<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB/A-1
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996
--------------
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
FOR THE TRANSITION PERIOD FROM TO .
--- ---
COMMISSION FILE NUMBER 0-16715
PhoneTel Technologies, Inc.
-----------------------------------------------------------
(NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)
OHIO 34-1462198
- ------------------------------- ------------------------------------
(STATE OF OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
1127 EUCLID AVENUE, SUITE 650, STATLER OFFICE TOWER 44115-1601
- ------------------------------------------------------ ------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(216) 241-2555
------------------------------------------------
(ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for past 90 days. Yes [ X ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: AS OF SEPTEMBER 20, 1996, 7,639,709
SHARES OF THE REGISTRANT'S COMMON STOCK $.01 PAR VALUE, WERE OUTSTANDING.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [ X ]
page 1 of 22 pages
<PAGE> 2
PHONETEL TECHNOLOGIES, INC. AND SUBSIDIARIES
FORM 10-QSB/A-1
QUARTER ENDED MARCH 31, 1996
INDEX
<TABLE>
<CAPTION>
PAGE NO.
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of December 31, 1995
and March 31, 1996 ............................................................3
Statements of Consolidated Operations for the Three
Months Ended March 31, 1995 and 1996 ..........................................4
Statements of Consolidated Cash Flows for the Three
Months Ended March 31, 1995 and 1996 ..........................................5
Statements of Changes in Mandatorily Redeemable Preferred
Stock and Non-Mandatorily Redeemable Preferred Stock,
Common Stock and Other Shareholders' Equity .....................................6
Notes to Consolidated Financial Statements ......................................8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations ...............................15
PART II. OTHER INFORMATION
Item 2. Changes in Securities ..........................................................19
Item 6. Exhibits and Reports on Form 8-K ...............................................20
Signatures ....................................................................22
</TABLE>
page 2 of 22 pages
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PHONETEL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
- -------------------------------------------------------------------------------
(Unaudited)
December 31 March 31
1995 1996
------------------ ------------------
<S> <C> <C>
ASSETS
Current assets:
Cash $713,462 $2,009,666
Accounts receivable, net of allowance for doubtful
of $40,000 and $100,961, respectively 901,508 1,311,272
Other current assets 185,634 292,618
------------------ ------------------
Total current assets 1,800,604 3,613,556
Property and equipment, net 14,099,111 23,543,118
Intangible assets, net 11,592,157 24,608,064
Other assets 1,425,384 523,522
------------------ ------------------
$28,917,256 $52,288,260
================== ==================
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt - related parties - $1,830,954
Current portion of long-term debt - others $1,010,412 1,829,665
Current portion of obligation under capital leases 288,972 75,503
Accounts payable 2,772,306 2,078,426
Accrued expenses 1,610,100 2,414,006
Deferred revenues - 1,200,000
Obligations relating to contractual settlements
and other unusual charges 962,338 163,810
------------------ ------------------
Total current liabilities 6,644,128 9,592,364
Long-term debt - related parties (amounts due at
maturity $1,732,500 and $29,000,000, respectively) 1,732,500 22,668,644
Long-term debt - others 7,586,001 260,289
Obligations under capital leases 3,243,965 179,808
14% cumulative preferred stock mandatorily redeemable
(redemption amount $6,514,939, due June 30, 2000) - 6,296,737
Non-mandatorily redeemable preferred stock,
common stock and other shareholders' equity 9,710,662 13,290,418
------------------ ------------------
$28,917,256 $52,288,260
================== ==================
</TABLE>
The accompanying notes are an integral part of these financial statements.
page 3 of 22 pages
<PAGE> 4
PHONETEL TECHNOLOGIES, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
STATEMENTS OF CONSOLIDATED OPERATIONS
- -------------------------------------------------------------------------------
(Unaudited)
Three Months Ended March 31
1995 1996
------------------ ------------------
<S> <C> <C>
REVENUES:
Coin calls $2,331,105 $4,451,795
Non-coin 1,301,288 1,908,882
Other 140,922 245,927
------------------ ------------------
3,773,315 6,606,604
------------------ ------------------
OPERATING EXPENSES:
Line and transmission charges 813,343 1,605,369
Location commissions 629,700 1,159,467
Other operating expenses 1,550,217 2,140,596
Depreciation and amortization 700,900 2,085,268
Selling, general and administrative 577,493 1,103,683
Contractual settlements and other unusual charges - 4,803,365
------------------ ------------------
4,271,653 12,897,748
------------------ ------------------
Loss from operations (498,338) (6,291,144)
OTHER INCOME (EXPENSE):
Interest expense - related parties - (279,716)
Interest expense - others (102,741) (224,121)
------------------ ------------------
(102,741) (503,837)
------------------ ------------------
Loss before extraordinary item (601,079) (6,794,981)
Extraordinary item:
Loss on debt restructuring - (176,710)
------------------ ------------------
NET LOSS ($601,079) ($6,971,691)
================== ==================
Earnings per share calculation:
Preferred dividend requirement payable in cash (77,417) -
Preferred dividend requirement paid in kind - (27,250)
Premium on redemption of 10% Preferred,
8% Preferred and 7% Preferred - (2,002,386)
------------------ ------------------
Net loss applicable to common shareholders ($678,496) ($9,001,327)
================== ==================
Net loss per common share before extraordinary item ($0.45) ($2.99)
================== ==================
Net loss per common share ($0.45) ($3.05)
================== ==================
Weighted average number of shares 1,523,537 2,955,894
================== ==================
</TABLE>
The accompanying notes are an integral part of these financial statements.
