<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 8-K/A-2
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): SEPTEMBER 14, 1995
------------------------
PRONET INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 0-16029 75-1832168
(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of Identification Number)
incorporation)
6340 LBJ FREEWAY
DALLAS, TEXAS
(Address of principal 75240
executive offices) (Zip code)
</TABLE>
Registrant's telephone number, including area code: (214) 687-2000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
<TABLE>
<S> <C>
Pro Forma Condensed Consolidated Financial Statements of ProNet Inc.:
99.8 Pro Forma Condensed Consolidated Balance Sheet as of June 30, 1995 (unaudited)
Pro Forma Condensed Consolidated Statement of Operations for the Year Ended
December 31, 1994 (unaudited)
Pro Forma Condensed Consolidated Statement of Operations for the Six Months
Ended June 30, 1995 (unaudited)
Schedule A Pending Acquisitions Pro Forma Condensed Consolidated Balance Sheet as of June
30, 1995 (unaudited)
Schedule B Completed Acquisitions Pro Forma Condensed Consolidated Statement of Operations
for the Year Ended December 31, 1994 (unaudited)
Schedule C Pending Acquisitions Pro Forma Condensed Consolidated Statement of Operations
for the Year Ended December 31, 1994 (unaudited)
Schedule D Completed Acquisitions Pro Forma Condensed Consolidated Statement of Operations
for the Six Months Ended June 30, 1995 (unaudited)
Schedule E Pending Acquisitions Pro Forma Condensed Consolidated Statement of Operations
for the Six Months Ended June 30, 1995 (unaudited)
Notes to Pro Forma Condensed Consolidated Financial Statements.
</TABLE>
2
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PRONET INC.
(Registrant)
By /s/ JAN E. GAULDING
-----------------------------------
Jan E. Gaulding,
SENIOR VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
(PRINCIPAL FINANCIAL AND ACCOUNTING
OFFICER)
Date: October 5, 1995
3
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- -------------- --------------------------------------------------------------------------------------------------
<S> <C>
Pro Forma Condensed Consolidated Financial Statements of ProNet Inc.:
99.8 Pro Forma Condensed Consolidated Balance Sheet as of June 30, 1995 (unaudited)
Pro Forma Condensed Consolidated Statement of Operations for the Year Ended December 31, 1994
(unaudited)
Pro Forma Condensed Consolidated Statement of Operations for the Six Months Ended June 30, 1995
(unaudited)
Schedule A Pending Acquisitions Pro Forma Condensed Consolidated Balance Sheet as of June 30, 1995
(unaudited)
Schedule B Completed Acquisitions Pro Forma Condensed Consolidated Statement of Operations for the Year Ended
December 31, 1994 (unaudited)
Schedule C Pending Acquisitions Pro Forma Condensed Consolidated Statement of Operations for the Year Ended
December 31, 1994 (unaudited)
Schedule D Completed Acquisitions Pro Forma Condensed Consolidated Statement of Operations for the Six Months
Ended June 30, 1995 (unaudited)
Schedule E Pending Acquisitions Pro Forma Condensed Consolidated Statement of Operations for the Six Months
Ended June 30, 1995 (unaudited)
Notes to Pro Forma Condensed Consolidated Financial Statements.
</TABLE>
<PAGE>
EXHIBIT 99.8
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Since January 1994, the Company has completed the acquisition of all of the
outstanding capital stock of Contact and Metropolitan and substantially all of
the paging assets of Radio Call, ChiComm, High Tech, Signet, Carrier, All City,
Americom, Lewis and Gold Coast (collectively, the "Completed Acquisitions"). The
Company has signed definitive agreements or letters of intent to acquire all of
the outstanding capital stock of and substantially all of the paging assets of
Nationwide, Apple, Signet Raleigh, P&C, PageOne, Williams, RCS, Total, Sun and
AGR (collectively, the "Pending Acquisitions"). The combination of the Completed
Acquisitions and the Pending Acquisitions is referred to as the "Acquisitions".
On October 2, 1995 the Company completed the acquisition of substantially all of
the paging assets of P&C.
The accompanying unaudited pro forma condensed consolidated balance sheet of
the Company combines the historical consolidated balance sheet of the Company
and the balance sheets of Americom, Lewis, Gold Coast and the Pending
Acquisitions as if the acquisitions had occurred on June 30, 1995. The
accompanying unaudited pro forma condensed consolidated statement of operations
of the Company for the year ended December 31, 1994 combines the historical
consolidated statement of operations of the Company and the statements of
operations of the Acquisitions as if the Acquisitions had occurred on January 1,
1994, and assumes that they were funded with the proceeds of the Company's $100
million Senior Subordinated Notes (the "Notes") or by borrowings under the
Company's credit facility. The accompanying unaudited pro forma condensed
consolidated statement of operations of the Company for the six months ended
June 30, 1995, combines the historical statement of operations of the Company
and the statements of operations of Signet, Carrier, Metropolitan, All City,
Americom, Lewis, Gold Coast and the Pending Acquisitions as if the acquisitions
of Signet, Carrier, Metropolitan, All City, Americom, Lewis, Gold Coast and the
Pending Acquisitions had occurred on January 1, 1995, and assumes that they were
funded with the proceeds of the Notes and borrowings under the Company's credit
facility.
The pro forma condensed consolidated financial statements do not purport to
represent what the Company's results of operations would have been had the
Acquisitions occurred on the dates indicated or for any future period or date.
The pro forma adjustments give effect to available information and assumptions
that management believes are reasonable. The pro forma condensed consolidated
financial statements should be read in conjunction with the Company's historical
consolidated financial statements and the financial statements of certain
Acquisitions and the notes thereto included or incorporated elsewhere herein.
