SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
[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
[ ] Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from ________ to __________
Commission File No. 333-23769
DOBSON COMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its charter)
OKLAHOMA 73-1110531
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
13439 North Broadway Extension
Suite 200
OKLAHOMA CITY, OKLAHOMA 73114
(Address of principal executive offices) (Zip Code)
(405) 391-8500
(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 (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
At August 13, 1997, there were 473,152 shares of the registrant's $1.00
par value Class A Common Stock outstanding.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
GENERAL
The Company provides diversified telecommunication products and services. The
Company currently provides rural cellular telephone services in Oklahoma and
Texas (the "Oklahoma/Texas Cluster"), in Kansas and Missouri (the
"Kansas/Missouri Cluster") and in Maryland and Pennsylvania (the "Maryland
Cluster"). Upon consummation of the Arizona 5 Partnership acquisition described
below, the Company will also own and operate a cellular system in Arizona. The
Company also owns interests in, and operates, regional fiberoptic transmission
networks in Oklahoma, Texas and Colorado, and owns and operates local telephone
exchanges in Oklahoma, and intends to resell local, long distance and wireless
services in Oklahoma.
RECENT EVENTS
In August 1997, the Company entered into a letter of intent with Texas 16
Cellular Telephone Company to purchase the assets of the cellular system in
Texas RSA #16, including the licenses granted by the Federal Communications
Commission. Texas RSA #16 is located in south Texas, adjacent to Houston,
Austin and San Antonio, and serves a population base of approximately 325,000.
Management of the Company anticipates entering a definitive agreement in the
third quarter and expects the transaction to close late in the fourth quarter
of 1997 or first quarter of 1998.
On February 28, 1997, the Company purchased the FCC cellular licenses for, and
certain assets relating to, two MSAs and two RSAs located in Maryland and
Pennsylvania for $77.7 million. The properties are located immediately outside
the Washington/Baltimore metropolitan area. On March 3, 1997, the Company
purchased the FCC cellular license for, and certain assets relating to, the
Maryland RSA 2 for $75.8 million. The property is located to the east of the
Washington/Baltimore metropolitan area. The acquired properties are hereafter
referred to as the "Maryland Cluster."
On February 28, 1997, the Company signed a definitive agreement to purchase the
Gila River Cellular General Partnership (the "Arizona 5 Partnership"), which
owns the cellular license for Arizona RSA 5 as well as the associated tangible
operating assets. Certain affiliates of the Company indirectly own a 20.6%
interest in the Arizona 5 Partnership and will receive approximately $9.5
million in connection with the acquisition. In addition, the Company will loan
$5.2 million to one of the current partners, which will acquire a 25% interest
in the Arizona 5 Partnership. Upon completion of these transactions, the
Company will have paid a net amount of $39.8 million and will own a 75%
interest in the Arizona 5 Partnership. The Company expects that this
acquisition will close late in the third quarter or early in the fourth quarter
of 1997.
On February 28, 1997, the Company's bank credit agreement was amended and
restated to provide the Company with a $200 million revolving credit facility
maturing in 2005 ("the Bank Facility"). Interest on borrowings under the Bank
Facility accrue at a variable rate (8.70% at June 30, 1997). Initial loan
proceeds were used to refinance existing indebtedness, finance the Maryland
Cluster acquisition described above and for general corporate purposes,
including the payment of a $7.6 million dividend to holders of the Company's
Class A Common Stock. The principal stockholder used $6.0 million of the
dividend to repay a loan which had been guaranteed by the Company and
approximately $.5 million to repay indebtedness owed to the Company with
respect to certain legal fees. As a result of the $7.6 million dividend, the
holders of Class B Convertible Preferred Stock were issued 100,000 shares of
Class C Preferred Stock, having a liquidation preference of approximately $1.6
million. In connection with the closing of the Bank Facility, the Company
extinguished its then existing credit facility. The Company will finance the
Arizona 5 Partnership acquisition with borrowings under the Bank Facility.
On February 28, 1997, the Company issued pursuant to a private offering $160
million of 11.75% Senior Notes maturing in 2007 and used the net proceeds
($155.2 million) to finance the acquisitions described above ($116.9 million)
and to purchase securities ($38.3 million) which have been pledged and escrowed
to secure payment of the first four semi-annual interest payments on the notes,
which begin on October 15, 1997. Except for the first four interest payments,
the senior notes are unsecured obligations of the Company, redeemable at the
option of the Company, in whole or in part, on or after April 15, 2002 at
105.875% of the principal amount outstanding, declining ratably to 100% on or
after April 15, 2004, plus accrued interest. In addition, at any time prior to
April 15, 2000, the Company may redeem up to 35% of the aggregate principal
amount with the net proceeds of sales of capital stock of the Company at
111.750% of principal amount, plus accrued interest; provided that after any
such redemption at least $104 million aggregate principal amount remains
outstanding.