page 4 of 22 pages
<PAGE> 5
PHONETEL TECHNOLOGIES, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
STATEMENTS OF CONSOLIDATED CASH FLOWS
- -------------------------------------------------------------------------------
(Unaudited)
Three Months Ended March 31
1995 1996
------------------ ------------------
<S> <C> <C>
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Net loss ($601,079) ($6,971,691)
Adjustments to reconcile net loss to net
cash flow from operating activities:
Depreciation and amortization 700,900 2,085,268
Issuance of Nominal Value Warrants - 3,886,140
Stock issued in lieu of cash payments 5,000 20,620
Accretion of related party debt - 80,144
Accretion of other debt 45,921
Extraordinary loss on debt restructuring - 247,974
Increase in allowance for doubtful accounts - 60,961
Changes in assets and liabilities:
Accounts receivable (167,979) (325,125)
Other current assets 86,996 (106,984)
Accounts payable 240,953 (573,880)
Accrued expenses 34,659 686,406
Obligations relating to contractual
settlements and other unusual charges - (798,528)
------------------ ------------------
299,450 (1,662,774)
------------------ ------------------
CASH FLOWS USED IN INVESTING ACTIVITIES:
Acquisition of International Pay Phones, Inc. - (4,687,353)
Acquisition of Paramount Communications Systems - (9,691,500)
Deposits on pending acquisitions - (300,000)
Deferred revenues - signing bonus - 1,200,000
Purchases of intangible assets (60,681) (127,570)
Change in other assets (22,204) 276,862
Purchases of property and equipment (175,089) (323,068)
------------------ ------------------
(257,974) (13,652,629)
------------------ ------------------
CASH FLOWS (USED IN) PROVIDED BY FINANCING ACTIVITIES:
Proceeds from related party debt - 30,530,954
Proceeds from shareholder debt - 550,000
Principal payments on borrowings (497,944) (9,886,029)
Proceeds from issuance of preferred and
common stock and other 90,000 -
Debt financing costs - (3,465,947)
Redemption of 10% Preferred and 8% Preferred - (1,117,371)
Equity financing costs (52,935) -
Proceeds from warrant and option exercises 20,000 -
------------------ ------------------
(440,879) 16,611,607
------------------ ------------------
(Decrease) increase in cash (399,403) 1,296,204
Cash at beginning of period 478,756 713,462
------------------ ------------------
Cash at end of period $79,353 $2,009,666
================== ==================
</TABLE>
The accompanying notes are an integral part of these financial statements.
page 5 of 22 pages
<PAGE> 6
PHONETEL TECHNOLOGIES, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN MANDATORILY REDEEMABLE PREFERRED STOCK AND
NON-MANDATORILY REDEEMABLE PREFERRED, COMMON STOCK AND
OTHER SHAREHOLDERS' EQUITY
- -------------------------------------------------------------------------------
(Unaudited)
Year Ended December 31 Three Months Ended March 31
1995 1996
---------------------------------------------------------------------
Shares Amount Shares Amount
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
MANDATORILY REDEEMABLE PREFERRED STOCK
14 % CUMULATIVE REDEEMABLE
CONVERTIBLE PREFERRED STOCK
Balance at beginning of year - - - -
Redemption of 7% Preferred - - 3,625.00 $217,500
Redemption of 8% Preferred - - 14,143.33 848,600
Redemption of 10% Preferred - - 16,668.00 1,000,000
Conversion of debt - - 59,695.39 3,581,723
Acquisition of Paramount Communications - - 8,333.33 375,768
Acquisition of International Pay Phones - - 5,453.14 245,896
Dividends payable-in-kind - - 664.13 27,250
TOTAL MANDATORILY REDEEMABLE
================ ================ ================ ================
PREFERRED STOCK - - 108,582.32 $6,296,737
================ ================ ================ ================
NON-MANDATORILY REDEEMABLE PREFERRED
STOCK, COMMON STOCK AND
OTHER SHAREHOLDERS' EQUITY
7 % CUMULATIVE CONVERTIBLE
REDEEMABLE PREFERRED STOCK
Balance at beginning of year 2,500 $200,000 2,500 $200,000
Redemption of 7% Preferred - - (2,500) (200,000)
---------------- ---------------- ---------------- ----------------
Balance at end of period 2,500 $200,000 - -
================ ---------------- ================ ----------------
8 % CUMULATIVE REDEEMABLE
PREFERRED STOCK
Balance at beginning of year 12,200 $981,084 12,200 $981,084
Redemption of 8% Preferred - - (12,200) (981,084)
---------------- ---------------- ---------------- ----------------
Balance at end of period 12,200 $981,084 - -
================ ---------------- ================ ----------------
10 % CUMULATIVE REDEEMABLE
PREFERRED STOCK
Balance at beginning of year 1,496 $1 1,496 $1
Redemption of 10% Preferred - - (1,496) (1)
---------------- ---------------- ---------------- ----------------
Balance at end of period 1,496 $1 - -
================ ---------------- ================ ----------------
10 % CUMULATIVE NON-VOTING
REDEEMABLE PREFERRED STOCK
Balance at beginning of year - - 530,534 $5,305,340
Acquisition of World Communications, Inc. 530,534 $5,305,340 - -
---------------- ---------------- ---------------- ----------------
Balance at end of period 530,534 $5,305,340 530,534 $5,305,340
================ ================ ================ ================
SERIES A SPECIAL CONVERTIBLE
PREFERRED STOCK
Balance at beginning of year - - - -
---------------- ---------------- ---------------- ----------------
Balance at end of period - - - -
================ ---------------- ================ ----------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 6 of 22 pages
<PAGE> 7
PHONETEL TECHNOLOGIES, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN MANDATORILY REDEEMABLE PREFERRED STOCK AND
NON-MANDATORILY REDEEMABLE PREFERRED, COMMON STOCK AND
OTHER SHAREHOLDERS' EQUITY
- -------------------------------------------------------------------------------
(Unaudited)
Year Ended December 31 Three Months Ended March 31
1995 1996
---------------------------------------------------------------------
Shares Amount Shares Amount
---------------- ---------------- ---------------- ----------------
(CONTINUED)
<S> <C> <C> <C> <C>
SERIES B SPECIAL CONVERTIBLE
PREFERRED STOCK
Balance at beginning of year - - - -
---------------- ---------------- ---------------- ----------------
Balance at end of period - - - -
================ ---------------- ================ ----------------
COMMON STOCK
Balance at beginning of year 1,522,158 $15,222 2,855,350 $28,554
Issuance of stock for services 91,383 914 4,400 44
Private sales of stock 472,056 4,720 - -
Exercise of warrants and options 8,333 83 - -
Acquisition of World Communications, Inc. 402,500 4,025 - -
Conversion of debt to equity 30,231 303 - -
Acquisition of Public Telephone Corporation 304,879 3,049 - -
Acquisition escrow deposits 23,810 238 (23,810) (238)
Acquisition of International Pay Phones - - 555,589 5,555
---------------- ---------------- ---------------- ----------------
Balance at end of period 2,855,350 $28,554 3,391,529 $33,915
================ ---------------- ================ ----------------
