<PAGE>
FORM 10-Q/A No. 1
_______________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
(Mark one)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended: March 31, 1996
--------------
[ ] 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: 0-15056
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COMMNET CELLULAR INC.
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(Exact name of registrant as specified in its charter)
Colorado 84-0924904
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8350 East Crescent Parkway, Suite 400
Englewood, Colorado 80111
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(Address of principal executive offices)
(Zip Code)
303/694-3234
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(Registrant's telephone number, including area code)
N/A
---
(Former name, former address and former fiscal year, if changed since last
report)
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 of the registrant's Common Stock outstanding as of May 9,
1996 was 13,855,245.
<PAGE>
COMMNET CELLULAR INC.
Form 10-Q/A No. 1 - March 31, 1996
INDEX
Part I Financial Information Page
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Supplemental Information 1
<PAGE>
SUPPLEMENTAL INFORMATION
General. The Company operates, manages and finances cellular
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telephone systems, primarily in rural markets in the mountain and plains regions
of the United States. The Company's cellular interests currently represent
approximately 3,409,000 net Company pops in 82 markets located in 14 states.
These markets consist of 72 RSA markets having a total of 5,243,000 pops and 10
MSA markets having a total of 1,302,000 pops, of which the Company's interests
represent 2,727,000 net Company pops and 682,000 net Company pops, respectively.
The Company currently manages 55 of the 82 markets in which it holds an interest
and owns a greater than 50% interest in 44 of its 55 managed markets. The
Company currently finances entities holding interests representing approximately
4,274,000 pops, of which 3,409,000 are included in net Company pops and 865,000
are attributable to parties other than the Company. Pops refers to the
estimated population of a market as initially licensed by the Federal
Communications Commission ("FCC"). Systems in which the Company holds an
interest constitute the largest geographic collection of contiguous cellular
markets in the United States.
The Company has concentrated on creating an integrated network of
contiguous cellular systems comprised of markets which are managed by the
Company. The network currently consists of 55 markets (48 RSA and 7 MSA
markets) spanning nine states and represents approximately 4,043,000 total pops
and 3,110,000 net Company pops. As of March 31, 1996, the RSA and MSA managed
markets had 131,422 and 49,084 subscribers, respectively.
Information regarding the Company's net interest in each cellular licensee
and the market subject to such license, as of May 9, 1996, is summarized in the
following table. The table does not reflect transactions that are pending or
under negotiation. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Acquisitions and Sales."
<TABLE>
<CAPTION>
Net Company
MSA or Interest in 1994 Net Company
RSA Code (1) State Licensee (2) Population (3)(6) Pops (4)
------------ ---------------- ------------ ----------------- -----------
<S> <C> <C> <C> <C>
MSAs:
141 Minnesota 16.34% 243,518 39,791
185 Indiana 16.67% 170,313 28,391
241*(5) Colorado 73.99% 127,299 94,189
253*(5) Iowa 74.50% 118,105 87,988
267*(5) South Dakota 51.00% 133,987 68,333
268*(5) Montana 77.05% 122,871 94,672
279 Maine 11.11% 102,441 11,380
289*(5) South Dakota 100.00% 113,831 113,831
297*(5) Montana 100.00% 81,938 81,938
298*(5) North Dakota 70.00% 87,835 61,485
--------- -------
Total MSA 1,302,138 681,998
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Net Company
MSA or Interest in 1994 Net Company
RSA Code (1) State Licensee (2) Population (3)(6) Pops (4)
------------ ---------------- ------------ ----------------- -----------
<S> <C> <C> <C> <C>
RSAs:
348* Colorado 10.00% 45,211 4,521
