Item 1. Business.
GENERAL
The Company is a nationwide communications company whose current primary business is owning and operating television stations through wholly-owned indirect subsidiaries. The Company's television properties currently consist of one ABC affiliated television station, WHTM-TV (which was acquired by the Company during September 1994), serving Harrisburg/Lancaster/ Lebanon/York, Pennsylvania; and three NBC affiliated television stations, KSNF-TV, serving Joplin, Missouri/Pittsburg, Kansas; KJAC-TV, serving Beaumont/Port Arthur, Texas; and KFDX-TV, serving Wichita Falls, Texas/Lawton, Oklahoma. During 1994, the Company sold its three AM and three FM radio stations serving the Fort Wayne, Indiana; Buffalo, New York; and West Palm Beach, Florida markets. The Company intends to continue to investigate potential media acquisitions involving television and radio properties and, possibly, outdoor advertising and newspapers.
The Company's business strategy is to acquire communications properties at prices it considers attractive, finance such properties on terms satisfactory to it, manage such properties in accordance with its operating strategy and dispose of them if and when the Company determines such disposition to be in its best interest. See "Recent Developments" regarding sales and acquisitions of properties since the beginning of 1994. For the foregoing reasons, the results of the Company's historical operations are not comparable to or indicative of results in the future. See "Management's Discussion and Analysis of Financial Condition and Results of Operations."
The Company was organized in New York in 1979 and began active operations in 1981. Its principal executive offices are located at 45 Rockefeller Plaza, New York, New York 10020, and its telephone number is (212) 757-5600. References to the "Company" or "Price" in this report include Price Communications Corporation and its subsidiaries, unless the context otherwise indicates.
RECENT DEVELOPMENTS
In February, 1994, the Company entered into an agreement to purchase WHTM-TV, Channel 27, serving Harrisburg/Lancaster/ Lebanon/York, Pennsylvania, the nation's 44th largest television market, at a purchase price based (subject to adjustment) on a 7.25 multiple of the station's cash flow during a 12-month period preceding the closing. The purchase was consummated on September 16, 1994, at which time the Company paid cash consideration of approximately $47 million plus a $4 million working capital adjustment. The funds utilized to make such acquisition were
I-1 principally supplied under an amended and restated line of credit agreement (the "Amended Line of Credit") with Bank of Montreal.
The Amended Line of Credit provided a seven year revolving credit facility of up to $45 million, which amount is permanently reduced periodically over its term. On October 17, 1994, the net proceeds from the sale of the Company's radio stations in West Palm Beach, Florida, were used to repay $22.5 million of borrowings under the Amended Line of Credit, at which time the facility was reduced to $22.5 million. See "Management's Discussion and Analysis of Financial Condition and Results of Operations."
During 1994, the Company consummated the sale of all of its radio properties as described below (see Note 3 of Notes to Consolidated Financial Statements), realizing gains on such dispositions and utilizing the proceeds of such sales principally to reduce indebtedness. The Company continues to investigate acquisitions of media properties and may reenter radio broadcasting.
On April 14, 1994, the Company sold substantially all of the assets of radio stations WWKB-AM and WKSE-FM in Buffalo, New York, for $5 million in cash. A pre-tax gain of approximately $3.2 million was recognized on the sale.
On October 17, 1994, the Company sold substantially all of the assets of radio stations WBZT-AM and WIRK-FM, West Palm Beach, Florida, for approximately $23 million in cash. The Company realized a pre-tax gain of approximately $13.5 million on this transaction.
On November 11, 1994, the Company sold substantially all of the assets of radio stations WOWO-AM, Fort Wayne, Indiana and WOWO-FM, Huntington, Indiana for approximately $2.3 million in cash. The Company recognized a pre-tax gain of approximately $.8 million on this transaction.
In addition to the radio dispositions, the Company sold certain other properties during 1994 (see Note 3 of Notes to Consolidated Financial Statements), as follows:
During February 1994, the Company sold its outdoor advertising business for a total sales price of $875,000, including $200,000 cash and a note from the buyer for $675,000. A pre-tax loss of approximately $350,000 was recognized in connection with the sale.
On May 20, 1994, the Company sold to TLM Corporation, a former majority owned subsidiary of the Company, all of the capital stock of Eimar Realty Corporation, the sole asset of which is a Nashville, Tennessee office building, for a total purchase price of $815,000 including $275,000 in cash and a note from the buyer for
I-2 $540,000. The Company had attempted unsuccessfully to find an unrelated buyer for the Eimar property during the approximately two years preceding such sale. A de minimis gain was recognized on the sale.
On October 28, 1994 the Company sold its building in Red Bank, New Jersey for $1.7 million in cash. The Company realized a small gain on the sale.
Prior to 1994, the Company had written off its investment in Fairmont Communications Corporation ("Fairmont"), which had filed for relief under Chapter 11 of the U.S. Bankruptcy Code, with the result that the Company's carrying value in such investment was zero. In January 1994, the Company entered into a settlement agreement with the various parties to the Fairmont bankruptcy proceedings whereby the Company agreed to desist in its challenge to the Fairmont plan of reorganization, Fairmont reimbursed the Company for $300,000 of legal fees previously incurred by the Company in connection with such bankruptcy proceeding, and, as an incentive to the manager of the Fairmont properties to maximize recovery, the Company agreed that any excess over a recovery of $5 million by the Company from the sale of Fairmont's properties would be split with such manager. Although the exact amount of any such recovery is uncertain at this time, the Company believes it will receive a cash payment of approximately $7 million in respect of such sale shortly, and anticipates that it may receive a smaller additional payment in the future upon the resolution by Fairmont of various state tax issues. See "Interests in Fairmont" below.
Due to the developments described above, the Company's historical results of operations should not be regarded as indicative of its future results.
SEGMENT DATA
See Note 13 of Notes to Consolidated Financial Statements for segment data concerning the Company's television, radio and other operations. The Company's television and radio segments contributed 70 percent and 30 percent, respectively, of the Company's net revenue for the year ended December 31, 1994. The Company sold 75 percent of its interest in The New York Law Publishing Company at the end of 1992, and during 1993 accounted for its remaining 25 percent interest (which was disposed of during 1993) as an investment under the equity method of accounting. For the year ended December 31, 1993, the Company's television, radio, and other segments contributed 52 percent, 45 percent and 3 percent, respectively. For the year ended December 31, 1992, the Company's television, radio, and publishing and other segments contributed 21 percent, 17 percent and 62 percent, respectively.
I-3 ACQUISITIONS AND DIVESTITURES
Through its history, the Company has actively acquired and divested broadcasting and other properties. In pursuing its acquisition and divestiture strategy, the Company has no fixed formula for determining the purchase price of properties it seeks. With respect to media properties, to date, the Company generally concentrates its acquisition activities on properties that have a history of generating Media Cash Flow (operating profits before deductions for interest, depreciation, amortization and income taxes) or properties that have potential for growth. In seeking acquisitions of media properties, the Company generally gives greater weight to a property's Media Cash Flow than to its net income, because such Media Cash Flow is a standard widely used in the industry to evaluate media properties. The Company's strategy is to seek properties that can be purchased at attractive multiples of "trailing" Media Cash Flow, the Media Cash Flow for the twelve months immediately prior to such acquisition, either in anticipation that such Media Cash Flow will continue at historical levels, or in anticipation that the Company will be able to improve it. However, the Company may consider acquiring properties without such cash flow if it believes them to have sufficient potential for growth or to otherwise be consistent with the Company's objectives.
Prices of media properties are affected by a number of factors in addition to a property's Media Cash Flow, including the characteristics and anticipated growth of the market area, the terms of purchase, programming, the competitive situation within the market area, the possibility of improving Media Cash Flow, the dial position and signal strength (in the case of radio stations), operating history, network affiliation and assigned signal frequency (in the case of television stations), and the value of the fixed assets acquired in connection with the purchase.
To finance its acquisitions and to provide funds for other purposes, the Company may consider using a variety of sources, including borrowings from banks and other institutional lenders, the proceeds of debt sold to the public, seller financing, convertible preferred stock and common stock issued by the Company or its subsidiaries, and cash on hand. Historically, the Company often acquired properties through newly organized subsidiaries, based on the credit of the properties being acquired or by borrowing or issuing securities at the parent company level.
From time to time brokers and potential buyers approach the Company with respect to the potential sale of certain of its media properties. The Company has generally not listed its properties with brokers, but management follows the practice of permitting potential responsible buyers to visit its media properties and of presenting bona fide offers from financially responsible parties to the Company's Board of Directors for consideration. Proceeds of asset sales will be used to retire outstanding debt, to repurchase equity, to finance the Company's
I-4 investments in new properties or for other corporate purposes as determined by the Board of Directors.
INTERESTS IN FAIRMONT
In connection with the sale in 1987 of seven radio stations to Fairmont for an aggregate sale price of $120 million, the Company loaned $50 million to Fairmont (the "Fairmont Notes") and acquired a 27% equity interest in Fairmont. On August 28, 1992, Fairmont filed for voluntary relief under Chapter 11 of the U.S. Bankruptcy Code. The Fairmont Notes owned by the Company and the Company's equity investment in Fairmont had no book value as of December 31, 1994.
By order dated September 10, 1993, the United States Bankruptcy Court for the Southern District of New York confirmed the Chapter 11 plan of reorganization (the "Fairmont Plan") for Fairmont and the Fairmont Subsidiaries. Essentially, the Fairmont Plan provided for the orderly liquidation of the assets of Fairmont and the Fairmont Subsidiaries, and the distribution of the proceeds derived therefrom according to the relative priorities of the parties asserting interests therein. In January 1994, the Company entered into a settlement agreement with the various parties to the Fairmont bankruptcy proceedings whereby the Company agreed to desist in its challenge to the Fairmont Plan, Fairmont reimbursed the Company for $300,000 of legal fees previously incurred by the Company in connection with such bankruptcy proceeding, and, as an incentive to the manager of the Fairmont properties to maximize recovery, the Company agreed that any excess over a recovery of $5 million by the Company from the sale of Fairmont's properties would be split with such manager. Although the exact amount of any such recovery is uncertain at this time, the Company believes it will receive a cash payment of approximately $7 million in respect of such sale shortly, and anticipates that it may receive a smaller additional payment in the future upon resolution by Fairmont of various state tax issues.
