<PAGE>
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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): April 7, 1996
________________
PRONET INC.
(Exact name of issuer as specified in its charter)
DELAWARE 0-16029 75-1832168
(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of Identification Number)
incorporation)
6340 LBJ FREEWAY 75240
DALLAS, TEXAS (Zip Code)
(Address of Principal
Executive Offices)
Registrant's telephone number, including area code: (214) 687-2000
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<PAGE>
ITEM 5. OTHER EVENTS.
(a) SIGNING OF LETTER OF INTENT FOR GEORGIALINA COMMUNICATION
COMPANY AND AFFILIATES.
On April 7, 1996, the Company signed a letter of intent to acquire
all of the outstanding capital stock of Georgialina Communication Company and
affiliates ("Georgialina") for approximately $11.6 million. This transaction
is subject to various conditions and approvals and is anticipated to close in
the third quarter of 1996. See Exhibit 99.4 for the related press release.
(b) SIGNING OF DEFINITIVE AGREEMENT FOR TELETOUCH COMMUNICATIONS, INC.
On April 16, 1996, ProNet Inc. (the "Company") signed a definitive
agreement to merge with Teletouch Communications, Inc. ("Teletouch"). This
transaction is subject to various conditions and approvals and is anticipated
to close mid-year 1996. See attached Exhibit 99.1 for the related press
release.
(c) NEGOTIATIONS CEASED WITH REISENWEAVER COMMUNICATIONS, INC.
On April 16, 1996, the Company announced that it had elected to cease
negotiations to acquire Reisenweaver Communications, Inc. This acquisition,
which was previously announced in 1995, would have added 9,000 subscribers to
the Company's existing base. See attached Exhibit 99.1 for the related press
release.
(d) SIGNING OF DEFINITIVE AGREEMENT WITH MOTOROLA INC.
On April 19, 1996, the Company signed a definitive agreement to purchase
a nationwide license (931.9125 MHz Radio Common Carrier frequency) and
associated system equipment (the "Nationwide License") from Motorola, Inc.
("Motorola") for approximately $43 million. This transaction is subject to
various conditions and approvals and is anticipated to close mid-year 1996.
See Exhibit 99.2 for the related press release.
(e) SIGNING OF DEFINITIVE AGREEMENT FOR PAC-WEST TELECOMM, INC. AND
SUBSIDIARY.
On April 25, 1996, the Company signed a definitive agreement to acquire
the paging divisions of Pac-West Telecomm, Inc. and subsidiary ("PacWest")
for approximately $19 million. This transaction is subject to various
conditions and approvals and is anticipated to close in the third quarter of
1996. See Exhibit 99.3 for the related press release.
(f) SIGNING OF LETTER OF INTENT FOR VENTURES IN PAGING, L.C.
On May 1, 1996, the Company signed a letter of intent to acquire
substantially all of assets of Ventures in Paging, L.C. ("VIP") for
approximately $6.1 million. This transaction is subject to various
conditions and approvals and is anticipated to close in the third quarter of
1996. See Exhibit 99.4 for the related press release.
(g) FILING OF FORM S-3 REGISTRATION STATEMENTS.
On May 8, 1996, the Company announced that it had filed two Form S-3
Registration Statements with the Securities and Exchange Commission relating
to the proposed public offerings of 4,000,000 shares of its common stock (the
"Equity Offering") and $100 million principal amount of senior subordinated
notes due 2006 (the "New Notes" and, together with the Equity Offering, the
"Offerings"). The Registration Statements were declared effective on May 30,
1996. The Company increased the principal amount of its New Notes to $120
million. The Company anticipates completing the Offerings during the first
week of June of 1996. See Exhibit 99.5 and Exhibit 99.7 for the related
press releases.
(h) PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND NOTES.
Attached hereto as Exhibit 99.7 are certain pro forma condensed
consolidated financial statements and notes thereto of the Company of its
completed and pending acquisitions.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
The following pro forma financial information is attached hereto and
filed as part of this report:
(b) PRO FORMA FINANCIAL INFORMATION.
- Unaudited Pro Forma Condensed Consolidated Balance Sheet for the
Company as of March 31, 1996, consolidating the assets and certain
liabilities of the Company, PacWest, Georgialina, VIP, Teletouch,
Premier Paging, Inc. ("Premier"), Russell's Communications, Inc.,
dba LaPageCo ("LaPageCo"), Dave Fant Company dba Oklahoma Radio
Systems ("Oklahoma"),
<PAGE>
Cimarron Paging, Inc. ("Cimarron"), Hyde's Stay in Touch, Inc.
("Stay in Touch"), AACS Communications, Inc. ("AACS") and Warren
Communications, Inc. ("Warren").
- Unaudited Pro Forma Condensed Consolidated Statements of Operations
for the Company for the year ended December 31, 1995, incorporating
the operating revenues and expenses of the Company, Teletouch,
Signet Paging of Charlotte, Inc. ("Signet Charlotte"), Carrier
Paging Systems, Inc. ("Carrier"), All City Communication Company,
Inc. ("All City"), Metropolitan Houston Paging Services, Inc.
("Metropolitan"), Americom Paging Corporation ("Americom"), Gold
Coast Paging, Inc. ("Gold Coast"), Lewis Paging, Inc. ("Lewis"),
Paging & Cellular of Texas ("Paging & Cellular"), Apple
Communication, Inc. ("Apple"), Sun Paging Communications ("Sun"),
SigNet Paging of Raleigh, Inc. ("SigNet Raleigh"), Cobbwells, Inc.
dba Page One ("Page One"), A.G.R. Electronics, Inc. and affiliates
("AGR"), Total Communication Services, Inc. ("Total"), Williams
Metro Communications Corp. and affiliates ("Williams"), PacWest,
Georgialina, VIP, Waco Communications, Inc. ("Waco"), Beepers Plus
of Memphis, Inc. and affiliates ("Beepers Plus"), Dial-A-Page, Inc.
("Dial-A-Page"), Premier, LaPageCo, Oklahoma, Cimarron, Stay in
Touch, AACS and Warren.
- Unaudited Pro Forma Condensed Consolidated Statements of Operations
for the Company for the three months ended March 31, 1996,
incorporating the operating revenues and expenses of the Company,
Teletouch, AGR, Total, Williams, PacWest, Georgialina, VIP,
Premier, LaPageCo, Oklahoma, Cimarron, Stay in Touch, AACS and
Warren.
The Pro Forma Condensed Consolidated Statements of Operations include
reasonable estimates of costs and expenses which will be incurred by the
Company in connection with the operation of Teletouch, Signet Charlotte,
Carrier, All City, Metropolitan, Americom, Gold Coast, Lewis, Paging &
Cellular, Apple, Sun, SigNet Raleigh, Page One, AGR, Total, Williams,
PacWest, Georgialina, VIP, Waco, Beepers Plus, Dial-A-Page, Premier,
LaPageCo, Oklahoma, Cimarron, Stay in Touch, AACS and Warren. The pro forma
condensed consolidated financial statements should be read in conjunction
with the historical consolidated financial statements of the Registrant.
Attached hereto as Exhibit 99.6 are pro forma condensed consolidated
financial statements and notes thereto of the Company and its completed and
pending acquisitions.
(c) EXHIBITS.
Press Releases of ProNet Inc.:
99.1 ProNet Inc. Press Release "ProNet and Teletouch Announce Merger
Agreement" dated April 16, 1996.
99.2 ProNet Inc. Press Release "ProNet Signs Definitive Agreement with
Motorola to Purchase Nationwide License" dated April 23, 1996.
99.3 ProNet Inc. Press Release "ProNet Reports Record Results for Ninth
Consecutive Quarter" dated April 26, 1996.
99.4 ProNet Inc. Press Release "ProNet Announces Two New Acquisitions"
dated April 26, 1996.
99.5 ProNet Inc. Press Release "ProNet Announces Concurrent Public
Equity and Debt Offerings" dated May 8, 1996.
99.6 ProNet Inc. Press Release "ProNet Inc. Announces Pricing of
Concurrent Public Equity and Debt Offerings" dated May 31, 1996.
Pro Forma Condensed Consolidated Financial Statements of ProNet Inc. and
Subsidiaries:
99.7 Pro Forma Condensed Consolidated Balance Sheet as of March 31,
1996 (unaudited)
Pro Forma Condensed Consolidated Statement of Operations for the
year ended December 31, 1995 (unaudited)
Pro Forma Condensed Consolidated Statement of Operations for the
three months ended March 31, 1996 (unaudited)
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities 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: June 4, 1996
<PAGE>
INDEX TO EXHIBITS
Press Releases of ProNet Inc.:
99.1 ProNet Inc. Press Release "ProNet and Teletouch Announce Merger
Agreement" dated April 16, 1996.
99.2 ProNet Inc. Press Release "ProNet Signs Definitive Agreement with
Motorola to Purchase Nationwide License" dated April 23, 1996.
99.3 ProNet Inc. Press Release "ProNet Reports Record Results for Ninth
Consecutive Quarter" dated April 26, 1996.
99.4 ProNet Inc. Press Release "ProNet Announces Two New Acquisitions"
dated April 26, 1996.
99.5 ProNet Inc. Press Release "ProNet Announces Concurrent Public
Equity and Debt Offerings" dated May 8, 1996.
99.6 ProNet Inc. Press Release "ProNet Inc. Announces Pricing of Concurrent
Public Equity and Debt Offerings" dated May 31, 1996.
Pro Forma Condensed Consolidated Financial Statements of ProNet Inc.:
99.7 Pro Forma Condensed Consolidated Balance Sheet as of March 31, 1996
(unaudited)
Pro Forma Condensed Consolidated Statement of Operations for the
year ended December 31, 1995 (unaudited)
Pro Forma Condensed Consolidated Statement of Operations for the
three months ended March 31, 1996 (unaudited)
<PAGE>
[LETTERHEAD]
FOR IMMEDIATE RELEASE
For More Information Contact:
Jan E. Gaulding, ProNet CFO
(214) 687-2000
Robert McMurrey, Teletouch CEO
(800) 943-0034
PRONET AND TELETOUCH ANNOUNCE MERGER AGREEMENT
DALLAS, TEXAS, APRIL 16, 1996 -- PRONET INC. (NASDAQ - PNET) and TELETOUCH
COMMUNICATIONS, INC. (NASDAQ - TELL) jointly announced today that their
respective boards of directors have unanimously approved a definitive
agreement to merge the two corporations in a transaction valued at
approximately $181 million, consisting of approximately $75 million of ProNet
common stock, the assumption of $91 million in indebtedness and the purchase
for cash of approximately $15 million of preferred stock.
Under the terms of the agreement, Teletouch's public common stockholders will
receive for each of their shares a number of shares of ProNet common stock
having a value of $5.50, subject to certain adjustments based on the future
trading prices of ProNet common stock. Certain common stockholders who are
affiliated with Teletouch will receive a number of shares of ProNet common
stock having a value of $5.00, subject to certain adjustments based on the
future trading prices of ProNet common stock. In no event will such
afffiliated stockholders receive more per share than the public stockholders.
The closing price of ProNet's common stock on April 15, 1996 was $28.625 per
share.
The transaction is subject to FCC regulatory approval as well as the approval
of the stockholders of both companies. Affiliates, who collectively own a
majority of Teletouch's preferred and common stock, have agreed to vote their
shares in favor of the merger. The merger, expected to be effective in the
third quarter of 1996, will be accounted for as a purchase.
Jackie Kimzey, ProNet Chairman and Chief Executive Officer, stated, "ProNet's
merger with Teletouch creates the fourth largest public paging company in the
U.S. with approximately 1.4 million subscribers on a proforma basis and
further establishes the combined entity as an experienced consolidator in the
industry. The Teletouch operations will be managed through our Houston and
Charlotte SuperCenters creating additional
<PAGE>
operational efficiencies. We look forward to working with the Teletouch team,
capitalizing and building on their recent successes."
Dave Vucina, ProNet President and Chief Operating Officer, added, "With
complementary and contiguous coverage areas reaching from Texas to Florida,
this combination establishes the new entity as a dominant player in the
Southern U.S. Teletouch's distribution channels are also complementary to
ProNet's, further strengthening our capabilities in reaching the consumer in
secondary markets."
