SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended October 28, 1995
______________________
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________________ to ________________
- --------------------------------------------------------------------------------
Commission file number 0-14900
_________________________________________________________
PSS, Inc.
_______________________________________
(Exact name of registrant as specified in its charter)
Delaware 91-1335798
______________________________ ________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1511 Sixth Avenue, Seattle, WA 98101
____________________________________ ________
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code)(206) 621-6938
________________________________________________________________________________
Former name, former address and former fiscal year, if changed
since last report.
Securities registered pursuant to Section 12(b) of the Act: None.
Securities registered pursuant to Section 12(g) of the Act:
Common stock - $1.00 par value
7-1/8% Convertible Debentures due July 15, 2006
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Aggregate market value of the registrant's voting stock held by nonaffiliates of
the registrant as of December 1, 1995: $270,000.
The number of shares of common stock outstanding as of October 28, 1995:
19,473,728.
Documents incorporated by reference: None.
Page 1 of 31
<PAGE>
PART I
ITEM 1 - BUSINESS
PSS, Inc. ("PSS"), through its wholly owned subsidiary, PNS Inc. ("PNS"), owns
PSSC Inc. ("PSSC"); together, PSS, PNS and PSSC are referred to collectively as
the "Company".
The Company owns pass-through and participation certificates issued by the
Federal Home Loan Mortgage Corporation backed by whole pool real estate
mortgages ("Mortgage Certificates"), and as a result, is primarily engaged in
the business of owning mortgages and other liens on and interests in real
estate. At October 28, 1995, the Company's principal assets consisted of
approximately $5.8 million of Mortgage Certificates from which interest income
is earned. The Mortgage Certificates are financed with borrowings, payable on
demand, secured by the Mortgage Certificates (the "Mortgage Financing"). The
principal obligations of the Company are the Mortgage Financing borrowings, the
PSS 7-1/8% Convertible Debentures due July 15, 2006 (the "Debentures"), and the
PNS 12- 1/8% Senior Subordinated Notes due July 15, 1996 (the "Senior Notes"),
upon which interest expense is incurred.
From July 1986, when the Company was organized, until June 1988, subsidiaries of
PNS (the "Sellers") operated retail stores that sold a variety of traditional
drugstore and general merchandise items. In June 1988, pursuant to an Agreement
for the Purchase and Sale of Assets the Sellers sold substantially all of their
assets, comprising the Sellers' entire retail operations, to Thrifty Corporation
(a subsidiary of Pacific Enterprises). In consideration for such sale of assets
(the "Asset Sale"), the Sellers received 5.2 million shares of Pacific
Enterprises common stock (the "PET Shares"). During 1990 through 1993, the
Company sold its PET Shares for the purpose of servicing and repurchasing some
of the Debentures and Senior Notes.
ITEM 2 - PROPERTIES
As a result of the Asset Sale, the Company disposed of all its properties.
ITEM 3 - LEGAL PROCEEDINGS
In the opinion of management, there are no material legal proceedings pending to
which the Company is a party or of which any of its assets is the subject.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
2
<PAGE>
PART II
ITEM 5 - MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
MARKET INFORMATION
The Company's common stock is traded over-the-counter. The high and low prices
for the stock by quarter for the two years ended October 28, 1995 were as
follows:
<TABLE>
<CAPTION>
Quarter ended High Low
------------- ---- ---
<S> <C> <C>
January 29, 1994 .03 .01
April 30, 1994 .03 .01
July 30, 1994 .02 .01
October 29, 1994 .02 .01
January 27, 1995 .02 .01
April 28, 1995 .04 .01
July 28, 1995 .04 .01
October 28, 1995 .02 .01
</TABLE>
The high and low prices for each quarter are the high and low bids as reported
by National Quotation Bureau, Incorporated, which are those quoted by dealers to
each other, exclusive of markups, markdowns or commissions, and do not represent
actual transactions.
HOLDERS
As of November 1, 1995, there were 940 holders of record of the Company's common
stock.
DIVIDENDS ON COMMON STOCK
The Company has never paid a dividend and does not anticipate paying dividends
for the foreseeable future. Any determination as to the payment of dividends
will depend upon future earnings, results of operations, capital requirements,
the financial condition of the Company and such other factors as the Board of
Directors of the Company may consider. The indentures governing the Company's
Senior Notes and Debentures contain covenants which restrict the ability of the
Company to pay dividends (see Note 5 to the financial statements).
3
<PAGE>
ITEM 6 - SELECTED FINANCIAL DATA
The following selected financial data should be read in conjunction with the
financial statements and related notes and "Management's Discussion and Analysis
of Financial Condition and Results of Operations" included elsewhere herein. As
explained in Note 2 to the financial statements, information relating to October
28, 1995 is presented on a liquidation basis, which reports an excess of
liabilities over assets. Presentation of per share information on a liquidation
basis is not considered meaningful and has been omitted.
<TABLE>
<CAPTION>
Year ended
__________________________________________________________________
October 28, October 29, October 30, October 31, November 2,
1995 1994 1993 1992 1991
______ ______ ______ ______ ______
(thousands of dollars, except per share data)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Increase in net liabilities $ (4,231)
Loss before extraordinary items (1) $ (2,141) $ (1,161) $(32,913) $(78,358)
Net income (loss) (2) 9,568 47,454 27,665 (58,653)
Net income (loss) per common share 0.49 2.44 1.42 (3.01)
BALANCE SHEET DATA:
Total assets $ 5,927 $ 11,383 $136,634 $217,489 $356,405
Total liabilities 37,833
Short-term borrowings 5,278 10,192 124,062 171,089 239,096
Long-term debt 28,159 48,144 126,634 235,248
Stockholders' deficit (27,675) (37,243) (84,697) (128,048)
Net liabilities (31,906)
</TABLE>
(1) Includes net realized and unrealized losses on Pacific Enterprises common
stock of approximately $37 million and $68 million during the years ended
October 31, 1992 and November 2, 1991, respectively.
(2) Includes pre-tax extraordinary gains on early extinguishment of debt of
approximately $13 million, $49 million, $77 million and $20 million during
the years ended October 29, 1994, October 30, 1993, October 31, 1992, and
November 2, 1991, respectively.
4
<PAGE>
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
At October 28, 1995, the Company's principal assets consisted of approximately
$5.8 million of Mortgage Certificates from which interest income is earned and
its principal obligations consisted of Mortgage Financing borrowings, Debentures
and Senior Notes upon which interest expense is incurred.
