- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
( ) TRANSITION REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File No. 1-10588
INTELLICALL, INC.
(Exact name of registrant as specified in its charter)
Delaware 75-1993841
(State or other jurisdiction of (I.R.S. Employer Identification number)
incorporation or organization)
2155 Chenault, Suite 410
Carrollton, TX 75006
(Address of Principal Executive Offices)
(214) 416-0022
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports 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.
Outstanding at
Class August 12,1996
Common Stock $.01 par value 8,001,920
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<PAGE>
INDEX
INTELLICALL, INC.
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets at June 30, 1996
(Unaudited) and December 31, 1995....................................1
Consolidated Statement of Operations for each of the three
month periods ended June 30, 1996 and 1995
(Unaudited)..........................................................2
Consolidated Statements of Operations for each of the
six month periods ended June 30, 1996 and 1995
(Unaudited)..........................................................3
Consolidated Statements of Cash Flows for each of the six
month periods ended June 30, 1996 and 1995
(Unaudited)..........................................................4
Notes to Consolidated Financial Statements...........................6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.............................................10
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K....................................13
Signatures...................................................................14
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
<TABLE>
<CAPTION>
INTELLICALL, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands, except share amounts)
June 30, 1996 December 31, 1995
------------- -----------------
<S> <C> <C>
ASSETS
Current assets:
Restricted cash $ 9 $ 492
Cash and cash equivalents 2,153 613
Receivables, net 24,320 23,008
Receivables from related party 272 272
Inventories 11,420 11,939
Other current assets 1,288 587
-------- --------
Total current assets 39,462 36,911
Fixed assets, net 1,936 2,089
License fees receivable 77 253
Investment in sales-type leases 60 96
Notes receivable, net 1,719 2,695
Intangible assets, net 973 1,018
Capitalized software costs, net 4,685 4,352
Other assets 1,873 1,230
-------- --------
$ 50,785 $ 48,644
========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 9,472 $ 6,406
Other liabilities 2,680 2,725
Current portion of long-term debt 13,475 15,474
------- -------
Total current liabilities 25,627 24,605
Long-term debt 10,256 8,620
Deferred revenue 1,782 1,976
Other liabilities 200 200
Minority interest 29 --
Stockholders' equity:
Preferred stock, $.01 par value; 1,000,000
shares authorized; none issued -- --
Common stock, $.01 par value; 20,000,000
shares authorized; 8,014,924 and 7,702,951
shares issued, respectively 80 77
Additional capital 48,603 47,191
Less common stock in treasury, at cost;
24,908 shares (258) (258)
Accumulated deficit (35,534) (33,767)
-------- --------
Total stockholders' equity 12,891 13,243
-------- --------
$ 50,785 $ 48,644
========= =========
See notes to consolidated financial statements.
</TABLE>
- 1 -
<PAGE>
<TABLE>
<CAPTION>
INTELLICALL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per share amounts)
Three Months Ended
June 30,
1996 1995
---- ----
<S> <C> <C>
Revenues and sales:
Service revenues $ 19,792 $ 14,790
Equipment sales 3,728 4,493
------- -------
23,520 19,283
------- -------
Cost of revenues and sales:
Service revenues 17,581 12,335
Equipment sales 3,687 4,472
-------- -------
21,268 16,807
------- -------
Gross profit
Service revenues 2,211 2,455
Equipment sales 41 21
--------- -------
2,252 2,476
Selling, general and administrative expenses 2,688 2,300
Research and development expenses 182 592
Provision for doubtful accounts 81 247
-------- -------
Operating loss (699) (663)
Gain on sale of assets 572 1,607
income 142 128
Interest expense (755) (965)
Minority interest (29) --
--------- --------
Net (loss) income $ (769) $ 107
========= ========
Net(loss)income per common and common equivalent
share $ (.10) $ .01
--------- --------
Weighted average number of common and common
equivalent shares outstanding 7,843 7,670
========= ========
See notes to consolidated financial statements.
