<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 6, 1996
------------------------
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 75240
(Address of principal (Zip Code)
executive offices)
</TABLE>
Registrant's telephone number, including area code: (214) 687-2000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
ITEM 5. OTHER EVENTS
(a) UNAUDITED FINANCIAL STATEMENTS OF VARIOUS COMPLETED ACQUISITIONS
Attached hereto are certain unaudited financial statements of the following
completed acquisitions of ProNet Inc. (the "Company"):
Unaudited Financial Statements as of and for the year ended December 31,
1995:
<TABLE>
<S> <C>
Sun Paging Corporation Exhibit 99.1
Signet Paging of Raleigh, Inc. Exhibit 99.2
Cobbwells, Inc. dba Page One Exhibit 99.3
A.G.R. Electronics, Inc. and Affiliates Exhibit 99.4
</TABLE>
Unaudited Financial Statements as of and for the six months ended June 30,
1996:
<TABLE>
<S> <C>
Americom Paging Corporation Exhibit 99.5
</TABLE>
(b) VENTURES IN PAGING L.C.
On May 6, 1996, the Company announced the signing of a letter of intent to
acquire the paging assets of Oklahoma-based Ventures in Paging L.C. including
approximately 39,000 subscribers, for a purchase price of approximately $6.1
million. The acquisition is subject to various conditions and approvals and is
scheduled to close in the third quarter of 1996. Included herein as Exhibit 99.6
are audited financial statements as of and for the years ended December 31, 1995
and 1994 and the unaudited financial statements for the three months ended March
31, 1996 and 1995.
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: May 6, 1996
3
<PAGE>
SUN PAGING COMMUNICATIONS
UNAUDITED FINANCIAL STATEMENTS
DECEMBER 31, 1995
BASIS OF PRESENTATION: The accompanying unaudited consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles for interim financial information. Accordingly, they do not include
all of the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included.
<PAGE>
SUN PAGING COMMUNICATIONS
(A JOINT VENTURE)
BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
1995
-------------
(UNAUDITED)
<S> <C>
Current assets
Cash............................................................................................. $ 163,705
Trade accounts receivable, net................................................................... 215,102
Inventory........................................................................................ 547,869
Prepaid expenses................................................................................. 40,898
-------------
Total current assets........................................................................... 967,574
Property and equipment:
Building and leasehold improvements.............................................................. 44,131
Equipment and furnishings........................................................................ --
Paging equipment................................................................................. 1,968,893
-------------
2,013,024
Less accumulated depreciation and amortization................................................... (1,713,224)
-------------
Net property and equipment..................................................................... 299,800
Licenses and goodwill, net......................................................................... 498,617
-------------
$ 1,765,991
-------------
-------------
LIABILITIES AND PARTNERS' EQUITY
Current liabilities:
Trade accounts payable........................................................................... $ 44,360
Other accrued expenses........................................................................... 7,956
Deferred revenue................................................................................. 184,884
Customer deposits................................................................................ 87,805
-------------
Total current liabilities...................................................................... 325,005
Partners' equity................................................................................. 1,440,986
-------------
$ 1,765,991
-------------
-------------
</TABLE>
<PAGE>
SUN PAGING COMMUNICATIONS
(A JOINT VENTURE)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1995
-------------
(UNAUDITED)
<S> <C>
Revenues:.......................................................................................... $ 1,761,164
Operating expenses:
Cost of service.................................................................................. 731,319
Sales and marketing.............................................................................. 260,107
General and administrative....................................................................... 842,068
Depreciation and amortization.................................................................... 424,967
-------------
Total operating expenses....................................................................... 2,258,461
Other income....................................................................................... 13,525
-------------
Net loss....................................................................................... $ (483,772)
-------------
-------------
</TABLE>
<PAGE>
SUN PAGING COMMUNICATIONS
(A JOINT VENTURE)
STATEMENT OF PARTNERS' EQUITY
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
TOTAL
-------------
<S> <C>
Balance at December 31, 1994....................................................................... $ 1,674,758
Capital contributions (unaudited).................................................................. 250,000
Net loss (unaudited)............................................................................... (483,772)
-------------
Balance at December 31, 1995 (unaudited)........................................................... $ 1,440,986
-------------
-------------
</TABLE>
<PAGE>
SUN PAGING COMMUNICATIONS
(A JOINT VENTURE)
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1995
------------
(UNAUDITED)
<S> <C>
Cash flows from operating activities:
Net loss.......................................................................................... $ (483,772)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization................................................................... 424,967
Increase in accounts receivable................................................................. (181,644)
Increase in inventory........................................................................... (547,869)
Decrease in prepaid expenses.................................................................... 5,208
Decrease in trade accounts payable.............................................................. (140,386)
Decrease in other accrued expenses.............................................................. (61,676)
Increase in deferred revenue.................................................................... 135,788
Increase in customer deposits................................................................... 3,309
------------
Net cash used in operating activities......................................................... (846,075)
Cash flows from investing activities:
Disposition of property and equipment, net........................................................ 657,197
Cash flows from financing activities:
Capital contributions in cash..................................................................... 250,000
------------
Net increase in cash.......................................................................... 61,122
Cash at beginning of period......................................................................... 102,583
------------
Cash at end of period............................................................................... $ 163,705
------------
------------
</TABLE>
<PAGE>
SIGNET PAGING OF RALEIGH, INC.
