1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K/A-1
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
COMMISSION FILE NUMBER 0-16715
PHONETEL TECHNOLOGIES, INC.
---------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
OHIO 34-1462198
---- ----------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
NORTH POINT TOWER, 7TH FLOOR, 1001 LAKESIDE AVENUE, CLEVELAND, OHIO 44114-1195
- ------------------------------------------------------------------- -----------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(216) 241-2555
--------------
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
SECURITIES REGISTERED UNDER SECTION 12(b) OF THE EXCHANGE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- -------------------
NONE NONE
SECURITIES REGISTERED UNDER SECTION 12(g) OF THE EXCHANGE ACT:
TITLE OF EACH CLASS
-------------------
COMMON STOCK, $0.01 PAR VALUE
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 BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM 405
OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE
BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS
INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS
FORM 10-K. [X]
INDICATE BY CHECK MARK WHETHER THE REGISTRANT HAS FILED ALL DOCUMENTS AND
REPORTS REQUIRED TO BE FILED BY SECTION 12, 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 SUBSEQUENT TO THE DISTRIBUTION OF SECURITIES UNDER A PLAN
CONFIRMED BY A COURT. YES X NO
--- ---
The aggregate market value of the voting stock held by non-affiliates of the
registrant as of March 27, 2001 was $1,009,000.
The number of shares outstanding of the registrant's Common Stock, $.01 par
value, as of March 27, 2001 was 10,189,684.
Documents Incorporated by Reference
None
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TABLE OF CONTENTS
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The undersigned registrant hereby amends the following items of its previously
filed Annual Report on Form 10-K for the fiscal year ended December 31, 2000 as
set forth in the pages attached hereto.
COVER PAGE..............................................................................PAGE 1
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT ...................PAGE 3
ITEM 11. EXECUTIVE COMPENSATION ...............................................PAGE 4
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT .................................................PAGE 8
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS .......................PAGE 10
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
DIRECTORS
The table below sets forth the names and ages of the Directors of the
Company as of March 31, 2001 and their positions, offices and business
experience during the past five years.
NAME AND AGE TENURE AS DIRECTOR AND POSITIONS, OFFICES AND BUSINESS
- ------------ ------------------------------------------------------
EXPERIENCE DURING LAST FIVE YEARS
---------------------------------
John D. Chichester, Age 52 Served as a Director of the Company since November 1999. Served as
President and Chief Executive Officer of the Company since March 1999.
Prior to joining the Company, Mr. Chichester served as a director and
Executive Vice President of Urban Telecommunications, Inc. and continues
to serve in that capacity. From 1970 to 1992, Mr. Chichester held
various positions with the Public Communications Department of NYNEX
including Director of Operations where he directed that company's
payphone operations.
Eugene I. Davis, Age 46 Served as a Director of the Company since November 1999. Mr. Davis has
been Chairman and Chief Executive Officer of Pirinate Consulting Group,
L.L.C., a consulting firm, from 1999 to present. From 1998 to 1999, he
was Chief Operating Officer of Totaltel USA Communications, a company
engaged in the telecommunications business. From 1992 until 1997, Mr.
Davis was President and Vice-Chairman, Emerson Radio Corporation, a
company engaged in the electronics business. From 1996 to 1997, Mr.
Davis was Chief Executive Officer and Vice-Chairman of Sport Supply
Group, a company engaged in the sporting goods industry. Mr. Davis is a
director of Murdock Communications Corporation, Coho Energy, Inc.,
Tipperary Corporation and Eagle Geophysical, Inc.
Peter G. Graf, Age 63 Served as a Director of the Company since July 1995. Mr. Graf also
served as Chairman of the Company from July 1995 to November 1999, and
served as Chief Executive Officer from July 1995 to March 1999. Mr. Graf
is licensed as an attorney and certified public accountant and serves as
an officer and/or director of various privately-held companies and as the
Managing Partner of Graf, Repetti & Company, an accounting firm.
Bruce Ferguson, Age 44 Served as a Director of the Company since January 2001. Served as a Senior Vice
President of Pacholder Associates, Inc., an investment management company, since
1999. Served as a Managing Director of Marshall Financial Group, Inc.,
("Marshall Financial") from 1991 to 1998. Marshall Financial acquired a number
of businesses and provided acquisition and management services to those businesses.
