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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
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|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2001
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number
1-8309
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PRICE COMMUNICATIONS CORPORATION
(Exact Name of Registrant as specified in its charter)
New York 13-2991700
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
45 Rockefeller Plaza, 10020
New York, New York (Zip Code)
(Address of principal executive offices)
Registrant's telephone number (212) 757-5600
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
------------------- -------------------
Common Stock, par value $.01 per share New York Stock Exchange
Associated Common Stock Rights Under Rights Plan Boston Stock Exchange
Chicago Stock Exchange
Pacific Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
--------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes |X| No |_|
The number of shares outstanding of the issuer's common stock as of May 3, 2001
was 55,121,939.
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PRICE COMMUNICATIONS CORPORATION AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets - March 31, 2001 and
December 31, 2000....................................... I-1
Condensed Consolidated Statements of Operations -
Three months ended March 31, 2001 and 2000.............. I-2
Condensed Consolidated Statements of Cash Flows -
Three months ended March 31, 2001 and 2000.............. I-3
Condensed Consolidated Statement of Shareholders' Equity -
Three months ended March 31, 2001....................... I-4
Notes to Condensed Consolidated Financial Statements.......... I-5
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations............................... I-6
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings............................................. II-1
ITEM 2. Changes in Securities......................................... II-1
ITEM 3. Defaults Upon Senior Securities - None........................ II-1
ITEM 4. Submission of Matters to a Vote of Security Holders........... II-1
ITEM 5. Other Information............................................. II-1
ITEM 6. Exhibits and Reports on Form 8-K.............................. II-1
SIGNATURES.............................................................. II-2
Item 1. Financial Statements
PRICE COMMUNICATIONS CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
($ in thousands)
(Unaudited) (Audited)
March 31, December 31,
2001 2000
---------- ----------
Assets
Current assets:
Cash and cash equivalents $ 200,658 $ 180,708
Trade accounts receivable, net of
allowance for doubtful accounts 27,320 36,052
Receivable from other cellular carriers 4,600 4,101
Available for sale securities 21,100 23,517
Inventory 4,680 6,015
Deferred income taxes 2,550 1,091
Prepaid expenses and other current assets 5,568 4,420
---------- ----------
Total current assets 266,476 255,904
Net property and equipment 144,333 147,233
Equity investment in other cellular properties 11,810 11,810
Licenses, net of amortization 826,790 832,471
Other intangible and other assets, net of amortization 18,249 19,002
---------- ----------
$1,267,658 $1,266,420
========== ==========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 7,064 $ 8,181
Accrued interest payable 18,196 12,374
Accrued salaries and employee benefits 1,346 1,329
Deferred revenue 9,802 9,029
Outstanding put option contracts 4,903 3,109
Income taxes payable 8,692 8,013
Customer deposits 1,200 1,153
Other current liabilities 8,986 9,101
---------- ----------
Total current liabilities 60,189 52,289
Long-term debt 700,000 700,000
Accrued income taxes - long term 53,165 53,165
Deferred income taxes 282,890 283,075
Minority interests 5,580 5,279
---------- ----------
Total liabilities 1,101,824 1,093,808
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Commitments and contingencies
Shareholders' equity 165,834 172,612
---------- ----------
$1,267,658 $1,266,420
========== ==========
See accompanying notes to condensed consolidated financial statements.
PRICE COMMUNICATIONS CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
($ in thousands, except per share data)
(Unaudited)
For the three months
ended March 31,
-------------------------------------
2001 2000
------------ ------------
Revenue:
Service $ 61,464 $ 60,825
Equipment sales and installation 4,255 4,530
------------ ------------
Total revenue 65,719 65,355
------------ ------------
Operating expenses:
Engineering, technical and other direct 7,953 7,087
Cost of equipment 8,847 8,017
Selling, general and administrative 17,352 16,322
Non-cash compensation-selling, general and administration 912 912
Depreciation and amortization 11,862 11,730
------------ ------------
Total operating expenses 46,926 44,068
------------ ------------
Operating income 18,793 21,287
------------ ------------
Other income (expense):
Interest expense, net (14,091) (15,450)
Other income (expense), net (1,029) 3,361
------------ ------------
Total other expense (15,120) (12,089)
------------ ------------
Income before minority interest
share of income and income taxes 3,673 9,198
Minority interest share of income (300) (309)
------------ ------------
Income before income taxes 3,373 8,889
Income tax expense 1,907 3,289
------------ ------------
Net income $ 1,466 $ 5,600
------------ ------------
Other comprehensive income, net of tax
Unrealized gains (losses) on available for sale securities (2,799) (4,296)
Reclassification adjustment 13 (2,049)
------------ ------------
Comprehensive income (loss) $ (1,320) $ (745)
============ ============
Per share data:
Basic earnings per share $ 0.03 $ 0.10
Weighted average shares outstanding 55,329,000 56,463,000
Diluted earnings per share $ 0.03 $ 0.10
Weighted average shares outstanding 55,712,000 57,052,000
See accompanying notes to condensed consolidated financial statements.
