SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 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): November 13, 2000 (November 13, 2000) AMERICAN TOWER CORPORATION (Exact name of registrant as specified in its charter) Delaware 001-14195 65-0723837 (State or Other (Commission File Number) (IRS Employer Jurisdiction of Identification No.) Incorporation) 116 Huntington Avenue Boston, Massachusetts 02116 (Address of Principal Executive Offices) (Zip Code) (617) 375-7500 (Registrant's telephone number, including area code) Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. The attached presents American Tower Corporation's (the Company) unaudited pro forma condensed consolidated balance sheet as of September 30, 2000 and unaudited proforma condensed consolidated statements of operations for the nine months ended September 30, 2000 and the year ended December 31, 1999 and notes thereto. The term pro forma transactions, as used in the Company's pro forma condensed consolidated financial statements and notes thereto, is defined as certain of the Company's major acquisitions and financings and includes the following: the OmniAmerica merger, the Telecom merger, the UNIsite merger, the ICG transaction, the AirTouch transaction, the AT&T transaction, the Company's public offering of common stock and private placement of common stock in February 1999 (February 1999 offerings), the Company's notes placement in October 1999 (October 1999 notes placement), the Company's notes placement in February 2000 (February 2000 notes placement) and the Company's public offering of common stock in June 2000 (June 2000 offering). The pro forma financial statements do not reflect all of the Company's consummated or pending acquisitions. The adjustments assume that all pro forma transactions were consummated on January 1, 1999, in the case of the unaudited pro forma condensed consolidated statements of operations. The adjustments assume that the then pending pro forma transactions were consummated as of September 30, 2000 in the case of the unaudited pro forma condensed consolidated balance sheet. These pro forma financial statements should be read in conjunction with the 1999 Annual Report on Form 10-K, quarterly report on Form 10-Q dated November 13, 2000 and reports on Form 8-K dated September 17, 1999 and March 30, 2000. Although the AirTouch transaction and the AT&T transaction do not involve the acquisition of a business, we have provided pro forma information related to these transactions as we believe such information is material. The pro forma condensed consolidated financial statements may not reflect the Company's financial condition or our results of operations had these events actually occurred on the dates specified. They may also not reflect the Company's future financial condition or results of operations. 2
Page Number ----------- (b) Pro forma Financial Information Unaudited Pro forma Condensed Consolidated Balance Sheet as of September 30, 2000 and Notes Thereto 3 Unaudited Pro forma Condensed Consolidated Statement of Operations for the Nine Months Ended September 30, 2000 and Notes Thereto 5 Unaudited Pro Forma Condensed Consolidated Statement of Operations for the Year Ended December 31, 1999 and Notes Thereto 7 AMERICAN TOWER CORPORATION UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET SEPTEMBER 30, 2000 (in thousands) See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements. 3
Adjustments for Pro Forma Pro Forma Historical Transactions(a) as adjusted ---------- --------------- ----------- ASSETS Cash and cash equivalents.............. $ 206,470 $ 206,470 Accounts receivable, net............... 154,993 154,993 Other current assets................... 121,455 121,455 Notes receivable....................... 118,307 118,307 Property and equipment, net............ 2,002,900 2,002,900 Unallocated purchase price............. $ 72,136 72,136 Intangible assets, net................. 2,272,183 2,272,183 Deferred tax asset..................... 154,351 154,351 Deposits and other assets.............. 117,864 (19,268) 98,596 ---------- -------- ---------- Total................................ $5,148,523 $ 52,868 $5,201,391 ========== ======== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities, excluding current portion of long-term debt............. $ 219,859 $ 219,859 Other long-term liabilities............ 8,293 8,293 Long-term debt, including current por- tion, but excluding convertible notes..................... 1,132,627 $ 47,594 1,180,221 Convertible notes, net of discount..... 918,893 918,893 Minority interest...................... 32,158 32,158 Stockholders' equity................... 2,836,693 5,274 2,841,967 ---------- -------- ---------- Total................................ $5,148,523 $ 52,868 $5,201,391 ========== ======== ========== NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS We have prepared the unaudited pro forma condensed consolidated balance sheet as of September 30, 2000 to give effect, as of such date, to the remaining portion of the AirTouch and AT&T transactions, the only pro forma transactions not completed by that date. We will account for the remaining portions of the AirTouch and AT&T transactions under the purchase method of accounting. (a) The following table sets forth the pro forma balance sheet adjustments as of September 30, 2000 (in thousands): The following table sets forth the remaining purchase prices and related pro forma financing for the AirTouch and AT&T transactions (in millions).
