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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 15, 2001.
REGISTRATION NO. 333-67068
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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AT&T WIRELESS SERVICES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 4812 91-1379052
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
7277 164TH AVENUE NE, BUILDING 1
REDMOND, WASHINGTON 98052
(425) 580-6000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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GREGORY P. LANDIS
SENIOR VICE PRESIDENT AND GENERAL COUNSEL
AT&T WIRELESS SERVICES, INC.
7277 164TH AVENUE NE, BUILDING 1
REDMOND, WASHINGTON 98052
(425) 580-6000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
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COPIES TO:
STEWART M. LANDEFELD
PERKINS COIE LLP
1201 THIRD AVENUE, SUITE 4800
SEATTLE, WASHINGTON 98101-3099
(206) 583-8888
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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PROSPECTUS
AT&T WIRELESS SERVICES, INC.
OFFER TO EXCHANGE
7.350% SENIOR NOTES DUE 2006
7.875% SENIOR NOTES DUE 2011
8.750% SENIOR NOTES DUE 2031
THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
FOR ANY AND ALL OF ITS OUTSTANDING
7.350% SENIOR NOTES DUE 2006
7.875% SENIOR NOTES DUE 2011
8.750% SENIOR NOTES DUE 2031
THAT WERE ISSUED AND SOLD IN A TRANSACTION EXEMPT FROM REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED
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AT&T Wireless Services, Inc., a Delaware corporation, hereby offers to
exchange, upon the terms and conditions set forth in this prospectus and the
accompanying letter of transmittal, up to $1,000,000,000 in aggregate principal
amount of its 7.350% senior notes due 2006, up to $3,000,000,000 in aggregate
principal amount of its 7.875% senior notes due 2011 and up to $2,500,000,000 in
aggregate principal amount of its 8.750% senior notes due 2031, which we refer
to as the "exchange notes," for the same principal amount of its outstanding
7.350% senior notes due 2006, 7.875% senior notes due 2011 and 8.750% senior
notes due 2031, which we refer to as the "original notes."
The terms of the exchange notes are substantially identical to the terms of
the original notes, except that the exchange notes will generally be freely
transferable and do not contain certain terms with respect to additional
interest. We will issue the exchange notes under the indenture governing the
original notes. For a description of the principal terms of the exchange notes,
see "Description of the Notes."
THIS EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M. NEW YORK CITY TIME, ON
SEPTEMBER 19, 2001, UNLESS WE EXTEND THE OFFER. At any time prior to the
expiration date, you may withdraw your tender and any original notes at any time
prior to the expiration date; otherwise, such tender is irrevocable. We will
receive no cash proceeds from this exchange offer.
The exchange notes constitute a new issue of securities for which there is
no established trading market. Any original notes not tendered and accepted in
this exchange offer will remain outstanding. To the extent original notes are
tendered and accepted in this exchange offer, your ability to sell untendered,
and tendered but unaccepted, original notes could be adversely affected.
Following consummation of this exchange offer, the original notes will continue
to be subject to their existing transfer restrictions and we will have no
further obligations to provide for the registration of the original notes under
the Securities Act of 1933, as amended. We cannot guarantee that an active
trading market will develop or give assurances as to the liquidity of the
trading market for either the original notes or the exchange notes.
This prospectus, as it may be amended or supplemented from time to time,
may be used by a broker-dealer in connection with resales of exchange notes
received for original notes that were acquired by such broker-dealer for its own
account as a result of market-making activities or other trading activities. We
have agreed that, starting on the expiration date of the exchange offer and
ending on the close of business on the 240th day after the expiration date of
the exchange offer, we will make copies of this prospectus available to any
broker-dealer for use in connection with any such resale, provided a
broker-dealer has notified us either in the letter of transmittal or otherwise
within 30 days after consummation of the exchange offer that it holds exchange
notes as a result of market-making or other trading activities.
INVESTING IN THE EXCHANGE NOTES INVOLVES CERTAIN RISKS. PLEASE READ "RISK
FACTORS" BEGINNING ON PAGE 11 OF THIS PROSPECTUS.
This prospectus and the letter of transmittal are first being mailed to all
holders of the original notes on August 20, 2001.
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NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR
DISAPPROVED OF THE EXCHANGE NOTES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL
OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is August 15, 2001.
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FORWARD-LOOKING INFORMATION
This document and other documents which we incorporate herein by reference
contain forward-looking statements with respect to:
- our relationship with AT&T Corp., our former parent,
- financial condition,
- results of operations,
- cash flows,
- financing plans,
- business strategies,
- operating efficiencies or synergies,
- budgets,
- capital and other expenditures,
- network build out and upgrade,
- competitive positions,
- availability of capital,
- growth opportunities for existing products,
- our acquisition and growth strategy,
- benefits from new technologies,
- availability and deployment of new technologies,
- plans and objectives of management, and
- other matters.
Statements in this document, or that are incorporated by reference into this
document, that are not historical facts are hereby identified as
"forward-looking statements." These forward-looking statements, including,
without limitation, those relating to the future business prospects, revenues,
working capital, liquidity, capital needs, network build out, interest costs and
income, in each case, relating to us, wherever they occur in this document or in
any document incorporated herein by reference, are necessarily estimates
reflecting the best judgment of senior management and involve a number of risks
and uncertainties that could cause actual results to differ materially from
those suggested by the forward-looking statements. These forward-looking
statements should, therefore, be considered in light of various important
factors, including those set forth in this document. Important factors that
could cause actual results to differ materially from estimates or projections
contained in the forward-looking statements include, without limitation:
- the risks associated with the implementation of a third-generation
network and business strategy, including risks relating to the operations
of new systems and technologies, substantial required expenditures and
potential unanticipated costs, the need to enter into roaming agreements
with third parties, uncertainties regarding the adequacy of suppliers on
whom we must rely to provide both network and consumer equipment and
consumer acceptance of the products and services to be offered;
- the potential impact of NTT DoCoMo's investment in us, including
provisions of the agreements that restrict our future operations, and
provisions that may require the repurchase of DoCoMo's investment if we
fail to meet specified conditions;
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- the risks associated with our operating as an independent entity as
opposed to as part of an integrated telecommunications provider with
AT&T, our former parent, including the inability to rely on the financial
and operational resources of the combined company and having to provide
services that were previously provided by a different part of the
combined company;
- the impact of existing and new competitors in the markets in which we
compete, including competitors that may offer less expensive products and
services, desirable or innovative products, technological substitutes, or
have extensive resources or better financing;
- the introduction or popularity of new products and services, including
prepaid phone products, which could increase churn;
- the impact of oversupply of capacity resulting from excessive deployment
of network capacity in the markets we serve;
- the ongoing global and domestic trend towards consolidation in the
telecommunications industry, which trend may have the effect of making
our competitors larger and better financed and afford these competitors
with extensive resources and greater geographic reach, allowing them to
compete more effectively;
- the effects of vigorous competition in the markets in which we operate
and for more valuable customers, which may decrease prices charged,
increase churn and change the customer mix, profitability and average
revenue per user;
- the ability to enter into agreements to provide, and the cost of entering
new markets necessary to provide, nationwide services;
- the ability to establish a significant market presence in new geographic
and service markets;
- the availability and cost of capital and the consequences of increased
leverage;
- the impact of any unusual items resulting from ongoing evaluations of our
business strategies;
- the requirements imposed on us or latitude allowed to competitors by the
FCC or state regulatory commissions under the Telecommunications Act of
1996 or other applicable laws and regulations;
- the risks and costs associated with the need to acquire additional
spectrum for current and future services;
- the risks associated with technological requirements, technology
substitution and changes and other technological developments;
- the results of litigation filed or to be filed against us, or of some
types of litigation filed or to be filed against AT&T for which we have
agreed to assume the liability under the split-off agreements between us
and AT&T;
- the possibility of one or more of the markets in which we compete being
impacted by changes in political, economic or other factors, such as
monetary policy, legal and regulatory changes or other external factors
over which we have no control; and
- those factors listed under "Risk Factors."
THE WORDS "ESTIMATE," "PROJECT," "INTEND," "EXPECT," "BELIEVE," "PLAN" AND
SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. THESE
FORWARD-LOOKING STATEMENTS ARE FOUND AT VARIOUS PLACES THROUGHOUT THIS DOCUMENT
AND IN DOCUMENTS INCORPORATED BY REFERENCE HEREIN. YOU ARE CAUTIONED NOT TO
PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF
THE DATE OF THIS DOCUMENT OR, AS APPLICABLE, AS OF THE DATE OF ANY SUCH DOCUMENT
INCORPORATED BY REFERENCE HEREIN. MOREOVER, IN THE FUTURE, WE MAY MAKE FORWARD
LOOKING STATEMENTS ABOUT THE MATTERS DESCRIBED IN THIS DOCUMENT OR ABOUT OTHER
MATTERS CONCERNING US.
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, prospectuses and other
information with the SEC. In addition, AT&T files annual, quarterly and special
reports, prospectuses and other information with the SEC. For so long as AT&T
Wireless Group tracking stock was outstanding, AT&T included in its SEC filings
consolidated financial statements of AT&T and combined financial statements of
AT&T Wireless Group. You may read and copy any reports, statements or other
information that AT&T or we file at the SEC's public reference rooms at 450
Fifth Street NW, Washington, D.C. 20549, 7 World Trade Center, Suite 1300, New
York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. These SEC filings are also available
to the public from commercial document retrieval services and at the Internet
world wide web site maintained by the SEC at www.sec.gov.
On August 8, 2001, we filed with the SEC a registration statement on Form
S-4 under the Securities Act of 1933, as amended. This prospectus does not
contain all of the information in the registration statement. We have omitted
parts of the registration statement, as permitted by the rules and regulations
of the SEC. You may inspect and copy the registration statement, including
exhibits, at the SEC's public reference facilities or its Web site. Our
statements in this prospectus about the contents of any contract or other
document are not necessarily complete. You should refer to the copy of each
contract or other document we have filed as an exhibit to the registration
statement for complete information.
The SEC allows us to "incorporate by reference" into this prospectus the
information that we file with the SEC. This means that we can disclose important
information to you by referring you to those documents. The information we
incorporate by reference is considered a part of this prospectus, and later
information that we file with the SEC will automatically update and supersede
this information. We incorporate by reference the documents listed below and any
future filings that we make with the SEC under Section 13(a), 13(c), 14 or 15(d)
of the Securities Exchange Act of 1934 until this offering is completed:
- Prospectus filed pursuant to Rule 424(b)(1) on July 9, 2001 (Commission
File Number 333-60472).
- Our Quarterly Report on Form 10-Q for the quarter ended June 30, 2001,
filed on August 14, 2001.
You can obtain any of the documents incorporated by reference through us,
the SEC or the SEC's Internet world wide web site as described above. Documents
incorporated by reference are available from us without charge, excluding
exhibits thereto unless we have specifically incorporated by reference such
exhibits in this prospectus. Any person, including any beneficial owner, to whom
this prospectus is delivered may obtain documents incorporated by reference in,
but not delivered with, this prospectus by requesting them in writing or by
telephone at the following address:
AT&T Wireless Services, Inc.
7277 164th Avenue NE, Building 1
Redmond, Washington 98052
(425) 580-6000
Attn: Corporate Secretary
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TO OBTAIN TIMELY DELIVERY, YOU MUST REQUEST THESE DOCUMENTS NO LATER THAN FIVE
BUSINESS DAYS BEFORE YOU MAKE YOUR INVESTMENT DECISION.
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
anyone else to provide you with information different from that contained in
this prospectus. We are offering to exchange original notes for exchange notes
only in jurisdictions where such offer is permitted. You should not assume that
the information in the incorporated documents, this prospectus or any prospectus
supplement is accurate as of any other date other than the date on the front of
these documents.
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PROSPECTUS SUMMARY
This summary may not contain all the information that may be important to
you. You should read the entire prospectus, including the additional documents
to which we refer you, before making an investment decision. See "Where You Can
Find More Information." In this prospectus "we," "our," "us," and "AT&T Wireless
Services" refer to AT&T Wireless Services, Inc. and its consolidated
subsidiaries. "AT&T" refers to AT&T Corp, our former parent.
AT&T WIRELESS SERVICES
We are one of the largest wireless communications service providers in the
United States. We seek to expand our customer base and revenue stream by
providing high-quality, innovative wireless services. As of June 30, 2001, we
had 16.4 million consolidated subscribers. For the year ended December 31, 2000
we had:
- $10.4 billion of consolidated revenues, and
- $658 million of consolidated net income.
We operate one of the largest U.S. digital wireless networks. As of June
30, 2001, we and our affiliates and partners held 850 megahertz and 1900
megahertz licenses to provide wireless services covering 98% of the U.S.
population. As of that date, we, our affiliates and our partners covered
approximately 83% of the U.S. population with at least 30 megahertz of wireless
spectrum. At the same date, our networks and those of our affiliates and
partners operated in markets including over 77% of the U.S. population and in
all 50 of the largest U.S. metropolitan areas. We supplement our operations with
roaming agreements that allow our subscribers to use other providers' wireless
services in regions where we do not have operations. With these roaming
agreements, we are able to offer customers wireless services covering over 95%
of the U.S. population. We plan to continue to increase our coverage and the
quality of our services by expanding our coverage area and the capacity of our
network through new network construction, acquisitions, and partnerships with
other wireless providers.
Our principal executive offices are located at 16331 NE 72 Way, Building 1,
Redmond, Washington 98052. The telephone number is (425) 580-6000.
OUR RELATIONSHIP WITH AT&T CORP.
On July 9, 2001, we split off from AT&T Corp. as an independent public
company. Prior to the split-off, our business was run as a division of AT&T
referred to as AT&T Wireless Group, the economic value of which was intended to
be reflected by AT&T Wireless Group tracking stock, which was a class of common
stock of AT&T that was listed on the New York Stock Exchange under the symbol
"AWE." AT&T Wireless Group was an integrated set of businesses, assets and
liabilities consisting of AT&T's wireless operations. We continue to have
contractual and commercial relationships with AT&T following the split-off.
Immediately after the split-off, AT&T held approximately 91 million shares or
3.6% of our stock which it intends to sell, exchange or monetize within six
months of the split-off.
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SUMMARY OF THE EXCHANGE OFFER
In March 2001, we completed a private offering of the original notes. We
received aggregate net proceeds, before expenses, of $6,448,090,000 from the
sale of the original notes.
In connection with the offering of original notes, we entered into a
registration rights agreement with the initial purchasers of the original notes
in which we agreed to use our reasonable best efforts to deliver to you this
prospectus and to commence the exchange offer for the original notes within 270
days of their issuance. In the exchange offer, you are entitled to exchange your
original notes for exchange notes, with substantially identical terms as the
original notes. The exchange notes will be accepted for clearance through The
Depository Trust Company ("DTC"), Clearstream, Luxembourg and the Euroclear
System with a new CUSIP and ISIN number and common code. You should read the
discussion under the heading "Description of the Notes" beginning on page 35 for
further information about the exchange notes. After the exchange offer is
completed, you will no longer be entitled to any exchange or, with limited
exceptions, registration rights for your original notes.
The Exchange Offer............ We are offering to exchange up to $6.5 billion
principal amount of the exchange notes for up
to $6.5 billion principal amount of the
original notes. Original notes may only be
exchanged in $1,000 increments.
The terms of the exchange notes are identical
in all material respects to those of the
original notes except the exchange notes will
not be subject to transfer restrictions and
holders of exchange notes, with limited
exceptions, will have no registration rights.
Also, the exchange notes will not include
provisions contained in the original notes that
required an increase in their stated interest
rate in the event we failed to satisfy our
registration obligations with respect to the
original notes.
Original notes that are not tendered for
exchange will continue to be subject to
transfer restrictions and, with limited
exceptions, will not have registration rights.
Therefore, the market for secondary resales of
original notes that are not tendered for
exchange is likely to be minimal.
We will issue registered exchange notes on or
promptly after the expiration of this exchange
offer.
Expiration Date............... The exchange offer will expire at 5:00 p.m. New
York City time, on September 19, 2001, unless
we decide to extend the expiration date. Please
read "The Exchange Offer -- Extensions, Delay
in Acceptance, Termination or Amendment" on
page 27 for more information about an extension
of the expiration date.
Withdrawal of Tenders......... You may withdraw your tender of original notes
at any time prior to the expiration date. We
will return to you, without charge, promptly
after the expiration or termination of the
exchange offer any original notes that you
tendered but that were not accepted for
exchange.
Conditions to the Exchange
Offer......................... We will not be required to accept original
notes for exchange:
- if the exchange offer would be unlawful or
would violate any interpretation of the staff
of the SEC, or
- if any legal action has been instituted or
threatened that would impair our ability to
proceed with the exchange offer.
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The exchange offer is not conditioned upon any
minimum aggregate principal amount of original
notes being tendered. Please read "The Exchange
Offer -- Conditions to the Exchange Offer" on
page 28 for more information about the
conditions to the exchange offer.
Procedures for Tendering
Original Notes................ If your original notes are held through The
Depositary Trust Company, or "DTC," and you
wish to participate in the exchange offer, you
may do so through DTC's automated tender offer
program. If you tender under this program, you
will agree to be bound by the letter of
transmittal that we are providing with this
prospectus as though you had signed the letter
of transmittal. By signing or agreeing to be
bound by the letter of transmittal, you will
represent to us that, among other things:
- any exchange notes that you receive will be
acquired in the ordinary course of your
business,
- you have no arrangement or understanding with
any person to participate in the distribution
of the original notes or the exchange notes,
- you are not our "affiliate," as defined in
Rule 405 of the Securities Act, or, if you
are our affiliate, you will comply with any
applicable registration and prospectus
delivery requirements of the Securities Act,
- if you are not a broker-dealer, you are not
engaged in and do not intend to engage in the
distribution of the exchange notes, and
- if you are a broker-dealer that will receive
exchange notes for your own account in
exchange for original notes that you acquired
as a result of market-making activities or
other trading activities, you will deliver a
prospectus in connection with any resale of
such exchange notes.
Special Procedures for
Beneficial Owner.............. If you own a beneficial interest in original
notes that are registered in the name of a
broker, dealer, commercial bank, trust company
or other nominee and you wish to tender the
original notes in the exchange offer, please
contact the registered holder as soon as
possible and instruct the registered holder to
tender on your behalf and to comply with our
instructions described in this prospectus.
Guaranteed Delivery
Procedures.................... You must tender your original notes according
to the guaranteed delivery procedures described
in "The Exchange Offer -- Guaranteed Delivery
Procedures" on page 31 if any of the following
apply:
- you wish to tender your original notes but
they are not immediately available,
- you cannot deliver your original notes, the
letter of transmittal or any other required
documents to the exchange agent prior to the
expiration date, or
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- you cannot comply with the applicable
procedures under DTC's automated tender offer
program prior to the expiration date.
Resales....................... Except as indicated herein, we believe that the
exchange notes may be offered for resale,
resold and otherwise transferred without
compliance with the registration and prospectus
delivery provisions of the Securities Act,
provided that:
- you are acquiring the exchange notes in the
ordinary course of your business;
- you are not participating, do not intend to
participate, and have no arrangement or
understanding with any person to participate,
in the distribution of the exchange notes;
and
- you are not an affiliate of AT&T Wireless
Services.
Our belief is based on existing interpretations
of the Securities Act by the SEC staff set
forth in several no-action letters to third
parties. We do not intend to seek our own
no-action letter, and there is no assurance
that the SEC staff would make a similar
determination with respect to the exchange
notes. If this interpretation is inapplicable,
and you transfer any exchange note without
delivering a prospectus meeting the
requirements of the Securities Act or without
an exemption from such requirements, you may
incur liability under the Securities Act. We do
not assume or indemnify holders against such
liability.
Each broker-dealer that is issued exchange
notes for its own account in exchange for
original notes that were acquired by such
broker-dealer as a result of market-making or
other trading activities must acknowledge that
it will deliver a prospectus meeting the
requirements of the Securities Act in
connection with any resale of the exchange
notes. To the extent described in "Plan of
Distribution" beginning on page 49 a
broker-dealer may use this prospectus for an
offer to resell, resale or other retransfer of
the exchange notes.
