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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] Annual Report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934 [Fee Required]
For the fiscal year ended December 31, 1995 or
[ ] Transition report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934 [No Fee Required]
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 (IRS Employer
incorporation or organization) Identification Number)
45 Rockefeller Plaza, New York, New York 10020
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 757-5600
Securities registered pursuant to Section 12 (b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock, par value $.01 per share American Stock Exchange
Securities registered pursuant to Section 12 (g) of the Act:
None.
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 of 1934 subsequent to the distribution of securities under its Plan
of Reorganization as confirmed by the court.
Yes X No
--- ---
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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 the
filing requirements for the past 90 days. Yes X No .
--- ---
Page 1 of 41 Pages
The Exhibit Index Appears on Page E-1
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (229.405 of this chapter) 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 the Form 10- K. [ ]
AGGREGATE MARKET VALUE OF THE VOTING STOCK
HELD BY NONAFFILIATES OF THE COMPANY
Aggregate market value of the Common Stock held by non-affiliates of
the Company, based on the last sale price on the American Stock Exchange
("AMEX") on March 1, 1996 ($7 as reported in the Wall Street Journal):
approximately $31.4 million. (For this purpose, all outstanding shares of Common
Stock have been considered held by non-affiliates, other than the shares
beneficially owned by directors, executive officers and principal shareholders
of the Company; certain of such persons disclaim that they are affiliates of the
Company.)
Indicate the number of shares outstanding of each of the Company's
classes of common stock as of the latest practicable date:
9,518,242 shares of Common Stock, par value $.01 per share, were
outstanding as of March 1, 1996.
DOCUMENTS INCORPORATED BY REFERENCE: None.
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PART I
Item 1. Business.
GENERAL
The Company has historically been a nationwide communications company.
Until consummation of their sale in March and February 1996, the Company owned
an ABC affiliate, WHTM-TV (which was acquired by the Company during 1994),
serving Harrisburg/Lancaster/Lebanon/York, Pennsylvania and three NBC affiliated
television stations, KSNF-TV, serving Joplin, Missouri/Pittsburg, Kansas;
KJAC-TV, serving Beaumont/Port Arthur, Texas; and KFDX-TV, serving Wichita
Falls, Texas/Lawton, Oklahoma (see "Recent Developments"), respectively. Prior
to 1995 the Company owned a number of television, radio, newspaper and other
media and related properties which were disposed of pursuant to the Company's
long-standing policy of buying and selling media properties at times deemed
advantageous by the Company's Board of Directors. The Company intends to
continue to investigate and pursue potential media and other acquisitions such
as television and radio properties and, possibly, outdoor advertising and
newspapers.
The Company's business strategy is to acquire communications properties
at prices it considers attractive, finance such properties on terms satisfactory
to it, manage such properties in accordance with its operating strategy and
dispose of them if and when the Company determines such disposition to be in its
best interest. See "Recent Developments" regarding sales of properties since the
beginning of 1995. For the foregoing reasons, the results of the Company's
historical operations are not comparable to or indicative of results in the
future. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
The Company was organized in New York in 1979 and began active
operations in 1981. Its principal executive offices are located at 45
Rockefeller Plaza, New York, New York 10020, and its telephone number is (212)
757-5600. References to the "Company" or "Price" in this report include Price
Communications Corporation and its subsidiaries, unless the context otherwise
indicates.
RECENT DEVELOPMENTS
On March 1, 1996, the Company sold substantially all of the assets,
except cash but including accounts receivable together with certain liabilities
of its ABC affiliate serving the Harrisburg-York-Lebanon-Lancaster, Pennsylvania
television market for approximately $115 million in cash to Allbritton
Communications Company. The Company expects to recognize a pre-tax gain of
approximately $65 million from this transaction.
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On February 2, 1996, the Company sold substantially all of the assets,
except cash and accounts receivable, together with certain liabilities, of its
three NBC affiliates, KJAC-TV, Beaumont/Port Arthur, Texas; KFDX-TV, Wichita
Falls, Texas/Lawton, Oklahoma and KSNF-TV, Joplin, Missouri/Pittsburg, Kansas
for approximately $41 million in cash. The stations were sold to US Broadcast
Group, a newly organized acquirer of television properties. The Company expects
to recognize a pre-tax gain of approximately $30 million from this transaction.
Prior to 1995, the Company had written off its investment in Fairmont
Communications Corporation ("Fairmont"), which had filed for relief under
Chapter 11 of the U.S. Bankruptcy Code, with the result that the Company's
carrying value in such investment was zero. During 1994, the Company entered
into a settlement agreement with the various parties to the Fairmont bankruptcy
proceedings although the exact amount was uncertain until 1995. The Company
received during 1995 cash payments totaling approximately $7.9 million in
respect of sales of properties by Fairmont.
After giving effect to the sale of its television properties, the
Company has significant liquid assets on hand to invest in communications
properties and possibly in other companies in the form of debt or equity that
its Board of Directors decides to be in the best interests of its shareholders.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources." In that connection, during
December, 1995, the Company invested approximately $8.4 million in warrants to
acquire approximately 1.2 million shares of Class B Common Stock of PriCellular
Corporation ("PriCellular"), a publicly held cellular telephone company of which
Mr. Price is President.
During February 1996, the Company purchased 600,000 shares of
PriCellular Class A Common Stock for approximately $6.3 million. The Company's
Board of Directors will continue to investigate investments for the Company that
it believes provide opportunities for significant returns to shareholders,
including possible additional investments in PriCellular.
Due to the developments described above, the Company's historical
results of operation should not be regarded as indicative of its future results.
SEGMENT DATA
See Note 13 of Notes to Consolidated Financial Statements for segment
data concerning the Company's television, radio and other operations. The
Company's television stations contributed 100 percent of the Company's net
revenue for 1995. The Company's television and radio segments contributed 70
percent and 30 percent, respectively, of the Company's net revenue for the year
ended December 31, 1994. During 1994, the Company disposed of all of its radio
properties. For the year ended December 31, 1993, the Company's television,
radio, and other segments contributed 52 percent, 45 percent and 3 percent,
respectively, of the Company's net revenue.
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ACQUISITION STRATEGY
After giving effect to the consummation of the sale by the Company of
WHTM-TV, KSNF-TV, KJAC-TV and KFDX-TV, the Company has significant funds
available for acquisition and investment purposes. See "Business - Recent
Developments." The Company continues to actively review potential acquisitions
and investments. Among the possible acquisitions or investments which may be
considered by the Company are: (i) subject to the availability of such
properties at prices deemed prudent by the Company, making acquisitions of radio
and television properties; (ii) exploring related media activities, such as
newspapers, outdoor advertising companies and publishing enterprises; (iii)
investing funds in media and media related securities; (iv) returning to the
Company's historic investment in PriCellular Corporation either through the
purchase of PriCellular securities or a business combination with PriCellular;
and (v) other acquisition and investment opportunities which may present
themselves from time to time.
To finance its acquisitions and to provide funds for other purposes,
the Company may consider using a variety of sources in addition to its cash on
hand, including borrowings from banks and other institutional lenders, the
proceeds of debt sold to the public, seller financing, convertible preferred
stock and common stock issued by the Company or its subsidiaries. Historically,
the Company often acquired properties through newly organized subsidiaries,
based on the credit of the properties being acquired or by borrowing or issuing
securities at the parent level.
THE TELEVISION BROADCASTING INDUSTRY
Television station revenues are primarily derived from local, regional
and national advertising and from compensation paid by television networks for
the local broadcast of network programming, with a small percentage of revenue
sometime obtained from studio rental and programming related activities. The
primary costs involved in owning and operating television stations are salaries,
programming, promotion, depreciation and amortization, and selling expenses.
The majority of national and local advertising contracts are
short-term, generally running for only a few weeks, while advertising contracts
sold by networks are typically for longer periods. National spot and local
advertising revenues are more susceptible to fluctuations in the economy than
network compensation. Advertising rates charged by a television station vary,
depending upon the population and number of television sets in the area served
by the station, a program's popularity among the viewers an advertiser wishes to
attract, the number of advertisers vying for available time, the prices being
charged by competitors and the availability of alternative media in the market
area. The number of television sets in an area and a program's popularity are
reflected in surveys made by a rating service of the number of sets tuned to the
station at various times. Advertising rates are highest during the most
desirable viewing hours. Local and most regional sales of advertising time are
made by a station's sales staff. National sales are made by a
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national "rep firm", specializing in television advertising sales on the
national level, which is compensated on a commission-only basis.
For most network programming that is broadcast by a network affiliate,
the network pays the affiliate compensation, which varies in amount depending
upon the time of day during which the program is broadcast. "Prime-time"
programming (7 P.M. to 11 P.M. E.S.T. Sundays and 8 P.M. to 11 P.M. E.S.T. other
days) generally earns the highest rates. In addition, a network often allocates
portions of advertising time during network broadcasts for direct sale by the
local station to advertisers.
While revenues are spread over the calendar year, the first quarter
generally reflects the lowest and the fourth quarter the highest revenue for the
year. The increase in retail advertising each fall in preparation for the
holiday season, combined with political advertising in election years and new
fall television programming, tend to increase fourth quarter revenues.
A significant portion of the programs broadcast by network-affiliated
television stations is provided by their networks. Programming costs are
generally lower for network affiliates than the independent television stations,
and network programs generally achieve higher ratings than non-network programs.
The Company's television stations have also acquired programs from non-network
sources. Programs obtained from non-network sources usually consists of
syndicated television shows, some of which have been shown previously on a
network, and feature films.
Competitive factors, in addition to management experience, include a
station's authorized transmitter power and antenna location, assigned frequency,
network affiliation, carriage of the station's signal on local cable television
systems, viewer acceptance of network and local programming and the strength of
local competition. Generally a television broadcasting station in one market
does not compete with stations in another market.
FEDERAL REGULATION OF BROADCASTING
Television and radio broadcasting (as well as some other potential
communications investments of the Company) are subject to the jurisdiction of
the FCC under the Communications Act of 1934, as amended ("Communications Act").
On February 8, 1996, President Clinton signed into law the Telecommunications
Act of 1996 (the "New Act"), which amends substantially the Communications Act.
The Communications Act, among other things, prohibits the assignment of a
broadcast license or the transfer of control of a corporation holding a license
without the prior approval of the FCC. Because many provisions of the New Act
require regulatory actions by the FCC that have not yet occurred, the Company
cannot predict the effect of any such new legislation or amendments on the
Company. The businesses in which the Company may engage in the future may be
subject to a greater or lesser degree of government regulation depending on the
nature of such businesses.
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EMPLOYEES
As of December 31, 1995, the Company employed approximately 220 full
time persons at its television stations. The stations have not experienced any
significant labor problems under the Company's ownership and the Company
considers its labor relations on the whole to be good.
The Company relies on experienced managers for its broadcasting
operations, who are given considerable authority at the local level. Where
appropriate, the Company has also hired new management in an effort to improve
the operations of a particular property.
ITEM 2. PROPERTIES.
The Company and its subsidiaries own studio and production facilities
and own or lease space for other offices, antenna sites and certain equipment
for their station. (See Note 16 of the Notes to Consolidated Financial
Statements for information on minimum lease payments of the Company and its
subsidiaries for the next five years.)
ITEM 3. LEGAL PROCEEDINGS.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
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PART II
ITEM 5. MARKET FOR COMPANY'S COMMON STOCK AND
RELATED STOCKHOLDER MATTERS.
a) Market for Common Stock
The Company's Common Stock is listed for trading on the American Stock
Exchange ("AMEX") under the ticker symbol "PR". The range of high and low last
sale prices for the Company's Common Stock on the AMEX as adjusted to reflect
its April, 1995 5 for 4 stock split, and rounded to the nearest eighth for each
of the four quarters of 1995 and 1994, as reported by the AMEX was:
<TABLE>
<CAPTION>
1995 1994
---------------------------- ---------------------------
Quarter High Low High Low
------- ---- --- ---- ---
<S> <C> <C> <C> <C>
First 6-1/4 4-7/8 3-3/4 2-7/8
Second 7-11/16 5-5/16 3-1/2 2-3/4
Third 9 6-7/8 4-3/4 3-1/4
Fourth 8-3/4 7-1/2 5-3/4 3-3/4
</TABLE>
The high and low last sale prices for the Company's Common Stock on the AMEX for
March 1, 1996 as reported by the AMEX were $7 and $7, respectively. The
Company's Common Stock has been afforded unlisted trading privileges on the
Pacific Stock Exchange under the ticker symbol "PR.P", on the Chicago Stock
Exchange under the ticker symbol "PR.M" and on the Boston Stock Exchange under
the ticker symbol "PR.B".
b) Holders
On March 1, 1996, there were approximately 430 holders of record of the
Company's Common Stock. The Company estimates that brokerage firms hold Common
Stock in street name for approximately 3,000 persons.
c) Dividends
The Company, to date, has paid no cash dividends on its Common Stock.
The Board of Directors will determine future dividend policy based on the
Company's earnings, financial condition, capital requirements and other
circumstances. It is not anticipated that dividends will be paid on its Common
Stock in the foreseeable future.
ITEM 6. SELECTED FINANCIAL DATA.
The following table sets forth certain selected consolidated financial
data with
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respect to the Company for each of the five years in the period ended December
31, 1995, derived from audited consolidated financial statements of the Company
and Notes thereto. On December 30, 1992, the Company's consensual Plan of
Reorganization which had been approved by the United States Bankruptcy Court in
the Southern District of New York in July of that year, became effective. A
vertical black line has been placed to separate pre-organization consolidated
operating statement and balance sheet items from the post-reorganization
consolidated operating statement and balance sheet items since they are not
prepared on a comparable basis.
