<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 June 30, 1996
COMMISSION FILE NUMBER: 0-22238
A+ NETWORK, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
TENNESSEE 62-1225322
(State or other jurisdiction of incorporation (I.R.S. Employer Identification No.)
or organization)
40 SOUTH PALAFOX STREET
PENSACOLA, FLORIDA 32501
(Address of principal executive offices) (Zip Code)
</TABLE>
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 June 30, 1996, 10,888,516 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 Six months ended
June 30, June 30,
----------------------------- ----------------------------
1996 1995 1996 1995
-------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
REVENUES:
Mobile communication services $19,617,012 $ 9,275,912 $ 37,382,992 $ 18,502,705
Equipment sales $ 1,225,068 $728,396 $3,006,045 $1,550,140
Telemessaging services 2,899,143 2,827,138 5,785,872 5,584,132
----------- ----------- ------------ ------------
Total revenues 23,741,223 12,831,446 46,174,909 25,636,977
Cost of equipment sales (1,939,863) (1,781,248) (4,158,575) (3,866,886)
----------- ----------- ------------ ------------
21,801,360 11,050,198 42,016,334 21,770,091
COSTS AND EXPENSES:
Operating expenses - exclusive of depreciation
and amortization 4,678,152 2,538,035 9,272,889 4,997,497
Depreciation and amortization 6,683,616 3,198,927 13,235,904 6,310,311
Selling 4,072,207 2,688,019 7,672,984 5,420,745
General and administrative 8,249,111 5,209,357 15,929,434 9,902,468
Restructuring charges - - 395,815 -
----------- ----------- ------------ ------------
23,683,086 13,634,338 46,507,026 26,631,021
OPERATING LOSS (1,881,726) (2,584,140) (4,490,692) (4,860,930)
INTEREST EXPENSE (3,890,114) (437,907) (7,561,419) (811,071)
INTEREST INCOME 415,587 980,933 -
----------- ----------- ------------ ------------
NET LOSS ($5,356,253) ($3,022,047) ($11,071,178) ($5,672,001)
=========== =========== ============ ============
LOSS PER SHARE ($.51) ($0.50) ($1.07) ($0.95)
=========== =========== ============ ============
AVERAGE NUMBER OF SHARES
OUTSTANDING (in thousands) 10,434 6,013 10,348 5,992
=========== =========== ============ ============
</TABLE>
See notes to consolidated financial statements.
2
<PAGE> 3
A+ NETWORK, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
------------ -------------
ASSETS (Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 4,031,831 $ 12,500,438
Short term investments $ 22,301,664 43,151,125
Accounts receivable - trade (net of allowance for doubtful accounts) 8,439,173 10,721,052
Inventory 6,387,416 4,164,077
Prepaid expenses 1,216,222 732,275
Other current assets 2,500,464 663,536
------------ ------------
Total current assets 44,876,770 71,932,503
EQUIPMENT AND FIXTURES - Net 63,526,965 48,325,727
EXCESS OF COST OVER FAIR VALUE OF
NET ASSETS ACQUIRED - Net 57,117,724 49,608,772
INTANGIBLE AND OTHER ASSETS - Net 42,844,881 41,145,669
------------ ------------
TOTAL $208,366,340 $211,012,671
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $1,646,503 $ 4,927,517
Accrued payroll related costs 2,338,524 1,911,730
Accrued liabilities 4,874,902 4,011,615
Deferred revenue and customer deposits 7,224,077 5,778,147
------------ ------------
Total current liabilities 16,084,006 16,629,009
LONG-TERM DEBT 124,775,949 124,101,373
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;
10,888,516 and 10,263,255 shares issued and outstanding
at June 30, 1996 and December 31, 1995, respectively 108,885 102,633
Additional paid-in capital 98,873,087 90,584,065
Accumulated deficit (32,293,830) (21,222,652)
------------ ------------
Total stockholders' equity 66,688,142 69,464,046
------------ ------------
TOTAL $208,366,340 $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>
Six months ended
June 30,
---------------------------
1996 1995
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss ($11,071,178) ($5,672,001)
Adjustments to reconcile net loss to cash
(used in) provided by operating activities:
Depreciation and amortization 13,235,904 6,310,311
Provision for losses on accounts receivable 1,840,253 681,093
Amortization of debt discount 24,878 -
Loss on sale of equipment 15,800 -
Changes in assets and liabilities:
Decrease (increase) in accounts receivable 1,285,981 (725,494)
(Increase) decrease in inventory (1,991,259) 775,991
(Increase) decrease in prepaid expenses (450,096) 93,339
Increase in other current assets (2,034,286) (3,647)
Increase in intangible and other assets (2,453,519) -
(Decrease) increase in accounts payable (3,706,700) 1,624,351
Increase in accrued payroll related costs 429,799 124,449
Increase in accrued liabilities 820,835 367,740
Increase in deferred revenue and customer deposits 941,216 261,116
------------ ------------
Net cash (used in) provided by operating activities (3,112,372) 3,837,248
INVESTING ACTIVITIES:
Acquisition of business, net of cash acquired (4,614,500) -
Net decrease (increase) in short-term investments 20,849,461 (1,017,446)
