Filed Pursuant to Rule 424(b)(3) of the Securities Act of 1933
Registration No. 333-89345
PROSPECTUS
LOGO
$300,000,000 $425,500,000
6.25% Convertible Notes Due 2009 2.25% Convertible Notes Due 2009
This prospectus relates to:
o $300,000,000 principal amount of 6.25% convertible notes due 2009,
o $425,500,000 principal amount at maturity of 2.25% convertible notes
due 2009, and
o the shares of Class A common stock issuable upon conversion of the
notes.
The notes and the Class A common stock that are offered for resale in this
prospectus are offered for the accounts of their holders. The notes were
initially acquired from us in October 1999 in connection with a private offering
by a group of investment banking firms who resold the notes pursuant to Rule
144A.
The 6.25% notes are convertible at any time prior to maturity into shares
of our Class A common stock at a conversion price of $24.40 per share of Class A
common stock. This is the equivalent to a conversion rate of 40.9836 shares of
Class A common stock for each $1,000 principal amount of the 6.25% notes. We
will pay interest on the 6.25% notes on April 15 and October 15 of each year,
commencing on April 15, 2000.
The 2.25% notes are convertible at any time prior to maturity into shares
of our Class A common stock at a conversion price of $24.00 per share of Class A
common stock, based on the issue price of 70.52% of the principal amount at
maturity. This is the equivalent to a conversion rate of 29.3833 shares of Class
A common stock for each $1,000 principal amount at maturity of the 2.25% notes.
We will pay interest on the 2.25% notes on April 15 and October 15 of each year,
commencing on April 15, 2000.
We may redeem the 6.25% notes on or after October 22, 2002. You may require
us to repurchase the 6.25% notes at a price of $1,000 for each 6.25% note on
October 22, 2006. We may redeem the 2.25% notes on or after October 22, 2003.
You may require us to repurchase the 2.25% notes at a price of $802.93 for each
2.25% note on October 22, 2003. In the case of a repurchase of notes, we have
the right to issue shares of Class A common stock, rather than to pay cash. In
addition, you may require us to repurchase the notes of each series upon a
change in control.
Our Class A common stock is listed on the New York Stock Exchange under the
symbol "AMT." The last reported sale price of the Class A common stock on the
New York Stock Exchange on October 19, 1999 was $18.0625 per share.
Investing in the notes involves risks. See "Risk Factors" beginning on page
12.
We will not receive any of the proceeds from sales of the notes or the
shares by the selling securityholders.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
The date of this Prospectus is November 2, 1999.
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TABLE OF CONTENTS
<S> <C> <C> <C>
Summary...............................................1 Description of Capital Stock........................39
The Notes.............................................6 Selling Securityholders.............................42
Selected Financial Data...............................9 Certain Federal Income Tax Consequences.............42
Risk Factors.........................................12 Registration Rights Agreement.......................51
Market Prices and Dividend Policy....................18 Plan of Distribution................................52
Unaudited Pro forma Condensed Legal Matters.......................................54
Consolidated Financial Statements..................19 Experts.............................................54
Description of the Notes.............................29 Where You Can Find More Information.................55
</TABLE>
You should rely only on the information contained or incorporated by
reference in this prospectus. We have not authorized anyone to provide you with
information that is different. This prospectus may only be used where it is
legal to sell these securities. The information in this prospectus may only be
accurate on the date of this prospectus.
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SUMMARY
This summary highlights selected information about us, including our
pending mergers, acquisitions and other transactions. All information in this
prospectus gives effect to pending transactions, unless the context otherwise
indicates. This summary is not complete and may not contain all of the
information that you should consider before investing in the notes. All selling
securityholders must deliver a prospectus to purchasers at or prior to the time
of any sale of the notes or Class A common stock issuable upon conversion of the
notes. You should carefully read this entire prospectus, including the "Risk
Factors" section beginning on page 12 and the financial statements, which are
incorporated by reference from our 1998 Annual Report, March 1999 Quarterly
Report, June 1999 Quarterly Report and the Current Report on Form 8-K, dated
September 17, 1999. We refer to those reports together as the "Historical
Financial Statements."
AMERICAN TOWER
We are a wireless communications and broadcast infrastructure company
operating in three business segments.
o We operate a leading network of communications towers and are the
largest independent operator of broadcast towers in the United
States.
o We provide comprehensive network development services for wireless
service providers and broadcasters.
o We operate a leading teleport business, which transmits video,
voice, data and Internet communications worldwide.
Towers. We believe we are the largest independent owner, operator and
developer of wireless communications towers in the United States. Assuming
consummation of all of the pending transactions, we operate a national network
of more than 9,400 multi-user sites, 8,300 of which are owned or leased towers
and 1,100 of which are managed sites. Our network spans 48 states and the
District of Columbia, with tower clusters in 43 of the 50 largest U.S.
metropolitan statistical areas. Our primary business is the leasing of antenna
space to a diverse range of wireless communications industries, including PCS,
cellular, ESMR, SMR, paging and fixed microwave. Our wireless customers include
AirTouch, Alltell, AT&T, AT&T Wireless Services, Bell Atlantic Mobile,
BellSouth, GTE Mobilnet, Nextel, Omnipoint, PacBell, PageNet, PowerTel, PrimeCo
PCS, Southwestern Bell, Sprint PCS, Teligent, Western Wireless and WinStar.
We believe we are the largest independent operator of broadcast towers with
approximately 300 sites, approximately 200 of which are in Mexico. We serve most
of the major radio and television broadcasters, including ABC, AMFM, CBS, Clear
Channel, CNN, Cox, Fox, Infinity, NBC, Paxson, Paramount, Sinclair, Tribune and
Univision.
Network Development Services. We are a leading provider of network
development services and components for both wireless service providers and
broadcasters. We offer full turnkey network development solutions to our
customers, consisting of network design, site acquisition, zoning and other
regulatory approvals, construction management, tower construction and antenna
installation. We also manufacture wireless infrastructure components. We provide
site acquisition services to most of the major wireless service providers and
have constructed or are constructing towers on a build-to-suit basis for
wireless and broadcast companies such as AirTouch, AT&T affiliates, AT&T
Wireless Services, Bell South, Nextel, Omnipoint, Paxson, PrimeCo PCS, Sinclair
and Southwestern Bell.
We have performed network development services for other companies on more
than 10,000 sites, including more than 2,150 sites in 1998. In 1998, we embarked
on a major construction program with an emphasis on build-to-suit projects. We
constructed more than 800 towers, including more than 500 towers for our own
account, at an aggregate cost of approximately $108.0 million. Our 1999 and 2000
business plans call for construction of more
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than 1,250 towers annually, including more than 1,000 towers in each year for
our own account at an estimated annual cost of between $180.0 million and $200.0
million. These figures do not include the construction of broadcast towers.
Teleports. We are a leading video, voice, data and Internet transmission
company, providing services worldwide. We own and operate approximately 110
satellite antennas in various locations across the United States, with major
facilities near New York, Washington, D.C., Dallas and San Francisco. Our
teleports are used by television networks, broadcasters, cable programmers and
many of the leading voice, data and Internet providers. Our customers include
ABC, British Telecom, CBS, CNN, Deutsche Telekom, Fox, MCI Worldcom, TCI,
Telefonica and Uunet.
For the year ended December 31, 1998, we had pro forma net revenues of
$273.1 million and EBITDA of $91.9 million. For the six months ended June 30,
1999, we had pro forma net revenues of $146.5 million and EBITDA of $52.5
million. This pro forma data includes the results of major acquisitions, but not
all of them.
We estimate that our three business segments accounted for the following
percentages of pro forma 1998 operating revenues:
o Towers--56%,
o Network development services--37%, and
o Teleports--7%.
We believe that site leasing activities generate the highest profit
margins. We also believe that leasing activities are likely to grow at a more
rapid rate than other segments of our business because of our pending
acquisitions and our build-to-suit and other construction activities. These
acquisitions and construction activities will increase significantly the number
of antenna sites available for leasing. The industry trend towards outsourcing
infrastructure needs may also result in a decline in our site acquisition and
construction activities for other companies.
We have a diversified base of more than 5,300 customers. Our largest
customer, AirTouch, accounted for approximately 25% of our pro forma annualized
August 1999 operating revenues. Our five largest customers accounted for
approximately 46% of those revenues. Annualized August 1999 revenues may not be
representative of historical revenues because revenues from service activities
are highly variable due to their transactional nature. For example, one
customer, Sprint PCS, accounted for approximately 11% of our pro forma operating
revenues for the six months ended June 30, 1999, principally as a result of
several site acquisition projects during that period.
We estimate that personal communications services ("PCS") accounted for
more than 28% of our pro forma annualized August 1999 operating revenues,
cellular accounted for approximately 16% of those revenues and paging accounted
for approximately 12% of those revenues. We believe that no other industry
sector accounted for as much as 10% of those revenues. We believe, however,
these industry sector percentages may not be indicative of what we will
experience in the future. The importance of the different sectors will probably
change because of the anticipated growth of PCS, cellular and ESMR, compared to
other wireless service providers. The relative contributions of the different
sectors will also be affected as major wireless service providers create
strategic alliances with independent operators, including in our case AirTouch
and AT&T. Finally, the percentage of operating revenues derived from PCS will
also be affected by the decline in our site acquisition and construction
activities for that sector, as providers continue to outsource those
requirements.
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Growth Strategy
We designed our growth strategy to create and then enhance our position as
a leader in each of our business segments. Our goals were:
o to create a national footprint of desirable communications towers in
all major markets in the United States,
o to establish the capacity to serve all of the infrastructure needs
of the wireless service and broadcast industries, and
o to create a leading teleport company with global reach.
We implemented our strategy through a combination of acquisitions and
construction. Acquisitions were pursued initially with independent tower
operators and other consolidators and more recently with major wireless service
providers selling their towers. This acquisition strategy also broadened the
scope of our network development services.
Our strategy has enabled us to create an organization with a depth of
personnel, computer and financial systems, sales and marketing, and engineering
and other technical expertise to take advantage of the growth in wireless
communications, digital television and the Internet. We believe we are well
positioned competitively for growth because we can meet the majority of
infrastructure requirements of wireless communications and digital television
and are playing an increasing role in addressing the Internet's infrastructure
needs. We will continue to pursue our growth strategy by:
o maximizing utilization of antenna sites through targeted sales and
marketing techniques,
o capitalizing on our ability to provide full turnkey network
development solutions principally through build-to-suit projects and
other tower construction activities, and
o pursuing strategic acquisitions, designed principally (a) to take
advantage of divestiture opportunities presented by wireless service
providers, (b) to facilitate entry into new geographic markets and
(c) to complement our construction program.
Recent Developments
Consummated Transactions
Since January 1, 1999, we have consummated more than 45 transactions
involving the acquisition of approximately 1,500 communications sites for an
aggregate purchase price of $945.8 million. This purchase price includes the
payment of approximately $352.2 million in cash, the issuance of 20.7 million
shares of Class A common stock, and the assumption of approximately $145.0
million of debt. The principal transactions were the following:
OmniAmerica merger. In February 1999, we consummated the OmniAmerica
merger. OmniAmerica owned or co-owned 223 towers in 24 states. OmniAmerica also
offered nationwide turnkey tower construction and installation services through
its Specialty Constructors subsidiary and manufactured wireless infrastructure
components. The aggregate consideration was $462.0 million, consisting of the
issuance of 16.8 million shares of Class A common stock and the assumption of
$96.6 million of debt. We also assumed certain Omni employee stock options that
were converted into options to purchase approximately 1.0 million shares of
Class A common stock.
TeleCom merger. In February 1999, we consummated the TeleCom merger.
TeleCom owned or co-owned approximately 271 towers and managed 121
revenue-generating sites in 27 states. The aggregate merger
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consideration was $194.6 million, consisting of the payment of $63.1 million in
cash, the issuance of 3.9 million shares of Class A common stock, and the
assumption of $48.4 million of debt.
Triton PCS acquisition. In September 1999, we acquired 187 wireless
communications towers from Triton PCS, the first member of the AT&T Wireless
Network, for $70.7 million in cash. We expect to consummate the purchase of the
remaining four communications towers for $1.5 million in cash in the fourth
quarter of 1999. The towers are located in Georgia, North Carolina, South
Carolina and Virginia. We will develop a minimum of 100 build-to-suit towers for
Triton PCS and provide turnkey services to Triton PCS for co-location sites
through 2001. The master lease agreement will provide Triton PCS with a 12-year
lease and three, five-year renewal terms for existing towers and future
build-to-suit towers. The initial rents are $1,200 per month, per antenna site,
subject to an annual 3% escalator.
Pending Transactions
We are a party to 15 pending transactions involving the acquisition of more
than 5,070 communications sites and a major teleport complex for an aggregate
purchase price of $1.7 billion. These transactions remain subject to regulatory
approvals in certain cases and other conditions. Our pending transactions
represent a recent shift in our acquisition focus from independent tower
operators and other consolidators to major wireless service providers seeking to
sell their towers. The principal transactions are the following:
AirTouch transaction. In August 1999, we agreed to lease on a long-term
basis 2,100 towers from AirTouch Communications. These towers are located in all
of AirTouch's major markets, other than Los Angeles and San Diego, including
Albuquerque, Atlanta, Cleveland, Denver, Detroit, Minneapolis, Omaha, Phoenix,
Portland, San Francisco and Seattle. At closing, we will pay AirTouch $800.0
million in cash and deliver a five-year warrant to purchase 3,000,000 shares of
Class A common stock at $22.00 per share.
Under the lease, we are entitled to all income generated from leasing space
on the towers and are responsible for the payment of all expenses of the towers,
including ground rent. AirTouch has reserved space on the towers for its
antennas, for which it will pay us a site maintenance charge equal to $1,500 per
month for each non-microwave reserved space and $385 per month for each
microwave reserved space.
At closing we will enter into an exclusive three-year build-to-suit
agreement with AirTouch. Under that agreement, we will have the right to build
all of AirTouch's towers in all of the markets covered by the lease. AirTouch
will enter into a separate master lease covering all towers constructed pursuant
to the build-to-suit agreement. AirTouch will lease space for a period of ten
years and will have the option to extend for five, five-year periods. The rent
will be $1,500 per month for each non-microwave antenna site and $385 per month
for each microwave antenna site, with annual increases of 3%. We expect this
build-to-suit agreement will produce 400 to 500 towers.
The transaction will be closed in stages, subject to the satisfaction of
customary conditions, beginning in the fourth quarter of this year or first
quarter of 2000.
AT&T transaction. In September 1999, we agreed to purchase 1,942 towers
from AT&T. These towers are located throughout the United States and were
constructed by AT&T for its microwave operations. We will enter into a
build-to-suit agreement with AT&T Wireless Services at the initial closing of
the transaction. The purchase price is $260.0 million in cash, subject to
adjustment if all towers are not purchased.
At the initial closing, AT&T will enter into a master lease agreement
covering those towers we will acquire on which it conducts microwave operations.
The lease will have an initial term of ten years, and AT&T will have five,
five-year renewal options. The annual base rent for the microwave operations is
approximately $1.0 million, payable in January of each lease year. In addition,
the rent will be adjusted based upon AT&T's use of the towers, except that any
downward adjustment can be used by AT&T as a credit only against future
additional rent and not
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against the base rent. AT&T currently uses 468 of these towers for its microwave
operations. We expect that as many as 50% of the towers may not be marketable,
at least in the near future, because of location.
AT&T Wireless Services uses and will lease from us space on 90 of the
towers to be purchased by us. At the initial closing, AT&T Wireless Services
will enter into an amendment to its existing master lease with us to lease those
sites at a monthly rent of $1,350 per site, increasing by 4% per year.
Our build-to-suit agreement with AT&T Wireless Services will require it to
present us 1,200 sites nationwide from which we will have the opportunity to
build 1,000 towers. There will be a separate master lease with AT&T Wireless
Services for the build-to-suit towers. The initial term will be ten years, and
AT&T will have three, five-year renewals. The rent for lease supplements entered
into in the initial year is $1,350 per month, per antenna site, increasing
annually by $50 per year for lease supplements entered into in subsequent years.
All rents will be subject to a 4% per annum escalator.
The transaction will be closed in stages, subject to the satisfaction of
customary conditions, including the receipt of all regulatory approvals,
beginning in the fourth quarter of this year or the first quarter of 2000.
UNIsite merger. In June 1999, we agreed to a merger with UNIsite. Based on
UNIsite owning 600 completed towers at closing, the purchase price will be
$205.0 million, $165.0 million of which is payable in cash and $40.0 million in
assumption of UNIsite's debt. The purchase price is subject to adjustment based
on (a) the net working capital and the long-term debt of UNIsite at closing and
(b) the number of completed towers. UNIsite's towers are located primarily in
the Northeast and Midwest. Subject to the satisfaction of customary closing
conditions, including approval under our credit facilities, the UNIsite merger
is expected to be consummated in the first quarter of 2000.
