================================================================================
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): August 3, 1998
MOBILEMEDIA COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
Delaware 33-68840 22-3379712
(State or other (Commission File No.) (IRS Employer
jurisdication Identification No.)
of incorporation)
Fort Lee Executive Park, One Executive Drive, Suite 500,
Fort Lee, New Jersey 07024
(Address of principal executive offices)
(Zip Code)
(201) 224-9200
(Registrant's telephone number, including area code)
-------------------------
(Former name or former address, if changed since last report)
================================================================================
<PAGE>
INFORMATION TO BE INCLUDED IN THE REPORT
Item 1. Changes in Control of Registrant.
Not Applicable.
Item 2. Acquisition or Disposition of Assets.
Not Applicable.
Item 3. Bankruptcy or Receivership.
Not Applicable.
Item 4. Changes in Registrant's Certifying Accountant.
Not Applicable.
Item 5. Other Events.
On August 3, 1998, MobileMedia Corporation (the "Company"), MobileMedia
Communications, Inc. ("MobileMedia Communications") and all of the subsidiaries
of MobileMedia Communications (collectively, the "Companies") filed with the
United States Bankruptcy Court for the District of Delaware (the "Bankruptcy
Court") their monthly operating report for the month ended June 30, 1998 which
is attached hereto as Exhibit 99.1.
Item 6. Resignations of Registrant's Directors.
Not Applicable.
Item 7. Financial Statements and Exhibits.
Not Applicable.
Item 8. Change in Fiscal Year.
Not Applicable.
2
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
Date: August 3, 1998 MOBILEMEDIA COMMUNICATIONS, INC.
By: /s/ David R. Gibson
----------------------------
David R. Gibson
Senior Vice President and
Chief Financial Officer
3
<PAGE>
EXHIBIT INDEX
Exhibit No. Page
- - ----------- ----
99.1 Monthly Operating Report
4
OFFICE OF THE U.S. TRUSTEE - REGION 3
MONTHLY OPERATING REPORT
For the month ended June 30, 1998
Debtor Name: MobileMedia Corporation et al.
Case Number: 97-174 (PJW)
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Document Previously Explanation
Required Attachments: Attached Submitted Attached
<S> <C> <C> <C>
1. Tax Receipts ( ) (X) (X)
2. Bank Statements ( ) ( ) (X)
3. Most recently filed Income Tax Return ( ) (X) ( )
4. Most recent Annual Financial Statements ( ) (X) ( )
prepared by accountant
</TABLE>
IN ACCORDANCE WITH TITLE 28, SECTION 1746, OF THE UNITED STATES CODE, I DECLARE
UNDER PENALTY OF PERJURY THAT I HAVE EXAMINED THE FOLLOWING MONTHLY OPERATING
REPORT AND THE ACCOMPANYING ATTACHMENTS AND, TO THE BEST OF MY KNOWLEDGE, THESE
DOCUMENTS ARE TRUE, CORRECT AND COMPLETE.
RESPONSIBLE PARTY:
Vice President-Controller
- - --------------------------------------- ----------------------------------
SIGNATURE OF RESPONSIBLE PARTY TITLE
Vito Panzella July 31, 1998
- - --------------------------------------- ----------------------------------
PRINTED NAME OF RESPONSIBLE PARTY DATE
Page 1 of 18
<PAGE>
OFFICE OF THE U.S. TRUSTEE - REGION 3
ATTACHMENT
For the month ended June 30, 1998
Debtor Name: MobileMedia Corporation et al.
Case Number: 97-174 (PJW)
- - --------------------------------------------------------------------------------
1. Payroll tax filings and payments are made by Automated Data Processing,
Inc. (an outside payroll processing company). Evidence of tax payments are
available upon request. Previously, the Debtors filed copies of such
evidence for the third quarter of 1996 with the US Trustee.
Please see the Status of Post Petition Taxes attached hereto for the
month's activity.
2. The Debtors have 50 bank accounts. In order to minimize costs to the
estate, the Debtors have included a GAAP basis Statement of Cash Flows in
the Monthly Operating Report. The Statement of Cash Flows replaces the
listing of cash receipts and disbursements, copies of the bank statements,
and bank account reconciliations.
Page 2 of 18
<PAGE>
OFFICE OF THE U.S. TRUSTEE - REGION 3
CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
For the month ended June 30, 1998
Debtor Name: MobileMedia Corporation et al.
Case Number: 97-174 (PJW)
- - --------------------------------------------------------------------------------
See Statement of Operations for reporting period attached.