I-2
PRICE COMMUNICATIONS CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
($ in thousands)
(Unaudited)
For the three months
ended March 31,
-------------------------------
2001 2000
--------- ---------
Cash flows from operating activities:
Net income $ 1,466 $ 5,600
--------- ---------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 11,862 11,730
Minority interest share of income 300 309
Deferred income taxes -- (1,164)
Gain on available for sale securities (248) (3,417)
Non-cash compensation 912 912
Amortization of deferred finance charges 610 608
Increase in outstanding put option contracts 1,794 --
Decrease in trade accounts receivable 8,233 486
Decrease in inventory 1,335 1,260
Decrease in accounts payable and accrued expenses (1,232) (5,406)
Increase in accrued interest payable 5,822 6,871
Change in other accounts 519 (25)
--------- ---------
Total adjustments 29,907 12,164
--------- ---------
Net cash provided by operating activities 31,373 17,764
--------- ---------
Cash flows from investing activities:
Capital expenditures (3,137) (12,085)
Proceeds from sale of available for sale securities 3,821 3,879
Purchase of available for sale securities (5,599) (23,381)
Purchase of minority interests -- (281)
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Net cash used in investing activities (4,915) (31,868)
--------- ---------
Cash flows from financing activities:
Purchase and retirement of common stock (7,210) (9,968)
Exercise of employee stock options 702 350
--------- ---------
Net cash used in financing activities (6,508) (9,618)
--------- ---------
Net increase (decrease) in cash and cash equivalents 19,950 (23,722)
Cash and cash equivalents at the beginning of period 180,708 194,231
--------- ---------
Cash and cash equivalents at the end of period $ 200,658 $ 170,509
========= =========
Supplemental disclosure of cash flow information:
Income taxes paid, net $ 1,138 $ 1,413
========= =========
Interest paid $ 10,281 $ 10,281
========= =========
See accompanying notes to condensed consolidated financial statements.
I-3
PRICE COMMUNICATIONS CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Shareholders' Equity
($ in thousands)
Common Stock Accumulated
Class A Additional other Total
-------------------- paid-in comprehensive Retained Deferred shareholders'
Shares Par Value capital income earnings compensation equity
-------- --------- ----------- ------------- --------- ------------ ----------
Balance December 31, 2000 55,433 $ 555 $ 189,053 $ (457) $ 45,790 $ (62,329) $ 172,612
Change in unrealized gain (loss) on
available for sale securities,
net of tax effect (2,799) (2,799)
Purchase and retirement of common
stock (399) (4) (7,206) (7,210)
Exercise of stock options 114 1 701 702
Deferred compensation expense
associated with the conversion of
preferred stock to common stock 912 912
Tax benefit from the exercise of
stock options 151 151
Net income 1,466 1,466
-------- --------- ----------- ----------- --------- ---------- ----------
Balance March 31, 2001 55,148 $ 552 $ 182,699 $ (3,256) $ 47,256 $ (61,417) $ 165,834
======== ========= =========== =========== ========= ========== ==========
See accompanying notes to condensed consolidated financial statements.
I-4
PRICE COMMUNICATIONS CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(1) Summary of Significant Accounting Policies
Basis of Presentation
The Consolidated Financial Statements include the accounts of Price
Communications Corporation and its subsidiaries (the "Company" or "Price"). All
significant intercompany items and transactions have been eliminated.
