<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
/x/ Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended June 30, 1996 or
/ / Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from to .
-------- --------
Commission file number 1-8309.
PRICE COMMUNICATIONS CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
NEW YORK 13-2991700
- -------------------------------------------- -----------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
45 Rockefeller Plaza, Suite 3201, New York, New York, 10020
-----------------------------------------------------------
(Address of Principal Executive Offices)
(Zip Code)
(212) 757-5600
--------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes x No
--- ---
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by sections 12, 13 or 15(d) of the Securities
Exchange Act subsequent to the distribution of securities under the plan
confirmed by the court. Yes x No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
9,372,608 shares of Common Stock, par value $.01 per share, outstanding as of
July 19, 1996.
<PAGE> 2
PRICE COMMUNICATIONS CORPORATION AND SUBSIDIARIES
INDEX TO QUARTERLY REPORT ON FORM 10-Q
June 30, 1996
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
---------------------
Page
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED) Number
--------------------------------- ------
<S> <C>
Consolidated Balance Sheets at June 30, 1996
and December 31, 1995 ................................... 3
Consolidated Statements of Operations for the
Three and Six Months Ended June 30, 1996 and 1995 ....... 4
Condensed Consolidated Statements of Cash Flows
for the Six Months Ended June 30, 1996 and 1995 ......... 5
Notes to Consolidated Financial Statements ................... 6 - 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS ....... 8 - 9
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS ................................... 10
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K .................... 10
SIGNATURES ................................................... 11
</TABLE>
<PAGE> 3
Price Communications Corporation and Subsidiaries
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
---- ----
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 46,313,162 $ 1,206,557
Short-term investments 68,516,469 237,975
Accounts receivable, net 446,533 6,096,446
Film broadcast rights -- 1,764,468
Prepaid expenses and other current assets 55,838 741,307
------------ -----------
Total current assets 115,332,002 10,046,753
------------ -----------
Long-term investments 10,360,000 8,350,000
Property and equipment, at cost less
accumulated depreciation 169,812 11,308,808
Broadcast licenses and other intangibles,
less accumulated amortization -- 65,434,705
Film broadcast rights -- 231,225
Note receivable 540,000 540,000
Other assets -- 73,907
------------ -----------
Total assets $126,401,814 $95,985,398
============ ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 2,898,932 $ 3,197,471
Accrued interest -- 510,119
Current portion of long-term debt -- 28,000,000
Income taxes payable (Note 3) 14,388,347 --
Other current liabilities -- 4,601,409
------------ -----------
Total current liabilities 17,287,279 36,308,999
------------ -----------
Long-term debt (Note 3) -- --
Deferred tax effect on basis difference arising on
acquisition -- 17,971,028
Other liabilities -- 829,689
Shareholders' equity:
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
9,367,608 and 9,579,842 at June 30, 1996 93,676 95,798
and December 31, 1995, respectively
Additional paid-in capital 15,133,272 16,935,009
Retained earnings 93,887,587 23,844,875
------------ -----------
Total shareholders' equity 109,114,535 40,875,682
------------ -----------
Total liabilities and shareholders' equity $126,401,814 $95,985,398
============ ===========
</TABLE>
See accompanying notes to consolidated financial statements
3
<PAGE> 4
Price Communications Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended June 30, Six months ended June 30,
--------------------------- -------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue -- $9,244,993 $ 3,491,441 $16,665,617
Agency and representatives' commissions -- 1,486,426 529,577 2,651,951
----------- ---------- ------------ -----------
Net revenue -- 7,758,567 2,961,864 14,013,666
----------- ---------- ------------ -----------
Operating expenses -- 4,223,571 2,131,801 7,757,223
Corporate expenses 483,810 561,191 1,210,919 1,135,963
Net loss on marketable securities 1,875,526 -- 1,689,589 --
Interest income and other, net (1,941,106) (377,351) (2,182,089) (6,472,627)
Gain on sale of media properties (Note 3) -- -- (95,451,876) --
Interest expense -- 521,700 212,376 1,060,973
Amortization of deferred debt expense -- -- -- 360,000
Depreciation and amortization 11,948 853,307 442,357 1,732,529
----------- ---------- ------------ -----------
430,178 5,782,418 (91,946,923) 5,574,061
----------- ---------- ------------ -----------
Income (loss) before income taxes (430,178) 1,976,149 94,908,787 8,439,605
