<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
Amendment No. 1
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
/ / 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 0-28362
PCS 2000, L.P.
(Exact name of registrant as specified in its charter)
Delaware 66-0514434
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
640 Broadway
Sonoma, California 95476
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203) 978-5200
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 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: 2,601.5 Units of Limited
Partnership Interest
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PCS 2000, L.P.
STATEMENT OF ASSETS, LIABILITIES
AND PARTNERS' CAPITAL
JUNE 30, 1996 and DECEMBER 31, 1995
<TABLE>
<CAPTION>
ASSETS
------
1996 1995
---- ----
(unaudited)
-----------
<S> <C> <C>
Cash and cash equivalents $1,040,371 $2,727,541
Prepaid expenses 42,000 96,000
Other current assets - deposits 50,000,000 50,000,000
Restricted cash 6,511,250 6,511,250
Equipment, net 12,619
------------- -------------
Total assets $57,606,240 $59,334,791
============= =============
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
Liabilities:
Bank overdraft $ $46,173
Accounts payable and accrued liabilities 308,272 130,634
Accounts payable General Partner 428,929 404,006
Accounts payable to related parties 215,540 255,844
------------- -------------
Total liabilities 952,741 836,657
------------- -------------
Contingency (Note 3)
Limited partners' capital (2,601.5 units in 1996;
and 2,604.5 units in 1995; authorized and issued) 65,037,500 65,112,500
General partner's capital 100,000 100,000
Undistributed losses (6,714,366) (6,714,366)
Net loss (1,769,635)
------------- -------------
Total partners' capital 56,653,499 58,498,134
------------- -------------
Total liabilities and partners' capital $57,606,240 $59,334,791
============= =============
</TABLE>
THE ACCOMPANYING NOTES ARE INTEGRAL PART OF THIS STATEMENT
1
<PAGE> 3
PCS 2000, L.P.
STATEMENT OF REVENUES AND EXPENSES
(UNAUDITED)
FOR THE PERIOD OF JANUARY 1, 1996 TO JUNE 30. 1996
<TABLE>
<CAPTION>
Three months ended Six months ended
------------------ ----------------
June 30, June 30,
-------- --------
1996 1995 1996 1995 *
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Interest income $17,130 $346,096 $44,297 $346,096
----------- ----------- ------------ -----------
Expenses:
Consulting and legal services rendered by
Related parties 158,792 2,746,906 405,849 5,564,406
General and administrative services billed by
the General Partner 110,467 103,798 219,298 215,600
Other legal fees 407,320 66,638 660,023 225,923
Miscellaneous consulting services 176,137 3,875 280,539 3,875
Insurance 32,000 64,000
Travel 92,166 7,680 145,686 7,680
Other administrative expenses 25,794 5,931 38,537 6,017
----------- ------------ ------------ -----------
Total expenses 1,002,676 2,934,828 1,813,932 6,023,501
----------- ------------ ------------ -----------
Net loss ($985,546) ($2,588,732) ($1,769,635) ($5,677,405)
=========== ============ ============ ===========
Net loss attributable to general partner (246,386) (647,183) (442,409) (1,419,351)
----------- ------------ ------------ -----------
Net loss attributable to limited partners (739,160) (1,941,549) (1,327,226) (4,258,054)
----------- ------------ ------------ -----------
Net loss per limited partner unit ($284.13) ($883.53) ($510.18) ($1,937.68)
----------- ------------ ------------ -----------
</TABLE>
The accompanying notes are integral part of this statement
* Represents the period from inception on January 24, 1995 to June 30, 1995.
2
<PAGE> 4
PCS 2000, L.P.