UNAUDITED FINANCIAL STATEMENTS
DECEMBER 31, 1995
BASIS OF PRESENTATION: The accompanying unaudited consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles for interim financial information. Accordingly, they do not include
all of the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included.
<PAGE>
SIGNET PAGING OF RALEIGH, INC.
BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
1995
-------------
(UNAUDITED)
<S> <C>
Cash............................................................................................... $ 8,067
Trade accounts receivable, less allowance of $20,000............................................... 78,548
Inventories........................................................................................ 14,013
Other current assets............................................................................... 2,191
-------------
Total current assets............................................................................. 102,819
Equipment:
Pagers........................................................................................... 1,765,330
Communications equipment......................................................................... 436,314
Office and other equipment....................................................................... 306,451
-------------
2,508,095
Less allowance for depreciation.................................................................. (1,533,268)
-------------
974,827
-------------
Total assets....................................................................................... $ 1,077,646
-------------
-------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade payables and accrued liabilities........................................................... $ 103,701
Customer deposits................................................................................ 4,115
Current maturities of long-term debt............................................................. 192,000
-------------
Total current liabilities.......................................................................... 299,816
Long-term debt, less current maturities............................................................ 442,648
Stockholders' equity:
Common stock, $100 par value;
Authorized shares -- 1,000
Issued and outstanding shares -- 500............................................................ 50,000
Additional paid-in capital....................................................................... 923,896
Accumulated deficit.............................................................................. (638,714)
-------------
335,182
-------------
Total liabilities and stockholders' equity......................................................... $ 1,077,646
-------------
-------------
</TABLE>
<PAGE>
SIGNET PAGING OF RALEIGH, INC.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1995
-------------
(UNAUDITED)
<S> <C>
Revenues:
Recurring revenues............................................................................... $ 2,900,713
Product sales.................................................................................... 145,672
-------------
Total revenues..................................................................................... 3,046,385
Cost of products sold.............................................................................. 123,620
-------------
2,922,765
Cost of services:
Pager lease and access services.................................................................. 700,206
-------------
Gross margin..................................................................................... 2,222,559
Expenses:
Selling, general, and administrative............................................................. 1,479,494
Depreciation and amortization.................................................................... 418,795
-------------
1,898,289
-------------
Operating income................................................................................... 324,270
Other expense...................................................................................... (29,729)
-------------
Net income......................................................................................... $ 294,541
-------------
-------------
</TABLE>
<PAGE>
SIGNET PAGING OF RALEIGH, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
---------------------- PAID-IN ACCUMULATED
SHARES AMOUNT CAPITAL DEFICIT TOTAL
----------- --------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1994....................... 500 $ 50,000 $ 923,896 $ (589,882) $ 384,014
Net income (unaudited)........................... -- -- -- 294,541 294,541
Stockholder distributions (unaudited)............ -- -- -- (343,373) (343,373)
--- --------- ----------- ------------- ------------
Balance at December 31, 1995 (unaudited)........... 500 $ 50,000 $ 923,896 $ (638,714) $ 335,182
--- --------- ----------- ------------- ------------
--- --------- ----------- ------------- ------------
</TABLE>
<PAGE>
SIGNET PAGING OF RALEIGH, INC.
