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SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of the Securities Exchange
Act of 1934
Check the appropriate box:
[X] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14c-5(d)(2))
[ ] Definitive Information Statement
PACIFIC SECURITY COMPANIES, INC.
(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14c-5(g).
[X] Fee Computed on Table Below Per Exchange Act Rules 14c-5(g) and 0-11.
1) Title of Each Class of Securities to Which Transaction Applies: None
2) Aggregate Number of Securities to Which Transaction Applies: None
3) Per Unit Price or Other Underlying Value of Transaction Computed Pursuant
to Exchange Act Rule 0-11 (Set Forth the Amount on Which the Filing Fee Is
Calculated and State How It Was Determined.): -$0- The transaction is
not of the type requiring a filing fee under Rule 0-11
4) Proposed Maximum Aggregate Value of Transaction: $-0-
5) Total fee paid: $-0-
[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: n/a
(2) Form, Schedule, or Registration Statement No: n/a
(3) Filing Party: n/a
(4) Date Filed: n/a
Document page 1 of 13
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NOTICE OF 1998 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 18, 1999
NOTICE IS HEREBY GIVEN that the 1998 Annual Meeting of Shareholders of
PACIFIC SECURITIES COMPANY (the "Company"), will be held at 10:00 a.m.
(PST), on Thursday, February 18, 1999, at the sixth floor conference
room of the Peyton Building, 10 North Post Street, Spokane, Washington
99201, to consider and act upon the following matters:
1. To elect one (1) member to the Board of Directors to serve for a
three-year term or until his successor is elected and qualified;
2. To consider and vote upon the adoption of an amendment to the Company's
Articles of Incorporation to eliminate the mandatory redemption of the
Class A Preferred Stock and authorize 10,000,000 shares of preferred
stock;
3. To consider and vote upon the adoption of an amendment to the Company's
Articles of Incorporation to increase in the size of the Board of
Directors from seven to eight members and a resolution ratifying the
election of Julian Guthrie to the Board of Directors;
4. To approve the engagement of PricewaterhouseCoopers LLP as independent
certified public accountants for the Company for the fiscal year ending
July 31, 1999;
5. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Only Shareholders of record on the books of the Company at the close of
business on December 31, 1998, will be entitled to notice of and to vote at
the meeting or any adjournment thereof.
By Order of the Board of Directors
Wayne E. Guthrie, Chairman of the Board
Document page 2 of 13
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PACIFIC SECURITY COMPANIES
10 North Post Street
Spokane, WA 99201
INFORMATION STATEMENT
For the Annual Meeting of Shareholders
To be Held February 18, 1999
This Information Statement is furnished in connection with matters to be
voted at the Annual Meeting of Shareholders of PACIFIC SECURITY COMPANIES
(the "Company") to be held at 10:00 a.m. (PST), on Thursday, February 18,
1999, at the sixth floor conference room of the Peyton Building, 10 North
Post Street, Spokane, Washington 99201, and at any and all adjournments
thereof with respect to the matters referred to in the accompanying notice.
This Information Statement is first being mailed to Shareholders on or about
January 25, 1999.
Management of the Company is the record and beneficial owner, or has voting
authority for 988,729 shares (approximately 85%) of the outstanding common
stock and 5,000 shares (100%) of the outstanding preferred stock of the
Company. It is management's intention to vote all of its shares in favor of
each matter to be considered by the Shareholders, thereby assuring approval.
Although, approval of each matter to be considered by the Shareholders is
assured, the Company is required by applicable law to submit each of the
matters to be considered to the vote of all Shareholders. There are no
dissenter's rights applicable with respect to any matter to be considered by
the Shareholders.
The Company has determined December 31, 1998, as the record date with
respect to the determination of Shareholders entitled to vote at the Annual
Meeting of Shareholders.
WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY.
PURPOSES OF THE ANNUAL MEETING
Election of Directors.
At the Annual Meeting, Shareholders will be asked to consider and to take
action on the election of one (1) member to the Board of Directors to serve
for a three-year term or until his successor is elected and qualified
(See " Election of Director").
Amendment to the Articles of Incorporation Authorizing Preferred Stock and
Eliminating Mandatory Redemption of Class A Preferred Stock.
At the Annual Meeting, Shareholders will be asked to consider and vote upon
the adoption of an amendment to the Company's Articles of Incorporation to
eliminate the mandatory redemption of the Class A Preferred Stock and
authorize 10,000,000 shares of preferred stock. (See "Amendment of the
Company's Articles of Incorporation").
