-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, fECQtOMKp7Jq7aP+dqiJO8c/FCvb4yEo80StM+Ck6aimp4NtGnYAFlMpxr+Fy6R5 emFBY0/sssC20vGnVtVjlQ== 0000950150-95-000499.txt : 19950814 0000950150-95-000499.hdr.sgml : 19950814 ACCESSION NUMBER: 0000950150-95-000499 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950811 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PACIFIC INTERNATIONAL SERVICES CORP CENTRAL INDEX KEY: 0000727066 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-AUTO RENTAL & LEASING (NO DRIVERS) [7510] IRS NUMBER: 952877371 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-11404 FILM NUMBER: 95561994 BUSINESS ADDRESS: STREET 1: 1600 KAPIOLANI BLVD STE 825 CITY: HONOLULU STATE: HI ZIP: 96814 BUSINESS PHONE: 8089264242 MAIL ADDRESS: STREET 1: 1600 KAPIOLANI BLVD STREET 2: SUITE 825 CITY: HONOLULU STATE: HI ZIP: 96814 10-Q 1 FORM 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended JUNE 30, 1995 Commission file number 0-11404 PACIFIC INTERNATIONAL SERVICES CORP. (Exact name of registrant as specified in its charter) CALIFORNIA 95-2877371 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 1600 KAPIOLANI BLVD., SUITE 825, HONOLULU, HAWAII (Address of principal executive office) Registrant's telephone number, including area code (808) 926-4242 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 for each of the issuer's classes of common stock, as of the latest practicable date.
CLASS SHARES OUTSTANDING AT AUGUST 11, 1995 ----------------- ------------------------------------- Common Stock 8,079,800
Page 1 of 13 2 PACIFIC INTERNATIONAL SERVICES CORP. INDEX
PAGE ---- PART I. FINANCIAL INFORMATION Item 1. Condensed Consolidated Balance Sheets.................................. 3 Condensed Consolidated Statements of Operations........................ 4 Condensed Consolidated Statements of Operations........................ 5 Condensed Consolidated Statements of Cash Flows........................ 6 Note to Condensed Consolidated Financial Statements.................... 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.................................... 9 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K....................................... 12 Computation of Earnings Per Common Share............................... 13 Signatures............................................................. 14
Page 2 3 PACIFIC INTERNATIONAL SERVICES CORP. CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, 1995 December 31, 1994 ------------- ----------------- (Unaudited) ASSETS Cash and cash equivalents $ 427,922 $ 831,952 Receivables, net 12,078,821 10,023,512 Automobile dealership vehicle inventories 9,238,175 4,961,600 Inventories and prepaid expenses 1,709,205 899,453 Rental vehicles, at cost, less accumulated depreciation 9,250,585 42,367,410 Furniture, equipment and leasehold improvements, net of accumulated depreciation and amortization 7,655,056 8,149,846 Other assets 2,034,941 2,038,462 ----------- ----------- Total assets $42,394,705 $69,272,235 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable $ 7,774,627 $ 5,744,507 Accrued expenses and other liabilities 7,125,689 8,152,270 Senior debt 22,131,009 48,034,463 Convertible subordinated debentures 5,250,000 5,250,000 ----------- ----------- Total liabilities 42,281,325 67,181,240 ----------- ----------- Preferred stock with no par value, authorized 15,000,000 shares; none issued - - Common stock, stated value $0.10 per share, authorized 50,000,000 shares, issued and outstanding 8,079,800 shares 807,980 807,980 Additional paid-in capital 9,102,181 9,102,181 Accumulated deficit (9,796,781) (7,819,166) ----------- ----------- Total shareholders' equity 113,380 2,090,995 ----------- ----------- Total liabilities and shareholders' equity $42,394,705 $69,272,235 =========== ===========
See accompanying Note to Condensed Consolidated Financial Statements Page 3 4 PACIFIC INTERNATIONAL SERVICES CORP. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended June 30, ---------------------------------- 1995 1994 ----------- ----------- Operating revenues: Vehicle rental $11,921,078 $13,283,130 Vehicle sales 11,950,869 10,883,066 ----------- ----------- Total operating revenues 23,871,947 24,166,196 ----------- ----------- Operating costs and expenses: Cost of vehicles sold 9,124,519 8,364,102 Depreciation of rental vehicles 1,693,586 969,558 Interest on fleet debt 491,977 517,488 Other direct fleet 4,077,710 3,138,941 Personnel 3,340,155 3,750,420 Occupancy 2,147,973 2,156,534 Other direct operating 2,562,232 3,095,202 Other selling, general and administrative 1,930,327 1,939,547 ----------- ----------- Total operating costs and expenses 25,368,479 23,931,792 ----------- ----------- Income (loss) from operations (1,496,532) 234,404 Interest income 11,003 15,720 Other interest expense (245,985) (229,906) Other, net 132,040 (17,853) ----------- ----------- Net income (loss) $(1,599,474) $ 2,365 =========== =========== Earnings (loss) per common share: $ (0.20) $ 0.00 =========== ===========