The Consolidated Financial Statements have been prepared by the Company
without audit in accordance with the rules and regulations of the Securities and
Exchange Commission. These Condensed Consolidated Financial Statements should be
read in conjunction with the audited Consolidated Financial Statements
previously filed on the Company's Form 10-K. In the opinion of management, the
statements reflect all adjustments necessary for a fair presentation of the
results of interim periods. All such adjustments are of a normal and recurring
nature. The results of operations for any interim period are not necessarily
indicative of the results to be expected for a full year.
Revenue Recognition
Service revenue from cellular operations for prepaid and post paid
customers includes local subscriber revenue and outcollect roaming revenue. In
accordance with the Securities and Exchange Commission Staff Accounting Bulletin
No. 101 ("SAB 101"), which was adopted in the fourth quarter of 2000 effective
January 1, 2000, prepaid airtime revenue is recognized when the airtime is
utilized and activation revenue is recognized over the estimated life of the
subscriber's contract or in respect to prepaid customers over the customer's
estimated initial usage. Accordingly, the Condensed Consolidated Statements of
Operations and the Condensed Consolidated Statement of Cash Flows have been
adjusted for the three-month period ending March 31, 2000.
(2) Shareholders' Equity
The Company's Board of Directors has authorized stock repurchase programs
of the Company's Class A Common Stock. The company is authorized to make such
purchases from time to time in the market or in privately negotiated
transactions when it is legally permissible to do so or believed to be in the
best interests of the Company. During the first quarter of 2001, the company
repurchased and retired 399,100 shares at an average price of $18.07 per share.
I-5
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion is intended to facilitate an understanding and
assessment of significant changes and trends related to the financial condition
and results of operations of the Company. This discussion should be read in
conjunction with the Company's Condensed Consolidated Financial Statements and
related notes thereto.
The discussion contains statements, which constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. Such statements are made regarding the intent, belief or current
expectations of the Company its directors or officers primarily with respect to
the future operating performance of the Company. Readers are cautioned that any
such forward-looking statements are not guarantees of future performance and may
involve risks and uncertainties, and that actual results may differ from those
in the forward-looking statements as a result of factors, many of which are
outside the control of the Company.
References to the "Company" or "Price" in this report include Price
Communications Corporation and its subsidiaries unless the context otherwise
indicates.
Overview
The Company is engaged in the construction, development, management and
operation of cellular telephone systems in the southeastern United States. As of
March 31, 2001, the Company provided cellular telephone service to 541,774
subscribers in Alabama, Florida, Georgia, and South Carolina in a total of 16
licensed service areas, composed of eight Metropolitan Statistical Areas
("MSAs") and eight Rural Service Areas ("RSAs"), with an aggregate estimated
population of 3.3 million. The Company sells its cellular telephone service as
well as a full line of cellular products and accessories principally through its
network of retail stores. The Company markets all of its products and services
under the nationally recognized service mark CELLULARONE.
On November 14, 2000, the Company entered into an agreement with Verizon
Wireless, Inc. ("VW") whereby the Company agreed to sell its wholly owned
subsidiary Price Communications Wireless ("PCW") for approximately $2.06 billion
through an exchange of stock. VW will assume the then outstanding debt of PCW
and Price will receive the balance in shares of Class A Common Stock, par value
$.001 per share of VW upon its IPO. The transaction is subject to termination in
certain events, the completion of VW's IPO and approval of the Company's
shareholders. The transaction has received FCC and other regulatory approvals.
If the closing of the transaction does not occur by September 30, 2001, either
party may terminate the agreement.
Market Ownership
The Company's cellular telephone systems serve contiguous licensed service
areas in Georgia, Alabama and South Carolina. The Company also has a cellular
service area in Panama City, Florida. The following table sets forth, with
respect to each service area in which the Company owns a cellular telephone
system, the estimated population, the Company's beneficial ownership percentage
and the Net Pops as of March 31, 2001.
