-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CteefEVIqXqp5gqQhQVrgqcCVUnJ/S1Q5ESFlYUDEATxOf66qyMFUC3KcR+iCuvL lRMQUGBj88ajZCbfA6gM5w== 0000819694-97-000008.txt : 19970515 0000819694-97-000008.hdr.sgml : 19970515 ACCESSION NUMBER: 0000819694-97-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970514 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: PEOPLES TELEPHONE COMPANY INC CENTRAL INDEX KEY: 0000819694 STANDARD INDUSTRIAL CLASSIFICATION: COMMUNICATION SERVICES, NEC [4899] IRS NUMBER: 132626435 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-12443 FILM NUMBER: 97605660 BUSINESS ADDRESS: STREET 1: 2300 NORTHWEST 89TH PL CITY: MIAMI STATE: FL ZIP: 33172 BUSINESS PHONE: 3055939667 MAIL ADDRESS: STREET 1: 2300 NORTHWEST 89TH PLACE CITY: MIAMI STATE: FL ZIP: 33172 10-Q 1 FIRST QUARTER REPORT FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [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 Commission File Number: 0-16479 PEOPLES TELEPHONE COMPANY, INC. ------------------------------- (Exact name of registrant as specified in its charter) NEW YORK 13-2626435 ------------ ------------- (State or other jurisdiction (I.R.S. Employer of incorporation or I.D. No.) organization) 2300 NORTHWEST 89TH PLACE, MIAMI, FLORIDA 33172 ----------------------------------------------- (Address of principal executive offices) (Zip Code) (305) 593-9667 -------------- (Registrant's telephone number, including area code) ____________________ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes X No APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock, $.01 Par Value, outstanding at May 12, 1997: 16,195,434 shares.
Part I. FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS PEOPLES TELEPHONE COMPANY, INC. CONSOLIDATED BALANCE SHEET (in thousands) March 31, December 31, Assets 1997 1996 ------------ ------------ (Unaudited) Current assets Cash and cash equivalents................. $ 4,367 $ 12,556 Accounts receivable, net of allowance for doubtful accounts of $4,147 and $4,037................................... 16,407 11,598 Inventory................................. 2,366 2,412 Prepaid expenses and other current assets 2,910 2,665 ------------ ------------ Total current assets.................. 26,050 29,231 Property and equipment, net................. 61,591 65,067 Location contracts, net..................... 27,681 27,465 Goodwill, net............................... 5,189 5,660 Intangible assets, net...................... 1,557 1,768 Other assets, net........................... 6,365 6,610 Deferred income taxes....................... 3,407 3,407 Investments................................. 1,790 1,662 ------------ ------------ Total assets........................... $ 133,630 $ 140,870 ============ ============ Liabilities and Shareholders' Equity Current liabilities Notes payable and current maturities of long-term debt........................ $ 565 $ 548 Current portion of obligations under capital leases........................... 852 952 Accounts payable and accrued expenses..... 19,268 19,240 Accrued interest payable.................. 2,632 5,697 Taxes payable............................. 2,379 2,418 ------------ ------------ Total current liabilities.............. 25,696 28,855 Notes payable and long-term debt............ 100,491 100,657 Obligations under capital leases............ 426 573 ------------ ------------ Total liabilities...................... 126,613 130,085 Commitments and contingencies.............. - - Preferred Stock Cumulative convertible preferred stock, Series C, $.01 par value, 160 shares authorized; 150 shares issued and outstanding.............................. 13,586 13,556 Preferred stock dividends payable ......... 1,785 1,523 ------------ ------------ Total preferred stock................. 15,371 15,079 ============ ============ Shareholders' equity Preferred stock; $.01 par value; 4,240 shares authorized; none issued and outstanding............................. - - Convertible preferred stock; Series B, $.01 par value; 600 shares authorized; none issued and outstanding............. - - Common stock; $.01 par value; 75,000 shares authorized; 16,195 and 16,108 shares issued and outstanding.................. 162 162 Capital in excess of par value............ 60,163 60,453 Accumulated deficit ...................... (67,336) (63,438) Unrealized loss on investments............ (1,343) (1,471) ---------- ------------ Total shareholders' deficit............ (8,354) (4,294) ---------- ------------ Total liabilities and shareholders' equity............................... $ 133,630 $ 140,870 =========== ============ The accompanying notes are an integral part of these consolidated financial statements.
