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 QUARTER ENDED MARCH 31, 2001.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
COMMISSION FILE NUMBER: 000-32357
ALAMOSA HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 75-2890997
(State or other jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or organization)
5225 SOUTH LOOP 289, SUITE 120
LUBBOCK, TEXAS 79424
(Address of principal executive offices, including zip code)
(806) 722-1100
(Registrant's telephone number, including area code)
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 that 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
---------
As of May 14, 2001, approximately 92,009,856 shares of common stock, $0.01 par
value per share, were issued and outstanding.
ALAMOSA HOLDINGS, INC.
TABLE OF CONTENTS
PAGE
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PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets at March 31, 2001 (unaudited) and December 31, 2000........................ 3
Consolidated Statements of Operations for the three months ended March 31, 2001 and 2000, (unaudited).. 4
Consolidated Statements of Cash Flows for the three months ended March 31, 2001 and 2000, (unaudited).. 5
Notes to the Consolidated Financial Statements......................................................... 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.................. 15
Item 3. Quantitative and Qualitative Disclosures About Market Risk............................................. 21
PART II OTHER INFORMATION
Item 1. Legal Proceedings...................................................................................... 21
Item 2. Changes in Securities and Use of Proceeds.............................................................. 21
Item 3. Defaults Upon Senior Securities........................................................................ 22
Item 4. Submission of Matters to a Vote of Security Holders.................................................... 22
Item 5. Other Information...................................................................................... 23
Item 6. Exhibits and Reports on Form 8-K....................................................................... 23
ALAMOSA HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
March 31, 2001 December 31,
(unaudited) 2000
-------------- ------------
ASSETS
Current assets:
Cash and cash equivalents $ 163,044,589 $ 141,768,167
Short-term investments 33,900,000 1,600,000
Accounts receivable, net of allowance for doubtful
accounts of $2,820,398 and $1,503,049, respectively 29,113,036 14,746,930
Inventory 4,467,032 2,752,788
Prepaid expenses and other assets 3,397,149 3,026,860
Deferred tax asset 1,762,000 --
Interest receivable 1,291,396 1,045,785
-------------- -------------
Total current assets 236,975,202 164,940,530
Property and equipment, net 386,792,498 228,982,869
Notes receivable -- 46,865,233
Debt issuance costs, net 27,600,789 13,108,376
Restricted cash 70,585,203 --
Goodwill and intangible assets, net 914,987,707 --
Other noncurrent assets 2,593,766 4,501,005
-------------- -------------
Total assets $1,639,535,165 $ 458,398,013
============== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 100,214,370 $ 61,385,806
Current installments of capital leases 36,974 35,778
-------------- -------------
Total current liabilities 100,251,344 61,421,584
Senior discount notes 215,937,323 209,279,908
2001 senior notes 250,000,000 --
Senior secured credit facility 203,000,000 --
EDC credit facility -- 54,524,224
Deferred tax liability, net 217,943,034 --
Capital lease obligations, noncurrent 1,028,972 1,038,614
Other noncurrent liabilities 1,741,121 735,593
-------------- -------------
Total liabilities 989,901,794 326,999,923
-------------- -------------
Commitments and contingencies -- --
Stockholders' equity:
Preferred stock, $.01 par value; 10,000,000 shares
authorized; no shares issued -- --
Common stock, $.01 par value; 290,000,000 shares
authorized, 92,009,856 and 61,359,856 issued and
outstanding, respectively 920,098 613,598
Additional paid-in capital 791,007,761 245,845,086
Accumulated deficit (141,379,879) (113,947,781)
Accumulated other comprehensive income, net of tax 15,084 --
Unearned compensation (929,693) (1,112,813)
-------------- -------------
Total stockholders' equity 649,633,371 131,398,090
-------------- -------------
Total liabilities and stockholders' equity $1,639,535,165 $ 458,398,013
============== =============
The accompanying notes are an integral part of the consolidated financial statements.
3
ALAMOSA HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three months ended March 31,
---------------------------------------------
2001 2000
------------ -----------
Revenues:
Subscriber revenues $ 30,508,098 $ 7,780,256
Roaming and travel revenues 11,411,125 2,516,486
------------ ------------
Total service revenues 41,919,223 10,296,742
Product sales 3,914,866 1,583,358
------------ ------------
Total revenue 45,834,089 11,880,100
------------ ------------
Costs and expenses:
Cost of service and operations
(including $0 and $455,736 of non-cash
compensation, respectively) 32,268,705 7,857,593
Cost of product sold 8,032,996 3,327,508
Selling and marketing 18,482,336 6,650,644
General and administrative expenses
(including $183,120 and $3,516,894
of non-cash compensation, respectively) 3,906,340 4,901,658
Depreciation and amortization 11,935,625 2,256,947
------------ ------------
Total costs and expenses 74,626,002 24,994,350
------------ ------------
Loss from operations (28,791,913) (13,114,250)
Interest and other income 5,720,933 2,314,485
Interest expense (14,715,954) (4,780,109)
------------ ------------
Net loss before income tax benefit and extraordinary item (37,786,934) (15,579,874)
Income tax benefit 13,858,115 --
------------ ------------
Net loss before extraordinary item (23,928,819) (15,579,874)
Loss on debt extinguishment, net of tax benefit of $1,968,885 (3,503,279) --
------------ ------------
Net loss $(27,432,098) $(15,579,874)
============ ============
Basic and diluted net loss per common share before extraordinary item $ (0.33) $ (0.27)
============ ============
Basic and diluted net loss per common share on debt extinguishment $ (.05) $ --
============ ============
Basic and diluted net loss per common share $ (0.38) $ (0.27)
============ ============
Basic and diluted weighted average common shares: 71,598,745 56,698,911
============ ============
The accompanying notes are an integral part of the consolidated financial statements.
4
ALAMOSA HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three months ended March 31,
----------------------------------------------
2001 2000
--------------- --------------
Cash flows from operating activities:
Net loss $ (27,432,098) $ (15,579,874)
Adjustments to reconcile net loss to net cash used in
operating activities:
Income tax benefit (15,827,000) --
Non-cash compensation expense 183,120 3,972,630
Depreciation and amortization 7,298,625 2,256,947
Amortization of goodwill 4,637,000 --
Bad debt expense 200,280 194,722
Amortization of debt issuance costs 338,770 283,312
Deferred interest expense 6,657,415 4,248,576
Loss on debt extinguishment 5,472,164 --
Loss from disposition of interest rate cap agreements -- 266,178
(Increase) decrease in asset accounts, net of effects from
acquisitions:
Accounts receivable (4,689,653) 591,699
Inventory 1,609,566 2,970,533
Prepaid expenses and other assets 2,047,395 66,650
Increase (decrease) in liability accounts, net of effects
from acquisitions:
Accounts payable and accrued expenses (5,272,643) 1,632,950
------------- -------------
Net cash (used in) provided by operating activities (24,777,059) 904,323
Cash flows from investing activities:
Additions to property and equipment (34,408,000) (10,648,505)
Repayment of notes receivable 11,859,795 --
Cash paid for business acquisitions (37,617,394) --
Purchase of short term investments (32,300,000) (15,063,018)
------------- -------------
Net cash used in investing activities (92,465,599) (25,711,523)
------------- -------------
Cash flows from financing activities:
Equity offering proceeds -- 208,589,367
Equity offering costs -- (13,598,942)
Issuance of 2000 senior discount notes -- 187,096,000
Issuance of 2001 senior notes 242,500,000 --
Issuance of senior secured credit facility 203,000,000 --
Repayment of debt assumed through acquisitions (169,059,698) --
Debt issuance costs (12,803,349) (10,677,511)
Stock options exercised -- 619,199
Proceeds from issuance of long-term debt -- 7,758,175
Repayments of long-term debt (54,524,224) (76,239,373)
Change in restricted cash (70,585,203) (481,983)
Payments on capital leases (8,446) (5,253)
Interest rate cap premiums -- (27,400)
------------- -------------
Net cash provided by financing activities 138,519,080 303,032,279
------------- -------------
Net increase in cash and cash equivalents 21,276,422 278,225,079
Cash and cash equivalents at beginning of period 141,768,167 5,655,711
------------- -------------
Cash and cash equivalents at end of period $ 163,044,589 $ 283,880,790
============= =============
The accompanying notes are an integral part of the consolidated financial statements.
5
ALAMOSA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION OF UNAUDITED INTERIM FINANCIAL INFORMATION
The unaudited consolidated balance sheet as of March 31, 2001, the
unaudited consolidated statements of operations and of cash flows for
the three months ended March 31, 2001 and 2000, 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. The
financial information presented should be read in conjunction with the
audited consolidated financial statements for the year ended December
31, 2000. In the opinion of management, the interim data includes all
adjustments (consisting of only normally recurring adjustments)
necessary for a fair statement of the results for the interim periods.
Operating results for the three months ended March 31, 2001 are not
necessarily indicative of results that may be expected for the year
ending December 31, 2001.
2. ORGANIZATION AND BUSINESS OPERATIONS
Alamosa Holdings, Inc. ("Superholdings") was formed in July 2000.
Superholdings is a holding company and through its subsidiaries
provides wireless personal communications services, commonly referred
to as PCS, in the Southwestern, Northwestern and Midwestern United
States. Alamosa (Delaware), Inc., a subsidiary of Superholdings, was
formed in October 1999 under the name "Alamosa PCS Holdings, Inc." to
operate as a holding company in anticipation of its initial public
offering. On February 3, 2000, Alamosa (Delaware), Inc. ("Alamosa
(Delaware"), completed its initial public offering. Immediately prior
to the initial public offering, shares of Alamosa (Delaware) were
exchanged for Alamosa PCS LLC's ("Alamosa") membership interests, and
Alamosa became wholly owned by Alamosa (Delaware). These financial
statements are presented as if the reorganization had occurred as of
the beginning of the periods presented. Superholdings and its
subsidiaries are collectively referred to in these financial statements
as the "Company".
On December 14, 2000, Alamosa (Delaware) formed a new holding company
pursuant to Section 251(g) of the Delaware General Corporation Law. In
that transaction, each share of Alamosa (Delaware) was converted into
one share of the new holding company, and the former public company,
which was renamed "Alamosa (Delaware), Inc." became a wholly owned
subsidiary of the new holding company, which was renamed "Alamosa PCS
Holdings, Inc."
