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Press release from Business Wire

American Tower Corporation Reports Second Quarter and First Half 2013 Financial Results

<p> <b>Consolidated Highlights</b> </p> <p> <i>Second Quarter 2013</i> </p> <ul> <li class='bwlistitemmargb'> Total revenue increased 15.9% to $808.8 million </li> <li class='bwlistitemmargb'> Operating income increased 15.6% to $312.8 million </li> <li class='bwlistitemmargb'> Cash provided by operating activities increased 8.2% to $390.5 million </li> </ul> <p> <i>First Half 2013</i> </p> <ul> <li class='bwlistitemmargb'> Total revenue increased 15.6% to $1,611.6 million </li> <li class='bwlistitemmargb'> Operating income increased 12.4% to $612.5 million </li> <li class='bwlistitemmargb'> Cash provided by operating activities increased 2.8% to $784.5 million </li> </ul> <p> <b>Segment Highlights</b> </p> <p> <i>Second Quarter 2013</i> </p> <ul> <li class='bwlistitemmargb'> Domestic rental and management segment revenue increased 10.1% to $521.0 million </li> <li class='bwlistitemmargb'> International rental and management segment revenue increased 28.4% to $268.2 million </li> <li class='bwlistitemmargb'> Network development services segment revenue was $19.6 million </li> </ul> <p> <i>First Half 2013</i> </p> <ul> <li class='bwlistitemmargb'> Domestic rental and management segment revenue increased 7.9% to $1,036.7 million </li> <li class='bwlistitemmargb'> International rental and management segment revenue increased 30.6% to $529.9 million </li> <li class='bwlistitemmargb'> Network development services segment revenue was $44.9 million </li> </ul> <p> </p>

Wednesday, July 31, 2013

American Tower Corporation Reports Second Quarter and First Half 2013 Financial Results

07:00 EDT Wednesday, July 31, 2013

BOSTON (Business Wire) -- American Tower Corporation (NYSE: AMT) today reported financial results for the quarter ended June 30, 2013.

Jim Taiclet, American Tower's Chief Executive Officer stated, “During the second quarter of 2013, our Core results significantly outperformed our internal expectations as demand for tower space drove robust leasing activity across our global portfolio. The combination of our extensive, high quality asset base and long-term master lease agreements with leading mobile operators resulted in strong growth in each of our key operating metrics.

"We expect the favorable leasing trends we have seen so far this year to continue generating solid Core performance, offsetting potential headwinds from the translation of foreign currency exchange rates. As a result, we are reaffirming our full year outlook for total rental and management revenue and raising our full year outlook for Adjusted EBITDA by $5 million and AFFO by $10 million.”

SECOND QUARTER 2013 OPERATING RESULTS OVERVIEW

American Tower generated the following operating results for the quarter ended June 30, 2013 (unless otherwise indicated, all comparative information is presented against the quarter ended June 30, 2012).

Total revenue increased 15.9% to $808.8 million and total rental and management revenue increased 15.7% to $789.2 million. Total rental and management revenue Core Growth was approximately 18.1%. Please refer to the selected statement of operations detail on page 13, which highlights the items affecting all Core Growth percentages for the quarter ended June 30, 2013.

Total rental and management Gross Margin increased 14.2% to $594.8 million. Total selling, general, administrative and development expense was $99.8 million, including $16.6 million of stock-based compensation expense. Adjusted EBITDA increased 12.5% to $524.0 million, Core Growth in Adjusted EBITDA was 14.7%, and Adjusted EBITDA Margin was 65%.

As previously disclosed, during the second quarter of 2012, the Company's results were positively impacted by the reversal of approximately $4.9 million of revenue reserves and approximately $3.8 million of bad debt expense reserves, attributable to one of the Company's tenants in Mexico.

Adjusted Funds From Operations (AFFO) increased 19.5% to $366.2 million, which includes the receipt of a one-time income tax refund during the quarter ended June 30, 2013 of $4.5 million in one of the Company's international markets. AFFO per Share increased 19.5% to $0.92, and Core Growth in AFFO was approximately 18.2%.

Operating income increased 15.6% to $312.8 million, and net income attributable to American Tower Corporation increased 107.1% to $99.8 million. Net income attributable to American Tower Corporation per both basic and diluted common share increased 108.3% to $0.25.

Cash provided by operating activities increased 8.2% to $390.5 million.

Segment Results

Domestic Rental and Management Segment Domestic rental and management segment revenue increased 10.1% to $521.0 million, which represented 64% of total revenues, and domestic rental and management segment Gross Margin increased 10.5% to $425.8 million. Domestic rental and management segment Operating Profit increased 10.3% to $401.6 million, and domestic rental and management segment Operating Profit Margin was 77%.