Page 3 of 18
<PAGE>
HEADNOTES:
These financial statements have not been prepared in accordance with GAAP
because Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-lived Assets and for Long-lived Assets, to be Disposed of"
("SFAS 121") has not been applied. Upon the application of SFAS 121, the Company
expects to be required to write down the carrying value of its long-lived assets
to their fair value. The Company believes the amount of the write-down will be
material; however, it is not possible at this time to determine such amount.
There could also be additional year end audit adjustments and adjustments to
certain other accounts as a result of the Debtors' filing for protection under
Chapter 11 of the US Bankruptcy Code on January 30, 1997.
MobileMedia Corporation and Subsidiaries
Consolidated Statements of Operations
For the Months Ended June 30, 1998, May 31, 1998 and April 30, 1998
( Unaudited )
( in thousands )
<TABLE>
<CAPTION>
June May April
1998 1998 1998
-------- -------- --------
<S> <C> <C> <C>
Paging Revenues
Service, Rents & Maintenance $ 34,557 $ 35,758 $ 36,251
Equipment Sales
Product Sales 2,142 2,208 2,823
Cost of Products Sold 1,604 1,470 2,186
-------- -------- --------
Equipment Margin 537 738 637
Net Revenue 35,094 36,496 36,888
Operating Expense
Service, Rents & Maintenance 9,161 8,308 9,660
Selling 4,788 5,378 5,591
General & Administrative 10,620 10,936 12,292
-------- -------- --------
Operating Expense Before Depr. & Amort 24,569 24,622 27,543
EBITDA Before Reorganization Costs 10,525 11,873 9,345
Reorganization Costs 1,495 1,456 1,493
Restructuring Costs 248 0 0
-------- -------- --------
EBITDA after Reorganization Costs 8,782 10,417 7,852
Depreciation 6,822 7,462 7,329
Amortization 8,237 8,240 8,244
-------- -------- --------
Total Depreciation and Amortization 15,058 15,702 15,573
Operating Loss (6,277) (5,285) (7,720)
Interest Expense 4,868 4,868 4,751
Other (Income)Expense 109 (11) (49)
Taxes 0 0 0
-------- -------- --------
Net Loss ($11,253) ($10,141) ($12,422)
======== ======== ========
</TABLE>
See Accompanying Notes.
Page 4 of 18
<PAGE>
OFFICE OF THE U.S. TRUSTEE - REGION 3
CONDENSED CONSOLIDATED BALANCE SHEET
For the month ended June 30, 1998
Debtor Name: MobileMedia Corporation et al.
Case Number: 97-174 (PJW)
- - --------------------------------------------------------------------------------
See balance sheet attached.
Page 5 of 18
<PAGE>
HEADNOTES:
These financial statements have not been prepared in accordance with GAAP
because Statement of Financial Accounting Standards No.121, "Accounting for the
Impairment of Long-lived Assets and for Long-lived Assets, to be Disposed of"
("SFAS 121") has not been applied. Upon the application of SFAS 121, the Company
expects to be required to write down the carrying value of its long-lived assets
to their fair value. The Company believes the amount of the write-down will be
material; however, it is not possible at this time to determine such amount.
There could also be additional year end audit adjustments and adjustments to
certain other accounts as a result of the Debtors' filing for protection under
Chapter 11 of the US Bankruptcy Code on January 30, 1997.
(1) Since the filing of the Monthly Operating Report for the month ended May 31,
1998, the Company increased its April and May Accounts Receivable, Net by $3.4
million. This adjustment resulted from reducing the allowance for doubtful
accounts at December 31, 1997.
