<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(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, 1997
---------------
[ ] 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 (I.R.S. EMPLOYER IDENTIFICATION NO.)
OF 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 APRIL 10, 1997,
16,097,200 SHARES OF THE REGISTRANT'S COMMON STOCK $.01 PAR VALUE, WERE
OUTSTANDING.
Transitional Small Business Disclosure Format (check one): Yes No X
--- ---
1
<PAGE> 2
PHONETEL TECHNOLOGIES, INC. AND SUBSIDIARIES
FORM 10-QSB
QUARTER ENDED MARCH 31, 1997
INDEX
<TABLE>
<CAPTION>
Page No.
<S> <C> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of December 31, 1996
and March 31, 1997................................................... 3
Statements of Consolidated Operations for the Three
Months Ended March 31, 1996 and 1997................................. 4
Statements of Changes in Mandatorily Redeemable Preferred
Stock as of December 31, 1996 and March 31, 1997..................... 5
Statements of Changes in Non-mandatorily Redeemable Preferred Stock,
Common Stock and Other Shareholders' Equity as of
December 31, 1996 and March 31, 1997................................. 6
Statements of Consolidated Cash Flows for the Three
Months Ended March 31, 1996 and 1997................................. 7
Notes to Consolidated Financial Statements.............................. 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations........................ 12
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K........................................ 16
Signatures.................................................................................. 19
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PHONETEL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(UNAUDITED)
DECEMBER 31, MARCH 31,
1996 1997
------------ ----------
<S> <C> <C>
ASSETS
Current assets:
Cash $46,438 $9,468
Accounts receivable, net of allowance for doubtful
of $92 and $338, respectively 3,749 13,974
Other current assets 283 764
-------- --------
Total current assets 50,470 24,206
Property and equipment, net 19,243 26,123
Intangible assets, net 52,144 104,945
Other assets 283 785
Acquisition deposits 520 11,000
Restricted cash equivalents 37,110 --
-------- --------
$159,770 $167,059
======== ========
LIABILITIES AND EQUITY
Current liabilities:
Current portion:
Long-term debt $1,009 $730
Obligation under capital leases 138 118
Accounts payable 5,003 5,263
Accrued expenses
Location commissions 1,767 2,218
Personal property and sales tax 1,071 1,264
Interest 774 4,333
Salaries, wages and benefits 574 799
Other 643 983
-------- --------
Total current liabilities 10,979 15,708
Long-term debt - others 125,274 125,802
Obligations under capital leases 104 79
Commitments and contingencies -- --
14% cumulative preferred stock mandatorily redeemable
(redemption amount $7,476 due June 30, 2000) 6,708 6,906
Non-mandatorily redeemable preferred stock,
common stock and other shareholders' equity 16,705 18,564
-------- --------
$159,770 $167,059
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 4
PHONETEL TECHNOLOGIES, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED OPERATIONS
(IN THOUSANDS EXCEPT FOR SHARE AND PER SHARE AMOUNTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(UNAUDITED)
THREE MONTHS ENDED MARCH 31,
1996 1997
------------ --------------
<S> <C> <C>
REVENUES:
Coin calls $4,452 $14,127
Non-coin telecommunication services 2,155 13,211
Other -- 320
----------- ------------
6,607 27,658
----------- ------------
COSTS AND EXPENSES:
Line and transmission charges 1,605 6,179
Telecommunication and validation fees 975 2,846
Location commissions 1,016 3,169
Field operations 1,404 5,819
Selling, general and administrative 1,009 1,976
Depreciation and amortization 2,086 5,296
Other unusual charges and contractual settlements 4,803 --
----------- ------------
12,898 25,285
----------- ------------
Income (loss) from operations (6,291) 2,373
----------- ------------
OTHER INCOME (EXPENSE):
Interest expense (504) (3,800)
Interest income -- 279
----------- ------------
(504) (3,521)
----------- ------------
Loss before extraordinary item (6,795) (1,148)
Extraordinary item:
Loss on early extinguishment of debt (177) --
----------- ------------
NET LOSS ($6,972) ($1,148)
=========== ============
Earnings per share calculation:
Preferred dividend payable in kind (27) (147)
Accretion of 14% Preferred to its redemption value -- (50)
Premium on redemption of 10%, 8% and 7% Preferred (2,002) --
----------- ------------
Net loss applicable to common shareholders ($9,001) ($1,345)
=========== ============
Net loss per common share before extraordinary item ($2.99) ($0.09)
=========== ============
Net loss per common share ($3.05) ($0.09)
=========== ============
Weighted average number of shares 2,955,894 15,525,902
=========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 5
PHONETEL TECHNOLOGIES, INC. AND SUBSIDIARIES
STATEMENTS OF CHANGES IN MANDATORILY REDEEMABLE PREFERRED STOCK
(IN THOUSANDS EXCEPT FOR SHARE AMOUNTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(UNAUDITED)
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, 1996 MARCH 31, 1997
------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT
------ ----------- ----------- --------
<S> <C> <C> <C> <C>
14 % CUMULATIVE REDEEMABLE
CONVERTIBLE PREFERRED STOCK
Balance at beginning of year -- -- 120,387 $6,708
Redemption of 7%, 8%, and 10% Preferred 34,436 $2,066 -- --
Conversion of debt 59,695 3,581 -- --
Acquisitions 13,787 622 -- --
Dividends payable-in-kind 12,469 337 4,214 148
Accretion of carrying value to amount
payable at redemption on June 30, 2000 -- 102 -- 50
Total Mandatorily Redeemable
------- ------ ------- ------
Preferred Stock 120,387 $6,708 124,601 $6,906
======= ====== ======= ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 6
PHONETEL TECHNOLOGIES, INC. AND SUBSIDIARIES
STATEMENTS OF CHANGES IN NON-MANDATORILY REDEEMABLE PREFERRED STOCK,
