SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the quarterly period ended
June 30, 1994 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 number 1-8309.
PRICE COMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its Charter)
NEW YORK 13-2991700
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
45 Rockefeller Plaza, Suite 3201, New York, New York 10020
(Address of Principal Executive Offices)
(Zip Code)
(212) 757-5600
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
Applicable only to issuers involved in bankruptcy proceedings
during the preceding five years. Indicate by check mark whether
the registrant has filed all documents and reports required to be
filed by Sections 12, 13 or 15(d) of the Securities Exchange Act
subsequent to the distribution of securities under the plan
confirmed by the court.
Yes X No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
9,931,731 shares of Common Stock, par value $.01 per share,
outstanding as of June 30, 1994.
Page 1 of 14 Pages.
There are no Exhibits.
PRICE COMMUNICATIONS CORPORATION AND SUBSIDIARIES
INDEX TO QUARTERLY REPORT ON FORM 10-Q
June 30, 1994
__________
PART I - FINANCIAL INFORMATION
Page
Item 1. Financial Statements (unaudited) Number
Consolidated Balance Sheets at June 30,
1994 and December 31, 1993............................. 4
Consolidated Statements of Operations for
Six Months and Three Months ended June 30,
1994 and 1993.......................................... 5-6
Consolidated Statements of Cash Flows
for Six Months and Three Months ended June 30, 1994
and 1993............................................... 7
Notes to Consolidated Financial
Statements............................................. 8-9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations...... 10-11
PART II - OTHER INFORMATION...................................... 12
Item 1. Legal Proceedings.................................. 12
Item 6. Exhibits and Reports on Form 8-K................... 12
SIGNATURES.................................................. 13
<PAGE>
PRICE COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
1994 1993
Unaudited
ASSETS
Current Assets:
Cash and cash equivalents $4,800,872 $1,395,102
Accounts receivable, net 3,374,719 4,006,801
Film broadcast rights 261,042 565,929
Escrow deposits 1,000,000 1,500,000
Prepaid expenses and other current assets 1,040,001 1,457,235
Total current assets 10,476,634 8,925,067
Property and equipment, at cost,
less accumulated depreciation 10,511,095 13,728,171
Broadcast licenses, less accumulated
amortization 12,331,469 12,797,559
Noncurrent film broadcast rights 143,043 138,383
Noncurrent notes receivable 1,215,000 -
Other assets 330,503 470,031
Reorganization value in excess of amounts
allocable to identifiable assets, less
accumulated amortization 1,054,789 1,212,289
Total assets $36,062,533 $37,271,500
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $1,855,142 $2,249,404
Accrued interest - 7,233
Other current liabilities 713,475 1,035,585
Total current liabilities 2,568,617 3,292,222
Long-term debt 0 3,200,000
Other liabilities 74,538 74,747
Shareholders' equity:
Common stock, par value $.01 per share;
authorized 40,000,000 shares; outstanding:
9,931,731 in 1994 and 9,883,717 in 1993 99,317 98,837
Additional paid-in capital 32,437,854 32,310,285
Accumulated earnings (losses) 882,207 (1,704,591)
Total shareholders' equity 33,419,378 30,704,531
Total liabilities and
shareholders' equity $36,062,533 $37,271,500
The accompanying notes are an integral part of the consolidated
financial statements.
4
PRICE COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
Six Months Ended June 30,
1994 1993
Revenue $12,267,111 $12,880,872
Agency and representatives' commissions 1,616,046 1,620,848
Net revenue 10,651,065 11,260,024
Operating expenses 7,323,044 7,986,928
Corporate expenses 2,050,236 1,860,668
Other income, net (2,453,885) (533,653)
Interest expense 58,489 944,160
Depreciation and amortization 1,047,442 1,152,825
Amortization of debt discount and deferred
debt expense 33,941 449,284
Unrealized noncash loss on marketable
securities - 145,884
Share of loss of partially owned companies - 731,000
Income (loss) before income taxes 2,591,798 (1,477,072)
Income taxes 5,000 (20,235)
Net income (loss) $2,586,798 ($1,497,307)
Net income (loss) per share $0.26 ($0.12)
Average shares outstanding 9,979,212 12,109,583
The accompanying notes are an integral part of the consolidated
financial statements.
