Type: 10-Q/A
Sequence: 1
Description: Form 10-Q/A
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q/A
(Amendment No. 1)
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED MARCH
31, 1999.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBERS: 333-57715 and 333-57715-01 through 06
TRITON PCS, INC.
TRITON PCS OPERATING COMPANY L.L.C.
TRITON PCS LICENSE COMPANY L.L.C.
TRITON PCS EQUIPMENT COMPANY L.L.C.
TRITON PCS PROPERTY COMPANY L.L.C.
TRITON PCS HOLDINGS COMPANY L.L.C.
TRITON MANAGEMENT COMPANY, INC.
375 TECHNOLOGY DRIVE
MALVERN, PA 19355
(610) 651-5900
DELAWARE 23-2930873
DELAWARE 23-2941874
DELAWARE 23-2941874
DELAWARE 23-2941874
DELAWARE 23-2941874
DELAWARE 23-2941874
DELAWARE 23-2940271
(State or other Jurisdictions (I.R.S. Employer
Of Incorporation or Organization) Identification Numbers)
SECURITES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: None
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: None
Indicate by a check mark whether the registrant (1) has filed all
reports required to be filed by section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant
was required to file such reports) and (2) has been subject to
such filing requirements for the past 90 days.
Yes ___X___ No ______
The registrants meet the conditions set forth in General
Instruction H(i)(a) and (b) to the Form 10-Q and are therefore
filing with the reduced disclosure format.
TRITON PCS, INC.
FIRST QUARTER REPORT
Table of Contents
PART I Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets at March 31, 1999 (unaudited)
and December 31, 1998
Consolidated Statements of Operations (unaudited) for the
three months ended March 31, 1999 and 1998
Consolidated Statements of Cash Flows (unaudited) for the
three months ended March 31, 1999 and 1998
Notes to the Consolidated Financial Statements (unaudited)
Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
PART II Other Information
Item 6. Exhibits and reports Reports on Form 8-K
PART I. Financial Information
Item I. Financial Statements
TRITON PCS, INC.
CONSOLIDATED BALANCE SHEET
($000s)
December 31, March 31,
1998 1999
(unaudited)
ASSETS:
Current assets:
Cash and cash equivalents $146,172 $ 100,152
Marketable securities 23,612 53,087
Due from related party 951 1,427
Accounts receivable net of
allowance for doubtful accounts of
$1,071 and $555 respectively 3,102 7,638
Inventory 1,433 6,739
Prepaid expenses and other
current assets 4,288 5,344
Deferred income tax 81 81
-------- --------
Total current assets 179,639 174,468
Property, plant, and equipment:
Land 313 313
Network infrastructure and equipment 34,147 170,558
Office furniture and equipment 17,642 26,769
Capital lease asset 2,263 2,263
Construction in progress 145,667 31,734
-------- --------
200,032 231,637
Less accumulated depreciation (1,079) (3,396)
-------- --------
Net property and equipment 198,953 228,241
Intangible assets, net 307,361 304,120
Deferred transaction costs 906 1,074
Other non current assets - 2,000
-------- ---------
Total assets $686,859 $709,903
======== =========
LIABILITIES AND SHAREHOLDERS EQUITY:
Current liabilities:
Accounts payable $25,256 $33,553
Accrued payroll and related expenses 3,719 3,197
Accrued expenses 3,646 1,184
Accrued interest 545 933
Capital lease obligations 281 280
-------- --------
Total current liabilities 33,447 39,147
Long-term debt 463,648 472,488
Capital lease obligations 2,041 1,997
Deferred income taxes 11,744 11,744
Shareholders Equity:
Common stock, $.01 par value, 1,000 shares
authorized, 100 shares issued and outstanding - -
Additional paid-in capital 217,050 254,198
Deferred compensation (4,370) (4,064)
Accumulated deficit (36,701) (65,607)
-------- --------
Total shareholders equity 175,979 184,527
-------- --------
Total liabilities and shareholders equity $686,859 $709,903
======== ========
See accompanying notes to consolidated financial statements.