International Rental and Management Segment International rental and management segment revenue increased 28.4% to $268.2 million, which represented 33% of total revenues. International rental and management segment Gross Margin increased 24.5% to $169.0 million, while international rental and management segment Operating Profit increased 17.5% to $136.5 million. International rental and management segment Operating Profit Margin was 51% (69%, excluding the impact of $71.3 million of pass-through revenues).

Network Development Services Segment Network development services segment revenue was $19.6 million, which represented 3% of total revenues. Network development services segment Gross Margin was $12.3 million, and network development services segment Operating Profit was $10.0 million. Network development services segment Operating Profit Margin was 51%.

FIRST HALF 2013 OPERATING RESULTS OVERVIEW

American Tower generated the following operating results for the six months ended June 30, 2013 (unless otherwise indicated, all comparative information is presented against the six months ended June 30, 2012).

Total revenue increased 15.6% to $1,611.6 million and total rental and management revenue increased 14.7% to $1,566.6 million. Total rental and management revenue Core Growth was approximately 19.2%. Please refer to the selected statement of operations detail on page 13, which highlights the items affecting all Core Growth percentages for the six months ended June 30, 2013.

Total rental and management Gross Margin increased 13.4% to $1,184.8 million. Total selling, general, administrative and development expense was $201.0 million, including $37.3 million of stock-based compensation expense. Adjusted EBITDA increased 12.9% to $1,048.4 million, Core Growth in Adjusted EBITDA was 17.1%, and the Adjusted EBITDA Margin was 65%.

AFFO increased 14.6% to $724.0 million, AFFO per Share increased 14.6% to $1.81, and Core Growth in AFFO was approximately 19.6%.

Operating income increased 12.4% to $612.5 million, while net income attributable to American Tower Corporation increased 0.6% to $271.2 million. Net income attributable to American Tower Corporation per basic common share increased 1.5% to $0.69, and net income attributable to American Tower Corporation per diluted common share remained at $0.68.

Cash provided by operating activities increased 2.8% to $784.5 million.

Segment Results

Domestic Rental and Management Segment Domestic rental and management segment revenue increased 7.9% to $1,036.7 million, which represented 64% of total revenues. Domestic rental and management segment Gross Margin increased 9.0% to $849.7 million, while domestic rental and management segment Operating Profit increased 8.6% to $802.5 million. Domestic rental and management segment Operating Profit Margin was 77%.

International Rental and Management Segment International rental and management segment revenue increased 30.6% to $529.9 million, which represented 33% of total revenues. International rental and management segment Gross Margin increased 26.1% to $335.1 million, while international rental and management segment Operating Profit increased 22.8% to $273.0 million. International rental and management segment Operating Profit Margin was 52% (70%, excluding the impact of $140.9 million of pass-through revenues).

Network Development Services Segment Network development services segment revenue was $44.9 million, which represented 3% of total revenues. Network development services segment Gross Margin was $27.3 million, and network development services segment Operating Profit was $22.1 million. Network development services segment Operating Profit Margin was 49%.

Please refer to “Non-GAAP and Defined Financial Measures” on pages 5 and 6 for definitions of Gross Margin, Operating Profit, Operating Profit Margin, Adjusted EBITDA, Adjusted EBITDA Margin, NAREIT Funds From Operations, Adjusted Funds From Operations, Adjusted Funds From Operations per Share, Core Growth and Net Leverage Ratio. For additional financial information, including reconciliations to GAAP measures, please refer to the unaudited selected financial information on pages 11 through 14.

INVESTING OVERVIEW

Distributions – On July 16, 2013, the Company paid its second quarter distribution of $0.27 per share, or a total of approximately $106.7 million, to stockholders of record at the close of business on June 17, 2013.

During the first half of 2013, the Company declared an aggregate of $0.53 per share in distributions, or a total of approximately $209.5 million, to its stockholders. Subject to the discretion of the Company's Board of Directors, the Company expects to continue paying regular distributions, the amount and timing of which will be determined by the Board.

Cash Paid for Capital Expenditures During the second quarter of 2013, total capital expenditures of $156.7 million included $72.9 million for discretionary capital projects, including spending to complete the construction of 96 towers and the installation of 3 distributed antenna system networks and 224 shared generators domestically and the construction of 303 towers and the installation of 17 distributed antenna system networks internationally; $17.1 million to purchase land under the Company's communications sites; $7.8 million for start-up capital projects in recently launched markets; $23.4 million for the redevelopment of existing communications sites to accommodate new tenant equipment; and $35.6 million for capital improvements and corporate capital expenditures.

During the first half of 2013, total capital expenditures of $280.6 million included $130.1 million for discretionary capital projects, including spending to complete the construction of 144 towers and the installation of 6 distributed antenna system networks and 348 shared generators domestically and the construction of 696 towers and the installation of 25 distributed antenna system networks internationally; $31.9 million to purchase land under the Company's communications sites; $14.5 million for start-up capital projects in recently launched markets; $45.1 million for the redevelopment of existing communications sites to accommodate new tenant equipment; and $59.0 million for capital improvements and corporate capital expenditures.

