<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended SEPTEMBER 30, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT
For the transition period from _______________to_______________
COMMISSION FILE NUMBER 0-27217
SPECTRASITE HOLDINGS, INC.
(Name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 4899 56-3027322
(State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
SPECTRASITE HOLDINGS, INC.
100 Regency Forest Drive, Suite 400
Cary, North Carolina 27511
(919) 468-0112
(Address and telephone number of principal executive offices and principal place
of business)
Check whether the issuer:
(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
--- ---
As of October 31, 1999, the registrant had only one outstanding class of common
stock, of which there were 19,714,001 shares outstanding.
<PAGE> 2
<TABLE>
<CAPTION>
INDEX
PART I - FINANCIAL INFORMATION
<S> <C>
ITEM 1 - UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATMENTS
Condensed Consolidated Balance Sheets
at September 30, 1999 (unaudited) and December 31, 1998 3
Unaudited Condensed Consolidated Statements of Operations
for the three and nine months ended September 30, 1999 and 1998 4
Unaudited Condensed Consolidated Statement of Redeemable Convertible
Preferred Stock and Shareholders' Equity (Deficiency)
for the nine months ended September 30, 1999 5
Unaudited Condensed Consolidated Statements of Cash Flows
for the nine months ended September 30, 1999 and 1998 6
Notes to the Unaudited Condensed Consolidated Financial Statements 7
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 13
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK 17
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS 18
ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS 18
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES 18
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 18
ITEM 5 - OTHER INFORMATION 18
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K 19
SIGNATURES 20
</TABLE>
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<PAGE> 3
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
At September 30,1999 and December 31, 1998
(dollars in thousands)
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------------- ------------------
ASSETS (unaudited)
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 120,241 $ 99,548
Short-term investments - 15,414
Accounts receivable 24,721 3,353
Earnings in excess of billings 7,314 -
Inventories 4,055 -
Prepaid expenses and other 2,825 253
------------------- ------------------
Total current assets 159,156 118,568
Property and equipment, net 695,921 28,469
Goodwill and other intangible assets, net 257,834 12,757
Other assets 56,755 2,152
------------------- ------------------
Total assets $ 1,169,666 $ 161,946
=================== ==================
LIABILITIES, REDEEMABLE PREFERRED STOCK AND SHAREHOLDERS'
EQUITY (DEFICIENCY)
Current liabilities:
Accounts payable $ 24,548 $ 1,635
Accrued and other expenses 13,936 809
Billings in excess of costs and estimated earnings 2,986 -
------------------- ------------------
Total current liabilities 41,470 2,444
Long-term debt 155,718 -
Senior discount notes 501,382 132,689
Other long-term liabilities - 224
------------------- ------------------
Total liabilities 698,570 135,357
------------------- ------------------
Redeemable convertible preferred stock (Series A and B) - 40,656
------------------- ------------------
Shareholders' equity (deficiency):
Common stock ($.001 par value, 300,000,000 and 20,000,000
shares authorized, 19,060,219 and 956,753 shares issued and
outstanding at September 30, 1999 and December 31, 1998,
respectively) 19 1
Convertible preferred stock (Series A, B and C) 339,494 -
Additional paid-in-capital 209,376 -
Accumulated other comprehensive income 135 -
Accumulated deficit (77,928) (14,068)
-------------------- -------------------
Total shareholders' equity (deficiency) 471,096 (14,067)
------------------- -------------------
Total liabilities, redeemable preferred stock and
shareholders' equity (deficiency) $ 1,169,666 $ 161,946
=================== ==================
</TABLE>
See accompanying notes to these financial statements
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<PAGE> 4
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three and Nine Months Ended September 30, 1999 and 1998
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
September 30, 1999 September 30, 1998 September 30, 1999 September 30, 1998
------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
Revenues:
Site leasing $ 16,436 $ 170 $ 29,450 $ 211
Network services 9,644 1,520 13,967 5,154
--------------- ----------------- ---------------- ---------------
Total revenues 26,080 1,690 43,417 5,365
--------------- ----------------- ---------------- ---------------
Operating Expenses:
Costs of operations, excluding depreciation,
amortization and selling, general and
administrative expenses:
Site leasing 5,463 117 10,490 143
Network services 6,372 565 7,265 1,721
Selling, general and administrative expenses 12,249 2,262 21,909 5,997
Depreciation and amortization expense 12,759 461 21,833 780
Restructuring charges 7,127 - 7,727 -
--------------- ----------------- ---------------- ---------------
Total operating expenses 43,970 3,405 69,224 8,641
--------------- ----------------- ---------------- ---------------
Loss from operations (17,890) (1,715) (25,807) (3,276)
--------------- ----------------- ---------------- ---------------
Other income (expense):
Interest income 2,485 1,743 7,212 2,110
Interest expense (18,693) (3,898) (47,519) (4,335)
Other income (expense) (295) 208 (295) 473
--------------- ----------------- ---------------- ---------------
Total other income (expense) (16,503) (1,947) (40,602) (1,752)
--------------- ----------------- ---------------- ---------------
Loss before income taxes (34,393) (3,662) (66,409) (5,028)
Income tax expense 107 - 107 -
--------------- ----------------- ---------------- ---------------
Net loss $ (34,500) $ (3,662) $ (66,516) $ (5,028)
=============== ================= ================ ===============
Loss applicable to common shareholders:
Net loss $ (34,500) $ (3,662) $ (66,516) $ (5,028)
Accretion of redemption
value of preferred stock - (626) (760) (1,396)
--------------- ----------------- ---------------- ---------------
Net loss applicable to common shareholders $ (34,500) $ (4,288) $ (67,276) $ (6,424)
=============== ================= ================ ===============
Net loss per common share (basic and diluted) $ (4.21) $ (4.53) $ (16.85) $ (6.86)
=============== ================= ================ ===============
Weighted average common
shares outstanding 8,188 947 3,993 937
=============== ================= ================ ===============
</TABLE>
See accompanying notes to these financial statements
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<PAGE> 5
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF REDEEMABLE
CONVERTIBLE PREFERRED STOCK AND SHAREHOLDERS' EQUITY (DEFICIENCY)
Nine Months Ended September 30, 1999
(dollars in thousands)
<TABLE>
<CAPTION>
Redeemable
Convertible Common Stock Convertible Additional
Preferred ----------------------------------- Preferred Paid-in
Stock Shares Amount Stock Capital
