<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d) of
the Securities Exchange Act of 1934
For Quarter Ended June 30, 1995
Commission File No. 0-17316
MOBILE TELECOMMUNICATION TECHNOLOGIES CORP.
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 64-0518209
------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
200 South Lamar Street, Mtel Centre, Jackson, Mississippi 39201
--------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(601) 944-1300
--------------------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
--- ---
Indicate the number of shares outstanding of each of the Registrant's
classes of common stock, as of the latest practicable date.
49,946,235 shares of Common Stock,
par value $.01 per share, as of
July 31, 1995
<PAGE>
MOBILE TELECOMMUNICATION TECHNOLOGIES CORP.
QUARTERLY REPORT ON FORM 10-Q
INDEX
PART I. FINANCIAL INFORMATION
---------------------
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets -- June 30, 1995 and December 31, 1994.
Consolidated Statements of Operations -- Six Months Ended June 30, 1995
and 1994, and Three Months Ended June 30, 1995 and 1994.
Consolidated Statements of Cash Flows -- Six Months Ended June 30, 1995
and 1994, and Three Months Ended June 30, 1995 and 1994.
Notes to Consolidated Financial Statements.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
PART II. OTHER INFORMATION
-----------------
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
----------
2
<PAGE>
MOBILE TELECOMMUNICATION TECHNOLOGIES CORP.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
-------------- --------------
<S> <C> <C>
ASSETS:
CURRENT ASSETS
Cash and cash equivalents $ 42,252,269 $145,620,779
Short term investments 56,988,113 53,689,435
Accounts receivable, net 31,801,966 20,337,010
Other current assets 10,916,713 10,427,822
-------------- --------------
TOTAL CURRENT ASSETS 141,959,061 230,075,046
-------------- --------------
MESSAGING NETWORKS
Property and equipment, net 174,504,884 114,796,040
Certificates of authority and goodwill 77,383,606 23,054,615
PCS license cost 127,500,000 127,500,000
Network construction and development cost 87,073,497 46,459,928
-------------- --------------
TOTAL MESSAGING NETWORKS 466,461,987 311,810,583
-------------- --------------
INVESTMENT IN UNCONSOLIDATED INTERNATIONAL VENTURES 60,354,728 62,681,009
-------------- --------------
OTHER ASSETS
Securities restricted for debt service 79,027,286 93,597,038
Other 18,244,842 17,307,256
-------------- --------------
TOTAL OTHER ASSETS 97,272,128 110,904,294
-------------- --------------
$766,047,904 $715,470,932
============== ==============
LIABILITIES AND STOCKHOLDERS' INVESTMENT:
CURRENT LIABILITIES
Current maturities of long-term debt $18,333 $49,820
Accounts payable and accrued liabilities 51,812,366 44,474,340
------------- --------------
TOTAL CURRENT LIABILITIES 51,830,699 44,524,160
------------- --------------
LONG -TERM DEBT 268,014,167 273,628,967
MINORITY INTEREST 30,312,447 31,240,992
STOCKHOLDERS' INVESTMENT
Preferred Stock, par value $.01 per share; 25,000,000
shares authorized; 3,750,000 shares of $2.25
Cumulative Convertible Exchangeable Preferred
Stock outstanding in 1995 and 1994 37,500 37,500
Common Stock, par value $.01 per share;
75,000,000 shares authorized; shares issued:
49,931,539 shares in 1995 and 45,646,719
shares in 1994 499,315 456,467
Additional paid-in-capital 498,217,647 439,038,067
Accumulated deficit (82,154,815) (72,919,024)
Cumulative translation adjustment (709,056) (536,197)
------------- --------------
TOTAL STOCKHOLDERS' INVESTMENT 415,890,591 366,076,813
------------- --------------
$766,047,904 $715,470,932
============= ==============
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
MOBILE TELECOMMUNICATION TECHNOLOGIES CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
--------------------------- --------------------------
1995 1994 1995 1994
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues $107,492,609 $ 78,474,455 $ 56,864,418 $ 38,133,154
Expenses:
Operating 25,732,511 20,106,841 13,828,167 10,652,566
Selling, general and administrative 76,496,247 53,953,544 39,577,659 29,431,896
Depreciation and amortization 14,509,632 10,472,623 7,404,578 5,446,223
------------ ------------ ----------- ------------
116,738,390 84,533,008 60,810,404 45,530,685
------------ ------------ ----------- ------------
Operating income (loss) (9,245,781) (6,058,553) (3,945,986) (7,397,531)
Interest income 7,777,963 3,805,361 3,577,187 2,001,926
Interest expense (5,148,935) (2,499,314) (1,971,908) (1,190,296)
Gain on sale of assets 40,667 4,478,103 41,640 2,323,922
Other income 907,916 - 464,211 -
------------ ------------ ----------- ------------
Income (loss) before income taxes
and equity income (5,668,170) (274,403) (1,834,856) (4,261,979)
Provision for income taxes 314,771 875,751 147,559 438,153
Equity in income of investments 981,084 2,140,273 989,044 1,093,349
------------ ------------ ----------- ------------
Net income (loss) ($5,001,857) $990,119 ($993,371) ($3,606,783)
Preferred dividend requirement 4,218,750 4,218,750 2,109,375 2,109,375
------------ ------------ ----------- ------------
Net income (loss) available to common stockholders ($9,220,607) ($3,228,631) ($3,102,746) ($5,716,158)
============ ============ =========== ============
Net income (loss) per common share ($0.19) ($0.09) ($0.06) ($0.16)
============ ============ =========== ============
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
MOBILE TELECOMMUNICATION TECHNOLOGIES CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30,
-------------------------------- --------------------------------
1995 1994 1995 1994
------------ --------------- ------------ ---------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) ($5,001,857) $990,119 ($993,371) ($3,606,783)
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 14,509,632 10,594,141 7,404,578 5,519,457
Provision for losses on accounts receivable 2,838,539 1,012,800 1,215,701 349,564
Amortization of debt issuance costs (591,346) 219,705 (628,061) 113,715
Foreign currency transaction (gain) (1,103) - (10,867) -
(Gain) on sale of assets (40,667) (4,478,103) (41,640) (2,323,922)
Minority interest (928,545) - (475,077) -
Equity in income of investments (981,084) (2,140,273) (989,044) (1,093,349)
Change in assets and liabilities:
(Increase) decrease in accounts receivable (14,303,495) (684,857) (7,157,357) 636,933
(Increase) decrease in other current assets 14,080,861 (5,367,335) 11,103,306 (5,505,524)
Increase in accounts payable and accrued liabilities 7,338,026 4,376,291 166,704 3,356,963
------------ ------------- ------------ -------------
Net Cash Provided By (Used In) Operating Activities 16,918,961 4,522,488 9,594,872 (2,552,946)
------------ ------------- ------------ -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of assets 3,840,250 3,295,784 3,840,250 553,945
