1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-----------------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
November 1, 1996
----------------------------------------------------
Date of Report (Date of earliest event reported)
360 COMMUNICATION COMPANY
-------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 1 - 14108 47-0649117
------------------ ------------------ --------------------------------
(State of Incorporation) (Commission File No.) (IRS Employer Identification No.)
8725 W. Higgins Road, Chicago, Illinois 60631
---------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(773) 399-2500
---------------------------------------------------------
(Registrant's telephone number, including area code)
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Item 2. Acquisition or Disposition of Assets.
On November 1, 1996, 360 Communications Company (the "Company")
completed its previously announced acquisition (the "ICN Acquisition") of
Independent Cellular Network, Inc. and affiliated companies (collectively, the
"Acquired Companies") which own and operate cellular licenses and related
systems and assets in Kentucky, Ohio, Pennslyvania and West Virginia. The
Acquired Companies provide cellular service to approximately 140,000 customers
in 20 markets representing an estimated 3.2 million potential customers. The
Company acquired the Acquired Companies from Independent Cellular Network
Partners and certain of its affiliates (collectively, "ICNP") for approximately
$514 million, comprised of 6,500,000 shares of the Company's Common Stock, $0.01
par value, $122 million in aggregate principal amount of the Company's
subordinated non-negotiable promissory notes and the Company's assumption of
$240 million of Independent Cellular Network Partners' senior debt. The
remaining portion of the purchase price was paid in cash. The ICN Acquisition
will be accounted for as a purchase.
The Company's subordinated non-negotiable promissory notes issued in
connection with the ICN Acquisition are due October 31, 2006 and accrue interest
at the rate of 9.5% per annum, subject to adjustment, payable semiannually.
Fifty percent of the interest due and owing will be paid on each interest
payment date and the remaining fifty percent of the interest due and owing will
be capitalized and become part of the principal amount owed thereunder. The $240
million of senior debt assumed by the Company in connection with the ICN
Acquisition was refinanced, and the cash portion of the purchase price was
funded, under the Company's existing revolving credit facility with a number of
banks and institutional lenders led by Citibank, N.A., as administrative agent,
The Chase Manhattan Bank and Bank of America Illinois, as syndication agents,
and Toronto Dominion (Texas), Inc., as documentation agent.
The terms of the ICN Acquisition were arrived at through private
negotiation and were based primarily on the population of the acquired markets,
the value of existing operations and the customer base. The Company intends to
continue to use the acquired assets in their respective markets.
A copy of the press release issued by the Company announcing the
completion of the ICN Acquisition is filed as Exhibit 99 to this Report and is
incorporated herein by reference.
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Business Acquired.
Independent Cellular Network, Inc. and Affiliates
--Report of Independent Public Accountants
--Combined Balance Sheets as of December 31, 1995 and 1994
--Combined Statements of Operations for the Years Ended December 31, 1995,
1994 and 1993
--Combined Statements of Changes in Shareholders' and Partners' Equity
(Deficit) for the Years Ended December 31, 1995, 1994, 1993 and 1992
--Combined Statements of Cash Flows for the Years Ended December 31, 1995,
1994 and 1993
--Notes to Combined Financial Statements
--Combined Balance Sheets as of June 30, 1996 and December 31, 1995
--Combined Statements of Operations for the Six Months Ended June 30, 1996
and 1995
--Combined Statements of Cash Flows for the Six Months Ended June 30, 1996
and 1995
--Notes to Unaudited Combined Financial Statements
(b) Pro Forma Financial Information.
360 Communications Company and Subsidiaries
--Pro Forma Condensed Combined Statement of Operations for the Year Ended
December 31, 1995
--Pro Forma Condensed Combined Statement of Operations for the Six Months
Ended June 30, 1996
--Pro Forma Condensed Combined Balance Sheet as of June 30, 1996
--Notes to Pro Forma Condensed Combined Financial Statements
(c) Exhibits.
2.2 Exchange and Merger Agreement (the "Exchange and Merger
Agreement"), dated as of May 31, 1996, by and among Independent
Cellular Network Partners, James A Dwyer, Jr., David Winstel, CC
Industries, Inc., Ohio Cellular RSA, L.P., Ohio RSA Corporation,
Quality Cellular Communications of Ohio, Inc., Cellular Plus, L.P.,
C-Plus, Inc., Quality Cellular Plus Communications, Inc., Henry
Crown and Company (Not Incorporated) and 360 Communications
Company. (Filed as Exhibit 2.2 to the Company's Quarterly Report on
Form 10-Q for the quarterly period ended June 30, 1996, File No.
1-14108, and incorporated herein by reference.)
2.3 First Amendment to Exchange and Merger Agreement, dated as of
November 1, 1996, to the Exchange and Merger Agreement.
4.4 Form of 360 Communications Company's Subordinated Non-Negotiable
Promissory Note (included in Exhibit 2.2).
23 Consent of Arthur Andersen LLP.
99 Press Release issued by 360 Communications Company on November 4,
1996.
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Partners of
Independent Cellular Network, Inc. and Affiliates
We have audited the accompanying combined balance sheets of INDEPENDENT CELLULAR
NETWORK, INC. AND AFFILIATES as of December 31, 1995 and 1994, and the related
combined statements of operations, changes in shareholders' and partners'
deficit and cash flows for each of the three years in the period ended December
31, 1995. These financial statements are the responsibility of the Companies'
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the combined financial position of Independent Cellular
Network, Inc. and Affiliates as of December 31, 1995 and 1994, and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1995, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois
March 15, 1996,
except for Note 14,
to which the date is May
31, 1996
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<TABLE>
<CAPTION>
Independent Cellular Network, Inc. and Affiliates
Combined Balance Sheets
(Thousands of Dollars)
December 31,
------------
1995 1994
---- ----
ASSETS
------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 2,370 $ 1,878
Accounts receivable, less allowance
of $683 and $651 9,796 8,226
Due from affiliates 29,903 8,479
Cellular telephone inventory 2,665 2,624
Other 365 183
-------- --------
Total current assets 45,099 21,390
-------- --------
Property and equipment 86,973 87,534
Less: Accumulated depreciation (38,079) (32,034)
--------- ---------
Property and equipment, net 48,894 55,500
--------- ---------
Licenses, net of accumulated amortization
of $39,140 and $28,030 141,586 155,334
Non compete agreements, net of accumulated
amortization of $15,991 and $2,778 9,009 22,222
Deferred costs, net of accumulated
amortization of $154 and $53 985 922
Investment in unconsolidated
cellular partnership 1,834 1,281
--------- --------
Total other assets 153,414 179,759
--------- ---------
Total assets $ 247,407 $ 256,649
========= =========
LIABILITIES AND SHAREHOLDERS' AND
---------------------------------
PARTNERS' EQUITY (DEFICIT)
--------------------------
CURRENT LIABILITIES
Current portion of long term debt $ - $ 1,369
Accounts payable 7,554 5,650
Accrued expenses 9,803 13,598
Due to affiliates 882 400
Customer deposits 384 333
--------- ---------
Total current liabilities 18,623 21,350
--------- ---------
LONG TERM DEBT 311,131 280,223
--------- ---------
MINORITY INTEREST 5,684 4,321
--------- ---------
SHAREHOLDERS' AND PARTNERS' EQUITY (DEFICIT)
Common stock, no par value; 2,000 shares author-
ized; 1,000 shares issued and outstanding 100 100
Preferred stock, no par value; 2,000 shares
authorized; 1,000 shares issued and outstanding 14,900 14,900
Accumulated deficit (69,147) (65,146)
Partners' equity (deficit) (33,884) 901
--------- ---------
Total shareholders' and partners'
equity (deficit) (88,031) (49,245)
--------- ---------
Total liabilities and shareholders'
and partners' equity (deficit) $ 247,407 $ 256,649
========= =========
The accompanying Notes to Combined Financial Statements are an integral part of
these balance sheets.
</TABLE>
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<TABLE>
<CAPTION>
Independent Cellular Network, Inc. and Affiliates
Combined Statements of Operations
(Thousands of Dollars)
Years Ended December 31,
--------------------------
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
OPERATING REVENUES
Cellular service revenues $ 58,444 $ 45,744 $ 18,464
Equipment sales 3,671 3,575 1,869
-------- -------- --------
Total operating revenues 62,115 49,319 20,333
-------- -------- --------
OPERATING EXPENSES
Cost of service 8,064 5,703 2,573
Cost of equipment sales 8,437 7,500 3,542
Other operations expenses 3,007 2,649 1,581
Selling, general, administrative
and other expenses 17,898 17,589 9,298
Depreciation and amortization 36,020 19,297 12,833
-------- -------- --------
Total operating expenses 73,426 52,738 29,827
-------- -------- --------
Operating Income (Loss) (11,311) (3,419) (9,494)
Interest income 1,400 383 30
Interest expense (27,760) (15,389) (5,615)
Equity in net income of uncon-
solidated cellular partnerships 248 317 -
Minority interest in net (income)
loss of consolidated entities (1,363) (1,000) 77
Preacquisition income - (1,719) -
------- -------- -------
Loss before income taxes (38,786) (20,827) (15,002)
Income tax expense - - -
-------- -------- --------
NET LOSS $(38,786) $(20,827) $(15,002)
======== ======== ========
The accompanying Notes to Combined Financial Statements are an integral part of
these statements.