TRITON PCS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
($000s)
Three Months Ended
March 31,
1998 1999
(unaudited) (unaudited)
Revenues:
Service revenues $ - $6,544
Roaming revenues - 2,771
Equipment revenues - 2,225
------ -------
Total revenue - 11,540
Expenses:
Cost of service - 6,587
Cost of equipment - 3,604
Selling and marketing - 7,646
General and administrative 2,683 7,808
Non-cash compensation 11 410
Depreciation and amortization - 5,511
------ -------
Loss from operations 2,694 20,026
Interest expense, net of
capitalized interest 765 10,000
Interest income (459) (1,076)
Other income, net - (44)
------- -------
Loss before taxes 3,000 28,906
Tax benefit (2,847) -
------- -------
Net loss $153 $28,906
======= =======
See accompanying notes to consolidated financial statements.
TRITON PCS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
($000s)
Three Months Ended
March 31,
1998 1999
(unaudited) (unaudited)
Cash flows from operating activities:
Net loss $(153) $(28,906)
Adjustments to reconcile net loss to cash
used in operating activities:
Depreciation and amortization 557 5,511
Amortization of bond discount - 151
Deferred income taxes (2,847) -
Accretion of interest - 8,691
Non-cash compensation 11 410
Change in operating assets and liabilities:
Accounts receivable - (4,536)
Inventory - (5,306)
Prepaid expenses and other
current assets (17) (1,057)
Other noncurrent assets - (2,228)
Accounts payable 1,410 (4,651)
Accrued expenses (182) (2,986)
Accrued interest (1,228) 663
------- -------
Net cash used in operating activities (2,449) (34,244)
Cash flows from investing activities:
Capital expenditures (3,842) (18,657)
Purchase of marketable securites - (29,475)
Escrow deposit (8,000) -
------- -------
Net cash used in
investing activities (11,842) (48,132)
Cash flows from financing activities:
Borrowings under credit facility 67,956 -
Capital contributions from parent 41,255 37,044
Payment of deferred transaction costs (1,855) (168)
Advances to related party, net (45) (475)
Principal payments under capital
lease obligations - (45)
------- -------
Net cash provided by
financing activities 107,311 36,356
------- -------
Net increase /(decrease) in cash 93,020 (46,020)
Cash and cash equivalents, beginning
of period 11,362 146,172
------- -------
Cash and cash equivalents, end of period $104,382 $100,152
======= =======
See accompanying notes to consolidated financial statements.
TRITON PCS, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1999
(Unaudited)
(1) Basis of Presentation
The accompanying consolidated financial statements are
unaudited and have been prepared by management. In the
opinion of management, these consolidated financial
statements contain all of the adjustments, consisting of
normal recurring adjustments, necessary to present fairly,
in summarized form, the financial position and the
results of operations of the Company. The results of
operations for the three months ended March 31, 1999 are not
indicative of the results that may be expected for the year
ending December 31, 1999. The financial information
presented herein should be read in conjunction with the
combined financial statements for the year ended December
31, 1998 which include information and disclosures notnot
included herein.
The consolidated accounts of the Company include Triton PCS,
Inc; Triton PCS Holdings Company L.L.C.; Triton Management
Company, Inc.; Triton PCS Property Company L.L.C., Triton
PCS Equipment Company L.L.C.; Triton PCS Operating Company
L.L.C.; Triton PCS License Company L.L.C. (License Company);
and Triton PCS Investment Company, L.L.C. All significant
intercompany accounts or balances have been eliminated
in consolidation.
Certain reclassifications have been made to prior period
financial statements to conform to the current period
presentation.
