American Tower Corporation Reports Second Quarter 2008 Financial Results.Second Quarter 2008 Highlights * Total revenue increased to $393.7 million * Adjusted 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 increased to $272.3 million * Cash provided by operating activities was $176.8 million BOSTON -- 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. (NYSE NYSE See: New York Stock Exchange : AMT See vPro. ) today reported financial results for the second quarter ended June 30, 2008. Jim Taiclet, American Tower's Chief Executive Officer stated, "We continued to perform well in the second quarter as demonstrated by our 10% and 13% revenue and Adjusted EBITDA growth, respectively. Moreover, demand for our tower space remains strong in all of our markets, which allows us to confidently raise our full year revenue and Adjusted EBITDA outlook. "While we continue to achieve solid growth from our current portfolio of assets, we are active in evaluating opportunities to add new assets in both our existing markets and new high growth markets including India, where we have recently completed the construction of our first operational towers. At the same time, we remain disciplined in allocating capital to new assets only when we can achieve an appropriate return. In addition, our solid financial position and significant free cash flow generation provides us with the flexibility to pursue these strategic opportunities and return excess capital to shareholders through our share repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. program." Second Quarter 2008 Operating Highlights American Tower generated the following operating results for the quarter ended June 30, 2008 (unless otherwise indicated, all comparative information is presented against the quarter ended June 30, 2007): Total revenue increased 9.9% to $393.7 million and rental and management segment revenue increased 9.6% to $384.3 million. Rental and Management Segment Gross Margin increased 10.3% to $296.0 million, and network development services segment revenue and Gross Margin increased to $9.4 million and $4.5 million, respectively. Rental and management segment revenue and Gross Margin include a year over year decrease of approximately $4.6 million non-cash straight-line revenue, which was included in the Company's previously disclosed outlook. Total selling, general, administrative and development expense was $41.8 million. The Company's selling, general, administrative and development expense for the quarter includes $13.6 million of stock-based compensation expense, $2.6 million of international business development expense and $0.6 million of costs related to ongoing legal and governmental proceedings and other related costs associated with the Company's historical stock option granting practices. In addition, total selling, general, administrative and development expense includes a one-time reduction of approximately $3.1 million, which was not included in the Company's previously disclosed outlook. Including costs related to the stock option review, Adjusted EBITDA increased 12.8% to $272.3 million and Adjusted EBITDA Margin was 69%. 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. increased to $154.8 million and income from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the increased to $50.7 million, which includes approximately $30.8 million pre-tax and $19.2 million, net of tax, respectively, related to the Company's previously disclosed change in useful life estimates for its towers and related intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. . Income from continuing operations was $0.13 per basic common share and $0.12 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. common share. Net income was $158.8 million or $0.40 per basic common share and $0.38 per diluted common share, which reflects a $106.1 million tax benefit related to the Company's Verestar subsidiary, as further discussed below. Free Cash Flow was $124.1 million, consisting of $176.8 million of cash provided by operating activities, less $52.7 million of payments for purchase of property and equipment and construction activities, including $42.9 million of capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. on the construction of new towers, the installation of in-building systems and ground lease purchases, as well as capital for the redevelopment of existing sites to meet additional tenant demand. During the quarter ended June 30, 2008, the Company completed the construction of 66 towers and the installation of 4 in-building systems. In addition, the Company spent approximately $11.0 million on ground lease purchases, which is included in payments for purchase of property and equipment and construction activities, and also spent $4.4 million to prepay pre·pay tr.v. pre·paid, pre·pay·ing, pre·pays To pay or pay for beforehand. pre·pay  ment n. long-term ground leases, which is
included as a reduction to cash provided by operating activities.
