-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MiZ3V/AhqnqStEyzODQE5FQN+mwOnykeRNtQQwK13earSethsSNF+Ak+2cw9VtV7 O2KDcBUwJDRxkWfpnF6uog== 0000950134-97-006078.txt : 19970814 0000950134-97-006078.hdr.sgml : 19970814 ACCESSION NUMBER: 0000950134-97-006078 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970813 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PAGING NETWORK INC CENTRAL INDEX KEY: 0000878324 STANDARD INDUSTRIAL CLASSIFICATION: RADIO TELEPHONE COMMUNICATIONS [4812] IRS NUMBER: 042740516 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-19494 FILM NUMBER: 97659235 BUSINESS ADDRESS: STREET 1: 4965 PRESTON PARK BLVD STE 600 CITY: PLANO STATE: TX ZIP: 75093 BUSINESS PHONE: 2149854100 MAIL ADDRESS: STREET 1: 4965 PRESTON PARK BLVD STREET 2: SUITE 600 CITY: PLANO STATE: TX ZIP: 75093 10-Q 1 FORM 10-Q FOR QUARTER ENDED JUNE 30, 1997 1 =============================================================================== UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------------- FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________ TO ________. COMMISSION FILE NO. 0-19494 PAGING NETWORK, INC. (Exact name of the Registrant as specified in charter) DELAWARE 04-2740516 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 4965 PRESTON PARK BOULEVARD, SUITE 800 PLANO, TEXAS 75093 (Address of principal executive offices, including zip code) (972) 985-4100 (Registrant's telephone number, including area code) 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 --- --- Indicate the number of shares outstanding of each of the Registrant's classes of Common Stock, as of the latest practicable date.
Title Shares Outstanding as of July 31, 1997 - --------------------------------- -------------------------------------- Common Stock, $ .01 par value 102,624,232
The Company's Common Stock is publicly traded under the symbol "PAGE" through the National Association of Securities Dealers Automated Quotation National Market System. =============================================================================== 2 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. Index to Financial Statements
Page ---- Paging Network, Inc. Consolidated Balance Sheets as of June 30, 1997 and December 31, 1996 (Unaudited) ..................... 3 Paging Network, Inc. Consolidated Statements of Operations for the Three and Six Months Ended June 30, 1997 and 1996 (Unaudited) 4 Paging Network, Inc. Consolidated Statements of Cash Flows for the Six Months Ended June 30, 1997 and 1996 (Unaudited) ......... 5 Paging Network, Inc. Notes to Consolidated Financial Statements .......... 6
2 3 PAGING NETWORK, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except share information) (Unaudited)
June 30, December 31, 1997 1996 ----------- ----------- ASSETS Current assets: Cash and cash equivalents ................................ $ 2,020 $ 3,777 Accounts receivable, less allowance for doubtful accounts ................................. 74,567 60,089 Inventories .............................................. 69,210 57,690 Prepaid expenses ......................................... 8,834 8,872 ----------- ----------- Total current assets .................................. 154,631 130,428 Property, equipment, and leasehold improvements, at cost ..... 1,333,008 1,171,090 Less accumulated depreciation ............................ (408,615) (330,055) ----------- ----------- Net property, equipment, and leasehold improvements ... 924,393 841,035 Other non-current assets, at cost ............................ 620,789 547,067 Less accumulated amortization ............................ (65,825) (56,417) ----------- ----------- Net other non-current assets .......................... 554,964 490,650 ----------- ----------- $ 1,633,988 $ 1,462,113 =========== =========== LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities: Accounts payable ......................................... $ 63,500 $ 59,857 Accrued interest ......................................... 42,124 41,853 Accrued expenses ......................................... 51,870 38,460 Customer deposits ........................................ 23,866 22,430 ----------- ----------- Total current liabilities ............................. 181,360 162,600 Long-term obligations ........................................ 1,702,598 1,459,188 Commitments and contingencies ................................ - - Stockholders' deficit: Common Stock: $.01 par, 250,000,000 shares authorized, 102,621,077 shares issued and outstanding in 1997 and 1996, respectively ............ 1,026 1,026 Paid-in capital .......................................... 124,522 124,522 Accumulated deficit ...................................... (375,704) (285,327) Foreign currency translation adjustments ................. 186 104 ----------- ----------- Total stockholders' deficit ..................... (249,970) (159,675) ----------- ----------- $ 1,633,988 $ 1,462,113 =========== ===========
See accompanying notes 3 4 PAGING NETWORK, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share information) (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, ---------------------- ---------------------- 1997 1996 1997 1996 --------- --------- --------- --------- Services, rent and maintenance revenues ................ $ 200,561 $ 167,036 $ 389,441 $ 325,811 Product sales .......................................... 33,666 32,143 70,034 59,741 --------- --------- --------- --------- Total revenues ..................................... 234,227 199,179 459,475 385,552 Cost of products sold .................................. (28,805) (27,124) (60,162) (50,476) --------- --------- --------- --------- 205,422 172,055 399,313 335,076 Operating expenses: Services, rent and maintenance ..................... 42,653 35,910 83,595 69,561 Selling ............................................ 25,427 20,570 53,698 39,081 General and administrative ......................... 62,318 53,071 122,716 102,867 Depreciation and amortization ...................... 71,860 51,517 138,928 96,855 --------- --------- --------- --------- Total operating expenses ...................... 202,258 161,068 398,937 308,364 --------- --------- --------- --------- Operating income ....................................... 3,164 10,987 376 26,712 Other income (expense): Interest expense ................................... (38,281) (29,907) (75,860) (59,642) Interest income .................................... 561 519 1,306 2,538 Equity in loss of an unconsolidated subsidiary ..... (363) (131) (655) (246) --------- --------- --------- --------- Total other income (expense) .................. (38,083) (29,519) (75,209) (57,350) --------- --------- --------- --------- Loss before extraordinary item ......................... (34,919) (18,532) (74,833) (30,638) Extraordinary loss ..................................... (15,544) - (15,544) - --------- --------- --------- --------- Net loss .............................................. $ (50,463) $ (18,532) $ (90,377) $ (30,638) ========= ========= ========= ========= Net loss per share: Loss before extraordinary item ..................... $ (0.34) $ (0.18) $ (0.73) $ (0.30) Extraordinary loss ................................. (0.15) - (0.15) - --------- --------- --------- --------- Net loss per share ..................................... $ (0.49) $ (0.18) $ (0.88) $ (0.30) ========= ========= ========= =========
See accompanying notes 4 5 PAGING NETWORK, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (Unaudited)
Six Months Ended June 30, ---------------------- 1997 1996 --------- --------- Operating activities: Net loss ................................................ $ (90,377) $ (30,638) Adjustments to reconcile net loss to net cash provided by operating activities: Extraordinary loss ............................... 15,544 - Depreciation ..................................... 126,153 85,980 Amortization ..................................... 12,775 10,875 Provision for doubtful accounts .................. 8,933 5,817 Equity in loss of an unconsolidated subsidiary ... 655 246 Amortization of debt issuance costs .............. 4,330 2,567 Changes in operating assets and liabilities: Accounts receivable .............................. (23,411) (8,198) Inventories ...................................... (11,520) (18,180) Prepaid expenses ................................. 38 (1,957) Accounts payable ................................. 3,643 (26,875) Accrued interest ................................. 271 (2,444) Accrued expenses ................................. 13,410 1,200 Customer deposits ................................ 1,436 736 --------- --------- Net cash provided by operating activities ................... 61,880 19,129 --------- --------- Investing activities: Capital expenditures .................................... (208,754) (191,340) Payments for spectrum licenses .......................... (66,905) (7,683) Business acquisitions and joint venture investments ..... (4,806) (5,276) Restricted cash invested in money market instruments .... (4,619) (19,200) Other ................................................... (10,234) (3,710) --------- --------- Net cash used in investing activities ....................... (295,318) (227,209) --------- --------- Financing activities: Borrowings under credit agreements ...................... 443,207 45,516 Redemption of $200 million senior subordinated notes .... (211,750) - Increase in capital lease obligations ................... 203 - Proceeds from exercise of Common Stock options .......... - 2,149 Debt issuance costs on credit agreements ................ - (3,432) Other ................................................... 21 (2) --------- --------- Net cash provided by financing activities ................... 231,681 44,231 --------- --------- Net decrease in cash and cash equivalents .................. (1,757) (163,849) Cash and cash equivalents at beginning of period ............ 3,777 198,182 --------- --------- Cash and cash equivalents at end of period .................. $ 2,020 $ 34,333 ========= =========