349*(5) Colorado 61.75% 63,315 39,097
351*(5) Colorado 61.75% 65,026 40,154
352*(5) Colorado 66.00% 26,890 17,747
353*(5) Colorado 100.00% 68,119 68,119
354*(5) Colorado (B1) 69.40% 45,689 31,708
355* Colorado 49.00% 45,026 22,063
356* Colorado (B1) 49.00% 27,671 13,559
389 Idaho 50.00% 66,552 33,276
390 Idaho 33.33% 15,911 5,303
392*(5) Idaho (B1) 100.00% 136,677 136,677
393*(5) Idaho 91.64% 288,252 264,154
415 Iowa 10.11% 155,924 15,770
416 Iowa 38.50% 108,063 41,603
417*(5) Iowa 100.00% 152,917 152,917
419* Iowa 44.92% 54,653 24,549
420*(5) Iowa 100.00% 63,395 63,395
424 Iowa 35.00% 66,706 23,347
425* Iowa 13.28% 107,924 14,337
426* Iowa 49.14% 85,106 41,820
427* Iowa 49.17% 102,917 50,601
428 Kansas 3.07% 28,006 860
429 Kansas 3.07% 31,188 957
430 Kansas 3.07% 52,587 1,614
431 Kansas 3.07% 127,201 3,905
432 Kansas 3.07% 31,075 954
433 Kansas 3.07% 20,183 620
434 Kansas 3.07% 81,665 2,507
435 Kansas 3.07% 127,567 3,916
436 Kansas 3.07% 58,095 1,784
437 Kansas 3.07% 105,951 3,253
438 Kansas 3.07% 81,692 2,508
439 Kansas 3.07% 42,526 1,306
440 Kansas 3.07% 28,891 887
441 Kansas 3.07% 172,162 5,285
442 Kansas 3.07% 155,265 4,767
512 Missouri (B1) 14.70% 56,387 8,289
523*(5) Montana (B1) 100.00% 68,744 68,744
523*(5) Montana (B2) 98.85% 72,353 71,521
524*(5) Montana (B1) 79.40% 37,090 29,449
526*(5) Montana (B1) 100.00% 23,028 23,028
527*(5) Montana 100.00% 180,555 180,555
528*(5) Montana 80.88% 64,321 52,020
529*(5) Montana 87.25% 29,807 26,007
530*(5) Montana 80.88% 85,945 69,508
531*(5) Montana 100.00% 31,508 31,508
532*(5) Montana 100.00% 19,628 19,628
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Net Company
MSA or Interest in 1994 Net Company
RSA Code (1) State Licensee (2) Population (3)(6) Pops (4)
------------ ---------------- ------------ ----------------- -----------
<S> <C> <C> <C> <C>
553* New Mexico 16.33% 251,919 41,143
555 New Mexico 12.25% 78,980 9,675
557 New Mexico 16.33% 56,850 9,285
580*(5) North Dakota 53.36% 101,590 54,208
581* North Dakota 49.00% 59,678 29,242
582 North Dakota 41.45% 90,940 37,694
583* North Dakota 49.00% 65,368 32,030
584*(5) North Dakota 61.75% 48,986 30,249
634*(5) South Dakota 100.00% 36,122 36,122
635*(5) South Dakota 100.00% 22,501 22,501
636*(5) South Dakota 100.00% 53,892 53,892
638*(5) South Dakota (B1) 100.00% 16,774 16,774
638*(5) South Dakota (B2) 100.00% 8,385 8,385
639*(5) South Dakota (B1) 100.00% 33,501 33,501
639*(5) South Dakota (B2) 100.00% 5,586 5,586
640*(5) South Dakota 64.49% 65,711 42,377
641*(5) South Dakota 61.13% 71,915 43,962
642* South Dakota 49.00% 92,384 45,268
675*(5) Utah 100.00% 53,271 53,271
676*(5) Utah 100.00% 91,208 91,208
677*(5) Utah (B3) 100.00% 38,644 38,644
678*(5) Utah 80.00% 23,676 18,941
718*(5) Wyoming 66.00% 47,112 31,094
719*(5) Wyoming 100.00% 73,641 73,641
720*(5) Wyoming 100.00% 148,567 148,567
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Total RSA 5,242,565 2,727,357
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Total MSA and RSA 6,544,703 3,409,355
========= =========
----------
</TABLE>
(1) MSA ranking is based on population as established by the FCC. RSAs
have been numbered by the FCC alphabetically by state.
(2) Represents the net ownership interest of the Company in the licensee for a
cellular telephone system in the respective market. Net ownership of
greater than 50% does not necessarily represent a controlling interest in
such licensee.
(3) Derived from the Strategic Marketing, Inc. 1994 population estimates.
(4) Net Company Pops represents net Company interest in licensee multiplied by
1994 population.
(5) The operations of these markets are currently reflected on a consolidated
basis in the Company's consolidated financial statements. The operations
of the other markets in which the Company holds an interest are reflected
in such financial statements on either an equity or a cost basis.
(6) Represents population within the market area initially licensed by the FCC.
The number of pops which are covered by radio signal in a market is
expected to be marginally lower than the market's total pops on a going-
forward basis.
Markets managed by the Company are denoted by an asterisk (*).
