EX-99.6 5 file003.htm PRO FORMA FINANCIAL INFORMATION

Exhibit 99.6

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

The unaudited pro forma condensed consolidated financial information presents the effects of the merger of AirGate with and into A-Co Merger Sub, Inc., a wholly owned subsidiary of Alamosa. The unaudited pro forma condensed consolidated financial information is prepared using the purchase method of accounting with Alamosa treated as the acquiror and as if the transaction had been completed as of January 1, 2004 for statements of operations purposes and on December 31, 2004 for balance sheet purposes. The pro forma adjustments are described in the accompanying notes presented on the following pages.

The pro forma statements were prepared using (1) the audited consolidated financial statements of Alamosa contained in Alamosa's annual report on Form 10-K for the year ended December 31, 2004 as filed on March 3, 2005, (2) the audited consolidated financial statements of AirGate contained in AirGate's annual report on Form 10-K for the year ended September 30, 2004 as filed on December 14, 2004, (3) the unaudited consolidated financial statements of AirGate contained in AirGate's quarterly reports on Form 10-Q for the quarterly periods ended December 31, 2004 and 2003, which have been used to present the AirGate fiscal year pro forma financial information on a calendar basis consistent with the Alamosa calendar year.

Under the purchase method of accounting, the purchase price will be allocated to the underlying tangible and intangible assets and liabilities acquired based on their respective fair market values, with any excess purchase price allocated to goodwill. The pro forma purchase price allocation is based on an estimate of the fair market value of the tangible and intangible assets and liabilities of AirGate. Certain assumptions have been made with respect to the fair market value of identifiable intangible assets as more fully described in the accompanying notes to the unaudited pro forma condensed consolidated financial information. As of the date of this filing, Alamosa has not completed the external valuation studies necessary to arrive at the fair market value of the assets and liabilities to be acquired and the related allocations of purchase price. Once Alamosa has received the external valuation studies necessary to finalize the required purchase price allocation after the consummation of the merger, the final allocation of purchase price will be determined. The final purchase price allocation based on third party appraisals may be different than that reflected in the pro forma purchase price allocation and this difference may be material.

The unaudited pro forma condensed consolidated financial information is provided for illustrative purposes only and does not purport to represent what the actual consolidated results of operations or the consolidated financial position of Alamosa would have been had the transaction occurred on the dates assumed, nor is it necessarily indicative of future consolidated results of operations or financial position.

The unaudited pro forma condensed consolidated financial information does not include the realization of any cost savings from operating efficiencies, synergies or other restructurings resulting from the transaction. The unaudited pro forma condensed consolidated financial information should be read in conjunction with the separate historical consolidated financial statements and accompanying notes of Alamosa and AirGate that are incorporated by reference in this document.

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ALAMOSA HOLDINGS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
December 31, 2004
(dollars in thousands)


  Alamosa Holdings, Inc.
December 31, 2004
AirGate PCS, Inc.
December 31, 2004
Pro Forma
Adjustments
Pro Forma
Consolidated
ASSETS
Current assets:
Cash and cash equivalents $ 129,917   $ 15,917   $ (10,558) (a)  $ 38,917  
                (96,359) (b)       
Short term investments   50,418     94,059     (15,641) (b)    128,836  
Customer accounts receivable, net   44,687     20,800           65,487  
Receivable from Sprint   24,809     22,749           47,558  
Interest receivable   216               216  
Inventory   9,136     4,672           13,808  
Prepaid expenses and other current assets   13,170     2,567           15,737  
Deferred customer acquisition costs   6,337               6,337  
Deferred tax asset   4,230               4,230  
Total current assets   282,920     160,764     (122,558   321,126  
Property and equipment, net   441,808     130,809           572,617  
Debt issuance costs, net   9,086     4,621     (4,621) (b)    9,086  
Early redemption option on preferred stock   21,387               21,387  
Intangible assets, net   416,716         340,109 (b)    756,825  
Goodwill           230,404 (b)    352,012  
                121,608 (c)       
Other noncurrent assets   4,188     2,645           6,833  
Total assets $ 1,176,105   $ 298,839   $ 564,942   $ 2,039,886  
LIABILITIES, MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY                        
Current liabilities:                        
Accounts payable $ 24,692   $ 1,275         $ 25,967  
Accrued expenses   43,916     23,977           67,893  
Payable to Sprint   35,852     39,954           75,806  
Interest payable   21,076               21,076  
Deferred revenue   22,549     9,567           32,116  
Current installments of capital leases   110               110  
Total current liabilities   148,195     74,773         222,968  
Long-term liabilities:                        
Capital lease obligations   749               749  
Other noncurrent liabilities   5,835     3,176           9,011  
Deferred subscriber activation fee revenue       2,843           2,843  
Deferred tax liability   16,362         121,608 (c)    137,970  
Senior notes   739,141     312,478     15,467 (b)    1,067,086  
Total liabilities   910,282     393,270     137,075     1,440,627  
Commitments and contingencies                  
Mandatorily Redeemable Convertible Preferred Stock   161,148               161,148  
 
