<PAGE>
As filed with the Securities and Exchange Commission on September 15, 1995
==============================================================================
REGISTRATION NO. 33-61279
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
______________
PRONET INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 75-1832168
(State or other jurisdiction (I.R.S. Employer Identification Number)
of incorporation or organization)
600 DATA DRIVE, SUITE 100
PLANO, TEXAS 75075
(214) 965-9400
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
MARK A. SOLLS Copies of all communications,
VICE PRESIDENT AND GENERAL COUNSEL including all communications to the
600 DATA DRIVE, SUITE 100 agent for service, should be sent to:
PLANO, TEXAS 75075
(214) 964-9500 JEFFREY A. CHAPMAN
MARK EARLY
(Name, address, including zip code, VINSON & ELKINS L.L.P.
and telephone number, including area 3700 TRAMMELL CROW CENTER
code, of agent for service) 2001 ROSS AVENUE
DALLAS, TEXAS 75201
(214) 220-7700
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement as determined
in light of market conditions and other factors.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933 other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. /X/
______________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===============================================================================================
TITLE OF EACH CLASS OF AMOUNT PROPOSED PROPOSED AMOUNT OF
SECURITIES TO BE TO BE MAXIMUM OFFERING MAXIMUM AGGREGATE REGISTRATION
REGISTERED REGISTERED PRICE PER SHARE (1) OFFERING PRICE (1) FEE
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par
value $.01 per
share(2) 2,000,000 $21.94 $43,880,000 $15,131.03
===============================================================================================
<FN>
(1) Estimated solely for the purpose of calculating the registration fee in accordance with
Rule 457(c), using the average of the high and low prices reported on The Nasdaq Stock
Market for the Registrant's Common Stock on July 20, 1995.
(2) This Registration Statement also pertains to rights to purchase shares of Series A Junior
Participating Preferred Stock of the Registrant. One right is attached to and trades with
each share of Common Stock of the Registrant. Until the occurrence of certain events, the
rights are not exercisable and will not be evidenced or transferred apart from the Common
Stock.
</TABLE>
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
<PAGE>
SUBJECT TO COMPLETION, DATED SEPTEMBER 15, 1995
PROSPECTUS
PRONET INC.
2,000,000 SHARES OF COMMON STOCK, $.01 PAR VALUE
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
____________________
This Prospectus relates to the offering by the Selling Stockholders (the
"Selling Stockholders") of up to an aggregate of 2,000,000 shares of Common
Stock, par value $.01 per share ("Common Stock"), of ProNet Inc., a Delaware
corporation ("ProNet" or the "Company"). The shares of Common Stock offered
hereby (the "Offered Securities") were privately offered by the Company
pursuant to acquisitions of paging businesses in a series of unrelated
transactions that have occurred since June 30, 1994. See "Resales and Plan of
Distribution" for information relating to such resales.
SEE "RISK FACTORS" ON PAGE 11 FOR CERTAIN FACTORS RELEVANT TO AN INVESTMENT
IN THE COMMON STOCK.
The Offered Securities may be sold from time to time pursuant to this
Prospectus by the Selling Stockholders. The Offered Securities may be sold
by the Selling Stockholders in ordinary brokerage transactions, in
transactions in which brokers solicit purchases, in negotiated transactions,
or in a combination of such methods of sale, at market prices prevailing at
the time of sale, at prices relating to such prevailing market prices or at
negotiated prices. See "Plan of Distribution." The distribution of the
Offered Securities is not subject to any underwriting agreement. The Company
will receive no part of the proceeds of sales from the offering by the
Selling Stockholders. All expenses of registration incurred in connection
with this offering are being borne by the Company, but all selling and other
expenses incurred by the Selling Stockholders will be borne by such Selling
Stockholders. None of the securities offered pursuant to this Prospectus
have been registered prior to the filing of the Registration Statement of
which this Prospectus is a part.
The Common Stock is quoted on The Nasdaq Stock Market. The last reported
sale price of the Common Stock on September 13, 1995 was $30.00.
____________________
The date of this Prospectus is September , 1995
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY SUCH STATE.
<PAGE>
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE UPON
REQUEST FROM PRONET INC., 600 DATA DRIVE, SUITE 100, PLANO, TEXAS 75075,
ATTENTION: GENERAL COUNSEL (TELEPHONE (214) 964-9500). IN ORDER TO INSURE
TIMELY DELIVERY OF THE DOCUMENTS, POTENTIAL INVESTORS SHOULD ALLOW FIVE
BUSINESS DAYS FOR DELIVERY. SEE "INCORPORATION OF CERTAIN INFORMATION BY
REFERENCE."
AVAILABLE INFORMATION
No person has been authorized to give any information or to make any
representations in connection with this offering other than those contained in
this Prospectus. If given or made, such representations must not be relied
upon as having been authorized by the Company or any Selling Stockholder.
This Prospectus shall not constitute an offer to sell or the solicitation of
an offer to buy nor shall there be any sale of these securities in any State
in which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities law of any such State.
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith, files reports, proxy and information statements and
other information with the Securities and Exchange Commission (the
"Commission"). Reports, proxy statements and other information filed by the
Company can be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, and at the Commission's Regional Offices at Seven World Trade Center,
13th Floor, New York, New York 10048 and CitiCorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such material can
be obtained by mail from the Public Reference Branch of the Commission at 450
West Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
The Company has filed with the Commission a Registration Statement on
Form S-3 (herein, together with all amendments and exhibits, referred to as
the "Registration Statement") under the Securities Act of 1933, as amended
(the "Securities Act") with respect to the securities offered hereby. This
Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which were omitted in accordance with
the rules and regulations of the Commission. For further information,
reference is hereby made to the Registration Statement. Any statements
contained herein concerning the provisions of any document filed as an exhibit
to the Registration Statement or otherwise filed with the Commission are not
necessarily complete, and in each instance reference is made to the copy of
such document so filed. Each such statement is qualified in its entirety by
such reference.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated herein by reference:
(i) Annual Report on Form 10-K for the fiscal year ended December 31,
1994;
(ii) Annual Report on Form 10-K/A for the fiscal year ended
December 31, 1994;
(iii) Annual Report on Form 10-K/A-2 for the fiscal year ended
December 31, 1994;
(iv) Current Report on Form 8-K filed March 16, 1995;
(v) Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 1995;
(vi) Current Report on Form 8-K filed April 17, 1995;
(vii) Current Report on Form 8-K filed April 19, 1995;
(viii) Current Report on Form 8-K/A filed May 12, 1995;
(ix) Current Report on Form 8-K filed May 18, 1995;
(x) Current Report on Form 8-K filed May 19, 1995;
(xi) Current Report on Form 8-K/A filed June 2, 1995;
(xii) Current Report on Form 8-K filed June 2, 1995;
(xiii) Quarterly Report on Form 10-Q for the quarterly period ended
June 30, 1995;
(xiv) Current Report on Form 8-K filed July 5, 1995;
(xv) Current Report on Form 8-K filed July 7, 1995;
(xvi) Current Report on Form 8-K filed September 15, 1995;
(xvii) The description of the Company's Common Stock contained in Item 1
of the Registration Statement on Form 8-A dated July 15, 1987, as
amended by Form 8-A/A dated April 19, 1995; and
(xviii) The description of the Company's Series A Junior Participating
Preferred Stock contained in Item 1 of the Registration Statement
on Form 8-A dated April 7, 1995.
-2-
<PAGE>
All documents filed by the Company pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering of the securities offered hereby
shall be deemed to be incorporated by reference into this Prospectus and to be
a part hereof from the date of filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the written or oral request of such person,
a copy of any or all of the documents which are incorporated by reference
herein, other than exhibits to such documents (unless such exhibits are
specifically incorporated by reference into such documents). Requests should
be directed to Mark A. Solls, Vice President, General Counsel and Secretary,
at the Company's principal executive offices.
-3-
<PAGE>
THE COMPANY
ProNet is one of the fastest growing wireless messaging providers in the
United States. The Company focuses its activities in five geographic regions
or communication "SuperCenters" centered around major metropolitan markets and
population corridors, which generally have the demographics, market size,
travel patterns and types of businesses that indicate significant potential
demand for the Company's products and services. The Company is a leading
provider of paging services in 12 major metropolitan markets in the United
States, including New York, Chicago, Dallas/Fort Worth, Houston, Charlotte and
Los Angeles. As of June 30, 1995, the Company had approximately 636,700
pagers in service. Upon completion of the acquisitions described herein, the
Company will have approximately 960,000 paging subscribers, making it one of
the five largest publicly traded paging companies in the United States.
The Company was founded in 1982 with the purpose of providing paging
services to hospitals, doctors and other healthcare providers. Prior to
January 1994, the Company provided paging services solely to the healthcare
industry. The Company is a solutions-oriented organization dedicated to
customer service which has concentrated on identifying market opportunities
in the wireless communications market where it can provide users with
enhanced wireless services. By utilizing proprietary technologies to manage
the under-served market of both the in-house and wide-area paging
requirements of hospitals, the Company quickly became the premier provider of
customized, enhanced wireless services to healthcare institutions in all of
its major metropolitan markets. In 1988, the Company began to apply advanced
wireless technology to the security business by marketing radio-activated
electronic tracking systems to financial institutions. As of June 30, 1995,
the Company's security systems consisted of 27,015 miniature radio
transmitters, or "TracPacs," in service and served approximately 400 customers.
In 1993, ProNet management recognized that the Company's operating
expertise combined with its presence in major metropolitan markets presented
an opportunity to capitalize on the growing demand for pagers among both
business users and the population at large. The Company believes that much of
the future growth in pagers in service will occur in large population centers
where demand from both business and individual subscribers will be primarily
for metropolitan and/or regional coverage. In 1994, the Company began to
market to these constituents through both direct and reseller distribution
channels and began to pursue acquisitions that complemented its existing
market presence. As a result of the Company's recent acquisition strategy, the
Company primarily provides pagers in the commercial marketplace.
The Company's strategy is to achieve rapid growth of its subscriber base
and expand service offerings while maintaining its low cost operating
structure. The Company believes that by further developing its SuperCenters,
it will continue to realize the benefits of operational consolidation while
maintaining the flexibility to react to regional market developments. Key
elements of the Company's operating strategy include:
GEOGRAPHIC CONCENTRATION. ProNet management believes that
focusing the Company's planned growth strategy around its SuperCenters
allows the Company to receive the greatest benefit for each dollar
invested and will most effectively address anticipated demand by new
paging subscribers for metropolitan and/or regional coverage. ProNet
ultimately intends to offer coverage to 60% of the United States
population through its SuperCenters encompassing the Northeast (anchored
by New York City), Midwest (anchored by Chicago), Southeast (anchored by
Charlotte), South Central (anchored by Houston) and West (anchored by
Los Angeles).
SELECTIVE ACQUISITIONS. The Company believes that a substantial
portion of its growth will be achieved through acquisitions of
commercial paging companies in its SuperCenter regions. ProNet
carefully screens and evaluates acquisition candidates according to
their synergistic qualities such as technical and operational
characteristics, frequency compatibilities, geographic coverage and
distribution capabilities within the SuperCenter strategy. Through
technical, operational and financial field teams, each new acquisition is
quickly and thoroughly integrated into the existing SuperCenter operations
to maximize cost savings and operating efficiencies. Since January 1,
1994, the Company has completed 11 acquisitions and signed definitive
agreements or letters of intent with respect to 10 additional acquisitions
that are expected to close in 1995 or the first quarter of 1996.
INCREASE MARKET PENETRATION. ProNet intends to become a market
leader in both its current and future markets by utilizing a variety of
existing distribution channels and by continually exploring new
channels. The Company uses its highly trained direct sales force to
target businesses, medical institutions and individual customers. The
Company also sells paging services through non-exclusive agreements with
resellers or agents and through local and regional retailers. Emphasis on
any one channel in a particular region is dictated by market
characteristics and business opportunities. ProNet's emphasis on customer
service and system reliability is intended to enable the Company to
continue to maintain a monthly disconnect ("churn") rate significantly
below the industry average and thereby further strengthen its market
share within its SuperCenters. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
COST EFFICIENT PROVIDER. The Company operates efficiently through
consolidation of key operating functions in one location per SuperCenter
and through the elimination of redundant operations in acquired
companies. The Company believes that subscriber volume, automation and
shared overhead will allow each SuperCenter to be one of the most cost
efficient providers in its marketplace.
-4-
<PAGE>
ENHANCED WIRELESS SERVICES AND PRODUCTS. ProNet currently offers
a number of enhanced wireless products and services. The Company's
proprietary Intelligent Processing Terminal ("ipt") system for large
corporate accounts is a multi-tasking wide-area communications system
capable of managing a company's in-house and wide-area paging
requirements within a single system. The Company also offers value-
added paging services such as voice-mail, simultaneous group paging,
news and sports highlights, stock quotes, remote alpha entry and other
specialized marketing applications. ProNet's security systems,
consisting of TracPacs and tracking receivers, provide a wireless
solution to the specialized asset recovery needs of various governmental
agencies and business customers. The Company expects to offer
additional enhanced services and technologies as they become available.
Wireless messaging is a high growth industry. Industry sources estimate
that there are currently 25 million pagers in service in the United States, a
penetration rate of 10% of the population. The number of pagers in service in
the United States has grown at an annual rate of 15-20% since the early 1980s.
Industry reports continue to project rapid growth for one-way pagers and other
wireless messaging services. Factors contributing to this level of growth
include (i) increasing mobility of the population, (ii) movement toward a
service-based economy, (iii) growing consumer awareness of the benefits of
mobile communications, (iv) technical advances in equipment and services
offered, and (v) continuing price efficiencies in equipment and services
offered.
The Company was incorporated under Delaware law in 1982. The Company's
principal executive office is located at 600 Data Drive, Suite 100, Plano,
Texas 75075 and its telephone number is (214) 964-9500.
