FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: June 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number: 1-7141
PS GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 95-2760133
(State or other jurisdiction (IRS Employer
of incorporation) Identification No.)
4370 La Jolla Village Drive, Suite 1050
San Diego, California 92122
(Address of principal executive offices)
(Zip code)
(619) 546-5001
(Registrant's telephone number, including area code)
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 the number of shares outstanding of each of the issuer's classes of
common stock, as of August 4, 1995: 6,068,313 shares of common stock, $1 par
value.<PAGE>
PS GROUP, INC.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Included herein.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Included herein.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
An annual meeting of stockholders of the Company was held on May 31,
1995 for the purpose of electing three directors, one with a term expiring in
1997 and two whose terms will expire in 1998. Information with respect to
this item and other information required by Regulation 14 is contained in the
definitive proxy statement furnished to stockholders of the Company dated
April 11, 1995.
The votes cast for directors at the annual meeting are as follows:
Percent of
For Withheld Shares
Represented
--------- -------- -----------
Robert M. Fomon 5,708,366 24,802 99.6%
J.P. Guerin 5,518,332 214,836 96.3%
Gordon C. Luce 5,708,471 24,697 99.6%<PAGE>
Item 5. Other information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
None.
(b) Reports on Form 8-K.
None.
SIGNATURES
Pursuant to the requirements 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.
PS GROUP, INC.
(Registrant)
Date: August 4, 1995
/s/ L.A. Guske
- -----------------
LAWRENCE A. GUSKE
Vice President - Finance and
Chief Financial Officer<PAGE>
PS Group, Inc.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
June 30, 1995 and December 31, 1994
(in thousands)
1995 1994
-------- --------
ASSETS
Current assets:
Cash and cash equivalents $ 27,964 $ 22,780
Accounts and notes receivable 18,691 18,304
Other current assets 15,376 14,902
-------- --------
Total current assets 62,031 55,986
Property and equipment, net 20,693 21,081
Aircraft leased under operating leases, net 127,891 134,933
Investment in aircraft financing leases 98,902 101,248
Aircraft held for sale 29,100
Other assets 16,193 18,910
-------- --------
$325,710 $361,258
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Other current liabilities $ 24,181 $ 30,546
Current portion of long-term obligations 15,597 15,151
-------- --------
Total current liabilities 39,778 45,697
Long-term obligations 113,846 122,074
Deferred income taxes and other 42,050 64,336
Stockholders' equity:
Common stock 6,068 6,068
Additional paid-in capital 98,420 98,420
Retained earnings 25,548 24,663
-------- --------
Total stockholders' equity 130,036 129,151
-------- --------
$325,710 $361,258
======== ========
See accompanying notes.
F-1<PAGE>
PS Group, Inc.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three and Six Months Ended June 30, 1995 and 1994
(in thousands, except per share amounts)
Three Months Six Months
Ended Ended
------- ------- ------- -------
1995 1994 1995 1994
------- ------- ------- -------
Continuing operations:
Revenues:
Fuel sales and distribution $30,476 $14,301 $56,325 $35,364
Aircraft leasing 8,847 8,871 17,745 17,785
Oil and gas production and development 1,809 1,921 3,587 3,598
Interest and other 592 413 1,154 1,704
------- ------- ------- -------
41,724 25,506 78,811 58,451
Costs and expenses:
Costs of products and services sold 31,047 14,983 57,516 36,112
Depreciation, depletion and amortization 4,064 4,028 8,123 8,062
General and administrative expenses 1,099 1,347 2,084 2,635
Loss on aircraft disposition 1,701 1,701
Interest expense 3,813 4,256 7,823 8,377
------- ------- ------- -------
41,724 24,614 77,247 55,186
------- ------- ------- -------
Income from continuing operations before
taxes 0 892 1,564 3,265
Provision for taxes 25 498 680 1,385
------- ------- ------- -------
Income (loss) from continuing operations (25) 394 884 1,880
Discontinued operations, net of tax:
(Loss) from operations (383) (3,504)
Gain (loss) on disposition (2,486) 12,844
------- -------
(2,869) 9,340
------- ------- ------- -------
Net income (loss) $ (25)$(2,475) $ 884 $11,220
======= ======= ======= =======
Income (loss) per share:
Continuing operations $ - $ .06 $ .15 $ .31
(Loss) from operations of discontinued
operations (.06) (.58)
Gain (loss) on disposition of discontinued
operations (.41) 2.12
------- ------- ------- -------
Net income (loss) per share $ - $ (.41) $ .15 $ 1.85
======= ======= ======= =======
Shares used in determining net income (loss)
per share 6,068 6,066 6,068 6,066
======= ======= ======= =======
See accompanying notes.