Stockholders' equity:                        
Preferred stock                  
Common stock   1,149     118     (118) (b)    1,410  
                261 (b) 
Additional paid-in capital   860,425     1,047,676     (1,047,676) (b)    1,193,600  
                333,175 (b)       
Accumulated deficit   (756,834   (1,142,225   (10,558) (a)    (756,834
                1,152,783 (b)       
Unearned compensation   (65             (65
Total stockholders' equity   104,675     (94,431   427,867     438,111  
Total liabilities & stockholders' equity $ 1,176,105   $ 298,839   $ 564,942   $ 2,039,886  

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ALAMOSA HOLDINGS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Year ended December 31, 2004
(dollars in thousands)


  Alamosa Holdings, Inc.
Year ended
December 31, 2004
Airgate PCS, Inc.
Year ended
December 31,
2004 (h)
Pro Forma
Adjustments
Pro Forma
Year ended
December 31,
2004
Revenues:                        
Subscriber revenues $ 555,711   $ 257,487         $ 813,198  
Roaming revenues   214,230     75,526           289,756  
Service revenues   769,941     333,013         1,102,954  
Product sales   33,159     14,804           47,963  
Total revenues   803,100     347,817         1,150,917  
Cost and expenses:                        
Cost of service and operations   383,287     167,765           551,052  
Cost of products sold   76,183     32,762           108,945  
Selling and marketing expenses   140,833     52,157           192,990  
General and administrative expenses   22,762     21,043     (871) (d)    42,934  
Depreciation and amortization   104,775     52,055     60,037 (e)    216,867  
Impairment of property and equipment   3,730     343           4,073  
Non-cash compensation   386     391           777  
Total costs and expenses   731,956     326,516     59,166     1,117,638  
Income (loss) from operations   71,144     21,301     (59,166   33,279  
Debt exchange expenses           (871) (d)    (871
Loss on derivative instrument   (305             (305
Loss on debt extinguishment   (13,101   (2,991         (16,092
Interest and other income   1,474     1,120     (1,053) (g)    1,541  
Interest expense   (75,739   (33,719   2,818 (f)    (106,640
Loss before income taxes   (16,527   (14,289   (58,272   (89,088
Income tax expense   (741             (741
Net loss   (17,268 $ (14,289 $ (58,272   (89,829
Preferred stock dividends   (10,321               (10,321
Preferred stock conversion premium   (6,600               (6,600
Net loss attributable to common stockholders $ (34,189             $ (106,750
Basic and diluted net loss per share $ (0.32             $ (0.81
Weighted average shares outstanding   106,226,231                 132,359,633 (i) 

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NOTES TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

(dollars in thousands)

(a)  In accordance with the terms of the merger agreement, immediately prior to the consummation of the transaction, AirGate was required to make a cash payment to retire all outstanding AirGate stock options and performance restricted stock awards. The pro forma adjustment of $10,558 is the amount of cash that was paid to option holders and holders of the performance restricted stock unit awards based on the 10 day trailing average of Alamosa's stock price through February 14, 2005 and a conversion ratio of 2.87 and is reflected as a reduction of cash and cash equivalents and stockholders' equity of AirGate. Due to the fact that this is a one time charge associated with the transaction, there is no pro forma impact to the Statement of Operations.
(b)  The pro forma adjustment represents the purchase price allocation as of December 31, 2004. For purposes of determining the purchase price allocation, the fair market value of all tangible and intangible assets and liabilities are estimated at December 31, 2004. The allocation of purchase price under this scenario is as follows:

