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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-12786
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AMERICAN PAGING, INC.
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(Exact name of registrant as specified in its charter)
Delaware 36-3109408
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1300 Godward Street Northeast, Suite 3100, Minneapolis, Minnesota 55413-1767
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (612) 623-3100
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 issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at August 1, 1996
----------------------------- -----------------------------
Common shares, $1 par value 7,549,816 Shares
Series A Common shares, $1 par value 12,500,000 Shares
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<PAGE>
AMERICAN PAGING, INC.
SECOND QUARTER REPORT ON FORM 10-Q
INDEX
Page No.
Part I. Financial Information
Management's Discussion and Analysis of
Results of Operations and Financial Condition 2-6
Consolidated Statements of Operations -
Three months and six months ended June 30, 1996 and 1995 7
Consolidated Statements of Cash Flows -
Six months ended June 30, 1996 and 1995 8
Consolidated Balance Sheets -
June 30, 1996 and December 31, 1995 9-10
Notes to Consolidated Financial Statements 11
Part II. Other Information 12
Signatures 13
-1-
<PAGE>
PART I. FINANCIAL INFORMATION
AMERICAN PAGING, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
Six months ended 6/30/96 compared to six months ended 6/30/95
American Paging, Inc. [AMEX:APP or the "Company"] results of operations for the
six months ended June 30, 1996 compared to the same period in 1995 reflect
slower customer unit and service revenue growth, continuing downward pressure on
prices, higher operating expenses, and substantially higher operating and net
losses. Service revenue increased 4.7% to $47.2 million on an 8.8% increase in
the number of pagers served since June 30, 1995. Customer units in service
totaled 803,500 at June 30, 1996 compared to 738,600 at June 30, 1995. The rate
of growth has declined over the past few quarters due to the impact of the
Company's restructuring efforts on the field sales and service offices as well
as continued competitive pressures. The average monthly disconnect rate
("churn") was 2.8% for the six months ended June 30, 1996 compared to 2.4% for
1995, also reflecting disruptions within the customer service groups as those
groups were consolidated.
During the third quarter of 1995, American Paging launched a comprehensive
restructuring initiative related to its sales and customer service organizations
and activities designed to improve unit growth, revenue growth, operating
efficiency, operating cash flow and earnings. The restructuring effort is
expected to extend into the second half of 1996. The Company's restructuring
included a reorganization of its sales and marketing organization, focused
primarily on committing additional resources to sales and sales support with the
intent to increase revenue and customer satisfaction. In addition, the Company
consolidated its 17 geographically-dispersed customer service and administrative
functions into one Customer Telecare Center ("CTC"), which is located in
Oklahoma City, Oklahoma. The CTC has been designed to better serve the Company's
customers and gain the efficiencies necessary to support a growing customer
base. Field offices will now primarily serve in a sales capacity. Finally, the
Company is reengineering its business processes and systems to gain further
efficiencies in its back office operations.
Operating cash flow (operating income/(loss) plus depreciation and amortization)
for the first half of 1996 was $4.0 million, or 8.5% of service revenue in 1996
compared to $7.2 million, or 16.1% of service revenue in 1995. During the first
half of 1996, the Company recorded pretax expenses of approximately $1.9 million
related to its restructuring efforts, primarily for consulting fees, travel,
training and duplicative staffing. Excluding these restructuring expenses,
operating cash flow would have been $5.9 million, or 12.5% of service revenue.
Service revenue increased 4.7% ($2.1 million) in the first half of 1996 compared
to 1995 as a result of the 8.8% growth in the number of pagers in service.
Service revenue and unit growth were slower during the first half of 1996
primarily due to the restructuring of the Company's field sales and service
offices. Service revenue growth was slower than paging unit growth due to
competitive pricing declines and a continuing shift in the distribution channel
mix, which had an adverse impact on average monthly service revenue per customer
-2-
<PAGE>
unit ("ARPU"). ARPU declined 7.9% to $9.89 for the first six months of 1996 from
$10.74 for the same period in 1995. Competitive pricing pressures accounted for
6.4% of the change with the shift in distribution channel mix contributing the
remaining 1.5%.