<PAGE>
PRONET INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1995
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
PENDING
GOLD ACQUISITIONS PRO FORMA
PRONET AMERICOM LEWIS COAST (1) ADJUSTMENTS INDEX
----------- ----------- --------- --------- -------------- ----------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Current Assets.................... $ 60,248 $ 1,279 $ 520 $ 65 $ 3,572 $ (51,160) (A),(C)
Equipment
Pagers.......................... 26,926 -- 233 242 7,359 (2,380) (A)
Communications equipment........ 19,877 2,530 390 375 3,166 (3,431) (A)
Security systems equipment...... 11,186 -- -- -- -- --
Office and other................ 5,388 -- 69 166 6,815 (4,936) (A)
----------- ----------- --------- --------- -------------- ----------- ---------
63,377 2,530 692 783 17,340 (10,747)
Less allowance for
depreciation................... 28,762 1,337 371 775 8,264 (10,747) (A)
----------- ----------- --------- --------- -------------- ----------- ---------
34,615 1,193 321 8 9,076 --
----------- ----------- --------- --------- -------------- ----------- ---------
Goodwill and other assets, net.... 73,646 (40) 2 148 755 87,232 (B)
----------- ----------- --------- --------- -------------- ----------- ---------
TOTAL ASSETS...................... $ 168,509 $ 2,432 $ 843 $ 221 $ 13,403 $ 36,072
----------- ----------- --------- --------- -------------- ----------- ---------
----------- ----------- --------- --------- -------------- ----------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities............... $ 10,451 $ 2,381 $ 190 $ 891 $ 6,868 $ (8,812) (A)
Deferred payments................. 8,719 -- -- -- -- 17,210 (C)
Long-term debt, less current
maturities....................... 99,283 74 301 -- 3,876 20,742 (A),(C)
Shareholders' equity (deficit).... 50,056 (23) 352 (670) 2,659 6,932 (A),(C)
----------- ----------- --------- --------- -------------- ----------- ---------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY............. $ 168,509 $ 2,432 $ 843 $ 221 $ 13,403 $ 36,072
----------- ----------- --------- --------- -------------- ----------- ---------
----------- ----------- --------- --------- -------------- ----------- ---------
<CAPTION>
PRO FORMA
CONSOLIDATED
------------
<S> <C>
Current Assets.................... $ 14,524
Equipment
Pagers.......................... 32,380
Communications equipment........ 22,907
Security systems equipment...... 11,186
Office and other................ 7,502
------------
73,975
Less allowance for
depreciation................... 28,762
------------
45,213
------------
Goodwill and other assets, net.... 161,743
------------
TOTAL ASSETS...................... $ 221,480
------------
------------
Current liabilities............... $ 11,969
Deferred payments................. 25,929
Long-term debt, less current
maturities....................... 124,276
Shareholders' equity (deficit).... 59,306
------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY............. $ 221,480
------------
------------
<FN>
- ------------------------
(1) See Schedule A for detail of the Pending Acquisitions.
</TABLE>
See accompanying notes to unaudited pro forma condensed consolidated financial
statements.
<PAGE>
PRONET INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1994
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL RESULTS PRO FORMA ADJUSTMENTS
----------------------------------------- -------------------------------------
COMPLETED PENDING COMPLETED PENDING
PRONET ACQUISITIONS (1) ACQUISITIONS (1) ACQUISITIONS ACQUISITIONS INDEX
--------- -------------- -------------- ----------- ----------- -----
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Service revenues........................ $ 33,079 $ 27,815 $ 21,537 $ -- $ --
Product sales........................... 6,639 6,266 6,972 -- --
--------- -------------- -------------- ----------- ----------- ---
Total revenues........................ 39,718 34,081 28,509 -- --
Cost of products sold................... 6,644 6,201 6,743 -- --
--------- -------------- -------------- ----------- ----------- ---
33,074 27,880 21,766 -- --
COST OF SERVICES.......................... 9,185 6,315 5,043 -- --
--------- -------------- -------------- ----------- ----------- ---
GROSS MARGIN............................ 23,889 21,565 16,723 -- --
EXPENSES
Sales, general and administrative....... 12,126 14,224 13,412 (1,961) (1,344) (E)
Depreciation and amortization........... 8,574 4,608 2,518 4,646 5,000 (F)
--------- -------------- -------------- ----------- ----------- ---
20,700 18,832 15,930 2,685 3,656
--------- -------------- -------------- ----------- ----------- ---
OPERATING INCOME (LOSS)................. 3,189 2,733 793 (2,685) (3,656)
OTHER INCOME (EXPENSE)
Interest expense........................ (1,774) (2,542) (829) (4,499) (5,235) (G)
Interest and other income............... 173 32 116 -- --
--------- -------------- -------------- ----------- ----------- ---
(1,601) (2,510) (713) (4,499) (5,235)
--------- -------------- -------------- ----------- ----------- ---
INCOME (LOSS) BEFORE INCOME TAXES....... 1,588 223 80 (7,184) (8,891)
Provision (benefit) for income taxes...... 895 323 96 (1,218) (96) (H)
--------- -------------- -------------- ----------- ----------- ---
NET INCOME (LOSS)..................... $ 693 $ (100) $ (16) $ (5,966) $ (8,795)
--------- -------------- -------------- ----------- ----------- ---
--------- -------------- -------------- ----------- ----------- ---
<CAPTION>
PRO FORMA
CONSOLIDATED
------------
<S> <C>
REVENUES
Service revenues........................ $ 82,431
Product sales........................... 19,877
------------
Total revenues........................ 102,308
Cost of products sold................... 19,588
------------
82,720
COST OF SERVICES.......................... 20,543
------------
GROSS MARGIN............................ 62,177
EXPENSES
Sales, general and administrative....... 36,457
Depreciation and amortization........... 25,346
------------
61,803
------------
OPERATING INCOME (LOSS)................. 374
OTHER INCOME (EXPENSE)
Interest expense........................ (14,879)
Interest and other income............... 321
------------
(14,558)
------------
INCOME (LOSS) BEFORE INCOME TAXES....... (14,184)
Provision (benefit) for income taxes...... --
------------
NET INCOME (LOSS)..................... $ (14,184)
------------
------------
<FN>
- ------------------------
(1) See Schedules B and C for detail of the Completed and Pending Acquisitions.
</TABLE>
See accompanying notes to unaudited pro forma condensed consolidated financial
statements.