TV Azteca acquisition. In September 1999, we entered into a letter of
intent with TV Azteca, the owner of a major national television broadcast
network in Mexico, relating to approximately 200 broadcast towers. We have
agreed to loan up to $120.0 million to that company and to take over
responsibility for marketing and certain maintenance functions for the towers.
The 20-year loan, which may be extended for an additional 20 years, will bear
net interest at approximately 11% per annum. We will be entitled to receive 100%
of the revenues generated by third party leases on the towers during the term of
the loan. We have made an interim loan of $60.0 million. The interim loan will
mature on the earlier of March 17, 2000 or the closing of the transaction. The
closing is subject to certain conditions, including the execution and delivery
of definitive agreements and the receipt of all necessary regulatory approvals.
Subject to satisfaction of those conditions, definitive agreements are scheduled
to be executed in the fourth quarter of 1999.
ICG transaction. In August 1999, we agreed to acquire all of the stock of
ICG Satellite Services and its subsidiary, Maritime Telecommunications Network,
Inc., for $100.0 million in cash. The acquisition involves a major
around-the-clock teleport facility in New Jersey and a global maritime
telecommunications network headquartered in Miami, Florida. The acquired company
provides voice, data, Internet and compressed video satellite services to major
cruise lines, the U.S. military, Internet-related companies and international
telecommunications customers. The New Jersey teleport and operations center has
12 existing antennas and one under construction that access satellites covering
the continental U.S., South America and the Atlantic Ocean region. The
transaction is expected to close in the fourth quarter of 1999, subject to
satisfaction of customary conditions.
Watson transaction. In July 1999, we agreed to acquire Watson
Communications for $73.0 million in cash. The acquisition involves 11 wireless
and 10 broadcast towers in the San Francisco Bay area and one teleport that
contains nine antennas. The teleport covers the full domestic and the Pacific
international service region. Among the acquired sites is San Bruno Mountain, a
premiere location within the San Francisco market. The transaction is expected
to close in the fourth quarter of 1999, subject to the satisfaction of customary
conditions.
Credit Facilities Amendment. We currently have credit facilities that
provide for borrowings of up to $483.0 million. We are seeking to negotiate new
credit facilities that would provide for borrowings of up to $2.0
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billion. As of October 15, 1999, we had no borrowings under our credit
facilities and available cash of $154.0 million. On a pro forma basis, giving
effect as of that date to all pending transactions, we would have had aggregate
borrowings under our credit facilities of approximately $1.1 billion and no
available cash. We must arrange for additional borrowings or other external
funds in order to complete all of our pending transactions. There is no
assurance that we will successfully negotiate new credit facilities or that we
will obtain our desired new borrowing level. The new credit facilities may
involve different and more restrictive covenants or other terms than our
existing credit facilities. Upon the execution of a new credit facility, we will
be required to recognize an extraordinary loss on extinguishment of debt. If the
new credit facility is executed in the fourth quarter of 1999, such loss would
be approximately $4.5 million, net of a tax benefit of approximately $3.0
million.
Private Placement of the Notes. On October 4, 1999, we closed the
private sale of the notes to institutional investors. Our net proceeds were
approximately $584.0 million, of which we used approximately $368.0 million to
repay all outstanding borrowings under our credit facilities. We invested the
balance in short-term, investment grade securities on an interim basis and will
use those funds to finance pending acquisitions and construction activities.
Our principal executive offices are located at 116 Huntington Avenue,
Boston, Massachusetts 02116. Our telephone number is (617) 375-7500.
THE NOTES
Securities Offered.................... 6.25% notes: $300,000,000 principal
amount of 6.25% Convertible Notes Due
2009 previously issued in a private
placement. We refer to those notes as the
6.25% notes.
2.25% notes: $425,500,000 principal
amount at maturity of 2.25% Convertible
Notes Due 2009 previously issued in a
private placement. This is equivalent to
total proceeds at the issue price of
$300,062,600. We refer to those notes as
the 2.25% notes and, together with the
6.25% notes, as the notes.
Issue Price........................... 6.25% notes: 100% plus accrued interest,
if any, from the date of issue.
2.25% notes: 70.52% plus accrued
interest, if any, from the date of issue.
Interest.............................. 6.25% notes: 6.25% per annum on the
principal amount, payable semiannually in
arrears in cash on April 15 and October
15 of each year, beginning April 15,
2000.
2.25% notes: 2.25% per annum on the
principal amount, payable semiannually in
arrears in cash on April 15 and October
15 of each year, beginning April 15,
2000.
Yield to Maturity..................... 6.25% notes: 6.25% per annum calculated
on a semiannual basis from October 4,
1999.
2.25% notes: 6.25% per annum, calculated
on a semiannual basis giving effect both
to accrued original issue discount and to
accrued interest from October 4, 1999.
Conversion Rights..................... 6.25% notes: You may convert the 6.25%
notes at any time on or before October
15, 2009, unless we have redeemed or
purchased them. The 6.25% notes are
convertible into shares of Class A common
stock at a conversion price of $24.40 per
share. We will deliver 40.9836 shares of
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Class A common stock for each $1,000
principal amount of 6.25% notes. Upon
conversion you will not receive any cash
payment representing accrued interest.
2.25% notes: You may convert the 2.25%
notes at any time on or before October
15, 2009, unless we have redeemed or
purchased them. The 2.25% notes are
convertible into shares of Class A common
stock at a conversion price of $24.00 per
share. We will deliver 29.3833 shares of
Class A common stock for each $1,000
principal amount at maturity of 2.25%
notes. We will not adjust the conversion
rate for accrued original issue discount
or interest. Upon conversion, you will
not receive any cash payment representing
accrued original issue discount or
interest.
The conversion rate of both series of
notes is subject to adjustment in certain
events.
Maturity Date......................... October 15, 2009.
Change in Control..................... If a change in control of our company
occurs, you may require us to purchase
your notes for cash at a price equal to
the principal amount, in the case of the
6.25% notes, and the issue price plus
accrued original issue discount in the
case of the 2.25% notes. In each case we
will also be required to pay accrued and
unpaid interest. Our existing credit
facilities prohibit making these change
in control payments without bank consent
until December 2006.
Optional Redemption................... 6.25% notes: We will not be able to
redeem the 6.25% notes prior to October
22, 2002. Thereafter, we can redeem those
notes, at our option, in whole or in part
at a redemption price initially of
103.125% of the principal amount. The
redemption price declines ratably
immediately after October 15 of each
following year to 100% of the principal
amount in 2005. We are also required to
pay accrued and unpaid interest.
2.25% notes: We will not be able to
redeem the 2.25% notes prior to October
22, 2003. Thereafter, we can redeem those
notes, at our option, in whole or in part
at increasing redemption prices designed
to reflect the accrued original issue
discount. We are also required to pay
accrued and unpaid interest.
Repurchase of Notes at
Your Option......................... 6.25% notes: You may require us to
repurchase all or any of your 6.25% notes
on October 22, 2006 at their principal
amount, together with accrued and unpaid
interest.
2.25% notes: You may require us to
repurchase all or any of your 2.25% notes
on October 22, 2003 at $802.93, which is
its issue price plus accrued original
issue discount, together with accrued and
unpaid interest.
We may, at our option, elect to pay the
repurchase price of each series in cash
or shares of Class A common stock, or any
combination thereof. Our existing credit
facilities require us to pay entirely in
stock unless we obtain bank consent.
Sinking Fund.......................... None.
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Original Issue Discount
on 2.25% Notes...................... Each 2.25% note was issued with original
issue discount for federal income tax
purposes. The amount of the discount is
the difference between the principal
amount of the 2.25% note at maturity and
its issue price. You should be aware that
accrued original issue discount will be
includable periodically in your gross
income for federal income tax purposes
before conversion, redemption, other
disposition or maturity of your 2.25%
notes, whether or not those notes are
ultimately converted, redeemed, sold to
us or others or paid at maturity.
Ranking............................... The notes of the two series will rank
equally with one another. Both series
will effectively rank junior to
indebtedness outstanding under the credit
facilities since all of that indebtedness
is issued by our subsidiaries and is
secured, directly or indirectly through
guarantees, by the assets of our
subsidiaries.
Registration Rights................... We have agreed to keep the SEC
registration statement that includes this
prospectus useable until October 4, 2001
or any shorter period permitted under the
SEC rules permitting unregistered resales
of privately placed securities. The
interest rate on the notes will increase
if we are not in compliance with this
requirement.
Use of Proceeds....................... We will not receive any proceeds from the
sale by the selling securityholders of
the notes or the shares issuable upon
conversion.
Trading............................... The notes are not listed and trade on the
over-the-counter market. The Class A
common stock is listed on the NYSE under
the symbol "AMT."
Common Stock Outstanding(1).......... 144,466,550 shares of Class A common stock
8,811,940 shares of Class B common stock
2,422,804 shares of Class C common stock
-----------
155,701,294 shares of common stock
===========
(1) The number of shares of common stock outstanding was determined as of
October 1, 1999. This number does not include shares we may issue in the
future upon conversion of other securities. Examples of these future
issuances include: (a) shares of Class A common stock issuable upon
conversion of Class B common stock or Class C common stock, (b) shares
issuable upon exercise of options currently outstanding to purchase an
aggregate of 13,774,198 shares of common stock, (c) 3,000,000 shares
issuable upon exercise of the warrant to be issued in the AirTouch
transaction, or (d) 24,797,690 of Class A common stock issuable upon
conversion of the notes.
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SELECTED FINANCIAL DATA
We have derived the following selected financial data from our historical
consolidated financial statements and our unaudited pro forma condensed
consolidated financial statements. The selected financial data should be read in
conjunction with the Historical Financial Statements. Prior to our separation
from our former parent on June 4, 1998, we operated as a subsidiary of American
Radio Systems and not as an independent company. Therefore, our results of
operations for that period may be different from what they would have been had
we operated as a separate, independent company.
Year-to-year comparisons are significantly affected by our acquisitions and
construction of towers, both of which have been numerous during the periods
presented. Our principal acquisitions are described in "American Tower--Recent
Developments" under "Summary" on page 3 and in the notes to the Historical
Financial Statements.
The pro forma balance sheet data gives effect, as of June 30, 1999, to the
pro forma transactions not then consummated: the AirTouch transaction, the AT&T
transaction, the UNIsite merger and the notes placement. The pro forma statement
of operations data and other operating data gives effect to the pro forma
transactions, as if each had occurred on January 1, 1998. We use the term pro
forma transactions to mean certain of our major acquisitions and financings as
follows: the OmniAmerica merger, the TeleCom merger, the separation from
American Radio Systems, the ATC merger, the Wauka transaction, the UNIsite
merger, the AirTouch transaction, the AT&T transaction, our public offerings in
July 1998 and February 1999 and our private placements in February and October
1999. Pro forma transactions do not include all of the consummated or pending
acquisitions or pending construction. See "American Tower--Recent Developments"
under "Summary" on page 3 and "Unaudited Pro Forma Condensed Consolidated
Financial Statements" on page 19.
We account for all of the included acquisitions as purchases. This means
that for accounting and financial reporting purposes, we include the results of
the acquired companies or assets with ours only after the closing of the
acquisition. The pro forma financial data reflects certain adjustments, as
explained elsewhere in this prospectus. Therefore, any comparison of the pro
forma financial data with the historical financial data for periods before 1998
is inappropriate. See "Unaudited Pro Forma Condensed Consolidated Financial
Statements" on page 19.
We use the term "tower cash flow" to mean operating income (loss) before
depreciation and amortization, tower separation expenses and corporate general
and administrative expenses. We use the term "tower separation expenses" to
refer to the one-time expenses incurred as a result of our separation from
American Radio Systems. We use "EBITDA" to mean operating income (loss) before
depreciation and amortization and tower separation expenses. "After-tax cash
flow" means income (loss) before extraordinary losses, plus depreciation and
amortization. We do not consider tower cash flow, EBITDA and after-tax cash flow
as a substitute for alternative measures of operating results or cash flow from
operating activities or as a measure of our profitability or liquidity. These
measures of performance are not calculated in accordance with generally accepted
accounting principles. However, we have included them because they are generally
used in the communications site industry as a measure of a company's operating
performance. More specifically, we believe they can assist in comparing company
performances on a consistent basis without regard to depreciation and
amortization. Our concern is that depreciation and amortization can vary
significantly among companies depending on accounting methods, particularly
where acquisitions are involved, or on non-operating factors including
historical cost bases. We believe tower cash flow is useful because it enables
you to compare tower performances before the effect of tower separation and
corporate general and administrative expenses that do not relate directly to
performance.
-9-
<PAGE>
<TABLE>
<CAPTION>
AMERICAN TOWER CORPORATION
Selected Financial Data(1)
July 17, 1995 Year Ended Year Ended Six Months Ended
(inception) December 31, December 31, 1998 June 30, 1999
through ----------- -------------------- ---------------------
December 31, 1995 1996 1997 Historical Pro Forma Historical Pro Forma
----------------- ---- ---- ---------- --------- ---------- ---------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Statements of Operations Data:
Operating revenues................... $163 $2,897 $17,508 $103,544 $273,092 $101,561 $146,482
---- ------ ------- -------- -------- -------- --------
Operating expenses:
Operating expenses excluding
depreciation and amortization,
tower separation, and corporate
general and administrative expenses 60 1,362 8,713 61,751 172,624 59,020 88,047
Depreciation and amortization...... 57 990 6,326 52,064 212,859 57,808 111,632
Tower separation expenses.......... 12,772 12,772
Corporate general and administrative
expenses......................... 230 830 1,536 5,099 8,599 4,140 5,890
-------- ------- ------- -------- -------- --------- --------
Total operating expenses......... 347 3,182 16,575 131,686 406,854 120,968 205,569
-------- ------- ------- -------- -------- --------- --------
(Loss) income from operations........ (184) (285) 933 (28,142) (133,762) (19,407) (59,087)
Interest expense..................... (3,040) (23,229) (11,539) (59,559)
(114,821)
Interest income and other, net....... 36 251 9,217 9,217 10,737 10,737
Minority interest in net (earnings)
losses of subsidiaries (2) (185) (193) (287) (287) 79 79
-------- ------- ------- -------- -------- --------- --------
Loss before income taxes and
extraordinary losses................. (184) (434) (2,049) (42,441) (239,653) (20,130) (107,830)
Benefit (provision) for income taxes. 74 (45) 473 4,491 70,091 747 31,535
-------- ------- ------- -------- -------- --------- --------
Loss before extraordinary losses..... $(110) $(479) $(1,576) $(37,950)$(169,562) $(19,383) $(76,295)
======== ======= ======= ======== ======== ========= ========
Basic and diluted loss per common share
before extraordinary losses(3)..... $(0.00) $(0.01) $(0.03) $(0.48) $(1.10) $(0.14) $(0.49)
======== ======= ======= ======== ======== ========= ========
Basic and diluted weighted average
common shares outstandings(3)...... 48,732 48,732 48,732 79,786 154,658 143,503 155,519
======== ======= ======= ======== ======== ========= ========
Other Operating Data:
Ratio of earnings to fixed charges(4) -- -- -- -- -- -- --
Tower cash flow...................... $103 $1,535 $8,795 $41,793 $100,468 $42,541 $58,435
EBITDA............................... (127) 705 7,259 36,694 91,869 38,401 52,545
EBITDA margin........................ (N/A) 24.3% 41.5% 35.4% 33.6% 37.8% 35.9%
After-tax cash flow.................. (53) 511 4,750 14,114 43,297 38,425 35,337
Cash provided by (used for) operating
activities......................... (51) 2,230 9,913 18,429 -- 25,844 --
Cash used for investing activities... -- -- (216,783) (350,377) -- (300,787) --
Cash provided by financing activities 63 132 209,092 513,527 -- 441,989 --
<CAPTION>
Six Months Ended
December 31, June 30, 1999
------------- --------------------
1997 1998 Historical Pro Forma
---- ---- ---------- ---------
<S> <C> <C> <C> <C>
Tower Data:
Towers operated at end of period(5)........................................ 674 2,492 3,644 9,271
Towers constructed(6)...................................................... 84 503 445 n/a
-10-
<PAGE>
<CAPTION>
Year Ended December 31,
Historical June 30, 1999
---------- -------------
1995(1) 1996 1997 1998 Historical Pro Forma
------- ---- ---- ---- ---------- ---------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash and cash equivalents................................. $ 12 $2,373 $ 4,596 $ 186,175 $ 353,221 $ 360,147
Working capital (deficiency), excluding current portion of
long-term debt............................................ (40) 663 (2,208) 93,602 352,848 349,748
Property and equipment, net............................... 3,759 19,710 117,618 449,476 725,846 725,846
Unallocated purchase price................................ -- -- -- -- -- 1,367,712
Total assets.............................................. 3,863 37,118 255,357 1,502,343 2,518,576 3,912,127
Long-term debt, including current portion................. -- 4,535 90,176 281,129 284,121 972,057
Convertible notes, net of discount........................ -- -- -- -- -- 600,000
Total stockholders' equity................................ 3,769 29,728 153,208 1,091,746 2,161,933 2,207,433
<FN>
- --------------
(1) We were organized on July 17, 1995.
