SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
--------------------------------------
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 0-28262
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AMERICAN PORTABLE TELECOM, INC.
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(Exact name of registrant as specified in its charter)
Delaware 39-1706857
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
8410 West Bryn Mawr, Suite 1100, Chicago, Illinois 60631
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (312) 399-4200
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 the latest practicable date.
Class Outstanding at October 31, 1996
Common Shares, $1 par value 31,351,143 Shares
Series A Common Shares, $1 par value 40,000,000 Shares
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<PAGE>
AMERICAN PORTABLE TELECOM, INC.
3RD QUARTER REPORT ON FORM 10-Q
INDEX
Page No.
Part I. Financial Information
Management's Discussion and Analysis of
Results of Operations and Financial Condition 2-6
Consolidated Statements of Operations -
Three Months and Nine Months Ended September 30, 1996
and 1995 7
Consolidated Statements of Cash Flows -
Nine Months Ended September 30, 1996 and 1995 8
Consolidated Balance Sheets -
September 30, 1996 and December 31, 1995 9
Notes to Consolidated Financial Statements 10-12
Part II. Other Information 13
Signatures 14
<PAGE>
PART I. FINANCIAL INFORMATION
AMERICAN PORTABLE TELECOM, INC
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
American Portable Telecom, Inc. (the "Company" - NASDAQ symbol: APTI), an
82.8%-owned subsidiary of Telephone and Data Systems, Inc. ("TDS"), was formed
to acquire Personal Communications Services ("PCS") licenses from the Federal
Communications Commission ("FCC"), construct PCS networks in its Metropolitan
Trading Areas ("MTAs") and offer wireless PCS communications services in these
areas.
The Company acquired eight licenses in the FCC broadband Block A and Block B PCS
auction which concluded in March, 1995. Since its acquisition of PCS licenses,
the Company has been devoting its efforts to recruiting an experienced
management team, developing and executing a business plan, raising capital and
designing and constructing a PCS network in each of its six primary MTAs
(Minneapolis, Tampa-St. Petersburg-Orlando, Houston, Pittsburgh, Kansas City and
Columbus). The Company has sold its license covering the Guam MTA and has
entered into a definitive agreement to sell its license covering the Alaska MTA.
FCC approval has been obtained for the sale of the Alaska license and the
closing is pending.
The Company's principal focus in 1996 continues to be the development of its PCS
business in its primary MTAs and this focus will continue until the expected
launch of commercial service in early 1997. As of September 30, 1996, a total of
118 microwave paths have been cleared, with an additional 52 paths having
pending agreements with incumbents. Management anticipates that by year-end
1996, sufficient paths will have been cleared to allow service launch in all six
markets. Over 500 cell sites have been secured as zoning and installation work
continues. The National Operations Center is substantially complete. Friendly
user (customer) trials are planned to begin late in the fourth quarter of 1996
and conclude in the first quarter of 1997, with roll-out of commercial service
after successful customer trials.
The Company is currently capitalizing, as work in process, expenditures for the
design, construction and testing of the Company's PCS networks as well as the
cost to relocate dedicated private microwave links currently operating in the
Company's spectrum. Costs associated with developing information systems are
also capitalized. The Company capitalizes interest on its work in process
expenditures and capitalized interest on the cost of the licenses associated
with its primary MTAs through December 31, 1995.
The Company's results of operations for 1996 compared to 1995 reflect primarily
increased activities undertaken to prepare the Company's MTAs for initiation of
commercial PCS services. The Company expects no operating revenues in 1996 as
commercial service is not anticipated to commence until early 1997, and expects
its net losses to increase during 1996 as the Company continues its business
development activities.