5
PRICE COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
Three Months Ended June 30,
1994 1993
Revenue $6,053,841 $6,826,872
Agency and representatives' commissions 804,617 864,924
Net revenue 5,249,224 5,961,948
Operating expenses 3,446,637 4,147,358
Corporate expenses 1,533,458 836,753
Other (income) - net (2,556,903) (10,443)
Interest expense 2,019 502,370
Depreciation and amortization 471,876 581,087
Amortization of debt discount and deferred
debt expense - 230,152
Unrealized noncash (recovery) on marketable
securities - (140,430)
Share of loss of partially owned companies - 145,000
Income (loss) before income tax 2,352,137 (329,899)
Income Taxes (13,151)
Net income (loss) $2,352,137 ($343,050)
Net income (loss) per share $0.24 ($0.03)
Average shares outstanding 9,982,507 12,109,583
The accompanying notes are an integral part of the consolidated
financial statements.
6
PRICE COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
Six Months Ended June 30,
1994 1993
Cash flows from operating activities:
Net income (loss) $2,586,798 ($1,497,307)
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Items not affecting cash: Amortization of
debt discount and deferred debt expense 33,941 449,284
Depreciation and amortization 1,047,442 1,152,825
Share of loss of partially owned
companies - 731,000
Unrealized noncash loss on marketable - 145,884
Change in assets and liabilities, net of
effects of business sold:
Decrease in net accounts receivable 192,289 (121,719)
Decrease in escrow deposits 413,593 -
(Increase) decrease in prepaid expenses,
notes receivable and other assets 874,051 760,532
Decrease in film broadcast rights 300,227 377,305
Decrease in accounts payable and
accrued expenses (420,766) (1,448,659)
Increase in accrued interest payable 38,357 (346,556)
Decrease in other liabilities (322,321) (1,411,045)
Reclassification of transactions to
investing activities:
Gain on sale of businesses (2,711,844) -
Gain on sale of securities - 5,401
Total adjustments (555,031) 294,252
Net cash used in operating activities 2,031,767 (1,203,055)
Cash flows from investing activities:
Sale of business, net 5,208,999 -
Capital expenditures (317,550) (377,954)
Investment in businesses (441,886) (316,116)
Purchases of marketable securities - (20,034,310)
Purchases of securities under agreements to resell - (8,050,811)
Proceeds from sale of marketable securities - 29,871,436
Net cash provided by investing activities 4,449,563 1,092,245
Cash flows from financing activities:
Proceeds from stock options exercised 128,048 -
Net borrowings under line of credit (3,200,000) -
Net repayment of repurchase agreements - (4,930,083)
Other (3,608) -
Net cash provided by (used in) financing (3,075,560)(4,930,083)
Net increase in cash and cash equivalent 3,405,770 (5,040,893)
Cash and cash equivalents at beginning
of period 1,395,102 9,119,527
Cash and cash equivalents at end of
period $4,800,872 $4,078,634
Supplemental disclosures of cash flow information:
Income taxes paid, net of refunds $35,327 $253,525
Interest paid $65,722 $1,294,995
The accompanying notes are an integral part of the consolidated
financial statements.
7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Basis for Preparation of Financial Statements
The accompanying consolidated financial statements have been
prepared by the Company without audit, in accordance with rules and
regulations of the Securities and Exchange Commission. In the
opinion of management, the statements reflect all adjustments
consisting only of normal recurring adjustments necessary for a
fair presentation of the results for the interim periods. The
results of operations for any interim period are not necessarily
indicative of the results for a full year.
Note 2 - Per Share Data
Earnings/(Losses) per common share are based on the weighted
average number of shares of common stock outstanding. Shares
issuable upon the exercise of all common stock equivalents and
other potentially dilutive securities are included in the
computation in those periods where their effect is considered
dilutive using the treasury stock method.
