SECURITIES AND EXCHANGE COMMISSION
Form 10-Q
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For The Quarterly Period Ended March 31, 2003
| o | 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: 0-21924
METROCALL HOLDINGS, INC.
| Delaware |
54-1215634
|
|
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(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer
Identification No.) |
|
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6677 Richmond Highway, Alexandria,
Virginia
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22306
|
|
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(Address of Principal Executive
Offices)
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(Zip Code)
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| Registrant’s Telephone Number, including area code: (703) 660-6677 | ||
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 o
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12(b-2) of the Exchange Act Yes x No o
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 o
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 1, 2003 | |
| Common Stock, $.01 par value | 991,809 |
INDEX TO FORM 10-Q
| Page | |||||||
| Number | |||||||
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PART I
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FINANCIAL INFORMATION
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Item 1
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Interim Condensed Consolidated Financial
Statements
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||||||
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Balance Sheets, December 31, 2002 and
March 31, 2003
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3 | ||||||
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Statements of Operations for the three months
ended March 31, 2002 and 2003
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4 | ||||||
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Statement of Stockholders’ Equity for the
three months ended March 31, 2003
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5 | ||||||
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Statements of Cash Flows for the three months
ended March 31, 2002 and 2003
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6 | ||||||
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Notes to Interim Condensed Consolidated Financial
Statements
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7 | ||||||
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Item 2.
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Management’s Discussion and Analysis of
Financial Condition and Results of Operations
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11 | |||||
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Item 3
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Quantitative and Qualitative Disclosures About
Market Risk
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20 | |||||
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Item 4
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Controls and Procedures
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20 | |||||
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PART II.
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OTHER INFORMATION
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Item 1.
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Legal Proceedings
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21 | |||||
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Item 2.
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Changes in Securities
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21 | |||||
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Item 3.
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Defaults Upon Senior Securities
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21 | |||||
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Item 4.
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Submission of Matters to a Vote of Security
Holders
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21 | |||||
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Item 5.
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Other Information
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21 | |||||
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Item 6.
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Exhibits and Reports on
Form 8-K
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21 | |||||
| SIGNATURES | 22 | ||||||
| CERTIFICATIONS | 23 | ||||||
2
PART I. FINANCIAL INFORMATION
ITEM 1. INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
METROCALL HOLDINGS, INC. AND SUBSIDIARIES
| December 31, | March 31, | |||||||||
| 2002 | 2003 | |||||||||
| ASSETS | ||||||||||
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CURRENT ASSETS:
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||||||||||
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Cash and cash equivalents
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$ | 47,530 | $ | 15,366 | ||||||
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Restricted cash
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8,516 | 10,381 | ||||||||
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Accounts receivable, less allowance for doubtful
accounts of $6,513 and $6,569
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24,280 | 21,357 | ||||||||
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Prepaid expenses and other current assets
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9,795 | 10,951 | ||||||||
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Total current assets
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90,121 | 58,055 | ||||||||
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PROPERTY AND EQUIPMENT:
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||||||||||
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Land, buildings and leasehold improvements
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3,197 | 3,209 | ||||||||
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Furniture, office equipment and vehicles
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21,297 | 21,862 | ||||||||
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Paging and plant equipment
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58,650 | 59,238 | ||||||||
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Less — Accumulated depreciation and
amortization
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(10,927 | ) | (20,346 | ) | ||||||
| 72,217 | 63,963 | |||||||||
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INTANGIBLE ASSETS, net of accumulated
amortization of approximately $1,948 and $3,772
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21,756 | 17,946 | ||||||||
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OTHER ASSETS
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5,653 | 5,906 | ||||||||
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TOTAL ASSETS