-5-
<PAGE>
ACQUISITIONS
In 1993, as part of its overall strategy to capitalize on the growing
demand for pagers among commercial users and consumers in general, the Company
announced its plan to commence acquiring paging businesses within its
SuperCenter regions. Since this announcement, the Company has purchased or
entered into definitive agreements or letters of intent to purchase the paging
operations described below:
<TABLE>
<CAPTION>
STATUS OF PAGERS IN
ACQUISTION LOCATION(S) ACQUISITION SERVICE(1) PURCHASE PRICE
---------- ------------ ----------- ----------- --------------
<S> <C> <C> <C> <C>
COMPLETED
ACQUISITIONS
Contact New York City Closed 3-1-94 91,000 $ 19.0 million
Radio Call New York City Closed 8-1-94 57,000 $ 7.8 million
ChiComm Chicago Closed 8-1-94 30,000 $ 9.8 million
High Tech Chicago and Texas Closed 12-31-94 2,000 $ 0.9 million
Signet Charlotte Closed 3-1-95 30,000 $ 9.0 million
Carrier New York City Closed 4-1-95 31,200 $ 6.5 million
Metropolitan Houston Closed 5-3-95 150,000 $ 21.0 million
All City Milwaukee Closed 5-19-95 20,000 $ 6.4 million
Americom Houston Closed 7-1-95 86,000 $ 17.5 million
Lewis Georgia Closed 9-1-95 15,000 $ 5.3 million
Gold Coast Florida Closed 9-1-95 6,000 $ 2.3 million
Total Closed
Acquisitions 518,200 $105.5 million
------- --------------
PENDING
ACQUISITIONS
Apple Chicago Letter of Intent )
signed 7-10-95 41,500 )
)
Signet )
Raleigh Raleigh Letter of Intent )
signed 7-10-95 13,000 )
)
Sun Florida Letter of Intent )
signed 7-26-95 12,000 )
)
P&C Houston Letter of Intent )
signed 8-2-95 -0-(2) )
)
Page One Georgia Letter of Intent )
signed 8-7-95 30,000 ) $ 74.9 million (3)
)
Nationwide Los Angeles Letter of Intent )
signed 8-11-95 45,000 )
)
Williams Florida Letter of Intent )
signed 8-21-95 )
)
RCS North Carolina Letter of Intent )
signed 8-22-95 78,500(4) )
)
Total Florida Letter of Intent )
signed 8-22-95 )
)
AGR Florida Letter of Intent )
signed 8-22-95 )
</TABLE>
-6-
<PAGE>
<TABLE>
<CAPTION>
STATUS OF PAGERS IN
ACQUISITION LOCATION(S) ACQUISITION SERVICE(1) PURCHASE PRICE
---------- ------------ ----------- ----------- --------------
<S> <C> <C> <C> <C>
--------- --------------
Total Pending
Acquisitions 220,000 $ 74.9 million
--------- --------------
Total
Acquisitions 738,000 $181.5 million
--------- --------------
--------- --------------
-----------------------------
<FN>
(1) As of the closing date or the date of execution of the definitive agreement
or letter of intent, as applicable.
(2) P&C is currently the Company's largest reseller serving more than 40,000
subscribers in Texas.
(3) Represents aggregate purchase price for Apple, Signet Raleigh, Sun, P&C,
Page One, Nationwide, Williams, RCS, Total and AGR.
(4) Represents aggregate number of pagers for Williams, RCS, Total and AGR.
</TABLE>
This portion of the text is a graphic depicting a map of the continental
United States indicating the locations of the Company's SuperCenters in the
Northeast Region (New York, NY -- 269,094 pagers in service), Southeast
Region (Charlotte, NC -- 220,392 pagers in service), South Central Region
(Houston, TX -- 276,114 pagers in service), Midwest Region (Chicago, IL --
129,591 pagers in service), and West Region (Los Angeles -- 31,510 pagers in
service).
-7-
<PAGE>
SUMMARY FINANCIAL AND OPERATING INFORMATION
The following table presents summary financial data for the Company as
of the dates and for the periods indicated. The financial data for the years
ended December 31, 1990, 1991, 1992, 1993 and 1994 were derived from the
audited consolidated financial statements of the Company. The financial data
for the six months ended June 30, 1994 and 1995 have been derived from the
Company's unaudited consolidated financial statements. The following
information should be read in conjunction with the Company's pro forma
condensed consolidated financial statements and the consolidated financial
statements and related notes thereto incorporated by reference herein and
with "Management's Discussion and Analysis of Financial Condition and Results
of Operations" included elsewhere herein.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
--------------------------------------------------------- ----------------------------
PRO PRO
FORMA FORMA
1990 1991 1992 1993 1994 1994 (1) 1994 1995 1995 (2)
------- -------- -------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PERCENTAGE, RATIO, UNIT AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Service revenues (3).... $13,028 $ 15,084 $ 16,845 $ 19,234 $ 33,079 $ 82,431 $ 13,461 $ 23,892 $43,207
Product sales (4)......... 1,581 1,466 1,855 2,040 6,639 19,877 1,931 4,669 9,895
------- -------- -------- -------- -------- -------- -------- -------- --------
Total revenues............ 14,609 16,550 18,700 21,274 39,718 102,308 15,392 28,561 53,102
Depreciation and
amortization expense..... 3,308 3,748 4,077 4,656 8,574 25,346 3,438 6,461 12,427
Operating income.......... 556 1,223 1,834 2,732 3,189 374 1,426 1,399 1,659
Interest expense.......... 528 425 310 292 1,774 14,879 517 1,894 7,553
Income (loss) before
extraordinary item....... 215 794 1,754 1,574 693 (14,184) 933 (372) (5,478)
Net income (loss)......... 395 1,312 1,754 1,574 693 (14,184) 933 (372) (5,478)
Net income (loss) per share:
Before extraordinary item .05 .20 .43 .40 .16 (3.22) .11 (.05) (.83)
Net income (loss)........ .10 .33 .43 .40 .16 (3.22) .11 (.05) (.83)
OTHER DATA:
Pagers in service at
end of period............ 88,759 103,157 114,356 130,000 353,830 915,168 235,903 636,701 960,398
TracPacs in service at
end of period............ 11,544 13,846 19,210 25,841 27,595 27,595 26,767 27,015 27,015
Pagers in service per
employee (5)............. 490 570 880 1,000 1,325 1,525 1,204 1,667 1,600
ARPU-Paging (6)........... $ 11.51 $ 10.64 $ 10.48 $ 10.23 $ 8.31 $ 7.09 $ 9.31 $ 6.79 $ 7.10
ARPU-TracPac (7).......... 14.25 15.00 14.75 15.90 16.52 16.52 15.68 16.18 16.18
Operating, general and
administrative costs
per paging
subscriber (8)........... 4.76 4.80 5.13 5.33 3.30 3.98 3.75 3.63 3.89
EBITDA (9)................ 3,864 4,971 5,911 7,388 11,763 $25,720 4,864 7,860 $14,086
EBITDA margin (10)........ 28% 32% 34% 36% 36% 31% 36% 33% 32%
Capital expenditures (11). $ 4,708 $ 4,193 $ 5,523 $ 5,497 $ 5,777 $10,826 $ 2,075 $ 5,847 $ 7,822
Ratio of total debt to
EBITDA (12).............. 1.2x 1.0x 0.6x 0.5x 0.9x 5.8x 2.5x 7.3x 5.3x
Ratio of EBITDA to
interest expense....... 7.3 11.7 19.1 25.3 6.6 1.7 9.4 4.1 1.9
</TABLE>
-8-
<PAGE>
<TABLE>
<CAPTION>
AS OF JUNE 30, 1995
----------------------------
ACTUAL PRO FORMA (14)
------ --------------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.................... $ 48,725 $ --
Working capital.............................. 49,797 2,555
Total assets................................. 168,509 221,480
Total debt................................... 108,002 150,205
Total liabilities............................ 118,453 162,174
Total shareholders' equity................... 50,056 59,306
<FN>
(1) Gives effect to (a) the acquisition of Contact Communications, Inc.
("Contact") and Metropolitan Houston Paging Services, Inc. ("Metropolitan"),
and the acquisition of the paging assets of Radio Call Company, Inc. ("Radio
Call"), the RCC division of Chicago Communication Service, Inc. ("ChiComm"),
High Tech Communications Corp. ("High Tech"), Carrier Paging Systems, Inc.
("Carrier"), Signet Paging of Charlotte, Inc. ("Signet"), All City
Communication Company, Inc. ("All City"), Americom Paging Corporation
("Americom"), Gold Coast Paging, Inc. ("Gold Coast") and Lewis Paging, Inc.
("Lewis" and, together with Contact, Metropolitan, Radio Call, ChiComm,
High Tech, Carrier, Signet, All City, Americom and Gold Coast, the "Completed
Acquisitions") and (b) the acquisition of Apple Communication, Inc.
("Apple"), Williams Metro Communications Corp. and affiliates ("Williams"),
Total Communications, Inc. ("Total"), and A.G.R. Electronics, Inc. and
affiliates ("AGR") and the paging assets of Signet of Raleigh, Inc. ("Signet
Raleigh"), Sun Paging Communications ("Sun"), Paging and Cellular of Texas
(a sole proprietorship) ("P&C"), Cobbwells, Inc. dba Page One Communications
("Page One"), Nationwide Paging, Inc. ("Nationwide"), and RCS paging, a
division of Reisenweaver Communications, Inc. ("RCS" and, together with Apple,
Williams, Total, AGR, Signet Raleigh, Sun, P&C, Page One and Nationwide, the
"Pending Acquisitions") as if they had occurred at the beginning of the
period presented and assumes that they were funded with a portion of the
proceeds of the Company's recently completed offering of $100,000,000 in
principal amount of Senior Subordinated Notes due 2005 (the "Subordinated
Notes"). The Completed Acquisitions and the Pending Acquisitions are
collectively referred to as the "Acquisitions."
(2) Gives effect to the acquisitions of Carrier, Signet, Metropolitan, All
City, Americom, Gold Coast, Lewis and the Pending Acquisitions as if they had
occurred at the beginning of the period presented, and assumes that they were
funded with the proceeds of the offering of the Suborinated Notes.
(3) Recurring revenues consist of fixed monthly, quarterly, annual and
bi-annual service and leasing fees.
(4) Product sales include pager and paging equipment sales and other
security systems' income.
(5) Calculated by dividing pagers in service by the number of employees at the
end of the period presented. This calculation excludes employees directly
related to the security systems business.
(6) ARPU-Paging (average revenue per paging unit) is calculated by dividing
paging systems' recurring revenues for the last month in the period by the
number of pagers in service at the beginning of such month.
(7) ARPU-TracPac (average revenue per TracPac unit) is calculated by
dividing security systems' recurring revenues for the last month in the
period by the number of TracPacs in service at the beginning of such month.
(8) Calculated by dividing the sum of the cost of pager lease and access
fees and general and administrative expenses for the last month in the period
by the number of pagers in service at the beginning of such month.
(9) EBITDA is earnings before other income (expense), income taxes,
depreciation and amortization expense. Other income (expense) consists
primarily of interest expense. EBITDA does not represent cash flows as
defined by generally accepted accounting principles and does not necessarily
indicate that cash flows are sufficient to fund all of the Company's cash
needs. EBITDA should not be considered in isolation or as a substitute for
net income, cash from operating activities or other measures of liquidity
determined in accordance with generally accepted accounting principles.
(10) Calculated by dividing EBITDA by the remainder of total revenues less
cost of products sold for the period presented.
(11) Excludes acquisition costs.
-9-
<PAGE>
(12) Calculated by dividing total debt at the end of the period by EBITDA for
the 12 months ended on the last day of the period except the pro forma ratio
for the six months ended June 30, 1995 is based on annualized EBITDA.
(13) Gives effect to the acquisitions Americom, Gold Coast, Lewis and the
Pending Acquisitions as if they had occurred on June 30, 1995, as adjusted to
reflect the sale of the Subordinated Notes and the application of the net
proceeds therefrom.
</TABLE>
-10-
<PAGE>
RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS, THE FOLLOWING
FACTORS SHOULD BE CONSIDERED CAREFULLY BY EACH PROSPECTIVE PURCHASER OF COMMON
STOCK.
ACQUISITION AND GROWTH STRATEGY
The Company intends to continue to pursue an aggressive acquisition
strategy. Since January 1, 1994, the Company has purchased 11 paging
operations and signed definitive agreements or letters of intent to purchase
10 more companies, representing approximately 738,000 pagers in service in
the aggregate. No assurances can be given that the Pending Acquisitions will
be consummated, that further suitable acquisition candidates can be found or
purchased on favorable terms, or that the Pending Acquisitions, if completed,
will be successful. Moreover, there can be no assurance that the Company will
be able to integrate the paging operations of each of the acquired companies
successfully. If the Company is not successful in integrating such paging
operations, the business of the Company may be adversely affected. In
addition, integration of new acquisitions may, at least in the short term,
have an adverse impact upon the Company's operations.
Prior to 1994, the Company delivered paging services solely to members
of the healthcare industry. However, most of the Company's growth since
January 1994 has resulted from, and much of the Company's future growth is
expected to result from, the addition of non-healthcare subscribers, such as
small businesses and individual consumers, many of whom will purchase and
maintain their own pagers rather than lease their pagers from the Company.
