SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
(AMENDMENT NO. 1)
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 11, 2003
SPECTRASITE, INC.
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(Exact name of Registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation or organization)
0-27217 56-2027322
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(Commission File Number) (I.R.S. Employer Identification Number)
400 Regency Forest Drive
Cary, North Carolina 27511
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(Address of principal executive offices) (Zip Code)
(919) 468-0112
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(Registrant's telephone number, including area code)
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of businesses acquired.
None.
(b) Pro forma financial information.
None.
(c) Exhibits.
None.
ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On August 11, 2003, SpectraSite, Inc. (the "Company") announced its
operating results for the three months ended June 30, 2003. This Amendment No. 1
to the Company's Current Report on 8-K restates the Company's prior announcement
in its entirety to conform the announcement to the presentation included in the
Company's Registration Statement on Form S-1, as amended (File No. 333-107123).
The information furnished in this Item 12 shall not be deemed to be
"filed" for purposes of the Securities Exchange Act of 1934, nor shall it be
deemed incorporated by reference in any filing under the Securities Act of 1933.
Consolidated revenues increased to $80.9 million for the three months
ended June 30, 2003 from $75.9 million for the three months ended June 30, 2002.
Site operations revenues increased to $77.5 million for the three months ended
June 30, 2003 from $69.6 million for the three months ended June 30, 2002.
Revenues from wireless operations increased to $72.0 million for the three
months ended June 30, 2003 from $64.2 million for the three months ended June
30, 2002. Revenues from broadcast leasing increased to $5.5 million for the
three months ended June 30, 2003 from $5.4 million for the three months ended
June 30, 2002. Revenues from broadcast services decreased to $3.4 million for
the three months ended June 30, 2003 compared to $6.2 million for the three
months ended June 30, 2002.
The Company's net loss was $7.6 million for the three months ended June
30, 2003, compared to a net loss of $127.6 million for the three months ended
June 30, 2002. The Company's net loss per share was $0.16 during the second
quarter of 2003 as compared to $0.83 during the second quarter of 2002.
Adjusted EBITDA, as defined by the Company, increased to $37.2 million for the
three months ended June 30, 2003 from $(10.7) million for the three months
ended June 30, 2002.
Net cash provided by operating activities increased to $16.6 million
during the second quarter of 2003 as compared to net cash used in operating
activities of $21.2 million during the second quarter of 2002. Purchases of
property and equipment during the second quarter of 2003 were $3.9 million, down
from $19.6 million for the same period in 2002. Free cash flow, defined as net
cash provided by operating activities less purchases of property and equipment,
during the second quarter of 2003 was $12.7 million as compared to a free cash
flow deficit of $40.8 during the prior year's period.
Based on trailing twelve-month revenues on towers owned or operated as of
June 30, 2002 and still owned or operated as of June 30, 2003, same tower
revenue growth was 15%. The Company owned or operated
2
7,539 towers and in-building sites at June 30, 2003, as compared to 7,994 towers
and in-building sites at June 30, 2002.
FINANCING TRANSACTIONS
On May 14, 2003, the Company's operating subsidiary, SpectraSite
Communications, Inc., amended its credit facility to reduce the unused $300
million commitment under its revolving credit facility by $100 million in
exchange for modification of certain covenants in future periods and certain
documentation changes.
On May 21, 2003, the Company issued $200 million aggregate principal
amount of 8.25% senior notes due 2010. Semi-annual interest payments for the
8.25% senior notes are due on May 15 and November 15 beginning on November 15,
2003. Net proceeds from the 8.25% senior notes were utilized to prepay a portion
of the Company's outstanding indebtedness under its credit facility.
STOCK SPLIT
On August 4, 2003, the Company announced a two for one forward stock
split. The record date for the forward split was August 14, 2003, and the
payment date was August 21, 2003. In addition, each of the Company's outstanding
warrants was adjusted to reflect the forward split. Effective on the record
date, each warrant entitles its holder to purchase two shares of the Company's
common stock at an aggregate exercise price of $32.00.
ACQUISITIONS
Under the terms of an amended agreement with affiliates of SBC completed
on November 14, 2002, the Company agreed to acquire the sublease rights to a
maximum of 600 towers during the period beginning May 2003 and ending August
2004. Towers subleased by the Company under this agreement will be subleased on
a quarterly basis in increments not to exceed 100 towers per quarter. To the
extent less than 100 towers are subleased during a period, the remaining balance
will be accrued to the last sublease period in August 2004. In the second
quarter of 2003 the Company subleased 54 towers under this agreement, for which
it paid $13.3 million in cash.
