424B3 1 d424b3.htm PROSPECTUS SUPPLEMENT DATED SEPTEMBER 30, 2003 Prospectus Supplement Dated September 30, 2003
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Filed Pursuant to 424(b)(3)

Registration No. 333-99293

 


 

TSI TELECOMMUNICATION HOLDINGS, LLC

 

TSI TELECOMMUNICATION SERVICES INC.

 

TSI TELECOMMUNICATION HOLDINGS, INC.

 

TSI TELECOMMUNICATION NETWORK SERVICES INC.

 

TSI FINANCE INC.

 

 

Supplement to Prospectus

Dated September 30, 2002

 

The date of this supplement is September 30, 2003

 

Our Current Report on Form 8-K/A relating to the acquisition of Brience, Inc. by TSI Telecommunication Network Services Inc. on July 23, 2003 pursuant to a merger is attached as Annex A to this prospectus supplement. This prospectus supplement relates to the offering for resale from time to time by a selling noteholder of an aggregate principal amount of $30,000,000 of our 123/4% Senior Subordinated Notes due 2009.

 


 

 

The purchase of our 123/4% Senior Subordinated Notes due 2009 involves a high degree of risk. See “Risk Factors” of the prospectus for a discussion of factors that you should carefully consider before purchasing the notes offered by the prospectus and all prospectus supplements to the prospectus.

 


 

 

Neither the Securities Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if the prospectus or this prospectus supplement is truthful or complete. Any representation to the contrary is a criminal offense.

 


 



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Annex A


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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 


 

FORM 8-K/A

 

CURRENT REPORT

(Amendment No. 1)

 

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of report (Date of earliest event reported): September 30, 2003

 


 

TSI TELECOMMUNICATION HOLDINGS, LLC TSI TELECOMMUNICATION SERVICES INC.

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

 

Delaware   333-88168-01   30-0041664
Delaware   333-88168   06-1262301

(State or other jurisdiction

of incorporation)

  (Commission File Number)   (IRS Employer Identification No.)

 

201 N. Franklin Street, Suite 700

Tampa, Florida 33602

(Address of Principal Executive Offices, including Zip Code)

 

(813) 273-3000

(Registrant’s Telephone Number, Including Area Code)

 


 


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Item 5. Other Events and Regulation FD Disclosure.

 

As initially reported on the Registrants’ current report on Form 8-K filed on August 29, 2003, effective July 23, 2003, pursuant to an Agreement and Plan of Merger dated as of July 15, 2003 (the “Merger Agreement”), among TSI Telecommunication Network Services Inc. (“TSI Networks”), TSI Brience, LLC (“Merger Sub”), Brience, Inc. (“Brience”) and certain holders of Series C Preferred Stock, par value $.01 per share, of Brience, Brience was merged with and into Merger Sub with Merger Sub continuing as the surviving entity and a wholly owned subsidiary of TSI Networks (the “Merger”). At the time of the Merger, GTCR Fund VII, L.P. and GTCR Co-Invest, L.P. collectively were majority owners of Brience and owned approximately 64% of the outstanding common stock of Brience on a fully diluted basis. GTCR Fund VII, L.P. and GTCR Co-Invest, L.P. collectively own approximately 52% of the outstanding common units of TSI Telecommunication Holdings, LLC (the “Ultimate Parent”) and their affiliate, GTCR Fund VII/A, L.P., owns approximately 26% of the common units of the Ultimate Parent. GTCR Fund VII, L.P., GTCR Fund VII/A, L.P. and GTCR Co-Invest, L.P. are private investment funds affiliated with GTCR Golder Rauner LLC (“GTCR”). Since GTCR had a controlling interest in both Brience and the Ultimate Parent at the time of the Merger, the transaction was accounted for as a combination of entities under common control, similar to a pooling of interests, whereby the assets and liabilities of Brience were combined at their historical amounts as of February 14, 2002, the date that GTCR had control of both entities. The Registrants intend to file restated audited consolidated financial statements for the period from February 14, 2002 to December 31, 2002 on the appropriate form reflecting these combined financial results. The inclusion of Brience’s historical financial results in the restated audited consolidated financial statements of the Registrants for the period from February 14, 2002 to December 31, 2002 could have a significant effect on the Registrants’ historical financial results. Prior to the Merger, Brience experienced significant losses and for its fiscal year ended April 30, 2003, its unaudited net income (loss) was approximately $(11.8) million. However, Brience’s operations at the time of the Merger were substantially less significant than they were historically because of reduced operations, product developments, personnel and geographic territories.

