<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, 1996
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.
54,364,245 shares of Common Stock,
par value $.01 per share, as of
July 31, 1996
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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, 1996 and December 31, 1995.
Consolidated Statements of Operations--Six Months Ended June 30,
1996 and 1995, and Three Months Ended June 30, 1996 and 1995.
Consolidated Statements of Cash Flows--Six Months Ended June 30,
1996 and 1995, and Three Months Ended June 30, 1996 and 1995.
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
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MOBILE TELECOMMUNICATION TECHNOLOGIES CORP.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
----------- -------------
<S> <C> <C>
ASSETS:
CURRENT ASSETS
Cash and cash equivalents $11,191,710 $9,612,734
Accounts receivable, net 71,924,641 46,313,031
Other receivables 6,281,227 5,488,392
Other current assets 3,068,388 3,700,019
------------ -----------
TOTAL CURRENT ASSETS 92,465,966 65,114,176
------------ -----------
MESSAGING NETWORKS
Property and equipment, net 315,822,425 294,626,442
Certificates of authority and
license cost 161,301,110 159,101,539
Network construction and
development costs 88,039,762 88,145,489
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TOTAL MESSAGING NETWORKS 565,163,297 541,873,470
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GOODWILL 86,706,841 88,144,574
INVESTMENT IN UNCONSOLIDATED
INTERNATIONAL VENTURES 73,450,725 68,043,591
OTHER ASSETS
Securities restricted for debt service 48,617,363 64,101,245
Other 22,822,567 24,136,475
------------ -----------
TOTAL OTHER ASSETS 71,439,930 88,237,720
------------ -----------
$889,226,759 $851,413,531
============ ============
LIABILITIES AND STOCKHOLDERS'
INVESTMENT:
CURRENT LIABILITIES
Current maturities of long-term debt $792,584 $1,278,426
Accounts payable and accrued
liabilities 91,542,138 93,281,635
------------ -----------
TOTAL CURRENT LIABILITIES 92,334,722 94,560,061
------------ -----------
LONG-TERM DEBT 378,099,401 333,258,720
MINORITY INTEREST 40,805 54,501
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 1996 and 1995;
57,500 shares of 7.5% Cumulative
Convertible Accruing PIK
Preferred Stock outstanding in 1996 38,075 37,500
Common Stock, par value $.01 per
share; 100,000,000 shares
authorized; shares issued:
54,361,545 in 1996 and
54,134,711 in 1995 543,615 541,347
Additional paid-in-capital 615,985,269 557,837,759
Accumulated deficit (195,992,165) (133,383,935)
Cumulative translation adjustment (1,822,963) (1,492,422)
------------ -----------
TOTAL STOCKHOLDERS' INVESTMENT 418,751,831 423,540,249
------------ -----------
$889,226,759 $851,413,531
============ ============
</TABLE>
See notes to consolidated financial statements.
3
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MOBILE TELECOMMUNICATION TECHNOLOGIES CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30,
----------------------------- ---------------------------
1996 1995 1996 1995
------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues $168,795,795 $107,492,609 $88,211,699 $56,864,418
Expenses:
Operating 55,847,350 25,732,511 26,965,793 13,828,167
Selling, general and administrative 112,924,793 76,496,247 56,837,250 39,577,659
Depreciation and amortization 44,671,494 14,509,632 22,920,251 7,404,578
------------- ------------ ------------ ------------
213,443,637 116,738,390 106,723,294 60,810,404
------------- ------------ ------------ ------------
Operating income (loss) (44,647,842) (9,245,781) (18,511,595) (3,945,986)
Interest income 2,882,724 7,777,963 1,446,414 3,577,187
Interest expense (20,403,375) (5,148,935) (10,413,613) (1,971,908)
Gain (loss) on sale of assets 6,188,629 40,667 (460,779) 41,640
Other income 33,872 907,916 3,724 464,211
------------- ------------ ------------ ------------
Income (loss) before income taxes
and equity income (losses) (55,945,992) (5,668,170) (27,935,849) (1,834,856)
Provision for income taxes 1,329,286 314,771 708,463 147,559
Equity in income (losses) of investments (195,344) 981,084 (252,552) 989,044
------------- ------------ ------------ ------------
Net income (loss) ($57,470,622) ($5,001,857) ($28,896,864) ($993,371)
Preferred dividend requirement 5,137,619 4,218,750 3,028,244 2,109,375
------------- ------------ ------------ ------------
Net income (loss) available to common
stockholders ($62,608,241) ($9,220,607) ($31,925,108) ($3,102,746)
============= ============ ============ ============
Net income (loss) per common share ($1.15) ($0.19) ($0.59) ($0.06)
============= ============ ============= ============
</TABLE>
See notes to consolidated financial statements.
4
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MOBILE TELECOMMUNICATION TECHNOLOGIES CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30,
----------------------------- ------------------------------
1996 1995 1996 1995
------------ ------------ -------------- -----------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ($57,470,622) ($5,001,857) ($28,896,864) ($993,371)
Adjustments to reconcile net
income (loss) to net cash
provided by operating activities:
Depreciation and amortization 44,671,494 14,509,632 22,920,251 7,404,578
Provision for losses on accounts
receivable 9,088,508 2,838,539 4,634,599 1,215,701
Amortization of debt issuance
costs 1,000,567 (591,346) 440,526 (628,061)
Foreign currency transaction
(gain) loss (20,176) (1,103) 3,731 (10,867)
(Gain) loss on sale of assets (6,188,629) (40,667) 460,779 (41,640)
Losses attributable to minority
interests (13,696) (928,545) (7,455) (475,077)
Equity in (income) losses from
investments 195,344 (981,084) 252,552 (989,044)
Change in assets and liabilities:
(Increase) in accounts receivable (34,700,118) (14,303,495) (19,575,432) (7,157,357)
(Increase) decrease in other
receivables (792,835) - 819,569 -
Decrease in other current assets 631,631 14,080,861 10,163,536 11,103,306
Increase (decrease) in accounts
payable and accrued liabilities (2,658,366) 7,338,026 (34,463,572) 166,704
------------- ------------ ------------- ----------
Net Cash Provided By (Used In)
Operating Activities (46,256,898) 16,918,961 (43,247,780) 9,594,872
------------- ------------ ------------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of assets 13,764,044 3,840,250 4,782,167 3,840,250
Capital expenditures, net (69,184,015) (113,674,339) (28,096,869) (67,447,847)
(Increase) decrease in investment in
unconsolidated international
ventures (6,795,161) (2,619,877) (4,688,428) 1,312,137
(Increase) decrease in other assets 11,744,377 (1,692,217) 4,999,878 510,408
(Increase) decrease in short term
investments - (3,298,678) - 22,685,401
------------- ------------ ------------- ----------
Net Cash (Used In) Investing Activities (50,470,755) (117,444,861) (23,003,252) (39,099,651)
------------- ------------ ------------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term borrowings 45,000,000 313,831 15,000,000 272,543
Principal payments on long-term debt (624,985) (5,960,118) (491,538) -
Payment of dividends on preferred
stock (4,218,750) (4,218,750) (2,109,375) (2,109,375)
Sale of stock and exercise of options 58,150,364 7,022,427 57,978,823 3,918,166
-------------- ------------ ------------- ----------
Net Cash Provided By (Used In)
Financing Activities 98,306,629 (2,842,610) 70,377,910 2,081,334
------------- ------------ ------------- ----------
Net increase (decrease) in cash and
cash equivalents 1,578,976 (103,368,510) 4,126,878 (27,423,445)
Cash and cash equivalents-beginning
of period 9,612,734 145,620,779 7,064,832 69,675,714
------------- ------------ ------------- ----------
Cash and cash equivalents-end of period $11,191,710 $42,252,269 $11,191,710 $42,252,269
============= ============ ============= ===========
</TABLE>
See notes to consolidated financial statements.
5
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MOBILE TELECOMMUNICATION TECHNOLOGIES CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION; RISKS AND UNCERTAINTIES
Mobile Telecommunication Technologies Corp. ("Mtel" or the "Company") is
a leading provider of nationwide messaging services in the United States.
Mtel's wholly-owned subsidiary, SkyTel Corp. ("SkyTel"), operates a one-way
nationwide messaging system whereby subscribers can be reached in thousands of
towns and cities in the United States by means of two dedicated 931 MHz
frequencies licensed by the Federal Communications Commission ("FCC"), a ground-
based transmitter system, leased satellite facilities and proprietary network
software.
On September 19, 1995, the Company launched commercial operation of
SkyTel 2-Way/(TM)/, the first two-way nationwide wireless messaging network in
the United States, which enables 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 laptop and palmtop computers, without the need to know the
location of the sender or receiver at the time of transmission. SkyTel 2-
Way/(TM)/ utilizes a proprietary system architecture designed and developed by
Mtel and offers a broad range of communications services, including
acknowledgment paging, wireless two-way messaging and information services.