See accompanying Note to Condensed Consolidated Financial Statements Page 4 5 PACIFIC INTERNATIONAL SERVICES CORP. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Six Months Ended June 30, -------------------------------- 1995 1994 ----------- ----------- Operating revenues: Vehicle rental $24,535,550 $27,184,699 Vehicle sales 22,697,361 20,933,924 ----------- ----------- Total operating revenues 47,232,911 48,118,623 ----------- ----------- Operating costs and expenses: Cost of vehicles sold 17,194,272 15,847,197 Depreciation of rental vehicles 3,508,142 2,901,337 Interest on fleet debt 1,392,995 1,142,441 Other direct fleet 6,620,770 5,450,425 Personnel 6,736,082 7,316,757 Occupancy 4,311,281 4,303,128 Other direct operating 5,443,502 6,596,890 Other selling, general and administrative 3,712,335 3,605,229 ----------- ----------- Total operating costs and expenses 48,919,379 47,163,404 ----------- ----------- Income from operations (1,686,468) 955,219 Interest income 20,068 25,265 Other interest expense (443,255) (430,490) Other, net 132,040 (36,010) ----------- ----------- Net income (loss) $(1,977,615) $ 513,984 =========== =========== Earnings (loss) per common share: $ (0.24) $ 0.06 =========== ===========
See accompanying Note to Condensed Consolidated Financial Statements Page 5 6 PACIFIC INTERNATIONAL SERVICES CORP. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended June 30, ----------------------------- 1995 1994 ------------- ------------ Cash flows from operating activities: Net income (loss) $ (1,977,615) $ 513,984 Adjustments to reconcile net income (loss) to net cash provided by operating activities: (Gain) or Loss on sale of rental vehicles 710,042 (572,064) Depreciation of rental vehicles and amortization of related costs 4,062,886 3,701,469 Depreciation and amortization, other 594,536 506,824 Provision for losses on rental vehicles 399,897 389,289 Provision for losses on receivables 369,237 108,490 Provision for self-insurance 103,994 881,742 Change in assets and liabilities: Receivables (2,424,546) (2,749,231) Automobile dealership vehicle inventories (4,276,575) 2,239,130 Inventories, prepaid expenses and other assets (806,231) (694,582) Accounts payable 2,030,120 1,501,796 Accrued expenses and other liabilities (1,130,575) (37,452) Notes payable for automobile dealership vehicle inventories 13,609,831 6,583,005 ------------ ------------ Net cash provided by operating activities 11,265,001 12,372,400 ------------ ------------ Cash flows from investing activities: Proceeds from the sale of rental vehicles 10,977,352 6,587,676 Purchases of rental vehicles (230,510) (1,278,992) Proceeds from the sale of furniture, equipment and leasehold improvements 160,476 - Additions to furniture, equipment and leasehold improvements (274,864) (913,953) ------------ ------------ Net cash provided by investing activities 10,632,454 4,394,731 ------------ ------------ Cash flows from financing activities: Principal payments of senior debt (22,301,485) (16,530,790) Net cash used in ------------ ------------ financing activities (22,301,485) (16,530,790) ------------ ------------ Net increase (decrease) in cash (404,030) 236,341 Cash and cash equivalents at beginning of period 831,952 1,719,123 ------------ ------------ Cash and cash equivalents at end of period $ 427,922 $ 1,955,464 ============ ============
See accompanying Note to Condensed Consolidated Financial Statements Page 6 7 PACIFIC INTERNATIONAL SERVICES CORP. Condensed Consolidated Statments of Cash Flows, continued Supplemental schedule of noncash investing and financing activities:
Six Months Ended June 30, --------------------------------- 1995 1994 ------------- ------------- Senior debt incurred for additions to rental vehicles $ 827,660 $ 20,484,068 Senior debt incurred from conversion of lease obligations $ - $ 1,400,000 Rental vehicle purchases not yet financed $ 39,688 $ 1,350,619 Reduction of senior debt resulting from turnback of rental vehicles $(18,063,993) $(25,739,992) Capital lease obligation incurred from purchase of equipment $ - $ 72,911