Purchase of South Central Bell paging assets - (1,232,061)
Purchase of equipment (22,856,896) (6,066,341)
Proceeds from sale of equipment 565,734 -
Payment of intangible and other assets - (634,859)
------------ ------------
Net cash used in investing activities (6,056,201) (8,950,707)
FINANCING ACTIVITIES:
Proceeds of long-term debt - 16,301,000
Repayment of long-term debt (3,333) (11,685,874)
Proceeds from sale of common stock 703,299 888,568
------------ ------------
Net cash provided by financing activities 699,966 5,503,694
------------ ------------
(Decrease) increase in cash and cash equivalents (8,468,607) 390,235
CASH AND CASH EQUIVALENTS, beginning of period 12,500,438 254,880
------------ ------------
CASH AND CASH EQUIVALENTS, end of period $ 4,031,831 $ 645,115
============ ============
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION:
Cash paid during the period for interest $ 7,712,813 $ 789,959
============ ============
SUPPLEMENTAL SCHEDULE OF NONCASH
INVESTING AND FINANCING ACTIVITIES:
Acquisition of business:
Long-term debt $653,031
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 six months ended June 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 six months ended
June 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 Accounting Standards No. 123 "Accounting for
Stock-Based Compensation."
2. ACQUISITIONS
5
<PAGE> 6
In the second quarter of 1996, certain assets of two paging companies and all
of the outstanding common stock of a third company were acquired for
$7,294,250 in cash 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 $9,379,489 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.
4. MERGER WITH METROCALL, INC.
On May 16, 1996 the Company entered into an Agreement and Plan of Merger with
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 June 24, 1996. The closing of the Merger is subject to approval of
the Agreement and Plan of Merger by the shareholders of Metrocall and the
Company.
6
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Total revenues increased 85.0% to $23.7 million in the three months ended June
30, 1996, as compared to $12.8 million for the same period in 1995. For the
first six months of 1996, total revenues increased 80.1% to $46.2 million, as
compared to $25.6 million for the same period in 1995. Net revenues increased
97.3% to $21.8 million in the three months ended June 30, 1996, as compared to
$11.1 million for the same period in 1995. For the first six months of 1996,
net revenues increased 93.0% to $42.0 million, as compared to $21.8 million for
the same period in 1995. Mobile communication revenues increased 111.5% to
$19.6 million in the three months ended June 30, 1996, as compared to $9.3
million for the same period in 1995, while telemessaging revenues increased
2.5% to $2.9 million. For the first six months of 1996, mobile communication
revenues increased 102.0% to $37.4 million, as compared to $18.5 million for
the same period in 1995, while telemessaging revenues increased 3.6% to $5.8
million. The growth in mobile communication revenues reflected a 172.4%
increase in paging units in service to 618,657 at June 30, 1996, as compared to
227,087 at June 30, 1995, offset by a decline in cellular revenues. Cellular
revenues declined for the three months ended June 30, 1996 to $1.2 million from
$2.2 million for the same period in 1995. Cellular revenues for the six months
ended June 30, 1996 declined to $2.7 million from $5.0 million for the six
months ended June 30, 1995. Cellular revenues have decreased primarily as a
result of a decline in new account activations.
The negative margin on sales of pager equipment was $116,000 for the three
months ended June 30, 1996, as compared to a negative margin of $198,000 for
the same period in 1995. The gross margin on sales of pager equipment was
$32,000 for the six months ended June 30, 1996, as compared to a negative
margin of $80,000 for the same period in 1995. The negative margin on total
equipment sales decreased to $715,000 for the three months ended June 30, 1996,
as compared to $1.1 million for the same period in 1995. The negative margin
on total equipment sales decreased to $1.2 million for the six months ended
June 30, 1996, as compared to $2.3 million for the same period in 1995. 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 $514,000 and
$855,000 for the three months ended June 30, 1996 and June 30, 1995,
respectively. The negative margins on cellular equipment sales declined to
$1.1 million for the six months ended June 30, 1996 from $2.2 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 84.3% to $4.7 million (21.5% of net revenues)
during the three months ended June 30, 1996, from $2.5 million (23.0% of net
revenues) for the same period in 1995. For the first six months of 1996,
operating expenses increased 85.6% to $9.3 million (22.1% of net revenues) as
compared to $5.0 million (23.0% of net revenues) for the same period in 1995.