Mtel's 100%-owned subsidiary, Destineer Corp., holds the FCC license utilized by
the SkyTel 2-Way/(TM)/ network.
Mtel, through its 100%-owned subsidiary Mtel International, Inc. ("Mtel
International"), operates or has investments in entities that operate one-way
wireless messaging systems in various countries in Latin America and the Asia
Pacific region. Mtel also provides its subscribers with access to an
international messaging network that utilizes Mtel's proprietary
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technology and interconnects the systems operated by Mtel and its joint ventures
with systems in Canada, Singapore and other countries.
Mtel is also engaged in other telecommunications-related businesses
including air-to-ground telecommunications operations and telephone answering
services.
Mtel operates primarily through three business segments: SkyTel one-way
messaging, SkyTel 2-Way/(TM)/ and international messaging operations. For the
second quarter of 1996, SkyTel one-way messaging, the Company's principal
operating segment, reported revenues of $79.0 million, operating income of $17.5
million and net income of $16.1 million. SkyTel 2-Way/(TM)/, which commenced
commercial operation in September 1995 and is currently in a start-up phase,
reported revenues of $2.2 million, an operating loss of $28.0 million and a net
loss of $37.2 million for the second quarter of 1996. Mtel's international
operations reported revenues of $4.8 million, an operating loss of $6.1 million
and a net loss of $8.0 million from its majority-owned ventures for the quarter
ended June 30, 1996. For purposes of reporting operating income (loss) for the
Company's business segments, certain indirect operating and selling, general and
administrative expenses are allocated among the business segments based on the
percentage of time spent by personnel on each segment's activities.
See Note 1 of Notes to Consolidated Financial Statements in Mtel's Annual
Report on Form 10-K for the year ended December 31, 1995 for a discussion of
certain risks and uncertainties involving the Company's ability to generate
future positive operating cash flows and operating income, the March 1996
amendment of the bank loan agreement and the impact of certain events and
transactions required by such amendment on the availability of the capital
resources needed by the Company to complete its business plans.
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2. 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.
The Company's consolidated financial statements for the three and six
month periods ending June 30, 1996 and 1995 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 these periods
are not necessarily indicative of the results for the year ending December 31,
1996.
3. EARNINGS (LOSS) PER SHARE
Loss per share for the three and six month periods ending June 30, 1996
and 1995 is calculated by dividing the net loss (after deducting preferred stock
dividends) by the weighted average number of shares of common stock outstanding
during the period with no effect given to common stock equivalents arising from
stock options, convertible subordinated debt and convertible preferred stock
because such effect would be antidilutive. The weighted average number of
shares of common stock outstanding in the second quarter of 1996 and the first
six months of 1996 was 54,304,107 and 54,226,860, respectively. The weighted
average number of shares of common stock outstanding in the second quarter of
1995 and the first six months of 1995 was 49,640,454 and 49,246,398,
respectively.
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4. 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.
5. BANK CREDIT FACILITY
In December 1995, SkyTel established a $250.0 million secured revolving
credit facility with a syndicate of financial institutions. As part of the bank
credit facility, SkyTel is also provided with access to letters of credit in an
amount up to $20.0 million. Borrowings under the credit facility may be
used for capital expenditures, working capital and other general corporate
purposes.
In March 1996, the lending banks waived certain first quarter 1996
covenant violations and agreed to certain amendments to the bank loan agreement
to provide additional operational flexibility. The amendments, among other
things, required the Company to complete the following transactions on or before
the dates indicated: (i) on or before May 15, 1996, complete the sale of such
number of shares of PIK Preferred Stock (as defined in Note 6) as would result
in the Company receiving gross proceeds of at least $50.0 million; (ii) on or
before June 30, 1996, complete the previously planned sale of the Company's 29%
equity interest in Mercury Paging Ltd. ("MPL"), which operates in the United
Kingdom, and its previously planned sale of equity securities of a subsidiary
formed for the purpose of holding the Company's investments in operations in
Latin America for certain minimum proceeds; and (iii) on or before December 31,
1996, complete the previously planned sale of equity securities of a subsidiary
to be formed for the purpose of holding the Company's investments in operations
in Asia
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for certain minimum proceeds. In June 1996, the lending banks granted the
Company a 30-day extension, until July 31, 1996, to complete the sale of its
interest in MPL, and a 90-day extension, until September 30, 1996, to complete
the sale of equity securities of the subsidiary formed for the purpose of
holding the Company's investments in its Latin American operations. The Company
completed the sale of PIK Preferred Stock in the second quarter of 1996 (see
Note 6) and completed the sale of its 29% equity interest in MPL on
July 15, 1996 (see Note 7).
Management of the Company believes that the two remaining transactions
described above required under the amended loan agreement will be concluded by
the dates prescribed in the amended loan agreement. However, the failure to
meet these requirements would result in an event of default under the amended
loan agreement.
6. PIK PREFERRED STOCK
In April and May of 1996, the Company completed the sale of 57,500 shares
of its 7.5% Cumulative Convertible Accruing PIK Preferred Stock (the "PIK
Preferred Stock") for an aggregate purchase price of $57.5 million. See Note 5.
The proceeds from the sale of the PIK Preferred Stock have been used by the
Company for general corporate purposes including the continued development and
optimization of the SkyTel 2-Way/(TM)/ network.
7. SALE OF MERCURY PAGING LTD.
On July 15, 1996, the Company completed the sale of its 29% equity
interest in MPL, which operates in the United Kingdom, and received net pre-tax
proceeds of approximately $26.4 million. MPL was considered a non-strategic
asset because it does not operate on the 931 MHz
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frequency. In the third quarter of 1996, the Company will report a net after-tax
loss on the sale of its operations in the United Kingdom of approximately $3.5
million.
8. AMENDMENT OF INDENTURE RELATING TO SENIOR NOTES
In July 1996, the Company completed a consent solicitation pursuant to
which the holders of the Company's 13.5% Senior Notes due 2002 (the "Senior
Notes") approved certain amendments to the indenture relating to the Senior
Notes. Under the amended terms of the indenture, the Company will have
increased borrowing capacity, subject to the terms of its existing bank
credit facility, to meet the Company's anticipated financial needs. Borrowing
capacity permitted under the indenture is based, in part, on the number of
messaging units placed in service since September 30, 1994. In addition, the
amendments permit the Company to designate its Latin American and Asian holding
companies as unrestricted subsidiaries for purposes of the indenture, thereby
taking them outside the scope of the indenture covenants, to facilitate the
planned sale of equity securities in these holding companies. The Company has
paid consenting holders of the Senior Notes $15.00 per $1,000 principal amount
of Senior Notes, or an aggregate of approximately $3.9 million, and has agreed
to extend the period during which the Company is prohibited from effecting an
optional redemption of the Senior Notes by one year to December 15, 1999. The
consideration paid to the consenting holders of the Senior Notes will be
amortized over the remaining term of the Senior Notes.
9. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid by Mtel was $20.5 million and $15.2 million during the six
months ended June 30, 1996 and 1995, respectively, and was $19.2 million and
$14.8 million during the three months ended June 30, 1996 and 1995,
respectively. No federal income taxes were paid during these periods.
11
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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, 1996 and 1995 and certain factors that will affect Mtel's financial
condition. See Note 1 of Notes to Consolidated Financial Statements in Mtel's
Annual Report on Form 10-K for the year ended December 31, 1995 for a discussion
of certain risks and uncertainties involving the Company's ability to generate
future positive operating cash flows and operating income, the March 1996
amendment of the bank loan agreement and the impact of certain events and
transactions required by such amendment on the availability of the capital
resources needed by the Company to complete its business plans.
Certain statements set forth in Management's Discussion and Analysis of
Financial Condition and Results of Operations, which are not historical facts,
are forward-looking statements under the Private Securities Litigation Reform
Act of 1995 that are subject to risks and uncertainties that could cause actual
results to differ materially from those set forth in the forward-looking
statements. Among the factors that could cause actual future results to differ
materially are competitive pressures, the timing and technique used in marketing
by third-party distributors and the market acceptance of certain services.