F-2<PAGE>
PS Group, Inc.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30, 1995 and 1994
(in thousands)
1995 1994
------- -------
Cash flows from operating activities:
Income from continuing operations $ 884 $ 1,880
Non-cash items:
Depreciation, depletion and amortization 8,123 8,062
Deferred taxes and other 3,748 1,713
Changes in non-cash working capital affecting
cash from operations:
Other current assets (1,365) 11,358
Other current liabilities (3,996) (8,407)
------- -------
Net cash provided from operating activities 7,394 14,606
Cash flows from financing activities:
Additions to long-term obligations 13,338
Reductions to long-term obligations (7,784) (32,608)
------- -------
Net cash used in financing activities (7,784) (19,270)
Cash flows from investing activities:
Capital additions (401) (220)
Cash collateralization of letters of credit, net 1,917 (7,691)
Proceeds from aircraft sales and other 4,297 4,434
------- -------
Net cash provided from (used in) investing activities 5,813 (3,477)
Discontinued operations (239) 20,697
------- -------
Net increase in cash and cash equivalents 5,184 12,556
Cash and cash equivalents at beginning of period 22,780 5,133
------- -------
Cash and cash equivalents at end of period $27,964 $17,689
======= =======
See accompanying notes.
F-3<PAGE>
PS Group, Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(a) In March 1994 the assets of USTravel Systems Inc., PSG's travel
management segment, were sold. In August 1994 PSG adopted a plan to
close-down or sell a metallic waste recycling plant, the major asset of
Recontek, Inc., a subsidiary of PSG, and in December 1994 the plant was
sold. Accordingly, travel management and metallic waste recycling are
shown as discontinued operations in 1994.
(b) In the opinion of management, the accompanying Unaudited Condensed
Consolidated Financial Statements include all adjustments (consisting
only of normal recurring adjustments, other than the disposition of the
travel management and metallic waste recycling businesses in 1994)
necessary for a fair statement of the consolidated financial position at
June 30, 1995 and the results of operations for the three and six months
ended June 30, 1995 and 1994, and cash flows for the six months ended
June 30, 1995 and 1994. These Unaudited Condensed Consolidated Financial
Statements should be read in conjunction with the Consolidated Financial
Statements and Notes thereto contained in the PSG 1994 Annual Report to
Stockholders (the 1994 Annual Report).
F-4<PAGE>
PS Group, Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
RESULTS OF OPERATIONS - COMPARISON OF THE THREE AND SIX MONTHS ENDED JUNE 30,
1995 AND 1994
Revenues - Revenues from PSG's fuel sales and distribution subsidiary, PS
Trading, Inc. (PST), increased 113% and 59%, respectively, for the second
quarter and first six months of 1995 compared to the 1994 periods as a result
of increased marketing efforts of the wholesale fuel division.
Interest and other revenues were down in the first half of 1995 primarily
because there were no investment gains in 1995 compared to gains of $.7
million in 1994's first half.
Costs and expenses - The increase during the second quarter and first half of
1995 in the cost of products and services sold reflects the increased volumes
at PST. The decrease in general and administrative expenses for the second
quarter and first half of 1995 is largely due to reductions in corporate
staffing and reduced legal expenses associated with the securities litigation
described in the 1994 Annual Report. Interest expense decreased in 1995's
second quarter and first half primarily due to lower levels of outstanding
debt.
