FORM 10-Q

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


              [X] Quarterly Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934


                  For the Quarterly Period Ended: June 30, 1997

                                       or

              [ ] Transition Report Pursuant to Section 13 or 15(d)
                     Of the Securities Exchange Act of 1934

                         Commission File Number: 0-16479
       

                         PEOPLES TELEPHONE COMPANY, INC.
             (Exact name of registrant as specified in its charter)


            NEW YORK                            13-2626435 
 (State or other jurisdiction of              (I.R.S. Employer
  incorporation or organization)                   I.D. No.) 


                 2300 NORTHWEST 89TH PLACE, MIAMI, FLORIDA 33172
               (Address of principal executive offices) (Zip Code)
 
                                 (305) 593-9667
              (Registrant's telephone number, including area code)
                               -------------------

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 and (2) has been subject to such filing requirements for
the past 90 days. Yes X No

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest  practicable  date. Common Stock, $.01 Par Value,
outstanding at August 11, 1997: 16,195,434 shares.

<PAGE>
<TABLE>
<CAPTION>

Part I. FINANCIAL INFORMATION 
Item 1. FINANCIAL STATEMENTS

                         PEOPLES TELEPHONE COMPANY, INC.
                           CONSOLIDATED BALANCE SHEET
                                 (in thousands)


                                                  June 30,   December 31,
             Assets                                 1997         1996    
                                                 ----------  -------------
                                                (Unaudited)                  
<S>                                             <C>          <C>
Current assets
  Cash and cash equivalents .................    $  7,424    $  12,556
  Accounts receivable, net of allowance 
   for doubtful accounts of $4,318 and $4,361.     18,732       11,598 
  Inventory ..................................      1,852        2,412
  Prepaid expenses  and other current assets .      2,855        2,665
                                                 ----------  ------------- 
      Total current assets ...................     30,863       29,231
Property and equipment, net ..................     59,209       65,067
Location contracts, net ......................     26,743       27,465
Goodwill, net ................................      4,780        5,660
Intangible assets, net .......................      1,346        1,768
Other assets, net ............................      5,809        6,610
Deferred income taxes ........................      3,407        3,407
Investments ..................................      1,993        1,662
                                                ----------  -------------  
     Total assets ............................   $134,150    $ 140,870
                                                ==========  =============
     Liabilities and Shareholders' Equity

Current liabilities
  Notes payable and current maturities of long
   -term debt ................................   $    582    $     548
  Current portion of obligations under capital
   leases ....................................        722          952
  Accounts payable and accrued expenses ......     20,697       19,240
  Accrued interest payable ...................      5,705        5,697
  Taxes payable ..............................      2,386        2,418
                                                ----------  -------------  
     Total current liabilities ...............     30,092       28,855
Notes payable and long-term debt .............    100,338      100,657
Obligations under capital leases .............        337          573
                                                ----------  -------------  
     Total liabilities .......................    130,767      130,085
 Commitments and contingencies ...............      --           --   
 Preferred Stock
  Cumulative convertible preferred stock, 
  Series C, $.01 par value,160 shares 
  authorized; 150 shares issued and outstanding    13,616       13,556
  Preferred stock dividends payable............     2,047        1,523
                                                ----------  -------------  
      Total preferred stock ...................    15,663       15,079
Shareholders' equity
  Preferred stock; $.01 par value; 4,240 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; 75,000 shares 
    authorized;16,195 shares issued and 
    outstanding ...............................       162          162
  Capital in excess of par value ..............    59,870       60,453
  Accumulated deficit .........................   (70,287)     (63,438)
  Unrealized loss on investments ..............    (2,025)      (1,471)
                                                ----------  -------------  
     Total shareholders' deficit ..............   (12,280)      (4,294)
                                                ----------  -------------  
     Total liabilities and shareholders' equity  $134,150     $140,870
                                                ==========  =============
</TABLE>

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

                                       2

<PAGE>
<TABLE>
<CAPTION>
                         PEOPLES TELEPHONE COMPANY, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                (unaudited, in thousands, except per share data)


                                               For the three months ended                                        
                                                        June  30,      
                                               ---------------------------
                                                 1997              1996         
                                               ---------        ----------
<S>                                           <C>              <C>
Revenues
  Coin calls ...............................   $ 19,293         $ 19,995
  Non-coin calls ...........................     13,702           11,964
                                               ---------        ----------
      Total revenues .......................     32,995           31,959