COMMON STOCK AND OTHER SHAREHOLDERS' EQUITY
(IN THOUSANDS EXCEPT FOR SHARE AMOUNTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(UNAUDITED)
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, 1996 MARCH 31, 1997
---------------------------------- --------------------------------
SHARES AMOUNT SHARES AMOUNT
---------------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C>
SERIES A SPECIAL CONVERTIBLE
PREFERRED STOCK
Balance at beginning of year - - - -
Exercise of warrants - - 12,500 $3
Conversion to common stock - - (12,500) (3)
---------------- ---------------- --------------- ----------------
Balance at end of period - - - -
================ ---------------- =============== ----------------
COMMON STOCK
Balance at beginning of year 2,855,350 29 14,488,828 $145
Company Equity Offering 6,750,000 68 1,012,500 10
Exercise of warrants and options 1,035,137 10 221,125 2
Acquisitions 2,860,608 28 - -
Conversion of 10% Non-voting Preferred 884,214 9 - -
Conversion of Series A Preferred - - 250,000 3
Other issuances of stock 103,519 1 124,747 1
---------------- ---------------- --------------- ----------------
Balance at end of period 14,488,828 145 16,097,200 161
================ ---------------- =============== ----------------
ADDITIONAL PAID-IN CAPITAL
Balance at beginning of year 16,650 59,104
Company Equity Offering 18,228 2,815
Acquisitions 8,010 -
Warrants issued with debt 6,412 -
Conversion of 10% Non-voting Preferred 5,296 -
Issuance of Nominal Value Warrants 4,241 -
Other issuances of stock 267 373
---------------- ----------------
Balance at end of period 59,104 62,292
---------------- ----------------
ACCUMULATED DEFICIT
Balance at beginning of year (13,454) (42,544)
Net loss for the period (26,649) (1,148)
14% Preferred dividends payable-in-kind
and accretion (439) (197)
Redemption of 7%, 8%, and 10% Preferred (2,002) -
---------------- ----------------
Balance at end of period (42,544) (43,889)
---------------- ----------------
Total Non-mandatorily Redeemable
Preferred Stock, Common Stock and
Other Shareholders' Equity $16,705 $18,564
================ ================
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE> 7
PHONETEL TECHNOLOGIES, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
(IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(UNAUDITED)
THREE MONTHS ENDED MARCH 31,
1996 1997
-------- --------
<S> <C> <C>
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Net loss ($6,972) ($1,148)
Adjustments to reconcile net loss to net cash flow from operating activities:
Depreciation and amortization 2,085 5,296
Issuance of Nominal Value Warrants 3,886 --
Stock issued in lieu of cash payments 21 --
Accretion of related parties debt 80 --
Accretion of other debt 46 3
Loss on debt restructuring 248 --
Increase in allowance for doubtful accounts 61 243
Amortization of deferred revenues -- (300)
Changes in assets and liabilities net of effects of acquisitions:
Net change in current assets (432) (5,902)
Net change in current liabilities (686) 1,951
-------- --------
(1,663) 143
-------- --------
CASH FLOWS USED IN INVESTING ACTIVITIES:
Acquisitions (14,379) (63,258)
Acquisition deposits (300) (11,000)
Deferred charges on pending acquisitions -- (41)
Deferred revenues - signing bonus 1,200 --
Deferred charges - commissions and signing bonuses (128) (426)
Change in other assets 277 (2)
Escrowed cash equivalents - Cherokee acquisition -- 37,110
Purchases of property and equipment (323) (983)
-------- --------
(13,653) (38,600)
-------- --------
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES:
Proceeds from debt issuances 30,531 69
Proceeds from shareholder debt 550 --
Principal payments on borrowings (9,886) (600)
Proceeds from issuance of common stock -- 2,825
Debt Offering expenses -- (812)
Debt financing costs (3,466) --
Redemption of 10% Preferred and 8% Preferred (1,117) --
Proceeds from warrant and option exercises -- 5
-------- --------
16,612 1,487
-------- --------
(Decrease) increase in cash 1,296 (36,970)
Cash at beginning of period 713 46,438
-------- --------
Cash at end of period $2,009 $9,468
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE> 8
PHONETEL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FOR THE QUARTER ENDED MARCH 31, 1997
(IN THOUSANDS OF DOLLARS EXCEPT FOR INSTALLED PUBLIC PAY TELEPHONE, SHARE AND
PER SHARE AMOUNTS)
- -------------------------------------------------------------------------------
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 adjustments) considered necessary for a fair presentation
have been included. Operating results for the three months ended March 31, 1997
are not necessarily indicative of the results that may be expected for the year
ended December 31, 1997. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's annual
report on Form 10-KSB for the year ended December 31, 1996.
Certain amounts relating to 1996 have been reclassified to conform to
the current quarter presentation. The reclassifications have had no impact on
total assets, shareholders' equity or net loss as previously reported.
2. ACQUISITIONS AND MERGERS
Acquisitions completed during the three months ended March 31, 1997:
COINLINK, LLC - FEBRUARY 14, 1997 ("COINLINK")
The Company acquired 300 installed public pay telephones for $938 and
approximately $4 in related acquisition expenses.
RSM COMMUNICATIONS, INC.- JANUARY 31, 1997 ("RSM")
The Company acquired 292 installed public pay telephones for $1,054 and
incurred acquisition expenses of approximately $7.
AMERICOM, INC. - JANUARY 17, 1997 ("AMERICOM")
The Company acquired 99 installed public pay telephones for $264 and
incurred acquisition costs of $10.
TEXAS COINPHONE - JANUARY 14, 1997 ("TEXAS COINPHONE")
The Company acquired 1,250 public installed pay telephones, parts and
supplies inventories, and certain other assets for $3,663 and incurred related
acquisition expenses of approximately $50.
