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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Date of Report (Date of earliest event reported): December 31, 1998
MASTEC, INC.
(Exact name of registrant as specified in its charter)
Florida 0-3797 65-0829355
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(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
3155 N.W. 77th Avenue
Miami, Florida 33122-1205
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (305) 599-1800
Not Applicable
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(Former name or former address, if changed since last report)
Page 2
Item 2. Disposition of Assets
Pursuant to a Stock Purchase and Sale Agreement dated as of December 30, 1998,
among MasTec, Inc. (the "Company") and a group of investors (the "Buyer"), the
Company sold 87% of its Spanish subsidiary, Sistemas e Instalaciones de
Telecomunicacion, S.A. ("Sintel"), which includes operations in Spain,
Argentina, Chile, Colombia, Peru, Puerto Rico and Venezuela, effective as of
December 31, 1998. The investor group included the chief executive officer of
Sintel and a member of its Board of Directors. In addition, the Company received
the right to sell its remaining 13% interest to the investors under certain
circumstances at fixed prices on December 31, 1999 and 2000. The Company also
received tag along rights to include its 13% interest in any public or private
sale of Sintel. Jorge Mas, the Company's Chairman and Chief Executive Officer,
will remain the Chairman of the Board of Sintel until the earlier of the sale of
the Company's remaining 13% interest or December 31, 2000. The terms of the
transaction were established through arm's length negotiation.
The Company received $919,000 (130.5 million pesetas at an exchange rate of 142
pesetas to the dollar) on the date of closing and the balance of $26.3 million
(3.7 billion pesetas ) is payable in four equal monthly installments with the
last payment due on April 30, 1999. The Company expects to report a loss on this
transaction in the fourth quarter of 1998 to the extent of Sintel's earnings
recognized in the fourth quarter. Proceeds from the sale are expected to be used
for general corporate purposes, including debt reduction and further development
of the Company's business in its core North American operations. The sale also
includes the remaining indebtedness to Telefonica, S.A. for the purchase of
Sintel totalling $25.4 million (3.6 billion pesetas).
Page 3
Item 7. Financial Statements and Exhibits
(b) Unaudited Pro forma financial information:
The Company's unaudited pro forma financial statements give effect to the sale
of Sintel as if such transaction had occurred for balance sheet purposes on
September 30, 1998 and for income statement purposes as of January 1, 1997. The
pro forma information is not necessarily indicative of the results that would
have been reported had such events actually occurred on the dates specified, nor
is it indicative of the Company's future results.
Page 4
MASTEC, INC.
PRO FORMA BALANCE SHEET AT SEPTEMBER 30, 1998
(In thousands)
Historical
-------------------------- Pro forma
Consolidated
Pro forma Without
Consolidated Sintel Adjustments Sintel
------------ ----------- ------------- ------------
ASSETS
Current assets:
Cash and cash equivalents $ 14,283 $ 2,706 $ $ 11,577
Accounts receivable-net and unbilled revenue 426,257 119,600 26,848 (1)(3) 333,505
Inventories 16,104 2,774 13,330
Other current assets 37,355 19,087 18,268
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Total current assets 493,999 144,167 26,848 376,680
Property and equipment-net 145,632 5,270 140,362
Investments in unconsolidated companies 69,316 28,807 3,103 (1) 43,612
Other assets 185,417 10,517 174,900
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TOTAL ASSETS $ 894,364 $ 188,761 $ 29,951 $ 735,554
======= ======= ======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of debt $ 77,924 $ 67,604 (4) $ $ 10,320
Accounts payable 197,113 75,269 121,844
Other current liabilities 70,237 4,469 (4) 6,750 (2) 72,518
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Total current liabilities 345,274 147,342 6,750 204,682
Other liabilities 42,069 16,968 25,101
Long-term debt 280,872 584 280,288
Shareholders' equity 226,149 23,867 23,201 (3) 225,483
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 894,364 $ 188,761 $ 29,951 $ 735,554
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Page 5
MASTEC, INC.