Cash Paid for Acquisitions During the second quarter of 2013, the Company spent $66.1 million for the purchase of 34 domestic towers and 119 international towers. The international towers consisted of those acquired pursuant to previously announced agreements, including 93 towers in Brazil and 26 towers in Colombia.

During the first half of 2013, the Company spent $311.2 million for the purchase of 36 domestic towers and 1,017 international towers.

Stock Repurchase Program – During the second quarter of 2013, the Company repurchased a total of approximately 0.8 million shares of its common stock for approximately $62.1 million pursuant to its stock repurchase program. Between July 1, 2013 and July 19, 2013, the Company repurchased an additional approximately 0.2 million shares of its common stock for an aggregate of approximately $18.2 million.

During the first half of 2013, the Company repurchased a total of approximately 1.0 million shares of its common stock for approximately $74.6 million pursuant to its stock repurchase program.

FINANCING OVERVIEW

Leverage For the quarter ended June 30, 2013, the Company's net leverage ratio was approximately 4.0x net debt (total debt less cash and cash equivalents) to second quarter 2013 annualized Adjusted EBITDA.

Liquidity As of June 30, 2013, the Company had approximately $2.6 billion of total liquidity, comprised of approximately $448.4 million in cash and cash equivalents, plus the ability to borrow an aggregate of approximately $2.2 billion under its two revolving credit facilities, net of any outstanding letters of credit.

FULL YEAR 2013 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 31, 2013. Actual results may differ materially from these estimates as a result of various factors, and the Company refers you to the cautionary language regarding “forward-looking” statements included in this press release when considering this information.

As reflected in the table below, the Company has reaffirmed the midpoint of its full year 2013 outlook for total rental and management revenue and increased the midpoint of its full year 2013 outlook for Adjusted EBITDA by $5 million and AFFO by $10 million.

The Company's outlook is based on the following average foreign currency exchange rates to 1.00 U.S. Dollar for the second half of 2013: (a) 2.20 Brazilian Reais; (b) 500.00 Chilean Pesos; (c) 1,900.00 Colombian Pesos; (d) 0.78 Euros; (e) 2.05 Ghanaian Cedi; (f) 59.00 Indian Rupees; (g) 12.60 Mexican Pesos; (h) 2.70 Peruvian Soles; (i) 10.00 South African Rand; and (j) 2,600.00 Ugandan Schillings.

           
($ in millions) Full Year 2013 Midpoint

Growth

Midpoint Core
Growth

 
Total rental and management revenue $ 3,160   to   $ 3,210 13.6 % 17.8 %
Adjusted EBITDA(1) $ 2,085 to $ 2,135 11.5 % 16.0 %
Adjusted Funds From Operations(1) $ 1,430 to $ 1,480 19.0 % 21.3 %
Net Income $ 655 to $ 695 13.6 % N/A

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

 

The Company's outlook for total rental and management revenue reflects the following at the midpoint: (1) domestic rental and management segment revenue of $2,100 million; and (2) international rental and management segment revenue of $1,085 million, which includes approximately $292 million of pass-through revenue.

The calculation of midpoint Core Growth is as follows:
(Totals may not add due to rounding.)

     

Total Rental and
Management

Revenue

Adjusted

EBITDA

AFFO
Outlook midpoint Core Growth 17.8 % 16.0 % 21.3 %
Estimated impact of fluctuations in foreign currency exchange rates (1.6 )% (1.1 )% (1.3 )%
Impact of straight-line revenue and expense recognition (1.9 )% (2.4 )%
Impact of significant one-time items (0.7 )% (1.0 )% (0.8 )%
Outlook midpoint growth 13.6 % 11.5 % 19.0 %
 
       
Outlook for Capital Expenditures:
($ in millions)
(Totals may not add due to rounding.) Full Year 2013
Discretionary capital projects(1) $ 210 to $ 270
Ground lease purchases 85 to 105
Start-up capital projects 20 20
Redevelopment 95 to 105
Capital improvement(2) 85 to 95
Corporate 30   30
Total $ 525   to $ 625
 

(1) Includes the construction of approximately 1,750 to 2,250 new communications sites.

(2) Includes spending related to a lighting system upgrade in the U.S. of approximately $15 million.