Please refer to Non-GAAP and Defined Financial Measures on page 3 and 4 for definitions of Rental and Management Segment Gross Margin, Network Development Services Segment Gross Margin, Adjusted EBITDA, Adjusted EBITDA Margin and Free Cash Flow. For additional financial information, including reconciliations to GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). measures, please refer to the supplemental schedules of unaudited selected financial information on pages 8 through 11. Stock Repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. Program During the quarter ended June 30, 2008, the Company repurchased a total of 2.7 million shares of its Class A common stock for approximately $115.3 million. As of July 25, 2008 the Company had repurchased pursuant to its publicly announced stock repurchase programs an aggregate of 62.5 million shares of its Class A common stock for approximately $2.4 billion since November 2005, which includes the repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. of 2.5 million shares of its Class A common stock for approximately $100.7 million, during the period July 1, 2008 to July 25, 2008. Verestar Tax Benefit As previously disclosed, the Company expected that it would be able to recognize a tax benefit associated with its investment in its Verestar subsidiary, which comprised the Company's former satellite and fiber network access segment. Verestar filed for protection under Chapter 11 of the federal bankruptcy laws in December 2003, and in April 2008, the court overseeing the bankruptcy proceeding approved the plan of liquidation The collection of assets belonging to a debtor to be applied to the discharge of his or her outstanding debts. A type of proceeding pursuant to federal Bankruptcy for Verestar. The Company recorded an income tax benefit of $106.1 million related to losses associated with its investment in Verestar as income from discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. during the three months ended June 30, 2008. Full Year 2008 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 July 30, 2008. Please refer to the cautionary language regarding "forward-looking" statements included in this press release when considering this information. The Company undertakes no obligation to update this information. [TABLE OMITTED] (1) Outlook for rental and management segment revenue includes an estimated decrease in non-cash straight-line revenues of approximately $23 million from the full year 2007. (For additional information on straight-line revenues, we refer you to the information contained in the section 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: "Revenue Recognition" of note 1 "Business and Summary of Significant Accounting Policies" within the notes to the consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge of our Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 2007.) (2) See Non-GAAP and Defined Financial Measures below. (3) Outlook for Adjusted EBITDA does not include (a) any estimate of future costs associated with the legal and governmental proceedings related to the review of the Company's historical stock option granting practices; (b) $57 million to $60 million of stock-based compensation expense; and includes (c) $9 million of international business development expense. (4) Outlook for depreciation, amortization and accretion The act of adding portions of soil to the soil already in possession of the owner by gradual deposition through the operation of natural causes. The growth of the value of a particular item given to a person as a specific bequest under the provisions of a will between the reflects the previously disclosed change to the Company's useful life estimate of its towers and related intangible assets from 15 to 20 years. (5) Outlook for interest expense does not reflect any future borrowings or repayments under the Company's existing senior unsecured revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility. (6) Outlook for cash provided by operating activities reflects the payment of approximately $15 million for the prepayment Prepayment 1. The payment of a debt obligation prior to its due date. 2. The excess payment over a scheduled debt repayment amount. Notes: 1. Examples include deferred expenses such as rent and early loan repayments. 2. of long-term ground leases, as part of the Company's land management program. (7) Outlook for capital expenditures includes costs for the construction of approximately 300 to 400 new sites, including tower sites and in-building systems 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, and approximately $35 million to $45 million of ground lease purchases, predominately in the United States. (8) Outlook for capital expenditures includes approximately $15 million related to the construction of approximately 200 tower sites pursuant to the Company's build-to-suit agreement in India. Conference Call Information American Tower will host a conference call today at 8:30 a.m. ET to discuss its second quarter 2008 financial results and the Company's outlook for the full year 2008. The conference call dial-in numbers are as follows: US/Canada dial-in: (877) 235-9047 International dial-in: (706) 645-9644 Passcode: 55829005 A replay of the call will be available from 11:30 a.m. ET July 30, 2008 until 11:59 p.m. ET August 9, 2008. The replay dial-in numbers are as follows: US/Canada dial-in: (800) 642-1687 International dial-in: (706) 645-9291 Passcode: 55829005 American Tower will also sponsor a live simulcast of the call on its website, www.americantower.com. When available, a replay of the call will be available on the Company's website. About American Tower American Tower is a 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. American Tower owns and operates over 23,000 sites in the United States, Mexico and Brazil. 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 Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. 