MobileMedia Corporation and Subsidiaries
Consolidated Balance Sheets
As of June 30, 1998, May 31, 1998 and April 30, 1998
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
June May April
1998 1998 1998
---------- ---------- ----------
<S> <C> <C> <C>
Assets:
- - -------
Current Assets:
---------------
Cash $ 11,559 $ 10,779 $ 12,435
Accounts Receivable, Net 39,890 44,778(1) 44,465(1)
Inventory 916 621 540
Prepaid Expenses 5,837 4,449 6,155
Other Current Assets 5,117 5,161 5,210
---------- ---------- ----------
Total Current Assets 63,319 65,788 68,805
Noncurrent Assets:
------------------
Property and Equipment, Net 227,699 231,556 233,665
Deferred Financing Fees, Net 21,117 21,421 21,724
Investment In Net Assets Of Equity Affiliate 1,734 1,766 1,766
Intangible Assets, Net 957,628 965,728 974,054
Other Assets 378 403 430
---------- ---------- ----------
Total Noncurrent Assets 1,208,555 1,220,873 1,231,640
Total Assets $1,271,875 $1,286,661 $1,300,445
========== ========== ==========
Liabilities and Stockholders' Equity:
- - -------------------------------------
Liabilities Not Subject to Compromise:
--------------------------------------
DIP Credit Facility $ 0 $ 0 $ 0
Accrued Reorganization Costs 5,041 5,454 4,836
Accrued Wages, Benefits and Payroll Taxes 7,614 6,859 9,984
Accounts Payable - Post Petition 3,815 2,691 2,436
Accrued Interest 5,435 5,439 5,290
Accrued Expenses and Other Current Liabilities 32,735 34,644 33,715
Advance Billings and Customer Deposits 32,446 32,851 34,404
---------- ---------- ----------
Total Liabilities Not Subject To Compromise 87,086 87,938 90,665
Liabilities Subject to Compromise:
----------------------------------
Accrued Wages, Benefits and Payroll Taxes 3,093 3,093 3,093
Chase Credit Facility 649,000 649,000 649,000
Notes Payable - 10 1/2% 174,125 174,125 174,125
Notes Payable - 9 3/8% 250,000 250,000 250,000
Notes Payable - Yampol 986 986 986
Notes Payable - Dial Page 12 1/4% 1,570 1,570 1,570
Accrued Interest 20,423 20,423 20,423
Accounts Payable- Pre Petition 16,124 18,794 19,701
Accrued Expenses and Other Current Liabilities - Pre Petition 21,515 21,515 21,518
Other Liabilities 4,744 4,755 4,762
---------- ---------- ----------
Total Liabilities Subject To Compromise 1,141,581 1,144,261 1,145,178
Deferred Tax Liability 72,097 72,097 72,097
Stockholders' Equity
--------------------
Class A Common Stock 50 50 50
Class B Common Stock 2 2 2
Additional Paid-In Capital 689,148 689,148 689,148
Accumulated Deficit - Pre Petition (454,821) (454,821) (454,821)
Accumulated Deficit - Post Petition (257,146) (245,893) (235,751)
---------- ---------- ----------
Total Stockholders' Equity (22,766) (11,513) (1,371)
Less:
Treasury Stock (6,123) (6,123) (6,123)
---------- ---------- ----------
Total Stockholders' Equity (28,889) (17,636) (7,494)
Total Liabilities and Stockholders' Equity $1,271,875 $1,286,661 $1,300,445
------------------------------------------ ========== ========== ==========
</TABLE>
See Accompanying Notes
Page 6 of 18
<PAGE>
Footnotes to the Financial Statements:
1. These financial statements have not been prepared in accordance with GAAP
because Statement of Financial Accounting Standards No. 121, "Accounting
for the Impairment of Long-lived Assets and for Long-lived Assets, to be
Disposed Of" ("SFAS 121") has not been applied. Upon the application of
SFAS 121, the Company expects to be required to write down the carrying
value of its long-lived assets to their fair value. The Company believes
the amount of the write-down will be material; however, it is not possible
at this time to determine such amount. There could also be additional year
end audit adjustments and adjustments to certain other accounts as a result
of the Debtors' filing for protection under Chapter 11 of the US Bankruptcy
Code on January 30, 1997.
In March 1995, the Financial Accounting Standards Board issued SFAS 121,
which is effective for financial statements for fiscal years beginning
after December 15, 1995. Under certain circumstances, SFAS 121 requires
companies to write down the carrying value of long-lived assets recorded in
the financial statements to the fair value of such assets. A significant
amount of the assets of the Company, which were acquired as a result of the
acquisitions of businesses, including the Dial Page and MobileComm
acquisitions, were recorded in accordance with principles of purchase
accounting at acquisition prices and constitute long-lived assets. The
Company has determined, and its independent auditors have concurred, that
SFAS 121 is applicable to the Company, and therefore the Company expects to
be required to write down the carrying value of its long-lived assets to
their fair value. The Company believes the amount of the write down will be
material; however, it is not possible at this time to determine such
amount. Since the Company cannot comply with SFAS 121 at this time, it is
unable to issue audited financial statements in compliance with generally
accepted accounting principles. Consequently, the Company will not file its
Report on Form 10-K or its other periodic reports under the Securities
Exchange Act of 1934, as amended.
