FORM 10-Q
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarterly Period Ended: March 31, 1997
or
[ ] Transition Report Pursuant to Section 13 or 15(d)
Of the Securities Exchange Act of 1934
Commission File Number: 0-16479
PEOPLES TELEPHONE COMPANY, INC.
-------------------------------
(Exact name of registrant as specified in its charter)
NEW YORK 13-2626435
------------ -------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or I.D. No.)
organization)
2300 NORTHWEST 89TH PLACE, MIAMI, FLORIDA 33172
-----------------------------------------------
(Address of principal executive offices) (Zip Code)
(305) 593-9667
--------------
(Registrant's telephone number, including area code)
____________________
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
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. Common Stock, $.01 Par Value,
outstanding at May 12, 1997: 16,195,434 shares.
<PAGE>
<TABLE>
<CAPTION>
Part I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
PEOPLES TELEPHONE COMPANY, INC.
CONSOLIDATED BALANCE SHEET
(in thousands)
March 31, December 31,
Assets 1997 1996
------------ ------------
(Unaudited)
<S> <C> <C>
Current assets
Cash and cash equivalents................. $ 4,367 $ 12,556
Accounts receivable, net of allowance
for doubtful accounts of $4,147 and
$4,037................................... 16,407 11,598
Inventory................................. 2,366 2,412
Prepaid expenses and other current assets 2,910 2,665
------------ ------------
Total current assets.................. 26,050 29,231
Property and equipment, net................. 61,591 65,067
Location contracts, net..................... 27,681 27,465
Goodwill, net............................... 5,189 5,660
Intangible assets, net...................... 1,557 1,768
Other assets, net........................... 6,365 6,610
Deferred income taxes....................... 3,407 3,407
Investments................................. 1,790 1,662
------------ ------------
Total assets........................... $ 133,630 $ 140,870
============ ============
Liabilities and Shareholders' Equity
Current liabilities
Notes payable and current maturities
of long-term debt........................ $ 565 $ 548
Current portion of obligations under
capital leases........................... 852 952
Accounts payable and accrued expenses..... 19,268 19,240
Accrued interest payable.................. 2,632 5,697
Taxes payable............................. 2,379 2,418
------------ ------------
Total current liabilities.............. 25,696 28,855
Notes payable and long-term debt............ 100,491 100,657
Obligations under capital leases............ 426 573
------------ ------------
Total liabilities...................... 126,613 130,085
Commitments and contingencies.............. - -
Preferred Stock
Cumulative convertible preferred stock,
Series C, $.01 par value, 160 shares
authorized; 150 shares issued and
outstanding.............................. 13,586 13,556
Preferred stock dividends payable ......... 1,785 1,523
------------ ------------
Total preferred stock................. 15,371 15,079
============ ============
Shareholders' equity
Preferred stock; $.01 par value; 4,240
shares authorized; none issued and
outstanding............................. - -
Convertible preferred stock; Series B,
$.01 par value; 600 shares authorized;
none issued and outstanding............. - -
Common stock; $.01 par value; 75,000 shares
authorized; 16,195 and 16,108 shares
issued and outstanding.................. 162 162
Capital in excess of par value............ 60,163 60,453
Accumulated deficit ...................... (67,336) (63,438)
Unrealized loss on investments............ (1,343) (1,471)
---------- ------------
Total shareholders' deficit............ (8,354) (4,294)
---------- ------------
Total liabilities and shareholders'
equity............................... $ 133,630 $ 140,870
=========== ============
The accompanying notes are an integral part of these consolidated financial
statements.
</TABLE>
2
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<TABLE>
<CAPTION>
PEOPLES TELEPHONE COMPANY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share data)
For the three months ended
March 31,
-----------------------------
1997 1996
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<S> <C> <C>
Revenues
Coin calls .......................... $ 17,940 $ 18,141
Non-coin calls....................... 13,668 12,355
---------- -------------
Total revenues................... 31,608 30,496
Costs and expenses
Telephone charges.................... 9,153 9,863
Commissions.......................... 8,764 8,267
Field service and collection......... 5,012 4,790
Selling, general and administrative.. 3,074 2,981
Depreciation and amortization........ 6,155 5,827
---------- -------------
Total costs and expenses.......... 32,158 31,728
---------- -------------
Operating loss......................... (550) (1,232)
Other (income) and expenses:
Interest expense, net................ 3,348 3,263
(Gain) loss on disposal of prepaid
calling card and international
telephone centers.................. - (545)
Other................................ - 550
---------- ------------
Total other (income) and expenses,
net............................. 3,348 3,268
---------- ------------
Loss before income taxes............... (3,898) (4,500)
Benefit from income taxes.............. - -
---------- ------------
Net loss............................... $ (3,898) $ (4,500)
============ =============
Earnings (loss) per common share both
primary and fully diluted........... $ (.26) $ (.29)
============ =============
Weighted average common and common
equivalent shares outstanding......... 16,195 16,173
============ =============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE>
<TABLE>
<CAPTION>
PEOPLES TELEPHONE COMPANY, INC.