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 (GAAP) provided throughout this press release, the Company has presented the following non-GAAP and defined financial measures: Rental and Management Segment Gross Margin, Network Development Services Segment Gross Margin, Adjusted EBITDA, Adjusted EBITDA Margin and Free Cash Flow. American Tower defines Rental and Management Segment Gross Margin as operating income before depreciation, amortization and accretion, impairments and net loss on sale of long-lived assets, stock-based compensation expense, corporate expenses, rental and management segment overhead, network development services segment overhead, network development services 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. , network development services segment revenue, plus 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. American Tower defines Network Development Services Segment Gross Margin as operating income before depreciation, amortization and accretion, impairments and net loss on sale of long-lived assets, stock-based compensation expense, corporate expenses, network development services segment overhead, rental and management segment overhead, rental and management segment operating expenses, and rental and management segment revenue. American Tower defines Adjusted EBITDA as operating income before depreciation, amortization and accretion, impairments and net loss on sale of long-lived assets, and stock-based compensation expense, plus interest income, TV Azteca, net. American Tower defines Adjusted EBITDA Margin as a percentage of Adjusted EBITDA over total revenue. American Tower defines Free Cash Flow as cash provided by operating activities less payments for purchase of property and equipment and construction activities. These measures are not intended as substitutes for other measures of financial performance determined in accordance with GAAP. They are presented as additional information because management believes they are useful indicators of the current financial performance of our core businesses. We believe that these measures can assist in comparing company performances on a consistent basis irrespective of irrespective of prep. Without consideration of; regardless of. irrespective of preposition despite 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 Rental and Management Segment Gross Margin, Network Development Services Segment Gross Margin, Adjusted EBITDA, Adjusted EBITDA Margin and Free Cash Flow may not be comparable to similarly titled measures used by other companies. Cautionary Language Regarding 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. This press release contains "forward-looking statements" concerning the Company's 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 2008 outlook, our stock repurchase programs and our international business development initiatives. 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 tower space would materially and adversely affect our operating results and we cannot control that demand; (2) if our wireless service provider customers consolidate or merge with each other to a significant degree, our growth, revenue and ability to generate positive cash flows could be adversely affected; (3) substantial leverage and debt service obligations may adversely affect us; (4) 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 the loan agreement for our Revolving Credit Facility and Term Loan, the indentures governing our debt securities, and the loan agreement related to our securitization Securitization The process of creating a financial instrument by combining other financial assets and then marketing them to investors. Notes: Mortgage backed securities are a perfect example of securitization. May also be spelled as "securitisation. transaction could adversely affect our business by limiting flexibility; (5) we have identified a material weakness in our internal control over financial reporting related to accounting for income taxes that, until remediated, could result in a material misstatement mis·state tr.v. mis·stat·ed, mis·stat·ing, mis·states To state wrongly or falsely. mis·state ment n. in our financial statements; (6) we
could suffer adverse tax and other financial consequences if taxing
authorities do not agree with our tax positions, or we are unable to
utilize our net operating losses Net operating lossesLosses that a firm can take advantage of to reduce taxes. ; (7) due to the long-term expectations of revenue from tenant leases, the tower industry is sensitive to the credit worthiness of its tenants; (8) our foreign operations are subject to economic, political and other risks that could adversely affect our revenues or financial position; (9) a substantial portion of our revenue is derived from a small number of customers; (10) we anticipate that we may need additional financing to fund our stock repurchase programs, to refinance Refinance 1. When a business or person revises their payment schedule for repaying debt. 2. Replacing an older loan with a new loan offering better terms. Notes: When a business refinances they typically extend the maturity date. our existing indebtedness INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. and to fund future growth and expansion initiatives; (11) new technologies could make our tower leasing business less desirable to potential tenants and result in decreasing revenues; (12) we could have liability under environmental laws; (13) our business is subject to governmental regulations and changes in current or future laws or regulations could restrict our ability to operate our business as we currently do; (14) increasing competition in the tower industry may create pricing pressures that may adversely affect us; (15) if we are unable to protect our rights to the land under our towers, it could adversely affect our business and operating results; (16) if we are unable or choose not to exercise our rights to purchase towers that are subject to lease and sublease sublease n. the lease of all or a portion of premises by a tenant who has leased the premises from the owner. A sublease may be prohibited by the original lease, or require written permission from the owner. agreements at the end of the applicable period, our cash flows derived from such towers would be eliminated; (17) our towers 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 risks are substantiated; (19) our historical stock option granting practices are subject to ongoing governmental proceedings, which could result in fines, penalties or other liability; and (20) pending civil litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc our historical stock option granting practices exposes us to risks and uncertainties. 