<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 September 30, 1997
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
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(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.
54,657,537 shares of Common Stock,
par value $.01 per share, as of
October 31, 1997
<PAGE>
MOBILE TELECOMMUNICATION TECHNOLOGIES CORP.
QUARTERLY REPORT ON FORM 10-Q
INDEX
PART I. FINANCIAL INFORMATION
---------------------
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets - September 30, 1997 and December 31, 1996.
Consolidated Statements of Operations -- Nine Months Ended September
30, 1997 and 1996, and Three Months Ended September 30, 1997 and 1996.
Consolidated Statements of Cash Flows -- Nine Months Ended September
30, 1997 and 1996, and Three Months Ended September 30, 1997 and 1996.
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>
September 30, December 31,
1997 1996
------------- --------------
<S> <C> <C>
ASSETS:
CURRENT ASSETS
Cash and cash equivalents $ 12,364,944 $ 25,744,724
Accounts receivable, net of allowances for losses 48,388,373 64,797,525
Assets held for sale 4,847,199 8,000,000
Other current assets 14,506,593 3,725,376
------------- -------------
TOTAL CURRENT ASSETS 80,107,109 102,267,625
------------- -------------
MESSAGING NETWORKS
Property and equipment, net 296,252,837 288,870,518
Certificates of authority and license cost, net 150,335,191 153,070,879
Network construction and development costs, net 72,115,188 80,173,364
------------- -------------
TOTAL MESSAGING NETWORKS 518,703,216 522,114,761
------------- -------------
GOODWILL, net 107,022,152 83,949,489
INVESTMENT IN UNCONSOLIDATED INTERNATIONAL VENTURES 21,060,168 29,641,441
OTHER ASSETS
Securities restricted for debt service 7,234,241 32,546,458
Other 26,213,401 32,740,100
------------- -------------
TOTAL OTHER ASSETS 33,447,642 65,286,558
------------- -------------
$ 760,340,287 $ 803,259,874
============= =============
LIABILITIES AND STOCKHOLDERS' INVESTMENT:
CURRENT LIABILITIES
Current maturities of long-term debt $ 1,023,430 $ 31,263
Accounts payable and accrued liabilities 104,604,268 78,351,642
------------- -------------
TOTAL CURRENT LIABILITIES 105,627,698 78,382,905
------------- -------------
LONG-TERM DEBT 404,270,442 402,491,222
MINORITY INTEREST 28,730,544 20,990,363
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 1997 and 1996;
57,500 shares of 7.5% Cumulative Convertible Accruing PIK
Preferred Stock outstanding in 1997 and 1996 38,075 38,075
Common Stock, par value $.01 per share; 100,000,000 shares
authorized; shares outstanding: 54,652,837 in
1997 and 54,404,188 in 1996 546,528 544,042
Additional paid-in-capital 618,513,940 618,212,220
Accumulated deficit (393,401,713) (316,800,646)
Cumulative translation adjustment (3,985,227) (598,307)
------------- -------------
TOTAL STOCKHOLDERS' INVESTMENT 221,711,603 301,395,384
------------- -------------
$ 760,340,287 $ 803,259,874
============= =============
</TABLE>
See notes to consolidated financial statements.
3
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MOBILE TELECOMMUNICATION TECHNOLOGIES CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
September 30, September 30,
----------------------------- -----------------------------
1997 1996 1997 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues $ 294,766,190 $ 260,801,420 $ 105,236,446 $ 92,005,625
Expenses:
Operating 91,663,383 83,953,470 31,051,703 28,106,120
Selling, general and administrative 167,996,402 171,561,335 59,844,787 58,636,542
Depreciation and amortization 64,247,948 67,759,636 22,434,766 23,088,142
------------- ------------- ------------- -------------
323,907,733 323,274,441 113,331,256 109,830,804
------------- ------------- ------------- -------------
Operating income (loss) (29,141,543) (62,473,021) (8,094,810) (17,825,179)
Interest income 3,190,814 4,457,804 781,804 1,575,081
Interest expense (41,628,675) (32,309,993) (13,268,811) (11,906,619)
Gain (loss) on sale of assets 6,843,521 2,411,103 (993,964) (3,777,526)
Other income (expense) (1,804,308) 51,778 417,082 17,906
------------- ------------- ------------- -------------
Income (loss) before income taxes
and equity income (losses) (62,540,191) (87,862,329) (21,158,699) (31,916,337)
Provision for income taxes 3,621,755 1,460,822 1,202,886 131,536
Equity in income (losses) of investments (593,469) (451,124) 184,388 (255,780)
------------- ------------- ------------- -------------
Net income (loss) ($66,755,415) ($89,774,275) ($22,177,197) ($32,303,653)
Preferred dividend requirement 9,845,666 8,355,824 3,303,736 3,218,205
------------- ------------- ------------- -------------
Net income (loss) available to common
stockholders ($76,601,081) ($98,130,099) ($25,480,933) ($35,521,858)
============= ============= ============= =============
Net income (loss) per common share ($1.41) ($1.81) ($0.47) ($0.65)
============= ============= ============= =============
</TABLE>
See notes to consolidated financial statements.