</TABLE>
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<TABLE>
<CAPTION>
Independent Cellular Network, Inc. and Affiliates
Combined Statements of Changes in Shareholders' and Partners' Equity (Deficit)
(Thousands of Dollars)
Common Stock Preferred Stock Partners'
------------ --------------- Accumulated Equity
Shares Amount Shares Amount Deficit (Deficit) Total
------ ------ ------ -------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
December 31, 1992 1,000 $ 100 1,000 $ 14,900 $ (47,066) $ (1,350) $(33,416)
Net loss - - - - (10,384) (4,618) (15,002)
------ ------ ------ -------- ---------- --------- --------
BALANCES,
December 31, 1993 1,000 100 1,000 14,900 (57,450) (5,968) (48,418)
Capital
contributions - - - - - 20,000 20,000
Net loss - - - - (7,696) (13,131) (20,827)
------ ------ ------ ------- --------- --------- --------
BALANCES,
December 31, 1994 1,000 100 1,000 14,900 (65,146) 901 (49,245)
Net loss - - - - (4,001) (34,785) (38,786)
------ ------ ------ -------- --------- --------- --------
BALANCES,
December 31, 1995 1,000 $ 100 1,000 $ 14,900 $ (69,147) $ (33,884) $(88,031)
====== ====== ====== ======== ========== ========= ========
The accompanying Notes to Combined Financial Statements are an integral part of these statements.
</TABLE>
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<TABLE>
<CAPTION>
Independent Cellular Network, Inc. and Affiliates
Combined Statements of Cash Flows
(Thousands of Dollars)
Years Ended December 31,
--------------------------------
1995 1994 1993
--------- --------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C> <C>
Net loss $ (38,786) $ (20,827) $ (15,002)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation and amortization 36,020 18,270 12,833
Interest capitalized as long term debt 21,907 - -
Minority interest, net 1,363 349 (77)
Equity in net income of unconsolidated
cellular partnerships, net (248) (140) -
Changes in assets and liabilities:
Accounts receivable and due from
affiliates (22,994) 2,351 (807)
Cellular telephone inventory (41) (1,217) (912)
Other current assets (182) 13 (392)
Accounts payable and due to affiliates 2,250 375 967
Accrued expenses 6,379 3,086 1,409
Customer deposits 51 57 -
--------- --------- ---------
Net cash provided (used) by
operating activities 5,719 2,317 (1,981)
--------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment, net (6,015) (10,682) (5,564)
Proceeds from cellular asset exchange, net 2,376 - -
Acquisition of subsidiary and
related assets - (191,187) -
--------- ---------- ----------
Net cash used by investing activities (3,639) (201,869) (5,564)
---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from debt - 246,877 11,545
Payments of debt (1,588) (67,208) (2,940)
Capital contribution - 20,000 -
--------- --------- ---------
Net cash provided (used) by
financing activities (1,588) 199,669 8,605
--------- --------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS 492 117 1,060
CASH AND CASH EQUIVALENTS,
beginning of year 1,878 1,761 359
--------- -------- ---------
CASH AND CASH EQUIVALENTS,
end of year $ 2,370 $ 1,878 $ 1,419
========= ========= =========
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION
Cash paid during the period for interest $ 285 $ 8,517 $ 5,003
--------- --------- ---------
Prior year accrued interest capitalized
as long-term debt $ 9,220 $ - $ -
========= ========= =========
The accompanying Notes to Combined Financial Statements are an integral part of
these statements.
</TABLE>
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Independent Cellular Network, Inc. and Affiliates
Notes to Combined Financial Statements
Note 1. Description of Business
Independent Cellular Network, Inc. ("ICN"), a Delaware corporation,
is an 83% owned subsidiary of Independent Cellular Network Partners
("ICNP"), a 60% owned subsidiary of Henry Crown and Company (Not
Inc.) ("HCNI"). ICN was organized in June 1987 to acquire licenses
for, and to construct and operate, cellular telephone systems in
various markets in Ohio, Pennsylvania, West Virginia and Kentucky.
Effective July 12, 1994, HCNI transferred its ownership interest in
ICN to ICNP.
ICN is an 85% general partner in ICN-Charleston, West Virginia
Limited Partnership ("ICN-Charleston"). ICN-Charleston was formed
in 1988 to acquire the license for and to construct and operate a
cellular telephone system in the Charleston, West Virginia market.
Ohio Cellular RSA L.P. ("Ohio Cell"), an Illinois limited
partnership, was organized in August 1991 to acquire licenses for,
and to construct and operate cellular telephone systems in certain
Ohio and West Virginia Rural Service Areas. Ohio Cell interests are
owned by ICNP, 82% limited partner, Quality Cellular Communications
of Ohio, Inc., 16% general partner, Ohio RSA Corporation, 1%
general partner, and Winstel Limited Partner, 1%. Effective
September 1, 1994, HCNI transferred its ownership interest in Ohio
Cell to ICNP.
Cellular Plus L.P. ("Cell Plus"), an Illinois limited partnership,
was organized in September 1994 to acquire, through an acquisition
company, the licenses owned by affiliates of C-TEC Corporation
("C-TEC"), a Pennsylvania corporation, and to own, construct and
operate cellular telephone systems in Pennsylvania and Iowa. Cell
Plus interests are owned by ICNP, 79% limited partner, Quality
Cellular Plus Communications, Inc., 17% general partner, Winstel
Limited Partner, 3%, and C-Plus, Inc. 1% general partner. Cell
Plus's Iowa cellular telephone systems were included in the swap
transaction completed during 1995 (See Note 8).
ICN, Ohio Cell and Cell Plus, collectively referred to herein as
the "Companies", are the wireline cellular providers in each of
their markets. The Companies provide cellular telephone service to
customers pursuant to various terms and rate plans throughout
Kentucky, Ohio, Pennsylvania and West Virginia, and offer unsecured
credit in the normal course of business. The Companies also sell
cellular telephone equipment and accessories through retail outlets
located in their licensed market areas. The Companies have entered
into various agreements with other cellular service providers to
provide the Companies' customers cellular service in areas outside
of the Companies' markets.
Following is a listing of the Companies' cellular telephone
markets, including the subsidiary and/or partnership interest
holding the license, approximate 1995 census populations (adjusted
to reflect ownership if less than 100%) and date on which cellular
service commenced:
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Note 1. Description of Business, Continued
Commencement
Population of Service
---------- ------------
Independent Cellular
Network, Inc. and
Subsidiary:
Huntington-Ashland,
WV-KY-OH 318,000 November 1987
Johnstown, PA 237,000 October 1987
Altoona, PA 132,000 March 1988
Wheeling, WV-OH 156,000 February 1988
Steubenville-Weirton,
OH-WV 140,000 July 1988
Charleston, WV 219,000 September 1988
Parkersburg-Marietta,
WV-OH 157,000 January 1989
Ohio Cellular RSA L.P.:
New Philadelphia, Ohio
(Tuscarawas, Guernsey,
Harrison, Monroe,
and Noble Counties) 170,000 September 1992
Athens, Ohio (Meigs,
Athens, Morgan
and Vinton Counties) 112,000 October 1992
Logan, WV
(Lincoln County) 185,000 April 1992
Cellular Plus L.P.:
Centre County, Pa. 130,000 June 1988
Williamsport/PA-8
Cellular Limited
Partnership:
Williamsport, PA 122,000 November 1988
Pennsylvania RSA No. 8 401,000 December 1990
Commonwealth Cellular
Telephone Services,
Inc.:
Pennsylvania RSA No. 5 33,000 September 1991
Allentown, PA SMSA 29,000 March 1985
Reading, PA SMSA 35,000 March 1986
Northeast Pennsylvania
SMSA 520,000 July 1985
Pennsylvania RSA No. 3
Sector 1 37,000 August 1991
Sector 2 9,800 N/A
Pennsylvania RSA No. 4
Sector 1 30,000 February 1991
---------
3,172,800
=========
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Note 2. Summary of Significant Accounting Policies
a) Principles of Combination
The accompanying combined financial statements include the accounts
of the Companies. All significant intercompany accounts and
transactions have been eliminated.
ICN includes the accounts of ICN-Charleston. Cell Plus includes the
accounts of its 100% owned subsidiary Commonwealth Cellular
Telephone Services, Inc. ("CCTS"), a Delaware corporation and its
69.23% partnership interest in the Williamsport/PA-8 Cellular
Limited Partnership ("PA-8"). The remaining partnership interest in
PA-8 is owned by Williamsport Cellular Telephone Company, Inc. The
CCTS financial statements include the following investments in
partnerships and corporations.
Ownership
Interest
Northeast Pennsylvania SMSA Ltd. Partnership 78.98%
Pennsylvania RSA No. 5 General Partnership ("PA 5") 40.00%
Pennsylvania RSA No. 3 Sector 2 Ltd.
Partnership ("RSA 3") 16.66%
Reading SMSA Ltd. Partnership ("Reading") 10.00%
Allentown SMSA Ltd. Partnership ("Allentown") 4.00%
Williamsport Cellular Telephone Company, Inc. 93.95%
(formerly Iowa City Cellular Telephone Co., Inc.)
