<PAGE> 1
Exhibit 99.1
AT&T LATIN AMERICA CORP.
UNAUDITED CONSOLIDATED BALANCE SHEETS
EXPRESSED IN THOUSANDS OF U.S. DOLLARS, EXCEPT SHARE AND PER SHARE DATA
AS OF JUNE 30, 2000 AND DECEMBER 31, 1999
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<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
-------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 28,062 $ 24,223
Accounts receivable....................................... 5,203 1,286
Prepaid expenses and recoverable taxes.................... 3,267 2,109
Investments............................................... -- 27,078
Other receivables......................................... 237 118
-------- --------
TOTAL CURRENT ASSETS.............................. 36,769 54,814
Plant and equipment, net.................................... 95,120 68,269
Goodwill and other intangible assets, net................... 287,607 261,345
-------- --------
TOTAL ASSETS...................................... $419,496 $384,428
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt........................................... $ 6,746 $ 1,414
Current portion of obligations under capital leases....... 328 317
Trade accounts payable.................................... 7,534 5,339
Social charges payable.................................... 1,344 865
Other current liabilities................................. -- 161
Employee bonus............................................ 2,462 531
-------- --------
TOTAL CURRENT LIABILITIES......................... 18,414 8,627
Non-current portion of obligations under capital leases..... 396 383
Deferred tax liability...................................... 517 1,624
Commitments and contingencies (Note 6)...................... -- --
-------- --------
TOTAL LIABILITIES................................. 19,327 10,634
-------- --------
Shareholders' equity:
Common stock.............................................. 8 --
Additional paid-in capital................................ 421,558 376,566
Accumulated deficit....................................... (24,746) (4,124)
Accumulated other comprehensive income.................... 3,349 1,352
-------- --------
TOTAL SHAREHOLDERS' EQUITY........................ 400,169 373,794
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY........ $419,496 $384,428
======== ========
</TABLE>
The accompanying footnotes are an integral part of these unaudited
consolidated financial statements.
1
<PAGE> 2
AT&T LATIN AMERICA CORP.
UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2000
EXPRESSED IN THOUSANDS OF U.S. DOLLARS, EXCEPT SHARE AND PER SHARE DATA
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<TABLE>
<S> <C>
Revenue..................................................... $ 10,509
Operating costs and expenses:
Cost of revenues.......................................... 12,357
Selling, general and administrative....................... 8,161
Depreciation and amortization............................. 12,143
-----------
TOTAL OPERATING COSTS AND EXPENSES................ 32,661
-----------
LOSS FROM OPERATIONS.............................. (22,152)
Other interest income....................................... 1,703
Foreign exchange gain (loss), net........................... (173)
-----------
NET LOSS.......................................... $ (20,622)
===========
Basic and diluted loss per share............................ $ (0.26)
===========
Weighted average shares outstanding......................... 80,095,025
===========
</TABLE>
The accompanying footnotes are an integral part of these unaudited
consolidated financial statements.
2
<PAGE> 3
AT&T LATIN AMERICA CORP.
UNAUDITED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2000
EXPRESSED IN THOUSANDS OF U.S. DOLLARS, EXCEPT SHARE AND PER SHARE DATA
------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ACCUMULATED
ADDITIONAL OTHER TOTAL
NUMBER OF COMMON PAID-IN ACCUMULATED COMPREHENSIVE SHAREHOLDERS'
SHARES SHARES CAPITAL DEFICIT INCOME EQUITY
---------- ------ ---------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1999..................... 50,000 -- $376,566 $ (4,124) $1,352 $373,794
Currency translation adjustments................. 1,997 1,997
Net loss for the period.......................... (20,622) (20,622)
Stock split 2000:1............................... 79,960,000 $ 8 (8)
Cash contribution................................ 848,204 -- 20,000 20,000
Keytech acquisition.............................. 1,178,689 -- 25,000 25,000
---------- --- -------- -------- ------ --------
Comprehensive net loss........................... (20,622) 1,997 (18,625)
---------- --- -------- -------- ------ --------
BALANCE AT JUNE 30, 2000......................... 82,026,893 $ 8 $421,558 $(24,746) $3,349 $400,169
========== === ======== ======== ====== ========
</TABLE>
The accompanying footnotes are an integral part of these unaudited
consolidated financial statements.
3
<PAGE> 4
AT&T LATIN AMERICA CORP.
