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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 quarterly period ended June 30, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from __________ to __________
COMMISSION FILE NUMBER: 1-15325
TRITON PCS HOLDINGS, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 23-2974475
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
1100 CASSATT ROAD
BERWYN, PENNSYLVANIA 19312
(Address and zip code of principal executive offices)
(610) 651-5900
(Registrant's telephone number, including area code)
Indicate by a 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 July 29, 2002, 60,240,654 shares of the registrant's Class A common stock,
par value $0.01 per share, and 7,926,099 shares of the registrant's Class B
non-voting common stock, par value $0.01 per share, were outstanding.
TRITON PCS HOLDINGS, INC.
SECOND QUARTER REPORT
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements Page No.
--------
Condensed Consolidated Balance Sheets at December 31, 2001 and
June 30, 2002 (unaudited) ................................................................... 3
Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and six
months ended June 30, 2001 and 2002 (unaudited) ............................................. 4
Condensed Consolidated Statements of Cash Flows for the six months ended
June 30, 2001 and 2002 (unaudited) .......................................................... 5
Notes to the Financial Statements (unaudited) ............................................... 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations........ 9
Item 3. Quantitative and Qualitative Disclosures About Market Risk .................................. 15
PART II. OTHER INFORMATION
Item 1. Legal Proceedings............................................................................ 16
Item 2. Changes in Securities and Use of Proceeds ................................................... 16
Item 3. Defaults Upon Senior Securities.............................................................. 16
Item 4. Submission of Matters to a Vote of Security Holders.......................................... 16
Item 5. Other Information............................................................................ 16
Item 6. Exhibits and Reports on Form 8-K............................................................. 17
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TRITON PCS HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
December 31, June 30,
2001 2002
----------- -----------
(unaudited)
ASSETS:
CURRENT ASSETS:
Cash and cash equivalents $ 371,088 $ 320,927
Accounts receivable, net of allowance for doubtful accounts of
$3,345 and $3,643, respectively 52,496 61,345
Accounts receivable - roaming partners 16,189 25,977
Inventory, net 29,740 23,868
Prepaid expenses 8,160 10,053
Other current assets 5,301 5,094
----------- -----------
TOTAL CURRENT ASSETS 482,974 447,264
PROPERTY AND EQUIPMENT:
Land 313 377
Network infrastructure and equipment 871,523 916,188
Furniture & fixtures and computer equipment 75,651 83,814
Capital lease assets 8,860 9,134
Construction in progress 55,651 35,368
----------- -----------
1,011,998 1,044,881
Less accumulated depreciation (218,823) (279,701)
----------- -----------
Net property and equipment 793,175 765,180
Intangible assets, net 283,847 305,549
Investment in and advances to non-consolidated entities 116,731 97,351
Other long-term assets 6,878 6,863
----------- -----------
TOTAL ASSETS $ 1,683,605 $ 1,622,207
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts payable $ 120,057 $ 91,107
Accrued payroll and related expenses 17,381 12,268
Accrued expenses 6,634 9,784
Current portion of long-term debt 12,641 9,297
Deferred revenue 12,099 16,361
Deferred gain on sale of property and equipment 1,190 1,190
Accrued interest 20,351 20,762
Other current liabilities 9,307 8,193
----------- -----------
TOTAL CURRENT LIABILITIES 199,660 168,962
LONG-TERM DEBT:
Capital lease obligations 2,512 1,716
Bank credit facility 174,441 171,529
Senior subordinated debt 1,167,338 1,192,832
----------- -----------
TOTAL LONG-TERM DEBT 1,344,291 1,366,077
Deferred income taxes 11,935 11,935
Deferred revenue 3,129 2,926
Fair value of derivative instruments 20,584 19,049
Deferred gain on sale of property and equipment 28,262 27,667
----------- -----------
TOTAL LIABILITIES 1,607,861 1,596,616
Series A Redeemable Preferred Stock, $0.01 par value, 1,000,000
shares authorized; 786,253 shares issued and outstanding as of
December 31, 2001 and June 30, 2002, plus accreted dividends 114,965 120,834
STOCKHOLDERS' EQUITY:
Series B Preferred Stock, $0.01 par value, 50,000,000
shares authorized; no shares issued or outstanding as of
December 31, 2001 and June 30, 2002 -- --
Series C Preferred Stock, $0.01 par value, 3,000,000 shares
authorized; no shares issued or outstanding as of December 31,
2001 and June 30, 2002 -- --
Series D Preferred Stock, $0.01 par value, 16,000,000 shares
authorized; 543,683 shares issued and outstanding as of
December 31, 2001 and June 30, 2002 5 5
Class A Common Stock, $0.01 par value, 520,000,000 shares authorized;
59,438,555 shares issued and 59,327,637 shares outstanding as of
December 31, 2001 and 60,301,721 shares issued and 60,128,899
shares outstanding as of June 30, 2002 594 601
Class B Non-voting Common Stock, $.01 par value, 60,000,000 shares
authorized; 7,926,099 shares issued and outstanding as of
December 31, 2001 and June 30, 2002 79 79
Additional paid-in capital 623,335 622,355
Accumulated deficit (561,580) (623,637)
Accumulated other comprehensive income (loss) (7,660) (6,898)
Deferred compensation (92,619) (86,373)
Common stock held in treasury, at cost (110,918) and (172,822),
respectively (1,375) (1,375)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY (39,221) (95,243)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,683,605 $ 1,622,207
=========== ===========
See accompanying notes to financial statements.