2. On January 30, 1997 (the "Filing Date"), MobileMedia Corporation (the
"Company"), MobileMedia Communications, Inc. ("MobileMedia Communications")
and all seventeen of MobileMedia Communications' subsidiaries (collectively
with the Company and MobileMedia Communications, the "Debtors"), filed for
protection under Chapter 11 of title 11 of the United States Code (the
"Bankruptcy Code"). The Debtors are operating as debtors-in-possession and
are subject to the jurisdiction of the United States Bankruptcy Court for
the District of Delaware (the "Bankruptcy Court").
The Bankruptcy Court has authorized the Debtors to pay certain pre-petition
creditors. These permitted pre-petition payments include: (i) employee
salary and wages; (ii) certain employee benefits and travel expenses; (iii)
certain amounts owing to essential vendors; (iv) trust fund type sales and
use taxes; (v) trust fund payroll taxes; (vi) property taxes; (vii)
customer refunds; and (viii) customer rewards.
Page 7 of 18
<PAGE>
Footnotes to the Financial Statements (continued):
On January 27, 1998, the Company filed its Joint Plan of Reorganization
with the Bankruptcy Court. On February 2, 1998, the Company filed its
Disclosure Statement with the Bankruptcy Court. The Debtors, the Steering
Committee for the Debtors' secured creditors and the Official Committee of
Unsecured Creditors have agreed to adjourn a hearing concerning the
adequacy of information contained in the Disclosure Statement that had been
scheduled for April 14, 1998. The Debtors and such Committees are
considering certain possible business combinations and standalone scenarios
involving the Debtors under a plan of reorganization. There can be no
assurance that the parties will reach agreement on a plan of reorganization
or that any business combination will be effected.
3. Since the Filing Date, the Debtors have continued to manage their business
as debtors-in-possession under sections 1107 and 1108 of the Bankruptcy
Code. During the pendency of the Chapter 11 cases, the Bankruptcy Court has
jurisdiction over the assets and affairs of the Debtors, and their
continued operations are subject to the Bankruptcy Court's protection and
supervision. The Debtors have sought, obtained, and are in the process of
applying for, various orders from the Bankruptcy Court intended to
stabilize and reorganize their business and minimize any disruption caused
by the Chapter 11 cases.
4. Restructuring costs of $0.2 million includes severance expenses primarily
related to the relocation of the Company's retail activation center.
5. Since the filing of the Monthly Operating Report for the month ended May
31, 1998, the Company increased its April and May Accounts Receivable, Net
by $3.4 million. This adjustment resulted from reducing the allowance for
doubtful accounts at December 31, 1997.
6. The Company is one of the largest paging companies in the U.S., with
approximately 3.2 million units in service at June 30, 1998, and offers
local, regional and national paging services to its subscribers. The
consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries. The Company's business is conducted
primarily through the Company's principal operating subsidiary, MobileMedia
Communications, and its subsidiaries. The Company markets its services
primarily under the "MobileComm" brand name. All significant intercompany
accounts and transactions have been eliminated.
Page 8 of 18
<PAGE>
Footnotes to the Financial Statements (continued):
7. As previously announced in its September 27, 1996 and October 21, 1996
releases, the Company discovered misrepresentations and other violations
which occurred during the licensing process for as many as 400 to 500, or
approximately 6% to 7%, of its approximately 8,000 local transmission
one-way paging stations. The Company caused an investigation to be
conducted by its outside counsel, and a comprehensive report regarding
these matters was provided to the FCC in the fall of 1996. In cooperation
with the FCC, outside counsel's investigation was expanded to examine all
of the Company's paging licenses, and the results of that investigation
were submitted to the FCC on November 8, 1996. As part of the cooperative
process, the Company also proposed to the FCC that a Consent Order be
entered which would result, among other things, in the return of certain
local paging authorizations then held by the Company, the dismissal of
certain pending applications for paging authorizations, and the voluntary
acceptance of a substantial monetary forfeiture.
On January 13, 1997, the FCC issued a Public Notice relating to the status
of certain FCC authorizations held by the Company. Pursuant to the Public
Notice, the FCC announced that it had (i) automatically terminated
approximately 185 authorizations for paging facilities that were not
constructed by the expiration date of their construction permits and
remained unconstructed, (ii) dismissed approximately 94 applications for
fill-in sites around existing paging stations (which had been filed under
the so-called "40-mile rule") as defective because they were predicated
upon unconstructed facilities and (iii) automatically terminated
approximately 99 other authorizations for paging facilities that were
constructed after the expiration date of their construction permits. With
respect to the approximately 99 authorizations where the underlying station
was untimely constructed, the FCC granted the Company interim operating
authority subject to further action by the FCC.
