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 March 31, 1997
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 May 2, 1997
---------- ----------------------------
Common shares, $1 par value 7,590,985 Shares
Series A Common shares, $1 par value 12,500,000 Shares
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<PAGE>
AMERICAN PAGING, INC.
FIRST 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
Ended March 31, 1997 and 1996 7
Consolidated Statements of Cash Flows - Three Months
Ended March 31, 1997 and 1996 8
Consolidated Balance Sheets -
March 31, 1997 and December 31, 1996 9-10
Notes to Consolidated Financial Statements 11
Part II. Other Information 12
Signatures 13
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<PAGE>
PART I. FINANCIAL INFORMATION
AMERICAN PAGING, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
Three Months Ended 3/31/97 Compared to Three Months Ended 3/31/96
American Paging, Inc. [AMEX:APP or the "Company"] results of operations for the
three months ended March 31, 1997 compared to the same period in 1996 reflect a
decrease in customer units and service revenue, downward pressure on prices,
higher operating expenses, and as a result, higher operating and net losses.
Service revenue decreased 5.9% to $22.3 million on a 4.3% decrease in the number
of units in service since March 31, 1996. Customer units in service totaled
767,400 at March 31, 1997 compared to 802,100 at March 31, 1996. The average
monthly disconnect rate ("churn") was 3.0% for the three months ended March 31,
1997 compared to 2.7% for 1996.
Starting in the third quarter of 1995, American Paging restructured its sales
and customer service organizations in an effort to improve unit growth, revenue
growth, operating efficiency, operating cash flow and earnings. During the
restructuring period, the Company achieved many goals in terms of positioning
the Company for future growth in the wireless messaging industry. Chief among
the goals was the consolidation of 17 geographically-dispersed customer service
and administrative functions into one Customer Telecare Center ("CTC"), which is
located in Oklahoma City, Oklahoma. During the conversion to the CTC in the
first quarter of 1996 and for several months thereafter, the Company also
encountered dysfunctions in several of its core business processes. Among the
challenges encountered during the restructuring initiative were an increased
level of turnover of sales personnel, a loss of qualified administrative support
for the field, and a need to redesign the customer support and retention
processes. In order to improve these core business process, changes were made in
the top management of the Company.
The new management team assembled in the latter half of 1996 and in early 1997
has begun implementing a strategic plan for 1997. The plan centers on building a
high-quality, focused sales and marketing organization driven by a new
goal-aligned compensation plan, creating new distribution channel and pricing
strategies, consolidating current transmission systems to reduce the cost of
service, and continually improving customer care practices. The strategies being
implemented for 1997 have resulted in slight improvements in quarter to quarter
financial results. Operating cash flow (operating income/(loss) plus
depreciation and amortization) and operating cash flow margin, while negative
for the quarter, have improved steadily over the third and fourth quarters of
1996. Additionally, process improvements implemented at the CTC have reduced the
churn rate from a peak of 3.9% in the third quarter of 1996 to 3.0% in the first
quarter of 1997.
Operating cash flow for the quarter was $(707,000), or (3.2)% of service revenue
in 1997 compared to $3.1 million, or 13.0% of service revenue in 1996. Service
operating expenses increased 11.7% to $30.8 million, principally due to higher
costs paid to outside vendors to serve customers and increased sales and
marketing costs. As a result, the Company incurred an operating loss of $8.4
million. In addition, the Company incurred higher interest expense contributing
to the first quarter net loss of $12.1 million. Interest expense increased by
$2.4 million compared to the same period a year ago due in part to the Company's
decision to discontinue capitalizing interest expense on borrowings related to
the Company's narrowband Personal Communications Services ("PCS") licenses.
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<PAGE>
Service revenue decreased 5.9% ($1.4 million) in 1997 compared to 1996 as a
result of a 4.3% decrease in units in service compared to the same period in
1996. Service revenue also declined due to continuing competitive pricing
pressures and a continuing shift in the distribution channel mix, which had an
adverse impact on average monthly service revenue per customer unit ("ARPU").
ARPU declined 4.0% to $9.63 for the first three months of 1997 from $10.03 for
the same period in 1996; 3.0% was due to the competitive pricing pressures and
1.0% was due to the change in distribution channel mix.
Service operating expenses increased 11.7% ($3.2 million) in 1997, principally
due to increased costs to serve the customer base, higher sales and marketing
costs, and higher depreciation and amortization expense, partially offset by
decreases in general and administrative costs.
Beginning in January 1997, the Company changed its income statement presentation
for two categories of service operating expenses. Bad debt expense, previously
included in general and administrative expense, is now included in sales and
marketing expense, and pager repair expense, previously included in cost of
service, is now included in general and administrative expense. Amounts in the
affected expense categories have been reclassified for 1996 in the Consolidated
Statement of Operations.