3
TRITON PCS HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, JUNE 30,
---------------------------- -----------------------------
2001 2002 2001 2002
------------ ------------ ------------ ------------
(unaudited) (unaudited) (unaudited) (unaudited)
Revenues:
Service revenues $ 96,833 $ 129,939 $ 178,802 $ 246,933
Roaming revenues 32,349 45,508 58,099 80,634
Equipment revenues 6,508 9,269 12,149 15,304
------------ ------------ ------------ ------------
Total revenue 135,690 184,716 249,050 342,871
Expenses:
Cost of service (excluding the
below amortization, excluding
depreciation of $21,090 and
$28,007 for the three months
ended June 30, 2001 and 2002,
respectively, and $42,937 and
$53,809 for the six months
ended June 30, 2001 and 2002,
respectively, and excluding
noncash compensation of $597
and $886 for the three months
ended June 30, 2001 and 2002,
respectively, and $958 and
$1,825 for the six months
ended June 30, 2001
and 2002, respectively) 43,482 52,926 80,126 100,808
Cost of equipment 18,190 20,282 33,616 35,549
Selling and marketing (excluding
noncash compensation of $629 and $650
for the three months ended June 30,
2001 and 2002, respectively, and $873
and $1,231 for the six months ended
June 30, 2001 and 2002, respectively) 27,470 28,166 50,841 53,438
General and administrative (excluding
noncash compensation of $3,184 and
$3,724 for the three months ended
June 30, 2001 and 2002, respectively,
and $4,903 and $7,552 for the six
months ended June 30, 2001 and 2002,
respectively) 31,237 37,357 58,746 71,069
Non-cash compensation 4,410 5,260 6,734 10,608
Depreciation 25,419 31,762 50,780 61,865
Amortization 4,722 1,277 9,393 2,542
------------ ------------ ------------ ------------
Income (loss) from operations (19,240) 7,686 (41,186) 6,992
Interest and other expense,
net of capitalized interest 29,417 40,020 56,219 73,252
Interest and other income 6,005 1,687 11,183 4,203
------------ ------------ ------------ ------------
Net loss (42,652) (30,647) (86,222) (62,057)
Accretion on preferred stock 2,690 2,971 5,313 5,869
------------ ------------ ------------ ------------
Net loss applicable to common
stockholders $(45,342) $(33,618) $(91,535) $(67,926)
============ ============ ============ ============
Other comprehensive loss, net of tax:
Cumulative effect of change
in accounting principle -- -- (4,162) --
Unrealized gain (loss) on
derivative instruments 564 (1,293) (3,949) 762
------------ ------------ ------------ ------------
Comprehensive loss applicable
to common stockholders $(44,778) $(34,911) $(99,646) $(67,164)
============ ============ ============ ============
Net loss per common share
(basic and diluted) $(0.69) $(0.51) $(1.42) $(1.03)
============ ============ ============ ============
Weighted average common shares
outstanding (basic and diluted) 65,498,258 65,818,338 64,353,202 65,704,040
============ ============ ============ ============
See accompanying notes to financial statements.
4
TRITON PCS HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
SIX MONTHS
ENDED
JUNE 30,
------------------------
2001 2002
--------- ---------
(unaudited) (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($ 86,222) ($ 62,057)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization 60,173 64,407
Accretion of interest 23,485 26,060
Equity losses in non-consolidated entities 13 897
Bad debt expense 5,635 5,823
Non-cash compensation 6,734 10,608
(Gain)/loss on derivative instruments not acting as hedges -- (773)
Loss on disposal of fixed assets -- 230
Change in operating assets and liabilities:
Accounts receivable (12,432) (24,460)
Inventory 2,242 5,872
Prepaid expenses and other current assets (3,805) (2,886)
Intangible and other assets (2,295) 301
Accounts payable 3,897 856
Accrued payroll and related expenses (3,038) (5,113)
Deferred revenue 4,728 4,059
Accrued expenses 519 3,150
Accrued interest 15,636 411
Other liabilities (836) (1,709)
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 14,434 25,676
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (133,485) (64,890)
Net (advances to) repayments from non-consolidated entities (27,162) 18,483
Acquisition of FCC licenses -- (21,307)
Proceeds from disposal of fixed assets -- 138
Other -- (20)
--------- ---------
NET CASH USED IN INVESTING ACTIVITIES (160,647) (67,596)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of subordinated debt, net 337,995 --
Borrowings under credit facility 206,000 --
Payments under credit facility (38,750) (6,250)
Proceeds from equity offering, net 106,680 --
Contributions under employee stock purchase plan 803 534
Payment of deferred financing costs (974) (1,450)
Payment of deferred transaction costs (963) --
Proceeds from related party, net 16 --
Purchase of treasury stock (582) --
Principal payments under capital lease obligations (961) (1,075)
--------- ---------
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES 609,264 (8,241)
--------- ---------
NET (DECREASE) INCREASE IN CASH 463,051 (50,161)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,617 371,088
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 464,668 $ 320,927
========= =========
CASH PAID FOR INTEREST EXPENSE 19,679 47,002
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Capital expenditures included in accounts payable 23,449 8,123
Deferred stock compensation 70,942 4,362
Change in fair value of derivative instruments acting as hedges 8,111 (762)
See accompanying notes to financial statements.
5
TRITON PCS HOLDINGS, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2002
(unaudited)
(1) BASIS OF PRESENTATION
The accompanying consolidated financial statements are unaudited and have
been prepared by management. In the opinion of management, these
consolidated financial statements contain all of the adjustments,
consisting of normal recurring adjustments, necessary to present fairly,
in summarized form, the financial position and the results of operations
of Triton PCS Holdings, Inc. ("Triton"). The results of operations for
the three and six months ended June 30, 2002 may not be indicative of the
results that may be expected for the year ending December 31, 2002. The
financial information presented herein should be read in conjunction with
the consolidated financial statements for the year ended December 31,
2001, which include information and disclosures not included herein.
The consolidated accounts include Triton and its wholly-owned
subsidiaries (collectively, the "Company"). All significant intercompany
accounts or balances have been eliminated in consolidation.
Certain reclassifications have been made to prior period financial
statements to conform to the current period presentation.
(2) NEW ACCOUNTING PRONOUNCEMENTS
In June 2001, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 143, "Accounting for
Obligations Associated with the Retirement of Long-Lived Assets". SFAS
No. 143 primarily establishes accounting standards for the recognition
and measurement of an asset retirement obligation and its associated
asset retirement costs. The provisions of SFAS No. 143 will be effective
for fiscal years beginning after June 15, 2002. Management is currently
evaluating the impact this statement will have on the Company's financial
position and results of operations.
In September 2001, the Emerging Issues Task Force ("EITF") issued EITF
01-09 "Accounting for Consideration Given by a Vendor to a
Customer/Reseller". EITF 01-09 primarily establishes accounting standards
for the classification, recognition and measurement of consideration
given by a vendor to a reseller. The provisions of EITF 01-09 are
effective for fiscal years beginning after December 15, 2001. The
adoption of EITF 01-09, effective January 1, 2002, did not have a
material impact on the Company's financial position or results of
operations, but it did require certain costs that were previously
classified as an expense to be reflected as an offset to equipment
revenue. For the six months ended June 30, 2001, approximately $155,000
of expense has been reclassified as an offset to equipment revenue to
conform with the current period presentation.
(3) ACCOUNTING FOR INTANGIBLE ASSETS
On January 1, 2002, the Company adopted SFAS No. 142, "Goodwill and Other
Intangible Assets". With the adoption of SFAS No. 142, FCC licenses,
which are categorized as an asset with an indefinite life, are no longer
subject to amortization. As an asset with an indefinite life, the
licenses are subject to at least an annual assessment for impairment. All
of the Company's FCC licenses are aggregated for the purpose of
performing the impairment test as they are operated as a single asset,
and, as such, are essentially inseparable from one another. The Company
has completed its transitional intangible impairment test, and based upon
a discounted future cash flows model, the FCC licenses are not impaired.
As of January 1, 2002, the Company had recorded a net asset of
approximately $255.7 million for its FCC licenses.