(2) Potential Exchange
On March 24, 1998, the Company entered into a non-binding
letter of intent related to certain transactions with AT&T
Wireless PCS, Inc. (AT&T), including the potential
acquisition of 1.9 million additional net incremental Pops.,
and the exchange of the Hagerstown, MD BTAs. The agreement
arrangement between the parties has been modified to only
include the exchange by License Company of 512,000 Pops
located in the Hagerstown, MD and Cumberland, MD BTAs for
517,000 Pops of AT&T located in certain counties in the
Savannah, GA and Athens, GA BTAs, all of which are
contiguous to the Companys existing service area. Due to
the difference in value per Pop of the BTAs exchanged,
consideration of approximately $9.7 million, all of which is
expected to be represented by non-cash equity interests in
Triton PCS Holdings, Company, Inc. (Holdings) will be issued
to AT&T. The transaction is subject to execution of a
definitive exchange agreement and closing conditions typical
in transactions of the nature contemplated thereby. The
networks relating to the Savannah and Athens Pops have not
been built,. However, the Company expects that the Pops
will be included in the current build-out plan developed for
the Companys existing footprint.
(3) Capital Contributions
On February 4, 1998, pursuant to the securities purchase
agreement, Holdings issued $140.0 million of equity
Series C Preferred Stock to certain institutional investors
and management stockholders. The securities purchase
agreement requires the institutional investors and
management stockholders to fund their unconditional and
irrevocable obligations in installments in accordance with
the following schedule:
Date Due Amount
($ Millions)
Initial closing (funded
on February 4, 1998) $ 45.0
First anniversary of initial
closing (funded February 4, 1999) 35.0
Second anniversary of initial closing 35.0
Third anniversary of initial closing 25.0
------
Total $140.0
======
Pursuant to the securities purchase agreement provided
that the initial cash contributions and the unfunded
commitments are required to be made to Holdings. Pursuant
to the Closing Agreement, Holdings has directed that all
cash contributions subsequent to the initial cash
contribution be made directly to the Company.
As of March 31, 1999, Holdings received $51.4 million of
additional equity contributions, of which $35.0 million
related to the acquisition of the Myrtle Beach system and
$16.4 million related to the Norfolk Acquisition. These
funds were concurrently contributed to the Company.
(4) Myrtle Beach Acquisition
On June 30, 1998, the Company acquired an existing cellular
system for a purchase price of approximately $164.5 million
from Vangard Cellular Systems. The following unaudited pro
forma information has been prepared assuming that this
acquisition had taken place on January 1, 1998. The pro
forma information includes adjustments to interest expense
that would have been incurred to finance the purchase,
additional depreciation based on the fair market value of
the property, plant and equipment acquired, and the
amortization of intangibles arising from the transaction.
For the Three Months Ended March 31,
($000s)
1998 1999
Revenues $ 6,000 $11,540
Net Income (loss) $(13,042) $(28,906)
(5) Financial Statement Adjustment
The Companys consolidated financial statements as of and for
the three month period ending March 31, 1999 as originally
presented have been adjusted to reflect deferred
compensation related to the issuance of 2,685 shares of
common stock of Holdings to employees. In January 1999,
Holdings granted 2,685 shares of restricted common stock to
an employee and deferred compensation of $243,000 was
recorded in connection with the adjustment. In March 1999,
$139,000 of deferred compensation was forfeited by a terminated
employee. Deferred compensation will amortize into income as
it vests over five years, and $410,000 was amortized into income
in for the three month period ended March 31, 1999. The following
is a reconciliation of the adjusted amounts:
As originally
Presented Adjustment As Adjusted
($000s)
Balance Sheet at March 31, 1999:
Additional paid in capital $248,604 $5,594 $254,198
Accumulated deficit 64,077 1,530 65,607
Deferred compensation - 4,064 4,064
Statement of Operations:
Three months ended March 31, 1999
Non-cash compensation $ - $410 $410
Net loss 28,496 410 28,906
Three months ended March 31, 1998
Non-cash compensation $ - $11 $11
Net loss 142 11 153
ITEM 2 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
When used in this Form 10-Q and in future filings by the Company
with the SEC, in the Companys press releases and in oral
statements made with the approval of an authorized executive
officer of the Company, the words or phrases will likely result,
management expects or the Company expects, will continue, is
anticipated, estimated or similar expressions (including
confirmations by an authorized executive officer of the Company
or any such expressions made by a third party with respect to the
Company) are intended to identify forward-looking statements
within the meaning of the Private Securities Litigation Reform
Act of 1995. Readers are cautioned not to place undue reliance on
any such forward-looking statements, each of which speaks only as
of the date made. Such statements are subject to certain risks
and uncertainties that could cause actual results to differ
materially from historical results and those presently
anticipated or projected. The Company has no obligation to
release publicly the result of any revisions, which may be made
to any forward-looking statements to reflect anticipated or
unanticipated events or circumstances occurring after the date of
such statements.