Document page 3 of 13
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Amendment to the Articles of Incorporation Increasing Number of Directors
At the Annual Meeting, Shareholders will be asked to consider and vote upon
an increase in the size of the Board of Directors from seven to eight
members and ratify the previous election of Julian Guthrie to the Board.
(See "Amendment of the Company's Articles of Incorporation").
Approval of Engagement of Auditors.
At the Annual Meeting, Shareholders will be asked to consider and vote upon
the selection of PricewaterhouseCoopers LLP as the Company's independent
auditors for the fiscal year ending July 31, 1999 (See "Selection of
Auditors").
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The following information as of the fiscal year ended July 31, 1998, is
provided with respect to each director and executive officer of the Company.
<TABLE>
Year First Term as
Elected as Director
Name Age Director Expire In Position
- -------------------- --- ------------- --------- ------------------------
<C> <S> <S> <S> <S>
Wayne E. Guthrie 78 1970 1999 Chairman of the Board
and CEO (1/17/70);
Director
Kevin M. Guthrie 43 1980 2001 Vice President
(5/2/85);
Director
David L. Guthrie 34 1987 2001 Vice President
(9/1/89);
Director
Donald J. Migliuri 52 1992 1998 Secretary/Treasurer
(5/29/90);
Director
Raymond J. Fisher 75 1970 1999 Director
Constance M. Guthrie 64 1981 1999 Director
Robert N. Codd 68 1994 2001 Director
Julian Guthrie 33 1998 2001 Director
</TABLE>
Family Relationships.
Kevin M. Guthrie, David L.Guthrie and Julian Guthrie are the children of
Wayne E. Guthrie, Constance M. Guthrie is the wife of Wayne E. Guthrie.
Document page 4 of 13
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Business Experience.
Wayne E. Guthrie, Chairman of the Board of Pacific Security Companies.
Mr. Guthrie is also Chairman of the Board of Aqua View Apartments, Inc., a
Washington corporation and subsidiary of the registrant. Mr. Guthrie has
over 50 years of experience in areas of construction, financing of real
estate and personal property, and real estate investments.
Kevin M. Guthrie, Vice President of Pacific Security Companies since 1985.
Mr. Guthrie has served as property manager for the Company since 1976. Mr.
Guthrie is also an officer and director of Aqua View Apartments, Inc.
David L. Guthrie, Vice President of Pacific Security Companies since
1989. Mr. Guthrie was formerly a financial consultant with Merrill Lynch
in Spokane, Washington. Mr. Guthrie is also an officer and director of Aqua
View Apartments, Inc. Mr. Guthrie is a NASD licensed securities sales
person (registered representative) and broker-dealer (general securities
principal). He is a licensed real estate broker in the state of Washington
and has obtained the CCIM designation (certified commercial investment
member) awarded by the commercial real estate investment institute.
Donald J. Migliuri, Treasurer of Pacific Security Companies since 1990 and
Secretary since 1991. Mr. Migliuri is a Certified Public Accountant and has
served as an accounting officer with various diversified financial services
companies for over 18 years. He also is a certified management accountant
(CMA) and has a Masters degree in Business Administration.
Constance M. Guthrie. Mrs. Guthrie is a housewife and has not been employed
outside the home during the past nine years.
Raymond J. Fisher. Mr. Fisher, now retired, was Secretary of Pacific
Security Companies. He was a Certified Public Accountant and was employed
by the Company and its predecessor companies for 41 years.
Robert N. Codd. Mr. Codd is employed by Pacific Security Companies in its
leasing and real estate activities. He was employed by the Company from 1970
to 1979 and was rehired in November 1992. Prior to being rehired, he was a
commercial realtor and property manager.
Julian Guthrie. Ms. Guthrie is a reporter for the San Francisco Examiner.
She covered general news for the paper for two years and last year was named
education reporter, responsible for covering all education issues in the Bay
Area. Before that, she was senior editor of a lifestyle managzine in San
Francisco and also worked as a freelance writer for the Examiner, covering
breaking business, political and lifestyle stories. She currently lives in
San Francisco.
Committees of the Board
The Company has no standing audit, nominating or compensation committees, or
committees performing similar functions.
Board Meetings
During the fiscal year ended July 31, 1998 there were four special meetings
of the Board and one regular meeeting. Mr. Migliuri, the only incumbent
director was present at each special and regular meeting of the Board of
Directors.
Document page 5 of 13
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Compliance With Section 16(a) of the Exchange Act.