The elimination of FCC license amortization would have reduced net loss
by approximately $1.7 million and $3.5 million for the three and six
months ended June 30, 2001, respectively, or $0.02 per basic and diluted
share and $0.05 per basic and diluted share, respectively. Pro forma net
income and earnings per share information are shown as if the provisions
of SFAS No. 142 were in effect for fiscal 2001.
6
TRITON PCS HOLDINGS, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2002
(unaudited)
THREE MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, JUNE 30,
-------------------------- --------------------------
(Dollars in thousands, PRO FORMA ACTUAL PRO FORMA ACTUAL
except per share amounts) 2001 2002 2001 2002
----------- ----------- ----------- -----------
(unaudited) (unaudited) (unaudited) (unaudited)
NET LOSS:
Reported net loss ($45,342) ($33,618) ($91,535) ($67,926)
Add back: FCC license amortization 1,736 -- 3,471 --
----------- ----------- ----------- -----------
Adjusted net loss ($43,606) ($33,618) ($88,064) ($67,926)
----------- ----------- ----------- -----------
BASIC AND DILUTED EARNINGS PER SHARE:
Reported net loss ($0.69) ($ 0.51) ($1.42) ($1.03)
FCC license amortization 0.02 -- 0.05 --
----------- ----------- ----------- -----------
Adjusted net loss ($0.67) ($ 0.51) ($1.37) ($1.03)
----------- ----------- ----------- -----------
(4) EMPLOYEE STOCK PURCHASE PLAN
Triton maintains an Employee Stock Purchase Plan (the "Plan") pursuant to
which employees may purchase shares of Triton's Class A common stock.
Under the terms of the Plan, the Stock Plan Committee establishes
offering periods during each calendar year in which employees can
participate. The purchase price is determined at the discretion of the
Stock Plan Committee, but shall not be less than the lesser of: (i)
eighty-five percent (85%) of the fair market value of the Class A common
stock on the first business day of each offering period; or (ii)
eighty-five percent (85%) of the fair market value of the Class A common
stock on the last business day of the offering period. Triton issued
9,650 shares of Class A common stock, at a per share price of $24.95, in
January 2002; 33,831 shares of Class A common stock, at a per share price
of $8.66, in April 2002; and 64,255 shares of Class A common stock, at a
per share price of $3.32 in July 2002 pursuant to the Plan.
(5) STOCK COMPENSATION
In the first quarter of 2002, certain employees who resigned their
employment with the Company forfeited approximately $1.0 million of
deferred compensation and in doing so forfeited 24,799 shares of
restricted Class A common stock, which were issued under Triton's 1999
Stock Incentive Plan (the "Stock Incentive Plan").
On May 1, 2002, Triton granted 622,185 shares of restricted Class A
Common Stock to management employees. Of the total grant, 50,000 shares
of restricted Class A Common Stock were issued from a common stock trust
established for grants of common stock to management, employees and
independent directors. The remaining shares were issued under the Stock
Incentive Plan. All of these shares are subject to five-year vesting
provisions. Deferred compensation of approximately $5.2 million was
recorded based on the market value at the date of grant. Also on May 1,
2002, Triton granted 212,435 shares of restricted Class A Common Stock to
employees. These shares of restricted Class A Common Stock were issued
under the Stock Incentive Plan and are subject to four-year vesting
provisions. Deferred compensation of approximately $1.8 million was
recorded based on the market value at the date of grant.
In the second quarter of 2002, certain employees who resigned their
employment with the Company forfeited approximately $1.8 million of
deferred compensation and in doing so forfeited 37,040 shares of
restricted Class A common stock, which were issued under the Stock
Incentive Plan.
7
TRITON PCS HOLDINGS, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2002
(unaudited)
Triton entered into Director Stock Award Agreements with its four
directors considered to be independent by management - Scott I. Anderson,
John D. Beletic, Arnold L. Chavkin and Rohit M. Desai. Each independent
director received an award of 11,250 shares of Class A common stock for
service on the Board of Directors and an additional 6,250 shares for
service on each of the audit committee and the compensation committee.
Accordingly, Mr. Anderson and Mr. Beletic each received total awards of
17,500 shares under agreements dated as of June 24, 2002, recognizing
their service on the audit committee and the compensation committee,
respectively, and Mr. Chavkin and Mr. Desai each received a total award
of 23,750 shares under agreements dated as of July 1, 2002, recognizing
their service on both committees. Each award vests in equal installments
over a five-year period, with the first installment vesting on June 1,
2003. Upon each director's termination of service as a member of Triton's
Board of Directors for any reason, the director has agreed to forfeit any
unvested shares, subject to the exception that if the director is not
nominated to serve as a member of the Board of Directors when his term
expires or if nominated, does not receive the requisite vote to be
elected, the director will be deemed to have served on the Board of
Directors as of the vesting date closest to the relevant annual meeting
of Triton's stockholders. The awards were made pursuant to the exemption
from registration provided by Section 4(2) of the Securities Act of 1933,
as transactions not involving any public offering.
(6) CREDIT FACILITY
Triton PCS, Inc. ("Triton PCS"), a wholly owned subsidiary of Triton, and
Triton are parties to a $478.8 million bank credit facility. On February
20, 2002, Triton PCS entered into a second amendment to its second
amended and restated credit agreement. As part of the second amendment,
various maturity dates were revised under the credit facility as follows:
the maturity dates of each of the Tranche A, C and D term loans and of
the Revolving Facility were changed from August 2006 to May 2006. The
maturity date of the Tranche B term loan was changed from May 2007 to
February 2007.
On March 8, 2002, Triton PCS entered into a third amendment to its second
amended and restated credit agreement. The third amendment created a
$125.0 million Tranche E term loan maturing in February 2007, increasing
Triton PCS's committed available borrowings under the facility to $300.0
million. Triton PCS must begin repaying the Tranche E term loan in
sixteen consecutive quarterly installments, beginning in May 2003 (the
amount of the first eleven installments, $312,500, the next four
installments, $6,250,000, and the last installment, $96,562,500). The
Tranche E term loan accrues interest under the same terms as the Tranche
B term loan, with an applicable margin of 2.00% in the case of an ABR
loan, and 3.00% in the case of a Eurodollar loan. As of June 30, 2002,
the Company had $178.8 million of outstanding borrowings under its bank
credit facility.
(7) SUBSEQUENT EVENT
On July 26, 2002, Triton PCS License Company L.L.C. entered into a
definitive agreement to acquire personal communications services licenses
in Richmond, Norfolk and Roanoke, Virginia from AT&T Wireless PCS, Inc.
for $65.0 million. The three 10 MHz A-block licenses for Richmond,
Norfolk and Roanoke Basic Trading Areas ("BTAs") cover approximately 3.7
million people. The Company currently owns and operates 20 MHz of the
A-block license in the respective BTAs. The Company will use the
additional spectrum as part of its current network overlay of GSM/GPRS
services. The transaction, which requires FCC approval, is expected to
close in the second half of 2002.