RESULTS OF OPERATIONS
REVENUES
Revenues on a consolidated basis increased 57% in the six months ended
June 30, 1996 as compared to the six months ended June 30, 1995, primarily due
to the 53% increase in SkyTel one-way messaging revenues in the first half of
1996 as compared to the first half of 1995. Revenues on a
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consolidated basis increased 55% in the second quarter of 1996 as compared to
the second quarter of 1995, primarily due to the 51% increase in SkyTel one-way
messaging revenue in the second quarter of 1996 as compared to the second
quarter of 1995. As of June 30, 1996, SkyTel had 1,037,500 one-way messaging
units in service in the United States, an increase of 49% over the 695,700 one-
way messaging units in service as of June 30, 1995. In the second quarter of
1996, SkyTel reported net one-way unit sales of 50,100 as compared to 60,500 net
unit additions in the first quarter of 1996. The Company also reported an
additional 19,700 one-way units as a result of an internal reconciliation,
resulting in a total of 69,800 net one-way unit additions in the second quarter
of 1996. The lower rate of net unit sales in the second quarter of 1996 as
compared to the first quarter of 1996 resulted from lower sales by resellers,
including MCI Telecommunications Corp ("MCI"), the termination of certain agent
relationships and significantly higher disconnect rates in these distribution
channels. The Company anticipates that it will continue to experience increased
disconnect rates in these distribution channels in the third quarter of 1996,
and that net unit additions in the third quarter will be comparable to the
levels reported in the first and second quarters of 1996. However, in the fourth
quarter of 1996 the Company expects to begin to experience a decline in these
disconnect rates and an increase in net unit additions from its reseller
distribution channel. Average revenue per unit from one-way messaging operations
increased 2.4% in the second quarter of 1996 as compared to the first quarter of
1996 primarily as a result of a shift in product mix to increased alphanumeric
products and an increase in usage by SkyTel's customers.
Mtel's consolidated revenues include revenues recorded by the Company's
wholly-owned subsidiary in Argentina which commenced commercial operation in
April 1994, its 98%-owned subsidiary in Colombia which commenced commercial
operation in June 1994, its 100%-owned subsidiary in Hong Kong which commenced
commercial operation in June 1995 and its 90%-owned
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subsidiary in Uruguay which was acquired in September 1995. During the first
half of 1996, revenues recorded by the Company's consolidated international
operations accounted for approximately 5% of Mtel's revenues as compared to 3%
in the first half of 1995.
During the first half of 1996, SkyTel one-way messaging provided
approximately 90% of Mtel's revenues as compared to 92% in the first half of
1995. SkyTel 2-Way/(TM)/ provided approximately 2% of consolidated revenues
during the first half of 1996. Other Mtel operations provided approximately 3%
of revenues in the first half of 1996 as compared to 5% in the first half of
1995.
EXPENSES
Expenses include operating, selling, general and administrative, and
depreciation and amortization. The Company capitalized costs related to the
SkyTel 2-Way/(TM)/ network until commencement of commercial operation in
September 1995.
Operating expenses primarily consist of salaries, telephone costs and
transmitter and receiver site rentals associated with the Company's one-way and
two-way messaging operations in the United States and international messaging
operations as well as expenses associated with the maintenance of the Company's
operating equipment and facilities. These expenses on a consolidated basis
increased 117% in the first six months of 1996 as compared to the first six
months of 1995 and increased 95% in the second quarter of 1996 as compared to
the second quarter of 1995. This increase primarily reflects operating expenses
attributable to the SkyTel 2-Way/(TM)/ network, which because of system design
and functionality have significantly higher fixed operating expenses than the
Company's one-way operations, and increased telephone and system costs
associated with the increasing one-way messaging subscriber base. As a
percentage of consolidated revenues, operating expenses increased to 33% in the
first six months of 1996 as compared to 24% in the first six months of 1995 and
increased
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to 31% in the second quarter of 1996 as compared to 24% in the second quarter of
1995. Mtel's operating expenses as a percentage of revenues declined from 36% in
the first quarter of 1996 to 31% in the second quarter of 1996. Mtel expects to
continue to incur increased operating expenses during 1996 as a result of the
inclusion of operating expenses related to the SkyTel 2-Way/(TM)/ network for a
full year. In addition, the Company expects to incur increased operating
expenses during 1996 as a result of the continuing expansion of its one-way
messaging subscriber base.
Selling, general and administrative expenses include marketing and
advertising costs related to domestic and international messaging operations,
personnel costs 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 48% in
the first six months of 1996 as compared to the first six months of 1995 and
increased 44% in the second quarter of 1996 as compared to the second quarter of
1995. This increase primarily reflects selling, general and administrative
expenses related to the SkyTel 2-Way/(TM)/ network and additional costs
associated with customer support operations, such as customer service, operator
dispatch, billing and collections related to the continuing increase in units in
service on the SkyTel one-way messaging system. As a percentage of consolidated
revenues, selling, general and administrative expenses decreased to 67% in the
first six months of 1996 as compared to 71% in the first six months of 1995 and
decreased to 64% in the second quarter of 1996 as compared to 70% in the second
quarter of 1995. On a consolidated basis, selling, general and administrative
expenses are expected to continue to increase during 1996 primarily as a result
of the inclusion of such expenses related to the SkyTel 2-Way/(TM)/ network for
a full year.
Depreciation and amortization increased 208% in the first six months of
1996 as compared to the first six months of 1995 and increased 210% in the
second quarter of 1996 as compared to the second quarter of 1995, primarily
reflecting depreciation and amortization of the network
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infrastructure, spectrum costs and other capitalized costs related to the SkyTel
2-Way/(TM)/ network and depreciation of one-way messaging units in service. As a
percentage of revenues, depreciation and amortization expenses increased to 26%
in the first six months of 1996 as compared to 14% in the first six months of
1995 and increased to 26% in the second quarter of 1996 as compared to 13% in
the second quarter of 1995. The Company expects depreciation and amortization
expenses to continue to increase during 1996 as a result of the inclusion of
depreciation and amortization of network infrastructure, spectrum costs and
other capitalized costs related to the SkyTel 2-Way/(TM)/ network for a full
year.
OPERATING INCOME (LOSS)
Mtel reported a consolidated operating loss of approximately $44.6
million for the first six months of 1996 as compared to an operating loss of
approximately $9.2 million for the first six months of 1995 and an operating
loss of $18.5 million for the second quarter of 1996 as compared to an operating
loss of $3.9 million for the second quarter of 1995. For the three-month period
ended June 30, 1996, one-way messaging operations recorded operating income of
$17.5 million, which was offset by an operating loss of $28.0 million from
SkyTel 2-Way/(TM)/ operations and an operating loss of $6.1 million from
international operations.
The Company expects to report operating losses on a consolidated basis
during 1996 and 1997 as a result of continuing start-up losses related to SkyTel
2-Way/(TM)/ operations and continuing losses from international messaging
operations. However, the Company expects SkyTel's one-way messaging business to
continue to report operating income in 1996 and future periods as a result of
continued growth in units in service.
16
<PAGE>
INTEREST INCOME (EXPENSE)
Interest expense increased 296% in the first six months of 1996 as
compared to the first six months of 1995 and increased 428% in the second
quarter of 1996 as compared to the second quarter of 1995. This increase
primarily reflects interest accrued on borrowings under the Company's bank
credit facility established in the fourth quarter of 1995. As of June 30, 1996,
the Company had $110.5 million principal amount outstanding under the bank
credit facility. In addition, the Company generally ceased capitalizing interest
related to the development and construction of the SkyTel 2-Way(TM) network upon
commencement of commercial operation in September 1995, except for capitalized
interest related to the cost of one narrowband PCS license acquired in 1994
that is not currently being utilized.
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 approximately $12.9 million and $4.0 million in interest
costs in the first six months of 1995 and 1996, respectively, and capitalized
approximately $7.0 million and $1.4 million in interest costs in the second
quarter of 1995 and 1996, respectively. Capitalized interest decreased in the
second quarter and first six months of 1996 as compared to the same periods in
1995 since the capitalization of interest related to the development and
construction of the SkyTel 2-Way/(TM)/ network ceased upon commencement of
commercial operation in September 1995, except as described above.
Interest income totaled $2.9 million in the first six months of 1996 as
compared to $7.8 million in the first six months of 1995 and totaled $1.4
million in the second quarter of 1996 as compared to $3.6 million in the second
quarter of 1995. This decrease is primarily attributable to a
17
<PAGE>
decrease in cash available for investment and a reduction in the aggregate
amount of securities restricted for debt service related to the Senior Notes.
PROVISION FOR INCOME TAXES
Mtel recorded a provision for income taxes of $1.3 million and $0.3
million in the first six months of 1996 and 1995, respectively, and $0.7 million
and $0.1 million in the second quarter of 1996 and 1995, 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, 1996
and 1995 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, 1996 and 1995 related to dividends on the Company's $2.25
Cumulative Convertible Exchangeable Preferred Stock (the "$2.25 Preferred
Stock"). In addition, the Company accrued approximately $0.9 million in the
second quarter of 1996 related to stock dividends accrued on the Company's 7.5%
Cumulative Convertible Accruing PIK Preferred Stock (the "PIK Preferred Stock")
issued in April and May of 1996. Although dividends on the $2.25 Preferred Stock
and the PIK 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. See Note 6 of Notes to
Consolidated Financial Statements.
