American Tower Corporation (NYSE: AMT) today reported financial
results for the quarter ended September 30, 2011.
Jim Taiclet, American Tower’s Chief Executive Officer stated,
“Our company strives to be world class in two core competencies:
operating communications real estate assets to maximize growth and
efficiency and evaluating and successfully acquiring, constructing,
and integrating these types of assets on a global basis. Our third
quarter results again demonstrate our competitive advantage in both
of these areas. We delivered over 9% core organic leasing growth on
both of our domestic and international assets while adding 15%
growth due to the more than 12,000 sites we have added in nine
countries on four continents.
To further enhance our value to investors, we are preparing for
the final steps in our plan to reorganize the company to qualify as
a real estate investment trust (REIT) for U.S. federal income tax
purposes. Between now and year end, we plan to hold our special
meeting of stockholders to approve the reorganization, complete the
distribution of our accumulated earnings and profits, continue our
communications outreach to REIT investors, and prepare to introduce
a quarterly dividend to begin in early 2012.”
THIRD QUARTER 2011 OPERATING RESULTS OVERVIEW
American Tower generated the following operating results for the
quarter ended September 30, 2011 (unless otherwise indicated, all
comparative information is presented against the quarter ended
September 30, 2010).
Total revenue increased 22.8% to $630.4 million and total rental
and management revenue increased 23.0% to $614.8 million. Total
rental and management Gross Margin increased 18.3% to $458.9
million. Adjusted EBITDA increased 14.5% to $400.6 million, and the
Adjusted EBITDA Margin was 64%.
Total rental and management revenue Core Growth was 24.2%, which
excludes the positive impact of approximately 1.1% due to foreign
currency exchange rate fluctuations and the negative impact of
approximately 2.3% due to straight-line revenue recognition.
Core Growth in Adjusted EBITDA was 16.5%, which excludes the
positive impact of approximately 0.9% due to foreign currency
exchange rate fluctuations and the negative impact of approximately
3.0% due to straight-line revenue and expense recognition.
Operating income increased 7.0% to $228.3 million. Net loss
attributable to American Tower Corporation was $15.7 million, and
net loss attributable to American Tower Corporation per basic and
diluted common share were both $0.04. Net loss attributable to
American Tower Corporation was negatively impacted as a result of
unrealized non-cash losses of $145.1 million associated with
fluctuations in foreign currency exchange rates related to the
Company's intercompany loans and similar unaffiliated balances.
Recurring Free Cash Flow increased 5.1% to $240.4 million and
Recurring Free Cash Flow per Share increased 7.0% to $0.61.
The Company is introducing the following metrics, which are
widely recognized by REIT investors: Funds From Operations and
Adjusted Funds From Operations. These measures have been provided
on a pro forma basis as if the REIT conversion had occurred on
January 1, 2010. During the quarter, pro forma Funds From
Operations would have been $112.5 million and pro forma Adjusted
Funds From Operations would have been $262.0 million.
Cash provided by operating activities increased 12.6% to $290.7
million.
Segment Results
Domestic Rental and Management Segment – Domestic rental and
management segment revenue increased 9.1% to $436.8 million, which
represented 69% of total revenues. In addition, domestic rental and
management segment Gross Margin increased 8.8% to $345.7 million,
while domestic rental and management segment Operating Profit
increased 7.1% to $325.2 million.
International Rental and Management Segment – International
rental and management segment revenue increased 78.9% to $178.0
million, which represented 28% of total revenues. In addition,
international rental and management segment Gross Margin increased
61.4% to $113.2 million, while international rental and management
segment Operating Profit increased 60.2% to $91.5 million.
Network Development Services Segment – Network development
services segment revenue was $15.6 million, which represented 3% of
total revenues. Network development services segment Gross Margin
was $7.8 million, and network development services segment
Operating Profit was $5.9 million.
YEAR TO DATE 2011 OPERATING RESULTS OVERVIEW
American Tower generated the following operating results for the
nine months ended September 30, 2011 (unless otherwise indicated,
all comparative information is presented against the nine months
ended September 30, 2010).
Total revenue increased 24.5% to $1,790.3 million and total
rental and management revenue increased 24.7% to $1,745.3 million.
Total rental and management Gross Margin increased 21.6% to
$1,324.3 million. Adjusted EBITDA increased 18.8% to $1,166.8
million, and the Adjusted EBITDA Margin was 65%.
Operating income increased 15.7% to $672.4 million. Net income
attributable to American Tower Corporation was $191.4 million and
net income attributable to American Tower Corporation per basic and
diluted common share were $0.48. As previously noted, net income
attributable to American Tower Corporation was negatively impacted
as a result of unrealized non-cash losses of $101.5 million
associated with fluctuations in foreign currency exchange rates
related to the Company's intercompany loans and similar
unaffiliated balances.
Recurring Free Cash Flow increased 6.2% to $733.4 million and
Recurring Free Cash Flow per Share increased 7.6% to $1.83.
Pro forma Funds From Operations would have been $665.8 million
and pro forma Adjusted Funds From Operations would have been $789.2
million.
Cash provided by operating activities increased 9.7% to $850.0
million.
Segment Results
Domestic Rental and Management Segment – Domestic rental and
management segment revenue increased 11.7% to $1,279.3 million,
which represented 71% of total revenues. In addition, domestic
rental and management segment Gross Margin increased 12.5% to
$1,017.5 million, while domestic rental and management segment
Operating Profit increased 11.4% to $960.9 million.
International Rental and Management Segment – International
rental and management segment revenue increased 82.6% to $466.0
million, which represented 26% of total revenues. In addition,
international rental and management segment Gross Margin increased
66.2% to $306.8 million, while international rental and management
segment Operating Profit increased 61.2% to $246.2 million.
Network Development Services Segment – Network development
services segment revenue was $45.0 million, which represented 3% of
total revenues. Network development services segment Gross Margin
was $23.1 million, and network development services segment
Operating Profit was $17.9 million.
Please refer to Non-GAAP and Defined Financial Measures on page
6 for definitions of Gross Margin, Operating Profit, Adjusted
EBITDA, Adjusted EBITDA Margin, Recurring Free Cash Flow, Recurring
Free Cash Flow per Share, Funds From Operations, Adjusted Funds
From Operations and Core Growth. For additional financial
information, including reconciliations to GAAP measures, please
refer to the supplemental schedules of selected financial
information on pages 12 through 17.