ADDITIONAL PAID-IN CAPITAL
Balance at beginning of year $8,755,364 $16,649,559
Issuance of stock for services 528,532 20,576
Private sales of stock 2,010,067 -
Exercise of warrants and options 34,917 -
Acquisition of World Communications, Inc. 2,712,852 -
Conversion of debt to equity 137,375 -
Acquisition of Public Telephone Corporation 2,054,902 -
Acquisition escrow deposits 149,762 (149,762)
Financing costs (83,212) -
Acquisition of International Pay Phones - 2,790,042
Acquisition of Paramount Communications - 443,510
Warrants issued with debt 349,000 6,411,500
Issuance of Nominal Value Warrants - 4,240,941
---------------- ----------------
Balance at end of period $16,649,559 $30,406,366
---------------- ----------------
ACCUMULATED DEFICIT
Balance at beginning of year ($7,303,804) ($13,453,876)
Net loss for the period (6,109,697) (6,971,691)
Dividends paid on 7% and 8% Preferred (40,375) -
14% Preferred dividend payable-in-kind - (27,250)
Premium on redemption of 7% Preferred - (17,500)
Premium on redemption of 8% Preferred - (293,516)
Premium on redemption of 10% Preferred - (1,691,370)
---------------- ----------------
Balance at end of period ($13,453,876) ($22,455,203)
---------------- ----------------
TOTAL NON-MANDATORILY REDEEMABLE
PREFERRED STOCK, COMMON STOCK AND
OTHER SHAREHOLDERS' EQUITY $9,710,662 $13,290,418
================ ================
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 7 of 22 pages
<PAGE> 8
PHONETEL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FOR THE QUARTER ENDED MARCH 31, 1996
- -------------------------------------------------------------------------------
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to form 10-QSB
and Item 310(b) of Regulation S-B. Accordingly, they do not include all
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 accruals)
considered necessary for a fair presentation have been included.
Operating results for the three month period ended March 31, 1996 are not
necessarily indicative of the results that may be expected for the year
ended December 31, 1996. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's annual report on form 10-KSB and subsequently amended on form
10-KSB/A-1 for the year ended December 31, 1995.
Certain amounts relating to the three months ended March 31, 1995 have
been reclassified to conform to the current quarter presentation. The
reclassifications have no impact on total assets, shareholders' equity or
net loss as previously reported.
2. ACQUISITIONS AND MERGERS
On March 15, 1996, the Company completed the acquisition of the
outstanding common stock of International Pay Phones, Inc. (a South
Carolina company) and International Pay Phones, inc. (a Tennessee
company) (collectively "IPP"), companies affiliated through common
ownership and management. In connection with the acquisition of IPP, the
company acquired 2,101 installed telephones for a purchase price
consisting of: (i) $3,496,487 in cash; (ii) 555,589 unregistered shares
of the Company's Common Stock, par value $.01, ("Common Stock"); (iii)
5,453.14 unregistered shares of 14% Convertible Cumulative Redeemable
preferred stock ("14% preferred"); and (iv) warrants to purchase 117,785
shares of the company's common stock at a nominal exercise price per
share ("Nominal Value Warrants"). Additionally, the Company assumed
approximately $1,757,000 in liabilities, of which $1,551,796 was repaid
by the Company on March 15, 1996. The cash purchase price included three
five year non-compete agreements, with an aggregate value of $60,000,
with three of IPP's former officers.
On March 15, 1996, the Company completed a Share Purchase Agreement with
Paramount Communications Systems, Inc. (a Florida corporation)
("Paramount"). Under the terms of the agreement, the company acquired
2,528 installed telephones for a purchase price consisting of: (i)
$9,618,553 in cash; (ii) 8,333.33 shares of 14% Preferred; and (iii)
nominal value warrants to purchase 179,996 shares of the Company's Common
Stock.
page 8 of 22 pages
<PAGE> 9
PHONETEL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FOR THE QUARTER ENDED MARCH 31, 1996
- --------------------------------------------------------------------------------
2. ACQUISITIONS AND MERGERS (CONTINUED)
In addition, the Company assumed outstanding liabilities of approximately
$733,000, of which $697,947 was repaid on March 15, 1996. The purchase
price included a five year consulting and non-compete agreement, valued
at $50,000, with one of Paramount's former officers.
The IPP and Paramount acquisitions were recorded as purchases and the
differences between the fair values of the tangible assets acquired and
the total purchase price, aggregating $9,303,278, were recorded as
intangibles and are being amortized over the life of the acquired
location contracts which have been estimated to be 60 months.
On October 16, 1995, the Company consummated its acquisition of the
outstanding common stock of Public Telephone Corporation (an Indiana
corporation) ("Public Telephone") in a transaction accounted for as a
purchase. The Company acquired current assets of $54,742, approximately
1,200 installed telephones, assumed approximately $2,800,000 in debt and
outstanding liabilities of public telephone and issued 224,879
unregistered shares of the Company's Common Stock to the shareholders of
Public Telephone. In connection with the acquisition, the company entered
into five year non-compete agreements with two of Public Telephone's
former owners which require both cash payments and the issuance, in the
aggregate, of 80,000 unregistered shares of the Company's Common Stock.
On September 22, 1995, the Company consummated its merger with World
Communications, Inc. (a Missouri corporation) ("World") in a transaction
accounted for as a purchase. The Company acquired current assets of
$256,571, 3,327 installed telephones, assumed approximately $6,900,000 in
debt and outstanding liabilities of World and issued 402,500 unregistered
shares of the Company's Common Stock and 530,534 shares of the Company's
10% Non-Voting Redeemable Preferred Stock.
The Public Telephone and World acquisitions were recorded as purchases
and the differences between the fair values of the tangible assets
acquired and the total purchase price, aggregating $9,305,168, were
recorded as intangibles and are being amortized over the average life of
the acquired location contracts which have been estimated to be 36
months.
page 9 of 22 pages
<PAGE> 10
PHONETEL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FOR THE QUARTER ENDED MARCH 31, 1996
- -------------------------------------------------------------------------------
2. ACQUISITIONS AND MERGERS (CONTINUED)
Set forth below is the Company's unaudited pro forma condensed statement of
operations data as though the World, Public, IPP and Paramount acquisitions
had occurred at the beginning of 1995 and as though the IPP and Paramount
acquisitions had occurred at the beginning of 1996.