Capital expenditures, net (68,811,947) (20,995,463) (38,032,783) (15,847,635)
(Increase) in other messaging networks (44,862,392) (5,997,985) (29,415,064) (6,328,179)
(Increase) decrease in investment in unconsolidated
international ventures (2,619,877) (14,673,533) 1,312,137 (2,271,368)
(Increase) decrease in other assets (1,692,217) 1,620,162 510,408 (662,076)
(Increase) decrease in short term investments (3,298,678) 83,186,784 22,685,401 18,523,463
------------ ------------- ------------ -------------
Net Cash Provided By (Used In) Investing Activities (117,444,861) 46,435,749 (39,099,651) (6,031,850)
------------ ------------- ------------ -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term borrowings 41,288 254,355 - 254,355
Principal payments on long-term debt (5,687,575) (235,557) 272,543 (27,569)
Payment of dividends on preferred stock (4,218,750) (4,126,875) (2,109,375) (2,109,375)
Sale of stock and exercise of options 7,022,427 1,669,548 3,918,166 1,603,525
------------ ------------- ------------ -------------
Net Cash Provided By (Used In) Financing Activities (2,842,610) (2,438,529) 2,081,334 (279,064)
------------ ------------- ------------ -------------
Effect of exchange rate changes on cash - 19,136 - 28,879
------------ ------------- ------------ -------------
Net increase (decrease) in cash and cash equivalents (103,368,510) 48,538,844 (27,423,445) (8,834,981)
Cash and cash equivalents-beginning of period 145,620,779 129,158,255 69,675,714 186,532,080
------------ ------------- ------------ -------------
Cash and cash equivalents-end of period $42,252,269 $177,697,099 $42,252,269 $177,697,099
============ ============= ============ =============
</TABLE>
See notes to consolidated financial statements
5
<PAGE>
MOBILE TELECOMMUNICATION TECHNOLOGIES CORP. AND SUBSIDIARIES NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
A. ORGANIZATION
Mobile Telecommunication Technologies Corp. ("Mtel" or the "Company") is
the leading provider of nationwide messaging services in the United States.
Subscribers can be reached almost instantly in thousands of towns and cities in
the United States by means of the dedicated 931 MHz frequency licensed by the
Federal Communications Commission, a ground-based transmitter system, leased
satellite facilities and proprietary network software. The nationwide paging
system in the United States is operated by Mtel's subsidiary, SkyTel Corp.
("SkyTel").
Mtel is also actively expanding its international coverage by operating or
investing in entities that provide wireless messaging services in various
countries outside the United States. Mtel, through its subsidiary Mtel
International, Inc., operates or has investments in nationwide messaging systems
in Mexico, the United Kingdom, Argentina, Brazil, Colombia, Hong Kong, Paraguay,
Peru, Malaysia, Indonesia and certain other countries. Mtel also provides its
subscribers with access to an international messaging network that utilizes
Mtel's proprietary technology and interconnects the systems operated by Mtel and
its joint ventures with systems in Canada, Singapore and other countries.
The Company's subsidiary, Destineer Corporation ("Destineer"), is
continuing to develop and construct a two-way nationwide wireless messaging
network in the United States (the "Destineer Network"). The Destineer Network
will enable its subscribers to send and receive two-way messages through the use
of a new class of small low-power, light-weight devices, as well as lap-top and
palm-top computers, without the need to know the location of the sender or
receiver at the time of transmission. The Destineer Network will utilize a
proprietary system architecture designed and developed by Mtel and will offer a
broad range of communications
6
<PAGE>
services, including acknowledgment paging, wireless two-way messaging and
information services. The Destineer Network is expected to commence commercial
operation in the second half of 1995.
Mtel is also engaged in a variety of other telecommunications-related
businesses including air-to-ground telecommunications operations, telephone
answering services and other investments.
B. BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Mtel and its
majority-owned subsidiaries. All significant intercompany transactions and
balances have been eliminated in consolidation.
In February 1995, the Company acquired United States Paging Corporation
("USPC") in a transaction which has been accounted for as a pooling of
interests. Accordingly, the financial statements of Mtel have been restated to
include the results of USPC for all periods presented.
The Company's consolidated financial statements for the three and six month
periods ended June 30, 1995 and 1994 have not been audited by independent public
accountants. However, in the opinion of management, these financial statements
include all adjustments (which include only normal recurring adjustments)
necessary for a fair presentation. The results for the period are not
necessarily indicative of the results for the year ending December 31, 1995.
C. EARNINGS PER SHARE
Loss per share for the three and six month periods ending June 30, 1995 and
1994 is calculated by dividing the net loss (after deducting preferred stock
dividends) by the weighted
7
<PAGE>
average number of common shares outstanding during the period with no effect
given to common stock equivalents arising from stock options and convertible
subordinated debt because such effect would be antidilutive. The weighted
average common shares outstanding in the second quarter of 1995 and the first
six months of 1995 were 49,640,454 and 49,246,398, respectively. The weighted
average common shares outstanding in the second quarter of 1994 and the first
six months of 1994 were 35,905,844 and 35,873,225, respectively.
D. FOREIGN CURRENCY
The assets and liabilities of international subsidiaries are translated
into U.S. dollars using the period-end exchange rates. Revenues and expenses
are translated at the average rates during the periods presented. Translation
adjustments are charged to a separate component of stockholders' investment.
E. ACQUISITION OF SKYTEL MINORITY INTEREST
On January 13, 1995, Mtel acquired the 9.7% of the outstanding shares of
SkyTel common stock that it did not already own in a transaction in which the
minority stockholders of SkyTel received approximately 3.4 million shares of
Mtel Common Stock. The transaction was accounted for as a purchase. As a
result of this transaction, all of the issued and outstanding shares of SkyTel
common stock are owned by Mtel.
The following summary presents the pro forma consolidated results of
operations as if the acquisition of the SkyTel minority interest had occurred on
January 1, 1994. Amounts (unaudited) are in thousands, except per share data.