Nine Months Ended 9/30/96 Compared to Nine Months Ended 9/30/95
Development costs-affiliate are management services performed by TDS and/or
affiliated companies and incurred in the development of the Company's business
plans. Development
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<PAGE>
costs-affiliate, decreased $167,000 in the first nine months of 1996, largely as
the result of a decrease of $314,000 in management services primarily
attributable to the continuing growth of the Company's own management and
operating teams and ability to independently coordinate the development of its
PCS business. This decrease was partially offset by approximately $147,000 in
management services incurred in connection with the Company's initial public
offering ("IPO") in April, 1996.
Development costs-other increased $6.5 million in the first nine months of 1996,
primarily due to increased consulting fees incurred in the development of the
Company's business and marketing plans and legal expenses incurred in the
continuing effort to prepare the Company's MTAs for commercial PCS services.
General and administrative expenses increased $15.6 million in the first nine
months of 1996, primarily as a result of the growth of the Company's management
and operating teams and the resulting increases in salaries, employee benefit
costs and overhead expenses.
Other income-affiliate increased $3.5 million in the first nine months of 1996,
primarily as a result of interest income earned on proceeds from the IPO
invested temporarily in the TDS cash management program pending use in PCS
network development and construction.
Gain on sale of license represents the pretax gain recognized on the sale of the
Guam license in May, 1996.
Interest expense-affiliate increased $1.1 million in the first nine months of
1996. Interest expense- affiliate represents interest on amounts borrowed under
the revolving credit agreement with TDS, less interest capitalized. Interest
capitalized totaled $380,000 in 1996 and $9.2 million in 1995. Interest
capitalization in 1995 includes interest capitalized on the cost of licenses
acquired prior to TDS's $289.2 million equity contribution covering such costs.
Interest capitalization in 1996 is based solely upon construction expenditures
incurred related to the PCS network and information system development.
Income tax expense increased $2.2 million in the first nine months of 1996,
primarily due to an increase in the estimated valuation allowance associated
with deferred tax assets.
For federal income tax purposes, the Company is included in the TDS consolidated
tax return. For financial reporting purposes, the Company computes its federal
income taxes as if it were not a member of the TDS consolidated group but filed
a separate return.
For 1995, TDS reimbursed the Company for the federal benefit of any net
operating loss of the Company which reduced the provision for income taxes
reflected in TDS's consolidated statements of income. The Company and TDS
entered into a tax allocation agreement which became effective as of January 1,
1996, pursuant to which, among other things, TDS no longer reimburses the
Company on a current basis for losses or credits used by TDS in the year they
are generated. Instead, the Company will be compensated (or future tax
liabilities will be reduced) for TDS's use of tax benefits at such time as the
Company could utilize such benefits on a separate return basis.
The weighted average common and Series A common shares increased by
approximately 7.1 million due to 12,250,000 common shares issued on April 25,
1996 in connection with the Company's IPO.
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<PAGE>
Three Months Ended 9/30/96 Compared to Three Months Ended 9/30/95
Development costs-affiliate decreased $44,000 in the third quarter of 1996,
primarily attributable to the Company's management and operating team's
increasing ability to independently coordinate the development of its PCS
business.
Development costs-other increased $2.8 million in the third quarter of 1996, for
reasons generally the same as for the first nine months of 1996.
General and administrative expenses increased $6.8 million in the third quarter
of 1996, for reasons generally the same as for the first nine months of 1996.
Other income-affiliate increased $1.7 million in the third quarter of 1996, for
reasons generally the same as for the first nine months of 1996.
Interest expense-affiliate decreased $406,000 in the third quarter of 1996, as
all outstanding borrowings under the revolving credit agreement with TDS were
repaid from the proceeds of the IPO.
Income tax expense increased $1.2 million in the third quarter of 1996, for
reasons generally the same as for the first nine months of 1996.
The weighted average common and Series A common shares increased by 12,250,000
due to the common shares issued on April 25, 1996, in connection with the
Company's IPO.
LIQUIDITY AND CAPITAL RESOURCES
The costs of development, construction and start-up activities of the Company
will require substantial capital. The Company expects to incur significant
operating losses and to generate negative cash flow from operating activities
during the next several years, while it develops and constructs its PCS networks
and builds its customer base.