----------------- ----------------- ----------------- ------------------ -----------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1998 $ 40,656 956,753 $ 1 $ - $ -
Net loss - - - - -
Foreign currency translation
adjustment - - - - -
Total comprehensive loss -
Issuance of common stock - 18,103,466 18 - 215,927
Stock issuance costs - - - - (6,551)
Issuance of Series C preferred stock - - - 301,494 -
Accretion of redemption value 760 - - - -
Cancellation of redemption status of
preferred stock (41,416) - - 38,000 -
------------ ---------- --------- ----------- -----------
Balance at September 30, 1999 $ - 19,060,219 $ 19 $ 339,494 $ 209,376
============ ========== ========= =========== ===========
</TABLE>
<TABLE>
<CAPTION>
Comprehensive Accumulated Other
Income Comprehensive Accumulated
(Loss) Income (loss) Deficit Total
----------------- ------------------ ----------------- -----------------
<S> <C> <C> <C> <C>
Balance at December 31, 1998 $ - $ - $ (14,068) $ (14,067)
Net loss (66,516) - (66,516) (66,516)
Foreign currency translation
adjustment 135 135 - 135
-----------------
Total comprehensive loss $ (66,381)
=================
Issuance of common stock - - 215,945
Stock issuance costs - - (6,551)
Issuance of Series C preferred stock - - 301,494
Accretion of redemption value - (760) (760)
Cancellation of redemption status of
preferred stock - 3,416 41,416
-------- ----------- -----------
Balance at September 30, 1999 $ 135 $ (77,928) $ 471,096
======== =========== ===========
</TABLE>
See accompanying notes to these financial statements
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<PAGE> 6
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended September 30, 1999 and 1998
(dollars in thousands)
<TABLE>
<CAPTION>
1999 1998
-------------------- --------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss $ (66,516) $ (5,028)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation 19,749 261
Amortization of goodwill and other intangibles 2,084 519
Amortization of debt issuance costs 11,085 -
Amortization of senior discount notes 28,689 3,915
Write-off of Telesite goodwill 6,178 -
Loss (gain) on sale of assets 95 (472)
Changes in operating assets and liabilities,
net of acquisition:
Accounts receivable (3,859) 436
Earnings in excess of billings (552) -
Inventories (147) -
Prepaid expenses and other (1,938) (149)
Accounts payable 16,832 1,217
Other current liabilities 8,372 (359)
Other, net (338) -
-------------------- --------------------
Net cash provided by operating activities 19,734 340
------------------- --------------------
INVESTING ACTIVITIES
Purchases of property and equipment (566,359) (12,496)
Deposits on asset purchases (48,186) (11,750)
Purchase of short-term investments - (45,561)
Maturities of short term investments 15,414 -
Acquisitions, net of cash acquired (78,720) (1,989)
Proceeds from sale of assets 22 298
Other, net (4,312) 150
-------------------- --------------------
Net cash flows used in investing activities (682,141) (71,348)
-------------------- ---------------------
FINANCING ACTIVITIES
Proceeds from issuance of common stock 900 -
Proceeds from issuance of preferred stock 231,494 28,000
Stock issuance costs (6,551) (359)
Proceeds from issuance of long-term debt 150,052 -
Repayments of debt (3,598) (2,952)
Proceeds from issuance of senior discount notes 340,004 125,000
Debt issuance costs (29,201) (4,711)
-------------------- ---------------------
Net cash flow from financing activities 683,100 144,978
------------------- --------------------
Net increase in cash and cash equivalents 20,693 73,970
Cash and cash equivalents at beginning of period 99,548 2,234
------------------- --------------------
Cash and cash equivalents at end of period $ 120,241 $ 76,204
================== ===================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for interest $ 4,498 $ 211
================== ===================
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND
FINANCING ACTIVITIES:
Common stock issued for financing costs $ 9,000 $ -
================== ===================
Series C preferred stock issued for purchase of
property and equipment $ 70,000 $ -
=================== ===================
Common stock issued for purchase of Westower
Corporation $ 205,559 $ -
=================== ===================
</TABLE>
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<PAGE> 7
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED STATEMENTS
1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
SpectraSite Holdings, Inc. ("SpectraSite") and its wholly owned
subsidiaries (collectively referred to as the "Company") are principally engaged
in providing services to companies operating in the telecommunications industry,
including leasing of antenna sites on multi-tenant towers, network design, tower
construction and antenna installation.
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the
accounts of SpectraSite and its subsidiaries. All significant intercompany
transactions and balances have been eliminated in consolidation.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the unaudited condensed
consolidated financial statements. Actual results could differ from those
estimates.
REVENUE RECOGNITION
Site leasing revenues are recognized when earned. Escalation clauses
present in the lease agreements with the Company's customers are recognized on a
straight-line basis over the term of the lease. Service revenues from site
selection, construction and construction management activities are derived under
service contracts with customers which provide for billing on a time and
materials or fixed price basis. Revenues are recognized as services are
performed with respect to time and materials contracts. Revenues are recognized
using the percentage-of-completion method for fixed price contracts, measured by
the percentage of contract costs incurred to date compared to estimated total
contract costs. Costs in excess of billings on uncompleted contracts represent
revenues recognized in excess of amounts billed. Billings in excess of costs on
uncompleted contracts represent billings in excess of revenues recognized.
Provisions for estimated losses on uncompleted contracts are made in the period
in which such losses are determined.
INVENTORIES
Inventories are stated at the lower of cost or market using the
first-in, first-out method and consist primarily of materials purchased for
future construction not associated with specific jobs
INVESTMENTS
Investments in entities in which the Company owns more than 20% but less
than 50% are accounted for using the equity method. Under the equity method, the
investment is stated at cost plus the Company's equity in net income (loss) of
the entity since acquisition. The equity in net income (loss) of such entity is
recorded in "Other income (expense)" in the accompanying condensed consolidated
statements of operations.
SIGNIFICANT CUSTOMERS
In the three and nine months ended September 30, 1999, one customer
accounted for 40.2% and 40.4% of the Company's revenues, respectively. In the
three and nine months ended September 30, 1998, a different customer accounted
for 41.2% and 42.2% of revenues, respectively. In addition, in the three months
ended September 30, 1998, two customers accounted for 21.9% and 10.1% of the
Company's revenues, respectively.