Page 7 8 PACIFIC INTERNATIONAL SERVICES CORP. NOTE TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Basis of Presentation In the opinion of management, the unaudited financial information included in this report contains all adjustments, consisting of normal recurring adjustments only, necessary for a fair presentation of the results of operations for the interim periods covered and the financial condition of the Company at the dates of the balance sheets. The operating results for the interim periods are not necessarily indicative of the results to be expected for the full fiscal year. The accounting policies followed by the Company are set forth in Note 1 to the financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 1994. Certain prior year amounts have been reclassified to conform to 1995 presentation. Page 8 9 Management's Discussion and Analysis of Financial Condition and Results of Operations Pacific International Services Corp., the ("Company"), reported a consolidated net loss of $1,599,474 or $0.20 per share for the second quarter of 1995, compared to net income of $2,365 or $0.00 per share for the same quarter last year. For the six months ended June 30, 1995, the Company reported a net loss of $1,977,615 or $0.24 per share, compared to net income of $513,984 or $0.06 per share for the same period last year. Operating revenues from the Company's vehicle rental division for the three months ended June 30, 1995, totaled $11,921,078, a decrease of 10.25% from revenues of $13,283,130 for the second quarter of 1994. The decrease in revenue for the quarter resulted from lower rental day volume compared to the same period in 1994, continuing a decline that also affected the first quarter. Rental division operating revenues totaled $24,535,550 for the six month period ended June 30, 1995, versus $27,184,699. Although the reduction in unit volume period affected most of the Company's markets, the sharpest declines were in the Company's business generated through reservations from the Dollar Systems, Inc. on the U.S. mainland, and from the local impulse market. The Company continued to make progress in increasing its average daily rental yield, however the increase of approximately 7.4% in second quarter yield was not sufficient to offset lower utilization as unit volume suffered. Total direct fleet holding costs, which include lease payments, depreciation, interest, car sales and other fleet expenses (freight, dealer profit and license) increased by 22% for the second quarter of 1995 compared to the same period in 1994, based on an average fleet size 11% lower than in 1994, reflecting the continuing significant increase in holding costs on a per unit basis. Other operating costs and expenses, including personnel, occupancy and other direct operating costs were down by almost $500,000 for the three months ended June 30, 1995 compared to the same period in 1994, and would have been down even more, except for approximately $250,000 incurred in legal fees relating the Company's efforts to settle various issues with its licensor, Dollar Systems, Inc. (see "Financial Condition"). The Company's vehicle sales operations generated revenues of $22,697,361 and $11,950,869 for the six months and three months ended June 30, 1995, as compared with $20,933,924 and $10,883,066 for the same periods in 1994. The increase in revenues from vehicle sales reflects price increases on new vehicle sales and higher sales of used vehicles. Operating expenses related to the Company's vehicle sales division increased from prior year levels in proportion to the revenue increases. Page 9 10 Financial Condition In March of 1995, after lengthy negotiations, the Company obtained a commitment in principle from Dollar Systems, Inc. for certain assistance related to the Company's vehicle rental operations (the "1995 Assistance Commitment"). Under this commitment, the Company would have received substantial economic benefits and a number of disputes between the Company and Dollar Systems, Inc. would have been resolved. However, the parties were unable to agree upon the final documentation with respect to the 1995 Assistance Commitment. Pending further negotiations, the Company withheld certain payments due to Dollar Systems, Inc. under its License Agreement and Master Lease Agreement. Dollar Systems, Inc. filed a legal action in U.S. District Court to compel the Company to execute the documentation proposed by Dollar Systems, Inc. to embody its understanding of the 1995 Assistance Agreement, The Company responded by commencing its own legal action against Dollar Systems for damages and injunctive relief based on violations of the franchise agreement and Hawaii law, whereupon Dollar Systems sent the Company notices purporting to terminate the License and Master Lease Agreement. Subsequent discussions led to execution of a Standstill Agreement, later amended and extended, and, finally to negotiation of a Settlement Agreement. The parties have terminated all litigation without prejudice to