Consideration:
Alamosa stock issued $ 333,436  
Cash (including direct transaction costs)   112,000  
Total   445,436  
Allocated to:
Current assets   150,206  
Tangible noncurrent assets   133,454  
Identifiable intangible assets   340,109  
Liabilities acquired   (408,737
Goodwill $ 230,404  

For purposes of allocating purchase price, the carrying value of current assets, current liabilities, property and equipment, other non-current assets, other non-current liabilities and deferred subscriber activation fee revenue are assumed to equal fair market value. Debt issuance costs with a carrying value of $4,621 are reduced to zero as they have no fair market value. The carrying value of debt of $312,478 has been increased to its fair market value of $327,945 based on graded market prices.

The value of Alamosa stock issued is based on 26,133,402 shares issued to AirGate stockholders who receive Alamosa stock in the merger. The number of Alamosa shares issued is calculated on the basis of (1) 11,836,463 AirGate shares outstanding at December 31, 2004, (2) the payment of $100,000 in cash to AirGate stockholders receiving cash in the merger, and (3) the calculation of the per share cash consideration received by these stockholders on the basis of (a) the exchange ratio of 2.87 and (b) the ten day trailing average closing price of Alamosa common stock through February 14, 2005 of $12.76. Alamosa shares issued to AirGate stockholders are valued at $12.76 per share.

The identifiable intangibles consist of (1) value assigned to the AirGate subscriber base as of December 31, 2004 of $140,109 and (2) value assigned to the agreements between AirGate and Sprint as of December 31, 2004 of $200,000. The allocation of value to intangible assets was based on assumptions as to the value of subscribers and the value of the Sprint agreements and does not necessarily represent the ultimate fair value of such assets that will be determined by an independent valuation firm subsequent to the consummation of the merger.

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The cash consideration consists of $100,000 in cash payment to AirGate stockholders and $12,000 in direct cash costs of the transaction, the direct cash costs consist of estimates for professional fees (including banking fees) and other direct costs of the transaction.

(c)  The pro forma purchase price allocation results in no differences between the carrying value and the fair value of the tangible assets and liabilities of AirGate as of December 31, 2004 with the exception of intangible assets, financing costs and long-term debt. With respect to the intangible assets associated with the purchase price allocation, such assets would have no tax basis at the time of the transaction and a deferred tax liability would be recognized in connection with this difference in book and tax basis as it relates to the identifiable subscriber base intangible and the intangible associated with the Sprint agreements. Additionally, a deferred tax asset would be recognized in connection with the net increase in the fair value of long-term debt and decrease in fair value of financing costs as described in note b. The net deferred tax liability increase of $121,608 is based on a 38% tax rate.
(d)  The pro forma adjustment represents expenses incurred in connection with the evaluation of financing alternatives, and the implementation of the recapitalization plan, including the issuance of debt. The expenses were included in general & administrative expense in AirGate's historical statements of operations. The adjustment conforms the presentation to be consistent with Alamosa's classification of such expenses.
(e)  The pro forma adjustment represents the amortization of identifiable intangible assets that would be recorded for the year ended December 31, 2004 assuming the transaction had been consummated on January 1, 2004. For purposes of determining this amount, the estimated life of the subscriber base intangible asset is assumed to be 3 years and the estimated life of the Sprint agreement intangible asset is assumed to be 15 years as of January 1, 2004.
(f)  The pro forma adjustment represents the decrease in interest expense associated with the amortization of the premium resulting from the increase in the fair value of long-term debt. Amortization has been calculated on a straight line basis over the remaining life of the respective notes.
(g)  The pro forma adjustments to interest income represents the cost associated with the $100,000 paid to AirGate stockholders. The reduction in interest income is based on Alamosa's historic yield during the period.
(h)  The consolidated statement of operations of AirGate for the year ended December 31, 2004 was determined by taking the fiscal year ended September 30, 2004 statement of operations less the activity reported for the quarter ended December 31, 2003 plus the activity reported for the quarter ended December 31, 2004. Certain reclassifications have been made to the historical AirGate presentation to conform to the Alamosa presentation.
(i)  Weighted average shares outstanding is based on Alamosa's historical weighted average shares outstanding and the additional shares issued in the merger of 26,133,402 shares.

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