<PAGE>
PRONET INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL RESULTS PRO FORMA ADJUSTMENTS
----------------------------------------- -------------------------------------------
COMPLETED PENDING COMPLETED PENDING
PRONET ACQUISITIONS (1) ACQUISITIONS (1) ACQUISITIONS ACQUISITIONS INDEX
--------- -------------- -------------- -------------- -------------- -----
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Service revenues.................. $ 23,892 $ 7,241 $ 12,266 $ (192) $ -- (D)
Product sales..................... 4,669 1,418 3,808 -- --
--------- -------------- -------------- ------- ------- ---
Total revenues.................. 28,561 8,659 16,074 (192) --
Cost of products sold............. 4,595 1,080 3,809 -- --
--------- -------------- -------------- ------- ------- ---
23,966 7,579 12,265 (192) --
COST OF SERVICES.................... 5,894 1,488 2,526 -- --
--------- -------------- -------------- ------- ------- ---
GROSS MARGIN...................... 18,072 6,091 9,739 (192) --
EXPENSES
Sales, general and
administrative................... 10,212 3,146 7,202 (600) (336) (E)
Depreciation and amortization..... 6,461 890 1,286 1,326 2,464 (F)
--------- -------------- -------------- ------- ------- ---
16,673 4,036 8,488 726 2,128
--------- -------------- -------------- ------- ------- ---
OPERATING INCOME (LOSS)........... 1,399 2,055 1,251 (918) (2,128)
OTHER INCOME (EXPENSE)
Interest expense.................. (1,894) (615) (430) (1,966) (2,648) (G)
Interest and other income......... 123 135 158 -- --
--------- -------------- -------------- ------- ------- ---
(1,771) (480) (272) (1,966) (2,648)
--------- -------------- -------------- ------- ------- ---
INCOME (LOSS) BEFORE INCOME
TAXES............................ (372) 1,575 979 (2,884) (4,776)
Provision (benefit) for income
taxes.............................. (37) 193 109 (156) (109) (H)
--------- -------------- -------------- ------- ------- ---
NET INCOME (LOSS)................. $ (335) $ 1,382 $ 870 $ (2,728) $ (4,667)
--------- -------------- -------------- ------- ------- ---
--------- -------------- -------------- ------- ------- ---
<CAPTION>
PRO FORMA
CONSOLIDATED
------------
<S> <C>
REVENUES
Service revenues.................. $ 43,207
Product sales..................... 9,895
------------
Total revenues.................. 53,102
Cost of products sold............. 9,484
------------
43,618
COST OF SERVICES.................... 9,908
------------
GROSS MARGIN...................... 33,710
EXPENSES
Sales, general and
administrative................... 19,624
Depreciation and amortization..... 12,427
------------
32,051
------------
OPERATING INCOME (LOSS)........... 1,659
OTHER INCOME (EXPENSE)
Interest expense.................. (7,553)
Interest and other income......... 416
------------
(7,137)
------------
INCOME (LOSS) BEFORE INCOME
TAXES............................ (5,478)
Provision (benefit) for income
taxes.............................. --
------------
NET INCOME (LOSS)................. $ (5,478)
------------
------------
<FN>
- ------------------------
(1) See Schedules D and E for details of the Completed and Pending
Acquisitions.
</TABLE>
See accompanying notes to unaudited pro forma condensed consolidated financial
statements.
<PAGE>
SCHEDULE A
PENDING ACQUISITIONS
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1995
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
SIGNET PAGING &
NATIONWIDE APPLE RALEIGH CELLULAR PAGEONE WILLIAMS RCS TOTAL
----------- --------- --------- --------- ----------- ----------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Current assets.............. $ 347 $ 558 $ 136 $ 842 $ 191 $ 612 $ 58 $ 161
Equipment
Pagers.................... -- -- 1,836 4,153 568 705 -- 97
Communications
equipment................ 795 521 396 -- 981 473 -- --
Office and other.......... 176 247 343 180 353 96 1,333 238
----------- --------- --------- --------- ----------- ----------- --------- ---------
971 768 2,575 4,333 1,902 1,274 1,333 335
Less allowance for
depreciation............. 196 366 1,473 778 897 1,123 886 145
----------- --------- --------- --------- ----------- ----------- --------- ---------
775 402 1,102 3,555 1,005 151 447 190
Goodwill and other assets,
net........................ 24 6 -- -- -- 181 -- 4
----------- --------- --------- --------- ----------- ----------- --------- ---------
TOTAL ASSETS................ $ 1,146 $ 966 $ 1,238 $ 4,397 $ 1,196 $ 944 $ 505 $ 355
----------- --------- --------- --------- ----------- ----------- --------- ---------
----------- --------- --------- --------- ----------- ----------- --------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities......... $ 1,239 $ 430 $ 322 $ 2,153 $ 1,412 $ 391 $ -- $ 284
Deferred payments........... -- -- -- -- -- -- -- --
Long-term debt, less current
maturities................. 453 -- 554 1,974 -- 375 -- 6
Shareholders' equity
(deficit).................. (546) 536 362 270 (216) 178 505 65
----------- --------- --------- --------- ----------- ----------- --------- ---------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY....... $ 1,146 $ 966 $ 1,238 $ 4,397 $ 1,196 $ 944 $ 505 $ 355
----------- --------- --------- --------- ----------- ----------- --------- ---------
----------- --------- --------- --------- ----------- ----------- --------- ---------
<CAPTION>
TOTAL PENDING
AGR SUN ACQUISITIONS
--------- --------- -------------
<S> <C> <C> <C>
Current assets.............. $ 151 $ 516 $ 3,572
Equipment
Pagers.................... -- -- 7,359
Communications
equipment................ -- -- 3,166
Office and other.......... 949 2,900 6,815
--------- --------- -------------
949 2,900 17,340
Less allowance for
depreciation............. 374 2,026 8,264
--------- --------- -------------
575 874 9,076
Goodwill and other assets,
net........................ 7 533 755
--------- --------- -------------
TOTAL ASSETS................ $ 733 $ 1,923 $ 13,403
--------- --------- -------------
--------- --------- -------------
Current liabilities......... $ 426 $ 211 $ 6,868
Deferred payments........... -- -- --
Long-term debt, less current
maturities................. 514 -- 3,876
Shareholders' equity
(deficit).................. (207) 1,712 2,659
--------- --------- -------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY....... $ 733 $ 1,923 $ 13,403
--------- --------- -------------
--------- --------- -------------
</TABLE>
See accompanying notes to unaudited pro forma condensed consolidated financial
statements.