Total Adjustments for AirTouch AT&T Pro Forma Transaction Transaction Transactions ----------- ----------- ------------ ASSETS Unallocated purchase price(1)............ $ 70,798 $1,338 $ 72,136 Deposits and other assets................ (19,268) (19,268) -------- ------ -------- Total.................................. $ 51,530 $1,338 $ 52,868 ======== ====== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Long-term debt, including current portion................................. $ 46,256 $1,338 $ 47,594 Stockholders' equity..................... 5,274 5,274 -------- ------ -------- Total.................................. $ 51,530 $1,338 $ 52,868 ======== ====== ======== - -------- (1) Upon completion of our evaluation of the purchase price allocations, we expect that the average life of the assets should approximate 15 years. (2) As of September 30, 2000 the Company had closed on 1,778 of the 2,100 towers included in the original AirTouch lease agreement, paid $677.3 million in cash, and issued warrants to purchase 3.0 million shares of Class A common stock at a price of $22.00 per share. The warrants vest based on the percentage of towers closed to total towers in the lease agreement (2,100). It is estimated that the Company will pay total consideration of approximately $70.8 million to close on an additional 172 towers through January 2001. The Company does not expect to close on approximately 150 towers included in the original agreement. (3) As of September 30, 2000 the Company has closed on 1,918 of the 1,942 towers included in the AT&T purchase agreement and paid $258.7 million in cash. It is estimated that the Company will pay approximately $1.3 million to close on any remaining towers. 4
Purchase Price Borrowings -------------- ---------- AirTouch transaction.................................. $70.8(2) $46.3 AT&T transaction...................................... 1.3(3) 1.3 AMERICAN TOWER CORPORATION UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS Nine Months Ended September 30, 2000 (in thousands, except per share data) See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements. 5
Adjustments for Pro Forma Pro Forma, Historical Transactions(a) as adjusted ---------- --------------- ----------- Operating revenues.................... $ 491,522 $13,777 $ 505,299 Operating expenses excluding depreciation and amortization, development and corporate general and administrative expenses.............. 344,503 7,620 352,123 Depreciation and amortization......... 198,264 16,744 215,008 Development expense................... 10,495 10,495 Corporate general and administrative expense.............................. 9,957 9,957 --------- ------- --------- Loss from operations.................. (71,697) (10,587) (82,284) Other (income) expense: Interest expense.................... 112,339 (4,593) 107,746 Interest income and other, net...... (12,997) (12,997) Interest income-TV Azteca, net of interest expense of $753 (related party)............................. (9,070) (9,070) Note conversion expense............. 16,968 16,968 Minority interest in net earnings of subsidiaries....................... (82) (82) --------- ------- --------- Total other (income) expense.......... 107,158 (4,593) 102,565 --------- ------- --------- Loss before income taxes and extraor- dinary losses........................ (178,855) (5,994) (184,849) Benefit for income taxes(b)........... 43,036 1,442 44,478 --------- ------- --------- Loss before extraordinary losses...... $(135,819) $(4,552) $(140,371) ========= ======= ========= Basic and diluted loss per common share before extraordinary losses.... $ (0.82) N/A $ (0.81) ========= ======= ========= Basic and diluted common shares outstanding(c)....................... 165,244 8,120 173,364 ========= ======= ========= NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued) The unaudited pro forma condensed consolidated statement of operations for the nine months ended September 30, 2000 gives effect to the pro forma transactions as if each of them had occurred on January 1, 2000. We have not adjusted the pro forma condensed consolidated statement of operations to reflect exchanges of our convertible notes for shares of our Class A common stock in May 2000. (a) To record the results of operations for the pro forma transactions. We have adjusted the results of operations to record a decrease in net interest expense of $4.6 million for the nine months ended September 30, 2000 as a result of the decrease in debt after giving effect to the proceeds of the February 2000 notes placement and the June 2000 offering. Debt issuance costs are being amortized on a straight-line basis over the term of the obligation. Amortization of issuance costs are included within interest expense. We have also adjusted the results of operations to record depreciation and amortization expense of $16.7 million for the nine months ended September 30, 2000 based on estimated allocations of purchase prices. With respect to unallocated purchase price, we have determined pro forma depreciation and amortization expense based on an expected average life of 15 years. The table below sets forth the detail for the pro forma transactions for the nine months ended September 30, 2000 (in thousands). The UNIsite operations for the 12 day period ended January 12, 2000 (acquisition closed January 13, 2000) have been excluded from the nine month period ended September 30, 2000 pro forma statement of operations due to immateriality. - ------- (b) To record the tax effect of