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<PAGE>
Subscriber Growth Table
-----------------------
Information regarding subscribers to the MSA and RSA cellular systems
managed by the Company is summarized by the following table:
<TABLE>
<CAPTION>
Number of Estimated Population Number of
Operating Systems of Operating Systems Subscribers
----------------- --------------------------------- ---------------------------
Total MSA RSA Total MSA RSA Total MSA RSA Growth
----- ----- ----- ---------- ------- ---------- -------- ------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sept. 30, 1987 0 0 0 0 0 0 0 0 0
Sept. 30, 1988 4 4 0 504,529 504,529(1) 0 424 424 0
Sept. 30, 1989 4 4 0 500,804 500,804(2) 0 1,362 1,362 0 221.23%
Sept. 30, 1990 18 4 14 1,687,481 500,804(2) 1,186,677(2) 6,444 3,513 2,931 373.13%
Sept. 30, 1991 49 5 44 3,509,779 566,722(3) 2,943,057(3) 17,952 6,387 11,565 178.58%
Sept. 30, 1992 49 5 44 3,509,779 566,722(3) 2,943,057(3) 35,884 11,119 24,765 99.89%
Sept. 30, 1993 50 6 44 3,665,758 644,526(4) 3,021,232(4) 60,381 17,898 42,483 68.27%
Sept. 30, 1994 55 7 48 3,906 063 771,660(5) 3,134,403(5) 99,002 30,711 68,291 63.96%
Sept. 30, 1995 56 7 49 4,220,975 785,866(6) 3,435,109(6) 151,482 42,401 109,081 53.01%
Dec. 31, 1995 55 7 48 4,043,143 785,866(6) 3,257,277(6) 168,465 46,381 122,084 11.21%
March 31, 1996 55 7 48 4,043,143 785,866(6) 3,257,277(6) 180,506 49,084 131,422 7.15%
---------------
</TABLE>
(1) Derived from 1988 Donnelley Market Service population estimates.
(2) Derived from 1989 Donnelley Market Service population estimates.
(3) Derived from 1990 Census Report.
(4) Derived from 1992 Donnelley Market Service population estimates.
(5) Derived from 1993 Strategic Marketing, Inc. population estimates.
(6) Derived from 1994 Strategic Marketing, Inc. population estimates.
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<PAGE>
Supplemental Information:
SELECTED COMBINED AND PROPORTIONATE
OPERATING RESULTS OF CELLULAR LICENSEES
The following table presents operating data for all cellular licensees in
which the Company holds an interest. The "Combined," "Financed Proportionate"
and "Company Proportionate" operating results, which are not included in the
Company's consolidated financial statements, are provided to assist in
understanding the results of the licensees in which the Company holds an
interest. Generally accepted accounting principles ("GAAP") prescribe inclusion
of revenues and expenses for consolidated interests (generally interests of more
than 50%), but not for equity interests (generally interests of 20% to 50%) or
cost interests (generally interests of less than 20%). Equity accounting
ordinarily results in the same net income as consolidation; however, the net
operating results are reflected on one line below operating income. Operating
activity related to interests accounted for under the cost method are not
reflected at all in a GAAP operating statement.
<TABLE>
<CAPTION>
Six Months ended March 31,
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1996 1995 1996 1995 1996 1995
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Financed Company
Combined (1) Proportionate (2) Proportionate (3)
--------------------------- --------------------------- ---------------------------
<S> <C> <C> <C> <C> <C> <C>
Managed Markets
Revenues:
Cellular service $44,085,004 $32,869,320 $40,890,071 $30,545,635 $32,112,239 $23,628,951
In-roaming 13,891,021 9,504,822 12,817,823 8,927,874 10,102,971 6,645,832
Equipment sales 1,793,860 2,436,845 1,640,082 2,259,232 1,324,523 1,687,086
----------- ----------- ----------- ----------- ----------- -----------
Total revenues 59,769,885 44,810,987 55,347,976 41,732,741 43,539,733 31,961,869
Costs and expenses
involving cash:
Cost of sales:
Cellular service
(including in-roaming) 11,564,492 9,719,179 10,767,237 9,186,918 8,380,235 6,797,354
Equipment sales 5,257,928 2,811,436 4,740,717 2,576,201 3,769,073 1,945,158
General and administrative 13,620,435 12,923,156 12,650,411 12,131,513 9,938,771 9,333,603
Marketing and selling 13,398,248 12,698,455 12,350,150 11,814,069 9,711,943 9,026,762
----------- ----------- ----------- ----------- ----------- -----------
Total cash costs and
expenses 43,841,103 38,152,226 40,508,515 35,708,701 31,800,022 27,102,877
----------- ----------- ----------- ----------- ----------- -----------
EBITDA $15,928,782 $ 6,658,761 $14,839,461 $ 6,024,040 $11,739,711 $ 4,858,992
=========== =========== =========== =========== =========== ===========
Capital expenditures $16,634,826 $18,119,233 $15,844,611 $15,892,540 $14,731,082 $11,926,090
Subscriber count 180,506 124,057 165,788 114,834 130,824 87,518
Total markets 55 55 55 55 55 55
Nonmanaged Markets
Revenues:
Cellular service
(including in-roaming) $43,836,503 $35,592,108 $ 7,014,230 $10,628,092 $ 4,231,194 $ 5,543,288
Equipment sales 3,574,803 2,934,029 383,433 853,782 275,451 490,090