 

The Registrants do not expect to be able to file the audited financial statements of Brience as of and for the twelve months ended April 30, 2003 required by Rule 3-05 of Regulation S-X by October 5, 2003 and may not be able to file them at all because the Registrants have not been able to obtain accounting records related to Brience’s discontinued foreign subsidiaries. A no-action request has been submitted to the Office of the Chief Accountant on behalf of the Registrants with respect to this matter.

 

Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.

 

(b) Pro forma financial information.

 

The unaudited pro forma condensed consolidated statements of operations for the year ended December 31, 2002 and for the six months ended June 30, 2003, and the unaudited pro forma condensed consolidated balance sheet as of June 30, 2003 are presented in Exhibit 7.1 attached hereto. The unaudited pro forma condensed consolidated statements of operations for the year ended December 31, 2002 and the six months ended June 30, 2003 give pro forma effect to the Merger as if it had occurred at the beginning of each period presented. The unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2002 also gives effect to the acquisition of TSI Telecommunication Services Inc. (“TSI”) on February 14, 2002 by GTCR, certain co-investors and members of management and certain related financing transactions as if they had occurred on January 1, 2002. The unaudited pro forma condensed consolidated balance sheet as of June 30, 2003 gives effect to the Merger as if it had occurred on June 30, 2003.

 

(c) Exhibits

 

7.1     Unaudited Pro Forma Condensed Consolidated Financial Statements


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SIGNATURES

 

According to the requirements of the Securities Exchange Act of 1934, each of the Registrants has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Date: September 30, 2003

 

TSI TELECOMMUNICATION HOLDINGS, LLC
    /s/  RAYMOND L. LAWLESS
 
By:  

Raymond L. Lawless

Its:  

Chief Financial Officer, Secretary and Manager

 

 

 

TSI TELECOMMUNICATION SERVICES INC.
    /s/  RAYMOND L. LAWLESS
 
By:  

Raymond L. Lawless

Its:  

Chief Financial Officer, Secretary and Director


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EXHIBIT INDEX

 

EXHIBIT NO.

  

DESCRIPTION


7.1

   Unaudited Pro Forma Condensed Consolidated Financial Statements


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EXHIBIT 7.1

 

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

The following unaudited pro forma condensed consolidated statements of operations for the year ended December 31, 2002 and the six months ended June 30, 2003, and the unaudited pro forma condensed consolidated balance sheet as of June 30, 2003, are based on the historical financial statements of TSI Telecommunication Holdings, LLC (“TSI LLC”) and Brience, Inc. (“Brience”) and give effect to the acquisition of Brience pursuant to a merger of Brience with and into TSI Brience, LLC, a wholly owned subsidiary of TSI Telecommunication Network Services Inc., with TSI Brience, LLC continuing as the surviving entity (the “Merger”) using the method of accounting similar to a pooling of interests. The unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2002 also gives effect to the acquisition of TSI Telecommunication Services Inc. (“TSI”) on February 14, 2002 by GTCR, certain co-investors and members of management and certain related financing transactions which was accounted for as a purchase business combination. The unaudited pro forma condensed consolidated financial statements should be read in conjunction with accompanying notes.

