<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant To Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended March 31, 2000
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the transition period from ______ to _____.
Commission File number: 000-27901
---------------------------------------
TeleCorp PCS, Inc.
(Exact name of registrant as specified in its charter)
Delaware 54-1872248
(State or other jurisdiction of (I.R.S. Employer Identification No.)
of incorporation or organization)
and the following subsidiary:
TeleCorp Communications, Inc.
(Exact name of registrant as specified in its charter)
Delaware 52-2105807
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
1010 N. Glebe Road, Suite 800
Arlington, VA 22201
(703) 236-1100
(Address of principal executive offices)
Indicate by 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 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 [ ].
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
As of May 15, 2000, the outstanding shares of each class of Telecorp PCS, Inc.
common stock are as follows:
Class A Common Stock, $.01 par value per share 87,900,661
Class C Common Stock, $.01 par value per share 283,813
Class D Common Stock, $.01 par value per share 851,429
Voting Preference Common Stock, $.01 par value per share 3,090
(TeleCorp Communications, Inc. is a wholly-owned subsidiary of TeleCorp PCS,
Inc.)
<PAGE>
Index
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets as of December 31, 1999 and March 31, 2000 (unaudited)............................ 1
Consolidated Statements of Operations for the three months ended
March 31, 1999 (unaudited) and 2000 (unaudited)........................................................... 2
Consolidated Statements of Cash Flows for the three months ended
March 31, 1999 (unaudited) and 2000 (unaudited)........................................................... 3
Notes to Consolidated Financial Statements.................................................................... 4
Item 2. Management's Discussion and Analysis of Financial Conditions and Results of Operations............................ 11
Item 3. Quantitative and Qualitative Disclosure About Market Risk......................................................... 14
PART II Other Information
Item 2 Use of Proceeds................................................................................................... 15
Item 6 Exhibits and Reports on Form 8-K.................................................................................. 15
</TABLE>
<PAGE>
Part I -- Financial Information
Item 1. Financial Statements
TELECORP PCS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
($ in thousands, except per share data)
<TABLE>
<CAPTION>
December 31, March 31,
1999 2000
----------- ----------
(unaudited)
ASSETS
Current assets:
<S> <C> <C>
Cash and cash equivalents.............................................................. $ 182,330 $ 94,606
Accounts receivable, net............................................................... 23,581 31,068
Inventory.............................................................................. 15,802 22,315
Prepaid expenses and other current assets.............................................. 3,828 3,937
----------- ----------
Total current assets................................................................. 225,541 151,926
Property and equipment, net............................................................ 400,450 461,742
PCS licenses and microwave relocation costs, net....................................... 267,682 273,396
Intangible assets -- AT&T agreements, net.............................................. 37,908 36,119
Deferred financing costs, net.......................................................... 19,577 18,999
Other assets........................................................................... 1,044 6,472
----------- ----------
Total assets......................................................................... $ 952,202 $ 948,654
=========== ============
LIABILITIES, MANDATORILY REDEEMABLE PREFERRED STOCK
AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable....................................................................... $ 38,903 $ 27,017
Accrued expenses....................................................................... 51,977 79,146
Microwave relocation obligation, current portion....................................... 36,122 30,753
Long-term debt, current portion........................................................ 1,361 1,461
Accrued interest....................................................................... 1,387 2,190
Deferred revenue....................................................................... 1,709 2,907
----------- ----------
Total current liabilities............................................................ 131,459 143,474
Long-term debt.......................................................................... 639,210 649,864
Microwave relocation obligation......................................................... 2,365 2,365
Accrued expenses and other.............................................................. 6,541 7,877
----------- ----------
Total liabilities.................................................................... 779,575 803,580
----------- ----------
Mandatorily redeemable preferred stock, 382,539 shares
issued and outstanding at December 31, 1999 and March 31, 2000
(liquidation preference $397,309 as of March 31, 2000)................................. 360,182 367,915
Preferred stock subscriptions receivable................................................ (97,001) (97,001)
----------- ----------
Total mandatorily redeemable preferred stock, net.................................... 263,181 270,914
----------- ----------
Commitments and contingencies
Stockholders' equity (deficit):
Series F preferred stock, par value $.01 per share, 14,912,778 shares issued
and outstanding at December 31, 1999 and March 31, 2000............................... 149 149
Common stock, par value $.01 per share, 85,592,221 and 87,837,221 shares,
issued and outstanding, respectively.................................................. 856 878
Additional paid-in capital............................................................. 267,442 306,011
Deferred compensation.................................................................. (42,811) (42,189)
Common stock subscriptions receivable.................................................. (191) (191)
Accumulated deficit.................................................................... (315,999) (390,498)
----------- ----------
Total stockholders' equity (deficit)................................................. (90,554) (125,840)
----------- ----------
Total liabilities, mandatorily redeemable preferred stock and stockholders' equity
(deficit)........................................................................... $ 952,202 $ 948,654
=========== ==========
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
1
<PAGE>
TELECORP PCS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
($ in thousands)
<TABLE>
<CAPTION>
For the three months ended
March 31,
-----------------------------------------------------
1999 2000
----------------------- -------------------------
(unaudited)
Revenue:
<S> <C> <C>
Service ..................................................... $ 504 $ 36,937
Roaming ....................................................... 1,878 11,452
Equipment ................................................... 1,858 7,057
----------------------- -------------------------
Total revenue ............................................ 4,240 55,446
----------------------- -------------------------
Operating expenses:
Cost of revenue................................................ 2,684 19,026
Operations and development (including noncash stock
compensation of $0 and $207)................................ 7,702 10,966
Selling and marketing (including noncash stock.................