Robert McMurrey, Teletouch Chairman and Chief Executive Officer, stated, "We
believe the merger with ProNet will enhance our shareholders' investment in
the paging industry. Our combined operations are expected to have more
opportunities for growth through our increased marketing presence, improved
operating efficiencies and enhanced access to capital. We believe these
elements will result in more opportunity to build value for our shareholders
in the future."
ProNet is being advised by Lehman Brothers regarding the Teletouch
transaction.
Earlier this week, ProNet announced that it signed a non-binding letter of
intent with Motorola Inc. for the transfer of Motorola's 931.9125 MHz Radio
Common Carrier nationwide license and for the sale of associated system
equipment. The transaction, which is pending FCC and other third party
approvals, as well as the execution of a definitive agreement, is expected to
close mid-year 1996.
Mr. Kimzey stated, "The nationwide frequency will be used to further
strengthen our regional presence, expand into new markets and provide a
system to support strategic marketing alliances. The merger with Teletouch
and the acquisition of this license demonstrates ProNet's strength as a major
presence in the industry."
ProNet also announced that based on the results of its due diligence review,
it has elected to cease negotiations to acquire Reisenweaver Communications,
Inc. in North Carolina. This acquisition, which was previously announced in
1995, would have added 9,000 subscribers to ProNet's existing base.
ProNet, based in Dallas, Texas, provides wireless communications services
through its paging and security operations to over a million subscribers in
five distinct regions of the United States.
Teletouch Communications provides paging services in Alabama, Arkansas,
Louisiana, Mississippi, Missouri, Texas and Tennessee. The Company focuses
on smaller metropolitan and rural markets where there is less competition and
more opportunity for internal growth than in larger metropolitan areas.
Matters discussed in this press release contain forward looking statements
that involve risks and uncertainties, including the timely development,
release and acceptance of new
<PAGE>
products and alliances, delays in regulatory approvals, the impact of
competitive products and pricing, and the other risks detailed from time to
time in ProNet's SEC reports, including the report on Form 10-K for the year
ended December 31, 1995.
<PAGE>
[LETTERHEAD]
FOR IMMEDIATE RELEASE
For More Information Contact:
Jan E. Gaulding, CFO
(214) 687-2000
PRONET SIGNS DEFINITIVE AGREEMENT WITH MOTOROLA TO
PURCHASE NATIONWIDE LICENSE
DALLAS, TEXAS, APRIL 23, 1996 -- PRONET INC. (NASDAQ - PNET) today announced
that it has signed a definitive agreement with Motorola Inc. for the transfer
of Motorola's nationwide license (931.9125 MHz Radio Common Carrier ["RCC"]
frequency) and for the sale of associated system equipment. The network
currently includes approximately 400 base stations and sites in over 220
major U.S. cities. The Company intends to fund the purchase price through the
Company's bank credit facility. The transaction, which is pending Federal
Communications Commission approval, is expected to close mid-year 1996.
EMBARC, a wholly owned subsidiary of Motorola Inc., intends to continue
in the business of offering information services and content packaging to the
wireless industry through wireless carriers. ProNet would be the first
nationwide carrier to offer as a reseller the EMBARC services, such as ESPNET
to GoTM and CNBC Market PageTM, integrated with traditional paging services.
Jackie Kimzey, ProNet Chairman and Chief Executive Officer, stated, "The
nationwide frequency fits well with our strategic plan by allowing us to
further strengthen our presence in our five current regions and expand into
new markets. It also sets the stage for ProNet's participation in strategic
marketing alliances."
ProNet, based in Dallas, Texas, provides wireless communications
services through its paging and security operations to over a million
subscribers in five distinct regions of the United States.
Motorola is one of the world's leading providers of wireless
communications, semiconductors, and advanced electronic systems, components,
and services. Major equipment businesses include cellular telephone, two-way
radio, paging and data communications, personal communications, automotive,
defense and space electronics and computers. Motorola semiconductors power
communication devices, computers and millions of other products.
<PAGE>
Matters discussed in this press release contain forward looking
statements that involve risks and uncertainties, including the timely
development, release and acceptance of new products and alliances, the impact
of competitive products and pricing, and the other risks detailed from time
to time in the Company's SEC reports, including the report on Form 10-K for
the year ended December 31, 1995.
###
<PAGE>
[LETTERHEAD]
FOR IMMEDIATE RELEASE
For More Information Contact:
Jan E. Gaulding, CFO
(214) 687-2000
PRONET REPORTS RECORD RESULTS FOR NINTH CONSECUTIVE QUARTER
DALLAS, TEXAS, APRIL 26, 1996 -- PRONET INC. (NASDAQ - PNET) today reported
record revenues, operating cash flow and subscriber growth for the quarter
ended March 31, 1996. The Company continued its trend of record revenues and
operating cash flow for the ninth consecutive quarter.
Net revenues for the first quarter of 1996 increased 102% to $21.4
million compared to $10.6 million for the same quarter last year, while
operating cash flow, or earnings before other income (expense), income taxes,
depreciation and amortization (EBITDA), increased 77% to $6.2 million,
compared to $3.5 million for the first quarter of 1995. The operating cash
flow margin (operating cash flow divided by net revenues) for the first
quarter was 29% compared to 33% for the same quarter of 1995. The decrease
in margin reflects transitional personnel and facility expenses that will be
reduced as further integration of the six acquisitions completed in the first
quarter of 1996 occurs.
Net loss for the first quarter of 1996 was $6.1 million or $0.89 per
share, while net income for the corresponding quarter of the prior year was
$66,000 or $0.01 per share. The decrease in earnings was directly related to
an increase in interest expense as a result of the Company's Senior
Subordinated Note Offering in June 1995 and additional depreciation and
amortization expense related to nineteen acquisitions completed since March
1, 1994.
Paging unit net adds during the quarter ended March 31, 1996 were
182,920 (124,500 of which were through acquisitions), a 259% increase over
the 50,883 added in the first quarter of 1995. There were 1,039,222 pagers
in service at the end of the first quarter which represents a 157% increase
over the 404,713 paging subscribers at the end of the first quarter in 1995.
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<PAGE>
"The results of this quarter are consistent with our growth strategy
based on internal growth and acquisitions. We completed six acquisitions
this quarter, all of which were in our Southeast region. The majority of
these were completed ahead of schedule and, with our strong internal growth,
helped us reach the one million pager mark, an exciting milestone for the
Company. We appreciate the hard work and continued efforts of our employees
that enabled us to reach one million subscribers in February, two years ahead
of our original schedule," said Jackie Kimzey, Chairman and Chief Executive
Officer of ProNet Inc.
Jan Gaulding, Senior Vice President and Chief Financial Officer stated,
"The integration process is underway for the acquisitions closed in the first
quarter, helped by the completion of our Southeast (Charlotte) SuperCenter
facility in March. The benefits of the consolidations will begin to be
recognized late in the second quarter."
The Company also announced that it has entered into definitive
agreements for a merger transaction valued at approximately $19 million,
subject to certain adjustments. ProNet will merge with Northern California
based Pac-West Telcomm, Inc. and acquire the stock of Strategic Products
Corporation with paging operations in California, Colorado and Nevada. Prior
to the closing of the transaction, Pac-West will spin-off to a group of its
existing shareholders its telephone business so that ProNet will be acquiring
only the paging related assets, which would include approximately 45,000
paging subscribers. The transaction, which is subject to regulatory
approvals, is expected to close in the third quarter of 1996.
ProNet, based in Dallas, Texas, provides wireless communications
services through its paging and security operations to over a million
subscribers in five distinct regions of the United States.
Matters discussed in this press release contain forward looking
statements that involve risks and uncertainties, including the timely
development, release and acceptance of new products and alliances, the impact
of competitive products and pricing, and the other risks detailed from time
to time in the Company's SEC reports, including the report on Form 10-K for
the year ended December 31, 1995.
-more-
<PAGE>
PRONET INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) (In thousands except unit and per share data)
THREE MONTHS ENDED
MARCH 31,
--------------------
1996 1995
---------- --------
Pagers in service 1,039,222 404,713
TracPacs in service 28,409 27,106
Recurring revenues $ 21,016 $ 10,488
Product sales 3,146 2,196
---------- --------
Total revenues 24,162 12,684
Cost of products sold 2,781 2,066
---------- --------
Net revenues 21,381 10,618
Cost of sales and services
Paging lease and access 5,512 2,220
Security systems equipment services 275 246
---------- --------
5,787 2,466
Sales and marketing expenses 4,039 1,642
General and administrative expenses 5,340 2,996
Depreciation and amortization 8,707 2,745
---------- --------
18,086 7,383
---------- --------
Operating income (loss) (2,492) 769
Interest and other income 27 41
Interest expense (3,659) (386)
---------- --------
Pretax income (loss) (6,124) 424
Provision for income taxes, net 0 (358)
---------- --------
Net income (loss) $ (6,124) $ 66
---------- --------
---------- --------
Net income (loss) per share $ (0.89) $ 0.01
---------- --------
---------- --------
Weighted average common shares outstanding 6,909 6,627
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<PAGE>
PRONET INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited) (In thousands)
MARCH 31, DECEMBER 31,
1996 1995
--------- ------------
ASSETS
- ------
Cash and cash equivalents $ 2,089 $ 10,154
Other current assets 15,584 11,999
Equipment, net 61,888 47,682
Goodwill and other non-current assets, net 151,269 117,134
-------- --------
$230,830 $186,969
-------- --------
-------- --------
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Trade payables and accrued liabilities $ 27,457 $ 18,910
Long-term debt (less current maturities) 130,296 99,319
Deferred credits 17,382 19,183
Shareholders' equity 55,695 49,557
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$230,830 $186,969
-------- --------
-------- --------
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<PAGE>
PRONET INC.
OTHER SELECTED FINANCIAL DATA
(Unaudited) (In thousands except margin and per unit data)
THREE MONTHS ENDED
MARCH 31,
1996 1995
------- -------
Total revenues
Paging systems:
Recurring fees $19,558 $ 9,187
Equipment sales 3,124 2,085
Tracking systems:
Recurring fees 1,458 1,301
Other security systems income 22 111
------- -------
$24,162 $12,684
------- -------
------- -------
EBITDA (Earnings before taxes, other
income (expense), depreciation and
amortization) $ 6,215 $ 3,514
------- -------
------- -------
EBITDA Margin(1) 29% 33%
------- -------
------- -------
EBITDA per Share $ 0.90 $ 0.53
------- -------
------- -------
Pagers per employee 1,531 1,289
------- -------
------- -------
(1) EBITDA divided by Net Revenue
###
<PAGE>
FOR IMMEDIATE RELEASE
For More Information Contact:
Jan E. Gaulding, CFO
(214) 687-2000
PRONET ANNOUNCES TWO NEW ACQUISITIONS
DALLAS, TEXAS, MAY 7, 1996 -- PRONET INC. (NASDAQ - PNET) today announced
that it has signed a letter of intent to purchase all of the outstanding
capital stock of Georgialina Communication Company and affiliates for an
approximate purchase price of $11.6 million, subject to certain adjustments.
The Company also signed a letter of intent to purchase substantially all of
the assets of Oklahoma-based Ventures in Paging, L.C. for an approximate
purchase price of $6.1 million, subject to certain adjustments. Georgialina
and Ventures in Paging will add more than 27,000 and 39,000 paging
subscribers, respectively, to ProNet's existing subscriber base. These
transactions, which are pending Federal Communications Commission and other
third party approvals, are expected to close in the third quarter of 1996.
Jackie Kimzey, ProNet Chairman and Chief Executive Officer, stated,
"Both of these acquisitions complement our existing SuperCenter strategy and
distribution methods. Georgialina, which will be integrated into our
Charlotte SuperCenter, will further strengthen our growing presence in the
Southeast by building upon our retail base in secondary markets. Their
distribution strategy is very similar to that of Page One which we acquired
at the first of the year."
Mr. Kimzey further stated, "VIP, which will be rolled into our Houston
SuperCenter, will build upon our presence in Oklahoma that is being added
through our merger with Teletouch. Teletouch currently has two pending
transactions in Oklahoma which will be integrated into VIP's operations.
