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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q/A
AMENDMENT NO. 1
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|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number
333-36253
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PRICE COMMUNICATIONS WIRELESS, INC.
(Exact Name of Registrant as specified in its charter)
Delaware 13-3956941
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
45 Rockefeller Plaza, 10020
New York, New York (Zip Code)
(Address of principal executive offices)
Registrant's telephone number (212) 757-5600
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Securities registered pursuant to Section 12(b) or Section 12(g) of the Act:
None
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 |_|
The number of shares outstanding of the issuer's common stock as of July 31,
1999 was 100.
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<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<S> <C>
PART 1. FINANCIAL INFORMATION
ITEM 1. Financial Statements (unaudited)
Price Communications Wireless, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets - June 30, 1999 and December 31, 1998....... 1
Condensed Consolidated Statements of Operations - Three months ended
June 30, 1999 and 1998 and six months ended June 30, 1999 and 1998......... 2
Condensed Consolidated Statements of Cash Flows - Six months ended
June 30, 1999 and 1998..................................................... 3
Notes to Condensed Consolidated Financial Statements ............................. 4
Palmer Wireless Holdings, Inc.
Condensed Consolidated Balance Sheets - June 30, 1999 and December 31, 1998....... 6
Condensed Consolidated Statements of Operations - Three months ended
June 30, 1999 and 1998 and six months ended June 30, 1999 and 1998......... 7
Condensed Consolidated Statements of Cash Flows - Six months ended
June 30, 1999 and 1998..................................................... 8
Notes to Condensed Consolidated Financial Statements ............................. 9
Cellular Systems of Southeast Alabama, Inc.
Condensed Consolidated Balance Sheets - June 30, 1999 and December 31, 1998....... 10
Condensed Consolidated Statements of Operations - Three months ended
June 30, 1999 and 1998 and six months ended June 30, 1999 and 1998......... 11
Condensed Consolidated Statements of Cash Flows - Six months ended
June 30, 1999 and 1998..................................................... 12
Notes to Condensed Consolidated Financial Statements ............................. 13
Albany Cellular Partners
Condensed Consolidated Balance Sheets - June 30, 1999 and December 31, 1998....... 14
Condensed Consolidated Statements of Operations - Three months ended
June 30, 1999 and 1998 and six months ended June 30, 1999 and 1998......... 15
Condensed Consolidated Statements of Cash Flows - Six months ended
June 30, 1999 and 1998..................................................... 16
Notes to Condensed Consolidated Financial Statements ............................. 17
Cellular Dynamics Telephone Company of Georgia
Condensed Consolidated Balance Sheets - June 30, 1999 and December 31, 1998....... 18
Condensed Consolidated Statements of Operations - Three months ended
June 30, 1999 and 1998 and six months ended June 30, 1999 and 1998......... 19
Condensed Consolidated Statements of Cash Flows - Six months ended
June 30, 1999 and 1998..................................................... 20
Notes to Condensed Consolidated Financial Statements ............................. 21
Columbus Cellular Telephone Company
Condensed Consolidated Balance Sheets - June 30, 1999 and December 31, 1998....... 22
Condensed Consolidated Statements of Operations - Three months ended
June 30, 1999 and 1998 and six months ended June 30, 1999 and 1998......... 23
Condensed Consolidated Statements of Cash Flows - Six months ended
June 30, 1999 and 1998..................................................... 24
Notes to Condensed Consolidated Financial Statements ............................. 25
</TABLE>
i
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<TABLE>
<S> <C>
Dothan Cellular Telephone Company, Inc.
Condensed Consolidated Balance Sheets - June 30, 1999 and December 31, 1998....... 26
Condensed Consolidated Statements of Operations - Three months ended
June 30, 1999 and 1998 and six months ended June 30, 1999 and 1998......... 27
Condensed Consolidated Statements of Cash Flows - Six months ended
June 30, 1999 and 1998..................................................... 28
Notes to Condensed Consolidated Financial Statements ............................. 29
Macon Cellular Telephone Systems Limited Partnership
Condensed Consolidated Balance Sheets - June 30, 1999 and December 31, 1998....... 30
Condensed Consolidated Statements of Operations - Three months ended
June 30, 1999 and 1998 and six months ended June 30, 1999 and 1998......... 31
Condensed Consolidated Statements of Cash Flows - Six months ended
June 30, 1999 and 1998..................................................... 32
Notes to Condensed Consolidated Financial Statements ............................. 33
Montgomery Cellular Holding, Co., Inc.
Condensed Consolidated Balance Sheets - June 30, 1999 and December 31, 1998....... 34
Condensed Consolidated Statements of Operations - Three months ended
June 30, 1999 and 1998 and six months ended June 30, 1999 and 1998......... 35
Condensed Consolidated Statements of Cash Flows - Six months ended
June 30, 1999 and 1998..................................................... 36
Notes to Condensed Consolidated Financial Statements ............................. 37
Montgomery Cellular Telephone Company, Inc.
Condensed Consolidated Balance Sheets - June 30, 1999 and December 31, 1998....... 38
Condensed Consolidated Statements of Operations - Three months ended
June 30, 1999 and 1998 and six months ended June 30, 1999 and 1998......... 39
Condensed Consolidated Statements of Cash Flows - Six months ended
June 30, 1999 and 1998..................................................... 40
Notes to Condensed Consolidated Financial Statements ............................. 41
Panama City Cellular Telephone Company, Ltd.
Condensed Consolidated Balance Sheets - June 30, 1999 and December 31, 1998....... 42
Condensed Consolidated Statements of Operations - Three months ended
June 30, 1999 and 1998 and six months ended June 30, 1999 and 1998......... 43
Condensed Consolidated Statements of Cash Flows - Six months ended
June 30, 1999 and 1998..................................................... 44
Notes to Condensed Consolidated Financial Statements ............................. 45
Panhandle Cellular Partnership
Condensed Consolidated Balance Sheets - June 30, 1999 and December 31, 1998....... 46
Condensed Consolidated Statements of Operations - Three months ended
June 30, 1999 and 1998 and six months ended June 30, 1999 and 1998......... 47
Condensed Consolidated Statements of Cash Flows - Six months ended
June 30, 1999 and 1998..................................................... 48
Notes to Condensed Consolidated Financial Statements ............................. 49
Savannah Cellular Limited Partnership
Condensed Consolidated Balance Sheets - June 30, 1999 and December 31, 1998....... 50
Condensed Consolidated Statements of Operations - Three months ended
June 30, 1999 and 1998 and six months ended June 30, 1999 and 1998......... 51
Condensed Consolidated Statements of Cash Flows - Six months ended
June 30, 1999 and 1998..................................................... 52
Notes to Condensed Consolidated Financial Statements ............................. 53
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
CEI Communications, Inc.
Condensed Consolidated Balance Sheets - June 30, 1999 and December 31, 1998....... 54
Condensed Consolidated Statements of Operations - Three months ended
June 30, 1999 and 1998 and six months ended June 30, 1999 and 1998......... 55
Condensed Consolidated Statements of Cash Flows - Six months ended
June 30, 1999 and 1998..................................................... 56
Notes to Condensed Consolidated Financial Statements ............................. 57
Panama City Communications, Inc.
Condensed Consolidated Balance Sheets - June 30, 1999 and December 31, 1998....... 58
Condensed Consolidated Statements of Operations - Three months ended
June 30, 1999 and 1998 and six months ended June 30, 1999 and 1998......... 59
Condensed Consolidated Statements of Cash Flows - Six months ended
June 30, 1999 and 1998..................................................... 60
Notes to Condensed Consolidated Financial Statements ............................. 61
Price Communications Wireless II, Inc.
Condensed Consolidated Balance Sheets - June 30, 1999 and December 31, 1998....... 62
Condensed Consolidated Statements of Operations - Three months ended
June 30, 1999 and 1998 and six months ended June 30, 1999 and 1998......... 63
Condensed Consolidated Statements of Cash Flows - Six months ended
June 30, 1999 and 1998..................................................... 64
Notes to Condensed Consolidated Financial Statements ............................. 65
Price Communications Wireless III, Inc.
Condensed Consolidated Balance Sheets - June 30, 1999 and December 31, 1998....... 66
Condensed Consolidated Statements of Operations - Three months ended
June 30, 1999 and 1998 and six months ended June 30, 1999 and 1998......... 67
Condensed Consolidated Statements of Cash Flows - Six months ended
June 30, 1999 and 1998..................................................... 68
Notes to Condensed Consolidated Financial Statements ............................. 69
Price Communications Wireless IV, Inc.
Condensed Consolidated Balance Sheets - June 30, 1999 and December 31, 1998....... 70
Condensed Consolidated Statements of Operations - Three months ended
June 30, 1999 and 1998 and six months ended June 30, 1999 and 1998......... 71
Condensed Consolidated Statements of Cash Flows - Six months ended
June 30, 1999 and 1998..................................................... 72
Notes to Condensed Consolidated Financial Statements ............................. 73
Price Communications Wireless V, Inc.
Condensed Consolidated Balance Sheets - June 30, 1999 and December 31, 1998....... 74
Condensed Consolidated Statements of Operations - Three months ended
June 30, 1999 and 1998 and six months ended June 30, 1999 and 1998......... 75
Condensed Consolidated Statements of Cash Flows - Six months ended
June 30, 1999 and 1998..................................................... 76
Notes to Condensed Consolidated Financial Statements ............................. 77
Price Communications Wireless VI, Inc.
Condensed Consolidated Balance Sheets - June 30, 1999 and December 31, 1998....... 78
Condensed Consolidated Statements of Operations - Three months ended
June 30, 1999 and 1998 and six months ended June 30, 1999 and 1998......... 79
Condensed Consolidated Statements of Cash Flows - Six months ended
June 30, 1999 and 1998..................................................... 80
Notes to Condensed Consolidated Financial Statements ............................. 81
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C>
Price Communications Wireless VII, Inc.
Condensed Consolidated Balance Sheets - June 30, 1999 and December 31, 1998....... 82
Condensed Consolidated Statements of Operations - Three months ended
June 30, 1999 and 1998 and six months ended June 30, 1999 and 1998......... 83
Condensed Consolidated Statements of Cash Flows - Six months ended
June 30, 1999 and 1998..................................................... 84
Notes to Condensed Consolidated Financial Statements ............................. 85
Price Communications Wireless VIII, Inc.
Condensed Consolidated Balance Sheets - June 30, 1999 and December 31, 1998....... 86
Condensed Consolidated Statements of Operations - Three months ended
June 30, 1999 and 1998 and six months ended June 30, 1999 and 1998......... 87
Condensed Consolidated Statements of Cash Flows - Six months ended
June 30, 1999 and 1998..................................................... 88
Notes to Condensed Consolidated Financial Statements ............................. 89
Price Communications Wireless IX, Inc.
Condensed Consolidated Balance Sheets - June 30, 1999 and December 31, 1998....... 90
Condensed Consolidated Statements of Operations - Three months ended
June 30, 1999 and 1998 and six months ended June 30, 1999 and 1998......... 91
Condensed Consolidated Statements of Cash Flows - Six months ended
June 30, 1999 and 1998..................................................... 92
Notes to Condensed Consolidated Financial Statements ............................. 93
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations................................................................. 94
PART I1. OTHER INFORMATION
ITEM 1. Legal Proceedings.......................................................... 101
ITEM 2. Changes in Securities...................................................... 101
ITEM 3. Defaults Upon Senior Securities -- None.................................... 101
ITEM 4. Submission of Matters to a Vote of Security Holders........................ 101
ITEM 5. Other Information.......................................................... 101
ITEM 6. Exhibit and Reports on Form 8-K............................................ 101
SIGNATURES................................................................................ 102
</TABLE>
iv
<PAGE>
Item 1. Financial Statements
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
($ in thousands)
(Unaudited) (Audited)
June 30, December 31,
1999 1998
----------- -----------
Assets
Current assets:
Cash and cash equivalents $ 117,299 $ 109,137
Restricted cash -- 79,081
Trade accounts receivable, net of
allowance for doubtful accounts 24,076 20,508
Receivable from other cellular carriers 3,067 2,282
Prepaid expenses and deposits 565 303
Inventory 2,799 3,940
Deferred income taxes 572 1,383
----------- -----------
Total current assets 148,378 216,634
Net property and equipment 145,267 144,828
Licenses, net of amortization 869,511 876,952
Other intangible assets and other assets,
at cost less accumulated amortization 19,026 25,320
----------- -----------
$ 1,182,182 $ 1,263,734
=========== ===========
Liabilities and Equity (Deficit)
Current liabilities:
Payable to Price Communications Corporation $ 928 $ 1,151
Accounts payable and accrued expenses 22,885 21,616
Accrued interest payable 11,617 11,779
Accrued salaries and employee benefits 2,499 2,656
Deferred revenue 6,355 5,535
Customer deposits 1,253 921
----------- -----------
Total current liabilities 45,537 43,658
Long-term debt 700,000 700,000
Obligation of Parent Company -- 209,432
Accrued income taxes - long term 23,426 22,775
Deferred income taxes 291,315 290,370
Minority interests 6,939 9,530
----------- -----------
Total liabilities 1,067,217 1,275,765
----------- -----------
Commitments and contingencies -- --
Stockholder's equity (deficit) 114,965 (12,031)
----------- -----------
$ 1,182,182 $ 1,263,734
=========== ===========
See accompanying notes to condensed consolidated financial statements.
1
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
($ in thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the three months For the six months
ended June 30, ended June 30,
--------------------- ----------------------
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenue:
Service $ 59,839 $ 45,737 $ 112,660 $ 86,421
Equipment sales and installation 4,770 3,181 8,540 5,772
--------- --------- --------- ---------
Total revenue 64,609 48,918 121,200 92,193
--------- --------- --------- ---------
Operating expenses:
Engineering, technical and other direct 8,076 6,655 16,389 13,022
Cost of equipment 7,601 6,019 14,441 11,515
Selling, general and administrative 15,288 14,044 28,671 26,145
Depreciation and amortization 10,667 11,165 21,387 22,553
--------- --------- --------- ---------
Total operating expenses 41,632 37,883 80,888 73,235
--------- --------- --------- ---------
Operating income 22,977 11,035 40,312 18,958
--------- --------- --------- ---------
Other income (expense):
Interest expense, net (21,316) (18,082) (42,472) (35,907)
Other income (expense), net 47 (6) 100 (43)
--------- --------- --------- ---------
Total other expense (21,269) (18,088) (42,372) (35,950)
--------- --------- --------- ---------
Income (loss) before minority interest
share of income, income taxes
and extraordinary item 1,708 (7,053) (2,060) (16,992)
Minority interest share of income (370) (542) (987) (1,002)
--------- --------- --------- ---------
Income (loss) before income taxes
and extraordinary item 1,338 (7,595) (3,047) (17,994)
Income tax (expense) benefit (535) 2,687 1,087 6,515
--------- --------- --------- ---------
Income (loss) before extraordinary item 803 (4,908) (1,960) (11,479)
Extraordinary item - write-off of
deferred finance costs,
net of income tax benefit of $3,935 -- (5,902) -- (5,902)
--------- --------- --------- ---------
Net income (loss) $ 803 $ (10,810) $ (1,960) $ (17,381)
========= ========= ========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
2
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
($ in thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the six months
ended June 30,
----------------------
1999 1998
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (1,960) $ (17,381)
--------- ---------
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization 21,387 22,553
Minority interest share of income 987 1,002
Deferred income taxes (1,734) (3,217)
Loss on disposal of property -- 37
Interest deferred and added to
obligation of Parent Company 11,309 5,876
Amortization of deferred finance 1,307 9,838
Decrease in trade accounts receivable (4,353) (2,742)
Decrease (increase) in inventory 1,141 (1,327)
Increase (decrease) in accounts
payable and accrued expenses 1,763 (15,821)
(Decrease) increase in accrued interest payable (162) 1,640
Change in other accounts 890 2,893
--------- ---------
Total adjustments 32,535 20,732
--------- ---------
Net cash provided by operating activities 30,575 3,351
--------- ---------
Cash flows from investing activities:
Capital expenditures (10,771) (4,171)
Purchases of minority interests (7,177) --
--------- ---------
Net cash used in investing activities (17,948) (4,171)
--------- ---------
Cash flows from financing activities:
Repayment of long-term debt -- (437,999)
Repayment of advances from Price Communications Corporation (223) (928)
Proceeds from long-term debt -- 525,000
Cash pledged for outstanding interest rate swap contracts -- (6,738)
Interest earned on restricted cash (3,454) --
Increase in other intangible assets and other assets (788)
Payment of debt issuance costs -- (13,760)
--------- ---------
Net cash (used in )/provided by financing activities (4,465) 65,575
--------- ---------
Net increase in cash and cash equivalents 8,162 64,755
Cash and cash equivalents at the beginning of period 109,137 27,926
--------- ---------
Cash and cash equivalents at the end of period $ 117,299 $ 92,681
========= =========
Supplemental disclosure of cash flow information:
Income taxes paid, net $ 205 $ 134
========= =========
Interest paid $ 34,234 $ 29,177
========= =========
Reversal of obligation of Parent Company
recorded on books pursuant to
"push-down" accounting:
Obligation of Parent Company $ 220,741
Elimination of restricted cash (79,081)
Interest earned on restricted cash (3,454)
Write-off of unamortized finance charges (5,760)
Reversal of deferred taxes on accreted interest (3,490)
---------
Addition to paid-in capital $ 128,956
=========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
($ in thousands)
(Unaudited)
(1) Summary of Significant Accounting Policies
Organization and Acquisition
Price Communications Wireless, Inc. ("PCW" or the "Company"), a
wholly-owned subsidiary of Price Communications Cellular Holdings, Inc.
("Holdings"), a wholly-owned subsidiary of Price Communications Cellular, Inc.,
a wholly owned subsidiary of Price Communications Corporation ("PCC"), was
incorporated on May 29, 1997 in connection with the purchase of Palmer Wireless,
Inc. and subsidiaries ("Palmer").
In May 1997, PCC, PCW and Palmer entered into an Agreement and Plan of
Merger (the "Merger Agreement"). The Merger Agreement provided, among other
things, for the merger of PCW with and into Palmer with Palmer as the surviving
corporation (the "Merger"). In October 1997, the Merger was consummated and
Palmer changed its name to "Price Communications Wireless, Inc."
The acquisition was funded in part by the issuance of PCW of $175.0
million aggregate principal amount of 11 3/4% Senior Subordinated Notes due
2007, a $44.0 million equity contribution from PCC, the issuance and sale for
$80.0 million by Holdings of units consisting of $153.4 million principal amount
of 13 1/2% Senior Secured Discount Notes due 2007 and the cash proceeds
generated from the sale of Palmer's Fort Myers, Florida MSA and GA-1 RSA the
total of which approximated $190.2 million. In addition, the Company entered
into a syndicated senior loan facility providing for term loan borrowings in the
aggregate principal amount of $325.0 million and revolving loan borrowings of
$200.0 million.
In June 1998, the Company issued $525.0 million of 9 1/8% Senior Secured
Notes due December 15, 2006 with interest payable semi-annually commencing
December 15, 1998. The proceeds of these notes were used principally to replace
the previously existing syndicated loan facility mentioned above.
In August 1998, Holdings redeemed all of its outstanding 13 1/2% notes.
The redemption was financed out of the net proceeds of a new $200.0 million
Holdings offering of 11 3/4% Senior Exchangeable Payable-in-Kind notes due 2008.
In June 1999, PCC converted these notes by issuing to the holders 17.2 million
shares of its common stock. The accompanying Balance Sheets include $79.1
million at December 31, 1998 of restricted cash and $209.4 million (including
accrued interest) of the 11 1/4% notes which were obligations of Holdings and
were included in the Balance Sheets solely pursuant to "push down" accounting
rules. The Company had no rights with respect to the restricted cash included
herein.
Basis of Presentation
The accompanying Condensed Consolidated Financial Statements of Price
Communications Wireless, Inc. and subsidiaries (the "Company") have been
prepared without audit pursuant to Rule 10-01 of Regulation S-X of the
Securities and Exchange Commission. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for financial statements. These Condensed Consolidated Financial Statements
should be read in conjunction with the audited Consolidated Financial Statements
previously filed on the Company's Form 10-K. In the opinion of management, all
adjustments (none of which were other than normal recurring items) considered
necessary for a fair presentation have been included. The results of operations
for the interim periods reported are not necessarily indicative of results to be
expected for the year.
4
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements - (Continued)
($ in thousands)
(Unaudited)
(1) Summary of Significant Accounting Policies - (Continued)
For financial reporting purposes, PCW revalued its assets and liabilities
as of October 1, 1997 to reflect the price paid by PCC to acquire 100% of its
Common Stock, a process generally referred to as "push down" accounting.
Impact of New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued Statement of
Accounting Standards No. 133 ("Accounting for Derivative Instruments and Hedging
Activities"). This statement establishes accounting and reporting standards
requiring that all derivative instruments (including certain derivative
instruments embedded in other contracts) be recorded on the balance sheet as an
asset or a liability and measured at their fair value. This statement is
effective for fiscal years beginning after June 15, 1999, but can be adopted
earlier. Management has not yet determined the timing of or method to be used in
adopting this statement. Management does not believe at this time that such
adoption would have a material impact on its consolidated financial statements.