18
<PAGE>
NET INCOME (LOSS)
Mtel recorded a net loss of approximately $57.5 million in the six month
period ended June 30, 1996 which, combined with the effect of the preferred
stock dividends, resulted in a net loss per common share of $1.15 for such
period. This compares to a net loss of approximately $5.0 million, or $0.19 per
common share, in the first six months of 1995. The Company recorded a net loss
of $28.9 million, or $0.59 per common share, in the second quarter of 1996 as
compared to a net loss of $1.0 million, or $0.06 per common share, in the second
quarter of 1995. The net loss in the first six months of 1996 was offset by a
gain of approximately $6.6 million from the sale of a portion of the Company's
investment in American Mobile Satellite Corp. in the first quarter of 1996.
The Company expects to incur net losses during the remainder of 1996 and 1997 as
a result of continuing start-up losses from SkyTel 2-Way/(TM)/ and continuing
losses from its international operations.
LIQUIDITY AND CAPITAL RESOURCES
The Company invested $38.9 million in the first half of 1996, including
$13.0 million in the second quarter of 1996, to procure messaging units to
support SkyTel's increasing one-way messaging subscriber base and, to a lesser
extent, in connection with the optimization and expansion of the SkyTel one-way
messaging system. In addition, Mtel incurred capital expenditures for
equipment, development costs and construction costs related to the SkyTel
2-Way/(TM)/ network of $25.6 million in the first half of 1996, including $12.1
million in the second quarter of 1996, which related to the Company's efforts to
expand the coverage of the SkyTel 2-Way/(TM)/ network in certain major
metropolitan areas, continued efforts to optimize and improve the performance
and reliability of the SkyTel 2-Way/(TM)/ network and the purchase of two-way
personal messaging units. Capital expenditures in the second quarter of 1996
were funded with cash generated from SkyTel's one-way
19
<PAGE>
messaging operations, proceeds from borrowings under SkyTel's bank credit
facility and proceeds from the sale of the PIK Preferred Stock.
In December 1995, SkyTel established a $250.0 million secured revolving
credit facility with a syndicate of financial institutions. As part of the bank
credit facility, SkyTel is also provided with access to letters of credit in an
amount up to $20.0 million. Borrowings under the credit facility may be used for
capital expenditures, working capital and other general corporate purposes.
As previously reported in the Company's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1996, in March 1996 the lending banks waived certain
first quarter 1996 covenant violations and agreed to certain amendments to the
bank loan agreement to provide additional operational flexibility. The
amendments, among other things, required the Company to complete the following
transactions on or before the dates indicated: (i) on or before May 15, 1996,
complete the sale of such number of shares of PIK Preferred Stock as would
result in the Company receiving gross proceeds of at least $50.0 million; (ii)
on or before June 30, 1996, complete the previously planned sale of the
Company's 29% equity interest in MPL, which operates in the United Kingdom, and
the previously planned sale of equity securities of a subsidiary formed for the
purpose of holding the Company's investments in operations in Latin America for
certain minimum proceeds; and (iii) on or before December 31, 1996, complete the
previously planned sale of equity securities of a subsidiary to be formed for
the purpose of holding the Company's investments in operations in Asia for
certain minimum proceeds. In June 1996, the lending banks granted the Company a
30-day extension, until July 31, 1996, to complete the sale of its interest in
MPL, and a 90-day extension, until September 30, 1996, to complete the sale of
equity securities of the subsidiary formed for the purpose of holding the
Company's investments in its Latin American operations. The Company completed
the sale of PIK
20
<PAGE>
Preferred Stock in the second quarter of 1996 and completed the sale of its 29%
equity interest in MPL on July 15, 1996. Management of the Company believes that
the two remaining transactions described above will be concluded by the dates
prescribed in the amended loan agreement, although there can be no assurance in
this regard.
As of June 30, 1996, SkyTel had $110.5 million in borrowings outstanding
under the bank credit facility, including borrowings of $15.0 million in the
second quarter of 1996. Letters of credit in the amount of $3.7 million have
been issued under the credit facility as of June 30, 1996, and the credit
available under the facility has been reduced by a corresponding amount.
The Company has agreed to temporarily limit its borrowing availability under the
bank credit facility pending the execution of a formal amendment to the bank
loan agreement and currently has borrowing availability of $12.5 million under
its bank credit facility. The Company is involved in negotiations with respect
to this amendment which would result in aggregate availability under the bank
credit facility of approximately $50 million in the third quarter of 1996.
In July 1996, the Company completed a consent solicitation pursuant to
which the holders of the Senior Notes approved certain amendments to the
indenture relating to the Senior Notes. Under the amended terms of the
indenture, the Company will have increased borrowing capacity, subject to the
terms of its existing bank credit facility, to meet the Company's anticipated
financial needs. Borrowing capacity permitted under the indenture is based, in
part, on the number of messaging units placed in service since September 30,
1994. In addition, the amendments permit the Company to designate its Latin
American and Asian holding companies as unrestricted subsidiaries for purposes
of the indenture, thereby taking them outside the scope of the indenture
covenants, to facilitate the planned sale of equity securities in these holding
companies. The Company has paid consenting holders of the Senior Notes $15.00
per $1,000 principal amount of Senior Notes, or an aggregate of approximately
$3.9 million, and has agreed
21
<PAGE>
to extend the period during which the Company is prohibited from effecting an
optional redemption of the Senior Notes by one year to December 15, 1999.
In April and May of 1996, the Company sold an aggregate of 57,500 shares
of PIK Preferred Stock for an aggregate purchase price of $57.5 million to
certain investors, including Microsoft Corporation, Kleiner Perkins Caufield &
Byers, Chase Manhattan Corporation and certain executive officers and directors
of the Company, including John N. Palmer, Chairman of the Board. Holders of the
PIK Preferred Stock will be entitled to receive dividends out of funds legally
available therefor at an annual rate of 7.5% (or $75 per share of PIK Preferred
Stock), payable quarterly on each March 15, June 15, September 15 and December
15. The Company will have the option, however, to pay dividends on the PIK
Preferred Stock through the later of the fifth anniversary of the date of
issuance or until cash dividends are permitted under the Company's bank credit
facility and the indenture relating to the Senior Notes in the form of
additional shares of PIK Preferred Stock. Dividends on the PIK Preferred Stock
will be cumulative and will accrue from the date of original issuance.
The PIK Preferred Stock will rank junior in right of payment to the
Company's outstanding $2.25 Preferred Stock. In the event of any liquidation,
dissolution or winding up of the Company, holders of PIK Preferred Stock will be
entitled to receive, following payment in full to the holders of the $2.25
Preferred Stock of all amounts to which such holders are entitled, a liquidation
preference in the amount of $1,000 per share of PIK Preferred Stock, plus
accrued and unpaid dividends, before any payment is made or assets are
distributed to holders of Mtel Common Stock or any other class of stock of the
Company ranking junior to the PIK Preferred Stock as to rights upon liquidation,
dissolution or winding up of the Company. Except as required by law or with
respect to the creation or amendment of senior classes of preferred stock,
holders of PIK Preferred Stock will not have voting rights unless
22
<PAGE>
quarterly dividends on the Company's $2.25 Preferred Stock are in arrears for
two consecutive quarters, in which case, the number of directors of the Company
will be increased by one and the holders of PIK Preferred Stock, voting
separately as a class, will be entitled to elect one director until the dividend
arrearage has been paid. In the event quarterly dividends on the Company's $2.25
Preferred Stock are in arrears for four consecutive quarters, the number of
directors of the Company will be increased again by one, and the holders of PIK
Preferred Stock will be entitled to elect an additional director.
Each share of PIK Preferred Stock will be convertible at the option of
the holder into shares of Mtel Common Stock at conversion prices ranging from
$17.90 per share to $18.19 per share of Mtel Common Stock, subject to adjustment
upon the occurrence of certain events. Following the second anniversary of the
date of issuance of the PIK Preferred Stock, the Company may redeem, in whole or
in part, the outstanding PIK Preferred Stock at a price of $1,000 per share plus
accrued and unpaid dividends. The bank credit facility, as amended, and the
indenture relating to the Senior Notes prohibit the voluntary redemption of the
PIK Preferred Stock. Commencing on the seventh anniversary of the date of
issuance of the PIK Preferred Stock and continuing through the tenth anniversary
thereof, the Company must redeem 7,500 shares of PIK Preferred Stock at a price
of $1,000 per share, along with accrued and unpaid dividends thereon.
