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 September 30, 2003
| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTS OF 1934 |
For The Transition Period from to
Commission File Number: 0-21924
METROCALL HOLDINGS, INC.
| Delaware |
54-1215634
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|
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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 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 Exchange Rule 12b-2) Yes o No 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 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 November 1, 2003 | |
| Common Stock, $.01 par value | 4,961,160 |
METROCALL HOLDINGS, INC. AND SUBSIDIARIES
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 September
30, 2003
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3 | ||||||
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Statements of Operations for the three and nine
months ended September 30, 2002 and 2003
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4 | ||||||
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Statement of Stockholders’ Equity for the
nine months ended September 30, 2003
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5 | ||||||
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Statements of Cash Flows for the nine months
ended September 30, 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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14 | |||||
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Item 3.
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Quantitative and Qualitative Disclosures About
Market Risk
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29 | |||||
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Item 4.
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Controls and Procedures
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29 | |||||
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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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30 | |||||
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Item 2.
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Changes in Securities
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30 | |||||
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Item 3.
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Defaults Upon Senior Securities
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30 | |||||
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Item 4.
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Submission of Matters to a Vote of Security
Holders
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30 | |||||
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Item 5.
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Other Information
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30 | |||||
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Item 6.
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Exhibits and Reports on Form 8-K
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30 | |||||
| SIGNATURES | 32 | ||||||
2
PART I. FINANCIAL INFORMATION
ITEM 1. INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
METROCALL HOLDINGS, INC. AND SUBSIDIARIES
| December 31, | September 30, | |||||||||
| 2002 | 2003 | |||||||||
| ASSETS | ||||||||||
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CURRENT ASSETS:
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Cash and cash equivalents
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$ | 47,530 | $ | 13,716 | ||||||
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Restricted cash
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8,516 | 2,659 | ||||||||
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Accounts receivable, less allowance for doubtful
accounts of $6,513 and $5,642 as of December 31, 2002 and
September 30, 2003, respectively
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24,280 | 17,345 | ||||||||
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Prepaid expenses and other current assets
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9,795 | 8,282 | ||||||||
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Total current assets
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90,121 | 42,002 | ||||||||
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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 | 1,935 | ||||||||
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Furniture, office equipment and vehicles
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21,297 | 22,631 | ||||||||
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Paging and plant equipment
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58,650 | 53,213 | ||||||||
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Less — Accumulated depreciation and
amortization
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(10,927 | ) | (28,590 | ) | ||||||
| 72,217 | 49,189 | |||||||||
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INTANGIBLE ASSETS, net of accumulated
amortization of approximately $1,948 and $5,940 as of
December 31, 2002 and September 30, 2003, respectively
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21,756 | 4,790 | ||||||||
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OTHER ASSETS
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5,653 | 4,703 | ||||||||
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TOTAL ASSETS
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$ | 189,747 | $ | 100,684 | ||||||
| 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 | $ | 1,042 | ||||||
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Accounts payable
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8,429 | 6,769 | ||||||||
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Accrued expenses and other current liabilities
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22,560 | 16,875 | ||||||||
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Deferred revenues and subscriber deposits
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15,517 | 12,819 | ||||||||
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Total current liabilities
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105,455 | 37,505 | ||||||||
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CAPITAL LEASE and other LONG-TERM DEBT, less
current maturities
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20,762 | 65 | ||||||||
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OTHER LONG-TERM LIABILITIES
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13,693 | 13,394 | ||||||||
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SERIES A REDEEMABLE PREFERRED STOCK, 15%
cumulative; par value $.01 per share; 8,500,000 shares
authorized; 4,196,187 shares issued and outstanding as of
September 30, 2003 with a liquidation preference of $46,777
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— | 39,110 | ||||||||
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Total liabilities
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139,910 | 90,074 | ||||||||
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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 with a liquidation preference of $62,071
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49,122 | — | ||||||||
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STOCKHOLDERS’ EQUITY:
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Common stock, par value $.01 per share;
authorized 7,500,000 shares; 4,956,990 and 4,961,160 shares
issued and outstanding as of December 31, 2002 and
September 30, 2003, respectively
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9 | 9 | ||||||||
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Additional paid-in capital
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— | 138 | ||||||||
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Unearned compensation
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(1,431 | ) | (523 | ) | ||||||
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Retained earnings
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2,137 | 10,986 | ||||||||
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Total stockholders’ equity
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715 | 10,610 | ||||||||
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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
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$ | 189,747 | $ | 100,684 | ||||||
See notes to interim condensed consolidated financial statements.
