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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q/A
AMENDMENT NO. 1
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|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____
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Commission file number
333-36253
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PRICE COMMUNICATIONS WIRELESS, INC.
(Exact Name of Registrant as specified in its charter)
Delaware 13-3956941
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
45 Rockefeller Plaza, 10020
New York, New York (Zip Code)
(Address of principal executive offices)
Registrant's telephone number (212) 757-5600
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Securities registered pursuant to Section 12(b) or Section 12(g) of the Act:
None
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 |_|
The number of shares outstanding of the issuer's common stock as of April 22,
1999 was 100.
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<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<S> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements (Unaudited)
Price Communications Wireless, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets- March 31, 1999 and December 31, 1998 ........ I-1
Condensed Consolidated Statements of Operations - Three months ended
March 31, 1999 and 1998 ................................................... I-2
Condensed Consolidated Statements of Cash Flows - Three months ended
March 31, 1999 and 1998 ......................................................... I-3
Notes to Condensed Consolidated Financial Statements ............................... I-4
Palmer Wireless Holdings, Inc.
Condensed Consolidated Balance Sheets- March 31, 1999 and December 31, 1998......... I-6
Condensed Consolidated Statements of Operations - Three months ended
March 31, 1999 and 1998.................................................... I-7
Condensed Consolidated Statements of Cash Flows - Three months ended
March 31, 1999 and 1998.................................................... I-8
Notes to Condensed Consolidated Financial Statements ............................... I-9
Cellular Systems of Southeast Alabama, Inc.
Condensed Consolidated Balance Sheets- March 31, 1999 and December 31, 1998......... I-11
Condensed Consolidated Statements of Operations - Three months ended
March 31, 1999 and 1998.................................................... I-12
Condensed Consolidated Statements of Cash Flows - Three months ended
March 31, 1999 and 1998.................................................... I-13
Notes to Condensed Consolidated Financial Statements ............................... I-14
Albany Cellular Partners
Condensed Consolidated Balance Sheets- March 31, 1999 and December 31, 1998......... I-15
Condensed Consolidated Statements of Operations - Three months ended
March 31, 1999 and 1998.................................................... I-16
Condensed Consolidated Statements of Cash Flows - Three months ended
March 31, 1999 and 1998.................................................... I-17
Notes to Condensed Consolidated Financial Statements ............................... I-18
Cellular Dynamics Telephone Company of Georgia
Condensed Consolidated Balance Sheets- March 31, 1999 and December 31, 1998......... I-19
Condensed Consolidated Statements of Operations - Three months ended
March 31, 1999 and 1998.................................................... I-20
Condensed Consolidated Statements of Cash Flows - Three months ended
March 31, 1999 and 1998.................................................... I-21
Notes to Condensed Consolidated Financial Statements ............................... I-22
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Columbus Cellular Telephone Company
Condensed Consolidated Balance Sheets- March 31, 1999 and December 31, 1998......... I-23
Condensed Consolidated Statements of Operations - Three months ended
March 31, 1999 and 1998.................................................... I-24
Condensed Consolidated Statements of Cash Flows - Three months ended
March 31, 1999 and 1998.................................................... I-25
Notes to Condensed Consolidated Financial Statements ............................... I-26
Dothan Cellular Telephone Company, Inc.
Condensed Consolidated Balance Sheets- March 31, 1999 and December 31, 1998......... I-27
Condensed Consolidated Statements of Operations - Three months ended
March 31, 1999 and 1998.................................................... I-28
Condensed Consolidated Statements of Cash Flows - Three months ended
March 31, 1999 and 1998.................................................... I-29
Notes to Condensed Consolidated Financial Statements ............................... I-30
Macon Cellular Telephone Systems, Limited Partnership
Condensed Consolidated Balance Sheets- March 31, 1999 and December 31, 1998......... I-31
Condensed Consolidated Statements of Operations - Three months ended
March 31, 1999 and 1998.................................................... I-32
Condensed Consolidated Statements of Cash Flows - Three months ended
March 31, 1999 and 1998.................................................... I-33
Notes to Condensed Consolidated Financial Statements ............................... I-34
Montgomery Cellular Holding, Co., Inc.
Condensed Consolidated Balance Sheets- March 31, 1999 and December 31, 1998......... I-35
Condensed Consolidated Statements of Operations - Three months ended
March 31, 1999 and 1998.................................................... I-36
Condensed Consolidated Statements of Cash Flows - Three months ended
March 31, 1999 and 1998.................................................... I-37
Notes to Condensed Consolidated Financial Statements ............................... I-38
Montgomery Cellular Telephone Company, Inc.
Condensed Consolidated Balance Sheets- March 31, 1999 and December 31, 1998......... I-39
Condensed Consolidated Statements of Operations - Three months ended
March 31, 1999 and 1998.................................................... I-40
Condensed Consolidated Statements of Cash Flows - Three months ended
March 31, 1999 and 1998.................................................... I-41
Notes to Condensed Consolidated Financial Statements ............................... I-42
Panama City Cellular Telephone Company, Ltd.
Condensed Consolidated Balance Sheets- March 31, 1999 and December 31, 1998......... I-43
Condensed Consolidated Statements of Operations - Three months ended
March 31, 1999 and 1998.................................................... I-44
Condensed Consolidated Statements of Cash Flows - Three months ended
March 31, 1999 and 1998.................................................... I-45
Notes to Condensed Consolidated Financial Statements ............................... I-46
Panhandle Cellular Partnership
Condensed Consolidated Balance Sheets- March 31, 1999 and December 31, 1998......... I-47
Condensed Consolidated Statements of Operations - Three months ended
March 31, 1999 and 1998.................................................... I-48
Condensed Consolidated Statements of Cash Flows - Three months ended
March 31, 1999 and 1998.................................................... I-49
Notes to Condensed Consolidated Financial Statements ............................... I-50
Savannah Cellular Limited Partnership
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Savannah Cellular Limited Partnership
Condensed Consolidated Balance Sheets- March 31, 1999 and December 31, 1998......... I-51
Condensed Consolidated Statements of Operations - Three months ended
March 31, 1999 and 1998.................................................... I-52
Condensed Consolidated Statements of Cash Flows - Three months ended
March 31, 1999 and 1998.................................................... I-53
Notes to Condensed Consolidated Financial Statements ............................... I-54
CEI Communications, Inc.
Condensed Consolidated Balance Sheets- March 31, 1999 and December 31, 1998......... I-55
Condensed Consolidated Statements of Operations - Three months ended
March 31, 1999 and 1998.................................................... I-56
Condensed Consolidated Statements of Cash Flows - Three months ended
March 31, 1999 and 1998.................................................... I-57
Notes to Condensed Consolidated Financial Statements ............................... I-58
Panama City Communications, Inc.
Condensed Consolidated Balance Sheets- March 31, 1999 and December 31, 1998......... I-59
Condensed Consolidated Statements of Operations - Three months ended
March 31, 1999 and 1998.................................................... I-60
Condensed Consolidated Statements of Cash Flows - Three months ended
March 31, 1999 and 1998.................................................... I-61
Notes to Condensed Consolidated Financial Statements ............................... I-62
Price Communications Wireless II, Inc.
Condensed Balance Sheets- March 31, 1999 and December 31, 1998...................... I-63
Condensed Statements of Operations - Three months ended
March 31, 1999 and 1998.................................................... I-64
Condensed Statements of Cash Flows - Three months ended
March 31, 1999 and 1998.................................................... I-65
Notes to Condensed Financial Statements ............................................ I-66
Price Communications Wireless III, Inc.
Condensed Balance Sheets- March 31, 1999 and December 31, 1998...................... I-67
Condensed Statements of Operations - Three months ended
March 31, 1999 and 1998.................................................... I-68
Condensed Statements of Cash Flows - Three months ended
March 31, 1999 and 1998.................................................... I-69
Notes to Condensed Financial Statements ............................................ I-70
Price Communications Wireless IV, Inc.
Condensed Balance Sheets- March 31, 1999 and December 31, 1998...................... I-71
Condensed Statements of Operations - Three months ended
March 31, 1999 and 1998.................................................... I-72
Condensed Statements of Cash Flows - Three months ended
March 31, 1999 and 1998.................................................... I-73
Notes to Condensed Financial Statements ............................................ I-74
Price Communications Wireless V, Inc.
Condensed Balance Sheets- March 31, 1999 and December 31, 1998...................... I-75
Condensed Statements of Operations - Three months ended
March 31, 1999 and 1998.................................................... I-76
Condensed Statements of Cash Flows - Three months ended
March 31, 1999 and 1998.................................................... I-77
Notes to Condensed Financial Statements ............................................ I-78
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Price Communications Wireless VI, Inc.
Condensed Balance Sheets- March 31, 1999 and December 31, 1998...................... I-79
Condensed Statements of Operations - Three months ended
March 31, 1999 and 1998.................................................... I-80
Condensed Statements of Cash Flows - Three months ended
March 31, 1999 and 1998.................................................... I-81
Notes to Condensed Financial Statements ............................................ I-82
Price Communications Wireless VII, Inc.
Condensed Consolidated Balance Sheets- March 31, 1999 and December 31, 1998......... I-83
Condensed Consolidated Statements of Operations - Three months ended
March 31, 1999 and 1998.................................................... I-84
Condensed Consolidated Statements of Cash Flows - Three months ended
March 31, 1999 and 1998.................................................... I-85
Notes to Condensed Financial Statements ............................................ I-86
Price Communications Wireless VIII, Inc.
Condensed Consolidated Balance Sheets- March 31, 1999 and December 31, 1998......... I-87
Condensed Consolidated Statements of Operations - Three months ended
March 31, 1999 and 1998.................................................... I-88
Condensed Consolidated Statements of Cash Flows - Three months ended
March 31, 1999 and 1998.................................................... I-89
Notes to Financial Statements ...................................................... I-90
Price Communications Wireless IX, Inc.
Condensed Consolidated Balance Sheets- March 31, 1999 and December 31, 1998......... I-91
Statement of Operations............................................................. I-92
Condensed Consolidated Statements of Cash Flows - Three months ended
March 31, 1999 and 1998.................................................... I-93
Notes to Financial Statements ...................................................... I-94
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations.............................................................. I-95
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings ............................................................. II-1
ITEM 2. Changes in Securities ......................................................... II-1
ITEM 3. Defaults Upon Senior Securities- None ......................................... II-1
ITEM 4. Submission of Matters to a Vote of Security Holders............................ II-1
ITEM 5. Other Information ............................................................. II-1
ITEM 6. Exhibits and Reports on Form 8-K .............................................. II-1
SIGNATURES ............................................................................... II-2
</TABLE>
<PAGE>
Item 1. Financial Statements
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
($ in thousands)
<TABLE>
<CAPTION>
(Unaudited) (Audited)
March 31, December 31,
1999 1998
------------ -------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 123,023 $ 109,137
Restricted cash 79,508 79,081
Trade accounts receivable, net of
allowance for doubtful accounts 20,913 20,508
Receivable from other cellular carriers 2,412 2,282
Prepaid expenses and deposits 989 303
Inventory 2,710 3,940
Deferred income taxes 572 1,383
----------- -----------
Total current assets 230,127 216,634
Net property and equipment 145,621 144,828
Licenses, net of amortization 871,263 876,952
Other intangible assets and other assets,
at cost less accumulated amortization 25,504 25,320
----------- -----------
$ 1,272,515 $ 1,263,734
=========== ===========
Liabilities and Equity (Deficit)
Current liabilities:
Payable to Price Communications Corporation $ 937 $ 1,151
Accounts payable and accrued expenses 23,102 21,616
Accrued interest payable 18,462 11,779
Accrued salaries and employee benefits 1,974 2,656
Deferred revenue 5,799 5,535
Customer deposits 1,105 921
----------- -----------
Total current liabilities 51,379 43,658
Long-term debt 700,000 700,000
Obligation of Parent Company 215,065 209,432
Accrued income taxes - long term 22,892 22,775
Deferred income taxes 287,825 290,370
Minority interests 10,148 9,530
----------- -----------
Total liabilities 1,287,309 1,275,765
----------- -----------
Commitments and contingencies
Stockholder's equity (deficit) (14,794) (12,031)
----------- -----------
$ 1,272,515 $ 1,263,734
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
I-1
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
($ in thousands)
(Unaudited)
For the three months
ended March 31,
--------------------
1999 1998
--------------------
Revenue:
Service $ 52,821 $ 40,684
Equipment sales and installation 3,770 2,591
-------- --------
Total revenue 56,591 43,275
-------- --------
Operating expenses:
Engineering, technical and other direct 8,313 6,367
Cost of equipment 6,840 5,496
Selling, general and administrative 13,383 12,101
Depreciation and amortization 10,720 11,388
-------- --------
Total operating expenses 39,256 35,352
-------- --------
Operating income 17,335 7,923
-------- --------
Other income (expense):
Interest expense, net (21,156) (17,825)
Other income (expense), net 53 (37)
-------- --------
Total other expense (21,103) (17,862)
-------- --------
Income (loss) before minority interest
share of income and income taxes (3,768) (9,939)
Minority interest share of income (617) (460)
-------- --------
Income (loss) before income taxes (4,385) (10,399)
Income tax benefit 1,622 3,828
-------- --------
Net income (loss) $ (2,763) $ (6,571)
======== ========
See accompanying notes to condensed consolidated financial statements.
I-2
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
($ in thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the three months
ended March 31,
----------------------
1999 1998
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (2,763) $ (6,571)
--------- ---------
Adjustments to reconcile net income (loss) to net cash provided by (used
in) operating activities:
Depreciation and amortization 10,720 11,382
Minority interest share of income 618 460
Deferred income taxes (1,734) (1,947)
Loss on disposal of property -- 37
Interest deferred and added to long-term debt 5,633 2,886
Amortization of deferred finance 594 546
Increase in trade accounts receivable (535) (501)
Decrease (increase) in inventory 1,230 (725)
Increase (decrease) in accounts payable and accrued expenses 921 (6,278)
Increase (decrease) in accrued interest payable 6,683 (6,076)
Change in other accounts (238) 1,182
--------- ---------
Total adjustments 23,892 966
--------- ---------
Net cash provided by (used in) operating activities 21,129 (5,605)
--------- ---------
Cash flows from investing activities:
Capital expenditures (5,814) (704)
Increase in other intangible assets and other assets (788) --
--------- ---------
Net cash used in investing activities (6,602) (704)
--------- ---------
Cash flows from financing activities:
Repayment of long-term debt -- (12,124)
Interest earned on restricted cash (427) --
Reduction in advances from Price Communications Corporation (214) (1,670)
--------- ---------
Net cash used in financing activities (641) (13,794)
--------- ---------
Net increase (decrease) in cash and cash equivalents 13,886 (20,103)
Cash and cash equivalents at the beginning of period 109,137 27,926
--------- ---------
Cash and cash equivalents at the end of period $ 123,023 $ 7,823
========= =========
Supplemental disclosure of cash flow information:
Income taxes paid, net $ 167 $ 63
========= =========
Interest paid $ 10,281 $ 20,577
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
I-3
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
($ in thousands)
(Unaudited)
(1) Summary of Significant Accounting Policies
Organization and Acquisition
Price Communications Wireless, Inc. ("PCW" or the "Company"), a
wholly-owned subsidiary of Price Communications Cellular Holdings, Inc.
("Holdings"), a wholly-owned subsidiary of Price Communications Cellular, Inc.,
a wholly owned subsidiary of Price Communications Corporation ("PCC"), was
incorporated on May 29, 1997 in connection with the purchase of Palmer Wireless,
Inc. and subsidiaries ("Palmer").
In May 1997, PCC, PCW and Palmer entered into an Agreement and Plan of
Merger (the "Merger Agreement"). The Merger Agreement provided, among other
things, for the merger of PCW with and into Palmer with Palmer as the surviving
corporation (the "Merger"). In October 1997, the Merger was consummated and
Palmer changed its name to "Price Communications Wireless, Inc."
The acquisition was funded in part by the issuance of PCW of $175.0
million aggregate principal amount of 11 3/4% Senior Subordinated Notes due
2007, a $44.0 million equity contribution from PCC, the issuance and sale for
$80.0 million by Holdings of units consisting of $153.4 million principal amount
of 13 1/2% Senior Secured Discount Notes due 2007 and the cash proceeds
generated from the sale of Palmer's Fort Myers, Florida MSA and GA-1 RSA the
total of which approximated $190.2 million. In addition, the Company entered
into a syndicated senior loan facility providing for term loan borrowings in the
aggregate principal amount of $325.0 million and revolving loan borrowings of
$200.0 million.
In June 1998, the Company issued $525.0 million of 9 1/8% Senior Secured
Notes due December 15, 2006 with interest payable semi-annually commencing
December 15, 1998. The proceeds of these notes were used principally to replace
the previously existing syndicated loan facility mentioned above.
In August 1998, Holdings redeemed all of its outstanding 13 1/2% notes.
The redemption was financed out of the net proceeds of a new $200.0 million
Holdings offering of 11 3/4% Senior Exchangeable Payable-in-Kind notes due 2008.
The accompanying Balance Sheets include $79.5 million and $79.1 million of
restricted cash at March 31, 1999 and December 31, 1998 respectively and $215.1
million and $209.4 million at March 31, 1999 and December 31, 1998 respectively
(including accrued interest) of the 11 1/4% notes which are obligations of
Holdings and are included in the Balance Sheets solely pursuant to "push down"
accounting rules. The Company has no rights with respect to the restricted cash
included herein.
Basis of Presentation
The accompanying condensed consolidated financial statements of Price
Communications Wireless, Inc. and subsidiaries (the "Company") have been
prepared without audit pursuant to Rule 10-01 of Regulation S-X of the
Securities and Exchange Commission. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financials. These Consolidated Financial Statements should be read
in conjunction with the audited Consolidated Financial Statements previously
filed on the Company's Form 10-K. In the opinion of management, all adjustments
(none of which were other than normal recurring items) considered necessary for
a fair presentation have been included. The results of operations for the
interim periods reported are not necessarily indicative of results to be
expected for the year.
I-4
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements - (Continued)
($ in thousands)
(Unaudited)
(1) Summary of Significant Accounting Policies - (Continued)
For financial reporting purposes, PCW revalued its assets and liabilities
as of October 1, 1997 to reflect the price paid by PCC to acquire 100% of its
Common Stock, a process generally referred to as "push down" accounting.
Impact of New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued Statement of
Accounting Standards No. 133 ("Accounting for Derivative Instruments and Hedging
Activities"). This statement establishes accounting and reporting standards
requiring that all derivative instruments (including certain derivative
instruments embedded in other contracts) be recorded on the balance sheet as an
asset or a liability and measured at its fair value. This statement is effective
for fiscal years beginning after June 15, 1999 but can be adopted earlier.
Management has not yet determined the timing of or method to be used in adopting
this statement. Management does not believe at this time that such adoption
would have a material impact on its consolidated financial statements.
Reclassifications
Certain reclassifications have been made to the 1998 Statement of
Operations and Statement of Cash Flows to conform to the 1999 presentation.
(2) Subsequent Event
In April 1999, the Company purchased existing minority interests in
several of its MSA's and RSA's. Based upon the percentages acquired, the Company
increased its existing POP holdings by 93,000 POPS at an aggregate purchase
price of approximately $7.1 million or an average of approximately $76.00 per
POP.
I-5
<PAGE>
Item 1. Financial Statements
PALMER WIRELESS HOLDINGS INC.