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1995
------------
(UNAUDITED)
<S> <C>
OPERATING ACTIVITIES
Net income........................................................................................ $ 294,541
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization................................................................... 418,795
Changes in operating assets and liabilities:
Trade accounts receivable..................................................................... (12,489)
Inventories................................................................................... 59
Other assets.................................................................................. 38,871
Trade payables and accrued liabilities........................................................ (12,897)
Customer deposits............................................................................. (9,235)
------------
Net cash provided by operating activities........................................................... 717,645
------------
INVESTING ACTIVITIES
Purchase of property and equipment................................................................ (205,315)
FINANCING ACTIVITIES
Stockholder distributions......................................................................... (351,813)
Payment on borrowings............................................................................. (169,078)
------------
Net cash used in financing activities............................................................... (520,891)
------------
Net decrease in cash................................................................................ (8,561)
Cash at beginning of year........................................................................... 16,628
------------
Cash at end of year................................................................................. $ 8,067
------------
------------
</TABLE>
<PAGE>
COBBWELLS, INC.
D/B/A PAGE ONE
UNAUDITED FINANCIAL STATEMENTS
DECEMBER 31, 1995
BASIS OF PRESENTATION: The accompanying unaudited consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles for interim financial information. Accordingly, they do not include
all of the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included.
<PAGE>
COBBWELLS, INC.
D/B/A PAGE ONE
BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
1995
------------
(UNAUDITED)
<S> <C>
Current assets:
Cash............................................ $ 73,053
Trade accounts receivable....................... (37,223)
Inventories..................................... 268,958
Prepaid expenses and advances................... (2,036)
------------
Total current assets.......................... 302,752
Property, pagers and equipment.................... 1,949,996
Less allowance for depreciation................. (1,043,826)
------------
906,170
------------
Total assets...................................... $ 1,208,922
------------
------------
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Trade payables.................................. $ 80,255
Advances from stockholders...................... 276,450
Customer deposits............................... 19,188
Other accrued expenses and liabilities.......... 27,485
Current maturities of long-term debt............ 1,274,560
------------
Total current liabilities......................... 1,677,938
Stockholders' deficit
Common stock, $100 par value.................... 15,000
Accumulated deficit............................. (484,016)
------------
Total stockholders' deficit....................... (469,016)
------------
Total liabilities and stockholders' deficit....... $ 1,208,922
------------
------------
</TABLE>
<PAGE>
COBBWELLS, INC.
D/B/A PAGE ONE
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1995
-----------------
(UNAUDITED)
<S> <C>
Total revenues................................................................................. $ 5,587,202
Cost of products sold.......................................................................... 1,215,839
-----------------
4,371,363
Cost of services -- pager lease and access services............................................ 775,750
-----------------
3,595,613
Expenses:
Selling, general and administrative.......................................................... 3,142,223
Depreciation and amortization................................................................ 360,000
-----------------
3,502,223
-----------------
Operating income............................................................................. 93,390
Interest expense............................................................................. (123,442)
-----------------
Net loss....................................................................................... $ (30,052)
-----------------
-----------------
</TABLE>
<PAGE>
COBBWELLS, INC.
D/B/A PAGE ONE
STATEMENT OF ACCUMULATED DEFICIT
<TABLE>
<S> <C>
Balance at December 31, 1994.................................................... $(431,184)
Net loss (unaudited)............................................................ (30,052)
Shareholder Distributions (unaudited)........................................... (22,780)
---------
Balance at December 31, 1995 (unaudited)........................................ $(484,016)
---------
---------
</TABLE>
<PAGE>
COBBWELLS, INC.
D/B/A PAGE ONE
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1995
-----------------
(UNAUDITED)
<S> <C>
OPERATING ACTIVITY
Net loss..................................................................................... $ (30,052)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization.............................................................. 360,000
Changes in operating assets and liabilities:
Decrease in trade accounts receivable.................................................... 91,610
Increase in inventories and other assets................................................. (193,741)
Decrease in trade payables and accrued liabilities....................................... (25,887)
-----------------
Net cash provided by operating activities.................................................... 201,930
INVESTING ACTIVITY
Purchase of property and equipment........................................................... (307,414)
FINANCING ACTIVITY
Proceeds from long-term debt................................................................. 125,878
Shareholder distributions and other.......................................................... (23,080)
-----------------
Net cash provided by financing activities...................................................... 102,798
-----------------
Net decrease in cash........................................................................... (2,686)
Cash at beginning of period.................................................................... 75,739
-----------------
Cash at end of period.......................................................................... $ 73,053
-----------------
-----------------
</TABLE>
<PAGE>
A.G.R. ELECTRONICS, INC. AND AFFILIATES
UNAUDITED FINANCIAL STATEMENTS
DECEMBER 31, 1995
BASIS OF PRESENTATION: The accompanying unaudited consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles for interim financial information. Accordingly, they do not include
all of the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included.
