<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 7, 1999
RURAL CELLULAR CORPORATION
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(Exact name of Registrant as Specified in its Charter)
MINNESOTA
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(State or Other Jurisdiction of Incorporation)
0-27416 41-1693295
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(Commission File Number) (IRS Employer Identification No.)
3905 DAKOTA STREET S.W., ALEXANDRIA, MINNESOTA 56308
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (320) 762-2000
-----------------------
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Former Name or Former Address, if Changed Since Last Report
<PAGE>
Item 2. Acquisition or Disposition of Assets.
Rural Cellular Corporation ("RCC"), effective June 7, 1999, converted $12.5
million of inter-company debt with Wireless Alliance, LLC ("Wireless Alliance")
into equity. This conversion increases Rural Cellular Corporation's capital
contribution to Wireless Alliance from $9.9 million to $22.4 million, thereby
increasing its ownership in Wireless Alliance from 51% to 70%.
Wireless Alliance is a joint venture formed in 1996 by Rural Cellular
Corporation and an affiliate of Aerial Communications, Inc. It primarily
markets PCS digital wireless services under the UNICEL-Registered Trademark-
trade name in Fargo and Grand Forks, North Dakota; Moorhead and Duluth,
Minnesota; Virginia and Hibbing, Minnesota; Sioux Falls, South Dakota, and
Superior, Wisconsin.
The $12.5 million inter-company debt, which was funded through RCC's internally
generated cash flows, reflected advances made by RCC to Wireless Alliance during
1997 and 1998 for the purpose of completing the construction of the PCS digital
wireless network.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements
Pursuant to 210.3-05 of Regulation S-X, Financial Statements
need not be presented once operating results of the acquired
business have been reflected in the audited consolidated
financial statements of the registrant for a complete fiscal
year.
Wireless Alliance's operating results were fully incorporated
into RCC's audited consolidated financial statements for fiscal
1998.
(b) Pro Forma Financial Information
<TABLE>
<S> <C>
Unaudited Pro Forma Condensed Consolidated Statement of
Operations for the year ended December 31, 1998 PF-1
Unaudited Pro Forma Condensed Consolidated Statement of
Operations for the three months ended March 31, 1999 PF-2
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of
March 31, 1999 PF-3
Notes to Unaudited Pro Forma Consolidated Financial Statements PF-4
</TABLE>
(c) Exhibits
99.1 Press release dated June 10, 1999
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
RURAL CELLULAR CORPORATION
/s/ Richard P. Ekstrand
-------------------------------------
RICHARD P. EKSTRAND
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Date: June 18, 1999
<PAGE>
RURAL CELLULAR CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
COMPANY PRO FORMA PRO FORMA AS
HISTORICAL ADJUSTMENTS ADJUSTED
---------- ----------- ------------
<S> <C> <C> <C>
REVENUES:
Service ............................................ $75,633 - $75,633
Roamer ............................................. 20,199 - 20,199
Equipment .......................................... 2,700 - 2,700
-------- -------- --------
Total revenues.................................... 98,532 - 98,532
-------- -------- --------
OPERATING EXPENSES:
Network costs....................................... 18,877 - 18,877
Cost of equipment sales............................. 5,968 - 5,968
Selling, general and administrative................. 39,156 - 39,156
Depreciation and amortization....................... 26,532 - 26,532
-------- -------- --------
Total operating expenses.......................... 90,533 - 90,533
-------- -------- --------
OPERATING INCOME ...................................... 7,999 - 7,999
-------- -------- --------
OTHER INCOME (EXPENSE):
Interest expense.................................... (19,060) - (19,060)
Interest and dividend income........................ 1,461 - 1,461
Equity in earnings (losses) of
unconsolidated affiliates......................... (535) - (535)
Minority interest.................................. 4,553 (2,083) (a) 2,470
-------- -------- --------
Other income (expense), net....................... (13,581) (2,083) (a) (15,664)
-------- -------- --------
LOSS BEFORE INCOME TAX AND EXTRAORDINARY ITEM.......... (5,582) (2,083) (a) (7,665)
-------- -------- --------
INCOME TAX PROVISION................................... - - -
-------- -------- --------
NET LOSS BEFORE EXTRAORDINARY ITEM..................... (5,582) (2,083) (a) (7,665)
EXTRAORDINARY ITEM - EARLY EXTINGUISHMENT OF
DEBT.............................................. (1,042) - (1,042)
-------- -------- --------
NET LOSS............................................... (6,624) (2,083) (a) (8,707)
PREFERRED STOCK DIVIDEND............................... (9,090) - (9,090)
-------- -------- --------
NET LOSS APPLICABLE TO COMMON SHARES................... $(15,714) (2,083) (a) $(17,797)
-------- -------- --------
-------- -------- --------
NET LOSS PER BASIC AND DILUTED COMMON SHARE........... $(1.76) $(2.00)
-------- -------- --------
-------- -------- --------
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING,
BASIC AND DILUTED................................. 8,916 8,916
-------- -------- --------
-------- -------- --------
</TABLE>
The accompanying note is an integral part of this statement.