On February 14, 2001, Superholdings became the new public holding
company of Alamosa PCS Holdings, Inc. ("Alamosa PCS Holdings") and its
subsidiaries pursuant to a reorganization transaction in which a wholly
owned subsidiary of Superholdings was merged with and into Alamosa PCS
Holdings. As a result of this reorganization, Alamosa PCS Holdings
became a wholly owned subsidiary of Superholdings, and each share of
Alamosa PCS Holdings common stock was converted into one share of
Superholdings common stock. Superholdings' common stock is quoted on
The Nasdaq National Market under the same symbol previously used by
Alamosa PCS Holdings, "APCS."
On February 14, 2001, the Company completed its acquisition of Roberts
Wireless Communications, L.L.C. ("Roberts") and Washington Oregon
Wireless, LLC ("WOW"). Roberts' service area, which includes 2.5
million people, includes the market areas surrounding Kansas City, the
world headquarters of Sprint PCS, and St. Louis, including the
Interstate 70 corridor connecting the two cities. WOW's service area,
which includes 1.5 million people, includes the market areas of
Ellenburg, Yakima and Kennewick, Washington and key travel corridors
within Washington and Oregon.
On March 30, 2001, the Company completed its acquisition of Southwest
PCS Holdings, Inc. ("Southwest"). Southwest's service area, which
includes 2.8 million people, includes market areas in Texas, Oklahoma
and Arkansas, encompassing over 2,100 highway miles.
In 1998, Alamosa was formed and subsequently entered into affiliation
agreements with Sprint and Sprint PCS, the PCS Group of Sprint
Corporation. The four major affiliation agreements with Sprint and
Sprint PCS are a management agreement, a services agreement, and two
trademark and service mark license agreements with different Sprint
entities. These affiliation agreements provided the Company with the
exclusive right to build,
6
own and manage a wireless mobility communications services network in
markets with over 5.2 million residents located in Texas, New Mexico,
Arizona and Colorado under the Sprint PCS brand. The Company amended
the affiliation agreements with Sprint PCS to expand its territories so
that as of March 31, 2001 it included 9.2 million covered residents.
The Company entered into one set of these agreements with Sprint and
Sprint PCS for its territories in the Southwestern part of the United
States and another set of these agreements for its territories in
Wisconsin. Roberts entered into a set of these agreements for its
territories in Illinois, Kansas and Missouri, which the Company has
assumed pursuant to its acquisition of Roberts. WOW entered into a set
of these agreements for its territories in Washington and Oregon, which
the Company has assumed pursuant to its acquisition of WOW. Southwest
entered into a set of these agreements for its territories in Texas,
Oklahoma and Arkansas, which the Company has assumed pursuant to its
acquisition of Southwest.
The Company is required to build out the wireless network according to
Sprint PCS specifications. If the Company does not meet the build-out
schedules as specified in the Sprint management agreements, the Company
could be in breach of its agreements with Sprint and subject to
penalties. The affiliation agreements are in effect for a term of 20
years with three 10-year renewal options unless terminated by either
party under provisions outlined in the affiliation agreements. The
affiliation agreements include indemnification clauses between the
Company and Sprint PCS to indemnify each other against claims arising
from violations of laws or the affiliation agreements, other than
liabilities resulting from negligence or willful misconduct of the
party seeking to be indemnified.
3. NOTES RECEIVABLE
ROBERTS - On July 31, 2000, Superholdings' subsidiary, Alamosa
Operations, Inc. ("Operations") entered into a loan agreement with
Roberts whereby Operations agreed to lend up to $26.6 million to be
used only for the purpose of funding Roberts' working capital needs
from July 31, 2000 through the completion of the Roberts merger, as
described in Note 4. Also on July 31, 2000, Operations entered into a
loan agreement with the owners of Roberts for $15 million, which was
fully repaid at February 14, 2001, when the merger closed. At the
completion of the Roberts acquisition, the Roberts promissory note was
transferred to Alamosa (Delaware) and contributed as equity to its
wholly owned subsidiary, Alamosa Holdings, LLC.
WOW - Also, on July 31, 2000, WOW and Operations entered into a loan
agreement whereby Operations agreed to lend up to $11 million to WOW to
be used only for the purposes of (a) satisfying certain capital
contribution requirements under WOW's operating agreement, and (b)
funding WOW's working capital needs from July 31, 2000 through the
completion of the WOW merger. At the completion of the WOW acquisition,
the WOW promissory note of approximately $10 million was transferred to
Alamosa (Delaware) and contributed as equity to its wholly owned
subsidiary, Alamosa Holdings, LLC.
4. MERGERS WITH ROBERTS WIRELESS COMMUNICATIONS, L.L.C., WASHINGTON OREGON
WIRELESS, LLC, AND SOUTHWEST PCS HOLDINGS, INC.
As of the end of the first quarter of 2001, Superholdings completed the
acquisitions of three Sprint PCS network partners. On February 14,
2001, Superholdings completed its acquisition of Roberts and WOW. In
connection with the Roberts and WOW acquisitions, Superholdings entered
into a new senior secured credit facility for up to $280 million. On
March 30, 2001, Superholdings completed its acquisition of Southwest.
In connection with the Southwest acquisition, Superholdings increased
the senior secured credit facility from $280 million to $333 million.
Each of these transactions was accounted for under the purchase method
of accounting.
The merger consideration in the Roberts acquisition consisted of 13.5
million common shares of Superholdings and approximately $4.0 million
in cash. Superholdings also assumed the net debt of Roberts in the
transaction, which amounted to approximately $57 million as of February
14, 2001.
7
ALAMOSA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The merger consideration in the WOW acquisition consisted of 6.05
million common shares of Superholdings and approximately $12.5 million
in cash. Superholdings also assumed the net debt of WOW in the
transaction, which amounted to approximately $31 million as of February
14, 2001.
The merger consideration in the Southwest acquisition consisted of 11.1
million common shares of Superholdings and approximately $5 million in
cash. Superholdings also assumed the net debt of Southwest in the
transaction, which amounted to approximately $81 million as of March
30, 2001.
The Company is in the process of obtaining valuations to definitively
allocate the purchase price. The acquisition activity is summarized as
follows:
Total
--------------
Net cash paid 21,500,000
Stock issued 545,041,000
Costs associated with acquisitions 17,968,490
Liabilities assumed 248,243,643
-------------
NBV of assets acquired, including
intangibles $ 832,753,133
=============
As a result of the acquisitions, the Company recorded goodwill and
intangibles of $919,624,707 which will be amortized over 18 years,
which approximates the remaining life of the initial term of the
assumed Sprint PCS contracts.
The unaudited pro forma condensed consolidated statements of income for
the three months ended March 31, 2001 and 2000 set forth below, present
the results of operations as if the acquisitions had occurred at the
beginning of each period and are not necessarily indicative of future
results or actual results that would have been achieved had these
acquisitions occurred as of the beginning of the period.
Three months ended March 31,
------------------------------
2001 2000
------------- -------------
Total revenues $ 64,756,953 $ 17,289,440
Net loss before income tax benefit
and extraordinary item (51,195,411) (28,289,280
Income tax benefit 13,858,115 --
Net loss before extraordinary item (37,337,296) (28,289,280)
Loss on debt extinguishment, net of tax
benefit of $1,968,885 (3,503,279) --
Net loss (40,840,575) (28,289,280)
Basic and diluted net loss per share
before extraordinary item (0.41) (0.32)
Basic and diluted net loss per share
(0.44) (0.32)
5. ACCUMULATED DEPRECIATION AND AMORTIZATION
Property and equipment are stated net of accumulated depreciation of
$22.8 million and $15.6 million at March 31, 2001 and December 31,
2000, respectively. Additionally, goodwill and other intangibles are
stated net of accumulated amortization of $4.6 million and $0 at March
31, 2001 and December 31, 2000, respectively.
6. LONG-TERM DEBT
Long-term debt consists of the following:
March 31, 2001 December 31, 2000
--------------- -----------------
Senior discount notes $ 215,937,323 $ 209,279,908
2001 senior notes 250,000,000 --
Senior secured credit facility 203,000,000 --
EDC credit facility -- 54,524,224
------------- --------------
8
ALAMOSA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Total debt
668,937,323 263,804,132
Less current maturities -- --
------------- -------------
Long-term debt, excluding
current maturities $ 668,937,323 $ 263,804,132
============= =============
NORTEL/EDC CREDIT FACILITY
On February 14, 2001, the outstanding balance of $54,524,224 was paid
in full plus accrued interest in the amount of $884,043 with proceeds
from the Senior Secured Credit Facility. As a result, $5,472,164 of
unamortized issuance costs were written off and classified as an
extraordinary item. The Company was refunded $1,377,049 of these costs
as a result of the early extinguishment.
2001 SENIOR NOTES
On January 31, 2001, Alamosa (Delaware) consummated the offering (the
"2001 Notes Offering") of $250 million aggregate principal amount of
Senior Notes (the "2001 Senior Notes"). The 2001 Senior Notes mature in
ten years (February 1, 2011), carry a coupon rate of 12 1/2%, payable
semiannually on February 1 and August 1, beginning on August 1, 2001.
The net proceeds from the sale of the 2001 Senior Notes were
approximately $241 million, after deducting the discounts and
commission to the initial purchasers and estimated offering expenses.
Approximately $59.0 million of the proceeds of the 2001 Notes Offering
were used by Alamosa (Delaware) to establish a security account (with
cash or U.S. government securities) to secure on a pro rata basis the
payment obligations under the 2001 Senior Notes and the 2000 Senior
Discount Notes, and the balance will be used for general corporate
purposes of Alamosa (Delaware), including, accelerating coverage within
the existing territories of Alamosa (Delaware); the build-out of
additional areas within its existing territories; expanding its
existing territories; and pursuing additional telecommunications
business opportunities or acquiring other telecommunications businesses
or assets.
Significant terms of the 2001 Senior Notes include:
RANKING - The 2001 Senior Notes are senior unsecured obligations of
Alamosa (Delaware), rank equally with all its existing and future
senior debt and rank senior to all its existing and future subordinated
debt.