United States Federal Income
Tax Considerations............ The exchange of original notes for exchange
notes will not be a taxable exchange for United
States federal income tax purposes. Please read
"Federal Income Tax Considerations" on page 47.
Use of Proceeds............... We will not receive any proceeds from the
issuance of the exchange notes pursuant to this
exchange offer. Except as described in "The
Exchange Offer -- Transfer Taxes," we will pay
certain expenses incident to this exchange
offer.
Registration Rights........... If we fail to complete the exchange offer as
required by the registration rights agreement,
we may be obligated to pay additional interest
to holders of original notes. Please read
"Description of Notes -- Registration Rights"
beginning on page 36 for more information
regarding your rights as a holder of original
notes.
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THE EXCHANGE AGENT
We have appointed The Bank of New York as exchange agent for the exchange
offer. Please direct questions and requests for assistance, requests for
additional copies of this prospectus or of the letter of transmittal and
requests for the notice of guaranteed delivery to the exchange agent. If you are
not tendering under DTC's automated tender offer program, you should send the
letter of transmittal and any other required documents to the exchange agent as
follows:
THE BANK OF NEW YORK
By Hand or Overnight Delivery: Facsimile Transmissions: By Registered or Certified
(Eligible Institutions Only) Mail:
The Bank of New York (212) 815-6339
101 Barclay Street The Bank of New York
Corporate Trust Services Window To Confirm by Telephone Reorganization Department
Ground Level or for Information Call: 101 Barclay Street, 7E
New York, New York 10286 (212) 815-3687 New York, New York 10286
Attention: Mr. Duong Nguyen Attention: Mr. Duong Nguyen
Reorganization Section
THE EXCHANGE NOTES
The form and terms of the exchange notes to be issued in this exchange
offer are the same as the form and terms of the original notes, except that the
exchange notes will be registered under the Securities Act and, therefore, will
not bear legends restricting their transfer, will not contain terms providing
for increased interest if we fail to perform our registration obligations with
respect to the original notes, and, with limited exceptions, will not be
entitled to registration under the Securities Act. The exchange notes will
evidence the same debt as the original notes and both the original notes and the
exchange notes are governed by the same Indenture.
Securities Offered......... $6,500,000,000 in aggregate principal amount of
exchange notes, comprised of $1,000,000,000 in
principal amount of 2006 notes, $3,000,000,000 in
principal amount of 2011 notes and $2,500,000,000
in principal amount of 2031 notes.
Maturity................... The 2006 notes will mature on March 1, 2006, the
2011 notes will mature on March 1, 2011, and the
2031 notes will mature on March 1, 2031.
Interest................... 7.350% per annum for the 2006 notes, 7.875% per
annum for the 2011 notes, and 8.750% per annum for
the 2031 notes, in each case, paid every six months
on September 1 and March 1, with the first payment
on September 1, 2001 to holders of record on August
15 or February 15 immediately preceding the
interest payment date.
Optional Redemption........ We may redeem some or all of the notes at any time
at the redemption prices set forth in "Description
of Notes -- Optional Redemption."
Ranking.................... The notes are unsecured and rank equally in right
of payment with all of our other existing and
future unsubordinated, unsecured debt. The notes
will effectively rank junior to all liabilities of
our subsidiaries and future secured indebtedness.
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Certain Covenants.......... The indenture governing the notes contains
covenants limiting our ability and our
subsidiaries' ability to:
- create secured indebtedness;
- engage in sale and leaseback transactions; and
- consolidate or merge with, or sell substantially
all our assets to, another person.
You should read "Description of Notes -- Certain
Covenants" and "-- Consolidation, Merger or Sale"
for a description of these covenants.
Absence of Public Market... There is no existing market for the exchange notes
or the original notes. We cannot provide any
assurance about the liquidity of any markets that
may develop for the exchange notes or the original
notes, your ability to sell the exchange notes or
the original notes or the prices at which you will
be able to sell the exchange notes or the original
notes.
Future trading prices of the exchange notes and, if
any remain outstanding after consummation of the
exchange offer, the original notes will depend on
many factors, including prevailing interest rates,
our operating results, the ratings of the exchange
notes and the market for similar securities.
We intend to apply for listing of the exchange
notes on the Luxembourg Stock Exchange, or another
exchange that is acceptable to the initial
purchasers. There is no guarantee that we will be
listed on the Luxembourg Stock Exchange. We do not
intend to apply for listing of the exchange notes
on any other securities exchange or for quotation
of the exchange notes in any automated dealer
quotation system.
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RISK FACTORS
You should carefully consider each of the following risks and uncertainties
associated with our company and the exchange offer, as well as all of the other
information set forth in this document or incorporated by reference into this
document.
RISKS RELATING TO THE EXCHANGE OFFER
BECAUSE THERE IS NO PUBLIC MARKET FOR THE EXCHANGE NOTES, YOU MAY NOT BE ABLE TO
SELL YOUR EXCHANGE NOTES
The exchange notes will be registered under the Securities Act, but will
constitute a new issue of securities with no established trading market, and
there can be no assurance as to:
- the liquidity of any trading market that may develop;
- the ability of holders to sell their exchange notes; or
- the price at which the holders would be able to sell their exchange
notes.
If a trading market were to develop, the exchange notes might trade at
higher or lower prices than their principal amount or purchase price, depending
on many factors, including prevailing interest rates, the market for similar
securities and our financial performance.
Any market-making activity in the exchange notes will be subject to the
limits imposed by the Securities Act and the Securities Exchange Act. There can
be no assurance that an active trading market will exist for the exchange notes
or that any trading market that does develop will be liquid.
In addition, any original note holder who tenders in the exchange offer for
the purpose of participating in a distribution of the exchange notes may be
deemed to have received restricted securities, and if so, will be required to
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction.
YOUR ORIGINAL NOTES WILL NOT BE ACCEPTED FOR EXCHANGE IF YOU FAIL TO FOLLOW THE
EXCHANGE OFFER PROCEDURES
We will issue exchange notes pursuant to this exchange offer only after a
timely receipt of your original notes, a properly completed and duly executed
letter of transmittal and all other required documents. Therefore, if you want
to tender your original notes, please allow sufficient time to ensure timely
delivery. If we do not receive your original notes, letter of transmittal and
other required documents by the expiration date of the exchange offer, we will
not accept your original notes for exchange. We are under no duty to give
notification of defects or irregularities with respect to the tenders of
original notes for exchange. If there are defects or irregularities with respect
to your tender of original notes, we will not accept your original notes for
exchange.
IF YOU DO NOT EXCHANGE YOUR ORIGINAL NOTES, YOUR ORIGINAL NOTES WILL CONTINUE TO
BE SUBJECT TO THE EXISTING TRANSFER RESTRICTIONS AND YOU MAY BE UNABLE TO SELL
YOUR OUTSTANDING ORIGINAL NOTES
We did not register the original notes, nor do we intend to do so following
the exchange offer. Original notes that are not tendered will therefore continue
to be subject to the existing transfer restrictions and may be transferred only
in limited circumstances under applicable securities laws. If you do not
exchange your original notes, you will lose your right to have your original
notes registered under the federal securities laws. As a result, if you hold
original notes after the exchange offer, you may be unable to sell your original
notes.
RISK FACTORS RELATING TO THE SPLIT-OFF
WE WILL NEED TO OBTAIN FINANCING ON A STAND-ALONE BASIS
Since 1994, all of our financing has been done by AT&T at the parent level.
AT&T was able to use its overall balance sheet to finance our operations. Now,
we will have to raise financing on a stand-alone
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basis without reference to AT&T's overall balance sheet and we may not be able
to secure adequate debt or equity financing on desirable terms. If concerns
generally affecting the wireless industry arise, we will have lost the benefit
of AT&T's current diverse business profile to support our debt. The cost to us
of stand-alone financing may be materially higher than the cost of financing
that we incurred as part of AT&T.
Our credit ratings are currently and may continue to be different than the
historical ratings of AT&T. Differences in credit ratings affect the interest
rate charged on financings, as well as the amounts of indebtedness, types of
financing structures and debt markets that may be available to us. We may not be
able to raise the capital we require on desirable terms.
WE MAY BE UNABLE TO MAKE THE CHANGES NECESSARY TO OPERATE AS AN INDEPENDENT
ENTITY AND MAY INCUR GREATER COSTS
Prior to the split-off, we had been part of an integrated
telecommunications provider since our acquisition by AT&T in 1994. Now, however,
AT&T has no obligation to provide financial, operational or organizational
assistance to us other than limited services. We may not be able to implement
successfully the changes necessary to operate independently. We may also incur
additional costs relating to operating independently that would cause our cash
flow and results of operations to decline materially. In addition, although we
may be able to participate in some of AT&T's supplier arrangements where those
arrangements permit or the vendors agree, our supplier arrangements may not be
as favorable as has historically been the case.
Agreements that we entered into in connection with the split-off provide
that our business will be conducted differently and that our relationship with
AT&T will be different from what it has historically been. These differences may
have a detrimental effect on our results of operations or financial condition.
THE HISTORICAL FINANCIAL INFORMATION OF AT&T WIRELESS GROUP MAY NOT BE
REPRESENTATIVE OF OUR RESULTS AS AN INDEPENDENT ENTITY, AND, THEREFORE, MAY NOT
BE RELIABLE AS AN INDICATOR OF OUR HISTORICAL OR FUTURE RESULTS
The historical financial information we have included in this document or
incorporated herein by reference may not reflect what our results of operations,
financial position and cash flows would have been had we been an independent
entity during the periods presented. This is because the financial information
reflects allocations for services provided to AT&T Wireless Group by AT&T, which
allocations may not reflect the costs we will incur for similar or incremental
services as an independent entity. In addition, the historical financial
information we have included in this document or incorporated herein by
reference does not reflect transactions that have occurred since June 30, 2001,
or that occurred in connection with the split-off. This historical financial
information also is not reliable as an indicator of future results.
WE WILL GENERALLY BE RESPONSIBLE FOR TAX LIABILITY IF THE SPLIT-OFF IS TAXABLE
Under the separation and distribution agreement between us and AT&T,
subject to limited exceptions, we are responsible for any tax liability and any
related liability that results from the split-off having failed to qualify as a
tax-free transaction. If the split-off failed to qualify as a tax-free
transaction, this liability would have a material adverse effect on us.
WE MAY NO LONGER RECEIVE TAX SHARING PAYMENTS FROM AT&T SINCE WE HAVE CEASED TO
BE A MEMBER OF THE AT&T CONSOLIDATED TAX RETURN GROUP, AND WE MAY INCUR OTHER
TAX LIABILITIES AS A RESULT OF THE SPLIT-OFF AND PRE-SPLIT-OFF TRANSACTIONS
As a result of the split-off, we ceased to be a member of the consolidated
federal income tax return group of which AT&T is the common parent.
Consequently, taxable income and losses, and our other tax attributes in
post-split-off taxable periods generally can no longer offset taxable income or
losses and other tax attributes of the AT&T consolidated tax return group. For
two taxable years after the split-off, under federal income tax rules, we
generally will be able to carry back any such tax losses, subject to
limitations, against taxable income, if any, of members of AT&T Wireless Group
for pre-split-off periods. Under our
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tax sharing agreement with AT&T, however, we generally may only carry back net
operating losses (and not other tax attributes) from post-split-off taxable
periods to pre-split-off taxable periods, only if those losses are significant
and only with the consent of AT&T, which consent AT&T has agreed not to withhold
unreasonably. To the extent we are expected to have tax losses in post-split-off
taxable periods, we generally will no longer receive current tax sharing
payments with respect to those losses. Instead, except where those losses can be
carried back, we will benefit from those losses only if and when we generated
sufficient taxable income in future years to utilize those tax losses on a
stand-alone basis. In addition, there may be tax costs associated with the
split-off that result from our ceasing to be a member of the AT&T consolidated
tax return group, as well as from pre-split-off transactions. If incurred, these
costs could be material to our results.
VARIOUS FACTORS MAY INTERFERE WITH OUR ABILITY TO ENGAGE IN DESIRABLE STRATEGIC
TRANSACTIONS AND EQUITY ISSUANCES
We may be prevented from engaging in some desirable strategic transactions.
The Internal Revenue Code restricts the ability of a company which has undergone
a tax-free split-off from certain issuances of shares generally within a
two-year period after the split-off. In addition, the separation and
distribution agreement prohibits us, for a period of 30 months following the
split-off, from entering into certain transactions that could render the
split-off taxable. This may discourage, delay or prevent a merger, change of
control, or other strategic or capital raising transactions involving our
issuance of equity. Provisions of our charter and bylaws, our rights plan,
applicable law and our agreements with NTT DoCoMo Inc. may also have the effect
of discouraging, delaying or preventing change of control transactions that our
stockholders find desirable.
WE MAY LOSE RIGHTS UNDER AGREEMENTS WITH AT&T IF A CHANGE OF CONTROL OCCURS
Some of the agreements that we entered into with AT&T in connection with
the split-off, including a brand license agreement, master carrier agreement and
other commercial agreements, contain provisions that give one party rights in
the event of a change of control of the other party. These provisions may deter
a change of control. In the event of a change of control, the exercise of these
rights could have a material adverse effect on us.
AT&T'S RESTRUCTURING MAY ADVERSELY IMPACT OUR COMPETITIVE POSITION
In connection with AT&T's restructuring, there is a risk that we and AT&T's
other separated business units may not be able to create effective intercompany
agreements to facilitate effective cost sharing or to maintain or enter into
arrangements for combining their respective services in customer offerings or
other forms of bundling arrangements. Competition between us and the other AT&T
units in overlapping markets, including the consumer markets where cable
telephone, fixed wireless and digital subscriber line solutions may all be
available at the same time, although generally not all under the AT&T brand,
could result in more downward price pressure. We expect that the different
businesses and companies will share the AT&T brand after the restructuring,
which will likely increase this level of competition. In addition, any
incremental costs associated with implementing AT&T's restructuring plan may
materially adversely affect the different businesses and companies, including
our business.
BRITISH TELECOMMUNICATIONS HAS ASSERTED THAT ITS CONSENT IS REQUIRED FOR AT&T'S
RESTRUCTURING
In a letter to AT&T dated July 6, 2001, British Telecommunications stated
that, in its view, AT&T's restructuring required British Telecommunications'
consent under agreements between AT&T and British Telecommunications. While it
is not clear whether British Telecommunications believes that its consent was
required for the split-off of AT&T Wireless Services and we do not believe that
such consent is required, it is possible that British Telecommunications will in
the future assert that its consent was required for the split-off, or assert
that the agreements between AT&T and British Telecommunications, including
non-competition provisions and exclusive purchasing requirements, would apply to
AT&T Wireless Services following the split-off.
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RISK FACTORS RELATING TO OUR BUSINESS
WE MAY SUBSTANTIALLY INCREASE OUR DEBT LEVEL IN THE FUTURE, WHICH COULD SUBJECT
US TO VARIOUS RESTRICTIONS AND HIGHER INTEREST COSTS AND DECREASE OUR CASH FLOW
AND EARNINGS
We may substantially increase our debt level in the future, which could
subject us to various restrictions and higher interest costs and decrease our
cash flow and earnings. It may also be difficult for us to obtain all the
financing we need to fund our business and growth strategy on desirable terms.
We currently anticipate requiring substantial additional financing for the
foreseeable future to fund capital expenditures, license purchases and costs and
expenses in connection with funding our operations, domestic and international
investments and our growth strategy. We have repaid $1.8 billion of long-term
debt and related accrued interest and redeemed $3.0 billion of preferred equity
and related unpaid dividends held by AT&T. We are exploring and evaluating the
relative advantages and disadvantages of various funding mechanisms. In addition
to the $6.5 billion offering of the original notes, we entered into bank credit
facilities of up to $2.5 billion and finalized agreements to issue up to $2.5
billion of private placement commercial paper notes. Other funding mechanisms
that still may be considered include other forms of public and private debt
facilities. The decision on debt composition is dependent on, among other
things, our business and financial plans and the market conditions at the time
of financing. The agreements governing this indebtedness may contain financial
and other covenants that could impair our flexibility and restrict our ability
to pursue growth opportunities.
OUR RELATIONSHIP WITH NTT DOCOMO, INC. CONTAINS FEATURES THAT COULD ADVERSELY
AFFECT OUR FINANCIAL CONDITION OR THE WAY IN WHICH OUR BUSINESS IS CONDUCTED
NTT DoCoMo, Inc., a leading Japanese wireless communications company, has
invested approximately $9.8 billion in us and as part of this investment we and
DoCoMo formed a strategic alliance. The agreements relating to DoCoMo's
investment in us contain requirements and contingencies that could materially
adversely affect our financial condition and technology strategies. The terms of
the DoCoMo investment enable DoCoMo to terminate its investment and require
repayment of its $9.8 billion investment, plus interest, if we fail, under some
circumstances, to commence service using an agreed on technology in at least 13
of the top 50 domestic markets by June 30, 2004. If DoCoMo requires repayment,
we will have to fund the entire repurchase obligation. If DoCoMo requires
repayment of its investment, it may also terminate the technology rights
provided to us in connection with its investment.
We need to obtain DoCoMo's consent to make any fundamental change in the
nature of our business or to allow another wireless operator to acquire more
than 15% but less than 50% of our equity. These limitations could prevent us
from taking advantage of some business opportunities or relationships that we
might otherwise pursue.
OUR SIGNIFICANT NETWORK BUILD OUT REQUIREMENTS MAY NOT BE COMPLETED AS PLANNED
We need to complete significant remaining build out activities, including
completion of regularly required build out activities in some of our existing
wireless markets. Failure or delay to complete the build out of our network and
launch of operations, or increased costs of this build out and launch of
operations, could have a material adverse effect on our operations and financial
condition.
As we continue to build out our network, we must, among other things,
continue to:
- lease, acquire or otherwise obtain rights to a large number of cell and
switch sites;
- obtain zoning variances or other local governmental or third-party
approvals or permits for network construction;
- complete the radio frequency design, including cell site design,
frequency planning and network optimization, for each of our markets; and
- complete the fixed network implementation, which includes designing and
installing network switching systems, radio systems, interconnecting
facilities and systems, and operating support
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systems; and expand and maintain customer care, network management,
billing and other financial and management systems.
In addition, in the next several years, we will be implementing upgrades to
our network to access the next generation of digital technology. These events
may not occur in the time frame we assume or that the FCC requires, at the cost
we assume, or at all.
Additionally, problems in vendor equipment availability, technical
resources or system performance could delay the launch of new or expanded
operations in new or existing markets or result in increased costs in all
markets. We intend to rely on the services of various companies that are
experienced in design and build out of wireless networks in order to accomplish
our build out schedule. However, we may not be able to obtain satisfactory
contractors on economically attractive terms or ensure that the contractors
obtained will perform as we expect.
WE HAVE SUBSTANTIAL CAPITAL REQUIREMENTS THAT WE MAY NOT BE ABLE TO FUND
Our strategy and business plan will continue to require substantial
capital, which we may not be able to obtain or to obtain on favorable terms. A
failure to obtain necessary capital would have a material adverse effect on us,
and result in the delay, change or abandonment of our development or expansion
plans and the failure to meet regulatory build out requirements. We currently
estimate that our capital expenditures for the build out of our networks,
including expenditures related to our fixed wireless operations, will total
approximately $5.5 billion during 2001, as compared to $4.1 billion in 2000. We
expect these 2001 capital expenditure amounts to include approximately $5
billion of mobility expenditures and approximately $450 million for fixed
wireless. We also expect to incur substantial capital expenditures in future
years. The actual amount of the funds required to finance our network build out
and other capital expenditures may vary materially from management's estimate.
We have entered into various contractual commitments associated with the
development of our third-generation strategy totaling approximately $2.2 billion
as of the dates the agreements were executed. These include purchase commitments
for network equipment. Additionally, we anticipate that we will enter into
material purchase commitments in the future.
We also may require substantial additional capital for, among other uses,
acquisitions of providers of wireless services, spectrum license or system
acquisitions, system development and network capacity expansion. We have also
entered into agreements for investments and ventures which have required or will
require substantial capital, including our agreement to invest $2.6 billion in
exchange for a combination of a non-controlling equity interest in and debt
securities issued by Alaska Native Wireless, which was the successful bidder for
licenses costing approximately $2.9 billion in the recently concluded 1900
megahertz auction. These agreements also may contain provisions potentially
requiring substantial additional capital in future circumstances, such as
allowing the other investors to require us to purchase assets or investments.