<PAGE>
A.G.R. ELECTRONICS, INC. AND AFFILIATES
COMBINED BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
1995
------------
<S> <C>
(UNAUDITED)
Cash................................................................................................ $ 8,243
Trade accounts receivable........................................................................... 66,897
Inventories......................................................................................... 25,365
Prepaids and other current assets................................................................... 166,031
------------
Total current assets................................................................................ 266,536
Equipment:
Communications equipment.......................................................................... 758,301
Office and other equipment........................................................................ 119,495
------------
Total equipment................................................................................... 877,796
Less allowance for depreciation................................................................... (417,697)
------------
Net equipment..................................................................................... 460,099
Other assets........................................................................................ 19,975
------------
Total assets........................................................................................ $ 746,610
------------
------------
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Trade payables.................................................................................... $ 256,106
Payable to stockholder............................................................................ --
Current maturities of long-term debt.............................................................. 179,084
Other accrued expenses and liabilities............................................................ 96,082
------------
Total current liabilities........................................................................... 531,272
Long-term debt...................................................................................... 524,697
Stockholders' deficit:
Common stock, $5 par value:
Authorized shares
Issued and outstanding shares................................................................... 1,000
Additional paid in capital........................................................................ 34,500
Accumulated deficit............................................................................... (344,859)
------------
Total stockholders' deficit....................................................................... (309,359)
------------
Total liabilities and stockholders' deficit......................................................... $ 746,610
------------
------------
</TABLE>
<PAGE>
A.G.R. ELECTRONICS, INC. AND AFFILIATES
COMBINED STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1995
-------------
(UNAUDITED)
<S> <C>
Revenue............................................................................................ $ 2,448,437
Cost of products sold.............................................................................. 771,572
-------------
1,676,865
Cost of services
Pager lease and access services.................................................................. 247,038
-------------
1,429,827
Expenses:
Selling, general, and administrative............................................................. 1,513,417
Depreciation..................................................................................... 187,388
-------------
1,700,805
-------------
Operating loss..................................................................................... (270,978)
Other income (expense):
Other income....................................................................................... 11,767
Interest expense................................................................................... (67,730)
-------------
(55,963)
Loss before income taxes........................................................................... (326,941)
Income tax expense................................................................................. --
-------------
Net loss........................................................................................... $ (326,941)
Beginning retained earnings........................................................................ 49,541
Shareholder distributions.......................................................................... (32,959)
-------------
Ending accumulated deficit......................................................................... $ (310,359)
-------------
-------------
</TABLE>
<PAGE>
A.G.R. ELECTRONICS, INC. AND AFFILIATES
COMBINED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1995
------------
(UNAUDITED)
<S> <C>
Operating activities:
Net loss.......................................................................................... $ (326,941)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation.................................................................................... 187,388
Changes in operating assets and liabilities:
Trade accounts receivable..................................................................... 86,158
Inventories................................................................................... (10,348)
Other assets.................................................................................. 30,212
Trade payables................................................................................ 81,213
Other accrued expenses and liabilities........................................................ 54,898
------------
Net cash provided by operating activities........................................................... 102,580
Investing activities:
Purchases of equipment............................................................................ (102,241)
Investments....................................................................................... 1,000
Shareholder distributions......................................................................... (32,959)
------------
Net cash used in investing activities............................................................. (134,200)
Financing activities:
Issuance of Common Stock.......................................................................... 500
Proceeds from long-term debt...................................................................... 34,868
Payments on long-term debt........................................................................ --
------------
Net cash provided by financing activities........................................................... 35,368
------------
Net increase in cash................................................................................ 3,748
Cash at beginning of year........................................................................... 4,495
------------
Cash at end of year................................................................................. $ 8,243
------------
------------
</TABLE>
<PAGE>
AMERICOM PAGING CORPORATION
UNAUDITED FINANCIAL STATEMENTS
JUNE 30, 1995
BASIS OF PRESENTATION: The accompanying unaudited consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles for interim financial information. Accordingly, they do not include
all of the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the six month period
ended June 30, 1995 are not necessarily indicative of the results that may be
expected for the year.