2
PEOPLES TELEPHONE COMPANY, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited, in thousands, except per share data) For the three months ended March 31, ----------------------------- 1997 1996 ---------- ------------ Revenues Coin calls .......................... $ 17,940 $ 18,141 Non-coin calls....................... 13,668 12,355 ---------- ------------- Total revenues................... 31,608 30,496 Costs and expenses Telephone charges.................... 9,153 9,863 Commissions.......................... 8,764 8,267 Field service and collection......... 5,012 4,790 Selling, general and administrative.. 3,074 2,981 Depreciation and amortization........ 6,155 5,827 ---------- ------------- Total costs and expenses.......... 32,158 31,728 ---------- ------------- Operating loss......................... (550) (1,232) Other (income) and expenses: Interest expense, net................ 3,348 3,263 (Gain) loss on disposal of prepaid calling card and international telephone centers.................. - (545) Other................................ - 550 ---------- ------------ Total other (income) and expenses, net............................. 3,348 3,268 ---------- ------------ Loss before income taxes............... (3,898) (4,500) Benefit from income taxes.............. - - ---------- ------------ Net loss............................... $ (3,898) $ (4,500) ============ ============= Earnings (loss) per common share both primary and fully diluted........... $ (.26) $ (.29) ============ ============= Weighted average common and common equivalent shares outstanding......... 16,195 16,173 ============ =============
The accompanying notes are an integral part of these consolidated financial statements. 3
PEOPLES TELEPHONE COMPANY, INC. STATEMENTS OF CONSOLIDATED CASH FLOWS (Unaudited, in thousands) For the three months ended, March 31, ----------------------------- 1997 1996 ---------- ------------ Cash flow from operating activities: Net loss................................ $ (3,898) $ (4,500) Adjustments to reconcile net loss to net cash used by operating activities: Depreciation and amortization....... 6,155 5,827 Amortization of deferred financing costs.............................. 285 201 Gain on sale of assets.............. - (545) Change in assets and liabilities: (Increase) decrease in accounts receivable................... (4,922) 158 Decrease (increase) in inventory.................... 46 (197) (Increase) decrease in prepaid expenses and other current assets....................... (245) 369 (Increase) decrease in other assets....................... (159) 313 Increase (decrease) in accounts payable and accrued expenses 28 (54) Decrease in accrued interest.. (3,065) (2,929) (Decrease) increase in taxes payable...................... (39) 103 ---------- ----------- Net cash used by operating activities..... (5,814) (1,254) Cash flow from investing activities: Payments for acquisitions and certain contracts............................. (1,690) (1,303) Property and equipment additions....... (419) (754) Proceeds from sale of assets........... 233 800 ---------- ----------- Net cash used in investing activities...... (1,876) (1,257) Cash flow from financing activities: Net payments under note payable to bank.................................. (150) (165) Principal payments under capital lease obligations........................... (351) (229) Exercise of stock options and warrants. 2 - ---------- ------------ Net cash used in financing activities..... (499) (394) ---------- ------------ Net decrease in cash and cash equivalents.. (8,189) (2,905) Cash and cash equivalents at beginning of period.................................... 12,556 12,366 ---------- ------------ Cash and cash equivalents at end of period. $ 4,367 $ 9,461 ============ =============
The accompanying notes are an integral part of these consolidated financial statements. 4 PEOPLES TELEPHONE COMPANY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1997 AND MARCH 31, 1996 (unaudited) NOTE 1 - UNAUDITED INTERIM INFORMATION The accompanying interim consolidated financial data are unaudited; however, in the opinion of management, the interim data include all adjustments necessary for a fair presentation of the results for the interim periods. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The results of operations for the three months ended March 31, 1997 are not necessarily indicative of the results to be expected for the year ending December 31, 1997. The interim unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 1996 as set forth in the Company's 1996 Annual Report on Form 10-K. NOTE 2 - INVESTMENTS The Company's investment in Global Telecommunications Solutions, Inc. ("GTS") is accounted for in accordance with Statement No. 115 ("SFAS 115"), Accounting for Certain Investments in Debt and Equity Securities. Accordingly, this investment is reported at fair value with unrealized gains or losses, net of tax, recorded as a separate component of Shareholders' Equity. The fair value of the Company's investment in GTS common stock at March 31, 1997 was approximately $1.8 million which is net of approximately $1.3 million of unrealized investment losses. NOTE 3 - EARNINGS PER SHARE The treasury stock method was used to determine the dilutive effect of options and warrants on earnings per share data. For 1997 and 1996, common stock equivalents were excluded since the effect would be anti-dilutive. See primary and fully diluted