<TABLE>
<CAPTION>
Pro Forma Selected Results of Operations Data
Three Months Ended March 31
1995 1996
------------ -------
<S> <C> <C>
Total revenues $ 8,784,210 $ 9,095,284
Net loss before
extraordinary item ( 3,603,456) ( 6,850,691)
Net loss applicable
to common shareholders ( 3,813,506) ( 7,027,401)
Net loss per common share $ (1.37) $ (2.06)
</TABLE>
The unaudited pro forma results above are not necessarily indicative of
either actual results of operations that would have occurred had the
acquisitions been made at the beginning of 1995 or 1996, or of future
results. The pro forma statement of operations data includes adjustments
relating to the amortization of intangible assets, reductions in certain
selling, general, and administrative expenses, interest expense on
borrowings used to finance the acquisitions and the weighted average
number of common shares outstanding after giving effect to the
acquisitions.
3. PROPERTY AND EQUIPMENT
As of December 31, 1995 and March 31, 1996, property and equipment
consisted of the following:
<TABLE>
<CAPTION>
Estimated
Useful Lives December 31 March 31
(in years) 1995 1996
---------- ---- ----
<S> <C> <C> <C>
Telephone boards, enclosures and cases 3-7 $16,386,987 $26,582,376
Furniture, fixtures and other equipment 3-5 989,300 1,161,364
Leasehold improvements 2-5 231,466 217,624
------------- ------------
17,607,753 27,961,364
Less - accumulated depreciation ( 3,508,642) ( 4,418,246)
------------- ------------
$ 14,099,111 $ 23,543,118
============= ============
</TABLE>
page 10 of 22 pages
<PAGE> 11
PHONETEL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FOR THE QUARTER ENDED MARCH 31, 1996
- -------------------------------------------------------------------------------
4. INTANGIBLE ASSETS
As of December 31, 1995 and March 31, 1996, intangible assets consisted
of the following:
<TABLE>
<CAPTION>
Amortization December 31 March 31
Period 1995 1996
-------------- -------------- ---------
<S> <C> <C> <C>
Costs incurred in the acquisition and
installation of phones 36-120 months $13,403,126 $22,596,960
Debt restructuring costs 40 months - 4,795,749
Non-compete agreement 24-60 months 1,513,765 1,623,765
State operating certifications 60 months 466,796 466,796
------------- ------------
15,383,687 29,483,270
Less: Accumulated amortization (3,791,530) (4,875,206)
------------- ------------
$ 11,592,157 $ 24,608,064
============= ============
</TABLE>
5. LONG-TERM DEBT - RELATED PARTIES
In a transaction consummated on March 15, 1996, the Company borrowed
$30,530,954 (out of a total credit facility ("Credit Facility")
commitment of $37,250,000) from Internationale Nederlanden (U.S.) Capital
Corporation and one other lender (collectively known as "Lenders"). As of
March 31, 1996, $6,700,000 was available to the Company under the Credit
Facility to fund future acquisitions and for general working capital
purposes, subject to certain conditions (including availability of
additional collateral). At March 31, 1996, due to the unavailability of
additional collateral, no additional funds were available to the Company.
The initial borrowings under the Credit Facility were used to complete
the Paramount and IPP acquisitions, to repay $8,503,405 of outstanding
debt and $3,173,931 of the outstanding obligations under capital leases,
to redeem the 10% Cumulative Redeemable Preferred Stock ("10%
Preferred"), 8% Cumulative Redeemable Preferred Stock ("8% Preferred"),
and 7% Cumulative Convertible Redeemable Preferred Stock ("7%
Preferred"), and to pay related transactions fees.
The Credit Facility requires monthly interest payments at the Alternate
Base Rate (as defined therein) plus 5% and contains various covenants
restricting the Company's ability to pay dividends or incur additional
debt, among other conditions, and also contains financial covenants
requiring minimum net worth, working capital and earnings before
interest, depreciation and amortization among other covenants. The Credit
Facility also contains a subjective acceleration clause which states that
in the event of a material adverse change in the business, as determined
by the Lenders, the Lenders can call the debt at their discretion. The
Lenders have waived their right to exercise this subjective acceleration
clause through April 1, 1997. Principal payments commence September 1997,
and continue quarterly through June 1999 at which time the remaining
principal balance is due. The amount of the principal payment is
contingent upon numerous factors, including the borrowing base and cash
flow of the Company. Based on amounts borrowed at March 31, 1996,
page 11 of 22 pages
<PAGE> 12
PHONETEL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FOR THE QUARTER ENDED MARCH 31, 1996
- --------------------------------------------------------------------------------
5. LONG-TERM DEBT - RELATED PARTIES (CONTINUED)
the estimated principal payment in September 1997 would be $612,500,
increasing to $975,000, quarterly for 1998. All of the Company's
installed telephones are pledged as collateral to the Credit Facility.
The majority of the Credit Facility (currently $29,000,000) can be
converted into Series B Special Convertible Preferred Stock ("Series B
Preferred"), at the ratio of 833 shares for each $100,000 in outstanding
debt and accrued interest. Additionally, the Lenders received warrants to
purchase 204,824 shares of Series A Special Convertible Preferred Stock
("Series A Preferred"), at an exercise price of $0.20 per share for the
initial borrowings under the Credit Facility. Each share of Series A
Preferred and Series B Preferred is convertible into 20 shares of Common
Stock. The debt under the Credit Facility was initially recorded net of
an allocation of the fair value of the warrants, such fair value was
determined using the Black-Scholes valuation model. The Company has
estimated the quarterly non-cash interest expense will be in excess of
$480,000.
