SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

Annual Report Pursuant To Section 13 Or 15(d)
Of The Securities Exchange Act Of 1934

Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 [Fee Required]

For the fiscal year ended December 31, 2004 or

Commission file number 1-8309.

Price Communications Corporation

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code (212) 757-5600

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to the filing requirements for the past 90 days. Yes ý No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to the Form 10-K.  ý

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act.)  ý

AGGREGATE MARKET VALUE OF THE VOTING STOCK
HELD BY NONAFFILIATES OF THE COMPANY

Aggregate market value of the Common Stock held by non-affiliates of the Company, based on the last sale price on the New York Stock Exchange (“NYSE”) on June 30, 2004 ($14.76 as reported in the Wall Street Journal): approximately $593.4 million.

The number of shares outstanding of the Company’s common stock as of February 28, 2005 was 56,216,445.

DOCUMENTS INCORPORATED BY REFERENCE:

Part III of this Form 10-K incorporates certain information contained in the registrant’s definitive proxy statement filed by the registrant in connection with the registrant’s 2005 Annual Meeting of Shareholders.

PART I

Item 1.  Business

General

Unless otherwise indicated, all references herein to “Price” and “PCC” refer to Price Communications Corporation and all references herein to the “Company” refer to PCC and its subsidiaries.  PCC was organized in New York in 1979 and began active operations in 1981.  Its principal executive offices are located at 45 Rockefeller Plaza, New York, New York 10020, and its telephone number is (212) 757-5600.  See “Certain Terms” for definitions of certain terms used herein.

Prior to August 15, 2002, Price Communications Corporation was engaged, through its wholly owned subsidiary Price Communications Wireless, Inc. (“PCW”), in the construction, development, management and operation of cellular telephone systems in the southeastern United States.  The Company provided cellular telephone service to subscribers in Georgia, Alabama, South Carolina and Florida in a total of 16 licensed service areas composed of eight Metropolitan Statistical Areas (“MSA”) and eight Rural Service Areas (“RSA”), with an aggregate estimated population of 3.4 million.

Contribution of the Company’s Wireless Business to the “Verizon Partnership”

On December 18, 2001, the Company agreed to contribute (“the asset contribution”) substantially all of the assets of PCW and approximately $149 million in cash to Verizon Wireless of the East (“the Verizon Partnership”), a limited partnership controlled by Cellco Partnership (doing business as “Verizon Wireless”), in exchange for a preferred limited partnership interest (the “Preferred Exchangeable Interest”) in the Verizon Partnership.  The transaction was consummated on August 15, 2002.  As a result of the asset contribution, the Company currently has no operating assets.  PCC’s shares remain listed on the New York Stock Exchange, the Pacific Stock Exchange, the Boston Stock Exchange and the Chicago Stock Exchange. The Verizon Partnership assumed certain liabilities of PCW relating to the contributed business.   After giving effect to certain adjustments, as defined in the transaction agreement, PCW’s initial capital account approximated $1.112 billion.  Pursuant to the Verizon Partnership agreement, PCW is entitled to an allocation of any profits from the Verizon Partnership for a period of up to four years after August 15, 2002 equal to its preferred return, which currently approximates 2.9% per annum.  Any losses incurred by the Partnership will be allocated to Cellco Partnership and its affiliates up to an amount equal to their capital account in the Verizon Partnership before being allocated to PCW.  The Company will receive 50% of its preferred return in cash with the balance being added to its capital account.

Under a letter agreement dated August 9, 2002, Verizon Communications provided the Verizon Partnership with $350 million of debt financing which was used in connection with the covenant defeasance and redemption of PCW’s Senior Subordinated Notes and Senior Secured Notes.  PCW guaranteed such indebtedness.  However, PCW is not obligated to make payment under such guaranty until Verizon Communications has exhausted all remedies against the Verizon Partnership.  The Company believes that the probability of the guaranty being enforced is remote.  Price has guaranteed PCW’s obligation under the guaranty, and upon closing of the transaction deposited $70 million ($91.0 million as of December 31, 2004) in cash and other property into a collateral account to secure the guaranty.  Price controls the investment of the assets in the collateral account, has the right to withdraw certain sums such as dividends, interest, and earnings on investments from the account, and had the right, in addition, to withdraw up to $5 million in the aggregate from the account to cover its ordinary operating expenses. During the year ended December 31, 2004 the Company withdrew the $5 million. Price and Verizon Communications further agreed that Price would retain its cash existing at the closing of the asset contribution for the purpose of making such investments as Price deems appropriate.

The Preferred Exchangeable Interest is exchangeable for common stock of either Verizon Wireless Inc. (if a qualifying initial public offering of Verizon Wireless occurs by August 15, 2006) or Verizon Communications Inc. (if, in general, such an offering does not occur).  At the time PCC negotiated the transaction with Verizon, PCC’s board of directors and management thought it possible that a qualifying initial public offering of Verizon Wireless would occur and that, consequently, PCC could probably receive Verizon Wireless common stock.  On January 29, 2003, however, Verizon Wireless announced the withdrawal of its registration statement for an initial public offering of its common stock, given Verizon Wireless’ ongoing strong cash flow and lack of significant funding requirements.  Moreover, since PCC entered into its transaction with Verizon, PCC has received no other indications as to if or when a Verizon Wireless public offering might occur.  As a result, PCC does not believe that such an offering will take place in the foreseeable future.  PCC consequently expects that the Preferred Exchangeable Interest will be exchanged for common stock of Verizon Communications in approximately August 2006.  If this happens, the number of shares of Verizon Communications common stock issued to PCC would equal the amount of PCW’s capital account in the Verizon Partnership divided by the 20-day average closing price of the Verizon Communications common stock, but such price may not be less than $40 nor more than $74.  If PCC receives Verizon Communications shares in August 2006, the Verizon Communications shares would, under the terms of PCC’s lockup agreements with Verizon, become eligible for distribution to

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PCC’s shareholders in approximately August 2007.  Since PCC expects to receive Verizon Communications stock in approximately August 2006, the discussion under “Business-General-Contribution of the Company’s Wireless Business to Verizon Partnership” does not address other possibilities.  Reference is made to “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Overview” and Note 2 to the Company’s Consolidated Financial Statements for further discussion of the exchange of the Preferred Exchangeable Interest for shares of Verizon Wireless Inc. or Verizon Communications Inc. common stock.

Under PCC’s proxy statement for its 2003 annual meeting of shareholders, PCC conducted a non-binding, advisory vote of its shareholders permitting shareholders to express their views as to whether the Company should follow a liquidation strategy with a view toward the liquidation of the Company in the years ahead, or as an alternative to a liquidation strategy, the Company’s management should seek to acquire another business that meets the economic and fiduciary requirements of the board of directors.  A majority of the votes cast in this non-binding, advisory vote favored seeking to acquire another business.  The Company’s proxy statement for this meeting noted that there could be no assurance that the Company would identify or succeed in acquiring a business that met its economic and fiduciary requirements, and stated that since this was only a non-binding, advisory vote for the purpose of providing guidance to the board of directors and management, the outcome of the advisory vote would be only one factor considered by the board of directors and management in determining their views regarding the proper future course to be followed by the Company.  The proxy statement further noted that regardless of the outcome of the vote, the board of directors and management would have the right, consistent with their fiduciary duties and exercise of their business judgment, to recommend to the shareholders that the Company be liquidated (subject to the requisite vote of at least 66 2/3% of the Company’s outstanding shares at a future meeting of shareholders), to seek other potential business opportunities, or to follow another course of action with respect to the Company’s future.

The Company and Mr. Price (in his capacity as chief executive officer of the Company and in his personal capacity) have reviewed a number of potential acquisitions and opportunities.  These include the purchase of a mutual fund management company, banks, cellular properties, independent telephone companies, broadcasting and or/ publishing companies and a proposal for the conversion of the Company into a closed-end investment company.  To date, the Company has not identified a business that it believes, in light of the price being asked for such business and other considerations deemed by the board of directors and management to be relevant, would be in the best interests of the Company to acquire, and there can be no assurance that the Company will identify or succeed in acquiring a business that meets its economic and fiduciary requirements.

Under New York State law, the affirmative vote of the holders of at least 66 2/3% of PCC’s outstanding shares will be required at a future shareholders’ meeting to approve a liquidation of the Company.  In recent votes of PCC’s shareholders between 6% and 19% of PCC’s shareholders have failed to vote (if such failure to vote occurs at such a future meeting of PCC’s shareholders it will be more difficult to reach the 66 2/3% affirmative vote required to approve liquidation.) The board of directors consequently believes that it may be difficult at any future shareholders meeting to obtain the necessary votes to approve liquidation.

The Company has accounted for the Preferred Exchangeable Interest in a manner similar to the equity method of accounting. The initial investment on the Company’s balance sheet equaled the credit in its capital account on the Verizon Partnership’s financial statements. Thereafter, the Company increased its investment by the amount of income it was entitled to based on the availability of profits and the agreed upon preferred rate of return and reduced its investment balance by any cash distributed by the Verizon Partnership to the Company.