Condensed Consolidated Balance Sheets
($ in thousands)
<TABLE>
<CAPTION>
(Unaudited) (Audited)
March 31, December 31,
1999 1998
----------- -----------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 123,023 $ 109,137
Restricted cash 79,508 79,081
Trade accounts receivable, net of
allowance for doubtful accounts 20,913 20,508
Receivable from other cellular carriers 2,412 2,282
Prepaid expenses and deposits 989 303
Inventory 2,710 3,940
Deferred taxes 572 1,383
----------- -----------
Total current assets 230,127 216,634
Net property and equipment 145,621 144,828
Licenses, net of amortization 871,263 876,952
Other intangible assets and other assets,
at cost less accumulated amortization 25,504 25,320
----------- -----------
$ 1,272,515 $ 1,263,734
=========== ===========
Liabilities and Equity (Deficit)
Current liabilities:
Payable to Price Communications Corporation $ 937 $ 1,151
Accounts payable and accrued expenses 23,102 21,616
Accrued interest payable 18,462 11,779
Accrued salaries and employee benefits 1,974 2,656
Deferred revenue 5,799 5,535
Customer deposits 1,105 921
----------- -----------
Total current liabilities 51,379 43,658
Obligation of Parent 700,000 700,000
Obligation of Price Communications Cellular Holdings, Inc. 215,065 209,432
Accrued income taxes - long term 22,892 22,775
Deferred income taxes 287,825 290,370
Minority interests 10,148 9,530
----------- -----------
Total liabilities 1,287,309 1,275,765
----------- -----------
Commitments and contingencies
Stockholder's equity (deficit) (14,794) (12,031)
----------- -----------
$ 1,272,515 $ 1,263,734
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
I-6
<PAGE>
PALMER WIRELESS HOLDINGS INC.
Condensed Consolidated Statements of Operations
($ in thousands)
(Unaudited)
For the three months
ended March 31,
---------------------
1999 1998
-------- --------
Revenue:
Service $ 52,821 $ 40,684
Equipment sales and installation 3,770 2,591
-------- --------
Total revenue 56,591 43,275
-------- --------
Operating expenses:
Engineering, technical and other direct 8,313 6,367
Cost of equipment 6,840 5,496
Selling, general and administrative 13,383 12,101
Depreciation and amortization 10,720 11,388
-------- --------
Total operating expenses 39,256 35,352
-------- --------
Operating income 17,335 7,923
-------- --------
Other income (expense):
Interest expense, net (21,156) (17,825)
Other income (expense), net 53 (37)
-------- --------
Total other expense (21,103) (17,862)
-------- --------
Income (loss) before minority interest
share of income and income taxes (3,768) (9,939)
Minority interest share of income (617) (460)
-------- --------
Income (loss) before income taxes (4,385) (10,399)
Income tax benefit 1,622 3,828
-------- --------
Net income (loss) $ (2,763) $ (6,571)
======== ========
See accompanying notes to condensed consolidated financial statements.
I-7
<PAGE>
PALMER WIRELESS HOLDINGS INC.
Condensed Consolidated Statements of Cash Flows
($ in thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the three months
ended March 31,
-----------------------
1999 1998
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (2,763) $ (6,571)
--------- ---------
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization 10,720 11,382
Minority interest share of income 618 460
Deferred income taxes (1,734) (1,947)
Loss on disposal of property -- 37
Interest deferred and added to obligation
of Price Communications Cellular Holdings, Inc. 5,633 2,886
Amortization of deferred finance 594 546
Increase in trade accounts receivable (535) (501)
Decrease (increase) in inventory 1,230 (725)
Increase (decrease) in accounts payable and accrued expenses 921 (6,278)
Increase (decrease) in accrued interest payable 6,683 (6,076)
Change in other accounts (238) 1,182
--------- ---------
Total adjustments 23,892 966
--------- ---------
Net cash provided by (used in) operating activities 21,129 (5,605)
--------- ---------
Cash flows from investing activities:
Capital expenditures (5,814) (704)
Increase in other intangible assets and other assets (788) --
--------- ---------
Net cash used in investing activities (6,602) (704)
--------- ---------
Cash flows from financing activities:
Repayment of long-term debt -- (12,124)
Interest earned on restricted cash (427) --
Reduction in advances from Price Communications Corporation (214) (1,670)
--------- ---------
Net cash used in financing activities (641) (13,794)
--------- ---------
Net increase (decrease) in cash and cash equivalents 13,886 (20,103)
Cash and cash equivalents at the beginning of period 109,137 27,926
--------- ---------
Cash and cash equivalents at the end of period $ 123,023 $ 7,823
========= =========
Supplemental disclosure of cash flow information:
Income taxes paid, net $ 167 $ 63
========= =========
Interest paid $ 10,281 $ 20,577
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
I-8
<PAGE>
PALMER WIRELESS HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements
($ in thousands)
(Unaudited)
(1) Summary of Significant Accounting Policies
Organization and Acquisition
Palmer Wireless Holdings, Inc. (the "Company"),was incorporated in March
1995. It was the wholly-owned subsidiary of Palmer Wireless, Inc.
Price Communications Wireless, Inc. ("PCW"), a wholly owned subsidiary of
Price Communications Cellular Holdings, Inc. ("Holdings"), a wholly-owned
subsidiary of Price Communications Corporation ("PCC"), was incorporated on May
29, 1997 in connection with the purchase of Palmer Wireless, Inc. and
subsidiaries ("Palmer").
In May 1997, PCC, PCW and Palmer entered into an Agreement and Plan of
Merger (the "Merger Agreement"). The Merger Agreement provided, among other
things, for the merger of PCW with and into Palmer with Palmer as the surviving
corporation (the "Merger").
The acquisition was funded in part by the issuance of PCW of $175.0
million aggregate principal amount of 11 3/4% Senior Subordinated Notes due
2007, a $44.0 million equity contribution from PCC, the issuance and sale for
$80.0 million by Holdings of units consisting of $153.4 million principal amount
of 13 1/2% Senior Secured Discount Notes due 2007 and the cash proceeds
generated from the sale of Palmer's Fort Myers, Florida MSA and GA-1 RSA the
total of which approximated $190.2 million. In addition, PCW entered into a
syndicated senior loan facility providing for term loan borrowings in the
aggregate principal amount of $325.0 million and revolving loan borrowings of
$200.0 million.
In June 1998, PCW issued $525.0 million of 9 1/8% Senior Secured Notes due
December 15, 2006 with interest payable semi-annually commencing December 15,
1998. The proceeds of these notes were used principally to replace the
previously existing syndicated loan facility mentioned above.
In August 1998, Holdings redeemed all of its outstanding 13 1/2% notes.
The redemption was financed out of the net proceeds of a new $200.0 million
Holdings offering of 11 3/4% Senior Exchangeable Payable-in-Kind notes due 2008.
The accompanying Balance Sheets include $79.5 million and $79.1 million of
restricted cash at March 31, 1999 and December 31, 1998 respectively and $215.1
million and $209.4 million at March 31, 1999 and December 31, 1998 respectively
(including accrued interest) of the 11 1/4% notes which are obligations of
Holdings and are included in the Balance Sheets solely pursuant to "push down"
accounting rules. The Company has no rights with respect to the restricted cash
included herein.
Basis of Presentation
The accompanying condensed consolidated financial statements of the
Company have been prepared without audit pursuant to Rule 10-01 of Regulation
S-X of the Securities and Exchange Commission. Accordingly, they do not include
all of the information and footnotes required by generally accepted accounting
principles for complete financials. These Consolidated Financial Statements
should be read in conjunction with the audited Consolidated Financial Statements
previously filed on the Company's Form 10-K/A. In the opinion of management, all
adjustments (none of which were other than normal recurring items) considered
necessary for a fair presentation have been included. The results of operations
for the interim periods reported are not necessarily indicative of results to be
expected for the year.
I-9
<PAGE>
PALMER WIRELESS HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements - (Continued)
($ in thousands)
(Unaudited)
(1) Summary of Significant Accounting Policies - (Continued)
For financial reporting purposes, the Company revalued its assets and
liabilities as of October 1, 1997 to reflect the price paid by PCC to acquire
100% of its Common Stock, a process generally referred to as "push down"
accounting.
Impact of New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued Statement of
Accounting Standards No. 133 ("Accounting for Derivative Instruments and Hedging
Activities"). This statement establishes accounting and reporting standards
requiring that all derivative instruments (including certain derivative
instruments embedded in other contracts) be recorded on the balance sheet as an
asset or a liability and measured at its fair value. This statement is effective
for fiscal years beginning after June 15, 1999 but can be adopted earlier.
Management has not yet determined the timing of or method to be used in adopting
this statement. Management does not believe at this time that such adoption
would have a material impact on its consolidated financial statements.
Reclassifications
Certain reclassifications have been made to the 1998 Financial Statements
to conform to the 1999 presentation.
(2) Subsequent Event
In April 1999, PCW purchased existing minority interests in several of its
MSA's and RSA's. Based upon the percentages acquired, the Company increased its
existing POP holdings by 93,000 POPS at an aggregate purchase price of
approximately $7.1 million or an average of approximately $76.00 per POP.
I-10
<PAGE>
CELLULAR SYSTEMS OF SOUTHEAST ALABAMA, INC.
AND SUBSIDIARY
Consolidated Balance Sheets
($ in thousands)
<TABLE>
<CAPTION>
(Unaudited) (Audited)
March 31, December 31,
1999 1998
---- ----
<S> <C> <C>
Assets
Current Assets:
Cash $ 127 $ 57
Trade accounts receivable, less allowance for doubtful
accounts of $42 in 1999 and $30 in 1998 1,504 1,618
Inventory 89 120
Other current assets 23 8
------------------
Total current assets 1,743 1,803
------------------
Property and equipment :
Land and land improvements 357 356
Buildings and leasehold improvements 196 196
Equipment and furnishings 328 324
Cellular equipment 5,649 5,474
------------------
6,530 6,350
Less accumulated depreciation and amortization 977 794
------------------
Net property and equipment 5,553 5,556
Licenses and other intangibles, less
accumulated amortization of $1,882 in 1999
and $1,576 in 1998 47,062 47,368
------------------
$54,358 $54,727
==================
Liabilities and Stockholder's Equity
Current liabilities:
Accrued salaries and benefits $ 20 $ 23
Other accrued expenses 295 125
Deferred revenue 469 427
Customer deposits 62 53
------------------
Total current liabilities 846 628
Deferred income taxes 17,783 17,895
Advances from affiliates 3,892 4,717
------------------
Total liabilities 22,521 23,240
------------------
Commitments and contingencies
Stockholder's equity :
Common stock, par value $.01 per share
Class A, authorized and issued 5,001 shares -- --
Class B, authorized and issued 4,999 shares -- --
Class C, authorized 90,000 shares, none issued -- --
Additional paid-in capital 30,343 30,343
Retained earnings 1,494 1,144
------------------
Total stockholder's equity 31,837 31,487
------- -------
$54,358 $54,727
==================
</TABLE>
See accompanying notes to consolidated financial statements.
I-11
<PAGE>
CELLULAR SYSTEMS OF SOUTHEAST ALABAMA, INC.
AND SUBSIDIARY
Consolidated Statements of Operations
($ in thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the three months
ended March 31,
1999 1998
---- ----
<S> <C> <C>
Revenue:
Service revenue $3,787 $2,671
Equipment sales and installation 291 243
---------------------
Total revenue 4,078 2,914
---------------------
Operating expenses:
Engineering, technical and other direct service 1,654 777
Cost of equipment 409 388
Sales and marketing 219 170
General and administrative 692 636
Depreciation and amortization 489 480
---------------------
Total operating expenses 3,463 2,451
---------------------
Operating income 615 463
Interest expense 59 115
---------------------
Net income before taxes 556 348
Provision for income taxes 206 128
---------------------
Net income $ 350 $ 220
=====================
</TABLE>
See accompanying notes to consolidated financial statements.
I-12
<PAGE>
CELLULAR SYSTEMS OF SOUTHEAST ALABAMA, INC.
AND SUBSIDIARY
Consolidated Statements of Cash Flows
($ in thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the three months
ended March 31,
1999 1998
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 350 $ 220
---------------------
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 489 480
Deferred taxes (112) (97)
Decrease (increase) in trade accounts receivable 114 (53)
Decrease (increase) in inventory 31 (81)
Increase in other current assets (15) (8)
Increase (decrease) in accrued expenses 167 (17)
Increase in deferred revenue 42 31
Increase in customer deposits 9 10
---------------------
Total adjustments 725 265
---------------------
Net cash provided by operating activities 1,075 485
Cash flows from investing activities:
Purchases of property and equipment (180) (250)
---------------------
Net cash used in investing activities (180) (250)
Cash flows from financing activities:
Decrease in advances from affiliates, net (825) (296)
---------------------
Net increase (decrease) increase in cash 70 (61)
Cash at beginning of year 57 88
---------------------
Cash at end of year $ 127 $ 27
=====================
Supplemental disclosure of cash flow information -
Cash paid during the year for interest $ 59 $ 115
=====================
</TABLE>
See accompanying notes to consolidated financial statements.
I-13
<PAGE>
CELLULAR SYSTEMS OF SOUTHEAST ALABAMA, INC.
AND SUBSIDIARY
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1) Summary of Significant Accounting Policies
Corporate Information
Cellular Systems of Southeast Alabama (the "Company") was formed on
October 7, 1987, and its wholly owned subsidiary, Dothan Cellular Telephone
Company, Inc., was formed on June 7, 1988, to operate the non-wireline cellular
telephone system in the Dothan, Alabama, Metropolitan Statistical Area. Palmer
Communications Incorporated (Palmer) acquired an interest in the outstanding
stock of Cellular Systems of Southeast Alabama, Inc. on December 20, 1988.
Effective August 4, 1989, Palmer transferred its investment in and
advances to the Cellular Systems of Southeast Alabama, Inc. and subsidiary (the
Company) to Palmer Cellular Partnership (PCP). Palmer owned a majority interest
in PCP. When Palmer's interest in the Company was transferred to PCP, it had no
effect on the carrying value of the assets of the Company.
In March of 1995, Palmer Wireless, Inc. (PWI) issued common stock for 100
percent of the Partnership interest of PCP. Palmer owned a majority interest in
PWI. Since this exchange was between related parties, it was accounted for in a
manner similar to a pooling of interests. References to PWI in the accompanying
consolidated financial statements and notes to consolidated financial statements
include the activity of PWI and its predecessor, PCP.
On May 23, 1997, Price Communications Wireless , Inc. ("PCW") and PWI
entered into a plan of merger whereby PCW merged into PWI with PWI as the
surviving corporation. On October 6, 1997 the merger was completed and PWI
changed its name to PCW. The direct owner of the Company is Palmer Wireless
Holdings, Inc.("Holdings"), which was formed in January, 1994. PCW is the 100%
owner of Holdings.
The Company's subsidiary is the 100% owner of Price Communications
Wireless III, Inc., the license holder for the Dothan MSA.
Basis of Presentation
Holdings owns approximately 92.3% of the Company. For financial reporting
purposes, PCW revalued its assets and liabilities as of October 6, 1997 to
reflect the price paid by Price Communications Corporation to acquire 100% of
PWI's common stock, a process generally referred to as "push down accounting".
On October 6, 1997, PCW allocated the purchase price to each of the markets
purchased and the Company revalued its assets and liabilities to reflect this
allocation. The preliminary allocation of the purchase price resulted in
licenses of approximately $50.4 million. During 1998, the allocation was
finalized resulting in an allocation of approximately $48.9 million to licenses,
with an adjustment also made to deferred tax liability and paid-in-capital to
finalize "push-down" accounting. The license is being amortized over a period of
40 years.
The Consolidated Financial Statements include the accounts of the Company
and its subsidiary. All significant inter-company balances and transactions have
been eliminated.
The Consolidated Financial Statements have been prepared by the Company
without audit in accordance with the rules and regulations of the Securities and
Exchange Commission. In the opinion of management, the statements reflect all
adjustments necessary for a fair presentation of the results of interim periods.
All such adjustments are of a normal and recurring nature. The results of
operations for any interim period are not necessarily indicative of the results
to be expected for a full year.
I-14
<PAGE>
ALBANY CELLULAR PARTNERS AND SUBSIDIARY
(A Georgia Partnership)
Consolidated Balance Sheets
( $ in thousands)
<TABLE>
<CAPTION>
(Unaudited) (Audited)
March 31, December 31,
1999 1998
---- ----
<S> <C> <C>
Assets
Current Assets:
Cash $ 293 $ 161
Trade accounts receivable, less allowance for doubtful
accounts of $81 in 1999 and $77 in 1998 2,010 2,063
Inventory 271 280
Other current assets 71 14
--------------------
Total current assets 2,645 2,518
--------------------
Property and equipment :
Land and land improvements 123 123
Buildings and leasehold improvements 279 279
Equipment and furnishings 773 772
Cellular equipment 8,748 8,520
--------------------
9,923 9,694
Less accumulated depreciation and amortization 1,663 1,368
--------------------
Net property and equipment 8,260 8,326
--------------------
License and other intangibles, less accumulated amortization of
$2,923 in 1999 and $2,444 in 1998 73,730 74,209
--------------------
$84,635 $85,053
====================
Liabilities and Partners' Equity
Current liabilities:
Accrued salaries and benefits $ 70 $ 53
Other accrued expenses 310 231
Deferred revenue 673 651
Customer deposits 76 58
--------------------
Total current liabilities 1,129 993
Deferred income taxes 11,686 11,759
Advances from affiliates 31,367 32,023
--------------------
Total liabilities 44,182 44,775
Commitments and contingencies
Partners' equity 40,453 40,278
--------------------
$84,635 $85,053
====================
</TABLE>
See accompanying notes to consolidated financial statements.
I-15
<PAGE>
ALBANY CELLULAR PARTNERS AND SUBSIDIARY
(A Georgia Partnership)
Consolidated Statements of Operations
($ in thousands)
(Unaudited)
For the three months
ended March 31,
----------------------
1999 1998
---- ----
Revenue:
Service revenue $ 5,190 $ 4,009
Equipment sales and installation 364 237
---------------------
Total revenue 5,554 4,246
---------------------
Operating expenses:
Engineering, technical and other direct 1,676 1,060
Cost of equipment 596 500
Sales and marketing 450 366
General and administrative 1,087 1,074
Depreciation and amortization 774 742
---------------------
Total operating expenses 4,583 3,742
---------------------
Operating income 971 504
Interest expense 693 701
---------------------
Net income (loss) before income taxes 278 (197)
Provision for income taxes (benefit) 103 (73)
---------------------
Net income (loss) $ 175 ($ 124)
=====================
See accompanying notes to consolidated financial statements.
I-16
<PAGE>
ALBANY CELLULAR PARTNERS AND SUBSIDIARY
(A Georgia Partnership)
Consolidated Statements of Cash Flows
($ in thousands)
(Unaudited)
For the three months
ended March 31,
---------------------
1999 1998
---- ----
Cash flows from operating activities:
Net income (loss) $ 175 $ (117)
---------------------
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 774 742
Deferred income taxes (73) (73)
Decrease (increase) in trade accounts receivable 53 (106)
Decrease (increase) in inventory 9 (34)
Increase in other current assets (57) (8)
Increase (decrease) in accrued expenses 96 (34)
Increase in deferred revenue 22 37
Increase in customer deposits 18 8
---------------------
Total adjustments 842 532
---------------------
Net cash provided by operating activities 1,017 415
---------------------
Cash flows from investing activities:
Purchases of property and equipment (229) (175)
---------------------
Net cash used in investing activities (229) (175)
---------------------
Cash flows from financing activities:
Decrease in advances from affiliates, net (656) (264)
---------------------
Net increase (decrease) in cash 132 (24)
Cash at beginning of year 161 111
=====================
Cash at end of period $ 293 $ 87
=====================
Supplemental disclosure of cash flow information -
Cash paid during the period for interest $ 693 $ 701
=====================
See accompanying notes to consolidated financial statements.