THE ACTUAL AMOUNT OF FUNDS NECESSARY TO IMPLEMENT OUR STRATEGY AND BUSINESS PLAN
MAY MATERIALLY EXCEED CURRENT ESTIMATES, WHICH COULD HAVE A MATERIAL ADVERSE
EFFECT ON OUR FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The actual amount of funds necessary to implement our strategy and business
plan may materially exceed our current estimates in the event of various factors
including:
- departures from our current business plan,
- unforeseen delays,
- cost overruns,
- unanticipated expenses,
- regulatory developments,
- engineering design changes, and
- technological and other risks.
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If actual costs do materially exceed our current estimates for these or other
reasons, this could have a material adverse effect on our financial condition
and results of operations.
OUR BUSINESS AND OPERATIONS WOULD BE ADVERSELY AFFECTED IF WE FAIL TO ACQUIRE
ADEQUATE RADIO SPECTRUM IN FCC AUCTIONS OR THROUGH OTHER TRANSACTIONS
Our domestic business depends on the ability to use portions of the radio
spectrum licensed by the FCC. We could fail to obtain sufficient spectrum
capacity in new and existing markets, whether through FCC auctions or other
transactions, in order to meet the expanded demands for our existing services,
as well as to enable development of third-generation services. This type of
failure would have a material adverse impact on the quality of our services or
our ability to roll out such future services in certain markets. To the extent
we determine we need additional spectrum for our mobility business, we may
utilize spectrum currently allocated to our fixed wireless business. We intend
to continue to acquire more spectrum through a combination of alternatives,
including participation in spectrum auctions, purchase of spectrum licenses from
companies that own them or purchase of these companies outright.
As required by law, the FCC periodically conducts auctions for licenses to
use certain parts of the radio spectrum. The decision to conduct auctions, and
the determination of what spectrum frequencies will be made available for
auction, are provided for by laws administered by the FCC. The FCC may not
allocate spectrum sufficient to meet the demands of all those wishing to obtain
licenses. Even if the FCC determines to conduct further auctions in the future,
we may not be successful in those future auctions in obtaining the spectrum that
we believe is necessary to implement our business and technology strategies. We
may also seek to acquire radio spectrum through purchases and swaps with other
spectrum licensees or otherwise, including by purchases of other licensees
outright. However, we may not be able to acquire sufficient spectrum through
these types of transactions, and we may not be able to complete any of these
transactions on favorable terms.
OUR BUSINESS AND OPERATIONS COULD BE HURT IF WE ARE UNABLE TO ESTABLISH NEW
AFFILIATES TO EXPAND OUR DIGITAL NETWORK OR IF OUR EXISTING OR ANY NEW
AFFILIATES DO NOT OR CANNOT DEVELOP THEIR SYSTEMS IN A MANNER CONSISTENT WITH
OURS
To accelerate the build out of widescale coverage of the United States by a
digital mobile wireless network operating on the technical standards we have
adopted, we have entered into affiliation agreements with other entities that
provide wireless service or hold spectrum licenses. Through contractual
arrangements between us and these affiliates, our customers are able to obtain
service in the affiliates' territories, and the affiliates' customers are able
to obtain service in our territory. In all markets where these affiliates
operate, we are at risk because we do not control the affiliates. As a result,
these affiliates are not obligated to implement our third-generation strategy.
Our ability to provide service on a nationwide level and to implement our
third-generation strategy would be adversely affected if these affiliates decide
not to participate in the further development of our digital network.
We may establish additional affiliate relationships to accelerate build out
of our digital mobile network. If we are unable to establish such affiliate
relationships, or if any such affiliates are unable or do not develop their
systems in a manner consistent with our network, our ability to service our
customers and expand the geographic coverage of our digital network could be
adversely affected.
IF THE FCC DENIES ALASKA NATIVE WIRELESS' APPLICATION TO ACQUIRE LICENSES FOR
WHICH IT WAS THE SUCCESSFUL BIDDER IN THE RECENT SPECTRUM AUCTION, OR, IN THE
FUTURE, REVOKES LICENSES AWARDED TO ALASKA NATIVE WIRELESS, OUR ABILITY TO
IMPLEMENT ITS THIRD-GENERATION STRATEGY COULD BE ADVERSELY AFFECTED OR WE COULD
BECOME OBLIGATED TO REPURCHASE OTHER INVESTORS' INTERESTS IN ALASKA NATIVE
WIRELESS
We have agreed to invest $2.6 billion in exchange for a combination of a
non-controlling equity interest in and debt securities issued by Alaska Native
Wireless, which was the successful bidder for licenses costing $2.9 billion in
the recently concluded 1900 megahertz auction. One auction participant has
challenged the qualifications of Alaska Native Wireless to acquire "closed"
licenses, which constituted
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most of the licenses for which Alaska Native Wireless was the successful bidder.
If the FCC determines that Alaska Native Wireless was not qualified, the FCC
could refuse to grant Alaska Native Wireless the closed licenses. If this
occurs, it could have a significant adverse impact on our ability to provide or
enhance services in key new and existing markets. On June 22, 2001, a federal
appeals court ruled in favor of the trustee in the Chapter 11 bankruptcy
proceeding of NextWave Telecom, Inc. and the unsecured creditors of NextWave
with respect to the litigation they commenced relating to the 1900 megahertz
auction. The court ruled that the FCC had acted improperly in repossessing from
NextWave the spectrum sold in the 1900 megahertz auction. If this decision is
not successfully appealed, or settled, or if Alaska Native Wireless is otherwise
unable to acquire the licenses for which it was the successful bidder, it could
have a significant adverse impact on our plans to provide or enhance services in
key new and existing markets. In specified circumstances, if a winning bid of
Alaska Native Wireless in the recently concluded 1900 megahertz spectrum auction
is rejected or if any license granted to it is revoked, we would become
obligated to compensate other investors for making capital available to the
venture. In specified circumstances, if the grant of those licenses is
challenged, we may be obligated to purchase the interests of other investors.
IF WE ARE UNABLE TO REACH AGREEMENT WITH ALASKA NATIVE WIRELESS REGARDING THE
DEVELOPMENT AND USE OF LICENSES FOR WHICH IT WAS THE SUCCESSFUL BIDDER IN THE
RECENT SPECTRUM AUCTION, OUR ABILITY TO IMPLEMENT OUR THIRD-GENERATION STRATEGY
MAY BE ADVERSELY AFFECTED
We have not reached any agreements with Alaska Native Wireless as to
whether it will participate in our digital mobile wireless network. Alaska
Native Wireless is not obligated to use or develop any spectrum it acquires in a
manner that will further, or be consistent with, our strategic objectives,
although Alaska Native Wireless is obligated to use technology that is
compatible and interoperable with our digital mobile wireless network. If Alaska
Native Wireless does not enter into agreements with us regarding the use and
development of this spectrum similar to those we have entered into with our
affiliates for our existing networks, it could have a material adverse impact on
the timing and cost of implementing our third-generation strategy.
POTENTIAL ACQUISITIONS MAY REQUIRE US TO INCUR SUBSTANTIAL ADDITIONAL DEBT AND
INTEGRATE NEW TECHNOLOGIES, OPERATIONS AND SERVICES, WHICH MAY BE COSTLY AND
TIME CONSUMING
An element of our strategy is to expand our network, which we may do
through the acquisition of licenses, systems and wireless providers. These
acquisitions may cause us to incur substantial additional indebtedness to
finance the acquisitions or to assume indebtedness of the entities that are
acquired. In addition, we may encounter difficulties in integrating those
acquired operations into our own operations, including as a result of different
technologies, systems, services or service offerings. These actions could prove
costly or time consuming or divert our management's attention from other
business matters.
FAILURE TO DEVELOP FUTURE BUSINESS OPPORTUNITIES MAY HAVE AN ADVERSE EFFECT ON
OUR GROWTH POTENTIAL
We intend to pursue a number of new growth opportunities, which involve new
services for which there are no proven markets. In addition, the ability to
deploy and deliver these services relies, in many instances, on new and unproven
technology. Our existing technology may not perform as expected and we may not
be able to successfully develop new technology to effectively and economically
deliver these services. These opportunities also require substantial capital
outlays and spectrum availability to deploy on a large scale. This capital or
spectrum may not be available to support these services. To the extent we
reallocate spectrum from our fixed wireless business to our mobility business,
it could impact our ability to deploy our fixed wireless service in the markets
covered by that spectrum.
Furthermore, each of these opportunities entails additional specific risks.
For example, on the one hand, the delivery of fixed wireless services requires
us to provide installation and maintenance services, which we have never
provided previously. This will require us to hire, employ, train and equip
technicians to provide installation and repair in each market served, or rely on
subcontractors to perform these services. We may not be able to hire and train
sufficient numbers of qualified employees or subcontract
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these services, or do so on economically attractive terms. The success of
wireless data services, on the other hand, is substantially dependent on the
ability of others to develop applications for wireless devices and to develop
and manufacture devices that support wireless applications. These applications
or devices may not be developed or developed in sufficient quantities to support
the deployment of wireless data services.
These services may not be widely introduced and fully implemented at all or
in a timely fashion. These services may not be successful when they are in
place, and customers may not purchase the services offered. If these services
are not successful or costs associated with implementation and completion of the
rollout of these services materially exceed those currently estimated by us, our
financial condition and prospects could be materially adversely affected.
WE FACE SUBSTANTIAL COMPETITION
There is substantial competition in the wireless telecommunications
industry. We expect competition to intensify as a result of the entrance of new
competitors and the development of new technologies, products and services.
Other two-way wireless providers, including other cellular and personal
communications services, operators and resellers, serve each of the markets in
which we compete.
A majority of U.S. markets likely will have five or more commercial mobile
radio service providers, and all of the top 50 U.S. metropolitan markets likely
have at least four, and in some cases as many as seven or more, facilities-based
wireless service providers offering wireless services on cellular, personal
communications services or specialized mobile radio frequency. Competition also
may increase to the extent that smaller, stand-alone wireless providers transfer
licenses to larger, better capitalized and more experienced wireless providers.
MARKET PRICES FOR WIRELESS SERVICES MAY DECLINE IN THE FUTURE
We anticipate that market prices for two-way wireless services generally
will decline in the future due to increased competition. We expect significant
competition among wireless providers, including from new entrants, to continue
to drive service and equipment prices lower. We also expect that there will be
increases in advertising and promotional spending, along with increased demands
on access to distribution channels.
All of this may lead to greater choices for customers, possible consumer
confusion, and increasing movement of customers between competitors, which we
refer to as "churn." We may also adopt customer policies or programs to be more
competitive, including credit policies, which policies or programs may also
affect churn. Our ability to compete successfully also will depend on marketing,
and on our ability to anticipate and respond to various competitive factors
affecting the industry, including new services, changes in consumer preferences,
demographic trends, economic conditions and discount pricing strategies by
competitors.
CONSOLIDATION IN THE WIRELESS COMMUNICATIONS INDUSTRY MAY ADVERSELY AFFECT US
The wireless communications industry has been experiencing significant
consolidation and we expect that this consolidation will continue. The
previously announced mergers or joint ventures of Bell Atlantic Corporation/GTE
Corporation/Vodafone AirTouch, now called Verizon, SBC/BellSouth, now called
Cingular, and Deutsche Telekom/VoiceStream Wireless, have created large,
well-capitalized competitors with substantial financial, technical, marketing
and other resources to respond to our offerings.
These mergers or ventures have caused our ranking to decline to third in
U.S. revenue and U.S. subscriber share. In terms of U.S. population covered by
licenses, we, including our partnerships and affiliates, rank third. As a
result, these competitors may be able to offer nationwide services and plans
more quickly and more economically than us, to obtain roaming rates that are
more favorable than those obtained by us, and may be better able to respond to
our offers.
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SIGNIFICANT TECHNOLOGICAL CHANGES IN THE WIRELESS INDUSTRY COULD MATERIALLY
ADVERSELY AFFECT US
The wireless communications industry is experiencing significant
technological change. This change includes the increasing pace of digital
upgrades in existing analog wireless systems, evolving industry standards,
ongoing improvements in the capacity and quality of digital technology, shorter
development cycles for new products, enhancements and changes in end-user needs
and preferences and increased importance of data and broadband capabilities. The
pace and extent of customer demand may not continue to increase, and airtime and
monthly recurring charges may continue to decline. As a result, the future
prospects of the industry and of us and the success of our competitive services
remain uncertain. Also, alternative technologies may develop for the provision
of services to customers that may provide wireless communications service or
alternative service superior to that available from us. Technological
developments may therefore materially adversely affect us.
TERMINATION OR IMPAIRMENT OF OUR RELATIONSHIP WITH A SMALL NUMBER OF KEY
SUPPLIERS COULD ADVERSELY AFFECT OUR REVENUES AND RESULTS OF OPERATIONS
We have developed relationships with a small number of key vendors,
including Nokia Mobile Phones, Inc., Telefonaktiebolaget LM Ericsson, Mitsubishi
Corporation, and Motorola, Inc. for our supply of wireless handsets, Lucent
Technologies, Inc., Nortel Networks, Inc., Ericsson and Nokia Networks, Inc. for
our supply of telecommunications infrastructure equipment and Convergys
Information Management Group for our billing services. We do not have
operational or financial control over our key suppliers, and have limited
influence with respect to the manner in which these key suppliers conduct their
businesses. If these key suppliers were unable to honor their obligations to us,
it could disrupt our business and adversely impact our revenues and results of
operations.
OUR TECHNOLOGY MAY NOT BE COMPETITIVE WITH OTHER TECHNOLOGIES OR BE COMPATIBLE
WITH NEXT GENERATION TECHNOLOGY
There are three existing digital transmission technologies, none of which
is compatible with the others. We selected time division multiple access
technology for our second-generation network because we believe that this
technology offers several advantages over other second-generation technologies.
However, a number of other wireless service providers chose code division
multiple access or global system for mobile communications as their digital
wireless technology. For our path to next generation technology, we have chosen
a global system for mobile communications platform to make available enhanced
data services using general packet radio service technology, and
third-generation capabilities using enhanced data rates for global evolution and
ultimately universal mobile telecommunications systems technologies. These
technologies may not provide the advantages we expect. Other wireless providers
have chosen a competing wideband technology as their third-generation
technology. If the universal mobile telecommunications standard does not gain
widespread acceptance, it would materially adversely affect our business,
financial condition and prospects.
As we implement our plans for deployment of technology for third-generation
capabilities, we will continue to incur substantial costs associated with
maintaining our time division multiple access networks.
Also, these networks are not compatible, and customers with phones that
operate on one network will not initially be able to use those phones on the
other network. There are risks inherent in the development of new
third-generation equipment and we may face unforeseen costs, delays or problems
that may have a material adverse effect on us.
WE RELY ON FAVORABLE ROAMING ARRANGEMENTS, WHICH WE MAY BE UNABLE TO CONTINUE TO
OBTAIN
We may not continue to be able to obtain or maintain roaming agreements
with other providers on terms that are acceptable to us. Our customers
automatically can access another provider's analog cellular or digital system
only if the other provider allows our customers to roam on its network. We rely
on agreements to provide roaming capability to our customers in many areas of
the United States that our network does not serve. Some competitors, because of
their call volumes or their affiliations with, or
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ownership of, wireless providers, however, may be able to obtain roaming rates
that are lower than those rates obtained by us.
In addition, the quality of service that a wireless provider delivers
during a roaming call may be inferior to the quality of service we or an
affiliated company provides, the price of a roaming call may not be competitive
with prices of other wireless providers for such call, and our customers may not
be able to use any of the advanced features, such as voicemail notification,
that the customer enjoys when making calls within our network. Finally, we may
not be able to obtain favorable roaming agreements for our third-generation
products and services that we intend to offer using the technologies we plan to
deploy for interim enhanced data and third-generation services.
OUR BUSINESS IS SEASONAL AND WE DEPEND ON FOURTH QUARTER RESULTS, WHICH MAY NOT
CONTINUE TO BE STRONG
The wireless industry, including us, has experienced a trend of generating
a significantly higher number of customer additions and handset sales in the
fourth quarter of each year as compared to the other three fiscal quarters. A
number of factors contribute to this trend, including the increasing use of
retail distribution, which is dependent upon the year-end holiday shopping
season, the timing of new product and service announcements and introductions,
competitive pricing pressures, and aggressive marketing and promotions. Strong
fourth quarter results for customer additions and handset sales may not continue
for the wireless industry or for us. In the future, the number of our customer
additions and handset sales in the fourth quarter could decline for a variety of
reasons, including our inability to match or beat pricing plans offered by
competitors, failure to adequately promote our products, services and pricing
plans, or failure to have an adequate supply or selection of handsets. If in any
year fourth quarter results fail to significantly improve upon customer
additions and handset sales from the year's previous quarters, this could
adversely impact our results for the following year.
MEDIA REPORTS HAVE SUGGESTED RADIO FREQUENCY EMISSIONS MAY BE LINKED TO VARIOUS
HEALTH CONCERNS AND INTERFERE WITH VARIOUS MEDICAL DEVICES, AND WE MAY BE
SUBJECT TO POTENTIAL LITIGATION RELATING TO THESE HEALTH CONCERNS
Media and other reports have linked radio frequency emissions from wireless
handsets to various health concerns, including cancer, and to interference with
various electronic medical devices, including hearing aids and pacemakers.
Research and studies are ongoing. Whether or not such research or studies
conclude there is a link between radio frequency emissions and health, these
concerns over radio frequency emissions may discourage the use of wireless
handsets or expose us to potential litigation, which could have a material
adverse effect on our results of operations. Several class action lawsuits have
been filed against us, several other wireless service operators and several
wireless phone manufacturers, asserting products liability, breach of warranty
and other claims relating to radio frequency transmissions to and from wireless
phones. The complaints seek damages for the costs of headsets for wireless phone
users as well as injunctive relief. In connection with the split-off, we were
allocated all of the liability, if any, arising from such lawsuits.
WE MAY BE SUBJECT TO POTENTIAL LITIGATION RELATING TO THE USE OF WIRELESS PHONES
WHILE DRIVING
Some studies have indicated that some aspects of using wireless phones
while driving may impair drivers' attention in certain circumstances, making
accidents more likely. These concerns could lead to potential litigation
relating to accidents, deaths or serious bodily injuries, or to new restrictions
or regulations on wireless phone use, any of which also could have material
adverse effects on our results of operations. In connection with the split-off,
we will be allocated the liability, if any, that could arise from any such
potential litigation.
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OUR OPERATIONS ARE SUBJECT TO GOVERNMENT REGULATION, WHICH REGULATION COULD HAVE
ADVERSE EFFECTS ON OUR BUSINESS
The licensing, construction, operation, sale, resale and interconnection
arrangements of wireless communications systems are regulated to varying degrees
by the FCC, and, depending on the jurisdiction, state and local regulatory
agencies. These regulations may include, among other things, required service
features and capabilities, such as number portability or emergency 911 service.
In addition, the FCC, together with the U.S. Federal Aviation Administration,
regulates tower marking and lighting. Any of these agencies having jurisdiction
over our business could adopt regulations or take other actions that could
adversely affect our business.
FCC licenses to provide wireless services or personal communications
services are subject to renewal and revocation. There may be competition for our
licenses upon their expiration and we cannot assure you that the FCC will renew
them. FCC rules require all wireless and personal communications services
licensees to meet specified build out requirements. We may not be able to meet
these requirements in each market. Failure to comply with these requirements in
a given license area could result in revocation or forfeiture of our license for
that license area or the imposition of fines on us by the FCC.
STATE AND LOCAL LEGISLATION RESTRICTING OR PROHIBITING WIRELESS PHONE USE WHILE
DRIVING COULD CAUSE SUBSCRIBER USAGE TO DECLINE
Some state and local legislative bodies have proposed legislation
restricting or prohibiting the use of wireless phones while driving motor
vehicles. Similar laws have been enacted in other countries. On June 28, 2001,
New York State enacted a law prohibiting the use of handheld wireless phones
while driving motor vehicles other than through the use of hands-free equipment.