Cost of service increased 14.0% ($842,000) in 1997, primarily due to increased
costs of reselling third-party nationwide service associated with an increase in
nationwide units in service. Telephone expenses also increased in 1997 as the
Company upgraded and repaired supporting telephone systems in Oklahoma, the
District of Columbia, Minnesota and Florida. Partially offsetting these
increases was an overall reduction in the number of technical and inventory
personnel, and transferring many of these functions to the CTC, the costs of
which are included in general and administrative expense.
The Company's transmitters in service increased to 1,047 at March 31, 1997 from
1,016 at March 31, 1996. 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 over the Company's conventional
signaling protocol. Over the next three years, the Company intends to reduce its
cost of providing service by reducing the number of frequencies it maintains and
dismantling older networks.
Sales and marketing expense increased 46.8% ($2.9 million) in 1997, primarily
due to a significant increase in the number of employees in the sales and
marketing function. In an effort to improve sales productivity and service
revenue growth, the Company increased the number of direct sales employees over
the last 12 months. Accordingly, the Company employed approximately 460 field
sales employees at March 31, 1997 compared to 388 at March 31, 1996. Store
location expense increased in 1997 due to an increase in the number of retail
store locations to 42 at March 31, 1997 from 38 at March 31, 1996. Also
increasing store location expense in 1997 was the fact that field store
locations are now almost solely dedicated to sales activities. As a result, a
greater percentage of field store related expenses are categorized as sales and
marketing. Prior to the opening of the CTC in April 1996, only a portion of
field store expenses was allocated to sales and marketing expense as various
administrative functions still remained at the field stores.
General and administrative expense decreased 13.2% ($1.1 million) in 1997.
During the first quarter of 1996, restructuring-related expenses were recorded
for subleasing office space, employee severance and outplacement services, and
for consulting services. No restructuring-related expenses were recorded during
the first quarter of 1997. Employee travel and relocation expenses decreased
during the first quarter of 1997 compared to the first quarter of 1996. During
the conversion to the CTC in 1996, there was a significant increase in employee
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<PAGE>
travel to Oklahoma City as well as additional costs to relocate customer support
personnel. Also contributing to the decrease was the reclassification of
corporate sales and marketing employees from general and administrative expense
to sales and marketing for 1997. These decreases were partially offset by an
increase in staffing levels at the CTC. As of March 31, 1997 there were
approximately 175 employees at the CTC compared to approximately 50 employees at
March 31, 1996. The total number of employees, though, decreased to 700 at March
31, 1997 from 825 at March 31, 1996.
Depreciation and amortization expense increased 7.5% ($535,000) in 1997,
reflecting the Company's increased investment in system infrastructure, CTC
system and equipment enhancements, and subscriber devices. Excluding the
investment in narrowband PCS licenses (which is not yet being amortized), the
gross depreciable/amortizable asset balance grew 2.6% to $144.4 million at March
31, 1997 from $140.7 million at March 31,1996. In the first quarter of 1996, the
Company recorded approximately $350,000 in additional depreciation expense due
to the reduction in useful lives of fixed assets retired as a result of the
Company's restructuring.
Equipment sales income/(loss) was $107,000 in 1997 compared to $(202,000) in
1996. The Company generally plans to break even on equipment sales, but may have
income or loss in any given quarter. 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 $8.4 million in 1997 compared $4.1 million in 1996. Operating
margin on service revenue decreased to (37.7)% in 1997 from (17.2)% in 1996. The
decrease in operating results reflects slower service revenue growth coupled
with higher costs to serve the customer base and increased sales and marketing
costs which were partially offset by lower general and administrative expenses.
Investment and other income/(expense) was $(211,000) in 1997 compared to
$(219,000) in 1996, reflecting primarily 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 ("AMS"), was formed to develop
multiple applications and distribution channels worldwide for a patented
communications network that provides two-way paging, location and telemetry
services. The Company has notified Nexus that it will stop funding AMS as of
June 30, 1997. As a result, the Company's interest in AMS may be diluted.
Interest expense-affiliates increased $2.4 million to $3.5 million in 1997
compared to 1996. The increase is the result of increased long-term indebtedness
of $43.0 million used to fund construction expenditures and continuing
operations, as well as a decision to stop capitalizing interest related to the
Company's narrowband PCS licenses. Beginning October 1, 1995 and continuing
through September 30, 1996, the Company capitalized interest costs related to
borrowings for the acquisition and development of its narrowband PCS licenses.