VIP, which primarily services reseller accounts, will enable us to introduce
our newly created reseller programs in Oklahoma, a new market for ProNet."
The Company also announced that it has notified the seller of Nationwide
Paging, Inc. that it will not pursue the acquisition of the company. The
Company previously announced that the acquisition would have added
approximately 45,000 subscribers to ProNet's existing base.
ProNet, based in Dallas, Texas, provides wireless communications
services through its paging and security operations to over a million
subscribers in five regions of the United States. Upon completion of its
merger with Teletouch Communications and
<PAGE>
its pending acquisitions, the Company will provide service to approximately
1.5 million subscribers.
Certain statements contained in this press release are not based on
historical facts, but are forward-looking statements that are based upon
numerous assumptions about future conditions that could prove not to be
accurate. Actual events, transactions and results may materially differ from
the anticipated transactions or results described in such statements. The
Company's ability to achieve such events or results is subject to certain
risks and uncertainties. Such risks and uncertainties include, but are not
limited to, the existence of, demand for, and acceptance of the Company's
products and services, the availability of appropriate candidates for
acquisition by the Company, regulatory approvals, economic conditions, the
impact of competition and pricing, results of financing efforts and other
factors affecting the Company's business that are beyond the Company's
control, including but not limited to the matters described from time to time
in the Company's SEC reports, including the report on Form 10-K for the year
ended December 31, 1995.
###
<PAGE>
[LETTERHEAD]
FOR IMMEDIATE RELEASE
For More Information Contact:
Jan E. Gaulding, CFO
(214) 687-2000
PRONET ANNOUNCES CONCURRENT PUBLIC EQUITY AND DEBT OFFERINGS
DALLAS, TEXAS, MAY 8, 1996 -- PRONET INC. (NASDAQ - PNET) today announced
that it has filed two Form S-3 Registration Statements with the Securities
and Exchange Commission relating to the proposed public offerings of
4,000,000 shares of its common stock and $100 million principal amount of
senior subordinated notes due 2006. The Company anticipates completing the
offerings by the end of the second quarter of 1996.
The proceeds received by ProNet from the offerings will be used to
refinance debt to be assumed through the previously announced merger with
Teletouch Communications, Inc., fund the previously announced acquisition of
the nationwide license and related system equipment from Motorola, fund other
pending acquisitions, pursue its acquisition program, make capital
expenditures for buildout of regional paging systems and for working capital
and general corporate purposes.
Lehman Brothers will manage both offerings. The common stock offering
will be co-managed by Donaldson, Lufkin & Jenrette Securities Corporation,
Goldman, Sachs & Co. and J.P. Morgan & Co. The notes offering will be
co-managed by Donaldson, Lufkin & Jenrette Securities Corporation, First
Chicago Capital Markets, Inc. and Goldman, Sachs & Co.
The registration statements relating to these offerings have been filed
with the Securities and Exchange Commission, but have not been declared
effective. The offered shares and notes may not be sold nor may offers to
buy be accepted prior to the time the registration statements become
effective. This press release shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these
securities in any state in which such offer, solicitation or sale would be
unlawful prior to the registration or qualification of these securities under
the securities laws of any such state.
ProNet, based in Dallas, Texas, provides wireless communications
services through its paging and security operations to over a million
subscribers in five regions of the United States. Upon completion of its
merger with Teletouch Communications and
<PAGE>
its pending acquisitions, the Company will provide service to approximately
1.5 million subscribers.
Certain statements contained in this press release are not based on
historical facts, but are forward-looking statements that are based upon
numerous assumptions about future conditions that could prove not to be
accurate. Actual events, transactions and results may materially differ from
the anticipated transactions or results described in such statements. The
Company's ability to achieve such events or results is subject to certain
risks and uncertainties. Such risks and uncertainties include, but are not
limited to, the existence of, demand for, and acceptance of the Company's
products and services, the availability of appropriate candidates for
acquisition by the Company, regulatory approvals, economic conditions, the
impact of competition and pricing, results of financing efforts and other
factors affecting the Company's business that are beyond the Company's
control, including but not limited to the matters described from time to time
in the Company's SEC reports, including the Form S-3 Registration Statements
filed May 6 and May 7, 1996.
###
<PAGE>
[LETTERHEAD]
FOR IMMEDIATE RELEASE
For More Information Contact:
Jan E. Gaulding, Sr. VP & CFO
(214) 687-2000
PRONET INC. ANNOUNCES PRICING OF CONCURRENT PUBLIC EQUITY
AND DEBT OFFERINGS
DALLAS, TEXAS, MAY 31, 1996 -- PRONET INC. (NASDAQ - PNET) today announced
the public offering of 4,000,000 shares of its common stock at $25.00 per
share and $120 million in principal amount of its 10 7/8% Senior Subordinated
Notes due 2006.
Lehman Brothers was the lead manager on both offerings. The common stock
offering was co-managed by Donaldson, Lufkin & Jenrette Securities
Corporation, Goldman, Sachs & Co. and J.P. Morgan & Co. The notes offering
was co-managed by Donaldson, Lufkin & Jenrette Securities Corporation,
Goldman, Sachs & Co. and First Chicago Capital Markets, Inc.
Pending completion of the Company's acquisition of Teletouch
Communications, Inc., the proceeds of the Notes will be held in an escrow
account maintained by Bank One, Texas, N.A. The proceeds received by ProNet
from the offerings will be used to refinance debt to be assumed through the
previously announced merger with Teletouch, fund the previously announced
acquisition of the nationwide license and related system equipment from
Motorola Inc. and fund other pending acquisitions.
The Company also announced that it has obtained the consent of the
holders of a majority in principal amount of its 11 7/8% Senior Subordinated
Notes due 2005 to conform certain covenants and events of default in the
11 7/8% Notes to those in ProNet's new notes. Holders of record as of May 15,
1996 who submitted valid and unrevoked consents on or prior to May 28, 1996
will receive the consent fee of $10.00 per $1,000 of principal amount of
notes.
ProNet, based in Dallas, Texas, provides wireless communications
services through its paging and security operations to over a million
subscribers in five regions of the United States. Upon completion of its
merger with Teletouch and its pending acquisitions, the Company will provide
service to approximately 1.5 million subscribers.
###
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
BASIS OF PRESENTATION
The Pro Forma Condensed Consolidated Financial Statements of Operations
assume the acquisition of (a) Metropolitan, Apple, Page One, Total, AGR and
Williams, and the acquisitions of the paging assets of Carrier, Signet
Charlotte, All City, Americom, Gold Coast, Lewis, Paging & Cellular, Sun and
SigNet Raleigh (collectively, the "ProNet Completed Acquisitions"), (b) the
pending acquisitions by the Company of Georgialina and PacWest and the paging
assets of VIP (collectively, the "ProNet Pending Acquisitions"), (c) the
acquisition of Teletouch, (d) the acquisition by Teletouch of Beepers Plus
and the acquisition of the paging assets of Waco and Dial-A-Page
(collectively, the "Teletouch Completed Acquisitions"), and (e) Teletouch's
pending acquisitions of AACS, Premier and LaPageCo and the acquisitions of
the paging assets of Warren, Stay in Touch, Oklahoma and Cimarron
(collectively, the "Teletouch Pending Acquisitions") as if they had occurred
at the beginning of the period presented. The ProNet Completed Acquisitions
and the ProNet Pending Acquisitions are collectively referred to as the
"ProNet Acquisitions." The acquisition of Teletouch, the Teletouch Completed
Acquisitions and the Teletouch Pending Acquisitions are collectively referred
to as the "Teletouch Acquisition." The ProNet Pending Acquisitions, the
acquisition of Teletouch and the Teletouch Pending Acquisitions are
collectively referred to as the "Pending Acquisitions." The ProNet
Acquisitions and the Teletouch Acquisition are collectively referred to as
the "Acquisitions." The Acquisitions do not include the acquisition of the
Nationwide License. The foregoing defined terms are explained in graphic
form below:
<TABLE>
"ACQUISITIONS"
- -------------------------------------------------------------------------------------------
"PRONET ACQUISITIONS" "TELETOUCH ACQUISITION"
- ------------------------------------ -----------------------------------------------------
"PENDING ACQUISITIONS"
------------------------------------------------
"PRONET COMPLETED "PRONET PENDING "TELETOUCH PENDING "TELETOUCH COMPLETED
ACQUISITIONS" ACQUISITIONS" "TELETOUCH" ACQUISITIONS" ACQUISITIONS"
- ------------------- --------------- ----------- ------------------ --------------------
<S> <C> <C> <C> <C>
Signet Charlotte Georgialina Teletouch Premier Beepers Plus
Carrier Pac West LaPageCo Waco
Metropolitan VIP Oklahoma Dial-A-Page
All City Cimarron
Americom Stay in Touch
Gold Coast AACS
Lewis Warren
Paging & Cellular
Apple
Sun
SigNet Raleigh
Page One
AGR
Total
Williams
</TABLE>
The accompanying unaudited pro forma condensed consolidated balance
sheet of the Company at March 31, 1996, combines the historical consolidated
balance sheet of the Company, the ProNet Pending Acquisitions, Teletouch and
the Teletouch Pending Acquisitions as if the Acquisitions and the acquisition
of the Nationwide License had occurred on March 31, 1996 and assumes that the
Acquisitions were funded with the proceeds of the Company's senior
subordinated debt and the Offerings. The accompanying unaudited pro forma
condensed consolidated balance sheet of the Company, excluding Teletouch,
combines the historical consolidated balance sheet of the Company and the
balance sheets of the ProNet Pending Acquisitions as if the acquisitions had
occurred on March 31, 1996. The accompanying unaudited pro forma condensed
consolidated balance sheet of Teletouch combines the historical consolidated
balance sheet of Teletouch and the balance sheets of the Teletouch Pending
Acquisitions as if the acquisitions had occurred on March 31, 1996.
The accompanying unaudited pro forma condensed statement of operations
of the Company for the year ended December 31, 1995 combines the pro forma
consolidated statement of operations of the Company and
<PAGE>
Teletouch as if the Teletouch Acquisition had occurred on January 1, 1995,
and assumes that the Acquisitions were funded with the proceeds of the
Company's senior subordinated debt and the Offerings. The accompanying
unaudited pro forma condensed statement of operations of the Company,
excluding Teletouch, for the year ended December 31, 1995, combines the
historical consolidated statement of operations of the Company and the
statements of operations of the ProNet Acquisitions as if the ProNet
Acquisitions had occurred on January 1, 1995. The accompanying unaudited pro
forma condensed statement of operations of Teletouch for the year ended
December 31, 1995, combines the historical consolidated statement of
operations of Teletouch and the statements of operations of the Teletouch
Pending Acquisitions and the Teletouch Completed Acquisitions as if the
Teletouch Pending Acquisitions and Teletouch Completed Acquisitions had
occurred on January 1, 1995.
The accompanying unaudited pro forma condensed consolidated statement of
operations of the Company for the three months ended March 31, 1996, combines
the pro forma consolidated statement of operations of the Company and the
Teletouch Acquisition as if these acquisitions had occurred on January 1,
1996, and assumes that the acquisitions were funded with the proceeds of the
Offerings and the Company's senior subordinated debt. The accompanying
unaudited pro forma condensed consolidated statement of operations of the
Company, excluding Teletouch, for the three months ended March 31, 1996,
combines the historical statement of operations of the Company and the
statements of operations of AGR, Total, Williams and the ProNet Pending
Acquisitions as if the acquisitions had occurred on January 1, 1996. The
accompanying unaudited pro forma condensed consolidated statement of
operations of Teletouch for the three months ended March 31, 1996, combines
the historical statement of operations of Teletouch and the statements of
operations of the Teletouch Pending Acquisitions as if the acquisitions had
occurred on January 1, 1996.
