<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q / A 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, 1998
or
[ ] Transition Report Pursuant to Section 13 or 15(d)
Of the Securities Exchange Act of 1934
Commission File Number: 001-12443
PEOPLES TELEPHONE COMPANY, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
NEW YORK 13-2626435
- ------------------------------- ----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) I.D. No.)
2300 NORTHWEST 89TH PLACE, MIAMI, FLORIDA 33172
--------------------------------------------------
(Address of principal executive offices) (Zip Code)
(305) 593-9667
---------------------------------------------------
(Registrant's telephone number, including area code)
--------------------
<PAGE> 2
Part I, Item 1 of the Form 10-Q for the quarter ended June 30, 1998 is hereby
amended in its entirety to read as follows:
2
<PAGE> 3
Part I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PEOPLES TELEPHONE COMPANY, INC.
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
ASSETS 1998 1997
---------- -----------
(UNAUDITED)
<S> <C> <C>
Current assets:
Cash and cash equivalents................................... $ 6,223 $ 22,834
Restricted cash............................................. 929 920
Accounts receivable, net of allowance for doubtful
accounts of $4,744 in 1998 and $4,936 in 1997............ 22,767 17,061
Prepaid expenses and other current assets................... 2,225 2,631
-------- --------
Total current assets.................................... 32,144 43,446
Property and equipment, net................................... 51,369 50,362
Location contracts, net....................................... 22,932 23,936
Intangible assets, net........................................ 633 824
Goodwill, net................................................. 8,900 4,084
Deferred income taxes......................................... 3,407 3,407
Other assets, net............................................ 4,972 5,258
-------- --------
Total assets............................................. $124,357 $131,317
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable and current maturities of long-term debt...... $ 210 $ 634
Current portion of obligations under capital leases......... 510 536
Accounts payable and accrued expenses....................... 23,506 22,722
Accrued interest payable.................................... 5,633 5,702
Income and other taxes payable.............................. 2,844 2,844
-------- --------
Total current liabilities................................ 32,703 32,438
Notes payable and long-term debt.............................. 100,000 100,000
Obligations under capital leases.............................. 947 275
-------- --------
Total liabilities........................................ 133,650 132,713
-------- --------
Commitments and contingencies ................................ -- --
Redeemable Preferred Stock:
Cumulative convertible preferred stock; Series C, $.01 par
value; 160 shares authorized; 150 shares issued and
outstanding, $100 per share liquidation value.......... 13,790 13,711
Preferred stock dividends payable .......................... 3,432 2,573
-------- --------
Total preferred stock.................................. 17,222 16,284
-------- --------
Common shareholders' deficit:
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;
16,212 shares in 1998 and 16,209 shares in 1997 issued
and outstanding.......................................... 162 162
Capital in excess of par value.............................. 58,360 59,291
Accumulated deficit ........................................ (82,522) (75,108)
Accumulated other comprehensive loss........................ (2,515) (2,025)
-------- --------
Total common shareholders' deficit....................... (26,515) (17,680)
-------- --------
Total liabilities less shareholders' deficit............. $124,357 $131,317
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE> 4
PEOPLES TELEPHONE COMPANY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
JUNE 30,
--------------------------
1998 1997
------- -------
<S> <C> <C>
Revenues:
Coin calls ............................................... $20,275 $19,293
Non-coin calls............................................ 9,079 10,173
------- -------
Total revenues......................................... 29,354 29,466
Costs and expenses:
Telephone charges......................................... 6,849 7,327
Commissions............................................... 8,458 7,998
Field service and collection.............................. 5,491 4,914
Depreciation and amortization............................. 5,624 5,352
Selling, general and administrative....................... 3,061 2,926
------- -------
Total costs and expenses.............................. 29,483 28,517
------- -------
Operating (loss) income................................... (129) 949
Other expenses:
Interest expense, net.................................... 3,265 3,280
------- -------
Loss from continuing operations
before income taxes....................................... (3,394) (2,331)
Income taxes ............................................... -- --
------- -------
Loss from continuing operations............................. (3,394) (2,331)
Loss from discontinued operations........................... -- (620)
------- -------
Net loss.................................................... (3,394) (2,951)
Dividends and accretion on preferred stock.................. (636) (302)
------- -------
Net loss applicable to common shareholders.................. $(4,030) $(3,253)
======= =======
Loss per common share (basic and diluted):
Loss from continuing operations.......................... $ (0.25) $ (0.16)
Loss from discontinued operations........................ -- (0.04)
------- -------
Net loss.................................................... $ (0.25) $ (0.20)
======= =======
Weighted average common shares outstanding.................. 16,212 16,195
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE> 5
PEOPLES TELEPHONE COMPANY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
JUNE 30,
--------------------------
1998 1997
------- -------
<S> <C> <C>
Revenues:
Coin calls ............................................... $39,528 $37,233
Non-coin calls............................................ 17,720 20,284
------- -------
Total revenues......................................... 57,248 57,517
Costs and expenses:
Telephone charges......................................... 14,147 14,740
Commissions............................................... 16,287 15,564
Field service and collection.............................. 10,568 9,660
Depreciation and amortization............................. 11,102 10,608
Selling, general and administrative....................... 6,063 5,861
------- -------
Total costs and expenses.............................. 58,167 56,433
------- -------