To date, a small number of communities in the United States have also passed
restrictive local ordinances. These laws, or if passed, other laws prohibiting
or restricting the use of wireless phones while driving, could have the effect
of reducing subscriber usage, which could cause a material adverse effect on our
results of operations.
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PRIVATE PLACEMENT
We issued $6.5 billion principal amount of the original notes dated as of
March 6, 2001 to the initial purchasers of those notes and received proceeds,
after deducting the discount to the initial purchasers, equal to 99.611% of the
principal amount on the notes due 2006, 99.201% of the principal amount on the
notes due 2011 and 99.038% of the principal amount of the notes due 2031,
representing aggregate net proceeds, before expenses, of $6,448,090,000 from the
sale of original notes. We issued the original notes to the initial purchasers
in a transaction exempt from or not subject to registration under the Securities
Act. The initial purchasers then offered and resold the original notes to
qualified institutional buyers in compliance with Rule 144A or non-U.S. persons
in compliance with Regulation S under the Securities Act initially at the price
of 99.961% of the principal amount on the notes due 2006, 99.651% of the
principal amount on the notes due 2011 and 99.913% of the principal amount of
the notes due 2031.
USE OF PROCEEDS
We are making this exchange offer to satisfy our obligations under the
original notes, the indenture and the registration rights agreement. We will not
receive any cash proceeds from this exchange offer. In consideration of issuing
the exchange notes in this exchange offer, we will receive an equal principal
amount of original notes. Any original notes that are properly tendered in this
exchange offer will be accepted, canceled and retired and cannot be reissued.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth our ratio of earnings to fixed charges for
the periods indicated. Earnings represent earnings before net undistributed
equity earnings or losses in equity investees, minority interest income or
expense in the loss or income of majority-owned consolidated subsidiaries,
income tax expense, and fixed charges (excluding capitalized interest). Fixed
charges consist of interest (including capitalized interest), preferred stock
dividend requirements, and the estimated portion of rental expense that is
representative of the interest factor.
SIX MONTHS YEAR ENDED DECEMBER 31,
ENDED JUNE 30, -------------------------------------
2001 2000 1999 1998 1997 1996
-------------- ----- ----- ----- ----- -----
Ratio.............................................. 2.5 1.9 (0.4) 1.9 1.2 2.4
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CAPITALIZATION
The following table sets forth as of June 30, 2001 our historical
consolidated cash and capitalization and our combined cash and capitalization on
an unaudited pro forma basis, which gives effect to:
- the repayment of the note receivable from AT&T which occurred in July
2001, in accordance with the separation and distribution agreement, as if
such event had occurred on June 30, 2001 for balance sheet purposes.
- the reclassification of the DoCoMo investment which occurred on January
22, 2001 to a mandatorily redeemable security effective with the
split-off of AT&T Wireless Services from AT&T as if such event had
occurred on June 30, 2001 for balance sheet purposes.
This table should be read in conjunction with the historical and pro forma
financial information included elsewhere in this document or incorporated by
reference into this document.
AT JUNE 30, 2001
-------------------------
HISTORICAL AS ADJUSTED
---------- -----------
(IN MILLIONS)
(UNAUDITED)
Cash and cash equivalents................................... $ 38 $ 5,841
------- -------
Due on demand notes payable................................. 98 98
Long-term debt due to others................................ 6,487 6,487
Mandatorily redeemable common stock......................... -- 6,728
Shareowners' Equity:
Common stock, no par value, no shares authorized, issued
or outstanding at June 30, 2001 (2,530 million shares
outstanding on an unaudited pro forma basis)(1)........ -- --
Shareowners' net investment............................... 28,281 21,553
Accumulated other comprehensive loss...................... (72) (72)
Total shareowners' equity.............................. 28,209 21,481
------- -------
Total capitalization................................... $34,794 $34,794
======= =======
-------------------------
(1) AT&T Wireless Services was a wholly owned subsidiary of AT&T and did not
have publicly traded shares outstanding at June 30, 2001. The 2,530 million
shares presented is the number outstanding immediately after the split-off
on July 9, 2001, and does not include shares issuable upon exercise of
outstanding options to purchase AT&T Wireless Services common stock or
warrants to purchase 41 million share equivalents issued to DoCoMo in
January 2001.
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SELECTED HISTORICAL FINANCIAL DATA
The following information is only a summary and you should read it together
with the financial information we included in our Prospectus filed pursuant to
Rule 424(b)(1) on July 9, 2001 (Commission File Number 333-60472), and in our
quarterly report on Form 10-Q for the quarter ended June 30, 2001, filed on
August 14, 2001, both of which are incorporated herein by reference.
In the table below, we provide you with selected historical consolidated
financial data of AT&T Wireless Services, Inc. This selected historical
consolidated financial data includes the effect of certain other businesses,
assets and liabilities of AT&T that constituted AT&T Wireless Group. AT&T has
contributed to us all of the remaining businesses and assets, and we have
assumed all liabilities, that constituted AT&T Wireless Group. These
contributions have been accounted for in a manner similar to a pooling of
interests.
We derived the following information using the consolidated financial
statements of AT&T Wireless Services at and for each of the six months ended
June 30, 2001 and 2000, and each of the fiscal years in the five-year period
ended December 31, 2000. We derived the consolidated income statement and cash
flow data below for each of the three years ended December 31, 2000 and the
consolidated balance sheet data at December 31, 2000 and 1999, from consolidated
financial statements audited by PricewaterhouseCoopers LLP, independent
accountants, included in the Prospectus filed pursuant to Rule 424(b)(1) on July
9, 2001 (Commission File Number 333-60472), and incorporated herein by
reference. We derived the remaining data from unaudited consolidated financial
information.
The financial data presented below is not necessarily comparable from
period to period as a result of several transactions, including acquisitions and
dispositions of consolidated subsidiaries. For this and other reasons, you
should read the selected historical financial data provided below in conjunction
with our consolidated financial statements and accompanying notes in the
Prospectus filed pursuant to Rule 424(b)(1) on July 9, 2001 (Commission File
Number 333-60472), and in our quarterly report on Form 10-Q for the quarter
ended June 30, 2001, filed on August 14, 2001, both of which are incorporated
herein by reference.
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
------------------- -------------------------------------------------
2001 2000 2000 1999 1998 1997 1996
-------- -------- -------- -------- ------- ------- -------
(IN MILLIONS, EXCEPT FOR PER SHARE AMOUNTS AND OTHER OPERATING DATA)
(UNAUDITED)
INCOME STATEMENT DATA:
Revenue...................................... $ 6,592 $ 4,675 $ 10,448 $ 7,627 $ 5,406 $ 4,668 $ 4,246
Operating income (loss)...................... 270 133 (38) (666) (343) (70) 234
Net income (loss) available to common
shareowners................................ 187 180 528 (461) 108 69 261
Unaudited pro forma earnings (loss) per
common shares -- basic(1).................. $ .07 $ .07 $ .21 $ (.18) $ .04 $ .03 $ .10
Unaudited pro forma earnings (loss) per
common shares -- diluted(1)................ $ .07 $ .07 $ .21 $ (.18) $ .04 $ .03 $ .10
Unaudited pro forma weighted average
shares -- basic(1)......................... 2,530 2,530 2,530 2,530 2,530 2,530 2,530
Unaudited pro forma weighted average
shares -- diluted(1)....................... 2,532 2,532 2,532 2,530 2,532 2,532 2,532
BALANCE SHEET DATA:
Total assets................................. $ 43,031 $ 32,843 $ 35,302 $ 23,512 $19,460 $19,040 $17,852
Total debt(2)................................ 6,585 1,958 2,551 3,558 2,589 2,447 2,217
Preferred stock held by AT&T................. -- 3,000 3,000 1,000 1,000 1,000 1,000
Shareowners' equity.......................... 28,209 21,522 21,877 12,997 10,532 10,187 9,497
CASH FLOW DATA:
Net cash provided by operating activities.... $ 1,473 $ 223 $ 1,635 $ 867 $ 414 $ 1,338 $ 1,183
Capital expenditures and other additions..... (2,692) (1,879) (4,012) (2,272) (1,219) (1,931) (1,832)
Net acquisitions of licenses................. (9) (105) (247) (47) (65) (443) (327)
Equity investment distributions and sales.... 656 245 360 236 1,354 294 176
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SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
------------------- -------------------------------------------------
2001 2000 2000 1999 1998 1997 1996
-------- -------- -------- -------- ------- ------- -------
(IN MILLIONS, EXCEPT FOR PER SHARE AMOUNTS AND OTHER OPERATING DATA)
(UNAUDITED)
Equity investment contributions, advances and
purchases and other investing activities... (670) (77) (1,645) (284) (156) (84) (32)
Net (acquisition) dispositions of businesses
including cash acquired.................... -- (2,602) (4,763) 244 324 -- 156
Net (decrease) increase in debt due to
AT&T....................................... (2,438) 400 400 900 100 200 200
Proceeds from issuance of long-term debt due
to others, net of issuance costs........... 6,345 -- -- -- -- -- --
Proceeds attributed from DoCoMo investment,
net of costs............................... 6,139 -- -- -- -- -- --
Redemption of preferred stock held by AT&T... (3,000) -- -- -- -- -- --
Proceeds attributed from AT&T Wireless Group
tracking stock offering.................... -- 7,000 7,000 -- -- -- --
Transfer from (to) AT&T, net................. -- 806 1,001 344 (694) 611 476
OTHER:
EBITDA(3).................................... $ 1,482 $ 904 $ 1,648 $ 587 $ 736 $ 756 $ 894
EBITDA (excluding asset impairment and
restructuring charges)..................... 1,482 904 1,648 1,118 856 916 894
OTHER OPERATING DATA:
(in thousands, except ($) are actual)
Consolidated subscribers..................... 16,416 11,700 15,163 9,569 7,174 5,964 5,032
Consolidated digital subscribers............. 15,347 9,959 13,666 7,580 4,354 1,746 909
Covered population(4)........................ 165,738 132,141 162,896 114,217 -- -- --
Licensed population(4)....................... 216,444 198,151 214,188 191,742 -- -- --
Subscriber churn............................. 2.9% 2.8% 2.9% 2.6% 2.7% 2.5% 2.3%
Total cost per gross subscriber addition..... $ 329 $ 356 $ 367 $ 367 $ 392 $ 432 $ 345
-------------------------
(1) AT&T Wireless Services was a wholly owned subsidiary of AT&T and did not
have publicly traded shares outstanding during the periods presented. We
have presented pro forma earnings per share information using 2,530 million
shares outstanding, which is the number of shares outstanding immediately
after the split-off on July 9, 2001. The 2,530 million shares does not
include shares issuable upon exercise of outstanding options to purchase
AT&T Wireless Services common stock or warrants to purchase 41 million share
equivalents issued to DoCoMo in January 2001. The 2,532 million shares
outstanding used to compute diluted earnings per share includes the 2,530
million shares above and an estimated 2 million shares associated with
dilutive stock options, with the exception of those periods in which the
effect of the stock options was considered to be anti-dilutive.
(2) Includes $4 million of long-term debt that is included in other long-term
liabilities at June 30, 2000, and at December 31, 2000 and 1999.
(3) EBITDA is defined as operating income, plus depreciation and amortization.
We believe EBITDA to be relevant and useful information, as EBITDA is the
primary metric used by our management to measure the performance of our
business. EBITDA should be considered in addition to, but not as a
substitute for, other measures of financial performance reported in
accordance with generally accepted accounting principles, including our cash
flows from operating, investing and financing activities.
(4) POPs represent AT&T Wireless Services' consolidated operations and does not
include partnership or affiliate markets. POPs are counted once whether a
POP is covered/licensed only by wireless licenses at the 850 megahertz
frequency or wireless licenses at the 1900 megahertz frequency or by both.
The amount of wireless spectrum licensed varies by geographic territory.
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THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
In connection with the sale of the original notes, we entered into a
registration rights agreement with the initial purchasers of the original notes.
In that agreement, we agreed to file a registration statement relating to an
offer to exchange the original notes for the exchange notes. We also agreed to
use our reasonable best efforts to commence the exchange offer for the original
notes by November 23, 2001. We are offering the exchange notes under this
prospectus in an exchange offer for the original notes to satisfy our
obligations under the registration rights agreement. We refer to our offer to
exchange the exchange notes for the original notes as the "exchange offer."
RESALE OF EXCHANGE NOTES
Based on interpretations of the SEC staff in no action letters issued to
third parties, we believe that each exchange note issued in the exchange offer
may be offered for resale, resold and otherwise transferred by you without
compliance with the registration and prospectus delivery provisions of the
Securities Act if:
- you are not our affiliate within the meaning of Rule 405 under the
Securities Act,
- you acquire such exchange notes in the ordinary course of your business,
- you do not intend to participate in the distribution of exchange notes,
and
- you are not a broker-dealer that will receive exchange notes for your own
account in exchange for original notes that you acquired as a result of
market-making activities or other trading activities.
If you tender your original notes in the exchange offer with the intention
of participating in any manner in a distribution of the exchange notes, you:
- cannot rely on such interpretations by the SEC staff, and
- must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with a secondary resale transaction of
the exchange notes.
Unless an exemption from registration is otherwise available, the resale by
any security holder intending to distribute exchange notes should be covered by
an effective registration statement under the Securities Act containing the
selling security holder's information required by Item 507 or Item 508, as
applicable, of Regulation S-K under the Securities Act. This prospectus may be
used for an offer to resell, resale or other retransfer of exchange notes only
as specifically described in this prospectus. Each broker-dealer that receives
exchange notes for its own account in exchange for original notes, where that
broker-dealer acquired such original notes as a result of market-making
activities or other trading activities, must acknowledge that it will deliver a
prospectus in connection with any resale of such exchange notes. Please read
"Plan of Distribution" for more details regarding the transfer of exchange
notes.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions described in this prospectus
and in the letter of transmittal, we will accept for exchange any original notes
properly tendered and not withdrawn prior to the expiration date of the exchange
offer. We will issue $1,000 principal amount of exchange notes in exchange for
each $1,000 principal amount of original notes surrendered under the exchange
offer and accepted by us. Original notes may be tendered only in integral
multiples of $1,000.
The exchange offer is not conditioned upon any minimum aggregate principal
amount of original notes being tendered for exchange.
As of the date of this prospectus, $6.5 billion principal amount of
original notes are outstanding. This prospectus and the letter of transmittal
are being sent to all registered holders of original notes. There will
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be no fixed record date for determining registered holders of original notes
entitled to participate in the exchange offer.
We intend to conduct the exchange offer in accordance with the provisions
of the registration rights agreement, the applicable requirements of the
Securities Act and the Securities Exchange Act and the rules and regulations of
the SEC. Original notes that are not tendered for exchange in the exchange
offer:
- will remain outstanding,
- will continue to accrue interest, and
- will not be entitled to the rights and benefits that holders have under
the indenture relating to the notes and, under limited circumstances, the
registration rights agreement.
We will be deemed to have accepted for exchange properly tendered original
notes when we have given oral or written notice of the acceptance to the
exchange agent and complied with the applicable provisions of the registration
rights agreement. The exchange agent will act as agent for the tendering holders
for the purposes of receiving the exchange notes from us.
If you tender original notes in the exchange offer, you will not be
required to pay brokerage commissions or fees or, subject to the instructions in
the letter of transmittal, transfer taxes with respect to the exchange of
original notes. We will pay all charges and expenses, other than certain
applicable taxes described below, in connection with the exchange offer. It is
important that you read "The Exchange Offer -- Fees and Expenses" for more
details about fees and expenses incurred in the exchange offer.
We will return any original notes that we do not accept for exchange for
any reason without expense to the tendering holder as promptly as practicable
after the expiration or termination of the exchange offer.
EXPIRATION DATE
The exchange offer will expire at 5:00 p.m., New York City time, on,
September 19, 2001, unless in our sole discretion we extend it.
EXTENSIONS, DELAY IN ACCEPTANCE, TERMINATION OR AMENDMENT
We expressly reserve the right, at any time or at various times, to extend
the period of time during which the exchange offer is open. We may delay
acceptance for exchange of any original notes by giving oral or written notice
of the extension to their holders. During any such extensions, all original
notes you have previously tendered will remain subject to the exchange offer for
that series, and we may accept them for exchange.
To extend the exchange offer, we will notify the exchange agent orally or
in writing of any extension. We also will make a public announcement of the
extension no later than 9:00 a.m., New York City time, on the next business day
after the previously scheduled expiration date.
If any of the conditions described below under "The Exchange
Offer -- Conditions to the Exchange Offer" have not been satisfied with respect
to the exchange offer, we reserve the right, in our sole discretion:
- to delay accepting for exchange any original notes,
- to extend the exchange offer, or
- to terminate the exchange offer.
We will give oral or written notice of such delay, extension or termination
to the exchange agent. Subject to the terms of the registration rights
agreement, we also reserve the right to amend the terms of the exchange offer in
any manner.
Any such delay in acceptance, extension, termination or amendment will be
followed as promptly as practicable by oral or written notice thereof to the
registered holders of original notes. If we amend the
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exchange offer in a manner that we determine to constitute a material change, we
will promptly disclose that amendment by means of a prospectus supplement. We
will distribute the supplement to the registered holders of the original notes.
Depending upon the significance of the amendment and the manner of disclosure to
the registered holders, we will extend the exchange offer if the exchange offer
would otherwise expire during such period.
Without limiting the manner in which we may choose to make public
announcements of any delay in acceptance, extension, termination or amendment of
the exchange offer, we have no obligation to publish, advertise or otherwise
communicate any such public announcement, other than by making a timely release
to an appropriate news agency.
CONDITIONS TO THE EXCHANGE OFFER
Despite any other term of the exchange offer, we will not be required to
accept for exchange, or exchange any exchange notes for any original notes, and
we may terminate the exchange offer as provided in this prospectus before
accepting any original notes for exchange, if in our reasonable judgment:
- the exchange offer, or the making of any exchange by a holder of original
notes, would violate applicable law or any applicable interpretation of
the staff of the SEC, or
- any action or proceeding has been instituted or threatened in any court
or by or before any governmental agency with respect to the exchange
offer that, in our judgment, would reasonably be expected to impair our
ability to proceed with that exchange offer.
In addition, we will not be obligated to accept for exchange the original
notes of any holder that has not made to us:
- the representations described under "The Exchange Offer -- Procedures for
Tendering" and "Plan of Distribution," and
- such other representations as may be reasonably necessary under
applicable SEC rules, regulations or interpretations to make available to
us an appropriate form for registering the exchange notes under the
Securities Act.
We expressly reserve the right to amend or terminate the exchange offer,
and to reject for exchange any original notes not previously accepted for
exchange in the exchange offer, upon the occurrence of any of the conditions to
the exchange offer specified above. We will give oral or written notice of any
extension, amendment, nonacceptance or termination to the holders of the
original notes as promptly as practicable.
These conditions are for our sole benefit, and we may assert them or waive
them in whole or in part at any time or at various times in our sole discretion.
Our failure at any time to exercise any of these rights will not mean that we
have waived our rights. Each right will be deemed an ongoing right that we may
assert at any time or at various times.
In addition, we will not accept for exchange any original notes tendered,
and will not issue exchange notes in exchange for any such original notes, if at
such time any stop order has been threatened or is in effect with respect to the
registration statement of which this prospectus constitutes a part or the
qualification of the indenture relating to the notes under the Trust Indenture
Act of 1939.
PROCEDURES FOR TENDERING
How to Tender Generally
Only a holder of original notes may tender such original notes in the
exchange offer. To tender in the exchange offer, a holder must either (1) comply
with the procedures for physical tender or (2) comply with the automated tender
offer program procedures of The Depository Trust Company, or "DTC," described
below.
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To complete a physical tender, a holder must:
- complete, sign and date the letter of transmittal or a facsimile of the
letter of transmittal,
- have the signature on the letter of transmittal guaranteed if the letter
of transmittal so requires,
- mail or deliver the letter of transmittal or facsimile to the exchange
agent prior to the expiration date, and
- deliver the original notes to the exchange agent prior to the expiration
date or comply with the guaranteed delivery procedures described below.