 
Reconciliations of Outlook for Net Income to Adjusted EBITDA:
($ in millions)  
(Totals may not add due to rounding.) Full Year 2013
Net income $ 655     to   $ 695
Interest expense 420 to 410
Depreciation, amortization and accretion 755 to 735
Income tax provision 35 to 50
Stock-based compensation expense 65 to 70
Other, including other operating expenses, interest income, loss on retirement of long-term obligations, (income) loss on equity method investments and other (income) expense 155   to 175

Adjusted EBITDA

$ 2,085   to $ 2,135
 
 
Reconciliations of Outlook for Net Income to Adjusted Funds From Operations:
($ in millions)  
(Totals may not add due to rounding.) Full Year 2013
Net income $ 655   to   $ 695
Straight-line revenue (139 ) (139 )
Straight-line expense 32 32
Depreciation, amortization and accretion 755 to 735
Stock-based compensation expense 65 to 70
Non-cash portion of tax provision (16 ) to (1 )
Other, including other operating expenses, interest expense, amortization of deferred financing costs, capitalized interest, debt discounts and premiums, loss on retirement of long-term obligations, other (income) expense and non-cash interest related to joint venture shareholder loans 193 to 213
Capital improvement capital expenditures (85 ) to (95 )
Corporate capital expenditures (30 ) (30 )
Adjusted Funds From Operations $ 1,430   to $ 1,480  
 

Conference Call Information

American Tower will host a conference call today at 8:30 a.m. ET to discuss its financial results for the second quarter and six months ended June 30, 2013 and its outlook for 2013. Supplemental materials for the call will be available on the Company's website, www.americantower.com. The conference call dial-in numbers are as follows:

U.S./Canada dial-in: (866) 740-9153
International dial-in: (706) 645-9644
Passcode: 17956884

When available, a replay of the call can be accessed until 11:59 p.m. ET on August 14, 2013. The replay dial-in numbers are as follows:

U.S./Canada dial-in: (855) 859-2056
International dial-in: (404) 537-3406
Passcode: 17956884

American Tower will also sponsor a live simulcast and replay of the call on its website, www.americantower.com.

About American Tower

American Tower is a leading independent owner, operator and developer of wireless and broadcast communications real estate. American Tower currently owns and operates over 56,000 communications sites in the United States, Brazil, Chile, Colombia, Germany, Ghana, India, Mexico, Peru, South Africa and Uganda. For more information about American Tower, please visit www.americantower.com.

Non-GAAP and Defined Financial Measures

In addition to the results prepared in accordance with generally accepted accounting principles in the United States (GAAP) provided throughout this press release, the Company has presented the following non-GAAP and defined financial measures: Gross Margin, Operating Profit, Operating Profit Margin, Adjusted EBITDA, Adjusted EBITDA Margin, NAREIT Funds From Operations, Adjusted Funds From Operations, Adjusted Funds From Operations per Share, Core Growth and Net Leverage Ratio. The Company uses Funds From Operations as defined by the National Association of Real Estate Investment Trusts (NAREIT), referred to herein as NAREIT Funds From Operations.

The Company defines Gross Margin as revenues less operating expenses, excluding stock-based compensation expense recorded in costs of operations, depreciation, amortization and accretion, selling, general, administrative and development expense, and other operating expenses. The Company defines Operating Profit as Gross Margin less selling, general, administrative and development expense, excluding stock-based compensation expense and corporate expenses. For reporting purposes, the international rental and management segment Operating Profit and Gross Margin also include interest income, TV Azteca, net. These measures of Gross Margin and Operating Profit are also before interest income, interest expense, loss on retirement of long-term obligations, other income (expense), net income attributable to non-controlling interest, income (loss) on equity method investments and income taxes. The Company defines Operating Profit Margin as the percentage that results from dividing Operating Profit by revenue. The Company defines Adjusted EBITDA as net income before income (loss) on discontinued operations, net, income (loss) from equity method investments, income tax provision (benefit), other income (expense), loss on retirement of long-term obligations, interest expense, interest income, other operating income (expense), depreciation, amortization and accretion and stock-based compensation expense. The Company defines Adjusted EBITDA Margin as the percentage that results from dividing Adjusted EBITDA by total revenue. NAREIT Funds From Operations is defined as net income before gains or losses from the sale or disposal of real estate, real estate related impairment charges and real estate related depreciation, amortization and accretion, and including adjustments for (i) unconsolidated affiliates and (ii) noncontrolling interest. The Company defines Adjusted Funds From Operations as NAREIT Funds From Operations before (i) straight-line revenue and expense, (ii) stock-based compensation expense, (iii) the non-cash portion of our tax provision, (iv) non-real estate related depreciation, amortization and accretion, (v) amortization of deferred financing costs, capitalized interest and debt discounts and premiums, (vi) other income (expense), (vii) loss on retirement of long-term obligations, (viii) other operating income (expense); and adjustments for (ix) unconsolidated affiliates and (x) noncontrolling interest, less cash payments related to capital improvements and cash payments related to corporate capital expenditures. The Company defines Adjusted Funds From Operations per Share as Adjusted Funds From Operations divided by the diluted weighted average common shares outstanding. The Company defines Core Growth in total rental and management revenue, Adjusted EBITDA and Adjusted Funds From Operations as the increase or decrease, expressed as a percentage, resulting from a comparison of financial results for a current period with corresponding financial results for the corresponding period in a prior year, in each case, excluding the impact of straight-line revenue and expense recognition, foreign currency exchange rate fluctuations and significant one-time items. The Company defines Net Leverage Ratio as net debt (total debt, less cash and cash equivalents) divided by last quarter annualized Adjusted EBITDA. These measures are not intended to replace financial performance measures determined in accordance with GAAP. Rather, they are presented as additional information because management believes they are useful indicators of the current financial performance of the Company's core businesses. The Company believes that these measures can assist in comparing company performances on a consistent basis irrespective of depreciation and amortization or capital structure. Depreciation and amortization can vary significantly among companies depending on accounting methods, particularly where acquisitions or non-operating factors, including historical cost bases, are involved. Notwithstanding the foregoing, the Company's measures of Gross Margin, Operating Profit, Operating Profit Margin, Adjusted EBITDA, Adjusted EBITDA Margin, NAREIT Funds From Operations, Adjusted Funds From Operations, Adjusted Funds From Operations per Share, Core Growth and Net Leverage Ratio may not be comparable to similarly titled measures used by other companies.