Reclassifications
Certain reclassifications have been made to the 1998 Statement of
Operations and Statement of Cash Flows to conform to the 1999 presentation.
(2) Obligation of Parent Company
Effective June 24, 1999, the Company's parent, PCH, elected to convert the
outstanding indebtedness of the $200 million 11 3/4% Senior Exchangeable
Payable-in-Kind notes according to the provisions of the indenture. Accordingly,
the obligation as of June 24, 1999, which amounted to $220.7 million including
accrued interest, was satisfied by the issuance by PCC of 17.2 million shares of
its common stock. In addition, the restricted cash previously recorded on the
Company's Balance Sheets, as well as the unamortized finance costs and deferred
taxes associated with the accreted interest, have been written off against
paid-in-capital.
5
<PAGE>
Item 1. Financial Statements
PALMER WIRELESS HOLDINGS INC.
Condensed Consolidated Balance Sheets
($ in thousands)
(Unaudited) (Audited)
June 30, December 31,
1999 1998
----------- -----------
Assets
Current assets:
Cash and cash equivalents $ 117,299 $ 109,137
Restricted cash -- 79,081
Trade accounts receivable, net of
allowance for doubtful accounts 24,076 20,508
Receivable from other cellular carriers 3,067 2,282
Prepaid expenses and deposits 565 303
Inventory 2,799 3,940
Deferred income taxes 572 1,383
----------- -----------
Total current assets 148,378 216,634
Net property and equipment 145,267 144,828
Licenses, net of amortization 869,511 876,952
Other intangible assets and other assets,
at cost less accumulated amortization 19,026 25,320
----------- -----------
$ 1,182,182 $ 1,263,734
=========== ===========
Liabilities and Equity (Deficit)
Current liabilities:
Payable to Price Communications Corporation $ 928 $ 1,151
Accounts payable and accrued expenses 22,885 21,616
Accrued interest payable 11,617 11,779
Accrued salaries and employee benefits 2,499 2,656
Deferred revenue 6,355 5,535
Customer deposits 1,253 921
----------- -----------
Total current liabilities 45,537 43,658
Long-term debt 700,000 700,000
Obligation of Parent Company -- 209,432
Accrued income taxes - long term 23,426 22,775
Deferred income taxes 291,315 290,370
Minority interests 6,939 9,530
----------- -----------
Total liabilities 1,067,217 1,275,765
----------- -----------
Commitments and contingencies -- --
Stockholder's equity (deficit) 114,965 (12,031)
----------- -----------
$ 1,182,182 $ 1,263,734
=========== ===========
See accompanying notes to condensed consolidated financial statements.
6
<PAGE>
PALMER WIRELESS HOLDINGS INC.
Condensed Consolidated Statements of Operations
($ in thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the three months For the six months
ended June 30, ended June 30,
---------------------- ----------------------
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenue:
Service $ 59,839 $ 45,737 $ 112,660 $ 86,421
Equipment sales and installation 4,770 3,181 8,540 5,772
--------- --------- --------- ---------
Total revenue 64,609 48,918 121,200 92,193
--------- --------- --------- ---------
Operating expenses:
Engineering, technical and other direct 8,076 6,655 16,389 13,022
Cost of equipment 7,601 6,019 14,441 11,515
Selling, general and administrative 15,288 14,044 28,671 26,145
Depreciation and amortization 10,667 11,165 21,387 22,553
--------- --------- --------- ---------
Total operating expenses 41,632 37,883 80,888 73,235
--------- --------- --------- ---------
Operating income 22,977 11,035 40,312 18,958
--------- --------- --------- ---------
Other income (expense):
Interest expense, net (21,316) (18,082) (42,472) (35,907)
Other income (expense), net 47 (6) 100 (43)
--------- --------- --------- ---------
Total other expense (21,269) (18,088) (42,372) (35,950)
--------- --------- --------- ---------
Income (loss) before minority interest
share of income, income taxes
and extraordinary item 1,708 (7,053) (2,060) (16,992)
Minority interest share of income (370) (542) (987) (1,002)
--------- --------- --------- ---------
Income (loss) before income taxes
and extraordinary item 1,338 (7,595) (3,047) (17,994)
Income tax (expense) benefit (535) 2,687 1,087 6,515
--------- --------- --------- ---------
Income (loss) before extraordinary item 803 (4,908) (1,960) (11,479)
Extraordinary item - write-off of deferred finance costs,
net of income tax benefit of $3,935 -- (5,902) -- (5,902)
--------- --------- --------- ---------
Net income (loss) $ 803 $ (10,810) $ (1,960) $ (17,381)
========= ========= ========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
7
<PAGE>
PALMER WIRELESS HOLDINGS INC.
Condensed Consolidated Statements of Cash Flows
($ in thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the six months
ended June 30,
----------------------
1999 1998
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (1,960) $ (17,381)
--------- ---------
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 21,387 22,553
Minority interest share of income 987 1,002
Deferred income taxes (1,734) (3,217)
Loss on disposal of property -- 37
Interest deferred and added to obligation of Parent Company 11,309 5,876
Amortization of deferred finance 1,307 9,838
Decrease in trade accounts receivable (4,353) (2,742)
Decrease (increase) in inventory 1,141 (1,327)
Increase (decrease) in accounts payable and accrued expenses 1,763 (15,821)
(Decrease) increase in accrued interest payable (162) 1,640
Change in other accounts 890 2,893
--------- ---------
Total adjustments 32,535 20,732
--------- ---------
Net cash provided by operating activities 30,575 3,351
--------- ---------
Cash flows from investing activities:
Capital expenditures (10,771) (4,171)
Purchases of minority interests (7,177) --
--------- ---------
Net cash used in investing activities (17,948) (4,171)
--------- ---------
Cash flows from financing activities:
Repayment of long-term debt -- (437,999)
Repayment of advances from Price Communications Corporation (223) (928)
Proceeds from long-term debt -- 525,000
Cash pledged for outstanding interest rate swap contracts -- (6,738)
Interest earned on restricted cash (3,454) --
Increase in other intangible assets and other assets (788)
Payment of debt issuance costs -- (13,760)
--------- ---------
Net cash (used in)/provided by financing activities (4,465) 65,575
--------- ---------
Net increase in cash and cash equivalents 8,162 64,755
Cash and cash equivalents at the beginning of period 109,137 27,926
--------- ---------
Cash and cash equivalents at the end of period $ 117,299 $ 92,681
========= =========
Supplemental disclosure of cash flow information:
Income taxes paid, net $ 205 $ 134
========= =========
Interest paid $ 34,234 $ 29,177
========= =========
Reversal of obligation of Parent Company recorded on books
pursuant to "push-down" accounting:
Obligation of Parent Company $ 220,741
Elimination of restricted cash (79,081)
Interest earned on restricted cash (3,454)
Write-off of unamortized finance charges (5,760)
Reversal of deferred taxes on accreted interest (3,490)
---------
Addition to paid-in capital $ 128,956
=========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
8
<PAGE>
PALMER WIRELESS HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements - (Continued)
($ in thousands)
(Unaudited)
(1) Summary of Significant Accounting Policies - (Continued)
For financial reporting purposes, the Company revalued its assets and
liabilities as of October 1, 1997 to reflect the price paid by PCC to acquire
100% of its Common Stock, a process generally referred to as "push down"
accounting.
Impact of New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued Statement of
Accounting Standards No. 133 ("Accounting for Derivative Instruments and Hedging
Activities"). This statement establishes accounting and reporting standards
requiring that all derivative instruments (including certain derivative
instruments embedded in other contracts) be recorded on the balance sheet as an
asset or a liability and measured at their fair value. This statement is
effective for fiscal years beginning after June 15, 1999, but can be adopted
earlier. Management has not yet determined the timing of or method to be used in
adopting this statement. Management does not believe at this time that such
adoption would have a material impact on its consolidated financial statements.
Reclassifications
Certain reclassifications have been made to the 1998 Statement of
Operations and Statement of Cash Flows to conform to the 1999 presentation.
9
<PAGE>
CELLULAR SYSTEMS OF SOUTHEAST ALABAMA, INC.
AND SUBSIDIARY
Consolidated Balance Sheets
($ in thousands)
<TABLE>
<CAPTION>
(Unaudited) (Audited)
June 30, December 31,
1999 1998
---- ----
<S> <C> <C>
Assets
Current Assets:
Cash $ 40 $ 57
Trade accounts receivable, less allowance for doubtful
accounts of $49 in 1999 and $30 in 1998 1,763 1,618
Inventory 124 120
Other current assets 26 8
---------------------
Total current assets 1,953 1,803
---------------------
Property and equipment :
Land and land improvements 357 356
Buildings and leasehold improvements 196 196
Equipment and furnishings 329 324
Cellular equipment 5,720 5,474
---------------------
6,602 6,350
Less accumulated depreciation and amortization 1,165 794
---------------------
Net property and equipment 5,437 5,556
Licenses and other intangibles, less
accumulated amortization of $2,188 in 1999
and $1,576 in 1998 46,756 47,368
---------------------
$54,146 $54,727
=====================
Liabilities and Stockholder's Equity
Current liabilities:
Accrued salaries and benefits $ 38 $ 23
Other accrued expenses 608 125
Deferred revenue 516 427
Customer deposits 67 53
---------------------
Total current liabilities 1,229 628
Deferred income taxes 17,673 17,895
Advances from affiliates 2,823 4,717
---------------------
Total liabilities 21,725 23,240
---------------------
Commitments and contingencies
Stockholder's equity :
Common stock, par value $.01 per share
Class A, authorized and issued 5,001 shares -- --
Class B, authorized and issued 4,999 shares -- --
Class C, authorized 90,000 shares, none issued -- --
Additional paid-in capital 30,343 30,343
Retained earnings 2,078 1,144
---------------------
Total stockholder's equity 32,421 31,487
------- -------
$54,146 $54,727
=====================
</TABLE>
See accompanying notes to consolidated financial statements.
10
<PAGE>
CELLULAR SYSTEMS OF SOUTHEAST ALABAMA, INC.
AND SUBSIDIARY
Consolidated Statements of Operations
($ in thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the three months For the six months
ended June 30, ended June 30,
1999 1998 1999 1998
------ ------ ------ -----
<S> <C> <C> <C> <C>
Revenue:
Service revenue $4,023 $2,986 $7,810 5,657
Equipment sales and installation 323 280 614 523
---------------------------------------
Total revenue 4,346 3,266 8,424 6,180
---------------------------------------
Operating expenses:
Engineering, technical and other direct service 1,560 1,026 3,214 1,803
Cost of equipment 401 446 810 834
Sales and marketing 234 172 453 342
General and administrative 681 690 1,373 1,326
Depreciation and amortization 495 499 984 979
---------------------------------------
Total operating expenses 3,371 2,833 6,834 5,284
---------------------------------------
Operating income 975 433 1,590 896
Interest expense 48 125 107 240
---------------------------------------
Net income before taxes 927 308 1,483 656
Provision for income taxes 343 115 549 243
---------------------------------------
Net income $ 584 $ 193 $ 934 $ 413
=======================================
</TABLE>
See accompanying notes to consolidated financial statements.
11
<PAGE>
CELLULAR SYSTEMS OF SOUTHEAST ALABAMA, INC.
AND SUBSIDIARY
Consolidated Statements of Cash Flows
($ in thousands)
(Unaudited)
For the six months
ended June 30,
1999 1998
---- ----
Cash flows from operating activities:
Net income $ 934 $ 413
--------------------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 984 979
Deferred taxes (222) (214)
Increase in trade accounts receivable (145) (204)
Increase in inventory (4) (67)
('Increase) decrease in other current assets (18) 3
Increase in accrued expenses 497 16
Increase in deferred revenue 89 72
Increase in customer deposits 14 19
--------------------
Total adjustments 1,195 604
--------------------
Net cash provided by operating activities 2,129 1,017
Cash flows from investing activities:
Purchases of property and equipment (252) (547)
--------------------
Net cash used in investing activities (252) (547)
Cash flows from financing activities:
Decrease in advances from affiliates, net (1,894) (504)
--------------------
Net (decrease) increase in cash (17) (34)
Cash at beginning of year 57 88
--------------------
Cash at end of year $ 40 $ 54
====================
Supplemental disclosure of cash flow information -
Cash paid during the year for interest $ 107 $ 240
====================
See accompanying notes to consolidated financial statements.
12
<PAGE>
CELLULAR SYSTEMS OF SOUTHEAST ALABAMA, INC.
AND SUBSIDIARY
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1) Summary of Significant Accounting Policies
Corporate Information
Cellular Systems of Southeast Alabama (the "Company") was formed on
October 7, 1987, and its wholly owned subsidiary, Dothan Cellular Telephone
Company, Inc., was formed on June 7, 1988, to operate the non-wireline cellular
telephone system in the Dothan, Alabama, Metropolitan Statistical Area. Palmer
Communications Incorporated (Palmer) acquired an interest in the outstanding
stock of Cellular Systems of Southeast Alabama, Inc. on December 20, 1988.
Effective August 4, 1989, Palmer transferred its investment in and
advances to the Cellular Systems of Southeast Alabama, Inc. and subsidiary (the
Company) to Palmer Cellular Partnership (PCP). Palmer owned a majority interest
in PCP. When Palmer's interest in the Company was transferred to PCP, it had no
effect on the carrying value of the assets of the Company.
In March of 1995, Palmer Wireless, Inc. (PWI) issued common stock for 100
percent of the Partnership interest of PCP. Palmer owned a majority interest in
PWI. Since this exchange was between related parties, it was accounted for in a
manner similar to a pooling of interests. References to PWI in the accompanying
consolidated financial statements and notes to consolidated financial statements
include the activity of PWI and its predecessor, PCP.
On May 23, 1997, Price Communications Wireless , Inc. ("PCW") and PWI
entered into a plan of merger whereby PCW merged into PWI with PWI as the
surviving corporation. On October 6, 1997 the merger was completed and PWI
changed its name to PCW. The direct owner of the Company is Palmer Wireless
Holdings, Inc.("Holdings"), which was formed in January, 1994. PCW is the 100%
owner of Holdings.
The Company's subsidiary is the 100% owner of Price Communications
Wireless III, Inc., the license holder for the Dothan MSA.
Basis of Presentation
Holdings owns approximately 95.0% of the Company. For financial reporting
purposes, PCW revalued its assets and liabilities as of October 6, 1997 to
reflect the price paid by Price Communications Corporation to acquire 100% of
PWI's common stock, a process generally referred to as "push down accounting".
On October 6, 1997, PCW allocated the purchase price to each of the markets
purchased and the Company revalued its assets and liabilities to reflect this
allocation. The preliminary allocation of the purchase price resulted in
licenses of approximately $50.4 million. During 1998, the allocation was
finalized resulting in an allocation of approximately $48.9 million to licenses,
with an adjustment also made to deferred tax liability and paid-in-capital to
finalize "push-down" accounting. The license is being amortized over a period of
40 years.
The Consolidated Financial Statements include the accounts of the Company
and its subsidiary. All significant inter-company balances and transactions have
been eliminated.
The Consolidated Financial Statements have been prepared by the Company
without audit in accordance with the rules and regulations of the Securities and
Exchange Commission. In the opinion of management, the statements reflect all
adjustments necessary for a fair presentation of the results of interim periods.
All such adjustments are of a normal and recurring nature. The results of
operations for any interim period are not necessarily indicative of the results
to be expected for a full year.
13
<PAGE>
ALBANY CELLULAR PARTNERS AND SUBSIDIARY
(A Georgia Partnership)
Consolidated Balance Sheets
($ in thousands)
<TABLE>
<CAPTION>
(Unaudited) (Audited)
June 30, December 31,
1999 1998
---- ----
<S> <C> <C>
Assets
Current Assets:
Cash $ 101 $ 161
Trade accounts receivable, less allowance for doubtful
accounts of $118 in 1999 and $77 in 1998 2,299 2,063
Inventory 270 280
Other current assets 29 14
-------------------
Total current assets 2,699 2,518
-------------------
Property and equipment :
Land and land improvements 123 123
Buildings and leasehold improvements 309 279
Equipment and furnishings 773 772
Cellular equipment 9,320 8,520
-------------------
10,525 9,694
Less accumulated depreciation and amortization 1,974 1,368
-------------------
Net property and equipment 8,551 8,326
-------------------
License and other intangibles,
less accumulated amortization of
$3,420 in 1999 and $2,444 in 1998 73,251 74,209
===================
$84,501 $85,053
===================
Liabilities and Partners' Equity
Current liabilities:
Accrued salaries and benefits $ 102 $ 53
Other accrued expenses 409 231
Deferred revenue 775 651
Customer deposits 88 58
-------------------
Total current liabilities 1,374 993
Deferred income taxes 11,605 11,759
Advances from affiliates 30,751 32,023
-------------------
Total liabilities 43,730 44,775
Commitments and contingencies
Partners' equity 40,771 40,278
-------------------
$84,501 $85,053
===================
</TABLE>
See accompanying notes to consolidated financial statements.
14
<PAGE>
ALBANY CELLULAR PARTNERS AND SUBSIDIARY
(A Georgia Partnership)
Consolidated Statements of Operations
($ in thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the three months For the six months
ended June 30, ended June 30,
--------------------------------------------
1999 1998 1999 1998
------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenue:
Service revenue $ 5,409 $ 4,688 $10,599 $ 8,697
Equipment sales and installation 477 273 841 510
--------------------------------------------
Total revenue 5,886 4,961 11,440 9,207
--------------------------------------------
Operating expenses:
Engineering, technical and other direct 1,489 1,554 3,165 2,614
Cost of equipment 669 547 1,265 1,047
Sales and marketing 487 414 937 780
General and administrative 1,135 1,151 2,222 2,225
Depreciation and amortization 791 770 1,565 1,512
--------------------------------------------
Total operating expenses 4,571 4,436 9,154 8,178
--------------------------------------------
Operating income 1,315 525 2,286 1,029
Interest expense 810 840 1,503 1,541
--------------------------------------------
Net income (loss) before income taxes 505 (315) 783 (512)
Provision for income taxes (benefit) 187 (116) 290 (189)
--------------------------------------------
Net income (loss) $ 318 ($ 199) $ 493 ($ 323)
============================================
</TABLE>
See accompanying notes to consolidated financial statements.
15
<PAGE>
ALBANY CELLULAR PARTNERS AND SUBSIDIARY
(A Georgia Partnership)
Consolidated Statements of Cash Flows
($ in thousands)
(Unaudited)
For the six months
ended June 30,
-------------------
1999 1998
------- -------
Cash flows from operating activities:
Net income (loss) $ 493 $ (117)
-------------------
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization 1,565 742
Deferred income taxes (154) (73)
Increase in trade accounts receivable (236) (106)
Decrease (increase) in inventory 10 (34)
Increase in other current assets (15) (8)
Increase (decrease) in accrued expenses 227 (34)
Increase in deferred revenue 124 37
Increase in customer deposits 30 8
-------------------
Total adjustments 1,551 532
-------------------
Net cash provided by operating activities 2,044 415
-------------------
Cash flows from investing activities:
Purchases of property and equipment (821) (175)
-------------------
Net cash used in investing activities (821) (175)
-------------------
Cash flows from financing activities:
Decrease in advances from affiliates, net (1,283) (205)
-------------------
Net increase (decrease) in cash (60) 35
Cash at beginning of year 161 111
-------------------
Cash at end of period $ 101 $ 146
===================
Supplemental disclosure of cash flow information -
Cash paid during the period for interest $ 1,503 $ 1,541
===================
See accompanying notes to consolidated financial statements.
16
<PAGE>
ALBANY CELLULAR PARTNERS AND SUBSIDIARY
(A Georgia Partnership)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1) Summary of Significant Accounting Policies
Partnership Operations
Albany Cellular Partners (the "Partnership") was formed on December 21,
1987, and its wholly owned subsidiary, Cellular Dynamics Telephone Company of
Georgia, was formed on September 17, 1987, to operate the non-wireline cellular
telephone system in the Albany, Georgia, Metropolitan Statistical Area. Palmer
Communications Incorporated ("Palmer") acquired an interest in the outstanding
Partnership interest in the Partnership on December 2, 1988.
Effective August 4, 1989, Palmer transferred its investment in and
advances to the Partnership to Palmer Cellular Partnership ("PCP"). Palmer owned
a majority interest in PCP. When Palmer's interest in the Partnership was
transferred to PCP, it had no effect on the carrying value of the assets of the
Partnership.
In March of 1995, Palmer Wireless, Inc. ("PWI") issued common stock for
100 percent of the Partnership interest of PCP. Palmer owned a majority interest
in PWI. Since this exchange was between related parties, it was accounted for in
a manner similar to a pooling of interest. References to PWI in the accompanying
consolidated financial statements and notes to consolidated financial statements
include the activity of PWI and its predecessor, PCP.
On May 23, 1997, Price Communications Wireless, Inc. ("PCW") and PWI
entered into a plan of merger whereby PCW merged into PWI with PWI as the
surviving corporation. On October 6, 1997 the merger was completed and PWI
changed its name to PCW. The direct owner of the Partnership is Palmer Wireless
Holdings, Inc. ("Holdings"), which was formed in January, 1994. PCW is the 100%
owner of Holdings.
