<PAGE> 1
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 the Quarterly Period Ended September 30, 1996
COMMISSION FILE NUMBER: 0-22238
A+ NETWORK, INC.
(Exact name of registrant as specified in its charter)
TENNESSEE 62-1225322
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
40 SOUTH PALAFOX STREET
PENSACOLA, FLORIDA 32501
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (904) 438-1653
A+ NETWORK, INC.
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
----- -----
As of September 30, 1996, 10,888,583 shares of the Registrant's Common
Stock, $.01 par value, were outstanding.
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM I. Financial Statements
A+ NETWORK, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
---------------------------- -----------------------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES:
Mobile communication services $21,181,697 $ 8,789,732 $58,564,689 $27,292,437
Equipment sales 1,547,550 844,167 4,553,595 2,394,307
Telemessaging services 2,963,280 2,965,391 8,749,152 8,549,523
----------- ----------- ----------- -----------
Total revenues 25,692,527 12,599,290 71,867,436 38,236,267
Cost of sales (2,292,249) (1,595,808) (6,450,824) (5,462,694)
----------- ----------- ----------- -----------
23,400,278 11,003,482 65,416,612 32,773,573
COSTS AND EXPENSES:
Operating expenses - exclusive of depreciation
and amortization 5,065,148 2,683,271 14,338,037 7,680,768
Depreciation and amortization 7,392,456 3,187,859 20,628,360 9,498,170
Selling 5,269,183 2,109,088 12,942,167 7,529,833
General and administrative 7,659,809 5,088,538 23,589,243 14,991,006
Restructuring charges - - 395,815 -
----------- ----------- ----------- -----------
25,386,596 13,068,756 71,893,622 39,699,777
OPERATING LOSS (1,986,318) (2,065,274) (6,477,010) (6,926,204)
INTEREST EXPENSE (3,791,050) (568,405) (11,352,469) (1,379,476)
INTEREST INCOME 278,554 - 1,259,487 -
----------- ----------- ----------- -----------
NET LOSS ($5,498,814) ($2,633,679) ($16,569,992) ($8,305,680)
=========== =========== =========== ===========
LOSS PER SHARE ($0.51) ($0.44) ($1.57) ($1.38)
=========== =========== =========== ===========
AVERAGE NUMBER OF SHARES
OUTSTANDING (in thousands) 10,889 6,016 10,530 6,016
=========== =========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
2
<PAGE> 3
A+ NETWORK, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
------------- -------------
ASSETS (Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 1,677,977 $12,500,438
Short term investments 18,199,211 43,151,125
Accounts receivable - trade (net of allowance for doubtful accounts) 12,008,071 10,721,052
Inventory 10,961,386 4,164,077
Prepaid expenses 803,050 732,275
Other current assets 2,330,102 663,536
------------ ------------
Total current assets 45,979,797 71,932,503
EQUIPMENT AND FIXTURES - Net 63,212,455 48,325,727
EXCESS OF COST OVER FAIR VALUE OF
NET ASSETS ACQUIRED - Net 58,344,990 49,608,772
INTANGIBLE AND OTHER ASSETS - Net 42,593,830 41,145,669
------------ ------------
TOTAL $210,131,072 $211,012,671
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $6,015,347 $4,927,517
Accrued payroll related costs 2,411,586 1,911,730
Accrued liabilities 7,496,412 4,011,615
Deferred revenue and customer deposits 7,163,254 5,778,147
------------ ------------
Total current liabilities 23,086,599 16,629,009
LONG-TERM DEBT 124,849,114 124,101,373
DEFERRED TAXES 818,243 818,243
STOCKHOLDERS' EQUITY:
Preferred stock - $.01 par value; 1,500,000 shares authorized;
issued and outstanding, none - -
Common stock - $.01 par value; 30,000,000 shares authorized;
10,888,583 and 10,263,255 shares issued and outstanding
at September 30, 1996 and December 31, 1995, respectively 108,886 102,633
Additional paid-in capital 99,060,874 90,584,065
Accumulated deficit (37,792,644) (21,222,652)
------------ ------------
Total stockholders' equity 61,377,116 69,464,046
------------ ------------
TOTAL $210,131,072 $211,012,671
============ ============
</TABLE>
See notes to consolidated financial statements.
