Attached files

file filename
8-K - FORM 8-K - AMERICAN TOWER CORP /MA/d346596d8k.htm

Exhibit 99.1

 

LOGO

Contact: Leah Stearns

Director, Investor Relations

Telephone: (617) 375-7500

AMERICAN TOWER CORPORATION REPORTS

FIRST QUARTER 2012 FINANCIAL RESULTS

FIRST QUARTER 2012

 

Consolidated Highlights    Segment Highlights

 

•    Total revenue increased 23.8% to $696.5 million

 

•    Operating income increased 25.7% to $274.4 million

 

•    Cash provided by operating activities increased 41.6% to $402.0 million

  

 

•    Domestic rental and management segment revenue increased 16.6% to $487.1 million

 

•    International rental and management segment revenue increased 52.6% to $196.9 million

 

•    Network development services segment revenue was $12.5 million

Boston, Massachusetts – May 3, 2012: American Tower Corporation (NYSE: AMT) today reported financial results for the quarter ended March 31, 2012.

Jim Taiclet, American Tower’s Chief Executive Officer stated, “Due to our unique global reach, American Tower is positioned to benefit from strong secular trends in wireless telecommunications in both the US and around the world. As a result of our robust first quarter performance and recent acquisition activities, we have increased the midpoint of our full year 2012 outlook for rental and management revenue, Adjusted EBITDA and AFFO growth to over 16%, 14% and 11%, respectively.

Furthermore, we are currently committed to deploying over $1.5 billion of capital during 2012, which includes spending on our annual capital expenditure program and acquisitions we have under contract today, as well as our regular distributions. We expect that these disciplined investments will support our internal goal of generating double digit annual AFFO growth.”

FIRST QUARTER 2012 OPERATING RESULTS OVERVIEW

American Tower generated the following operating results for the quarter ended March 31, 2012 (unless otherwise indicated, all comparative information is presented against the quarter ended March 31, 2011).

Total revenue increased 23.8% to $696.5 million and total rental and management revenue increased 25.1% to $684.0 million, which includes the impact of two non-recurring domestic revenue items, as further discussed below. Total rental and management Gross Margin increased 24.1% to $524.0 million. Total selling, general, administrative and development expense was $79.6 million, including approximately $12.6 million of stock-based compensation expense and the impact of a one-time state tax expense. Adjusted EBITDA increased 22.7% to $462.5 million, and the Adjusted EBITDA Margin was 66%.

Total rental and management revenue Core Growth was approximately 24.5%, and Core Growth in Adjusted EBITDA was approximately 22.5%. Please refer to the selected statement of operations detail on page 13, which highlights the items affecting the Core Growth percentages.


Operating income increased 25.7% to $274.4 million, net income attributable to American Tower Corporation increased 141.0% to $221.3 million, and net income attributable to American Tower Corporation per basic and diluted common share both increased 143.5% to $0.56.

Recurring Free Cash Flow (RFCF) increased 20.5% to $299.2 million and RFCF per Share increased 21.0% to $0.75. Adjusted Funds From Operations (AFFO) increased 13.2% to $295.8 million from the pro forma AFFO for the same period in 2011, and AFFO per Share increased 13.8% to $0.74 from the pro forma AFFO per Share for the same period in 2011. Core Growth in AFFO was approximately 15.9%.

Cash provided by operating activities increased 41.6% to $402.0 million, which reflects the accelerated recovery of approximately $62 million of value added tax in our international rental and management segment.

Segment Results

Domestic Rental and Management Segment – Domestic rental and management segment revenue increased 16.6% to $487.1 million, which represented 70% of total revenues. In addition, domestic rental and management segment Gross Margin increased 17.8% to $394.1 million, while domestic rental and management segment Operating Profit increased 18.5% to $374.7 million. Domestic rental and management segment Operating Profit Margin was 77%.

Domestic rental and management segment revenue for the quarter was positively impacted by two non-recurring items, a tenant billing settlement of $6.0 million and a lease termination settlement of $9.6 million. The lease termination settlement resulted in the Company recording an impairment of $10.7 million.

International Rental and Management Segment – International rental and management segment revenue increased 52.6% to $196.9 million, which represented 28% of total revenues. International rental and management segment pass-through revenues increased 46.7% to $48.6 million. In addition, international rental and management segment Gross Margin increased 47.9% to $129.9 million, while international rental and management segment Operating Profit increased 50.7% to $106.1 million. International rental and management segment Operating Profit Margin was 54% and would be 72%, if the impact of pass-through revenues were excluded.