<PAGE>
SCHEDULE B
COMPLETED ACQUISITIONS
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1994
(UNAUDITED)
<TABLE>
<CAPTION>
SEVEN MONTHS
TWO MONTHS ENDED
ENDED FEB. JULY 31, 1994 YEAR ENDED DECEMBER 31, 1994
28, 1994 ---------------------- -------------------------------
----------- RADIO
CONTACT CALL CHICOMM HIGH TECH SIGNET CARRIER
----------- --------- ----------- --------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Service revenues...................................... $ 1,599 $ 3,200 $ 2,225 $ 291 $ 4,750 $ 2,435
Product sales......................................... 743 738 338 -- 1,100 900
----------- --------- ----------- --------- --------- ---------
Total revenues...................................... 2,342 3,938 2,563 291 5,850 3,335
Cost of products sold................................. 956 536 296 -- 1,089 1,185
----------- --------- ----------- --------- --------- ---------
1,386 3,402 2,267 291 4,761 2,150
COST OF SERVICES........................................ 202 755 486 86 1,149 203
----------- --------- ----------- --------- --------- ---------
GROSS MARGIN........................................ 1,184 2,647 1,781 205 3,612 1,947
EXPENSES
Sales, general and administrative..................... 1,022 2,181 792 220 2,287 1,603
Depreciation and amortization......................... 93 689 413 128 627 228
----------- --------- ----------- --------- --------- ---------
1,115 2,870 1,205 348 2,914 1,831
----------- --------- ----------- --------- --------- ---------
OPERATING INCOME (LOSS)............................. 69 (223) 576 (143) 698 116
OTHER INCOME (EXPENSE)
Interest expense...................................... (46) (44) (141) -- (292) (124)
Interest and other income............................. -- -- -- -- 5 --
----------- --------- ----------- --------- --------- ---------
(46) (44) (141) -- (287) (124)
----------- --------- ----------- --------- --------- ---------
INCOME (LOSS) BEFORE INCOME TAXES................... 23 (267) 435 (143) 411 (8)
Provision (benefit) for income taxes.................. -- (59) -- -- -- --
----------- --------- ----------- --------- --------- ---------
NET INCOME (LOSS)................................... $ 23 $ (208) $ 435 $ (143) $ 411 $ (8)
----------- --------- ----------- --------- --------- ---------
----------- --------- ----------- --------- --------- ---------
<CAPTION>
TOTAL
COM-
PLETED
METRO- ACQUISI-
POLITAN ALL CITY AMERICOM GOLD COAST LEWIS TIONS
----------- --------- ----------- ----- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Service revenues...................................... $ 4,835 $ 3,257 $ 3,477 $ 699 $ 1,047 $ 27,815
Product sales......................................... 152 387 1,105 -- 803 6,266
----------- --------- ----------- ----- --------- ---------
Total revenues...................................... 4,987 3,644 4,582 699 1,850 34,081
Cost of products sold................................. 156 299 1,015 -- 669 6,201
----------- --------- ----------- ----- --------- ---------
4,831 3,345 3,567 699 1,181 27,880
COST OF SERVICES........................................ 1,517 833 856 158 70 6,315
----------- --------- ----------- ----- --------- ---------
GROSS MARGIN........................................ 3,314 2,512 2,711 541 1,111 21,565
EXPENSES
Sales, general and administrative..................... 1,622 1,670 1,764 232 831 14,224
Depreciation and amortization......................... 597 1,225 381 92 135 4,608
----------- --------- ----------- ----- --------- ---------
2,219 2,895 2,145 324 966 18,832
----------- --------- ----------- ----- --------- ---------
OPERATING INCOME (LOSS)............................. 1,095 (383) 566 217 145 2,733
OTHER INCOME (EXPENSE)
Interest expense...................................... -- (1,595) (291) -- (9) (2,542)
Interest and other income............................. 27 -- -- -- -- 32
----------- --------- ----------- ----- --------- ---------
27 (1,595) (291) -- (9) (2,510)
----------- --------- ----------- ----- --------- ---------
INCOME (LOSS) BEFORE INCOME TAXES................... 1,122 (1,978) 275 217 136 223
Provision (benefit) for income taxes.................. 382 -- -- -- -- 323
----------- --------- ----------- ----- --------- ---------
NET INCOME (LOSS)................................... $ 740 $ (1,978) $ 275 $ 217 $ 136 $ (100)
----------- --------- ----------- ----- --------- ---------
----------- --------- ----------- ----- --------- ---------
</TABLE>
See accompanying notes to unaudited pro forma condensed consolidated financial
statements.
<PAGE>
SCHEDULE C
PENDING ACQUISITIONS
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1994
(UNAUDITED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1994
-------------------------------------------------------------
SIGNET PAGING &
NATIONWIDE APPLE RALEIGH CELLULAR PAGEONE
----------- --------- ----------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Service revenues........................................... $ 2,503 $ 3,938 $ 2,528 $ 3,530 $ 2,862
Product sales.............................................. 1,336 1,459 138 1,187 932
----------- --------- ----------- ----------- -----------
Total revenues........................................... 3,839 5,397 2,666 4,717 3,794
Cost of products sold...................................... 1,406 1,539 141 1,055 981
----------- --------- ----------- ----------- -----------
2,433 3,858 2,525 3,662 2,813
COST OF SERVICES............................................. 530 545 464 1,118 606
----------- --------- ----------- ----------- -----------
GROSS MARGIN............................................. 1,903 3,313 2,061 2,544 2,207
EXPENSES
Sales, general and administrative.......................... 1,773 3,031 1,222 1,534 1,959
Depreciation and amortization.............................. 58 105 424 695 233
----------- --------- ----------- ----------- -----------
1,831 3,136 1,646 2,229 2,192
----------- --------- ----------- ----------- -----------
OPERATING INCOME (LOSS).................................. 72 177 415 315 15
OTHER INCOME (EXPENSE)
Interest expense........................................... (83) (6) (101) (384) (108)
Interest and other income.................................. -- 5 -- -- --
----------- --------- ----------- ----------- -----------
(83) (1) (101) (384) (108)