CHEROKEE COMMUNICATIONS, INC. - JANUARY 1, 1997 ("CHEROKEE")
The Company acquired 13,949 public pay telephones, of which 726 were
under contract waiting to be installed, for a purchase price consisting of:
$53,848 for the installed and uninstalled public pay telephones; $1,250 for
non-competition agreements; contingent consideration (aggregating $6,000)
payable $3,000 on January 3, 1998 if rate guidelines are not implemented in 1997
and $3,000 on January 3, 1999 if rate guidelines are not implemented in 1998;
and incurred related acquisition expenses of approximately $1,125. Additionally,
the Company acquired outstanding accounts receivable, prepaid expenses, deposits
and coin in the installed pay telephones aggregating $5,888, and assumed
accounts payable, accrued expenses, and vehicle debt aggregating $3,408.
Acquisitions completed during the year ended December 31, 1996:
AMTEL COMMUNICATIONS SERVICES - SEPTEMBER 13, 1996 ("AMTEL")
The Company acquired 6,872 installed public pay telephones and
inventory consisting of 728 public pay telephones and related parts. Amtel's
assets were acquired for a purchase price consisting of $7,000 and 2,162,163
shares of Common Stock (valued by an independent consultant at $2.15 per share,
or $4,638). Additionally, the Company incurred approximately $783 in related
acquisition expenses.
PAY PHONES OF AMERICA, INC. - AUGUST 1, 1996 ("POA")
The Company acquired 3,115 installed public pay telephones for a
purchase price consisting of: $500; 166,666 shares of Common Stock (valued by an
independent consultant at $1.87 per share, or $312); assumption of $7,783 in
capital lease obligations; $3,634 in notes payable to the sellers; the
assumption of $1,779 in current
8
<PAGE> 9
liabilities and other debt; and two five-year non-competition and consulting
agreements for an aggregate value of $360. Additionally, the Company incurred
approximately $50 in related acquisition expenses.
INTERNATIONAL PAY PHONES, INC. OF SOUTH CAROLINA ("IPP SC") AND
INTERNATIONAL PAYPHONES, INC. OF TENNESSEE ("IPP TN") - MARCH 15, 1996 (REFERRED
TO AS "IPP")
The Company acquired 2,101 installed public pay telephones for a
purchase price consisting of: $4,829; 555,589 shares of Common Stock (valued at
$4.51 per share, or $2,506); 5,453 shares of 14% Preferred, valued at $246; and
117,785 warrants to purchase shares of Common Stock at a nominal exercise price
per share ("Nominal Value Warrants"), valued at $139; $57 for three five year
non-competition agreements; and the assumption of approximately $588 in
liabilities.
PARAMOUNT COMMUNICATIONS, INC. - MARCH 15, 1996 ("PARAMOUNT")
The Company acquired 2,528 installed public pay telephones for a
purchase price consisting of: $10,397; 8,333 shares of 14% Preferred, valued at
$376; 179,996 Nominal Value Warrants, valued at $443; the assumption of $245 in
liabilities; and included a five year consulting and non-competition agreement,
valued at $50.
PURCHASE PRICE ACCOUNTING
The above transactions have been accounted for as purchases and have
been included in the results of operations from the respective dates of
acquisition. The difference between the total purchase price and the current
assets and liabilities assumed has been allocated to property and equipment,
location contracts and non-compete agreements based on the relative fair values,
fair values of location contracts being determined using discounted cash flows
over the remaining estimated economic lives of the acquired location contracts.
The amount of the location contracts and non-competition agreements recorded for
each acquisition and the estimated economic life of the acquired location
contracts are as follows: Coinlink $838, 103 months; RSM $949, 112 months;
Americom $243, 120 months; Texas Coinphone $3,144, 101 months; Cherokee $50,311,
113 months; Amtel $10,136, 99 months; POA $12,054, 103 months; IPP $6,959, 97
months; and Paramount $10,116, 109 months. Acquired property and equipment is
depreciated over three to five years.
PRO FORMA FINANCIAL DATA (UNAUDITED)
Set forth below is the Company's unaudited pro forma condensed
statement of operations data as though the IPP, Paramount, POA, Amtel, Cherokee,
Texas Coinphone, Americom, RSM and Coinlink acquisitions had occurred at the
beginning of 1996 and as though the Texas Coinphone, Americom, RSM and Coinlink
acquisitions had occurred at the beginning of 1997.
<TABLE>
<CAPTION>
Pro Forma Selected Results of Operations Data
Three Months Ended March 31,
----------------------------
1996 1997
---- ----
<S> <C> <C>
Total revenues $22,789 $27,658
Net loss before extraordinary (9,992) (1,148)
Net loss (10,169) (1,148)
Net loss applicable to
common shareholders (12,302) (1,345)
Net loss per common share (1.02) (0.09)
</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 1996 or 1997, or of future results.
The pro forma statement of operations data includes adjustments related to the
depreciation and amortization of tangible and intangible assets, interest
expense on borrowings used to finance the acquisitions and the weighted average
number of common shares outstanding after giving effect to the acquisitions and
excludes the assets and results of operations not acquired.
9
<PAGE> 10
2. PENDING ACQUISITIONS
COMMUNICATIONS CENTRAL, INC. ("CCI")
On March 14, 1997, the Company signed a definitive merger agreement
with CCI pursuant to a tender offer whereby the Company will acquire 6,054,556
shares of CCI's issued and outstanding common stock and 1,137,282 outstanding
options and warrants for $12.85 per share in cash. The total cost of the
transaction, including debt to be assumed or refinanced and excluding related
fees, is approximately $172,000. The tender offer is conditioned upon, among
other things, 75% of the outstanding CCI shares, on a fully diluted basis, being
tendered and the receipt by the Company of financing sufficient to enable it to
consummate the transaction. CCI operates a network of approximately 26,000
installed public pay telephones and inmate telephones. Pursuant to the merger
agreement, the Company deposited $5,000 into escrow, which is refundable, only
in certain circumstances.
ADVANCE PAY SYSTEMS, INC. ("ADVANCE")
On April 2, 1997, the Company agreed to acquire approximately 800
public pay telephones for $2,700.