See accompanying notes 5 6 PAGING NETWORK, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1997 (Unaudited) 1. THE COMPANY Paging Network, Inc. (the Company) is a provider of paging and wireless messaging services. The Company provides paging services in all 50 states, the District of Columbia, the U.S. Virgin Islands, Puerto Rico, and Canada, including local paging service in all of the largest 100 markets (in population) in the United States, and owns a minority interest in paging companies in Spain and Brazil. The consolidated financial statements include the accounts of all of its wholly and majority-owned subsidiaries. All intercompany transactions have been eliminated. 2. UNAUDITED INTERIM FINANCIAL STATEMENTS The interim consolidated financial information contained herein is unaudited but, in the opinion of management, includes all adjustments, which are of a normal recurring nature, necessary for a fair presentation of the financial position, results of operations, and cash flows for the periods presented. These financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The balance sheet as of December 31, 1996, has been derived from the audited financial statements as of that date. Results of operations for the periods presented herein are not necessarily indicative of results of operations for the entire year. These financial statements and related notes should be read in conjunction with the financial statements and notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 1996. Certain 1996 amounts have been reclassified to conform with the 1997 presentation. 3. LONG-TERM OBLIGATIONS On May 14, 1997, the Company redeemed all $200.0 million of its outstanding 11.75% Senior Subordinated Notes (11.75% Notes), utilizing funds borrowed under the Company's domestic $1.0 billion revolving credit agreement (the Credit Agreement). The Company recorded an extraordinary loss of $15.5 million in the second quarter of 1997 on the early retirement of the 11.75% Notes. The extraordinary loss was comprised of the redemption premium of $11.8 million and the write-off of unamortized issuance costs of $3.7 million. As of June 30, 1997, the Company had $468.0 million of borrowings outstanding under the Credit Agreement. 6 7 4. DEPRECIATION EXPENSE Effective January 1, 1997, the Company shortened the depreciable lives of its pagers from four to three years, and revised the related residual values. The change had an effect of increasing depreciation expense by approximately $8 million and $16 million for the three and six months ended June 30, 1997, respectively. 5. INCOME TAX PROVISION No provision or benefit for income taxes has been made for the six months ended June 30, 1997 and 1996, as the deferred benefit from operating losses was offset by the increase in the valuation allowance. 6. COMMON STOCK AND NET LOSS PER SHARE Net loss per share amounts are computed based on the weighted average number of common shares outstanding. The number of shares used to compute per share amounts for the three and six months ended June 30, 1997 was 102.6 million. The number of shares used to compute per share amounts for the three and six months ended June 30, 1996 were 102.5 million and 102.4 million, respectively. The Company has 275.0 million authorized shares, of which 250.0 million are Common Stock and 25.0 million are preferred stock. As of June 30, 1997, there were no preferred shares issued or outstanding. In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, "Earnings Per Share" (SFAS No. 128), which the Company will be required to initially adopt in the fourth quarter of 1997. The Company anticipates the adoption of SFAS No. 128 will have no impact on its reporting of loss per share for 1997 or prior years. On May 22, 1997, the Company's stockholders approved an amendment to its 1991 Stock Option Plan (1991 Plan) to increase the number of the Company's Common Stock issuable pursuant thereto from 6,450,000 shares to 13,950,000 shares and reserving an additional 7,500,000 shares of Common Stock for options to be issued pursuant to the 1991 Plan. On May 22, 1997, the Company's stockholders approved the adoption of an additional stock option plan, the "Paging Network, Inc. 1997 Restricted Stock Plan" (Restricted Stock Plan). The maximum number of shares of Common Stock which may be available for purchase or grant pursuant to the Restricted Stock Plan is 300,000 shares. On June 12, 1997, the Company offered an election to its employees with options granted during 1995 and 1996 under the 1991 Plan to cancel such options and accept new options at a lower price. As a result of the election by certain of its employees, the Company canceled 2.9 million options with exercise prices ranging from $13.69 to $26.50 and granted approximately 1.1 million options to the same optionees with an exercise price of $8.25 per share. 7. STATEMENT OF CASH FLOWS INFORMATION Cash and cash equivalents include highly liquid debt instruments with an original maturity of three months or less. Cash payments made for interest during the six months ended June 30, 1997 and 1996 were approximately $77.2 million and $59.4 million, respectively. There were no significant federal or state income taxes paid or refunded for the six months ended June 30, 1997 and 1996. 7 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 The statements contained in this filing which are not historical facts, such as future capital expenditures, future borrowings, international investments expectations, and introduction of new products are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in the forward-looking statements. Among the factors that could cause actual future results to differ materially are competitive pressures, growth rates, new market opportunities, supplier constraints, market conditions, timing and techniques used in marketing by third-party distributors, and acceptance of the Company's services in the marketplace. RESULTS OF OPERATIONS Throughout this section the Company makes reference to earnings before interest, income taxes, depreciation, amortization, and equity in loss of an unconsolidated subsidiary (EBITDA). EBITDA is a key performance measure used in the paging industry and is one of the financial measures by which the Company's covenants are calculated under the agreements governing its debt obligations. EBITDA is not a measure defined in generally accepted accounting principles and should not be considered in isolation or as a substitute for measures of performance in accordance with generally accepted accounting principles. The following table presents certain items in the Consolidated Statements of Operations as a percentage of revenues from services, rent and maintenance plus product sales less the cost of products sold (Net Revenues) for the three and six months ended June 30, 1997 and 1996, respectively.
Three Months Ended Six Months Ended June 30, June 30, ------------------ ------------------ 1997 1996 1997 1996 ----- ----- ----- ----- Net Revenues ................................ 100.0% 100.0% 100.0% 100.0% Operating expenses: Services, rent and maintenance ........ 20.8(1) 20.9 20.9(1) 20.7 Selling ............................... 12.4(1) 12.0 13.5(1) 11.7 General and administrative ............ 30.3 30.8 30.7 30.7 Depreciation and amortization ......... 35.0(1) 29.9 34.8(1) 28.9 ----- ----- ----- ----- Operating income ............................ 1.5 6.4 0.1 8.0 Net loss .................................... (24.6) (10.8) (22.6) (9.1) EBITDA ...................................... 36.5 36.3 34.9 36.9 EBITDA for domestic operations .............. 37.7 37.5 36.1 37.6 EBITDA for core domestic paging operations... 38.7 37.5 38.3 37.6
(1) Excluding expenses related to the launch of the Company's new VoiceNow(R) service, which was introduced during the first quarter of 1997, services, rent and maintenance expenses, selling expenses, and depreciation and amortization expenses as a percentage of Net Revenues were 20.6%, 11.5%, and 33.8%, respectively, for the three months ended June 30, 1997, and were 20.6%, 11.7%, and 34.1%, respectively, for the six months ended June 30, 1997. 8 9 Net Revenues for the three-and six-month periods ended June 30, 1997, were $205.4 million and $399.3 million, respectively, an increase of 19.4% and 19.2% from $172.1 million and $335.1 million for the comparable periods ended June 30, 1996. Revenues from services, rent and maintenance, which the Company considers its primary business, increased 20.1% to $200.6 million for the three months ended June 30, 1997, compared to $167.0 million for the three months ended June 30, 1996. Services, rent and maintenance revenues for the six months ended June 30, 1997 increased 19.5% to $389.4 million, compared to $325.8 million for the six months ended June 30, 1996. These increases were primarily due to continued growth in the number of pagers in service with subscribers of the Company. The number of pagers in service with subscribers at June 30, 1997 was 10,057,941 compared to 7,881,764 pagers in service with subscribers at June 30, 1996, an increase of 27.6%, and 9,002,733 pagers in service with subscribers at December 31, 1996, an increase of 11.7%. Contributing to the growth in the number of pagers in service with subscribers is the Company's expanding local and national third-party reseller customer base, which includes the impact of the Company's National Accounts Division. The Company's increased reliance on distribution of pagers and paging services through resellers and marketing affiliates could generate variability in quarterly and annual results relating to the net addition of pagers. Product sales, less cost of products sold, were relatively flat for the three and six months ended June 30, 1997, compared to the same periods in 1996. Product sales, less cost of products sold, were $4.9 million (2.4% of Net Revenues) for the second quarter of 1997 compared to $5.0 million (2.9% of Net Revenues) for the second quarter of 1996 and were $9.9 million (2.5% of Net Revenues) for the first six months of 1997 compared to $9.3 million (2.8% of Net Revenues) for the first six months of 1996. Services, rent and maintenance expenses increased 18.8% to $42.7 million (20.8% of Net Revenues) for the three months ended June 30, 1997, compared to $35.9 million (20.9% of Net Revenues) for the three months ended June 30, 1996. Services, rent and maintenance expenses increased 20.2% to $83.6 million (20.9% of Net Revenues) for the six months ended June 30, 1997, compared to $69.6 million (20.7% of Net Revenues) for the six months ended June 30, 1996. The increases in services, rent and maintenance expenses for the three and six months ended June 30, 1997 and the increase as a percentage of Net Revenues for the first six months of 1997 were the result of the continued growth in the number of pagers in service with subscribers of the Company, expenses associated with an increase in transmitter sites, expansion of the nationwide transmission networks, costs incurred by the Company's Canadian operations, and costs associated with the Company's new VoiceNow service, which was introduced on February 24, 1997. For the three months ended June 30, 1997, selling expenses increased 23.6% to $25.4 million (12.4% of Net Revenues) from $20.6 million (12.0% of Net Revenues) for the three months ended June 30, 1996. Selling expenses increased 37.4% to $53.7 million (13.5% of Net Revenues) for the six months ended June 30, 1997, compared to $39.1 million (11.7% of Net Revenues) for the six months ended June 30, 1996. The increases in selling expenses and the increases as a percentage of Net Revenues resulted primarily from certain VoiceNow marketing research and development costs along with advertising expenses associated with the Company's new VoiceNow service, and from the addition of sales personnel to support continued growth in both Net Revenues and the number of pagers in service with subscribers. The VoiceNow marketing research and development costs and advertising expenses associated with the Company's new VoiceNow service were $1.7 million and $7.2 million (0.8% and 1.8% of Net Revenues), respectively, for the three and six months ended June 30, 1997. General and administrative expenses increased 17.4% to $62.3 million (30.3% of Net Revenues) for the second quarter of 1997, compared to $53.1 million (30.8% of Net Revenues) for the corresponding period of 1996. General