Costs and expenses
  Telephone charges ........................      8,994            9,883
  Commissions ..............................      9,156            8,846
  Field service and collection .............      5,188            5,020
  Selling, general and administrative ......      3,071            3,265
  Depreciation and amortization ............      6,257            5,994
  Other ....................................       --               --   
                                               ---------        ----------
     Total costs and expenses ..............     32,666           33,008
                                               ---------        ----------
Operating income (loss)  ...................        329           (1,049)

Other (income) and expenses:
  Interest expense, net ....................      3,280            3,130
 (Gain) loss on disposal of prepaid calling 
   card and International telephone centers.       --               --   
                                               ---------        ----------
     Total other (income) and expenses, net.      3,280            3,130
                                               ---------        ----------
Loss before income taxes ....................    (2,951)          (4,179)
Benefit from income taxes ...................      --               --   
Net loss ....................................  $ (2,951)        $ (4,179)
                                               =========        ========== 
Earnings (loss) per common share both primary
   and fully diluted ........................  $  (0.20)        $  (0.28)
                                               =========        ========== 
Weighted average common and common equivalent 
  shares outstanding ........................    16,195           16,188
                                               =========        ========== 
</TABLE>

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.


                                       3
<PAGE>
<TABLE>
<CAPTION>
                         PEOPLES TELEPHONE COMPANY, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                (unaudited, in thousands, except per share data)

                                                For the six months ended 
                                                        June  30,      
                                               ---------------------------
                                                 1997              1996         
                                               ---------        ----------
<S>                                           <C>              <C>
Revenues
  Coin calls ................................  $ 37,233          $ 38,136
  Non-coin calls ............................    27,370            24,319
                                               ---------        ----------
      Total revenues ........................    64,603            62,455

Costs and expenses
  Telephone charges .........................    18,148            19,746
  Commissions ...............................    17,920            17,113
  Field service and collection ..............    10,200             9,811
  Selling, general and administrative .......     6,144             6,245
  Depreciation and amortization .............    12,412            11,804
  Other .....................................      --                 550
                                               ---------        ----------
     Total costs and expenses ...............    64,824            65,269
                                               ---------        ----------
Operating income (loss)......................      (221)           (2,814)

Other (income) and expenses:
  Interest expense, net .....................     6,628             6,410
 (Gain) loss on disposal of prepaid calling 
    card and international telephone centers.      --                (545)
                                               ---------        ----------
     Total other (income) and expenses, net..     6,628             5,865
                                               ---------        ----------
Loss before income taxes ....................    (6,849)           (8,679)
Benefit from income taxes ...................      --                --   
                                               ---------        ----------
Net loss ....................................  $ (6,849)         $ (8,679)
                                               =========        ========== 
Earnings (loss) per common share both primary
   and fully diluted ........................  $  (0.46)         $  (0.57)
                                               =========        ========== 
Weighted average common and common equivalent 
 shares outstanding .........................    16,195            16,181
                                               =========        ========== 
</TABLE>

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.



                                       4
<PAGE>
<TABLE>
<CAPTION>
                         PEOPLES TELEPHONE COMPANY, INC.
                      STATEMENTS OF CONSOLIDATED CASH FLOWS
                            (Unaudited, in thousands)

                                                For the six months ended 
                                                        June  30,      
                                               ---------------------------
                                                 1997              1996         
                                               ---------        ----------
<S>                                           <C>               <C>
Cash flow from operating activities:
  Net loss ..................................  $ (6,849)        $ (8,679)
  Adjustments to reconcile net loss to net 
      cash used by operating activities:
      Depreciation and amortization .........    12,412           11,804
      Amortization of deferred financing costs      510              409
      Gain on sale of assets ................     --                (545)
      Change in assets and liabilities:
           Increase in accounts receivable...    (6,909)          (1,580)
           Decrease in inventory.............       561              503
           Increase in prepaid expenses 
            and other current assets..........     (190)             (23)
           (Increase) decrease in other assets     (167)             219
           Increase in accounts payable
               and accrued expenses...........    1,457            1,092
           Increase in accrued interest.......        8               93
           (Decrease) increase in taxes payable     (31)             488
                                               ---------        ----------
Net cash provided  by  operating activities...      802            3,781

Cash flow from investing activities:
    Payments for acquisitions and certain 
    contracts.................................   (2,057)          (2,384)
    Property and equipment additions..........   (2,368)          (1,873)
    Proceeds from sale of assets..............      233            1,580
    Increase in investments...................     (886)              31  
                                               ---------        ----------
Net cash used in investing activities.........   (5,078)          (2,646)