AMERICAN PUBLIC TELECOM, INC. ("AMERICAN")
On April 4, 1997, the Company agreed to acquire approximately 850
public pay telephones for $3,300.
LONDON COMMUNICATIONS, INC. ("LONDON")
On April 4, 1997, the Company agreed to acquire approximately 2,500
installed public pay telephones for a purchase price consisting of $9,900 and
the assumption of certain liabilities.
3. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
<TABLE>
<CAPTION>
Estimated
Useful Lives December 31, March 31,
(in years) 1996 1997
---------- ---- ----
<S> <C> <C> <C>
Telephones, boards, enclosures and cases 3-10 $25,784 $33,551
Furniture, fixtures and other equipment 3-5 1,751 2,380
Leasehold improvements 2-5 249 249
-------- --------
27,784 36,180
Less - accumulated depreciation (8,541) (10,057)
-------- --------
$19,243 $26,123
======== ========
</TABLE>
4. INTANGIBLE ASSETS
Intangible assets consisted of the following:
<TABLE>
<CAPTION>
Amortization Period December 31, March 31,
(in months) 1996 1997
----------- ---- ----
<S> <C> <C> <C>
Value assigned to location contracts
acquired and installation of public
pay telephones 60-120 $53,862 $108,177
Deferred financing costs 120 5,851 6,663
Non-competition agreements 24-60 2,099 3,399
State operating certifications 60 524 524
-------- --------
62,336 118,763
Less: Accumulated amortization (10,192) (13,818)
-------- --------
$52,144 $104,945
======== ========
</TABLE>
10
<PAGE> 11
5. PREFERRED STOCK MANDATORILY REDEEMABLE
Mandatorily redeemable preferred stock consisted of the following:
<TABLE>
<CAPTION>
December 31, March 31,
1996 1997
---- ----
<S> <C> <C>
14% Cumulative Redeemable Convertible Preferred Stock ($60 stated value
- 200,000 shares authorized; 107,918 shares issued and outstanding,
cumulative dividends issuable of 12,469 shares at December 31, 1996
(valued at $337) and 16,682 shares at March 31, 1997, (valued at $484);
mandatory redemption amount of $7,476 due June 30, 2000 $ 6,708 $ 6,906
</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. For the three months ended March 31, 1997, the carrying
value of the 14% Preferred was increased by $50 through accretions. 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.
6. NON-MANDATORILY REDEEMABLE PREFERRED STOCK, COMMON STOCK AND OTHER
SHAREHOLDERS' EQUITY
Non-mandatorily redeemable preferred stock, common stock, and other
shareholders' equity consisted of the following:
<TABLE>
<CAPTION>
December 31, March 31,
1996 1997
---- ----
<S> <C> <C>
Series A Special Convertible Preferred Stock ($0.20 par value, $0.20
stated value - 250,000
shares authorized; no shares issued) -- --
Common Stock
($0.01 par value - 50,000,000 shares authorized; 14,488,828 and
16,097,200 shares issued and outstanding at December 31, 1996 and
March 31, 1997, respectively) $145 $161
Additional paid-in capital 59,104 62,292
Accumulated deficit (42,544) (43,889)
-------- --------
$16,705 $18,564
======== ========
</TABLE>
During January 1997, the Company's underwriters exercised their over
allotment option pursuant to the Company's December 18, 1996 Equity Offering,
and sold an additional 1,012,500 shares of Common Stock for $2,825 in net
proceeds. During the three months ended March 31, 1997, directors of the Company
exercised 221,125 options with net proceeds to the Company of $2 and a former
lender to the Company exercised options for 12,500 shares of Series A Special
Convertible Preferred (with net proceeds to the Company of $3) which the lender
then immediately converted into 250,000 shares of Common Stock. On January 2,
1997, an executive officer of the Company converted an outstanding loan and
accrued interest of $374 to 124,747 share of Common Stock.
7. COMMITMENTS AND CONTINGENCIES
On September 20,1996, the FCC adopted rules which implemented the
public pay telephone provisions of Section 276 of the Telecommunications Act
enacted on February 8, 1996. Included in the adopted rules was mandated changes
to dial-around compensation. Effective November 6, 1996, the Company started to
derive additional revenues from the access it provides callers to any carrier
other than the presubscribed carrier (commonly referred to as "dial-around"
access). The Company accrues gross dial-around revenues at the mandated rate of
$45.85 per telephone per month, as compared with the flat fee of $6.00 per
telephone per month in place prior to November 6, 1996. Commencing October 7,
1997 and ending October 6, 1998, the $45.85 per telephone per month
11
<PAGE> 12
rate will change to a rate of $0.35 per call. Thereafter, the dial-around rate
will be at a per-call rate equal to the local coin call rate. A number of
parties have filed petitions for judicial review of certain of the FCC
implementing regulations (including the dial-around rules) in federal courts of
appeal. The cases initiated by these petitions have been consolidated in a
single proceeding before the U.S. Court of Appeals for the D.C. Circuit.
Although the Company does not believe the court will overturn the FCC's
determination as to the amount of dial-around compensation, there can be no
assurance as to the outcome of the judicial proceeding.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (IN THOUSAND OF DOLLARS EXCEPT FOR PUBLIC PAY
TELEPHONES, PER CALL, SHARE AND PER SHARE AMOUNTS)
PENDING ACQUISITIONS
COMMUNICATIONS CENTRAL, INC. ("CCI")
On March 14, 1997, the Company signed a definitive merger agreement
with CCI pursuant to a tender offer whereby the Company will acquire 6,054,556
shares of CCI's issued and outstanding common stock and 1,137,282 outstanding
options and warrants for $12.85 per share in cash. The cost of the transaction,
including debt to be assumed or refinanced and excluding related fees, is
approximately $172,000. The tender offer is conditioned upon, among other
things, 75% of the outstanding CCI shares, on a fully diluted basis, being
tendered and the receipt by the Company of financing sufficient to enable it to
consummate the transaction. CCI operates a network of approximately 26,000
installed public pay telephones and inmate telephones. Pursuant to the merger
agreement, the Company deposited $5,000 into escrow, which is refundable only,
in certain circumstances.