4
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MOBILE TELECOMMUNICATION TECHNOLOGIES CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
September 30, September 30,
1997 1996 1997 1996
----------------------------- ----------------------------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ($66,755,415) ($89,774,275) ($22,177,197) ($32,303,653)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization 64,247,948 67,759,636 22,434,766 23,088,142
Provision for losses on accounts receivable 17,231,001 14,667,847 6,105,343 5,579,339
Amortization of debt issuance costs 1,818,747 1,457,034 626,429 456,467
Foreign currency transaction (gain) loss (396,244) (14,445) (211,004) 5,731
(Gain) loss on sale of assets (6,843,521) (2,411,103) 993,964 3,777,526
Income (losses) attributable to minority interests 2,151,788 (37,333) (191,634) (23,637)
Equity in (income) losses from investments 593,469 451,124 (184,388) 255,780
Change in assets and liabilities:
(Increase) decrease in accounts receivable 3,934,381 (25,780,844) (4,135,565) 8,919,274
Decrease in assets held for sale 3,152,801 - 2,846,728 -
(Increase) decrease in other current assets 8,834,273 (11,823,568) (6,376,711) (11,662,364)
Increase (decrease) in accounts payable and
accrued liabilities 18,907,571 (17,884,112) 22,925,472 (15,225,746)
------------- ------------- ------------ ------------
Net Cash Provided By (Used In) Operating Activities 46,876,799 (63,390,039) 22,656,203 (17,133,141)
------------- ------------- ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of assets 36,104,852 66,801,059 2,551,225 53,037,015
Capital expenditures, net (61,259,957) (104,742,913) (20,184,969) (35,558,898)
(Increase) in investment in unconsolidated
international ventures (3,108,795) (10,260,714) (2,092,575) (3,465,553)
Acquisition of Argentinean paging company (16,000,000) - - -
(Increase) decrease in other assets (5,155,148) 16,224,449 (6,965,767) 4,480,072
------------- ------------- ------------ ------------
Net Cash Provided By (Used In) Investing Activities (49,419,048) (31,978,119) (26,692,086) 18,492,636
------------- ------------- ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term borrowings - 65,000,000 - 20,000,000
Principal payments on long-term debt (5,829,656) (1,218,205) (314,851) (593,220)
Payment of dividends on preferred stock (6,328,125) (6,328,125) (2,109,375) (2,109,375)
Sale of stock and exercise of options 1,320,250 58,179,060 853,467 28,696
------------- ------------- ------------ ------------
Net Cash Provided By (Used In) Financing Activities (10,837,531) 115,632,730 (1,570,759) 17,326,101
------------- ------------- ------------ ------------
Net increase (decrease) in cash and cash equivalents (13,379,780) 20,264,572 (5,606,642) 18,685,596
Cash and cash equivalents-beginning of period 25,744,724 9,612,734 17,971,586 11,191,710
------------- ------------- ------------ ------------
Cash and cash equivalents-end of period $ 12,364,944 $ 29,877,306 $ 12,364,944 $ 29,877,306
============= ============= ============ ============
</TABLE>
See notes to consolidated financial statements.
5
<PAGE>
MOBILE TELECOMMUNICATION TECHNOLOGIES CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION
Mobile Telecommunication Technologies Corp. ("Mtel" or the "Company") is
a leading provider of nationwide messaging services in the United States.
Mtel's principal operations include one-way messaging services in the United
States, advanced messaging services on the narrowband personal communication
services ("PCS") network in the United States and international one-way
messaging operations. 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.
In September 1995, the Company launched commercial operation of the first
nationwide wireless messaging network in the United States that utilizes
frequency licensed by the FCC for narrowband PCS. This network enables
subscribers to send and receive messages without the need to know the location
of the sender or receiver at the time of transmission, and utilizes a
proprietary system architecture designed and developed by Mtel.
Mtel, through its subsidiaries and joint ventures, operates one-way
wireless messaging systems in various countries outside the United States,
primarily in the Latin America region. Mtel also provides its subscribers with
access to an international messaging network that utilizes Mtel's proprietary
technology and interconnects the systems operated by its subsidiaries and joint
ventures with systems in the United States, Canada, Singapore and other
countries.
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For the third quarter of 1997, one-way messaging operations, the
Company's principal operating segment, reported revenues of $85.6 million,
operating income of $23.3 million and net income of $21.9 million. Advanced
messaging operations reported revenues of $9.9 million, an operating loss of
$24.9 million and a net loss of $35.7 million for the third quarter of 1997.
Mtel's international operations reported revenues of $8.5 million, an operating
loss of $5.3 million and a net loss of $6.5 million for the quarter ended
September 30, 1997. 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
various financial and operational factors which reflect usage of services.
See Note 2 of Notes to Consolidated Financial Statements in Mtel's Annual
Report on Form 10-K for the year ended December 31, 1996 for a discussion of
certain risks and uncertainties involving the Company's ability to generate
future positive operating cash flows and operating income.