----------- ----------- ----------- ----------- ----------- -----------
Total revenues 47,411,306 38,526,137 7,397,663 11,481,874 4,506,645 6,033,378
Costs and expenses
involving cash:
Cost of sales:
Cellular service 10,324,007 11,713,506 1,942,075 3,487,467 1,131,587 1,784,999
Equipment sales 3,727,575 2,050,558 455,677 631,365 314,752 347,255
General and administrative 8,775,811 7,457,553 1,483,533 2,219,846 864,493 1,157,470
Marketing and selling 9,522,960 10,644,801 1,537,717 3,141,880 995,922 1,660,914
----------- ----------- ----------- ----------- ----------- -----------
Total cash costs
and expenses 32,350,353 31,866,418 5,419,002 9,480,558 3,306,754 4,950,638
----------- ----------- ----------- ----------- ----------- -----------
EBITDA $15,060,953 $ 6,659,719 $ 1,978,661 $ 2,001,316 $ 1,199,891 $ 1,082,740
=========== =========== =========== =========== =========== ===========
Capital expenditures $ 4,216,348 $18,885,247 $ 1,582,580 $ 6,159,696 $ 962,632 $ 3,230,609
Subscriber count 129,939 107,118 20,119 31,064 12,362 16,771
Total markets 27 38 27 38 27 38
</TABLE>
-5-
<PAGE>
<TABLE>
<CAPTION>
Six Months ended March 31,
---------------------------
1996 1995
------------ -------------
<S> <C> <C>
Reconciliation From Company
Proportionate EBITDA to Consolidated
Reporting
Total proportionate EBITDA (managed and
nonmanaged markets) $12,939,602 $ 5,941,732
Proportionate depreciation and
amortization (7,687,228) (5,957,343)
Proportionate interest expense (5,151,134) (4,477,732)
Equity in nonlicensee affiliates (2,310,339) (2,613,204)
Minority interests (66,535) (1,145,423)
Intercompany interest 4,620,783 3,882,931
Amortization of license costs not owned
by affiliates (1,243,013) (1,062,466)
Unallocated corporate expenses (2,591,253) (1,617,271)
Gain (loss) on sales of affiliates (250,000) 67,247
Interest expense (net) and other (6,349,469) (5,292,843)
----------- ------------
Consolidated net income (loss) $(8,088,586) $(12,274,372)
=========== ============
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</TABLE>
(1) Includes 100% of the operating activity of all licensees, regardless of the
Company's owner-ship interest. This is essentially equivalent to
consolidating all licensees regardless of ownership percentage.
(2) Includes that percentage of a licensee's operating results which equals the
Company's ownership interest as well as the ownership interest held by
affiliates of the Company that are financed by CIFC.
(3) Includes only that percentage of a licensee's operating results which
corresponds to the Company's ownership interest. This is essentially
equivalent to a pro rata consolidation.
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<PAGE>
The following table presents "Financed Proportionate" operating results and
other cash activity of the cellular licensees in which the Company holds an
interest, as well as incremental cash activity of the Company. Financed
Proportionate activity represents cash flows that are allocable to the Company
which, when received, will be used to pay the Company's obligations to CoBank.
<TABLE>
<CAPTION>
Six Months ended March 31,
-----------------------------
1996 1995
-----------------------------
<S> <C> <C>
Revenues:
Cellular service (including in-roaming) $ 60,722,124 $ 50,101,601
Equipment sales 2,023,515 3,113,014
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Total revenues 62,745,639 53,214,615
Cash costs and expenses:
Cost of sales:
Cellular service (including
in-roaming) 12,709,312 12,674,385
Equipment sales 5,196,394 3,207,566
General and administrative 14,133,944 14,351,359
Marketing and selling 13,887,867 14,955,949
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Total operating expenses 45,927,517 45,189,259
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EBITDA 16,818,122 8,025,356
Cash interest expense (net) (7,018,741) (5,648,665)
Capital expenditures, including
corporate (17,427,191) (22,052,236)
Changes in operating assets and
liabilities and other (4,147,112) (591,896)
------------ ------------
Cash (used) by financed cellular
licensee affiliates (11,774,922) (20,267,441)
Acquisition activity involving cash 607,553 (603,656)
Nonlicensee cash corporate expenses (738,015) (1,241,492)
Changes to long-term debt and equity
involving cash (25,733) 13,240,324
------------ ------------
Change in cash and short-term
investments $(11,931,117) $ (8,872,265)
============ ============
</TABLE>
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COMMNET CELLULAR INC. (Registrant)
Date: May 20, 1996 By: /s/Daniel P. Dwyer
-----------------------------------------
Daniel P. Dwyer
Executive Vice President, Treasurer &
Chief Financial Officer
Date: May 20, 1996 By: /s/Andrew J. Gardner
--------------------
Andrew J. Gardner
Senior Vice President and Controller
(Principal Accounting Officer)
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