Cautionary Language Regarding Forward-Looking Statements

This press release contains "forward-looking statements" concerning our goals, beliefs, expectations, strategies, objectives, plans, future operating results and underlying assumptions, and other statements that are not necessarily based on historical facts. Examples of these statements include, but are not limited to statements regarding our full year 2013 outlook, foreign currency exchange rates and our expectation regarding the declaration of regular distributions. Actual results may differ materially from those indicated in our forward-looking statements as a result of various important factors, including: (1) decrease in demand for our communications sites would materially and adversely affect our operating results and we cannot control that demand; (2) new technologies or changes in a tenant's business model could make our tower leasing business less desirable and result in decreasing revenues; (3) our business is subject to government regulations and changes in current or future laws or regulations could restrict our ability to operate our business as we currently do; (4) if our tenants consolidate, merge or share site infrastructure with each other to a significant degree, our growth, revenue and ability to generate positive cash flows could be materially and adversely affected; (5) we could suffer adverse tax or other financial consequences if taxing authorities do not agree with our tax positions; (6) a substantial portion of our revenue is derived from a small number of tenants, and we are sensitive to changes in the creditworthiness and financial strength of our tenants; (7) our foreign operations are subject to economic, political and other risks that could materially and adversely affect our revenues or financial position, including risks associated with fluctuations in foreign currency exchange rates; (8) our expansion initiatives involve a number of risks and uncertainties that could adversely affect our operating results, disrupt our operations or expose us to additional risk if we are not able to successfully integrate operations, assets and personnel; (9) if we are unable to protect our rights to the land under our towers, it could adversely affect our business and operating results; (10) increasing competition in the tower industry may create pricing pressures that may materially and adversely affect us; (11) if we are unable or choose not to exercise our rights to purchase towers that are subject to lease and sublease agreements at the end of the applicable period, our cash flows derived from such towers would be eliminated; (12) if we elect not to qualify as a REIT or fail to remain qualified as a REIT, we would be subject to tax at corporate income tax rates, which would substantially reduce funds otherwise available; (13) we may be limited in our ability to fund required distributions using cash generated through our TRSs; (14) complying with REIT requirements may limit our flexibility or cause us to forego otherwise attractive opportunities; (15) certain of our business activities may be subject to corporate level income tax and foreign taxes, which reduce our cash flows, and may have deferred and contingent tax liabilities; (16) we may need additional financing to fund capital expenditures, future growth and expansion initiatives and to satisfy our REIT distribution requirements; (17) our leverage and debt service obligations may materially and adversely affect us; (18) restrictive covenants in the loan agreement related to our securitization transaction, the loan agreements for our credit facilities and the indentures governing our debt securities could materially and adversely affect our business by limiting flexibility; (19) we may incur goodwill and other intangible asset impairment charges which could result in a significant reduction to our earnings; (20) we have limited experience operating as a REIT, which may adversely affect our financial condition, results of operations, cash flow and ability to satisfy debt service obligations; (21) we could have liability under environmental and occupational safety and health laws; (22) our towers or data centers may be affected by natural disasters and other unforeseen events for which our insurance may not provide adequate coverage; and (23) our costs could increase and our revenues could decrease due to perceived health risks from radio emissions, especially if these perceived risks are substantiated. For additional information regarding factors that may cause actual results to differ materially from those indicated in our forward-looking statements, we refer you to the information contained in Item 1A of our Form 10-Q for the quarter ended March 31, 2013. We undertake no obligation to update the information contained in this press release to reflect subsequently occurring events or circumstances.

