American Tower to Acquire $100 Million of Tower Assets From NII Holdings to be Funded With Proceeds From Non-Core Asset Sales.Business/Technology Editors BOSTON--(BUSINESS WIRE)--Dec. 10, 2002 -- 535 NII (National Information Infrastructure) The U.S. government's policy for managing advanced technology in the country. The Clinton/Gore administration (1993-2001) was very enthusiastic about the Internet and proposed that it should be funded by private industry and be Holdings wireless communication towers to be acquired for $100 million with approximately $14 million annual cash flow at closing -- Acquisitions will be funded with the proceeds of non-core asset sales, with approximately $125 million of non-core asset sales closed or previously announced in 2002 -- Over $100 million additional non-core asset sales expected by mid-2003, including approximately $55 million currently under non-binding letters of intent 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 announced the signing of a definitive agreement with NII Holdings, Inc. (OTC OTC See: Over-the-counter. OTC See over-the-counter market (OTC). BB: NIHD NIHD National Initiative for Human Development ) to acquire 535 communication towers in Mexico for an aggregate of $100 million. American Tower has also agreed to provide up to 250 additional cell sites to NII Holdings' incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. network build-out, of which at least 100 cell sites must be co-locations on American Tower's existing towers. The remaining 150 cell sites, if not co-located on American Tower's existing towers, will be part of a build-to-suit program, which American Tower expects to be completed over the next three years. The NII Holdings transaction is expected to close in stages, with the first closing of approximately $30 million scheduled to close by the end of 2002, subject to customary closing conditions, and the remaining $70 million expected to close by the end of the second quarter 2003. The Company expects to fund the closings with proceeds from consummated con·sum·mate tr.v. con·sum·mat·ed, con·sum·mat·ing, con·sum·mates 1. a. To bring to completion or fruition; conclude: consummate a business transaction. b. and planned non-core asset sales. To date, including the sales subject to the non-binding letters of intent described below, the Company has completed or announced approximately $180 million of non-core asset sales. The completion of these sales will result in a debt reduction of approximately $38 million and net cash proceeds of approximately $142 million, which can be used to fund the NII Holdings transaction. Separately, the company announced the signing of non-binding letters of intent with undisclosed parties to sell its remaining service components business and certain real estate assets for approximately $55 million. The assets subject to the non-binding letters of intent were expected to contribute approximately $7 million annual cash flow to the Services segment and $1 million annual cash flow to the Rental and Management segment in 2003. Completion of these transactions is subject to the negotiation and execution of definitive agreements and the satisfaction of customary closing conditions. In addition, the Company stated its goal to sell approximately $50 million of additional non-core assets by mid-2003, not including any potential disposition of Verestar. Steve Dodge, Chairman and Chief Executive Officer of American Tower, stated, "These transactions provide both immediate and long-term value to the stakeholders Stakeholders All parties that have an interest, financial or otherwise, in a firm-stockholders, creditors, bondholders, employees, customers, management, the community, and the government. of American Tower. The day-one returns on the NII Holdings transaction are strong and there is significant additional growth potential in the highly attractive Mexican market. Furthermore, by redeploying proceeds from non-core asset sales into higher growth tower assets we have taken another significant step forward in our strategy to focus on the core tower business and related, strategic services. By mid-2003, we expect to have completed asset sales in 2002 and 2003 in excess of $230 million, not including any potential disposition of Verestar. These strategic acquisition and 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). activities in 2002 and 2003, taken as a whole, will result in incremental liquidity of nearly $100 million, total company cash flow virtually unchanged or even improved, reduced leverage and perhaps what our customers will view as the premier North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. tower portfolio. "With regard to NII Holdings, we have chosen an attractive portfolio of towers and a strong customer. As a result of its recent organizational and financial 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). , NII Holdings has improved both its operating performance and financial position. "As much as we like and believe in both the Mexican market and NII Holdings, we would prefer to stress that what we are doing here is improving the quality of our assets. We are improving the reliability and growth potential of our cash flow. We are diversifying customer risk. We are de-levering. We are improving ratios and increasing our financial flexibility. You should expect more of the same from us in the future." Steve Shindler, 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 NII Holdings said "As a result of the successful completion of our restructuring, NII Holdings emerges as a financially healthy company with tremendous assets and a solid operational track record. We believe we have a fully funded business plan with annual revenues in excess of $700 million, less than $500 million in debt and 1.2 million wireless subscribers with the best ARPU (Average Revenue Per User) A calculation often used to determine the overall value of an application. It is also used to rate particular customers, especially in the wireless space, by comparing someone's account to the overall average. in Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. . We have made a long trek from being a wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. of Nextel Communications Nextel Communications, styled NEXTEL, (Former NASDAQ: NXTL) which is now known as the Sprint Nextel Corporation was a telecommunications firm based in the United States. Known for providing a nation-wide mobile communications system. to a fully independent company with strong operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. growth and a clear companywide focus on profitability and free cash flow generation." Financial Summary The following estimates are based on a number of assumptions that management believes to be reasonable, and reflect the Company's expectations as of December 10, 2002. Company outlook is based on assumptions about the timing of closings, the number of towers acquired at each closing, and the completion of transactions under non-binding letters of intent. 