compensation of $0 and $132)................................ 7,855 34,625
General and administrative (including noncash stock
compensation of $0 and $4,738).............................. 10,179 27,276
Depreciation and amortization.................................. 2,764 23,468
----------------------- -------------------------
Total operating expenses................................... 31,184 115,361
----------------------- -------------------------
Operating loss ........................................... (26,944) (59,915)
Other expense (income):
Interest expense ............................................. 6,320 16,990
Interest income .............................................. (1,041) (2,384)
Other expense (income) ....................................... 70 (22)
----------------------- -------------------------
Net loss ............................................... (32,293) (74,499)
Accretion of mandatorily redeemable preferred stock ........... (4,267) (7,733)
----------------------- -------------------------
Net loss attributable to common equity................... $ (36,560) $ (82,232)
======================= =========================
Net loss attributable to common equity per share--
basic and diluted.............................................. $ (0.62) $ (0.83)
======================= =========================
Weighted average common equity shares outstanding--
basic and diluted.............................................. 59,037,842 99,556,975
======================= =========================
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
2
<PAGE>
TELECORP PCS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in thousands)
<TABLE>
<CAPTION>
For the three months ended
March 31,
--------------------------------------------------
<S> <C> <C>
1999 2000
--------------------- ---------------------
(unaudited)
Cash flows from operating activities:
Net loss .................................................. $ (32,293) $(74,499)
Adjustment to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization ............................ 2,764 23,468
Noncash stock compensation expense ....................... -- 5,077
Noncash interest expense................................... 753 11,089
Bad debt expense ......................................... -- 1,661
Changes in cash flow from operations resulting from
changes in assets and liabilities:
Accounts receivable ...................................... (3,057) (7,487)
Inventory ................................................ (6,923) (6,513)
Prepaid expenses and other current assets ................ 775 (109)
Other assets ............................................. (559) (347)
Accounts payable ......................................... 13,656 (11,886)
Accrued expenses ......................................... 5,132 (1,011)
Accrued interest ......................................... (1,758) 803
Deferred revenue ......................................... -- 1,198
--------------------- ---------------------
Net cash used in operating activities ................... (21,510) (58,556)
--------------------- ---------------------
Cash flows from investing activities:
Expenditures for property and equipment ................... (112,233) (52,549)
Capitalized interest ...................................... (1,273) (622)
Expenditures for microwave relocation ..................... (1,187) (369)
Payment of FCC Deposit on PCS licences .................... (17,819) (12,081)
Capitalized Tritel acquisition costs ...................... -- (5,081)
--------------------- ---------------------
Net cash used in investing activities ................... (132,512) (70,702)
--------------------- ---------------------
Cash flows from financing activities:
Receipt of preferred stock subscription receivable ........ 3,500 --
Proceeds from sale of common stock.......................... -- 41,869
Proceeds from long-term debt .............................. 50,000 --
Payments on long term debt ................................ -- (335)
--------------------- ---------------------
Net cash provided by financing activities ............... 53,500 41,534
--------------------- ---------------------
Net decrease in cash and cash equivalents .................. (100,522) (87,724)
Cash and cash equivalents at the beginning of period ....... 111,733 182,330
--------------------- ---------------------
Cash and cash equivalents at the end of period ............. $ 11,211 $ 94,606
===================== =====================
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
3
<PAGE>
TELECORP PCS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($ in thousands, except per share data)
1. Organization and Business
TeleCorp Holding Corp., Inc. (Holding) was incorporated in the State of
Delaware on July 29, 1996 (date of inception). Holding was formed to participate
in the Federal Communications Commission's (FCC) auction of F-Block Personal
Communications Services licenses (the Auction) in April 1997. Holding
successfully obtained licenses in the New Orleans, Memphis, Beaumont, Little
Rock, and New England Basic Trading Areas (BTAs). Holding qualifies as a
Designated Entity and Very Small Business under Part 24 of the rules of the FCC
applicable to broadband PCS.
TeleCorp PCS, Inc. (TeleCorp) was incorporated in the State of Delaware on
November 14, 1997 by the controlling stockholders of Holding. Holding became a
wholly-owned subsidiary of TeleCorp, and TeleCorp and Holding are hereafter
referred to as the Company (Company). The Company is the largest AT&T Wireless
affiliate in the United States, with licenses covering markets where
approximately 16.7 million people reside. The Company provides wireless personal
communication services, or PCS, in selected markets in the south-central and
northeast United States and in Puerto Rico, encompassing eight of the 100
largest metropolitan areas in the United States.
Under the terms of the AT&T strategic alliance, the Company is AT&T's
exclusive provider of wireless mobility services in its licensed markets, using
equal emphasis co-branding with AT&T subject to AT&T's right to resell services
on the Company's network. The Company has the right to use the AT&T brand name
and logo together with the SunCom brand name and logo in its covered markets.
The Company is AT&T's preferred roaming partner for digital customers in the
Company's markets. Additionally, the Company's relationship with AT&T provides
coast-to-coast coverage to the Company's customers.
2. Basis of Presentation: Unaudited Interim Financial Information
The accompanying unaudited consolidated financial statements and related
footnotes, have been prepared in accordance with generally accepted accounting
principles for interim financial information and Article 10 of Regulation S-X.
Accordingly, they do not include all the information and footnotes required by
generally accepted accounting principles. In the opinion of management the
interim data includes all adjustments of a normal recurring nature necessary for
a fair statement of the results for the interim periods. Operating results for
the three months ended March 31, 2000 are not necessarily indicative of results
that may be expected for the year ending December 31, 2000.
3. Property and Equipment
Property and equipment consists of the following:
<TABLE>
<CAPTION>
December 31, March 31,
1999 2000
--------------------- ---------------------
(unaudited)
<S> <C> <C>
Wireless network ........................................ $364,491 $439,718
Network under development ............................... 21,758 22,543
Computer equipment ...................................... 16,888 17,940
Internal use software ................................... 21,648 22,898
Leasehold improvements .................................. 12,011 13,358
Furniture, fixtures and office equipment ................ 10,855 12,792
Land...................................................... 49 49
--------------------- ---------------------
447,700 529,298
Accumulated depreciation ................................ (47,250) (67,556)
--------------------- ---------------------
$400,450 $461,742
===================== =====================
</TABLE>
4
<PAGE>
TELECORP PCS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
($ in thousands)
4. Concurrent Offering
In an offering concurrent with the Company's initial public offering, the
Company issued 2,245,000 shares of Class A common stock to AT&T Wireless
Services, Inc. (AT&T Wireless) for $18.65 per share. The Company's proceeds for
the concurrent offering of $41,869 were received on January 18, 2000.
5. Tritel Merger and Contribution and Exchange with AT&T Wireless
On February 28, 2000, the Company agreed to merge with Tritel, Inc.
(Tritel), through a merger of each of TeleCorp and Tritel into a newly formed
holding company (Holding Company). The merger will result in the exchange of
100% of the outstanding common and preferred stock of the Company and Tritel for
common and preferred stock of Holding Company. The new entity will be controlled
by the Company's voting preference common stockholders, and the Company and
Tritel will become subsidiaries of Holding Company.