8
<PAGE>
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30,
------------------- --------------------
1994 1995 1994 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net income (loss) available
to common stockholders $(3,879) $(9,329) $(6,041) $(3,103)
Net income (loss) per
common share $(0.10) $(0.19) $(0.15) $(0.06)
</TABLE>
F. ACQUISITION OF USPC
On February 17, 1995, Mtel acquired USPC in a merger in which USPC
stockholders received 1.6 million shares of Mtel Common Stock having an
aggregate value of approximately $30.5 million. USPC provides local and
regional paging services with centralized and customized nationwide billing,
computerized maintenance and service reporting and automatic messaging for
centralized dispatch. The merger has been accounted for as a pooling of
interests and, accordingly, the financial statements of Mtel have been restated
to include the results of USPC for all periods presented.
The following summary presents separate and combined results of operations
for the first six months of 1994. Amounts (unaudited) are in thousands.
<TABLE>
<CAPTION>
Net Income
Available to
Revenue Common Stockholders
-------- -------------------
<S> <C> <C>
Mtel $70,851 ($3,389)
USPC 8,291 136
Eliminations (668) 0
------- -------
Combined $78,474 ($3,253)
======= =======
</TABLE>
9
<PAGE>
G. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid by Mtel was $15,169,000 and $3,167,000 during the six months
ended June 30, 1995 and 1994, respectively, and was $14,766,000 and $2,993,000
during the three months ended June 30, 1995 and 1994, respectively. No federal
income taxes were paid during these periods.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following is a discussion of the consolidated financial condition and
results of operations of Mtel for the three and six month periods ended June 30,
1995 and 1994 and certain factors that will affect Mtel's financial condition.
In 1994, the Company implemented a new strategic plan intended to accelerate
subscriber growth in its core SkyTel business through price reductions, the
expansion of SkyTel's marketing efforts and other operational initiatives. The
initiatives implemented by SkyTel in 1994 have resulted in a 109% increase in
SkyTel units in service, a 48% increase in SkyTel revenues and a 246% increase
in SkyTel cash flows from operations in the second quarter of 1995 as compared
to the second quarter of 1994. On a consolidated basis, revenues increased 49%
in the second quarter of 1995 as compared to the second quarter of 1994, and
Mtel recorded consolidated cash flows from operations of approximately $3.5
million in the second quarter of 1995 as compared to consolidated negative cash
flow from operations of approximately $2.0 million in the second quarter of
1994. However, Mtel expects to continue to incur net losses on a consolidated
basis during 1995, primarily as a result of the start-up losses that are
anticipated in connection with the commercial launch of the Destineer Network
which is expected to occur in the second half of 1995 and continuing start-up
losses from international operations.
RESULTS OF OPERATIONS
REVENUES
Revenues on a consolidated basis increased 37% in the six months ended June
30, 1995 as compared to the six months ended June 30, 1994, and increased 49% in
the second quarter of 1995 as compared to the second quarter of 1994. The
increase was primarily attributable to a
11
<PAGE>
37% increase in SkyTel revenues in the first six months of 1995 as compared to
the first six months of 1994 and a 48% increase in SkyTel revenues in the second
quarter of 1995 as compared to the second quarter of 1994. During the first six
months of 1995, SkyTel recorded 178,000 net additions of paging and voice
messaging units in service on the SkyTel System as compared to 49,000 net
additions during the first six months of 1994, and recorded 98,400 net unit
additions in the second quarter of 1995 compared to 31,600 net additions in the
second quarter of 1994. The Company believes that this increase in units in
service on the SkyTel System is attributable to the implementation of the new
strategic plan announced in January 1994, including the increased productivity
of SkyTel's expanded direct sales force and indirect distribution channels.
During the first six months of 1995, SkyTel provided approximately 92% of
Mtel's revenues and international operations provided approximately 3% of Mtel's
revenues. Mtel's international revenues primarily consist of revenues recorded
by the Company's wholly-owned subsidiary in Argentina that commenced commercial
nationwide and international messaging operations on the 931 MHz frequency in
April 1994 and by the Company's 95%-owned subsidiary in Colombia which commenced
commercial nationwide and international messaging operations on the 931 MHz
frequency in June 1994. Telephone answering services and air-to-ground
operations provided approximately 4% of Mtel's revenues in the first six months
of 1995.
EXPENSES
Expenses include operating, selling, general and administrative, and
depreciation and amortization.
12
<PAGE>
Operating expenses consist of salaries and telephone costs associated with
domestic and international messaging operations and telephone answering service
operations, transmitter site rentals and expenses associated with the
maintenance of the Company's operating equipment and facilities. These expenses
on a consolidated basis increased 28% in the first six months of 1995 as
compared to the first six months of 1994 and increased 30% in the second quarter
of 1995 as compared to the second quarter of 1994. This increase primarily
reflects increased SkyTel System costs associated with SkyTel's expanding
subscriber base as well as operating expenses from the Company's messaging
operations in Argentina and Colombia. In addition, the Company launched
commercial operations in Hong Kong through a 100% owned subsidiary in the second
quarter of 1995 and, as a result, recorded additional operating expenses from
these operations. As a percentage of revenues, operating expenses decreased to
24% in the first six months of 1995 as compared to 26% in the first six months
of 1994 and decreased to 24% in the second quarter of 1995 as compared to 28% in
the second quarter of 1994. Mtel expects to continue to incur increased
operating expenses during 1995 as a result of the continuing expansion of
SkyTel's subscriber base, increased operating expenses related to the Company's
messaging operations in Argentina, Colombia and Hong Kong and operating expenses
related to the Destineer Network which is expected to commence operations in the
second half of 1995.
Selling, general and administrative expenses include marketing and
advertising costs associated with domestic and international messaging
operations, personnel costs and related expenses associated with SkyTel's direct
sales and marketing staff and customer support operations, and corporate
overhead costs, primarily salaries and administrative expenses. These expenses
on a consolidated basis increased 42% in the first six months of 1995 as
compared to the first six months of 1994 and increased 34% in the second quarter
of 1995 as compared to the
13
<PAGE>
second quarter of 1994. This increase primarily reflects costs associated with
the significant expansion in 1994 of SkyTel's direct sales staff, and selling,
general and administrative expenses associated with the Company's messaging
operations in Argentina, Colombia and Hong Kong. In addition, costs associated
with customer support operations, such as customer service, operator dispatch,
billing and collections, have increased with the continuing increase in the
level of units in service on the SkyTel System in order to maintain the quality
of these operations. As a percentage of revenues, selling, general and
administrative expenses increased to 71% in the first six months of 1995 as
compared to 69% in the first six months of 1994 and decreased to 70% in the
second quarter of 1995 as compared to 77% in the second quarter of 1994. On a
consolidated basis, selling, general and administrative expenses are expected to
continue to increase during the remainder of 1995 as a result of continued
SkyTel unit growth, increased selling, general and administrative expenses
related to the messaging operations in Argentina, Colombia and Hong Kong and
selling, general and administrative expenses related to the Destineer Network.