the pro forma adjustments and impact on our estimated effective tax rate. The actual effective tax rate may be different once we determine the final purchase price allocations. (c) Includes adjustment for the 12.5 million shares of Class A common stock issued pursuant to the June 2000 offering. (d) Includes additional revenues recognized on a straight-line basis in accordance with terms stipulated in the AirTouch lease agreement (assumes the leasing of 1,950 towers). Approximately $3.5 million of annual third- party lease revenues existing as of the date the agreement was signed has not been included. (e) Includes additional revenues recognized on a straight-line basis in accordance with terms stipulated in the AT&T and AT&T Wireless Services lease agreements (assumes the acquisition of 1,942 towers). Approximately $7.6 million of annual third-party lease revenues existing as of the date the agreements were signed has not been included. (f) The towers involved in each of these acquisitions were operated as part of the wireless service divisions of AirTouch and AT&T. Accordingly, separate financial records were not maintained and financial statements were never prepared for the operation of these towers. In addition to land leases that we have assumed, we have estimated certain operating expenses we would expect to incur based on our own experience with comparable towers and with AirTouch and AT&T towers acquired to date. Such estimates include expenses related to utilities, repairs and maintenance, insurance and real estate taxes. These operating expenses are based on management's best estimate and, as such, the actual expenses may be different than the estimate presented. 6
Total Adjustments February 2000 for Pro AirTouch AT&T Notes June 2000 Pro Forma Forma Transaction Transaction Placement Offering Adjustments Transactions ----------- ----------- ------------- --------- ----------- ------------ Operating revenues...... $11,886(d) $1,891(e) $13,777 Operating expenses excluding depreciation and amortization....... 4,817(f) 2,803(f) 7,620 Depreciation and amortization........... $ 16,744 16,744 ------- ------ -------- ------- Income (loss) from operations............. 7,069 (912) (16,744) (10,587) Other (income) expense: Interest expense, net.. $(1,439) $(23,675) 20,521 (4,593) ------- ------ ------- -------- -------- ------- Income (loss) before income taxes and extraordinary losses... $ 7,069 $ (912) $ 1,439 $ 23,675 $(37,265) $(5,994) ======= ====== ======= ======== ======== ======= AMERICAN TOWER CORPORATION UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS Year Ended December 31, 1999 (in thousands, except per share data) See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements. 7
Adjustments for Pro Forma Pro Forma, Historical Transactions(a) as Adjusted ---------- --------------- ----------- Operating revenues..................... $258,081 $ 114,459 $ 372,540 Operating expenses excluding depreciation and amortization, development and corporate general and administrative expenses............... 155,857 78,009 233,866 Depreciation and amortization.......... 132,539 105,631 238,170 Development expense.................... 1,607 1,607 Corporate general and administrative expense............................... 9,136 2,800 11,936 -------- --------- --------- Loss from operations................... (41,058) (71,981) (113,039) Other (income) expense: Interest expense..................... 27,492 35,713 63,205 Interest income and other, net....... (19,551) (19,551) Minority interest in net losses of subsidiaries........................ 142 142 -------- --------- --------- Total other expense.................... 8,083 35,713 43,796 -------- --------- --------- Loss before income taxes and extraordi- nary loss............................. (49,141) (107,694) (156,835) (Provision) benefit for income taxes(b).............................. (214) 42,476 42,262 -------- --------- --------- Loss before extraordinary loss......... $(49,355) $ (65,218) $(114,573) ======== ========= ========= Basic and diluted loss per common share before extraordinary loss............. $ (0.33) N/A $ (0.68) ======== ========= ========= Basic and diluted common shares outstanding(c)........................ 149,749 18,173 167,922 ======== ========= ========= NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued) The unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 1999 gives effect to the pro forma transactions as if each of them had occurred on January 1, 1999. We have not adjusted the pro forma condensed consolidated statement of operations to reflect exchanges of our convertible notes for shares of our Class A common stock in May 2000. (a) To record the results of operations for the pro forma transactions. We have adjusted the results of operations to: (1) reverse historical interest expense associated with the companies included in the pro forma transactions; and (2) record an increase in net interest expense of $35.7 million for the year ended December 31, 1999 as a result of the increased debt after giving effect to the proceeds of the February 1999 offerings, the October 1999 notes placement, the February 2000 notes placement and the June 2000 offering. Debt discount is being amortized using the effective interest method. Debt issuance costs are being amortized on a straight-line basis over the term of the obligation. Amortization of debt discount and issuance costs are included within interest expense. We have also adjusted the results of operations to reverse