Business of The Verizon Partnership

The business of the Verizon Partnership consists of the ownership and operation of all of the assets contributed by PCW and Cellco Partnership, and its subsidiaries to the Verizon Partnership.  PCW contributed substantially all of its assets and approximately $149 million in cash, and Cellco Partnership and its subsidiaries have contributed an aggregate 85% partnership interest in Orange County-Poughkeepsie Limited Partnership (including the general partner interest and its associated management rights), certain FCC licenses, a $500 million promissory demand note receivable and approximately $250 million in cash.

The operations of the Verizon Partnership are closely integrated with Cellco Partnership’s other wireless telecommunications assets.  Cellco Partnership provides or arranges for the provision of certain services to the Verizon Partnership in connection with its business.  These services may include: (i) administrative, accounting, billing, credit, collection, insurance, legal, purchasing, clerical and such other general services as may be necessary to administer the Verizon Partnership: (ii) design, engineering, optimization, implementation, surveillance, maintenance, repair and such other technical services as may be necessary to operate the Verizon Partnership’s wireless network: and (iii) assistance in the preparation of filings with regulatory authorities and in the negotiation of transactions with respect to the FCC licenses owned by the Verizon Partnership.

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The Company’s Contributed Assets

As of August 15, 2002, the date of the contribution, PCW provided cellular telecommunications service in Alabama, Florida, Georgia and South Carolina in a total of 16 licensed service areas, composed of eight MSAs and eight RSAs, with an aggregate population of approximately 3.4 million.  The Company sold its cellular telecommunications service as well as a full line of cellular products and accessories principally through its network of retail stores.  The Verizon Partnership has converted these markets to the “Verizon Wireless” brand name.

Seven MSAs, Montgomery and Dothan, Alabama and Macon, Columbus, Albany, Augusta and Savannah, Georgia, make up the core of the Georgia/Alabama cluster.  Additional cellular service areas in this region include the Georgia-9 RSA, Alabama-8 RSA, Georgia-7 RSA, Georgia-8 RSA, Georgia-10 RSA, Georgia-12 RSA, Georgia-13 RSA and the Georgia-6 RSA.  The Augusta, Georgia MSA includes Aiken County in South Carolina.  In the aggregate, these markets cover a contiguous service area of approximately 38,000 square miles that includes Montgomery, the state capital of Alabama, prominent resort destinations in Jekyll Island, St. Simons Island and Sea Island, Georgia, and over 710 miles of interstate highway, including most of 1-95 from Savannah, Georgia to Jacksonville, Florida.  Substantial roaming revenue is earned from cellular telephone subscribers from other systems traveling in these markets from nearby population centers such as Atlanta and Birmingham, as well as from vacation and business traffic in the southeastern United States.  Due in part to the favorable labor environment, moderate weather and relatively low cost of land, there has been an influx of new manufacturing plants in this market.

The Verizon Partnership also owns the non-wireline cellular license for the Panama City, Florida market.  Substantial roaming revenue is earned in this market from subscribers from other systems who visit Panama City, a popular spring and summer vacation destination.

Cellco Contributed Assets

Orange County-Poughkeepsie Limited Partnership

The Orange County-Poughkeepsie Limited Partnership (“OCP”) operates as a wholesale provider of wireless services in the Orange County, NY MSA and the Poughkeepsie, NY MSA.  As a wholesale provider, OCP owns and operates a cellular telecommunications network and sells lines of service to reseller companies who in turn sell to individual subscribers.  The OCP cellular system became operational in 1987.

OCP is owned 85% by NYNEX Mobile Limited Partnership 2 (which is beneficially owned 100% by Cellco Partnership) and 7.5% by each of Taconic Telephone Corporation and Warwick Valley Telephone Company.  Cellco Partnership presently acts as the general partner, which makes all decisions and is empowered to do or cause to be done all acts necessary for the operation of OCP and also as a limited partner.

OCP operates using two wireline cellular licenses on the 800 MHZ frequency band.  The licenses cover the two MSA markets stated above.  Orange County has a population of over 341,000, a population density of approximately 414 persons per square mile and a median household annual income over $40,000.  Poughkeepsie has a population of over 280,000, a population density of approximately 348 persons per square mile and a median household annual income over $40,000.

OCP operates on the CDMA digital standard.  As a wholesale provider, OCP does not have its own retail subscribers but instead sells lines of service to reseller companies.   The main reseller is Cellco Partnership, which contracts for lines and is responsible for most of OCP’s service revenue.  Because OCP operates on a wholesale basis only, it does not operate any retail stores directly or contract with any agents for the retail distribution of cellular service or wireless communication devices.

All services and network operations are performed on behalf of OCP by employees of Cellco Partnership managed through the Cellco Partnership regional and area operations groups.  OCP does not have any employees.

The partners make capital contributions, share in the operating results and receive distributions from OCP in accordance with their respective ownership percentages.

FCC Licenses

Cellco Partnership contributed to Verizon Wireless of the East the FCC licenses which provide broadband PCS wireless communications services within the Macon, Georgia BTA, and all of Cellco Partnership’s rights, title and interest in the FCC license which provides broadband wireless communications service within a portion of the Atlanta, Georgia BTA.  These licenses authorize operation on the 10MHz E block spectrum constituting the 1885-1890 MHz and 1965-1970 MHz frequency bands.

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Integration with the “Verizon Wireless” Business

Cellco Partnership (doing business as “Verizon Wireless”) is one of the leading wireless communications providers in the United States in terms of the number of subscribers, revenues and operating cash flow and offers wireless voice and data services across the most extensive wireless network in the United States.

Their four strategic objectives are to: (1) expand its revenue base by increasing penetration in existing service areas and encouraging greater usage among its existing customers, (2) provide high-quality customer service to create and maintain customer loyalty, (3) enhance performance by aggressively pursuing opportunities to increase operating efficiencies and (4) expand its regional wireless communications presence by selectively acquiring additional interests in cellular telephone systems (including minority interests).

The operations of the Verizon Partnership are closely integrated with the operations of Cellco Partnership.

The Verizon Partnership’s services are marketed under the “Verizon Wireless” brand name. Cellco Partnership’s studies have found that its brand awareness is over 90% among wireless users and prospective customers.

The Verizon Partnership’s marketing, sales and distribution are coordinated by and integrated with Cellco Partnership’s national marketing campaign.  Cellco Partnership’s marketing efforts are focused on a coordinated program of television, print, radio, outdoor signage, internet and point of sale media promotions.  Cellco Partnership coordinates marketing efforts throughout its service area, which includes the Verizon Partnership’s service area, to ensure that its marketing message is uniformly presented across all of its markets.  In particular, the Verizon Partnership has adopted the Cellco Partnership pricing plans, including its national America’s Choice plans, which appeal to nationwide travelers, its Corporate America’s Choice national plans, for large corporate customers, and prepaid plans that appeal to new users and various other business and consumer segments. The Verizon Partnership’s sales strategy is consistent with that of Cellco Partnership’s sales strategy-to use a mix of direct, indirect and resale distribution channels in order to increase customer growth while reducing customer acquisition costs.

The Verizon Partnership’s customer care is integrated with and coordinated by Cellco Partnership.  Customer care, retention and satisfaction are essential elements of the Verizon Partnership’s and Cellco Partnership’s strategies.  Through Cellco Partnership’s customer care network, the Verizon Partnership will offer customer care twenty-four hours a day/ seven days a week.

The systems contributed by the Company have been converted from time division multiple access, or TDMA, to code division multiple access or CDMA.  The network contributed by PCW used a wireless transmission standard known as TDMA.  Cellco Partnership’s digital network uses a wireless digital transmission standard known as CDMA.  These two digital technologies are not compatible.  Accordingly, the Verizon Partnership converted the Company’s contributed TDMA network and handsets used by the Company’s subscribers to CDMA.  Pursuant to the terms of the limited partnership agreement (1) all losses realized upon the sale, disposition or write-off of any assets in connection with the conversion and (2) all costs of purchasing handsets provided to then existing customers in connection with the conversion will be specifically allocated to the capital accounts of the subsidiaries of Cellco Partnership which are partners of the Verizon Partnership and such costs will not effect the computation of the preferred participation of PCW.  The foregoing two categories do not include all of the costs to be incurred as a result of the conversion.

The Verizon Partnership’s information systems are integrated with and provided by Cellco Partnership. The Verizon Partnership’s information systems include billing, point of sale, provisioning, customer care, data warehouse, and fraud detection and prevention.