 

At the time of the Merger, GTCR Fund VII, L.P. and GTCR Co-Invest, L.P. collectively were majority owners of Brience and owned approximately 64% of the outstanding common stock of Brience on a fully diluted basis. GTCR Fund VII, L.P. and GTCR Co-Invest, L.P. collectively own approximately 52% of the outstanding common units of TSI LLC and their affiliate, GTCR Fund VII/A, L.P., owns approximately 26% of the common units of TSI LLC. Since GTCR had a controlling interest in both Brience and TSI LLC at the time of the Merger, the transaction was accounted for as a combination of entities under common control, similar to a pooling of interests, whereby the assets and liabilities of Brience were combined at their historical amounts as of the date that GTCR had control of both entities (February 14, 2002). For historical accounting purposes, Brience will only be combined for the periods under common control by GTCR. For the minority interest of Brience not owned by GTCR affiliates at the time of the combination, purchase accounting is to be applied. However, the effects of the fair value adjustments relating to this purchase accounting are expected to be insignificant, and therefore, are assumed to be zero for purposes of these the pro forma financial statements.

 

The unaudited pro forma condensed consolidated statements of operations for the year ended December 31, 2002 and the six months ended June 30, 2003, give pro forma effect to the Merger as if it had occurred at the beginning of each period presented. The unaudited pro forma condensed consolidated balance sheet as of June 30, 2003 gives effect to the Merger as if it had occurred on June 30, 2003. The unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2002 also gives effect to the acquisition of TSI Telecommunication Services Inc. on February 14, 2002 by GTCR, certain co-investors and members of management and certain related financing transactions as if they had occurred on January 1, 2002. The acquisition of TSI was accounted for as a purchase business combination (for further information, refer to the consolidated financial statements and footnotes thereto included in TSI LLC’s registration statement on Form S-4, number 333-88168-01, dated May 24, 2002).

 

The unaudited pro forma condensed consolidated financial statements are presented for illustrative purposes only and may not be indicative of the results that would have been obtained had the transaction actually occurred during the periods or as of the date presented, nor are they necessarily indicative of the future consolidated results of operations or the financial position of the combined enterprise. The unaudited pro forma condensed consolidated financial statements should be read in conjunction with the historical consolidated financial statements and accompanying notes contained in TSI LLC’s Form 10-K for the year ended December 31, 2002, and TSI LLC’s Quarterly Report on Form 10-Q for its quarter ended June 30, 2003 and TSI LLC’s registration statement on Form S-4 dated May 24, 2002.


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INDEX TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

TSI TELECOMMUNICATION HOLDINGS, LLC

 

 

     Page

Unaudited Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 2002

   3

Unaudited Pro Forma Condensed Consolidated Statement of Operations for the six months ended June 30, 2003

   4

Unaudited Pro Forma Condensed Consolidated Balance Sheet as of June 30, 2003

   5

Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

   6


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TSI TELECOMMUNICATION HOLDINGS, LLC

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(DOLLARS IN THOUSANDS)

 

     Predecessor

    Successor

 
    

Period from Jan 1, 2002

to February 13, 2002

                                       
      

TSI

 

   

Adjustments

 

 

 
 

 

 


TSI LLC
Period from

Feb. 14 to

Dec. 31, 2002


 
 

 

 


 

 
 
 

 


TSI LLC
Twelve
Months Ended

Dec. 31, 2002


 
 
 

 


 

 

 
 

 


Brience

Twelve
Months Ended

Dec. 31, 2002


 

 
 

 


   

Adjustments

 

 

 
 
 

 


Twelve
Months Ended
Dec. 31, 2002

Consolidated


 
 
 

 


       Historical       Pro Forma       Historical       Pro Forma       Historical       Pro Forma       Pro Forma  

Revenues

   $ 39,996     $     $ 291,216     $ 331,212     $ 5,280     $ —       $ 336,492  
    


 


 


 


 


 


 


Costs and expenses:

                                                        

Cost of operations

     20,655       (1,522 )(a)     127,251       146,384       3,640       —         150,024  