The merger will be accounted for using the purchase method of accounting.
The purchase price for Tritel will be determined based on the fair value of the
shares issued to the former shareholders of Tritel plus cash, the fair value
associated with the conversion of outstanding Tritel stock options, liabilities
assumed, and merger related costs. The fair value of the shares issued will be
determined based on the market price of the Company's Class A common stock,
which is publicly traded, and, for those shares that do not have a readily
available market price, through valuation by an investment banking firm. The
purchase price for this transaction will be allocated to the assets acquired
based on their estimated fair values as determined by a valuation services
company. The excess of the purchase price over the assets acquired will be
recorded as goodwill and amortized over 20 years.
The proposed merger has been unanimously approved by the Company's and
Tritel's board of directors, with three of TeleCorp's directors abstaining. In
addition, shareholders with greater than 50% of the voting power of each company
have agreed to vote in favor of the merger. The merger is subject to regulatory
approval and other conditions and is expected to close in the last quarter of
2000.
In connection with the merger, AT&T has agreed to contribute certain
assets and rights to Holding Company (the Contribution). The Contribution will
result in Holding Company acquiring various assets in exchange for the
consideration issued as follows:
Holding Company acquires:
. $20,000 cash from AT&T Wireless
. The right to acquire all of the common and preferred stock of Indus, Inc.
(Indus).
. The right to acquire additional wireless properties and assets from
Airadigm Communications, Inc. (Airadigm).
. The two year extension and expansion of the AT&T Network Membership
Licenses Agreement to cover all people in Holding Company's markets.
Consideration issued:
. 9,272,740 shares of Class A common stock of the new holding company formed
from the Tritel merger to AT&T Wireless.
Separately, AT&T Wireless and the Company entered into an Asset Exchange
Agreement (the Exchange) pursuant to which the Company has agreed to exchange
certain assets with AT&T Wireless, among other consideration.
The Company acquires:
. $80,000 in cash from AT&T Wireless.
. AT&T Wireless' 10 MHZ PCS licenses in the areas covering part of the
Wisconsin market, in addition to adjacent licenses.
. AT&T Wireless 10 MHZ PCS licenses in Fort Dodge and Waterloo, Iowa.
. The right to acquire additional wireless properties from Polycell
Communications, Inc. (Polycell) and ABC Wireless, L.L.C. (ABC Wireless)
Consideration issued:
. The Company's New England market segment to AT&T Wireless.
Further, AT&T has agreed to extend the term of the roaming agreement and
to expand the geographic coverage of the AT&T operating agreements with TeleCorp
to include the new markets, either through amending TeleCorp's existing
agreements or by entering into new agreements with Holding Company on
substantially the same terms as TeleCorp's existing agreements. In addition,
TeleCorp has granted AT&T Wireless a "right of first refusal" with respect to
certain markets contributed by AT&T Wireless triggered in the event of a sale of
Holding Company to a third party.
The Contribution and Exchange with AT&T Wireless will be accounted for as
an asset purchase and disposition and recorded at fair value. The purchase price
will be determined based on cash paid, the fair value of the Class A common
stock issued, and the fair value of the assets relinquished. The purchase price
will be proportionately allocated to the noncurrent assets acquired based on
their estimated fair values. A gain is recognized as the difference between the
fair value of the New England assets disposed and their net book value.
6. Subsidiary Guarantee
On April 23, 1999, the Company completed the issuance and sale of 11 5/8%
Senior Subordinated Discount Notes. The Notes are fully and unconditionally
guaranteed on a joint and several basis by TeleCorp Communications, Inc., one of
the Company's wholly-owned subsidiaries. Summarized financial information of
TeleCorp, TeleCorp Communications, Inc. and other non-guarantor subsidiaries as
follows:
5
<PAGE>
TELECORP PCS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
($ in thousands)
Balance Sheet as of March 31, 2000
<TABLE>
<CAPTION>
TeleCorp
Communications, Inc.-- Non-Guarantor
TeleCorp Guarantor Subsidiary Subsidiaries Eliminations Consolidated
-------- -------------------- ------------ ------------ ------------
ASSETS
Current assets:
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents ................. $ 113,488 $ (16,450) $ (2,432) $ -- $ 94,606
Accounts receivable, net .................. -- 30,904 164 -- 31,068
Inventory ................................. -- 22,315 -- -- 22,315
Intercompany receivables .................. 947,844 (471,227) (476,617) -- --
Prepaid expenses and other current assets........ 88 1,577 2,272 -- 3,937
----------- ----------- ----------- ----------- -----------
Total current assets .................. 1,061,420 (432,881) (476,613) -- 151,926
Property and equipment, net ................... 6,339 213,726 241,748 (71) 461,742
PCS licenses and microwave relocation
costs, net .................................. 2,105 110,981 160,310 -- 273,396
Intangible assets--AT&T agreements, net ....... -- -- 36,119 -- 36,119
Deferred financing costs, net ................. 18,811 188 -- -- 18,999
Other assets .................................. 8,354 2,081 17,923 (21,886) 6,472
----------- ----------- ----------- ----------- -----------
Total assets .......................... $ 1,097,029 $ (105,905) $ (20,513) $ (21,957) $ 948,654
=========== =========== =========== =========== ===========
LIABILITIES, MANDATORILY
REDEEMABLE PREFERRED
STOCK AND STOCKHOLDERS'
EQUITY (DEFICIT)
Current liabilities:
Accounts payable .......................... $ -- $ 14,243 $ 12,774 $ -- $ 27,017
Accrued expenses .......................... 3,925 71,074 4,147 -- 79,146
Microwave relocation obligation,
current portion ....................... -- 30,753 -- -- 30,753
Long-term debt, current portion ........... -- -- 1,461 -- 1,461
Accrued interest .......................... 1,546 -- 644 -- 2,190
Deferred revenue .......................... -- 2,907 -- -- 2,907
----------- ----------- ----------- ----------- -----------
Total current liabilities ............. 5,471 118,977 19,026 -- 143,474
----------- ----------- ----------- ----------- -----------
Long-term debt ................................ 633,766 -- 16,098 -- 649,864
Microwave relocation obligation ............... -- 2,365 -- -- 2,365
Accrued expenses .............................. -- -- 7,877 -- 7,877
----------- ----------- ----------- ----------- -----------
Total liabilities ..................... 639,237 121,342 43,001 -- 803,580
----------- ----------- ----------- ----------- -----------
Mandatorily redeemable preferred
stock ....................................... 367,915 -- -- -- 367,915
Preferred stock subscriptions
