American Tower Corporation Reports Strong Third Quarter Results and Announces Operational Initiatives.Business Editors BOSTON--(BUSINESS WIRE)--Nov. 6, 2001 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 significant increases in revenues and 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 ("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 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") for the quarter and nine months ended September September: see month. 30, 2001 as compared to the same period in the prior year. For the three months ended September 30, 2001, revenues increased to $296.2 million from $209.0 million for the three months ended September 30, 2000. EBITDA increased to $71.2 million for the three months ended September 30, 2001 from $58.7 million for the same period in 2000. For the nine months ended September 30, 2001, revenues increased to $821.6 million from $491.5 million for the nine months ended September 30, 2000. EBITDA increased to $191.1 million for the nine months ended September 30, 2001 from $135.6 million for the same period in 2000. In the third quarter 2001, the Company constructed 295 towers and acquired 591 towers for quarter end tower counts of 12,519 wireless towers, 327 broadcast towers, and 936 managed or sub-leased sites. Of the towers acquired in the third quarter, 537 were related to the ALLTEL ALLTEL Corporation (NYSE: AT) is an American telecommunications company with headquarters in Little Rock, Arkansas. Alltel provides wireless services to residential and business customers in 35 states. transaction, for a total of 1,406 ALLTEL towers closed as of September 30, 2001. The Company expects to close on approximately 1,800 to 1,850 towers at the completion of the ALLTEL transaction. Organic same wireless tower revenue growth for the 8,396 towers owned as of the beginning of the third quarter 2000 and the third quarter 2001 was 21%. For the 11,490 wireless towers owned by the Company in the U.S. and Mexico Mexico, city, Mexico Mexico or Mexico City, Span. Ciudad de México (Méjico), city (1990 pop. 8,236,960; 1991 met. area est. 20,899,000), central Mexico, capital and largest city of Mexico. as of the beginning of the third quarter 2001, the Company added 1,165 broadband broadband Term describing the radiation from a source that produces a broad, continuous spectrum of frequencies (contrasted with a laser, which produces a single frequency or very narrow range of frequencies). equivalent tenants. This is equivalent to an annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. lease-up rate of 0.41 broadband equivalent tenants per tower, an implied annual revenue growth rate of approximately 25%. New rental business was primarily driven by broadband customers, including PCS (1) (Personal Communications Services) Refers to wireless services that emerged after the U.S. government auctioned commercial licenses in 1994 and 1995. This radio spectrum in the 1. , cellular and ESMR ESMR Enhanced Specialized Mobile Radio ESMR Extended Specialized Mobile Radio (Nextel) ESMR Expert Systems Message Router ESMR Electrically/Electronically Scanned/ing Microwave Radiometer ESMR Engine Starter Motor Relay , representing approximately 95% of new business. Steve v. t. 1. To pack or stow, as cargo in a ship's hold. See Steeve. Dodge, American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of Tower's Chairman and Chief Executive Officer stated, "We are encouraged by the strong revenue growth in our core tower business and by overall sequential quarterly growth in EBITDA. Margin expansion in our tower group is a focus and we have targeted exceeding the 60.0% level by Q4 of next year, versus 54.2% in the current quarter. We expect this improvement to become quite visible by Q2 of 2002 and to accelerate from there. This margin expansion should occur as our development activities moderate, as the benefits of a company-wide ERP (Enterprise Resource Planning) An integrated information system that serves all departments within an enterprise. Evolving out of the manufacturing industry, ERP implies the use of packaged software rather than proprietary software written by or for one customer. solution are felt, as we continue to add customers to our towers, and as a result of other initiatives. We believe that margin performance for core tower operations in the high sixties is ultimately achievable, and we see strong evidence of this within the portfolio of towers that we have owned for more than a year. "Services which relate to new site development remain soft and subject to margin pressure. Service activities more directly related to installation and co-location Placing equipment owned by a customer or competitor in an organization's own facility. Telephone companies often allow co-location in order to provide the best interconnection between devices. activity are more robust. We see a continuation of these circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or and we are adjusting our forecasts and our organizational overheads accordingly. The shutting down of a major fixed wireless deployment has been particularly impactful in our case. "Verestar's sequential quarterly improvement is encouraging, though much work remains to be done. We have shifted our sales focus to longer-term contracts, emphasizing large corporate and government accounts, and de-emphasizing ISP's and second and third tier long distance carriers. This strategy appears to be gaining traction Traction Definition Traction is the use of a pulling force to treat muscle and skeleton disorders. Purpose Traction is usually applied to the arms and legs, the neck, the backbone, or the pelvis. , and we are also focused on Verestar's cost