STATEMENTS OF CONSOLIDATED CASH FLOWS
(Unaudited, in thousands)
For the three months ended,
March 31,
-----------------------------
1997 1996
---------- ------------
<S> <C> <C>
Cash flow from operating activities:
Net loss................................ $ (3,898) $ (4,500)
Adjustments to reconcile net loss
to net cash used by operating
activities:
Depreciation and amortization....... 6,155 5,827
Amortization of deferred financing
costs.............................. 285 201
Gain on sale of assets.............. - (545)
Change in assets and liabilities:
(Increase) decrease in accounts
receivable................... (4,922) 158
Decrease (increase) in
inventory.................... 46 (197)
(Increase) decrease in prepaid
expenses and other current
assets....................... (245) 369
(Increase) decrease in other
assets....................... (159) 313
Increase (decrease) in accounts
payable and accrued expenses 28 (54)
Decrease in accrued interest.. (3,065) (2,929)
(Decrease) increase in taxes
payable...................... (39) 103
---------- -----------
Net cash used by operating activities..... (5,814) (1,254)
Cash flow from investing activities:
Payments for acquisitions and certain
contracts............................. (1,690) (1,303)
Property and equipment additions....... (419) (754)
Proceeds from sale of assets........... 233 800
---------- -----------
Net cash used in investing activities...... (1,876) (1,257)
Cash flow from financing activities:
Net payments under note payable to
bank.................................. (150) (165)
Principal payments under capital lease
obligations........................... (351) (229)
Exercise of stock options and warrants. 2 -
---------- ------------
Net cash used in financing activities..... (499) (394)
---------- ------------
Net decrease in cash and cash equivalents.. (8,189) (2,905)
Cash and cash equivalents at beginning of
period.................................... 12,556 12,366
---------- ------------
Cash and cash equivalents at end of period. $ 4,367 $ 9,461
============ =============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE>
PEOPLES TELEPHONE COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997 AND MARCH 31, 1996
(unaudited)
NOTE 1 - UNAUDITED INTERIM INFORMATION
The accompanying interim consolidated financial data are unaudited; however, in
the opinion of management, the interim data include all adjustments necessary
for a fair presentation of the results for the interim periods. The preparation
of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
The results of operations for the three months ended March 31, 1997 are not
necessarily indicative of the results to be expected for the year ending
December 31, 1997.
The interim unaudited consolidated financial statements should be read in
conjunction with the audited consolidated financial statements and notes thereto
for the year ended December 31, 1996 as set forth in the Company's 1996 Annual
Report on Form 10-K.
NOTE 2 - INVESTMENTS
The Company's investment in Global Telecommunications Solutions, Inc. ("GTS") is
accounted for in accordance with Statement No. 115 ("SFAS 115"), Accounting for
Certain Investments in Debt and Equity Securities. Accordingly, this investment
is reported at fair value with unrealized gains or losses, net of tax, recorded
as a separate component of Shareholders' Equity. The fair value of the Company's
investment in GTS common stock at March 31, 1997 was approximately $1.8 million
which is net of approximately $1.3 million of unrealized investment losses.
NOTE 3 - EARNINGS PER SHARE
The treasury stock method was used to determine the dilutive effect of options
and warrants on earnings per share data. For 1997 and 1996, common stock
equivalents were excluded since the effect would be anti-dilutive.
See primary and fully diluted earnings (loss) per common share calculation as
summarized on page 7.