receivable .................................. (97,001) -- -- -- (97,001)
----------- ----------- ----------- ----------- -----------
Total mandatorily redeemable preferred
stock, net .......................... 270,914 -- -- -- 270,914
----------- ----------- ----------- ----------- -----------
Commitments and Contingencies
Stockholders' equity (deficit):
Series F preferred stock .................. 149 -- -- -- 149
Common stock .............................. 878 -- -- -- 878
Additional paid-in capital ................ 306,011 -- 21,886 (21,886) 306,011
Deferred compensation ..................... (42,182) (7) -- -- (42,189)
Common stock subscriptions
receivable ................................ (191) -- -- -- (191)
Accumulated deficit ....................... (77,787) (227,240) (85,400) (71) (390,498)
----------- ----------- ----------- ----------- -----------
Total stockholders' equity
(deficit) ........................... 186,878 (227,247) (63,514) (21,957) (125,840)
----------- ----------- ----------- ----------- -----------
Total liabilities, mandatorily
redeemable preferred stock and
stockholders' equity (deficit) ........ $ 1,097,029 $ (105,905) $ (20,513) $ (21,957) $ 948,654
=========== =========== =========== =========== ===========
</TABLE>
6
<PAGE>
TELECORP PCS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
($ in thousands)
Balance Sheet as of December 31, 1999:
<TABLE>
<CAPTION>
TeleCorp
Communications, Inc.-- Non-Guarantor
TeleCorp Guarantor Subsidiary Subsidiaries Eliminations Consolidated
------------ ----------------------- -------------- ------------- -------------
ASSETS
Current assets:
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents ............. $ 186,110 $ (2,724) $ (1,056) $ -- $ 182,330
Accounts receivable, net .............. -- 23,443 138 -- 23,581
Inventory ............................. -- 15,802 -- -- 15,802
Intercompany receivables .............. 831,623 (415,728) (415,895) -- --
Prepaid expenses and other current
assets ................................ 146 1,325 2,357 -- 3,828
---------- --------- --------- ------------ ---------
Total current assets ................ 1,017,879 (377,882) (414,456) -- 225,541
Property and equipment, net ............. 6,058 176,116 218,347 (71) 400,450
PCS licenses and microwave relocation
costs, net............................... 2,119 47,835 217,728 -- 267,682
Intangible assets--AT&T agreements, net . -- -- 37,908 -- 37,908
Deferred financing costs, net ........... 19,389 188 -- -- 19,577
Other assets ............................ 4,385 601 17,944 (21,886) 1,044
---------- --------- --------- ------------ ---------
Total assets ........................ $1,049,830 $(153,142) $ 77,471 $(21,957) $ 952,202
========== ========= ========= ============ =========
LIABILITIES, MANDATORILY
REDEEMABLE PREFERRED
STOCK AND STOCKHOLDERS'
EQUITY (DEFICIT)
Current liabilities:
Accounts payable ...................... $ 96 $ 12,222 $ 26,585 $ -- $ 38,903
Accrued expenses ...................... (23) 48,983 3,017 -- 51,977
Microwave relocation obligation,
current portion...................... -- 36,122 -- -- 36,122
Long-term debt, current portion......... -- -- 1,361 -- 1,361
Accrued interest ...................... 675 -- 712 -- 1,387
Deferred revenue ...................... -- 1,709 -- -- 1,709
---------- --------- --------- ------------ ---------
Total current liabilities ........... 748 99,036 31,675 -- 131,459
Long-term debt .......................... 622,795 -- 16,415 -- 639,210
Microwave relocation obligation ......... -- 2,365 -- -- 2,365
Accrued expenses ........................ -- -- 6,541 -- 6,541
---------- --------- --------- ------------ ---------
Total liabilities ................... 623,543 101,401 54,631 -- 779,575
---------- --------- --------- ------------ ---------
Mandatorily redeemable preferred
stock..................... ............. 360,182 -- -- -- 360,182
Preferred stock subscriptions
receivable ............................ (97,001) -- -- -- (97,001)
---------- --------- --------- ------------ ---------
Total mandatorily reedeemable
preferred stock, net................. 263,181 -- -- -- 263,181
---------- --------- --------- ------------ ---------
Committments and Contingencies
Stockholders' equity (deficit):
Series F preferred stock ............... 149 -- -- -- 149
Common stock ........................... 856 -- -- -- 856
Additional paid-in capital ............. 267,442 -- 21,886 (21,886) 267,442
Deferred compensation .................. (42,811) -- -- -- (42,811)
Common stock subscriptions
receivable ............................ (191) -- -- -- (191)
Accumulated deficit .................... (62,339) (254,543) 954 (71) (315,999)
---------- --------- --------- ------------ ---------
Total stockholders' equity
(deficit) .......................... 163,106 (254,543) 22,840 (21,957) (90,554)
---------- --------- --------- ------------ ---------
Total liabilities, mandatorily
redeemable preferred stock and
stockholders' equity (deficit) ...... $1,049,830 $(153,142) $ 77,471 $(21,957) $ 952,202
========== ========= ========= ============ =========
</TABLE>
7
<PAGE>
TELECORP PCS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
($ in thousands)
Statement of Operations for the three months ended March 31, 2000:
<TABLE>
<CAPTION>
TeleCorp
---------------------- Non-Guarantor
Communications, Inc.- --------------
TeleCorp Guarantor Subsidiary Subsidiaries Eliminations Consolidated
---------- ---------------------- -------------- ------------- -------------
Revenue:
<S> <C> <C> <C> <C> <C>
Service ................................ $ -- $ 36,757 $ 1,837 $(1,657) $ 36,937
Roaming ................................ -- 11,452 -- -- 11,452
Equipment .............................. -- 7,057 -- -- 7,057
-------- -------- -------- ------- --------
Total revenue ......................... -- 55,266 1,837 (1,657) 55,446
-------- -------- -------- ------- --------
Operating expenses:
Cost of revenue ......................... -- 19,026 -- -- 19,026
Operations and development .............. -- 8,795 2,171 -- 10,966
Selling and marketing ................... -- 34,093 532 -- 34,625
General and administrative .............. 322 26,273 681 -- 27,276
Depreciation and amortization ........... 355 9,349 13,764 -- 23,468
-------- -------- -------- ------- --------
Total operating expenses .............. 677 97,536 17,148 __ 115,361
-------- -------- -------- ------- --------
Operating loss ........................ (677) (42,270) (15,311) (1,657) (59,915)
Other expense (income):
Interest expense ........................ 16,458 -- 532 -- 16,990
Interest income ......................... (2,329) (40) (15) -- (2,384)
Other income ............................ -- -- (22) -- (22)
-------- -------- -------- ------- --------
Net loss .............................. (14,806) (42,230) (15,806) (1,657) (74,499)
Accretion of mandatorily redeemable
preferred stock .......................... (7,733) -- -- -- (7,733)
-------- -------- -------- ------- --------
Net loss attributable to
common equity ........................ $(22,539) $(42,230) $(15,806) $(1,657) $(82,232)