Service operating expenses increased 17.2% ($8.5 million) in the first half of
1996, principally due to increased costs to serve the expanded customer base,
higher selling costs, restructuring charges, and higher depreciation and
amortization expense. The first half 1996 increase includes total restructuring
expenses recorded during the period of $1.9 million.
Cost of service increased 23.6% ($2.7 million) in the first half of
1996, primarily due to increased costs to serve the expanded customer base as
well as upgrading and expanding the Company's transmission systems to increase
system capacity, improve network reliability and expand geographic coverage. The
Company's transmitters in service increased to 1,016 at June 30, 1996 from 964
at June 30, 1995. During the past twelve months, transmitters were added
primarily for the continued expansion and upgrade of existing systems coupled
with the retirement of smaller, outdated systems to improve operating
efficiencies. The Company's new systems and upgraded transmitters are capable of
digital broadcast using the high-speed FLEX(TM) signaling protocol,
significantly increasing system capacity.
Selling and advertising expense increased 36.2% ($3.1 million) in the
first half of 1996, primarily due to a significant increase in the number of
sales and marketing employees and related costs resulting from the restructuring
of the sales and marketing organization. The Company has committed additional
resources to sales and sales support with the intent to increase unit sales,
service revenue and productivity. As anticipated, the Company has experienced
slower unit and revenue growth during the restructuring period as a result of
work force disruptions caused by the refocusing of the sales force on direct
sales and reengineering of the customer service organization. Slower unit growth
coupled with the increase in selling and advertising expense caused a sharp
increase in selling cost per net unit addition to $605 in 1996 compared to $98
in 1995. Selling cost per gross unit added, excluding acquisitions, increased to
$76 in 1996 compared to $45 in 1995.
General and administrative expense decreased 3.8% ($700,000) in the
first half of 1996. During the first half, the Company recorded restructuring
expenses of approximately $1.9 million related to subleasing office space,
employee severance and out placement services, and for consulting services.
However, general and administrative expense decreased overall primarily as a
result of administrative staff reductions also related to restructuring
initiatives. Further reductions are anticipated during the second half of 1996
as the remaining duplicative field administrative staff are eliminated.
Depreciation and amortization expense increased 29.9% ($3.4 million) in
the first half of 1996, reflecting increased investment in system and pager
equipment, acquisitions and restructuring expenses. Excluding the investment in
narrowband PCS licenses (which is not yet being amortized), gross fixed assets
grew 18.1% to $144.6 million at June 30, 1996 from $122.4 million at June 30,
1995, primarily due to increases in pagers, transmitters and terminals. Also
contributing to the increase in depreciation expense was the first half expense
of approximately $350,000 for accelerated depreciation on certain assets
expected to be retired as a result of the Company's restructuring.
-3-
<PAGE>
Equipment sales loss was $161,000 in the first half of 1996 compared to
equipment sales income of $101,000 in 1995. The Company generally plans to break
even on equipment sales. For marketing purposes, it may, at times in selected
locations, discount paging equipment below cost due to competitive pressures or
sales promotions.
Operating loss was $10.7 million in the first half of 1996 compared $4.0 million
in 1995. Operating margin on service revenue decreased to (22.6%) in 1996 from
(9.0%) in 1995. The decrease in operating results reflect slower service revenue
growth as well as increased operating expenses associated with the growth in the
number of paging customers served and restructuring activities.
The Company anticipated slower unit and revenue growth during the first half of
1996 as a result of work force disruptions caused by the reengineering of the
sales force and customer service organization. In addition, the Company expects
operating expenses to continue to increase in 1996 as the customer base grows
and as the Company continues to upgrade and expand its transmission systems to
further improve network reliability, increase system capacity and expand
geographical coverage.