CCTS accounts for its ownership interests in PA 5 using the equity
method. It accounts for its ownership in Reading and Allentown on a
cost basis. The related asset appears as investment in
unconsolidated cellular partnerships in the accompanying combined
balance sheets. At December 31, 1995 RSA 3 had not commenced
operations.
b) Basis of Presentation
Cell Plus, through an acquisition company, acquired 100% of CCTS on
September 9, 1994 (See Note 3). The acquisition was accounted for
using the purchase method of accounting. The revenues and expenses
of Cell Plus have been included in the accompanying combined
statements of operations as though CCTS had been acquired as of
January 1, 1994.
c) Cash and Cash Equivalents
For purposes of reporting combined cash flows, the Companies
consider all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents.
d) Cellular Telephone Inventory
Cellular telephone inventory is stated at cost using the "first-in,
first-out" method.
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Note 2. Summary of Significant Accounting Policies, Continued
e) Property and Equipment
Property and equipment are carried at cost. Replacements and
betterments are capitalized, while maintenance and repairs are
expensed as incurred. When property and equipment are disposed of,
the related cost and accumulated depreciation are removed from the
accounts and any resulting gains or losses are included in the
determination of results of operations. Depreciation is computed by
applying the straight-line method over the estimated service lives
for depreciable property and equipment.
f) Licenses
The licenses held by the Companies are recorded at fair market
value at date of acquisition. License costs are amortized on a
straight line basis over ten or fifteen years, beginning with the
month each licensed market was acquired.
g) Non Compete Agreements
In connection with the acquisition of CCTS (see Note 3), certain
non compete agreements were entered into between Cell Plus and
C-TEC. In the markets acquired, the agreements effectively bar, for
a term of three years, C-TEC or any of its affiliated companies
from any involvement in any business that provides wireless
telecommunications. The asset related to these non compete
agreements is being amortized over three years.
h) Deferred Costs
Deferred costs include costs incurred in connection with the
acquisition of CCTS. These costs have been capitalized and are
being amortized over periods of five to fifteen years.
i) Income Taxes
ICN and CCTS file separate company corporate income tax returns.
Both companies account for income taxes in accordance with
Statement of Financial Accounting Standards ("SFAS") 109,
"Accounting for Income Taxes." Under SFAS 109, deferred tax assets
and liabilities are computed based on the difference between the
financial statement and income tax basis of assets and liabilities
using the enacted statutory tax rates. Deferred income tax expense
or benefit is based on the changes in the deferred tax asset and
liability accounts.
For the remaining combined partnerships, no provision or liability
for Federal or state income taxes is reflected in the accompanying
financial statements of the partnerships since such taxes are the
responsibility of the individual partners.
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Note 2. Summary of Significant Accounting Policies, Continued
j) Derivatives
ICN maintains derivative financial instruments in the form of
interest rate swaps. These interest rate swaps are held pursuant to
debt agreement requirements and are used to manage well-defined
interest rate risks. ICN does not use these derivatives for trading
purposes.
k) Minority Interest
Minority interest represents the results of operations attributable
to the minority owners of the Companies' subsidiaries.
l) Revenue Recognition
Revenue from operations primarily consists of charges to customers
for monthly access, cellular airtime and data usage, and roamer and
toll charges. Revenue is recognized as services are rendered.
Unbilled revenues, resulting from cellular service provided from
the billing cycle to the end of each month and from other cellular
carriers' customers using the Companies' cellular systems for the
last half of each month, are estimated and recorded. Equipment
sales are recognized upon delivery to the customer and reflect
charges to customers for cellular telephone user equipment
purchased.
m) Use of Estimates
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 and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenue and expense during the reporting
period. Actual results could differ from those estimates.
n) Changes in Accounting Principles
In March 1995, the Financial Accounting Standards Board issued
SFAS 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed Of," which is effective for
fiscal years beginning after December 15, 1995. SFAS 121 requires
that assets to be held and used be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. The Companies do not
anticipate that the requirements of SFAS 121 will have a material
affect on their 1996 combined financial statements and operating
results.
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Note 3. Acquisition
Pursuant to an agreement dated September 9, 1994, Cell Plus,
through an acquisition company, acquired the stock of CCTS and Iowa
City Cellular Telephone Co., Inc. ("Iowa City") and the assets of
certain affiliated companies from C-TEC. The purchase price
approximated $190,565,000. Financing for the acquisition was
provided by borrowings from ICNP and ICNP's senior secured credit
agreement (See Note 6).
The allocation of the purchase price among the assets acquired and
liabilities assumed is as follows (in thousands):
Assets acquired:
Cash $ 284
Receivables, net 8,594
Inventory 253
Property and equipment 24,429
Covenant not to compete 25,000
Licenses 135,822
---------
Total assets acquired 194,382
---------
Liabilities assumed:
Accounts payable 1,199
Accrued expenses 376
Long term debt 2,242
---------
Total liabilities assumed 3,817
---------
Net assets acquired $ 190,565
=========
The revenue and expenses of CCTS and Iowa City have been included
in the accompanying combined statements of operations as though
CCTS and Iowa City had been acquired as of January 1, 1994. The
results of operations of CCTS and Iowa City, which occurred prior
to September 9, 1994, have been reflected as preacquistion income
in the 1994 statement of operations. The combined statement of cash
flows for the year ended December 31, 1994 includes the activities
of CCTS from the acquisition date through December 31, 1994. If the
acquisition had occurred on January 1, 1993, management estimates
that on an unaudited pro forma basis total operating revenues and
net loss would have been $49,319,000 and $19,108,000 and
$42,873,000 and $14,042,000, for the years ended December 31, 1994
and 1993, respectively. These estimates were prepared based on
assumptions that management deems appropriate, but the results are
not necessarily indicative of those that might have occurred had
the acquisition taken place on January 1, 1993.
The assets and cellular operations of Iowa City were included in
the swap transaction completed during 1995 (See Note 8).
15
<PAGE>
Note 4. Property and Equipment
Property and equipment consisted of the following at December 31, (in
thousands):
Depreciable
Lives 1995 1994
----------- ------ ------
Land $ 599 $ 507
Switching, base site controller
and radio frequency equipment 10 years 61,188 69,050
Cell site towers and shelters 7-20 years 12,849 9,854
Office furniture and other
equipment 5 years 12,337 8,123
------- -------
Total property and equipment 86,973 87,534
Less: Accumulated depreciation (38,079) (32,034)
------- --------
$48,894 $55,500
------- --------
Depreciation expense charged to operations for the years ended
December 31, 1995, 1994 and 1993 was $9,221,000, $8,693,000 and
$5,242,000, respectively.
For the year ended December 31, 1993, the Companies wrote down various
telecommunications equipment to fair market value, based on an offer
by another cellular telephone company. The resulting loss of
$2,914,000 has been included in depreciation and amortization expense
in the accompanying combined statements of operations.
During the year ended December 31, 1993, the Companies acquired
$4,530,000 of cellular equipment through vendor financing.
16
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Note 5. Investment in Unconsolidated Entity
Condensed financial information for Cell Plus' investment in PA 5, which
is accounted for under the equity method, follows (in thousands):
Years Ended December 31,
---------------------------
1995 1994 1993
------- ------- -------
Total operating revenues $ 1,978 $ 1,613 $ 1,221
Total operating expenses 1,250 1,044 1,089
----- ----- ------
Operating income 728 569 132
Net interest expense 57 71 60
------ ------- -------
Net income $ 671 $ 498 $ 72
====== ======= =======
December 31,
---------------------
1995 1994
------- -------
Assets
Current assets $ 1,820 $ 1,294
Noncurrent assets 1,833 1,736
------- -------
$ 3,653 $ 3,030
======= =======
Liabilities and equity
Current liabilities $ 50 $ 51
Mortgage note payable 1,462 1,509
Equity 2,141 1,470
----- -----
$ 3,653 $ 3,030
======= =======
Note 6. Long Term Debt
The Companies' long term debt consists of the following at December 31,
(in thousands):
1995 1994
--------- ---------
Revolving notes with ICNP $ 265,629 $ 240,316
Demand notes with HCNI 45,502 39,907
--------- ---------
$ 311,131 $ 280,223
========= =========
The notes bear interest at a rate calculated to be equivalent to the
cost of funds charged to ICNP pursuant to ICNP's senior secured credit
facility, 8.913% and 9.764% at December 31, 1995 and 1994, respectively.
Interest under the notes is payable quarterly and any installments not
paid are capitalized and become part of the outstanding principal
balance. Prepayment of interest may be made at any time without penalty.
The notes are secured by a pledge of certain rights to distributions,
partnership interests, and capital stock pursuant to a certain
Partnership Interest and Stock Pledge and Security Agreement dated July
12, 1994. The notes are subordinate to the senior indebtedness of ICNP,
as defined in the subordination agreement dated September 9, 1994 and,
accordingly, are classified as long term in the accompanying balance
sheets. Based on the borrowing rates currently offered to ICNP for long
term debt with similar terms and maturities, the fair value of the
Companies' long term debt approximates carrying value.
17
<PAGE>
Note 6. Long Term Debt, continued
Ohio Cell also maintains a secured line of credit with ICNP. There were
no borrowings under this line of credit at December 31, 1995 and 1994.