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$ | 189,747 | $ | 145,870 | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||
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CURRENT LIABILITIES:
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||||||||||
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Current maturities of long-term debt
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$ | 58,949 | $ | 10,980 | ||||||
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Accounts payable
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8,429 | 7,835 | ||||||||
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Accrued expenses and other current liabilities
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22,560 | 25,039 | ||||||||
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Deferred revenues and subscriber deposits
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15,517 | 14,616 | ||||||||
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Total current liabilities
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105,455 | 58,470 | ||||||||
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CAPITAL LEASE and other LONG TERM DEBT, less
current maturities
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20,762 | 19,391 | ||||||||
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LONG-TERM DEFERRED REVENUE AND OTHER
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13,693 | 14,431 | ||||||||
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Total liabilities
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139,910 | 92,292 | ||||||||
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COMMITMENTS AND CONTINGENCIES
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SERIES A REDEEMABLE PREFERRED STOCK, 15%
cumulative; par value $.01 per share; 8,500,000 shares
authorized; 5,992,572 shares issued and outstanding as of
December 31, 2002 and March 31, 2003 respectively, and
a liquidation preference of $62,071 and $64,367 at
December 31, 2002 and March 31, 2003, respectively
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49,122 | 52,106 | ||||||||
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STOCKHOLDERS’ EQUITY:
|
||||||||||
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Common stock, par value $.01 per share;
authorized 1,200,000 shares; 991,398 shares issued and
outstanding as of December 31, 2002 and March 31,
2003, respectively
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9 | 9 | ||||||||
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Additional paid-in capital
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— | — | ||||||||
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Unearned compensation
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(1,431 | ) | (651 | ) | ||||||
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Retained earnings
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2,137 | 2,114 | ||||||||
| 715 | 1,472 | |||||||||
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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
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$ | 189,747 | $ | 145,870 | ||||||
See notes to interim condensed consolidated financial statements.
3
METROCALL HOLDINGS, INC. AND SUBSIDIARIES
| Predecessor | Reorganized | |||||||||||
| Company | / | Company | ||||||||||
| / | ||||||||||||
| Three Months Ended | ||||||||||||
| March 31, | ||||||||||||
| 2002 | 2003 | |||||||||||
| / | ||||||||||||
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REVENUES:
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Service, rent and maintenance revenues
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$ | 102,884 | / | $ | 82,848 | |||||||
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Product sales
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9,184 | / | 4,541 | |||||||||
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Total revenues
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112,068 | / | 87,389 | |||||||||
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Net book value of products sold
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(4,851 | ) | / | (979 | ) | |||||||
| 107,217 | / | 86,410 | ||||||||||
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OPERATING EXPENSES:
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||||||||||||
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Service, rent and maintenance
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31,141 | / | 23,474 | |||||||||
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Selling and marketing
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20,676 | / | 11,982 | |||||||||
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General and administrative
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36,481 | / | 26,768 | |||||||||
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Restructuring expense
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10,097 | / | 5,726 | |||||||||
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Depreciation
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18,330 | / | 9,770 | |||||||||
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Amortization
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— | / | 1,898 | |||||||||
| 116,725 | / | 79,618 | ||||||||||
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Income/(loss) from operations
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(9,508 | ) | / | 6,792 | ||||||||
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INTEREST EXPENSE
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(19,597 | ) | / | (2,149 | ) | |||||||
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INTEREST AND OTHER INCOME (EXPENSE), NET
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(117 | ) | / | 231 | ||||||||
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INCOME/(LOSS) BEFORE INCOME TAXES
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(29,222 | ) | / | 4,874 | ||||||||
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INCOME TAX BENEFIT (PROVISION)
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— | / | (1,912 | ) | ||||||||
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Net income (loss)
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(29,222 | ) | / | 2,962 | ||||||||
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PREFERRED DIVIDENDS AND ACCRETION
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(2,807 | ) | / | (2,985 | ) | |||||||
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Loss attributable to common stockholders
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$ | (32,029 | ) | / | $ | (23 | ) | |||||
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BASIC AND DILUTED LOSS PER SHARE ATTRIBUTABLE TO
COMMON STOCKHOLDERS
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$ | (0.36 | ) | / | $ | (0.02 | ) | |||||
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Weighted-average common shares outstanding
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89,975,772 | / | 991,398 | |||||||||
See notes to interim condensed consolidated financial statements.