On June 16, 1997, the Company completed an offer to exchange all of the
outstanding Senior Notes for substantially identical notes registered under the
Securities Act of 1933.
RESULTS OF OPERATIONS
The following table presents the period-to-period change, for the periods
indicated, in dollars and percent for the various Condensed Consolidated
Statements of Operations line items:
<TABLE>
<CAPTION>
Period-to-Period Period-to-Period
Change for the Change for the
Three Months Ended Six Months Ended
June 30, 1997 and 1996 June 30, 1997 and 1996
Increase/(Decrease) Increase/(Decrease)
------------------------------ -------------------------------
<S> <C> <C> <C> <C>
Operating Revenues:
Cellular service $ 5,650,074 130.2% $ 7,824,639 92.6%
Cellular roaming 4,533,946 232.8% 6,695,057 211.9%
Cellular equipment sales 67,067 44.5% (38,735) (9.8%)
Wireline telephone service 534,278 16.2% 849,721 12.9%
Fiber service 361,033 66.7% 689,033 67.9%
Other 1,684 .5% (146,442) (22.4%)
------------ --------- ------------ --------
Total operating revenues 11,148,182 105.0% 5,873,273 78.4%
Operating Expenses:
Cellular service 2,524,915 241.4% 3,514,216 188.0%
Cellular equipment 435,516 77.2% 752,066 72.5%
Wireline telephone service 68,467 16.7% 142,554 17.0%
Fiber service 28,268 56.8% 45,733 46.0%
Marketing and selling 1,382,943 119.9% 2,145,668 109.1%
General and administrative 2,175,630 75.4% 3,815,754 72.8%
Depreciation and amortization 3,560,649 146.1% 5,423,595 130.1%
------------ -------- ------------ --------
Total operating expenses 10,176,388 119.1% 15,839,586 104.0%
------------ -------- ------------ --------
Operating income 971,694 46.9% 33,687 0.7%
------------ -------- ------------ --------
Other expense 3,818,715 123.6% 6,053,207 134.9%
------------ -------- ------------ --------
Loss before minority interests in
income of subsidiaries, income taxes
and extraordinary items (2,847,021) (280.5%) (6,019,520) (1,144.7%)
Minority interests in income of
subsidiaries 493,814 762.5% 576,774 256.9%
------------ -------- ------------ --------
Loss before income taxes and
extraordinary items (3,340,834) (309.4%) (6,596,294) (2,189.3%)
Income tax benefit 220,657 55.5% 344,682 370.6%
------------ -------- ------------ --------
Loss before extraordinary items (3,561,491) (521.9%) (6,251,611) (3,001.4%)
Extraordinary expense, net of income
tax benefit - - 1,861,656 343.4%
------------ -------- ------------ --------
Net loss $ (3,561,491) (521.9%) $ (8,113,267) (2,430.8%)
============ ======== ============ ========
</TABLE>
THREE MONTHS ENDED JUNE 30, 1997 COMPARED TO THE THREE MONTHS ENDED JUNE 30,
1996
OPERATING REVENUE. For the three months ended June 30, 1997, total operating
revenue increased $11.1 million, or 105%, to $21.8 million from $10.6 million
for the comparable period in 1996.
CELLULAR. The Company's operating revenue from its cellular operations
(service, roaming, and equipment) increased $10.3 million in the second quarter
of 1997 compared to 1996. Cellular service revenue increased $5.7 million, or
130.2%, to $10.0 million in 1997 from $4.3 million in 1996. Of the increase,
$4.8 million was attributable to the acquisition of the Maryland Cluster in
1997. The remaining $.9 million was primarily attributable to increased
penetration and usage in the Oklahoma/Texas Cluster and the Kansas/Missouri
Cluster. The Company's cellular subscriber base increased 170.3% to 82,264 at
June 30, 1997, from 30,437 at June 30, 1996. 42,608 subscribers were added as a
result of the acquisition of the Maryland Cluster. However, the Company's
average monthly cellular service revenue per subscriber decreased 14.1% to
$41.35 for the three months ended June 30, 1997 from $48.11 for the comparable
period in 1996 due to the addition of new lower rate subscribers in the
Maryland Cluster and competitive market pressures. Cellular roaming revenue
increased $4.5 million, or 232.8%, to $6.5 million in 1997 from $1.9 million in
1996. Of the increase, $3.5 million was attributable to the acquisition of the
Maryland Cluster in 1997. The remaining $1.1 million was primarily attributable
to increased roaming minutes in the Oklahoma/Texas Cluster and Kansas/Missouri
Cluster due to expanded coverage area in these markets and the general increase
in cellular minutes of use. Cellular equipment sales of $.2 million in the
second quarter of 1997 represented a slight increase from 1996, as the Company
sold more equipment during the second quarter of 1997.