GUARANTEES - The 2001 Senior Notes are fully and unconditionally,
jointly and severally guaranteed on a senior subordinated basis by the
current subsidiaries and future restricted subsidiaries of Alamosa
(Delaware).
SECURITY AGREEMENT - Concurrently with the closing of the 2001 Senior
Notes, Alamosa (Delaware) deposited $59.0 million with the collateral
agent, to secure on a pro rata basis the payment obligations of Alamosa
(Delaware) under the 2001 Senior Notes and the 2000 Senior Discount
Notes. The amount deposited in the security account, together with the
proceeds from the investment thereof, will be sufficient to pay, when
due, the first four interest payments on the 2001 Senior Notes. Funds
will be released from the security account to make interest payments on
the 2001 Senior Notes or the 2000 Senior Discount Notes as they become
due, so long as there does not exist an event of default with respect
to the 2001 Senior Notes or the 2000 Senior Discount Notes.
OPTIONAL REDEMPTION - During the first thirty six (36) months after the
2001 Notes Offering, Alamosa (Delaware) may use net proceeds of an
equity offering to redeem up to 35% of the accreted value of the 2001
Senior Notes at a redemption price of 112.5%.
CHANGE OF CONTROL - Upon a change of control as defined by the 2001
Notes Offering, Alamosa (Delaware) will be required to make an offer to
purchase the 2001 Senior Notes at a price equal to 101% of the
principal amount together with accrued and unpaid interest.
9
ALAMOSA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
RESTRICTIVE COVENANTS - The indenture governing the 2001 Senior Notes
contains covenants that, among other things and subject to important
exceptions, limit the ability of Alamosa (Delaware) and the ability of
the subsidiaries of Alamosa (Delaware) to incur additional debt, issue
preferred stock, pay dividends, redeem capital stock or make other
restricted payments or investments as defined by the 2001 Notes
Offering, create liens on assets, merge, consolidate or dispose of
assets, or enter into transactions with affiliates and change lines of
business.
The 2001 Senior Notes have cross default provisions whereby an event of
default, that results in acceleration of the maturity on other
indebtedness of Alamosa (Delaware), triggers a default on the 2000
Senior Discount Notes and the 2001 Senior Notes.
REGISTRATION RIGHTS - In connection with the 2001 Notes Offering,
Alamosa (Delaware) entered into a registration rights agreement, where
Alamosa (Delaware) and the guarantors of the 2001 Senior Notes agreed,
(i) to file a registration statement within 90 days of the closing of
the 2001 Notes Offering which, when effective, will enable holders of
the 2001 Senior Notes to exchange the privately placed 2001 Senior
Notes for publicly registered notes. The publicly registered notes will
have terms substantially identical to those of the privately placed
notes, except that the new notes will be freely transferable; and (ii)
to use reasonable best efforts to cause the registration statement to
become effective under the Securities Act of 1933 within 180 days after
the closing of the 2001 Notes Offering.
SENIOR SECURED CREDIT FACILITY
On February 14, 2001, Superholdings, Alamosa (Delaware) and Alamosa
Holdings, LLC, as borrower; entered into a $280.0 million Senior
Secured Credit Facility (the "Senior Secured Credit Facility") with
Citicorp USA, as administrative agent and collateral agent; Toronto
Dominion (Texas), Inc., as syndication agent; EDC as co-documentation
agent; First Union National Bank, as documentation agent; and a
syndicate of banking and financial institutions. On March 30, 2001,
this credit facility was amended to increase the facility to $333
million in relation to the acquisition of Southwest. At that time, all
covenants were amended to reflect this increase and the inclusion of
Southwest.
The following is a summary of the principal terms of the Senior Secured
Credit Facility.
The Senior Secured Credit Facility consists of:
o a 7-year senior secured 12-month delayed draw term loan facility in
an aggregate principal amount of up to $293.0 million; and
o a 7-year senior secured revolving credit facility in an aggregate
principal amount of up to $40.0 million, part of which will be
available in the form of letters of credit.
Under the Senior Secured Credit Facility, interest will accrue, at
Alamosa Holdings, LLC's option: (i) at the London Interbank Offered
Rate adjusted for any statutory reserves ("LIBOR"), or (ii) the base
rate which is generally the higher of the administrative agent's base
rate, the federal funds effective rate plus 0.50% or the administrative
agent's base CD rate plus 0.50%, in each case plus an interest margin
which is initially 4.00% for LIBOR borrowings and 3.00% for base rate
borrowings. The applicable interest margins are subject to reductions
under a pricing grid based on ratios of Alamosa Holdings, LLC's total
debt to its earnings before interest, taxes, depreciation and
amortization ("EBITDA"). The interest rate margins will increase by an
additional 200 basis points in the event Alamosa Holdings, LLC fails to
pay principal, interest or other amounts as they become due and payable
under the Senior Secured Credit Facility.
The interest rate on the outstanding loans is 9.4375%. Alamosa
Holdings, LLC is also required to pay quarterly, in arrears, a
commitment fee on the unfunded portion of the commitment of each
lender. The commitment fee accrues at a rate per annum equal to (i)
1.50% on each day when the utilization (determined by dividing the
total amount of loans plus outstanding letters of credit under the
Senior Secured Credit Facility by the total commitment amount under the
Senior Secured Credit Facility) of the Senior Secured Credit Facility
is
10
ALAMOSA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
less than or equal to 33.33%, (ii) 1.25% on each day when utilization
is greater than 33.33% but less than or equal to 66.66% and (iii) 1.00%
on each day when utilization is greater than 66.66%.
Alamosa Holdings, LLC is also required to pay a separate annual
administration fee and a fee on the aggregate face amount of
outstanding letters of credit, if any, under the new revolving credit
facility.
As of March 31, 2001, Alamosa Holdings, LLC borrowed $203.0 million
under the new term loan facility while an additional $130.0 million in
term debt will be available for multiple drawings in amounts to be
agreed for a period of 12 months thereafter. Any amount outstanding at
the end of the 12-month period will amortize quarterly in amounts to be
agreed upon beginning May 14, 2004. The new revolving credit facility
of $40.0 million will be available for multiple drawings prior to its
final maturity, provided that no amounts under the new revolving credit
facility will be available until all amounts under the new term
facility have been fully drawn. All advances under the Senior Secured
Credit Facility are subject to usual and customary conditions,
including actual and pro forma covenant compliance and the requirement
that the ratio of senior debt to net property, plant and equipment for
the most recent fiscal quarter will not exceed 1:1.
Loans under the new term loan portion of the Senior Secured Credit
Facility will be subject to mandatory prepayments from 50% of excess
cash flow for each fiscal year commencing with the fiscal year ending
December 31, 2003, 100% of the net cash proceeds (subject to exceptions
and reinvestment rights of asset sales or other dispositions, including
insurance and condemnation proceeds) of property by Alamosa (Delaware)
and its subsidiaries, and 100% of the net proceeds of issuances of debt
obligations of Alamosa (Delaware) and its subsidiaries (subject to
exceptions). After the term loans are repaid in full, mandatory
prepayments will be applied to permanently reduce commitments under the
revolving credit portion of the Senior Secured Credit Facility.
All obligations of Alamosa Holdings, LLC under the Senior Secured
Credit Facility are unconditionally guaranteed on a senior basis by
Superholdings, Alamosa PCS Holdings, Alamosa (Delaware) and, subject to
certain exceptions, by each current and future direct and indirect
subsidiary of Alamosa (Delaware), including Alamosa PCS, Inc., Roberts,
WOW and Southwest.
The Senior Secured Credit Facility is secured by a first priority
pledge of all of the capital stock of Alamosa Holdings, LLC and subject
to certain exceptions, each current and future direct and indirect
subsidiary of Alamosa (Delaware), as well as a first priority security
interest in substantially all of the assets (including all of the
Sprint affiliation agreements with Alamosa PCS Holdings, Roberts, WOW
and Southwest) of Alamosa (Delaware) and, subject to certain
exceptions, each current and future direct and indirect subsidiary of
Alamosa (Delaware).
The Senior Secured Credit Facility contains customary events of
default, including, but not limited to:
o the non-payment of the principal, interest and other obligations
under the Senior Secured Credit Facility;
o the inaccuracy of representations and warranties contained in the
credit agreement or the violation of covenants contained in the
credit agreement;
o cross default and cross acceleration to other material
indebtedness;
o bankruptcy;
o material judgments and certain events relating to compliance with
the Employee Retirement Income Security Act of 1974 and related
regulations;
o actual or asserted invalidity of the security documents or
guaranties of the Senior Secured Credit Facility;
o the occurrence of a termination event under the management,
licenses and other agreements between any of Alamosa (Delaware),
WOW, Roberts and Southwest and their subsidiaries and Sprint PCS or
a breach or
11
ALAMOSA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
default under the consent and agreement entered into
between Citicorp USA, Inc., as administrative agent for the
lenders, and Sprint PCS;
o loss of rights to benefit of or the occurrence of any default under
other material agreements that could reasonably be expected to
result in a material adverse effect on Alamosa Holdings, LLC;
o the occurrence of a change of control;
o any termination, revocation or non-renewal by the FCC of one or
more material licenses; and
o the failure by the Company to make a payment, if that could
reasonably be expected to result in the loss, termination,
revocation, non-renewal or material impairment of any material
licenses or otherwise result in a material adverse affect on
Alamosa Holdings, LLC.
The Senior Secured Credit Facility contains numerous affirmative and
negative covenants customary for credit facilities of a similar nature,
including, but not limited to, negative covenants imposing limitations
on the ability of Alamosa (Delaware), Alamosa Holdings, LLC and their
subsidiaries, and as appropriate, Superholdings, to, among other
things, (i) declare dividends or repurchase stock; (ii) prepay, redeem
or repurchase debt; (iii) incur liens and engage in sale-leaseback
transactions; (iv) make loans and investments; (v) incur additional
debt, hedging agreements and contingent obligations; (vi) issue
preferred stock of subsidiaries; (vii) engage in mergers, acquisitions
and asset sales; (viii) engage in certain transactions with affiliates;
(ix) amend, waive or otherwise alter material agreements or enter into
restrictive agreements; and (x) alter the businesses they conduct.