THIRD QUARTER 2011 INVESTING OVERVIEW
Cash Paid for Capital Expenditures – During the third quarter of
2011, total capital expenditures of $160.5 million included $89.9
million for capital projects, including spending to complete the
construction of 57 communications sites domestically, 625
communications sites internationally, and the installation of
shared generators; $31.7 million to purchase land under our towers;
$14.4 million for the redevelopment of existing communications
sites to accommodate new customer equipment; and $24.5 million for
capital improvements and corporate capital expenditures.
Cash Paid for Acquisitions – During the third quarter of 2011,
total payments for acquisitions were approximately $328.0 million,
which included the purchase of 56 communications sites domestically
and 1,164 communications sites internationally.
Stock Repurchase Programs – During the third quarter of 2011,
the Company repurchased a total of 3.2 million shares of its Class
A common stock for approximately $168.4 million pursuant to its
previously announced stock repurchase programs. Between October 1,
2011 and October 21, 2011, the Company repurchased an additional
0.5 million shares of its Class A common stock for an aggregate of
$26.5 million.
Subsequent Event - Subsequent to the end of the third quarter,
the Company entered into a transaction to purchase property
interests under certain of its existing communications sites in the
United States for a total consideration of up to $86.0 million,
subject to customary closing conditions. The purchase of the
property interests is in accordance with its current land purchase
program.
YEAR TO DATE 2011 INVESTING OVERVIEW
Cash Paid for Capital Expenditures – During the nine months
ended September 30, 2011, total capital expenditures of $397.1
million included $221.9 million for capital projects, including
spending to complete the construction of 204 communications sites
domestically, 946 communications sites internationally, and the
installation of shared generators; $80.3 million to purchase land
under our towers; $37.3 million for the redevelopment of existing
communications sites to accommodate new customer equipment; and
$57.6 million for capital improvements and corporate capital
expenditures.
Cash Paid for Acquisitions – During the nine months ended
September 30, 2011, total payments for acquisitions were
approximately $1,220.6 million, which included the purchase of 135
communications sites domestically and 3,614 communications sites
internationally.
Stock Repurchase Programs – During the nine months ended
September 30, 2011, the Company repurchased a total of 7.6 million
shares of its Class A common stock for approximately $393.1 million
pursuant to its previously announced stock repurchase programs.
INVESTMENT UPDATE
On September 3, 2011, the Company entered into an agreement to
acquire interests in companies holding a portfolio of property
interests under approximately 1,800 communications sites in the
United States. The acquisition includes property interests under
the Company’s existing communications sites in accordance with its
current land purchase program, as well as property interests under
carrier customer and other third-party communications sites
providing complementary leasing and recurring cash flow. The
acquisition closed on October 14, 2011 for an aggregate purchase
price of approximately $500.0 million, which included the
assumption of approximately $200.0 million of existing
indebtedness.
The Company has the following pending acquisitions:
- Approximately 700 additional towers in
connection with the Company’s joint venture in Ghana, which are
expected to close by year end, subject to customary closing
conditions;
- Approximately 1,000 towers in
connection with the Company’s joint venture in Colombia, which are
expected to close by year end, with the balance of approximately
1,100 towers expected to close throughout 2012, subject to
customary closing conditions; and
- Approximately 80 existing towers from
the South Africa transaction, which are expected to close in
December 2011, and up to approximately 1,800 additional towers that
may be constructed over the next two years, subject to customary
closing conditions.
REAL ESTATE INVESTMENT TRUST UPDATE
The Company continues to be on track to elect REIT status for
the taxable year beginning January 1, 2012. On September 22, 2011,
the Company announced that its registration statement, which
outlines its plan to merge into American Tower REIT, Inc., was
declared effective by the Securities and Exchange Commission. The
Company also announced that it will hold a special meeting of
stockholders on November 29, 2011 to vote on the proposed merger.
Stockholders of record as of October 3, 2011 will be entitled to
vote at the special meeting.
The Company continues to focus its REIT readiness efforts on two
remaining work streams. First, the Company continues to make
progress with respect to finalizing the amount of its earnings and
profits (E&P), and continues to anticipate it will distribute
up to $200 million to stockholders using cash on hand during the
fourth quarter of 2011. Second, the Company continues to make
substantial progress on its operational readiness initiatives,
which include finalizing systems and process changes by year end.
The determination to elect REIT status is subject to final approval
by the Company’s Board of Directors. There is no certainty as to
the timing of a REIT election or whether the Company will make a
REIT election at all.
FULL YEAR 2011 OUTLOOK
The following estimates are based on a number of assumptions
that management believes to be reasonable and reflect the Company’s
expectations as of November 1, 2011. These estimates include the
impact of the Company’s recent land acquisitions, the construction
of 450 to 650 sites in the fourth quarter and a new master lease
agreement with one of the Company's major U.S. customers. Actual
results may differ materially from these estimates as a result of
various factors, and the Company refers you to the cautionary
language regarding “forward-looking” statements included in this
press release when considering this information.
($ in millions) (1) Full Year 2011
Total rental and management revenue (2) $2,360 to
$2,390 Adjusted EBITDA (3) 1,580 to 1,600 Income from continuing
operations 300 to 340 Cash provided by operating activities 1,110
to 1,130 Payments for purchase of property and equipment and
construction activities (4) 475 to 525
Total rental and management revenue growth is expected to be
approximately 22.7% based on the midpoint, and total rental and
management revenue Core Growth, which excludes the effect of
non-cash straight-line revenue recognition, fluctuations in foreign
currency exchange rates and material one-time items, is expected to
be approximately 21.8%, based on the midpoint.
Adjusted EBITDA growth is expected to be approximately 18.0%
based on the midpoint, and Adjusted EBITDA Core Growth, which
excludes the effect of non-cash straight-line revenue and expense
recognition, fluctuations in foreign currency exchange rates and
material one-time items, is expected to be approximately 16.0%,
based on the midpoint.