Depreciation and amortization increased 39% in the first six months of 1995
as compared to the first six months of 1994 and increased 36% in the second
quarter of 1995 as compared to the second quarter of 1994, primarily reflecting
depreciation and amortization of the Company's increased investments in property
and equipment. As a percentage of revenues, depreciation and amortization
expenses increased to 14% in the first six months of 1995 as compared to 13% in
the first six months of 1994 and decreased to 13% in the second quarter of 1995
as compared to 14% in the second quarter of 1994. The Company expects
depreciation and amortization expenses to continue to increase during 1995 as a
result of the commencement of operations of the Destineer Network in the second
half of 1995.
14
<PAGE>
The Company will begin to record operating expenses, selling expenses and
depreciation and amortization expenses, as well as increased levels of general
and administrative expenses related to the Destineer Network upon the
commencement of commercial operation which is expected to occur in the second
half of 1995. The amount of such expenses recorded in 1995 will be dependent
upon the timing of commencement of commercial operation of the Destineer
Network.
OPERATING INCOME (LOSS)
SkyTel reported operating income of approximately $3,709,000 for the second
quarter of 1995 and $6,262,000 for the first six-months of 1995. SkyTel's
operating income was offset by losses from international operations, including
continuing start-up losses associated with the messaging operations in
Argentina, Colombia and Hong Kong, of approximately $5,413,000 million and
$9,395,000 for the three-month and six-month periods ended June 30, 1995,
respectively. Mtel reported a consolidated operating loss of approximately
$9,246,000 for the first six months of 1995 as compared to an operating loss of
approximately $6,059,000 for the first six months of 1994, and reported an
operating loss of approximately $3,946,000 for the second quarter of 1995 as
compared to an operating loss of approximately $7,398,000 for the second quarter
of 1994.
The Company expects SkyTel to report operating income in 1995 as a result
of continued accelerated growth in units in service. However, the Company
expects to report operating losses on a consolidated basis during the remainder
of 1995 as a result of continuing start-up losses from messaging operations in
Argentina, Colombia and Hong Kong and the commencement of commercial operation
of the Destineer Network.
15
<PAGE>
INTEREST INCOME (EXPENSE)
Interest expense increased 106% in the first six months of 1995 as compared
to the first six months of 1994 and increased 66% in the second quarter of 1995
as compared to the second quarter of 1994. This increase primarily reflects
interest accrued on $265 million principal amount of 13.5% Senior Notes due 2002
(the "Senior Notes") issued in December 1994. In accordance with Statement of
Financial Accounting Standards ("SFAS") No. 34, the Company capitalizes interest
expense related to equity investments and the purchase of certain assets which
constitute activities preliminary to the commencement of the investee's or
purchaser's planned principal operations. The Company capitalized $12,896,000
and $1,026,000 in interest costs in the first six months of 1995 and 1994,
respectively, and capitalized $7,029,000 and $539,000 in interest costs in the
second quarter of 1995 and 1994, respectively, primarily related to the
development of the Destineer Network.
Interest income totaled $7,778,000 in the first six months of 1995 as
compared to $3,805,000 in the first six months of 1994 and totaled $3,577,000 in
the second quarter of 1995 as compared to $2,002,000 in the second quarter of
1994. This increase is primarily attributable to income generated by the
investment of the net proceeds from the sale of the Senior Notes not immediately
applied by the Company.
16
<PAGE>
PROVISION FOR INCOME TAXES
Mtel recorded a provision for income taxes of $315,000 and $876,000 in the
first six months of 1995 and 1994, respectively, and $148,000 and $438,000 in
the second quarter of 1995 and 1994, respectively, relating to state and local
income taxes. The Company reported net losses for federal income tax purposes
during the three and six month periods ended June 30, 1995 and 1994 and,
accordingly, no provision for federal income taxes has been made for such
periods.
PREFERRED STOCK DIVIDENDS
The Company accrued approximately $2.1 million in each of the quarters
ended June 30, 1995 and 1994 which represents dividends on the Company's $2.25
Cumulative Convertible Exchangeable Preferred Stock (the "Preferred Stock").
Although dividends on the Preferred Stock are not treated as an expense on the
Company's consolidated statements of operations and, therefore, do not affect
reported net income, such dividends are deducted from net income for the purpose
of determining net income (loss) per common share.
NET INCOME (LOSS)
Mtel recorded a net loss of approximately $5.0 million in the six month
period ended June 30, 1995 which, combined with the effect of the preferred
stock dividends, resulted in a net loss per common share of $0.19 for such
period. This compares to net income of approximately $1.0 million, and a loss
of $0.09 per common share, in the first six months of 1994. The Company
recorded a net loss of $1.0 million, or $0.06 per common share, in the second
quarter of 1995, as compared to a net loss of $3.6 million, or $0.16 per common
share, in the second quarter of 1994. The net loss in the second quarter of
1994 was partially offset by a nonrecurring gain of $2.3
17
<PAGE>
million recorded by the Company in connection with the sale of its digital
point-to-point microwave system that operated in the Los Angeles area.
Net losses in the first half of 1995 included approximately $6.8 million of
start-up losses associated with the Company's messaging operations in Argentina,
Colombia and Hong Kong. The Company is continuing to pursue opportunities to
provide nationwide and international messaging services outside of the United
States, and decisions by the Company regarding the capital structure of its
international operations could affect the Company's consolidated net income in
the future.
LIQUIDITY AND CAPITAL RESOURCES
Mtel continued to make significant capital investments in the second
quarter and first half of 1995 related to the development of the Destineer
Network which is expected to commence commercial operation in the second half of
1995. In the first six months of 1995, the Company invested approximately $76
million in connection with the development of the Destineer Network which was
funded from a portion of the net proceeds from the sale of the Senior Notes.
The Company also invested approximately $28 million in the first six months
of 1995 in connection with the development and expansion of the SkyTel System
and to procure messaging units to support SkyTel's increasing subscriber base.
This amount included funds used to upgrade the SkyTel System to Flex/TM/
technology, which increases the speed and efficiency of the network, thereby
augmenting the network's capacity to accommodate greater volumes of subscriber
units. These capital expenditures were funded with cash generated from SkyTel's
operations and with a portion of the net proceeds from the sale of the Preferred
Stock completed in October 1993. As a result of significant increases in net
unit additions and the expansion of SkyTel's distribution
18
<PAGE>
channels, the Company anticipates that additional capital expenditures will be
necessary during the remainder of 1995 and in future periods to increase
capacity on the SkyTel System.
