<PAGE>
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): November 15, 1999 (November
15, 1999)
AMERICAN TOWER CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 001-14195 65-0723837
(State or Other (Commission File Number) (IRS Employer
Jurisdiction of Identification No.)
Incorporation)
116 Huntington Avenue
Boston, Massachusetts 02116
(Address of Principal Executive Offices) (Zip Code)
(617) 375-7500
(Registrant's telephone number, including area code)
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(b) Pro forma Financial Information
The attached, presents the American Tower Corporation (the Company)
unaudited pro forma condensed consolidated balance sheet as of September 30,
1999 and the Company's unaudited pro forma condensed consolidated statements
of operations for the nine month period ended September 30, 1999 and the year
ended December 31, 1998.
The term pro forma transactions, as used in the accompanying pro forma
condensed consolidated financial statements and notes thereto, is defined as
certain of our major acquisitions and financings and includes the following:
the OmniAmerica merger, the Telecom merger, the Separation from American Radio
Systems Corporation, the ATC merger, the Wauka transaction, the UNIsite
merger, the AirTouch transaction, the AT&T transaction, our public offering in
July 1998 (July offering), our secondary public offering and private placement
in February (February offerings), and our placement of 6.25% and 2.25%
convertible notes (notes placement) in October 1999. The pro forma financial
statements do not reflect all of our consummated or pending acquisitions. The
adjustments assume that all pro forma transactions were consummated on January
1, 1998, in the case of the unaudited pro forma condensed consolidated
statements of operations. The adjustments assume that the pending pro forma
transactions were consummated as of September 30, 1999 in the case of the
unaudited pro forma condensed consolidated balance sheet. You should read the
pro forma financial statements in conjunction with the 1998 Annual Report on
Form 10-K, March 1999, June 1999 and September 1999 Quarterly Reports on Form
10-Q, and our report on Form 8-K dated September 17, 1999. Although the
AirTouch transaction and the AT&T transaction do not involve the acquisition
of a business, 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 our financial condition
or our results of operations had these events actually occurred on the dates
specified. They may also not reflect our financial condition or our results of
operations as a separate, independent company during the periods. Finally,
they may not reflect our future financial condition or results of operations.
<TABLE>
<CAPTION>
Description Page Number
----------- -----------
<S> <C>
Unaudited Pro forma Condensed Consolidated Balance Sheet as of 3
September 30, 1999 and Notes Thereto
Unaudited Pro forma Condensed Consolidated Statement of 5
Operations for the Year Ended December 31, 1998 and Notes
Thereto
Unaudited Pro forma Condensed Consolidated Statement of 8
Operations for the Nine Months Ended September 30, 1999, and
Notes Thereto
</TABLE>
2
<PAGE>
AMERICAN TOWER CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1999
(in thousands)
<TABLE>
<CAPTION>
Adjustments
for Pro Forma Pro Forma
Historical Transactions(a) as adjusted
---------- --------------- -----------
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents.............. $ 41,711 $ 13,740 $ 55,451
Accounts receivable, net............... 38,818 1,806 40,624
Other current assets................... 39,010 6,868 45,878
Notes receivable....................... 72,156 (25,000) 47,156
Property and equipment, net............ 892,245 892,245
Unallocated purchase price............. 1,356,061 1,356,061
Intangible assets, net................. 1,275,807 1,275,807
Deferred tax asset..................... 113,003 113,003
Deposits and other assets.............. 147,808 (87,000) 60,808
---------- ---------- ----------
Total................................ $2,620,558 $1,266,475 $3,887,033
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities, excluding current
portion of long-term debt............. $ 74,906 $ 15,549 $ 90,455
Deferred income taxes.................. 42,268 42,268
Other long-term liabilities............ 3,369 1,494 4,863
Long-term debt, including current por-
tion.................................. 378,640 561,664 940,304
Convertible notes, net of discount..... 600,000 600,000
Minority interest...................... 5,909 5,909
Stockholders' equity................... 2,157,734 45,500 2,203,234
---------- ---------- ----------
Total................................ $2,620,558 $1,266,475 $3,887,033
========== ========== ==========
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.
3
<PAGE>
NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
We have prepared the unaudited pro forma condensed consolidated balance sheet
as of September 30, 1999 to give effect, as of such date, to the AirTouch
transaction, the AT&T transaction, the UNIsite merger and the notes placement,
the only pro forma transactions not completed by that date. The Company will
account for all of the pro forma transactions under the purchase method of
accounting.