The Company is also subject to the following financial covenants, which
will apply until June 30, 2002:
o minimum numbers of Sprint PCS subscribers;
o providing coverage to a minimum number of residents;
o minimum service revenue;
o maximum negative EBITDA or minimum EBITDA;
o ratio of senior debt to total capital;
o ratio of total debt to total capital; and
o maximum capital expenditures.
After June 30, 2002, the financial covenants will be the following:
o ratio of senior debt to EBITDA;
o ratio of total debt to EBITDA;
o ratio of EBITDA to total fixed charges (the sum of debt service,
capital expenditures and taxes);
o ratio of EBITDA to total cash interest expense; and
o ratio of EBITDA to pro forma debt service.
Unless waived by the Senior Secured Credit Facility lenders, the
failure of Superholdings, Alamosa Holdings, LLC and their subsidiaries
to satisfy or comply with any of the financial or other covenants, or
the occurrence of an event of default under the Senior Secured Credit
Facility, will entitle the lenders to declare the outstanding
12
ALAMOSA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
borrowings under the Senior Secured Credit Facility immediately due and
payable and exercise all or any of their other rights and remedies. Any
such acceleration or other exercise of rights and remedies would likely
have a material adverse effect on Superholdings, Alamosa (Delaware),
Alamosa PCS Holdings, Alamosa Holdings, LLC and their subsidiaries.
13
ALAMOSA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
DEBT COVENANT WAIVER
As of March 31, 2001, the Company did not meet the maximum negative
EBITDA covenant requirement under the Senior Secured Credit Facility,
which had an outstanding balance of $203 million. During the quarter
ended March 31, 2001, the Company reported an EBITDA loss of $16.7
million which exceeded the maximum negative EBITDA covenant by $7.0
million.
On May 8, 2001, the Company obtained a permanent waiver of the covenant
as of March 31, 2001 from the lending institutions of the Senior
Secured Credit Facility. Management of the Company believes that the
maximum negative EBITDA covenant will be met in periods subsequent to
March 31, 2001.
CONSENT AND AGREEMENT FOR THE BENEFIT OF THE HOLDERS OF THE SENIOR
SECURED CREDIT FACILITY
Sprint PCS entered into a consent and agreement with Citicorp, that
modifies Sprint PCS's rights and remedies under the Company's
affiliation agreements with Sprint PCS, for the benefit of Citicorp and
the holders of the Senior Secured Credit Facility and any refinancing
thereof. The consent and agreement with Citicorp generally provide,
among other things, Sprint PCS's consent to the pledge of substantially
all of the Company's assets, including its rights in the affiliation
agreements with Sprint PCS, and that the affiliation agreements with
Sprint PCS generally may not be terminated by Sprint PCS until the
Senior Secured Credit Facility is satisfied in full pursuant to the
terms of the consent and agreement.
Subject to the requirements of applicable law, so long as the Senior
Secured Credit Facility remains outstanding, Sprint PCS has the right
to purchase the Company's operating assets or the partnership
interests, membership interests or other equity interests of the
Company's operating subsidiaries, upon its receipt of notice of an
acceleration of the Senior Secured Credit Facility, under certain
terms.
If Sprint PCS does not purchase the Company's operating assets or the
partnership interests, membership interests or other equity interests
of the Company's operating subsidiaries after an acceleration of the
obligations under the Senior Secured Credit Facility, then the
administrative agent may sell the operating assets or the partnership
interests, membership interests or other equity interests of the
Company's operating subsidiaries.
7. INCOME TAXES
The income tax expense adjustment of $13,858,115 represents the
reversal of the deferred tax asset valuation allowance and the
resulting recognition of its deductible net operating loss carry
forwards. These adjustments were based on an assessment of the combined
past and expected future taxable income of the Company and expected
reversals of the temporary differences from the Roberts, WOW and
Southwest mergers.
8. HEDGING ACTIVITIES AND COMPREHENSIVE INCOME
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivatives
and Hedging Activities". The statement requires the Company to record
all derivatives on the balance sheet at fair value. Derivatives that
are not hedges must be adjusted to fair value through earnings. If the
derivative is a hedge, depending on the nature of the hedge, changes in
the fair value of the derivatives are either recognized in earnings or
are recognized in other comprehensive income until the hedged item is
recognized in earnings. In June 1999, the Financial Accounting
Standards Board issued SFAS No. 137, "Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective Date of
the FASB Statement No. 133", which deferred the effective date of SFAS
No. 133 to fiscal years beginning after June 15, 2000. As a result of
SFAS No. 133, the Company recorded approximately $24,000 in "other
noncurrent assets" representing the fair market value of the interest
rate hedge that will expire April 17, 2004. In addition, the Company
recognized $15,084 net of tax effect, in other comprehensive income,
which appears as a separate component of Stockholder's Equity as
"Accumulated other comprehensive income".
In June 1997, FASB issued SFAS No. 130, "Reporting Comprehensive
Income." This statement requires that all items required to be
recognized under accounting standards as components of comprehensive
income be
14
ALAMOSA HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
reported in a financial statement that is displayed with the same
prominence as other financial statements. SFAS No. 130 is effective for
financial statement periods beginning after December 31, 1997.
Three months ended March 31,
----------------------------------
2001 2000
------------- -------------
Net loss $ (27,432,098) $ (15,579,874)
Change in fair value of
derivatives (net of tax
effect of $8,477) 15,084 --
------------- -------------
Comprehensive loss $ (27,417,014) $ (15,579,874)
============= =============
9. SUPPLEMENTAL DISCLOSURE TO STATEMENTS OF CASH FLOW
Accounts payable at March 31, 2001 and 2000 include $29,744,559 and
$7,430,587, respectively, of property and equipment additions.
Additions to property and equipment of $34,408,000 in the consolidated
statements of cash flows for the three months ended March 31, 2001
include payments of accounts payable outstanding at December 31, 2000.
10. LONG-TERM INCENTIVE PLAN
A vote of shareholders on February 14, 2001 increased the number of
shares of the Company's common stock reserved for issuance under the
long-term incentive plan by 6,000,000 shares, from 7,000,000 shares to
13,000,000 shares.
11. SUBSEQUENT EVENTS
On May 9, 2001, Alamosa (Delaware) filed a registration statement on
Form S-4 with the Securities and Exchange Commission. This filing
offers the holders of the 2001 Senior Notes, as described in Note 6,
the right to exchange the outstanding notes for registered notes which
have substantially the same terms.
15
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FORWARD-LOOKING STATEMENTS
This quarterly report on Form 10-Q includes "forward-looking
statements" within the meaning of Section 27A of the Securities Act of
1933, as amended (the "Securities Act"), and Section 21E of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), which
can be identified by the use of forward-looking terminology such as,
"may," "might," "could," "would," "believe," "expect," "intend,"
"plan," "seek," "anticipate," "estimate," "project" or "continue" or
the negative thereof or other variations thereon or comparable
terminology. These forward-looking statements are subject to various
risks and uncertainties and are made pursuant to the "safe-harbor"
provisions of the private Securities Litigation Reform Act of 1995.
These statements are made based on management's current expectations or
beliefs as well as assumptions made by, and information currently
available to, management.
A variety of factors could cause actual results to differ materially
from those anticipated in the Company's forward-looking statements,
including the following factors: the Company's dependence on its
affiliation with Sprint PCS; shifts in populations or network focus;
changes or advances in technology; changes in Sprint's national service
plans or fee structure with us; change in population; difficulties in
network construction; increased competition in our markets; failure to
consummate anticipated acquisitions or financings; and adverse changes
in financial position, condition or results of operations. For a
detailed discussion of these and other cautionary statements and
factors that could cause actual results to differ from the Company's
forward-looking statements, please refer to the Company's filings with
the Securities and Exchange Commission, especially in the "risk
factors" sections of the Company's Prospectuses filed on February 4,
2000, "Item 1. Business" and "Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operation" of the
Company's Form 10-K for the year ended December 31, 2000 and the "risk
factors" sections of the Company's subsequent filings with the
Securities and Exchange Commission.
Readers are cautioned not to place undue reliance on these
forward-looking statements, which reflect management's analysis only as
of the date hereof. The Company does not undertake any obligation to
publicly revise these forward-looking statements to reflect events or
circumstances that arise after the date hereof. Readers should
carefully review the risk factors described in other documents the
Company files from time to time with the Securities and Exchange
Commission.
OVERVIEW
Since our inception, we have incurred substantial costs to negotiate
our contracts with Sprint PCS and our debt financing, to raise funds in
the public market, to engineer our wireless system, to develop our
business infrastructure and distribution channels and to build-out our
portion of the Sprint PCS network. As of March 31, 2001, our
accumulated deficit was $141.4 million. Through March 31, 2001, we
incurred $279.9 million of capital expenditures and construction in
progress related to the build-out of our portion of the Sprint PCS
network. While we anticipate operating losses to continue, we expect
revenue to continue to increase substantially as the base of Sprint PCS
subscribers located in our territories increases.
On July 17, 1998, we entered into our affiliation agreements with
Sprint PCS. We subsequently amended our affiliation agreements with
Sprint PCS to expand our territories so that as of March 31, 2001 it
included approximately 9.2 million covered residents, including the
acquisitions of Roberts, WOW and Southwest.
As a Sprint PCS affiliate, we have the exclusive right to provide
wireless mobility communications network services under the Sprint and
Sprint PCS brand names in our territories. We are responsible for
building, owning and managing the portion of the Sprint PCS network
located in our territories. We market wireless products and services in
our territories under the Sprint and Sprint PCS brand names. We offer
national plans designed by Sprint PCS and intend to offer specialized
local plans tailored to our market demographics. Our portion of the
Sprint PCS network is designed to offer a seamless connection with
Sprint PCS's 100% digital wireless network. We market wireless products
and services through a number of distribution outlets located in
16
our territories, including our own Sprint PCS stores, major national
distributors and third party local representatives.
We recognize 100% of revenues from Sprint PCS subscribers based in our
territories, proceeds from the sales of handsets and accessories and
fees from Sprint PCS and other wireless service providers when their
customers roam onto our portion of the Sprint PCS network. Sprint PCS
handles our billing and collections and retains 8% of all collected
revenue from Sprint PCS subscribers based in our territories and fees
from wireless service providers other than Sprint PCS when their
subscribers roam onto our portion of the Sprint PCS network. We report
the amount retained by Sprint PCS as an operating expense.