The Company stopped capitalizing interest as of October 1, 1996 due to a
suspension in the Company's development of its narrowband PCS licenses. Please
see the Capital Resources and Liquidity section for more information related to
the Company's plans with respect to the buildout of its narrowband PCS licenses.
Capitalized interest for the first quarter of 1996 totaled $1.4 million. At
March 31, 1997, the Company had $148.0 million outstanding under its Revolving
Credit Agreement with its parent, Telephone and Data Systems, Inc. [AMEX:TDS].
Income tax benefit decreased to zero in 1997 compared to $39,000 in 1996, as
current period net losses resulted in no current income tax liability for the
Company. The Company and TDS are parties to a tax allocation agreement, 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 $12.1 million in 1997 compared to $5.3 million in 1996,
reflecting a significant increase in operating loss as well as increased
interest expense. Loss per common share was $0.60 in 1997 compared to $0.27 in
1996, reflecting the change in net loss.
CAPITAL RESOURCES AND LIQUIDITY
Construction and development of the Company's radio paging infrastructure and
the CTC, the purchase of narrowband PCS licenses, and costs associated with
restructuring the Company's operations have caused financing requirements to
exceed internally generated cash flow during the last few 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. The additional funds will be
used to finance continuing operations as needed, as well as for expanding and
upgrading its infrastructure to provide increased coverage and improve quality
service to customers.
Cash flows from operating activities required $4.3 million in 1997 and $487,000
in 1996. The $3.8 million increase in cash required was primarily due to the
$6.8 million additional net loss. Offsetting the additional net loss was a $2.3
million decrease in cash provided by working capital items, such as accounts
payable, accounts receivable and unearned revenue and a $700,000 increase in
non-cash items, such as depreciation and amortization. Accounts payable
decreased significantly from December 31, 1995 to March 31, 1996 due to the
advance payment of certain invoices prior to the Company's conversion to a new
accounting system software.
Cash flows from financing activities provided $8.1 million in 1997 compared to
$10.5 million in 1996. Cash flows from financing activities include cash from
borrowings under the Revolving Credit Agreement with TDS and sales of common
stock related to the Company's employee benefit plans. The Company borrowed $8.0
million during the three months ended March 31, 1997 under the Revolving Credit
Agreement with TDS compared to $10.4 million for the same period in 1996.
Cash flows from investing activities required cash totaling $2.9 million in 1997
compared to $12.6 million in 1996. The majority of the cash outflow during the
quarter related to net additions to property, plant and equipment of $3.0
million in 1997, representing purchases of subscriber devices and enhancements
to existing systems. Capital expenditures for radio paging property and
equipment and the purchase of pagers for lease are anticipated to total
approximately $35 million in 1997.
In April 1995, the Company completed its acquisition of five regional narrowband
PCS licenses, providing coverage equivalent to that of a nationwide license,
from the Federal Communications Commission ("FCC"). The Company does not expect
to spend a significant amount during 1997 on the development of its narrowband
PCS licenses. The Company has suspended development of its narrowband PCS
licenses until such time as the supporting infrastructure and related subscriber
device equipment is commercially available. In addition, significant funds will
be required when the Company resumes development of its narrowband PCS
infrastructure and markets the services that these licenses will allow the
Company to provide. There can be no assurance that the Company will be
successful in developing these licenses due to such factors as the inability to
obtain sufficient financing at a reasonable cost, the availability of supporting
infrastructure and related subscriber device equipment, competition, regulatory
developments or other factors.
At March 31, 1997, the Company had $1.5 million in cash. The Company had unused
borrowing capacity at March 31, 1997 of $32 million under its Revolving Credit
Agreement with TDS.
Pursuant to the Revolving Credit Agreement, amended effective March 5, 1997, the
Company may borrow up to an aggregate of $180 million from TDS. At March 31,
1997, $148 million total long-term debt under this agreement was used for the
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<PAGE>
acquisition and development of five regional narrowband PCS licenses ($61.0
million), investment in infrastructure, systems and subscriber devices ($52.2
million), continuing operations ($19.1) and acquisitions ($15.7 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 March 31, 1997 was 10%. 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 determined that it was in violation of a covenant under
the Revolving Credit Agreement with TDS relating to maintaining a certain ratio
of equity to liabilities. The Company obtained a waiver of the covenant from TDS
through January 1, 1999. In absence of such waiver, the entire amount
outstanding under the Revolving Credit Agreement would have become immediately
due and payable at the discretion of TDS.