and administrative expenses increased 19.3% to $122.7 million (30.7% of Net Revenues) for the first six months of 1997, compared to $102.9 million (30.7% of Net Revenues) for the corresponding period of 1996. The increases in general and administrative expenses occurred to support the growth in the number of pagers in service with subscribers of the Company. The decrease in general and administrative 9 10 expenses as a percentage of Net Revenues for the three months ended June 30, 1997 was due to the general and administrative expenses being absorbed by a larger subscriber base. Depreciation and amortization expenses increased by 39.5% for the second quarter of 1997 as compared to the corresponding period in the prior year from $51.5 million (29.9% of Net Revenues) to $71.9 million (35.0% of Net Revenues). Depreciation and amortization expenses increased 43.4% to $138.9 million (34.8% of Net Revenues) for the six months ended June 30, 1997, compared to $96.9 million (28.9% of Net Revenues) for the six months ended June 30, 1996. The increases in depreciation and amortization expenses were primarily attributable to the increase in the number of pagers owned by the Company and leased to subscribers, the increase in computer and paging equipment, the changes in pager depreciation, and the commencement of amortization of the licenses for spectrum. Effective January 1, 1997, the Company shortened the depreciable life of its pagers from four to three years, and revised the related residual values, in order to better reflect the estimated periods during which the pagers will remain in service. The change had an effect of increasing depreciation expense by approximately $8 million in the second quarter of 1997 and by approximately $16 million for the first six months of 1997. The commencement of amortization of the licenses for spectrum and certain other costs associated with the Company's VoiceNow service increased amortization expense by approximately $2.3 million for the three months ended June 30, 1997. As previously reported, depreciation and amortization expenses will increase significantly for the year ended December 31, 1997 due to the shorter depreciable lives for pagers (which is expected to increase depreciation expense by approximately $35 million for the year ended December 31, 1997) and the commencement of amortization of the licenses for spectrum and certain other costs associated with the introduction of the Company's VoiceNow service (which is expected to increase amortization expense by approximately $19 million for the year ended December 31, 1997). As a result of the above factors, EBITDA increased 20.0% to $75.0 million (36.5% of Net Revenues) for the second quarter of 1997 compared to $62.5 million (36.3% of Net Revenues) for the corresponding period in 1996. For the six months ended June 30, 1997, EBITDA increased 12.7% to $139.3 million (34.9% of Net Revenues) compared to $123.6 million (36.9% of Net Revenues) for the corresponding period of 1996. As expected, in the second quarter of 1997 and for the first six months of 1997, EBITDA and EBITDA as a percentage of Net Revenues were negatively impacted by the Company's international operations and its new VoiceNow service. The Company's international operations and its start-up of the VoiceNow service resulted in a decrease to EBITDA of $1.8 million and $2.1 million, respectively, in the second quarter of 1997. EBITDA for the Company's domestic operations increased 18.9% to $76.8 million (37.7% of Net Revenues) for the second quarter of 1997, compared to $64.6 million (37.5% of Net Revenues) for the second quarter of 1996. Excluding the Company's VoiceNow operations, EBITDA for the Company's core domestic paging operations increased 22.2% to $78.9 million (38.7% of Net Revenues) for the second quarter of 1997, compared to $64.6 million (37.5% of Net Revenues) for the second quarter of 1996. The Company's international operations and its start-up of the VoiceNow service resulted in a decrease to EBITDA of $3.9 million and $8.6 million, respectively, for the six months ended June 30, 1997. EBITDA for the Company's domestic operations increased 13.7% to $143.1 million (36.1% of Net Revenues) for the six months ended June 30, 1997, compared to $125.9 million (37.6% of Net Revenues) for the six months ended June 30, 1996. Excluding the Company's VoiceNow operations, EBITDA for the Company's core domestic paging operations increased 20.5% to $151.7 million (38.3% of Net Revenues) for the first six months of 1997, compared to $125.9 million (37.6% of Net Revenues) for the corresponding period of 1996. The Company anticipates that during 1997 its VoiceNow service will have an incremental negative impact of less than $15 million on consolidated EBITDA. Interest expense increased $8.4 million and $16.2 million, respectively, from the three- and six-month periods ended June 30, 1996, to the corresponding periods in 1997, due to a higher average level of indebtedness outstanding in 1997. The average level of indebtedness outstanding during the three and six months ended June 30, 1997 was approximately $1.66 billion and $1.60 billion, respectively, compared to 10 11 approximately $1.16 billion and $1.15 billion, respectively, outstanding during the three and six months ended June 30, 1996. On May 14, 1997, the Company redeemed all $200.0 million of its outstanding 11.75% Notes, utilizing funds borrowed under the Company's Credit Agreement. The Company recorded an extraordinary loss of $15.5 million in the second quarter of 1997 on the early retirement of the 11.75% Notes. LIQUIDITY AND CAPITAL RESOURCES The Company's operations and expansion into new markets and product lines require substantial capital investment for the development and installation of wireless communications systems and for the procurement of pagers and paging equipment. Capital expenditures (excluding payments for licenses) were $208.8 million for the six months ended June 30, 1997 and $191.3 million for the same period in 1996. For the first six months of 1997, capital expenditures were funded by net cash provided by operating activities ($61.9 million) and borrowings. During April 1996, the Company concluded its participation in a Federal Communications Commission auction of specialized mobile radio (SMR) frequency licenses, and ultimately acquired rights to two to four blocks of two-way spectrum in markets across the United States for a purchase price of $45.6 million. The Company is in the process of purchasing exclusive rights to certain of these SMR frequencies from incumbent operators. The total cost of the investment will be approximately $250 million (including the $45.6 million auction purchase price), of which $109 million was paid in 1996 and $66 million was paid in the first six months of 1997, and the remainder will be paid in the last six months of 1997 and in 1998. The Company intends to utilize its narrowband personal communications services and SMR frequencies for additional capacity as needed for its paging operations, such as digital and alphanumeric, and to build a two-way network over which it can deploy new products such as its new voice paging service, VoiceNow, and various data products. The Company has expended $47 million in 1996 and $63 million in the first six months of 1997 to construct the two-way network and expects to incur an additional $40 million during the remainder of 1997. Additional capital expenditures for the two-way network after 1997 will be determined based on the market introduction and success of new products. Through its wholly-owned subsidiary, PageNet Canada, the Company began offering paging services in Canada in April 1996. In July 1996, the Company purchased a 25% interest in an existing Spanish paging company. In December 1996, the Company signed agreements as the operational partner with a 20% interest in a joint venture to provide paging services in Brazil which commenced operations during the first quarter of 1997. The Company is considering other opportunities for international expansion, with the goal of creating a portfolio of select international operations. Paging market penetration in many international markets is relatively low, and many such markets have only a small number of existing paging providers. Additional investments will depend on such factors as growth rates, new market opportunities, and execution of financing plans that maximize value for the Company's stockholders. Under the Credit Agreement, the Company is able to borrow, provided it meets certain financial covenants, the lesser of $1.0 billion or an amount based upon a calculation which is reduced by total outstanding domestic indebtedness for borrowed monies (as defined) and outstanding letters of credit. The amount of total indebtedness allowed at the end of each quarter is equal to 6.5 times annualized domestic EBITDA. As of June 30, 1997, the Company had $468.0 million of borrowings outstanding under the Credit Agreement and, under the terms of the Credit Agreement, an additional $328.6 million was available for borrowings as of that date. Such amount will increase or decrease during the third quarter based on the 11 12 domestic EBITDA for the third quarter. As of July 31, 1997, the Company had $487.0 million of borrowings outstanding under its Credit Agreement. The maximum borrowings which may be outstanding under its Credit Agreement. The maximum borrowing which may be outstanding under the Credit Agreement will begin reducing on June 30, 2001, and the Credit Agreement expires on December 31, 2004. The two credit agreements of the Company's Canadian subsidiaries provide for total borrowings of approximately $65 million, of which approximately $36 million was initially available under fully collateralized borrowings. The remaining amounts are available for borrowings provided they are either collateralized or certain financial covenants are met. As of June 30, 1997, approximately $34 million of borrowings were outstanding under the credit facilities. The maximum borrowings which may be outstanding under the credit facilities will begin reducing on June 30, 1999, and both credit agreements expire on June 30, 2003. On May 14, 1997, the Company redeemed all $200.0 million of its outstanding 11.75% Notes, utilizing funds borrowed under the Company's Credit Agreement. The 11.75% Notes were redeemed to achieve an annual interest cost savings of approximately $8 million per year for five years based on current interest rates, including savings of approximately $4 million in 1997. It is anticipated that 1997 net cash from operating activities will be insufficient to fund 1997 capital expenditures (including the costs to build the two-way network) and frequency purchases. These expenditures, which are expected to approximate $500 million, primarily relate to the development of a new digital transmission network and the Company's ongoing paging operations, including greater market share of existing markets. These expenditures will be funded through the Company's operating cash flow and from borrowings under its credit facility. The Company currently estimates 1997 incremental indebtedness may aggregate in excess of $400 million. Relative to amounts previously disclosed, the reductions in projected 1997 capital expenditures and incremental indebtedness are the result of revisions in the Company's strategy for its new VoiceNow product. The Company will continue to offer VoiceNow service in its three existing markets and initiate service in one additional market, Chicago, in 1997. The Company will also begin to utilize, where economically feasible, excess capacity in the spectrum and two-way network constructed for use for VoiceNow for certain existing paging services offered by the Company. 