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 expenses, restructuring expenses, 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. NII Holdings Transaction Pro Forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma Impact on American Tower Assuming the acquisition of 535 towers: -- Initial pro forma incremental annual rental and management revenues are expected to be $21 million -- Initial pro forma incremental annual rental and management cash flow is expected to be $14 million Giving effect to this transaction American Tower will increase its North American leading tower count to nearly 15,000, including approximately 1,800 towers in Mexico. Summary of 2002 Announced Strategic Transactions and Revised Outlook for Fourth Quarter 2002, Full Year 2002 and Full Year 2003 On page five of this release, the Company has provided a summary of its announced strategic activity for 2002 and its revised fourth quarter 2002, full year 2002 and full year 2003 outlook. Fourth Quarter 2002 and Full Year 2002 -- The Company has modestly adjusted its fourth quarter 2002 and full year 2002 Rental and Management outlook to reflect its corporate headquarters building and certain real estate assets 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. , 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. -- Fourth quarter 2002 Rental and Management: reduced by approximately $1 million of revenue and $1 million of cash flow -- Full year 2002 Rental and Management: reduced by approximately $10 million of revenue and $5 million of cash flow -- The Company has adjusted its fourth quarter 2002 and full year 2002 Services outlook to its remaining service components business as discontinued operations, 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 . -- Fourth quarter 2002 Services: reduced by approximately $5 million of revenue and $1 million of cash flow -- Full Year 2002 Services: reduced by approximately $19 million of revenue and $5 million of cash flow -- The Company has not adjusted its fourth quarter and full year 2002 outlook for its Satellite and Fiber Network Access Services segment. Full Year 2003 -- The Company has adjusted full year 2003 Rental and Management outlook to reflect the run-rate on the revised fourth quarter 2002 ranges, described above, and for the acquisition of the NII Holdings towers. Approximately one third of the NII Holdings towers are expected to close at the end of 2002, with the acquisition of the remaining towers expected to close by the end of the second quarter 2003. -- The Company has adjusted full year 2003 Services outlook for the sale of its remaining service components business. -- Full Year 2003 Services: reduced by approximately $21 million of revenue and $7 million of cash flow -- The Company has not changed its full year 2003 outlook for its Satellite and Fiber Network Access Services segment. -- The Company has not changed its new build or 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. outlook. About 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 , 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 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. , 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. Conference Call Information American Tower will host a 30 minute conference call on December 10, 2002 at 10 a.m. Eastern to discuss this transaction. The call will be hosted by Brad Singer, Chief Financial Officer, who will be joined by Steve Dodge, Chief Executive Officer, Michael Gearon, President ATC ATC Air Traffic Control ATC Average Total Cost ATC Certified Athletic Trainer ATC At the Center (Hartford, Maine retreat center) ATC Applied Technology Council ATC All Things Considered International, and other executive officers. The dial-in numbers are US: (800) 603-0809, international: (706) 643-3257, no access codes required. A live simulcast will be available on American Tower's website, www.americantower.com. A replay of the call will be available from 12:30 p.m. Eastern Tuesday, December 10, 2002 until 12:00 p.m. Eastern Tuesday, December 17, 2002. The replay dial-in numbers are US: (800) 642-1687, and international: (706) 645-9291, access code 7095652. Replay will also be available on American Tower's website, www.americantower.com. 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 14,900 sites in the United States, Mexico, and Brazil, including approximately 300 broadcast tower sites. Of the 14,900 sites, approximately 14,000 are owned or leased towers and approximately 900 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 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 historical facts. Examples of these statements include, but are not limited to, the amount of proceeds we expect to realize from future asset sales, our ability to fund the NII Holdings closings from future asset sales, the benefits we expect to receive from the NII Holdings transaction and our fourth quarter 2002 and full year 2003 projections. 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) difficulties integrating and operating the towers to be acquired from NII Holdings; (3) a decrease in demand for tower space, which would materially and adversely affect our operating results and we cannot control that demand; (4) continuation of the current U.S. economic slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. , which could materially and adversely affect our business; (5) our substantial leverage and debt service obligations may adversely affect our operating results by restricting our ability to allocate To reserve a resource such as memory or disk. See memory allocation. capital to income producing assets; (6) 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 credit facilities npl → facilidades fpl de crédito credit facilities npl → facilités fpl de paiement 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; (7) 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; (8) 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; (9) operations in 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; (10) if we issue a
significant amount of equity securities, the trading price Trading priceThe price at which a security is currently selling. for our shares of Class A Common Stock could be adversely affected; and (11) new technologies could make our tower antenna leasing services less desirable to potential tenants and result in 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 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 .