The Company anticipates that the net proceeds from the sale of the Senior
Notes, existing cash balances, funds generated from operations and the proceeds
of a proposed senior credit facility will be sufficient to meet projected
capital requirements through the end of 1996. The Company has received a
commitment from its commercial banks for a new senior credit facility in the
principal amount of $60.0 million, completion of which is subject to the
satisfaction of certain conditions and the execution of definitive agreements.
The Company is also currently exploring additional sources of financing to fund
the purchase of additional equipment, primarily subscriber units required by
SkyTel's expanding subscriber base and personal messaging units that will be
required upon the commercial launch of the Destineer Network.
RECENT DEVELOPMENTS
In December 1994, the Company announced that it had reached agreement with
the minority stockholders, which include Microsoft Corporation ("Microsoft"), of
its 80%-owned Destineer subsidiary pursuant to which these minority shareholders
would exchange their shares of Destineer common stock for an aggregate of
approximately 4.0 million shares of Mtel Common Stock. In July 1995, the
parties executed a definitive stock exchange agreement and the exchange is
expected to be completed in the third quarter of 1995 upon the receipt of
certain required regulatory approvals. In conjunction with the agreement to
exchange Destineer common stock for Mtel Common Stock, the Company and Microsoft
have agreed to amend the joint technology and marketing agreement entered into
in March 1994 to reflect developments at
19
<PAGE>
Microsoft and Mtel. The revised joint technology and marketing agreement is
expected to be completed in the third quarter of 1995.
RECENTLY ISSUED ACCOUNTING STANDARDS
In March 1995, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to be Disposed of." SFAS No. 121 establishes accounting standards
for the impairment of long-lived assets, certain identifiable intangibles, and
goodwill related to those assets to be held and used and for long-lived assets
and certain identifiable intangibles to be disposed of. SFAS No. 121 is
effective for financial statements for fiscal years beginning after December 15,
1995. Mtel believes that SFAS No. 121 will not have a material impact on the
Company's consolidated results of operations or financial position.
20
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
Reference is made to "Item 3. Legal Proceedings" in the Company's Annual
Report on Form 10-K for the year ended December 31, 1994 for a description of
certain securities litigation involving the Company. These actions were
consolidated in April 1994 under the caption In Re Mobile Telecommunication
------------------------------
Technologies Corp. Securities Litigation, Master file No. 3:94-CV-6. There were
----------------------------------------
no material developments in connection with this litigation during the quarter
ended June 30, 1995. Except as referenced above, there are no other material
legal or regulatory proceedings involving the Company or its subsidiaries except
license applications and renewals and other regulatory proceedings incident to
the Company's business.
Item 2. Changes in Securities
---------------------
None.
Item 3. Defaults upon Senior Securities
-------------------------------
None.
Item 4. Submission of Matters to a Vote of Security Holders
----------------------------------------------------
The 1995 Annual Meeting of Stockholders was held on May 25, 1995. At the
1995 Annual Meeting, Haley Barbour, Jai P. Bhagat and R. Faser Triplett, M.D.
were elected directors of the Company for a three year term expiring at the 1998
Annual Meeting of Stockholders and until their respective successors are elected
and qualified. The holders of 44,200,859 shares of Common Stock present in
person or by proxy at the 1995 Annual Meeting voted in favor of the election of
Mr. Barbour, and the holders of 405,932 shares of Common Stock withheld their
vote for Mr. Barbour. The holders of 44,204,338 shares of Common Stock present
in person or by
21
<PAGE>
proxy at the 1995 Annual Meeting voted in favor of the election of Mr. Bhagat,
and the holders of 402,453 shares of Common Stock withheld their vote for Mr.
Bhagat. The holders of 44,229,138 shares of Common Stock present in person or by
proxy at the 1995 Annual Meeting voted in favor of the election of Dr. Triplett,
and the holders of 377,653 shares of Common Stock withheld their vote for Dr.
Triplett. Messrs. Thomas G. Barksdale, M. Bernard Puckett and E. Lee Walker will
continue to serve as directors of the Company until the 1996 Annual Meeting of
Stockholders, and Messrs. John N. Palmer and John E. Welsh III will continue to
serve as directors of the Company until the 1997 Annual Meeting of Stockholders,
in each case until their respective successors are elected and qualified. On May
25, 1995, the Board of Directors increased the size of the Board and elected Mr.
Gregory B. Maffei as a director of the Company to serve until the 1997 Annual
Meeting of Stockholders and until his successor is elected and qualified.
At the 1995 Annual Meeting, the stockholders of the Company also approved
an amendment to the Company's 1990 Executive Incentive Plan (the "1990 Plan").
The principle purpose of the amendment was to increase the number of shares of
Common Stock available for awards under the 1990 Plan by two million shares,
such that the aggregate number of shares of Common Stock available for awards
under the amended 1990 Plan was increased from four million to six million
shares. The amendment to the 1990 Plan also made changes that were necessary so
that awards of option rights under the amended 1990 Plan may qualify as
performance-based compensation for purposes of Section 162(m) of the Internal
Revenue Code of 1986, as amended. In addition, the amendment to the 1990 Plan
provided that both awards of stock options and other transactions by officers of
the Company under the amended 1990 Plan will be eligible for exemption from the
short-swing profit provisions of Section 16(b) of the
22
<PAGE>
Securities Exchange Act of 1934, as amended, pursuant to Rule 16b-3 thereunder.
The amendment to the 1990 Plan was approved by the affirmative vote of the
holders of 38,770,140 shares of Common Stock, constituting a majority of the
shares of Common Stock present in person or by proxy at the 1995 Annual Meeting,
with 5,257,360 shares of Common Stock voting against the amendment and 299,294
shares abstaining from voting.
Item 5. Other Information
-----------------
None.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits.
The following exhibit is filed as part of this Quarterly Report on
Form 10-Q.
Exhibit No. Description
----------- -----------
10 Mobile Telecommunication Technologies Corp. 1990
Executive Incentive Plan, as amended by the Board
of Directors on March 6, 1995 and approved by the
Stockholders on May 25, 1995
27 Financial Data Schedule for quarter ended
June 30, 1995
(b) Reports on Form 8-K.
None.
23
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MOBILE TELECOMMUNICATION
TECHNOLOGIES CORP.