GENERAL
The following discussion and analysis is based upon the
consolidated financial statements of the Company for the periods
presented herein, and should be read in conjunction with the
combined financial statements as of December 31, 1998 and for the
year then ended.
OVERVIEW
The Company intends to become a leading provider of wireless
broadband personal communications services (PCS) in the
southeastern United States. The Company was established by
Michael Kalogris, Steven Skinner and other former executives of
Horizon Cellular LP Group, along with various equity investors,
with the intent to develop and operate a leading PCS network in
the Southeast.
The Company has entered into a joint venture with AT&T Wireless
PCS, Inc. (AT&T), whereby the Company is positioned as the
exclusive provider of wireless mobility services under the AT&T
consumer brand name in the southeastern United States. The
Company is also party to agreements with AT&T that allows the
Company to benefit from AT&Ts nationwide wireless footprint, as
well as and promotional and marketing efforts, and provide the
Company with favorable roaming and long distance rates for
services on AT&Ts wireless and long distance networks.
The Company provides services in a contiguous area covering
approximately 13 million Pops in the southeastern United States,
including such major population and business centers as
Charleston, SC, Columbia, SC, Greenville/Spartanburg, SC,
Norfolk, VA, Richmond, VA and Augusta, GA, as well as major
resort destinations such as Myrtle Beach, SC, Hilton Head, SC and
Kiawah Island, SC.
To date, the Company has incurred expenditures in connection with
the establishment of its business, raising capital, the initial
design and construction of its PCS network, and engineering,
marketing, administrative and other start-up related expenses.
The Company launched commercial service in eight markets serving
approximately 5 million Pops during the first quarter of 1999.
Upon completion of the initial buildout, the Company intends to
target the remaining cities, connecting highway corridors and
counties along the interstates with population densities of 50 or
more per square mile. The Company expects to extend its coverage
to approximately 80% of the Pops in its licensed area by the end
of the fourth quarter of 2002, which the Company believes will
generally provide greater coverage than current cellular
operators in such markets. The extent to which the Company is
able to generate operating revenues and earnings is dependent on
a number of business factors, including construction of the
network at or below its estimated costs, successful deployment of
the PCS network and attainment of profitable levels of market
demand for the Companys products and services.
FINANCIAL STATEMENT ADJUSTMENT
The Companys consolidated financial statements as of and for the
three month period ending March 31, 1999 as originally presented
have been adjusted to reflect deferred compensation related to
the issuance of 2,685 shares of common stock of Holdings to
employees. In January 1999, Holdings granted 2,685 shares of
restricted common stock to an employee and deferred compensation
of $243,000 was recorded in connection with the adjustment. In
March 1999, $139,000 of deferred compensation was forfeited by a
terminated employee. Deferred compensation will amortize into
income as it vests over five years, and $410,000 was amortized
into income in for the three month period ended March 31, 1999.
