SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended DECEMBER 31, 1998
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________________ to _________________
Commission File No. 1-10682
PAGE AMERICA GROUP, INC.
(Exact name of registrant as specified in its charter)
NEW YORK 13-2865787
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
c/o Bariston Associates, Inc.
ONE INTERNATIONAL PLACE, BOSTON, MA 02110
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 330-8950
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.10
par value
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 / /
As of March 1, 1999, the aggregate market value of the voting stock held by
non-affiliates of the registrant, based on the closing price, was approximately
$500,000.
As of March 1, 1999, the registrant had 16,024,585 shares of Common Stock
outstanding.
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
<PAGE>
ITEM 1. BUSINESS
On July 1, 1997, Page America Group, Inc. (the "Company" or "Page
America") sold (the "Sale") substantially all of its assets to Metrocall, Inc.
("Metrocall") pursuant to the provisions of an Amended and Restated Asset
Purchase Agreement dated as of January 30, 1997, as amended (the "Sale
Agreement"). As the result of the Sale, Page America discontinued all its
operations and, as discussed below, no longer engages in any business. Metrocall
paid a purchase price (as adjusted) of approximately $60.7 million, including
the assumption of $2.2 million of liabilities. Page America received $24.8
million in cash, $15 million of Series B Junior Convertible Preferred Stock of
Metrocall ("Series B Preferred Stock") and $18.7 million of common stock of
Metrocall, inclusive of a post-closing working capital adjustment resulting in
the Company returning 85,602 shares of common stock of Metrocall. Excluded from
the sale were cash, assets related to the employee benefit plans and to the
Florida and California operations which had been previously sold, liabilities
under the Company's credit facility with its lenders (the "Credit Facility"),
subordinated notes (the "Subordinated Notes"), NEC America leasing contract,
obligations with respect to federal, state and local taxes and certain other
liabilities. The Company has recognized a gain from the sale of assets to
Metrocall of approximately $22.9 million, net of expenses related to the sale of
approximately $1.5 million. Through December 31, 1998, the Company has sold an
aggregate of 855,000 shares of Metrocall common stock and realized a net gain of
$1.98 million. At December 31, 1998, the Company held 3,056,856 shares of common
stock of Metrocall.
In connection with the Sale, the Company adopted a plan of complete
liquidation and dissolution which became effective with the completion of the
Sale. Accordingly, on July 1, 1997, the Company changed from the going concern
basis of accounting to the liquidation basis of accounting. The value of the
assets to be available for payment of its liabilities and distribution to the
Page America shareholders upon liquidation cannot be ascertained at this time
and will depend among other things, on the total amount of its liabilities and
the market value of the Metrocall Common Stock. Pursuant to the plan of
liquidation, the Company will continue in existence for the sole purpose of
winding up its affairs and will not engage in any business activities other than
activities related to implementation of the plan of liquidation.
On January 8, 1999, the Company sold all of its Metrocall Series B
Preferred Stock for $15.7 million in cash. Page America received $4.6 million in
cash after using $11.1 million of the proceeds from the sale to retire the
Senior Credit Facility, including any accrued interest and related expenses. The
Company recorded a loss of $2.8 million on the sale for unrealized depreciation.
The holders of Subordinated Notes and the Company entered into a
Forbearance Agreement, as amended (the "Forbearance Agreement") pursuant to
which the holders have agreed to forbear from collecting on such Subordinated
Notes until the earlier of August 31, 1999 or the occurrence of certain events
relating to Page America, as described in the Forbearance Agreement. During the
forbearance period, the holders of the Subordinated Notes will not initiate any
action, exercise any remedy or make any claim against the Company with respect
to the Subordinated Notes. In consideration of such forbearance, and in complete
satisfaction of all amounts of principal and interest due, the holders of the
Subordinated Notes will be entitled to receive 70% of cash available for
distribution to the Subordinated Noteholders and the shareholders of the
Company, up to an aggregate distribution to Subordinated Noteholders of $19
million, with the remaining 30% to be distributed to the shareholders of Page
America. After the holders of Subordinated Notes have indefeasibly received a
total of $19 million, any remaining amounts available for distribution to the
Subordinated Noteholders and the shareholders of the Company will be made 50% to
the holders of the Subordinated Notes and 50% to the shareholders of Page
America. Interest will continue to accrue on the Subordinated Notes until the
full amount of principal and interest due thereunder shall have been paid in
full or the obligations thereunder shall have been otherwise satisfied in
accordance with the terms and provisions of the Forbearance Agreement. The
holders of Page America's Preferred Stock have agreed that 30% of any
distributions otherwise payable to them with respect to their liquidation
preference will be distributed to the holders of Page America's Common Stock. In
addition, holders of the Preferred Stock waived their rights to receive accrued
dividends of $4,295,000 and their rights to future dividends. Had the
Plan of Liquidation been completed on December 31, 1998, and assuming that the
asset values reflected in the accompanying statement of Net Assets in
Liquidation had been realized, the holders of the Subordinated Notes would have
received approximately $12.6 million and the Preferred and Common shareholders
would have received $3.8 million and $1.6 million, respectively. However, the
actual amounts to be distributed to the holders of the Subordinated Notes and
Preferred and Common shareholders will be dependent on the value of the
Metrocall Common Stock at the time the shares are sold or distributed, and
subject to other liabilities that could arise in connection with completing the
Plan of Liquidation and Dissolution, including obtaining required clearance from
the various tax authorities.
Under the Forbearance Agreement, Page America is not permitted to
enter into transactions with its stockholders, officers or directors or conduct
any business or incur any debt other than in connection with the payment of
permitted liabilities and the implementation of its plan of liquidation.
Page America was incorporated in 1976 under the laws of the State of
New York. The Company's principal executive offices are located c/o Bariston
Associates, Inc., One International Place, Boston, Massachusetts 02110 and its
telephone number is 617-330-8950.
EMPLOYEES
At March 1, 1999, Page America did not have any employees.
ITEM 2. PROPERTIES
The Company does not lease any real estate or own any real property.
The Company presently uses the facilities of Bariston Associates, Inc.
ITEM 3. LEGAL PROCEEDINGS
The Company is involved in various lawsuits and proceedings arising in
the normal course of its past business. In the opinion of management of the
Company, the ultimate outcome of these lawsuits and proceedings will not have a
material adverse effect on the Company's net assets in liquidation.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
PRICE RANGE OF COMMON STOCK
The Common Stock of the Company was delisted from the American Stock
Exchange ("AMEX") in April 1996 due to the Company's inability to comply with
the financial guidelines of the AMEX for continued listing. The last available
price quotation for the Common Stock from a listed exchange was April 16, 1996
and, therefore, current price quotations are not available. However, the Common
Stock is currently being traded over-the-counter by some market makers.
1996 HIGH LOW
First Quarter $0.3125 $0.1875
Second Quarter 0.75 0.1875
Third Quarter ---- ----
Fourth Quarter ---- ----
There were approximately 2,000 shareholders of record of Common Stock
as of March 1, 1999. This number does not include beneficial owners holding
shares through nominee or "street" names.
DIVIDEND POLICY
The Company has never declared or paid cash dividends on its Common
Stock and does not anticipate paying cash dividends to the holders of its Common
Stock in the foreseeable future. The payment of dividends on Common Stock and
Preferred Stock is also restricted pursuant to the provisions of the Company's
Forbearance Agreement.
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Years Ended December 31, from Period
------------------------------------------------ January 1 to
1993 1994(3) 1995(1) 1996 July 1, 1997(4)
--------- ----------- ---------- -------- ---------------
(In thousands, except per share and pager data)
<S> <C> <C> <C> <C> <C>
Consolidated Statement of Operations Data:
Revenues
Expenses
related to corporate, finance and other activities
General and administrative $2,183 $2,295 $2,579 $1,403 $671
Interest 4,032 5,102 6,248 6,141 3,078
Other 1,453 362 2,785 573 106
-------- --------- --------- ---------- -----------
Net loss before discontinued operations (7,668) (7,759) (11,612) (8,117) (3,855)
Discontinued operations
Net income (loss) from operations of discontinued business 1,123 731 (763) 7 (307)
(Loss) gain on sale of discontinued businesses - - (718) - 22,903
--------- --------- ---------- ------------ ------------
1,123 731 1,481 7 22,596
Net (loss) income (6,545) (7,028) (13,093) (8,110) 18,741
Preferred stock dividend requirements (3,268) (3,023)(2) ( 2,863)(2) (2,864) (1,432)
--------- ----------- ------------ ------------ ------------
Net (loss) income applicable to common shares ($9,813) ($10,051) ($15,956) ($10,974) $17,309
========= =========== ============ ============= ============
Net loss before discontinued operations applicable to
common shares ($10,936) ($10,782) ($14,475) ($10,981) ($5,287)
========== =========== ============ ============= ===========
Net income (loss) from discontinued operations applicable to
common shares $1,123 $731 ($1,481) $7 $22,596
========== =========== ============ ============= ===========
Basic and diluted (loss) income per common share ($2.55) ($1.55) ($2.01) ($0.88) $1.08
========== =========== ============ ============= ============
Basic and diluted loss before discontinued operations per
common share ($2.84) ($1.66) ($1.82) ($0.88) ($0.33)
========== =========== ============ ============= ============
Basic and diluted income (loss) from discontinued operations
per common share(5) $0.29 $0.11 ($0.19) -- $1.41
========== =========== ============ ============= ============
Weighted average shares outstanding 3,847 6,464 7,936 12,498 16,033
========== =========== ============ ============= ============
December 31, July 1,
Consolidated Balance Sheet Data(6): 1993(5) 1994(2) 1995(1)(2) 1996 1997(4)
<S> <C> <C> <C> <C> <C>
Working capital (deficiency) ($2,053) ($9,541) ($52,444) ($58,409) (14,146)
Total assets 75,193 70,229 44,003 39,561 36,622
Long-term debt, less current maturities 57,850 56,953 69 37 --
Accumulated Deficit (68,980) (78,989) (94,945) (105,919) (83,876)
Shareholders' equity (deficit) 9,096 439 (11,222) (20,746) 1,293
- -------------------------
(1) In July, 1995, the Company sold its California and Florida paging assets.
