EXHIBIT 99.1
CAUTIONARY STATEMENTS REGARDING SAFE HARBOR PROVISIONS
OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
The Company is filing this cautionary statement identifying important
factors that could cause the Company's actual results to differ materially from
those projected in forward looking statements of the Company made by, or on
behalf of, the Company.
Dependence on Key Customers and the Telecommunications Industry
The Company derives a substantial portion of its revenue from customers in
the telecommunications industry, particularly BellSouth. The Company anticipates
that it will continue to derive a significant portion of its revenue from
services performed for customers in the telecommunications industry and
specifically BellSouth. The loss of BellSouth as a customer or a significant
reduction in the aggregate amount of business generated by these customers could
have a material adverse effect on the Company's results of operations.
In addition, there are a number of factors that could adversely affect
these and the Company's other customers and their ability or willingness to fund
capital expenditures in the future, which in turn could have a material adverse
effect on the Company's results of operations. These factors include the
potential adverse nature of, or the uncertainty caused by, changes in
governmental regulation, technological changes, increased competition, adverse
financing conditions for the industry and economic conditions generally.
Further, the volume of work awarded under contracts with the Company's public
utility customers is subject to periodic appropriations during the term of the
contract, and a failure by the customer to receive sufficient appropriations
could result in a reduction in the volume of work under these contracts or a
delay in payments, which in turn could negatively affect the Company.
Risks Inherent in Growth Strategy
The Company has grown rapidly through the acquisition of other companies
and its growth strategy is dependent in part on additional acquisitions. The
Company anticipates that it will make additional acquisitions and is actively
seeking and evaluating new acquisition candidates. There can be no assurance
that the Company will be able to continue to identify and acquire appropriate
businesses or obtain financing for acquisitions on satisfactory terms or that
acquired companies will perform as expected. The Company's growth strategy
presents the risks inherent in assessing the value, strengths and weaknesses of
growth opportunities, in evaluating the costs and uncertain returns of expanding
the operations of the Company and in integrating existing operations with new
acquisitions. Future competition for acquisition candidates could raise prices
for these targets and lengthen the time period required to recoup the Company's
investment. The Company's growth strategy also assumes there will be a
significant increase in demand for telecommunications and other infrastructure
services, which may not materialize. The Company's anticipated growth may place
significant demands on the Company's management and its operational, financial
and marketing resources. The Company's operating results could be adversely
affected if it is unable to integrate and manage acquired companies
successfully. Future acquisitions by the Company could also result in the
incurrence of additional debt and contingent liabilities, and amortization
expenses related to goodwill and other intangible assets, which could materially
adversely affect the Company's financial condition and results of operations.
Risks of Foreign Operations
Some of the countries in which the Company conducts business are
experiencing or have experienced political, economic or social instability,
including expropriations, currency devaluations, hyper-inflation, confiscatory
taxation or other adverse regulatory or legislative developments, or have
limited the repatriation of investment income, capital and other assets. There
can be no assurance that some of these circumstances will not occur in the
future or that, if they occur, they will not have a material adverse effect on
the Company's financial condition and results of operations.
The Company conducts business in several foreign currencies that are
subject to fluctuations in the exchange rate relative to the U.S. dollar. The
Company's results of operations from foreign activities are translated into U.S.
dollars at the average prevailing rates of exchange during the period reported,
which average rates may differ from the actual rates of exchange in effect at
the time of actual conversion into U.S. dollars. The Company monitors its
currency exchange risk but currently does not hedge against this risk. There can
be no assurance that currency exchange fluctuations will not adversely affect
the Company's financial condition or results of operations.
Dependence on Labor Force
The Company's business is labor intensive with high employee turnover in
many operations. The low unemployment rate in the United States has made it more
difficult to find qualified personnel at low cost in some areas where the
Company operates. Shortages of labor or increased labor costs could have a
material adverse effect on the Company's operations. There can be no assurance
that the Company will be able to continue to hire and retain a sufficient labor
force of qualified persons.
