<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
/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
/ / 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
PCS 2000, L.P.
STATEMENT OF ASSETS, LIABILITIES
AND PARTNERS' CAPITAL
SEPTEMBER 30, 1996 and DECEMBER 31, 1995
<TABLE>
<CAPTION>
ASSETS
------
1996 1995
(unaudited)
----------- --------
<S> <C> <C>
Cash and cash equivalents $722,348 $2,727,541
Prepaid expenses 96,000
Other current assets - deposits 50,000,000 50,000,000
Restricted cash 6,511,250 6,511,250
Equipment, net 16,008
------------- -------------
Total assets $57,249,606 $59,334,791
============= =============
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
Liabilities:
Bank overdraft $ $46,173
Accounts payable and accrued liabilities 853,412 130,634
Accounts payable General Partner 105,373 404,006
Accounts payable to related parties 539,514 255,844
------------- -------------
Total liabilities 1,498,299 836,657
------------- -------------
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 (2,671,827)
------------- -------------
Total partners' capital 55,751,307 58,498,134
------------- -------------
Total liabilities and partners' capital $57,249,606 $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 SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------ -----------------
September 30, September 30,
------------- -------------
1996 1995 1996 1995 *
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Interest income $6,761 $476,540 $51,058 $822,636
------------- -------------- ------------- --------------
Expenses:
Consulting and legal services rendered by
Related parties 134,471 713,626 540,320 6,278,032
General and administrative services billed by
the General Partner 109,397 77,278 328,695 292,878
Other legal fees 432,879 77,698 1,092,902 303,621
Miscellaneous consulting services 71,406 6,398 351,945 10,273
Insurance 59,000 123,000
Travel 56,409 55,860 202,095 63,540
Other administrative expenses 45,391 16,280 83,928 22,297
------------- -------------- ------------- --------------
Total expenses 908,953 947,139 2,722,885 6,970,641
------------- -------------- ------------- --------------
Net loss ($902,192) ($470,599) ($2,671,827) ($6,148,005)
============= ============== ============= ==============
Net loss attributable to general partner (225,548) (117,650) (667,957) (1,537,001)
------------- -------------- ------------- --------------
Net loss attributable to limited partners (676,644) (352,949) (2,003,870) (4,611,004)
------------- -------------- ------------- --------------
Net loss per limited partner unit ($260.10) ($144.47) ($770.27) ($2,622.87)
------------- -------------- ------------- --------------
</TABLE>
THE ACCOMPANYING NOTES ARE INTEGRAL PART OF THIS STATEMENT.
* REPRESENTS THE PERIOD FROM INCEPTION ON JANUARY 24, 1995 TO SEPTEMBER 30,
1995.
2
<PAGE> 4
PCS 2000, L.P.
STATEMENT OF CASH FLOWS
(UNAUDITED)
FOR THE PERIODS ENDED SEPTEMBER 30,
<TABLE>
<CAPTION>
Nine months ended
-----------------
1996 1995 *
---- ----
<S> <C> <C>
Cash flows from operating activities
Net income (loss) ($2,671,827) ($6,148,005)
--------------- ---------------
Adjustments to reconcile the net income (loss) for the
period to net cash used by operating activities:
Depreciation 1,252
Decrease (Increase) in prepaid expenses 96,000 (128,000)
Decrease in Bank overdraft (46,173)
Increase in accounts payable 722,778 198,080
Increase (Decrease) in accounts payable General Partner (298,633)
Increase in accounts payable to related parties 283,670 267,878
--------------- ---------------
Total adjustments 758,894 337,958
--------------- ---------------
Net cash provided (used) by operating activities (1,912,933) (5,810,047)
--------------- ---------------
Cash flows used in investing activities:
Equipment (17,260)
---------------
Net cash used in investing activities (17,260)
---------------
Cash flows from financing activities:
Capital investment by partners (75,000) 61,175,000
Restricted cash - (6,107,500)
--------------- ---------------
Net cash from financing activities (75,000) 55,067,500
--------------- ---------------
Net increase (decrease) in cash ($2,005,193) $49,257,453
=============== ===============
Summary:
Net increase (decrease) in cash (2,005,193) 49,257,453
Cash and cash equivalents at the beginning of the period 2,727,541 0
--------------- ---------------
Cash and cash equivalents at the end of the period $722,348 $49,257,453
=============== ===============
</TABLE>
The accompanying notes are integral part of this statement
* Represents the period from inception on January 24, 1995 to September 30,
1995.