This may tend to reduce the Company's average revenue per unit ("ARPU")
because such subscribers will not generate leasing revenues. The combined
lease and access fee of a single leased pager currently ranges from
approximately $3.00 to $45.00 per month, depending upon the type of pager and
optional features selected. The Company charges a monthly access fee for
service to each COAM pager of from $2.00 to $18.00. At June 30, 1995, leased
pagers and COAM pagers represented approximately 34% and 66% of the Company's
total pagers in service, respectively. See "Summary Financial and Operating
Information." Marketing and providing paging services to such businesses and
consumers can vary significantly from marketing and providing such services
to healthcare subscribers. No assurances can be given that the Company will
be successful in the general marketplace. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
HIGH DEGREE OF LEVERAGE; RESTRICTIONS IMPOSED BY LENDERS
The Company is highly leveraged. At June 30, 1995, after giving pro
forma effect to the acquisitions of Americom, Gold Coast, Lewis and the
Pending Acquisitions and the offering of the Subordinated Notes and the
application of the net proceeds therefrom, the Company would have had
approximately $150 million of debt outstanding and the Company's long-term
debt as a percentage of total capitalization would have been 72%.
The Company's high degree of leverage will have important consequences
to the Company, including the following: (i) the ability of the Company to
obtain additional financing in the future for acquisitions, working capital,
capital expenditures or other purposes, should it need to do so, may be
impaired; (ii) a substantial portion of the Company's cash flow from
operations will be required to be dedicated to the payment of the Company's
interest expense, which will reduce the funds available to the Company for its
operations and future business opportunities; (iii) the Company may be more
highly leveraged than some of its competitors, which may place it at a
competitive disadvantage; and (iv) the Company's high degree of leverage may
make it more vulnerable to a downturn in its business or the economy
generally.
The Company's credit facility (the "Credit Facility") and the Indenture
governing the Subordinated Notes (the "Indenture") contain financial and
operating covenants including, among other things, requirements that the
Company maintain certain financial ratios and satisfy certain financial tests
and limitations on the Company's ability to incur other indebtedness, pay
dividends, engage in transactions with affiliates, sell assets and engage in
mergers and consolidations and other acquisitions. If the Company fails to
comply with these covenants, the lenders will be able to accelerate the
maturity of the applicable indebtedness.
FUTURE PROFITABILITY
The Company has been profitable in each of the last five years. However,
the Company anticipates incurring significantly greater depreciation,
amortization and interest expenses in future periods as a result of the
Company's recent and planned acquisitions of commercial paging companies and
the offering of the Subordinated Notes. Such increased expenses will reduce
net income and may contribute to the Company's incurrence of losses in future
periods. In any event, no assurances can be given that the Company will
continue to achieve profitability. See "Summary Financial and Operating
Information" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
-11-
<PAGE>
SUBSCRIBER TURNOVER
The results of operations of paging service providers such as the
Company may be significantly affected by subscriber cancellations. In order
to realize net growth in pagers in service, disconnected users must be
replaced and additional users must be added. However, the sales and marketing
costs associated with attracting new subscribers are substantial relative to
the costs of providing service to existing customers. Although the Company's
current disconnect rate is below the industry average, the Company
anticipates that, as the number of its commercial subscribers increases, it
will experience a higher disconnect rate in the future among small
businesses, individual consumers and other non-healthcare subscribers than it
has experienced historically, primarily because commercial subscribers tend
to disconnect their paging services more frequently than do healthcare
subscribers. A significant increase in the Company's subscriber cancellation
rate may adversely affect the Company's operating results. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
COMPETITION AND TECHNOLOGICAL CHANGE
The Company faces direct competition in all of its paging markets.
Competition for subscribers to the Company's paging services in most
geographic markets is based primarily on the price and quality of services
offered and the geographic area covered. Some of the Company's competitors,
which include certain national and regional paging companies and Regional
Bell Operating Companies, possess greater financial and other resources than
the Company. There can be no assurance that additional competitors will not
enter markets served by the Company or that the Company will be able to
continue to compete successfully. In addition, the telecommunications
industry is characterized by rapid technological change. Future technological
advances in the industry may result in the availability of new services or
products that could compete directly with the services and products being
provided or developed by the Company. Recent and proposed regulatory changes
by the Federal Communications Commission (the "FCC") are aimed at encouraging
such new services and products. Moreover, changes in technology could lower
the cost of competitive services and products to a level at which the
Company's services and products would become less competitive or the Company
would be required to reduce the prices of its services and products. There
can be no assurance that the Company will be able to develop or introduce new
services and products to remain competitive or that the Company will not be
adversely affected in the event of such technological developments.
GOVERNMENT REGULATION
The paging industry is subject to regulation by the FCC and, depending
on the jurisdiction, may be regulated by state regulatory agencies. There can
be no assurance that either the FCC or those state agencies having
jurisdiction over the Company's business will not adopt regulations or take
other actions that would adversely affect the business of the Company.
RELIANCE ON SELECT GROUP OF EXECUTIVES
The Company believes that its success will depend to a significant
extent on the efforts and abilities of a relatively small group of executive
personnel. The loss of services of one or more of these key executives could
adversely affect the Company. The Company does not maintain "key man" life
insurance policies on its executives. However, the Company has entered into
three-year employment agreements with Jackie R. Kimzey, the Company's Chairman
and Chief Executive Officer, and David J. Vucina, the Company's President and
Chief Operating Officer.
-12-
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company at June 30,
1995 on (a) an historical basis and (b) on a pro forma basis to give effect to
the acquisition of Americom, Gold Coast, Lewis and the Pending Acquisitions
as if they had occurred on June 30, 1995, as adjusted to reflect the sale by
the Company of the Old Notes (after deducting estimated discounts,
commissions and offering expenses) and the application of the net proceeds
therefrom. See "Use of Proceeds."
<TABLE>
<CAPTION>
AS OF JUNE 30, 1995
--------------------------------------
ACTUAL PRO FORMA(1)
------- --------------
(IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents........... $ 48,725 $ --
======== ========
Deferred payments (2)............... $ 8,719 $ 25,929
Credit Facility..................... -- 24,993
11 7/8% Senior Subordinated
Notes due 2005..................... 99,283 99,283
-------- --------
Total debt...................... 108,002 150,205
-------- --------
Shareholders' equity:
Preferred Stock, par value $1.00
per share; 5,000,000 shares
authorized; no shares issued or
outstanding...................... --
Common Stock, par value $.01 per
share; 20,000,000 shares
authorized; 6,198,881 shares
issued and outstanding (3)....... 66 70
Less treasury stock at cost....... (1,430) (1,430)
Additional capital (3)............ 49,729 58,975
Retained earnings................. 1,691 1,691
-------- --------
Total shareholders' equity...... 50,056 59,306
-------- --------
Total capitalization.............. $158,058 $209,511
======== ========
<FN>
___________
(1) Gives effect to the acquisition of Americom, Gold Coast, Lewis and
the Pending Acquisitions as if they had occurred on June 30, 1995, as
adjusted to reflect the sale by the Company of the Subordinated Notes (after
deducting estimated discounts, commissions and offering expenses) and the
application of the net proceeds therefrom.
(2) Assuming the completion of all of the Pending Acquisitions, the
Company will have deferred payment obligations (the "Deferred Payments")
aggregating $25.9 million in respect of certain of the Acquisitions. The
Deferred Payments constitute Senior Debt and are due and payable one year
from the closing of the respective Acquisitions. The Company has the option
to issue Common Stock in lieu of cash for each Deferred Payment.
(3) Assuming the completion of all of the Pending Acquisitions, the
Company will issue approximately 437,000 shares of Common Stock (based on the
closing price of the Company's Common Stock on or before June 30, 1995) in
order to satisfy an aggregate of $9.3 million in purchase price obligations,
to be paid upon the closing thereof.
</TABLE>
-13-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The Company provides wireless messaging services through its paging and
security systems operations. Until 1994, paging services were provided solely to
members of the healthcare industry. Beginning in 1994, the Company broadened its
paging focus through the acquisition of paging businesses serving the general
commercial marketplace. As a result of completed and anticipated acquisitions,
the Company's results of operations for prior periods may not be indicative of
future performance.
In both its paging and security systems operations, the Company builds and
operates communications systems and generates revenues from the sale and lease
of pagers, IPT systems and security devices and related access fees. The
Company's revenues are derived primarily from fixed monthly, quarterly, annual
and bi-annual fees charged to customers for paging and security tracking
services. While a subscriber remains in service, operating results benefit from
this recurring monthly revenue stream with minimal requirements for additional
selling expenses or other fixed costs. However, certain variable costs such as
telephone and equipment charges are directly related to the number of pagers in
service.
Each month a percentage of the customer base disconnects service for a
variety of reasons. ProNet does, however, place substantial emphasis on customer
care and quality of service and as a result currently has one of the lowest
average monthly disconnect ("churn") rates in the paging industry -
approximately 2%, compared to an industry average of approximately 2.9%. In the
future, the Company expects that it will experience a higher churn rate among
small businesses, individual consumers and other subscribers than it has
experienced historically with its healthcare subscribers. The Company's monthly
churn rate in the security tracking business is lower than in its paging
business - currently approximately 0.7%.
Currently, recurring revenues consist of two components - service fees and
unit leasing fees. As the Company pursues its strategy of expanding into new
markets, increasing its coverage within its existing service areas and
broadening its customer base and distribution channels, the percentage of
customers who own and maintain ("COAM") their paging equipment rather than
leasing it from the Company is likely to increase. This, together with
competitive factors, may result in declining recurring revenues per subscriber
since these customers will not pay a leasing fee as part of their monthly
charge. However, the Company will not incur the capital costs related to these
COAM pagers. Additionally, average revenue per unit ("ARPU") for pagers served
through resellers is lower than for direct sales due to the wholesale rates
charged to this distribution channel. Such resellers do, however, assume all
selling, marketing, subscriber management and related costs that would otherwise
be incurred by the Company.
Product sales and costs are also likely to increase as the business mix
shifts in favor of COAM units. The Company's objective is to break even on
product sales, but it may selectively offer discounts due to promotional offers
or competitive pressures.
The Company currently enjoys low operating costs per unit due to the
efficiency of its operations. It expects that the development of its business
around its SuperCenters will result in substantial economies of scale and
consolidation of operating and selling expenses that will help it retain this
competitive advantage.
Earnings before other income (expense), income taxes, depreciation and
amortization ("EBITDA") is a standard measure of operating performance in the
paging industry. The Company's EBITDA has grown at a compound annual rate of
over 30% over the past four years. EBITDA growth is expected to continue
although near term margins may be slightly impacted by start-up costs associated
with certain SuperCenters and the buildout of existing and acquired frequencies
in its marketplaces. The Company, unlike a number of its competitors, has
generated net income in recent years. It should be noted, however, that non-cash
and financing-related charges for the Company's acquisition program have the
potential to negatively impact earnings in the future.
-14-
<PAGE>
PAGING SYSTEMS' RESULTS OF OPERATIONS FOR THE
SIX MONTHS ENDED JUNE 30, 1995 AND 1994
Net revenues and gross margin for paging systems consisted of the
following:
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
-----------------------------------
1995 1994
------------- -------------
(IN THOUSANDS)
<S> <C> <C>
Revenues
Pager lease and access fees.......................................... $ 21,278 $ 10,984
Product sales........................................................ 4,532 1,850
-------- --------
Total revenues............................................................ 25,810 12,834
Cost of products sold..................................................... 4,532 1,825
------ -----
Net revenues (1).......................................................... 21,278 11,009
Cost of pager lease and access fees....................................... 5,355 2,960
----- -----
Gross margin.............................................................. 15,923 8,049
Sales and marketing expenses.............................................. 3,271 2,675
General and administrative expenses....................................... 6,434 1,912
Depreciation and amortization expense..................................... 5,632 2,680
------- -------
Operating income.......................................................... $ 586 $ 782
------- -------
------- -------
EBITDA.................................................................... $ 6,218 $ 3,462
------- -------
------- -------
<FN>
-------------------------------
(1) Net revenues represent revenues from services, rent and maintenance plus
product sales less cost of products sold.
</TABLE>
PAGING SYSTEMS' NET REVENUES for the six months ended June 30, 1995
increased to $21.3 million, compared to $11.0 million for the comparable period
in 1994. Pager lease and access fees increased approximately 94%, to
$21.3 million for the six months ended June 30, 1995, compared to $11.0 million
for the comparable period in 1994. This increase was primarily the result of a
170% increase in pagers in service to 636,701 at June 30, 1995 from 235,903 at
June 30, 1994. The increase in pagers in service was primarily the result of
the acquisitions of Radio Call, ChiComm, and High Tech in 1994 and the
acquisitions of Signet, Carrier, All City and Metropolitan during the first two
quarters of 1995. In 1994 and 1995, most of the Company's growth in pagers in
service has been from acquisitions. In addition, internal growth accounted for
approximately 45,000 pagers in service during the six months ended June 30,
1995, representing an annual growth rate of approximately 20%. The Company
believes that this internal growth rate will increase due to continued
commercial paging activity.
ARPU was $6.79 for the month of June 1995 compared to $9.31 for the month
of June 1994. This decrease was due to the Company's continued acquisition of
commercial paging businesses, which traditionally have lower ARPU than
healthcare operations since most commercial pagers are COAM and do not generate
leasing fees. The Company believes that ARPU will continue to decrease, although
at a slower rate upon completion of the Pending Acquisitions, as the Company
continues to become more involved in the commercial paging business and expands
its reseller operations, which tend to generate lower revenues per subscriber.
PRODUCT SALES LESS COST OF PRODUCTS SOLD were at breakeven for the six
months ended June 30, 1995, compared to a gain of $25,000 for the comparable
period in 1994. In certain of the Company's markets, pagers are being sold at
a slight loss in order to gain market share. As the Company's commercial
operations continue to grow, management anticipates that product sales will
increase but that margins on these sales will be lower than were achieved
prior to 1994 in the healthcare industry. Management also anticipates that the
Company's margins may vary from market to market due to competition and other
factors.