As part of our affiliation agreements with Sprint PCS, we have the
option of contracting with Sprint PCS to provide back office services
such as customer activation, handset logistics, billing, customer
service and network monitoring services. We have elected to delegate
the performance of these services to Sprint PCS to take advantage of
Sprint PCS's economies of scale, to accelerate our build-out and market
launches and to lower our initial capital requirements. The cost for
these services is primarily calculated on a per subscriber and per
transaction basis and is recorded as an operating expense.
As of the end of the first quarter of 2001, we completed the
acquisitions of three Sprint PCS network partners. On February 14,
2001, we completed our acquisition of Roberts and WOW. In connection
with the Roberts and WOW acquisitions, we entered into a new senior
secured credit facility for up to $280 million. On March 30, 2001, we
completed our acquisition of Southwest. In connection with the
Southwest acquisition, we increased the senior secured credit facility
from $280 million to $333 million. Each of these transactions was
accounted for under the purchase method of accounting.
Roberts' service area, which includes 2.5 million people, includes the
market areas surrounding Kansas City, the world headquarters of Sprint
PCS, and St. Louis, including the Interstate 70 corridor connecting the
two cities. At March 31, 2001, Roberts' network covered approximately
1.7 million people. The merger consideration in the Roberts acquisition
consisted of 13.5 million shares of our common stock and approximately
$4.0 million in cash.
WOW's service area, which includes 1.5 million people, includes the
market areas of Ellenburg, Yakima and Kennewick, Washington and key
travel corridors within Washington and Oregon. At March 31, 2001, WOW's
network covered approximately 0.9 million people. The merger
consideration in the WOW acquisition consisted of 6.05 million shares
of our common stock and approximately $12.5 million in cash.
Southwest's service area, which includes 2.8 million people, includes
the market areas in Texas, Oklahoma and Arkansas, encompassing over
2,100 heavily traveled highway miles. At March 31, 2001, Southwest had
launched service in 18 markets covering approximately 1.5 million
people. The merger consideration in the Southwest acquisition consisted
of 11.1 million shares of our common stock and approximately $5 million
in cash.
On February 14, 2001, as part of the reorganization transaction in
which we acquired Roberts and WOW, Alamosa Sub I, Inc., our wholly
owned subsidiary, merged with Alamosa PCS Holdings, with Alamosa PCS
Holdings surviving the merger and Alamosa PCS Holdings became our
wholly owned subsidiary. Each share of Alamosa PCS Holdings common
stock issued and outstanding immediately prior to the merger was
converted into the right to receive one share of our common stock.
We launched Sprint PCS service in our first market, Laredo, Texas, in
June 1999, and have since commenced service in 21 additional markets
through March 31, 2001 in our original territory. Including
acquisitions, we had a total of 62 markets in service at March 31,
2001. At March 31, 2001 our systems, including acquisitions, covered
approximately 9.2 million residents out of approximately 15.6 million
total residents in those markets. The number of residents covered by
our systems does not represent the number of Sprint PCS subscribers
that we expect to be based in our territories. As of March 31, 2001,
261,345 Sprint PCS subscribers were based in our territories.
17
SEASONALITY
Our business is subject to seasonality because the wireless industry is
heavily dependent on fourth quarter results. Among other things, the
industry relies on significantly higher customer additions and handset
sales in the fourth quarter as compared to the other three fiscal
quarters. A number of factors contribute to this trend, including:
o the increasing use of retail distribution, which is dependent upon
the year-end holiday shopping season;
o the timing of new product and service announcements and
introductions;
o competitive pricing pressures; and
o aggressive marketing and promotions.
RESULTS OF OPERATIONS
FOR THE QUARTER ENDED MARCH 31, 2001 COMPARED TO THE QUARTER ENDED MARCH 31,
2000
NET LOSS. Our net loss for the quarter ended March 31, 2001 was
$27,432,098 as compared to a net loss of $15,579,874 for the quarter ended March
31, 2000. These losses were comprised of the continued incurrence of start-up
expenses relative to the preparation of markets for commercial launch and the
operation of markets launched during 2000.
SERVICE REVENUES. Service revenues are comprised of subscriber revenue,
Sprint PCS roaming revenue, non-Sprint PCS roaming revenue and long distance
revenue, all of which initially began accruing to us at or near our first
initial commercial launch in June 1999. Subscriber revenue consists of payments
received from Sprint PCS subscribers based in our territories for monthly Sprint
PCS service in our territories under a variety of service plans. These plans
generally reflect the terms of national plans offered by Sprint PCS. We receive
Sprint PCS roaming revenue at a per minute rate (which was 20 cents per minute
for travel and 6 cents per minute for long distance in the first quarter of 2001
and 2000) from Sprint PCS or another Sprint PCS affiliate when Sprint PCS
subscribers based outside of our territories use our portion of the Sprint PCS
network. Service revenues were $41,919,223 for the quarter ended March 31, 2001,
and $10,296,742 for the quarter ended March 31, 2000. This increase is due to
the growth in our subscribers and subscribers acquired on February 14, 2001 upon
closing the mergers of Roberts and WOW totaling approximately 40,000
subscribers.
Non-Sprint PCS roaming revenue primarily consists of fees collected
from Sprint PCS customers based in our territories when they roam on non-Sprint
PCS networks. These fees are based on rates specified in the customers'
contracts. However, it is possible that in some cases these fees may be less
than the amount we must pay to other wireless service providers that provide
service to Sprint PCS customers based in our territories. Non-Sprint PCS roaming
revenue also includes payments from wireless service providers, other than
Sprint PCS, when those providers' customers roam on our portion of the Sprint
PCS network. Our average monthly revenue per user ("ARPU") for Sprint PCS
customers in our territories, including long distance and roaming revenue, was
approximately $82 for the quarter ended March 31, 2001 and was approximately $84
for the quarter ended March 31, 2000. Without roaming, our ARPU was $60 and $63
for the quarters ended March 31, 2001 and 2000, respectively.
PRODUCT SALES. 100% of the revenue from the sale of handsets and
accessories through our retail stores and local indirect distributors are
recorded, net of an allowance for returns, as product sales. The amount recorded
for the quarter ended March 31, 2001 totaled $3,914,866 as compared to
$1,583,358 for the quarter ended March 31, 2000. Sprint PCS's handset return
policy allows customers to return their handsets for a full refund within 14
days of purchase. When handsets are returned to us, we may be able to reissue
the handsets to customers at little additional cost to us. However, when
handsets are returned to Sprint PCS for refurbishing, we receive a credit from
Sprint PCS, which is less than the amount we originally paid for the handset.
COST OF SERVICE AND OPERATIONS. Expenses totaling $32,268,705 for the
quarter ended March 31, 2001 and $7,857,593 for the quarter ended March 31, 2000
related to providing wireless services to customers and are included in
18
cost of services and operations. Among these costs are the cost of operations
for our network, (such as fees related to data transfer via T-1 and other
transport lines and inter-connection fees), Sprint PCS and, non-Sprint PCS
roaming fees, long distance, the affiliation fee paid to Sprint PCS of 8% of
collected service revenues and customer care, billing and service fees paid to
Sprint PCS. Also included is non-cash compensation expense related to the
Company's stock option plans of $455,736 for the quarter ended March 31, 2000.
We pay Sprint PCS roaming fees when Sprint PCS subscribers based in our
territories use the Sprint PCS network outside of our territories (which was 20
cents per minute for travel and 6 cents per minute for long distance in the
first quarter of 2001 and 2000). Pursuant to our affiliation agreements with
Sprint PCS, Sprint PCS can change this per minute rate. Sprint and the Company
recently agreed in principle to change the reciprocal roaming rate which has
been 20 cents to 15 cents effective June 1, 2001, 12 cents effective October 1,
2001, and 10 cents effective January 1, 2002 and thereafter. We pay non-Sprint
PCS roaming fees to other wireless service providers when Sprint PCS customers
based in our territories use their network.
COST OF PRODUCTS SOLD. The cost of products sold through our retail and
local indirect stores totaled $8,032,996 for the quarter ended March 31, 2001 as
compared to $3,327,508 for the quarter ended March 31, 2000. The increase was
due to growth in our subscribers between March 31, 2000 and March 31, 2001.
These amounts include the cost of accessories and the cost of handsets sold
through our retail stores including sales to local indirects. We expect the cost
of handsets to exceed the retail sales price because we subsidize the price of
handsets for competitive reasons. The handset subsidy included in cost of
products sold through our retail stores totaled $4,862,615 for the quarter ended
March 31, 2001 and $1,715,316 for the quarter ended March 31, 2000.
SELLING AND MARKETING. Selling and marketing expenses totaled
$18,482,336 for the quarter ended March 31, 2001 and $6,650,644 for the quarter
ended March 31, 2000. Selling and marketing expenses include advertising
expenses, promotion costs, sales commissions and expenses related to our
distribution channels and handset subsidy paid to Sprint PCS for customers based
in our territories that purchase handsets through Sprint PCS or its national
retailers. The amount of handset subsidy from channels other than our retails
stores and local indirects included in selling and marketing totaled $1,690,200
and $1,144,436 for the quarter ended March 2001 and 2000, respectively.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative
expenses include corporate costs and expenses such as administration, human
resources and accounting and finance. For the quarter ended March 31, 2001 and
2000 general and administrative expenses totaled $3,906,340 and $4,901,658,
respectively. Also included in general and administrative expenses is non-cash
compensation expense related to the Company's stock option plans of $183,120 and
$3,516,894 for the quarters ended March 31, 2001 and 2000, respectively. The
increase of $2,338,456 from the first quarter of 2000 to the first quarter of
2001, when non-cash compensation is excluded is due to increases in personnel
and administrative expenses due to the growth in the Company from March 2000.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization for the
quarter ended March 31, 2001 totaled $11,935,625 as compared to $2,256,947 for
the quarter ended March 31, 2000. Included in depreciation and amortization for
the quarter ended March 31, 2001 was $4,637,000 of amortization of Goodwill that
resulted from the mergers with the three other Sprint affiliates as discussed in
Note 4 of the consolidated financial statements. Depreciation is calculated
using the straight-line method over the useful life of the asset. We begin to
depreciate the assets for each market only after we launch that market. The
increase in depreciation expense is due to the significant increase in network
infrastructure we built and launched since March 2000.