Network Development Services Segment – Network development services segment revenue was $12.5 million, which represented 2% of total revenues. Network development services segment Gross Margin was $5.5 million, and network development services segment Operating Profit was $5.2 million. Network development services segment Operating Profit Margin was 41%.

Please refer to Non-GAAP and Defined Financial Measures on pages 5 and 6 for definitions of Gross Margin, Operating Profit, Operating Profit Margin, Adjusted EBITDA, Adjusted EBITDA Margin, Recurring Free Cash Flow, Recurring Free Cash Flow per Share, Funds From Operations, Adjusted Funds From Operations, Adjusted Funds From Operations per Share, Core Growth and Net Leverage Ratio. For additional financial information, including reconciliations to GAAP measures, please refer to the unaudited selected financial information on pages 11 through 15.

FIRST QUARTER 2012 INVESTING AND FINANCING OVERVIEW

Cash Paid for Capital Expenditures – During the first quarter of 2012, total capital expenditures of $121.0 million included $63.7 million for capital projects, including the construction of 29 communications sites domestically and 597 towers internationally and the installation of 109 shared generators domestically; $14.7 million to purchase land under the Company’s towers; $22.8 million for the redevelopment of existing communications sites to accommodate new tenant equipment; and $19.8 million for capital improvements and corporate capital expenditures.

 

2


Cash Paid for Acquisitions – During the first quarter of 2012, the Company spent $159.4 million, which consisted of $15.5 million for the purchase of 35 domestic towers and $143.9 million for amounts due from acquisitions, that closed in December of 2011. Subsequent to the end of the first quarter of 2012, the Company funded its acquisition of 800 towers in Brazil.

Stock Repurchase Program – During the first quarter of 2012, the Company repurchased a total of approximately 0.1 million shares of its common stock for approximately $4.9 million, pursuant to its stock repurchase program. Between April 1, 2012 and April 24, 2012, the Company repurchased approximately 0.02 million additional shares of its common stock for an aggregate of approximately $1.6 million, pursuant to its stock repurchase program.

Distribution – On April 25, 2012, the Company paid its first regular distribution to stockholders of record at the close of business on April 11, 2012 of $0.21 per share, or approximately $82.9 million. Subject to the discretion of the Company’s Board of Directors, the Company expects to continue paying regular distributions, the amount and timing of which will be determined by the Board.

Leverage – For the quarter ended March 31, 2012, the Company’s Net Leverage Ratio was approximately 3.7x net debt (total debt less cash and cash equivalents) to last quarter annualized Adjusted EBITDA.

Liquidity – As of March 31, 2012, the Company had approximately $1.8 billion of total liquidity, comprised of approximately $0.5 billion in cash and cash equivalents and the ability to borrow an aggregate of approximately $1.3 billion under its two revolving credit facilities, net of any outstanding letters of credit.

RECENT ACQUISITIONS

First Quarter 2012 Acquisitions – During the first quarter of 2012, the Company completed the acquisition of 35 towers domestically and acquired 800 towers in Brazil from a wireless service provider.

Subsequent and Pending Acquisitions – Subsequent to the end of the first quarter of 2012, the Company completed the acquisitions of 55 towers in Mexico and expects to complete the acquisition of 962 towers in Uganda, in early May. The Company currently expects to complete its acquisition of up to approximately 350 towers in Mexico and up to approximately 800 towers in Colombia, prior to the end of 2012.

FULL YEAR 2012 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 May 3, 2012. These estimates include the Company’s pending acquisition of 962 towers in Uganda and exclude any remaining pending acquisitions described above. 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.

The Company’s outlook is based on the following average foreign currency exchange rates to 1.00 U.S. Dollar for the remainder of 2012: (a) 1.80 Brazilian Reais; (b) 500.00 Chilean Pesos; (c) 1,860.00 Colombian Pesos; (d) 1.60 Ghanian Cedi; (e) 51.50 Indian Rupees; (f) 13.25 Mexican Pesos; (g) 2.70 Peruvian Soles; (h) 8.20 South African Rand; and (i) 2,500.00 Ugandan Shillings.

 

($ in millions)

(Totals may not add due to rounding.)

   Full Year 2012      Midpoint
Growth
    Midpoint
Core Growth
 

Total rental and management revenue

   $ 2,745         to       $ 2,795         16.1     18.7

Adjusted EBITDA (1)

     1,795         to         1,845         14.1     16.5

Adjusted Funds From Operations(1)

     1,170         to         1,202         11.1     14.8

Net Income

     675         to         715         82.0     N/A   

 

(1) See Non-GAAP and Defined Financial Measures below.