Cash flow from financing activities:
    Net payments under note payable to bank...     (286)            (294)
    Principal payments under capital lease 
      obligations.............................     (571)            (571)
    Exercise of stock options and warrants....        1            --   
                                               ---------        ----------
Net cash used in  financing activities........     (856)            (865)

Net decrease in cash and cash equivalents.....   (5,132)             270
Cash and cash equivalents at beginning of 
  period......................................   12,556           12,366
                                               ---------        ----------
Cash and cash equivalents at end of period....  $ 7,424         $ 12,636
                                               =========        ========== 
</TABLE>

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.


                                       5
<PAGE>

                         PEOPLES TELEPHONE COMPANY, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         JUNE 30, 1997 AND JUNE 30, 1996
                                   (unaudited)

NOTE 1 - UNAUDITED INTERIM INFORMATION
 
The accompanying interim consolidated financial data are unaudited;  however, in
the opinion of management,  the interim data include all  adjustments  necessary
for a fair presentation of the results for the interim periods.  The preparation
of  financial  statements  in  conformity  with  generally  accepted  accounting
principles requires management to make estimates and assumptions that affect the
reported  amounts  of  assets  and  liabilities  at the  date  of the  financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.

The results of  operations  for the three  months and six months  ended June 30,
1997 are not  necessarily  indicative of the results to be expected for the year
ending December 31, 1997.

The  interim  unaudited  consolidated  financial  statements  should  be read in
conjunction with the audited consolidated financial statements and notes thereto
for the year ended  December 31, 1996 as set forth in the Company's  1996 Annual
Report on Form 10-K.

NOTE 2 - INVESTMENTS

Investments in debt  securities  and equity  securities in which the Company has
less than a twenty percent ownership interest are generally  accounted for under
the cost method in accordance  with  Statement No. 115 ("SFAS 115"),  Accounting
for  Certain  Investments  in  Debt  and  Equity  Securities.  Accordingly,  the
Company's investment in Global Telecommunications Solutions, Inc. ("GTS"), which
is classified as "available for sale," is reported at fair value with unrealized
gains or losses,  net of tax, recorded as a separate  component of Shareholders'
Equity.  The fair value of the Company's  investment in GTS common stock at June
30, 1997 was  approximately  $1.1  million  which is net of  approximately  $2.0
million of unrealized investment losses.

At June 30, 1997 the  Company  had an  investment  in debt  securities  which is
classified as  "held-to-maturity"  and stated at amortized cost of approximately
$0.9 million.

NOTE 3 - EARNINGS PER SHARE

The treasury  stock method was used to determine the dilutive  effect of options
and  warrants  on  earnings  per share  data.  For 1997 and 1996,  common  stock
equivalents were excluded since the effect would be anti-dilutive.

See primary and fully diluted  earnings  (loss) per common share  calculation as
summarized on page 8.

NOTE 4 - LONG-TERM DEBT
 
During March 1997,  the Company  executed an amendment to the Fourth Amended and
Restated Loan and Security  Agreement  increasing  the credit  facility to $20.0
million.  The interest rate on balances  outstanding  under the credit  facility
varies based upon the leverage ratio maintained by the Company.  All outstanding
principal  balances  are due in full in 2000.  Interest  is payable  monthly for
loans based on the prime rate and quarterly for loans based on the LIBOR rate. A
commitment fee of 1/2 of 1% is charged on the aggregate  daily unused balance of
the credit facility under the Loan  Agreement.  The Loan Agreement is secured by
substantially  all of the Company assets and contains  certain  covenants which,
among other things, require the Company to maintain certain cash flow levels and
interest  coverage  ratios and places  certain  restrictions  on the  payment of
dividends.




                                       6
<PAGE>

At June 30, 1997,  the Company was in  compliance  with the covenants and had no
amounts borrowed under the facility.

NOTE 5 - SHAREHOLDERS' EQUITY

In March 1997, the Company's  shareholders approved an increase in the number of
authorized shares of the Company's Preferred Stock and Common Stock to 5 million
and 75 million shares, respectively.

NOTE 6 - INCOME TAXES

For the  quarter  and six  months  ended June 30,  1997,  the  Company  recorded
deferred tax assets and deferred tax asset valuation allowances of approximately
$1.1 million and $2.6 million, respectively.  Valuation allowances were provided
to reduce the deferred tax assets to a level which,  more likely than not,  will
be realized.