6. PREFERRED STOCK MANDATORILY REDEEMABLE
As of December 31, 1995 and March 31, 1996, preferred stock mandatorily
redeemable consisted of the following:
<TABLE>
<CAPTION>
December 31 March 31
1995 1996
----------- --------
<S> <C> <C>
14% Cumulative Redeemable Convertible Preferred Stock ($60 stated value
- 200,000 shares authorized; 107,918.19 shares issued and
outstanding at March 31, 1996; cumulative dividends issuable of
664.13 shares, valued at $27,250; mandatory
redemption amount of $6,514,939 due June 30, 2000) - $6,296,737
</TABLE>
The Company records dividends, declared and undeclared, at their fair
market value and recognizes the difference between the carrying value of
the 14% Preferred and the mandatory redemption amount, through monthly
accretions, using the interest method. Each share of 14% Preferred is
entitled to receive a quarterly dividend of 0.035 shares of 14%
Preferred. Each share of 14% Preferred is convertible into 10 shares of
Common Stock.
page 12 of 22 pages
<PAGE> 13
PHONETEL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FOR THE QUARTER ENDED MARCH 31, 1996
- --------------------------------------------------------------------------------
7. NON-MANDATORILY REDEEMABLE PREFERRED STOCK, COMMON STOCK AND OTHER
SHAREHOLDERS' EQUITY
As of December 31, 1995 and March 31, 1996, non-mandatorily redeemable
preferred stock, common stock and other shareholders' equity consisted of
the following:
<TABLE>
<CAPTION>
December 31 March 31
1995 1996
----------- --------
<S> <C> <C>
10% Cumulative Nonvoting Redeemable Preferred Stock ($10 stated value -
550,000 shares authorized; 530,534 shares issued and outstanding at
December 31, 1995 and March 31, 1996) $ 5,305,340 $ 5,305,340
Series A Special Convertible Preferred Stock ($0.20 par value, $0.20
stated value - 250,000
shares authorized; no shares issued) - -
Series B Special Convertible Preferred Stock ($0.20 par value, $120
stated value - 250,000
shares authorized; no shares issued) - -
10% Cumulative Redeemable Preferred Stock ($1,000 stated value - 3,880
shares authorized; 1,496 shares issued and outstanding at
December 31, 1995, redeemed on March 15, 1996) 1 -
8% Cumulative Redeemable Preferred Stock ($100 stated value - 16,000
shares authorized; 12,200 shares issued and outstanding at
December 31, 1995, redeemed on March 15, 1996) 981,084 -
7% Cumulative Convertible Redeemable Preferred Stock ($100 stated
value - 2,500 shares authorized, issued and outstanding at December
31, 1995,
redeemed on March 15, 1996) 200,000 -
</TABLE>
page 13 of 22 pages
<PAGE> 14
PHONETEL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FOR THE QUARTER ENDED MARCH 31, 1996
- --------------------------------------------------------------------------------
7. NON-MANDATORILY REDEEMABLE PREFERRED STOCK, COMMON STOCK AND OTHER
SHAREHOLDERS' EQUITY (CONTINUED)
<TABLE>
<CAPTION>
December 31 March 31
1995 1996
----------- --------
<S> <C> <C>
Common Stock
($0.01 par value - 22,500,000 shares authorized; 2,855,350 and
3,391,529 shares issued and outstanding at December 31, 1995 and
March 31, 1996) 28,554 33,915
Additional paid-in capital 16,649,559 30,406,366
Accumulated deficit (13,453,876) (22,455,203)
-------------- -------------
$ 9,710,662 $ 13,290,418
============== =============
</TABLE>
On February 23, 1996, the Company created three new classes of preferred
stock: (i) Series A Preferred; (ii) Series B Preferred; and (iii) 14%
Preferred.
On March 15, 1996, concurrent with the Lenders Credit Facility, the
Company redeemed the 10% Preferred, 8% Preferred, and the 7% Preferred.
The redemption price was cash payments aggregating $1,117,371 and
34,436.33 shares of 14% Preferred. In the aggregate, $6,269,487 of the
Company's outstanding obligations, including portions of the purchase
price for the IPP and Paramount acquisitions, was liquidated by issuing
107,918.19 shares of 14% Preferred. The $2,002,386 excess of the
redemption price of the preferred issues redeemed over their aggregate
carrying value was recorded as a reduction of earnings available to
common shareholders as of March 31, 1996.
On March 15, 1996, Nominal Value Warrants to purchase 2,018,942 shares of
Common Stock were issued in conjunction with the IPP and Paramount
acquisitions, redemption of the 10% Preferred, 8% Preferred and 7%
Preferred, and conversion of certain related party debt of the Company to
the 14% Preferred. Certain holders of the 14% Preferred are deemed
related parties pursuant to the rules and regulations of the Securities
and Exchange Commission. The warrants expire on March 13, 2001. Watson,
Wyatt & Company have estimated the fair market value of the Nominal Value
Warrants to be $4,974,673, using the Black-Scholes valuation method, of
which $3,886,139 (the amount attributable to the warrants provided to
related parties in connection with the redemption of the 10% Preferred,
8% Preferred and 7% Preferred shares and the conversion of certain debt)
was recorded as an unusual charge in the Company's statement of
operations for the three months ended March 31, 1996.
During April and May 1996, warrants representing 972,487 shares of Common
Stock were exercised, and total proceeds to the Company were $9,725. Of
the total warrants exercised, 539,989 shares of Common Stock were issued
to an officer of the Company.
page 14 of 22 pages
<PAGE> 15
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
ACQUISITIONS AND MERGERS
On March 15, 1996 the Company completed the acquisition of the outstanding
common stock of IPP. The Company acquired 2,101 installed telephones for a
purchase price consisting of: (i) $3,496,487 in cash; (ii) 555,589 unregistered
shares of the Company's Common Stock; (iii) 5,453.14 shares of 14% Preferred
(immediately convertible into 54,530 shares of Common Stock); and (iv) Nominal
Value Warrants to purchase 117,785 shares of the Company's Common Stock.
Additionally, the Company assumed approximately $1,757,000 in liabilities, of
which $1,551,795 was repaid by the Company on March 15, 1996. The cash purchase
price included three five year non-compete agreements, with an aggregate value
of $60,000, with three of IPP's former officers.
On March 15, 1996, the Company completed a Share Purchase Agreement with
Paramount. Under the terms of the Agreement, the Company acquired 2,528
installed telephones for a purchase price consisting of: (i) $9,618,553 in cash;
(ii) 8,333.33 shares of 14% Preferred Stock (immediately convertible into 83,330
shares of Common Stock); and (iii) Nominal Value Warrants to purchase 179,996
shares of the Company's Common Stock. In addition, the Company assumed
outstanding liabilities of approximately $733,000, of which $697,947 was repaid
on March 15, 1996. The purchase price included a five year consulting and
non-compete agreement, valued at $50,000, with one of Paramount's former
officers.