(a) The following table sets forth the pro forma balance sheet adjustments as
of September 30, 1999 (in thousands).
<TABLE>
<CAPTION>
Total
Adjustments
for
AirTouch AT&T UNIsite Notes Pro Forma
Transaction Transaction Merger Placement Transactions
----------- ----------- -------- --------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and cash
equivalents............ $ 13,740 $ 13,740
Accounts receivable,
net.................... 1,806 1,806
Other current assets.... 6,868 6,868
Notes receivable........ (25,000) (25,000)
Unallocated purchase
price(1)............... $845,500 $ 265,000 245,561 1,356,061
Deposits and other
assets................. (100,000) (3,000) $ 16,000 (87,000)
-------- --------- -------- --------- ----------
Total................. $745,500 $ 262,000 $242,975 $ 16,000 $1,266,475
======== ========= ======== ========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities,
excluding current
portion of long-term
debt................... $ 5,000 $ 10,549 $ 15,549
Deferred income taxes... 42,268 42,268
Other long-term
liabilities............ 1,494 1,494
Long-term debt,
including current
portion................ $700,000 257,000 188,664 $(584,000) 561,664
Convertible notes, net
of discount............ 600,000 600,000
Stockholders' equity.... 45,500(2) 45,500
-------- --------- -------- --------- ----------
Total................. $745,500 $ 262,000 $242,975 $ 16,000 $1,266,475
======== ========= ======== ========= ==========
</TABLE>
The following table sets forth the purchase prices and related pro forma
financing of the transactions described above (in millions).
<TABLE>
<CAPTION>
Fair Value of
Purchase Price Borrowings Debt Assumed
-------------- ---------- -------------
<S> <C> <C> <C>
AirTouch transaction.................... $ 845.5(2) $ 700.0
AT&T transaction........................ 260.0 257.0
UNIsite merger.......................... 165.0 135.2 $ 51.7
</TABLE>
- --------
(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) We have agreed to issue warrants having a fair value of approximately $45.5
million to purchase an aggregate of 3,000,000 shares of Class A common
stock at $22.00 per share.
4
<PAGE>
AMERICAN TOWER CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended December 31, 1998
(in thousands, except per share data)
<TABLE>
<CAPTION>
Adjustments for
Pro Forma Pro Forma,
Historical Transactions(a) as adjusted
---------- --------------- -----------
<S> <C> <C> <C>
Operating revenues...................... $ 103,544 $ 169,548 $ 273,092
Operating expenses excluding
depreciation and amortization, tower
separation, and corporate general and
administrative expenses ............... 61,751 110,873 172,624
Depreciation and amortization........... 52,064 160,795 212,859
Tower separation expense................ 12,772 12,772
Corporate general and administrative ex-
pense.................................. 5,099 3,500 8,599
--------- --------- ---------
Loss from operations.................... (28,142) (105,620) (133,762)
--------- --------- ---------
Other (income) expense:
Interest expense...................... 23,229 91,592 114,821
Interest income and other, net........ (9,217) (9,217)
Minority interest in net earnings of
subsidiaries......................... 287 287
--------- --------- ---------
Total other (income) expense............ 14,299 91,592 105,891
--------- --------- ---------
Loss before income taxes and extraordi-
nary losses............................ (42,441) (197,212) (239,653)
Benefit for income taxes(b)............. (4,491) (65,600) (70,091)
--------- --------- ---------
Loss before extraordinary losses........ $ (37,950) $(131,612) $(169,562)
========= ========= =========
Basic and diluted net loss per common
share before extraordinary losses...... $ (0.48) N/A $ (1.10)
========= ========= =========
Basic and diluted common shares
outstanding(c)......................... 79,786 74,872 154,658
========= ========= =========
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.
5
<PAGE>
NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The unaudited pro forma condensed consolidated statement of operations for the
year ended December 31, 1998 gives effect to the pro forma transactions, as if
each of them had occurred on January 1, 1998.
(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;
and (2) record an increase of net interest expense of $91.6 million for the
year ended December 31, 1998 as a result of the increased debt after giving
effect to the July 1998 and February 1999 equity financings and the notes
placement.
We have also adjusted the results of operations to reverse historical
depreciation and amortization expense of $20.3 million for the year ended
December 31, 1998 and record depreciation and amortization expense of $160.8
million for the year ended December 31, 1998 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. 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 obligations. Amortization of debt discount and issuance costs
are included within interest expense.