During 1994 ICNP entered into a senior secured credit agreement
("Agreement"). The Agreement provides for a revolving line of credit and
a term loan. At December 31, 1995 and 1994, the revolving line of credit
was partially drawn and the term loan was fully drawn. ICNP and its
subsidiaries, including the Companies, have pledged substantially all of
their assets to secure this indebtedness. The Agreement contains
numerous restrictive covenants. ICNP was in compliance with these loan
covenants at December 31, 1995. During 1995, ICNP received waivers for
December 31, 1994 covenant non compliance and the acquisition and
disposition of certain assets during the current year. The Agreement was
amended to provide for ICNP's expected financial performance. The
ability of ICNP to comply with such provisions in the future will depend
on its performance, which is subject to prevailing economic, financial
and industry conditions and other factors beyond ICNP's control. The
Agreement contains provisions allowing the lender to accelerate debt
repayment upon the occurrence of an event the lender determines to
represent a material adverse change. ICNP's management believes that no
such material adverse change has occurred and no such event is probable
within the foreseeable future. No prepayment requirements existed as of
December 31, 1995.
In connection with the swap of Cell Plus' Iowa cellular licenses and
assets during 1995 (See Note 8), debt obligations under the prior
financing agreement between Motorola, Inc. and Iowa City were paid in
full.
Note 7. Income Taxes
The tax effect of CCTS' and ICN's temporary differences that give rise
to significant portions of the deferred tax assets and deferred tax
liabilities are as follows at December 31 (in thousands):
1995 1994 1993
------- ------- --------
Deferred tax assets:
Depreciation and amortization $ 3,805 $ 304 $ -
Other 396 139 135
Net operating loss carryforwards 27,566 19,447 11,884
------- ------- --------
Gross deferred tax assets 31,767 19,890 12,019
Valuation allowance (29,258) (19,124) (10,585)
------- ------- -------
Deferred tax assets 2,509 766 1,434
------- ------- -------
Deferred tax liabilities:
Depreciation and amortization - - 1,434
Partnership basis difference 2,491 754 -
Other 18 12 -
------- ------- -------
Deferred tax liabilities 2,509 766 1,434
------- ------- -------
Net deferred income tax $ -0- $ -0- $ -0-
======= ======= =======
18
<PAGE>
Note 7. Income Taxes, continued
Due to ICN's and CCTS' history of operating losses, both companies
provide a valuation allowance against the total net deferred tax asset.
The net change in the total valuation allowance for the years ended
December 31, 1995 and 1994 were increases of $10,134,000 and
$8,539,000, respectively.
At December 31, 1995, CCTS has net operating loss carryforwards for
financial reporting and income tax purposes of approximately
$13,146,000 and $19,947,000, respectively. These carryforwards will
begin expiring in 2009. ICN has net operating loss carryforwards for
financial reporting and income tax purposes of approximately
$45,060,000 and $47,969,000, respectively. These carryforwards will
begin expiring in 2004.
Note 8. Cellular Asset Exchange
Pursuant to an agreement dated July 21, 1995, Cell Plus exchanged the
licenses and assets of its Iowa City MSA and Iowa RSA cellular telephone
operations for the licenses and assets of the Williamsport and
Pennsylvania RSA No. 8 markets. The effect of the exchange was to
increase Cell Plus' contiguous cellular markets in central Pennsylvania.
The exchange was accounted for as a non monetary transaction. No gain or
loss was recognized on the exchange, however, in connection with the
exchange, the unamortized balance of the non compete agreement related
to these Iowa markets (approximately $4,900,000) was fully amortized.
Note 9. Related Party Transactions
ICN provides office facilities and management services to Ohio Cell and
Cell Plus and certain other affiliates. ICN charges fees to the
affiliates for these services. Fees received by ICN for these services
were approximately $4,520,000, $1,862,000 and $1,023,000 for the years
ended December 31, 1995, 1994, and 1993, respectively.
ICN purchases inventory, supplies and services, including billing
services, on behalf of these affiliates. The cost of these items and
services are passed on to the affiliates at cost. ICN maintains a lock
box which is used to collect customer payments for cellular services
provided by the affiliates. The net of the affiliates' accounts
receivable collections and the costs of inventory, supplies and
services, including management services, is periodically settled with
ICN. Unsettled amounts with affiliates other than Ohio Cell and Cell
Plus, are reflected as due from or to affiliates in the accompanying
combined balance sheets. The unsettled balances bear interest at ICNP's
cost of funds rate, 8.913% at December 31, 1995.
The Companies invest excess cash with ICNP to maximize their investment
return. The advances, which totaled approximately $23 million at
December 31, 1995, are included as due from affiliates in the
accompanying combined balance sheets. These advances also bear interest
at ICNP's cost of funds rate.
ICN leases office space from a corporation owned by ICN's president.
Total rent expense under this lease was approximately $122,000, $108,000
and $101,000 for the years ended December 31, 1995, 1994 and 1993,
respectively.
19
<PAGE>
Note 9. Related Party Transactions, continued
An affiliate of ICN provides management services to ICN. The fees for
these services was approximately $146,000, $96,000 and $134,000 for the
years ended December 31, 1995, 1994 and 1993, respectively.
In connection with the guarantee of ICN's bank revolving credit, during
the year ended December 31, 1993, HCNI charged a fee of 2% of the
outstanding balance. The fee amounted to $976,000 and is included in
interest expense in the accompanying combined statement of operations.
Note 10.Derivatives
ICN has two interest rate swap agreements with financial institutions in
effect at December 31, 1995, as follows:
Notional Principal Amount $30,000,000 $35,000,000
Fixed Rate 5.35% 5.605%
Date of Maturity August 1998 March 1997
Fair Market Value of Swap $59,000 $142,000
ICN receives a variable rate of interest under these agreements. The
rate in effect at December 31, 1995 under these agreements was 5.6875%
and 5.8125%, respectively.
Net payments or receipts under these agreements are recorded as
adjustments to interest expense. The fair value of the interest rate
swaps is based on the estimated termination value at December 31, 1995.
Note 11.Shareholders' and Partners' Equity (Deficit)
ICN's preferred stock, which is held by a related company of ICNP, has a
cumulative stated value of $14,900 per share, is nonvoting, and is
entitled to cumulative annual dividends equal to 8% of stated value,
compounded semi-annually. The preferred stock shareholder is entitled to
a preference upon liquidation equal to the stated value plus any
cumulative unpaid dividends and is entitled to payment of any dividend
arrearage prior to any redemption of or payment of dividends on ICN's
common stock. Cumulative unpaid and undeclared dividends aggregated
$14,323,000 and $12,119,000 at December 31, 1995 and 1994, respectively.
The Ohio Cell and Cell Plus partnership agreements provide that ICNP and
certain related companies are entitled to cumulative "priority returns"
on their total unreturned capital, to be paid prior to any other cash
distributions to the respective partners. The rate of return is adjusted
to equal ICNP's current available borrowing rate compounded quarterly,
8.913% at December 31, 1995. At December 31, 1995, Ohio Cell's and Cell
Plus' unpaid and unaccrued priority returns were approximately $943,000
and $2,587,000, respectively, and total unreturned capital was
$2,600,000 and $20,000,000, respectively.
Certain partners of Cell Plus and Ohio Cell and shareholders of ICN have
the option to require ICNP to purchase their respective interests at a
price determined in accordance with the respective partnership or
shareholder agreements. The option can be exercised upon the death or
disability of the partner or shareholder or after August 31, 2004 and
upon repayment of all indebtedness of ICNP and its affiliates as defined
in the agreements.
20
<PAGE>
Note 11.Shareholders' and Partners' Equity (Deficit), continued
The Ohio Cell and Cell Plus partnership agreements provide that
additional capital contributions may be contributed by the partners, as
needed, in proportion to each partner's percentage interest. Net profits
and losses are allocated to the partners pursuant to the terms of the
partnership agreements.
Pursuant to an agreement dated March 3, 1995, ICNP acquired an
additional 1% limited partnership interest in Ohio Cell and 10 shares of
ICN common stock from a former officer of a related company.
Note 12.Employee Savings Plan
The Companies have a Retirement Savings/401(k) Plan ("Plan") which
covers all employees. Under the Plan, employees are allowed to
contribute up to 15% of their eligible compensation. The Companies will
then contribute $1.00 for each of the first $250 contributed to the
Plan, and $.25 for each $1.00 contributed above $250 up to the maximum
Companies' contribution. The Companies' maximum contribution is the
greater of $250 or 1.5% of eligible compensation, as defined in the
Plan. The contributions to the Plan for the years ended December 31,
1995, 1994 and 1993 were approximately $49,000, $28,000 and $21,000,
respectively.
Note 13.Contingencies and Commitments
Operating Leases
The Companies lease office and retail store space and land for tower
sites. All such leases are accounted for as operating leases. Although
the terms vary, the leases typically provide for initial terms of one to
five years, with annual rent adjustments based on cost-of-living
increases and one or more renewal options. The approximate future
minimum lease payments required under leases with remaining terms in
excess of one year, by year for the subsequent five years and in the
aggregate, are as follows at December 31, 1995 (in thousands):
1996 $ 1,017
1997 869
1998 661
1999 420
2000 354
Thereafter 1,066
--------
Total $ 4,387
========
Total rent expense recorded by the Companies for the years ended
December 31, 1995, 1994 and 1993 was approximately $1,025,000, $980,000
and $474,000, respectively.