3
<PAGE> 4
A+ NETWORK, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine months ended
September 30,
---------------------------
1996 1995
----------- -----------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss ($16,569,992) ($ 8,305,680)
Adjustments to reconcile net loss to cash (used in)
provided by operating activities:
Depreciation and amortization 20,628,360 9,498,170
Provision for losses on accounts receivable 2,517,268 1,221,621
Amortization of debt discount 36,878 ---
Loss on sale of equipment 6,057 ---
Changes in assets and liabilities:
Increase in accounts receivable (3,473,336) (1,374,477)
(Increase) decrease in inventory (6,518,129) 815,108
(Increase) decrease in prepaid expenses (36,582) 157,510
Increase in other current assets (1,586,490) (20,110)
Decrease increase in accounts payable 1,033,481 724,592
Increase in accrued payroll related costs 502,861 17,295
Increase in accrued liabilities 3,438,999 356,133
Increase in deferred revenue and customer deposits 880,393 412,459
----------- -----------
Net cash provided by operating activities 859,768 3,502,621
INVESTING ACTIVITIES:
Acquisition of business, net of cash acquired (13,611,053) ---
Net decrease in short-term investments 24,951,914 ---
Purchase of South Central Bell paging assets --- (1,232,061)
Purchase of equipment (27,978,659) (7,112,899)
Proceeds from sale of equipment 1,645,742 ---
Investments in consortium and other --- (2,145,469)
Reduction in (payment of) intangible and other assets 2,460,908 (423,268)
----------- -----------
Net cash used in investing activities (12,531,148) (10,913,697)
FINANCING ACTIVITIES:
Proceeds of long-term debt --- 24,155,000
Repayment of long-term debt (42,168) (17,028,389)
Proceeds from sale of common stock 891,087 889,356
----------- -----------
Net cash provided by financing activities 848,919 8,015,967
----------- -----------
(Decrease) increase in cash and cash equivalents (10,822,461) 604,891
CASH AND CASH EQUIVALENTS, beginning of period 12,500,438 254,880
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 1,677,977 $ 859,771
=========== ===========
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION:
Cash paid during the period for interest $ 7,726,669 $ 1,289,276
=========== ===========
SUPPLEMENTAL SCHEDULE OF NONCASH
INVESTING AND FINANCING ACTIVITIES:
Acquisition of business:
Long-term debt $ 753,031 ---
Common stock $ 7,591,974 ---
</TABLE>
See notes to consolidated financial statements.
4
<PAGE> 5
A+ NETWORK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL
UNAUDITED INTERIM INFORMATION. The unaudited interim consolidated
financial statements include all adjustments, consisting only of normal
recurring adjustments, which management considers necessary for a fair
presentation of the financial position and results of operations. The results
of operations for the three months and nine months ended September 30, 1996,
are not necessarily indicative of the results that may be expected for a full
year.
CERTAIN RECLASSIFICATIONS. Certain amounts have been reclassified in
the consolidated statement of operations for the three months and nine months
ended September 30, 1995 and the consolidated balance sheet as of December 31,
1995 to conform with the presentation in 1996.
EMPLOYEE STOCK BASED TRANSACTIONS. The Company will continue to apply
Accounting Principles Board Opinion No. 25 for the measurement and recognition
of employee stock based transactions, and will follow the disclosure
requirements of Statement of Financial Accounting Standards No. 123 "Accounting
for Stock-Based Compensation."
2. ACQUISITIONS
During the first nine months of 1996, certain assets of four paging companies
and all of the outstanding common stock of a fifth company were acquired for
$13,611,053 in cash (including acquisition related expenses and net of cash
acquired), $753,031 in notes payable and 568,687 shares of common
stock valued at $7,591,974. The acquisitions were accounted for as purchases.
Accordingly, the aggregate purchase prices were allocated to specific assets
and liabilities based upon their fair market value at the date of acquisition.
The excess of the purchase price over the estimated fair market value of net
assets acquired ("goodwill") of $11,713,292 is being amortized on a
straight-line basis over 15 years. The results of operations of these
companies have been included in the Consolidated Statements of Operations from
the date of acquisition.