MSA Estimated
Service Area Rank Population (1) Percentage Net Pops
---- -------------- ---------- --------
Albany, GA............................................... 271 118,442 100.0% 118,442
Augusta, GA.............................................. 106 440,242 100.0 440,242
Columbus, GA............................................. 165 249,365 99.1 247,121
Macon, GA................................................ 139 322,093 99.6 320,805
Savannah, GA............................................. 153 287,349 98.5 283,039
Georgia-6 RSA............................................ --- 204,765 99.5 203,741
Georgia-7 RSA............................................ --- 134,698 100.0 134,698
Georgia-8 RSA............................................ --- 159,858 100.0 159,858
Georgia-9 RSA............................................ --- 119,299 100.0 119,299
Georgia-10 RSA........................................... --- 152,871 100.0 152,871
Georgia-12 RSA........................................... --- 220,340 100.0 220,340
Georgia-13 RSA........................................... --- 150,714 100.0 150,714
Dothan, AL............................................... 250 134,980 95.2 128,487
Montgomery, AL........................................... 137 323,675 94.6 306,197
Alabama-8 RSA............................................ --- 178,813 100.0 178,813
---------- ----------
Subtotal........................................... 3,197,504 3,164,667
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Panama City, FL.......................................... 233 148,422 92.0 136,548
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Total.............................................. 3,345,926 3,301,215
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(1) Based on population estimates for 1999 from the DLJ 1999-2000 Summer Book.
I-6
Results of Operations
The following table sets forth for the Company the percentage, which
certain amounts bear to total revenue.
Three Months Ended
March 31,
---------
2001 2000
---- ----
Revenue:
Service ................................. 93.5% 93.1%
Equipment sales and installation ........ 6.5 6.9
------ ------
Total revenue ................. 100.0 100.0
Operating expenses:
Engineering, technical and other direct:
Engineering and technical (1) ..... 5.7 5.5
Other direct costs of services (2) 6.4 5.4
Cost of equipment (3) ................... 13.5 12.3
Selling, general and administrative:
Sales and marketing (4) ........... 8.8 8.4
Customer service (5) .............. 6.0 7.7
General and administrative (6) .... 11.6 8.9
Non-cash compensation ............. 1.4 1.4
Depreciation and amortization ........... 18.0 17.8
------ ------
Total operating expenses .... 71.4 67.4
Operating income ....................... 28.6% 32.6%
Operating income before depreciation and
amortization - adjusted EBITDA (7) 48.0% 51.9%
Operating income before depreciation and
amortization - Price Communications
Wireless, Inc. (8) ................ 49.0% 54.2%
(1) Consists of costs of cellular telephone network, including inter-trunk
costs, span-line costs, cell site repairs and maintenance, cell site
utilities, cell site rent, engineers' salaries and benefits and other
operational costs.
(2) Consists of net costs of incollect roaming, costs of long distance, costs
of interconnection with wireline telephone companies, costs for prepaid
airtime usage (2001 only) and other costs of services.
(3) Consists primarily of the costs of the cellular telephones and accessories
sold.
(4) Consists primarily of salaries and benefits of sales and marketing
personnel, advertising and promotion expenses and employee and agent
commissions.
(5) Consists primarily of salaries and benefits of customer service personnel
and costs of printing and mailing subscriber's bills.
(6) Includes salaries and benefits of general and administrative personnel and
other overhead expenses.
(7) Adjusted EBITDA represents operating income before Depreciation and
amortization and non-cash compensation. Adjusted EBITDA should not be
considered in isolation or as an alternative measurement of operating
performance or liquidity to net income, operating income or any other
measure of performance under generally accepted accounting principles. The
Company believes that adjusted EBITDA is viewed as a relevant supplemental
measure of performance in the cellular telephone industry.
(8) Represents operating income before Depreciation and amortization of the
Company's operating subsidiary Price Communications Wireless, Inc. It does
not include $656,000 for the current quarter and $1.5 million for the same
period last year of the parent Company's general and administrative
expenses.
Three Months Ended March 31, 2001 Compared to Three Months Ended March 31, 2000
Revenue. Service revenues totaled $61.0 million for the first quarter of
2001 and 2000. An increase in the average number of cellular subscribers and in
the average access per subscriber and a reduction in promotional credits
generated additional access revenue of approximately $3.1 million for the
current three-month period. While airtime revenue from post-paid subscribers was
comparatively flat for the same three-month periods, prepaid airtime increased
by $814,000. The Company's outcollect roaming revenue, which is revenue that the
Company collects from other wireless carrier's subscribers using their phones in
the Company's markets, decreased from $9.8 million for the first quarter 2000 to
$7.5 million for the current quarter. A 7% increase in the number of outcollect
minutes from 26.7 million minutes in the first quarter of 2000 to 28.5 million
minutes for the same period in 2001 was more than offset by lower renegotiated
reimbursement rates with certain
I-7
carriers that changed during the first quarter of 2001. While local toll and
directory assistance revenue increased for the current three month period, the
renegotiated toll rates from other carriers for roaming resulted in a net
decrease in toll revenue from $5.9 million for the three month period ended
March 31, 2000 to $5.3 million for the current three month period.