Investment and other income/(expense) was ($513,000) in the first half of 1996
compared to ($362,000) in 1995, primarily reflecting investment losses during
each period associated with the Company's joint venture with Nexus
Telecommunication Systems, Ltd. ("Nexus"), accounted for using the equity
method. The joint venture, American Messaging Services, LLC, was formed to
develop multiple applications and distribution channels worldwide for a patented
communications network that provides two-way paging, location and telemetry
services. Through royalty agreements, American Paging will receive revenue on
all world-wide sales and usage of Nexus messaging systems. Nexus two-way
messaging systems are currently under construction in Australia and Russia.
Revenue accruing to the Company as a result of such sales is not expected to be
material during 1996 or 1997.
Interest expense-affiliates increased 8.5% ($200,000) in the first half of 1996
compared to 1995 resulting from increased long-term indebtedness due to the
purchase and development of narrowband PCS licenses, acquisitions, capital
expenditures, and continuing operations. On October 1, 1995, the Company started
to capitalize interest costs related to borrowing for the acquisition of its
narrowband PCS licenses, such capitalized interest totaled $2.8 million for the
first half of 1996. At June 30, 1996, the Company had $121.8 million outstanding
under its Revolving Credit Agreement with its parent, Telephone and Data
Systems, Inc. [AMEX:TDS].
Income tax benefit was $1,000 in the first half of 1996 compared to income tax
expense of $52,000 in 1995, reflecting primarily state income tax expense in
both periods. The Company and TDS entered into a tax allocation agreement which
became effective January 1, 1994, pursuant to which, the Company calculates its
losses and credits as if it were a separate affiliated group and will carry
forward its losses and credits, if any, to reduce future tax liabilities. For
financial reporting purposes, the Company computes its federal income taxes as
if it were not a member of the TDS consolidated group.
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<PAGE>
Net loss totaled $13.7 million in the first half of 1996 compared to $6.8
million in 1995, reflectinga significant increase in operating loss as well as
costs associated with the Company's investment in the Nexus joint venture and
increased interest expense. Loss per common share was $0.68 in 1996 compared to
$0.34 in 1995, reflecting the change in net loss.
Three months ended 6/30/96 compared to three months ended 6/30/95
Service revenue increased 2.7% ($627,000) in the second quarter of 1996 from the
same period in 1995, primarily as a result of the 8.8% growth in the number of
pagers in service at the end of each period. Competitive pricing declines
coupled with a continuing shift in the distribution channel mix contributed to
the decline in ARPU to $9.73 for the second quarter of 1996 from $10.56 for the
same period in 1995.
Service operating expense increased 20.3% ($5.1 million) in the second quarter
of 1996 from the same period in 1995, for reasons generally the same as for the
first half of 1996.
Equipment sales income decreased 72.3% ($108,000) in the second quarter of 1996
compared to the same period in 1995, for reasons generally the same as for the
first half of 1996.
Operating loss was $6.6 million in the second quarter of 1996 compared to $2.0
million for the same period in 1995, for reasons generally the same as for the
first half of 1996.
Investment and other income/(expense) increased 4.3% ($14,000) in the second
quarter of 1996 compared to the same period in 1995, for reasons generally the
same as for the first half of 1996.
Interest expense-affiliates decreased 6.1% ($93,000) for the second quarter of
1996 compared to the same period in 1995, for reasons generally the same as for
the first half of 1996.
Income tax expense decreased 78.6% ($137,000) for the second quarter of 1996
compared to the same period in 1995, for reasons generally the same as for the
first half of 1996.
Net loss totaled $8.3 million for the second quarter of 1996 compared to $4.0
million for the same period in 1995. Loss per share was $0.42 for the second
quarter of 1996 compared $0.20 for the same period in 1995.
CAPITAL RESOURCES AND LIQUIDITY
Construction, development and upgrade of the Company's radio paging systems, the
purchase of narrowband PCS licenses, and growth in the number of customers
served, both internally and through acquisitions, have caused financing
requirements to exceed internally generated cash flow during the last three
years. Accordingly, the Company has obtained substantial external funds in the
form of borrowings under a Revolving Credit Agreement with TDS and anticipates
that it will require additional funds over the next few years. In addition,
significant funds will be required when the Company begins expanding its
infrastructure to accommodate the services that the narrowband PCS licenses will
allow the Company to provide.