The following is a reconciliation of the adjusted amounts:
As originally
Presented Adjustment As Adjusted
($000s)
Balance Sheet at March 31, 1999:
Additional paid in capital $248,604 $5,594 $254,198
Accumulated deficit 64,077 1,530 65,607
Deferred compensation - 4,064 4,064
Statement of Operations:
Three months ended March 31, 1999
Non-cash compensation $ - $410 $410
Net loss 28,496 410 28,906
Three months ended March 31, 1998
Non-cash compensation $ - $11 $11
Net loss 142 11 153
POTENTIAL EXCHANGE
On March 24, 1998, the Company entered into a non-binding letter
of intent with AT&T related to certain transactions, including
the potential acquisition of 1.9 million additional net
incremental Pops. The arrangement has been modified to only
include the exchange by Triton PCS License Company L.L.C.
(License Company) of 512,000 Pops located in the Hagerstown, MD
and Cumberland, MD BTAs for 517,000 Pops of AT&T located in
certain counties in the Savannah, GA and Athens, GA BTAs, all of
which are contiguous to the Companys existing service area. Due
to the difference in value per Pop of the BTAs exchanged,
consideration of approximately $9.7 million, all of which is
expected to be represented by non-cash equity interests in
Triton PCS Holdings, Company, Inc. (Holdings) will be issued to
AT&T. The transaction is subject to execution of a definitive
exchange agreement and closing conditions typical in transactions
of theis nature. If the networks relating to the Savannah and
Athens Pops have not been built,. However, the Company expects
that the Pops will be included in the current build-out plan
developed for the Companys existing footprint.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THE THREE MONTHS
ENDED MARCH 31, 1998
Revenues for the three months ended March 31, 1999 were $11.5
million related primarily exclusively to services launched in
eight markets during the first quarter 1999 and ongoing services
provided in the Myrtle Beach area. At March 31, 1999, subscribers
totaled 43,741, representing an incremental increase of 9,897
for the three-month period, resulting primarily from the service
launches. Service revenues were $6.5 million. The average revenue
per subscriber was $47.30, reflecting average minutes of use per
subscriber of 186. At March 31, 1999, roaming revenues were $2.8
million, reflecting total roaming minutes of use of approximately 7.3
million, generated primarily from the newly launched markets.
Costs of services includes the cost of interconnection, cell site
costs, roaming validation, toll costs, and supplementary
services. Costs of services were $6.6 million for the three
months ended March 31, 1999, resulting primarily exclusively from
the eight market launches and existing operations in Myrtle
Beach.
Equipment margins were a loss of $1.4 million for the three
months ended March 31, 1999. The Company expects to continue
subsidizing the cost of handsets to consumers for the foreseeable
future.
Selling and marketing costs were $7.6 million for the three
months ended March 31, 1999. The costs were incurred primarily
exclusively due to advertising and promotional activities related
to the launch of eight markets in the first quarter and the
establishment of the Companys distribution channels.
General and administrative expenses were $7.8 million for the
three months ended March 31, 1999, an increase of $5.1 million
over the same period in 1998, primarily as a result of increased
employee headcount, and costs associated with the Companys
corporate and regional administrative offices, and costs
associated with commencement of operations in two regional call
centers.
For the three months ended March 31, 1999, non-cash compensation
was $0.4 million, as compared to $11,000 for the same period in
1998. This amount related to the issuances of common stock of
Holdings to employees. The compensation is recognized over five
years of the stock vests.
For the three months ended March 31, 1999, depreciation and
amortization expense was $5.5 million. This amount relates
primarily exclusively to depreciation on network equipment and
the amortization of licenses put into service during the first
quarter related to the market launches and amortization
attributable to certain agreements acquired in the AT&T
transaction.
For the three months ended March 31, 1999, interest expense was
$10.0 million, net of capitalized interest of $3.0 million, an
increase of $9.2 million over the same period in 1998. The
increase is attributable to increased borrowings of $472.5
million as compared to $75.0 million in the same period in 1998.
The Companys weighted average interest rate was 10.07%.