INTEREST AND OTHER INCOME. Interest and other income totaled $5,720,933
for the quarter ended March 31, 2001 and $2,314,485 for the quarter ended March
31, 2000. This income generally has been generated from the investment of equity
and loan proceeds held in liquid accounts waiting to be deployed.
INTEREST EXPENSE. Interest expense totaled $14,715,954 for the quarter
ended March 31, 2001 and $4,780,109 for the quarter ended March 31, 2000. During
the first quarter of 2001, we issued new Senior Notes and a new credit facility
for a combined total of approximately $450 million. The increase from 2000 to
2001 is due to higher average outstanding debt balances due to business
acquisitions and network construction.
LIQUIDITY AND CAPITAL RESOURCES
Since inception, we have financed our operations through capital
contributions from our owners, through debt financing and through proceeds
generated from our initial offering. We entered into a credit agreement with
Nortel
19
effective June 10, 1999, which was amended and restated on February 8, 2000. On
June 23, 2000, Nortel assigned the entirety of its loans and commitments to EDC,
and Alamosa and EDC entered into the credit facility with EDC (the "EDC Credit
Facility").
The EDC Credit Facility was reduced by $75.0 million from the issuance
of the Company's 2000 Senior Discount Notes, such that the EDC Credit Facility
provided for advancing term loan facilities in the aggregate principal amount of
$175.0 million. The terms and conditions of the EDC Credit Facility were
substantially the same as the terms and conditions of the Nortel credit
agreement before the assignment and the amendments. As of December 31, 2000,
approximately $54.5 million of the $175.0 million EDC Credit Facility had been
drawn. On February 14, 2001, we repaid the total amount outstanding on the
facility in the amount of $54.5 million plus accrued interest of $884,043 with
the proceeds from our Senior Secured Credit Facility of $333 million.
Pursuant to the equipment agreement with Nortel, we are required to
purchase a total of $167.0 million of equipment and services from Nortel. As of
March 31, 2001, we had remaining commitments of $12.5 million under the Nortel
equipment agreement. These purchases from Nortel were financed pursuant to the
EDC Credit Facility prior to the closing of the Senior Secured Credit Facility,
and, after the closing of the Senior Secured Credit Facility, have been and will
be pursuant to such facility.
On February 4, 2000, we issued $350.0 million face amount of senior
discount notes (the "2000 Senior Discount Notes"). The 2000 Senior Discount
Notes mature in ten years (February 15, 2010), carry a coupon rate of 12 7/8%,
and provide for interest deferral for the first five years. The 2000 Senior
Discount Notes will accrete to their $350.0 million face amount by February 8,
2005, after which interest will be paid in cash semiannually.
On January 31, 2001, we issued $250.0 million face amount of Senior
Notes (the "2001 Senior Notes"). The 2001 Senior Notes mature in ten years
(February 1, 2011), carry a coupon rate of 12 1/2%, payable semiannually on
February 1 and August 1, beginning on August 1, 2001.
On February 14, 2001, Superholdings, Alamosa (Delaware) and Alamosa
Holdings, LLC, as borrower; entered into a $280.0 million Senior Secured Credit
Facility with Citicorp USA, as administrative agent and collateral agent Toronto
Dominion (Texas), Inc., as syndication agent; EDC as co-documentation agent;
First Union National Bank, as documentation agent; and a syndicate of banking
and financial institutions. On March 30, 2001, this credit facility was amended
to increase the facility to $333 million in relation to the acquisition of
Southwest. At that time, all covenants were amended to reflect this increase and
the inclusion of Southwest.
The Senior Secured Credit Facility consists of:
o A 7-year senior secured 12 month delayed draw term loan facility in an
aggregate principal amount of up to $293.0 million; and
o A 7-year senior secured revolving credit facility in an aggregate
principal amount of up to $40.0 million, part of which will be available
in the form of letters of credit.
For a complete description of our indebtedness, please refer to Note 6
included in Item 1. FINANCIAL STATEMENTS.
Net cash used in operating activities was $24,777,059 for the quarter
ended March 31, 2001. Cash used in operating activities was attributable to
operating losses and working capital needs. Net cash provided by operating
activities was $904,323 for the quarter ended March 31, 2000 and was primarily
attributable to a significant increase in operating revenues during the first
quarter of 2000.
Net cash used in investing activities was $92,465,599 for the quarter
ended March 31, 2001, and $25,711,523 for the quarter ended March 31, 2000. In
2001, we invested $34,408,000 in our network infrastructure, $37,617,394 in the
acquisitions of Roberts, WOW and Southwest, and increased our short-term liquid
investments by $32,300,000. The expenditures in 2000 were related primarily to
the purchase of network infrastructure needed to construct our portion of the
Sprint PCS network, office equipment and telephone equipment of $10,648,505 and
investment in short-term liquid investments of $15,063,018.
20
Net cash provided by financing activities was $138,519,080 for the
quarter ended March 31, 2001 and consisted primarily of the net proceeds from
our issuance of the 2001 Senior Notes and borrowings under the Senior Secured
Credit Facility, less repayment of long-term debt of $223,583,922, $169,059,698
of which was assumed through acquisitions. We also set aside $70,585,203 in
restricted cash primarily for interest escrow on the 2001 Senior Notes for two
years. Net cash provided by financing activities was $303,032,279 for the
quarter ended March 31, 2000 consisting primarily of net proceeds from our
initial public offering of approximately $194.3 million and net proceeds from
our issuance of 2000 Senior Discount Notes of approximately $181 million less
repayments of long-term debt of $76,239,373.
As of March 31, 2001, our primary sources of liquidity were
approximately $163 million in cash, $33.9 million in short-term investments and
$130 million of unused capacity under the $333 million Senior Secured Credit
Facility.
We estimate that we will require approximately $165 million to complete
the current build-out plan and fund working capital losses through the year
2001. The actual funds required to build-out our portion of the Sprint PCS
network and to fund operating losses and working capital needs may vary
materially from this estimate, and additional funds could be required.
We include capital leases related to network equipment and build-out in
construction in progress until service has commenced in their respective
markets. Once that service has commenced, those capital leases are reclassified
to property and equipment. At March 31, 2001, capital leases totaled $1,065,946
and included long-term capital lease obligations of $1,028,972. At December 31,
2000 the capital leases totaled $1,074,392 and included long-term capital lease
obligations of $1,038,614.
DEBT COVENANT WAIVER
As of March 31, 2001, we did not meet the maximum negative EBITDA
covenant under our Senior Secured Credit Facility. During the quarter ended
March 31, 2001, we reported an EBITDA loss of $16.7 million, which exceeded the
maximum negative EBITDA covenant by $7.0 million.
Differences in first quarter 2001 actual results versus projections on
which the covenants were based are primarily attributable to negative variances
from (i) higher than projected selling and marketing expenses, somewhat due to
greater than expected subscriber growth, (ii) actual outbound roaming minutes
used by our customers exceeding projections which resulted in higher costs, and
(iii) general and administrative costs in excess of projections, all partially
offset by favorable variances in revenue due to (a) higher actual ARPU than
projected, (b) more actual subscribers than projected, and (c) actual inbound
roaming minutes on Alamosa's network exceeding projections resulting in
additional revenue.
On May 8, 2001, we obtained a waiver of any default or event of default
arising from the failure to comply with the covenant for the fiscal quarter
ended March 31, 2001 from the lending institutions under the Senior Secured
Credit Facility. We believe that the maximum negative EBITDA covenant will be
met in periods subsequent to March 31, 2001.
INFLATION
Management believes that inflation has not had, and is not likely to
have, a material adverse effect on our results of operations.
EFFECT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 1998 and June 1999, the Financial Accounting Standards Board
("FASB"), issued SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities" and SFAS No. 137, "Accounting for Derivative Instruments and
Hedging Activities-Deferral of the Effective Date of FASB Statement No. 133."
These statements require companies to record derivatives on the balance sheet as
assets or liabilities, measured at fair value. Gains or losses resulting from
changes in the values of those derivatives would be accounted for depending on
the use of the derivative and whether it qualifies for hedging accounting. SFAS
No. 133 has been adopted during the first quarter.
21
We do not believe that any recently issued accounting pronouncements
will have any material impact on our financial position, results of operations
or cash flows.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
For the quarter ended March 31, 2001, we did not experience any
material changes in market risk exposures that affect the quantitative and
qualitative disclosures presented in our 2000 Annual Report on Form 10-K.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We and our subsidiaries are not parties to any pending legal
proceedings that we believe would, if adversely determined, individually or in
the aggregate have a material adverse effect on our, or our subsidiaries',
financial condition or results of operations.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
RECENT SALES OF UNREGISTERED SECURITIES
On January 31, 2001, Alamosa (Delaware) consummated the offering of
$250 million of its 12 1/2% senior notes due 2011. The net proceeds from the
sale of the Senior Notes, after issuance costs were approximately $241 million.
The Senior Notes were purchased by institutional purchasers and a limited number
of non-U.S. purchasers under Regulation S. These shares were issued pursuant to
the exemption from registration provided by Section 4 (2) and Regulation S of
the Securities Act of 1933.
On February 14, 2001, we issued 13,500,000 shares of our common stock
to the members of Roberts in connection with Superholdings' acquisition of
Roberts. These shares were issued pursuant to the exemption from registration
provided by section 4 (2) of the Securities Act of 1933.
On February 14, 2001, we issued 6,050,000 shares of our common stock to
the members of WOW in connection with our acquisition of WOW. These shares were
issued pursuant to the exemption from registration provided by Section 4 (2) of
the Securities Act of 1933.
On March 30, 2001 we issued 11,100,000 shares of our common stock to
members of Southwest in connection with our acquisition of Southwest. These
shares were issued pursuant to the exemption from registration provided by
Section 4 (2) of the Securities Act of 1933.