Cash flows from operating activities required $3.6 million in the first half of
1996 and provided $5.1 million for the same period in 1995. The $8.7 million
decrease in cash provided was primarily due to the $6.9 million additional net
-5-
<PAGE>
loss coupled with a total of $5.8 million for changes in items requiring cash,
such as accounts receivable and accrued interest. These decreases were partially
offset by $4.1 million for depreciation and amortization and other items not
requiring cash.
Cash flows from financing activities provided $27.3 million in the first half of
1996 compared to $55.1 million in 1995. Cash flows from financing activities
include cash from borrowings under the Revolving Credit Agreement-TDS and sales
of common stock related to the Company's employee benefit plans.
Cash flows from investing activities required cash totaling $25.7 million in the
first half of 1996 compared to $60.9 million in 1995. The majority of the cash
outflow during the first half of 1996 related to additions to property, plant
and equipment totaling $22.0 million, representing enhancements to existing
systems, construction of new systems and pagers, not including PCS build out
costs, and costs related to the build out of the CTC. In addition, net cash
outflow of $2.9 million related to capitalized interest and development costs
for the Company's five regional narrowband PCS licenses. Cash required for other
investments related primarily to the Company's joint venture with Nexus
Telecommunication Systems Ltd. The majority of the cash outflow during the first
half of 1995 related to the initial purchase of five regional narrowband PCS
licenses.
The Company expects to spend approximately $8 million in 1996 for the
development of its five regional narrowband PCS licenses, primarily for interest
capitalized on the borrowings to acquire the licenses. The Company intends to
begin deploying narrowband PCS services during the first half of 1997 in some of
its existing markets. In addition, significant funds will be required as the
Company continues to develop its infrastructure and to market the services that
these licenses will allow the Company to provide, such as two-way acknowledgment
paging and digital data transmission. The source of funds for these expenditures
is expected to be internally generated cash flow and additional borrowings under
the Revolving Credit Agreement with TDS.
At June 30, 1996, the Company had $2.3 million in cash. Pursuant to the
Revolving Credit Agreement, amended August 2, 1996, the Company may borrow up to
an aggregate of $140 million from TDS. At June 30, 1996, $121.8 million total
long-term debt under this agreement was used for the acquisition and development
of five regional narrowband Personal Communications Services ("PCS") licenses
($59.5 million), investments in infrastructure, systems and pagers ($38.7
million), acquisitions ($15.7 million), and continuing operations ($7.9
million). The Revolving Credit Agreement allows the Company to borrow funds at
an interest rate equal to 1 1/2% above the prime rate, which is payable
quarterly. The Company's interest rate at June 30, 1996 was 9 3/4%. No principal
is payable until January 1, 1999, subject to acceleration under certain
circumstances, at which time the entire principal balance then outstanding is
scheduled to become due and payable. The Company may prepay the balance due
under the Revolving Credit Agreement at any time, in whole or in part, without
premium.
In connection with the Company's efforts to increase its customer base and
market share and to invest in new communications technologies, the Company
anticipates requiring additional funding, the nature, amount and source of which
cannot now be determined, but which may include public or private offerings of
debt or equity securities. However, the Company has no agreements, commitments
or understandings with respect to any such transactions. If sufficient funding
is not made available to the Company on terms and prices acceptable to the
Company, the Company would have to reduce its construction and development
programs, which could have a material adverse impact on the Company's financial
condition and results of operations.