CONSOLIDATED OPERATING STATEMENT ITEMS
(in thousands)
<TABLE>
<CAPTION>
Year Ended December 31 (2)
--------------------------------------------------------------------
Reorganized Company Predecessor Company
--------------------------------------------------------------------
1995 1994 (1) 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Revenue $ 29,155 $ 24,039 $ 22,790 $ 53,957 $ 48,452
Operating Expenses 16,685 14,962 16,335 39,567 37,182
Corporate Expenses 2,687 4,475 3,649 4,973 6,123
Other (Income) Expense - Net (7,280) (16,245) 539 (35) 12,925
Interest Expense 2,099 813 1,485 17,768 41,473
Amortization of Debt Discount and
Deferred Debt Expense 460 646 766 1,004 2,039
Depreciation and Amortization 3,459 3,312 2,343 4,873 5,132
Unrealized Noncash (Recovery)
Loss on Marketable Securities (3) 166 -- 146 (146) (8,476)
Share of Loss of Partially
Owned Companies -- -- 1,118 2,934 9,005
--------- --------- --------- --------- ---------
Income (Loss) Before Reorganization
Items, Income Taxes, and Extraordinary Items 10,879 16,076 (3,591) (16,981) (56,951)
Reorganization Items -- -- -- (5,983) --
--------- --------- --------- --------- ---------
Income (Loss) Before Income Taxes and
Extraordinary Items 10,879 16,076 (3,591) (22,964) (56,951)
Income Tax (Expense) Benefits (247) (1,652) (124) (499) 327
--------- --------- --------- --------- ---------
Income (Loss) Before Extraordinary Items 11,126 14,424 (3,715) (23,463) (56,624)
Extraordinary Items (Net of Income Taxes):
Gain on Early Extinguishments of Debt -- -- 2,010 -- --
Gain on Forgiveness of Debt and Partial
Sale of Subsidiary -- -- -- 312,678 --
--------- --------- --------- --------- ---------
Net Income (Loss) $ 11,126 $ 14,424 ($ 1,705) $ 289,215 ($ 56,624)
========= ========= ========= ========= =========
Per Share Amounts (4):
Income (Loss) Before Extraordinary Items $ 1.06 $ 1.15 ($ 0.25)
Extraordinary Items -- -- 0.14
--------- --------- ---------
Net Income (Loss) $ 1.06 $ 1.15 (0.11)
========= ========= =========
</TABLE>
(1) Reflects results of operations of WHTM-TV since its acquisition during
September 1994 and the results of the properties disposed of through
their respective dates of sale. See notes to 3 and 4 to Consolidated
Financial Statements.
(2) Due to the acquisition and dispositions discussed under
"Business-Recent Developments," the borrowings incurred to effect such
acquisition, the retirement of the Company's Secured Notes, the
consummation of the Plan of Reorganization and the adoption of Fresh
Start Reporting, the Company's historical results should not be
regarded as indicative of its future results.
(3) See Note 2 of Notes to Consolidated Financial Statements.
(4) Per share amounts for the Predecessor Company are neither comparable
nor meaningful due to the forgiveness of debt, partial sale of
subsidiary, issuance of new common stock and adoption of Fresh Start
Reporting. All per share amounts prior to 1995 have been restated to
reflect the April, 1995 5 for 4 stock split. See Note 14 to
Consolidated Financial Statements.
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CONSOLIDATED BALANCE SHEET ITEMS
(in thousands, including notes)
<TABLE>
<CAPTION>
As of December 31
---------------------------------------------------------------
Predecessor
Reorganized Company Company
------------------------------------------------ -----------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Total Current Assets $ 10,047 $ 9,093 $ 8,925 $ 28,494 $ 18,464
Total Assets 95,985 90,852 37,272 74,327 92,347
Total Current Liabilities (1) (2) 36,309 9,076 3,292 11,373 338,274
Long-Term Debt (3) -- 21,310 3,200 22,100 41,198
Shareholders' Equity (Deficit) 40,876 39,079 30,705 40,646 (287,823)
</TABLE>
(1) Net of unamortized original issue discount of $5,124 as of December 31,
1991.
(2) Includes $28,000 of a note payable to Bank of Montreal which was repaid
upon the sale of three television stations on February 2, 1996. See
"Business - Recent Developments."
(3) Net of unamortized original issue discount of $8,705 as of December 31,
1992.
ITEM 7. Management's Discussion and Analysis of
Financial Condition and Result of Operations
The Company reorganized and emerged from bankruptcy proceedings on
December 30, 1992 and adopted Fresh Start Reporting in accordance with the
guidelines established by the American Institute of Certified Public Accountants
in Statement of Position 90-7 :Financial Reporting by Entities in Reorganization
Under the Bankruptcy Code". Under Fresh Start Reporting, assets and liabilities
were recorded at their estimated fair market value and the historical deficit
was eliminated. Accordingly, the Company's consolidated financial statements
have been prepared as if it is a new reporting entity and a vertical black line
has been placed to separate the pre-organization consolidated statements of
operations and cash flows from the post-reorganization consolidated statements
of operations and cash flows since they are not prepared on a comparable basis.
Due to the acquisition and dispositions discussed under "Business -
General" and "Recent Developments," the borrowings incurred to effect the
acquisition, the retirement of the Company's Secured Notes, the consummation of
the Plan of Reorganization and the adoption of Fresh Start Reporting, the
Company's historical results of operations should not be regarded as indicative
of its future results. The following discussion should be read in conjunction
with the Consolidated Financial Statements and the Notes thereto.
RESULTS OF OPERATIONS - GENERAL
The compatibility of results for future periods will be affected by the
acquisition and dispositions during 1994, and thereafter (see Notes 3 and 4 of
Notes to Consolidated Financial Statements) and by the nature and timing of any
future acquisitions or dispositions. The Company currently has disposed of all
of its operating properties. Consequently, the Company will have no operating
revenues following such dispositions, and the Company's future revenues will be
derived from the investment of its funds and
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from operating businesses which may be acquired by the Company. Future
acquisitions could substantially increase the Company's operating expenses,
depreciation and amortization charges and, if additional financing is required,
interest expense, as well as increasing revenues. For these reasons, the results
of the Company's historical operations may not be comparable from period to
period or indicative of results in the future.
1995 COMPARED TO 1994
The Company's net revenue, operating expenses, depreciation and
amortization, and interest expense for the year ended December 31, 1995 are not
comparable to the year ended December 31, 1994 due to the acquisition of WHTM-TV
and the borrowings under the Amended Line of Credit to effect such acquisition,
and the dispositions of the Company's radio properties and other assets (see
Notes 3 and 4 of Notes to Consolidated Financial Statements). During 1995, net
revenue increased by approximately 21% to $29.2 million from $24.0 million. This
increase was primarily due to the acquisition of WHTM-TV the results of which
were included in the Company's results for a full year as opposed to only three
months in 1994. Operating expenses of the Company increased overall to $16.7
million in 1995 from $15.0 million in 1994 due to the acquisition of WHTM-TV
which was owned for the full year. Depreciation and amortization expense rose to
$3.5 million in 1995 from $3.3 million in 1994 primarily as a result of the
amortization of intangibles associated with the acquisition of WHTM-TV, offset
by a reduction in the expense due to properties sold in 1994.
The Company recognized net income of approximately $11.1 million in
1995, as compared to $14.4 million in 1994 primarily as a result of the recovery
on the Fairmont Notes of approximately $7.9 million in 1995. Net income in 1994
was $14.4 million primarily due to the net gains on the sale of its radio
properties of $17.2 million. Additionally, interest expense was $2.1 million in
1995 as opposed to $.8 million in 1994 as a result of the acquisition of WHTM-TV
in September 1994 and the related borrowings under the Amended Line of Credit.
The Company had net income per share of $1.06 in 1995, as opposed to
$1.15 in 1994.
1994 COMPARED TO 1993
The Company's net revenue, operating expenses, depreciation and
amortization, and interest expense for the year ended December 31, 1994 are not
comparable to the year ended December 31, 1993 due to the acquisition of WHTM-TV
and the borrowings under the Amended Line of Credit to effect such acquisition,
and the dispositions of the Company's radio properties and other assets (see
Notes 3 and 4 of Notes to Consolidated Financial Statements). During 1994, net
revenue increased by approximately 5% to $24.0million from $22.8 million in
1993. This increase was due to the acquisition of WHTM-TV during September 1994
which resulted in an increase in television segment revenues of approximately
42.7% to $16.8 million from $11.7 million during 1993. This increase was
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partially offset by a decline in net revenue from radio and other segments to
$7.3 million from $11.0 million. Television revenues during 1994 were impacted
by a large influx of political advertising revenues which contributed to
increases in the Company's revenues. Operating expenses of the Company decreased
overall to $15.0 million in 1994 from $16.3 million in 1993 due to the
dispositions and despite the acquisition largely as a result of the higher
operating margins in television broadcasting as compared to radio broadcasting.
Depreciation and amortization expense rose to $3.3 million in 1994 from $2.3
million in 1993 primarily as a result of the write off of the portion of the
reorganization value remaining on the Company's balance sheet after adjustment
for dispositions (see Note 4 of Notes to Consolidated Financial Statements) and
amortization of intangibles associated with the acquisition of WHTM-TV.
The Company had net income of approximately $14.4 million in 1994,
primarily as a result of the net gains on the sales of properties during the
year of approximately $17.2 million. Additionally, the Company did not have a
share of loss of partially owned companies since it disposed of its interest in
PriCellular Corporation during the fourth quarter of 1993 and interest expense
decreased by approximately $670,000 due to the retirement of the Secured Notes
at the end of 1993. For a substantial portion of 1994, the Company had little or
no long-term debt outstanding until the acquisition of WHTM-TV during September
of 1994.
These improvements were offset, in part, by the increase in
depreciation and amortization noted above, and by an increase in corporate
expenses of approximately $800,000 and an increase in income taxes of $1.5
million. The increase in corporate expenses was primarily attributable to
increased legal, consulting and fees of investment advisors due to the
acquisition of WHTM-TV and the exploration by the Company of various business
opportunities, as well as to the write off of deferred compensation attributable
to an employment agreement related to the Plan of Reorganization which was
renegotiated. The increase in income taxes was attributable mainly to the state
tax consequences of gains the Company recognized on the sale of properties.
The Company had net income per share of $1.15 in 1994, as opposed to a
net loss per share of $.11 in 1993. During 1993, net loss includes an
extraordinary gain of $.14 per share due to the early extinguishment of debt. No
such extraordinary item existed during 1994.
LIQUIDITY AND CAPITAL RESOURCES
The Company had approximately $1.2 million in cash and cash equivalents
and negative net working capital at December 31, 1995 due to the classification
of $28 million of long-term debt as current. Such debt was repaid by the Company
during February 1996 upon the sale of three of its television stations. See Note
4.
If the Company's acquisition strategy (see "Business - Acquisition
Strategy") is successful the Company may require substantial capital to finance
it. After giving effect to
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the sale of its remaining television property, the Company has significant
liquid assets on hand (estimated at $100 million) for acquisition purposes.
Additionally, the Company may use a variety of sources including the proceeds of
debt sold to the public, additional borrowings from banks and other
institutional leaders, 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.
Although the Company has incurred substantial depreciation and
amortization expenses as a result of the purchase of its properties, it does not
anticipate the need to make major capital expenditures in respect of its
existing media properties (see "Properties") during 1996 prior to the sale of
its stations. Capital expenditures for 1995 were approximately $1.5 million.
The Company's sources of funds to serve its debt and meet its other
obligations 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.
On February 10, 1994, the Company's Board of Directors authorized the
repurchase by the Company of up to 2,000,000 shares of its Common Stock. The
Company is authorized to make such purchases from time to time in the market or
in privately negotiated transactions. During the year ended December 31, 1995,
the Company repurchased approximately 1.7 million shares pursuant to that
authorization.
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ITEM 8. Financial Statements and Supplementary Data
Price Communications Corporation and Subsidiaries Consolidated
Financial Statements are set forth on the following pages of this Part II.
INDEX TO FINANCIAL STATEMENTS
--------------
PRICE COMMUNICATIONS CORPORATION SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
Auditors' Reports II-9-1
Consolidated Balance Sheets at December 31,
1995 and 1994 II-9-4
Consolidated Statements of Operations for
Years ended December 31, 1995, 1994
and 1993 II-9-5
Consolidated Statements of Cash Flows for
Years ended December 31, 1995, 1994
and 1993 II-9-6
Consolidated Statements of Shareholders'
Equity for Years ended
December 31, 1995, 1994 and 1993 II-9-7
Notes to Consolidated Financial Statements II-9-8
ITEM 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure
Not applicable.
II-7
<PAGE> 15
[ARTHUR ANDERSEN LLP LETTERHEAD]
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders of
Price Communications Corporation:
We have audited the accompanying consolidated balance sheet of Price
Communications Corporation and subsidiaries (a New York corporation) as of
December 31, 1995, and the related consolidated statements of operations,
shareholders' equity and cash flows for the year then ended. These consolidated
financial statements and the schedules referred to below are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these consolidated financial statements and schedules based on our audit.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Price Communications
Corporation and subsidiaries as of December 31, 1995, and the results of its
operations and its cash flows for the year then ended in conformity with
generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. Schedules I and II are presented for purposes of
additional analysis and are not a required part of the basic consolidated
financial statements. This information has been subjected to the auditing
procedures applied in our audit of the basic consolidated financial statements
and, in our opinion, is fairly stated in all material respects in relation to
the basic consolidated financial statements taken as a whole.
/s/ Arthur Andersen LLP
New York, New York
February 16, 1996
II-9-1
<PAGE> 16
KPMG Peat Marwick LLP
345 Park Avenue
New York, NY 10154
Independent Auditors' Report
The Board of Directors and Shareholders
Price Communications Corporation:
We have audited the accompanying consolidated balance sheet of Price
Communications Corporation and subsidiaries as of December 31, 1994, and the
related consolidated statements of operations, cash flows, and shareholders'
equity for the year then ended. In connection with our audits of the
consolidated financial statements, we have also audited the related financial
statement schedules as listed in Part IV., Item 14(a). These consolidated
financial statements and financial statement schedules are the responsibility of
the Company's management. Our responsibility is to express our opinion on these
consolidated financial statements and financial statement schedules based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Price Communications
Corporation and subsidiaries as of December 31, 1994, and the results of their
operations and their cash flows for the year ended December 31, 1994 in
conformity with generally accepted accounting principles. Also in our opinion,
the relaxed financial statement schedules, when considered in relation to the
basic consolidated financial statements taken as a whole present fairly, in all
material respects, the information set forth therein.
KPMG Peat Marwick LLP
New York, New York
January 20, 1995
II-9-2
<PAGE> 17
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders
Price Communications Corporation
We have audited the accompanying consolidated statements of operations,
shareholders' equity and cash flows of Price Communications Corporation and
Subsidiaries (the "Company") for the year ended December 31, 1993. Our audit
also included the financial statement schedules listed at item 14(a) for the
year ended December 31, 1993. These consolidated financial statements and
schedules are the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements and schedules based on
our audit.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated results of operations and cash flows of
Price Communications Corporation and Subsidiaries for the year ended December
31, 1993 in conformity with generally accepted accounting principles. Also, in
our opinion, the related financial statement schedules, when considered in
relation to the basic financial statements taken as a whole, present fairly in
all material respects the information set forth therein.