___
(1) The Company’s outlook is based on the following average
foreign currency exchange rates to 1.0 U.S. Dollar for the fourth
quarter 2011: (a) 1.75 Brazilian Reais; (b) 500.00 Chilean Pesos;
(c) 1,850.00 Colombian Pesos; (d) 1.60 Ghanaian Cedi; (e) 48.50
Indian Rupees; (f) 13.0 Mexican Pesos; (g) 2.70 Peruvian Soles; and
(h) 7.80 South African Rand. (2) Outlook includes an
estimated increase in non-cash straight-line revenue of
approximately $35 million and an increase in non-cash straight-line
expense of approximately $9 million in 2011 from the full year
2010. (For additional information on straight-line accounting,
please reference the information contained in the section entitled
“Revenue Recognition” of note 1, “Business and Summary of
Significant Accounting Policies” within the notes to the
consolidated financial statements of the Company’s Annual Report on
Form 10-K for the year ended December 31, 2010.) (3) See
Non-GAAP and Defined Financial Measures below. (4) Outlook
for capital expenditures reflects (a) $70 million to $80 million of
spending on capital improvements and corporate capital
expenditures; (b) $55 million for the redevelopment of existing
communications sites; (c) $110 million for ground lease purchases;
and (d) $240 million to $280 million for other discretionary
capital projects including the construction of approximately 1,600
to 1,800 new communications sites.
Conference Call Information
American Tower will host a conference call today at 8:00 a.m. ET
to discuss its financial results for the third quarter ended
September 30, 2011 and its outlook for the remainder of 2011.
Supplemental materials for the call will be available on the
Company’s website, www.americantower.com. The conference call
dial-in numbers are as follows:
U.S./Canada dial-in: (866) 740-9153 International dial-in: (706)
645-9644 Passcode: 18528941
When available, a replay of the call can be accessed until 11:59
p.m. ET on November 15, 2011. The replay dial-in numbers are as
follows:
U.S./Canada dial-in: (855) 859-2056 International dial-in: (404)
537-3406 Passcode: 18528941
American Tower will also sponsor a live simulcast and replay of
the call on its website, www.americantower.com.
About American Tower
American Tower is a leading independent owner, operator and
developer of broadcast and wireless communications sites. American
Tower currently owns and operates approximately 40,000
communications sites in the United States, Brazil, Chile, Colombia,
Ghana, India, Mexico, Peru and South Africa. For more information
about American Tower, please visit www.americantower.com.
Non-GAAP and Defined Financial Measures
In addition to the results prepared in accordance with generally
accepted accounting principles in the United States (GAAP) provided
throughout this press release, the Company has presented the
following non-GAAP and defined financial measures: Gross Margin,
Operating Profit, Adjusted EBITDA, Adjusted EBITDA Margin,
Recurring Free Cash Flow, Recurring Free Cash Flow per Share, Funds
From Operations, Adjusted Funds From Operations and Core Growth.
The Company defines Gross Margin as revenues less operating
expenses, excluding stock-based compensation expense. The Company
defines Operating Profit as Gross Margin less selling, general,
administrative and development expense, excluding stock-based
compensation expense and corporate expenses. For reporting
purposes, the international rental and management segment Operating
Profit and Gross Margin also include interest income, TV Azteca,
net. These measures of Gross Margin and Operating Profit are also
before interest income, interest expense, loss on retirement of
long-term obligations, other income (expense), net income
attributable to non-controlling interest, income (loss) on equity
method investments, income taxes and discontinued operations. The
Company defines Adjusted EBITDA as net income before income (loss)
from discontinued operations, net, income from equity method
investments, income tax provision (benefit), other income
(expense), loss on retirement of long-term obligations, interest
expense, interest income, other operating expenses, depreciation,
amortization and accretion, and stock-based compensation expense.
The Company defines Adjusted EBITDA Margin as the percentage that
results from dividing Adjusted EBITDA by total revenue. The Company
defines Recurring Free Cash Flow as Adjusted EBITDA before
straight-line revenue and expense, plus interest income, less
interest expense, cash paid for income taxes and cash payments
related to redevelopment, capital improvement and corporate capital
expenditures. The Company defines Recurring Free Cash Flow per
Share as Recurring Free Cash Flow divided by the diluted weighted
average common shares outstanding. The Company defines Funds From
Operations as net income before real estate related depreciation,
amortization and accretion. The Company defines Adjusted Funds From
Operations as Funds From Operations before straight-line (revenue)
expense, stock-based compensation expense, non-real estate related
depreciation, amortization and accretion, amortization of deferred
financing costs, debt discounts and capitalized interest, other
(income) expense, loss on retirement of long-term obligations,
other operating expense, less capital improvement capital
expenditures, and corporate capital expenditures. The Company
defines Core Growth in total rental and management revenue and
Adjusted EBITDA as the increase or decrease, expressed as a
percentage, resulting from a comparison of financial results for a
current period with corresponding financial results for the
corresponding period in a prior year, in each case, excluding the
impact of straight-line revenue and expense recognition, foreign
currency exchange rate fluctuations, and material one-time items.
These measures are not intended to replace financial performance
measures determined in accordance with GAAP. Rather, they are
presented as additional information because management believes
they are useful indicators of the current financial performance of
the Company’s core businesses. The Company believes that these
measures can assist in comparing company performances on a
consistent basis irrespective of depreciation and amortization or
capital structure. Depreciation and amortization can vary
significantly among companies depending on accounting methods,
particularly where acquisitions or non-operating factors, including
historical cost bases, are involved. Notwithstanding the foregoing,
the Company’s measures of Gross Margin, Operating Profit, Adjusted
EBITDA, Adjusted EBITDA Margin, Recurring Free Cash Flow, Recurring
Free Cash Flow per Share, Funds From Operations, Adjusted Funds
From Operations, and Core Growth may not be comparable to similarly
titled measures used by other companies.