Concurrently with the sale, the Company amended its Credit Facility and
Subordinated Notes providing, among other things, for accelerated
maturities. Such debt, which was classified as long term at December 31,
1994, was in default and is classified as a current liability at December
31, 1995 and 1996 and July 1, 1997. See Note C of Notes to Financial
Statements.
(2) In August, 1994 and March, 1995, the Company issued shares of its Common
Stock as full payment of fiscal year 1994 dividends on Series One
Convertible Preferred Stock. On June 30, 1995, in exchange for the waiver
of the dividend payment on Series One Convertible Preferred Stock, the
accrued dividends were added to the liquidation value. In June, 1996, the
Company issued shares of its Common Stock in payment of accrued dividends
at December 31, 1995 on Series One Convertible Preferred Stock. See Note
F of Notes to Consolidated Financial Statements.
(3) On December 30, 1993, the Company acquired Crico and refinanced its
senior and subordinated debt and redeemable Preferred Stocks.
(4) On July 1, 1997, the Company sold its remaining operations and adopted a
plan of complete liquidation. Accordingly, there are no operations
subsequent to July 1, 1997. (See Note B of Notes to Financial
Statements). Operating results for the businesses sold have been
reclassified to discontinued operations for all years presented.
(5) The Company has never paid any cash dividends on its Common Stock.
(6) The Company's net assets in liquidation at December 31, 1998 and 1997 is
comprised of the following ($ in thousands):
1998 1997
------- --------
Cash and cash equivalents $ 524 $1,382
Other assets 274 287
Equity investments 28,742 33,890
Accounts payable and accrued expenses (2,403) (1,655)
Debt (31,800) (33,045)
-------- ---------
Net assets in liquidation $(4,663) $ 859
========= ==========
</TABLE>
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
The following table presents certain items in the Consolidated
Statement of Operations.
<TABLE>
<CAPTION>
Period
from
January 1 to
July 1, Years Ended December 31
1997 1996 1995
----------------- ----------- ------------
(Dollar amounts in thousands)
<S> <C> <C> <C>
Revenues -- -- --
Expenses related to corporate, finance and
other activities
General and administrative $671 $1,403 $2,579
Interest 3,078 6,141 6,248
Other 106 573 2,785
----------- ----------- ---------
Net loss before discontinued operations (3,855) (8,117) (11,612)
Discontinued operations
Net (loss) income from operations of
discontinued businesses (307) 7 (763)
Gain (loss) on sale of discontinued
businesses 22,903 -- (718)
------------ ---------- ------------
Net income (loss) $18,741 ($8,110) ($13,093)
============ =========== ============
</TABLE>
<PAGE>
YEAR ENDED DECEMBER 31, 1997 (FOR THE PERIOD JANUARY 1 THROUGH JULY 1, 1997)
COMPARED WITH YEAR ENDED DECEMBER 31, 1996
GENERAL AND ADMINISTRATIVE EXPENSES on an annualized basis remained
relatively constant in 1997 as compared to 1996.
INTEREST EXPENSE on an annualized basis remained relatively constant
in 1997 as compared to 1996.
OTHER EXPENSES on an annualized basis decreased approximately $361,000
(63.0%) in 1997. The decrease was principally due to banking fees of $450,000
associated with the modification of the senior credit facility incurred in the
second quarter of 1996.
NET LOSS FROM DISCONTINUED OPERATIONS excluding the gain on sale of
discontinued businesses ($22.9 million ) was $614,000 on an annualized basis for
1997, as compared to a net profit of $7,000 in the year ended December 31, 1996.
Operating results were negatively impacted during 1997 by the lack of available
operating capital.
FINANCIAL CONDITION
CHANGES IN NET ASSETS IN LIQUIDATION
CASH AND CASH EQUIVALENTS
Cash and cash equivalents were $.5 million at December 31, 1998 and
$1.4 million at December 31, 1997. In 1998, the Company received $4.31 million
from the sale of 606,800 shares of Metrocall common stock. Disbursements
principally consisted of $3.2 million of principal and $1.5 million of interest
on the Credit Facility, and $.5 million of general and administrative expenses.
OTHER ASSETS
Dividends of $271,000 and $279,000 on the Series B Preferred Stock of
Metrocall have been accrued for one and one-half months ended December 31, 1998
and 1997, respectively. The accrued dividends reflect the actual price paid for
the Series B Preferred Stock and accrued dividends on January 8, 1999.
EQUITY INVESTMENTS
In 1998, the Company sold 606,800 shares of Metrocall common stock for
$4.31 million and realized a net gain of $1.35 million. On November 15, 1998 and
May 15, 1998, the Company received 118 shares ($1.18 million fair value) and 111
shares ($1.11 million fair value), respectively, of Series B Preferred Stock in
payment of dividends accrued for the six month periods ended November 15, 1998
and May 15, 1998, respectively. On January 8, 1999, the Company sold all of the
Series B Preferred Stock plus accrued dividends for $15.7 million. Accordingly,
on December 31, 1998, the Company revalued its holdings of the Series B
Preferred Stock to reflect the actual purchase price paid on January 8, 1999 and
recorded an unrealized loss of $2.8 million. On December 31, 1998, the Company
revalued its remaining Metrocall common stock of 3,056,856 shares based on a
closing price of $4.375 and recorded an unrealized loss of $1.7 million.
ACCRUED EXPENSES
In 1998, the Company accrued interest on the Subordinated Notes of
$951,000. In addition, the Company paid interest and an agency fee totaling
$39,000 in connection with the Credit Facility and severance of $77,000 to
terminated employees, which were accrued at December 31, 1997. The Company also
reduced other accrued expenses by $87,000.
CREDIT FACILITY
In 1998, the Company paid $3.2 million of principal on the Credit
Facility. In January 1999, in connection with its sale of the Series B Preferred
Stock, the Company paid $11.1 million to repay in full the Credit Facility.
SUBORDINATED NOTES PAYABLE
The Company issued an additional promissory note of $1.95 million as
payment of interest on the Subordinated Notes for the year ended December 31,
1998.
LIQUIDITY AND CAPITAL RESOURCES
Pursuant to an Amended and Restated Asset Purchase Agreement dated
January 30, 1997, as amended (the "Agreement"), on July 1, 1997, the Company
sold substantially all of its assets to Metrocall, Inc. ("Metrocall") for
consideration consisting of $24.8 million in cash, 1,500 shares of Series B
Junior Convertible Preferred Stock of Metrocall ("Series B Preferred Stock")
having a value upon liquidation or redemption of $15 million and 3,911,856
shares ($18.7 million) of common stock of Metrocall, inclusive of a post-closing
working capital adjustment resulting in the Company returning 85,602 shares of
common stock to Metrocall. Certain shares of Metrocall common stock with a fair
market value of $4.0 million (832,250 common shares) at the date of the sale
were held in escrow until April 1, 1998. Pursuant to the provisions of the
Agreement, those shares were released to the Company on that date. The Company
has recognized a gain from the sale of assets to Metrocall of approximately
$22.9 million, net of expenses related to the sale of approximately $1.5
million. Through December 31, 1998, the Company sold an aggregate of 855,000
shares of Metrocall common stock and realized a net gain of $1.98 million. At
December 31, 1998, the Company held 3,056,856 shares of common stock of
Metrocall.
The Company has received a total of 308 shares ($3,080,000 fair value)
of Series B Preferred Stock of Metrocall in payment of dividends accrued from
July 1, 1997 to November 15, 1998 on the 1,500 shares of Series B Preferred
Stock it received from the sale. At December 31, 1998, the Series B Preferred
Stock was convertible at the option of the Company into 2,911,336 shares of
Metrocall common stock. On January 8, 1999, the Company sold all the Series B
Preferred Stock for $15.7 million in cash, $11.1 million of which was used to
repay in full the Credit Facility, and $4.6 million was retained by the Company.
The cash proceeds of $24.8 million from the sale to Metrocall were
used as follows: $19.3 million to repay current maturities of long-term debt,
$2.7 million to pay accrued interest and accounts payable, $654,000 for
transaction costs and the remainder for working capital purposes.
In connection with the Agreement, the Company adopted a plan of
complete liquidation and dissolution of corporate entity which became effective
with the completion of the Metrocall sale. Accordingly, on July 1, 1997, the
Company changed from the going concern basis of accounting to the liquidation
basis of accounting. The cash received by the Company from this sale was not
sufficient for the Company to pay in full in cash its outstanding obligations
under the Credit Facility or under the Subordinated Notes or to pay its other
outstanding liabilities. Page America will pay the balance of its obligations
from proceeds generated by the sale or redemption of Metrocall Common Stock.
In connection with the transaction, Page America renegotiated its
Credit Facility such that the remaining outstanding balance of $15,271,831 was
due and payable on or prior to December 31, 1998. In August and October, 1997,
the Company paid $326,484 and $750,000, respectively, of the Credit Facility and
during 1998, the Company paid down an additional $3,195,347 of the Credit
Facility reducing the balance to $11,000,000. All amounts outstanding under the
Credit Facility were paid in full in January 1999 from proceeds of the sale of
the Series B Preferred Stock discussed above.