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 nine
month periods ending September 30, 1997 and 1996 have not been audited by
independent public accountants. However, in the opinion of management, these
financial statements include all adjustments (which
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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, 1997.
3. EARNINGS (LOSS) PER SHARE
Loss per share for the three and nine month periods ending September 30,
1997 and 1996 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 third quarter of 1997 and
the first nine months of 1997 was 54,618,857 and 54,513,455, respectively. The
weighted average number of shares of common stock outstanding in the third
quarter of 1996 and the first nine months of 1996 was 54,364,009 and 54,272,058,
respectively.
4. AMENDMENT TO 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 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 October 1997, SkyTel and the bank group completed the fourth amendment
to the bank credit facility which modified certain covenants. The amendment
included the elimination of the covenant requiring the maintenance of a
prescribed number of one-way units in service and an
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extension, from December 31, 1997 to December 31, 1998, to complete the
disposition of the Company's Asian operations and investments. This amendment
was completed without the payment of any additional fees by Mtel.
5. SALE OF HONG KONG OPERATIONS
In July 1997, the Company completed the sale of its Hong Kong operations
for an aggregate purchase price of $1.7 million. As a result, the consolidated
results of the Company for the third quarter of 1997 do not include any income
or expenses related to the Hong Kong operations, which were not material to the
consolidated revenues and expenses of the Company. Approximately $250,000 of
the proceeds from the sale were received upon closing. The remainder of the
proceeds will be received in three installments on each of December 31, 1997,
June 30, 1998 and December 31, 1998. Interest accrues on the unpaid proceeds at
a rate of 7.5% per annum.
6. STOCKHOLDER LITIGATION
On February 20, 1997, litigation was filed in the United States District
Court for the District of Columbia against the Company, its wholly-owned
subsidiary SkyTel, and seven current and former officers and directors. The
complaint alleges certain violations of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), during the period January 19, 1995 through
February 22, 1996. The plaintiffs are seeking unspecified damages and to have
the case certified as a class action. The defendants have filed motions to
dismiss the complaint and intend to vigorously defend in this litigation.
9
<PAGE>
7. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid by Mtel was $30.2 million and $24.3 million during the nine
months ended September 30, 1997 and 1996, respectively, and was $3.4 million and
$3.7 million during the three months ended September 30, 1997 and 1996,
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 nine month periods ended
September 30, 1997 and 1996 and certain factors that will affect Mtel's
financial condition. See Note 2 of Notes to Consolidated Financial Statements
in Mtel's Annual Report on Form 10-K for the year ended December 31, 1996 for a
discussion of certain risks and uncertainties involving the Company's ability to
generate future positive operating cash flows and operating income.
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 13% in the nine months ended
September 30, 1997 as compared to the nine months ended September 30, 1996 and
reflected a 7% increase in one-way messaging revenues, a 146% increase in
advanced messaging revenues and a 59% increase in international revenues.
Revenues on a consolidated basis increased 14% in the third quarter of 1997 as
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compared to the third quarter of 1996, primarily due to a 273% increase in
advanced messaging revenues. This increase in advanced messaging revenues in
the third quarter of 1997 was due, in large part, to sales of SkyWord Plus(TM)
units, a service which was introduced by the Company in April 1997.
As of September 30, 1997, the Company had 1,146,000 one-way messaging
units in service in the United States, an increase of 8% over the 1,056,400 one-
way messaging units in service as of September 30, 1996. In addition, Mtel had
133,200 advanced messaging units in service as of September 30, 1997, an
increase of 392% over the 27,100 advanced messaging units in service as of
September 30, 1996. Approximately 27% of net unit additions on the advanced
messaging network in the third quarter of 1997 represented conversions of units
from one-way to advanced messaging services, as compared to approximately 25% of
net unit additions on the advanced messaging network in the second quarter of
1997.
Average revenue per one-way unit in service increased slightly in the
third quarter of 1997 ($25.19) as compared to the second quarter of 1997
($24.74) but decreased approximately 4% in the third quarter of 1997 as compared
to the third quarter of 1996 ($26.24), primarily due to product mix. The
Company expects to continue to experience a slight decline in average revenue
per one-way messaging unit in service in the future. The Company does not
believe that average revenue per advanced messaging unit is indicative of future
trends during this period because of the rapid growth of advanced messaging
units in 1997 and limited experience with usage sensitive charges.
Although net unit additions in the first half of 1997 were adversely
impacted by disconnect rates in the reseller distribution channel, total net
unit additions placed in service by the reseller channel increased 133% in the
third quarter of 1997 as compared to the second quarter of 1997. The
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Company believes that the availability of new product offerings on the
narrowband PCS network, including SkyWord Plus service that was introduced at
the end of April 1997, and the addition late in the third quarter of 1997 of
Paging Network, Inc. and MobileMedia Communications, Inc. as resellers of the
Company's advanced messaging products, will result in increased net unit
additions from the reseller distribution channel in the fourth quarter of 1997
and future periods, although this will be dependent, in part, on the marketing
efforts of resellers and the commercial acceptability of these new product
offerings.