12 13 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. The Company is involved in various lawsuits arising in the normal course of business. In management's opinion, the ultimate outcome of these lawsuits will not have a material adverse effect on the Company's financial position or results of operations. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. On May 22, 1997, the Company held its Annual Meeting of Stockholders, at which all of the matters listed below were approved. (a) Mr. Bryan C. Cressey was elected as a Class III Director for a three year term to expire in 2000 (83,814,979 voting for and 1,194,045 withholding authority). Mr. Richard C. Alberding was elected as a Class III Director for a three year term to expire in 2000 (83,758,826 voting for and 1,250,198 withholding authority). Mr. Lee M. Mitchell was elected as a Class III Director for a three year term to expire in 2000 (83,812,623 voting for and 1,196,401 withholding authority). (b) The adoption of an amendment to the Company's 1991 Stock Option Plan to increase the number of shares of common stock issuable pursuant thereto from 6,450,000 shares to 13,950,000 shares was approved (50,994,494 voting for, 20,129,665 voting against, and 13,884,865 abstaining or not voting). (c) The adoption of the Company's amended and restated 1992 Stock Option Plan for Directors was approved (69,801,000 voting for, 5,125,054 voting against, and 10,082,970 abstaining or not voting). (d) The adoption of the Company's 1997 Restricted Stock Plan was approved (70,094,694 voting for, 4,830,276 voting against, and 10,084,054 abstaining or not voting). As of the record date there were 102,621,077 shares of common stock issued and outstanding and entitled to vote. ITEM 5. OTHER INFORMATION On August 4, 1997, Glenn W. Marschel resigned as President and Chief Executive Officer of the Company and George M. Perrin resigned as Chairman of the Board of Directors. Mr. Perrin will remain on the Company's Board of Directors. On August 5, 1997, the Company announced that effective August 4, 1997, John P. Frazee, Jr. was elected by its Board of Directors as Chairman, President and Chief Executive Officer. 13 14 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits The exhibits listed on the accompanying index to exhibits are filed as part of this quarterly report. (b) Reports on Form 8-K On May 20, 1997, the Company filed a Current Report on Form 8-K relating to the redemption of all of its outstanding $200 million 11.75% Senior Subordinated Notes due May 15, 2002. 14 15 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Paging Network, Inc. Date: August 6, 1997 /s/ John P. Frazee, Jr. ----------------------------------------------- John P. Frazee, Jr. Chairman of the Board of Directors, President and Chief Executive Officer (Principal Executive Officer) Date: August 6, 1997 /s/ Kenneth W. Sanders ----------------------------------------------- Kenneth W. Sanders Senior Vice President-Finance, Treasurer, Chief Financial Officer and Assistant Secretary (Principal Financial Officer and Principal Accounting Officer) 15 16 EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION ----------- ----------- 4.1 Articles Sixth, Seventh, Eighth, Twelfth, and Thirteenth of the Restated Certificate of Incorporation of the Registrant, as amended(1) 4.2 Articles II, III, and VII and Section I of Article VIII of the Registrant's By-laws, as amended(1) 4.3 Form of Indenture(2) 4.4 Article V, Sections I, VI, and VII of the Registrant's By-Laws, as amended(4) 10.1 1982 Incentive Stock Option Plan, as amended and restated(1) 10.2 Form of Stock Option Agreement executed by recipients of options granted under the 1982 Incentive Stock Option Plan(1) 10.3 Form of Management Agreement executed by recipients of options granted under the 1982 Incentive Stock Option Plan(1) 10.4 Form of Vesting Agreement executed by recipients of options granted under the 1982 Incentive Stock option Plan(1) 10.5 1991 Stock Option Plan(1) 10.6 Form of Stock Option Agreement executed by recipients of options granted under the 1991 Stock Option Plan(1) 10.7 Form of Indemnification Agreement executed by directors and officers of the Registrant(1) 10.8 Form of First Amendment to Vesting Agreement executed by recipients of options granted under the 1982 Incentive Stock Option Plan(1) 10.9 Form of First Amendment to Management Agreement executed by recipients of options granted under the 1982 Incentive Stock Option Plan(1) 10.10 1992 Stock Option Plan for Directors(3) 10.11 Amended and Restated Credit Agreement dated as of May 2, 1995 among the Registrant, NationsBank of Texas, N.A., Toronto Dominion (Texas), Inc., The First National Bank of Boston, and certain other lenders(4) 10.12 Amendment No. 1 dated as of December 12, 1995 to the Amended and Restated Credit Agreement dated as of May 2, 1995 among the Registrant, NationsBank of Texas, N.A., Toronto Dominion (Texas), Inc., The First National Bank of Boston, and certain other lenders(5)
16 17
EXHIBIT NO. DESCRIPTION ----------- ----------- 10.13 Employment Agreement dated as of December 1, 1995 among the Registrant and Glenn W. Marschel(5) 10.14 Second Amended and Restated Credit Agreement dated as of June 5, 1996, among the Registrant, NationsBank of Texas, N.A., Toronto Dominion (Texas), Inc., The First National Bank of Boston, Chase Securities Inc., and certain other lenders(6) 10.15 Loan Agreement dated as of June 5, 1996 among Paging Network of Canada Inc., The Toronto-Dominion Bank, and such other financial institutions as become banks(6) 10.16 Loan Agreement dated as of June 5, 1996 among Madison Telecommunications Holdings, Inc., The Toronto-Dominion Bank, and such other financial institutions as become banks(6) 10.17 1991 Stock Option Plan, as amended and approved by stockholders on May 22, 1997(7) 10.18 1992 Stock Option Plan for Directors, as amended and restated and approved by stockholders on May 22, 1997(7) 10.19 1997 Restricted Stock Option Plan and approved by stockholders on May 22, 1997(7) 12 Ratio of Earnings to Fixed Charges for the three and six months ended June 30, 1997 and 1996(7)
--------------------------------------------------------------- (1) Previously filed as an exhibit to Registration Statement No. 33-42253 on Form S-1 and incorporated herein by reference. (2) Previously filed as an exhibit to Registration Statement No. 33-46803 on Form S-1 and incorporated herein by reference. (3) Previously filed as an exhibit to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1991. (4) Previously filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1995. (5) Previously filed as an exhibit to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1995. (6) Previously filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1996. (7) Filed herewith. 17 EX-10.17 2 AMENDED AND APPROVED 1991 STOCK OPTION PLAN 1 EXHIBIT 10.17 PAGING NETWORK, INC. 1991 STOCK OPTION PLAN 1. Purpose. The purpose of this Plan is to advance the interests of PAGING NETWORK, INC. (the "Company") by providing an opportunity to selected key employees of the Company and its subsidiaries to purchase Common Stock of the Company through the exercise of options granted under this Plan. By encouraging such stock ownership, the Company seeks to attract, retain and motivate employees of training, experience and ability. It is intended that this purpose will be effected by the granting of nonqualified stock options ("nonqualified options") the federal income tax treatment of which is determined under Section 83 of the Internal Revenue Code of 1986, as amended from time to time, and regulations thereunder (the "Code"), and incentive stock options intended to qualify under Section 422 of the Code. 2. Effective Date. This 1991 Stock Option Plan (the "Plan") became effective on August 23, 1991, the date it was adopted by the Board of Directors of the Company. The Plan was approved by the stockholders of the Company on August 23, 1991. The Plan was amended by the Board of Directors on January 26, 1993, subject to stockholder approval, which was given on May 20, 1993. The Plan was further amended by the Board of Directors on September 11, 1996 and on January 9, 1997, subject to stockholder approval, which was given on May 22, 1997. 3. Stock Subject to the Plan. The shares that may be granted under this Plan shall not exceed in the aggregate 13,950,000 shares of the $.01 par value common stock of the Company ("Common Stock"). Any shares subject to an option which for any reason expires or is terminated unexercised as to such shares may again be the subject of an option under the Plan. The shares delivered upon exercise of options under this Plan may, in whole or in part, be either authorized but unissued shares or issued shares re-acquired by the Company. In addition to foregoing aggregate limitation, no more than 500,000 shares may be granted under this Plan in any one calendar year to any one eligible individual. 4. Administration. The Plan shall be administered either by the Board of Directors of the Company (the "Board"), if each member of the Board is a disinterested person, or by a committee comprised of two or more directors of the Company who are disinterested persons and who are not employees of the Company or its parent or a subsidiary ("nonemployee directors"). The members of such committee shall be elected by the Board, which shall have the discretion to remove any member of the committee for 2 -2- any reason. Hereinafter, the term "Committee" shall mean the entity administering the Plan pursuant to this paragraph, whether the administrator is the Board or a committee. Subject to the provisions of the Plan, the Committee shall have full power to construe and interpret the Plan and to establish, amend and rescind rules and regulations for its administration. Any decisions made with respect thereto shall be final and binding on the Company, the optionee and all other persons. In addition, no employee shall have a right to be granted an option or, having received an option, a right to again be granted an option. 5. Eligible Employees. Incentive options or nonqualified options, or both, may be granted to such key employees of the Company or of any of its subsidiaries, including officers and members of the Board who are also employees of the Company or of its subsidiaries, as are selected by the Committee. 6. Duration of the Plan. This Plan shall terminate August 22, 2001, unless terminated earlier pursuant to Paragraph 12 hereafter, and no options may be granted thereafter. 