For the three months ended March 31, 1999, interest income was
$1.1 million, as compared to $0.5 million for the same period in
1998. This amount relates primarily to interest income on the
Companys cash and cash equivalents. The average available cash
balance for the three months ended March 31, 1999 was $104.1
million, as compared to the $101.0 million for the same period in
1998. The available cash balance is due primarily from cash
generated throughout the last 12 months from net proceeds of
$291.0 million from the issuance of subordinated debt, borrowings
of $150.0 million under the Companys bank credit facility, and
$119.7 million of capital contributions, offset by capital
expenditures related to the network build-out.
For the three months ended March 31, 1999, the net loss was $28.9
million as compared to $0.2 million for the same period in 1998.
The net loss increased $28.7 million, resulting primarily from
the items discussed above.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 1999, the Company had $100.2 million in cash and
cash equivalents, as compared to $146.2 million in cash and cash
equivalents at December 31, 1998. Net working capital was $135.3
million at March 31, 1999 and $146.2 million at December 31,
1998.
Net Cash Used in Operating Activities
Cash used by operating activities of $34.2 million arose
primarily from an increase in sales, marketing and operating
activities related to launching eight new markets and the
commencing of operations in two regional call centers.
Net Cash Used in Investing Activities
Cash used by investing activities of $48.1 million arose from the
purchase of marketable securities of $29.4 million and capital
expenditures related to the network build-out of $18.7 million.
Net Cash Provided by Financing Activities
Cash provided by financing activities of $36.4 arose primarily
from $37.0 million in capital contributions from Holdings related
to funding of capital commitments by the cash equity investors.
Liquidity
The build-out of the Companys PCS network and the marketing of
the Companys PCS services will require substantial capital. As it
completes its build-out, the Company will be highly leveraged.
The Company currently estimates that its capital requirements
(including capital expenditures, working capital, debt service
requirements and anticipated operating losses) for the period
from inception through year-end 2002 (assuming substantial
completion of the Companys network build-out to cover 80% of the
Pops in the its licensed area by such time) will total
approximately $743.3 million. Actual amounts of the funds
required may vary materially from these estimates.
As part of the Companys network build-out, the Company expects to
spend $272.0 million in 1999 related to the completion of the
build-out of its initial coverage area and its continued build-
out of the Companys licensed area toward coverage of 80% which
is expected in by year-end 2002. The build-out of the initial
coverage area included the installation of two switches and the
lease or acquisition of approximately 1,200 cell sites, as well
as spectrum clearing costs, retail store fitout, and
administrative systems. The preceding capital forecasts exclude
internal engineering and capitalized interest costs.
The cash equity investors and certain management stockholders
have severally made irrevocable commitments to contribute $140
million in cash to the Company Holdings through February
2001 in exchange for 1.4 million shares of Holdings Series C
Preferred Stock. Holdings, in turn, has contributed and will
contribute all cash received on account thereof to the Company.
The cash equity investors and certain management stockholders,
have contributed $80 million on account of these commitments and
are obligated to contribute the balance as follows: $35 million
on February 4, 2000 and $25 million on February 4, 2001. In
addition, the Company Holdings has received additional equity
contributions of $35.0 million and $16.5 million from Holdings
the cash equity investors (who contributed such amounts to the
Company) related to the Myrtle Beach and Norfolk acquisitions,
respectively.
On February 3, 1998, the Company entered into a bank credit
facility. This credit facility provides for (i) a $175 million,
eight and one-half year Tranche A term loan, (ii) a $150 million,
nine and one-quarter year Tranche B term loan and (iii) a $100
million, eight and one-half year revolving credit facility. The
commitment to make revolving credit loans is reduced
automatically beginning on August 3, 2004 and the term loans must
be repaid beginning on February 3, 2002. In addition, the credit
facility requires the Company to make mandatory prepayments of
outstanding borrowings under the credit facility commencing with
the fiscal year ending December 31, 2001 based on a percentage of
excess cash flow, and contains customary financial and other
covenants. To date, $150 million of the Tranche B term loans have
been drawn by the Company, which are expected to fund the
Companys future operations. Borrowings under the facilities are
secured by a first priority pledge of all assets of the Company,
including the capital stock of the Company and its subsidiaries
that hold the PCS licenses.