Ernst & Young LLP
New York, New York
March 8, 1994
II-9-3
<PAGE> 18
PRICE COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
ASSETS 1995 1994
------ ----------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 1,206,557 $ 1,136,010
Short-Term investments 237,975 -
Accounts receivable, net of allowance for doubtful
accounts of $294,554 in 1995 and $395,012 in 1994 6,096,446 5,073,450
Film broadcast rights 1,764,468 1,990,874
Prepaid expenses and other current assets 741,307 892,303
----------- -----------
Total current assets 10,046,753 9,092,637
----------- -----------
PROPERTY AND EQUIPMENT, AT COST LESS ACCUMULATED
DEPRECIATION (Note 7) 11,308,808 11,499,936
BROADCAST LICENSES AND OTHER INTANGIBLES, less accumulated
amortization of $2,559,354 in 1995 and $760,666 in
1994 (Note 2) 65,434,705 67,528,870
FILM BROADCAST RIGHTS 231,225 1,867,096
LONG-TERM INVESTMENT (Note 6) 8,350,000 -
NOTES RECEIVABLE (Note 5) 540,000 817,500
OTHER ASSETS 73,907 46,091
----------- -----------
Total assets $95,985,398 $90,852,130
=========== ===========
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY 1995 1994
------------------------------------ ----------- -----------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable and accrued expenses (Note 8) $ 3,197,471 $ 3,602,734
Accrued interest 510,119 -
Current portion of long-term debt (Note 10) 28,000,000 1,200,000
Other current liabilities (Note 9) 4,601,409 4,273,819
----------- -----------
Total current liabilities 36,308,999 9,076,553
----------- -----------
LONG TERM DEBT (Note 10) - 21,300,000
DEFERRED TAX EFFECT OF BASIS DIFFERENCE ARISING ON
ACQUISITION (Note 11) 17,971,028 18,435,308
OTHER LIABILITIES (Note 9) 829,689 2,960,941
COMMITMENTS AND CONTINGENCIES (Note 16)
SHAREHOLDERS' EQUITY (Notes 14 and 15):
Preferred Stock, par value $.01 per share;
authorized 20,000,000, no shares outstanding - -
Common Stock, par value $.01 per share; authorized
40,000,000 shares; outstanding 9,579,842 shares
in 1995 and 11,213,610 shares in 1994 95,798 112,136
Additional paid-in capital 16,935,009 26,248,234
Retained earnings 23,844,875 12,718,958
----------- -----------
Total shareholders' equity 40,875,682 39,079,328
----------- -----------
Total liabilities and shareholders' equity $95,985,398 $90,852,130
=========== ===========
</TABLE>
The accompanying notes are an integral part of these balance sheets.
II-9-4
<PAGE> 19
PRICE COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Revenue $34,377,543 $28,053,341 $26,010,294
Agency and representatives' commissions 5,222,273 4,014,209 3,220,102
----------- ----------- -----------
Net revenue 29,155,270 24,039,132 22,790,192
----------- ----------- -----------
Operating expenses 16,684,608 14,961,399 16,334,761
Corporate expenses 2,687,064 4,474,787 3,648,524
Other (income) expense, net (Notes 5 and 12) (7,280,215) (16,244,568) 539,289
Interest expense 2,099,365 813,493 1,485,389
Amortization of debt discount and deferred debt expense 460,000 645,835 766,075
Depreciation and amortization 3,459,320 3,312,049 2,343,015
Unrealized noncash loss on marketable securities - - 145,884
Realized loss on marketable securities 166,211 - -
Share of loss of partially owned companies (Note 6) - - 1,118,293
----------- ----------- -----------
Income (loss) before income taxes 10,878,917 16,076,137 (3,591,038)
Income tax benefit (expense) (Note 11) 247,000 (1,652,588) (123,885)
----------- ----------- -----------
Income (loss) before extraordinary item 11,125,917 14,423,549 (3,714,923)
Extraordinary item, net of income taxes of $0 in 1993 (Note 10) - - 2,010,332
----------- ----------- -----------
Net income (loss) $11,125,917 $14,423,549 $(1,704,591)
=========== =========== ===========
Income (loss) per share (Note 2):
Income (loss) before extraordinary item $ 1.06 $ 1.15 $ (.25)
Extraordinary item - - .14
---------- ---------- -----------
Net income (loss) $ 1.06 $ 1.15 $ (.11)
========== ========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
II-9-5
<PAGE> 20
PRICE COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Net income (loss) $11,125,917 $14,423,549 $(1,704,591)
----------- ----------- -----------
Adjustments to reconcile net income (loss) to net cash provided by (used in)
operating activities:
Items not affecting cash-
Amortization of debt discount and deferred debt expense 100,000 645,835 766,075
Depreciation and amortization 3,459,320 3,312,049 2,343,015
Share of loss of partially owned companies - - 1,118,293
Loss on disposition of equipment - 47,529 425
Unrealized noncash loss on marketable securities - - 145,884
Change in assets and liabilities, net of effects of reorganization-
(Increase) decrease in net accounts receivable (1,022,996) 307,979 (354,058)
Decrease (increase) in prepaid expenses and other assets 83,180 1,581,117 (297,915)
Decrease in film broadcast rights 1,862,277 536,910 209,948
Decrease in goodwill 295,477 - -
Increase (decrease) in accounts payable and accrued expenses (405,263) 1,563,455 (1,859,013)
Increase (decrease) in accrued interest payable, net of forgiveness 510,119 (1,023,932) (343,602)
(Decrease) increase in other liabilities (2,267,942) 1,013,375 (1,080,826)
Reclassification of transactions to investing and financing activities-
Gain on sale of properties, net - (17,219,231) -
Loss on purchase of common stock 1,185,662 - 3,976,597
Gain on early extinguishment of debt - - (2,010,332)
Loss (gain) on sale of securities 166,211 - (6,609)
(Recovery) reserve on notes receivable, net (7,884,884) 737,500 (2,730,432)
----------- ----------- -----------
Total adjustments (3,918,839) (8,497,414) (122,550)
----------- ----------- -----------
Net cash provided by (used in) operating activities 7,207,078 5,926,135 (1,827,141)
----------- ----------- -----------
CASH FLOWS (USED IN) PROVIDED BY INVESTING ACTIVITIES:
Sale of businesses and equipment, net of cash retained - 32,451,283 11,000,214
Investment in businesses, net of cash acquired - (50,270,793) (454,337)
Purchases of securities under agreements to resell - - (8,050,811)
Capital expenditures (1,469,505) (751,965) (577,918)
Purchase of marketable securities and PriCellular's warrants (10,567,300) - (36,704,873)
Proceeds from sale of marketable securities 1,813,115 - 54,394,512
Proceeds from (disbursements of) notes receivable, net 8,202,384 (390,000) 5,630,432
----------- ----------- -----------
Net cash (used in) provided by investing activities (2,021,306) (18,961,475) 25,237,219
----------- ----------- -----------
CASH FLOWS (USED IN) PROVIDED BY FINANCING ACTIVITIES:
Short-term borrowings 1,000,000 - -
Payment of short-term borrowings (1,000,000) - -
Repurchases and payments of long-term debt - - (20,846,643)
Repayment of repurchase agreements - - (4,930,083)
Payment of line of credit origination fee (100,000) (475,000) -
Borrowings under line of credit agreements 6,360,000 45,000,000 3,020,065
Repayments under line of credit agreements (860,000) (25,700,000) -
Repurchase of Company common stock (10,659,200) (6,271,064) (8,434,058)
Proceeds from stock options exercised 143,975 222,312 56,216
----------- ----------- -----------
Net cash (used in) provided by financing (5,115,225) 12,776,248 (31,134,503)
----------- ----------- -----------
Net increase (decrease) in cash and cash equivalents 70,547 (259,092) (7,724,425)
CASH AND CASH EQUIVALENTS, beginning of year 1,136,010 1,395,102 9,119,527
----------- ----------- -----------
CASH AND CASH EQUIVALENTS, end of year $ 1,206,557 $ 1,136,010 $ 1,395,102
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
II-9-6
<PAGE> 21
PRICE COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
Common Stock
------------------------- Additional
Number Paid-in Retained
of Shares Value Capital Earnings Total
---------- -------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
BALANCE, December 31, 1992 15,136,978 $151,370 $40,495,041 $ - $40,646,411
Net loss - - - (1,704,591) (1,704,591)
Fractional shares issued on conversion of Company
common stock 2,710 27 (27) - -
Purchase and retirement of common stock (2,811,361) (28,114) (8,265,391) - (8,293,505)
Stock Options Exercised 26,319 263 55,953 - 56,216
----------- ----------- ----------- ---------- -----------
BALANCE, December 31, 1993 12,354,646 123,546 32,285,576 (1,704,591) 30,704,531
Net income - - - 14,423,549 14,423,549
Purchase and retirement of common stock (1,245,115) (12,451) (6,258,613) - (6,271,064)
Stock options exercised 104,079 1,041 221,271 - 222,312
----------- ----------- ----------- ----------- -----------
BALANCE, December 31, 1994 11,213,610 112,136 26,248,234 12,718,958 39,079,328
Net income - - - 11,125,917 11,125,917
Purchase and retirement of common stock (1,691,028) (16,910) (9,456,628) - (9,473,538)
Stock options exercised 57,260 572 143,403 - 143,975
----------- ----------- ----------- ----------- -----------
BALANCE, December 31, 1995 9,579,842 $ 95,798 $16,935,009 $23,844,875 $40,875,682
=========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
II-9-7
<PAGE> 22
PRICE COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
1. OPERATIONS
Price Communications Corporation ("Price" or the "Company") is a nationwide
communications company whose current primary business is owning and operating
television stations through wholly-owned indirect subsidiaries. The Company's
television properties currently consist of one ABC affiliated television
station, WHTM-TV, serving Harrisburg/Lancaster/Lebanon/York, Pennsylvania; and
three NBC affiliated television stations, KSNF-TV, serving Joplin,
Missouri/Pittsburg, Kansas; KJAC-TV, serving Beaumont/Port Arthur, Texas; and
KFDX-TV, serving Wichita Falls, Texas/Lawton Oklahoma. In 1996, the Company sold
all of its operating assets in two separate transactions. Reference is made to
Note 17, "subsequent events," for a discussion of these transactions.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The consolidated financial statements include the accounts of Price and its
subsidiaries. All significant intercompany balances and transactions have been
eliminated in the consolidated financial statements. All presentations of shares
outstanding and amounts for years prior to 1995 have been restated to reflect a
five-for-four common stock split in April, 1995 (Note 14).
Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reported period. Actual
results could differ from these estimates.
Cash and Cash Equivalents
The Company considers all highly liquid debt instruments, including Treasury
bills, purchased with maturities of three months or less at the time of purchase
to be cash equivalents.
II-9-8
<PAGE> 23
Short-Term Investments
The Company adopted Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities" ("SFAS No.
115") effective January 1, 1994. At December 31, 1995, the Company's short-term
investments were in marketable equity securities, which are classified as
trading securities under the provisions of SFAS No. 115. Accordingly, net
unrealized holding gains and losses for trading securities were included in net
earnings for 1995.
Short-Term investments at December 31, 1995, are carried at fair value, which is
based on quoted market prices for these investments. The adoption of SFAS No.
115 did not have a material impact on the Company's results of operations or
financial condition.
Property and Equipment
Property and equipment are recorded at cost. Depreciation and amortization are
computed using the straight-line method over estimated useful lives, as follows:
Buildings- 15 to 25 years
Broadcasting equipment- 10 to 12 years
Leasehold improvements- the life of the underlying lease
Furniture and fixtures- 3 to 10 years
Transportation equipment- 3 years
Broadcast Licenses and Other Intangibles
Excess of purchase price over the fair value of net assets acquired includes FCC
licenses, station call letters, and goodwill. These assets are integral
determinants of a communications property's economic value and have long and
productive lives. The Company amortizes such assets over a 40-year life
commencing from the original date of acquisition.
Deferred expenses associated with debt instruments were amortized under the
straight-line method over their respective life of such debt instruments. Debt
discounts were amortized using the effective interest method.
In 1992, the Company reorganized and emerged from Chapter 11 bankruptcy
proceedings and adopted Fresh Start Reporting in accordance with the guidelines
established by the American Institute of Certified Public Accountants in
Statement of Position 90-7, "Financial Reporting by Entities in Reorganization
Under Bankruptcy Code." The reorganization value in excess of amounts allocable
to identifiable assets, which resulted from the implementation of Fresh Start
Reporting was amortized using the straight-line method over 20 years. During the
year ended December 31, 1994, the portion of this asset remaining after
adjustment for dispositions (approximately $670,000) was written off.
II-9-9
<PAGE> 24
Film Broadcast Rights
The cost of film broadcast rights is stated at the lower of cost or estimated
net realizable value. The total cost of the rights is recorded as an asset and a
liability when the program becomes available for broadcast. The cost of film
broadcast rights is charged to operations on the basis of the estimated number
of showings or, if unlimited showings are permitted, over the term of the
broadcast license agreements. The current portion of film broadcast rights
represent those rights that will be amortized in the succeeding year.
Amortization of film broadcast rights included in operating expenses amounted to
approximately $1,831,000, $1,077,000 and $800,000 for the years ended December
31, 1995, 1994, and 1993, respectively.
Revenue Recognition
Advertising revenue is recognized as income when the advertisements are
broadcast.
Revenue from barter transactions (advertising provided in exchange for goods and
services) is recognized as income when advertisements are broadcast, and
merchandise or services received are charged to expense when received or used.
Credit Risk
The Company provides an allowance for doubtful accounts based on reviews of its
customers' accounts. Included in operating expense is bad debt expense of
approximately $84,000, $319,000, and $264,000 for the years ended December 31,
1995, 1994, and 1993, respectively.
Per Share Data
Income (loss) per share is based on net income (loss) for the period divided by
the weighted average number of shares of common stock and common stock
equivalents outstanding, which were approximately 10.4 million shares, 12.4 and
14.9 million shares for 1995, 1994, and 1993, respectively.
Income Taxes
The Company accounts for income taxes in accordance with the provisions of
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" ("SFAS No. 109"). Under the asset and liability method of SFAS 109,
deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled.
Reclassifications
Certain reclassifications have been made to prior year amounts to conform with
current year presentation.