7. Restrictions on Incentive Options. Incentive options (but not nonqualified options) granted under this Plan shall be subject to the following restrictions: (a) Limitation on Number of Shares. (i) With respect to options granted before January 1, 1987, the aggregate fair market value, determined as of the date the option is granted, of the shares for which an employee may be granted incentive options in any calendar year shall not exceed $100,000 plus any "unused limit carryovers", as that term is defined under Section 422A(c)(4) of the Code (as in effect immediately prior to its amendment by the Tax Reform Act of 1986), available in such year; or (ii) with respect to options granted after December 31, 1986, the aggregate fair market value, determined as of the date the option is granted, of the shares with respect to which options are exercisable for the first time by an employee during any calendar year shall not exceed $100,000. If an incentive option is granted pursuant to which the aggregate fair market value of shares with respect to which it first becomes exercisable in any calendar year by an individual exceeds the aforementioned $100,000 limitation, the portion of such option which is in excess of the $100,000 limitation shall be treated as a nonqualified option pursuant to Section 422(d)(1) of the Code. In the event that an individual is eligible to participate in any other stock option plan of the Company or its parent or a subsidiary which is also intended to comply with the provisions of Section 422 of the Code, the $100,000 3 -3- limitation shall apply to the aggregate number of shares for which incentive stock options may be granted under all such plans. (b) 10% Stockholder. If any employee to whom an incentive option is granted pursuant to the provisions of the Plan is on the date of grant the owner of stock (as determined under Section 424(d) of the Code) possessing more than 10% of the total combined voting power of all classes of stock of the Company or its parent or a subsidiary, then the following special provisions shall be applicable to the incentive option granted to such individual: (i) The option price per share subject to such incentive option shall not be less than 110% of the fair market value of one share on the date of grant; and (ii) The incentive option shall not have a term in excess of five (5) years from the date of grant. 8. Terms and Conditions of Options. Options granted under this Plan shall be evidenced by stock option agreements in such form and containing such terms and conditions as the Committee shall determine; provided, however, that such agreements shall evidence among their terms and conditions the following: (a) Price. Subject to the conditions on incentive options in Paragraph 7(b), if applicable, the purchase price per share of Common Stock payable upon the exercise of each option granted hereunder shall be as determined by the Committee in its discretion, and shall be not less than 100% of the fair market value of the stock on the day the option is granted. Such fair market value shall be determined in accordance with procedures to be established in good faith by the Committee in conformity with regulations issued by the Internal Revenue Service with regard to incentive and nonqualified stock options. (b) Number Of Shares. Each option agreement shall specify the number of shares to which it pertains. (c) Exercise of Options. Subject to the conditions on incentive options in Paragraph 7(b), if applicable, each option grant shall be exercisable for the full amount or for any part thereof and at such intervals or in such installments as the Committee may determine at the time it grants such option; provided, however, that no option shall be exercisable with respect to any shares later than ten (10) years after the date of the grant of such option. 4 -4- (d) Notice of Exercise and Payment. An option shall be exercisable only by delivery of a written notice to the Company's Treasurer, or any other officer of the Company designated by the Committee to accept such notices on its behalf, specifying the number of shares for which it is exercised. If said shares are not at that time effectively registered under the Securities Act of 1933, as amended, the optionee shall include with such notice a letter, in form and substance satisfactory to the Company, confirming that the shares are being purchased for the optionee's own account for investment and not with a view to distribution. Payment shall be made in full at the time the option is exercised. Payment shall be made either by (i) cashier's or certified check, (ii) if permitted by the Committee and stated in the option agreement, by delivery and assignment to the Company of shares of Common Stock having a value equal to the option price, or (iii) by a combination of (i) and (ii). The value of the Common Stock for such purpose shall be its fair market value as of the date the option is exercised, as determined in accordance with procedures to be established by the Committee. (e) Withholding Taxes; Delivery of Shares. The Company's obligation to deliver shares of Common Stock upon exercise of an option, in whole or in part, shall be subject to the optionee's satisfaction of all applicable federal, state and local tax withholding obligations. (f) Non-Transferability. No option shall be transferable by the optionee otherwise than by will or the laws of descent and distribution, and each option shall be exercisable during the optionee's lifetime only by the optionee (or the optionee's guardian or legal representative). (g) Termination of Options. Each option agreement shall contain provisions for the termination of the options granted thereunder if the optionee ceases for any reason to be an employee of the Company, or its parent or a subsidiary, no more favorable to the optionee than the following: (i) if the optionee ceases to perform services for the Company or its parent or a subsidiary by reason of resignation or other voluntary action of the optionee before his retirement on or after age 55, or if the Company or its parent or a subsidiary determines that it no longer wishes to engage the optionee's services and makes such determination based on cause, the option shall terminate at the time of such resignation or termination and may not be exercised thereafter; (ii) if the optionee ceases to perform services for the Company or its parent or a subsidiary for any reason other than cause, 5 -5- disability, death, or resignation or other voluntary action before his retirement on or after age 55, he may at any time within a period of thirty (30) days after he ceased to perform services exercise each of his options to the extent that the option was exercisable by him on the date on which he ceased to perform services for the Company or its parent or a subsidiary; (iii) if the optionee ceases to perform services for the Company or its parent or a subsidiary because of disability within the meaning of Section 22(e)(3) of the Code, he may at any time within a period of one (1) year after such termination of employment exercise his option to the extent that the option was exercisable by him on the date he ceased to perform services for the Company or its parent or a subsidiary; and (iv) if the optionee dies at a time when he might have exercised the option, then his estate, personal representative or beneficiary to whom it has been transferred pursuant to Paragraph 8(e) hereof may, at any time within a period of one (1) year after the optionee's death, or the termination of the option pursuant to this Plan, whichever is earlier, exercise it to the extent the optionee might have exercised it at the time of his death; provided, however, that the Committee may provide specifically in a nonqualified option agreement, but not an incentive option agreement, for such other period of time during which an optionee may exercise an option after termination of services as the Committee may approve, subject to the overriding limitation that no option may be exercised to any extent by anyone after the date of expiration of the option. (h) Rights as Stockholder. An optionee shall have no rights as a stockholder with respect to any shares covered by his option until the date the option has been exercised and the full purchase price for such shares has been received by the Company. 9. Stock Dividends; Stock Splits; Stock Combinations; Recapitalization. Appropriate adjustment shall be made in the maximum number of shares of Common Stock subject to the Plan and in the number, kind, and option price of shares covered by outstanding options granted hereunder to give effect to any stock dividends, stock splits, stock combinations, recapitalization and other similar changes in the capital structure of the Company after the effective date of the Plan. 10. Merger; Sale of Assets; Dissolution. Except as otherwise determined by the Committee, if the Company is merged or consolidated into a new surviving company and the holders of the Company's voting securities 6 -6- (on a fully-diluted basis) immediately prior to the merger or consolidation own less than a majority of the ordinary voting power to elect directors of the new surviving company (on a fully-diluted basis), or if there is a sale of all or substantially all of the Company's assets or capital stock in any transaction or series of related transactions, then (i) ten business days before any such occurrence, every option outstanding hereunder shall become immediately exercisable in full, to the extent not then exercised, and (ii) upon such occurrence, every option outstanding hereunder will terminate, to the extent not then exercised. In the event of a change of the Common Stock resulting from a merger or similar reorganization other than as described in the preceding sentence, the number and kind of shares which thereafter may be optioned and sold under the Plan and the number and kind of shares then subject to options granted hereunder and the price per share thereof shall be appropriately adjusted, in such manner as the Committee may deem equitable, to prevent substantial dilution or enlargement of the rights available or granted hereunder. 11. Definitions. (a) The term "disinterested person" shall have, for purposes of this Plan, the meaning ascribed to it in Rule 16b-3(c)(2)(i) under Section 16 of the Securities Exchange Act of 1934, as amended from time to time. (b) The term "employee" shall have, for purposes of this Plan, the meaning ascribed to it under Section 3401(c) of the Code and the regulations promulgated thereunder; the term "key employees" means those executive, administrative or managerial employees who are determined by the Committee to be eligible for options under this Plan. (c) The term "optionee" shall mean, for purposes of this Plan, a key employee to whom an option is granted under this Plan. (d) The term "parent" shall have, for purposes of this Plan, the meaning ascribed to it under Section 424(e) of the Code and the regulations promulgated thereunder. (e) The term "subsidiary" shall have, for purposes of this Plan, the meaning ascribed to it under Section 424(f) of the Code and the regulations promulgated thereunder. In addition, but solely for purposes of determining when an option will otherwise terminate due to the holder's termination of employment and only in the case of a holder who is not subject to Section 16 of the Securities Exchange Act of 1934, as amended, or otherwise a director or officer of the Company or its subsidiaries (as defined in the preceding sentence), "subsidiary" shall include any other entity in 7 -7- which the Company or any of its subsidiaries (as defined in the preceding sentence) owns a significant equity interest, as determined by the Committee in its discretion. 