Competition

There is substantial competition in the wireless telecommunications industry.  The Verizon Partnership expects competition to intensify as a result of the consolidation of the industry, the entrance of new competitors, the development of new technologies, products and services, the auction of additional spectrum and regulatory changes.  Other wireless providers, including other cellular and PCS operators and resellers, serve each of the markets in which the Verizon Partnership operates.  ALLTEL is the principal competitor in most of the markets contributed by PCW, with Public Service Cellular and or Cingular Wireless competing in six of the contributed markets.  OCP, however, is a wholesale provider of wireless services and thus does not compete directly for individual subscribers.  OCP does compete, however, with the other wireless licensees in its service areas for resellers.  In addition, the impact of such competition on OCP’s resellers affects their use of OCP’s wireless services.  OCP’s principal competitor in the wholesale wireless business is American Cellular, a joint venture between Dobson Communications and Cingular Wireless (formerly AT&T Wireless).

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Brand recognition. The Verizon Partnership’s retail wireless services in the Company’s former markets are marketed under the “Verizon Wireless” brand, which has developed strong brand recognition.  In these markets, there are other brands that are well established.

Network coverage.  In recent years, competition in the wireless industry has led to lower prices and to the popularity of pricing plans that do not charge for roaming.  As a result, the ability to offer national coverage through one’s own network is important.  The ability to provide service over a single network also offers other advantages, including the ability to ensure uniform performance and the availability of features throughout the country, as many features are not fully available through roaming partners.  Through the integration of the Verizon Partnership’s network with Cellco Partnership’s network, the Verizon Partnership believes that it will realize the benefits of Cellco Partnership’s network.  None of the competitors of the Verizon Partnership have as extensive a network in the former Company’s markets as Cellco Partnership does, and most have build-out needs, although some have affiliate relationships with other wireless providers.

Digital service. Digital service offers benefits to the customer and also permits a network to have greater capacity.  Neither the Verizon Partnership’s nor Cellco Partnership’s network is fully digital yet, while some competitors in the Company’s former markets have fully digital networks.  In addition, those competitors with fully digital networks generally achieve higher revenue per subscriber.

Technology. CDMA, global system for mobile communications (“GSM”), and TDMA each have their respective strengths and weaknesses.  The Verizon Partnership believes that CDMA digital technology provides approximately eight times greater capacity than that of analog technology.  CDMA has proven in the marketplace that it can provide significant operating and cost efficiencies.  CDMA is also currently used by several other wireless providers in the United States, providing additional potential CDMA roaming partners, and ensuring continued support and development of CDMA handsets and network equipment by manufacturers.  While the Verizon Partnership believes that CDMA has competitive advantages, proponents of GSM and TDMA believe that those systems provide different advantages.  Cingular Wireless, one of the leading wireless providers in the United States, uses TDMA while GSM is used throughout Europe, although T-Mobile is the only major wireless provider in the United States that exclusively uses GSM.  Cingular Wireless has announced an intention to add a GSM-overlay to its network, which will increase the use in the United States.

Capital Resources.  In order to expand and build-out networks and introduce next generation services; wireless providers require significant capital resources.  While the Verizon Partnership’s indirect majority owner, Cellco Partnership, is well capitalized and has more operating cash flow than any other wireless provider, Cellco Partnership has no obligation to fund the Verizon Partnership’s capital needs.

The Verizon Partnership’s ability to anticipate and respond to various competitive factors will depend in part on its marketing efforts and on its ability to anticipate and respond to various competitive factors affecting the industry, including new services and technologies, changes in consumer preferences, demographic trends, economic conditions and pricing strategies by competitors.

Environmental Matters

The Verizon Partnership is subject to various federal, state and local environmental protection and health safety laws and regulations, including those related to the location and construction of transmitter towers, and will incur costs to comply with those laws.  Although the Verizon Partnership currently anticipates that such compliance will not materially adversely affect it, there is no assurance that material costs in the future will not be incurred due to the discovery of new facts or conditions, the occurrence of new releases of hazardous materials or a change in environmental laws.

Intellectual Property

Verizon Communications owns the trademarks issued for “Verizon” and “Verizon Wireless” and some service offerings, such as “SingleRate,” that the Verizon Partnership intends to use.  Verizon Communications has licensed these and other marks to Cellco Partnership on a non-exclusive basis until 2 1/2 years after it ceases to own any interest in Cellco Partnership or Cellco Partnership begins to use a different brand name.  Neither Verizon Communications nor Cellco Partnership has any obligation to permit the Verizon Partnership to use these trademarks and could require the Verizon Partnership to discontinue their use at any time.

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Regulations and Broadband Wireless Service Systems

The licensing, construction, operation, acquisition and transfer of wireless systems in the United States are regulated by the FCC pursuant to the Communications Act of 1934, as amended by the Telecommunications Act of 1996 and other legislation and the associated rules, regulations and policies promulgated by the FCC.  Wireless systems are subject to Federal Aviation Administration and FCC regulations governing the location, lighting and construction of transmitter towers and antennas and are subject to regulation under federal environmental laws and the FCC environmental regulations, including limits on radio frequency radiation from mobile handsets and antennas.  State or local zoning and land use regulations also apply to tower siting and construction activities. States and localities also have authority to impose taxes and adopt consumer protections regulations.

A cellular system operates on one of two 25 MHz frequency blocks, known as the “A” and “B” blocks, in the 850 MHz band that the FCC allocates for cellular radio services, including two-way mobile voice applications, data applications and fixed wireless services.  Cellular licenses are issued for either Metropolitan Statistical Areas (MSAs) or Rural Service Areas (RSAs), two in each area.  The FCC may prohibit or impose conditions on sales or transfers of licenses.  Initial operating licenses are generally granted for terms of up to 10 years, renewable upon application to the FCC.  Licenses may be revoked and license renewal applications denied for cause after appropriate notice and hearing.  The Company also uses common carrier point-to-point microwave facilities to connect its wireless cell sites and to link them to the main switching office.  Where it uses point-to-point microwave facilities, the FCC licensed these facilities separately, and they are subject to regulation as to technical parameters and service.  Microwave licenses must also be renewed every 10 years.

In addition to its cellular licenses, the Verizon Partnership also holds geographic service area licenses granted by the FCC which provide personal communications service (“PCS”).  While most of the Verizon Partnership’s competitors hold cellular or PCS licenses, one of its principal competitors, Nextel Communications, provides wireless service on frequencies allocated to the “Specialized Mobile Radio” service.  The Verizon Partnership does not hold specialized mobile radio licenses.

A broadband PCS system operates on one of six frequency blocks in the 1800-1900MHz bands that the FCC allocated for personal communications services.  PCS systems generally are used for services similar to cellular services.  For the purpose of awarding PCS licenses, the FCC divided the country into 51 large regions called major trading areas, which are comprised of 493 smaller regions called basic trading areas.  The FCC awarded two PCS licenses for each major trading area, known as the “A” and “B” blocks, and four licenses for each basic trading area known as “C”, “D”, “E” and “F” blocks.  The two major trading area licenses authorize the use of 30 MHz of PCS spectrum.  One of the basic trading area licenses is for 30 MHz of spectrum, and the other three are for 10 MHz each.  The Verizon Partnership holds “E” block 10 MHz PCS licenses for the Macon, GA BTA and for a portion of the Atlanta, GA BTA.

Spectrum Acquisitions

As is the case with many other wireless providers, the Verizon Partnership anticipates that it may need additional spectrum to meet future demand.  The Verizon Partnership can attempt to meet its needs for new spectrum, in two ways, by acquiring spectrum held by others and by acquiring new spectrum licenses from the FCC.  The Communications Act requires the FCC to award new licenses for most commercial wireless services to applicants through a competitive bidding process.  If the Verizon Partnership needs additional spectrum, it may be able to acquire that spectrum through Cellco Partnership, if Cellco Partnership participates in an auction for any new licenses that may become available or by purchasing existing facilities and then contributing or selling such licenses or facilities to the Verizon Partnership for incorporation into its system.  There can be no assurances that the Verizon Partnership will be able to acquire spectrum to meet its projected needs on a timely basis or at all, given the competition for licenses among commercial mobile radio service providers and others seeking to become mobile radio service providers.

Recent Federal Regulatory Developments

The FCC does not specify the rates that the Verizon Partnership may charge for its services nor does it require it to file tariffs for its U.S. wireless operations.  However, the Communications Act states that an entity that provides commercial mobile radio services is a common carrier, and is thus subject to the requirements of the Act that it not charge unjust or unreasonable rates, nor engage in unreasonable discrimination.  The FCC may invoke these provisions to regulate the rates, terms and conditions under which the Verizon Partnership provides service.  In addition, the Act defines a commercial mobile radio service provider as a telecommunications carrier, which makes it subject to a number of other regulatory requirements in its dealings with other carriers and subscribers.  These requirements impose restrictions on the Verizon Partnership’s business and increase its costs.  Among the requirements that affect it are the following:

The FCC has imposed rules for making emergency 911 services available by cellular, PCS and other broadband commercial mobile radio service providers, including enhanced 911 services that provide the caller’s communications number,

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location and other information.  These rules require the Verizon Partnership to make significant investments in its network and to reach agreements both with vendors of 911 equipment and state and local public safety dispatch agencies with no assurance that it can obtain reimbursement for the substantial costs it will incur.