recommence proceedings should the transactions contemplated be the Settlement Agreement fail to close. Under the terms of the Settlement Agreement, dated July 17, 1995, the parties agreed to stay the litigation and signed documents under which Dollar Systems, Inc. will acquire substantially all of the assets and certain liabilities of the Company's vehicle rental division. This transaction is subject to due diligence review and other conditions and to consents and approvals of certain persons, including the Company's shareholders and bondholders. The assets and liabilities of the Company's vehicle sale division, as well as certain other liabilities and obligations, will remain with the Company. The parties will also release various claims against each other. The transaction is scheduled to close by October 31, 1995. In the meantime, the Company continues to operate the vehicle rental division, including efforts to increase revenue, utilization and yield per rental day, and to control its operating costs. While the transaction is pending, the Company is incurring and will continue to incur substantial transaction costs including legal and accounting and other professional fees. Although Dollar Systems, Inc. has agreed to certain interim financial assistance, there is no assurance of continuing support from Dollar Systems, Inc. if the transaction does not close as planned. If the transaction does not close, and further assistance from Dollar Systems, Inc. is not made available, it is doubtful that the vehicle rental operations and PISC could continue as going concerns, although the vehicle sales subsidiary should continue to be viable. Upon the closing of the Dollar Systems, Inc. transaction, the Company plans to seek to exchange common stock and cash for certain of its outstanding publicly-held debt. The terms of such an exchange have not been determined. In view of the reduced operations of the Company after the Dollar Systems, Inc. transaction, management believes that such a re capitalization will be necessary to place the Company on a sound financial basis. Page 10 11 Update The Company's primary source of capital for financing its rental vehicle fleet has traditionally been through borrowings from manufacturer financing affiliates, banks and other lenders. The Company maintains credit lines with General Motors Acceptance Corporation ($20,000,000), FINOVA Capital Corporation ($15,000,000), Ford Motor Credit Company ($7,500,000) and Bank of Hawaii ($3,645,000). The following amounts were outstanding under each respective line of credit as of June 30, 1995, $550,000, $7,996,000, $281,000 and $735,000. The Company finances its automobile dealership vehicle inventories through a $13,500,000 line of credit with Chrysler Credit Corporation, of which $9,258,000 remains outstanding as of June 30, 1995. Page 11 12 PART 11. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) The Exhibits noted herein as previously filed are hereby incorporated as an exhibit to this document by this reference as though set forth herein: Exhibit 11 - Statement re: Computation of Earnings Per Share (b) None Page 12 13 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 of the undersigned thereunto duly authorized. PACIFIC INTERNATIONAL SERVICES CORP. By /s/ Alan M. Robin ------------------------------------- Alan M. Robin President and Chief Executive Officer By /s/ Richard Bauman ------------------------------------- Richard Bauman Chief Financial Officer (Principal Financial Officer) By /s/ Tyrus Kawashima ------------------------------------- Tyrus Kawashima Controller and Chief Accounting Officer August 11, 1995 Page 13 EX-11 2 COMPUTATION OF EARNINGS PER COMMON SHARE 1 EXHIBIT 11 PACIFIC INTERNATIONAL SERVICES CORP. COMPUTATION OF EARNINGS PER COMMON SHARE
Three Months Ended June 30, ------------------------------- 1995 1994 ------------ ---------- Weighted average common shares outstanding 8,079,800 9,009,300 =========== ========== Net income (loss) $(1,599,474) $ 2,365 =========== ========== Earnings per common share: Net income (loss) $ (0.20) $ 0.00 =========== ========== Six Months Ended June 30, ------------------------------- 1995 1994 ------------ ---------- Weighted average common shares outstanding 8,079,800 9,009,300 =========== ========== Net income (loss) $(1,977,615) $ 513,984 =========== ========== Earnings per common share: Net income (loss) $ (0.24) $ 0.06 =========== ==========
EX-27 3 FINANCIAL DATA SCHEDULE
5 1,000 U.S. DOLLARS 6-MOS DEC-31-1995 JUN-30-1995 1 428 0 12,079 0 10,947 0 16,906 0 42,395 42,281 0 808 0 0 (694) 42,395 47,233 47,233 0 48,920 0 0 291 (1,978) 0 0 0 0 0 (1,978) (0.24) (0.19)
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