RESTRUCTURING CHARGES
In September 1999, the Company announced that it would no longer
directly provide site acquisition services. As a result, the Company recorded
restructuring charges of $7.1 million, of which $6.2 million is related to the
write-off of goodwill related to the purchase of TeleSite Services, LLC and
$0.9 million is related to costs of employee severance. In March 1999, the
Company announced that it would relocate its marketing and administrative
operations from Little Rock, Arkansas and Birmingham, Alabama to its corporate
headquarters in Cary, North Carolina. As a result, the Company recorded a
restructuring charge of $0.6 million for
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<PAGE> 8
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED STATEMENTS
employee termination and other costs related to the relocation of these
activities.
INCOME TAXES
The Company provides for income taxes at the end of each interim
period based on the estimated effective tax rate for the full fiscal year for
each tax reporting entity. Cumulative adjustments to the Company's estimate are
recorded in the interim period in which a change in the estimated annual
effective rate is determined.
RECLASSIFICATIONS
Certain reclassifications have been made to the 1998 condensed
consolidated financial statements to conform to the 1999 presentation.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
In June 1998, the FASB issued Statement of Financial Accounting
Standards No. 133, Accounting for Derivative Instruments and Hedging Activities
("SFAS 133"). SFAS 133 requires that derivative instruments be recognized as
either assets or liabilities in the consolidated balance sheet based on their
fair values. Changes in the fair values of such derivative instruments will be
recorded either in results of operations or in other comprehensive income,
depending on the intended use of the derivative instrument. The initial
application of SFAS 133 will be reported as the effect of a change in accounting
principle. SFAS 133 is effective for all fiscal quarters beginning after June
15, 2000. The Company has not yet determined the effect that the adoption of
SFAS 133 will have on its consolidated financial statements.
UNAUDITED INTERIM FINANCIAL STATEMENTS
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles for interim financial reporting and in accordance with the
instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they
do not include all of the information and disclosures normally required by
generally accepted accounting principles for complete financial statements or
those normally reflected in the Company's Annual Report on Form 10-K. The
financial information included herein reflects all adjustments (consisting of
normal recurring adjustments) which are, in the opinion of management, necessary
for a fair presentation of results for interim periods. Results of interim
periods are not necessarily indicative of the results to be expected for a full
year.
2. PROPERTY AND EQUIPMENT
Property and equipment consists of the following (in thousands):
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
---------------------- ----------------------
<S> <C> <C>
Towers $ 667,333 $ 24,780
Equipment 6,293 823
Furniture and fixtures 1,701 288
Other 11,444 212
--------------------- ---------------------
686,771 26,103
Less accumulated depreciation (15,348) (870)
---------------------- ----------------------
671,423 25,233
Construction in progress 24,498 3,236
--------------------- ---------------------
$ 695,921 $ 28,469
===================== =====================
</TABLE>
3. ACQUISITION ACTIVITIES
In September 1999, the Company consummated the Agreement and Plan of
Merger, dated as of May 15, 1999 with Westower Corporation ("Westower"). Under
the terms of the agreement, Westower shareholders received 1.81 shares of
SpectraSite common stock for each share of Westower common stock. In the
aggregate, SpectraSite exchanged 15.5 million shares of its common stock valued
at $205.6 million for 8.6 million shares of Westower common stock and assumed
$81.5
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<PAGE> 9
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED STATEMENTS
million of debt. The Company repaid $72.2 million of such assumed debt at
closing. In addition, the Company assumed the outstanding Westower employee
stock options, which were converted into options to purchase 1.7 million shares
of SpectraSite's common stock. The acquisition was accounted for as a purchase,
and the excess of cost over fair value of the net assets acquired is being
amortized on a straight-line basis over fifteen years. The operations of
Westower are included in the consolidated statement of operations from the date
of acquisition.
The pro forma unaudited results of operations for the nine months
ended September 30, 1999 and 1998, assuming the acquisition of Westower by the
Company and Westower's purchases of Cord Communications, Inc. and Summit
Communications, LLC had been consummated as of January 1, 1998, follows (in
thousands, except per share data):
<TABLE>
<CAPTION>
Nine months Nine months
Ended Ended
September 30, September 30,
1999 1998
------------- -------------
<S> <C> <C>
Revenues $ 130,571 $ 60,613
Net loss $ (81,860) $ (17,834)
Basic and diluted net loss
per common share $ (4.65) $ (1.17)
</TABLE>
In April 1999, the Company purchased 2,000 communications towers from
Nextel Communications, Inc. ("Nextel") for $560.0 million in cash and shares of
SpectraSite's Series C preferred stock valued at $70.0 million. The Company used
$150.0 million of borrowings under a $500.0 million committed credit facility,
$340.0 million from the proceeds of a privately-placed offering of senior
discount notes and $231.5 million from the sale of SpectraSite's Series C
preferred stock to fund the cash purchase price, to pay related fees and
expenses and for general corporate purposes. As part of the transaction, Nextel
has agreed to lease 1,700 additional sites on the Company's towers as part of
Nextel's national deployment.
In connection with the purchase, Nextel entered into a master lease
agreement to become the anchor tenant on each of the acquired towers and also
conveyed to the Company certain third-party co-location site leases associated
with the acquired assets. Nextel also transferred to the Company certain
non-cancelable ground leases, and the Company assumed all operating and other
costs associated with the acquired assets.
In November 1999, the Company entered into an agreement to acquire 94
communications towers from DigiPH PCS, Inc. for $36 million in cash. The cash
consideration is expected to come from currently available funds. The
transaction is expected to close in the fourth quarter of 1999.