We have not carried forward 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 $3.5 million of
incremental costs, we believe that we have existing management capacity
sufficient to provide the services without incurring additional incremental
costs.
The following table sets forth the historical results of operations for the pro
forma transactions for the year ended December 31, 1998 (in thousands).
<TABLE>
<CAPTION>
Wauka ATC Separation July OmniAmerica TeleCom February
Transaction Merger From ARS Offering Merger Merger Offerings
----------- -------- ---------- -------- ----------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Operating revenues...... $ 4,736 $ 11,337 $ 82,313 $ 12,273
Operating expenses
excluding depreciation
and amortization, and
corporate general and
administrative
expenses............... 2,065 3,936 73,461 2,701
Depreciation and
amortization........... 986 3,125 8,325 5,990
Corporate general and
administrative
expense................ 3,520 13,932
-------- -------- -------- --------
(Loss) income from
operations............. (1,835) 4,276 527 (10,350)
Other (income) expense:
Interest expense....... 997 3,333 $ 8,901 $(15,736) 2,638 2,873 $(19,184)
Interest income........ (660)
Other, net............. 9 5,144 (458) 843
-------- -------- -------- -------- -------- -------- --------
(Loss) income before
income taxes........... $ (2,841) $ (4,201) $ (8,901) $ 15,736 $ (1,653) $(13,406) $ 19,184
======== ======== ======== ======== ======== ======== ========
</TABLE>
6
<PAGE>
NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
<TABLE>
<CAPTION>
Total
Adjustments
for Pro
UNIsite AirTouch AT&T Notes Pro Forma Forma
Merger Transaction Transaction Placement Adjustments Transactions
-------- ----------- ----------- --------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Operating revenues...... $ 4,414 $ 51,566(d) $ 2,909(e) $ 169,548
Operating expenses
excluding depreciation
and amortization, and
corporate general and
administrative
expenses............... 1,615 19,400(f) 7,695(f) 110,873
Depreciation and
Amortization........... 1,870 $ 140,499 160,795
Corporate general and
administrative
expense................ 12,273 (26,225) 3,500
-------- --------- --------- ------- --------- ---------
(Loss) income from
operations............. (11,344) 32,166 (4,786) (114,274) (105,620)
Other (income) expense:
Interest expense....... 6,320 64,000 20,800 $(7,403) 24,053 91,592
Interest income........ (2,331) 2,991
Other, net............. (27) (5,511)
-------- --------- --------- ------- --------- ---------
(Loss) income before
income taxes........... $(15,306) $ (31,834) $ (25,586) $ 7,403 $(135,807) $(197,212)
======== ========= ========= ======= ========= =========
</TABLE>
(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 Wauka
transaction--1.4 million, the ATC merger--28.8 million, the OmniAmerica
merger--16.8 million, the TeleCom merger--3.9 million, July offering--27.9
million, and the February offerings--26.2 million.
(d) Includes additional revenues to be recognized in connection with the
AirTouch lease agreement. Approximately $3.5 million of existing third-party
lease revenues has not been included.
(e) Includes additional revenues to be recognized in connection with the AT&T
and AT&T Wireless Services lease agreements. Approximately $8.8 million of
existing third-party lease revenues has not been included.
(f) The towers involved in each of these acquisitions were operated as part of
the wireless service businesses of 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
will assume, we have estimated certain operating expenses we would expect to
incur based on our own experience with comparable towers. Such estimates
include expenses related to utilities, repairs and maintenance, insurance and
real estate taxes. These operating expenses are based on management's best
estimate and, as such, the actual expenses may be different than the estimate
presented.