II-9-10
<PAGE> 25
3. ACQUISITION OF WHTM-TV
On September 16, 1994, the Company acquired all of the outstanding shares of the
corporation which owns all of the assets of WHTM-TV, the ABC affiliate serving
the Harrisburg-York-Lancaster-Lebanon, Pennsylvania television market for
approximately $47 million plus a working capital adjustment of approximately $4
million. The acquisition has been accounted for under the purchase method, and
accordingly, the operating results of WHTM-TV have been included in the
consolidated operating results since the date of acquisition. Funds for the
acquisition were provided by cash on hand and a credit facility from the Bank of
Montreal ("BMO") of $45 million (Note 10), which was reduced to $22.5 million
upon the sale of the Company's radio properties in West Palm Beach during
October of 1994 (Note 4). The acquisition resulted in intangible assets,
primarily broadcast licenses of approximately $44.2 million and goodwill of
approximately $18.6 million, both of which are being amortized over a forty year
period.
4. DISPOSITIONS
In February 1994, the Company sold its outdoor advertising business for a total
of $875,000 in cash and notes receivable (Note 5). This disposition resulted in
a pretax loss of $350,000.
In April 1994, the Company sold substantially all of the assets of its radio
properties, WWKB-AM and WKSE-FM in Buffalo, New York, for $5 million in cash.
The Company realized a pretax gain of approximately $3.2 million on this
transaction.
In May 1994, the Company sold all of the stock of Eimar Realty Corporation, its
then wholly owned subsidiary, owning a building in Nashville, Tennessee, to TLM
Corporation, a former subsidiary of the Company. The purchase price was $815,000
including a note from the purchaser of $540,000 (Note 5). The Company's pretax
gain on the transaction was deminimis.
In October 1994, the Company sold substantially all of the assets, together with
certain liabilities of radio stations WBZT-AM and WIRK-FM, West Palm Beach,
Florida, for approximately $23 million in cash. The Company realized a pretax
gain of approximately $13.5 million on this transaction. The net proceeds were
used to retire $22.5 million under the BMO credit facility (Note 10).
In October 1994, the Company sold its building in Red Bank, New Jersey for $1.7
million in cash. The Company realized a deminimis gain on the sale.
In November 1994, the Company sold substantially all of the assets of radio
stations WOWO-AM and WOWO-FM in Fort Wayne and Huntington, Indiana,
respectively, for $2.3 million in cash. The Company recognized a pretax gain on
the sale of approximately $.8 million.
The gains and losses on the dispositions outlined above have been included in
other (income) expense, net on the Company's statement of operations for the
year ended December 31, 1994.
II-9-11
<PAGE> 26
5. NOTES RECEIVABLE
Investments in notes receivable include the following:
In May 1995, the Company received a $655,000 payment on a note receivable
originating from the sale of its outdoor advertising business in 1994 from the
buyer, Midwest Media, Inc. During 1994, the Company set up a reserve of $337,500
against this note receivable. Since this note receivable has been collected in
full, the previously established reserve has been reversed and treated as income
included in other (income) expense, net on the Company's consolidated statement
of operations.
During May 1994, in connection with the sale of Eimar Realty Corporation, the
Company received a note from the buyer, TLM Corporation (a former subsidiary of
the Company (Note 4), in the amount of $540,000. The note bears interest at the
rate of 5% per annum, payable quarterly, with principal payable on May 20, 1998.
In connection with the sale in 1987 of seven radio stations to Fairmont
Communications Corporation ("Fairmont") for an aggregate sale price of $120
million, the Company loaned $50 million to Fairmont (the "Fairmont Notes") and
acquired a 27% equity interest in Fairmont. The Fairmont Notes were issued in
three series of 12 1/2% increasing rate subordinated notes due in 1992,
extendible at Fairmont's option to 1994. Interest on the notes was payable
quarterly in cash or additional notes at Fairmont's election.
During 1992, Fairmont filed for voluntary relief under Chapter 11 of the U.S.
Bankruptcy Code. At that time the Company ceased to record additional notes
related to interest paid in kind since it was not entitled to interest after
that date under the Bankruptcy Code.
The $94.8 million principal amount of Fairmont Notes owned by the Company (which
includes accrued interest paid in additional Fairmont Notes) and the Company's
equity investment in Fairmont had no book value as of December 31, 1995 and
1994.
During September 1993, the United States Bankruptcy Court for the Southern
District of New York confirmed the Chapter 11 Plan of Reorganization (the
"Fairmont Plan") for Fairmont and its subsidiaries. Essentially, the Fairmont
Plan provides for the orderly liquidation of the assets of Fairmont and its
subsidiaries, and the distribution of the proceeds derived therefrom according
to the relative priorities of the parties asserting interests therein. In 1995,
the Company received net cash payments totaling approximately $7.5 million from
the proceeds of the liquidation of Fairmont. This amount has been treated as
income and included in other (income) expense, net on the Company's consolidated
statement of operations.
6. INVESTMENT IN PARTIALLY OWNED COMPANIES
On October 1, 1993, the Company sold its 74% interest in PriCellular Corporation
("PriCellular"), an affiliate of the Company, to a subsidiary of PriCellular for
$11 million in cash. The proceeds from the sale were used to repurchase a
portion of the Secured Notes, in accordance with the terms of the indenture of
such notes. During 1993, the Company recognized a charge of
II-9-12
<PAGE> 27
approximately $890,000 related to its share of PriCellular's losses through
October 1, 1993, and realized no gain or loss from the sale of its interest in
PriCellular.
On December 21, 1995, the Company acquired warrants for $8,350,000 to purchase
1,220,550 shares of PriCellular's, Class B Common Stock. The exercise price is
$7.46, per share of Class B Common Stock, and escalates over the next four years
to $9.84.
7. PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
<TABLE>
<CAPTION>
December 31
----------------------------
1995 1994
----------- -----------
<S> <C> <C>
Land $ 685,000 $ 685,000
Buildings 2,403,409 2,403,409
Broadcasting equipment 10,783,560 9,487,151
Leasehold improvements 119,836 115,000
Furniture and fixtures 551,332 510,252
Transportation equipment 596,829 500,222
----------- -----------
15,139,966 13,701,034
Less- Accumulated depreciation and amortization (3,831,158) (2,201,098)
----------- -----------
Net property and equipment $11,308,808 $11,499,936
=========== ===========
</TABLE>
8. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consist of the following:
<TABLE>
<CAPTION>
December 31
----------------------------
1995 1994
----------- -----------
<S> <C> <C>
Accounts payable-suppliers $ 507,987 $ 1,594,571
Accrued professional fees 998,579 869,669
Other 1,690,905 1,138,494
----------- -----------
$ 3,197,471 $ 3,602,734
=========== ===========
</TABLE>
II-9-13
<PAGE> 28
9. OTHER LIABILITIES
Other liabilities consist of:
<TABLE>
<CAPTION>
December 31
------------------------------
1995 1994
---------- ----------
<S> <C> <C>
Liability for broadcast rights $2,722,343 $4,572,569
Income and franchise taxes payable 1,461,995 2,001,801
Other 1,246,760 660,390
---------- ----------
5,431,098 7,234,760
Less- Amounts due currently 4,601,409 4,273,819
---------- ----------
$ 829,689 $2,960,941
---------- ----------
</TABLE>
10. LONG-TERM DEBT
Long-term debt consists of the following notes payable by wholly-owned
subsidiaries of the Company at December 31, 1995 and 1994 as follows:
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Atlantic Broadcasting Corporation, Federal Broadcasting Corporation,
Southeast Texas Broadcasting Corporation and Tri-State
Broadcasting Corporation:
Note payable to BMO under term loan agreement (A) $28,000,000 $ -
Atlantic Broadcasting Corporation, Southeast Texas Broadcasting
Corporation, Texoma Broadcasting Corporation and Tri-State
Broadcasting Corporation:
Note payable to BMO under term loan agreement (B) - 22,500,000
----------- -----------
Total debt 28,000,000 22,500,000
Less- Amount due currently 28,000,000 1,200,000
----------- -----------
Total long-term debt $ - $21,300,000
=========== ===========
</TABLE>
(A) On December 12, 1995, the Company entered into an amended line of
credit agreement ("Credit Agreement") with The Bank of Montreal
("BMO"). The Credit Agreement created a line of credit for $28
million. Borrowings under the Credit Agreement are subject to base
interest at the BMO base rate, as defined, plus a maximum of .75% and
are secured by the assets of the subsidiaries. Additionally, there is
a commitment fee of .5% on the unused portion, if any, of the Credit
Agreement. On December 31, 1995, the effective interest rate was
8.5%. The terms of the Credit Agreement require the Company to
maintain certain financial ratios, restrict the declaration of
dividends and to apply the proceeds from future asset sales to the
outstanding balance due.
On February 2, 1996, the Company sold its three NBC affiliates and
used a portion of the proceeds to pay $28 million plus interest to
BMO to terminate the Credit Agreement.
II-9-14
<PAGE> 29
(B) On September 16, 1994, certain subsidiaries of the Company entered
into an Amended and Restated Line of Credit Agreement with BMO (the
"Amended Line of Credit"). The Amended Line of Credit was for $45
million, permanently reduced by $22.5 million upon the sale of the
Company's radio stations in West Palm Beach (Note 4) and reduced
further quarterly, in varying amounts through the year 2001 as
follows:
<TABLE>
<S> <C>
1995 $1.2 million
1996 2.4 million
1997 2.9 million
1998 3.4 million
1999 4.1 million
2000 4.8 million
2001 3.7 million
</TABLE>
Borrowings under the Amended Line of Credit bore interest at the BMO
Base Rate, as defined, plus up to a maximum of .75%, and were secured
by the assets of the subsidiaries, had a book value of approximately
$81.3 million as of December 31, 1994. There was also a fee of .5% on
the unused portion, if any, of the Amended Line of Credit. On
December 31, 1994 the effective interest rate was 9.25%. These
borrowings were repaid and this agreement was superceded by the
amended agreement as discussed in (A) above.
(C) In connection with the plan of reorganization, the Company issued
$30,805,000 face amount of 5% Senior Secured Notes. The Company
recorded these notes net of a discount of $8,705,000 under Fresh
Start Reporting (Note 2). During October and December 1993, the
Company repurchased all of the notes for approximately $20.8 million,
plus accrued interest, and realized a gain of approximately $2.0
million, net of taxes of zero.
11. INCOME TAXES
(Benefit) provision for income taxes is approximately:
<TABLE>
<CAPTION>
Year Ended December 31
---------------------------------------------
1995 1994 1993
--------- ---------- --------
<S> <C> <C> <C>
Current:
Federal $ - $ 300,000 $ -
State and local 447,000 1,489,000 124,000
--------- ---------- --------
447,000 1,789,000 124,000
--------- ---------- --------
Deferred:
Federal (560,000) (97,000) -
State and local (134,000) (39,000) -
--------- ---------- --------
(694,000) (136,000) -
--------- ---------- --------
Tax provision $(247,000) $1,653,000 $124,000
========= ========== ========
</TABLE>
II-9-15
<PAGE> 30
For the year ended December 31, 1995, the Company was unable to utilize the tax
benefit of capital and net operating losses, and accordingly, no amounts were
provided therefor. For the years ended December 31, 1995 and 1994, the provision
for income taxes differs from the amount computed by applying the federal income
tax rate (35%) because of the effect of the following items:
<TABLE>
<CAPTION>
Year Ended December 31
-------------------------------
1995 1994
----------- -----------
<S> <C> <C>
Tax at federal income tax rate $ 3,808,000 $ 5,627,000
State taxes, net of federal income tax benefit 291,000 942,000
Benefits of utilization of operating loss carryforwards (4,975,000) (5,120,000)
Amortization of goodwill and other intangibles 217,000 309,000
Other 412,000 (105,000)
----------- -----------
$ (247,000) $ 1,653,000
=========== ===========
</TABLE>
The Company had, as of December 31, 1995 and 1994, deferred tax assets which
were subject to a valuation allowance of approximately $31,925,000 and
$39,529,000, respectively. The allowance has been recognized to offset the
related tax asset due to the uncertainty of the realization of benefit of such
amount. These deferred tax assets and liabilities consist of the following:
<TABLE>
<CAPTION>
December 31
------------------------------
1995 1994
----------- -----------
<S> <C> <C>
Deferred tax assets:
Accounts receivable, principally due to allowance
for doubtful accounts $ 100,000 $ 134,000
Notes from and investment in partially owned companies - 15,251,000
Minimum tax credit carryforward 642,000 642,000
Capital loss carryforwards 10,681,000 14,350,000
Net operating loss carryforwards 22,406,000 11,520,000
Investment tax credit carryforwards 100,000 100,000
Note receivable, principally due to reserves 136,000 251,000
Other 230,000 -
----------- -----------
34,295,000 42,248,000
----------- -----------
Deferred tax liabilities:
Property and equipment, principally due to differences in
depreciation and the effect of Fresh Start Reporting
2,370,000 2,719,000
Intangible asset FCC license 17,971,000 18,435,000
----------- -----------
$20,341,000 $21,154,000
=========== ===========
</TABLE>
Net operating loss carryforwards aggregating approximately $65.9 million are
available for federal income tax purposes at December 31, 1995. These
carryforwards expire in the years 2002 through 2010. The Company also has
available investment tax credit carryforwards of approximately $100,000 expiring
in the year 2000 and capital loss carryforwards of approximately $31.4 million
expiring in the year 1998. A portion of these carryforwards arose prior to the
reorganization and are subject to the limitations of Internal Revenue Code
Sections 382 and 383.
II-9-16
<PAGE> 31
12. OTHER (INCOME) EXPENSE, NET
Other (income) expense, net, consists of:
<TABLE>
<CAPTION>
Year Ended December 31
-----------------------------------------------------
1995 1994 1993
------------ ------------ -----------
<S> <C> <C> <C>
Gains on sales of properties, net $ - $(17,219,231) $ -
Interest income - (201,896) (715,918)
Loss on disposition of equipment - 47,529 425
(Recovery) reserve for losses on notes
receivable, net (Note 5) (7,884,884) 737,500 (2,730,432)
Loss on purchase of common stock (Note 14)
1,185,662 - 3,976,597
Other, net (580,993) 391,530 8,617
------------ ------------ -----------
$ (7,280,215) $(16,244,568) $ 539,289
============ ============ ===========
</TABLE>
13. SEGMENT DATA
The Company's business operations were previously classified into two segments:
Television and Radio Broadcasting and Other. The Company sold its radio stations
and outdoor advertising business during 1994 and accordingly operated in only
one segment in 1995. The segment data for prior years follows:
<TABLE>
<CAPTION>
Year Ended December 31, 1994
------------------------------------------------------------------
Broadcasting
-----------------------------
Television Radio Other Consolidated
----------- ---------- --------- -----------
<S> <C> <C> <C> <C>
Net revenue $16,756,288 $7,233,424 $ 49,420 $24,039,132
Operating expenses 9,651,752 5,250,629 59,018 14,961,399
Depreciation and amortization 2,464,785 577,430 269,834 3,312,049
----------- ---------- --------- -----------
Operating income (loss)* $ 4,639,751 $1,405,365 $(279,432) $ 5,765,684
=========== ========== ========= ===========
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31, 1993
------------------------------------------------------------------
Broadcasting
-----------------------------
Television Radio Other Consolidated
----------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Net revenue $11,744,547 $10,271,892 $ 773,753 $22,790,192
Operating expenses 7,484,486 8,226,346 623,929 16,334,761
Depreciation and amortization 1,153,860 834,346 354,809 2,343,015
----------- ----------- --------- -----------
Operating income (loss)* $ 3,106,201 $ 1,211,200 $(204,985) $ 4,112,416
=========== =========== ========= ===========
</TABLE>
*Operating income (loss) is before corporate expenses, other (expense)
income-net, interest expense, amortization of debt discount and deferred debt
expense, unrealized non-cash loss (recovery) on marketable securities, share of
loss of partially owned companies, reorganization items, income taxes and
extraordinary items.