The acquisitions were recorded as purchases and the differences between the fair
values of the tangible assets acquired and the total purchase prices were
recorded as increases to intangibles and amortized over the life of the acquired
location contracts which were estimated to be 60 months. The results of
operations of each acquired company are included in the results of operations of
the Company from March 15, 1996.
LIQUIDITY AND CAPITAL RESOURCES
In a transaction consummated on March 15, 1996, the Company borrowed $30,530,954
(out of a total credit facility commitment of $37,250,000) from the Lenders. As
of March 31, 1996, $6,700,000 was available under the Credit Facility to fund
future acquisitions and for general working capital purposes, subject to certain
conditions (including the availability of collateral). The initial borrowings
under the Credit Facility were used to complete the Paramount and IPP
acquisitions, to repay $8,503,405 of outstanding debt and $3,173,931 of the
outstanding obligations under capital leases, to redeem the 10% Preferred, 8%
Preferred, and 7% Preferred, and to pay related transactions fees.
The Credit Facility requires monthly interest payments at the Alternate Base
Rate (as defined therein) plus 5% and contains various covenants restricting the
Company's ability to pay dividends or incur additional debt, among other
conditions, and also contains financial covenants requiring minimum net worth,
working capital and earnings before interest, depreciation and amortization
among other covenants. The Credit Facility also contains a subjective
acceleration clause which states that in the event of a material adverse change
in the business, as determined by the Lenders, the Lenders can call the debt at
their discretion. The Lenders have waived their right to exercise this
subjective acceleration clause through April 1, 1997. Principal payments
commence September 1997, and continue quarterly through June 1999 at which time
the remaining principal balance is due. The amount of the principal payment is
contingent upon numerous factors, including the borrowing base and cash flow of
the Company. Based on amounts borrowed at
page 15 of 22 pages
<PAGE> 16
March 31, 1996, the estimated principal payment in September 1997 would be
$612,500, increasing to $975,000, quarterly for 1998. All of the Company's
installed telephones are pledged as collateral to the Credit Facility.
The majority of the Credit Facility (currently $29,000,000) can be converted
into Series B Preferred at the ratio of 833 shares for each $100,000 in
outstanding debt and accrued interest. Additionally, the Lenders received
warrants to purchase 204,824 shares of Series A Preferred at an exercise price
of $0.20 per share. Each share of Series A Preferred and Series B Preferred is
convertible into 20 shares of Common Stock. The debt under the Credit facility
was recorded net of the fair value of the warrants. The Company has estimated
the quarterly non-cash interest expense will be in excess of $480,000.
On March 15, 1996, concurrent with the consummation of the Credit Facility, the
Company redeemed the 10% Preferred, 8% Preferred, and 7% Preferred. The
redemption price was cash payments aggregating $1,117,371 and 34,436.33 shares
of 14% Preferred. In the aggregate, $6,269,487 of the Company's outstanding
obligations, including portions of the purchase price for the IPP and Paramount
acquisitions, was liquidated by issuing 107,918.19 shares of 14% Preferred. The
$2,002,386 excess of the redemption price of the preferred issues redeemed over
their aggregate carrying value was recorded as a reduction of earnings available
to common shareholders on March 15, 1996.
On March 15, 1996, Nominal Value Warrants to purchase 2,018,942 shares of Common
Stock were issued in conjunction with the IPP and Paramount acquisitions,
redemption of the 10% Preferred, 8% Preferred, and 7% Preferred, and conversion
of certain debt of the Company to the 14% Preferred. The warrants expire on
March 13, 2001. Watson, Wyatt & Company have estimated the fair market value of
the Nominal Value Warrants to be $4,974,673, using the Black-Scholes valuation
model, of which $3,886,139 (the amount attributable to the warrants provided to
related parties in connection with the redemption of preferred shares and the
conversion of certain debt) was recorded as an unusual charge in the Company's
statement of operations for the three months ended March 31, 1996.
At March 31, 1996, long-term debt consisted of: (i) related party debt (payable
to the Lenders and an officer of the Company), including the current portion and
excluding the portion allocated to the Lenders warrants, of $24,499,598 compared
to $1,732,500 at December 31, 1995, and increase of $22,767,098; and (ii) other
long-term debt, including the current portion, of $2,089,954 as compared to
$8,596,413 at December 31, 1995, a decrease of $6,506,459. Obligations under
capital leases, including the current portion, amounted to $255,311 compared
with $3,532,937 at December 31, 1995, an decrease of $3,277,626. Total long-term
debt outstanding and obligations under capital leases, including the current
portion and the amount allocated to the Lenders warrants, was $33,176,219 at
March 31, 1996. The overall increase is mostly attributable to debt incurred in
connection with the IPP and Paramount acquisitions.
The Company had a working capital deficit of $5,978,808 at March 31, 1996,
compared to a working capital deficit of $4,843,524 at December 31, 1995, an
increase of $1,135,284. Income before interest, taxes, depreciation and
amortization, contractual settlements and other unusual charges, and the
extraordinary loss on debt restructuring ("EBITDA") was $597,489 for the three
months ended March 31, 1996, compared to $202,562, for the three months ended
March 31, 1995, an increase of $394,927, or 195.0%. EBITDA is not intended to
represent an alternative to operating income (as determined in accordance with
generally accepted accounting principles) as an indicator of the Company's
operating
page 16 of 22 pages
<PAGE> 17
performance, or as an alternative to cash flows from operating activities (as
determined in accordance with generally accepted accounting principles) as a
measure of liquidity. Cash flows used in operations in the first quarter of 1996
amounted to $1,662,774 a decrease of $1,962,224 over cash provided by operations
in first quarter of 1995 of $299,450, mostly due to the larger loss in the first
quarter of 1996 and repayment of significant payables.
Management believes, but cannot assure, that cash flows from operations, the
proceeds and the availability under the Credit Facility and other financial
alternatives, including a contemplated equity offering, will be sufficient to
allow the Company to sustain its operations and meet its obligations over the
next twelve months.