OPERATING STRATEGY
At the outset, the Company develops specific plans for each property acquired in an effort to improve its efficiency. The Company attempts to increase the Media Cash Flow of its broadcasting properties and to make each property a significant one relative to its competitors. The Company's goal is to realize annual increases in the net revenue of its properties that exceed increases in operating expenses.
The Company has sought both to elevate its television and radio stations' positions in their markets and to increase advertising rates, although the position of stations in their markets tends to fluctuate. Station revenue growth benefits from the advertising revenue growth of the markets themselves, which the
I-5 Company believes can generally be measured by the growth in retail sales in the areas involved.
Local demographic considerations and promotion play less of a role in television station programming than in the case of radio stations, because a significant portion of station programming is provided by the television networks to the Company's network affiliated television stations. The Company strives to improve or maintain the ratings of its television stations by fine tuning non-network programming and news coverage, improving promotional activities and upgrading physical and technical facilities where necessary.
Within each radio market, the Company historically targeted key demographic groups (determined by age and/or sex), based on advertiser demand and the nature of competition in the market. Research was periodically conducted by outside consultants to help refine and improve the programming of each station, and the Company attempted to direct its sales efforts, both local and national, to obtain the largest possible share of advertising budgets. Although broadcast ratings normally reflect all listeners in a market and the Company's stations may have performed well in the overall ratings, the Company's emphasis was on superior performance in the targeted demographic group, which it believed could result in substantial improvement in revenues and Media Cash Flow by attracting advertisers interested in reaching the target groups. The Company also sought to generate radio revenues through promotional events and print-media tie-ins, techniques that may be particularly important as a station grows more successful and its ability to increase the number of commercials sold becomes more limited.
THE TELEVISION BROADCASTING INDUSTRY
Television station revenues are primarily derived from local, regional and national advertising and from compensation paid by television networks for the local broadcast of network programming, with a small percentage of revenue sometimes obtained from studio rental and programming-related activities. The primary costs involved in owning and operating television stations are salaries, programming, promotion, depreciation and amortization, and selling expenses.
The majority of national and local advertising contracts are short-term, generally running for only a few weeks, while advertising contracts sold by networks are typically for longer periods. National spot and local advertising revenues are more susceptible to fluctuations in the economy than network compensation. Advertising rates charged by a television station vary, depending upon the population and number of television sets in the area served by the station, a program's popularity among the viewers an advertiser wishes to attract, the number of advertisers vying for available time, the prices being charged by competitors
I-6 and the availability of alternative media in the market area. The number of television sets in an area and a program's popularity are reflected in surveys made by a rating service of the number of sets tuned to the station at various times. Advertising rates are highest during the most desirable viewing hours. Local and most regional sales of advertising time are made by a station's sales staff. National sales are made by a national "rep firm", specializing in television advertising sales on the national level, which is compensated on a commission-only basis.
For most network programming that is broadcast by a network affiliate, the network pays the affiliate compensation, which varies in amount depending upon the time of day during which the program is broadcast. "Prime-time" programming (7 to 11 P.M. E.S.T. Sundays and 8 to 11 P.M. E.S.T. other days) generally earns the highest rates. Recent trends indicate a general increase in network compensation levels, and the Company has been attempting to negotiate increased compensation levels under its network affiliation agreements. In addition, a network often allocates portions of advertising time during network broadcasts for direct sale by the local station to advertisers and these time slots have generally been increasing.
While revenues are spread over the calendar year, the first quarter generally reflects the lowest and the fourth quarter the highest revenue for the year. The increase in retail advertising each fall in preparation for the holiday season, combined with political advertising in election years and new fall television programming, tend to increase fourth quarter revenues.
A significant portion of the programs broadcast by the Company's television stations is provided by their networks. Programming costs are generally lower for network affiliates than the independent television stations, and network programs generally achieve higher ratings than non-network programs. The Company's television stations also acquire programs from non- network sources. Programs obtained from non-network sources usually consists of syndicated television shows, some of which have been shown previously on a network, and feature films.
The competitive position of a network affiliated television station is significantly affected by viewer acceptance of the network's programs. Network affiliation agreements have historically generally been for a term of one or two years (although the recent trend has been toward longer terms), and are generally renewed automatically. A network affiliate may reject particular network programs, which might then be offered to other stations in the area.
Competitive factors, in addition to management experience, include a station's authorized transmitter power and antenna location, assigned frequency, network affiliation, carriage of the station's signal on local cable television systems, viewer
I-7 acceptance of network and local programming and the strength of local competition. Generally a television broadcasting station in one market does not compete with stations in another market.
During the past several years, there has been a steady growth of cable communications and a significant liberalization of FCC rules which allow cable systems, satellite master antenna systems, and MMDS services located in areas served by the stations to provide additional program choices. Additionally, direct broadcast satellite service is increasingly being made available on a nationwide basis. Moreover, the FCC has begun to issue authorizations for telephone companies to offer "video dialtone" service that will be similar in nature to that provided by cable communications systems. By federal statute, local telephone companies have been precluded from providing cable television service within their local service areas. However, several U.S. Courts of Appeals have ruled that the federal statutory ban is unconstitutional. To date, the existence of additional program services has not had a demonstrably adverse effect upon the Company's television stations.
The FCC has adopted "must carry" and "retransmission consent" rules at the direction of Congress pursuant to the 1992 Cable Television Consumer Protection and Competition Act. Under this new regulatory regime, virtually all cable systems that carried the Company's television stations have continued to do so. Some systems have agreed to provide compensation to the Company's television stations in return for carriage on the cable system under the new regulations, although such compensation is not substantial. A number of cable television entities have appealed the must carry and retransmission consent rules. A three- judge panel of the U.S. District Court for the District of Columbia upheld the rules, but the U.S. Supreme Court decided to review the ruling and heard oral argument in January 1994. A decision by the Court is expected during 1995. In any event, the Company believes that cable subscriber demand for programming carried by the Company's television stations makes it unlikely that the stations will cease to be carried by cable systems served by those stations, even in the absence of must carry rules.
Several other new technologies are in their developmental stages, such as high definition television capable of transmitting television pictures with higher resolution, truer color and wider aspect ratios. The FCC has recently determined that local television stations such as the Company's will be entitled to frequencies necessary to broadcast high definition television so long as those frequencies are used within a specified time period. These developing technologies have had no immediate impact on the television broadcast industry, and their potential impact on the Company's business cannot be predicted.
I-8 THE RADIO BROADCASTING INDUSTRY
As indicated above, the Company sold during 1994 all of its radio properties, although it continues to investigate possible radio acquisitions and may reenter radio broadcasting. Virtually all of the revenue of a radio station is derived from local and national advertising, and to a minor extent from network compensation. Local sales are made by a station's sales staff. National sales are made by a national "rep firm", specializing in radio advertising sales on the national level, which is compensated on a commission-only basis. Advertising rates charged by a radio station are based primarily on the station's ability to attract audiences in the market area. A station's listenership is reflected in rating service surveys of the number of radios tuned to the station at various times. The primary costs incurred in owning and operating radio stations are salaries, programming, depreciation and amortization, promotion and advertising, rental of premises for studios and transmitting equipment, music license royalty fees and selling expenses.
Radio broadcasting stations compete with the other broadcasting stations in their respective market areas, as well as with other advertising media such as newspapers, broadcast and cable television, magazines, outdoor advertising, transit advertising and direct mail marketing. Competition within the radio broadcasting industry occurs primarily in individual market areas, so that a station in one market does not generally compete with stations in other market areas. In addition to management experience, factors that are material to competitive position include the station's rank in its market, authorized power, assigned frequency, audience characteristics, local program acceptance and the number and characteristics of other stations in the market area.
FEDERAL REGULATION OF BROADCASTING
Television and radio broadcasting (as well as some other potential communications investments of the Company) are subject to the jurisdiction of the FCC under the Communications Act of 1934, as amended ("Communications Act"). The Communications Act, among other things, prohibits the assignment of a broadcast license or the transfer of control of a corporation holding a license without the prior approval of the FCC. Legislation has been introduced from time to time which would amend the Communications Act in various respects and the FCC from time to time considers new regulations or amendments to its existing regulations. During the 103rd Congress, legislation involving major revisions to the Communications Act passed the House of Representatives but was not acted on by the Senate. It is expected that one or more bills proposing a comprehensive revision of the Communications Act will be given substantial attention in the 104th Congress. The Company cannot predict the effect of any such new legislation or amendments on the Company.
I-9
Television licenses are issued and renewable for terms of five years. The Company's licenses have the following expiration dates, until renewed:
KSNF-TV . . . . . . . . . . . . . . February 1, 1998 KJAC-TV . . . . . . . . . . . . . . * KFDX-TV . . . . . . . . . . . . . . August 1, 1998 WHTM-TV . . . . . . . . . . . . . . August 1, 1999
* The license term for KJAC-TV was to have expired on August 1, 1993. KJAC-TV filed a timely application for renewal, thereby extending the license term until action is taken on the renewal application. That application remains pending due to a viewer complaint about the Phil Donahue program. The Company expects the station's license to be renewed during 1995 for a term ending August 1, 1998.
In the vast majority of cases, broadcast licenses are renewed by the FCC. Current FCC regulations permit cognizable ownership by one entity of up to 12 television stations, 20 FM radio stations and 20 AM radio stations. With respect to television stations, however, there is an additional ownership limit based on audience reach. Under the audience reach limitation, an entity may acquire cognizable ownership interests in up to 12 television stations only if the aggregate number of television households reached by the television stations does not exceed 25% of the national television household audience as determined by the Arbitron ADI market rankings. The percentage of the national television household audience reached by the Company's television stations is significantly under these limitations. On December 15, 1994, the FCC commenced a rulemaking proceeding to review its television ownership rules. The FCC has proposed to relax its national ownership limitations with regard to the number of stations an entity may own and to permit a higher national audience reach. Any new rules are not likely to take effect until late 1995 or early 1996. The Company is unable to predict at this time the impact of this initiative on its television broadcast operations.