NON-GAAP FINANCIAL MEASURES
Adjusted EBITDA. Adjusted EBITDA consists of net income (loss) before
depreciation, amortization and accretion, interest, income tax expense (benefit)
and, if applicable, before discontinued operations and cumulative effect of
change in accounting principle. For the periods prior to January 31, 2003,
Adjusted EBITDA also excludes gain on debt discharge, reorganization items, and
writeoffs of investments in and loans to affiliates. We use a different
definition of Adjusted EBITDA for the fiscal periods prior to our reorganization
to enable investors to view our operating performance on a consistent basis
before the impact of the items discussed above on the predecessor company. Each
of these historical items was incurred prior to, or in connection with, our
bankruptcy and is excluded from Adjusted EBITDA to reflect, as accurately as
possible, the results of our core operations. Management does not expect any of
these items to have a material financial impact on our operations on a
going-forward basis because none of these pre-reorganization items is expected
to occur in the foreseeable future.
Adjusted EBITDA may not be comparable to a similarly titled measure
employed by other companies and is not a measure of performance calculated in
accordance with accounting principles generally accepted in the United States,
or "GAAP".
We use Adjusted EBITDA as a measure of operating performance. Adjusted
EBITDA should not be considered in isolation or as a substitute for operating
income, net income or loss, cash flows provided by operating, investing and
financing activities or other income statement or cash flow statement data
prepared in accordance with GAAP.
We believe Adjusted EBITDA is useful to an investor in evaluating our
operating performance because:
- it is the primary measure used by our management to evaluate the
economic productivity of our operations, including the efficiency of
our employees and the profitability associated with their performance,
the realization of contract revenue under our long-term contracts, our
ability to obtain and maintain our customers and our ability to operate
our leasing and licensing business effectively;
- it is widely used in the wireless tower industry to measure operating
performance without regard to items such as depreciation and
amortization, which can vary depending upon accounting methods and the
book value of assets; and
- we believe it helps investors meaningfully evaluate and compare the
results of our operations from period to period by removing the impact
of our capital structure (primarily interest charges from our
outstanding debt) and asset base (primarily depreciation and
amortization) from our operating results.
Our management uses Adjusted EBITDA:
- as a measurement of operating performance because it assists us in
comparing our operating performance on a consistent basis as it removes
the impact of our capital structure (primarily interest charges from
our outstanding debt) and asset base (primarily depreciation and
amortization) from our operating results;
- in presentations to our board of directors to enable it to have the
same measurement of operating performance used by management;
- for planning purposes, including the preparation of our annual
operating budget;
- for compensation purposes, including the basis for incentive quarterly
and annual bonuses for certain employees, including our sales force;
- as a valuation measure in strategic analyses in connection with the
purchase and sale of assets; and
- with respect to compliance with our credit facility, which requires us
to maintain certain financial ratios based on Annualized EBITDA (as
defined in our credit agreement).
There are material limitations to using a measure such as Adjusted EBITDA,
including the difficulty associated with comparing results among more than one
company and the inability to analyze certain significant items, including
depreciation and interest expense, that directly affect our net income or loss.
Management compensates for these limitations by considering the economic effect
of the excluded expense items independently as well as in connection with its
analysis of net income. Adjusted EBITDA should be considered in addition to, but
not as a substitute for, other measures of financial performance reported in
accordance with generally accepted accounting principles.
3
Adjusted EBITDA for the three months ended June 30, 2003
and 2002 was calculated as follows:
THREE MONTHS THREE MONTHS
ENDED ENDED
JUNE 30, 2003 JUNE 30, 2002
------------- -------------
(IN THOUSANDS)
Net loss........................................... $ (7,574) $ (127,568)
Add / Less:
Depreciation, amortization and accretion expenses 25,626 50,625
Interest income.................................. (279) (293)
Interest expense................................. 18,604 61,795
Income tax expense (benefit)..................... 206 (18)
Loss from operations of discontinued segment, net
of income tax expense.......................... -- 4,797
Loss on disposal of discontinued segment......... 596 --
------------- -------------
Adjusted EBITDA.................................... $ 37,179 $ (10,662)
============= =============
Free Cash Flow. Free cash flow (deficit), as we have defined it, is
calculated as the cash provided by (used in) operating activities less purchases
of property and equipment. We believe free cash flow to be relevant and useful
information to our investors as this measure is used by our management in
evaluating our liquidity and the cash generated by our consolidated operating
businesses. Our definition of free cash flow does not take into consideration
cash provided by or used for acquisitions or sales of tower assets or cash used
to acquire other businesses. Additionally, our definition of free cash flow does
not reflect cash used to make mandatory repayments of our debt obligations. The
limitations of using this measure include the difficulty in analyzing the impact
on our operating cash flow of certain discretionary expenditures such as
purchases of property and equipment and our mandatory debt service requirements.