On July 1, 1997, concurrent with the sale of the Company's assets, the
holders of Subordinated Notes have agreed to forbear from collecting on such
Subordinated Notes until December 31, 1998, which has been extended until August
31, 1999, or the occurrence of certain events relating to Page America, as
described in the Forbearance Agreement. During the forbearance period, the
holders of the Subordinated Notes will not initiate any action, exercise any
remedy or make any claim against the Company with respect to the Subordinated
Notes. In consideration of such forbearance, and in complete satisfaction of all
amounts of principal and interest due, the holders of the Subordinated Notes
will be entitled to receive 70% of cash available for distribution to the
Subordinated Noteholders and the Preferred and Common shareholders of the
Company up to an aggregate distribution to Subordinated Noteholders of $19
million, with the remaining 30% to be distributed to the Preferred and Common
shareholders of Page America. After the holders of Subordinated Notes have
indefeasibly received a total of $19 million, any remaining amounts available
for distribution to the Subordinated Noteholders and the Preferred and Common
shareholders of the Company will be made 50% to the holders of the Subordinated
Notes and 50% to the Preferred and Common shareholders of Page America. Interest
will continue to accrue on the Subordinated Notes until the full amount of
principal and interest due thereunder shall have been paid in full or the
obligations thereunder shall have been otherwise satisfied in accordance with
the terms and provisions of the Forbearance Agreement. The holders of Page
America's Series One Preferred Stock have agreed that 30% of any distributions
otherwise payable to them with respect to their liquidation preference will be
distributed to the holders of Page America's Common Stock. Had the
Plan of Liquidation been completed on December 31, 1998, and assuming that the
asset values reflected in the accompanying statement of Net Assets in
Liquidation had been realized, the holders of the Subordinated Notes would have
received approximately $12.6 million and the Preferred and Common shareholders
would have received $3.8 million and $1.6 million, respectively. However, the
actual amounts to be distributed to the holders of the Subordinated Notes and
Preferred and Common shareholders will be dependent on the value of the
Metrocall Common Stock at the time the shares are sold or distributed, and
subject to other liabilities that could arise in connection with completing the
Plan of Liquidation and Dissolution, including obtaining required clearance from
the various tax authorities.
Pursuant to the Forbearance Agreement, Page America's obligations to
repurchase the warrants held by the holders of the Subordinated Notes have been
terminated. Page America is not permitted to enter into transactions with its
stockholders, officers or directors or conduct any business or incur any debt
other than in connection with the satisfaction of its obligations under the
Credit Facility, payment of other permitted liabilities and the implementation
of the Plan of Liquidation.
COMPANY SPECIFIC RISKS
MARKET RISK DISCLOSURE
LIMITED ASSET DIVERSIFICATION
The Company's future liquidity and net realizable value of its assets
are dependent upon the economic success of Metrocall and are also subject to the
volatility of the public securities markets. At December 31, 1998, 45.3% of the
Company's remaining assets were Common Stock of Metrocall. In addition, at
December 31, 1998, 53% of the Company's assets were Series B Preferred Stock of
Metrocall which was sold on January 8, 1999, resulting in the Company recording
an unrealized loss of $2.8 million for the year ended December 31, 1998.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The Financial Statements and supplementary data required by Part II,
Item 8, are included in Part IV, as indexed at Item 14(a)(1).
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers and directors of the Company are as follows:
NAME AGE POSITION WITH DIRECTOR OR
COMPANY OFFICER SINCE
David A. Barry 52 Chairman of the
Board and Chief
Executive Officer 1988
Martin H. Neidell 52 Secretary 1983
Jack Kadis 50 Director 1996
The Directors are presently elected for one year terms which expire at
the next annual meeting of shareholders. Executive officers are elected annually
by the Board of Directors to hold office until the first meeting of the Board
following the next annual meeting of shareholders and until their successors are
chosen and qualified.
Mr. Barry has been President of Bariston Associates, Inc. since April
1986. He has been acting as Chairman of the Board and Chief Executive Officer of
the Company since August 1, 1995. Mr. Barry was Managing Director and Principal
of Winthrop Financial Associates from September 1982 to April 1986. Prior
thereto, Mr. Barry was a Managing Director of PaineWebber Incorporated.
Mr. Neidell has been Secretary of the Company since 1983. For more
than the past five years, Mr. Neidell has been a partner of Stroock & Stroock &
Lavan LLP, counsel to the Company.
Mr. Kadis has been a director since 1996. He has been Executive Vice
President of Bariston for more than the past 10 years.
The Company's Directors do not receive any fees.
ITEM 11. EXECUTIVE COMPENSATION
The Company did not pay any compensation to any officers during 1998.
The Chief Executive Officer of the Company does not receive any compensation for
service in such capacity.
STOCK OPTION GRANTS AND EXERCISES
At December 31, 1998, no stock options were outstanding. No stock
options were exercised or granted in 1998.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to
beneficial ownership of Common Stock at February 1, 1999 by (i) each person
known by the Company to beneficially own more than five percent of outstanding
Common Stock, (ii) each Director of the Company, (iii) each of the most highly
compensated executive officers of the Company and (iv) all Directors and
executive officers of the Company as a group. Except as noted below, each person
or entity has sole voting and investment power with respect to all shares listed
as owned by such person or entity.
NAME AND ADDRESS NUMBER(1) PERCENT OF CLASS
David A. Barry(2) 8,104,950 33.6%
One International Place
Boston, MA 02110
Jack Kadis(2) 8,069,113 33.5%
One International Place
Boston, MA 02110
Bariston Paging Partners, L.P.(2) 7,781,837 32.7%
c/o Bariston Associates, Inc.
One International Place
Boston, MA 02110
T. Rowe Price Associates, Inc.(3) 2,515,986 14.9%
100 East Pratt Street
Baltimore, MD 21202
Sandler Mezzanine General Partnership(4) 1,053,019 6.4%
767 Fifth Avenue
New York, NY 10153
Revy Investment Co., Inc.(5) 1,022,724 6.0%
1300 S.W. Fifth Avenue
Portland, Oregon 10153
Directors and executive officers as a group
(3 persons) (6) 36,027 *
* Less than one percent.
(1) Assumes exercise of warrants to purchase shares of Common Stock and
conversion of shares of Series One Convertible Preferred Stock into
shares of Common Stock.
(2) David A. Barry and Jack Kadis are directors of the Company elected by the
holders of the Company's Series One Convertible Preferred Stock. Mr.
Barry and Mr. Kadis are the general partners of BHI Associates VI, L.P.,
which is the sole general partner of Bariston Paging Partners, L.P.
("Bariston Paging"). Messrs. Barry and Kadis are the controlling
shareholders of Bariston Holdings, Inc., which is the sole shareholder of
Bariston Associates, Inc. ("Bariston") and Bariston Securities, Inc. The
total number of shares listed above include 156,242 shares of Series One
Convertible Preferred Stock owned by Bariston Paging, 2,254 shares of
Series One Convertible Preferred Stock owned by Bariston and 378 shares
of Series One Convertible Preferred Stock owned by Mr. Barry, which are
convertible into an aggregate of 3,530,180 shares of Common Stock,
125,778 shares of Common Stock issuable upon exercise of warrants owned
by BHI Associates VI, L.P., 41,672 shares of Common Stock issuable upon
exercise of warrants owned by Bariston, 4,310,140 shares of Common Stock
owned by Bariston Paging, 69,742 shares of Common Stock owned by Bariston
and 27,428 shares of Common Stock owned by Mr. Barry. Messrs. Barry and
Kadis disclaim beneficial ownership of the portion of the foregoing
shares in which they have no actual pecuniary interest.
(3) These securities are owned by various individual and institutional
investors including T. Rowe Price High Yield Fund, Inc., which T. Rowe
Price Associates, Inc. ("Price Associates") serves as investment adviser
with power to direct investments and/or sole power to vote the
securities. For purposes of the reporting requirements of the Securities
Exchange Act of 1934, Price Associates is deemed to be a beneficial owner
of such securities; however, Price Associates expressly disclaims that it
is, in fact, the beneficial owner of such securities. Consists of 20,000
shares of Series One Convertible Preferred Stock convertible into an
aggregate of 444,400 shares of Common Stock and 1,128,624 shares of
Common Stock owned by T. Rowe Price High Yield Fund, Inc. and 18,560
shares of Series One Convertible Preferred Stock convertible into an
aggregate of 412,403 shares of Common Stock and 530,559 shares of Common
Stock owned by Price Associates.
(4) Sandler Mezzanine General Partnership is the investment General Partner
of each of Sandler Mezzanine T-E Partners, L.P. ("TE"), Sandler Mezzanine
Partners, L.P. ("SM") and Sandler Mezzanine Foreign Partners, L.P.
("FP"). Each of MJM Media Corp., which is controlled by Michael J.
Marocco, ARPH Media Corp., which is controlled by Harvey Sandler, EMEBE
Media Corp., which is controlled by Barry Lewis, and Kornreich Media
Corp., which is controlled by John A. Kornreich, is a General Partner of
Sandler Mezzanine General Partnership. Consists of 5,390, 12,020 and
2,590 shares of Series One Convertible Preferred Stock owned by TE, SM,
and FP, respectively, which are convertible into an aggregate of 444,400
shares of Page America Common Stock; and 164,022, 365,782 and 78,815
shares of Page America Common Stock owned by TE, SM and FP, respectively.
Messrs. Marocco, Sandler, Lewis and Kornreich disclaim beneficial
ownership of the portion of the foregoing shares in which they have no
actual pecuniary interest.
(5) Includes 551,729 shares of Common Stock and 20,000 shares of Series One
Convertible Preferred Stock convertible into an aggregate of 444,400
shares of Common Stock.
(6) Includes 378 shares of Series One Convertible Preferred Stock which are
convertible into 8,399 shares of Common Stock.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's Directors, executive officers and holders of more than 10% of its
Common Stock to file with the Securities and Exchange Commission initial reports
of ownership and reports of changes in ownership of Common Stock and other
equity securities of the Company. The Company believes that during the fiscal
year ended December 31, 1998, its officers, directors and holders of more than
10% of its Common Stock complied with all Section 16(a) filing requirements.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Bariston Associates, Inc. ("Bariston") has been engaged by the Company
to provide investment banking functions for which it presently receives a fee of
$9,087 per month during the Company's liquidation, plus reimbursement for
expenses incurred by it in connection therewith. This agreement will terminate
upon the earlier to occur of Bariston and its affiliates ceasing to control a
majority of the Series One Convertible Preferred Stock (or Common Stock issued
upon conversion thereof) or Bariston and its affiliates owning less than 20
percent of the Company's fully diluted shares of Common Stock. Upon consummation
of the Sale, Bariston was paid $288,565 of previously accrued fees owing to it
under such agreement.