 

3


The Company’s outlook for total rental and management revenue reflects the following at the midpoint: (1) domestic rental and management segment revenue of $1,900 million; and (2) international rental and management segment revenue of $870 million, which includes approximately $230 million of pass-through revenue.

The calculation of midpoint Core Growth is as follows:

 

(Totals may not add due to rounding.)    Total Rental and
Management
Revenue
    Adjusted
EBITDA
    AFFO(1)  

Outlook midpoint Core Growth

     18.7     16.5     14.8

Estimated impact of fluctuations in foreign currency exchange rates

     (2.3     (1.8     (2.4

Impact of straight-line revenue and expense recognition

     (0.9     (0.9     —     

Impact of significant one-time items

     0.6        0.4        (1.2
  

 

 

   

 

 

   

 

 

 

Outlook midpoint growth

     16.1     14.1     11.1
  

 

 

   

 

 

   

 

 

 

 

(1) Core Growth in AFFO reflects approximately $20 million of one-time start-up capital improvement capital expenditures related to our joint ventures in Colombia, Ghana and Uganda.

Outlook for Capital Expenditures:

 

($ in millions)

(Totals may not add due to rounding.)

   Full Year 2012  

Capital improvement

   $ 75         to       $ 85   

Corporate

     15                 15   

Redevelopment

     65         to         75   

Ground lease purchases

     90         to         100   

Discretionary capital projects(1)

     255         to         325   
  

 

 

       

 

 

 

Total

   $ 500         to       $ 600   
  

 

 

       

 

 

 

 

(1) Includes the construction of approximately 1,800 to 2,200 new communications sites.

Reconciliations of Outlook for Net Income to Adjusted EBITDA:

 

($ in millions)

(Totals may not add due to rounding.)

   Full Year 2012  

Net income

   $ 675         to       $ 715   

Interest expense

     380         to         384   

Depreciation, amortization and accretion

     630         to         640   

Stock-based compensation expense

     53                 53   

Other, including other operating expenses, interest income, loss on retirement of long-term obligations, income (loss) on equity method investments, other income (expense) and income tax provision (benefit)

     57         to         53   
  

 

 

       

 

 

 

Adjusted EBITDA

   $ 1,795         to       $ 1,845   
  

 

 

       

 

 

 

 

4


Reconciliations of Outlook for Net Income to Adjusted Funds From Operations:

 

($ in millions)

(Totals may not add due to rounding.)

   Full Year 2012  

Net income

   $ 675        to       $ 715   

Straight-line revenue

     (148             (148

Straight-line expense

     33                33   

Depreciation, amortization and accretion

     630        to         640   

Stock-based compensation expense

     53                53   

Other, including other operating expenses, interest expense, amortization of deferred financing costs, debt discounts and capitalized interest, loss on retirement of long-term obligations, income (loss) on equity method investments and other (income) expense

     17        to         9   

Capital improvement capital expenditures

     (75     to         (85

Corporate capital expenditures

     (15             (15
  

 

 

      

 

 

 

Adjusted Funds From Operations

   $ 1,170        to       $ 1,202   
  

 

 

      

 

 

 

Conference Call Information

American Tower will host a conference call today at 8:30 a.m. ET to discuss its financial results for the first quarter ended March 31, 2012 and its outlook for the remainder of 2012. 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: 72926728

When available, a replay of the call can be accessed until 11:59 p.m. ET on May 17, 2012. The replay dial-in numbers are as follows:

U.S./Canada dial-in: (855) 859-2056

International dial-in: (404) 537-3406

Passcode: 72926728

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 global owner, operator and developer of wireless communications sites. American Tower currently owns and operates approximately 47,000 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, Operating Profit Margin, Adjusted EBITDA, Adjusted EBITDA Margin, Recurring Free Cash Flow, Recurring Free Cash Flow per Share, Funds From Operations, Adjusted Funds From Operations, Adjusted Funds From Operations per Share, Core Growth and Net Leverage Ratio. 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 Operating Profit Margin as Operating Profit divided by revenue. The Company defines Adjusted EBITDA as net income before income (loss) from discontinued operations, net, income (loss) 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

 