3
METROCALL HOLDINGS, INC. AND SUBSIDIARIES
STATEMENTS OF OPERATIONS
| Predecessor | / | Reorganized | Predecessor | / | Reorganized | |||||||||||||||||
| Company | / | Company | Company | / | Company | |||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||||
| 2002 | 2003 | 2002 | 2003 | |||||||||||||||||||
| / | / | |||||||||||||||||||||
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REVENUES:
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/ | / | ||||||||||||||||||||
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Service, rent and maintenance revenues
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$ | 92,395 | / | $ | 75,459 | $ | 294,003 | / | $ | 237,260 | ||||||||||||
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Product sales
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6,833 | / | 4,155 | 23,777 | / | 12,528 | ||||||||||||||||
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Total revenues
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99,228 | / | 79,614 | 317,780 | / | 249,788 | ||||||||||||||||
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Net book value of products sold
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(3,675 | ) | / | (1,212 | ) | (14,176 | ) | / | (3,143 | ) | ||||||||||||
| 95,553 | / | 78,402 | 303,604 | / | 246,645 | |||||||||||||||||
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OPERATING EXPENSES:
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/ | / | ||||||||||||||||||||
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Service, rent and maintenance
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28,676 | / | 20,877 | 88,835 | / | 67,681 | ||||||||||||||||
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Selling and marketing
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12,778 | / | 9,174 | 50,064 | / | 31,182 | ||||||||||||||||
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General and administrative
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31,659 | / | 21,970 | 100,744 | / | 72,156 | ||||||||||||||||
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Restructuring expenses
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5,951 | / | 521 | 18,505 | / | 6,247 | ||||||||||||||||
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Depreciation and amortization
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13,512 | / | 6,432 | 49,332 | / | 29,114 | ||||||||||||||||
| 92,576 | / | 58,974 | 307,480 | / | 206,380 | |||||||||||||||||
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Income/(loss) from operations
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2,977 | / | 19,428 | (3,876 | ) | / | 40,265 | |||||||||||||||
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INTEREST EXPENSE
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(2,659 | ) | / | (805 | ) | (39,364 | ) | / | (6,703 | ) | ||||||||||||
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INTEREST EXPENSE — DIVIDENDS AND
ACCRETION OF SERIES A PREFERRED
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— | / | (6,413 | ) | — | / | (6,413 | ) | ||||||||||||||
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INTEREST AND OTHER INCOME (EXPENSE), NET
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594 | / | 97 | (1,036 | ) | / | 329 | |||||||||||||||
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INCOME/(LOSS) BEFORE INCOME TAXES
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912 | / | 12,307 | (44,276 | ) | / | 27,478 | |||||||||||||||
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INCOME TAX PROVISION
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— | / | (6,725 | ) | — | / | (12,537 | ) | ||||||||||||||
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Net income (loss)
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912 | / | 5,582 | (44,276 | ) | / | 14,941 | |||||||||||||||
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PREFERRED DIVIDENDS AND ACCRETION
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— | / | — | (4,855 | ) | / | (6,092 | ) | ||||||||||||||
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REORGANIZATION ITEM — ACCRETION OF
LIQUIDATION PREFERENCE
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— | / | — | (4,715 | ) | / | — | |||||||||||||||
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Income/(loss) attributable to common stockholders
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$ | 912 | / | $ | 5,582 | $ | (53,846 | ) | / | $ | 8,849 | |||||||||||
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BASIC INCOME/(LOSS) PER SHARE ATTRIBUTABLE TO
COMMON STOCKHOLDERS
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$ | 0.01 | / | $ | 1.13 | $ | (0.60 | ) | / | $ | 1.78 | |||||||||||
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DILUTED INCOME/(LOSS) PER SHARE ATTRIBUTABLE TO
COMMON STOCKHOLDERS
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$ | 0.01 | / | $ | 1.08 | $ | (0.60 | ) | / | $ | 1.75 | |||||||||||
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Basic weighted-average common shares outstanding
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89,975,772 | / | 4,960,200 | 89,975,772 | / | 4,958,597 | ||||||||||||||||
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Diluted weighted-average common shares outstanding
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89,975,772 | / | 5,161,502 | 89,975,772 | / | 5,054,987 | ||||||||||||||||
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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4,956,990 | $ | 9 | $ | — | $ | (1,431 | ) | $ | 2,137 | $ | 715 | ||||||||||||
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Issuance of common stock
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4,170 | — | — | — | — | — | ||||||||||||||||||
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Compensation related to employee stock option
grants
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— | — | 138 | — | — | 138 | ||||||||||||||||||
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Amortization of unearned compensation
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— | — | — | 908 | — | 908 | ||||||||||||||||||
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Preferred dividends and accretion
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— | — | — | — | (6,092 | ) | (6,092 | ) | ||||||||||||||||
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Net income
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— | — | — | — | 14,941 | 14,941 | ||||||||||||||||||
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BALANCE, September 30, 2003
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4,961,160 | $ | 9 | $ | 138 | $ | (523 | ) | $ | 10,986 | $ | 10,610 | ||||||||||||
See notes to interim condensed consolidated financial statements.
5
METROCALL HOLDINGS, INC. AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS
| Predecessor | Reorganized | ||||||||||||
| Company | / | Company | |||||||||||
| / | |||||||||||||
| Nine Months Ended | |||||||||||||
| September 30, | |||||||||||||
| 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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$ | (44,276 | ) | / | $ | 14,941 | |||||||
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Adjustments to reconcile net income/(loss) to net
cash provided by operating activities
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/ / |
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Depreciation and amortization
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49,332 | / | 29,114 | ||||||||||
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Deferred income taxes
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— | / | 12,537 | ||||||||||
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Amortization of unearned compensation
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— | / | 908 | ||||||||||
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Equity in loss of affiliate
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1,246 | / | — | ||||||||||
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Amortization of debt financing costs and debt
discount
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1,095 | / | — | ||||||||||
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Stock option compensation
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— | / | |||||||||||