8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
In this section, the terms "Triton," "we," "our" and similar terms refer
collectively to Triton PCS Holdings, Inc., Triton PCS, Inc., and their
consolidated subsidiaries. The following discussion and analysis is based upon
our financial statements as of the dates and for the periods presented in this
section. You should read this discussion and analysis in conjunction with our
financial statements and the related notes contained elsewhere in this report.
FORWARD-LOOKING STATEMENTS
When used in this Form 10-Q and in future filings by us with the Securities and
Exchange Commission, in our press releases and in oral statements made with the
approval of an authorized executive officer of Triton, statements concerning
possible or assumed future results of operations of Triton and those preceded
by, followed by or that include the words "may," "will," "should," "expects,"
"plans," "anticipates," "believes," "estimates," "predicts," "potential" or
"continue" or the negative of such terms and other comparable terminology
(including confirmations by an authorized executive officer of Triton or any
such expressions made by a third party with respect to Triton) are intended to
identify "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Readers are cautioned not to place
undue reliance on any such forward-looking statements, each of which speaks only
as of the date made. Such statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from
historical earnings and those presently anticipated or projected. For a
discussion of certain risks and uncertainties that could affect our results of
operations, liquidity and capital resources, see the "Risk Factors" section of
the Triton PCS, Inc. prospectus dated April 26, 2002, as filed with the
Securities and Exchange Commission on that date. We have no obligation to
release publicly the result of any revisions which may be made to any
forward-looking statements to reflect anticipated or unanticipated events or
circumstances occurring after the date of such statements.
OVERVIEW
We are a leading provider of wireless communications services in the
southeastern United States. Our wireless communications licenses cover
approximately 13.6 million potential customers in a contiguous geographic area
encompassing portions of Virginia, North Carolina, South Carolina, Tennessee,
Georgia and Kentucky. In February 1998, we entered into a joint venture with
AT&T Wireless. As part of the agreement, AT&T Wireless contributed personal
communications services licenses for 20 megahertz, or MHz, of authorized
frequencies covering 11.3 million potential customers within defined areas of
our region in exchange for an equity position in Triton. Since that time, we
have expanded our coverage area to include an additional 2.3 million potential
customers through acquisitions and license exchanges with AT&T Wireless. As part
of the transaction with AT&T Wireless, we were granted the right to be the
exclusive provider of wireless mobility services using equal emphasis
co-branding with AT&T within our region. We believe our markets are
strategically attractive because of their proximity to AT&T Wireless' systems in
the Washington, D.C., Charlotte, North Carolina and Atlanta, Georgia markets,
which collectively cover a population of more than 28.5 million. In addition, we
are the preferred provider of wireless mobility services to AT&T Wireless'
digital wireless customers who roam into our markets. Our strategy is to provide
extensive coverage to customers within our region, to offer our customers
coast-to-coast coverage and to benefit from roaming revenues generated by AT&T
Wireless' and other carriers' wireless customers who roam into our covered
areas.
As of December 31, 2001, we had successfully launched personal communications
services in all of our 37 markets. Our network in these markets includes 2,153
cell sites and seven switches. Our markets have attractive demographic
characteristics for wireless communications services and include 10 of the top
100 markets in the country with population densities that are 80% greater than
the national average. Since we began offering services in these 37 markets, our
subscriber base and the number of minutes generated by non-Triton subscribers
roaming onto our network have grown dramatically.
From our initial launch of personal communications services in January 1999 to
June 30, 2002, our subscriber base has grown from 33,844 subscribers to 763,525
subscribers. Roaming minutes generated by non-Triton subscribers since January
1999 have increased from approximately 0.7 million minutes per month to a high,
in June 2002, of 83.2 million minutes per month. Roaming minutes for the second
quarter of 2002 were 234.8 million, which represents a 51.1% increase over the
second quarter of 2001.
9
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2002 COMPARED TO THE THREE MONTHS ENDED JUNE 30,
2001
Subscribers
Net subscriber additions were 44,327 for the three months ended June 30, 2002,
bringing our total subscribers to 763,525 as of June 30, 2002, an increase of
36.2% over our subscriber total as of June 30, 2001. The increase in subscribers
was primarily due to continued strong demand for our digital service offerings
and pricing plans. During the three months ended June 30, 2002, 100% of our
gross subscriber additions were post - pay on a one or two year service
contract.
Churn
Subscriber churn was 2.0% and 1.9% for the three months ended June 30, 2002 and
2001, respectively. We believe that our churn rate remains consistently low due
to our high-quality system performance, our commitment to quality customer
service and our focused collection efforts.
Average Revenue Per User
Average revenue per user was $58.42 and $60.75 for the three months ended June
30, 2002 and 2001, respectively. We continue to focus on attracting new
customers with rate plans that provide more value to the customer at a higher
average customer bill. The $2.33 decrease, or 3.8%, was primarily the result of
changes to our rate plans offered.
Revenues
Total revenue increased 36.1% to $184.7 million for the three months ended June
30, 2002, from $135.7 million for the three months ended June 30, 2001. Service
revenue for the three months ended June 30, 2002 was $129.9 million, an increase
of $33.1 million, or 34.2%, compared to $96.8 million for the three months ended
June 30, 2001. The increase in service revenue was due primarily to strong
growth in credit worthy subscribers. Equipment revenue was $9.3 million for the
three months ended June 30, 2002, an increase of $2.8 million, or 43.1%,
compared to $6.5 million for the three months ended June 30, 2001. The equipment
revenue increase was due primarily to an increase in the average revenue per
item sold.
Roaming revenue was $45.5 million for the three months ended June 30, 2002, an
increase of $13.2 million, or 40.9%, compared to $32.3 million for the three
months ended June 30, 2001. The increase in roaming revenue was due to increased
roaming minutes of use resulting from the expansion of our network, as well as
the implementation of new roaming agreements with such carriers as Cingular
Wireless LLC. Roaming minutes per cell site increased to 36,918 per month for
the three months ended June 30, 2002, from 28,402 minutes per month for the
three months ended June 30, 2001.
Cost of Service and Equipment
Cost of service was $52.9 million for the three months ended June 30, 2002, an
increase of $9.4 million, or 21.6%, compared to $43.5 million for the three
months ended June 30, 2001. Approximately 24% of the increase was due to an
increase in the costs to expand our network due to a growing number of
subscribers and roamer minutes of use. The remaining increase, of approximately
76%, was the result of an increase in the charges paid to connect calls on other
networks, including access, interconnection and toll related charges. Cost of
service as a percentage of revenue, excluding equipment revenue, was 30.2% and
33.7% for the three months ended June 30, 2002 and 2001, respectively. The
decrease of 350 basis points is primarily attributable to increased leverage on
fixed interconnect and cell site costs.