Cautionary Language Regarding Forward-Looking
Statements
This press release contains "forward-looking statements"
concerning our goals, beliefs, expectations, strategies,
objectives, plans, future operating results and underlying
assumptions, and other statements that are not necessarily based on
historical facts. Examples of these statements include, but are not
limited to statements regarding our full year 2011 outlook, our
pending acquisitions, including anticipated closing dates and
expected purchase prices, foreign currency exchange rates, our
expected election of real estate investment trust status and
related preparation, the timing and effect of that election, the
form, timing, and amount of the special E&P distribution and
our expectation regarding the declaration of quarterly
distributions. Actual results may differ materially from those
indicated in our forward-looking statements as a result of various
important factors, including: (1) decrease in demand for our
communications sites would materially and adversely affect our
operating results and we cannot control that demand; (2) if our
tenants consolidate or merge with each other to a significant
degree, our growth, revenue and ability to generate positive cash
flows could be materially and adversely affected; (3) new
technologies or changes in a tenant’s business model could make our
tower leasing business less desirable and result in decreasing
revenues; (4) our expansion initiatives may disrupt our operations
or expose us to additional risk if we are not able to successfully
integrate operations, assets and personnel; (5) we could suffer
adverse tax and other financial consequences if taxing authorities
do not agree with our tax positions; (6) due to the long-term
expectations of revenue from tenant leases, we are sensitive to
changes in the creditworthiness and financial strength of our
tenants; (7) our foreign operations are subject to economic,
political and other risks that could materially and adversely
affect our revenues or financial position, including risks
associated with fluctuations in foreign currency exchange rates;
(8) we anticipate that we may need additional financing to fund
capital expenditures, to fund future growth and expansion
initiatives and to return capital to our stockholders; (9) a
substantial portion of our revenue is derived from a small number
of customers; (10) increasing competition in the tower industry may
create pricing pressures that may materially and adversely affect
us; (11) our business is subject to government regulations and
changes in current or future laws or regulations could restrict our
ability to operate our business as we currently do; (12) if we are
unable or choose not to exercise our rights to purchase towers that
are subject to lease and sublease agreements at the end of the
applicable period, our cash flows derived from such towers would be
eliminated; (13) if we are unable to protect our rights to the land
under our towers, it could adversely affect our business and
operating results; (14) our leverage and debt service obligations
may materially and adversely affect us; (15) restrictive covenants
in the loan agreements related to our Securitization, the loan
agreements for the credit facilities and the indentures governing
our debt securities could materially and adversely affect our
business by limiting flexibility; (16) we could have liability
under environmental laws; (17) our towers or data centers may be
affected by natural disasters and other unforeseen damage for which
our insurance may not provide adequate coverage; (18) our costs
could increase and our revenues could decrease due to perceived
health risks from radio emissions, especially if these perceived
risks are substantiated; (19) if we fail to qualify as a REIT or
fail to remain qualified as a REIT, we would be subject to tax at
corporate income tax rates and would not be able to deduct
distributions to stockholders when computing our taxable income;
(20) we may not realize the anticipated tax benefits from the REIT
conversion effective January 1, 2012 because the timing of the REIT
conversion is not certain; (21) as a REIT, failure to make required
distributions would subject us to federal corporate income tax;
(22) covenants specified in our existing and future debt
instruments may limit our ability to make required REIT
distributions; (23) our cash distributions may fluctuate; (24)
there are uncertainties relating to the estimate of our special
E&P distribution; (25) even if we qualify as a REIT, certain of
our business activities will be subject to corporate level income
tax and foreign taxes, which will continue to reduce our cash
flows, and we will have potential deferred and contingent tax
liabilities; (26) we may be required to borrow funds, sell assets
or raise equity to satisfy our REIT distribution requirements or
maintain the asset ownership tests; (27) complying with REIT
requirements may limit our flexibility or cause us to forego
otherwise attractive opportunities; (28) as a REIT, we will be
limited in our ability to fund distribution payments using cash
generated through our taxable REIT subsidiaries (TRSs); (29) our
planned extensive use of TRSs, in particular for our international
operations, may cause us to fail to qualify as a REIT; (30)
complying with REIT requirements may limit our ability to hedge
effectively and increase the cost of our hedging, and may cause us
to incur tax liabilities; (31) the current market price of our
Common Stock may not be indicative of the market price of American
Tower REIT common stock following the REIT conversion and the
special E&P distribution; (32) we have no experience operating
as a REIT, which may adversely affect our financial condition,
results of operations, cash flow, per share trading price of
American Tower REIT common stock and ability to satisfy debt
service obligations; and (33) legislative or other actions
affecting REITs could have a negative effect on us or our
stockholders. For additional information regarding factors that may
cause actual results to differ materially from those indicated in
our forward-looking statements, we refer you to the information
contained in Item 1A of our Form 10-Q for the six months ended June
30, 2011 and our Definitive Proxy Statement filed on October 11,
2011 under the caption "Risk Factors." We undertake no obligation
to update the information contained in this press release to
reflect subsequently occurring events or circumstances.
ADDITIONAL INFORMATION AND CAUTIONARY STATEMENT
This communication does not constitute an offer to sell or the
solicitation of an offer to buy securities or a solicitation of any
vote or approval. American Tower REIT, Inc. has filed with the
Securities and Exchange Commission (SEC) a registration statement
on Form S-4/A containing a proxy statement of American Tower
Corporation and a prospectus of American Tower REIT, Inc. with
respect to the proposed merger. The registration statement was
declared effective by the SEC on September 22, 2011. On October 11,
2011, notice of a special meeting and a definitive proxy
statement/prospectus were mailed to stockholders of American Tower
Corporation who held shares of Class A common stock of American
Tower Corporation on October 3, 2011. INVESTORS ARE URGED TO READ
THE FORM S-4/A AND PROXY STATEMENT (INCLUDING ALL AMENDMENTS AND
SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT DOCUMENTS THAT ARE
FILED WITH THE SEC BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION
ABOUT THE PROPOSED MERGER. You may obtain documents free of charge
at the website maintained by the SEC at www.sec.gov. In addition,
you may obtain documents filed with the SEC by American Tower
Corporation free of charge by contacting Corporate Secretary, 116
Huntington Avenue Boston, Massachusetts 02116.
American Tower, its directors and executive officers and certain
other members of management and employees may be deemed to be
participants in the solicitation of proxies from American Tower's
stockholders in connection with the merger. Information regarding
the persons who may, under the rules of the SEC, be considered
participants in the solicitation of proxies in connection with the
merger is included in the Form S-4/A and proxy statement.