Cash flows used by operating activities were $14.1 million in 1996 and cash
flows provided by operating activities were $6.3 million in 1995. Cash used in
1996 resulted primarily from the $23.7 million net loss for the period, offset
by a $10.2 million decrease in income tax receivable-affiliate. The cash
provided in 1995 resulted largely from an $8.5 million increase in affiliated
accounts payable and accrued interest, offset by the $2.2 million net loss for
the period.
Cash flows from financing activities provided $163.9 million in 1996 and $272.1
million in 1995. In April, 1996, the Company received proceeds from its IPO of
$195.3 million, net of underwriting discounts and commissions. The Company used
a portion of the net proceeds to repay the outstanding balance under the
revolving credit agreement with TDS. In 1996 the Company received from TDS $28.8
million representing the balance due in connection with TDS's $289.2 million
contribution to the equity capital of the Company in 1995. The 1995 equity
contribution was made to cover the original cost of the licenses acquired in the
FCC broadband Block A and Block B PCS auction. Cash flows from financing
activities in 1995 were generated by borrowings under the revolving credit
agreement.
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<PAGE>
Cash flows from investing activities required cash totaling $50.7 million in
1996 and $278.4 million in 1995. Such cash requirements in 1996 consisted
primarily of $7.3 million of additions to property and equipment (primarily
computer equipment, office equipment, and leasehold improvements) and $44.1
million of additions to work in process, including network equipment and
capitalized network design, site acquisition and information system development
costs. Cash requirements in 1995 related largely to the Company's acquisition of
eight licenses in the FCC broadband Block A and Block B PCS auction.
The Company continues to construct networks in its primary MTAs. Commercial
operations are anticipated to commence in early 1997.
The Company anticipates construction, development and introduction of PCS
networks and services will require substantial capital and operating
expenditures over the next several years. While construction (including
microwave relocation), and other start-up activities may be impacted by many
factors, the Company estimates that the aggregate funds required through
December 31, 1998 will total approximately $865 million ($345 million in 1996,
$415 million in 1997 and $105 million in 1998). This amount includes an
estimated $620 million of capital expenditures for construction of the PCS
networks and information systems development ($300 million in 1996, $275 million
in 1997 and $45 million in 1998) and $245 million of estimated working capital
requirements.
The Company expects 1996 capital expenditures and expenditures for start-up and
development activities to be financed using a variety of sources, including but
not limited to, borrowings under the TDS revolving credit agreement, vendor
financing and equity investors in the Company. In March 1996, the Company
selected Nokia Telecommunications, Inc. ("Nokia") as its sole supplier of
digital radio channel and switching infrastructure equipment during the initial
build out of its PCS networks. Nokia has agreed to provide up to $200 million in
financing for the equipment through a Credit Agreement with the Company dated
June 19, 1996 ("Credit Agreement"). Total borrowings under the Credit Agreement
as of September 30, 1996, were approximately $11.1 million.
At the Company's option it may issue in tranches 10-year unsecured zero coupon
promissory notes in accordance with the provisions of the Credit Agreement, the
proceeds of which are to be paid to Nokia in satisfaction of borrowings by the
Company under the Credit Agreement.
On November 4, 1996, the Company issued $226.2 million in aggregate principal
amount at maturity Series A Zero Coupon Notes ("Notes") due in 2006. The issue
price of the Notes was 44.2% of the principal amount at maturity or $100
million, and there is no periodic payment of interest. The per annum yield to
maturity on the Notes is 8.34% (computed on a semi-annual bond equivalent basis)
calculated from November 4, 1996. The Notes will rank in the same prioty with
all other unsecured and unsubordinated indebtedness of the Company.