The Telecom Act also provides that all communications carriers providing interstate communications services, including cellular carriers, must contribute to the federal universal service support mechanisms established by the FCC.  The FCC also provided that any cellular carrier is potentially eligible to receive universal service support.  The universal service support fund will support telephone service in high-cost and low-income areas and support access to telecommunications facilities by schools, libraries and rural health care facilities.  Many states are also moving forward to develop state universal service fund programs.  A number of these state funds require contributions, varying greatly from state to state, from cellular carriers such as the Verizon Partnership.  The FCC has been considering whether to change the method for calculating each carrier’s contribution from being revenue-based to connection-based.  The FCC has also initiated a proceeding to determine whether it should spread its universal service support fund contribution requirements to additional classes of telecommunications carriers.  There can be no guarantee that the Verizon Partnership will be able to continue to pass the costs of the fund requirements on to its subscribers in the future.

The FCC has adopted rules regulating the use of telephone numbers by wireless carriers and other providers as part of an effort to achieve more efficient number utilization.  In addition, it adopted rules on communications number portability that will enable customers to keep their communications number when switching to another carrier.  Wireless carriers must offer number portability to their customers.  The FCC has also adopted rules requiring wireless providers to provide functions to facilitate electronic surveillance by law enforcement officials pursuant to the Communications Assistance for Law Enforcement Act of 1995 and establishing standards for carriers to provide “priority access” to certain government and public safety agencies.  These and other regulatory mandates and regulations will impose costs on the Verizon Partnership to purchase, install and maintain the software and other equipment needed.

Under reciprocal compensation, a cellular licensee is entitled to collect the same charges for terminating wireline-to-wireless traffic on their system that the Local Exchange Carriers (“LEC”) charge for terminating wireless-to-wireline calls.  Carriers typically negotiate interconnection agreements, but in the event of a dispute, state public utility commissions, courts and the FCC all have a role in enforcing the interconnection provisions of the Telecom Act.  Interconnection agreements are subject to modification, expiration or termination in accordance with their terms.  The FCC is reassessing its interconnection compensation rules.

The FCC has adopted rules to govern customer billing by all telecommunications carriers.  It adopted additional detailed billing rules for landline telecommunications service providers and is considering whether to extend these rules to commercial mobile radio service providers, which could add to the expense of the Verizon Partnership’s billing process as systems are modified to conform to any new requirements.

The Communications Act generally preempts state and local regulation of the entry of, or the rates charged by, any provider of cellular service.  State and local governments are permitted to manage public rights of way and can require fair and reasonable compensation from telecommunications providers, on a competitively neutral and nondiscriminatory basis, for the use of such rights of way by telecommunications carriers, so long as the compensation required is publicly disclosed by the government.  States may also impose competitively neutral requirements that are necessary for universal service, conserving telephone numbering resources, protecting the public safety and welfare, ensuring continued service quality and safeguarding the rights of consumers.  While a state may not impose requirements that effectively function as barriers to entry or create a competitive disadvantage and the scope of state authority to maintain existing or to adopt new such requirements is unclear, activity by the states has been increasing.  This may result in restrictions on the Verizon Partnership’s business and increase its costs.

Other FCC rules determine the obligation of telecommunications carriers to make their services accessible to individuals with disabilities. Accordingly, the rules may require the Verizon Partnership to make material changes to its network, product line or services at its own expense.

The FCC also permits limited operation on unlicensed spectrum that can be used for Internet access, data transmissions and voice applications.  These services, known as Wi-Fi or 802.11, may provide limited competition to the Verizon Partnership and may also be used by the Verizon Partnership to utilize its existing licensed spectrum more efficiently.  The FCC recently ordered the allocation of an additional 255 MHz of spectrum for use by unlicensed devices in the 5 GHz band.  As a result of the ruling, unlicensed devices will have nearly 650 MHz of spectrum to use in the 5 GHz, 2.4 GHz, and 915 MHz bands.  The FCC indicated that it allocated the additional spectrum to ensure that unlicensed devices do not experience interference in the increasingly congested 2.4 GHz band.  Concerns over interference with U.S. military radar systems had delayed the spectrum

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allocation, but a recent compromise reached by the Department of Defense and the wireless industry should allow effective unlicensed operation in the 5 GHz band.

In January 2003, the FCC provided for the use of ancillary terrestrial components (“ATCs”) by mobile satellite service (“MSS”) providers, while at the same time reallocating 30 MHz of MSS spectrum to emerging wireless services.  The ATC ruling could permit competition to the Verizon Partnership by MSS operators that include a terrestrial component to their MSS service.  However, the FCC imposed a number of conditions that MSS providers must meet prior to employing ATCs.

In conjunction with its ATC ruling, the FCC reallocated 30 MHz of MSS spectrum for fixed and mobile terrestrial services, including third-generation (“3G”) wireless offerings.  Specifically, the Commission reallocated spectrum in the 1990-2000 MHz, 2020-2025 MHz and 2165-2180 MHz bands.  The reallocation of this spectrum may enable wireless operators such as the Verizon Partnership to expand their service footprints with high-speed data technology to support advanced mobile services.

Certain Considerations

Any liquidation of the Company is subject to various uncertainties.

Under the Company’s lock up agreement with Verizon, a liquidation of the Company is not permitted until 360 days after the exchange of the Preferred Exchangeable Interest for Verizon stock.  The Company currently expects that the Preferred Exchangeable Interest will be exchanged for common stock of Verizon Communications in approximately August 2006.  If this happens, liquidation cannot, in general, occur prior to approximately August 2007.  Under New York State law, the affirmative vote of at least 66 2/3% of Price’s outstanding shares will be required at a future shareholders meeting to approve a liquidation of the Company.  In recent votes of Price’s shareholders between 6% and 19% of Price’s shareholders have failed to vote (with any such failure to vote at such future meeting of shareholders making it more difficult to reach the 66 2/3% affirmative vote required to approve liquidation). The board of directors consequently believes that it may be difficult at any future shareholders’ meeting to obtain the necessary votes to approve liquidation.

Future activities of Robert Price.

Although Robert Price has informed the Company that he currently plans to remain with the Company if it determines to seek to acquire another business, Mr. Price has stated that it is possible that he will leave the Company and begin another company, including for the purpose of pursuing one of the acquisitions or other business opportunities studied by the Company and Mr. Price.

The Company does not currently expect that the Preferred Exchangeable Interest will be exchanged for Verizon Wireless common stock, but rather expects that it will be exchanged for Verizon Communications common stock in approximately August 2006.

The Company’s ability to exchange the Preferred Exchangeable Interest for Verizon Wireless common stock would depend upon the occurrence and timing of an initial public offering of such stock meeting certain size requirements, over which it has no control.  On January 29, 2003, Verizon Wireless announced the withdrawal of its registration statement for an initial public offering of its common stock, given Verizon Wireless’ ongoing strong cash flow and lack of significant funding requirements.  Moreover, since the Company entered into its transaction with Verizon it has received no other indications as to if or when a Verizon Wireless initial public offering might occur.  None of Cellco Partnership, Verizon Wireless Inc., Verizon Communications or any other party to the Verizon transaction has any obligation to cause such public offering to occur.  If a qualifying initial public offering of Verizon Wireless common stock does not occur prior to August 15, 2006, the Preferred Exchangeable Interest will be manditorily exchanged for Verizon Communications common stock.  As a consequence, the Company expects that the Preferred Exchangeable Interest will be exchanged for Verizon Communications common stock in approximately August 2006.

The Preferred Exchangeable Interest is non-transferable and the Verizon common stock issuable upon an exchange is subject to lock-up agreements.

Except for certain intercompany transfers or a pledge of all of the Preferred Exchangeable Interest in connection with a financing transaction consented to by Cellco Partnership, the Preferred Exchangeable Interest is non-transferable by the Company.  In addition, the shares of Verizon common stock issuable upon an exchange are subject to lock-up agreements, which restrict the ability of the Company to dispose of such shares for a period of time.

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The Company, PCW and the Company’s shareholders may be subject to substantial income tax liability as a result of the asset contribution and the exchange of the Preferred Exchangeable Interest.

