SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): February 16, 2001
AMERICAN TOWER CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 001-14195 65-0723837
(State or Other Jurisdiction of (Commission File Number) (IRS Employer
Incorporation) Identification No.)
116 Huntington Avenue
Boston, Massachusetts 02116
(Address of Principal Executive Offices) (Zip Code)
(617) 375-7500
(Registrant's telephone number, including area code)
Item 5. Other Events.
We are filing these pro forma financial statements to provide additional
information about American Tower Corporation (the Company). The attached
presents the Company's unaudited pro forma condensed consolidated balance
sheet as of September 30, 2000 and unaudited pro forma condensed consolidated
statements of operations for the nine months ended September 30, 2000 and for
the year ended December 31, 1999. To the extent required, the Company has
adjusted these pro forma statements for the pro forma transactions. The pro
forma transactions consist of:
. the OmniAmerica, TeleCom, UNIsite and ICG acquisitions and the ALLTEL,
AirTouch and AT&T transactions,
. the Class A common stock offerings in January 2001, June 2000 and
February 1999,
. our convertible notes private placements in February 2000 and October
1999,
. our senior note offering in January 2001.
The pro forma financial statements do not reflect all of the Company's
consummated or pending acquisitions. The adjustments assume that all pro forma
transactions were consummated on January 1, 1999, in the case of the unaudited
pro forma condensed consolidated statements of operations. The adjustments
assume that the pro forma transactions that had not been consummated as of
September 30, 2000 were consummated on that date in the case of the unaudited
pro forma condensed consolidated balance sheet. These pro forma financial
statements should be read in conjunction with our 1999 Annual Report on Form
10-K, quarterly report on Form 10-Q dated November 13, 2000 and our Current
Reports on Form 8-K dated September 17, 1999 and March 30, 2000. Although the
ALLTEL, AirTouch and AT&T transactions do not involve the acquisition of
businesses, we have provided pro forma information related to these
transactions, as we believe such information is material.
The pro forma financial statements may not reflect the Company's financial
condition or our results of operations had the pro forma transactions actually
occurred on the dates specified. They may also not reflect the Company's
future financial condition or results of operations.
(b) Pro Forma Financial Information
Page
Number
------
Unaudited Pro forma Condensed Consolidated Balance Sheet as of September
30, 2000
and Notes Thereto...................................................... 2
Unaudited Pro forma Condensed Consolidated Statement of Operations for
the Nine Months Ended September 30, 2000 and Notes Thereto............. 4
Unaudited Pro forma Condensed Consolidated Statement of Operations for
the Year Ended December 31, 1999 and Notes Thereto..................... 7
1
AMERICAN TOWER CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2000
(in thousands)
Adjustments for
Pro Forma Pro Forma
Historical Transactions(a) as adjusted
---------- --------------- ------------
ASSETS
Cash and cash equivalents............. $ 206,470 $ 941,806 $ 1,148,276
Accounts receivable, net.............. 154,993 154,993
Other current assets.................. 121,455 121,455
Notes receivable...................... 118,307 118,307
Property and equipment, net........... 2,002,900 2,002,900
Unallocated purchase price............ 730,036 730,036
Intangible assets, net................ 2,272,183 2,272,183
Deferred tax asset.................... 154,351 154,351
Deposits and other assets............. 117,864 11,732 129,596
---------- ---------- ------------
Total............................. $5,148,523 $1,683,574 $ 6,832,097
========== ========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities, excluding current
portion of long-term debt............ $ 219,859 $ 219,859
Other long-term liabilities........... 8,293 8,293
Credit facilities..................... 1,032,500 $ 317,500 1,350,000
Convertible notes, net of discount.... 918,893 918,893
Senior notes.......................... 1,000,000 1,000,000
Other long-term debt, including cur-
rent portion......................... 100,127 100,127
Minority interest..................... 32,158 32,158
Stockholders' equity.................. 2,836,693 366,074 3,202,767
---------- ---------- ------------
Total............................. $5,148,523 $1,683,574 $ 6,832,097
========== ========== ============
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.
2
NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The unaudited pro forma condensed consolidated balance sheet as of September
30, 2000 has been prepared to give effect, as of such date, to the January
2001 equity offering, the January 2001 senior note offering, the ALLTEL
transaction and the remaining portions of the AirTouch and AT&T transactions,
the only proforma transactions that had not been completed at that date.
