<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(MARK ONE)
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
--------------
or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-25588
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PALMER WIRELESS, INC.
---------------------
(Exact Name of Registrant as specified in its charter)
DELAWARE 65-0456627
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
12800 University Drive, Ste. 500, Fort Myers, Florida 33907
- - ------------------------------------------------------ -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number (941) 433-4350
--------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes XX No
-- --
The number of shares outstanding of the issuer's common stock as of
May 13, 1996 was 23,396,016.
- - ------------ -----------
<PAGE> 2
PALMER WIRELESS, INC. AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION
<TABLE>
<S> <C> <C>
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets I-1
- December 31, 1995 and March 31, 1996
Condensed Consolidated Statements of I-2
Operations - Three months ended March 31, 1995
and 1996
Condensed Consolidated Statements of I-3
Stockholders' Equity
Condensed Consolidated Statements of I-4
Cash Flows - Three Months ended
March 31, 1995 and 1996
Notes to Condensed Consolidated I-5
Financial Statements
Item 2. Management's Discussion and Analysis I-6
of Financial Condition and Results of Operations
</TABLE>
PART II. OTHER INFORMATION
<TABLE>
<S> <C> <C>
Item 1. Legal Proceedings II-1
Item 2. Changes in Securities II-1
Item 3. Defaults Upon Senior Securities II-1
Item 4. Submission of Matters to a Vote of II-1
Security Holders
Item 5. Other Information II-1
Item 6. Exhibits and Reports on Form 8-K II-1
SIGNATURES II-2
</TABLE>
<PAGE> 3
ITEM 1 FINANCIAL STATEMENTS
PALMER WIRELESS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
($ IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1995 1996
------------ ---------
Assets
------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 3,436 $ 4,553
Trade accounts receivable, net of
allowance for doubtful accounts 17,347 17,297
Receivable from other cellular carriers 3,936 2,267
Deferred income taxes 821 949
Prepaid expenses and deposits 1,111 1,750
Inventory 2,434 2,056
----------- -------------
Total current assets 29,085 28,872
Net property, plant and equipment 100,936 103,885
Licenses, net of amortization 321,053 319,284
Other intangible assets, net of amortization 11,797 14,000
----------- -------------
$ 462,871 $ 466,041
=========== =============
Liabilities and Equity
----------------------
Current liabilities:
Current installments of long-term debt $ 7,441 $ 7,603
Accounts payable 10,795 9,522
Accrued expenses 8,833 10,837
Other liabilities 3,451 3,452
----------- -------------
Total current liabilities 30,520 31,414
Long-term debt, excluding current installments 343,000 345,000
Deferred income taxes 9,636 9,805
Minority interests 5,162 5,193
----------- -------------
Total liabilities 388,318 391,412
----------- -------------
Stockholders' equity 74,553 74,629
----------- -------------
$ 462,871 $ 466,041
=========== =============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
I-1
<PAGE> 4
PALMER WIRELESS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
------------------------------------
1995 1996
------------- -------------
<S> <C> <C>
Revenue:
Service $ 20,408 $ 33,856
Equipment sales and installation 1,966 2,035
----------- -----------
Total revenue 22,374 35,891
----------- -----------
Operating expenses:
Engineering, technical and other direct 3,860 6,624
Cost of equipment 3,144 3,931
Selling, general and administrative 7,131 10,924
Depreciation and amortization 3,367 5,898
----------- -----------
Total operating expenses 17,502 27,377
----------- -----------
Operating income 4,872 8,514
----------- -----------
Other income (expense):
Interest expense, net (5,730) (7,945)
Other expense, net (328) -
----------- -----------
Total other expense (6,058) (7,945)
----------- -----------
(Loss) income before minority interest
share of income and income tax expense (1,186) 569
Minority interest share of income (122) (452)
----------- -----------
Net (loss) income before income taxes (1,308) 117
Income tax expense (2,650) (41)
----------- -----------
Net (loss) income $ (3,958) $ 76
=========== ===========
Net (loss) income per share of common stock $ (0.21) $ 0.00
=========== ===========
Average shares outstanding 18,611,111 23,561,923
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
I-2
<PAGE> 5
PALMER WIRELESS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
($ IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Common Stock Common Stock
Class A Class B
------------------------------------ ------------------------------------
Shares Amount Shares Amount
--------- ------------- ---------- ---------
<S> <C> <C> <C> <C>
Balances at December 31, 1994 706,422 $ 7 17,293,578 $ 173
Partnership loss before
business combination - - - -
Public offering, net of
issuance costs of $8,114 5,369,350 54 - -
Exercise of stock options 20,000 - - -
Net income - - - -
--------- ------------ ---------- --------
Balances at December 31, 1995 6,095,772 $ 61 17,293,578 $ 173
Net income - - - -
--------- ------------ ---------- --------
Balances at March 31, 1996 6,095,772 $ 61 17,293,578 $ 173
========= ============ ========== ========
</TABLE>
<TABLE>
<CAPTION>
(Accumulated
Additional deficit) Total
paid-in retained stockholders'
capital earnings equity
------------- ----------------- ---------------
<S> <C> <C> <C>
Balances at December 31, 1994 $ 4,902 $ (167) $ 4,915
Partnership loss before
business combination (1,066) - (1,066)
Public offering, net of
issuance costs of $8,114 68,345 - 68,399
Exercise of stock options 285 - 285
Net income - 2,020 2,020
------------ --------------- --------------
Balances at December 31, 1995 $ 72,466 $ 1,853 $ 74,553
Net income - 76 76
------------ --------------- --------------
Balances at March 31, 1996 $ 72,466 $ 1,929 $ 74,629
============ =============== ==============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
I-3
<PAGE> 6
PALMER WIRELESS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
($ IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
---------------------------
1995 1996
---------- --------
<S> <C> <C>
Cash flows from operating activities:
Net (loss) income $ (3,958) $ 76
----------- ---------
Adjustments to reconcile net (loss) income to net cash
provided by operating activities:
Depreciation and amortization 3,367 5,898
Minority interest share of income 122 452
Deferred income taxes 2,650 41
Loss on disposal of property 325 -
Interest deferred and added to long-term debt 149 187
(Increase) decrease in trade accounts receivable (497) 50
Decrease in inventory 2,416 378
(Decrease) increase in accounts payable and accrued expenses (3,824) 40
Change in other accounts 547 (343)
----------- ---------
Total adjustments $ 5,255 $ 6,703
----------- ---------
Net cash provided by operating activities $ 1,297 $ 6,779
Cash flows from investing activities:
Capital expenditures (4,442) (6,618)
Purchases of minority interests - (1,224)
Collection of receivable from other cellular carriers - 2,452
Increase in other intangible assets (614) (2,247)
----------- ---------
Net cash used in investing activities $ (5,056) $ (7,637)
----------- ---------
Cash flows from financing activities:
Advances to Palmer Communications Incorporated, net (1,603) -
Repayment of long-term debt (60,025) (25)
Proceeds from long-term debt 5,000 2,000
Public offering proceeds, net 66,250 -
----------- ---------
Net cash provided by financing activities $ 9,622 $ 1,975
----------- ---------
Net increase in cash and cash equivalents $ 5,863 $ 1,117
Cash and cash equivalents at the beginning of period 2,998 3,436
----------- ---------
Cash and cash equivalents at the end of period 8,861 4,553
=========== =========
Supplemental disclosure of cash flow information:
Cash paid for interest $ 5,483 $ 7,033
=========== =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
I-4
<PAGE> 7
PALMER WIRELESS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
($ IN THOUSANDS)
(UNAUDITED)
(1) Basis of Presentation
The accompanying condensed consolidated financial statements of Palmer
Wireless, Inc. and subsidiaries (the "Company") have been prepared without
audit pursuant to Rule 10-01 of Regulation S-X of the Securities and Exchange
Commission. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financials. In the opinion of management, all adjustments (none of which were
other than normal recurring items) considered necessary for a fair presentation
have been included. The results of operations for the interim periods reported
are not necessarily indicative of results to be expected for the year.
The computation of net (loss) income per share is based on the weighted
average number of common and dilutive common equivalent shares (common stock
options using the treasury stock method) outstanding during the periods
presented.
(2) Acquisitions
On March 22, 1996, two of the Company's majority-owned subsidiaries
entered into a definitive agreement to purchase the non-wireline cellular
telephone system serving Georgia-6 RSA for a total purchase price of $35
million, subject to certain adjustments.