The Company intends to continue to emphasize the distribution of its
advanced messaging products, including SkyWord Plus and two-way interactive
messaging services. The ability of the Company to achieve adequate levels of
net unit additions on the narrowband PCS network will depend upon the success of
the direct, reseller and other distribution channels, the commercial
acceptability of the advanced messaging services and the competitive
environment, including pricing, for competing services.
Mtel's consolidated revenues include revenues recorded by the Company's
international operations in Argentina, Colombia, Uruguay, Puerto Rico and Costa
Rica. Revenues from international operations increased 59% in the first nine
months of 1997 as compared to the first nine months of 1996, and increased 64%
in the third quarter of 1997 as compared to the third quarter of 1996. The
increase in the third quarter of 1997 resulted, in large part, from the
inclusion of revenues of RadioMensaje S.A.C., a paging company in Argentina
("RadioMensaje") which was acquired on June 27, 1997. Excluding the impact of
RadioMensaje, international revenue growth would have been relatively flat in
the third quarter of 1997 as compared to the third quarter of 1996, primarily
due to increased competition from the cellular industry in many Latin American
countries. During the first
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nine months of 1997, revenues recorded by the Company's consolidated
international operations provided approximately 7% of Mtel's revenues as
compared to 5% in the first nine months of 1996.
During the first nine months of 1997, one-way messaging operations
provided approximately 85% of Mtel's revenues as compared to 89% in the first
nine months of 1996. Advanced messaging operations provided approximately 6% of
consolidated revenues during the first nine months of 1997 as compared to 3% in
the first nine months of 1996. Other Mtel operations provided approximately 2%
of revenues in the first nine months of 1997 as compared to 3% in the first nine
months of 1996.
EXPENSES
Expenses include operating, selling, general and administrative, and
depreciation and amortization.
Operating expenses primarily consist of salaries, telephone costs and
transmitter and receiver site rentals associated with the Company's one-way and
advanced messaging operations in the United States and one-way 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 9% in the first nine months of 1997 as compared to the first
nine months of 1996 and increased 10% in the third quarter of 1997 as compared
to the third quarter of 1996. This increase primarily reflects operating
expenses attributable to the narrowband PCS network, which because of system
design and functionality has significantly higher fixed operating expenses than
the Company's one-way operations, and increased telephone and system costs
associated with the increasing one-way and advanced messaging subscriber base in
the United States. As a percentage of consolidated
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revenues, operating expenses decreased to 31% in the first nine months of 1997
as compared to 32% in the first nine months of 1996, and decreased to 30% in the
third quarter of 1997 as compared to 31% in the third quarter of 1996. Mtel
expects to continue to incur increased operating expenses during the remainder
of 1997 and in future periods, primarily as a result of the projected increase
in the number of units in service on its one-way and narrowband PCS networks in
the United States and the continued expansion of coverage of the narrowband PCS
network.
Selling, general and administrative expenses include marketing and
advertising costs, personnel costs associated with the direct sales and
marketing staff, costs associated with customer support operations and corporate
overhead costs, primarily salaries and administrative expenses. On a
consolidated basis, these expenses decreased 2% in the first nine months of 1997
as compared to the first nine months of 1996 but increased 2% in the third
quarter of 1997 as compared to the third quarter of 1996. Selling, general and
administrative expenses in the third quarter of 1997 included advertising and
marketing expenses incurred in connection with the promotion of the advanced
messaging services in the United States and the inclusion of selling, general
and administrative expenses of RadioMensaje which was acquired in June 1997.
As a percentage of consolidated revenues, selling, general and administrative
expenses decreased to 57% in the first nine months of 1997 as compared to 66% in
the first nine months of 1996 and decreased to 57% in the third quarter of 1997
as compared to 64% in the third quarter of 1996. Selling, general and
administrative expenses on a consolidated basis are expected to increase during
the remainder of 1997 and in future periods as a result of the Company's plans
to continue to expand its direct sales force in the United States and additional
marketing expenses which the Company expects to incur in connection with the
promotion of the advanced messaging services on the narrowband PCS network.
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Depreciation and amortization decreased 5% in the first nine months of
1997 as compared to the first nine months of 1996 and decreased 3% in the third
quarter of 1997 as compared to the third quarter of 1996, primarily due to the
write-down of the book value of paging equipment, the cessation of the Company's
international operations in Europe and the Company's decision to divest its
operations and investments in the Asia Pacific region, all of which resulted in
an impairment loss that was recorded in the fourth quarter of 1996. As a
percentage of revenues, depreciation and amortization expenses decreased to 22%
in the first nine months of 1997 as compared to 26% in the first nine months of
1996 and decreased to 21% in the third quarter of 1997 as compared to 25% in the
third quarter of 1996. The Company expects depreciation and amortization
expenses to increase during the remainder of 1997, primarily as a result of the
continued expansion of coverage of the narrowband PCS network and the purchase
of pagers and advanced messaging units to support the projected increase in the
Company's subscriber base.