(a) The following table sets forth the components of the pro forma balance
sheet adjustments as of September 30, 2000 (in thousands):
Total
January Adjustments
January 2001 for
2001 Equity Senior Note ALLTEL AirTouch AT&T Pro Forma
Offering(5) Offering(6) Transaction Transaction Transaction Transactions
----------- ----------- ----------- ----------- ----------- ------------
ASSETS
Cash and cash equiva-
lents.................. $360,800 $ 581,006 $ 941,806
Unallocated purchase
price(1)............... $657,900 $70,798 $1,338 730,036
Deposits and other
assets................. 31,000 (19,268) 11,732
-------- ---------- -------- ------- ------ ----------
Total............. $360,800 $ 612,006 $657,900 $51,530 $1,338 $1,683,574
======== ========== ======== ======= ====== ==========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Credit facilities....... $ (387,994) $657,900 $46,256 $1,338 $ 317,500
Senior notes............ 1,000,000 1,000,000
Stockholders' equity.... $360,800 5,274 366,074
-------- ---------- -------- ------- ------ ----------
Total............. $360,800 $ 612,006 $657,900 $51,530 $1,338 $1,683,574
======== ========== ======== ======= ====== ==========
The following table sets forth the remaining purchase prices and related pro
forma financing for the ALLTEL, AirTouch and AT&T transactions (in millions):
Purchase Price Borrowings
-------------- ----------
ALLTEL transaction(2)............................... $657.9 $657.9
AirTouch transaction(3)............................. 70.8 46.3
AT&T transaction(4)................................. 1.3 1.3
- --------
(1) Upon completion of our evaluation of the purchase price allocations, we
expect that the average life of the assets should approximate 15 years.
(2) In December 2000, we entered into an agreement with ALLTEL Corporation to
acquire the rights to up to 2,193 communications towers through a 15-year
agreement to sublease. Under the agreement, we will lease up to 2,193
towers for consideration of up to $657.9 million in cash.
(3) As of September 30, 2000 we had closed on 1,778 of the 2,100 towers
included in the original AirTouch lease agreement, paid $677.3 million in
cash, and issued warrants to purchase 3.0 million shares of Class A common
stock at a price of $22.00 per share. The warrants vest based on the
percentage of towers closed to total towers in the lease agreement
(2,100). We estimate that we will pay total consideration of approximately
$70.8 million to close on an additional 172 towers through January 2001.
We do not expect to close on approximately 150 towers included in the
original agreement.
(4) As of September 30, 2000, we had closed on 1,918 of the 1,942 towers
included in the AT&T purchase agreement and paid $258.7 million in cash.
We estimate that we will pay approximately $1.3 million to close on any
remaining towers.
(5) In January 2001, we consummated the sale of 10.0 million shares of Class A
common stock resulting in net proceeds of approximately $360.8 million.
(6) In January 2001, we issued $1.0 billion aggregate principal amount of
senior notes resulting in net proceeds of approximately $969.0 million.
For purposes of the pro forma presentation only, we have assumed that a
portion of the proceeds were utilized to repay borrowings on our credit
facilities in excess of borrowings on our Term A and B loans.
3
AMERICAN TOWER CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
Nine Months Ended September 30, 2000
(in thousands, except share data)
Adjustments for
Pro Forma Pro Forma,
Historical Transactions(a) as Adjusted
---------- --------------- -----------
Operating revenues.................... $ 491,522 $ 42,213 $ 533,735
Operating expenses excluding
depreciation and amortization,
development and corporate general and
administrative expenses.............. 344,503 24,173 368,676
Depreciation and amortization......... 198,264 49,639 247,903
Development expense................... 10,495 10,495
Corporate general and administrative
expense.............................. 9,957 9,957
--------- -------- ---------
Loss from operations.................. (71,697) (31,599) (103,296)
Other (income) expense:
Interest expense.................... 112,339 87,816 200,155
Interest income and other, net...... (12,997) (12,997)
Interest income TV Azteca, net of
interest expense of $753 (related
party)............................. (9,070) (9,070)
Note conversion expense............. 16,968 16,968
Minority interest in net earnings of
subsidiaries....................... (82) (82)
--------- -------- ---------
Total other expense................... 107,158 87,816 194,974
--------- -------- ---------
Loss before income taxes and
extraordinary losses................. (178,855) (119,415) (298,270)
Benefit for income taxes(b)........... 43,036 44,184 87,220
--------- -------- ---------
Loss before extraordinary losses...... $(135,819) $(75,231) $(211,050)
========= ======== =========
Basic and diluted loss per common
share before extraordinary losses.... $ (0.82) N/A $ (1.22)
========= ======== =========
Basic and diluted common shares
outstanding.......................... 165,244 8,120 (c) 173,364
========= ======== =========
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.