(2) Represents the minority interest in net (earnings) losses of our non wholly-owned subsidiaries.
(3) Basic and diluted loss per common share before extraordinary losses has been computed using (a) in the case of historical
information, for periods prior to June 4, 1998, the number of shares outstanding following the separation from American Radio
Systems and (b) in the case of pro forma information, the number of shares expected to be outstanding following the pro forma
transactions.
(4) For purposes of calculating this ratio, "earnings" consist of loss before income taxes and extraordinary losses and fixed
charges. "Fixed charges" consist of interest expense, amortization of debt discount and related issuance costs and the
component of rental expense believed by management to be representative of the interest factor on that expense. We had a
deficiency in earnings to fixed charges in each period as follows (in millions): 1995--$184; 1996--$434; 1997--$2,049; 1998
(historical)--$42,441; and 1999 (six months ended June 30, historical)--$20,130.
(5) Includes information with respect to our company only and assumes consummation of all pending transactions, including those
not included in the pro forma transactions. Does not include towers under construction. See Note (6) below.
(6) Includes towers constructed in each period by us, including towers constructed for and owned by third parties. These numbers
do not include towers constructed by companies we acquired during the applicable period.
</FN>
</TABLE>
-11-
<PAGE>
RISK FACTORS
You should consider carefully the following factors and other information
in this prospectus before deciding to invest in our securities.
If we cannot keep raising capital, our growth will be impeded
Without additional capital, we would need to curtail our acquisition and
construction programs. We expect to use borrowed funds for most of this capital.
However, we must continue to satisfy financial ratios and to comply with
financial and other covenants in order to do so. If our revenues and cash flow
do not meet expectations, we may lose our ability to borrow money. These same
factors, as well as market conditions beyond our control, could make it
difficult or impossible for us to sell stock as an alternative to borrowing.
As explained below, we do not have sufficient borrowing capacity under our
credit facilities to finance all of our pending acquisitions. See "Our future
commitments for pending transactions exceed our currently available funds" on
page 14.
Meeting payments on our large debt could be a burden to us
Our high debt level makes us vulnerable to downturns in our operations.
This high debt level requires us to use most of our cash flow to make interest
and principal payments. If we do not generate sufficient cash flow through our
operations to make interest and principal payments, we may be forced to sell
debt or equity securities or to sell some of our core assets. This could be
harmful to our business and to our securityholders. Market conditions or our own
financial situation may require us to make these sales on unattractive terms.
Demand for tower space may be beyond our control
Many of the factors affecting the demand for tower space, and therefore our
cash flow, are beyond our control. Those factors include:
o consumer demand for wireless services,
o the financial condition of wireless service providers and their
preference for owning or leasing antenna sites,
o the growth rate of wireless communications or of a particular
wireless segment,
o the number of wireless service providers in a particular segment,
nationally or locally,
o governmental licensing of broadcast rights,
o zoning, environmental and other government regulations, and
o technological changes.
"Roaming" and "resale" arrangements could also adversely affect demand.
These arrangements enable a wireless service provider to serve customers outside
its license area through agreements with other providers. Wireless service
providers might consider roaming and resale arrangements preferable to leasing
antenna space from us.
-12-
<PAGE>
New tower construction, particularly build-to-suit projects, involves
uncontrollable risks and increasing competition
Our increasing focus on major build-to-suit projects for wireless service
providers entails several unique risks. The first is the greater dependence on a
single customer. Second, because of intense competition for these projects, we
often grant the wireless service provider non-economic lease and control
provisions more favorable than our general terms. Finally, although we have the
benefit of an "anchor" tenant in build-to-suit projects, we may not be able to
find a sufficient number of additional tenants. In fact, one reason wireless
service providers may want build-to-suit arrangements is to share or escape the
costs of an undesirable site. A site may be undesirable because it has high
construction costs or may be considered a poor location by other providers.
Our expanded construction activities also involve other substantial risks.
These risks include:
o increasing our debt and the amount of payments on that debt,
o uncontrollable risks that could delay or increase the cost of a
project,
o increasing competition for construction sites and experienced tower
construction companies, resulting in significantly higher costs and
failure to meet time schedules,
o failing to meet time schedules could result in our paying
significant penalties to prospective tenants, particularly in
build-to-suit situations, and
o possible lack of sufficient experienced personnel to manage an
expanded construction program.
We cannot control the main factors that can prevent, delay or increase the
cost of construction. These factors include:
o zoning and local permitting requirements,
o environmental group opposition,
o availability of skilled construction personnel and construction
equipment,
o adverse weather conditions, and
o federal regulations.
Our acquisition strategy involves increasing acquisition costs, high debt levels
and potential management and integration issues
Increased competition, which we believe will continue, has resulted in
substantially higher acquisition costs, particularly for towers being sold by
wireless service providers. These prices, in turn, result in high debt and debt
service requirements. Equally important, the increased size of our acquisitions
from wireless service providers could create certain problems we have not faced
in the past:
o dependence on a limited number of customers,
o lease and control provisions more favorable to the wireless service
provider than those we give our tenants generally,
o integration of major national networks into our operational systems,
-13-
<PAGE>
o demands on managerial personnel that could divert their attention
from other aspects of our business, and
o potential antitrust constraints, either in local markets or on a
regional or national basis, that could impede future acquisitions or
require selective divestitures at unfavorable prices.
An additional risk is the acquisition of significant numbers of towers that
may have limited marketing potential. See "American Tower--Recent
Developments--Pending Transactions--AT&T transaction" under "Summary" on page 4.
Covenants in our credit facilities could impede our growth strategy and restrict
our ability to pay interest on or redeem or repurchase the notes
Our growth strategy may be impaired by restrictive covenants in our credit
facilities. The most significant of these covenants impose limits on our
aggregate borrowings and require us to meet certain financial ratios and comply
with all of the financial and other covenants in order to borrow funds. Also,
certain types of acquisitions and investments in other companies are limited in
accordance with a formula based, in part, on proceeds of equity offerings and,
in part, on cash flow. Events beyond our control may affect our ability to meet
these requirements. If these covenants restrict our ability to borrow funds, our
acquisition strategy and construction program will be harmed.
Our credit facilities also restrict the ability of our subsidiaries to pay
dividends or make other distributions to the parent company and prohibit those
dividends and other distributions during periods of default. Since we are a
holding company, with no independent operations, we are dependent on our
subsidiaries for funds in order for us to make payments of interest and
principal on the notes.
In addition, our existing credit facilities prohibit us from redeeming or
repurchasing any of the notes without bank consent until December 2006. This
requires us to elect to repurchase the notes with Class A common stock on the
repurchase dates and to obtain bank consent in order to repurchase notes upon
any change in control.
Our new credit facilities, if entered into, may contain different and more
restrictive covenants than our existing credit facilities with respect to
payments of interest on and principal of the notes and on the ability of our
subsidiaries to pay dividends or make other distributions and our ability to
make certain types of acquisitions and investments.
Our future commitments for pending transactions exceed our currently available
funds
We have the ability to borrow approximately $483.0 million under our
existing credit facilities. We also had, as of October 15, 1999, available cash
of $154.0 million. Our future commitments under pending transactions aggregate
$1.7 billion. Accordingly, we must arrange for additional borrowings or other
external funds in order to complete all or some of our pending transactions.
There is no assurance that we will successfully negotiate new credit facilities
or that we will obtain our desired new borrowing level. If we are unable to
complete transactions that we are contractually bound to perform, we may have to
pay liquidated or other damages to the other parties to the agreements. Pursuant
to our agreement with AirTouch, we paid a deposit of $100.0 million, which we
could forfeit if we were unable to close the transaction.
Interest on the notes may not be deductible
If the notes were found to be "corporate acquisition indebtedness" or
"disqualified debt instruments," we would not be entitled to deduct the interest
on the notes for federal income tax purposes. See "Certain Federal Income Tax
Consequences--Our Deductions for Interest and OID on the Notes" on page 48.
-14
<PAGE>
We are dependent on key personnel and would be adversely affected if they leave
The loss of our Chief Executive Officer, Steven B. Dodge, and other
executive officers has a greater likelihood of having a material adverse effect
upon us than it would on most other companies of our size. Our growth strategy
is highly dependent on the efforts of Mr. Dodge and our other executive
officers. Our ability to raise capital is dependent in part on the reputation of
Mr. Dodge. You should be aware that we have not entered into employment
agreements with Mr. Dodge or most of our other executive officers. We may not be
able to retain our executive officers, including those with employment
agreements, or other key personnel or prevent them from competing with us if
they leave.
New technologies could make our tower antenna leasing services less desirable to
potential tenants
Mobile satellite systems and other new technologies could compete with
land-based wireless communications systems, thereby reducing the demand for
tower lease space and other services we provide. The FCC has granted license
applications for several low-earth orbiting satellite systems that are intended
to provide mobile voice or data services. In addition, the emergence of new
technologies could reduce the need for tower-based transmission and reception
and have an adverse affect on our operations. For example, at least one company
is offering systems with devices that can be attached to telephone and utility
lines that could serve as an alternative to certain towers.
The growth in delivery of video services by direct broadcast satellites and
the development and implementation of signal combining technologies, which
permit one antenna to service two different transmission frequencies and,
therefore, two customers, could also reduce the demand for our tower space by
wireless service providers.
We have Year 2000 risks, including some that are unique to tower operation
We, like all companies, face risks associated with the fact that many
computers and computer software programs were not designed to recognize the
change from 1999 to 2000 or are otherwise unable to process dates related to the
turn of the millennium. These computers, and the systems they control, might
malfunction or cease to work unless they are reprogrammed or replaced by the end
of 1999.
One known area of Year 2000 risk for us and for other operators of
communications sites is tower lighting systems. Year 2000-related problems could
prevent our monitoring system from detecting a failure of light systems on our
tower structures, creating a situation where a failed light might not be
automatically reported to air navigation. We and other tower owners are
responsible for providing tower lighting that complies with FCC and FAA
requirements. Our Year 2000 plans and risks are more fully discussed under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Year 2000" in the June 1999 Quarterly Report.
We could be harmed if perceived health risks from radio emissions are
substantiated
If a connection between radio emissions and possible negative health
effects, including cancer, were established, we would be materially and
adversely affected. The results of several substantial studies by the scientific
community in recent years have been inconclusive. We and the lessees of antenna
sites on our towers are subject to government regulations relating to radio
frequency emissions. We do not maintain any significant insurance with respect
to these matters.
-15-
<PAGE>
Pro forma financial information is based on estimates and assumptions and may
not be indicative of actual future results
Our actual future results could vary materially and adversely from those
reflected in the pro forma financial information we have included in this
prospectus. That information is based upon a number of assumptions we believe to
be reasonable. However, our two most significant acquisitions, the AirTouch and
AT&T transactions, do not involve the acquisition of businesses. The towers
involved in those acquisitions were operated as part of the wireless service
businesses of AirTouch and AT&T. Separate financial records were not maintained
and financial statements were never prepared for the operation of those towers.
We have, however, compiled certain revenue and expense data of those towers in
the pro forma information. In the case of certain expenses, we have estimated
amounts based on our own experience with comparable towers. Neither our
auditors, AirTouch's auditors, AT&T's auditors nor the initial purchasers have
expressed any opinion or provided any form of assurance with respect to AirTouch
or AT&T's historical data presented in the unaudited pro forma financial
information.
We could have liability under environmental laws
Under various federal, state and local environmental laws, we, as an owner,
lessee or operator of real estate, may be liable for the substantive costs of
remediating soil and groundwater contaminated by hazardous wastes. Some of these
laws may impose responsibility and liability on us even if we did not cause the
contamination or even know about it. Almost all of the towers we own and
operate, other than rooftop towers, are located on parcels of land, which could
result in substantial environmental liability. Our liability often will continue
even if we sell the property.
The notes will effectively rank junior to secured debt under our credit
facilities
Our payment of principal of and interest on the notes will effectively rank
junior to all existing and future debt under our credit facilities. This is so
because the debt under our credit facilities is issued or guaranteed by our
subsidiaries and secured by their assets. The notes will also effectively rank
junior to all other existing and future debt of our subsidiaries. The parent
company has also guaranteed that debt and secured it with its assets, and the
stock of its subsidiaries. As a result, in the event of our insolvency,
liquidation or reorganization, or should any of that debt be accelerated because
of a default, we must pay that debt in full before we can make any payment on
the notes.
There may not be any trading market for the notes
There is no existing trading market for the notes and one may never
develop. Accordingly, you may not be able to sell your notes or sell them at an
acceptable price. If a market were to develop, the notes could trade at prices
that may be higher or lower than the initial offering price depending on many
factors, including prevailing interest rates, the market price of the Class A
common stock, our operating results and the market for similar securities. The
initial purchasers of the notes have advised us that they currently intend to
make a market in the notes of each series. They are not, however, obligated to
do so. Any market making may be discontinued at any time without notice.
Therefore, we cannot assure you as to the liquidity of any trading market for
either series of the notes or that an active market for either series will
develop. We do not intend to list the notes of either series on any securities
exchange or to seek approval for quotation through any automated quotation
system.
Control by our principal stockholders could deter mergers where you could get
more than current market price for your stock
Control by Mr. Dodge and others may have the effect of discouraging a
merger or other takeover of our company in which holders of Class A common stock
may be paid a premium for their shares over then-current market prices. Mr.
Dodge, together with a limited number of our directors, may be able to control
or block the vote
-16-
<PAGE>
on mergers and other matters submitted to the common stockholders. On October 1,
1999, our directors and executive officers, together with their affiliates,
owned "beneficially" approximately 45% of the combined voting power of the
common stock. On that date, Mr. Dodge, together with his affiliates, owned
"beneficially" approximately 29% of the combined voting power.
Our common stock does not pay dividends
We have never paid a dividend on our common stock and do not expect to pay
cash dividends in the foreseeable future.
Our forward-looking statements could prove to be wrong and we might suffer a
material adverse effect
Our forward-looking statements are subject to risks and uncertainties. You
should note that many factors, some of which are discussed in this section or
elsewhere in this prospectus or in the documents we have incorporated by
reference, could affect our company in the future and could cause our results to
differ materially from those expressed in our forward-looking statements.
Forward-looking statements include those regarding our goals, beliefs, plans or
current expectations and other statements regarding matters that are not
historical facts. For example, when we use the words "believe," "expect,"
"anticipate" or similar expressions, we are making forward-looking statements.
Forward-looking statements include statements concerning:
o the outcome of our growth strategy,
o future results of operations,
o liquidity and capital expenditures,
o construction and acquisition activities,
o debt levels and the ability to obtain financing and make payments on
our debt,
o regulatory developments and competitive conditions in the
communications site and wireless carrier industries,
o projected growth of the wireless communications and wireless carrier
industries, and
o general economic conditions.
We are not required to release publicly the results of any revisions to
these forward-looking statements we may make to reflect future events or
circumstances.
-17-
<PAGE>
MARKET PRICES AND DIVIDEND POLICY
Market Price Data
On February 27, 1998, our Class A common stock commenced trading on a
"when-issued" basis on the inter-dealer bulletin board of the over-the-counter
market. Our Class A common stock commenced trading on the NYSE on June 5, 1998
(the day after we separated from American Radio Systems). The following table
presents reported high and low sale prices of our Class A common stock in the
over-the-counter market or on the Composite Tape of the NYSE.
<TABLE>
<CAPTION>
1998 High Low
---- ---- ---
<S> <C> <C>
Quarter Ended March 31 (commencing February 27, 1998).......... $ 20.250 $15.500
Quarter Ended June 30.......................................... 26.125 18.750
Quarter Ended September 30..................................... 28.625 14.375
Quarter Ended December 31...................................... 29.625 13.250
<CAPTION>
1999
----
<S> <C> <C>
Quarter Ended March 31......................................... 30.250 20.500
Quarter Ended June 30.......................................... 26.875 20.500
Quarter Ended September 30..................................... 25.875 19.500
Quarter Ended December 31 (through October 19)................. 20.125 17.5625
</TABLE>
The outstanding shares of common stock and number of registered holders as of
October 1, 1999 were as follows:
<TABLE>
<CAPTION>
Class
----------------------------
A B C
----------- --------- ---------
<S> <C> <C> <C>
Outstanding shares....................................................... 144,466,550 8,811,940 2,422,804
Registered holders....................................................... 539 64 1
</TABLE>
Dividends
We have never paid a dividend on any class of common stock. We anticipate
that we will retain future earnings, if any, to fund the development and growth
of our business. We do not anticipate paying cash dividends on shares of common
stock in the foreseeable future. Our credit facilities restrict the payment of
cash dividends by our subsidiaries. See "Description of Capital Stock--Dividend
Restrictions" on page 41.