PF-1
<PAGE>
RURAL CELLULAR CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE QUARTER ENDED MARCH 31, 1999
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
COMPANY PRO FORMA PRO FORMA AS
HISTORICAL ADJUSTMENTS ADJUSTED
---------- ----------- -------------
<S> <C> <C> <C>
REVENUES:
Service ............................................ $23,642 - $23,642
Roamer ............................................. 7,251 - 7,251
Equipment .......................................... 1,272 - 1,272
------- ------- -------
Total revenues.................................... 32,165 - 32,165
------- ------- -------
OPERATING EXPENSES:
Network costs....................................... 4,844 - 4,844
Cost of equipment sales............................. 2,122 - 2,122
Selling, general and administrative................. 11,753 - 11,753
Depreciation and amortization....................... 9,726 - 9,726
------- ------- -------
Total operating expenses.......................... 28,445 - 28,445
------- ------- -------
OPERATING INCOME ...................................... 3,720 - 3,720
------- ------- -------
OTHER INCOME (EXPENSE):
Interest expense.................................... (6,718) - (6,718)
Interest and dividend income........................ 146 - 146
Equity in earnings (losses) of unconsolidated
affiliates........................................ (1) - (1)
Minority interest.................................. 1,332 (605) (a) 727
------- ------- -------
Other income (expense), net....................... (5,241) (605) (a) (5,846)
------- ------- -------
LOSS BEFORE INCOME TAX AND EXTRAORDINARY ITEM.......... (1,521) (605) (a) (2,126)
INCOME TAX PROVISION................................... 34 34
------- ------- -------
NET LOSS BEFORE EXTRAORDINARY ITEM..................... (1,555) (605) (a) (2,160)
------- ------- -------
EXTRAORDINARY ITEM - EARLY EXTINGUISHMENT OF DEBT...... - -
------- ------- -------
NET LOSS............................................... (1,555) (605) (a) (2,160)
PREFERRED STOCK DIVIDEND............................... (3,813) - (3,813)
------- ------- -------
NET LOSS APPLICABLE TO COMMON SHARES................... $(5,368) $(605) (a) $(5,973)
------- ------- -------
------- ------- -------
NET LOSS PER BASIC AND DILUTED COMMON SHARE........... $ (0.60) $(.67)
------- -------
------- -------
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING,
BASIC AND DILUTED................................. 9,006 9,006
------- -------
------- -------
</TABLE>
The accompanying note is an integral part of this statement.