structure. We anticipate continued EBITDA gains in 2002 and beyond. "Clearly, the economy, capital and telecom markets remain challenging, and we are managing the company's resources and performance expectations in the belief that they will continue to be challenging through next year and perhaps beyond." Operational Initiatives As a result of our desire to increase overall return on investment, the Company is accelerating the process of shifting its focus from acquisitions and development activities to improving operations, profitability, and margin expansion across all business units. Accordingly, today the Company is announcing operational initiatives including an organizational restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). that will lead to more streamlined operations and substantial cost savings by the second half of 2002. In conjunction with these initiatives, the Company expects to record a restructuring charge restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. over the next two quarters totaling $41 million to $44 million. The Company is reducing the scope of its tower development activities and will build substantially fewer towers in the remainder of 2001 and in 2002 than previously expected due to the implementation of stronger short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. investment criteria while maintaining high expectations for long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. performance. This initiative will result in a significant decrease in the Company's tower development portfolio, a reduction in development-related capital expenditures, and a non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. of approximately $32 million to $35 million related to the write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of construction-in-progress to reflect the abandonment of sites due to reduced development activity. The entire construction-in-progress portion of the charge will be incurred in the fourth quarter 2001. In addition, approximately $9 million of the restructuring charge relates to consolidating operations and represents employee separation costs and office closings, affecting all of the Company's segments. The majority of this operations portion of the charge will be incurred in the fourth quarter 2001 with the remainder in the first quarter 2002. The Company's core business, tower rental, continues to show strong quarterly sequential revenue and tower cash flow growth. The tower rental outlook remains healthy and is expected to represent over 80% of the Company's cash flow in 2002. In addition to the development initiative noted above, the Company has implemented similarly strict guidelines guidelines, n.pl a set of standards, criteria, or specifications to be used or followed in the performance of certain tasks. for evaluating tower acquisition opportunities. The Company expects to engage in limited acquisition activity for the remainder of 2001 and in 2002, at a significantly reduced level from earlier years. While the majority of the Company's tower portfolio is in place, it believes there are still excellent opportunities to selectively add high return assets. The challenging current telecom environment and the retrenchment re·trench·ment n. The cutting away of superfluous tissue. of several large customers has affected services performance in the third quarter and has caused the Company to lower its expectations for its services segment for the fourth quarter 2001 and fiscal year 2002. As part of the operational initiatives noted above, the Company is focusing its services resources on a smaller amount of higher margin business and reducing its direct expenses relative to a lower level of gross sales Gross Sales A measure of overall sales that isn't adjusted for customer discounts or returns, calculated simply by adding all sales invoices, and not including operating expenses, cost of goods sold, payment of taxes, or any other charge. . Verestar, the Company's satellite and fiber network access subsidiary, has begun to make significant progress in the return to profitability and growth. The Company expects ongoing progress in 2002 and beyond as Verestar continues to consolidate and integrate the operations of acquisitions made in prior periods. Liquidity and Capital Resources The Company is actively managing its balance sheet. The Company is covering cash interest expense in the current quarter and expects to cover total interest expense in the fourth quarter 2001. As the number of young towers decreases as a percentage of the total portfolio, and existing towers continue to lease up, the Company expects to reduce its leverage maintaining its previously stated goal of obtaining investment grade status in several years. The Company continues its conservative approach to liquidity management. As of September 30, 2001, the Company had $338 million in cash and cash equivalents and outstanding bank debt of $1.35 billion. As disclosed throughout 2001, the Company had been seeking to increase the current availability under its Credit Facilities credit facilities npl → facilidades fpl de crédito credit facilities npl → facilités fpl de paiement credit facilities and recently received commitments for an additional $250 million increasing the Credit Facilities to a total of $2.25 billion out of $2.5 billion as provided for under the Credit Facilities, subject to compliance with bank covenants. These additional funds are not currently allocated for any specific uses. The Company views this additional availability as important to its operational flexibility, allowing it to assess ongoing needs and opportunities from a position of funding strength. The Company may also at its option seek commitments for the remaining $250 million as contemplated by its Credit Facilities. Conference Call Information American Tower will host a conference call today at 2:00 p.m. Eastern to discuss quarterly results and the Company's outlook. The call will be hosted by Joe Winn, Chief Financial Officer, who will be joined by Steve Dodge, Chief Executive Officer, and other executive officers. The dial-in numbers are US: 800-288-8976, international: 612-332-0530, no access codes required. A replay of the call will be available from 5:30 p.m. Eastern November November: see month. 