Operating (loss) income................................... (919) 1,084
Other expenses:
Interest expense, net.................................... 6,495 6,628
------- -------
Loss from continuing operations
before income taxes....................................... (7,414) (5,544)
Income taxes ............................................... -- --
------- -------
Loss from continuing operations............................. (7,414) (5,544)
Loss from discontinued operations........................... -- (1,305)
------- -------
Net loss.................................................... (7,414) (6,849)
Dividends and accretion on preferred stock.................. (937) (603)
------- -------
Net loss applicable to common shareholders.................. $(8,351) $(7,452)
======= =======
Loss per common share (basic and diluted):
Loss from continuing operations.......................... $ (0.52) $ (0.38)
Loss from discontinued operations........................ -- (0.08)
------- -------
Net loss.................................................... $ (0.52) $ (0.46)
======= =======
Weighted average common shares outstanding.................. 16,212 16,195
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE> 6
PEOPLES TELEPHONE COMPANY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED, IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
JUNE 30,
----------------------------------
1998 1997
-------- -------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss................................................... $ (7,414) $(6,849)
Adjustments to reconcile net loss to net cash (used in)
provided by operating activities:
Depreciation and amortization.............................. 11,102 10,608
Amortization of deferred financing costs................... 393 510
Changes in operating assets and liabilities:
Accounts receivable.................................. (5,706) (7,247)
Prepaid expenses and other current assets............ 406 36
Other assets......................................... (596) 219
Accounts payable and accrued expenses................ 784 1,457
Accrued interest payable............................. (69) 8
Income and other taxes payable....................... -- (32)
Net effect of discontinued operations and assets
held for sale...................................... -- 1,350
-------- -------
Net cash (used in) provided by operating activities........ (1,100) 60
CASH FLOWS FROM INVESTING ACTIVITIES
Property and equipment additions........................... (1,719) (1,381)
Proceeds from sale of assets............................... -- 233
Payments for acquisition of Indiana Telcom assets.......... (11,317) --
Payments for certain contracts............................. (1,598) (2,234)
Restricted cash............................................ (9) (886)
-------- -------
Net cash used in investing activities...................... (14,643) (4,268)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long-term debt....................... (424) (285)
Principal payments under capital lease obligations......... (451) (641)
Exercise of stock options and warrants..................... 7 2
-------- -------
Net cash used in financing activities...................... (868) (924)
-------- -------
Net decrease in cash and cash equivalents.................. (16,611) (5,132)
Cash and cash equivalents at beginning of period........... 22,834 12,556
-------- -------
Cash and cash equivalents at end of period................. $ 6,223 $ 7,424
======== =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
6
<PAGE> 7
PEOPLES TELEPHONE COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998 AND JUNE 30, 1997
(UNAUDITED)
NOTE 1 - UNAUDITED INTERIM INFORMATION
The accompanying interim consolidated financial data for Peoples Telephone
Company, Inc. (the "Company") and subsidiaries, 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 and six months ended June 30,
1998 are not necessarily indicative of the results to be expected for the year
ending December 31, 1998.
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, 1997 as set forth in the Company's 1997 Annual
Report on Form 10-K as amended by Form 10-K/A No. 1.
NOTE 2 - INVESTMENTS AND OTHER COMPREHENSIVE LOSS
Investments in debt and equity securities are accounted for in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 115, ACCOUNTING FOR
CERTAIN INVESTMENTS IN DEBT AND EQUITY SECURITIES ("SFAS 115"). The Company's
investment in Global Telecommunications Solutions, Inc. ("GTS") is classified as
"available for sale", and reported at fair value with unrealized gains or
losses, net of tax, recorded as a separate component of shareholders' deficit.
The Company's investment in GTS common stock at June 30, 1998 was approximately
$0.6 million, net of approximately $2.5 million of unrealized losses.
As of January 1, 1998, the Company adopted SFAS No. 130, REPORTING COMPREHENSIVE
INCOME ("SFAS 130"). SFAS 130 establishes new rules for the reporting and
display of comprehensive income and its components; however, the adoption of
SFAS 130 had no impact on the Company's net loss or shareholders' deficit. SFAS
130 requires unrealized gains or losses on the Company's available-for-sale
securities, which, prior to adoption, were reported separately in shareholders'
deficit, to be included in other comprehensive loss. Prior year financial
statements have been reclassified to conform to the requirements of SFAS 130.
The components of the comprehensive loss are as follows (in thousands):
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED JUNE 30,
------------------------
1998 1997
------- -------
<S> <C> <C>
Net loss................................................................... $(3,394) $(2,951)
Unrealized loss on investment ............................................. (617) (682)
------- -------
Comprehensive loss......................................................... $(4,011) $(3,633)
======= =======
</TABLE>
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED JUNE 30,
-----------------------
1998 1997
------- ------
<S> <C> <C>
Net loss................................................................... $(7,414) $(6,849)
Unrealized (loss) gain on investment....................................... (490) 554
------- -------
Comprehensive loss......................................................... $(7,904) $(6,295)
======= =======
</TABLE>
7
<PAGE> 8
PEOPLES TELEPHONE COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998 AND JUNE 30, 1997
(UNAUDITED)
NOTE 3 - EARNINGS PER SHARE
For the quarter and six months ended June 30, 1998 and 1997, the treasury stock
method was used to determine the dilutive effect of options and warrants on
earnings per share data. The following table summarizes the loss from continuing
operations and the weighted average number of shares outstanding used in the
computation of loss from continuing operations per common share in accordance
with SFAS No. 128, EARNINGS PER SHARE (in thousands, except per share data).