-15-
<PAGE>
RECLASSIFICATION OF COSTS. During 1994, the Company restructured its
technical, sales and operational functions into its decentralized SuperCenter
strategy. To reflect this restructuring financially, certain costs that were
previously classified as cost of pager lease and access fees and sales and
marketing expenses in 1994 were reclassified to general and administrative
expenses in 1995. In the aggregate, costs of pager lease and access fees,
sales and marketing expenses and general and administrative expenses increased
by 100% for the six months ended June 30, 1995, compared to the same period
last year as a result of the Company's internal growth and acquisitions. In
total, these costs were $15.1 million (71% of paging systems' net revenues) for
the six months ended June 30, 1995, compared to $7.5 million (69% of paging
systems' net revenues) for the comparable period in 1994. The increase in
these costs as a percentage of net revenues is the result of increased
expenses related to the buildout of the Company's regional SuperCenters.
These expenses as a percentage of net revenues should decline in the future as
new acquisition companies are integrated into the existing SuperCenters.
PAGING SYSTEMS' GROSS MARGIN (net revenues less cost of pager lease and
access fees) was $15.9 million (75% of paging systems' net revenues) for the six
months ended June 30, 1995, compared to $8.0 million (73% of paging systems' net
revenues) for the comparable period in 1994. The increase in gross margin was
due to the reclassification of certain operating expenses described above. The
Company believes that the margin on net revenues will decrease in the near
future as an increasing number of the Company's customers elect to purchase
their paging equipment resulting in a corresponding decrease in ARPU as
discussed above. In addition, cost of pager lease and access fees increased to
$5.4 million for the six months ended June 30, 1995, compared to $3.0 million
for the comparable period in 1994, as a result of the increased costs of
servicing new customers added through both internal growth and acquisitions.
PAGING SYSTEMS' SALES AND MARKETING EXPENSES were $3.3 million (15% of
paging systems' net revenues) for the six months ended June 30, 1995, compared
to $2.7 million (24% of paging systems' net revenues) for the comparable period
of the prior year. The decrease as a percentage of paging systems' net revenues
was due to the reclassification of certain operating expenses described above.
These expenses are not expected to change significantly in the future as a
percentage of paging systems' net revenues.
PAGING SYSTEMS' GENERAL AND ADMINISTRATIVE EXPENSES were $6.4 million (30%
of paging systems' net revenues) for the six months ended June 30, 1995,
compared to $1.9 million (17% of paging systems' net revenues) for the
comparable period in 1994. The increase as a percentage of paging systems' net
revenues was due to the reclassification of certain operating expenses described
above, plus the cost of additional management hired in the fourth quarter of
1994 and the first half of 1995, offset by savings resulting from consolidating
the paging operations into the Company's SuperCenters. The Company anticipates
that paging systems' general and administrative expenses will continue to grow
but at a lesser rate than increases in paging systems' net revenues, as a result
of general and administrative expenses being amortized across a larger
subscriber base as well as savings resulting from the consolidation of
acquisitions.
PAGING SYSTEMS' DEPRECIATION AND AMORTIZATION EXPENSES are better expressed
as a percentage of paging systems' recurring revenues since product sales do not
require any capital investment. Paging systems' depreciation and amortization
expenses as a percentage of recurring paging revenues for the six months ended
June 30, 1995, were 26%, compared to 24%, for the comparable period in 1994.
The increase is due to the amortization of intangibles arising from
acquisitions. The Company believes that this trend in depreciation and
amortization expenses as a percentage of paging systems' recurring revenues
will continue in the short term as a result of acquisitions and continued
capital investment in paging equipment to support the Company's growth.
EBITDA for the paging systems' operations was $6.2 million (29% of paging
systems' net revenues) for the six months ended June 30, 1995, compared to $3.5
million (31% of paging system's net revenues) for the comparable period in 1994.
Consolidation savings in general and administrative expenses were offset by
lower margins on product sales. The Company believes EBITDA may decrease in
the short term due to increased commercial paging activity as a result of
internal growth and
-16-
<PAGE>
future acquisitions of commercial paging operations, but will thereafter
increase over time as the Company integrates the acquired operations and
achieves resulting economies of scale and operating efficiencies.
SECURITY SYSTEMS' RESULTS OF OPERATIONS FOR THE
SIX MONTHS ENDED JUNE 30, 1995 AND 1994
Security systems' net revenues and gross margin consisted of the following:
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
----------------------------------
1995 1994
-------------- -----------------
(IN THOUSANDS)
<S> <C> <C>
Revenues
Security systems' equipment fees........................................ $2,614 $2,477
Other security systems' income.......................................... 137 81
------ ------
Total revenues............................................................... 2,751 2,558
Cost of other security systems............................................... 63 30
-- --
Net revenues(1).............................................................. 2,688 2,528
Cost of security systems' equipment services................................. 539 617
--- ---
Gross margin................................................................. 2,149 1,911
Sales and marketing expenses................................................. 141 127
General and administrative expenses.......................................... 365 382
Depreciation and amortization expense........................................ 830 758
------ ------
Operating income............................................................. $ 813 $ 644
------- -------
------- -------
EBITDA....................................................................... $ 1,643 $ 1,402
------- -------
------- -------
<FN>
-------------------------------
(1) Net revenues represent revenues from services, rent and maintenance plus
other security systems' income less cost of other security systems income.
</TABLE>
SECURITY SYSTEMS' EQUIPMENT FEES increased to $2.6 million for the six
months ended June 30, 1995, from $2.5 million for the comparable period in 1994.
The increase was due to the installation of two new systems since June 30, 1994,
as well as expansion and additional penetration in existing markets. The number
of TracPacs in service increased from 26,767 at June 30, 1994 to 27,015 at June
30, 1995.
OTHER SECURITY SYSTEMS' INCOME LESS COST OF OTHER SECURITY SYSTEMS was
$74,000 for the six months ended June 30, 1995 compared to $51,000 for the
comparable period in 1994. Net revenues fluctuate depending on the type and
volume of equipment sold. The Company does not anticipate significantly
increasing this area of security systems operations.
SECURITY SYSTEMS' GROSS MARGIN was $2.1 million (80% of security systems'
net revenues) for the six months ended June 30, 1995, compared to $1.9 million
(76% of security systems' net revenues) for the comparable period in 1994. The
increase as a percentage of net revenues is due to additional product sales in
the first quarter of 1995. The Company anticipates that these margins will
increase slightly above the margin for the six months ended June 30, 1994 in the
near future as more subscribers are added to existing systems and as systems are
installed in new or existing markets.
SECURITY SYSTEMS' SALES AND MARKETING EXPENSES were $141,000 for the six
months ended June 30, 1995 (5% of security systems' net revenues), compared to
$127,000 for the comparable period in 1994 (5% of security systems' net
revenues). The Company currently anticipates hiring additional management in the
near future to accelerate the growth of security systems' net revenues.
Therefore, these expenses should grow at or slightly above the rate of growth in
the related security systems' net revenues and therefore should increase
slightly as a percentage of these revenues.
SECURITY SYSTEMS' GENERAL AND ADMINISTRATIVE EXPENSES were $365,000 (14% of
security systems' net revenues) for the six months ended June 30, 1995, compared
to $382,000 (15% of security systems' net revenues) for the comparable period in
1994. This decrease in general and administrative expenses was the result of the
decreased burden of corporate overhead as a result of the Company's expanded
paging
-17-
<PAGE>
operations. The Company currently believes that general and administrative
expenses will grow at a slower rate than security systems' net revenues and
therefore should represent a decreasing percent of such revenues.
SECURITY SYSTEMS' DEPRECIATION AND AMORTIZATION EXPENSES are better
expressed as a percentage of recurring revenues since product sales do not
require any capital investment. Security systems' depreciation and amortization
expenses as a percentage of recurring revenues for the six months ended June 30,
1995 were 32%, compared to 31%, for the comparable period in 1994. These
increases were a result of the capital investment necessary to support the
expansion into new markets as well as growth within existing markets. The
Company believes that this trend in depreciation and amortization should
continue due to the relationship of capital investment to recurring revenue.
EBITDA for the security systems' operations was $1.6 million (61% of
security systems' net revenues) for the six months ended June 30, 1995, compared
to $1.4 million (55% of security systems' net revenues) for the same period in
1994. This increase was primarily due to decreases in general and administrative
expenses as described above.
PAGING SYSTEMS' RESULTS OF OPERATIONS FOR THE
YEARS ENDED DECEMBER 31, 1992, 1993 AND 1994
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1992 1993 1994
----------- --------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
Revenues
Pager lease and access fees...................................................... $13,969 $14,853 $28,015
Product sales.................................................................... 1,613 1,554 6,506
------- ------- -------
Total revenues........................................................................ 15,582 16,407 34,521
Cost of products sold................................................................. 894 794 6,605
------- ------- -------
Net revenues(1)....................................................................... 14,688 15,613 27,916
Cost of pager lease and access fees................................................... 3,889 4,119 7,972
------- ------- -------
Gross margin.......................................................................... 10,799 11,494 19,944
Sales and marketing expenses.......................................................... 3,444 3,736 6,530
General and administrative expenses................................................... 2,639 2,908 4,713
Depreciation and amortization expense................................................. 3,025 3,333 7,017
------- ------- -------
Operating income...................................................................... $ 1,691 $ 1,517 $ 1,684
------- ------- -------
------- ------- -------
EBITDA................................................................................ $ 4,716 $ 4,850 $ 8,701
------- ------- -------
------- ------- -------
<FN>
-------------------------------
(1) Net revenues represent revenues from services, rent and maintenance plus
product sales less cost of products sold.
</TABLE>
PAGING SYSTEMS' NET REVENUES increased in each of the last three years
compared to prior years. These increases were attributable primarily to a
growing subscriber base achieved through greater market penetration in existing
markets and the acquisitions of Contact, Radio Call and ChiComm in 1994.
Pager lease and access fees increased from $14.0 million in 1992 to $14.9
million in 1993 and to $28.0 million in 1994. This increase from 1993 to 1994
was primarily due to a 172% increase in pagers in service to 353,830 at
December 31, 1994, from 130,000 at December 31, 1993. The increase in pagers
in service was primarily due to such acquisitions. In addition, internal growth
accounted for approximately 38,000 units during 1994, which represents an
annualized internal growth rate of approximately 16%.
ARPU was $10.48, $10.23, and $8.31 for the months of December 1992, 1993
and 1994, respectively. This decrease was primarily due to the acquisition of
commercial paging businesses in 1994, which traditionally have lower ARPU than
healthcare operations since most commercial pagers are COAM and do not generate
leasing fees.
PRODUCT SALES LESS COST OF PRODUCTS SOLD was $719,000 in 1992, $760,000 in
1993 and ($99,000) in 1994. Historically, the Company has primarily leased
equipment to customers rather than selling it, whereas the industry trend is
towards increased COAM pagers. In certain markets, pagers are being sold at a
slight discount to cost in order to gain market share. As commercial operations
continue to grow, management
-18-
<PAGE>
anticipates that product sales will increase but that margins on these sales
will be lower than have been achieved prior to 1994 in the healthcare industry.
Management also anticipates that margins may vary from market to market due to
competition and other factors.
PAGING SYSTEMS' GROSS MARGIN (net revenues less related cost of pager lease
and access fees) increased from $10.8 million (73% of paging systems' net
revenues) in 1992 to $11.5 million (74% of paging systems' net revenues) in 1993
and to $19.9 million (71% of paging systems' net revenues) in 1994. The margin
on net revenue decreased in 1994 due to the transition into the commercial
paging marketplace, which resulted in lower ARPU as well as a slight loss on
product sales.
PAGING SYSTEMS' SALES AND MARKETING EXPENSES were $3.4 million (23% of
paging systems' net revenues) in 1992, $3.7 million (24% of paging systems' net
revenues) in 1993 and $6.5 million (23% of paging systems' net revenues) in
1994.
PAGING SYSTEMS' GENERAL AND ADMINISTRATIVE EXPENSES were $2.6 million (18%
of paging systems' net revenues) in 1992, $2.9 million (19% of paging systems'
net revenues) in 1993 and $4.7 million (17% of paging systems' net revenues) in
1994. The percentage decrease was due to savings resulting from the
consolidation of certain of the Completed Acquisitions' paging operations into
the Company's SuperCenters.
PAGING SYSTEMS' DEPRECIATION AND AMORTIZATION EXPENSES are better expressed
as a percentage of paging systems' recurring revenues since product sales do not
require any capital investment. Paging systems' depreciation and amortization
expenses were $3.0 million, $3.3 million and $7.0 million in 1992, 1993 and
1994, respectively, which, as percentages of paging systems' recurring revenue,
were 22% for 1992 and 1993 and 25% in 1994. The increase was primarily due to
the amortization of intangibles arising from the Completed Acquisitions in 1994.
EBITDA for the paging systems' operations was approximately $4.7 million
(32% of paging systems' net revenues), $4.9 million (31% of paging systems' net
revenues) and $8.7 million (31% of paging systems' net revenues) for 1992, 1993
and 1994, respectively. Consolidation savings in general and administrative
expenses were offset by lower margins on product sales for Contact, Radio Call
and ChiComm, which sell pagers at a lower margin or at a slight discount to cost
compared to the Company's healthcare communications operations.
SECURITY SYSTEMS' RESULTS OF OPERATIONS FOR THE YEARS ENDED
DECEMBER 31, 1992, 1993 AND 1994
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------
1992 1993 1994
--------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
REVENUES
Security systems' equipment fees $ 2,876 $ 4,381 $ 5,064
Other security systems' income 242 486 133
------- -------- --------
Total revenues 3,118 4,867 5,197
Cost of other security systems 192 162 39
------- -------- --------
Net revenues(1) 2,926 4,705 5,158
Cost of security systems' equipment services 819 983 1,213
------- -------- --------
Gross margin 2,107 3,722 3,945
Sales and marketing expenses 248 314 207
General and administrative expenses 665 871 676
Depreciation and amortization expense 1,051 1,323 1,557
------- -------- --------
Operating income $ 143 $ 1,214 $ 1,505
------- -------- --------
------- -------- --------
EBITDA $ 1,194 $ 2,537 $ 3,062
------- -------- --------
------- -------- --------
-------------------------------
(1) Net revenues represent revenues from services, rent and maintenance plus
other security systems' income less cost of other security systems' income.