STATEMENT OF CASH FLOWS
(UNAUDITED)
FOR THE PERIODS ENDED JUNE 30,
<TABLE>
<CAPTION>
Six months ended
----------------
1996 1995 *
---- ----
<S> <C> <C>
Cash flows from operating activities
Net loss ($1,769,635) ($5,677,405)
-------------- --------------
Adjustments to reconcile the net income (loss) for the
period to net cash used by operating activities:
Depreciation 591
Decrease in prepaid expenses 54,000
Decrease in bank overdraft (46,173)
Increase in accounts payable 177,639 38,330
Increase in accounts payable General Partner 24,923 215,600
Decrease in accounts payable to related parties (40,304)
-------------- --------------
Total adjustments 170,676 253,930
-------------- --------------
Net cash provided (used) by operating activities (1,598,959) (5,423,475)
-------------- --------------
Cash flows used in investing activities:
Computers (13,211)
--------------
Net cash used in investing activities (13,211)
--------------
Cash flows from financing activities:
Capital investment by partners (75,000) 55,037,500
Restricted cash - (5,493,750)
-------------- --------------
Net cash from financing activities (75,000) 49,543,750
-------------- --------------
Net increase (decrease) in cash ($1,687,170) $44,120,275
============== ==============
Summary:
Net increase (decrease) in cash (1,687,170) 44,120,275
Cash and cash equivalents at the beginning of the period 2,727,541 0
-------------- --------------
Cash and cash equivalents at the end of the period $1,040,371 $44,120,275
============== ==============
</TABLE>
The accompanying notes are integral part of this statement
* Represents the period from inception on January 24, 1995 to June 30, 1995.
3
<PAGE> 5
PCS 2000, L.P.
STATEMENT OF CHANGES IN PARTNERS' CAPITAL ACCOUNTS
(UNAUDITED)
FROM JANUARY 24, 1995 TO JUNE 30, 1996
<TABLE>
<CAPTION>
General Limited Partners Accounts Accumulated
--------- ------------------------- -----------
Partner Units Average Loss Amount Total
------- ----- ------------ ------ -----
Per Unit
--------
<S> <C> <C> <C> <C> <C>
Contributed Capital during:
First quarter 1995 $100,000 1,131.0 $28,275,000 $28,375,000
Second quarter 1995 1,066.5 26,662,500 55,037,500
Third quarter 1995 245.5 6,137,500 61,175,000
Fourth quarter 1995 161.5 4,037,500 65,212,500
-------------- ----------- ------------- --------------
Contributed Capital as of
December 31, 1995 100,000 2,604.5 65,112,500 65,212,500
Repurchase of Limited Partners units
during the Second quarter 1996 (3.0) (75,000) (75,000)
-------------- ----------- ------------- --------------
Contributed Capital as of
June 30, 1996 100,000 2,601.5 65,037,500 65,137,500
============== ----------- ============= ==============
Share of Undistributed Losses:
First quarter 1995 * (772,168) (2,048.19) (2,316,505) (3,088,673)
Second quarter 1995 (647,183) (883.53) (1,941,549) (2,588,732)
Third quarter 1995 (117,650) (144.47) (352,950) (470,600)
Fourth quarter 1995 (141,590) (163.09) (424,771) (566,361)
-------------- ------------- --------------
Net loss for the year ending
December 31, 1995 (1,678,591) (1,933.49) (5,035,775) (6,714,366)
============== =========== ============= ==============
First quarter 1996 * (196,022) (225.79) (588,067) (784,089)
Second quarter 1996 (246,387) (284.13) (739,160) (985,546)
-------------- ------------- --------------
Net loss for the six months period
ending June 30, 1996 (442,409) (510.18) (1,327,226) (1,769,635)
============== =========== ============= ==============
Ending (deficit) capital at
June 30, 1996 ($2,021,000) $58,674,499 $56,653,499
============== ============= ==============
</TABLE>
* This reporting period amount differs from the amount reported previously,
because it now includes the amounts of General Partner's expenses
accrued.
4
<PAGE> 6
PCS 2000, L.P.
(a limited partnership ( the "Partnership"))
NOTES TO INTERIM FINANCIAL STATEMENTS
NOTE 1 - INTERIM FINANCIAL DATA:
The interim financial data is unaudited; however, in the opinion of management,
the interim data includes all adjustments, consisting of normal recurring
adjustments, necessary for a fair statement of the results of the interim
periods.
NOTE 2 - RELATED PARTY TRANSACTIONS:
The partnership agreement, as amended provides for the payment to SuperTel
Communications Corp. (the "General Partner" or "SuperTel"), the general partner
of the Partnership, of a management fee equal to the reasonable costs of
operating the business of the Partnership, plus 10% of such aggregate amount,
which fee will be payable monthly, on the first day of each month during the
year. Expenses to be reimbursed include, but are not limited to, compensation
costs, and expenses related to officers, directors, and employees in the
performance of their duties. The fee and the related expenses incurred by the
General Partner are currently accrued, based on counsel's opinion. The
Partnership considered in earlier financial statements such fees and expenses
to be contingent upon the issuance of the licenses, as it was originally stated
in the Partnership agreement. The audited financial statements as of December
31, 1995 now includes an accrual for such costs and expenses. In addition, the
General Partner is entitled to 25% of all distributions made by the
Partnership.