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED JUNE 30,
----------------------
1998 1997
------- ------
<S> <C> <C>
Loss from continuing operations ........................................... $(3,394) $(2,331)
Deduct:
Cumulative preferred stock dividend requirement................... (263) (263)
Cumulative adjustment for preferred stock
dividend compounding....................................... (334) --
Preferred stock issuance cost accretion........................... (39) (39)
------- -------
Loss from continuing operations
applicable to common shareholders.......................... $(4,030) $(2,633)
======= =======
Weighted average common shares outstanding........................ 16,212 16,195
======= =======
Basic and diluted loss per share from continuing operations....... $ (0.25) $ (0.16)
======= =======
</TABLE>
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED JUNE 30,
-----------------------
1998 1997
------- -------
<S> <C> <C>
Loss from continuing operations ........................................... $(7,414) $(5,544)
Deduct:
Cumulative preferred stock dividend requirement................... (525) (525)
Cumulative adjustment for preferred stock
dividend compounding....................................... (334) --
Preferred stock issuance cost accretion........................... (78) (78)
------- -------
Loss from continuing operations
applicable to common shareholders.......................... $(8,351) $(6,147)
======= =======
Weighted average common shares outstanding........................ 16,212 16,195
======= =======
Basic and diluted loss per share from continuing operations....... $ (0.52) $ (0.38)
======= =======
</TABLE>
Diluted loss per share is equal to basic loss per share since the conversion of
preferred shares and the exercise of outstanding options and warrants would be
anti-dilutive for all periods presented.
8
<PAGE> 9
PEOPLES TELEPHONE COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998 AND JUNE 30, 1997
(UNAUDITED)
NOTE 4 - LONG-TERM DEBT
During June 1998, the Company executed an amendment to the Fourth Amended and
Restated Loan and Security Agreement which modified the Company's financial
covenants in the Company's $20 million credit facility with Creditanstalt
Corporate Finance, Inc., formerly known as "Creditanstalt-Bankverein", (the
"Credit Facility") as of June 30, 1998. The interest rate on balances
outstanding under the Credit Facility varies based upon the leverage ratio
maintained by the Company. Outstanding principal balances are due in full in the
year 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 available balance of the Credit Facility. The
Credit Facility is secured by substantially all of the Company's assets and
contains certain 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 June 30, 1998, the Company
had no amounts borrowed under the Credit Facility and was in compliance with the
financial covenants.
NOTE 5 - INCOME TAXES
For the three and six months ended June 30, 1998, the Company recorded deferred
tax assets and deferred tax asset valuation allowances of approximately $1.3 and
$2.8 million, respectively. Valuation allowances were provided to reduce the
deferred tax assets to a level which, more likely than not, will be realized.
NOTE 6 - LOSS FROM DISCONTINUED OPERATIONS
In the fourth quarter of 1997, the Company sold the operating assets of its
inmate telephone division. The accompanying Consolidated Statement of Operations
for the three and six months ended June 30, 1997 and the Consolidated Statement
of Cash Flows for the six months ended June 30, 1997 have been restated to
present results of the former inmate telephone division as discontinued
operations. For the three months and six months ended June 30, 1997, the Company
reported approximately $0.6 million and $1.3 million in losses from discontinued
operations, respectively.
NOTE 7 - ACQUISITION OF INDIANA TELCOM CORPORATION
On January 12, 1998, the Company acquired the operating assets of Indiana Telcom
Corporation for approximately $11.3 million in cash. The results of operations
for the Company include the operations of Indiana Telcom from January 12, 1998
forward. The acquisition was accounted for as a purchase, and, accordingly, the
preliminary purchase price was allocated to the assets acquired based on
appraisals and other estimates of their underlying fair values. The allocation
of the purchase price is preliminary, pending finalization of appraisals and
other estimates. The fair value of the assets acquired included $5.4 million of
installed payphones and related equipment and $0.3 million in location
contracts. No liabilities were assumed in the transaction. The excess of the
purchase price over the fair value of net assets acquired of $5.6 million was
recorded as goodwill and is being amortized over 5 years.
9
<PAGE> 10
PEOPLES TELEPHONE COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998 AND JUNE 30, 1997
(UNAUDITED)
The following summarizes unaudited pro forma consolidated results of operations
for the six months ending June 30, 1997 assuming that the Indiana Telcom
acquisition occurred at the beginning of 1997. These pro forma results are
provided for comparative purposes only and do not purport to be indicative of
the results that would have been obtained if this acquisition had been effected
on the date indicated or which may be obtained in the future (in thousands,
except per share data).
Six months ended June 30, 1997:
Total revenues.............................................$60,255
Loss from continuing operations.............................(5,789)
Loss from continuing operations per common share.............(0.39)
NOTE 8 - MERGER AGREEMENT WITH DAVEL COMMUNICATIONS GROUP
On July 5, 1998, the Company entered into a definitive merger agreement with
Davel Communications Group, Inc. and Davel Holdings, Inc. (collectively
"Davel"). Under the terms of the agreement, which has been approved by the Board
of Directors of each company, holders of common stock of the Company will
receive 0.235 of a share of Davel common stock for each outstanding share of
Company common stock and the Company will become a wholly owned subsidiary of
Davel (the "Merger").
The transaction, which is intended to close in the fourth quarter of 1998, is
subject to the approval of the shareholders of both companies, receipt of
required regulatory approvals and other customary conditions. Consummation of
the Merger is conditioned on its eligibility for pooling-of-interests accounting
treatment. The transaction is also subject to conversion of the Company's Series
C Cumulative Convertible Preferred Stock into common stock and receipt by Davel
of financing for, and successful consummation of, a cash tender offer for the
Company's 12 1/4% Senior Notes due 2002 (the "Senior Notes"), pursuant to which
a minimum of 85% of the aggregate outstanding principal amount of $100 million
shall have been tendered. Davel plans to refinance the Senior Notes through a
combination of high-yield debt and a new senior credit facility. No assurance
can be given that all of the conditions for the consummation of the proposed
Merger will be satisfied.