To be tendered effectively, the exchange agent must receive any physical
delivery of the letter of transmittal and other required documents at its
address provided above under "Summary of the Exchange Offer -- The Exchange
Agent" prior to the expiration date.
To complete a tender through DTC's automated tender offer program, the
exchange agent must receive, prior to the expiration date, a timely confirmation
of book-entry transfer of such original notes into the exchange agent's account
at DTC according to the procedure for book-entry transfer described below or a
properly transmitted agent's message.
The tender by a holder that is not withdrawn prior to the expiration date
and our acceptance of that tender will constitute an agreement between the
holder and us in accordance with the terms and subject to the conditions
described in this prospectus and in the letter of transmittal.
THE METHOD OF DELIVERY OF ORIGINAL NOTES, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT YOUR ELECTION AND RISK.
RATHER THAN MAIL THESE ITEMS, WE RECOMMEND THAT YOU USE AN OVERNIGHT OR HAND
DELIVERY SERVICE. IN ALL CASES, YOU SHOULD ALLOW SUFFICIENT TIME TO ASSURE
DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. YOU SHOULD NOT SEND
THE LETTER OF TRANSMITTAL OR ORIGINAL NOTES TO US. YOU MAY REQUEST YOUR BROKER,
DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE TO EFFECT THE ABOVE
TRANSACTIONS FOR YOU.
How to Tender if You Are a Beneficial Owner
If you beneficially own original notes that are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and you wish to
tender those notes, you should contact the registered holder as soon as possible
and instruct the registered holder to tender on your behalf. If you are a
beneficial owner and wish to tender on your own behalf, you must, prior to
completing and executing the letter of transmittal and delivering your original
notes, either:
- make appropriate arrangements to register ownership of the original notes
in your name, or
- obtain a properly completed bond power from the registered holder of your
original notes.
The transfer of registered ownership may take considerable time and may not
be completed prior to the expiration date.
SIGNATURES AND SIGNATURE GUARANTEES
You must have signatures on a letter of transmittal or a notice of
withdrawal described below under "The Exchange Offer -- Withdrawal of Tenders"
guaranteed by an eligible institution unless the original notes are tendered:
- by a registered holder who has not completed the box entitled "Special
Issuance Instructions" or "Special Delivery Instructions" on the letter
of transmittal, or
- for the account of an eligible institution.
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An eligible institution is a member firm of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
a commercial bank or trust company having an office or correspondent in the
United States, or an eligible guarantor institution within the meaning of Rule
17Ad-15 under the Securities Exchange Act, that is a member of one of the
recognized signature guarantee programs identified in the letter of transmittal.
WHEN ENDORSEMENTS OR BOND POWERS ARE NEEDED
If a person other than the registered holder of any original notes signs
the letter of transmittal, the original notes must be endorsed or accompanied by
a properly completed bond power. The registered holder must sign the bond power
as the registered holder's name appears on the original notes. An eligible
institution must guarantee that signature.
If the letter of transmittal or any original notes or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact, or
officers of corporations or others acting in a fiduciary or representative
capacity, those persons should so indicate when signing. Unless we waive this
requirement, they also must submit evidence satisfactory to us of their
authority to deliver the letter of transmittal.
TENDERING THROUGH DTC'S AUTOMATED TENDER OFFER PROGRAM
The exchange agent and DTC have confirmed that any financial institution
that is a participant in DTC's system may use DTC's automated tender offer
program to tender. Accordingly, participants in the program may, instead of
physically completing and signing the letter of transmittal and delivering it to
the exchange agent, transmit their acceptance of the exchange offer
electronically. They may do so by causing DTC to transfer the original notes to
the exchange agent in accordance with its procedures for transfer. DTC will then
send an agent's message to the exchange agent.
An agent's message is a message transmitted by DTC to and received by the
exchange agent and forming part of the book-entry confirmation, stating that:
- DTC has received an express acknowledgment from a participant in DTC's
automated tender offer program that is tendering original notes that are
the subject of such book-entry confirmation,
- the participant has received and agrees to be bound by the terms of the
letter of transmittal or, in the case of an agent's message relating to
guaranteed delivery, the participant has received and agrees to be bound
by the applicable notice of guaranteed delivery, and
- we may enforce the agreement against such participant.
DETERMINATIONS UNDER THE EXCHANGE OFFER
We will determine in our sole discretion all questions as to the validity,
form, eligibility, time of receipt, acceptance of tendered original notes and
withdrawal of tendered original notes. Our determination will be final and
binding. We reserve the absolute right to reject any original notes not properly
tendered or any original notes our acceptance of which, in the opinion of our
counsel, might be unlawful. We also reserve the right to waive any defects,
irregularities or conditions of the exchange offer as to particular original
notes. Our interpretation of the terms and conditions of the exchange offer,
including the instructions in the letter of transmittal, will be final and
binding on all parties.
Unless waived, any defects or irregularities in connection with tenders of
original notes must be cured within such time as we determine. Neither we, the
exchange agent nor any other person will be under any duty to give notification
of defects or irregularities with respect to tenders of original notes, nor will
we or those persons incur any liability for failure to give such notification.
Tenders of original notes will not be deemed made until such defects or
irregularities have been cured or waived. Any original notes received by the
exchange agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned to the tendering
holder, unless otherwise provided in the letter of transmittal, as soon as
practicable following the expiration date.
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WHEN WE WILL ISSUE EXCHANGE NOTES
In all cases, we will issue exchange notes for original notes that we have
accepted for exchange in the exchange offer only after the exchange agent timely
receives:
- original notes or a timely book-entry confirmation of transfer of such
original notes into the exchange agent's account at DTC, and
- a properly completed and duly executed letter of transmittal and all
other required documents or a properly transmitted agent's message.
RETURN OF ORIGINAL NOTES NOT ACCEPTED OR EXCHANGED
If we do not accept any tendered original notes for exchange for any reason
described in the terms and conditions of the exchange offer or if original notes
are submitted for a greater principal amount than the holder desires to
exchange, we will return the unaccepted or nonexchanged original notes without
expense to their tendering holder. In the case of original notes tendered by
book-entry transfer into the exchange agent's account at DTC according to the
procedures described below, such nonexchanged original notes will be credited to
an account maintained with DTC. These actions will occur as promptly as
practicable after the expiration or termination of the exchange offer.
YOUR REPRESENTATIONS TO US
By signing or agreeing to be bound by the letter of transmittal, you will
represent to us that, among other things:
- any exchange notes you receive will be acquired in the ordinary course of
your business,
- you have no arrangement or understanding with any person to participate
in the distribution of the original notes or the exchange notes within
the meaning of the Securities Act,
- you are not our affiliate, as defined in Rule 405 under the Securities
Act, if you are our affiliate, you will comply with the applicable
registration and prospectus delivery requirements of the Securities Act,
- if you are not a broker-dealer, you are not engaged in and do not intend
to engage in the distribution of the exchange notes, and
- if you are a broker-dealer that will receive exchange notes for your own
account in exchange for original notes that you acquired as a result of
market-making activities or other trading activities, you will deliver a
prospectus in connection with any resale of such exchange notes.
BOOK-ENTRY TRANSFER
The exchange agent will make a request to establish an account with respect
to the original notes at DTC for purposes of the exchange offer promptly after
the date of this prospectus. Any financial institution participating in DTC's
system may make book-entry delivery of original notes by causing DTC to transfer
such original notes into the exchange agent's account at DTC in accordance with
DTC's procedures for transfer. If you are unable to deliver confirmation of the
book-entry tender of your original notes into the exchange agent's account at
DTC or all other documents required by the letter of transmittal to the exchange
agent on or prior to the expiration date, you must tender your original notes
according to the guaranteed delivery procedures described below.
GUARANTEED DELIVERY PROCEDURES
If you wish to tender your original notes but they are not immediately
available or if you cannot deliver your original notes, the letter of
transmittal or any other required documents to the exchange agent
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or comply with the applicable procedures under DTC's automated tender offer
program prior to the expiration date, you may tender if:
- the tender is made through a member firm of a registered national
securities exchange or of the National Association of Securities Dealers,
Inc., a commercial bank or trust company having an office or
correspondent in the United States, or an eligible guarantor institution,
- prior to the expiration date, the exchange agent receives from such
member firm of a registered national securities exchange or of the
National Association of Securities Dealers, Inc., commercial bank or
trust company having an office or correspondent in the United States, or
eligible guarantor institution either a properly completed and duly
executed notice of guaranteed delivery by facsimile transmission, mail or
hand delivery or a properly transmitted agent's message and notice of
guaranteed delivery:
- stating your name and address, the registered number(s) of your
original notes and the principal amount of original notes tendered,
- stating that the tender is being made thereby, and
- guaranteeing that, within three New York Stock Exchange trading days
after the expiration date, the letter of transmittal or facsimile thereof
or agent's message in lieu thereof, together with the original notes or a
book-entry confirmation, and any other documents required by the letter
of transmittal will be deposited by the eligible guarantor institution
with the exchange agent,
- the exchange agent receives such properly completed and executed letter
of transmittal or facsimile or agent's message, as well as all tendered
original notes in proper form for transfer or a book-entry confirmation,
and all other documents required by the letter of transmittal, within
three New York Stock Exchange trading days after the expiration date.
Upon request to the exchange agent, the exchange agent will send a notice
of guaranteed delivery to you if you wish to tender your original notes
according to the guaranteed delivery procedures described above.
WITHDRAWAL OF TENDERS
Except as otherwise provided in this prospectus, you may withdraw your
tender at any time prior to 5:00 p.m., New York City time, on the expiration
date.
For a withdrawal to be effective:
- the exchange agent must receive a written notice of withdrawal at one of
the addresses listed above under "Summary of the Exchange Offer -- The
Exchange Agent," or
- the withdrawing holder must comply with the appropriate procedures of
DTC's automated tender offer program.
Any notice of withdrawal must:
- specify the name of the person who tendered the original notes to be
withdrawn,
- identify the original notes to be withdrawn, including the registration
number or numbers and the principal amount of such original notes,
- be signed by the person who tendered the original notes in the same
manner as the original signature on the letter of transmittal used to
deposit those original notes or be accompanied by documents of transfer
sufficient to permit the trustee to register the transfer in the name of
the person withdrawing the tender, and
- specify the name in which such original notes are to be registered, if
different from that of the person who tendered the original notes.
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If original notes have been tendered under the procedure for book-entry
transfer described above, any notice of withdrawal must specify the name and
number of the account at DTC to be credited with the withdrawn original notes
and otherwise comply with the procedures of DTC.
We will determine all questions as to the validity, form, eligibility and
time of receipt of notice of withdrawal, and our determination shall be final
and binding on all parties. We will deem any original notes so withdrawn not to
have been validly tendered for exchange for purposes of the exchange offer.
Any original notes that have been tendered for exchange but that are not
exchanged for any reason will be returned to their holder without cost to the
holder or, in the case of original notes tendered by book-entry transfer into
the exchange agent's account at DTC according to the procedures described above,
such original notes will be credited to an account maintained with DTC for the
original notes. This return or crediting will take place as soon as practicable
after withdrawal, rejection of tender or termination of the exchange offer. You
may retender properly withdrawn original notes by following one of the
procedures described under "The Exchange Offer -- Procedures for Tendering"
above at any time on or prior to 5:00 p.m., New York City time, on the
expiration date.
FEES AND EXPENSES
We will bear the expenses of soliciting tenders. The principal solicitation
is being made by mail; however, we may make additional solicitation by
facsimile, email, telephone or in person by our officers and regular employees
and those of our affiliates.
We have not retained any dealer-manager in connection with the exchange
offer and will not make any payments to broker-dealers or others soliciting
acceptances of the exchange offer. We will, however, pay the exchange agent
reasonable and customary fees for its services and reimburse it for its related
reasonable out-of-pocket expenses. We may also pay brokerage houses and other
custodians, nominees and fiduciaries the reasonable out-of-pocket expenses
incurred by them in forwarding copies of this prospectus, letters of transmittal
and related documents to the beneficial owners of the original notes and in
handling or forwarding tenders for exchange.
We will pay the cash expenses to be incurred in connection with the
exchange offer. They include:
- SEC registration fees for the exchange notes,
- fees and expenses of the exchange agent and trustee,
- accounting and legal fees,
- printing costs, and
- related fees and expenses.
TRANSFER TAXES
If you tender your original notes for exchange, you will not be required to
pay any transfer taxes. We will pay all transfer taxes, if any, applicable to
the exchange of original notes in the exchange offer. The tendering holder will,
however, be required to pay any transfer taxes, whether imposed on the
registered holder or any other person, if:
- certificates representing exchange notes or original notes for principal
amounts not tendered or accepted for exchange are to be delivered to, or
are to be issued in the name of, any person other than the registered
holder of original notes tendered,
- tendered original notes are registered in the name of any person other
than the person signing the letter of transmittal, or
- a transfer tax is imposed for any reason other than the exchange of
original notes for exchange notes in the exchange offer.
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If satisfactory evidence of payment of any transfer taxes payable by a
tendering holder is not submitted with the letter of transmittal, the amount of
such transfer taxes will be billed directly to that tendering holder. The
exchange agent will retain possession of exchange notes with a face amount equal
to the amount of the transfer taxes due until it receives payment of the taxes.
CONSEQUENCES OF FAILURE TO EXCHANGE
If you do not exchange your original notes for exchange notes in the
exchange offer, you will remain subject to the existing restrictions on transfer
of the original notes. In general, you may not offer or sell the original notes
unless either they are registered under the Securities Act or the offer or sale
is exempt from or not subject to registration under the Securities Act and
applicable state securities laws. Except as required by the registration rights
agreement, we do not intend to register resales of the original notes under the
Securities Act.
The tender of original notes in the exchange offer will reduce the
outstanding principal amount of the original notes. Due to the corresponding
reduction in liquidity, this may have an adverse effect upon, and increase the
volatility of, the market price of any original notes that you continue to hold.
OTHER
Participation in the exchange offer is voluntary, and you should carefully
consider whether to accept. You are urged to consult your financial and tax
advisors in making your decision on what action to take. In the future, we may
seek to acquire untendered original notes in open market or privately negotiated
transactions, through subsequent exchange offers or otherwise. We have no
present plan to acquire any original notes that are not tendered in the exchange
offer or to file a registration statement to permit resales of any untendered
original notes, except as required by the registration rights agreement.
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DESCRIPTION OF NOTES
The original notes were, and the exchange notes will be, issued under an
indenture, dated as of March 6, 2001, between AT&T Wireless Services and The
Bank of New York, as trustee. The terms of the notes include those stated in the
indenture and those made part of the indenture by reference to the Trust
Indenture Act of 1939. The following is a summary of the material provisions of
the indenture. Because this is a summary, it may not contain all the information
that is important to you. You should read the indenture in its entirety. Copies
of the proposed form of the indenture are available as described under "Where
You Can Find More Information."
BASIC TERMS OF NOTES
The notes
- are our unsecured unsubordinated obligations, ranking equally in right of
payment with all of our existing and future unsecured unsubordinated
obligations;
- are issued in an original aggregate principal amount of $6,500,000,000,
consisting of $1,000,000,000 in principal amount of 2006 notes,
$3,000,000,000 in principal amount of 2011 notes and $2,500,000,000 in
principal amount of 2031 notes;
- mature on March 1, 2006; March 1, 2011; and March 1, 2031;
- bear interest commencing March 1, 2001 at 7.350%, for the 2006 notes,
7.875% for the 2011 notes and 8.750% for the 2031 notes, payable
semiannually on September 1 and March 1, commencing September 1, 2001, to
holders of record on August 15 or February 15 immediately preceding the
interest payment date.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
ADDITIONAL INTEREST
If any registration default with respect to the original notes occurs, we
will be obligated to pay additional interest on the original notes at the rate
of 0.25% per year. See "Description of Notes -- Registration Rights."
The additional interest provision in the original notes related to the
potential DoCoMo repurchase is no longer applicable as a result of the
completion of the split-off.
OPTIONAL REDEMPTION
Our notes will be redeemable, as a whole or in part, at our option, at any
time or from time to time, on at least 30 days, but not more than 90 days, prior
notice mailed to the registered address of each holder of our notes. In case of
a redemption, if we are listed on the Luxembourg Stock Exchange, a publication
will be made in the Luxemburger Wort and in the event of an early redemption the
Luxembourg Stock Exchange will be notified. The redemption prices will be equal
to the greater of (1) 100% of the principal amount of the notes to be redeemed
or (2) the sum of the present values of the Remaining Scheduled Payments
discounted, on a semiannual basis (assuming a 360-day year consisting of twelve
30-day months), at a rate equal to the sum of the Treasury Rate and 30 basis
points for the 2006 notes, 40 basis points for the 2011 notes and 50 basis
points for the 2031 notes. In the case of each of clause (1) and (2), accrued
interest will be payable to the redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the notes to be redeemed that would be utilized, at the
time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of the notes. "Independent Investment Banker" means one of the
Reference Treasury Dealers appointed by us.
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"Comparable Treasury Price" means, with respect to any redemption date, (1)
the average of the Reference Treasury Dealer Quotations for such redemption date
after excluding the highest and lowest of such Reference Treasury Dealer
Quotations, or (2) if the Trustee obtains fewer than five such Reference
Treasury Dealer Quotations, the average of all such quotations. "Reference
Treasury Dealer Quotations" means, with respect to each Reference Treasury
Dealer and any redemption date, the average, as determined by the trustee, of
the bid and asked prices for the Comparable Treasury Issue (expressed in each
case as a percentage of its principal amount) quoted in writing to the trustee
by such Reference Treasury Dealer at 3:30 p.m., New York City time, on the third
business day preceding such redemption date.
"Reference Treasury Dealer" means each of Merrill Lynch, Pierce, Fenner &
Smith Incorporated, Salomon Smith Barney Inc. plus three of the other initial
purchases that are U.S. Government securities dealers and their respective
successors. If any of the foregoing shall cease to be a primary U.S. Government
securities dealer (a "Primary Treasury Dealer"), we shall substitute another
nationally recognized investment banking firm that is a Primary Treasury Dealer.
"Remaining Scheduled Payments" means, with respect to each note to be
redeemed, the remaining scheduled payments of principal of and interest on such
note that would be due after the related redemption date but for such
redemption. If such redemption date is not an interest payment date with respect
to such note, the amount of the next succeeding scheduled interest payment on
such note will be reduced by the amount of interest accrued on such note to such
redemption date.
"Treasury Rate" means, with respect to any redemption date, the rate per
annum equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date.
On and after the redemption date, interest will cease to accrue on the
notes or any portion of the notes called for redemption (unless we default in
the payment of the redemption price and accrued interest). On or before the
redemption date, we will deposit with the trustee money sufficient to pay the
redemption price of and (unless the redemption date shall be an interest payment
date) accrued interest to the redemption date on the notes to be redeemed on
such date. If less than all of the notes of any series are to be redeemed, the
notes to be redeemed shall be selected by the trustee by such method as the
trustee shall deem fair and appropriate.
Under certain circumstances we may, at our option, redeem, as a whole, but
not in part, under certain circumstances. See the section under the heading
"Book-Entry; Delivery and Form -- Redemption Upon a Tax Event" below.
NO MANDATORY REDEMPTION OR SINKING FUND
There will be no mandatory redemption or sinking fund payments for the
notes.
REGISTRATION RIGHTS
In connection with the issuance of the original notes, we entered into a
registration rights agreement with the initial purchasers of the original notes.
This agreement requires us to use our reasonable best efforts to:
- file with the SEC within 180 days of the issue date of the original notes
a registration statement relating to an exchange offer of the exchange
notes for the original notes under the Securities Act,
- cause the exchange offer to be consummated within 240 days following the
issue date of the original notes,
- keep the exchange offer open for at least 30 calendar days after the date
on which notice of the exchange offer is mailed to the registered holders
of the original notes, or longer if required by applicable law,
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- cause the exchange offer to be consummated within 270 calendar days of
the issue date of the original notes; and
- accept for exchange all original notes duly tendered and not validly
withdrawn in the exchange offer.