4
METROCALL HOLDINGS, INC. AND SUBSIDIARIES
| Common Stock | ||||||||||||||||||||||||
| Additional | ||||||||||||||||||||||||
| Shares | Par | Paid-in | Unearned | Retained | ||||||||||||||||||||
| Outstanding | Value | Capital | Compensation | Earnings | Total | |||||||||||||||||||
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BALANCE, December 31, 2002
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991,398 | $ | 9 | $ | — | $ | (1,431 | ) | $ | 2,137 | $ | 715 | ||||||||||||
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Preferred dividends and accretion
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— | — | — | — | (2,985 | ) | (2,985 | ) | ||||||||||||||||
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Amortization of unearned compensation
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— | — | — | 780 | — | 780 | ||||||||||||||||||
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Net income
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— | — | — | — | 2,962 | 2,962 | ||||||||||||||||||
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BALANCE, March 31, 2003
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991,398 | $ | 9 | $ | — | $ | (651 | ) | $ | 2,114 | $ | 1,472 | ||||||||||||
See notes to interim condensed consolidated financial statements.
5
METROCALL HOLDINGS, INC. AND SUBSIDIARIES
| Predecessor | / | Reorganized | |||||||||||
| Company | / | Company | |||||||||||
| Three Months Ended | |||||||||||||
| March 31, | |||||||||||||
| 2002 | 2003 | ||||||||||||
| / | |||||||||||||
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CASH FLOWS FROM OPERATING ACTIVITIES:
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|||||||||||||
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Net income/(loss)
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$ | (29,222 | ) | / | $ | 2,962 | |||||||
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Adjustments to reconcile net loss to net cash
provided by operating activities Depreciation and amortization
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18,331 | / | 11,668 | ||||||||||
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Deferred income taxes
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— | / | 1,912 | ||||||||||
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Amortization of unearned compensation
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— | / | 780 | ||||||||||
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Equity in loss of affiliate
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343 | / | — | ||||||||||
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Amortization of debt financing costs and debt
discount
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39 | / | — | ||||||||||
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Accretion on and issuance of PIK Notes
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— | / | 924 | ||||||||||
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Accretion on long-term debt
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— | / | 701 | ||||||||||
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Cash provided by changes in assets and
liabilities:
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|||||||||||||
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Restricted cash
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— | / | (1,865 | ) | |||||||||
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Accounts receivable
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6,151 | / | 2,923 | ||||||||||
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Prepaid expenses and other current assets
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(4,273 | ) | / | (1,157 | ) | ||||||||
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Accounts payable
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954 | / | (594 | ) | |||||||||
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Accrued interest
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16,725 | / | — | ||||||||||
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Accrued expenses and other current liabilities
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663 | / | 2,479 | ||||||||||
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Deferred revenues and subscriber deposits
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(4,468 | ) | / | (901 | ) | ||||||||
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Net cash provided by operating activities
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5,243 | / | 19,832 | ||||||||||
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CASH FLOWS FROM INVESTING ACTIVITIES:
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|||||||||||||
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Capital expenditure, net
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(11,153 | ) | / | (1,515 | ) | ||||||||
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Other
|
(85 | ) | / | (254 | ) | ||||||||
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Net cash used in investing activities
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(11,238 | ) | / | (1,769 | ) | ||||||||
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CASH FLOWS FROM FINANCING ACTIVITIES:
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|||||||||||||
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Repayment of long-term debt
|
(200 | ) | / | (50,227 | ) | ||||||||
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Net cash used in financing activities
|
(200 | ) | / | (50,227 | ) | ||||||||
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NET DECREASE IN CASH AND CASH EQUIVALENTS
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(6,195 | ) | / | (32,164 | ) | ||||||||
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CASH AND CASH EQUIVALENTS, beginning of period
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24,135 | / | 47,530 | ||||||||||
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CASH AND CASH EQUIVALENTS, end of period
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$ | 17,940 | / | $ | 15,366 | ||||||||
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SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
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Cash payments for interest
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$ | 2,777 | / | $ | 491 | ||||||||
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Cash payments for income taxes
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$ | — | / | $ | — | ||||||||
See notes to interim condensed consolidated financial statements.
6
METROCALL HOLDINGS, INC.
1. Organization and Chapter 11 Emergence
The accompanying