As of June 30, 1998, the Company had incurred approximately $0.6 million in
accounting, legal and advisory costs relating to the pending business
combination. These costs have been recorded in other assets on the Company's
Consolidated Balance Sheet and will be recognized in results of operations upon
the consummation of the Merger.
NOTE 9 - DIAL-AROUND COMPENSATION
Effective November 6, 1996, pursuant to FCC regulations, the Company derived
additional revenues from dial-around calls placed from its public payphones.
Under the 1996 Payphone Order, from November 6, 1996 to June 30, 1997, the
Company recorded gross dial-around revenue at the then-mandated rate of $45.85
per
10
<PAGE> 11
PEOPLES TELEPHONE COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998 AND JUNE 30, 1997
(UNAUDITED)
payphone per month, as compared with the flat fee of $6.00 per payphone per
month in place prior to November 6, 1996. Pursuant to the Remand Order, in the
period from July 1 to October 6 of 1997, the Company recorded gross dial-around
compensation revenue at a rate of $37.20 per payphone per month and recorded a
charge of approximately $2.1 million in the third quarter of 1997 for the
retroactive reduction in the dial-around compensation rate from $45.85 to $37.20
per payphone per month, applicable to the November 6, 1996 to June 30, 1997
period.
From October 7, 1997 to October 6, 1999, the Company is entitled to receive
dial-around compensation at a per-call rate of $0.284 based on the actual
number of dial-around calls placed from each of its payphones (or such other
number of calls as may be ultimately permitted by the FCC or the courts).
Thereafter, the dial-around compensation rate is anticipated to be at a per-call
rate equal to the local coin call rate less $0.066. For the period from October
7, 1997 to June 30, 1998, the Company recorded dial-around compensation revenue
using an estimated 131 calls per month per payphone. The Company has based its
compensation on an estimated number of calls (131) per payphone per month
because actual call counts are not available from the IXCs until four to nine
months after the calls are made. From October 7, 1997 forward, the estimated
amount may be adjusted for actual call counts provided by the IXCs.
The FCC, in its Order issued April 3, 1998, left in place the requirement for
payment of per-call compensation for payphones that do not transmit the
requisite payphone-specific coding digits, but gave the IXC's a choice for
computing the amount of compensation for payphones on local exchange carrier
lines not transmitting the payphone-specific coding digits of either accurately
computing per-call compensation from their databases or paying per-phone,
flat-rate compensation computed by multiplying the $0.284 per call rate by the
nationwide average number of 800 and 888 subscriber and access code calls placed
from regional Bell operating company payphones for corresponding payment
periods. Accurate payments made at the flat rate are not subject to subsequent
adjustment for actual call counts from the applicable payphone. Based on the
information available to it, including actual payments from IXCs for the fourth
quarter of 1997, the Company does not believe application of this order will
result in any material adjustment to the dial-around compensation revenues
recorded for the period from October 7, 1997 forward.
On May 15, 1998, the Court again remanded the per-call compensation rate to the
FCC for further explanation without vacating the $0.284 per call rate. The Court
stated that any resulting overpayment would be subject to refund and directed
the FCC to conclude its proceedings within a six-month period from the effective
date of the Court's decision. The Company believes that the FCC will issue its
ruling in the current proceeding within the six-month period established by the
Court. Based on the information available to it, the Company does not believe
that it is reasonably possible that the amount of compensation for dial-around
calls will be materially reduced from the amount recorded as dial-around
compensation. While the amount of $0.284 per call constitutes the Company's
position on the minimum appropriate level of fair compensation, certain IXCs
have challenged this rate level, asserting that the appropriate level of fair
compensation should be lower than $0.284 per call.
11
<PAGE> 12
PEOPLES TELEPHONE COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998 AND JUNE 30, 1997
(UNAUDITED)
NOTE 10 - COMMITMENTS AND CONTINGENCIES
In December 1995, Cellular World filed a complaint in Dade County Circuit Court
against the Company and its subsidiary, PTC Cellular, Inc., alleging wrongful
interference with Cellular World's advantageous business relationship with Alamo
Rent-A-Car, and alleged misappropriation of Cellular World's trade secrets
concerning Cellular World's proprietary cellular car phone rental system
equipment. Cellular World is seeking damages alleged to exceed $10 million. The
Company successfully obtained dismissal of one count of the complaint early in
the proceedings, but the court allowed the remaining two counts to proceed
through discovery. Formal discovery is nearly completed. On July 31, 1998, the
court granted a summary judgment in the Company's favor, dismissing one of the
two remaining counts. Trial has been reset for February 1999. Based on the
discovery conducted to date, the Company continues to believe that it has
several meritorious legal and factual defenses. Based upon the incomplete status
of discovery, the Company is unable to predict the final outcome of the
litigation.
12
<PAGE> 13
Item 2 for the Form 10-Q for the quarter ended June 30, 1998 is amended in its
entirety to read as follows:
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis compares the quarter and six
months ended June 30, 1998 to the quarter and six months ended June 30, 1997 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 Annual Report on
Form 10-K for the year ended December 31, 1997.
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, performance or achievements of
the Company to be materially different from any future results, performance 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 (including the ability of the Company to implement higher
market-based rates for local coin calls as well as competition from alternative
telecommunications services, such as wireless communications), uncertainties
with respect to the implementation and effect of the Telecommunications Act of
1996, including any new rule-making by the Federal Communications Commission
("FCC") or litigation which may seek to modify or overturn the FCC orders
implementing such act or portions thereof, particularly in the area of
Dial-Around Compensation (as defined below), the ongoing ability of the Company
to deploy its public payphones in favorable locations, the Company's ability to
continue to implement operational improvements, the ability of the Company to
efficiently integrate acquisitions of other telephone companies and the
Company's ability to consummate the planned business combination with Davel
Communications Group, Inc. Such factors and others are set forth more fully in
the Company's 1997 Annual Report on Form 10-K and the consolidated financial
statements and notes thereto appearing elsewhere in this Form 10-Q.