I-17
<PAGE>
ALBANY CELLULAR PARTNERS AND SUBSIDIARY
(A Georgia Partnership)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1) Summary of Significant Accounting Policies
Partnership Operations
Albany Cellular Partners (the "Partnership") was formed on December 21,
1987, and its wholly owned subsidiary, Cellular Dynamics Telephone Company of
Georgia, was formed on September 17, 1987, to operate the non-wireline cellular
telephone system in the Albany, Georgia, Metropolitan Statistical Area. Palmer
Communications Incorporated ("Palmer") acquired an interest in the outstanding
Partnership interest in the Partnership on December 2, 1988.
Effective August 4, 1989, Palmer transferred its investment in and
advances to the Partnership to Palmer Cellular Partnership ("PCP"). Palmer owned
a majority interest in PCP. When Palmer's interest in the Partnership was
transferred to PCP, it had no effect on the carrying value of the assets of the
Partnership.
In March of 1995, Palmer Wireless, Inc. ("PWI") issued common stock for
100 percent of the Partnership interest of PCP. Palmer owned a majority interest
in PWI. Since this exchange was between related parties, it was accounted for in
a manner similar to a pooling of interest. References to PWI in the accompanying
consolidated financial statements and notes to consolidated financial statements
include the activity of PWI and its predecessor, PCP.
On May 23, 1997, Price Communications Wireless, Inc. ("PCW") and PWI
entered into a plan of merger whereby PCW merged into PWI with PWI as the
surviving corporation. On October 6, 1997 the merger was completed and PWI
changed its name to PCW. The direct owner of the Partnership is Palmer Wireless
Holdings, Inc. ("Holdings"), which was formed in January, 1994. PCW is the 100%
owner of Holdings.
The partnership's subsidiary is the 100% owner of Price Communications
Wireless V, Inc., the license holder for the Albany MSA.
Basis of Presentation
For financial reporting purposes, PCW revalued its assets and liabilities
as of October 6, 1997 to reflect the price paid by Price Communications
Corporation to acquire 100% of PWI's common stock, a process generally referred
to as "push down accounting". On October 6, 1997, PCW allocated the purchase
price to each of the markets purchased and the partnership revalued its assets
and liabilities to reflect this allocation. The preliminary allocation of the
purchase price resulted in licenses of approximately $78.3 million. During 1998
the allocation was finalized resulting in an allocation of approximately $76.7
million to licenses, with an adjustment also made to deferred tax liability and
paid-in-capital to finalize "push-down" accounting. The license is being
amortized over a period of 40 years.
The Consolidated Financial Statements include the accounts of the
Partnership and its subsidiary. All significant intercompany balances and
transactions have been eliminated. The consolidated financial statements of the
Partnership do not include the assets and liabilities of the partners.
The Consolidated Financial Statements have been prepared by the
Partnership without audit in accordance with the rules and regulations of the
Securities and Exchange Commission.
In the opinion of management, the statements reflect all adjustments
necessary for a fair presentation of the results of interim periods. All such
adjustments are of a normal and recurring nature. The results of operations for
any interim period are not necessarily indicative of the results to be expected
for a full year.
I-18
<PAGE>
CELLULAR DYNAMICS TELEPHONE COMPANY OF GEORGIA
Consolidated Balance Sheets
($ in thousands)
<TABLE>
<CAPTION>
(Unaudited) (Audited)
March 31, December 31,
1999 1998
---------------------
<S> <C> <C>
Assets
Current Assets:
Cash $ 293 $ 161
Trade accounts receivable, less allowance for doubtful
accounts of $81 1999 and $77 in 1998 2,010 2,063
Inventory 271 280
Other current assets 71 14
---------------------
Total current assets 2,645 2,518
---------------------
Property and equipment :
Land and land improvements 123 123
Buildings and leasehold improvements 279 279
Equipment and furnishings 773 772
Cellular equipment 8,748 8,520
---------------------
9,923 9,694
Less accumulated depreciation and amortization 1,663 1,368
---------------------
Net property and equipment 8,260 8,326
---------------------
License and other intangibles, less
accumulated amortization of
$2,941 in 1999 and $2,444 in 1998 73,730 74,209
---------------------
$ 84,635 $ 85,053
=====================
Liabilities and Stockholder's Equity
Current liabilities:
Accrued salaries and benefits $ 70 $ 53
Other accrued expenses 310 231
Deferred revenue 673 651
Customer deposits 76 58
---------------------
Total current liabilities 1,129 993
Deferred income taxes 11,686 11,759
Advances from affiliates 31,367 32,023
---------------------
Total liabilities 44,182 44,775
Commitments and contingencies
Stockholder's equity
Common stock; no par value, 200
shares authorized; 100 shares issued 1 1
Paid-in capital 44,822 44,811
Retained earnings (deficit) (4,370) (4,534)
---------------------
Total stockholder's equity 40,453 40,278
---------------------
$ 84,635 $ 85,053
=====================
</TABLE>
See accompanying notes to consolidated financial statements.
I-19
<PAGE>
CELLULAR DYNAMICS TELEPHONE COMPANY OF GEORGIA
Consolidated Statements of Operations
($ in thousands)
(Unaudited)
For the three months
ended March 31,
----------------------
1999 1998
---- ----
Revenue:
Service revenue $ 5,190 $ 4,009
Equipment sales and installation 364 237
----------------------
Total revenue 5,554 4,246
----------------------
Operating expenses:
Engineering, technical and other direct 1,676 1,060
Cost of equipment 596 500
Sales and marketing 450 366
General and administrative 1,087 1,058
Depreciation and amortization 774 777
----------------------
Total operating expenses 4,583 3,761
----------------------
Operating income 971 485
Interest expense 693 701
----------------------
Net income (loss) before taxes 278 (216)
Provision for income taxes (benefit) 103 (80)
----------------------
Net income (loss) income $ 175 ($ 136)
======================
See accompanying notes to consolidated financial statements.
I-20
<PAGE>
CELLULAR DYNAMICS TELEPHONE COMPANY OF GEORGIA
Consolidated Statements of Cash Flows
($ in thousands)
(Unaudited)
Fopr the three months
ended March 31,
---------------------
1999 1998
---- ----
Cash flows from operating activities:
Net income (loss) $ 175 $ (117)
-------------------
Adjustments to reconcile net income
(loss) to net cash provided by operating
activities:
Depreciation and amortization 774 742
Deferred income taxes (73) (73)
Decrease (increase) in trade accounts receivable 53 (106)
Decrease (increase) in inventory 9 (34)
Increase in other current assets (57) (8)
Increase (decrease) in accrued expenses 96 (34)
Increase in deferred revenue 22 37
Increase in customer deposits 18 8
-------------------
Total adjustments 842 532
-------------------
Net cash provided by operating activities 1,017 415
-------------------
Cash flows from investing activities:
Purchases of property and equipment (229) (175)
-------------------
Net cash used in investing activities (229) (175)
-------------------
Cash flows from financing activities -
Decrease in advances from affiliates, net (656) (264)
-------------------
Net increase (decrease) in cash 132 (24)
Cash at beginning of year 161 111
-------------------
Cash at end of period $ 293 $ 87
===================
Supplemental disclosure of cash flow information -
Cash paid during the period for interest $ 693 $ 701
===================
See accompanying notes to consolidated financial statements.
I-21
<PAGE>
CELLULAR DYNAMICS TELEPHONE COMPANY OF GEORGIA
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1) Summary of Significant Accounting Policies
Company Operations
Cellular Dynamics Telephone Company of Georgia (the "Company"), was formed
on September 17, 1987 to operate the non-wireline cellular telephone system in
the Albany, Georgia, Metropolitan Statistical Area. Albany Cellular Partners was
formed on December 21, 1987, and is the 100% owner of the Company. The financial
statements of Albany Cellular Partners are included elsewhere in this document.
Palmer Communications Incorporated ("Palmer") acquired an interest in the
outstanding Partnership interest of the Partnership on December 2, 1988.
Effective August 4, 1989, Palmer transferred its investment in and
advances to the Partnership to Palmer Cellular Partnership ("PCP"). Palmer owned
a majority interest in PCP. When Palmer's interest in the Partnership was
transferred to PCP, it had no effect on the carrying value of the assets of the
Partnership.
In March of 1995, Palmer Wireless, Inc. ("PWI") issued common stock for
100 percent of the Partnership interest of PCP. Palmer owned a majority interest
in PWI. Since this exchange was between related parties, it was accounted for in
a manner similar to a pooling of interests. References to PWI in the
accompanying consolidated financial statements and notes to consolidated
financial statements include the activity of PWI and its predecessor, PCP.
On May 23, 1997, Price Communications Wireless , Inc. ("PCW") and PWI
entered into a plan of merger whereby PCW merged into PWI with PWI as the
surviving corporation. On October 6, 1997 the merger was completed and PWI
changed its name to PCW. The direct owner of the Company is Palmer Wireless
Holdings, Inc. ("Holdings") which was formed in January 1994. PCW is the 100%
owner of Holdings.
The Company is the 100% owner of Price Communications Wireless V, Inc.,
the license holder for the Albany MSA.
Basis of Presentation
Holdings owned approximately 82.7% of the Company at March 31, 1999. The
accompanying.
For financial reporting purposes, PCW revalued its assets and liabilities
as of October 6, 1997 to reflect the price paid by Price Communications
Corporation to acquire 100% of PWI's common stock, a process generally referred
to as "push down accounting". On October 6, 1997, PCW allocated the purchase
price to each of the markets purchased and the partnership revalued its assets
and liabilities to reflect this allocation. The preliminary allocation of the
purchase price resulted in licenses of approximately $78.3 million. During 1998
the allocation was finalized resulting in an allocation of approximately $76.7
million to licenses, with an adjustment also made to deferred tax liability and
paid-in-capital to finalize "push-down" accounting. The license is being
amortized over a period of 40 years.
The Consolidated Financial Statements include the accounts of the Company
and its subsidiary. All significant inter-company balances and transactions have
been eliminated.
The Consolidated Financial Statements have been prepared by the Company
without audit in accordance with the rules and regulations of the Securities and
Exchange Commission. In the opinion of management, the statements reflect all
adjustments necessary for a fair presentation of the results of interim periods.
All such adjustments are of a normal and recurring nature. The results of
operations for any interim period are not necessarily indicative of the results
to be expected for a full year.
I-22
<PAGE>
COLUMBUS CELLULAR TELEPHONE COMPANY
(A Georgia Partnership)
Consolidated Balance Sheets
($ in thousands)
<TABLE>
<CAPTION>
(Unaudited) (Audited)
March 31, December 31,
1999 1998
---- ----
<S> <C> <C>
Assets
Current Assets:
Cash $ 75 $ 41
Trade accounts receivable, less allowance for doubtful
accounts of $106 in 1999 and $213 in 1998 1,736 1,847
Inventory 378 472
Other current assets 99 31
--------------------
Total current assets 2,288 2,391
--------------------
Property and equipment :
Land and land improvements 277 277
Buildings and leasehold improvements 305 287
Equipment and furnishings 387 378
Cellular equipment 10,301 10,030
--------------------
11,270 10,972
Less accumulated depreciation and amortization 1,983 1,655
--------------------
Net property and equipment 9,287 9,317
--------------------
Licenses and other intangibles less accumulated amortization
of $3,421 in 1999 and $2,860 in 1998 86,280 86,841
Advances to affiliates, net 2,546 671
--------------------
$100,401 $ 99,220
====================
Liabilities and Partners' Equity
Current liabilities:
Accrued salaries and benefits $ 48 $ 39
Other accrued expenses 504 318
Deferred revenue 665 545
Customer deposits 123 110
--------------------
Total current liabilities 1,340 1,012
Deferred income taxes 28,312 28,505
--------------------
Total liabilities 29,652 29,517
Commitments and contingencies
Partners' equity 70,749 69,703
--------------------
$100,401 $ 99,220
====================
</TABLE>
See accompanying notes to consolidated financial statements.
I-23
<PAGE>
COLUMBUS CELLULAR TELEPHONE COMPANY
(A Georgia Partnership)
Consolidated Statements of Operations
($ in thousands)
(Unaudited)
For the three months
ended March 31,
--------------------
1999 1998
---- ----
Revenue:
Service revenue $ 4,607 $ 3,845
Equipment sales and installation 425 253
--------------------
Total revenue 5,032 4,098
--------------------
Operating expenses:
Engineering, technical and other direct 1,079 675
Cost of equipment 655 453
Sales and marketing 459 276
General and administrative 1,135 1,005
Depreciation and amortization 889 868
--------------------
Total operating expenses 4,217 3,277
--------------------
Operating income 815 821
Interest income (expense), net 38 (81)
--------------------
Net income before taxes 853 740
Deferred tax benefit 193 193
--------------------
Net income $ 1,046 $ 933
====================
I-24
<PAGE>
COLUMBUS CELLULAR TELEPHONE COMPANY
(A Georgia Partnership)
Consolidated Statements of Cash Flows
($ in thousands)
(Unaudited)
For the three months
ended March 31,
Cash flows from operating activities: 1999 1998
Net income $ 1,046 $ 933
------- -------
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 889 868
Deferred income taxes (193) (193)
Decrease in trade accounts receivable 111 15
Decrease (increase) in inventory 94 (48)
Increase in other current assets (68) (69)
Increase (decrease) in accrued expenses 195 (28)
Increase in deferred revenue 120 41
Increase in customer deposits 13 19
------- -------
Total adjustments 1,161 605
------- -------
Net cash provided by operating activities 2,207 1,538
------- -------
Cash flows from investing activities:
Purchase of property and equipment (298) (254)
------- -------
Net cash used in investing activities (298) (254)
------- -------
Cash flows from financing activities:
Decrease in advances from afiliates, net (1,875) (1,265)
------- -------
Net increase in cash 34 19
Cash at beginning of year 41 66
------- -------
Cash at end of period $ 75 $ 85
======= =======
Supplemental disclosure of cash flow information -
Cash paid during the period for interest $ -- $ 81
======= =======
See accompanying notes to consolidated financial statements.
I-25
<PAGE>
COLUMBUS CELLULAR TELEPHONE COMPANY
(A Georgia Partnership)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1) Summary of Significant Accounting Policies
Partnership Operations
The formal partnership agreement of Columbus Cellular Telephone Company
(the "Partnership") was entered into by the partners effective March 1, 1988.
The Partnership was inactive for the period March 1, 1988, through June 9, 1988,
at which date Palmer Communications Incorporated ("Palmer") acquired and
transferred the FCC license to operate the non-wireline cellular telephone
system in the Columbus, Georgia, Metropolitan Statistical Area to the
Partnership. The non-wireline cellular telephone system was constructed after
June 9, 1988, and actual operations of the system began on November 24, 1988.
Effective August 4, 1989, Palmer transferred its investment in and
advances to the Partnership to Palmer Cellular Partnership ("PCP"). Palmer owned
a majority interest in PCP. When Palmer's interest in the Partnership was
transferred to PCP, it had no effect on the carrying value of the assets of the
Partnership.
In March of 1995, Palmer Wireless, Inc. ("PWI") issued common stock for
100 percent of the partnership interests of PCP. Palmer owned a majority
interest in PWI. Since this exchange was between related parties, it was
accounted for in a manner similar to a pooling of interests. References to PWI
in the accompanying financial statements and notes to financial statements
include the activity of PWI and its predecessor, PCP.
On May 23, 1997, Price Communications Wireless Inc. ("PCW") and PWI
entered into a plan of merger whereby PCW merged into PWI with PWI as the
surviving corporation. On October 6, 1997 the merger was completed and PWI
changed its name to PCW. The direct owner of the Partnership is Palmer Wireless
Holdings, Inc. ("Holdings") which was formed in January, 1994. PCW is the 100%
owner of Holdings.
The Partnership is the 100% owner of Price Communications Wireless VI
Inc., the license holder for the Columbus MSA.
Basis of Presentation
Holdings owned approximately 84.9% of the Partnership at March 31, 1999.
For financial reporting purposes, PCW revalued its assets and liabilities as of
October 6, 1997 to reflect the price paid by Price Communications Corporation to
acquire 100% of PWI's common stock, a process generally referred to as "push
down accounting". On October 6, 1997, PCW allocated the purchase price to each
of the markets purchased and the Partnership revalued its assets and liabilities
to reflect this allocation. The preliminary allocation of the purchase price
resulted in licenses of approximately $91.5 million. During 1998 the allocation
was finalized resulting in an allocation of approximately $89.7 million to
licenses, with an adjustment also made to deferred tax liability and
paid-in-capital to finalize "push-down" accounting. The license is being
amortized over a period of 40 years.
The financial statements of the Partnership do not include the assets and
liabilities of the partners.
The Consolidated Financial Statements include the accounts of the
Partnership and its subsidiary. All significant inter-company balances and
transactions have been eliminated.
The Consolidated Financial Statements have been prepared by the
Partnership without audit in accordance with the rules and regulations of the
Securities and Exchange Commission. In the opinion of management, the statements
reflect all adjustments necessary for a fair presentation of the results of the
interim periods. All such adjustments are of a normal and recurring nature. The
results of operations for any interim period are not necessarily indicative of
the results to be expected for a full year.
I-26
<PAGE>
DOTHAN CELLULAR TELEPHONE CO., INC.
Consolidated Balance Sheets
($ in thousands)
<TABLE>
<CAPTION>
(Unaudited) (Audited)
March 31, December 31,
1999 1998
---- ----
<S> <C> <C>
Assets
Current Assets:
Cash $ 127 $ 57
Trade accounts receivable, less allowance for doubtful
accounts of $42 in 1999 and $30 in 1998 1,504 1,618
Inventory 89 120
Other current assets 23 8
--------------------
Total current assets 1,743 1,803
--------------------
Property and equipment :
Land and land improvements 357 356
Buildings and leasehold improvements 196 196
Equipment and furnishings 328 324
Cellular equipment 5,649 5,474
--------------------
6,530 6,350
Less accumulated depreciation and amortization 977 794
--------------------
Net property and equipment 5,553 5,556
Licenses and other intangibles,
less accumulated amortization of $1,882 in 1999
and $1,576 in 1998 47,062 47,368
--------------------
$54,358 $54,727
====================
Liabilities and Stockholder's Equity
Current liabilities:
Accrued salaries and benefits $ 20 $ 23
Other accrued expenses 295 125
Deferred revenue 469 427
Customer deposits 62 53
--------------------
Total current liabilities 846 628
Deferred income taxes 17,783 17,895
Advances from affiliates 3,892 4,717
--------------------
Total liabilities 22,521 23,240
--------------------
Commitments and contingencies
Stockholder's equity (deficit):
Common stock, par value $.01 per share;
authorized 3,000 shares
issued and outstanding 200 shares -- --
Additional paid-in capital 30,343 30,343
Retained earnings 1,494 1,144
--------------------
Total stockholder's equity 31,837 31,487
--------------------
$54,358 $54,727
====================
</TABLE>
See accompanying notes to consolidated financial statements.
I-27
<PAGE>
DOTHAN CELLULAR TELEPHONE CO., INC.
Consolidated Statements of Operations and Retained Earnings (Deficit)
($ in thousands)
(Unaudited)
For the three months
ended March 31,
1999 1998
---- ----
Revenue:
Service revenue $3,787 $2,671
Equipment sales and installation 291 243
--------------------
Total revenue 4,078 2,914
--------------------
Operating expenses:
Engineering, technical and other direct 1,654 777
Cost of equipment 409 388
Sales and marketing 219 170
General and administrative 692 636
Depreciation and amortization 489 480
--------------------
Total operating expenses 3,463 2,451
--------------------
Operating income 615 463
Interest expense 59 115
--------------------
Net income before taxes 556 348
Provision for income taxes 206 128
--------------------
Net income $ 350 $ 220
====================
See accompanying notes to consolidated financial statements.
I-28
<PAGE>
DOTHAN CELLULAR TELEPHONE CO., INC.