Information about the directors and executive officers of American
Tower and their ownership of American Tower stock is set forth in
the proxy statement for American Tower's 2011 Annual Meeting of
Stockholders. Investors may obtain additional information regarding
the interests of such participants by reading the Form S-4/A and
proxy statement for the merger.
Investors should read the Form S-4/A and proxy statement
carefully before making any voting or investment decisions.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (In
thousands)
September 30, December
31, 2011
2010 (1)
ASSETS Current assets: Cash and cash equivalents $ 177,506 $
883,963 Restricted cash 50,221 75,972 Short-term investments and
available-for-sale securities 4,726 46,428 Accounts receivable, net
100,063 81,479 Prepaid and other current assets 228,590 145,599
Deferred income taxes 252,699 174,788
Total current assets 813,805 1,408,229
Property and equipment, net 4,125,887 3,685,105 Goodwill 2,673,631
2,514,539 Other intangible assets, net 2,208,387 1,880,466 Deferred
income taxes 177,423 93,300 Deferred rent asset 560,121 470,637
Notes receivable and other long-term assets 336,082
317,808 Total $ 10,895,336 $ 10,370,084
LIABILITIES: Current liabilities: Accounts payable
and accrued expenses $ 352,781 $ 289,809 Accrued interest 61,536
40,621 Current portion of long-term obligations 861,160 74,896
Unearned revenue 95,851 134,135 Total
current liabilities 1,371,328 539,461
Long-term obligations 4,970,502 5,512,492 Asset retirement
obligations 400,216 341,838 Other long-term liabilities
805,649 471,735 Total liabilities
7,547,695 6,865,526
STOCKHOLDERS'
EQUITY: Class A common stock 4,884 4,860 Additional paid-in
capital 8,665,807 8,577,093 Accumulated deficit (1,545,244 )
(1,736,596 ) Accumulated other comprehensive (loss) income (87,070
) 38,053 Treasury stock (3,775,087 ) (3,381,966 )
Total American Tower Corporation stockholders' equity 3,263,290
3,501,444 Noncontrolling interest 84,351 3,114
Total stockholders' equity 3,347,641
3,504,558 Total $ 10,895,336 $ 10,370,084
(1)
December 31, 2010 balances have been
revised to reflect purchase accounting measurement period
adjustments.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (In
thousands, except per share data)
Three Months Ended
Nine Months Ended September 30, September 30,
2011 2010
2011 2010 REVENUES: Rental and
management $ 614,808 $ 499,821 $ 1,745,302 $ 1,400,120 Network
development services 15,595 13,501
45,031 37,573 Total operating revenues
630,403 513,322 1,790,333
1,437,693 OPERATING EXPENSES: Costs of operations
(exclusive of items shown separately below) Rental and management
(including stock-based compensation expense of $853, $0, $853 and
$0, respectively) 160,265 115,390 432,454 321,587 Network
development services (including stock-based compensation expense of
$910, $0, $910 and $0, respectively) 8,668 7,583 22,884 20,054
Depreciation, amortization and accretion 142,113 115,383 411,902
336,621 Selling, general, administrative and development expense
(including stock-based compensation expense of $10,377, $13,353,
$34,422 and $40,146, respectively) 76,476 57,295 214,929 164,404
Other operating expenses 14,576 4,299
35,770 14,090 Total operating expenses
402,098 299,950 1,117,939
856,756 OPERATING INCOME 228,305
213,372 672,394 580,937 OTHER
(EXPENSE) INCOME: Interest income, TV Azteca, net 3,498 3,585
10,587 10,669 Interest income 1,822 1,954 6,837 3,150 Interest
expense (77,796 ) (62,904 ) (226,735 ) (177,395 ) Loss on
retirement of long-term obligations - - - (35 )
Other (expense) income (including
unrealized foreign currency (losses) gains of $(145,144),$8,933,
$(101,505) and $5,531, respectively)
(150,876 ) 8,236 (115,710 )
1,913 Total other expense (223,352 ) (49,129 )
(325,021 ) (161,698 ) INCOME FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES AND INCOME ON EQUITY METHOD
INVESTMENTS 4,953 164,243 347,373 419,239 Income tax provision
(24,681 ) (70,649 ) (161,981 ) (129,390 ) Income on equity method
investments 2 6 14
24 (LOSS) INCOME FROM CONTINUING OPERATIONS (19,726 ) 93,600
185,406 289,873 Income from discontinued operations, net -
1 - 30 NET (LOSS)
INCOME (19,726 ) 93,601 185,406 289,903 Net loss (income)
attributable to noncontrolling interest 4,025
(162 ) 5,946 (481 ) NET(LOSS) INCOME
ATTRIBUTABLE TO AMERICAN TOWER CORPORATION $ (15,701 ) $ 93,439
$ 191,352 $ 289,422 NET (LOSS) INCOME
PER COMMON SHARE AMOUNTS: BASIC: (Loss) income from continuing
operations attributable to American Tower Corporation $ (0.04 ) $
0.23 $ 0.48 $ 0.72 Income from discontinued operations attributable
to American Tower Corporation - -
- - Net (loss) income
attributable to American Tower Corporation $ (0.04 ) $ 0.23
$ 0.48 $ 0.72 DILUTED: (Loss) income from continuing
operations attributable to American Tower Corporation $ (0.04 ) $
0.23 $ 0.48 $ 0.71 Income from discontinued operations attributable
to American Tower Corporation - -
- - Net (loss) income
attributable to American Tower Corporation $ (0.04 ) $ 0.23
$ 0.48 $ 0.71 WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING: BASIC 395,183 400,602
396,507 401,887 DILUTED 395,183
403,455 400,467 405,053
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH
FLOWS (In thousands)
Nine Months Ended
September 30, 2011
2010 CASH FLOWS FROM OPERATING ACTIVITIES: Net income
$ 185,406 $ 289,903 Stock-based compensation expense 36,185 40,146
Depreciation, amortization and accretion 411,902 336,621 Other
non-cash items reflected in statements of operations 287,286
144,674 Increase in net deferred rent asset (69,874 ) (49,404 )
