American Tower Announces Verestar Strategic Initiatives and Sale of Verestar Subsidiary, MTN.Business Editors/High-Tech Writers BOSTON--(BUSINESS WIRE)--Jan. 6, 2003 American Tower Corporation Formed in 1995, American Tower Corporation is a publicly held company (NYSE: AMT) that is a leading owner and operator of wireless and broadcast communications sites in North America. Today American Tower owns and operates over 30,000 sites in the United States, Mexico and Brazil. ("the Company") (NYSE NYSE See: New York Stock Exchange : AMT See vPro. ) today announced its intention to divest To deprive or take away. Divest is usually used in reference to the relinquishment of authority, power, property, or title. If, for example, an individual is disinherited, he or she is divested of the right to inherit money. its wholly-owned subsidiary, Verestar Inc., during 2003, beginning with the sale of a Verestar subsidiary. The Company announced the signing of a letter of intent to sell Maritime Telecommunications Network A telecommunications network is a of telecommunications links and nodes arranged so that messages may be passed from one part of the network to another over multiple links and through various nodes. (MTN MTN A short-form for Medium Term Note. MTN Medium term notes issued by corporations, much like shorter-term commercial paper. MTN See medium-term note (MTN). ), a subsidiary of Verestar, to MTN's management group and financial partners for approximately $30 million in cash. The sale of MTN is expected to close by the end of the first quarter 2003, subject to the completion of definitive agreements and the satisfaction of customary closing conditions. The proceeds from the sale will be used to repay loans as required under the Company's secured credit facilities credit facilities npl → facilidades fpl de crédito credit facilities npl → facilités fpl de paiement credit facilities . As a result of these activities, the Company has designated Verestar Inc. as discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. for the fourth quarter 2002 and full year 2002, in accordance with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting . During 2003, the Company intends to divest the remaining portion of Verestar, the financial impact of which, at a minimum, will be the elimination of approximately $120 million of capital lease obligations. Pending the terms of the final disposition, American Tower may have additional financial guarantees of up to $12 million for Verestar contractual obligations. As of September 30, 2002, Verestar had net assets Net assets The difference between total assets on the one hand and current liabilities and noncapitalized long-term liabilities on the other hand. net assets See owners' equity. of approximately $50 million. This amount includes assets of $216 million and liabilities of $166 million, including the capital lease obligations, which previously were classified as long term obligations. Throughout the divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). process, the Company will have a nominal, if any, commitment to invest additional funds in Verestar. Steve Dodge, CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of American Tower and of Verestar, stated, "We are pleased to have agreed to sell MTN to a management-led group, and we wish them well with the company. This is an important first step in reducing our exposure to Verestar, while enabling us, at the same time, to realize proceeds from the MTN sale. "As to the remaining portion of Verestar, we applaud the efforts of all of the employees at Verestar who have fought through a very challenging year and we encourage them to continue those efforts as they face new challenges and opportunities. It will be their ability to drive additional revenue gains and to further reduce expenses that will keep the remaining portion of Verestar viable. While there is significant strategic and financial sponsor interest in Verestar, it is the successful completion of this work that will be the key to attracting fresh capital into the company and setting the stage for its long-term success. "As we continue to make progress toward fulfilling American Tower's strategic and financial goals, the consistent and strong performance of our core tower leasing business will become increasingly prominent and apparent. In fact, giving effect to the discontinued operations accounting treatment of Verestar, we expect company-wide EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become margins to approach 50% by year-end 2003, with substantial, growing free cash flow. Still ahead in the next couple of quarters should be the sale of certain additional non-core assets, which will further strengthen the margin performance and overall liquidity of American Tower." Revised Outlook for Fourth Quarter 2002, Full Year 2002 and Full Year 2003 On page three of this release, the Company has provided its revised fourth quarter 2002, full year 2002 and full year 2003 outlook. -- The Company maintains its fourth quarter 2002, full year 2002 and full year 2003 outlook for its Rental and Management and Services segments. -- The Company adjusts its fourth quarter 2002, full year 2002 and full year 2003 outlook for Verestar (Satellite and Fiber Network Access Services segment) solely to reflect this segment as discontinued operations. -- The Company maintains its new build and capital spending outlook for fourth quarter 2002 and full year 2002. The Company also maintains its full year 2003 new build and capital spending outlook for Rental and Management, Services and Corporate, but reduces for full year 2003 capital spending outlook for Verestar by $5 million to $3 to $5 million. Total capital spending for full year 2003 is now expected to be $50 to $75 million. American Tower is the leading independent owner, operator and developer of broadcast and wireless communications wireless communications System using radio-frequency, infrared, microwave, or other types of electromagnetic or acoustic waves in place of wires, cables, or fibre optics to transmit signals or data. sites in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. . Giving effect to pending transactions, American Tower operates approximately 15,000 sites in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , Mexico, and Brazil, including approximately 300 broadcast tower sites. Of the 15,000 sites, approximately 14,000 are owned or leased towers and approximately 1,000 are managed and lease/sublease sites. Based in Boston, American Tower has regional hub offices in Boston, Chicago, Phoenix, Mexico City Mexico City Spanish Ciudad de México City (pop., 2000: city, 8,605,239; 2003 metro. area est., 18,660,000), capital of Mexico. Located at an elevation of 7,350 ft (2,240 m), it is officially coterminous with the Federal District, which occupies 571 sq mi and Sao Paulo. For more information about American Tower Corporation, please visit our web site www.americantower.com. This press release contains "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " concerning our goals, beliefs, expectations, strategies, objectives, plans, future operating results and underlying