</TABLE>
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<PAGE>
SECURITY SYSTEMS' EQUIPMENT FEES increased in each of the last three years.
These increases were attributable primarily to installation of new systems in
each year, as well as further market penetration in existing markets. The
Company installed four systems in 1992, four in 1993 and two in 1994. The number
of TracPacs in service at the end of 1994 was 27,595, an increase of 7% over the
end of 1993. The number of TracPacs in service at the end of 1993 was 25,841, an
increase of 35% over the end of 1992.
OTHER SECURITY SYSTEMS' INCOME LESS COST OF OTHER SECURITY SYSTEMS for
1992, 1993 and 1994 consisted primarily of miscellaneous equipment sales and
research and development contracts which earned gross margins of $50,000 or 21%
in 1992, $324,000 or 67% in 1993, and $94,000 or 71% in 1994. The margins
fluctuate depending on the type of sales and contracts.
SECURITY SYSTEMS' GROSS MARGIN was $2.1 million (72% of security systems'
net revenues) in 1992, $3.7 million (79% of security systems' net revenues) in
1993 and $3.9 million (76% of security systems' net revenues) in 1994. The
increase in margin from 1992 to 1993 resulted from four new systems being added
to the existing customer base in early 1993, a major expansion of an existing
system, and margin improvement on systems installed in 1992. The decrease in
margin from 1993 to 1994 was due to profitable production work on earlier
research and development contracts that were completed in 1993.
SECURITY SYSTEMS' SALES AND MARKETING EXPENSES were $248,000 (8% of
security systems' net revenues) in 1992, $314,000 (7% of security systems' net
revenues) in 1993 and $207,000 (4% of security systems' net revenues) in 1994.
The decrease in 1994 was the result of a planned reduction in marketing costs.
SECURITY SYSTEMS' GENERAL AND ADMINISTRATIVE EXPENSES were $665,000 (23% of
security systems' net revenues) in 1992, $871,000 (19% of security systems' net
revenues) in 1993 and $676,000 (13% of security systems' net revenues) in 1994.
The percentage decrease in 1993 was a result of revenue growth with no
significant increase in general and administrative expenses. The percentage
decrease in 1994 was the result of the decreased burden of corporate overhead as
a result of the Company's overall expanded operations. In late 1994, the Company
hired additional management to assist in managing the day-to-day operations of
the security systems business.
SECURITY SYSTEMS' DEPRECIATION AND AMORTIZATION EXPENSES are better
expressed as a percentage of recurring revenues since product sales do not
require any capital investment. Depreciation and amortization expenses for
security systems' operations were $1.1 million (37% of security systems'
recurring revenues), $1.3 million (30% of security systems' recurring revenues)
and $1.6 million (31% of security systems' recurring revenues) in 1992, 1993 and
1994, respectively. The decrease in depreciation and amortization expenses as a
percentage of security systems' recurring revenues from 1992 to 1993 primarily
resulted from increasing revenues. Depreciation expense for security systems'
operations has increased in each of the last three years because of capital
equipment requirements necessary to support the expansion into new markets as
well as the continued growth of the existing systems.
EBITDA for security systems' operations were $1.2 million (41% of security
systems' net revenues) in 1992, $2.5 million (54% of security systems' net
revenues) in 1993 and $3.1 million (59% of security systems' net revenues) in
1994. This increase was primarily due to decreases in general and administrative
expenses as a percentage of revenues as a result of general and administrative
costs being expensed across a larger combined subscriber base.
OTHER INCOME (EXPENSE)
Other income (expense) includes interest income generated from
short-term investments and interest expense incurred. The period-to-period
fluctuation in interest expense has resulted primarily from changes in the
outstanding amounts under the Company's revolving loan agreement and the
Notes. Interest expense increased in 1994 as a result of the increased
borrowings to fund acquisitions made during the year. Interest expense will
increase in the future as a result of interest due on the Subordinated Notes
which were issued in June 1995.
-20-
<PAGE>
FEDERAL INCOME TAXES
At December 31, 1994, the Company had net operating loss carryforwards of
$3.3 million for income tax purposes that expire in years 2004 through 2007. For
the year ended December 31, 1994, the primary differences between the U.S.
Federal statutory tax rate and the effective rate in the Company's historical
financial statements are state income taxes and the amortization of goodwill
related to stock acquisitions, which is not deductible for tax purposes. The
Company anticipates that in the future the primary differences between the U.S.
Federal statutory tax rate and the effective rate in the Company's financial
statements will continue to be state income taxes and the amortization of
goodwill related to stock acquisitions.
LIQUIDITY AND CAPITAL RESOURCES
During 1992, 1993 and 1994, the Company financed the majority of its
growth, other than acquisitions, through internally generated funds. Net cash
provided by operating activities was $3.2 million for the six months ended
June 30, 1995 and $6.7 million in 1992, $7.1 million in 1993 and $8.4 million
in 1994 after deducting debt financing costs. The acquisitions of Contact,
Radio Call, ChiComm and High Tech in 1994 and Signet, Carrier, Metropolitan
and All City in 1995 were financed under the Credit Facility. The Company
anticipates that its ongoing capital needs, including the Pending
Acquisitions, will be funded with borrowings under the Credit Facility,
proceeds from the sale of the Subordinated Notes and net cash generated by
operations.
CAPITAL EXPENDITURES
As of June 30, 1995, the Company had invested $46.8 million in system
equipment and pagers for its 12 major metropolitan markets and $11.2 million in
system equipment and TracPacs for its 26 security systems.
Capital expenditures for paging systems' equipment and pagers (excluding
assets acquired pursuant to the completed acquisitions) were $4.0 million in
each of 1992 and 1993, $5.0 million in 1994 and $4.5 million for the six months
ended June 30, 1995. Capital expenditures for security systems' equipment and
TracPacs were $1.5 million in each of 1992 and 1993, $763,000 in 1994 and
$672,000 for the six months ended June 30, 1995.
At June 30, 1995, the Company had invested $4.1 million in inventories, the
majority of which were pagers, compared to $4.6 million at December 31, 1994.
The decrease was due to better inventory management as the SuperCenters
generated operating efficiencies. Inventory balances are expected to remain at
higher levels than in prior years as a result of acquisitions and increased
subscriber growth.
Except for those assets acquired through acquisitions, the Company expects
to meet its capital requirements in 1995 with cash generated from operations.
Although the Company had no material binding commitments to acquire capital
equipment at June 30, 1995, the Company anticipates capital expenditures for the
remainder of 1995 to be approximately $9.9 million for the purchase of pagers
and system equipment for its current paging systems' operations and $1.5 million
for the manufacture of TracPacs and the purchase of system equipment for its
security systems' operations.
PRIVATE PLACEMENT OF $100 MILLION OF SUBORDINATED NOTES
In June 1995, the Company completed the private placement of the
Subordinated Notes. Proceeds to the Company from the sale of the Subordinated
Notes, after deducting discounts, commissions and offering expenses, were
approximately $95.6 million. The Company used approximately $49.4 million of
the net proceeds to repay all indebtedness outstanding under the Credit
Facility. The Company expects to use the remaining proceeds to pursue the
Company's acquisition strategy, to purchase frequency rights, to make capital
expenditures for buildout of the Company's regional paging systems and for
enhanced services, and for working capital and general corporate purposes.
-21-
<PAGE>
The Subordinated Notes are general unsecured obligations of the Company
and are subordinated to all existing and future Senior Debt of the Company. The
Indenture provides that the Company may not incur any debt that is subordinate
in right of payment to the Senior Debt and senior in right of payment to the
Notes. The Indenture also contains certain covenants that, among other things,
limit the ability of the Company and its subsidiaries to incur indebtedness, pay
dividends, engage in transactions with affiliates, sell assets and engage in
certain other transactions.
CREDIT FACILITY
The Credit Facility was amended and restated in February 1995 to increase
the amount of available credit from $52 million to $125 million. The Credit
Facility was subsequently amended in June 1995. The Credit Facility is a
revolving line of credit which, in February 1997, will convert to a five and
one-half year term loan maturing in July 2002. The term loan may be repaid at
any time and will be payable in quarterly installments, based on the principal
amount outstanding on the conversion date, in amounts ranging from 3.25%
initially to 5.75% over five and one-half years.
Concurrent with the Company's offering of the Subordinated Notes, the
Credit Facility was amended by and among the Company and its lenders to
permit issuance of the Subordinated Notes. The approximate $49.9 million
outstanding under the Credit Facility was repaid with the proceeds of the
offering of the Subordinated Notes. See "Description of Credit Facility."
ACQUISITIONS
In early 1993, the Company announced its plans to commence a program of
acquiring businesses that serve the commercial paging market and offer
operational synergies when integrated within the Company's SuperCenters.
During 1994, the Company acquired all of the outstanding capital stock of
Contact, substantially all of the paging assets of Radio Call and High Tech
and substantially all of the Chicago-area paging assets of ChiComm for $19.0
million, $7.8 million, $900,000 and $9.8 million, respectively. In the first
six months of 1995, the Company has acquired the paging assets of All City
for $6.4 million, Signet for $9.0 million and Carrier for $6.5 million and
all the outstanding capital stock of Metropolitan for $21.0 million. In July
1995, the Company acquired the paging assets of Americom for $17.5 million.
In September 1995, the Company acquired the paging assets of Lewis for $5.3
million and Gold Coast for $2.3 million. The Completed Acquisitions were all
accounted for as purchases and were funded either by borrowings under the
Credit Facility or proceeds from the sale of the Subordinated Notes. Also in
1995, the Company signed letters of intent or definitive agreements to
purchase the paging assets of Signet Raleigh, Sun, P&C, Page One, RCS and
Nationwide and all of the outstanding capital stock of Apple, Williams, Total
and AGR. The Pending Acquisitions are expected to close in late 1995 or
early 1996 and will be funded by proceeds from the sale of the Subordinated
Notes, borrowings under the Credit Facility and issuances of shares of Common
Stock of the Company. The Pending Acquisitions are subject to various
conditions, including FCC, regulatory and other third-party approvals and the
execution of definitive agreements.
The Company has Deferred Payments outstanding related to the High Tech,
Signet, Carrier and All City acquisitions of $200,000, $4.2 million, $3.0
million and $350,000, respectively, which are due and payable one year from the
closing of the respective transactions. These balances are payable, at the
Company's discretion, either in cash or shares of the Company's Common Stock
based on current market value at the date of payment. With regard to Contact,
Radio Call, Metropolitan and Gold Coast, the purchase price was paid in full at
closing. In addition, the Company has an $8.7 million Deferred Payment related
to the Americom acquisition and a $2.1 million Deferred Payment related to the
Lewis acquisition, both of which closed subsequent to the end of the second
quarter.
On August 1, 1995, the Company issued 44,166 shares of its Common Stock to
ChiComm in payment of the $950,000 deferred portion of the purchase price of
ChiComm.
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<PAGE>
SELLING STOCKHOLDERS
The following table sets forth the name of each Selling Stockholder and
relationship, if any, with the Company and (i) the number of shares of Common
Stock owned by each Selling Stockholder as of September 14, 1995, (ii) the
maximum number of shares of Common Stock which may be offered for the account
of such Selling Stockholder under this Prospectus, and (iii) the amount and
percentage of Common Stock to be owned by the Selling Stockholder after the
completion of the Offering assuming the sale of all the Common Stock which may
be offered hereunder.
<TABLE>
<CAPTION>
AMOUNT AND PERCENTAGE OF
MAXIMUM NUMBER OF COMMON STOCK OWNED
NAME OF SELLING HOLDER AND RELATIONSHIP TO SHARES OWNED PRIOR TO SHARES WHICH MAY BE AFTER THE OFFERING (1)
COMPANY OFFERING SOLD HEREUNDER AMOUNT - %
------------------------------------------ --------------------- ------------------- ------------------------
<S> <C> <C> <C>
Chicago Communication Service, Inc. 44,166 44,166 --
<FN>
--------------------
(1) Assumes the sale of all shares of Common Stock registered hereunder, although none of the Selling
Stockholders are under any obligation known to the Company to sell any shares of Common Stock.
</TABLE>
The Company will pay the expenses of registering the shares of Common
Stock being sold hereunder which are estimated to be $30,000.
-23-
<PAGE>
PLAN OF DISTRIBUTION
The Offered Securities were issued to the Selling Stockholders in
connection with the acquisition by the Company of the various paging
businesses of the Selling Stockholders in a series of separate transactions.
The Offered Securities may be sold from time to time by the Selling
Stockholders. The Selling Stockholders may from time to time sell all or a
portion of the Offered Securities in transactions on The Nasdaq Stock Market,
in the over-the-counter market, in negotiated transactions, or a combination
of such methods of sale, at market prices prevailing at the time of sale, at
prices related to such prevailing market prices or at negotiated prices;
provided that such transactions will not include an underwritten public
offering. The Offered Securities may be sold directly or through
broker-dealers. If shares of Common Stock are sold through broker-dealers,
the Selling Stockholders may pay brokerage commissions and charges. The
methods by which the Offered Securities may be sold include (a) a block trade
(which may involve crosses) in which the broker or dealer so engaged will
attempt to sell the securities as agent but may position and resell a portion
of the block as principal to facilitate the transaction; (b) purchases by a
broker or dealer as principal and resale by such broker or dealer for its own
account pursuant to this Prospectus; (c) exchange distributions and/or
secondary distributions in accordance with the rules of The Nasdaq Stock
Market; (d) ordinary brokerage transactions and transactions in which the
broker solicits purchasers; and (e) privately negotiated transactions.