On July 15, 1996, the Company completed the sale of its 29% equity
interest in MPL, which operates in the United Kingdom, and received net pre-tax
proceeds of approximately $26.4 million. MPL was considered a non-strategic
asset because it does not operate on the 931 MHz frequency. In the third
quarter of 1996, the Company will report a net after-tax loss on the sale of its
operations in the United Kingdom of approximately $3.5 million.
23
<PAGE>
Although the Company believes that its bank credit facility, cash flows
from operations and the other sources of capital described above will be
sufficient to meet projected capital expenditures through 1997, the Company may
be required to engage in other financings, the timing, nature, amount and source
of which cannot be determined. Factors that may affect the need for additional
financing include the Company's operating results, its borrowing availability
under the bank credit facility and the indenture relating to the Senior Notes
and the successful completion of sales of equity securities in subsidiaries
formed for the purpose of holding the Company's investments in operations in
Latin America and Asia.
24
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
None.
Item 2. Changes in Securities
---------------------
During April and May 1996, the Company issued 57,500 shares of PIK
Preferred Stock for an aggregate consideration of $57.5 million. The PIK
Preferred Stock ranks junior to the Company's outstanding $2.25 Preferred Stock
in terms of rights to receive cash dividends and upon a liquidation of the
Company. The PIK Preferred Stock ranks senior to the Common Stock in right of
payment of cash dividends and upon a liquidation of the Company. As a result,
the holders of Common Stock may not receive any dividends in respect thereof
until all accrued and unpaid dividends on the PIK Preferred Stock and the $2.25
Preferred Stock have been paid in full. Furthermore, no amounts can be paid to
the holders of Common Stock upon a liquidation of the Company until the
liquidation preference of $1,000 per share to which the holders of the PIK
Preferred Stock and the $2.25 Preferred Stock are entitled has been paid in
full.
Item 3. Defaults upon Senior Securities
-------------------------------
None.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
The 1996 Annual Meeting of Stockholders was held on May 30, 1996. At
the 1996 Annual Meeting, Thomas G. Barksdale and E. Lee Walker were elected
directors of the Company for a three year term expiring at the 1999 Annual
Meeting of Stockholders and until their respective successors are elected and
qualified. The holders of 43,837,819 shares of Common Stock present in person or
by proxy at the 1996 Annual Meeting voted in favor of the election of Mr.
Barksdale, and
25
<PAGE>
the holders of 1,394,250 shares of Common Stock withheld their vote for Mr.
Barksdale. The holders of 44,129,836 shares of Common Stock present in person or
by proxy at the 1996 Annual Meeting voted in favor of the election of Mr.
Walker, and the holders of 1,102,233 shares of Common Stock withheld their vote
for Mr. Walker. Messrs. Gregory B. Maffei, John N. Palmer and John E. Welsh III
will continue to serve as directors of the Company until the 1997 Annual Meeting
of Stockholders, and Messrs. Haley Barbour, Jai P. Bhagat and R. Faser Triplett,
M.D. will continue to serve as directors of the Company until the 1998 Annual
Meeting of Stockholders, in each case until their respective successors are
elected and qualified.
At the 1996 Annual Meeting, the stockholders of the Company also approved
an amendment to the Company's Restated Certificate of Incorporation (the
"Certificate"). The purpose of the amendment was to increase the number of
authorized shares of Common Stock of the Company from 75,000,000 to 100,000,000
shares. The amendment to the Certificate was approved by the affirmative vote
of the holders of 43,866,852 shares of Common Stock, constituting a majority of
the shares of Common Stock issued and outstanding as of the record date for the
1996 Annual Meeting, with 857,352 shares of Common Stock voting against the
amendment, 366,265 shares abstaining from voting, and 141,598 shares
constituting broker nonvotes.
Item 5. Other Information
-----------------
None.
26
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
The following Exhibits are filed as part of this Quarterly Report on
Form 10-Q:
Exhibit No. Description
4.1 Amendment No. 1 dated as of March 27, 1996 to the
Credit, Security, Guaranty and Pledge Agreement dated
as of December 21, 1995 by and among the Company, the
lenders referred to therein, Chase Manhattan
Corporation, Credit Lyonnais New York Branch and
J.P. Morgan Securities, Inc.
4.2 Supplemental Indenture dated as of July 18, 1996
between the Company and Texas Commerce Bank National
Association, as Trustee, relating to the 13.5% Senior
Notes due 2002.
27.1 Financial Data Schedule.
(b) Reports on Form 8-K
None.
27
<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 13, 1996 By /s/ John N. Palmer
-----------------------------------------
John N. Palmer
Chairman of the Board
Dated: August 13, 1996 By /s/ John E. Welsh, III
------------------------------------------
John E. Welsh, III
Vice Chairman and
Acting Chief Financial Officer
28
<PAGE>
Exhibit 4.1
AMENDMENT NO. 1 (the "Amendment") dated as of March 27,
1996 to the Credit, Security, Guaranty and Pledge Agreement
dated as of December 21, 1995 (the "Agreement"), among
SKYTEL CORP., a Delaware corporation ("SkyTel"), MOBILE
TELECOMMUNICATION TECHNOLOGIES CORP., a Delaware corporation
("Mtel"), the Subsidiaries of Mtel referred to therein, the
lenders referred to therein (the "Lenders"), CHEMICAL BANK,
as administrative agent for the Lenders (the "Administrative
Agent"), CREDIT LYONNAIS NEW YORK BRANCH, as documentation
agent, and J.P. MORGAN SECURITIES INC., as co-syndication
agent.
INTRODUCTORY STATEMENT
----------------------
All capitalized terms not otherwise defined in this Amendment are used
herein as defined in the Agreement.
The Borrower has presented the Lenders with a revised business plan
which includes certain planned asset sales and equity issuances. In connection
therewith, the Borrower has requested that the Agreement be amended to modify
certain provisions of the Agreement as hereinafter set forth.
In consideration of the mutual agreements contained herein and other
good and valuable consideration, the parties hereto hereby agree as follows:
SECTION 1. Amendment to the Agreement. Subject to the provisions of
--------------------------
Section 3 hereof, the Agreement is hereby amended effective as of the Effective
Date (such term being used herein as defined in Section 3 hereof) as follows:
(A) The definition of "Margin" appearing in Article 1 of the Agreement
is hereby amended in its entirety to read as follows:
"'Margin' shall mean (i) at any time on or before March 31, 1997,
------
in the case of Alternate Base Rate Loans, 175 Basis Points per annum
and in the case of Eurodollar Loans, 275 Basis Points per annum and
(ii) at any time after March 31, 1997, in the case of Alternate Base
Rate Loans, 150 Basis Points per annum and in the case of Eurodollar
Loans, 250 Basis Points per annum, subject in each case, at any time
after (but not before) March 31, 1997, to adjustment from time to
<PAGE>
time in accordance with the terms of Section 2.5(c) hereof."
(B) The first sentence of Section 2.2(b) of the Agreement is hereby
amended by inserting the words " at any time after (but not before) March 31,
1997," immediately after the words "in each case" appearing therein.
(C) Section 2.5(c) of the Agreement is hereby amended by (1) inserting
the words "At all times after (but not before) March 31, 1997," at the beginning
of such Section, immediately preceding the words "The ratio of the Total Debt of
Mtel and its Consolidated Subsidiaries" appearing therein, (2) deleting the
words "including the date of the initial Loan hereunder" appearing in clause (i)
of such Section and (3) deleting the date "December 31, 1995" appearing in
clause (ii) of such Section and inserting the date "June 30, 1997" in lieu
thereof.
(D) The parenthetical phrase appearing in Clause (i) of Section 2.7(d)
is hereby amended in its entirety to read as follows:
"(excluding any issuance of equity securities permitted under Section
6.4(e) hereof and excluding the issuance of the equity securities
required for the Credit Parties to comply with Section 5.21(c) hereof
but only to the extent that the aggregate gross cash proceeds received
from the issuance of such securities does not exceed $60,000,000)"
(E) The parenthetical phrase appearing in Clause (i) of Section
2.10(c) is hereby amended in its entirety to read as follows:
"(excluding any issuance of equity securities permitted under Section
6.4(e) hereof and excluding the issuance of the equity securities
required for the Credit Parties to comply with Section 5.21(c) hereof
but only to the extent that the aggregate gross cash proceeds received
from the issuance of such securities does not exceed $60,000,000)"
(F) Article 5 of the Agreement is hereby amended by adding the
following new Section:
"SECTION 5.21. Required Asset Sales and Sales of Equity.
----------------------------------------
(a) On or before June 30, 1996, sell or otherwise dispose of (i)
all the equity interests in Mercury Paging Limited owned by Mtel or
any of its Affiliates, in a transaction which results in the receipt
by the
-2-
<PAGE>
Credit Parties of Net Cash Proceeds of at least $20,000,000 and
otherwise complies with the provisions of Section 6.4(e) hereof and
(ii) equity interests in Mtel Latin America, Inc. in a transaction
which results in the receipt by the Credit Parties of Net Cash
Proceeds of at least $25,000,000 and otherwise complies with the
provisions of Section 6.4(e) hereof.