3. REORGANIZATION EXPENSE
In the first quarter of 1996, the Company recorded restructuring charges of
$396,000, representing the expected costs of employee separations.
5
<PAGE> 6
4. MERGER WITH METROCALL, INC.
On November 6, 1996 the Company's shareholders approved the Agreement and Plan
of Merger between the Company and Metrocall, Inc. ("Metrocall") of Alexandria,
Virginia pursuant to which the Company will be merged into Metrocall, with
Metrocall to be the surviving corporation. Pursuant to a tender offer and a
Shareholders' Option and Sale Agreement, Metrocall purchased approximately
40.0% of the Company's common stock on September 24, 1996. The closing of the
Merger is expected to occur by November 15, 1996.
6
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Total revenues increased 103.9% to $25.7 million in the three months ended
September 30, 1996, as compared to $12.6 million for the same period in 1995.
For the first nine months of 1996, total revenues increased 88.0% to $71.9
million, as compared to $38.2 million for the same period in 1995.
Mobile communication revenues increased 141.0% to $21.2 million in the three
months ended September 30, 1996, as compared to $8.8 million for the same
period in 1995, while telemessaging revenues declined 0.1% to $3.0 million.
For the first nine months of 1996, mobile communication revenues increased
114.6% to $58.6 million, as compared to $27.3 million for the same period in
1995, while telemessaging revenues increased 2.3% to $8.7 million. The growth
in mobile communication revenues reflected a 177.1% increase in paging units in
service to 660,268 at September 30, 1996, as compared to 238,302 at September
30, 1995, offset by a decline in total cellular revenues. Total cellular
revenues increased slightly for the three months ended September 30, 1996 to
$1.4 million from $1.3 million for the same period in 1995. Total cellular
revenues for the nine months ended September 30, 1996 declined to $4.0 million
from $5.8 million for the nine months ended September 30, 1995, primarily as a
result of a decline in new account activations.
Net revenues increased 112.7% to $23.4 million in the three months ended
September 30, 1996, as compared to $11.0 million for the same period in 1995.
For the first nine months of 1996, net revenues increased 99.6% to $65.4
million, as compared to $32.8 million for the same period in 1995. The
increase is primarily related to the increase in paging units in service,
offset by a decline in pager margins and a decline in total cellular revenues.
The negative margin on sales of pager equipment was $58,000 for the three
months ended September 30, 1996, as compared to a gross margin of $165,000 for
the same period in 1995. The negative margin on sales of pager equipment was
$26,000 for the nine months ended September 30, 1996, as compared to a gross
margin of $380,000 for the same period in 1995. As a result of competition,
the Company expects the average revenues per unit to decline in 1996. Due to
competitive factors, cellular phones were sold at heavily discounted prices or
in many instances were given to customers through free phone promotions
resulting in negative margins on cellular equipment sales of $554,000 and
$917,000 for the three months ended September 30, 1996 and September 30, 1995,
respectively. The negative margins on cellular equipment sales declined to
$1.6 million for the nine months ended September 30, 1996 from $3.4 million for
the same period in 1995. It is customary to sell cellular phones at a loss in
order to earn the activation commission and expected monthly recurring revenues
from the cellular carrier.
7
<PAGE> 8
Operating expenses increased 88.8% to $5.1 million (21.6% of net revenues)
during the three months ended September 30, 1996, from $2.7 million (24.4% of
net revenues) for the same period in 1995. For the first nine months of 1996,
operating expenses increased 86.7% to $14.3 million (21.9% of net revenues) as
compared to $7.7 million (23.4% of net revenues) for the same period in 1995.
The increase primarily reflects the increase in operating expenses incurred to
support the $13.1 million increase in total revenues for the three months ended
September 30, 1996, as compared to the three months ended September 30, 1995,
and the $33.7 million increase in total revenues for the nine months ended
September 30, 1996, as compared to the nine months ended September 30, 1995.
Operating expenses declined as a percentage of net revenues as a result of a
decline in salaries realized from the Merger discussed below.