Consolidated Statements of Cash Flows
($ in thousands)
(Unaudited)
For the three months
ended March 31,
1999 1998
---- ----
Cash flows from operating activities:
Net income $ 350 $ 220
--------------------
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 489 480
Deferred taxes (112) (97)
Decrease (increase) in trade accounts receivable 114 (53)
Decrease (increase) in inventory 31 (81)
Increase in other current assets (15) (8)
Increase (decrease) in accrued expenses 167 (17)
Increase in deferred revenue 42 31
Increase in customer deposits 9 10
--------------------
Total adjustments 725 265
--------------------
Net cash provided by operating activities 1,075 485
--------------------
Cash flows from investing activities:
Purchases of property and equipment (180) (250)
--------------------
Net cash used in investing activities (180) (250)
Cash flows from financing activities:
Decrease in advances from affiliates, net (825) (296)
--------------------
Net increase (decrease) in cash 70 (61)
Cash at beginning of year 57 88
--------------------
Cash at end of period $ 127 $ 27
====================
Supplemental disclosure of cash flow information -
Cash paid during the period for interest $ 59 $ 115
====================
See accompanying notes to consolidated financial statements.
I-29
<PAGE>
DOTHAN CELLULAR TELEPHONE CO., INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1) Summary of Significant Accounting Policies
Corporate Information
Dothan Cellular Telephone Company, Inc. (the "Company") was formed on June
7,1988 to operate the non-wireline cellular telephone system in the Dothan,
Alabama, Metropolitan Statistical Area. Cellular Systems of Southeast Alabama,
the 100% owner of the Company, was formed on October 7, 1987. On December 20,
1988 Palmer Communications Incorporated (Palmer) acquired an interest in the
outstanding stock of Cellular Systems of Southeast Alabama, Inc. whose financial
statements are included elsewhere in this document.
Effective August 4, 1989, Palmer transferred its investment in and
advances to the Cellular Systems of Southeast Alabama, Inc. and the Company to
Palmer Cellular Partnership (PCP). Palmer owned a majority interest in PCP. When
Palmer's interest in the Company was transferred to PCP, it had no effect on the
carrying value of the assets of the Company.
In March of 1995, Palmer Wireless, Inc. (PWI) issued common stock for 100
percent of the Partnership interest of PCP. Palmer owned a majority interest in
PWI. Since this exchange was between related parties, it was accounted for in a
manner similar to a pooling of interests. References to PWI in the accompanying
consolidated financial statements and notes to consolidated financial statements
include the activity of PWI and its predecessor, PCP.
On May 23, 1997, Price Communications Wireless , Inc. ("PCW") and PWI
entered into a plan of merger whereby PCW merged into PWI with PWI as the
surviving corporation. On October 6, 1997 the merger was completed and PWI
changed its name to PCW. The direct owner of the Company is Palmer Wireless
Holdings, Inc. ("Holdings") which was formed in January, 1994. PCW is the 100%
owner of Holdings.
The Company is the 100% owner of Price Communications Wireless III Inc.,
the license holder for the Dothan MSA.
Basis of Presentation
Holdings owned approximately 92.3% of the Company at March 31, 1999. For
financial reporting purposes, PCW revalued its assets and liabilities as of
October 6, 1997 to reflect the price paid by Price Communications Corporation to
acquire 100% of PWI's common stock, a process generally referred to as "push
down accounting". On October 6, 1997, PCW allocated the purchase price to each
of the markets purchased and the Company revalued its assets and liabilities to
reflect this allocation. The preliminary allocation of the purchase price
resulted in licenses of approximately $50.4 million. During 1998, the allocation
was finalized resulting in an allocation of approximately $48.9 million to
licenses, with an adjustment also made to deferred tax liability and
paid-in-capital to finalize "push-down" accounting. The license is being
amortized over a period of 40 years.
The consolidated financial statements include the accounts of the Company
and its subsidiary All significant inter-company balances and transactions have
been eliminated.
The Consolidated Financial Statements have been prepared by the Company
without audit in accordance with the rules and regulations of the Securities and
Exchange Commission. In the opinion of management, the statements reflect all
adjustments necessary for a fair presentation of the results of interim periods.
All such adjustments are of a normal and recurring nature. The results of
operations for any interim period are not necessarily indicative of the results
to be expected for a full year.
I-30
<PAGE>
MACON CELLULAR TELEPHONE SYSTEMS LIMITED PARTNERSHIP
(A New Hampshire Limited Partnership)
Consolidated Balance Sheets
($ in thousands)
<TABLE>
<CAPTION>
(Unaudited) (Audited)
March 31, December 31,
1999 1998
---- ----
<S> <C> <C>
Assets
Current Assets:
Cash $ 145 $ 145
Trade accounts receivable, less allowance for doubtful
accounts of $125 in 1999 and $142 in 1998 3,073 2,921
Inventory 529 680
Other current assets 92 58
---------------------
Total current assets 3,839 3,804
---------------------
Property and equipment:
Land and leasehold improvements 203 203
Buildings & improvements 36 36
Equipment and furnishings 796 792
Cellular equipment 15,987 15,947
---------------------
17,022 16,978
Less accumulated depreciation and amortization 3,124 2,569
---------------------
Net property and equipment 13,898 14,409
Advances to affiliate, net 5,434 119
Licenses and other intangibles less accumulated
amortization of $5,452 in 1999 and $4,603 in 1998 130,728 131,577
---------------------
$153,899 $149,909
=====================
Liabilities and Partners' Equity
Current liabilities:
Accrued salaries and benefits $ 109 $ 113
Other accrued expenses 769 460
Deferred revenue 934 824
Customer deposits 186 158
---------------------
Total current liabilities 1,998 1,555
Deferred income taxes 40,623 40,888
---------------------
Total liabilities 42,621 42,443
Commitments and contingencies
Partners' equity 107,197 107,466
---------------------
$149,818 $149,909
=====================
</TABLE>
See accompanying notes to consolidated financial statements.
I-31
<PAGE>
MACON CELLULAR TELEPHONE SYSTEMS LIMITED PARTNERSHIP
(A New Hampshire Limited Partnership)
Consolidated Statements of Operations
($ in thousands)
(Unaudited)
For the three months
ended March 31,
1999 1998
---- ----
Revenue:
Service revenue $ 9,683 $ 6,743
Equipment sales and installation 460 339
-----------------------
Total revenue 10,143 7,082
-----------------------
Operating expenses:
Engineering, technical and other direct 2,553 1,619
Cost of equipment 740 623
Sales and marketing 606 382
General and administrative 1,277 1,178
Depreciation and amortization 1,404 1,306
-----------------------
Total operating expenses 6,580 5,108
-----------------------
Operating income 3,563 1,974
Interest expense, net 15 214
-----------------------
Net income before income taxes 3,548 1,760
Deferred tax benefit 265 265
-----------------------
Net income $ 3,813 $ 2,025
=======================
See accompanying notes to consolidated financial statements.
I-32
<PAGE>
MACON CELLULAR TELEPHONE SYSTEMS LIMITED PARTNERSHIP
(A New Hampshire Limited Partnership)
Consolidated Statements of Cash Flows
($ in thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the three months
ended March 31,
1999 1998
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,813 $ 2,025
-----------------------
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 1,404 1,306
Deferred income taxes (265) (265)
Increase in trade accounts receivable (152) (59)
Decrease in inventory 151 2
Increase in other current assets (35) (34)
Increase (decrease) in accrued expenses 305 (39)
Increase in deferred revenue 110 45
Increase in customer deposits 28 26
-----------------------
Total adjustments 1,546 982
-----------------------
Net cash provided by operating activities 5,359 3,007
-----------------------
Cash flows from investing activities:
Purchases of property and equipment (44) (121)
-----------------------
Net cash used in investing activities (44) (121)
-----------------------
Cash flows from financing activities:
Increase in advances to affiliates, net (5,315) (2,833)
-----------------------
Net increase in cash -- 53
Cash at beginning of year 145 50
-----------------------
Cash at end of period $ 145 $ 103
=======================
Supplemental disclosure of cash flow information -
Cash paid during the period for interest $ 15 $ 214
=======================
</TABLE>
See accompanying notes to consolidated financial statements.
I-33
<PAGE>
MACON CELLULAR TELEPHONE SYSTEMS LIMITED PARTNERSHIP
(A New Hampshire Limited Partnership)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1) Summary of Significant Accounting Policies
Partnership Operations and Asset Exchange Agreement
Macon Cellular Telephone Systems Limited Partnership (the "Partnership")
was formed on November 11, 1986, to construct and operate certain non-wireline
cellular telephone systems. On October 24, 1989, Palmer Cellular Partnership
("PCP"), a subsidiary of Palmer Communications Incorporated ("Palmer"), directly
or indirectly acquired the Partnership's general partner (approximately 1
percent) and approximately 94 percent of the limited partnership units. In
conjunction with this acquisition, the Partnership entered into an Asset
Exchange Agreement with Macon Cellular Telephone Corp. ("Macon"), whereby the
assets consisted primarily of FCC licenses and a nonwireline cellular telephone
system serving the Macon, Georgia, Metropolitan Statistical Area. The
partnership operates the non-wireline cellular telephone system serving the
Georgia-6 RSA which was acquired on July 5, 1996.
In March of 1995, Palmer Wireless, Inc. ("PWI") issued common stock for
100 percent of the partnership interests of PCP. Palmer owns a majority interest
in PWI. Since this exchange was between related parties, it was accounted for in
a manner similar to a pooling of interests. References to PWI in the
accompanying financial statements and notes to financial statements include the
activity of PWI and its predecessor, PCP.
On May 23, 1997, Price Communications Wireless, Inc. ("PCW") and PWI
entered into a plan of merger whereby PCW merged into PWI with PWI as the
surviving corporation. On October 6, 1997 the merger was completed and PWI
changed its name to PCW. The direct owner of the Partnership is Palmer Wireless
Holdings, Inc. ("Holdings") which was formed in January, 1994. PCW is the 100%
owner of Holdings.
The Partnership is the 100% owner of Price Communications Wireless VII
Inc., the licenseholder for the Macon MSA.
Basis of Presentation
For financial reporting purposes, PCW revalued its assets and liabilities
as of October 6, 1997 to reflect the price paid by Price Communications
Corporation to acquire 100% of PWI's common stock, a process generally referred
to as "push down accounting". On October 6, 1997, PCW allocated the purchase
price to each of the markets purchased and the partnership revalued its assets
and liabilities to reflect this allocation. The preliminary allocation of the
purchase price resulted in licenses of approximately $138.7 million. During 1998
the allocation was finalized resulting in an allocation of approximately $136.2
million to licenses, with an adjustment also made to deferred tax liability and
paid-in-capital to finalize "push-down" accounting. The license is being
amortized over a period of 40 years. Prior to October 6, 1997, PWI also utilized
"push down accounting", as PWI owned approximately 99.1% of the Partnership.
The accompanying financial statements do not include the assets and
liabilities of the partners.
The Consolidated Financial Statements include the accounts of the
Partnership and its subsidiary. All significant inter-company balances and
transactions have been eliminated.
The Consolidated Financial Statements have been prepared by the
Partnership without audit in accordance with the rules and regulations of the
Securities and Exchange Commission. In the opinion of management, the statements
reflect all adjustments necessary for a fair presentation of the results of
interim periods. All such adjustments are of a normal and recurring nature. The
results of operations for any interim period are not necessarily indicative of
the results to be expected for a full year.
I-34
<PAGE>
MONTGOMERY CELLULAR HOLDING CO., INC.
AND SUBSIDIARY
Consolidated Balance Sheets
($ in thousands Except Per Share Amounts)
<TABLE>
<CAPTION>
(Unaudited) (Audited)
March 31, December 31,
1999 1998
---- ----
<S> <C> <C>
Assets
Current Assets:
Cash $ 226 $ 36
Trade accounts receivable, less allowance for doubtful
accounts of $125 in 1999 and $98 in 1998 2,453 2,365
Inventory 189 182
Other current assets 104 22
------------------------
Total current assets 2,972 2,605
------------------------
Property and equipment :
Land and leasehold improvements 139 136
Equipment and furnishings 421 418
Cellular equipment 12,132 11,958
------------------------
12,692 12,512
Less accumulated depreciation and amortization 2,273 1,820
------------------------
Net property and equipment 10,419 10,692
------------------------
Advances to affiliates 2,826 1,242
Licenses and other intangibles, less accumulated amortization
of $4,201 in 1999 and $3,507 in 1998 106,750 107,444
------------------------
122,967 121,983
========================
Liabilities and Stockholder's Equity
Current liabilities:
Accrued salaries and benefits $ 58 $ 51
Other accrued expenses 534 296
Deferred revenue 567 525
Customer deposits 96 68
------------------------
Total current liabilities 1,255 940
Deferred income taxes 40,206 40,624
Other notes payable 14 15
------------------------
Total liabilities 41,475 41,579
Commitments and contingencies
Stockholder's equity:
Preferred stock, $.01 par value; authorized 50,000 shares
none issued -- --
Common stock, $.01 par value; authorized 100,000 shares,
issued 10,000 shares -- --
Additional paid in capital 69,031 69,031
Retained earnings 12,461 11,373
------------------------
Total stockholder's equity 81,492 80,404
------------------------
$122,967 $121,983
========================
</TABLE>
See accompanying notes to consolidated financial statements.
I-35
<PAGE>
MONTGOMERY CELLULAR HOLDING CO., INC.
AND SUBSIDIARY
Consolidated Statements of Operations and
Retained Earnings
($ in thousands)
(Unaudited)
For the three months
ended March 31,
1999 1998
---- ----
Revenue:
Service revenue $ 6,469 $ 5,034
Equipment sales and installation 480 292
----------------------
Total revenue 6,949 5,326
----------------------
Operating expenses:
Engineering, technical and other direct 1,346 830
Cost of equipment 908 590
Sales and marketing 509 315
General and administrative 1,417 1,305
Depreciation and amortization 1,105 1,088
----------------------
Total operating expenses 5,285 4,128
----------------------
Operating income 1,664 1,198
Interest expense 63 (48)
----------------------
Income before income tax expense 1,727 1,150
Provision for income taxes 639 426
----------------------
Net income $ 1,088 $ 724
======================
See accompanying notes to consolidated financial statements.
I-36
<PAGE>
MONTGOMERY CELLULAR HOLDING CO., INC.
AND SUBSIDIARY
Consolidated Statements of Cash Flows
($ In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the three months
ended March 31,
1999 1998
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,088 $ 724
-----------------------
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 1,105 1,088
Deferred income tax (418) (418)
Increase in trade accounts receivable (88) (82)
Increase in inventory (7) (54)
Increase in other current assets (82) (69)
Increase (decrease) in accrued expenses 245 (37)
Increase in deferred revenue 42 44
Increase in customer deposits 28 7
-----------------------
Total adjustments 825 479
-----------------------
Net cash provided by operating activities 1,913 1,203
-----------------------
Cash flows from investing activities:
Purchases of property and equipment (138) (327)
-----------------------
Cash flows from financing activities:
Long-term borrowings (1) --
Decrease in advances from affiliates, net (1,584) (996)
-----------------------
Net cash used in financing activities (1,585) (996)
-----------------------
Net increase (decrease) in cash 190 (120)
Cash at beginning of year 36 184
-----------------------
Cash at end of period $ 226 $ 64
=======================
Supplemental disclosure of cash flow information -
Cash paid during the year for interest $ -- $ 48
=======================
</TABLE>
See accompanying notes to consolidated financial statements.
I-37
<PAGE>
MONTGOMERY CELLULAR HOLDING CO., INC.
AND SUBSIDIARY
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1) Summary of Significant Accounting Policies
Corporate Information
Montgomery Cellular Holding Co., Inc. and its wholly owned subsidiary,
Montgomery Cellular Telephone Company, Inc., (the "Company") were formed in
February 1988 to operate the non-wireline cellular telephone system in the
Montgomery, Alabama, Metropolitan Statistical Area. Palmer Communications
Incorporated ("Palmer") acquired an interest in the outstanding stock of
Montgomery Cellular Holding Co., Inc. on December 31, 1988.
Effective August 4, 1989, Palmer transferred its investment in and
advances to the Company to Palmer Cellular Partnership ("PCP"). Palmer owned a
majority interest in PCP. When Palmer's interest in the Company was transferred
to PCP, it had no effect on the carrying value of the assets of the Company.
In March of 1995, Palmer Wireless, Inc. ("PWI") issued common stock for
100 percent of the partnership interests of PCP. Palmer owns a majority interest
in PWI. Since this exchange was between related parties, it was accounted for in
a manner similar to a pooling of interests.
On May 23, 1997, Price Communications Wireless , Inc. ("PCW") and PWI
entered into a plan of merger whereby PCW merged into PWI with PWI as the
surviving corporation. On October 6, 1997 the merger was completed and PWI
changed its name to PCW. The direct owner of the Company is Palmer Wireless
Holdings Inc. ("Holdings") which was formed in January 1994. PCW is the 100%
owner of Holdings.
The Company's subsidiary is the 100% owner of Price Communications
Wireless IV, Inc. the license holder for the Montgomery MSA.
Basis of Presentation
Holdings owned approximately 91.9% of the Company at March 31, 1999. For
financial reporting purposes, PCW revalued its assets and liabilities as of
October 6, 1997 to reflect the price paid by Price Communications Corporation to
acquire 100% of PWI's common stock, a process generally referred to as "push
down accounting". On October 6, 1997, PCW allocated the purchase price to each
of the markets purchased and the Company revalued its assets and liabilities to
reflect this allocation. The preliminary allocation of the purchase price
resulted in licenses of approximately $113.4 million. During 1998 the allocation
was finalized resulting in an allocation of approximately $111.0 million to
licenses, with an adjustment also made to deferred tax liability and
paid-in-capital to finalize "push-down" accounting. The license is being
amortized over a period of 40 years.
The Consolidated Financial Statements include the accounts of Montgomery
Cellular Holding Co., Inc. and its Subsidiary. All significant inter-company
balances and transactions have been eliminated.
The Consolidated Financial Statements have been prepared by the Company
without audit in accordance with the rules and regulations of the Securities and
Exchange Commission. In the opinion of management, the statements reflect all
adjustments necessary for a fair presentation of the results of interim periods.
All such afjustments are of a normal and recurring nature. The results of
operations for any interim period are not necessarily indicative of the results
for a full year.
I-38
<PAGE>
MONTGOMERY CELLULAR TELEPHONE CO., INC.
Consolidated Balance Sheets
($ In thousands Except Per Share Amounts))
<TABLE>
<CAPTION>
(Unaudited) (Audited)
March 31, December 31,
1999 1998
---- ----
<S> <C> <C>
Assets
Current Assets:
Cash $ 226 $ 36
Trade accounts receivable, less allowance for doubtful
accounts of $125 in 1999 and $98 in 1998 2,453 2,365
Inventory 189 182
Other current assets 104 22
--------------------
Total current assets 2,972 2,605
--------------------
Property and equipment :
Land and leasehold improvements 139 136
Equipment and furnishings 421 418
Cellular equipment 12,132 12,000
--------------------
12,692 12,554
Less accumulated depreciation and amortization 2,273 1,862
--------------------
Net property and equipment 10,419 10,692
--------------------
Advances to affiliates 2,826 1,242
License and other intangibles, less accumulated amortization
of $4,201 in 1999 and $3,507 in 1998 106,750 107,444
--------------------
122,967 121,983
====================
Liabilities and Stockholder's Equity
Current liabilities:
Accrued salaries and benefits $ 58 $ 51
Other accrued expenses 534 296
Deferred revenue 567 525
Customer deposits 96 68
--------------------
Total current liabilities 1,255 940
Deferred income taxes 40,206 40,624
Other notes payable 14 15
--------------------
Total liabilities 41,475 41,579
Commitments and contingencies Stockholder's equity:
Common stock, $1.00 par value; authorized 5,000 shares,
100 shares, issued and outstanding -- --
Additional paid in capital 69,031 69,031
Retained earnings 12,461 11,373
--------------------
Total stockholder's equity 81,492 80,404
--------------------
$122,967 $121,983
====================
</TABLE>
See accompanying notes to consolidated financial statements.