ADVANCE PAY SYSTEMS, INC. ("ADVANCE")
On April 2, 1997, the Company agreed to acquire approximately 800
public pay telephones for $2,700.
AMERICAN PUBLIC TELECOM, INC. ("AMERICAN")
On April 4, 1997, the Company agreed to acquire approximately 850
public pay telephones for $3,300.
LONDON COMMUNICATIONS, INC. ("LONDON")
On April 4, 1997, the Company agreed to acquire approximately 2,500
installed public pay telephones for a purchase price consisting of $9,900 and
the assumption of certain liabilities.
COMPLETED ACQUISITIONS
Acquisitions completed during the three months ended March 31, 1997:
COINLINK, LLC - FEBRUARY 14, 1997 ("COINLINK")
The Company acquired 300 installed public pay telephones for $938 and
approximately $4 in related acquisition expenses.
RSM COMMUNICATIONS, INC.- JANUARY 31, 1997 ("RSM")
The Company acquired 292 installed public pay telephones for $1,054 and
incurred acquisition expenses of approximately $7.
AMERICOM, INC. - JANUARY 17, 1997 ("AMERICOM")
The Company acquired 99 installed public pay telephones for $264 and
incurred acquisition costs of $10.
TEXAS COINPHONE - JANUARY 14, 1997 ("TEXAS COINPHONE")
The Company acquired 1,250 public installed pay telephones, parts and
supplies inventories, and certain other assets for $3,663 and incurred related
acquisition expenses of approximately $50.
CHEROKEE COMMUNICATIONS, INC. - JANUARY 1, 1997 ("CHEROKEE")
The Company acquired 13,949 public pay telephones, of which 726 were
under contract waiting to be installed, for a purchase price consisting of:
$53,848 for the installed and uninstalled public pay telephones; $1,250 for
non-competition agreements; contingent consideration (aggregating $6,000)
payable $3,000 on January 3, 1998 if rate guidelines are not implemented in 1997
and $3,000 on January 3, 1999 if rate guidelines are not implemented in 1998;
and incurred related acquisition expenses of approximately $1,125. Additionally,
the Company acquired
12
<PAGE> 13
outstanding accounts receivable, prepaid expenses, deposits and coin in the
installed pay telephones aggregating $5,888, and assumed accounts payable,
accrued expenses, and vehicle debt aggregating $3,408.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 COMPARED TO THREE MONTHS ENDED MARCH 31, 1996
Revenues. Revenues increased $21,051, or 318.6%, from $6,607 for the
three months ended March 31, 1996 to $27,658 for the three months ended March
31, 1997. This increase is attributable primarily to the number of installed
public pay telephones, which increased by 26,472, or 184.4%, from 14,357 at
March 31, 1996 to approximately 40,829 at March 31, 1997, with the majority of
the increase occurring in the third quarter of 1996 and the first quarter of
1997 due to the Company's recent acquisitions, and the increase in the mandated
monthly dial-around rate.
Revenues from coin calls increased $9,675, or 217.3%, from $4,452 for
the three months ended March 31, 1996 to $14,127 for the three months ended
March 31, 1997. Non-coin telecommunication services increased $11,056, or
513.1%, from $2,155 for the three months ended March 31, 1996 to $13,211 for the
three months ended March 31, 1997. The increases were primarily due to the
acquisition and installation of public pay telephones producing additional
revenues and the increase in the monthly dial-around rate. Dial-around revenues
increased $5,382, or 2,396.9%, from $225 for the three months ended March 31,
1996 to $5,607 for the three months ended March 31, 1997. Dial-around revenues
represented 3.4% of total revenues for the three months ended March 31, 1996 and
20.3% of total revenues for the three months ended March 31, 1997, an increase
of 16.9%. This increase was due to the increase in the number of public pay
telephones and the FCC mandated changes in the dial-around rate, pursuant to the
February 8, 1996 enactment of Section 276 of the Telecommunications Act.
Effective November 6, 1996, the Company started to derive additional revenues
from the access it provides callers to any carrier other than the presubscribed
carrier. The Company accrues gross dial-around revenues at the mandated rate of
$45.85 per telephone per month, as compared with the flat fee of $6.00 per
telephone per month in place prior to November 6, 1996. Commencing October 7,
1997 and ending October 6, 1998, the $45.85 per telephone per month rate will
change to a rate of $0.35 per call. Thereafter, the dial-around rate will be at
a per-call rate equal to the local coin call rate. A number of parties have
filed petitions for judicial review of certain of the FCC implementing
regulations (including the dial-around rules) in federal courts of appeal. The
cases initiated by these petitions have been consolidated in a single proceeding
before the U.S. Court of Appeals for the D.C. Circuit. Although the Company does
not believe the court will overturn the FCC's determination as to the amount of
dial-around compensation, there can be no assurance as to the outcome of the
judicial proceeding.
Other revenues increased $320 from nil for the three months ended March
31, 1996 to $320 for the three months ended March 31, 1997. This increase was
primarily the result of the amortization of a deferred operator services bonus.
Operating Expenses. Total operating expenses increased $12,387, or 96%,
from $12,898 for the three months ended March 31, 1996 to $25,285 for the three
months ended March 31, 1997. Operating expenses represented 195.2% of total
revenues for the three months ended March 31, 1996 and 91.4% of total revenues
for the three months ended March 31, 1997, a decrease of 103.8%. The percentage
decrease was due to the absence of other unusual charges and contractual
settlements for the three months ended March 31, 1997 as compared to $4,803 of
such charges for the three months ended March 31, 1996 and lower operating costs
(as a percentage of total revenues) offset by higher depreciation and
amortization resulting from the acquisitions. A portion of the decrease in the
percentage is also due to the additional dial-around compensation as discussed
in non-coin telecommunication services above.