Selling expenses increased 149.8% to $5.3 million (22.5% of net revenues)
during the three months ended September 30, 1996 from $2.1 million (19.2% of
net revenues) for the same period in 1995. For the first nine months of 1996,
selling expenses increased 71.9% to $12.9 million (19.8% of net revenues), as
compared to $7.5 million (23.0% of net revenues) for the same period in 1995.
The increase primarily reflects the additional sales and marketing costs
incurred to support the $13.1 million increase in total revenues for the three
months ended September 30, 1996, as compared to the three months ended
September 30, 1995, and the $33.7 million increase in total revenues for the
nine months ended September 30, 1996, as compared to the nine months ended
September 30, 1995. Selling expenses increased as a percentage of net revenues
for the three months ended September 30, 1996 as a result of an increase in
salaries and employee related costs, offset by lower advertising and commission
costs. Selling expenses declined as a percentage of net revenues for the nine
months ended September 30, 1996, primarily as a result of lower advertising and
commission costs, offset by increased salaries and employee related costs.
General and administrative expenses increased 50.5% to $7.7 million (32.7% of
net revenues) during the three months ended September 30,1996 from $5.1 million
(46.2% of net revenues) for the same period in 1995. For the first nine months
of 1996, general and administrative expenses increased 57.4% to $23.6 million
(36.1% of net revenues), as compared to $15.0 million (45.7% of net revenues)
for the same period in 1995. The increase primarily reflects the additional
general and administrative costs incurred to support the $13.1 million increase
in total revenues for the three months ended September 30, 1996, as compared to
the three months ended September 30, 1995, and the $33.7 million increase in
total revenues for the nine months ended September 30, 1996, as compared to the
nine months ended September 30, 1995. The decline as a percentage of net
revenues is the result of a reduction in general and administrative salaries,
employee related costs and increased operating efficiencies realized from the
Merger discussed below.
Depreciation and amortization expense increased 131.9% to $7.4 million during
the three months ended September 30, 1996, from $3.2 million for the same
period in 1995. For the first nine months of 1996, depreciation and
amortization expense increased 117.2% to $20.6 million, as compared to $9.5
million for the same period in 1995. These increases in depreciation and
amortization expense relate to increased equipment and intangible asset
purchases and paging network equipment acquired.
8
<PAGE> 9
The Company experienced an operating loss of $2.0 million during the three
months ended September 30, 1996, as compared to an operating loss of $2.1
million during the same period in 1995. The operating loss for the nine months
ended September 30, 1996 was $6.5 million, as compared to $6.9 million for the
same period in 1995. The decreased operating losses related primarily to
a decline in other costs and expenses (Operating, Selling and General and
administrative) from 89.8% of net revenues in the three months ended September
30, 1995 to 76.9% of net revenues in the three months ended September 30, 1996
and from 92.2% of net revenues in the nine months ended September 30, 1995 to
77.8% of net revenues in the nine months ended September 30, 1996, offset by an
increase in depreciation and amortization expense and a one-time reorganization
charge of $396,000 in the first quarter of 1996.
Interest expense was $3.8 million for the three months ended September 30,
1996, as compared to interest expense of $568,000 for the same period in 1995.
Interest expense was $11.4 million for the nine months ended September 30,
1996, as compared to interest expense of $1.4 million for the same period in
1995. The increase in interest expense was primarily due to the increase of
the Company's long-term debt from the issuance of the Notes.
The Company experienced a net loss in the three months ended September 30, 1996
of $5.5 million, or $0.51 per share, as compared to a net loss of $2.6 million,
or $0.44 per share, during the same quarter in 1995. For the first nine months
of 1996, the Company had a net loss of $16.6 million, or $1.57 per share, as
compared to a net loss of $8.3 million, or $1.38 per share for the first nine
months of 1995.
Operating cash flow, or earnings before interest, income taxes, depreciation
and amortization (EBITDA), was $5.4 million in the three months ended September
30, 1996, as compared to $1.1 million for the same period in 1995. For the
first nine months of 1996, EBITDA was $14.2 million, as compared to $2.6
million for the same period in 1995. Reduced operating, selling and general
and administrative expenses as a percentage of total revenues resulted in an
increase in EBITDA.