WIRELINE. Wireline operations revenue increased $.5 million, or 16.2%, to
$3.8 million for the three months ended June 30, 1997 compared to $3.3 million
for the same period in 1996 due primarily to an increase in toll charges and an
increase in the number of access lines.
FIBER. The Company's revenue from its fiber operations increased $.4 million,
or 66.7%, to $.9 million in the second quarter of 1997 from $.5 million in 1996
primarily as a result of an increase in the number of fiber lines, bringing the
total lines leased to an equivalent of 48 DS3s at June 30, 1997 compared to 33
at June 30, 1996.
OTHER. For the three months ended June 30, 1997, other income of $.3 million
included rental revenue for the use of Company owned facilities, interest on
loans to Company employees and affiliates, management fees from affiliates and
other telecommunications services such as internet and voice mail.
COST OF SERVICE AND EQUIPMENT SALES. For the three month period ended June 30,
1997, the total cost of service and equipment sales increased $3.1 million, or
147.7%, to $5.1 million from $2.1 million for the comparable period in 1996.
CELLULAR. Cost of cellular service increased $2.5 million, or 241.4% to $3.6
million during the three months ended June 30, 1997 from the same period in
1996. Of the increase, $2.0 million was attributable to the acquisition of the
Maryland Cluster in 1997. The remaining $.5 million was primarily attributable
to increased subscribers and minutes of use in the Oklahoma/Texas Cluster and
Kansas/Missouri Cluster and expanded use of rerating agreements with cellular
providers adjacent to our markets. Cost of cellular equipment increased $.4
million in 1997 primarily from increases in the volume of equipment sold due to
the growth in subscribers.
WIRELINE. Cost of wireline telephone service increased $.1 million, or 16.7%,
to $.5 million in 1997 from $.4 million in 1996. The increase was a result of
increased costs associated with continued customer growth and usage.
FIBER. Costs of fiber service remained fairly constant for the period.
MARKETING AND SELLING COSTS. Marketing and selling costs increased
$1.4 million, or 119.9%, to $2.5 million in the second quarter of 1997 from
$1.2 million in 1996. The increase was primarily due to the higher level of
cellular subscribers added period to period. Gross cellular subscribers added
in the second quarter of 1997 was 8,440 with the Maryland Cluster making up
4,787 of the gross cellular subscribers added in the second quarter of 1997.
The number of gross cellular subscribers added in the second quarter of 1996
was 2,619.
GENERAL AND ADMINISTRATIVE COSTS. For the three month period ended June 30,
1997, general and administrative costs increased $2.2 million, or 75.4%, to
$5.1 million from $2.9 million for 1996. The increase was primarily due to
increased billing costs as a result of the growth in cellular subscribers, the
acquisition of the Maryland Cluster and increased salary costs resulting from
additional personnel in the Company's cellular and fiber operations.
DEPRECIATION AND AMORTIZATION EXPENSE. For the three month period ended June
30, 1997, depreciation and amortization expense increased $3.6 million to
$6.0 million from $2.4 million in 1996. Approximately $3.3 million of the
increase was the result of the amortization of assets acquired in the Maryland
Cluster, with the remainder due primarily to an increase in equipment in the
Company's cellular, wireline and fiber businesses.
OTHER EXPENSE. For the three months ended June 30, 1997, total other expense
(consisting of interest income, interest expense and other) increased $3.8
million, or 123.6% to $6.9 million from $3.1 million for the comparable period
in 1996. Interest income of $.8 million, was a result of interest earned on
securities purchased which were pledged and escrowed to secure payment of the
first four semi-annual interest payments on the Senior Notes. For the second
quarter of 1997, interest expense increased $6.0 million to $7.7 million from
$1.7 million in the comparable period of 1996. The increase was primarily a
result of increased borrowings in the first quarter 1997 to finance the
Maryland Cluster acquisition. For the second quarter 1997, other expense
decreased $1.4 million for the comparable period in 1996. This is primarily the
result of a $1.6 million loss recognized in the second quarter 1996 relating to
a sale of assets.
SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 1996
OPERATING REVENUE. For the six months ended June 30, 1997, total operating
revenue increased $15.9 million, or 78.4% to $36.1 million from $20.2 million
for the comparable period in 1996.
CELLULAR. The Company's operating revenue from its cellular operations
(service, roaming, and equipment) increased $14.5 million for the first six
months of 1997 compared to 1996. Cellular service revenue increased $7.9
million, or 92.6%, to $16.3 million in 1997 from $8.4 million in 1996. Of the
increase, $6.6 million was attributable to the acquisition of the Maryland
Cluster in 1997 and the inclusion of the operations of the Kansas/Missouri
Cluster, which was acquired March 19, 1996, for all of 1997. The remaining
$1.3 million was primarily attributable to increased penetration, usage in the
Oklahoma/Texas Cluster and Kansas/Missouri Cluster. The Company's cellular
subscriber base increased 170.3% to 82,264 at June 30, 1997, from 30,437 at
June 30, 1996. 42,608 subscribers were added as a result of the acquisition of
the Maryland Cluster. However, the Company's average monthly cellular service
revenue per subscriber decreased 14.5 % to $41.93 for the six months ended June
30, 1997 from $49.06 for the comparable period in 1996 due to the addition of
new lower rate subscribers in the Maryland Cluster and competitive market
pressures. Cellular roaming revenue increased $6.7 million, or 211.9%, to $9.9
million in 1997 from $3.2 million in 1996. Of the increase, $5.1 million was
attributable to the acquisition of the Maryland Cluster in 1997 and the
inclusion of the operations of the Kansas/Missouri Cluster which was acquired
on March 19, 1996, for all of 1997. The remaining $1.6 million was primarily
attributable to increased roaming minutes in the Oklahoma/Texas Cluster and
Kansas Missouri Cluster due to expanded coverage areas in these markets and the
general increase in cellular minutes of use. Cellular equipment sales of $.4
million in 1997 remained fairly consistent for the period.
WIRELINE. Wireline operations revenue increased $.8 million, or 12.9%, to
$7.4 million for the six months ended June 30, 1997 compared to $6.6 million
for the same period in 1996 due primarily to an increase in toll charges and an
increase in the number of access lines.
FIBER. The Company's revenue from its fiber operations increased $.7 million,
or 67.9%, to $1.7 million in the first six months of 1997 from $1.0 million in
1996 primarily as a result of an increase in the number of fiber lines,
bringing the total lines leased to an equivalent of 48 DS3s at June 30, 1997
compared to 33 at June 30, 1996.
OTHER. For the six months ended June 30, 1997 and 1996, other income of
$.5 million and $.7 million, respectively, included rental revenue for the use
of Company owned facilities, interest on loans to Company employees and
affiliates, management fees from affiliates and other telecommunications
services such as internet and voice mail.
COST OF SERVICE AND EQUIPMENT SALES. For the six month period ended June 30,
1997, the total cost of service and equipment sales increased $4.4 million, or
115.9%, to $8.3 million from $3.8 million for the comparable period in 1996.
CELLULAR. Cost of cellular service increased $3.5 million, or 188.0% to $5.4
million during the six months ended June 30, 1997 from the same period in 1996.
Of the increase $2.8 million was attributable to the acquisition of the
Maryland Cluster in 1997 and the inclusion of the operations of the
Kansas/Missouri Cluster, which was acquired March 19, 1996, for all of 1997.
The remaining $.7 million was primarily attributable to increased subscribers
and minutes of use in the Oklahoma/Texas Cluster and Kansas/Missouri Cluster
and expanded use of rerating agreements with cellular providers adjacent to our
markets. Cost of cellular equipment increased $.8 million in 1997 primarily
from increases in the volume of equipment sold due to the growth in
subscribers.
WIRELINE. Cost of wireline telephone service increased $.1 million, or 17.0%,
to $1.0 million in 1997 from $.9 million in 1996. The increase was a result of
increased costs associated with continued customer growth and usage.
FIBER. Costs of fiber service remained fairly constant for the period.