Line and transmission charges increased $4,573, or 284.9%, from $1,605
for the three months ended March 31, 1996 to $6,179 for the three months ended
March 31, 1997. Line charges represented 24.3% of total revenues for the three
months ended March 31, 1996 and 22.3% of total revenues for the three months
ended March 31, 1997, a decrease of 2.0%. The dollar increase in line and
transmission charges was due principally to additional public pay telephones
acquired in the acquisitions. The percentage decrease was due to higher
dial-around revenues. On a per phone basis, line and transmission charges were
constant between the 1996 and 1997 quarters.
Telecommunication and validation fees (consisting primarily of
processing costs relating to operator services) increased $1,871, or 191.9%,
from $975 for the three months ended March 31, 1996 to $2,846 for the three
months ended March 31, 1997. Telecommunication and validation fees represented
14.8% of total revenues for the three months ended March 31, 1996 and 10.3% for
the three months March 31, 1997, a decrease of 4.5%.
13
<PAGE> 14
The dollar increase was primarily the result of the increase in the number of
installed public pay telephones and the outsourcing of operator services after
the first quarter of 1996. The percentage decrease was mostly due to the effect
of the increase in dial-around revenues on total revenues.
Location commissions increased $2,153, or 212%, from $1,016 for the
three months ended March 31, 1996 to $3,169 for the three months ended March 31,
1997. Location commissions represented 15.4% of total revenues for the three
months ended March 31, 1996 and 11.5% of total revenues for the three months
ended March 31, 1997, a decrease of 3.9%. The dollar increase is due to the
acquired location agreements. The percentage decrease is due to such location
agreements having lower commission rates than those from the Company's existing
public pay telephones.
Field operations (consisting principally of field operations personnel
costs, rents and utilities of the local service facilities and repair and
maintenance of the installed public pay telephones), increased $4,416, or
314.7%, from $1,404 for the three months ended March 31, 1996 to $5,819 for the
three months ended March 31, 1997. Field operations represented 21.2% of total
revenues for the three months ended March 31, 1996 and 21% of total revenues for
the three months ended March 31, 1997. The dollar increase was primarily the
result of higher operating and service costs attributable to the acquisitions
and the increased public pay telephone base and the additional field personnel
to accommodate the increased business.
Selling, general and administrative ("SG&A") expenses increased $967,
or 95.8%, from $1,009 for the three months ended March 31, 1996 to $1,976 for
the three months ended March 31, 1997. SG&A represented 15.3% of total revenues
for the three months ended March 31, 1996 and 7.1% of total revenues for the
three months ended March 31, 1997, a decrease of 8.2%. The dollar increase was
primarily the result of the acquisitions and the percentage decrease reflects
the economies of scale resulting from those acquisitions that the Company has
already realized.
Depreciation and amortization increased $3,210, or 153.9%, from $2,086
for the three months ended March 31, 1996 to $5,296 for the three months ended
March 31, 1997. Depreciation and amortization represented 31.6% of total
revenues for the three months ended March 31, 1996 and 19.1% of total revenues
for the three months ended March 31, 1997, a decrease of 12.5%. The dollar
increase was primarily due to the Company's acquisitions and expansion of its
public pay telephone base and purchases of additional computer equipment,
service vehicles and software to accommodate the Company's growth. The
percentage decrease is due, in part, to a change in the estimated remaining
economic life of acquired location contracts, which became effective in the
fourth quarter of 1996. This change is expected to decrease depreciation and
amortization by $2,645 each year.
Other unusual charges and contractual settlements decreased $4,803, or
100%, from $4,803 for the three months ended March 31, 1996 to nil for the three
months ended March 31, 1997. For the three months ended March 31, 1996, other
unusual charges and contractual settlements consisted primarily of: (i) the
settlement of contractual obligations under certain employment contracts, $160;
(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, $127; (iii) losses recognized on the early
pay-off of obligations under capital leases and other debt concurrent with the
debt restructuring completed on March 15, 1996, $630; and (iv) the estimated
fair market value of the Nominal Value Warrants charged to operations, $3,886.
Other unusual charges and contractual settlements represented 72.7% of total
revenues for the three months ended March 31, 1996.
Other income (expense). Other income (expense) is comprised principally
of interest expense incurred on debt and interest income. Total interest expense
increased $3,296, or 654%, from $504 for the three months ended March 31, 1996
to $3,800 for the three months ended March 31, 1997. Interest expense
represented 7.6% of total revenues for the three months ended March 31, 1996 and
13.7% of total revenues for the three months ended March 31, 1997, an increase
of 6.1% as a result of the additional incurred debt from the Company's Debt
Offering in December 1996. Interest income represented 1% of total revenues for
the three months ended March 31, 1997, and resulted from the investment of
acquisition deposits and excess operating cash.
Extraordinary item. The Company recorded an extraordinary loss of $177,
representing 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 refinancing of the Company's long-term debt. Concurrent with
the refinancing of the Company's debt and the redemption of the 10%, 8% and 7%
Preferred, the Company recorded the difference between the carrying value of the
10%, 8% and 7% Preferred and the redemption price as an increase to the
accumulated deficit of $2,002.
14
<PAGE> 15
EBITDA. EBITDA (income before interest income, interest expense, taxes,
depreciation and amortization, other unusual charges and contractual
settlements, and the extraordinary loss on debt refinancing) increased $7,071,
or 1,181.5%, from $598 for the three months ended March 31, 1996 to $7,669 for
the three months ended March 31, 1997. EBITDA represented 9.1% of total revenues
for the three months ended March 31, 1996 and 27.7% of total revenues for the
three months ended March 31, 1997, an increase of 18.6%. EBITDA is not intended
to represent an alternative to operating income (as defined in accordance with
generally accepted accounting principles) as an indicator of the Company's
operating 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. The Company believes that EBITDA is a
meaningful measure of performance because it is commonly used in the public pay
telephone industry to analyze comparable public pay telephone companies on the
basis of operating performance, leverage and liquidity.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows. The Company had working capital of $8,498 at March 31,
1997, compared to $39,491 at December 31, 1996, a decrease of $30,993, resulting
from the acquisitions completed in 1997 and the placement of acquisition
deposits for the pending acquisitions. Net cash provided by (used in) operating
activities during the three months ended March 31, 1996 and 1997 were ($1,663)
and $143, respectively. Net cash provided by operations resulted mainly from the
reduction in the net loss for the three months ended March 31, 1997.