I-39
<PAGE>
MONTGOMERY CELLULAR TELEPHONE CO., INC.
Consolidated Statements of Operations and
Retained Earnings
($ in thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the three months
ended March 31,
1999 1998
---- ----
<S> <C> <C>
Revenue:
Service revenue $ 6,469 $ 5,034
Equipment sales and installation 480 292
---------------------
Total revenue 6,949 5,326
---------------------
Operating expenses:
Engineering, technical and other direct 1,346 830
Cost of equipment 908 590
Sales and marketing 509 315
General and administrative 1,417 1,305
Depreciation and amortization 1,105 1,088
---------------------
Total operating expenses 5,285 4,128
---------------------
Operating income 1,664 1,198
Interest income (expense) 63 (48)
---------------------
Income before income tax expense 1,727 1,150
Provision for income taxes 639 426
---------------------
Net income $ 1,088 $ 724
=====================
</TABLE>
See accompanying notes to consolidated financial statements.
I-40
<PAGE>
MONTGOMERY CELLULAR TELEPHONE CO., INC.
Consolidated Statements of Cash Flows
($ In thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the three months
ended March 31,
1999 1998
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,088 $ 724
-------------------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,105 1,088
Deferred income tax (418) (418)
Increase in trade accounts receivable (88) (82)
Increase in inventory (7) (54)
Increase in other current assets (82) (69)
Increase (decrease) in accrued expenses 245 (37)
Increase in deferred revenue 42 44
Increase in customer deposits 28 7
-------------------
Total adjustments 825 479
-------------------
Net cash provided by operating activities 1,913 1,203
-------------------
Cash flows from investing activities:
Purchases of property and equipment (138) (327)
-------------------
Cash flows from financing activities:
Long-term borrowings (1) --
Decrease in advances from affiliates, net (1,584) (996)
-------------------
Net cash used in financing activities (1,585) (996)
-------------------
Net (decrease) increase in cash 190 (120)
Cash at beginning of year 36 184
-------------------
Cash at end of period $ 226 $ 64
===================
Supplemental disclosure of cash flow information -
Cash paid during the period for interest $ -- $ 48
===================
</TABLE>
See accompanying notes to consolidated financial statements.
I-41
<PAGE>
MONTGOMERY CELLULAR TELEPHONE CO., INC.
Notes to Consolidated Financial Statements
For the Years Ended December 31, 1998, 1997, and 1996
1) Summary of Significant Accounting Policies
Corporate Information
Montgomery Cellular Telephone Co., Inc., (the "Company") and its parent
Montgomery Cellular Holding Co., Inc., whose financial statements are included
elsewhere in this document, were formed in February 1988 to operate the
non-wireline cellular telephone system in the Montgomery, Alabama, Metropolitan
Statistical Area. Palmer Communications Incorporated ("Palmer") acquired an
interest in the outstanding stock of Montgomery Cellular Holding Co., Inc. on
December 31, 1988.
Effective August 4, 1989, Palmer transferred its investment in and
advances to the Company to Palmer Cellular Partnership ("PCP"). Palmer owned a
majority interest in PCP. When Palmer's interest in the Company was transferred
to PCP, it had no effect on the carrying value of the assets of the Company.
In March of 1995, Palmer Wireless, Inc. ("PWI") issued common stock for
100 percent of the partnership interests of PCP. Palmer owns a majority interest
in PWI. Since this exchange was between related parties, it was accounted for in
a manner similar to a pooling of interests.
On May 23, 1997, Price Communications Wireless , Inc. ("PCW") and PWI
entered into a plan of merger whereby PCW merged into PWI with PWI as the
surviving corporation. On October 6, 1997 the merger was completed and PWI
changed its name to PCW. The Company's direct owner Montgomery Cellular Holding
Co., Inc. ("Montgomery Holding"). Montgomery Holding in turn is 100% owned by
Palmer Wireless Holdings, Inc. which was formed in January, 1994. PCW is the
100% owner of Holdings.
The Company is the 100% owner of Price Communications Wireless IV, Inc.,
the license holder for the Montgomery MSA.
Basis of Presentation
Holdings owned approximately 91.9% of the Company at March 31, 1999. For
financial reporting purposes, PCW revalued its assets and liabilities as of
October 6, 1997 to reflect the price paid by Price Communications Corporation to
acquire 100% of PWI's common stock, a process generally referred to as "push
down accounting". On October 6, 1997, PCW allocated the purchase price to each
of the markets purchased and the Company revalued its assets and liabilities to
reflect this allocation. The preliminary allocation of the purchase price
resulted in licenses of approximately $113.4 million. During 1998 the allocation
was finalized resulting in an allocation of approximately $111.0 million to
licenses, with an adjustment also made to deferred tax liability and
paid-in-capital to finalize "push-down" accounting. The license is being
amortized over a period of 40 years.
The Consolidated Financial Statements include the accounts of the Company
and its subsidiary. All significant inter-company balances and transactions have
been eliminated.
The Consolidated Financial Statements have been prepared by the Company
without audit in accordance with the rules and regulations of the Securities and
Exchange Commission. In the opinion of management, the statements reflect all
adjustments necessary for a fair presentation of the results of interim periods.
All adjustments are of a normal and recurring nature. The results of operations
for any interim period are not necessarily indicative of the results to be
expected for a full year.
I-42
<PAGE>
PANAMA CITY CELLULAR TELEPHONE COMPANY, LTD.
(A Florida Limited Partnership)
Balance Sheets
($ in thousands)
<TABLE>
<CAPTION>
(Unaudited) (Audited)
March 31, December 31,
1999 1998
---- ----
<S> <C> <C>
Assets
Current Assets:
Cash $ 13 $ 18
Trade accounts receivable, less allowance for doubtful
accounts of $34 in 1999 and $29 in 1998 979 961
Inventory 123 135
Other current assets 27 15
----------------------
Total current assets 1,142 1,129
----------------------
Property and equipment :
Land and land improvements 295 295
Buildings and leasehold improvements 109 109
Equipment and furnishings 241 239
Cellular equipment 4,810 4,810
----------------------
5,455 5,453
Less accumulated depreciation and amortization 872 692
----------------------
Net property and equipment 4,583 4,761
----------------------
Advances to affiliates 8,332 6,809
License and other intangibles, less accumulated amortization
of $1,677 in 1999 and $1,406 in 1998 41,658 41,929
----------------------
$55,715 $54,628
======================
Liabilities and Partners' Equity
Current liabilities:
Accrued salaries and benefits $ 19 $ 20
Other accrued expenses 216 98
Deferred revenue 259 225
Customer deposits 75 68
----------------------
Total current liabilities 569 411
Deferred income taxes 13,084 13,169
----------------------
Total liabilities 13,653 13,580
----------------------
Commitments and contingencies
Partners' equity 42,062 41,048
----------------------
$55,715 $54,628
======================
</TABLE>
See accompanying notes to consolidated financial statements.
I-43
<PAGE>
PANAMA CITY CELLULAR TELEPHONE COMPANY, LTD.
(A Florida Limited Partnership)
Consolidated Statements of Operations
($ in thousands)
(Unaudited)
For the three months
ended March 31,
1999 1998
---- ----
Revenue:
Service revenue $2,355 $1,920
Equipment sales and installation 205 180
---------------------
Total revenue 2,560 2,100
---------------------
Operating expenses:
Engineering, technical and other direct 317 295
Cost of equipment 314 304
Sales and marketing 190 140
General and administrative 523 507
Depreciation and amortization 451 459
---------------------
Total operating expenses 1,795 1,705
---------------------
Operating income 765 395
Interest income 164 50
---------------------
Income before taxes 929 445
Deferred tax benefit 85 93
---------------------
Net income $1,014 $ 538
=====================
See accompanying notes to consolidated financial statements.
I-44
<PAGE>
PANAMA CITY CELLULAR TELEPHONE COMPANY, LTD.
(A Florida Limited Partnership)
Consolidated Statements of Cash Flows
($ in thousands)
(Unaudited)
For the three months
ended March 31,
1999 1998
---- ----
Cash flows from operating activities:
Net income $ 1,014 $ 538
--------------------
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 451 459
Deferred taxes (85) (93)
Increase in trade accounts receivable (18) (17)
Decrease (increase) in inventory 12 (94)
Increase in other current assets (12) (9)
Increase in accrued expenses 116 7
Increase in deferred revenue 34 13
Increase in customer deposits 8 11
--------------------
Total adjustments 506 277
--------------------
Net cash provided by operating activities 1,520 815
--------------------
Cash flows from investing activities:
Purchases of property and equipment (2) (2)
--------------------
Net cash used in investing activities (2) (2)
Cash flows from financing activities -
Decrease in advances from affiliates, net (1,523) (805)
--------------------
Net (decrease) increase in cash (5) 8
Cash at beginning of year 18 13
--------------------
Cash at end of period $ 13 $ 21
====================
See accompanying notes to consolidated financial statements.
I-45
<PAGE>
PANAMA CITY CELLULAR TELEPHONE COMPANY, LTD.
(A Florida Limited Partnership)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1) Summary of Significant Accounting Policies
Partnership Operations
Panama City Cellular Telephone Company Ltd. (the "Partnership") was formed
on April 1, 1988, to construct and operate non-wireline cellular telephone
systems in the Panama City, Florida, Metropolitan Statistical Area. On July 25,
1991, Palmer Cellular Partnership ("PCP"), a subsidiary of Palmer Communications
Incorporated ("Palmer"), acquired 100 percent of the general partners' interest
and a portion of the limited partners' interest.
In March of 1995, Palmer Wireless, Inc. ("PWI") issued common stock for
100 percent of the partnership interests of PCP. Palmer owns a majority interest
in PWI. Since this exchange was between related parties, it was accounted for in
a manner similar to a pooling of interests. References to PWI in the
accompanying financial statements and notes to financial statements include the
activity of PWI and its predecessor, PCP.
On May 23, 1997, Price Communications Wireless , Inc. ("PCW") and PWI
entered into a plan of merger whereby PCW merged into PWI with PWI as the
surviving corporation. On October 6, 1997, the merger was completed and PWI
changed its name to PCW. The Partnership's direct owner is Panhandle Cellular
Partnership ("Panhandle") whose financial statements are included elsewhere in
this document. Panhandle in turn is owned by Palmer Wireless Holdings, Inc.
("Holdings"). PCW is the 100% owner of Holdings.
The Partnership is the 100% owner of Price Communications Wireless IX,
Inc., the licenseholder for the Panama City MSA.
Basis of Presentation
Holdings owned approximately 77.9% of the Partnership at March 31, 1999.
For financial reporting purposes, PCW revalued its assets and liabilities as of
October 6, 1997 to reflect the price paid by Price Communications Corporation to
acquire 100% of PWI's common stock, a process generally referred to as "push
down accounting". On October 6, 1997, PCW allocated the purchase price to each
of the markets purchased and the Partnership revalued its assets and liabilities
to reflect this allocation. The preliminary allocation of the purchase price
resulted in licenses of approximately $44.2 million. During 1998 the allocation
was finalized resulting in an allocation of approximately $43.3 million to
licenses, with an adjustment also made to deferred tax liability and
paid-in-capital. The license is being amortized over a period of 40 years.
The accompanying financial statements do not include the assets and
liabilities of the partners.
The Consolidated Financial Statements include the accounts of the
Partnership and its subsidiary. All significant inter-company balances and
transactions have been eliminated.
The Consolidated Financial Statements have been prepared by the
Partnership without audit in accordance with rules and regulations of the
Securities and Exchange Commission. In the opinion of management, the statements
reflect all adjustments necessary for a fair presentation of the results of the
interim periods. All such adjustments are of a normal and recurring nature. The
results of operations for any interim period are not necessarily indicative of
the results for a full year.
I-46
<PAGE>
PANHANDLE CELLULAR PARTNERSHIP
Consolidated Balance Sheets
($ in thousands)
<TABLE>
<CAPTION>
(Unaudited) (Audited)
March 31, December 31,
1999 1998
---- ----
<S> <C> <C>
Assets
Current Assets:
Cash $ 13 $ 18
Trade accounts receivable, less allowance for doubtful
accounts of $34 in 1999 and $29 in 1998 979 961
Inventory 123 135
Other current assets 27 15
-------------------
Total current assets 1,142 1,129
-------------------
Property and equipment :
Land and land improvements 295 295
Buildings and leasehold improvements 109 109
Equipment and furnishings 241 239
Cellular equipment 4,810 4,810
-------------------
5,455 5,453
Less accumulated depreciation and amortization 872 692
-------------------
Net property and equipment 4,583 4,761
Advances to affiliates 8,332 6,809
Licenses and other intangibles, less accumulated amortization
of $1,667 in 1999 and $1,406 in 1998 41,658 41,929
-------------------
$55,715 $54,628
===================
Liabilities and Partners' Equity
Current liabilities:
Accrued salaries and benefits $ 19 $ 20
Other accrued expenses 216 98
Deferred revenue 259 225
Customer deposits 75 68
-------------------
Total current liabilities 569 411
Deferred income taxes 13,084 13,169
Minority interest 559 549
-------------------
Total liabilities 14,212 14,129
Commitments and contingencies
Partners' equity 41,503 40,499
-------------------
$55,715 $54,628
===================
</TABLE>
See accompanying notes to consolidated financial statements.
I-47
<PAGE>
PANHANDLE CELLULAR PARTNERSHIP
Consolidated Statements of Operations
($ in thousands)
(Unaudited)
For the three months
ended March 31,
1999 1998
---- ----
Revenue:
Service revenue $ 2,355 $ 1,920
Equipment sales and installation 205 180
-------------------------
Total revenue 2,560 2,100
-------------------------
Operating expenses:
Engineering, technical and other direct 317 295
Cost of equipment 314 304
Sales and marketing 190 140
General and administrative 523 507
Depreciation and amortization 451 459
-------------------------
Total operating expenses 1,795 1,705
-------------------------
Operating income 765 395
Interest income 164 50
Minority interest (10) (5)
-------------------------
Income before taxes 919 440
Deferred tax benefit 85 93
-------------------------
Net income $ 1,004 $ 533
=========================
See accompanying notes to consolidated financial statements.
I-48
<PAGE>
PANHANDLE CELLULAR PARTNERSHIP
Consolidated Statements of Cash Flows
($ in thousands)
(Unaudited)
For the three months
ended March 31,
1999 1998
---- ----
Cash flows from operating activities:
Net income $ 1,004 $ 533
---------------------
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 451 459
Minority interest share of income 10 5
Deferred taxes (85) (93)
Increase in trade accounts receivable (18) (17)
Decrease (increase) in inventory 12 (94)
Increase in other current assets (12) (9)
Increase in accrued expenses 116 7
Increase in deferred revenue 34 13
Increase in customer deposits 8 11
---------------------
Total adjustments 516 282
---------------------
Net cash provided by operating activities 1,520 815
---------------------
Cash flows from investing activities:
Purchases of property and equipment (2) (2)
---------------------
Net cash used in investing activities (2) (2)
Cash flows from financing activities:
Increase in advances to affiliates, net (1,523) (805)
---------------------
Net increase (decrease) in cash (5) 8
Cash at beginning of year 13 13
---------------------
Cash at end of period $ 8 $ 21
=====================
See accompanying notes to consolidated financial statements.
I-49
<PAGE>
PANHANDLE CELLULAR PARTNERSHIP
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1) Summary of Significant Accounting Policies
Partnership Operations
Panhandle Cellular Partnership. (the "Partnership") was formed on January
1, 1987, to construct and operate non-wireline cellular telephone systems in the
Panama City, Florida, Metropolitan Statistical Area. The Partnership is the
99.01% partner of Panama City Cellular Telephone Co., Ltd. which was formed on
April 1, 1988 and whose financial statements are included elsewhere in this
document. On July 25, 1991, Palmer Cellular Partnership ("PCP"), a subsidiary of
Palmer Communications Incorporated ("Palmer"), acquired an interest in the
Partnership.
In March of 1995, Palmer Wireless, Inc. ("PWI") issued common stock for
100 percent of the partnership interests of PCP. Palmer owns a majority interest
in PWI. Since this exchange was between related parties, it was accounted for in
a manner similar to a pooling of interests. References to PWI in the
accompanying financial statements and notes to financial statements include the
activity of PWI and its predecessor, PCP.
On May 23, 1997, Price Communications Wireless, Inc. ("PCW") and PWI
entered into a plan of merger whereby PCW merged into PWI with PWI as the
surviving corporation. On October 6, 1997, the merger was completed and PWI
changed its name to PCW. The direct owner of the Partnership is Palmer Wireless
Holdings, Inc. ("Holdings") which has a 78.41% ownership interest. Holdings,
which was formed in January, 1994, is 100% owned by PCW.
The Partnership's subsidiary is the 100% owner of Price Communications
Wireless IX, Inc., the license holder for the Panama City MSA.
Basis of Presentation
Holdings owned approximately 77.7% of the Partnership at March 31, 1999.
For financial reporting purposes, PCW revalued its assets and liabilities as of
October 6, 1997 to reflect the price paid by Price Communications Corporation to
acquire 100% of PWI's common stock, a process generally referred to as "push
down accounting". On October 6, 1997, PCW allocated the purchase price to each
of the markets purchased and the Partnership revalued its assets and liabilities
to reflect this allocation. The preliminary allocation of the purchase price
resulted in licenses of approximately $44.2 million. During 1998 the allocation
was finalized resulting in an allocation of approximately $43.3 million to
licenses, with an adjustment also made to deferred tax liability and
paid-in-capital to finalize "push-down" accounting. The license is being
amortized over a period of 40 years.
The accompanying financial statements do not include the assets and
liabilities of the partners.
The Consolidated Financial Statements include the accounts of the
Partnership and its subsidiary. All significant inter-company balances and
transactions have been eliminated.
The Consolidated Financial Statements have been prepared by the
Partnership without audit in accordance with the rules and regulations of the
Security and Exchange Commission. In the opinion of management, the statements
reflect all adjustments necessary for a fair presentation of the results of
interim periods. All such adjustments are of a normal and recurring nature. The
results of operations for any interim period are not necessarily indicative of
the results to be expected for a full year.
I-50
<PAGE>
SAVANNAH CELLULAR LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
Consolidated Balance Sheets
($ in thousands)
<TABLE>
<CAPTION>
(Unaudited) (Audited)
March 31, December 31,
1999 1998
---- ----
<S> <C> <C>
Assets
Current Assets:
Cash $ 30 $ 14
Trade accounts receivable, less allowance for doubtful
accounts of $112 in 1999 and $108 in 1998 1,843 1,751
Inventory 236 368
Other current assets 55 30
----------------------
Total current assets 2,164 2,163
----------------------
Property and equipment:
Land and land improvements 758 715
Buildings and leasehold improvements 975 975
Equipment and furnishings 283 278
Cellular equipment 11,682 10,457
----------------------
13,698 12,425
Less accumulated depreciation and amortization 2,827 2,469
----------------------
Net property and equipment 10,871 9,956
----------------------
Advances to affiliates 1,749 3
Licenses and other intangibles, less accumulated amortization
of $3,066 in 1999 and $2,583 in 1998 74,207 74,690
----------------------
$88,991 $86,812
======================
Liabilities and Partners' Equity
Current liabilities:
Accrued salaries and benefits $ 49 $ 43
Other accrued expenses 359 190
Deferred revenue 467 390
Customer deposits 85 64
----------------------
Total current liabilities 960 687
Deferred income taxes 21,960 22,103
----------------------
Total liabilities 22,920 22,790
Commitments and contingencies
Partners' equity 66,071 64,022
----------------------
$88,991 $86,812
======================
</TABLE>
See accompanying notes to consolidated financial statements.