-18-
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
We have included our unaudited pro forma condensed consolidated balance
sheet as of June 30, 1999 and our unaudited pro forma condensed consolidated
statements of operations for the year ended December 31, 1998 and for the six
months ended June 30, 1999. To the extent required, these pro forma statements
have been adjusted for:
o the OmniAmerica merger, the TeleCom merger, the separation from
American Radio Systems, the ATC merger, the Wauka transaction, the
UNIsite merger, the AirTouch transaction and the AT&T transaction,
o our public offerings of Class A common stock in July 1998 and
February 1999 and our private placement in February 1999, and
o the 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 statement of operations. The adjustments assume that the
pending pro forma transactions were consummated as of June 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 Historical Financial
Statements. 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 to
your investment decision.
The pro forma financial statements may not reflect our financial condition
or our results of operations had these events actually occurred on the date
specified. They may also not reflect our financial condition or our results of
operations of operating as a separate, independent company during the periods.
Finally, they may not reflect our future financial condition or results of
operations.
-19-
<PAGE>
<TABLE>
<CAPTION>
AMERICAN TOWER CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 1999
(in thousands)
Adjustments
for Pro Forma Pro Forma,
Historical Transactions(a) as adjusted
---------- --------------- -----------
ASSETS
<S> <C> <C> <C>
Cash and cash equivalents..................... $ 353,221 $ 6,926 $ 360,147
Accounts receivable, net...................... 38,454 2,384 40,838
Other current assets.......................... 25,501 529 26,030
Notes receivable.............................. 13,624 13,624
Property and equipment, net................... 725,846 725,846
Unallocated purchase price.................... 1,367,712 1,367,712
Intangible assets, net........................ 1,213,374 1,213,374
Deferred tax asset............................ 116,079 116,079
Deposits and other assets..................... 32,477 16,000 48,477
---------- ---------- ----------
Total...................................... $2,518,576 $1,393,551 $3,912,127
========== ========== ==========
<CAPTION>
LIABILITIES AND
STOCKHOLDERS' EQUITY
<S> <C> <C> <C>
Current liabilities, excluding current
portion of long-term debt.................. $ 64,328 $ 12,939 $ 77,267
Deferred income taxes......................... 45,656 45,656
Other long-term liabilities................... 2,545 1,520 4,065
Long-term debt, including current
portion.................................... 284,121 687,936 972,057
Convertible notes, net of discount............ 600,000 600,000
Minority interest............................. 5,649 5,649
Stockholders' equity.......................... 2,161,933 45,500 2,207,433
---------- ---------- ----------
Total..................................... $2,518,576 $1,393,551 $3,912,127
========== ========== ==========
</TABLE>
See Notes to Unaudited Pro Forma Condensed
Consolidated Balance Sheet of American Tower.
-20-
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
We have prepared the unaudited pro forma condensed consolidated balance
sheet as of June 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. See "American
Tower--Recent Developments--Pending Transactions" under "Summary" on page 4 for
a description of those pro forma transactions.
(a) The following table sets forth the pro forma balance sheet adjustments as of
June 30, 1999 (in thousands).
<TABLE>
<CAPTION>
Total
Adjustments
AirTouch AT&T UNIsite Notes for Pro Forma
Transaction Transaction Merger Placement Transactions
----------- ----------- ------ --------- ------------
ASSETS
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents..................................... $ 6,926 $ 6,926
Accounts receivable, net...................................... 2,384 2,384
Other current assets.......................................... 529 529
Unallocated purchase price(1)................................. $845,500 $265,000 257,212 1,367,712
Deposits and other assets..................................... $ 16,000 16,000
-------- -------- -------- -------- ----------
Total...................................................... $845,500 $265,000 $267,051 $ 16,000 $1,393,551
======== ======== ======== ======== ==========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C> <C> <C> <C>
Current liabilities, excluding current portion of long-term
debt....................................................... $ 5,000 $ 7,939 $ 12,939
Deferred income taxes......................................... 45,656 45,656
Other long-term liabilities................................... 1,520 1,520
Long-term debt, including current portion..................... $800,000 260,000 211,936 $(584,000) 687,936
Convertible notes, net of discount............................ 600,000 600,000
Stockholders' equity.......................................... 45,500(2) 45,500
-------- -------- -------- -------- ----------
Total...................................................... $845,500 $265,000 $267,051 $ 16,000 $1,393,551
======== ======== ======== ======== ==========
</TABLE>
We will account for all of the pro forma transactions under the purchase
method of accounting.
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>
AirTouch transaction.................................................. $ 845.5(1) $ 800.0
AT&T transaction...................................................... 260.0 260.0
UNIsite merger........................................................ 165.0 160.2 $ 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.
-21-
<PAGE>
<TABLE>
<CAPTION>
AMERICAN TOWER CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended December 31, 1998
(in thousands, except per share data)
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 expenses..................... 12,772 12,772
Corporate general and administrative
expenses................................... 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) income before income taxes and
extraordinary losses....................... (42,441) (197,212) (239,653)
(Benefit) provision for income taxes(b)....... (4,491) (65,600) (70,091)
--------- ---------- ---------
(Loss) income before extraordinary losses..... $ (37,950) $ (131,612) $(169,562)
========= ========== =========
Basic and diluted (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 Statement of Operations.
-22-
<PAGE>
NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
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. See "American Tower--Recent
Developments--Pending Transactions" under "Summary" on page 4 for a description
of the pending pro forma transactions and Historical Financial Statements for a
description of the other pro forma transactions.
(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 $99.0 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.
-23-
<PAGE>
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 expenses. 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
======= ======== ======== ======== ======== ======== ========
<CAPTION>
Total Adjustments
UNIsite AirTouch AT&T Notes Pro Forma for Pro 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 expenses... 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 allocation of purchase price.
(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.
-24-
<PAGE>
(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.
-25-
<PAGE>
<TABLE>
<CAPTION>
AMERICAN TOWER CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Six Months Ended June 30, 1999
(in thousands, except per share data)
Adjustments
for Pro Forma Pro Forma,
Historical Transactions(a) as adjusted
---------- --------------- -----------
<S> <C> <C> <C>
Operating revenues............................ $101,561 $44,921 $146,482
Operating expenses excluding depreciation
and amortization and corporate, general
and administrative expenses................ 59,020 29,027 88,047
Depreciation and amortization................. 57,808 53,824 111,632
Corporate general and administrative
expenses................................... 4,140 1,750 5,890
--------- --------- ---------
Loss from operations.......................... (19,407) (39,680) (59,087)
--------- --------- ---------
Other (income) expense:
Interest expense........................... 11,539 48,020 59,559
Interest income and other, net............. (10,737) (10,737)
Minority interest in net losses of
subsidiaries............................. (79) (79)
--------- --------- ---------
Total other (income) expense.................. 723 48,020 48,743
--------- --------- ---------
(Loss) income before income taxes and
extraordinary loss......................... (20,130) (87,700) (107,830)
(Benefit) provision for income taxes(b)....... (747) (30,788) (31,535)
--------- --------- ---------
(Loss) income before extraordinary loss....... $ (19,383) $ (56,912) $ (76,295)
========= ========= =========
Basic and diluted (loss) per common share
before extraordinary loss.................. $ (0.14) N/A $ (0.49)
========= ========= =========
Basic and diluted common shares
outstanding(c)............................. 143,503 12,016 155,519
========= ========= =========
</TABLE>
See Notes to Unaudited Pro Forma Condensed
Consolidated Statement of Operations.
-26-
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
The unaudited pro forma condensed consolidated statement of operations for
the six months ended June 30, 1999 gives effect to the pro forma transactions
not consummated as of January 1, 1999. See "American Tower--Recent
Developments--Pending Transactions" under "Summary" on page 4 for a description
of the pending pro forma transactions and the Historical Financial Statements
for a description of the other pro forma transactions.
(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 $51.7 million for
the six months ended June 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 $5.4 million for the six months ended
June 30, 1999 and record depreciation and amortization expense of $53.8 million
for the six months ended June 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 $1.8 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 six months ended June 30, 1999 (in thousands).
<TABLE>
<CAPTION>
Total
Adjustments
OmniAmerica TeleCom February UNIsite AirTouch AT&T Notes Pro Forma for Pro 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 $ 3,408 $25,783(d) $ 1,455(e) $ 44,921
Operating expenses excluding
depreciation and
amortization, and
corporate general and
administrative expenses. 12,257 549 2,673 9,700(f) 3,848(f) 29,027
Depreciation and
amortization............ 2,372 1,201 1,871 $48,380 53,824
Corporate general and
administrative expenses. 2,882 10,173 5,148 (16,453) 1,750
-------- -------- ------- ------- ------- --------- --------
(Loss) income from
operations.............. (5,265) (9,894) (6,284) 16,083 (2,393) (31,927) (39,680)
Other (income) expense:
Interest expense, net... 746 521 $(1,499) 3,558 $ (3,671) 48,365 48,020
Interest income......... (14) (361) 375
Other, net.............. 816 (106) 381 (1,091)
-------- -------- ------- ------- ------- ------- ------- --------- --------
(Loss) income before
income taxes............ $ (6,813)$(10,309) $ 1,499 $(9,862) $16,083 $(2,393) $ 3,671 $ (79,576) $(87,700)
======== ======== ======= ======= ======= ======= ======= ========= ========
</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 allocation of purchase price.
-27-
<PAGE>
(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 $1.7 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 $4.4 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.
-28-
<PAGE>
DESCRIPTION OF THE NOTES
The notes have been issued under two separate indentures, each dated as
of October 4, 1999, between us and The Bank of New York, as trustee. The
following statements are subject to the detailed provisions of the indentures
and are qualified in their entirety by reference to the indentures, copies of
which have been filed as exhibits to the registration statement of which this
prospectus is a part. Wherever particular provisions of the indentures are
referred to, those provisions are incorporated by reference as a part of the
statements made, and the statements are qualified in their entirety by that
reference. Certain terms that are defined in the indentures are used in this
section without definitions.
General
The notes represent our unsecured general obligations convertible into
Class A common stock as described under "Conversion." The principal amount of
the 6.25% notes is $300,000,000. The principal amount of the 2.25% notes is
$425,500,000, which is equivalent to total proceeds at the issue price of
$300,062,600. Notes may be in fully registered form only in denominations of
$1,000 or any multiple thereof. The notes mature on October 15, 2009, unless we
redeem them or you convert them earlier.
The indentures do not contain any restrictions on the payment of
dividends, the incurrence of debt or the repurchase of our equity securities or
any financial covenants.
The two series of notes bear interest at the respective annual rates
set forth on the cover page of this prospectus from their issue date. Interest
is payable semiannually on April 15 and October 15 of each year, commencing on
April 15, 2000, to holders of record at the close of business on the preceding
March 31 and September 30. We may pay interest by mailing a check to holders.
We will make payment of principal and any premium, and you may present
the notes for conversion, registration of transfer and exchange, without service
charge, at the office of our paying agent, initially the trustee, in New York,
and at the corporate trust office of the trustee in New York.
The 2.25% notes were issued at 70.52% or their principal amount at
maturity. The federal income tax consequences of this discount are discussed
under "Certain Federal Income Tax Consequences--Tax Consequences for U.S.
Holders--Original Issue Discount on the 2.25% Notes" on page 44. Original issue
discount means the difference between the issue price of the 2.25% notes and
their principal amount at maturity. The calculation of the accrual of original
issue discount in the period during which a 2.25% note remains outstanding will
be on a semi-annual bond equivalent basis, using a 360-day year composed of
twelve 30-day months. The accrual will begin on October 4, 1999, the first date
of issuance of 2.25% notes.
Conversion
You will be entitled to convert your notes, in denominations of $1,000
principal amount at maturity or multiples thereof, at any time, into shares of
Class A common stock. You determine the number of shares of Class A common stock
issuable upon conversion by dividing the issue price of the notes surrendered
for conversion by the conversion price. The conversion price is shown on the
cover of this prospectus.
Upon conversion, you will not be entitled to any payment or adjustment
on account of accrued and unpaid interest on notes or accrued original issue
discount on 2.25% notes. Our delivery to you of the fixed number of shares of
Class A common stock into which the note is convertible, together with any cash
payment in lieu of any fractional share of Class A common stock, will be deemed
to satisfy all of our obligations to pay the principal amount and accrued
interest on notes and accrued original issue discount on 2.25% notes. Thus, the
accrued interest and accrued original issue discount are deemed to be paid in
full rather than canceled, extinguished or forfeited.
-29-
<PAGE>
With respect to notes that have been acquired, all shares of Class A
common stock distributed upon conversion will be freely transferable without
restriction under the Securities Act, other than by our affiliates. Those shares
will be eligible for receipt on global form through the facilities of the
Depositary.
If you surrender notes for conversion during the period after any
interest record date and prior to the corresponding interest payment date, you
must pay us the interest payable on those notes, unless they have been called
for redemption on a redemption date on or prior to the interest payment date.
You may not convert notes called for redemption after the close of business on
the business day preceding the date fixed for redemption, unless we default in
payment of the redemption price. We will not issue fractional shares of Class A
common stock on a conversion. Rather, we will pay the converting holder an
amount of cash equal to the fair market value of the fractional interest, unless
payment in cash is prohibited by our indebtedness. In that case we will issue
fractional shares.
The initial conversion price per share of Class A common stock is
subject to adjustment in certain events, including upon the occurrence of an
adjustment event. We use the term "adjustment event" to mean the following:
o the issuance of Class A common stock as a dividend or distribution
on Class A common stock,
o certain subdivisions and combinations of the Class A common stock,
o the issuance to all holders of Class A common stock of certain
rights or warrants to purchase Class A common stock, and
o the distribution to all holders of Class A common stock of shares of
our capital stock, evidences of our indebtedness or other assets,
including securities. Excluded from the foregoing are shares of
Class A common stock and rights, warrants, dividends and
distributions referred to above and dividends and distributions in
connection with our liquidation or paid in cash.
To the extent permitted by law, we may reduce the conversion price by any amount
for any period of at least 20 days if our board of directors determines that
such reduction would be in our best interests. We may also reduce the conversion
price as our board of directors deems advisable to avoid or diminish any income
tax to holders of Class A common stock resulting from any dividend or
distribution of stock, or rights to acquire stock, or from any event treated as
such for income tax purposes. See "Certain Federal Income Tax Consequences--Tax
Consequences for U.S. Holders--Potential Distributions Resulting from Adjustment
of Conversion Price" on page 46.
If a reorganization event occurs, pursuant to which any holders of
Class A common stock shall be entitled to receive other securities, cash or
other property, then we shall make appropriate provision so that you will have
the right to convert notes only into the kind and amount of the securities, cash
or other property you would have received had you converted your notes
immediately prior to the reorganization event. We use the term "reorganization
event" to mean the following:
o any recapitalization or reclassification of shares of Class A common
stock, other than changes involving par value, or as a result of a
subdivision or combination of the Class A common stock,
o any consolidation or merger involving our company, other than one
that does not result in a reclassification, conversion, exchange or
cancellation of Class A common stock,
o any sale or transfer of all or substantially all of our assets, or
o any compulsory share exchange pursuant to which any holders of Class
A common stock shall be entitled to receive other securities, cash
or other property.
-30-
<PAGE>
Any company that succeeds to us or acquires our assets will be required to
provide in its governing documents the foregoing right and also to provide for
other rights essentially equivalent to those described under this "Conversion"
heading.
Payment of Excess Cash Dividends
If we declare and pay excess cash dividends on the Class A common stock,
then we will pay to you an amount equal to the excess, based on the number of
shares of Class A common stock that you would have received had you converted
all of your notes, unless you convert and receive those dividends as a holder of
Class A common stock. We use the term "excess cash dividends" to mean cash
dividends in an annualized amount per share that exceeds the greater of (a) the
annualized amount per share of the immediately preceding cash dividend on the
Class A common stock, appropriately adjusted for anti-dilution type events, and
(b) 15% of the last sale price of the Class A common stock as of the trading day
immediately preceding the date of declaration of that dividend. Our credit
facilities currently restrict us from paying cash dividends or making excess
cash dividend payments on the notes.
Change in Control
If we experience a change in control, then you will have the right to
require us to repurchase for cash all or a portion of your notes. The repurchase
price of the 6.25% notes is equal to the principal amount of the notes, plus
accrued and unpaid interest, through the day prior to repurchase. The cash
repurchase price of the 2.25% notes is their accreted value, plus accrued and
unpaid interest, through the day prior to repurchase. The repurchase day is 45
days after notice to you. By accreted value we mean the issue price of the 2.25%
notes plus accrued original issue discount. This right to require us to
repurchase the notes will exist upon the occurrence of any change in control
whether or not the relevant transaction has been approved by our management. It
may not be waived by our management. Your exercise of this right will be
irrevocable. We currently must obtain bank approval under our credit facilities,
which approval may not be forthcoming, in order to make any change in control
payments before December 2006.
Your right to require us to repurchase the notes upon a change in control
will not apply if either:
o the last sale price of the Class A common stock for five of the ten
trading days before the date of the change in control equals or
exceeds 105% of the applicable conversion price; or
o the consideration paid for the Class A common stock in a transaction
constituting the change in control consists of cash, securities that
are traded on a national securities exchange or quoted on the National
Association of Securities Dealers, Inc. Automated Quotation System or
the Nasdaq National Market, or a combination of cash and such
securities, and the aggregate fair market value of such consideration
is a least 105% of the conversion price in effect immediately before
the closing of that transaction.