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2000
EXPRESSED IN THOUSANDS OF U.S. DOLLARS, EXCEPT SHARE AND PER SHARE DATA
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<TABLE>
<S> <C>
Cash flows from operating activities:
Net loss.................................................. $(20,622)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization expense.................. 12,143
Other.................................................. 173
Changes in operating assets and liabilities:
Accounts receivable.................................... (3,917)
Prepaid expenses and recoverable taxes................. (1,158)
Other receivables...................................... (119)
Trade accounts payable................................. 2,195
Payroll and related charges............................ 2,410
Other liabilities...................................... (1,268)
--------
NET CASH USED IN OPERATING ACTIVITIES............. (10,163)
--------
Cash flows from investing activities:
Investments in short-term securities...................... 27,078
Purchases of property and equipment....................... (33,195)
Payment to Keytech shareholders........................... (5,213)
--------
NET CASH USED IN INVESTING ACTIVITIES............. (11,330)
--------
Cash flows from financing activities:
Short-term debt........................................... 5,332
Capital infusion.......................................... 20,000
--------
NET CASH PROVIDED BY FINANCING ACTIVITIES......... 25,332
--------
NET INCREASE IN CASH.............................. 3,839
Cash at beginning of period................................. 24,223
--------
CASH AT END OF PERIOD............................. $ 28,062
========
Supplemental information on cash disclosures:
Interest paid............................................. $ --
========
Income taxes paid......................................... $ --
========
</TABLE>
The accompanying footnotes are an integral part of these unaudited
consolidated financial statements.
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<PAGE> 5
AT&T LATIN AMERICA CORP.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
EXPRESSED IN THOUSANDS OF U.S. DOLLARS, EXCEPT SHARE AND PER SHARE DATA
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1. BASIS OF PRESENTATION
The unaudited consolidated financial statements included herein have
been prepared by AT&T Latin America Corp. (the "Company"). The
foregoing statements contain all adjustments, consisting only of normal
recurring adjustments which are, in the opinion of the Company's
management, necessary to present fairly the consolidated financial
position of the Company as of June 30, 2000 and the consolidated
results of its operations and its consolidated cash flows for the
six-month period ended June 30, 2000. Result of operations for the six
months ended June 30, 2000 are not necessarily indicative of the
results of operations for the full year.
Certain information and footnote disclosure normally included in
financial statements, prepared in accordance with generally accepted
accounting principles, have been condensed or omitted pursuant to the
instructions, rules and regulations prescribed by the Securities and
Exchange Commission (the "Commission"). Although the Company believes
the disclosures provided are adequate to make the information presented
not misleading, it strongly recommends that these unaudited condensed
consolidated financial statements be read in conjunction with the
audited consolidated financial statements and the footnotes for the
year ended December 31, 1999.
2. PLANT AND EQUIPMENT, NET
JUNE 30,
DESCRIPTION 2000
----------- --------
Switching equipment......................................... $ 2,921
Transmission equipment...................................... 35,925
Cables...................................................... 3,565
Underground installation.................................... 27,453
Other plant and equipment................................... 14,222
Construction in progress.................................... 1,584
Client network deployment................................... 16,570
--------
102,240
Less accumulated depreciation and amortization............ 7,120
--------
PLANT AND EQUIPMENT, NET.......................... $ 95,120
========
Depreciation expense related to the plant and property was $5,069 for
the six-month period ended June 30, 2000.
3. KEYTECH ACQUISITION
On February 23, 2000, the Company agreed to acquire 100% of Keytech LD
S.A., a development stage broadband communications company based in
Argentina. The Company completed the acquisition of Keytech LD S.A.
(now known as AT&T Argentina) on June 30, 2000. Under the terms of the
stock purchase agreement for Keytech, the Company acquired all of the
capital stock of Keytech in exchange for 1,178,689 shares of the
Company's Class A common stock, plus $5 million in cash. The parties
placed 550,000 of the Class A common shares in escrow. These shares
will be released to Keytech's stockholders over six years to the extent
they are not used to satisfy indemnity obligations of the Keytech
stockholders to the Company. The Company will also pay up to an
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AT&T LATIN AMERICA CORP.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
EXPRESSED IN THOUSANDS OF U.S. DOLLARS, EXCEPT SHARE AND PER SHARE DATA
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additional $1.5 million to the Keytech LD shareholders one year after
the acquisition if certain business milestones specified in the stock
purchase agreement are accomplished.
The Company has accounted for the acquisition of Keytech LD, S.A. in
accordance with the purchase method for business combinations. The
Company has recorded approximately $33 million of goodwill that
represents the excess of the purchase price over the fair value of the
net assets acquired. The goodwill is being amortized over a twenty-year
period. For the six-months ended June 30, 2000, there was no
amortization of goodwill recorded.
4. SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES
As previously discussed, in Note 3, the Company acquired the net assets
of Keytech LD, S.A. on June 30, 2000. The total purchase price was
approximately $30.2 million comprised of a $5.2 million cash payment to
the Keytech shareholders and the issuance of 1,178,689 of the Company's
Class A common shares with a value of approximately $25 million.
