<PAGE> 1
UNITED STATES
Securities and Exchange Commission
Washington, D.C. 20549
Form 8-K/A-1
Current Report
0-16715
-----------------
Commission File Number
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
September 22, 1995
---------------------------------
Date of Report
(Date of Earliest Event Reported)
PHONETEL TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Ohio 34-1462198
---------------------- ------------------------
(State of Incorporation) (I.R.S. Identification No.)
1127 Euclid Avenue
650 Statler Office Tower
Cleveland, Ohio 44115-1601
---------------------------
Address and zip code of principal executive offices
(216) 241-2555
--------------------
Registrant's telephone number
<PAGE> 2
PART I
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
The attached pro forma financial information amends in entirety the previously
filed pro forma financial statements that were included with Form 8-K/A. This
amendment was necessary due to the discovery of a transposition error.
Additionally, included with this filing, are interim period financial
statements for World Communications, Inc. that had been omitted from Form 8-K.
Exhibits
(a) Financial Statements of Business Acquired:
1. World Communications, Inc. - Unaudited Consolidated Balance Sheet at
June 30, 1995.
2. World Communications, Inc. - Unaudited Consolidated Statements of
Income for the Six Months ended June 30, 1995 and 1994 and the Three
Months ended June 30, 1995 and 1994.
3. World Communications, Inc. - Unaudited Consolidated Statements of
Cash Flows for the Six Months Ended June 30, 1995 and 1994.
4. World Communications, Inc. Unaudited Notes to the Financial
Statements for the period ended June 30, 1995.
(b) Pro Forma Financial Information:
1. World Communications, Inc. and PhoneTel Technologies, Inc.
Unaudited Pro Forma Combined Condensed Balance Sheet at
June 30, 1995.
2. World Communications, Inc. and PhoneTel Technologies, Inc.
Unaudited Pro Forma Combined Condensed Income Statements for the
Year Ended December 31, 1994, and Six Months Ended June 30, 1995.
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
PHONETEL TECHNOLOGIES, INC.
(Registrant)
Date: December 28, 1995 /s/ Daniel J. Moos
------------------------
Daniel J. Moos
Executive Vice President
Treasurer and
Chief Financial Officer
<PAGE> 4
EXHIBIT (a)
<PAGE> 5
EXHIBIT (a) 1
WORLD COMMUNICATIONS, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31
June 30, 1995 1994
------------- -----------
(Unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash $193,430 $184,112
Accounts receivable, less allowance for doubtful accounts
of $45,900 and $46,500, respectively 705,603 486,073
Prepaid expenses 99,006 93,969
Other current assets 3,029
----------- -----------
Total current assets 998,039 767,183
----------- -----------
Operating Equipment
Telecommunication equipment 6,086,267 5,344,296
Telephone equipment held for installation 230,311 225,151
----------- -----------
6,316,578 5,569,447
Less accumulated depreciation and amortization (2,393,319) (2,015,225)
----------- -----------
Net operating equipment 3,923,259 3,554,222
----------- -----------
Leasehold improvements, equipment, furniture and fixtures
net of accumulated depreciation and amortization of
$175,125 and $131,954, respectively 384,039 284,358
Intangible assets
Site license contracts, net 1,167,368 534,375
Agreements not to compete, net 308,269 294,167
----------- -----------
1,475,637 828,542
Other assets 266,418 228,701
----------- -----------
Total Assets $7,047,392 $5,663,006
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $845,960 $495,492
Accrued expenses 306,214 445,305
Current maturities of long-term debt, notes payable
and obligations under capital leases 768,905 1,029,342
----------- -----------
Total current liabilities 1,921,079 1,970,139
Deferred revenue, less current maturities 27,226 7,562
Long-term debt, less current maturities
Notes payable and obligations under capital leases 3,746,014 2,388,488
Notes payable to stockholders 625,000 50,000
Subordinated convertible debentures 1,140,000 1,140,000
----------- -----------
Total liabilities 7,459,319 5,556,189
----------- -----------
Stockholders' equity:
Common stock 2,699 2,699
Additional paid-in capital 476,951 476,951
Accumulated deficit (891,577) (372,833)
----------- -----------
Total stockholders' equity (411,927) 106,817
----------- -----------
$7,047,392 $5,663,006
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 6
EXHIBIT (a) 2
WORLD COMMUNICATIONS, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Six Months Six Months Three Months Three Months
ended ended ended ended