On April 23, 1996, the Company entered into a definitive agreement to
purchase the non-wireline cellular telephone system serving Georgia-1 RSA for a
total purchase price of $31.5 million, subject to certain adjustments.
I-5
<PAGE> 8
PALMER WIRELESS, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
Palmer Wireless, Inc. ("Company") is engaged in the construction, development,
management and operation of cellular telephone systems in the southeastern
United States. As of March 31, 1996, the Company provided cellular telephone
service to 227,400 subscribers in Alabama, Florida, Georgia, and South
Carolina in a total of 15 licensed service areas, composed of nine
Metropolitan Service Areas ("MSAs") and six Rural Service Areas ("RSAs") with
an aggregate estimated population of 3.3 million. The Company sells its
cellular telephone service as well as cellular telephones and accessories
principally through its network of retail stores offering a full line of
cellular products and services. The Company markets all of its products and
services under the nationally-recognized service mark CELLULAR ONE.
MARKET OWNERSHIP
The following is a summary of the Company's ownership interest in the cellular
telephone system in each licensed service area to which the Company provided
service at December 31, 1995 and March 31, 1996.
<TABLE>
<CAPTION>
CELLULAR SERVICE DECEMBER 31, MARCH 31,
AREA AREA 1995 1996
- - ---------------- ---- ----
<S> <C> <C>
Albany, Georgia 82.1% 82.7%
Augusta, Georgia 100.0 100.0
Columbus, Georgia 83.2 84.2
Macon, Georgia 98.4 98.7
Savannah, Georgia 97.9 98.2
Dothan, Alabama 92.1 92.1
Montgomery, Alabama 91.9 91.9
Georgia 7 - RSA 100.0 100.0
Georgia 8 - RSA 100.0 100.0
Georgia 9 - RSA 100.0 100.0
Georgia 10 - RSA 100.0 100.0
Georgia 12 - RSA 100.0 100.0
Alabama 8 - RSA 100.0 100.0
Fort Myers, Florida 99.0 99.0
Panama City, Florida 77.9 77.9
</TABLE>
On December 1, 1995, the Company acquired the cellular telephone systems
serving the Augusta and Savannah MSAs for an aggregate purchase price of $158.4
million ("the GTE Acquisition"). The cellular telephone systems in the
newly-acquired MSAs serve a geographic territory in eastern Georgia and a
portion of South Carolina that is adjacent to the Company's existing markets in
the Georgia-8 and Georgia-12 RSAs. In the GTE Acquisition, the Company also
acquired interim authority to provide cellular service to the southern
portions of South Carolina RSA Market Nos. 631 and 632, otherwise known as
South Carolina-7 RSA and South Carolina-8 RSA, respectively, which serve a
geographic territory that is adjacent to the Company's existing markets in
Georgia-8 RSA as well as the Augusta and Savannah, Georgia MSAs. The Company
has no subscribers and has not constructed any cell sites in South Carolina-7
I-6
<PAGE> 9
RSA and South Carolina-8 RSA, however it provides roaming access to its own
subscribers and others when they travel in these two service areas by
utilizing its existing cell sites in adjacent service areas.
On March 22, 1996, two of the Company's majority-owned subsidiaries entered
into a definitive agreement to purchase the non-wireline cellular telephone
system serving Georgia-6 RSA for a total purchase price of $35 million, subject
to certain adjustments.
On April 23, 1996, the Company entered into a definitive agreement to purchase
the non-wireline cellular telephone system serving Georgia-1 RSA for a total
purchase price of $31.5 million, subject to certain adjustments.
RESULTS OF OPERATIONS
The following table sets forth for the Company, for the periods indicated, the
percentage which certain amounts bear to total revenue.
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
----------------------------
1995 1996
---- ----
<S> <C> <C>
REVENUE:
Service 91.2% 94.3%
Equipment sales and installation 8.8 5.7
----- -----
TOTAL REVENUE 100.0 100.0
OPERATING EXPENSES:
Engineering, technical and other direct:
Engineering and technical (1) 8.0 9.2
Other direct costs of services (2) 9.3 9.2
Cost of equipment (3) 14.1 11.0
Selling, general and administrative:
Sales and marketing (4) 9.2 8.8
Customer service (5) 6.7 5.9
General and administrative (6) 15.9 15.8
Depreciation and amortization 15.0 16.4
----- -----
TOTAL OPERATING EXPENSE 78.2 76.3
Operating income 21.8% 23.7%
Operating income before depreciation
and amortization (7) 36.8% 40.1%
</TABLE>
(1) Consists of costs of cellular telephone network, including inter-trunk
costs, span-line costs, cell site repairs and maintenance, cell site
utilities, cell site rent, engineers' salaries and benefits and other
operational costs.