We commenced our initial public offering on February 3, 2000 pursuant
to a Registration Statement on Form S-1, file no. 333-89995, that was declared
effective on February 2, 2000. On February 8, 2000, we consummated the offering.
In the offering, we registered and sold an aggregate of 12,321,100 shares of our
common stock, including 1,607,100 shares of common stock pursuant to the
exercise of the underwriters' over-allotment option. The aggregate price of the
shares offered and sold was approximately $208.6 million. Our net proceeds,
after accounting for approximately $13.3 million in underwriting discounts,
commissions and approximately $1.0 million in expenses, were approximately
$194.3 million.
We commenced our sale of the senior discount notes on February 3, 2000
pursuant to a Registration Statement on Form S-1, file no. 333-93499, that was
declared effective on February 2, 2000. On February 8, 2000, we consummated the
offering. In the offering, we registered and sold $350 million aggregate
principal amount at maturity of the senior discount notes at an aggregate price
to the public of $187.1 million. Our net proceeds from the sale of the senior
discount notes, after accounting for approximately $6.1 million in underwriting
discounts and commissions and other third party expenses, were approximately
$181 million.
As of March 31, 2001, all of the net proceeds from the sales of the
registered securities had been used.
22
None of the net offering proceeds was, directly or indirectly, paid by
us to our directors or officers (other than pursuant to ordinary compensation
arrangements) or their associates, persons owning 10% or more of any class of
our securities, or our affiliates.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
A special meeting of shareholders was held on Wednesday, February 14,
2001, at which the stockholders considered and approved the following proposals:
A proposal to adopt an agreement and plan of reorganization between
Holdings and Superholdings pursuant to which:
o Holdings became a wholly-owned subsidiary of Superholdings; and
o Each share of Holdings common stock was converted into one share of
Superholdings common stock.
Results: For Against Abstain
--- ------- -------
56,271,168 85,410 7,950
A proposal to approve the issuance of shares of Superholdings common
stock in connection with the acquisition by Superholdings of Roberts and WOW
pursuant to which:
o Roberts and WOW became wholly-owned subsidiaries of Superholdings;
and
o The former members of Roberts and WOW received a combination of
cash and Superholdings common stock in exchange for their ownership
interests in Roberts and WOW.
Results: For Against Abstain
--- ------- -------
56,273,061 83,000 8,467
A proposal to approve an amendment to the Superholdings 1999 long-term
incentive plan which:
o Increased the number of shares of Superholdings common stock
reserved for issuance under the long-term incentive plan by
6,000,000 shares, from 7,000,000 shares to 13,000,000 shares; and
o Increased on December 31 of each year, from and including December
31, 2001, the number of shares of Superholdings common stock
reserved for issuance under the long-term incentive plan by 800,000
shares or such lesser amount determined by the committee which
administers the long-term incentive plan.
Results: For Against Abstain
--- ------- -------
48,691,807 7,658,065 14,056
A proposal to adopt the Superholdings employee stock purchase plan
pursuant to
which:
o 600,000 shares of Superholdings Common Stock were initially
reserved for issuance; and
o Beginning in the year 2002 and for each fiscal year thereafter, up
to an additional 200,000 shares of Superholdings Common Stock may
be added to the shares initially reserved for issuance.
Results: For Against Abstain
--- ------- -------
52,686,246 3,661,465 16,817
23
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are included herein:
EXHIBIT
NUMBER: EXHIBIT TITLE:
------- --------------
2.1 Agreement and Plan of Merger, dated as of March 9, 2001, by and among Alamosa
PCS Holdings, Inc., Forty Acquisition, Inc., Southwest PCS Holdings, Inc.
("Southwest") and the stockholders of Southwest, filed as Exhibit 2.1 to the
Current Report on Form 8-K, dated April 5, 2001, of Alamosa Holdings, Inc.,
which exhibit is incorporated herein by reference.
3.1 Amended and Restated Certificate of Incorporation of Alamosa Holdings, Inc.,
filed as Exhibit 1.1 to the Registration Statement on Form 8-A, dated February 14,
2001 (SEC File No. 000-32357) of Alamosa Holdings, Inc., which exhibit is
incorporated herein by reference.
3.2 Amended and Restated Bylaws of Alamosa Holdings, Inc., filed as Exhibit 1.2 to the
Registration Statement on Form 8-A, dated February 14, 2001 (SEC File No. 000-32357)
of Alamosa Holdings, Inc., which exhibit is incorporated herein by reference.
4.1 Third Supplemental Indenture for 12 7/8% Senior Discount Notes due 2010, dated as of
March 30, 2001, among SWLP, L.L.C., SWGP, L.L.C., Southwest PCS, L.P., Southwest PCS
Properties, LLC, Southwest PCS Licenses, LLC and Wells Fargo Bank Minnesota, N.A., as
trustee, filed as Exhibit 4.10 to the Registration Statement on Form S-4, dated May 9, 2001
(Registration No. 333-60572) of Alamosa (Delaware), Inc., which exhibit is incorporated
herein by reference.
4.2 Second Supplemental Indenture for 12 1/2% Senior Notes due 2011, dated as of March 30, 2001,
among SWLP, L.L.C., SWGP, L.L.C., Southwest PCS, L.P., Southwest PCS Properties, LLC,
Southwest PCS Licenses, LLC and Wells Fargo Bank Minnesota, N.A., as trustee, filed as Exhibit 4.11
to the Registration Statement on Form S-4, dated May 9, 2001 (Registration No. 333-60572) of
Alamosa (Delaware), Inc., which exhibit is incorporated herein by reference.
10.1 Amended and Restated Credit Agreement, dated as of March 30, 2001, by and among Alamosa Holdings,
LLC, Alamosa Holdings, Inc., Alamosa (Delaware), Inc., the lenders party thereto, Citicorp USA,
Inc., as administrative and collateral agent, Export Development Corporation, as co-documentation
agent, First Union National Bank, as documentation agent, Toronto Dominion (Texas), Inc. as
syndication agent, Export Development Corporation and First Union Securities, Inc., as lead
arrangers and Salomon Smith Barney Inc. and TD Securities (USA) Inc. as joint lead arrangers and
joint book managers, for a $333,000,000 credit facility, as amended by the First Amendment and
Waiver dated May 8, 2001 (attached thereto), filed as Exhibit 10.23 to the Registration
Statement on Form S-4, dated May 9, 2001 (Registration No. 333-60572) of Alamosa (Delaware), Inc.,
which exhibit is incorporated herein by reference.
24
10.2 Amended and Restated Security Agreement, dated as of March 30, 2001, by and among Alamosa
(Delaware), Inc., Alamosa Holdings, LLC, each subsidiary of Alamosa (Delaware), Inc. listed on
Schedule I thereto, and Citicorp USA, Inc., as collateral agent, filed as Exhibit 10.24 to the
Registration Statement on Form S-4, dated May 9, 2001 (Registration No. 333-60572) of Alamosa
(Delaware), Inc., which exhibit is incorporated herein by reference.
10.3 Amended and Restated Pledge Agreement, dated as of March 30, 2001, among Alamosa (Delaware), Inc.,
Alamosa Holdings, LLC, each Subsidiary of Alamosa (Delaware), Inc. listed on Schedule I thereto and
Citicorp USA, Inc., as collateral agent, filed as Exhibit 10.25 to the Registration Statement on
Form S-4, dated May 9, 2001 (Registration No. 333-60572) of Alamosa (Delaware), Inc., which exhibit
is incorporated herein by reference.
10.4 Amended and Restated Consent and Agreement, dated as of March 30, 2001, by and among Sprint
Spectrum L.P., SprintCom, Inc., Sprint Communications Company, L.P., Cox Communications PCS, L.P.,
Cox PCS License, LLC, WirelessCo, L.P., and Citicorp USA, Inc., as administrative agent, filed as
Exhibit 10.26 to the Registration Statement on Form S-4, dated May 9, 2001 (Registration No.
333-60572) of Alamosa (Delaware), Inc., which exhibit is incorporated herein by reference.
10.5 Addendum VI to Sprint PCS Management Agreement (Wisconsin), dated March 30, 2001, by and between
Sprint Spectrum L.P., WirelessCo, L.P., Sprint Communications Company, L.P. and Alamosa Wisconsin
Limited Partnership, filed as Exhibit 10.45 to the Registration Statement on Form S-4, dated
May 9, 2001 (Registration No. 333-60572) of Alamosa (Delaware), Inc., which exhibit is incorporated
herein by reference.
10.6 Addendum VII to Sprint PCS Management Agreement, dated as of March 30, 2001, by and between
Sprint Spectrum L.P., WirelessCo, L.P., Sprint Communications Company, L.P. and Texas
Telecommunications, LP, Sprint PCS Management Agreement, filed as Exhibit 10.46 to the
Registration Statement on Form S-4, dated May 9, 2001 (Registration No. 333-60572) of Alamosa
(Delaware), Inc., which exhibit is incorporated herein by reference.
10.7 Addendum IX to Sprint PCS Management Agreement, dated as of March 30, 2001, by and between
Sprint Spectrum L.P., WirelessCo, L.P., Sprint Communications Company, L.P. and Roberts
Wireless Communications, filed as Exhibit 1047 to the Registration Statement on Form S-4,
dated May 9, 2001 (Registration No. 333-60572) of Alamosa (Delaware), Inc., which exhibit is
incorporated herein by reference.
10.8 Addendum IV to Sprint PCS Management Agreement, dated as of March 30, 2001, by and between
Sprint Spectrum L.P., WirelessCo, L.P., Sprint Communications Company, L.P. and Washington
Oregon Wireless, LLC, filed as Exhibit 10.48 to the Registration Statement on Form S-4, dated
May 9, 2001 (Registration No. 333-60572) of Alamosa (Delaware), Inc., which exhibit is incorporated
herein by reference.
10.9 Sprint PCS Management Agreement, dated March 30, 2001, as amended by Addendum IV, by and
between Sprint Spectrum, L.P., SprintCom, Inc. and Southwest PCS, L.P., filed as Exhibit 10.49
to the Registration Statement on Form S-4, dated May 9, 2001 (Registration No. 333-60572) of
Alamosa (Delaware), Inc., which exhibit is incorporated herein by reference.