----------- --------- ----------- ----------- -----------
INCOME (LOSS) BEFORE INCOME TAXES........................ (11) 176 314 (69) (93)
Provision (benefit) for income taxes....................... -- 93 -- -- --
----------- --------- ----------- ----------- -----------
NET INCOME (LOSS)........................................ $ (11) $ 83 $ 314 $ (69) $ (93)
----------- --------- ----------- ----------- -----------
----------- --------- ----------- ----------- -----------
<CAPTION>
TOTAL
PEND-
ING
ACQUISI-
WILLIAMS RCS TOTAL AGR SUN TIONS
----------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Service revenues........................................... $ 1,087 $ 1,259 $ 528 $ 1,537 $ 1,765 $ 21,537
Product sales.............................................. 138 200 333 962 287 6,972
----------- --------- --------- --------- --------- ---------
Total revenues........................................... 1,225 1,459 861 2,499 2,052 28,509
Cost of products sold...................................... 107 244 332 596 342 6,743
----------- --------- --------- --------- --------- ---------
1,118 1,215 529 1,903 1,710 21,766
COST OF SERVICES............................................. 104 376 211 628 461 5,043
----------- --------- --------- --------- --------- ---------
GROSS MARGIN............................................. 1,014 839 318 1,275 1,249 16,723
EXPENSES
Sales, general and administrative.......................... 749 436 356 1,092 1,260 13,412
Depreciation and amortization.............................. 100 186 18 126 573 2,518
----------- --------- --------- --------- --------- ---------
849 622 374 1,218 1,833 15,930
----------- --------- --------- --------- --------- ---------
OPERATING INCOME (LOSS).................................. 165 217 (56) 57 (584) 793
OTHER INCOME (EXPENSE)
Interest expense........................................... (65) (29) (6) (47) -- (829)
Interest and other income.................................. 35 -- 73 3 -- 116
----------- --------- --------- --------- --------- ---------
(30) (29) 67 (44) -- (713)
----------- --------- --------- --------- --------- ---------
INCOME (LOSS) BEFORE INCOME TAXES........................ 135 188 11 13 (584) 80
Provision (benefit) for income taxes....................... -- -- -- 3 -- 96
----------- --------- --------- --------- --------- ---------
NET INCOME (LOSS)........................................ $ 135 $ 188 $ 11 $ 10 $ (584) $ (16)
----------- --------- --------- --------- --------- ---------
----------- --------- --------- --------- --------- ---------
</TABLE>
See accompanying notes to unaudited pro forma condensed consolidated financial
statements.
<PAGE>
SCHEDULE D
COMPLETED ACQUISITIONS
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
TWO MONTHS ENDED THREE MONTHS ENDED FOUR MONTHS ENDED
FEBRUARY 28, 1995 MARCH 31, 1995 APRIL 30, 1995
--------------------- ----------------------- --------------------------
SIGNET CARRIER METROPOLITAN ALL CITY
--------------------- ----------------------- ------------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
REVENUES
Service revenues.................................... $ 872 $ 532 $ 1,870 $ 1,139
Product sales....................................... 109 197 50 47
----- ----- ------------- -----------
Total revenues.................................... 981 729 1,920 1,186
Cost of products sold............................... 109 179 54 --
----- ----- ------------- -----------
872 550 1,866 1,186
COST OF SERVICES...................................... 273 59 514 272
----- ----- ------------- -----------
GROSS MARGIN...................................... 599 491 1,352 914
EXPENSES
Sales, general and administrative................... 367 286 592 511
Depreciation and amortization....................... 17 54 215 292
----- ----- ------------- -----------
384 340 807 803
----- ----- ------------- -----------
OPERATING INCOME (LOSS)........................... 215 151 545 111
OTHER INCOME (EXPENSE)
Interest expense.................................... (54) (26) -- (528)
Interest and other income........................... 2 1 20 --
----- ----- ------------- -----------
(52) (25) 20 (528)
----- ----- ------------- -----------
INCOME (LOSS) BEFORE INCOME TAXES................. 163 126 565 (417)
Provision (benefit) for income taxes................ -- 1 192 --
----- ----- ------------- -----------
NET INCOME (LOSS)................................. $ 163 $ 125 $ 373 $ (417)
----- ----- ------------- -----------
----- ----- ------------- -----------
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1995 TOTAL
----------------------------------- COMPLETED
AMERICOM GOLD COAST LEWIS ACQUISITIONS
----------- ----- --------- -------------
<S> <C> <C> <C> <C>
REVENUES
Service revenues.................................... $ 1,810 $ 319 $ 699 $ 7,241
Product sales....................................... 430 -- 585 1,418
----------- ----- --------- -------------
Total revenues.................................... 2,240 319 1,284 8,659
Cost of products sold............................... 371 -- 367 1,080
----------- ----- --------- -------------
1,869 319 917 7,579
COST OF SERVICES...................................... 259 75 36 1,488
----------- ----- --------- -------------
GROSS MARGIN...................................... 1,610 244 881 6,091
EXPENSES
Sales, general and administrative................... 782 121 487 3,146
Depreciation and amortization....................... 209 37 66 890
----------- ----- --------- -------------
991 158 553 4,036
----------- ----- --------- -------------
OPERATING INCOME (LOSS)........................... 619 86 328 2,055
OTHER INCOME (EXPENSE)
Interest expense.................................... (4) -- (3) (615)
Interest and other income........................... 97 -- 15 135
----------- ----- --------- -------------
93 -- 12 (480)
----------- ----- --------- -------------
INCOME (LOSS) BEFORE INCOME TAXES................. 712 86 340 1,575
Provision (benefit) for income taxes................ -- -- -- 193
----------- ----- --------- -------------
NET INCOME (LOSS)................................. $ 712 $ 86 $ 340 $ 1,382
----------- ----- --------- -------------
----------- ----- --------- -------------
</TABLE>
See accompanying notes to unaudited pro forma condensed consolidated financial
statements.