Increase in restricted cash (825 ) (2,994 ) Increase in assets
(58,891 ) (56,555 ) Increase in liabilities 58,809
72,228 Cash provided by operating activities
849,998 774,619 CASH FLOWS FROM
INVESTING ACTIVITIES: Payments for purchase of property and
equipment and construction activities (397,088 ) (228,480 )
Payments for acquisitions (1,220,572 ) (584,270 ) Proceeds from
sale of short-term investments, available-for-sale securities and
other long-term assets 65,223 9,340 Payments for short-term
investments (20,412 ) (36,425 ) Deposits, restricted cash,
investments and other 13,218 (19,325 ) Cash
used for investing activities (1,559,631 ) (859,160 )
CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from
short-term borrowings 101,128 - Borrowings under credit facilities
280,014 457,153 Proceeds from issuance of senior notes - 699,160
Proceeds from other long-term borrowings 80,814 - Repayments of
notes payable, credit facilities and capital leases (207,120 )
(722,031 ) Purchases of Class A common stock (391,098 ) (350,452 )
Proceeds from stock options, warrants and stock purchase plan
60,926 122,342 Deferred financing costs and other financing
activities 79,601 (6,214 ) Cash provided by
financing activities 4,265 199,958
Net effect of changes in foreign currency exchange rates on
cash and cash equivalents (1,089 ) 9,168 NET
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (706,457 ) 124,585
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 883,963
247,293 CASH AND CASH EQUIVALENTS, END OF
PERIOD $ 177,506 $ 371,878 CASH PAID FOR
INCOME TAXES $ 48,808 $ 22,921 CASH PAID FOR INTEREST
$ 195,877 $ 144,239
UNAUDITED RESULTS FROM
OPERATIONS, BY SEGMENT (In thousands)
Three Months Ended, September 30, 2011
Rental and Management
NetworkDevelopmentServices
Total
Domestic International Total
Segment revenues $ 436,783 $ 178,025 $ 614,808 $ 15,595 $ 630,403
Segment operating expenses (1) 91,076 68,336 159,412 7,758 167,170
Interest income, TV Azteca, net - 3,498 3,498
- 3,498 Segment Gross Margin 345,707
113,187 458,894 7,837 466,731 Segment selling,
general, administrative and development expense 20,516
21,641 42,157 1,918 44,075 Segment
operating profit $ 325,191 $ 91,546 $ 416,737 $ 5,919 $ 422,656
Three Months Ended, September 30, 2010 Rental and
Management
NetworkDevelopmentServices
Total Domestic International Total
Segment revenues $ 400,319 $ 99,502 $ 499,821 $
13,501 $ 513,322 Segment operating expenses 82,449 32,941 115,390
7,583 122,973 Interest income, TV Azteca, net - 3,585
3,585 - 3,585 Segment Gross Margin
317,870 70,146 388,016 5,918 393,934
Segment selling, general, administrative and development expense
14,354 12,990 27,344 1,398
28,742 Segment operating profit $ 303,516 $ 57,156 $ 360,672 $
4,520 $ 365,192
Nine Months Ended, September 30, 2011
Rental and Management
NetworkDevelopmentServices
Total Domestic International Total
Segment revenues $ 1,279,315 $ 465,987 $ 1,745,302 $
45,031 $ 1,790,333 Segment operating expenses (1) 261,856 169,745
431,601 21,974 453,575 Interest income, TV Azteca, net -
10,587 10,587 - 10,587 Segment Gross
Margin 1,017,459 306,829 1,324,288
23,057 1,347,345 Segment selling, general, administrative
and development expense 56,528 60,619 117,147
5,130 122,277 Segment operating profit $ 960,931 $
246,210 $ 1,207,141 $ 17,927 $ 1,225,068
Nine Months
Ended, September 30, 2010 Rental and Management
NetworkDevelopmentServices
Total Domestic International Total
Segment revenues $ 1,144,970 $ 255,150 $ 1,400,120 $
37,573 $ 1,437,693 Segment operating expenses 240,427 81,160
321,587 20,054 341,641 Interest income, TV Azteca, net -
10,669 10,669 - 10,669 Segment Gross
Margin 904,543 184,659 1,089,202 17,519
1,106,721 Segment selling, general, administrative and
development expense 41,920 31,941 73,861
4,507 78,368 Segment operating profit $ 862,623 $
152,718 $ 1,015,341 $ 13,012 $ 1,028,353 (1) Excludes
stock-based compensation expense.
UNAUDITED SELECTED FINANCIAL
INFORMATION (In thousands, except where noted. Totals
may not add due to rounding.)
Selected Balance Sheet Detail: September 30, 2011
September 30, 2011 Long-term obligations summary,
including current portion Pro Forma (1)
Commercial Mortgage Pass-Through Certificates, Series 2007-1 $
1,750,000 $ 1,750,000 Senior Unsecured Revolving Credit Facility
375,000 275,000 Senior Unsecured Term Loan 325,000 325,000 4.625%
Senior Notes due 2015 599,452 599,452 7.000% Senior Notes due 2017
500,000 500,000 4.500% Senior Notes due 2018 999,288 999,288 7.250%
Senior Notes due 2019 295,725 295,725 5.050% Senior Notes due 2020
699,240 699,240 5.900% Senior Notes due 2021 - 499,290 South
African Bridge Loan (2) 85,889 85,889 Colombian short-term credit
facility (3) 73,057 73,057 Ghana Loan (4) 80,814 80,814 Other debt,
including capital leases
48,197
48,197 Total debt
$
5,831,662
$
6,230,952 Cash and cash equivalents 177,506
Net debt (Total debt less cash and cash equivalents)
$
5,654,156 (1 ) Pro forma for the Company's issuance of $500
million of 5.900% Senior Notes due 2021 in October 2011, and the
receipt of net proceeds of approximately $495.2 million, $100.0
million of which has been utilized for the repayment of a portion
of the Company’s Senior Unsecured Revolving Credit Facility. (2 )
The South African Bridge Loan is a short-term facility, denominated
in South African Rand. (3 ) The Colombian short-term credit
facility is denominated in Colombian Pesos. (4 ) The Ghana Loan is
denominated in U.S. Dollars and was entered into in connection with
the acquisition of towers through our joint venture in Ghana.