The existence of the right to require us to repurchase the notes upon a
change in control may deter certain mergers, tender offers or other takeover
attempts and may thereby adversely affect the market price of the Class A common
stock.
By a "change in control" we mean:
o any person or group, other than a permitted owner, acquires direct or
indirect beneficial ownership of shares of our capital stock
sufficient to entitle such person to exercise more than 50% of the
total voting power of all classes of our capital stock entitled to
vote generally in elections of directors; an acquisition could occur
by means of an exchange offer, liquidation, tender offer,
consolidation, merger, combination, reclassification, recapitalization
or otherwise, or
-31-
<PAGE>
o we sell, lease, exchange or otherwise transfer, in one transaction or
a series of related transactions, all or substantially all of our
assets to any person or group, other than to a permitted owner.
However, a transaction of a type described above that results in the Class A
common stock no longer being listed on a stock exchange or traded on the Nasdaq
National Market would also be treated as a change in control even if a permitted
owner were involved.
We use a "permitted owner" to mean one or more of our principal
stockholders or any person employed by us in a management capacity as of the
original offering of the notes, or any group of which any of them is a member.
We use the terms "person" and "group" as those terms are used in Section
13(d)(3) or 14(d)(2) of the Exchange Act. Our "principal stockholders" are
Steven B. Dodge, Thomas H. Stoner, Hicks, Muse, Tate & Furst Incorporated, Cox
Telecom Towers, Inc. and Clear Channel Communications, Inc. and includes their
affiliates.
Optional Redemption
6.25% notes. We may not redeem 6.25% notes on or prior to October 22, 2002.
After October 22, 2002, at our option, we may redeem 6.25% notes, in whole or in
part, at the following redemption prices, expressed as a percentage of the
principal amount. We are also required to pay any accrued and unpaid interest
upon redemption.
Twelve Months (or shorter period) Commencing Redemption Price
-------------------------------------------- ----------------
October 22, 2002................................... 103.125%
October 15, 2003................................... 102.083
October 15, 2004................................... 101.042
October 15, 2005 and thereafter.................... 100.000
2.25% notes. We may not redeem 2.25% notes on or prior to October 22, 2003.
After October 22, 2003, at our option, we may redeem 2.25% notes, in whole or in
part, at the applicable redemption price. The table below shows redemption
prices of notes per $1,000 principal amount at maturity at October 22, 2003, at
October 15, 2004, at each following October 15 prior to maturity, and at
maturity on October 15, 2009. The prices reflect the accrued original issue
discount calculated through each date. The redemption price of a 2.25% note
redeemed between these dates would include an additional amount reflecting the
additional original issue discount accrued since the next preceding date in the
table to the actual redemption date.
<TABLE>
<CAPTION>
(2) (3)
(1) Original Issue Redemption Price
Redemption Date Note Issue Price Discount (1)+(2)
- --------------- ---------------- -------- -------
<S> <C> <C> <C>
October 22, 2003.................................. $705.20 $97.73 $802.93
October 15, 2004.................................. 705.20 125.28 830.48
October 15, 2005.................................. 705.20 155.14 860.34
October 15, 2006.................................. 705.20 186.90 892.10
October 15, 2007.................................. 705.20 220.68 925.88
October 15, 2008.................................. 705.20 256.60 961.80
October 15, 2009 (maturity)....................... 705.20 294.80 1,000.00
</TABLE>
General. We must give holders at least 20 and not more than 60 calendar
days' notice of the redemption date.
Repurchase of Notes at the Option of the Holder
6.25% notes. On October 22, 2006, we will be required to repurchase, at
your option, any outstanding 6.25% note if certain conditions are met. If you
desire us to repurchase your 6.25% notes, you must give, and not withdraw, a
written repurchase notice to the trustee at any time from the opening of
business on the date that is 20 business days prior to October 22, 2006 until
the close of business on October 22, 2006. The repurchase price of a
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6.25% note will be equal to its principal amount together with accrued and
unpaid interest through the repurchase date.
2.25% notes. On October 22, 2003, we will be required to repurchase, at
your option, any outstanding 2.25% note if certain conditions are met. If you
desire us to repurchase your 2.25% notes, you must give, and not withdraw, a
written repurchase notice to the trustee at any time from the opening of
business on the date that is 20 business days prior to October 22, 2003 until
the close of business on October 22, 2003. The repurchase price of a 2.25% note
will be equal to $802.93, which is its accreted value on October 22, 2003, in
other words, its issue price plus accrued original issue discount, together with
accrued and unpaid interest through the repurchase date.
General. We may, at our option, elect to pay the repurchase price in cash
or shares of Class A common stock, or any combination thereof.
We will be required to give notice on a date not less than 20 business days
prior to the relevant repurchase date to you stating, among other things:
o what portion of the notes we will repurchase for cash and what portion
for Class A common stock,
o if we elect to use Class A common stock, how we calculate its value,
and
o the procedures that you must follow to require us to purchase notes
from you.
If you elect to require us to purchase notes, the repurchase notice given
by you shall state:
o the notes to be delivered by you for purchase by us,
o the portion of the principal amount at maturity of notes to be
purchased; this portion must be $1,000 principal amount at maturity or
an integral multiple of $1,000,
o that the notes are to be purchased by us pursuant to the applicable
provisions of the notes, and
o in the event we elect to pay any portion of the repurchase price in
Class A common stock but the repurchase price is ultimately to be paid
entirely in cash because the conditions to payment of any portion of
the repurchase price in Class A common stock are not satisfied,
whether you elect: (1) to withdraw your repurchase notice as to some
or all of the notes, stating the principal amount at maturity and
certificate numbers of the notes as to which such withdrawal relates,
or (2) to receive cash in respect of all or the applicable portion of
the repurchase price.
If you fail to indicate in the repurchase notice and in any written notice
of withdrawal your choice with respect to your election, you shall be deemed to
have elected to receive cash in respect of the entire repurchase price.
You may withdraw any repurchase notice by a written notice of withdrawal
delivered to the applicable trustee prior to 10:00 a.m. on the repurchase date.
The notice of withdrawal must state the principal amount at maturity, and the
certificate numbers of the notes as to which the withdrawal notice relates and
the principal amount at maturity, if any, which remains subject to the
repurchase notice.
If we elect to pay any portion of the repurchase price in shares of Class A
common stock, we will determine the number of shares of Class A common stock to
be delivered by dividing that portion by the Market Price of a share of Class A
common stock. Our credit facilities require us to make the entire payment in
Class A common stock.
By "Market Price" we mean, in effect, the average of the Sale Prices of the
Class A common stock for the five Trading Day period ending on the third
business day prior to the applicable repurchase date, appropriately adjusted
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to take into account the occurrence of certain events that would result in an
adjustment of the conversion price with respect to the Class A common stock.
By "Sale Price" of the Class A common stock on any date we mean (a) the
closing per share sale price on that date as reported in composite transactions
for the principal United States securities exchange on which the Class A common
stock is traded, (b) if the Class A common stock is not listed on a United
States national or regional securities exchange, as reported by the National
Association of Securities Dealers Automated Quotation System or (c) if no
closing sale price is reported, the average of the bid and ask prices or, if
more than one in either case, the average of the average bid and the average ask
prices will govern.
Because the Market Price of the Class A common stock is determined prior to
the applicable repurchase date, you will bear the market risk with respect to
the value of the Class A common stock to be received from the date we determine
the Market Price to the repurchase date.
Our right to repurchase notes with Class A common stock is subject to our
satisfying various conditions, including:
o the registration of the Class A common stock under the Securities Act
and the Exchange Act, if required; and
o any necessary qualification or registration under applicable state
securities law or the availability of an exemption from that
qualification and registration.
When we determine the actual number of shares of Class A common stock in
accordance with the foregoing provisions, we will publish that information in a
daily newspaper of national circulation.
If the foregoing conditions are not satisfied with respect to a holder or
holders prior to the close of business on the repurchase date, we will pay you
the repurchase price of your tendered notes entirely in cash. We may not change
the form of consideration to be paid once we have given you the applicable
notice, except as described in the prior sentence.
We will comply with the provisions of Rule 13e-4, Rule 14e-1 and any other
tender offer rules under the Exchange Act that may then be applicable and will
file Schedule 13E-4 or any other schedule required thereunder in connection with
any offer by us to purchase notes at your option.
No notes may be purchased for cash at your option if an event of default
continues with respect to the notes described under "Events of Default and
Remedies" immediately below, other than a default in the payment of the
repurchase price with respect to the notes.
Payment of the repurchase price for a note for which a repurchase notice
has been delivered and not validly withdrawn is conditioned upon delivery of the
note, together with necessary endorsements to the applicable trustee at any time
after delivery of such repurchase notice. Payment of the repurchase price for
the note will be made promptly following the later of the repurchase date or the
delivery of the note. If the relevant trustee holds, in accordance with the
terms of its indenture, money or securities sufficient to pay the repurchase
price of the note on the business day following the repurchase date, then,
immediately after the repurchase date, the note will cease to be outstanding and
interest and, in the case of 2.25% notes, original issue discount will cease to
accrue, whether or not you deliver the note to the trustee. In that event, all
of your other rights shall terminate, other than the right to receive the
repurchase price upon delivery of your note.
Our ability to redeem notes and to repurchase notes upon a change in
control or at your option, as described in the three preceding sections, is
restricted under the terms of our credit facilities and is effectively
prohibited during the existence of a default under them. See Notes to
Consolidated Financial Statements of American Tower in the 1998 Annual Report.
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Events of Default and Remedies
An event of default is defined in each indenture as being any of the
following:
o our default in payment of the principal amount at maturity, issue
price plus accrued original issue discount (2.25% notes only),
repurchase price, optional redemption price or any change in control
repurchase price when due, upon maturity, acceleration, redemption or
otherwise, on any of the notes,
o our default for 30 days in payment of any installment of interest on
the notes,
o our default for 60 days after notice in the observance or performance
of any other covenants in the applicable indenture, and
o certain events involving our bankruptcy, insolvency or reorganization.
Each indenture provides that if any event of default exists, the applicable
trustee or the holders of not less than 25% in principal amount of the notes of
a relevant series then outstanding may declare the relevant amount of all notes
of that series to be due and payable immediately. The relevant amount for the
6.25% notes is their principal amount. The relevant amount for the 2.25% notes
is the sum of their issue price plus accrued original issue discount from their
date of issue to the date of acceleration. However, if we cure all defaults,
except the nonpayment of principal and interest with respect to any notes of
that series that become due by acceleration, and certain other conditions are
met, the holders of a majority in principal amount of notes of that series then
outstanding may rescind that acceleration. Holders may similarly waive past
defaults.
The holders of a majority in principal amount of the notes of the relevant
series then outstanding have the right to direct the time, method and place of
conducting any proceedings for any remedy available to the trustee, subject to
certain limitations specified in the relevant indenture.
Each indenture provides that the trustee shall give notice to the holders
of notes of any default, except in payment of principal or interest with respect
to the notes, if the trustee, in good faith, considers it in the interest of the
holders of the notes of that series to do so.
Modification of the Indentures
Each indenture contains provisions permitting us and the trustee, with the
consent of the holders of not less than a majority in principal amount of the
notes of the relevant series at the time outstanding, to modify the indenture
for that series and the rights of the holders of the notes of that series.
However, without the consent of the holder of each note so affected, we cannot
make any modification that will:
o extend the final maturity of any notes,
o reduce the rate or extend the time for payment of interest,
o reduce the principal amount or any premium,
o change the accrual rate or time of payment of original issue discount
on the 2.25% notes,
o change the provisions for redemption at the option of the holders in a
manner adverse to the holders,
o impair or affect the right of a holder to institute suit for the
payment of principal, interest or any premium,
o change the currency in which the notes are payable,
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o impair the right to convert the notes into Class A common stock, or
o reduce the percentage of notes of that series, the consent of the
holders of which is required for any modification.
Global Notes, Book-Entry Form
The notes will be represented by global notes, except as set forth below
under "--Certificated Notes." The global notes will be deposited with, or on
behalf of, DTC and registered in the name of Cede & Co., as DTC's nominee.
Beneficial interests in the global notes will be exchangeable for definitive
certificated notes only in accordance with the terms of the relevant indenture.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its participants deposit with DTC. DTC also facilitates
the settlement among participants of securities transactions, such as transfers
and pledges, in deposited securities through electronic computerized book-entry
changes in participants' accounts, thereby eliminating the need for physical
movement of securities certificates. Direct participants include securities
brokers and dealers, banks, trust companies, clearing corporations, and certain
other organizations. DTC is owned by a number of its direct participants and by
the NYSE, the American Stock Exchange, Inc. and the NASD. Access to DTC's system
is also available to others such as securities brokers and dealers, banks and
trust companies that clear through or maintain a custodial relationship with a
direct participant, either directly or indirectly. The rules applicable to DTC
and its participants are on file with the SEC.
Purchases of interests in global notes under DTC's system must be made by
or through direct participants, which will receive a credit for the interest in
the global notes on DTC's records. The ownership interest of each actual
purchaser of each interest in the global notes (we call it the "beneficial
owner") is in turn to be recorded on the direct and indirect participants'
records. Beneficial owners will not receive written confirmation from DTC of
their purchase, but beneficial owners are expected to receive written
confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the direct or indirect participant through
which the beneficial owner entered into the transaction. Transfers of ownership
interests in the global notes are to be accomplished by entries made on the
books of participants acting on behalf of beneficial owners. Beneficial owners
will not receive certificates representing their ownership interests in global
notes, except in the event that use of the book-entry system for one or more
global notes is discontinued.
To facilitate subsequent transfers, all global notes deposited by
participants with DTC are registered in the name of DTC's partnership nominee,
Cede & Co. The deposit of global notes with DTC and their registration in the
name of Cede & Co. effects no change in beneficial ownership. DTC has no
knowledge of the actual beneficial owners of the global notes. DTC's records
reflect only the identity of the direct participants to whose accounts such
global notes are credited, which may or may not be the beneficial owners. The
participants will remain responsible for keeping account of their holdings on
behalf of their customers.
Conveyance of notices and other communications by DTC to direct
participants, by direct participants to indirect participants and by direct
participants and indirect participants to beneficial owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect.
Redemption notices will be sent to Cede & Co. If less than all of the
global notes are being redeemed, and unless otherwise notified by either us or
the relevant trustee, DTC's practice is to determine by lot the amount of the
interest of each direct participant in such issue to be redeemed.
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Neither DTC nor Cede & Co. will consent or vote with respect to global
notes. Under its usual procedures, DTC will mail an omnibus proxy to us as soon
as possible after the record date. The omnibus proxy assigns Cede & Co.'s
consenting or voting rights to those direct participants to whose accounts the
global notes are credited on the record date. This is identified in a listing
attached to the omnibus proxy.
Payment of interest on and the redemption price of the global notes will be
made to DTC. DTC's practice is to credit direct participants' accounts on the
payment date in accordance with their respective holdings shown on DTC's records
unless DTC has reason to believe that it will not receive payment on the payment
date. Payments by participants to beneficial owners will be governed by standing
instructions and customary practices as is the case with securities held for the
accounts of customers in bearer form or registered in "street name" and will be
the responsibility of such participant and not of DTC, any agents or us. The
foregoing is subject to any statutory or regulatory requirements as may be in
effect from time to time. Payment of interest on and the redemption price of the
global notes to DTC is our responsibility. Disbursement of payments to direct
participants will be the responsibility of DTC. Disbursement of payments to the
beneficial owners will be the responsibility of direct and indirect
participants.
A beneficial owner must give notice to elect to have its interest in the
global notes purchased or tendered, through its participant, to the paying
agent, and must effect delivery of this interest by causing the direct
participant to transfer the participant's interest in the global notes, on DTC's
records, to the paying agent. The requirement for physical delivery of global
notes in connection with a demand for purchase of a mandatory purchase will be
deemed satisfied when the ownership rights in the global notes are transferred
by direct participants on DTC's records.
DTC may discontinue providing its services as securities depositary with
respect to the global notes at any time by giving reasonable notice to us or to
our agents. Under these circumstances, or if DTC is at any time unable to
continue as depositary and a successor depositary is not appointed by us within
90 days, we will cause notes to be issued in definitive form in exchange for the
global notes.
DTC's management is aware that some computer applications, systems and the
like for processing data, which we refer to collectively as systems, that are
dependent upon calendar dates may encounter Year 2000 problems. DTC has informed
its participants and other members of the financial community that it has
developed and is implementing a program so that its systems, relating to the
timely payment of distributions to securityholders, book-entry deliveries and
settlement of trades within DTC, continue to function appropriately. This
program includes a technical assessment and a remediation plan, each of which is
complete. Additionally, DTC's plan includes a testing phase, which is expected
to be completed within appropriate time frames.