(2) Consists of net costs of roaming, costs of long distance, costs of
interconnection with wireline telephone companies and other costs of
services.
(3) Consists primarily of the costs of the cellular telephones and
accessories sold.
(4) Consists primarily of salaries and benefits of sales and marketing
personnel, employee and agent commissions and advertising and promotional
expenses.
(5) Consists primarily of salaries and benefits of customer service
personnel and costs of printing and mailing billings generated in-house.
(6) Includes salaries and benefits of general and administrative personnel
and other overhead expenses.
I-7
<PAGE> 10
(7) Operating income before depreciation and amortization should not be
considered in isolation or as an alternative to net income (loss),
operating income or any other measure of performance under generally
accepted accounting principles. The Company believes that operating
income before depreciation and amortization is viewed as a relevant
supplemental measure of performance in the cellular telephone industry.
THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THREE MONTHS ENDED MARCH 31, 1995
REVENUE. Service revenues totaled $33.9 million for the first quarter of
1996, an increase of 65.9% over $20.4 million for the first quarter of 1995.
This increase was primarily due to a 76.7% increase in the number of
subscribers to 227,400 as of March 31, 1996 versus 128,661 as of March 31,
1995. The increase in subscribers is the result of internal growth, which the
Company attributes primarily to its strong sales and marketing efforts, and the
GTE Acquisition. The GTE Acquisition accounted for 35,685 subscribers at March
31, 1996. Service revenue attributable to the cellular systems acquired in the
GTE Acquisition totaled $6.2 million for the three months ended March 31,
1996.
Average monthly revenue per subscriber decreased 8.0% to $52.10 for the first
quarter of 1996 from $56.64 for the first quarter of 1995. This is due to a
common trend in the cellular telephone industry, where, on average, new
customers use less airtime than existing subscribers. Therefore, service
revenues generally do not increase proportionately with the increase in
subscribers.
Equipment sales and installation revenue, which consists primarily of cellular
subscriber equipment sales, remained flat at $2.0 million for the first quarter
of 1996 and 1995. While equipment sales and installation revenue remained flat
for the first quarter of 1996 and 1995, it decreased as a percentage of total
cellular revenue to 5.7% for 1996 from 8.8% for 1995, reflecting the increased
recurring revenue base as well as lower cellular equipment prices charged to
customers. Equipment sales and installation revenue attributable to the
cellular telephone systems acquired in the GTE Acquisition totaled $0.2 million
for the three months ended March 31, 1996.
OPERATING EXPENSES. Engineering and technical expenses increased by 85.5% to
$3.3 million for the first quarter of 1996 from $1.8 million in the first
quarter of 1995, due primarily to the increase in subscribers and the GTE
Acquisition. As a percentage of revenue, engineering and technical expenses
increased to 9.2% from 8.0% due to additional costs incurred for the GTE
Acquisition. The Company expects engineering and technical expenses to
decrease as a percentage of revenue due to its large component of fixed costs
except for extraordinary expenses incurred in cases of acquisitions.
Engineering and technical expenses attributable to the cellular telephone
systems acquired in the GTE Acquisition totaled $0.8 million for the three
months ended March 31, 1996.
Other direct costs of services increased 59.7% to $3.3 million for the first
quarter of 1996 from $2.1 million in the first quarter of 1995. As a
percentage of revenue, however, these costs of service remained relatively flat
at 9.2% and 9.3% for the first quarter of 1996 and 1995 respectively. Other
direct costs of services attributable to the cellular telephone systems
acquired in the GTE Acquisition totaled $0.6 million for the three months ended
March 31, 1996.