-6-
<PAGE>
<TABLE>
<CAPTION>
AMERICAN PAGING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------------------
1996 1995 1996 1995
-------- -------- -------- --------
(Dollars in thousands, except per share amounts)
<S> <C> <C> <C> <C>
SERVICE REVENUE ....................... $ 23,493 $ 22,866 $ 47,201 $ 45,103
-------- -------- -------- --------
SERVICE OPERATING EXPENSE
Cost of service .................... 7,533 5,973 14,119 11,425
Selling and advertising ............ 6,377 4,309 11,509 8,451
General and administrative ......... 8,697 9,019 17,402 18,083
Depreciation and amortization ...... 7,494 5,724 14,663 11,284
-------- -------- -------- --------
Total service operating expense . 30,101 25,025 57,693 49,243
-------- -------- -------- --------
SERVICE OPERATING LOSS ................ (6,608) (2,159) (10,492) (4,140)
-------- -------- -------- --------
EQUIPMENT SALES
Revenue ............................ 2,803 3,999 5,405 7,680
Cost of equipment sold ............. 2,762 3,850 5,566 7,579
-------- -------- -------- --------
EQUIPMENT SALES INCOME/(LOSS) ......... 41 149 (161) 101
-------- -------- -------- --------
OPERATING LOSS ........................ (6,567) (2,010) (10,653) (4,039)
-------- -------- -------- --------
INVESTMENT AND OTHER INCOME/(EXPENSE)
Investment loss in joint venture ... (374) (377) (668) (494)
Interest income .................... 80 39 122 74
Other, net ......................... -- 30 33 58
-------- -------- -------- --------
Total investment and other (expense) (294) (308) (513) (362)
-------- -------- -------- --------
LOSS BEFORE INTEREST
AND INCOME TAXES ................... (6,861) (2,318) (11,166) (4,401)
Interest expense - affiliates ......... 1,441 1,534 2,519 2,322
-------- -------- -------- --------
LOSS BEFORE INCOME TAXES .............. (8,302) (3,852) (13,685) (6,723)
Income tax expense/(benefit) .......... 38 175 (1) 52
-------- -------- -------- --------
NET LOSS .............................. $ (8,340) $ (4,027) $(13,684) $ (6,775)
======== ======== ======== ========
WEIGHTED AVERAGE COMMON AND
SERIES A COMMON SHARES (000s) ...... 20,047 20,019 20,044 20,010
NET LOSS PER COMMON AND
SERIES A COMMON SHARE .............. $ (0.42) $ (0.20) $ (0.68) $ (0.34)
</TABLE>
The accompanying notes to consolidated financial statements are an
integral part of these statements.
-7-
<PAGE>
AMERICAN PAGING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
Six Months Ended
June 30,
1996 1995
-------- --------
(Dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss ............................................ $(13,684) $ (6,775)
Add (deduct) adjustments to reconcile net loss
to net cash provided by operating activities:
Depreciation and amortization ....................... 14,663 11,284
Deferred income taxes, net .......................... (4) (8)
Investment loss ..................................... 668 494
Other noncash expense ............................... 1,428 907
Change in accounts receivable ....................... (2,894) (36)
Change in accounts payable .......................... (4,391) (4,280)
Change in unearned revenue .......................... 2,223 513
Change in accrued taxes ............................. 308 77
Change in accrued interest .......................... (1,423) 1,031
Change in other assets and liabilities .............. (541) 1,843
-------- --------
(3,647) 5,050
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Change in Revolving Credit Agreement - TDS .......... 27,237 54,918
Common stock issued ................................. 90 152
-------- --------
27,327 55,070
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment .......... (22,027) (16,558)
Investment in PCS ................................... (2,873) (43,517)
Other investments ................................... (763) (814)
-------- --------
(25,663) (60,889)
-------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS .............. (1,983) (769)
CASH AND CASH EQUIVALENTS
Beginning of period ................................. 4,280 2,284
-------- --------
End of period ....................................... $ 2,297 $ 1,515
======== ========
The accompanying notes to consolidated financial statements are an
integral part of these statements.