4
NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The unaudited pro forma condensed consolidated statement of operations for
the nine months ended September 30, 2000 gives effect to the pro forma
transactions as if each of them had occurred on January 1, 1999.
(a) To record the results of operations for the pro forma transactions. We
have adjusted the results of operations to record an increase in net interest
expense of $87.8 million for the nine months ended September 30, 2000 as a
result of the increase in debt after giving effect to the proceeds of the
February 2000 notes placement, the June 2000 offering and the January 2001
senior note offering. We are amortizing debt issuance costs on a straight-line
basis over the term of the obligations. We have included amortization of
issuance costs within interest expense.
We have also adjusted the results of operations to record depreciation and
amortization expense of $49.6 million for the nine months ended September 30,
2000 based on estimated allocations of purchase prices. With respect to
unallocated purchase prices, we have determined pro forma depreciation and
amortization expense based on an expected average life of 15 years.
The table below sets forth the detail for the pro forma transactions for the
nine months ended September 30, 2000 (in thousands). We have excluded the
UNIsite operations for the 12-day period ended January 12, 2000 (the
acquisition closed January 13, 2000) from the nine months ended September 30,
2000 pro forma statement of operations due to immateriality.
January
2001 Total Adjustments
Senior Note ALLTEL AirTouch AT&T February 2000 June 2000 Pro Forma for Pro Forma
Offering Transaction Transaction Transaction Notes Placement Offering Adjustments Transactions
----------- ----------- ----------- ----------- --------------- --------- ----------- -----------------
Operating
revenues....... $ 28,436(d) $11,886(e) $1,891 (f) $ 42,213
Operating
expenses
excluding
depreciation
and
amortization... 16,553(g) 4,817(g) 2,803 (g) 24,173
Depreciation and
amortization... $ 49,639 49,639
-------- ---------- --------- --------- ------- --------- --------- ---------
Income (loss)
from
operations..... 11,883 7,069 (912) (49,639) (31,599)
Interest
expense, net... $45,619(h) $(1,439) $ (23,675) 67,311 87,816
-------- ---------- --------- --------- ------- --------- --------- ---------
Income (loss)
before income
taxes and
extraordinary
losses......... $(45,619) $ 11,883 $ 7,069 $ (912) $ 1,439 $ 23,675 $(116,950) $(119,415)
======== ========== ========= ========= ======= ========= ========= =========
(b) To record the tax effect of the pro forma adjustments and impact on our
estimated effective tax rate. The actual effective tax rate may be different
once we determine the final purchase price allocations.
(c) Includes adjustment for the 12.5 million shares of Class A common stock
issued pursuant to the June 2000 offering. There are no adjustments to the
statement of operations associated with the January 2001 equity offering due
to proceeds being applied to cash. Accordingly, we have not adjusted the share
data for the equity offering.
(d) Includes additional revenues recognized on a straight-line basis in
accordance with terms stipulated in the ALLTEL lease agreement (assumes the
leasing of 2,193 towers). We have not included approximately $7.4 million of
annual third party lease revenues existing as of the date the agreement was
signed.
(e) Includes additional revenues recognized on a straight-line basis in
accordance with terms stipulated in the AirTouch lease agreement (assumes the
leasing of 1,950 towers). We have not included approximately $3.5 million of
annual third-party lease revenues existing as of the date the agreement was
signed.
5
(f) Includes additional revenues recognized on a straight-line basis in
accordance with terms stipulated in the AT&T and AT&T Wireless Services lease
agreements (assumes the acquisition of 1,942 towers). We have not included
approximately $7.6 million of annual third-party lease revenues existing as of
the date the agreement was signed.
(g) The towers involved in each of these acquisitions were operated as part
of the wireless service divisions of ALLTEL, AirTouch and AT&T. Accordingly,
separate financial records were not maintained and financial statements were
never prepared for the operation of these towers. In addition to land leases
that we have or will assume, we have estimated certain operating expenses we
would expect to incur based on our own experience with comparable towers and
with AirTouch and AT&T towers acquired to date. Such estimates include
expenses related to utilities, repairs and maintenance, insurance and real
estate taxes. We have based these operating expenses on management's best
estimate and, as such, the actual expenses may be different from the estimates
presented.