Holders of a majority of Series One Convertible Preferred Stock, as a
class, have the right to elect two directors of the Company. Bariston Paging
Partners, L.P. holds a majority of the Series One Convertible Preferred Stock.
Mr. Barry and Mr. Kadis are the directors elected by the holders of Series One
Convertible Preferred Stock. The holders of a majority of the Series One
Convertible Preferred Stock have agreed that as long as they continue to own a
majority of such stock they will vote for a nominee designated by the holders of
a majority of such stock.
David A. Barry and Jack Kadis, directors of the Company, are
affiliated with Bariston Securities, Inc. and Bariston.
All of the terms and provisions of the foregoing transactions were
determined on an arms length basis. The Company believes that the terms of these
transactions were no less favorable to the Company than those which could have
been obtained from unaffiliated third parties.
PART IV
ITEM 14. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a)(1). Financial Statements. The consolidated financial statements
of Page America Group, Inc. and Subsidiaries, required by Part II,
Item 8, are included in Part IV of this report.
Report of Independent Auditors.
Financial Statements Subsequent to Adoption of Plan of Liquidation.
Consolidated Statements of Net Assets in Liquidation at December 31,
1998 and 1997.
Consolidated Statements of Changes in Net Assets in Liquidation for the
year ended December 31, 1998 and for the period from July 2, 1997 to
December 31, 1997.
Financial Statements Prior to Adoption of Plan of Liquidation
Consolidated Statements of Operations for the period from January 1,
1997 to July 1, 1997 and for the year ended December 31, 1996.
Consolidated Statements of Cash Flows for the period from January 1,
1997 to July 1, 1997 and for the year ended December 31, 1996.
Consolidated Statement of Stockholder's Equity (Deficit) for the period
from January 1, 1997 to July 1, 1997 and for the year ended December
31, 1996.
Notes to Consolidated Financial Statements.
(a)(2). Financial Statement Schedule.
Schedule II - Valuation and Qualifying Accounts
All other financial statement schedules are omitted because they are
not applicable, or not required, or because the required information is
included in the consolidated financial statements or notes thereto.
EXHIBITS
(a)(3) Exhibits:
EXHIBIT NO.
3.1 Restated Certificate of Incorporation of the Registrant, as amended.
Incorporated by reference to Exhibit 3.1 to Annual Report on Form 10-K
for the fiscal year ended December 31, 1993 ("1993 10-K").
3.2 By-Laws of the Registrant. Incorporated by reference to Exhibit 3.2 to
Registration Statement on Form S-1 (File No. 33-46333).
10.1 Amended and Restated Asset Purchase Agreement dated as of January 30,
1997, as amended, by and among Metrocall, Inc., Page America Group,
Inc. and various subsidiaries of Page America Group, Inc. Incorporated
by reference to Exhibits 2.2 and 2.3 to Registration Statement on Form
S-4 filed by Metrocall (No. 333-21231).
10.2 Subordinated Promissory Note, Preferred Stock, Common Stock and
Warrant Purchase Agreement dated as of December 30, 1993, by and among
Page America Group, Inc., its subsidiaries and various purchasers
parties thereto. Incorporated by reference to Exhibit 10.4 to 1993
10-K.
10.3 Series One Convertible Preferred Stock Voting Agreement dated as of
December 30, 1993. Incorporated by reference to Exhibit 10.7 to 1993
10-K.
10.4 Investment Banking Agreement dated December 30, 1993 between Bariston
Associates, Inc. and Page America Group, Inc. Incorporated by
reference to Exhibit 10.8 to 1993 10-K.
10.5 Indenture dated as of June 30, 1994 among Page America Group, Inc.,
its subsidiaries, and American Stock Transfer and Trust Company, as
Trustee. Incorporated by reference to Exhibit 4 to Registration
Statement on Form S-4 (File No. 33-77832).
10.6 Amendment dated as of July 28, 1995 to Indenture dated as of June 30,
1994 by and among Page America Group, Inc., its subsidiaries, and
American Stock Transfer and Trust Company, as Trustee. Incorporated by
reference to Exhibit 10.14 to 1995 10-K.
10.7 Forbearance Agreement dated as of July 1, 1997 among the holders of
Subordinated Notes, Page America Group, Inc., and its subsidiaries.
Incorporated by reference to Exhibit 10.11 to Annual Report on Form
10-K for the fiscal year ended December 31, 1997.
10.8 Amendments to Forbearance Agreement.
27 Financial Data Schedule
(b) Reports on Form 8-K
None
<PAGE>
PAGE AMERICA GROUP, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PAGE
Report of Independent Auditors F-2
Financial Statements Subsequent to Adoption
of Plan of Liquidation
Consolidated Statements of Net Assets
in Liquidation at December 31, 1998 and December 31, 1997 F-3
Consolidated Statements of Changes in
Net Assets in Liquidation for the year ended December 31, 1998
and for the period from July 2, 1997 to December 31, 1997 F-4
Financial Statements Prior to Adoption of
Plan of Liquidation
Consolidated Statements of Operations for
the period from January 1, 1997 to July 1, 1997 and
for the year ended December 31, 1996 F-5
Consolidated Statements of Cash Flows for
the period from January 1, 1997 to July 1, 1997 and
for the year ended December 31, 1996 F-6
Consolidated Statement of Shareholders'
Equity (Deficit) for the period
from January 1, 1997 to July 1, 1997
and for the year ended December 31, 1996 F-8
Notes to Consolidated Financial Statements F-9
<PAGE>
PAGE AMERICA GROUP, INC. AND SUBSIDIARIES
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Directors
Page America Group, Inc.
We have audited the accompanying statements of net assets in liquidation of Page
America Group, Inc. and subsidiaries as of December 31, 1998 and December 31,
1997 and the related statements of changes in net assets in liquidation for the
year ended December 31, 1998 and for the period from July 2, 1997 to December
31, 1997. In addition, we have audited the consolidated statements of
operations, shareholders' equity (deficit) and cash flows for the period from
January 1, 1997 to July 1, 1997 and for the year ended December 31, 1996. Our
audit also included the financial statement schedule listed in the Index at Item
14(a). These financial statements and schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
As described in Note B to the consolidated financial statements, the
stockholders of Page America Group, Inc. approved a plan of liquidation on July
1, 1997, and the Company commenced liquidation shortly thereafter. As a result,
the Company has changed its basis of accounting for periods subsequent to July
1, 1997 from the going-concern basis to a liquidation basis.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the net assets in liquidation of Page America
Group, Inc. and subsidiaries at December 31, 1998 and December 31, 1997 and the
changes in their net assets in liquidation for the year ended December 31, 1998
and for the period from July 2, 1997 to December 31, 1997, and the consolidated
results of their operations and their cash flows for the period from January 1,
1997 to July 1, 1997 and for the year ended December 31, 1996, in conformity
with generally accepted accounting principles applied on the bases described in
the preceding paragraph. Also, in our opinion, the related financial statement
schedule, when considered in relation to the basic financial statements taken as
a whole, presents fairly in all material respects the information set forth
therein.