6, 2001 until 11:59 p.m. Eastern November 13, 2001. The replay dial-in numbers are US: 800-475-6701, and international: 320-365-3844, access code 607403. American Tower will also sponsor a live simulcast of the call on its web site at http://investor.americantower.com. A replay of the call will be available on the web site shortly after the end of the call. 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 14,400 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 Brazil (brəzĭl`), Port. Brasil, officially Federative Republic of Brazil, republic (2005 est. pop. 186,113,000), 3,286,470 sq mi (8,511,965 sq km), E South America. , including approximately 300 broadcast tower sites. Of the 14,400 sites, approximately 13,500 are owned or leased towers and approximately 900 are managed and lease/sublease sites. Based in Boston Boston, town, England Boston, town (1991 pop. 26,495), E central England, on the Witham River. Boston's fame as a port dates from the 13th cent., when it was a Hanseatic port trading wool and wine. Having recovered from a decline in the 18th and 19th cent. , American Tower has regional hub offices in Boston, Atlanta Atlanta (ətlăn`tə, ăt–), city (1990 pop. 394,017), state capital and seat of Fulton co., NW Ga., on the Chattahoochee R. and Peachtree Creek, near the Appalachian foothills; inc. 1847. , Chicago, Houston, San Francisco San Francisco (săn frănsĭs`kō), city (1990 pop. 723,959), coextensive with San Francisco co., W Calif., on the tip of a peninsula between the Pacific Ocean and San Francisco Bay, which are connected by the strait known as the Golden and 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 . For more information about American Tower Corporation and its subsidiary Verestar, Inc., please visit our web sites www.americantower.com and www.verestar.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 of historical facts. Forward-looking statements include information regarding our outlook for the fourth quarter 2001 and full-year results of operations for 2002. Actual results may differ materially from those indicated in our forward-looking statements as a result of various important factors, including: (i) a decrease in demand for tower space would materially and adversely affect our operating results and we cannot control that demand; (ii) our substantial leverage and debt service obligations may adversely affect our operating results and our ability to make payments on our 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. ; (iii) 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 limiting flexibility; (iv) build-to-suit construction projects and major acquisitions from wireless service providers increase our dependence on a limited number of customers, the loss of which could materially decrease revenue, and may also involve less favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. terms; (vii) if we cannot successfully integrate acquired sites or businesses or manage our operations as we grow, our business will be adversely affected and our growth may decline; (viii) increasing competition in the satellite and fiber network access services market may slow Verestar's growth and adversely affect its business; (ix) expanding operations into foreign countries could lead to expropriations, government regulations, funds inaccessibility in·ac·ces·si·ble adj. Not accessible; remote or unapproachable. in  ac·ces , foreign
exchange exposure and management problems; and (x) the economic slow
down in 2001 has harmed, and may continue to harm, the financial
condition of some wireless service providers. 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: "Factors That May Affect Future Results" in our Form 10-Q Form 10-Q See 10-Q. for the quarter ended June 30, 2001, which "Factors That May Affect Future Results" 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
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three Months Nine Months
Ended Ended
September 30, September 30,
2001 2000 2001 2000
REVENUES:
Rental and management $120,032 $75,535 $317,736 $192,475
Services 118,762 91,185 325,705 203,363
Satellite and fiber network
access services 57,402 42,238 178,191 95,684
--------- ------- ------- -------
Total operating revenues 296,196 208,958 821,632 491,522
--------- ------- ------- -------
OPERATING EXPENSES:
Rental and management 58,605 37,335 155,742 97,117
Services 105,609 75,741 290,190 173,068
Satellite and fiber network
access services 55,353 32,060 169,467 74,318
Depreciation and amortization 118,898 75,973 317,853 198,264
Development expense(A) 1,736 5,311 7,038 10,495
Corporate general and
administrative expense 7,353 3,442 18,887 9,957
--------- -------- --------- ------
Total operating expenses 347,554 229,862 959,177 563,219
--------- -------- -------- -------
OPERATING LOSS (51,358) (20,904) (137,545)(71,697)
--------- --------- -------- --------
OTHER INCOME (EXPENSE):
Interest expense (73,483) (41,752) (210,223)(112,339)
Interest income and
other, net 720 6,560 13,578 12,997
Interest income, TV Azteca,
net of interest
expense(B) 3,627 3,607 10,747 9,070
Loss on investment in U.S.