3
<PAGE> 5
PCS 2000, L.P.
STATEMENT OF CHANGES IN PARTNERS' CAPITAL ACCOUNTS
(UNAUDITED)
FROM JANUARY 24, 1995 TO SEPTEMBER 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
September 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)
Third quarter 1996 (225,548) (260.10) (676,644) (902,192)
---------------- --------------- --------------
Net loss for the nine months period
ending September 30, 1996 (667,957) (770.27) (2,003,870) (2,671,827)
================ ============ =============== ==============
Ending (deficit) capital at
September 30, 1996 ($2,246,548) $57,997,855 $55,751,307
================ =============== ==============
</TABLE>
* This reporting period amount differs from the amount reported
previously because it now includes the amounts of General Partners 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
Results of Operations
NINE MONTH PERIOD ENDED SEPTEMBER 30, 1996 COMPARED WITH THE SAME PERIOD ENDED
SEPTEMBER 30, 1995
Revenues
The Partnership's sole source of revenue for the nine months period
ended September 30, 1996 continued to be interest income. Interest income for
this period was $51,058. During the same period of 1995, the Partnership had
interest earnings of $822,636. Interest earnings were reduced because the
Partnership deposited $50 million with the Federal Communications Commission to
participate in the PCS auction on November 18, 1995.
Expenses
Expenses for the nine months period ended September 30, 1996 totaled
$2,722,885 including an accrual for $298,814 of expenses to be reimbursed to
the General Partner and $29,881 of management fees. General and administrative
expenses for the same period ended September 30, 1995 were $6,970,641 including
amounts paid to Romulus Telecommunications, Inc. ("Romulus") under the Services
Agreement and the expenses and fees of the General Partner. Expenses for the
nine months period ended on September 30, 1996 were significantly lower than
the expenses for the same period of 1995, the reason being that 1995 expenses
includes the amounts paid to Romulus under the Services Agreement.
Liquidity and Capital Resources
As of September 30, 1996, the Partnership had assets totaling
$57,249,606 primarily consisting of $722,348 in cash and cash equivalents, $50
million on deposit with the FCC, $6,511,250 in restricted cash, $16,008 in
other assets and current liabilities of $1,498,299. As of September 30, 1995,
the Partnership had assets totaling $55,517,952, consisting of $49,257,452 in
cash and cash equivalents, other assets of $153,000, $6,107,500 in restricted
cash and current liabilities of $490,958. The Partnership assets increased as
the result of the Private Placement it begun in 1995, which ended during the
fourth quarter of 1995.
The Partnership did not raise any additional capital during the nine
months period ended September 30, 1996. Three Partnership units were
repurchased, during the second quarter 1996, from a former Director of Unicom
Corporation in connection with the bidding error described below. The
Partnership is in the process of making a capital call to its Limited Partners.
The proceeds of this capital call will be used for the ongoing operation of the
business. Notwithstanding the capital call, 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.
7
<PAGE> 9
THREE MONTH PERIOD ENDED SEPTEMBER 30, 1996 COMPARED WITH THE SAME PERIOD ENDED
SEPTEMBER 30, 1995
Revenues
The Partnership's sole source of revenue for the three months period
ended September 30, 1996 continued to be interest income. Interest income for
this period was $6,671. During the same period of 1995, the Partnership had
interest earnings of $476,540.
Expenses
Expenses for the three months period ended September 30, 1996 totaled
$908,953 including an accrual for $99,451 of expenses to be reimbursed to
the General Partner and $9,946 of management fees. General and administrative
expenses for the same period ended September 30, 1995 were $947,139 including
amounts paid to Romulus under Services Agreement and $70,252 of expenses of
the General Partner and $7,026 of management fees. Expenses for the three
months period ended on September 30, 1996 were 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 subject to certain legal and FCC
proceedings which were described in Amendment No. 1 to the Partnership's Form
10-Q for the quarterly period ended June 30, 1996.
9
<PAGE> 11
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.
10
<PAGE> 12
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
11
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 722
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 57,233
<PP&E> 16
<DEPRECIATION> 0
<TOTAL-ASSETS> 57,249
<CURRENT-LIABILITIES> 1,498
<BONDS> 0
0
0
<COMMON> 65,137
<OTHER-SE> (9,386)
<TOTAL-LIABILITY-AND-EQUITY> 57,249
<SALES> 0
<TOTAL-REVENUES> 7
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 909
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (902)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (902)
<EPS-PRIMARY> (260)
<EPS-DILUTED> (347)
</TABLE>