In connection with the Company's efforts to increase its customer base and
market share, invest in new communications technologies and fulfill its
obligations under the Revolving Credit Agreement with TDS, the Company may
require additional funding, the nature, amount and source of which cannot now be
determined, but which may include changes in the structure of the Revolving
Credit Agreement with TDS or public or private offerings of debt or equity
securities. 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.
Private Securities Litigation Reform Act of 1995 Safe Harbor Cautionary Language
This Management's Discussion and Analysis of Financial Condition and Results of
Operations contain "forward-looking" statements, as defined in the Private
Securities Litigation Reform Act of 1995, that are based on current
expectations, estimates and projections. Statements that are not historical
facts, including statements about the Company's beliefs and expectations are
forward-looking statements. These statements contain potential risks and
uncertainties and, therefore, actual results may differ materially. American
Paging undertakes no obligation to update publicly any forward-looking
statements whether as a result of new information, future events or otherwise.
Important factors that may affect these projections or expectations include, but
are not limited to: changes in the overall economy; changes in competition in
the Company's markets; new wireless messaging technology advances; possible
future litigation; availability of future financing; start-up of narrowband PCS
operations; and unanticipated changes in growth in paging customers, penetration
rates, churn rates and the mix of products and services offered in the Company's
markets. Readers should evaluate any statements in light of these important
factors.
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<PAGE>
AMERICAN PAGING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
Three Months Ended
March 31,
1997 1996
---- ----
(Dollars in thousands,
except per share amounts)
SERVICE REVENUE .................................. $ 22,310 $ 23,708
-------- --------
SERVICE OPERATING EXPENSE
Cost of service ................................ 6,861 6,019
Sales and marketing ............................ 9,203 6,271
General and administrative ..................... 7,060 8,133
Depreciation and amortization .................. 7,704 7,169
-------- --------
Total service operating expense .............. 30,828 27,592
-------- --------
SERVICE OPERATING LOSS ........................... (8,518) (3,884)
-------- --------
EQUIPMENT SALES
Revenue ........................................ 2,270 2,602
Cost of equipment sold ......................... 2,163 2,804
-------- --------
EQUIPMENT SALES INCOME/(LOSS) .................... 107 (202)
-------- --------
OPERATING LOSS ................................... (8,411) (4,086)
-------- --------
INVESTMENT AND OTHER INCOME/(EXPENSE)
Investment loss in joint venture ............... (241) (294)
Interest income ................................ 30 42
Other income, net .............................. -- 33
-------- --------
Total investment and other (expense) ......... (211) (219)
-------- --------
LOSS BEFORE INTEREST AND INCOME TAXES ............ (8,622) (4,305)
Interest expense - affiliates .................... 3,507 1,078
-------- --------
LOSS BEFORE INCOME TAXES ......................... (12,129) (5,383)
Income tax benefit ............................... -- (39)
-------- --------
NET LOSS ......................................... $(12,129) $ (5,344)
======== ========
WEIGHTED AVERAGE COMMON AND
SERIES A COMMON SHARES (000s) .................. 20,080 20,041
NET LOSS PER COMMON AND
SERIES A COMMON SHARE (Note 2) ................. $ (0.60) $ (0.27)
The accompanying notes to consolidated financial statements are an
integral part of these statements.
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<PAGE>
AMERICAN PAGING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
Unaudited
Three Months Ended
March 31,
1997 1996
---- ----
(Dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss .............................................. $(12,129) $ (5,344)
Add (deduct) adjustments to reconcile net loss to
net cash (required)/provided by operating activities:
Depreciation and amortization ......................... 7,704 7,169
Deferred income taxes, net ............................ -- (43)
Investment loss ....................................... 241 294
Other noncash expense ................................. 699 519
Change in accounts receivable ......................... 829 498
Change in accounts payable ............................ (636) (3,545)
Change in unearned revenue ............................ (1,048) 38
Change in accrued taxes ............................... 154 139
Change in accrued interest ............................ 71 63
Change in other assets and liabilities ................ (145) (275)
-------- --------
(4,260) (487)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Change in Revolving Credit Agreement - TDS ............ 8,000 10,391
Common shares issued .................................. 145 59
-------- --------
8,145 10,450
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment, net ....... (2,954) (10,814)
Investment in PCS licenses ............................ -- (1,438)
Other investments ..................................... (240) (384)
Change in temporary investments and
marketable securities ............................... 290 --
-------- --------
(2,904) (12,636)
-------- --------
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS ............................ 981 (2,673)
CASH AND CASH EQUIVALENTS
Beginning of period ................................... 557 4,280
-------- --------
End of period ......................................... $ 1,538 $ 1,607
======== ========
The accompanying notes to consolidated financial statements are an
integral part of these statements.