June 30, 1995 June 30, 1994 June 30, 1995 June 30, 1994
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues
Coin calls $1,809,623 $1,246,903 $1,000,418 $ 722,855
Non-coin calls 2,342,687 2,262,051 1,291,550 1,262,820
other 40,858 54,155 18,709 26,709
------------- ------------- ------------- -------------
4,193,168 3,563,109 2,310,677 2,012,384
------------- ------------- ------------- -------------
Cost of revenues
Line access charges 1,776,079 1,671,415 907,038 904,606
Commissions 554,191 506,380 296,482 279,682
Service and collection 674,005 377,966 352,138 175,792
Depreciation and amortization 582,489 349,669 291,425 170,537
------------- ------------- ------------- -------------
3,586,764 2,905,430 1,847,083 1,530,617
------------- ------------- ------------- -------------
Gross Profit 606,404 657,679 463,594 481,767
Selling, general and administrative
expenses 813,824 643,142 423,576 332,934
------------- ------------- ------------- -------------
Operating income (loss) (207,420) 14,537 40,018 148,833
------------- ------------- ------------- -------------
Other income (expense)
Interest expense (315,109) (140,742) (162,711) (73,915)
Gain on sale of assets 0 56,033 (750) 21,848
Other income 3,786 6,063 2,287 523
------------- ------------- ------------- -------------
Total other income (expense) (311,323) (78,646) (161,174) (51,544)
------------- ------------- ------------- -------------
Income (loss) before taxes on income (518,743) (64,109) (121,156) 97,289
Taxes on income
------------- ------------- ------------- -------------
Net income (loss) ($518,743) ($64,109) ($121,156) ($97,289)
============= ============= ============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 7
EXHIBIT (a) 3
WORLD COMMUNICATIONS, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Six Months
ended ended
June 30, 1995 June 30, 1994
------------- -------------
<S> <C> <C>
Operating activities
Net loss ($518,743) ($64,109)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization 582,489 349,669
Gain on sale of property and equipment (55,962)
Deferred income (20,641) (20,848)
Changes in assets and liabilities:
Accounts receivable (219,539) (35,289)
Prepaid and other current assets (2,008) (45,584)
Accounts payable and accrued expenses 239,371 26,716
Other 16,809
------------- -------------
Cash provided by operating activities 60,929 171,402
------------- -------------
Investing activities:
Purchase of fixed assets (881,143) (559,939)
Proceeds from sale of assets 155,324
Increase (decrease) in other assets (842,557) (93,995)
------------- -------------
Cash flows used in investing activities (1,723,700) (498,610)
------------- -------------
Financing Activities
Proceeds from banks, capital leases, stockholders and
related parties 2,129,705 808,758
Principal payments on debt (457,616) (521,560)
------------- -------------
Cash provided by financing activities 1,672,089 287,198
------------- -------------
Net increase (decrease) in cash 9,318 (40,010)
Cash, beginning of period 184,112 186,894
------------- -------------
Cash, end of period $193,430 $146,884
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 8
EXHIBIT a (4)
WORLD COMMUNICATIONS, INC.
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Basis of Presentation
The accompanying audited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial
information. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring adjustments) considered necessary for a fair
presentation have been included. For further information, refer to the
Financial Statements and Notes thereto included in the Company's Consolidated
Financial Statements with Supplemental Material for the Years Ended December
31, 1994 and 1993.
Note 2 - Acquisitions
On February 9, 1995, World Communications, Inc. ("Company") acquired
substantially all the assets of Acuquik Pay Phones, Inc. for a purchase price
of approximately $275,000 for 94 installed phones with $162,200 allocated to
intangibles. On April 13, 1995, the Company acquired 8 installed phones from
On Line Company for a purchase price of approximately $17,500 with $7,900
allocated to intangibles. On April 29, 1995, the Company acquired 38 installed
phones from Florida Public Phones for a purchase price of approximately
$189,500 with $143,900 allocated to intangibles. On May 17, 1995, the Company
acquired 31 installed phones from Public Payphones, Inc. for a purchase price
of approximately $40,000 with $2,800 allocated to intangibles. On May 31,
1995, the Company acquired 131 installed phones from Telepath Inc. for a
purchase price of approximately $599,000 with $441,800 allocated to
intangibles.