Cost of equipment was $20.3 million for the three months ended June 30, 2002, an
increase of $2.1 million, or 11.5%, compared to $18.2 million for the three
months ended June 30, 2001. The increase in cost of equipment is primarily
attributable to a higher average cost per handset as the result of the mix of
equipment sold. Inventory turned on average 30% a month during the three months
ended June 30, 2002, as compared to 28% a month during the three months ended
June 30, 2001. Inventory turnover remained strong as the result of offering a
wide array of quality handsets manufactured by Nokia, Motorola, Sony Ericsson
and Panasonic.
10
Selling and Marketing Expense
Selling and marketing expense was $28.2 million for the three months ended June
30, 2002, an increase of $0.7 million, or 2.5%, compared to $27.5 million for
the three months ended June 30, 2001. The increase was primarily due to
increased commission expense as the result of sales through the agent channel
increasing as a percentage of total gross additions, partially offset by a
decrease in advertising and promotional spending.
General and Administrative Expense
General and administrative expense was $37.4 million for the three months ended
June 30, 2002, an increase of $6.2 million, or 19.9%, compared to $31.2 million
for the three months ended June 30, 2001. The increase was primarily due to the
development and growth of infrastructure and staffing related to customer care,
billing, collections and retention in conjunction with the corresponding growth
in our subscriber base. General and administrative expenses as a percentage of
revenue, excluding equipment revenue, was 21.3% and 24.2% for the three months
ended June 30, 2002 and 2001, respectively. The decrease of 290 basis points is
primarily attributable to increased customer care efficiency and focused
management of variable costs such as bad debt and subscriber retention spending.
EBITDA Excluding Amortization of Non-Cash Compensation
EBITDA excluding amortization of non-cash compensation represents operating loss
plus depreciation and amortization expense and non-cash compensation expense
("EBITDA"). We believe EBITDA provides meaningful additional information on our
operating results and on our ability to service our long-term debt and other
fixed obligations as well as our ability to fund our continued growth. EBITDA is
considered by many financial analysts to be a meaningful indicator of an
entity's ability to meet its future financial obligations. Growth in EBITDA is
considered to be an indicator of future profitability, especially in a
capital-intensive industry such as wireless telecommunications. EBITDA should
not be construed as an alternative to operating income (loss) or to cash flows
from operating activities as determined in accordance with United States GAAP,
or as a measure of liquidity. EBITDA was $46.0 million and $15.3 million for the
three months ended June 30, 2002 and 2001, respectively. The increase of $30.7
million resulted primarily from the items discussed above.
Non-cash Compensation Expense
Non-cash compensation expense was $5.3 million for the three months ended June
30, 2002, an increase of $0.9 million, or 20.5%, compared to $4.4 million for
the three months ended June 30, 2001. The increase is attributable to the
vesting of an increased number of restricted shares of Class A common stock
awarded to management in prior periods.
Depreciation and Amortization Expense
Depreciation and amortization expense was $33.0 million for the three months
ended June 30, 2002, an increase of $2.9 million, or 9.6%, compared to $30.1
million for the three months ended June 30, 2001. The increase relates primarily
to increased depreciation expense due to the growth in the depreciable asset
base resulting from capital expenditures, partially offset by the effect of
ceasing amortization on our FCC licenses, which was approximately $1.7 million
for the three months ended June 30, 2001, in accordance with SFAS No. 142,
"Goodwill and Other Intangible Assets".
Interest Income and Expense
Interest and other expense was $40.0 million, net of capitalized interest of
$1.0 million, for the three months ended June 30, 2002. Interest and other
expense was $29.4 million, net of capitalized interest of $2.0 million, for the
three months ended June 30, 2001. The increase of $10.6 million, or 36.1%,
relates partially to interest expense on our November 2001 private placement of
$400.0 million aggregate principal amount of 8 3/4% senior subordinated notes,
offset partially by a decrease of interest expense on our bank credit facility.
The aggregate interest expense of these debt instruments increased from $10.4
million for the three months ended June 30, 2001 to $15.4 million for the three
months ended June 30, 2002. Interest and other expense also increased
approximately $2.7 million as the result of higher accretion of interest on our
May 1998 private placement of $512.0 million aggregate principal amount of 11%
senior subordinated discount notes, a greater loss in non-consolidated entities
and a decrease in capitalized interest for the three months ended June 30, 2002.
There was also a $2.4 million loss recognized as the result of the change in
fair value of our interest rate swap derivative instruments, which did not
qualify as hedges, for the three months ended June 30, 2002. For the three
months ended June 30, 2002, we had a weighted average interest rate of 9.69% on
our average
11
borrowings under our bank credit facility and our average obligation for the
senior subordinated debt, as compared with the 9.38% weighted average interest
rate for the three months ended June 30, 2001.
Interest and other income was $1.7 million for the three months ended June 30,
2002, a decrease of $4.3 million, or 71.7%, compared to $6.0 million for the
three months ended June 30, 2001. The decrease was due primarily to the
combination of lower average interest rates on lower average cash balances.
Net Loss
Net loss was $30.6 million and $42.7 million for the three months ended June 30,
2002 and 2001, respectively. The net loss decrease of $12.1 million resulted
primarily from the items discussed above.
SIX MONTHS ENDED JUNE 30, 2002 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 2001
Subscribers
Net subscriber additions were 77,872 for the six months ended June 30, 2002,
bringing our total subscribers to 763,525 as of June 30, 2002, an increase of
36.2% over our subscriber total as of June 30, 2001. The increase in subscribers
was primarily due to continued strong demand for our digital service offerings
and pricing plans. During the six months ended June 30, 2002, 100% of our gross
subscriber additions were post-pay on a one or two year service contract.
Churn
Subscriber churn was 2.0% and 1.9% for the six months ended June 30, 2002 and
2001, respectively. We believe that our churn rate remains consistently low due
to our high quality system performance, our commitment to quality customer
service and our focused collection efforts.
Average Revenue Per User
Average revenue per user was $57.01 and $59.27 for the six months ended June 30,
2002 and 2001, respectively. We continue to focus on attracting new customers
with rate plans that provide more value to the customer at a higher average
customer bill. The $2.26 decrease, or 3.8%, was primarily the result of changes
to our rate plans offered.
Revenues
Total revenue increased 37.7% to $342.9 million for the six months ended June
30, 2002 from $249.1 million for the six months ended June 30, 2001. Service
revenue for the six months ended June 30, 2002 was $246.9 million, an increase
of $68.1 million, or 38.1%, compared to $178.8 million for the six months ended
June 30, 2001. The increase in service revenue was due primarily to strong
growth in credit worthy subscribers. Equipment revenue was $15.3 million for the
six months ended June 30, 2002, an increase of $3.2 million, or 26.4%, compared
to $12.1 million for the six months ended June 30, 2001. The equipment revenue
increase was due primarily to an increase in the average revenue per item sold.
