PEOPLES TELEPHONE COMPANY, INC.
The following unaudited pro forma financial statements give effect to the sale
by PTC Cellular, Inc. ("PTCC"), a wholly owned subsidiary of Peoples Telephone
Company, Inc. (the "Company") of certain assets related to its cellular
telephone operations for $300,000 in cash, a $2.0 million promissory note,
shares of Shared Technologies Cellular, Inc. ("STC") common stock, a $2.5
million potential revenue earn out, and the payment by STC of approximately $1.2
million of PTCC's liabilities. The unaudited pro forma balance sheet reflects
the disposition of these assets as of September 30, 1995. The unaudited pro
forma statements of operations reflect the financial results of the Company
after giving effect to the operations which were generated by the assets sold
for the nine months ended September 30, 1995 and the year ended December 31,
1994 as if the disposition had occurred on January 1, 1995 and 1994,
respectively.
PEOPLES TELEPHONE COMPANY, INC.
CONSOLIDATED PRO FORMA BALANCE SHEET
SEPTEMBER 30, 1995
(UNAUDITED, IN THOUSANDS)
ASSETS PEOPLES TELEPHONE PTC(A) PRO FORMA
COMPANY, INC CELLULAR, INC. ADJUSTMENTS PRO FORMA
----------------- -------------- ----------- ---------
Current assets
Cash and cash equivalents................................................. $ 9,107 -- 300(b) 9,407
Accounts receivable, net of allowance for doubtful
accounts of $4,912 ...................................................... 10,649 -- -- 10,649
Inventory ................................................................ 3,209 -- -- 3,209
Prepaid expenses and other current assets ............................... 3,496 -- -- 3,496
Net assets of discontinued operations .................................... 2,300 2,300 -- --
--------- --------- --------- ---------
Total current assets .................................................. 28,761 2,300 300 26,761
Property and equipment, net ................................................ 82,183 -- -- 82,183
Location contracts, net .................................................... 32,324 -- -- 32,324
Goodwill, net .............................................................. 8,437 -- -- 8,437
Intangible assets, net ..................................................... 3,249 -- -- 3,249
Other assets, net .......................................................... 9,354 -- 2,000(c) 11,354
Deferred income taxes ...................................................... 3,407 -- -- 3,407
Investment in unconsolidated affiliate ..................................... 3,940 -- -- 3,940
--------- --------- --------- ---------
Total assets .......................................................... $ 171,655 $ 2,300 $ 2,300 $ 171,655
========= ========= ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Notes payable and current maturities of long-term debt ................... $ 455 -- -- $ 455
Current portion of obligations under capital leases ...................... 1,142 -- -- 1,142
Accounts payable and accrued expenses .................................... 24,544 -- -- 24,544
Accrued interest payable ................................................. 2,645 -- -- 2,645
Income and other taxes payable ........................................... 2,277 -- -- 2,277
--------- --------- --------- ---------
Total current liabilities ............................................. 31,063 -- -- 31,063
Notes payable and long-term debt ........................................... 103,047 -- -- 103,047
Obligations under capital leases ........................................... 1,971 -- -- 1,971
--------- --------- --------- ---------
Total liabilities ..................................................... 136,081 -- -- 136,081
--------- --------- --------- ---------
Commitments and contingencies .............................................. -- -- -- --
Preferred Stock
Mandatory redeemable preferred stock, $.01 par value, 5,000 shares
authorized; 150 shares issued and outstanding ........................... 14,546 -- -- 14,546
Preferred stock dividends payable ........................................ 210 -- -- 210
--------- --------- --------- ---------
Total preferred stock ................................................ 14,756 -- -- 14,756
--------- --------- --------- ---------
Shareholders' equity
Preferred stock; $.01 par value; 4,300 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; 25,000 shares authorized;
15,883 shares issued and outstanding ................................... 159 -- -- 159
Capital in excess of par value ........................................... 57,598 -- -- 57,598
Accumulated deficit ...................................................... (36,939) -- -- (36,939)
--------- --------- --------- ---------
Total shareholders' equity ............................................ 20,818 -- -- 20,818
--------- --------- --------- ---------
Total liabilities and shareholders' equity ............................ $ 171,655 $ -- $ -- $ 171,655
========= ========= ========= =========
<FN>
(a) Does not include assets not sold or liabilities not assumed of approximately $6.0 million, net.
(b) Cash proceeds from sale transaction.
(c) Note receivable from sale transaction.
</FN>
PEOPLES TELEPHONE COMPANY, INC.
CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995
(UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE DATA)
PEOPLES TELEPHONE PTC PRO FORMA
COMPANY, INC CELLULAR, INC. ADJUSTMENTS PRO FORMA
----------------- -------------- ----------- ---------
Revenues
Coin calls ................................................. $ 58,855 -- -- $ 58,855
Non-coin calls ............................................. 46,897 -- -- 46,897
Service and other .......................................... 122 -- -- 122
--------- --------- --------- ---------
Total revenues .......................................... 105,874 -- -- 105,874
Costs and expenses
Telephone charges .......................................... 37,554 -- -- 37,554
Commissions ................................................ 26,264 -- -- 26,264
Field service and collection ............................... 17,319 -- -- 17,319
Selling, general and administrative ........................ 8,455 -- 150 (b) 8,605
Depreciation and amortization .............................. 16,888 -- -- 16,888
Interest ................................................... 7,119 -- 723 (c) 7,842
Provision for impairment of inmate assets .................. 4,350 -- -- 4,350
Loss on disposal of prepaid calling card and
international telephone centers .......................... 566 -- -- 566
Litigation settlement expense .............................. 925 -- -- 925
Other ...................................................... 237 -- -- 237
--------- --------- --------- ---------
Total costs and expenses ................................ 119,677 -- 873 120,550
Loss from continuing operations before income taxes .......... (13,803) -- (873) (14,676)
Benefit from income taxes .................................... 1,737 -- -- 1,737
--------- --------- --------- ---------
Loss from continuing operations .............................. (12,066) -- (873) (12,939)
--------- --------- --------- ---------
Discontinued operations
Loss from operations........................................ -- -- -- --
Loss on disposition ........................................ (12,066) (14,600)(a) (13,607)(a) (11,073)
--------- --------- --------- ---------
Loss from discontinued operations ............................ (12,066) (14,600) (13,607) (11,073)
Extraordinary loss from extinguishment of debt, net .......... (3,015) -- -- (3,015)
--------- --------- --------- ---------
Net loss ............................................... $ (27,147) $ (14,600) (14,480) (27,027)
========= ========= ========= =========
Earnings (loss) per common share
Loss from continuing operations ............................. $ (.76) $ (.81)
Loss from discontinued operations ........................... (.76) (.70)
Extraordinary loss from extinguishment of debt, net ......... (.19) (.19)
--------- ---------
Net loss ................................................ $ (1.71) $ (1.70)
========= =========
Weighted average common and common equivalent shares
outstanding ................................................. 15,861 15,861
========= =========
<FN>
(a) Represents loss on disposal of PTC Cellular, Inc. The loss on disposal
includes a valuation allowance of approximately $5.5 million recorded against
deferred tax assets generated by this transaction. The change in estimated loss
on disposal resulted from, among other things, change in market conditions,
disputes over liabilities for cellular cloning charges, decreased revenue
attributable to PIN numbers introduced by the cellular carriers to prevent
cloning and a delay in creating a new phone technology to deal with PIN numbers
and other matters.
(b) Represents rent expense previously absorbed by PTC Cellular, Inc. which will
not be absorbed upon sale and relocation of these operations.
(c) Represents interest allocation from parent, net of interest income on $2.0
million promissory note at 8.0% beginning on January 1, 1995.
</FN>
PEOPLES TELEPHONE COMPANY, INC.
CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1994
(UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE DATA)
PEOPLES TELEPHONE PTC PRO FORMA
COMPANY, INC CELLULAR, INC. ADJUSTMENTS PRO FORMA
----------------- -------------- ----------- ---------
Revenues
Coin calls ................................................. $ 79,392 -- -- $ 79,392
Non-coin calls ............................................. 75,542 -- -- 75,542
Gain on sale of assets ..................................... 441 -- -- 441
Service and other .......................................... 1,615 -- -- 1,615
--------- --------- --------- ---------
Total revenues .......................................... 156,990 -- -- 156,990
Costs and expenses
Telephone charges .......................................... 65,204 -- -- 65,204
Commissions ................................................ 32,693 -- -- 32,693
Field service and collection ............................... 21,334 -- -- 21,334
Selling, general and administrative ........................ 14,580 -- 210 (c) 14,790
Depreciation and amortization .............................. 22,522 -- -- 22,522
Interest ................................................... 6,668 -- 623 (d) 7,291
Loss from operations of prepaid calling card and
international telephone centers ......................... 1,816 -- -- 1,816
Loss on disposal of prepaid calling card and
international telephone centers .......................... 3,690 -- -- 3,690
--------- --------- --------- ---------
Total costs and expenses ................................ 168,507 -- 833 169,340
Loss from continuing operations before income taxes .......... (11,517) -- (833) (12,350)
Benefit from income taxes .................................... 4,354 -- -- 4,354
--------- --------- --------- ---------
Loss from continuing operations .............................. (7,163) -- (833) (7,996)
Discontinued operations
Loss from operations, net of tax benefit of $2,344 ......... (3,910) (3,910)(a) -- --
Loss on disposition ........................................ (7,320) (4,786)(b) (13,607)(e) (16,141)
--------- --------- --------- ---------
Loss from discontinued operations ............................ (11,230) (8,696) (13,607) (16,141)
--------- --------- --------- ---------
Net loss ............................................... $ (18,393) $ (8,696) $ (14,440) $ (24,137)
========= ========= ========= =========
Earnings (loss) per common share
Loss from continuing operations.............................. $ (.46) $ (.51)
Loss from discontinued operations ........................... (.71) (1.03)
--------- ---------
Net loss................................................. $ (1.17) $ (1.54)
========= =========
Weighted average common and common equivalent shares
outstanding ................................................. 15,713 15,713
========= =========
<FN>
(a) Represents losses from operations of PTC Cellular, Inc. for the year ended
December 31, 1994.
(b) Represents a provision for the estimated impairment of asset values and
losses through the anticipated divestiture date. The provision was net of an
estimated gain on disposition of approximately $1.1 million and included a
valuation allowance of approximately $3.4 million against deferred tax assets
generated by these losses.
(c) Represents rent expense previously absorbed by PTC Cellular, Inc. which
will not be absorbed upon sale and relocation of these operations.
(d) Represents interest allocation from parent, net of interest income on
$2.0 million promissory note at 8.0% beginning January 1, 1994.
(e) Represents additional losses incurred on the disposition of PTC Cellular,
Inc. The Loss on Disposal includes a valuation allowance of approximately
$5.5 million recorded against deferred tax assets generated by this transaction.
The change in the estimated Loss on Disposal resulted from, among other things,
changes in market conditions, disputes over liabilities for cellular cloning
charges, decreased revenue attributable to PIN numbers introduced by cellular
carriers to prevent cloning and a delay in creating a new phone technology to
deal with PIN numbers and other matters.
</FN>