======== ======== ======== ======= ========
</TABLE>
8
<PAGE>
TELECORP PCS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
($ in thousands)
Statement of Cash Flows for the three months ended March 31, 2000:
<TABLE>
<CAPTION>
TeleCorp
Communications,
Inc.--Guarantor
TeleCorp Subsidiary
---------- ------------------
<S> <C> <C>
Cash flows from operating activities:
Net loss ...................................................................... $ (14,806) $(42,230)
Adjustment to reconcile net loss to net cash (used in) provided by
operating activities:
Depreciation and amortization ................................................ 355 9,349
Noncash compensation expense................................................... 5,077 --
Noncash interest expense....................................................... 11,089 --
Bad debt expense ............................................................. -- 1,661
Changes in cash flow from operations resulting from
changes in assets and liabilities:
Accounts receivable .......................................................... -- (7,487)
Intercompany receivables....................................................... (116,221) 55,499
Inventory .................................................................... -- (6,513)
Prepaid expenses and other current assets...................................... (58) (102)
Other assets ................................................................. (3,969) (1,480)
Accounts payable ............................................................. (96) 2,021
Accrued expenses ............................................................. 8,970 21,967
Accrued interest ............................................................. 871 --
Deferred revenue ............................................................. -- 1,198
----------- -----------
Net cash (used in) provided by operating activities ......................... (108,788) 33,883
----------- -----------
Cash flows from investing activities:
Expenditures for property and equipment ....................................... -- (46,905)
Capitalized interest .......................................................... (622) --
Expenditures for microwave relocation........................................... - (369)
Capitalized Tritel acquisition costs.......................................... (5,081) --
----------- -----------
Net cash used in investing activities ....................................... (5,703) (47,274)
----------- -----------
Cash flows from financing activities:
Proceeds from sale of common stock.............................................. 41,869 --
Payments on long term debt .................................................... -- (335)
----------- -----------
Net cash provided by (used in) financing activities ......................... 41,869 (335)
----------- -----------
Net decrease in cash and cash equivalents ...................................... (72,622) (13,726)
Cash and cash equivalents at the beginning of period ........................... 186,110 (2,724)
----------- -----------
Cash and cash equivalents at the end of period ................................. $ 113,488 $(16,450)
=========== ===========
</TABLE>
9
<PAGE>
TELECORP PCS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
($ in thousands, except per share data)
7. Subsequent events
Acquisitions
On April 7, 2000, the Company completed its acquisition of TeleCorp LMDS,
Inc. (TeleCorp LMDS) through an exchange of all of the outstanding stock of
TeleCorp LMDS for 878,400 shares of the Company's Class A common stock valued at
$45,896. TeleCorp LMDS's stockholders are Mr. Vento, Mr. Sullivan and three of
the Company's initial investors. As Mr. Vento and Mr. Sullivan have voting
control of the Company and TeleCorp LMDS, the acquisition is accounted for as an
acquisition between companies under common control. The licenses acquired will
be recorded by the Company at $2,707 which represents the cost basis of
TeleCorp LMDS. The remaining $43,189 is considered a distribution to the
shareholders of TeleCorp LMDS. By acquiring TeleCorp LMDS, TeleCorp gained local
multipoint distribution service licenses covering 1100 MHz of airwaves in the
Little Rock, Arkansas basic trading area and 150 MHz of airwaves in each of the
Beaumont, Texas; New Orleans, Louisiana; San Juan and Mayaguez, Puerto Rico; and
U.S. Virgin Islands basic trading areas.
On April 11, 2000, the Company completed its acquisition of the 15% of
Viper Wireless, Inc. (Viper Wireless) that it did not already own from Mr. Vento
and Mr. Sullivan in exchange for an aggregate of 323,372 shares of TeleCorp's
Class A common stock and 800 shares of its Series E preferred stock. The Company
acquired 85% of Viper Wireless on March 1, 1999 in exchange for $32,286
contributed by AT&T and certain of the Company's other initial investors for
additional shares of its preferred and common stock. Viper Wireless used the
proceeds to participate in the Federal Communications Commission's reauction of
PCS licenses. Viper Wireless was subsequently granted six PCS licenses in the
reauction. In connection with the final closing, the Company recognized
compensation expense of $15,297 based on the fair value of the Class A common
stock and Series E preferred stock at the date of issuance.
On April 27, 2000, the Company completed its acquisition of 15 MHz of
additional airwaves in the Lake Charles, Louisiana basic trading area from Gulf
Telecom, LLC (Gulf Telecom). As consideration for the additional airwaves the
Company paid Gulf Telecom $262 in cash, assumed approximately $2,400 in Federal
Communications Commission debt related to the license and reimbursed Gulf
Telecom $471 for interest it paid to the Federal Communications Commission on
the debt related to the license from June 1998 through March 2000. The entire
purchase price will be allocated to acquired licenses.
10
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
General
You should read the following discussion in conjunction with (1) our
accompanying unaudited consolidated financial statements and notes thereto and
(2) our audited consolidated financial statements, notes thereto and
management's discussion and analysis of financial condition and results of
operations as of and for the year ended December 31, 1999 included in our
annual report on Form 10-K for such period. Management's Discussion and
Analysis of Financial Condition and Results of Operations contains forward-
looking statements that are based on current expectations, estimates, and
projections. Such forward-looking statements reflect management's good-faith
evaluation of information currently available. However, because such statements
are based upon, and therefore can be influenced by, a number of external
variables over which management has no, or incomplete, control, they are not,
and should not be read as being guarantees of future performance or of actual
future results; nor will they necessarily prove to be accurate indications of
the times at or by which any such performance or result will be achieved.