II-9-17
<PAGE> 32
<TABLE>
<CAPTION>
Identifiable Capital
Assets Expenditures
------ ------------
<S> <C> <C>
1994:
Television broadcasting $88,645,508 $694,159
Radio broadcasting 293,711 50,708
Other 867,500 -
Corporate 1,045,411 7,098
----------- --------
Consolidated $90,852,130 $751,965
=========== ========
1993:
Television broadcasting $16,208,021 $397,604
Radio broadcasting 13,988,511 200,600
Publishing and other 3,673,912 50,069
Corporate 3,401,056 3,885
----------- --------
Consolidated $37,271,500 $652,158
=========== ========
</TABLE>
14. SHAREHOLDERS' EQUITY
On November 24, 1993, the Company purchased from investment advisory clients of
W.R. Huff Asset Management Co., L.P. ("Huff") a block of 2,249,086 shares of its
common stock. The purchase price consisted of $3.75 per share in cash, plus the
stock of its indirect wholly-owned subsidiary, Price Publishing Corporation,
which held the remaining 25% interest in the New York Law Publishing Company.
The stock of Price Publishing Corporation had a book value of approximately
$3,836,000 at such date which in the opinion of management approximated its fair
value. In connection with this transaction, the Company recorded a loss of
approximately $3,977,000 reflecting the difference between the value of the cash
and stock of Price Publishing Corporation transferred to Huff and the then
current trading market price of the common stock. The loss has been included in
other (income) expense for 1993 in the accompanying statement of operations
(Note 12), and the common stock purchased from Huff has been treated as
constructively retired in the accompanying balance sheet at December 31, 1993.
In connection with the Plan, warrants on the Company's common stock, originally
issued on April 12, 1990, were amended. The warrants will be exercisable for
approximately 124,000 shares of the Reorganized Company's common stock at an
exercise price of $4.23 per share during the five-year period commencing October
1, 1993.
In October 1994, the Company's Board of Directors enacted a Stockholders' Rights
Plan (the "Plan") designed to protect the interests of the Company's
shareholders in the event of a potential takeover for a price which does not
reflect the Company's full value or which is conducted in a manner or on terms
not approved by the Board as being in the best interests of the Company and its
shareholders. The Board has declared a dividend distribution of One Common Stock
Purchase Right on each outstanding share of Common Stock of the Company. The
Rights provide, in substance, that should any person or group acquire 20% or
more of the Company's Common Stock, each Right, other than Rights held by the
acquiring person or group, would entitle its holder to purchase a specified
number of Price Communications Corporation common shares for 50% of their
then-current market value. In addition, the Rights may be exercised at the
holders option, at a purchase price of $22.50 per share at any time prior to the
termination of the Plan. Unless a 20% acquisition has occurred, the Rights may
be redeemed by the Company at any time prior to the termination date of the
Plan.
II-9-18
<PAGE> 33
On February 10, 1994, the Company's Board of Directors authorized the repurchase
by the Company of up to 2,500,000 shares of its Common Stock. The Company is
authorized to make such purchases from time to time in the market or in
privately negotiated transactions when it is legally permissible to do so or
believed to be in the best interests of its shareholders. During the year ended
December 31, 1994, the Company repurchased approximately 1,245,000 shares
pursuant to that authorization. Repurchased common stock of the Company has been
treated as constructively retired in the accompanying balance sheet as of
December 31, 1994.
On February 1, 1995, Price purchased 1,077,875 shares of its common stock from
S.A.C. Capital Management, L.P. for approximately $6.6 million. The Company paid
a premium over the daily quoted market price of approximately $1.2 million that
is recorded as other (income) expense on the Company's statement of operations.
In March 1995, at the Company's Annual Meeting, the shareholders authorized the
creation of 20 million shares of undesignated Preferred Stock for acquisitions
and other purposes. No preferred stock had been issued as of December 31, 1995.
On April 8, 1995, the Company's Board of Directors approved a five-for-four
stock split of the Company's Common Stock to shareholders of record as of the
close of business on March 27, 1995. The Company issued approximately 2 million
shares of Common Stock. The stated par value of each share was not changed from
$.01. All presentations of shares outstanding and amounts per share in years
prior to 1995 have been restated to reflect the 1995 stock split.
In March 1995, the Company's Board of Directors authorized the purchase of
Common Stock in the open market or in privately negotiated transactions when it
is legally permissible to do so or believed to be in the best interest of
Price's shareholders, in addition to previous authorizations. Approximately 1.7
million shares were purchased in 1995 under this new authorization and previous
authorizations. Repurchased Common Stock of the Company has been treated as
constructively retired in the accompanying consolidated balance sheet as of
December 31, 1995.
15. STOCK OPTION PLAN
The Company has a long-term incentive plan, (the "1992 Long Term Incentive
Plan") which provides for granting incentive stock options, as defined under
current tax law, and other stock-based incentives to key employees and officers.
The maximum number of shares of the Company that are subject to awards granted
under the 1992 Long Term Incentive Plan is 1,250,000. The exercise of such
options, other than those granted on December 10, 1992, will be exercisable at a
price not less than the fair market value on the date of the grant, for a period
up to ten years.
II-9-19
<PAGE> 34
The following table sets forth information with respect to the Company's stock
options for the years ended December 31, 1995 and 1994:
<TABLE>
<CAPTION>
Number of Shares
----------------
Under Option
------------
Option
1995 1994 Price Range
------- ------- -----------
<S> <C> <C> <C>
Exercised 57,260 104,079 $ 2.15
Canceled - 37,967 2.15 - 3.00
Granted 145,750 702,500 3.00 - 7.88
Outstanding 824,510 736,242 2.15 - 7.88
Reserved for issuance 262,759 383,361
</TABLE>
The above has been restated to reflect the April, 1995 five-for-four common
stock split.
16. COMMITMENTS AND CONTINGENCIES
The Company is involved in various claims and litigation in the ordinary course
of business. In the opinion of legal counsel and management, the ultimate
disposition of these matters will not have a material adverse effect on the
Company's financial condition.
The Company has an employment agreement with Robert Price covering base salary
and incentive compensation. The agreement is for a term of three years
commencing October 1994, at a base salary of $300,000 and is extendible for
periods of three years at the Company's option. Cash performance bonuses and
stock options awards are determined solely at the discretion of the Board of
Directors or the Stock Option Committee, respectively.
The Company and its subsidiaries lease a variety of assets used in their
operations, including office space and antenna sites. Renewal options are
available in the majority of leases. The following is a schedule of the
Company's minimum rental commitment for operating leases of real and personal
property for each of the five years subsequent to 1995 and in the aggregate:
<TABLE>
<CAPTION>
Operating Leases
----------------
<S> <C>
Year:
1996 $237,896
1997 231,414
1998 226,498
1999 221,020
2000 232,749
Thereafter 887,622
</TABLE>
II-9-20
<PAGE> 35
Rental expense for operating leases was approximately $187,250, $312,000 and
$312,000 for the years ended December 31, 1995, 1994, and 1993, respectively.
At December 31, 1995, the Company is committed to the purchase of film broadcast
rights of various syndicated programming aggregating approximately $2,956,704,
$2,116,675, $777,437, $97,069 and $-0- for the years 1996, 1997, 1998, 1999 and
2000, respectively.
17. SUBSEQUENT EVENTS
On February 2, 1996, the Company sold substantially all of the assets, except
cash and accounts receivable, together with certain liabilities, of its three
NBC affiliates, KJAC-TV, Beaumont/Port Arthur, TX; KFDX-TV, Wichita Falls,
TX/Lawton, OK and KSNF-TV, Joplin, MO/Pittsburgh, KS for approximately $41
million in cash. The stations were sold to USA Broadcasting Group L.L.C., a
newly organized acquirer of television properties. The Company expects to
recognize a pre-tax gain of approximately $30 million from this transaction
during 1996.
On March 1, 1996, the Company sold substantially all of the assets, together
with certain liabilities of WHTM, its ABC affiliate serving the
Harrisburg-York-Lebanon-Lancaster, PA television market, for $113 million in
cash to Allbritton Communications Company. The Company expects to recognize a
pre-tax gain of approximately $65 million from this transaction.
In January 1996, the Company purchased 600,000 shares of PriCellular's, an
affiliate, Class A Common Stock for approximately $6.3 million.
Also in January 1996, the Company repurchased 129,000 shares of its Common Stock
in the open market for approximately $1.0 million.
18. SUPPLEMENTAL CASH FLOW INFORMATION
The following is supplemental disclosure cash flow information for the years
ended December 31, 1995, 1994, and 1993:
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Cash paid for:
Income taxes paid, net of refunds $ 339,862 $ 240,102 $ 158,878
Interest paid 1,534,245 813,493 1,828,991
Non-cash operating activities:
Trade/barter revenue 1,439,760 1,117,218 1,475,733
Trade/barter expense 1,439,760 962,356 1,421,342
</TABLE>
II-9-21
<PAGE> 36
PART III
The information called for by Items 10, 11, 12 and 13 is incorporated
herein by reference from the following portions of the definitive proxy
statement to be filed by the Company in connection with its 1996 Meeting of
Shareholders.
Item Incorporated from
---- -----------------
ITEM 10. Directors and Executive "Directors and Executive
Officers of the Company Officers"
ITEM 11. Executive Compensation "Executive Compensation"
and "Certain Relationships
and Related Transactions"
ITEM 12. Security Ownership of "Principal Shareholders"
Certain Beneficial and Security Ownership of
Owners and Management Management"
ITEM 13. Certain Relationships "Executive Compensation
and Related Transactions and "Certain Relationships
and Related Transactions"
III-1
<PAGE> 37
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
AND REPORTS ON FORM 8-K
(a) (1) and (2) List of financial statements and financial statement schedules:
Independent Auditors' Reports
Consolidated Balance Sheets at December 31, 1995 and 1994
Consolidated Statements of Operations for Years ended
December 31, 1995, 1994 and 1993
Consolidated Statements of Shareholders' Equity for Years ended
December 31, 1995, 1994 and 1993
Consolidated Statements of Cash Flows for the Years ended December
31, 1995, 1994 and 1993
Notes to Consolidated Financial Statements
I. Condensed Financial Information of Registrant
II. Valuation and Qualifying Accounts
(Schedules other than those listed are omitted for the reason that they
are not required or are not applicable or the required information is
shown in the financial statements or notes thereto.)
(3) Exhibits
See Exhibit Index at page E-1, which is incorporated herein by
reference.
(b) Reports on Form 8-K.
None.