12. Termination or Amendment of Plan. The Board may at any time suspend or terminate the Plan, or make such changes in or additions to the Plan as it deems advisable without further action on the part of the stockholders of the Company, provided: (a) that no such termination or amendment shall adversely affect or impair any then outstanding option or any shares at the time subject to options without the consent of the optionee holding such option; and (b) that any such amendment which requires stockholder approval in order to comply with applicable provisions of the Code, rules promulgated pursuant to Section 16 of the Securities Exchange Act of 1934, applicable state law, or NASD or exchange listing requirements shall be subject to approval by the stockholders of the Company within one (1) year from the effective date of such amendment and shall be null and void if such approval is not obtained. EX-10.18 3 AMENDED AND RESTATED 1992 STOCK OPTION PLAN 1 EXHIBIT 10.18 PAGING NETWORK, INC. 1992 STOCK OPTION PLAN FOR DIRECTORS (AS AMENDED AND RESTATED JANUARY 9, 1997) 1. Purpose. The purpose of this Plan is to advance the interests of PAGING NETWORK, INC. (the "Company") by providing an opportunity for non-employee directors of the Company to purchase Common Stock of the Company through the exercise of options granted under the Plan and, on an elective basis, to receive grants of options on shares or shares in lieu of directors fees. 2. Effective Date. This 1992 Stock Option Plan for Directors (the "Plan") became effective on May 21, 1992 (the "Effective Date"), the date it was adopted by the Board of Directors of the Company (the "Board") and approved by the stockholders of the Company. The Plan was amended and restated by the Board on January 9, 1997, subject to stockholder approval, which was given on May 22, 1997. 3. Stock Subject to the Plan. Awards of Common Stock and options to purchase shares of the $.01 par value common stock of the Company ("Common Stock") may be granted under the Plan. At no time shall the number of shares of Common Stock then outstanding which are attributable to the grant of shares under the Plan or the exercise of options granted under the Plan plus the number of shares then issuable upon exercise of outstanding options granted under the Plan exceed 750,000 shares, subject, however, to the adjustment provisions of Paragraph 9 of the Plan. Any shares subject to an option which for any reason expires or is terminated unexercised as to such shares may again be the subject of an option under the Plan. The shares delivered under the Plan may, in whole or in part, be either authorized but unissued shares or issued shares reacquired by the Company. 4. Options. (a) Nonelective Grants. (i) Initial Election. On the first Monday of June immediately following a person's initial election as a director, each eligible director who is not an employee of the Company shall receive an option to purchase 45,000 shares of Common Stock. (ii) Subsequent Grants. On the first Monday of June immediately following the date on which an eligible director's most recently granted option under this Plan (other than as an Elective Grant, defined in subsection (b) below) has become exercisable in full, such director shall receive a further option to purchase 45,000 shares of Common Stock. 2 - 2 - (b) Elective Grants. (i) Grant & Conditions Thereto. Subject to the following qualifications, any eligible director shall receive a grant under the Plan of either (x) that whole number of shares of Common Stock having a fair market value equal to or most nearly approaching the amount of the director's annual retainer and meeting fees, as the case may be, as and when otherwise payable in cash or (y) an option, granted on the second Monday of January beginning in January, 1997, to purchase that whole number of shares of Common Stock resulting in an option having a value, determined under the method and assumptions for valuing options most recently employed for purposes of the Company's annual proxy statement to stockholders, equal to or most nearly approaching the amount of the director's annual retainer fee for the year and the meetings fees payable to the director assuming his attendance at each of the Board meetings, and meetings of committees of the Board of which he is a member, for the coming year. Grants of shares or options pursuant to this Section 4(b) are here referred to as "Elective Grants." (ii) Election Procedures. To receive an Elective Grant with respect to any calendar year's retainer and meetings fees, a director must elect in writing to receive shares or options in lieu of the Company's payment in cash of the directors' annual retainer and meeting fees for such year. Any such election shall be made by written notice to the Company to forego any cash payment of the retainer and meeting fees taken into consideration in determining the number of shares subject to such Grant, such notice to be given prior to the beginning of that calendar year (or on or prior to May 22, 1997, in the case of Elective Grants to otherwise be made in respect of 1997). Such election shall not affect his or her right to cash compensation in accordance with the Company's director compensation policies as in effect from time to time for any number of Board or committee meetings attended in a calendar year in excess of the number taken into account in determining the number of shares subject to an Elective Grant in option form made to the director in January of that year. Such election shall specify whether the director wishes to receive an Elective Grant of shares, or of options, as provided above. Combinations of shares and options for the same calendar year are not permitted. Each such election shall be irrevocable as to a calendar year once that year begins, except that in the event the stockholders should fail to approve this amended and restated Plan, all such elections shall be immediately revoked and the director promptly paid in cash any fees theretofore withheld pursuant to such election. Any such election may be of continuing effect, i.e., to carry over from year to year, until revoked as to a year or years subsequent to the year in which revoked. 3 - 3 - (c) Effect of Lack of Shares. In the event that on any date on which shares or options are to be granted hereunder, there is not a sufficient number of shares available to implement fully the grants then to be made, then each such director entitled to a grant at such time shall receive a pro rata portion of the grant contemplated by the preceding provisions. In addition, if the grants which are to be made but cannot be fully implemented are Elective Grants, then the director's agreement to forego fees shall be deemed automatically revoked to the same extent. 5. Administration. The Plan shall be administered by the Committee. The members of the Committee shall be elected by the Board, which shall have the discretion to remove any member of the Committee for any reason. Subject to the provisions of the Plan, the Committee shall have full power to construe and interpret the Plan and to establish, amend and rescind rules and regulations for its administration. Any decisions made with respect thereto shall be final and binding on the Company, any director receiving grants hereunder and all other persons. 6. Duration of the Plan. This Plan shall terminate on January 20, 2002 unless terminated earlier pursuant to Paragraph 10, and no options or shares may be granted thereafter. 7. Eligibility. Any person who is a director of the Company and who is not an employee of the Company and who has not been an employee of the Company during the 24 months preceding the date of grant is eligible to have an option granted to him or her and to elect to receive Elective Grants. 8. Terms and Conditions of Options. Options granted under the Plan shall be evidenced by stock option agreements in such form and containing such terms and conditions as the Committee shall determine; provided, however, that such agreements shall evidence among their terms and conditions the following: (a) Price. The purchase price per share of Common Stock payable upon the exercise of each option granted hereunder shall be 100% of the fair market value of the stock on the day the option is granted or, in the event there is no fair market value available on the day the option is granted, on the date next following the day the option is granted for which a fair market value is available. (b) Number of Shares. Each option agreement shall specify the number of shares to which it pertains. (c) Exercise of Options. In general, each option grant shall be exercisable for the full amount or for any part thereof and at such intervals or in such installments as the Committee may determine at the time it grants such option; provided, however, that no option shall be exercisable with respect to any shares later than ten years after the date of the grant of such option. However, Elective Grants of options shall 4 - 4 - become exercisable as to one-twelfth, two-twelfths, and so on, of the number of shares covered by each such Grant (or the nearest lower number of whole shares, if less) on the last day of the first through twelfth calendar months to end subsequent to the date such Grant was made (including the January in which such grant was made). Notwithstanding the foregoing, no option grant pursuant to this amended and restated Plan, Elective Grant or otherwise, may be exercised until the shareholders of the Company shall have approved this amended and restated Plan. (d) Notice of Exercise and Payment. An option shall be exercisable only by delivery of a written notice to the Company's Treasurer or any other officer of the Company designated by the Committee to accept such notices on its behalf, specifying the number of shares for which it is exercised. If shares to be purchased are not at that time effectively registered under the Securities Act of 1933, as amended, the optionee shall include with such notice a letter, in form and substance satisfactory to the Company, confirming that the shares are being purchased for the optionee's own account for investment and not with a view to distribution and acknowledging the consequences for resale of absence of registration. Payment shall be made in full at the time the option is exercised. Payment shall be made either by (i) check, (ii) if permitted by the Committee and stated in the option agreement, by delivery and assignment to the Company of shares of Common Stock having a value equal to the option price, or (iii) by a combination of (i) and (ii). The value of the Common Stock for such purpose shall be its fair market value as of the date the option is exercised, as determined in accordance with procedures to be established by the Committee. (e) Withholding Taxes: Delivery of Shares. The Company's obligation to deliver shares of Common Stock under the Plan or upon exercise of an