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<PAGE>
AMERICAN PAGING, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(Unaudited)
March 31, December 31,
1997 1996
---- ----
(Dollars in thousands)
CURRENT ASSETS
Cash and cash equivalents ........................ $ 1,538 $ 557
Temporary investments ............................ 37 150
Accounts receivable
Customers ...................................... 11,922 12,639
Other .......................................... 122 234
Inventory ........................................ 9,745 8,548
Net deferred tax asset ........................... 2,346 2,482
Prepaid expenses and other ....................... 1,454 1,231
-------- --------
27,164 25,841
-------- --------
INVESTMENTS
Investment in joint venture ...................... 193 193
Marketable securities ............................ 109 286
-------- --------
302 479
-------- --------
PROPERTY, PLANT AND EQUIPMENT
In service ....................................... 112,221 113,000
Less accumulated depreciation .................... 66,459 61,528
-------- --------
45,762 51,472
-------- --------
INTANGIBLE ASSETS
PCS licenses ..................................... 60,901 60,901
Other intangibles, net of accumulated amortization
of $18,479 and $17,543, respectively ........... 13,745 14,681
-------- --------
74,646 75,582
-------- --------
TOTAL ASSETS ....................................... $147,874 $153,374
======== ========
The accompanying notes to consolidated financial statements are an
integral part of these statements.
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<PAGE>
AMERICAN PAGING, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
(Unaudited)
March 31, December 31,
1997 1996
---- ----
(Dollars in thousands)
CURRENT LIABILITIES
Due to affiliates -
Accounts payable ........................... $ 1,419 $ 1,486
Accrued interest ........................... 1,240 1,169
Accounts payable ............................. 2,831 3,401
Unearned revenue and deposits ................ 9,479 10,527
Accrued taxes ................................ 510 357
Accrued compensation ......................... 1,434 1,266
Other current liabilities .................... 2,753 2,841
-------- --------
19,666 21,047
-------- --------
REVOLVING CREDIT AGREEMENT - TDS ............... 147,960 139,960
-------- --------
NET DEFERRED INCOME TAX LIABILITY .............. 2,034 2,169
-------- --------
COMMON SHAREHOLDERS' EQUITY
Common shares, par value $1 per share ........ 7,591 7,560
Series A Common shares, par value $1 per share 12,500 12,500
Additional paid-in capital ................... 72,703 72,589
Retained deficit ............................. (114,580) (102,451)
-------- --------
(21,786) (9,802)
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ..... $ 147,874 $ 153,374
========= =========
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, 1996. Certain reclassifications
have been made to prior year financial statements for consistency with
current year presentation.
The accompanying unaudited consolidated financial statements contain all
adjustments (consisting of only normal recurring items) necessary to
present fairly the financial position as of March 31, 1997 and December 31,
1996, and the results of operations and cash flows for the three months
ended March 31, 1997 and 1996. The results of operations for the three
months ended March 31, 1997 and 1996, 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 periods
ended March 31, 1997 and 1996 were computed by dividing net loss by the
weighted average number of Common shares and Series A Common shares
outstanding during the period.
The Financial Accounting Standards Boards issued Statement of Financial
Accounting Standards ("SFAS") No. 128, "Earnings per Share" in March 1997
which will become effective in December 1997. The Company has not yet
adopted SFAS No. 128, but management anticipates there will be no impact on
Net loss per Common and Series A Common share.
3. The following table summarizes interest and income taxes paid:
Three Months Ended March 31,
1997 1996
---- ----
(Dollars in thousands)
Interest paid $ 3,436 $ 2,391
Income taxes paid 1 96
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<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit
Number Description
- ------- -----------
27 Financial Data Schedule
(b) No reports were filed on Form 8-K during the quarter ended March 31, 1997.
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<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, thereto duly authorized.
American Paging, Inc.
(Registrant)
Date: May 14, 1997 By: /s/ TERRENCE T. SULLIVAN
Terrence T. Sullivan
President
(Chief Executive Officer)
Date: May 14, 1997 By: /s/ DENNIS M. BESTE
Dennis M. Beste
Vice President-Finance and Treasurer
(Chief Financial Officer)
Date: May 14, 1997 By: /s/ MICHELLE M. HAUPT
Michelle M. Haupt
Controller
(Principal Accounting Officer)
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated financial statements of American Paging, Inc. as of March 31, 1997,
and for the three months then ended, and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 1,538
<SECURITIES> 0
<RECEIVABLES> 12,044
<ALLOWANCES> 0
<INVENTORY> 9,745
<CURRENT-ASSETS> 27,164
<PP&E> 112,221
<DEPRECIATION> 66,459
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0
0
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</TABLE>