PNS is restricted by terms of its Senior Notes Indenture from paying dividends
or making other payments to PSS, except that PNS may pay dividends to PSS in
amounts sufficient to enable PSS to meet its obligation on its Debentures when
due. PNS, like its parent company, has a stockholder's deficit.
At October 28, 1995, the Company had tangible assets of approximately $5.92
million and liabilities secured by such assets of approximately $5.37 million,
thus having a net difference of approximately $550,000 available for holders of
Senior Notes and Debentures. At October 28, 1995, approximately $5.26 million of
Senior Notes and $22.92 million of Debentures remain outstanding and annual
interest thereon, in the absence of additional repurchases, approximates
$638,000 and $1.63 million, respectively.
The Company failed to pay the interest due January 15, 1995 and July 15, 1995 on
its Convertible Debentures and such default has continued beyond the 30 day
"grace" period. However, the trustee for the Convertible Debentures has
indicated to the holders of the Debentures that it does not intend to accelerate
payment of the Debentures "because it is unlikely that the Debenture holders
would receive any payment if the Debentures were accelerated."
Although the Company's subsidiary, PNS, paid the interest due on January 15,
1995 on its Senior Notes within the 30 day "grace" period, it failed to make the
interest payment due on July 15, 1995 and such default has continued beyond the
30 day "grace" period. Claiming that PNS is in default because it is "unable to
pay its debts as the same become due" and due to its failure to make the July
15, 1995 interest payment, the trustee for the Senior Notes has accelerated and
declared the principal and interest on the Senior Notes immediately due and
payable. The trustee has since been advised by a representative of the holders
of a substantial portion of the Senior Notes that such holders are in the
process of developing a proposal to reorganize the Company and PNS and has asked
the trustee to forbear from taking any action for so long as discussions are
pending with the Company. Although the Company has not yet received a proposal,
it has been contacted by the representative of such holders and anticipates that
such a proposal will be forthcoming. In the interim, the trustee has taken no
legal action with respect to the default.
5
<PAGE>
The Company's future operating results, liquidity, capital resources and
requirements are primarily dependent upon actions which may be taken by the
trustees for the Senior Notes and the Debentures to collect amounts due
thereunder, the payment of amounts due on and purchases of Senior Notes and
Debentures and, to a lesser extent, interest rate fluctuations as they relate to
the market value of Mortgage Certificates and to the spread of interest income
therefrom over interest expense on related borrowings. The Company is
exclusively invested in Mortgage Certificates, and, accordingly, is presently
relying solely on such as its source of cash funds. It has not been determined
what course of action the Company may pursue with respect to debt service
on Senior Notes and Debentures.
RESULTS OF OPERATIONS
INTEREST INCOME
Interest income for each of the years ended October 28, 1995, October 29, 1994
and October 30, 1993 decreased as compared to the immediate preceding year as a
result of lower balances of investments in Mortgage Certificates, and for the
years ended October 29, 1994 and October 30, 1993 lower annual interest income
rates earned on the adjustable rate Mortgage Certificates. Included in
investment income for the year ended October 28, 1995 is approximately $100,000
of unrealized gains resulting from mark-to-market adjustments. The weighted
average interest income rate earned on the Mortgage Certificates, net of
amortization of premiums, approximated 7.3%, 5.0% and 5.8% during the years
ended October 28, 1995, October 29, 1994 and October 30, 1993, respectively.
INTEREST EXPENSE
Interest expense for each of the years ended October 28, 1995, October 29, 1994
and October 30, 1993 decreased as compared to the immediate preceding year
primarily due to lower investments in Mortgage Certificates and related
borrowings upon which interest expense is incurred. The weighted average
interest expense rate on Mortgage Certificate related borrowings approximated
6.0%, 3.9% and 3.4% during the years ended October 28, 1995, October 29, 1994
and October 30, 1993, respectively. Interest expense also decreased during each
of the years ended October 28, 1995, October 29, 1994 and October 30, 1993 as
compared to the preceding year as a result of having fewer Debentures and Senior
Notes outstanding due to bond repurchases.
REALIZED AND UNREALIZED LOSS
During the year ended October 30, 1993, the Company disposed of its remaining
PET Shares and recorded a realized loss of approximately
6
<PAGE>
$40 million and a decrease in unrealized loss of approximately $42 million,
representing the previously recognized unrealized loss for PET Shares sold
during the year.
WRITE OFF OF DEFERRED FINANCING COSTS AND ORIGINAL ISSUE
DISCOUNT
As a result of the continued default due to the non-payment of interest on the
Convertible Debentures and Senior Notes, the Company has expensed remaining
deferred financing costs and original issue discount.
EXTRAORDINARY ITEMS
During the year ended October 29, 1994, the Company purchased approximately $14
million and $6 million of its Senior Notes and Debentures, respectively, and as
a result, after the write-off of related deferred financing costs, recorded an
extraordinary gain on early extinguishment of debt, before income taxes, of
approximately $13 million.
During the year ended October 30, 1993, the Company purchased approximately $65
million and $14 million of its Senior Notes and Debentures, respectively, and as
a result, after the write-off of related deferred financing costs, recorded an
extraordinary gain on early extinguishment of debt, before income taxes, of
approximately $49 million.
7
<PAGE>
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS Page
Report of Independent Accountants 9
Consolidated Statement of Net Liabilities
(Liquidation Basis) 10
Consolidated Balance Sheet (Going Concern Basis) 10
Consolidated Statement of Change in Net Liabilities
(Liquidation Basis) 11
Consolidated Statements of Operations
(Going Concern Basis) 11
Consolidated Statements of Cash Flows 12
Notes to Financial Statements 13
FINANCIAL STATEMENT SCHEDULES
Financial statement schedule information is presented in the
financial statements.
SUPPLEMENTARY FINANCIAL INFORMATION
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) 21
8
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
of PSS, Inc.:
We have audited the consolidated balance sheet of PSS, Inc. as of October 29,
1994, the related consolidated statements of operations, and cash flows for each
of the two years in the period ended October 29, 1994. In addition, we have
audited the consolidated statement of net liabilities (liquidation basis) as of
October 28, 1995, and the related consolidated statement of changes in net
liabilities (liquidation basis) and cash flows (liquidation basis) for the
period from October 30, 1994 to October 28, 1995. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
As described in Note 2 to the financial statements, effective October 28, 1995
the Company adopted the liquidation basis of accounting for presenting its
consolidated financial statements. As a result, the Company has changed its
basis of accounting for periods subsequent to October 29, 1994 from the going
concern basis to a liquidation basis.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of PSS, Inc. and its subsidiaries
as of October 29, 1994, the results of their operations and their cash flows for
each of the two years then ended and their net liabilities in liquidation as of
October 28, 1995, and the changes in their net liabilities (liquidation basis)
and cash flows (liquidation basis) for the period from October 30, 1994 to
October 28, 1995, in conformity with generally accepted accounting principles
applied on the basis described in the preceding paragraph.