On May 7, 1998, the Company completed an offering of $512 million
aggregate principal amount at maturity of 11% senior subordinated
discount notes due 2008, pursuant to Rule 144A of the Securities
Act of 1933, as amended. The proceeds of the offering (after
deducting an initial purchasers discount of $9 million) wasere
$291 million. The Company has used or intends to use the net
proceeds from the offering, together with the capital
contributions and borrowings under the credit facility, to fund:
(i) capital expenditures, including the build-out of its PCS
network; (ii) the acquisition of the Myrtle Beach system; (iii)
the Norfolk acquisition; (iv) working capital as required; (v)
operating losses; (vi) general corporate purposes; and (vii)
potential acquisitions.
The Company believes that the proceeds from the notes, together
with the availability under the credit facility and the
committed equity contributions, provide the Company
with funds sufficient to complete the build-out of the Companys
planned network within the licensed area.
INTEREST RATE RISK MANAGEMENT POLICIES
The Companys interest rate risk management program focuses on
minimizing exposure to interest rate movements, setting an
optimal mixture of floating and fixed rate debt, and minimizing
liquidity risk. To the extent possible, the Company manages
interest rate exposure and the floating and fixed ratio through
its borrowings, but sometimes uses interest rate swaps to adjust
its risk profile. The Company selectively enters into interest
rate swaps to manage interest rate exposure only.
YEAR 2000 DISCLOSURE
The Year 2000 issue is the result of computer programs being
written using two digits rather than four digits to define the
applicable year. Computer programs that have time-sensitive
software may recognize a date using 00 as the year 1900 rather
than the year 2000. This could result in a system failure or
miscalculations causing disruptions of operations, a temporary
inability to process transactions, send invoices, or engage in
normal business activities.
Currently, the Company is actively taking measures to eliminate
or mitigate the impact of any issues associated with the Year
2000. To that end, a project team with senior management
sponsorship has been established to provide centralized
coordination for the Companys Year 2000 related activities.
This team is currently conducting the inventory and assessment
phase of the program. Although the majority of the software,
hardware and firmware deployed as part of our start-up operation
was procured to the latest revision levels and believed to be
year 2000 capable, our process requires a re-verification of the
Year 2000 readiness capabilities with the vendors, suppliers and
third party providers. All suppliers and third-party vendors
deemed critical to the function of the Company are being surveyed
to ensure readiness and non-disruption to the Companys
operations. Through this assessment and surveying process, we
are identifying those remediation efforts necessary to ensure our
systems and applications will continue to operate without
interruption prior to, during and after the Year 2000. However,
we can provide no assurance that the information provided by the
vendors, suppliers and third party providers, upon whom we rely
for our services, is accurate. As such, we can make no guarantee
that inaccurate information provided to us could not have a
material effect upon our company.
To date, our assessments have shown that the Companys main
switching and transmission equipment, with the exception of the
Myrtle Beach operational systems, is capable of correctly
recognizing and processing date sensitive information. This
capability was further demonstrated through inter-operability
testing conducted by the Cellular Telecommunications Industry
Association. In addition to the wireless operational
infrastructure, initial assessments of support system providers
have revealed some products and applications that are not
currently in a conforming status. In all identified instances to
date, the supplier(s) of those products or applications have
identified that their product(s) will be compliant by the end of
the second quarter of 1999. However, there can be no guarantee
that the systems of other companies which the Company relies on
will be converted on a timely basis, or that a failure to convert
by another company would not have a material adverse effect on
the Company.
As part of the Myrtle Beach acquisition, the operational and
financial systems were to be migrated to the systems being
deployed as part of the Companys PCS start-up plan. The Myrtle
Beach financial systems were successfully migrated to those
systems in the first quarter of 1999. Additionally, the Company
is developing plans to upgrade or replace the existing
operational systems with compliant versions. This remediation
effort is expected to be completed by the end of the third
quarter of 1999. The failure to upgrade the Myrtle Beach
operational systems to a compliant version could have a material
adverse effect on the Company.
