<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 September 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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
9,247,208 shares of Common Stock, Par Value $.01 per share, outstanding as of
November 8, 1996.
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PRICE COMMUNICATIONS CORPORATION AND SUBSIDIARIES
INDEX TO QUARTERLY REPORT ON FORM 10-Q
September 30, 1996
PART I - FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Page
ITEM 1. FINANCIAL STATEMENTS Number
<S> <C>
Consolidated Balance Sheets at September 30, 1996
and December 31, 1995......................................... 3
Consolidated Statements of Operations for the
Three and Nine Months Ended September 30, 1996 and 1995..... 4
Condensed Consolidated Statements of Cash Flows
for the Nine Months Ended September 30, 1996 and 1995......... 5
Notes to Consolidated Financial Statements............................. 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS........ 8
PART II - OTHER INFORMATION..................................................... 10
SIGNATURES............................................................. 11
</TABLE>
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PRICE COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1996 1995
------------ ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 94,753,223 $ 1,206,557
Short-term investments (Note 4) 13,880,915 237,975
Securities fair value adjustment (Note 4) 2,248,990
Accounts receivable, net 458,242 6,096,446
Film broadcast rights -- 1,764,468
Prepaid expenses and other current assets 6,923 741,307
------------ ------------
Total current assets 111,348,293 10,046,753
------------ ------------
Long-term investments 10,850,000 8,350,000
Property and equipment, at cost less
accumulated depreciation 164,853 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 29,500 73,907
------------ ------------
Total assets $122,932,646 $ 95,985,398
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 2,548,647 $ 3,197,471
Accrued interest -- 510,119
Current portion of long-term debt -- 28,000,000
Income taxes payable (Note 3) 9,196,325 --
Deferred tax liability (Note 4) 787,146 --
Other current liabilities -- 4,601,409
------------ ------------
Total current liabilities 12,532,118 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
9,278,908 and 9,579,842 at September 30, 1996
and December 31, 1995, respectively 92,789 95,798
Additional paid-in capital 14,263,354 16,935,009
Unrealized gain on marketable equity securities,
net of tax effect (Note 4) 1,461,844 --
Retained earnings 94,582,541 23,844,875
------------ ------------
Total shareholders' equity 110,400,528 40,875,682
------------ ------------
Total liabilities and shareholders' equity $122,932,646 $ 95,985,398
============ ============
</TABLE>
See accompanying notes to consolidated financial statements
3
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PRICE COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended September 30, Nine months ended September 30,
-------------------------------- --------------------------------
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenue -- $ 7,887,917 $ 3,491,441 $ 24,553,534
Agency and representatives' commissions -- 1,231,532 529,577 3,883,483
------------ ------------ ------------ ------------
Net revenue -- 6,656,385 2,961,864 20,670,051
------------ ------------ ------------ ------------
Operating expenses -- 3,588,962 2,131,801 11,346,185
Corporate expenses 583,536 877,755 1,794,455 2,013,718
Net (gain) loss on marketable securities (301,746) 110,629 1,387,843 110,629
Interest income and other, net (1,059,193) (403,832) (3,241,282) (6,876,459)
Gain on sale of media properties (Note 3) -- -- (95,451,876) --
Interest expense 2,161 511,481 214,537 1,572,454
Amortization of deferred debt expense -- -- -- 360,000
Depreciation and amortization 12,528 977,742 454,885 2,710,271
------------ ------------ ------------ ------------
(762,714) 5,662,737 (92,709,637) 11,236,798
------------ ------------ ------------ ------------
Income before income taxes 762,714 993,648 95,671,501 9,433,253
Income tax expense (benefit) 67,760 5,080 24,933,835 (152,616)
------------ ------------ ------------ ------------
Net income $ 694,954 $ 988,568 $ 70,737,666 $ 9,585,869
============ ============ ============ ============
Income per share $ 0.07 $ 0.10 $ 7.42 $ 0.91
============ ============ ============ ============
</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>
Nine months ended September 30,
----------------------------------
1996 1995
------------- -------------
<S> <C> <C>
NET CASH (USED IN) PROVIDED BY
OPERATING ACTIVITIES $ (14,146,709) $ 5,489,163
CASH FLOWS PROVIDED BY INVESTING ACTIVITIES:
Proceeds from sale of media properties 156,007,011 --
Recovery on notes receivable, net -- 7,593,802
Purchase of marketable securities, net (15,030,783) (1,042,179)
Long-term investments (2,500,000) --
Capital expenditures (108,189) (1,100,958)
Other -- (28,300)
------------- -------------
Net cash provided by investing activities 138,368,039 5,422,365
------------- -------------
CASH FLOWS (USED IN) 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
Repurchase of common stock (3,042,723) (8,664,219)
Proceeds from stock options exercised 368,059 121,951
------------- -------------
Net cash (used in) financing activities (30,674,664) (9,402,268)
------------- -------------
Increase in cash and cash equivalents 93,546,666 1,509,260
Cash and cash equivalents at beginning of period 1,206,557 1,136,010
============= =============
Cash and cash equivalents at end of period $ 94,753,223 $ 2,645,270
============= =============
Supplemental information:
Income taxes paid, net of refunds $ 17,626,000 $ 180,718
============= =============
Interest paid $ 715,016 $ 1,572,454
============= =============
</TABLE>
See accompanying notes to consolidated financial statements
5
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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. The results of operations for any interim period are not necessarily
indicative of the results for a full year. These financial statements should be
read in conjunction with the financial statements and notes thereto included in
the Company's 1995 Annual Report on Form 10-K.