</TABLE>
- 2 -
<PAGE>
<TABLE>
<CAPTION>
INTELLICALL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per share amounts)
Six Months Ended
June 30,
1996 1995
---- ----
<S> <C> <C>
Revenues and sales:
Service revenues $ 32,771 $ 27,415
Equipment sales 7,979 12,030
------- -------
40,750 39,445
------- -------
Cost of revenues and sales:
Service revenues 28,712 22,717
Equipment sales 7,356 10,898
------- -------
36,068 33,615
------- -------
Gross profit
Service revenues 4,059 4,698
Equipment sales 623 1,132
------- -------
4,682 5,830
Selling, general and administrative expenses 5,224 4,559
Research and development expenses 322 1,057
Provision for doubtful accounts 162 386
------- -------
Operating loss (1,026) (172)
Gain on sale of assets 572 1,607
Interest income 242 252
Interest expense (1,526) (1,829)
Minority interest (29) --
------- -------
Net loss $ (1,767) $ (142)
========= =========
Net loss per common and common equivalent share $ (.23) $ (.02)
--------- ---------
Weighted average number of common and common
equivalent shares outstanding 7,720 7,666
========= =========
See notes to consolidated financial statements.
</TABLE>
- 3 -
<PAGE>
<TABLE>
<CAPTION>
INTELLICALL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
Six Months Ended
June 30,
1996 1995
---- ----
<S> <C> <C>
Operating Activities:
Net loss $ (1,767) $ (142)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 1,955 1,791
Provision for doubtful accounts 162 386
Provision for inventory 36 36
Minority interest in income of subsidiary 29 --
Changes in operating assets and liabilities:
Decrease in restricted cash 483 798
(Increase) in receivables (2,308) (558)
Decrease in inventories 483 79
(Increase) in other current assets (807) (215)
Decrease in license fee receivable 397 1,136
Decrease in investment in sales type leases 188 1,821
Decrease in related party receivable -- 367
Decrease in notes receivable 1,185 696
Increase (decrease) in accounts payable 3,066 (180)
(Decrease) in accrued liabilities (44) (526)
(Decrease) increase in deferred revenues (194) 2,247
(Decrease) increase in other (947) 386
-------- --------
Net cash provided by operating activities $ 1,917 $ 8,122
</TABLE>
Continued on next page
- 4 -
<PAGE>
<TABLE>
<CAPTION>
INTELLICALL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - continued
(in thousands)
Six Months Ended
June 30,
1996 1995
---- ----
<S> <C> <C>
Investing activities:
Purchase of equipment (324) (510)
Capitalized software (1,100) (1,300)
-------- --------
Net cash used in investing activities (1,424) (1,810)
Financing activities:
Proceeds from borrowings on long-term debt 2,900 13
Issuance of warrant 100 --
Principal payments on long-term debt (2,119) (6,264)
Proceeds from issuance of stock 166 38
--------- --------
Net cash provided by (used in)financing activities 1,047 (6,213)
Net increase in cash and cash equivalents 1,540 99
Cash and cash equivalents at beginning of period 613 808
--------- --------
Cash and cash equivalents at end of period $ 2,153 $ 907
========= ========
Supplemental cash flow information:
Interest paid $ 863 $ 2,193
========= ========
Supplemental schedule of noncash investing and financing
activities:
Conversion of long-term debt to common stock $ 1,150 $ --
========= ========
See notes to consolidated financial statements.
</TABLE>
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<PAGE>
INTELLICALL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1 - CERTAIN ACCOUNTING POLICIES
Basis of Presentation. The accompanying consolidated financial
statements of Intellicall, Inc. (the "Company") have been prepared in accordance
with the requirements of Form 10-Q and do not include all disclosures normally
required by generally accepted accounting principles or those normally made in
annual reports on Form 10-K. In management's opinion, all adjustments necessary
for a fair presentation of the results of operations for the periods shown have
been made and are of a normal and recurring nature.
The results of operations for the six months ended June 30, 1996 are
not necessarily indicative of the results of operations for the full year 1996.
The consolidated financial statements herein should be read in conjunction with
the consolidated financial statements and notes thereto included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1995.
Statement Presentation. Certain prior year amounts have been reclass-
ified to conform to the current year presentation.