OVERVIEW
On January 12, 1998, the Company acquired the operating assets of
Indiana Telcom Corporation ("Indiana Telcom") for approximately $11.3 million in
cash. This transaction added approximately 2,600 public pay telephones, located
primarily in Indiana and adjacent Midwestern states, and was largely financed
with the proceeds from the sale of the Company's inmate division assets in
December 1997.
On July 5, 1998, the Company entered into a definitive merger agreement
with Davel Communications Group, Inc. and Davel Holdings, Inc. (collectively
"Davel"). Under the terms of the agreement, which has been approved by the Board
of Directors of each company, holders of common stock of the Company will
receive 0.235 of a share of Davel common stock for each outstanding share of
Company common stock and the Company will become a wholly owned subsidiary of
Davel (the "Merger").
The transaction, which is intended to close in the fourth quarter of
1998, is subject to the approval of the shareholders of both companies, receipt
of required regulatory approvals and other customary conditions. Consummation of
the Merger is conditioned on its eligibility for pooling-of-interests accounting
treatment. The transaction is also subject to conversion of the Company's Series
C Cumulative Convertible Preferred Stock into common stock and receipt by Davel
of financing for, and successful consummation of, a cash tender offer for the
Company's 12 1/4% Senior Notes due 2002 (the "Senior Notes"), pursuant to which
a minimum of 85% of the aggregate outstanding principal amount of $100 million
shall have been tendered. Davel plans to
13
<PAGE> 14
refinance the Senior Notes through a combination of high yield debt and a senior
credit facility. No assurance can be given that all of the conditions necessary
for the consummation of the proposed Merger will be satisfied.
As of June 30, 1998, the Company had incurred approximately $0.6
million in accounting, legal and advisory costs relating to the pending business
combination. These costs have been recorded in other assets on the Company's
Consolidated Balance Sheet and will be recognized in results of operations upon
the consummation of the Merger.
DIAL-AROUND COMPENSATION
Effective November 6, 1996, pursuant to FCC regulations, the Company
derived additional revenues from access code and 1-800 subscriber, or
dial-around, calls placed from its public payphones. Under the Initial Payphone
Orders, from November 6, 1996 to June 30, 1997, the Company recorded gross
dial-around revenue at the then-mandated rate of $45.85 per payphone per month,
as compared with the flat fee of $6.00 per payphone per month in place prior to
November 6, 1996. Pursuant to the Remand Order, in the period from July 1 to
October 6 of 1997, the Company recorded gross dial-around compensation revenue
at a rate of $37.20 per payphone per month and recorded a charge of
approximately $2.1 million in the third quarter of 1997 for the retroactive
reduction in the dial-around compensation rate from $45.85 to $37.20 per
payphone per month, applicable to the November 6, 1996 to June 30, 1997 period.
(See "Management's Discussion and Analysis of Financial Condition and Results of
Operations" appearing in the Company's 1997 Form 10-K.)
From October 7, 1997 to October 6, 1999, the Company is entitled to
receive dial-around compensation at a per-call rate of $0.284 based on the
actual number of dial-around calls placed from each of its payphones (or such
other number of calls as may be ultimately permitted by the FCC or the courts).
Thereafter, the dial-around compensation rate is anticipated to be at a
per-call rate equal to the local coin call rate less $0.066. For the period from
October 7, 1997 to June 30, 1998, the Company recorded dial-around compensation
revenue using an estimated 131 calls per month per payphone. The Company has
based its compensation on an estimated number of calls per payphone per month
because actual call counts are not provided by the IXCs for as much as nine
months after the calls are made. From October 7, 1997 forward, the estimated
amount may be adjusted for actual call counts provided by the IXCs. For the
period from October 7, 1997 to December 31, 1997, Peoples did not begin to
receive detail call count reporting from the carriers until July 1998. That
reporting is still not complete. AT&T, in particular, has not provided accurate
call count reporting for this period and has therefore agreed to pay Peoples on
all of its payphones at a surrogate flat rate for this period. Until detailed
information is available to support higher estimates, Peoples continues to
accrue dial-around compensation at an estimated 131 call average per payphone
per month based on the FCC's original industry average figures.
The FCC, in its Order issued April 3, 1998, left in place the
requirement for payment of per-call compensation for payphones that do not
transmit the requisite payphone-specific coding digits, but gave the IXCs a
choice for computing the amount of compensation for payphones on LEC lines not
transmitting the payphone-specific coding digits of either accurately computing
per-call compensation from their databases or paying per-phone, flat-rate
compensation computed by multiplying the $0.284 per call rate by the nationwide
average number of 800 and 888 subscriber and access code calls placed from RBOC
payphones for corresponding payment periods. Accurate payments made at the flat
rate are not subject to subsequent adjustment for actual call counts from the
applicable payphone. Based on the information available to it, including actual
payments from IXCs for the fourth quarter of 1997, the Company does not believe
application of this order will result in any material adjustment to the
dial-around compensation revenues recorded for the period from October 7, 1997
forward.