PRICE WATERHOUSE LLP
/s/ Price Waterhouse LLP
Seattle, Washington
January 25, 1996
9
<PAGE>
<TABLE>
<CAPTION>
PSS, INC.
Consolidated Statement of Net Liabilities (Liquidation Basis)
Consolidated Balance Sheet (Going Concern Basis)
(thousands of dollars)
October 28, October 29,
1995 1994
----------- -----------
(Liquidation (Going Concern
Basis) Basis)
<S> <C> <C>
Assets:
Cash and short-term investments $ 11 $ 45
Investment in mortgage certificates 5,840 10,892
Accrued interest receivable 76 112
Deferred financing costs 334
------- -------
Total assets 5,927 $ 11,383
======= =======
Liabilities:
Borrowings under mortgage certificate
financing agreement 5,278 $ 10,192
Accounts payable and accrued liabilities 92 41
Reserve for estimated costs during
period of liquidation 50
PNS 12-1/8% senior notes 5,258 5,258
Original issue discount on PNS notes (19)
Interest payable on PNS notes 504 187
Reserve for interest on PNS notes during
period of liquidation 456
PSS 7-1/8% debentures 22,920 22,920
Interest payable on PSS debentures 2,107 479
Reserve for interest on PSS debentures
during period of liquidation 1,168
------- -------
Total liabilities 37,833 39,058
------- -------
Net Liabilities $(31,906)
========
Stockholders' Deficit:
Preferred stock, $1 par value, authorized
10 million shares; none issued
Common stock, $1 par value, authorized
60 million shares; issued and
outstanding 19,473,728 19,474
Additional paid-in capital 149,110
Accumulated deficit (196,259)
--------
Total Stockholders' Deficit (27,675)
--------
Total Liabilities and Stockholders Deficit $ 11,383
=======
</TABLE>
The accompanying notes are an integral part
of these financial statements.
10
<PAGE>
<TABLE>
<CAPTION>
PSS, INC.
Consolidated Statement of Changes in Net Liabilities
(Liquidation Basis)
Consolidated Statements of Operations (Going Concern Basis)
(thousands of dollars except per share data)
Year ended
-----------------------------------------
October 28, October 29, October 30,
1995 1994 1993
------ ------ ------
(Liquidation (Going Concern Basis)
Basis)
<S> <C> <C> <C>
Investment income $ 582 $ 4,804 $ 9,073
Interest expense (2,765) (7,841) (12,076)
Realized loss on sale of Pacific
Enterprises common stock (40,209)
Decrease in unrealized loss on
Pacific Enterprises common stock 41,836
Write off of deferred financing
costs and original issue discount (226)
General and administrative expense (148) (207) (383)
------- ------ -------
Loss from operations before income
taxes and extraordinary items (2,557) (3,244) (1,759)
Estimated costs and interest during
period of liquidation (1,674)
------- ------ -------
Increase in Net Liabilities $(4,231)
=======
Loss before income taxes and
extraordinary items (3,244) (1,759)
Income tax benefit 1,103 598
------- -------
Loss before extraordinary items (2,141) (1,161)
Extraordinary items:
Gain on early extinguishment of
debt, net of income taxes of
$4,356 and $16,732, respectively 8,456 32,481
Tax benefit resulting from
utilization of net operating
loss carryforwards 3,253 16,134
------- -------
Net income $ 9,568 $ 47,454
======= =======
Loss per common share before
extraordinary items $ (0.11) $ (0.06)
======= =======
Net income per common share $ 0.49 $ 2.44
======= =======
</TABLE>
The accompanying notes are an integral part
of these financial statements.
11
<PAGE>
PSS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(thousands of dollars)
<TABLE>
<CAPTION>
Year ended
---------------------------------------------------------
October 28, October 29, October 30,
1995 1994 1993
---------- ----------- -----------
(Liquidation (Going Concern Basis)
Basis)
<S> <C> <C> <C>
Cash flows from operating activities:
Increase in Net Liabilities $ ( 4,231)
Net income $ 9,568 $ 47,454
Adjustments to reconcile to net cash flows
from operating activities:
Extraordinary gain on early extinguishment of debt (12,812) (49,213)
Net realized and unrealized loss on Pacific Enterprises
common stock (1,627)
Amortization 127 963 1,088
Write off of deferred financing
costs and original issue discount 226
Increase in estimated costs and interest during
period of liquidation 1,674
Decrease in accrued interest receivable 36 1,240 672
Increase (decrease) in accrued interest payable 1,945 (754) (2,728)
Other (49) (208) (458)
--------- -------- ---------
Net cash used by operating activities (272) (2,003) (4,812)
--------- -------- ---------
Cash flows from investing activities:
Proceeds from sale of mortgage certificates 726 98,653 13,220
Principal repayments on mortgage certificates 4,426 23,664 33,995
Proceeds from sale of Pacific Enterprises
common stock 21,893
--------- -------- ---------
Net cash provided by investing activities 5,152 122,317 69,108
--------- -------- --------
Cash flows from financing activities:
Repayment of borrowings under mortgage
certificates financing agreement (4,914) (113,870) (47,027)
Repurchases of long-term debt (6,971) (18,568)
--------- -------- --------
Net cash used by financing activities (4,914) (120,841) (65,595)
--------- -------- --------
Net decrease in cash and short-term investments (34) (527) (1,299)
Cash and short-term investments at
beginning of year 45 572 1,871
--------- -------- --------
Cash and short-term investments at
end of year $ 11 $ 45 $ 572
======== ======== ========
</TABLE>
The accompanying notes are an integral part
of these financial statements.
12
<PAGE>
PSS, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - THE COMPANY
The consolidated financial statements of PSS, Inc. ("PSS"), includes its direct
subsidiary PNS Inc. ("PNS") and its subsidiary PSSC, Inc. ("PSSC"),
collectively, the "Company". The Company is principally owned by Seacorp, Inc.