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
SUMMARY PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1996
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
PRO FORMA CONSOLIDATED
-------------------------
TELETOUCH PRO FORMA PRO FORMA
PRONET (1) (2) ADJUSTMENTS FOOTNOTE CONSOLIDATED
----------- ------------ ------------ ------------------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Current assets.............................. $ 19,040 $ 9,313 $ (6,507) (O),(P),(Q),(R) $ 21,846
Equipment
Pagers.................................... 50,334 6,977 1,462 (R),(T) 58,773
Communications equipment.................. 41,516 16,409 (2,774) (R) 55,151
Security systems' equipment............... 12,304 -- -- 12,304
Office and other.......................... 9,451 4,177 (731) (R) 12,897
----------- ------------ ------------ ------------
113,605 27,563 (2,043) 139,125
Less allowance for depreciation........... 38,614 4,514 (4,514) (R) 38,614
----------- ------------ ------------ ------------
74,991 23,049 2,471 100,511
Goodwill and other assets, net.............. 217,284 88,011 84,263 (O),(R),(S),(T) 389,558
----------- ------------ ------------ ------------
TOTAL ASSETS................................ $ 311,315 $ 120,373 $ 80,227 $ 511,915
----------- ------------ ------------ ------------
----------- ------------ ------------ ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities......................... $ 28,242 $ 5,466 $ (1,660) (P),(Q) $ 32,048
Deferred payments........................... 16,694 -- -- 16,694
Long-term debt, less current maturities..... 199,997 93,148 (68,408) (O),(P),(Q) 224,737
Deferred tax liabilities.................... 688 1,507 (1,507) (R) 688
Shareholders' equity (deficit).............. 65,694 20,252 151,802 (O),(Q),(R) 237,748
----------- ------------ ------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY..................................... $ 311,315 $ 120,373 $ 80,227 $ 511,915
----------- ------------ ------------ ------------
----------- ------------ ------------ ------------
</TABLE>
- ------------------------
(1) See Schedule A for detail.
(2) See Schedule D for detail.
See accompanying notes to unaudited pro forma
condensed consolidated financial statements.
<PAGE>
PRONET INC. AND SUBSIDIARIES
SUMMARY PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA CONSOLIDATED
-------------------------
TELETOUCH PRO FORMA PRO FORMA
PRONET (1) (2) ADJUSTMENTS FOOTNOTE CONSOLIDATED
----------- ------------ ----------- ---------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
REVENUES
Service revenues.............................. $ 95,588 $ 37,886 $ -- $ 133,474
Product sales................................. 18,003 6,475 -- 24,478
----------- ------------ ----------- ------------
Total revenues.............................. 113,591 44,361 -- 157,952
Cost of products sold......................... (18,417) (7,083) -- (25,500)
----------- ------------ ----------- ------------
95,174 37,278 -- 132,452
COST OF SERVICES................................ 22,761 6,188 (98) (U) 28,851
----------- ------------ ----------- ------------
GROSS MARGIN.................................. 72,413 31,090 98 103,601
EXPENSES
Sales, general and administrative............. 43,463 16,575 (1,632) (U) 58,406
Depreciation and amortization................. 33,106 11,886 5,481 (V) 50,473
----------- ------------ ----------- ------------
76,569 28,461 3,849 108,879
----------- ------------ ----------- ------------
OPERATING INCOME (LOSS)..................... (4,156) 2,629 (3,751) (5,278)
OTHER INCOME (EXPENSE)
Interest expense.............................. (10,514) (5,653) (5,593) (W) (21,760)
Interest and other income..................... 1,630 61 -- 1,691
----------- ------------ ----------- ------------
(8,884) (5,592) (5,593) (20,069)
LOSS BEFORE INCOME TAXES.................... (13,040) (2,963) (9,344) (25,347)
Provision (benefit) for income taxes............ 62 (1,370) 1,370 (X) 62
----------- ------------ ----------- ------------
NET LOSS.................................... $ (13,102) $ (1,593) $ (10,714) $ (25,409)
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
</TABLE>
- ------------------------
(1) See Schedule B for detail.
(2) See Schedule E for detail.
See accompanying notes to unaudited pro forma
condensed consolidated financial statements.
<PAGE>
PRONET INC. AND SUBSIDIARIES
SUMMARY PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA
CONSOLIDATED
-------------------------
TELETOUCH PRO FORMA PRO FORMA
PRONET (1) (2) ADJUSTMENTS FOOTNOTE CONSOLIDATED
----------- ------------ ----------- ---------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
REVENUES
Service revenues............................... $ 24,461 $ 10,075 $ -- $ 34,536
Product sales.................................. 3,857 1,520 -- 5,377
----------- ------------ ----------- ------------
Total revenues............................... 28,318 11,595 -- 39,913
Cost of products sold.......................... (3,555) (1,793) 179 (V) (5,169)
----------- ------------ ----------- ------------
24,763 9,802 179 34,744
COST OF SERVICES................................. 6,509 2,002 (25) (U) 8,486
----------- ------------ ----------- ------------
GROSS MARGIN................................. 18,254 7,800 204 26,258
EXPENSES
Sales, general and administrative.............. 11,233 4,233 (408) (U) 15,058
Depreciation and amortization.................. 10,384 2,998 1,286 (V) 14,668
----------- ------------ ----------- ------------
21,617 7,231 878 29,726
----------- ------------ ----------- ------------
OPERATING INCOME (LOSS)...................... (3,363) 569 (674) (3,468)
OTHER INCOME (EXPENSES)
Interest expense............................... (3,830) (1,927) (1,067) (W) (6,824)
Interest and other income...................... 47 (10) -- 37
----------- ------------ ----------- ------------
(3,783) (1,937) (1,067) (6,787)
LOSS BEFORE INCOME TAXES..................... (7,146) (1,368) (1,741) (10,255)
Provision (benefit) for income taxes........... -- (601) 601 (X) --
----------- ------------ ----------- ------------
NET LOSS..................................... $ (7,146) $ (767) $ (2,342) $ (10,255)
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
</TABLE>
- ------------------------
(1) See Schedule C for detail.
(2) See Schedule F for detail.
See accompanying notes to unaudited pro forma
condensed consolidated financial statements.
<PAGE>
SCHEDULE A
PRONET INC. AND SUBSIDIARIES (EXCLUDING TELETOUCH)
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1996
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
HISTORICAL
------------------------------------------------ PRO FORMA PRO FORMA
PRONET PACWEST GEORGIALINA VIP ADJUSTMENTS FOOTNOTE CONSOLIDATED
--------- ----------- ------------- --------- ----------- ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Current assets......................... $ 17,673 $ 316 $ 842 $ 346 $ (137) (B) $ 19,040
Equipment
Pagers............................... 47,485 2,300 1,525 398 (1,374) (B)(D) 50,334
Communications equipment............. 31,689 4,656 456 1,198 3,517 (B)(E) 41,516
Security systems' equipment.......... 12,304 -- -- -- -- 12,304
Office and other..................... 9,024 105 470 119 (267) (B) 9,451
--------- ----------- ------------- --------- ----------- ------------
100,502 7,061 2,451 1,715 1,876 113,605
Less allowance for depreciation...... 38,614 2,693 672 673 (4,038) (B) 38,614
--------- ----------- ------------- --------- ----------- ------------
61,888 4,368 1,779 1,042 5,914 74,991
Goodwill and other assets, net......... 151,269 100 800 21 65,094 (B)(C)(D)(E) 217,284
--------- ----------- ------------- --------- ----------- ------------
TOTAL ASSETS........................... $ 230,830 $ 4,784 $ 3,421 $ 1,409 $ 70,871 $ 311,315
--------- ----------- ------------- --------- ----------- ------------
--------- ----------- ------------- --------- ----------- ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities.................... $ 27,457 $ 1,454 $ 573 $ 85 $ (1,327) (B) $ 28,242
Deferred payments...................... 16,694 -- -- -- -- 16,694
Long-term debt, less current
maturities............................ 130,297 2,843 2,595 177 64,085 (A)(B)(E) 199,997
Deferred tax liabilities............... 688 150 -- -- (150) (B) 688
Shareholders' equity (deficit)......... 55,694 337 253 1,147 8,263 (A)(B) 65,694
--------- ----------- ------------- --------- ----------- ------------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY................................ $ 230,830 $ 4,784 $ 3,421 $ 1,409 $ 70,871 $ 311,315
--------- ----------- ------------- --------- ----------- ------------
--------- ----------- ------------- --------- ----------- ------------
</TABLE>
See accompanying notes to unaudited pro forma
condensed consolidated financial statements.
<PAGE>
SCHEDULE B
PRONET INC. AND SUBSIDIARIES (EXCLUDING TELETOUCH)
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL RESULTS
------------------------------------------- PRO FORMA ADJUSTMENTS
PRONET PRONET -----------------------------------
COMPLETED PENDING PRONET PRONET
ACQUISITIONS ACQUISITIONS COMPLETED PENDING PRO FORMA
PRONET (1) (2) ACQUISITIONS ACQUISITIONS FOOTNOTE CONSOLIDATED
--------- --------------- --------------- ----------- ----------- --------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUES
Service revenues........... $ 56,108 $ 28,448 $ 11,224 $ (192) $ -- (F) $ 95,588
Product sales.............. 10,036 5,293 2,674 -- -- 18,003
--------- --------------- --------------- ----------- ----------- ------------
Total revenues........... 66,144 33,741 13,898 (192) -- 113,591
Cost of products sold...... (9,421) (6,071) (2,925) -- -- (18,417)
--------- --------------- --------------- ----------- ----------- ------------
56,723 27,670 10,973 (192) -- 95,174
COST OF SERVICES............. 14,396 5,743 2,622 -- -- 22,761
--------- --------------- --------------- ----------- ----------- ------------
GROSS MARGIN............. 42,327 21,927 8,351 (192) -- 72,413
EXPENSES
Sales, general and
administrative............ 23,935 15,992 6,582 (2,195) (851) (G) 43,463
Depreciation and
amortization.............. 18,662 3,020 1,388 5,645 4,391 (H) 33,106
--------- --------------- --------------- ----------- ----------- ------------
42,597 19,012 7,970 3,450 3,540 76,569
--------- --------------- --------------- ----------- ----------- ------------
OPERATING INCOME
(LOSS).................. (270) 2,915 381 (3,642) (3,540) (4,156)
OTHER INCOME (EXPENSE)
Interest expense........... (8,640) (1,252) (622) -- -- (10,514)
Interest and other income.. 1,291 339 -- -- -- 1,630
--------- --------------- --------------- ----------- ----------- ------------
(7,349) (913) (622) -- -- (8,884)
INCOME (LOSS) BEFORE
INCOME TAXES............ (7,619) 2,002 (241) (3,642) (3,540) (13,040)
Provision (benefit) for
income taxes.............. 78 193 (209) -- -- 62
--------- --------------- --------------- ----------- ----------- ------------
NET INCOME (LOSS)........ $ (7,697) $ 1,809 $ (32) $ (3,642) $ (3,540) $ (13,102)
--------- --------------- --------------- ----------- ----------- ------------
--------- --------------- --------------- ----------- ----------- ------------
</TABLE>
- ------------------------------
(1) See Schedule H for detail
(2) See Schedule I for detail
See accompanying notes to unaudited pro forma
condensed consolidated financial statements.