RESULTS OF OPERATIONS
At March 31, 1996, the Company had approximately 14,622 installed telephones
compared to 4,950 at March 31, 1995, an increase of 9,672 installed telephones,
or 195.4%. The increase in installed telephones is attributable to telephones
acquired in acquisitions and internal growth.
REVENUES. Total revenue from all product lines increased $2,833,289, or 75.1%,
from $3,773,315 for the three months ended March 31, 1995 to $6,606,604 for the
three months ended March 31, 1996.
Revenues from coin calls increased $2,120,690, or 91.0%, from $2,331,105 for
the three months ended March 31, 1995 to $4,451,795 for the three months
ended March 31, 1996. This increase is attributable primarily to an increase
in the number of installed pay telephones, which increased by 9,672, with
the majority of the increase occurring in the fourth quarter of 1995 and the
first quarter of 1996 and attributable to the Company's recent acquisitions.
Non-coin revenue increased $607,594, or 46.7%, from $1,301,288 for the three
months ended March 31, 1995 to $1,908,882 for the three months ended March
31, 1996. The increase was primarily due to the acquisition and installment
of additional revenues producing pay telephones. However, this increase was
offset in part by a reduction in operator assisted calls as a result of
aggressive dial-around advertising by long distance carriers such as
American Telephone & Telegraph Company ("AT&T") and MCI Communications
Corporation ("MCI"). In addition, in December 1995 the Company decided to
focus on the ownership and maintenance of its pay telephone business and
outsourced its operator service center.
Other revenues increased $105,005, or 74.5% from $140,922 for the three
months ended March 31, 1995 to $245,927 for the three months ended March 31,
1996. This increase was primarily the result of increased telephones and
dial-around compensation.
OPERATING EXPENSES. Total operating expenses increased $8,626,095, or 201.9%,
from $4,271,653 for the three months ended March 31, 1995, to $12,897,748 for
the three months March 31, 1996. Operating expenses represented 113.2% of total
revenues for the three months ended March 31, 1995 and 195.2% of total revenues
for the three months ended March 31, 1996.
Line charges increased $792,026, or 97.4% from $813,343 for the three months
ended March 31, 1995 to $1,605,369 for the three months ended March 31,
1996. Line charges represented 21.6% of total
page 17 of 22 pages
<PAGE> 18
revenues for the three months ended March 31, 1995 and 24.3% of total
revenues for the three months ended March 31, 1996, an increase of 2.7%. The
dollar increase in line charges was, in part, due to the additional
telephones acquired from IPP and Paramount, the increases in coin calls
resulting from the continuation of the 1994 program which offered customers
a three minute long-distance call anywhere in the continental United States
for $0.75 (the "$0.75 Long Distance Call Program"), as well as increases in
certain local telephone company line charges.
Location commissions increased $529,767, or 84.1%, from $629,700 for the
three months ended March 31, 1995 to $1,159,467 for the three months ended
March 31, 1996. Location commissions represented 16.7% of total revenues for
the three months ended March 31, 1995 and 17.6% of total revenues for the
three months ended March 31, 1996, an increase of 0.9%. The dollar increase
is due to location agreements from pay telephones acquired in the
acquisitions of World Communications, Inc. ("World") and Public Telephone
Corporation, ("Public Telephone") and due to increased competition in
obtaining new locations.
Other operating expenses (consisting of personnel costs, rents, utilities,
repair and maintenance of the phones, operator services processing fees and
property/sales taxes), increased $590,379, or 38.1%, from $1,550,217 for the
three months ended March 31, 1995 to $2,140,596 for the three months ended
March 31, 1996. Other operating expenses represented 41.1% of total revenues
for the three months ended March 31, 1995 and 32.4% of total revenues for
the three months ended March 31, 1996, a decrease of 8.7%. The dollar
increase was primarily the result of higher personnel costs, rent, utilities
and service related expenses attributable to the outsourcing of operator
services and to the acquisitions of World and Public Telephone completed in
September and October 1995, respectively, and to a lesser extent, the
acquisitions of IPP and Paramount completed in March 1996, the increase in
the Company's pay telephone base, and the additional field personnel to
accommodate the increased business. Management anticipates economies of
scale resulting from these acquisitions will be realized in 1996, resulting
in the decrease of other operating expenses as a percentage of total
revenues.
Depreciation and amortization increased $1,384,368, or 197.5%, from $700,900
for the three months ended March 31, 1995 to $2,085,268 for the three months
ended March 31, 1996. Depreciation and amortization represented 18.6% of
total revenues for the three months ended March 31, 1995 and 31.6% of total
revenues for the three months ended March 31, 1996. This increase was
primarily due to the Company's acquisitions and expansion of its pay
telephone base, purchases of additional computer equipment, service vehicles
and software to accommodate the Company's growth.
Selling, general and administrative ("SG&A") expenses increased $526,190, or
91.1%, from $577,493 for the three months ended March 31, 1995 to $1,103,683
for the three months ended March 31, 1996. SG&A represented 15.3% of total
revenues for the three months ended March 31, 1995 and 16.7% for the three
months ended March 31, 1996, an increase of 1.4%. The dollar increase was
primarily the result of the acquisitions of World, Public Telephone, IPP and
Paramount.
Contractual settlements and other unusual charges consists primarily of: (i)
the settlement of contractual obligations, $160,000; (ii) the write-off of
selected assets in connection with the continued evaluation of the Company's
operations and certain one-time charges for changes to the operations of the
Company, $126,582; (iii) losses recognized on the early pay-off of
obligations under capital leases and other debt completed on March 15, 1996,
$630,644; and (iv) the estimated fair market value of the
page 18 of 22 pages
<PAGE> 19
Nominal Value Warrants charged to operations on March 15, 1996, $3,886,139.
In the aggregate, contractual settlements and other unusual charges were
$4,803,365, or 72.7% of total revenues for the three months ended March 31,
1996.
OTHER EXPENSE AND INCOME. Other expense and income is comprised of interest
expense incurred on debt with related parties and others and interest income.