                                       7
<PAGE>
<TABLE>
<CAPTION>

                         PEOPLES TELEPHONE COMPANY, INC.
            COMPUTATION OF PRIMARY AND FULLY-DILUTED EARNINGS (LOSS)
                                PER COMMON SHARE
                (unaudited, in thousands, except per share data)

                                                        For The
                                                   Three Months Ended
                                                        June 30,
                                                   -------------------
                                                     1997       1996
                                                   --------   --------
<S>                                               <C>         <C>      
Net loss ..................................       $ (2,951)   $ (4,179)

Less:
 Cumulative preferred stock dividends......           (263)       (263)
                                                   --------   ---------
   Net loss for per share computations.....       $ (3,214)   $ (4,442)
                                                  =========   ========= 

Number of shares:
Weighted average shares used in the per 
 share computation.........................         16,195      16,188
                                                  =========   ========= 
Primary loss per common and common equivalent 
 share.....................................       $   (.20)   $   (.28)
                                                  =========   ========= 
</TABLE>
<TABLE>
<CAPTION>
                                                         For The
                                                    Six Months Ended
                                                        June 30,
                                                   -------------------
                                                     1997       1996
                                                   --------   --------
<S>                                               <C>         <C>      
Net loss ..................................       $ (6,849)   $ (8,679)

Less:
 Cumulative preferred stock dividends.......          (525)       (525)
                                                   --------   ---------
   Net loss for per share computations......      $ (7,374)   $ (9,204)
                                                  =========   ========= 
Number of shares:
Weighted average shares used in the per 
 share computation..........................        16,195      16,181
                                                  =========   ========= 
Fully diluted loss per common and common 
 equivalent share...........................      $   (.46)   $   (.57)
                                                  =========   ========= 
</TABLE>

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.



                                       8
<PAGE>


ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

     The following  discussion and analysis  compares the quarter and six months
ended June 30, 1997 to the quarter and six months ended June 30, 1996 and should
be read in  conjunction  with the  consolidated  financial  statements and notes
thereto  appearing   elsewhere  in  this  Form  10-Q  and  in  conjunction  with
Management's  Discussion  and Analysis  appearing in the Company's Form 10-K for
the year ended December 31, 1996.

     Statements in Management's Discussion and Analysis relating to matters that
are not historical facts are forward-looking  statements.  Such  forward-looking
statements  involve  known and unknown  risks,  uncertainties  and other factors
which may cause the  actual  results,  performance  or  achievements  of Peoples
Telephone  Company,  Inc. to be materially  different  from any future  results,
performance  or  achievements  expressed  or  implied  by  such  forward-looking
statements.  Such  known and  unknown  risks,  uncertainties  and other  factors
include,  but are not  limited  to, the  following:  the impact of  competition,
especially  in a  deregulated  environment,  uncertainties  with  respect to the
implementation and effect of the  Telecommunications  Act of 1996, including any
new rule making by the Federal Communications  Commission ("FCC") in response to
a court  order  issued  as a result  of  litigation  which  sought  to modify or
overturn the FCC's order implementing such act, or portions thereof, the ongoing
ability  of the  Company to deploy its  phones in  favorable  locations  and the
Company's  ability to  continue  to  implement  operational  improvements.  Such
factors and others are set forth more fully in the Company's  1996 Annual Report
on Form 10-K,  Quarterly  Reports on Form 10-Q,  Current Reports on Form 8-K and
the consolidated  financial  statements and notes thereto appearing elsewhere in
this report.
    
Revenues
 
     The Company  primarily  derives its revenues from coin and non-coin  calls.
Coin revenue is generated exclusively from calls made by depositing coins in the
Company's public pay telephones.  Coin revenue  represented  approximately 58.5%
and 62.6% of total  consolidated  revenues for the quarters  ended June 30, 1997
and 1996 and 57.6% and 61.1% of total revenues for the six months ended June 30,
1997 and 1996, respectively. Coin revenue decreased 3.5% to $19.3 million during
the  quarter  ended  June 30,  1997 and  decreased  approximately  2.4% to $37.2
million for the six months ended June 30, 1997,  as compared to the same periods
in  1996.  The  Company's  average  installed  public  pay  telephone  base  was
approximately  38,650  phones and 38,300  phones for the six month periods ended
June 30,  1997  and  1996,  respectively.  Coin  revenue  on a per  phone  basis
decreased  by 4.9% and 3.2% for the quarter and six months  ended June 30, 1997,
respectively, as compared to the same periods in 1996. The Company believes that
the decrease can be attributed  to, among other things,  the increased  usage of
alternative  methods of calling such as long distance carrier access code calls,
(800) subscriber calls and prepaid calling card calls,  increased  deployment of
public pay  telephones  and the use of wireless  technologies.  The Company also
believes that these  decreases  may be offset,  over time, by increases in local
coin call rates as a result of potential regulatory changes,  although there can
be no assurances.