The partnership's subsidiary is the 100% owner of Price Communications
Wireless V, Inc., the license holder for the Albany MSA.
Basis of Presentation
For financial reporting purposes, PCW revalued its assets and liabilities
as of October 6, 1997 to reflect the price paid by Price Communications
Corporation to acquire 100% of PWI's common stock, a process generally referred
to as "push down accounting". On October 6, 1997, PCW allocated the purchase
price to each of the markets purchased and the partnership revalued its assets
and liabilities to reflect this allocation. The preliminary allocation of the
purchase price resulted in licenses of approximately $78.3 million. During 1998
the allocation was finalized resulting in an allocation of approximately $76.7
million to licenses, with an adjustment also made to deferred tax liability and
paid-in-capital to finalize "push-down" accounting. The license is being
amortized over a period of 40 years.
The Consolidated Financial Statements include the accounts of the
Partnership and its subsidiary. All significant intercompany balances and
transactions have been eliminated. The consolidated financial statements of the
Partnership do not include the assets and liabilities of the partners.
The Consolidated Financial Statements have been prepared by the
Partnership without audit in accordance with the rules and regulations of the
Securities and Exchange Commission.
In the opinion of management, the statements reflect all adjustments
necessary for a fair presentation of the results of interim periods. All such
adjustments are of a normal and recurring nature. The results of operations for
any interim period are not necessarily indicative of the results to be expected
for a full year.
17
<PAGE>
CELLULAR DYNAMICS TELEPHONE COMPANY OF GEORGIA
Consolidated Balance Sheets
($ in thousands)
(Unaudited) (Audited)
June 30, December 31,
1999 1998
-------- ------------
Assets
Current Assets:
Cash $ 101 $ 161
Trade accounts receivable, less
allowance for doubtful
accounts of $118 1999 and $77 in 1998 2,299 2,063
Inventory 270 280
Other current assets 29 14
----------------------
Total current assets 2,699 2,518
----------------------
Property and equipment :
Land and land improvements 123 123
Buildings and leasehold improvements 309 279
Equipment and furnishings 773 772
Cellular equipment 9,320 8,520
----------------------
10,525 9,694
Less accumulated depreciation and amortization 1,974 1,368
----------------------
Net property and equipment 8,551 8,326
----------------------
License and other intangibles,
less accumulated amortization of
$3,420 in 1999 and $2,444 in 1998 73,251 74,209
----------------------
$ 84,501 $ 85,053
======================
Liabilities and Stockholders' Equity
Current liabilities:
Accrued salaries and benefits $ 102 $ 53
Other accrued expenses 409 231
Deferred revenue 775 651
Customer deposits 88 58
----------------------
Total current liabilities 1,374 993
Deferred income taxes 11,605 11,759
Advances from affiliates 30,740 32,023
----------------------
Total liabilities 43,719 44,775
Commitments and contingencies
Stockholder's equity
Common stock; no par value, 200
shares authorized; 100 shares issued 1 1
Paid-in capital 44,822 44,811
Retained earnings (deficit) (4,041) (4,534)
----------------------
Total stockholder's equity 40,782 40,278
----------------------
$ 84,501 $ 85,053
======================
See accompanying notes to consolidated financial statements.
18
<PAGE>
CELLULAR DYNAMICS TELEPHONE COMPANY OF GEORGIA
Consolidated Statements of Operations
($ in thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the three months For the three months
ended June 30, ended June 30,
------------------------------------------
1999 1998 1999 1998
------- ------- ------- --------
<S> <C> <C> <C> <C>
Revenue:
Service revenue $ 5,409 $ 4,688 $10,599 $ 8,697
Equipment sales and installation 477 273 841 510
-----------------------------------------
Total revenue 5,886 4,961 11,440 9,207
-----------------------------------------
Operating expenses:
Engineering, technical and other direct 1,489 1,554 3,165 2,614
Cost of equipment 669 547 1,265 1,047
Sales and marketing 487 414 937 780
General and administrative 1,135 1,151 2,222 2,225
Depreciation and amortization 791 770 1,565 1,512
-----------------------------------------
Total operating expenses 4,571 4,436 9,154 8,178
-----------------------------------------
Operating income 1,315 525 2,286 1,029
Interest expense 810 840 1,503 1,541
-----------------------------------------
Net income (loss) before taxes 505 (315) 783 (512)
Provision for income taxes (benefit) 187 (116) 290 (189)
-----------------------------------------
Net income (loss) income $ 318 ($ 199) $ 493 ($ 323)
=========================================
</TABLE>
See accompanying notes to consolidated financial statements.
19
<PAGE>
CELLULAR DYNAMICS TELEPHONE COMPANY OF GEORGIA
Consolidated Statements of Cash Flows
($ in thousands)
(Unaudited)
For the six months
ended June 30,
--------------------
1999 1998
------- -------
Cash flows from operating activities:
Net income (loss) $ 493 $ (117)
--------------------
Adjustments to reconcile net income
(loss) to net cash provided by operating
activities:
Depreciation and amortization 1,565 742
Deferred income taxes (154) (73)
Increase in trade accounts receivable (236) (106)
Decrease (increase) in inventory 10 (34)
Increase in other current assets (15) (8)
Increase (decrease) in accrued expenses 227 (34)
Increase in deferred revenue 124 37
Increase in customer deposits 30 8
--------------------
Total adjustments 1,551 532
--------------------
Net cash provided by operating activities 2,044 415
--------------------
Cash flows from investing activities:
Purchases of property and equipment (821) (175)
--------------------
Net cash used in investing activities (821) (175)
--------------------
Cash flows from financing activities -
Decrease in advances from affiliates, net (1,283) (205)
--------------------
Net (decrease) in cash (60) 35
Cash at beginning of year 161 111
--------------------
Cash at end of period $ 101 $ 146
====================
Supplemental disclosure of cash flow information -
Cash paid during the period for interest $ 1,503 $ 1,541
====================
See accompanying notes to consolidated financial statements.
20
<PAGE>
CELLULAR DYNAMICS TELEPHONE COMPANY OF GEORGIA
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1) Summary of Significant Accounting Policies
Company Operations
Cellular Dynamics Telephone Company of Georgia (the "Company"), was formed
on September 17, 1987 to operate the non-wireline cellular telephone system in
the Albany, Georgia, Metropolitan Statistical Area. Albany Cellular Partners was
formed on December 21, 1987, and is the 100% owner of the Company. The financial
statements of Albany Cellular Partners are included elsewhere in this document.
Palmer Communications Incorporated ("Palmer") acquired an interest in the
outstanding Partnership interest of the Partnership on December 2, 1988.
Effective August 4, 1989, Palmer transferred its investment in and
advances to the Partnership to Palmer Cellular Partnership ("PCP"). Palmer owned
a majority interest in PCP. When Palmer's interest in the Partnership was
transferred to PCP, it had no effect on the carrying value of the assets of the
Partnership.
In March of 1995, Palmer Wireless, Inc. ("PWI") issued common stock for
100 percent of the Partnership interest of PCP. Palmer owned a majority interest
in PWI. Since this exchange was between related parties, it was accounted for in
a manner similar to a pooling of interests. References to PWI in the
accompanying consolidated financial statements and notes to consolidated
financial statements include the activity of PWI and its predecessor, PCP.
On May 23, 1997, Price Communications Wireless , Inc. ("PCW") and PWI
entered into a plan of merger whereby PCW merged into PWI with PWI as the
surviving corporation. On October 6, 1997 the merger was completed and PWI
changed its name to PCW. The direct owner of the Company is Palmer Wireless
Holdings, Inc. ("Holdings") which was formed in January 1994. PCW is the 100%
owner of Holdings.
The Company is the 100% owner of Price Communications Wireless V, Inc.,
the license holder for the Albany MSA.
Basis of Presentation
Holdings owned approximately 96.8% of the Company at June 30, 1999. For
financial reporting purposes, PCW revalued its assets and liabilities as of
October 6, 1997 to reflect the price paid by Price Communications Corporation to
acquire 100% of PWI's common stock, a process generally referred to as "push
down accounting". On October 6, 1997, PCW allocated the purchase price to each
of the markets purchased and the partnership revalued its assets and liabilities
to reflect this allocation. The preliminary allocation of the purchase price
resulted in licenses of approximately $78.3 million. During 1998 the allocation
was finalized resulting in an allocation of approximately $76.7 million to
licenses, with an adjustment also made to deferred tax liability and
paid-in-capital to finalize "push-down" accounting. The license is being
amortized over a period of 40 years.
The Consolidated Financial Statements include the accounts of the Company
and its subsidiary. All significant inter-company balances and transactions have
been eliminated.
The Consolidated Financial Statements have been prepared by the Company
without audit in accordance with the rules and regulations of the Securities and
Exchange Commission. In the opinion of management, the statements reflect all
adjustments necessary for a fair presentation of the results of interim periods.
All such adjustments are of a normal and recurring nature. The results of
operations for any interim period are not necessarily indicative of the results
to be expected for a full year.
21
<PAGE>
COLUMBUS CELLULAR TELEPHONE COMPANY
(A Georgia Partnership)
Consolidated Balance Sheets
($ in thousands)
<TABLE>
<CAPTION>
(Unaudited) (Audited)
June 30, December 31,
1999 1998
---- ----
<S> <C> <C>
Assets
Current Assets:
Cash $ 90 $ 41
Trade accounts receivable, less
allowance for doubtful
accounts of $112 in 1999 and $213 in 1998 1,957 1,847
Inventory 394 472
Other current assets 63 31
---------------------
Total current assets 2,504 2,391
---------------------
Property and equipment :
Land and land improvements 280 277
Buildings and leasehold improvements 315 287
Equipment and furnishings 390 378
Cellular equipment 10,554 10,030
---------------------
11,539 10,972
Less accumulated depreciation and amortization 2,313 1,655
---------------------
Net property and equipment 9,226 9,317
---------------------
Licenses and other intangibles less
accumulated amortization
of $3,982 in 1999 and $2,860 in 1998 85,719 86,841
Advances to affiliates, net 4,523 671
---------------------
$101,972 $ 99,220
=====================
Liabilities and Partners' Equity
Current liabilities:
Accrued salaries and benefits $ 69 $ 39
Other accrued expenses 588 318
Deferred revenue 627 545
Customer deposits 136 110
---------------------
Total current liabilities 1,420 1,012
Deferred income taxes 28,119 28,505
---------------------
Total liabilities 29,539 29,517
Commitments and contingencies
Partners' equity 72,433 69,703
---------------------
$101,972 $ 99,220
=====================
</TABLE>
See accompanying notes to consolidated financial statements.
22
<PAGE>
COLUMBUS CELLULAR TELEPHONE COMPANY
(A Georgia Partnership)
Consolidated Statements of Operations
($ in thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the three months For the six months
ended June 30, ended June 30,
-----------------------------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue:
Service revenue $ 5,135 $ 4,239 $ 9,742 $ 8,084
Equipment sales and installation 531 314 956 567
-----------------------------------------
Total revenue 5,666 4,553 10,698 8,651
-----------------------------------------
Operating expenses:
Engineering, technical and other direct 1,036 794 2,115 1,469
Cost of equipment 773 582 1,428 1,035
Sales and marketing 483 503 942 779
General and administrative 1,083 1,206 2,218 2,211
Depreciation and amortization 891 887 1,780 1,755
-----------------------------------------
Total operating expenses 4,266 3,972 8,483 7,249
-----------------------------------------
Operating income 1,400 581 2,215 1,402
Interest income (expense), net 91 (71) 129 (152)
-----------------------------------------
Net income before taxes 1,491 510 2,344 1,250
Deferred tax benefit 193 193 386 386
-----------------------------------------
Net income $ 1,684 $ 703 $ 2,730 $ 1,636
=========================================
</TABLE>
23
<PAGE>
COLUMBUS CELLULAR TELEPHONE COMPANY
(A Georgia Partnership)
Consolidated Statements of Cash Flows
($ in thousands)
(Unaudited)
For the six months
ended June 30,
1999 1998
------- -------
Cash flows from operating activities:
Net income $ 2,730 $ 1,636
------- -------
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 1,780 1,755
Deferred income taxes (386) (386)
Increase in trade accounts receivable (110) (108)
Decrease (increase) in inventory 78 (194)
Increase in other current assets (32) (52)
Increase in accrued expenses 300 55
Increase in deferred revenue 82 90
Increase in customer deposits 26 37
------- -------
Total adjustments 1,738 1,197
------- -------
Net cash provided by operating activities 4,468 2,833
------- -------
Cash flows from investing activities:
Purchase of property and equipment (567) (726)
------- -------
Net cash used in investing activities (567) (726)
------- -------
Cash flows from financing activities:
Increase (decrease) in advances from afiliates, net (3,852) (2,119)
------- -------
Net increase in cash 49 (12)
Cash at beginning of year 41 66
------- -------
Cash at end of period $ 90 $ 54
======= =======
Supplemental disclosure of cash flow information -
Cash paid during the period for interest $ -- $ 152
======= =======
See accompanying notes to consolidated financial statements.
24
<PAGE>
COLUMBUS CELLULAR TELEPHONE COMPANY
(A Georgia Partnership)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1) Summary of Significant Accounting Policies
Partnership Operations
The formal partnership agreement of Columbus Cellular Telephone Company
(the "Partnership") was entered into by the partners effective March 1, 1988.
The Partnership was inactive for the period March 1, 1988, through June 9, 1988,
at which date Palmer Communications Incorporated ("Palmer") acquired and
transferred the FCC license to operate the non-wireline cellular telephone
system in the Columbus, Georgia, Metropolitan Statistical Area to the
Partnership. The non-wireline cellular telephone system was constructed after
June 9, 1988, and actual operations of the system began on November 24, 1988.
Effective August 4, 1989, Palmer transferred its investment in and
advances to the Partnership to Palmer Cellular Partnership ("PCP"). Palmer owned
a majority interest in PCP. When Palmer's interest in the Partnership was
transferred to PCP, it had no effect on the carrying value of the assets of the
Partnership.
In March of 1995, Palmer Wireless, Inc. ("PWI") issued common stock for
100 percent of the partnership interests of PCP. Palmer owned a majority
interest in PWI. Since this exchange was between related parties, it was
accounted for in a manner similar to a pooling of interests. References to PWI
in the accompanying financial statements and notes to financial statements
include the activity of PWI and its predecessor, PCP.
On May 23, 1997, Price Communications Wireless Inc. ("PCW") and PWI
entered into a plan of merger whereby PCW merged into PWI with PWI as the
surviving corporation. On October 6, 1997 the merger was completed and PWI
changed its name to PCW. The direct owner of the Partnership is Palmer Wireless
Holdings, Inc. ("Holdings") which was formed in January, 1994. PCW is the 100%
owner of Holdings.
The Partnership is the 100% owner of Price Communications Wireless VI
Inc., the license holder for the Columbus MSA.
Basis of Presentation
Holdings owned approximately 99.1% of the Partnership at June 30, 1999.
For financial reporting purposes, PCW revalued its assets and liabilities as of
October 6, 1997 to reflect the price paid by Price Communications Corporation to
acquire 100% of PWI's common stock, a process generally referred to as "push
down accounting". On October 6, 1997, PCW allocated the purchase price to each
of the markets purchased and the Partnership revalued its assets and liabilities
to reflect this allocation. The preliminary allocation of the purchase price
resulted in licenses of approximately $91.5 million. During 1998 the allocation
was finalized resulting in an allocation of approximately $89.7 million to
licenses, with an adjustment also made to deferred tax liability and
paid-in-capital to finalize "push-down" accounting. The license is being
amortized over a period of 40 years.
The financial statements of the Partnership do not include the assets and
liabilities of the partners.
The Consolidated Financial Statements include the accounts of the
Partnership and its subsidiary. All significant inter-company balances and
transactions have been eliminated.
The Consolidated Financial Statements have been prepared by the
Partnership without audit in accordance with the rules and regulations of the
Securities and Exchange Commission. In the opinion of management, the statements
reflect all adjustments necessary for a fair presentation of the results of the
interim periods. All such adjustments are of a normal and recurring nature. The
results of operations for any interim period are not necessarily indicative of
the results to be expected for a full year.
25
<PAGE>
DOTHAN CELLULAR TELEPHONE CO., INC.
Consolidated Balance Sheets
($ in thousands)
(Unaudited) (Audited)
June 30, December 31,
1999 1998
---- ----
Assets
Current Assets:
Cash $ 40 $ 57
Trade accounts receivable, less
allowance for doubtful
accounts of $49 in 1999 and $30 in 1998 1,763 1,618
Inventory 124 120
Other current assets 26 8
-------------------
Total current assets 1,953 1,803
-------------------
Property and equipment :
Land and land improvements 357 356
Buildings and leasehold improvements 196 196
Equipment and furnishings 329 324
Cellular equipment 5,720 5,474
-------------------
6,602 6,350
Less accumulated depreciation and amortization 1,165 794
-------------------
Net property and equipment 5,437 5,556
Licenses and other intangibles,
less accumulated amortization
of $2,188 in 1999 and $1,576 in 1998 46,756 47,368
-------------------
$54,146 $54,727
===================
Liabilities and Stockholder's Equity
Current liabilities:
Accrued salaries and benefits $ 38 $ 23
Other accrued expenses 608 125
Deferred revenue 516 427
Customer deposits 67 53
-------------------
Total current liabilities 1,229 628
Deferred income taxes 17,673 17,895
Advances from affiliates 2,823 4,717
-------------------
Total liabilities 21,725 23,240
-------------------
Commitments and contingencies
Stockholder's equity:
Common stock, par value $.01 per
share; authorized 3,000 shares
issued and outstanding 200 shares -- --
Additional paid-in capital 30,343 30,343
Retained earnings 2,078 1,144
-------------------
Total stockholder's equity 32,421 31,487
-------------------
$54,146 $54,727
===================
See accompanying notes to consolidated financial statements.
26
<PAGE>
DOTHAN CELLULAR TELEPHONE CO., INC.
Consolidated Statements of Operations
($ in thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the three months For the six months
ended June 30, ended June 30,
1999 1998 1999 1998
------ ------ ------ ------
<S> <C> <C> <C> <C>
Revenue:
Service revenue $4,023 $2,986 $7,810 $5,657
Equipment sales and installation 323 280 614 523
----------------------------------------
Total revenue 4,346 3,266 8,424 6,180
----------------------------------------
Operating expenses:
Engineering, technical and other direct 1,560 1,026 3,214 1803
Cost of equipment 401 446 810 834
Sales and marketing 234 172 453 342
General and administrative 681 690 1,373 1326
Depreciation and amortization 495 499 984 979
----------------------------------------
Total operating expenses 3,371 2,833 6,834 5,284
----------------------------------------
Operating income 975 433 1,590 896
Interest expense 48 125 107 240
----------------------------------------
Net income before taxes 927 308 1,483 656
Provision for income taxes 343 115 549 243
----------------------------------------
Net income $ 584 $ 193 $ 934 $ 413
========================================
</TABLE>
See accompanying notes to consolidated financial statements.
27
<PAGE>
DOTHAN CELLULAR TELEPHONE CO., INC.
Consolidated Statements of Cash Flows
($ in thousands)
(Unaudited)
For the six months
ended June 30,
1999 1998
------- -------
Cash flows from operating activities:
Net income $ 934 $ 413
-------------------
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 984 979
Deferred taxes (222) (214)
Increase in trade accounts receivable (145) (204)
Increase in inventory (4) (67)
(Increase) decrease in other current assets (18) 3
Increase in accrued expenses 497 16
Increase in deferred revenue 89 72
Increase in customer deposits 14 19
-------------------
Total adjustments 1,195 604
-------------------
Net cash provided by operating activities 2,129 1,017
-------------------
Cash flows from investing activities:
Purchases of property and equipment (252) (547)
-------------------
Net cash used in investing activities (252) (547)
Cash flows from financing activities:
Decrease in advances from affiliates, net (1,894) (504)
-------------------
Net (decrease) in cash (17) (34)
Cash at beginning of year 57 88
-------------------
Cash at end of period $ 40 $ 54
===================
Supplemental disclosure of cash flow information -
Cash paid during the period for interest $ 107 $ 240
===================
See accompanying notes to consolidated financial statements.
28
<PAGE>
DOTHAN CELLULAR TELEPHONE CO., INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1) Summary of Significant Accounting Policies
Corporate Information
Dothan Cellular Telephone Company, Inc. (the "Company") was formed on June
7,1988 to operate the non-wireline cellular telephone system in the Dothan,
Alabama, Metropolitan Statistical Area. Cellular Systems of Southeast Alabama,
the 100% owner of the Company, was formed on October 7, 1987. On December 20,
1988 Palmer Communications Incorporated (Palmer) acquired an interest in the
outstanding stock of Cellular Systems of Southeast Alabama, Inc. whose financial
statements are included elsewhere in this document.
Effective August 4, 1989, Palmer transferred its investment in and
advances to the Cellular Systems of Southeast Alabama, Inc. and the Company to
Palmer Cellular Partnership (PCP). Palmer owned a majority interest in PCP. When
Palmer's interest in the Company was transferred to PCP, it had no effect on the
carrying value of the assets of the Company.