ERNST & YOUNG LLP
Hackensack, New Jersey
February 24, 1999
<PAGE>
PAGE AMERICA GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF NET ASSETS IN LIQUIDATION
($ IN THOUSANDS)
<TABLE>
<CAPTION>
December 31,
1998 1997
---- ----
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 524 $ 1,382
Other assets 274 287
Equity investments 28,742 33,890
--------- --------
29,540 35,559
--------- --------
LIABILITIES
Accounts payable and accrued expenses 2,403 1,655
Senior credit facility 11,000 14,195
Subordinated notes payable 20,800 18,850
---------- --------
34,203 34,700
----------- --------
Net (deficiency) assets in liquidation $(4,663) $ 859
========== =========
The accompanying notes are an integral part of these statements
</TABLE>
<PAGE>
PAGE AMERICA GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS IN LIQUIDATION
($ In Thousands)
<TABLE>
<CAPTION>
Period from
Year Ended July 2, 1997 to
December 31, 1998 December 31, 1997
<S> <C> <C>
Net assets at beginning of period $ 859 $ 854
--------- ---------
Changes in net assets in liquidation attributed to:
Interest expense, net (4,363) (2,259)
Dividend income on preferred stock 2,283 1,069
Gain on sale of equity investments 1,363 627
Unrealized (loss) gain on equity investments (4,518) 727
General and administrative expenses (287) (159)
--------- ---------
Net change in net assets in liquidation (5,522) 5
--------- ---------
Net (deficiency) assets in liquidation at end of period $(4,663) $ 859
======= ==========
Changes in the components of net (deficiency) assets in liquidation:
Decrease in cash and cash equivalents $ (858) $(1,234)
Decrease in prepaid expenses and other (13) (152)
Net (decrease) increase in equity investments (5,148) 323
Decrease in senior credit facility 3,195 1,117
Increase in subordinated notes payable (1,950) (975)
(Increase) decrease in accounts payable and
accrued expenses (748) 926
--------- ----------
Net change in net assets in liquidation $(5,522) $ 5
========= ===========
The accompanying notes are an integral part of these statements
</TABLE>
<PAGE>
PAGE AMERICA GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(GOING CONCERN BASIS)
($ IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Period from Year ended
January 1, 1997 to December 31,
July 1, 1997 1996
------------ ------------
Revenues - -
<S> <C> <C>
Expenses related to corporate, finance and other activities
General and administrative $ 671 $ 1,403
Interest 3,078 6,141
Other 106 573
-------------- --------------
Net loss before discontinued operations (3,855) (8,117)
Discontinued operations
Net (loss) income from operations of
discontinued businesses (307) 7
Gain (loss) on sale of discontinued businesses
(less applicable income taxes of $439) 22,903 -
------------ -----------------
Net income (loss) 18,741 (8,110)
Dividends on preferred stock (1,432) (2,864)
------------- -------------
Net income (loss) applicable to common stock $ 17,309 $ (10,974)
============= ============
Net loss before discontinued operations
applicable to common stock $ (5,287) $ (10,981)
============== ============
Net income (loss) from discontinued operations
applicable to common stock $ 22,596 $ 7
============== =============
Basic and diluted income (loss) applicable to
common stock, per share $ 1.08 $ (0.88)
=============== ==============
Basic and diluted loss before discontinued operations
applicable to common stock, per share $ (.33) $ (0.88)
=============== ==============
Basic and diluted income (loss) from discontinued
operations applicable to common stock, per share $ 1.41 -
=============== ===============
Weighted average number of shares outstanding 16,032,849 12,497,800
=============== ===============
The accompanying notes are an integral part of these statements
</TABLE>
<PAGE>
PAGE AMERICA GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(GOING CONCERN BASIS)
($ IN THOUSANDS)
<TABLE>
<CAPTION>
Period from Year Ended
January 1, 1997 to December 31,
July 1, 1997 1996
------------ ----
<S> <C> <C>
Net income (loss) $ 18,741 $(8,110)
Adjustments to reconcile net income (loss) to net cash (used in)
provided by operating activities:
Depreciation and amortization 2,321 6,253
Write-off of deferred financing costs - -
Net book value of pagers sold 379 1,164
Provision for losses on accounts receivable 307 908
Provision for lost pagers 95 238
Issuance of promissory notes to satisfy interest on
subordinated debt 975 1,950
(Gain) loss on disposal of assets (22,903) 91
Other 52 492
Change in assets and liabilities:
(Increase) decrease in accounts receivable (81) (790)
(Increase) decrease in prepaid expenses and other
assets (97) 170
Decrease in accounts payable (357) (293)
(Decrease) increase in accrued expenses (189) 671
(Decrease) increase in customer deposits and
deferred revenue (62) 244
----------- --------
Net cash (used in) provided by operating
activities (819) 2,988
---------- -------
Cash flows from investing activities:
Capital expenditures (1,109) (3,523)
Licensing costs (14) -
Net proceeds from disposal of assets 23,946 616
----------- ---------
Net cash provided by (used in) investing activities 22,823 (2,907)
----------- ---------
Cash flows from financing activities:
Proceeds from issuance of debt 87 1,337
Principal payments on debt (19,765) (1,562)
Costs related to financing of debt - (129)
Costs related to sale of assets - (188)
Cost related to issuance of preferred and common stock - -
------------ ----------
Net cash used in financing activities (19,678) (542)
------------ ----------
Net increase (decrease) in cash and cash equivalents 2,326 (461)
Cash and cash equivalents at beginning of period 290 751
------------ -----------
Cash and cash equivalents at end of period $ 2,616 $ 290
============ ===========
The accompanying notes are an integral part of these statements
</TABLE>
<PAGE>
PAGE AMERICA GROUP, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(Going Concern Basis)
($ In Thousands)
Period from Year Ended
January 1, 1997 December 31,
to July 1, 1997 1996
--------------- ------------
<S> <C> <C>
Supplemental schedule of noncash investing and financing activities:
Dividends accrued on preferred stock $1,432 $2,864
Common stock issued to employee stock purchase plan - 22
Common stock issued as payment on preferred stock - 1,432
Capital expenditures in accounts payable and accrued expenses 611 31
Capital expenditures financed 94 989
Reversal of preferred dividends 4,295 -
Equity investments received on disposal of assets 33,700 -
The accompanying notes are an integral part of these statements
</TABLE>
<PAGE>
PAGE AMERICA GROUP, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)
(Going Concern Basis)
($ In Thousands)
Series One Series C Paid-in Accu-
Preferred Stock Preferred Stock Common Stock Capital mulated
Shares Amount Shares Amount Shares Amount Amount Deficit Total
------- -------- -------- ------ ------- -------- ------ ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1996 286,361 30,068 0 0 8,052,305 805 52,850 (94,945) (11,222)
Issuance of Common Stock:
To employee stock purchase plan and trust 85,200 9 13 22
For dividends on Preferred Stock - Series One 7,899,590 790 642 1,432
Expenses related to issuance of Common Stock (4) (4)
Dividends declared on Preferred Stock (2,864) (2,864)
Net loss (8,110) (8,110)
-------- ---------- ------ ---- ----------- ------- ------- ---------- -------
Balance at December 31, 1996 286,361 30,068 0 0 16,037,095 1,604 53,501 (105,919) (20,746)
Adjustment of Common Stock issued to employee
stock purchase plan and trust (12,008) (1) (3) (4)
Dividends declared on Preferred Stock (1,432) (1,432)
Net income for the period ended July 1, 1997 18,741 18,741
Reversal of accrued dividends on preferred stock 4,295 4,295
-------- -------- ----- ---- ------------ ------ -------- -------- -------
Balance at July 1, 1997 286,361 $30,068 0 $ 0 16,025,087 $1,603 $57,793 ($88,610) $ 854
======== ======= ===== ===== ============ ======= ======== ========= =========
The accompanying notes are an integral part of these statements
</TABLE>
<PAGE>
PAGE AMERICA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS -- Through July 1, 1997, the Company was a
radio paging company which marketed and provided over-the-air messaging
information, products and services in the New York and Chicago metropolitan area
markets through facilities which it owned and operated as a radio common carrier
("RCC") under licenses from the Federal Communications Commission.
BASIS OF PRESENTATION -- As a result of the sale of substantially all
of the Company's assets to Metrocall, Inc. and the adoption of a plan of
complete liquidation and dissolution, the Company changed its basis of
accounting from the going concern basis to the liquidation basis in accordance
with generally accepted accounting principles, effective July 1, 1997.
Consequently, assets have been valued at estimated net realizable value and
liabilities are presented at their estimated settlement amounts; however with
respect to the Subordinated Debt obligations it is not possible to determine the
ultimate settlement amount (See Note B). Accordingly, such obligations have been
stated at their face value. Amounts included in the prior year statements of
operations related to the businesses sold have been reclassified to discontinued
operations.
PRINCIPLES OF CONSOLIDATION -- The consolidated financial statements
include the accounts of the Company and its subsidiaries. Significant
intercompany accounts and transactions have been eliminated in consolidation.
USE OF ESTIMATES -- The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. The valuation of assets in liquidation are
based upon management's best estimates of their value at December 31, 1998 and
1997. Such values could differ substantially from amounts ultimately realized in
the future as the Company completes its plan of liquidation.
CASH AND CASH EQUIVALENTS -- The Company considers all highly liquid
debt instruments purchased with a maturity of three months or less, at date of
acquisition, to be cash equivalents.
EQUIPMENT -- Depreciation of equipment was computed by the declining
balance method for pager equipment and the straight-line method for all other
equipment in amounts sufficient to allocate the cost of depreciable assets to
operations over their estimated useful lives. Leasehold improvements were
amortized over the shorter of the life of the respective lease or service life
of the improvement. Depreciation expense was $1,658 for the period from January
1, 1997 to July 1, 1997 and $4,297 in 1996.
CERTIFICATES OF AUTHORITY -- The costs of certificates of authority
related to the conduct of RCC operations were amortized on a straight-line basis
principally over periods of 40 years.
CUSTOMER LISTS -- Customer lists generally consisted of a portion of
the cost of business acquisitions assigned to the value of customer accounts and
were amortized on a straight-line basis over the various estimated lives of
those customers.
OTHER INTANGIBLES -- Other intangibles included the excess of the
purchase price over the fair market value of the net assets acquired and were
amortized on a straight-line basis principally over 40 year periods. The Company
routinely evaluated the carrying value of all of its intangibles for impairment.
EQUITY INVESTMENTS -- Equity investments included in the consolidated
statement of Net Assets in Liquidation are stated at estimated net realizable
value.
INTEREST RATE PROTECTION -- On December 30, 1993, the Company entered
into a new senior credit facility with certain banks. On February 15, 1994, the
Company entered into an interest rate cap agreement which protected the Company
against increases in interest rates on $25 million of this debt. The cost of
this agreement was fully amortized as of December 31, 1996.
EARNINGS/LOSS PER SHARE -- Net income (loss) per share is computed
based upon the weighted average number of common shares outstanding during the
periods presented and is computed after giving effect to preferred stock
dividend requirements. In 1997, the Company adopted SFAS No. 128 "Earnings Per
Share." Implementation of this pronouncement did not change the reported net
income (loss) per share for the periods reported. Stock options, warrants and
the assumed conversion of the convertible preferred stock have not been included
in the calculation, since their inclusion would be anti-dilutive for each of the
periods presented. Accordingly, basic and diluted net income (loss) per share
are the same for all periods presented.
EMPLOYEE STOCK BASED COMPENSATION -- The Company followed Accounting
Principles Board Statement No. 25 with regard to the accounting for stock issued
as compensation for employees.