OPERATING INCOME (LOSS)
Mtel reported a consolidated operating loss of approximately $29.1
million for the first nine months of 1997 as compared to a consolidated
operating loss of approximately $62.5 million for the first nine months of 1996,
and a consolidated operating loss of $8.1 million for the third quarter of 1997
as compared to a consolidated operating loss of $17.8 million for the third
quarter of 1996. For the three-month period ended September 30, 1997, one-way
messaging operations recorded operating income of $23.3 million, which was
offset by an operating loss of $24.9 million from advanced messaging operations
and an operating loss of $5.3 million from international operations.
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The Company expects to report operating losses on a consolidated basis
in 1997 and 1998 as a result of continuing operating losses related to its
advanced messaging operations in the United States and international messaging
operations. However, the Company expects its one-way messaging business to
continue to report operating income in 1997 and future periods as a result of
continued growth in profitable units in service, although the level of growth
will be dependent on the success of its direct, reseller and other distribution
channels, the competitive environment, including pricing, for competing services
and the extent to which subscribers for the Company's one-way messaging services
elect to use the advanced messaging services available on the Company's
narrowband PCS network.
INTEREST INCOME (EXPENSE)
Interest expense increased 29% in the first nine months of 1997 as
compared to the first nine months of 1996 and increased 11% in the third quarter
of 1997 as compared to the third quarter of 1996. This increase is due, in
part, to interest accrued on borrowings under the Company's bank credit
facility, although the Company has not incurred any additional borrowings under
the bank credit facility during the first nine months of 1997. Interest expense
for the first nine months of 1997 also included approximately $2.9 million of
fees incurred in connection with the amendment of the bank credit facility in
March 1997. In addition, the increase in interest expense reflects the fact
that the Company did not capitalize any interest costs in the third quarter and
first nine months of 1997, although approximately $1.7 million and $5.7 million
in interest costs were capitalized in the third quarter of 1996 and first nine
months of 1996, respectively.
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Interest income totaled $3.2 million in the first nine months of 1997 as
compared to $4.5 million in the first nine months of 1996 and totaled $0.8
million in the third quarter of 1997 as compared to $1.6 million in the third
quarter of 1996. This decrease is primarily attributable to a reduction in the
aggregate amount of securities restricted for debt service related to the
Company's 13.5% Senior Subordinated Discount Notes due December 15, 2002
("Senior Notes").
PROVISION FOR INCOME TAXES
Mtel recorded a provision for income taxes of $3.6 million and $1.5
million in the first nine months of 1997 and 1996, respectively, and $1.2
million and $0.1 million in the third quarter of 1997 and 1996, respectively,
relating to state and local income taxes. The Company reported net losses for
federal income tax purposes during the three and nine month periods ended
September 30, 1997 and 1996 and, accordingly, no provision for federal income
taxes was made for such periods.
PREFERRED STOCK DIVIDENDS
The Company accrued and paid dividends of approximately $2.1 million in
each of the quarters ended September 30, 1997 and 1996 on the Company's $2.25
Cumulative Convertible Exchangeable Preferred Stock (the "$2.25 Preferred
Stock"). In addition, the Company accrued approximately $1.2 million in the
third quarter of 1997 as compared to $1.1 million in the third quarter of 1996
related to stock dividends on the Company's 7.5% Cumulative Convertible Accruing
Pay-In-Kind 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,
18
<PAGE>
such dividends are deducted from net income for the purpose of determining net
income (loss) per common share.
NET INCOME (LOSS)
Mtel recorded a consolidated net loss of approximately $66.8 million in
the nine month period ended September 30, 1997 which, when combined with the
effect of the preferred stock dividends, resulted in a consolidated net loss per
common share of $1.41 for such period. This compares to a consolidated net loss
of approximately $89.8 million, or $1.81 per common share, in the first nine
months of 1996. The consolidated net loss in the first nine months of 1997 was
offset by a gain of approximately $7.4 million from the sale of the Company's
19% equity interest in a joint venture that conducts paging operations in Brazil
which was completed in February 1997. The consolidated net loss in the first
nine 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.
The Company recorded a consolidated net loss of $22.2 million, or $0.47 per
common share, in the third quarter of 1997 as compared to a consolidated net
loss of $32.3 million, or $0.65 per common share, in the third quarter of 1996.
The Company expects to incur a net loss on a consolidated basis in 1997 and 1998
as a result of continuing losses from its advanced messaging and international
operations, although one-way messaging operations are expected to generate net
income during these periods.
CURRENCY EXCHANGE RATES
The Company is subject to exposure resulting from adverse trends in
exchange rates relative to local foreign currencies, primarily in Latin America.
Management periodically reviews its exchange
19
<PAGE>
rate risks and may take certain actions to reduce such risks. Although the
Company has not incurred any material exchange rate gains or losses to date,
there can be no assurance that fluctuations in currency exchange rates in the
future will not have an adverse effect on the Company's operations. The Company
has not previously used derivative financial instruments to hedge its foreign
currency exchange rate risks due, in part, to the lack of availability of
appropriate hedging instruments in most of the countries in which Mtel has
investments.