Total other expense (net of interest income) increased $401,096, or 390.4%, from
$102,741 for the three months ended March 31, 1995 to $503,837 for the three
months ended March 31, 1996. Other expense and income represented 2.7% of total
revenues for the three months ended March 31, 1995 and 7.6% of total revenues
for the three months ended March 31, 1996. The increase was due to the financing
obtained for the recent acquisitions. Related party interest expense was
$279,716 for the three months ended March 31, 1996, representing 4.2% of total
revenues. Included in related party interest expense was non-cash interest
expense of $80,144, or 1.2% of revenues, for the three months ended March 31,
1996, representing the accretion of the debt under the Credit Facility to its
maturity amount.
EXTRAORDINARY ITEM. The Company recorded an extraordinary loss of $176,710, or
2.7% of total revenues for the three months ended March 31, 1996. The
extraordinary loss related to one-time costs that were incurred in connection
with the restructuring of the Company's debt and obligations under
non-cancelable capital leases assumed by the Company under the terms of the
acquisitions of World and Public Telephone. Concurrent with the restructuring of
the Company's debt and the redemption of the 10% Preferred, 8% Preferred, and 7%
Preferred, the Company recorded the difference between the carrying value of the
10% Preferred, 8% Preferred, and 7% Preferred and the redemption price as an
increase to the accumulated deficit of $2,002,386.
IMPACT OF SEASONALITY
Since a large concentration of telephones are in shopping malls, the greatest
portion of the Company's revenue is earned in the fourth quarter due to the
increased holiday traffic. Company telephones located outdoors, in the northern
and western states, will experience reduced revenues during periods of adverse
weather.
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
WORKING CAPITAL RESTRICTIONS AND OTHER LIMITATIONS UPON THE PAYMENT OF DIVIDENDS
The Lenders credit facility contains various covenants restricting the Company's
ability to pay dividends or incur additional debt, among other conditions, and
also contains financial covenants requiring the Company to maintain certain
financial ratios, including, among other things, minimum net worth, working
capital and earnings before interest, depreciation and amortization.
page 19 of 22 pages
<PAGE> 20
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS:
(27) Financial Data Schedule
(B) REPORTS ON FORM 8-K
The following reports on Form 8-K were filed by the Company during the
first quarter of 1996.
FORM 8-K/A-2 AMENDING FORM 8-K DATED OCTOBER 16, 1995:
(b) Pro Forma Financial Information:
1. Public Telephone Corporation and PhoneTel Technologies, Inc.
Unaudited Pro Forma Combined Condensed Balance Sheet at
September 30, 1995.
2. Public Telephone Corporation and PhoneTel Technologies, Inc.
Unaudited Pro Forma Combined Condensed Income Statements for
the Year Ended December 31, 1994, and Six Months Ended
September 30, 1995.
3. Public Telephone Corporation and PhoneTel Technologies, Inc.
Pro Forma Combined Condensed Financial Information - Footnotes
to Financial Information.
FORM 8-K DATED MARCH 15, 1996:
(a) Financial Statements of Business Acquired:
1. International Pay Phones, Inc. of South Carolina Financial
Statements For the Year Ended December 31, 1994
2. International Pay Phones, Inc. of Tennessee Financial
Statements For the Year Ended December 31, 1994 and for the
Nine Months Ended September 30, 1995
3. Paramount Communications Systems, Inc. Financial Statements
For the Years Ended December 31, 1994, 1993, and 1992.
(c) Other Exhibits:
1. Agreement and Plan of Merger between PhoneTel Technologies,
Inc. and International Pay Phones, Inc. (a South Carolina
company) dated November 22, 1995, and all amendments thereto.
2. Agreement and Plan of Merger between PhoneTel Technologies,
Inc. and International Pay Phones, Inc. (a Tennessee company)
dated November 22, 1995, and all amendments
page 20 of 22 pages
<PAGE> 21
thereto.
3. Share Purchase Agreement between PhoneTel Technologies, Inc.
and Paramount Communications Systems, Inc., dated November
16, 1995, and all amendments thereto.
4. Credit Agreement dated as of March 15, 1996 among PhoneTel
Technologies, Inc., Various Lenders and Internationale
Nederlanden (U.S.) Capital Corporation.
5. Security Agreement dated as of March 15, 1996 among PhoneTel
Technologies, Inc., Public Telephone Corporation, World
Communications, Inc., Northern Florida Telephone Corporation
and Paramount Communications Systems, Inc. and
Internationale Nederlanden (U.S.) capital Corporation as
Agent for itself and certain other lenders.
6. Warrant Purchase Agreement dated as of March 15, 1996
between PhoneTel Technologies, Inc. and Internationale
Nederlanden (U.S.) Capital Corporation and Cerberus
Partners, L.P.
7. Registration Rights Agreement dated March 15, 1996 between
PhoneTel Technologies, Inc. and Internationale Nederlanden
(U.S.) Capital Corporation and Cerberus Partners, L.P.
page 21 of 22 pages
<PAGE> 22
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
PHONETEL TECHNOLOGIES, INC.
September 27, 1996 By: /s/ Peter G. Graf
---------------------
Peter G. Graf
Chairman of the Board,
Chief Executive Officer and
Chief Accounting Officer
page 22 of 22 pages
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1996 AND THE STATEMENT OF
CONSOLIDATED OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND THE
ACCOMPANYING NOTES AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 2,009,666
<SECURITIES> 0
<RECEIVABLES> 1,412,233
<ALLOWANCES> (100,961)
<INVENTORY> 0
<CURRENT-ASSETS> 3,613,556
<PP&E> 27,961,364
<DEPRECIATION> (4,418,246)
<TOTAL-ASSETS> 52,288,260
<CURRENT-LIABILITIES> 9,592,364
<BONDS> 23,108,741
<COMMON> 33,915
6,296,737
5,305,340
<OTHER-SE> 7,951,163
<TOTAL-LIABILITY-AND-EQUITY> 52,288,260
<SALES> 0
<TOTAL-REVENUES> 6,606,604
<CGS> 0
<TOTAL-COSTS> 12,897,748
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 503,837
<INCOME-PRETAX> (6,794,981)
<INCOME-TAX> 0
<INCOME-CONTINUING> (6,794,981)
<DISCONTINUED> 0
<EXTRAORDINARY> (176,710)
<CHANGES> 0
<NET-INCOME> (6,971,691)
<EPS-PRIMARY> (3.05)
<EPS-DILUTED> 0
</TABLE>