NOTE B - SALE OF ASSETS AND PLAN OF LIQUIDATION
On July 1, 1997, the Company sold substantially all of its assets to
Metrocall, Inc. ("Metrocall") for a sale price (as adjusted) of approximately
$60.7 million including the assumption of $2.2 million of liabilities. Page
America received $24.8 million in cash, $15 million of Series B Junior
Convertible Preferred Stock of Metrocall and $18.7 million of Common Stock of
Metrocall, inclusive of a post-closing working capital adjustment resulting in
the Company returning 85,602 shares of common stock to Metrocall. Certain shares
of Metrocall common stock with a fair market value of $4.0 million (832,250
common shares) at the date of the sale were held in escrow until April 1, 1998
and, pursuant to the sale agreement, those shares were released to the Company
on that date. Excluded from the sale were cash, assets related to the employee
benefit plans and to the Florida and California operations which had been
previously sold, liabilities under the Credit Facility, subordinated debt
agreement and NEC America leasing contract, obligations with respect to federal,
state and local taxes and certain other liabilities. In 1997, the Company
recognized a gain from the sale of assets to Metrocall of approximately $22.9
million, net of expenses related to the sale of approximately $1.5 million. In
1998, the Company sold 606,800 shares of Metrocall common stock and realized a
net gain of $1,353,000. During the six month period ended December 31, 1997, the
Company sold 248,200 shares of Metrocall common stock and realized a net gain of
$627,000. At December 31, 1998, the Company held 3,056,856 shares of common
stock of Metrocall (See Note D).
In connection with the sale discussed above, the Company adopted a
plan of complete liquidation and dissolution of the corporate entity which
became effective with the completion of the Metrocall sale. Accordingly, on July
1, 1997, the Company changed from the going concern basis of accounting to the
liquidation basis of accounting. The value of the assets to be available for
payment of its liabilities and distribution to the Page America shareholders
upon liquidation cannot be ascertained at this time and will depend among other
things, on the total amount of its liabilities, the market value of the
Metrocall Common Stock, and the value of the Metrocall Preferred Stock.
Had the Plan of Liquidation been completed on December 31, 1998, and assuming
that the asset values reflected in the accompanying statement of Net Assets in
Liquidation had been realized, the holders of the Subordinated Notes would have
received $12.6 million and the Preferred and Common shareholders would have
received $3.8 million and $1.6 million, respectively. However, the actual
amounts to be distributed to the holders of the Subordinated Notes and Preferred
and Common shareholders will be dependent on the value of the Metrocall Common
Stock at the time the shares are sold or distributed, and subject to other
liabilities that could arise in connection with completing the Plan of
Liquidation and Dissolution, including obtaining required clearance from the
various tax authorities (See Notes C and F).
Concurrent with the sale of substantially all of the Company's assets,
the Company's Credit Facility was amended (See Note C).
On July 1, 1997, the holders of Subordinated Notes and the Company
entered into a Forbearance Agreement (the "Forbearance Agreement") pursuant to
which the holders have agreed to forbear from collecting on such Subordinated
Notes until the earlier of December 31, 1998 or the occurrence of certain events
relating to Page America, as described in the Forbearance Agreement (See Note
C). The maturity date of the Agreement has been extended until August 31, 1999.
NOTE C - SENIOR CREDIT FACILITY AND SUBORDINATED NOTES PAYABLE
Debt is as follows: December 31,
1998 1997
---- ----
($ in Thousands)
Bank credit facility $11,000 $14,195
Subordinated notes (including deferred interest) 20,800 18,850
-------- ------
31,800 33,045
Less current maturities 31,800 33,045
-------- -------
Long term portion $ 0 $ 0
======== ========
On December 30, 1993, the Company entered into a senior secured credit
facility with certain banks with an original final maturity of March 31, 2000.
Payments on the Credit Facility initially were to be interest only with
mandatory principal payments due quarterly beginning on September 30, 1995.
On July 28, 1995, concurrent with the sale of the Company's Florida
and California paging assets, the Credit Facility was amended. Among other
things, the amendment provided for an acceleration of the maturity to December
29, 1995 and modified the financial covenants so that the Company would no
longer be in default as of the amendment date. The Company used the net proceeds
from the sale of its Florida and California operations to reduce the debt by
$11.8 million and pay interest costs. On April 26, 1996, the Company's Credit
Facility was again modified to provide for a revolving credit loan of $750,000,
a waiver of all existing defaults on certain financial and other covenants, the
omission of financial covenants effective April 30, 1996 and an extension of the
maturity date to the earlier of November 30, 1996 or the completion of the sale
of the Company's assets to Metrocall, Inc.
On July 1, 1997, concurrent with the sale of substantially all of the
Company's assets, the Company's Credit Facility was further amended. Among other
things, the amendment provided for an extension of the maturity date to December
31, 1998 and a waiver of all existing covenant defaults. In addition, the
Company was required to use $20.5 million of the cash proceeds from the sale to
reduce the debt by approximately $18.4 million and pay accrued interest of $2.0
million and certain closing expenses. Any amounts outstanding under the Amended
Credit Agreement bear interest payable monthly at prime plus 2% to 4% depending
on the principal amount outstanding thereunder from time to time. At December
31, 1998, the interest rate was prime of 7.75% plus 4%. The Credit Facility was
not paid on December 31, 1998 and the Company was in default on payment of the
debt until it was retired on January 8, 1999 with proceeds from the sale of
certain equity investments. (See Note L).
On September 30, 1997, pursuant to the amended agreement, the Company
paid a reinstatement fee of $350,000 originally due on November 30, 1996. Under
the terms of the Credit Facility, Page America was not permitted to make any
payments to the holders of the Subordinated Notes or its common or preferred
stockholders, but it was permitted to pay accounts payable, claims, expenses and
liabilities incurred in connection with its liquidation. Subject to the payment
of such accounts, claims, expenses and liabilities, any amounts received by the
Company from the sale or redemption of any Metrocall securities was required to
be paid in reduction of amounts outstanding under the Credit Facility. All
Metrocall Series B Preferred Stock and Common Stock was held as collateral
against the Senior Credit Facility. Page America was required to maintain a
ratio of face amount of Series B Preferred Stock and value of Metrocall Common
Stock to amounts outstanding under the Credit Facility of at least 1.5 to 1.
On December 30, 1993, the Company sold $13 million aggregate principal
amount of 12 percent Subordinated Notes originally due 2003, with warrants,
pursuant to a Note Purchase Agreement. Payments on the Subordinated Notes
initially were to be interest only with mandatory principal payments of $1.3
million due semi-annually beginning on June 30, 1999. All payments on the notes
are subordinated to the prior payment in full of all amounts outstanding under
the Credit Facility. The notes are governed by certain financial covenants. In
July, 1994, the Company exchanged the notes for identical notes which were
registered under the Securities Act of 1933.
On July 28, 1995, the subordinated notes were modified to provide for
a final maturity of six months subsequent to the final maturity of the Credit
Facility and to defer the cash payment of interest until maturity. Commencing
January 1, 1995, interest was increased from 12 to 15 percent per annum,
compounded semi-annually and is satisfied by the issuance of additional
promissory notes with terms substantially identical to the subordinated notes,
as amended. The subordinated notes were due on December 31, 1996 and had not
been paid.
On July 1, 1997, concurrent with the sale of the Company's assets to
Metrocall, the holders of Subordinated Notes and the Company entered into a
Forbearance Agreement (the "Forbearance Agreement") pursuant to which the
holders have agreed to forbear from collecting on such Subordinated Notes until
the earlier of December 31, 1998 or the occurrence of certain events relating to
the Company, as described in the Forbearance Agreement. The maturity date of the
Agreement has been extended to August 31, 1999. During the forbearance period,
the holders of the Subordinated notes will not initiate any action, exercise any
remedy or make any claim against the Company with respect to the Subordinated
Notes. In consideration of such forbearance, and in the complete satisfaction of
all amounts of principal and interest due, after all amounts have been paid in
full under the Credit Facility, the holders of the Subordinated Notes will be
entitled to receive 70% of cash available for distribution to the Subordinated
Noteholders and the Preferred and Common shareholders of the Company, up to an
aggregate distribution to Subordinated Noteholders of $19 million, with the
remaining 30% to be distributed to the Preferred and Common shareholders of Page
America. After the holders of Subordinated Notes have indefeasibly received a
total of $19 million, any remaining amounts available for distribution to the
Subordinated Noteholders and the Preferred and Common shareholders of the
Company will be made 50% to the holders of the Subordinated Notes and 50% to the
Preferred and Common shareholders of Page America. Interest will continue to
accrue on the Subordinated Notes until the full amount of principal and interest
due thereunder shall have been paid in full or the obligations thereunder shall
have been otherwise satisfied in accordance with the terms and provisions of the
Forbearance Agreement. (See Note B).
Pursuant to the Forbearance Agreement, Page America's obligations to
repurchase the warrants held by the holders of the Subordinated Notes were
terminated. Under the Forbearance Agreement, Page America is not permitted to
enter into transactions with its stockholders, officers or directors or conduct
any business or incur any debt other than in connection with the satisfaction of
its obligations under the Credit Facility, payment of other permitted
liabilities and the implementation of the Plan of Liquidation.
Interest payments for fiscal years 1998, 1997 and 1996 were $1.5
million, $2.9 million and $3.3 million, respectively.