LIQUIDITY AND CAPITAL RESOURCES
DOMESTIC
The Company incurred capital expenditures of $13.1 million in the first
nine months of 1997, including $2.0 million in the third quarter of 1997, a
significant portion of which was used to procure messaging units to support its
one-way messaging subscriber base in the United States. In addition, in the
first nine months of 1997, Mtel incurred capital expenditures of $35.6 million,
including $13.5 million in the third quarter of 1997, for messaging units and
for infrastructure equipment and construction costs related to the continued
expansion of coverage of the narrowband PCS network. Capital expenditures in
the third quarter of 1997 were funded with cash generated from one-way messaging
operations.
The Company's total borrowing availability under the bank credit facility
increased to $200.0 million as of September 30, 1997. During the third quarter
of 1997, the Company did not increase its outstanding borrowings under the bank
credit facility, and had a balance of $130.5 million of borrowings outstanding
as of September 30, 1997. The Company intends to fund its capital requirements
in the fourth quarter of 1997 and in 1998 with cash flows from operations and,
to the
20
<PAGE>
extent required, with borrowings under the bank credit facility. The Company
anticipates that it will be required to incur borrowings under the bank credit
facility to fund capital expenditures and working capital requirements in the
fourth quarter of 1997, although the level of borrowings is not expected to be
material. Letters of credit in the amount of $10.0 million had been issued under
the credit facility as of September 30, 1997, and the credit available under the
facility has been reduced by a corresponding amount. As of September 30, 1997,
the Company had borrowing availability under the bank credit facility of
approximately $59.5 million.
In October 1997, SkyTel and the bank group completed the fourth amendment
to the bank credit facility which modified certain covenants. The amendment
included the elimination of the covenant requiring the maintenance of a
prescribed number of one-way units in service and an extension, from December
31, 1997 to December 31, 1998, to complete the disposition of the Company's
Asian operations and investments. This amendment was completed without the
payment of any additional fees by Mtel.
Interest expense on the Company's Senior Notes is payable semi-annually,
in cash, on June 15 and December 15 of each year. The indenture related to the
Senior Notes required the Company to deposit approximately $93.6 million of the
net proceeds to purchase a portfolio of securities (the "Pledged Securities") to
provide for the payment of interest on the Senior Notes through December 15,
1997. The Company will be required to fund interest payments on the Senior
Notes commencing with the interest payment due on June 15, 1998.
The Company has entered into an arrangement with a third-party finance
company to provide financing to Mtel's customers for a lease-to-own pager
program. Under the lease-to-own program, a finance company will directly lease
paging units to the Company's customers and will be
21
<PAGE>
paid a monthly rental fee for two years. The customer will have the opportunity
to purchase the unit at the conclusion of the two-year period for an additional
charge. The finance company has committed $10.0 million of funding for this
program, and the Company began offering this program to its customers in the
third quarter of 1997.
INTERNATIONAL
In 1996, the Company designated Mtel Latin America, Inc. ("Mtel Latam")
as an "unrestricted subsidiary" for purposes of the Company's bank credit
agreement and the indenture relating to its Senior Notes. As a result of this
designation, Mtel Latam is required to finance its operations and development
efforts independent of Mtel. On July 18, 1997, Mtel Latam entered into a Credit
and Security Agreement (the "Latam Credit Agreement") with Credit Lyonnais New
York Branch under which Mtel Latam may borrow up to an aggregate of $6.5
million. Borrowings under the Latam Credit Agreement are secured by an
installment payment of $7.15 million payable to Mtel Latam in connection with
the sale of its 19% equity interest in the Brazilian joint venture which was
completed in February 1997, together with the related bank guarantee issued by
Banco Itau S.A. which secures this installment obligation. Borrowings under the
Latam Credit Agreement bear interest at the matched rate (as defined in the
Latam Credit Agreement) plus 2% and mature on February 12, 1998. During the
third
22
<PAGE>
quarter of 1997, Mtel Latam borrowed $2.0 million under the Latam Credit
Agreement and expects to borrow the remaining $4.5 million during the fourth
quarter of 1997.
Mtel Latam will require additional financing to repay $8.0 million of
indebtedness incurred in connection with the acquisition of RadioMensaje, which
matures on June 27, 1998, and to fund working capital requirements in 1998. Mtel
Latam will be required to engage in additional debt or equity financings to fund
its Latin American operations in 1998, and is currently involved in negotiations
with a financial institution to establish a secured credit facility in the
amount of approximately $15 - $30 million. There can be no assurance that any
such financing can be completed on terms favorable to Mtel Latam, if at all.
DISPOSITION OF ASSETS
In the third quarter of 1997, the Company completed the sale of its Hong
Kong operations for approximately $1.7 million. The Company is currently
involved in negotiations with respect to the sale of its remaining Asian
operations and investments. The fourth amendment to the bank credit facility
completed in October 1997 extended the completion date for the disposition of
the Company's Asian operations and investments from December 31, 1997 to
December 31, 1998.