In April of 1996, the Company sold 12,250,000 of its common shares,
approximately 17.2% of total outstanding shares, at a price of $17 per share in
an initial public offering. The net proceeds from the offering, after
underwriters fees, were $195.3 million. A portion of the net proceeds was
applied to the repayment of $64.1 million in outstanding indebtedness (including
accrued interest) to TDS under the revolving credit agreement. The Company
currently has available $250 million under the revolving credit agreement with
TDS.
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<PAGE>
The Company believes that its capital resources will be sufficient to fund the
development, construction and operating costs of the Company's PCS networks into
the second half of 1997. Sources of additional capital may include additional
vendor financing as well as private equity and debt financings by the Company or
its subsidiaries. If sufficient funding is not made available to the Company on
terms and prices acceptable to the Company, the Company would have to reduce its
construction and development programs, which could have a material adverse
impact on the Company's financial condition and results of future operations.
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<PAGE>
AMERICAN PORTABLE TELECOM, INC. AND SUBSIDIARIES
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
Three Nine Cumulative
Months Ended Months Ended July 23, 1991
September 30, September 30, to
1996 1995 1996 1995 Sept 30, 1996
----- ---- ---- ---- -------------
(Dollars in thousands, except per share amounts)
OPERATING EXPENSES
Development costs - affiliate $ 214 $ 258 $ 727 $ 894 $ 2,974
Development costs - other 3,161 359 7,311 792 11,274
General and administrative 7,430 659 16,274 659 19,860
-------- -------- -------- -------- --------
OPERATING (LOSS) (10,805) (1,276) (24,312) (2,345) (34,108)
OTHER INCOME
Other income - affiliate 1,755 27 3,547 29 3,604
Gain on sale of license -- -- 189 -- 189
-------- -------- -------- -------- --------
1,755 27 3,736 29 3,793
(LOSS) BEFORE INTEREST AND
INCOME TAXES (9,050) (1,249) (20,576) (2,316) (30,315)
Interest expense - affiliate -- 406 1,669 556 2,825
Interest expense - other 8 -- 8 -- 8
--------- -------- -------- -------- --------
(LOSS) BEFORE INCOME TAXES (9,058) (1,655) (22,253) (2,872) (33,148)
Income tax expense (benefit) 771 (405) 1,453 (703) (1,490)
--------- -------- -------- -------- --------
NET (LOSS) $ (9,829) $(1,250) $(23,706) $(2,169) $(31,658)
========= ======== ======== ======== =========
WEIGHTED AVERAGE COMMON
AND SERIES A COMMON SHARES
(000s) 71,336 59,086 66,176 59,086 60,791
(LOSS) PER COMMON AND
SERIES A COMMON SHARE $ (0.14) $ (0.02) $ (0.36) $ (0.04) $ (0.52)
========= ======== ========= ======== =========
The accompanying notes to consolidated financial statements are an
integral part of these statements.
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<PAGE>
AMERICAN PORTABLE TELECOM, INC. AND SUBSIDIARIES
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
Nine Months Ended Cumulative
September 30, July 23, 1991
------------------- to
1996 1995 Sept 30, 1996
--------- ------- -------------
(Dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) $ (23,706) $ (2,169) $ (31,658)
Add (Deduct) adjustments to reconcile
net (loss) to net cash (used) provided
by operating activities:
Depreciation 1,091 -- 1,138
Gain on sale of PCS license (189) -- (189)
Change in cash - restricted 416 -- --
Change in accounts payable - affiliates
and accrued interest - affiliate (1,075) 8,470 1,706
Change in accounts payable - other (2,584) 843 3,817
Change in income tax refund receivable -
affiliate 10,206 (34) (2,296)
Change in deferred tax asset/liability
- net 3,926 (703) 13,668
Change in other assets and deferred costs (3,333) (103) (3,534)
Change in other liabilities 1,195 -- 1,195
--------- --------- --------
(14,053) 6,304 (16,153)
--------- --------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Change in note receivable - affiliate 28,836 -- 28,836
Change in revolving credit agreement
- TDS (60,238) 272,105 260,358
Issuance of common stock 195,265 -- 195,305
--------- -------- --------
163,863 272,105 484,499
--------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in PCS licenses -- (277,972) (305,818)
Change in temporary cash and other
investments 273 62 (50)
Additions to work in process (44,074) (275) (52,132)
Additions to property and equipment (7,263) (234) (11,339)
Proceeds from sale of PCS license 350 -- 350
--------- -------- --------
(50,714) (278,419) (368,989)
--------- -------- --------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 99,096 (10) 99,357
CASH AND CASH EQUIVALENTS-
Beginning of period 261 10 --
--------- -------- --------
End of period $ 99,357 $ -- $ 99,357
========= ======== ========
The accompanying notes to consolidated financial statements are
an integral part of these statements.