5


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 and 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 (income) expense, less cash payments related to capital improvements and cash payments related to corporate capital expenditures. The Company defines Adjusted Funds From Operations per Share as Adjusted Funds From Operations divided by the diluted weighted average common shares outstanding. Funds From Operations, Adjusted Funds From Operations and Adjusted Funds From Operations per Share for the three months ended March 31, 2011 are presented on a pro forma basis and reflect adjustments for income tax provision as if the REIT conversion had occurred on January 1, 2011. 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 significant one-time items. The Company defines Net Leverage Ratio as net debt (total debt, less cash and cash equivalents) divided by last quarter annualized Adjusted EBITDA. 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, Operating Profit Margin, Adjusted EBITDA, Adjusted EBITDA Margin, Recurring Free Cash Flow, Recurring Free Cash Flow per Share, Funds From Operations, Adjusted Funds From Operations, Adjusted Funds From Operations per Share, Core Growth and Net Leverage Ratio 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 2012 outlook, our pending acquisitions, including anticipated closing dates and expected purchase prices, foreign currency exchange rates and our expectation regarding the declaration of regular 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, merge or share site infrastructure 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) 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, which would substantially reduce funds available; (6) we could suffer adverse tax and other financial consequences if taxing authorities do not agree with our tax positions; (7) failure to make required distributions would subject us to federal corporate income tax, which may limit our ability to fund these distributions using cash generated through our taxable REIT subsidiaries (TRSs); (8) certain of our business activities will be subject to corporate level income tax and foreign taxes, which will reduce our cash flows, and we will have potential deferred and contingent tax liabilities; (9) complying with REIT requirements may limit our flexibility or cause us to forego otherwise attractive opportunities; (10) our extensive use of TRSs, in particular for our international operations, may cause us to fail to qualify as a REIT; (11) 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 our common stock and ability to satisfy debt service obligations; (12) 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; (13) 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; (14) a substantial portion of our revenue is derived from a small number of tenants; (15) 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; (16) if we are unable to protect our rights to the land under our towers, it could adversely affect our business and operating results; (17) we we may need additional financing to fund capital expenditures, future growth and expansion initiatives and satisfy our REIT distribution requirements; (18) our leverage and debt service obligations may materially and adversely affect us; (19) 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; (20) increasing competition in the tower industry may create pricing pressures that may materially and adversely affect us; (21) 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; (22) we may incur goodwill and other intangible impairment charges which may require us to record a significant charge to earnings; (23) distributions payable by REITs generally do not qualify for reduced tax rates; (24) we could have liability under environmental and occupational and health laws; (25) our towers or data centers may be affected by natural disasters and other unforeseen damage for which our insurance may not provide adequate coverage; and (26) our costs could increase and our revenues could decrease due to perceived health risks from radio emissions, especially if these perceived risks are substantiated. 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-K for the twelve months ended December 31, 2011. We undertake no obligation to update the information contained in this press release to reflect subsequently occurring events or circumstances.

 

6


UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

 

     March 31,
2012
    December  31,
2011(1)
 

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 471,258      $ 330,191   

Restricted cash

     56,338        42,775   

Short-term investments and available-for-sale securities

     32,817        22,270   

Accounts receivable, net

     105,120        100,971   

Prepaid and other current assets

     279,518        317,698   

Deferred income taxes

     30,318        29,596   
  

 

 

   

 

 

 

Total current assets

     975,369        843,501   
  

 

 

   

 

 

 

Property and equipment, net

     5,006,647        4,881,000   

Goodwill

     2,767,516        2,726,376   

Other intangible assets, net

     2,523,354        2,465,148   

Deferred income taxes

     233,646        209,863   

Deferred rent asset

     651,476        609,529   

Notes receivable and other long-term assets

     480,198        494,272   
  

 

 

   

 

 

 

Total

   $ 12,638,206      $ 12,229,689   
  

 

 

   

 

 

 

LIABILITIES:

    

Current liabilities:

    

Accounts payable

   $ 226,283      $ 215,366   

Accrued expenses

     336,094        304,208   

Distribution payable

     82,907        —     

Accrued interest

     73,728        65,729   

Current portion of long-term obligations

     127,316        101,816   

Unearned revenue

     92,939        93,099   
  

 

 

   

 

 

 

Total current liabilities

     939,267        780,218   
  

 

 

   

 

 

 

Long-term obligations

     7,161,126        7,134,492   

Asset retirement obligations

     368,959        344,180   

Other long-term liabilities

     582,451        560,657   
  

 

 

   

 

 

 

Total liabilities

     9,051,803        8,819,547   
  

 

 

   

 

 

 

COMMITMENTS AND CONTINGENCIES

    

Common stock

     3,946        3,936   

Additional paid-in capital

     4,917,255        4,903,800   

Distributions in excess of earnings

     (1,339,627     (1,477,899

Accumulated other comprehensive loss

     (97,682     (142,617

Treasury Stock(2)

     (4,924     —     
  

 

 

   

 

 

 

Total American Tower Corporation equity

     3,478,968        3,287,220   

Noncontrolling interest

     107,435        122,922   
  

 