     On November 8, 1996, the FCC issued its final order on reconsideration (the
"Order") setting forth and affirming regulations implementing Section 276 of the
federal Telecommunications Act of 1996, previously issued on September 20, 1996.
Based upon a July 1, 1997 ruling by the United  States  Court of Appeals for the
District of Columbia  ("Appeals  Court")  certain  provisions  of the Order were
upheld while others were remanded to the FCC for further  proceedings and may be
subject to change upon  further  review by the FCC.  See  "Business - Public Pay
Telephone  Industry  Overview"  and  "Business -  Regulation"  appearing  in the
Company's  Form 10-K for the year ended December 31, 1996 and its Current Report
on Form 8-K dated July 10,  1997.  The  regulations  in the Order,  among  other
things,  set forth a plan for the  deregulation  of local coin calling  rates by
October 1997. This portion of the Order,  which was upheld by the Appeals Court,
also allows state  regulators to request  modification  of or exemption from the
coin rate deregulation upon a detailed showing in support of such request by the
state. To date no such requests have been filed by the states.  Although neither
the Company nor the industry can predict exactly what will happen in such a




                                       9


<PAGE>

deregulated  environment,  trends  indicate  that there  should be a move by the
public pay  telephone  operators  toward  increased  local coin calling rates in
states where  deregulation is  implemented.  This trend is evidenced by the fact
that five states  (Iowa,  Nebraska,  Wyoming,  Michigan  and South  Dakota) have
deregulated  local coin  calling  rates and four of those  five  states now have
local coin calling rates of $0.35. In addition, Illinois and Wisconsin, although
still under  regulation,  have also increased  their local coin calling rates to
$0.35  through  approval  of  rate/tariff  applications  filed by pay  telephone
operators in such states.

     Non-coin  revenue is derived from  calling  card calls,  credit card calls,
collect calls and third-party  billed calls placed from the Company's public pay
telephones and inmate telephones.  The Company currently uses AT&T and Sprint to
act as its primary national operator service providers. When calls are completed
through the  third-party  operator  service  provider,  the  Company  records as
revenue the amount it receives from the provider  which  represents a negotiated
percentage of the total amount the caller pays for the call.  In May 1996,  AT&T
began paying a specified per call amount for  interLATA  (800) dial around calls
as opposed to a percentage of the revenue  generated by those calls. The Company
estimates that the impact on non-coin  revenue of the change in the compensation
structure under the AT&T contract was a decrease of  approximately  $0.5 million
and $1.9  million  for the three  months  and six months  ended  June 30,  1997,
respectively as compared to the same periods of the prior year.

     In  addition to the change in  compensation  under the AT&T  contract,  the
Company is  continuing  to  experience a shift in call traffic from 0+/0- calls,
for which the Company  receives a percentage  of the revenue  generated by those
calls, to access code calls for which the Company receives a flat rate per phone
or per  call  compensation  amount.  Due  to  continued  aggressive  advertising
campaigns by long-distance companies promoting the use of access code calls, the
Company  believes  that the  decrease in non-coin  revenue due to the changes in
call traffic patterns is likely to continue. These decreases in non-coin revenue
are currently being offset by changes in the amount of compensation  received by
the Company for access code calls as well as (800) subscriber calls, as required
under the Order. The Order currently mandates dial around compensation to public
pay telephone providers for both types of calls at a flat-rate of $45.85 per pay
telephone per month  beginning  November 6, 1996. This flat rate is scheduled to
be effective  through October 1997, at which time,  compensation will begin on a
per call basis at a rate of $0.35 per call or such other rate  negotiated by the
pay  telephone  provider and the  carriers.  The portion of the Order related to
dial-around  compensation was remanded to the FCC for further review of rate and
structure  and may be subject  to change.  The  Company  believes  that there is
sufficient  industry  information  available to justify the current  dial-around
rate and structure, although there can be no assurances.