The FCC's rules generally prohibit the common ownership of a television station and an AM radio station, an FM radio station or general circulation daily newspaper in the same market, although ownership of up to two AM and two FM stations is generally permitted. Ownership of a CATV system and television station in the same market is also prohibited. These rules apply to entities such as the Company, that seek new authorizations or approval of a transfer of an existing combination. The FCC has relaxed its ownership restrictions such that common ownership of television and radio stations may be permissible in the 25 largest markets. In
I-10 its review of the television ownership rules, the FCC has proposed to relax or eliminate the current restriction outside the 25 largest markets on common ownership of a television station and radio stations in the same market and has also proposed to permit common ownership of two television stations in some large markets. Any new rules are not likely to take effect until late 1995 or early 1996. The Company is unable to predict at this time the impact of these initiatives on its television broadcast operations.
The FCC requires the attribution to a broadcast company not only of licenses held by the Company, but also of licenses attributable to its officers and directors and certain of its stockholders and their affiliates, such that there would be a violation of FCC regulations where such an officer, director, stockholder or stockholder's affiliate together held attributable interest in more than the permitted number of stations on a nationwide or local market basis. The Company's By-Laws state that the Board of Directors shall prohibit any voting or transfer of its capital stock, including its Common Stock, which would cause the Company to violate the Communications Act or FCC regulations.
The foregoing is only a brief summary of certain provisions of the Communications Act and the regulations of the FCC. Reference is made to the Communications Act, FCC regulations and the public notices promulgated by the FCC for further information. The Company is unable to predict what impact, if any, changes in these laws would have on its operations.
EMPLOYEES
As of December 31, 1994, the Company employed approximately 222 full time persons at its television stations. The stations have not experienced any significant labor problems under the Company's ownership and the Company considers its labor relations on the whole to be good.
The Company relies on experienced managers for its broadcasting operations, who are given considerable authority at the local level. Where appropriate, the Company has also hired new management in an effort to improve the operations of a particular property.
ITEM 2.
ITEM 2. PROPERTIES.
The Company and its subsidiaries own their studio and production facilities and own or lease space for other offices, antenna sites and certain equipment for each of its stations. The Company believes that its other facilities are suitable and adequate for carrying on its broadcasting and other operations and that no major capital improvements will be necessary over the next year. (See Note 16 of the Notes to Consolidated Financial Statements for information on minimum lease payments of the Company and its subsidiaries for the next five years.)
I-11
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS.
None.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth the executive officers of the Company, their respective ages, the year in which each was first elected an executive officer and the office of the Company held by each. Each executive officer will hold office until removed or until their respective successors have been duly elected and qualified.
Robert Price (Director, President, Chief Executive Officer and Treasurer of the Company), an attorney, is a former General Partner of Lazard Freres & Co. He has served as an Assistant United States Attorney, practiced law in New York and served as Deputy Mayor of New York City. After leaving public office, Mr. Price became Executive Vice President of The Dreyfus Corporation and an Investment Officer of The Dreyfus Fund. In 1972 he joined Lazard Freres & Co. Mr. Price has served as a Director of Holly Sugar Corporation, Atlantic States Industries, The Dreyfus Corporation, Graphic Scanning Corp. and Lane Bryant, Inc., and is currently a member of The Council on Foreign Relations. Mr. Price is also a Director and President of TLM Corporation, and a Director and President of PriCellular Corporation.
Kim I. Pressman, a certified public accountant, is a graduate of Indiana University and holds an M.B.A. from New York University. Before assuming her present office as Executive Vice President and Secretary in October 1994, Ms. Pressman was Vice President and
I-12 Treasurer of the Company from November 1987 to December 1989, and Senior Vice President of the Company from January 1990 to September 1994. She was also Secretary of the Company from July 1989 to February 1990. Ms. Pressman was Vice President- Broadcasting and Vice President, Controller, and Assistant Treasurer of the Company from 1984 to October 1987. Prior to joining the Company in 1984, Ms. Pressman was employed by Peat, Marwick, Mitchell & Co., a national certified public accounting firm, was Supervisor, Accounting Policies for International Paper Company and then Manager, Accounting Operations for Corinthian Broadcasting Division of Dun & Bradstreet Company, a large group owner of broadcasting stations. Ms. Pressman is a Director, Vice President, Treasurer and Secretary of TLM Corporation, and a Director, Vice President and Secretary of PriCellular Corporation.
Bill Bengtson has held a variety of positions in the broadcasting industry for 34 years and assumed his current position in July 1989. Mr. Bengtson is also Vice President and General Manager of KSNF-TV, the Company's NBC affiliate in Joplin, Missouri/Pittsburg, Kansas, a position he has held since April 1987. From January 1985 to March 1987, he was Vice President and General Manager of KRCG-TV, a CBS affiliate in Jefferson City/Columbia, Missouri formerly owned by the Company. Prior to joining the Company in 1985, Mr. Bengtson was Vice President and General Manager of KOAM-TV in Pittsburg, Kansas for 12 years. Mr. Bengtson has served on the National Association of Broadcasters' Television Board of Directors, and as President of the Pittsburg, Kansas Chamber of Commerce, President of the Pittsburg, Kansas Industrial Development Corporation and Mayor of Pittsburg, Kansas.
James Lyndon Kreps, a certified public accountant and graduate of Bucknell University, assumed his current position in July 1994. Prior to joining the Company in 1994, Mr. Kreps was Vice President of Promotional Concept Group, Inc. From June 1989 to September 1992 Mr. Kreps served in various positions at Paramount Pictures Corporation including Director of Financial Reporting and Analysis for the Television Group. From April 1988 to June 1989, Mr. Kreps was a Supervisor of Internal Audit for Gulf & Western (Paramount Communications Corporation). Mr. Kreps also spent four years with Coopers & Lybrand.
I-13 PART II
ITEM 5.
ITEM 5. MARKET FOR COMPANY'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
a) Market for Common Stock
The Company's Common Stock is listed for trading on the American Stock Exchange ("AMEX") under the ticker symbol "PR". The range of high and low last sale prices for the Company's Common Stock on the AMEX for each of the four quarters of 1994 and 1993, as reported by the AMEX was:
The high and low last sale prices for the Company's Common Stock on the AMEX for January 23, 1995, as reported by the AMEX were 6 1/2 and 6 3/8, respectively. The Company's Common Stock has been afforded unlisted trading privileges on the Pacific Stock Exchange under the ticker symbol "PR.P", on the Chicago Stock Exchange under the ticker symbol "PR.M" and on the Boston Stock Exchange under the ticker symbol "PR.B".
b) Holders
On January 23, 1995, there were 705 holders of record of the Company's Common Stock. The Company estimates that brokerage firms hold Common Stock in street name for approximately 3,000 persons.
c) Dividends
The Company, to date, has paid no cash dividends on its Common Stock. The Board of Directors will determine future dividend policy based on the Company's earnings, financial condition, capital requirements and other circumstances. It is not anticipated that dividends will be paid on its Common Stock in the foreseeable future.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA.
The following table sets forth certain selected consolidated financial data with respect to the Company for each of the five
II-1 years in the period ended December 31, 1994, derived from audited consolidated financial statements of the Company and Notes thereto. On December 30, 1992, the Company's consensual Plan of Reorganization, which had been approved by the United States Bankruptcy Court in the Southern District of New York in July of that year, became effective. A vertical black line has been placed to separate pre-reorganization consolidated operating statement and balance sheet items from the post-reorganization consolidated operating statement and balance sheet items since they are not prepared on a comparable basis (see Note 1 of Notes to Consolidated Financial Statements).
II-2 CONSOLIDATED OPERATING STATEMENT ITEMS (in thousands, except for per share amounts)
(1) Reflects results of operations of WHTM-TV since its acquisition during September 1994 and the results of the properties disposed of through their respective dates of sale. See Notes to 2 and 3 to Consolidated Financial Statements. (2) Due to the acquisition and dispositions discussed under "Business-Recent Developments," the borrowings incurred to effect such acquisition, the retirement of the Company's Secured Notes, the consummation of the Plan of Reorganization and the adoption of Fresh Start Reporting, the Company's historical results should not be regarded as indicative of its future results. (3) See Note 1 of Notes to Consolidated Financial Statements. (4) Per share amounts for the Predecessor Company are neither comparable nor meaningful due to the forgiveness of debt, partial sale of subsidiary, issuance of new common stock and adoption of Fresh Start Reporting.
II-3 CONSOLIDATED BALANCE SHEET ITEMS (in thousands, including notes)
- ----------------------------------- (1) Net of unamortized original issue discount of $5,124 and $6,203 as of December 31, 1991 and 1990, respectively. (2) Net of unamortized original issue discount of $8,705 as of December 31, 1992, respectively.
II-4 ITEM 7.
ITEM 7. Management's Discussion and Analysis of Financial Condition and Result of Operations.
The Company reorganized and emerged from bankruptcy proceedings on December 30, 1992 and adopted Fresh Start Reporting in accordance with the guidelines established by the American Institute of Certified Public Accountants in Statement of Position 90-7 "Financial Reporting by Entities in Reorganization Under the Bankruptcy Code". Under Fresh Start Reporting, assets and liabilities were recorded at their estimated fair market value and the historical deficit was eliminated. Accordingly, the Company's financial statements have been prepared as if it is a new reporting entity and a vertical black line has been placed to separate the pre- reorganization consolidated statements of operations and cash flows from the post-reorganization consolidated statements of operations and cash flows since they are not prepared on a comparable basis.
Due to the acquisition and dispositions discussed under "Business - Recent Developments," the borrowings incurred to effect the acquisition, the retirement of the Company's Secured Notes, the consummation of the Plan of Reorganization and the adoption of Fresh Start Reporting, the Company's historical results of operations should not be regarded as indicative of its future results. The following discussion should be read in conjunction with the Consolidated Financial Statements and the Notes thereto.