 

   

 

 

 

Total equity

     3,586,403        3,410,142   
  

 

 

   

 

 

 

Total

   $ 12,638,206      $ 12,229,689   
  

 

 

   

 

 

 

 

(1) December 31, 2011 balances have been revised to reflect purchase accounting measurement period adjustments.
(2) As part of the Company’s reorganization to qualify as a REIT for federal income tax purposes, effective December 31, 2011, the Company completed the merger with its predecessor approved by the Company’s stockholders in November 2011. At the time of the merger, each share of Class A common stock of American Tower held in treasury at December 31, 2011 ceased to be outstanding, and a corresponding adjustment was recorded to additional paid-in capital and common stock.

 

7


UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(In thousands, except per share data)

 

     Three Months Ended
March 31,
 
     2012     2011  

REVENUES:

    

Rental and management

   $ 683,990      $ 546,655   

Network development services

     12,527        16,040   
  

 

 

   

 

 

 

Total operating revenues

     696,517        562,695   
  

 

 

   

 

 

 

OPERATING EXPENSES:

    

Costs of operations (exclusive of items shown separately below)

    

Rental and management (including stock-based compensation expense of $197 and $0, respectively)

     163,724        127,859   

Network development services (including stock-based compensation expense of $264 and $0, respectively)

     7,261        7,469   

Depreciation, amortization and accretion

     149,655        131,231   

Selling, general, administrative and development expense (including stock-based compensation expense of $12,584 and $12,358, respectively)

     79,584        66,132   

Other operating expenses

     21,847        11,704   
  

 

 

   

 

 

 

Total operating expenses

     422,071        344,395   
  

 

 

   

 

 

 

OPERATING INCOME

     274,446        218,300   
  

 

 

   

 

 

 

OTHER (EXPENSE) INCOME:

    

Interest income, TV Azteca, net

     3,543        3,499   

Interest income

     2,253        2,304   

Interest expense

     (95,117     (74,427

Loss on retirement of long-term obligations

     (398     —     

Other income (including unrealized foreign currency gains of $55,838 and $16,178, respectively)

     52,861        13,707   
  

 

 

   

 

 

 

Total other expense

     (36,858     (54,917
  

 

 

   

 

 

 

INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND INCOME ON EQUITY METHOD INVESTMENTS

     237,588        163,383   

Income tax provision

     (27,248     (71,423

Income on equity method investments

     18        1   
  

 

 

   

 

 

 

NET INCOME

     210,358        91,961   

Net loss (income) attributable to noncontrolling interest

     10,948        (119
  

 

 

   

 

 

 

NET INCOME ATTRIBUTABLE TO AMERICAN TOWER CORPORATION

   $ 221,306      $ 91,842   
  

 

 

   

 

 

 

NET INCOME PER COMMON SHARE AMOUNTS:

    

Basic net income attributable to American Tower Corporation

   $ 0.56      $ 0.23   
  

 

 

   

 

 

 

Diluted net income attributable to American Tower Corporation

   $ 0.56      $ 0.23   
  

 

 

   

 

 

 

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:

    

BASIC

     393,885        397,768   
  

 

 

   

 

 

 

DILUTED

     398,453        401,899   
  

 

 

   

 

 

 

DISTRIBUTIONS DECLARED PER SHARE

   $ 0.21        —     
  

 

 

   

 

 

 

 

8


UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(In thousands)

 

     Three Months Ended
March 31,
 
     2012     2011  

CASH FLOWS FROM OPERATIONS:

    

Net income

   $ 210,358      $ 91,961   

Adjustments to reconcile net income to cash provided by operating activities:

    

Stock-based compensation expense

     13,045        12,358   

Depreciation, amortization and accretion

     149,655        131,231   

Other non-cash items reflected in statements of operations

     (28,342     53,335   

Increase in net deferred rent asset

     (28,789     (22,704

Increase in restricted cash

     (13,490     (7,444

Decrease (increase) in assets

     55,126        (13,486

Increase in liabilities

     44,454        38,565   
  

 

 

   

 

 

 

Cash provided by operating activities

     402,017        283,816   
  

 

 

   

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

    

Payments for purchase of property and equipment and construction activities

     (121,032     (97,901

Payments for acquisitions, net of cash acquired

     (159,403     (617,348

Proceeds from sale of short-term investments, available-for-sale securities and other long-term assets

     1,095        49,189   

Payments for short-term investments

     (10,085     (12,037

Deposits, restricted cash, investments and other

     (1,871     3,567   
  

 

 

   

 

 

 