<PAGE>
SCHEDULE C
PRONET INC. AND SUBSIDIARIES (EXCLUDING TELETOUCH)
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
ONE MONTH ENDED THREE MONTHS ENDED
JANUARY 31, 1996 MARCH 31, 1996
---------------------- ----------------------------
PRONET AGR TOTAL WILLIAMS SUBTOTAL PACWEST GEORGIALINA VIP SUBTOTAL
------- ---- ----- -------- -------- ------- ----------- ---- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES
Service revenues...................... $21,016 $198 $ 69 $ 87 $21,370 $1,524 $1,058 $509 $3,091
Product sales......................... 3,146 6 36 14 3,202 242 185 228 655
------- ---- ----- -------- -------- ------- ----------- ---- --------
Total revenues...................... 24,162 204 105 101 24,572 1,766 1,243 737 3,746
Cost of products sold................. (2,781) (64) (92) (8) (2,945) (223) (260) (213) (696)
------- ---- ----- -------- -------- ------- ----------- ---- --------
21,381 140 13 93 21,627 1,543 983 524 3,050
COST OF SERVICES........................ 5,787 21 23 13 5,844 274 252 139 665
------- ---- ----- -------- -------- ------- ----------- ---- --------
GROSS MARGIN.......................... 15,594 119 (10) 80 15,783 1,269 731 385 2,385
EXPENSES
Sales, general and administrative..... 9,379 126 46 75 9,626 1,159 523 174 1,856
Depreciation and amortization......... 8,707 16 2 8 8,733 257 102 45 404
------- ---- ----- -------- -------- ------- ----------- ---- --------
18,086 142 48 83 18,359 1,416 625 219 2,260
------- ---- ----- -------- -------- ------- ----------- ---- --------
OPERATING INCOME (LOSS)............... (2,492) (23) (58) (3) (2,576) (147) 106 166 125
OTHER INCOME (EXPENSE)
Interest expense...................... (3,659) (6) (1) (5) (3,671) (97) (54) (8) (159)
Interest and other income............. 27 1 4 3 35 -- 12 -- 12
------- ---- ----- -------- -------- ------- ----------- ---- --------
(3,632) (5) 3 (2) (3,636) (97) (42) (8) (147)
INCOME (LOSS) BEFORE INCOME TAXES... (6,124) (28) (55) (5) (6,212) (244) 64 158 (22)
Provision (benefit) for income
taxes................................ -- -- -- -- -- (99) -- -- (99)
------- ---- ----- -------- -------- ------- ----------- ---- --------
NET INCOME (LOSS)................... $(6,124) $(28) $ (55) $ (5) $(6,212) $ (145) $ 64 $158 $ 77
------- ---- ----- -------- -------- ------- ----------- ---- --------
------- ---- ----- -------- -------- ------- ----------- ---- --------
<CAPTION>
PRO FORMA ADJUSTMENTS
-------------------------------------
PRONET
AGR, TOTAL, PENDING PRO FORMA
WILLIAMS ACQUISITIONS FOOTNOTE CONSOLIDATED
----------- ------------ -------- ------------
<S> <C> <C> <C> <C>
REVENUES
Service revenues...................... -$- $-- $24,461
Product sales......................... -- -- 3,857
----- ------------ ------------
Total revenues...................... -- -- 28,318
Cost of products sold................. 16 70 (H) (3,555)
----- ------------ ------------
16 70 24,763
COST OF SERVICES........................ -- -- 6,509
----- ------------ ------------
GROSS MARGIN.......................... 16 70 18,254
EXPENSES
Sales, general and administrative..... (36) (213) (G) 11,233
Depreciation and amortization......... 80 1,167 (H) 10,384
----- ------------ ------------
44 954 21,617
----- ------------ ------------
OPERATING INCOME (LOSS)............... (28) (884) (3,363)
OTHER INCOME (EXPENSE)
Interest expense...................... -- -- (3,830)
Interest and other income............. -- -- 47
----- ------------ ------------
-- -- (3,783)
INCOME (LOSS) BEFORE INCOME TAXES... (28) (884) (7,146)
Provision (benefit) for income
taxes................................ -- 99 --
----- ------------ ------------
NET INCOME (LOSS)................... $(28) $ (983) $(7,146)
----- ------------ ------------
----- ------------ ------------
</TABLE>
See accompanying notes to unaudited pro forma condensed consolidated financial
statements.
<PAGE>
SCHEDULE D
TELETOUCH COMMUNICATIONS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1996
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
TELETOUCH
FEBRUARY 29, PENDING
1996 ACQUISITIONS PRO FORMA PRO FORMA
TELETOUCH (1) ADJUSTMENTS FOOTNOTE CONSOLIDATED
---------------- --------------- ----------- --------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Current assets......................... $ 8,394 $ 2,086 $ (1,167) (J) $ 9,313
Equipment
Pagers............................... 5,401 2,050 (474) (J) 6,977
Communications equipment............. 14,853 3,286 (1,730) (J) 16,409
Office and other..................... 3,918 470 (211) (J) 4,177
-------- ------- ----------- ------------
24,172 5,806 (2,415) 27,563
Less allowance for depreciation...... 4,514 2,320 (2,320) (J) 4,514
-------- ------- ----------- ------------
19,658 3,486 (95) 23,049
Goodwill and other assets, net......... 57,512 291 30,208 (J)(K) 88,011
-------- ------- ----------- ------------
TOTAL ASSETS........................... $ 85,564 $ 5,863 $ 28,946 $ 120,373
-------- ------- ----------- ------------
-------- ------- ----------- ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities.................... $ 5,313 $ 1,376 $ (1,223) (J) $ 5,466
Long-term debt, less current
maturities............................ 58,492 1,903 32,753 (I)(J) 93,148
Deferred tax liabilities............... 1,507 59 (59) (J) 1,507
Shareholders' equity (deficit)......... 20,252 2,525 (2,525) (J) 20,252
-------- ------- ----------- ------------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY................................ $ 85,564 $ 5,863 $ 28,946 $ 120,373
-------- ------- ----------- ------------
-------- ------- ----------- ------------
</TABLE>
- ------------------------
(1) See Schedule G for detail
See accompanying notes to unaudited pro forma
condensed consolidated financial statements.
<PAGE>
SCHEDULE E
TELETOUCH COMMUNICATIONS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL RESULTS
----------------------------------------------------- PRO FORMA ADJUSTMENTS
12 MONTHS TELETOUCH TELETOUCH ---------------------------------------
ENDED COMPLETED PENDING TELETOUCH TELETOUCH
NOVEMBER 30, 1995 ACQUISITIONS ACQUISITIONS COMPLETED PENDING
TELETOUCH (1) (2) ACQUISITIONS ACQUISITIONS FOOTNOTE
------------------- --------------- --------------- ------------- ------------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Service revenues..... $ 18,233 $ 11,366 $ 8,287 $ -- $ --
Product sales........ 2,693 1,247 2,535 -- --
-------- --------------- --------------- ------ -------------
Total revenues..... 20,926 12,613 10,822 -- --
Cost of products
sold................ (3,854) (866) (2,363) -- --
-------- --------------- --------------- ------ -------------
17,072 11,747 8,459 -- --
COST OF SERVICES....... 3,469 1,775 944 -- --
-------- --------------- --------------- ------ -------------
GROSS MARGIN........ 13,603 9,972 7,515 -- --
EXPENSES
Sales, general and
administrative...... 8,046 5,401 4,524 (864) (532) (L)
Depreciation and
amortization........ 5,542 2,989 564 1,589 1,202 (M)
-------- --------------- --------------- ------ -------------
13,588 8,390 5,088 725 670
-------- --------------- --------------- ------ -------------
OPERATING INCOME
(LOSS)............. 15 1,582 2,427 (725) (670)
OTHER INCOME (EXPENSE)
Interest expense..... (3,999) (1,253) (401) -- --
Interest and other
income.............. -- 7 54 -- --
-------- --------------- --------------- ------ -------------
(3,999) (1,246) (347) -- --
INCOME (LOSS) BEFORE
INCOME TAXES....... (3,984) 336 2,080 (725) (670)
Provision (benefit) for
income taxes.......... (1,062) -- 41 (128) (221) (N)
-------- --------------- --------------- ------ -------------
NET INCOME (LOSS)... $ (2,922) $ 336 $ 2,039 $ (597) $ (449)
-------- --------------- --------------- ------ -------------
-------- --------------- --------------- ------ -------------
<CAPTION>
PRO FORMA
CONSOLIDATED
-------------
<S> <C>
REVENUES
Service revenues..... $ 37,886
Product sales........ 6,475
-------------
Total revenues..... 44,361
Cost of products
sold................ (7,083)
-------------
37,278
COST OF SERVICES....... 6,188
-------------
GROSS MARGIN........ 31,090
EXPENSES
Sales, general and
administrative...... 16,575
Depreciation and
amortization........ 11,886
-------------
28,461
-------------
OPERATING INCOME
(LOSS)............. 2,629
OTHER INCOME (EXPENSE)
Interest expense..... (5,653)
Interest and other
income.............. 61
-------------
(5,592)
INCOME (LOSS) BEFORE
INCOME TAXES....... (2,963)
Provision (benefit) for
income taxes.......... (1,370)
-------------
NET INCOME (LOSS)... $ (1,593)
-------------
-------------
</TABLE>
- ----------------------------------
(1) See Schedule J for detail
(2) See Schedule K for detail
See accompanying notes to unaudited pro forma
condensed consolidated financial statements.
<PAGE>
SCHEDULE F
TELETOUCH COMMUNICATIONS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL RESULTS
---------------------------------
3 MONTHS PRO FORMA ADJUSTMENT
ENDED TELETOUCH --------------------------
FEBRUARY 29, PENDING TELETOUCH
1996 ACQUISITIONS PENDING PRO FORMA
TELETOUCH (1) ACQUISITIONS FOOTNOTE CONSOLIDATED
---------------- --------------- ------------- ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
REVENUES
Service revenues...................... $ 7,790 $ 2,285 $ -- $ 10,075
Product sales......................... 815 705 -- 1,520
------- ------- ------ ------------
Total revenues...................... 8,605 2,990 -- 11,595
Cost of products sold................. (1,214) (579) -- (1,793)
------- ------- ------ ------------
7,391 2,411 -- 9,802
COST OF SERVICES........................ 1,706 296 -- 2,002
------- ------- ------ ------------
GROSS MARGIN........................ 5,685 2,115 -- 7,800
EXPENSES
Sales, general and administrative..... 3,155 1,211 (133) (L) 4,233
Depreciation and amortization......... 2,562 136 300 (M) 2,998
------- ------- ------ ------------
5,717 1,347 167 7,231
------- ------- ------ ------------
OPERATING INCOME (LOSS)............. (32) 768 (167) 569
OTHER INCOME (EXPENSE)
Interest expense...................... (1,844) (83) -- (1,927)
Interest and other income............. -- (10) -- (10)
------- ------- ------ ------------
(1,844) (93) -- (1,937)
INCOME (LOSS) BEFORE INCOME TAXES... (1,876) 675 (167) (1,368)
Provision (benefit) for income
taxes................................ (563) 12 (50) (N) (601)
------- ------- ------ ------------
NET INCOME (LOSS)................... $ (1,313) $ 663 $ (117) $ (767)
------- ------- ------ ------------
------- ------- ------ ------------
</TABLE>
- ------------------------
(1) See Schedule L for detail
See accompanying notes to unaudited pro forma
condensed consolidated financial statements.
<PAGE>
SCHEDULE G
TELETOUCH COMMUNICATIONS, INC. AND SUBSIDIARIES
TELETOUCH PENDING ACQUISITIONS
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1996
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
TELETOUCH
STAY IN PENDING
PREMIER LAPAGECO OKLAHOMA CIMARRON TOUCH AACS WARREN ACQUISITIONS
------- -------- -------- -------- ------- ---- ------ ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Current assets................................... $ 557 $ 96 $184 $ 24 $ 864 $102 $259 $2,086
Equipment
Pagers......................................... 1,584 -- 31 -- 114 -- 321 2,050
Communications equipment....................... 406 389 284 101 1,391 496 219 3,286
Office and other............................... 312 7 11 -- 88 -- 52 470
------- -------- -------- -------- ------- ---- ------ ------------
2,302 396 326 101 1,593 496 592 5,806
Less allowance for depreciation................ 487 219 81 21 786 479 247 2,320
------- -------- -------- -------- ------- ---- ------ ------------
1,815 177 245 80 807 17 345 3,486
Goodwill and other assets, net................... 193 10 9 -- 29 50 -- 291
------- -------- -------- -------- ------- ---- ------ ------------
TOTAL ASSETS..................................... $ 2,565 $283 $438 $104 $ 1,700 $169 $604 $5,863
------- -------- -------- -------- ------- ---- ------ ------------
------- -------- -------- -------- ------- ---- ------ ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities.............................. $ 714 $ 68 $ 1 $ 75 $ 145 $-- $373 $1,376
Long-term debt, less current maturities.......... 1,303 121 -- -- 312 -- 167 1,903
Deferred tax liabilities......................... 59 -- -- -- -- -- -- 59
Shareholders' equity (deficit)................... 489 94 437 29 1,243 169 64 2,525
------- -------- -------- -------- ------- ---- ------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY....... $ 2,565 $283 $438 $104 $ 1,700 $169 $604 $5,863
------- -------- -------- -------- ------- ---- ------ ------------
------- -------- -------- -------- ------- ---- ------ ------------
</TABLE>
See accompanying notes to unaudited pro forma
condensed consolidated financial statements.