(b) On or before December 31, 1996, sell or otherwise dispose of
equity interests in Mtel Asia in a transaction which results in the
receipt by the Credit Parties of Net Cash Proceeds of at least
$20,000,000 and otherwise complies with the provisions of Section
6.4(e) hereof.
(c) On or before May 15, 1996, complete one or more sales of
Acceptable Stock (as such term is defined below) to one or more third
parties which sale(s) shall be pursuant to stock purchase agreement(s)
containing customary terms and conditions and result in the receipt by
Mtel of gross cash proceeds of at least $50,000,000 (inclusive of the
gross cash proceeds from the consummation of the sale contemplated by
Section 3(C) of Amendment No. 1 dated March 27, 1996 to this
Agreement). As used herein, the term "Acceptable Stock" shall mean
----------------
(i) common stock of Mtel or (ii) other securities of Mtel which
satisfy the following criteria:
(A) do not require the payment of any dividend or interest
(other than dividends or interest paid in such other securities
or the common stock of Mtel);
(B) are not required to be redeemed, converted or exchanged
in any manner except that (1) such other securities may be
redeemable, convertible or exchangeable for such other securities
or the common stock of Mtel; (2) such other securities may be
redeemable upon a change of control (as such term is defined in
the Senior Note Indenture) provided that all the Credit Parties'
--------
obligations under the Agreement or any refinancing or replacement
of the Agreement with senior lenders consisting of banks and/or
insurance companies, shall have first been paid in full and any
commitment(s) with respect thereto have been permanently
terminated in their entirety and (3) such other securities may
otherwise be redeemable at any time after December 31, 2002."
-3-
<PAGE>
(G) Section 6.11 of the Agreement is hereby amended (i) by deleting
the words "Except for transactions expressly permitted by the other provisions
of this Agreement," and (ii) inserting the following clause at the end of the
existing text:
", except (i) for transactions expressly permitted by the other
provisions of this Agreement and (ii) that a Foreign Subsidiary may
enter into transactions with one or more Credit Parties which
transactions are on terms less favorable to such Foreign Subsidiary
than would be the case if such transaction had been effected at arms
length with a Person other than a Credit Party."
(H) Clause (d) of Section 6.12 of the Agreement is hereby amended in
its entirety to read as follows:
"(d) any certificate of designations of any equity security of
any Credit Party, which security is not common stock, as such
certificate was initially filed with the Secretary of State or other
applicable office in the jurisdiction of incorporation of the
applicable Credit Party, including, without limitation, the
certificate of designations of the Preferred Stock."
(I) The table appearing in Section 6.15 of the Agreement (Total Debt
to EBITDA Ratio of Mtel and Its Consolidated Subsidiaries) is hereby amended in
its entirety to read as follows:
<TABLE>
<CAPTION>
"Period Ratio
------ -----
<S> <C>
From 9/30/97 through 12/30/97 6.00:1.00
From 12/31/97 through 3/30/98 5.50:1.00
From 3/31/98 through 6/29/98 5.00:1.00
From 6/30/98 through 9/29/98 4.50:1.00
From 9/30/98 through 12/30/98 4.00:1.00
From 12/31/98 through 9/29/99 3.50:1.00
From 9/30/99 through 3/30/00 3.00:1.00
3/31/00 and thereafter 2.50:1.00"
</TABLE>
(J) The table appearing in Section 6.17 of the Agreement (Ratio of
Total Debt of Mtel and its Consolidated Subsidiaries to EBITDA of SkyTel) is
hereby amended in its entirety to read as follows:
-4-
<PAGE>
<TABLE>
<CAPTION>
"Period Ratio
------ ----------
<S> <C>
From 3/31/96 through 6/29/96 6.00:1.00
From 6/30/96 through 9/29/96 5.50:1.00
From 9/30/96 through 12/30/96 5.25:1.00
From 12/31/96 through 3/30/97 4.75:1.00
From 3/31/97 through 9/29/98 4.50:1.00
From 9/30/98 through 12/30/98 4.25:1.00
From 12/31/98 through 12/30/00 4.00:1.00
12/31/00 and thereafter 3.00:1.00"
</TABLE>
(K) The table appearing in Section 6.18(a) of the Agreement (EBITDA to
Consolidated Interest Expense Ratio of Mtel and its Consolidated Subsidiaries)
is hereby amended in its entirety to read as follows:
<TABLE>
<CAPTION>
"Period Ratio
------ ----------
<S> <C>
From 3/31/97 through 12/31/97 3.50:1.00
Thereafter 4.00:1.00"
</TABLE>
(L) The table appearing in Section 6.20 of the Agreement (Minimum
EBITDA of Mtel) is hereby amended in its entirety to read as follows:
<TABLE>
<CAPTION>
"Fiscal Quarter Ended Amount (in millions)
-------------------- ------
<S> <C>
March 31, 1997 12.6
June 30, 1997 20.0
September 30, 1997 23.0
December 31, 1997 25.0
March 31, 1998 30.0
June 30, 1998 35.0
September 30, 1998 40.0
December 31, 1998 45.0
March 31, 1999 45.0
June 30, 1999 50.0
September 30, 1999 50.0
December 31, 1999 55.0
March 31, 2000 60.0
June 30, 2000 65.0
September 30, 2000 65.0
December 31, 2000 70.0
March 31, 2001 75.0
June 30, 2001 80.0
September 30, 2001 80.0
December 31, 2001 85.0"
</TABLE>
-5-
<PAGE>
(M) The table appearing in Section 6.21 of the Agreement (Limitations
on Capital Expenditures) is hereby amended in its entirety to read as follows:
<TABLE>
<CAPTION>
"Period
(Fiscal Year ending on
December 31) Amount (in millions)
---------------------- --------------------
<S> <C>
1996 200.0
1997 147.5
1998 135.0
1999 155.0
2000 165.0
2001 175.0"
</TABLE>
(N) Section 6.21 of the Credit Agreement is hereby further amended by
adding the following sentence to the end of the existing text:
"The Credit Parties and the Lenders hereby agree that Capital
Expenditures for any fiscal year which are made from the proceeds of
intercompany loans, which loans are subsequently repaid in the same
fiscal year from the Net Cash Proceeds from the sale or other
disposition of any equity securities (including by way of the issuance
of new equity interests) or assets pursuant to and as contemplated by
Section 6.4(e) hereof, shall be deemed to have been made from such Net
Cash Proceeds for purposes of determining compliance with this Section
6.21."
(O) The table appearing in Section 6.23 of the Agreement (Minimum
Subscriber Level for Destineer) is hereby amended in its entirety to read as
follows:
<TABLE>
<CAPTION>
"Date Subscribers
---- -----------
<S> <C>
March 31, 1997 150,000
June 30, 1997 200,000
September 30, 1997 250,000
December 31, 1997 325,000
March 31, 1998 390,000
June 30, 1998 455,000
September 30, 1998 525,000
December 31, 1998 600,000
March 31, 1999 675,000
June 30, 1999 760,000
September 30, 1999 875,000
December 31, 1999 1,000,000
</TABLE>
-6-
<PAGE>
<TABLE>
<S> <C>
March 31, 2000 1,125,000
June 30, 2000 1,250,000
September 30, 2000 1,375,000
December 31, 2000 1,500,000
March 31, 2001 1,625,000
June 30, 2001 1,750,000
September 30, 2001 1,875,000
December 31, 2001 2,000,000"
</TABLE>
(P) Paragraph (c) of Article 7 of the Agreement is hereby amended by
inserting the phrase ", Section 5.21" immediately after the phrase "Section
5.20" appearing therein.
(Q) Section 11.3(a) of the Agreement is hereby amended by inserting
the following clause immediately after the word "issued," appearing therein:
"(other than the issuance(s) of new equity securities the disposition
of which is expressly permitted by the provisions of Section 6.4(e)
hereof)".
SECTION 2. Waiver by the Lenders. Each of the Lenders hereby waives,
---------------------
for all times prior to the Effective Date, (a) the Credit Parties non-compliance
with Sections 6.17 and 6.21 of the Agreement and (b) any Default or Event of
Default that may have occurred and be continuing solely by reason of any of the
Credit Parties or any of their Subsidiaries making an intercompany loan or
advance (which otherwise complies with the provisions of the Agreement) at any
time when a Default or Event of Default had occurred and was then continuing.