On April 8, 1997, the FCC adopted an order commencing an administrative
hearing into the qualification of the Company to remain a licensee. The
order directed an Administrative Law Judge to take evidence and develop a
full factual record on directed issues concerning the Company's filing of
false forms and applications. The Company was permitted to operate its
licensed facilities and provide service to the public during the pendency
of the hearing.
On June 6, 1997, the FCC issued an order staying the hearing proceeding in
order to allow the Company to develop and consummate a plan of
reorganization that provides for a change of control of the Company and a
permissible transfer of the Company's FCC licenses. The order was
originally granted for ten months and was extended by the FCC through
October 6, 1998. The order, which is based on an FCC doctrine known as
Second Thursday, provides that if there is a change of control that meets
the conditions of Second Thursday, the Company's FCC issues will be
resolved by the transfer of the Company's FCC licenses to the new owners of
the Company and the hearing will not proceed. The Company believes that a
reorganization plan that provides for either a conversion of certain
existing debt to equity, in which case existing MobileMedia shares will be
substantially diluted or eliminated
Page 9 of 18
<PAGE>
Footnotes to the Financial Statements (continued):
or a sale of the Company will result in a change of control. In the event
that the Company were unable to consummate a plan of reorganization that
satisfies the conditions of Second Thursday, the Company would be required
to proceed with the hearing, which, if adversely determined, could result
in the loss of the Company's licenses or substantial monetary fines, or
both. Such an outcome would have a material adverse effect on the Company's
financial condition and results of operations.
Page 10 of 18
<PAGE>
OFFICE OF THE U.S. TRUSTEE - REGION 3
CONSOLIDATED STATEMENT OF CASH
RECEIPTS AND DISBURSEMENTS
For the month ended June 30, 1998
Debtor Name: MobileMedia Corporation et al.
Case Number: 97-174 (PJW)
- - --------------------------------------------------------------------------------
The Debtors have 50 bank accounts. In order to minimize costs to the estate, the
Debtors have included a GAAP basis Statement of Cash Flows for the reporting
period which is attached. The Statement of Cash Flows replaces the listing of
cash receipts and disbursements, copies of the bank statements, and bank account
reconciliations.
Page 11 of 18
<PAGE>
HEADNOTES:
These financial statements have not been prepared in accordance with GAAP
because Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-lived Assets and for Long-lived Assets, to be Disposed of"
("SFAS 121") has not been applied. Upon the application of SFAS 121, the Company
expects to be required to write down the carrying value of its long-lived assets
to their fair value. The Company believes the amount of the write-down will be
material; however, it is not possible at this time to determine such amount.
There could also be additional year end audit adjustments and adjustments to
certain other accounts as a result of the Debtors' filing for protection under
Chapter 11 of the US Bankruptcy Code on January 30, 1997.
MobileMedia Corporation and Subsidiaries
Consolidated Statements Of Cash Flows
For The Months Ended June 30, 1998, May 31, 1998 and April 30, 1998
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
June May April
1998 1998 1998
-------- -------- --------
<S> <C> <C> <C>
Operating Activities
Net Loss ($11,253) ($10,141) ($12,422)
Adjustments To Reconcile Net Loss To Net Cash
Provided By (Used In) Operating Activities:
Depreciation And Amortization 15,058 15,702 15,573
Provision For Uncollectible Accounts And Returns 999 1,563 2,128
Undistributed Earnings Of Affiliate 32 0 0
Deferred Financings Fees, Net 304 304 304
Change In Operating Assets and Liabilities:
Accounts Receivable 3,889 (1,876) 1,045
Inventory (294) (82) (79)
Prepaid Expenses And Other Assets (1,456) 1,869 (1,842)
Accounts Payable, Accrued Expenses and Other (3,533) (3,643) (5,483)
-------- -------- --------
Net Cash Provided By (Used In) Operating Activities 3,746 3,696 (776)
Investing Activities
Construction And Capital Expenditures,
Including Net Change In Pager Assets (2,964) (5,353) (2,397)
-------- -------- --------
Net Cash Used In Investing Activities (2,964) (5,353) (2,397)
Financing Activities
Borrowings (Repayments) of DIP Credit Facility 0 0 0
-------- -------- --------
Net Cash Provided By (Used In) Financing Activities 0 0 0
Net Increase (Decrease) In Cash And Cash Equivalents 781 (1,657) (3,173)
Cash And Cash Equivalents At Beginning Of Period 10,779 12,435 15,608
-------- -------- --------
Cash And Cash Equivalents At End Of Period $ 11,560 $ 10,779 $ 12,435
======== ======== ========
</TABLE>
See Accompanying Notes
Page 12 of 18
<PAGE>
OFFICE OF THE U.S. TRUSTEE - REGION 3
STATEMENT OF ACCOUNTS RECEIVABLE AGING AND
AGING OF POSTPETITION ACCOUNTS PAYABLE
For the month ended June 30, 1998
Debtor Name: MobileMedia Corporation et al.