Note 3 - Recent Developments
On February 16, 1994, the Company sold its outdoor advertising
business for a total of $875,000 including $200,000 cash and a note
from the buyer for $675,000. A pre-tax loss of approximately
$368,000 was recognized on the sale and is included in other
income-net.
On February 16, 1994, the Company entered into an agreement to
buy WHTM-TV, Channel 27, serving the Harrisburg-York-Lancaster-
Lebanon, Pennsylvania market for approximately $41 million. The
Company expects to close on this purchase during the second half of
1994.
In March 1994, the Company entered into an agreement to sell
radio stations WOWO-AM and WOWO-FM in Fort Wayne, Indiana, for $2.3
million in cash. The transaction is subject to FCC approval. The
Company expects to realize a gain on the transaction.
On April 15, 1994, the Company sold substantially all the
assets of its radio stations WWKB-AM and WKSE-FM in Buffalo, New
York, for $5 million in cash. A pre-tax gain of approximately $3.0
million was recognized on the sale and is included in other income-
net. The proceeds were used, in part, to retire the remaining
balance of $3.2 million due under a line of credit agreement.
8
On May 20, 1994, the Company sold all of the capital stock of
Eimar Realty Corporation, the sole asset of which is a Nashville,
Tennessee office building, for a total of $815,000 including
$275,000 in cash and a note from the buyer for $540,000. A gain of
approximately $13,000 was recognized on the sale and included in
other income-net.
On June 13, 1994, the Company entered into an agreement to
sell substantially all of the assets, together with certain
liabilities, of radio stations WBZT-AM and WIRK-FM, West Palm
Beach, Florida. The transaction is subject to FCC approval. The
Company expects to realize a gain on the transaction.
Note 4 - Income Taxes
The Company is utilizing net operating losses accumulated in
prior periods to offset current periods tax expenses.
Note 5 - Notes Receivable
In connection with the sale of the Company's Outdoor
advertising business, the Company took a note from the buyer,
Midwest Media, Inc., for $675,000. (See Note 3 to Consolidated
Financial Statements). The note is for four years, and bears
interest at the rate of eight percent payable quarterly.
Additionally, in connection with the sale of the stock of
Eimar Realty Corporation, the owner of an office building in
Nashville to TLM Corporation, Price received a note from TLM
Corporation in the amount of $540,000 (See Note 3). The note bears
interest at the rate of five percent. Principal and interest are
payable in four years.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
References to the "Company" in this Report include Price
Communications Corporation and its subsidiaries, unless the context
otherwise indicates.
Results of Operations
The Company recognized approximately $2.6 million and $2.4
million of net income for the six months and three months ended
June 30, 1994 as compared to a $1.5 million and $.3 million net
loss for the six months and three months ended June 30, 1993. Net
revenues decreased approximately 5.4% and 12.0% during the six and
three months ended June 30, 1994 over the comparable periods in
1993, primarily as a result of the sale of the Buffalo radio
stations. Related operating expenses also decreased 8.3% and 16.9%
for the six and three month over periods in 1993, primarily as a
result of the decrease in sales. Corporate expenses increased
approximately $190,000 and $697,000 for the six and three months
ended June 30, 1994 compared to the same period in 1993. This
increase is due to additional legal and advisory expenses primarily
in connection with the restructuring and Apollo lawsuit (see "Legal
Preceedings"). Interest expense and amortization of debt discount
and deferred debt expense decreased for the six and three months
ended June 30, 1994 compared to the same periods in 1993 because
the Company retired the $30.8 million face amount of its 5% senior
secured notes during the fourth quarter of 1993 and the $3.2
million of long-term bank debt during the second quarter of 1994.
Other significant reasons for the improvement in net income were
the recognition of a gain of approximately $3.0 million from the
sale of the Buffalo stations, the absence of unrealized non-cash
loss on marketable securities and loss on partially owned companies
since the Company sold its interest in PriCellular Corporation
during the fourth quarter of 1993.