As promptly as practicable after the exchange offer registration statement
becomes effective, we will offer the holders of original notes who are not
prohibited by any law or policy of the SEC from participating in the exchange
offer the opportunity to exchange their original notes for exchange notes
registered under the Securities Act that are substantially identical to the
original notes, except that the exchange notes will not contain terms with
respect to transfer restrictions, registration rights and additional interest.
Under the following circumstances, we will use our reasonable best efforts
to file and to cause to become effective under the Securities Act a shelf
registration statement to cover resales of the original notes by those holders
who provide required information in connection with that shelf registration
statement:
- if any change in law or applicable interpretations by the staff of the
SEC does not permit us to effect the exchange offer as contemplated by
the registration rights agreement,
- if the exchange offer is not consummated within 270 days after the issue
date of the original notes,
- if any holder of original notes that participates in the exchange offer,
such holder does not receive exchange notes on the date of the exchange
that may be sold without restriction under state and federal securities
laws (other than solely due to the status of such holder as an affiliate
of us or as a broker-dealer).
If applicable, we will use our reasonable best efforts to keep such shelf
registration statement effective for a period of up to two years after the issue
date of the original notes. We will have the ability to suspend the availability
of the shelf registration statement in limited circumstances.
If any registration default with respect the original notes occurs, we will
become obligated to pay additional interest on the original notes at the rate of
0.25% per year. The additional interest rate will continue until we have cured
all registration defaults. The aggregate amount of the additional interest
payable will in no event exceed .25% per annum.
A registration default with respect to the original notes will occur if,
among other things:
- the exchange offer registration statement or shelf registration statement
is not filed with the SEC on or prior to the 180th calendar day following
the issue date of the original notes.
- the exchange offer registration statement is not declared effective on or
prior to the 240th calendar day after the issue date of the original
note,
- the exchange offer is not consummated or the shelf registration statement
is not declared effective on or prior to the 270th calendar day following
the issue date of the original notes, or
- if a shelf registration statement is filed and declared effective, we
fail to keep such registration statement continuously effective or usable
for resales for the period required by the registration rights agreement
due to certain circumstances relating to pending corporate developments,
public filings with the SEC and similar events, or because the prospectus
contains an untrue statement of material fact or omits to state a
material fact required in order to make the statements therein not
misleading, and such failure continues for more than 60 days in any
12-month period.
If you desire to tender your original notes, you will be required to make
to us the representations described under "The Exchange Offer -- Procedures for
Tendering" and "Your Representations to Us" to participate in the exchange
offer. In addition, we may require you to deliver information that we will use
in connection with the shelf registration statement to have your original notes
included in the shelf
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registration statement and benefit from the provisions regarding additional
interest described in the preceding paragraphs. If you sell original notes under
the shelf registration statement, you generally will:
- be required to be named as a selling security holder in the related
prospectus and to deliver a prospectus to purchasers,
- be subject to applicable civil liability provisions under the Securities
Act in connection with those sales, and
- be bound by the provisions of the registration rights agreement
applicable to you.
This description of the registration rights agreement is a summary only.
For more information, you may read the provisions of the agreement, which we
have filed with the SEC. See "How to Obtain More Information."
RANKING
Structural Subordination. A substantial majority of our operations are
conducted through our consolidated subsidiaries. Claims of creditors of these
subsidiaries, including trade creditors, secured creditors and creditors holding
debt and guarantees issued by those subsidiaries, and claims of preferred and
minority stockholders (if any) of those subsidiaries generally will have
priority with respect to the assets and earnings of those subsidiaries over the
claims of our creditors, including holders of the notes. The notes therefore
will be effectively subordinated to creditors (including trade creditors) and
preferred and minority stockholders or interest holders, as the case may be (if
any) of our consolidated subsidiaries. As of June 30, 2001, the total
indebtedness of our consolidated subsidiaries was approximately $154 million,
excluding trade payables, accrued operating expenses, deferred revenue, deferred
income taxes and the interests of preferred and minority stockholders (if any)
of our subsidiaries.
CERTAIN COVENANTS
We have agreed to some restrictions on our activities for the benefit of
holders of the notes. The restrictive covenants summarized below will apply,
unless the covenants are waived or amended, so long as any of the notes are
outstanding. We have provided a list of certain definitions at the end of this
section to define the capitalized words used in describing the covenants. In the
covenants, all references to us mean AT&T Wireless Services only.
Limitation on Secured Indebtedness. We have agreed that we will not, and we
will not permit any of our Restricted Subsidiaries to, create, assume, incur or
guarantee any Secured Indebtedness unless we secure the notes equally and
ratably with (or prior to) such Secured Indebtedness. However, we may incur
Secured Indebtedness without securing the notes if, immediately after incurring
the Secured Indebtedness, the aggregate amount of all Secured Indebtedness and
the aggregate amount of Attributable Debt then outstanding pursuant to Sale and
Leaseback Transactions would not exceed 15% of Consolidated Net Tangible Assets.
The aggregate amount of all Secured Indebtedness in the preceding sentence
excludes Secured Indebtedness which is secured equally and ratably with the
notes and Secured Indebtedness that is being repaid concurrently.
Limitation on Sale and Leaseback Transactions. We have agreed that we will
not, and we will not permit any of our Restricted Subsidiaries to, enter into
any Sale and Leaseback Transaction, unless either
- immediately thereafter, the sum of
- the Attributable Debt to be outstanding pursuant to such Sale and
Leaseback Transaction and all other Sale and Leaseback Transactions
entered into by us or a Restricted Subsidiary after April 26, 2000 (or,
in the case of a Restricted Subsidiary, the date on which it became a
Restricted Subsidiary, if later than April 26, 2000) and
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- the aggregate amount of all Secured Indebtedness, excluding Secured
Indebtedness which is secured to the same extent as the notes
does not exceed 15% of Consolidated Net Tangible Assets, or
- an amount equal to the greater of
- the net proceeds to us or a Restricted Subsidiary from such sale and
- the Attributable Debt to be outstanding pursuant to such Sale and
Leaseback Transaction, is used within 180 days to retire long-term debt
of AT&T Wireless Services or a Restricted Subsidiary. However, debt
which is subordinate to the notes or which is owed to AT&T Wireless
Services or a Restricted Subsidiary may not be retired.
CERTAIN DEFINITIONS
"Attributable Debt" means, as of the date of its determination, the present
value (discounted semiannually at an interest rate implicit in the terms of the
lease) of the obligation of a lessee for rental payments pursuant to any Sale
and Leaseback Transaction (reduced by the amount of the rental obligations of
any sublessee of all or part of the same property) during the remaining term of
such Sale and Leaseback Transaction (including any period for which the lease
relating thereto has been extended), such rental payments not to include amounts
payable by the lessee for maintenance and repairs, insurance, taxes, assessments
and similar charges and for contingent rates (such as those based on sales),
provided, however, that in the case of any Sale and Leaseback Transaction in
which the lease is terminable by the lessee upon the payment of a penalty,
Attributable Debt shall mean the lesser of the present value of (i) the rental
payments to be paid under such Sale and Leaseback Transaction until the first
date (after the date of such determination) upon which it may be so terminated
plus the then applicable penalty upon such termination and (ii) the rental
payments required to be paid during the remaining term of such Sale and
Leaseback Transaction (assuming such termination provision is not exercised).
"Consolidated Net Tangible Assets" means the total assets of us and our
Subsidiaries, less current liabilities and certain intangible assets (other than
product development costs).
"Principal Property" means land, land improvements, buildings and
associated factory, laboratory, office and switching equipment (excluding all
products marketed by AT&T Wireless Services or any of its Subsidiaries)
constituting a manufacturing, development, warehouse, service, office or
operating facility owned by or leased to AT&T Wireless Services or a Restricted
Subsidiary, located within the United States and having an acquisition cost plus
capitalized improvements in excess of .25% of Consolidated Net Tangible Assets
as of the date of such determination, other than any such property financed
through the issuance of tax-exempt governmental obligations, or which our Board
of Directors determines is not of material importance to AT&T Wireless Services
and its Restricted Subsidiaries taken as a whole, or in which the interest of
AT&T Wireless Services and all its Subsidiaries does not exceed 50%.
"Restricted Subsidiary" means any Subsidiary of AT&T Wireless Services
which has substantially all its property in the United States, which owns or is
a lessee of any Principal Property and in which the investment of AT&T Wireless
Services and all its Subsidiaries exceeds .25% of Consolidated Net Tangible
Assets as of the date of such determination, other than certain financing
Subsidiaries and Subsidiaries formed or acquired after April 26, 2000 for the
purpose of acquiring the business or assets of another person and that do not
acquire all or any substantial part of the business or assets of AT&T Wireless
Services or any Restricted Subsidiary. In addition, our Board of Directors may
designate any other Subsidiary as a Restricted Subsidiary.
"Sale and Leaseback Transaction" means any arrangement with any person
providing for the leasing by us or any Restricted Subsidiary of any Principal
Property (whether such Principal Property is now owned or hereafter acquired)
that has been or is to be sold or transferred by us or such Restricted
Subsidiary to such person, other than (i) temporary leases for a term, including
renewals at the option of the lessee, of not more than three years; (ii) leases
between us and a Restricted Subsidiary or between
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Restricted Subsidiaries; and (iii) leases of Principal Property executed by the
time of, or within 180 days after the latest of, the acquisition, the completion
of construction or improvement (including any improvements on property which
will result in such property becoming Principal Property), or the commencement
of commercial operation of such Principal Property.
"Secured Indebtedness" means:
- indebtedness of us or any Restricted Subsidiary secured by any lien upon
any Principal Property or the stock or indebtedness of a Restricted
Subsidiary or
- any conditional sale or other title retention agreement covering any
Principal Property or Restricted Subsidiary but does not include any
indebtedness secured by any lien or any conditional sale or other title
retention agreement:
- outstanding on April 26, 2000,
- incurred or entered into after April 26, 2000 to finance the
acquisition, improvement or construction of such property and either
secured by purchase money mortgages or liens placed on such property
within 180 days of acquisition, improvement or construction,
- on Principal Property or the stock or indebtedness of Restricted
Subsidiaries and existing at the time of acquisition of the property,
stock or indebtedness,
- owing to us or any other Restricted Subsidiary,
- existing at the time a corporation becomes a Restricted Subsidiary,
- incurred to finance the acquisition or construction of property in
favor of any country or any of its political subdivisions, and
- replacing, extending or renewing any such indebtedness (to the extent
such indebtedness is not increased).
"Subsidiary" means any corporation a majority of the Voting Shares of which
are at the time owned or controlled, directly or indirectly, by us or by one or
more Subsidiaries, or by us and one or more Subsidiaries.
"Voting Shares" means as to shares of a particular corporation, outstanding
shares of stock of any class of such corporation entitled to vote in the
election of directors, excluding shares entitled so to vote only upon the
happening of some contingency.
CONSOLIDATION, MERGER OR SALE
We have agreed not to consolidate with or merge into any other corporation
or convey or transfer substantially all of our properties and assets to any
person, unless
- that person is authorized to acquire and operate our property and
- the successor corporation expressly assumes by a supplemental indenture
the due and punctual payment of the principal of and any premium or any
interest on all the notes and the performance of every covenant in the
indenture that we would otherwise have to perform.
MODIFICATION OF THE INDENTURE
Under the indenture, our rights and obligations and the rights of the
holders may be modified if the holders of a majority in aggregate principal
amount of the outstanding notes consent to it. No modification of the principal
or interest payment terms, and no modification reducing the percentage required
for modifications, is effective against any holder without its consent.
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EVENTS OF DEFAULT
When we use the term Event of Default in the indenture, here are some
examples of what we mean.
Unless otherwise specified in a prospectus supplement, an Event of Default
with respect to the notes occurs if --
- we fail to pay the principal or any premium on any note when due
- we fail to pay interest when due on any debt security for 90 days
- we fail to perform any other covenant in the indenture and this failure
continues for 90 days after we receive written notice of it from the
trustee or from the holders of 25% in principal amount of the outstanding
notes or
- we or a court take certain actions relating to our bankruptcy, insolvency
or reorganization for the benefit of our creditors
A default under our other indebtedness will not be a default under the
indenture.
The trustee may withhold notice to the holders of notes of any default,
except in the payment of principal or interest, if it considers such withholding
of notice to be in the best interests of the holders. By default we mean any
event which is an Event of Default described above or would be an Event of
Default but for the giving of notice or the passage of time.
If an Event of Default for the notes occurs and continues, the trustee or
the holders of at least 25% in aggregate principal amount of the notes may
require us to repay immediately the entire principal of the notes.
The holders of a majority of the aggregate principal amount of the notes
can rescind this accelerated payment requirement or waive any past default or
Event of Default or allow us to not comply with any provision of the indenture.
However, among other things, they cannot waive a default in payment of principal
of, premium, if any, or interest on, any of the notes.
Other than its duties in case of a default, the trustee is not obligated to
exercise any of its rights or powers under the indenture at the request, order
or direction of any holders, unless the holders offer the trustee reasonable
indemnity. If they provide this reasonable indemnity, the holders of a majority
in principal amount of any notes may, subject to certain limitations, direct the
time, method and place of conducting any proceeding or any remedy available to
the trustee, or exercising any power conferred upon the Trustee.
We are not required to provide the trustee with any certificate or other
document saying that we are in compliance with the indenture or that there are
no defaults.
DEFEASANCE
When we use the term defeasance, we mean discharge from some or all of our
obligations under the indenture. If we deposit with the trustee sufficient cash
or government securities to pay the principal, interest, any premium and any
other sums due to the stated maturity date or a redemption date of the notes,
then at our option:
- we will be discharged from our obligations with respect to the notes or
- we will no longer be under any obligation to comply with certain
restrictive covenants under the indenture, and certain Events of Default
will no longer apply to us.
If this happens, the holders of the notes will not be entitled to the
benefits of the indenture except for registration of transfer and exchange of
notes and replacement of lost, stolen or mutilated notes. Such holders may look
only to such deposited funds or obligations for payment.
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We must deliver to the trustee an opinion of counsel to the effect that the
deposit and related defeasance would not cause the holders of the notes to
recognize income, gain or loss for federal income tax purposes.
BOOK-ENTRY; DELIVERY AND FORM
THE GLOBAL SECURITIES
The original notes are, and the exchange notes will be, issued in the form
of one or more global certificates, known as "global securities." The global
securities will be deposited on the date of the acceptance for exchange of the
original notes and the issuance of the exchange notes with, or behalf of, DTC
and registered in the name of Cede & Co., as DTC's nominee.
Exchange notes that are issued as described below under "Issuance of
Certificated Securities" will be issued in the form of registered definitive
certificates, known as "certificated securities." Upon the transfer of
certificated securities, such certificated securities may, unless the global
securities have previously been exchanged for certificated securities, be
exchanged for an interest in the global securities representing the principal
amount of exchange notes being transferred.
Persons holding interests in the global securities may hold their interests
directly through DTC, or indirectly through organizations which are participants
in DTC.
The descriptions of the operations and procedures of DTC, Euroclear and
Clearstream set forth below are provided solely as a matter of convenience.
These operations and procedures are solely within the control of the respective
settlement systems and are subject to change by them from time to time. Neither
we, the trustee, nor any paying agent or registrar takes any responsibility for
these operations or procedures, and holders of securities are urged to contact
the relevant system or its participants directly to discuss these matters.
DTC has advised us that it is (1) a limited purpose trust company organized
under the laws of the State of New York, (2) a "banking organization" within the
meaning of the New York Banking Law, (3) a member of the Federal Reserve System,
(4) a "clearing corporation" within the meaning of the Uniform Commercial Code,
as amended and (5) a "clearing agency" registered pursuant to Section 17A of the
Securities Exchange Act of 1934. DTC was created to hold securities for its
participants and facilitates the clearance and settlement of securities
transactions between participants through electronic book-entry changes to the
accounts of its participants, thereby eliminating the need for physical transfer
and delivery of certificates. DTC's participants include securities brokers and
dealers, including the initial purchasers, banks and trust companies, clearing
corporations and certain other organizations. Indirect access to DTC's system is
also available to other entities such as banks, brokers, dealers and trust
companies, referred to as "indirect participants," that clear through or
maintain a custodial relationship with a participant, either directly or
indirectly. Investors who are not participants may beneficially own securities
held by or on behalf of DTC only through participants or indirect participants.
Ownership of the exchange notes will be shown on, and the transfer of
ownership thereof will be effected only through, records maintained by DTC, with
respect to the interests of participants, and the records of participants and
the indirect participants, with respect to the interests of persons other than
participants.
The laws of some jurisdictions may require that some types of purchasers of
exchange notes take physical delivery of the securities in definitive form.
Accordingly, the ability to transfer interests in exchange notes represented by
a global security to these persons may be limited. In addition, because DTC can
act only on behalf of its participants, who in turn act on behalf of persons who
hold interests through participants, the ability of a person having an interest
in securities represented by a global security to pledge or transfer the
interest to persons or entities that do not participate in DTC's system, or to
otherwise take actions in respect of the interest, may be affected by the lack
of a physical definitive security in respect of the interest.
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So long as DTC or its nominee is the registered owner of a global security,
DTC or such nominee, as the case may be, will be considered the sole owner or
holder of the exchange notes represented by the global security for all purposes
under the indenture. Except as provided below, owners of beneficial interests in
a global security will not be entitled to have securities represented by the
global security registered in their names, will not receive or be entitled to
receive physical delivery of certificated securities, and will not be considered
the owners or holders thereof under the indenture for any purpose, including
with respect to the giving of any direction, instruction or approval to the
trustee under the indenture. Accordingly, each holder owning a beneficial
interest in a global security must rely on the procedures of DTC and, if the
holder is not a participant or an indirect participant, on the procedures of the
participant through which the holder owns its interest, to exercise any rights
of a holder of exchange notes under the indenture or the global security.
We understand that under existing industry practice, in the event that we
request any action of holders of exchange notes, or a holder that is an owner of
a beneficial interest in a global security desires to take any action that DTC,
as the holder of such global security, is entitled to take, DTC would authorize
the participants to take the action and the participants would authorize holders
owning through the participants to take the action or would otherwise act upon
the instruction of the holders. Neither we nor the trustee will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of securities by DTC, or for maintaining, supervising
or reviewing any records of DTC relating to the exchange notes.
Payments with respect to the principal of, and premium, if any, and
interest on, any exchange notes represented by a global security registered in
the name of DTC or its nominee on the applicable record date will be payable by
the trustee to or at the direction of DTC or its nominee in its capacity as the
registered holder of the global security representing the exchange notes under
the indenture. Under the terms of the indenture, we may treat, and the trustee
may treat, the persons in whose names the exchange notes, including the global
securities, are registered as the owners of the exchange notes for the purpose
of receiving payment on the exchange notes and for any and all other purposes
whatsoever. Accordingly, neither we nor the trustee has or will have any
responsibility or liability for the payment of these amounts to owners of
beneficial interests in the global security, including principal, premium, if
any, and interest. Payments by the participants and the indirect participants to
the owners of beneficial interests in the global securities will be governed by
standing instructions and customary industry practice and will be the
responsibility of the participants or the indirect participants and DTC.
Transfers between participants in DTC will be effected in accordance with
DTC's procedures, and will be settled in same-day funds. Transfers between
participants in Euroclear or Clearstream will be effected in the ordinary way in
accordance with their respective rules and operating procedures.
Subject to compliance with the transfer restrictions applicable to the
securities, cross-market transfers between the participants in DTC, on the one
hand, and Euroclear or Clearstream participants, on the other hand, will be
effected through DTC in accordance with DTC's rules on behalf of Euroclear or
Clearstream, as the case may be, by its respective depositary; however, such
cross-market transactions will require delivery of instructions to Euroclear or
Clearstream, as the case may be, by the counterparty in the system in accordance
with the rules and procedures and within the established deadlines (Brussels
time) of the system. Euroclear or Clearstream, as the case may be, will, if the
transaction meets its settlement requirements, deliver instructions to its
respective depositary to take action to effect final settlement on its behalf by
delivering or receiving interests in the relevant global securities in DTC, and
making or receiving payment in accordance with normal procedures for same-day
funds settlement applicable to DTC. Euroclear participants and Clearstream
participants may not deliver instructions directly to the depositaries for
Euroclear or Clearstream.