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 9,456,000 and 9,533,000
for the three and nine months ended September 30, 1996, respectively, and
10,392,000 and 10,528,000 for the three and nine months ended September 30,
1995, respectively. All presentations of shares outstanding and income per
common 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 937,500 shares (as adjusted to
reflect the five-for-four stock splits in March and October 1996) of Class A
Common Stock of PriCellular Corporation, an affiliate, for approximately $6.3
million. In connection with PriCellular's secondary offering in August 1996, the
Company purchased an additional 625,000 shares of Class A Common Stock of
PriCellular Corporation, for $5 million. As of September 30, 1996, the Company
had acquired an additional 152,500 shares of PriCellular Class A Common Stock
for approximately $1.6 million, through purchases of shares made over time in
the open market (see Note 4 below).
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.
4. 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 September 30, 1996, the Company's
Short-Term investments were in marketable equity securities and classified as
"available-for-sale securities" under the provisions of SFAS No. 115.
Accordingly, unrealized holding gains and losses for available-for-sale
securities are excluded from earnings and reported net of taxes, as a separate
component of shareholders' equity until realized.
Short-Term investments are shown at cost, along with a valuation
adjustment to reflect fair value, which is based on quoted market prices for
these investments.
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 nine months ended September 30, 1996 are not comparable to the
three and nine months ended September 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.
The Company had net income of approximately $695,000 for the three
months ended September 30, 1996, compared with net income of approximately
$989,000 for the three months ended September 30, 1995. Earnings for the quarter
ended September 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, partially offset by interest income earned on investments in money market
funds and U.S. treasuries of approximately $1 million and by a net realized gain
on the sale of marketable securities of approximately $300,000. In addition,
corporate expenses decreased approximately $300,000 as compared to the third
quarter of 1995. Net income for the nine months ended September 30, 1996 was
$70.7 million as compared with $9.6 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 income applicable to common stock was $.07 per share
for the quarter ended September 30, 1996, as compared to earnings per share of
$.10 for the third quarter of 1995. Per share income for the nine months ended
September 30, 1996 and 1995 was $7.42 and $.91, respectively.
8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES
The Company had approximately $94.8 million and $1.2 million in cash
and cash equivalents at September 30, 1996 and December 31, 1995, respectively.
The increase is due to the proceeds received from the sales of the Company's
television stations which have been invested primarily in money market funds and
marketable equity securities. The Company had net working capital of
approximately $98.8 million at September 30, 1996. The Company had no long- term
debt outstanding as of September 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.
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 nine month period ended
September 30, 1996, the Company repurchased approximately 404,000 shares
pursuant to that authorization and previous authorizations.
9
<PAGE> 10
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
None.
Item 2. CHANGES IN SECURITIES
None.
Item 3. DEFAULTS UPON SENIOR SECURITIES
None.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
Item 5. OTHER INFORMATION
None.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
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: November 13, 1996 By /s / Robert
------------
Price
Robert Price
President and Chief Financial Officer
11
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 94,753,223
<SECURITIES> 16,129,905
<RECEIVABLES> 931,821
<ALLOWANCES> (473,579)
<INVENTORY> 0
<CURRENT-ASSETS> 111,348,293
<PP&E> 250,562
<DEPRECIATION> (85,709)
<TOTAL-ASSETS> 122,932,646
<CURRENT-LIABILITIES> 12,532,118
<BONDS> 0
0
0
<COMMON> 92,789
<OTHER-SE> 110,307,739
<TOTAL-LIABILITY-AND-EQUITY> 122,932,646
<SALES> 0
<TOTAL-REVENUES> 2,961,864
<CGS> 0
<TOTAL-COSTS> (2,131,801)
<OTHER-EXPENSES> 95,055,975
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 214,537
<INCOME-PRETAX> 95,671,501
<INCOME-TAX> 24,933,835
<INCOME-CONTINUING> 70,737,666
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 70,737,666
<EPS-PRIMARY> 7.42
<EPS-DILUTED> 0
</TABLE>