IMPACT OF STATEMENTS OF ACCOUNTING STANDARDS
As of January 1, 1996, the Company adopted SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of."
SFAS No. 121 requires review of long-lived assets and certain identifiable
intangibles for impairment. Adoption of SFAS No. 121 did not have a
significant impact on the Company's financial statements.
In October 1995, the Financial Accounting Standards Board issued SFAS No. 123,
"Accounting for Stock-Based Compensation," which requires adoption of the
disclosure provisions no later than fiscal years beginning after December 15,
1995 and adoption of the recognition and measurement provisions for nonemployee
transactions no later than fiscal years beginning after December 15, 1995. The
new standard defines fair value method of accounting for stock options and
other equity instruments. The Company will continue to apply Accounting
Principles Board Opinion No. 25 for the measurement and recognition of employee
stock based transactions, and will follow the disclosure of Statement of
Financial Accounting Standards No. 123 "Accounting for Stock-Based
Compensation."
9
<PAGE> 10
Under the fair value method, compensation cost is measured at the grant date
based on the fair value of the award and is recognized over the service period,
which is usually the vesting period.
Pursuant to the new standard, companies are encouraged, but are not required,
to adopt the fair value method of accounting for employee stock-based
transactions. Companies are also permitted to continue to account for such
transactions under Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees," but would be required to disclose in a note to the
financial statements pro forma net income and, if presented, earnings per share
as if the Company had applied the new method of accounting.
10
<PAGE> 11
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of capital have been cash flows from operations,
borrowings from its bank lenders, vendor financing, proceeds from the Company's
initial public offering of Common Stock in August 1993 and proceeds from the
sale of $125.0 million principal amount of its 11 7/8% Senior Subordinated
Notes due 2005 (the "Notes") in October 1995, further described below. Net
cash provided by operating activities totaled $860,000 and $3.5 million for the
nine months ended September 30, 1996 and September 30, 1995, respectively.
The decline in 1996 is primarily the result of an increase in net cash used to
purchase inventory and an increase in net cash provided by depreciation and
amortization.
The Company's paging operations require substantial capital investment to
procure pagers and paging network equipment to support the Company's growth.
By contrast, the Company's telemessaging operations will require relatively
little additional capital investment through 1996. Net cash used in investing
activities amounted to $12.5 million and $10.9 million for the nine months ended
September 30, 1996 and September 30, 1995, respectively. For the nine months
ended September 30, 1996, the Company purchased $28.0 million of equipment,
reduced short-term investments by $25.0 million and acquired five companies for
a net cash consideration of $13.6 million. For the nine months ended September
30, 1995, the Company purchased $7.1 million of equipment, $1.2 million was
used to purchase the South Central Bell paging assets in Louisiana and
investments in consortium and other were $2.1 million.
Net cash provided by financing activities was $849,000 for the nine months ended
September 30, 1996 and $8.0 million for the same period in 1995. The primary
source of cash from financing activities during the nine months ended September
30, 1996 was proceeds from the exercise of stock options. The Company borrowed
$24.2 million and repaid $17.0 million of long-term debt during the nine months
ended September 30, 1995. In addition, the Company received $889,000 from the
exercise of stock options during the nine months ended September 30, 1995.
On October 24, 1995, the Company sold the Notes to the public. The Notes will
mature on November 1, 2005 and the interest on the Notes is payable
semi-annually on May 1 and November 1 of each year, commencing on May 1, 1996.
The Notes will be redeemable by the Company in whole or in part at any time on
or after November 1, 2000 at certain designated redemption prices plus interest
accrued thereon to the redemption date. Upon a change in control, the Company
will be required to offer to purchase all outstanding Notes at 101% of the
principal amount thereof, plus interest accrued and unpaid thereon, to the
purchase date. The Notes are subordinated in right of payment to all of the
Company's existing and future senior debt, including any indebtedness that may
be incurred pursuant to the Company's New Credit Facility (as defined below).
Although the Company has no indebtedness outstanding which would be
subordinated to the Notes and currently has no plans to incur any such
subordinated indebtedness, the Notes will rank senior to any subordinated
indebtedness the Company may incur. The Indenture governing the Notes contains
customary affirmative and negative covenants.