4. INTANGIBLE ASSETS
Intangible assets consist of the following (in thousands):
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
--------------------- ---------------------
<S> <C> <C>
Goodwill $ 227,048 $ 8,963
Debt issuance costs 33,847 4,836
--------------------- ---------------------
260,895 13,799
Less accumulated amortization (3,061) (1,042)
---------------------- ----------------------
$ 257,834 $ 12,757
===================== =====================
</TABLE>
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<PAGE> 10
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED STATEMENTS
5. OTHER ASSETS
Other assets consist of the following (in thousands):
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
--------------------- ---------------------
<S> <C> <C>
Deposits $ 49,244 $ 1,750
Other 7,511 402
--------------------- ---------------------
$ 56,755 $ 2,152
===================== =====================
</TABLE>
6. DEBT
11.25% SENIOR DISCOUNT NOTES DUE 2009
In April 1999, SpectraSite issued $586.8 million aggregate principal
amount at maturity of senior discount notes due 2009 (the "2009 Notes") for
gross proceeds of $340.0 million. Interest on the 2009 Notes accretes daily at a
rate of 11.25% per annum, compounded semiannually, to an aggregate principal
amount of $586.8 million on April 15, 2004. Cash interest will not accrue on the
2009 Notes prior to April 15, 2004. Commencing April 15, 2004, cash interest
will accrue and be payable semiannually in arrears on each April 15 and October
15, commencing October 15, 2004, at a rate of 11.25% per annum. After April 15,
2004, the Company may redeem all or a portion of the 2009 Notes at specified
redemption prices, plus accrued and unpaid interest, to the applicable
redemption date. On one or more occasions prior to April 15, 2002, the Company
may redeem up to 35% of the aggregate principal amount at maturity of the 2009
Notes with the net cash proceeds from one or more equity offerings. The
redemption price would be 111.25% of the accreted value on the redemption date.
The Company is required to comply with certain covenants under the terms of the
2009 Notes that restrict the Company's ability to incur additional indebtedness,
make certain payments and issue preferred stock, among other things.
CREDIT FACILITY
In April 1999 in connection with the acquisition of communications
towers from Nextel, SpectraSite Communications, Inc. ("Communications"), a
wholly-owned subsidiary of SpectraSite, entered into a $500.0 million credit
facility. The credit facility consists of a $50.0 million revolving credit
facility that may, subject to the satisfaction of certain financial covenants,
be drawn at any time up to December 31, 2005, at which time all amounts drawn
under the revolving credit facility must be paid in full; a $300.0 million
multiple draw term loan that may be drawn at any through March 31, 2002, which
requires that the amount drawn be repaid in quarterly installments commencing on
June 30, 2002 and ending on December 31, 2005; and a $150.0 million term loan
that was drawn in full at the closing of the Nextel tower acquisition and that
amortizes at a rate of 1.0% annually, payable in quarterly installments
beginning on June 30, 2002 through December 31, 2005, $67.5 million on March 31,
2006 with the balance due on June 30, 2006. In addition, the credit facility
contemplates borrowings to be funded by affiliates of certain of SpectraSite's
stockholders subject to the approval of a majority of the lenders under the
credit facility and the consent of such affiliates.
The revolving credit loans and the multiple draw term loans will bear
interest, at our option, at either Canadian Imperial Bank of Commerce's base
rate, plus an applicable margin of 1.5% per annum initially, which margin after
a period of time may decrease based on a leverage ratio, or the reserve adjusted
London interbank offered rate, plus an applicable margin of 3.0% per annum
initially, which margin after a period of time may decrease based on a leverage
ratio.
The term loan bears interest, at our option, at either Canadian
Imperial Bank of Commerce's base rate, plus 2.0% per annum, which margin after a
period of time may decrease based on a leverage ratio, or the reserve adjusted
London interbank offered rate, plus 3.5% per annum, which margin after a period
of time may decrease based on a leverage ratio.
We will be required to pay a commitment fee of between 1.25% and
0.50% per annum in respect of the undrawn portion of the multiple draw term
loan, depending on the amount undrawn. We are required to pay a commitment fee
of 0.50% per annum in respect of the undrawn portion of the revolving credit
facility.
We may be required to prepay the credit facility in part upon the
occurrence of certain events, such as a sale of assets, the incurrence of
certain additional indebtedness, the issuance of equity and the generation of
excess cash flow.
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<PAGE> 11
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED STATEMENTS
SpectraSite and each of Communications' subsidiaries has guaranteed
the obligations under the credit facility. The credit facility is further
secured by substantially all the tangible and intangible assets of
Communications and its subsidiaries and a pledge of all of the capital stock of
Communications and its subsidiaries.
The credit facility contains a number of covenants that, among other
things, restrict our ability to incur additional indebtedness; create liens on
assets; make investments, make acquisitions, or engage in mergers or
consolidations; dispose of assets; enter into new lines of business; engage in
certain transactions with affiliates; and pay dividends or make capital
distributions. SpectraSite, however, will be permitted to pay dividends after
July 15, 2003, for the purpose of paying interest on its 12% Senior Discount
Notes due 2008 and the 2009 Notes so long as no default under the credit
facility then exists or would exist after giving effect to such payment.
In addition, the credit facility requires compliance with certain
financial covenants, including requiring Communications and its subsidiaries, on
a consolidated basis, to maintain a maximum ratio of total debt to annualized
EBITDA; a minimum interest coverage ratio; a minimum fixed charge coverage
ratio; and a minimum annualized EBITDA, for the first year only.
7. SHAREHOLDERS' EQUITY
SERIES A AND B CONVERTIBLE PREFERRED STOCK
At December 31, 1998, the Company had mandatorily redeemable
convertible preferred stock consisting of Series A and Series B cumulative
redeemable preferred stock, each with a $0.001 par value, 10,462,830 shares
authorized in the aggregate and 3,462,830 and 7,000,000 shares issued and
outstanding, respectively. In connection with closing the Nextel tower
acquisition, provisions for dividends and redemption were eliminated with
respect to the Series A and Series B preferred stock. Previously accrued
dividends have been eliminated, and the outstanding balances have been
reclassified as shareholders' equity in the balance sheet as of September 30,
1999. Each share of Series A and Series B preferred stock is convertible into
one share of common stock and entitles the holder to vote on an as-converted
basis with holders of common stock. In addition, contemporaneously with the
closing of an underwritten public offering of common stock resulting in gross
proceeds of at least $150.0 million at a per share price of $8.00 or greater,
the outstanding shares of Series A and Series B preferred stock shall
automatically convert to common stock on a share-for-share basis. The Company
has reserved a sufficient number of its authorized shares of common stock for
the purpose of effecting the future conversion of the preferred stock.