Software Development Costs. The Company capitalizes costs related to
the development of certain software products. In accordance with Statement of
Financial Accounting Standards No. 86, capitalization of costs begins when
technological feasibility has been established and ends when the product is
available for general release to customers. Amortization is computed on an
individual product basis based on the products' estimated economic life using
the straight line method, not to exceed three years.
The amounts of software development costs capitalized in the second
quarter of both 1996 and 1995 were $600,000. The Company recorded $387,000 and
$156,000 of software amortization expense for the three months ended June 30,
1996 and 1995, respectively.
For the six months ended June 30, 1996 and 1995, respectively, the
Company capitalized $1.1 million and $1.3 million. The software amortization
expense recorded was $767,000 and $312,000 for the six months ended June 30,
1996 and 1995.
Restricted Cash. Certain cash accounts serve as collateral under the
Company's Series A Notes as discussed in Note 2 of the Consolidated Financial
Statements and, accordingly, are shown as restricted.
- 6 -
<PAGE>
INTELLICALL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Cash and Cash Equivalents. Cash and cash equivalents include short-term
liquid investments purchased with remaining maturities of twelve months or less.
Other. The allowance for doubtful accounts was $3.9 million at June
30, 1996, and $3.3 million at December 31, 1995.
NOTE 2 - LONG-TERM DEBT AND LINE OF CREDIT
As of June 30, 1996 and December 31, 1995, the Company's debt consisted
of the following (in thousands):
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
---- ----
<S> <C> <C>
Intellicall, Inc.
Variable rate senior bridge notes due 1996, Series A $ 13,475 $ 15,375
8% Convertible subordinated notes, due 2000 6,350 7,500
Note collateralized by certain leases -- 219
Convertible subordinated note, due 1999 1,000 1,000
-------- ---------
20,825 24,094
ILD Communications, Inc.
Senior secured debt, due 1999 2,000 --
Convertible subordinated notes, due 2001 1,000 --
Debt discount (94) --
--------- ---------
2,906 --
Total debt 23,731 24,094
Less: Current portion of long-term debt (13,475) (15,474)
--------- ---------
Total long-term debt $ 10,256 $ 8,620
========= =========
</TABLE>
On August 11, 1994 the Company issued its Variable Rate Senior Bridge
Notes Due 1996, Series A ("Series A Notes") and 12.5% Senior Bridge Notes Due
1996, Series B ("Series B Notes") to Nomura Holding America Inc. ("Nomura"). The
Series B Notes were repaid in full in 1995 and may not be re-issued. The Company
issued a warrant which entitles Nomura to purchase 551,954 shares of the
Company's common stock, $.01 par value (the "Common Stock"). The notes are
secured by collateral comprising substantially all the assets of the Company.
- 7 -
<PAGE>
INTELLICALL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Interest on the Series A Notes accrued monthly at a rate of prime plus
2.0% through December 31, 1995 (10.75% at December 31, 1995), and accrued at
prime plus 3.0% through August 11, 1996. Subsequent to August 11, 1996, the
Series A Notes accrue interest at a rate of prime plus 5.0%. Interest on the
Series A Notes is payable quarterly. The Series A Notes were schedules to
mature on August 11, 1996. Nomura has extended the maturity date to September
11, 1996. The Series A Notes may be issued from time to time provided the
aggregate amount outstanding does not exceed $14.03 million.
The note agreement with Nomura requires the Company to comply with
certain debt covenants. Such covenants require the Company to maintain certain
financial ratios and prohibit the payment of dividends. As of June 30, 1996,
Nomura waived the Company's non-compliance with certain covenants.
The Company is obligated to repay or refinance the Series A Notes by their
extended maturity on September 11, 1996. Cash flow from operations is
insufficient to repay the Series A Notes at their maturity. Therefore,
management is pursuing loans from asset-based lenders collateralized by the
Company's assets. Through August 14, 1996, the Company has received proposals
from three such lenders. The Company has not received a commitment to make a
loan from any lender. Each loan is subject to lender credit committee approval,
due diligence, and the completion of loan documentation.