Sales and marketing

     2,614       —         19,404       22,018       3,912       —         25,930  

General and administrative

     3,001       60 (b)     33,316       36,377       8,883       —         45,260  

Provision for (recovery of) uncollectible accounts

     1,340       —         (603 )     737       179       —         916  

Loss on renegotiation of lease

     —         —         —         —         1,255       —         1,255  

Depreciation and amortization

     1,464       3,162 (c)     32,110       36,736       1,467       —         38,203  

Restructuring

     —         —         2,845       2,845       —         —         2,845  
    


 


 


 


 


 


 


       29,074       1,700       214,323       245,097       19,336       —         264,433  
    


 


 


 


 


 


 


Operating income (loss)

     10,922       (1,700 )     76,893       86,115       (14,056 )     —         72,059  

Other income (expense), net:

                                                        

Interest income

     432       (202 )(d)     865       1,095       9       —         1,104  

Interest expense

     —         (7,596 )(e)     (54,012 )     (61,608 )     —         —         (61,608 )

Equity in earnings of unconsol. investee

     —         —         —         —         1,125       —         1,125  

Other, net

     (19 )     —         (8 )     (27 )     (16 )     —         (43 )
    


 


 


 


 


 


 


       413       (7,798 )     (53,155 )     (60,540 )     1,118       —         (59,422 )
    


 


 


 


 


 


 


Income (loss) from continuing operations before income taxes

     11,335       (9,498 )     23,738       25,575       (12,938 )     —         12,637  

Provision for income taxes

     4,418       (3,714 )(f)     9,320       10,024       —         —   (j)     10,024  
    


 


 


 


 


 


 


Income (loss) from continuing operations

     6,917       (5,784 )     14,418       15,551       (12,938 )     —         2,613  

Discontinued operations:

                                                        

Loss from discontinued operations,
net of taxes

     —         —         —         —         (3,533 )     —         (3,533 )
    


 


 


 


 


 


 


Net income (loss)

     6,917       (5,784 )     14,418       15,551       (16,471 )     —         (920 )

Preferred unit dividends

     —         (3,042 )(g)     (22,952 )     (25,994 )     —         —         (25,994 )
    


 


 


 


 


 


 


Net income (loss) attributable to
common stockholder/ unitholders

   $ 6,917     $ (8,826 )   $ (8,534 )   $ (10,443 )   $ (16,471 )   $ —       $ (26,914 )
    


 


 


 


 


 


 


 

See notes to unaudited pro forma condensed consolidated financial statements.

 

3


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TSI TELECOMMUNICATION HOLDINGS, LLC

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(DOLLARS IN THOUSANDS)

 

 

     Six Months Ended June 30, 2003
    

                       Pro Forma      Pro Forma  
       TSI LLC       Brience       Adjustments      Consolidated  
    


 


 

  


Revenues

   $ 128,807     $ 2,981     $    $ 131,788  
    


 


 

  


Costs and expenses:

                               

Cost of operations

     52,413       867       —        53,280  

Sales and marketing

     9,165       487       —        9,652  

General and administrative

     15,992       2,814       —        18,806  

Provision for uncollectible accounts

     669       100       —        769  

Depreciation and amortization

     18,221       48       —        18,269  

Restructuring

     1,841       —         —        1,841  
    


 


 

  


       98,301       4,316       —        102,617  
    


 


 

  


Operating income (loss)

     30,506       (1,335 )     —        29,171  

Other income (expense), net:

                               

Interest income

     382       7       —        389  

Interest expense

     (31,069 )     23       —        (31,046 )

Other, net

     (1 )     1       —        —    
    


 


 

  


       (30,688 )     31       —        (30,657 )
    


 


 

  


Loss from continuing operations before income taxes

     (182 )     (1,304 )     —        (1,486 )

Provision for income taxes

     360       —         —        360  
    


 


 

  


Loss from continuing operations

     (542 )     (1,304 )     —        (1,846 )

Discontinued operations:

                               

Gain on disposal of discontinued operations, net of taxes

     —         541       —        541  
    


 


 

  


Net loss

     (542 )     (763 )     —        (1,305 )

Preferred unit dividends

     (13,938 )     —         —        (13,938 )
    


 


 

  


Net loss attributable to common stockholder/unitholders

   $ (14,480 )   $ (763 )   $    $ (15,243 )
    


 


 

  


 

 

See notes to unaudited pro forma condensed consolidated financial statements.