<PAGE>
AMERICOM PAGING CORPORATION
BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
JUNE 30, 1995
--------------
(UNAUDITED)
<S> <C>
Current assets:
Cash and cash equivalents....................................................................... $ 403,512
Accounts receivable, less allowance for doubtful accounts....................................... 413,397
Inventories..................................................................................... 383,056
Prepaid expenses and other current assets....................................................... 78,793
--------------
Total current assets.......................................................................... 1,278,758
Fixtures and equipment, at cost................................................................... 2,529,445
Less accumulated depreciation................................................................... (1,336,697)
--------------
Net fixtures and equipment.................................................................... 1,192,748
Other assets...................................................................................... (39,992)
--------------
$ 2,431,514
--------------
--------------
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Accounts payable................................................................................ $ (840)
Accrued expenses and other liabilities.......................................................... 244,511
Current portion of long-term debt............................................................... 1,677,700
Other current liabilities....................................................................... 459,166
--------------
Total current liabilities..................................................................... 2,380,537
Long-term debt.................................................................................... 73,890
--------------
Total liabilities............................................................................. 2,454,427
Shareholders' deficit:
Common stock, $1.00 par value, 1,000 shares authorized, issued, and outstanding................. 1,000
Accumulated deficit............................................................................. (23,913)
--------------
Total shareholders' deficit................................................................... (22,913)
--------------
$ 2,431,514
--------------
--------------
</TABLE>
<PAGE>
AMERICOM PAGING CORPORATION
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE
30, 1995
-------------
(UNAUDITED)
<S> <C>
Services and rental revenues....................................................................... $ 1,809,414
Product sales...................................................................................... 430,017
Cost of products sold.............................................................................. (259,185)
-------------
Gross profit................................................................................... 1,980,246
Operating expenses:
Services, rent and maintenance................................................................... 370,649
Selling.......................................................................................... 11,130
General and administrative....................................................................... 770,905
Depreciation..................................................................................... 208,806
-------------
Total operating expenses....................................................................... 1,361,490
-------------
Operating income............................................................................... 618,756
Other (income) expense:
Interest expense................................................................................. 4,255
Other, net....................................................................................... (97,570)
-------------
Net income..................................................................................... $ 712,071
-------------
-------------
</TABLE>
<PAGE>
AMERICOM PAGING CORPORATION
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE
30, 1995
-------------
(UNAUDITED)
<S> <C>
Cash flows from operating activities:
Net income....................................................................................... $ 712,071
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization.................................................................. 208,807
Changes in operating assets and liabilities:
Accounts receivable.......................................................................... 13,199
Inventories.................................................................................. (164,238)
Prepaid expenses and other current assets.................................................... 1,170
Other assets................................................................................. 65,833
Accounts payable, accrued expenses and other liabilities..................................... 177,579
-------------
Total adjustments.......................................................................... 302,350
-------------
Net cash provided by operating activities.................................................. 1,014,421
Cash flows from investing activities:
Additions to fixtures and equipment.............................................................. (51,787)
Shareholder distributions........................................................................ (85,028)
-------------
Net cash used in investing activities.......................................................... (136,815)
Cash flows from financing activities:
Reduction in long-term debt and other notes payable.............................................. (474,094)
-------------
Net increase in cash and cash equivalents.................................................. 403,512
Cash balance at beginning of year.................................................................. --
-------------
Cash balance at end of year........................................................................ $ 403,512
-------------
-------------
</TABLE>
<PAGE>
[LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
The Members
Ventures in Paging L.C.
Oklahoma City, Oklahoma
We have audited the balance sheets of Ventures in Paging L.C. (formerly
Ventures in Paging, Limited Partnership) as of December 31, 1995 and 1994, and
the related statements of operations, members' capital, and cash flows for the
years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Ventures in Paging L.C. as
of December 31, 1995 and 1994, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted accounting
principles.
SARTAIN FISCHBEIN & CO.
Tulsa, Oklahoma
February 2, 1996
<PAGE>
VENTURES IN PAGING L.C.