Accordingly, actual outcomes and results may differ materially from those
expressed in such forward-looking statements.
Overview
For periods prior to 1999 we were a development stage company. In the
first quarter of 1999, we exited the development stage and commenced commercial
operations in each of our major mainland U.S. markets, after having launched our
New Orleans market for roaming services in late December 1998. We launched
service in our Puerto Rico markets on June 30, 1999. At March 31, 2000 we had
launched our service in 28 markets covering approximately 74% of the population
of our licensed area.
Revenue
We derive our revenue from:
. Services. We sell wireless personal communications services. The various
types of service revenue associated with personal communications
services for our customers include monthly recurring access charges and
monthly non-recurring airtime charges for local, long distance and
roaming airtime used in excess of pre-subscribed usage. Our customers'
charges are rate plan dependent, based on the number of pooled minutes
included in their plans. Service revenue also includes monthly non-
recurring airtime usage associated with our prepaid customers and non-
recurring activation and de-activation service charges.
. Roaming Charges. We charge monthly, non-recurring, per minute fees to
other wireless companies whose customers use our network facilities to
place and receive wireless calls.
. Equipment Sales. We sell wireless personal communications handsets and
accessories that are used by our customers in connection with our
wireless services.
Service revenue constituted our largest component of revenue during the
three months ended March 31, 2000, at 67%. Roaming revenue and equipment revenue
represented 21% and 12%, respectively. We expect that as our customer base
grows, service revenue will become an even larger percentage of revenue, while
roaming revenue and equipment revenue are expected to decrease as a percentage
of revenue. Roaming minutes on our network are expected to increase as AT&T and
other carriers increase the number of customers on their networks. Under our
reciprocal roaming agreement with AT&T Wireless, our largest roaming partner,
the amount we will receive and pay per roaming minute declines for each of the
next several years.
It appears that the wireless industry is experiencing a general trend
towards offering rate plans containing larger buckets of minutes. This is
expected to result in decreases in gross revenue per minute.
We have autonomy in determining our pricing plans. We have developed our
pricing plans to be competitive and to emphasize the advantages of our service.
We may discount our pricing from time to time in order to obtain additional
customers or in response to downward pricing in the market for wireless
communications services.
Cost of Revenue
. Equipment. We purchase personal communications handsets and accessories
from third party vendors to resell to our customers for use in
connection with our services. The cost of handsets is, and is expected
to remain, higher than the resale price to the customer. We record as
cost of revenue an amount approximately equal to our revenue on
equipment sales. We record the excess cost of handsets as a sales and
marketing operating expense. We do not manufacture any of this
equipment.
11
<PAGE>
. Roaming Fees. We pay fees to other wireless communications companies
based on airtime usage of our customers on other communications
networks. It is expected that reciprocal roaming rates charged between
us and other carriers will decrease. We do not have any significant
minimum purchase requirements other than our obligation to purchase at
least 15 million roaming minutes from July 1999 to January 2002 from
another wireless provider in Puerto Rico relating to customers roaming
outside our coverage area. We believe we will be able to meet this
minimum requirement.
. Clearinghouse Fees. We pay fees to an independent clearinghouse for
processing our call data records and performing monthly inter-carrier
financial settlements for all charges that we pay to other wireless
companies when our customers use their network, and that other wireless
companies pay to us when their customers use our network. We do not have
any significant minimum purchase requirements. These fees are based on
the number of call data records processed in a month.
. Variable Interconnect. We pay monthly charges associated with the
connection of our network with other carriers' networks. These fees are
based on minutes of use by our customers. This is known as
interconnection. We do not have any significant minimum purchase
requirements.
. Variable Long Distance. We pay monthly usage charges to other
communications companies for long distance service provided to our
customers. These variable charges are based on our customers' usage,
applied at pre-negotiated rates with the other carriers. We do not have
any significant minimum purchase requirements other than an obligation
to AT&T Wireless to purchase a minimum number of minutes of traffic
annually over a specified time period and a specified number of
dedicated voice and data leased lines in order for us to retain
preferred pricing rates. We believe we will be able to meet these
minimum requirements.
Operating Expenses
Operations and development. Our operations and development expense
includes engineering operations and support, field technicians, network
implementation support, product development, engineering management and noncash
stock compensation related to employees whose salaries are recorded within
operations and development. This expense also includes monthly recurring charges
directly associated with the maintenance and operations of the network
facilities and equipment. Operations and development expense is expected to
increase as we expand our coverage and operations and add customers. In future
periods, we except that this expense will decrease as a percentage of gross
revenue.
Selling and marketing. Our selling and marketing expense includes brand
management, external communications, sales training, and all costs associated
with retail distribution, direct, indirect, third party and telemarketing sales
(primarily salaries, commissions and retail store rent) and noncash stock
compensation related to employees whose salaries are included within selling and
marketing. We also record the excess cost of handsets over the resale price as a
cost of selling and marketing. Selling and marketing expense is expected to
increase as we expand our coverage and add customers. In future periods, we
expect that this expense will decrease as a percentage of gross revenues.
General and administrative. Our general and administrative expense
includes customer support, billing, information technology, finance, accounting
and legal services and noncash stock compensation related to employees whose
salaries are included within general and administrative. Although we expect
general and administrative expense to increase in future periods we expect this
expense will decrease as a percentage of gross revenues.
Depreciation and amortization. Depreciation of property and equipment is
computed using the straight-line method, generally over three to ten years,
based upon estimated useful lives. Leasehold improvements are amortized over the
lesser of the useful lives of the assets or the term of the lease. Network
development costs incurred to ready our network for use are capitalized.
Amortization of network development costs begins when the network equipment is
ready for its intended use and will be amortized over its estimated useful life
ranging from five to ten years. We began amortizing the cost of the PCS
licenses, microwave relocation costs, and capitalized interest in the first
quarter of 1999, when PCS services commenced in some of our basic trading areas.
Microwave relocation entails transferring business and public safety companies
from radio airwaves that overlap with the portion of the airwaves covered by our
business to other portions of the airwaves. Amortization of PCS licenses and
microwave relocation is calculated using the straight-line method over 40 years.