The Company notes that none of the Officers or Directors of the Company have
filed reports on transactions in or holdings of the Company's Common Stock
during the most recent fiscal year or during any prior fiscal years.
Legal Proceedings
As of the date hereof, it is the opinion of management that there is no
material proceeding to which any director, officer or affiliate of the
registrant, any owner of record or beneficially of more than five percent of
any class of voting securities of the registrant, or any associate of any
such director, officer, affiliate of the registrant, or security holder is a
party adverse to the registrant or any of its subsidiaries or has a material
interest adverse to the registrant or any of its subsidiaries.
Certain Relationships and Related Transactions
Redeemable Preferred Stock
In fiscal 1995, the Company issued 10,400 shares of $100 par value
redeemable Class A preferred stock. The Company has the right to redeem
any shares after three years from the date of issuance. During the year
ended July 31, 1998, the Company redeemed 2,400 shares of the preferred
stock at par. However, all shares are required to be redeemed by the
Company ten years after issuance at the par value plus accrued dividends
to date or redemption. Due to the mandatory ten-year redemption, the
discount on the issuance of the preferred stock is being accreted using
the interest method over the redemption period. The accretion is recorded
as an increase in the carrying value of the preferred stock and as a charge
against retained earnings. The accretion of this discount was $37,500 in
the year ended July 31, 1998. The accretion of the discount on the shares
redeemed during the years ended July 31, 1998 was $81,500.
Each share of Class A Preferred Stock is entitled to one vote on each
matter voted on at a stockholders' meeting. The preferred stockholders have
liquidation rights equal to the par value plus accumulated and unpaid
dividends. The liquidation preference of the preferred stock was $742,000 at
July 31, 1998.
At July 31, 1998, preferred stock with a face value of $400,000 has been
pledged as collateral for a contract receivable from WCI. In August 1998,
$200,000 (2,000 shares) of preferred stock was redeemed at par value and the
contract receivable from WCI was satisfied in full. In connection with this
redemption, the Board of Directors of the Company has proposed a plan to
remove the mandatory redemption provision on the remaining 5,000 shares of
outstanding preferred stock.
Litigation Settlement
On January 5, 1998, in connection with pending litigation between the
Company and all of the Company's offices and directors and certain minority
stockholders of the Company, ("The Minority Stockholders") who are children
of Wayne E. Guthrie, the Company'' Chief Executive Officer and largest
individual Company common stockholder, the Company agreed to settle all
claims of the Minority Stockholders and redeem all Company common shares
held by the Minority Stockholders by paying approximately $317,000 in cash,
Document page 6 of 13
<PAGE>
distributing Company real property with an estimated fair value of $643,500
and the issuance of notes payable, bearing interest at 7% per annum,
aggregating approximately $729,000. The Company acquired 408,419 of its
common shares pursuant to this agreement, which are retired. In addition,
the Company obtained a covenant not-to-compete for five years form one of
the Minority Stockholders in return for the issuance of a $125,000 note
payable bearing interest at 7% per annum. Concurrently, certain Company
officers and directors issued notes payable aggregation approximately
$236,000 to one of the Minority Stockholders for legal costs aggregating to
$150,000. Total expenses incurred by the Company during the year ended
July 31, 1998 related to this settlement were approximately $300,000.
Yellowfront Building
On July 31, 1998, the Company transferred its ownership of the Yellowfront
Building, a commercial property located in Coeur d' Alene, Idaho, to a
family trust formed by Wayne E. Guthrie in exchange for 200,000 shares of
Class A common stock. The transfer was recorded at the fair value of the
property and resulted in a net gain to the Company of approximately
$420,000.
Contracts and Notes Receivable
Certain former stockholders are indebted to the Company on contracts or
notes with the following terms:
Note secured by real estate or common stock,
bearing 12.5 % (prime plus 4%) $227,183
$227,183
Debenture Bonds
Included in debenture bonds at July 31, 1998 is approximately $135,000 that
is payable to related parties. These bonds bear interest at the prevailing
market rate of the date of purchase.