option, in whole or in part, shall be subject to the optionee's satisfaction of all applicable federal, state and local tax withholding obligations. (f) Non-Transferability. No option shall be transferable by the optionee otherwise than by will or the laws of descent and distribution, and each option shall be exercisable during the optionee's lifetime only by the optionee (or the optionee's guardian or legal representative). (g) Termination of Options. Each option agreement shall contain provisions for the termination of the options granted thereunder if the optionee ceases for any reason to be a director of the Company no more favorable to the optionee than the following: (i) if the optionee ceases to be a director of the Company for any reason other than disability or death, he may at any time within a period of three months after he ceased to be a director exercise each of his options to the extent that the option was exercisable by him on the date on which he ceased to be a director; 5 - 5 - (ii) if the optionee ceases to be a director of the Company because of disability within the meaning of Section 22(e)(3) of the Code, he may at any time within a period of one year after such termination exercise his option to the extent that the option was exercisable by him on the date he ceased to be a director; and (iii) if the optionee dies at a time when he might have exercised the option, then his estate, personal representative or beneficiary to whom it has been transferred pursuant to Paragraph 8(f) hereof may, at any time within a period of one year after the optionee's death, or the termination of the option pursuant to this Plan, whichever is earlier, exercise it to the extent the optionee might have exercised it at the time of his death. (h) Rights as Stockholder. An optionee shall have no rights as a stockholder with respect to any shares covered by his option until the date the option has been exercised and the full purchase price for such shares has been received by the Company. 9. Stock Dividends; Stock Splits; Stock Combinations; Recapitalizations. Appropriate adjustment shall be made in the maximum number of shares of Common Stock subject to the Plan and in the number, kind, and option price of shares covered by outstanding options granted hereunder to give effect to any stock dividends, stock splits, stock combinations, recapitalizations and other similar changes in the capital structure of the Company after the effective date of the Plan. 10. Merger; Sale of Assets; Dissolution. Except as otherwise determined by the Committee, if the Company is merged or consolidated into a new surviving company and the holders of the Company's voting securities (on a fully-diluted basis) immediately prior to the merger or consolidation own less than a majority of the ordinary voting power to elect directors of the new surviving company (on a fully-diluted basis), or if there is a sale of all or substantially all of the Company's assets or capital stock in any transaction or series of related transactions, then (i) ten business days before any such occurrence, every option outstanding hereunder shall become immediately exercisable in full, to the extent not then exercised, and (ii) upon such occurrence, every option outstanding hereunder will terminate, to the extent not then exercised. In the event of a change of the Common Stock resulting from a merger or similar reorganization other than as described in the preceding sentence, the number and kind of shares which thereafter may be optioned and sold under the Plan and the number and kind of shares then subject to options granted hereunder and the price per share thereof shall be appropriately adjusted, in such manner as the Committee may deem equitable, to prevent substantial dilution or enlargement of the rights available or granted hereunder. 6 - 6 - 11. Termination or Amendment of Plan. The Board may at any time terminate the Plan, or make such changes in or additions to the Plan as it deems advisable without further action on the part of the stockholders of the Company, provided: (a) that no such termination or amendment shall adversely affect or impair any then outstanding option or any shares at the time subject to options without the consent of the optionee holding such option; and (b) that any such amendment which requires stockholder approval in order to comply with applicable provisions of the Code, rules promulgated pursuant to Section 16 of the Securities Exchange Act of 1934, applicable state law, or NASD or exchange listing requirements shall be subject to approval by the stockholders of the Company within one year from the effective date of such amendment and shall be null and void if such approval is not obtained. EX-10.19 4 APPROVED 1997 RESTRICTED STOCK OPTION PLAN 1 EXHIBIT 10.19 PAGING NETWORK, INC. 1997 RESTRICTED STOCK PLAN 1. PURPOSE The purpose of this Plan is to offer senior management the opportunity of the Paging Network, Inc. and its Affiliates to (i) increase their ownership of shares of stock in the Company, (ii) participate in the stockholder value which has been created, and (iii) have a mutuality of interest with other stockholders. 2. DEFINITIONS For the purposes of the Plan, the following terms shall have the meanings set forth below: 2.1. Affiliate means any corporation in which the Company, directly or indirectly, has a significant equity interest, by vote or value. 2.2. Award means the grant or sale pursuant to the Plan of Restricted Stock or Stock Grants. 2.3. Board means the Board of Directors of the Company. 2.4. Code means the federal Internal Revenue Code of 1986, as amended from time to time, or any statute successor thereto, and any regulations issued from time to time thereunder. 2.5. Committee means the Stock Option/Compensation Committee of the Board. 2.6. Company means Paging Network, Inc., a corporation organized under the laws of the State of Delaware. 2.7. Participant means an employee to whom an Award shall have been granted under the Plan. 2.8. Plan means this 1997 Restricted Stock Plan of the Company, as amended from time to time. 2.9. Restricted Stock means an Award pursuant to Section 7 below of shares of Stock subject to restrictions or other forfeiture conditions. 2.10. Restriction Period has the meaning assigned such term in Section 7.3(e). 2.11. Stock means Common Stock, par value $.01 per share, of the Company. 2 - 2 - 2.12. Stock Grant means an Award pursuant to Section 8 below of shares of Stock not subject to restrictions or other forfeiture conditions. 3. TERM OF THE PLAN Unless the Plan shall have been earlier terminated by the Board, Awards may be granted hereunder at any time in the period commencing on the approval of the Plan by the Board and ending on the tenth anniversary of the earlier of the adoption of the Plan by the Board or approval of the Plan by the Company's stockholders. Awards granted pursuant to the Plan within such period shall not expire solely by reason of the termination of the Plan. Awards granted prior to stockholder approval of the Plan shall be conditioned upon receipt of such approval, and shall be void ab initio in the event such approval is not received within twelve months of the Board's adoption of the Plan. 4. STOCK SUBJECT TO THE PLAN (a) Aggregate Limit On Awards. At no time shall the number of shares of Stock issued pursuant to or subject to Awards granted under the Plan exceed 300,000 shares, subject, however, to the provisions of subsection (b) below. Such shares may be either authorized but unissued shares or shares held by the Company in its treasury. The Company shall at all times reserve and make available sufficient number of shares to meet the requirements of the Plan, provided that following termination of the Plan, the number of shares reserved need not exceed the number of Shares issued under Awards outstanding from time to time thereafter. Shares reacquired by the Company as a result of forfeiture of Awards shall again be available for use under subsequent Awards under the Plan. (b) Other Adjustment. In the event of any merger, reorganization, consolidation, recapitalization, Stock dividend, or other change in corporate structure affecting the Stock, such substitution or adjustment shall be made in the character and aggregate number of shares reserved for issuance under the Plan, and in the number of shares subject to stock based Awards granted under the Plan, as may be determined to be appropriate by the Committee, provided that the number of shares subject to any Award shall always be a whole number. 5. ADMINISTRATION The Plan shall be administered by the Committee. Subject to the provisions of the Plan, the Committee shall have complete authority, in its sole discretion, to make or to select the manner of making any and all determinations required for the operation of the Plan, and without limiting the generality of the foregoing, shall have the authority to (a) grant to eligible individuals, pursuant to the terms of the Plan, Restricted Stock and Stock Grants; (b) determine whether and to what extent Restricted Stock and Stock Grants or any combination thereof, are to be granted hereunder; 3 - 3 - (c) determine the number of shares of Stock to be covered by each Award; (d) determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award (which need not be identical in every case), including, but not limited to, the share price and any restriction or limitation, or any vesting acceleration or forfeiture waiver regarding any Award and the shares of Stock relating thereto, based on such factors as the Committee shall determine. In making such determinations, the Committee may take into account the nature of the services rendered by the respective employees, their present and potential contributions to the success of the Company and its Affiliates, and such other factors as the Committee in its discretion shall deem relevant. Subject to the provisions of the Plan, the Committee shall also have complete authority, in its sole discretion, to interpret the Plan, to prescribe, amend and rescind rules and regulations relating to it, to determine the terms and provisions of any Award issued under the Plan (and any agreements relating thereto), to resolve all disputes arising under the Plan, and to make all other determinations necessary or advisable for the administration of the Plan. The Committee's determinations shall be conclusive, final and binding upon all persons having or claiming any interest in the Plan or in any Award pursuant to the Plan. 6. ELIGIBILITY Awards may be granted under the Plan to this Company's chairman and its president, and to officers of the Company and its Affiliates in the following classes: (i) executive, senior and corporate vice presidents, (ii) regional presidents, and (iii) officers with authority over any of the preceding classes of officers. In addition, the Committee may in its sole discretion also grant Awards to other key employees of the Company and its Affiliates. 7. RESTRICTED STOCK 7.1. Provision for Grant. Shares of Stock may be issued either alone or in addition to other Awards granted under the Plan at such price, if any, as the Committee may determine. The Committee shall condition the grant of Restricted Stock upon the completion of additional service, attainment of specified performance goals or such other factors as the Committee may determine. 