Three Months Ended Nine Months Ended Share
count rollforward: (in millions of shares)
September 30,
2011 September 30, 2011 Total shares, beginning of
period 396.0 398.7 Shares repurchased (3.2 ) (7.6 ) Shares issued
0.7 2.4 Total shares
outstanding, end of period (1) 393.5 393.5
(1 ) As of September 30, 2011, excludes (a) 4.2 million
potentially dilutive shares associated with vested and exercisable
stock options with an average exercise price of $33.49 per share,
(b) 2.9 million potentially dilutive shares associated with
unvested stock options, and (c) 2.2 million potentially dilutive
shares associated with unvested restricted stock units.
SELECTED STATEMENT OF OPERATIONS DETAIL: The following table
reflects the estimated impact of foreign currency exchange rate
fluctuations and straight-line revenue on total rental and
management revenue and Adjusted EBITDA:
Three Months
Ended Total rental and management revenue growth
components: September 30, 2011 Total rental and
management revenue Core Growth 24.2 % Estimated impact of
fluctuations in foreign currency exchange rates 1.1 % Impact of
straight-line revenue recognition (2.3 )% Reported total
rental and management revenue growth 23.0 %
Adjusted
EBITDA growth components: Adjusted EBITDA Core Growth 16.5 %
Estimated impact of fluctuations in foreign currency exchange rates
0.9 % Impact of straight-line revenue and expense recognition
(3.0 )% Reported Adjusted EBITDA growth 14.5 %
UNAUDITED
SELECTED FINANCIAL INFORMATION (In thousands. Totals may not
add due to rounding.)
Total rental
and management straight-line revenue and expense: In accordance
with GAAP, the Company recognizes consolidated rental and
management revenue and expense related to non-cancellable customer
and ground lease agreements with fixed escalations on a
straight-line basis, over the applicable lease term. As a result,
the Company’s revenue recognized may differ materially from the
amount of cash collected per customer lease, and the Company’s
expense incurred may differ materially from the amount of cash paid
per ground lease. Additional information regarding straight-line
accounting can be found in the Company’s Annual Report on Form 10-K
for the year ended December 31, 2010 in the section entitled
"Revenue Recognition," of note 1, "Business and Summary of
Significant Accounting Policies" within the notes to the
consolidated financial statements. A summary of total rental and
management straight-line revenue and expense, which represents the
non-cash revenue and expense recorded due to straight-line
recognition, is as follows:
Three Months Ended
Nine Months Ended September 30, September 30,
2011 2010 2011
2010 Total rental and management operations
straight-line revenue $ 32,687 $ 35,379 $ 92,999 $ 67,805 Total
rental and management operations straight-line expense 7,869 5,250
23,125 18,401
Three Months Ended Nine
Months Ended September 30, September 30,
Selling, general, administrative and development expense
breakout: 2011 2010
2011 2010 Total rental and management
overhead $ 42,157 $ 27,344 $ 117,147 $ 73,861 Network development
services segment overhead 1,918 1,398 5,130 4,507 Corporate and
development expenses 22,024 15,200 58,230 45,890 Stock-based
compensation expense 10,377 13,353
34,422 40,146 Total $ 76,476 $ 57,295 $
214,929 $ 164,404
SELECTED CASH FLOW DETAIL:
Three Months Ended Nine Months Ended September
30, September 30, Payments for purchase of property
and equipment and construction activities: 2011
2010 2011 2010
Discretionary capital projects $ 89,875 $ 54,305 $ 221,910 $
133,203 Discretionary ground lease purchases 31,726 23,276 80,280
49,842 Redevelopment 14,412 5,769 37,281 16,585 Capital
improvements 19,751 9,215 44,115 21,089 Corporate 4,744
3,405 13,503 7,761 Total $
160,508 $ 95,970 $ 397,088 $ 228,480
UNAUDITED SELECTED FINANCIAL
INFORMATION
(Totals may not add due to rounding.)
SELECTED PORTFOLIO
DETAIL - OWNED SITES: Three months ended September
30, 2011 Wireless Broadcast DAS
Total Beginning sites 37,335 467 246 38,048 New construction
670 - 12 682 Acquisitions 1,214 6 - 1,220 Adjustments/Reductions
(23 ) - - (23 ) Ending sites
39,196 473 258 39,927
As of September 30, 2011 Wireless Broadcast
DAS Total Domestic 20,935 274 252 21,461
International 18,261 199 6
18,466 Total sites 39,196 473
258 39,927
International Supplemental
Detail as of September 30, 2011 Wireless
Broadcast DAS Total Brazil 2,475 - 3 2,478
Chile 479 - - 479 Colombia 1,188 - - 1,188 Ghana 1,177 - - 1,177
India 8,414 - - 8,414 Mexico 2,765 199 3 2,967 Peru 475 - - 475
South Africa 1,288 - - 1,288
Total International sites 18,261 199
6 18,466
UNAUDITED RECONCILIATIONS TO GAAP
MEASURES AND THE CALCULATION OF DEFINED FINANCIAL MEASURES
(In thousands, except where noted. Totals may not add due to
rounding.) The reconciliation of
net income to Adjusted EBITDA and the calculation of Recurring Free
Cash Flow, Recurring Free Cash Flow per Share and Adjusted EBITDA
Margin are as follows:
Three Months Ended Nine
Months Ended September 30, September 30,
2011 2010 2011
2010 Net income ($19,726 ) $ 93,601 $
185,406 $ 289,903 Income from discontinued operations, net -
(1 ) - (30 ) Income from
continuing operations (19,726 ) 93,600
185,406 289,873 Income from equity method
investments (2 ) (6 ) (14 ) (24 ) Income tax provision 24,681
70,649 161,981 129,390 Other expense (income) 150,876 (8,236 )
115,710 (1,913 ) Loss on retirement of long-term obligations - - -
35 Interest expense 77,796 62,904 226,735 177,395 Interest income
(1,822 ) (1,954 ) (6,837 ) (3,150 ) Other operating expenses 14,576
4,299 35,770 14,090 Depreciation, amortization and accretion
142,113 115,383 411,902 336,621 Stock-based compensation expense
12,140 13,353 36,185
40,146 Adjusted EBITDA $ 400,632 $ 349,992
$ 1,166,838 $ 982,462 Adjusted EBITDA
(from above) $ 400,632 $ 349,992 $ 1,166,838 $ 982,462 Interest
expense (77,796 ) (62,904 ) (226,735 ) (177,395 ) Interest income
1,822 1,954 6,837 3,150 Cash paid for income taxes (20,513 )
(11,664 ) (48,808 ) (22,921 ) Straight-line revenue (32,687 )
(35,379 ) (92,999 ) (67,805 ) Straight-line expense 7,869 5,250
23,125 18,401 Redevelopment capital expenditures (14,412 ) (5,769 )
(37,281 ) (16,585 ) Capital improvement capital expenditures
(19,751 ) (9,215 ) (44,115 ) (21,089 ) Corporate capital
expenditures (4,744 ) (3,405 ) (13,503 )
(7,761 ) Recurring Free Cash Flow $ 240,420 $ 228,860
$ 733,359 $ 690,458 Divided by weighted
average diluted shares outstanding 395,183
403,455 400,467 405,053
Recurring Free Cash Flow per Share $ 0.61 $ 0.57 $
1.83 $ 1.70 Adjusted EBITDA (from above) $
400,632 $ 349,992 $ 1,166,838 $ 982,462 Divided by total revenue
630,403 513,322 1,790,333
1,437,693 Adjusted EBITDA Margin 64 %
68 % 65 % 68 %
UNAUDITED PRO FORMA REIT MEASURES
AND RECONCILIATIONS TO GAAP MEASURES (In thousands, except
where noted. Totals may not add due to rounding.)