Case Number: 97-174 (PJW)
- - --------------------------------------------------------------------------------
================================================================================
ACCOUNTS RECEIVABLE AGING
- - --------------------------------------------------------------------------------
$ 22,851,609 0 - 30 days old
-----------------------------------------------------------------
13,886,449 31 - 60 days old
-----------------------------------------------------------------
7,472,535 61 - 90 days old
-----------------------------------------------------------------
15,429,617 91+ days old
-----------------------------------------------------------------
59,640,210 TOTAL TRADE ACCOUNTS RECEIVABLE
-----------------------------------------------------------------
(20,165,885) ALLOWANCE FOR UNCOLLECTIBLE ACCOUNTS
-----------------------------------------------------------------
39,474,325 TRADE ACCOUNTS RECEIVABLE (NET)
-----------------------------------------------------------------
416,054 OTHER NON-TRADE RECEIVABLES
-----------------------------------------------------------------
$ 39,890,379 ACCOUNTS RECEIVABLE, NET
================================================================================
=========================================
AGING OF POSTPETITION ACCOUNTS PAYABLE
================================================================================
0-30 31-60 61-90 91+
Days Days Days Days Total
- - --------------------------------------------------------------------------------
ACCOUNTS PAYABLE $3,342,480 472,147 0 0 $3,814,628
================================================================================
Page 13 of 18
<PAGE>
OFFICE OF THE U.S. TRUSTEE - REGION 3
STATEMENT OF OPERATIONS, TAXES,
INSURANCE AND PERSONNEL
For the month ended June 30, 1998
Debtor Name: MobileMedia Corporation et al.
Case Number: 97-174 (PJW)
- - --------------------------------------------------------------------------------
================================================================================
STATUS OF POSTPETITION TAXES
================================================================================
BEGINNING AMOUNT ENDING
TAX WITHHELD AMOUNT TAX DELINQUENT
LIABILITY OR ACCRUED PAID LIABILITY TAXES
================================================================================
FEDERAL
================================================================================
WITHHOLDING $ 0 $1,154,296 $1,154,296 $ 0 $ 0
- - --------------------------------------------------------------------------------
FICA-EMPLOYEE 0 639,176 639,176 0 0
- - --------------------------------------------------------------------------------
FICA-EMPLOYER 0 1,270,098 1,210,004 60,094 0
- - --------------------------------------------------------------------------------
UNEMPLOYMENT 0 6,505 6,111 394 0
- - --------------------------------------------------------------------------------
INCOME 0 0 0 0 0
- - --------------------------------------------------------------------------------
TOTAL FEDERAL TAXES 0 3,070,075 3,009,587 60,488 0
================================================================================
STATE AND LOCAL
================================================================================
WITHHOLDING 0 293,627 293,627 0 0
- - --------------------------------------------------------------------------------
SALES 657,389 1,144,265 1,161,337 640,317 0
- - --------------------------------------------------------------------------------
UNEMPLOYMENT 0 71,580 67,951 3,629 0
- - --------------------------------------------------------------------------------
REAL PROPERTY 5,924,210 383,695 25,322 6,282,583 0
- - --------------------------------------------------------------------------------
OTHER 926,314 623,452 525,955 1,023,811 0
================================================================================
TOTAL STATE AND LOCAL 7,507,913 2,516,619 2,074,192 7,950,340 0
================================================================================
TOTAL TAXES $7,507,913 $5,586,694 $5,083,779 $8,010,828 $ 0
================================================================================
Page 14 of 18
<PAGE>
<TABLE>
<CAPTION>
==============================================================================================
PAYMENTS TO INSIDERS AND PROFESSIONALS
For the month ended June 30, 1998
==============================================================================================
==============================================================================================
INSIDERS (1)
==============================================================================================
Payee Name Position Salary/Bonus/ Reimbursable
Auto Allowance Expenses Total
==============================================================================================
<S> <C> <C> <C> <C>
Alvarez & Marsal Chairman - Restructuring $54,167 $1,814 $ 55,981
Inc. - Joseph A. Bondi
- - ----------------------------------------------------------------------------------------------
Burdette, H. Stephen Senior VP Corporate 15,000 3,702 18,702
Development and Senior
VP Operations
- - ----------------------------------------------------------------------------------------------
Grawert, Ron Chief Executive Officer 30,769 9,146 39,915