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------- MARCH 31,
1995 1994 1996
---------- --------- ----------
(UNAUDITED)
<S> <C> <C> <C>
Current assets:
Cash................................................... $ 109,284 $ 26,260 $ 74,335
Accounts receivable:
Trade, less allowance for doubtful accounts of
$18,243 in 1995 and $34,000 in 1994................. 230,926 174,147 271,330
Affiliates........................................... 11,571 19,446 --
Inventories............................................ 258,233 125,486 --
Prepaid expenses....................................... 16,212 -- --
---------- --------- ----------
Total current assets..................................... 626,226 345,339 345,665
Property and equipment, at cost:
Transmitter equipment.................................. 1,130,968 727,309 1,197,778
Leased paging equipment................................ 105,825 155,734 397,334
Office and computer equipment.......................... 56,992 36,564 59,237
Furniture and fixtures................................. 29,222 24,499 36,156
Leasehold improvements................................. 23,961 20,377 23,961
---------- --------- ----------
1,346,968 964,483 1,714,466
Less accumulated depreciation.......................... (626,672) (502,268) (672,680)
---------- --------- ----------
Net property and equipment............................. 720,296 462,215 1,041,786
Other assets........................................... 2,072 2,579 21,218
---------- --------- ----------
$1,348,594 $ 810,133 $1,408,669
---------- --------- ----------
---------- --------- ----------
LIABILITIES AND MEMBERS' CAPITAL
Current liabilities:
Current maturities of long-term debt................... $ 102,826 $ 44,128 $ --
Accounts payable -- trade.............................. 69,030 71,447 47,619
Accrued expenses....................................... 69,267 20,544 17,919
Customer deposits...................................... 20,221 25,419 19,040
---------- --------- ----------
Total current liabilities................................ 261,344 161,538 84,578
Long-term debt........................................... 98,796 59,298 177,271
---------- --------- ----------
Total liabilities........................................ 360,140 220,836 261,849
Members' capital......................................... 988,454 589,297 1,146,820
---------- --------- ----------
$1,348,594 $ 810,133 $1,408,669
---------- --------- ----------
---------- --------- ----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
VENTURES IN PAGING L.C.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
YEARS ENDED DECEMBER 31, ENDED ENDED
------------------------- MARCH 31, MARCH 31,
1995 1994 1996 1995
---------- ---------- ------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Income:
Pager Wholesale Operations:
Air time...................................... $1,166,436 $ 614,419 $408,439 $238,675
Equipment sales............................... 828,057 583,304 212,491 206,046
Finance charges and other..................... 17,259 6,317 4,163 2,363
---------- ---------- ------------ ------------
2,011,752 1,204,040 625,093 447,084
Pager Retail Operations:
Air time...................................... 363,935 245,587 80,884 90,806
Equipment sales............................... 42,109 59,095 14,722 10,855
Equipment rental.............................. 69,577 120,116 10,064 14,392
Finance charges and other..................... 18,756 -- 5,965 --
---------- ---------- ------------ ------------
494,377 424,798 111,635 116,053
---------- ---------- ------------ ------------
2,506,129 1,628,838 736,728 563,137
Costs and Expenses:
Pager Wholesale Operations:
Operating expenses............................ 900,322 617,330 276,809 172,487
Cost of equipment sales....................... 784,615 588,361 200,783 198,858
Depreciation.................................. 112,661 82,321 42,012 25,125
---------- ---------- ------------ ------------
1,797,598 1,288,012 519,604 396,470
Pager Retail Operations:
Operating expenses............................ 205,345 228,280 35,416 55,738
Cost of equipment sales....................... 48,900 44,567 12,118 10,801
Depreciation.................................. 36,078 39,554 3,999 13,200
---------- ---------- ------------ ------------
290,323 312,401 51,533 79,739
---------- ---------- ------------ ------------
2,087,921 1,600,413 571,137 476,209
---------- ---------- ------------ ------------
Income From Operations............................ 418,208 28,425 165,591 86,928
Interest Expense.................................. (20,357) (12,995) (7,225) (3,273)
Gain on Disposal of Property and Equipment........ 975 -- -- --
---------- ---------- ------------ ------------
Net Income........................................ $ 398,826 $ 15,430 $158,366 $ 83,655
---------- ---------- ------------ ------------
---------- ---------- ------------ ------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
VENTURES IN PAGING L.C.