Management compensates for these limitations by analyzing the economic effect of
these expenditures and asset dispositions independently as well as in connection
with analysis of our cash flow. Free cash flow reflects cash available for
financing activities, to strengthen our balance sheet, or cash available for
strategic investments, including acquisitions of tower assets or businesses. We
believe free cash flow should be considered in addition to, but not as a
substitute for, other measures of liquidity reported in accordance with
generally accepted accounting principles. Free cash flow, as we have defined it,
may not be comparable to similarly titled measures reported by other companies.
Free cash flow (deficit) for the three months ended June 30, 2003 and 2002 was
calculated as follows:
THREE MONTHS THREE MONTHS
ENDED ENDED
JUNE 30, 2003 JUNE 30, 2002
------------- -------------
(IN THOUSANDS)
Net cash provided by (used in) operating activities $ 16,623 $ (21,187)
Less: Purchases of property and equipment.......... (3,926) (19,579)
------------- -------------
Free cash flow (deficit)........................... $ 12,697 $ (40,766)
============= =============
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ABOUT SPECTRASITE, INC.
SpectraSite, Inc. (www.spectrasite.com), based in Cary, North Carolina, is
one of the largest, in terms of number of towers, and fastest growing, in terms
of revenue growth, wireless tower operators in the United States. At June 30,
2003, SpectraSite owned or operated approximately 10,000 revenue producing
sites, including over 7,500 towers primarily in the top 100 basic trading area,
or BTA, in the United States. SpectraSite's customers are leading wireless
communications providers, including AT&T Wireless, Cingular, Nextel, Sprint PCS,
T-Mobile and Verizon Wireless.
SAFE HARBOR
This announcement and oral statements made from time to time by
representatives of the Company may contain "forward-looking statements"
concerning SpectraSite's future expectations, financial and operating
projections, plans, strategies and the trading markets for its securities. These
forward-looking statements are subject to a number of risks and uncertainties.
The Company wishes to caution readers that certain factors may impact the
Company's actual results and could cause results for subsequent periods to
differ materially from those expressed in any forward-looking statements made by
or on behalf of the Company. Such factors include, but are not limited to (i)
the interest of market makers and others in maintaining an active market for
SpectraSite's securities, (ii) SpectraSite's substantial capital requirements
and leverage, (iii) market conditions, (iv) the Company's dependence on demand
for wireless communications and related infrastructure, (v) competition in the
communications tower industry, including the impact of technological
developments, (vi) future regulatory actions and conditions in its operating
areas, (vii) technological innovation, (viii) the integration of towers or
businesses that we have or may acquire, (ix) dependence upon a small number of
significant customers, (x) disputes with current and prospective customers and
lessors, and (xi) other risks and uncertainties as may be detailed from time to
time in our public announcements and SEC filings. These and other important
factors are described in more detail in the "Risk Factors" section of the
Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2003, as
amended, and in the Company's other SEC filings and public announcements. The
Company undertakes no obligation to update forward-looking statements to reflect
subsequently occurring events or circumstances.
5
SPECTRASITE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AT JUNE 30, 2003 AND DECEMBER 31, 2002
REORGANIZED PREDECESSOR
COMPANY COMPANY
JUNE 30, 2003 DECEMBER 31, 2002
------------- -----------------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
ASSETS
Current assets:
Cash and cash equivalents............................... $ 58,753 $ 80,961
Accounts receivable, net of allowance of $8,839 and
$11,431, respectively................................ 6,553 15,180
Costs and estimated earnings in excess of billings...... 3,194 2,169
Inventories............................................. 7,756 7,878
Prepaid expenses and other.............................. 12,759 16,696
---------- -----------
Total current assets................................. 89,015 122,884
Property and equipment, net............................... 1,243,743 2,292,945
Goodwill, net............................................. -- 60,626
Other assets.............................................. 223,427 102,001
---------- -----------
Total assets......................................... $1,556,185 $ 2,578,456
========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable........................................ $ 7,840 $ 13,029
Accrued and other expenses.............................. 77,390 66,280
Current portion of liabilities under SBC agreement...... 40,335 --
Billings in excess of costs and estimated earnings...... 748 703
Current portion of credit facility...................... -- 2,244
---------- -----------
Total current liabilities............................ 126,313 82,256
---------- -----------
Long-term portion of credit facility...................... 479,955 780,711
Senior notes.............................................. 200,000 --
Long-term portion of liabilities under SBC agreement...... 16,008 --
Other long-term liabilities............................... 52,315 27,330
---------- -----------
Total long-term liabilities.......................... 748,278 808,041
---------- -----------
Liabilities subject to compromise (Note 2)................ -- 1,763,286
---------- -----------
Stockholders' equity (deficit):
Common stock, $0.001 par value, 300,000,000 shares
authorized, 154,013,917 issued and outstanding at
December 31, 2002.................................... -- 154
Common stock, $0.01 par value, 250,000,000 shares
authorized, 47,487,030 issued and outstanding at June
30, 2003............................................. 475 --
Additional paid-in-capital.............................. 686,861 1,624,939
Accumulated other comprehensive income (loss)........... 3,524 (355)
Accumulated deficit..................................... (9,266) (1,699,865)
---------- -----------
Total stockholders' equity (deficit)................. 681,594 (75,127)
---------- -----------
Total liabilities and stockholders' equity
(deficit).......................................... $1,556,185 $ 2,578,456
========== ===========
See accompanying notes.