7
<PAGE>
AMERICAN TOWER CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Nine Months Ended September 30, 1999
(in thousands, except per share data)
<TABLE>
<CAPTION>
Adjustments for
Pro Forma Pro Forma,
Historical Transactions(a) as adjusted
---------- --------------- -----------
<S> <C> <C> <C>
Operating revenues..................... $169,100 $ 60,412 $ 229,512
Operating expenses excluding
depreciation and amortization and
corporate, general and administrative
expenses.............................. 99,525 37,702 137,227
Depreciation and amortization.......... 92,919 76,036 168,955
Corporate general and administrative
expense............................... 6,395 2,625 9,020
-------- --------- ---------
Loss from operations................... (29,739) (55,951) (85,690)
Other (income) expense:
Interest expense..................... 17,497 64,332 81,829
Interest income and other, net....... (13,899) (13,899)
Minority interest in net losses of
subsidiaries........................ 79 79
-------- --------- ---------
Total other (income) expense........... 3,677 64,332 68,009
Loss before income taxes............... (33,416) (120,283) (153,699)
Benefit for income taxes(b)............ (942) (43,210) (44,152)
-------- --------- ---------
Net loss............................... $(32,474) $ (77,073) (109,547)
======== ========= =========
Basic and diluted net loss per common
share before extraordinary losses..... $ (0.22) $ N/A $ (0.70)
======== ========= =========
Basic and diluted common shares
outstanding(c)........................ 147,588 8,010 155,598
======== ========= =========
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.
8
<PAGE>
NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The unaudited pro forma condensed consolidated statement of operations for the
nine months ended September 30, 1999 gives effect to the pro forma transactions
not consummated as of January 1, 1999, which includes the Omni merger, the
Telecom merger, the UNIsite merger, the AirTouch transaction, the AT&T
transaction, the February offerings, and the notes placement. The Company will
account for all of the pro forma transactions under the purchase method of
accounting.
(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;
and (2) record an increase in net interest expense of $64.4 million for the
nine months ended September 30, 1999 as a result of the increased debt after
giving effect to the proceeds of the February 1999 equity financings and the
notes placement.
We have also adjusted the results of operations to reverse historical
depreciation and amortization expense of $6.6 million for the nine months ended
September 30, 1999 and recorded depreciation and amortization expense of $76.0
million for the nine months ended September 30, 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. 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. Amortization of debt
discount and issuance costs are included within interest expense.
We have not carried forward 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 $2.6 million of
incremental costs, we believe that we have existing management capacity
sufficient to provide the services without incurring additional incremental
costs.
The following table sets forth the historical results of operations for the pro
forma transactions for the nine months ended September 30, 1999 (in thousands).
<TABLE>
<CAPTION>
Total
Adjustments
for Pro
OmniAmerica TeleCom February UNIsite AirTouch AT&T Notes Pro Forma Forma
Merger Merger Offerings Merger Transaction Transaction Placement Adjustments Transactions
----------- -------- --------- -------- ----------- ----------- --------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Operating
revenues.......... $12,246 $ 2,029 $ 5,183 $38,675(d) $ 2,279(e) $ 60,412
Operating expenses
excluding
depreciation and
amortization, and
corporate general
and administrative
expenses.......... 12,257 549 4,575 14,550(f) 5,771(f) 37,702
Depreciation and
amortization...... 2,372 1,201 3,005 $ 69,458 76,036
Corporate general
and administrative
expense........... 2,882 10,173 6,906 (17,336) 2,625
------- -------- ------- -------- ------- ------- ------- --------- ---------
(Loss) income from
operations........ (5,265) (9,894) (9,303) 24,125 (3,492) (52,122) (55,951)
Other (income)
expense:
Interest expense,
net.............. 746 521 $(1,499) 5,702 $(5,534) 64,396 64,332
Interest income... (14) (681) 695
Other, net........ 816 (106) 511 (1,221)
------- -------- ------- -------- ------- ------- ------- --------- ---------
(Loss) income
before income
taxes............. $(6,813) $(10,309) $ 1,499 $(14,835) $24,125 $(3,492) $ 5,534 $(115,992) $(120,283)
======= ======== ======= ======== ======= ======= ======= ========= =========
</TABLE>
9
<PAGE>
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, and the February
offerings--26.2 million.
(d) Includes additional revenues to be recognized in connection with the
AirTouch lease agreement. Approximately $2.6 million of existing third-party
lease revenues has not been included.
(e) Includes additional revenues to be recognized in connection with the AT&T
and AT&T Wireless Services lease agreements. Approximately $6.6 million of
existing third-party lease revenues has not been included.
(f) The towers involved in each of these acquisitions were operated as part of
the wireless service businesses of 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
will assume, we have estimated certain operating expenses we would expect to
incur based on our own experience with comparable towers. Such estimates
include expenses related to utilities, repairs and maintenance, insurance and
real estate taxes. These operating expenses are based on management's best
estimate and, as such, the actual expenses may be different than the estimate
presented.
10
<PAGE>
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: Vice President and Corporate
Controller
Date: November 15, 1999
- -------------------------
11