IV-1
<PAGE> 38
PRICE COMMUNICATIONS CORPORATION AND SUBSIDIARIES
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
ASSETS:
Cash and cash equivalents $ 979,817 $ 777,284
Short-term investment 237,975 -
Prepaid expenses and other current assets 346,075 171,387
----------- -----------
Total current assets 1,563,867 948,671
Investments in and receivables from subsidiaries* 33,877,001 40,683,842
Property and equipment, net 70,553 96,740
Long-term investment 8,350,000 -
----------- -----------
$43,861,421 $41,729,253
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Accounts payable and accrued expenses 1,799,879 1,989,516
Other current liabilities 1,185,860 660,409
----------- -----------
Total current liabilities 2,985,739 2,649,925
Shareholders' equity 40,875,682 39,079,328
----------- -----------
$43,861,421 $41,729,253
=========== ===========
</TABLE>
* Eliminated in consolidation
<PAGE> 39
PRICE COMMUNICATIONS CORPORATION AND SUBSIDIARIES
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Corporate expenses $ 2,710,307 $ 4,474,787 $ 3,648,524
Other (income) expense, net (6,836,333) 615,608 3,473,391
Interest expense - 9,731 1,465,315
Amortization of debt discount and deferred debt expense - - 756,975
Depreciation and amortization 31,024 77,051 75,192
Unrealized noncash loss on marketable securities - - 145,884
Realized loss on marketable securities 166,211 - -
Earnings of unconsolidated subsidiaries (7,223,406) (19,978,726) (5,850,243)
----------- ------------ -----------
Income (loss) before income taxes and
extraordinary item 11,152,197 14,801,549 (3,715,038)
Income tax (expense) benefit (26,280) (378,000) 115
----------- ------------ -----------
Income (loss) before extraordinary item 11,125,917 14,423,549 (3,714,923)
Extraordinary item, net of income tax expense of
$0 in 1993 - - 2,010,332
----------- ------------ -----------
Net income (loss) $11,125,917 $ 14,423,549 $(1,704,591)
=========== ============ ===========
</TABLE>
<PAGE> 40
PRICE COMMUNICATIONS CORPORATION AND SUBSIDIARIES
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------
Cash flows used in operating activities: 1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Net income (loss) $ 11,125,917 $ 14,423,549 $ (1,704,591)
------------ ------------ ------------
Adjustments to reconcile net income (loss) to cash used in operating activities:
Items not affecting cash:
Amortization of debt discount and deferred debt expense - - 756,975
Depreciation and amortization 31,024 77,051 75,192
Unrealized noncash loss on marketable securities - - 145,884
Reserve on note receivable - 400,000 -
Earnings of unconsolidated subsidiaries (7,223,406) (19,978,726) (5,850,243)
Change in assets and liabilities, net of effects of reorganization:
(Increase) decrease in prepaid expenses and other assets (174,688) 2,150,932 (458,316)
(Decrease) increase in accounts payable and accrued expenses (189,637) 1,103,917 (1,646,172)
Increase (decrease) in other liabilities, net of forgiveness 525,451 139,504 (729,095)
Decrease in accrued interest, net of forgiveness - - (350,835)
Reclassification of transactions to investing and financing activities:
Loss on purchase of common stock 1,185,662 - 3,976,597
Gain on early extinguishments of debt - - (2,010,332)
Loss (gain) on sale of securities, net 166,211 - (6,609)
Recovery on note receivable (7,547,384) - -
------------ ------------ ------------
Total adjustments (13,226,767) (16,107,322) (6,096,954)
------------ ------------ ------------
Net cash used in operating activities (2,100,850) (1,683,773) (7,801,545)
------------ ------------ ------------
Cash flows provided by investing activities:
Cash received from subsidiaries* 14,030,247 8,004,863 24,828,406
Purchases of securities under agreements to resell - - (8,050,811)
Purchases of marketable securities and PriCellular Warrants (10,567,300) - (36,704,873)
Proceeds from sales of marketable securities and mutual funds 1,813,115 - 54,394,512
Capital expenditures (4,837) (7,098) (3,885)
Investment in partially owned company - - (66,805)
Proceeds from (disbursement of) notes receivable 7,547,384 (400,000) -
------------ ------------ ------------
Net cash provided by investing activities 12,818,609 7,597,765 34,396,544
------------ ------------ ------------
Cash flows (used in) provided by financing activities:
Short-term borrowings 1,000,000 - -
Payment of short-term borrowings (1,000,000) - -
Repurchases of long-term debt - - (20,846,643)
Purchase of common stock (10,659,201) (6,271,064) (8,434,058)
Proceeds from stock options exercised 143,975 222,312 56,216
Net repayments of under repurchase agreements - - (4,930,083)
------------ ------------ ------------
Net cash used in financing activities (10,515,226) (6,048,752) (34,154,568)
------------ ------------ ------------
Net increase (decrease) in cash and cash equivalents 202,533 (134,760) (7,559,569)
Cash and cash equivalents at beginning of year 777,284 912,044 8,471,613
------------ ------------ ------------
Cash and cash equivalents at end of year $ 979,817 $ 777,284 $ 912,044
============ ============ ============
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Income taxes, net of refunds $ 339,862 $ 240,102 $ 158,251
============ ============ ============
Interest $ 1,534,245 $ 813,493 $ 1,816,150
============ ============ ============
Chapter 11 items:
Professional and administrative expenses paid $ - $ - $ 26,085
============ ============ ============
</TABLE>
* Eliminated in consolidation
<PAGE> 41
PRICE COMMUNICATIONS CORPORATION AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
DECEMBER 1995, 1994 AND 1993
<TABLE>
<CAPTION>
BALANCE AT ADDITIONS
BEGINNING OF CHARGED TO BALANCE AT
DESCRIPTION PERIOD EXPENSES DEDUCTIONS(a) END OF PERIOD
- ----------- ------ -------- ------------- -------------
<S> <C> <C> <C> <C>
For the year ended December 31, 1995:
Allowance for doubtful accounts $395,012 $ 83,775 $(184,233) $294,554
For the year ended December 31, 1994:
Allowance for doubtful accounts $487,576 $319,204 $(411,768)(b) $395,012
For the year ended December 31, 1993:
Allowance for doubtful accounts $565,351 $263,909 $(341,684) $487,576
</TABLE>
(a) Amounts written off as uncollectible and payments.
(b) Includes adjustments for the disposition of properties and the acquisition
of WHTM-TV.
<PAGE> 42
SIGNATURES
Pursuant to the requirements of Section 13 and 15 (d) of the Securities
and Exchange Act of 1934, the Company has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
PRICE COMMUNICATIONS CORPORATION
By /s/ Robert Price
-------------------------------
Robert Price, President
Dated: March 11, 1996
Pursuant to the requirements of the Securities and Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the Company and in the capacities and on the dates indicated. Each person whose
signature appears below hereby authorizes and appoints Robert Price as his
attorney-in-fact to sign and file in his behalf individually and in each
capacity stated below any and all amendments to this Annual Report.
Dated: March 11, 1996 By /s/ Robert Price
-----------------------------------------
Robert Price, Director and President
(Principal Executive Officer,
Financial Officer and Accounting Officer)
Dated: March 11, 1996 By /s/ George H. Cadgene
-----------------------------------------
George H. Cadgene,
Director
Dated: March 11, 1996 By /s/ Robert F. Ellsworth
-----------------------------------------
Robert F. Ellsworth,
Director
Dated: March 11, 1996 By /s/ Robert Paul
-----------------------------------------
Robert Paul,
Director
Dated: March 11, 1996 By /s/ Kim I. Pressman
-----------------------------------------
Kim I. Pressman,
Director
Dated: March 11, 1996 By /s/ Steven Price
-----------------------------------------
Steven Price,
Director
<PAGE> 43
EXHIBIT INDEX
ITEM 14(a)(3)
PRICE COMMUNICATIONS CORPORATION
Annual Report on Form 10-K for the year ended
December 31, 1995
Page
----
(3)(a)(1) Restated Certificate of
Incorporation of the Registrant as
filed with the Secretary of State of
the State of New York on December
29, 1992, incorporated by reference
to Exhibit 3(a) to Registrant's Form
10-K for the year ended December 31,
1992.
(2) Certificate of Amendment of the
Certificate of Incorporation of the
Registrant as filed with the
Secretary of State of New York on
March 17, 1995.
(3) Certificate of Amendment of the
Certificate of Incorporation of the
Registrant as filed with the
Secretary of State of New York on
January 2, 1996.
(b) Restated By-laws of the Registrant.
(10)(a) The Registrant's 1992 Long Term
Incentive Plan, incorporated by
reference to Exhibit 10(a) to
Registrant's Form 10-K for the year
ended December 31, 1992.
(b) Warrant Agreement dated April 12,
1990 between Price Communications
Corporation and Warner
Communications Investors, Inc.,
incorporated by reference to Exhibit
(4) to Registrant's Form 8-K filed
to report an event of April 12,
1990.
(c) Form of Amendment to Time Warner
Warrant, incorporated by reference
to Exhibit 10(i) to Registrant's
Form 10-K for the year ended
December 31, 1992.
(d) Stock Purchase Agreement, dated as
of
E-1
<PAGE> 44
Page
----
April 27, 1987, among Registrant,
Republic Broadcasting Corporation
and Fairfield Broadcasting, Inc., as
amended July 16, 1987, incorporated
by reference to Annex I to
Registrant's Definitive Proxy
Statement dated July 27, 1987.
(e) Notes and Stock Purchase Agreement
between and among Fairfield
Broadcasting, Inc., Price
Communications Corporation and
Republic Broadcasting Corporation
dated as of September 30, 1987, as
amended, incorporated by reference
to Exhibit 10(a) to Registration
Statement on Form S-1 (File No.
33-30318).
(f) Stockholders' Agreement among
Fairfield Broadcasting, Inc., Price
Communications Corporation, Citicorp
Venture Capital Ltd., Osborn
Communications Corporation and
Prudential-Bache Interfunding Inc.,
dated as of September 30, 1987,
incorporated by reference to Exhibit
10(b) to Registration Statement on
Form S-1 (File No. 33-30318).
(g) Form of Indemnification Agreement
between Registrant and its officers
and directors, incorporated by
reference to Exhibit 10(y) to the
Registrant's Form 10-K for the year
ended December 31, 1993.
(h) Employment Agreement, dated as of
October 6, 1994, between the
Registrant and Robert Price,
incorporated by reference to Exhibit
10(aa) to the Registrant's Form 10-K
for the year ended December 31,
1994.
(i) Employment Agreement, dated as of
January 5, 1995, between the
Registrant and Kim Pressman,
incorporated by reference to Exhibit
10(bb) to the Registrant's Form 10-K
for the year ended December 31,
1994.
E-2
<PAGE> 45
Page
----
(j) Stock Option Agreement, dated as of
February 10, 1994, between the
Registrant and Robert Price,
incorporated by reference to Exhibit
10(cc) to the Registrant's Form 10-K
for the year ended December 31,
1994.
(k) Rights Agreement dated as of October
6, 1994 between the Registrant and
Harris Trust Company of New York,
incorporated by reference to Exhibit
4 to Registrant's Form 8-K filed to
report an event on October 6, 1994.
(l) Amendment dated January 12, 1995 to
Rights Agreement dated as of October
6, 1994 between the Registrant and
Harris Trust Company of New York,
incorporated by reference to Exhibit
4 to Registrant's Form 8-K filed to
report an event on January 12, 1995.
(m) Securities Purchase Agreement, dated
as of February 15, 1994, between the
stockholders and warrant holders of
Smith Acquisition Corp. and the
Registrant, incorporated by
reference to Exhibit 10 to the
Registrant's Form 8-K filed to
report an event of September 16,
1994.
(n) Asset purchase agreement dated as of
August 8, 1995 by and between USA
Broadcast Group L.L.C. and Price
Communications Corporation, Texoma
Broadcasting Corp., Southeast Texas
Broadcasting Corp. and Tri-State
Broadcasting Corp., incorporated by
reference to Exhibit 10(gg) to the
Registrant's Form 10-Q for the
Quarter ended September 30, 1995.
(o) Asset purchase agreement dated as of
October 18, 1995 by and between
WHTM-TV, Inc. and Allbritton
Communications Company, incorporated
by reference to Exhibit 10(hh) to the
Registrant's Form 10-Q for the
Quarter ended September 30, 1995.
E-3
<PAGE> 46
Page
----
(11) Statement regarding computation of
per share earnings (omitted;
computation can be clearly determined
from material contained in the
Report).
(21) Subsidiaries of Registrant. - None.
(24) The powers of attorney to sign
amendments to this Report appear on
the signature page.
(27) Financial Data Schedule.
E-4
<PAGE> 1
Exhibit (3)(a)(2)
----------------------
Certificate of Amendment
of the
Certificate of Incorporation
of
Price Communications Corporation
Under Section 805 of the Business Corporation Law
----------------------
It is hereby certified that:
1. The name of the Corporation is Price Communications
Corporation.
2. The Certificate of Incorporation of the Corporation was
filed by the Department of State on August 1, 1979. The Amended and Restated
Certificate of Incorporation of the Corporation was filed by the Department of
State on December 29, 1992.
3. The amendments of the Corporation's Amended and Restated
Certificate of Incorporation effected hereby are as follows:
An increase in the number of shares of the Corporation's
preferred stock, par value $.01 (the "Preferred Stock"), which the Corporation
shall have authority to issue by 10,000,000 shares; and the elimination of the
requirement of shareholder authorization for the establishment of each series of
Preferred Stock.
4. To accomplish the foregoing amendments, Paragraphs A and C
of Article FOURTH of the Corporation's Amended and Restated Certificate of
Incorporation are hereby amended to read, respectively, as follows:
A.
The total number of shares of capital stock which the
Corporation shall have authority to issue is Sixty Million (60,000,000) shares,
of which Forty Million (40,000,000) shares shall be common stock, $.01 par value
per share (the "Common
<PAGE> 2
Stock"), and Twenty Million (20,000,000) shares shall be preferred stock, par
value $.01 per share (the "Preferred Stock"). Shares of capital stock of the
Corporation may be issued for such consideration, not less than the par value
thereof, as shall be fixed from time to time by the Board of Directors, and
shares issued for such consideration shall be fully paid and nonassessable.
C.
The Corporation may issue Preferred Stock from time to time in
one or more series as may be established by the adoption of a resolution or
resolutions relating thereto by the Board of Directors and set forth in a
certificate of amendment prepared and delivered in accordance with Section 805
of the Business Corporation Law, with each series having such voting powers,
full or limited, or no voting powers, and such designations, preferences and
relative, participating, optional or other special rights, and such
qualifications, limitations or restrictions thereof or thereon, as shall be
stated and expressed therein.
5. The foregoing amendments of the Corporation's Amended and
Restated Certificate of Incorporation were authorized by vote of the Board of
Directors of the corporation at a meeting thereof followed by the vote of the
holders of at least a majority of all of the outstanding shares of the
Corporation's capital stock entitled to vote on said amendment.
IN WITNESS WHEREOF, we have signed this Certificate of
Amendment on the 9th day of March, 1995, and we affirm the statements contained
therein as true under penalties of perjury.
/s/ Robert Price
----------------------------------------
Robert Price, President and Chief
Executive Officer
/s/ Kim I. Pressman
----------------------------------------
Kim I. Pressman, Executive Vice
President and Secretary
<PAGE> 1
Exhibit (3)(a)(3)
-------------------
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
PRICE COMMUNICATIONS CORPORATION
UNDER SECTION 805 OF THE BUSINESS CORPORATION LAW
-------------------
It is hereby certified that:
1. The name of the Corporation is Price Communications
Corporation.
2. The Certificate of Incorporation of the Corporation was
filed by the Department of State on August 1, 1979.
3. The amendments of the Corporation's Certificate of
Incorporation effected hereby are as follows:
(a) to provide for a Board of Directors consisting of not
less than five and not more than ten Directors, with the actual number of
Directors being set from time to time by resolution of the Board, and to delete
provisions relating to the classification of the Board of Directors which have
expired in accordance with their terms.
(b) to provide that Directors may be removed only for
cause; and
<PAGE> 2
(c) to provide that the written request of the holders of
a majority of the outstanding shares of the Corporation's Common Stock is
necessary for the calling by shareholders of a special meeting of shareholders.
4. To accomplish the amendments described in paragraphs 3(a)
and 3(b) above, Article NINTH of the Corporation's Certificate of Incorporation
is hereby amended to delete the first two paragraphs thereof in their entirety
and replace them with the following paragraph:
The number of directors constituting the entire Board of
Directors of the Corporation shall be not less than five (5)
and not more than ten (10), with the actual number of Directors
being set from time to time by resolution of the Board.
Election of directors need not be by ballot unless the By-laws
so provide. Each director shall hold office until the next
annual meeting of shareholders and the election and
qualification of his or her successor. Directors may be removed
by vote of the shareholders for cause; provided, however, that
during the period from the Effective Date through the third
anniversary of the Effective Time (hereinafter referred to as
the "Restricted Period"), any such removal shall require the
affirmative vote of the holders of at least 80% of the
outstanding shares of Common Stock.
5. To accomplish the amendment described in paragraph 3(b)
thereof, Article EIGHTH of the Corporation's Articles of Incorporation is hereby
amended to read in its entirety as follows:
A special meeting of the shareholders may be called only
by (i) the Board of Directors or (ii) upon the written request
of the holders of a majority of the outstanding shares of
Common Stock.