NOTE D - EQUITY INVESTMENTS
The Company's equity investments are as follows ($ in Thousands):
<TABLE>
<CAPTION>
Net Appreciation
(Depreciation) in
December 31, 1998: Fair Value Cost Fair Value
<S> <C> <C> <C>
Metrocall Series B Junior Convertible Preferred Stock $15,368 $18,080 $(2,712)
Metrocall Common Stock (3,056,856 shares) 13,374 14,711 (1,337)
-------- ------- --------
$28,742 $32,791 $(4,049)
======== ======== ========
Net Appreciation
(Depreciation) in
December 31, 1997: Fair Value Cost Fair Value
<S> <C> <C> <C>
Metrocall Series B Junior Convertible Preferred Stock $15,790 $15,790 -
Metrocall Common Stock (3,663,656 shares) 18,090 17,363 $ 727
Other Marketable Securities 10 10 -
------- --------- -------
$33,890 $33,163 $ 727
======= ========= =======
</TABLE>
The Series B Junior Convertible Preferred Stock has a 14% dividend
rate payable semi-annually in arrears on May 15 and November 15. Payment of
dividends may be made in cash or in kind. The Series B Preferred Stock may be
redeemed by Metrocall at any time and must be redeemed by Metrocall on July 1,
2009, if not previously redeemed or converted by that date. On November 15, 1998
and May 15, 1998, the Company received 118 shares ($1,118,000 fair value) and
111 shares ($1,110,000 fair value), respectively, of Series B Junior Convertible
Preferred in payment of dividends accrued for the six month periods ended
November 15, 1998 and May 15, 1998, respectively. On November 15, 1997, the
Company received 79 shares ($790,000 fair value ) of Series B Junior Convertible
Preferred in payment of dividends accrued from July 1 to November 15, 1997. The
fair value of the accrued but unpaid dividends on the Series B Junior
Convertible Preferred Stock was approximately $271,000 at December 31, 1998. At
December 31, 1998, the Metrocall Series B Convertible Preferred Stock was
convertible at the option of the Company as follows: 25% at $6.61 per share, 25%
at $5.85 per share, 25% at $6.45 per share, and 25% at $6.00 per share. In
total, as of December 31, 1998, the $18,080,000 of Metrocall Series B
Convertible Preferred Stock was convertible into 2,911,336 shares of Metrocall
Common Stock. The estimated fair value of the Metrocall Series B Junior
Convertible Preferred Stock at December 31, 1998 is based on the value received
from the sale of these securities on January 8, 1999 which resulted in a charge
in 1998 of $2.8 million for unrealized depreciation. (See Note L).
The estimated fair value of the Metrocall Common Stock is based on the
closing price of $4.375 per share on December 31, 1998.
Realized gains and losses on the sale of these securities and net
unrealized gains or losses on these securities available for sale have been
reflected in the statement of changes in net assets in liquidation.
NOTE E - ASSET CLASSIFICATIONS ($ IN THOUSANDS)
Other current assets comprise the following:
December 31,
1998 1997
Dividend receivable $ 271 $ 279
Other current assets 3 8
-------- ---------
$ 274 $ 287
======== =========
The dividend receivable relates to the Metrocall Series B Convertible Preferred
Stock and at December 31, 1998 is based on the value received from the sale of
the securities on January 8, 1999 (See Note L).
Accounts payable and accrued expenses and other liabilities comprise the
following:
December 31,
1998 1997
Accounts payable $ 1 $ 3
Interest 2,051 1,139
Taxes 310 292
Salaries and bonuses - 77
Professional services 41 67
Other - 77
--------- --------
$2,403 $1,655
NOTE F - SHAREHOLDERS' EQUITY
Capital stock outstanding as of December 31, 1998 and December 31, 1997
consists of the following:
Series One
Preferred Common
Stock Stock
Par value $ .01 $ .10
Shares authorized 310,000 100,000,000
Shares issued and outstanding 286,361 16,024,585
SERIES ONE CONVERTIBLE PREFERRED STOCK -- The Series One Convertible Preferred
Stock has a liquidation value of $105 per share and a 10 percent dividend,
payable semi-annually in arrears and is convertible into Common Stock at $4.50
per share, subject to certain anti-dilution provisions. Payment of dividends
could be made in cash or in Common Stock of the Company. On August 11, 1994 and
March 8, 1995, the Company issued 406,220 shares and 437,629 shares of its
Common Stock, respectively, to the holders of Series One Convertible Preferred
Stock, as full payment of dividends for the year ended December 31, 1994. On
June 30, 1995, the Preferred shareholders waived their right to receive the
dividend payment of $1,432,000 due on the same date. In exchange, this amount
was added to the liquidation value of the shares. On June 12, 1996, the Company
issued 7,899,590 shares of its Common Stock as full payment of the dividends
accrued at December 31, 1995. Dividends in arrears aggregated $4,295,000, or
$15.00 per preferred share, at June 30, 1997. On July 1, 1997, concurrent with
the sale of assets to Metrocall, the Preferred shareholders waived their rights
to receive the dividend payment of $4,295,000 and their rights to future
dividends. The amount of dividend waived has been credited to paid in capital.
Pursuant to the Company's Plan of Liquidation, the holders of Page America's
Series One Preferred Stock have agreed that 30% of any distributions otherwise
payable to them with respect to their liquidation preference will be distributed
to the holders of Page America's Common Stock. (See Note B).
WARRANTS - In connection with the issuance of the Subordinated Notes,
the Company also issued warrants to purchase an aggregate of 1,205,556 shares of
Common Stock, at a purchase price of $3.50 per share. As part of the Forbearance
Agreement, the holders of the subordinated notes surrendered their warrants.
STOCK OPTIONS -- The Company's 1983 Stock Option Plan, as amended,
provided for the granting of options to purchase an aggregate of 235,000 shares
of the Company's Common Stock to key employees. The option prices cannot be less
than the fair market value of Common Stock at dates of grant. Options could not
be exercised until specified time restrictions have lapsed and option periods
could not exceed five years. No more options may be granted under this plan.
The Company's 1990 Stock Option Plan provided for the grant by the
Company of options to purchase not more that 555,000 shares of Common Stock to
key employees and directors. The exercise price per share is the fair market
value of a share of Common Stock for options granted after December 29, 1992,
and the greater of (i) the fair market value of a share of Common Stock or (ii)
$7.00, for options granted on or before December 29, 1992. Options granted under
the 1990 Stock Option Plan could not be exercised prior to one year from the
date of grant and options could be exercised 20 percent per year thereafter.
Option activities under the Incentive Plans are detailed in the following table:
<TABLE>
<CAPTION>
Weighted
Average Option
1990 Plan 1983 Plan Price Per Share
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Outstanding at January 1, 1996 246,700 5,000 1.39
Forfeited/canceled (11,700) - 7.00
- ---------------------------------------------------------------------------------------------------------------------
Outstanding at December 31, 1996 235,000 5,000 1.12
Forfeited/canceled (235,000) (5,000) 1.12
- ---------------------------------------------------------------------------------------------------------------------
Outstanding at December 31, 1997 and 1998 - - -
=====================================================================================================================
Exercisable At December 31, 1997 and 1998 - - -
- ---------------------------------------------------------------------------------------------------------------------
Exercisable At December 31, 1996 54,000 5,000 2.13
- ---------------------------------------------------------------------------------------------------------------------
Exercisable At December 31, 1995 18,700 3,750 6.80
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
Had the Company been accounting for its employee stock options under
the fair value method of SFAS No. 123, there would not have been a material
impact on the Company's net loss or net loss per common share during 1996 and
1997.
NOTE G -- INCOME TAXES
The Tax Reform Act of 1986 enacted a complex set of rules limiting the
utilization of net operating loss and tax credit carry forwards to offset future
taxable income following a corporate "ownership change". In general, an
ownership change occurs if the percentage of stock of a loss corporation owned
(actually, constructively and, in some cases, deemed ownership) by one or more
"5 percent shareholders" has increased by more than 50 percentage points over
the lowest percentage of such stock owned by those persons during a three year
testing period. If an ownership change occurs it would limit the utilization of
the net operating loss carryforwards for federal income tax purposes. The
Company has determined that there has been an ownership change as of December
31, 1993. As of December 31, 1998, the Company had net operating losses of
approximately $71 million for federal income tax purposes which will expire at
various dates between 1999 and 2018. Net operating losses of $52.6 million are
subject to the aforementioned limitation. In addition, the Company has
investment tax credit carryforwards of approximately $467,513 which expire
principally in 1999 through 2000, which are also subject to limitation.
The effects of temporary differences that gave rise to deferred tax
assets and liabilities are as follows:
<TABLE>
<CAPTION>
December 31, 1998 December 31, 1997
($ In Thousands) ($ In Thousands)
<S> <C> <C>
Deferred tax assets:
Investment tax credit carryforwards $ 468 $ 621
Net operating loss carryforwards 26,605 25,044
Other 1,135 -
--------- -------
Total deferred tax assets 28,208 25,655
Less: Valuation allowance (28,208) (25,385)
-------- -------
Net deferred tax assets 0 280
Deferred tax liabilities:
Other 0 280
-------- --------
Total deferred tax liabilities 0 280
-------- --------
Net deferred tax asset/liability $ 0 $ 0
========= ==========
</TABLE>
The Company's valuation allowance increased by approximately
$2,823,000 to $28,208,000 as of December 31, 1998 due principally to the
generation of net operating losses.
The reconciliation of income taxes computed at the U.S. federal
Statutory tax rate to income tax expenses is ($ In Thousands):
<TABLE>
<CAPTION>
Year Ended Period from Period from Year Ended
December 31, July 2, 1997 to January 1, 1997 December 31,
1998 December 31, 1997 to July 1, 1997 1996
---- ----------------- --------------- -----------
<S> <C> <C> <C> <C>
Tax (benefit) at U.S. statutory rates ($1,877) $ 2 $ 6,521 ($2,757)
State income taxes, net of federal benefit ( 329) - 39 (278)
Reversal of deferred tax assets - - 1,475 -
Valuation allowance 2,749 252 (7,596) 3,017
Dividend exclusion ( 543) (254) - -
Other - - - 18
---------- --------- ----------- ----------
$ 0 $ 0 $ 439 $ 0
========== ========= =========== ==========
Cash paid for taxes totaled $0 in 1998.
</TABLE>
NOTE H -- CONTINGENCIES
The Company is involved in various lawsuits and proceedings arising in
the normal course of business. In the opinion of management of the Company, the
ultimate outcome of these lawsuits and proceedings will not have a material
adverse effect on the Company's net assets in liquidation.
<PAGE>
PAGE AMERICA GROUP, INC. AND SUBSIDIARIES
NOTE I -- RELATED PARTY TRANSACTIONS
A company (the "Related Company") whose president is a Director of the
Company acted as a placement agent in connection with the sale by the Company of
shares of Series One Convertible Preferred Stock and subordinated notes and the
entering into of the bank credit facility.