RESULTS OF OPERATIONS - GENERAL
The comparability of results for future periods will be affected by the acquisition and dispositions during 1994 (see Notes 2 and 3 of Notes to Consolidated Financial Statements) and by the nature and timing of any future acquisitions or dispositions. Future acquisitions could substantially increase the Company's operating expenses, depreciation and amortization charges and, if additional financing is required, interest expense, as well as increasing revenues. For these reasons, the results of the Company's historical operations may not be comparable from period to period or indicative of results in the future.
1994 COMPARED TO 1993
The Company's net revenue, operating expenses, depreciation and amortization, and interest expense for the year ended December 31, 1994 are not comparable to the year ended December 31, 1993 due to the acquisition of WHTM-TV and the borrowings under the Amended Line of Credit to effect such acquisition, and the dispositions of the Company's radio properties and other assets (see Notes 2 and 3 of Notes to Consolidated Financial Statements). During 1994, net revenue increased by 5% to $24.0 million from $22.8 million. This increase was due to the acquisition of WHTM-TV during September of 1994 which resulted in an increase in television segment revenues of 42.7% to $16.8 million from $11.7 million during 1993. This
II-5 increase was partially offset by a decline in net revenue from radio and other segment to $7.3 million from $11.0 million. Television revenues during 1994 were impacted by a large influx of political dollars which contributed to increases in the Company's stations. Operating expenses of the Company decreased overall to $15.0 million from $16.3 million due to the dispositions and despite the acquisition largely as a result of the higher operating margins in television broadcasting as compared to radio broadcasting. Depreciation and amortization expense rose to $3.3 million from $2.3 million primarily as a result of the write off of the portion of the reorganization value remaining on the Company's balance sheet after adjustment for dispositions (see Note 1(e) of Notes to Consolidated Financial Statements) and amortization of intangibles associated with the acquisition of WHTM-TV.
The Company recognized net income of approximately $14.4 million in 1994, primarily as a result of the net gains on the sales of properties during the year of approximately $17.2 million. Additionally, the Company did not have a share of loss of partially owned companies since it disposed of its interest in PriCellular Corporation during the fourth quarter of 1993 and interest expense decreased by approximately $670,000 due to the retirement of the Secured Notes at the end of 1993. For a substantial portion of 1994, the Company had little or no long-term debt outstanding until the acquisition of WHTM-TV during September of 1994.
These improvements were offset, in part, by the increase in depreciation and amortization noted above, and by an increase in corporate expenses of approximately $800,000 and an increase in income taxes of $1.5 million. The increase in corporate expenses was primarily attributable to increased legal, consulting and fees of investment advisors due to the acquisition of WHTM-TV and the exploration by the Company of various business opportunities, as well as to the write off of deferred compensation attributable to an employment agreement related to the Plan of Reorganization which was renegotiated. The increase in income taxes was attributable mainly to the state tax consequences of gains the Company recognized on the sale of properties.
The Company had net income per share according to generally accepted accounting principles of $1.44 in 1994, as opposed to a net loss per share of $.14 in 1993. During 1993 net loss includes an extraordinary gain of $.17 due to the extinguishment of debt. No such extraordinary item existed during 1994.
1993 COMPARED TO 1992
The Company's net revenue, operating expenses and depreciation and amortization for the year ended December 31, 1993 are not comparable to the year ended December 31, 1992 due to the sale of 75 percent of its stock of The New York Law Publishing Company as part of the Plan. The Company's net revenue decreased by approximately $31.2 million and operating expenses by $23.2 million
II-6 as the result of that sale. However, net revenue from the broadcasting segment increased by $1.5 million or 7.1 percent, due to an overall improvement in the market for broadcast advertising, the impact of political revenues and an improvement in market shares at certain of the Company's properties. Operating expenses for the broadcasting segment increased 4% primarily as the result of programming additions at the Company's radio properties.
The Company's corporate expenses decreased from 1992 primarily because professional fees and administrative expenses incurred during the Company's reorganization negotiations, excluding those that are classified as reorganization items, decreased during 1993. Interest expense and the amortization of debt discount during 1993 decreased from 1992 primarily because the Company's long-term debt was substantially reduced as a result of its Plan of Reorganization. Additionally, approximately $23.2 million face amount of the new Secured Notes was retired in October 1993, further reducing those expenses.
The Company's share of loss of partially owned companies decreased in 1993 primarily because the Company ceased to record losses on its share of PriCellular Corporation, once that investment was reduced to its realizable value of $11 million, the amount that the Company sold it for in October of 1993. The decrease was offset, in part, by losses related to The New York Law Publishing Company which was accounted for under the equity method in 1993. The Company's "Other (income) expense, net" decreased to an expense of $539,000 in 1993, as a result of the purchase of 2,249,086 shares of the Company's Common Stock from Huff (see Note 14 of Notes to Consolidated Financial Statements) on which a loss of approximately $4.0 million was recognized. This loss was offset in part by the sale of the Company's preferred and common stock in NTG for $2.4 million which resulted in a gain of the same amount since the stock was carried at a book value of zero. Additionally, the Company had a recovery of approximately $300,000 on the repayment of the note from LL Broadcasting which had been recorded at $2.9 million under Fresh Start Reporting. As a result of the foregoing, the Company recognized a loss before extraordinary items of approximately $3.7 million as compared to a loss of $23.5 million in 1992. The 1992 loss also includes net reorganization expense items totalling approximately $6 million relating to the Company's period under Chapter 11.
Extraordinary income for 1992 was approximately $313 million due to the forgiveness of debt and the partial sale of The New York Law Publishing Company as part of the Company's Plan of Reorganization. Extraordinary income for 1993 was approximately $2 million due to the early extinguishment of the Company's Secured Notes.
The Company had net loss per share before extraordinary item of $.31 and net loss per share of $.14 for 1993. Per share amounts for prior periods are not comparable or meaningful due to the
II-7 forgiveness of debt, partial sale of subsidiary, issuance of new common stock and adoption of Fresh Start Reporting.
LIQUIDITY AND CAPITAL RESOURCES
The Company had approximately $1.1 million in cash and cash equivalents and positive net working capital at December 31, 1994. Long-term debt of $22.5 million was owed by the Company as of December 31, 1994.
During September 1994, certain of the Company's subsidiaries entered into an Amended Line of Credit with the Bank of Montreal ("BMO"). The Amended Line of Credit was for $45 million, which the Company permanently reduced upon the sale of its West Palm Beach radio stations to $22.5 million. The Amended Line of Credit is permanently reduced quarterly by varying amounts, beginning on September 30, 1995, bears interest at a rate equal to the BMO base rate, as defined, plus up to a maximum of .75% and is secured by the assets of the Company's subsidiaries who are the borrowers on the Amended Line of Credit. See Note 10 of Notes to Consolidated Financial Statements.
If the Company's acquisition strategy (see "Business-Acquisitions and Divestitures") continues to be successful the Company may require substantial capital to finance them. The Company may use a variety of sources including the proceeds of debt sold to the public, additional borrowings from banks and other institutional lenders, seller financing, convertible preferred stock and common stock issued at the parent company or subsidiary level. There can be no assurance that the Company will be successful in obtaining funds from those sources.
Although the Company has incurred substantial depreciation and amortization expenses as a result of the purchase of its properties, it does not anticipate the need to make major capital expenditures in respect of its existing media properties (see "Properties") during 1995 and it does not believe that such lack of major capital expenditures will affect its competitive position. Capital expenditures for 1994 were approximately $750,000.
The Company's sources of funds to serve its debt and meet its other obligations historically have been provided by its liquid assets, cash flow from its operating and investment activities, proceeds from the sale of properties and proceeds from loans and financings. The Company intends to seek to improve cash flow from operations by continuing to impose stringent budget procedures on its media properties and by continuing to seek to increase revenues at its properties in excess of increases in operating expenses.
On February 10, 1994, the Company's Board of Directors authorized the repurchase by the Company of up to 2,000,000 shares of its Common Stock. The Company is authorized to make such purchases from time to time in the market or in privately
II-8 negotiated transactions. During the year ended December 31, 1994, the Company repurchased approximately 996,000 shares pursuant to that authorization.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Price Communications Corporation and Subsidiaries Consolidated Financial Statements are set forth on the following pages of this Part II.
___________
PRICE COMMUNICATIONS CORPORATION and SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
II-9
AUDITED CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
Price Communications Corporation and Subsidiaries
December 31, 1994 and 1993 and for each of the three years in the period ended December 31, 1994 with Reports of Independent Auditors
[KPMG PEAT MARWICK LLP LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders Price Communications Corporation:
We have audited the accompanying consolidated balance sheet of Price Communications Corporation and subsidiaries as of December 31, 1994, and the related consolidated statements of operations, shareholders' equity (deficit), and cash flows for the year then ended (Reorganized Company) and the consolidated statements of operations, shareholders' equity (deficit), and cash flows for the year ended December 31, 1992 (Predecessor Company). In connection with our audits of the consolidated financial statements, we have also audited the related financial statement schedules as listed in Part IV, Item 14(a). These consolidated financial statements and financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Price Communications Corporation and subsidiaries as of December 31, 1994, and the results of their operations and their cash flows for the years ended December 31, 1994 and 1992 in conformity with generally accepted accounting principles. Also in our opinion, the related financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole present fairly, in all material respects, the information set forth therein.
As discussed in note 4 to the consolidated financial statements, effective December 30, 1992, Price Communications Corporation was reorganized under a plan confirmed by the Federal Bankruptcy Court and adopted a new basis of accounting whereby all remaining assets and liabilities were revalued at their estimated fair values. As discussed in notes 1 and 11, Price Communications Corporation and subsidiaries (Reorganized Company) have changed their method of accounting for income taxes in 1992 to adopt the provisions of Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes."
/s/ KPMG Peat Marwick LLP ------------------------- KPMG PEAT MARWICK LLP
NEW YORK, NEW YORK JANUARY 20, 1995
Report of Independent Auditors
The Board of Directors and Shareholders Price Communications Corporation
We have audited the accompanying consolidated balance sheet of Price Communications Corporation and subsidiaries (the "Company") as of December 31, 1993 and the related consolidated statements of operations, shareholders' equity (deficit) and cash flows for the year then ended. Our audit also included the financial statement schedules listed in Part IV, Item 14(a). These consolidated financial statements and financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedules based on our audit.