Purchase Commitments
At December 31, 1995 the Companies had commitments to acquire
approximately $5,000,000 of cellular telephone systems equipment. These
commitments are expected to be funded from operating cash flow.
21
<PAGE>
Note 13.Contingencies and Commitments, continued
Litigation
The Companies are involved in certain claims and lawsuits arising in the
normal course of business. In the opinion of management, the ultimate
resolution of these matters will not have a material adverse effect on
the financial position or results of operations of the Companies.
Insurance Risk
The Companies retain the risk to a maximum of $500,000 per occurrence
for worker's compensation, commercial general liability and business
automobile liability losses. Catastrophic liability insurance is
purchased in excess of the subsidiaries' self-retention maximum.
Provision for the Companies' claims under the self-retention program is
recorded based upon an estimate of the aggregate liability for claims
incurred. An affiliate of the Companies administers the program.
Note 14.Subsequent Event
The Companies entered into an Exchange and Merger Agreement with 360
Communications Company dated May 31, 1996 for the sale of all the assets
and rights related to the Companies' cellular telephone systems and
related business in all their collective markets. The transaction,
valued at approximately $514 million, is expected to close prior to
December 31, 1996.
22
<PAGE>
<TABLE>
<CAPTION>
Independent Cellular Network, Inc. and Affiliates
Combined Balance Sheets
(Thousands of Dollars)
June 30, December 31,
1996 1995
---------- ------------
(Unaudited)
ASSETS
------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 4,249 $ 2,370
Accounts receivable, less allowance
of $644 and $683 11,755 9,796
Due from affiliates 40,316 29,903
Cellular telephone inventory 2,272 2,665
Other 140 365
---------- ------------
Total current assets 58,732 45,099
---------- ------------
Property and equipment 87,841 86,973
Less: Accumulated depreciation (42,793) (38,079)
---------- ------------
Property and equipment, net 45,048 48,894
---------- ------------
Licenses, net of accumulated amortization
of $45,946 and $39,140 134,779 141,586
Non compete agreements, net of accumulated
amortization of $18,694 and $15,991 6,306 9,009
Deferred costs, net of accumulated
amortization of $223 and $154 1,018 985
Investment in unconsolidated
cellular partnerships 1,926 1,834
---------- ------------
Total other assets 144,029 153,414
---------- ------------
Total assets $ 247,809 $ 247,407
========== ============
LIABILITIES AND SHAREHOLDERS' AND
---------------------------------
PARTNERS' EQUITY (DEFICIT)
--------------------------
CURRENT LIABILITIES
Accounts payable $ 5,516 $ 7,554
Accrued expenses 10,313 9,803
Due to affiliates 1,157 882
Customer deposits 480 384
---------- ------------
Total current liabilities 17,466 18,623
---------- ------------
LONG TERM DEBT 325,466 311,131
---------- ------------
MINORITY INTEREST 6,484 5,684
---------- ------------
SHAREHOLDERS' AND PARTNERS' EQUITY (DEFICIT)
Common stock, no par value; 2,000 shares author-
ized; 1,000 shares issued and outstanding 100 100
Preferred stock, no par value; 2,000 shares
authorized; 1,000 shares issued and
outstanding 14,900 14,900
Accumulated deficit (70,434) (69,147)
Partners' equity (deficit) (46,173) (33,884)
---------- ------------
Total shareholders' and partners'
equity (deficit) (101,607) (88,031)
---------- ------------
Total liabilities and shareholders'
and partners' equity (deficit) $ 247,809 $ 247,407
========== =============
The accompanying Notes to Combined Financial Statements are an integral part of
these balance sheets.
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
Independent Cellular Network, Inc. and Affiliates
Combined Statements of Operations
(Thousands of Dollars)
(Unaudited)
Six Months Ended June 30,
-------------------------
1996 1995
---------- ----------
<S> <C> <C>
OPERATING REVENUES
Cellular service revenues $ 31,977 $ 28,667
Equipment sales 2,116 1,771
---------- -----------
Total operating revenues 34,093 30,438
---------- ----------
OPERATING EXPENSES
Cost of service 4,035 4,935
Cost of equipment sales 4,794 3,589
Other operations expenses 1,487 1,444
Selling, general, administrative
and other expenses 9,441 9,006
Depreciation and amortization 14,297 16,260
---------- ----------
Total operating expenses 34,054 35,234
---------- ----------
Operating Income (Loss) 39 (4,796)
Interest income 1,402 401
Interest expense (14,424) (13,658)
Equity in net income of uncon-
solidated cellular partnerships 207 148
Minority interest in net income
of consolidated entities (800) (499)
---------- ----------
Loss before income taxes (13,576) (18,404)
Income tax expense - -
---------- ----------
NET LOSS $ (13,576) $ (18,404)
========== ==========
The accompanying Notes to Combined Financial Statements are an integral part of
these statements.
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
Independent Cellular Network, Inc. and Affiliates
Combined Statements of Cash Flows
(Thousands of Dollars)
(Unaudited)
Six Months Ended June 30,
-------------------------
1996 1995
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (13,576) $ (18,404)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation and amortization 14,297 16,260
Interest capitalized as long term debt 7,249 5,818
Minority interest, net 800 499
Equity in net income of unconsolidated
cellular partnerships, net (266) (148)
Changes in assets and liabilities:
Accounts receivable and due from
affiliates (12,372) (12,268)
Cellular telephone inventory 393 (41)
Other current assets 225 (161)
Accounts payable and due to affiliates (1,587) 1,037
Accrued expenses 7,597 9,276
Customer deposits 96 62
---------- ----------
Net cash provided by
operating activities 2,856 1,930
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment, net (875) (1,997)
Other (102) -
---------- ----------
Net cash used by investing activities (977) (1,997)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from debt - 1,000
Payments of debt - (1,369)
---------- ----------
Net cash used by
financing activities - (369)
---------- ----------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 1,879 (436)
CASH AND CASH EQUIVALENTS,
beginning of period 2,370 1,878
---------- ----------
CASH AND CASH EQUIVALENTS,
end of period $ 4,249 $ 1,442
========== ==========
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION
Cash paid during the period for interest $ 195 $ 645
========== ==========
Prior year accrued interest capitalized
as long-term debt $ 7,087 $ 9,912
========== ==========
The accompanying Notes to Combined Financial Statements are an integral part of
these statements.
</TABLE>
25
<PAGE>
Independent Cellular Network, Inc. and Affiliates
Notes to Unaudited Combined Financial Statements
Note 1. Basis of Combination and Presentation
Independent Cellular Network, Inc., Ohio Cellular RSA L.P. and
Cellular Plus L.P. ("the Companies"), affiliated through common
ownership, provide wireless voice telecommunications services. The
Companies operate as general and limited partners and majority
owners of cellular systems in various metropolitan and rural
service areas in Kentucky, Ohio, Pennsylvania and West Virginia.
The accompanying unaudited combined financial statements include
the accounts of the Companies and their wholly-owned and majority
owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated.
The unaudited combined financial statements have been prepared in
conformity with generally accepted accounting principles and are
presented in accordance with the rules and regulations of the
Securities and Exchange Commission applicable to interim financial
information. In the Companies' opinion, the unaudited combined
financial statements include all adjustments necessary to present
fairly the financial position and results of operations for the
interim periods presented. All such adjustments are of a normal
recurring nature. These financial statements should be read in
conjunction with the combined financial statements, including the
notes thereto, for the fiscal year ended December 31, 1995.
Note 2. Sale of Assets
The Companies have entered into an Exchange and Merger Agreement
dated May 31, 1996 with 360 Communications Company for the sale of
all the assets and rights related to the Companies cellular
telephone systems and related business in all their collective
markets. The transaction, valued at approximately $514 million, is
expected to close prior to December 31, 1996.
26
<PAGE>
360 COMMUNICATIONS COMPANY AND SUBSIDIARIES
Pro Forma Condensed Combined Financial Statements Introduction
The following unaudited pro forma condensed combined financial statements
have been prepared from the historical consolidated financial statements of
360 Communications Company and Subsidiaries (the "Company"). The ICN
Acquisition column in the following unaudited pro forma condensed combined
financial statements reflects the historical combined financial statements of
Independent Cellular Network, Inc. and Affiliates (the "Acquired Companies"),
the combined entities which represent the operations acquired from Independent
Cellular Network Partners and certain of its affiliates (collectively, "ICNP").
The unaudited pro forma condensed combined financial statements have been
adjusted to reflect the ICN Acquisition under the terms described herein under
Item 2. The ICN Acquisition, with a purchase price of approximately $514
million, will be accounted for as a purchase.
The unaudited pro forma condensed combined financial statements assume that
the ICN Acquisition occurred as of January 1, 1995 for the unaudited pro forma
condensed combined statements of operations and as of June 30, 1996 for the
unaudited pro forma condensed combined balance sheet.
In the opinion of management, all adjustments necessary to present fairly
the unaudited pro forma condensed combined financial statements have been made.
The unaudited pro forma condensed combined financial statements should be
read in conjunction with the Company's historical consolidated financial
statements including the notes thereto, set forth in the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1995; the Company's
historical consolidated financial statements including the notes thereto, set
forth in the Company's Quarterly Report on Form 10-Q for the quarterly period
ended June 30, 1996; and Independent Cellular Network, Inc. and Affiliates
historical combined financial statements and notes thereto included elsewhere
herein. The unaudited pro forma condensed combined financial statements are not
necessarily indicative of the financial position or results of operations had
the ICN Acquisition occurred on the indicated dates nor do they purport to
indicate the results of future operations of the Company.