("Seacorp") and Zimmerman Retailing Group Limited ("Zimco"). Seacorp and Zimco
own approximately 41% and 38%, respectively, of the Company's outstanding common
stock, with the remainder publicly owned.
The Company, through PSSC, owns pass-through and participation certificates
issued by the Federal Home Loan Mortgage Corporation backed by whole pool real
estate mortgages ("Mortgage Certificates"), and as a result, is primarily
engaged in the business of owning mortgages and other liens on and interests in
real estate. The principal obligations of the Company are PSSC borrowings
secured by Mortgage Certificates, PNS 12-1/8% Senior Subordinated Notes due July
15, 1996 (the "Senior Notes") and PSS 7-1/8% Convertible Debentures due July 15,
2006 (the "Debentures").
The Company failed to pay the interest due January 15, 1995 and July 15, 1995 on
its Debentures and such default has continued beyond the 30 day "grace" period.
The Company has also failed to make the January 15, 1996 interest payment.
However, the trustee for the Debentures has indicated to the holders of the
Debentures that it does not intend to accelerate payment of the Debentures
"because it is unlikely that the Debenture holders would receive any payment if
the Debentures were accelerated."
Although PNS paid the interest due on January 15, 1995 on its Senior Notes
within the 30 day "grace" period, it failed to make the interest payment due on
July 15, 1995 and such default has continued beyond the 30 day "grace" period.
The Company has also failed to make the January 15, 1996 interest payment.
Claiming that PNS is in default because it is "unable to pay its debts as the
same become due" and due to its failure to make the July 15, 1995 interest
payment, the trustee for the Senior Notes has accelerated and declared the
principal and interest on the Senior Notes immediately due and payable. The
trustee has since been advised by a representative of the holders of a
substantial portion of the Senior Notes that such holders are in the process of
developing a proposal to the Company and PNS and has asked the trustee to
forbear from taking any action for so long as discussions are pending with the
Company. Although the Company has not yet received a proposal, it has been
contacted by the representative of such holders and anticipates that such a
proposal will be forthcoming. In the interim, the trustee has taken no legal
action with respect to the default.
13
<PAGE>
NOTE 1 - THE COMPANY (continued)
At October 28, 1995, the Company had tangible assets of approximately $5.92
million and liabilities secured by such assets of approximately $5.37 million,
thus having a net difference of approximately $550,000 available for holders of
Senior Notes and Debentures. At October 28, 1995, approximately $5.26 million of
Senior Notes and $22.92 million of Debentures remain outstanding and, annual
interest thereon, in the absence of additional repurchases, approximates
$638,000 and $1.63 million, respectively. The Company's future operating
results, liquidity, capital resources and requirements are primarily dependent
upon actions which may be taken by the trustees for the Senior Notes and the
Debentures to collect amounts due thereunder, the payment of amounts due on and
purchases of Senior Notes and Debentures and, to a lesser extent, interest rate
fluctuations as they relate to the market value of Mortgage Certificates and to
the spread of interest income therefrom over interest expense on related
borrowings. The Company is exclusively invested in Mortgage Certificates, and,
accordingly, is presently relying solely on such as its source of cash funds. It
has not been determined what course of action the Company may pursue with
respect to debt service on the Senior Notes and Debentures.
NOTE 2 - LIQUIDATION BASIS OF ACCOUNTING
The consolidated financial statements for fiscal 1994 and 1993 were prepared on
a going concern basis of accounting which contemplates realization of assets and
satisfaction of liabilities in the normal course of business. Effective October
28, 1995, the Company has adopted the liquidation basis of accounting for
presenting its consolidated financial statements. This basis of accounting is
considered appropriate when, among other things, liquidation of a company
appears imminent and the net realizable value of assets are reasonably
determinable. Under this basis of accounting, assets and liabilities are stated
at their net realizable value and estimated costs through the liquidation date
are provided to the extent reasonably determinable.
The net effect of converting from the going concern basis to the liquidation
basis of accounting was an increase in net liabilities of approximately $1.7
million, as a result of recording estimated costs and interest expense to the
liquidation date. No adjustment to the reported value of assets was required.
Under the liquidation basis, the Company has accrued future liabilities and
estimated future net revenues from interest or other income associated with
mortgage certificates.
14
<PAGE>
NOTE 2 - LIQUIDATION BASIS OF ACCOUNTING (CONTINUED)
The conversion from the going concern to liquidation basis of accounting has
required the determination of significant estimates and judgments. A summary of
significant estimates and judgments utilized in preparation of the October 28,
1995 consolidated financial statements on a liquidation basis follows:
* The Senior Notes July 15, 1996 due date has been utilized
as the liquidation date.
* Mortgage Certificates and related interest receivable are
stated at estimated market value.
* Borrowings secured by Mortgage Certificates are stated at
face value.
* The reserve for estimated costs during the period of
liquidation represents estimates of costs (primarily legal
and trustee fees) to be incurred in the future to the
liquidation date.
* Net estimated interest income to be earned on Mortgage
Certificates in excess of interest expense on related
borrowings is considered in determining the reserve for
estimated costs during the period of liquidation.
* Senior Notes and Debentures and related interest accrued
through October 28, 1995 are stated at face value.
* The reserve for interest during the period of liquidation
represents interest on Senior Notes and Debentures for the
period from October 29, 1995 to July 15, 1996.
All of the above estimates and judgments may be subject to change as facts and
circumstances change. Similarly, actual costs and expenses may differ
significantly depending on a number of factors, particularly the length of the
liquidation period.
15
<PAGE>
NOTE 3 - SUMMARY OF ACCOUNTING PRINCIPLES
CASH AND SHORT-TERM INVESTMENTS
Cash and short-term investments, having maturities of three months or less when
purchased, are primarily comprised of interest-bearing short-term bank deposits.
INVESTMENT IN MORTGAGE CERTIFICATES
The investment in Mortgage Certificates is recorded at estimated fair value,
based upon market prices obtained from traders. Gains and losses realized on
sale are determined utilizing the specific identification method. Premiums paid
are amortized utilizing the interest method. Gains and losses realized upon sale
of Mortgage Certificates and unrealized gains and losses resulting from
mark-to-market adjustments are included in investment income.
INCOME (LOSS) PER COMMON SHARE
As explained in Note 2, effective October 28, 1995, the Company adopted the
liquidation basis of accounting, which reports an excess of liabilities over
assets. Accordingly, the presentation of per common share information on a
liquidation basis is not considered meaningful and has been omitted.