STATEMENTS OF MEMBERS' CAPITAL
YEARS ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
MEMBERS
---------------------------------------------------------------
BIXBY CENTRAL CHICKASAW
TELEPHONE OKLAHOMA HINTON CATV PERSONAL
VENTURES IN INVESTMENT TELEPHONE COMPANY HOLDING
PAGING INC. COMPANY COMPANY INC. CORPORATION TOTAL
----------- ----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Members' capital --
January 1, 1994................... $ 4,435 $ 109,858 $ 109,858 $ 109,858 $ 109,858 $ 443,867
Capital contributions.............. 1,300 32,175 32,175 32,175 32,175 130,000
Net Income......................... 154 3,819 3,819 3,819 3,819 15,430
----------- ----------- ----------- ----------- ----------- -------------
Members' capital --
December 31, 1994................. 5,889 145,852 145,852 145,852 145,852 589,297
Distribute interest in connection
with change in business entity.... (5,889) 1,472 1,472 1,472 1,473 --
Capital contributions.............. -- 83 83 83 82 331
Net income......................... -- 99,707 99,707 99,706 99,706 398,826
----------- ----------- ----------- ----------- ----------- -------------
Members' capital -- December 31,
1995.............................. -- 247,114 247,114 247,113 247,113 988,454
Net income (unaudited)............. -- 39,591 39,591 39,592 39,592 158,366
----------- ----------- ----------- ----------- ----------- -------------
Members' capital --
March 31, 1996 (unaudited)........ $ -- $ 286,705 $ 286,705 $ 286,705 $ 286,705 $ 1,146,820
----------- ----------- ----------- ----------- ----------- -------------
----------- ----------- ----------- ----------- ----------- -------------
Members' ownership percentage...... 0% 25.00% 25.00% 25.00% 25.00% 100%
----------- ----------- ----------- ----------- ----------- -------------
</TABLE>
The accompanying notes are an integral part of the financial stattements
<PAGE>
VENTURES IN PAGING L.C.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS
YEARS ENDED DECEMBER 31, ENDED
------------------------ MARCH 31,
1995 1994 1996
--------- --------- ------------
(UNAUDITED)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income...................................... $ 398,826 $ 15,430 $158,366
Adjustments to reconcile net income to net cash
provided by operating activities:
(Gain) loss on disposal of property and
equipment.................................... (975) -- --
Depreciation and amortization................. 148,739 121,874 46,011
Increase in accounts receivable............... (48,904) (84,279) (28,834)
Increase in inventories....................... (89,472) (24,805) (38,551)
Increase in prepaid expenses and other
assets....................................... (15,705) (1,879) (2,934)
Increase (decrease) in accounts payable....... (2,417) 18,509 (21,411)
Increase (decrease) in accrued expenses....... 48,723 13,357 (51,347)
Increase (decrease) in customer deposits...... (5,198) 24,747 (1,181)
--------- --------- ------------
Net cash provided by operating activities......... 433,617 82,954 60,119
Cash flows from investing activities:
Additions to property and equipment............. (290,072) (159,142) (70,717)
Proceeds from disposal of property and
equipment...................................... 14,827 -- --
--------- --------- ------------
Net cash used in investing activities (275,245) (159,142) (70,717)
Cash flows from financing activities:
Capital contributed by members.................. 331 130,000 --
Principal payments on long-term debt............ (75,679) (34,295) (24,351)
--------- --------- ------------
Net cash provided by (used in) financing
activities....................................... (75,348) 95,705 (24,351)
--------- --------- ------------
Net increase (decrease) in cash................... 83,024 19,517 (34,949)
Cash, beginning of year........................... 26,260 6,743 109,284
--------- --------- ------------
Cash, end of year................................. $ 109,284 $ 26,260 $ 74,335
--------- --------- ------------
--------- --------- ------------
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Equipment acquired under capital lease............ $ 173,875 $ 136,054
Leased pagers transferred to inventory............ 43,275 35,141
OTHER DISCLOSURES
Interest paid..................................... $ 20,357 $ 12,995
Income taxes paid................................. -- --
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
VENTURES IN PAGING L.C.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995 AND 1994
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS: Ventures in Paging, L.C. (the "Company") was
organized in 1995 as a limited liability company in Oklahoma and is the
successor company to Ventures in Paging Limited Partnership. The Company is a
wholesale provider of air time and pager equipment to resalers in Oklahoma. The
Company is also engaged in selling and renting pagers and providing air time to
retail customers in the Oklahoma City and Tulsa areas under the name VIP Pagers.
INVENTORIES: Inventories consist of pagers and are stated at the lower of
cost determined by the first-in, first-out method, or market.
FIXTURES AND EQUIPMENT: Depreciation is provided using the straight-line
method over the estimated useful lives of the related assets. Repairs and
maintenance are expensed as incurred, whereas major improvements are
capitalized.
CASH AND CASH EQUIVALENTS: The Company's cash account is insured by the
Federal Deposit Insurance Corporation up to $100,000.
INCOME TAXES: The Company is not subject to income taxes. Income or loss of
the Company is required to be included in the income tax returns of the members.