       

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

 

June 30, 2013

December 31, 2012 (1)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 448,447 $ 368,618
Restricted cash 97,277 69,316
Short-term investments 14,257 6,018
Accounts receivable, net 130,861 143,772
Prepaid and other current assets 232,436 222,895
Deferred income taxes 22,773   25,754  
Total current assets 946,051   836,373  
Property and equipment, net 5,811,081 5,766,254
Goodwill 2,832,392 2,850,573
Other intangible assets, net 3,214,383 3,197,640
Deferred income taxes 216,463 209,589
Deferred rent asset 842,093 776,201
Notes receivable and other non-current assets 476,931   452,788  
TOTAL $ 14,339,394   $ 14,089,418  
 
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable $ 91,021 $ 89,578
Accrued expenses 293,605 286,962
Distributions payable 107,053 189
Accrued interest 89,701 71,271
Current portion of long-term obligations 57,350 60,031
Unearned revenue 142,310   124,147  
Total current liabilities 781,040   632,178  
Long-term obligations 8,798,604 8,693,345
Asset retirement obligations 451,549 435,613
Other non-current liabilities 688,334   644,101  
Total liabilities 10,719,527   10,405,237  
 
COMMITMENTS AND CONTINGENCIES
EQUITY:
Common stock 3,969 3,959
Additional paid-in capital 5,061,814 5,012,124
Distributions in excess of earnings (1,135,851 ) (1,196,907 )
Accumulated other comprehensive loss (274,256 ) (183,347 )
Treasury stock (137,353 ) (62,728 )
Total American Tower Corporation equity 3,518,323 3,573,101
Noncontrolling interest 101,544   111,080  
Total equity 3,619,867   3,684,181  
TOTAL $ 14,339,394   $ 14,089,418  
 

(1) December 31, 2012 balances have been revised to reflect purchase accounting measurement period adjustments.

 
       

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

 
Three Months Ended Six Months Ended
June 30, June 30,
2013     2012 2013     2012
REVENUES:
Rental and management $ 789,199 $ 682,262 $ 1,566,632 $ 1,366,252
Network development services 19,631   15,472   44,926   27,999  
Total operating revenues 808,830   697,734   1,611,558   1,394,251  
OPERATING EXPENSES:
Costs of operations (exclusive of items shown separately below):
Rental and management (including stock-based compensation expense of $257, $202, $503 and $399, respectively) 198,217 165,060 389,512 328,784
Network development services (including stock-based compensation expense of $149, $240, $341 and $504, respectively) 7,492 7,324 17,963 14,585
Depreciation, amortization and accretion 184,608 172,072 370,412 321,727
Selling, general, administrative and development expense (including stock-based compensation expense of $16,649, $13,109, $37,253 and $25,693, respectively) 99,803 76,848 200,956 156,432
Other operating expenses 5,898   5,944   20,217   27,791  
Total operating expenses 496,018   427,248   999,060   849,319  
OPERATING INCOME 312,812   270,486   612,498   544,932  
OTHER INCOME (EXPENSE):
Interest income, TV Azteca, net 3,586 3,586 7,129 7,129
Interest income 1,412 2,283 3,126 4,536
Interest expense (100,815 ) (100,233 ) (212,581 ) (195,350 )
Loss on retirement of long-term obligations (2,669 ) (37,967 ) (398 )
Other expense (141,660 ) (118,623 ) (119,369 ) (65,762 )
Total other expense (240,146 ) (212,987 ) (359,662 ) (249,845 )
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND INCOME ON EQUITY METHOD INVESTMENTS 72,666 57,499 252,836 295,087
Income tax benefit (provision) 11,447 (23,815 ) (7,775 ) (51,063 )
Income on equity method investments   5     23  
NET INCOME 84,113 33,689 245,061 244,047
Net loss attributable to noncontrolling interest 15,708   14,520   26,167   25,468  
NET INCOME ATTRIBUTABLE TO AMERICAN TOWER CORPORATION $ 99,821   $ 48,209   $ 271,228   $ 269,515  
NET INCOME PER COMMON SHARE AMOUNTS:
Basic net income attributable to American Tower Corporation $ 0.25   $ 0.12   $ 0.69   $ 0.68  
Diluted net income attributable to American Tower Corporation $ 0.25   $ 0.12   $ 0.68   $ 0.68  
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic 395,420   394,743   395,330   394,314  
Diluted 399,458   398,811   399,659   398,750  
DISTRIBUTIONS DECLARED PER SHARE $ 0.27 $ 0.22 $ 0.53 $ 0.43
 

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 
Six Months Ended

June 30,

2013   2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 245,061 $ 244,047
Adjustments to reconcile net income to cash provided by operating activities:
Stock-based compensation expense 38,097 26,596
Depreciation, amortization and accretion 370,412 321,727
Loss on retirement of long-term obligations 35,288
Other non-cash items reflected in statements of operations 127,946 112,660
Increase in net deferred rent asset (53,017 ) (59,590 )
(Increase) decrease in restricted cash (27,961 ) 4,083
(Increase) decrease in assets (10,229 ) 33,478
Increase in liabilities 58,924   79,874  
Cash provided by operating activities 784,521   762,875  
 