Income (loss) per common share data for periods prior to October 28, 1995 have
been computed on the basis of 19,473,728 shares outstanding. For purposes of
calculating income (loss) per common share, the conversion of the PSS 7-1/8%
Convertible Debentures would be antidilutive and thus was not assumed.
RECLASSIFICATIONS
Certain reclassifications have been made in prior years' financial statements.
16
<PAGE>
NOTE 4 - INVESTMENT IN MORTGAGE CERTIFICATES
Mortgage Certificates are financed with borrowings provided by an investment
bank pursuant to a letter agreement (the "Financing Agreement"). Borrowings
pursuant to the Financing Agreement (the "Mortgage Financing") are secured by
the Mortgage Certificates. In the event of a decrease in the aggregate market
value of the Mortgage Certificates below the requirements of the Financing
Agreement, additional collateral is required. Principal and interest payments
received on Mortgage Certificates are maintained in an interest earning account
and are released to the Company, at its request, after all interest and any
"mark-to-market" indebtedness then due have been paid. The Mortgage Financing is
payable on demand and generally bears interest at rates approximating LIBOR plus
10 basis points. Mortgage Financing borrowings and related interest rates
approximated $5.3 million and 6.0% at October 28, 1995 and $10 million and 5.1%
at October 29, 1994, respectively. During the years ended October 28, 1995,
October 29, 1994 and October 30, 1993, the average balance of mortgage related
borrowings outstanding approximated $5 million, $91 million and $143 million,
and the weighted annual average interest expense rates approximated 6.0%, 3.9%,
and 3.4%, respectively.
At October 28, 1995, the average annual interest rate to be earned on the
Mortgage Certificates approximated 8.0% as determined on a basis that interest
rates do not change. The rate of interest on the Mortgage Certificates is
adjustable based on general interest rate trends with certain maximums,
including limits of 2% for annual interest rate changes and interest rate
maximums of approximately 13%. The weighted average interest income rates earned
on the Mortgage Certificates, net of amortization of premiums, approximated
7.4%, 5.0% and 5.8% during the years ended October 28, 1995, October 29, 1994
and October 30, 1993, respectively.
The Company sold approximately $1 million, $99 million and $13 million of
Mortgage Certificates during the years ended October 28, 1995, October 29, 1994
and October 30, 1993, respectively.
17
<PAGE>
NOTE 5 - SUBORDINATED DEBT
Subordinated debt and related interest payable through the balance sheet dates
are summarized as follows (thousands of dollars):
<TABLE>
October 28, October 29,
1995 1994
------ ------
<S> <C> <C>
PNS 12-1/8% Senior Notes $ 5,258 $ 5,258
Interest payable on Senior Notes 504 187
------- -------
$ 5,762 $ 5,445
======= =======
PSS 7-1/8% Debentures $ 22,920 $ 22,920
Interest payable on Debentures 2,107 479
------- -------
$ 25,027 $ 23,399
======= =======
</TABLE>
In July 1986, the Company completed three public securities offerings (the
"Public Offerings"). PNS issued $150 million of Senior Notes (at a price of
98.6%) and PSS sold 3.25 million shares of its common stock and issued at par
$150 million of Debentures convertible to PSS common stock at $19.68 per share
(the conversion price is subject to adjustment in the case of dilution). Debt
financing costs and the discount on the Senior Notes have been amortized over
the term of the borrowings. PSS invested the net proceeds from its two offerings
in PNS, in the form of a contribution to capital and an intercompany debenture
between PNS and PSS (the "Intercompany Debenture") in the amount of $150 million
with substantially the same interest rate and redemption provisions as the
Debentures. At October 28, 1995, the Intercompany Debenture approximated $9
million.
As explained in Note 1, the Company is in default due to the non-payment of
interest on the Senior Notes and Debentures. As a result, during the year ended
October 28, 1995 the Company expensed remaining deferred financing costs and
original issue discount.
The indenture governing the Senior Notes restricts the ability of PNS and its
subsidiaries to pay dividends or make other payments to PSS. The Senior Notes
indenture permits PNS to pay dividends to PSS in amounts sufficient to enable
PSS to meet its obligations on the Debentures when due (to the extent payments
are not made to PSS when due pursuant to the Intercompany Debenture), provided
that no event of default (as defined in the Senior Notes indenture) has occurred
and is continuing. PNS, like its parent company, has a stockholder's deficit.
The Senior Notes and Debentures provide for semiannual interest payments and are
unsecured. Principal repayment on the Senior Notes is due in full on July 15,
1996. The Debentures require annual principal payments of approximately $11
million commencing July 15, 1996 until July 15, 2006 when the balance is due; by
utilizing Debentures which the Company has previously acquired, there will be no
scheduled maturity payments required before 2006.
18
<PAGE>
NOTE 5 - SUBORDINATED DEBT (continued)
The indentures for the Senior Notes and Debentures contain certain restrictive
covenants which, among other things, limit dividends and similar distributions
to stockholders, redemptions and retirements of the Company's equity,
essentially prohibiting such transactions as of October 28, 1995, limit the
Company's ability to incur debt, and restrict action and agreements by the
Company that would prohibit dividends and similar distributions to the Company
from its subsidiaries, and under certain conditions, require accelerated
redemption payments.
During the year ended October 29, 1994, the Company purchased approximately $14
million of Senior Notes and $6 million of Debentures and, as a result, after the
write-off of related deferred financing costs, recorded an extraordinary gain on
early extinguishment of debt of approximately $13 million.
During the year ended October 30, 1993, the Company purchased approximately $64
million of Senior Notes and $14 million of Debentures in exchange for 500,000
PET Shares and approximately $23 million cash (such total price including
accrued interest), and as a result, after the write-off of related deferred
financing costs, recorded an extraordinary gain on early extinguishment of debt
of approximately $49 million.
Interest paid approximated $319,000, $8 million and $14 million during the years
ended October 28, 1995, October 29, 1994 and October 30, 1993, respectively.
NOTE 6 - INVESTMENT IN PACIFIC ENTERPRISES COMMON STOCK
In June 1988, pursuant to an Agreement for the Purchase and Sale of Assets,
subsidiaries of PNS (the "Sellers") sold substantially all of their assets,
comprising the Sellers' entire retail operations, to Pacific Enterprises. In
consideration for the sale of such assets, the Sellers received approximately
5.2 million shares of Pacific Enterprises common stock (the "PET Shares").