Mr. Ferguson acted as an officer, director or consultant to most of the companies
in which Marshall Financial had an interest.
Kevin Schottlaender, Age 41 Served as a Director of the Company since November 1999. Mr.
Schottlaender has been President, Director and Chief Executive Officer of
Global Interactive Communications Corp., a telecommunications company
serving the multi-family housing industry, from December 1998 to
present. From June 1996 to December 1998, he was President, Director and
Chief Executive Officer of Interactive Cable Systems, a
telecommunications company serving the multi-family housing industry.
From June 1994 to June 1996, Mr. Schottlaender was President-FMS and
Senior Vice President-Technology of Shared Technologies Fairchild, Inc.,
a company serving the shared tenant services industry.
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EXECUTIVE OFFICERS
The table below sets forth the names and ages of the executive officers of the
Company as of March 31, 2001 and their positions and business experience during
the past five years.
NAME AND AGE POSITIONS, OFFICES AND BUSINESS EXPERIENCE
- ------------ ------------------------------------------
DURING LAST FIVE YEARS
----------------------
John D. Chichester, Age 52 For a description of the positions, offices and business
experience of Mr. Chichester, see "Directors", above.
Richard P. Kebert, Age 54 Served as Chief Financial Officer and Treasurer of the Company
since September 1996 and Secretary of the Company since March
2000. Prior to joining the Company, Mr. Kebert was an
independent consultant. From 1994 to 1996, he was Vice
President-Finance and Administration of Acordia of Cleveland,
Inc. For 12 years prior thereto, Mr. Kebert held several senior
management positions with Mr. Coffee, inc., including Vice
President of Administration and Secretary. Mr. Kebert is a
certified public accountant.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to the rules of the Securities Exchange Act of 1934 (the
"Act"), the Company is obligated to identify each person who, at any time during
the fiscal year, was a director, officer and/or beneficial owner of more than
10% of any class of equity securities of the Company registered pursuant to
Section 12 of the Act, or any other person subject to Section 16 of the Act with
respect to the Company (a "Reporting Person") that failed to file on a timely
basis, as disclosed in the Forms (as defined below), reports required by Section
16(a) of the Act during the fiscal year ended December 31, 2000, or prior fiscal
years.
The Company has, therefore, reviewed the following reports of Reporting
Persons received on or before March 31, 2001: Form 3--Initial Statement of
Beneficial Ownership of Securities and Form 4--Statement of Changes in
Beneficial Ownership, and amendments thereto, furnished to the Company during
the fiscal year ended December 31, 2000, and Form 5--Annual Statement of Changes
in Beneficial Ownership, and amendments thereto, furnished to the Company with
respect to the fiscal year ended December 31, 2000 (collectively, the "Forms").
Based on this review, the Company believes that all Reporting Persons timely
filed all Forms required to be filed with respect to the year ended December 31,
2000.
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth a summary of all compensation for
services rendered during the three-year period ended December 31, 2000 paid to
the Company's Chief Executive Officer and to the Company's other executive
officer who was serving as an executive officer at December 31, 2000 and whose
total salary and bonus for fiscal 2000 exceeded $100,000 (together, the "Named
Executive Officers").
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SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
-------------------------------------- --------------------------------------
AWARDS PAYOUTS
------------------------- ---------
SECURITIES
RESTRICTED UNDERLYING LONG-TERM ALL OTHER
NAME AND OTHER ANNUAL STOCK OPTIONS/ INCENTIVE COMPEN-
PRINCIPAL SALARY BONUS COMPENSATION AWARD(S) SARS PAYOUTS SATION
POSITION YEAR ($) ($) ($) ($) (#) ($) ($)
- ---------------------------------------------------------------------------------------------------------------------------
John D. 2000 $343,269 $75,000 ___ ___ 125,000(b) ___ ___
Chichester, 1999 231,250(a) ___ ___ ___ ___ ___ ___
Director, 1998 ___ ___ ___ ___ ___ ___ ___
President and
Chief Executive
Officer
Richard P. Kebert, 2000 144,039 11,875 ___ ___ 30,000(c) ___ ___
Chief Financial 1999 120,000 15,000 ___ ___ ___ ___ ___
Officer, 1998 124,615 57,500 ___ ___ ___ ___ ___
Treasurer and
Secretary
(a) Represents salary received by Mr. Chichester from March 30, 1999, the
date of his employment, to December 31, 1999.