- - ----------------------------------------------------------------------------------------------
Gray, Patricia Secretary/VP and 13,846 1,191 15,037
General Counsel
- - ----------------------------------------------------------------------------------------------
Gross, Steven Executive VP Sales & 14,865 3,778 18,643
Marketing
- - ----------------------------------------------------------------------------------------------
Hilson, Debra Assistant Secretary 4,662 0 4,662
- - ----------------------------------------------------------------------------------------------
Hughes, Curtis VP Management 9,856 671 10,527
Information Systems
- - ----------------------------------------------------------------------------------------------
Pascucci, James Treasurer 8,469 4,023 12,492
- - ----------------------------------------------------------------------------------------------
Panzella, Vito VP / Controller 8,846 0 8,846
- - ----------------------------------------------------------------------------------------------
Witsaman, Mark Senior VP and Chief 15,269 333 15,602
Technology Officer
- - ----------------------------------------------------------------------------------------------
TOTAL PAYMENTS TO INSIDERS $200,407
==============================================================================================
</TABLE>
(1) Excludes 19 non-executive officers of subsidiaries who were paid salaries
and reimbursable expenses in the aggregate of $221,995.
Page 15 of 18
<PAGE>
<TABLE>
<CAPTION>
======================================================================================================================
PAYMENTS TO INSIDERS AND PROFESSIONALS (Continued)
For the month ended June 30, 1998
======================================================================================================================
======================================================================================================================
PROFESSIONALS
======================================================================================================================
Holdback and
Date of Invoice
Name and Relationship Court Invoices Invoices Balances
Approval Received (1) Paid Due
- - ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. Ernst & Young - Auditor, Tax and Financial 1/30/97 $ 477,289 $ 671,969 $ 432,074
Consultants to Debtor
- - ----------------------------------------------------------------------------------------------------------------------
2. Latham & Watkins - Counsel to Debtor 1/30/97 58,428 18,188 92,128
- - ----------------------------------------------------------------------------------------------------------------------
3. Alvarez & Marsal Inc.- Restructuring 1/30/97 387,219 169,800 650,576
Consultants to Debtor (2)
- - ----------------------------------------------------------------------------------------------------------------------
4. Sidley & Austin - Bankruptcy Counsel to 1/30/97 321,722 400,786 704,194
Debtor
- - ----------------------------------------------------------------------------------------------------------------------
5. Young, Conway, Stargate & Taylor - Delaware 1/30/97 35,045 18,037 42,504
Counsel to Debtor
- - ----------------------------------------------------------------------------------------------------------------------
6. Wiley, Rein & Fielding - FCC Counsel to 1/30/97 34,884 17,536 88,387
Debtor
- - ----------------------------------------------------------------------------------------------------------------------
7. Koteen & Naftalin - FCC Counsel to 6/11/97 -- -- 3,945
Debtor
- - ----------------------------------------------------------------------------------------------------------------------
8. Houlihan, Lokey, Howard & Zukin - Advisors 6/04/97 -- 185,869 75,000
to the Creditors' Committee
- - ----------------------------------------------------------------------------------------------------------------------
9. Jones, Day, Reavis & Pogue - Counsel to the 4/03/97 -- 72,666 38,106
Creditors' Committee
- - ----------------------------------------------------------------------------------------------------------------------
10. Morris, Nichols, Arsht & Tunnell - Delaware 4/03/97 648 448 2,272
Counsel to the Creditors' Committee
- - ----------------------------------------------------------------------------------------------------------------------
11. Paul, Weiss, Rifkind, Wharton & Garrison - 4/25/97 2,102 -- 3,066
FCC Counsel to the Creditors' Committee
- - ----------------------------------------------------------------------------------------------------------------------
12. The Blackstone Group LP - Financial 7/10/97 523,466 223,466 400,000
Advisors to Debtor
- - ----------------------------------------------------------------------------------------------------------------------
13. Gerry, Friend & Sapronov, LLP. - Counsel to 10/27/97 25,712 33,995 101,662
Debtor
======================================================================================================================
TOTAL $1,866,515 $1,812,760 $2,633,914
======================================================================================================================
</TABLE>
(1) Excludes invoices for fees and expenses through June 30, 1998 that were
received by the Debtors subsequent to June 30, 1998.
