<PAGE> 1
EXHIBIT 99.4
BEVERLY HILLS CENTER, LLC
FINANCIAL STATEMENTS
FOR THE
YEAR ENDED DECEMBER 31, 1999
<PAGE> 2
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders
of Pinnacle Holdings, Inc.
In our opinion, the accompanying statement of financial position and the
related statements of operations and retained earnings and of cash flows present
fairly, in all material respects, the financial position of Beverly Hills
Center, LLC (the "Company") at December 31, 1999, and the results of its
operations and its cash flows for the year then ended, in conformity with
accounting principles generally accepted in the United States. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these statements in accordance with
auditing standards generally accepted in the United States, which require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for the opinion expressed above.
As discussed in Note 1 to the financial statements, in June 2000, the
Company entered into an agreement to sell its building and certain other assets
and operations to Pinnacle Towers Inc. for $135,000,000.
PricewaterhouseCoopers LLP
Tampa, Florida
July 21, 2000
27
<PAGE> 3
BEVERLY HILLS CENTER, LLC
STATEMENTS OF FINANCIAL POSITION
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
----------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................. $ 1,073,486 $11,343,329
Restricted cash....................................... 213,722 213,722
Accounts receivable, net.............................. 278,741 80,012
Prepaid expenses...................................... 3,296 13,186
----------- -----------
Total current assets.......................... 1,569,245 11,650,249
Property and equipment, net............................. 24,291,088 24,501,298
Loans receivable from related parties................... 1,563,877 1,519,677
Other assets............................................ 4,542,712 4,466,456
----------- -----------
Total assets.................................. $31,966,922 $42,137,680
=========== ===========
LIABILITIES AND MEMBERS' EQUITY
Current liabilities:
Accounts payable and other accrued expenses........... $ 310,455 $ 971,067
Deferred revenue...................................... 429,675 510,887
Current portion of long-term debt..................... 691,156 691,156
----------- -----------
Total current liabilities..................... 1,431,286 2,173,110
Long-term debt.......................................... 41,779,063 42,308,844
Tenant improvement liability............................ 1,146,264 1,146,264
Other liabilities....................................... 270,802 331,075
----------- -----------
Total liabilities............................. 44,627,415 45,959,293
----------- -----------
Commitments and contingencies (Note 6)
Members' equity:
Distributions in excess of earnings................... (12,660,493) (3,821,613)
----------- -----------
Total liabilities and members' equity......... $31,966,922 $42,137,680
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
28
<PAGE> 4
BEVERLY HILLS CENTER, LLC
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED YEAR ENDED
MARCH 31, MARCH 31, DECEMBER 31,
2000 1999 1999
------------ ------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Revenues.............................................. $ 3,309,494 $ 1,867,291 $ 11,623,964
Direct operating expenses, excluding deprecation...... 1,354,429 708,599 5,512,842
------------ ------------ ------------
Gross margin, excluding depreciation........ 1,955,065 1,158,692 6,111,122
------------ ------------ ------------
Other expenses:
General and administrative.......................... 81,113 186,685 78,401
Depreciation and amortization....................... 299,154 210,987 1,230,997
------------ ------------ ------------
380,267 397,672 1,309,398
------------ ------------ ------------
Income from operations................................ 1,574,798 761,020 4,801,724
Interest expense, net, including amortization of
deferred financing costs............................ 245,684 424,411 1,617,972
------------ ------------ ------------
Income before extraordinary loss from modification of
debt agreement...................................... 1,329,114 336,609 3,183,752
Extraordinary loss from modification of debt agreement
(Note 5)............................................ -- -- (193,527)
------------ ------------ ------------
Net income.................................. 1,329,114 336,609 2,990,225
(Distributions in excess of earnings) retained
earnings, beginning of year......................... (3,821,613) 3,355,562 3,355,562
Distribution to members............................... (10,167,994) -- (10,167,400)
------------ ------------ ------------
Distributions in excess of earnings, end of year...... $(12,660,493) $ 3,692,171 $ (3,821,613)
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE> 5
BEVERLY HILLS CENTER, LLC
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE THREE
MONTHS ENDED MONTHS ENDED YEAR ENDED
MARCH 31, MARCH 31, DECEMBER 31,
2000 1999 1999
------------ ------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income........................................... $ 1,329,114 $ 336,609 $ 2,990,225
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization...................... 299,154 210,987 1,230,997
Extraordinary loss on modification of credit
agreement....................................... -- -- 193,527
Changes in assets and liabilities:
(Increase) in accounts receivable............... (198,729) (741,283) (16,005)
Decrease (increase) in prepaid expenses......... 9,890 2 (13,184)
(Increase) in loans receivable.................. (44,200) (321,859) (294,238)
(Increase) in other assets...................... (76,256) (10,397) (1,299,117)
(Decrease) in accounts payable and other accrued
expenses...................................... (660,613) (209,634) (449,221)
(Decrease) increase in deferred revenue......... (81,212) 362,385 510,763