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 contained in Item 1A of our Form 10-Q Form 10-Q See 10-Q. for the quarter ended March 31, 2008 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. UNAUDITED CONDENSED con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. CONSOLIDATED BALANCE SHEETS consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. (In thousands) [TABLE OMITTED] UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS See Income statement. (In thousands, except per share data) [TABLE OMITTED] (1) Selling, general, administrative and development expense includes $13,597 and $11,546 of stock-based compensation expense for the three months ended June 30, 2008 and June 30, 2007, respectively, and $29,862 and $28,214 of stock-based compensation expense for the six months ended June 30, 2008 and June 30, 2007, respectively. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) [TABLE OMITTED] UNAUDITED SELECTED FINANCIAL INFORMATION (In thousands, except where noted) SELECTED BALANCE SHEET DETAIL: [TABLE OMITTED] (1) Includes (a) 16.8 million shares related to the Company's 3.0% Convertible Notes due 2012 which are convertible at $20.50 per share; and (b) 0.4 million shares related to the Company's 3.25% Convertible Notes due 2010 which are convertible at $12.22 per share; and excludes (c) 1.2 million shares related to the Company's 5.0% Convertible Notes due 2010 which are convertible at $51.50 per share. (2) Includes vested and exercisable options outstanding and excludes (a) 8.7 million of unvested options; and (b) 1.1 million of unvested restricted stock units Restricted stock units Similar to restricted stock. However, the unit represents a promise that employees will receive stock in the future. The units do not pay dividends until the stock is vested. outstanding as of June 30, 2008. (3) Includes (a) 0.2 million shares related to warrants with an exercise price of $0.01 per share, which expire on August 1, 2008; and (b) 1.9 million shares related to warrants with an effective exercise price of $4.48 per share. UNAUDITED SELECTED FINANCIAL INFORMATION, CONTINUED (In thousands, except where noted) SELECTED INCOME STATEMENT DETAIL: [TABLE OMITTED] (1) Includes $608 and $1,757 of costs related to the review of the Company's historical stock option granting practices, related legal and governmental proceedings and other related costs for the three months ended June 30, 2008 and June 30, 2007, respectively and $1,158 and $4,547 of costs related to the review of the Company's historical stock option granting practices, related legal and governmental proceedings and other related costs for the six months ended June 30, 2008 and June 30, 2007. (2) Includes a one-time reduction of approximately $3,062 for the three months ended June 30, 2008. [TABLE OMITTED] SELECTED CASH FLOW DETAIL: [TABLE OMITTED] SELECTED PORTFOLIO DETAIL - OWNED SITES: [TABLE OMITTED] UNAUDITED RECONCILIATIONS TO GAAP MEASURES AND THE CALCULATION OF DEFINED FINANCIAL MEASURES (In thousands, except where noted) The reconciliation of net income to Adjusted EBITDA and the calculation of Rental and Management Segment Operating Profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. , Rental and Management Gross Margin, Network Development Services Segment Operating Profit, Network Development Services Segment Gross Margin and Adjusted EBITDA Margin are as follows: [TABLE OMITTED] UNAUDITED CALCULATION OF DEFINED FINANCIAL MEASURES, CONTINUED (In thousands) The calculation of Free Cash Flow is as follows: [TABLE OMITTED] (1) Cash provided by operating activities for the three and six months ended June 30, 2008 includes $4.4 million and $9.1 million of long-term ground lease prepayments Prepayments Payments made in excess of scheduled mortgage principal repayments. , respectively. (2) Cash provided by operating activities for the three and six months ended June 30, 2007 includes approximately $80.0 million in proceeds received by the Company from its previously announced federal income tax refund Tax refund Money back from the government when too much tax has been paid or withheld from a salary. related to the carry back of certain federal net operating losses and excludes a $21.6 million net increase in cash held in reserve accounts related to the Company's securitization transaction, as these accounts were classified as restricted cash. UNAUDITED RECONCILIATIONS OF OUTLOOK TO GAAP MEASURES (In millions) The reconciliation of Income from continuing operations to Adjusted EBITDA Outlook is as follows: [TABLE OMITTED] (1) The company has not reconciled Adjusted EBITDA Outlook to net income because it does not provide guidance for net income (loss) from discontinued operations, net, which is the reconciling item between income from continuing operations and net income. As items that impact income (loss) from discontinued operations are out of the Company's control and/or cannot be reasonably predicted, the Company is unable to provide such guidance. Accordingly, a reconciliation to net income is not available without unreasonable effort. |
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