Although Proskauer Rose LLP has opined, subject to certain assumptions and conditions, that neither the asset contribution nor the exchange of the Preferred Exchangeable Interest for Verizon common stock should be a taxable transaction to PCC or PCW, there is a risk that the asset contribution or the exchange will be a taxable transaction, which may result, in either case, in PCC or PCW incurring in excess of $500 million of federal, state and local income tax liability.  In addition, in the event the Company is not liquidated within one year following an exchange of the Preferred Exchangeable Interest for shares of Verizon stock, and the Company decides to sell such shares, dispose of them in another taxable disposition or distribute them to its shareholders, the Company would incur substantial tax liability (possibly in excess of $500 million of federal, state and local tax liability), except to the extent that gain recognized by the Company with respect to Verizon shares is offset by tax losses incurred by the Company in connection with an acquired business, including tax losses attributable to depreciation or interest on acquisition indebtedness.  In the event the Company were not liquidated within such one year period, if the Company’s board of directors determined to make a subsequent distribution of the Verizon stock to the Company’s shareholders that was not in liquidation of the Company, the value of the stock distributed would be treated as a dividend to the extent of the Company’s current or accumulated earnings and profits (which would include the gain recognized by the Company on the distribution of the stock), and taxed to the shareholder as ordinary income.  Any amount in excess of earnings and profits would be treated as return of basis, to the extent thereof, and thereafter as capital gain.  Alternatively, if the shareholders approved a subsequent distribution to shareholders in liquidation (which would require a 66 2/3% affirmative vote of the shareholders at a future meeting of shareholders), each shareholder would recognize gain or loss to the extent of the difference between the value of the Verizon stock (and any other company assets) received by the shareholder and the aggregate tax basis of shares in the Company held by the shareholder.

The Company has limited sources of cash, and its funds may be insufficient to meet its obligations.

Until the exchange of the Preferred Exchangeable Interest for Verizon common stock, the Preferred Exchangeable Interest and the investments in the collateral account are expected to be substantially all of the Company’s assets.  For a period of up to four years after August 15, 2002, PCW will receive taxable allocations of any profits from the Verizon Partnership equal to its preferred return (which allocations to the extent not distributed in cash, will increase PCW’s capital account in the Verizon Partnership).  PCW will receive cash distributions equal to 50% of its preferred return.  During the period, the Company expects to have as sources of cash, the cash distributions from the Verizon Partnership prior to the exchange for Verizon stock, income from interest or dividends on investments in the collateral account, up to an aggregate of $5 million which the Company is authorized to withdraw from the collateral accounts to cover its ordinary operating expenses, other cash balances and funds that the Company may be able to borrow.  During 2004, the Company withdrew the $5 million. The Company currently anticipates that its cash and income are sufficient to meet any cash obligations in the future.  There is a remote risk, however, if significant unexpected cash needs arise (such as a demand for payment under the Company’s guaranty to Verizon Communications), that its funds will be insufficient to meet its obligations and if the Company needs to borrow money, to meet such obligations, it may be forced to do so on unfavorable terms.

There are restrictions on the Company’s activities

The Preferred Exchangeable Interest is substantially all of the assets of Price and PCW.  In order to avoid being required to register as an “investment company” under the Investment Company Act, which would (among other things) limit the ability of other registered investment companies to own shares of Price’s common stock, Price and PCW have obtained an order from the SEC exempting them from all provisions of the Investment Company Act.  The order is, however, subject to the following conditions:

•  neither Price nor PCW will be or will hold itself out as being engaged in the business of investing, reinvesting or trading in securities;

•  PCW will not acquire any “investment securities,” as that term is defined under such Act, except for the partnership interest in the Verizon Partnership and certain cash equivalents;

•  Price will not acquire any “investment securities,” unless consistent with the goals of preserving capital, maintaining liquidity or fulfilling the obligations of the collateral agreement; and

•  the order will terminate on the earliest of (1) the date on which PCW ceases to own the partnership interest in the Verizon Partnership, (2) the date on which PCW makes an acquisition of assets by reason of which such partnership interest ceases to constitute at least 80% (or is further reduced below 80%) of the total assets of PCW, (3) the date on which Price Communications makes an acquisition of assets by reason of which its interest in PCW ceases to constitute at least 80% (or is further reduced below 80%) of Price’s total assets, and (4) the fourth anniversary of the closing of the asset contribution.

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At the time of an exchange of the Preferred Exchangeable Interest for shares of Verizon common stock, such shares may account for a substantial portion of the asset value of Price.  In order to avoid Investment Company Act registration at that time, Price may need to (1) liquidate or (2) be primarily engaged in a business other than that of investing, reinvesting, owning, holding or trading in securities.  While registering as an investment company may be considered by the board of directors, as a means of building shareholder value, such registration could limit the Company’s ability to take advantage of potential business opportunities or require changes to the corporate and operational structure of the Company.

The Company has limited management rights with respect to the Verizon Partnership.

Subject to the veto rights granted to the Company under the limited partnership agreement of the Verizon Partnership relating to, among other things, acquisitions and dispositions of assets, engaging in other business activities, incurring indebtedness, capital contributions and distributions, related party transactions and equity issuances, a subsidiary of Cellco Partnership will have the right to manage the Verizon Partnership as its managing general partner.  There are no assurances that such subsidiary will be successful in managing the Verizon Partnership or that such subsidiary’s interests in managing the Verizon Partnership will not conflict with the interests of the Company.

Possible delisting of the Company’s shares.

As a result of the asset contribution transaction with Verizon Wireless, the Company currently has no operating assets.  Under the rules of the New York Stock Exchange, if a listed company’s operating assets are substantially reduced or if the company ceases to be an operating company, the Exchange may in its discretion initiate delisting procedures.  Such procedures typically afford a listed company an opportunity to advise the Exchange of action the company has taken, or plans to take, that would bring it within conformity with continued listing standards within an 18-month period.  The Company believes that a determination to follow a liquidation strategy (with the result that the Company’s activities prior to liquidation would be limited to ownership of its interest in the Verizon Partnership) might increase the risk of delisting by the Exchange, in that such a strategy would preclude the acquisition of an operating business.

Certain Terms

Interests in cellular markets that are licenses by the FCC are commonly measured on the basis of the population of the market served with each person in the market area referred to as a “Pop”.  The number of Pops or Net Pops owned is not necessarily indicative of the number of subscribers or potential subscribers.  As used herein, unless otherwise indicated, the term “Pops” means the estimate of the 2000 population of an MSA or RSA, as derived from the 2000 U.S. Census.  MSAs and RSAs are also referred to as “markets”.  The term “wireline” license refers to the license for any market initially awarded to a company or group that was affiliated with a local landline telephone carrier in the market, and the term “non-wireline” license refers to the license for any market that was initially awarded to a company, individual or group not affiliated with any landline carrier.  The term “System” means an FCC-licensed cellular telephone system.

Employees

At December 31, 2004, the Company had three full-time employees.

Available Information

The Company routinely files reports and other information with the SEC, including Forms 8-K, 10-K and 10-Q. The public may read and copy any materials the Company files with the SEC at the SEC’s Public Reference Room at 450 Fifth St., N.W., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy, and information statements, and other information regarding issuers that file electronically with the SEC. The address of that site is http://www.sec.gov.

The Company maintains a website at the address http://www.pricecommunicationscorp.com/  containing information about the Company, its officers and directors and its policies and charters.

The Company does not make its filings available on the Internet (except through the SEC’s Internet site) since all the filings are readily available on that SEC site. Paper copies of the Company’s annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act may be obtained free of charge upon request, by writing to the Company at 45 Rockefeller Plaza, Suite 3200, New York, New York 10020.

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Item 2.  Properties

The Company maintains one office, its headquarters in New York City, and occupies approximately 5400 square feet. The monthly lease payments are approximately $27,000 per month beginning January 1, 2004 through December 31, 2007.

Item 3.  Legal Proceedings

The Company is not currently involved in any pending legal proceedings likely to have a material adverse impact on the Company.

Item 4.  Submission of Matters to a Vote of Security Holders

Not Applicable

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PART II

Item 5.  Market for Company’s Common Stock and Related Stockholder Matters

(a) Market for Common Stock

PCC is listed on the New York Stock Exchange (“NYSE”) under the ticker symbol “PR”.  The range of high and low last sale prices for PCC’s Common Stock on the NYSE for each of the quarters of 2004 and 2003 as reported by the NYSE was:

PCC’s Common Stock has been afforded unlisted trading privileges on the Pacific Stock Exchange under the ticker symbol “PR.P”, on the Chicago Stock Exchange under the ticker symbol “PR.M” and on the Boston Stock Exchange under the ticker symbol “PR.B” and trades in Euros on the Frankfurt and Munich Stock Exchanges.

(b) Holders

On February 28, 2005 there were approximately 300 holders of record of PCC’s Common Stock.  The Company estimates that brokerage firms hold Common Stock in street name for approximately 2,300 persons.

(c) Dividends

PCC to date has paid no cash dividends on its Common Stock.  The Board of Directors will determine future dividend policy based on the Company’s earnings, financial condition, capital requirements and other circumstances.

(d) Securities Authorized for Issuance Under Equity Compensation Plans

EQUITY COMPENSATION PLAN INFORMATION as of December 31, 2004

(e) Issuer Purchases of Securities

(1) In April, 2003 the Company’s Board of Directors announced the authorization to repurchase 1,000,000 shares in privately negotiated transactions or in the open market. In April, 2004, the Board announced the authorization of an additional 1,000,000 shares.