NOTE 3 - CONTINGENCY
During 1995, the Partnership's bidding agent inadvertently submitted an
incorrect bid for one of the Basic Trading Area ("BTA") licenses. Although the
Partnership subsequently withdrew the erroneous bid, the FCC may impose a very
substantial penalty for the withdrawal of a high bid consisting of the
difference between the bid withdrawn and the eventual highest bid (as of the
date of these statements, the maximum penalty would be approximately
$92,491,000).
The General Partner has met with the FCC officers and has filed a petition for
a waiver of this penalty or, in the alternative, a substantial reduction on the
amount of the penalty, as these rules were made to deter frivolous and
manipulative bids and not errors. Although no final determination has been
made at the date of the financial statements, the General Partner is
optimistic that the FCC will agree either to a waiver or a substantial
reduction of the penalty.
Based on the results of an internal investigation of the bidding error, the
Board of Directors of Unicom Corporation ("Unicom"), the former general partner
of the Partnership, concluded that it was in the best interest of the
Partnership that the ownership interests of a former director and acting chief
executive officer of Unicom and members of his family in Unicom be divested.
Since Unicom and the former director and his family were unable to come to an
agreement on transferring such interests to Unicom or to a third party, Unicom
determined to sell its general partnership interest in the Partnership to
SuperTel. On June 18, 1996, Unicom sold its general partnership interest to
SuperTel for $100,000 by means of a promissory note. The stockholders,
officers and directors of SuperTel are essentially the same as those of Unicom.
All stockholders of Unicom received the same amount of shares of SuperTel that
they held in Unicom, except for the shares held by two trusts for the benefit
of the respective families of two former directors of Unicom. The Partnership
repurchased the interest in the Partnership held by a former director.
5
<PAGE> 7
The transfer of Unicom's general partnership interest is the subject of a
lawsuit brought by the wife of a former director. In addition, the former
director has brought suit seeking declaratory judgment that he is not
responsible for the bidding error. The General Partner is vigorously defending
the interests of the Partnership in these matters; it believes it has
meritorious defenses to each suit and that the outcome of each suit will not
adversely affect the operations of the Partnership.
Additionally, three parties have filed petitions with the FCC to deny the award
of any licenses to the Partnership. The Partnership filed an opposition
statement to the petitions. The General Partner believes that the petitions
should be summarily dismissed and intends to vigorously defend the
Partnership's interests.
The Partnership is also subject to a withdrawal penalty of approximately $1.25
million for its deliberate withdrawal of a bid for the PCS license covering
Omaha, Nebraska. At one point during the Block C auction, the Partnership had
targeted and was bidding for certain midwestern markets. During the course of
the auction, however, the Partnership determined to focus its efforts in Puerto
Rico and certain western markets. Accordingly, the Partnership withdrew its
bid for the Omaha market and is subject to the withdrawal penalty.
Although no assurances can be made, the General Partner expects that the
Partnership will ultimately prevail in these matters. If any of the petitions
to deny are granted or if the penalty issue is not satisfactorily resolved,
the Partnership may not received some or all of the licenses, and failure to
receive licenses will have a material adverse effect on the financial condition
of the Partnership.
NOTE 4 - SUBSEQUENT EVENTS:
The Partnership is currently in negotiations with other companies for
additional financing to be used in the construction of the PCS system and
eventual operation of the business. No such additional financing is probable
at this time. The Partnership is engaged in a capital call to cover its
expenses until the FCC releases the portion of the Partnership's $50 million
deposit which is in excess of the down payment for the licenses and penalties
that may be imposed.
6
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Introduction
The Partnership was formed in January 1995, and is managed by the
General Partner. The Partnership was organized to acquire, own and operate PCS
licenses in frequency Blocks C and F, and to take advantage of the benefits
that the Federal Communications Commission (the "FCC") has set aside for
certain "designated entities."
Results of Operations
SIX MONTH PERIOD ENDED JUNE 30, 1996 COMPARED WITH THE SAME PERIOD ENDED JUNE
30, 1995
Revenues
The Partnership's sole source of revenue for the six month period
ended June 30, 1996 continued to be interest income. Interest income for this
period was $44,297. During the same period of 1995, the Partnership had
interest earnings of $346,096. Interest earnings were reduced because the
Partnership deposited $50 million with the FCC to participate in the PCS
auctions on November 18, 1995.