Cash used in investing activities during the three months ended March
31, 1996 and 1997 were $13,653 and $38,600, respectively. Cash used in investing
activities consisted primarily of payments and deposits to acquire companies and
purchases of property and equipment, offset by the release of the escrowed cash
equivalents for the closing of the Cherokee acquisition.
Cash flows provided by financing activities during the three months
ended March 31, 1996 and 1997 were $16,612 and $1,487, respectively, which in
1997 consisted primarily of the net proceeds from the exercise of the
Underwriters' overallotment pursuant to the Company Equity Offering completed on
December 18, 1996, offset by additional Debt Offering expenses. Cash flows
provided by financing activities during the three months ended March 31, 1996 of
$16,612 resulted from the $31,081 borrowed to acquire IPP and Paramount offset
by the repayment of $9,886 in debt , the redemption of $1,117 in preferred
stock, and the payment of $3,466 in refinancing fees.
The Company intends to fund the pending acquisitions with another debt
and/or equity offering and through the sale of preferred stock and senior
secured debt.
Management believes, but cannot assure, that cash flows from operations
and other financial alternatives, including contemplated debt and equity
offerings which are necessary to complete the Pending Acquisitions and could be
used to repay certain debt, will be sufficient to meet the Company's cash
requirements for working capital, capital expenditures and debt service over the
next twelve months.
CAPITAL EXPENDITURES
For the three months ended March 31, 1997, the Company had capital
expenditures (exclusive of acquisitions) of $983, which were financed through
cash flows from operations and net proceeds from the Company Debt Offering and
the Company Equity Offering. Capital expenditures are principally for the
expansion of the Company's installed public pay telephone base and include
purchases of telephones, related equipment, site contracts, operating equipment
and computer hardware.
SEASONALITY
The Company completed three acquisitions, which added 4,629 public pay
telephones, in the first quarter of 1996, and five acquisitions, that added
15,890 public pay telephones, during the first three months of 1997. The
seasonality of the Company's historical operating results has been affected by
shifts in the geographic concentrations of its public pay telephones resulting
from such acquisitions.
15
<PAGE> 16
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
(27) Financial Data Schedule
(b) Reports on Form 8-K
The Company filed the following reports on Form 8-K during the first
quarter of 1997.
FORM 8-K DATED JANUARY 3, 1997
(a) Financial Statements of Business Acquired.
1. Cherokee Communications, Inc.
Audited Financial Statements:
Independent Auditors' Report
Balance Sheets as of September 30, 1995 and 1994
Statements of Income for the years ended September 30,
1995, 1994, and 1993
Statements of Shareholders' Equity for the years ended
September 30, 1996, 1995 and 1994
Statements of Cash Flows for the years ended September 30,
1995, 1994 and 1993
Notes to financial Statements
(b) Pro Forma financial information.
Introduction to Unaudited Pro Forma Combined Condensed Financial
Information
1. Cherokee Communications, Inc., Texas Coinphone, Amtel
Communications, Inc. and Combined Companies
(Debtor-in-Possession), Payphones of America, Inc.,
International Pay Phones, Inc. (a Tennessee company),
International Pay Phones, Inc. (a South Carolina Company),
Paramount Communications Systems, Inc., World Communications,
Inc., Public Telephone Corporation, and PhoneTel Technologies,
Inc. - Unaudited Pro Forma Combined Condensed Statement of
Operations for the Year Ended December 31, 1995.
2. Cherokee Communications, Inc., Texas Coinphone, Amtel
Communications, Inc. and Combined Companies
(Debtor-in-Possession), Payphones of America, Inc.,
International Pay Phones, Inc. (a Tennessee company),
International Pay Phones, Inc. (a South Carolina Company),
Paramount Communications Systems, Inc., World Communications,
Inc., Public Telephone Corporation, and PhoneTel Technologies,
Inc. - Footnotes to the Unaudited Pro Forma Combined Condensed
Statement of Operations for the Year Ended December 31, 1995.
3. Cherokee Communications, Inc., Texas Coinphone, Amtel
Communications, Inc. and Combined Companies
(Debtor-in-Possession), Payphones of America, Inc.,
International Pay Phones, Inc. (a Tennessee company),
International Pay Phones, Inc. (a South Carolina Company),
Paramount Communications Systems, Inc., and PhoneTel
Technologies, Inc. - Unaudited Pro Forma Combined Condensed
Statement of Operations for the Nine Months Ended September
30, 1996.
4. Cherokee Communications, Inc., Texas Coinphone, Amtel
Communications, Inc. and Combined Companies
(Debtor-in-Possession), Payphones of America, Inc.,
International Pay Phones, Inc. (a Tennessee company),
International Pay Phones, Inc. (a South Carolina Company),
Paramount Communications Systems, Inc., and PhoneTel
Technologies, Inc. - Footnotes to the Unaudited Pro Forma
Combined Condensed Statement of Operations for the Nine Months
Ended September 30, 1996.
16
<PAGE> 17
5. Cherokee Communications, Inc. Texas Coinphone and PhoneTel
Technologies, Inc. - Unaudited Pro Forma Combined Condensed
Balance Sheet at September 30, 1996
6. Cherokee Communications, Inc. Texas Coinphone and PhoneTel
Technologies, Inc. - Footnotes to the Unaudited Pro Forma
Combined Condensed Balance Sheet at September 30, 1996
(c) Exhibits
10.1 Agreement and Plan of Merger dated as of November 21, 1996 among
PhoneTel Technologies, Inc., PhoneTel CCI., Inc., Cherokee Communications,
Inc. and all of the shareholders of Cherokee Communications, Inc.