Pursuant to the provisions of various Registration Rights Agreements
entered into by and between the Company and each of the Selling Stockholders,
the Selling Stockholders will pay their costs and expenses of selling the
shares of Common Stock offered hereunder, including commissions and discounts
of brokers, dealers, or agents, and the Company has agreed to pay the costs
and expenses incident to its registration and qualification of the Common
Stock offered hereby, including registration and filing fees. In addition,
the Company has agreed to indemnify the Selling Stockholders against certain
liabilities, including liabilities arising under the Securities Act.
The Selling Stockholders and any broker-dealer participating in the
distribution of the Offered Securities may be deemed to be "underwriters"
within the meaning of the Securities Act, and any profit and any commissions
paid or any discounts or concessions allowed to any such broker-dealer may be
deemed to be underwriting discounts and commissions under the Securities Act.
The Selling Stockholders may indemnify any broker-dealer that participates in
transactions involving the sale of shares of Common Stock against certain
liabilities, including liabilities under the Securities Act.
There can be no assurances that the Selling Stockholders will sell any
or all of the shares of Common Stock offered by them hereunder.
VALIDITY OF SECURITIES
The validity of the shares of Common Stock will be passed upon by Vinson
& Elkins L.L.P., Dallas, Texas.
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<PAGE>
EXPERTS
The consolidated financial statements of ProNet Inc. for the three years
ended December 31, 1994, appearing in ProNet Inc.'s Annual Report on Form
10-K have been audited by Ernst & Young LLP, independent auditors, as
indicated in their report thereon included therein. Such consolidated
financial statements are incorporated herein by reference in reliance upon
such report given upon the authority of such firm as experts in accounting
and auditing.
The combined financial statements of Contact Communications, Inc.
appearing in one of the documents incorporated herein by reference to the
extent and for the periods indicated in their report have been audited by
Hiltzik, Schneider, Ehrlich & Wengrover, independent public accountants, as
indicated in their report incorporated by reference herein upon the authority
of such firm as experts in accounting and auditing.
The combined financial statements of Radio Call Company, Inc. appearing
in one of the documents incorporated herein by reference have been audited by
Cummings & Carroll, P.C., independent public accountants, as indicated in
their report incorporated by reference herein upon the authority of such firm
as experts in accounting and auditing.
The financial statements of the RCC Division of Chicago Communication
Service, Inc. appearing in one of the documents incorporated herein by
reference to the extent and for the periods indicated in their report have
been audited by Natarelli & Associates, independent public accountants, as
indicated in their report incorporated by reference herein upon the authority
of such firm as experts in accounting and auditing.
The financial statements of All City Communication Company, Inc.
appearing in one of the documents incorporated herein by reference to the
extent and for the periods indicated in their report have been audited by
Winter, Kloman, Moter & Repp, S.C., independent public accountants, as
indicated in their report incorporated by reference herein upon the authority
of such firm as experts in accounting and auditing.
The financial statements of Signet Paging of Charlotte, Inc. appearing
in one of the documents incorporated herein by reference have been audited
by Greer & Walker, L.L.P., independent public accountants, as indicated in
their report incorporated by reference herein upon the authority of such firm
as experts in accounting and auditing.
The financial statements of Metropolitan Houston Paging Services, Inc.
appearing in one of the documents incorporated herein by reference to the
extent and for the periods indicated in their report have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report incorporated by reference herein upon the authority of such firm as
experts in accounting and auditing.
The financial statements of Americom Paging Corporation as of December 31,
1994, and for each of the years in the two-year period ended December 31, 1994,
have been incorporated by reference in reliance upon the report of KPMG Peat
Marwick LLP, independent certified public accountants, incorporated by reference
herein, and upon the authority of said firm as experts in accounting and
auditing.
The report of KPMG Peat Marwick LLP covering the December 31, 1994,
American Paging Corporation financial statements contains an explanatory
paragraph that states that the Company's recurring losses from operations and
net capital deficiency raise substantial doubt about the entity's ability to
continue as a going concern. These financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
The financial statements of Paging and Cellular of Texas (a sole
proprietorship) appearing in one of the documents incorporated herein by
reference to the extent and for the periods indicated in their report have
been audited by KPMG Peat Marwick LLP, independent public accountants, as
indicated in their report incorporated by reference herein in reliance upon
such report given upon the authority of such firm as experts in accounting
and auditing.
The financial statements of Apple Communication, Inc., SigNet of
Raleigh, Inc., Cobbwells, Inc. dba Page One Messaging Services, A.G.R.
Electronics, Inc. and affiliates and Nationwide Paging, Inc. and the
statement of net assets to be acquired of RCS Paging, a division of
Reisenweaver Communications, Inc. appearing in one of the documents
incorporated herein by reference to the extent and for the periods
indicated in their reports have been audited by Ernst & Young, LLP,
independent auditors as indicated in their reports thereon included
therein. Such financial statements are incorporated herein by reference
in reliance upon such reports given upon the authority of such firm as
experts in accounting and auditing.
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<PAGE>
===================================
No dealer, salesman or other
person has been authorized to give
any information or to make any
representations other than those
contained in this Prospectus in
connection with the offer made by
this Prospectus and, if given or
made, such information or
representations must not be relied
upon as having been authorized by
the Company, by any selling
stockholder or underwriter. Neither
the delivery of this Prospectus nor
any sale made hereunder shall under
any circumstances create an
implication that there has been no
change in the affairs of the Company
since the date hereof. This
Prospectus does not constitute an
offer or solicitation by anyone in
any state in which such offer or
solicitation is not authorized or in
which the person making such offer
or solicitation is not qualified to
do so to anyone to whom it is
unlawful to make such offer or
solicitation
_____________________
TABLE OF CONTENTS
PAGE
----
Available Information. . . 2
Incorporation of Certain
Information by Reference. 2
The Company. . . . . . . . 4
Summary Financial and
Operating Information . . 8
Risk Factors . . . . . . . 11
Capitalization . . . . . . 13
Management's Discussion
and Analysis of Financial
Condition and Results
of Operations . . . . . . 14
Selling Stockholders . . . 23
Plan of Distribution . . . 24
Validity of Securities . . 24
Experts. . . . . . . . . . 25
===============================
===============================
PRONET INC.
2,000,000 Shares
of Common Stock
____________
Prospectus
____________
September , 1995
===============================
<PAGE>
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article Six of the Restated Certificate of Incorporation of the
Registrant provides that the Registrant shall indemnify its directors and
officers to the maximum extent allowed by the Delaware General Corporation
Law. Pursuant to Section 145 of the Delaware General Corporation Law, the
Registrant generally has the power to indemnify its present and former
directors and officers against expenses and liabilities incurred by them in
connection with any suit to which they are, or are threatened to be made, a
party by reason of their serving in those positions so long as they acted in
good faith and in a manner they reasonably believed to be in, or not opposed
to, the best interests of the Registrant, and with respect to any criminal
action, so long as they had no reasonable cause to believe their conduct was
unlawful. With respect to suits by or in the right of the Registrant,
however, indemnification is generally limited to attorneys' fees and other
expenses and is not available if the person is adjudged to be liable to the
Registrant, unless the court determines that indemnification is appropriate.
The statute expressly provides that the power to indemnify authorized thereby
is not exclusive of any rights granted under any bylaw, agreement, vote of
stockholders or disinterested directors, or otherwise. The Registrant also
has the power to purchase and maintain insurance for its directors and
officers and has recently obtained such insurance.
The preceding discussion of the Registrant's Restated Certificate of
Incorporation and Section 145 of the Delaware General Corporation Law is not
intended to be exhaustive and is qualified in its entirety by the Restated
Certificate of Incorporation and Section 145 of the Delaware General
Corporation Law.
The Registrant has entered into indemnity agreements with the
Registrant's directors and officers. Pursuant to such agreements, the
Registrant will, to the extent permitted by applicable law, indemnify such
persons against all expenses, judgments, fines and penalties incurred in
connection with the defense or settlement of any actions brought against them
by reason of the fact that they were directors or officers of the Registrant
or assumed certain responsibilities at the direction of the Registrant.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------ -----------------------
3.1 -- Restated Certificate of Incorporation dated July 31, 1987
filed as an exhibit to the Registrant's Registration
Statement on Form S-4 (File No. 33-60925) filed July 7,
1995, and incorporated herein by reference.
3.2 -- Certificate of Designation of Series A Junior
Participating Preferred Stock dated April 11, 1995
(filed as part of the Registrant's Registration
Statement on Form 8-A dated April 7, 1995, and
incorporated herein by reference).
3.3 -- Certificate of Amendment to Restated Certificate of
Incorporation dated June 12, 1995 (filed as an
exhibit to the Registrant's Current Report on Form 8-K,
dated July 5, 1995, and incorporated herein by
reference).
3.4 -- Restated Bylaws of the Registrant, as amended (filed as an
exhibit to the Registrant's Current Report on Form 8-K dated
April 7, 1995, and incorporated herein by reference).
4.1 -- Indenture, dated as of June 15, 1995, between the
Registrant and First Interstate Bank of Texas, N.A.,
as Trustee (filed as an exhibit to the Registrant's
Current Report on Form 8-K, dated July 5, 1995,
and incorporated herein by reference).
4.2 -- Registration Rights Agreement, dated as of June 15,
1995, between the Registrant, Lehman Brothers, Inc.,
Alex. Brown & Sons Incorporated and PaineWebber
Incorporated (filed as an exhibit to the Registrant's
Registration Statement on Form S-4 (File No. 33-60925 filed
July 7, 1995, and incorporated herein by reference).
4.3 -- Rights Agreement, dated as of April 5, 1995,
between the Registrant and Chemical Shareholder
Services Group, Inc., as Rights Agent, specifying
the terms of the rights to purchase the Registrant's
Series A Junior Participating Preferred Stock, and
the exhibits thereto (filed as an exhibit to the
Registrant's Registration Statement on Form 8-A dated
April 7, 1995, and incorporated herein by reference).
II-1
<PAGE>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------ -----------------------
5.1 -- Opinion of Vinson & Elkins L.L.P.*
10.1 -- Agreement dated June 15, 1988, between the Registrant
and Texas Instruments Incorporated for the
acquisition of assets including the use of patents,
technology and software related to ProNet Tracking
Systems (filed as an exhibit to the Registrant's
Current Report on Form 8-K, dated July 21, 1988,
and incorporated herein by reference).
10.2 -- Office/Showroom/Warehouse Lease Agreement dated
January 2, 1990, between the Registrant and Dal-Mac
Westridge I, Ltd., as amended (filed as an exhibit
to the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1990, and incorporated
herein by reference).
10.3 -- Stock Purchase Agreement dated September 24, 1993,
by and between the Registrant and Contact
Communications, Inc. (filed as an exhibit to the
Registrant's Current Report on Form 8-K, dated March
1, 1994, and incorporated herein by reference).
10.4 -- Amendment Letter No. One to Stock Purchase
Agreement dated October 20, 1993, by and between
the Registrant and Contact Communications, Inc. (filed
as an exhibit to the Registrant's Current Report on
Form 8-K, dated March 1, 1994, and incorporated
herein by reference).
10.5 -- Amendment Letter No. Two to Stock Purchase
Agreement dated January 4, 1994, by and between the
Registrant and Contact Communications, Inc. (filed as
an exhibit to the Registrant's Current Report on Form
8-K, dated March 1, 1994, and incorporated herein
by reference).
10.6 -- Amendment Letter No. Three to Stock Purchase
Agreement dated March 1, 1994, by and between the
Registrant and Contact Communications, Inc. (filed as
an exhibit to the Registrant's Current Report on Form
8-K, dated March 1, 1994, and incorporated herein
by reference).
10.7 -- Asset Purchase Agreement dated March 22, 1994, by
and among the Registrant, Radio Call Company, Inc., a
New York corporation, MRN Communications, Inc., a
New York corporation, Radio Call Co. of N.J., Inc.,
a New Jersey corporation and Marvin R. Neuwirth
(filed as an exhibit to the Registrant's Current
Report on Form 8-K, dated August 5, 1994, and
incorporated herein by reference).
10.8 -- Asset Purchase Agreement dated May 5, 1994, by and
among the Registrant, Chicago Communication Service,
Inc., an Illinois corporation, Gerald C. Bear,
Gerald C. Bear, Trustee of the Lewis Bear Trust,
Leo Magiera and Gerald Manikowski (filed as an
exhibit to the Registrant's Current Report on Form
8-K, dated August 5, 1994, and incorporated herein by
reference).
10.9 -- Asset Purchase Agreement dated June 30, 1994, by
and among the Registrant, All City Communication
Company, Inc., Robert J. von Bereghy, Maurice S.
Meyers, Martin T. Franke, Virginia Franke, Personal
Representative of the estate of Martin K. Franke
and Cove Communications of Wisconsin, Inc. (filed
as an exhibit to the Registrant's Quarterly Report on
Form 10-Q for the fiscal quarter ended June 30,
1994, and incorporated herein by reference).
10.10 -- Amendment Agreement dated July 29, 1994, by and
among the Registrant, Radio Call Company, Inc., a New
York corporation, MRN Communications, Inc., a New
York corporation, Radio Call Co. of N.J., Inc., a
New Jersey corporation and Marvin R. Neuwirth
(filed as an exhibit to the Registrant's Current
Report on Form 8-K, dated August 5, 1994, and
incorporated herein by reference).