assumptions, and other statements that are not historical facts. Examples of these statements include, but are not limited to, the completion of the MTN sale; the future divestiture of the remaining portion of Verestar and its financial impact on the Company; our revised full year and fourth quarter 2002 estimated ranges and fiscal year 2003 Outlook; and planned future asset sales. Actual results may differ materially from those indicated in our forward-looking statements as a result of various important factors, including: (1) our inability to complete our planned asset sales or realize the amount of proceeds that we currently expect from such sales; (2) a decrease in demand for tower space, which would materially and adversely affect our operating results and we cannot control that demand; (3) continuation of the current U.S. economic slowdown, which could materially and adversely affect our business; (4) our substantial leverage and debt service obligations may adversely affect our operating results by restricting our ability to allocate capital to income producing assets; (5) restrictive covenants Restrictive covenants Provisions that place constraints on the operations of borrowers, such as restrictions on working capital, fixed assets, future borrowing, and payment of dividends. in our credit facilities and our senior notes could adversely affect our business by further limiting our flexibility and causing us to breach our tower development obligations; (6) if our wireless service provider customers consolidate or merge with each other to a significant degree, our growth, our revenue and our ability to generate positive cash flows could be adversely affected; (7) due to the long-term expectations of revenue from tenant leases, we are dependent on the creditworthiness Creditworthiness The condition in which the risk of default on a debt obligation by that entity is deemed low. Creditworthiness Eligibility of an individual or firm to borrow money. of our tenants; (8) operations in foreign countries could lead to expropriations, government regulations, funds inaccessibility, foreign exchange exposure and management problems; (9) if we issue a significant amount of equity securities, the trading price Trading price The price at which a security is currently selling. for our shares of Class A Common Stock could be adversely affected; and (10) new in technologies could make our tower antenna leasing services less desirable to potential tenants and result decreasing revenues. For other important factors that may cause actual results to differ materially from those indicated in our forward-looking statements, we refer you to the information under the caption entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: "Business Factors That May Affect Future Results" in our Form 10-Q Form 10-Q See 10-Q. for the quarter ended September 30, 2002, which we incorporate herein by reference. We undertake no obligation to update the information contained in this press release to reflect subsequently occurring events or circumstances. American Tower Corporation Financial Summary January 6, 2003 (In Millions, Except Per Share Data) Fourth Quarter 2002, Full Year 2002 and Full Year 2003 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 January 6, 2003. Company outlook is based on assumptions about the number of new builds constructed, tenant lease-up, the timing of tower closings and the completion of transactions under the terms of the non-binding letters of intent. Fourth quarter 2002, full year 2002 and full year 2003 have been adjusted to reflect Verestar (Satellite and Fiber Network Access Services) as discontinued operations. Please refer to the cautionary language included in this press release when considering this information. The Company undertakes no obligation to update this information. "Cash flow" is defined as segment revenues less segment operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. before depreciation and amortization, development expense, restructuring expense, corporate general and administrative expense, and impairments and net loss on sale of long-lived assets. Segment cash flow for rental and management includes interest income TV Azteca TV Azteca is the second largest Mexican television network. It was established in 1968 as the state-owned Instituto Mexicano de la Televisión ("Imevisión"), and was privatized under its current name in 1993. Its flagship program is the newscast Hechos. , net. "EBITDA" is defined as operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. before depreciation and amortization and impairments and net loss on sale of assets plus interest income, TV Azteca, net.
Q4 2002 Fiscal Year 2002 Fiscal Year 2003
Outlook Ranges Outlook Ranges Outlook Ranges
----------------- ----------------- ---------------
Rental and
Management Revenue $145 to $148 $543 to $546 $620 to $645
Rental and
Management Cash
Flow 90 to 93 328 to 331 397 to 422
(Includes Interest
Income, TV Azteca,
net)
Services Revenue 45 to 55 227 to 237 154 to 204
Services Cash Flow 5 to 6 20 to 21 13 to 23
Total Revenue 190 to 203 770 to 783 774 to 849
Total Cash Flow 95 to 99 348 to 352 410 to 445
Corporate Expense 6 to 5 25 to 24 24 to 20
Development Expense 1 to 1 6 to 6 4 to 4
EBITDA Before
Restructuring 88 to 93 317 to 322 382 to 421
Restructuring
Expense 2 to 1 11 to 10 0 to 0
EBITDA 86 to 92 306 to 312 382 to 421
Depreciation and
Amortization 77 to 81 314 to 318 not provided
Interest Expense 66 to 64 259 to 257 not provided
Basic and Diluted Net
Loss Per Common Share
Before Discontinued
Operations,
Extraordinary Item and
Cumulative Effect of a
Change in Accounting
Principle $(0.30)to $(0.26)$(1.65)to $(1.62) not provided
Capital
Expenditures $25 to $30 $151 to $156 $50 to $75
Acquisition spending for the year 2002 is estimated to be
approximately $59 million. $22 million of the $59 million had been
spent as of September 30, 2002.
Acquisition spending for the year 2003 is expected to be approximately
$70 million.
About EBITDA, EBITDA Before Restructuring and Segment Cash Flow We do not consider EBITDA, EBITDA before restructuring, and segment cash flow as substitutes for other measures of profitability or liquidity determined in accordance with generally accepted accounting principles (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ) in the United States, such as operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. or cash flows from operating activities. EBITDA, EBITDA before restructuring and segment cash flow are not calculated in accordance with GAAP. However, we have included them in this release as additional information because they are commonly used in the communications site industry as a measure of a company's operating performance. More specifically, we believe they can assist in comparing company performances on a consistent basis without regard to depreciation and amortization. Our concern is that 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. However, our measure of EBITDA, EBITDA before restructuring, and segment cash flow may not be comparable to similarly titled measures of other companies. |
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