I-51
<PAGE>
SAVANNAH CELLULAR LIMITED PARTNERHIP
(A Delaware Limited Partnership)
Consolidated Statements of Operations
($ in thousands)
(Unaudited)
For the three months
ended March 31,
1999 1998
---- ----
Revenue:
Service revenue $ 5,316 $ 3,823
Equipment sales and installation 277 223
-----------------------
Total revenue 5,593 4,046
-----------------------
Operating expenses:
Engineering, technical and other direct 1,084 704
Cost of equipment 603 419
Sales and marketing 409 359
General and administrative 769 737
Depreciation and amortization 841 869
-----------------------
Total operating expenses 3,706 3,088
-----------------------
Operating income 1,887 958
Interest income (expense) 19 (131)
-----------------------
Income before taxes 1,906 827
Deferred tax benefit 143 167
-----------------------
Net income $ 2,049 $ 994
=======================
See accompanying notes to consolidated financial statements.
I-52
<PAGE>
SAVANNAH CELLULAR LIMITED PARTNERHSIP
(A Delaware Limited Partnership)
Consolidated Statements of Cash Flows
($ in thousands)
(Unaudited)
For the three months
ended March 31,
1999 1998
---- ----
Cash flows from operating activities:
Net income $ 2,049 $ 994
-----------------------
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 841 869
Deferred taxes (143) (167)
Decrease in trade accounts receivable (92) (315)
Decrease (increase) in inventory 132 (79)
Decrease in other current assets (25) (22)
Increase in accrued expenses 175 3
Increase in deferred revenue 77 13
Increase in customer deposits 21 4
-----------------------
Total adjustments 986 306
-----------------------
Net cash provided by operating activities 3,035 1,300
Cash flows from investing activities:
Purchases of property and equipment (1,273) (63)
Cash flows from financing activities:
Decrease in advances to affiliates, net (1,746) (1,241)
-----------------------
Net increase (decrease) in cash 16 (4)
Cash at beginning of year 14 24
-----------------------
Cash at end of period $ 30 $ 20
=======================
Supplemental disclosure of cash flow information -
Cash paid during the period for interest $ -- $ 131
=======================
See accompanying notes to consolidated financial statements
I-53
<PAGE>
SAVANNAH CELLULAR LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1) Summary of Significant Accounting Policies
Partnership Operations
Savannah Cellular Limited Partnership (the "Partnership") was formed on
June 21, 1987, to construct and operate certain non-wireline cellular telephone
systems in Bryan, Chatham and Effingham counties, Georgia. On December 1, 1995,
Palmer Wireless Holdings, Inc. ("Holdings"), a subsidiary of Palmer Wireless,
Inc. ("PWI"), acquired Georgia Metronet, Inc., which owned 47.6226 percent of
the Partnership directly through its 100 percent ownership of the Savannah
General Partnership, the general partner of the Partnership. As such, Holdings
purchased 97.8816 percent of the Partnership's general and limited partnership
interests on December 1, 1995.
On May 23, 1997, Price Communications Wireless , Inc. ("PCW") and PWI
entered into a plan of merger whereby PCW merged into PWI with PWI as the
surviving corporation. On October 6, 1997 the merger was completed and PWI
changed its name to PCW. The direct owner of the Partnership is Holdings which
was formed in January, 1994. PCW is the 100% owner of Holdings.
The partnership is the 100% owner of Price Communications Wireless VIII,
Inc., the license holder for the Savannah MSA.
Basis of Presentation
For financial reporting purposes, PCW revalued its assets and liabilities
as of October 6, 1997 to reflect the price paid by Price Communications
Corporation to acquire 100% of PWI's common stock, a process generally referred
to as "push down accounting". On October 6, 1997, PCW allocated the purchase
price to each of the markets purchased and the partnership revalued its assets
and liabilities to reflect this allocation. The preliminary allocation of the
purchase price resulted in licenses of approximately $79.0 million. During 1998,
the allocation was finalized resulting in an allocation of approximately $77.3
million to licenses, with an adjustment also made to deferred tax liability and
paid-in-capital to finalize "push-down" accounting. The license is being
amortized over a period of 40 years. Prior to October 6, 1997, Holdings utilized
"push down accounting."
The accompanying financial statements do not include the assets and
liabilities of the partners.
The Consolidated Financial Statements include the accounts of the
Partnership and its subsidiary. All significant inter-company balances and
transactions have been eliminated.
The Consolidated Financial Statements have been prepared by the
Partnership without audit in accordance with rules and regulations of the
Securities and Exchange Commission. In the opinion of management, the statements
reflect all adjustments necessary for a fair presentation of the results of
interim periods. All such adjustments are of a normal and recurring nature. The
results of operations for any interim period are not necessarily indicative of
the results to be expected for a full year.
I-54
<PAGE>
CEI COMMUNICATIONS, INC.
Balance Sheets
($ in thousands)
<TABLE>
<CAPTION>
(Unaudited) (Audited)
March 31, December 31,
1999 1998
--------------------------
<S> <C> <C>
Assets
Investment in Macon Cellular Telephone Systems Limited Partnership $704 $664
==========================
Commitments and contingencies
Equity
Common stock, $1.00 par value, 150,000 shares authorized,
500 shares issued and outstanding $ -- $ --
Retained earnings 704 664
--------------------------
$704 $664
==========================
</TABLE>
See accompanying notes to financial statements.
I-55
<PAGE>
CEI COMMUNICATIONS, INC.
Statements of Operations
($ in thousands)
(Unaudited)
For the three months
ended March 31,
1999 1998
--------------------
Partnership income from Macon Cellular Telephone Systems
Limited Partnership $40 $21
====================
See accompanying notes to financial statements.
I-56
<PAGE>
CEI COMMUNICATIONS, INC.
Statements of Cash Flows
($ in thousands)
Unaudited
For the three months
ended March 31,
1999 1998
---------------------
Net income $40 $20
Increase in investment account (41) (20)
---------------------
Increase in cash $0 $0
=====================
See accompanying notes to financial statements.
I-57
<PAGE>
CEI COMMUNICATIONS, INC.
Notes to Unaudited Financial Statements
1) Summary of Significant Accounting Policies
CEI Communications, Inc. (the "Company") has a 1.06% partnership interest
in Macon Cellular Telephone Systems Limited Partnership. The Company is owned
100% by Palmer Wireless Holdings, Inc.
I-58
<PAGE>
PANAMA CITY COMMUNICATIONS INC.
Balance Sheets
($ in thousands)
(Unaudited) (Audited)
December 31, December 31,
1999 1998
---- ----
Assets
Investment in Panama City Cellular
Telephone Co. Inc. $ 121 $ 111
===========================
Equity
Common stock, no par value: 100 shares authorized,
issued and outstanding $ -- $ --
Retained earnings 121 111
---------------------------
$ 121 $ 111
===========================
See accompanying notes to financial statements.
I-59
<PAGE>
PANAMA CITY COMMUNICATIONS INC.
Statements of Operations
($ in thousands)
(Unaudited)
For the three months
ended March 31,
1999 1998
---- ----
Partnership income from Panama
City Cellular Telephone Co. Ltd. $10 $5
=========================
See accompanying notes to financial statements.
I-60
<PAGE>
PANAMA CITY COMMUNICATIONS INC.
Statements of Cash Flows
($ in thousands)
(Unaudited)
For the three months
ended March 31,
1999 1998
---- ----
Net income $10 $5
Increase in investment account (10) (5)
------------------------
Increase in cash $0 $0
========================
See accompanying notes to financial statements.
I-61
<PAGE>
PANAMA CITY COMMUNICATIONS, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1) Summary of Significant Accounting Policies
Basis of Presentation
Panama City Communications, Inc. (the "Company") has a .99% partnership
interest in Panama City Cellular Telephone Co., Ltd. The Company is owned 100%
by Palmer Wireless Holdings, Inc.
I-62
<PAGE>
PRICE COMMUNICATIONS WIRELESS II, INC.
Balance Sheets
($ in thousands except share data)
<TABLE>
<CAPTION>
(Unaudited) (Audited)
March 31, December 31,
1999 1998
---- ----
<S> <C> <C>
Assets
Cellular license, net of accumulated amortization of $12,553 in 1998
and $10,533 in 1998 $ 310,713 $ 312,733
============================
Liabilities and Stockholder's Equity
Deferred taxes $ 95,176 $ 95,724
Commitments and contingencies -- --
Stockholder's Equity
Common stock, par value $.01 per share; authorized, issued
and outstanding 1,000 shares -- --
Paid-in capital 224,058 224,058
(Accumulated deficit) (8,521) (7,049)
----------------------------
Total stockholder's equity 215,537 217,009
----------------------------
Total liabilities and stockholder's equity $ 310,713 $ 312,733
============================
</TABLE>
See accompanying notes to financial statements.
I-63
<PAGE>
PRICE COMMUNICATIONS WIRELESS II, INC.
Statements of Operations
($ in thousands)
(Unaudited)
For the three months ended
March 31,
1999 1998
---- ----
Amortization of cellular license $2,020 $2,118
Deferred tax benefit 548 697
----------------------
Net (loss) ($1,472) ($1,421)
======================
See accompanying notes to financial statements.
I-64
<PAGE>
PRICE COMMUNICATIONS WIRELESS II, INC.
Statements of Cash Flows
($ in thousands)
(Unaudited)
For the three months ended
March 31,
1999 1998
---- ----
Net (loss) ($1,472) ($1,421)
Amortization of cellular license 2,020 2,118
Decrease in deferred tax liability (548) (697)
--------------------------
Net change in cash $0 $0
==========================
See accompanying notes to financial statements.
I-65
<PAGE>
PRICE COMMUNICATIONS WIRELESS II, INC.
Notes to Condensed Financial Statements
(Unaudited)
1) Summary of Significant Accounting Policies
Corporation Operations
Price Communications Wireless II, Inc. ("Wireless II") (the "Company") was
incorporated in the state of Delaware on October 7, 1997. The Company is 100%
owned by its parent Palmer Wireless Holdings Inc. which in turn is 100% owned by
its parent Price Communications Wireless Inc. ("PCW"), the Registrant. The
Company owns the non-wireline licenses of the AL-8 RSA, GA-7 RSA, GA-8 RSA, GA-9
RSA, GA-10 RSA, GA-12 RSA, Augusta Georgia MSA and the interim operating
authority for SC-7 RSA.
Financial Statement Basis
On May 23, 1997, PCW and Palmer Wireless, Inc. ("PWI") entered into a plan
of merger whereby PCW merged into PWI with PWI as the surviving corporation. On
October 6, 1997 the merger was completed and PWI changed its name to PCW.
For financial reporting purposes, PCW revalued its assets and liabilities
as of October 6, 1997 to reflect the price paid by Price Communications
Corporation to acquire 100% of Palmer's common stock, a process generally
referred to as "push down accounting". On October 6, 1997, PCW allocated the
purchase price to each of the markets purchased and the various operating
entities revalued their assets and liabilities to reflect this allocation. The
preliminary allocation of the purchase price resulted in licenses of
approximately $330.0 million. During 1998, the preliminary allocation was
finalized resulting in an allocation of approximately $323.3 million to
licenses, with an adjustment also made to deferred tax liability and
paid-in-capital to finalize "push-down" accounting. Palmer Wireless Holdings
Inc. is 100% owned by PCW and accordingly the value of the license allocated to
it was contributed to Wireless II
Licenses
Subsequent to the initial license valuation, the Company continually
evaluates whether later events and circumstances have occurred that indicate the
remaining estimated useful life of the license or licenses may warrant revision
or that the remaining balance of the license rights may not be recoverable. The
Company utilizes projected undiscounted cash flows over the remaining life of
the license or licenses and sales of comparable businesses to evaluate the
recorded value of these licenses. The assessment of the recoverability of the
remaining balance of the license rights will be impacted if projected cash flows
are not achieved.
Deferred Tax Liability
For financial statement purposes, the Company, recognizes deferred taxes
as it relates to the difference between financial statement and income tax basis
of the licenses.
Commitments and Contingencies
The Company is listed as a guarantor for PCW's $525.0 million 91/8% Senior
Secured Notes due 2006. All of PCW's direct or indirect subsidiaries are also
listed as guarantors.
I-66
<PAGE>
PRICE COMMUNICATIONS WIRELESS III, INC.
Balance Sheets
($ in thousands except share data)
<TABLE>
<CAPTION>
(Unaudited) (Audited)
March 31, December 31,
1999 1998
---- ----
<S> <C> <C>
Assets
Cellular license, net of accumulated amortization of $1,882 in 1999
and $1,576 in 1998 $ 47,062 $ 47,368
==================================
Liabilities and Stockholder's Equity
Deferred taxes $ 17,415 $ 17,526
Commitments and contingencies
Stockholder's Equity
Common stock, par value $.01 per share; authorized, issued
and outstanding 1,000 shares -- --
Paid-in capital 30,884 30,884
(Accumulated deficit) (1,237) (1,042)
----------------------------------
Total stockholder's equity 29,647 29,842
----------------------------------
Total liabilities and stockholder's equity $ 47,062 $ 47,368
==================================
</TABLE>
See accompanying notes to financial statements.
I-67
<PAGE>
PRICE COMMUNICATIONS WIRELESS III, INC.
Statements of Operations
($ in thousands)
(Unaudited)
For the three months ended
March 31,
1999 1998
---- ----
Amortization of cellular license $306 $315
Deferred tax benefit 111 107
--------------------------
Net (loss) ($195) ($208)
==========================
See accompanying notes to financial statements.
I-68
<PAGE>
PRICE COMMUNICATIONS WIRELESS III, INC.
Statements of Cash Flows
($ in thousands)
(Unaudited)
For the three months ended
March 31,
1999 1998
---- ----
Net (loss) ($195) ($208)
Amortization of cellular license 306 315
Decrease in deferred tax liability (111) (107)
--------------------------
Net change in cash $0 $0
==========================
See accompanying notes to financial statements.
I-69
<PAGE>
PRICE COMMUNICATIONS WIRELESS III, INC.
Notes to Condensed Financial Statements
(Unaudited)
1) Summary of Significant Accounting Policies
Corporation Operations
Price Communications Wireless III, Inc. ("Wireless III") (the "Company")
was incorporated in the state of Delaware on October 7, 1997. The Company is
100% owned by its parent Dothan Cellular Telephone Co. Inc. ("Dothan") whose
financial statements are included elsewhere in this document. Dothan in turn is
100% owned by Cellular Systems of Southeast Alabama, Inc. ("Cellular Systems").
Palmer Wireless Holdings, Inc.("Holdings") has a 94.6% ownership interest in
Cellular Systems. Holdings is 100% owned by Price Communications Wireless, Inc.
("PCW"). The Company owns the non-wireline license of Dothan (Dothan MSA), the
operating entity.
Financial Statement Basis
On May 23, 1997, PCW, and Palmer Wireless, Inc. ("PWI") entered into a
plan of merger whereby PCW merged into PWI with PWI as the surviving
corporation. On October 6, 1997, the merger was completed and PWI changed its
name to PCW.
For financial reporting purposes, PCW revalued its assets and liabilities
as of October 6, 1997 to reflect the price paid by Price Communications
Corporation to acquire 100% of Palmer's common stock, a process generally
referred to as "push down accounting". On October 6, 1997, PCW allocated the
purchase price to each of the markets purchased and the various operating
entities revalued their assets and liabilities to reflect this allocation. The
preliminary allocation of the purchase price resulted in licenses of
approximately $50.4 million. During 1998, the preliminary allocation was
finalized resulting in an allocation of $48.9 million to licenses, with an
adjustment also made to deferred tax liability and paid-in-capital to finalize
"push-down" accounting. Palmer Wireless Holdings Inc. contributed the value of
the license allocated to it by PCW to Wireless III.
Licenses
Subsequent to the initial license valuation, the Company continually
evaluates whether later events and circumstances have occurred that indicate the
remaining estimated useful life of the license or licenses may warrant revision
or that the remaining balance of the license rights may not be recoverable. The
Company utilizes projected undiscounted cash flows over the remaining life of
the license or licenses and sales of comparable businesses to evaluate the
recorded value of these licenses. The assessment of the recoverability of the
remaining balance of the license rights will be impacted if projected cash flows
are not achieved.
Deferred Income Taxes
For financial statement purposes, the Company recognizes a deferred tax
liability as it relates to the difference between the financial statement and
income tax basis of the licenses. The Company recognizes a deferred tax benefit
for the turnaround in the deferred tax liability attributable to the additional
amortization of the licenses.
Commitments and Contingencies
The Company is listed as a guarantor for PCW's $525.0 million 91/8% Senior
Secured Notes due 2006. All of PCW's direct or indirect subsidiaries are also
listed as guarantors.
I-70
<PAGE>
PRICE COMMUNICATIONS WIRELESS IV, INC.
Balance Sheets
($ in thousands except share data)
<TABLE>
<CAPTION>
(Unaudited) (Audited)
March 31, December 31,
1999 1998
---- ----
<S> <C> <C>
Assets
Cellular license, net of accumulated amortization of $4,238 in 1998
and $3,544 in 1998 $ 106,755 $ 107,449
==============================
Liabilities and Stockholder's Equity
Deferred taxes $ 39,505 $ 39,756
Commitments and contingencies
Stockholder's Equity
Common stock, par value $.01 per share; authorized, issued
and outstanding 1,000 shares -- --
Paid-in capital 70,038 70,038
(Accumulated deficit) (2,788) (2,345)
------------------------------
Total stockholder's equity 67,250 67,693
------------------------------
Total liabilities and stockholder's equity $ 106,755 $ 107,449
==============================
</TABLE>
See accompanying notes to financial statements.
I-71
<PAGE>
PRICE COMMUNICATIONS WIRELESS IV, INC.
Statements of Operations
($ in thousands)
(Unaudited)
For the three months ended
March 31,
1999 1998
---- ----
Amortization of cellular license $694 $709
Deferred tax benefit 251 240
--------------------------
Net (loss) ($443) ($469)
==========================
See accompanying notes to financial statements.
I-72
<PAGE>
PRICE COMMUNICATIONS WIRELESS IV, INC.
Statements of Cash Flows
($ in thousands)
(Unaudited)
For the three months ended
March 31,
1999 1998
---- ----
Net (loss) ($443) ($469)
Amortization of cellular license 694 709
Decrease in deferred tax liability (251) (240)
--------------------------
Net change in cash $0 $0
==========================
See accompanying notes to financial statements.
I-73
<PAGE>
PRICE COMMUNICATIONS WIRELESS IV, INC.
Notes to Condensed Financial Statements
(Unaudited)
1) Summary of Significant Accounting Policies
Corporation Operations
Price Communications Wireless IV, Inc. ("Wireless IV") (the "Company") was
incorporated in the state of Delaware on October 7, 1997. The Company is 100%
owned by its parent Montgomery Cellular Telephone Co. Inc. ("Montgomery").
Montgomery in turn is 100% owned by its parent, Montgomery Cellular Holding Co.
Inc. ("Montgomery Holdings"), the operating entity. Palmer Wireless Holdings,
Inc. has a 92.8% ownership interest in Montgomery Holdings. Palmer Wireless
Holdings, Inc. is 100% owned by Price Communications Wireless, Inc.,("PCW"). The
Company owns the non-wireline license of Montgomery Holdings (Montgomery MSA).
Financial Statement Basis
On May 23, 1997, PCW and Palmer Wireless, Inc. ("PWI") entered into a plan
of merger whereby PCW merged into PWI with PWI as the surviving corporation. On
October 6, 1997, the merger was completed and PWI changed its name to PCW.
For financial reporting purposes, PCW revalued its assets and liabilities
as of October 6, 1997 to reflect the price paid by Price Communications
Corporation to acquire 100% of Palmer's common stock, a process generally
referred to as "push down accounting". On October 6, 1997, PCW allocated the
purchase price to each of the markets purchased and the various operating
entities revalued their assets and liabilities to reflect this allocation. The
preliminary allocation of the purchase price resulted in licenses of
approximately $113.4 million to licenses. During 1998, the preliminary
allocation was finalized resulting in an allocation of approximately $111.0
million to licenses, with an adjustment also made to deferred tax liability and
paid-in-capital to finalize "push-down" accounting. Palmer Wireless Holdings
Inc. contributed the value of the license allocated to it by PCW to Wireless
IV..