(b) Of these stock options, 50,000 were granted on April 1, 2000 under the
PhoneTel Technologies, Inc. 1999 Management Incentive Plan (the "1999
Plan") and vest in equal thirds on April 1, 2001, 2002 and 2003 and
75,000 options were granted not under the 1999 Plan on May 23, 2000 and
were vested immediately upon grant.
(c) These stock options were granted on March 9, 2000 under the 1999 Plan.
The stock options vest in equal thirds on March 9, 2001, 2002 and 2003.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT, AND CHANGE-IN-CONTROL
ARRANGEMENTS
Effective April 1, 2000, the Company entered into an Employment
Agreement (the "Agreement") with John D. Chichester. The Agreement provides that
he will be President and Chief Executive Officer of the Company and has a term
of two years from April 1, 2000 ("Initial Term") that may be extended for an
additional one-year period (collectively, the "Extended Term"). Under the
Agreement, Mr. Chichester is to receive an annual base salary of not less than
$350,000, subject to an increase of 4% per annum, health and welfare benefits
and the opportunity to earn an annual cash incentive bonus based upon the annual
financial performance of the Company (the "Annual Bonus"). In addition, Mr.
Chichester was granted under the Agreement stock options to purchase 50,000
shares of Common Stock under the 1999 Plan. The stock options vest 16,667 on
April 1, 2001; 16,667 on April 1, 2002 and the remaining balance on April 1,
2003.
The target Annual Bonus for the first year of the Initial Term of the
Agreement shall be $90,000, and the percentage earned shall depend upon the
"achievement percentage" represented as the actual annual EBITDA performance of
the Company divided by the Company's projected EBITDA performance for the
subject year as defined in the Agreement. Under the formula, Mr. Chichester can
earn the following "bonus opportunity percentage" of his target Annual Bonus
amount with respect to a fiscal year during which the Annual Bonus is in effect.
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ANNUAL BONUS CALCULATION SCHEDULE
ACHIEVEMENT PERCENTAGE BONUS OPPORTUNITY PERCENTAGE
Less than 80% 0%
80.1% to 90% 90%
90.1% to 100% 100%
100.1% to 110% 110%
Greater than 110% 120%
The target Annual Bonus amount for the second year of the Initial Term of the
contract would be $100,000, and during any Extended Term the target Annual Bonus
amount would be $110,000. Notwithstanding that the foregoing formula would have
resulted in no bonus for 2000, the Compensation Committee of the Company's Board
of Directors elected to award Mr. Chichester a discretionary bonus of $50,000
for 2000 to be paid in installments during 2001.
The Agreement may be terminated by the Company in the event of Mr.
Chichester's death, disability, for cause or without cause. In the event the
Agreement is terminated by the Company without cause during the Initial Term,
Mr. Chichester shall be entitled to the following: (i) immediate vesting of all
unvested stock incentive options previously granted, (ii) a severance payment
("Severance Payment") equal to the sum of (A) salary for remaining months in the
Initial Term and (B) $7,500 for each calendar month then remaining in the
Initial Term for which Mr. Chichester has not yet qualified or been paid the
Annual Bonus. The amount of the Severance Payment shall additionally be
increased by a factor of 25% to account for loss of benefits. A Severance
Payment calculated on a similar basis would be in effect with respect to
termination without cause during the Extended Term.
In addition, Mr. Chichester may elect to terminate the Agreement at any
time upon 60 days written notice or upon 30 days written notice upon the
occurrence of a "Trigger Event," as defined in the Agreement. A Trigger Event
shall be deemed to occur if (i) the Company is merged or consolidated into
another entity not affiliated with the Company, (ii) all or substantially all
the assets of the Company are sold to another entity that is not affiliated with
the Company, or (iii) any person, with the exception of an affiliate existing as
of the date of the Agreement, becomes a beneficial owner of securities of the
Company representing 50% or more of the combined voting power of the Company's
then outstanding securities entitled to vote generally in the election of
directors, other than by means of a public offering. In the event a Trigger
Event occurs, Mr. Chichester would be entitled to the Severance Payment
calculated in the manner required by a termination of his employment by the
Company without cause. Mr. Chichester would not be entitled to such payment if
he has been advised by the Company, or its successor, that subsequent to the
Trigger Event he is to be retained for the remainder of the Initial Term or
Extended Term of the Agreement, subject to the terms and conditions thereof, and
that he will perform substantially the same functions as those that he performed
prior to the Trigger Event; provided, however, that Mr. Chichester shall not be
required to relocate his primary residence to another location.