We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Price Communications Corporation and subsidiaries at December 31, 1993 and the results of their operations and their cash flows for the year then ended in conformity with generally accepted accounting principles. Also in our opinion, the related financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole present fairly, in all material respects, the information set forth therein.
/s/ Ernst & Young LLP
March 8, 1994
Price Communications Corporation and Subsidiaries
Consolidated Balance Sheets
(continued)
Price Communications Corporation and Subsidiaries
Consolidated Balance Sheets - continued
*The Company also has net operating loss carryforwards which may mitigate federal income taxes, if any, resulting from disposition of the acquired assets during the carryforward period (see Note 11).
See accompanying notes to consolidated financial statements.
Price Communications Corporation and Subsidiaries
Consolidated Statements of Operations
*Per share amounts for the Predecessor Company are neither comparable nor meaningful due to forgiveness of debt, partial sale of subsidiary, issuance of new common stock and adoption of Fresh Start Reporting.
See accompanying notes to consolidated financial statements.
Price Communications Corporation and Subsidiaries
Consolidated Statements of Shareholders' Equity (Deficit)
Years ended December 31, 1994, 1993 and 1992
See accompanying notes to consolidated financial statements.
Price Communications Corporation and Subsidiaries
Consolidated Statements of Cash Flows ============
(continued)
Price Communications Corporation and Subsidiaries
Consolidated Statements of Cash Flows (continued)
See accompanying notes to consolidated financial statements.
Price Communications Corporation and Subsidiaries
Notes to Consolidated Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Basis of Presentation - The consolidated financial statements include the accounts of Price Communications Corporation (the "Company" or "Price") and its subsidiaries. All significant intercompany items and transactions have been eliminated.
b. Fresh Start Reporting - The Company reorganized and emerged from Chapter 11 bankruptcy proceedings on December 30, 1992 (the "Effective Date"-see Note 4), and adopted Fresh Start Reporting in accordance with the guidelines established by the American Institute of Certified Public Accountants in Statement of Position 90-7, "Financial Reporting by Entities in Reorganization Under the Bankruptcy Code." Under Fresh Start Reporting, assets and liabilities are recorded at their estimated fair market value and the historical deficit is eliminated. Accordingly, the Company's financial statements were prepared as if it were a new reporting entity (referred to as the "Reorganized Company") as of the Effective Date. A vertical black line has been placed to separate the consolidated statements of operations and cash flows of the Company prior to the reorganization (referred to as the "Predecessor Company") from those of the Reorganized Company, since they are not prepared on a comparable basis.
The Company's operations for the two-day period of December 30 and December 31, 1992 were insignificant. Accordingly, December 31, 1992 was used as the cut-off date for financial reporting purposes in lieu of the Effective Date.
The revaluation of the Company's assets and liabilities as of December 31, 1992 was based on an independent appraisal, modified as appropriate, and resulted in a reduction in net carrying values of assets and liabilities of approximately $5,027,000.
c. Depreciation and Amortization - Depreciation is computed on the straight-line method on the basis of estimated useful lives, as follows:
Buildings-15 to 25 years Broadcasting equipment-10 to 12 years Leasehold improvements-the life of the underlying lease Furniture and fixtures-3 to 10 years Transportation equipment-3 years
Price Communications Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
d. Intangible Assets:
i. Excess of purchase price over the fair value of net assets acquired includes FCC licenses, station call letters, and goodwill. These assets are integral determinants of a communications property's economic value, and have long and productive lives. In connection with Fresh Start Reporting, unamortized goodwill related to acquisitions prior to December 31, 1992 was eliminated and corresponding FCC licenses were restated at their approximate fair value as of December 31, 1992. The Predecessor Company amortized such intangible assets over a 40-year period, the maximum life allowable under Accounting Principles Board Opinion No. 17. The Reorganized Company continues to amortize such assets over a 40-year life commencing from the original date of acquisition.
ii. Deferred expenses associated with debt instruments were amortized under the straight-line method over their respective lives. Debt discounts were amortized under the effective interest method. As of December 31, 1992, the unamortized carrying value of deferred debt expense and unamortized debt discount associated with debt forgiven or exchanged under the Company's Plan of Reorganization (the "Plan"-see Note 4) was eliminated.
e. Reorganization Value in Excess of Amounts Allocable to Identifiable Assets-The reorganization value in excess of amounts allocable to identifiable assets, which resulted from the implementation of Fresh Start Reporting was amortized using the straight-line method over 20 years. During the year ended December 31, 1994, the portion of this asset remaining after adjustment for dispositions (approximately $670,000) was written off.
f. Per Share Data-Primary income per common share is based on income for the period divided by the weighted average number of shares of common stock and common stock equivalents outstanding, which was approximately 9.9 million shares for 1994 and 11.9 million shares for 1993. Per share amounts for the Predecessor Company are not presented because they are neither comparable nor meaningful due to forgiveness of debt, partial sale of subsidiary, issuance of new common stock and adoption of Fresh Start Reporting.
Price Communications Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
g. Allowance for Doubtful Accounts-The Company provides an allowance for doubtful accounts based on reviews of its customers' accounts. Included in operating expense is bad debt expense of approximately $319,000, $264,000, and $514,000 for the years ended December 31, 1994, 1993, and 1992, respectively.
h. Barter Transactions-Revenue from barter transactions (advertising provided in exchange for goods and services) is recognized as income when advertisements are broadcast, and merchandise or services received are charged to expense when received or used.
i. Advertising Revenues-Sales of advertisements are recognized as income when advertisements are broadcasted or printed.
j. Film Broadcast Rights-The capitalized cost of film broadcast rights is amortized on the basis of the estimated number of showings or, if unlimited showings are permitted, over the term of the broadcast license agreements. Unamortized film broadcast rights are classified as current or noncurrent on the basis of their estimated future usage. Amortization of film broadcast rights is included in operating expenses and amounted to approximately $1,077,000, $800,000, and $940,000 for the years ended December 31, 1994, 1993, and 1992, respectively.
k. Cash and Cash Equivalents-For purposes of the consolidated statements of cash flows, the Company considers all highly liquid debt instruments, including Treasury bills, purchased with maturities of three months or less at the time of purchase to be cash equivalents.
l. Marketable Securities-Dividend and interest income are accrued as earned. Net realized gains (losses) on the sale of marketable securities are based upon weighted average cost (see Note 12).
Price Communications Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
m. Income Taxes-Effective December 31, 1992, the Company adopted Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("Statement 109"), issued by the Financial Accounting Standards Board (see Note 11). The cumulative effect of this change had no significant impact on the Company's consolidated financial statements, including income tax expense. Under the asset and liability method of Statement 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under Statement 109, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
Prior to December 31, 1992, the Company accounted for income taxes pursuant to the deferred method under APB Opinion 11. Under the deferred method, deferred income taxes were recognized for income and expense items that were reported in different years for financial reporting purposes and income tax purposes using the tax rate applicable for the year of calculation.
2. ACQUISITION OF WHTM-TV
On September 16, 1994, the Company acquired all of the outstanding shares of the corporation which owns all of the assets of WHTM- TV, the ABC affiliate serving the Harrisburg-York-Lancaster-Lebanon, Pennsylvania television market for approximately $47 million plus a working capital adjustment of approximately $4 million. The acquisition has been accounted for under the purchase method, and accordingly, the operating results of WHTM-TV have been included in the consolidated operating results since the date of acquisition. The purchase price is subject to adjustment in the Company's favor based upon resolution of contemplated arbitration proceedings. Funds for the acquisition were provided by cash on hand and a credit facility from the Bank of Montreal ("BMO") of $45 million (see Note 10), which was reduced to $22.5 million upon the sale of the Company's radio properties in West Palm Beach during October of 1994 (see Note 3). The acquisition resulted in intangible assets, primarily broadcast licenses of approximately $44.2 million and goodwill of approximately $19.7 million, both of which are being amortized over a forty year period. Condensed pro forma financial information regarding this acquisition and dispositions during 1994 are included under Note 3.
Price Communications Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
3. DISPOSITIONS
In February 1994, the Company sold its outdoor advertising business for a total of $875,000 in cash and notes receivable. (see Note 5). This disposition resulted in a pretax loss of $350,000.
In April 1994, the Company sold substantially all of the assets of its radio properties, WWKB-AM and WKSE-FM in Buffalo, New York, for $5 million in cash. The Company realized a pretax gain of approximately $3.2 million on this transaction.
In May 1994, the Company sold all of the stock of Eimar Realty Corporation, its then wholly owned subsidiary, owning a building in Nashville, Tennessee, to TLM Corporation, a former subsidiary of the Company. The purchase price was $815,000 including a note from the purchaser of $540,000 (see Note 5). The Company's pretax gain on the transaction was de minimis.
In October 1994, the Company sold substantially all of the assets, together with certain liabilities of radio stations WBZT-AM and WIRK-FM, West Palm Beach, Florida, for approximately $23 million in cash. The Company realized a pretax gain of approximately $13.5 million on this transaction. The net proceeds were used to retire $22.5 million under the BMO credit facility (see Note 10).
In October 1994, the Company sold its building in Red Bank, New Jersey for $1.7 million in cash. The Company realized a de minimis gain on the sale.
In November 1994, the Company sold substantially all of the assets of radio stations WOWO- AM and WOWO-FM in Fort Wayne and Huntington, Indiana, respectively, for $2.3 million in cash. The Company recognized a pretax gain on the sale of approximately $.8 million.
The gains and losses on the dispositions outlined above have been included in other (income) expense, net on the Company's statement of operations for the year ended December 31, 1994.
Price Communications Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
3. DISPOSITIONS (CONTINUED)
The following unaudited pro forma financial information has been prepared based on the assumption that the aforementioned 1994 acquisition had occurred on January 1, 1994 and 1993:
*Further reflects the sales during 1994 of radio stations and other properties as if they had occurred on January 1, 1994.