Because of time zone differences, the securities account of a Euroclear or
Clearstream participant purchasing an interest in a global security from a
participant in DTC will be credited, and any such crediting will be reported to
the relevant Euroclear or Clearstream participant, during the securities
settlement processing day, which must be a business day for Euroclear and
Clearstream, immediately
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following the settlement date of DTC. Cash received in Euroclear or Clearstream
as a result of the sale of an interest in a global security by or through a
Euroclear or Clearstream participant to a participant in DTC will be received
with value on the settlement date of DTC but will be available in the relevant
Euroclear or Clearstream cash account only as of the business day for Euroclear
or Clearstream following DTC's settlement date.
Although DTC, Euroclear and Clearstream have agreed to the foregoing
procedures to facilitate transfers of interests in the global securities among
participants in DTC, Euroclear and Clearstream, they are under no obligation to
perform or to continue to perform such procedures, and such procedures may be
discontinued at any time. Neither we nor the trustee will have any
responsibility for the performance by DTC, Euroclear or Clearstream or their
respective participants or indirect participants of their respective obligations
under the rules and procedures governing their operations.
ISSUANCE OF CERTIFICATED SECURITIES
If (1) we notify the trustee in writing that DTC, Euroclear or Clearstream
is no longer willing or able to act as a depositary or clearing system for the
exchange notes or DTC ceases to be registered as a clearing agency under the
Exchange Act, and a successor depositary or clearing system is not appointed
within 90 days of this notice or cessation, (2) we, at our option, notify the
trustee in writing that we elect to cause the issuance of exchange notes in
definitive form under the indenture or (3) upon the occurrence and continuation
of an event of default under the indenture with respect to any series of
exchange notes, then, upon surrender by DTC of the global securities,
certificated securities will be issued to each person that DTC identifies as the
beneficial owner of the exchange notes represented by the global securities.
Upon any such issuance, the trustee is required to register the certificated
securities in the name of the person or persons or the nominee of any of these
persons and cause the same to be delivered to these persons.
Neither we nor the trustee shall be liable for any delay by DTC or any
participant or indirect participant in identifying the beneficial owners of the
related exchange notes and each such person may conclusively rely on, and shall
be protected in relying on, instructions from DTC for all purposes, including
with respect to the registration and delivery, and the respective principal
amounts, of the exchange notes to be issued.
PROPOSED EU DIRECTIVE ON THE TAXATION OF SAVINGS INCOME
The European Union is currently considering proposals for a new directive
regarding the taxation of savings income. Subject to a number of conditions
being met, it is proposed that member states of the European Union will be
required to provide to the tax authorities of another member state details of
payments of interest or other similar income paid by a paying agent resident
within its jurisdiction to an individual resident in that other member state,
subject to the right of certain member states (including possibly Luxembourg) to
opt instead for a withholding system for a transitional period in relation to
such payments. This directive, if adopted, may be conditioned on the adoption of
equivalent measures in non-European Union countries with significant financial
centers (such as the United States) and in dependent or associated territories
of certain member states. Pending agreement on the precise text of the
directive, it is difficult to say what effect, if any, the adoption of the
directive would have on the exchange notes or payments in respect thereof.
Additional amounts, as described below, will not, in any event, be payable by us
as a result of such directive.
PAYMENT OF ADDITIONAL AMOUNTS
We will, subject to the exceptions and limitations set forth below, pay as
additional interest on our notes such additional amounts as are necessary so
that the net payment by us or a paying agent of the principal of and interest on
our notes to a person that is not a United States Holder (as defined below),
after deduction for any present or future tax, assessment or governmental charge
of the United States or a political subdivision or taxing authority thereof of
therein, imposed by withholding with respect to the
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payment, will not be less than the amount that would have been payable in
respect of our notes had no such withholding or deduction been required.
Our obligation to pay additional amounts shall not apply:
(1) to a tax, assessment or governmental charge that is imposed or
withheld solely because the holder, or a fiduciary, settlor, beneficiary,
member or shareholder of the holder if the holder is an estate, trust,
partnership or corporation, or a person holding a power over an estate or
trust administered by a fiduciary holder:
(a) is or was present or engaged in trade or business in the United
States or has or had a permanent establishment in the United States;
(b) has a current or former relationship with the United States,
including a relationship as a citizen or resident thereof;
(c) is or has been a foreign or domestic personal holding company,
a passive foreign investment company or a controlled foreign corporation
with respect to the United States or a corporation that has accumulated
earnings to avoid United States federal income tax; or
(d) is or was a "10-percent shareholder" of us as defined in
section 871(h)(3) of the United States Internal Revenue Code or any
successor provision;
(2) to any holder that is not the sole beneficial owner of our notes,
or a portion thereof, or that is a fiduciary or partnership, but only to
the extent that the beneficial owner, a beneficiary or settlor with respect
to the fiduciary, or a member of the partnership would not have been
entitled to the payment of an additional amount had such beneficial owner,
beneficiary, settlor or member received directly its beneficial or
distributive share of the payment;
(3) to a tax, assessment or governmental charge that is imposed or
withheld solely because the holder or any other person failed to comply
with certification, identification or information reporting requirements
concerning the nationality, residence, identity or connection with the
United States of the holder or beneficial owner of our notes, if compliance
is required by statute, by regulation of the United States Treasury
Department or by an applicable income tax treaty to which the United States
is a party as a precondition to exemption from such tax, assessment or
other governmental charge;
(4) to a tax, assessment or governmental charge that is imposed other
than by withholding by us or a paying agent from the payment;
(5) to a tax, assessment or governmental charge that is imposed or
withheld solely because of a change in law, regulation, or administrative
or judicial interpretation that becomes effective more than 15 days after
the payment becomes due or is duly provided for, whichever occurs later;
(6) to an estate, inheritance, gift, sales, excise, transfer, wealth
or personal property tax or a similar tax, assessment or governmental
charge;
(7) to any tax, assessment or other governmental charge any paying
agent must withhold from any payment of principal or of interest on any
note, if such payment can be made without such withholding by any other
paying agent; or
(8) in the case of any combination of the above items.
Our notes are subject in all cases to any tax, fiscal or other law or
regulation or administrative or judicial interpretation applicable. Except as
specifically provided under this heading "Payment of Additional Amounts" and
under the heading "-- Redemption Upon a Tax Event," we do not have to make any
payment with respect to any tax, assessment or governmental charge imposed by
any government or a political subdivision or taxing authority.
"United States Holder" means a beneficial owner of a note that is, for
United States federal income tax purposes, (a) a citizen or resident of the
United States, (b) a corporation, partnership or other entity
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created or organized in or under the laws of the United States or of any
political subdivision thereof, (c) an estate or trust the income of which is
subject to United States federal income taxation regardless of its source or (d)
any other person whose income from a note is effectively connected with the
conduct of a United States trade or business.
REDEMPTION UPON A TAX EVENT
If (a) we become or will become obligated to pay additional amounts as
described herein under the heading "-- Payment of Additional Amounts" as a
result of any change in, or amendment to, the laws (or any regulations or
rulings promulgated thereunder) of the United States (or any political
subdivision or taxing authority thereof or therein), or any change in, or
amendments to, any official position regarding the application or interpretation
of such laws, regulations or rulings, which change or amendment is announced or
becomes effective on or after March 1, 2001, or (b) a taxing authority of the
United States takes an action on or after the date of this offering memorandum,
whether or not with respect to us or any of our affiliates, that results in a
substantial probability that we will or may be required to pay such additional
amounts, then we may, at our option, redeem, as a whole, but not in part, our
notes on any interest payment date on not less than 30 nor more than 60 calendar
days' prior notice, at a redemption price equal to 100% of their principal
amount, together with interest accrued thereon to the date fixed for redemption;
provided that we determine, in our business judgment, that the obligation to pay
such additional amounts cannot be avoided by the use of reasonable measures
available to us, not including substitution of the obligor under our notes. No
redemption pursuant to (b) above may be made unless we shall have received an
opinion of independent counsel to the effect that an act taken by a taxing
authority of the United States results in a substantial probability that we will
or may be required to pay the additional amounts described herein under the
heading "-- Payment of Additional Amounts" and we shall have delivered to the
trustee a certificate, signed by a duly authorized officer stating, that based
on such opinion we are entitled to redeem our notes pursuant to their terms.
GOVERNING LAW
The indenture and the notes shall be governed by, and construed in
accordance with, the laws of the State of New York, without regard to conflicts
of laws principles thereof.
NOTICES
Notices to holders of our notes will be published in authorized newspapers
in The City of New York, in London, and, if and so long as our notes are listed
on the Luxembourg Stock Exchange, in Luxembourg. It is expected that publication
will be made in The City of New York in The Wall Street Journal, in London in
the Financial Times and, if we are listed on the Luxembourg Exchange, in
Luxembourg in a daily newspaper having a general circulation in Luxembourg,
which is expected to be the Luxemburger Wort. We will be deemed to have given
such notice on the date of each publication or, if published more than once, on
the date of the first such publication.
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UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a general discussion of the material United States federal
income tax consequences relating to the exchange of original notes for exchange
notes in this exchange offer and the ownership and disposition of the exchange
notes. This discussion is based upon, as of the date hereof, the applicable
provisions of the Internal Revenue Code of 1986, as amended, Treasury
Regulations promulgated or proposed thereunder, judicial decisions and current
positions of the Internal Revenue Service contained in published revenue
rulings, revenue procedures and announcements, all of which are subject to
change either prospectively or retroactively, or are subject to different
interpretations. We have not obtained, nor do we intend to obtain, a ruling from
the Internal Revenue Service as to any United States federal income tax
consequences discussed below and there can be no assurances that the IRS will
not take contrary positions.
This discussion is limited to U.S. and Non-U.S. Holders who exchange
original notes for exchange notes pursuant to this exchange offer and who hold
the exchange notes as capital assets. This discussion does not deal with all
aspects of United States federal income taxation that might be relevant to
holders in light of their particular circumstances, nor does it address the tax
consequences to holders subject to special treatment under the United States
federal income tax laws, such as:
- certain financial institutions;
- insurance companies;
- tax-exempt organizations;
- dealers in securities or foreign currencies;
- persons who hold the exchange notes as part of a hedge, conversion
transaction, straddle or other integrated transaction;
- U.S. Holders whose functional currency is not the United States dollar;
- partnerships or other entities classified as partnerships for United
States federal income tax purposes; and
- persons subject to the alternative minimum tax.
This discussion does not address the tax consequences arising under the
laws of any foreign, state or local jurisdiction. PROSPECTIVE INVESTORS ARE
URGED TO CONSULT THEIR OWN TAX ADVISORS REGARDING THE UNITED STATES FEDERAL TAX
CONSEQUENCES OF ACQUIRING, HOLDING AND DISPOSING OF THE EXCHANGE NOTES, AS WELL
AS ANY TAX CONSEQUENCES ARISING UNDER THE LAWS OF ANY STATE, LOCAL, OR FOREIGN
TAXING JURISDICTION.
As used herein, the term "U.S. Holder" means a beneficial owner of a note
that is for United States federal income tax purposes:
- a citizen or resident of the United States;
- a corporation, or other entity taxable as a corporation for United States
federal income tax purposes, created or organized in or under the laws of
the United States or any political subdivision thereof;
- an estate, the income of which is subject to United States federal income
taxation regardless of its source;
- a trust that either is subject to the supervision of a court within the
United States and which has one or more United States persons with
authority to control all substantial decisions, or has a valid election
in effect under applicable Treasury Regulations to be treated as a United
States person; or
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- not otherwise a U.S. Holder but whose income from a note is effectively
connected with the holder's conduct of a trade or business in the United
States.
The term U.S. Holder also includes certain former citizens of the United
States.
As used herein, the term "Non-U.S. Holder" means a beneficial owner of a
note that is not a U.S. Holder for United States federal income tax purposes.
THE EXCHANGE OFFER
An exchange of original notes for exchange notes pursuant to the exchange
offer will not be a taxable event for United States federal income tax purposes.
Consequently, U.S. Holders and Non-U.S. Holders will not recognize any taxable
gain or loss as a result of exchanging original notes for exchange notes
pursuant to this exchange offer. The holding period of the exchange notes will
include the holding period of the original notes and the tax basis in the
exchange notes will be the same as the basis in the original notes immediately
before the exchange.
TAX CONSEQUENCES TO U.S. HOLDERS
Treatment of Interest
Interest on an exchange note will be taxable to a U.S. Holder as ordinary
interest income at the time it accrues or is received in accordance with the
U.S. Holder's regular method of accounting for United States federal income tax
purposes.
Sale, Exchange or Retirement of Exchange Notes
In general, upon the sale, exchange, retirement or other taxable
disposition of an exchange note, a U.S. Holder will recognize taxable gain or
loss equal to the difference between:
(1) the amount of cash and the fair market value of other property
received in the sale, exchange, retirement or other taxable disposition
(not including any amount attributable to accrued but unpaid interest on
the exchange note) (the "amount realized"); and
(2) the U.S. Holder's adjusted tax basis in such exchange note.
Any portion of the amount realized that is attributable to accrued but
unpaid interest will be treated as ordinary interest income. Please read the
discussion under the heading "Treatment of Interest" above.
Gain or loss recognized by a U.S. Holder on the sale, exchange, retirement
or other taxable disposition of an exchange note will be capital gain or loss.
The gain or loss will be long-term capital gain or loss, if the exchange note
has been held for more than twelve (12) months. The deductibility of capital
losses is subject to certain limitations.
Backup Withholding and Information Reporting
Information returns will be filed with the Internal Revenue Service in
connection with payments on the exchange notes and the proceeds from a sale or
other disposition of the exchange notes. A U.S. Holder will not be subject to a
31% backup withholding tax on these payments if the U.S. Holder provides its
taxpayer identification number to the paying agent and complies with certain
certification procedures or is otherwise exempt from backup withholding. The
amount of any backup withholding withheld from a payment to a U.S. Holder will
be allowed as a credit against the U.S. Holder's United States federal income
tax liability and may entitle the U.S. Holder to a refund, provided that the
required information is furnished to the Internal Revenue Service.
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TAX CONSEQUENCES TO NON-U.S. HOLDERS
Treatment of Interest
Subject to the discussion below concerning backup withholding, payments of
interest on the exchange notes to any Non-U.S. Holder will not be subject to
United States federal income tax, or 30% withholding, provided that:
(i) the interest is not effectively connected with the conduct by the
Non-U.S. Holder of a trade or business in the United States,
(ii) the Non-U.S. Holder does not own, actually or constructively, 10%
or more of the combined voting power of all classes of our stock entitled
to vote,
(iii) the Non-U.S. Holder is not a controlled foreign corporation
(within the meaning of the Code) that is related, directly or indirectly,
to us through stock ownership, and
(iv) the certification requirements required to claim the portfolio
interest exemption set forth in Section 871(h) or Section 881(c) of the
Code have been fulfilled with respect to the beneficial owner. Generally,
to satisfy the certification requirements set forth in Section 871(h) or
Section 881(c) of the Code, the beneficial owner of an exchange note must
certify on Internal Revenue Service Form W-8BEN, under penalties of
perjury, that the Non-U.S. Holder is not a United States person.
Sale, Exchange or Retirement of Exchange Notes
Subject to the discussion below concerning backup withholding, a Non-U.S.
Holder of an exchange note will not be subject to United States federal income
tax on any gain realized on the sale, exchange, retirement or other taxable
disposition of an exchange note unless (i) the Non-U.S. Holder is an individual
who is present in the United States for 183 days or more during the taxable year
of disposition and certain other conditions are met or (ii) the gain is
effectively connected with the conduct by the Non-U.S. Holder of a trade or
business in the United States.
Backup Withholding and Information Reporting
Information returns will be filed with the Internal Revenue Service in
connection with payments on the exchange notes and the proceeds from a sale,
exchange, retirement or other taxable disposition of the exchange notes. In
order to avoid information reporting and backup withholding tax requirements, a
Non-U.S. Holder of an exchange note may have to comply with certification
procedures to establish that the Non-U.S. Holder is not a United States person.
The certification procedures required to claim the portfolio interest exemption
described under the heading "Treatment of Interest" generally will satisfy the
certification requirements necessary to avoid the 31% backup withholding tax as
well. The amount of any backup withholding tax withheld from a payment to a
Non-U.S. Holder will be allowed as a credit against the Non-U.S. Holder's United
States federal income tax liability and may entitle the holder to a refund,
provided that the required information is furnished to the Internal Revenue
Service.
PLAN OF DISTRIBUTION
Based on interpretations by the staff of the SEC in no action letters
issued to third parties, we believe that you may resell or otherwise transfer
exchange notes issued in the exchange offer without further compliance with the
registration and prospectus delivery requirements of the Securities Act of 1933,
as amended, if:
- you acquire exchange notes in the ordinary course of your business, and
- you are not engaged in, and do not intend to engage in, and have no
arrangement or understanding with any person to participate in, a
distribution of exchange notes.
49
52
We believe that you may not transfer exchange notes issued in the exchange
offer without further compliance with such requirements or an exemption from
such requirements if you are:
- our affiliate within the meaning of Rule 405 under the Securities Act, or
- a broker-dealer that acquired original notes as a result of market-making
or other trading activities.
The information described above concerning interpretations of and positions
taken by the SEC staff is not intended to constitute legal advice, and
broker-dealers should consult their own legal advisors with respect to these
matters.
If you wish to exchange your original notes for exchange notes in the
exchange offer, you will be required to make representations to us as described
in "The Exchange Offer -- Procedures for Tendering" and "Your Representations to
Us" of this prospectus and in the letter of transmittal. In addition, if a
broker-dealer receives exchange notes for its own account in exchange for
original notes that were acquired by it as a result of market-making activities
or other trading activities, it will be required to acknowledge that it will
deliver a prospectus in connection with any resale by it of such exchange notes.
A broker-dealer may use this prospectus, as we may amend or supplement it, in
connection with these resales. We have agreed that, for a period of 240 days
after the closing date of the exchange offer, we will make this prospectus, as
amended or supplemented, available to any broker-dealer for use in connection
with any such resale.
We will not receive any proceeds from any sale of exchange notes by
broker-dealers. Exchange notes received by broker-dealers for their own account
in the exchange offer may be sold from time to time in one or more transactions:
- in the over-the-counter market,
- in negotiated transactions,
- through the writing of options on the exchange notes, or
- a combination of such methods of resale.
The prices at which these sales occur may be:
- at market prices prevailing at the time of resale,
- at prices related to such prevailing market prices, or
- at negotiated prices.
Any such resale may be made directly to purchasers or to or through brokers
or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer or the purchasers of any such exchange
notes. Any broker-dealer that resells exchange notes that it received for its
own account in the exchange offer and any broker or dealer that participates in
a distribution of exchange notes may be deemed to be an underwriter within the
meaning of the Securities Act. Any profit on any resale of exchange notes and
any commission or concessions received by any such persons maybe deemed to be
underwriting compensation. The letter of transmittal states that, by
acknowledging that it will deliver and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an underwriter within the
meaning of the Securities Act.
For 240 days after the closing of the exchange offer, we will promptly send
additional copies of this prospectus and any amendment or supplement to this
prospectus to any broker-dealer that requests them in the letter of transmittal.
We have agreed to pay all expenses incident to the exchange offer, including
certain expenses of counsel for the holders of the original notes, other than
commissions or concessions of any broker-dealer. The initial purchasers of the
original notes will reimburse us for certain of these expenses. We also have
agreed to indemnify the holders of the original notes, including any
broker-dealer, against certain liabilities, including liabilities under the
Securities Act.
50
53
TRANSFER RESTRICTIONS ON THE ORIGINAL NOTES
The original notes were not registered under the Securities Act.
Accordingly, we offered and sold the original notes only in private sales exempt
from or not subject to the registration requirements of the Securities Act:
- to qualified institutional buyers under Rule 144A under the Securities
Act, or
- to non-U.S. persons outside the United States in compliance with
Regulation S under the Securities Act.
You may not offer or sell those original notes in the United States or to,
or for the account or benefit of, U.S. persons except in transactions exempt
from or not subject to the Securities Act registration requirements.