American Tower Corporation Financial Summary
December 10, 2002
(In Millions, Except Per Share Data)
Announced Strategic Transactions(1)
Rental &
Management Services Total
Date Status Proceeds Cash Cash Cash
Announced Flow Flow Flow
Sources of Proceeds
MTS Wireless
Components(2) 08-Aug-02 Closed $32 - - -
Corporate
Headquarters
Building 08-Nov-02 Pending $68 $5 - $5
Remaining
Service
Components
Business 10-Dec-02 LOI(3) $45 - $7 $7
Non-Core Tower
and Real
Estate Asset Year-to- See
Sales date below(4) $35 ($2) - ($2)
Total $180 $3 $7 $10
Uses of Proceeds
NII Holdings,
Inc. Tower
Acquisition 10-Dec-02 Pending $100 $14 - $14
Retirement of
Corporate
Headquarters
Building
Debt 08-Nov-02 Pending $38 - - -
Total $138 $14 - $14
Incremental Available Cash
and Cash Flow from
Announced Transactions $42 $11 ($7) $4
(1) Excludes the approximately $50 million of additional non-core
asset sales that the Company expects by mid-2003.
(2) Approximately $23 million of the $32 million of proceeds from the
MTS Wireless Components transaction have been received to date.
The remaining $9 million are in notes receivable expected to be
received in 2003.
(3) LOI stands for non-binding letter of intent.
(4) Approximately $25 million of the $35 million of proceeds from the
non-core tower and real estate asset sales have closed. The other
$10+ million is under a non-binding letter of intent.
Q4 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 December 10, 2002. Company outlook is based on
assumptions about the number of new builds constructed, tenant
lease-up, the timing of closing and number of NII Holdings towers
acquired at each closing, and the completion of transactions under the
terms of the non-binding letters of intent. Fourth quarter 2002 and
full year 2002 have been adjusted to reflect the corporate
headquarters building, certain other real estate assets and the
Company's remaining service components business as discontinued
operations. Full year 2003 has been adjusted to reflect the sale of
the Company's remaining service components business and certain real
estate assets. 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 expenses,
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, net.
"EBITDA" is defined as operating loss before depreciation and
amortization and impairments and net loss on sale of assets plus
interest income, TV Azteca, net.
Fiscal Year Fiscal Year 2003
Q4 2002 2002 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
(Includes Interest
Income, TV Azteca, net) 90 to 93 328 to 331 397 to 422
Services Revenue 45 to 55 227 to 237 154 to 204
Services Cash Flow 5 to 6 20 to 21 13 to 23
Satellite and Fiber Network
Access Services Revenue 50 to 55 224 to 229 200 to 225
Satellite and Fiber Network
Access Services Cash Flow 0 to 2 1 to 3 10 to 15
Total Revenue 240 to 258 994 to 1,012 974 to 1,074
Total Cash Flow 95 to 100 349 to 355 420 to 460
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 94 318 to 325 392 to 436
Restructuring Expense 2 to 1 20 to 19 0 to 0
EBITDA 86 to 93 299 to 307 392 to 436
Depreciation and
Amortization 84 to 88 361 to 365 not provided
Interest Expense 68 to 66 269 to 267 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) $(2.89)to$(2.85) not provided
Capital Expenditures $ 25 to $ 30 $ 151 to $ 156 $ 55 to $ 80
Acquisition spending for the year 2002 is expected to be approximately
$59 million, including approximately $30 million related to the NII
Holdings transaction. $22 million of the $59 million expected 2002
acquisition spending had been spent as of September 30, 2002.
Acquisition spending for the year 2003 is expected to be approximately
$70 million, all of which is related to the NII Holdings transaction.
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