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Item 6.  Selected Consolidated Financial Data

The following tables contain certain consolidated financial data with respect to the Company for the periods and dates set forth below. This information has been derived from the audited consolidated financial statements of the Company.

The following data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Consolidated Financial Statements and Notes thereto, included elsewhere herein.

(1)          On August 15, 2002, the Company contributed the operations of PCW to the Verizon Partnership; therefore results for the year ended December 31, 2002 include results for the wireless operations through that date.

(2)          Per share amounts have been retroactively adjusted to reflect a 5% stock dividend in May 2004.

(3)          The ratio of earnings to fixed charges for the years 2000 through 2002 is determined by dividing the sum of earnings before interest expense, taxes and a portion of rent expense representative of interest by the sum of interest expense and a portion of rent expense representative of interest.  The ratio of earnings to fixed charges is not meaningful for the years after 2002 since the Company did not have any debt.

(4)          Restated to reflect correction in accounting for non-cash compensation and related tax benefit. See Note 9-Restatement Related to Redeemable Preferred Stock in Notes to Consolidated Financial Statements.

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Consolidated Balance Sheet Items

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Item 7.      MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion is intended to facilitate an understanding and assessment of significant changes and trends related to the financial condition and results of operations of the Company.  This discussion should be read in conjunction with the Company’s Consolidated Financial Statements and the related Notes thereto.  References to the “Company” in this report include Price Communications Corporation and its subsidiaries unless the context otherwise indicates.

The discussion contains statements, which constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Such statements are made regarding the intent, belief or current expectations of the Company and its directors or officers primarily with respect to the future operating performance of the Company.  Readers are cautioned that any such forward-looking statements are not guarantees of future performance and may involve risks and uncertainties, and that actual results may differ from those in the forward-looking statements as a result of factors, many of which are outside the control of the Company.

Overview

The Company has been engaged in the construction, development, management and operation of cellular telephone systems in the southeastern United States.  Effective August 15, 2002, the Company contributed substantially all of the assets and liabilities of its operating subsidiary, Price Communications Wireless, Inc. (“PCW”), to the Verizon Partnership.  Accordingly, the financial information for the years ended December 31, 2004 and 2003 is not comparable to the year ended December 31, 2002.

The Company remains listed on the New York and other stock exchanges, has no operating assets and approximately $1.155 billion in an illiquid preferred partnership interest in the Verizon Partnership, cash and marketable securities.

Contribution of the Company’s Wireless Business to the Verizon Partnership

On December 18, 2001, the Company agreed to contribute substantially all of the assets of PCW and approximately $149 million in cash to the Verizon Partnership in exchange for a preferred limited partnership interest in the Verizon Partnership.  The transaction was consummated on August 15, 2002.  The Verizon Partnership assumed certain liabilities of PCW relating to the contributed business.  After giving effect to certain adjustments, as defined in the transaction agreement, PCW’s initial capital account approximated $1.112 billion.  According to the partnership agreement, the Company is entitled to an allocation of any profits from the Verizon Partnership for a period of up to four years after August 15, 2002 equal to its preferred return, which currently approximates 2.9% per annum.  The Company will receive in cash 50% of its preferred return, with the balance being added to its capital account.

Under a letter agreement dated August 9, 2002, Verizon Communications provided the Verizon Partnership with $350 million of debt financing which was used in connection with the covenant defeasance and redemption of PCW’s Senior Subordinated Notes and Senior Secured Notes.  PCW guaranteed such indebtedness.  However, PCW is not obligated to make payment under the guaranty until Verizon Communications has exhausted all remedies against the Verizon Partnership.  The Company believes that the probability of the guaranty being enforced is remote.  Price has guaranteed PCW’s obligation under the guaranty, and upon the closing of the transaction deposited $70 million ($91.0 million as of December 31, 2004) in cash and other property into a collateral account to secure the guaranty.  Price controls the investment of the assets in the collateral account, has the right to withdraw certain sums such as dividends and interest on investments from the account, and had the right, in addition, to withdraw up to $5 million from the account to cover its ordinary operating expenses which it did during 2004. Price and Verizon Communications have further agreed that Price will retain its cash existing at the closing of the asset contribution which is not reserved to satisfy known liabilities existing at such time (and in any event in a minimum amount of $2 million) for the purpose of making such investments as Price deems appropriate.

If a qualifying initial public offering of Verizon Wireless Inc. common stock (as defined in the transaction agreement) occurs before August 15, 2006 the Company will have an option to (subject to approval of Price’s shareholders) exchange its Preferred Exchangeable Interest for shares of Verizon Wireless common stock.  If this happens, the number of shares the Company would receive would be calculated by dividing the existing balance in the Company’s capital account in the Verizon Partnership by the Verizon Wireless initial public offering price.  If the Company chooses not to exercise such option (including as a result of the failure of the Company’s shareholders to approve such exchange), it will be obligated to exchange its Preferred Exchangeable Interest for Verizon Communications common stock on August 15, 2012 or such earlier date as may be specified by Verizon Communications.  In this latter case, the number of shares the Company will receive will be determined by dividing

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the amount in the Company’s capital account as of the date of exchange by the greater of the trailing 20 day average closing price of Verizon Communications common stock as of the exchange date or $55.30.

In the event a qualifying initial public offering of Verizon Wireless does not occur prior to August 15, 2006, or if Verizon Wireless does complete such an offering but an exchange into Verizon Wireless common stock does not occur solely as a result of a breach of agreement by Verizon Wireless, the Preferred Exchangeable Interest will be manditorily exchanged for shares of Verizon Communications common stock on approximately August 15, 2006.  In these circumstances, the number of shares of Verizon Communications common stock issuable to the Company will equal the balance in the Company’s capital account in the Verizon Partnership on August 15, 2006 divided by the trailing 20-day average closing price of Verizon Communications common stock, but such price may not be less than $40 or more than $74.  At December 31, 2004 the closing market price of Verizon Communications common stock was $40.51. During 2004, the closing market price of Verizon Communications common stock was above $40 numerous times and during the period January 1, 2005 to February 28, 2005 it fluctuated between $35.08 and $41.06.

In addition, in certain circumstances (including a change in control of the Company or a transfer of the Preferred Exchangeable Interest to a secured creditor of the Company), Verizon Communications will have the right to cause an exchange of the Preferred Exchangeable Interest into Verizon Communications common stock, whether or not an initial public offering of Verizon Wireless common stock has occurred.

After adjustments for working capital as defined in the asset contribution agreement, the amount of PCW’s initial capital account in the Verizon Partnership approximated $1.112 billion.  Pursuant to the partnership agreement for the Verizon Partnership, PCW is entitled to receive taxable allocations of any profits from the Verizon Partnership in an amount up to its preferred return, which is currently at 2.9% per annum.  Any losses incurred by the Verizon Partnership will be allocated to Cellco Partnership and its affiliates up to an amount equal to their capital account before being allocated to PCW.

The Company has accounted for the Preferred Exchangeable Interest in a manner similar to the equity method of accounting. The initial investment on the Company’s balance sheet equaled the credit in its capital account on the Verizon Partnership’s financial statements. Thereafter, the Company increased its investment by the amount of income it was entitled to based on the availability of profits and the agreed upon preferred rate of return and reduced its investment balance by any cash distributed by the Verizon Partnership to the Company.

The board of directors and management have the right, consistent with their fiduciary duties and exercise of their business judgment, to recommend to the shareholders that the Company be liquidated (subject to the requisite vote of at least 66 2/3% of the Company’s outstanding shares at a future meeting of shareholders), to seek other potential business opportunities, or to follow another course of action with respect to the Company’s future.

Under New York State law, the affirmative vote of the holders of at least 66 2/3% of PCC’s outstanding shares will be required at a future shareholders meeting to approve a liquidation of the Company. In recent votes of PCC’s shareholders between 6% and 19% of PCC’s shareholders have failed to vote (with any such failure to vote at such a future meeting of PCC’s shareholders making it more difficult to reach the 66 2/3% affirmative vote required to approve liquidation).  The board of directors consequently believes that it may be difficult at any future shareholders meeting to obtain the necessary votes to approve liquidation.

The Company and Mr. Price (in his capacity as chief executive officer of the Company and in his personal capacity) have been shown a variety of potential acquisitions and opportunities.  These include the purchase of a mutual fund management company, banks, cellular properties, independent telephone companies, broadcasting and or/ publishing companies and the conversion of the Company into a closed-end investment company.

Results of Operations

Year ended December 31, 2004 compared to Year ended December 31, 2003

During the years ended December 31, 2004 and 2003, the Company had no operating assets and its main source of income was the investment in the Verizon Partnership. During the year 2004, the Company had $33.3 million of income from the partnership, slightly higher than the $32.8 million in 2003, due to the higher balance which has accumulated in the Company’s partnership account.

The Company incurred $6.1 million of selling, general and administrative expenses during the year 2004 compared to $8.2 million in 2003. This difference was primarily due to legal settlements expensed during 2003 of approximately $1.9 million in connection with two matters related to the Company’s wireless business prior to its merger into the Verizon partnership.