SERIES C CONVERTIBLE PREFERRED STOCK
In connection with closing the Nextel tower acquisition, the Company
sold 46,286,795 shares of Series C preferred stock at a price of $5.00 per
share. In addition, Nextel received 14 million shares of Series C preferred
stock. At September 30, 1999, the Company has 60,286,795 of $0.001 par value
Series C shares authorized, issued and outstanding. Each share of Series C
preferred stock is convertible into one share of common stock and entitles the
holder to vote on an as-converted basis with holders of common stock. In
addition, contemporaneously with the closing of an underwritten public offering
of common stock resulting in gross proceeds of at least $150.0 million at a per
share price of $8.00 or greater, the outstanding shares of Series C preferred
stock shall automatically convert to common stock. The Company has reserved a
sufficient number of its authorized shares of common stock for the purpose of
effecting the future conversion of the preferred stock.
COMMON STOCK
In connection with the Nextel tower acquistion, SpectraSite also
restated its certificate of incorporation. The amended and restated certificate
authorized 95 million shares of common stock, $0.001 par value per share. In
addition, the Company increased the maximum number of shares for which options
may be granted under its stock option plan to 4.1 million.
In August 1999, SpectraSite amended its restated certificate of
incorporation to increase the authorized shares of common stock to 300 million.
In addition, SpectraSite increased the maximum number of shares for which
options may be granted under its stock option plan to 10 million and authorized
one million shares to be issued under the Employee Stock Purchase Plan.
- 11 -
<PAGE> 12
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED STATEMENTS
8. BUSINESS SEGMENTS
The Company previously operated in one business segment. As a result
of the Westower acquisition, the Company now operates in two business segments,
site leasing and network services. Prior period information has been restated to
reflect the current business segments. The site leasing segment provides for
leasing and subleasing of antennae sites on multi-tenant towers for a diverse
range of wireless communication services, including personal communication
services, paging, cellular and microwave. The network services segment offers a
broad range of network development services, including network design, tower
construction and antenna installation.
In evaluating financial performance, management focuses on operating
profit (loss), excluding depreciation and amortization and restructuring
charges. This measure of operating profit (loss) is also before interest income,
interest expense, other income (expense) and income taxes. All reported segment
revenues are generated from external customers as intersegment revenues are not
significant.
Summarized financial information concerning the reportable segments
as of and for the three and nine months ended September 30, 1999 and 1998 is
shown in the following table. The "Other" column represents amounts excluded
from specific segments, such as income taxes, corporate general and
administrative expenses, depreciation and amortization, restructuring and other
non-recurring charges and interest. In addition, "Other" also includes corporate
assets such as cash and cash equivalents, tangible and intangible assets and
income tax accounts which have not been allocated to a specific segment.
<TABLE>
<CAPTION>
Site Leasing Network Services Other Total
------------------- -------------------- ------------------- --------------------
(in thousands)
<S> <C> <C> <C> <C>
Three months ended September 30,
- --------------------------------
1999
Revenues $ 16,436 $ 9,644 $ - $ 26,080
Income (loss) before income taxes 10,944 1,227 (46,564) (34,393)
Assets 691,820 44,832 433,014 1,169,666
1998
Revenues $ 170 $ 1,520 $ - $ 1,690
Income (loss) before income taxes 53 955 (4,670) (3,662)
Assets 25,865 - 136,081 161,946
Nine months ended September 30,
- -------------------------------
1999
Revenues $ 29,450 $ 13,967 $ - $ 43,417
Income (loss) before income taxes 18,930 4,658 (89,997) (66,409)
Assets 691,820 44,832 433,014 1,169,666
1998
Revenues $ 211 $ 5,154 $ - $ 5,365
Income (loss) before income taxes 68 3,433 (8,529) (5,028)
Assets 25,865 - 136,081 161,946
</TABLE>
- 12 -
<PAGE> 13
ITEM 2- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
This report contains "forward looking statements" concerning our
future expectations, plans or strategies that involve risks and uncertainties.
When we use the words or phrases "will likely result," "management expects" or
"will continue," "is anticipated," "estimated" or similar expressions (including
oral confirmations by our authorized executive officers), these statements 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 earnings and those presently anticipated or projected. Factors that
could impact our expectations include (i) substantial capital requirements and
leverage principally as a consequence of our ongoing acquisition and
construction activities, (ii) dependence on demand for wireless communications
services, (iii) the success of our network development and tower construction
programs, and (iv) the successful integration of assets and businesses we have
acquired. We have 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.
SpectraSite's primary business is the leasing of antenna sites on
multi-tenant towers to a diverse range of wireless communications industries.
SpectraSite also offers its customers a broad range of network services,
including network design, tower construction and antenna installation.
SpectraSite is geographically diversified throughout the United States and
Canada.
In April 1999, we acquired 2,000 communications towers from Nextel
for a combination of cash and stock. In addition, Nextel has agreed to lease
1,700 additional sites on our towers as part of Nextel's national deployment.
This transaction has significantly increased our revenues, costs of operations,
operating expenses and interest expense.
On September 2, 1999, we acquired Westower Corporation in a merger
transaction. In connection with the merger, Westower shareholders received 1.81
shares of SpectraSite common stock for each Westower share. The addition of
Westower will significantly increase our revenues, costs of operations and
operating expenses in future periods.
In November 1999, the Company entered into an agreement to acquire 94
communications towers from DigiPH PCS, Inc. for $36 million in cash. The cash
consideration is expected to come from currently available funds. The
transaction is expected to close in the fourth quarter of 1999.
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO THE RESULTS FOR THE THREE
MONTHS ENDED SEPTEMBER 30, 1998.
Consolidated revenues for the three months ended September 30, 1999
were $26.1 million, an increase of $24.4 million from the three months ended
September 30, 1998. Revenues from site leasing increased to $16.4 million for
the three months ended September 30, 1999 from $0.2 million for the three months
ended September 30, 1998 primarily as a result of revenues derived from 2,000
communications towers which we acquired from Nextel in April 1999. We owned
2,405 communications towers at September 30, 1999 compared to 45 communications
towers at September 30, 1998.