The Company's per share earnings were $.26 and $.24 for the
six and three months ended June 30, 1994 as compared to losses of
$.12 and $.03 for the six and three months ended June 30, 1993.
Liquidity and Capital Resources
The Company had approximately $4.8 million in cash and cash
equivalents at June 30, 1994 and $1.4 million at December 31, 1993.
The Company had net working capital of approximately $7.9 million
at June 30, 1994 and $5.6 million at December 31, 1993. Long-term
debt of approximately $0 million and $3.2 million was owed by the
Company as of June 30, 1994 and December 31, 1993, respectively.
During April 1994, the Company used the proceeds from the sale
of its radio stations in Buffalo, New York of $5 million to repay
the $3.2 million due under a line of credit agreement (see Note 3
to Consolidated Financial Statements).
Use of Funds. The Company will require substantial funds to
complete the approximately $41 million acquisition of WHTM-TV (See
Note 3 to Consolidated Financial Statements) and funds available
from the Company's existing liquid assets and proceeds from the
sales of properties will not be sufficient. The Company is
establishing expanded credit lines to raise the capital required
for the purchase. Additionally, if the Company's strategy to
acquire communications properties continues to be successful, the
Company may require substantial capital to finance them. The
Company may use a variety of sources including the proceeds of debt
sold to the public, additional borrowings from banks and other
institutional lenders, seller financing, convertible preferred
stock and common stock issued at the parent company or subsidiary
level. There can be no assurance that the Company will be
successful in obtaining funds from those sources.
The Company does not anticipate the need to make major capital
expenditures in respect of its existing media properties during the
remainder of 1994 and it does not believe that such lack of major
capital expenditures will affect its competitive position.
Source of Funds. The Company's sources of funds historically
have been provided by its liquid assets, cash flow from its
operating and investment activities, proceeds from the sale of
properties and proceeds from loans and financings. The Company
intends to seek to improve cash flow from operations by imposing
stringent budget procedures on its media properties and by seeking
to increase revenues in excess of increases in operating expenses.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
On November 29, 1993, Apollo Investment Fund, L.P.
("Apollo"), commenced an action by way of temporary restraining
order and order to show cause in the Supreme Court of the State of
New York, County of New York, entitled Apollo Investment Fund, L.P.
v. Price Communications Corporation, Price Publishing Corporation,
W.R. Huff Asset Management Co., L.P., and William R. Huff, Index
No. 130011/93, seeking to enjoin the Company and PPC from selling
their interest in Alexandra Publishing Corporation ("Alexandra"),
to the Huff defendants, or in the alternative, if the sale had
already been completed, rescission of the transaction. Apollo
based its claim on an Amended and Restated Shareholders Agreement,
dated as of May 8, 1992, (the "Shareholders Agreement"), among
Apollo, the Company, PPC, Alexandra, and The New York Law
Publishing Company, which purports to restrict the sale of shares
of Alexandra held by the Company or PPC. The Company answered the
complaint asserting that the challenged transaction involved only
the sale of PPC, Alexandra's parent, which was not restricted by
the Shareholders Agreement.
On April 28, 1994, the Company entered into a settlement
Agreement with Apollo, whereby Apollo released all claims against
the Company, Apollo's claim was dismissed with prejudice, and each
of W.R. Huff and the Company provided Apollo with $100,000 in order
to reimburse Apollo for certain contingent liabilities which had
arisen in connection with the transaction.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
None.
(b) Reports on Form 8-K.
On May 2, 1994, the Company filed a Form 8-K to
report an event of April 15, 1994. The Report
included an Item 2 discussion of the disposition of
substantially all assets of WWKB-AM and WKSE-FM in
Buffalo, New York.
On June 28, 1994, the Company filed a Form 8-K to
report an event of June 13, 1994. The report
included an Item 2 discussion of the pending
disposition of substantially all of the assets,
together with certain liabilities of WBZT-AM and
WIRK-FM West Palm Beach, Florida.
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.
PRICE COMMUNICATIONS
CORPORATION
Dated: August 5, 1994 By/s/Robert Price
Robert Price
President and Chief
Financial Officer