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<PAGE>
AMERICAN PORTABLE TELECOM, INC. AND SUBSIDIARIES
(A Development Stage Enterprise)
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, 1996 December 31, 1995
------------------ -----------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents
General funds $ 334 $ 261
Affiliated cash equivalents 99,023 --
----------- -----------
99,357 261
Cash - restricted -- 416
Temporary cash investments 12 107
Other investments 38 216
Note receivable - affiliate -- 28,836
Income tax refund receivable
- affiliate 2,296 12,502
Interest receivable - affiliate 506 --
Other 1,883 201
----------- -----------
104,092 42,539
----------- -----------
FIXED ASSETS AND LICENSES
Property and equipment
- net of accumulated depreciation
of $1,138 and $47, respectively 10,201 4,029
Work in process 111,639 8,058
Investment in PCS licenses 305,676 305,818
----------- -----------
427,516 317,905
----------- -----------
OTHER DEFERRED COSTS 814 --
----------- -----------
TOTAL ASSETS $ 532,422 $ 360,444
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable - affiliates $ 1,706 $ 1,284
Accounts payable - other 41,479 6,401
Accrued microwave relocation costs 11,167 --
Accrued interest - affiliate -- 1,497
Other 1,195 --
----------- -----------
55,547 9,182
----------- -----------
REVOLVING CREDIT AGREEMENT - TDS -- 60,238
----------- -----------
LONG TERM DEBT 11,427 --
----------- -----------
DEFERRED TAX LIABILITY 13,668 9,742
----------- -----------
COMMON SHAREHOLDERS' EQUITY
Common shares, par value $1 per share 31,336 1
Series A Common Shares, par value $1
per share 40,000 --
Additional paid-in capital 412,102 289,233
Deficit accumulated during the
development stage (31,658) (7,952)
----------- -----------
451,780 281,282
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $ 532,422 $ 360,444
=========== ===========
The accompanying notes to consolidated financial statements
are an integral part of these statements
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<PAGE>
AMERICAN PORTABLE TELECOM, INC. AND SUBSIDIARIES
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The consolidated financial statements included herein have been prepared
by the Company, without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in the financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although the
Company believes that the disclosures are adequate to make the information
presented not misleading. It is suggested that these consolidated
financial statements be read in conjunction with the consolidated
financial statements and the notes thereto included in the Company's
Current Report on Form 8-K dated June 4, 1996.
The accompanying unaudited consolidated financial statements contain all
adjustments (consisting of only normal recurring items) necessary to
present fairly the financial position as of September 30, 1996 and
December 31, 1995 and the results of operations and cash flows for the
nine months ended September 30, 1996 and 1995. The results of operations
for the nine months ended September 30, 1996 and 1995, are not necessarily
indicative of the results to be expected for the full year.
2. Net (Loss) per Common and Series A Common share for the three and nine
months ended September 30, 1996 and 1995, was computed based on the number
of Common and Series A Common shares outstanding during the period
adjusted, as applicable, to give retroactive effect to the
recapitalization in conjunction with the Company's 1996 initial public
offering, as if this transaction had occurred at January 1, 1995.
3. Supplemental Cash Flow Information. The following summarizes interest and
income taxes paid and certain noncash transactions.