<PAGE>
SCHEDULE E
PENDING ACQUISITIONS
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1995
--------------------------------------------------------------------------
SIGNET PAGING &
NATIONWIDE APPLE RALEIGH CELLULAR PAGEONE WILLIAMS
----------- --------- ----------- ----------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Service revenues................................... $ 1,502 $ 2,297 $ 1,408 $ 2,049 $ 1,935 $ 532
Product sales...................................... 983 500 100 767 566 83
----------- --------- ----------- ----------- ----------- -----
Total revenues................................... 2,485 2,797 1,508 2,816 2,501 615
Cost of products sold.............................. 1,035 570 115 650 533 61
----------- --------- ----------- ----------- ----------- -----
1,450 2,227 1,393 2,166 1,968 554
COST OF SERVICES..................................... 463 10 298 697 293 55
----------- --------- ----------- ----------- ----------- -----
GROSS MARGIN..................................... 987 2,217 1,095 1,469 1,675 499
EXPENSES
Sales, general and administrative.................. 743 1,751 676 760 1,230 406
Depreciation and amortization...................... 41 54 215 348 180 56
----------- --------- ----------- ----------- ----------- -----
784 1,805 891 1,108 1,410 462
----------- --------- ----------- ----------- ----------- -----
OPERATING INCOME (LOSS).......................... 203 412 204 361 265 37
OTHER INCOME (EXPENSE)
Interest expense................................... (45) -- (38) (202) (65) (29)
Interest and other income.......................... -- -- 19 12 -- 21
----------- --------- ----------- ----------- ----------- -----
(45) -- (19) (190) (65) (8)
----------- --------- ----------- ----------- ----------- -----
INCOME (LOSS) BEFORE INCOME TAXES................ 158 412 185 171 200 29
Provision (benefit) for income taxes............... -- 109 -- -- -- --
----------- --------- ----------- ----------- ----------- -----
NET INCOME (LOSS)................................ $ 158 $ 303 $ 185 $ 171 $ 200 $ 29
----------- --------- ----------- ----------- ----------- -----
----------- --------- ----------- ----------- ----------- -----
<CAPTION>
TOTAL
PENDING
RCS TOTAL AGR SUN ACQUISITIONS
--------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C>
REVENUES
Service revenues................................... $ 602 $ 286 $ 891 $ 764 $ 12,266
Product sales...................................... 141 141 403 124 3,808
--------- --------- --------- --------- -----------
Total revenues................................... 743 427 1,294 888 16,074
Cost of products sold.............................. 127 150 424 144 3,809
--------- --------- --------- --------- -----------
616 277 870 744 12,265
COST OF SERVICES..................................... 193 161 137 219 2,526
--------- --------- --------- --------- -----------
GROSS MARGIN..................................... 423 116 733 525 9,739
EXPENSES
Sales, general and administrative.................. 222 230 655 529 7,202
Depreciation and amortization...................... 101 7 75 209 1,286
--------- --------- --------- --------- -----------
323 237 730 738 8,488
--------- --------- --------- --------- -----------
OPERATING INCOME (LOSS).......................... 100 (121) 3 (213) 1,251
OTHER INCOME (EXPENSE)
Interest expense................................... (18) (6) (27) -- (430)
Interest and other income.......................... -- 95 11 -- 158
--------- --------- --------- --------- -----------
(18) 89 (16) -- (272)
--------- --------- --------- --------- -----------
INCOME (LOSS) BEFORE INCOME TAXES................ 82 (32) (13) (213) 979
Provision (benefit) for income taxes............... -- -- -- -- 109
--------- --------- --------- --------- -----------
NET INCOME (LOSS)................................ $ 82 $ (32) $ (13) $ (213) $ 870
--------- --------- --------- --------- -----------
--------- --------- --------- --------- -----------
</TABLE>
See accompanying notes to unaudited pro forma condensed consolidated financial
statements.
<PAGE>
PRONET INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
On March 1, 1994, the Company completed the acquisition of all the
outstanding capital stock of Contact for approximately $19.0 million in cash
(including amounts paid pursuant to noncompetition agreements). On August 1,
1994, the Company completed the purchase of substantially all of the paging
assets of Radio Call and certain of its affiliates for approximately $7.8
million in cash (including amounts paid pursuant to noncompetition agreements).
On August 1, 1994, the Company also completed the purchase of substantially all
of the Chicago area paging assets of ChiComm for approximately $9.8 million,
comprised of approximately $8.9 million in cash at closing (including amounts
paid pursuant to noncompetition agreements) and a $900,000 Deferred Payment.
Effective December 31, 1994, the Company purchased substantially all of the
paging assets of High Tech for $900,000, comprised of $700,000 in cash at
closing and a $200,000 Deferred Payment. On March 1, 1995, the Company purchased
substantially all of the paging assets of Signet for approximately $9.0 million,
comprised of approximately $4.8 million in cash at closing and a $4.2 million
Deferred Payment. On April 1, 1995, the Company completed the purchase of
substantially all of the paging assets of Carrier for approximately $6.5
million, comprised of approximately $3.5 million in cash at closing and a
Deferred Payment of approximately $3.0 million. On May 3, 1995, the Company
completed the acquisition of all the outstanding capital stock of Metropolitan
for approximately $21.0 million in cash. On May 19, 1995, the Company completed
the purchase of substantially all of the paging assets of All City for
approximately $6.4 million, comprised of approximately $6.1 million in cash at
closing and a $350,000 Deferred Payment. On July 1, 1995, the Company completed
the purchase of substantially all of the paging assets of Americom for
approximately $17.5 million, comprised of approximately 8.8 million in cash at
closing and a Deferred Payment of $8.7 million. On September 1, 1995, the
Company completed the purchase of substantially all of the paging assets of
Lewis for approximately $5.6 million, comprised of approximately $3.5 million in
cash at closing and a $2.1 million Deferred Payment. On September 1, 1995, the
Company completed the purchase of substantially all of the paging assets of Gold
Coast for approximately $2.3 million in cash. These acquisitions were accounted
for as purchases and were financed with the proceeds of the Notes or by
borrowings under the Company's credit facility. The results of operations for
Contact, Radio Call, ChiComm, High Tech, Signet, Carrier, All City and
Metropolitan are included in the actual results of operations of the Company
from the respective dates of acquisition, and the historical balance sheet of
the Company at June 30, 1995 includes these acquisitions.