10.11 -- Amendment Agreement dated August 1, 1994, by and
among the Registrant, All City Communication Company,
Inc., Robert J. von Bereghy, Maurice S. Meyers,
Martin T. Franke, Virginia Franke, Personal
Representative of the estate of Martin K. Franke
and Cove Communications of Wisconsin, Inc. (filed
as an exhibit to the Registrant's Quarterly Report on
Form 10-Q for the fiscal quarter ended June 30,
1994, and incorporated herein by reference).
II-2
<PAGE>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------ -----------------------
10.12 -- Stock Purchase Agreement dated April 20, 1994,
regarding the acquisition of the outstanding
capital stock of Metropolitan Houston Paging
Services, Inc., ("Metro Houston") by and among
Contact Communications Inc., Metro Houston and the
shareholders of Metro Houston (filed as an exhibit
to the Registrant's Quarterly Report on Form 10-Q for the
fiscal quarter ended March 31, 1995, and incorporated
herein by reference).
10.13 -- Form of PS-58 Split Dollar Agreement between the
Registrant and each of its executive officers (filed
as an exhibit to the Registrant's Registration
Statement on Form S-2 (File No. 33-85696) filed
with the Commission on October 28, 1994, and
incorporated herein by reference).
10.14 -- Asset Purchase Agreement dated November 30, 1994,
among Signet Paging of Charlotte, Inc., Eileen L.
Knight, John R. Knight, Sr., John R. Knight, Jr.
and Contact Communications Inc. (filed as an
exhibit to Amendment No. 2 to the Registrant's
Registration Statement on Form S-2 (File No. 33-
85696) filed with the Commission on December 14,
1994, and incorporated herein by reference).
10.15 -- Employment Agreement dated May 18, 1994, by and
between the Registrant and Jackie R. Kimzey (filed as
an exhibit to the Registrant's Quarterly Report on
Form 10-Q for the fiscal quarter ended June 30,
1994, and incorporated herein by reference).
10.16 -- Employment Agreement dated May 18, 1994, by and
between the Registrant and David J. Vucina (filed as
an exhibit to the Registrant's Quarterly Report on
Form 10-Q for the fiscal quarter ended June 30,
1994, and incorporated herein by reference).
10.17 -- Change in Control Agreement dated May 18, 1994, by
and between the Registrant and Bo Bernard (filed as an
exhibit to the Registrant's Quarterly Report on Form
10-Q for the fiscal quarter ended June 30, 1994,
and incorporated herein by reference).
10.18 -- Change in Control Agreement dated May 18, 1994, by
and between the Registrant and Jan E. Gaulding (filed
as an exhibit to the Registrant's Quarterly Report on
Form 10-Q for the fiscal quarter ended June 30,
1994, and incorporated herein by reference).
10.19 -- Change in Control Agreement dated May 18, 1994, by
and between the Registrant and Jeffery Owens (filed as
an exhibit to the Registrant's Quarterly Report on
Form 10-Q for the fiscal quarter ended June 30,
1994, and incorporated herein by reference).
10.20 -- Change in Control Agreement dated January 17, 1995,
by and between the Registrant and Mark A. Solls (filed
as an exhibit to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1994, and incorporated
herein by reference).
10.21 -- Asset Purchase Agreement dated May 24, 1995,
regarding the acquisition of substantially all of
the paging assets of Americom Paging Corporation,
by and among the Registrant, Gregory W. Hadley, Mo
Shebaclo and American 900 Paging, Inc. dba Americom
Paging Corporation (filed as an exhibit to the
Registrant's Current Report on Form 8-K, dated July 7, 1995,
and incorporated herein by reference).
10.22 -- Amended and Restated Credit Agreement dated
February 9, 1995, by and among the Registrant, The
First National Bank of Chicago, as Agent, and the
Lenders party thereto (filed as an exhibit to the
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1994, and incorporated herein by
reference).
10.23 -- Waiver, Consent and Amendment No. 1 dated as of
June 12, 1995 by and among the Registrant, The First
National Bank of Chicago, as Agent, and the Lenders
party thereto (filed as an exhibit to the Registrant's
Registration Statement on Form S-4 (File No. 33-60925)
filed July 7, 1995, and incorporated herein by reference).
II-3
<PAGE>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------ -----------------------
10.24 -- Letter of Agreement dated March 31, 1995, regarding
the acquisition of substantially all of the common
stock of Lewis Paging Inc., by and among the
Registrant and Terry W. Lewis (filed as an exhibit to
the Registrant's Quarterly Report on Form 10-Q for the
fiscal quarter ended March 31, 1995, and incorporated
herein by reference).
10.25 -- Office Lease Agreement by and between the Registrant
and Carter-Crowley Properties, Inc., as Landlord
(filed as an exhibit to the Registrant's Current Report
on Form 8-K, dated July 5, 1995, and incorporated herein
by reference).
10.26 -- Letter of Agreement dated July 10, 1995, regarding the
acquisition of substantially all of the paging assets of
Signet Paging of Raleigh, Inc., by and among CCI, Signet
Paging of Raleigh, Inc., and W. David Sweatt.*
10.27 -- Letter of Agreement dated July 10, 1995, regarding the
acquisition of the common stock of Apple Communication,
Inc. and certain assets of Best Page, Inc., by and among
Apple Communication, Inc., Best Page, Inc., CCI,
Sam Zarcone and Jill DiFoggio.*
10.28 -- Letter of Agreement dated August 2, 1995, regarding the
acquisition of substantially all of the paging assets of
Paging and Cellular of Texas, by and among CCI, Paging and
Cellular of Texas and Daniel L. Sheppard (filed as an exhibit
to the Registrant's Quarterly Report on Form 10-Q for the fiscal
quarter ended June 30, 1995, and incorporated herein by reference).
10.29 -- Letter of Agreement dated August 7, 1995, regarding the
acquisition of substantially all of the paging assets of
Cobbwells, Inc. dba Page One Communications, by and among CCI,
Cobbwells, Inc. dba Page One Communications, James H.
Cobb, III and Warren K. Wells (filed as an exhibit to the
Registrant's Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 1995, and incorporated herein by reference).
22.1 -- Subsidiaries of the Registrant (filed as an exhibit to
the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1994, and incorporated
herein by reference).
23.1 -- Consent of Vinson & Elkins L.L.P. (set forth in
Exhibit 5.1).
23.2 -- Consent of Ernst & Young LLP, Independent Auditors.
23.3 -- Consent of Hiltzik, Schneider, Ehrlich & Wengrover,
Independent Public Accountants.
23.4 -- Consent of Cummings & Carroll, P.C., Independent
Public Accountants.
23.5 -- Consent of Natarelli & Associates, Independent
Public Accountants.
23.6 -- Consent of Winter, Kloman, Moler & Repp, S.P.,
Independent Public Accountants.
23.7 -- Consent of Greer & Walker, L.L.P., Independent
Public Accountants.
23.8 -- Consent of Arthur Andersen LLP, Independent Public
Accountants.
23.9 -- Consent of KPMG Peat Marwick LLP, Independent
Public Accountants.
23.10 -- Consent of KPMG Peat Marwick LLP, Independent
Public Accountants.
24.1 -- Powers of Attorney (set forth on signature page).
---------------
* Previously filed.
II-4
<PAGE>
ITEM 22. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(i) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration
Statement:
(ii) To include any prospectus required in Section 10(a) (3) of
the Securities Act of 1933, as amended (the "Securities
Act");
(iii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the Registration
Statement;
(iv) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
PROVIDED, HOWEVER, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant
to section 13 or section 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
(4) That, for purposes of determining any liability under the
Securities Act, each filing of the Registrant's annual report pursuant to
section 13(a) or section 15(d) of the Exchange Act that is incorporated by
reference in the Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 20 above, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant has duly caused this Amendment to Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Plano, State of Texas, on September 13, 1995.
PRONET INC.
By: /s/ Jan E. Gaulding
---------------------------------
Jan E. Gaulding
Senior Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Amendment to Registration Statement has been signed by the
following persons in the capacities indicated on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- -----
<S> <C> <C>
/s/ Jackie R. Kimzey* Chairman, Chief Executive September 13, 1995
------------------------------- Officer and Director
Jackie R. Kimzey (Principal Executive Officer)
/s/ David J. Vucina* President, Chief Operating September 13, 1995
------------------------------- Officer and Director
David J. Vucina
/s/ Jan E. Gaulding Senior Vice President, Treasurer September 13, 1995
------------------------------- and Chief Financial Officer
Jan E. Gaulding (Principal Financial and
Accounting Officer)
/s/ Thomas V. Bruns* Director September 13, 1995
-------------------------------
Thomas V. Bruns
/s/ Harvey B. Cash* Director September 13, 1995
-------------------------------
Harvey B. Cash
/s/ Edward E. Jungerman* Director September 13, 1995
-------------------------------
Edward E. Jungerman
/s/ Mark C. Masur* Director September 13, 1995
-------------------------------
Mark C. Masur
*By /s/ Jan E. Gaulding
----------------------------
Jan E. Gaulding
Attorney-in-Fact
</TABLE>
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS PAGE NO.
------ ----------------------- --------
3.1 -- Restated Certificate of Incorporation dated July 31, 1987
filed as an exhibit to the Registrant's Registration
Statement on Form S-4 (File No. 33-60925) filed
July 7, 1995, and incorporated herein by reference.
3.2 -- Certificate of Designation of Series A Junior
Participating Preferred Stock dated April 11, 1995
(filed as part of the Registrant's Registration
Statement on Form 8-A dated April 7, 1995, and
incorporated herein by reference).
3.3 -- Certificate of Amendment to Restated Certificate of
Incorporation dated June 12, 1995 (filed as an
exhibit to the Registrant's Current Report on Form
8-K, dated July 5, 1995, and incorporated herein by
reference).
3.4 -- Restated Bylaws of the Registrant, as amended (filed as an
exhibit to the Registrant's Current Report on Form 8-K dated
April 7, 1995, and incorporated herein by reference).
4.1 -- Indenture, dated as of June 15, 1995, between the
Registrant and First Interstate Bank of Texas, N.A.,
as Trustee (filed as an exhibit to the Registrant's
Current Report on Form 8-K, dated July 5, 1995,
and incorporated herein by reference).
4.2 -- Registration Rights Agreement, dated as of June 15,
1995, between the Registrant, Lehman Brothers, Inc.,
Alex. Brown & Sons Incorporated and PaineWebber
Incorporated (filed as an exhibit to the Registrant's
Registration Statement on Form S-4 (File No. 33-60925)
filed July 7, 1995, and incorporated herein by reference).
4.3 -- Rights Agreement, dated as of April 5, 1995,
between the Registrant and Chemical Shareholder
Services Group, Inc., as Rights Agent, specifying
the terms of the rights to purchase the Registrant's
Series A Junior Participating Preferred Stock, and
the exhibits thereto (filed as an exhibit to the
Registrant's Registration Statement on Form 8-A dated
April 7, 1995, and incorporated herein by
reference).
5.1 -- Opinion of Vinson & Elkins L.L.P.*
10.1 -- Agreement dated June 15, 1988, between the Registrant
and Texas Instruments Incorporated for the
acquisition of assets including the use of patents,
technology and software related to ProNet Tracking
Systems (filed as an exhibit to the Registrant's
Current Report on Form 8-K, dated July 21, 1988,
and incorporated herein by reference).
10.2 -- Office/Showroom/Warehouse Lease Agreement dated
January 2, 1990, between the Registrant and Dal-Mac
Westridge I, Ltd., as amended (filed as an exhibit
to the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1990, and incorporated
herein by reference).
10.3 -- Stock Purchase Agreement dated September 24, 1993,
by and between the Registrant and Contact
Communications, Inc. (filed as an exhibit to the
Registrant's Current Report on Form 8-K, dated March
1, 1994, and incorporated herein by reference).
10.4 -- Amendment Letter No. One to Stock Purchase
Agreement dated October 20, 1993, by and between
the Registrant and Contact Communications, Inc. (filed
as an exhibit to the Registrant's Current Report on
Form 8-K, dated March 1, 1994, and incorporated
herein by reference).
10.5 -- Amendment Letter No. Two to Stock Purchase
Agreement dated January 4, 1994, by and between the
Registrant and Contact Communications, Inc. (filed as
an exhibit to the Registrant's Current Report on Form
8-K, dated March 1, 1994, and incorporated herein
by reference).
10.6 -- Amendment Letter No. Three to Stock Purchase
Agreement dated March 1, 1994, by and between the
Registrant and Contact Communications, Inc. (filed as
an exhibit to the Registrant's Current Report on Form
8-K, dated March 1, 1994, and incorporated herein
by reference).
10.7 -- Asset Purchase Agreement dated March 22, 1994, by
and among the Registrant, Radio Call Company, Inc., a
New York corporation, MRN Communications, Inc., a
New York corporation, Radio Call Co. of N.J., Inc.,
a New Jersey corporation and Marvin R. Neuwirth
(filed as an exhibit to the Registrant's Current
Report on Form 8-K, dated August 5, 1994, and
incorporated herein by reference).
<PAGE>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS PAGE NO.
------ ----------------------- --------
10.8 -- Asset Purchase Agreement dated May 5, 1994, by and
among the Registrant, Chicago Communication Service,
Inc., an Illinois corporation, Gerald C. Bear,
Gerald C. Bear, Trustee of the Lewis Bear Trust,
Leo Magiera and Gerald Manikowski (filed as an
exhibit to the Registrant's Current Report on Form
8-K, dated August 5, 1994, and incorporated herein by
reference).
10.9 -- Asset Purchase Agreement dated June 30, 1994, by
and among the Registrant, All City Communication
Company, Inc., Robert J. von Bereghy, Maurice S.
Meyers, Martin T. Franke, Virginia Franke, Personal
Representative of the estate of Martin K. Franke
and Cove Communications of Wisconsin, Inc. (filed
as an exhibit to the Registrant's Quarterly Report on
Form 10-Q for the fiscal quarter ended June 30,
1994, and incorporated herein by reference).