Accrued Expenses and Other Liabilities
<TABLE>
1998
-----------------------
Interest
Amount Rate
----------- ----------
<C> <S> <S>
Wayne E. Guthrie $ 82,990 7.50 %
Contance Guthrie 99,996 7.50
Other stockholders 24,254 7.50
----------- ----------
207,240
===========
</TABLE>
Document page 7 of 13
<PAGE>
Heritage Village Apartment Complex
On February 1, 1974, Wayne E. Guthrie and his wife, Constance Guthrie,
purchased the Heritage Village apartment complex located in King County,
Washington for $2,100,000 from Pacific National Capital Company (which
subsequently merged into Pacific Security Companies). The purchase was
partially seller-financed by a real estate contract bearing interest at 8%
in an original amount of $2,060,000. This contract was assigned to WCI in
1990 (see below). The balance owed on this contract was $200,000 on
July 31, 1998. The taxable gain on this sale was $932,348. The balance
owed was paid in full in August 1998.
On November 29, 1979, Security Savesco, Inc. sold the Heritage Village
apartment complex for $6,000,000 to a non-related party. The sale was
partially seller-financed by a real estate contract bearing interest at
9% in an original amount of $5,200,000. The balance owed on this contract
was paid in full during the year ended July 31, 1998.
Washington Capital, Inc. (WCI)
In July 1990, certain contracts receivable from Company officers, directors
and stockholders were assigned by the Company to WCI, a corporation whose
sole stockholder was Wayne E. Guthrie. In December 1991, Mr. Guthrie
transferred his ownership interest in WCI to his brother, who is now the
sole stockholder of WCI.
The assignment of the contracts receivable from
officers/directors/stockholders of the Company was made at no gain or
loss as WCI executed installment notes payable to the Company for the
same principal amount and interest rates as the contracts assigned to
WCI. At July 31, 1998 the only significant assets and liabilities of
WCI were the contracts receivable and the installment contract payable
to the Company.
In July 1994, Wayne E. Guthrie and/or WCI pledged $800,000 face value
of the Company's Class A Preferred Stock to guarantee performance and
full payment of any account that he or WCI may owe to the Company. As
a result of the redemption of preferred share during the years ended
July 31, 1998 and 1997, the pledge was adjusted to $400,000 face value
of the Company's Class A Preferred Stock.
The contract receivable by the Company from WCI had a balance outstanding
of $200,000 at July 31, 1998. This contract was repayable in $15,000
monthly installments and bore interest at 8% per annum. The contract
was satisfied in full subsequent to July 31, 1998 in connection with the
redemption of preferred shares.
Document page 8 of 13
<PAGE>
Installment Contracts Mortgage Notes and Notes Payable
At July 31, 1998 the following related-party notes payable were
outstanding:
<TABLE>
Interest Monthly
Rate Payment
---------------- -----------
<C> <S> <S> <S>
John Guthrie* $ 496,618 7.00% $ 2,917
Linda Welden* 176,899 7.00% 1,200
Robert Guthrie* 176,899 7.00% 1,200
Wayne E. Guthrie 176,658 6.75% 2,000
----------
$1,027,315
==========
</TABLE>
* These notes were paid in full in November, 1998.
REMUNERATION AND OTHER COMPENSATION OF MANAGEMENT
The following table lists, on an accrual basis, for each of the three
years ended July 31, 1998, the remuneration paid by the Company to any
officers or directors in excess of $100,000 and to all officers and
directors as a group who were officers or directors of the Company at
any time during the year ended July 31, 1998:
<TABLE>
Name of Annual
Individual Capacities Compensation*
or Number of in Which Fiscal -------------------
Persons in Group Served Year Salary Bonus
- ----------------- ---------------------------- ------- --------- --------
<C> <S> <S> <S> <S>
David L. Guthrie Vice President and Director 1998 $ 98,580 $ 10,000
Kevin M. Guthrie Vice President and Director 1998 $ 98,862 $ 10,000
Officers and Directors 1998 $382,223 $ 25,000
as a group (5)
</TABLE>
The Company has no qualified or nonqualified stock option plans as of July 31,
1998.
*Annual compensation did not exceed $100,000 in 1996 and 1997.
The Company has no outstanding stock options.
Document page 9 of 13
<PAGE>
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The Company has two classes of voting securities entitled to be voted
at the Annual Meeting. At the date hereof, there were 1,168,849 shares
of Common Stock outstanding and 5,000 shares of Class A Preferred Stock
outstanding. Each share of Common Stock and Class A Preferred Stock is
entitled to one vote on each matter to be considered. The presence in
person of the holders of a majority of the outstanding voting shares is
necessary to constitute a quorum at the Annual Meeting. Approval of the
proposals to be presented at the Annual Meeting will require the
affirmative vote of the holders of a majority of the shares present at
the meeting. There is no cumulative voting for directors
The Company has determined December 31, 1998, as the record date with
respect to the determination of Shareholders entitled to vote at the 1998
Annual Meeting of Shareholders.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) Security Ownership of Certain Beneficial Owners
Set forth below is certain information concerning parties, excluding
management, who are known by the Company to directly own more than 5%
of any class of the Company's voting shares on July 31, 1998: none.