Revenues from network services increased to $9.6 million for the
three months ended September 30, 1999 compared to $1.5 million in the three
months ended September 30, 1998 primarily as a result of the acquisition of
Westower in September 1999. In September 1999, we announced that we would no
longer directly provide site acquisition services. Revenues from site
acquisition activities were $1.9 million and $1.5 million in the three months
ended September 30, 1999 and 1998, respectively.
Costs of operations increased to $11.8 million for the three months
ended September 30, 1999 from $0.7 million for the three months ended September
30, 1998. The increase in costs was primarily attributable to operating costs of
the 2,000 communication towers purchased from Nextel in April 1999 and to the
acquisition of Westower in September 1999. Costs of operations for site leasing
as a percentage of site leasing revenues decreased to 33.2% for the three months
ended September 30, 1999 from 68.8% for the three months ended September 30,
1998 primarily due to revenues generated from the acquisition of towers from
Nextel and co-location revenues on those towers. As our site leasing operations
mature, additional tenants on a
- 13 -
<PAGE> 14
tower will generate increases in gross profit margin and cash flow because a
significant proportion of tower operating costs are fixed and do not increase
with additional tenants. Costs of operations for network services as a
percentage of network services revenues increased to 66.1% for the three months
ended September 30, 1999 from 37.2% for the three months ended September 30,
1998. This increase is due to construction activities associated with Westower's
operations which have higher levels of direct costs than our historical site
acquisition activities.
Selling, general and administrative expenses increased to $12.2
million for the three months ended September 30, 1999 from $2.3 million for the
three months ended September 30, 1998. The increase is a result of expenses
related to additional corporate overhead and field operations to manage and
operate the growth in the ongoing activities of SpectraSite and the acquisition
of Westower in September 1999.
Depreciation and amortization expense increased to $12.8 million for
the three months ended September 30, 1999 from $0.5 million for the three months
ended September 30, 1998 primarily as a result of the increased depreciation
from the towers we have acquired or constructed and amortization of goodwill
related to the Westower acquisition.
In September 1999, we announced that we would no longer directly
provide site acquisition services. As a result, we recorded restructuring
charges of $7.1 million, of which $6.2 million is related to the write-off of
goodwill related to the purchase of TeleSite Services, LLC and $0.9 million is
related to costs of employee severance.
As a result of the factors discussed above, our loss from operations
was $17.9 million for the three months ended September 30, 1999 compared to $1.7
million for the three months ended September 30, 1998.
Net interest expense increased to $16.2 million during the three
months ended September 30, 1999 from $2.2 million for the three months ended
September 30, 1998, reflecting additional interest expense due to the issuance
of SpectraSite's 12% senior discount notes due 2008 in June 1998 and
SpectraSite's 11.25% senior discount notes due 2009 in April 1999, as well as
borrowings under our credit facility in April 1999.
NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO THE RESULTS FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 1998.
Consolidated revenues for the nine months ended September 30, 1999
were $43.4 million, an increase of $38.1 million from the nine months ended
September 30, 1998. Revenues from site leasing increased to $29.5 million for
the nine months ended September 30, 1999 from $0.2 million for the nine months
ended September 30, 1998 primarily as a result of revenues derived from 2,000
communication towers which we acquired from Nextel in April 1999. We owned 2,405
communications towers at September 30, 1999 compared to 45 communications towers
at September 30, 1998.
Revenues from network services increased to $14.0 million for the
nine months ended September 30, 1999 compared to $5.2 million in the nine months
ended September 30, 1998 primarily as a result of the acquisition of Westower in
September 1999. In September 1999, we announced that we would no longer directly
provide site acquisition services. Revenues from site acquisition activities
were $6.2 million and $5.2 million in the nine months ended September 30, 1999
and 1998, respectively.
Costs of operations increased to $17.8 million for the nine months
ended September 30, 1999 from $1.9 million for the nine months ended September
30, 1998. The increase in costs was attributable to operating costs of the 2,000
communication towers purchased from Nextel in April 1999. Costs of operations
for site leasing as a percentage of site leasing revenues decreased to 35.6% for
the nine months ended September 30, 1999 from 67.8% for the nine months ended
September 30, 1998 primarily due to revenues generated from the acquisition of
towers from Nextel and co-location revenues on those towers. As our site leasing
operations mature, additional tenants on a tower will generate increases in
gross profit margin and cash flow because a significant proportion of tower
operating costs are fixed and do not increase with additional tenants. Costs of
operations for network services as a percentage of network services revenues
increased to 52.0% for the nine months ended September 30, 1999 from 33.4% for
the nine months ended September 30, 1998. This increase is due to construction
activities associated with Westower's operations which have higher levels of
direct costs than our historical site acquisition activities.
Selling, general and administrative expenses increased to $21.9
million for the nine months ended September 30, 1999 from $6.0 million for the
nine months ended September 30, 1998. The increase is a result of expenses
related to additional corporate overhead and field operations to manage and
operate the growth in the ongoing activities of SpectraSite and the acquisition
of Westower.
Depreciation and amortization expense increased to $21.8 million for
the nine months ended September 30, 1999
- 14 -
<PAGE> 15
from $0.8 million for the nine months ended September 30, 1998 primarily as a
result of the increased depreciation from the towers we have acquired or
constructed and amortization of goodwill related to the Westower acquisition.
In September 1999, we announced that we would no longer directly
provide site acquisition services. As a result, we recorded restructuring
charges of $7.1 million, of which $6.2 million is related to the write-off of
goodwill related to the purchase of TeleSite Services, LLC and $0.9 million is
related to costs of employee severance. In March 1999, SpectraSite announced
that it would relocate its marketing and administrative operations from Little
Rock, Arkansas and Birmingham, Alabama to its corporate headquarters in Cary,
North Carolina. As a result, we recorded a restructuring charge of $0.6 million
for employee termination and other costs related to the relocation of these
activities.
As a result of the factors discussed above, our loss from operations
was $25.8 million for the nine months ended September 30, 1999 compared to $3.3
million for the nine months ended September 30, 1998.
Net interest expense increased to $40.3 million during the nine
months ended September 30, 1999 from $2.2 million for the nine months ended
September 30, 1998, reflecting additional interest expense due to the issuance
of the 2008 notes in June 1998 and the 2009 notes in April 1999, as well as
borrowings under our credit facility in April 1999.