On February 15, 1994 the Company issued a $1.0 million, 10.0%,
convertible, subordinated note to T.J. Berthel Investments, L.P., whose
ownership also controls 8.9% of the Company's outstanding common stock. Interest
is payable quarterly and commenced March 31, 1994. The entire principal amount
matures on March 31, 1999. The note may be converted by the holder into 160,000
shares of the Company's common stock at any time.
On December 29, 1995 the Company completed the sale of $7.5 million of
8.0% convertible subordinated notes, due December 31, 2000, to Banca Del
Gottardo in Lugano, Switzerland with the proceeds used to repay the Series B
Notes and for working capital purposes. The notes were issued with warrants to
purchase 300,000 shares of the Company's Common Stock. The notes are convertible
into 1,785,714 shares of the Company's Common Stock at a price of $4.20 per
share. As of June 30, 1996, $1,150,000 of the Banca Del Gottardo Notes has been
converted to 273,806 shares of the Company's Common Stock.
- 8 -
<PAGE>
INTELLICALL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
On May 10, 1996, a majority owned subsidiary of the Company, ILD
Communications, Inc. ("ILD") completed the sale of $1.0 million of 10.0%
convertible subordinated notes, due May 10, 2001, to Triad-ILD Partners, L.P.
and Morris Telecommunications, LLC in the amounts of $666,666.67 and
$333,333.33, respectively. The notes can be converted at the rate of one (1)
share of common stock of ILD for each $90.00 of principal then due the holder.
On May 10, 1996, ILD issued Secured Promissory Notes in the aggregate
principal amount of $2,000,000 with warrants to purchase an aggregate of 7,239
shares of ILD common stock at a price of $0.01 per share. Sirrom Capital
Corporation purchased a note in the original amount of $1,500,000 with a warrant
to purchase 5,429 shares of common stock and Reedy River Ventures Limited
Partnership purchased a note in the original amount of $500,000 with a warrant
to purchase 1,810 shares of common stock at a price of $0.01 per share. The
notes are payable on April 31, 1999 and bear interest at 13.5% annually.
NOTE 3 - INVENTORY
As of June 30, 1996 and December 31, 1995, the Company's inventory
consisted of the following (in thousands):
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
---- ----
<S> <C> <C>
Raw materials $ 4,960 $ 6,083
Work-in-process 1,721 898
Finished goods 4,739 4,958
-------- --------
Total inventory $ 11,420 $ 11,939
========= =========
</TABLE>
NOTE 4 - LITIGATION
The Company is subject to various legal proceedings arising out of
the conduct of its business. It is the opinion of the management of the Company
that the ultimate disposition of these proceedings will not have a material
adverse effect on the Company's financial condition and results of operations.
NOTE 5 - CREATION OF ILD COMMUNICATIONS, INC.
On May 10, 1996, the Company entered into an agreement with
certain investor groups to create ILD, a new long-distance re-sale and operator
services company. The Company transferred ownership in its wholly owned
subsidiary, Intellicall Operator Services, Inc. ("IOS"), to ILD in exchange for
cash in the amount of $2,000,000, a $1,000,000
- 9 -
<PAGE>
subordinated convertible note, and preferred and common stock representing
approximately 72.5% of the voting stock of ILD. The other investor groups
collectively purchased $2,000,000, or 27.5% of the voting stock of ILD, and
$1,000,000 of ILD's subordinated convertible notes. ILD also has a secured loan
in the amount of $2,000,000. The Company recorded a $572,000 gain from the
transaction.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Creation of ILD Communications, Inc.
See Note 2 and Note 5 to the financial statements.
Financial Condition
Liquidity and Capital Resources
During the first half of 1996 the Company generated $1,917,000 of cash
from operations and invested $324,000 in capital equipment and $1,100,000 in
software development. The Company repaid long term debt to Nomura of
$1,900,000 and $219,000 to Norwest. In connection with the creation of ILD
Communications, ILD received $2 million for 27.5% of its common stock, borrowed
$2,000,000 from a secured lender, and issued notes totaling $1,000,000 to the
27.5% shareholders of ILD. Cash accounts for the Company and ILD are segregated
and neither company may use the other's cash balances for any purposes.