27
<PAGE>
<TABLE>
<CAPTION>
360 COMMUNICATIONS COMPANY AND SUBSIDIARIES
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1995
Unaudited
(Thousands of Dollars, except per share amounts)
360 360
Communications Pro Forma Communications
Company as ICN Acquisition Company
Reported Acquisition Adjustments Pro Forma
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Operating Revenues
Cellular Service Revenues $ 789,459 $ 58,444 $ (1,268)(a) $ 846,635
Equipment Sales 44,956 3,671 48,627
---------------- ---------------- -------------- ----------------
Total Operating Revenues 834,415 62,115 (1,268) 895,262
---------------- ---------------- -------------- ----------------
Operating Expenses
Cost of Service 68,223 8,064 76,287
Cost of Equipment Sales 109,441 8,437 117,878
Other Operations Expense 40,591 3,007 43,598
Sales, Marketing and Advertising Expenses 141,505 6,485 147,990
General, Administrative and Other Expenses 214,536 11,413 (3,989)(b) 221,960
Depreciation and Amortization 114,731 36,020 (9,880)(c)
7,598 (d)
(993)(e) 147,476
---------------- ---------------- ---------------- ----------------
Total Operating Expenses 689,027 73,426 (7,264) 755,189
Operating Income (Loss) 145,388 (11,311) 5,996 140,073
Interest Expense, net (127,240) (27,760) 940 (f) (154,060)
Minority Interests in Net Income
of Consolidated Entities (34,269) (1,363) (35,632)
Equity in Net Income of
Unconsolidated Entities 40,016 248 40,264
Other Income (Expense), net (185) 1,400 (1,400)(g) (185)
---------------- ---------------- ---------------- ----------------
Income (Loss) Before Income Taxes 23,710 (38,786) 5,536 (9,540)
Income Tax Expense 25,405 (9,622)(h) 15,783
---------------- ---------------- ---------------- ----------------
Net Income (Loss) $ (1,695) $ (38,786) $ 15,158 $ (25,323)
================ ================ ================ ================
Net Loss per Share (in Dollars) $ (0.21) (p)
================
Weighted Average Shares
Outstanding, in thousands 123,206
================
The accompanying notes are an integral part of these unaudited pro forma condensed combined financial statements.
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
360 COMMUNICATIONS COMPANY AND SUBSIDIARIES
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 1996
Unaudited
(Thousands of Dollars, except per share amounts)
360 360
Communications Pro Forma Communications
Company as ICN Acquisition Company
Reported Acquisition Adjustments Pro Forma
---------------- ---------------- ---------------- -----------------
<S> <C> <C> <C> <C>
Operating Revenues
Cellular Service Revenues $ 494,314 $ 31,977 $ (1,474)(a)$ 524,817
Equipment Sales 19,554 2,116 21,670
---------------- ---------------- -------------- -----------------
Total Operating Revenues 513,868 34,093 (1,474) 546,487
---------------- ---------------- -------------- -----------------
Operating Expenses
Cost of Service 44,344 4,035 48,379
Cost of Equipment Sales 45,964 4,794 50,758
Other Operations Expense 24,326 1,487 25,813
Sales, Marketing and Advertising Expenses 94,619 3,491 98,110
General, Administrative and Other Expenses 122,257 5,950 (1,928)(b) 126,279
Depreciation and Amortization 68,154 14,297 (5,036)(c)
3,799 (d)
(496)(e) 80,718
---------------- ---------------- ---------------- -----------------
Total Operating Expenses 399,664 34,054 (3,661) 430,057
Operating Income 114,204 39 2,187 116,430
Interest Expense, net (54,102) (14,424) 1,014 (f) (67,512)
Minority Interests in Net Income
of Consolidated Entities (24,325) (800) (25,125)
Equity in Net Income of
Unconsolidated Entities 24,020 207 24,227
Other Income (Expense), net 322 1,402 (1,402)(g) 322
---------------- ---------------- ---------------- -----------------
Income (Loss) Before Income Taxes 60,119 (13,576) 1,799 48,342
Income Tax Expense 28,855 (3,020)(h) 25,835
---------------- ---------------- ---------------- -----------------
Net Income (Loss) $ 31,264 $ (13,576) $ 4,819 $ 22,507
================ ================ ================ =================
Net Income per Share (in Dollars) $ 0.18 (p)
=================
Weighted Average Shares
Outstanding, in thousands 123,548
=================
The accompanying notes are an integral part of these unaudited pro forma condensed combined financial statements.
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
360 COMMUNICATIONS COMPANY AND SUBSIDIARIES
PRO FORMA CONDENSED COMBINED BALANCE SHEET
June 30, 1996
Unaudited
(Thousands of Dollars)
360 360
Communications Pro Forma Communications
Company as ICN Acquisition Company
Reported Acquisition Adjustments Pro Forma
---------------- ----------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Assets
Total Current Assets $ 202,780 $ 58,732 $ (43,210)(i) $ 218,302
Property, Plant and Equipment, net 950,789 45,048 (6,942)(j) 988,895
Investments in Unconsolidated Entities 333,851 1,926 335,777
Intangibles, net 709,363 141,085 303,941 (k) 1,154,389
Other Assets 20,210 1,018 (1,018)(i)
30,844 (l) 51,054
---------------- ----------------- ---------------- ----------------
Total Assets $ 2,216,993 $ 247,809 $ 283,615 $ 2,748,417
================ ================= ================ ================
Liabilities and Shareowners'
and Partners' Equity
Total Current Liabilities $ 261,456 $ 17,466 $ (5,796)(i) $ 273,126
Long-Term Debt 1,387,662 325,466 (325,466)(m)
363,747 (m) 1,751,409
Deferred Credits and Other Liabilities 109,612 109,612
---------------- ----------------- ---------------- ----------------
Total Liabilities 1,758,730 342,932 32,485 2,134,147
Minority Interests in Consolidated Entities 171,596 6,484 (790)(n) 177,290
Shareowners' and Partners'
Equity (Deficit)
Common Stock 1,168 100 (100)(o)
65 (o) 1,233
Preferred Stock 14,900 (14,900)(o)
Additional Paid-In Capital 624,686 150,248 (o) 774,934
Accumulated Deficit (339,187) (70,434) 70,434 (o) (339,187)
Partners' Deficit (46,173) 46,173 (o)
---------------- ----------------- ---------------- ----------------
Total Shareowners' and Partners'
Equity (Deficit) 286,667 (101,607) 251,920 436,980
---------------- ----------------- ---------------- ----------------
Total Liabilities and Shareowners' and
Partners' Equity (Deficit) $ 2,216,993 $ 247,809 $ 283,615 $ 2,748,417
================ ================= ================ ================
The accompanying notes are an integral part of these unaudited pro forma condensed combined financial statements.
</TABLE>
30
<PAGE>
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
PRO FORMA STATEMENTS OF OPERATIONS
(a) Cellular Service Revenues are adjusted to eliminate intercompany
revenues and to reflect the reduced rates the Company charges its customers for
roaming in markets within the Company's service area.
(b) Certain expenses associated with general and administrative services
are duplicative in nature and are eliminated since the Company will not incur
these costs subsequent to the Acquisition.
(c) This entry adjusts to 40 years the amortization period for certain
acquired identifiable intangible assets to conform with the Company's current
accounting policies for amortization of such assets.
(d) This adjustment reflects amortization of the excess of the purchase
price over the fair value of net assets acquired.
(e) Depreciation expense for the Acquired Companies' property, plant and
equipment has been adjusted to reflect the Company's current accounting policies
for depreciable lives. This adjustment also accounts for the effect on
depreciation expense of property, plant and equipment that will be replaced as
described in (j).
(f) This entry reflects the net effect on interest expense resulting from
the debt transactions described in (m). An annual variable interest rate of 6.3%
and an annual fixed rate of 9.5% was used for additional credit facility
borrowings and subordinated debt, respectively. A 1/8% difference in the annual
variable interest rate would have the effect of changing interest expense by
$302,000 for the year ended December 31, 1995 and by $151,000 for the six
months ended June 30, 1996.
(g) Interest income associated with the nonretained assets of the Acquired
Companies is eliminated.
(h) The provision for income taxes is adjusted to reflect the tax effects
of pro forma adjustments (a) through (g). In addition, pro forma adjustments are
recorded to give effect to the tax provision associated with the historical
operating results of the Acquired Companies.
PRO FORMA BALANCE SHEET
(i) These entries adjust assets and liabilities to reflect net balances
acquired.
(j) To achieve cellular system compatibility and standard customer
functionality it will be necessary for the Company to replace the cell site
equipment and switches of the Acquired Companies. This adjustment represents the
write down of property, plant and equipment that will be replaced to realizable
value.
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(k) This entry adjusts intangibles for the excess of the estimated purchase
price over net assets acquired. The aggregate purchase price is approximately
$514 million. Presented below is a preliminary allocation of the purchase price
as if the ICN Acquisition occurred on June 30, 1996 (in thousands of dollars).