historical depreciation and amortization expense of $18.8 million for the year ended December 31, 1999 and recorded depreciation and amortization expense of $105.6 million for the year ended December 31, 1999 based on estimated allocations of purchase prices. With respect to unallocated purchase price, we have determined pro forma depreciation and amortization expense based on an expected average life of 15 years. We have not carried forward certain corporate general and administrative expenses of the prior owners into the pro forma condensed consolidated financial statements. These costs represent duplicative facilities and compensation to owners and/or executives we did not retain, including charges related to the accelerated vesting of stock options and bonuses that were directly attributable to the purchase transactions. Because we already maintain our own separate corporate headquarters, which provides services substantially similar to those represented by these costs, we do not expect them to recur following the acquisition. After giving effect to an estimated $2.8 million of incremental costs, we believe that we have existing management capacity sufficient to provide the services without incurring additional incremental costs. 8 NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued) The following table sets forth the detail for the pro forma transactions for the year ended December 31, 1999 (in thousands). (b) To record the tax effect of the pro forma adjustments and impact on our estimated effective tax rate. The actual effective tax rate may be different once we determine the final purchase price allocations. (c) Includes shares of Class A common stock issued pursuant to: the OmniAmerica merger--16.8 million, the TeleCom merger--3.9 million, the February 1999 offerings--26.2 million and the June 2000 offering--12.5 million. (d) Includes additional revenues recognized on a straight-line basis in accordance with terms stipulated in the AirTouch lease agreement (assumes the leasing of 1,950 towers). Approximately $3.5 million of annual third-party lease revenues existing as of the date the agreement was signed has not been included. (e) Includes additional revenues recognized on a straight-line basis in accordance with terms stipulated in the AT&T and AT&T Wireless Services lease agreements (assumes the acquisition of 1,942 towers). Approximately $7.6 million of annual third-party lease revenues existing as of the date the agreements were signed has not been included. (f) The towers involved in each of these acquisitions were operated as part of the wireless service divisions of AirTouch and AT&T. Accordingly, separate financial records were not maintained and financial statements were never prepared for the operation of these towers. In addition to land leases that we have assumed, we have estimated certain operating expenses we would expect to incur based on our own experience with comparable towers. Such estimates include expenses related to utilities, repairs and maintenance, insurance and real estate taxes. These operating expenses are based on management's best estimate and, as such, the actual expenses may be different than the estimate presented. 9
February October 1999 February 2000 OmniAmerica TeleCom 1999 UNIsite ICG AirTouch AT&T Notes Notes Merger Merger Offerings Merger Transaction Transaction Transaction Placement Placement ----------- -------- --------- -------- ----------- ----------- ----------- ------------ ------------- Operating revenues........ $12,246 $ 2,029 $ 8,018 $41,756 $47,371(d) $ 3,039(e) Operating expenses excluding depreciation and amortization, and corporate general and administrative expense......... 12,257 549 7,234 32,256 18,018(f) 7,695(f) Depreciation and amortization.... 2,372 1,201 4,539 10,719 Corporate general and administrative expense......... 2,882 10,173 8,580 321 ------- -------- -------- ------- ------- ------- (Loss) income from operations...... (5,265) (9,894) (12,335) (1,540) 29,353 (4,656) Other (income) expense: Interest expense, net... 746 521 $(1,499) 8,078 802 $(5,616) $ (11,415) Interest income......... (14) (1,021) Other, net...... 816 (106) (4,026) 22 ------- -------- ------- -------- ------- ------- ------- ------- --------- (Loss) income before income taxes and extraordinary loss............ $(6,813) $(10,309) $ 1,499 $(15,366) $(2,364) $29,353 $(4,656) $ 5,616 $ 11,415 ======= ======== ======= ======== ======= ======= ======= ======= ========= Total Adjustments for Pro June 2000 Pro Forma Forma Offering Adjustments Transactions ---------- ----------- ------------ Operating revenues........ $ 114,459 Operating expenses excluding depreciation and amortization, and corporate general and administrative expense......... 78,009 Depreciation and amortization.... $ 86,800 105,631 Corporate general and administrative expense......... (19,156) 2,800 ----------- ------------ (Loss) income from operations...... (67,644) (71,981) Other (income) expense: Interest expense, net... $(41,085) 85,181 35,713 Interest income......... 1,035 Other, net...... 3,294 ---------- ----------- ------------ (Loss) income before income taxes and extraordinary loss............ $ 41,085 $(157,154) $(107,694) ========== =========== ============ SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. AMERICAN TOWER CORPORATION (Registrant) By: /s/ Justin D. Benincasa --------------------------------- Name: Justin D. Benincasa Title: Senior Vice President and Corporate Controller Date: November 13, 2000 ------------------------- 10