NOTE 4 - LONG-TERM DEBT
During March 1997, the Company executed an amendment to the Fourth Amended and
Restated Loan and Security Agreement increasing the credit facility to $20.0
million. The interest rate on balances outstanding under the credit facility
vary based upon the leverage ratio maintained by the Company. All outstanding
principal balances are due in full in 2000. Interest is payable monthly for
loans based on the prime rate and quarterly for loans based on the LIBOR rate. A
commitment fee of 1/2 of 1% is charged on the aggregate daily unused balance of
the credit facility under the Loan Agreement. The Loan Agreement is secured by
substantially all of the Company assets and contains certain restrictive
covenants which, among other things, require the Company to maintain certain
cash flow levels and interest coverage ratios and places certain restrictions on
the payment of dividends.
5
<PAGE>
PEOPLES TELEPHONE COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997 AND MARCH 31, 1996
(unaudited)
NOTE 5 - SHAREHOLDERS' EQUITY
In March 1997, the Company's shareholders approved an increase in the number of
authorized shares of the Company's Preferred Stock and Common Stock to 5 million
and 75 million shares, respectively.
NOTE 6 - INCOME TAXES
For the quarters ended March 31, 1997 and 1996, the Company recorded valuation
allowances of approximately $1.5 million and $1.7 million against deferred tax
assets generated during the periods. Valuation allowances were provided to
reduce the deferred tax assets to a level which, more likely than not, will be
realized.
6
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<TABLE>
<CAPTION>
PEOPLES TELEPHONE COMPANY, INC.
COMPUTATION OF PRIMARY AND FULLY-DILUTED EARNINGS (LOSS)
PER COMMON SHARE
(unaudited, in thousands, except per share data)
For The
Three Months Ended
March 31,
-------------------------
1997 1996
--------- -----------
<S> <C> <C>
Net loss.................................. $ (3,898) $ (4,500)
Less:
Cumulative preferred stock dividends..... (262) (262)
--------- -----------
Net loss for per share computations.... $ (4,160) $ (4,762)
=========== ============
Number of shares:
Weighted average shares used in the per
share computation........................ 16,195 16,173
=========== ============
Primary loss per common and common
equivalent share........................ $ (.26) $ (.29)
=========== ============
</TABLE>
<TABLE>
<CAPTION>
For The
Three Months Ended
March 31,
----------------------------
1997 1996
------------ ----------
<S> <C> <C>
Net loss.................................. $ (3,898) $ (4,500)
Less:
Cumulative preferred stock dividends...... (262) (262)
--------- -----------
Net loss for per share computations..... $ (4,160) $ (4,762)
=========== ============
Number of shares:
Weighted average shares used in the per
share computation........................ 16,195 16,173
=========== ============
Fully diluted loss per common and common
equivalent share......................... $ (.26) $ (.29)
=========== ============
</TABLE>
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis compares the quarter ended March 31,
1997 to the quarter ended March 31, 1996 and should be read in conjunction with
the consolidated financial statements and notes thereto appearing elsewhere in
this Form 10-Q and in conjunction with Management's Discussion and Analysis
appearing in the Company's Form 10-K for the year ended December 31, 1996.
Statements in Management's Discussion and Analysis relating to matters that
are not historical facts are forward-looking statements. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performances or achievements of Peoples
Telephone Company, Inc. to be materially different from any future results,
performances or achievements expressed or implied by such forward- looking
statements. Such known and unknown risks, uncertainties and other factors
include, but are not limited to, the following: the impact of competition,
especially in a deregulated environment, uncertainties with respect to the
implementation and effect of the Telecommunications Act of 1996, including
potential litigation seeking to modify or overturn the order of the Federal
Communications Commission implementing such act, or portions thereof, the
ongoing ability of the Company to deploy its phones in favorable locations and
the Company's ability to continue to implement operational improvements. Such
factors and others are set forth more fully in the Company's 1996 Annual Report
on Form 10-K, Quarterly Reports on Form 10-Q and the consolidated financial
statements and notes there to appearing elsewhere in this report.
Revenues
The Company primarily derives its revenues from coin and non-coin calls.
Coin revenue is generated exclusively from calls made by depositing coins in the
Company's public pay telephones. Coin revenue represented approximately 56.8 %
and 59.5% of total consolidated revenues for the quarters ended March 31, 1997
and 1996, respectively. Coin revenue decreased 1.1% to $17.9 million during the
quarter ended March 31, 1997, compared to the same period in 1996. The Company's
average installed public pay telephone base was approximately 38,400 phones and
38,300 phones for the three month periods ended March 31, 1997 and 1996,
respectively. Coin revenue on a per phone basis decreased by 1.3% for the
quarter ended March 31, 1997, respectively, as compared to the same period in
1996. The decrease in coin revenue is primarily attributable to a decrease in
the number of days in February 1997 (28) as compared to February 1996 (29).