Dependence on Management
The Company's businesses are managed by a small number of key executive and
operational officers, including Jorge Mas, the Company's Chairman, President and
Chief Executive Officer, Joel-Tomas Citron, the Company's Vice Chairman, and the
Company's service line presidents. The loss of services of certain of these
executives and managers could have a material adverse effect on the Company. The
Company's growth strategy also is dependent on its ability to hire and retain
additional qualified management personnel. There can be no assurance that the
Company will be able to hire and retain such personnel.
Technological Changes
The telecommunications industry is subject to rapid changes in technology.
Wireline systems used for the transmission of video, voice and data face
potential displacement by various technologies, including wireless technologies
such as direct broadcast satellite television and cellular telephony. An
increase in the use of such technologies could, over the long term, have an
adverse effect on the Company's wireline operations.
Seasonality; Variability of Quarterly Results
The Company's external network services business is subject to seasonality,
with the Company experiencing a reduction in revenue during the first and fourth
quarters relative to other quarters. This reduction is due, in large part, to
reduced expenditures and work order requests of the Company's telecommunications
and other utility customers, particularly the ILEC's, at the end of their
budgetary years, which typically end in December. The onset of winter also
affects the Company's ability to render external networks in certain regions of
the United States.
The Company may experience variances in quarterly results as a consequence
of winning major contracts, which typically require significant start-up costs
in one period and realization of the benefit of contractual revenue in
subsequent periods, or as a result of the completion of major contracts. In
addition, the amount and type of work performed at any given time and the
general mix of customers for which work is being performed can vary
significantly from quarter to quarter, which also may affect quarterly results.
Short-Term Nature of Contracts; Failure to Renew or Win Bids
A significant portion of the Company's services are provided on a
non-recurring, project by project basis under contracts of relatively short
duration, typically less than one year. Many of the Company's contracts with its
customers, including most of its master contracts and contracts with its public
utility customers, are subject to cancellation by the customer without notice or
on relatively short notice, typically 90 to 180 days, even if the Company is not
in default under the contract. Many of the Company's contracts, including master
contracts, also are opened to public bid at the expiration of the contract term,
and there can be no assurance that the Company will be the successful bidder on
existing contracts that come up for bid. Cancellation of a significant number of
contracts by the Company's customers or the failure of the Company to win a
significant number of existing contracts upon re-bid could have a material
adverse effect on the Company.
Disposal of Non-Core Assets
The Company currently has investments in a number of non-core assets,
including non-operating real estate, an interest in an Argentine cable
television operator, an interest in an Ecuadorian cellular telephone company,
and a voice and data teleport facility. The Company is exploring strategic
alternatives to maximize the value of these assets. There can be no assurance
that the Company will be successful in achieving any proposed alternatives or
that the achievement of any proposed alternatives would not result in a charge,
loss or tax liability.
Controlling Shareholders
Jorge Mas, the Company's Chairman, President and Chief Executive Officer,
and other family members beneficially own more than 50% of the outstanding
shares of Common Stock of the Company. Accordingly, they have the power to
control the affairs of the Company.
Restrictions Imposed By Credit Facility and Senior Notes
The Credit Facility and the Senior Notes contain customary events of
default and covenants which prohibit the Company, among other things, making
investments in excess of specified amounts, incurring additional indebtedness in
excess of a specified amount, paying dividends in excess of a specified amount,
making capital expenditures in excess of a specified amount, creating liens,
prepaying other indebtedness, including the Senior Notes and engaging in certain
margins or combinations without the prior written consent of the lenders. The
Credit Facility also provides that the Company must maintain certain financial
ratio coverage, requiring, among other things, minimum ratios at the end of each
fiscal quarter of debt to earnings and earnings to interest expense. The ability
of the Company to comply with such provisions may be affected by events that are
beyond the Company's control. The breach of any of these covenants could result
in a default under the Credit Facility and the Senior Notes indenture and a
subsequent acceleration of such indebtedness. In addition, as a result of these
covenants, the ability of the Company to respond to changing business and
economic conditions and to secure additional financing, if needed, may be
restricted significantly, and the Company may be prevented from engaging in
transactions that might otherwise be considered beneficial to the Company.