-8-
<PAGE>
AMERICAN PAGING, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(Unaudited)
June 30, December 31,
1996 1995
-------- --------
(Dollars in thousands)
CURRENT ASSETS
Cash and cash equivalents ............................ $ 2,297 $ 4,280
Accounts receivable
Customers .......................................... 14,656 11,883
Affiliates - income taxes .......................... 318 258
Other .............................................. 136 15
Inventory ............................................ 4,822 3,408
Deferred tax asset ................................... 2,145 2,028
Prepaid expenses and other ........................... 1,383 1,508
-------- --------
25,757 23,380
-------- --------
INVESTMENTS ............................................ 192 97
-------- --------
PROPERTY, PLANT AND EQUIPMENT
In service ........................................... 112,852 102,385
Less accumulated depreciation ........................ 49,427 42,933
-------- --------
63,425 59,452
-------- --------
INTANGIBLE ASSETS
PCS licenses ......................................... 58,236 55,538
Other intangibles, net of accumulated amortization
of $15,662 and $13,733, respectively ............... 17,828 20,682
-------- --------
76,064 76,220
-------- --------
TOTAL ASSETS ........................................... $165,438 $159,149
======== ========
The accompanying notes to consolidated financial statements are an
integral part of these statements.
-9-
<PAGE>
AMERICAN PAGING, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
(Unaudited)
June 30, December 31,
1996 1995
--------- ---------
(Dollars in thousands)
CURRENT LIABILITIES
Due to affiliates -
Accounts payable ............................... $ 902 $ 1,540
Accrued interest ............................... 968 2,391
Accounts payable ................................. 1,861 9,192
Unearned revenue and deposits .................... 13,052 10,829
Accrued taxes .................................... 721 353
Other current liabilities ........................ 2,358 3,024
--------- ---------
19,862 27,329
--------- ---------
REVOLVING CREDIT AGREEMENT - TDS ................... 121,760 94,523
--------- ---------
DEFERRED LIABILITIES AND CREDITS
Net deferred income tax liability ................ 1,834 1,721
--------- ---------
COMMON SHAREHOLDERS' EQUITY
Common shares, par value $1 per share ............ 7,549 7,537
Series A Common shares, par value $1 per share ... 12,500 12,500
Additional paid-in capital ....................... 72,541 72,463
Retained deficit ................................. (70,608) (56,924)
--------- ---------
21,982 35,576
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ......... $ 165,438 $ 159,149
========= =========
The accompanying notes to consolidated financial statements are an
integral part of these statements.
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<PAGE>
AMERICAN PAGING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The consolidated financial statements included herein have been prepared by
the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although the
Company believes that the disclosures are adequate to make the information
presented not misleading. It is suggested that these consolidated financial
statements be read in conjunction with the consolidated financial
statements and the notes thereto included in the Company's annual report on
Form 10-K for the year ended December 31, 1995.
The accompanying unaudited consolidated financial statements contain all
adjustments (consisting of only normal recurring items) necessary to
present fairly the financial position as of June 30, 1996 and December 31,
1995, and the results of operations and cash flows for the three month
periods and six month periods ended June 30, 1996 and 1995. The results of
operations for the three month periods and six month periods ended June 30,
1996 and 1995, are not necessarily indicative of the results to be expected
for the full year.
2. Net loss per Common and Series A Common share for the three month and six
month periods ended June 30, 1996 and 1995 was computed by dividing net
loss by the weighted average number of Common shares and Series A Common
shares outstanding during the period.
3. The following table summarizes interest and income taxes paid:
Six Months Ended June 30,
1996 1995
---- ----
(Dollars in thousands)
Interest paid $ 6,696 $ 1,291
Income taxes paid 96 196
4. Assuming the acquisitions accounted for as purchases during the period
January 1, 1995 to June 30, 1996, had taken place on January 1, 1995,
unaudited pro forma results of operations would have been as follows:
Six Months Ended June 30,
1996 1995
---- ----
(Dollars in thousands,
except per share amounts)
Service revenue $ 47,201 $ 47,118
Net loss (13,684) (7,334)
Loss per Common share $ (0.68) $ (0.37)
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<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security-Holders.