After adjusting for the difference in number of days, coin revenue, per phone
basis, remained relatively consistent during the first quarter of 1997 as
compared to the same period in the prior year.
While the Company's coin revenue on a per phone basis has remained
relatively consistent, the Company believes that the number of coin calls made
at its public pay telephones may remain flat or decrease over time. The Company
believes that the decreases will primarily result from among other things, the
increased usage of alternative methods of calling such as prepaid calling cards
and wireless technologies and the operation of more public pay telephones in
closer proximity to the Company's telephones. The Company also believes that
these decreases may be offset, over time, by increases in local coin call rates
as a result of potential regulatory changes, although there can be no
assurances.
On November 8, 1996, the Federal Communications Commission (the AFCC@)
issued its final order on reconsideration (the AOrder@) setting forth and
affirming regulations implementing Section 276 of the federal Telecommunications
Act of 1996, previously issued on September 20, 1996. As a result of an appeal
of the Order, the ultimate implementation and details of the Order are subject
to the outcome of an action pending before the United States Court of Appeals
for the District of Columbia. See "Business - Public Pay Telephone Industry
Overview" and "Business - Regulation" appearing in the Company's Form 10-K for
the year ended December 31, 1996. The regulations in the Order, among other
things, set forth a plan for the deregulation of local coin calling rates by
October 1997. The Order allows states to request modification or exemption from
deregulation upon a detailed showing in
8
<PAGE>
support of such request by the state. Although neither the Company nor the
industry can predict exactly what will happen in such a deregulated environment,
trends indicate that there should be a move by the public pay telephone
operators toward increased local coin calling rates in states where deregulation
is implemented. This trend is evidenced by the fact that five states (Iowa,
Nebraska, Wyoming, Michigan and South Dakota) have deregulated local coin
calling rates and four of those five states now have local coin calling rates of
$0.35. In addition, Illinois and Wisconsin, although still under regulation,
have also increased their local coin calling rates to $0.35 through approval of
rate/tariff applications filed by pay telephone operators in such states.
Non-coin revenue is derived from calling card calls, credit card calls,
collect calls and third-party billed calls placed from the Company's public pay
telephones and inmate telephones. The Company currently uses AT&T to act as its
primary national operator service provider. When the call is completed through
the third-party operator service provider, the Company records as revenue the
amount it receives from the third-party operator service provider which
represents a negotiated percentage of the total amount the caller pays for the
call. In May 1996, AT&T began paying a specified per call amount for interLATA
(800) dial around calls as opposed to a percentage of the revenue generated by
those calls. The Company estimates that the impact on non-coin revenue of the
change in the compensation structure under the AT&T contract was a decrease of
approximately $1.4 million for the three months ended March 31, 1997.
In addition to the change in compensation under the AT&T contract, the
Company is continuing to experience a shift in call traffic from 0+ calls, for
which the Company receives a percentage of the revenue generated by those calls,
to access code calls for which the Company receives a flat rate per phone or per
call compensation amount. Due to aggressive advertising campaigns by
long-distance companies promoting the use of access code calls, the Company
believes that the decrease in non-coin revenue due to the changes in call
traffic patterns is likely to continue. Subject to possible changes resulting
from the appeal of the Order, these decreases in non-coin revenue are currently
being offset by changes in the amount of compensation received by the Company
for access code calls as well as (800) subscriber calls, as required under the
Order. The Order mandates dial around compensation to public pay telephone
providers for both types of calls at a flat-rate of $45.85 per pay telephone per
month beginning November 6, 1996. This flat rate will be effective through
October 1997, at which time, compensation will begin on a per call basis at a
rate of $0.35 per call or such other rate negotiated by the pay telephone
provider and the carriers.
Non-coin revenue represented approximately 43.2 % and 40.5% of total
revenues from continuing operations for the quarters ended March 31, 1997 and
1996, respectively. For the quarter ended March 31, 1997, revenues from non-coin
calls increased 10.6% to approximately $13.7 million, compared to the quarter
ended March 31, 1996. This increase was primary attributable to the increase in
compensation received for dial-around calls as a result of the implementation of
the Order, partially offset by (i) the change in the Company's compensation
structure under the AT&T contract discussed above, and; (ii) the decrease in the
number of inmate telephone lines operated by the Company. During the three month
period ended March 31, 1997, the Company operated an average of 1,700 inmate
telephone lines compared to approximately 2,100 during the same period of 1996.