Average monthly revenue per post-paid subscriber (based upon service
revenue only) includes local revenue as well as outcollect revenue, but does not
include incollect revenue from subscribers, as this revenue is accounted for as
an offset to the Company's direct cost of service. Such revenue decreased from
$46.23 for last year's first quarter to $44.15 for the current three month
period because of the factors stated above.
Equipment sales and installation revenue, which consists primarily of
cellular subscriber equipment and accessory sales, decreased from $4.5 million
for the first quarter of 2000 to $4.3 million for the current three month
period. Although there were more gross subscriber additions during the current
quarter, there were fewer post-paid subscriber additions, which caused a
decrease in accessory and installation revenue of $324,000, since prepaid
subscribers purchase fewer accessories. During the current three-month period
the company sold 16,678 additional digital units but due to the competitive
nature of equipment sales, did not realize additional revenue despite the higher
cost of these phones.
Operating Expenses. Total operating expenses increased from $44.1 million
in the first quarter of 2000 to $46.9 million in the current quarter. As a
percentage of total revenue, operating expenses increased to 71.4% of revenue
for the current quarter in 2001 from 67.4 % of revenue for the same quarter in
2000.
Engineering, technical and other direct increased by $900,000 to $8.0
million in the current quarter from $7.0 million in the first quarter of 2000.
Included in engineering, technical and other direct is the net cost of incollect
roaming which represents the difference between the amount paid to other
cellular carriers for the Company's subscribers roaming in those carriers'
markets and the amount billed to these subscribers by the Company. The net for
the current three-month period amounted to a small amount of revenue ($45,000)
compared to a net cost of $751,000 for the same period in the prior year or a
net decrease of $796,000. The primary reason for the decrease was the more
favorable rates negotiated with certain other cellular carriers during the first
three months of 2001 which as previously stated, had a negative effect on
roaming revenue. Partially offsetting this decrease, were increases in long
distance, directory assistance and other variable telephone costs directly
related to additional usage by the increased average number of subscribers. In
addition, cell site rents increased due to new sites added in 2000. Prepaid
system charges increased because the Company switched to a new prepaid vendor in
June of 2000 and has experienced an increase in its prepaid customer base and
usage. The change to a new vendor was necessitated when the Company's previous
vendor went out of business.
The increase in cost of equipment from $8.0 million in the first quarter
of 2000 to $8.8 million in the first quarter of 2001 is a result of additional
phone sales due to increased gross subscriber additions in the current quarter
over the same period last year, combined with additional sales of digital phones
(see above), which have a higher unit cost. In the current period, the Company
was able to recover approximately 48% of its equipment cost, which is less than
the 56% recovered for the three-month period in 2000.
Selling, general and administrative expenses increased by $1.0 million
when comparing the first quarter of 2001 to the same period in 2000. Sales and
marketing (including the cost of installation) increased $271,000 when comparing
the current quarter to last year's first quarter. The increase in gross
subscriber adds resulted in additional commissions, the principal component of
the increase. The cost to add a gross subscriber, which includes sales and
marketing costs combined with the loss on equipment sales, an important
statistic in the cellular industry, remained at $161 for the current and prior
three month periods.
Customer service costs, which are included in general and administrative
expenses, were $3.9 million for the current three-month period compared to $5.0
million for the same period last year. Increases in costs for the generation of
subscribers' monthly invoices, as well as additional payroll costs, occurred
because of the increased subscribers for the first quarter of 2001 compared to
the first quarter of 2000. However, due to the difficulties incurred during the
Company's billing conversion (see below) the Company was credited with $2.0
million by the billing vendor, which reduced net billing and customer service
costs to $3.9 million for the current three month period compared with $5.0
million for the same period last year. For the current three-month period,
customer service costs amounted to 6.0% of revenue compared to 7.7% for the same
period in 2000.