(h) To record interest expense and amortization of debt issuance costs
associated with the January 2001 senior note offering. Interest expense has
been recorded using an interest rate of 9.375%. Debt issuance costs are being
amortized over a period of eight years.
6
AMERICAN TOWER CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended December 31, 1999
(in thousands, except share data)
Adjustments for
Pro Forma Pro Forma,
Historical Transactions(a) as Adjusted
---------- --------------- -----------
Operating revenues..................... $258,081 $ 152,373 $ 410,454
Operating expenses excluding deprecia-
tion and amortization, development and
corporate general and administrative
expenses.............................. 155,857 100,079 255,936
Depreciation and amortization.......... 132,539 149,491 282,030
Development expense.................... 1,607 1,607
Corporate general and administrative
expense............................... 9,136 2,800 11,936
-------- --------- ---------
Loss from operations................... (41,058) (99,997) (141,055)
Other (income) expense:
Interest expense..................... 27,492 154,930 182,422
Interest income and other, net....... (19,551) (19,551)
Minority interest in net losses of
subsidiaries........................ 142 142
-------- --------- ---------
Total other expense.................... 8,083 154,930 163,013
-------- --------- ---------
Loss before income taxes and extraordi-
nary loss............................. (49,141) (254,927) (304,068)
(Provision) benefit for income
taxes(b).............................. (214) 98,852 98,638
-------- --------- ---------
Loss before extraordinary loss......... $(49,355) $(156,075) $(205,430)
======== ========= =========
Basic and diluted net loss per common
share before extraordinary loss....... $ (0.33) N/A $ (1.22)
======== ========= =========
Basic and diluted common shares out-
standing.............................. 149,749 18,173 (c) 167,922
======== ========= =========
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.
7
NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The unaudited pro forma condensed consolidated statement of operations for
the year ended December 31, 1999 gives effect to the pro forma transactions as
if each of them had occurred on January 1, 1999.
(a) To record the results of operations for the pro forma transactions. We
have adjusted the results of operations to: (1) reverse historical interest
expense associated with the companies included in the pro forma transactions;
and (2) record an increase in net interest expense of $154.9 million for the
year ended December 31, 1999 as a result of the increased debt after giving
effect to the proceeds of the February 1999 and June 2000 offerings, the
October 1999 and February 2000 note placements and the January 2001 senior
note offering. Debt discount is being amortized using the effective interest
method. Debt issuance costs are being amortized on a straight-line basis over
the term of the obligation. We have included amortization of debt discount and
issuance costs within interest expense.
We have also adjusted the results of operations to reverse historical
depreciation and amortization expense of $18.8 million for the year ended
December 31, 1999 and recorded depreciation and amortization expense of $149.5
million for the year ended December 31, 1999 based on estimated allocations of
purchase prices. With respect to unallocated purchase price, we have
determined pro forma depreciation and amortization expense based on an
expected average life of 15 years.
We have not carried forward certain corporate general and administrative
expenses of the prior owners into the pro forma condensed consolidated
financial statements. These costs represent duplicative facilities and
compensation to owners and/or executives we did not retain, including charges
related to the accelerated vesting of stock options and bonuses that were
directly attributable to the purchase transactions. Because we already
maintain our own separate corporate headquarters, which provides services
substantially similar to those represented by these costs, we do not expect
them to recur following the acquisition. After giving effect to an estimated
$2.8 million of incremental costs, we believe that we have existing management
capacity sufficient to provide the services without incurring additional
incremental costs.