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Expenses for such settlements netted only $15,000 in 2004.  For the year ended December 31, 2004, the largest of the selling, general and administrative expenses were salaries ($2.8 million) and legal expenses ($1.7 million), primarily related to the ongoing valuation cases with the Company’s former minority partners.

The Company accrued an additional $10.5 million in expense to increase its estimated liability to former minority interest holders during 2004. On September 30, 2004, the Court of Chancery of the State of Delaware issued a Memorandum Opinion in the case of Gerhard Frank Dobler et al (“Dobler”) v. Montgomery Cellular Holding Co. Inc. (“MCHC”) et al, the appraisal action to determine the value of the shares held in MCHC, by Mr. Dobler and other petitioners at the time of the merger of those shares into Palmer. The Court held that PCW, Palmer and MCHC jointly and severally owed $12.7 million to the Petitioners as payment for their minority shares in MCHC, including pre-judgment interest. On October 13, 2004 a Final Order and Judgment (“Final Order”) was entered. PCW, Palmer and MCHC appealed the Memorandum Opinion and Final Order to the Supreme Court of the State of Delaware on November 12, 2004, by asserting that both contained errors of law and fact that warrant a remand to the Court of Chancery to further consider the amount due to the Petitioners.

Prior to the issuance of the Memorandum Opinion and Final Order, the Company had accrued $16 million for amounts potentially due in this case and other similar minority valuation cases, its best estimate of these amounts. The Company accrued an additional $10.5 million to provide for the higher valuation, including interest to December 31, 2004, by the Court in the Dobler case, on the assumption that this valuation would be the basis for determining value of the minority interests in such other cases. The $10.5 million provision is reflected as loss on contribution of cellular business on the statement of operations and comprehensive income.

Net Interest Expense, Other Income, Income Taxes and Net Income.  Interest expense for the year ended December 31, 2003 was $3,056,000 was related to a tax audit.

The Company had $12.5 million of other income, net in 2004 compared to $10.1 million in 2003. The increase was due to increased realized gains on sales of securities, mainly in the Company’s collateral account, of $8.5 million compared to $5.9 million in 2003, an increase of $2.6 million.

The Company had an income tax benefit for the year 2004 of $43.0 million compared to an expense of $9.6 million in 2003. During the third quarter of 2004, following the expiration of applicable statutes of limitations, the Company reversed the $53.165 million of accrued income taxes-long term resulting in a reduction of income tax expense for that amount for the year. The Company incurred $10.1 million of tax expense on pretax income of $29.2 million which was netted against that tax benefit.

Net income was $72.3 million for the year ended December 31, 2004 compared to $21.1 million for the year ended December 31, 2003. The difference was mainly due to the reversal of the long term tax liability, partially offset by the increase of $10.5 million in the accrual for amounts due to former minority interest holders.

Year ended December 31, 2003 compared to Year ended December 31, 2002

As previously stated, substantially all of the assets and liabilities of the Company’s operating subsidiary were contributed to the Verizon Partnership on August 15, 2002.  Accordingly, the consolidated statement of operations for the year ended December 31, 2002 include seven and one-half months of operating activity which therefore precludes any comparison of that year’s operations with the year ended December 31, 2003, when the Company did not own an operating business.

During the year ended December 31, 2003, the Company recorded $32.8 million of income from the Verizon partnership whereas during the year ended December 31, 2002 that income was only $12.4 million. Such amounts are not comparable since in 2002, the Company had only four and a half months of income from the partnership since the sale to Verizon occurred on August 15, 2002 as stated above.

The Company had $8.2 million of selling, general and administrative expenses for the year ended December 31, 2003. That expense is comprised mainly of salaries and severance ($2.9 million), legal expenses ($2.1 million) and settlements of two legal matters ($1.9 million) that the Company had related to the cellular business that it sold.

Net Interest Expense, Other Income, Income Taxes and Net Income.  Interest expense decreased to $3.1 million related to a tax audit, which was completed during the year ended December 31, 2003. Such audit resulted in a net cash cost to the Company of approximately $500,000. The Company’s long-term debt was transferred to the Verizon partnership upon the sale of the cellular business and therefore, there was no interest expense related to such debt during 2003.

The Company had $10.1 million of other income for the year 2003 and that amount was mainly derived from gains on the sale of securities in both the collateral account and the Company’s unrestricted accounts.

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The Company recognized $9.6 million of income tax expense for the year ended December 31, 2003, based on pretax income of approximately $30.6 million. Included in the Company’s taxable income was approximately $3.5 million of dividend income that is subject to the dividends received exclusion. There were also $1.3 million in alternative minimum tax credits carried over to 2003 as a result of the tax audit mentioned above.

Net income was $21.1 million for the year ended December 31, 2003 compared to $457.9 million for the year ended December 31, 2002. Net income in 2002 contained a gain of $659.2 million on the sale of the Company’s cellular business and as stated above, the operating results of the Company’s cellular business through August 15, 2002, whereas in 2003 the Company had no operating business and its main source of income was the Verizon partnership.

Liquidity and Capital Resources

As a result of the asset contribution transaction with Verizon, the Company has substantial assets but due to their illiquid nature, limited future sources of revenue and cash.  From the asset contribution transaction (August 15, 2002) to the exchange of the Preferred Exchangeable Interest for either the common stock of Verizon Wireless Inc. or Verizon Communications Inc., the Preferred Exchangeable Interest, and the investments in the collateral account described under “Contribution of the Company’s Wireless Business to the Verizon Partnership” above are expected to be substantially all of the Company’s assets.  After the asset contribution for a period of up to four years, PCW’s share of partnership profits (if available) will be determined by multiplying a rate of return (currently approximately 2.9% per annum) by the balance in its capital account.  Of such share of profits (taxable whether or not distributed), PCW is entitled to receive 50% in cash, with the balance being added to its capital account in the Verizon Partnership.  During the year ended December 31, 2004 the Company received $16.6 million in distributions and expects to receive such distributions for the remainder of the four year period.

During the period following the asset contribution, the Company retained sufficient cash to meet its requirement under the collateral agreement and as of December 31, 2004 had unencumbered cash and securities equal to approximately $8.3 million to meets its current needs.  Besides the anticipated quarterly cash distributions from the Verizon Partnership, the Company will have potential additional sources of cash from interest and dividends on investments in the collateral account and its other cash.  As part of the collateral agreement, the Company was authorized to withdraw an aggregate of $5 million from the collateral account to cover its ordinary operating expenses, which it did during 2004 to partially fund an escrow deposit with the Court of Chancery while the MCHC case is on appeal.

While the Company’s appeal in the MCHC case is pending, payment will not be made on the Final Order. However, PCW was required to provide security acceptable to the Court of Chancery. PCW provided such security through an interest bearing escrow account with a recognized financial institution in an amount satisfactory to the Court ($13.6 million), sufficient to cover the judgment specified in the Final Order plus post-judgment interest of 7.5%. Interest on the security account will accrue to PCW.

The Company currently anticipates that its cash and income will be sufficient to meet any cash obligations in the future.  There is a remote risk, however, if significant unexpected cash needs arise (such as a demand for payment under the Company’s guaranty to Verizon Communications), that its funds (including distributions, interest and dividends) will be insufficient to meet its obligations and if the Company needs to borrow money to meet such obligations, it may be forced to do so on unfavorable terms.

The following table presents the Company’s contractual obligations as of December 31, 2004, which consist only of its obligations under its lease for office space in New York City.

Significant Accounting Policies and Estimates

Our discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with the standards of the Public Company Accounting Oversight Board

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(United States).  The preparation of our financial statements requires us to make estimates that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosures of contingent assets and liabilities.  We base our accounting estimates on historical experience and other factors that are believed to be reasonable under the circumstances.  However, actual results may vary from these estimates under different assumptions or conditions. The following is a summary of our critical significant accounting policies and estimates:

Investment in Limited Partnership.  The Company has accounted for the Preferred Exchangeable Interest in the investment in limited partnership in a manner similar to the equity method of accounting. The initial investment on the Company’s balance sheet equaled the credit in its capital account on the Verizon Partnership’s financial statements. Thereafter, the Company increased its investment by the amount of income it was entitled to based on the availability of profits and the agreed upon preferred rate of return and reduced its investment balance by any cash distributed by the Verizon Partnership to the Company.

Financial Instruments.  At December 31, 2004 and 2003, all of the Company’s investment securities were marketable equity securities classified as “Available-for-Sale-Securities.” Unrealized holding gains and losses for Available-for-Sale Securities are excluded from earnings and reported, net of taxes, as accumulated other comprehensive income (loss).  The Company sells put and call options some of which are in the Company’s own stock.  These options entitle the holders to buy from or to sell publicly traded securities to the Company during certain periods at certain prices.  The Company is required to maintain collateral to support options issued.  Therefore, such unsettled contracts have been classified as liabilities in the accompanying consolidated balance sheets (if unsettled at the balance sheet date), with changes in fair values recorded as part of other (income) expense. As of December 31, 2004, there were no unsettled contracts outstanding. As of December 31, 2003, such amount was immaterial.