(Decrease) increase in other liabilities........ (60,271) (54,900) 22,723
------------ ------------ ------------
Net cash provided by operating activities............ 516,877 (428,090) 2,876,470
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Tenant improvement expenditures.................... -- -- (624,884)
Capital expenditures............................... (88,945) (140,345) (964,794)
------------ ------------ ------------
Net cash used in investing activities................ (88,945) (140,345) (1,589,678)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt refinancing..................... -- 92,130 19,672,392
Repayment of debt.................................. (529,781) (172,789) (402,084)
Distributions to owners............................ (10,167,994) -- (10,167,400)
------------ ------------ ------------
Net cash (used in) provided by financing
activities......................................... (10,697,775) (80,659) 9,102,908
------------ ------------ ------------
Net (decrease) increase in cash and cash
equivalents........................................ (10,269,843) (649,094) 10,389,700
Cash and cash equivalents at beginning of period..... 11,343,329 953,629 953,629
------------ ------------ ------------
Cash and cash equivalents at end of period........... $ 1,073,486 $ 304,535 $ 11,343,329
============ ============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest............................... $ 981,189 $ 427,686 $ 1,710,744
============ ============ ============
Non-cash items:
Accrual for tenant improvement allowance........... $ -- $ 146,241 $ (584,963)
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
30
<PAGE> 6
BEVERLY HILLS CENTER, LLC
NOTES TO FINANCIAL STATEMENTS
1. NATURE OF BUSINESS AND BASIS OF PRESENTATION
Nature of Business
On November 21, 1995, Beverly Hills Center, a Limited Liability
Corporation, (the "Company") acquired the Univision Tower from the Equitable
Life Insurance Company for the purpose of leasing the building as office space.
Subsequent to the acquisition, the Company's management began to shift its
marketing efforts toward the telecommunications industry. The Company now
utilizes the office space as a switching center for data and telephone
communications that is transferred via fiber optic networks. As of December 31,
1999, 85% of the building's tenants were operating in the telecommunications
industry.
In June 2000, the Company entered into an agreement to sell its buildings
and certain other assets and operations to Pinnacle Towers Inc. In accordance
with the purchase agreement, the Company will receive approximately $135,000,000
for these assets.
The March 31, 2000 and 1999 financial statements are unaudited, but in the
opinion of management include all adjustments, which consist of normal recurring
adjustments, necessary for a fair presentation.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and use assumptions that affect the reported amounts of assets and
liabilities and the disclosure for contingent assets and liabilities at the date
of the financial statements as well as the reported amounts of revenues and
expenses during the reporting period. Actual results may vary from estimates
used.
Cash and Cash Equivalents
The Company considers all highly liquid temporary cash investments with an
original maturity of three months or less to be cash equivalents.
Restricted Cash
On December 31, 1999, the Company had restricted deposits of $214,000.
Restricted cash is comprised of funds held in escrow as part of the Company's
debt agreement.
Property and Equipment
Property and equipment consists of the building, building improvements made
by the Company, tenant improvements, land, and furniture and office equipment,
which are recorded at cost and depreciated using the straight-line method over
the estimated useful lives of the assets or the tenant lease agreements, which
range from 5 to 40 years. Betterments, renewals and extraordinary repairs which
increase the value or extend the lives of assets are capitalized. Repairs and
maintenance costs are expensed as incurred.
Debt Financing Costs
Debt financing costs represent direct costs incurred to obtain long-term
financing. These costs are capitalized and then amortized to interest expense
over the term of the underlying debt utilizing the effective interest method.
Impairment of Long-lived Assets
The Company evaluates the recoverability of its long-lived assets whenever
adverse events or changes in business climate indicate that the expected
undiscounted future cash flows from the related asset may be less than
previously
31
<PAGE> 7
BEVERLY HILLS CENTER, LLC
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
anticipated. If the net book value of the related asset exceeds the undiscounted
future cash flows of the asset, the carrying amount would be reduced to the
present value of its expected future cash flows and an impairment loss would be
recognized. As of December 31, 1999, management does not believe that an
impairment reserve is required.
Fair Value of Financial Instruments
The carrying amounts of the Company's financial instruments at December 31,
1999, which include cash, restricted cash, accounts receivable and accounts
payable, approximate fair value due to the short-term nature of these
instruments. The carrying amount of debt approximates fair value based on the
most recent modification of debt terms as discussed in Note 5.
Revenue Recognition
Revenue is recognized ratably over the tenant lease period. Tenant rent is
typically due at the beginning of each month for which it applies. Deferred
revenue is recorded when a tenant payment is received in advance of its due
date.
Income Taxes
The Company operates as a Limited Liability Corporation, and in accordance
with Internal Revenue Code statutes, has elected to be taxed as a partnership.
As such, net income is taxed directly to the owners.