Nine Months Ended
September 30,
-------------------
1996 1995
---- ----
(Dollars in thousands)
Interest paid $ 508 $ -
Income tax benefits - Cash payments from TDS
resulting from taxable losses generated by the
Company in 1995 12,676 -
Accrued interest converted to debt under the
revolving credit agreement with TDS 2,973 1,842
Capitalized PCS network and information systems
development costs financed through accounts payable 36,913 -
Acquisition of network equipment and switch building
through issuance of long term debt 11,427 -
Accrued microwave relocation costs capitalized in
work in process $ 11,167 $ -
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<PAGE>
The Company capitalized interest expense of $380,000 during the nine months
ended September 30, 1996, and $9.2 million during the nine months ended
September 30, 1995.
4. Income tax refund receivable-affiliate. During the third quarter of
1996, the Company recorded an additional $2.3 million income tax refund
receivable-affiliate. This affiliated receivable relates to a revision
of the 1995 tax provision as reflected in the TDS 1995 consolidated tax
return. The revision resulted from a change in the treatment of the
Company's pre-opening costs.
5. Recapitalization. On March 28, 1996, TDS, as the sole shareholder of
the Company, executed a consent to action in lieu of a meeting, voting
all 1,000 shares of the common stock of the Company then outstanding
for the approval of a Restated Certificate of Incorporation of the
Company. Such Restated Certificate of Incorporation authorized (a)
60,000,000 Common Shares, $1.00 par value per share; (b) 60,000,000
Series A Common Shares, $1.00 par value per share; (c) 60,000,000
Series B Common Shares, $1.00 par value per share; and (d)
10,000,000 Preferred Shares, $1.00 par value per share. Upon filing of
the Restated Certificate of Incorporation with the Secretary of the
State of Delaware on April 19, 1996, the 1,000 shares of common stock
of the Company theretofore held by TDS were converted into
19,086,000 Common Shares and 40,000,000 Series A Common Shares of the
Company.
Initial Public Offering. The Company sold 12,250,000 Common Shares at a
price of $17 per share in an initial public offering on April 25, 1996.
Proceeds of the Offering, net of underwriting discounts and
commissions, totaled $195.3 million. The Company used a portion of the
net proceeds to repay TDS approximately $64.1 million, representing the
outstanding balance (including accrued interest) under the revolving
credit agreement, and expects to use the balance of the funds to
partially finance construction, development and operating costs
incurred to establish its PCS networks.
6. Credit Agreement. The Company entered into a Credit Agreement with
Nokia Telecommunications, Inc. ("Nokia") on June 19, 1996 ("Credit
Agreement"). Pursuant to the Credit Agreement, Nokia will provide
vendor financing for up to $200 million in PCS infrastructure equipment
to be purchased by the Company. The obligations of the Company
under the Credit Agreement are fully and unconditionally guaranteed
by TDS, at an annual fee rate of 3%. Guarantee fees owed TDS are
payable semiannually. Borrowings under the Credit Agreement are due
December 1, 1997. Total borrowings under the Credit Agreement as
of September 30, 1996, were approximately $11.1 million.
At the Company's option it may issue in tranches 10-year unsecured zero
coupon promissory notes ("Notes") in accordance with the provisions of
the Credit Agreement, the proceeds of which are to be paid to Nokia in
satisfaction of borrowings by the Company under the Credit Agreement.
The Credit Agreement obligates Nokia, subject to certain conditions, to
purchase any Notes offered which are not purchased by other parties.
The Notes are callable by the Company on and after the fifth
anniversary of their issuance at the accreted principal amount on the
date of payment for such call. The obligations of the Company under the
Notes are fully and unconditionally guaranteed by TDS, at the annual
fee rate indicated above. See note 9.
"Subsequent Event".
7. In May of 1996, concurrent with FCC approval, the Company sold its Guam
PCS license for $350,000 and recorded a pretax gain on the sale of
approximately $189,000, net of commissions.