During the year ended October 30, 1993, the Company disposed of its remaining
PET Shares and recorded a realized loss of approximately $40 million and a
decrease in unrealized loss of approximately $42 million, representing the
previously recognized unrealized loss for PET Shares sold during the year.
NOTE 7 - RELATIONSHIP WITH AFFILIATES
Prior to fiscal 1995, affiliates of Seacorp provided the Company with
accounting, legal, tax and other services. Fees for services approximated
$56,000 and $167,000 for the years ended October 29, 1994 and October 30, 1993,
respectively.
19
<PAGE>
NOTE 8 - INCOME TAXES
Due to losses reported for the year ended October 28, 1995, there was no
provision for income taxes recorded. During each of the years ended October 29,
1994 and October 30, 1993, the Company recognized an income tax benefit as a
result of income taxes provided on the extraordinary gain on early
extinguishment of debt. The Company also recorded a provision for income taxes
representing a charge in lieu of income taxes that would have been provided in
the absence of net operating loss carryforwards. The income tax benefit
resulting from utilization of net operating loss carryforwards is presented as
an extraordinary item.
For income tax purposes, net operating loss carryforwards, which begin to expire
in 2001, approximate $137 million, and capital loss carryforwards approximate
$120 million, $115 million of which expire in 1997 and 1998. If certain
substantial changes in the Company's ownership should occur, there would be an
annual limitation on the amount of the carryforwards which could be utilized.
NOTE 9 - STOCKHOLDERS' DEFICIT
There have been no changes in common stock or additional paid in capital since
October 29, 1994. As a result of presenting October 28, 1995 financial
statements on the liquidation basis, changes in components of stockholders'
deficit are not presented. The Company's stockholders' deficit and the changes
therein during the two years ended October 29, 1994, are summarized as follows
(thousands of dollars):
<TABLE>
<CAPTION>
Total
Additional Stock-
Common Paid-in Accumulated holders'
Stock Capital Deficit Deficit
------- ------- -------- -------
<S> <C> <C> <C> <C>
Balances at October 31, 1992 $ 19,474 $149,110 $(253,281) $(84,697)
Net income 47,454 47,454
------- ------- -------- -------
Balances at October 30, 1993 19,474 149,110 (205,827) (37,243)
Net income 9,568 9,568
------- ------- -------- -------
Balances at October 29, 1994 $ 19,474 $149,110 $(196,259) $(27,675)
======= ======= ======== =======
</TABLE>
20
<PAGE>
NOTE 10 - Selected Quarterly Financial Data (Unaudited)
Selected quarterly financial data are as follows (thousands of dollars, except
per share data):
<TABLE>
<CAPTION>
Fiscal quarters ended
------------------------------------------------
October 28, July 29, April 29, January 28,
1995 1995 1995 1995
----------- --------- -------- ---------
<S> <C> <C> <C> <C>
Loss from operations before income taxes and
extraordinary items $ (513) $ (556) $ (862) $ (626)
Estimated costs and interest during
period of liquidation (1,674)
Increase in net liabilities (2,187)
Net loss (556) (862) (626)
Loss before extraordinary items per
common share (a) (.03) (.05) (.03)
Net income (loss) per common share (a) (.03) (.05) (.03)
</TABLE>
(a) As explained in Note 3, per share information has not been presented on a
liquidation basis.
<TABLE>
<CAPTION>
Fiscal quarters ended
------------------------------------------------
October 29, July 30, April 30, January 29,
1994 1994 1994 1994
----------- --------- -------- ---------
<S> <C> <C> <C> <C>
Income (loss) before extraordinary items $ 384 $ (996) $ (812) $ (717)
Extraordinary items:
Gain on early extinguishment of debt 8,456
Tax benefit resulting from utilization of net
operating loss carryforwards 3,253
Net income (loss) 12,093 (996) (812) (717)
Income (loss) before extraordinary items per
common share .02 (.05) (.04) (.04)
Net income (loss) per common share .62 (.05) (.04) (.04)
</TABLE>
21
<PAGE>
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Directors of the Company
The following table sets forth certain information concerning each of the
directors of the Company. All directors will serve until the next Annual Meeting
of Shareholders and until his respective successor is elected or appointed. Each
director of the Company is also a director of PNS.
Present Principal
Occupation or Employment
Name and Position and Five Year
with the Company Age Employment History
- ----------------- --- --------------------------
Larry Chroman 44 Director of the Company since July 1991. President of
Director USA Global Link since July 1995 Co-manages investments
for the William Zimmerman family for more than five
years.
James M. Lieb 45 Director of the Company since May 1989. Executive Vice
Director President of The Trump Group (a private investment
group) since October 1995 and Senior Vice President
thereof for more than five years.
Gerald P. Nathanson 58 Director of the Company since October 1986. Chief
Director Executive Officer, L.Luria (a retail company) since
January 1996. Chief Executive Officer, US Holographics
(marketing company for holographic products) from April
1992 to December 1995. Managing Director, C4 Marketing
(an import company) until January 1992.
Eddie Trump 49 Director of the Company since May 1986. President of
Director The Trump Group for more than five years.
22
<PAGE>
Pursuant to the terms of the Subscription and Stockholders' Agreement, dated May
7, 1986 (the "Stockholders' Agreement"), as amended as of November 25, 1987 (the
"November 1987 Agreement" and, as amended, the "Amended Stockholders'
Agreement"), between the Company's two major stockholders, Zimco and Seacorp,
Seacorp was, subject to certain conditions, entitled to nominate as directors
one-half the Company's Nonindependent Directors (as defined in the Company's
Restated Certificate of Incorporation) plus one, and Zimco was entitled to
nominate one-half the Nonindependent Directors minus one. Messrs. Lieb and Trump
were nominees of Seacorp; Mr. Chroman was the nominee of Zimco. The Amended
Stockholders' Agreement terminated in accordance with its terms on October 31,
1995. See the discussion under Item 13 - Certain Relationships and Related
Transactions.
The Trump Group, of which Mr. Trump is a director and officer and Mr. Lieb is an
officer, through affiliates controls Seacorp. See the discussion under Item 12 -
Security Ownership of Certain Beneficial Owners and Management.
EXECUTIVE OFFICERS OF THE COMPANY
Since January 1995, the Company has no executive officers.