At the Annual Meeting of Shareholders of the Company, held on May 13, 1996, the
following numbers of votes were cast for the matters indicated:
1.a. Election of one Class III member of the Board of Directors of the Company
by the holders of Common shares.
Broker
Nominee For Withhold Non-Vote
--------- --------- ---------- ----------
Jean Burhardt Keffeler 7,114,308 172,169 -0-
1.b. Election of two Class III Directors of the Company by the holder of
Series A Common Shares.
Broker
Nominee For Withhold Non-Vote
--------- --------- ---------- ----------
John R. Schaaf 187,500,000 -0- -0-
James Barr III 187,500,000 -0- -0-
2. Proposal to approve the 1994 Long-Term Incentive Plan of the Company by
the holders of Common and Series A Common shares.
Broker
For Against Abstain Non-Vote
--------- --------- ---------- ----------
193,428,430 220,630 6,034 1,131,196
3. Proposal to ratify the selection of Arthur Andersen LLP as Independent
Public Accountants for 1996 by the holders of Common shares.
Broker
For Against Abstain Non-Vote
--------- --------- ---------- ----------
194,770,138 13,085 3,067 -0-
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit
Number Description
- ------- -----------
10 Amendment to Revolving Credit Agreement, dated August 2, 1996,
between TDS and American Paging
27 Financial Data Schedule
(b) No reports were filed on Form 8-K during the quarter ended June 30, 1996.
-12-
<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.
American Paging, Inc.
(Registrant)
Date: August 13, 1996 By: /s/ JOHN R. SCHAAF
John R. Schaaf
President
(Chief Executive Officer)
Date: August 13, 1996 By: /s/ TERRENCE T. SULLIVAN
Terrence T. Sullivan
Vice President-Finance
(Principal Accounting
and Chief Financial Officer)
-13-
Exhibit 10
August 2, 1996
American Paging, Inc.
1300 Godward Street NE #3100
Minneapolis, MN 55413
RE: Revolving Credit Agreement dated January 1, 1994, (the "Revolving Credit
Agreement"), as amended December 31, 1995, between American Paging, Inc.
("API") and Telephone and Data Systems, Inc. ("TDS")
Gentlemen:
This letter will constitute TDS's agreement to amend the Revolving Credit
Agreement by changing all of the references to "$125,000,000" in the Revolving
Credit Agreement to "$140,000,000." All of the other terms and conditions of the
Revolving Credit Agreement shall remain in full force and effect.
Please acknowledge your agreement to this amendment by executing the copy of
this letter and return it to the undersigned.
Very truly yours,
TELEPHONE AND DATA SYSTEMS, INC.
By: /S/ MURRAY L. SWANSON
Murray L. Swanson
Executive Vice President - Finance
Accepted and agreed to as of the date set forth above.
AMERICAN PAGING, INC.
By: /S/ TERRENCE T. SULLIVAN
Terrence T. Sullivan
Vice President - Finance
-14-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated financial statements of American Paging, Inc. as of June 30, 1996,
and for the six months then ended, and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 2,297
<SECURITIES> 0
<RECEIVABLES> 15,110
<ALLOWANCES> 0
<INVENTORY> 4,822
<CURRENT-ASSETS> 25,757
<PP&E> 112,852
<DEPRECIATION> 49,427
<TOTAL-ASSETS> 165,438
<CURRENT-LIABILITIES> 19,862
<BONDS> 0
0
0
<COMMON> 20,049
<OTHER-SE> 1,933
<TOTAL-LIABILITY-AND-EQUITY> 165,438
<SALES> 5,405
<TOTAL-REVENUES> 52,606
<CGS> 5,566
<TOTAL-COSTS> 63,259
<OTHER-EXPENSES> 513
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,519
<INCOME-PRETAX> (13,685)
<INCOME-TAX> (1)
<INCOME-CONTINUING> (13,684)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (13,684)
<EPS-PRIMARY> (0.68)
<EPS-DILUTED> (0.68)
</TABLE>