Initial assessments of our information technology have shown
that our network hardware, software and firmware was procured and
deployed at a compliant version level. Some previously deployed
information technology hardware in the Myrtle Beach markets is
non-compliant. However, these non-compliant applications are
planned for upgrade, and given the nature of the Companys
operations, potential failures of these applications are not
expected to have a material adverse effect on the Company.
The Company has not yet fully developed a comprehensive
contingency plan to address situations that may result if the
Company is unable to achieve Year 2000 readiness of its critical
operations. There can be no assurance that the Company will be
able to develop a contingency plan that will adequately address
issues that may arise in the year 2000. The failure of the
Company to successfully resolve such issues could result in a
disruption of the Companys service and operations, which wcould
have a material adverse effect on the Company.
The costs associated with the Year 2000 issues are estimated to
be approximately $200,000, of which $88,000 has been spent to
date. These costs are not material to the Companys business
operations or financial position. The costs of the plan and the
date on which the Company believes it will complete the Year 2000
modification are based on managements best estimates, which were
derived utilizing numerous assumptions regarding future events,
including the continued availability of certain resources, third-
party modification plans and other factors. There can be no
assurance that these estimates will be achieved and actual
results could differ materially from those anticipated.
INFLATION
The Company does not believe that inflation has had a material
impact on operations.
REGULATORY UPDATE
On January 25, 1999, the United States Supreme Court reversed the
United States Court of Appeals for the Eighth Circuits decisions
regarding the FCCs jurisdiction over interconnection provisions
of the Telecommunications Act. The Court upheld the FCCs
exercise of jurisdiction over local interconnection matters and
on all other respects material to the Companys operations.
On February 8, 1999, the FCC extended the deadline for CMRS
providers to comply with telephone number portability rules to
November 24, 2002, subject to any later determination that an
earlier phase-in of number portability is necessary to conserve
telephone numbers.
On April 15, 1999, the FCC completed its re-auction of 347 C, E,
and F block broadband PCS licenses, including licenses for
markets in the Companys Licensed Area, and applications for these
licenses are pending.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
4.1 First Supplemental Indenture, dated as of March 30, 1999, to
the Indenture dated as of May 4, 1998.
10.1 Fourth Amendment, dated as of March 29, 1999, to Credit
Agreement, dated as of February 3, 1998
27 Financial Data Schedule
(b) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934,
as amended, the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Malvern, State of
Pennsylvania on November 12, 1999.
Triton PCS, Inc.
By: /s/ Michael Kalogris
--------------------------------------------
Sole Director and Chief Executive Officer
Triton Management Company, Inc.
By: /s/ Michael Kalogris
------------------------------------------
Sole Director and Chief Executive Officer
Triton PCS Holdings Company L.L.C.
By:Triton Management Company, Inc.,its manager
By: /s/ Michael Kalogris
------------------------------------------
Sole Director and Chief Executive Officer
Triton PCS Property Company L.L.C.
By:Triton Management Company, Inc., its manager
By: /s/ Michael Kalogris
------------------------------------------
Sole Director and Chief Executive Officer
Triton PCS Equipment Company L.L.C.
By:Triton Management Company, Inc., its manager
BY: /s/ Michael Kalogris
------------------------------------------
Sole Director and Chief Executive Officer
Triton PCS Operating Company L.L.C.
By:Triton Management Company, Inc., its manager
By: /s/ Michael Kalogris
------------------------------------------
Sole Director and Chief Executive Officer
Triton PCS License Company L.L.C
By:Triton Management Company, Inc., its manager
By: /s/ Michael Kalogris
------------------------------------------
Sole Director and Chief Executive Officer
By: /s/ David Clark
------------------------------------------
Senior Vice President, Chief Financial
Officer, and Secretary
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