<PAGE>
SCHEDULE H
PRONET INC. AND SUBSIDIARIES
PRONET COMPLETED ACQUISITIONS
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
TWO
MONTHS THREE SIX
ENDED MONTHS MONTHS EIGHT MONTHS NINE MONTHS
FEB. 28, ENDED FOUR MONTHS ENDED ENDED ENDED AUGUST ENDED SEPT.
1995 MARCH 31, APRIL 30, 1995 JUNE 30, 31, 1995 30, 1995
--------- 1995 ------------------ 1995 -------------- -----------
SIGNET --------- METRO- -------- GOLD PAGING &
CHARLOTTE CARRIER POLITAN ALL CITY AMERICOM COAST LEWIS CELLULAR
--------- --------- ------- -------- -------- ----- ------ -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES
Service revenues......................... $ 872 $ 532 $ 1,870 $ 1,139 $1,810 $ 427 $ 932 $3,016
Product sales............................ 109 197 50 47 430 -- 780 1,161
--------- --------- ------- -------- -------- ----- ------ -----------
Total revenues......................... 981 729 1,920 1,186 2,240 427 1,712 4,177
Cost of products sold.................... (109) (179) (54) -- (259) -- (490) (887)
--------- --------- ------- -------- -------- ----- ------ -----------
872 550 1,866 1,186 1,981 427 1,222 3,290
COST OF SERVICES........................... 273 59 514 272 371 99 48 1,078
--------- --------- ------- -------- -------- ----- ------ -----------
GROSS MARGIN........................... 599 491 1,352 914 1,610 328 1,174 2,212
EXPENSES
Sales, general and administrative........ 367 286 592 511 782 160 650 1,122
Depreciation and amortization............ 17 54 215 292 209 51 88 492
--------- --------- ------- -------- -------- ----- ------ -----------
384 340 807 803 991 211 738 1,614
--------- --------- ------- -------- -------- ----- ------ -----------
OPERATING INCOME (LOSS)................ 215 151 545 111 619 117 436 598
OTHER INCOME (EXPENSE)
Interest expense......................... (54) (26) -- (528) (4) -- (4) (300)
Interest and other income................ 2 1 20 -- 97 -- 20 13
--------- --------- ------- -------- -------- ----- ------ -----------
(52) (25) 20 (528) 93 -- 16 (287)
INCOME (LOSS) BEFORE INCOME TAXES...... 163 126 565 (417) 712 117 452 311
Provision (benefit) for income taxes..... -- 1 192 -- -- -- -- --
--------- --------- ------- -------- -------- ----- ------ -----------
NET INCOME (LOSS)...................... $ 163 $ 125 $ 373 $ (417) $ 712 $ 117 $ 452 $ 311
--------- --------- ------- -------- -------- ----- ------ -----------
--------- --------- ------- -------- -------- ----- ------ -----------
<CAPTION>
ELEVEN
MONTHS
ENDED
NOV.
30, YEAR ENDED DECEMBER 31, 1995
1995 --------------------------------------------------- PRONET
------- SIGNET PAGE COMPLETED
APPLE SUN RALEIGH ONE AGR TOTAL WILLIAMS ACQUISITIONS
------- ------ ------- ------- ------ ------ -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES
Service revenues......................... $ 4,358 $1,528 $ 2,900 $ 4,864 $2,377 $ 784 $1,039 $28,448
Product sales............................ 846 246 146 722 72 322 165 5,293
------- ------ ------- ------- ------ ------ -------- ------------
Total revenues......................... 5,204 1,774 3,046 5,586 2,449 1,106 1,204 33,741
Cost of products sold.................... (1,153) (286) (123) (1,216) (772) (442) (101) (6,071)
------- ------ ------- ------- ------ ------ -------- ------------
4,051 1,488 2,923 4,370 1,677 664 1,103 27,670
COST OF SERVICES........................... 395 445 700 776 247 313 153 5,743
------- ------ ------- ------- ------ ------ -------- ------------
GROSS MARGIN........................... 3,656 1,043 2,223 3,594 1,430 351 950 21,927
EXPENSES
Sales, general and administrative........ 2,861 1,102 1,479 3,142 1,510 528 900 15,992
Depreciation and amortization............ 96 425 419 360 187 17 98 3,020
------- ------ ------- ------- ------ ------ -------- ------------
2,957 1,527 1,898 3,502 1,697 545 998 19,012
------- ------ ------- ------- ------ ------ -------- ------------
OPERATING INCOME (LOSS)................ 699 (484) 325 92 (267) (194) (48) 2,915
OTHER INCOME (EXPENSE)
Interest expense......................... -- -- (78) (123) (68) (13) (54) (1,252)
Interest and other income................ -- -- 48 1 8 90 39 339
------- ------ ------- ------- ------ ------ -------- ------------
-- -- (30) (122) (60) 77 (15) (913)
INCOME (LOSS) BEFORE INCOME TAXES...... 699 (484) 295 (30) (327) (117) (63) 2,002
Provision (benefit) for income taxes..... -- -- -- -- -- -- -- 193
------- ------ ------- ------- ------ ------ -------- ------------
NET INCOME (LOSS)...................... $ 699 $ (484) $ 295 $ (30) $ (327) $ (117) $ (63) $ 1,809
------- ------ ------- ------- ------ ------ -------- ------------
------- ------ ------- ------- ------ ------ -------- ------------
</TABLE>
See accompanying notes to unaudited pro forma condensed consolidated financial
statements.
<PAGE>
SCHEDULE I
PRONET INC. AND SUBSIDIARIES
PRONET PENDING ACQUISITIONS
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
PRONET
PENDING
PACWEST GEORGIALINA VIP ACQUISITIONS
------------- ----------- --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
REVENUES
Service revenues........................................... $ 5,724 $ 3,865 $ 1,635 $ 11,224
Product sales.............................................. 1,015 789 870 2,674
------------- ----------- --------- -----------
Total revenues........................................... 6,739 4,654 2,505 13,898
Cost of products sold...................................... (874) (1,218) (833) (2,925)
------------- ----------- --------- -----------
5,865 3,436 1,672 10,973
COST OF SERVICES............................................. 1,233 898 491 2,622
------------- ----------- --------- -----------
GROSS MARGIN............................................... 4,632 2,538 1,181 8,351
EXPENSES
Sales, general and administrative.......................... 3,970 1,998 614 6,582
Depreciation and amortization.............................. 856 383 149 1,388
------------- ----------- --------- -----------
4,826 2,381 763 7,970
------------- ----------- --------- -----------
OPERATING INCOME (LOSS).................................. (194) 157 418 381
OTHER INCOME (EXPENSE)
Interest expense........................................... (381) (221) (20) (622)
Interest and other income.................................. -- (1) 1 --
------------- ----------- --------- -----------
(381) (222) (19) (622)
INCOME (LOSS) BEFORE INCOME TAXES........................ (575) (65) 399 (241)
Provision (benefit) for income taxes....................... (209) -- -- (209)
------------- ----------- --------- -----------
NET INCOME (LOSS)........................................ $ (366) $ (65) $ 399 $ (32)
------------- ----------- --------- -----------
------------- ----------- --------- -----------
</TABLE>
See accompanying notes to unaudited pro forma
condensed consolidated financial statements.
<PAGE>
SCHEDULE J
TELETOUCH COMMUNICATIONS, INC. AND SUBSIDIARIES
TELETOUCH COMPLETED ACQUISITIONS
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
ONE MONTH EIGHT MONTHS
ONE MONTH ENDED DEC. 31, ENDED JULY 31,
ENDED DEC. 31, 1994 1995
1994 -------------- -------------- TELETOUCH
--------------- BEEPERS DIAL-A- COMPLETED
WACO PLUS PAGE ACQUISITIONS
--------------- -------------- -------------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
REVENUES
Service revenues.......................................... $127 $ 660 $10,579 $11,366
Product sales............................................. 17 104 1,126 1,247
----- ------ -------------- ------------
Total revenues.......................................... 144 764 11,705 12,613
Cost of products sold..................................... (18) (163) (685) (866)
----- ------ -------------- ------------
126 601 11,020 11,747
COST OF SERVICES............................................ 16 76 1,683 1,775
----- ------ -------------- ------------
GROSS MARGIN............................................ 110 525 9,337 9,972
EXPENSES
Sales, general and administrative......................... 70 227 5,104 5,401
Depreciation and amortization............................. 10 82 2,897 2,989
----- ------ -------------- ------------
80 309 8,001 8,390
----- ------ -------------- ------------
OPERATING INCOME (LOSS)................................. 30 216 1,336 1,582
OTHER INCOME (EXPENSE)
Interest expense.......................................... (1) (38) (1,214) (1,253)
Interest and other income................................. 3 -- 4 7
----- ------ -------------- ------------
2 (38) (1,210) (1,246)
INCOME (LOSS) BEFORE INCOME TAXES....................... 32 178 126 336
Provision (benefit) for income taxes...................... -- -- -- --
----- ------ -------------- ------------
NET INCOME (LOSS)....................................... $ 32 $ 178 $ 126 $ 336
----- ------ -------------- ------------
----- ------ -------------- ------------
</TABLE>
See accompanying notes to unaudited pro forma
condensed consolidated financial statements.
<PAGE>
SCHEDULE K
TELETOUCH COMMUNICATIONS, INC. AND SUBSIDIARIES
TELETOUCH PENDING ACQUISITIONS
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
STAY IN
PREMIER LAPAGECO OKLAHOMA CIMARRON TOUCH AACS
----------- ------------- ----------- ----------- --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Service revenues............................ $ 1,369 $ 542 $ 655 $ 471 $ 3,250 $ 622
Product sales............................... 859 -- 465 52 883 --
----------- ----- ----------- ----------- --------- -----
Total revenues............................ 2,228 542 1,120 523 4,133 622
Cost of products sold....................... (309) -- (462) (298) (1,031) --
----------- ----- ----------- ----------- --------- -----
1,919 542 658 225 3,102 622
COST OF SERVICES.............................. 115 52 112 29 312 87
----------- ----- ----------- ----------- --------- -----
GROSS MARGINS............................. 1,804 490 546 196 2,790 535
EXPENSES
Sales, general and administrative........... 1,405 361 78 141 1,657 195
Depreciation and amortization............... 185 47 -- 20 195 24
----------- ----- ----------- ----------- --------- -----
1,590 408 78 161 1,852 219
----------- ----- ----------- ----------- --------- -----
OPERATING INCOME (LOSS)................... 214 82 468 35 938 316
OTHER INCOME (EXPENSE)
Interest expense............................ (234) (22) -- -- (66) --
Interest and other income................... 4 (5) -- -- 17 30
----------- ----- ----------- ----------- --------- -----
(230) (27) -- -- (49) 30
INCOME (LOSS) BEFORE INCOME
TAXES.................................... (16) 55 468 35 889 346
Provision (benefit) for income taxes........ 22 11 -- 8 -- --
----------- ----- ----------- ----------- --------- -----
NET INCOME (LOSS)......................... $ (38) $ 44 $ 468 $ 27 $ 889 $ 346
----------- ----- ----------- ----------- --------- -----
----------- ----- ----------- ----------- --------- -----
<CAPTION>
TELETOUCH
PENDING
WARREN ACQUISITIONS
----------- -----------
<S> <C> <C>
REVENUES
Service revenues............................ $ 1,378 $ 8,287
Product sales............................... 276 2,535
----------- -----------
Total revenues............................ 1,654 10,822
Cost of products sold....................... (263) (2,363)
----------- -----------
1,391 8,459
COST OF SERVICES.............................. 237 944
----------- -----------
GROSS MARGINS............................. 1,154 7,515
EXPENSES
Sales, general and administrative........... 687 4,524
Depreciation and amortization............... 93 564
----------- -----------
780 5,088
----------- -----------
OPERATING INCOME (LOSS)................... 374 2,427
OTHER INCOME (EXPENSE)
Interest expense............................ (79) (401)
Interest and other income................... 8 54
----------- -----------
(71) (347)
INCOME (LOSS) BEFORE INCOME
TAXES.................................... 303 2,080
Provision (benefit) for income taxes........ -- 41
----------- -----------
NET INCOME (LOSS)......................... $ 303 $ 2,039
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to unaudited pro forma
condensed consolidated financial statements.