Income tax (benefit) expense (154,992) (63,775) 24,866,075 (157,696)
----------- ---------- ------------ -----------
Net income (loss) $ (275,186) $2,039,924 $ 70,042,712 $ 8,597,301
=========== ========== ============ ===========
Income (loss) per share $ (0.03) $ 0.20 $ 7.03 $ 0.80
=========== ========== ============ ===========
</TABLE>
See accompanying notes to consolidated financial statements
4
<PAGE> 5
Price Communications Corporation and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
-------------------------
1996 1995
---- ----
<S> <C> <C>
NET CASH (USED IN) PROVIDED BY
OPERATING ACTIVITIES $ (7,323,542) $ 3,145,458
CASH FLOWS PROVIDED BY INVESTING ACTIVITIES:
Proceeds from sale of media properties 156,007,011 --
Gain on sale of media properties (71,662,104) --
Recovery on notes receivable, net -- 7,593,802
Long-term investment in equity securities (2,010,000) --
Capital expenditures (100,619) (742,342)
Other -- (46,600)
------------ -----------
Net cash provided by investing activities 82,234,288 6,804,860
------------ -----------
CASH FLOWS (USED IN) PROVIDED BY
FINANCING ACTIVITIES:
Repayment of long-term debt (28,000,000) (860,000)
Payment of line of credit origination fee -- (360,000)
Borrowings under line of credit agreements -- 360,000
Purchase of Company common stock (2,097,200) (8,278,718)
Proceeds from stock options exercised 293,059 86,061
------------ -----------
Net cash (used in) provided by financing activities (29,804,141) (9,052,657)
------------ -----------
Net increase in cash and cash equivalents 45,106,605 897,661
Cash and cash equivalents at beginning of period 1,206,557 1,136,010
------------ -----------
Cash and cash equivalents at end of period $ 46,313,162 $ 2,033,671
============ ===========
Supplemental information:
Income taxes paid, net of refunds $ 11,789,500 $ 156,333
============ ===========
Interest paid $ 712,855 $ 1,060,973
============ ===========
</TABLE>
See accompanying notes to consolidated financial statements
5
<PAGE> 6
PRICE COMMUNICATIONS CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Price
Communications Corporation (the "Company" or "Price") and its subsidiaries. All
significant intercompany items and transactions have been eliminated.
The consolidated financial statements have been prepared by the Company
without audit, in accordance with rules and regulations of the Securities and
Exchange Commission. In the opinion of management, the statements reflect all
adjustments necessary for a fair presentation of the results for the interim
periods. All such adjustments are of a normal, recurring nature. The results of
operations for any interim period are not necessarily indicative of the results
for a full year.
2. PER SHARE DATA
Primary income per common share is based on income for the period divided
by the weighted average number of shares of common stock and common stock
equivalents outstanding, which was approximately 9,896,000 and 9,962,000 for the
three and six months ended June 30, 1996, respectively, and 10,301,000 and
10,796,000 for the three and six months ended June 30, 1995, respectively. All
presentations of shares outstanding and income per share have been retroactively
restated to reflect a five-for-four common stock split in April 1995.
3. RECENT DEVELOPMENTS
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/Pittsburg, KS for approximately $40.7
million in cash. Of the sale proceeds, approximately $28.7 million was used to
repay the principal and interest due under a Bank of Montreal term loan
agreement. The Company recognized a pre-tax gain of approximately $29.9 million
from this transaction during the first quarter of 1996.
On March 1, 1996, the Company sold substantially all of the assets except
cash, together with certain liabilities of WHTM-TV, its ABC affiliate serving
the Harrisburg-Lancaster-Lebanon-York, PA television market, for $115.3 million
in cash to Allbritton Communications Company. The Company recognized a pre-tax
gain of approximately $65.6 million from this transaction during the first
quarter of 1996.
6
<PAGE> 7
PRICE COMMUNICATIONS CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. RECENT DEVELOPMENTS (CONTINUED)
In January 1996, the Company purchased 750,000 shares (as adjusted to
reflect a five-for-four stock split in March 1996) of Class A Common Stock of
PriCellular Corporation, an affiliate, for approximately $6.3 million. As of
June 30, 1996, the Company had acquired an additional 83,000 shares of
PriCellular Class A Common Stock for approximately $ 1.1 million, through
purchases of shares made over time on the open market.
The Company continues to make short-term investments using the proceeds
received from the sales of the aforementioned stations, while actively reviewing
potential acquisitions and other investments.
[The remainder of this page is left blank intentionally]
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
References to the "Company" or "Price" in this report include Price
Communications Corporation and its subsidiaries, unless the context otherwise
indicates.