Expenses
Expenses for the six month period ended June 30, 1996 totaled
$1,813,932 including an accrual for $199,362 of expenses to be reimbursed to
the General Partner and $19,936 of management fees. General and administrative
expenses for the same period ended June 30, 1995 were $6,023,501 including
amounts paid to Romulus Telecommunications, Inc. ("Romulus") under the Services
Agreement and the expenses and fees of the General Partner. These expenses
were significantly lower than the expenses for the same period of 1995, the
reason is that it includes the amounts paid to Romulus under the Services
Agreement.
Liquidity and Capital Resources
As of June 30, 1996, the Partnership had assets totaling $57,606,240
primarily consisting of $1,040,371 in cash and cash equivalents, $50 million on
deposit with the FCC, $6,511,250 in restricted cash, $42,000 in prepaid
expenses, $12,619 in other assets and current liabilities of $952,741. As of
June 30, 1995, the Partnership had assets totaling $49,614,025, consisting of
$44,120,274 in cash and cash equivalents and current liabilities of $253,930.
The Partnership assets increased as the result of the Private Placement it
began in 1995.
The Partnership did not raise any additional capital during the six
month period ended June 30, 1996. Three Partnership units were repurchased,
during the second quarter 1996, from a former Director of Unicom Corporation
as a result of the bidding error described below. The Partnership will still
need to raise additional capital or debt for the purposes of building out the
PCS system to operate the licenses it expects to acquire. The Partnership's
efforts to raise additional capital is dependent on whether the Partnership
acquires any PCS licenses. Although no assurance can be made, the Partnership
expects to raise the additional amounts it needs to develop the PCS licenses it
acquires. The Partnership currently estimates it will need to raise
approximately $290 million to develop the PCS licenses it expect to acquire.
7
<PAGE> 9
THREE MONTH PERIOD ENDED JUNE 30, 1996 COMPARED WITH THE SAME PERIOD ENDED JUNE
30, 1995
Revenues
The Partnership's sole source of revenue for the three month period
ended June 30, 1996 continued to be interest income. Interest income for this
period was $17,130. During the same period of 1995, the Partnership had
interest earnings of $346,096.
Expenses
Expenses for the three month period ended June 30, 1996 totaled
$1,002,676 including an accrual for $100,425 of expenses to be reimbursed to
the General Partner and $10,042 of management fees. General and administrative
expenses for the same period ended June 30, 1995 were $2,934,828 including
amounts paid to Romulus under Services Agreement and $94,362 of expenses of
the General Partner and $9,436 of management fees. These expenses were
significantly lower than the expenses for the same period of 1995. The reason
is that expenses in 1995 include the amounts paid to Romulus under the Services
Agreement.
8
<PAGE> 10
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Partnership is a party to three legal proceedings, an FCC
proceeding and two petitions to deny the award of any PCS licenses to
the Partnership, all of which have arisen in connection with an erroneous bid
at the FCC auctions. On January 23, 1996, Romulus entered an erroneous bid on
behalf of the Partnership for the Norfolk, Virginia market. Mr. Easton, in his
capacity as bidding agent and Director of Engineering of Romulus, mistakenly
entered a bid of $180,060,000 when he had meant to bid $18,006,000 (the
"Bidding Error"). At the time, Mr. Easton was also the acting chief executive
officer of Unicom and a member of its Board of Directors. Unicom engaged
special counsel to investigate and report (the "Report") to Unicom the
circumstances surrounding the Bidding Error.
The Partnership withdrew the erroneous bid on January 24, 1996
and requested the FCC to waive or reduce the amount of any withdrawal penalty.
Under FCC Rules, a bidder who withdraws a high bid during the course of an
auction is subject to a penalty equal to the difference between the amount bid
and the amount of the winning bid when the license is auctioned. Since the
high bid for the Norfolk, Virginia market was $87,569,000, the Partnership is
subject to a withdrawal penalty as high as $92,491,000. The FCC, however, has
not yet determined what the Partnership's penalty will be but the Partnership
believes the penalty will be significantly lower than $92,491,000. The
Partnership believes that Romulus and Mr. Easton should be ultimately
responsible for the Bidding Error.
