EXHIBIT 2.4
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders of
Crown Castle International Corp.
We have audited the accompanying statement of net assets of Powertel Tower
Operations as of December 31, 1998, and the related statement of revenues and
direct expenses for the year 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 conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the statement of net assets and the related
statement of revenues and direct expenses are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the statement of net assets and the related statement of
revenues and direct expenses. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall presentation of the statement of net assets and the
related statement of revenues and direct expenses. We believe that our audits
provide a reasonable basis for our opinion.
The statements of net assets and revenues and direct expenses were prepared
for the purpose of complying with the rules and regulations of the Securities
and Exchange Commission. As discussed in note 1, such statements do not reflect
certain corporate overhead expenses incurred by Powertel, Inc., the owner of
the net assets, on behalf of the tower operations.
In our opinion, the statements referred to above present fairly, in all
material respects, the net assets of Powertel Tower Operations as of December
31, 1998, and the related revenues and direct expenses for the year then ended
in conformity with generally accepted accounting principles.
KPMG LLP
February 5, 1999
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POWERTEL TOWER OPERATIONS
STATEMENT OF NET ASSETS
(In thousands of dollars)
December 31, March 31,
1998 1999
------------ -----------
(Unaudited)
Prepaid expenses and other current assets.............. $ 2,031 $ 1,604
Property and equipment, net............................ 121,490 116,722
-------- --------
Total assets......................................... 123,521 118,326
Deferred revenues...................................... 309 89
-------- --------
Net assets........................................... $123,212 $118,237
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See notes to financial statements.
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POWERTEL TOWER OPERATIONS
STATEMENT OF REVENUES AND DIRECT EXPENSES
(In thousands of dollars)
Three
Months
Year Ended Ended
December 31, March 31,
1998 1999
------------ -----------
(Unaudited)
Site rental revenues................................... $ 1,865 $ 1,118
Cost of operations..................................... 6,167 1,641
Depreciation........................................... 7,534 2,151
-------- -------
Loss from tower operations........................... $(11,836) $(2,674)
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See notes to financial statements.
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POWERTEL TOWER OPERATIONS
NOTES TO FINANCIAL STATEMENTS
(In thousands of dollars)
1. Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation
On March 15, 1999, Crown Castle International Corp. ("CCIC") and Powertel,
Inc. ("Powertel") entered into an asset purchase agreement, whereby Powertel
will sell tower structures and certain related assets to CCIC. The tower
structures and related assets consist of the tower facilities that were
previously part of Powertel's PCS and cellular operations. Their locations span
Atlanta, Georgia; Jacksonville, Florida; Memphis, Tennessee; Jackson,
Mississippi; and Birmingham, Alabama and certain areas in Kentucky and
Tennessee.
The accompanying statement of net assets reflects the assets to be sold by
Powertel to CCIC pursuant to the asset purchase agreement. The statement of net
assets reflects Powertel's historical carrying values of the tower assets,
adjusted to exclude certain assets which will not be contributed as part of the
asset purchase agreement.
The accompanying statement of revenues and direct expenses reflects
operations related to the tower assets to be sold by Powertel to CCIC per the
asset purchase agreement. The statement of revenues and direct expenses does
not include allocated costs related to general corporate overhead, interest
expense and income taxes and therefore may not be indicative of future
operations.
The accompanying statement of net assets and the related statement of
revenues and direct expenses were prepared for the purpose of complying with
the requirements of the Securities and Exchange Commission and are not intended
to be a complete presentation of Powertel's assets and liabilities or revenues
and expenses.
Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities as of the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Revenue Recognition
Site rental revenues are recognized on a monthly basis under lease
agreements. Site rental revenues represent charges for tower usage billed to
third party customers under lease arrangements. Revenue amounts received in
advance are deferred and recognized over the term of the lease agreement.
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POWERTEL TOWER OPERATIONS
NOTES TO FINANCIAL STATEMENTS--(Continued)
(In thousands of dollars)
2. Property and Equipment
Property and equipment are stated at historical costs. Depreciation of
property and equipment is provided on the straight-line method over the
estimated useful lives of the assets. Property and equipment at December 31,
1998 consisted of the following:
Estimated
Useful Lives
------------
Land..................................................... $ 859
Telecommunication towers and related equipment........... 15 years 134,757
--------
135,616
Less: accumulated depreciation .......................... (14,126)
--------
$121,490
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3. Commitments
At December 31, 1998, minimum rental commitments under operating leases are
as follows:
Year ending December 31,
1999................................................................... $4,120
2000................................................................... 4,093
2001................................................................... 3,276
2002................................................................... 1,929
2003................................................................... 626
Thereafter............................................................. 185
4. Site Rental Revenues
At December 31, 1998, minimum amounts receivable under third party lease
agreements are as follows:
Year ending December 31,
1999................................................................... $2,690
2000................................................................... 2,677
2001................................................................... 2,610
2002................................................................... 2,131
2003................................................................... 948
Thereafter............................................................. 485
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