7.2. Awards and Certificates. The prospective recipient of a Restricted Stock Award shall not have any rights with respect to such Award, unless and until such recipient has executed an agreement evidencing the Award, has delivered a fully executed copy thereof to the Company, and has otherwise complied with the applicable terms and conditions of such Award. 7.3. Additional Terms and Conditions. Grants of Restricted Stock may be made under the following additional terms and conditions: 4 - 4 - (a) Purchase Price. Shares of Restricted Stock shall be issued under the Plan for such consideration, in cash, other property or services, as is determined by the Committee. (b) Acceptance of Awards. Awards of Restricted Stock must be accepted within a period of 60 days (or such shorter period as the Committee may specify at grant) after the Award date, by executing a Restricted Stock Award agreement and paying whatever price (if any) is required pursuant to the terms of the Award. (c) Issuance of Certificates. Each Participant receiving a Restricted Stock Award, subject to subsection (d) below, shall be issued a stock certificate in respect of such shares of Restricted Stock. Such certificate shall be registered in the name of such Participant, and, if applicable, shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Award substantially in the following form: The transferability of this certificate and the shares represented by this certificate are subject to the terms and conditions of the Paging Network, Inc. 1997 Restricted Stock Plan and a Restricted Stock Grant Agreement entered into by the registered owner and Paging Network, Inc. Copies of such Plan and Agreement are on file in the offices of Paging Network, Inc. at 4965 Preston Park Boulevard, Plano, TX 75093. (d) Escrow of Shares. The Committee may require that the stock certificates evidencing shares of Restricted Stock be held in custody by a designated escrow agent until the restrictions thereon shall have lapsed, and that the Participant deliver a stock power, endorsed in blank, relating to the Stock covered by such Award. (e) Transferability. Subject to the provisions of this Plan and the Award agreement, during the period set by the Committee commencing with the date of such Award (the "Restriction Period"), the Participant may not sell, transfer, pledge, assign or otherwise encumber shares of Restricted Stock awarded under the Plan. The Committee may provide for the lapse of such restrictions in installments and may accelerate or waive such restrictions in whole or in part, based on service, performance and/or such other factors or criteria as the Committee may determine. (f) Rights Pending Lapse of Restrictions or Forfeiture of Award. Except as provided in this subsection (f) and subsection (e) above, the Participant shall have, with respect to the shares of Restricted Stock, all of the rights of a stockholder of the Company, including the right to vote the shares, and the right to receive any cash dividends. The Committee, as determined at the time of Award, may permit or require the payment of cash dividends to be deferred and, if the Committee so determines, reinvested in additional Restricted Stock to the extent shares are available under Section 4. (g) Effect of Termination Of Employment Or Association. Unless otherwise determined by the Committee at grant and subject to the applicable provisions of the Award agreement and this Section 7, upon termination of a Participant's employment or 5 - 5 - other association with the Company and its Affiliates for any reason during the Restriction Period, all shares still subject to restriction shall be subject to return to the Company; provided, however, that military or sick leave shall not be deemed a termination of employment or other association, if it does not exceed the longer of 90 days or the period during which the absent optionee's reemployment rights, if any, are guaranteed by statute or by contract. (h) Lapse of Restrictions. If and when the Restriction Period expires without a prior forfeiture of the Restricted Stock subject to such Restriction Period, the certificates for such shares shall be delivered to the Participant promptly if not theretofore so delivered. 8. STOCK GRANTS In recognition of significant contributions to the success of the Company or its Affiliates, in lieu of compensation otherwise already due and in such other limited circumstances as the Committee deems appropriate, shares of Stock may be issued either alone or in addition to other stock or cash-based Awards granted under the Plan at such price, if any, as the Committee may determine. Stock Grant Awards shall be made without forfeiture conditions of any kind and otherwise pursuant to such terms and conditions as the Committee may determine. 9. TERMINATION AND AMENDMENT OF THE PLAN AND AWARDS The Board may at any time terminate the Plan or make such modifications of the Plan as it shall deem advisable. No termination or amendment of the Plan may, without the consent of the Participant to whom any Award shall theretofore have been granted, adversely affect the rights of such Participant under such Award. The Committee may amend the terms of any Award theretofore granted, prospectively or retroactively, but no such amendment shall impair the rights of any Participant without the Participant's consent. 10. MISCELLANEOUS PROVISIONS 10.1. Adoption of Other Plans. Nothing contained in this Plan shall prevent the Board of Directors from adopting other or additional compensation arrangements, subject to stockholder approval if such approval is required; and such arrangements may be either generally applicable or applicable only in specific cases. 10.2. Payments on Death. The Committee shall establish such procedures as it deems appropriate for a Participant to designate a beneficiary to whom any amounts payable in the event of the Participant's death are to be paid. 10.3. Tax Withholding. No later than the date as of which an amount first becomes includible in the gross income of the Participant for federal income tax purposes with respect 6 - 6 - to any Award, the Participant shall pay to the Company, or make arrangements satisfactory to the Company regarding the payment of, any federal, state, or local taxes of any kind required by law to be withheld (whether so required to secure an otherwise available tax deduction or otherwise) with respect to such amount. If authorized by the Committee at the grant of an Award, the minimum required withholding obligations may be settled with Stock, including Stock that is part of the Award that gives rise to the withholding requirement. The obligations of the Company under the Plan shall be conditional on such payment or arrangements and the Company shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the Participant. 10.4. Limitation of Rights in Stock. No Participant shall not be deemed for any purpose to be a stockholder of the Company with respect to any of the shares of Stock covered by an Award, except to the extent any payment required therefore shall have been received by the Company and a certificate shall have been issued therefore and delivered to the Participant or his or her agent (or, in the case of Restricted Stock, any designated escrow agent). Any Stock issued pursuant to an Award shall be subject to all restrictions upon the transfer thereof which may be now or hereafter imposed by the Certificate of Incorporation and By-laws of the Company. 10.5. No Special Employment or Other Rights. Nothing contained in the Plan or in any Award shall confer upon any Participant any right with respect to the continuation of his or her employment or other association with the Company (or any Affiliate), or interfere in any way with the right of the Company (or any Affiliate), subject to the terms of any separate employment or consulting agreement or provision of law or corporate articles or by-laws to the contrary, at any time to terminate such employment or consulting agreement or to increase or decrease the compensation of the Participant from the rate in existence at the time of the grant of an Award under the Plan. 10.6. Notices and Other Communications. Any notice, demand, request or other communication hereunder to any party shall be deemed to be sufficient if contained in a written instrument delivered in person or duly sent by first class registered, certified or overnight mail, postage prepaid, or telecopied with a confirmation copy by regular, certified or overnight mail, addressed or telecopied, as the case may be, (i) if to the Executive or any other party, at his or her address as last provided to the Company and (ii) if to the Company, at 4965 Preston Park Boulevard, Plano, TX 75093, Attention: Senior Vice President-Finance, Telecopier: (972)-985-6551, or to such other address or telecopier number, as the case may be, as the addressee may have, after the date of this Agreement, designated by notice to the addressor. All such notices, requests, demands and other communications shall be deemed to have been received: (i) in the case of personal delivery, on the date of such delivery; (ii) in the case of mailing, when received by the addressee; and (iii) in the case of facsimile transmission, when confirmed by facsimile machine report. 7 - 7 - 10.7. Governing Law. The Plan and all Awards and actions taken thereunder shall be governed by and construed in accordance with the laws of the State of Texas, without regard to the conflict of laws principles thereof. EX-12 5 COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES 1 EXHIBIT 12 PAGING NETWORK, INC. COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
Three Months Ended Six Months Ended June 30, June 30, -------------------- -------------------- 1997 1996 1997 1996 -------- -------- -------- -------- Earnings: Loss before extraordinary item .............. $(34,919) $(18,532) $(74,833) $(30,638) Fixed charges ............................... 44,031 34,785 87,244 69,248 -------- -------- -------- -------- Earnings ................................. $ 9,112 $ 16,253 $ 12,411 $ 38,610 ======== ======== ======== ======== Fixed charges: Interest expense ............................ $ 36,422 $ 28,623 $ 71,530 $ 57,075 Amortization of deferred financing costs .... 1,859 1,284 4,330 2,567 Interest portion of rental expense .......... 5,750 4,878 11,384 9,606 -------- -------- -------- -------- Fixed charges ............................ $ 44,031 $ 34,785 $ 87,244 $ 69,248 ======== ======== ======== ======== Ratio of earnings to fixed charges .......... - - - - ======== ======== ======== ======== Deficiency of earnings available to cover fixed charges ............................. $(34,919) $(18,532) $(74,833) $(30,638) ======== ======== ======== ========
EX-27 6 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS DEC-31-1997 APR-01-1997 JUN-30-1997 2,020 0 81,296 6,729 69,210 154,631 1,333,008 408,615 1,633,988 181,360 1,702,598 0 0 1,026 (250,996) 1,633,988 4,861 234,227 28,805 202,258 38,083 4,770 38,281 (34,919) 0 (34,919) 0 (15,544) 0 (50,463) (0.49) (0.49)
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