Revenue Recognition.  Service revenue from cellular operations for prepaid and post paid customers included local subscriber revenue and outcollect roaming revenue.  In accordance with the Securities and Exchange Commission Staff Accounting Bulletin No. 101 (“SAB 101”), which was adopted in the fourth quarter of 2000 effective January 1, 2000, prepaid airtime revenue was recognized when the airtime was utilized and activation revenue was recognized over the estimated life of the subscriber’s contract or the expected term of the customer’s relationship, whichever was longer.  Local subscriber revenue was earned by providing access to the cellular network (“access revenue”) or, as applicable, for usage of the cellular network (“airtime revenue”).  Access revenue was billed one month in advance and was recognized when earned.  Postpaid airtime revenue was recognized when the service was rendered.

Outcollect roaming revenue represented revenue earned for usage of its cellular network by subscribers of other cellular carriers.  Outcollect roaming revenue was recognized when the services were rendered.

Equipment sales and installation revenues were recognized upon delivery to the customer or installation of the equipment.

For financial reporting purposes, the Company reported 100% of revenues and expenses for the markets for which it provided cellular telephone service.

Cost to Add a Subscriber.  The cost to add a subscriber, which consisted principally of the net loss on the sale of equipment, as well as commissions, was recognized at the time the subscriber started to receive cellular service.  Both commissions and the loss on the sale of handsets, which represent a separate earnings process, were expensed in the same month that the subscriber commenced using the Company’s system.

Engineering, Technical and Other Direct.  Engineering, technical and other direct expenses represented certain costs of providing cellular telephone services to customers.  These costs included incollect roaming expense.  Incollect roaming expense was the result of the Company’s subscribers using cellular networks of other cellular carriers.

Acquisitions and Licenses. The cost of previously acquired companies was allocated first to the identifiable assets, including licenses, based on the fair market value of such assets at the date of acquisition.  Accordingly, the Company did not record any goodwill.  Licenses were amortized on a straight-line basis over a 40-year period. Such amortization was in effect prior to the Company’s adoption of the Statement of Financial Accounting Standards No. 142 “Goodwill and Other Intangible Assets” (SFAS No. 142) which the Company adopted on January 1, 2002 due to the fact that licenses were deemed by the Company to have an indefinite life.

Prior to the adoption of SFAS No.142, the Company continually evaluated whether subsequent events and circumstances have occurred that indicate the remaining estimated useful life of such licenses might warrant revision or that the remaining balance of the license rights may not be recoverable.  The Company utilized projected undiscounted cash flows over the

20

remaining life of the licenses. Subsequent to the application of SFAS No. 142 the realizability of licenses was evaluated annually. The Company determined fair value by reference to sales of comparable businesses to evaluate the recorded value of licenses

Expensing Stock Options and Share-Based Payment.  The Company has always submitted stock option plans for shareholder approval. However, Mr. Price, the president of the Company, believes expensing stock options is a silliness and the expense may not be reversed if the employee leaves the Company before exercising. Further, it may increase accounting fees which have already risen astronomically due to the Sarbanes-Oxley Act. In addition, stock options have generally been granted in small amounts, often 1,000 shares or less, to fifty to one hundred employees with management never receiving excessive amounts.  Currently, the principal stock options outstanding are 105,000 shares each to Robert Price and Kim Pressman at $29.45 per share with another 105,000 shares each to Robert Price and Kim Pressman at $31.35 per share. In the opinion of Robert Price, these options cannot be correctly priced and it would have harmed shareholders to expense them. Management believes stock options have helped employee performance.

In December 2004, the FASB issued FAS No. 123 ( R), “Share-Based Payment”, which establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments. This Statement focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions. This Statement does not change the accounting guidance for share-based payment transactions with parties other than employees provided in FAS 123 originally issued and EITF Issue No. 96-18, “Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling Goods or Services.” This Statement is effective for interim and annual periods beginning after June 15, 2005 and applies to all outstanding and unvested stock-based payment awards at the date of adoption. We anticipate the adoption of FAS 123 ( R ) will affect our results of operation to an extent similar to that as presented in our FAS 123 pro forma disclosure included in the Company’s consolidated financial statements (footnote 3).

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk

The only market risk that the Company is exposed to relates to the Company’s investment securities, whose values fluctuate with the market and have been adjusted to reflect the market values as of December 31, 2004.

In addition, the realizability of the Company’s investment in the Verizon Partnership could be affected if the price of Verizon Communications common stock is below $40 for an extended period of time (at the date it becomes convertible into Verizon common stock.) The Company believes its investment in the Verizon Partnership is realizable at its recorded value at December 31, 2004.

Item 8.  Financial Statements and Supplementary Data

See Index to Consolidated Financial Statements on page 24.

Item 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None

Item 9A. Controls and Procedures-

The Chief Executive Officer and the Chief Financial Officer of the Company are in the process of completing their evaluation of the effectiveness of the Company’s design and operation of disclosure controls and procedures (as such term is defined in Rules 13a-15 (e) and 15d-15 (e) promulgated under the Securities and Exchange Act of 1934, as amended) as of December 31, 2004.  To date, certain ineffective controls have been identified (resulting principally from the fact that the Company has only three employees) which the Company expects to report on in an amended 10-K/A within the 45 days following the date of this report.

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PART III

The information called for by Items 10, 11, 12, 13 and 14 is incorporated herein by reference from the following portions of the definitive proxy statement to be filed by the Company in connection with its 2005 Meeting of Shareholders.

PART IV

Item 15.  Exhibits and Financial Statement Schedules

(a) (1) and (2) List of financial statements and financial statement schedules:

See “Index to Consolidated Financial Statements” on page 24.

(Schedules are omitted for the reason that they are not required or are not applicable or the required information is shown in the financial statements or notes thereto.)

(3) Exhibits

See Exhibit Index at page E-1, which is incorporated herein by reference.

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

PRICE COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

23

Report of Independent Registered Public Accounting Firm

Board of Directors

Price Communications Corporation

New York, New York

We have audited the accompanying consolidated balance sheets of Price Communications Corporation and subsidiaries as of December 31, 2004 and 2003 and the related consolidated statements of operations, shareholders’ equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We did not audit the 2004 and 2003 financial statements of Verizon Wireless of the East LP, in which the Company is a limited partner and holds a preferred exchangeable interest. The 2004 and 2003 financial information provided in Note 14 to the Company’s financial statements has not been audited by us but has been derived from the Verizon Wireless of the East LP financial statements, which were audited by other auditors whose report has been furnished to us. Our opinion, insofar as it relates to the 2004 and 2003 financial information disclosure included in Note 14 to the Company’s financial statements is based solely on the report of the other auditors.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the report of other auditors provide a reasonable basis for our opinion.

In our opinion, based on our audit and the report of other auditors with respect to the 2004 and 2003 financial information provided in Note 14 to the financial statements, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Price Communications Corporation and subsidiaries at December 31, 2004 and December 31, 2003 and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

BDO Seidman, LLP

New York, New York

March 7, 2005

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

Price Communications Corporation:

We have audited the accompanying consolidated statements of operations and comprehensive income, changes in shareholders’ equity and cash flows for the year ended December 31, 2002 of Price Communications Corporation and subsidiaries (the “Company”).  Our audit also included the financial statement schedule listed in the index at Item 15.  These financial statements and financial statement schedule are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America.  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audit provides a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the results of operations and cash flows for the year ended December 31, 2002 of the Company, in conformity with accounting principles generally accepted in the United States of America.  Also in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

As discussed in Note 3 to the consolidated financial statements, in 2002 the Company changed its method of accounting for Intangible Assets to conform to Statement of Financial Accounting Standards No. 142.

The financial statements of the Company for the year ended December 31, 2001 (not presented herein), including the restatement adjustments described in Note 9, are the responsibility of the Company’s mangement.  The 2001 financial statements prior to restatement for correction of an error were audited by other auditors who have ceased operations.  Those auditors expressed an unqualified opinion on those financial statements before restatement in their report dated February 25, 2002.  We were not engaged to, and we did not, audit or review the 2001 financial statements or perform any procedures on the application of the restatement adjustments to those financial statements and, accordingly, we do not express an opinion or any other form of assurance on the 2001 financial statements taken as a whole or on the restatement adjustments.

F-2

PRICE COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2004 AND 2003

(Amounts in thousands except share data)

See accompanying notes to consolidated financial statements.

F-3

PRICE COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

(Amounts in thousands, except per share data)

See accompanying notes to consolidated financial statements.

F-4

PRICE COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

(Amounts in thousands)

See accompanying notes to consolidated financial statements.

F-5

PRICE COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2004, 2003, AND 2002

(Amounts and share amounts in thousands)