The Related Company has been engaged to provide investment banking
functions for which it presently receives a fee of $9,087 per month during the
Company's liquidation, and will be reimbursed for expenses incurred by it in
connection therewith. This agreement will terminate if the Related Company
ceases to control a majority of the Series One Convertible Preferred Stock (or
Common Stock issued upon conversion thereof) or owns less than 20% of the
Company's fully diluted shares of Common Stock. Investment banking fees were
$109,038, in 1998, 1997 and 1996.
In conjunction with the purchase of Series A and Series A-2 Preferred
Stock and the issuance of subordinated notes from 1990 to 1992, the Related
Company was issued warrants to purchase 167,696 shares of the Company's Common
Stock at an aggregate exercise price of $843,900.
NOTE J -- RENTALS
Rental expense for the fiscal years 1998, 1997 and 1996, was
approximately $4,000, $1,190,000, and $2,383,000, respectively.
All leases that existed on July 1, 1997 have been assumed by Metrocall
as part of the sale transaction. On October 1, 1997, the Company entered into a
new lease commitment for office space at a rate of $1,000 per month. The lease
term expired on May 31, 1998.
NOTE K -- EMPLOYEE BENEFIT PLAN
The Company had a 401(K) plan covering substantially all of its
employees. All employees who completed ninety days of service were eligible to
participate. Employees could contribute 1% to 4% of compensation to the plan on
an after-tax basis and also defer additional amounts of compensation in 1%
increments on a pre-tax basis, subject to limits established by the Internal
Revenue Code. The Company matched 100% of after-tax and 25% of pre-tax
contributions with shares of its common stock until March 15, 1996, after which
matching contributions were paid in cash. The total cost of the plan amounted to
$7,400, $11,700, and $43,900 in 1998, 1997 and 1996, respectively.
The plan was terminated on June 30, 1997. All assets in the plan will
be distributed to the participants after which the plan will be dissolved.
NOTE L - SUBSEQUENT EVENT
On January 8, 1999, the Company sold all of its Metrocall Series B Convertible
Preferred Stock plus accrued dividends for $15.7 million. No gain or loss will
be recognized in 1999 with respect to this sale because the estimated fair
market value at December 31, 1998 is based on the value received in this
transaction (See Note D). Page America received $4.6 million in cash after
using $11.1 million of the proceeds from the sale to retire the Senior Credit
Facility including any accrued interest and to pay related legal fees and
expenses.
PAGE AMERICA GROUP, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
($ In Thousands)
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
-------- -------- -------- -------- --------
Additions
Balance at charged to Balance at
beginning costs and Deductions -- end of
Description of period expenses describe period
<S> <C> <C> <C> <C>
Year ended December 31, 1996
Allowance for
doubtful accounts $277 $908 $907 (a) $278
==== ==== ==== ====
For the period January 1, 1997
to July 1, 1997
Allowance for
doubtful accounts $278 $307 $585 (b) $ 0
==== ==== ==== ====
(a) Accounts written off as uncollectible.
(b) Accounts written off or acquired by Metrocall as part of the sale
transaction on July 1, 1997.
</TABLE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
PAGE AMERICA GROUP, INC.
March 30, 1999
By: /s/ David A. Barry
------------------------------
David A. Barry
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
NAME TITLE DATE
/s/ David A. Barry Chairman of the Board and
- ------------------- Chief Executive Officer March 30, 1999
David A. Barry
/s/ Jack Kadis
- ---------------
Jack Kadis Director March 30, 1999
Exhibit 10.8
AMENDMENT NO. 2
TO
FORBEARANCE AGREEMENT
This AMENDMENT NO. 2 TO FORBEARANCE AGREEMENT (the "Amendment"), dated
as of the ____ day of February, 1999, by and among Sandler Mezzanine Partners,
L.P., a Delaware limited partnership, Sandler Mezzanine T-E Partners, L.P., a
Delaware limited partnership, Sandler Mezzanine Foreign Partners, L.P., a
Delaware limited partnership, T. Rowe Price High Yield Fund, Inc., Page America
Group, Inc., a New York corporation, Page America of Illinois, Inc., an Illinois
corporation, Page America Communications of Indiana, Inc., an Indiana
corporation, Page America of New York, Inc., a New York corporation, Page
America Communications of California, Inc., a California corporation, and Page
America Communications of Florida, Inc., a Florida corporation.
WHEREAS, the parties have entered into a Forbearance Agreement dated
as of July 1, 1997, as previously amended (the "Agreement");
WHEREAS, the parties desire to amend the Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto agree
as follows:
1. Terms defined in the Agreement shall have the same meaning when
used herein.
2. The definition of Forbearance Period Expiration Date contained in
the Agreement is hereby amended by deleting the date "March 1, 1999" contained
therein and inserting in place thereof "August 31, 1999."
3. Except as specifically amended herein, the Agreement remains
unmodified and in full force and effect in accordance with its terms.
4. This Amendment may be executed in one or more counterparts, each of
which shall be deemed an original, and all of which together shall constitute
one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date and year first above written.
SANDLER MEZZANINE PARTNERS, L.P.
By: Sandler Mezzanine Partnership, General
Partner
By: EMEBE MEDIA CORP., General Partner
By: ______________________________
Name: Moira Mitchell
Title: Vice President
SANDLER MEZZANINE FOREIGN PARTNERS, L.P.
By: Sandler Mezzanine General Partnership,
General Partner
By: EMEBE MEDIA CORP., General Partner
By:______________________________
Name: Moira Mitchell
Title: Vice President
SANDLER MEZZANINE T-E PARTNERS, L.P.
By: Sandler Mezzanine General Partnership,
General Partner
By: EMEBE MEDIA CORP., General Partner
By:______________________________
Name: Moira Mitchell
Title: Vice President
T. ROWE PRICE HIGH YIELD FUND, INC.
By:______________________________
Name: Mark J. Vaelkiv
Title: President
PAGE AMERICA GROUP, INC.
By:______________________________
Name:
Title:
PAGE AMERICA OF ILLINOIS, INC.
By:_____________________________
Name:
Title:
PAGE AMERICA COMMUNICATIONS OF
INDIANA, INC.
By:____________________________
Name:
Title:
PAGE AMERICA OF NEW YORK, INC.
By:___________________________
Name:
Title:
PAGE AMERICA COMMUNICATIONS OF
CALIFORNIA, INC.
By:___________________________
Name:
Title:
PAGE AMERICA COMMUNICATIONS OF
FLORIDA, INC.
By:___________________________
Name:
Title:
<PAGE>
AMENDMENT NO. 1
TO
FORBEARANCE AGREEMENT
This AMENDMENT NO. 1 TO FORBEARANCE AGREEMENT (the "Amendment"), dated
as of the ____ day of December, 1998 by and among Sandler Mezzanine Partners,
L.P., a Delaware limited partnership, Sandler Mezzanine T-E Partners, L.P., a
Delaware limited partnership, Sandler Mezzanine Foreign partners, L.P., a
Delaware limited partnership, T. Rowe Price High Yield fund, Inc., Page America
Group, Inc., a New York corporation, Page America of Illinois, Inc., an Illinois
corporation, Page America Communications of Indiana, Inc., an Indiana
corporation, Page America of New York, Inc., a New York corporation, Page
America Communications of California, Inc., a California corporation and Page
America Communications of Florida, Inc., a Florida corporation.
WHEREAS, the parties have entered into a Forbearance Agreement dated
as of July 1, 1997, (the "Agreement");
WHEREAS, the parties desire to amend the Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto agree
as follows:
1. Terms defined in the Agreement shall have the same meaning when
used herein
2. The definition of Forbearance Period Expiration Date contained in
the Agreement is hereby amended by deleting the date "March 1, 1999" contained
therein and inserting in place thereof "March 31, 1999 or if The Senior Secured
Facilities with Paribas Corporation, as agent, are consummated prior to that
date, the Maturity date of such Facilities."
3. Except as specifically amended herein, the Agreement remains
unmodified and in full force and effect in accordance with its terms.
4. This Amendment may be executed in one or more counterparts, each
of which shall be deemed an original, and all of which together shall
constitute on and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date year first above written.
SANDLER MEZZANINE PARTNERS, L.P.
By: Sandler Mezzanine Partnership, General
Partner
By: EMEBE MEMDIA CORP. General Partner
By: ______________________________
Name:
Title:
SANDLER MEZZANINE FOREIGN PARTNERS, L.P.
By: Sandler Mezzanine General Partnership,
General Partner
By: EMEBE MEDIA CORP., General Partner
By: ________________________________
Name:
Title:
SANDLER MEZZANINE T-E PARTNERS, L.P.
By: Sandler Mezzanine General partnership,
General Partner
EMEBE MEDIA CORP., General Partner
By:____________________________
Name:
Title:
T. ROWE PRICE HIGH YIELD FUND, INC.
By: ___________________________
Name:
Title:
PAGE AMERICA GROUP, INC.
By: ____________________________
Name: David Barry
Title: President
PAGE AMERICA OF ILLINOIS, INC.
By: ____________________________
Name: David Barry
Title: President
PAGE AMERICA COMMUNICATIONS OF INDIANA, INC.
By: ____________________________
Name: David Barry
Title: President
PAGE AMERICA OF NEW YORK, INC.
By: ____________________________
Name: David Barry
Title: President
PAGE AMERICA COMMUNICATIONS OF CALIFORNIA, INC.
By: ____________________________
Name: David Barry
Title: President
PAGE AMERICA COMMUNICATIONS OF FLORIDA, INC.
By: ____________________________
Name: David Barry
Title: President
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 524
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 29,540
<CURRENT-LIABILITIES> 34,203
<BONDS> 0
0
30,068
<COMMON> 1,603
<OTHER-SE> (36,334)
<TOTAL-LIABILITY-AND-EQUITY> 29,540
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 388
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,414
<INCOME-PRETAX> (1,169)
<INCOME-TAX> (165)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,004)
<EPS-PRIMARY> (.06)
<EPS-DILUTED> 0
</TABLE>