In March of 1995, Palmer Wireless, Inc. (PWI) issued common stock for 100
percent of the Partnership interest of PCP. Palmer owned a majority interest in
PWI. Since this exchange was between related parties, it was accounted for in a
manner similar to a pooling of interests. References to PWI in the accompanying
consolidated financial statements and notes to consolidated financial statements
include the activity of PWI and its predecessor, PCP.
On May 23, 1997, Price Communications Wireless , Inc. ("PCW") and PWI
entered into a plan of merger whereby PCW merged into PWI with PWI as the
surviving corporation. On October 6, 1997 the merger was completed and PWI
changed its name to PCW. The direct owner of the Company is Palmer Wireless
Holdings, Inc. ("Holdings") which was formed in January, 1994. PCW is the 100%
owner of Holdings.
The Company is the 100% owner of Price Communications Wireless III Inc.,
the license holder for the Dothan MSA.
Basis of Presentation
Holdings owned approximately 95.0% of the Company at June 30, 1999. For
financial reporting purposes, PCW revalued its assets and liabilities as of
October 6, 1997 to reflect the price paid by Price Communications Corporation to
acquire 100% of PWI's common stock, a process generally referred to as "push
down accounting". On October 6, 1997, PCW allocated the purchase price to each
of the markets purchased and the Company revalued its assets and liabilities to
reflect this allocation. The preliminary allocation of the purchase price
resulted in licenses of approximately $50.4 million. During 1998, the allocation
was finalized resulting in an allocation of approximately $48.9 million to
licenses, with an adjustment also made to deferred tax liability and
paid-in-capital to finalize "push-down" accounting. The license is being
amortized over a period of 40 years.
The consolidated financial statements include the accounts of the Company
and its subsidiary All significant inter-company balances and transactions have
been eliminated.
The Consolidated Financial Statements have been prepared by the Company
without audit in accordance with the rules and regulations of the Securities and
Exchange Commission. In the opinion of management, the statements reflect all
adjustments necessary for a fair presentation of the results of interim periods.
All such adjustments are of a normal and recurring nature. The results of
operations for any interim period are not necessarily indicative of the results
to be expected for a full year.
29
<PAGE>
MACON CELLULAR TELEPHONE SYSTEMS LIMITED PARTNERSHIP
(A New Hampshire Limited Partnership)
Consolidated Balance Sheets
($ in thousands)
(Unaudited) (Audited)
June 30, December 31,
1999 1998
---- ----
Assets
Current Assets:
Cash $ 151 $ 145
Trade accounts receivable, less
allowance for doubtful accounts
of $150 in 1999 and $142 in 1998 3,350 2,921
Inventory 440 680
Other current assets 85 58
----------------------
Total current assets 4,026 3,804
----------------------
Property and equipment:
Land and leasehold improvements 203 203
Buildings & improvements 36 36
Equipment and furnishings 797 792
Cellular equipment 16,918 15,947
----------------------
17,954 16,978
Less accumulated depreciation and amortization 3,691 2,569
----------------------
Net property and equipment 14,263 14,409
Advances to affiliate, net 10,314 119
Licenses and other intangibles
less accumulated amortization of
$6,301 in 1999 and $4,603 in 1998 129,879 131,577
----------------------
$158,482 $149,909
======================
Liabilities and Partners' Equity
Current liabilities:
Accrued salaries and benefits $ 92 $ 113
Other accrued expenses 901 460
Deferred revenue 1,049 824
Customer deposits 204 158
----------------------
Total current liabilities 2,246 1,555
Deferred income taxes 40,358 40,888
----------------------
Total liabilities 42,604 42,443
Commitments and contingencies
Partners' equity 115,878 107,466
----------------------
$158,482 $149,909
======================
See accompanying notes to consolidated financial statements.
30
<PAGE>
MACON CELLULAR TELEPHONE SYSTEMS LIMITED PARTNERSHIP
(A New Hampshire Limited Partnership)
Consolidated Statements of Operations
($ in thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the three months For the six months
ended June 30, ended June 30,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue:
Service revenue $ 10,070 $ 7,531 $ 19,753 $ 14,274
Equipment sales and installation 558 367 1,018 706
---------------------------------------------
Total revenue 10,628 7,898 20,771 14,980
---------------------------------------------
Operating expenses:
Engineering, technical and other direct 2,201 1,864 4,754 3,483
Cost of equipment 853 643 1,593 1,266
Sales and marketing 690 398 1,296 780
General and administrative 1,288 1,326 2,565 2,504
Depreciation and amortization 1,416 1,409 2,820 2,715
---------------------------------------------
Total operating expenses 6,448 5,640 13,028 10,748
---------------------------------------------
Operating income 4,180 2,258 7,743 4,232
Interest income (expense), net 154 (180) 139 (394)
---------------------------------------------
Net income before income taxes 4,334 2,078 7,882 3,838
Deferred tax benefit 265 321 530 586
---------------------------------------------
Net income $ 4,599 $ 2,399 $ 8,412 $ 4,424
=============================================
</TABLE>
See accompanying notes to consolidated financial statements.
31
<PAGE>
MACON CELLULAR TELEPHONE SYSTEMS LIMITED PARTNERSHIP
(A New Hampshire Limited Partnership)
Consolidated Statements of Cash Flows
($ in thousands)
(Unaudited)
For the six months
ended June 30,
1999 1998
---- ----
Cash flows from operating activities:
Net income $ 8,412 $ 4,424
---------------------
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 2,820 2,715
Deferred income taxes (530) (586)
Increase in trade accounts receivable (429) (317)
Decrease (increase) in inventory 240 (100)
Increase in other current assets (27) (18)
Increase in accrued expenses 420 66
Increase in deferred revenue 225 145
Increase in customer deposits 46 23
---------------------
Total adjustments 2,765 1,928
---------------------
Net cash provided by operating activities 11,177 6,352
---------------------
Cash flows from investing activities:
Purchases of property and equipment (976) (189)
---------------------
Net cash used in investing activities (976) (189)
---------------------
Cash flows from financing activities:
Increase in advances to affiliates, net (10,195) --
Decrease in advances from affiliates, net -- (6,128)
---------------------
Net increase in cash 6 35
Cash at beginning of year 145 50
---------------------
Cash at end of period $ 151 $ 85
=====================
Supplemental disclosure of cash flow information -
Cash paid during the period for interest $ -- $ 394
=====================
See accompanying notes to consolidated financial statements.
32
<PAGE>
MACON CELLULAR TELEPHONE SYSTEMS LIMITED PARTNERSHIP
(A New Hampshire Limited Partnership)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1) Summary of Significant Accounting Policies
Partnership Operations and Asset Exchange Agreement
Macon Cellular Telephone Systems Limited Partnership (the "Partnership")
was formed on November 11, 1986, to construct and operate certain non-wireline
cellular telephone systems. On October 24, 1989, Palmer Cellular Partnership
("PCP"), a subsidiary of Palmer Communications Incorporated ("Palmer"), directly
or indirectly acquired the Partnership's general partner (approximately 1
percent) and approximately 94 percent of the limited partnership units. In
conjunction with this acquisition, the Partnership entered into an Asset
Exchange Agreement with Macon Cellular Telephone Corp. ("Macon"), whereby the
assets consisted primarily of FCC licenses and a nonwireline cellular telephone
system serving the Macon, Georgia, Metropolitan Statistical Area. The
partnership operates the non-wireline cellular telephone system serving the
Georgia-6 RSA which was acquired on July 5, 1996.
In March of 1995, Palmer Wireless, Inc. ("PWI") issued common stock for
100 percent of the partnership interests of PCP. Palmer owns a majority interest
in PWI. Since this exchange was between related parties, it was accounted for in
a manner similar to a pooling of interests. References to PWI in the
accompanying financial statements and notes to financial statements include the
activity of PWI and its predecessor, PCP.
On May 23, 1997, Price Communications Wireless, Inc. ("PCW") and PWI
entered into a plan of merger whereby PCW merged into PWI with PWI as the
surviving corporation. On October 6, 1997 the merger was completed and PWI
changed its name to PCW. The direct owner of the Partnership is Palmer Wireless
Holdings, Inc. ("Holdings") which was formed in January, 1994. PCW is the 100%
owner of Holdings.
The Partnership is the 100% owner of Price Communications Wireless VII
Inc., the licenseholder for the Macon MSA.
Basis of Presentation
For financial reporting purposes, PCW revalued its assets and liabilities
as of October 6, 1997 to reflect the price paid by Price Communications
Corporation to acquire 100% of PWI's common stock, a process generally referred
to as "push down accounting". On October 6, 1997, PCW allocated the purchase
price to each of the markets purchased and the partnership revalued its assets
and liabilities to reflect this allocation. The preliminary allocation of the
purchase price resulted in licenses of approximately $138.7 million. During 1998
the allocation was finalized resulting in an allocation of approximately $136.2
million to licenses, with an adjustment also made to deferred tax liability and
paid-in-capital to finalize "push-down" accounting. The license is being
amortized over a period of 40 years. Prior to October 6, 1997, PWI also utilized
"push down accounting", as PWI owned approximately 99.1% of the Partnership. As
of June 30, 1999 PWI owns approximately 99.6% of the Partnership.
The accompanying financial statements do not include the assets and
liabilities of the partners.
The Consolidated Financial Statements include the accounts of the
Partnership and its subsidiary. All significant inter-company balances and
transactions have been eliminated.
The Consolidated Financial Statements have been prepared by the
Partnership without audit in accordance with the rules and regulations of the
Securities and Exchange Commission. In the opinion of management, the statements
reflect all adjustments necessary for a fair presentation of the results of
interim periods. All such adjustments are of a normal and recurring nature. The
results of operations for any interim period are not necessarily indicative of
the results to be expected for a full year.
33
<PAGE>
MONTGOMERY CELLULAR HOLDING CO., INC.
AND SUBSIDIARY
Consolidated Balance Sheets
($ in thousands)
(Unaudited) (Audited)
June 30, December 31,
1999 1998
---- ----
Assets
Current Assets:
Cash $ 301 $ 36
Trade accounts receivable, less
allowance for doubtful
accounts of $154 in 1999 and $98 in 1998 3,096 2,365
Inventory 316 182
Other current assets 79 22
----------------------
Total current assets 3,792 2,605
----------------------
Property and equipment :
Land and leasehold improvements 142 136
Equipment and furnishings 423 418
Cellular equipment 12,284 11,958
----------------------
12,849 12,512
Less accumulated depreciation and amortization 2,681 1,820
----------------------
Net property and equipment 10,168 10,692
----------------------
Advances to affiliates 4,741 1,242
Licenses and other intangibles,
less accumulated amortization
of $4,895 in 1999 and $3,507 in 1998 106,056 107,444
----------------------
124,757 121,983
======================
Liabilities and Stockholder's Equity
Current liabilities:
Accrued salaries and benefits $ 83 $ 51
Other accrued expenses 611 296
Deferred revenue 718 525
Customer deposits 110 68
----------------------
Total current liabilities 1,522 940
Deferred income taxes 40,144 40,624
Other notes payable 13 15
----------------------
Total liabilities 41,679 41,579
Commitments and contingencies
Stockholder's equity:
Preferred stock, $.01 par value;
authorized 50,000 shares none issued -- --
Common stock, $.01 par value; authorized
100,000 shares, issued 10,000 shares -- --
Additional paid in capital 69,031 69,031
Retained earnings 14,047 11,373
----------------------
Total stockholder's equity 83,078 80,404
----------------------
$124,757 $121,983
======================
See accompanying notes to consolidated financial statements.
34
<PAGE>
MONTGOMERY CELLULAR HOLDING CO., INC.
AND SUBSIDIARY
Consolidated Statements of Operations
($ in thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the three months For the six months
ended June 30, ended June 30,
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenue:
Service revenue $ 7,475 $ 5,452 $ 13,944 $ 10,486
---------------------------------------------
Equipment sales and installation 545 365 1,025 657
---------------------------------------------
Total revenue 8,020 5,817 14,969 11,143
---------------------------------------------
Operating expenses:
Engineering, technical and other direct 1,471 899 2,817 1729
Cost of equipment 930 700 1,838 1290
Sales and marketing 542 399 1,051 714
General and administrative 1,538 1,448 2,955 2753
Depreciation and amortization 1,102 1,114 2,207 2202
---------------------------------------------
Total operating expenses 5,583 4,560 10,868 8,688
---------------------------------------------
Operating income 2,437 1,257 4,101 2,455
Interest expense 80 (33) 143 (81)
---------------------------------------------
Income before income tax expense 2,517 1,224 4,244 2,374
Provision for income taxes 931 452 1,570 878
---------------------------------------------
Net income $ 1,586 $ 772 $ 2,674 $ 1,496
=============================================
</TABLE>
See accompanying notes to consolidated financial statements.
35
<PAGE>
MONTGOMERY CELLULAR HOLDING CO., INC.
AND SUBSIDIARY
Consolidated Statements of Cash Flows
($ In Thousands)
(Unaudited)
For the six months
ended June 30,
1999 1998
------- -------
Cash flows from operating activities:
Net income $ 2,674 $ 1,496
-------------------
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 2,207 2,202
Deferred income tax (480) (480)
Increase in trade accounts receivable (731) (287)
Increase in inventory (134) (87)
Increase in other current assets (57) (53)
Increase (decrease) in accrued expenses 347 (32)
Increase in deferred revenue 193 99
Increase in customer deposits 42 23
-------------------
Total adjustments 1,387 1,385
-------------------
Net cash provided by operating activities 4,061 2,881
-------------------
Cash flows from investing activities:
Purchases of property and equipment (295) (1,101)
-------------------
Cash flows from financing activities:
Long-term borrowings (2) (1)
Increase in advances from affiliates, net (3,499) --
Decrease in advances to affiliates, net -- (1,886)
-------------------
'Net cash used in financing activities (3,501) (1,887)
-------------------
Net increase (decrease) in cash 265 (107)
Cash at beginning of year 36 184
-------------------
Cash at end of period $ 301 $ 77
===================
Supplemental disclosure of cash flow information -
Cash paid during the year for interest $ -- $ 81
===================
See accompanying notes to consolidated financial statements.
36
<PAGE>
MONTGOMERY CELLULAR HOLDING CO., INC.
AND SUBSIDIARY
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1) Summary of Significant Accounting Policies
Corporate Information
Montgomery Cellular Holding Co., Inc. and its wholly owned subsidiary,
Montgomery Cellular Telephone Company, Inc., (the "Company") were formed in
February 1988 to operate the non-wireline cellular telephone system in the
Montgomery, Alabama, Metropolitan Statistical Area. Palmer Communications
Incorporated ("Palmer") acquired an interest in the outstanding stock of
Montgomery Cellular Holding Co., Inc. on December 31, 1988.
Effective August 4, 1989, Palmer transferred its investment in and
advances to the Company to Palmer Cellular Partnership ("PCP"). Palmer owned a
majority interest in PCP. When Palmer's interest in the Company was transferred
to PCP, it had no effect on the carrying value of the assets of the Company.
In March of 1995, Palmer Wireless, Inc. ("PWI") issued common stock for
100 percent of the partnership interests of PCP. Palmer owns a majority interest
in PWI. Since this exchange was between related parties, it was accounted for in
a manner similar to a pooling of interests.
On May 23, 1997, Price Communications Wireless , Inc. ("PCW") and PWI
entered into a plan of merger whereby PCW merged into PWI with PWI as the
surviving corporation. On October 6, 1997 the merger was completed and PWI
changed its name to PCW. The direct owner of the Company is Palmer Wireless
Holdings Inc. ("Holdings") which was formed in January 1994. PCW is the 100%
owner of Holdings.
The Company's subsidiary is the 100% owner of Price Communications
Wireless IV, Inc. the license holder for the Montgomery MSA.
Basis of Presentation
Holdings owned approximately 94.6% of the Company at June 30, 1999. For
financial reporting purposes, PCW revalued its assets and liabilities as of
October 6, 1997 to reflect the price paid by Price Communications Corporation to
acquire 100% of PWI's common stock, a process generally referred to as "push
down accounting". On October 6, 1997, PCW allocated the purchase price to each
of the markets purchased and the Company revalued its assets and liabilities to
reflect this allocation. The preliminary allocation of the purchase price
resulted in licenses of approximately $113.4 million. During 1998 the allocation
was finalized resulting in an allocation of approximately $111.0 million to
licenses, with an adjustment also made to deferred tax liability and
paid-in-capital to finalize "push-down" accounting. The license is being
amortized over a period of 40 years.
The Consolidated Financial Statements include the accounts of Montgomery
Cellular Holding Co., Inc. and its Subsidiary. All significant inter-company
balances and transactions have been eliminated.
The Consolidated Financial Statements have been prepared by the Company
without audit in accordance with the rules and regulations of the Securities and
Exchange Commission. In the opinion of management, the statements reflect all
adjustments necessary for a fair presentation of the results of interim periods.
All such adjustments are of a normal and recurring nature. The results of
operations for any interim period are not necessarily indicative of the results
for a full year.
37
<PAGE>
MONTGOMERY CELLULAR TELEPHONE CO., INC.
Consolidated Balance Sheets
($ In thousands Except Per Share Amounts))
(Unaudited) (Audited)
June 30, December 31,
1999 1998
---- ----
Assets
Current Assets:
Cash $ 301 $ 36
Trade accounts receivable, less
allowance for doubtful accounts
of $154 in 1999 and $98 in 1998 3,096 2,365
Inventory 316 182
Other current assets 79 22
--------------------
Total current assets 3,792 2,605
--------------------
Property and equipment :
Land and leasehold improvements 142 136
Equipment and furnishings 423 418
Cellular equipment 12,284 12,000
--------------------
12,849 12,554
Less accumulated depreciation and amortization 2,681 1,862
--------------------
Net property and equipment 10,168 10,692
--------------------
Advances to affiliates 4,741 1,242
License and other intangibles,
less accumulated amortization
of $4,895 in 1999 and $3,507 in 1998 106,056 107,444
--------------------
124,757 121,983
====================
Liabilities and Stockholder's Equity
Current liabilities:
Accrued salaries and benefits $ 83 $ 51
Other accrued expenses 611 296
Deferred revenue 718 525
Customer deposits 110 68
--------------------
Total current liabilities 1,522 940
Deferred income taxes 40,144 40,624
Other notes payable 13 15
--------------------
Total liabilities 41,679 41,579
Commitments and contingencies
Stockholder's equity:
Common stock, $1.00 par value;
authorized 5,000 shares,
100 shares, issued and outstanding -- --
Additional paid in capital 69,031 69,031
Retained earnings 14,047 11,373
--------------------
Total stockholder's equity 83,078 80,404
--------------------
$124,757 $121,983
====================
See accompanying notes to consolidated financial statements.
38
<PAGE>
MONTGOMERY CELLULAR TELEPHONE CO., INC.
Consolidated Statements of Operations
($ in thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the three months For the six months
ended June 30, ended June 30,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue:
Service revenue $ 7,475 $ 5,452 $ 13,944 $ 10,486
Equipment sales and installation 545 365 1,025 657
---------------------------------------------
Total revenue 8,020 5,817 14,969 11,143
---------------------------------------------
Operating expenses:
Engineering, technical and other direct 1,471 899 2,817 1,729
Cost of equipment 930 700 1,838 1,290
Sales and marketing 542 399 1,051 714
General and administrative 1,538 1,448 2,955 2,753
Depreciation and amortization 1,102 1,114 2,207 2,202
---------------------------------------------
Total operating expenses 5,583 4,560 10,868 8,688
---------------------------------------------
Operating income 2,437 1,257 4,101 2,455
Interest income (expense) 80 (33) 143 (81)
---------------------------------------------
Income before income tax expense 2,517 1,224 4,244 2,374
Provision for income taxes 931 452 1,570 878
---------------------------------------------
Net income $ 1,586 $ 772 $ 2,674 $ 1,496
=============================================
</TABLE>
See accompanying notes to consolidated financial statements.
39
<PAGE>
MONTGOMERY CELLULAR TELEPHONE CO., INC.
Consolidated Statements of Cash Flows
($ In thousands)
(Unaudited)
For the six months
ended June 30,
1999 1998
------- -------
Cash flows from operating activities:
Net income $ 2,674 $ 1,496
-------------------
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 2,207 2,202
Deferred income tax (480) (480)
Increase in trade accounts receivable (731) (287)
Increase in inventory (134) (87)
Increase in other current assets (57) (53)
Increase (decrease) in accrued expenses 347 (32)
Increase in deferred revenue 193 99
Increase in customer deposits 42 23
-------------------
Total adjustments 1,387 1,385
-------------------
Net cash provided by operating activities 4,061 2,881
-------------------
Cash flows from investing activities:
Purchases of property and equipment (295) (1,101)
-------------------
Cash flows from financing activities:
Long-term borrowings (2) (1)
Increase in advances to affiliates, net (3,499) --
Decrease in advances from affiliates, net -- (1,886)
-------------------
Net cash used in financing activities (3,501) (1,887)
-------------------
Net increase (decrease) in cash 265 (107)
Cash at beginning of year 36 184
-------------------
Cash at end of period $ 301 $ 77
===================
Supplemental disclosure of cash flow information -
Cash paid during the period for interest $ -- $ 81
===================
See accompanying notes to consolidated financial statements.