ITEM 11 - EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
The Company has no employees or executive officers. There are currently no
arrangements under which any officer or director of the Company will receive
compensation for serving as such; however, other arrangements may be made in the
future.
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth, as of December 1, 1995, information concerning
the beneficial ownership of the common stock of the Company by (i) persons known
by the Company to own beneficially more than 5% of its outstanding common stock,
(ii) each of the directors of the Company and (iii) all directors and executive
officers of the Company as a group. Except as set forth in the footnotes to the
table, the stockholders have sole voting and investment power over such shares.
Unless otherwise specified, the address for all directors is the address of the
Company's executive offices. The address for Messrs. Julius and Eddie Trump is
the address set forth below for Seacorp. The address for Messrs. Larry Chroman
and Christopher Podoll is the address set forth below for Zimmerman Retailing
Group Limited.
23
<PAGE>
<TABLE>
<CAPTION>
Amount and Nature
of Beneficial Percent
Name Ownership of Class
- ---- --------- --------
<S> <C> <C>
Christopher Podoll (a) 7,330,284 37.6%
Zimmerman Retailing Group Limited (a) 7,330,284 37.6%
P.O. Box 948
Route 2, Pleasant Plain Road
Fairfield, IA 52556
Seacorp, Inc. (b) 8,014,705 41.1%
1511 6th Avenue
Seattle, WA 98101
Eddie Trump (b) 8,014,705 41.1%
Julius Trump (b) 8,014,705 41.1%
All Directors and Executive Officers as
a Group (4 persons) (c) 8,014,705 41.1%
</TABLE>
(a) According to the Schedule 13D, as amended (the "Zimco Amended 13D"), filed
with the Securities and Exchange Commission (the "Commission"), Zimco is an
Iowa limited partnership, the sole general partner of which is Soma 2 L.P.,
a Delaware limited partnership ("Soma 2"). Soma 2 has as its general
partner ZRG Co., Inc., a Delaware corporation ("ZRG"), for which Mr. Podoll
serves as the sole executive officer and director. Mr. Podoll is a manager
of investments of the William Zimmerman family. Amounts include 8,079
shares issuable upon conversion of Debentures beneficially owned by Zimco.
Amounts do not include the ownership of 6,000 shares and 3,810 shares
issuable upon conversion of Debentures owned by the Surya Financial Inc.
Retirement Plan, a retirement plan for the benefit of various employees of
Surya Financial Inc., an affiliate of Zimco.
(b) According to the Schedule 13D, as amended, filed with the Commission by
Julius Trump, Eddie Trump and Seacorp, Seacorp is, and Messrs. Julius and
Eddie Trump may be deemed to be, the beneficial owner(s) of 8,014,705
shares of common stock. Such amount includes 8,079 shares issuable upon
conversion of Debentures beneficially owned by an affiliate of Seacorp. As
set forth in the Schedule 13D, Seacorp is a Delaware corporation and does
not presently have any business other than the ownership of shares of
common stock of the Company. Seacorp is indirectly controlled by Messrs.
Julius and Eddie Trump.
(c) Assumes the conversion of all Debentures beneficially owned by an affiliate
of Seacorp. Does not include shares owned by Zimco. Mr. Chroman, who is a
director of the Company, is co- manager of investments for the William
Zimmerman family and Mr. Podoll, who is also such a manager, is, as noted
above, the sole executive officer and director of affiliates of Zimco.
24
<PAGE>
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
STOCKHOLDERS' AGREEMENT
GENERAL. On May 7, 1986, Zimco, Seacorp and the Company entered into the
Stockholders' Agreement. Under the Stockholders' Agreement, Zimco and Seacorp
exchanged all of their common stock in Pay'n Save for all of the issued and
outstanding Common Stock of the Company. Subsequently, in consideration of
Seacorp causing to be made available short-term borrowing facilities aggregating
$20 million to the Company, Seacorp, Zimco and certain related parties entered
into an agreement amending the Stockholders' Agreement (the "November 1987
Amendment") in certain respects. In connection with the November 1987 Amendment,
the parent of Seacorp guaranteed Company borrowings by Pay'n Save under such
short-term borrowing facilities (which have since expired) in an amount up to
$15 million.
The Stockholders' Agreement and the November 1987 Amendment were entered into by
Seacorp and Zimco and certain of its related parties on their own behalf and on
behalf of their respective permitted transferees, for the exclusive benefit of
Seacorp and its permitted transferees (the "Seacorp Group"), and Zimco and its
permitted transferees and certain of its related parties (the "Zimco Group").
The Stockholders' Agreement, as amended by the November 1987 Amendment,
terminated in accordance with its terms on October 31, 1995.
The November 1987 Amendment contains certain indemnities in favor of (and for
the benefit of) the Company which remain effective.
Pursuant to separate agreements, the Company has granted certain registration
rights to each group and certain of each group's transferees, including Zimco,
with respect to the shares of common stock acquired pursuant to the
Stockholders' Agreement.
NOMINATION OF DIRECTORS. The Stockholders' Agreement had provided that each
group would nominate and vote for an equal number of nominees on the Company's
Board of Directors and vote as stockholders in favor of each matter previously
approved by a majority of the directors nominated by Zimco and Seacorp and vote
against each matter not so approved. The November 1987 Amendment amended the
Stockholders' Agreement to provide that so long as Julius or Eddie Trump or
their affiliates or certain related parties and certain other designated parties
(collectively, the "Trump Group") remained the beneficial owners, directly or
indirectly, of at least a majority of the shares of common stock owned by
Seacorp as of November 25, 1987, Seacorp would be entitled to nominate as
directors one-half the number of Nonindependent Directors plus one and Zimco
would be entitled to nominate one-half the number of Nonindependent Directors
minus one, and that at all times at least four seats on the Company's Board of
Directors would be reserved for Nonindependent Directors. The Stockholders'
Agreement, as amended, terminated in accordance with its terms on October 31,
1995. Consequently, the Company's two major stockholders, Zimco and Seacorp, are
no longer obligated to nominate and vote for each other's nominees to the
Company's Board of Directors, or to vote as stockholders in favor of each matter
previously approved by a majority of the directors nominated by Zimco and
Seacorp.
-25-
<PAGE>
The Company's Certificate of Incorporation provides that actions by the
Company's Board of Directors generally require the affirmative vote of that
number of directors equal to the sum of (i) the number of Independent Directors
(as defined) plus (ii) a majority of the Nonindependent Directors.