25
10.10 Sprint PCS Services Agreement, dated July 10, 1998, between Sprint Spectrum L.P. and Southwest
PCS, L.P., filed as Exhibit 10.50 to the Registration Statement on Form S-4, dated May 9, 2001
(Registration No. 333-60572) of Alamosa (Delaware), Inc., which exhibit is incorporated herein
by reference.
10.11 Sprint Trademark and Service Mark License Agreement, dated July 10, 1998, between Sprint
Communications Company, L.P. and Southwest PCS, L.P., filed as Exhibit 10.51 to the
Registration Statement on Form S-4, dated May 9, 2001 (Registration No. 333-60572) of
Alamosa (Delaware), Inc., which exhibit is incorporated herein by reference.
10.12 Sprint Spectrum Trademark and Service Mark License Agreement, dated July 10, 1998, between
Sprint Spectrum L.P. and Southwest PCS, L.P., filed as Exhibit 10.52 to the Registration
Statement on Form S-4, dated May 9, 2001 (Registration No. 333-60572)) of Alamosa
(Delaware), Inc., which exhibit is incorporated herein by reference.
(b) Current Reports on Form 8-K filed during the first quarter of 2001
are as follows:
On February 28, 2001, Alamosa Holdings, Inc. filed a Current Report
stating that on February 14, 2001 it had completed the acquisitions of
Roberts Wireless Communications, L.L.C., a Missouri limited liability
company and Washington Oregon Wireless, LLC, an Oregon limited
liability company and the related reorganization. The Current Report
also stated that the Board of Directors of Alamosa Holdings, Inc.
declared a dividend distribution payable February 14, 2001 of one
preferred share purchase right for each outstanding share of common
stock, par value $0.01 per share, of Alamosa Holdings, Inc. held of
record at the close of business on February 14, 2001.
26
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 thereunto duly authorized.
ALAMOSA HOLDINGS, INC.
Registrant
/s/ David E. Sharbutt
---------------------------------
David E. Sharbutt
Chairman of the Board of Directors and
Chief Executive Officer
(Principal Executive Officer)
/s/ Kendall W. Cowan
---------------------------------
Kendall W. Cowan
Chief Financial Officer
(Principal Financial and Accounting Officer)
27
EXHIBIT INDEX
--------------
EXHIBIT
NUMBER: EXHIBIT TITLE:
------- --------------
2.1 Agreement and Plan of Merger, dated as of March 9,2001, by and among Alamosa PCS Holdings, Inc.,
Forty Acquisition, Inc., Southwest PCS Holdings, Inc. ("Southwest") and the stockholders of
Southwest, filed as Exhibit 2.1 to the Current Report on Form 8-K, dated April 5, 2001, of
Alamosa Holdings, Inc., which exhibit is incorporated herein by reference.
3.1 Amended and Restated Certificate of Incorporation of Alamosa Holdings, Inc., filed as Exhibit 1.1
to the Registration Statement on Form 8-A, dated February 14, 2001 (SEC File No. 000-32357) of
Alamosa Holdings, Inc., which exhibit is incorporated herein by reference.
3.2 Amended and Restated Bylaws of Alamosa Holdings, Inc., filed as Exhibit 1.2 to the Registration
Statement on Form 8-A, dated February 14, 2001 (SEC File No. 000-32357) of Alamosa Holdings, Inc.,
which exhibit is incorporated herein by reference.
4.1 Third Supplemental Indenture for 12 7/8% Senior Discount Notes due 2010, dated as of March 30, 2001,
among SWLP, L.L.C., SWGP, L.L.C., Southwest PCS, L.P., Southwest PCS Properties, LLC, Southwest PCS
Licenses, LLC and Wells Fargo Bank Minnesota, N.A., as trustee, filed as Exhibit 4.10 to the
Registration Statement on Form S-4, dated May 9, 2001 (Registration No. 333-60572) of Alamosa
(Delaware), Inc., which exhibit is incorporated herein by reference.
4.2 Second Supplemental Indenture for 12 1/2% Senior Notes due 2011, dated as of March 30, 2001, among
SWLP, L.L.C., SWGP, L.L.C., Southwest PCS, L.P., Southwest PCS Properties, LLC, Southwest PCS
Licenses, LLC and Wells Fargo Bank Minnesota, N.A., as trustee, filed as Exhibit 4.11 to the
Registration Statement on Form S-4, dated May 9, 2001 (Registration No. 333-60572) of Alamosa
(Delaware), Inc., which exhibit is incorporated herein by reference.
10.1 Amended and Restated Credit Agreement, dated as of March 30, 2001, by and among Alamosa Holdings, LLC,
Alamosa Holdings, Inc., Alamosa (Delaware), Inc., the lenders party thereto, Citicorp USA, Inc., as
administrative and collateral agent, Export Development Corporation, as co-documentation agent,
First Union National Bank, as documentation agent, Toronto Dominion (Texas), Inc. as syndication
agent, Export Development Corporation and First Union Securities, Inc., as lead arrangers and Salomon
Smith Barney Inc. and TD Securities (USA) Inc. as joint lead arrangers and joint book managers, for a
$333,000,000 credit facility, as amended by the First Amendment and Waiver dated May 8, 2001 (attached
thereto), filed as Exhibit 10.23 to the Registration Statement on Form S-4, dated May 9, 2001
(Registration No. 333-60572) of Alamosa (Delaware), Inc., which exhibit is incorporated herein by
reference.
10.2 Amended and Restated Security Agreement, dated as of March 30, 2001, by and among Alamosa (Delaware),
Inc., Alamosa Holdings, LLC, each subsidiary of Alamosa (Delaware), Inc. listed on Schedule I thereto,
and Citicorp USA, Inc., as collateral agent, filed as Exhibit 10.24 to the Registration Statement on
Form S-4, dated May 9, 2001 (Registration No. 333-60572) of Alamosa (Delaware), Inc., which exhibit
is incorporated herein by reference.
28
10.3 Amended and Restated Pledge Agreement, dated as of March 30, 2001, among Alamosa (Delaware), Inc.,
Alamosa Holdings, LLC, each Subsidiary of Alamosa (Delaware), Inc. listed on Schedule I thereto and
Citicorp USA, Inc., as collateral agent, filed as Exhibit 10.25 to the Registration Statement on
Form S-4, dated May 9, 2001 (Registration No. 333-60572) of Alamosa (Delaware), Inc., which exhibit
is incorporated herein by reference.
10.4 Amended and Restated Consent and Agreement, dated as of March 30, 2001, by and among Sprint
Spectrum L.P., SprintCom, Inc., Sprint Communications Company, L.P., Cox Communications PCS, L.P.,
Cox PCS License, LLC, WirelessCo, L.P., and Citicorp USA, Inc., as administrative agent, filed as
Exhibit 10.26 to the Registration Statement on Form S-4, dated May 9, 2001 (Registration No. 333-60572)
of Alamosa (Delaware), Inc., which exhibit is incorporated herein by reference.
10.5 Addendum VI to Sprint PCS Management Agreement (Wisconsin), dated March 30, 2001, by and between
Sprint Spectrum L.P., WirelessCo, L.P., Sprint Communications Company, L.P. and Alamosa Wisconsin
Limited Partnership, filed as Exhibit 10.45 to the Registration Statement on Form S-4, dated May 9, 2001
(Registration No. 333-60572) of Alamosa (Delaware), Inc., which exhibit is incorporated herein by
reference.
10.6 Addendum VII to Sprint PCS Management Agreement, dated as of March 30, 2001, by and between Sprint
Spectrum L.P., WirelessCo, L.P., Sprint Communications Company, L.P. and Texas Telecommunications, LP,
Sprint PCS Management Agreement, filed as Exhibit 10.46 to the Registration Statement on Form S-4,
dated May 9, 2001 (Registration No. 333-60572) of Alamosa (Delaware), Inc., which exhibit is
incorporated herein by reference.
10.7 Addendum IX to Sprint PCS Management Agreement, dated as of March 30, 2001, by and between Sprint
Spectrum L.P., WirelessCo, L.P., Sprint Communications Company, L.P. and Roberts Wireless
Communications, filed as Exhibit 10.47 to the Registration Statement on Form S-4, dated May 9, 2001
(Registration No. 333-60572) of Alamosa (Delaware), Inc., which exhibit is incorporated herein by
reference.
10.8 Addendum IV to Sprint PCS Management Agreement, dated as of March 30, 2001, by and between Sprint
Spectrum L.P., WirelessCo, L.P., Sprint Communications Company, L.P. and Washington Oregon Wireless,
LLC, filed as Exhibit 10.48 to the Registration Statement on Form S-4, dated May 9, 2001
(Registration No. 333-60572) of Alamosa (Delaware), Inc., which exhibit is incorporated herein by
reference.
10.9 Sprint PCS Management Agreement, dated March 30, 2001, as amended by Addendum IV, by and between
Sprint Spectrum, L.P., SprintCom, Inc. and Southwest PCS, L.P., filed as Exhibit 10.49 to the
Registration Statement on Form S-4, dated May 9, 2001 (Registration No. 333-60572) of Alamosa
(Delaware), Inc., which exhibit is incorporated herein by reference.
10.10 Sprint PCS Services Agreement, dated July 10, 1998, between Sprint Spectrum L.P. and Southwest PCS,
L.P., filed as Exhibit 10.50 to the Registration Statement on Form S-4, dated May 9, 2001
(Registration No. 333-60572) of Alamosa (Delaware), Inc., which exhibit is incorporated herein by
reference.
10.11 Sprint Trademark and Service Mark License Agreement, dated July 10, 1998,
29
between Sprint Communications Company, L.P. and Southwest PCS, L.P., filed as Exhibit 10.51 to the
Registration Statement on Form S-4, dated May 9, 2001 (Registration No. 333-60572) of Alamosa
(Delaware), Inc., which exhibit is incorporated herein by reference.
10.12 Sprint Spectrum Trademark and Service Mark License Agreement, dated July 10, 1998, between Sprint
Spectrum L.P. and Southwest PCS, L.P., filed as Exhibit 10.52 to the Registration Statement on
Form S-4, dated May 9, 2001 (Registration No. 333-60572)) of Alamosa (Delaware), Inc., which
exhibit is incorporated herein by reference.
30