LEGAL MATTERS
The validity of the notes being offered hereby will be passed upon for AT&T
Wireless Services by Gregory P. Landis, Senior Vice President and General
Counsel, AT&T Wireless Services. As of July 30, 2001, Mr. Landis was the
beneficial owner of approximately 229,224 shares of our common stock and had
options to purchase additional shares of our common stock.
EXPERTS
The audited financial statements and the financial statement schedule
incorporated in this S-4 Registration Statement by reference to the Prospectus
filed pursuant to Rule 424(b)(1) on July 9, 2001 (No. 333-60472), except as they
relate to Vanguard Cellular Systems, Inc. and its subsidiaries, have been
audited by PricewaterhouseCoopers LLP, independent accountants, and, insofar as
they relate to Vanguard Cellular Systems, Inc., and its subsidiaries, by Arthur
Andersen LLP, independent public accountants, whose reports thereon are
incorporated by reference. Such financial statements have been so incorporated
in reliance on the reports of such independent accountants given on the
authority of such firms as experts in auditing and accounting.
51
54
INDEX TO FINANCIAL STATEMENTS
PAGE
----
PRO FORMA FINANCIAL STATEMENTS
Unaudited Pro Forma Condensed Combined Financial
Statements................................................ F-2
Unaudited Pro Forma Condensed Combined Balance Sheet at June
30, 2001.................................................. F-3
Unaudited Pro Forma Condensed Combined Income Statement for
the six months ended June 30, 2001........................ F-4
Unaudited Pro Forma Condensed Combined Income Statement for
the year ended December 31, 2000.......................... F-5
Notes to Unaudited Pro Forma Condensed Combined Financial
Statements................................................ F-6
F-1
55
AT&T WIRELESS SERVICES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The unaudited pro forma condensed combined financial statements set forth
below for AT&T Wireless Services give effect to:
- the settlement of all intercompany obligations between AT&T and AT&T
Wireless Services in accordance with the separation and distribution
agreement entered into between AT&T and AT&T Wireless Services as if such
event had been completed on January 1, 2000 for income statement purposes,
and at June 30, 2001 for balance sheet purposes as it relates to the Note
receivable from AT&T that was repaid prior to the split-off on July 9,
2001;
- the $6.5 billion debt offering of Senior Notes of AT&T Wireless Services
which occurred on March 1, 2001 as if such event had been completed on
January 1, 2000 for income statement purposes;
- the reclassification of the DoCoMo investment which occurred on January
22, 2001 to a mandatorily redeemable security effective with the split-off
of AT&T Wireless Services from AT&T as if such event had occurred on June
30, 2001 for balance sheet purposes.
The pro forma adjustments included herein are based on available
information and certain assumptions that management believes are reasonable and
are described in the accompanying notes to the pro forma financial statements.
The unaudited pro forma condensed combined financial statements do not
necessarily represent what AT&T Wireless Services' financial position or results
of operations would have been had these items occurred on such dates or to
project AT&T Wireless Services' financial position or results of operations at
or for any future date or period. In the opinion of management, all adjustments
necessary to present fairly the unaudited pro forma financial information have
been made. The unaudited pro forma condensed combined financial statements
should be read in conjunction with the historical financial statements of AT&T
Wireless Services, as incorporated by reference into this document.
F-2
56
AT&T WIRELESS SERVICES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AT JUNE 30, 2001
(IN MILLIONS)
AT&T PRO FORMA
WIRELESS PRO FORMA AT&T WIRELESS
SERVICES(1) ADJUSTMENTS SERVICES
----------- ----------- -------------
ASSETS:
Cash and cash equivalents............................. $ 38 $ 5,803(2) $ 5,841
Accounts receivable, net.............................. 1,955 1,955
Note receivable from AT&T............................. 5,803 (5,803)(2) --
Other current assets.................................. 552 552
Total Current Assets.................................. 8,348 -- 8,348
Property, plant and equipment, net.................... 11,131 11,131
Licensing costs, net.................................. 13,443 13,443
Investments in and advances to unconsolidated
subsidiaries........................................ 4,037 4,037
Goodwill, net......................................... 4,860 4,860
Other assets, net..................................... 1,212 1,212
------- ------- -------
Total Assets..................................... $43,031 $ -- $43,031
======= ======= =======
LIABILITIES:
Accounts payable...................................... $ 645 $ $ 645
Payroll and benefit-related liabilities............... 301 301
Due on demand notes payable........................... 98 98
Other current liabilities............................. 1,770 1,770
Total Current Liabilities............................. 2,814 -- 2,814
Long-term debt due to others.......................... 6,487 6,487
Deferred income taxes................................. 4,780 4,780
Other long-term liabilities........................... 297 297
Total Liabilities................................ 14,378 -- 14,378
Minority Interest..................................... 444 444
Mandatorily redeemable common stock................... -- 6,728(4) 6,728
SHAREOWNER'S EQUITY:
Shareowner's net investment........................... 28,281 (6,728)(4) 21,553
Accumulated other comprehensive loss.................. (72) (72)
Total Shareowner's Equity........................ 28,209 (6,728) 21,481
------- ------- -------
Total Liabilities and Shareowner's Equity........ $43,031 $ -- $43,031
======= ======= =======
See Notes To Unaudited Pro Forma AT&T Wireless Services Condensed Combined
Financial Statements.
F-3
57
AT&T WIRELESS SERVICES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED COMBINED INCOME STATEMENT
FOR THE SIX MONTHS ENDED JUNE 30, 2001
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
AT&T PRO FORMA
WIRELESS PRO FORMA AT&T WIRELESS
SERVICES(1) ADJUSTMENTS SERVICES
----------- ----------- -------------
Revenue............................................... $6,592 $ -- $6,592
Operating Expenses
Costs of services..................................... 1,910 -- 1,910
Costs of equipment sales.............................. 968 968
Selling, general and administrative................... 2,232 -- 2,232
Depreciation and amortization......................... 1,212 -- 1,212
------ ---- ------
Total operating expenses.............................. 6,322 -- 6,322
Operating Income...................................... 270 -- 270
Other income.......................................... 213 -- 213
Interest expense...................................... 182 (70)(2) 206
94(3)
Income (loss) before income taxes and net equity
earnings from investments........................... 301 (24) 277
Provision (benefit) for income taxes.................. 156 (9)(5) 147
Net equity earnings from investments.................. 118 -- 118
Net Income (loss)..................................... 263 (15) 248
Dividend requirements on preferred stock held by
AT&T, net........................................... 76 (76)(2) --
------ ---- ------
Net income available to common shareowners............ $ 187 $ 61 $ 248
====== ==== ======
Unaudited pro forma net income per share:
Basic............................................... $ 0.07 $ 0.10
Diluted............................................. $ 0.07 $ 0.10
Weighted average shares to used to compute unaudited
pro forma net income per share:
Basic............................................... 2,530 2,530
Diluted............................................. 2,532 2,532
See Notes To Unaudited Pro Forma AT&T Wireless Services Condensed Combined
Financial Statements.
F-4
58
AT&T WIRELESS SERVICES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED COMBINED INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2000
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
AT&T PRO FORMA
WIRELESS PRO FORMA AT&T WIRELESS
SERVICES(1) ADJUSTMENTS SERVICES
----------- ----------- -------------
Revenue............................................... $10,448 $ -- $10,448
Operating Expenses
Costs of services..................................... 3,169 -- 3,169
Costs of equipment sales.............................. 2,041 2,041
Selling, general and administrative................... 3,590 -- 3,590
Depreciation and amortization......................... 1,686 -- 1,686
------- ----- -------
Total operating expenses......................... 10,486 -- 10,486
Operating Loss........................................ (38) -- (38)
Other income.......................................... 534 -- 534
Interest expense...................................... 85 (196)(2) 419
530(3)
Income (loss) before income taxes and net equity
earnings from investments........................... 411 (334) 77
Provision (benefit) for income taxes.................. 141 (128)(5) 13
Net equity earnings from investments.................. 388 -- 388
Net Income (Loss)..................................... 658 (206) 452
Dividend requirements on preferred stock held by
AT&T, net........................................... 130 (130)(2) --
------- ----- -------
Net income (loss) available to common shareowners..... $ 528 $ (76) $ 452
======= ===== =======
Unaudited pro forma net income per share:
Basic............................................... $ 0.21 $ 0.18
Diluted............................................. $ 0.21 $ 0.18
Weighted average shares used to compute unaudited pro
forma net income per share:
Basic............................................... 2,530 2,530
Diluted............................................. 2,532 2,532
See Notes To Unaudited Pro Forma AT&T Wireless Services Condensed Combined
Financial Statements.
F-5
59
AT&T WIRELESS SERVICES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
1. This column reflects the historical consolidated results of operations
and financial position of AT&T Wireless Services.
2. Gives effect to the settlement of the note receivable balance with AT&T
as of June 30, 2001, for balance sheet purposes as this amount was repaid on
July 9, 2001 in connection with the split-off. For income statement purposes,
the amounts of interest expense related to the intercompany short-term and
long-term debt and dividends on preferred stock were eliminated as if the
intercompany short-term and long-term debt and preferred stock had been repaid
as of January 1, 2000.
3. Gives effect to the March 1, 2001, private placement of $6.5 billion in
Senior Notes as if such private placement occurred as of January 1, 2000 for
income statement purposes. The notes included $1.0 billion paying interest at
7.350% due in 2006, $3.0 billion paying interest at 7.875% due in 2011, and $2.5
billion paying interest at 8.750% due in 2031.
4. Gives effect to the reclassification of the DoCoMo investment to a
mandatorily redeemable security which occurred in conjunction with the
split-off. The DoCoMo investment has been classified as a mandatorily redeemable
security due to certain contractual provisions that could require AT&T Wireless
Services to repay the proceeds of the investment plus interest if certain
technology commitments are not met subsequent to the split-off. The value
assigned to the mandatorily redeemable common stock was based upon the fair
value of the stock as of July 9, 2001, for which the closing price of AT&T
Wireless Services common stock was $16.56. The actual allocation will be based
upon a third party valuation.
5. Reflects the federal statutory and blended state tax effect on the pro
forma adjustments.
F-6
60
------------------------------------------------------
------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THIS EXCHANGE
OFFER, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THOSE TO WHICH IT RELATES OR AN
OFFER OR A SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCE CREATE
AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF.
-------------------------
TABLE OF CONTENTS
PAGE
----
Forward-Looking Information........... 1
Where You Can Find More Information... 3
Prospectus Summary.................... 5
Summary of the Exchange Offer......... 6
The Exchange Agent.................... 9
The Exchange Notes.................... 9
Risk Factors.......................... 11
Private Placement..................... 22
Use of Proceeds....................... 22
Ratio of Earnings to Fixed Charges.... 22
Capitalization........................ 23
Selected Historical Financial Data.... 24
The Exchange Offer.................... 26
Description of Notes.................. 35
Book Entry; Delivery and Form......... 42
United States Federal Income Tax
Considerations...................... 47
Plan of Distribution.................. 49
Transfer Restrictions on the Original
Notes............................... 51
Legal Matters......................... 51
Experts............................... 51
Index to Financial Statements......... F-1
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
AT&T WIRELESS SERVICES, INC.
-------------------------
OFFER TO EXCHANGE ITS
7.350% SENIOR NOTES DUE 2006
7.875% SENIOR NOTES DUE 2011
8.750% SENIOR NOTES DUE 2031
THAT HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
FOR ANY AND ALL OF ITS OUTSTANDING
7.350% SENIOR NOTES DUE 2006
7.875% SENIOR NOTES DUE 2011
8.750% SENIOR NOTES DUE 2031
THAT WERE ISSUED AND SOLD IN A
TRANSACTION EXEMPT FROM REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS
AMENDED
-------------------------
PROSPECTUS
-------------------------
AUGUST 15, 2001
------------------------------------------------------
------------------------------------------------------
61
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law provides that a
corporation may indemnify directors and officers as well as other employees and
individuals against expenses including attorneys' fees, judgments, fines and
amounts paid in settlement in connection with various actions, suits or
proceedings, whether civil, criminal, administrative or investigative other than
an action by or in the right of the corporation, a derivative action, if they
acted in good faith and in a manner they reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, if they had no reasonable cause to believe their
conduct was unlawful. A similar standard is applicable in the case of derivative
actions, except that indemnification only extends to expenses including
attorneys' fees incurred in connection with the defense or settlement of such
actions, and the statute requires court approval before there can be any
indemnification where the person seeking indemnification has been found liable
to the corporation. The statute provides that it is not exclusive of other
indemnification that may be granted by a corporation's by-laws, disinterested
director vote, stockholder vote, agreement or otherwise.
Our certificate of incorporation provides that each person who was or is
made a party or is threatened to be made a party to or is involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that such person, or a person of whom such
person is the legal representative, is or was a director or officer of us or, is
or was serving at our request as a director, officer, employee or agent of
another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans, whether
the basis of such proceeding is the alleged action of such person in an official
capacity as a director, officer, employee or agent or in any other capacity
while serving as a director, officer, employee or agent, will be indemnified and
held harmless by us to the fullest extent authorized by the Delaware General
Corporation Law, as the same exists or may hereafter be amended, against all
expense, liability and loss reasonably incurred or suffered by such person in
connection therewith; provided, however, that, except when such person is
bringing action against us to recover an unpaid claim of indemnification, we
shall indemnify any such person seeking indemnification in connection with a
proceeding, or part thereof, initiated by such person only if such proceeding,
or part thereof, was authorized by our board of directors. Our certificate of
incorporation also provides that we shall pay the expenses incurred in defending
any such proceeding in advance of its final disposition, subject to the
provisions of the Delaware General Corporation Law. Such rights are not
exclusive of any other right which any person may have or thereafter acquire
under any statute, provision of the certificate, by-law, agreement, vote of
stockholders or disinterested directors or otherwise. No repeal or modification
of such provision will in any way diminish or adversely affect the rights of any
director, officer, employee or agent of us thereunder in respect of any
occurrence or matter arising before any such repeal or modification. Our
certificate of incorporation also specifically authorizes us to maintain
insurance and to grant similar indemnification rights to our employees or
agents.
The Delaware General Corporation Law permits a corporation to provide in
its certificate of incorporation that a director of the corporation shall not be
personally liable to the corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, except for liability for:
- any breach of the director's duty of loyalty to the corporation or its
stockholders,
- acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law,
- payments of unlawful dividends or unlawful stock repurchases or
redemptions, or
- any transaction from which the director derived an improper personal
benefit.
II-1
62
Our certificate of incorporation provides that none of our directors will
be personally liable to us or our stockholders for monetary damages for breach
of fiduciary duty as a director, except, if required by the Delaware General
Corporation Law as amended from time to time, for liability
- for any breach of the director's duty of loyalty to us or our
stockholders,
- for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law,
- under Section 174 of the Delaware General Corporation Law, which concerns
unlawful payments of dividends, stock purchases or redemptions, or
- for any transaction from which the director derived an improper personal
benefit.
Neither the amendment nor repeal of such provision will eliminate or reduce
the effect of such provision in respect of any matter occurring, or any cause of
action, suit or claim that, but for such provision, would accrue or arise before
such amendment or repeal.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or persons controlling the
registrant pursuant to the foregoing provisions, the registrant has been
informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is
therefore unenforceable.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) EXHIBITS
Reference is made to the Exhibit Index on page E-1.
ITEM 22. UNDERTAKINGS
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, as amended (the
"Securities Act"), each filing of the registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the Exchange Act),
that is incorporated by reference in this Registration Statement shall be deemed
to be a new registration statement relating to the securities offered herein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form S-4, within one business day of receipt
of such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-2
63
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Amendment No. 1 to
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Redmond, State of Washington, on the 14th day of
August, 2001.
AT&T Wireless Services, Inc.
By: /s/ JOHN D. ZEGLIS
------------------------------------
Name: John D. Zeglis
Title: Chairman, President and
Chief
Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed by the following persons in the
capacities indicated below and on August 14, 2001.
SIGNATURE TITLE
--------- -----
/s/ JOHN D. ZEGLIS Chairman of the Board, President and Chief
--------------------------------------------------- Executive Officer (Principal Executive Officer)
John D. Zeglis
/s/ JOSEPH MCCABE, JR.* Executive Vice President, Chief Financial Officer
--------------------------------------------------- (Principal Financial and Accounting Officer)
Joseph McCabe, Jr.
/s/ WALTER Y. ELISHA* Director
---------------------------------------------------
Walter Y. Elisha
/s/ DONALD V. FITES* Director
---------------------------------------------------
Donald V. Fites
/s/ RALPH S. LARSEN* Director
---------------------------------------------------
Ralph S. Larsen
/s/ JOHN W. MADIGAN* Director
---------------------------------------------------
John W. Madigan
/s/ NOBUHARU ONO* Director
---------------------------------------------------
Nobuharu Ono
/s/ WAYNE PERRY* Director
---------------------------------------------------
Wayne Perry
/s/ A. BARRY RAND* Director
---------------------------------------------------
A. Barry Rand
/s/ CAROLYN M. TICKNOR* Director
---------------------------------------------------
Carolyn M. Ticknor
*By /s/ JOHN D. ZEGLIS
---------------------------------------------
Attorney-in-Fact
II-3
64
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
------- -----------
4.1 Indenture, dated as of March 6, 2001, between AT&T Wireless
Services, Inc. and The Bank of New York, as trustee (filed
as Exhibit 4.5 to Registration Statement on Form S-1/A
(Commission file No. 333-59174), filed June 11, 2001, and
incorporated herein by reference)
4.2 Registration Rights Agreement between AT&T Wireless
Services, Inc., AT&T Corp. and the Initial Purchasers, dated
March 1, 2001 (filed as Exhibit 10.11 to Registration
Statement on Form S-1/A (Commission file No. 333-59174),
filed June 11, 2001, and incorporated herein by reference)
4.3 Specimen certificate for 7.350% Senior Notes due March 1,
2006, 7.875% Senior Notes due March 1, 2011 and 8.750%
Senior Notes due March 1, 2031 (filed as Exhibit A within
Exhibit 4.5 to Registration Statement on Form S-1/A
(Commission file No. 333-59174), filed June 11, 2001, and
incorporated herein by reference)
4.4 Form of Exchange Note due 2006 (filed as Exhibit 4.4 to
Registration Statement on Form S-4 (Commission file No.
333-67068), filed August 8, 2001, and incorporated herein by
reference)
4.5 Form of Exchange Note due 2011 (filed as Exhibit 4.5 to
Registration Statement on Form S-4 (Commission file No.
333-67068), filed August 8, 2001, and incorporated herein by
reference)
4.6 Form of Exchange Note due 2031 (filed as Exhibit 4.6 to
Registration Statement on Form S-4 (Commission file No.
333-67068), filed August 8, 2001, and incorporated herein by
reference)
5.1 Opinion of counsel as to legality of the Notes issued by
AT&T Wireless Services, Inc. (filed as Exhibit 5.1 to
Registration Statement on Form S-4 (Commission file No.
333-67068), filed August 8, 2001, and incorporated herein by
reference)
8.1 Opinion of Perkins Coie LLP, special tax counsel, as to
certain federal income tax matters (filed as Exhibit 8.1 to
Registration Statement on Form S-4 (Commission file No.
333-67068), filed August 8, 2001, and incorporated herein by
reference)
12.1 Computation of ratio of earnings to fixed charges
23.1 Consent of PricewaterhouseCoopers LLP
23.2 Consent of Arthur Andersen LLP
23.2 Consent of counsel (included in Exhibit 5.1)
23.3 Consent of Perkins Coie LLP (included in Exhibit 8.1)
24.1 Power of Attorney (filed as Exhibit 24.1 to Registration
Statement on Form S-4 (Commission file No. 333-67068), filed
August 8, 2001, and incorporated herein by reference)
25.1 Form T-1 Statement of Eligibility of The Bank of New York to
act as trustee under the Indenture (filed as Exhibit 25.1 to
Registration Statement on Form S-4 (Commission file No.
333-67068), filed August 8, 2001, and incorporated herein by
reference)
99.1 Form of Letter of Transmittal
99.2 Form of Notice of Guaranteed Delivery
99.3 Form of Letter to DTC Participants
99.4 Form of Letter to Clients
E-1
65
All schedules are omitted because they are inapplicable or the requested
information is shown in the consolidated financial statements of the registrant
or related notes thereto.