40
<PAGE>
MONTGOMERY CELLULAR TELEPHONE CO., INC.
Notes to Consolidated Financial Statements
(Unaudited)
1) Summary of Significant Accounting Policies
Corporate Information
Montgomery Cellular Telephone Co., Inc., (the "Company") and its parent
Montgomery Cellular Holding Co., Inc., whose financial statements are included
elsewhere in this document, were formed in February 1988 to operate the
non-wireline cellular telephone system in the Montgomery, Alabama, Metropolitan
Statistical Area. Palmer Communications Incorporated ("Palmer") acquired an
interest in the outstanding stock of Montgomery Cellular Holding Co., Inc. on
December 31, 1988.
Effective August 4, 1989, Palmer transferred its investment in and
advances to the Company to Palmer Cellular Partnership ("PCP"). Palmer owned a
majority interest in PCP. When Palmer's interest in the Company was transferred
to PCP, it had no effect on the carrying value of the assets of the Company.
In March of 1995, Palmer Wireless, Inc. ("PWI") issued common stock for
100 percent of the partnership interests of PCP. Palmer owns a majority interest
in PWI. Since this exchange was between related parties, it was accounted for in
a manner similar to a pooling of interests.
On May 23, 1997, Price Communications Wireless , Inc. ("PCW") and PWI
entered into a plan of merger whereby PCW merged into PWI with PWI as the
surviving corporation. On October 6, 1997 the merger was completed and PWI
changed its name to PCW. The Company's direct owner Montgomery Cellular Holding
Co., Inc. ("Montgomery Holding"). Montgomery Holding in turn is 100% owned by
Palmer Wireless Holdings, Inc. which was formed in January, 1994. PCW is the
100% owner of Holdings.
The Company is the 100% owner of Price Communications Wireless IV, Inc.,
the license holder for the Montgomery MSA.
Basis of Presentation
Holdings owned approximately 94.6% of the Company at June 30, 1999. For
financial reporting purposes, PCW revalued its assets and liabilities as of
October 6, 1997 to reflect the price paid by Price Communications Corporation to
acquire 100% of PWI's common stock, a process generally referred to as "push
down accounting". On October 6, 1997, PCW allocated the purchase price to each
of the markets purchased and the Company revalued its assets and liabilities to
reflect this allocation. The preliminary allocation of the purchase price
resulted in licenses of approximately $113.4 million. During 1998 the allocation
was finalized resulting in an allocation of approximately $111.0 million to
licenses, with an adjustment also made to deferred tax liability and
paid-in-capital to finalize "push-down" accounting. The license is being
amortized over a period of 40 years.
The Consolidated Financial Statements include the accounts of the Company
and its subsidiary. All significant inter-company balances and transactions have
been eliminated.
The Consolidated Financial Statements have been prepared by the Company
without audit in accordance with the rules and regulations of the Securities and
Exchange Commission. In the opinion of management, the statements reflect all
adjustments necessary for a fair presentation of the results of interim periods.
All adjustments are of a normal and recurring nature. The results of operations
for any interim period are not necessarily indicative of the results to be
expected for a full year.
41
<PAGE>
PANAMA CITY CELLULAR TELEPHONE COMPANY, LTD.
(A Florida Limited Partnership)
Balance Sheets
($ in thousands)
(Unaudited) (Audited)
June 30, December 31,
1999 1998
---- ----
Assets
Current Assets:
Cash $ -- $ 18
Trade accounts receivable, less
allowance for doubtful
accounts of $45 in 1999 and $29 in 1998 1,165 961
Inventory 104 135
Other current assets 23 15
--------------------
Total current assets 1,292 1,129
--------------------
Property and equipment :
Land and land improvements 295 295
Buildings and leasehold improvements 109 109
Equipment and furnishings 240 239
Cellular equipment 4,877 4,810
--------------------
5,521 5,453
Less accumulated depreciation and amortization 1,052 692
--------------------
Net property and equipment 4,469 4,761
--------------------
Advances to affiliates 10,399 6,809
License and other intangibles,
less accumulated amortization
of $1,948 in 1999 and $1,406 in 1998 41,387 41,929
--------------------
$57,547 $54,628
====================
Liabilities and Partners' Equity
Current liabilities:
Accrued salaries and benefits $ 33 $ 20
Other accrued expenses 285 98
Deferred revenue 290 225
Customer deposits 82 68
--------------------
Total current liabilities 690 411
Deferred income taxes 12,999 13,169
--------------------
Total liabilities 13,689 13,580
--------------------
Commitments and contingencies
Partners' equity 43,858 41,048
--------------------
$57,547 $54,628
====================
See accompanying notes to consolidated financial statements.
42
<PAGE>
PANAMA CITY CELLULAR TELEPHONE COMPANY, LTD.
(A Florida Limited Partnership)
Consolidated Statements of Operations
($ in thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the three months For the six months
ended June 30, ended June 30,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue:
Service revenue $3,147 $2,569 $5,502 $4,489
Equipment sales and installation 255 190 460 370
------------------------------------
Total revenue 3,402 2,759 5,962 4,859
------------------------------------
Operating expenses:
Engineering, technical and other direct 339 361 656 656
Cost of equipment 347 331 661 635
Sales and marketing 221 160 411 300
General and administrative 578 611 1,101 1,118
Depreciation and amortization 452 466 903 925
------------------------------------
Total operating expenses 1,937 1,929 3,732 3,634
------------------------------------
Operating income 1,465 830 2,230 1,225
Interest income 164 88 410 138
------------------------------------
Income before taxes 1,629 918 2,640 1,363
Deferred tax benefit 85 93 170 186
------------------------------------
Net income $1,714 $1,011 $2,810 $1,549
====================================
</TABLE>
See accompanying notes to consolidated financial statements.
43
<PAGE>
PANAMA CITY CELLULAR TELEPHONE COMPANY, LTD.
(A Florida Limited Partnership)
Consolidated Statements of Cash Flows
($ in thousands)
(Unaudited)
For the six months
ended June 30,
1999 1998
---- ----
Cash flows from operating activities:
Net income $ 2,810 $ 1,549
-------------------
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 903 925
Deferred taxes (170) (186)
Increase in trade accounts receivable (204) (67)
Decrease in inventory 31 57
Increase in other current assets (8) (4)
Increase in accrued expenses 199 71
Increase in deferred revenue 65 26
Increase in customer deposits 14 17
-------------------
Total adjustments 830 839
-------------------
Net cash provided by operating activities 3,640 2,388
-------------------
Cash flows from investing activities:
Purchases of property and equipment (68) (153)
-------------------
Net cash used in investing activities (68) (153)
Cash flows from financing activities -
Increase in advances to affiliates, net (3,590) --
Increase in advances from affiliates, net -- (2,231)
-------------------
Net (decrease) increase in cash (18) 4
Cash at beginning of year 18 13
-------------------
Cash at end of period $ -- $ 17
===================
See accompanying notes to consolidated financial statements.
44
<PAGE>
PANAMA CITY CELLULAR TELEPHONE COMPANY, LTD.
(A Florida Limited Partnership)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1) Summary of Significant Accounting Policies
Partnership Operations
Panama City Cellular Telephone Company Ltd. (the "Partnership") was formed
on April 1, 1988, to construct and operate non-wireline cellular telephone
systems in the Panama City, Florida, Metropolitan Statistical Area. On July 25,
1991, Palmer Cellular Partnership ("PCP"), a subsidiary of Palmer Communications
Incorporated ("Palmer"), acquired 100 percent of the general partners' interest
and a portion of the limited partners' interest.
In March of 1995, Palmer Wireless, Inc. ("PWI") issued common stock for
100 percent of the partnership interests of PCP. Palmer owns a majority interest
in PWI. Since this exchange was between related parties, it was accounted for in
a manner similar to a pooling of interests. References to PWI in the
accompanying financial statements and notes to financial statements include the
activity of PWI and its predecessor, PCP.
On May 23, 1997, Price Communications Wireless , Inc. ("PCW") and PWI
entered into a plan of merger whereby PCW merged into PWI with PWI as the
surviving corporation. On October 6, 1997, the merger was completed and PWI
changed its name to PCW. The Partnership's direct owner is Panhandle Cellular
Partnership ("Panhandle") whose financial statements are included elsewhere in
this document. Panhandle in turn is owned by Palmer Wireless Holdings, Inc.
("Holdings"). PCW is the 100% owner of Holdings.
The Partnership is the 100% owner of Price Communications Wireless IX,
Inc., the license holder for the Panama City MSA.
Basis of Presentation
Holdings owned approximately 92.0% of the Partnership at June 30, 1999.
For financial reporting purposes, PCW revalued its assets and liabilities as of
October 6, 1997 to reflect the price paid by Price Communications Corporation to
acquire 100% of PWI's common stock, a process generally referred to as "push
down accounting". On October 6, 1997, PCW allocated the purchase price to each
of the markets purchased and the Partnership revalued its assets and liabilities
to reflect this allocation. The preliminary allocation of the purchase price
resulted in licenses of approximately $44.2 million. During 1998 the allocation
was finalized resulting in an allocation of approximately $43.3 million to
licenses, with an adjustment also made to deferred tax liability and
paid-in-capital. The license is being amortized over a period of 40 years.
The accompanying financial statements do not include the assets and
liabilities of the partners.
The Consolidated Financial Statements include the accounts of the
Partnership and its subsidiary. All significant inter-company balances and
transactions have been eliminated.
The Consolidated Financial Statements have been prepared by the
Partnership without audit in accordance with rules and regulations of the
Securities and Exchange Commission. In the opinion of management, the statements
reflect all adjustments necessary for a fair presentation of the results of the
interim periods. All such adjustments are of a normal and recurring nature. The
results of operations for any interim period are not necessarily indicative of
the results for a full year.
45
<PAGE>
PANHANDLE CELLULAR PARTNERSHIP
Consolidated Balance Sheets
($ in thousands)
(Unaudited) (Audited)
June 30, December 31,
1999 1998
---- ----
Assets
Current Assets:
Cash $ -- $ 18
Trade accounts receivable,
less allowance for doubtful
accounts of $45 in 1999 and $29 in 1998 1,165 961
Inventory 104 135
Other current assets 23 15
-------------------
Total current assets 1,292 1,129
-------------------
Property and equipment :
Land and land improvements 295 295
Buildings and leasehold improvements 109 109
Equipment and furnishings 240 239
Cellular equipment 4,877 4,810
-------------------
5,521 5,453
Less accumulated depreciation and amortization 1,052 692
-------------------
Net property and equipment 4,469 4,761
Advances to affiliates 10,399 6,809
Licenses and other intangibles,
less accumulated amortization
of $1,948 in 1999 and $1,406 in 1998 41,387 41,929
-------------------
$57,547 $54,628
===================
Liabilities and Partners' Equity
Current liabilities:
Accrued salaries and benefits $ 33 $ 20
Other accrued expenses 285 98
Deferred revenue 290 225
Customer deposits 82 68
-------------------
Total current liabilities 690 411
Deferred income taxes 12,999 13,169
Minority interest 577 549
-------------------
Total liabilities 14,266 14,129
Commitments and contingencies
Partners' equity 43,281 40,499
-------------------
$57,547 $54,628
===================
See accompanying notes to consolidated financial statements.
46
<PAGE>
PANHANDLE CELLULAR PARTNERSHIP
Consolidated Statements of Operations
($ in thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the three months For the six months
ended June 30, ended June 30,
1999 1998 1999 1998
------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenue:
Service revenue $ 3,147 $ 2,569 $ 5,502 $ 4,489
Equipment sales and installation 255 190 460 370
-------------------------------------------
Total revenue 3,402 2,759 5,962 4,859
-------------------------------------------
Operating expenses:
Engineering, technical and other direct 339 361 656 656
Cost of equipment 347 331 661 635
Sales and marketing 221 160 411 300
General and administrative 578 611 1101 1118
Depreciation and amortization 452 466 903 925
-------------------------------------------
Total operating expenses 1,937 1,929 3,732 3,634
-------------------------------------------
Operating income 1,465 830 2,230 1,225
Interest income 164 88 410 138
Minority interest (16) (9) (26) (14)
-------------------------------------------
Income before taxes 1,613 909 2,614 1,349
Deferred tax benefit 85 93 170 186
-------------------------------------------
Net income $ 1,698 $ 1,002 $ 2,784 $ 1,535
===========================================
</TABLE>
See accompanying notes to consolidated financial statements.
47
<PAGE>
PANHANDLE CELLULAR PARTNERSHIP
Consolidated Statements of Cash Flows
($ in thousands)
(Unaudited)
For the six months
ended June 31,
1999 1998
---- ----
Cash flows from operating activities:
Net income $ 2,784 $ 1,535
-------------------
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 903 925
Minority interest share of income 26 14
Deferred taxes (170) (186)
Increase in trade accounts receivable (204) (67)
Decrease in inventory 31 57
Increase in other current assets (8) (4)
Increase in accrued expenses 199 71
Increase in deferred revenue 65 26
Increase in customer deposits 14 17
-------------------
Total adjustments 856 853
-------------------
Net cash provided by operating activities 3,640 2,388
-------------------
Cash flows from investing activities:
Purchases of property and equipment (68) (153)
-------------------
Net cash used in investing activities (68) (153)
Cash flows from financing activities:
Increase in advances to affiliates, net (3,590) --
Increase in advances tfrom affiliates, net -- (2,231)
-------------------
Net increase (decrease) in cash (18) 4
Cash at beginning of year 18 13
-------------------
Cash at end of period $ -- $ 17
===================
See accompanying notes to consolidated financial statements.
48
<PAGE>
PANHANDLE CELLULAR PARTNERSHIP
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1) Summary of Significant Accounting Policies
Partnership Operations
Panhandle Cellular Partnership. (the "Partnership") was formed on January
1, 1987, to construct and operate non-wireline cellular telephone systems in the
Panama City, Florida, Metropolitan Statistical Area. The Partnership is the
99.01% partner of Panama City Cellular Telephone Co., Ltd. which was formed on
April 1, 1988 and whose financial statements are included elsewhere in this
document. On July 25, 1991, Palmer Cellular Partnership ("PCP"), a subsidiary of
Palmer Communications Incorporated ("Palmer"), acquired an interest in the
Partnership.
In March of 1995, Palmer Wireless, Inc. ("PWI") issued common stock for
100 percent of the partnership interests of PCP. Palmer owns a majority interest
in PWI. Since this exchange was between related parties, it was accounted for in
a manner similar to a pooling of interests. References to PWI in the
accompanying financial statements and notes to financial statements include the
activity of PWI and its predecessor, PCP.
On May 23, 1997, Price Communications Wireless, Inc. ("PCW") and PWI
entered into a plan of merger whereby PCW merged into PWI with PWI as the
surviving corporation. On October 6, 1997, the merger was completed and PWI
changed its name to PCW. The direct owner of the Partnership is Palmer Wireless
Holdings, Inc. ("Holdings") which has a 78.41% ownership interest. Holdings,
which was formed in January, 1994, is 100% owned by PCW.
The Partnership's subsidiary is the 100% owner of Price Communications
Wireless IX, Inc., the license holder for the Panama City MSA.
Basis of Presentation
Holdings owned approximately 77.7% of the Partnership at March 31, 1999.
For financial reporting purposes, PCW revalued its assets and liabilities as of
October 6, 1997 to reflect the price paid by Price Communications Corporation to
acquire 100% of PWI's common stock, a process generally referred to as "push
down accounting". On October 6, 1997, PCW allocated the purchase price to each
of the markets purchased and the Partnership revalued its assets and liabilities
to reflect this allocation. The preliminary allocation of the purchase price
resulted in licenses of approximately $44.2 million. During 1998 the allocation
was finalized resulting in an allocation of approximately $43.3 million to
licenses, with an adjustment also made to deferred tax liability and
paid-in-capital to finalize "push-down" accounting. The license is being
amortized over a period of 40 years.
The accompanying financial statements do not include the assets and
liabilities of the partners.
The Consolidated Financial Statements include the accounts of the
Partnership and its subsidiary. All significant inter-company balances and
transactions have been eliminated.
The Consolidated Financial Statements have been prepared by the
Partnership without audit in accordance with the rules and regulations of the
Security and Exchange Commission. In the opinion of management, the statements
reflect all adjustments necessary for a fair presentation of the results of
interim periods. All such adjustments are of a normal and recurring nature. The
results of operations for any interim period are not necessarily indicative of
the results to be expected for a full year.
49
<PAGE>
SAVANNAH CELLULAR LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
Consolidated Balance Sheets
($ in thousands)
(Unaudited) (Audited)
June 30, December 31,
1999 1998
---- ----
Assets
Current Assets:
Cash $ 116 $ 14
Trade accounts receivable,
less allowance for doubtful
accounts of $117 in 1999 and $108 in 1998 2,205 1,751
Inventory 282 368
Other current assets 47 30
------------------
Total current assets 2,650 2,163
------------------
Property and equipment:
Land and land improvements 808 715
Buildings and leasehold improvements 982 975
Equipment and furnishings 285 278
Cellular equipment 11,816 10,457
------------------
13,891 12,425
Less accumulated depreciation
and amortization 3,242 2,469
------------------
Net property and equipment 10,649 9,956
------------------
Advances to affiliates 4,524 3
Licenses and other intangibles,
less accumulated amortization of
$3,549 in 1999 and $2,583 in 1998 73,724 74,690
------------------
$91,547 $86,812
==================
Liabilities and Partners' Equity
Current liabilities:
Accrued salaries and benefits $ 68 $ 43
Other accrued expenses 400 190
Deferred revenue 483 390
Customer deposits 112 64
------------------
Total current liabilities 1,063 687
Deferred income taxes 21,817 22,103
------------------
Total liabilities 22,880 22,790
Commitments and contingencies
Partners' equity 68,667 64,022
------------------
$91,547 $86,812
==================
See accompanying notes to consolidated financial statements.
50
<PAGE>
SAVANNAH CELLULAR LIMITED PARTNERHIP
(A Delaware Limited Partnership)
Consolidated Statements of Operations
($ in thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the three months For the six months
ended June 30, ended June 30,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue:
Service revenue $ 6,098 $ 4,371 $11,414 $ 8,194
Equipment sales and installation 366 341 643 564
-----------------------------------------
Total revenue 6,464 4,712 12,057 8,758
-----------------------------------------
Operating expenses:
Engineering, technical and other direct 1,213 844 2,297 1,548
Cost of equipment 673 575 1,276 994
Sales and marketing 433 552 842 911
General and administrative 878 801 1,647 1,538
Depreciation and amortization 897 881 1,738 1,750
-----------------------------------------
Total operating expenses 4,094 3,653 7,800 6,741
-----------------------------------------
Operating income 2,370 1,059 4,257 2,017
Interest income (expense) 83 (127) 102 (258)
-----------------------------------------
Income before taxes 2,453 932 4,359 1,759
Deferred tax benefit 143 167 286 334
-----------------------------------------
Net income $ 2,596 $ 1,099 $ 4,645 $ 2,093
=========================================
</TABLE>
See accompanying notes to consolidated financial statements.
51
<PAGE>
SAVANNAH CELLULAR LIMITED PARTNERHSIP
(A Delaware Limited Partnership)
Consolidated Statements of Cash Flows
($ in thousands)
(Unaudited)
For the six months
ended June 30,
1999 1998
---- ----
Cash flows from operating activities:
Net income $ 4,645 $ 2,093
-------------------
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 1,738 1,750
Deferred taxes (286) (334)
Increase in trade accounts receivable (454) (575)
Decrease (increase) in inventory 86 (119)
Increase in other current assets (16) (7)
Increase in accrued expenses 235 107
Increase in deferred revenue 93 63
Increase (decrease) in customer deposits 48 (8)
-------------------
Total adjustments 1,444 877
-------------------
Net cash provided by operating activities 6,089 2,970
Cash flows from investing activities:
Purchases of property and equipment (1,466) (323)
Cash flows from financing activities:
Decrease in advances from affiliates, net (4,521) (2,605)
-------------------
Net increase in cash 102 42
Cash at beginning of year 14 24
-------------------
Cash at end of period $ 116 $ 66
===================
Supplemental disclosure of cash flow information -
Cash paid during the period for interest $ -- $ 258
===================
See accompanying notes to consolidated financial statements
52
<PAGE>
SAVANNAH CELLULAR LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1) Summary of Significant Accounting Policies
Partnership Operations
Savannah Cellular Limited Partnership (the "Partnership") was formed on
June 21, 1987, to construct and operate certain non-wireline cellular telephone
systems in Bryan, Chatham and Effingham counties, Georgia. On December 1, 1995,
Palmer Wireless Holdings, Inc. ("Holdings"), a subsidiary of Palmer Wireless,
Inc. ("PWI"), acquired Georgia Metronet, Inc., which owned 47.6226 percent of
the Partnership directly through its 100 percent ownership of the Savannah
General Partnership, the general partner of the Partnership. As such, Holdings
purchased 97.8816 percent of the Partnership's general and limited partnership
interests on December 1, 1995.