     Non-coin  revenue  represented  approximately  41.5 % and  37.4%  of  total
consolidated   revenues  for  the  quarters   ended  June  30,  1997  and  1996,
respectively.  For the quarter ended June 30, 1997, revenues from non-coin calls
increased 14.5% to  approximately  $13.7 million,  compared to the quarter ended
June 30, 1996. For the six months ended June 30, 1997 and 1996 non-coin revenues
were  approximately  $27.4  million  and  $24.3  million,  respectively.   These
increases were primarily  attributable to the increase in compensation  received
for dial-around calls as a result of the implementation of the Order,  partially
offset by (i) the change in the Company's  compensation structure under the AT&T
contract discussed above, (ii) the shifting of call traffic discussed above, and
(iii) the  decrease  in the number of inmate  telephone  lines  operated  by the
Company.  During the six month period ended June 30, 1997, the Company  operated
an  average  of   approximately   1,660  inmate   telephone  lines  compared  to
approximately 2,110 during the same period of 1996.

    Operating Expenses
 
     Operating  expenses include telephone charges,  commissions,  field service
and  collection  expenses  and  selling,  general and  administrative  expenses.
Telephone  charges consist of local line charges paid to Local Exchange Carriers



                                       10

                                       
<PAGE>

which  include  the costs of basic  service and  transport  of local coin calls,
long-distance transmission charges and network costs and billing, collection and
validation  costs.   Commissions  represent  payments  to  property  owners  and
correctional  facilities  for  revenues  generated by the  Company's  telephones
located on their properties. Field service and collection expenses represent the
costs of servicing and maintaining the telephones on an ongoing basis,  costs of
collecting  coin  from the  telephones  and  other  related  operational  costs.
Selling,  general and  administrative  expenses primarily consist of payroll and
related costs,  legal and other  professional  fees,  promotion and  advertising
expenses, property, gross receipts and certain other taxes, corporate travel and
entertainment  and  various  other  expenses.   Total  operating  expenses  were
approximately  80.0% and 84.5% of total  consolidated  revenues for the quarters
ended June 30, 1997 and 1996,  respectively.  For the six months  ended June 30,
1997 total operating expenses were 81.1% of the total  consolidated  revenues as
compared to 84.7% for the same period in 1996.

     Telephone charges decreased as a percentage of total consolidated  revenues
to 27.3% for the  quarter  ended June 30,  1997,  compared to 30.9% for the same
period  in 1996.  For the six  months  ended  June 30,  1997 and 1996  telephone
charges were 28.1% and 31.6% of total consolidated revenues,  respectively.  The
decrease in telephone charges as a percentage of total consolidated  revenue can
be  primarily  attributed  to  the  increase  in  non-coin  revenue  related  to
dial-around  compensation  earned in 1997 for  which no  telephone  charges  are
incurred.  In addition,  the Company continues to experience decreased telephone
charges as a result of regulatory  changes and emerging  competition  within the
local/intraLATA service market.

     Commissions  as a percentage of total  consolidated  revenues for the three
months ended June 30, 1997 of approximately 27.8% remained relatively consistent
as compared  to 27.7% for the same period of the prior year.  For the six months
ended June 30, 1997 and 1996,  commissions were approximately 27.7% and 27.4% of
total consolidated  revenues  respectively.  Higher commission rates for new and
renewed contracts due to increasing  competition in the public pay telephone and
inmate telephone markets were partially offset by lower average commission rates
paid on certain non-coin revenue sources.
 
     Field  service and  collection  expenses  increased  approximately  3.3% to
approximately   $5.2  million  for  the  quarter  and   approximately   4.0%  to
approximately  $10.2 million for the six months ended June 30, 1997, as compared
to the same  periods  in 1996.  This  increase  was  primarily  attributable  to
additional  costs incurred for the addition of certain key operations  employees
who are needed to implement certain  initiatives which are intended to result in
achieving further operational efficiencies.  Selling, general and administrative
expenses decreased approximately 5.9 % to $3.1 million for the second quarter of
1997 as compared to the same period in 1996.  For the six months  ended June 30,
1997, selling,  general and administrative expenses decreased approximately 1.6%
to  $  6.1  million  as  compared  to  the  prior  year.  Selling,  general  and
administrative  expense  reductions  are  primarily  the result of certain  cost
saving efforts and temporary headcount decreases.