earnings (loss) per common share calculation as summarized on page 7. NOTE 4 - LONG-TERM DEBT During March 1997, the Company executed an amendment to the Fourth Amended and Restated Loan and Security Agreement increasing the credit facility to $20.0 million. The interest rate on balances outstanding under the credit facility vary based upon the leverage ratio maintained by the Company. All outstanding principal balances are due in full in 2000. Interest is payable monthly for loans based on the prime rate and quarterly for loans based on the LIBOR rate. A commitment fee of 1/2 of 1% is charged on the aggregate daily unused balance of the credit facility under the Loan Agreement. The Loan Agreement is secured by substantially all of the Company assets and contains certain restrictive covenants which, among other things, require the Company to maintain certain cash flow levels and interest coverage ratios and places certain restrictions on the payment of dividends. 5 PEOPLES TELEPHONE COMPANY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1997 AND MARCH 31, 1996 (unaudited) NOTE 5 - SHAREHOLDERS' EQUITY In March 1997, the Company's shareholders approved an increase in the number of authorized shares of the Company's Preferred Stock and Common Stock to 5 million and 75 million shares, respectively. NOTE 6 - INCOME TAXES For the quarters ended March 31, 1997 and 1996, the Company recorded valuation allowances of approximately $1.5 million and $1.7 million against deferred tax assets generated during the periods. Valuation allowances were provided to reduce the deferred tax assets to a level which, more likely than not, will be realized. 6
PEOPLES TELEPHONE COMPANY, INC. COMPUTATION OF PRIMARY AND FULLY-DILUTED EARNINGS (LOSS) PER COMMON SHARE (unaudited, in thousands, except per share data) For The Three Months Ended March 31, ------------------------- 1997 1996 --------- ----------- Net loss.................................. $ (3,898) $ (4,500) Less: Cumulative preferred stock dividends..... (262) (262) --------- ----------- Net loss for per share computations.... $ (4,160) $ (4,762) =========== ============ Number of shares: Weighted average shares used in the per share computation........................ 16,195 16,173 =========== ============ Primary loss per common and common equivalent share........................ $ (.26) $ (.29) =========== ============
For The Three Months Ended March 31, ---------------------------- 1997 1996 ------------ ---------- Net loss.................................. $ (3,898) $ (4,500) Less: Cumulative preferred stock dividends...... (262) (262) --------- ----------- Net loss for per share computations..... $ (4,160) $ (4,762) =========== ============ Number of shares: Weighted average shares used in the per share computation........................ 16,195 16,173 =========== ============ Fully diluted loss per common and common equivalent share......................... $ (.26) $ (.29) =========== ============
7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis compares the quarter ended March 31, 1997 to the quarter ended March 31, 1996 and should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this Form 10-Q and in conjunction with Management's Discussion and Analysis appearing in the Company's Form 10-K for the year ended December 31, 1996. Statements in Management's Discussion and Analysis relating to matters that are not historical facts are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performances or achievements of Peoples Telephone Company, Inc. to be materially different from any future results, performances or achievements expressed or implied by such forward- looking statements. Such known and unknown risks, uncertainties and other factors include, but are not limited to, the following: the impact of competition, especially in a deregulated environment, uncertainties with respect to the implementation and effect of the Telecommunications Act of 1996, including potential litigation seeking to modify or overturn the order of the Federal Communications Commission implementing such act, or portions thereof, the ongoing ability of the Company to deploy its phones in favorable locations and the Company's ability to continue to implement operational improvements. Such factors and others are set forth more fully in the Company's 1996 Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and the consolidated financial statements and notes there to appearing elsewhere in this report. Revenues The Company primarily derives its revenues from coin and non-coin calls. Coin revenue is generated exclusively from calls made by depositing coins in the Company's public pay telephones. Coin revenue represented approximately 56.8 % and 59.5% of total consolidated revenues for the quarters ended March 31, 1997 and 1996, respectively. Coin revenue decreased 1.1% to $17.9 million during the quarter ended March 31, 1997, compared to the same period in 1996. The Company's average installed public pay telephone base was approximately 38,400 phones and 38,300 phones for the three month periods ended March 31, 1997 and 1996, respectively. Coin revenue on a per phone basis decreased by 1.3% for the quarter ended March 31, 1997, respectively, as compared to the same period in 1996. The decrease in coin revenue is primarily attributable to a decrease in the number of days in February 1997 (28) as compared to February 1996 (29). After adjusting for the difference in number of