Dated: August 14, 1995 By /s/ John N. Palmer
-----------------------------------
John N. Palmer
Chairman of the Board
Dated: August 14, 1995 By /s/ J. Robert Fugate
-----------------------------------
J. Robert Fugate
Senior Vice President - Finance,
and Chief Financial Officer
24
<PAGE>
EXHIBIT 10
MOBILE TELECOMMUNICATION TECHNOLOGIES CORP.
1990 EXECUTIVE INCENTIVE PLAN
(as amended by The Board of Directors on March 6, 1995
and approved by The Stockholders on May 25, 1995)
1. Purpose. The purpose of this Plan is to attract and retain officers and
-------
key employees for Mobile Telecommunication Technologies Corp. (the "Company")
and its Subsidiaries and to provide to such persons incentives and rewards for
superior performance.
2. Definitions. As used in this Plan,
-----------
"Appreciation Right" means a right granted pursuant to Paragraph 5.
"Board" means the Board of Directors of the Company.
"Committee" means the committee of the Board referred to in Paragraph 12 of
this Plan.
"Common Stock" means Common Stock, par value $.01 per share, of the Company
or any security into which such Common Stock may be changed by reason of
any transaction or event of the type described in Paragraph 9 of this Plan.
"Date of Grant" means the date specified by the Committee on which a grant
of Option Rights, Appreciation Rights or Performance Units or a grant or
sale of Restricted Stock shall become effective (which date shall not be
earlier than the date on which the Committee takes action with respect
thereto).
"Eligible Participant" means a person who is selected by the Committee to
receive benefits under this Plan and who is at the time an officer or key
employee of the Company or any of its Subsidiaries, or who has agreed to
commence serving in any of such capacities within 90 days of the Date of
Grant.
"Management Objectives" means the achievement objectives established by the
Committee pursuant to Paragraph 7 of this Plan for Eligible Participants
who have received grants of Performance Units.
"Market Value Per Share" means, at any date, (a) the closing sale price of
the Common Stock on that date (or, if there are no sales on that date, the
last preceding date on which there were sales) in the principal market in
which the Common Stock is traded, or (b) in the absence of a principal
market, the fair market value price determined by the Committee in good
faith.
"Optionee" means the optionee named in an agreement evidencing an
outstanding Option Right.
"Option Right" means the right to purchase shares of Common Stock upon
exercise of an option granted pursuant to Paragraph 4 of this Plan.
"Performance Period" means, in respect of a Performance Unit, a period of
time established pursuant to Paragraph 7 of this Plan within which the
Management Objectives relating to such Performance Unit are to be achieved.
"Performance Unit" means a unit equivalent to $100.00 awarded pursuant to
Paragraph 7 of this Plan.
"Restricted Stock" means shares of Common Stock granted or sold pursuant to
Paragraph 6 of this Plan as to which neither the substantial risk of
forfeiture nor the prohibition on transfers referred to therein has
expired.
"Spread" means the amount obtained by multiplying the excess of the Market
Value Per Share of Common Stock on the date when an Appreciation Right is
exercised over the option price per share provided for in the related
Option Right by the number of shares of Common Stock subject to the Option
Right.
"Subsidiary" means any corporation in which the Company owns or controls,
directly or indirectly, more than 50% of the total combined voting power
represented by all outstanding classes of stock issued by such corporation.
1
<PAGE>
3. Shares Available Under Plan. The shares of Common Stock which may be
---------------------------
(a) sold or transferred upon the exercise of Option Rights or Appreciation
Rights, (b) awarded or sold as Restricted Stock and released from substantial
risks of forfeiture thereof or (c) transferred in payment of Performance Units
which have been earned, shall not exceed in the aggregate 6,000,000 shares,
subject to adjustment as provided in Paragraph 9 of this Plan. Upon exercise by
an Optionee of any Appreciation Rights, there shall be deemed to have been
transferred to such Optionee under this Plan the number of shares of Common
Stock covered by the related Option Rights, regardless of whether such
Appreciation Rights were paid in cash, shares of Common Stock or a combination
thereof. Such shares may be shares of original issuance, treasury shares or a
combination of the foregoing.
Notwithstanding any other provision of this Plan to the contrary, no Eligible
Participant shall be granted Option Rights for more than 10% of the total
number of shares authorized for awards under the Amended 1990 Plan at the time
that the Amended 1990 Plan is adopted by the Company's stockholders.
4. Option Rights. The Committee may, from time to time and upon such terms
-------------
and conditions as it may determine, grant to Eligible Participants Option
Rights. Without limiting the foregoing, each such grant may utilize any or all
of the authorizations, and shall be subject to all of the limitations,
contained in the following provisions:
(a) Each grant shall specify the number of shares of Common Stock to
which it pertains.
(b) Each grant shall specify an option price per share not less than the
Market Value Per Share on the Date of Grant.
(c) Each grant shall specify that the option price shall be payable at
the time of exercise in the manner specified in the agreement evidencing
the Option Rights (i) in cash or by check acceptable to the Company, or
(ii) by the transfer to the Company of a sufficient number of shares of
Common Stock having a Market Value Per Share at the time of exercise to
equal the total option price, or (iii) by a combination of such methods of
payment, as determined by the Committee in its sole discretion.
(d) Each grant shall specify the period or periods of continuous
employment of the optionee by the Company or any Subsidiary which is
necessary (as consideration to the Company) before the Option Rights or
installments thereof will become exercisable.
(e) Option Rights granted under this Plan may be (i) options which are
intended to qualify under particular provisions of the Internal Revenue
Code of 1986, as amended from time to time ("Code"), (ii) options that are
not intended to so qualify or (iii) combinations of the foregoing.
(f) No Option Right shall be exercisable more than ten years from the
Date of Grant.