MARKETING AND SELLING COSTS. Marketing and selling costs increased
$2.1 million, or 109.1%, to $4.1 million in the first six months of 1997 from
$2.0 million in 1996. The increase was primarily due to the higher level of
cellular subscribers added period to period. Gross cellular subscribers added
in the first six months of 1997 was 13,242 with the Maryland Cluster making up
6,196 of the gross cellular subscribers added since its acquisition. The number
of gross cellular subscribers added in the first six months of 1996 was 4,805.
GENERAL AND ADMINISTRATIVE COSTS. For the six month period ended June 30,
1997, general and administrative costs increased $3.8 million, or 72.8%, to
$9.1 million from $5.2 million for 1996. The increase was primarily due to
increased billing costs as a result of the growth in cellular subscribers, the
acquisition of the Maryland Cluster, the inclusion of the Kansas/Missouri
Cluster for all of 1997, and increased salary costs resulting from additional
personnel in the Company's cellular and fiber operations.
DEPRECIATION AND AMORTIZATION EXPENSE. For the six month period ended June 30,
1997, depreciation and amortization expense increased $5.4 million to
$9.6 million from $4.2 million in 1996. Approximately $5.0 million of the
increase was the result of the amortization of assets acquired in the Maryland
and Kansas/Missouri Clusters, with the remainder due primarily to an increase
in equipment in the Company's cellular, wireline and fiber businesses.
OTHER EXPENSE. For the six months ended June 30, 1997, total other expense
(consisting of interest income, interest expense, and other) increased $6.1
million or 134.9% to $10.5 million from $4.4 million for the comparable period
in 1996. Interest income of $1.1 million for the first six months of 1997 was
a result of interest earned on securities purchased which were pledged and
escrowed to secure payment of the first four semi-annual interest payments on
the Senior Notes. For the first six months of 1997, interest expense increased
$8.9 million to $11.7 million from $2.8 million in the comparable period of
1996. The increase was primarily a result of increased borrowings in the first
quarter 1997 to finance the Maryland Cluster acquisition. For the first six
months of 1997, other expense decreased $1.7 million for the comparable period
in 1996. This is primarily the result of a $1.6 million loss recognized in the
second quarter 1996 relating to a sale of assets.
EXTRAORDINARY EXPENSE. In the first six months of 1997 and 1996, the Company
incurred a pretax loss of approximately $2.5 million and $.8 million,
respectively, as a result of writing off previously capitalized financing costs
associated with a revolving credit facility that was refinanced in February
1997 and March 1996.
LIQUIDITY AND CAPITAL RESOURCES
The cellular telephone business requires substantial capital to acquire,
construct, and expand cellular telephone systems and to fund operating
requirements. The Company historically has financed its acquisitions and other
capital needs through vendor financing, bank debt and proceeds from the sale of
debt and equity. The Company's wireline businesses have historically been
financed through government loans. During the first quarter of 1997, the
Company established a $200 million revolving bank credit facility maturing in
2005 and issued $160 million of 11.75% Senior Notes due 2007 pursuant to a
private offering. See " - Recent Events."
At June 30, 1997, the Company had working capital of $25.1 million (a ratio of
current assets to current liabilities of 2.5:1) and a cash balance of $2.3
million, which compares to working capital of $11.0 million (a ratio of current
assets to current liabilities of 2.2:1) and a cash balance of $1.6 million of
at December 31, 1996. The Company's net cash provided by operating activities
for the six month periods ended June 30, 1997 and 1996 was $6.8 million and $8.6
million, respectively. The net cash provided by operating activities in 1997
primarily relates to the net changes in current assets and liabilities and
depreciation and amortization, offset by the Company's net loss for the period.
The increase in net cash used in investing activities and net cash provided by
financing activities from 1997 to 1996 is primarily the result of the Company's
acquisition of cellular systems in the Maryland Cluster which was financed
through the issuance of additional long-term debt.
In April 1997, the Company entered into an interest rate hedge agreement to
hedge the Company's interest expense on its indebtedness under the Bank
Facility. The agreement provides for a rate cap of 8% plus a factor,
based on the Company's leverage ratio (cap at June 30, 1997 was 10.75%),
terminating on the earlier of April 24, 2000 or the date an option to enter
into an interest rate swap transaction is exercised by the financial partner.