The Company's future liquidity will depend on working capital turnover,
spending levels, the volume and timing of equipment sales and product gross
margins. There can be no assurance that the Company's efforts to maintain or
enhance liquidity will be successful, and, under certain circumstances, the
Company may be required to limit its operations, dispose of certain assets,
consider the sale of additional equity, or take other actions as considered
necessary.
The Company's Series A Notes were scheduled to mature on August 11,
1996. Nomura has amended its agreement and extended the maturity to September
11, 1996. Cash flow from operations will be insufficient to repay the Series A
Notes at their new scheduled maturity. Therefore, management is pursuing loans
from asset-based lenders collateralized by the Company's assets. Through August
14, 1996, the Company has received proposals from three such lenders. The
Company has not received a commitment to make a loan from any lender. Each loan
is subject to lender credit committee approval, due diligence, and the
completion of loan documentation.
Management believes that the Company will qualify for an asset-based
loan in an amount which will depend primarily on: (i) the amount and composition
of collateral to support the loan, (ii) projected cash flow from operations,
(iii) historical operating results and future
- 10 -
<PAGE>
operating plans, and (iv) the quality of management. There can be no assurance
that the Company will successfully refinance the Series A Notes or that Nomura
will grant further extensions of the maturity date should the Company be
unsuccessful with such refinancing.
Results of Operations
Service Revenues. Service revenues were $19.8 million for the second quarter
ended June 30, 1996 compared to $14.8 million for the second quarter in 1995.
For the six month period ended June 30, 1996, revenues were $32.8 million
compared to $27.4 million for the six months ended June 30, 1995. The table
below provides a detailed analysis of service revenues by type for the three and
six month periods ended June 30, 1996 and 1995.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, 1996 June 30, 1995 June 30, 1996 June 30, 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Call Traffic Revenue $10,885 $10,930 $19,824 $20,675
Long-distance Resale 1,304 918 2,128 1,647
Validation Services 92 1,092 175 1,903
Operator Services 6,536 1,680 8,871 2,920
Prepaid Calling Services 975 170 1,773 270
-------- -------- -------- ---------
Total Service Revenues $19,792 $14,790 $32,771 $27,415
======= ======= ======= =======
</TABLE>
Call traffic revenue for the three and six months ended June 30, 1996
was virtually unchanged from comparable periods for 1995. Revenues results mask
an increase in the number of installations generating call traffic, offset by a
decline in the average number of telephone calls per location. During most of
1996, the Company's marketing efforts to increase call traffic have kept pace
with the increased incidence of dial-around.
Prepaid calling revenues increased $805,000 and $1,503,000 for the
three and six months ended June 30, 1996 compared to the same periods in 1995.
Revenue increases for both periods were due to additional sales of prepaid cards
in retail environments, principally direct sales by grocery store and
convenience store chains.
Revenues from long-distance resale were $386,000 and $481,000 higher
for the three and six months ended June 30, 1996, respectively, compared to the
same periods in 1995. The increase is due to a greater number of customers
purchasing long-distance services from the Company.
Lower validation services compared to 1995 resulted from the sale of
the Company's call validating assets in June of 1995. The comparative revenue
loss is $1,000,000 for the second quarter and $1,728,000 for the six months
ended June 30, 1996.
- 11 -
<PAGE>
The principal change in revenues occurred in the Company's operator
services business. Operator service revenues increased approximately $4.9
million in the second quarter of 1996 compared to the second quarter of 1995.
For the first six months of 1996 operator service revenues increased $5.9
million compared to the same period in 1995. The higher revenues are primarily
the result of the addition of a new customer in April of 1996 (resulting in
$2.4 million of additional revenue) and an amended contract with the Company's
third party operator service provider compared to prior periods.
On April 1, 1996 the Company entered into a new operating arrangement
with its third party operator service provider. The new agreement gives the
Company greater control of its customer base, and contractually changes the
methods by which the Company receives payment for call traffic and pays for
services rendered. Historically, the Company recorded revenue net of amounts
withheld by the service provider as the operating contract provided for the
Company receiving a commission on call traffic. Based on the terms of the new
contract, beginning April 1, 1996 the Company began recording operator services
call traffic at its gross amount, and recording the costs for services provided
as cost of sales. The Company believes the new contractual arrangements warrant
the gross presentation of revenues. The effect of the change on both the second
quarter and six month period was to increase reported revenue approximately $1.3
million.