 

4


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TSI TELECOMMUNICATION HOLDINGS, LLC

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

(DOLLARS IN THOUSANDS)

 

     June 30, 2003

 
                       Pro Forma       Pro Forma  
       TSI LLC       Brience       Adjustments       Consolidated  
    


 


 


 


ASSETS                                 

Current assets:

                                

Cash

   $ 9,617     $ 329     $ —       $ 9,946  

Accounts receivable, net of allowances

     56,116       211       —         56,327  

Deferred tax assets

     —         —         —         —    

Prepaid and other current assets

     3,506       110       —         3,616  
    


 


 


 


Total current assets

     69,239       650       —         69,889  
    


 


 


 


Property and equipment, net

     31,467       346       —         31,813  

Capitalized software, net

     70,336       —         —         70,336  

Deferred finance costs, net

     13,064       —         —         13,064  

Goodwill

     330,559       —         —         330,559  

Identifiable intangibles:

                                

Customer contract, net

     11,389       —         —         11,389  

Trademark

     51,700       —         —         51,700  

Customer base, net

     201,697       —         —         201,697  

Deferred taxes and other

     —         66       —   (j)     66  
    


 


 


 


Total assets

   $ 779,451     $ 1,062     $ —       $ 780,513  
    


 


 


 


LIABILITIES AND SHAREHOLDER’S/UNITHOLDERS’ EQUITY                                 

Current liabilities:

                                

Accounts payable

   $ 13,878     $ 90       —       $ 13,968  

Accrued payroll and related benefits

     3,749       —         —         3,749  

Accrued interest

     14,218       23       —         14,241  

Other accrued liabilities

     12,501       48       743 (h)     13,292  

Deferred revenue

     —         745       —         745  

Current portion of Term Note B, net of discount

     23,717       —         —         23,717  
    


 


 


 


Total current liabilities

     68,063       906       743       69,712  
    


 


 


 


Long-term liabilities:

                                

Deferred taxes

     9,105       —         —         9,105  

Subordinated Notes, net of discount

     240,647       —         —         240,647  

Term Note B, net of discount

     192,431       —         —         192,431  

Other liabilities

     —         —         —         —    
    


 


 


 


Total long-term liabilities

     442,183       —         —         442,183  

Commitments and contingencies:

                                

Redeemable preferred stock

             119       (119 )(i)     —    

Shareholder’s/unitholders’ equity:

                                

Class A Preferred Units-an unlimited number authorized, none issued or

                                

or outstanding

     —         —         —         —    

Class B Preferred Units-an unlimited number authorized, 252,367.50 units issued and outstanding at June 30, 2003; liquidation preference of $252,367

     252,367       —         —         252,367  

Common Units-an unlimited number authorized, 89,099,099 units issued and 88,963,964 outstanding at June 30, 2003

     2,967       —         3 (i)     2,970  

Common stock-$.01 par value, 30,000,000 shares authorized and 72,266 issued and outstanding at June 30, 2003

             1       (1 )(i)     —    

Additional paid-in capital

     —         117,219       117 (i)     117,336  

Retained earnings

     13,876       (117,183 )     (743 )(h)     (104,050 )

Less cost of treasury units (135,135 common units )

     (5 )     —         —         (5 )
    


 


 


 


Total shareholder’s/unitholders’ equity

     269,205       36       (743 )     268,618  
    


 


 


 


Total liabilities and shareholder’s/unitholders’ equity

   $ 779,451     $ 1,062     $ —       $ 780,513  
    


 


 


 


 

 

See notes to unaudited pro forma condensed consolidated financial statements.