The pro forma information reflects adjustments for changes in depreciation, amortization, interest expense and income taxes resulting from the acquisition and dispositions.
The proforma financial information is not necessarily indicative either of results of operations that would have occurred had the acquisition and dispositions been made at the beginning of the periods, or of future results of operations of the Company.
Price Communications Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
4. REORGANIZATION
On December 30, 1992, The Plan of Reorganization ("the Plan"), which had been approved by the United States Bankruptcy Court for the Southern District of New York became effective. Under the Plan, the following occurred:
a. Holders of approximately $31 million principal amount of the Company's senior debt received new $31 million face amount seven-year 5% Senior Secured Notes (the "Secured Notes"-see Notes 6 and 10).
b. Apollo Investment Fund, L.P. and James Finkelstein purchased 75% of Alexandra Publishing Corporation, which owns The New York Law Publishing Company, in exchange for the cancellation of approximately $19 million principal amount of senior debt, the payment to the Company of $7.5 million in cash and the assumption of certain liabilities of the Company of approximately $45 million. See note 14 for subsequent disposal of the remaining 25% interest in the publishing subsidiaries.
c. The holders of the existing subordinated debt received 94.5% of the common stock of Price.
d. Shareholders received shares which constituted 3.5% of the common stock of the Reorganized Company, and Robert Price, President of the Company, received 2% of such common stock in exchange for the junior common stock, all of which was held by Mr. Price.
The gain on the partial sale of publishing companies and the gain from cancellation of indebtedness resulted in extraordinary income of approximately $312.7 million which is net of a tax provision of $900,000 relating to the sale of the publishing companies. The gain resulting from the forgiveness of debt is not taxable for Federal income tax purposes.
In a related transaction, on August 5, 1992, the Company exchanged its interest in TLM Corporation (until then a 90.7% owned subsidiary) for 90.7% of the assets of TLM Corporation. These assets consisted of cash and common stock and certain public debt securities of the Company. The Company's loss from the transaction was de minimis.
Price Communications Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
5. NOTES RECEIVABLE
Investments in notes receivable include the following:
a. In connection with the sale in 1987 of seven radio stations to Fairmont Communications Corporation ("Fairmont") for an aggregate sale price of $120 million, the Company loaned $50 million to Fairmont (the "Fairmont Notes") and acquired a 27% equity interest in Fairmont. The Fairmont Notes were issued in three series of 12 1/2% increasing rate subordinated notes due in 1992, extendible at Fairmont's option to 1994. Interest on the notes was payable quarterly in cash or additional notes at Fairmont's election.
During 1992, Fairmont filed for voluntary relief under Chapter 11 of the U.S. Bankruptcy Code. At that time the Company ceased to record additional notes related to interest paid in kind since it was not entitled to interest after that date under the Bankruptcy Code.
The $94.8 million principal amount of Fairmont Notes owned by the Company (which includes accrued interest paid in additional Fairmont Notes) and the Company's equity investment in Fairmont had no book value as of December 31, 1994 and 1993.
During September 1993, the United States Bankruptcy Court for the Southern District of New York confirmed the Chapter 11 Plan of Reorganization (the "Fairmont Plan") for Fairmont and its subsidiaries. Essentially, the Fairmont Plan provides for the orderly liquidation of the assets of Fairmont and its subsidiaries, and the distribution of the proceeds derived therefrom according to the relative priorities of the parties asserting interests therein. The Company believes that the level of asset sales will be sufficiently high to provide for some recovery upon the Fairmont Notes, although the exact amount of any such recovery is uncertain at this time.
b. During February 1994, in connection with the sale of its outdoor advertising business, the Company received a note from the buyer, Midwest Media, Inc., for a total of $675,000 (see Note 3). The note bears interest at the rate of 8% and is payable quarterly. Principal is payable in quarterly installments of varying amounts beginning in November 1994 through November 1997 with the balance of the principal of $465,000 due in February 1998. During 1994, the Company set up a partial reserve of $337,500 against this note.
Price Communications Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
5. NOTES RECEIVABLE (CONTINUED)
c. During May 1994, in connection with the sale of Eimar Realty Corporation, the Company received a note from the buyer, TLM Corporation (a former subsidiary of the Company-see Note 3), in the amount of $540,000. The note bears interest at the rate of 5% per annum, payable quarterly, with principal payable on May 20, 1998.
6. INVESTMENT IN PARTIALLY OWNED COMPANIES
a. Alexandra Publishing Corporation ("Alexandra")
On December 30, 1992, the Company, in connection with its Plan of Reorganization, sold 75% of Alexandra (see Note 4). The Company retained a 25% interest in Alexandra which owns 100% of The New York Law Publishing Company. In November 1993, in connection with the repurchase of common stock (see Note 14), the Company transferred its remaining 25% interest in Alexandra, which had a carrying value of approximately $3.8 million.
For the year ended December 31, 1992, these subsidiaries were consolidated in the statements of operations and cash flows of the Predecessor Company. Based upon audited financial information, Alexandra had net revenue, operating expenses, and depreciation and amortization of approximately $32.6 million, $23.9 million (including intercompany expenses of $1.3 million), and $1.6 million, respectively, for the year ended December 31, 1992. For the year ended December 31, 1993, the 25% interest in such subsidiaries was accounted for by the equity method and the Reorganized Company recognized a charge to operations of approximately $230,000 for its period of ownership.
b. PriCellular Corporation ("PriCellular")
During 1992 and 1993, the Company accounted for its investment in PriCellular under the equity method of accounting as it believed its control in PriCellular to be temporary. The Company recognized 75% of PriCellular's losses as a charge to operations to the extent of its investment in PriCellular representing $2.9 million for the year ended December 31, 1992. Prior to Fresh Start Reporting, the Predecessor Company's investment in PriCellular had been reduced to zero book value. In accordance with the court approved Plan, the Company transferred 1% of PriCellular's common stock to Robert Price, reducing the Company's interest to 74%. In connection with fresh start reporting, this investment was reflected at an approximate fair market value of $11.5 million at December 31, 1992.
Price Communications Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
6. INVESTMENT IN PARTIALLY OWNED COMPANIES (CONTINUED)
On October 1, 1993, the Company sold its remaining 74% interest in PriCellular to a subsidiary of PriCellular for $11 million in cash. The proceeds from the sale were used to repurchase a portion of the Secured Notes, in accordance with the terms of the indenture of such notes (see Note 10). During 1993, the Company recognized a charge of approximately $890,000 related to its share of PriCellular's losses through October 1, 1993, and realized no gain or loss from the sale of its interest in PriCellular.
7. PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
Price Communications Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
8. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consist of the following:
9. OTHER LIABILITIES
Other liabilities consist of:
Price Communications Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
10. LONG-TERM DEBT
Long-term debt consists of the following notes payable by wholly-owned subsidiaries of the Company at December 31, 1994 and 1993 as follows:
(A) On September 16, 1994, certain subsidiaries of the Company entered into an Amended and Restated Line of Credit Agreement with BMO (the "Amended Line of Credit"). The Amended Line of Credit was for $45 million, permanently reduced by $22.5 million upon the sale of the Company's radio stations in West Palm Beach (see Note 3) and reduced further quarterly, in varying amounts through the year 2001 as follows:
Price Communication Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
10. LONG-TERM DEBT (CONTINUED)
Borrowings under the Amended Line of Credit bear interest at the BMO Base Rate, as defined, plus up to a maximum of .75%, and are secured by the assets of the subsidiaries, which have a book value of approximately $81.3 million as of December 31, 1994. There is also a fee of .5% on the unused portion, if any, of the Amended Line of Credit. On December 31, 1994 the effective interest rate was 9.25%. The terms of the Amended Line of Credit require the Company to maintain certain financial ratios, restrict the declaration of dividends and require the Company to apply the proceeds from future asset sales to the outstanding balance due.
(B) In December 1993, certain subsidiaries of the Company entered into a $10 million Line of Credit Agreement (the "Line of Credit") with BMO. Borrowings under the Line of Credit bore interest at the BMO Base Rate, as defined (or at other rates at the borrowers' option), and were secured by the assets of the subsidiaries. Borrowings of $5.6 million under the Line of Credit were used to retire the remaining Secured Notes issued in connection with the Plan of Reorganization. Also in December 1993, the Company used proceeds of $2.4 million from the sale of its position in Northstar Television Group, Inc. ("NTG") to repay borrowings under the Line of Credit (see Note 12).
(C) In connection with the Plan, the Company issued $30,805,000 face amount of 5% Senior Secured Notes. The Company recorded these notes net of a discount of $8,705,000 under Fresh Start Reporting (see Note 1). During October and December 1993, the Company repurchased all of the notes for approximately $20.8 million, plus accrued interest, and realized a gain of approximately $2.0 million, net of taxes of zero.
Price Communications Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
11. INCOME TAXES
As discussed in Note 1, the Company adopted Statement 109 as of December 31, 1992. The cumulative effect of this change had no significant impact on the Company's consolidated financial statements, including tax expense, for the year then ended.
Provision (benefit) for income taxes is approximately:
In addition, a provision of $900,000, primarily for Federal alternative minimum tax, has been included in extraordinary items for the year ended December 31, 1992 (see Note 4).
For the years ended December 31, 1992 and 1993, the Company was unable to utilize the tax benefit of capital and net operating losses, and accordingly, no amounts were provided therefor. For the year ended December 31, 1994, the provision for income taxes differs from the amount computed by applying the federal income tax rate (35%) because of the effect of the following items:
Price Communication Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
11. INCOME TAXES (CONTINUED)
The Company had, as of December 31, 1994 and 1993, deferred tax assets which were subject to a valuation allowance of approximately $39,529,000 and $46,031,000, respectively, and deferred tax liabilities of approximately $21,154,000 and $3,943,000, respectively. The allowance has been recognized to offset the related deferred tax asset due to the uncertainty of the realization of benefit of such amount. These deferred tax assets and liabilities consist of the following:
Net operating loss carryforwards aggregating approximately $32.9 million are available for federal income tax purposes at December 31, 1994. These carryforwards expire in the years 2002 through 2006. The Company also has available investment tax credit carryforwards of approximately $100,000 expiring in the year 2000 and capital loss carryforwards of approximately $41 million expiring in the year 1998. A portion of these carryforwards arose prior to the reorganization and are subject to the limitations of Internal Revenue Code Sections 382 and 383.