Cash used for investing activities

     (291,296     (674,530
  

 

 

   

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

    

Proceeds from short-term borrowings

     17,127        101,129   

Borrowings under credit facilities

     1,325,000        —     

Proceeds from issuance of senior notes

     698,670        —     

Proceeds from other long-term borrowings

     16,676        —     

Repayments of notes payable, credit facilities and capital leases

     (2,018,847     (126,669

Net contributions from noncontrolling interest holders

     3,327        6,589   

Purchases of common stock

     (20,665     (127,723

Proceeds from stock options

     15,615        10,173   

Deferred financing costs and other financing activities

     (9,463     (1,025
  

 

 

   

 

 

 

Cash provided by (used for) financing activities

     27,440        (137,526
  

 

 

   

 

 

 

Net effect of changes in foreign currency exchange rates on cash and cash equivalents

     2,906        7,100   
  

 

 

   

 

 

 

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

     141,067        (521,140

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

     330,191        883,963   
  

 

 

   

 

 

 

CASH AND CASH EQUIVALENTS, END OF PERIOD

   $ 471,258      $ 362,823   
  

 

 

   

 

 

 

CASH (RECEIVED) PAID FOR INCOME TAXES

   $ (897   $ 13,477   
  

 

 

   

 

 

 

CASH PAID FOR INTEREST

   $ 77,936      $ 50,806   
  

 

 

   

 

 

 

 

9


UNAUDITED RESULTS FROM OPERATIONS, BY SEGMENT

(In thousands)

 

Three Months Ended, March 31, 2012

 
     Rental and Management     Network
Development
Services
    Total  
     Domestic     International     Total      

Segment revenues

   $ 487,062      $ 196,928      $ 683,990      $ 12,527      $ 696,517   

Segment operating expenses (1)

     93,003        70,524        163,527        6,997        170,524   

Interest income, TV Azteca, net

     —          3,543        3,543        —          3,543   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Segment Gross Margin

     394,059        129,947        524,006        5,530        529,536   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Segment selling, general, administrative and development expense(1)

     19,400        23,895        43,295        358        43,653   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Segment Operating Profit

   $ 374,659      $ 106,052      $ 480,711      $ 5,172      $ 485,883   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Segment Operating Profit Margin

     77     54     70     41     70

Three Months Ended, March 31, 2011

 
     Rental and Management     Network
Development
Services
    Total  
     Domestic     International     Total      

Segment revenues

   $ 417,626      $ 129,029      $ 546,655      $ 16,040      $ 562,695   

Segment operating expenses

     83,182        44,677        127,859        7,469        135,328   

Interest income, TV Azteca, net

     —          3,499        3,499        —          3,499   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Segment Gross Margin

     334,444        87,851        422,295        8,571        430,866   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Segment selling, general, administrative and development expense(1)

     18,179        17,461        35,640        1,663        37,303   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Segment Operating Profit

   $ 316,265      $ 70,390      $ 386,655      $ 6,908      $ 393,563   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Segment Operating Profit Margin

     76     55     71     43     70

 

(1) Excludes stock-based compensation expense.

 

10


UNAUDITED SELECTED FINANCIAL INFORMATION

(In thousands, except where noted. Totals may not add due to rounding.)

Selected Balance Sheet Detail:

 

Long-term obligations summary, including current portion    March 31, 2012  

Commercial Mortgage Pass-Through Certificates, Series 2007-1

   $ 1,750,000   

2011 Credit Facility

     —     

2012 Credit Facility

     632,000   

4.625% Senior Notes due 2015

     599,525   

7.000% Senior Notes due 2017

     500,000   

4.500% Senior Notes due 2018

     999,338   

7.250% Senior Notes due 2019

     295,938   

5.050% Senior Notes due 2020

     699,276   

5.900% Senior Notes due 2021

     499,316   

4.700% Senior Notes due 2022

     698,680   

Unison Notes(1)

     208,503   

South African Facility(2)

     89,535   

Colombian short-term credit facility (3)

     78,907   

Colombian bridge loans (3)

     46,212   

Colombian loan (4)

     13,192   

Ghana Loan (5)

     130,951   

Other debt, including capital leases

     47,069   
  

 

 

 

Total debt

     7,288,442   

Cash and cash equivalents

     471,258   
  

 

 

 

Net debt (Total debt less cash and cash equivalents)

   $ 6,817,184   
  

 

 

 

 

(1) The Unison Notes are secured debt and were assumed as a result of the acquisition of certain legal entities holding a portfolio of property interests from Unison Holdings LLC and Unison Site Management II, L.L.C.
(2) The South African Facility is denominated in South African Rand.
(3) The Colombian short-term credit facility and bridge loans are denominated in Colombian Pesos.
(4) The Colombian loan is denominated in U.S. Dollars.
(5) The Ghana Loan is denominated in U.S. Dollars.