General and administrative expenses increased $1.8 million for the current
quarter compared to the same quarter in 2000. The increase was primarily a
result of a $2.5 million increase in the provision for doubtful accounts. In the
fourth quarter of 2000, the Company changed its billing vendor in order to take
advantage of a system that would provide for more flexibility in creating
customized rate plans and more meaningful reports for management. The previous
billing provider also informed the Company that it would not be a long-term
participant in the cellular billing business. The transition encountered
processing
I-8
problems and as a result, the Company's collection efforts were hampered, which
led to a longer average aging period of the Company's accounts receivable and a
necessity to provide a higher provision for bad debts. Partially offsetting this
increase were reductions in payroll. Most other components of general and
administrative expense had little or no increase. General and administrative
expenses excluding customer service costs, increased to 11.6% of total revenue
for the current quarter compared to 8.9% for the same period in 2000.
Depreciation and amortization increased $200,000 to $11.9 million for the
first quarter of 2001 from $11.7 million for the first quarter of 2000 as a
result of fixed asset additions during 2000. As a percentage of revenue,
depreciation and amortization amounted to 18.0% for the first quarter of 2001
compared to 17.8% for the first quarter of 2000.
Operating income decreased approximately $2.5 million to $18.8 million in
the first quarter of 2001 from $21.3 million for the same period in 2000.
Operating income before depreciation and amortization and non-cash compensation
amounted to 48.0% of total revenue in the current quarter compared to 51.9% of
total revenue for the quarter ended March 31, 2000. The decrease is a result of
the items discussed above. The continuing emphasis by management on maintaining
cost controls, resulted in no increase in the average operating cost per
subscriber (total operating costs before depreciation and amortization, non-cash
compensation and corporate overhead) which was $18.22 for the current three
month period compared to $18.24 for the first quarter of 2000. Management
believes that the current figure of $18.22 continues to be one of the lowest in
the industry.
Net Interest Expense, Income Taxes and Net Income. Net interest expense
decreased to $14.1 million for the quarter ended March 31, 2001 from $15.5
million in the first quarter of 2000.
The current period's income tax provision of $1.9 million compared to the
income tax provision of $3.3 million in the first quarter of 2000 is a result of
the higher financial statement taxable income for the first three months of 2000
compared to the first three months of 2001 and certain non taxable items.
The net income of $1.5 million for the first quarter of 2001 compared to
net income of $5.6 million for the first quarter of 2000 is a function of the
items discussed above.
Liquidity and Capital Resources
The Company's long-term capital requirements consist of funds for capital
expenditures, acquisitions and debt service. Historically, the Company has met
its capital requirements primarily through the issuance of debt, and to a lesser
extent, operating cash flow. During the three month period ended March 31, 2001,
the Company generated $31.4 million of cash from operating activities as shown
in the Condensed Consolidated Statements of Cash Flows. The Company's EBITDA
(earnings before interest, depreciation and amortization and non-cash
compensation) was $31.6 million for the current quarter. The Company's debt
service requirements for the current year consist of cash interest payments of
$68.5 million of which $10.3 million was paid in January 2001. The remaining
cash interest requirements are approximately $24.0 million during the second
quarter, $10.3 million during the third quarter and $24.0 million in the fourth
quarter. Based upon the Company's current ability to generate operating cash
flow combined with its available cash position of $200.7 million, there does not
appear to be a necessity to provide additional funding for the foreseeable
future. The Company's outstanding debt instruments consist of $525 million 9
1/8% Senior Secured Notes due December 15, 2006, and $175 million 11 3/4% Senior
Subordinated Notes due July 15, 2007. Both of these instruments contain
covenants that restrict the payment of dividends, incurrence of debt and sale of
assets.
Item 7a. Quantitative and Qualitative Disclosures About Market Risk
The Company utilizes fixed rate debt instruments to fund its acquisitions.
Management believes that the use of fixed rate debt minimizes the Company's
exposure to market conditions and the ensuing increases and decreases that could
arise with variable rate financing.
I-9
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
None
II-i
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has fully caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PRICE COMMUNICATIONS CORPORATION
Date: May 14, 2001 By: /s/ Robert Price
--------------------------------
Robert Price
Director, President and Treasurer
By: /s/ Kim I. Pressman
--------------------------------
Kim I. Pressman
Director, Executive Vice President
and Principal Financial Officer
By: /s/ Michael Wasserman
--------------------------------
Michael Wasserman
Vice President and Chief Accounting Officer
II-2