6
SPECTRASITE, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
REORGANIZED PREDECESSOR PREDECESSOR
COMPANY COMPANY REORGANIZED COMPANY PREDECESSOR
THREE THREE COMPANY ONE MONTH COMPANY
MONTHS MONTHS FIVE MONTHS ENDED SIX MONTHS
ENDED JUNE ENDED JUNE ENDED JUNE 30, JANUARY 31, ENDED JUNE 30,
30, 2003 30, 2002 2003 2003 2002
----------- ----------- -------------- ----------- --------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Revenues:
Site operations................................ $ 77,498 $ 69,633 $128,567 $ 25,556 $ 135,585
Broadcast services............................. 3,413 6,236 6,988 1,237 12,688
-------- --------- -------- ---------- ---------
Total revenues............................. 80,911 75,869 135,555 26,793 148,273
-------- --------- -------- ---------- ---------
Operating Expenses:
Costs of operations, excluding depreciation,
amortization and accretion expense:
Site operations.............................. 25,764 26,705 42,824 8,840 52,210
Broadcast services........................... 3,538 5,005 6,427 1,492 10,375
Selling, general and administrative expenses... 12,589 15,456 21,275 4,280 30,976
Depreciation, amortization and accretion
expenses....................................... 25,626 50,625 42,452 16,075 95,263
Restructuring and non-recurring charges......... -- 28,570 -- -- 28,570
-------- --------- -------- ---------- ---------
Total operating expenses................... 67,517 126,361 112,978 30,687 217,394
-------- --------- -------- ---------- ---------
Operating income (loss)......................... 13,394 (50,492) 22,577 (3,894) (69,121)
-------- --------- -------- ---------- ---------
Other income (expense):
Interest income................................ 279 293 496 137 377
Interest expense............................... (18,604) (61,795) (27,865) (4,721) (120,492)
Gain on debt discharge......................... -- -- -- 1,034,764 --
Other expense.................................. (1,841) (10,795) (3,070) (493) (11,182)
-------- --------- -------- ---------- ---------
Total other income (expense)............... (20,166) (72,297) (30,439) 1,029,687 (131,297)
-------- --------- -------- ---------- ---------
Income (loss) from continuing operations before
income taxes................................... (6,772) (122,789) (7,862) 1,025,793 (200,418)
Income tax expense (benefit).................... 206 (18) 808 5 143
-------- --------- -------- ---------- ---------
Income (loss) from continuing operations........ (6,978) (122,771) (8,670) 1,025,788 (200,561)
Reorganization items:
Adjust accounts to fair value.................. -- -- -- (644,688) --
Professional and other fees.................... -- -- -- (23,894) --
-------- --------- -------- ---------- ---------
Total reorganization items................. -- -- -- (668,582) --
-------- --------- -------- ---------- ---------
Income (loss) before discontinued operations.... (6,978) (122,771) (8,670) 357,206 (200,561)
Discontinued operations:
Loss from operations of discontinued segment,
net of income tax expense.................... -- (4,797) -- -- (2,785)
Loss on disposal of discontinued segment....... (596) -- (596) -- --
-------- --------- -------- ---------- ---------
Income (loss) before cumulative effect of change
in accounting principle........................ (7,574) (127,568) (9,266) 357,206 (203,346)
Cumulative effect of change in accounting
principle (Note 4)............................. -- -- -- (12,236) (376,753)
-------- --------- -------- ---------- ---------
Net income (loss)............................... $ (7,574) $(127,568) $ (9,266) $ 344,970 $(580,099)
======== ========= ======== ========== =========
Basic and diluted earnings per share:
Income (loss) from continuing operations....... $ (0.15) $ (0.80) $ (0.18) $ 6.66 $ (1.30)
Reorganization items........................... -- -- -- (4.34) --
Discontinued operations........................ (0.01) (0.03) (0.02) -- (0.02)
Cumulative effect of change in accounting
principle.................................... -- -- -- (0.08) (2.45)
-------- --------- -------- ---------- ---------
Net income (loss).............................. $ (0.16) $ (0.83) $ (0.20) $ 2.24 $ (3.77)
======== ========= ======== ========== =========
Weighted average common shares outstanding
(basic and diluted)............................ 47,244 154,014 47,216 154,014 153,834
======== ========= ======== ========== =========
See accompanying notes.