 

Calculation of Net Leverage Ratio ($ in thousands)    Three Months Ended
March 31, 2012
 

Total debt

   $ 7,288,442   

Cash and cash equivalents

     471,258   
  

 

 

 

Numerator: net debt (total debt less cash and cash equivalents)

   $ 6,817,184   
  

 

 

 

Adjusted EBITDA

   $ 462,536   

Denominator: annualized Adjusted EBITDA

     1,850,144   
  

 

 

 

Net Leverage Ratio

     3.7x   
  

 

 

 

 

11


UNAUDITED SELECTED FINANCIAL INFORMATION

(In thousands, except where noted. Totals may not add due to rounding.)

 

Share count rollforward: (in millions)    Three Months Ended
March 31, 2012
 

Total common shares, beginning of period

     393.6   

Common shares repurchased

     (0.1

Common shares issued

     1.0   
  

 

 

 

Total common shares outstanding, end of period (1)

     394.6   
  

 

 

 

 

(1) As of March 31, 2012, excludes (a) 4.2 million potentially dilutive shares associated with vested and exercisable stock options with an average exercise price of $35.27 per share, (b) 2.8 million potentially dilutive shares associated with unvested stock options, and (c) 2.0 million potentially dilutive shares associated with unvested restricted stock units.

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, 2011 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
March 31,
 
     2012      2011  

Total rental and management operations straight-line revenue

   $ 38,503       $ 29,843   

Total rental and management operations straight-line expense

     9,735         7,139   
     Three Months Ended
March 31,
 
Selling, general, administrative and development expense breakout:    2012      2011  

Total rental and management overhead

   $ 43,295       $ 35,640   

Network development services segment overhead

     358         1,663   

Corporate and development expenses

     23,347         16,471   

Stock-based compensation expense

     12,584         12,358   
  

 

 

    

 

 

 

Total

   $ 79,584       $ 66,132   
  

 

 

    

 

 

 
     Three Months Ended
March 31,
 
International pass-through revenue detail:    2012      2011  

Pass-through revenue

   $ 48,626       $ 33,137   

SELECTED CASH FLOW DETAIL:

 

     Three Months Ended
March 31,
 
Payments for purchase of property and equipment and construction activities:    2012      2011  

Discretionary capital projects

   $ 63,738       $ 56,830   

Discretionary ground lease purchases

     14,714         20,529   

Redevelopment

     22,812         7,705   

Capital improvements

     15,556         10,156   

Corporate

     4,212         2,681   
  

 

 

    

 

 

 

Total

   $ 121,032       $ 97,901   
  

 

 

    

 

 

 

 

12


UNAUDITED SELECTED FINANCIAL INFORMATION

(In thousands, except where noted. Totals may not add due to rounding.)

 

SELECTED STATEMENT OF OPERATIONS DETAIL:

The following table reflects the estimated impact of foreign currency exchange rate fluctuations, straight-line revenue and expense recognition and material one-time items on total rental and management revenue, Adjusted EBITDA and AFFO:

The calculation of Core Growth is as follows:

 

     Total Rental and
Management
Revenue
    Adjusted EBITDA     AFFO  

Three Months Ended March 31, 2012

      

Core Growth

     24.5     22.5     15.9

Estimated impact of fluctuations in foreign currency exchange rates

     (2.1     (1.6     (4.3

Impact of straight-line revenue recognition

     0.2        0.3        —     

Impact of material one-time items

     2.5        1.5        1.6   
  

 

 

   

 

 

   

 

 

 

Reported growth

     25.1     22.7     13.2

SELECTED PORTFOLIO DETAIL:

 

Tower Count(1) :

             
     As of
December 31, 2011(2)
     Constructed      Acquired      Adjustments     As of
March 31, 2012
 

United States(3)

     21,446         23         35         (16     21,488   

Brazil

     2,502         55         800         —          3,357   

Chile

     1,142         26         —           —          1,168   

Colombia

     2,677         —           —           —          2,677   

Ghana

     1,872         3         —           —          1,875   

India

     8,801         500         —           —          9,301   

Mexico(4)

     5,064         12         —           —          5,076   

Peru

     475         —           —           —          475   

South Africa

     1,364         1         —           —          1,365   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total

     45,343         620         835         (16     46,782   

 

(1) Excludes 265 in-building and outdoor Distributed Antenna System networks.
(2) December 31, 2011 balances have been adjusted to reflect a change in methodology from a site count to a tower count approach.
(3) United States tower count includes 274 broadcast towers.
(4) Mexico tower count includes 199 broadcast towers.