The AT&T agreements are amortized on a straight-line basis over the related
contractual terms, which range from three to ten years. Amortization of the AT&T
exclusivity agreement, long distance agreement and the intercarrier roamer
services agreement began once wireless services were available to our customers.
Amortization of the network membership license agreement began on July 17, 1998,
the date of the finalization of the AT&T transaction.
12
<PAGE>
OTHER (EXPENSE) INCOME
Interest income (expense). Interest income is earned primarily on our cash
and cash equivalents. Interest expense through March 31, 2000 consists of
interest due on our senior credit facilities, senior subordinated discount
notes, vendor financing, and debt owed to the U.S. government related to our
licenses, less interest capitalized.
Results of Operations
Three months ended March 31, 2000 compared to three months ended March 31,
1999
Customer Analysis
We commenced commercial operations in the first quarter of 1999 with the
launch of our New Orleans market, and by March 31, 2000, grew our customer base
to over 228,000 customers. We have successfully launched commercial service in
28 of our markets with our network covering approximately 74% of the population
in the basic trading area's in which we hold licenses.
Revenue
Service revenue was approximately $36.9 million for the three months ended
March 31, 2000 resulting primarily from three full months of service offerings
to our customers. Service revenue for the three months ended March 31, 1999 was
approximately $0.5 million which consisted of commercial service for
approximately one month in certain of our domestic markets. Roaming revenue was
$11.5 million for the three months ended March 31, 2000, as compared to $1.9
million for the three months ended March 31, 1999. The increase was due to our
significant increase in cell sites which provided roaming service to AT&T
Wireless' and other carriers customers in our markets. Equipment revenue was
approximately $7.1 million for the three months ended March 31, 2000 as compared
to approximately $1.9 million for the three months ended March 31, 1999. The
increase was primarily due to our increase in customers and their related
purchase of handsets and other equipment in connection with the use of our
service.
Cost of Revenue
Cost of revenue for the three months ended March 31, 2000 was
approximately $19.0 million as compared to $2.7 million for the three months
ended March 31, 1999. Cost of revenue consists of equipment costs, roaming
expenses and other costs such as clearinghouse fees, variable interconnect and
long distance charges and increased primarily as a result of a full three months
of service offerings in the quarter ended March 31, 2000.
Operations and Development
Operations and development expense was approximately $11.0 million for the
three months ended March 31, 2000, as compared to approximately $7.7 million for
the three months ended March 31, 1999. The increase in operations and
development was primarily due to the engineering and implementation support and
maintenance expense related to the significant build-out of our PCS network and
the use of our network by our customers as well as other carriers' roaming
customers during the quarter ended March 31, 2000.
Selling and Marketing
Selling and marketing expense for the three months ended March 31, 2000
was approximately $34.6 million as compared to approximately $7.9 million for
the same period ended March 31, 1999. This increase was due primarily to the
expense associated with the excess cost of handsets over the retail price for
new subscribers in the three months ended March 31, 2000 as well as the increase
in salary and benefit expenses for new corporate and regional sales staff,
advertising expenses associated with the continued promotion of our existing
markets as well as launch costs associated with two new markets in the quarter
ended March 31, 2000.
General and Administrative
General and administrative expense was approximately $27.3 million,
including approximately $4.7 million in non cash stock compensation, for the
three months ended March 31, 2000, as compared to approximately $10.2 million
and no non cash stock compensation for the three months ended March 31, 1999.
The increase was primarily due to the development and growth of infrastructure
and staffing related to information technology, customer care and other
administrative functions incurred in conjunction with the commencement of our
service offering, as well as the stock based compensation charge related to the
vesting of stock options and restricted stock awards.
Depreciation and Amortization
Depreciation and amortization expense was approximately $23.5 million for
the three months ended March 31, 2000, as compared to approximately $2.8 million
for the three months ended March 31, 1999. The increase was primarily due to
13
<PAGE>
depreciation of our network and their property and equipment, as well a full
quarter of amortization on our personal communications services licenses and
AT&T operating agreements, whose amortization commenced with the launch of our
service on February 29, 1999.
Interest Expense
Interest expense was approximately $17.0 million, net of capitalized
interest of approximately $0.6 million, for the three months ended March 31,
2000, as compared to approximately $6.3 million, net of capitalized interest of
approximately $1.3 million, for the three months ended March 31, 1999. The
increase in interest expense was primarily due to the increase in debt including
the issuance of the senior subordinated discount notes of $327.6 million in
April, 1999. The decrease in capitalized interest was attributable to the
decrease in capital expenditures in the first quarter of 2000.
Liquidity and Capital Resources
December 31, March 31,
1999 2000
------------- -------------
(unaudited)
Cash and cash equivalents $182,330 $94,606
Working capital $ 94,082 $ 8,452
Current assets to current liabilities 1.72 1.06
Debt to total capitalization 0.79 0.82
Cash and cash equivalents totaled approximately $94.6 million at March 31,
2000, as compared to approximately $182.3 million at December 31, 1999. This
decrease was the result of $58.6 million of cash used in operating activities
and $70.7 million of cash used in investing activities, offset by cash provided
from financing activities of $41.5 million.
Cash used in operating activities of $58.6 million for the three months
ended March 31, 2000 resulted from a net loss of $74.5 million that was
partially offset by non-cash charges of $41.3 million. Cash outlays for capital
expenditures required for the development and construction of our network
totaled $52.5 million. We spent $12.1 million on the FCC deposit and $5.1
million on capitalized Tritel acquisition costs. During the three months ended
March 31, 2000, we received proceeds from the sale of common stock to AT&T of
$41.9 million.
During the three months ended March 31, 1999, we received proceeds from
long-term debt of $50.0 million. Additionally, we received $3.5 million of
preferred stock subscriptions receivable. Cash outlays for capital expenditures
required to develop and construct our network totaled $112.2 million and we
deposited $17.8 million with the FCC for PCS licenses. Cash used in operating
activities of $21.5 million for the three months ended March 31, 1999 resulted
from a net loss of $32.3 million that was offset by non-cash charges of $3.5
million.
New Accounting Pronouncements
In July 1999, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 137, "Deferral of the Effective
Date of FAS 133" which defers the effective date of SFAS No. 133, "Accounting
for Derivative Instruments and Hedging Activities." SFAS 133 is effective for
all fiscal quarters of fiscal years beginning after June 15, 2000. The Company
is in the process of determining the effect of adopting this standard.