Based upon the Report and after repeated discussions and
consultations with the FCC, Unicom's board of directors concluded that it was
in the best interest of the Partnership and its limited partners that the
beneficial interests of Mr. Easton and any members of his family in Unicom be
divested. Mr. Easton's wife, Susan D. Easton, is the beneficiary of the SDE
Trust which owned a portion of the shares of Unicom. Since Unicom and the SDE
Trust were unable to come to an agreement on transferring such shares to Unicom
or to a third party, Unicom determined to sell all its assets, which consisted
only of its general partnership interest in the Partnership, to the General
Partner.
On June 6, 1996, the Partnership filed suit in San Juan
Superior Court for the Commonwealth of Puerto Rico and attached the Romulus
account which holds approximately $6.5 million which would be payable to
Romulus under its agreement with the Partnership. That agreement provided that
Romulus would be entitled to 20% of the amount of capital that the Partnership
raised in the sale of its limited partnership units, but that one-half of such
amount would be held in a separate account and would be paid only if the
Partnership successfully acquired at least one PCS license. The $6.5 million
that the Partnership has attached are the funds held in the separate account.
The Partnership took steps to attach the funds to ensure that Romulus funds
were available to pay any fines that the FCC determines may be payable by the
Partnership in connection with the Bidding Error. On July 26, 1996, Romulus
and Mr. Easton
9
<PAGE> 11
each filed a demand for arbitration with the American Arbitration Association
at its Miami, Florida office seeking to arbitrate all matters relating to the
Bidding Error, including the attachment of the Romulus account. The General
Partner is presently determining its response to these demands for arbitration.
Mr. Easton has filed a suit in Superior Court for the State of
California, County of San Mateo, on June 18, 1996, seeking declaratory judgment
that he is not responsible or liable for the Bidding Error. As noted above,
the General Partner maintains that Romulus must reimburse it for any fines
which may be assessed against the Partnership in connection with the Bidding
Error.
Susan D. Easton, beneficiary of the SDE Trust and wife of Mr.
Easton, has filed suit in Superior Court for the State of California, County of
San Mateo, on May 28, 1996 seeking declaratory judgment with respect to the
transfer of the general partnership interest to the General Partner. The
General Partner believes that it has meritorious defenses to this action.
On July 1, 1996, two parties filed petitions with the FCC to
deny the award of any PCS licenses to the Partnership. Susan D. Easton has
filed a petition maintaining that the Partnership should not receive any PCS
licenses because the SDE Trust's interest in the Partnership was extinguished
when the general partnership interest was transferred from Unicom to the
General Partner. In addition, a limited partner of the Partnership,
WillowRun, L.P., has filed a petition stating that the Partnership should not
receive any Licenses on grounds that the General Partner does not hold a 25%
equity interest in the Partnership, and that the General Partner was not
truthful with the FCC or in its disclosures to the Investors. In the
alternative, WillowRun, L.P. requested that the FCC release records that it
collected in connection with its investigation of the Bidding Error, that the
Partnership's limited partners be fully informed of developments and that the
comment period for opposition to the award of any PCS licenses to the
Partnership be extended following release of such information. The Partnership
filed an opposition statement to the two petitions on July 16, 1996 and
WillowRun, L.P. filed a reply on July 26, 1996. On August 12, 1996, the SDE
Trust filed a new petition to deny and the General Partner intends to file a
timely opposition statement. The General Partner believes that the petitions
should be summarily dismissed and intends to defend vigorously the
Partnership's interests.
The General Partner believes that loss of any of these
lawsuits or failure to be granted some or all of the PCS licenses will have a
materially adverse effect on the financial condition and affairs of the
Partnership. Although no assurances can be made, the General Partner
expects that the Partnership will ultimately prevail in all of these matters.
10
<PAGE> 12
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) List of Exhibits
27.0 Financial Data Schedule
(b) The Partnership has not filed any reports on Form 8-K
during the quarter for which this report is being filed.
11
<PAGE> 13
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.
PCS 2000, L.P.
By: SuperTel Communications Corp.
By: /s/ Javier O. Lamoso
--------------------
Name: Javier O. Lamoso
Title: President
September 13, 1996
12
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,040
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 57,593
<PP&E> 13
<DEPRECIATION> 0
<TOTAL-ASSETS> 57,606
<CURRENT-LIABILITIES> 953
<BONDS> 0
0
0
<COMMON> 65,137
<OTHER-SE> (8,484)
<TOTAL-LIABILITY-AND-EQUITY> 57,608
<SALES> 0
<TOTAL-REVENUES> 17
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,003
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (986)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (986)
<EPS-PRIMARY> (284)
<EPS-DILUTED> (379)
</TABLE>