<PAGE>
SCHEDULE L
TELETOUCH COMMUNICATIONS, INC. AND SUBSIDIARIES
TELETOUCH PENDING ACQUISITIONS
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
TELETOUCH
STAY IN PENDING
PREMIER LAPAGECO OKLAHOMA CIMARRON TOUCH AACS WARREN ACQUISITIONS
------- -------- -------- -------- ------- ---- ------ ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES
Service revenues.............................. $408 $156 $164 $118 $ 908 $153 $378 $2,285
Product sales................................. 308 -- 116 13 236 -- 32 705
------- -------- -------- -------- ------- ---- ------ ------------
Total revenues.............................. 716 156 280 131 1,144 153 410 2,990
Cost of product sold.......................... (89) -- (116) (75) (238) -- (61) (579)
------- -------- -------- -------- ------- ---- ------ ------------
627 156 164 56 906 153 349 2,411
COST OF SERVICES................................ 45 17 28 7 119 21 59 296
------- -------- -------- -------- ------- ---- ------ ------------
GROSS MARGIN................................ 582 139 136 49 787 132 290 2,115
EXPENSES
Sales, general and administrative............. 393 90 20 35 447 55 171 1,211
Depreciation and amortization................. 41 17 -- 5 45 3 25 136
------- -------- -------- -------- ------- ---- ------ ------------
434 107 20 40 492 58 196 1,347
------- -------- -------- -------- ------- ---- ------ ------------
OPERATING INCOME (LOSS)..................... 148 32 116 9 295 74 94 768
OTHER INCOME (EXPENSE)
Interest expense.............................. (51) (4) -- -- (9) -- (19) (83)
Interest and other income..................... 1 5 -- -- (16) -- -- (10)
------- -------- -------- -------- ------- ---- ------ ------------
(50) 1 -- -- (25) -- (19) (93)
INCOME (LOSS) BEFORE INCOME
TAXES...................................... 98 33 116 9 270 74 75 675
Provision for income taxes.................... -- 10 -- 2 -- -- -- 12
------- -------- -------- -------- ------- ---- ------ ------------
NET INCOME (LOSS)........................... $ 98 $ 23 $116 $ 7 $ 270 $74 $ 75 $ 663
------- -------- -------- -------- ------- ---- ------ ------------
------- -------- -------- -------- ------- ---- ------ ------------
</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, 1995, the Company purchased substantially all of the paging
assets of Signet Charlotte for approximately $9.0 million, comprised of
approximately $4.8 million paid 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 paid in cash at closing and
a deferred payment of approximately $3.0 million. Effective May 1, 1995, the
Company completed the acquisition of all the outstanding capital stock of
Metropolitan for approximately $21.0 million paid in cash at closing. Also
effective May 1, 1995, the Company completed the purchase of substantially
all of the paging assets of All City for approximately $6.4 million,
comprised of approximately $6.0 million paid in cash at closing and a
$350,000 deferred payment. Effective 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 paid 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 paid 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 paid in cash
at closing. Effective October 1, 1995, the Company completed the
acquisition of substantially all of the paging assets of Paging & Cellular
for approximately $9.5 million paid in cash at closing. On December 1, 1995,
the Company completed the acquisition of all of the outstanding capital
stock of Apple for approximately $13.0 million, comprised of approximately
$8.5 million paid in cash and approximately $4.5 million in stock at closing.
Effective December 31, 1995, the Company completed the acquisition of
substantially all of the paging assets of Sun for approximately $2.3 million
paid in cash at closing. Effective January 1, 1996, the Company completed
two acquisitions. The Company acquired substantially all of the paging
assets of SigNet Raleigh for approximately $8.7 million, comprised of
approximately $4.7 million paid in cash at closing and delivery of $3.2
million in common stock of the Company at closing and a $800,000 deferred
payment. Also, the Company completed the purchase of substantially all of the
outstanding capital stock of Page One for approximately $19.7 million,
comprised of approximately $14.8 million paid in cash at closing and a $4.9
million deferred payment. Effective February 1, 1996, the Company completed
three additional acquisitions. The Company acquired all of the outstanding
capital stock of AGR for approximately $6.5 million paid in cash at closing,
Total for approximately $2.2 million, comprised of approximately $400,000
paid in cash and $1.8 million in common stock of the Company at closing, and
Williams for $2.7 million paid in cash at closing. In addition, upon the
final grant of certain licenses, the Company would pay an additional $1.5
million for AGR and $400,000 for Total. These acquisitions were accounted for
as purchases and were financed with the proceeds of the Company's senior
subordinated debt and/or borrowings under the Company's credit facility. The
results of operations for the ProNet Completed Acquisitions 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 March 31,
1996 includes these acquisitions.
In April 1996, the Company signed a letter of intent to purchase all of
the outstanding capital stock of Georgialina for an amount to be determined
based upon the terms of the agreement. Also in April 1996, the Company
signed a definitive agreement to purchase all of the outstanding capital
stock of PacWest and another definitive agreement to acquire all the
outstanding capital stock of Teletouch. In May 1996, the Company signed a
letter of intent to purchase substantially all of the assets of VIP. These
transactions will be accounted for as purchases for an approximate aggregate
cost of $229.5 million. Also in April 1996, the Company entered into an
agreement to purchase the Nationwide License for approximately $43 million.
These transactions are expected to close in 1996 and are subject to various
conditions and approvals. The Company anticipates these acquisitions will be
funded with proceeds from the Offerings.
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.
<PAGE>
PRONET INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
On December 29, 1994, Teletouch acquired substantially all of the
non-cash assets and assumed certain liabilities of Waco for approximately
$2.9 million. Also on December 29, 1994, Teletouch acquired certain assets,
liabilities and stock of Beepers Plus for approximately $17.7 million paid in
cash. On August 3, 1995, Teletouch acquired substantially all of the
non-cash assets and assumed selected liabilities of Dial-A-Page for
approximately $49.8 million. These acquisitions were accounted for as
purchases and were funded with proceeds from debt and equity financings.
In April 1996, Teletouch signed definitive agreements or letters of intent
to purchase substantially all of the paging assets of Warren, Stay in Touch,
Cimarron and Oklahoma, all of the outstanding capital stock of AACS, LaPageCo
and Premier. These transactions are expected to close in 1996 and are subject to
various conditions and approvals. They will be accounted for as purchases for
an approximate aggregate cost of $34.3 million.
The unaudited pro forma condensed financial statements reflect the
transactions as though the Acquisitions had been acquired at the beginning of
the period presented. The Company and the Acquisitions, except for Gold Coast,
Teletouch, Premier and PacWest, operated on a December 31 fiscal year basis.
Gold Coast operated on a June 30 fiscal year basis. Teletouch operates on a May
31 fiscal year basis. Teletouch's results of operations for the six months
ended November 30, 1995, were combined with the results of operations for the
six months ended May 31, 1995, to reflect the year ended November 30, 1995.
Premier operates on a March 31 fiscal year basis. PacWest operates on a
November 30 fiscal year basis. The respective results of operations for Signet
Charlotte, Carrier, Metropolitan, All City, Americom, Gold Coast, Lewis, Paging
& Cellular and Apple from January 1, 1995, to the dates of the respective
acquisitions were combined with the actual results of operations of the Company,
Sun, SigNet Raleigh, Page One, AGR, Total, Williams, Georgialina and VIP for the
year ended December 31, 1995 and the results of operations of PacWest for the
twelve months ended November 30, 1995, to determine the pro forma results of
operations for ProNet for the year ended December 31, 1995. The respective
results of operations for Waco, Beepers Plus and Dial-A-Page from November 30,
1994, to the dates of the respective acquisitions and Premier, LaPageCo,
Oklahoma, Cimarron, Stay in Touch, AACS and Warren for the year ended December
31, 1995, were combined with the actual results of operations of Teletouch for
the twelve months ended November 30, 1995, to determine the pro forma results of
operations for Teletouch for the year ended December 31, 1995. The respective
results of operations of AGR, Total and Williams from the date of acquisition
were combined with the actual results of operations of the Company, Georgialina
and VIP for the three months ended March 31, 1996 and the results of operations
of PacWest for the three months ended February 29, 1996, to determine the pro
forma results of operations for ProNet for the three months ended March 31,
1996. The respective results of operations of Premier, LaPageCo, Oklahoma,
Cimarron, Stay in Touch, AACS and Warren for the three months ended March 31,
1995, were combined with the results of operations of Teletouch for the three
months ended February 29, 1995, to determine the pro forma results of operations
for Teletouch for the three months ended March 31, 1996.
<PAGE>
PRONET INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
PRONET PRO FORMA FINANCIAL STATEMENTS
The accompanying ProNet pro forma condensed consolidated balance sheet
as of March 31, 1996, has been prepared as if the ProNet Pending
Acquisitions had occurred on that date and reflects the following adjustments:
(A) Pro forma adjustments are made to record the borrowings under the
Company's credit facility and the issuance of the Company's common stock.
The following is a detail of these adjustments (in thousands):
DEBIT CREDIT
------- --------
Investments in the ProNet Pending Acquisitions $36,700
Shareholders' equity (deficit) $ 10,000
Long-term debt, less current maturities 26,700
To record the purchases of the ProNet Pending Acquisitions.
(B) Pro forma adjustments are made to reflect the fair value of those
assets acquired and liabilities assumed as a result of the ProNet Pending
Acquisitions. The Company will 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):
Long-term debt $5,615
Allowance for depreciation 4,038
Current liabilities 1,327
Deferred tax liabilities 150
Shareholders' equity (deficit) 1,737
Current assets $ 137
Equipment 4,038
Goodwill and other assets 860
Investments in the ProNet Pending Acquisitions 7,832
To reflect the allocation of the purchase price of the ProNet Pending
Acquisitions and to reflect reductions in certain assets not acquired and
liabilities not assumed by the Company.
(C) Pro forma adjustments are made to goodwill equal to the excess of
the applicable purchase price over the fair values assigned to assets
acquired and liabilities assumed. A pro forma adjustment is made to other
assets to record the noncompetition agreements based on amounts stated in
the respective definitive agreements. The following is a detail of these
adjustments (in thousands):
Goodwill and other assets $ 28,868
Investments in the ProNet Pending Acquisitions $28,868
To record goodwill related to the ProNet Pending Acquisitions.
(D) Pro forma adjustments are made to adjust depreciate pagers
according to the method used by the Company. The following is a detail
of these adjustments (in thousands):
Goodwill and other assets $ 86
Pagers $ 86
To depreciate pagers related to the ProNet Pending Acquisitions.
<PAGE>
PRONET INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(E) A pro forma adjustment is made to record the purchase of the
Nationwide License. The following is a detail of this adjustment (in
thousands):
DEBIT CREDIT
-------- -------
Communications equipment $ 6,000
Goodwill and other assets 37,000
Long-term debt, less current maturities $43,000
To record the purchase of the Nationwide License.