Given the Company's preparation for potential
election of REIT status for the taxable year beginning January 1,
2012, two widely recognized metrics of operating performance for
REITs, Funds From Operations (FFO) and Adjusted Funds From
Operations (AFFO), are presented below on a pro forma basis as if
the REIT conversion had occurred on January 1, 2010. For more
information on the general nature of the pro forma adjustments, see
“Pro Forma Financial Information” in the Company’s Definitive Proxy
Statement, filed with the SEC on October 11, 2011. The unaudited
pro forma calculation of FFO is based on the definition as set
forth by the National Association of Real Estate Investment Trusts
(NAREIT). A reconciliation of net income to FFO and the calculation
of AFFO, which are non-GAAP financial measures, are also presented
below. The measures of FFO and AFFO may not be comparable to those
reported by REITs that do not compute these measures in accordance
with the NAREIT definitions, or that interpret those definitions
differently than the Company does. The pro forma adjustments, and
other estimates and assumptions set forth in the footnotes below,
are preliminary and have been made solely for the purposes of
developing the pro forma information. The unaudited pro forma
consolidated financial data is not necessarily indicative of the
financial position or operating results that would have been
achieved had the REIT conversion been completed as of the date
indicated, nor are they necessarily indicative of future financial
position or operating results. The unaudited pro forma consolidated
financial data does not reflect one-time transaction costs related
to the REIT conversion and the potential immaterial effect of lower
cash balances these transactions have on interest income, higher
borrowing costs or foregone investment opportunities.
Three Months Ended Nine Months Ended September
30, September 30, 2011 2010
2011 2010 Net
income $ (19,726 ) $93,601 $ 185,406 $ 289,903 Adjustment for pro
forma income taxes (1) 8,499 59,020
123,478 106,536 Pro-forma net income
(11,227 ) 152,621 308,885 396,440
Real estate related depreciation and amortization
123,715 103,422 356,948 301,695
Pro Forma Funds From Operations $ 112,488 $256,043
$ 665,833 $ 698,135
Three Months
Ended Nine Months Ended September 30,
September 30, 2011
2010 2011 2010
Pro Forma Funds From Operations (from above) $ 112,488 $
256,043 $ 665,833 $ 698,135 Straight-line revenue (32,687 ) (35,379
) (92,999 ) (67,805 ) Straight-line expense 7,869 5,250 23,125
18,401 Stock-based compensation expense 12,140 13,353 36,185 40,146
Non-real estate related depreciation, amortization and accretion
18,398 11,962 54,954 34,926 Amortization of deferred financing
costs, debt discounts and capitalized interest 2,813 1,840 8,278
6,224 Other expense (income) (2) 150,876 (8,236 ) 115,710 (1,913 )
Other operating expense (3) 14,576 4,299 35,770 14,090 Capital
improvement capital expenditures (19,751 ) (9,215 ) (44,115 )
(21,089 ) Corporate capital expenditures (4,744 )
(3,405 ) (13,503 ) (7,761 ) Pro Forma Adjusted Funds
From Operations $ 261,978 $ 236,512 $ 789,238
$ 713,354 (1 ) Adjustment reflects reduction to the
Company’s income tax provision, as a result of the assumed REIT
election on January 1, 2010. For more information, see Note (B) to
Unaudited Pro Forma Consolidated Financial Statements in the
Company’s Definitive Proxy Statement. As a result, on a pro forma
basis, income tax expense is lower by the amount of the adjustment.
(2 ) Primarily includes unrealized (gains)/losses on foreign
exchange. (3 ) Primarily includes impairments and transaction
related costs.
UNAUDITED RECONCILIATIONS OF OUTLOOK TO GAAP
MEASURES AND DEFINED FINANCIAL MEASURES (In millions, except
where noted. Totals may not add due to rounding.)
The reconciliation of Income from
continuing operations to Adjusted EBITDA outlook is as follows:
Full Year 2011 Net income $300 to $340
Interest expense 310 to 315 Depreciation, amortization and
accretion 540 to 550 Non-cash stock-based compensation expense 48
to 48 Other, including other operating expenses, interest income,
loss on retirement of long-term obligations, income (loss) on
equity method investments, other income (expense), income tax
provision and non-controlling interest in net earnings of
subsidiaries 382 to 347 Adjusted EBITDA $1,580 to $1,600
The calculation of Core Growth outlook is as follows:
Total Rental and Management Revenue Adjusted EBITDA
Outlook midpoint Core Growth 21.8% 16.0% Estimated impact of
fluctuations in foreign currency exchange rates 0.7% 0.6% Impact of
straight-line revenue and expense recognition 0.6% 0.9% Impact of
material one-time items (0.5)% 0.4% Outlook midpoint growth 22.7%
18.0%
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