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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) August 12, 1997
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American Telecasting, Inc.
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(Exact Name of Registrant as Specified in Charter)
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<S> <C> <C>
Delaware 0-23008 54-1486988
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(State or Other Jurisdiction of Incorporation) (Commission File Number) (IRS Employer identification No.)
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<S> <C>
5575 Tech Center Drive, Suite 300, Colorado Springs, Colorado 80919
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(Address of Principal Executive Offices) (Zip Code)
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Registrant's telephone number, including area code (719) 260-5533
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NOT APPLICABLE
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 2. DISPOSAL OF ASSETS
On March 18, 1997, American Telecasting, Inc. ("ATI" or the "Company")
entered into a definitive agreement (the "BellSouth Agreement") with BellSouth
Corporation and BellSouth Wireless Cable, Inc. ("BellSouth Wireless") which
provides for the sale of all of the Company's Florida and Louisville, Kentucky
wireless cable assets (the "Southeastern Assets") to BellSouth Wireless. The
Southeastern Assets include operating wireless cable systems in Orlando,
Lakeland, Jacksonville, Daytona Beach, Ft. Myers, Florida, and Louisville,
Kentucky and wireless cable channel rights in Bradenton, Naples, Sebring and
Miami, Florida. The purchase price for all of the Southeastern Assets will
range from $67.9 million to $103.2 million, depending upon the number of
wireless cable channel rights that are ultimately transferred to BellSouth
Wireless.
On August 12, 1997, the Company completed the first closing under the
BellSouth Agreement, which involved transferring to BellSouth Wireless, the
Company's operating systems and current channel rights in the Florida markets
of Orlando, Jacksonville, Ft. Myers and Daytona Beach, along with the
Louisville, Kentucky market and certain rights in Miami, Florida (the "Group 1"
Assets). The proceeds received by the Company from the first closing totaled
approximately $54 million. Of such amount, $7 million was placed in escrow for
a period of twelve months to satisfy any indemnification obligations of the
Company. The markets sold in the first closing accounted for approximately
24,000 subscribers as of June 30, 1997, and revenue of $4.3 million for the six
month period ending June 30, 1997. Under the terms of the BellSouth Agreement,
additional closings are anticipated over the next two years.
The BellSouth Agreement contains customary conditions for each closing,
including the satisfaction of all applicable regulatory requirements. There
can be no assurance that all of such conditions will be satisfied or that
further sales of assets to BellSouth Wireless will be consummated.
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ITEM 7. FINANCIAL STATEMENTS AND PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
a. PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED)
AMERICAN TELECASTING, INC.
The following unaudited pro forma condensed consolidated
financial statements are filed with this report:
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Unaudited Pro Forma Condensed Consolidated Balance Sheet as of June, 30, 1997 . . . . . . . . 4
Unaudited Pro Forma Condensed Consolidated Statements of Operations:
For the Six Months Ended June 30, 1997 . . . . . . . . . . . . . . . . . . . . . 5
For the Year Ended December 31, 1996 . . . . . . . . . . . . . . . . . . . . . . 6
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The Unaudited Pro Forma Condensed Consolidated Balance Sheet
of the Company as of June 30, 1997, reflects the financial position of
the Company after giving effect to the disposition of the assets and
current channel rights in the Florida markets of Orlando,
Jacksonville, Ft. Myers, and Daytona Beach along with the Louisville,
Kentucky market and certain channel rights in Miami, Florida. The
adjustments related to the pro forma condensed consolidated balance
sheet assume the transaction was consummated on June 30, 1997. The
Unaudited Pro Forma Condensed Consolidated Statements of Operations
for the six months ended June 30, 1997 and the year ended December
31, 1996 assume that the disposition occurred at the beginning of the
period presented.
The unaudited pro forma condensed consolidated financial
statements have been prepared by the Company based upon what the
company deemed to be proper assumptions. The unaudited pro forma
condensed consolidated financial statements presented herein are shown
for illustrative purposes only and are not necessarily indicative of
the future financial position or results of operations of the Company,
or of the financial position or results of operations of the Company
that would have actually occurred had the transaction been in effect
as of the date and for the periods presented. In addition, it should
be noted that the Company's financial statements will reflect the
disposition as of August 12, 1997, the first closing date.
The unaudited pro forma condensed consolidated financial
statements should be read in conjunction with the consolidated
historical financial statements and footnotes thereto included in the
Company's Annual Report on Form 10-K for the year ended December 31,
1996, and the most recent interim financial information reported on
Form 10-Q for the period ended June 30, 1997.