days, coin revenue, per phone basis, remained relatively consistent during the first quarter of 1997 as compared to the same period in the prior year. While the Company's coin revenue on a per phone basis has remained relatively consistent, the Company believes that the number of coin calls made at its public pay telephones may remain flat or decrease over time. The Company believes that the decreases will primarily result from among other things, the increased usage of alternative methods of calling such as prepaid calling cards and wireless technologies and the operation of more public pay telephones in closer proximity to the Company's telephones. The Company also believes that these decreases may be offset, over time, by increases in local coin call rates as a result of potential regulatory changes, although there can be no assurances. On November 8, 1996, the Federal Communications Commission (the AFCC@) issued its final order on reconsideration (the AOrder@) setting forth and affirming regulations implementing Section 276 of the federal Telecommunications Act of 1996, previously issued on September 20, 1996. As a result of an appeal of the Order, the ultimate implementation and details of the Order are subject to the outcome of an action pending before the United States Court of Appeals for the District of Columbia. See "Business - Public Pay Telephone Industry Overview" and "Business - Regulation" appearing in the Company's Form 10-K for the year ended December 31, 1996. The regulations in the Order, among other things, set forth a plan for the deregulation of local coin calling rates by October 1997. The Order allows states to request modification or exemption from deregulation upon a detailed showing in 8 support of such request by the state. Although neither the Company nor the industry can predict exactly what will happen in such a deregulated environment, trends indicate that there should be a move by the public pay telephone operators toward increased local coin calling rates in states where deregulation is implemented. This trend is evidenced by the fact that five states (Iowa, Nebraska, Wyoming, Michigan and South Dakota) have deregulated local coin calling rates and four of those five states now have local coin calling rates of $0.35. In addition, Illinois and Wisconsin, although still under regulation, have also increased their local coin calling rates to $0.35 through approval of rate/tariff applications filed by pay telephone operators in such states. Non-coin revenue is derived from calling card calls, credit card calls, collect calls and third-party billed calls placed from the Company's public pay telephones and inmate telephones. The Company currently uses AT&T to act as its primary national operator service provider. When the call is completed through the third-party operator service provider, the Company records as revenue the amount it receives from the third-party operator service provider which represents a negotiated percentage of the total amount the caller pays for the call. In May 1996, AT&T began paying a specified per call amount for interLATA (800) dial around calls as opposed to a percentage of the revenue generated by those calls. The Company estimates that the impact on non-coin revenue of the change in the compensation structure under the AT&T contract was a decrease of approximately $1.4 million for the three months ended March 31, 1997. In addition to the change in compensation under the AT&T contract, the Company is continuing to experience a shift in call traffic from 0+ calls, for which the Company receives a percentage of the revenue generated by those calls, to access code calls for which the Company receives a flat rate per phone or per call compensation amount. Due to aggressive advertising campaigns by long-distance companies promoting the use of access code calls, the Company believes that the decrease in non-coin revenue due to the changes in call traffic patterns is likely to continue. Subject to possible changes resulting from the appeal of the Order, these decreases in non-coin revenue are currently being offset by changes in the amount of compensation received by the Company for access code calls as well as (800) subscriber calls, as required under the Order. The Order mandates dial around compensation to public pay telephone providers for both types of calls at a flat-rate of $45.85 per pay telephone per month beginning November 6, 1996. This flat rate will be effective through October 1997, at which time, compensation will begin on a per call basis at a rate of $0.35 per call or such other rate negotiated by the pay telephone provider and the carriers. Non-coin revenue represented approximately 43.2 % and 40.5% of total revenues from continuing operations for the quarters ended March 31, 1997 and 1996, respectively. For the quarter ended March 31, 1997, revenues from non-coin calls increased 10.6% to approximately $13.7 million, compared to the quarter ended March 31, 1996. This increase was primary attributable to the increase in compensation received for dial-around calls as a result of the implementation of the Order, partially offset by (i) the change in the Company's compensation structure under the AT&T contract discussed above, and; (ii) the decrease in the number of inmate telephone lines operated by the Company. During the three month period ended March 31, 1997, the Company operated an average of 1,700 inmate telephone lines compared to