Depreciation and Amortization
 
     Depreciation is based on the cost of the telephones,  booths, pedestals and
other enclosures,  related installation costs and line  interconnection  charges
and is calculated  on a  straight-line  method using a ten-year  useful life for
public  pay  telephones  and a  five-year  useful  life for  inmate  telephones.
Amortization  is  primarily  based  on  acquisition  costs  including   location
contracts,  goodwill  and  non-competition  provisions  and is  calculated  on a
straight-line  method using  estimated  useful lives ranging from five to twenty
years.  Depreciation and amortization  increased to $6.3 million for the quarter
ended June 30, 1997,  compared to $6.0 million for the same period in 1996.  For
the six  months  ended June 30,  1997 and 1996,  depreciation  and  amortization
expense was approximately $12.4 million and $11.8 million,  respectively.  These
increases are primarily attributable to additional  amortization expense related
to acquisition and renewal costs of location contracts.



                                       11

                                       
<PAGE>

Other

     Other expense for the six months ended June 30, 1996 includes approximately
$0.6 million of severance  obligations incurred under employment agreements with
certain executive officers.

Operating Income (Loss)

     For the three months ended June 30, 1997 the Company had  operating  income
of  approximately  $0.3  million as  compared  to $(1.0)  million for the second
quarter of 1996.  For the six  months  ended  June 30,  1997 and 1996  operating
losses were $(0.2) million and $(2.8) million, respectively.

Interest Expense, net
 
     For the second quarter of 1997, net interest expense was approximately $3.3
million as compared to $3.1 million in the same  quarter in 1996.  For the first
six  months  of 1997,  net  interest  expense  increased  approximately  3.4% to
approximately  $6.6  million  as  compared  to the first six months of the prior
year. The increase in net interest expense was due primarily to the reduction of
interest income on cash balances and certain notes receivable.

Gain on Disposal of Prepaid Calling Card and International Telephone Centers

     The six months  ended June 30, 1996  includes a gain on disposal of prepaid
calling card and international  telephone centers of approximately  $0.3 million
received in connection  with the sale of the Company's  international  telephone
center operations and approximately  $0.3 million  recognized in connection with
the merger of Global  Link  Teleco  Corporation  and  Global  Telecommunications
Solutions, Inc.

Benefit from Income Taxes
 
     The Company  recorded  valuation  allowances  for 100% of the  deferred tax
assets generated from operating losses. The Company recorded deferred tax assets
and deferred tax asset valuation  allowances of  approximately  $1.1 million and
$2.6 million for the three and six months ended June 30, 1997.

Net Loss
 
     The Company had consolidated  net losses of approximately  $3.0 million and
$6.8 million for the three  months and six months ended June 30, 1997,  compared
to consolidated  net losses of  approximately  $4.2 million and $8.7 million for
the same periods in 1996.

Earnings Before Interest, Taxes, Depreciation and Amortization

     EBITDA is not presented as an alternative to operating results or cash flow
from  operations  as  determined  by Generally  Accepted  Accounting  Principles
("GAAP"), but rather to provide additional information related to the ability of
the Company to meet current  trade  obligations  and debt service  requirements.
EBITDA  should not be  considered  in  isolation  from,  or  construed as having
greater  importance than, GAAP operating income or cash flows from operations as
a measure of an entity's performance.

     EBITDA from continuing  operations was  approximately  $6.6 million for the
quarter  ended June 30,  1997,  compared to $4.9  million for the same period in
1996.  EBITDA for the six months  ended June 30,  1997 was  approximately  $12.2
million,  compared to $9.5  million  for the same period in the prior year.  The
increases in EBITDA are attributable to the net impact of increased  dial-around
compensation,  partially  offset by the net  effect of:  (i)  decreases  in coin
revenue;  (ii) changes in non-coin calling  patterns and decreased  compensation
received  under  the AT&T  contract,  and (iii) the  decrease  in the  Company's
installed  base of inmate  telephone  lines,  as noted above.




                                       12


                                       
<PAGE>

Liquidity  and Capital Resources
 
     During the second  quarter of 1997,  the Company  continued  to finance its
operations from operating cash flow. For the six months ended June 30, 1997, the
Company's  operating cash flow was $0.8 million compared to $3.8 million for the
same  period in 1996.  The  decrease  in the  Company's  operating  cash flow is
primarily  attributable to an increase of approximately $6.9 million of accounts
receivable related to the accrual of dial-around compensation,  partially offset
by increases in accounts payable and accrued expenses.
 
     The  Company's  working  capital was  approximately  $0.8  million,  with a
current ratio of 1.0 at June 30, 1997.  This compares with a working  capital of
$0.4 million and a current ratio of 1.0 at December 31, 1996.