SECTION 3. Conditions to Effectiveness. The effectiveness of this
---------------------------
Amendment is subject to the satisfaction in full of the following conditions
precedent (the first date on which all such conditions have been satisfied being
herein referred to as the "Effective Date"):
(A) the Administrative Agent shall have received executed counterparts
of this Amendment, which, when taken together, bear the signatures of the Credit
Parties and those Lenders required by Section 13.9 of the Agreement;
(B) all fees payable to a Lender in connection with this Amendment
shall have been paid;
(C) the Administrative Agent shall have received a fully executed copy
of a stock purchase agreement (containing customary terms and conditions)
between Mtel and a third party relating to the sale by Mtel to such third party
of Acceptable Stock (as such term is defined in Section 5.21(c) of the Agreement
which Section is being added to the Agreement pursuant
-7-
<PAGE>
to this Amendment), which sale shall result in the receipt by Mtel of gross cash
proceeds of at least $25,000,000; and
(D) all legal matters in connection with this Amendment shall be
reasonably satisfactory to Morgan, Lewis & Bockius LLP, counsel for the Agents.
SECTION 4. Representations and Warranties. The Credit Parties hereby
------------------------------
represent and warrant to the Lenders that:
(A) after giving effect to this Amendment, the representations and
warranties contained in the Agreement and in the other Fundamental Documents are
true and correct in all material respects on and as of the date hereof as if
such representations and warranties had been made on and as of the date hereof
(except to the extent such representations and warranties expressly relate to an
earlier date); and
(B) after giving effect to this Amendment, the Credit Parties are in
compliance with all the terms and provisions set forth in the Agreement and the
other Fundamental Documents and no Default or Event of Default has occurred or
is continuing under the Agreement.
SECTION 5. Full Force and Effect.
---------------------
Except as expressly set forth herein, this Amendment does not
constitute a waiver or modification of any provision of the Agreement or a
waiver of any Default or Event of Default under the Agreement, in either case
whether or not known to the Agents. Except as expressly amended hereby, the
Agreement shall continue in full force and effect in accordance with the
provisions thereof on the date hereof. As used in the Agreement, the terms
"Credit Agreement", "this Agreement", "herein", "hereafter", "hereto", "hereof",
and words of similar import, shall, unless the context otherwise requires, mean
the Agreement as amended by this Amendment. References to the terms "Agreement"
or "Credit Agreement" appearing in the Exhibits or Schedules to the Agreement,
shall, unless the context otherwise requires, mean the Agreement as amended by
this Amendment.
SECTION 6. APPLICABLE LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
--------------
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WHICH ARE
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY WITHIN THE STATE OF NEW
YORK.
SECTION 7. Counterparts. This Amendment may be executed in two or
------------
more counterparts, each of which shall constitute an original, but all of which
when taken together shall constitute but one instrument.
-8-
<PAGE>
SECTION 8. Expenses. The Borrower agrees to pay all reasonable out-
--------
of-pocket expenses incurred by the Agents in connection with the preparation,
execution and delivery of this Amendment and any other documentation
contemplated hereby, including, but not limited to, the reasonable fees and
disbursements of counsel for the Agents.
SECTION 9. Headings. The headings of this Amendment are for the
--------
purposes of reference only and shall not affect the construction of, or be taken
into consideration in interpreting, this Amendment.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed by their duly authorized officers, all as of the date and year
first written above.
BORROWER:
SKYTEL CORP.
By
---------------------------------
Name:
Title:
GUARANTORS:
MOBILE TELECOMMUNICATION
TECHNOLOGIES CORP.
MTEL PAGING, INC.
MTEL INTERNATIONAL, INC.
MTEL LATIN AMERICA, INC.
MTEL PUERTO RICO, INC.
UNITED STATES PAGING CORPORATION
DESTINEER CORPORATION
MOBILECOMM EUROPE INC.
MTEL SPACE TECHNOLOGIES CORPORATION
MTEL TECHNOLOGIES, INC.
MTEL MAINE, INC.
COM/NAV REALTY CORP.
INTELLIGENT INVESTMENT PARTNERS, INC.
By
----------------------------
Name:
Title:
-9-
<PAGE>
LENDERS:
CHEMICAL BANK, individually and as
Administrative Agent
Executed by Chemical Bank
in New York, New York
By
---------------------------------
Name: Ann B. Kerns
Title: Vice President
CREDIT LYONNAIS NEW YORK BRANCH,
as Documentation Agent
By
---------------------------------
Name: Bruce M. Yeager
Title: Senior Vice President
CREDIT LYONNAIS CAYMAN ISLAND BRANCH
By
---------------------------------
Name: Bruce M. Yeager
Title: Authorized Signature
J.P. MORGAN SECURITIES INC.,
as Co-Syndication Agent
By
---------------------------------
Name: Michael Y. Leder
Title: Vice President
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By
---------------------------------
Name: John A. Payne
Title: Managing Director
-10-
<PAGE>
ABN AMRO BANK N.V.
By
---------------------------------
Name:
Title:
By
---------------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF BOSTON
By
---------------------------------
Name:
Title:
THE BOATMEN'S NATIONAL BANK OF
ST. LOUIS
By
---------------------------------
Name:
Title:
CIBC INC.
By
---------------------------------
Name:
Title:
VAN KAMPEN AMERICAN CAPITAL
PRIME RATE INCOME TRUST
By
---------------------------------
Name:
Title:
-11-
<PAGE>
Exhibit 4.2
================================================================================
MOBILE TELECOMMUNICATION
TECHNOLOGIES CORP.
and
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION
as Trustee
-------------
SUPPLEMENTAL INDENTURE
Dated as of July 18, 1996
-------------
To
The Indenture Dated as of December 29, 1994
Between Mobile Telecommunication Technologies Corp. and
Texas Commerce Bank National Association, as Trustee, Relating to
$265 million Aggregate Principal Amount at Maturity
of 13-1/2% Senior Notes due 2002
================================================================================
<PAGE>
SUPPLEMENTAL INDENTURE
THIS SUPPLEMENTAL INDENTURE (the "Supplemental Indenture") is made as
of the 18th day of July, 1996, between Mobile Telecommunication Technologies
Corp. (the "Company") and Texas Commerce Bank National Association, as trustee
(the "Trustee").
WHEREAS, the Company and the Trustee heretofore executed and delivered
an Indenture, dated as of December 29, 1994 (the "Indenture"); and
WHEREAS, pursuant to the Indenture, the Company issued and the Trustee
authenticated and delivered $265 million aggregate principal amount at maturity
of the Company's 13-1/2% Senior Notes due 2002 (the "Notes"); and
WHEREAS, Section 9.02 of the Indenture provides that with the consent
of the Holders of not less than 66-2/3% in principal amount of the Notes at the
time outstanding (the "Requisite Amendment Consents"), the Company, when
authorized by a resolution of its Board of Directors, and the Trustee may enter
into an amended or supplemental Indenture; and
WHEREAS, the Company has obtained the Requisite Amendment Consents to
amend the Indenture in certain respects (the "Proposed Amendments"); and
WHEREAS, this Supplemental Indenture has been duly authorized by all
necessary corporate action on the part of the Company;
NOW, THEREFORE, the Company and the Trustee agree as follows for the
equal and ratable benefit of the Holders of the Notes:
ARTICLE 1
AMENDMENTS TO CERTAIN PROVISIONS OF THE INDENTURE
SECTION 1.01 Amendment of Certain Sections of the Indenture. Subject
to Section 2.01 hereof, the Indenture is hereby amended in the following
respects:
(a) The last paragraph of the definition of "Unrestricted Subsidiary"
in Section 1.01 of the Indenture shall be deleted and the following paragraph
shall be added:
"Notwithstanding the foregoing, except as provided in the following
sentence, under no circumstances will any of the Designated Subsidiaries of
the Company that exist on the Issue Date be designated as Unrestricted
Subsidiaries. Notwithstanding the foregoing, the Board of Directors of the
Company may designate as an Unrestricted Subsidiary, Mtel Puerto Rico, Inc.
or any Subsidiary of the Company, whether incorporated in the United States
or elsewhere, existing on the date that the first supplemental indenture is
executed by the Company and the Trustee (as well as (i) any parent holding
company of any such Subsidiary, (ii) any Subsidiary of any such Subsidiary
or any joint venture in which such Subsidiary has a direct or indirect
interest, or (iii) any successor in interest of any such Subsidiary,
whether existing on the date that the first supplemental indenture is
excecuted or thereafter formed)
2
<PAGE>
that is engaged in the Telecommunications Business outside the United
States (each such Subsidiary being hereinafter referred to as an
"International Subsidiary"), and any such entity so designated shall
otherwise and thereafter be exempt from the provisions of this definition
of Unrestricted Subsidiary. Such designation must be made pursuant to a
resolution of the Board of Directors of the Company set forth in an
Officers' Certificate and delivered to the Trustee (provided that no
Default or Event of Default shall have occurred and be continuing or would
result from such designation)."