Licenses
Subsequent to the initial license valuation, the Company continually
evaluates whether later events and circumstances have occurred that indicate the
remaining estimated useful life of the license or licenses may warrant revision
or that the remaining balance of the license rights may not br recoverable. The
Company utilizes projected undiscounted cash flows over the remaining life of
the license or licenses and sales of comparable businesses to evaluate the
recorded value of these licenses. The assessment of the recoverability of the
remaining balance of the license rights will be impacted if projected cash flows
are not achieved.
Deferred Income Taxes
For financial statement purposes, the Company recognizes a deferred tax
liability as it relates to the difference between the financial statement and
income tax basis of the licenses. The Company recognizes a deferred tax benefit
for the turnaround in the deferred tax liability attributable to the additional
amortization of the licenses.
Commitments and Contingencies
The Company is listed as a guarantor for PCW's $525.0 million 91/8% Senior
Secured Notes due 2006. All of PCW's direct or indirect subsidiaries are also
listed as guarantors.
I-74
<PAGE>
PRICE COMMUNICATIONS WIRELESS V, INC.
Balance Sheets
($ in thousands except share data)
<TABLE>
<CAPTION>
(Unaudited) (Audited)
March 31, December 31,
1999 1998
---- ----
<S> <C> <C>
Assets
Cellular license, net of accumulated amortization of $2,923 in 1999
and $2,444 in 1998 $ 73,730 $ 74,209
==============================
Liabilities and Stockholder's Equity
Deferred taxes $ 11,682 $ 11,759
Commitments and contingencies
Stockholder's Equity
Common stock, par value $.01 per share; authorized, issued
and outstanding 1,000 shares -- --
Paid-in capital 64,069 64,069
(Accumulated deficit) (2,021) (1,619)
------------------------------
Total stockholder's equity 62,048 62,450
------------------------------
Total liabilities and stockholder's equity $ 73,730 $ 74,209
==============================
</TABLE>
See accompanying notes to financial statements.
I-75
<PAGE>
PRICE COMMUNICATIONS WIRELESS V, INC.
Statements of Operations
($ in thousands)
(Unaudited)
For the three months ended
March 31,
1999 1998
---- ----
Amortization of cellular license $479 $489
Deferred tax benefit 77 166
--------------------------
Net (loss) ($402) ($323)
==========================
See accompanying notes to financial statements.
I-76
<PAGE>
PRICE COMMUNICATIONS WIRELESS V, INC.
Statements of Cash Flows
($ in thousands)
(Unaudited)
For the three months ended
March 31,
1999 1998
---- ----
Net (loss) ($402) ($323)
Amortization of cellular license 479 489
Decrease in deferred tax liability (77) (166)
--------------------------
Net change in cash $0 $0
==========================
See accompanying notes to financial statements.
I-77
<PAGE>
PRICE COMMUNICATIONS WIRELESS V, INC.
Notes to Condensed Financial Statements
(Unaudited)
1) Summary of Significant Accounting Policies
Corporation Operations
Price Communications Wireless V, Inc. ("Wireless V") (the "Company") was
incorporated in the state of Delaware on October 7, 1997. The Company is 100%
owned by its parent Cellular Dynamics Telephone Company of Georgia ("Cellular
Dynamics"). Cellular Dynamics in turn is 100% owned by its parent Albany
Cellular Partners ("Albany"), the operating entity. Palmer Wireless Holdings,
Inc.("Holdings"), has an 86.5% ownership interest in Albany. Holdings is 100%
owned by Price Communications Wireless, Inc.("PCW"). The Company owns the
non-wireline license of Albany (Albany MSA and GA-13 RSA).
Financial Statement Basis
On May 23, 1997, PCW and Palmer Wireless, Inc. ("PWI") entered into a plan
of merger whereby PCW merged into PWI with PWI as the surviving corporation. On
October 6, 1997 the merger was completed and PWI changed its name to PCW.
For financial reporting purposes, PCW revalued its assets and liabilities
as of October 6, 1997 to reflect the price paid by Price Communications
Corporation to acquire 100% of Palmer's common stock, a process generally
referred to as "push down accounting". On October 6, 1997, PCW allocated the
purchase price to each of the markets purchased and the various operating
entities revalued their assets and liabilities to reflect this allocation. The
preliminary allocation of the purchase price resulted in licenses of
approximately $78.3 million. During 1998, the preliminary allocation was
finalized resulting in an allocation of approximately $76.7 million to licenses,
with an adjustment also made to deferred tax liability and paid-in-capital to
finalize "push-down" accounting. Palmer Wireless Holdings Inc. contributed the
value of the license allocated to it by PCW to Wireless V.
Licenses
Subsequent to the initial license valuation, the Company continually
evaluates whether later events and circumstances have occurred that indicate the
remaining estimated useful life of the license or licenses may warrant revision
or that the remaining balance of the license rights may not be recoverable. The
Company utilizes projected undiscounted cash flows over the remaining life of
the license or licenses and sales of comparable businesses to evaluate the
recorded value of these licenses. The assessment of the recoverability of the
remaining balance of the license rights will be impacted if projected cash flows
are not achieved.
Deferred Income Taxes
For financial statement purposes, the Company recognizes a deferred tax
liability as it relates to the difference between the financial statement and
income tax basis of the licenses. The Company recognizes a deferred tax benefit
for the turnaround in the deferred tax liability attributable to the additional
amortization of the licenses.
Commitments and Contingencies
The Company is listed as a guarantor for PCW's $525.0 million 91/8% Senior
Secured Notes due 2006. All of PCW's direct or indirect subsidiaries are also
listed as guarantors.
I-78
<PAGE>
PRICE COMMUNICATIONS WIRELESS VI, INC.
Balance Sheets
($ in thousands except share data)
<TABLE>
<CAPTION>
(Unaudited) Audited)
March 31, December 31,
1999 1998
---- ----
<S> <C> <C>
Assets
Cellular license, net of accumulated amortization of $3,421 in 1998
and $2,860 in 1998 $ 86,280 $ 86,841
===========================
Liabilities and Stockholder's Equity
Deferred taxes $ 28,322 $ 28,506
Commitments and contingencies
Stockholder's Equity
Common stock, par value $.01 per share; authorized, issued
and outstanding 1,000 shares -- --
Paid-in capital 60,229 60,229
(Accumulated deficit) (2,271) (1,894)
---------------------------
Total stockholder's equity 57,958 58,335
---------------------------
Total liabilities and stockholder's equity $ 86,280 $ 86,841
===========================
</TABLE>
See accompanying notes to financial statements.
I-79
<PAGE>
PRICE COMMUNICATIONS WIRELESS VI, INC.
Statements of Operations
($ in thousands)
(Unaudited)
For the three months ended
March 31,
1999 1998
---- ----
Amortization of cellular license $561 $572
Deferred tax benefit 184 193
---------------------------
Net (loss) ($377) ($379)
===========================
See accompanying notes to financial statements.
I-80
<PAGE>
PRICE COMMUNICATIONS WIRELESS VI, INC.
Statements of Cash Flows
($ in thousands)
(Unaudited)
For the three months ended
March 31,
1999 1998
---- ----
Net (loss) ($377) ($379)
Amortization of cellular license 561 572
Decrease in deferred tax liability (184) (193)
---------------------------
Net change in cash $0 $0
===========================
See accompanying notes to financial statements.
I-81
<PAGE>
PRICE COMMUNICATIONS WIRELESS VI, INC.
Notes to Condensed Financial Statements
(Unaudited)
1) Summary of Significant Accounting Policies
Corporation Operations
Price Communications Wireless VI, Inc. ("Wireless VI") (the "Company") was
incorporated in the state of Delaware on October 7, 1997. The Company is 100%
owned by its parent Columbus Cellular Telephone Company ("Columbus Cellular").
Palmer Wireless Holdings, Inc.("Holdings") has an 85.2% ownership interest in
Columbus Cellular Holdings and is 100% owned by Price Communications Wireless,
Inc. ("PCW"). The Company owns the non-wireline licenses of Columbus Cellular
(Columbus MSA and the GA-6 A2 RSA.
Financial Statement Basis
On May 23, 1997, PCW and Palmer Wireless, Inc. ("PWI") entered into a plan
of merger whereby PCW merged into PWI with PWI as the surviving corporation. On
October 6, 1997, the merger was completed and PWI changed its name to PCW.
For financial reporting purposes, PCW revalued its assets and liabilities
as of October 6, 1997 to reflect the price paid by Price Communications
Corporation to acquire 100% of Palmer's common stock, a process generally
referred to as "push down accounting". On October 6, 1997, PCW allocated the
purchase price to each of the markets purchased and the various operating
entities revalued their assets and liabilities to reflect this allocation. The
preliminary allocation of the purchase price resulted in licenses of
approximately $91.5 million. During 1998, the preliminary allocation was
finalized resulting in an allocation of approximately $89.7 million to licenses,
with an adjustment also made to deferred tax liability and paid-in-capital to
finalize "push-down" accounting. Palmer Wireless Holdings Inc. contributed the
value of the license allocated to it by PCW to Wireless VI.
Licenses
Subsequent to the initial license valuation, the Company continually
evaluates whether later events and circumstances have occurred that indicate the
remaining estimated useful life of the license or licenses may warrant revision
or that the remaining balance of the license rights may not be recoverable. The
Company utilizes projected undiscounted cash flows over the remaining life of
the license or licenses and sales of comparable businesses to evaluate the
recorded value of these licenses. The assessment of the recoverability of the
remaining balance of the license rights will be impacted if projected cash flows
are not achieved.
Deferred Income Taxes
For financial statement purposes, the Company recognizes a deferred tax
liability as it relates to the difference between the financial statement and
income tax basis of the licenses. The Company recognizes a deferred tax benefit
for the turnaround in the deferred tax liability attributable to the additional
amortization of the licenses.
Commitments and Contingencies
The Company is listed as a guarantor for PCW's $525.0 million 9 1/8%
Senior Secured Notes due 2006. All of PCW's direct or indirect subsidiaries are
also listed as guarantors.
I-82
<PAGE>
PRICE COMMUNICATIONS WIRELESS VII, INC.
Balance Sheets
($ in thousands except share data)
<TABLE>
<CAPTION>
(Unaudited) (Audited)
March 31, December 31,
1999 1998
---- ----
<S> <C> <C>
Assets
Cellular license, net of accumulated amortization of $5,183 in 1998
and $4,334 in 1998 $130,728 $131,577
================================
Liabilities and Stockholder's Equity
Deferred taxes $40,623 $40,888
Commitments and contingencies
Stockholder's Equity
Common stock, par value $.01 per share; authorized, issued
and outstanding 1,000 shares -- --
Paid-in capital 93,558 93,558
(Accumulated deficit) (3,453) (2,869)
--------------------------------
Total stockholder's equity 90,105 90,689
--------------------------------
Total liabilities and stockholder's equity $130,728 $131,577
================================
</TABLE>
See accompanying notes to financial statements.
I-83
<PAGE>
PRICE COMMUNICATIONS WIRELESS VII, INC.
Statements of Operations
($ in thousands)
(Unaudited)
For the three months ended
March 31,
1999 1998
---- ----
Amortization of cellular license $849 $867
Deferred tax benefit 265 293
---------------------------
Net (loss) ($584) ($574)
===========================
See accompanying notes to financial statements.
I-84
<PAGE>
PRICE COMMUNICATIONS WIRELESS VII, INC.
Statements of Cash Flows
($ in thousands)
(Unaudited)
For the three months ended
March 31,
1999 1998
---- ----
Net (loss) ($584) ($574)
Amortization of cellular license 849 867
Decrease in deferred tax liability (265) (293)
--------------------------
Net change in cash $0 $0
==========================
See accompanying notes to financial statements.
I-85
<PAGE>
PRICE COMMUNICATIONS WIRELESS VII, INC.
Notes to Condensed Financial Statements
(Unaudited)
1) Summary of Significant Accounting Policies
Corporation Operations
Price Communications Wireless VII, Inc. ("Wireless VII") (the "Company")
was incorporated in the state of Delaware on October 7, 1997. The Company is
100% owned by its parent Macon Cellular Telephone Systems Limited Partnership
("Macon"). C.E.I. Communications Inc. ("CEI") is the general partner of Macon
and holds a 1.06% ownership interest in Macon. Palmer Wireless Holdings,
Inc.("Holdings") is the 100% owner of CEI and has a 99.2% ownership interest in
Macon when combined with its ownership of CEI. Holdings is 100% owned by Price
Communications Wireless, Inc. ("PCW"). The Company owns the non-wireline
licenses of Macon (Macon MSA and the GA-6 A1 RSA.
Financial Statement Basis
On May 23, 1997, PCW, and Palmer Wireless, Inc. ("PWI") entered into a
plan of merger whereby PCW merged into PWI with PWI as the surviving
corporation. On October 6, 1997, the merger was completed and PWI changed its
name to PCW.
For financial reporting purposes, PCW revalued its assets and liabilities
as of October 6, 1997 to reflect the price paid by Price Communications
Corporation to acquire 100% of Palmer's common stock, a process generally
referred to as "push down accounting". On October 6, 1997, PCW allocated the
purchase price to each of the markets purchased and the various operating
entities revalued their assets and liabilities to reflect this allocation. The
preliminary allocation of the purchase price resulted in licenses of
approximately $138.7 million. During 1998, the preliminary allocation was
finalized resulting in an allocation of approximately $135.9 million to
licenses, with an adjustment also made to deferred tax liability and
paid-in-capital to finalize "push-down' accounting. Palmer Wireless Holdings
Inc. contributed the value of the license allocated to it by PCW to Wireless
VII.
Licenses
Subsequent to the initial license valuation, the Company continually
evaluates whether later events and circumstances have occurred that indicate the
remaining estimated useful life of the license or licenses may warrant revision
or that the remaining balance of the license rights may not be recoverable. The
Company utilizes projected undiscounted cash flows over the remaining life of
the license or licenses and sales of comparable businesses to evaluate the
recorded value of these licenses. The assessment of the recoverability of the
remaining balance of the license rights will be impacted if projected cash flows
are not achieved.
Deferred Income Taxes
For financial statement purposes, the Company recognizes a deferred tax
liability as it relates to the difference between the financial statement and
income tax basis of the licenses. The Company recognizes a deferred tax benefit
for the turnaround in the deferred tax liability attributable to the additional
amortization of the licenses.
Commitments and Contingencies
The Company is listed as a guarantor for PCW's $525.0 million 91/8% Senior
Secured Notes due 2006. All of PCW's direct or indirect subsidiaries are also
listed as guarantors.
I-86
<PAGE>
PRICE COMMUNICATIONS WIRELESS VIII, INC.
Balance Sheets
($ in thousands except share data)
<TABLE>
<CAPTION>
(Unaudited) (Audited)
March 31, December 31,
1999 1998
---- ----
<S> <C> <C>
Assets
Cellular license, net of accumulated amortization of $3,066 in 1999
and $2,583 in 1998 $74,207 $74,690
=================================
Liabilities and Stockholder's Equity
Deferred taxes $21,960 $22,103
Commitments and contingencies
Stockholder's Equity
Common stock, par value $.01 per share; authorized, issued
and outstanding 1,000 shares -- --
Paid-in capital 54,336 54,336
(Accumulated deficit) (2,089) (1,749)
---------------------------------
Total stockholder's equity 52,247 52,587
---------------------------------
Total liabilities and stockholder's equity $74,207 $74,690
=================================
</TABLE>
See accompanying notes to financial statements.
I-87
<PAGE>
PRICE COMMUNICATIONS WIRELESS VIII, INC.
Statements of Operations
($ in thousands)
(Unaudited)
For the three months ended
March 31,
1999 1998
---- ----
Amortization of cellular license $483 $523
Deferred tax benefit 143 167
---------------------------
Net (loss) ($340) ($356)
===========================
See accompanying notes to financial statements.
I-88
<PAGE>
PRICE COMMUNICATIONS WIRELESS VIII, INC.
Statements of Cash Flows
($ in thousands)
(Unaudited)
For the three months ended
March 31,
1999 1998
---- ----
Net (loss) ($340) ($356)
Amortization of cellular license 483 523
Decrease in deferred tax liability (143) (167)
---------------------------
Net change in cash $0 $0
===========================
See accompanying notes to financial statements.
I-89
<PAGE>
PRICE COMMUNICATIONS WIRELESS VIII, INC.
Notes to Condensed Financial Statements
(Unaudited)
1) Summary of Significant Accounting Policies
Corporation Operations
Price Communications Wireless VIII, Inc. ("Wireless VIII") (the "Company")
was incorporated in the state of Delaware on October 7, 1997. The Company is
100% owned by its parent Savannah Cellular Limited Partnership ("Savannah").
Palmer Wireless Holdings, Inc.("Holdings") has a 98.5% ownership interest in
Savannah. Holdings is 100% owned by Price Communications Wireless, Inc. ("PCW").
The Company owns the non-wireline license of Savannah (Savannah MSA).
Financial Statement Basis
On May 23, 1997, PCW and Palmer Wireless, Inc. ("PWI") entered into a plan
of merger whereby PCW merged into PWI with PWI as the surviving corporation. On
October 6, 1997, the merger was completed and PWI changed its name to PCW.
For financial reporting purposes, PCW revalued its assets and liabilities
as of October 6, 1997 to reflect the price paid by Price Communications
Corporation to acquire 100% of Palmer's common stock, a process generally
referred to as "push down accounting". On October 6, 1997, PCW allocated the
purchase price to each of the markets purchased and the various operating
entities revalued their assets and liabilities to reflect this allocation. The
preliminary allocation of the purchase price resulted in licenses of
approximately $79.0 million. During 1998, the preliminary allocation was
finalized resulting in an allocation of approximately $77.3 million to licenses,
with an adjustment also made to deferred tax liability and paid-in-capital to
finalize "push-down" accounting. Palmer Wireless Holdings Inc. contributed the
value of the license allocated to it by PCW to Wireless VIII.
Licenses
Subsequent to the initial license valuation, the Company continually
evaluates whether later events and circumstances have occurred that indicate the
remaining estimated useful life of the license or licenses may warrant revision
or that the remaining balance of the license rights may not be recoverable. The
Company utilizes projected undiscounted cash flows over the remaining life of
the license or licenses and sales of comparable businesses to evaluate the
recorded value of these licenses. The assessment of the recoverability of the
remaining balance of the license rights will be impacted if projected cash flows
are not achieved.
Deferred Income Taxes
For financial statement purposes, the Company recognizes a deferred tax
liability as it relates to the difference between the financial statement and
income tax basis of the licenses. The Company recognizes a deferred tax benefit
for the turnaround in the deferred tax liability attributable to the additional
amortization of the licenses.
Commitments and Contingencies
The Company is listed as a guarantor for PCW's $525.0 million 9 1/8%
Senior Secured Notes due 2006. All of PCW's direct or indirect subsidiaries are
also listed as guarantors.
I-90
<PAGE>
PRICE COMMUNICATIONS WIRELESS IX, INC.
Balance Sheets
($ in thousands except share data)
<TABLE>
<CAPTION>
(Unaudited) (Audited)
March 31, December 31,
1999 1998
---- ----
<S> <C> <C>
Assets
Cellular license, net of accumulated amortization of $1,652 in 1999
and $1,381 in 1998 $41,658 $41,929
===============================
Liabilities and Stockholder's Equity
Deferred taxes $13,085 $13,170
Commitments and contingencies
Stockholder's Equity
Common stock, par value $.01 per share; authorized, issued
and outstanding 1,000 shares -- --
Paid-in capital 29,674 29,674
(Accumulated deficit) (1,101) (915)
-------------------------------
Total stockholder's equity 28,573 28,759
-------------------------------
Total liabilities and stockholder's equity $41,658 $41,929
===============================
</TABLE>
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<PAGE>
See accompanying notes to financial statements.