Price Communications Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
12. OTHER (INCOME) EXPENSE-NET
Other (income) expense-net consists of:
As of December 31, 1992, in conjunction with the adoption of Fresh Start Reporting, the investment in common and preferred stock of NTG was removed from the Company's consolidated balance sheet since its estimated realizable value was zero (see Note 1). In December 1993, the Company sold its investment in NTG for approximately $2.4 million in cash and recognized a gain of approximately $2.4 million on the sale.
Price Communications Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
13. SEGMENT DATA
The Reorganized Company's business operations are classified into two segments: Television and Radio Broadcasting and Other. The Company sold its radio stations during 1994 and has no current contracts to acquire any other radio stations (see Note 3). The Predecessor Company's business operations included Publishing with Other. The Company's Publishing operations were transferred to third parties in 1992 (see Note 4) and therefore, are no longer consolidated in the Reorganized Company's operations. There are no transfers between segments of the Company. The segment data follows:
Price Communications Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
13. SEGMENT DATA (CONTINUED)
*Operating income (loss) is before corporate expenses, other (expense) income-net, interest expense, amortization of debt discount and deferred debt expense, unrealized non-cash loss (recovery) on marketable securities, share of loss of partially owned companies, reorganization items, income taxes and extraordinary items.
Price Communications Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
13. SEGMENT DATA (CONTINUED)
====================================
Price Communications Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
14. SHAREHOLDERS' EQUITY (DEFICIT)
a. Refer to notes 1 and 4 for a description of changes to shareholders' equity (deficit) pursuant to the Plan of Reorganization.
b. On November 24, 1993, the Company purchased from investment advisory clients of W.R. Huff Asset Management Co., L.P. ("Huff") a block of 2,249,086 shares of its common stock. The purchase price consisted of $3.75 per share in cash, plus the stock of its indirect wholly-owned subsidiary, Price Publishing Corporation, which held the remaining 25% interest in the New York Law Publishing Company (see Note 4). The stock of Price Publishing Corporation had a book value of approximately $3,836,000 at such date which in the opinion of management approximated its fair value (see Note 6). In connection with this transaction, the Company recorded a loss of approximately $3,977,000 reflecting the difference between the value of the cash and stock of Price Publishing Corporation transferred to Huff and the then current trading market price of the common stock. The loss has been included in other expense (income) for 1993 in the accompanying statement of operations (see Note 12), and the common stock purchased from Huff has been treated as constructively retired in the accompanying balance sheet at December 31, 1993.
c. In connection with the Plan, warrants on the Company's common stock, originally issued on April 12, 1990, were amended. The warrants will be exercisable for approximately 124,000 shares of the Reorganized Company's common stock at an exercise price of $4.23 per share during the five-year period commencing October 1, 1993.
d. In October 1994, the Company's Board of Directors enacted a Stockholders Rights Plan designed to protect the interests of the Company's shareholders in the event of a potential takeover for a price which does not reflect the Company's full value or which is conducted in a manner or on terms not approved by the Board as being in the best interests of the Company and its shareholders. The Board has declared a dividend distribution of One Common Stock Purchase Right on each outstanding share of Common Stock of the Company. The Rights provide, in substance, that should any person or group acquire 20% or more of the Company's Common Stock, each Right, other than Rights held by the acquiring person or group, would entitle its holder to purchase a specified number of Price Communications Corporation common shares for 50% of their then-current market value. In addition, the Rights may be exercised, at the holders option, at a purchase price of $22.50 per share at any time prior to the termination of the Plan. Unless a 20% acquisition has occurred, the Rights may be redeemed by the Company at any time prior to the termination date of the Plan.
e. On February 10, 1994, the Company's Board of Directors authorized the repurchase by the Company of up to 2,000,000 shares of its Common Stock. The Company is authorized to make such purchases from time to time in the market or in privately negotiated transactions
Price Communications Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
14. SHAREHOLDERS' EQUITY (DEFICIT) - CONTINUED
when it is legally permissible to do so or believed to be in the best interests of its shareholders. During the year ended December 31, 1994, the Company repurchased approximately 996,000 shares pursuant to that authorization. Repurchased common stock of the Company has been treated as constructively retired in the accompanying balance sheet as of December 31, 1994.
15. STOCK OPTION PLAN
A long-term incentive plan, (the "1992 Long Term Incentive Plan") was established under the Plan, which provides for granting incentive stock options, as defined under current tax law, and other stock-based incentives to key employees and officers. The maximum number of shares of the Company that are subject to awards granted under the 1992 Long Term Incentive Plan is 1,000,000. The exercise of such options, other than those granted on December 10, 1992, will be exercisable at a price not less than the fair market value on the date of the grant, for a period up to ten years.
New incentive stock options were granted on December 10, 1992 under the 1992 Long Term Incentive Plan to key employees and officers. The number of options issued represents essentially a 1 for 2 reverse split for all previously awarded stock options granted, which were canceled pursuant to the Plan, except for options previously awarded to Robert Price which were surrendered by Mr. Price. Options granted on December 10, 1992 represent 170,911 shares and the exercise price was set at $2.67 per share.
The following table sets forth information with respect to the Company's stock options for the years ended December 31, 1994 and 1993:
Price Communications Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
16. COMMITMENTS AND CONTINGENCIES
The Company is involved in various claims and litigation arising in the ordinary course of business. In the opinion of legal counsel and management, the ultimate disposition of these matters will not have a material adverse effect on the Company's financial condition.
The Company has an employment agreement with Robert Price covering base salary and incentive compensation. The agreement is for a term of three years commencing October 1994 at a base salary of $300,000 and is extendable for periods of three years at the Company's option. Cash performance bonuses and stock options awards are determined solely at the discretion of the Board of Directors or the Stock Option Committee, respectively.
The Company and its subsidiaries lease a variety of assets used in their operations, including office space and antenna sites. Renewal options are available in the majority of leases. The following is a schedule of the Company's minimum rental commitment for operating leases of real and personal property for each of the five years subsequent to 1994 and in the aggregate:
Rental expense for operating leases was approximately $312,000, $312,000, and $1,468,000 for the years ended December 31, 1994, 1993, and 1992, respectively.
At December 31, 1994, the Company is committed to the purchase of film broadcast rights of various syndicated programming aggregating approximately $1,602,000, $1,141,000, $378,000, and $111,000 for the years 1995, 1996, 1997, and 1998, respectively.
Price Communications Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
17. SUPPLEMENTAL CASH FLOW INFORMATION
The following is supplemental disclosure cash flow information for the years ended December 31, 1994, 1993, and 1992:
PART III
The information called for by Items 10, 11, 12 and 13 is incorporated herein by reference from the following portions of the definitive proxy statement to be filed by the Company in connection with its 1995 Meeting of Shareholders.
III-1 PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) (1) and (2) List of financial statements and financial statement schedules:
Independent Auditors' Reports Consolidated Balance Sheets at December 31, 1994 and 1993 Consolidated Statements of Operations for Years ended December 31, 1994, 1993 and 1992 Consolidated Statements of Shareholders' Equity (Deficit) for Years ended December 31, 1994, 1993 and 1992 Consolidated Statements of Cash Flows for the Years ended December 31, 1994, 1993 and 1992 Notes to Consolidated Financial Statements
III. Condensed Financial Information of Registrant VIII. Valuation and Qualifying Accounts
(Schedules other than those listed are omitted for the reason that they are not required or are not applicable or the required information is shown in the financial statements or notes thereto.)
(3) Exhibits
See Exhibit Index at page E-1, which is incorporated herein by reference.
(b) Reports on Form 8-K.
During the quarter ended December 31, 1994, Registrant filed the following Current Reports on Form 8-K:
On October 6, 1994, the Company filed a Form 8-K to report an event of September 16, 1994. The report included an Item 2 discussion of the purchase of WHTM-TV, Harrisburg, Pennsylvania.
On October 14, 1994, Registrant filed a report on Form 8-K wherein a change of the Company's Certifying Accountants on October 6, 1994, was reported at Item 4.
On October 24, 1994, Registrant filed an amended Form 8-K to its Current Report on Form 8-K filed on October 14, 1994, regarding a change in the Registrant's Certifying Accountants at Item 4.
IV-1
On December 5, 1994, Registrant filed a report on Form 8-K wherein adoption of the Registrant's Shareholder Rights Plan was reported in Item 5.
IV-2
PRICE COMMUNICATIONS CORPORATION AND SUBSIDIARIES
SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
Balance Sheets December 31, 1994 and 1993
- --------------- * Eliminated in consolidation
PRICE COMMUNICATIONS CORPORATION AND SUBSIDIARIES
SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
Statements of Operations
PRICE COMMUNICATIONS CORPORATION AND SUBSIDIARIES
SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
Statements of Cash Flows
- --------------- * Eliminated in consolidation.
PRICE COMMUNICATIONS CORPORATION AND SUBSIDIARIES
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
DECEMBER 1994, 1993 AND 1992
--------------- (a) Amounts written off as uncollectible and payments. (b) Includes adjustments for the disposition of properties and the acquisition of WHTM-TV. (c) $85,000 relates to the partial sale of companies in 1992.
SIGNATURES
Pursuant to the requirements of Section 13 and 15(d) of the Securities and Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
PRICE COMMUNICATIONS CORPORATION
By /s/ Robert Price ------------------------------------- Robert Price, President
Dated: January 26, 1995
Pursuant to the requirements of the Securities and Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated. Each person whose signature appears below hereby authorizes and appoints Robert Price as his attorney-in-fact to sign and file in his behalf individually and in each capacity stated below any and all amendments to this Annual Report.