10.10 -- Amendment Agreement dated July 29, 1994, by and
among the Registrant, Radio Call Company, Inc., a New
York corporation, MRN Communications, Inc., a New
York corporation, Radio Call Co. of N.J., Inc., a
New Jersey corporation and Marvin R. Neuwirth
(filed as an exhibit to the Registrant's Current
Report on Form 8-K, dated August 5, 1994, and
incorporated herein by reference).
10.11 -- Amendment Agreement dated August 1, 1994, by and
among the Registrant, All City Communication Company,
Inc., Robert J. von Bereghy, Maurice S. Meyers,
Martin T. Franke, Virginia Franke, Personal
Representative of the estate of Martin K. Franke
and Cove Communications of Wisconsin, Inc. (filed
as an exhibit to the Registrant's Quarterly Report on
Form 10-Q for the fiscal quarter ended June 30,
1994, and incorporated herein by reference).
10.12 -- Stock Purchase Agreement dated April 20, 1994,
regarding the acquisition of the outstanding
capital stock of Metropolitan Houston Paging
Services, Inc., ("Metro Houston") by and among
Contact Communications Inc., Metro Houston and the
shareholders of Metro Houston (filed as an exhibit
to the Registrant's Quarterly Report on Form 10-Q for the
fiscal quarter ended March 31, 1995, and incorporated
herein by reference).
10.13 -- Form of PS-58 Split Dollar Agreement between the
Registrant and each of its executive officers (filed
as an exhibit to the Registrant's Registration
Statement on Form S-2 (File No. 33-85696) filed
with the Commission on October 28, 1994, and
incorporated herein by reference).
10.14 -- Asset Purchase Agreement dated November 30, 1994,
among Signet Paging of Charlotte, Inc., Eileen L.
Knight, John R. Knight, Sr., John R. Knight, Jr.
and Contact Communications Inc. (filed as an
exhibit to Amendment No. 2 to the Registrant's
Registration Statement on Form S-2 (File No. 33-
85696) filed with the Commission on December 14,
1994, and incorporated herein by reference).
10.15 -- Employment Agreement dated May 18, 1994, by and
between the Registrant and Jackie R. Kimzey (filed as
an exhibit to the Registrant's Quarterly Report on
Form 10-Q for the fiscal quarter ended June 30,
1994, and incorporated herein by reference).
10.16 -- Employment Agreement dated May 18, 1994, by and
between the Registrant and David J. Vucina (filed as
an exhibit to the Registrant's Quarterly Report on
Form 10-Q for the fiscal quarter ended June 30,
1994, and incorporated herein by reference).
10.17 -- Change in Control Agreement dated May 18, 1994, by
and between the Registrant and Bo Bernard (filed as an
exhibit to the Registrant's Quarterly Report on Form
10-Q for the fiscal quarter ended June 30, 1994,
and incorporated herein by reference).
10.18 -- Change in Control Agreement dated May 18, 1994, by
and between the Registrant and Jan E. Gaulding (filed
as an exhibit to the Registrant's Quarterly Report on
Form 10-Q for the fiscal quarter ended June 30,
1994, and incorporated herein by reference).
10.19 -- Change in Control Agreement dated May 18, 1994, by
and between the Registrant and Jeffery Owens (filed as
an exhibit to the Registrant's Quarterly Report on
Form 10-Q for the fiscal quarter ended June 30,
1994, and incorporated herein by reference).
<PAGE>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS PAGE NO.
------ ----------------------- --------
10.20 -- Change in Control Agreement dated January 17, 1995,
by and between the Registrant and Mark A. Solls (filed
as an exhibit to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1994, and incorporated
herein by reference).
10.21 -- Asset Purchase Agreement dated May 24, 1995,
regarding the acquisition of substantially all of
the paging assets of Americom Paging Corporation,
by and among the Registrant, Gregory W. Hadley, Mo
Shebaclo and American 900 Paging, Inc. dba Americom
Paging Corporation (filed as an exhibit to the
Registrant's Current Report on Form 8-K, dated
July 7, 1995, and incorporated herein by reference).
10.22 -- Amended and Restated Credit Agreement dated
February 9, 1995, by and among the Registrant, The
First National Bank of Chicago, as Agent, and the
Lenders party thereto (filed as an exhibit to the
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1994, and incorporated herein by
reference).
10.23 -- Waiver, Consent and Amendment No. 1 dated as of
June 12, 1995 by and among the Registrant, The First
National Bank of Chicago, as Agent, and the Lenders
party thereto (filed as an exhibit to the Registrant's
Registration Statement on Form S-4 (File No. 33-60925)
filed July 7, 1995, and incorporated herein by reference).
10.24 -- Letter of Agreement dated March 31, 1995, regarding
the acquisition of substantially all of the common
stock of Lewis Paging Inc., by and among the
Registrant and Terry W. Lewis (filed as an exhibit to
the Registrant's Quarterly Report on Form 10-Q for the
fiscal quarter ended March 31, 1995, and incorporated
herein by reference).
10.25 -- Office Lease Agreement by and between the Registrant
and Carter-Crowley Properties, Inc., as Landlord
(filed as an exhibit to the Registrant's Current Report
on Form 8-K, dated July 5, 1995, and incorporated
herein by reference).
10.26 -- Letter of Agreement dated July 10, 1995, regarding the
acquisition of substantially all of the paging assets of
Signet Paging of Raleigh, Inc., by and among CCI, Signet
Paging of Raleigh, Inc., and W. David Sweatt.*
10.27 -- Letter of Agreement dated July 10, 1995, regarding the
acquisition of the common stock of Apple Communication,
Inc. and certain assets of Best Page, Inc., by and among
Apple Communication, Inc., Best Page, Inc., CCI,
Sam Zarcone and Jill DiFoggio.*
10.28 -- Letter of Agreement dated August 2, 1995, regarding the
acquisition of substantially all of the paging assets of
Paging and Cellular of Texas, by and among CCI, Paging and
Cellular of Texas and Daniel L. Sheppard (filed as an exhibit
to the Registrant's Quarterly Report on Form 10-Q for the fiscal
quarter ended June 30, 1995).
10.29 -- Letter of Agreement dated August 7, 1995, regarding the
acquisition of substantially all of the paging assets of
Cobbwells, Inc. dba Page One Communications, by and among CCI,
Cobbwells, Inc. dba Page One Communications, James H.
Cobb, III and Warren K. Wells (filed as an exhibit to the
Registrant's Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 1995).
22.1 -- Subsidiaries of the Registrant (filed as an exhibit to
the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1994, and incorporated
herein by reference).
23.1 -- Consent of Vinson & Elkins L.L.P. (set forth in
Exhibit 5.1).
23.2 -- Consent of Ernst & Young LLP, Independent Auditors.
23.3 -- Consent of Hiltzik, Schneider, Ehrlich & Wengrover,
Independent Public Accountants.
23.4 -- Consent of Cummings & Carroll, P.C., Independent
Public Accountants.
23.5 -- Consent of Natarelli & Associates, Independent
Public Accountants.
23.6 -- Consent of Winter, Kloman, Moler & Repp, S.P.,
Independent Public Accountants.
23.7 -- Consent of Greer & Walker, L.L.P., Independent
Public Accountants.
23.8 -- Consent of Arthur Andersen LLP, Independent Public
Accountants.
23.9 -- Consent of KPMG Peat Marwick LLP, Independent
Public Accountants.
23.10 -- Consent of KPMG Peat Marwick LLP, Independent
Public Accountants.
24.1 -- Powers of Attorney (set forth on signature page).
--------------------
* Previously filed.
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the references to our firm under the caption "Experts" in the
Registration Statement (Form S-3, No. 33-61279) and related Prospectus of ProNet
Inc. for the registration of $100,000,000 of 11 7/8% Senior Subordinated Notes
due 2005 and to the incorporation by reference therein of our reports (a) dated
March 3, 1995, with respect to the consolidated financial statements and
schedule of ProNet Inc. included in its Annual Report (Form 10-K) for the year
ended December 31, 1994, and (b) with respect to the financials of companies to
be acquired as follows:
<TABLE>
<CAPTION>
WITH RESPECT TO YEAR ENDED REPORT DATED
--------------------------------------------- ----------------------- -----------------------
<S> <C> <C>
Apple Communications, Inc. December 31, 1994 August 4, 1995
SigNet of Raleigh, Inc. December 31, 1994 August 9, 1995
Cobbwells, Inc. d/b/a Page One December 31, 1994 August 24, 1995
A.G.R. Electronics, Inc. December 31, 1994 September 9, 1995
Nationwide Paging, Inc. December 31, 1994 September 9, 1995
and with respect to the statement of assets to be acquired as follows:
RCS Paging, A Division of
Reisenweaver Communications, Inc. December 31, 1994 September 9, 1995
</TABLE>
all such statements are included in ProNet Inc.'s Current Report on Form 8-K
dated September 15, 1995, and all filed with the Securities and Exchange
Commission.
Ernst & Young LLP
Dallas, Texas
September 14, 1995
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3, No. 33-61279) and related Prospectus of
ProNet Inc. for the registration of 2,000,000 shares of its common stock and
to the incorporation by reference therein of our report dated September 17,
1993, with respect to the consolidated financial statements of Contact
Communications, Inc. and its Affiliated Companies included in ProNet Inc.'s
Current Report on Form 8-K/A dated March 1, 1994, both filed with the
Securities and Exchange Commission.
/s/ SCHNEIDER, EHRLICH & WENGROVER
----------------------------------
Schneider, Ehrlich & Wengrover
(successor firm to Hiltzik, Schneider, Ehrlich & Co.)
September 13, 1995
Great Neck, New York
<PAGE>
EXHIBIT 23.4
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3, No. 33-61279) and related Prospectus of
ProNet Inc. for the registration of 2,000,000 shares of its common stock and
to the incorporation by reference therein of our report dated September 16,
1994, with respect to the consolidated financial statements of Radio Call
Company, Inc. and Affiliates included in ProNet Inc.'s Current Report on Form
8-K/A dated August 1, 1994, both filed with the Securities and Exchange
Commission.
/s/ CUMMINGS & CARROLL, P.C.
----------------------------
Cummings & Carroll, P.C.
Certified Public Accountants
September 13, 1995
Great Neck, New York
<PAGE>
EXHIBIT 23.5
September 13, 1995
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3, No. 33-61279) and related Prospectus of
ProNet Inc. for the registration of 2,000,000 shares of its common stock and
to the incorporation by reference therein of our report dated October 10,
1994, with respect to the consolidated financial statements of RCC Division
of Chicago Communication Service, Inc. included in ProNet Inc.'s Current
Report on Form 8-K/A dated August 1, 1994, both filed with the Securities
and Exchange Commission.
/s/ Charles J. Natarelli
---------------------------------
Charles J. Natarelli
NATARELLI & ASSOCIATES
Chicago, Illinois
<PAGE>
EXHIBIT 23.6
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3, No. 33-61279) and related Prospectus of
ProNet Inc. for the registration of 2,000,000 shares of its common stock and
to the incorporation by reference therein of our report dated April 14, 1995,
with respect to the consolidated financial statements of All City
Communication Company, Inc. included in ProNet Inc.'s Current Report on
Form 8-K dated May 19, 1995, both filed with the Securities and Exchange
Commission.
/s/ WINTER, KLOMAN, MOTER & REPP S.C.
-----------------------------------------
Winter, Kloman, Moter & Repp S.C.
September 13, 1995
Elm Grove, Wisconsin
<PAGE>
EXHIBIT 23.7
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3, No. 33-61279) and related Prospectus of
ProNet Inc. for the registration of 2,000,000 shares of its common stock and
to the incorporation by reference therein of our report dated April 13, 1995,
with respect to the financial statements of Signet Paging of Charlotte, Inc.
included in ProNet Inc.'s Current Report on Form 8-K/A dated March 1, 1995,
both filed with the Securities and Exchange Commission.
/s/ GREER & WALKER, LLP
-----------------------
Greer & Walker, LLP
September 13, 1995
Charlotte, North Carolina
<PAGE>
EXHIBIT 23.8
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement of our reports dated April 20, 1995
with respect to the financial statements of Metropolitan Houston Paging
Services, Inc. included in ProNet Inc.'s Form 8-K dated May 18, 1995, and to
all references to our firm included in this Registration Statement.
/s/ ARTHUR ANDERSEN L.L.P.
----------------------------------
Arthur Andersen L.L.P.
Little Rock, Arkansas,
September 12, 1995.
<PAGE>
EXHIBIT 23.9
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3, No. 33-61279) and related Prospectus of
ProNet Inc. for the registration of 2,000,000 shares of its common stock and
to the incorporation by reference Americom Paging Corporation included in
ProNet Inc.'s Current Report on Form 8-K dated July 6, 1995, both filed with
the Securities and Exchange Commission.
Our report dated April 17, 1995, contains an explanatory paragraph that
states that the Americom Paging Corporation has suffered recurring losses
from operations and has a net capital deficiency, which raise substantial
doubt about its ability to continue as a going concern. The financial
statements do not include any adjustments that might result from the outcome
of that uncertainty.
/s/ KPMG PEAT MARWICK LLP
-------------------------
KPMG Peat Marwick LLP
September 13, 1995
Houston, Texas
<PAGE>
EXHIBIT 23.10
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3, No. 33-61279) and related Prospectus of
ProNet Inc. for the registration of 2,000,000 shares of its common stock and
to the incorporation by reference therein of our report dated September 8,
1995, with respect to the financial statements of Paging and Cellular of
Texas (a Sole Proprietorship) included in ProNet Inc.'s Current Report on
Form 8-K dated September 14, 1995, both filed with the Securities and
Exchange Commission.
/s/ KPMG Peat Marwick LLP
----------------------------
KPMG Peat Marwick LLP
September 13, 1995
Houston, Texas