On May 15, 1998, the Court again remanded the per-call compensation
rate to the FCC for further explanation without vacating the $0.284 per call
rate. The Court stated that any resulting overpayment would
14
<PAGE> 15
be subject to refund and directed the FCC to conclude its proceedings within a
six-month period from the effective date of the Court's decision. The Company
believes that the FCC will issue its ruling in the current proceeding within the
six-month period established by the Court. Based on the information available to
it, the Company does not believe that it is reasonably possible that the amount
of compensation for dial-around calls will be materially reduced from the amount
recorded as dial-around compensation. While the amount of $0.284 per call
constitutes the Company's position on the minimum appropriate level of fair
compensation, certain IXCs have challenged this rate level asserting that the
appropriate level of fair compensation should be lower than $0.284 per call.
As part of the non-coin revenue, the Company recorded dial-around
compensation revenue of approximately $3.2 million for the period from November
7, 1996 through December 31, 1996, approximately $17.2 million for the period
from January 1, 1997 through December 31, 1997, and approximately $9.6 million
for the period from January 1, 1998 through June 30, 1998.
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
69.1% and 65.5% of total revenues for the quarters ended June 30, 1998 and 1997,
respectively, and 69.0% and 64.7% of total revenues for the six months ended
June 30, 1998 and 1997, respectively. Coin revenue increased 5.1% to $20.3
million during the quarter ended June 30, 1998, and increased approximately 6.2%
to $39.5 million for the six months ended June 30, 1998, as compared to the same
periods in 1997. The Company's average installed public pay telephone base was
approximately 42,700 phones and 38,600 phones for the six month periods ended
June 30, 1998 and 1997, respectively. Coin revenue on a per phone basis
decreased by 4.8% and 3.8% for the quarter and the six months ended June 30,
1998, respectively, as compared to the same periods in 1997. The decrease in
coin revenue on a per phone basis is primarily attributable to the higher than
expected call suppression resulting from the implementation of higher
market-based local calling rates following local coin rate deregulation. The
Company believes that the magnitude of the call suppression should decrease as
public payphone consumers become accustomed to the market-based local coin
rates, although there can be no assurances that this will occur. The Company
also believes that the decrease is the result of, 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
close proximity to the Company's telephones.
A significant portion of the Company's revenues is derived from
compensation mandated by the FCC under the Telecommunications Act of 1996 for
access code and 1-800 subscriber calls ("Dial-Around Compensation"). In
accordance with the FCC's initial orders thereunder, the Company recorded
Dial-Around Compensation at the rate of $45.85 per pay phone per month (an
assumed 131 calls multiplied by $0.35 per call) during the first and second
quarters of 1997. As a result of court challenges, the FCC modified this rate
during the fourth quarter of 1997 to $0.284 per call for per call compensation
from October 7, 1997 forward. The FCC also tentatively concluded that the same
$0.284 per call rate should govern compensation obligations during the period
from November 7, 1996 through October 6, 1997 and that the allocation method
between long-distance carriers would be determined in a separate order. The
Company recorded the net effect of this rate change as a Provision for
Dial-Around Compensation Adjustment in the third quarter of 1997. For the period
from November 7, 1996 through October 6, 1997, the Company has collected
approximately $10.1 million from carriers for Dial-Around Compensation. At June
30, 1998, the Company's accounts receivable include approximately $6.3 million
of accrued revenue for Dial-Around Compensation from this period which will be
15
<PAGE> 16
billed after final resolution of the allocation obligations of the IXCs as
determined by the FCC. A future order from the FCC to resolve the allocation of
compensation obligations among the carriers is expected during the first six
months of 1999. See "Business - Public Pay Telephone Industry Overview",
"Business - Regulation" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Provision for Dial-Around Compensation
Adjustment" appearing in the Company's Form 10-K for the year ended December 31,
1997 for a more complete discussion.
Non-coin revenue, in addition to Dial-Around Compensation, is derived
from calling card calls, credit card calls, collect calls and third-party billed
calls placed from the Company's public pay telephones. The Company currently
uses AT&T and Sprint to act as its primary national operator service providers.
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.
Effective July 1, 1998, new FCC rules regarding Billed Party Preference
require payphone operators to give payphone users the option of receiving a rate
quote before a call is connected when making a O+ interstate call. These rules
could reduce revenues earned by the Company on long-distance calls placed from
payphones by encouraging more consumers to dial around the OSP utilized by the
Company. The Company cannot currently assess what impact the new rules will have
on its financial performance.
The Company is continuing to experience a shift in call traffic from
operator service 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 Dial-Around 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 FCC's Dial-Around Compensation
orders, these decreases in non-coin revenue are currently being offset to some
extent by changes in the amount of compensation due to the Company for
Dial-Around Compensation.
Non-coin revenue represented approximately 30.9 % and 34.5% of total
revenues for the quarters ended June 30, 1998 and 1997, respectively, and
approximately 31.0% and 35.3% for the six months ended June 30, 1998 and 1997,
respectively. For the quarter ended June 30, 1998, revenues from non-coin calls
decreased 10.8%, to approximately $9.1 million, compared to the quarter ended
June 30, 1997. For the six months ended June 30, 1998 and 1997, non-coin
revenues decreased 12.6%, to approximately $17.7 million from $20.3 million.
These decreases were primarily attributable to the decrease in the rate for
Dial-Around Compensation as noted above. After adjusting for the rate change for
Dial-Around Compensation from $0.35 to $0.284 per call, revenues for the six
months ended June 30, 1997 would have been $2.0 million lower than originally
reported and revenues for the quarter ended June 30, 1997 would have been $1.0
million lower than originally reported. Using these adjusted figures, non-coin
revenues in the first six months of 1998 would have been approximately $0.5
million, or 2.9%, lower than for the first six months of 1997 and non-coin
revenues for the quarter ended June 30, 1998 would have been approximately $0.1
million, or 0.9%, lower than for the quarter ended June 30, 1997, primarily due
to the lower revenue per call received by the Company for dial-around calls
compared to operator service calls.