On May 23, 1997, Price Communications Wireless , Inc. ("PCW") and PWI
entered into a plan of merger whereby PCW merged into PWI with PWI as the
surviving corporation. On October 6, 1997 the merger was completed and PWI
changed its name to PCW. The direct owner of the Partnership is Holdings which
was formed in January, 1994. PCW is the 100% owner of Holdings.
The partnership is the 100% owner of Price Communications Wireless VIII,
Inc., the license holder for the Savannah MSA.
Basis of Presentation
For financial reporting purposes, PCW revalued its assets and liabilities
as of October 6, 1997 to reflect the price paid by Price Communications
Corporation to acquire 100% of PWI's common stock, a process generally referred
to as "push down accounting". On October 6, 1997, PCW allocated the purchase
price to each of the markets purchased and the partnership revalued its assets
and liabilities to reflect this allocation. The preliminary allocation of the
purchase price resulted in licenses of approximately $79.0 million. During 1998,
the allocation was finalized resulting in an allocation of approximately $77.3
million to licenses, with an adjustment also made to deferred tax liability and
paid-in-capital to finalize "push-down" accounting. The license is being
amortized over a period of 40 years. Prior to October 6, 1997, Holdings utilized
"push down accounting."
The accompanying financial statements do not include the assets and
liabilities of the partners.
The Consolidated Financial Statements include the accounts of the
Partnership and its subsidiary. All significant inter-company balances and
transactions have been eliminated.
The Consolidated Financial Statements have been prepared by the
Partnership without audit in accordance with rules and regulations of the
Securities and Exchange Commission. In the opinion of management, the statements
reflect all adjustments necessary for a fair presentation of the results of
interim periods. All such adjustments are of a normal and recurring nature. The
results of operations for any interim period are not necessarily indicative of
the results to be expected for a full year.
53
<PAGE>
CEI COMMUNICATIONS, INC.
Balance Sheets
($ in thousands)
(Unaudited) (Audited)
June 30, December 31,
1999 1998
---- ----
Assets
Investment in Macon Cellular Telephone
Systems Limited Partnership $753 $664
================
Commitments and contingencies
Equity
Common stock, $1.00 par value,
150,000 shares authorized,
500 shares issued and outstanding $ -- $ --
Retained earnings 753 664
----------------
$753 $664
================
See accompanying notes to financial statements.
54
<PAGE>
CEI COMMUNICATIONS, INC.
Statements of Operations
'($ in thousands)
(Unaudited)
For the three months For the six months
ended June 30, ended June 30,
1999 1998 1999 1998
-------------------------------------
Partnership income from Macon
Cellular Telephone Systems
Limited Partnership $49 $26 $89 $47
=====================================
See accompanying notes to financial statements.
55
<PAGE>
CEI COMMUNICATIONS, INC.
'Statements of Cash Flows
($ in thousands)
Unaudited
For the six months
ended June 30,
1999 1998
-------------
Net income $89 $47
Increase in investment account (89) (47)
-------------
Increase in cash $ 0 $ 0
=============
See accompanying notes to financial statements.
56
<PAGE>
CEI COMMUNICATIONS, INC.
Notes to Unaudited Financial Statements
1) Summary of Significant Accounting Policies
CEI Communications, Inc. (the "Company") has a 1.06% partnership interest
in Macon Cellular Telephone Systems Limited Partnership. The Company is owned
100% by Palmer Wireless Holdings, Inc.
57
<PAGE>
PANAMA CITY COMMUNICATIONS INC.
Balance Sheets
($ in thousands)
(Unaudited) (Audited)
June 30, December 31,
1999 1998
---- ---
Assets
Investment in Panama City Cellular
Telephone Co. Inc. $137 $111
================
Equity
Common stock, no par value:
100 shares authorized,
issued and outstanding $ -- $ --
Retained earnings 137 111
----------------
$137 $111
================
See accompanying notes to financial statements.
58
<PAGE>
PANAMA CITY COMMUNICATIONS INC.
'Statements of Operations
($ in thousands)
(Unaudited)
For the three months For the six months
ended June 30, ended June 30,
1999 1998 1999 1998
---- ---- ---- ----
Partnership income from Panama
City Cellular Telephone Co. Ltd. $ 16 $ 9 $ 26 $14
====================================
See accompanying notes to financial statements.
59
<PAGE>
PANAMA CITY COMMUNICATIONS INC.
'Statements of Cash Flows
($ in thousands)
(Unaudited)
For the six months
ended June 30,
1999 1998
---- ----
Net income $ 26 $ 14
Increase in investment account (26) (14)
---------------------
Increase in cash $ 0 $ 0
=====================
See accompanying notes to financial statements.
60
<PAGE>
PANAMA CITY COMMUNICATIONS, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1) Summary of Significant Accounting Policies
Basis of Presentation
Panama City Communications, Inc. (the "Company") has a .99% partnership
interest in Panama City Cellular Telephone Co., Ltd. The Company is owned 100%
by Palmer Wireless Holdings, Inc.
61
<PAGE>
PRICE COMMUNICATIONS WIRELESS II, INC.
Balance Sheets
($ in thousands)
(Unaudited) (Audited)
June 30, December 31,
1999 1998
---- ----
Assets
Cellular license, net of accumulated
amortization of $14,573 in 1999
and $10,533 in 1998 $ 308,693 $ 312,733
=======================
Liabilities and Stockholder's Equity
Deferred taxes $ 94,628 $ 95,724
Commitments and contingencies -- --
Stockholder's Equity
Common stock, par value $.01 per share;
authorized, issued and outstanding
1,000 shares -- --
Paid-in capital 224,058 224,058
(Accumulated deficit) (9,993) (7,049)
-----------------------
Total stockholder's equity 214,065 217,009
-----------------------
Total liabilities and stockholder's equity $ 308,693 $ 312,733
=======================
See accompanying notes to financial statements.
62
<PAGE>
PRICE COMMUNICATIONS WIRELESS II, INC.
Statements of Operations
($ in thousands)
(Unaudited)
For the three months For the six months
ended June 30, ended June 30,
1999 1998 1999 1998
---- ---- ---- ----
Amortization of cellular license $ 2,020 $ 2,118 $ 4,040 $ 4,236
Deferred tax benefit 548 697 $ 1,096 $ 1,394
-------------------------------------------
Net (loss) ($1,472) ($1,421) ($2,944) ($2,842)
===========================================
See accompanying notes to financial statements.
63
<PAGE>
PRICE COMMUNICATIONS WIRELESS II, INC.
Statements of Cash Flows
($ in thousands)
(Unaudited)
For the six months ended
June 30,
1999 1998
---- ----
Net (loss) ($2,944) ($2,842)
Amortization of cellular license 4,040 4,236
Decrease in deferred tax liability (1,096) (1,394)
-----------------------
Net change in cash $ 0 $ 0
=======================
See accompanying notes to financial statements.
64
<PAGE>
PRICE COMMUNICATIONS WIRELESS II, INC.
Notes to Condensed Financial Statements
(Unaudited)
1) Summary of Significant Accounting Policies
Corporation Operations
Price Communications Wireless II, Inc. ("Wireless II") (the "Company") was
incorporated in the state of Delaware on October 7, 1997. The Company is 100%
owned by its parent Palmer Wireless Holdings Inc. which in turn is 100% owned by
its parent Price Communications Wireless Inc. ("PCW"), the Registrant. The
Company owns the non-wireline licenses of the AL-8 RSA, GA-7 RSA, GA-8 RSA, GA-9
RSA, GA-10 RSA, GA-12 RSA, Augusta Georgia MSA and the interim operating
authority for SC-7 RSA.
Financial Statement Basis
On May 23, 1997, PCW and Palmer Wireless, Inc. ("PWI") entered into a plan
of merger whereby PCW merged into PWI with PWI as the surviving corporation. On
October 6, 1997 the merger was completed and PWI changed its name to PCW.
For financial reporting purposes, PCW revalued its assets and liabilities
as of October 6, 1997 to reflect the price paid by Price Communications
Corporation to acquire 100% of Palmer's common stock, a process generally
referred to as "push down accounting". On October 6, 1997, PCW allocated the
purchase price to each of the markets purchased and the various operating
entities revalued their assets and liabilities to reflect this allocation. The
preliminary allocation of the purchase price resulted in licenses of
approximately $330.0 million. During 1998, the preliminary allocation was
finalized resulting in an allocation of approximately $323.3 million to
licenses, with an adjustment also made to deferred tax liability and
paid-in-capital to finalize "push-down" accounting. Palmer Wireless Holdings
Inc. is 100% owned by PCW and accordingly the value of the license allocated to
it was contributed to Wireless II
Licenses
Subsequent to the initial license valuation, the Company continually
evaluates whether later events and circumstances have occurred that indicate the
remaining estimated useful life of the license or licenses may warrant revision
or that the remaining balance of the license rights may not be recoverable. The
Company utilizes projected undiscounted cash flows over the remaining life of
the license or licenses and sales of comparable businesses to evaluate the
recorded value of these licenses. The assessment of the recoverability of the
remaining balance of the license rights will be impacted if projected cash flows
are not achieved.
Deferred Tax Liability
For financial statement purposes, the Company, recognizes deferred taxes
as it relates to the difference between financial statement and income tax basis
of the licenses.
Commitments and Contingencies
The Company is listed as a guarantor for PCW's $525.0 million 91/8% Senior
Secured Notes due 2006. All of PCW's direct or indirect subsidiaries are also
listed as guarantors.
65
<PAGE>
PRICE COMMUNICATIONS WIRELESS III, INC.
Balance Sheets
($ in thousands)
(Unaudited) (Audited)
June 30, December 31,
1999 1998
---- ----
Assets
Cellular license, net of accumulated
amortization of $2,188 in 1999
and $1,576 in 1998 $ 46,756 $ 47,368
=====================
Liabilities and Stockholder's Equity
Deferred taxes $ 17,304 $ 17,526
Commitments and contingencies
Stockholder's Equity
Common stock, par value $.01 per
share; authorized, issued
and outstanding 1,000 shares -- --
Paid-in capital 30,884 30,884
(Accumulated deficit) (1,432) (1,042)
---------------------
Total stockholder's equity 29,452 29,842
---------------------
Total liabilities and stockholder's equity $ 46,756 $ 47,368
=====================
See accompanying notes to financial statements.
66
<PAGE>
PRICE COMMUNICATIONS WIRELESS III, INC.
Statements of Operations
($ in thousands)
(Unaudited)
For the three months For the six months
ended June 30, ended June 30,
1999 1998 1999 1998
----- ----- ----- -----
Amortization of cellular license $ 306 $ 315 $ 612 $ 630
Deferred tax benefit 111 107 $ 222 $ 214
--------------------------------------
Net (loss) ($195) ($208) ($390) ($416)
======================================
See accompanying notes to financial statements.
67
<PAGE>
PRICE COMMUNICATIONS WIRELESS III, INC.
Statements of Cash Flows
($ in thousands)
(Unaudited)
For the six months ended
June 30,
1999 1998
---- ----
Net (loss) ($390) ($416)
Amortization of cellular license 612 630
Decrease in deferred tax liability (222) (214)
--------------------
Net change in cash $ 0 $ 0
====================
See accompanying notes to financial statements.
68
<PAGE>
PRICE COMMUNICATIONS WIRELESS III, INC.
Notes to Condensed Financial Statements
(Unaudited)
1) Summary of Significant Accounting Policies
Corporation Operations
Price Communications Wireless III, Inc. ("Wireless III") (the "Company")
was incorporated in the state of Delaware on October 7, 1997. The Company is
100% owned by its parent Dothan Cellular Telephone Co. Inc. ("Dothan") whose
financial statements are included elsewhere in this document. Dothan in turn is
100% owned by Cellular Systems of Southeast Alabama, Inc. ("Cellular Systems").
Palmer Wireless Holdings, Inc.("Holdings") has a 95.0% ownership interest in
Cellular Systems. Holdings is 100% owned by Price Communications Wireless, Inc.
("PCW"). The Company owns the non-wireline license of Dothan (Dothan MSA), the
operating entity.
Financial Statement Basis
On May 23, 1997, PCW, and Palmer Wireless, Inc. ("PWI") entered into a
plan of merger whereby PCW merged into PWI with PWI as the surviving
corporation. On October 6, 1997, the merger was completed and PWI changed its
name to PCW.
For financial reporting purposes, PCW revalued its assets and liabilities
as of October 6, 1997 to reflect the price paid by Price Communications
Corporation to acquire 100% of Palmer's common stock, a process generally
referred to as "push down accounting". On October 6, 1997, PCW allocated the
purchase price to each of the markets purchased and the various operating
entities revalued their assets and liabilities to reflect this allocation. The
preliminary allocation of the purchase price resulted in licenses of
approximately $50.4 million. During 1998, the preliminary allocation was
finalized resulting in an allocation of $48.9 million to licenses, with an
adjustment also made to deferred tax liability and paid-in-capital to finalize
"push-down" accounting. Palmer Wireless Holdings Inc. contributed the value of
the license allocated to it by PCW to Wireless III.
Licenses
Subsequent to the initial license valuation, the Company continually
evaluates whether later events and circumstances have occurred that indicate the
remaining estimated useful life of the license or licenses may warrant revision
or that the remaining balance of the license rights may not be recoverable. The
Company utilizes projected undiscounted cash flows over the remaining life of
the license or licenses and sales of comparable businesses to evaluate the
recorded value of these licenses. The assessment of the recoverability of the
remaining balance of the license rights will be impacted if projected cash flows
are not achieved.
Deferred Income Taxes
For financial statement purposes, the Company recognizes a deferred tax
liability as it relates to the difference between the financial statement and
income tax basis of the licenses. The Company recognizes a deferred tax benefit
for the turnaround in the deferred tax liability attributable to the additional
amortization of the licenses.
Commitments and Contingencies
The Company is listed as a guarantor for PCW's $525.0 million 91/8% Senior
Secured Notes due 2006. All of PCW's direct or indirect subsidiaries are also
listed as guarantors.
69
<PAGE>
PRICE COMMUNICATIONS WIRELESS IV, INC.
Balance Sheets
($ in thousands)
(Unaudited) (Audited)
June 30, December 31,
1999 1998
---- ----
Assets
Cellular license, net of accumulated
amortization of $4,932 in 1999
and $3,544 in 1998 $ 106,061 $ 107,449
======================
Liabilities and Stockholder's Equity
Deferred taxes $ 39,254 $ 39,756
Commitments and contingencies
Stockholder's Equity
Common stock, par value $.01
per share; authorized, issued
and outstanding 1,000 shares -- --
Paid-in capital 70,038 70,038
(Accumulated deficit) (3,231) (2,345)
----------------------
Total stockholder's equity 66,807 67,693
----------------------
Total liabilities and stockholder's equity $ 106,061 $ 107,449
======================
See accompanying notes to financial statements.
70
<PAGE>
PRICE COMMUNICATIONS WIRELESS IV, INC.
Statements of Operations
($ in thousands)
(Unaudited)
For the three months For the six months
ended June 30, ended June 30,
1999 1998 1999 1998
---- ---- ---- ----
Amortization of cellular license $ 694 $ 709 $ 1,388 $ 1,418
Deferred tax benefit 251 240 $ 502 $ 480
-------------------------------------------
Net (loss) ($ 443) ($ 469) ($ 886) ($ 938)
===========================================
See accompanying notes to financial statements.
71
<PAGE>
PRICE COMMUNICATIONS WIRELESS IV, INC.
Statements of Cash Flows
($ in thousands)
(Unaudited)
For the six months ended
June 30,
1999 1998
---- ----
Net (loss) ($ 886) ($ 938)
Amortization of cellular license 1,388 1,418
Decrease in deferred tax liability (502) (480)
-------------------
Net change in cash $ 0 $ 0
===================
See accompanying notes to financial statements.
72
<PAGE>
PRICE COMMUNICATIONS WIRELESS IV, INC.
Notes to Condensed Financial Statements
(Unaudited)
1) Summary of Significant Accounting Policies
Corporation Operations
Price Communications Wireless IV, Inc. ("Wireless IV") (the "Company") was
incorporated in the state of Delaware on October 7, 1997. The Company is 100%
owned by its parent Montgomery Cellular Telephone Co. Inc. ("Montgomery").
Montgomery in turn is 100% owned by its parent, Montgomery Cellular Holding Co.
Inc. ("Montgomery Holdings"), the operating entity. Palmer Wireless Holdings,
Inc. has a 94.6% ownership interest in Montgomery Holdings. Palmer Wireless
Holdings, Inc. is 100% owned by Price Communications Wireless, Inc.,("PCW"). The
Company owns the non-wireline license of Montgomery Holdings (Montgomery MSA).
Financial Statement Basis
On May 23, 1997, PCW and Palmer Wireless, Inc. ("PWI") entered into a plan
of merger whereby PCW merged into PWI with PWI as the surviving corporation. On
October 6, 1997, the merger was completed and PWI changed its name to PCW.
For financial reporting purposes, PCW revalued its assets and liabilities
as of October 6, 1997 to reflect the price paid by Price Communications
Corporation to acquire 100% of Palmer's common stock, a process generally
referred to as "push down accounting". On October 6, 1997, PCW allocated the
purchase price to each of the markets purchased and the various operating
entities revalued their assets and liabilities to reflect this allocation. The
preliminary allocation of the purchase price resulted in licenses of
approximately $113.4 million to licenses. During 1998, the preliminary
allocation was finalized resulting in an allocation of approximately $111.0
million to licenses, with an adjustment also made to deferred tax liability and
paid-in-capital to finalize "push-down" accounting. Palmer Wireless Holdings
Inc. contributed the value of the license allocated to it by PCW to Wireless
IV..
Licenses
Subsequent to the initial license valuation, the Company continually
evaluates whether later events and circumstances have occurred that indicate the
remaining estimated useful life of the license or licenses may warrant revision
or that the remaining balance of the license rights may not br recoverable. The
Company utilizes projected undiscounted cash flows over the remaining life of
the license or licenses and sales of comparable businesses to evaluate the
recorded value of these licenses. The assessment of the recoverability of the
remaining balance of the license rights will be impacted if projected cash flows
are not achieved.
Deferred Income Taxes
For financial statement purposes, the Company recognizes a deferred tax
liability as it relates to the difference between the financial statement and
income tax basis of the licenses. The Company recognizes a deferred tax benefit
for the turnaround in the deferred tax liability attributable to the additional
amortization of the licenses.
Commitments and Contingencies
The Company is listed as a guarantor for PCW's $525.0 million 91/8% Senior
Secured Notes due 2006. All of PCW's direct or indirect subsidiaries are also
listed as guarantors.
73
<PAGE>
PRICE COMMUNICATIONS WIRELESS V, INC.
Balance Sheets
($ in thousands)
(Unaudited) (Audited)
June 30, December 31,
1999 1998
---- ----
Assets
Cellular license, net of accumulated
amortization of $3,402 in 1999
and $2,444 in 1998 $ 73,251 $ 74,209
=====================
Liabilities and Stockholder's Equity
Deferred taxes $ 11,605 $ 11,759
Commitments and contingencies
Stockholder's Equity
Common stock, par value
$.01 per share; authorized, issued
and outstanding 1,000 shares -- --
Paid-in capital 64,069 64,069
(Accumulated deficit) (2,423) (1,619)
---------------------
Total stockholder's equity 61,646 62,450
---------------------
Total liabilities and stockholder's equity $ 73,251 $ 74,209
=====================
See accompanying notes to financial statements.
74
<PAGE>
PRICE COMMUNICATIONS WIRELESS V, INC.
Statements of Operations
($ in thousands)
(Unaudited)
For the three months For the six months
ended June 30, ended June 30,
1999 1998 1999 1998
---- ---- ---- ----
Amortization of cellular license $ 479 $ 489 $ 958 $ 978
Deferred tax benefit 77 166 $ 154 $ 332
--------------------------------------
Net (loss) ($402) ($323) ($804) ($646)
======================================
See accompanying notes to financial statements.
75
<PAGE>
PRICE COMMUNICATIONS WIRELESS V, INC.
Statements of Cash Flows
($ in thousands)
(Unaudited)
For the six months ended
June 30,
1999 1998
---- ----
Net (loss) ($804) ($646)
Amortization of cellular license 958 978
Decrease in deferred tax liability (154) (332)
-----------------
Net change in cash $ 0 $ 0
=================
See accompanying notes to financial statements.
76
<PAGE>
PRICE COMMUNICATIONS WIRELESS V, INC.
Notes to Condensed Financial Statements
(Unaudited)
1) Summary of Significant Accounting Policies
Corporation Operations
Price Communications Wireless V, Inc. ("Wireless V") (the "Company") was
incorporated in the state of Delaware on October 7, 1997. The Company is 100%
owned by its parent Cellular Dynamics Telephone Company of Georgia ("Cellular
Dynamics"). Cellular Dynamics in turn is 100% owned by its parent Albany
Cellular Partners ("Albany"), the operating entity. Palmer Wireless Holdings,
Inc.("Holdings"), has an 96.8% ownership interest in Albany. Holdings is 100%
owned by Price Communications Wireless, Inc.("PCW"). The Company owns the
non-wireline license of Albany (Albany MSA and GA-13 RSA).