7
SPECTRASITE, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
REORGANIZED PREDECESSOR PREDECESSOR
COMPANY COMPANY COMPANY
FIVE MONTHS ONE MONTH SIX MONTHS
ENDED JUNE 30, ENDED JANUARY 31, ENDED JUNE 30,
2003 2003 2002
-------------- ----------------- --------------
(IN THOUSANDS)
OPERATING ACTIVITIES
Net income (loss).......................................... $ (9,266) $ 344,970 $(580,099)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation............................................. 35,089 15,609 96,703
Cumulative effect of change in accounting principle...... -- 12,236 376,753
Amortization of intangible assets........................ 6,277 252 1,728
Amortization of debt issuance costs...................... 2,451 425 5,267
Amortization of asset retirement obligation.............. 1,087 214 --
Amortization of senior discount notes.................... -- -- 61,149
Writeoff of debt issuance costs.......................... 8,182 -- --
Non-cash compensation charges............................ -- -- 580
(Gain) loss on disposal of assets........................ 1,676 (84) 31,426
Gain on debt discharge................................... -- (1,034,764) --
Adjust accounts to fair value............................ -- 644,688 --
Equity in net loss of affiliates......................... -- -- 102
Changes in operating assets and liabilities, net of
acquisitions:
Accounts receivable.................................... 3,582 5,045 33,053
Costs and estimated earnings in excess of billings,
net.................................................. (707) (272) (8,305)
Inventories............................................ 124 (2) (1,751)
Prepaid expenses and other............................. (934) (2,238) (3,879)
Accounts payable....................................... (18,751) 13,549 (23,187)
Other liabilities...................................... (260) 6,264 (5,228)
--------- ----------- ---------
Net cash provided by (used in) operating
activities......................................... 28,550 5,892 (15,688)
--------- ----------- ---------
INVESTING ACTIVITIES
Purchases of property and equipment........................ (6,181) (2,737) (48,530)
Acquisitions............................................... (9,288) -- (10,067)
Loans to affiliates........................................ -- -- (750)
Proceeds from the sale of assets........................... 81,171 -- --
--------- ----------- ---------
Net cash provided by (used in) investing
activities......................................... 65,702 (2,737) (59,347)
--------- ----------- ---------
FINANCING ACTIVITIES
Proceeds from issuance of common stock, net of issuance
costs.................................................... 1,606 -- 477
Proceeds from issuance of long-term debt................... 200,000 -- 90,000
Repayments of debt......................................... (303,275) (10,884) (1,656)
Debt issuance costs........................................ (7,062) -- (26)
--------- ----------- ---------
Net cash provided by (used in) financing
activities......................................... (108,731) (10,884) 88,795
--------- ----------- ---------
Net increase (decrease) in cash and cash
equivalents........................................ (14,479) (7,729) 13,760
Cash and cash equivalents at beginning of period........... 73,232 80,961 31,547
--------- ----------- ---------
Cash and cash equivalents at end of period................. $ 58,753 $ 73,232 $ 45,307
========= =========== =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for interest................... $ 12,693 $ 4,265 $ 55,828
Cash paid during the period for income taxes............... 482 5 772
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING
ACTIVITIES:
Common stock issued for deposits........................... $ -- $ 408 $ --
Common stock issued for acquisitions....................... -- -- 1,677
Capital lease obligations incurred for the purchase of
property and equipment................................... 68 -- 1,034
See accompanying notes.
8
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.
SPECTRASITE, INC.
Dated: September 15, 2003 By: /s/ David P. Tomick
----------------------------------------
David P. Tomick
Executive Vice President
and Chief Financial Officer
11