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
16
<PAGE> 17
transmission charges and network costs and billing, collection and validation
costs. Commissions represent payments to property owners 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 operating expenses were approximately 81.3% and 78.6% of total revenues
for the quarters ended June 30, 1998 and 1997, respectively. For the six months
ended June 30, 1998, total operating expenses were 82.2% of total revenue as
compared to 79.7% for the same period in 1997.
Telephone charges decreased as a percentage of total revenues to 23.4%
for the quarter ended June 30, 1998, compared to 24.9% for the same period in
1997. For the six months ended June 30, 1998 and 1997, telephone charges were
24.7% and 25.6% of total revenues, respectively. 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 for the three months
ended June 30, 1998 increased to approximately 28.8% as compared to 27.1% for
the same period of the prior year. For the six months ended June 30, 1998 and
1997, commissions were approximately 28.4% and 27.1% of total revenues,
respectively. The increase in commissions as a percentage of revenues for the
three months and six months ended June 30, 1998 and 1997 was primarily
attributable to increased commission rates for new and renewed contracts.
Field service and collection expenses as a percentage of total revenues
were 18.7% and 16.7% for the second quarters of 1998 and 1997, respectively, and
18.5% and 16.8% for the six months ended June 30, 1998 and 1997, respectively.
Field service and collection expenses increased as a percent of revenue
primarily as a result of the higher amount recorded for Dial-Around Compensation
revenue in the first six months of 1997, as discussed above. Field service and
collection expenses increased approximately 11.8%, to approximately $5.5 million
for the second quarter of 1998, as compared to the same period in 1997 and
approximately 9.4%, to approximately $10.6 million for the six months ended June
30, 1998, as compared to the same period in 1997, due to the increase in the
average number of phones. Field service and collection expenses on a per phone
basis decreased by approximately 1.0% for the six months ended June 30, 1998 as
compared to the same period in the prior year as a result of certain initiatives
intended to achieve operational efficiencies.
Selling, general and administrative expenses were slightly higher at
approximately $3.1 million and $2.9 million for the second quarter of 1998 and
1997, respectively, and $6.1 million and $5.9 million for the six months ended
June 30, 1998 and 1997, respectively.
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. Amortization is primarily based on acquisition costs
including location contracts, goodwill, non-competition provisions, signing
bonuses and sales commissions which are calculated on a straight-line method
using estimated useful lives ranging from three to twenty years. Depreciation
and amortization increased to $5.6 million for the quarter ended June 30, 1998,
compared to $5.4 million for the same period in 1997. For the six months ended
June 30, 1998 and 1997, depreciation and amortization expense was approximately
$11.1 million and $10.6 million, respectively. These increases are primarily
attributable to additional depreciation and amortization expenses related to the
Indiana Telcom acquisition and to the renewal costs of location contracts.
17
<PAGE> 18
INTEREST EXPENSE
For the second quarter of 1998, net interest expense was approximately
$3.3 million, which was the same as interest expense in the same quarter in
1997. For the first six months of 1998, net interest expense remained consistent
with net interest expense in the same period of 1997, at approximately $6.5
million and $6.6 million, respectively.
BENEFIT FROM INCOME TAXES
The Company currently records 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
$1.3 million and $2.8 million for the three and six months ended June 30, 1998.
NET LOSS
Net loss for the three months ended June 30, 1998 was approximately
$3.4 million as compared to $3.0 million for the second quarter of 1997. After
adjusting for the rate change for Dial-Around Compensation, 1997's second
quarter net loss would have been approximately $0.8 million greater. Using this
adjusted figure for comparison, the net loss for the second quarter of 1998
would have been approximately $0.4 million, or 9.8%, lower than the second
quarter of 1997. For the six months ended June 30, 1998 and 1997, the Company
had net losses of approximately $7.4 million and $6.8 million, respectively.
After adjusting for the rate change for Dial-Around Compensation, 1997's six
month net loss would have been approximately $1.6 million greater. Using this
adjusted figure for comparison, the net loss for the first six months of 1998
would have been approximately $1.1 million, or 12.5%, lower than the first six
months of 1997.
LIQUIDITY AND CAPITAL RESOURCES
During the second quarter of 1998, the Company continued to finance its
operations from current and prior period operating cash flow. For the six months
ended June 30, 1998, the Company's operating cash flow was $(1.1) million
compared to $0.1 million for the same period in 1997, due primarily to a higher
net loss and an increase in other assets related to costs incurred in connection
with the Merger. Accounts receivable, primarily due from carriers for
Dial-Around Compensation, increased during the six months ended June 30, 1998,
primarily due to payment delays as carriers implemented new payment systems for
per-call compensation under the FCC's Dial-Around Compensation orders.
Subsequent to June 30, the Company has received approximately $6.1 million in
Dial-Around Compensation payments from various carriers with respect to fourth
quarter 1997 and first quarter 1998 obligations. The allowance for doubtful
accounts decreased by approximately $0.2 million, primarily as a result of the
write-off of a portion of uncollectible inmate division accounts, offset
somewhat by an increase in the allowance for uncollectible Dial-Around
Compensation receivables.
The Company's net working capital was approximately ($0.6) million,
with a current ratio of 0.98 to 1.0, at June 30, 1998. This compares with a net
working capital of $11.0 million at December 31, 1997. The Company used $11.3
million of cash in January, 1998 to acquire the assets of Indiana Telcom.