Financial Statement Basis
On May 23, 1997, PCW and Palmer Wireless, Inc. ("PWI") entered into a plan
of merger whereby PCW merged into PWI with PWI as the surviving corporation. On
October 6, 1997 the merger was completed and PWI changed its name to PCW.
For financial reporting purposes, PCW revalued its assets and liabilities
as of October 6, 1997 to reflect the price paid by Price Communications
Corporation to acquire 100% of Palmer's common stock, a process generally
referred to as "push down accounting". On October 6, 1997, PCW allocated the
purchase price to each of the markets purchased and the various operating
entities revalued their assets and liabilities to reflect this allocation. The
preliminary allocation of the purchase price resulted in licenses of
approximately $78.3 million. During 1998, the preliminary allocation was
finalized resulting in an allocation of approximately $76.7 million to licenses,
with an adjustment also made to deferred tax liability and paid-in-capital to
finalize "push-down" accounting. Palmer Wireless Holdings Inc. contributed the
value of the license allocated to it by PCW to Wireless V.
Licenses
Subsequent to the initial license valuation, the Company continually
evaluates whether later events and circumstances have occurred that indicate the
remaining estimated useful life of the license or licenses may warrant revision
or that the remaining balance of the license rights may not be recoverable. The
Company utilizes projected undiscounted cash flows over the remaining life of
the license or licenses and sales of comparable businesses to evaluate the
recorded value of these licenses. The assessment of the recoverability of the
remaining balance of the license rights will be impacted if projected cash flows
are not achieved.
Deferred Income Taxes
For financial statement purposes, the Company recognizes a deferred tax
liability as it relates to the difference between the financial statement and
income tax basis of the licenses. The Company recognizes a deferred tax benefit
for the turnaround in the deferred tax liability attributable to the additional
amortization of the licenses.
Commitments and Contingencies
The Company is listed as a guarantor for PCW's $525.0 million 91/8% Senior
Secured Notes due 2006. All of PCW's direct or indirect subsidiaries are also
listed as guarantors.
77
<PAGE>
PRICE COMMUNICATIONS WIRELESS VI, INC.
Balance Sheets
($ in thousands)
(Unaudited) (Audited)
June 30, December 31,
1999 1998
---- ----
Assets
Cellular license, net of accumulated
amortization of $3,982 in 1999
and $2,860 in 1998 $ 85,719 $ 86,841
======================
Liabilities and Stockholder's Equity
Deferred taxes $ 28,138 $ 28,506
Commitments and contingencies
Stockholder's Equity
Common stock, par value $.01
per share; authorized, issued
and outstanding 1,000 shares -- --
Paid-in capital 60,229 60,229
(Accumulated deficit) (2,648) (1,894)
----------------------
Total stockholder's equity 57,581 58,335
----------------------
Total liabilities and stockholder's equity $ 85,719 $ 86,841
======================
See accompanying notes to financial statements.
78
<PAGE>
PRICE COMMUNICATIONS WIRELESS VI, INC.
Statements of Operations
($ in thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the three months For the six months
ended June 30, ended June 30,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Amortization of cellular license $ 561 $ 572 $ 1,122 $ 1,144
Deferred tax benefit 184 193 $ 368 $ 386
----------------------------------------------
Net (loss) ($ 377) ($ 379) ($ 754) ($ 758)
==============================================
</TABLE>
See accompanying notes to financial statements.
79
<PAGE>
PRICE COMMUNICATIONS WIRELESS VI, INC.
Statements of Cash Flows
($ in thousands)
(Unaudited)
For the six months ended
June 30,
1999 1998
---- ----
Net (loss) ($ 754) ($ 758)
Amortization of cellular license 1,122 1,144
Decrease in deferred tax liability (368) (386)
--------------------
Net change in cash $ 0 $ 0
====================
See accompanying notes to financial statements.
80
<PAGE>
PRICE COMMUNICATIONS WIRELESS VI, INC.
Notes to Condensed Financial Statements
(Unaudited)
1) Summary of Significant Accounting Policies
Corporation Operations
Price Communications Wireless VI, Inc. ("Wireless VI") (the "Company") was
incorporated in the state of Delaware on October 7, 1997. The Company is 100%
owned by its parent Columbus Cellular Telephone Company ("Columbus Cellular").
Palmer Wireless Holdings, Inc.("Holdings") has an 99.1% ownership interest in
Columbus Cellular Holdings and is 100% owned by Price Communications Wireless,
Inc. ("PCW"). The Company owns the non-wireline licenses of Columbus Cellular
(Columbus MSA and the GA-6 A2 RSA.
Financial Statement Basis
On May 23, 1997, PCW and Palmer Wireless, Inc. ("PWI") entered into a plan
of merger whereby PCW merged into PWI with PWI as the surviving corporation. On
October 6, 1997, the merger was completed and PWI changed its name to PCW.
For financial reporting purposes, PCW revalued its assets and liabilities
as of October 6, 1997 to reflect the price paid by Price Communications
Corporation to acquire 100% of Palmer's common stock, a process generally
referred to as "push down accounting". On October 6, 1997, PCW allocated the
purchase price to each of the markets purchased and the various operating
entities revalued their assets and liabilities to reflect this allocation. The
preliminary allocation of the purchase price resulted in licenses of
approximately $91.5 million. During 1998, the preliminary allocation was
finalized resulting in an allocation of approximately $89.7 million to licenses,
with an adjustment also made to deferred tax liability and paid-in-capital to
finalize "push-down" accounting. Palmer Wireless Holdings Inc. contributed the
value of the license allocated to it by PCW to Wireless VI.
Licenses
Subsequent to the initial license valuation, the Company continually
evaluates whether later events and circumstances have occurred that indicate the
remaining estimated useful life of the license or licenses may warrant revision
or that the remaining balance of the license rights may not be recoverable. The
Company utilizes projected undiscounted cash flows over the remaining life of
the license or licenses and sales of comparable businesses to evaluate the
recorded value of these licenses. The assessment of the recoverability of the
remaining balance of the license rights will be impacted if projected cash flows
are not achieved.
Deferred Income Taxes
For financial statement purposes, the Company recognizes a deferred tax
liability as it relates to the difference between the financial statement and
income tax basis of the licenses. The Company recognizes a deferred tax benefit
for the turnaround in the deferred tax liability attributable to the additional
amortization of the licenses.
Commitments and Contingencies
The Company is listed as a guarantor for PCW's $525.0 million 9 1/8%
Senior Secured Notes due 2006. All of PCW's direct or indirect subsidiaries are
also listed as guarantors.
81
<PAGE>
PRICE COMMUNICATIONS WIRELESS VII, INC.
Balance Sheets
($ in thousands)
(Unaudited) (Audited)
June 30, December 31,
1999 1998
---- ----
Assets
Cellular license, net of accumulated
amortization of $6,032 in 1999
and $4,334 in 1998 $ 129,879 $ 131,577
========================
Liabilities and Stockholder's Equity
Deferred taxes $ 40,358 $ 40,888
Commitments and contingencies
Stockholder's Equity
Common stock, par value $.01
per share; authorized, issued
and outstanding 1,000 shares -- --
Paid-in capital 93,558 93,558
(Accumulated deficit) (4,037) (2,869)
------------------------
Total stockholder's equity 89,521 90,689
------------------------
Total liabilities and stockholder's equity $ 129,879 $ 131,577
========================
See accompanying notes to financial statements.
82
<PAGE>
PRICE COMMUNICATIONS WIRELESS VII, INC.
Statements of Operations
($ in thousands)
(Unaudited)
For the three months For the six months
ended June 30, ended June 30,
1999 1998 1999 1998
---- ---- ---- ----
Amortization of cellular license $ 849 $ 867 $ 1,698 $ 1,734
Deferred tax benefit 265 293 530 586
-------------------------------------------
Net (loss) ($ 584) ($ 574) ($1,168) ($1,148)
===========================================
See accompanying notes to financial statements.
83
<PAGE>
PRICE COMMUNICATIONS WIRELESS VII, INC.
Statements of Cash Flows
($ in thousands)
(Unaudited)
For the six months ended
June 30,
1999 1998
---- ----
Net (loss) ($1,168) ($1,148)
Amortization of cellular license 1,698 1,734
Decrease in deferred tax liability (530) (586)
--------------------
Net change in cash $ 0 $ 0
====================
See accompanying notes to financial statements.
84
<PAGE>
PRICE COMMUNICATIONS WIRELESS VII, INC.
Notes to Condensed Financial Statements
(Unaudited)
1) Summary of Significant Accounting Policies
Corporation Operations
Price Communications Wireless VII, Inc. ("Wireless VII") (the "Company")
was incorporated in the state of Delaware on October 7, 1997. The Company is
100% owned by its parent Macon Cellular Telephone Systems Limited Partnership
("Macon"). C.E.I. Communications Inc. ("CEI") is the general partner of Macon
and holds a 1.06% ownership interest in Macon. Palmer Wireless Holdings,
Inc.("Holdings") is the 100% owner of CEI and has a 99.6% ownership interest in
Macon when combined with its ownership of CEI. Holdings is 100% owned by Price
Communications Wireless, Inc. ("PCW"). The Company owns the non-wireline
licenses of Macon (Macon MSA and the GA-6 A1 RSA.
Financial Statement Basis
On May 23, 1997, PCW, and Palmer Wireless, Inc. ("PWI") entered into a
plan of merger whereby PCW merged into PWI with PWI as the surviving
corporation. On October 6, 1997, the merger was completed and PWI changed its
name to PCW.
For financial reporting purposes, PCW revalued its assets and liabilities
as of October 6, 1997 to reflect the price paid by Price Communications
Corporation to acquire 100% of Palmer's common stock, a process generally
referred to as "push down accounting". On October 6, 1997, PCW allocated the
purchase price to each of the markets purchased and the various operating
entities revalued their assets and liabilities to reflect this allocation. The
preliminary allocation of the purchase price resulted in licenses of
approximately $138.7 million. During 1998, the preliminary allocation was
finalized resulting in an allocation of approximately $135.9 million to
licenses, with an adjustment also made to deferred tax liability and
paid-in-capital to finalize "push-down' accounting. Palmer Wireless Holdings
Inc. contributed the value of the license allocated to it by PCW to Wireless
VII.
Licenses
Subsequent to the initial license valuation, the Company continually
evaluates whether later events and circumstances have occurred that indicate the
remaining estimated useful life of the license or licenses may warrant revision
or that the remaining balance of the license rights may not be recoverable. The
Company utilizes projected undiscounted cash flows over the remaining life of
the license or licenses and sales of comparable businesses to evaluate the
recorded value of these licenses. The assessment of the recoverability of the
remaining balance of the license rights will be impacted if projected cash flows
are not achieved.
Deferred Income Taxes
For financial statement purposes, the Company recognizes a deferred tax
liability as it relates to the difference between the financial statement and
income tax basis of the licenses. The Company recognizes a deferred tax benefit
for the turnaround in the deferred tax liability attributable to the additional
amortization of the licenses.
Commitments and Contingencies
The Company is listed as a guarantor for PCW's $525.0 million 91/8% Senior
Secured Notes due 2006. All of PCW's direct or indirect subsidiaries are also
listed as guarantors.
85
<PAGE>
PRICE COMMUNICATIONS WIRELESS VIII, INC.
Balance Sheets
($ in thousands)
(Unaudited) (Audited)
June 30, December 31,
1999 1998
-------- --------
Assets
Cellular license, net of accumulated
amortization of $3,549 in 1999
and $2,583 in 1998 $ 73,724 $ 74,690
======================
Liabilities and Stockholder's Equity
Deferred taxes $ 21,817 $ 22,103
Commitments and contingencies
Stockholder's Equity
Common stock, par value $.01
per share; authorized, issued
and outstanding 1,000 shares -- --
Paid-in capital 54,336 54,336
(Accumulated deficit) (2,429) (1,749)
----------------------
Total stockholder's equity 51,907 52,587
----------------------
Total liabilities and stockholder's equity $ 73,724 $ 74,690
======================
See accompanying notes to financial statements.
86
<PAGE>
PRICE COMMUNICATIONS WIRELESS VIII, INC.
Statements of Operations
($ in thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the three months For the six months
ended June 30, ended June 30,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Amortization of cellular license $ 483 $ 523 $ 966 $ 1,046
Deferred tax benefit 143 167 $ 286 $ 334
----------------------------------------------
Net (loss) ($ 340) ($ 356) ($ 680) ($ 712)
==============================================
</TABLE>
See accompanying notes to financial statements.
87
<PAGE>
PRICE COMMUNICATIONS WIRELESS VIII, INC.
Statements of Cash Flows
($ in thousands)
(Unaudited)
For the six months ended
June 30,
1999 1998
---- ----
Net (loss) ($680) ($712)
Amortization of cellular license 966 1,046
Decrease in deferred tax liability (286) (334)
----------------------
Net change in cash $0 $0
======================
See accompanying notes to financial statements.
88
<PAGE>
PRICE COMMUNICATIONS WIRELESS VIII, INC.
Notes to Condensed Financial Statements
(Unaudited)
1) Summary of Significant Accounting Policies
Corporation Operations
Price Communications Wireless VIII, Inc. ("Wireless VIII") (the "Company")
was incorporated in the state of Delaware on October 7, 1997. The Company is
100% owned by its parent Savannah Cellular Limited Partnership ("Savannah").
Palmer Wireless Holdings, Inc.("Holdings") has a 98.5% ownership interest in
Savannah. Holdings is 100% owned by Price Communications Wireless, Inc. ("PCW").
The Company owns the non-wireline license of Savannah (Savannah MSA).
Financial Statement Basis
On May 23, 1997, PCW and Palmer Wireless, Inc. ("PWI") entered into a plan
of merger whereby PCW merged into PWI with PWI as the surviving corporation. On
October 6, 1997, the merger was completed and PWI changed its name to PCW.
For financial reporting purposes, PCW revalued its assets and liabilities
as of October 6, 1997 to reflect the price paid by Price Communications
Corporation to acquire 100% of Palmer's common stock, a process generally
referred to as "push down accounting". On October 6, 1997, PCW allocated the
purchase price to each of the markets purchased and the various operating
entities revalued their assets and liabilities to reflect this allocation. The
preliminary allocation of the purchase price resulted in licenses of
approximately $79.0 million. During 1998, the preliminary allocation was
finalized resulting in an allocation of approximately $77.3 million to licenses,
with an adjustment also made to deferred tax liability and paid-in-capital to
finalize "push-down" accounting. Palmer Wireless Holdings Inc. contributed the
value of the license allocated to it by PCW to Wireless VIII.
Licenses
Subsequent to the initial license valuation, the Company continually
evaluates whether later events and circumstances have occurred that indicate the
remaining estimated useful life of the license or licenses may warrant revision
or that the remaining balance of the license rights may not be recoverable. The
Company utilizes projected undiscounted cash flows over the remaining life of
the license or licenses and sales of comparable businesses to evaluate the
recorded value of these licenses. The assessment of the recoverability of the
remaining balance of the license rights will be impacted if projected cash flows
are not achieved.
Deferred Income Taxes
For financial statement purposes, the Company recognizes a deferred tax
liability as it relates to the difference between the financial statement and
income tax basis of the licenses. The Company recognizes a deferred tax benefit
for the turnaround in the deferred tax liability attributable to the additional
amortization of the licenses.
Commitments and Contingencies
The Company is listed as a guarantor for PCW's $525.0 million 9 1/8%
Senior Secured Notes due 2006. All of PCW's direct or indirect subsidiaries are
also listed as guarantors.
89
<PAGE>
PRICE COMMUNICATIONS WIRELESS IX, INC.
Balance Sheets
($ in thousands)
(Unaudited) (Audited)
June 30, December 31,
1999 1998
---- ----
Assets
Cellular license, net of accumulated
amortization of $1,923 in 1999
and $1,381 in 1998 $ 41,387 $ 41,929
======================
Liabilities and Stockholder's Equity
Deferred taxes $ 13,000 $ 13,170
Commitments and contingencies
Stockholder's Equity
Common stock, par value $.01
per share; authorized, issued
and outstanding 1,000 shares -- --
Paid-in capital 29,674 29,674
(Accumulated deficit) (1,287) (915)
----------------------
Total stockholder's equity 28,387 28,759
----------------------
Total liabilities and stockholder's equity $ 41,387 $ 41,929
======================
See accompanying notes to financial statements.
90
<PAGE>
PRICE COMMUNICATIONS WIRELESS IX, INC.
Statements of Operations
($ in thousands)
(Unaudited)
For the three months For the six months
ended June 30, ended June 30,
1999 1998 1999 1998
---- ---- ---- ----
Amortization of cellular license $ 271 $ 276 $ 542 $ 552
Deferred tax benefit 85 93 $ 170 $ 186
--------------------------------------
Net (loss) ($186) ($183) ($372) ($366)
======================================
See accompanying notes to financial statements.
91
<PAGE>
PRICE COMMUNICATIONS WIRELESS IX, INC.
Statements of Cash Flows
($ in thousands)
(Unaudited)
For the six months ended
June 30,
1999 1998
Net (loss) ($372) ($366)
Amortization of cellular license 542 552
Decrease in deferred tax liability (170) (186)
------------------
Net change in cash $ 0 $ 0
==================
See accompanying notes to financial statements.
92
<PAGE>
PRICE COMMUNICATIONS WIRELESS IX, INC.
Notes to Condensed Financial Statements
(Unaudited)
1) Summary of Significant Accounting Policies
Corporation Operations
Price Communications Wireless IX, Inc. ("Wireless IX") ("Company") was
incorporated in the state of Delaware on October 7, 1997. The Company is 100%
owned by its parent Panama Cellular Telephone Company, Ltd. ("Panama City"), the
operating entity. Panama City in turn is owned by Panhandle Cellular Partnership
("PCP") and by Panama City Communications, Inc. ("PCCI"), which owns .99% of
Panama City and which is 100% owned by Palmer Wireless Holdings,
Inc.("Holdings"). Through its ownership of PCP and PCCI, Palmer Wireless
Holdings, Inc. has a 92.0% ownership interest in Panama City. Holdings is 100%
owned by Price Communications Wireless, Inc. ("PCW"). The Company owns the
non-wireline license of Panama City(Panama City MSA).
Financial Statement Basis
On May 23, 1997, Price Communications Wireless, Inc. ("PCW"), the parent
of Palmer Wireless Holdings, Inc. and Palmer Wireless, Inc. ("PWI") entered into
a plan of merger whereby PCW merged into PWI with PWI as the surviving
corporation. On October 6, 1997, the merger was completed and PWI changed its
name to PCW.
For financial reporting purposes, PCW revalued its assets and liabilities
as of October 6, 1997 to reflect the price paid by Price Communications
Corporation to acquire 100% of Palmer's common stock, a process generally
referred to as "push down accounting". On October 6, 1997, PCW allocated the
purchase price to each of the markets purchased and the various operating
entities revalued their assets and liabilities to reflect this allocation. The
preliminary allocation of the purchase price resulted in licenses of
approximately $44.2 million. During 1998, the preliminary allocation was
finalized resulting in an allocation of approximately $43.3 million to licenses,
with an adjustment also made to deferred tax liability and paid-in-capital to
finalize "push-down" accounting. Palmer Wireless Holdings Inc. contributed the
value of the license allocated to it by PCW to Wireless IX.
Licenses
Subsequent to the initial license valuation, the Company continually
evaluates whether later events and circumstances have occurred that indicate the
remaining estimated useful life of the license or licenses may warrant revision
or that the remaining balance of the license rights may not be recoverable. The
Company utilizes projected undiscounted cash flows over the remaining life of
the license or licenses and sales of comparable businesses to evaluate the
recorded value of these licenses. The assessment of the recoverability of the
remaining balance of the license rights will be impacted if projected cash flows
are not achieved.
Deferred Income Taxes
For financial statement purposes, the Company recognizes a deferred tax
liability as it relates to the difference between the financial statement and
income tax basis of the licenses. The Company recognizes a deferred tax benefit
for the turnaround in the deferred tax liability attributable to the additional
amortization of the licenses.
Commitments and Contingencies
The Company is listed as a guarantor for PCW's $525.0 million 91/8% Senior
Secured Notes due 2006. All of PCW's direct or indirect subsidiaries are also
listed as guarantors.
93
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion is intended to facilitate an understanding and
assessment of significant changes and trends related to the financial condition
and results of operations of the Company. This discussion should be read in
conjunction with the Company's Condensed Consolidated Financial Statements and
the related notes thereto.
The discussion contains statements which constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. Such statements are made regarding the intent, belief or current
expectations of the Company and its directors or officers primarily with respect
to the future operating performance of the Company. Readers are cautioned that
any such forward-looking statements are not guarantees of future performance and
may involve risks and uncertainties, and that actual results may differ from
those in the forward-looking statements as a result of factors, many of which
are outside the control of the Company.
OVERVIEW
Price Communications Wireless, Inc. ("PCW" or the "Company"), a
wholly-owned subsidiary of Price Communications Cellular Holdings, Inc.
("Holdings"), a wholly-owned subsidiary of Price Communications Corporation
Cellular, Inc., a wholly owned subsidiary of Price Communications Corporation
("PCC"), was incorporated on May 29, 1997 in connection with the purchase of
Palmer Wireless, Inc. ("Palmer).