The increase primarily reflects the increase in operating expenses incurred to
support the $10.9 million increase in total revenues for the three months ended
June 30, 1996, as compared to the three months ended June 30, 1995, and the
$20.6 million increase in total revenues for the six months ended June 30,
1996, as compared to the six months ended June 30, 1995.
Selling expenses increased 51.5% to $4.1 million (18.7% of net revenues) during
the three months ended June 30, 1996 from $2.7 million (24.3% of net revenues)
for the same period in 1995. For the first six months of 1996, selling expenses
increased 41.5% to $7.7 million (18.3% of net revenues), as compared to $5.4
million (24.9% of net revenues) for the same period in 1995. The increase
primarily reflects the additional sales and marketing costs incurred to support
the $10.9 million increase in total revenues for the three months ended June
30, 1996, as compared to the three months ended June 30, 1995, and the $20.6
million increase in total revenues for the six months ended June 30, 1996, as
compared to the six months ended June 30, 1995. Selling expenses declined as a
percentage of net revenues primarily as a result of lower advertising and
commission costs.
General and administrative expenses increased 58.4% to $8.2 million (37.8% of
net revenues) during the three months ended June 30,1996 from $5.2 million
(47.1% of net revenues) for the same period in 1995. For the first six months
of 1996, general and administrative expenses increased 60.9% to $15.9 million
(37.9% of net revenues), as compared to $9.9 million (45.5% of net revenues)
for the same period in 1994. The increase primarily reflects the additional
general and administrative costs incurred to support the $10.9 million increase
in total revenues for the three months ended June 30, 1996, as compared to the
three months ended June 30, 1995, and the $20.6 million increase in total
revenues for the six months ended June 30, 1996, as compared to the six months
ended June 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 108.9% to $6.7 million during
the three months ended June 30, 1996, from $3.2 million for the same period in
1995. For the first six months of 1996, depreciation and amortization expense
increased 109.8% to $13.2 million, as compared to $6.3 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.
The Company experienced an operating loss of $1.9 million during the three
months ended June 30, 1996, as compared to an operating loss of $2.6 million
during the same period in 1995. The operating loss for the six months ended
June 30, 1996 was $4.5 million, as compared to $4.9 million for the same period
in 1995. The decreased operating losses related primarily to the increase in
depreciation and amortization expense and a one-time reorganization charge of
8
<PAGE> 9
$396,000, offset by a decline in other costs and expenses (Operating, Selling
and General and administrative) from 94.4% of net revenues in the three months
ended June 30, 1995 to 78.0% of net revenues in the three months ended June 30,
1996 and from 93.3% of net revenues in the six months ended June 30, 1995 to
78.2% of net revenues in the six months ended June 30, 1996.
Interest expense was $3.9 million for the three months ended June 30, 1996, as
compared to interest expense of $438,000 for the same period in 1995. Interest
expense was $7.6 million for the six months ended June 30, 1996, as compared to
interest expense of $811,000 for the same period in 1995. The increase in
interest expense was 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 June 30, 1996 of
$5.4 million, or $.51 per share, as compared to a net loss of $3.0 million, or
$.50 per share, during the same quarter in 1995. For the first six months of
1996, the Company had a net loss of $11.1 million, or $1.07 per share, as
compared to a net loss of $5.7 million, or $.95 per share for the first six
months of 1995.
Operating cash flow, or earnings before interest, income taxes, depreciation
and amortization (EBITDA), was $4.8 million in the three months ended June 30,
1996, as compared to $615,000 for the same period in 1995. For the first six
months of 1996, EBITDA was $8.7 million, as compared to $1.4 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. 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
9
<PAGE> 10
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 used in operating activities for the six months ended June 30, 1996
amounted to $3.1 million and net cash provided by operating activities totaled
$3.8 million for the six months ended June 30, 1995.
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. Cash used in investing
activities amounted to $6.1 million and $9.0 million for the six months ended
June 30, 1996 and June 30, 1995, respectively. For the six months ended June
30, 1996, the Company purchased $22.9 million of equipment, reduced short-term
investments by $20.1 million and acquired three companies for a net cash
consideration of $4.6 million. For the six months ended June 30, 1995, the
Company purchased $6.1 million of equipment, $1.2 million was used to purchase
the South Central Bell paging assets in Louisiana and short-term investments
were increased by $1.0 million.