On July 10, 1995, the Company signed a letter of intent to purchase all the
outstanding capital stock of Apple. On September 27, 1995, the Company signed a
definitive agreement to purchase substantially all of the paging assets of
Signet Raleigh. On July 26, 1995, the Company signed a letter of intent to
purchase substantially all of the paging assets of Sun. On August 2, 1995, the
Company signed a letter of intent to purchase substantially all of the paging
assets of P&C. On August 7, 1995, the Company signed a letter of intent to
purchase substantially all of the paging assets of Page One. On August 11, 1995,
the Company signed a letter of intent to purchase substantially all of the
paging assets of Nationwide. On August 16, 1995, the Company signed a letter of
intent to purchase all of the outstanding capital stock of Williams. On August
22, 1995, the Company signed letters of intent to acquire substantially all of
the paging assets of RCS and all of the outstanding capital stock of Total and
AGR. The aggregate purchase price for the Pending Acquisitions is approximately
$74.9 million and is comprised of approximately $59.2 million in cash at
closing, $6.4 million in Deferred Payments and $9.3 million in the Company's
Common Stock. The Company will issue approximately 437,000 shares of Common
Stock, based on the closing stock price of the Company's Common Stock on or
before June 30, 1995, in order to satisfy an aggregate of approximately $9.3
million in purchase price obligations, to be paid upon the closing thereof.
These transactions are subject to various conditions, including FCC, regulatory
and other third party approvals, and the execution of definitive agreements. All
Deferred Payments listed above are due one year from the closing of the
respective transactions and are payable, at the Company's discretion, either in
cash or shares of the Company's Common Stock based on market value at the date
of payment. On October 2, 1995 the Company completed the acquisition of
substantially all of the paging assets of P&C for $9.5 million in cash. The
terms and conditions of this acquisition were substantially the same as the
terms and conditions depicted in the letter of intent.
All of the Pending Acquisitions will be accounted for as purchases and are
assumed to be funded with a portion of the proceeds of the Notes and borrowings
under the Company's credit facility.
The unaudited pro forma condensed consolidated statements of operations
reflect the Acquisitions as if the Acquisitions had been completed at the
beginning of the periods presented. The Company and the Acquisitions
<PAGE>
PRONET INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
except for Contact and Gold Coast operated on a December 31 fiscal year basis.
Gold Coast operated on a June 30 fiscal year basis. Gold Coast's results of
operations for the six months ended June 30, 1994 were combined with the results
of operations for the six months ended December 31, 1994 to reflect the year
ended December 31, 1994. The respective results of operations for Contact, Radio
Call, ChiComm and High Tech from January 1, 1994 to the dates of the respective
acquisitions were combined with the actual results of operations of the Company,
Signet, Carrier, Metropolitan, All City, Americom, Lewis, Gold Coast and the
Pending Acquisitions for the year ended December 31, 1994 to determine the pro
forma results of operations for the year ended December 31, 1994. The respective
results of operations for Signet, Carrier, Metropolitan, and All City from
January 1, 1995 to the date of acquisition were combined with the actual results
of operations of the Company, Americom, Lewis, Gold Coast, and the Pending
Acquisitions for the six months ended June 30, 1995 to determine the pro forma
results of operations for the six months ended June 30, 1995.
The historical financial information presented for ChiComm includes an
audited Statement of Net Assets and a Summary of Income and Direct Operating
Expenses. ChiComm was a stand alone division of Chicago Communication Service,
Inc. and was not a separate reporting entity. The Summary of Income and Direct
Operating Expenses excludes certain overhead and corporate expenses not directly
related to ChiComm. The historical financial information presented for RCS
includes an audited Statement of Assets to be Acquired and a Statement of
Revenue and Operating Expenses. RCS is a division of Reisenweaver
Communications, Inc. and is not a separate reporting entity. The Statement of
Revenue and Operating Expenses excludes certain corporate expenses not directly
related to RCS.
The accompanying pro forma condensed consolidated balance sheet as of June
30, 1995, has been prepared as if the Americom, Lewis and Gold Coast
acquisitions and the Pending Acquisitions had occurred on that date and reflects
the following adjustments:
(A) Pro forma adjustments are made to reflect the fair value of those
assets and liabilities that were acquired as a result of the Americom, Lewis
and Gold Coast acquisitions and the Pending Acquisitions. The Company did
not acquire cash or assume certain trade payables, certain accrued expenses
or existing long-term debt. The following is a detail of these adjustments
(in thousands):
<TABLE>
<CAPTION>
DR CR
----- ------
<S> <C> <C>
Long-term debt...................................................................................... 375
Allowance for depreciation.......................................................................... 2,483
Current liabilities................................................................................. 3,302
Current Assets.................................................................................... 764
Equipment......................................................................................... 2,483
Shareholders' equity (deficit).................................................................... 341
Investment in completed acquisitions.............................................................. 25,400
</TABLE>
To reflect the allocation of the purchase price of Americom, Lewis and Gold
Coast, and to reflect reductions in certain assets and liabilities not acquired
by the Company.
<TABLE>
<S> <C> <C>
Long-term debt...................................................................................... 3,876
Allowance for depreciation.......................................................................... 8,264
Current liabilities................................................................................. 5,510
Shareholders' equity (deficit)...................................................................... 2,659
Current Assets.................................................................................... 1,599
Equipment......................................................................................... 8,264
Investment in Pending Acquisitions................................................................ 74,850
</TABLE>
To reflect the allocation of the purchase price of the Pending Acquisitions,
and reflect reductions in certain assets and liabilities not acquired by the
Company.
<PAGE>
PRONET INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(B) Pro forma adjustments are made to goodwill equal to the excess of
the applicable purchase price over the fair values assigned to assets and
liabilities acquired. A pro forma adjustment is made to other assets to
record the noncompetition agreements based on amounts stated in the
respective letters of intent or definitive agreements. The following is a
detail of these adjustments (in thousands):
<TABLE>
<CAPTION>
DR CR
------- -------
<S> <C> <C>
Goodwill and other assets....................................................... 22,828
Investments in Americom, Lewis and Gold Coast................................. 22,828
</TABLE>
To record goodwill related to the acquisitions of Americom, Lewis and Gold
Coast.
<TABLE>
<S> <C> <C>
Goodwill and other assets....................................................... 64,404
Investments in Pending Acquisitions........................................... 64,404
</TABLE>
To record goodwill related to the Pending Acquisitions.
(C) Pro forma adjustments are made to (i) record the use of cash, the
borrowings under the Credit Facility, and the issuance of the Company's
Common Stock and (ii) record the incurrence of Deferred Payments of $17.2
million in connection with the acquisitions of Americom, Lewis and the
Pending Acquisitions. All Deferred Payments are classified as long-term
liabilities since the Company has the option to make the Deferred Payments
in cash with funds available from the proceeds of the Credit Facility or in
shares of the Company's Common Stock. The following is a detail of these
adjustments (in thousands):
<TABLE>
<S> <C> <C>
Investments in completed acquisitions........................................... 25,400
Deferred payments............................................................. 10,800
Current Assets................................................................ 14,600
</TABLE>
To record the purchases of Americom, Lewis and Gold Coast.