6. The foregoing amendments of the Corporation's Certificate of
Incorporation were authorized by vote of the Board of Directors of the
Corporation at a meeting thereof followed by the vote of the holders of at least
a majority of all of the outstanding shares of the Corporation's capital stock
entitled to vote on said amendment.
2
<PAGE> 3
IN WITNESS WHEREOF, we have signed this Certificate of
Amendment on the 20th day of December, 1995, and we affirm the statements
contained therein as true under penalties of perjury.
/s/ Robert Price
-------------------------------------
Robert Price, President and Chief
Executive Officer
/s/ Kim I. Pressman
-------------------------------------
Kim I. Pressman, Executive Vice
President and Secretary
3
<PAGE> 1
Exhibit 3(b)
RESTATED BY-LAWS
OF
PRICE COMMUNICATIONS CORPORATION
ARTICLE I
OFFICES
Section 1. Principal Office. The principal office of Price
Communications Corporation (the "Corporation") shall be in the County of New
York, State of New York.
Section 2. Other Offices. The Corporation may also have an office or
offices and keep the books and records of the Corporation, except as otherwise
may be required by law, in such other place or places, either within or without
the State of New York, as the Board of Directors of the Corporation may from
time to time determine or the business of the Corporation may require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 1. Place of Meetings. All meetings of holders of shares of
capital stock of the Corporation shall be held at such place or places, within
or without the State of New York, as may from time to time be fixed by the Board
of Directors and stated in the notice of the meeting.
Section 2. Annual Meetings. An annual meeting of shareholders for the
election of directors and for the transaction of such other business as may
properly come before the meeting (an "Annual Meeting") shall be held on such
date as may be fixed by the Board of Directors and stated in the notice of the
meeting.
Section 3. Special Meetings. Special meetings of shareholders may be
called only as provided in the Restated Certificate of Incorporation of the
Corporation.
Section 4. Notice of Meetings. Except as otherwise may be required by
law, notice of a meeting of shareholders, whether an Annual Meeting or a special
meeting, shall be in writing, shall state the purpose or purposes of the
meeting, the place, date and hour of the meeting and, unless it is an Annual
Meeting, shall
<PAGE> 2
indicate that the notice is being issued by or at the direction of the person or
persons calling the meeting, and a copy thereof shall be delivered or sent by
mail, not less than 10 nor more than 50 days before the date of said meeting, to
each shareholder entitled to vote at such meeting. If mailed, the notice shall
be directed to such shareholder at his or her address as it appears on the stock
records of the Corporation, unless such shareholder shall have filed with the
Secretary a written request that notices be mailed to some other address, in
which case it shall be directed to him or her at such other address. Notice of
an adjourned meeting need not be given if the time and place to which the
meeting is to be adjourned was announced at the meeting at which the adjournment
was taken, unless the Board shall fix a new record date for such adjourned
meeting after the adjournment.
Section 5. Quorum. At each meeting of shareholders of the Corporation,
the presence in person or by proxy holders of shares having a majority of the
voting power of the capital stock of the Corporation issued and outstanding and
entitled to vote thereat shall constitute a quorum for the transaction of
business, except as otherwise provided by law.
Section 6. Adjournments. Any meeting of shareholders may be adjourned
to a designated time and place by a vote of a majority in interest of the
shareholders present in person or by proxy and entitled to vote thereon, even if
less than a quorum is present.
Section 7. Order of Business.
(a) At any Annual Meeting of shareholders, only such business
shall be conducted as shall have been brought before the Annual Meeting (i) by
or at the direction of the Board of Directors or (ii) by any shareholder who
complies with the procedures set forth in this Section 7. At any special
meeting, only such business shall be conducted as shall have been set forth in
the notice of such meeting.
(b) For business properly to be brought before a meeting by a
shareholder, the shareholder must have given timely notice thereof in proper
written form to the Secretary of the Corporation. To be timely, a shareholder's
notice must be delivered to or mailed and received at the principal executive
offices of the Corporation not less than 50 days nor more than 90 days prior to
the meeting at which such business will be considered; provided, however, that
if less than 50 days' notice or prior public disclosure of the date of the
meeting is given or made to shareholders, notice by the shareholder to be timely
must be received not later than the close of business on the earlier of (i) the
tenth day following the day on which such notice of the date of the meeting was
mailed or such public disclosure was made or (ii) the last business day prior to
the meeting date. To be in proper written form, a shareholder's notice to the
2
<PAGE> 3
Secretary shall set forth in writing as to each matter the shareholder proposes
to bring before the meeting: (i) a brief description of the business desired to
be brought before the meeting and the reasons for conducting such business at
the meeting; (ii) the name and address, as they appear on the Corporation's
books, of the shareholder or shareholders proposing such business; (iii) the
class and number of shares of the Corporation which are beneficially owned by
such shareholder or shareholders, and (iv) any material interest of such
shareholders in such business. Notwithstanding anything else in the By-laws to
the contrary, no business shall be conducted at a meeting of shareholders except
in accordance with the procedures set forth in this Section 7. The chairman of a
meeting shall, if the facts warrant, determine that business was not properly
brought before the meeting in accordance with the provisions of this Section 7
and, if he should so determine, he shall so declare to the meeting and any such
business not properly brought before the meeting shall not be transacted.
Section 8. Voting. At each meeting of shareholders, each holder of a
share of Common Stock (as defined in the Corporation's Restated Certificate of
Incorporation) of the Corporation shall be entitled to one vote for each share
of Common Stock standing in his name on the stock records of the Corporation (i)
at the time fixed pursuant to Section 6 of Article VI of these By- laws as the
record date for the determination of shareholders entitled to vote at such
meeting, or (ii) if no such record date shall have been fixed, then at the close
of business on the day next preceding the day on which notice thereof shall be
given. At each meeting of shareholders, except as otherwise provided in Section
3 of Article III of these By-laws and except in cases where a greater vote is
required by law or by the Restated Certificate of Incorporation of the
Corporation, all matters shall be decided by a majority of the votes cast at
such meeting by the holders of shares of Common Stock present or represented by
proxy and entitled to vote thereon, a quorum being present.
Section 9. Inspectors. For each election of directors by the
shareholders and in any other case in which it shall be advisable, in the
opinion of the Board, that the voting upon any matter shall be conducted by
inspectors of election, the Board shall appoint two inspectors of election. If
any inspector appointed by the Board shall be unwilling or unable to serve, or
if the Board shall fail to appoint inspectors, the chairman of the meeting shall
appoint the necessary inspector or inspectors. Before entering upon the
discharge of their duties, the inspectors so appointed shall be sworn faithfully
to execute the duties of inspectors with strict impartiality and according to
the best of their ability, and such oath shall be subscribed by them. The
inspectors shall (i) determine the number of shares of capital stock of the
Corporation outstanding and the voting power of each of the shares represented
at the meeting, the existence of a quorum and the validity and effect of
proxies, (ii) receive
3
<PAGE> 4
the votes, ballots or consents, (iii) hear and determine all challenges and
questions arising in connection with the right to vote, (iv) count and tabulate
all votes, ballots or consents and determine the result, and (v) do such acts as
are proper to conduct the election or vote with fairness to all shareholders. On
request of the chairman of the meeting or any shareholder entitled to vote
thereat, the inspectors shall make a report in writing of any challenge,
question or matter determined by them and shall execute a certificate of any
fact found by them. No director or candidate for the office of director shall
act as an inspector of election of directors. Inspectors need not be
shareholders.
ARTICLE III
DIRECTORS
Section 1. Powers. The business of the Corporation shall be managed
under the direction of the Board of Directors. The Board may exercise all such
authority and powers of the Corporation and do all such lawful acts and things
as are not by law or otherwise directed or required to be exercised or done by
the shareholders.
Section 2. Number, Election and Terms. The authorized number of
directors shall be set as provided in the Restated Certificate of Incorporation
of the Corporation.
Section 3. Nominations of Directors; Elections. Nominations for the
election of directors may be made by the Board of Directors or a committee
appointed by the Board, or by any shareholder entitled to vote generally in the
election of directors who complies with the procedures set forth in this Section
3. Directors shall be at least 21 years of age. Directors need not be
shareholders. At each meeting of shareholders for the election of directors at
which a quorum is present, the persons receiving a plurality of the votes cast
shall be elected directors. All nominations by shareholders shall be made
pursuant to timely notice in proper written form to the Secretary of the
Corporation. To be timely, a shareholder's notice shall be delivered to or
mailed and received at the principal executive offices of the Corporation not
less than 50 days nor more than 90 days prior to the meeting; provided, however,
that if less than 50 days' notice or prior public disclosure of the date of the
meeting is given or made to shareholders, notice by the shareholder to be timely
must be so received not later than the close of business on the earlier of (i)
the tenth day following the day on which such notice of the date of the meeting
was mailed or such public disclosure was made or (ii) the last business day
prior to the meeting date. To be in proper written form, a shareholder's notice
to the Secretary shall set forth in writing (i) as to each person whom the
shareholder proposes to nominate for election or
4
<PAGE> 5
reelection as a director, all information relating to such person that is
required to be disclosed in connection with the solicitation of proxies for
election of directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended, or any
successor regulation or law, including, without limitation, such person's
written consent to being named in the proxy statement as a nominee and to
serving as director if elected; and (ii) as to the shareholder or shareholders
giving the notice, (x) the name and address, as they appear on the Corporation's
books, of such shareholder or shareholders and (y) the class and number of
shares of the Corporation which are beneficially owned by such shareholder or
shareholders. If a shareholder seeks to nominate one or more directors, the
Secretary shall appoint two inspectors, who shall not be affiliated with the
Corporation, to determine whether a shareholder has complied with this Section
3. If the inspectors shall determine that a shareholder has not complied with
this Section 3, the inspectors shall direct the chairman of the meeting to
declare to the meeting that the nomination was not made in accordance with the
procedures prescribed by the By-laws of the Corporation, and the defective
nomination shall be disregarded.
Section 4. Place of Meetings. Meetings of the Board shall be held at
the Corporation's office in the State of New York or at such other place, within
or without such State, as the Board may from time to time determine or as shall
be specified or fixed in the notice or waiver of notice of any such meeting.
Section 5. Regular Meetings. Regular meetings of the Board shall be
held in accordance with a yearly meeting schedule as determined by the Board; or
such meetings may be held on such other days and at such other times as the
Board may from time to time determine. Notice of regular meetings of the Board
need not be given except as otherwise required by these By-laws.
Section 6. Special Meetings. Special meetings of the Board may be
called by the Chairman of the Board or the President and shall be called by the
Secretary at the request of any two of the other directors.
Section 7. Notice of Meetings. Notice of each special meeting of the
Board (and of each regular meeting for which notice shall be required), stating
the time, place and purposes thereof, shall be mailed to each director,
addressed to him at his residence or usual place of business, or shall be sent
to him by telex, cable or telegram so addressed, or shall be given personally or
by telephone, on five business days' notice.
Section 8. Quorum and Manner of Acting. The presence of a majority of
the entire Board of Directors shall be necessary and sufficient to constitute a
quorum for the transaction of business at any meeting of the Board. If a quorum
shall not be present at
5
<PAGE> 6
any meeting of the Board, a majority of the directors present thereat may
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present. Except where a different vote is
expressly required or permitted by the New York Business Corporation Law or the
Restated Certificate of Incorporation of the Corporation, the act of a majority
of the directors present at any meeting at which a quorum is present shall be
the act of the Board. Any action required or permitted to be taken by the Board
may be taken without a meeting if all the directors consent in writing to the
adoption of a resolution authorizing the action. The resolution and the written
consent thereto by the directors shall be filed with the minutes of the
proceedings of the Board. Any one or more directors may participate in any
meeting of the Board by means of a conference telephone or similar
communications equipment allowing all persons participating in the meeting to
hear each other at the same time. Participation by such means shall be deemed to
constitute presence in person at a meeting of the Board.
Section 9. Resignation. Any director may resign at any time by giving
written notice to the Corporation. Written notice to the Board, the Chairman of
the Board, the President or the Secretary shall be deemed to constitute notice
to the Corporation. Such resignation shall take effect upon receipt of such
notice or at any later time specified therein and, unless otherwise specified
therein, acceptance of such resignation shall not be necessary to make it
effective.
Section 10. Removal of Directors. Directors may be removed only as
provided in the Restated Certificate of Incorporation of the Corporation.
Section 11. Vacancies. Any vacancy among the members of the Board of
Directors, whether caused by death, resignation, removal or any other cause, may
be filled by majority vote of the Directors then in office or by shareholder
vote.
Section 12. Compensation of Directors. The Corporation shall pay each
director who is not also an officer or employee of the Corporation a fee of
$25,000 per annum, and shall reimburse each director for his or her reasonable
expenses.
Section 13. Board Observer. W.R. Huff Asset Management, L.P. ("Huff")
shall have the right to designate an individual to sit as an observer of the
Board of Directors and all Committees of the Board for so long as the aggregate
number of shares of Common Stock with respect to which Huff (i) is a beneficial
owner as defined in Rule 13d-3 promulgated under the Securities Exchange Act of
1934, or (ii) has been engaged by one or more such beneficial owners to provide
investment advice, equals or exceeds 5% of the Corporation's outstanding Common
Stock.
6
<PAGE> 7
Section 14. Indemnification. Without limiting the other rights of any
director, officer or other person seeking indemnification or advancement or
reimbursement of expenses, the Corporation has the authority, with the approval
of the Board of Directors of the Corporation, to provide for such
indemnification or advancement or reimbursement of expenses pursuant to
agreement.
ARTICLE IV
COMMITTEES OF THE BOARD
Section 1. Appointment of Executive Committee. The Board may not
designate an Executive Committee of the Board, or any other Committee having
powers or authority of a type or scope generally exercised by an executive
committee or a full board of directors.
Section 2. Appointment of Audit and Finance Committee. The Board may,
by resolution adopted by the affirmative vote of a majority of the entire Board,
designate an Audit and Finance Committee of the Board which shall consist of
such members as the Board shall determine. The Audit and Finance Committee shall
(i) make recommendations to the Board as to the independent accountants to be
appointed by the Board; (ii) review with the independent accountants the scope
of their examination; (iii) receive the reports of the independent accountants
and meet with representatives of such accountants for the purpose of reviewing
and considering questions relating to their examination and such reports; (iv)
review, either directly or through the independent accountants, the internal
accounting and auditing procedures of the Corporation; (v) study various issues
relating to the capital structure of the Corporation; and (vi) perform such
other functions as may be assigned to it from time to time by the affirmative
vote of a majority of the entire Board. The Audit and Finance Committee may
determine its manner of acting and fix the time and place of its meetings,
unless the Board, by the affirmative vote of a majority of the entire Board,
shall otherwise provide. A majority of the members of the Audit and Finance
Committee shall constitute a quorum for the transaction of business by the
committee, and the act of a majority of the members of the committee present at
a meeting at which a quorum shall be present shall be the act of the committee.