CERTAIN VOTING ARRANGEMENTS. The November 1987 Amendment provided that Seacorp
and the Zimco Group would use their best efforts to cause the Seacorp Directors
and the Zimco Directors to vote against any issuance of capital stock of the
Company or its subsidiaries (i) to any affiliate of Seacorp unless the Zimco
Group was first offered the opportunity to purchase a portion of such shares pro
rata in accordance with their then ownership of shares of common stock, for the
same consideration that was to be paid by such affiliate, or (ii) to any entity
not affiliated with Seacorp without the consent or approval of the holders of a
majority of the outstanding shares of common stock, subject in each case to
waiver by the Zimco Directors. This voting arrangement terminated on October 31,
1995.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company does not have a compensation or similar committee.
26
<PAGE>
PART IV. OTHER INFORMATION
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
(a) See the section entitled "Index to Financial Statements" appearing under
Item 8 of this Annual Report on Form 10-K.
(b) Not applicable
(c) Exhibits:
3.1 Restated Certificate of Incorporated by reference
Incorporation of Pay'n Save Inc. from Exhibit 3.1 to the
Registration Statement on
Form S-1 (File No. 33-5560)
of the Company (the
"Registration Statement").
3.2 Certificate of Amendment of Incorporated by reference
Certificate of Incorporation from Exhibit 3.2 to the
of Pay'n Save Inc. Registration Statement.
3.3 Certificate of Amendment of Incorporated by reference
Certificate of Incorporation from Exhibit 3.1 to
of Pay'n Save Inc. Quarterly Report on Form
10-Q for the quarter ended
July 30, 1988.
3.4 Certificate of Amendment of Incorporated by reference
Certificate of Incorporation from Exhibit 3.4 to the
of PSS, Inc. Annual Report on Form 10-K
for the year ended October
31, 1992.
3.5 By-Laws of Pay'n Save Inc. Incorporated by reference
from Exhibit 3.3 to the
Registration Statement.
4.1 Indenture between Pay'n Save Incorporated by reference
Inc. and United States Trust from Exhibit 4.1
Company of New York, as Trustee, to the
-27-
<PAGE>
relating to the 7-1/8% Con- Registration Statement.
vertible Debentures due July 15,
2006 (including the form of
Convertible Debenture).
4.2 First Supplemental Indenture be- Incorporated by reference
tween Pay'n Save Inc., and from Exhibit 4.1 to the
United States Trust Company of Quarterly Report on Form
New York as Trustee, relating 10-Q for the quarter ended
to the 7-1/8% Convertible De- April 30, 1988.
bentures due July 15, 2006.
4.3 Indenture between PNS Inc. and Incorporated by reference
Norwest Bank Minneapolis, Nat- from Exhibit 4.1 to the
ional Association as Trustee, Registration Statement on
relating to the 12-1/8% Senior Form S-1 (File No. 33-5591)
Subordinated Notes due July 15, of PNS Inc.
1996 (including the form of
Senior Subordinated Note).
4.4 First Supplemental Indenture be- Incorporated by reference
tween PNS Inc., and Norwest Bank from Exhibit 4.2 to the
Minnesota, National Association Quarterly Report on Form
as Trustee, relating to the 10-Q for the quarter ended
12-1/8% Senior Subordinated April 30, 1988.
Notes due July 15, 1996.
10.1 Subscription and Stockholders' Incorporated by reference
Agreement, dated as of May 7, from Exhibit 2.3 to the
1986, by and among Zimmerman Registration Statement.
Retailing Group Limited,
Seacorp, Inc. and Pay'n Save Inc.
10.2 Amended Stockholders' Agreement Incorporated by reference
between Pay'n Save Inc., Seacorp, from Exhibit 10.25 to the
Inc., Zimmerman Retailing Group Annual Report on Form 10-K
Limited and related parties dated for the year ended October
November 25, 1987. 31, 1987.
10.3 Registration Rights Agreement, Incorporated by reference
dated as of May 7, 1986, by from Exhibit 10.7 to the
and among Pay'n Save Inc., Registration Statement.
Seacorp, Inc. and Zimmerman
Retailing Group Limited.
10.4 Agreement for purchase and sale Incorporated by reference
of assets by and among Pay'n from Exhibit 2.1 to
Save Stores, Inc., The Bi-Mart
-28-
<PAGE>
Company, Pay'n Save Drugs Inc. Form 8-K dated May 13, 1988.
and Thrifty Corporation, dated
as of May 12, 1988.
10.5 Letter Agreement dated Incorporated by reference
February 9, 1990 by and among from Exhibit (i) to the
PSSC Inc. and Bear Stearns & Quarterly Report on Form
Co., Inc. for the purchase and 10-Q for the quarter ended
financing of adjustable-rate February 3, 1990.
mortgages.
10.6 Agreements dated as of Incorporated by reference
January 14, 1993 with respect from Exhibit 10.7 to the
to the acquisition by PSS, Inc. Annual Report on Form
and PNS Inc. of up to $64.475 10-K for the year ended
million of Senior Notes and October 31, 1992.
$14 million of Debentures.
22.1 Subsidiaries of the Registrant. Incorporated by reference
from Exhibit 22.1 to the
Annual Report on Form 10-K
for the year ended October
31, 1992.
-29-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
PSS, INC.
(Registrant)
Date: January 26, 1996 By: /s/ James Lieb
----------------- -------------------
James M. Lieb, Director
-30-
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
Date Title Signature
---
January 26, 1996 Director By: /s/ Larry Chroman
---------------------------
Larry Chroman
January 26, 1996 Director By: /s/ James M. Lieb
---------------------------
James M. Lieb
January 26, 1996 Director By: /s/ Gerald Nathanson
---------------------------
Gerald Nathanson
January 26, 1996 Director By:/s/ Eddie Trump
---------------------------
Eddie Trump
-31-
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000793322
<NAME> PSS, Inc.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-28-1995
<PERIOD-END> OCT-28-1995
<CASH> 11
<SECURITIES> 5,840
<RECEIVABLES> 76
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,927
<CURRENT-LIABILITIES> 5,420
<BONDS> 32,413
0
0
<COMMON> 0
<OTHER-SE> (31,906)
<TOTAL-LIABILITY-AND-EQUITY> 5,927
<SALES> 0
<TOTAL-REVENUES> 582
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> (374)
<LOSS-PROVISION> (1,674)
<INTEREST-EXPENSE> (2,765)
<INCOME-PRETAX> (4,231)
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,231)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,231)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