The cost of equipment sales increased 25.0% to $3.9 million for the first
quarter of 1996 from $3.1 million for the first quarter of 1995, due primarily
to the increase in gross subscriber activations for the same period. The
equipment sales margin decreased to (93.2%) for the first quarter of 1996 from
(59.9%) for the first quarter of 1995. In an effort to address market
competition and improve market share, the Company sold more telephones below
cost in the first quarter of 1996 than in the same period of 1995. The cost of
equipment attributable to the cellular telephone systems acquired in the GTE
Acquisition totaled $0.4 million for the three months ended March 31, 1996.
Sales and marketing costs increased 53.4% to $3.2 million for the first quarter
of 1996 from $2.1 million for the same period in 1995. This increase is
primarily due to the 49.1% increase in gross subscriber activations and the
resulting increase in salaries and commissions. As a percentage of total
revenue, sales and marketing costs decreased to 8.8% from 9.2% for the first
quarter of 1996 and 1995 respectively. The decrease is due to a significant
portion of sales and marketing costs being fixed. The Company's cost to add a
net subscriber, including loss on telephone sales, increased to $357 for the
first quarter of 1996 from $315 for the first quarter of 1995. This increase
in cost to add a net subscriber was caused primarily by increased losses from
the Company's sales of cellular telephones. The sales and marketing costs
attributable to the cellular telephone systems acquired in the GTE Acquisition
totaled $0.6 million for the three months ended March 31, 1996.
I-8
<PAGE> 11
Customer service costs increased 41.3% to $2.1 million for the first quarter of
1996 from $1.5 million for the first quarter of 1995, but decreased as a
percentage of total revenue to 5.9% from 6.7% for the same period. This
decrease is due to a significant portion of customer service costs being fixed.
The customer service costs attributable to the cellular telephone systems
acquired in the GTE Acquisition totaled $0.5 million for the three months ended
March 31, 1996.
General and administrative expenditures increased 58.0% to $5.6 million for the
first quarter of 1996 from $3.6 million for the first quarter of 1995, due
primarily to the increase in the number of subscribers and the GTE Acquisition.
General and administrative expenses remained relatively flat as a percentage
of total revenue at 15.8% in the first quarter of 1996 and 15.9% for the first
quarter of 1995. As the Company continues to add more subscribers, and
generates associated revenue, general and administrative expenses should
decrease as a percentage of total revenues. The general and administrative
costs attributable to the cellular telephone systems acquired in the GTE
Acquisition totaled $1.0 million for the three months ended March 31, 1996.
Depreciation and amortization increased 75.2% to $5.9 million for the first
quarter of 1996 from $3.4 million for the first quarter of 1995. This increase
was primarily due to the depreciation and amortization associated with the GTE
Acquisition and additional capital expenditures. Depreciation and amortization
attributable to the cellular telephone systems acquired in the GTE Acquisition
totaled $1.5 million for the three months ended March 31, 1996.
Operating income increased 74.8% to $8.5 million in the first quarter of 1996,
from $4.9 million for the first quarter of 1995. This improvement in operating
results is attributable primarily to increases in revenue which exceeded
increases in operating expenses. Operating income attributable to the cellular
telephone systems acquired in the GTE Acquisition totaled $1.0 million for the
three months ended March 31, 1996.
NET INTEREST EXPENSE, OTHER EXPENSE, INCOME TAXES AND NET INCOME (LOSS) Net
interest expense increased 38.7% to $7.9 million for the first quarter of 1996
versus $5.7 million for the first quarter of 1995. This increase is due
primarily to debt incurred for the GTE Acquisition and the amortization of
deferred financing fees related to the Credit Facility (as defined in
"Liquidity and Capital Resources").
Other expense was none in the first quarter of 1996 and $0.3 million for the
first quarter of 1995 which consists primarily of the disposal of certain
assets by the Company.
Income tax expense was immaterial in the first quarter of 1996 and $2.7 million
in the first quarter of 1995. The $2.7 million is a non-recurring deferred
income tax charge related to the difference between the financial statement and
income tax return basis of certain assets and liabilities of Palmer Cellular
Partnership and Subsidiaries. In connection with the initial public offering
in March of 1995, all of the assets and liabilities of Palmer Cellular
Partnership and Subsidiaries were exchanged for stock in Palmer Wireless, Inc.
Due to the exchange, a corporate tax liability was recorded to reflect the
difference between the financial and income tax return basis in these assets
and liabilities.