During March 1997,  the Company  executed an amendment to the Fourth Amended and
Restated Loan and Security  Agreement  increasing  the credit  facility to $20.0
million.  The interest rate on balances  outstanding  under the credit  facility
varies based upon the leverage ratio maintained by the Company.  All outstanding
principal  balances  are due in full in 2000.  Interest  is payable  monthly for
loans based on the prime rate and quarterly for loans based on the LIBOR rate. A
commitment fee of 1/2 of 1% is charged on the aggregate  daily unused balance of
the credit facility under the Loan  Agreement.  The Loan Agreement is secured by
substantially  all  of the  Company  assets  and  contains  certain  restrictive
covenants  which,  among other things,  require the Company to maintain  certain
cash flow levels and interest coverage ratios and places certain restrictions on
the payment of dividends.  At June 30, 1997, the Company was in compliance  with
the amended covenants and had no amounts borrowed under the facility.

     Based upon current  expectations of the Company's operations and resolution
of  certain  regulatory  issues,  the  Company  believes  that  cash  flow  from
operations, together with amounts which may be borrowed under the amended credit
facility,  will be  adequate  for it to meet its working  capital  requirements,
pursue its business  strategy and service its obligations with respect to its 12
1/4% Senior Notes,  although there can be no assurances  that it will be able to
do so.

     The  preceding  forward  looking  information  is  subject  to a variety of
factors and uncertainties,  including the impact of competition on the Company's
operations, the ultimate implementation and effect of the Telecommunications Act
of 1996,  the ongoing  ability of the Company to deploy its phones in  favorable
locations and to continue to implement operational improvements.




                                       13

                                       
<PAGE>
<TABLE>
<CAPTION>
Part II OTHER INFORMATION

Item 4. Submission of Matters to a Vote of Security Holders

At the  Company's  Annual  Meeting of  Shareholders  held on July 14, 1997,  the
shareholders of the Company voted:

(a) to elect Jody Frank, Robert E. Lund and E. Craig Sanders as Directors of the
Company.

The  number  of the  votes  cast  for or  withheld,  and the  number  of  broker
non-votes, with respect to each of the nominees were as follows:

                                          Withhold                  Broker
Nominee           For           Against   Authority   Abstentions  Non-Votes
---------------   ----------    --------  ----------  ------------ ----------
<S>              <C>           <C>       <C>          <C>          <C>       
Jody Frank        16,481,783       -       127,924        -           -
Robert E. Lund    16,488,963       -       120,744        -           -
E. Craig Sanders  16,495,960       -       113,747        -           -
</TABLE>

The holders of the Company's  Series C Cumulative  Convertible  Preferred  Stock
("Preferred  Stock") are  entitled to elect two  members of the  Company's  five
member Board of Directors.  Mr. Charles J. Delaney and Mr. Justin S.  Maccarone,
who were incumbent  directors,  were  re-elected by the holders of the Preferred
Stock on July  14,  1997 and  continue  as  directors.  The  Preferred  Stock is
entitled  to  vote  on all  matters  submitted  to the  shareholders  for a vote
together with the holders of the Company's Common Stock voting as a single class
with each share of Preferred Stock entitled to one vote for each share of Common
Stock issuable upon conversion.

(b) to approve the adoption of the 1997 Incentive Plan.
<TABLE>
<CAPTION>
For             Against    Withhold Authority    Abstentions   Broker Non-Votes
----------     ---------   -------------------   ------------  ----------------
<S>           <C>         <C>                   <C>           <C>      
13,026,331      295,873           -                32,080         3,255,423
</TABLE>

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits:

Exhibits Description

10.1 Letter  Agreements  dated  February 25, 1997 and March 17, 1997 between the
Company and David Arvizu

10.2 Letter  Agreement  dated July 15,  1997  between the Company and William A.
Baum

27 Financial Data Schedule

(b) Reports on Form 8-K:
(i) A current  report on Form 8-K dated July 10, 1997  related to Item 5 - Other
Information.
(ii) A current  report on Form 8-K dated July 17, 1997 related to Item 5 - Other
Information.




                                       14


                                       
<PAGE>


                                    SIGNATURE

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


                                    PEOPLES TELEPHONE COMPANY, INC.
                                    Registrant


Date:  August 12, 1997              /s/ William A. Baum
                                    William A. Baum
                                    Chief Financial Officer





                                       15