RECENTLY ISSUED ACCOUNTING STANDARDS
In February 1997, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standard ("SFAS") No. 128, "Earnings
Per Share." This Statement establishes standards for computing and presenting
earnings per share ("EPS") and applies to entities with publicly held common
stock. SFAS No. 128 requires the presentation of basic and diluted EPS on the
face of
23
<PAGE>
the income statement. SFAS No. 128 is effective for financial statements issued
for periods ending after December 15, 1997. Mtel believes that SFAS No. 128 will
not have a material effect on the Company's consolidated results of operations
or financial position.
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income". SFAS No. 130 establishes standards for reporting comprehensive income
and its components. Comprehensive income is defined as all changes in the equity
of a business enterprise during a period from transactions and other events and
circumstances, except those resulting from investments by owners and
distributions to owners. This Statement requires that all items of comprehensive
income be reported in a financial statement that is displayed with the same
prominence as other financial statements. SFAS No. 130 is effective for fiscal
years beginning after December 15, 1997. Mtel believes that SFAS No. 130 will
not have a material effect on the Company's consolidated results of operations
or financial position.
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information." This Statement establishes new
standards for reporting information about operating segments in annual financial
statements of public business enterprises and requires disclosure of certain
selected information about operating segments in interim financial reports. SFAS
No. 131 is effective for financial statements for periods beginning after
December 15, 1997. Mtel believes that SFAS No. 131 will not have a material
effect on the Company's consolidated results of operations or financial
position, and has not yet determined the impact on its current segment
reporting.
24
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
On February 20, 1997, a civil complaint was filed in the United States
District Court for the District of Columbia, Kris Lindblom and Jack Fefer v.
Mobile Telecommunication Technologies Corporation, SkyTel Corporation, J. Robert
Fugate, Leonard G. Kriss, M. Bernard Puckett, Thomas G. Barksdale, Calvin C.
LaRoche, Jai Bhagat and John N. Palmer, Civil Action No. 1:97CV00337. The
complaint has two counts, one alleging violations of Section 10(b) of the
Exchange Act against all defendants, and one alleging violations of Section
20(a) of the Exchange Act against the Company and defendants Palmer and Puckett.
The plaintiffs seek unspecified damages and to certify the case as a class
action. The defendants have filed motions to dismiss the complaint and intend
to vigorously defend the case. Subsequent to the filing of the complaint, the
Company, as have other companies involved in private securities litigation,
received from the staff of the Securities and Exchange Commission ("SEC") an
informal inquiry letter seeking documents pertaining to consultants and products
used in the development and operation of the narrowband PCS network. The
Company is cooperating with the SEC staff.
Except as set forth above and except for certain proceedings involving
the narrowband PCS license awarded to the Company by the FCC in July 1994
pursuant to a Pioneer's Preference which is referenced in "Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Liquidity and Capital Resources" in the Quarterly Report on Form 10-Q for the
quarter ended June 30, 1997, there are no material legal or regulatory
proceedings involving the Company or any of 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.
---------------------------------------------------
None.
Item 5. Other Information
-----------------
None.
25
<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. 4 dated as of October 8, 1997 to
the Credit, Security, Guaranty and Pledge
Agreement dated as of December 21, 1995, as
amended, by and among the Company, the lenders
referred to therein, Chase Manhattan Bank,
Credit Lyonnais New York Branch and J.P. Morgan
Securities, Inc.
27.1 Financial Data Schedule.
(b) Reports on Form 8-K
None.
26
<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: November 13, 1997 By /s/ John T. Stupka
--------------------------------------
John T. Stupka
President and Chief Executive Officer
Dated: November 13, 1997 By /s/ Robert Kaiser
--------------------------------------
Robert Kaiser
Senior Vice President-Finance and
Chief Financial Officer
27
<PAGE>
Exhibit 4.1
AMENDMENT NO. 4 (the "Amendment") dated as of October 8,
1997 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"), THE CHASE
MANHATTAN BANK (formerly known as 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 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 2 hereof, the Agreement is hereby amended effective as of the Effective
Date (such term being used herein as defined in Section 2 hereof) as follows:
(A) The Agreement is hereby amended by adding CIBC Inc. as a Co-
Syndication Agent and changing all references to "Co-Syndication Agent" in the
Agreement to "Co-Syndication Agents".
(B) The definition of "Consolidated Interest Expense" appearing in
Article 1 of the Agreement is hereby amended in its entirety to read as follows:
"'Consolidated Interest Expense' shall mean, for any Person, for any
-----------------------------
period for which such amount is being determined, interest expense,
whether paid or accrued (including the interest component of Capital
Lease obligations) on all Indebtedness of such Person and its
Consolidated Subsidiaries on a consolidated basis (if applicable) for
such period, including, without limitation or duplication,
<PAGE>
(a) interest expense in respect of the Loans (in the case of the
Borrower) and all other outstanding Indebtedness, (b) commissions,
discounts and other fees and charges payable in connection with
letters of credit, (c) net payments payable hereunder or in connection
with all Interest Rate Production Agreements (excluding amortization
of any discount) and (d) any interest which is capitalized; but
excluding amortization of the discount or issuance cost of any
Indebtedness (including any original issue discount attributable to
any issuance of debt securities)."
