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: March 31, 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 May 1, 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.
None.
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: May 1, 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
March 31, 1995 and December 31, 1994
(in thousands)
1995 1994
ASSETS
Current assets:
Cash and cash equivalents $ 22,893 $ 22,780
Accounts and notes receivable 17,196 18,304
Other current assets 14,187 14,902
Total current assets 54,276 55,986
Property and equipment, net 20,894 21,081
Aircraft leased under operating leases, net 131,412 134,933
Investment in aircraft financing leases 99,318 101,248
Aircraft held for sale and other assets 41,993 48,010
$ 347,893 $ 361,258
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Amounts due for aircraft conversions and other $ 46,099 $ 30,546
Current portion of long-term obligations 15,461 15,151
Total current liabilities 61,560 45,697
Long-term obligations 117,198 122,074
Deferred income taxes and other 39,074 64,336
Stockholders' equity:
Common stock 6,068 6,068
Additional paid-in capital 98,420 98,420
Retained earnings 25,573 24,663
Total stockholders' equity 130,061 129,151
$ 347,893 $ 361,258
See accompanying notes.
F-1<PAGE>
PS Group, Inc.
UNAUDITED CONDENSED CONSOLIDATED INCOME STATEMENTS
Three Months Ended March 31, 1995 and 1994
(in thousands except per share data)
1995 1994*
Continuing operations:
Revenues:
Fuel sales and distribution $25,849 $ 21,063
Aircraft leasing 8,898 8,914
Oil and gas production and development 1,778 1,677
Interest and other 562 1,291
37,087 32,945
Costs and expenses:
Cost of sales 26,469 21,129
Depreciation, depletion and amortization 4,059 4,034
General and administrative expenses 985 1,288
Interest expense 4,010 4,121
35,523 30,572
Income from continuing operations before taxes 1,564 2,373
Provision for taxes 655 887
Income from continuing operations 909 1,486
Discontinued operations, net of tax:
Loss from operations (3,121)
Gain on disposition 15,330
12,209
Net income $ 909 $ 13,695
Income (loss) per share:
Continuing operations $ .15 $ .24
(Loss) from operations of discontinued operations (.51)
Gain on disposition of discontinued operation 2.53
Net income per share $ .15 $ 2.26
Shares used in determining net income per share 6,068 6,066
* Restated as described in Note a.
See accompanying notes.
F-2<PAGE>
PS Group, Inc.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended March 31, 1995 and 1994
(in thousands)
1995 1994*
Cash flows from operating activities:
Income from continuing operations $ 909 $ 1,486
Non-cash items:
Depreciation, depletion and amortization 4,059 4,034
Deferred taxes and other 1,411 1,015
Changes in non-cash working capital affecting
cash from operations:
Other current assets 1,799 4,044
Other current liabilities (5,523) (3,000)
Net cash provided from operating activities 2,655 7,579
Cash flows from financing activities:
Reductions to long-term obligations (4,568) (26,962)
Stock options exercised 2
Net cash used in financing activities (4,568) (26,960)
Cash flows from investing activities:
Capital additions (130) (111)
Cash (collateralization) release of letters of credit 815 (17,692)
Proceeds from sales of marketable securities and other 1,637 6,738
Net cash provided from (used in) investing activities 2,322 (11,065)
Discontinued operations (296) 38,208
Net increase in cash and cash equivalents 113 7,762
Cash and cash equivalents at beginning of period 22,780 5,133
Cash and cash equivalents at end of period $22,893 $ 12,895
* Restated as described in Note a.
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. Information for the first
quarter of 1994 has been restated to show Recontek as a discontinued
operation; travel management was previously shown as a discontinued
operation in the first quarter of 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 business in 1994) necessary for a fair statement of the
consolidated financial position at March 31, 1995 and the results of
operations for the three months ended March 31, 1995 and 1994, and cash
flows for the three months ended March 31, 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 MONTHS ENDED MARCH 31, 1995
AND 1994
Revenues - Revenues from PSG's fuel sales and distribution subsidiary, PS
Trading, Inc. (PST), increased 23% for the first quarter of 1995 compared to
1994 as a result of increased marketing efforts of the wholesale fuel
division.
Interest and other revenues were down $.7 million in the first quarter of 1995
primarily because there were no investment gains in 1995's first quarter
compared to 1994's gains of $.7 million.
Costs and expenses - The increase during the first quarter of 1995 in the cost
of sales reflects the increased fuel volumes at PST. The decrease in general
and administrative expenses for the first quarter of 1995 is largely due to
reductions in corporate staff.
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 quarter of 1995 due to lower operating margins as a result of
declining prices, which were recovering late in the quarter.
Results for aircraft leasing in 1995 were similar to 1994.
Statex operating results declined in 1995's first quarter due to increased
costs.
FINANCIAL CONDITION
At March 31, 1995 PSG's principal source of liquidity was cash and cash
equivalents of $22.9 million, a $.1 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 51% long and short-term obligations and 49% equity at March 31,
1995 compared to 52%/48% at December 31, 1994. There was a working capital
deficit of $7.3 million at March 31, 1995 compared to working capital of $10.3
million at December 31, 1994. The large decrease in working capital is the
result of the reclassification to current of the payment obligation related to
the conversion of the two 747 freighter aircraft described below. At the end
of 1995's first quarter PSG had $6.9 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.
Under the March 1995 agreement reached in principle to settle all pending
class action litigation, the only significant items remaining to be
accomplished at March 31, 1995 are the definitive agreement and the approval
of the Federal Court. While the $5 million settlement liability was recorded
as of December 31, 1994, the actual cash payment is expected to be made in
either the second or third quarter of 1995.
F-5<PAGE>
In April 1995 PSG amended its agreement with the company which converted PSG's
two 747 aircraft into full cargo configuration. This amendment fixed the
payment obligation for the conversions at approximately $20 million and
requires full payment by the end of 1995. The payment obligation is
collateralized by the two 747-100 freighter aircraft. If the obligation is
not paid by the fall of 1995, the aircraft will be put up for auction and PSG
will be liable for any short-fall in sales proceeds to cover the payment
obligation. PSG is talking with several potential buyers and is vigorously
marketing the aircraft, but there can be no assurances the sale(s) will be
completed by the end of 1995 or that if completed the proceeds will be
sufficient to cover the payment obligation. If a sale does occur, PSG may be
required to provide part of the financing for the buyer. This could result in
PSG directly funding part of the payment obligation. At March 31, 1995 the
payment obligation was reclassified to a current liability. Due to the
uncertainty surrounding any potential sale and related PSG financing
participation, the aircraft held for sale are shown as long-term assets.
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.
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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