Gross profit derived from service revenues was $2.2 million or 11.2%
and $4.1 million or 12.4% for the three and six months ended June 30, 1996 as
compared to gross profit of $2.5 million or 16.6% and $4.7 million or 17.1% for
the three and six months ended June 30, 1995. The change described in the
foregoing paragraph accounts for the decreased gross margin percentage.
Equipment Sales. The Company's equipment sales were $3.7 million and
$8.0 million for the three and six months ended June 30, 1996 compared to $4.5
million and $12.0 million for the three and six months ended June 30, 1995. The
declines in sales in 1996 are principally attributable to reduced demand for the
Company's products from the U.S. private payphone market. Such reduced demand
appears to be a result of industry consolidation and uncertainty surrounding
implementation of the 1996 Telecommunications Act (the "Act"). In November 1996,
the Federal Communications Commission is expected to issue its regulations which
will permit implementation of the Act. The Company believes that the Act, when
implemented, will benefit the private pay telephone industry.
Gross profit from equipment sales was $41,000 (1.1% of related sales)
and $623,000 (7.8% of related sales) for the three and six months ended June 30,
1996 as compared to $21,000 (0.5% of related sales) and $1,132,000 (9.4% of
related sales) for the three and six months ended June 30, 1995. Although
equipment sales volume declined in the 1996 periods, reduced product costs and
an improved sales mix mitigated the effect of lower volume on gross margins.
- 12 -
<PAGE>
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $388,000 and $665,000 for the three and six
months ended June 30, 1996 compared to the same time periods in 1995. These
increases and similar decreases in research and development expenses resulted
from a reorganization of the Company's engineering department early in 1996. In
the reorganization, employees who were formerly and principally engaged in new
product development were reassigned to application engineering and customer
support functions, for which reason their associated costs have been classified
as selling expenses. The effect of this change was to increase selling expense
and to correspondingly decrease research and development expense by $373,000 and
$773,000 for the three and six month periods ended June 30, 1996 in comparison
to amounts that would have been reported had this change not occurred.
Research and Development Expenses. Gross spending for research and
development decreased $410,000 and $935,000 for the three and six months ended
June 30, 1996 as compared to the same period in 1995. In the first two quarters
of 1996, the Company capitalized software development costs of $1.1 million as
compared to $1.3 million in the first two quarters of 1995. Contributing to the
reductions in gross research and development spending were (i) the
reorganization described in the preceding paragraph, and (ii) reduced travel and
prototype development costs.
Provision for Doubtful Accounts. During the quarter ended June 30, 1996
the Company provided $81,000 for collection losses as compared to $247,000 in
the same quarter in 1995. For the six months ended June 30, 1996 the provision
for collection losses declined from $386,000 in 1995 to $162,000 in 1996.
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits: None
(b) Reports on Form 8-K: None.
- 13 -
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
INTELLICALL, INC.
08/14/96 /s/ William O. Hunt
Date Chairman of the Board, President and
Chief Executive Officer
08/14/96 /s/ Michael H. Barnes
Date Senior Vice President Corporate Staff
and Chief Financial Officer
(principal financial officer)
Date: August 14, 1996
- 14 -
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000818674
<NAME> INTELLICALL, INC.
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1
<CASH> 2,162
<SECURITIES> 0
<RECEIVABLES> 28,491
<ALLOWANCES> (3,899)
<INVENTORY> 11,420
<CURRENT-ASSETS> 39,462
<PP&E> 10,250
<DEPRECIATION> (8,314)
<TOTAL-ASSETS> 50,785
<CURRENT-LIABILITIES> 25,627
<BONDS> 0
0
0
<COMMON> 80
<OTHER-SE> 12,811
<TOTAL-LIABILITY-AND-EQUITY> 50,785
<SALES> 3,728
<TOTAL-REVENUES> 23,520
<CGS> 3,687
<TOTAL-COSTS> 21,268
<OTHER-EXPENSES> 2,951
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