Operating Expenses
Operating expenses include telephone charges, commissions, field service
and collection expenses and selling, general and administrative expenses.
Telephone charges consist of local line charges paid to Local Exchange Carriers
which include the costs of basic service and transport of local coin calls,
long-distance transmission charges and network costs and billing, collection and
validation costs. Commissions represent payments to property owners and
correctional facilities for revenues generated by the Company's telephones
located on their properties. Field service and collection expenses represent the
costs of servicing and maintaining the telephones on an ongoing basis, costs of
collecting coin from the telephones and other related operational costs.
Selling, general and administrative expenses primarily consist of payroll and
related costs, legal and other professional fees, promotion and advertising
expenses, property, gross receipts and certain other taxes, corporate travel and
entertainment and various other expenses. Total
9
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operating expenses were approximately 82.3% and 84.9% of total revenues from
continuing operations for the quarters ended March 31, 1997 and 1996,
respectively.
Telephone charges decreased as a percentage of total revenues from
continuing operations to 29.0% for the quarter ended March 31, 1997, compared to
32.3% for the same period in 1996. The decrease in telephone charges as a
percentage of total revenue can be primarily attributed to the increase in
non-coin revenue related to dial-around compensation earned in the first quarter
of 1997 for which no telephone charges are incurred. In addition, the Company
continues to experience decreased telephone charges as a result of regulatory
changes and competition within the local/intraLATA service market.
Commissions as a percentage of total revenues from continuing operations
for the three months ended March 31, 1997 increased to approximately 27.7% as
compared to 27.1% for the same period of the prior year. The increase in
commissions as a percentage of revenues for the three months was primarily
attributable to an increase in commission rates paid in connection with the
Atlanta Hartsfield International Airport account and increased commission rates
for new and renewed contracts due to increasing competition in the public pay
telephone and inmate telephone markets.
Field service and collection expenses as a percentage of total revenues
from continuing operations were 15.9% and 15.7% for the first quarters of 1997
and 1996, respectively. Field service and collection expenses increased
approximately 4.7% to approximately $5.0 million for the first quarter of 1997,
as compared to the same period in 1996. This increase was primarily attributable
to additional costs incurred for the addition of certain key operations
employees who are needed to implement certain initiatives which are intended to
result in achieving further operational efficiencies. Selling, general and
administrative expenses were constant at approximately $3.0 million for both the
first quarter of 1997 and 1996.
Depreciation and Amortization
Depreciation is based on the cost of the telephones, booths, pedestals and
other enclosures, related installation costs and line interconnection charges
and is calculated on a straight-line method using a ten-year useful life for
public pay telephones and a five-year useful life for inmate telephones.
Amortization is primarily based on acquisition costs including location
contracts, goodwill and non-competition provisions and is calculated on a
straight-line method using estimated useful lives ranging from five to twenty
years. Depreciation and amortization increased to $6.2 million for the quarter
ended March 31, 1997, compared to $5.8 million for the same period in 1996,
primarily attributable to additional amortization expense related to acquisition
and renewal costs of location contracts.
Operating Loss
Operating losses for the three months ended March 31, 1997 were
approximately $0.6 million as compared to $1.2 million for the first quarter of
1996.
Interest Expense
For the first quarter of 1997, interest expense was approximately $3.3
million which is relatively consistent with interest expense in the same quarter
in 1996.
Gain on Disposal of Prepaid Calling Card and International Telephone Centers
The three months ended March 31, 1996 includes a gain on disposal of
prepaid calling card and international telephone centers of approximately $0.3
million received in connection with the sale of the Company's international
telephone center operations and approximately $0.3 million recognized in
connection with the merger of Global Link Teleco Corporation and Global
Telecommunications Solutions, Inc.
10
<PAGE>
Other
Other expense for the three months ended March 31, 1996 includes
approximately $0.6 million of severance obligations incurred under employment
agreements with certain key executives.
Benefit from Income Taxes
The Company recorded valuation allowances for 100% of the deferred tax
assets generated from operating losses. The Company recorded deferred tax assets
and deferred tax asset valuation allowances of approximately $1.5 million as
compared to $1.7 million for the three months ended March 31, 1997 and 1996,
respectively.