PRICE COMMUNICATIONS WIRELESS IX, INC.
Statements of Operations
($ in thousands)
(Unaudited)
For the three months ended
March 31,
1999 1998
---- ----
Amortization of cellular license $271 $276
Deferred tax benefit 85 93
---------------------------
Net (loss) ($186) ($183)
===========================
See accompanying notes to financial statements.
I-92
<PAGE>
PRICE COMMUNICATIONS WIRELESS IX, INC.
Statements of Cash Flows
($ in thousands)
(Unaudited)
For the three months ended
March 31,
1999 1998
---- ----
Net (loss) ($186) ($183)
Amortization of cellular license 271 276
Decrease in deferred tax liability (85) (93)
---------------------------
Net change in cash $0 $0
===========================
See accompanying notes to financial statements.
I-93
<PAGE>
PRICE COMMUNICATIONS WIRELESS IX, INC.
Notes to Condensed Financial Statements
(Unaudited)
1) Summary of Significant Accounting Policies
Corporation Operations
Price Communications Wireless IX, Inc. ("Wireless IX") ("Company") was
incorporated in the state of Delaware on October 7, 1997. The Company is 100%
owned by its parent Panama Cellular Telephone Company, Ltd. ("Panama City"), the
operating entity. Panama City in turn is owned by Panhandle Cellular Partnership
("PCP") and by Panama City Communications, Inc. ("PCCI"), which owns .99% of
Panama City and which is 100% owned by Palmer Wireless Holdings,
Inc.("Holdings"). Through its ownership of PCP and PCCI, Palmer Wireless
Holdings, Inc. has a 78.4% ownership interest in Panama City. Holdings is 100%
owned by Price Communications Wireless, Inc. ("PCW"). The Company owns the
non-wireline license of Panama City(Panama City MSA).
Financial Statement Basis
On May 23, 1997, Price Communications Wireless, Inc. ("PCW"), the parent
of Palmer Wireless Holdings, Inc. and Palmer Wireless, Inc. ("PWI") entered into
a plan of merger whereby PCW merged into PWI with PWI as the surviving
corporation. On October 6, 1997, the merger was completed and PWI changed its
name to PCW.
For financial reporting purposes, PCW revalued its assets and liabilities
as of October 6, 1997 to reflect the price paid by Price Communications
Corporation to acquire 100% of Palmer's common stock, a process generally
referred to as "push down accounting". On October 6, 1997, PCW allocated the
purchase price to each of the markets purchased and the various operating
entities revalued their assets and liabilities to reflect this allocation. The
preliminary allocation of the purchase price resulted in licenses of
approximately $44.2 million. During 1998, the preliminary allocation was
finalized resulting in an allocation of approximately $43.3 million to licenses,
with an adjustment also made to deferred tax liability and paid-in-capital to
finalize "push-down" accounting. Palmer Wireless Holdings Inc. contributed the
value of the license allocated to it by PCW to Wireless IX.
Licenses
Subsequent to the initial license valuation, the Company continually
evaluates whether later events and circumstances have occurred that indicate the
remaining estimated useful life of the license or licenses may warrant revision
or that the remaining balance of the license rights may not be recoverable. The
Company utilizes projected undiscounted cash flows over the remaining life of
the license or licenses and sales of comparable businesses to evaluate the
recorded value of these licenses. The assessment of the recoverability of the
remaining balance of the license rights will be impacted if projected cash flows
are not achieved.
Deferred Income Taxes
For financial statement purposes, the Company recognizes a deferred tax
liability as it relates to the difference between the financial statement and
income tax basis of the licenses. The Company recognizes a deferred tax benefit
for the turnaround in the deferred tax liability attributable to the additional
amortization of the licenses.
Commitments and Contingencies
The Company is listed as a guarantor for PCW's $525.0 million 91/8% Senior
Secured Notes due 2006. All of PCW's direct or indirect subsidiaries are also
listed as guarantors.
I-94
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion is intended to facilitate an understanding and
assessment of significant changes and trends related to the financial condition
and results of operations of the Company. This discussion should be read in
conjunction with the Company's Condensed Consolidated Financial Statements and
related notes thereto.
The discussion contains statements which constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. Such statements are made regarding the intent, belief or current
expectations of the Company its directors or officers primarily with respect to
the future operating performance of the Company. Readers are cautioned that any
such forward-looking statements are not guarantees of future performance and may
involve risks and uncertainties, and that actual results may differ from those
in the forward-looking statements as a result of factors, many of which are
outside the control of the Company.
OVERVIEW
Price Communications Wireless, Inc. ("PCW" or the "Company"), a
wholly-owned subsidiary of Price Communications Cellular Holdings, Inc.
("Holdings"), a wholly-owned subsidiary of Price Communications Corporation
Cellular, Inc., a wholly owned subsidiary of Price Communications Corporation
("PCC"), was incorporated on May 29, 1997 in connection with the purchase of
Palmer Wireless, Inc. ("Palmer).
In May 1997, PCC, PCW and Palmer entered into an Agreement and Plan of
Merger (the "Merger Agreement"). The Merger Agreement provided, among other
things, for the merger of PCW with and into Palmer with Palmer as the surviving
corporation (the "Merger"). In October 1997, the Merger was consummated and
Palmer changed its name to "Price Communications Wireless, Inc."
The Company is engaged in the construction, development, management and
operation of cellular telephone systems in the southeastern United States. As of
March 31, 1999, the Company provided cellular telephone service to 398,542
subscribers (excluding subscribers in the area where the Company had interim
operating authority) in Alabama, Florida, Georgia, and South Carolina in a total
of 16 licensed service areas, composed of eight Metropolitan Service Areas
("MSAs") and eight Rural Service Areas ("RSAs"), with an aggregate estimated
population of 3.4 million (including the acquisition of additional Pops in April
1999). The Company sells its cellular telephone service as well as a full line
of cellular products and accessories principally through its network of retail
stores. The Company markets all of its products and services under the
nationally-recognized service mark CELLULARONE.
During the course of the year, the Company has been engaged and continues
to be engaged in preliminary discussions and negotiations with respect to
potential acquisitions and exchanges, all with the object of being accretive in
the long term for shareholders and bondholders. There can be no assurances that
the Company will be successful in consummating any of such transactions or as to
the terms thereof.
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<PAGE>
Market Ownership
The following is a summary of the Company's ownership interests in the
cellular telephone system in each licensed service area to which the Company
provided service at March 31, 1999 and December 31, 1998. The percentages for
March reflect the additional minority percentages acquired in April 1999.
March 31, December 31,
1999 1998
---- ----
Dothan, Alabama ........................ 95.0% 94.6%
Montgomery, Alabama. ................... 94.6 92.8
Albany, Georgia ........................ 96.8 86.5
Augusta, Georgia ....................... 100.0 100.0
Columbus, Georgia ...................... 98.9 85.2
Macon, Georgia ......................... 99.2 99.2
Savannah, Georgia ...................... 98.5 98.5
Panama City, Florida ................... 92.0 78.4
Alabama 8 - RSA ........................ 100.0 100.0
Georgia 6 - RSA ........................ 96.3 96.3
Georgia 7 - RSA ........................ 100.0 100.0
Georgia 8 - RSA ........................ 100.0 100.0
Georgia 9 - RSA ........................ 100.0 100.0
Georgia 10 - RSA ....................... 100.0 100.0
Georgia 12 - RSA ....................... 100.0 100.0
Georgia 13 - RSA ....................... 100.0 86.5
RESULTS OF OPERATIONS
The following table sets forth for the Company the percentage which
certain amounts bear to total revenue.
Three Months Ended
March 31,
---------
1999 1998
---- ----
Revenue:
Service ............................................... 93.3% 94.0%
Equipment sales and installation ...................... 6.7 6.0
----- -----
Total revenue ............................... 100.0 100.0
Operating expenses:
Engineering, technical and other direct:
Engineering and technical (1) ................... 6.4 7.5
Other direct costs of services (2) .............. 8.3 7.2
Cost of equipment (3) ................................. 12.1 12.7
Selling, general and administrative:
Sales and marketing (4) ......................... 8.8 10.7
Customer service (5) ............................ 6.4 6.7
General and administrative (6) .................. 8.5 10.6
Depreciation and amortization ......................... 18.9 26.3
----- -----
Total operating expenses .................. 69.4 81.7
Operating income ..................................... 30.6% 18.3%
Operating income before depreciation and
amortization (7) ................................ 49.6% 44.6%
- -----------------
(1) Consists of costs of cellular telephone network, including inter-trunk
costs, span-line costs, cell site repairs and maintenance, cell site
utilities, cell site rent, engineers' salaries and benefits and other
operational costs.
(2) Consists of net costs of incollect roaming, costs of long distance, costs
of interconnection with wireline telephone companies and other costs of
services.
I-96
<PAGE>
(3) Consists primarily of the costs of the cellular telephones and accessories
sold.
(4) Consists primarily of salaries and benefits of sales and marketing
personnel, advertising and promotion expenses and employee and agent
commissions.
(5) Consists primarily of salaries and benefits of customer service personnel
and costs of printing and mailing billings generated in-house.
(6) Includes salaries and benefits of general and administrative personnel and
other overhead expenses.
(7) Operating income before depreciation and amortization should not be
considered in isolation or as an alternative to net income, operating
income or any other measure of performance under generally accepted
accounting principles. The Company believes that operating income before
depreciation and amortization is viewed as a relevant supplemental measure
of performance in the cellular telephone industry.
Three Months Ended March 31, 1999 Compared to Three Months Ended March 31, 1998
Revenue. Service revenues totaled $52.8 million for the first quarter of
1999, an increase of 29.8% from $40.7 million for the same period in 1998. The
increase is attributable to a combination of several factors all of which show
positive trends when comparing the current quarter to 1998's first quarter. A
significant increase in the average number of subscribers to 389,467 from
316,906, an increase in roaming revenue which is a result of an increase in
coverage, a significant increase in the number of minutes our subscribers are
using (an increase of 60.8%) and an increase in the average local revenue per
subscriber which consists primarily of a monthly access fee and billable airtime
(including roaming revenue) all contributed to the significant increase.
Average monthly revenue per subscriber (based upon service revenue only)
includes local revenue as well as roaming revenue but does not include incollect
revenue from subscribers, as this revenue offsets the Company's direct cost of
service. Such revenue increased to $44.38 for the current quarter from $42.80
for the same period last year or an increase of 3.7%. The significant increase
in total minutes used per subscriber from 148 minutes to 198 minutes is
noteworthy since this increase does indicate a greater acceptance by customers
of the use of cellular service which may manifest itself in increased revenue in
the future.
Equipment sales and installation revenue, which consists primarily of
cellular subscriber equipment sales, increased from $2.6 million for the first
quarter of 1998 to $3.8 million for the first quarter of 1999. The increase is
primarily due to a 19.4% increase in gross subscriber activations in the current
quarter of 1999 compared to 1998. Also contributing to the increase is an
increase in accessory sales, as well as an increase in the price point for phone
sales, as the Company continues to sell more digital phones instead of analog
phones. As a percentage of revenue, equipment sales and installation revenue
increased to 6.7% in the current quarter of 1999 from 6.0% in the same quarter
of 1998.
Operating Expenses. Total operating expenses increased from $35.4 million
in the first quarter of 1998 to $41.4 million in the current quarter. As a
percentage of total revenue, however, operating expenses decreased to 73.1% for
the current quarter in 1999 from 81.7 % for the same quarter in 1998.
Engineering, technical and other direct expenses increased by $2.1 million
to $8.8 million in the current quarter from $6.8 million in the first quarter of
1998. Included in engineering, technical and other direct is the expense which
represents the difference between the amount the Company charges its subscribers
when they roam in other markets compared to the amount the Company is charged by
other cellular providers. The increase in this expense for the current quarter
in 1999 compared to the same quarter in 1998 amounted to approximately $739,000
as a result of the increased subscribers in 1999. The ratio of revenue to cost
remained relatively constant. The significant increase in subscribers and
minutes of use resulted in an increase in long distance telephone charges
($672,000), increases in fixed span lines to provide additional capacity
($192,000), and increases in the variable telephone costs from charges per
minute of use ($355,000).
The increase in cost of equipment from $5.5 million in the first quarter
of 1998 to $6.8 million in the first quarter of 1999 is a direct result of
additional phone sales to the increased number of subscribers added in the
current quarter over the same period last year. In the current period, the
Company was able to recover approximately 55% of its cost which compares
favorably to the 47% recovery in the same quarter of 1998.
Selling, general and administrative expenses increased only $1.3 million,
and as a percentage of revenue decreased from 28.0 % to 23.6% when comparing the
current three month period to the same period in 1998. Sales
I-97
<PAGE>
and marketing (including the cost of installation) increased $336,000 when
comparing the current quarter to last year's first quarter. Advertising and
commissions were variable expenses that contributed to the increase. The cost to
add a gross subscriber, which includes sales and marketing costs combined with
the loss on equipment sales, an important statistic in the cellular industry,
decreased from approximately $223 per subscriber for the first three months of
1998 to approximately $199 in the first quarter of 1999. General and
administrative expenses, which include customer service expenses, amounted to
$8.4 million for the current three month period versus $7.5 million for the same
period last year. Customer service, which consists primarily of costs relating
to the generation of the subscribers monthly invoice and payroll costs,
increased $681,000 for the current period. The cost per subscriber, however,
remained flat at approximately $3 per subscriber.
General and administrative expenses increased only $265,000 for the
current quarter compared to the same quarter in 1998. Payroll and related
expenses decreased by $535,000 for the current three month period when compared
to the first quarter in 1998. Management's restructuring and commitment to cost
control were the principal factors in this 27% reduction. Offsetting the
decreases in payroll and their related expenses were increases in "MIS" support,
related to the increase in the average number of subscribers. License and
maintenance fees related to the various systems maintained by the Company,
including the Company's fraud prevention system and prepay system contributed to
this increase. General and administrative expenses without customer service
costs decreased to 8.5% of total revenue for the 1999 quarter compared to 10.5%
for the same period in 1998.
Depreciation and amortization decreased 5.9% to $10.7 million for the
first quarter of 1999 from $11.4 million for the first quarter of 1998. As a
percentage of revenue, depreciation and amortization decreased to 18.9% for the
first quarter of 1999 compared to 26.3% for the first quarter of 1998. The
reduction reflects the adjustment of the value of the licenses in the fourth
quarter of 1998 to finalize purchase accounting.
Operating income increased approximately 119% to $17.3 million in the
first quarter of 1999 from $7.9 million for the same period in 1998. Operating
income before depreciation and amortization amounts to 49.6% of total revenue in
the current quarter compared to 44.6% of total revenue in the same quarter of
1998. This increase in operating margin is attributable primarily to the strong
increase in revenue as a result of significant subscriber growth, increases in
roaming revenue, and management's emphasis on cost control which has resulted in
an average operating cost (total operating costs before depreciation and
amortization) of $21.20 for the current three month period compared to $22.48
for the first quarter of 1998.
Net Interest Expense, Income Taxes and Net Income. Net interest expense
increased to $21.2 million for the first quarter of 1999 from $17.8 million in
the first quarter of 1998 primarily due to the increased level of debt from the
refinancings which took place in the second and third quarters of 1998. Somewhat
offsetting the increase in interest expense is the increase in interest income,
as a result of the higher level of available cash during the first quarter of
1999 compared with the first quarter of 1998.
The current period income tax benefit of $1.6 million compared to the
income tax benefit of $3.8 million in the first quarter of 1998 represents the
reduction of the accrued tax liability associated with the sale of the Ft. Myers
and GA-1 properties which was established as the result of purchase accounting,
which carryback is less for the current quarter due to the smaller loss before
taxes.
The net loss for the first quarter of 1999 was $2.8 million compared to a
net loss of $6.6 million for the first quarter of 1998 represents a decrease of
approximately 58%. The decrease in the net loss is primarily attributable to the
factors discussed above.
LIQUIDITY AND CAPITAL RESOURCES
The Company's long-term capital requirements consist of funds for capital
expenditures, acquisitions and debt service. Historically, the Company has met
its capital requirements primarily through equity contributions, bank debt, and,
to a lesser extent, operating cash flow. During the three month period ended
March, 31 1999, the Company generated $21.1 million in operating cash flow. The
Company's debt service requirements for the current year consists of cash
interest payments of 68.5 million of which $10.3 million was paid in January
1999. The remaining cash interest requirements are approximately $24.0 million
during the second quarter, $10.3 million during the third quarter and $24.0
million in the fourth quarter. Based upon the Company's current ability to
generate operating cash flow combined with its available cash position, there
does not appear to be any necessity to
I-98
<PAGE>
provide additional funding for the current level of operations. The Company's
outstanding debt instruments consist of $525 million 9 1/8% Senior Secured Notes
due June 15, 2002, $175 million and 11 3/4% Senior Subordinated Notes due July
15, 2007. Both of these instruments contain covenants that restrict the payment
of dividends, incurrence of debt and sale of assets.
YEAR 2000 IMPACT
The Company is in the process of reviewing the full impact that the Year
2000 could have on its operational and financial systems. The Company has chosen
its current billing and MIS outsource provider to coordinate the testing of all
of the operating and financial systems that could effect the Company's
operations. Several of these systems such as the point of sale system, the
prepaid calling system, wide area network and local area network, and general
ledger system are currently integrated into the billing system.
The Company's current billing vendor and MIS outsource provider has
committed to test the compliance of the above systems with the Year 2000
requirements by reviewing each system's upgrade releases which these third party
providers maintain will make their systems Year 2000 compliant. Most of these
third party providers deal with other cellular companies which enable the
Company to leverage the knowledge obtained from servicing these other cellular
and telecommunications companies. The Company anticipates that this will reduce
the testing and validation time necessary for a comprehensive review.
In addition to the testing of third party provider systems, the current
billing vendor will review their own internal operating systems to verify Year
2000 compliance. They will then test the integration of the updated Year 2000
versions with their own updated version to ensure compliance and operational
compatibility.
The Company, with the billing provider's guidance, has formulated its
strategy after analyzing all systems that could have an effect on the Company's
operations and prioritizing the impact into high, medium and low risk. The
Company estimates that the total costs of these testing and upgrading procedures
will be less than $2.0 million. However, the Company is unable to predict all of
the implications of the Year 2000 issue as it relates to the Company's suppliers
and other entities. It is anticipated that the substantial portion of these
costs will be incurred during 1999 and will be expensed when incurred.
The Company has investigated the possibility of establishing a contingency
plan in the event the above is not successful. The Company's dependence on a few
key third party providers which providers service most of the cellular industry
to a great extent and therefore the lack of accessibility of alternative systems
make a contingency plan impractical.
INFLATION
The Company believes that inflation affects its business no more than it
generally affects other similar businesses.
Item 7a. Quantitative and Qualitative Disclosures About Market Risk
The Company utilizes fixed rate debt instruments to fund its acquisitions.
Management believes that the use of fixed rate debt minimizes the Company's
exposure to market conditions and the ensuing increases and decreases that could
arise with variable rate financing. See notes to consolidated financial
statements for description and terms of long term debt.
I-99
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit
Number Description
------ -----------
27 Financial Data Schedule
(b) Reports on Form 8-K
None
II-1
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has fully caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PRICE COMMUNICATIONS WIRELESS, INC.
Date: April 26, 1999 By: /s/ Robert Price
----------------------------------------
Robert Price
Director, President and Treasurer
By: /s/ Kim I Pressman
----------------------------------------
Kim I Pressman
Vice President and Chief Financial Officer
By: /s/ Michael Wasserman
----------------------------------------
Michael Wasserman
Vice President and Chief Accounting Officer
II-2
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description
- ------ -----------
27 Financial Data Schedule