Loss on aircraft disposition - In June 1995 PSG sold two Boeing 747-100SF
aircraft which were held for sale since they were returned to PSG in early
1992 when the lessee of the aircraft, Pan American World Airways, Inc., ceased
operations. Subsequently, these aircraft were converted into full cargo
configuration under an agreement with a third party vendor, and an obligation
for approximately $20 million was incurred. This obligation was paid-off out
of the sale proceeds. As a result of this sale, PSG recorded in the second
quarter of 1995 a $1.7 million pre-tax loss on disposition. The net cash
proceeds to PSG (after payment of costs and expenses and the repayment of the
obligation mentioned above) was approximately $1.5 million.
Income taxes - Taxes in both 1995 and 1994 differ from the corporate federal
tax rate primarily because of the effect of state taxes.
Segment results - In spite of increased revenues, PST's profits decreased
during the first half of 1995 due to lower operating margins as a result of
declining prices in early 1995. PST's second quarter profits in 1995 and 1994
were approximately the same.
Second quarter and first half results in 1995 for aircraft leasing were
sightly improved over 1994 primarily due to reduced interest expense.
Statex operating results declined slightly in 1995 principally due to higher
costs.
F-5<PAGE>
FINANCIAL CONDITION
At June 30, 1995 PSG's principal source of liquidity was cash and cash
equivalents of $28 million, a $5.2 million increase from December 31, 1994.
The major changes in cash and cash equivalents are detailed in the Unaudited
Condensed Consolidated Statements of Cash Flows. PSG's capitalization
consisted of 50% long and short-term obligations and 50% equity at June 30,
1995 compared to 52%/48% at December 31, 1994. There was working capital of
$22.3 million at June 30, 1995 compared to working capital of $10.3 million at
December 31, 1994. At the end of 1995's second quarter PSG had $5.7 million
outstanding under its bank credit agreement, consisting entirely of letters of
credit, all of which were cash collateralized. No borrowings are permitted
under the bank credit agreement. PSG is working to extend or replace the
current credit agreement which expires in early November 1995.
In July 1995 the Federal Court signed an Order preliminarily approving the
settlement reached in March 1995 to settle all pending class action
litigation. While the $5 million settlement liability was recorded as of
December 31, 1994, the actual cash payment was made in July 1995.
Realization of certain of PSG assets is dependent upon the future performance
by USAir, Inc. (USAir) and Continental Airlines, Inc. (Continental) under
aircraft leases with PSG. Should either USAir or Continental default on their
leases with PSG or reject certain of such leases, PSG would suffer significant
losses on the ultimate disposal of the related aircraft or upon the ultimate
repossession of the aircraft by the lenders. The eventual outcome of these
matters cannot be determined at this time. For a more complete discussion of
USAir's and Continental's relationships to PSG's financial condition refer to
PSG's 1994 Annual Report. PSG refers readers to public information regarding
USAir and Continental for current details relating to their financial
condition. USAir frequently makes important announcements. For example, on
July 28, 1995, USAir announced that "it is ending discussions with its unions
on a wage concession and restructuring package and now will concentrate on
reducing its labor costs through traditional collective bargaining." USAir
also reported that it is vital to their long-term future to reduce their
costs.
As discussed in the 1994 Annual Report, PSG is subject to tax regulations that
severely limit future usage of net operating losses and tax credit carry
forwards for tax purposes. This limitation occurs if there is a "calculated"
50% stock ownership change over a three year period. While this test has not
yet been exceeded (approximate 38% change at year end 1994), future ownership
changes, primarily involving present or future holders of 5% or more of PSG's
shares, may result in significant limitations in usage of tax benefit carry
forwards. Generally, PSG has no control of purchases or sales by investors
who acquire 5% or more of PSG shares.
PSG believes that, absent a failure by USAir to meet its lease obligations to
PSG, its cash and cash equivalents plus projected cash flow are adequate to
meet the operating and planned capital needs of PSG in both the short and
long-term.
F-6<PAGE>
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