LIQUIDITY AND CAPITAL RESOURCES
SpectraSite Holdings is a holding company whose only significant
asset is the outstanding capital stock of its subsidiary, SpectraSite
Communications. Our only source of cash to pay interest on and principal of our
debt is distributions from SpectraSite Communications. Prior to July 15, 2003,
interest expense on the 2008 notes will consist solely of non-cash accretion of
an original issue discount and the notes will not require annual cash interest
payments. After such time, the 2008 notes will have accreted to approximately
$225.2 million and will require semi-annual cash interest payments of $13.5
million. In addition, the notes mature on July 15, 2008. Similarly, the 2009
notes will not require cash interest payments prior to October 15, 2004 and
mature on April 15, 2009. After October 15, 2004, the 2009 notes will have
accreted to approximately $586.8 million and will require semi-annual cash
interest payments of $33.0 million. Furthermore, our credit facility provides
for periodic principal and interest payments.
Under a registration rights agreement with the initial purchasers of
the 2008 notes, we agreed to complete an exchange offer for the privately placed
2008 notes prior to March 10, 1999. Since we did not complete this exchange
offer prior to March 10, 1999, the interest rate on the 2008 notes increased by
0.50% per year. This additional interest accrued on the 2008 notes until we
completed the exchange offer on September 15, 1999. On July 15, 1999, we paid
the first installment in additional cash interest to holders of the 2008 notes
with cash-on-hand, and on January 15, 2000, we will pay the final installment to
such holders. Similarly, under a registration rights agreement with the initial
purchasers of the 2009 notes, Holdings agreed to file a registration statement
with the SEC for an exchange offer of registered notes for the privately placed
2009 notes before July 20, 1999. Since we did not file the 2009 notes exchange
offer registration statement before July 20, 1999, the interest rate on the 2009
notes increased by 0.50% per year. This additional interest accrued on the 2009
notes until we filed the exchange offer registration statement on August 12,
1999, and we paid this interest in cash on October 15, 1999. We completed both
exchange offers on September 15, 1999.
To complete the Nextel tower acquisition and pay related fees and
expenses, we used $150.0 million of borrowings under our credit facility, $340.0
million of proceeds from the sale of the 2009 notes and $231.4 million from the
sale of Series C preferred stock. In addition, Nextel received shares of Series
C preferred stock valued at $70.0 million. We also issued two million shares of
common stock to various parties as consideration for providing financing
commitments related to the Nextel tower acquisition. We did not utilize these
commitments for the Nextel acquisition primarily because of the success of the
2009 notes offering. We currently have $350.0 million available under our credit
facility to fund new tower construction or acquisition activity. The weighted
average interest rate on outstanding borrowings under our credit facility as of
September 30, 1999 was 8.76%. The facility also requires compliance with certain
financial covenants. At September 30, 1999, we were in compliance with these
covenants. In addition, our cash and cash equivalents were $120.2 million at
September 30, 1999.
For the nine months ended September 30, 1999, cash flows provided by
operating activities were $19.7 million as compared to $0.3 million for the nine
months ended September 30, 1998. The change is primarily attributable to the
favorable cash flow generated from communications tower acquisitions in 1999.
For the nine months ended September 30, 1999, cash flows used in
investing activities were $682.1 million compared to $71.3 million for the nine
months ended September 30, 1998. In the nine months ended September 30, 1999,
SpectraSite invested $614.5 million in purchases of property and equipment and
deposits on future acquisitions, primarily related to the acquisition of
communications towers from Nextel. In addition, we used $78.7 million to acquire
Westower in September
- 15 -
<PAGE> 16
1999. These investments were partially offset by $15.4 million in maturities of
short-term investments. In the nine months ended September 30, 1998, SpectraSite
invested $45.6 million in short-term investments.
In the nine months ended September 30, 1999, cash flows provided by
financing activities were $683.1 million as compared to $145.0 million in the
nine months ended September 30, 1998. The increase in cash provided by financing
activities was attributable to the proceeds from the sales of Series C preferred
stock and the 2009 notes, as well as proceeds from borrowings under the credit
facility.
Our ability to make scheduled payments of principal of, or to pay
interest on, our debt obligations, and our ability to refinance any such debt
obligations, including the 2008 notes and the 2009 notes, or to fund planned
capital expenditures, will depend on our future performance, which, to a certain
extent is subject to general economic, financial, competitive, legislative,
regulatory and other factors that are beyond our control. Our business strategy
contemplates substantial capital expenditures in connection with our planned
tower build-out. Based on SpectraSite's current operations and anticipated
revenue growth, management believes that cash flow from operations, available
cash and anticipated available borrowings under our credit facility will be
sufficient to fund our purchase of 94 towers from DigiPH PCS, Inc., capital
expenditures and future acquisitions through fiscal 2000. Thereafter, however,
or in the event SpectraSite exceeds its currently anticipated capital
expenditures, makes significant additional acquisitions or, if for any reason,
is unable to access our credit facility, SpectraSite anticipates that it will
seek additional equity or debt financing to fund its business plan. Failure to
obtain any such financing could require SpectraSite to significantly reduce its
planned capital expenditures or scale back the scope of its tower build-out or
acquisition activities, any of which could have a material adverse effect on our
business, prospects, financial condition or results of operations. We cannot
assure you that we will generate sufficient cash flow from operations, that
anticipated revenue growth will be realized or that future borrowings or equity
financing will be available, on terms acceptable to us, in amounts sufficient to
service our indebtedness and make anticipated capital expenditures.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 1998, the FASB issued Statement of Financial Accounting Standards
No. 133, Accounting for Derivative Instruments and Hedging Activities. SFAS 133
requires that derivative instruments be recognized as either assets or
liabilities in the consolidated balance sheet based on their fair values.
Changes in the fair values of such derivative instruments will be recorded
either in results of operations or in other comprehensive income, depending on
the intended use of the derivative instrument. The initial application of SFAS
133 will be reported as the effect of a change in accounting principle. SFAS 133
is effective for all fiscal years beginning after June 15, 2000. We have not yet
determined the effect that the adoption of SFAS 133 will have on our
consolidated financial statements.
YEAR 2000 COMPLIANCE
We have conducted a comprehensive review of our computer systems to
identify which of our systems will have to be modified, upgraded or converted to
recognize and process dates after December 31, 1999. We believe that most, if
not all, of our computer software and systems are year 2000 compliant, because
most of our hardware and software has been purchased within the past two years.