Cash provided by financing activities was $700,000 for the six months ended
June 30, 1996 and $5.5 million for the same period in 1995. The source of cash
from financing activities during the six months ended June 30, 1996 was
proceeds from the exercise of stock options. The Company borrowed $16.3
million and repaid $11.7 million of long-term debt during the six months ended
June 30, 1995. In addition, the Company received $889,000 from the exercise of
stock options during the six months ended June 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
11
<PAGE> 12
subordinated indebtedness the Company may incur. The Indenture governing the
Notes contains customary affirmative and negative covenants.
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, subject to certain limitations, for 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
the 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.
In the second quarter of 1996, certain assets of two paging companies and all
of the outstanding common stock of Page East, Inc. were acquired for $7.3
million in cash and 568,687 shares of common stock valued at $7.6 million. In
July 1996, the Company acquired two additional companies for a total purchase
price of $3.6 million in cash. The Company has also entered into agreements to
purchase two additional paging companies for an aggregate consideration of
$11.0 million payable in cash or a combination of cash and stock. These
acquisitions will be paid for with working capital, including remaining
proceeds from the sale of the Notes, and operating cash flows.
12
<PAGE> 13
On May 16, 1996 the Company entered into an Agreement and Plan of Merger with
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 June 24, 1996. The closing of the Merger is subject to approval of
the Agreement and Plan of Merger by the shareholders of Metrocall and the
Company.
13
<PAGE> 14
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a vote of Security Holders
(a) The Annual Meeting of Shareholders of the Company was held on May 29,
1996.
(b) N/A
(c) Issue I
Prentice I. Robinson and Irby C. Simpkins, Jr. were elected to serve on the
Board of Directors of the Company for a term of three years.
<TABLE>
<CAPTION>
Total
Not
For Against Abstain Voted
--------- ------- -------- ----------
<S> <C> <C> <C> <C>
Prentice I. Robinson 8,828,011 0 183,113 1,252,131
Irby C. Simpkins, Jr. 8,828,161 0 182,963 1,252,131
</TABLE>
Issue II
The shareholders voted to increase the number of shares reserved for issuance
pursuant to the Company's 1992 Key Employee Incentive Stock Plan by 250,000
shares by a vote of 8,469,736 for, 525,338 against and 16,050 abstentions. The
total not voted was 1,252,131.
Issue III
The Shareholders ratified the appointment of Deloitte & Touche LLP as
independent public accountants for the Company and its subsidiaries for the
year ending December 31, 1996 by a vote of 8,990,724 for, 14,400 against and
6,000 abstentions. The total not voted was 1,252,131.
Item 5. Other Information
On August 2, 1995, the Company, Network Paging Corporation, PageEast, Inc. and
the owner of Page East, Inc. were named as defendants in a lawsuit brought in
the District Court of Collin County, Texas by ProNet, Inc. and its subsidiary,
Contact Communications, Inc. On August 5, 1996, the parties settled all issues
in controversy between them and the suit was dismissed with prejudice.
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
14
<PAGE> 15
The Company filed a Current Report on Form 8-K dated May 20, 1996 to
report the Agreement and Plan of Merger between Metrocall, Inc. and
A+Network, Inc dated May 16, 1996. The Company filed a Current Report on
Form 8-K dated June 24, 1996 to report the acquisition of Page East, Inc.
15
<PAGE> 16
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: August 14, 1996
16
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1
<CASH> 4,031,831
<SECURITIES> 22,301,664
<RECEIVABLES> 9,297,264
<ALLOWANCES> 858,091
<INVENTORY> 6,387,416
<CURRENT-ASSETS> 44,876,770
<PP&E> 103,589,007
<DEPRECIATION> 40,062,042
<TOTAL-ASSETS> 208,366,340
<CURRENT-LIABILITIES> 16,084,006
<BONDS> 124,126,251
0
0
<COMMON> 108,885
<OTHER-SE> 66,579,257
<TOTAL-LIABILITY-AND-EQUITY> 208,366,340
<SALES> 3,006,045
<TOTAL-REVENUES> 42,016,334
<CGS> 4,158,575
<TOTAL-COSTS> 4,158,575
<OTHER-EXPENSES> 46,507,026
<LOSS-PROVISION> 1,840,253
<INTEREST-EXPENSE> 7,561,419
<INCOME-PRETAX> (11,071,178)
<INCOME-TAX> 0
<INCOME-CONTINUING> (11,071,178)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (11,071,178)
<EPS-PRIMARY> (1.07)
<EPS-DILUTED> (1.07)
</TABLE>