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for purchase of property and equipment and construction activities (280,605 ) (226,402 )
Payments for acquisitions, net of cash acquired (311,170 ) (532,860 )
Proceeds from sale of short-term investments and other non-current assets 27,978 192,977
Payments for short-term investments (36,881 ) (198,174 )
Deposits, restricted cash, investments and other (1,096 ) (2,450 )
Cash used for investing activities (601,774 ) (766,909 )
 
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term borrowings, net 17,127
Borrowings under credit facilities 249,000 1,325,000
Proceeds from issuance of senior notes, net 983,354 698,670
Proceeds from issuance of Securities in securitization transaction, net 1,778,496
Proceeds from term loan credit facility 750,000
Proceeds from other long-term borrowings 16,000 77,699
Repayments of notes payable, credit facilities and capital leases (2,938,699 ) (2,652,458 )
Contributions from noncontrolling interest holders, net 17,721 46,476
Purchases of common stock (74,625 ) (10,838 )
Proceeds from stock options 19,752 31,134
Distributions (102,984 ) (82,881 )
Payment for early retirement of securitized debt (29,234 )
Deferred financing costs and other financing activities (13,641 ) (29,639 )
Cash (used for) provided by financing activities (94,860 ) 170,290  
 
Net effect of changes in foreign currency exchange rates on cash and cash equivalents (8,058 ) (14,510 )
NET INCREASE IN CASH AND CASH EQUIVALENTS 79,829   151,746  
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 368,618   330,191  
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 448,447   $ 481,937  
 
CASH PAID FOR INCOME TAXES, NET OF REFUNDS $ 17,153   $ 12,776  

CASH PAID FOR INTEREST

$ 181,315   $ 171,661  
 
 

UNAUDITED RESULTS FROM OPERATIONS, BY SEGMENT

(In thousands, except percentages)

 
Three months ended June 30, 2013
  Rental and Management   Network
Development
Services
  Total
Domestic   International   Total
Segment revenues $ 521,043 $ 268,156 $ 789,199 $ 19,631 $ 808,830
Segment operating expenses (1) 95,208 102,752 197,960 7,343 205,303
Interest income, TV Azteca, net   3,586   3,586     3,586  
Segment Gross Margin 425,835   168,990   594,825   12,288   607,113  
Segment selling, general, administrative and development expense (1) 24,243   32,490   56,733   2,324   59,057  
Segment Operating Profit $ 401,592   $ 136,500   $ 538,092   $ 9,964   $ 548,056  
Segment Operating Profit Margin 77 % 51 % 68 % 51 % 68 %
 
Three months ended June 30, 2012
Rental and Management Network
Development
Services
Total
Domestic International Total
Segment revenues $ 473,411 $ 208,851 $ 682,262 $ 15,472 $ 697,734
Segment operating expenses (1) 88,113 76,745 164,858 7,084 171,942
Interest income, TV Azteca, net   3,586   3,586     3,586  
Segment Gross Margin 385,298   135,692   520,990   8,388   529,378  
Segment selling, general, administrative and development expense (1) 21,097   19,481   40,578   1,925   42,503  
Segment Operating Profit $ 364,201   $ 116,211   $ 480,412   $ 6,463   $ 486,875  
Segment Operating Profit Margin 77 % 56 % 70 % 42 % 70 %
 
Six months ended June 30, 2013
Rental and Management Network
Development
Services
Total
Domestic International Total
Segment revenues $ 1,036,719 $ 529,913 $ 1,566,632 $ 44,926 $ 1,611,558
Segment operating expenses (1) 187,041 201,968 389,009 17,622 406,631
Interest income, TV Azteca, net   7,129   7,129     7,129  
Segment Gross Margin 849,678   335,074   1,184,752   27,304   1,212,056  
Segment selling, general, administrative and development expense (1) 47,141   62,025   109,166   5,225   114,391  
Segment Operating Profit $ 802,537   $ 273,049   $ 1,075,586   $ 22,079   $ 1,097,665  
Segment Operating Profit Margin 77 % 52 % 69 % 49 % 68 %
 
Six months ended June 30, 2012
Rental and Management Network
Development
Services
Total
Domestic International Total
Segment revenues $ 960,473 $ 405,779 $ 1,366,252 $ 27,999 $ 1,394,251
Segment operating expenses (1) 181,116 147,269 328,385 14,081 342,466
Interest income, TV Azteca, net   7,129   7,129     7,129  
Segment Gross Margin 779,357   265,639   1,044,996   13,918   1,058,914  
Segment selling, general, administrative and development expense (1) 40,497   43,376   83,873   2,283   86,156  
Segment Operating Profit $ 738,860   $ 222,263   $ 961,123   $ 11,635   $ 972,758  
Segment Operating Profit Margin 77 %

55

% 70 % 42 % 70 %
 

(1) Excludes stock-based compensation expense.