PF-2
<PAGE>
RURAL CELLULAR CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS
COMPANY PRO FORMA PROFORMA AS
HISTORICAL ADJUSTMENTS ADJUSTED
------------ ----------- ------------
<S> <C> <C> <C>
CURRENT ASSETS:
Cash........................................................... $ 3,291 - $ 3,291
Accounts receivable, less allowance of $818.................... 13,257 - 13,257
Inventories.................................................... 1,664 - 1,664
Other current assets........................................... 818 - 818
---------- ----------
Total current assets......................................... 19,030 - 19,030
---------- ----------
PROPERTY AND EQUIPMENT, less accumulated depreciation of $48,720 . 132,518 - 132,518
---------- ----------
LICENSES AND OTHER ASSETS:
Licenses and other intangible assets, less accumulated
amortization of $10,960..................................... 317,837 - 317,837
Deferred debt issuance costs, less accumulated amortization of
$831 ........................................................ 11,547 - 11,547
Other assets................................................... 8,045 - 8,045
---------- ----------
Total licenses and other assets.............................. 337,429 - 337,429
---------- ----------
$488,977 - $488,977
---------- ----------
---------- ----------
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
COMPANY PRO FORMA PROFORMA AS
HISTORICAL ADJUSTMENTS ADJUSTED
---------- ----------- -----------
<S> <C> <C> <C>
CURRENT LIABILITIES:
Accounts payable............................................... $ 8,943 - $ 8,943
Advance billings and customer deposits......................... 3,320 - 3,320
Accrued interest............................................... 6,482 - 6,482
Dividends payable.............................................. 1,933 - 1,933
Other accrued expenses......................................... 3,932 - 3,932
--------- ---------
Total current liabilities.................................... 24,610 - 24,610
LONG-TERM DEBT.................................................... 313,828 - 313,828
--------- ---------
Total liabilities............................................ 338,438 - 338,438
MINORITY INTEREST................................................. 330 605 (a) 935
EXCHANGEABLE PREFERRED STOCK...................................... 135,942 - 135,942
SHAREHOLDERS' EQUITY:
Class A common stock; $.01 par value; 15,000 shares 78 - 78
authorized; 7,822 shares issued and outstanding.............
Class B common stock; $.01 par value; 5,000 shares authorized; 12 - 12
1,199 shares issued and outstanding.........................
Additional paid-in capital..................................... 36,063 - 36,063
Accumulated deficit............................................ (21,886) (605) (a) (22,491)
--------- ---------
Total shareholders' equity................................... 14,267 (605) (a) 13,662
--------- ---------
$488,977 - $488,977
--------- ---------
--------- ---------
</TABLE>
The accompanying note is an integral part of this balance sheet.
PF-3
<PAGE>
RURAL CELLULAR CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS)
For purposes of determining the pro forma effect of the transactions described
in the previous pages on the Company's unaudited pro forma condensed
consolidated financial data for the three months ended March 31, 1999 and for
the year ended December 31, 1998 the following adjustment has been made:
(a) Represents the decrease of the minority partner's absorption of
Wireless Alliance losses resulting from RCC increasing its ownership in
the Wireless Alliance from 51% to 70%.
PF-4
<PAGE>
EXHIBIT 99.1
PRESS RELEASE
RURAL CELLULAR CORPORATION CONVERTS INTER-COMPANY DEBT WITH
WIRELESS ALLIANCE INTO EQUITY
JUNE 10, 1999--ALEXANDRIA, MN--Rural Cellular Corporation (Nasdaq/NMS: RCCC)
announced that, effective June 7, 1999, it converted $12.5 million of
inter-company debt with Wireless Alliance, LLC ("Wireless Alliance") into
equity. This conversion increases Rural Cellular Corporation's ownership in
Wireless Alliance from 51% to 70%.
Wireless Alliance is a joint venture formed in 1996 by Rural Cellular
Corporation ("RCC") and an affiliate of Aerial Communications, Inc. It
primarily markets PCS digital wireless services under the UNICEL-Registered
Trademark- trade name in Fargo and Grand Forks, North Dakota; Moorhead and
Duluth, Minnesota; Virginia and Hibbing, Minnesota; Sioux Falls, South
Dakota, and Superior, Wisconsin.
"Since entering into this agreement in 1996, we have been extremely pleased to
partner with RCC, a respected and innovative company," said Don Warkentin,
President and Chief Executive Officer for Aerial. "Wireless Alliance has been
tremendously successful and will continue to be so under this new arrangement."
Richard Ekstrand, RCC's president and chief executive officer, said: "We believe
our increased ownership in Wireless Alliance represents a vote of confidence to
its successes made to date and is a strategic step towards our long term
wireless strategy."
# # #
FINANCIAL CONTACT: MEDIA:
Wesley E. Schultz (CFO) Chris Boraas (Manager, Investor Relations)
320/762-2000 320/808-2451
World Wide Web address: http://www.rccwireless.com
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