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AMERICAN TELECASTING, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 1997
(Dollars in thousands)
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Group 1 Pro Forma Pro Forma
ATI Assets (a) Adjustments Consolidated
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ASSETS
Current Assets:
Cash and cash equivalents . . . . . . . . . . . . . $ 12,777 $ 123 $ 123 (b) $ 53,537
-- -- 47,052 (f) --
-- -- ( 6,292) (c) --
Trade accounts receivable, net . . . . . . . . . . . 1,021 130 -- 891
Prepaid expenses and other current assets . . . . . 3,107 407 ( 1,000) (c) 8,700
-- -- 7,000 (f) --
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Total current assets . . . . . . . . . . . . . . . . . 16,905 660 46,883 63,128
Property and equipment, net . . . . . . . . . . . . . . 83,184 11,404 -- 71,780
Deferred license and leased license acquisition
costs, net . . . . . . . . . . . . . . . . . . . . . 138,028 4,972 -- 133,056
Goodwill, net . . . . . . . . . . . . . . . . . . . . . 14,730 -- -- 14,730
Deferred financing costs, net . . . . . . . . . . . . . 5,346 -- (857) (c) 4,489
Other assets, net . . . . . . . . . . . . . . . . . . . 1,255 83 -- 1,172
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Total assets $ 259,448 $ 17,119 $ 46,026 $ 288,355
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses . . . . . . . . $ 14,871 $ 1,387 $ (772) (c) $ 16,721
-- -- 2,285 (d) --
-- -- 1,122 (e) --
-- -- 602 (b) --
Current portion of long-term obligations . . . . . . 8,689 74 (6,155) (c) 2,460
Customer deposits . . . . . . . . . . . . . . . . . . 347 44 -- 303
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Total current liabilities . . . . . . . . . . . . . . . 23,907 1,505 ( 2,918) 19,484
Deferred income taxes . . . . . . . . . . . . . . . . . 2,834 -- -- 2,834
2004 Notes . . . . . . . . . . . . . . . . . . . . . . 145,750 -- -- 145,750
2005 Notes . . . . . . . . . . . . . . . . . . . . . . 125,444 -- -- 125,444
Other long-term obligations, net of current portion . . 3,662 47 -- 3,615
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Total liabilities . . . . . . . . . . . . . . . . . 301,597 1,552 ( 2,918) 297,127
STOCKHOLDERS' EQUITY (DEFICIT) . . . . . . . . . . . . ( 42,149) 15,567 48,944 ( 8,772)
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Total liabilities and stockholders' equity $ 259,448 $ 17,119 $ 46,026 $ 288,355
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(a) To reflect the sale of the assets of the Company's operating systems and
current channel rights in the Florida markets of Orlando, Jacksonville,
Ft. Myers and Daytona Beach along with the Louisville, Kentucky market and
certain rights in Miami, Florida (the "Group 1 Assets").
(b) To reflect certain assets and liabilities that were not assumed by
BellSouth as part of the Group 1 transaction.
(c) To reflect use of approximately $6.3 million of the proceeds to pay off
principal, interest, and debt warrants; return of $1 million from
escrowed funds; and write off deferred financing costs of $857,000 related
to a bank credit facility entered into in February 1997.
(d) To reflect the liability for transaction costs associated with the sale
of the Group 1 Assets.
(e) To reflect the income tax liability related to the disposition of the
Group 1 Assets.
(f) To reflect cash proceeds from the sale of the Group 1 Assets of
approximately $47 million and reflect approximately $7 million of escrowed
funds to satisfy indemnification obligations of the Company.