<PAGE> 9
EXHIBIT (b)
<PAGE> 10
EXHIBIT (b)
PHONETEL TECHNOLOGIES, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED
FINANCIAL INFORMATION
The following unaudited pro forma combined condensed financial information
gives effect to the acquisition of all the outstanding shares of common stock
of World Communications, Inc. ("WCI") in exchange for 2,415,001 shares of
common stock of PhoneTel Technologies, Inc. ("PhoneTel") and 530,534 shares of
preferred stock of PhoneTel. The acquisition of WCI is being accounted for as
a purchase and, therefore, is included in the Unaudited Pro Forma Combined
Condensed Balance Sheet as if the transaction had occurred on June 30, 1995 and
in the Unaudited Pro Forma Combined Condensed Statements of Income as if the
transaction had occurred at the beginning of each of the periods presented
giving effect to the pro forma adjustments described therein.
The unaudited combined condensed pro forma information presented herein may not
be indicative of the results that actually would have occurred if the merger
had occurred on the date indicated, or which may be obtained in the future.
The unaudited pro forma combined financial information should be read in
conjunction with the historical financial statements of PhoneTel and WCI.
<PAGE> 11
EXHIBIT (b) 1
PHONETEL TECHNOLOGIES, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
<TABLE>
<CAPTION>
PhoneTel at WCI at Pro forma Pro forma
June 30, 1995 June 30, 1995 Adjustments Combined
------------ ------------ ----------- -------------
ASSETS
- ------
<S> <C> <C> <C> <C>
Cash $357,657 $193,430 $551,087
Accounts receivable, net 795,499 705,603 1,501,102
Inventories 516,086 230,311 746,397
Prepaid expenses 69,902 99,006 168,908
Property and equipment, net 4,778,515 4,076,987 $3,027,052 (1) 11,882,554
Intangibles, net 2,229,173 1,167,368 5,407,091 (1) 8,803,632
Other assets, net 960,042 574,687 1,534,729
------------ ------------ ----------- -------------
Total Assets $9,706,874 $7,047,392 $8,434,143 $25,188,409
============ ============ =========== =============
LIABILITIES AND
- ---------------
STOCKHOLDERS' EQUITY
- --------------------
Current portion long-term
debt and leases $1,768,727 $768,905 $2,537,632
Accounts payable 3,089,367 845,960 3,935,327
Accrued liabilities 762,945 333,440 1,096,385
Subordinated convertible
debentures and shareholder debt 1,765,000 1,765,000
Long-term debt and capital
lease obligations 2,055,440 3,746,014 5,801,454
------------ ------------ ----------- -------------
Total liablilities 7,676,479 7,459,319 0 15,135,798
------------ ------------ ----------- -------------
Preferred stock, 7% cumulative
convertible redeemable 200,000 200,000
Preferred stock, 8% cumulative
convertible redeemable 981,084 981,084
Preferred stock, 10% cumulative
convertible redeemable 1 1
Preferred stock, 10% nonvoting $5,305,340 (1) 5,305,340
Common stock 103,914 2,699 21,451 (1) 128,064
Additional paid in capital 9,502,575 476,951 2,215,775 (1) 12,195,301
Accumulated deficit (8,757,179) (891,577) 891,577 (1) (8,757,179)
------------ ------------ ----------- -------------
Total stockholders' equity 2,030,395 (411,927) 8,434,143 10,052,611
------------ ------------ ----------- -------------
Total liabilities and
stockholders' equity $9,706,874 $7,047,392 $8,434,143 $25,188,409
============ ============ =========== =============
</TABLE>
The accompanying notes are an integral part of this pro forma statement.