Roaming revenue was $80.6 million for the six months ended June 30, 2002, an
increase of $22.5 million, or 38.7%, compared to $58.1 million for the six
months ended June 30, 2001. The increase in roaming revenue was due to increased
roaming minutes of use resulting from the expansion of our network as well as
the implementation of new roaming agreements with such carriers as Cingular
Wireless LLC. Roaming minutes per cell site increased to 32,493 per month, for
the six months ended June 30, 2002, from 25,891 minutes per month for the six
months ended June 30, 2001.
Cost of Service and Equipment
Cost of service was $100.8 million for the six months ended June 30, 2002, an
increase of $20.7 million, or 25.8%, compared to $80.1 million for the six
months ended June 30, 2001. Approximately 28% of the increase was due to an
increase in the costs to expand our network due to a growing number of
subscribers and roamer minutes of use. The remaining increase, of approximately
72%, was the result of an increase in the charges paid to connect calls on other
networks, including access, interconnection and toll related charges. Cost of
service as a percentage of revenue, excluding equipment revenue, was 30.8% and
33.8% for the six months ended June 30, 2002 and 2001, respectively. The
decrease of 300 basis points is primarily attributable to increased leverage on
fixed interconnect and cell site costs.
12
Cost of equipment was $35.5 million for the six months ended June 30, 2002, an
increase of $1.9 million, or 5.7%, compared to $33.6 million for the six months
ended June 30, 2001. The increase in cost of equipment is attributable to a
higher average cost per handset as the result of the mix of equipment sold.
Inventory turned on average 22% a month during the six months ended June 30,
2002 as compared to 29% a month during the six months ended June 30, 2001. The
decline in inventory turn is based upon an elevated inventory balance as of
December 31, 2001.
Selling and Marketing Expense
Selling and marketing expense was $53.4 million for the six months ended June
30, 2002, an increase of $2.6 million, or 5.1%, compared to $50.8 million for
the six months ended June 30, 2001. The increase was primarily due to increased
commission expense as the result of sales through the agent channel increasing
as a percentage of total gross additions, partially offset by a decrease in
advertising and promotional spending.
General and Administrative Expense
General and administrative expense was $71.1 million for the six months ended
June 30, 2002, an increase of $12.4 million, or 21.1%, compared to $58.7 million
for the six months ended June 30, 2001. The increase was primarily due to the
development and growth of infrastructure and staffing related to customer care,
billing, collections and retention in conjunction with the corresponding growth
in our subscriber base. General and administrative expenses as a percentage of
revenue, excluding equipment revenue, was 21.7% and 24.8% for the six months
ended June 30, 2002 and 2001, respectively. The decrease of 310 basis points is
primarily attributable to increased customer care efficiency and focused
management of variable costs such as bad debt and subscriber retention spending.
EBITDA Excluding Amortization of Non-Cash Compensation
EBITDA excluding amortization of non-cash compensation represents operating loss
plus depreciation and amortization expense and non-cash compensation expense
("EBITDA"). We believe EBITDA provides meaningful additional information on our
operating results and on our ability to service our long-term debt and other
fixed obligations as well as our ability to fund our continued growth. EBITDA is
considered by many financial analysts to be a meaningful indicator of an
entity's ability to meet its future financial obligations. Growth in EBITDA is
considered to be an indicator of future profitability, especially in a
capital-intensive industry such as wireless telecommunications. EBITDA should
not be construed as an alternative to operating income (loss) or to cash flows
from operating activities as determined in accordance with United States GAAP,
or as a measure of liquidity. EBITDA was $82.0 million and $25.7 million for the
six months ended June 30, 2002 and 2001, respectively. The increase of $56.3
million resulted primarily from the items discussed above.
Non-cash Compensation Expense
Non-cash compensation expense was $10.6 million for the six months ended June
30, 2002, an increase of $3.9 million, or 58.2%, compared to $6.7 million for
the six months ended June 30, 2001. The increase is attributable to the vesting
of an increased number of restricted shares of Class A common stock awarded to
management in prior periods.
Depreciation and Amortization Expense
Depreciation and amortization expense was $64.4 million for the six months ended
June 30, 2002, an increase of $4.2 million, or 7.0%, compared to $60.2 million
for the six months ended June 30, 2001. The increase relates primarily to
increased depreciation expense due to the growth in the depreciable asset base
resulting from capital expenditures, partially offset by the effect of ceasing
amortization on our FCC licenses, which was approximately $3.5 million for the
six months ended June 30, 2001, in accordance with SFAS No. 142, "Goodwill and
Other Intangible Assets".
Interest Income and Expense
Interest and other expense was $73.3 million, net of capitalized interest of
$2.2 million, for the six months ended June 30, 2002. Interest and other expense
was $56.2 million, net of capitalized interest of $3.5 million, for the six
months ended June 30, 2001. The increase of $17.1 million, or 30.4%, relates
primarily to increases of interest expense on our January 2001 private placement
of $350.0 million aggregate principal amount of 9 3/8% senior subordinated notes
and our November 2001 private placement of $400.0 million aggregate principal
amount of 8 3/4% senior subordinated notes, offset partially by a decrease of
interest expense on our bank credit facility. The aggregate interest expense of
these debt instruments increased from $35.0 million for the six months ended
June 30, 2001 to $47.1 million for the six
13
months ended June 30, 2002. The remaining increase in interest and other expense
was due primarily to increases in the accretion of interest on our May 1998
private placement of $512.0 million aggregate principal amount of 11% senior
subordinated discount notes, our loss in non-consolidated entities and a
decrease in capitalized interest. For the six months ended June 30, 2002, we had
a weighted average interest rate of 9.67% on our average borrowings under our
bank credit facility and our average obligation for the senior subordinated
debt, as compared with the 9.58% weighted average interest rate for the six
months ended June 30, 2001.
Interest and other income was $4.2 million for the six months ended June 30,
2002, a decrease of $7.0 million, or 62.5%, compared to $11.2 million for the
six months ended June 30, 2001. The decrease was due primarily to the
combination of lower average interest rates on lower average cash balances,
offset by a $0.8 million of gain resulting from the change in fair value of our
interest rate swap derivative instruments, which did not qualify as hedges.
Net Loss
Net loss was $62.1 million and $86.2 million for the six months ended June 30,
2002 and 2001, respectively. The net loss decrease of $24.1 million resulted
primarily from the items discussed above.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 2002, we had $320.9 million in cash and cash equivalents, as
compared to $371.1 million in cash and cash equivalents at December 31, 2001.
Net working capital was $278.3 million as of June 30, 2002 and $283.3 million as
of December 31, 2001.