Net income for the first quarter of 1996 was $0.1 million, or $0.00 per share,
compared to a net loss of $(4.0) million, or $(0.21) per share, for the first
quarter of 1995. The increase in net income is primarily attributable
to decreases in income tax expense and other expense and increases in revenue
which exceeded increases in operating expenses and interest expense.
LIQUIDITY AND CAPITAL RESOURCES
The Company's long-term capital requirements consist of funds for capital
expenditures, acquisitions and debt service. Historically, the Company has met
its capital requirements primarily through equity contributions, bank and
intercompany debt, and to a lesser extent through operating cash flow.
The Company currently has a $500.0 million revolving credit facility with a
syndicate of 21 banks ("Credit Facility"). The Credit Facility is a revolving
line of credit with scheduled commitment reductions commencing September 30,
1998. Interest rates under the Credit Facility range from .25% over prime or
1.5% over the London Inter Bank Offered Rate ("LIBOR") to 1.25% over prime or
2.5% over LIBOR depending upon the Company's leverage ratio. The Company has
entered into five interest rate swap agreements and six interest rate cap
agreements for a total notional amount of $185.0 million. Under these
agreements, the maximum interest rate may range from 7.76% to 11.25%. As of
March 31, 1996, the effective interest rate under these agreements ranged from
7.39% to 10.23%.
I-9
<PAGE> 12
The Credit Facility is secured by substantially all of the property and assets
of the Company and its subsidiaries. The subsidiaries of the Company also
guarantee all obligations of the Company under the Credit Facility.
As of March 31, 1996, $345.0 million was outstanding under the Credit Facility
and $155.0 million was available to be borrowed. The Company believes that
operating cash flow and borrowings available under the Credit Facility will
provide sufficient financial resources to satisfy the Company's debt service
requirements and to meet the Company's currently anticipated capital and other
expenditure requirements over at least the next two to three years. However,
there can be no assurance that the Company will not require future financing or
that, if so required, such financing will be available, or, if available, that
the terms thereof will be attractive to the Company.
Any acquisitions by the Company of ownership interests in cellular telephone
systems may be for cash, securities or a combination of cash and securities.
To the extent that the Company uses cash for all or a part of any such
acquisitions, it expects to raise such cash from borrowings under the Credit
Facility or, if feasible and attractive, issuance of Class A Common Stock.
INFLATION
The Company believes that inflation affects its business no more than it
generally affects other similar businesses.
I-10
<PAGE> 13
PART II
OTHER INFORMATION
<TABLE>
<S> <C>
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit
Number Description
------- -----------
27 Financial Data Schedule
(b) Reports on Form 8-K
</TABLE>
On February 12, 1996, the Company filed an Amendment No. 1 to Form
8-K Current Report (the "Amendment"), which amended Item 7(a) of a Current
Report on Form 8-K filed on December 14, 1995 (the "Form 8-K") to include
financial statements of two acquired companies, Augusta Metronet, Inc. ("AMI")
and Georgia Metronet, Inc. ("GMI"). Those financial statements included, for
both AMI and GMI, audited balance sheets as of December 31, 1993 and 1994, and
the related statements of operations, changes in stockholder's equity, and cash
flows for each of the three years in the period ended December 31, 1994. Also
included for both AMI and GMI were the unaudited condensed balance sheet as of
September 30, 1995, and the unaudited condensed statements of operations and
accumulated deficit and the unaudited condensed statements of cash flows for the
nine months ended September 30, 1994 and 1995.
The Amendment also amended Item 7(b) of the Form 8-K to include pro
forma financial information for the Company reflecting the acquisition of AMI
and GMI. The information included the pro forma combined balance sheet as of
September 30, 1995 and the pro forma combined summaries of operations for the
year ended December 31, 1994 and the nine months ended September 30, 1995.
II-1
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has fully caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
PALMER WIRELESS, INC.
Date: May 13, 1996 By: /s/ William J. Ryan
-------------------------
William J. Ryan
President
and
Chief Executive Officer
Date: May 13, 1996 By: /s/ M. Wayne Wisehart
-------------------------
M. Wayne Wisehart
Vice President, Treasurer
and
Chief Financial Officer
II-2
<PAGE> 15
INDEX TO EXHIBITS
Exhibit
Number Description Numbered Page
- - ------- ----------- -------------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
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0
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