(b) Security Ownership of Management
The following table sets forth as of July 31, 1998 information
concerning the direct ownership of each class of equity securities by
all directors and all directors and officers of the Company as a group:
<TABLE>
Amount and
Nature of
Title Beneficial Percent
of Class Name of Beneficial Owner Ownership of Class
- ------------- -------------------------- ------------- --------------
<C> <S> <S> <S>
Common stock Wayne E. Guthrie* 182,870 15.60
Common stock Constance Guthrie 105,043 8.96
Common stock Kevin Guthrie** 222,718 18.99
Common stock David Guthrie** 222,718 18.99
Common stock Julian Guthrie 196,838 16.79
Common stock All directors and
officers as a group 930,187 79.33
Preferred stock Wayne E. Guthrie* 4,000 57.10
Preferred stock Wayne E. or
Constance Guthrie 2,000 28.60
Preferred stock Constance Guthrie 1,000 14.30
Preferred stock All directors and
officers as a group 7,000 100.00%
*Subsequent to July 31, 1998 Mr. Guthrie redeemed 2,870 shares of Common
Stock and 2,000 shares of Preferred Stock
**These parties each exercise voting rights over an additional 30,706
shares (2.62%) of this class through the holdings of their minor children.
Document page 10 of 13
<PAGE>
MATTERS TO BE CONSIDERED AND VOTED UPON AT THE ANNUAL MEETING OF
SHAREHOLDERS
1. Election of Director.
At the Annual Meeting, Shareholders will be asked to consider and to
take action on the election of one (1) member to the Board of Directors
to serve for a three-year term or until his respective successor is
elected and qualified.
The nominee for director, together with certain information with respect
to him, is as follows:
Shares Owned Beneficially
Name Age Director Since directly or indirectly, as
of 7/31/98
Donald J. Migliuri 52 1992 -0-
Donald J. Migliuri. Donald J. Migliuri has been treasurer of Pacific
Security Companies since 1990. He was a Certified Public Accountant and
has served as an accounting officer with various diversified financial
service companies for over ten years.
2. Amendments to the Company's Articles of Incorporation.
The Board of Directors proposes two Amendments to the Articles of
Incorporation.
A. Capitalization
The Amendment of Article V. provides for the authorization of 10,000,000
shares of Preferred Stock and eliminates the mandatory requirement of the
Company to redeem the shares of Class A Preferred Stock currently
authorized. All other rights and preferences of the Class A preferred
Stock shall remain intact.
Discussion: The Company currently has an authorized class of preferred
shares, Class A Preferred. The total authorized Class A Preferred stock
is 20,000 shares with a par value of $100.00 per share. There are
currently 5,000 shares of Class A Preferred outstanding. Each Class A
Preferred share must be redeemed by the Company ten years after the date
of issuance. The Company, has the absolute right to redeem any portion
of Class A Preferred shares after three years from date of issuance. The
elimination of the mandatory redemption feature will allow the Company to
treat the Class A Preferred shares as permanent equity and will strengthen
the Company's balance sheet. The current Class A Preferred shareholders
have unanimously consented to this amendment to the Class A Preferred Stock.
Additionally, the Company will have authority to issue up to Ten Million
(10,000,000) shares of newly created preferred stock ("Preferred Stock").
The Preferred Stock shall have no stated value. The Preferred Stock shall
be entitled to preference over the Common Stock with respect to the
distribution of assets of the Company in the event of liquidation,
dissolution, or winding-up of the Company, whether voluntarily or
involuntarily, or in the event of any other distribution of assets of the
Company among its shareholders for the purpose of winding-up its affairs.
Document page 11 of 13
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The authorized but unissued shares of Preferred Stock may be divided into
and issued in designated series from time to time by one or more resolutions
adopted by the Board of Directors. The Directors in their sole discretion
shall have the power to determine the relative powers, preferences, and
rights of each series of Preferred Stock.