(C) Section 5.21(b) of the Agreement is hereby amended in its entirety
to read as follows:
"(b) On or before December 31, 1998, sell or otherwise dispose of all
or a portion of the equity interests in Mtel Asia (or any of Mtel
Asia's Subsidiaries) owned by Mtel or any of its Affiliates, in a
transaction which results in the receipt by the Credit Parties of Net
Cash Proceeds of at least $5,000,000 and otherwise complies with the
provisions of Section 6.4(e) hereof."
(D) Section 6.22 (Minimum Subscriber Level for SkyTel) of the
Agreement is hereby amended by deleting the existing text in its entirety and
inserting in its place the words "Not Used".
SECTION 2. 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; and
(B) all legal matters in connection with this Amendment shall be
reasonably satisfactory to Morgan, Lewis & Bockius LLP, counsel for the Agents.
SECTION 3. 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
-2-
<PAGE>
(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 4. 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 5. 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 6. 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.
SECTION 7. 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 8. 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.
-3-
<PAGE>
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: /s/ Robert Kaiser
------------------------------------------
Name: Robert Kaiser
Title: Senior Vice President - Finance
GUARANTORS:
MOBILE TELECOMMUNICATION
TECHNOLOGIES CORP.
MTEL PAGING, INC.
MTEL INTERNATIONAL, 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: /s/ John E. Welsh III
--------------------------------------
Name: John E. Welsh III
Title: Vice Chairman
-4-
<PAGE>
LENDERS:
THE CHASE MANHATTAN BANK (formerly known as
Chemical Bank), individually and as Administrative
Agent
Executed in
New York, New York
By: /s/ John J. Huber
--------------------------------------
Name: John J. Huber III
Title: Managing Director
CREDIT LYONNAIS NEW YORK BRANCH,
as Documentation Agent
By: /s/ Bruce M. Yeager
--------------------------------------
Name: Bruce M. Yeager
Title: Senior Vice President
CREDIT LYONNAIS CAYMAN ISLAND BRANCH
By: /s/ Bruce M. Yeager
--------------------------------------
Name: Bruce M. Yeager
Title: Senior Vice President
J.P. MORGAN SECURITIES INC.,
as Co-Syndication Agent
By: /s/ Andrew Holmes
--------------------------------------
Name: Andrew Holmes
Title: Vice President
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By: /s/ Maria D. Kratsios
--------------------------------------
Name: Maria D. Kratsios
Title: Vice President
-5-
<PAGE>
CIBC INC., individually and as Co-Syndication
Agent
By: /s/ Deborah Strek
--------------------------------------
Name: Deborah Strek
Title: Managing Director
CIBC Wood Gundy Securities Corp.,
as Agent
ABN AMRO BANK N.V.
By: /s/ Ronald O. Drake
--------------------------------------
Name: Ronald O. Drake
Title: Group Senior Vice President
By: /s/ William J. Fitzgerald
--------------------------------------
Name: William J. Fitzgerald
Title: Senior Vice President
NATIONSBANK, N.A.
By: /s/ Keith M. Wilson
--------------------------------------
Name: Keith M. Wilson
Title: Vice President
VAN KAMPEN AMERICAN CAPITAL
PRIME RATE INCOME TRUST
By: /s/ Jeffrey W. Maillet
--------------------------------------
Name: Jeffrey W. Maillet
Title: Senior Vice President and Director
MERRILL LYNCH, PIERCE, FENNER & SMITH,
INCORPORATED
By: /s/ Neil Brison
--------------------------------------
Name: Neil Brison
Title: Director
-6-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MOBILE
TELECOMMUNICATION TECHNOLOGIES CORP. CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER
30, 1997 AND CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 12,364,944
<SECURITIES> 0
<RECEIVABLES> 68,797,176
<ALLOWANCES> 20,408,803
<INVENTORY> 0
<CURRENT-ASSETS> 80,107,109
<PP&E> 451,193,304
<DEPRECIATION> 154,940,467
<TOTAL-ASSETS> 760,340,287
<CURRENT-LIABILITIES> 105,627,698
<BONDS> 404,270,442
38,075
0
<COMMON> 546,528
<OTHER-SE> 221,127,000
<TOTAL-LIABILITY-AND-EQUITY> 760,340,287
<SALES> 294,766,190
<TOTAL-REVENUES> 294,766,190
<CGS> 0
<TOTAL-COSTS> 323,907,733
<OTHER-EXPENSES> 1,804,308
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 41,628,675
<INCOME-PRETAX> (63,133,660)
<INCOME-TAX> 3,621,755
<INCOME-CONTINUING> (66,755,415)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (66,755,415)
<EPS-PRIMARY> (1.41)
<EPS-DILUTED> (1.41)
</TABLE>