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AMERICAN TELECASTING, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(Dollars in thousands except per share amounts)
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Group1 Pro Forma Pro Forma
ATI Operations (a) Adjustments Consolidated
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<S> <C> <C> <C> <C>
Revenues . . . . . . . . . . . . . . . . . . . . . . . $ 31,659 $ 4,314 $ -- $ 27,345
Costs and Expenses:
Operating . . . . . . . . . . . . . . . . . . . . . . 19,127 2,663 -- 16,464
Marketing . . . . . . . . . . . . . . . . . . . . . . 1,531 137 -- 1,394
General and administrative . . . . . . . . . . . . . 10,449 687 -- 9,762
Depreciation and amortization . . . . . . . . . . . . 25,609 2,786 -- 22,823
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Total costs and expenses . . . . . . . . . . . . . . . 56,716 6,273 -- 50,443
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Loss from operations . . . . . . . . . . . . . . . . . 25,057) ( 1,959) -- ( 23,098)
Interest expense . . . . . . . . . . . . . . . . . . . (21,127) ( 150) 309 (b) (19,895)
773 (c)
Interest income . . . . . . . . . . . . . . . . . . . . 350 -- 928 (d) 1,278
Other income, net . . . . . . . . . . . . . . . . . . . 439 5 -- 434
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Loss before income tax benefit (expense) . . . . . . . (45,395) ( 2,104) 2,010 ( 41,281)
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Net loss . . . . . . . . . . . . . . . . . . . . . . . $ (45,395) $ ( 2,104) $ 2,010 $ (<41,281)
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Net loss per share . . . . . . . . . . . . . . . . . . $ ( 1.80) $ ( 1.64)
Weighted average number of shares outstanding . . . . . 25,168,157 25,168,157
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(a) To eliminate the operations of the Company's operating systems and current
channel rights in the Florida markets of Orlando, Jacksonville, Ft. Myers
and Daytona Beach along with the Louisville, Kentucky market and certain
rights in Miami, Florida. No recognition has been given to the gain on
the disposition. The Company estimates transaction costs of $2.3 million,
income taxes of $1.1 million, and a non-cash charge of $857,000 to
write-off deferred financing costs. The estimated net gain, after these
charges is $33.7 million.
(b) To reflect elimination of amortization of deferred financing costs of a
bank credit facility, obtained in February 1997, for the entire period.
(c) To reflect elimination of interest expense associated with a bank credit
facility, obtained in February 1997, for the entire period.
(d) To adjust for interest income that would be earned on the weighted average
net proceeds available, invested at 5 percent, after giving affect for
certain expenditures made.
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AMERICAN TELECASTING, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(Dollars in thousands except per share amounts)
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ATI Group 1 Pro Forma Pro Forma
Historical Operations (a) Adjustments Consolidated
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Revenues . . . . . . . . . . . . . . . . . . . . . . . $ 62,032 $ 8,717 $ -- $
53,315
Costs and Expenses:
Operating . . . . . . . . . . . . . . . . . . . . . 36,029 5,539 -- 30,490
Marketing . . . . . . . . . . . . . . . . . . . . . 7,429 790 -- 6,639
General and administrative . . . . . . . . . . . . 18,827 1,564 -- 17,263
Depreciation and amortization. . . . . . . . . . . 44,665 4,641 -- 40,024
Impairment of wireless cable assets . . . . . . . . 21,271 1,617 -- 19,654
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Total costs and expenses . . . . . . . . . . . . . . . 128,221 14,151 -- 114,070
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Loss from operations . . . . . . . . . . . . . . . . . (66,189) ( 5,434) -- (60,755)
Interest expense . . . . . . . . . . . . . . . . . . . (37,281) ( 390) -- (36,891)
Interest income . . . . . . . . . . . . . . . . . . . . 1,106 -- 1,784 (b) 2,890
Other income, net . . . . . . . . . . . . . . . . . . . 687 70 -- 617
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Loss before income tax benefit . . . . . . . . . . . . 101,677) ( 5,754) 1,784 (94,139)
Income tax benefit (expense) . . . . . . . . . . . . . 3,297 ( 3) -- 3,300
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Net loss applicable to Class A Common Stock . . . . . . (98,380) ( 5,757) 1,784 (90,839)
Dividend-Series B Preferred . . . . . . . . . . . . . . ( 6,250) -- -- ( 6,250)
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Net applicable to Class A Common Stock . . . . . . . . $ (104,630) $ ( 5,757) $ 1,784 $ (97,089)
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Net loss per share . . . . . . . . . . . . . . . . . . $ ( 5.78) $ ( 5.37)
Weighted average number of shares outstanding . . . . . 18,095,961 18,095,961
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(a) To eliminate the operations of the Company's operating systems and current
channel rights in the Florida markets of Orlando, Jacksonville, Ft. Myers
and Daytona Beach along with the Louisville, Kentucky market and certain
rights in Miami, Florida. No recognition has been given to the gain on
the disposition. The Company estimates transaction costs of $2.3 million,
income taxes of $1.1 million, and a non-cash charge of $857,000 to
write-off deferred financing costs. The estimated net gain, after these
charges is $33.7 million.
(b) To adjust for interest income that would be earned on the weighted average
net proceeds available, invested at 5 percent, after giving affect for
certain expenditures made.
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SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED.
AMERICAN TELECASTING, INC.
/S/ DAVID K. SENTMAN
DAVID K. SENTMAN
SENIOR VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
DATED: AUGUST 26, 1997