If approved, the Board of Directors would be empowered without the
necessity of further action or authorization by the Company's Shareholders
(unless such action or authorization is required in a specific case by
applicable laws or regulations or stock exchange rules) to authorize the
issuance of the Preferred Shares from time to time in one or more series or
classes, and to fix by resolution the designations, preferences,
limitations, and relative rights of each such series or class. Each series
of Preferred Shares would, as determined by the Board of Directors at the
time of issuance, rank senior to the Company's shares of Common Stock with
respect to dividends and redemption and liquidation rights.
The Preferred Shares will provide authorized and unissued shares of
Preferred Stock which may be used by the Company for any proper corporate
purpose. Such purpose might include, without limitation, issuance as part
or all of the consideration required to be paid by the Company in the
acquisition of other businesses or properties, or issuance in public or
private sales for cash as a means of obtaining additional capital for use
in the Company's business and operations. There are no transactions
currently under review by the Board of Directors which contemplate the
issuance of Preferred Shares.
It is not possible to state the precise effects of the authorization of the
Preferred Shares upon the rights of the holders of the Company's Common
Stock until the Board of Directors determines the respective preferences,
limitations, and relative rights of the holders of each class or series of
the Preferred Shares. Such effects might include, however: (a) reduction of
the amount otherwise available for payment of dividends on Common Stock to
the extent dividends are payable on any issued Preferred Shares; (b)
restrictions on dividends on the Common Stock; (c) dilution of the voting
power of the Common Stock to the extent that the Preferred Shares had voting
rights; (d) conversion of the Preferred Shares into Common Stock at such
prices as the Board of Directors determines, which could include issuance at
below the fair market value or original issue price of the Common Stock; and
(e) the holders of Common Stock not being entitled to share in the Company's
assets upon liquidation until satisfaction of any liquidation preference
granted to holders of the Preferred Shares.
Although the Board of Directors would authorize the issuance of additional
Preferred Shares based on its judgment as to the best interests of the
Company and its Shareholders, the issuance of authorized Preferred Shares
could have the effect of diluting the voting power and book value per share
of the outstanding Common Stock.
B. Directors
By amendment to Article VII. the Board proposes to increase the size of the
Board of directors from seven to eight members. Through oversight this
amendment was not considered at the 1997 Annual Meeting at which an eighth
member was elected to the Board. The resolution adopting this amendment
contains language making the date of the 1997 Annual Meeting the effective
date of the amendment and incorporates language approving, adopting and
ratifying the election of Julian Guthrie as the eighth director of the
Company.
Document page 12 of 13
<PAGE>
4. Selection of Auditors
For the fiscal year ended July 31, 1998, the Company retained
PricewaterhouseCoopers LLP as its independent auditors. It shall be the
Company's practice to refer to the Shareholders the selection of the firm
to audit its annual financial statements.
The Board of Directors recommends a vote for the Appointment of
PricewaterhouseCoopers LLP as the independent auditors for the Company for
the fiscal year ending July 31, 1999. It is not expected that a
representative of PricewaterhouseCoopers LLP will be present at the Annual
Meeting.
4. Other Matters
Management does not know of any other matters likely to be brought before
the 1998 Annual Meeting of Shareholders. However, in the event any other
matters properly come before the 1998 Annual Meeting of Shareholders, such
matters will be acted upon accordingly.
FINANCIAL AND OTHER INFORMATION
This information is incorporated by reference to the consolidated balance
sheets and the related consolidated statements of operations, stockholders'
equity and cash flows appearing in the Company's 1998 Annual Report, the
Form 10K for the fiscal year ended July 31, 1998 and the Form 10Q for the
quarterly period ended October 31, 1998.
As disclosed in the Company's most recent 10Q filing, on December 1, 1998,
management decided to close Birdies Golf Center and commence a liquidation of
assets. Management is currently attempting to lease the buildings and market
the property.
SHAREHOLDER PROPOSALS
Proposals by shareholders intended to be presented at the next Annual
Meeting of Shareholders to be held in 1999, must be received by the
Secretary of the Company on or before October 1, 1999, in order to be
included in the information statement for that meeting. Proposals should
be directed to Mr. Donald J. Migliuri, Secretary.
A COPY OF THE COMPANY'S ANNUAL REPORT FOR THE PERIOD ENDED JULY 31, 1998
(FORM 10-K) AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION,
INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES THERETO, MAY BE OBTAINED
BY SHAREHOLDERS WITHOUT CHARGE BY WRITING TO:
Pacific Security Companies
525 Peyton Building, 10 North Post Street
Spokane, Washington 99201
Wayne E. Guthrie Date: January 25, 1999
Chairman of the Board
Document page 13 of 13
</TABLE>