<PAGE> 12
EXHIBIT (b) 2
PHONETEL TECHNOLOGIES, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED INCOME STATEMENT
<TABLE>
<CAPTION>
PhoneTel for WCI for
the year ended the year ended Pro forma Pro forma
Dec 31, 1994 Dec 31, 1994 Adjustments Combined
-------------- --------------- ----------- ----------
<S> <C> <C> <C> <C>
Net revenues $15,866,087 $7,534,916 $23,401,003
Costs and Expenses:
Operating expenses 12,112,371 4,990,831 ($800,000)(2) 16,303,202
Depreciation and amortization 2,236,269 570,038 2,407,774 (3) 5,214,081
Selling, general and administrative 2,831,775 1,583,076 (500,000)(2) 3,914,851
----------- ------------ ------------ -----------
17,180,415 7,143,945 1,107,774 25,432,134
----------- ------------ ------------ -----------
Income (loss) from operations (1,314,328) 390,971 (1,107,774) (2,031,131)
Other income/(expense) (380,794) (271,887) (652,681)
----------- ------------ ------------ -----------
Income (loss) before taxes (1,695,122) 119,084 (1,107,774) (2,683,812)
Income tax provision
----------- ------------ ------------ -----------
Net income (loss) (1,695,122) 119,084 (1,107,774) (2,683,812)
Preferred stock dividend 291,980 530,534 (4) 822,514
----------- ------------ ------------ -----------
Income (loss) applicable to
common stock ($1,987,102) $119,084 ($1,638,308) ($3,506,326)
=========== ============ ============ ===========
Loss per common share ($0.23) ($0.31)
=========== ============
Weighted average number of
shares outstanding 8,822,914 2,415,001 11,237,915
=========== ============ ============ ===========
</TABLE>
The accompanying notes are an integral part of this pro forma statement.
<PAGE> 13
PHONETEL TECHNOLOGIES, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED INCOME STATEMENT
<TABLE>
<CAPTION>
PhoneTel for WCI for
six months six months
ended ended Pro forma Pro forma
June 30, 1995 June 30, 1995 Adjustments Combined
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
Net revenues $7,878,062 $4,193,168 $12,071,230
Costs and Expenses:
Operating expenses 6,150,685 3,004,275 ($400,000)(2) 8,754,960
Depreciation and amortization 1,432,491 582,489 1,203,887 (3) 3,218,867
Selling, general and administrative 1,494,244 813,824 (250,000)(2) 2,058,068
------------ ------------ ----------- -----------
9,077,420 4,400,588 553,887 14,031,895
------------ ------------ ----------- -----------
Loss from operations (1,199,358) (207,420) (553,887) (1,960,665)
Other income/(expense) (213,642) (311,323) (524,965)
------------ ------------ ----------- -----------
Loss before taxes (1,413,000) (518,743) (553,887) (2,485,630)
Income tax provision
------------ ------------ ----------- -----------
Net loss (1,413,000) (518,743) (553,887) (2,485,630)
Preferred stock dividend 154,834 265,267 (4) 420,101
------------ ------------ ----------- -----------
Loss applicable to common stock ($1,567,834) ($518,743) ($819,154) ($2,905,731)
============ ============ =========== ===========
Loss per common share ($0.16) ($0.24)
============ ============
Weighted average number of
shares outstanding 9,516,845 2,415,001 11,931,846
============ ============ ===========
</TABLE>
The accompanying notes are an integral part of this pro forma statement.
<PAGE> 14
PHONETEL TECHNOLOGIES, INC.
PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
FOOTNOTES TO FINANCIAL INFORMATION
(1) Represents the issuance of 2,415,001 shares of PhoneTel's common stock,
$.01 par value, at an assumed price of $1.125 per share and the issuance
of 530,534 shares of PhoneTel's 10% cumulative, nonvoting preferred stock,
$10 stated value per share in exchange for all of the outstanding common
stock of WCI. In conjunction with the merger, property and equipment was
written up by $3,027,052 to its estimated fair value and $5,407,091 was
recorded relating to the value of WCI's existing phone contracts. As
required by purchase accounting, the accumulated deficit of WCI prior to
the merger was eliminated.
(2) Represents the estimated recurring benefits as a result of the merger of
WCI into PhoneTel. The savings are primarily the result of backroom
efficiencies, including the elimination of substantially all
administrative personnel at WCI and economies of scale in billing and
other operating areas.
(3) Represents the incremental depreciation and amortization associated with
the merger. The increase in property and equipment is assumed to
depreciate over 60 months while the intangible asset relating to WCI's
existing phone contracts is being amortized over 36 months.
(4) Represents the preferred dividend on the 10% cumulative, nonvoting
preferred stock, $10 stated value, issued to the existing stockholders of
WCI in connection with the merger.