However, DTC's ability to perform properly its services is also dependent
upon other parties, including issuers and their agents, as well as third-party
vendors from whom DTC licenses software and hardware, and third-party vendors on
whom DTC relies for information or the provision of services. This includes
telecommunication and electrical utility service providers. DTC has informed the
financial community that it is in contact with and will continue to contact
third-party vendors from whom DTC acquires services to:
o impress upon them the importance of such services being Year 2000
compliant, and
o determine the extent of their efforts for Year 2000 remediation and,
as appropriate, testing of their services.
In addition, DTC is in the process of developing contingency plans as it deems
appropriate.
According to DTC, the foregoing information with respect to DTC has been
provided to the financial community for informational purposes only and is not
intended to serve as a representation, warranty or contract modification of any
kind. The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that we believe to be reliable, but we take no
responsibility for the accuracy.
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Neither we, either trustee, any paying agent nor the registrar for the
notes will have any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership interest in a
global security or for maintaining, supervising or reviewing any records
relating to beneficial ownership interests.
Certificated Notes
The notes represented by the global securities are exchangeable for
certificated notes in definitive form of the same series and of like tenor if:
o DTC notifies us that it is unwilling or unable to continue as
depositary for the global securities and a successor is not appointed
within 90 days or if at any time DTC ceases to be a clearing agency
registered under the Exchange Act,
o an event of default has occurred and is continuing, or
o we, in our discretion and at any time, determine not to have all of
the notes represented by the global securities.
Any notes that are exchangeable pursuant to the preceding sentence are
exchangeable for certificated notes issuable in authorized denominations and
registered in those names as DTC shall direct. Subject to the foregoing, the
global securities are not exchangeable, except for global securities of the same
aggregate denominations to be registered in the name of DTC or its nominee.
Concerning the Trustee
The Bank of New York is a lender under our credit facilities and may
provide other commercial banking services to us in the future.
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DESCRIPTION OF CAPITAL STOCK
The description below summarizes the more important terms of our capital
stock. Because this section is a summary, it does not describe every aspect of
the capital stock. This summary is subject to and qualified in its entirety by
reference to the provisions of our restated certificate of incorporation, as
amended. We refer to it as the "restated certificate." A copy of the restated
certificate has been filed as an exhibit to the registration statement of which
this prospectus is a part. Wherever particular defined terms or provisions of
the restated certificate are referred to, those terms and provisions are
incorporated by reference as a part of the statements made, and the statements
are qualified in their entirety by that reference.
General
Our authorized capital stock consists of 20,000,000 shares of preferred
stock, $.01 par value per share, 500,000,000 shares of Class A common stock,
$.01 par value per share, 50,000,000 shares of Class B common stock, $.01 par
value per share, and 10,000,000 shares of Class C common stock, $.01 par value
per share. The number of outstanding shares of common stock as of October 1,
1999 is shown on page 18.
Preferred Stock
General. Our board of directors will determine the designations,
preferences, limitations and relative rights of the 20,000,000 authorized and
unissued shares of preferred stock, including:
o the distinctive designation of each series and the number of shares
that will constitute the series,
o the voting rights, if any, of shares of the series,
o the dividend rate on the shares of the series, any restriction,
limitation or condition upon the payment of the dividends, whether
dividends will be cumulative, and the dates on which dividends are
payable,
o the prices at which, and the terms and conditions on which, the shares
of the series may be redeemed, if the shares are redeemable,
o the purchase or sinking fund provisions, if any, for the purchase or
redemption of shares of the series,
o any preferential amount payable upon shares of the series upon our
liquidation or the distribution of our assets,
o the price or rates of conversion at which, and the terms and
conditions on which the shares of the series may be converted into
other securities, if the shares are convertible, and
o whether the series can be exchanged, at our option, into debt
securities, and the terms and conditions of any permitted exchange.
The issuance of preferred stock, or the issuance of rights to purchase
preferred stock, could discourage an unsolicited acquisition proposal.
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Common Stock
Dividends. Holders of record of shares of common stock on the record date
fixed by our board of directors are entitled to receive dividends as declared by
our board of directors out of funds legally available for the purpose. No
dividends may be declared or paid in cash or property on any share of any class
of common stock, however, unless simultaneously the same dividend is declared or
paid on each share of the other classes of common stock. Dividends in the form
of shares of stock of any company, including our company or any of our
subsidiaries, are excepted from that requirement. In that case, the shares may
differ as to voting rights to the extent that voting rights now differ among the
different classes of common stock. In the case of any dividend payable in shares
of common stock, holders of each class of common stock are entitled to receive
the same percentage dividend, payable in shares of that class, as the holders of
each other class. Dividends and other distributions on common stock are also
subject to the rights of holders of any series of preferred stock or debt that
may be outstanding from time to time. See "--Dividend Restrictions" on the
following page.
Voting Rights. Holders of shares of Class A common stock and Class B common
stock have the exclusive voting rights and will vote as a single class on all
matters submitted to a vote of the stockholders. The foregoing is subject to the
requirements of Delaware corporate law, special provisions governing election of
directors and the rights of holders of any series of preferred stock that may be
outstanding from time to time. Each share of Class A common stock is entitled to
one vote and each share of Class B common stock is entitled to ten votes. The
holders of the Class A common stock, voting as a separate class, have the right
to elect two independent directors. The Class C common stock is nonvoting except
as otherwise required by Delaware corporate law.
Delaware corporate law requires the affirmative vote of the holders of a
majority of the outstanding shares of any class or series of common stock to
approve, among other things, a change in the designations, preferences and
limitations of the shares of that class or series. The restated certificate,
however, requires the affirmative vote of the holders of not less than 66 2/3%
of the Class A common stock and Class B common stock, voting as a single class,
to amend most of the provisions of the restated certificate, including those
relating to the provisions of the various classes of common stock,
indemnification of directors, exoneration of directors for certain acts and the
super-majority provision.
The restated certificate:
o limits the aggregate voting power of Steven B. Dodge and his
controlled entities to 49.99% of the aggregate voting power of all
shares of capital stock entitled to vote generally for the election of
directors, less the voting power represented by the shares of Class B
common stock acquired by Thomas H. Stoner, a director, and purchasers
affiliated with him in the January 1998 private offering and owned by
them or any of their controlled entities or family members at the
applicable time,
o prohibits future issuances of Class B common stock, except upon
exercise of then outstanding options and pursuant to stock dividends
or stock splits,
o limits transfers of Class B common stock to permitted transferees,
o provides for automatic conversion of the Class B common stock to Class
A common stock if the aggregate voting power of Mr. Dodge, Mr. Stoner
and their respective controlled entities fall below either (a) 50% of
Mr. Dodge's initial aggregate voting power on June 8, 1998; which was
approximately 42.6%; or (b) 20% of the aggregate voting power of all
shares of common stock at the time outstanding, and
o requires the holders of a majority of Class A common stock to approve
amendments adversely affecting the Class A common stock.
On October 1, 1999, our directors and executive officers, together with
their affiliates, owned beneficially approximately 45% of the combined voting
power of our common stock. On that date, Mr. Dodge, together with his
affiliates, owned beneficially approximately 29% of the combined voting power.
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Conversion Provisions. Shares of Class B common stock and Class C common
stock are convertible, at any time at the option of the holder, on a share for
share basis into shares of Class A common stock. The present owner of Class C
common stock can convert that stock only upon the occurrence of a conversion
event or with the consent of our board of directors. Shares of Class B common
stock automatically convert into shares of Class A common stock upon any sale,
transfer, assignment or other disposition other than (a) to permitted
transferees, or (b) pursuant to pledges but not to the pledgee upon foreclosure.
Permitted transferees includes certain family members and other holders of Class
B common stock.
Liquidation Rights. Upon our liquidation, dissolution or winding up the
holders of each class of common stock are entitled to share ratably in all
assets available for distribution after payment in full of creditors and payment
in full to holders of preferred stock then outstanding of any amount required to
be paid to them.
Other Provisions. The holders of common stock are not entitled to
preemptive or subscription rights. The shares of common stock presently
outstanding are validly issued, fully paid and nonassessable.
In any merger, consolidation or business combination, the holders of each
class of common stock must receive the identical consideration to that received
by holders of each other class of common stock, except if shares of common stock
or common stock of any other company are distributed, the shares may differ as
to voting rights to the same extent that voting rights then differ among the
different classes of common stock.
No class of common stock may be subdivided, consolidated, reclassified or
otherwise changed unless, concurrently, the other classes of common stock are
subdivided, consolidated, reclassified or otherwise changed in the same
proportion and in the same manner.
Dividend Restrictions
Our borrower subsidiaries are prohibited under the terms of their credit
facilities from paying cash dividends or making other distributions on, or
making redemptions, purchases or other acquisitions of, their capital stock or
other equity interests, including preferred stock, except that, beginning on
April 15, 2002, if no default exists or would be created thereby under the
credit facilities, our borrower subsidiaries may pay cash dividends or make
other distributions to the extent that restricted payments, as defined in the
credit facilities, do not exceed (a) 50% of excess cash flow, as defined in the
credit facilities, for the preceding calendar year or (b) 50% of the net
proceeds of any debt or equity offering after June 16, 1998.
Delaware Business Combination Provisions
Under Delaware corporate law, certain "business combinations," including
the issuance of equity securities, between a Delaware corporation and any
"interested stockholder" must be approved by the holders of at least 66 2/3% of
the voting stock not owned by the interested stockholder if it occurs within
three years of the date the person became an interested stockholder. The voting
requirement does not apply, however, if, before the acquisition, the
corporation's board of directors approved either the business combination or the
transaction which resulted in the person becoming an interested stockholder.
"Interested stockholder" means any person who owns, directly or indirectly, 15%
or more of the voting power of the corporation's shares of capital stock. The
provision does not apply to Mr. Dodge because our board of directors approved
the transaction pursuant to which he became an interested stockholder.
Listing of Class A Common Stock
Our Class A common stock is traded on the NYSE under the symbol "AMT."
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Transfer Agent and Registrar
The transfer agent and registrar for the common stock is Harris Trust and
Savings Bank, 311 West Monroe Street, Chicago, Illinois 60606 (telephone number
(312) 461-4600).
SELLING SECURITYHOLDERS
The notes were originally issued by us and sold by the initial
purchasers in private transactions exempt from the registration requirements of
the Securities Act to "qualified institutional buyers" (as defined in Rule 144A
under the Securities Act). The selling securityholders, which term includes
their transferees, pledgees, donees or their successors, may from time to time
offer and sell pursuant to this prospectus any or all of the notes and common
stock issuable upon conversion of the notes.
Prior to any use of this prospectus in connection with a resale of the
notes and/or the Class A common stock issuable upon conversion of the notes,
this prospectus will be supplemented to set forth the name and number of shares
beneficially owned by the selling securityholder intending to sell notes and/or
Class A common stock and the principal amount of notes and/or number of shares
of Class A common stock to be offered. The prospectus supplement will also
disclose whether any selling securityholder selling in connection with the
prospectus supplement has held any position or office with, been employed by or
otherwise has had a material relationship with us or any of our affiliates
during the three years prior to the date of the prospectus supplement.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following summary of certain federal income tax consequences is based
upon the Internal Revenue Code of 1986, as amended (the "Code"), Treasury
regulations, and rulings and decisions now in effect, all of which are subject
to change or differing interpretations. We have not sought a ruling from the
Internal Revenue Service with respect to any matter described in this summary.
We can provide no assurance that the IRS or a court will agree with the
statements made in this summary. This summary applies to you only if you hold
the notes and Class A common stock as a capital asset. A capital asset is
generally an asset held for investment rather than as inventory or as property
used in a trade or business. The summary also does not discuss the particular
tax consequences that might be relevant to you if you are subject to special
rules under the federal income tax laws.
Special rules apply, for example, if you are:
o a bank, life insurance company, regulated investment company, or other
financial institution,
o a broker or dealer in securities or foreign currency,
o a person that has a functional currency other than the U.S. dollar,
o a person who acquires the notes or Class A common stock in connection
with your employment or other performance of services,
o a person subject to alternative minimum tax,
o a person who owns the notes or Class A common stock as part of a
straddle, hedging transaction, conversion transaction, or constructive
sale transaction,
o a tax-exempt entity, or
o an expatriate.
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In addition, the following summary does not address all possible tax
consequences. In particular, it does not discuss any estate, gift, state, local,
or foreign tax consequences. For all these reasons, we urge you to consult with
your tax advisor about the federal income tax and other tax consequences of the
acquisition, ownership and disposition of the notes and Class A common stock.
As explained below, the federal income tax consequences of acquiring,
owning and disposing of the notes and Class A common stock depend on whether or
not you are a "U.S. holder." For purposes of this summary, you are a U.S. holder
if you are a beneficial owner of the notes or Class A common stock and for
federal income tax purposes are:
o a citizen or resident of the United States, including an alien
individual who is a lawful permanent resident of the United States or
meets the substantial presence residency test under the federal income
tax laws,
o a corporation, partnership or other entity treated as a corporation or
partnership for federal income tax purposes, that is created or
organized in or under the laws of the United States, any of the fifty
states or the District of Columbia, unless otherwise provided by
Treasury regulations,
o an estate the income of which is subject to federal income taxation
regardless of its source, or
o a trust if a court within the United States is able to exercise
primary supervision over the administration of the trust and one or
more United States persons have the authority to control all
substantial decisions of the trust, or electing trusts in existence on
August 20, 1996 to the extent provided in Treasury regulations,
and if your status as a U.S. holder is not overridden under the provisions of an
applicable tax treaty. Conversely, you are a "non-U.S. holder" if you are a
beneficial owner of the notes or Class A common stock and are not a U.S. holder.
In General
The notes will be treated as indebtedness for federal income tax purposes.
This summary discussion assumes that the IRS will respect this classification.
Payments you might receive on the notes that are for excess cash
dividends paid on Class A common stock should be treated as potential contingent
interest payments and not as distributions on stock potentially taxable as
ordinary dividend income. Further, this summary discussion reflects our
expectation that only a remote possibility exists that (a) you will receive
payments for excess cash dividends on Class A common stock or (b) you will
receive additional interest because of a registration default.
Tax Consequences for U.S. Holders
Interest and Excess Cash Dividend Payments on the Notes
The 6.25% notes and the 2.25% notes are required to pay interest at a
stated fixed rate. You must generally include this stated interest in your gross
income as ordinary interest income:
o when you receive it, if you use the cash method of accounting for
federal income tax purposes, or
o when it accrues, if you use the accrual method of accounting for
federal income tax purposes.
Purchase price for a note that is allocable to prior accrued stated interest may
be treated as offsetting a portion of the interest income from the next
scheduled stated interest payment on the note.
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If you receive a payment equivalent to an excess cash dividend paid on
our Class A common stock or a payment of additional interest for a registration
default, and if the chances of another payment like that occurring in the future
remain remote, then you should report the payment as ordinary interest income in
the manner discussed above, and the tax consequences of the notes should
otherwise remain unchanged. In contrast, if one or more of these types of
payments cease to remain remote in the future, then the notes would be treated
as having been retired and reissued with original issue discount, and the tax
consequences of holding the notes would then be governed by special original
issue discount rules for contingent payment debt instruments. We urge you to
consult your tax advisor on the consequences to you if these events, which we
believe are remote, should occur.
Original Issue Discount on the 2.25% notes
In addition to the stated interest which you must include in income, the
2.25% notes will be treated as having original issue discount ("OID"), which
will generally be taxable to you as interest income. The amount of OID on a
2.25% note is the excess of its stated redemption price at maturity over its
issue price. A 2.25% note's stated redemption price at maturity is the sum of
all payments expected to be received under the terms of the 2.25% note from the
time of issue until maturity, except for the stated interest which is
unconditionally payable semiannually. Its issue price is 70.52% of the principal
amount at maturity.
You will be required under section 1272 of the Code to include in gross
income, irrespective of your method of accounting, a portion of the OID for each
year during which you hold a 2.25% note, even though the cash to which the
income is attributable may not be received until maturity or redemption of the
2.25% note. The timing of the accrual of OID is based on the 2.25% note's yield
to maturity, which is its economic, not its stated, interest rate. The economic
interest rate is equal to the present value discount rate at which all expected
payments on the 2.25% note would have an aggregate present value equal to its
issue price. The yield to maturity of the 2.25% notes is 6.25%, calculated on a
semiannual basis from October 4, 1999. The amount of any OID included in income
for a taxable year would be calculated by accruing and compounding interest at
the economic interest rate at semiannual intervals corresponding to the payments
of stated interest on the 2.25% notes. This is known as the "constant yield
method" of accruing interest. The excess of the determined constant yield over
the stated interest is the amount of OID included in income for that semiannual
period. The semiannual amounts of OID are then allocated evenly to each day in
the semiannual period, and the sum of the OID allocable to the days in your tax
year constitutes the OID includible in your gross income for the year. You
should consult your tax advisor about the possibility of using different accrual
periods and other assumptions for purposes of computing OID accruals into your
income.
The amount of OID you include in income without actual receipt of cash
increases your basis in your 2.25% notes for federal income tax purposes.