Wireless (1,182) (23,408)
Note conversion expense(C) (26,336) (26,336) (16,968)
Minority interest in net
(earnings) losses
of subsidiaries (19) 140 (16) 82
--------- -------- -------- ---------
Total other expense (96,673) (31,445) (235,658) (107,158)
--------- -------- --------- ---------
LOSS BEFORE INCOME TAXES
AND EXTRAORDINARY LOSSES (148,031) (52,349) (373,203) (178,855)
INCOME TAX BENEFIT 23,093 12,822 72,818 43,036
--------- -------- --------- ---------
LOSS BEFORE EXTRAORDINARY
LOSSES (124,938) (39,527) (300,385) (135,819)
EXTRAORDINARY LOSSES ON
EXTINGUISHMENT OF DEBT, NET OF
INCOME TAX BENEFIT OF $ 2,892 (4,338)
---------- -------- --------- ---------
NET LOSS $(124,938) $(39,527)$(300,385) $(140,157)
========== ======== ========== =========
BASIC AND DILUTED NET LOSS
PER COMMON SHARE
Loss before extraordinary
losses $(0.65) $(0.22) $(1.58) $(0.82)
Extraordinary losses (0.03)
---------- -------- ---------- -------
BASIC AND DILUTED NET LOSS
PER COMMON SHARE $(0.65) $(0.22) $(1.58) $(0.85)
========== ========= ========= ========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 193,135 178,056 190,380 165,244
========== ========== ========= ========
OTHER OPERATING DATA
(In thousands, except per share data)
EBITDA(D) $71,167 $58,676 $191,055 $135,637
========== ======= ========= ========
EBITDA EXCLUDING DEVELOPMENT
EXPENSE $72,903 $63,987 $198,093 $146,132
========== ======= ========= ========
NET LOSS PER SHARE
EXCLUDING NOTE
CONVERSION EXPENSE
AND EXTRAORDINARY
LOSSES $(0.51) $(0.22) $(1.44) $(0.72)
=========== ======== ======== =======
NOTES
(A) Includes uncapitalized acquisition costs, costs to integrate
acquisitions, costs associated with new business initiatives,
abandoned acquisition costs and costs associated with tower
site inspections and related data gathering which are not
capitalized in accordance with generally accepted accounting
principles.
(B) Amounts are net of interest expense of $ 289 and $ 296 for
the three months ended September 30, 2001 and 2000, and of $
873 and $ 753 for the nine months ended September 30, 2001
and 2000, respectively.
(C) Represents expense equal to the fair value of incremental stock
issued to encourage convertible noteholders to convert their
holdings prior to the original conversion date.
(D) Defined as operating loss before depreciation and amortization
plus interest income, TV Azteca, net.
American Tower Corporation
November 6, 2001
(In Millions, except Loss per Common Share and Number of Towers)
Revised Fourth Quarter 2001, 2001 Fiscal Year Outlook, and 2002
Fiscal Year Outlook
The following estimates are based on a number of assumptions that
management believes to be reasonable, and reflect the Company's
expectations as of November 6, 2001. Company outlook is based on
assumptions such as the timing of acquisition closings, the number of
towers closed, the number of new builds constructed, tenant lease-up
rates, and successful implementation of operational initiatives.
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 before depreciation and amortization, development expense,
and corporate general and administrative expense. Segment cash flow
for rental and management includes interest income TV Azteca, net.
Q4 2001 Fiscal Year 2001 Fiscal Year 2002
Outlook Ranges Outlook Ranges Outlook Ranges
----------------------------------------------------
----------------------------------------------------
Rental and Management
Revenue $126 to $132 $444 to $450 $560 to $610
Rental and Management
Cash Flow 69 to 75 242 to 248 325 to 355
(includes Interest
Income TV
Azteca, net)
Services Revenue 105 to 120 431 to 446 320 to 380
Services Cash Flow 10 to 15 46 to 51 35 to 60
Satellite and Fiber
Network Access
Services Revenue 58 to 70 236 to 248 260 to 300
Satellite and Fiber
Network Access
Services Cash Flow 2 to 5 11 to 14 10 to 30
Total Revenue 289 to 322 1,111 to 1,144 1,140 to 1,290
Total Cash Flow 81 to 95 299 to 313 370 to 445
EBITDA Excluding
Development and
Restructuring
Expenses 74 to 88 273 to 287 340 to 417
EBITDA 30 to 48 221 to 242 333 to 412
Depreciation and
Amortization 124 to 122 442 to 440 Not Provided
Interest Expense, Net
of Interest Income
and Other(a) 76 to 73 296 to 293 Not Provided
Basic and Diluted
Net Loss Per
Common Share $(0.75) to $(0.66) $(2.33) to $(2.23) Not Provided
Number of New
Towers Erected 363 to 463 1,400 to 1,500 800 to 1,000
Capital
Expenditures $100 to $125 $575 to $600 $275 to $325
(a) Includes second and third quarter total impairment charges on
investment in U.S. Wireless of approximately $23 million and note
conversion expense of approximately $26 million.
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