We presently believe that the year 2000 issue will not pose significant
operational problems for our systems as so modified, upgraded or converted. In
fact, even if all of our computer systems and other equipment vulnerable to the
millennium date change failed, we could continue operations uninterrupted after
such failures. Like most other companies, SpectraSite is dependent upon a
variety of external suppliers including vendors providing electrical power,
telephony, water and other necessary commodities. SpectraSite also relies upon
the interstate banking system and related electronic communications for
functions such as transmitting financial data from field offices. We are not
aware currently of any material non-compliance by these vendors that will
materially affect our business operations; however, we do not control these
systems and cannot assure that they will be converted in a timely fashion. Any
delays or omissions by us or our customers, suppliers or contractors to resolve
the year 2000 issue could materially adversely affect our business, financial
condition or results of operations. We do not anticipate material expenditures
related to the year 2000 issue and incremental costs to date have been
negligible, but we cannot assure you that amounts to be spent on addressing the
year 2000 issue will not be material.
- 16 -
<PAGE> 17
ITEM 3- QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We use financial instruments, including fixed and variable rate debt, to
finance our operations. The information below summarizes our market risks
associated with debt obligations outstanding as of September 30, 1999. The
following table presents principal cash flows and related weighted average
interest rates by fiscal year of maturity. Variable interest rate obligations
under our credit facility are not included in the table. We have no long-term
variable interest obligations other than borrowings under our credit facility.
<TABLE>
<CAPTION>
Expected Maturity Date
-----------------------------------------------------------------------------------------------------
1999 2000 2001 2002 2003 Thereafter Total
---------------------------------------- --------------- --------------------------------------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Long-term obligations:
Fixed rate................. $ - $ - $ - $ - $ - $ 501,382 $ 501,382
Average interest rate...... - - - - - 11.5% 11.5%
</TABLE>
- 17 -
<PAGE> 18
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
In May 1999, by unanimous written consent, the stockholders of
SpectraSite consented to an amendment to SpectraSite's Amended and Restated
Certificate of Incorporation to increase the number of shares of capital stock
SpectraSite can issue from 165,749,625 to 190,749,625 and increase the number of
shares of common stock SpectraSite can issue from 95 million to 120 million.
However, the Amended and Restated Certificate of Incorporation was not amended
at that time. In August 1999, by unanimous written consent, the stockholders of
SpectraSite (i) consented to an amendment to SpectraSite's Amended and Restated
Certificate of Incorporation to increase the number of shares of capital stock
SpectraSite can issue from 165,749,625 to 370,749,625 and increase the number of
shares of common stock SpectraSite can issue from 95 million to 300 million,
(ii) approved the adoption of the SpectraSite Holdings, Inc. Stock Option Plan
in amended and restated form and (iii) approved the adoption of the Employee
Stock Purchase Plan.
ITEM 5. OTHER INFORMATION
None.
- 18 -
<PAGE> 19
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.1 Amended and Restated Certificate of Incorporation (incorporated by
reference to Exhibit 3.9 filed with the registration statement on Form
S-4 (File No. 333-67043) of SpectraSite Holdings, Inc.).
3.2 Amendment No. 1 to the Amended and Restated Certificate of
Incorporation (incorporated by reference to Exhibit 3.1 of
SpectraSite's Form 8-K dated September 2, 1999 and filed September 17,
1999).
4.1 Indenture, dated as of June 26, 1998, between SpectraSite Holdings,
Inc. and United States Trust Company of New York, as trustee
(incorporated by reference to Exhibit 4.1 filed with the registration
statement on Form S-4 (File No. 333-67043) of SpectraSite Holdings,
Inc.).
4.2 First Supplemental Indenture, dated as of March 25, 1999, between
SpectraSite Holdings, Inc. and United States Trust Company of New
York, as trustee (incorporated by reference to Exhibit 4.2 filed with
the registration statement on Form S-4 (File No. 333-67043) of
SpectraSite Holdings, Inc.).
4.3 Indenture, dated as of April 20, 1999, between SpectraSite Holdings,
Inc. and United States Trust Company of New York, as trustee
(incorporated by reference to Exhibit 4.3 filed with the registration
statement on Form S-4 (File No. 333-67043) of SpectraSite Holdings,
Inc.).
27.1 Financial Data Schedule for the nine months ended September 30, 1999
(b) Reports on Form 8-K
A report on Form 8-K, dated September 2, 1999, was filed on September 17,
1999 to report SpectraSite's acquisition of Westower Corporation in a merger
transaction under Item 2, to report the completion of SpectraSite's registered
exchange offer for its 12% senior discount notes due 2008 and its 11 1/4% senior
discount notes due 2009 under Item 5, and to include pro forma financial
statements reflecting the acquisition of Westower.
- 19 -
<PAGE> 20
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of the 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: November 15, 1999 SPECTRASITE HOLDINGS, INC.
(Registrant)
/s/DAVID P. TOMICK
---------------------------------------------------------------------
David P. Tomick
Executive Vice President, Chief Financial Officer and Secretary
/s/DANIEL I. HUNT
---------------------------------------------------------------------
Daniel I. Hunt
Vice President- Finance and Administration, Principal Accounting
Officer
- 20 -
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 120,241
<SECURITIES> 0
<RECEIVABLES> 24,721
<ALLOWANCES> 0
<INVENTORY> 4,055
<CURRENT-ASSETS> 159,156
<PP&E> 711,269
<DEPRECIATION> 15,348
<TOTAL-ASSETS> 1,169,666
<CURRENT-LIABILITIES> 41,470
<BONDS> 657,100
339,494
0
<COMMON> 19
<OTHER-SE> 131,583
<TOTAL-LIABILITY-AND-EQUITY> 1,169,666
<SALES> 0
<TOTAL-REVENUES> 43,417
<CGS> 0
<TOTAL-COSTS> 17,755
<OTHER-EXPENSES> 51,469
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 47,519
<INCOME-PRETAX> (66,409)
<INCOME-TAX> 107
<INCOME-CONTINUING> (66,516)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (66,516)
<EPS-BASIC> (6.86)
<EPS-DILUTED> (6.86)
</TABLE>