Under terms of the Company's Series C Cumulative Convertible Preferred
Stock Agreement, the Preferred Stock cumulates dividends at an annual rate of
7%. The dividends are payable in cash, or, at the Company's option during the
first three years, will cumulate. The Company's Indenture Agreement for its
Senior Notes due 2002 allows cash payment of these dividends only in the event
that the Company's fixed charge coverage ratio exceeds a certain value. As of
June 30, 1998, the fixed charge coverage ratio did not
18
<PAGE> 19
exceed that value. As a result, and as permitted under the Preferred Stock
Agreement, these dividends will continue to cumulate, until the Company's fixed
charge coverage ratio exceeds that value.
During June, 1998, the Company executed an amendment to the Fourth
Amended and Restated Loan and Security Agreement modifying certain financial
covenants. At June 30, 1998, the Company was in compliance with the amended
covenants and had no amounts borrowed under this $20 million credit facility.
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 through December 31, 1999, 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
collectibility of amounts owed for Dial-Around Compensation and the ongoing
ability of the Company to deploy its phones in favorable locations and to
continue to implement operational improvements.
IMPACT OF YEAR 2000
The Year 2000 Issue is the result of computer programs using two digits
rather than four to define the applicable year. Any of the Company's computer
programs that have time-sensitive software may recognize a date using "00" as
the year 1900 rather than the year 2000. This could result in a system failure,
disruption of operations, and/or a temporary inability to conduct normal
business activities.
The Company's Year 2000 project is broken into seven major
sub-projects, including: 1) Telecommunications Equipment, 2) Computer Equipment,
3) Software, 4) Databases, 5) Data Services, 6) Network Infrastructure, and 7)
Telephone Equipment. Each sub-project is divided into 4 phases: a)
Analysis/Assessment, b) Plan Development, c) Implementation, and d) Testing. As
each phase and sub-project is completed, project progress will be tracked
against planned targets, and resource adjustments made as necessary. Two
subprojects, Telecommunications Equipment and Software, began in the third
quarter of 1998. The remaining sub-projects will all be underway by the fourth
quarter of 1998. The project is estimated to be complete by August of 1999,
which is prior to any anticipated impact on the Company's operating systems. The
Company believes that, with modifications to existing software, conversions to
new software and replacement or modification of certain embedded systems, the
Year 2000 issue will not pose significant operational problems. However, if such
modifications and conversions are not made, or are not completed on a timely
basis, the Year 2000 issue would have a material adverse impact on the Company's
business, financial condition and results of operations. In addition, formal
communications with all significant suppliers and customers have been initiated
to determine the extent to which related interfaces with the Company's systems
are vulnerable if these third parties fail to remediate their own Year 2000
issues. There can be no assurance that these third parties' systems will be
converted on a timely basis and will not adversely affect the Company's systems.
The Company has completed the initial assessment of the Year 2000 issue
with respect to internal business systems, and believes that it has secured
sufficient resources to implement new and modified computer systems to address
the issue. As a result, the Company has not identified a need for contingency
planning with respect to those systems at this time. The assessment of embedded
systems is nearing completion and, due to the manageable quantity of embedded
devices encountered in the Company's facilities, the Company does not believe
that findings in the assessment warrant contingency planning at this time. The
assessment of third parties external to the Company is underway, and may reveal
the need for contingency planning based on the progress and findings of the Year
2000 project.
19
<PAGE> 20
The Company will utilize both internal and external resources to
complete and test the Year 2000 project. At the present time, the total
estimated cost of this project is in a range of $0.5 million to $1.0 million and
is being funded through operating cash flows. Approximately 20% of the total
will relate to purchased software and hardware and will be capitalized. The
remainder will be expensed as incurred. Through June 30, 1998, related costs
incurred were not material. Project costs and the targeted completion date are
based on management's best estimates, which were derived utilizing numerous
assumptions of future events, including the continued availability of certain
resources, the ability to locate and correct all relevant computer codes, third
party modification plans and other factors. There can be no assurance these
estimates will be achieved or that the actual results will not differ materially
from those anticipated.
20
<PAGE> 21
Part II, Item 6 of the Form 10-Q for the quarter ended June 30, 1998 is hereby
amended in its entirety to read as follows:
21
<PAGE> 22
PART II OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS:
EXHIBIT DESCRIPTION
- ------- -----------
27 Financial Data Schedule
(B) REPORTS ON FORM 8-K:
None
22
<PAGE> 23
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: November 6, 1998 /s/ WILLIAM A. BAUM
---------------------------------
William A. Baum
On behalf of the registrant and as
Chief Financial Officer
23
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000819694
<NAME> PEOPLES TELEPHONE COMPANY, INC.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 6,223,000
<SECURITIES> 0
<RECEIVABLES> 27,511,000
<ALLOWANCES> (4,744,000)
<INVENTORY> 0
<CURRENT-ASSETS> 32,144,000
<PP&E> 135,388,000
<DEPRECIATION> (84,019,000)
<TOTAL-ASSETS> 124,357,000
<CURRENT-LIABILITIES> 32,703,000
<BONDS> 100,000,000
0
17,222,000
<COMMON> 162,000
<OTHER-SE> (26,515,000)
<TOTAL-LIABILITY-AND-EQUITY> 124,357,000
<SALES> 57,248,000
<TOTAL-REVENUES> 57,248,000
<CGS> 47,065,000
<TOTAL-COSTS> 58,167,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,495,000
<INCOME-PRETAX> (7,414,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (7,414,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,414,000)
<EPS-PRIMARY> (0.52)
<EPS-DILUTED> (0.52)
</TABLE>