In December 1999, the SEC released Staff Accounting Bulletin (SAB) Number
101, "Revenue Recognition in Financial Statements." This bulletin will become
effective for the Company for the quarter ending June 30, 2000. This bulletin
establishes more clearly defined revenue recognition criteria than previously
existing accounting pronouncements, and specifically addresses revenue
recognition requirements for nonrefundable fees, such as activation fees,
collected by a company upon entering into an arrangement with a customer, such
as an arrangement to provide telecommunications services. The Company is
currently evaluating the full impact of this SAB to determine the impact on its
financial position and results of operations.
Item 3. Quantitative and Qualitative Disclosure About Market Risk
We are not exposed to fluctuations in currency exchange rates because all
of our services are invoiced in U.S. dollars. We are exposed to the impact of
interest rate changes on our short-term cash investments, consisting of U.S.
Treasury obligations and other investments in respect of institutions with the
highest credit ratings, all of which have maturities of three months or less.
These short-term investments carry a degree of interest rate risk. We believe
that the impact of a 10% increase or decline in interest rates would not be
material to our investment income.
14
<PAGE>
We use interest rate swaps to hedge the effects of fluctuations in
interest rates on our senior credit facilities. These transactions meet the
requirements for hedge accounting, including designation and correlation. These
interest rate swaps are managed in accordance with our policies and procedures.
We do not enter into these transactions for trading purposes. The resulting
gains or losses, measured by quoted market prices, are accounted for as part of
the transactions being hedged, except that losses not expected to be recovered
upon the completion of hedged transactions are expensed. Gains or losses
associated with interest rate swaps are computed as the difference between the
interest expense per the amount hedged using the fixed rate compared to a
floating rate over the term of the swap agreement. As of March 31, 2000, we had
entered into six interest rate swap agreements totaling $225 million to convert
our variable rate debt to fixed rate debt. The interest rate swaps had no
material impact on our consolidated financial statements as of and for the year
ended December 31, 1999 or as of and for the three months ended March 31, 2000.
Part II--Other Information
Item 2. Use of Proceeds.
On November 23, 1999, in connection with our offering to AT&T concurrent
to our initial public offering, a registration statement on Form S-1 (File No.
333-89393) and an additional registration statement on Form S-1 (File No. 333-
91481) pursuant to Rule 462 (b) of the Securities Exchange Act of 1933 were
declared effective by the Securities and Exchange Commission, pursuant to which
2,245,000 shares of our class A common stock were sold at a price of $18.65 per
share. This concurrent offering generated proceeds of approximately $41.9
million. No associated costs were incurred as the offering was directly with
AT&T, therefore the net proceeds to us were approximately $41.9 million. We
received the cash proceeds from AT&T on January 18, 2000. The following table
approximates our intended use of the net offering proceeds:
<TABLE>
<CAPTION>
<S> <C>
Construction of wireless network and other property and equipment. $ 36,500
Working capital................................................... 5,369
------------------
Total.......................................................... $ 41,869
==================
</TABLE>
Item 6. Exhibit and Reports on Form 8-K.
(a) Exhibit:
27.1 Financial Data Schedule
(b) Reports on Form 8-K
We filed a Current Report on Form 8-K dated February 28, 2000 under
which we announced the execution of a definitive agreement to merge
with Tritel, Inc. Additionally, TeleCorp separately announced the
execution of a definitive agreement to exchange certain property with
AT&T Wireless PCS, LLC. A copy of both press releases, dated
February 28, 2000, were filed as exhibits.
We filed an amendment to the Current Report on Form 8-K dated March
10, 2000 under which we amended the Current Report on Form 8-K filed
February 28, 2000 in connection with the execution of a definitive
agreement to merge with Tritel, Inc and, TeleCorp's separate
announcement of the execution of a definitive agreement to exchange
certain property with AT&T Wireless PCS, LLC. A copy of both press
releases, dated February 28, 2000, were filed as exhibits.
We filed a Current Report on Form 8-K dated March 15, 2000 under which
we filed as exhibits copies of the definitive Agreement and Plan of
Reorganization and Contribution (the Merger Agreement) and the
definitive Asset Exchange Agreement. In connection with the Merger
Agreement, holders representing in excess of 50% of the voting control
of each of TeleCorp and Tritel have entered into voting agreements
which provide for, among other matters, voting their shares in favor
of the transactions contemplated by the Merger Agreement (the "Voting
Agreements"). A copy of each of the Voting Agreements were attached as
exhibits.
15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, each
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TELECORP PCS, INC.
Dated: May 15, 2000 By: /s/ Thomas H. Sullivan
------------------------------------------------
Thomas H. Sullivan,
Executive Vice President and Chief Financial
Officer
SUBSIDIARY
TELECORP COMMUNICATIONS, INC.
Dated: May 15, 2000 By: /s/ Thomas H. Sullivan
------------------------------------------------
Thomas H. Sullivan,
Executive Vice President and Chief Financial
Officer
16
<PAGE>
EXHIBIT INDEX
27.1 Financial Data Schedule.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2000 AND IS QUALIFIED IN
ITS ENTIRETY TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> $ 94,606
<SECURITIES> $ 0
<RECEIVABLES> $ 33,985
<ALLOWANCES> $ 2,917
<INVENTORY> $ 22,315
<CURRENT-ASSETS> $ 151,926
<PP&E> $ 529,298
<DEPRECIATION> $ (67,556)
<TOTAL-ASSETS> $ 948,654
<CURRENT-LIABILITIES> $ 143,474
<BONDS> $ 651,325
$ 270,914
$ 149
<COMMON> $ 878
<OTHER-SE> $(126,867)
<TOTAL-LIABILITY-AND-EQUITY> $ 948,654
<SALES> $ 55,446
<TOTAL-REVENUES> $ 55,446
<CGS> $ 19,026
<TOTAL-COSTS> $ 115,361
<OTHER-EXPENSES> $ (22)
<LOSS-PROVISION> $ 0
<INTEREST-EXPENSE> $ 16,990
<INCOME-PRETAX> $ (74,499)
<INCOME-TAX> $ 0
<INCOME-CONTINUING> $ (74,499)
<DISCONTINUED> $ 0
<EXTRAORDINARY> $ 0
<CHANGES> $ 0
<NET-INCOME> $ (74,499)
<EPS-BASIC> $ (0.83)
<EPS-DILUTED> $ (0.83)
</TABLE>