In addition, the Company is obligated to reimburse to Mr. Chichester
the actual reasonable and customary expenses incurred as a result of the
relocation of his primary residence from New York to Ohio, up to a maximum
amount of $70,000. The Company is also obligated to provide him with a vehicle
for business and personal use and to pay for all expenses incident to the
operation of said vehicle.
Under the Agreement, Mr. Chichester is permitted to continue as an
officer and director of Urban Telecommunications, Inc. provided such involvement
does not interfere in any material respect with his services to the Corporation.
In addition, the Agreement contains certain non-solicitation and non-competition
provisions to which Mr. Chichester has agreed to be subject.
STOCK OPTIONS
The following table contains information concerning the grant of stock
options under the 1999 Plan to the Named Executive Officers:
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OPTION/SAR GRANTS IN LAST FISCAL YEAR
Individual Grants
Number of Percentage of Potential Realizable Value at
Securities Total Options/ Market Assumed Rates of Stock Price
Underlying SARs Granted to Exercise Price on Appreciated for Option Term
Options/ Employees in or Base Date of Expiration ------------------------------
Name SARs Granted Fiscal Year Price Grant Date 0% 5% 10%
---- ------------ ----------- ----- ----- ---- -- -- ---
John D. 50,000 15.7% $1.16 $1.16 3/31/05 -- $16,024 $35,410
Chichester 75,000 23.6% 0.01 0.375 5/22/03 $27,375 31,808 36,684
------ ------- ------ ------
125,000 39.3% 27,375 47,832 72,094
Richard P. 30,000 9.4% 1.56 1.56 3/8/05 -- 12,930 28,572
Kebert
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION/SAR VALUES
Number of Securities
Underlying Unexercised Value of Unexercised
Options/SARs at Fiscal In-the-Money Options at
Year End Year End
Shares
Acquired on Value Exercisable/ Exercisable/
Name Exercise Realized Unexercisable Unexercisable
---- -------- -------- ------------- -------------
John D. Chichester -- -- 75,000 $13,313
50,000 --
Richard P. Kebert -- -- -- --
30,000 --
COMPENSATION OF DIRECTORS
The Company's Amended and Restated Code of Regulations provides that
the Board of Directors may compensate Directors for serving on the Board and
reimburse them for any expenses incurred as a result of Board meetings. From
January 1, 2000 to December 31, 2000 each non-employee Director received
quarterly cash compensation payments of $5,000, other than the Chairman of the
Board, who received quarterly cash compensation payments of $6,000. The Board
also authorized the issuance of 20,000 options to purchase Common Stock of the
Company to each non-employee Director, with an additional issuance of 5,000
options to the Chairman of the Board. On December 27, 1999, the Company granted
such options to the non-employee Directors as additional compensation for
services to be rendered during the 1999-2000 service year. Such options vested
on the date of grant, were exercisable immediately at an exercise price of $1.14
per share and have a term of three (3) years.
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Common Stock owned by each Director of the Company,
each person known by the Company to own beneficially more than 5% of the
outstanding Common Stock, the Named Executive Officers and all Directors and
officers as a group as of April 1, 2001. Unless otherwise indicated, the number
of shares of Common Stock owned by the named shareholders assumes the exercise
of the warrants or options that are exercisable within 60 days, the number of
which is separately referred to in a footnote, and the percentage shown assumes
the exercise of such warrants or options and assumes that no warrants or options
held by others are exercised. This information is based upon information
furnished by such persons, statements filed with the Commission or other
information known to the Company.