Net Cash Provided by Operating Activities
The $25.7 million of cash provided by operating activities during the six month
period ended June 30, 2002 was the result of our net loss of $62.1 million and
$19.5 million of cash used by changes in working capital and other long-term
assets, offset by $107.3 million of depreciation and amortization, accretion of
interest, loss in equity investment, non-cash compensation, bad debt expense,
loss on disposal of fixed assets and gain on non-hedging interest rate swap
derivative instruments.
Net Cash Used in Investing Activities
The $67.6 million of cash used by investing activities during the six month
period ended June 30, 2002 was primarily related to $64.9 million of capital
expenditures associated with our network expansion and the acquisition of FCC
licenses for $21.3 million, partially offset by the net repayment of $18.5
million of senior loans by Lafayette Communications Company, L.L.C., an entity
in which we hold a 39% interest. The capital expenditures were made primarily to
expand and enhance our wireless network in order to increase capacity and to
satisfy subscriber needs and competitive requirements. We will continue to
upgrade our network to support future technological advances.
Net Cash Used in Financing Activities
The $8.2 million of cash used by financing activities during the six month
period ended June 30, 2002 was primarily related to our $6.3 million payment on
our credit facility and the payment of $1.5 million of deferred financing costs.
Liquidity
On June 11, 2002, we entered into a definitive agreement to acquire personal
communications services licenses from Lafayette in several markets in our
territory for an aggregate purchase price of $23.5 million. The transaction,
which requires FCC approval, is expected to close in the second half of 2002.
We believe that cash on hand and available credit facility borrowings will be
sufficient to meet our projected capital requirements, however, it is possible
that additional financing may be needed. Our credit facility will permit us,
subject to various terms and conditions, including compliance with specified
leverage ratios, to borrow up to $478.8 million to finance working capital
requirements, capital expenditures, permitted acquisitions and other corporate
purposes. Our borrowings under this facility are subject to customary terms and
conditions. As of June 30, 2002, we had outstanding borrowings of $178.8 million
and could have borrowed up to an additional $300.0 million under our credit
facility.
INFLATION
We do not believe that inflation has had a material impact on our operations.
14
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are highly leveraged and, as a result, our cash flows and earnings are
exposed to fluctuations in interest rates. Our debt obligations are U.S. dollar
denominated. Our market risk, therefore, is the potential loss arising from
adverse changes in interest rates. As of June 30, 2002, our outstanding debt can
be categorized as follows (dollars in thousands):
Fixed interest rates:
Senior subordinated notes ... $1,192,832
Subject to interest rate fluctuations:
Bank credit facility ........ $ 178,750
Our interest rate risk management program focuses on minimizing exposure to
interest rate movements, setting an optimal mixture of floating and fixed rate
debt and minimizing liquidity risk. To the extent possible, we manage interest
rate exposure and the floating to fixed ratio through Triton PCS's borrowings,
but sometimes we may use interest rate swaps to adjust our risk profile. We
selectively enter into interest rate swaps to manage interest rate exposure
only.
We utilize interest rate swaps to hedge against the effect of interest rate
fluctuations on our senior debt portfolio. Swap counter parties are major
commercial banks. Through June 30, 2002, we had entered into thirteen interest
rate swap transactions having an aggregate non-amortizing notional amount of
$480.0 million. Under these interest rate swap contracts, we agree to pay an
amount equal to a specified fixed-rate of interest times a notional principal
amount and to receive in turn an amount equal to a specified variable-rate of
interest times the same notional amount. The notional amounts of the contracts
are not exchanged. Net interest positions are settled quarterly. A 100 basis
point fluctuation in market rates would not have a material effect on our
overall financial condition.
Our cash and cash equivalents consist of short-term assets having initial
maturities of three months or less. While these investments are subject to a
degree of interest rate risk, it is not considered to be material relative to
our overall investment income position.
15
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Triton entered into Director Stock Award Agreements with its four
independent directors - Scott I. Anderson, John D. Beletic, Arnold L.
Chavkin and Rohit M. Desai. Each independent director received an award
of 11,250 shares of Class A common stock for service on the Board of
Directors and an additional 6,250 shares for service on each of the
audit committee and the compensation committee. Accordingly,
Mr. Anderson and Mr. Beletic each received total awards of 17,500 shares
under agreements dated as of June 24, 2002, recognizing their service on
the audit committee and the compensation committee, respectively, and
Mr. Chavkin and Mr. Desai each received a total award of 23,750 shares
under agreements dated as of July 1, 2002, recognizing their service on
both committees. Each award vests in equal installments over a five-year
period, with the first installment vesting on June 1, 2003. The
agreements provide that vesting will accelerate upon a change of
control, as defined in the agreements. Upon each director's termination
of service as a member of Triton's Board of Directors for any reason,
the director has agreed to forfeit any unvested shares, subject to the
exception that if the director is not nominated to serve as a member of
the Board of Directors when his term expires or if nominated, does not
receive the requisite vote to be elected, the director will be deemed to
have served on the Board of Directors as of the vesting date closest to
the relevant annual meeting of Triton's stockholders. The awards were
made pursuant to the exemption from registration provided by Section
4(2) of the Securities Act of 1933, as transactions not involving any
public offering.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Triton held its Annual Meeting of Stockholders on May 15, 2002, at which
the stockholders elected three Class III directors and ratified the
selection of PricewaterhouseCoopers LLP as Triton's independent auditors
for the year ending December 31, 2002.
The following table sets forth the names of the nominees for director
and the votes for and withheld with respect to each such nominee:
Nominee For Withheld
------- --- --------
Michael E. Kalogris 45,522,802 488,389
Steven R. Skinner 45,522,172 489,019
Rohit M. Desai 45,824,827 186,364
In connection with the ratification of the selection of
PricewaterhouseCoopers LLP as the independent auditors for Triton for
the year ended December 31, 2002, 45,502,072 shares were voted in favor
of the ratification, 507,543 against the ratification and 1,576
abstained.
ITEM 5. OTHER INFORMATION
Effective as of August 6, 2002, William Hague resigned from Triton's
Board of Directors, and pursuant to Section 5.4 of Triton's Second
Restated Certificate of Incorporation and Section 2.14 of Triton's
Second Amended and Restated Bylaws, AT&T Wireless PCS LLC appointed
Mr. Robert W. Stokes, Jr. as a replacement for Mr. Hague. Mr. Hague did
not resign because of a disagreement with Triton on any matter relating
to Triton's operations, policies or practices. Triton's Board of
Directors caused Mr. Stokes to be elected for the remainder of
Mr. Hague's term at a duly convened meeting of the Board of Directors on
August 6, 2002.
16
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------ -----------
3.1 Second Restated Certificate of Incorporation of Triton PCS
Holdings, Inc. (incorporated by reference to Exhibit 3.4 to
the Form 10-Q of Triton PCS Holdings, Inc. for the quarter
ended September 30, 1999).