approximately 2,100 during the same period of 1996. Operating Expenses Operating expenses include telephone charges, commissions, field service and collection expenses and selling, general and administrative expenses. Telephone charges consist of local line charges paid to Local Exchange Carriers which include the costs of basic service and transport of local coin calls, long-distance transmission charges and network costs and billing, collection and validation costs. Commissions represent payments to property owners and correctional facilities for revenues generated by the Company's telephones located on their properties. Field service and collection expenses represent the costs of servicing and maintaining the telephones on an ongoing basis, costs of collecting coin from the telephones and other related operational costs. Selling, general and administrative expenses primarily consist of payroll and related costs, legal and other professional fees, promotion and advertising expenses, property, gross receipts and certain other taxes, corporate travel and entertainment and various other expenses. Total 9 operating expenses were approximately 82.3% and 84.9% of total revenues from continuing operations for the quarters ended March 31, 1997 and 1996, respectively. Telephone charges decreased as a percentage of total revenues from continuing operations to 29.0% for the quarter ended March 31, 1997, compared to 32.3% for the same period in 1996. The decrease in telephone charges as a percentage of total revenue can be primarily attributed to the increase in non-coin revenue related to dial-around compensation earned in the first quarter of 1997 for which no telephone charges are incurred. In addition, the Company continues to experience decreased telephone charges as a result of regulatory changes and competition within the local/intraLATA service market. Commissions as a percentage of total revenues from continuing operations for the three months ended March 31, 1997 increased to approximately 27.7% as compared to 27.1% for the same period of the prior year. The increase in commissions as a percentage of revenues for the three months was primarily attributable to an increase in commission rates paid in connection with the Atlanta Hartsfield International Airport account and increased commission rates for new and renewed contracts due to increasing competition in the public pay telephone and inmate telephone markets. Field service and collection expenses as a percentage of total revenues from continuing operations were 15.9% and 15.7% for the first quarters of 1997 and 1996, respectively. Field service and collection expenses increased approximately 4.7% to approximately $5.0 million for the first quarter of 1997, as compared to the same period in 1996. This increase was primarily attributable to additional costs incurred for the addition of certain key operations employees who are needed to implement certain initiatives which are intended to result in achieving further operational efficiencies. Selling, general and administrative expenses were constant at approximately $3.0 million for both the first quarter of 1997 and 1996. Depreciation and Amortization Depreciation is based on the cost of the telephones, booths, pedestals and other enclosures, related installation costs and line interconnection charges and is calculated on a straight-line method using a ten-year useful life for public pay telephones and a five-year useful life for inmate telephones. Amortization is primarily based on acquisition costs including location contracts, goodwill and non-competition provisions and is calculated on a straight-line method using estimated useful lives ranging from five to twenty years. Depreciation and amortization increased to $6.2 million for the quarter ended March 31, 1997, compared to $5.8 million for the same period in 1996, primarily attributable to additional amortization expense related to acquisition and renewal costs of location contracts. Operating Loss Operating losses for the three months ended March 31, 1997 were approximately $0.6 million as compared to $1.2 million for the first quarter of 1996. Interest Expense For the first quarter of 1997, interest expense was approximately $3.3 million which is relatively consistent with interest expense in the same quarter in 1996. Gain on Disposal of Prepaid Calling Card and International Telephone Centers The three months ended March 31, 1996 includes a gain on disposal of prepaid calling card and international telephone centers of approximately $0.3 million received in connection with the sale of the Company's international telephone center operations and approximately $0.3 million recognized in connection with the merger of Global Link Teleco Corporation and Global Telecommunications Solutions, Inc. 10 Other Other expense for the three months ended March 31, 1996 includes approximately $0.6 million of severance obligations incurred under employment agreements with certain key executives. Benefit from Income Taxes The Company recorded valuation allowances for 100% of the deferred tax assets generated from operating losses. The Company recorded deferred tax assets and deferred tax asset valuation allowances of approximately $1.5 million as compared to $1.7 million for the three months ended March 31, 1997 and 1996, respectively. Net Loss from Continuing Operations before Extraordinary Item The Company had a net loss from continuing operations of approximately $(3.9) million and $(4.5) million for the three months ended March 31, 1997 and 1996, respectively. Earnings Before Interest, Taxes, Depreciation and Amortization EBITDA is not presented as an alternative to operating results or cash flow from operations as determined by Generally Accepted Accounting Principles ("GAAP"), but rather to provide additional information related to the ability of the Company to meet current trade obligations and debt service requirements. EBITDA should not be considered in isolation from, or construed as having greater importance than, GAAP operating income or cash flows from operations as a measure of an entity's performance. EBITDA from continuing operations was approximately $5.6 million for the quarter ended March 31, 1997, compared to $4.6 million for the same period in 1996. The increase in EBITDA is attributable to increased dial-around compensation, partially offset by decreased compensation received under the AT&T contract and the decrease in the Company's installed base of inmate telephone lines, as noted above. Liquidity and Capital Resources During the first quarter of 1997, the Company continued to finance its operations from operating cash flow. For the three months ended March 31, 1997, the Company's operating cash flow was $(5.8) million compared to $(1.3) million for the same period in 1996. The decrease in the Company's operating cash flow is primarily attributable to an increase of approximately $4.8 million of accounts receivable related to the accrual of dial-around compensation. The Company's net working capital was approximately $0.4 million, with a current ratio of 1.0 to 1, at March 31, 1997. This is consistent with the Company's liquidity position at December 31, 1996. During March 1997, the Company executed an amendment to the Fourth Amended and Restated Loan and Security Agreement increasing the credit facility to $20.0 million. The interest rate on balances outstanding under the credit facility vary based upon the leverage ratio maintained by the Company. All outstanding principal balances are due in full in 2000. Interest is payable monthly for loans based on the prime rate and quarterly for loans based on the LIBOR rate. A commitment fee of 1/2 of 1% is charged on the aggregate daily unused balance of the credit facility under the Loan Agreement. The Loan Agreement is secured by substantially all of the Company assets and contains certain restrictive covenants which, among other things, require the Company to maintain certain cash flow levels and interest coverage ratios and places certain restrictions on the payment of dividends. At March 31, 1997, the Company was in compliance with the amended covenants and had no amounts borrowed under the facility. 11 Based upon current expectations, the Company believes that cash flow from operations, together with amounts which may be borrowed under the amended credit facility, will be adequate for it to meet its working capital requirements, pursue its business strategy and service its obligations with respect to its 12 1/4% Senior Notes, although there can be no assurances that it will be able to do so. The preceding forward looking information is subject to a variety of factors and uncertainties, including the impact of competition on the Company's operations, the ultimate implementation and effect of the Telecommunications Act of 1996, the ongoing ability of the Company to deploy its phones in favorable locations and to continue to implement operational improvements. 12 Part II OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders At the Company's Special Meeting of Shareholders held on February 14, 1997 and adjourned to, and reconvened on, March 7, 1997, the shareholders of the Company voted: 1. to amend the Company's Restated Certificate of Incorporation, as amended (the "Charter"), in order to increase the number of authorized shares of the Company's common stock to 75,000,000 shares and the number of authorized shares of the Company's preferred stock to 5,000,000 shares; 2. to amend the Charter to permit the Company to grant preemptive and preferential rights to acquire shares of the Company's capital stock pursuant to contractual agreements; 3. to ratify the grant of certain stock options granted outside of the Company's stock option plans. The number of votes on each proposal cast for, against, abstaining and broker non-votes was as follows: For Against Abstain Broker Non-Votes ------------ ----------- ----------- ---------------- a) Proposal One 10,024,036 3,026,655 61,230 - b) Proposal Two 9,641,669 3,389,442 79,585 - c) Proposal Three 9,673,007 2,591,008 63,891 - Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: Exhibit Description 27 Financial Data Schedule (b) Reports on Form 8-K: None 13 SIGNATURE 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. PEOPLES TELEPHONE COMPANY, INC. ---------------------------------------- Registrant Date: May 14, 1997 /s/ Bonnie S. Biumi ---------------------------------------- Bonnie S. Biumi Chief Financial Officer EX-27 2 FDS WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 0000819694 Peoples Telephone Company, Inc. 3-MOS DEC-31-1997 JAN-01-1997 Mar-31-1997 4367000 0 20554000 (4147000) 2366000 26050000 135733000 (74142000) 133630000 25696000 100491000 0 162000 (8516000) 133630000 31608000 31608000 26003000 32158000 0 0 3348000 (3898000) 0 (3898000) 0 0 0 (3898000) (0.26) (0.26)
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