USE OF ESTIMATES: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
RECLASSIFICATIONS: Certain reclassifications have been made in the 1994
Financial Statements to conform to the classifications used in 1995. These
reclassifications relate primarily to the classification of revenue and expense
in the statement of operations.
NOTE 2 -- ACCOUNTS RECEIVABLE -- AFFILIATES
Accounts receivable -- affiliates consists of amounts due from parties
related to the members for the purchase of air time.
NOTE 3 -- LONG-TERM DEBT
Long term debt consists of the following:
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Obligation to finance company under capital lease, due in monthly installments
of $4,591 including interest at 13.1%. The final installment is due February,
1997......................................................................... $ 59,298 $ 103,426
Obligation to finance company under capital lease, due in monthly installments
of $5,915 including interest at 15.5%. The final installment is due May,
1998......................................................................... 142,324 --
----------- -----------
201,622 103,426
Less current maturities....................................................... 102,826 44,128
----------- -----------
$ 98,796 $ 59,298
----------- -----------
----------- -----------
</TABLE>
Maturities on long-term debt are as follows: 1996 -- $102,826; 1997 --
$70,334; 1998 -- $28,462.
See Note 4 for further description of capital lease arrangements.
<PAGE>
VENTURES IN PAGING L.C.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1995 AND 1994
NOTE 4 -- LEASING ARRANGEMENTS
The Company leases transmitting tower space under various short-term
cancelable and noncancelable operating leases. The Partnership also leases
office space under noncancelable operating leases expiring in 1996 and 2000.
Rental expense consists of the following:
<TABLE>
<CAPTION>
1995 1994
--------- ---------
<S> <C> <C>
Transmitting tower space......................................................... $ 61,656 $ 45,020
Office space..................................................................... 20,305 12,683
--------- ---------
$ 81,961 $ 57,703
--------- ---------
--------- ---------
</TABLE>
Minimum future rental payments under noncancelable operating leases as of
December 31, 1995 are as follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, AMOUNT
- ------------------------------------------------- ---------
<S> <C>
1996......................................... $ 32,268
1997......................................... 22,845
1998......................................... 21,384
1999......................................... 20,714
2000......................................... 10,782
---------
$ 107,993
---------
---------
</TABLE>
The Company leases certain transmitter equipment under capital leases
expiring in 1997 and 1998. The asset and liability have been recorded at the
fair value of the asset. The assets are depreciated over the estimated
productive lives. Depreciation of assets under capital leases is included in
depreciation expense. Net transmitter equipment under the capital lease was
approximately $251,800 and $113,400 at December 31, 1995 and 1994, respectively,
net of accumulated depreciation of approximately $58,200 and $22,600 at December
31, 1995 and 1994, respectively.
NOTE 5 -- RELATED PARTY TRANSACTIONS
The Company purchases air time from Chickasaw Personal Communications Corp.,
a member, to provide pager roaming services to customers. Air time purchases
were $34,061 in 1995 and $25,652 in 1994. In addition, Chickasaw Telephone
Company and Chickasaw Personal Communications, an affiliate of Chickasaw
Telephone Company, were paid for various expenses including utilities,
inventories, billing services, management fees and expense reimbursements
totaling $26,500 in 1995 and $133,300 in 1994. The Company also paid accounting
fees of $10,500 in 1994 to Bixby Telephone Co., an affiliate of Bixby Telephone
Investment Company, a member.
The Company also generates revenues from each of the four members or their
affiliates. Revenues from airtime sales and equipment sales to each of the
members and their affiliates are as follows:
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Bixby Telephone Investment Co................................................. $ 101,139 $ 171,364
Central Oklahoma Telephone Co................................................. 24,676 22,305
Hinton CATV Company, Inc...................................................... 11,722 12,157
Chickasaw Personal Holding Corp............................................... 27,428 40,770
----------- -----------
$ 164,965 $ 246,596
----------- -----------
----------- -----------
</TABLE>
<PAGE>
VENTURES IN PAGING L.C.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1995 AND 1994
NOTE 6 -- FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, DISCLOSURES ABOUT FAIR
VALUE OF FINANCIAL INSTRUMENTS, requires disclosure of fair value information
about financial instruments, whether or not recognized in the accompanying
balance sheets.
The Company's only financial instrument requiring disclosure of fair value
under Statement No. 107 is cash. The carrying amount of cash approximates its
fair value.
NOTE 7 -- BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three month period ended March 31, 1996
are not necessarily indicative of the results that may be expected for the year.