PRO FORMA STATEMENT OF INCOME FOR PERIOD ENDED DECEMBER 31, 1997
(In thousands, except per share amounts)
Historical
------------------------------- Pro forma
Consolidated
Pro forma Without
Consolidated Sintel Adjustments Sintel
--------------- ------------ --------------- ---------------
Revenue $ 659,439 $ 207,209 $ 452,230
Costs of revenue 496,230 152,892 343,338
Depreciation and amortization 23,465 2,616 20,849
General and administrative expenses 82,261 39,120 43,141
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Operating Income 57,483 12,581 44,902
Interest expense 11,541 4,946 6,595
Interest and dividend income 1,783 1,016 767
Other income, net 8,252 547 7,705
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Income before equity in earnings of unconsolidated companies,
provision for income taxes and minority interest 55,977 9,198 46,779
Provision for income taxes 20,864 3,268 17,596
Equity in earnings of unconsolidated companies 2,897 2,280 617
Minority interest (3,346) (161) (3,185)
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Net income $ 34,664 $ 8,049 $ 26,615
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Weighted average common shares outstanding 26,460 26,460
Basic Earnings per share $ 1.31 $ 1.01
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Weighted average common shares outstanding 27,019 27,019
Diluted earnings per share $ 1.28 $ 0.99
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Page 6
MASTEC, INC.
PRO FORMA STATEMENT OF INCOME FOR PERIOD ENDED SEPTEMBER 30, 1998
(In thousands, except per share amounts)
Historical
------------------------------- Pro forma
Consolidated
Pro forma Without
Consolidated Sintel Adjustments Sintel
--------------- ------------- -------------- ---------------
Revenue $ 720,807 $ 151,409 $ 569,398
Costs of revenue 557,707 118,212 439,495
Depreciation and amortization 30,994 1,770 29,224
General and administrative expenses 99,406 37,585 61,821
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Operating Income 32,700 (6,158) 38,858
Interest expense 19,916 3,395 16,521
Interest and dividend income 6,010 520 5,490
Other income, net 2,467 1,797 670
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Income (loss) before provision (benefit) for income taxes, equity
in earnings of unconsolidated companies and minority interest 21,261 (7,236) 28,497
Provision (benefit) for income taxes 9,769 (1,586) 11,355
Equity in earnings of unconsolidated companies 1,558 1,149 409
Minority interest (2,344) (323) (2,021)
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Net income (loss) $ 10,706 $ (4,824) $ 15,530
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Weighted average common shares outstanding 27,640 27,640
Basic Earnings per share $ 0.39 $ 0.56
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Weighted average common shares outstanding 28,010 28,010
Diluted earnings per share $ 0.38 $ 0.55
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Page 7
Notes to Unaudited Pro forma Balance Sheet and Income Statements
(1) Reflects the gross proceeds of $27.2 million (3.9 billion pesetas) from the
sale of the Company's Spanish subsidiary. The sale represents an 87%
interest in Sintel of which $919,000 (130.5 million pesetas) was received
at closing and $26.3 million (3.7 billion pesetas) is to be paid in four
equal installments of $6.6 million (934.8 million pesetas) through April
30, 1999. The remaining 13% is recorded at cost at $3.1 million.
(2) To adjust for income taxes payable related to the sale. Income taxes were
computed using a basis of $10.3 million.
(3) To adjust shareholders' equity for the settlement of intercompany accounts
and the effect of adjustment in notes 1 and 2 above.
(4) The balance represents working capital debt and original seller financing
of $24.1 million provided by Telefonica, S.A. and accrued interest thereon
of $4.5 million.
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: January 14, 1999 MasTec, Inc.
By: /s/ Carmen M. Sabater
Carmen M. Sabater
Senior Vice President-
Director of Finance
(Principal Financial
and Accounting Officer)