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<PAGE>
8. Commitments. As of September 30, 1996, the Company had orders totaling
approximately $77.4 million with Nokia Telecommunications, Inc.
("Nokia") and certain tower vendors for infrastructure equipment as
part of the Company's initial build out of its PCS networks.
9. Subsequent Event. On November 4, 1996, the Company issued $226.2
million in aggregate principal amount at maturity Series A Zero Coupon
Notes ("Notes") due in 2006. The issue price of the Notes was 44.2% of
the principal amount at maturity or $100 million, and there is no
periodic payment of interest. The per annum yield to maturity on the
Notes is 8.34% (computed on a semi-annual bond equivalent basis)
calculated from November 4, 1996. The Notes will rank in the same
prioity with all other unsecured and unsubordinated indebtedness of the
Company.
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<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit 10.1 - American Portable Telecom, Inc. 1996 Long-Term
Incentive Plan is hereby incorporated by reference to Exhibit 99.1
to the Company's Registration Statement on Form S-8 (Registration
No. 333-06471).
Exhibit 11 - Computation of earnings per common share.
Exhibit 27 - Financial Data Schedule.
(b) Reports on Form 8-K filed during the quarter ended September 30,
1996.
No Reports on Form 8-K were filed during the quarter ended
September 30, 1996.
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<PAGE>
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.
AMERICAN PORTABLE TELECOM, INC
(Registrant)
Date November 13, 1996 /s/ DONALD W. WARKENTIN
--------------------------- -------------------------------
Donald W. Warkentin
President
(Chief Executive Officer)
Date November 13, 1996 /s/ J. CLARKE SMITH
-------------------------- ----------------------------
J. Clarke Smith
Vice President-Finance and Administration
(Chief Financial Officer)
Date November 13, 1996 /s/ B. SCOTT DAILEY
-------------------------- ----------------------------
B. Scott Dailey
Controller
(Principal Accounting Officer)
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<PAGE>
Exhibit 11
American Portable Telecom, Inc. and Subsidiaries
(A Development Stage Enterprise)
Computation of Earnings Per Common Share
(in thousands, except per share amounts)
Three Months Ended September 30, 1996 1995
- -------------------------------- ----- ----
Primary Earnings
Net (Loss) $ (9,829) $ (1,250)
========== ============
Primary Shares
Weighted average number of Common and Series A
Common Shares Outstanding* 71,336 59,086
========== ============
Primary Earnings per Common Share
Net (Loss) $ (0.14) $ (0.02)
========== ============
Nine Months Ended September 30, 1996 1995
- ------------------------------- ----- ----
Primary Earnings
Net (Loss) $ (23,706) $ (2,169)
========== ============
Primary Shares
Weighted average number of Common and Series A
Common Shares Outstanding* 66,176 59,086
========== ============
Primary Earnings per Common Share
Net (Loss) $ (0.36) $ (0.04)
========== ============
* Weighted average number of Common and Series A Common Shares Outstanding was
calculated based on the number of Common Shares outstanding during the period
adjusted to give retroactive effect to the recapitalization in conjunction with
the Company's initial public offering, as if this transaction had occurred at
January 1, 1995.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated financial statements of American Portable Telecom, Inc. as of
September 30, 1996, and for the nine months then ended, and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 99,357
<SECURITIES> 38
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 104,092
<PP&E> 11,339
<DEPRECIATION> 1,138
<TOTAL-ASSETS> 532,422
<CURRENT-LIABILITIES> 55,547
<BONDS> 0
<COMMON> 71,336
0
0
<OTHER-SE> 380,444
<TOTAL-LIABILITY-AND-EQUITY> 55,547
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 20,576
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,675
<INCOME-PRETAX> (22,253)
<INCOME-TAX> 1,453
<INCOME-CONTINUING> (23,706)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (23,706)
<EPS-PRIMARY> (0.36)
<EPS-DILUTED> (0.36)
</TABLE>