3.2 Second Amended and Restated Bylaws of Triton PCS Holdings,
Inc. (incorporated by reference to Exhibit 3.6 to the Form
10-Q of Triton PCS Holdings, Inc. for the quarter ended
September 30, 1999).
4.1 Specimen Common Stock Certificate (incorporated by
reference to Exhibit 4.1 to Amendment No. 3 to the Form S-1
Registration Statement of Triton PCS Holdings, Inc., File
No. 333-85149).
4.2 Indenture, dated as of May 4, 1998, between Triton PCS,
Inc., the Guarantors party thereto and PNC Bank, National
Association (incorporated by reference to Exhibit 4.1 of
the Form S-4 Registration Statement of Triton PCS, Inc. and
its subsidiaries, File No. 333-57715).
4.3 First Supplemental Indenture, dated as of March 30, 1999,
to the Indenture dated as of May 4, 1998 (incorporated by
reference to Exhibit 4.1 to the Form 10-Q of Triton PCS,
Inc. and its subsidiaries for the quarter ended March 31,
1999).
4.4 Second Supplemental Indenture, dated as of December 21,
1999, to the Indenture dated as of May 4, 1998
(incorporated by reference to Exhibit 4.4 to Amendment No.
2 to the Form S-3 Registration Statement of Triton PCS
Holdings, Inc., File No. 333-49974).
4.5 Agreement of Resignation, Appointment and Acceptance, dated
as of January 18, 2001, by and among Triton PCS, Inc.,
Chase Manhattan Trust Company, National Association, as
prior trustee and successor to PNC Bank, National
Association, and The Bank of New York, as successor trustee
under the Indenture dated as of May 4, 1998 (incorporated
by reference to Exhibit 4.5 to the Form 10-Q of Triton PCS
Holdings Inc. for the quarter ended June 30, 2001).
4.6 Indenture, dated as of January 19, 2001, among Triton PCS,
Inc., the Guarantors party thereto and The Bank of New York
(incorporated by reference to Exhibit 4.5 to Amendment No.
2 to the Form S-3 Registration Statement of Triton PCS
Holdings, Inc., File No. 333-49974).
4.7 Indenture, dated as of November 14, 2001, among Triton PCS,
Inc., The Guarantors thereto and The Bank of New York, as
trustee (incorporated by reference to Exhibit 4.1 to the
Form 8-K/A of Triton PCS Holdings, Inc. filed November 15,
2001).
4.8 First Amended and Restated Stockholders' Agreement, dated
as of October 27, 1999, among AT&T Wireless PCS, L.L.C.,
Triton PCS Holdings, Inc., the cash equity investor party
thereto, the management stockholders party thereto and the
independent directors party thereto (incorporated by
reference to Exhibit 10.47 to the Form 10-Q of Triton PCS
Holdings, Inc. for the quarter ended September 30, 1999).
4.9 Amendment No. 1 to First Amended and Restated Stockholders'
Agreement, dated as of April 4, 2002, among AT&T Wireless
PCS, L.L.C., Triton PCS Holdings, Inc., the cash equity
investor party thereto, the management stockholders party
thereto and the independent directors party thereto.
4.10 Investors Stockholders' Agreement, dated as of February 4,
1998, among CB Capital Investors, L.P., J.P. Morgan
Investment Corporation, Ninety Wall Street SBIC Fund, L.P.,
Private Equity Investors III, L.P., Equity-Linked
Investors-II, Toronto Dominion Capital (USA), Inc.,
DAG-Triton PCS, L.P., First Union Capital Partners, Inc.,
and the stockholders named therein (incorporated by
reference to Exhibit 10.10 to the Form S-4 Registration
Statement of Triton PCS, Inc. and its subsidiaries, File
No. 333-57715).
17
4.11 Amendment No. 1 to Investors Stockholders' Agreement, dated
as of October 27, 1999, among CB Capital Investors, L.P.,
J.P. Morgan Investment Corporation, Ninety Wall Street SBIC
Fund, L.P., Private Equity Investors III, L.P.,
Equity-Linked Investors-II, Toronto Dominion Capital (USA),
Inc., DAG-Triton PCS, L.P., First Union Capital Partners,
Inc., and the stockholders named therein (incorporated by
reference to Exhibit 10.48 to the Form 10-Q of Triton PCS
Holdings, Inc. for the quarter ended September 30, 1999).
10.1 Amendment No. 3 to Network Membership License Agreement,
dated as of April 4, 2002, between AT&T Corp. and Triton
PCS Operating Company L.L.C.
10.2 Amendment No. 3 to Intercarrier Roamer Service Agreement,
dated as of April 4, 2002, between AT&T Wireless Services,
Inc. and Triton PCS Operating Company L.L.C.
+ 10.3 Fourth Addendum to Acquisition Agreement, effective as of
September 21, 2001, between Triton PCS Equipment Company
L.L.C. and Ericsson Inc.
+ 10.4 Master Purchase Agreement, effective as of September 21,
2001, between Ericsson Inc. and Triton PCS Equipment
Company L.L.C.
+ 10.5 Statement of Work No. 1, effective as of September 21,
2001, between Triton PCS Equipment Company L.L.C. and
Ericsson Inc.
+ 10.6 Statement of Work No. 2, effective as of April 10, 2002,
between Triton PCS Equipment Company L.L.C. and Ericsson
Inc.
+ 10.7 Purchase and License Agreement, effective as of May 16,
2002, between Triton PCS Equipment Company L.L.C. and
Nortel Networks Inc.
+ 10.8 GSM/GPRS Supplement to the Purchase and License Agreement,
effective as of May 16, 2002, between Triton PCS Equipment
Company L.L.C. and Nortel Networks Inc.
10.9 Form of Director Stock Award Agreement, as amended.
10.10 Agreement for Purchase and Sale of FCC License, dated as of
July 25, 2002, by and between AT&T Wireless PCS, Inc., AT&T
Wireless Services, Inc., Triton PCS, Inc. and Triton PCS
License Company L.L.C.
99.1 Certification of Chief Executive Officer Pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
99.2 Certification of Chief Financial Officer Pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
(b) REPORTS ON FORM 8-K
None.
+ Portions of this exhibit have been omitted pursuant to a request for
confidential treatment, and the omitted portions have been filed separately
with the Securities and Exchange Commission.
18
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TRITON PCS HOLDINGS, INC.
Date: August 12, 2002 By: /s/ Michael E. Kalogris
---------------------------------------
Michael E. Kalogris
Chief Executive Officer
(principal executive officer)
Date: August 12, 2002 By: /s/ David D. Clark
---------------------------------------
David D. Clark
Executive Vice President and Chief
Financial Officer (principal financial
officer)
19