RESULTS OF OPERATIONS
During February and March of 1996 the Company consummated the sales of its
three NBC affiliated television stations, KSNF-TV, serving Joplin, MO/Pittsburg,
KS; KJAC-TV, serving Beaumont/Port Arthur, TX, and KFDX-TV, serving Wichita
Falls, TX/Lawton, OK and its ABC affiliate, WHTM-TV, serving
Harrisburg/Lancaster/Lebanon/York, PA. The Company used $28.7 million of the
proceeds of these sales to repay principal and interest due to Bank of Montreal
under a term loan agreement. As a result of these transactions, the Company's
net revenue, operating expenses, depreciation, amortization and interest expense
for the three and six months ended June 30, 1996 are not comparable to the three
and six months ended June 30, 1995. Revenue, net revenue, operating expenses and
depreciation and amortization all decreased significantly as a result of the
operations being sold and the debt being retired during the first quarter of
1996. Furthermore, results for 1996 are not indicative of results in the future.
The Company had a net loss of approximately $300,000 for the three months
ended June 30, 1996, compared with net income of approximately $2.0 million for
the three months ended June 30, 1995. Earnings for the quarter ended June 30,
1996 decreased as compared to the same quarter of 1995 primarily due to the
sales of the Company's four television stations described above, and the net
losses incurred on investments in marketable securities, primarily U.S. Treasury
notes, of $1.9 million. This loss was partially offset by interest income earned
on investments in money market funds and U.S. treasuries of approximately $1.8
million and by a net tax benefit of approximately $150,000. Net income for the
six months ended June 30, 1996 was $70.0 million as compared with $8.6 million
for the same period last year. This increase was primarily due to the pre-tax
gain of $95.5 million recognized on the sale of the Company's television
properties. This gain was partially offset by approximately $25 million of
income tax expense largely related to these sales (see Note 3 of Notes to
Consolidated Financial Statements).
The Company's net loss applicable to common stock was $0.03 per share for
the quarter ended June 30, 1996, as compared to earnings per share of $0.20 for
the second quarter of 1995. Per share income for the six months ended June 30,
1996 and 1995 was $7.03 and $0.80, respectively.
LIQUIDITY AND CAPITAL RESOURCES
The Company had approximately $46.3 million and $1.2 million in cash and
cash equivalents at June 30, 1996 and December 31, 1995, respectively. The
increase is due to the
8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
investment in money market funds of a portion of the proceeds received from the
sales of the Company's television stations. The Company had net working capital
of approximately $98.0 million at June 30, 1996. The Company had no long- term
debt outstanding as of June 30, 1996.
The Company is actively reviewing 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 either through the purchase of additional PriCellular securities or
a business combination with PriCellular; and (v) other acquisition and
investment opportunities which may present themselves from time to time.
If any of the Company's acquisition and investment alternatives is
successful the Company may require additional capital to finance it. After
giving effect to the sale of its television properties, the Company has
significant liquid assets on hand for acquisition purposes. Additionally, the
Company may use a variety of sources including the proceeds of debt sold to the
public, borrowings from banks and other institutional lenders, seller financing,
convertible preferred stock and common stock issued at the parent company or
subsidiary level. There can be no assurance that the Company will be successful
in obtaining funds from those sources.
The Company's sources of funds to service 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. Cash used in operations for the period
ended June 30, 1996, as reported on the Condensed Consolidated Statement of Cash
Flow, reflects the receipt of proceeds from the sales of the Company's
television stations and the subsequent investment of a portion of these proceeds
in marketable securities, as well as the use of cash to pay income taxes related
to the sales.
In March 1995 the Company's Board of Directors authorized the repurchase by
the Company of up to 1,000,000 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 six month period ended June 30,
1996, the Company repurchased approximately 146,000 shares pursuant to that
authorization and previous authorizations.
9
<PAGE> 10
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
None.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
(27) Financial data schedule
(b) Reports on Form 8-K
None.
10
<PAGE> 11
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities and
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
PRICE COMMUNICATIONS CORPORATION
Dated: July 19, 1996 By /s/ Robert Price
----------------------------
Robert Price
President and Chief Financial Officer
11
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 46313162
<SECURITIES> 68516469
<RECEIVABLES> 920112
<ALLOWANCES> (473579)
<INVENTORY> 0
<CURRENT-ASSETS> 115332002
<PP&E> 376975
<DEPRECIATION> (207163)
<TOTAL-ASSETS> 126401814
<CURRENT-LIABILITIES> 17287279
<BONDS> 0
0
0
<COMMON> 93676
<OTHER-SE> 109020859
<TOTAL-LIABILITY-AND-EQUITY> 109114535
<SALES> 0
<TOTAL-REVENUES> 3491441
<CGS> 529577
<TOTAL-COSTS> 3785077
<OTHER-EXPENSES> (95944376)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 212376
<INCOME-PRETAX> 94908787
<INCOME-TAX> 24866075
<INCOME-CONTINUING> 70042712
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 70042712
<EPS-PRIMARY> 7.03
<EPS-DILUTED> 7.03
</TABLE>