11
<PAGE> 12
Immediately following the sale of the Notes, Network Paging Corporation
("Network") was merged into the Company in a transaction accounted for as a
purchase (the "Merger"). The aggregate merger consideration, including the
redemption of preferred stock, was $16.7 million in cash, which was provided
from the net proceeds of $120.0 million from the sale of the Notes, and
4,200,000 shares of Common Stock of the Company. Of the balance of the
approximately $103.3 million net proceeds from the sale of the Notes, $35.2
million was used to retire outstanding debts of the Company and Network, $14.7
million was used to purchase government securities securing the payment of the
first two interest payments on the Notes and $3.6 million was used to pay the
expenses of the Merger, the sale of the Notes and the establishment of the New
Credit Facility, as defined below. The balance of approximately $49.8 million
is to be used for ,subject to certain limitations, general corporate purposes.
Also in connection with the Merger, the Company entered into a new credit
facility with The First National Bank of Chicago ("First Chicago") to provide
a new credit facility of $25.0 million (the "New Credit Facility"). The
$25.0 million facility is a secured two-year term loan, with quarterly
principal payments. The interest rate on the New Credit Facility is a base
rate, plus a margin fluctuating with the Company's ratio of total debt to net
operating cash flow. Borrowings under the New Credit Facility are secured by a
lien on all the assets of the Company, including the stock of its subsidiaries,
to the extent permissible under the rules of the Federal Communications
Commission. The loan documents contain customary affirmative and negative
covenants. In addition, the Company will be required to maintain specified
ratios of net operating cash flows to interest expense on total debt, ratios of
total debt to equity and other operating ratios. The availability of
borrowings under the New Credit Facility will be limited by certain of these
ratios. Until it has achieved a substantial improvement in its results of
operations or completed a significant acquisition of one or more other paging
providers on favorable terms, the Company does not anticipate being able to
borrow under the New Credit Facility.
During the first nine months of 1996, certain assets of four paging companies
and all of the outstanding common stock of Page East, Inc. were acquired for
$13.6 million in cash, $753,031 in notes payable and 568,687 shares of common
stock valued at $7.6 million. Since September 30, 1996, the Company has
acquired two additional paging companies for $4.2 million in cash. The Company
has also entered into an agreement to purchase an additional paging company for
$750,000 payable in cash. This acquisition will be paid for with working
capital, including remaining proceeds from the sale of the Notes, and operating
cash flows.
On November 6, 1996 the Company's shareholders approved the Agreement and Plan
of Merger between the Company and Metrocall, Inc. ("Metrocall") of Alexandria,
Virginia pursuant to which the Company will be merged into Metrocall, with
Metrocall to be the surviving corporation. Pursuant to a tender offer and a
Shareholders' Option and Sale Agreement, Metrocall purchased approximately
40.0% of the Company's common stock on September 24, 1996. The closing of the
Merger is expected to occur by November 15, 1996.
12
<PAGE> 13
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K
The Company has not filed any Current Reports on Form 8-K during the
third quarter of 1996.
13
<PAGE> 14
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.
A+ NETWORK, INC.
By: /s/ Randy K. Schultz
------------------------------------
Randy K. Schultz
Vice-President of Finance and
Chief Financial Officer
(principal financial officer)
Date: November 13, 1996
14
<TABLE> <S> <C>
<ARTICLE> 5
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 1,677,977
<SECURITIES> 18,199,211
<RECEIVABLES> 12,812,603
<ALLOWANCES> 804,532
<INVENTORY> 10,961,386
<CURRENT-ASSETS> 45,979,797
<PP&E> 106,631,279
<DEPRECIATION> 43,418,824
<TOTAL-ASSETS> 210,131,072
<CURRENT-LIABILITIES> 23,086,599
<BONDS> 124,138,251
0
0
<COMMON> 108,886
<OTHER-SE> 61,268,230
<TOTAL-LIABILITY-AND-EQUITY> 210,131,072
<SALES> 4,553,595
<TOTAL-REVENUES> 65,416,612
<CGS> 6,450,824
<TOTAL-COSTS> 6,450,824
<OTHER-EXPENSES> 71,893,622
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