<TABLE>
<S> <C> <C>
Investments in Pending Acquisitions............................................. 74,850
Deferred payments............................................................. 6,410
Shareholders' equity (deficit)................................................ 9,250
Long-term debt................................................................ 24,993
Current assets................................................................ 34,197
</TABLE>
To record the purchases of the Pending Acquisitions.
<PAGE>
PRONET INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
The following is a summary of the fair value assigned to the assets and
liabilities acquired from Americom, Gold Coast and Lewis (in thousands):
<TABLE>
<CAPTION>
HISTORICAL COST
---------------------------------
GOLD FAIR
AMERICOM COAST LEWIS SUBTOTAL ADJUSTMENTS VALUE
----------- --------- --------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Current assets............................................... $ 1,279 $ 520 $ 65 $ 1,864 $ (764) $ 1,100
Equipment
Pagers..................................................... -- 233 242 475 (367) 108
Communications Equipment................................... 2,530 390 375 3,295 (1,916) 1,379
Office and other........................................... -- 69 166 235 (200) 35
----------- --------- --------- --------- ----------- ---------
2,530 692 783 4,005 (2,483) 1,522
Less allowance for depreciation............................ 1,337 371 775 2,483 (2,483) --
----------- --------- --------- --------- ----------- ---------
1,193 321 8 1,522 -- 1,522
----------- --------- --------- --------- ----------- ---------
Goodwill, net................................................ -- -- -- -- 22,828 22,828
Other assets, net............................................ (40) 2 148 110 -- 110
----------- --------- --------- --------- ----------- ---------
Total Assets................................................. 2,432 843 221 3,496 22,064 25,560
Current liabilities.......................................... 2,381 190 891 3,462 (3,302) 160
Long-term debt............................................... 74 301 -- 375 (375) --
----------- --------- --------- --------- ----------- ---------
Net assets................................................... $ (23) $ 352 $ (670) $ (341) $ 25,741 $ 25,400
----------- --------- --------- --------- ----------- ---------
----------- --------- --------- --------- ----------- ---------
</TABLE>
The following is a summary of the fair value assigned to the assets and
liabilities acquired in the Pending Acquisitions (in thousands):
<TABLE>
<CAPTION>
HISTORICAL
COST
PENDING FAIR
ACQUISITIONS ADJUSTMENTS VALUE
----------- ----------- ---------
<S> <C> <C> <C>
Current assets......................................................................... $ 3,572 $ (1,599) $ 1,973
Equipment
Pagers............................................................................... 7,359 (2,013) 5,346
Communications equipment............................................................. 3,166 (1,515) 1,651
Office and other..................................................................... 6,815 (4,736) 2,079
----------- ----------- ---------
17,340 (8,264) 9,076
Less allowance for depreciation...................................................... 8,264 (8,264) --
----------- ----------- ---------
9,076 -- 9,076
----------- ----------- ---------
Goodwill, net.......................................................................... -- 64,404 64,404
Other assets, net...................................................................... 755 -- 755
----------- ----------- ---------
Total Assets........................................................................... 13,403 62,805 76,208
Current liabilities.................................................................... 6,868 (5,510) 1,358
Long-term debt......................................................................... 3,876 (3,876) --
----------- ----------- ---------
Net assets............................................................................. $ 2,659 $ 72,191 $ 74,850
----------- ----------- ---------
----------- ----------- ---------
</TABLE>
The accompanying pro forma condensed consolidated statements of operations
for the year ended December 31, 1994 and for the six months ended June 30, 1995,
have been prepared by combining the historical results of the Company and the
Acquisitions for such respective periods and reflect the following adjustments:
(D) A pro forma adjustment is made to reflect the effect on net revenues
and costs of sales related to the segment of the operations of All City not
acquired by the Company.
(E) The pro forma adjustment to sales, general and administrative
expenses represents expenses that either would or would not have been
incurred had the Acquisitions occurred at the beginning of the periods
<PAGE>
PRONET INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
presented. For Signet, All City, Metropolitan, Americom, Gold Coast, Lewis
and Apple, cost savings relate to decreased salaries (primarily due to
reductions in senior management of the Acquisitions), office rent,
professional fees, telephone costs and bad debts. For ChiComm, additional
costs relate to additional salaries and office rent.
(F) Pro forma adjustments are made to the statements of operations to
reflect additional depreciation and amortization expense based on the fair
value of the assets acquired as if the Acquisitions had occurred at the
beginning of the periods presented. Pro forma depreciation is computed using
the straight-line method over the remaining estimated useful lives of the
assets. The noncompetition agreements are amortized using the straight-line
method over the terms of the agreements, and goodwill is amortized using the
straight-line method over a 15-year term.
(G) Interest expense is comprised of interest on long-term debt and the
Deferred Payments, plus the commitment fee on the Credit Facility. Pro forma
adjustments reflect (i) the reversals of interest expense of $1.0 million
for the six months ended June 30, 1995 and $3.4 million for the year ended
December 31, 1994 on debt of the Acquisitions not assumed by the Company and
(ii) the increase in interest expense due to the sale of the Notes at an
assumed annual rate of 11.875%. Interest expense on the Deferred Payments is
provided as required by the definitive agreements or letters of intent.
(H) A pro forma adjustment is made to reflect the effect upon the income
tax provision as if the Acquisitions had occurred at the beginning of the
periods presented. The proforma tax benefit for the year ended December 31,
1994 and the six months ended June 30, 1995 was offset by a valuation
reserve, resulting in no tax expense/benefit for either pro forma period.
The primary differences in the effective tax rate between the Company's
historical financial statements and the pro forma statements are state taxes
and the amortization of goodwill related to the acquisitions of Contact,
Metropolitan, Apple, Williams, Total and AGR, which is assumed not to be
deductible for tax purposes, and the provision for a valuation reserve for
deferred taxes.
The pro forma condensed consolidated financial information presented is not
necessarily indicative of either the results of operations that would have
occurred had the acquisitions taken place at the beginning of the periods
presented or of future results of operations of the combined operations.