(Incorporated by reference from Amendment No.2 to the Company's
Registration Statement on Form SB-2 Registration No. 333-1367, filed
December 12, 1996.)
10.2 Amendment to Agreement and Plan of Merger dated as of December 31,
1996 among PhoneTel Technologies, Inc., Phone Tel CCI,. Inc., Cherokee
Communications, Inc., Bill H. Bailey, Jr., Edward L. Marshall, Jerry T.
Beddow, C. Nelson Trimble, Berthel Fisher & Company Investments, Inc.,
Capital Southwest Corporation, Capital Southwest Venture Corporation, Banc
One Capital Partners, L.P. (collectively the "Sellers"); and Bill H.
Bailey, Jr. and J. Bruce Duty, as Seller Representatives.
10.3 Escrow Agreement dated as of November 21, 1996 among Comerica Bank -
Texas, as escrow agent, Cherokee Communications, Inc., Bill H. Bailey, Jr.,
and J. Bruce Duty, as duly authorized agents for all of the shareholders of
Cherokee Communications, Inc., PhoneTel Technologies, Inc. and Bill H.
Bailey, Jr., Jerry T. Beddow, and Edward L. Marshall, individually.
(Incorporated by reference from Amendment No.2 to the Company's
Registration Statement on Form SB-2, Registration No. 333-13767, filed
December 12, 1996.)
10.4 Asset Purchase Agreement dated January 13, 1997, among PhoneTel
Technologies, Inc., an Ohio Corporation, Texas Coinphone, a Texas general
partnership, Pete W. Catalena and Dennis H. Goehring.
99.1 Financial Statements of Cherokee Communications as listed in (a) 1
above.
99.2 Unaudited pro forma financial statements as listed in (b) above.
FORM 8-K/A-1 AMENDING FORM 8-K DATED JANUARY 3, 1997
(a) Financial Statements of Business Acquired.
1. Cherokee Communications, Inc.
Audited Financial Statements:
Independent Auditors' Report
Balance Sheets as of September 30, 1996 and 1995
Statements of Income for the years ended September 30,
1996, 1995, and 1994
Statements of Shareholders' Equity for the years ended
September 30, 1996, 1995 and 1994
Statements of Cash Flows for the years ended September 30,
1996, 1995 and 1994
Notes to Financial Statements
(b) Exhibits
99.1 Financial Statements of Cherokee Communications, Inc. as listed in
(a) above.
FORM 8-K/A-2 AMENDING FORM 8-K DATED JANUARY 3, 1997
(b) Pro Forma financial information
1. Introduction to Unaudited Pro Forma Combined Condensed
Financial Information
2. Cherokee Communications, Inc., Texas Coinphone, Amtel
Communications, Inc. and Combined Companies
(Debtor-in-Possession), Payphones of America, Inc.,
International Pay Phones, Inc. (a Tennessee company),
International Pay Phones, Inc. (a South Carolina Company),
Paramount Communications Systems, Inc., World
Communications, Inc., Public
17
<PAGE> 18
Telephone Corporation, and PhoneTel Technologies, Inc. -
Unaudited Pro Forma Combined Condensed Statement of
Operations for the Year Ended December 31, 1995.
3. Cherokee Communications, Inc., Texas Coinphone, Amtel
Communications, Inc. and Combined Companies
(Debtor-in-Possession), Payphones of America, Inc.,
International Pay Phones, Inc. (a Tennessee company),
International Pay Phones, Inc. (a South Carolina Company),
Paramount Communications Systems, Inc., World
Communications, Inc., Public Telephone Corporation, and
PhoneTel Technologies, Inc. - Footnotes to the Unaudited
Pro Forma Combined Condensed Statement of Operations for
the Year Ended December 31, 1995.
4. Cherokee Communications, Inc., Texas Coinphone, Amtel
Communications, Inc. and Combined Companies
(Debtor-in-Possession), Payphones of America, Inc.,
International Pay Phones, Inc. (a Tennessee company),
International Pay Phones, Inc. (a South Carolina Company),
Paramount Communications Systems, Inc., and PhoneTel
Technologies, Inc. - Unaudited Pro Forma Combined Condensed
Statement of Operations for the Nine Months Ended September
30, 1996.
5. Cherokee Communications, Inc., Texas Coinphone, Amtel
Communications, Inc. and Combined Companies
(Debtor-in-Possession), Payphones of America, Inc.,
International Pay Phones, Inc. (a Tennessee company),
International Pay Phones, Inc. (a South Carolina Company),
Paramount Communications Systems, Inc., and PhoneTel
Technologies, Inc. - Footnotes to the Unaudited Pro Forma
Combined Condensed Statement of Operations for the Nine
Months Ended September 30, 1996.
6. Cherokee Communications, Inc. Texas Coinphone and PhoneTel
Technologies, Inc. - Unaudited Pro Forma Combined Condensed
Balance Sheet at September 30, 1996
7. Cherokee Communications, Inc. Texas Coinphone and PhoneTel
Technologies, Inc. - Footnotes to the Unaudited Pro Forma
Combined Condensed Balance Sheet at September 30, 1996
(c) Exhibits
99.2 Unaudited pro forma financial statements as listed in (b)
above.
<PAGE> 19
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.
April 29, 1997 By: /s/ Peter G. Graf
---------------------
Peter G. Graf
Chairman of the Board and
Chief Executive Officer
April 29, 1997 By: /s/ Richard Kebert
-----------------------
Richard Kebert
Chief Financial Officer and
Treasurer
(Principal Financial Officer and
Accounting Officer)
19
<TABLE> <S> <C>
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<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-QSB
FOR THE QUARTERLY PERIOD ENDED 3-31-97 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
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6,906
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