Tangible Assets Acquired $ 86,398
Intangible Assets Acquired 141,085
Liabilities Assumed (11,670)
Ownership Percentage Adjustment -
Minority Interests (5,694)
-------
Net Assets Acquired 210,119
Estimated Purchase Price 514,060
-------
Intangibles $ 303,941
=======
(l) This entry reflects the recording of deferred income tax assets
acquired by the Company in the ICN Acquisition. The deferred income tax assets
were primarily generated by the operating losses of the Acquired Companies and
represent future tax benefits to the extent that realization of such benefits
are more likely than not. The balance recorded includes a valuation allowance
in the amount of $5,120,000 established for the portion of deferred income tax
assets not expected to be realized.
(m) Under the terms of the transaction, the Company issued $122 million in
aggregate principal amount of subordinated non-negotiable promissory notes to
ICNP. These notes initially bear interest at 9.5%, which may be reduced to 9.0%
upon the occurrence of certain specified events, payable semiannually. Fifty
percent of the interest payments will be capitalized and become part of the
outstanding principal balance. In addition, the Company assumed $240 million of
Independent Cellular Network Partners' senior debt. On the acquisition date, the
Company refinanced the senior debt and funded the remaining purchase price by
borrowing under its existing revolving bank credit facility. Prior to the ICN
Acquisition, the Company's revolving bank credit facility was amended and
restated to permit, among other thing, the acquisition and increase its
borrowing capacity from $800 million to $1.0 billion. This entry eliminates the
long-term debt of the Acquired Companies and replaces it with the subordinated
debt and additional credit facility borrowings.
(n) This entry reflects the minority partners pro rata share of the write
down of certain property, plant and equipment as described in (j).
(o) Reflects the issuance of 6,500,000 shares of the Company's Common
Stock, $0.01 par value, ("Company Common Stock") issued in connection with the
ICN Acquisition and eliminates the capital accounts of the Acquired Companies.
EARNINGS PER SHARE
(p) Net Loss per Share for the year ended December 31, 1995 was calculated
based upon the number of Sprint Corporation weighted average shares outstanding,
adjusted assuming a conversion ratio of 1 to 3 and as if the 6,500,000 shares of
Company Common Stock issued in connection with the ICN Acquisition had been
outstanding since the beginning of the period. Net Income per Share for the six
months ended June 30, 1996 was computed using weighted average shares
outstanding, including common stock equivalents, and as if the 6,500,000 shares
of Company Common Stock issued in connection with the ICN Acquisition had been
outstanding since the beginning of the period.
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SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
360 Communications Company
/s/ Gary L. Burge
By:____________________________________
Gary L. Burge
Senior Vice President - Finance
Date: November 7, 1996
33
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EXHIBIT INDEX
Exhibit
No. Description of Exhibits
2.2 Exchange and Merger Agreement (the "Exchange and Merger
Agreement"), dated as of May 31, 1996, by and among Independent
Cellular Network Partners, James A Dwyer, Jr., David Winstel, CC
Industries, Inc., Ohio Cellular RSA, L.P., Ohio RSA Corporation,
Quality Cellular Communications of Ohio, Inc., Cellular Plus, L.P.,
C-Plus, Inc., Quality Cellular Plus Communications, Inc., Henry
Crown and Company (Not Incorporated) and 360 Communications
Company. (Filed as Exhibit 2.2 to the Company's Quarterly Report on
Form 10-Q for the quarterly period ended June 30, 1996, File No.
1-14108, and incorporated herein by reference.)
2.3 First Amendment to Exchange and Merger Agreement, dated as of
November 1, 1996, to the Exchange and Merger Agreement.
4.4 Form of 360 Communications Company's Subordinated Non-Negotiable
Promissory Note (included in Exhibit 2.2).
23 Consent of Arthur Andersen LLP.
99 Press Release issued by 360 Communications Company on
November 4, 1996.
34
<PAGE>
Exhibit 2.3
FIRST AMENDMENT TO EXCHANGE AND MERGER AGREEMENT
This First Amendment, dated as of November 1, 1996 ("First Amendment"),
to the Exchange and Merger Agreement dated as of May 31, 1996 (the "Agreement")
is made and entered into by and among each of the Persons listed under the
heading "Exchanging Group" on the signature pages hereto ("Exchanging Group"),
Henry Crown and Company (Not Incorporated), an Illinois limited partnership
("HCNI"), and 360 Communications Company, a Delaware corporation ("360 ").
RECITALS
A. Exchanging Group, HCNI and 360 are parties to the Agreement.
B. Exchanging Group, HCNI and 360 desire to amend the Agreement as set
forth herein.
NOW, THEREFORE, in consideration of the agreements hereinafter set
forth and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Exchanging Group, HCNI and 360 agree as follows:
AGREEMENT
1. The definition of "Non-Retained Assets" set forth in Section 1 of the
Agreement is hereby amended by: (i) deleting the words "(i) any accounts
receivable arising in connection with the Swaps and (ii)" in subsection (c)
thereof, (ii) deleting the word "and" at the end of subsection (j) thereof,
(iii) deleting the period at the end of subsection (k) thereof, and (iv)
inserting the following clause immediately after subsection (k) thereof: "(l)
any rights of Subject Entities under the Swaps and (m) any rights of ICN to
participate in the lottery for the A-side cellular licenses for Florida Rural
Service Area Number 11 and Minnesota Rural Service Area Number 11".
2. The definition of "Non-Retained Liabilities" set forth in Section 1 of the
Agreement is hereby amended by:(i) deleting the word "or" at the end of
subsection (n) thereof, (ii) deleting the period at the end of subsection (o)
thereof and replacing it with the following: "; and", and (iii) inserting the
following clause immediately after subsection (o) thereof: "(p) any liability,
obligation or commitment with respect to the Swaps."
3. The definition of "Retained Liabilities" set forth in Section 1 of the
Agreement is hereby amended by: (i) deleting the words ", including liabilities
under the Swaps, provided the Swaps are assigned to 360 and the required
consents for such assignment are obtained," in subsection (a) thereof, and (ii)
deleting "(o)" in subsection (a) thereof and replacing it with "(p)".
35
<PAGE>
4. Section 1 of the Agreement is hereby amended by inserting the following
definitions in appropriate alphabetical order:
""Specified Party" means (i) with respect to the Swap identified as
item no.1 on Schedule 1.6, ICNP; (ii) with respect to the Swap
identified as item no. 2 on Schedule 1.6, CCI; (iii) with respect to
the Swap identified as item no. 3 on Schedule 1.6, ICNP; (iv) with
respect to the Swap identified as item no. 4 on Schedule 1.6, CHF
Industries, Inc. n/k/a Habco, Inc.; (v) with respect to the Swap
identified as item no.5 on Schedule 1.6, ICN; and (vi) with respect to
the Swap identified as item no. 6 on Schedule 1.6, ICN.
"Specified Swaps" means (i) the Swap identified as item no. 2 on
Schedule 1.6 and (ii) the Swap identified as item no.4 on Schedule 1.6.
"Swap Differential" has the meaning set forth in Section 2.12.
"Value" means the value of the applicable Swap to the applicable
Specified Party as of 11:00 a.m., New York time, on the day which is
two business days immediately preceding the Closing Date, as calculated
by The First National Bank of Chicago in accordance with GAAP using its
customary "mark to market" procedures."
5. Section 2.1 of the Agreement is hereby amended by (i) deleting the word "and"
immediately after the number "2.7" in the third line of the first sentence
thereof and replacing it with a comma, (ii) inserting the following clause
immediately after the number "2.11" in the third line of the first sentence
thereof: "and 2.12" and (iii) deleting the third, fourth and fifth sentences
thereof.
6. Section 2.6 of the Agreement is hereby amended by (i) deleting the word "and"
immediately after the number "2.7" in the third line of the first sentence
thereof and replacing it with a comma and (ii) inserting the following clause
immediately after the number "2.11" in the third line of the first sentence
thereof: "and 2.12 (together with the payments set forth in Section 12.12)".
7. The Agreement is hereby amended by inserting a new Section 2.12 to read
as follows:
"2.12. Swap Differential. The amount obtained by subtracting (a) the
product of one-half multiplied by the sum of the Value of each of the
Specified Swaps from (b) the sum of the Value of each of the Swaps is
referred to herein as the "Swap Differential." If the Swap Differential
exceeds zero, Exchanging Group shall jointly and severally pay an
amount equal to the Swap Differential to 360 at Closing (a) by wire
transfer of immediately available funds to an account or accounts
designated by 360 in writing prior to Closing or (b) in such other
consideration as shall be mutually agreeable to the parties. If the
Swap Differential exceeds zero, the amount of the Swap Differential
shall be a reduction of the consideration received by Exchanging Group
36
<PAGE>
pursuant to the terms and conditions of this Agreement, and the parties
shall allocate such reduction in consideration to the partnership
interests of Cell Plus and the capital stock of ICN and CCTS as
follows: 30.06% to ICN, 19.26% to Cell Plus and 50.68% to CCTS. If the
Swap Differential is negative, 360 shall pay an amount equal to the
absolute value of the Swap Differential to Exchanging Group (or such
other parties as are designated in writing by Exchanging Group prior to
Closing) at Closing (a) by wire transfer of immediately available funds
to an account or accounts designated in writing by Exchanging Group
prior to Closing or (b) in such other consideration as shall be
mutually agreeable to the parties. If the Swap Differential is
negative, the absolute value of the Swap Differential shall be
additional consideration received by Exchanging Group pursuant to the
terms and conditions of this Agreement, and the parties shall allocate
such additional consideration to the partnership interests of Cell Plus
and the capital stock of ICN and CCTS as follows: 30.06% to ICN, 19.26%
to Cell Plus and 50.68% to CCTS. In either case, the amount of
consideration for Cell Plus shall be deemed a reduction or increase, as
the case may be, of the goodwill of Cell Plus."