NAME OF BENEFICIAL OWNER NUMBER OF SHARES PERCENTAGE
(AND ADDRESS OF FIVE PERCENT OF COMMON STOCK OF
BENEFICIAL OWNER) BENEFICIALLY OWNED CLASS
DIRECTORS
---------
John D. Chichester (a) 91,667 *
Director, President and
Chief Executive Officer
Eugene I. Davis(b) 20,000 *
Director
Bruce Ferguson(c) 505,400 4.96%
Director
Peter G. Graf (d) 382,512 3.68%
Director
Kevin Schottlaender(b) 20,000 *
Director
NAMED EXECUTIVE OFFICERS
------------------------
Richard P. Kebert (a) 10,000 *
Chief Financial Officer, Treasurer,
and Secretary
Executive Officers and Directors (e) 1,029,579 9.77%
As a group (6 persons)
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NAME OF BENEFICIAL OWNER NUMBER OF SHARES PERCENTAGE
(AND ADDRESS OF FIVE PERCENT OF COMMON STOCK OF
BENEFICIAL OWNER) BENEFICIALLY OWNED CLASS
- ----------------------------------------------------------------------------------------------------------------------------
FIVE PERCENT BENEFICIAL OWNERS
------------------------------
American Express Financial Corporation (f) 3,325,380 32.63%
IDS Tower 10
30th Floor, Unit 273
Minneapolis, MN 55402
Bankers Trust (g)
One Bankers Trust Plaza 732,000 7.18%
130 Liberty Street
New York, NY 10006
Leucadia National Corp. (h)
315 Park Avenue South 722,000 7.09%
New York, NY 10010
CIBC World Markets Corp. (i)
425 Lexington Avenue 608,000 5.97%
New York, NY 10017
Lutheran Brotherhood (j)
625 Fourth Avenue South 532,000 5.22%
Minneapolis, MN 55415
Paul Graf (k)
1114 Avenue of the Americas 820,000 8.05%
New York, NY 10036
- ------------
* Less than 1.0%
(a) These represent vested stock options.
(b) Includes options to purchase 20,000 shares of Common Stock through
December 26, 2002.
(c) Mr. Ferguson is an officer of Pacholder Associates, Inc., which manages
a limited partnership and a closed-end mutual fund, which entities
collectively own 362,900 shares of Common Stock. He is also a member of
a limited liability company that serves as the general partner of a
limited partnership that owns 142,500 shares of Common Stock. Mr.
Ferguson disclaims beneficial ownership of these shares.
(d) Includes warrants to purchase 187,242 shares of Common Stock through
November 17, 2002, options to purchase 20,000 shares of Common Stock
through December 26, 2002 and beneficial ownership of 100,000 shares
held by Mr. Graf's wife. Mr. Graf disclaims beneficial ownership of
shares held by his son, Paul Graf.
(e) Includes beneficial ownership of Common Stock described above with
respect to Messrs. Chichester, Davis, Ferguson, Graf, Schottlaender and
Kebert.
(f) The information regarding this holder is as of December 29, 2000 and
was obtained directly from the holder. Reflects beneficial ownership of
American Express Financial Corporation and affiliated entities.
(g) Based on the records of the Company regarding entitlement of holder to
issuance of shares of Common Stock effective November 17, 1999, in
connection with the Prepackaged Plan of Reorganization.
(h) This information is as of February 28, 2001 and was obtained directly
from the holder.
(i) This information is as of April 24, 2001 and was obtained directly from
the holder.
(j) This information is as of April 11, 2001 and was obtained directly from
the holder. Reflects beneficial ownership of Lutheran Brotherhood High
Yield Fund of 212,800 shares and LB Series Fund, Inc. of 319,200
shares.
(k) This information is as of April 1, 2001 and was obtained directly from
the holder. Paul Graf is the son of Peter Graf, a Director of the
Company, and disclaims beneficial ownership of shares of Common Stock
beneficially owned by his father.
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Chichester, the Company's President and Chief Executive Officer, is
a Director, Executive Vice President and a 49% shareholder of Urban
Telecommunications, Inc. ("Urban"). During the year ended December 31, 2000, the
Company earned revenue of $81,378 from various telecommunications contractor
services provided to Urban, principally residence and small business facility
provisioning and inside wiring.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
Not applicable.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Amendment Number 1 to its previously filed
Annual Report on Form 10-K for the fiscal year ended December 31, 2000 to be
signed on its behalf by the undersigned thereunto duly authorized.
PHONETEL TECHNOLOGIES, INC.
April 30, 2001 By: /s/ John D. Chichester
--------------------------------------
John D. Chichester,
President and Chief Executive Officer
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