(2) Includes fees and expenses for David R. Gibson, Senior Vice President and
Chief Financial Officer (effective June 24, 1997).
Page 16 of 18
<PAGE>
<TABLE>
<CAPTION>
======================================================================================================================
ADEQUATE PROTECTION PAYMENTS
For the month ended June 30, 1998
======================================================================================================================
SCHEDULED AMOUNTS
MONTHLY PAID TOTAL
PAYMENTS DURING UNPAID
NAME OF CREDITOR DUE MONTH POSTPETITION
======================================================================================================================
<S> <C> <C> <C>
The Chase Manhattan Bank - (Interest) $ 4,486,842 $ 4,486,842* $ 0
======================================================================================================================
* Payment made on 7/1/98.
<CAPTION>
======================================================================================================================
QUESTIONNAIRE
<S> <C> <C>
For the month ended June 30, 1998 YES NO
======================================================================================================================
1. Have any assets been sold or transferred outside the normal course of
business this reporting period? No
- - ----------------------------------------------------------------------------------------------------------------------
2. Have any funds been disbursed from any account other than a debtor in possession account? No
- - ----------------------------------------------------------------------------------------------------------------------
3. Are any postpetition receivables (accounts, notes, or loans) due from related parties? No
- - ----------------------------------------------------------------------------------------------------------------------
4. Have any payments been made of prepetition liabilities this reporting period? Yes
- - ----------------------------------------------------------------------------------------------------------------------
5. Have any postpetition loans been received by the debtor from any party? No
- - ----------------------------------------------------------------------------------------------------------------------
6. Are any postpetition payroll taxes past due? No
- - ----------------------------------------------------------------------------------------------------------------------
7. Are any postpetition state or federal income taxes past due? No
- - ----------------------------------------------------------------------------------------------------------------------
8. Are any postpetition real estate taxes past due? No
- - ----------------------------------------------------------------------------------------------------------------------
9. Are any postpetition taxes past due? No
- - ----------------------------------------------------------------------------------------------------------------------
10. Are any amounts owed to postpetition creditors past due? No
- - ----------------------------------------------------------------------------------------------------------------------
11. Have any prepetition taxes been paid during the reporting period? Yes
- - ----------------------------------------------------------------------------------------------------------------------
12. Are any wage payments past due? No
======================================================================================================================
</TABLE>
If the answer to any of the above questions is "YES", provide a detailed
explanation of each item.
Item 4 & 11. The Court has authorized the Debtors to pay certain pre-petition
creditors. These permitted pre-petition payments include (i)
employee salary and wages; (ii) certain employee benefits and
travel expenses; (iii) certain amounts owing to essential vendors;
(iv) trust fund type sales and use taxes; (v) trust fund payroll
taxes; (vi) property taxes; (vii) customer refunds; and (viii)
customer rewards.
Item 5. During 1997, the Debtors drew down $47 million of borrowings and
repaid $37 million under the DIP facility with The Chase Manhattan
Bank, as agent for the lenders thereunder. During January and
February, 1998 the Debtors repaid an additional $10 million. As of
June 30, 1998 there were no funded borrowings under the DIP
facility and a $0.5 million letter of credit issued in 1997
remained a contingent obligation of the Debtors under the DIP
facility.
Page 17 of 18
<PAGE>
<TABLE>
===========================================================================================================
INSURANCE
For the month ended June 30, 1998
===========================================================================================================
There were no changes in insurance coverage for the reporting period.
===========================================================================================================
<CAPTION>
===========================================================================================================
PERSONNEL
For the month ended June 30, 1998
===========================================================================================================
Full Time Part Time
- - -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. Total number of employees at beginning of period 3,192 35
- - -----------------------------------------------------------------------------------------------------------
2. Number of employees hired during the period 18 15
- - -----------------------------------------------------------------------------------------------------------
3. Number of employees terminated or resigned during the period 135 18
- - -----------------------------------------------------------------------------------------------------------
4. Total number of employees on payroll at end of period 3,075 32
===========================================================================================================
</TABLE>
Page 18 of 18