Net Loss from Continuing Operations before Extraordinary Item
The Company had a net loss from continuing operations of approximately
$(3.9) million and $(4.5) million for the three months ended March 31, 1997 and
1996, respectively.
Earnings Before Interest, Taxes, Depreciation and Amortization
EBITDA is not presented as an alternative to operating results or cash flow
from operations as determined by Generally Accepted Accounting Principles
("GAAP"), but rather to provide additional information related to the ability of
the Company to meet current trade obligations and debt service requirements.
EBITDA should not be considered in isolation from, or construed as having
greater importance than, GAAP operating income or cash flows from operations as
a measure of an entity's performance.
EBITDA from continuing operations was approximately $5.6 million for the
quarter ended March 31, 1997, compared to $4.6 million for the same period in
1996. The increase in EBITDA is attributable to increased dial-around
compensation, partially offset by decreased compensation received under the AT&T
contract and the decrease in the Company's installed base of inmate telephone
lines, as noted above.
Liquidity and Capital Resources
During the first quarter of 1997, the Company continued to finance its
operations from operating cash flow. For the three months ended March 31, 1997,
the Company's operating cash flow was $(5.8) million compared to $(1.3) million
for the same period in 1996. The decrease in the Company's operating cash flow
is primarily attributable to an increase of approximately $4.8 million of
accounts receivable related to the accrual of dial-around compensation.
The Company's net working capital was approximately $0.4 million, with a
current ratio of 1.0 to 1, at March 31, 1997. This is consistent with the
Company's liquidity position at December 31, 1996.
During March 1997, the Company executed an amendment to the Fourth Amended and
Restated Loan and Security Agreement increasing the credit facility to $20.0
million. The interest rate on balances outstanding under the credit facility
vary based upon the leverage ratio maintained by the Company. All outstanding
principal balances are due in full in 2000. Interest is payable monthly for
loans based on the prime rate and quarterly for loans based on the LIBOR rate. A
commitment fee of 1/2 of 1% is charged on the aggregate daily unused balance of
the credit facility under the Loan Agreement. The Loan Agreement is secured by
substantially all of the Company assets and contains certain restrictive
covenants which, among other things, require the Company to maintain certain
cash flow levels and interest coverage ratios and places certain restrictions on
the payment of dividends. At March 31, 1997, the Company was in compliance with
the amended covenants and had no amounts borrowed under the facility.
11
<PAGE>
Based upon current expectations, the Company believes that cash flow from
operations, together with amounts which may be borrowed under the amended credit
facility, will be adequate for it to meet its working capital requirements,
pursue its business strategy and service its obligations with respect to its 12
1/4% Senior Notes, although there can be no assurances that it will be able to
do so.
The preceding forward looking information is subject to a variety of
factors and uncertainties, including the impact of competition on the Company's
operations, the ultimate implementation and effect of the Telecommunications Act
of 1996, the ongoing ability of the Company to deploy its phones in favorable
locations and to continue to implement operational improvements.
12
<PAGE>
Part II OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
At the Company's Special Meeting of Shareholders held on February 14, 1997 and
adjourned to, and reconvened on, March 7, 1997, the shareholders of the Company
voted:
1. to amend the Company's Restated Certificate of Incorporation, as amended
(the "Charter"), in order to increase the number of authorized shares of the
Company's common stock to 75,000,000 shares and the number of authorized shares
of the Company's preferred stock to 5,000,000 shares;
2. to amend the Charter to permit the Company to grant preemptive and
preferential rights to acquire shares of the Company's capital stock pursuant to
contractual agreements;
3. to ratify the grant of certain stock options granted outside of the
Company's stock option plans.
The number of votes on each proposal cast for, against, abstaining and
broker non-votes was as follows:
For Against Abstain Broker Non-Votes
------------ ----------- ----------- ----------------
a) Proposal One 10,024,036 3,026,655 61,230 -
b) Proposal Two 9,641,669 3,389,442 79,585 -
c) Proposal Three 9,673,007 2,591,008 63,891 -
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit Description
27 Financial Data Schedule
(b) Reports on Form 8-K:
None
13
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SIGNATURE
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.
PEOPLES TELEPHONE COMPANY, INC.
----------------------------------------
Registrant
Date: May 14, 1997 /s/ Bonnie S. Biumi
----------------------------------------
Bonnie S. Biumi
Chief Financial Officer
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000819694
<NAME> Peoples Telephone Company, Inc.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> Mar-31-1997
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