Conversely, your basis is reduced by the actual receipt of OID payments and
principal payments. Similarly, the issue price of the 2.25% notes is adjusted
upward by OID accrued but not received and is decreased by the receipt of
payments of OID and principal. This "adjusted issue price" of a 2.25% note is
especially relevant if you purchase a 2.25% note after its original issue.
Acquisition Premium on the 2.25% notes
If you purchase a 2.25% note at a price in excess of its then adjusted
issue price but below its stated redemption price at maturity, then you will
have paid an acquisition premium equal to this excess. If this happens, then
each of your subsequent accruals of OID into gross income is to be reduced by a
percentage equal to the amount of acquisition premium divided by the remaining
amount of OID to be accrued at the time you purchased the 2.25% note. If instead
you purchase a 2.25% note at a price in excess of its stated redemption price at
maturity, then you need not include any OID accruals into income and the
elective amortization of bond premium described below would apply.
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Amortizable Bond Premium on the Notes
If you purchase a 6.25% note for an amount which, when reduced by the value
of the conversion feature, is greater than its principal amount, or if you
purchase a 2.25% note for an amount which, when reduced by the value of the
conversion feature, is greater than its stated redemption price at maturity,
then you will be treated as having purchased that note with "bond premium" equal
to the excess. You generally may elect to amortize this bond premium over the
remaining term of the note on a constant yield method. The amount amortized in
any year will be treated as a reduction of your interest income from the note
for that year. If you do not make the election, your bond premium on a note will
decrease the gain or increase the loss that you otherwise recognize on the
note's disposition. Any election to amortize bond premium applies to all debt
obligations, other than debt obligations the interest on which is excludable
from gross income, that you hold at the beginning of the first taxable year to
which the election applies and that you thereafter acquire. You may not revoke
an election to amortize bond premium without the consent of the IRS. We urge you
to consult with your tax advisor regarding this election.
Market Discount on the Notes
If you purchase a 6.25% note for an amount less than its principal amount,
or if you purchase a 2.25% note for less than its then adjusted issue price,
then you will be treated as having purchased that note at a "market discount"
equal to the difference, unless the amount of the market discount is less than
the de minimis amount specified under the Code. Under the market discount rules,
you will be required to treat any gain on the sale, exchange, redemption,
retirement, or other taxable disposition of a note, or any appreciation in a
note in the case of a nontaxable disposition such as a gift, as ordinary income
to the extent of the market discount that has not previously been included in
your income and that is treated as having accrued on the note through the date
of disposition. In addition, you may be required to defer, until the maturity of
the note or earlier taxable disposition, the deduction of all or a portion of
the interest expense on any indebtedness incurred or continued to purchase or
carry the note.
Any market discount will be considered to accrue evenly during the period
from the date of your acquisition to the maturity date of the note, unless you
elect to accrue the market discount on a constant yield method. You may also
elect to include market discount in income currently as it accrues, on either an
even or constant yield method. If you do so, your basis in the note will
increase by the amounts you so include in your income. If you make this
election, the rules described above regarding ordinary income on dispositions
and deferral of interest deductions will not apply. This election to include
market discount in income currently, once made, applies to all market discount
obligations acquired on or after the first taxable year to which the election
applies and may not be revoked without the consent of the IRS. We urge you to
consult with your tax advisor regarding these market discount elections.
Redemption or Sale of the Notes
Generally, a redemption or sale of your notes will result in your
recognizing taxable gain or loss equal to the difference between the amount of
cash or property you receive and your adjusted tax basis in the notes. The
preceding rule does not apply to cash or property received that is attributable
to accrued interest, because those amounts would be taxed as interest income in
the manner described above. Your adjusted tax basis in a 6.25% note generally
will be equal to your cost, increased by any market discount included in your
income, and reduced by any bond premium you amortized and principal payments you
received. Your adjusted tax basis in a 2.25% note generally will be equal to
your cost, increased by any OID or market discount included in your income, and
reduced by any bond premium you amortized and OID or principal payments you
received. Subject to the market discount rules described above, your gain or
loss will be capital gain or loss and will be long-term capital gain or loss if
your holding period in the note exceeds one year.
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Repurchase of the Notes at Your Option
If you exercise your repurchase right, then your notes will be exchanged
for an amount of cash and Class A common stock. To the extent the cash or Class
A common stock received constitutes payment of accrued interest, those amounts
will be taxed as interest income in the manner described above. The balance of
the cash and Class A common stock will be treated as proceeds of the exchange
and taxed in the following manner. In an exchange of notes solely for cash, the
repurchase will be treated as a redemption for cash, the consequences of which
are discussed above. In an exchange of notes involving Class A common stock, the
repurchase should constitute a recapitalization in which you will not recognize
any taxable gain except to the extent of the cash you receive, and in which you
will not recognize any loss. Accordingly, your tax basis in the Class A common
stock you receive will equal your adjusted tax basis in the notes you
surrendered, plus the taxable gain you recognized in the recapitalization, minus
the amount of cash that you received in the recapitalization. Your holding
period in the Class A common stock will include your holding period in the notes
you surrendered in the exchange.
Conversion of the Notes into Class A Common Stock
You will generally not recognize any gain or loss on conversion of your
notes solely into shares of Class A common stock. You will have some taxable
gain if you receive cash in lieu of a fractional share of Class A common stock.
The cash will be treated as your receipt of a fractional share, followed by our
redemption of it for cash. The redemption will be treated as a sale of your
Class A common stock which would result in your recognition of gain or loss
equal to the difference between the cash received and your adjusted tax basis in
the fractional share of Class A common stock redeemed. Any gain would be
ordinary income to the extent of any accrued market discount on your notes that
you have not previously included in your income, and otherwise would be capital
gain. Your holding period in the Class A common stock will include your holding
period in the notes you surrendered in the conversion.
Your income tax basis for the shares of Class A common stock received upon
conversion will be equal to the adjusted tax basis of the notes you exchange,
except for any adjustment necessary because of your receipt of cash in lieu of a
fractional share of Class A common stock. Any accrued market discount not
previously included in income as of the date of the conversion of the notes will
carry over to the Class A common stock received on conversion and will give rise
to ordinary income upon the subsequent disposition of that stock.
Distributions on Class A common stock are treated first as ordinary
dividend income to the extent paid out of our current or accumulated earnings
and profits, next as a nontaxable return of capital that reduces your basis in
the stock dollar-for-dollar until the basis has been reduced to zero, and
finally as gain from the sale or exchange of the stock. We do not at this time
anticipate making distributions on the Class A common stock. Subject to the
market discount rules discussed above, your sale or other taxable disposition of
Class A common stock will generally result in capital gain or loss equal to the
difference between the amount of cash or property you receive and your adjusted
tax basis in the stock.
Potential Distributions Resulting from Adjustment of Conversion Price
Your rights to convert your notes into Class A common stock allow for the
conversion price to be adjusted under a number of circumstances, generally to
ensure that you receive an economically equivalent number of shares from a
conversion following stock splits and stock dividends of our Class A common
stock. Section 305 of the Code may treat some of these adjustments as
constructive taxable distributions of stock. This would generally occur if the
conversion price is adjusted for a taxable distribution to the holders of Class
A common stock. Constructive distributions so treated would be taxable first as
dividends to the extent paid out of our current or accumulated earnings and
profits, next as a nontaxable return of capital to the extent of your basis in
the notes, and finally as gain from the sale or exchange of the notes. Your
adjusted tax basis in the notes would be increased by constructive distributions
to you taxable as dividends or gain, and would be unaffected by constructive
distributions that were nontaxable returns of capital. Conversely, a failure to
appropriately adjust the conversion price of the notes could
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result in a constructive distribution to holders of Class A common stock that
would be taxable to them in a similar manner.
Special Tax Consequences for Non-U.S. Holders
The federal income tax attributes of the notes and Class A common stock for
non-U.S. holders are generally comparable to those described above for U.S.
holders. However, special federal income tax rules apply to non-U.S. holders as
described below.
In General
If you are a non-U.S. holder, you will generally not be subject to federal
income taxes on payments of principal, premium, if any, or interest or OID on a
note or upon the sale, exchange, redemption, retirement or other disposition of
a note or Class A common stock, if:
o you do not own directly or indirectly 10% or more of the total voting
power of all classes of our voting stock,
o your income and gain in respect of the note or Class A common stock is
not effectively connected with the conduct of a United States trade or
business,
o you are not a controlled foreign corporation that is related to or
under common control with us,
o we or the applicable withholding agent have received from you a
properly executed, applicable IRS Form W-8 or substantially similar
form in the year in which a payment of interest, OID, principal, or
premium on a note occurs, or in a preceding calendar year to the
extent provided for in the instructions to the applicable IRS Form
W-8,
o in the case of gain upon the sale, exchange, redemption, retirement or
other disposition of a note or Class A common stock recognized by an
individual non-U.S. holder, you were present in the United States for
less than 183 days during the taxable year in which the gain was
recognized, and
o section 897 of the Code, discussed below, does not apply to you.
The IRS Form W-8 or substantially similar form must be signed by you under
penalties of perjury certifying that you are a non-U.S. holder and providing
your name and address. You must inform the withholding agent of any change in
the information on the statement within 30 days of the change. If you hold a
note or Class A common stock through a securities clearing organization or other
qualified financial institution, the organization or institution may provide a
signed statement to the withholding agent. However, in that case, the signed
statement must generally be accompanied by a copy of the executed IRS Form W-8
or substantially similar form that you provided to the organization or
institution.
Except in the case of income or gain that is effectively connected with the
conduct of a United States trade or business, discussed below, interest, OID,
dividends or gain recognized by you which does not qualify for exemption from
taxation will be subject to federal income tax and withholding at a rate of 30%
unless reduced or eliminated by an applicable tax treaty. For example, neither
constructive distributions on notes taxable as dividends, nor excess cash
dividend payments on notes, nor dividends on Class A common stock would qualify
for exemption from taxation, although an applicable tax treaty may reduce the
tax rate on these items to below 30%. You may generally use IRS Form 1001 to
claim tax treaty benefits for calendar years 1999 and 2000, and under new
Treasury regulations discussed below an applicable IRS Form W-8 or substantially
similar form for subsequent calendar years.
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Effectively Connected Income and Gain
If you are a non-U.S. holder whose income and gain in respect of a note or
Class A common stock is effectively connected with the conduct of a United
States trade or business, you will be subject to regular federal income tax on
this income and gain in generally the same manner as U.S. holders, and general
federal income tax return filing requirements will apply. In addition, if you
are a corporation, you may be subject to a branch profits tax equal to 30% of
your effectively connected adjusted earnings and profits for the taxable year,
unless you qualify for a lower rate under an applicable tax treaty. To obtain an
exemption from withholding on interest, dividends, and OID, you may generally
supply to the withholding agent an IRS Form 4224 for calendar years 1999 and
2000, and under new Treasury regulations discussed below an applicable IRS Form
W-8 or substantially similar form for subsequent calendar years.
We believe that we are currently a United States real property holding
corporation, and that we are likely to remain one. Because of this, section 897
of the Code and the applicable Treasury regulations potentially cause any gain
or loss you realize upon a disposition of your notes or Class A common stock to
be treated as effectively connected with the conduct of a trade or business in
the United States, and thus taxable as effectively connected gain in the manner
described above. Section 897 can also cause realized gains that would otherwise
remain unrecognized, for example gains in a recapitalization where you have
required us to repurchase your note in exchange for Class A common stock, to be
recognized in full absent compliance with procedural requirements under section
897. We believe that, provided our Class A common stock continues to be
regularly traded on the New York Stock Exchange, you will not recognize taxable
gain under section 897 on a disposition of a 6.25% or 2.25% note or Class A
common stock, so long as you meet the following three standards:
o you have not directly or indirectly owned, at any time during the
five-year period preceding the disposition, more than 5% of the total
outstanding 6.25% notes or more than 5% of the total outstanding 2.25%
notes;
o you have not directly or indirectly owned more than 5% of the total
outstanding Class A common stock at any time during the five-year
period preceding the disposition; and
o upon the date of your acquisition of any of the notes or any other
interests in our company not regularly traded on an established
securities market, the aggregate fair market value of your directly
and indirectly owned notes, plus any of your other directly or
indirectly owned interests in our company not regularly traded on an
established securities market, does not exceed 5% of the aggregate
value of our outstanding Class A common stock.
We urge you to consult with your tax advisor to determine whether you meet these
three standards, or whether you otherwise qualify for exemption from section 897
of the Code.
Our Deductions for Interest and OID on the Notes
Under section 279 of the Code, deductions otherwise allowable to a
corporation for interest and OID expense may be reduced or eliminated in the
case of "corporate acquisition indebtedness." This is defined generally to
include subordinated convertible debt issued to provide consideration for the
acquisition of stock or a substantial portion of the assets of another
corporation, where the acquiring corporation does not meet statutorily specified
debt/equity ratio and earnings coverage tests. Our deductions for interest and
OID expense on any notes could be reduced or eliminated if the notes so issued
meet the definition of corporate acquisition indebtedness in the year of
issuance. Also, the notes could become corporate acquisition indebtedness in a
subsequent year if we initially meet the debt/equity ratio and earnings coverage
tests, but later fail them in a year during which we issue additional
indebtedness for corporate acquisitions. Because the notes are not expressly
subordinated to any of our unsecured debt, and because the notes have the same
creditor priority as more than an insubstantial amount of our trade debt, we
believe the notes are not subordinated within the meaning of section 279 of the
Code and therefore do not constitute corporate acquisition indebtedness.
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Under section 163(l) of the Code, our deduction for interest and OID
expense on the notes would be disallowed if they are found to be "disqualified
debt instruments." Disqualified debt instruments are debt instruments:
o where a substantial amount of the principal or interest is required to
be paid or converted, or at the option of the issuer or a related
party is payable in or convertible into, issuer equity, or
o which are part of an arrangement that is reasonably expected to result
in a transaction described in the preceding clause.
For these purposes, principal or interest on a debt instrument is treated as
required to be paid in or converted into issuer equity if the payment or
conversion may be required at the option of the holder and that option is
substantially certain to be exercised. We do not believe that principal or
interest on the notes is required to be paid in or converted into our equity
under section 163(l), because principal or interest on our notes may only be
exchanged for equity in our company at the holder's option, and we do not
believe that this option is substantially certain to be exercised. Furthermore,
the legislative history of section 163(l) indicates that the provision is not
intended to apply to debt instruments with a conversion feature where the
conversion price is significantly higher than the market price of the stock on
the issue date of the debt. We believe that the conversion price of the notes
was significantly higher than the market price of our Class A common stock on
the date the notes were issued. Accordingly, we believe that the notes are not
disqualified debt instruments under section 163(l) of the Code. However, our
conclusions in this regard are factual judgments as to which no legal opinion
can be given. In any event, we cannot assure you that the IRS or a court would
agree with our conclusions.
Information Reporting, Income Tax Withholding and Backup Withholding
Information reporting, income tax withholding, and backup withholding may
apply to interest, OID, dividend and other payments to you under the
circumstances discussed below. Amounts withheld are generally not an additional
tax and may be refunded or credited against your federal income tax liability,
provided you furnish the required information to the IRS.
If You are a U.S. Holder. You may be subject to backup withholding at a 31%
rate when you receive interest, OID, and dividends with respect to the notes or
Class A common stock, or when you receive proceeds upon the sale, exchange,
redemption, retirement or other disposition of the notes or Class A common
stock. In general, you can avoid this backup withholding by properly executing
under penalties of perjury an IRS Form W-9 or substantially similar form that
provides:
o your correct taxpayer identification number, and
o a certification that (a) you are exempt from backup withholding
because you are a corporation or come within another enumerated exempt
category, (b) you have not been notified by the IRS that you are
subject to backup withholding, or (c) you have been notified by the
IRS that you are no longer subject to backup withholding.
If you do not provide your correct taxpayer identification number on the IRS
Form W-9 or substantially similar form, you may be subject to penalties imposed
by the IRS.
Unless you have established on a properly executed IRS Form W-9 or
substantially similar form that you are a corporation or come within another
enumerated exempt category, interest, OID, dividend and other payments on the
notes or Class A common stock paid to you during the calendar year, and the
amount of tax withheld, if any, will be reported to you and to the IRS.
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Special Rule for U.S. Holders Beneficially Owned by Non-U.S. Holders. As
stated above, we believe that we are currently a United States real property
holding corporation under section 897 of the Code, and that we are likely to
remain one. Section 1445 of the Code governs income tax withholding for gains
taxable to non-U.S. holders under section 897. It provides that upon a
disposition of the notes or Class A common stock, income tax withholding may be
required of disposing U.S. holders that are partnerships, trusts, estates, and
other entities because of their beneficial ownership by non-U.S. holders. We
believe that, provided our Class A common stock continues to be regularly traded
on the New York Stock Exchange, you will not have to withhold upon a disposition
of the notes or Class A common stock under section 1445 of the Code if you meet
the 5% thresholds discussed above that are applicable to non-U.S. holders on the
disposition of the notes and Class A common stock. We urge you to consult with
your tax advisor to determine whether you meet these standards, or whether you
otherwise qualify for exemption from sections 897 and 1445 of the Code.