 

13


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
March 31,
 
     2012     2011  

Net income

   $ 210,358      $ 91,961   

Income from equity method investments

     (18     (1

Income tax provision

     27,248        71,423   

Other income

     (52,861     (13,707

Loss on retirement of long-term obligations

     398        —     

Interest expense

     95,117        74,427   

Interest income

     (2,253     (2,304

Other operating expenses

     21,847        11,704   

Depreciation, amortization and accretion

     149,655        131,231   

Stock-based compensation expense

     13,045        12,358   
  

 

 

   

 

 

 

Adjusted EBITDA

   $ 462,536      $ 377,092   
  

 

 

   

 

 

 

Adjusted EBITDA (from above)

   $ 462,536      $ 377,092   

Interest expense

     (95,117     (74,427

Interest income

     2,253        2,304   

Cash (received) paid for income taxes

     897        (13,477

Straight-line revenue

     (38,503     (29,843

Straight-line expense

     9,735        7,139   

Redevelopment capital expenditures

     (22,812     (7,705

Capital improvement capital expenditures

     (15,556     (10,156

Corporate capital expenditures

     (4,212     (2,681
  

 

 

   

 

 

 

Recurring Free Cash Flow

   $ 299,221      $ 248,246   
  

 

 

   

 

 

 

Divided by weighted average diluted shares outstanding

     398,453        401,899   
  

 

 

   

 

 

 

Recurring Free Cash Flow per Share

   $ 0.75      $ 0.62   
  

 

 

   

 

 

 

Adjusted EBITDA (from above)

   $ 462,536      $ 377,092   

Divided by total revenue

     696,517        562,695   
  

 

 

   

 

 

 

Adjusted EBITDA Margin

     66     67
  

 

 

   

 

 

 

 

14


UNAUDITED REIT MEASURES AND RECONCILIATIONS TO GAAP MEASURES

(In thousands, except where noted. Totals may not add due to rounding.)

The reconciliation of net income to Funds From Operations and the calculation of Adjusted Funds From Operations and Adjusted Funds From Operations per Share are presented below:

 

     Three Months Ended
March 31,
 
     2012     2011  

Net Income

   $ 210,358      $ 91,961   

Adjustment for pro forma income tax provision (1)

     —          60,791   
  

 

 

   

 

 

 

Pro forma net income

     210,358        152,753   

Real estate related depreciation, amortization

     132,832        114,209   
  

 

 

   

 

 

 

Funds from operations

     343,190        266,961   
  

 

 

   

 

 

 

Straight-line revenue

     (38,503     (29,843

Straight-line expense

     9,735        7,139   

Stock-based compensation expense

     13,045        12,358   

Non-real estate related depreciation, amortization and accretion

     16,823        17,022   

Amortization of deferred financing costs, capitalized interest and debt discounts and premiums

     1,852        2,502   

Other income

     (52,861     (13,707

Loss on retirement of long-term obligations

     398        —     

Other operating (income) expense (2)

     21,847        11,704   

Capital improvement capital expenditures

     (15,556     (10,156

Corporate capital expenditures

     (4,212     (2,681
  

 

 

   

 

 

 

Adjusted Funds From Operations

   $ 295,758      $ 261,298   
  

 

 

   

 

 

 

Divided by weighted average diluted shares outstanding

     398,453        401,899   
  

 

 

   

 

 

 

Adjusted Funds From Operations per Share

   $ 0.74      $ 0.65   
  

 

 

   

 

 

 

 

(1) Adjustment for March 31, 2011 assumes the REIT election occurred on January 1, 2011, and that as a result, income taxes would no longer be payable on certain of the Company’s activities. As a result, on a pro forma basis, income tax expense is lower by the amount of the adjustment. For more information, see Note (B) to Unaudited Pro Forma Consolidated Financial Statements in the Company’s Definitive Proxy Statement, filed with the SEC on October 11, 2011. The pro forma adjustment set forth in this footnote has been made solely for the purpose of this pro forma information. This information is not necessarily indicative of the financial position or operating results that would have been achieved had the REIT election been completed as of January 1, 2011, nor is it necessarily indicative of future financial position or operating results. It also does not reflect one-time transaction costs related to the REIT election and the potential immaterial effect of lower cash balances these transactions have on interest income, higher borrowing costs or foregone investment opportunities.
(2) Primarily includes impairments and transaction related costs.

 

15