(g) Option Rights granted under this Plan may be exercised only as
follows: (i) no Option Right, or portion thereof, may be exercised until
the first anniversary of the Date of Grant of such Option Right; (ii) from
the first anniversary of the Date of Grant of an Option Right until the day
before the date eighteen months after the Date of Grant, such Option Right
may be exercised as to not more than 33 1/3% of the shares of Common Stock
subject to such Option Right; (iii) after each of eighteen months and
twenty-four months after the Date of Grant of an Option Right, such Option
Right may be exercised as to an additional 33 1/3% of the shares of Common
Stock subject to such Option Right, plus any shares as to which the Option
Right might theretofore have been exercised but has not been exercised; and
(iv) subject in any case to any additional limitations established in
accordance with subparagraph (e) above. Upon a filing pursuant to any
federal or state law in connection with any tender offer for shares of the
Company (other than a tender offer by the Company) or upon the signing of
any agreement for the merger or consolidation of the Company with another
corporation or for sale of all or substantially all of the assets of the
Company or upon adoption of any resolution of reorganization or dissolution
of the Company by the stockholders or upon the occurrence of any other
event or series of events, which tender offer, merger, consolidation, sale,
reorganization, dissolution or other event or series of events, in the
opinion of the Board, will, or is likely to, if carried out, result in a
change of control of the Company or if during any period of two consecutive
years, individuals who at the beginning of such period constituted
2
<PAGE>
the Directors of the Company cease for any reason to constitute a majority
thereof (unless the election, or the nomination for election by the
Company's stockholders, of each Director of the Company first elected
during such period was approved by a vote of at least two-thirds of the
Directors then still in office who were Directors of the Company at the
beginning of any such period), the Option Rights granted under this Plan
shall become immediately exercisable in full. If any such tender offer,
merger, consolidation, sale, reorganization, liquidation or other event or
series of events mentioned in the immediately preceding sentence shall be
abandoned, the Board may by notice to the Optionees nullify the effect
thereof and reinstate the provisions of the first sentence of this
subparagraph (g), but without prejudice to any exercise of Option Rights
that may have occurred prior to such nullification.
(h) Each grant of Option Rights shall be evidenced by an agreement
executed on behalf of the Company by a duly authorized officer and
delivered to the Optionee and containing such terms and provisions,
consistent with this Plan, as the Committee may approve.
5. Appreciation Rights. The Committee may, from time to time and upon such
-------------------
terms and conditions as it may determine, also grant to any Optionee
Appreciation Rights in respect of Option Rights granted hereunder. An
Appreciation Right shall be a right of the Optionee, exercisable by surrender
of the related Option Right, to receive from the Company an amount which shall
be determined by the Committee, and shall be expressed as a percentage of the
Spread (not exceeding 100%) at the time of exercise. Without limiting the
foregoing, each such grant may utilize any or all of the authorizations, and
shall be subject to all of the limitations, contained in the following
provisions:
(a) Any grant may specify that the amount payable on exercise of an
Appreciation Right may be paid by the Company in cash, in shares of Common
Stock, or in any combination thereof, and may either grant to the Optionee
or retain in the Committee the right to elect among those alternatives;
provided, however, that if the right to elect among those alternatives is
granted to the Optionee, the Committee shall have sole discretion to
consent to or disapprove the Optionee's election to receive cash in full or
partial settlement of an Appreciation Right, which consent or disapproval
may be given at any time after the election to which it relates.
(b) Any grant may specify that the amount payable on exercise of an
Appreciation Right (valuing shares of Common Stock subject to the related
Option Right for this purpose at their Market Value Per Share at the date
of exercise) may not exceed a maximum specified by the Committee at the
Date of Grant.
(c) Any grant may specify waiting periods before exercise and permissible
exercise dates or periods, and shall provide that no Appreciation Right may
be exercised except at a time when the related Option Right is also
exercisable and at a time when the Spread is positive.
(d) Each grant of Appreciation Rights shall be evidenced by a
notification executed on behalf of the Company by a duly authorized officer
and delivered to and accepted by the Optionee, which notification shall
describe such Appreciation Rights, identify the related Option Rights,
state that such Appreciation Rights are subject to all the terms and
conditions of this Plan, and contain such other terms and conditions,
consistent with this Plan, as the Committee may approve.
6. Restricted Stock. The Committee may, from time to time and upon such terms
----------------
and conditions as it may determine, also grant or sell to Eligible Participants
Restricted Stock. Without limiting the foregoing, each such grant or sale may
utilize any or all of the authorizations, and shall be subject to all of the
limitations, contained in the following provisions:
(a) Each such grant or sale shall constitute an immediate transfer of the
ownership of shares of Common Stock to the Eligible Participant in
consideration of the performance of services, entitling such Eligible
Participant to voting, dividend and other ownership rights, but subject to
the substantial risk of forfeiture and restrictions on transfer hereinafter
referred to.
(b) Each such grant or sale may be made without the payment of cash
consideration or in consideration of a payment by such Eligible Participant
at a price per share of Common Stock that is less than Market Value Per
Share at the Date of Grant.
3
<PAGE>
(c) Each such grant or sale shall provide that the shares of Restricted
Stock covered by such grant or sale shall be subject, for a period to be
determined by the Committee at the Date of Grant, to a "substantial risk of
forfeiture" within the meaning of Section 83 of the Code, and the
regulations of the Internal Revenue Service thereunder (in addition to that
which may be imposed by reason of applicability of Section 16(b) of the
Securities Exchange Act of 1934 to the Eligible Participant).
(d) Each such grant or sale shall provide that during the period for
which such substantial risk of forfeiture is to continue, the
transferability of the Restricted Stock shall be prohibited or restricted
in a manner and to the extent prescribed by the Committee at the Date of
Grant (which restrictions may include, without limiting the generality of
the foregoing, rights of repurchase or first refusal in the Company or
provisions subjecting the Restricted Stock to a continuing substantial risk
of forfeiture in the hands of any transferee).
(e) Each grant or sale of Restricted Stock shall be evidenced by an
agreement executed on behalf of the Company by a duly authorized officer
and delivered to and accepted by the Eligible Participant and shall contain
such terms and conditions, consistent with this Plan, as the Committee may
approve.
7. Performance Units. The Committee may, from time to time and upon such
-----------------
terms and conditions as it may determine, also grant Performance Units which
will become payable to an Eligible Participant upon achievement of specified
Management Objectives. Without limiting the foregoing, each such grant may
utilize any or all of the authorizations, and shall be subject to all of the
limitations, contained in the following provisions:
(a) Each grant shall specify the number of Performance Units to which it
pertains.
(b) The Performance Period with respect to each Performance Unit shall be
such period of time commencing with the Date of Grant as shall be
determined by the Committee at the Date of Grant.
(c) Each grant shall specify the Management Objectives that are to be
achieved by the Eligible Participant, which may be described in terms of
Company-wide objectives or objectives that are related to performance of
the division or Subsidiary in which such Eligible Participant is employed.
(d) Each grant shall specify a minimum acceptable level of achievement in
respect of the specified Management Objectives below which no payment will
be made and shall set forth a formula for determining the amount of payment
to be made if performance is at or above such minimum but short of full
achievement of the Management Objectives.
(e) Each grant shall specify the time and manner of payment (whether in
cash, shares of Common Stock or a combination thereof) of Performance Units
which have been earned.
(f) The Committee may adjust Management Objectives and the related
minimum acceptable level of achievement if, in the sole judgment of the
Committee, events or transactions have occurred after the Date of Grant
which are unrelated to the performance of the Eligible Participant and
result in distortion of the Management Objectives or the related minimum
acceptable level of achievement.