The following is a summary of the fair value assigned to the assets
acquired and liabilities assumed from the ProNet Pending Acquisitions (in
thousands):
HISTORICAL COST
----------------------------
FAIR
PACWEST GEORGIALINA VIP SUBTOTAL ADJUSTMENTS VALUE
------- ----------- ------ -------- ----------- -------
Current assets $ 316 $ 842 $ 346 $ 1,504 $ (137) $ 1,367
Equipment
Pagers 2,300 1,525 398 4,223 (1,288) 2,935
Communications
equipment 4,656 456 1,198 6,310 (2,483) 3,827
Office and
other 105 470 119 694 (267) 427
------ ------ ------ ------- ------- -------
7,061 2,451 1,715 11,227 (4,038) 7,189
Less allowance
for depreciation 2,693 672 673 4,038 (4,038) --
------ ------ ------ ------- ------- -------
4,368 1,779 1,042 7,189 -- 7,189
Goodwill, net -- -- -- -- 28,868 28,868
Other assets, net 100 800 21 921 (860) 61
------ ------ ------ ------- ------- -------
Total assets 4,784 3,421 1,409 9,614 27,871 37,485
Current
liabilities 1,454 573 85 2,112 (1,327) 785
Long-term debt 2,993 2,595 177 5,765 (5,765) --
------ ------ ------ ------- ------- -------
Net assets $ 337 $ 253 $1,147 $ 1,737 $34,963 $36,700
------ ------ ------ ------- ------- -------
------ ------ ------ ------- ------- -------
The accompanying ProNet pro forma condensed consolidated statement of
operations for the year ended December 31, 1995 and for the three months
ended March 31, 1996, have been prepared by combining the historical results
of ProNet and the ProNet Acquisitions for such respective periods and reflect
the following adjustments:
(F) A pro forma adjustment is made to reflect the effect on service
revenues related to the segment of the operations of All City not acquired
by the Company.
(G) The pro forma adjustment to sales, general and administrative
expenses represents expenses that either would not have been incurred had
the ProNet Acquisitions occurred at the beginning of the periods presented.
For Signet Charlotte, Carrier, All City, Metropolitan, Lewis, Paging &
Cellular, Apple, Sun, SigNet Raleigh, Page One, AGR, Total, Williams,
PacWest, Georgialina and VIP cost savings relate to decreased salaries
(primarily due to reductions in senior management), office rent,
professional fees, telephone costs and bad debts.
(H) Pro forma adjustments are made to the statements of operations to
reflect additional depreciation and amortization expenses based on the fair
value of the assets acquired as if the ProNet 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. Goodwill is amortized using the straight-line method over a 15-
year term.
<PAGE>
PRONET INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
TELETOUCH PRO FORMA FINANCIAL STATEMENTS
The accompanying Teletouch pro forma condensed consolidated balance
sheet as of March 31, 1996, has been prepared as if the Teletouch Pending
Acquisitions had occurred on that date and reflects the following adjustments:
(I) Pro forma adjustments are made to record borrowings assuming
Teletouch obtains a new credit facility to fund the Teletouch Pending
Acquisitions. The following is a detail of these adjustments (in
thousands):
DEBIT CREDIT
------- -------
Investments in the Teletouch Pending Acquisitions $34,281
Long-term debt, less current maturities $34,281
To record the purchases of the Teletouch Pending Acquisitions.
(J) Pro forma adjustments are made to reflect the fair value of those
assets acquired and liabilities assumed as a result of Teletouch Pending
Acquisitions. Teletouch will 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):
Goodwill and other assets $ 165
Long-term debt, less current maturities 1,528
Allowance for depreciation 2,320
Current liabilities 1,223
Deferred tax liabilities 59
Shareholders' equity (deficit) 2,525
Current assets $ 1,167
Equipment 2,415
Investments in the Teletouch Pending Acquisitions 4,238
To reflect the allocation of the purchase price of the Teletouch Pending
Acquisitions and to reflect reductions in certain assets not acquired and
liabilities not assumed by the Teletouch.
(K) Pro forma adjustments are made to goodwill equal to the excess of
the applicable purchase price over the fair values assigned to assets
acquired and liabilities assumed. The following is a detail of these
adjustments (in thousands):
Goodwill and other assets $30,043
Investments in the Teletouch Pending Acquisitions $30,043
To record goodwill related to the Teletouch Pending Acquisitions.
<PAGE>
PRONET INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The following is a summary of the fair value assigned to the assets and
liabilities acquired from the Teletouch Pending Acquisitions (in thousands):
<TABLE>
HISTORICAL COST
-----------------------------------------------------------
STAY IN FAIR
PREMIER LAPAGECO OKLAHOMA CIMARRON TOUCH AACS WARREN SUBTOTAL ADJUSTMENTS VALUE
------- -------- -------- -------- ------- ---- ------ -------- ----------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Current assets $ 557 $ 96 $184 $ 24 $ 864 $102 $259 $2,086 $(1,167) $ 919
Equipment
Pagers 1,584 -- 31 -- 114 -- 321 2,050 (474) 1,575
Communications
equipment 406 389 284 101 1,391 496 219 3,286 (1,730) 1,556
Office and
other 312 7 11 -- 88 -- 52 470 (211) 259
------ ---- ---- ---- ------ ---- ---- ------ ------- -------
2,302 396 326 101 1,593 496 592 5,806 (2,415) 3,391
Less allowance
for depreciation 487 219 81 21 786 479 247 2,320 (2,320) --
------ ---- ---- ---- ------ ---- ---- ------ ------- -------
1,815 177 24 80 807 17 345 3,486 (95) 3,391
Goodwill, net -- -- -- -- -- -- -- -- 30,043 30,043
Other assets, net 193 10 9 -- 29 50 -- 291 (210) 81
------ ---- ---- ---- ------ ---- ---- ------ ------- -------
Total assets 2,565 283 438 104 1,700 169 604 5,863 28,571 34,434
Current
liabilities 714 68 1 75 145 -- 373 1,376 (1,223) 153
Long-term debt 1,362 121 -- -- 312 -- 167 1,962 (1,962) --
------ ---- ---- ---- ------ ---- ---- ------ ------- -------
Net assets $ 489 $ 94 $437 $ 29 $1,243 $169 $ 64 $2,525 $31,751 $34,281
------ ---- ---- ---- ------ ---- ---- ------ ------- -------
------ ---- ---- ---- ------ ---- ---- ------ ------- -------
</TABLE>
The accompanying Teletouch pro forma condensed consolidated statement of
operations for the year ended December 31, 1995 and for the three months
ended March 31, 1996, have been prepared by combining the historical results
of the Teletouch and the Teletouch Acquisitions for such respective periods
and reflect the following adjustments:
(L) The pro forma adjustment to sales, general and administrative
expenses represents expenses that would not have been incurred had the
Teletouch Pending Acquisitions and the Teletouch Completed Acquisitions
occurred at the beginning of the periods presented. For Dial-A-Page,
Premier, LaPageCo, Cimarron, Stay in Touch and Warren, cost savings relate
to decreased salaries (primarily due to reductions in senior management),
office rent and professional fees.
(M) Pro forma adjustments are made to the statements of operations to
reflect additional depreciation and amortization expenses based on the fair
value of the assets acquired as if the Teletouch Pending Acquisitions and
the Teletouch Completed 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.
Goodwill is amortized using the straight-line method over a 15-year term.
(N) The pro forma adjustments reflect the estimated tax impact of the
pro forma adjustments reflected in the Teletouch Completed Acquisitions and
Teletouch Pending Acquisitions. Dial-A-Page, Waco and Beepers Plus were
historically nontaxable entities.
<PAGE>
PRONET INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS
The accompanying consolidated pro forma condensed consolidated balance
sheet as of March 31, 1996, has been prepared as if the Teletouch
Acquisition had occurred on that date and reflects the following adjustments:
(O) Pro forma adjustments are made to record the (i) proceeds from
the Offerings and associated issuance expenses and (ii) write-off of the
previous bank debt financing costs. The following is a detail of these
adjustments (in thousands):
DEBIT CREDIT
-------- --------
Current assets $207,700
Goodwill and other assets 7,100
Shareholders' equity (deficit) 2,282
Goodwill and other assets $ 2,282
Long-term debt, less current maturities 120,000
Shareholders' equity (deficit) 94,800
To record the proceeds from the Offerings and associated issuance expenses.
(P) Pro forma adjustments are made to record payments on the
Company's credit facility. The following is a detail of these adjustments
(in thousands):
Current liabilities $ 1,040
Long-term debt, less current maturities 95,260
Current assets $ 96,300
To record the payments on the Company's credit facility.
(Q) Pro forma adjustments are made to (i) record the use of cash, (ii)
record the payment of Teletouch's debt and (iii) the issuance of stock in
connection with the Teletouch Acquisition. The following is a detail of
these adjustments (in thousands):
Shareholders' equity (deficit) $ 17,447
Investment in the Teletouch Acquisition 83,422
Current liabilities 620
Long-term debt, less current maturities 93,148
Current assets $115,101
Shareholders' equity (deficit) 79,536
To record the Teletouch Acquisition.
(R) Pro forma adjustments are made to reflect the fair value of those
assets acquired and liabilities assumed as a result of the Teletouch
Acquisition. The following is a detail of these adjustments (in
thousands):
Investment in the Teletouch Acquisition $ 83,774
Allowance for depreciation 4,514
Deferred tax liabilities 1,507
Shareholders' equity (deficit) 2,805
Current assets $ 2,806
Equipment 1,864
Goodwill and other assets 87,930
<PAGE>
PRONET INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
To reflect the allocation of the purchase price of the Teletouch
Acquisition.
(S) Pro forma adjustments are made to goodwill equal to the excess of
the applicable purchase price over the fair values assigned to assets
acquired and liabilities assumed. The following is a detail of these
adjustments (in thousands):
DEBIT CREDIT
-------- --------
Goodwill and other assets $167,196
Investments in the Teletouch Acquisition $167,196
To record goodwill related to the Teletouch Acquisition.
(T) Pro forma adjustments are made to depreciate pagers according to
the method used by the Company. The following is a detail of these
adjustments (in thousands):
Goodwill and other assets $179
Pagers $179
To depreciate pagers related to the Teletouch Acquisition.
The following is a summary of the fair value assigned to the assets
acquired and liabilities assumed from the Teletouch Acquisition (in
thousands):
TELETOUCH ADJUSTMENTS FAIR VALUE
--------- ----------- ----------
Current assets $ 9,313 $(2,806) $ 6,507
Equipment
Pagers 6,977 1,462 8,439
Communications equipment 16,409 (2,774) 13,635
Office and other 4,177 (731) 3,446
-------- -------- --------
27,563 (2,043) 25,520
Less allowance for depreciation 4,514 (4,514) --
-------- -------- --------
23,049 2,471 25,520
Goodwill and other assets, net 88,011 79,445 167,456
-------- -------- --------
Total assets 120,373 79,110 199,483
Current liabilities 5,466 (620) 4,846
Long-term debt 94,655 (94,655) --
-------- -------- --------
Net assets $ 20,252 $174,385 $194,637
-------- -------- --------
-------- -------- --------
The accompanying pro forma condensed consolidated statement of
operations for the year ended December 31, 1995 and for the three months
ended March 31, 1996, have been prepared by combining the pro forma results
of ProNet and Teletouch for such respective periods and reflect the following
adjustments:
(U) The pro forma adjustment to sales, general and administrative
expenses represents expenses that would not have been incurred had the
Teletouch Acquisition occurred at the beginning of the periods presented.
The cost savings relate to decreased salaries (primarily due to reductions
in senior management), office rent and professional fees.
(V) Pro forma adjustments are made to the statements of operations to
reflect additional depreciation and amortization expenses based on the fair
value of the assets acquired as if the Teletouch Acquisition 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. Goodwill is amortized using the straight-line method
over a 15-year term.
<PAGE>
PRONET INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(W) Interest expense is comprised of interest on the revolving line
of credit, senior subordinated debt, the New Notes and the deferred
payments, plus the commitment fee on the revolving line of credit. Pro
forma adjustments reflect (i) the reversals of interest expense of $2.1
million for the three months ended March 31, 1996 and $7.5 million for the
year ended December 31, 1995 on debt of the Acquisitions not assumed by the
Company and (ii) increase in interest expense due to the sale of the New
Notes at and assumed annual rate of 10.875% and amortization of related
debt issuance costs. Interest expense on the deferred payments is
provided as required by the definitive agreements or letters of intent.
(X) At December 31, 1995, the Company had net operating loss
carryforwards of $11.0 million for income tax purposes that expire in years
2005 through 2011. No tax benefits were recorded because the realization
of net operating losses is not assured beyond a reasonable doubt.
Therefore, a pro forma adjustment was made to eliminate any tax benefits
associated with the Acquisitions.
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.