3. OTHER ASSETS
At December 31, 1999, other assets consisted of the following:
<TABLE>
<S> <C>
Lease commissions........................................... $ 3,615,330
Accrued tenant improvements................................. 1,146,264
Straight-line rent receivable............................... 840,909
Financing costs............................................. 194,683
Other....................................................... 141,355
Less: accumulated amortization.............................. (1,472,085)
-----------
Other assets, net................................. $ 4,466,456
===========
</TABLE>
4. PROPERTY AND EQUIPMENT
At December 31, 1999, property and equipment consisted of the following:
<TABLE>
<CAPTION>
ESTIMATED USEFUL
LIVES IN YEARS
------------------
<S> <C> <C>
Land.................................................... N/A $ 1,178,742
Building................................................ 40 22,946,528
Building improvements................................... 40 1,490,540
Tenant improvements..................................... lease term (5-15) 1,928,972
Furniture and office equipment.......................... 5 17,580
Less: accumulated depreciation.......................... (3,061,064)
-----------
Property and equipment, net of accumulated
depreciation.......................................... $24,501,298
===========
</TABLE>
5. LONG-TERM DEBT
At December 31, 1999, the Company had $43,000,000 outstanding under one
term loan with a bank. On December 28, 1999, the mortgage loan agreement was
refinanced, increasing the principal balance outstanding by
32
<PAGE> 8
BEVERLY HILLS CENTER, LLC
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
$19,672,392, from $23,327,608, and increasing the fixed annual interest rate
from 7.27% to 7.52%. The term of the loan was not modified and it remains due on
January 1, 2005. The loan is secured by mortgage deeds of trust on the land, the
building and building assets owned by the Company. The agreement requires fixed
payments of $327,063 per month for principal and accrued interest commencing on
January 1, 2000, with a final payment of $39,224,846 to be made on January 1,
2005. Debt financing fees of $194,683 have been capitalized and are being
amortized to interest expense over the life of the mortgage.
In conjunction with the modification of the term loan agreement during
1999, the Company expensed $193,527 relating to unamortized debt financing
costs. The amount has been presented as an extraordinary item on the statement
of operations.
The term loan agreement contains provisions that require the Company to
comply with certain covenants. The Company was in compliance with all covenants
at December 31, 1999.
The following is a schedule of the remaining principal payments as of
December 31, 1999:
<TABLE>
<S> <C>
2000........................................................ $ 691,156
2001........................................................ 743,131
2002........................................................ 799,014
2003........................................................ 859,100
2004 and thereafter......................................... 39,907,599
-----------
$43,000,000
===========
</TABLE>
6. COMMITMENTS AND CONTINGENCIES
The Company is party to several management contracts for services related
to property management, accounting and operations and lease marketing and
management, with various termination dates through 2002. The contracts contain
renewal provisions with specified increases in lease payments upon exercise.
Minimum future commitments under the noncancelable contracts at December 31,
1999 are as follows:
<TABLE>
<S> <C>
2000........................................................ $156,000
2001........................................................ 102,000
2002........................................................ 8,500
--------
$266,500
========
</TABLE>
7. TENANT LEASES
The following is a schedule by year of total future rentals to be received
for building space under noncancelable lease agreements as of December 31, 1999:
<TABLE>
<S> <C>
2000........................................................ $ 8,736,552
2001........................................................ 8,181,184
2002........................................................ 7,655,172
2003........................................................ 6,655,839
2004 and thereafter......................................... 6,109,670
-----------
$37,338,417
===========
</TABLE>
Principally all leases provide for renewal at varying escalations. Leases
with fixed-rate escalations have been included above.
33
<PAGE> 9
BEVERLY HILLS CENTER, LLC
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
8. MEMBERS' EQUITY
Investor and Service Units
The Company's partnership agreement provides for two classes of common
units: service units and investor units. Service units are granted to those
members who perform various management functions within the Company. The amount
of these units is determined by the proportionate share of service to the
Company. Investor units were granted to two entities, Algrin and Atlantic Pearl
Investments, which initially funded the start-up of the Company. These units are
determined by the Companies' proportionate share of the initial investment.
Distributions
Investor units are the first members to receive distributions until their
initial capital is returned. Service units share proportionately in income with
the investor units after the return of capital is distributed. Prior to 1999,
the investor units had received distributions that met their return of initial
capital.
Advance to Owners
In December 1999 the Company refinanced its mortgage in order to raise
additional capital (see Note 5). Of the additional $19,672,392 in capital
financing, $10,167,400 was advanced to the members in December 1999.
Additionally, during 2000, $10,167,994 was advanced to members.
9. RELATED PARTY TRANSACTIONS
At December 31, 1999, the Company had approximately $1,519,677 outstanding
in loans to related parties. These loans accrue interest at a rate of 8.0%
annually. The accrued interest amount has been reflected in the financial
statements.
The Company also pays certain fees to MTA, Inc. and Atlantic Pearl
Investments as directed through formal management agreements.
34