(g) Each grant of Performance Units shall be evidenced by a notification
executed on behalf of the Company by a duly authorized officer and
delivered to and accepted by the Eligible Participant, which notification
shall describe the Performance Units, state that such Performance Units are
subject to all the terms and conditions of this Plan, and contain such
other terms and conditions, consistent with this Plan, as the Committee may
approve.
8. Transferability. No Option Right or Appreciation Right shall be
---------------
transferable by an Optionee other than by will or the laws of descent and
distribution. Option Rights and Appreciation Rights shall be exercisable during
the Optionee's lifetime only by him (or by his guardian or legal
representative).
9. Adjustments. The Committee shall make or provide for such adjustments in
-----------
the numbers of shares of Common Stock covered by outstanding Option Rights and
Appreciation Rights granted hereunder, in the prices per share applicable to
such Option Rights and Appreciation Rights and in the kind of shares covered
4
<PAGE>
thereby, as the Committee in its sole discretion, exercised in good faith,
determines is equitably required to prevent dilution or enlargement of the
rights of Optionees that otherwise would result from (a) any stock dividend,
stock split, combination of shares, recapitalization or other change in the
capital structure of the Company, or (b) any merger, consolidation, spin-off,
reorganization, partial or complete liquidation, issuance of rights or warrants
to purchase securities, or (c) any other corporate transaction or event having
an effect similar to any of the foregoing. The Committee shall also make or
provide for such adjustments in the number of shares available for award, sale
or transfer under this Plan specified in Paragraph 3 of this Plan as the
Committee in its sole discretion, exercised in good faith, determines is
appropriate to reelect any transaction or event described in the preceding
sentence.
10. Fractional Shares. The Company shall not be required to issue any
-----------------
factional share of Common Stock pursuant to this Plan. The Committee may
provide for the elimination of fractions or for the settlement of fractions in
cash.
11. Withholding Taxes. To the extent that the Company is required to withhold
-----------------
federal, state, local or foreign taxes in connection with any payment made or
benefit realized by an Eligible Participant or other person under this Plan,
and the amounts available to the Company for such withholding are insufficient,
it shall be a condition to the receipt of such payment or the realization of
such benefit that the Eligible Participant or such other person pay to the
Company the balance of such taxes required to be withheld.
12. Administration of the Plan.
--------------------------
(a) This Plan shall be administered by one or more committees of the
Board, as determined by the Board, each of which shall consist of not less
than one director appointed by the Board and none of the members of which
shall be eligible or shall have been eligible at any time within one year
of their selection as members of the Committee for selection as a person to
whom stock may be allocated or to whom stock options or stock appreciation
rights may be granted pursuant to this Plan or any other benefit plan of
the Company or any Subsidiary. Each such Committee shall be deemed the
"Committee" hereunder with the limits of its authority as prescribed by the
Board. A majority of the Committee shall constitute a quorum, and the
action of the members of the Committee present at any meeting at which the
quorum is present, or acts unanimously approved in writing, shall be the
acts of the Committee.
(b) The interpretation and construction by the Committee of any provision
of this Plan or of any agreement, notification or document evidencing the
grant of Option Rights, Appreciation Rights, Restricted Stock or
Performance Units and any determination by the Committee pursuant to any
provision of this Plan or of any such agreement, notification or document
shall be final and conclusive. No member of the Committee shall be liable
for any such action or determination made in good faith.
13. Amendments, Etc.
---------------
(a) This Plan may be amended from time to time by the Board.
(b) The Committee may, with the concurrence of the affected Optionee,
cancel or amend any agreement evidencing Option Rights or Appreciation
Rights granted under this Plan. In the event of cancellation, the Committee
may authorize the granting of new Option Rights or Appreciation Rights
(which may or may not cover the same number of shares which had been the
subject of the prior agreement) in such manner, at such option price and
subject to the same terms, conditions and discretions as would have been
applicable under this Plan had the cancelled Option Rights or Appreciation
Rights not been granted.
(c) In case of termination of employment by reason of death, disability
or retirement at or after normal retirement age under a retirement plan of
the Company or a Subsidiary (or at an earlier age with the consent of the
Committee) of an Eligible Participant who holds an Option Right or
Appreciation Right not immediately exercisable in full, or any Restricted
Stock as to which the substantial risk of forfeiture or the prohibition or
restriction on transfer has not lapsed, or any Performance Units which have
not been fully earned, the Committee may, in its sole discretion,
accelerate the time at which such
5
<PAGE>
Option Right or Appreciation Right may be exercised or the time at which
such substantial risk of forfeiture or prohibition or restriction on
transfer will lapse or the time at which such Performance Units will be
deemed to have been fully earned.
(d) In the event an Eligible Participant shall intentionally commit an
act materially inimical to the interests of the Company or any Subsidiary
and the Committee in its sole discretion, exercised in good faith, shall so
find, notwithstanding any other provision in this Plan the Committee may
terminate as of the time of such act any Option Rights or Appreciation
Rights, or cause the forfeiture of Restricted Stock or Performance Units,
granted such Eligible Participant.
(e) This Plan shall not confer upon any Eligible Participant any right
with respect to continuance of employment or other service with the Company
or any Subsidiary, nor shall it interfere in any way with any right the
Company or any Subsidiary would otherwise have to terminate such Eligible
Participant's employment or other service at any time.
6
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from Consolidated
Balance Sheet as of June 30, 1995 and Consolidated Statement of Operations for
the six months ended June 30, 1995 and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 42,252,269
<SECURITIES> 56,988,113
<RECEIVABLES> 36,863,858
<ALLOWANCES> 5,061,892
<INVENTORY> 0
<CURRENT-ASSETS> 141,959,061
<PP&E> 234,958,862
<DEPRECIATION> 60,453,978
<TOTAL-ASSETS> 766,047,904
<CURRENT-LIABILITIES> 51,830,699
<BONDS> 268,014,167
<COMMON> 499,315
0
37,500
<OTHER-SE> 415,353,776
<TOTAL-LIABILITY-AND-EQUITY> 766,047,904
<SALES> 107,492,609
<TOTAL-REVENUES> 107,492,609
<CGS> 0
<TOTAL-COSTS> 116,738,390
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,148,935
<INCOME-PRETAX> (4,687,086)
<INCOME-TAX> 314,771
<INCOME-CONTINUING> (5,001,857)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,001,857)
<EPS-PRIMARY> (0.19)
<EPS-DILUTED> (0.19)
</TABLE>