5. EQUITY TRANSACTIONS
On June 12, 2000, the shareholders of AT&T Latin America agreed to an
amendment of the Certificate of Incorporation, providing a
reclassification of all the common stock outstanding. All the then
outstanding shares, 40,000, that were held by AT&T Corp. and Promon
Ltda. were converted into 80,000,000 common shares after a 2000:1 stock
split. This reclassification was made in order to accommodate the
issuance to FirstCom Corp. shareholders of one Class A share of AT&T
Latin America common stock for each outstanding share of FirstCom Corp.
common stock upon the closing of the merger with FirstCom Corp. (see
Note 7).
Additionally, as a condition to the FirstCom Corp. merger, AT&T Latin
America was to receive a total of $70 million in cash equity
contributions from the shareholders. Accordingly, as part of the
Netstream acquisition, in December 1999, an affiliate of AT&T Corp.
contributed $10 million and an affiliate of Promon Ltda., the prior
owner of Netstream, contributed $40 million of equity capital to the
company, in cash. During June 2000, AT&T Corp. and an affiliate of
Promon contributed an additional $20 million in cash on a pro rata
basis, in accordance with their respective ownership percentages. AT&T
Latin America issued another 848,204 common shares to AT&T Corp. and
Promon for the additional cash contribution based on their respective
ownership percentages of 90% and 10%, respectively.
On June 30, 2000, AT&T Latin America issued an additional 1,178,689
Class A common shares to the shareholders of Keytech LD, S.A. as part
of the acquisition (see Note 3).
As of June 30, 2000, the Company's equity is composed of the following
number of shares outstanding with a par value of .0001 per share.
Class A common shares.................................... 9,263,509
Class B common shares.................................... 72,763,384
----------
TOTAL COMMON SHARES OUTSTANDING................ 82,026,893
==========
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<PAGE> 7
AT&T LATIN AMERICA CORP.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
EXPRESSED IN THOUSANDS OF U.S. DOLLARS, EXCEPT SHARE AND PER SHARE DATA
-------------------------------------------------------------------------------
6. COMMITMENTS AND CONTINGENCIES
In accordance with the legislation in force in Brazil, tax registers
related to federal, state and municipal taxes are subject to
examination by the respective tax authorities from 5 to 30 years.
In March 2000, the Company entered into an import financing loan with
Dresdner Bank with principal amount of $1,755 at an interest rate of
0.8% plus LIBOR for one year.
In May and June 2000, the Company entered into other import financing
loans with Dresdner Bank with principal amounts of $836 and $2,707,
respectively, at an interest rate of 0.5% plus LIBOR for one year.
In the normal course of business, the Company may be subject to
proceedings, lawsuits and other claims. Although there can be no
assurance that the Company will prevail in every case, management does
not believe that the ultimate disposition of known legal contingencies
will have a material effect on the Company's financial condition,
results of operations or cash flows.
7. SUBSEQUENT EVENTS
CREDIT FACILITY
On July 28, 2000 a subsidiary of AT&T Corp. provided AT&T Latin America
a revolving credit facility for up to $100 million principal amount
with an annual interest rate equal to the 90-day London Inter-Bank
Offered Rate, or LIBOR, plus 3.75%, payable quarterly.
As of August 28, 2000, the available balance was $70,786 after the
withdrawals of $29,214 were made which remain outstanding and mature
two years after August 28, 2000.
CLOSING OF THE FIRSTCOM CORP. MERGER
On August 28th, 2000, immediately after the approval of the FirstCom
Shareholders, the merger became effective. The following transactions
were effective on that date:
o All of the 33,715,892 outstanding FirstCom shares, options and
warrants were exchanged on a 1:1 basis for Class A common shares of
AT&T Latin America.
o AT&T Latin America issued 100,000 shares of 15% Series B cumulative
preferred stock to Global Card Holdings, Inc., a subsidiary of AT&T
Corp., having an aggregate liquidation value of $177.1 million.
These funds, together with an additional $10.5 million from a
FirstCom restricted investments account, were used to fund the
transfer for all the outstanding FirstCom 14% Senior Notes for a
total of $187.6 million.
o AT&T Latin America issued 318,211 shares of Class B common stock to
AT&T Latin America Holding Corp.
o AT&T Latin America issued 35,357 shares of Class A common stock to
SL Participacoes
The Company will account for the FirstCom merger in accordance with the
purchase method for business combinations. The Company will record
goodwill representing the excess of the purchase price over the fair
value of the net assets acquired. The goodwill will be amortized over a
twenty-year period.
7