(b) Clause (i) of the definition of "Permitted Liens" in Section 1.01
of the Indenture is hereby amended to read in its entirety as follows:
"(i) Liens securing Indebtedness pursuant to the Senior Credit
Agreement, provided that the aggregate principal amount of such
Indebtedness which is secured pursuant to this clause may not exceed (x)
$75.0 million plus (y) any amounts Incurred under the Senior Credit
Agreement pursuant to (A) clause (iii) of this definition or (B) Liens
securing Indebtedness incurred pursuant to clause (v) of the second
paragraph of Section 4.09";
(c) Clause (a) of Section 3.07 of the Indenture is hereby amended to
read in its entirety as follows:
"Except as set forth in Section 3.07(b) below, the Notes will not
be redeemable at the Company's option prior to December 15, 1999.
Commencing December 15, 1999 and ending December 14, 2000, the
Notes will be subject to redemption at the option of the Company,
in whole or in part, upon notice as provided in the following
sentence, at a redemption price equal to the sum of (x) 100% of
the principal amount thereof plus accrued and unpaid interest
thereon to the redemption date and (y) the Applicable Premium
with respect to each $1,000 principal amount of Notes so
redeemed. Thereafter, the Notes will be subject to redemption at
the option of the Company, in whole or in part, upon not less
than 30 nor more than 60 days' notice to the Holders, at the
redemption prices (expressed as percentages of principal amount)
set forth below plus accrued and unpaid interest thereon to the
applicable redemption date, if redeemed during the twelve-month
period beginning on December 15 of the years indicated below :
<TABLE>
<CAPTION>
Year Percentage
---- -----------
<S> <C>
2000.......................... 106.750%
2001.......................... 103.375%
</TABLE>
(d) Clause B of Section 4.07(c) of the Indenture is hereby amended by
inserting "(other than an International Subsidiary)" after the phrase "any
Investment in a Subsidiary."
3
<PAGE>
(e) Clause B of Section 4.07(c) of the Indenture is hereby further
amended by inserting at the end of such clause the following sentence:
"Notwithstanding clause (i) above, any Indebtedness permitted to be Incurred
under clauses (iii) or (v) above may be Incurred under the Senior Credit
Agreement."
(f) Clause (v) of Section 4.09(b) of the Indenture is hereby amended
by substituting "$55.0 million" for "$5.0 million."
(g) Clause (iii) of Section 4.09(b) of the Indenture is hereby
amended by substituting "(i) from the date the first supplemental indenture
becomes effective through and until December 31, 1997, $125.00, (ii) from
January 1, 1998 through and until December 31, 1998, $100.00 or (iii)
thereafter, $75.00, as the case may be," for "$75.00."
(h) Section 4.11(b) of the Indenture is hereby amended to read in its
entirety as follows:
"(b) Within 270 days after any Asset Sale, to the extent that the
assets or Equity Interests that were the subject of such Asset Sale
pertained to a Telecommunications Business primarily engaged in business in
the United States, the Company (or such Subsidiary, as the case may be) may
apply the Net Proceeds from such Asset Sale to (i) permanently reduce the
amounts permitted to be borrowed under the Senior Credit Agreement, or (ii)
the purchase of Telecommunications Related Assets and/or Voting Stock of
any Person engaged in the Telecommunications Business in the United States,
provided, that such Person concurrently becomes a Subsidiary of the
Company. Any Net Proceeds from any Asset Sale, to the extent that the
assets or Equity Interests that were the subject of such Asset Sale
pertained to a Telecommunications Business primarily engaged in business in
the United States, that are not applied or invested as provided in the
preceding sentence, shall constitute "Excess Proceeds" and shall be applied
to an offer to purchase Notes as set forth in Section 3.09."
MISCELLANEOUS
SECTION 2.01. Effect of Supplemental Indenture. Upon the execution
and delivery of this Supplemental Indenture by the Company and the Trustee, the
Indenture shall be supplemented in accordance herewith, and this Supplemental
Indenture shall form a part of the Indenture for all purposes, and every Holder
of Securities heretofore or hereafter authenticated and delivered under the
Indenture shall be bound thereby.
SECTION 2.02. Indenture Remains in Full Force and Effect. Except as
supplemented hereby, all provisions in the Indenture shall remain in full force
and effect.
SECTION 2.03. Indenture and Supplemental Indenture Construed
Together. This Supplemental Indenture is an indenture supplemental to and in
implementation of the Indenture, and the Indenture and this Supplemental
Indenture shall henceforth be read and construed together.
SECTION 2.04. Confirmation and Preservation of Indenture. The
Indenture as supplemented by this Supplemental Indenture is in all respects
confirmed and preserved.
SECTION 2.05. Conflict with Trust Indenture Act. If any provision of
this Supplemental Indenture limits, qualifies or conflicts with any provision of
the TIA that is required under the TIA to be part
4
<PAGE>
of and govern any provision of this Supplemental Indenture, the provision of the
TIA shall control. If any provision of this Supplemental Indenture modifies or
excludes any provision of the TIA that may be so modified or excluded, the
provision of the TIA shall be deemed to apply to the Indenture as so modified or
to be excluded by this Supplemental Indenture, as the case may be.
SECTION 2.06. Severability. In case any provision in this
Supplemental Indenture shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
SECTION 2.07. Terms Defined in the Indenture. All capitalized terms
not otherwise defined herein shall have the meanings ascribed to them in the
Indenture.
SECTION 2.08. Headings. The Article and Section headings of this
Supplemental Indenture have been inserted for convenience of reference only, are
not to be considered a part of this Supplemental Indenture and shall in no way
modify or restrict any of the terms or provisions hereof.
SECTION 2.09. Benefits of Supplemental Indenture, etc. Nothing in
this Supplemental Indenture or the Notes, express or implied, shall give to any
Person, other than the parties hereto and thereto and their successors hereunder
and thereunder and the Holders of the Notes, any benefit of any legal or
equitable right, remedy or claim under the Indenture, this Supplemental
Indenture or the Notes.
SECTION 2.10. Successors. All agreements of the Company in this
Supplemental Indenture shall bind its successors. All agreements of the Trustee
in this Supplemental Indenture shall bind its successors.
SECTION 2.11. Trustee Not Responsible for Recitals. The recitals
contained herein shall be taken as the statements of the Company, and the
Trustee assumes no responsibility for their correctness.
SECTION 2.12. Certain Duties and Responsibilities of the Trustee. In
entering into this Supplemental Indenture, the Trustee shall be entitled to the
benefit of every provision of the Indenture relating to the conduct or affecting
the liability or affording protection to the Trustee, whether or not elsewhere
herein so provided.
SECTION 2.13. Governing Law. The internal law of the State of New
York shall govern and be used to construe this Supplemental Indenture.
SECTION 2.14. Counterpart Originals. The parties may sign any number
of copies of this Supplemental Indenture. Each signed copy shall be an
original, but all of them together represent the same agreement.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date and year first
above written.
MOBILE TELECOMMUNICATION
TECHNOLOGIES CORP.
(SEAL)
By: /s/ John E. Welsh, III
-----------------------
Name: John E. Welsh, III
Title: Vice Chairman & Acting CFO
Attest:
/s/ Lisa Hughes
- ------------------
Name: Lisa Hughes
Title: Executive Assistant
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, TRUSTEE
(SEAL)
By: /s/ John G. Jones
------------------
Name: John G. Jones
Title: Vice President
Attest:
/s/ Kathleen Wagner
- --------------------
Name: Kathleen Wagner
Title: Vice President
6
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
Mobile Telecommunication Technologies Corp. Consolidated Balance Sheet as of
June 30, 1996 and Consolidated Statement of Operations for the six months ended
June 30, 1996
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 11,191,710
<SECURITIES> 0
<RECEIVABLES> 86,403,260
<ALLOWANCES> 14,478,619
<INVENTORY> 0
<CURRENT-ASSETS> 92,465,966
<PP&E> 418,546,623
<DEPRECIATION> 102,724,198
<TOTAL-ASSETS> 889,226,759
<CURRENT-LIABILITIES> 92,334,722
<BONDS> 378,099,401
38,075
0
<COMMON> 543,615
<OTHER-SE> 418,170,141
<TOTAL-LIABILITY-AND-EQUITY> 889,226,759
<SALES> 168,795,795
<TOTAL-REVENUES> 168,795,795
<CGS> 0
<TOTAL-COSTS> 213,443,637
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,403,375
<INCOME-PRETAX> (56,141,336)
<INCOME-TAX> 1,329,286
<INCOME-CONTINUING> (57,470,622)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (57,470,622)
<EPS-PRIMARY> (1.15)
<EPS-DILUTED> (1.15)
</TABLE>