 

 

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TSI TELECOMMUNICATION HOLDINGS, LLC

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(DOLLARS IN THOUSANDS)

 

1. Pro Forma Adjustments

 

(a) To reflect the following adjustments to cost of operations:

 

    

Period from

January 1, 2002 to
February 13, 2002


Lease and maintenance payments made to Verizon affiliates(1)

   $2,902

Renegotiated contractual costs for same services(2)

     1,380
    

Total savings

   $1,522
    

(1) Costs historically incurred by TSI to obtain mainframe computing services and distributed processing computing services from Verizon.

(2) To reflect the costs set forth in a new multi-year contract for distributed processing computing services which we entered into with an affiliate of Verizon concurrently with the acquisition and a new multi-year contract for mainframe computing services which we have entered into with Lockheed Martin Global Telecommunications.

(b) To reflect the management fee to be paid annually to GTCR Golder Rauner, LLC under its professional services agreement with us.

(c) To reflect the additional amortization and depreciation resulting from the purchase accounting related to the acquisition of TSI. For purposes of the unaudited pro forma consolidated financial statements, the property and equipment is being depreciated over its estimated remaining economic lives of seven years. The identifiable intangible assets with definite lives are being amortized over their estimated economic lives, which range from four to 19 years.

 

     Period from
January 1, 2002 to
February 13, 2002


Depreciation and amortization (historical)

   $1,464

Depreciation and amortization, after purchase accounting

     4,626
    

Additional expense

   $3,162
    

 

(d) To exclude interest income earned on note receivable from affiliate since this note was repaid by Verizon prior to closing and the proceeds distributed to Verizon at the closing.

(e) To reflect the adjustments to interest expense as a result of (i) the acquisition of TSI on February 14, 2002 by GTCR, certain co-investors and members of management and certain related financing transactions (the “Transactions”), assuming a LIBOR rate of 2.09%, (ii) the amortization of deferred financing costs associated with obtaining the transaction debt financing, using the interest method (iii) the amortization of debt discount, using the interest method and (iv) commitment fees on the revolving credit facility assuming no amounts outstanding:

 

    

Period from

January 1, 2002 to

February 13, 2002


Interest on term loan B (LIBOR plus 4.50%)

   $2,416

Interest on 12.75% senior subordinated notes due 2009

     3,904

Interest on revolving line of credit (LIBOR plus 4.50%)

          43

Amortization of debt discount

        715

Amortization of deferred finance costs

        500

Commitment fee on revolving credit facility (0.50% of unused facility)

          18
    

Interest expense

   $7,596
    

 


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The actual interest rates on indebtedness incurred to consummate the Transactions could vary from those used to compute the above adjustment of interest expense due to the variable rate debt. The effect on pre-tax income of a 1/8 percent variance in these rates would be approximately $369 over the terms of the debt.

 

(f) To reflect the tax effect of the pro forma adjustments, using a 39.1% effective rate.

(g) To reflect 10% preferred dividends to holders of Class B Preferred Units.

(h) In connection with the Merger, TSI Telecommunication Holdings, LLC estimates that it will incur approximately $743 for direct merger costs, consisting primarily of legal fees, accounting fees and severance costs. Direct merger costs will be charged to operations in the period in which the Merger is consummated. This estimate is preliminary and is subject to change. The unaudited pro forma condensed consolidated balance sheet gives effect to the direct merger costs as if they were incurred on June 30, 2003; the unaudited pro forma condensed consolidated statements of operations do not reflect such costs since they are non-recurring.

(i) Adjustment reflects the cancellation of all preferred and common stock of Brience at the time of the Merger and the common units of TSI Telecommunication Holdings, LLC issued in connection with the Merger.

(j) TSI is in the process of determining the impact of Brience’s tax NOL carryforwards. No adjustments have been made to the unaudited pro forma condensed consolidated financial statements since a comprehensive analysis relating to the use of these NOLs has not been completed at this time.

 

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