8
NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The following table sets forth the detail for the pro forma transactions for
the year ended December 31, 1999 (in thousands):
February
OmniAmerica TeleCom 1999 UNIsite ICG ALLTEL
Merger Merger Offering Merger Transaction Transaction
----------- -------- -------- -------- ----------- -----------
Operating revenues...... $12,246 $ 2,029 $ 8,018 $ 41,756 $ 37,914(d)
Operating expenses ex-
cluding depreciation
and amortization, and
corporate general and
administrative ex-
penses................. 12,257 549 7,234 32,256 22,070(g)
Depreciation and amorti-
zation................. 2,372 1,201 4,539 10,719
Corporate general and
administrative ex-
penses................. 2,882 10,173 8,580 321
------- -------- ------- -------- -------- ----------
(Loss) income from oper-
ations................. (5,265) (9,894) (12,335) (1,540) 15,844
Other (income) expense:
Interest expense........ 746 521 $(1,499) 8,078 802
Interest income......... (14) (1,021)
Other, net.............. 816 (106) (4,026) 22
------- -------- ------- -------- -------- ----------
(Loss) income before in-
come taxes and extraor-
dinary loss............ $(6,813) $(10,309) $ 1,499 $(15,366) $ (2,364) $ 15,844
======= ======== ======= ======== ======== ==========
January Total
2001 October February Adjustments
Senior 1999 2000 June for Pro
Note AirTouch AT&T Notes Notes 2000 Forma
Offering Transaction Transaction Placement Placement Offering Pro Forma Transactions
---------- ----------- ----------- --------- --------- -------- --------- ------------
Operating revenues...... $47,371 (e) $3,039 (f) $ 152,373
Operating expenses ex-
cluding depreciation
and amortization, and
corporate general and
administrative ex-
penses................. 18,018 (g) 7,695 (g) 100,079
Depreciation and amorti-
zation................. $ 130,660 149,491
Corporate general and
administrative ex-
penses................. (19,156) 2,800
---------- -------- ------- --------- ---------
(Loss) income from oper-
ations................. 29,353 (4,656) (111,504) (99,997)
Other (income) expense:
Interest expense........ $66,585 (h) $(5,616) $(11,415) $(41,085) 137,813 154,930
Interest income......... 1,035
Other, net.............. 3,294
---------- -------- ------- ------- -------- -------- --------- ---------
(Loss) income before in-
come taxes and extraor-
dinary loss............ $ (66,585) $ 29,353 $(4,656) $ 5,616 $ 11,415 $ 41,085 $(253,646) $(254,927)
========== ======== ======= ======= ======== ======== ========= =========
9
NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(b) To record the tax effect of the pro forma adjustments and impact on our
estimated effective tax rate. The actual effective tax rate may be different
once we determine the final purchase price allocations.
(c) Includes shares of Class A common stock issued pursuant to: the
OmniAmerica merger--16.8 million, the TeleCom merger--3.9 million, the
February 1999 offerings--26.2 million and the June 2000 offering--12.5
million. There are no adjustments to the pro forma statement of operations
associated with the January 2001 equity offering due to the proceeds being
applied to cash. Accordingly, we have not adjusted the share data for the
equity offering.
(d) Includes additional revenues recognized on a straight-line basis in
accordance with terms stipulated in the ALLTEL lease agreement (assumes the
leasing of 2,193 towers). We have not included approximately $7.4 million of
annual third party lease revenues existing as of the date the agreement was
signed.
(e) Includes additional revenues recognized on a straight-line basis in
accordance with terms stipulated in the AirTouch lease agreement (assumes the
leasing of 1,950 towers). We have not included approximately $3.5 million of
annual third party lease revenues existing as of the date the agreement was
signed.
(f) Includes additional revenues recognized on a straight-line basis in
accordance with terms stipulated in the AT&T and AT&T Wireless Services lease
agreements (assumes the acquisition of 1,942 towers). We have not included
approximately $7.6 million of annual third-party lease revenues existing as of
the date the agreement was signed.
(g) The towers involved in each of these acquisitions were operated as part
of the wireless service divisions of ALLTEL, AirTouch and AT&T. Accordingly,
separate financial records were not maintained and financial statements were
never prepared for the operation of these towers. In addition to land leases
that we have or will assume, we have estimated certain operating expenses we
would expect to incur based on our own experience with comparable towers and
with Airtouch and AT&T towers acquired to date. Such estimates include
expenses related to utilities, repairs and maintenance, insurance and real
estate taxes. We have based these operating expenses on management's best
estimate and, as such, the actual expenses may be different from the estimate
presented.
(h) To record interest expense and amortization of debt issuance costs
associated with the January 2001 senior note offering. Interest expense has
been recorded using an interest rate of 9.375%. Debt issuance costs are being
amortized over a period of eight years.
10
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AMERICAN TOWER CORPORATION
(Registrant)
By: /s/ Justin D. Benincasa
-------------------------------------
Name: Justin D. Benincasa
Title: Senior Vice President and
Corporate Controller
Date: February 16, 2001
11