Dated: January 26, 1995 By /s/ Robert Price -------------------------------------- Robert Price, Director and President (Principal Executive Officer, Financial Officer and Accounting Officer)
Dated: January 26, 1995 By /s/ George H. Cadgene -------------------------------------- George H. Cadgene, Director
Dated: January 26, 1995 By /s/ Robert F. Ellsworth -------------------------------------- Robert F. Ellsworth, Director
Dated: January 26, 1995 By /s/ Robert Paul -------------------------------------- Robert Paul, Director
Dated: January 26, 1995 By /s/ Kim I. Pressman -------------------------------------- Kim I. Pressman, Director
Dated: January 26, 1995 By /s/ Steven Price -------------------------------------- Steven Price, Director EXHIBIT INDEX ITEM 14(a)(3)
PRICE COMMUNICATIONS CORPORATION
Annual Report on Form 10-K for the year ended December 31, 1994
Page(1) ----
(3)(a) Restated Certificate of Incorporation of the Registrant as filed with the Secretary of State of the State of New York on December 29, 1992, incorporated by reference to Exhibit 3(a) to Registrant's Form 10-K for the year ended December 31, 1992.
(b) Restated By-laws of the Registrant, incorporated by reference to Exhibit 3(b) to the Registrant's Form 10-K for the year ended December 31, 1993.
(4)(a) Indenture dated as of December 30, 1992 between the Registrant and IBJ Schroder Bank & Trust Company, as trustee, relating to the Company's 5% Senior Secured Notes due 1999 (the "Indenture"), incorporated by reference to Exhibit 4(a) to Registrant's Form 10-K for the year ended December 31, 1992.
(b) Pledge, Intercreditor and Collateral Agency Agreement dated as of December 30, 1992, among the Registrant, IBJ Schroder Bank & Trust Company, as Trustee under the Indenture, and IBJ Schroder Bank & Trust Company, as Collateral Agent, incorporated by reference to Exhibit 4(b) to Registrant's Form 10-K for the year ended December 31, 1992.
(10)(a) The Registrant's 1992 Long Term Incentive Plan, incorporated by reference to Exhibit 10(a) to
- -------------------- 1 Page numbers are sequentially numbered pages.
E-1 Page ----
Registrant's Form 10-K for the year ended December 31, 1992.
(b) Amended and Restated Employment Agreement dated as of May 8, 1992 between The New York Law Publishing Company and Robert Price, incorporated by reference to Exhibit 10(b) to Registrant's Form 10-K for the year ended December 31, 1992.
(c) Employment Agreement with Robert Price, dated May 8, 1992, incorporated by reference to Exhibit 10(c) to Registrant's Form 10-K for the year ended December 31, 1992.
(d) Agreement dated May 8, 1992 between the Registrant and Robert Price with respect to PriCellular Corporation, incorporated by reference to Exhibit 10(d) to Registrant's Form 10-K for the year ended December 31, 1992.
(e) Amended and Restated Stock Purchase Agreement dated as of May 8, 1992 among the Registrant, Price Publishing Corporation, Alexandra Publishing Corporation, The New York Law Publishing Company and Apollo Investment Fund, L.P., incorporated by reference to Exhibit 10(e) to Registrant's Form 10-K for the year ended December 31, 1992.
(f) Amended and Restated Shareholders Agreement dated as of May 8, 1992 among the Registrant, Apollo Investment Fund, L.P., Price Publishing Company, Alexandra Publishing Corporation and The New York Law Publishing Company, incorporated by reference to Exhibit 10(f) to Registrant's Form 10-K for the year ended December 31, 1992.
(g) Registration Rights Undertaking, incorporated by reference to Exhibit
E-2
Page ----
10(g) to Registrant's Form 10-K for the year ended December 31, 1992.
(h) Warrant Agreement dated April 12, 1990 between Price Communications Corporation and Warner Communications Investors, Inc., incorporated by reference to Exhibit (4) to Registrant's Form 8-K filed to report an event of April 12, 1990.
(i) Form of Amendment to Time Warner Warrant, incorporated by reference to Exhibit 10(i) to Registrant's Form 10-K for the year ended December 31, 1992.
(j) Stock Purchase Agreement, dated as of April 27, 1987, among Registrant, Republic Broadcasting Corporation and Fairfield Broadcasting, Inc., as amended July 16, 1987, incorporated by reference to Annex I to Registrant's Definitive Proxy Statement dated July 27, 1987.
(k) Notes and Stock Purchase Agreement between and among Fairfield Broadcasting, Inc., Price Communications Corporation and Republic Broadcasting Corporation dated as of September 30, 1987, as amended, incorporated by reference to Exhibit 10(a) to Registration Statement on Form S-1 (File No. 33-30318).
(l) Stockholders' Agreement among Fairfield Broadcasting, Inc., Price Communications Corporation, Citicorp Venture Capital Ltd., Osborn Communications Corporation and Prudential-Bache Interfunding Inc., dated as of September 30, 1987, incorporated by reference to Exhibit 10(b) to Registration Statement on Form S-1 (File No. 33-30318).
(m) Asset Purchase Agreement by and among
E-3
Page ----
NTG, Inc., Price Communications Corporation and Western Michigan Broadcasting Corporation, Rhode Island Broadcasting Corporation, Magnolia Broadcasting Corporation and Keystone Broadcasting Corporation, dated as of June 28, 1989, incorporated by reference to Exhibit 10(c) to Registration Statement on Form S-1 (File No. 33-30318).
(n) Stock Purchase Agreement between NTG Holdings, Inc. and Price Communications Corporation, dated as of June 28, 1989, incorporated by reference to Exhibit 10(d) to Registration Statement on Form S-1 (File No. 33-30318).
(o) Network Affiliation Agreement, dated September 10, 1982, between National Broadcasting Company, Inc., and Tri-State Broadcasting Corporation, as amended (KSNF-TV), incorporated by reference to Exhibit 10(v) to Registration Statement on Form S-1 (File No. 33-30318).
(p) Network Affiliation Agreement, dated April 22, 1989, between National Broadcasting Company, Inc. and Continental Broadcasting Corporation (KJAC-TV), incorporated by reference to Exhibit 10(w) to Registration Statement on Form S-1 (File No. 33-30318).
(q) Network Affiliation Agreement, dated January 1, 1981, between National Broadcasting Company, Inc. and Clay Broadcasting Corporation of Texas, as amended (KFDX-TV), incorporated by reference to Exhibit 10(x) to Registration Statement on Form S-1 (File No. 33-30318).
(r) Stock Purchase Agreement dated March 1, 1990 among Time Warner Inc., Warner Communications Investors, Inc., Price Communications Corporation, and PriCellular Corporation, incorporated by reference to Exhibit (1) to
E-4
Page ----
Registrant's Form 8-K filed to report events of April 12, 1990.
(s) Amendment No. 1 to Stock Purchase Agreement dated April 6, 1990, among Time Warner Inc., Warner Communications Investors, Inc., Price Communications Corporation, and PriCellular Corporation, incorporated by reference to Exhibit (2) to Registrant's Form 8-K filed to report an event of April 12, 1990.
(t) Stock Option Agreement, dated April 12, 1990 between PriCellular Corporation and Warner Communications Investors, Inc., incorporated by reference to Exhibit (3) to Registrant's Form 8-K filed to report an event of April 12, 1990.
(u) Line of Credit Agreement, dated as of December 21, 1993 among Atlantic Broadcasting Corporation, Southeast Texas Broadcasting Corporation, Texoma Broadcasting Corporation, Tri-State Broadcasting Corporation, the Lenders Parties Thereto and the Bank of Montreal, incorporated by reference to Exhibit 10(u) to the Registrant's Form 10-K for the year ended December 31, 1993.
(v) Securities Purchase Agreement, dated December 30, 1993, among Apple Publishing Corporation, Price Communications Corporation, Equity-Linked Investors, L.P. and Equity-Linked Investors-II, incorporated by reference to Exhibit 10(v) to the Registrant's Form 10-K for the year ended December 31, 1993.
(w) Agreement dated November 19, 1993, between Price Communications Corporation, Apple Publishing Corporation, the Sellers listed on Exhibit A thereto and W.R. Huff Asset Management Co., L.P., incorporated by reference to Exhibit 10(w) to the
E-5
Page ----
Registrant's Form 10-K for the year ended December 31, 1993.
(x) Stock Purchase Agreement, dated as of October 1, 1993, by and between Price Communications Cellular, Inc., Price Communications Corporation and Atlas Cellular Corporation, incorporated by reference to Exhibit 10 to Registrant's Form 8-K filed to report an event of October 1, 1993.
(y) Form of Indemnification Agreement between Registrant and its officers and directors, incorporated by reference to Exhibit 10(y) to the Registrant's Form 10-K for the year ended December 31, 1993.
(z) Amended and Restated Line of Credit Agreement among the Co- Borrowers named therein, the Several Lenders named therein, and Bank of Montreal, as Agent, dated as of September 16, 1994.
(aa) Employment Agreement, dated as of October 6, 1994, between the Registrant and Robert Price.
(bb) Employment Agreement, dated as of January 5, 1995, between the Registrant and Kim Pressman.
(cc) Stock Option Agreement, dated as of February 10, 1994, between the Registrant and Robert Price.
(dd) Rights Agreement dated as of October 6, 1994 between the Registrant and Harris Trust Company of New York, incorporated by reference to Exhibit 4 to Registrant's Form 8-K filed to report an event on October 6, 1994.
(ee) Amendment dated January 12, 1995 to Rights Agreement dated as of October 6, 1994 between the Registrant and Harris Trust Company of New York, incorporated by reference to Exhibit 4 to
E-6
Page ----
Registrant's Form 8-K filed to report an event on January 12, 1995.
(ff) Securities Purchase Agreement, dated as of February 15, 1994, between the stockholders and warrant holders of Smith Acquisition Corp. and the Registrant, incorporated by reference to Exhibit 10 to the Registrant's Form 8-K filed to report an event of September 16, 1994.
(11) Statement regarding computation of per share earnings (omitted; computation can be clearly determined from material contained in the Report).
(21) Subsidiaries of Registrant.
(24) The powers of attorney to sign amendments to this Report appear on the signature page.
(27) Financial Data Schedule.
E-7