Special Rule for Substantial Acquisitions from Non-U.S. Holders. As stated
above, we believe we are currently a United States real property holding
corporation under section 897 of the Code, and we are likely to remain one.
Because of this, section 1445 of the Code may require a person acquiring notes
from a non-U.S. holder to withhold 10% of the purchase price. However, provided
our Class A common stock continues to be regularly traded on the New York Stock
Exchange, this 10% withholding is generally not required for an acquisition of
notes where the purchase price constitutes 5% or less of the then aggregate
value of the outstanding Class A common stock. We urge you to consult with your
tax advisor to determine whether you meet this standard, or whether you
otherwise qualify for exemption from section 1445 of the Code.
If You are a Non-U.S. Holder. The amount of interest, OID, and dividends
paid to you on a note or Class A common stock during each calendar year, and the
amount of tax withheld, if any, will generally be reported to you and to the
IRS. This information reporting requirement applies regardless of whether you
were subject to withholding or whether withholding was reduced or eliminated by
an applicable tax treaty. Also, interest, OID, and dividends paid to you may be
subject to backup withholding at a 31% rate, unless you properly certify your
non-U.S. holder status on an IRS Form W-8 or substantially similar form.
Similarly, information reporting and 31% backup withholding will not apply to
proceeds you receive upon the sale, exchange, redemption, retirement or other
disposition of the notes or Class A common stock, if you properly certify that
you are a non-U.S. holder on an IRS Form W-8 or substantially similar form. Even
without having executed an IRS Form W-8 or substantially similar form, however,
in some cases information reporting and 31% backup withholding will not apply to
proceeds you receive upon the sale, exchange, redemption, retirement or other
disposition of the notes or Class A common stock if you receive those proceeds
through a broker's foreign office.
If you are a non-U.S. holder whose income and gain on the notes or Class A
common stock are effectively connected with the conduct of a United States trade
or business, a slightly different rule may apply to proceeds you receive upon
the sale, exchange, redemption, retirement or other disposition of those
securities. Until you comply with the new Treasury regulations discussed below,
information reporting and 31% backup withholding may apply to you in the same
manner as to a U.S. holder, and thus you may have to execute an IRS Form W-9 or
substantially similar form to prevent the backup withholding.
New Treasury Regulations. New Treasury regulations alter the withholding
rules on interest, OID, dividends, and sale or exchange proceeds paid to you,
effective generally for payments after December 31, 2000 and subject to complex
transition rules. For example, documentation and procedures satisfying the new
Treasury regulations are deemed in some instances to satisfy current law
requirements. In these instances you or the withholding agent may wish to
satisfy the requirements of the new Treasury regulations rather than the
requirements of the Treasury regulations soon to expire. The new Treasury
regulations are complex, and we urge you to consult with your tax advisor to
determine how the new Treasury regulations affect your particular circumstances.
The new Treasury regulations replace old IRS Forms W-8, 1001 and 4224 with
a new series of IRS Forms W-8, which you will generally have to properly execute
earlier than you would have otherwise had to for purposes of providing
replacements for the old IRS forms. For example, you must properly execute the
appropriate new version of IRS Form W-8, or substantially similar form, no later
than December 31, 2000 if you remain a non-U.S. holder of the notes or Class A
common stock on that date. Under the new Treasury regulations, it may also be
possible for
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you to receive payments on those securities through a qualified intermediary
that complies with requisite procedures and provides applicable certification of
your non-U.S. holder status on your behalf. The new Treasury regulations also
clarify withholding agents' standards of reliance on executed IRS Forms W-8 or
substantially similar forms.
If you are a non-U.S. holder claiming benefits under an income tax treaty,
you should be aware that you may be required to obtain a taxpayer identification
number and to certify your eligibility under the applicable treaty's limitations
on benefits article in order to comply with the new Treasury regulations'
certification requirements. The new Treasury regulations also provide special
rules to determine whether, for purposes of determining the applicability of a
tax treaty, amounts paid to a non-U.S. holder that is an entity should be
treated as paid to the entity or to those holding the ownership interests in
that entity, and whether the entity or the holders in the entity are entitled to
benefits under the tax treaty.
REGISTRATION RIGHTS AGREEMENT
On October 4, 1999, we entered into a registration rights agreement with
the initial purchasers for the benefit of the holders of the notes. That
agreement obligates us, at our sole expense, as follows:
o use our reasonable best efforts to file a shelf registration statement
as soon as practicable, but in no event more than 90 days after the
issue of the notes, covering resales of the notes and the Class A
common stock issuable upon their conversion. We refer to those
securities collectively as the "registrable securities;"
o to use our reasonable best efforts to cause the shelf registration
statement to be declared effective under the Securities Act within 150
days after the issue of the notes; and
o to use our reasonable best efforts to keep the shelf registration
statement effective and usable for two years or such other shorter
period as shall be required under Rule 144(k) of the Securities Act.
We are permitted, however, to suspend the use of the shelf
registration statement during certain black-out periods if we
determine in good faith that it is in our best interest and if we
provide the registered holders with written notice of the suspension.
The period may not exceed 30 days in any three-month period and may
not exceed 90 days in the aggregate in any 12-month period. We are
also not required to maintain the shelf registration statement if
prior to the end of that two-year period or other shorter Rule 144(k)
period all the registrable securities have been sold under the shelf
registration statement, transferred under Rule 144 under the
Securities Act or otherwise transferred in a way that eliminates their
Securities Act transfer restrictions for future resales by
non-affiliates.
The registration statement of which this prospectus is a part satisfies the
first two of the foregoing requirements.
We are obligated to:
o provide each holder of registrable securities with copies of this
prospectus;
o notify each such holder when the registration statement has become
effective, and
o take certain other actions as are required to permit unrestricted
resales of the registrable securities.
If you sell registrable securities pursuant to the registration statement,
you (a) will usually be required to be named as a selling securityholder in this
prospectus and to deliver this prospectus to purchasers, (b) will be subject to
certain of the civil liability provisions under the Securities Act in connection
with your sales, and (c) will be bound by the applicable provisions of the
registration rights agreement, including certain indemnification rights and
obligations.
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If a registration default occurs, the interest rate will be increased 0.50%
per annum, subject to certain exceptions. Following the cure of a registration
default, the interest rate will become the rate in effect immediately prior to
the registration default. We use the term "registration default" to mean if:
o we fail to timely file the shelf registration statement with the SEC
within 90 days of closing,
o the SEC has not declared the shelf registration statement effective
within 150 days of closing, or
o we fail to keep the shelf registration statement that has been
declared effective continuously effective and usable, subject to
certain exceptions, for the period required.
Each registrable security contains a legend to the effect that the holder
is deemed to have agreed to be bound by the provisions of the registration
rights agreement.
The summary of certain provisions of the registration rights agreement does
not purport to be complete and is subject to, and is qualified in its entirety
by reference to, all the provisions of the registration rights agreement, a copy
of which has been filed as an exhibit to the registration statement of which
this prospectus is a part.
PLAN OF DISTRIBUTION
The notes and Class A common stock may be sold from time to time to
purchasers directly by the selling securityholders. Alternatively, the selling
securityholders may from time to time offer the notes with discounts,
concessions or commissions from the selling securityholders and/or the
purchasers of the notes and Class A common stock for whom they may act as agent.
The selling securityholders and any such brokers, dealers or agents who
participate in the distribution of the notes and Class A common stock may be
deemed to be "underwriters," and any profits on the sale of the notes and Class
A common stock by them and any discounts, commissions or concessions received by
any such brokers, dealers or agents might be deemed to be underwriting discounts
and commissions under the Securities Act. To the extent the selling
securityholders may be deemed to be underwriters, the selling securityholders
may be subject to certain statutory liabilities, including, but not limited to,
Sections 11, 12 and 17 of the Securities Act and Rule 10b-5 under the Exchange
Act.
The notes and underlying Class A common may be sold from time to time in
one or more transactions at fixed prices, at prevailing market prices at the
time of sale, at varying prices determined at the time of sale or at negotiated
prices. The notes and Class A common stock may be sold by one or more of the
following methods:
o a block trade in which the broker or dealer so engaged will attempt to
sell the notes and Class A common stock issuable upon conversion
thereof as agent but may position and resell a portion of the block as
principal to facilitate the transaction;
o purchases by a broker or dealer as principal and resale by such broker
or dealer for its account pursuant to this prospectus;
o ordinary brokerage transactions and transactions in which the broker
solicits purchasers;
o an exchange distribution in accordance with the rules of such
exchange;
o face-to-face transactions between sellers and purchasers without a
broker-dealer;
o through the writing of options; and
o other transactions.
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At any time a particular offer of the notes and Class A common stock is
made, a revised prospectus or prospectus supplement, if required, will be
distributed which will set forth the aggregate amount and type of securities
being offered and the terms of the offering, including the name or names of any
underwriters, dealers or agents, any discounts, commissions, concessions and
other items constituting compensation from the selling securityholders and any
discounts, commissions or concessions allowed or reallowed or paid to dealers.
The prospectus supplement and, if necessary, a post-effective amendment to the
registration statement of which this prospectus is a part, will be filed with
the SEC to reflect the disclosure of additional information with respect to the
distribution of the notes and Class A common stock. In addition, the notes and
Class A common stock covered by this prospectus may be sold in private
transactions or under Rule 144 rather than pursuant to this prospectus.
We have agreed in the registration rights agreement to keep this prospectus
useable until October 4, 2001 as described under "Registration Rights Agreement"
on page 51. To our knowledge currently no plans, arrangements or understandings
exist between any selling securityholders and any broker, dealer, agent or
underwriter regarding the sale of the securities by the selling securityholders.
We cannot assure you that any selling securityholder will sell any or all of the
securities offered by it under this prospectus or that any selling
securityholder will not transfer, devise or gift such securities by other means
not described in this prospectus.
The selling securityholders and any other person participating in such
distribution will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including, without limitation, Regulation
M. That regulation may limit the timing of purchases and sales of any of the
notes and Class A common stock by the selling securityholders and any other
participating person. Furthermore, Regulation M of the Exchange Act may restrict
the ability of any person engaged in the distribution of the notes and Class A
common stock to engage in market-making activities with respect to the
particular notes and Class A common stock being distributed for a period of up
to five business days prior to the commencement of the distribution. All of the
foregoing may affect the marketability of the notes and Class A common stock and
the ability of any person or entity to engage in market-making activities with
respect to the notes and Class A common stock.
Pursuant to the registration rights agreement entered into in connection
with our initial private placement, we and each of the selling securityholders
will be indemnified by the other against certain liabilities, including certain
liabilities under the Securities Act, or will be entitled to contribution in
connection with these matters.
We have agreed to pay substantially all of the expenses incidental to the
registration, offering and resale by the selling securityholders of the notes to
the public other than commissions, fees and discounts of underwriters, brokers,
dealers and agents.
We will not receive any of the proceeds of the sale of the notes and
underlying Class A common stock covered by this prospectus.
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LEGAL MATTERS
The validity of the notes and any Class A common stock issuable upon
conversion of such notes have been passed upon for us by Sullivan & Worcester
LLP, Boston, Massachusetts. Sullivan & Worcester LLP, Boston, Massachusetts,
also passed upon certain matters relating to United States federal income tax
considerations for us, as our special tax counsel. Norman A. Bikales, a member
of the firm of Sullivan & Worcester LLP, is the owner of 11,000 shares of Class
A common stock and 41,490 shares of Class B common stock and has an option to
purchase 20,000 shares of Class A common stock at $10.00 per share. An associate
of Sullivan & Worcester LLP has an option to purchase 8,000 shares of Class A
common stock at $18.75 per share. Mr. Bikales and/or associates of that firm
serve as our secretary or assistant secretaries and certain of our subsidiaries.
EXPERTS
The consolidated financial statements of American Tower Corporation as of
December 31, 1998 and 1997 and for each of the years in the three year period
ended December 31, 1998 incorporated by reference in this prospectus from the
Company's Annual Report on Form 10-K, have been audited by Deloitte & Touche
LLP, independent auditors, as stated in their report, which is incorporated
herein by reference, and has been so incorporated in reliance upon the report of
such firm given upon their authority as experts in accounting and auditing.
The following financial statements are incorporated by reference in this
prospectus from the Form 8-K dated September 17, 1999:
o The consolidated financial statements of American Tower Corporation
and subsidiaries as of December 31, 1997 and 1996, and for each of the
years in the three year period ended December 31, 1997 have been
incorporated by reference in this prospectus in reliance upon the
report of KPMG LLP, independent auditors, incorporated by reference in
this prospectus, and upon the authority of said firm as experts in
accounting and auditing.
o The consolidated financial statements of OmniAmerica, Inc. and
Subsidiaries (formerly Specialty Teleconstructors, Inc.) at and for
the year ended June 30, 1998, incorporated by reference in this
prospectus have been audited by Ernst & Young LLP, independent
auditors, as stated in their report incorporated by reference herein,
and are incorporated by reference herein in reliance upon such report
given on the authority of such firm as experts in accounting and
auditing.
o The consolidated financial statements of OmniAmerica, Inc. (formerly
Specialty Teleconstructors, Inc.) as of and for the year ended June
30, 1997 have been incorporated by reference in this prospectus in
reliance upon the report of KPMG LLP, independent auditors,
incorporated by reference in this prospectus, and upon the authority
of said firm as experts in accounting and auditing.
o The financial statements of TeleCom Towers, L.L.C. as of December 31,
1998 and 1997 and for the year ended December 31, 1998 and the three
month period from September 30, 1997 (date of inception) to December
31, 1997 and the financial statements of Telecom Southwest Towers LP,
Telecom Towers Mid-Atlantic LP, and Telecom Towers of the West, L.P.,
as of July 31, 1998 and December 31, 1997 and for the seven month
period ended July 31, 1998 and the year ended December 31, 1997,
incorporated by reference in this prospectus have been audited by
Ernst & Young LLP, independent auditors, as stated in their reports
appearing therein, and as to the seven month period ended July 31,
1998 and the year ended December 31, 1997 as related to Telecom Towers
Mid-Atlantic, LP and as to the year ended December 31, 1998 as related
to Telecom Towers, LLC is based in part on the report of KPMG LLP,
independent auditors, as set forth in their report on the financial
statements of RCC Consultants, Inc. (not separately presented in the
Form 8-K) appearing therein. The financial statements referred to
above are included in reliance upon such reports given upon the
authority of such firms as experts in accounting and auditing.
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o The financial statements of Wauka Communications, Inc. as of October
26, 1998 and December 31, 1997 and for the ten month period ended
October 26, 1998 and year ended December 31, 1997 incorporated by
reference in this prospectus have been audited by Arthur Andersen LLP,
independent auditors, as stated in their report appearing therein.
o The consolidated financial statements of UNIsite, Inc. and
subsidiaries as of December 31, 1998 and 1997 and for each of the
years in the three year period ended December 31, 1998 have been
incorporated by reference in this prospectus in reliance upon the
report of KPMG LLP, independent auditors, incorporated by reference in
this prospectus, and upon the authority of said firm as experts in
accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and
other information with the SEC. You may read and copy any reports, statements or
other information on file at the SEC's public reference room at 450 Fifth
Street, N.W., Washington, D.C. 20549. You can request copies of those documents
upon payment of a duplicating fee to the SEC. You may also review a copy of the
registration statement at the SEC's regional offices in Chicago, Illinois and
New York, New York. Please call the SEC at 1-800-SEC-0330 for further
information on the operation of the public reference rooms. You can review our
SEC filings and the registration statement by accessing the SEC's Internet site
at http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file
with them. This means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus. Statements in this prospectus
regarding the contents of any contract or other document may not be complete.
You should refer to the copy of the contract or other document filed as an
exhibit to the registration statement. Later information filed with the SEC will
update and supersede information we have included or incorporated by reference
in this prospectus.
We incorporate by reference the documents listed below and any filings
made after the date of the original filing of the registration statement of
which this prospectus is a part made with the SEC under Section 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act of 1934 until this offering is completed
or terminated:
o our Annual Report on Form 10-K for the fiscal year ended December 31,
1998 (the "1998 Annual Report"),
o our proxy statement for our 1999 annual meeting of stockholders,
o our Quarterly Reports on Form 10-Q for the quarters ended March 31 and
June 30, 1999 (the "March 1999 Quarterly Report" and the "June 1999
Quarterly Report"), and
o (a) our Current Reports on Form 8-K dated January 8, 1999, January 21,
1999, February 12, 1999, February 24, 1999, March 5, 1999, July 16,
1999, September 17, 1999 and September 21, 1999; and (b) our Current
Reports on Form 8-K/A dated January 27, 1999 and March 18, 1999.
We will provide a copy of the documents we incorporate by reference,
excluding exhibits other than those to which we specifically refer. You may
obtain this information at no cost by writing or telephoning us at: 116
Huntington Avenue, Boston, Massachusetts 02116, (617) 375-7500, Attention:
Director of Investor Relations.
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