In May 1997, PCC, PCW and Palmer entered into an Agreement and Plan of
Merger (the "Merger Agreement"). The Merger Agreement provided, among other
things, for the merger of PCW with and into Palmer with Palmer as the surviving
corporation (the "Merger"). In October 1997, the Merger was consummated and
Palmer changed its name to "Price Communications Wireless, Inc."
The Company is engaged in the construction, development, management and
operation of cellular telephone systems in the southeastern United States. As of
June 30, 1999, the Company provided cellular telephone service to approximately
418,000 subscribers in Alabama, Florida, Georgia, and South Carolina in a total
of 16 licensed service areas, composed of eight Metropolitan Service Areas
("MSAs") and eight Rural Service Areas ("RSAs"), with an aggregate estimated
population of 3.3 million. The Company sells its cellular telephone service as
well as a full line of cellular products and accessories principally through its
network of retail stores. The Company markets all of its products and services
under the nationally-recognized service mark CELLULARONE.
During the course of the year, the Company has been engaged and continues
to be engaged in preliminary discussions and negotiations with respect to
potential acquisitions and exchanges, all with the object of being accretive in
the long term for shareholders and bondholders. There can be no assurances that
the Company will be successful in consummating any of such transactions or as to
the terms thereof.
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<PAGE>
Market Ownership
The following is a summary of the Company's ownership interest in the
cellular telephone system in each licensed service area to which the Company
provided service at December 31, 1998 and June 30, 1999.
June 30, 1999 December 31, 1998
DLJ Winter 98-9 ---------------------- -------------------
Cellular MSA Estimated Percentage Net POPS Percentage Net POPS
Service Area Rank Market POPS Ownership Owned Ownership Owned
- ------------ ---- ----------- --------- ----- --------- -----
Albany 270 117,984 96.8% 114,209 86.5% 102,056
Augusta 105 440,864 100.0% 440,864 100.0% 440,864
Columbus 165 250,845 99.1% 248,587 85.2% 213,720
Macon 139 318,227 99.6% 316,954 99.2% 315,681
Savannah 152 288,736 98.5% 284,405 98.5% 284,405
Montgomery 138 320,687 94.6% 303,370 92.8% 297,598
Dothan 252 133,618 95.0% 126,937 94.6% 126,403
Panama City 230 149,953 92.0% 137,957 78.4% 117,563
GA-6 203,899 96.5% 196,763 96.3% 196,355
GA-7 135,121 100.0% 135,121 100.0% 135,121
GA-8 157,912 100.0% 157,912 100.0% 157,912
GA-9 118,111 100.0% 118,111 100.0% 118,111
GA-10 151,827 100.0% 151,827 100.0% 151,827
GA-12 215,935 100.0% 215,935 100.0% 215,935
GA-13 148,361 100.0% 148,361 86.5% 128,332
AL-8 173,677 100.0% 173,677 100.0% 173,677
--------- --------- ---------
3,325,757 3,270,990 3,175,560
========= ========== =========
RESULTS OF OPERATIONS
The following table sets forth for the Company for the periods indicated,
the percentage which certain amounts bear to total revenue.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue:
Service .................................... 92.6% 93.5% 93.0% 93.7%
Equipment sales and installation ........ 7.4 6.5 7.0 6.3
------ ------ ------ ------
Total revenue ................. 100.0 100.0 100.0 100.0
------ ------ ------ ------
Operating expenses:
Engineering, technical and other direct:
Engineering and technical (1) ..... 5.3 6.2 5.8 6.8
Other direct costs of services (2) 7.2 7.4 7.7 7.3
Cost of equipment(3) .................... 11.7 12.3 11.9 12.5
Selling, general and administrative:
Sales and marketing(4) ............ 8.3 12.0 8.5 11.4
Customer service(5) ............... 6.3 6.3 6.3 6.5
General and administrative 6) ..... 9.1 10.4 8.8 10.5
Depreciation and amortization ........... 16.5 22.8 17.7 24.4
------ ------ ------ ------
Total operating expenses .... 64.4 77.4 66.7 79.4
------ ------ ------ ------
Operating income ....................... 35.6% 22.6% 33.3% 20.6%
Operating income before depreciation and
Amortization(7) ................... 52.1% 45.4% 50.9% 45.0%
</TABLE>
95
<PAGE>
- ----------
(1) Consists of costs of cellular telephone network, including inter-trunk
costs, span-line costs, cell site repairs and maintenance, cell site
utilities, cell site rent, engineers' salaries and benefits and other
operational costs.
(2) Consists of net costs of roaming, costs of long distance, costs of
interconnection with wireline telephone companies and other costs of
services.
(3) Consists primarily of the costs of the cellular telephones and accessories
sold.
(4) Consists primarily of salaries and benefits of sales and marketing
personnel, advertising and promotion expenses and employee and agent
commissions.
(5) Consists primarily of salaries and benefits of customer service personnel
and costs of printing and mailing subscriber invoices.
(6) Includes salaries and benefits of general and administrative personnel and
other overhead expenses.
(7) Operating income before depreciation and amortization should not be
considered in isolation or as an alternative to net income, operating
income or any other measure of performance under generally accepted
accounting principles. The Company believes that operating income before
depreciation and amortization is viewed as a relevant supplemental measure
of performance in the cellular telephone industry.
Three Months Ended June 30, 1999 Compared to Three Months Ended June 30, 1998
Revenue. Service revenues totaled $59.8 million for the second quarter of
1999, an increase of 30.8% from $45.7 million for the second quarter of 1998.
The significant increase is primarily attributable to the continued improvement
in the operating statistics combined with an increase in the average number of
subscribers for the period. The average number of subscribers increased by
approximately 76,000 for the current three months compared to last year's second
quarter. In addition, roaming revenue increased by $3.8 million or 57% over last
year's second quarter results.
Average monthly revenue per subscriber (defined as service revenue per the
financial statement) excludes incollect revenue from our subscribers since this
revenue is offset against incollect expense in the other direct cost caption.
For the second quarter of 1999 the average monthly revenue per subscriber
amounted to $48.70 compared to $45.30 for the same period last year or an
increase of 7.5%. In the future, the Company may realize a decrease in the
average monthly revenue per subscriber as a result of the new roaming rates
negotiated with roaming partners. Minutes of use per subscriber has also
markedly increased improving from 187 minutes from last year's second quarter to
247 minutes for the current quarter. Although this increase does not immediately
result in a direct corresponding increase in airtime revenue, greater usage by
subscribers may eventually lead to additional billable minutes of use.
Equipment sales and installation revenue, which consists primarily of
subscriber equipment sales, increased to $4.8 million for the second quarter of
1999 compared to $3.2 million for the second quarter of 1998. The increase is
primarily due to the emphasis on recovering a greater percentage of the phone
cost from subscribers. In addition, increased sales of accessories, as well as
the sale of digital phones which have a higher price point, have contributed to
the increase in equipment revenue.
Operating Expenses. Operating expenses, excluding depreciation and
amortization, increased by $4.2 million for the current three month period but
decreased as a percentage of total revenue to 47.9% from 54.6% for the second
quarter of 1998.
Engineering, technical and other direct costs of service increased to $8.1
million for the second quarter of 1999 from $6.7 million for the second quarter
of 1998. Included in this category is the net cost of incollect which represents
the difference between the amount paid to other cellular carriers for the
Company's subscribers roaming in other markets and the amount charged to
subscribers. Although the cost increased by $1.3 million, the amount recovered
from subscribers increased by $1.6 million which resulted in an improved
recovery ratio. The recovery ratio amount may improve further based on the
negotiated decreases in rates reimbursed to various outside carriers (see
outcollect roaming revenue for a similar decrease in rates). The increase is a
result of the increased subscriber base which generates increases in long
distance costs, and span and inter-trunk cost increases as a result of the
increase in the lines due to the additional cellular usage.
Cost of equipment increased to $7.6 million for the second quarter of 1999
from $6.0 million for the second quarter of 1998, primarily as a result of an
increase in the average cost of a phone as more subscribers buy digital phones
and the increase in accessories now being sold to subscribers. The percentage of
cost recovered increased
96
<PAGE>
from 52.8% for the second quarter of 1998 to 62.8% for the current quarter. This
positive trend is a result of the emphasis on selling more accessories per
subscriber addition and an effort to reduce the loss on the sale of phones,
which loss is standard practice in the industry.
Selling, general and administrative expenses ("SG&A") increased by $1.2
million from $14.0 million in the second quarter of 1998 to $15.3 million for
the same period of the current year. As a percentage of revenue, SG&A for the
current three month period is 23.7% of revenue compared to 28.7% for the same
three month period in 1998 or an improvement of 17.4%. SG&A expenses decreased
by $740,000 as a result of stronger budgetary controls initiated by management.
Decreases in salaries combined with flat advertising expenditures were factors
contributing to the decrease in the current three month period. The cost to add
a subscriber (gross), which consists of the net cost of equipment sold,
installation costs and sales and marketing, has improved, decreasing from
$221.67 for the second quarter of 1998 to $205.16 for the same period in 1999 or
a decrease of 7.4%. General and administrative expenses, which include customer
service expenses, increased to $9.9 million for the current three month period
from $8.2 million for the same period in 1998. As a percentage of revenue, the
current quarter amounts to 15.4% of revenue compared to 16.7% of revenue for the
second quarter of 1998. Customer service expenses increased $1.0 million for the
current quarter but remained at 6.3% of revenue as it was in last year's second
quarter. As the number of subscribers increase, billing costs, which comprise
the major portion of customer service, increase. General and administrative
expenses increased by $753,000 principally as a result of increased bad debts,
which were partially offset by decreases in payroll and related expenses.
Depreciation and amortization decreased $498,000 to $10.7 million in the
current period from $11.2 million for the second quarter of 1998. The decrease
was primarily due to the reduction in the carrying value of the licenses due to
the finalization of purchase accounting in the fourth quarter of 1998. As a
percentage of revenue, depreciation and amortization decreased to 16.5% for the
second quarter of 1999 compared to 22.8% for the second quarter of 1998.
Operating income increased significantly to $23.0 million in the second
quarter of 1999 from $11.0 million for the second quarter of 1998. Operating
income before depreciation and amortization increased to 52.1% as a percentage
of revenue compared to 45.4% for the second quarter of 1998. This increase in
operating margin is attributable primarily to the increase in operating revenue
combined with control of operating costs.
Net Interest Expense, Income Taxes, Extraordinary Item and Net Income. Net
interest expense increased to $21.3 million for the second quarter of 1999 from
$18.1 million in the second quarter of 1998, primarily due to the increased
level of debt from the refinancings* which occurred in the second and third
quarters of 1998. Partially offsetting this increase is the additional interest
earned on the higher level of cash during the second quarter of 1999. The effect
of the conversion of the PCH debt will be realized in the third and fourth
quarters of 1999 with a reduction in interest expense approximating $12.4
million.
The provision for taxes in the current quarter ($535,000) as compared to
the income tax benefit of $2.7 million in the second quarter of 1998 is a result
of taxable income for the current quarter compared to a loss for 1998. The
income tax benefit in 1998 represents the reduction of the accrued tax liability
associated with the sale of the Ft. Myers and GA-1 properties which was
established as the result of purchase accounting.
The net income for the current three month period of $803,000 compared to
a net loss for the second quarter of 1998 of $10.8 million is a function of the
items discussed above. In addition, the second quarter of 1998 includes $5.9
million net of taxes of deferred finance charges written off as the result of
early extinguishment of debt.
Six Months Ended June 30, 1999 Compared to Six Months Ended June 30, 1998
Revenue. Service revenues totaled $112.7 million for the six month period
of 1999, an increase of 30.4% from $86.4 million for the same period of 1998.
The significant increase is primarily attributable to the increase in the
average number of subscribers for the period. The average number of subscribers
increased by approximately 73,000 for the current six month period compared to
last year's comparable period. In addition, roaming revenue increased by $7.0
million or 58% over last year's six month results.
Average monthly revenue per subscriber (defined as service revenue per the
financial statement) excludes incollect revenue from our subscribers since the
revenue is offset against incollect expense in the other direct cost caption.
For 1999, the average monthly revenue amounted to $47.00 compared to $44.08 for
the same period last
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<PAGE>
year or an increase of 6.6%. In the future, the Company may realize a decrease
in the average monthly revenue per subscriber as a result of the new roaming
rates negotiated with roaming partners. Minutes of use per subscriber has also
increased improving from 167 minutes for last year's six month period quarter to
224 minutes for the current six months. Although this increase does not
immediately result in a direct corresponding increase in airtime revenue,
greater usage by our subscribers may eventually lead to additional billable
minutes of use.
Equipment sales and installation revenue, which consists primarily of
cellular subscriber equipment sales, increased to $8.5 million for the first six
months of 1999 compared to $5.8 million for the same period in 1998. The
increase is primarily due to the emphasis on recovering a greater percentage of
the phone cost from subscribers as well as additional gross adds for the current
six month period. In addition, increased sales of accessories, as well as the
sale of digital phones which have a higher price point, have contributed to the
increase in equipment revenue.
Operating Expenses. Operating expenses, excluding depreciation and
amortization, increased by $8.8 million for the current six month period but
decreased as a percentage of total revenue to 49.0% from 55.0% for last year's
comparable period.
Engineering, technical and other direct costs of service increased to
$16.4 million for the current six months from $13.0 million for the same period
in 1998. Included in this category is the net cost of incollect which represents
the difference between the amount paid to other cellular carriers for our
subscribers roaming in their markets and the amount we charge our subscribers.
Although the cost increased by $4.3 million, the amount recovered from
subscribers increased by $3.8 million resulting in a net increase of $470,000
for the current six months. In the future, the recovery ratio amount may improve
based on the negotiated decrease in rates reimbursed to various outside carriers
(see outcollect roaming revenue for a similar decrease in rates). The increase
is a result of the increased subscriber base which generates increases in long
distance costs, and span and inter-trunk cost increases as a result of the
increase in the lines due to the additional cellular usage
Cost of equipment increased to $14.4 million for the current period from
$11.5 million for the first six months of 1998, primarily as a result of an
increase in the average cost of a phone as more subscribers buy digital phones,
the increase in gross subscriber additions and the increase in accessories now
being sold to subscribers. The percentage of cost recovered increased from 50.1%
for 1998 to 59.1% for 1999. This positive trend is a result of the emphasis on
selling more accessories per subscriber addition and an effort to reduce the
loss on the sale of phones, which loss is standard practice in the industry.
Selling, general and administrative expenses ("SG&A") increased $2.5
million to $28.7 million from $26.1 million in 1998. As a percentage of revenue,
SG&A for the current six month period is 23.7% of revenue compared to 28.4% for
the same six month period in 1998 or an improvement of 16.5%. SG&A expenses
decreased by $173,000 as a result of stronger budgetary controls initiated by
management. Decreases in salaries combined with slight increases in advertising
expenditures and installation costs were factors contributing to the decrease in
the current month period. The cost to add a subscriber (gross), which consists
of the net cost of equipment sold, installation costs and sales and marketing,
has improved, decreasing from $222.25 for the six months of 1998 to $202.16 for
the same period in 1999 or a decrease of 9.0%. General and administrative
expenses, which include customer service expenses, increased to $18.3 million
for the current six month period from $15.6 million for the same period in 1998.
As a percentage of revenue, the current six month period amounts to 15.1% of
revenue compared to 17.0% of revenue for the same period in 1998. Customer
service expenses increased $1.7 million but remained at 6.3% of revenue a light
decrease from the 6.5% for last year's six month period. As the number of
subscribers increase, billing costs, which comprise the major portion of
customer service, increase. General and administrative expenses increased by
$1.0 million principally as a result of increased bad debts, which were
partially offset by decreases in payroll and related expenses.
Depreciation and amortization decreased $1.2 million to $21.4 million in
the current period from $22.6 million for the same period in 1998. The decrease
was primarily due to the reduction in the carrying value of the licenses due to
the finalization of purchase accounting in the fourth quarter of 1998. As a
percentage of revenue, depreciation and amortization decreased to 17.7% for 1999
compared to 24.4% for 1998.
Operating income increased significantly to $40.3 million for the first
six months of 1999, from $19.0 million for the same period in 1998. Operating
income before depreciation and amortization increased to 50.9% as a percentage
of revenue compared to 45.0% for the first six months of 1998. This increase in
operating margin is attributable primarily to the increase in operating revenue
combined with control of operating costs.
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<PAGE>
Net Interest Expense, Income Taxes, Extraordinary Item and Net Income. Net
interest expense increased to $42.5 million for 1999 from $35.9 million in the
first six months primarily due to the increased level of debt from the
refinancings which occurred in the second and third quarters of 1998. Partially
offsetting this increase is the additional interest earned on the higher level
of cash during the second quarter of 1999. The effect of the conversion of the
PCH debt will be realized in the third and fourth quarters of 1999 with a
reduction in interest for the second six months approximating $12.4 million.
The income tax benefit was $1.1 million for the first six months of 1999
compared to $2.7 million for the same period in 1998. The income tax benefit in
1998 represents the reduction of the accrued tax liability associated with the
sale of the Ft. Myers and GA-1 properties, which was established as the result
of purchase accounting.
The net loss for the current six month period of $2.0 million compared to
a net loss $17.4 million for 1998 is a function of the items discussed above. In
addition, the second quarter of 1998 includes $5.9 million net of taxes of
deferred finance charges written off as the result of early extinguishment of
debt.
LIQUIDITY AND CAPITAL RESOURCES
The Company's long-term capital requirements consist of funds for capital
expenditures, acquisitions and debt service. Historically, the Company has met
its capital requirements primarily through equity contributions, bank debt, debt
issued to the public, and, to a lesser extent, operating cash flow. During the
current six month period, the Company generated $30.6 million of operating cash
flow as shown in the Condensed Consolidated Statement Of Cash Flows compared to
$3.4 million for 1998. The Company's debt service requirements for the current
year consist of cash interest payments of $68.5 million, of which $34.3 million
has been paid through June 30, 1999. The remaining cash interest requirements
are approximately $10.3 million in the third quarter and $24.0 million in the
fourth quarter. Based upon the Company's current ability to generate operating
cash flow combined with its current available cash position, there does not
appear to be any necessity to provide additional funding for the current level
of operations. The Company's outstanding debt instruments consist of $525
million of 9 1/8% Senior Secured Notes due June 15, 2002 and $175 million 11
3/4% Senior Subordinated Notes due July 15, 2007. Both of these instruments
contain covenants that restrict the payment of dividends, incurrence of debt and
sale of assets, among other things.
YEAR 2000 IMPACT
The Company is in the process of reviewing the full impact that the Year
2000 could have on its operational and financial systems. The Company has chosen
its current billing and MIS outsource provider to coordinate the testing of all
of the operating and financial systems that could effect the Company's
operations. Several of these systems, such as the point of sale system, the
prepaid calling system, wide area network and local area network, and general
ledger system are currently integrated into the billing system.
The Company's current billing vendor (EDS) and MIS outsource provider has
committed to test the compliance of the above systems with the Year 2000
requirements by reviewing each system's upgrade releases which these third party
providers maintain will make their systems Year 2000 compliant. Most of these
third party providers deal with other cellular companies, which enables the
Company to leverage the knowledge obtained from servicing these other cellular
and telecommunications companies. The Company anticipates that this will reduce
the testing and validation time necessary for a comprehensive review.
In addition to the testing of third party provider systems, the current
billing vendor will review their own internal operating systems to verify Year
2000 compliance. They will then test the integration of the updated Year 2000
versions with their own updated version to ensure compliance and operational
compatibility.
The Company, with the billing provider's guidance, has formulated its
strategy after analyzing all systems that could have an effect on the Company's
operations and prioritizing the impact into high, medium and low risk. The
Company estimates that the total costs of these testing and upgrading procedures
will be less than $2.0 million. However, the Company is unable to predict all of
the implications of the Year 2000 issue as it relates to the Company's suppliers
and other entities. It is anticipated that the substantial portion of these
costs will be incurred during 1999 and will be expensed when incurred.
99
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The Company has investigated the possibility of establishing a contingency
plan in the event the above is not successful. The Company's dependence on a few
key third party providers, which provides service to most of the cellular
industry, combined with the lack of accessibility of alternative systems makes a
contingency plan impractical.
Item 7a. Quantitative and Qualitative Disclosures About Market Risk
The Company utilizes fixed rate debt instruments to fund its acquisitions.
Management believes that the use of fixed rate debt minimizes the Company's
exposure to market conditions and the ensuing increases and decreases that could
arise with variable rate financing. See notes to consolidated financial
statements for description and terms of long term debt.
100
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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
(a) Exhibits
Exhibit
Number Description
------ -----------
27 Financial Data Schedule
(b) Reports on Form 8-K
None
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has fully caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PRICE COMMUNICATIONS WIRELESS, INC.
Date: July 28, 1999 By: /s/ Robert Price
Robert Price
Director, President and Treasurer
By: /s/ Kim I Pressman
-------------------------------------------
Kim I Pressman
Vice President and Chief Financial Officer
By: /s/ Michael Wasserman
-------------------------------------------
Michael Wasserman
Vice President and Chief Accounting Officer
102