Under the swap agreement, the interest rate would be fixed at 6.13% plus the
factor referred to above or a floating LIBOR rate, terminating on April 24,
2002. The Company accounts for this as a hedge.
The Company's capital expenditures (excluding cost of acquisitions) were $2.4
and $5.0 million, respectively, for the three month and six month periods ended
June 30, 1997 and the Company expects its capital expenditures (excluding cost
of acquisitions) to be approximately $19 million for 1997. Capital expenditures
for its cellular operations include buildout of new cell sites and new store
locations. Fiber operations capital expenditures will be for electronics to
increase capacity and the Company expects to invest only maintenance capital
for its wireline operations. The Company also expects to invest approximately
$4.9 million in high capacity switches and other communications equipment in
1997 for use in its business to resell local, long-distance and wireless
services in Oklahoma City and Tulsa, and in its wireline operations.
In April 1997, the Company was granted PCS licenses in nine markets adjacent to
and overlapping the Company's existing cellular footprint. The aggregate bid
for these licenses was $5.1 million after a discount of 15%. The Company has
paid 20% of the net winning bid amount and has financed the balance with the
government at the U.S. Treasury rate for ten-year obligations with a quarterly
amortization over eight years beginning in 1999. The Company is required to
build out systems covering 25% of the licensed population by 2002. The Company
currently anticipates that the cost to build out the minimum PCS system will be
$10 million to $30 million. The actual amount of the expenditures will depend
on the PCS technology selected by the Company, the extent of the Company's
buildout, the costs at the time of buildout and the extent the Company must
relocate incumbent microwave licensees.
The amount and timing of capital expenditures may vary depending on the rate at
which the Company expands and develops its cellular systems, whether the
Company consummates additional acquisitions, the rate at which the Company
builds out a PCS system and whether the Company expands its fiberoptic network
or local exchange operations.
Although there can be no assurance, management believes the proceeds available
from the Bank Facility, together with cash on hand, and cash flow from
operations will be sufficient to fund the pending acquisition of the Arizona 5
Partnership, the Company's capital expenditures and its working capital and
debt service requirements. At June 30, 1997, the Company had approximately
$79.0 million of funds available under the Bank Facility. The Company will
require additional financing to complete the Texas 16 acquisition, to pursue
future acquisitions, and to meet the required PCS buildout. Sources of
additional capital may include cash flows from operations and public or private
debt or equity financings. There can be no assurance that any additional
financing will be available to the Company or, if available, that it can be
obtained on terms acceptable to the Company and within the limitations
contained in the Company's financing arrangements. The successful
implementation of the Company's strategy, including the further development of
its cellular systems and significant and sustained growth in the Company's cash
flows, is necessary for the Company to meet its debt service requirements.
The Company is a holding company with no direct operations and no significant
assets other than the stock of its subsidiaries. The Company is dependent on
the cash flows of its subsidiaries to meet its obligations, including the
payment of interest and principal on the Senior Notes (except with respect to
the first four semi-annual interest payments for which the Company has
restricted investments available). The Bank Facility contains certain
restrictions on the ability of the Company's primary subsidiary to distribute
funds to the Company. The indenture under which the Senior Notes were issued
and the Bank Facility impose certain limits on the ability of the Company to,
among other things, incur additional indebtedness.
FORWARD-LOOKING STATEMENTS
The description of the Company's capital expenditure plans set forth above,
including planned acquisitions, are forward-looking statements made pursuant to
the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. These plans involve a number of risks and uncertainties. The important
factors that could cause actual capital expenditures, acquisitions activity, or
the Company's performance to differ materially from the plans include, without
limitation, the Company's ability to satisfy the financial covenants of its
existing debt instruments and to raise additional capital; the Company's
ability to manage its rapid growth successfully and to compete effectively in
its cellular, fiber and resale businesses against competitors with greater
financial, technical, marketing and other resources; changes in end-user
requirements and preferences; the development of other technologies and
products that may gain more commercial acceptance than those of the Company;
and adverse regulatory changes. For further information regarding these and
other risk factors, see "Risk factors" and "Business" in the Company's
Prospectus dated May 14, 1997 filed with the Securities and Exchange Commission
under Rule 424(b) of the Securities Act of 1933.
<PAGE>
SIGNATURES
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.
Date: August 19, 1997 Dobson Communications Corporation
(registrant)
EVERETT R. DOBSON
Everett R. Dobson
Chairman of the Board, President
and Chief Executive Officer
Date: August 19, 1997 BRUCE R. KNOOIHUIZEN
Bruce R. Knooihuizen
Vice President and Chief Financial
Officer (principal financial officer)