Section 3. Stock Option and Compensation Committee; Other Committees.
(a) The Board may, by resolution adopted by the affirmative vote
of a majority of the entire Board, designate a Stock Option and Compensation
Committee of the Board which shall consist of such members as the Board shall
determine. The Stock Option and Compensation Committee shall (i) review and
approve
7
<PAGE> 8
arrangements relating to the compensation of executive officers of the
Corporation; (ii) administer the Corporation's 1992 Long-Term Incentive Plan;
and (iii) perform such other functions as may be assigned to it from time to
time by the affirmative vote of a majority of the entire Board. The Stock Option
and Compensation Committee may determine its manner of acting and fix the time
and place of its meetings, unless the Board, by the affirmative vote of a
majority of the entire Board, shall otherwise provide. A majority of the members
of the Stock Option and Compensation Committee shall constitute a quorum for the
transaction of business by the Committee, and the act of a majority of the
members of the Committee present at a meeting at which a quorum shall be present
shall be the act of the Committee.
(b) The Board may, by resolution adopted by the affirmative vote
of a majority of the entire Board, designate members of the Board to constitute
such other committees of the Board as it may determine. Such committees shall in
each case consist of such number of directors as the Board may provide, and
shall have and may exercise, to the extent permitted by law, such powers as the
Board may delegate to them in the respective resolutions appointing such
committees. Each such committee may determine its manner of acting and fix the
time and place of its meeting, unless the Board, by the affirmative vote of a
majority of the entire Board, shall otherwise provide. A majority of the members
of any such committee shall constitute a quorum for the transaction of business
by the committee, and the act of a majority of the members of such committee
present at a meeting at which a quorum shall be present shall be the act of the
committee.
Section 4. Action by Consent; Participation by Telephone or Similar
Equipment. Unless the Board shall otherwise provide, by the affirmative vote of
a majority of the entire Board, any action required or permitted to be taken by
any committee may be taken without a meeting if all members of the committee
consent in writing to the adoption of a resolution authorizing the action. The
resolution and the written consents thereto by the members of the committee
shall be filed with the minutes of the proceedings of the committee. Unless the
Board shall otherwise so provide, by the affirmative vote of a majority of the
entire Board, any one or more members of any such committee may participate in
any meeting of the committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear one another. Participation by such means shall constitute
presence in person at a meeting of the committee.
Section 5. Changes in Committees; Resignations, Removals. Subject to
Section 1 of this Article IV, the Board shall have power, by the affirmative
vote of a majority of the entire Board, at any time to change the members of, to
fill vacancies in, and
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<PAGE> 9
to discharge any committee of the Board in accordance with the provisions of
this Article IV. Any member of any committee may resign at any time by giving
notice to the Corporation. Notice to the Board, the Chairman of the Board, the
President, the chairman of such committee or the Secretary shall be deemed to
constitute notice to the Corporation. Such resignation shall take effect upon
receipt of such notice or at any later time specified therein; and, unless
otherwise specified therein, acceptance of such resignation shall not be
necessary to make it effective. Any member of any committee may be removed at
any time, either with or without cause, by the affirmative vote of a majority of
the entire Board at any meeting of the Board called for that purpose.
ARTICLE V
OFFICERS
Section 1. Number and Qualification. The Corporation shall have such
officers as may be necessary or desirable for the business of the Corporation.
There shall be elected by the Board of Directors persons having the titles and
exercising the duties of the Chairman of the Board, President, Vice President,
Treasurer and Secretary, and such other persons having such other titles and
such other duties as the Board may prescribe. The same person may hold more than
one office. The Chairman of the Board shall be elected from among the directors.
Unless otherwise determined by the Board, the officers of the Corporation shall
be elected by the Board at its annual meeting and shall be elected to hold
office until the next succeeding annual meeting of the Board. In the event of
the failure to elect officers at such annual meeting, officers may be elected at
any regular or special meeting of the Board. Each officer shall hold office
until his successor has been elected and qualified, or until his earlier death,
resignation or removal.
Section 2. Resignations. Any officer may resign at any time by giving
written notice to the Corporation. Notice to the Board, the Chairman of the
Board, the President or the Secretary shall be deemed to constitute notice to
the Corporation. Such resignation shall take effect upon receipt of such notice
or at any later time specified therein; and, unless otherwise specified therein,
the acceptance of such resignation shall not be necessary to make it effective.
Section 3. Vacancies. Any vacancy among the officers, whether caused by
death, resignation, removal or any other cause, shall be filled in the manner
prescribed for election or appointment to such office.
Section 4. Chairman of the Board. The Chairman of the Board shall, if
present, preside at all meetings of the Board and
9
<PAGE> 10
of the shareholders. He shall perform the duties incident to the office of the
Chairman of the Board and all such other duties of a senior executive nature as
are specified in these By-laws or as shall be assigned to him from time to time
by the Board.
Section 5. President. In the absence of the Chairman of the Board or if
there shall be no such officer, the President shall preside at all meetings of
the shareholders and of the Board of Directors at which he is present. He shall
act as Chief Executive Officer of the Corporation and shall have supervision and
control over, and complete responsibility for, the general management and
operation of the Corporation, and such other powers and duties that may, from
time to time, be prescribed by the Board, provided that such duties are of the
type usually assigned to the President and Chief Executive Officer in charge of
similar companies.
Section 6. Vice President. The Vice President (or if there shall be
more than one Vice President, the Vice Presidents) shall perform such duties and
exercise such powers consistent with these By-laws as may be assigned to such
officer(s) from time to time by a resolution of a majority of the Board of
Directors. In the absence of a President, the duties of a President shall be
performed and his powers may be exercised by such Vice President as may be
designated by the President or, failing such designation, such duties shall be
performed and such power may be exercised by each Vice President in the order of
their earliest election to that office; subject in any case to review and
superseding action by the President.
Section 7. Treasurer. The Treasurer shall have charge and custody of,
and be responsible for, all funds and securities of the Corporation, shall keep
full and accurate accounts of receipts and disbursements in books belonging to
the Corporation, shall deposit all moneys and other valuables to the credit of
the Corporation in such depositaries as may be designated pursuant to these
By-laws, shall receive, and give receipts for, moneys due and payable to the
Corporation from any source whatsoever, shall disburse the funds of the
Corporation and shall render to all regular meetings of the Board, or whenever
the Board may require, an account of all his transactions as Treasurer. He
shall, in general, perform all the duties incident to the office of Treasurer
and all such other duties as may be assigned to him from time to time by the
President.
Section 8. Secretary. The Secretary shall, if present, act as secretary
of, and keep the minutes of all meetings of the Board, such committees of the
Board, and the shareholders in one or more books provided for that purpose,
shall see that all notices are duly given in accordance with these By-laws and
as required by law, shall be custodian of the seal of the Corporation and shall
affix and attest the seal to all documents to be executed on behalf of the
Corporation under its seal. He
10
<PAGE> 11
shall, in general, perform all the duties incident to the office of Secretary
and all such other duties as may be assigned to him from time to time by the
President.
Section 9. Additional Officers. The Board of Directors may by
resolution appoint such other officers and agents as it may deem appropriate,
and such other officers and agents shall hold their offices for such terms and
shall exercise such powers and perform such duties consistent with these By-laws
as may be determined from time to time by the Board of Directors.
Section 10. Salaries. No officer shall be prevented from receiving any
salary by reason of the fact that he is also a director of the Corporation.
ARTICLE VI
CAPITAL STOCK
Section 1. Stock Certificates. Each shareholder shall be entitled to
have, in such form as shall be approved by the Board, a certificate or
certificates signed by the Chairman of the Board or the President, and by either
the Treasurer or an Assistant Treasurer or the Secretary or an Assistant
Secretary (except that, when any such certificate is countersigned by a transfer
agent or registered by a registrar other than the Corporation or an employee of
the Corporation, the signatures of any such officers may be facsimiles, engraved
or printed), which may be sealed with the seal of the Corporation (which seal
may be a facsimile, engraved or printed), certifying the number of shares of
capital stock of the Corporation owned by such shareholder. In the event any
officer who has signed or whose facsimile signature has been placed upon any
such certificate shall have ceased to be such officer before such certificate is
issued, such certificate may be issued by the Corporation with the same effect
as if he were such officer at the date of its issue.
Section 2. List of Shareholders Entitled to Vote. The officer of the
Corporation who has charge of the stock ledger of the Corporation shall prepare
and make or cause to be prepared or made, at least 10 days before every meeting
of shareholders, a complete list of the shareholders entitled to vote at the
meeting arranged in alphabetical order, and showing the address of each
shareholder and the number of shares of capital stock registered in the name of
each shareholder. Such list shall be open to the examination of any shareholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least 10 days prior to the meeting, either at a place within the
city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not so specified, at the place where the meeting
is to be held. The list shall also be produced and kept at the time and place of
the meeting for the
11
<PAGE> 12
duration thereof, and may be inspected by any shareholder of the Corporation who
is present.
Section 3. Stock Ledger. The stock ledger of the Corporation shall be
the only evidence as to who are the shareholders entitled to examine the stock
ledger, the list required by Section 2 of this Article VI or the books of the
Corporation, or to vote in person or by proxy at any meeting of shareholders.
Section 4. Transfers of Capital Stock. Transfers of shares of capital
stock of the Corporation shall be made only on the stock ledger of the
Corporation by the holder of record thereof, by his attorney thereunto
authorized by power of attorney duly executed and filed with the Secretary of
the Corporation, or by the transfer agent of the Corporation, and only on
surrender of the certificate or certificates representing such shares, properly
endorsed or accompanied by a duly executed stock transfer power. The Board may
make such additional rules and regulations as it may deem advisable concerning
the issue and transfer of certificates representing shares of the capital stock
of the Corporation.
Section 5. Restriction on Ownership, Voting and Transfer. In accordance
with the Federal Communications Act of 1934, as amended (the "Communications
Act"), and regulations of the Federal Communications Commission (the "FCC"), the
Board of Directors shall prohibit: (i) the ownership or voting of the
Corporation's outstanding capital stock whenever necessary to ensure that, in
the aggregate, no more than 25% of the Corporation's outstanding capital stock
(or 20% of the Corporation's outstanding capital stock if the Corporation holds
any FCC licenses directly rather than through subsidiaries) is held or voted by
or for the account of aliens or their representatives or by foreign
government(s) or representative(s) thereof or by any corporation(s) organized
under the laws of a foreign country, or by or for corporations of which any
officer is an alien, more than one-fourth of its directors are aliens, or by or
for corporations or partnerships deemed alien pursuant to Section 310(b) of the
Communications Act (collectively "Aliens"); and (ii) any transfer or voting of
the Corporation's outstanding capital stock which would cause the Corporation to
violate the above or any other provision of the Communications Act or FCC
regulation.
Section 6. Lost Certificates. The Board of Directors may direct a new
certificate to be issued in place of any certificate theretofore issued by the
Corporation alleged to have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen or destroyed. When authorizing such issue of a new certificate, the
Board of Directors may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
certificate, or his legal
12
<PAGE> 13
representative, to give the Corporation a bond in such sum as it may direct as
indemnity against any claim that may be made against the Corporation with
respect to the certificate alleged to have been lost, stolen or destroyed.
Section 7. Fixing of Record Date. In order that the Corporation may
determine the shareholders entitled to notice of or to vote at any meeting of
shareholders or any adjournment thereof, or entitled to receive payment of any
dividends or other distributions or allotments of any rights, or entitled to
exercise any rights in respect to any change, conversion or exchange of stock,
or for the purpose of any other lawful action, the Board may fix, in advance, a
record date, which shall not be more than 50 days nor less than 10 days before
the date of such meeting, nor more than 50 days prior to any other action. A
determination of shareholders of record entitled to notice of or to vote at a
meeting of shareholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
Section 8. Beneficial Owners. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends and to vote as such owner, and to hold liable for
calls and assessments a person registered on its books as the owner of shares,
and shall not be bound to recognize any equitable or other claim to or interest
in such shares on the part of any other person, whether or not the Corporation
shall have express or other notice thereof, except as otherwise provided by law.
ARTICLE VII
FISCAL YEAR
The Corporation's fiscal year shall coincide with the calendar year.
ARTICLE VIII
SEAL
The Corporation's seal shall be circular in form and shall include the
words, "PRICE COMMUNICATIONS CORPORATION, New York, 1979, Seal".
13
<PAGE> 14
ARTICLE IX
WAIVER OF NOTICE
Whenever any notice is required by law, the certificate of
incorporation or these By-laws to be given to any director, member of a
committee or shareholder, a waiver thereof in writing, signed by the person or
persons entitled to such notice, whether signed before or after the time stated
in such written waiver, shall be deemed equivalent to such notice. Attendance of
a person at a meeting shall constitute a waiver of notice of such meeting,
except when such person attends a meeting for the express purpose of objecting,
at the beginning of the meeting, to the transaction of any business on the
grounds that the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any meeting of the
shareholders, directors, or members of a committee of directors need be
specified in any written waiver of notice.
ARTICLE X
AMENDMENTS
These By-laws may be adopted, amended, supplemented or repealed by vote
of the holders of a majority of the outstanding shares of Common Stock, except
that during the Restricted Period (as defined in the Amended and Restated
Certificate of Incorporation) the affirmative vote of 80% or more of the
outstanding shares of Common Stock is required to amend, supplement or repeal
Section 13 of Article III, Section 1 of Article IV or the supermajority
shareholder vote requirements of this Article X. Except as hereinafter provided,
the By-laws may be adopted, amended or repealed by majority vote of the Board of
Directors, but any such By-law may be amended or repealed by the shareholders
entitled to vote thereon as herein provided, and no amendment or supplement
adopted by the Board shall vary or conflict with any amendment or supplement to
these By-laws adopted by the shareholders. During the Restricted Period (i) the
Board may not amend, supplement or repeal Section 13 of Article IV or this
Article X, (ii) the affirmative vote of at least seven (7) directors is required
to amend, supplement or repeal Section 1 of Article IV, and (iii) whenever these
By-laws require the affirmative vote of a majority of the entire Board for the
taking of any action, the repeal of such requirement requires the affirmative
vote of a majority of the entire Board.
14
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