PhoneTel Technologies, Inc. Reports Third Quarter 2001 Financial Results
CLEVELAND--(BUSINESS WIRE)--Nov. 20, 2001--PhoneTel Technologies, Inc. (OTCBB:PHTE) today reported financial results for the three-month and nine-month periods ended September 30, 2001.
Revenues for the third quarter were $11.8 million, compared to $16.0 million in the prior year's third quarter. This decline reflects a 9.7% reduction in the number of installed pay telephones and the continuing impact of wireless communications on payphone usage. Third quarter EBITDA (earnings before interest, taxes, depreciation and amortization, and other unusual charges and contractual settlements) was $0.7 million, compared to $2.2 million in the prior year's third quarter. The net loss for the third quarter was $7.4 million, or $0.72 per common share, compared to a net loss of $7.8 million, or $0.77 per common share, in the third quarter of 2000. The third quarter 2001 net loss included a non-cash charge of $1.8 million, or $0.17 per common share for the write-off of intangible assets related to approximately 2,000 pay telephones removed from service as part of the Company's continuing program of evaluating and removing phones that are no longer profitable. A similar charge for $2.9 million, or $0.28 per common share, for the removal of approximately 1,500 pay telephones in last year's third quarter is included in other unusual charges and contractual settlements in the condensed consolidated statements of operations.
Revenues for the third quarter 2001 decreased $0.5 million when compared to second quarter revenues of $12.3 million. Third quarter EBITDA of $0.7 is an increase of $0.9 million compared to second quarter 2001 EBITDA. The net loss for the third quarter decreased by $5.4 million, or $0.53 per common share, compared to the second quarter 2001 net loss of $12.8 million, or $1.25 per common share. The reduction in net loss was due principally to a $6.3 million asset impairment loss relating to the non-cash write-down in the carrying value of certain payphone assets included in other unusual charges and contractual settlements in the second quarter of 2001.
Revenues for the nine months ended September 30, 2001 were $35.5 million, compared to $45.9 million for the same period in 2000. For the nine months ended September 30, 2001, EBITDA was $0.5 million compared to $5.9 million for the same period in 2000. The net loss for the nine months ended September 30, 2001, was $26.4 million, or $2.59 per common share, compared to a net loss of $18.2 million, or $1.79 per common share, last year.
As previously announced on June 13, 2001, the Company has entered into a servicing agreement and a letter of intent to merge with Davel Communications, Inc. The letter of intent contemplates the execution of a definitive merger agreement as well as a substantial debt restructuring of each company. Completion of the merger is also subject to approval by the boards of directors, shareholders and existing secured lenders of both companies and the receipt of material third party and governmental approvals and consents. In anticipation of the merger, the companies have implemented mutual servicing arrangements affecting their respective field service operations on a geographic basis.
The merger, once completed, will bring together the nation's two largest independent payphone providers with resulting improvements in route densities and operating costs that are critical to success in today's payphone environment. In pursuing the merger, the companies look forward to fully combining the relative strengths and resources of their corporate and field service organizations through a formal business combination early next year.
At September 30, 2001, the Company was not in compliance with certain financial covenants under its loan agreement for post-reorganization financing entered into on November 17, 1999 (the "Loan Agreement"). In addition, the Company has not paid the monthly interest previously due on September 1 through November 1, 2001 and is in default with respect to the Loan Agreement. Management has requested and expects to obtain an amendment to the Loan Agreement that would permit the Company to continue to defer the payment of past due interest by adding it to loan principal and to waive the defaults described above. Although the lenders have previously waived compliance with respect to certain financial covenants, entered into amendments to defer the due date of certain payments and granted their consent to enter into the letter of intent to merge with Davel (which contemplates a substantial debt restructuring), there can be no assurance that the lenders will waive the current or any future defaults or permit the deferral of past due interest through the maturity date of the loan. If the Company is unable to obtain waivers of defaults or deferral of amounts due under the Loan Agreement, all outstanding amounts could, at the option of the lenders, become immediately due and payable.
PhoneTel Technologies, Inc., is a leading independent provider of pay telephones and related services with operations in 45 states and the District of Columbia. PhoneTel serves a wide array of customers operating in the shopping center, hospitality, health care, convenience store, university, service station, retail and restaurant industries. |