8. Section 3.34 of the Agreement is hereby amended by inserting the following
immediately after the last sentence thereof: "Exchanging Group is acquiring the
360 Shares solely for the purpose of investment as defined in 16 CFR ss.
801.1(i)(1), which provides as follows:
Voting securities are held or acquired `solely for the purpose of
investment' if the person holding or acquiring such voting securities
has no intention of participating in the formulation, determination or
direction of the basic business decisions of the issuer."
9. Section 9.4(n) of the Agreement is hereby amended by deleting such
Section in its entirety and replacing it with the following:
"(n) Evidence of cancellation of, or assignment to and assumption by
ICNP of, those Swaps to which any of the Subject Entities is a party
(which shall include the consent of the other parties to such
agreements, if necessary)."
10. Section 9.5(i) of the Agreement is hereby amended by deleting the
following words: "and the Swaps (if all requisite consents are obtained in
accordance with Section 2.1 hereof)".
11. Section 11.1(b) of the Agreement is hereby amended by deleting the
fourth sentence thereof and substituting the following sentence in lieu thereof:
"Exchanging Group agrees to include Section 754 elections with these final
Federal returns if 360 so directs."
12. Except as expressly modified hereby, the terms and provisions of the
Agreement shall continue in full force and effect, and, as so amended, the
Agreement is hereby ratified and confirmed. Whenever the Agreement or any of the
agreements, instruments or other documents executed and delivered in connection
therewith refer to the Agreement, all such references shall be deemed to be to
the Agreement as modified hereby.
37
<PAGE>
13. This First Amendment and the legal relations among the parties hereto shall
be governed by and construed in accordance with the laws of the State of
Illinois, and any litigation concerning this First Amendment or the transactions
contemplated hereby or any other matters relating hereto shall be cited in a
court of competent jurisdiction located in Cook County, Illinois.
14. This First Amendment may be executed in one or more counterparts, each of
which shall be considered an original, but all of which together shall
constitute the same instrument.
[The balance of this page is intentionally left blank]
38
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed and delivered this
First Amendment as of the date first above written.
EXCHANGING GROUP:
INDEPENDENT CELLULAR NETWORK PARTNERS
By: HENRY CROWN AND COMPANY (NOT INCORPORATED)
By:
-----------------------
A General Partner
By: INDEPENDENT CELLULAR NETWORK INVESTORS
By:
---------------------
Geoffrey F. Grossman, Not Personally
but Solely as Trustee of the Trusts that
are Partners
CC INDUSTRIES, INC.
By:
----------------------
Its: ----------------------
--------------------------------
James A. Dwyer, Jr.
--------------------------------
David Winstel
39
<PAGE>
CELLULAR PLUS, L.P.
By: QUALITY CELLULAR PLUS COMMUNICATIONS, INC.
By:
-----------------------------
James A. Dwyer, President
OHIO CELLULAR RSA, L.P.
By: QUALITY CELLULAR COMMUNICATIONS OF OHIO, INC.
By:
----------------------------
James A. Dwyer, President
OHIO RSA CORPORATION
By:
------------------
Its:
------------------
QUALITY CELLULAR COMMUNICATIONS OF OHIO, INC.
By:
-------------------------
James A. Dwyer, President
40
<PAGE>
QUALITY CELLULAR PLUS COMMUNICATIONS, INC.
By:
---------------------------
James A. Dwyer, President
C-PLUS, INC.
By:
------------------------
Its:
------------------------
360 :
360 COMMUNICATIONS COMPANY
By:
------------------------
Its:
------------------------
HENRY CROWN AND COMPANY (NOT INCORPORATED)
By:
-------------------------
A General Partner
41
<PAGE>
Exhibit 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in the Registration Statements (Form S-8 No. 333-1378 related to the
360 Communications Company Retirement Savings Plan; Form S-8 No. 333-1382
related to the 360 Communications Company 1996 Equity Incentive Plan and the 360
Communications Company Director Equity and Deferred Compensation Plan; and Form
S-8 No. 333-1380 related to the 360 Communications Company Replacement Stock
Option Plan) of 360 Communications Company of our report dated March 15, 1996
(except with respect to Note 14, as to which the date is May 31, 1996) related
to the financial statements of Independent Cellular Network, Inc. and
Affiliates, included in the Current Report on Form 8-K of 360 Communications
Company dated November 6, 1996.
ARTHUR ANDERSEN LLP
Chicago, Illinois
November 6, 1996
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Exhibit 99
360 Communications completes ICN acquisition
360 Communications....Corporate Communications....8725 W. Higgins Road.
...Chicago, Illinois 60631....(773)399-2200
FOR IMMEDIATE RELEASE
MEDIA:
Margaret Kirch Cohen
(773) 399-2385
ANALYSTS:
Dave Gould
(773) 399-2284
360 COMMUNICATIONS COMPLETES ACQUISITION
OF ICN'S CELLULAR OPERATIONS
CHICAGO, Nov. 4, 1996 -- 360 Communications Company (NYSE: XO) today
completed its previously announced acquisition of Independent Cellular Network's
(ICN) cellular properties in Kentucky, Ohio, Pennsylvania and West Virginia
controlled by the Crown family of Chicago and their associates. ICN's cellular
business operates under the Wireless One brand.
360 's interests in the 20 ICN markets represent approximately 140,000
customers and 3.2 million potential customers (net POPS), bringing the total net
POPs owned by 360 Communications to 24.9 million. The ICN properties in
Pennsylvania will become part of 360 's Mid-Atlantic Region, while those in
Ohio, Kentucky and West Virginia will become part of the company's Midwest
Region. 360 expects to complete the name change from Wireless One to 360 in
early 1997.
"We're delighted to welcome Wireless One associates to the 360 team,"
said Dennis E. Foster, president and chief executive officer of 360
Communications. "This acquisition further strengthens our market position and
clustering strategy. It also provides instant expansion of cellular coverage,
including 225 miles of contiguous interstate highways that lead to New York,
Pittsburgh and Columbus."
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Under terms of the transaction, 360 is issuing to ICN 6.5 million
shares of 360 common stock and $122 million of subordinated debt. 360 is also
assuming $240 million of ICN's senior debt.
ICN's markets in Ohio and West Virginia, which include Steubenville,
Ohio, and Wheeling and Parkersburg, West Virginia, form a natural market cluster
with the 360 markets of Mansfield and Youngstown, Ohio. ICN's Pennsylvania
markets, which include Altoona, Scranton, State College, Wilkes-Barre and
Williamsport, Pa., more than double 360 's presence in the state.
ICN, which is privately held, will continue to provide cellular service
in Florida. Chicago-based 360 Communications provides wireless voice and data
services to more than 1.85 million customers in nearly 100 markets in Alabama,
Florida, Illinois, Indiana, Iowa, Nevada, New Mexico, North Carolina, Ohio,
Pennsylvania, South Carolina, Tennessee, Texas and Virginia. The company also
offers residential long distance service. In addition to the New York Stock
Exchange, 360 Communications' stock is listed on the Chicago and Pacific stock
exchanges under the symbol XO.
To obtain financial information or copies of quarterly earnings and
other recent news releases issued by the company, please call toll-free
1.888.360.INFO (1.888.360.4636), 24 hours a day, seven days a week. 360
Communications' news releases are also available through PR Newswire and can be
accessed by calling (800) 578-7888, #111849. 360 's internet address is
www.360.com.
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The following markets are involved in the transaction:
Year-end '95
Total % Net
POPS Ownership POPS
Pennsylvania
Allentown 712,049 4.00 28,482
Altoona 132,385 100.00 132,385
Johnstown 39,532 100.00 239,532
Reading 349,909 10.00 34,991
Scranton/Wilkes-Barre 660,089 78.98 521,338
State College 129,835 100.00 129,835
Williamsport 121,194 98.75 119,675
Pennsylvania RSA 3B1 37,639 100.00 37,639
Pennsylvania RSA 3B2 59,275 16.66 9,875
Pennsylvania RSA 4B1 29,692 100.00 29,692
Pennsylvania RSA 5 81,417 40.00 32,567
Pennsylvania RSA 8 406,665 98.75 401,569
Ohio/West Virginia/Kentucky
Charleston, WV 255,548 85.00 217,216
Huntington-Ashland, WV-KY-OH 317,193 100.00 317,193
Parkersburg-Marietta, WV-OH 157,631 100.00 157,631
Steubenville-Weirton, OH-WV 139,988 100.00 139,988
Wheeling, WV-OH 157,559 100.00 157,559
Ohio RSA 7B2 170,703 100.00 170,703
Ohio RSA 10B2 111,929 100.00 111,929
West Virginia RSA 6 186,273 100.00 186,273
--------- ---------
TOTALS: 4,456,505 3,176,072
###
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