 
 

UNAUDITED SELECTED FINANCIAL INFORMATION

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

Selected Balance Sheet Detail:

 
Long-term obligations summary, including current portion June 30, 2013
2012 Credit Facility $ 322,000
2013 Credit Facility (1)
2012 Term Loan 750,000
4.625% Senior Notes due 2015 599,715
7.000% Senior Notes due 2017 500,000
4.500% Senior Notes due 2018 999,467
7.250% Senior Notes due 2019 296,506
5.050% Senior Notes due 2020 699,373
5.900% Senior Notes due 2021 499,385
4.700% Senior Notes due 2022 698,814
3.500% Senior Notes due 2023 992,176
Total unsecured at American Tower Corporation $ 6,357,436
Secured Tower Revenue Securities, Series 2013-1A 500,000
Secured Tower Revenue Securities, Series 2013-2A 1,300,000
Unison Notes (2) 206,312
South African Facility (3) 84,435
Colombian long-term credit facility (3) 69,984
Colombian bridge loans (3) 48,737
Shareholder loans (4) 227,150
Indian Working Capital Facility
Other debt, including capital leases 61,900
Total secured or subsidiary debt $ 2,498,517
Total debt $ 8,855,954
Cash and cash equivalents 448,447
Net debt (total debt less cash and cash equivalents) $ 8,407,507
 

(1) On June 28, 2013, the Company terminated its $1.0 billion 2011 Credit Facility upon the closing of the new 2013 Credit Facility. Subsequent to the end of the second quarter, the Company used borrowings under its new 2013 Credit Facility to repay all amounts outstanding under its 2012 Credit Facility.

(2) The Unison Notes are secured debt and were assumed as a result of the acquisition of certain legal entities holding a portfolio of property interests from Unison Holdings LLC and Unison Site Management II, L.L.C.

(3) Denominated in local currency.

(4) Denominated in USD, reflects balances attributable to minority shareholder loans in the Company's joint ventures in Colombia, Ghana and Uganda.

 
 
Calculation of Net Leverage Ratio ($ in thousands) Three Months Ended June 30, 2013
Total debt $ 8,855,954
Cash and cash equivalents $ 448,447
Numerator: net debt (total debt less cash and cash equivalents) $ 8,407,507
 
Adjusted EBITDA $ 523,959
Denominator: annualized Adjusted EBITDA 2,095,836
Net leverage ratio 4.0x
 
   

UNAUDITED SELECTED FINANCIAL INFORMATION

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

 
Share count rollforward: (in millions of shares) Three Months Ended June 30, 2013 Six Months Ended June 30, 2013
Total common shares, beginning of period 395.6 395.1
Common shares repurchased (0.8 ) (1.0 )
Common shares issued 0.3   1.0  
Total common shares outstanding, end of period (1) 395.1   395.1  
 

(1) As of June 30, 2013, excludes (a) 3.8 million potentially dilutive shares associated with vested and exercisable stock options with an average exercise price of $39.48 per share, (b) 3.0 million potentially dilutive shares associated with unvested stock options, and (c) 1.8 million potentially dilutive shares associated with unvested restricted stock units.

 
     

Total rental and management straight-line revenue and expense (1):

 
Three Months Ended
June 30
Six Months Ended
June 30
2013     2012 2013     2012
Total rental and management operations straight-line revenue $ 34,442 $ 39,056 $ 68,682 $ 77,559
Total rental and management operations straight-line expense $ 7,911 $ 8,294 $ 15,026 $ 18,029
 

(1) In accordance with GAAP, the Company recognizes consolidated rental and management revenue and expense related to non-cancellable customer and ground lease agreements with fixed escalations on a straight-line basis, over the applicable lease term. As a result, the Company's revenue recognized may differ materially from the amount of cash collected per tenant lease, and the Company's expense incurred may differ materially from the amount of cash paid per ground lease. Additional information regarding straight-line accounting can be found in the Company's Annual Report on Form 10-K for the year ended December 31, 2012 in the section entitled “Revenue Recognition,” in note 1, “Business and Summary of Significant Accounting Policies” within the notes to the consolidated financial statements. A summary of total rental and management straight-line revenue and expense, which represents the non-cash revenue and expense recorded due to straight-line recognition, is as follows:

       
Three Months Ended
June 30,
Six Months Ended
June 30,
International pass-through revenue detail: 2013     2012 2013     2012
Pass-through revenue $ 71,279 $ 55,344 $ 140,930 $ 103,970
 
       
Three Months Ended
June 30,
Six Months Ended
June 30,
Prepaid tenant rent detail: 2013     2012 2013     2012
Beginning balance $ 212,671 $ 155,690 $ 198,792 $ 156,678
Cash received 18,031 13,349 45,043 25,471
Amortization (14,054 ) (10,503 ) (27,187 ) (23,613 )
Ending balance $ 216,649   $ 158,536   $ 216,649   $ 158,536  
 
       
Three Months Ended
June 30,
Six Months Ended
June 30,
Selling, general, administrative and development expense breakout: 2013     2012 2013     2012
Total rental and management overhead $ 56,733 $ 40,578 $ 109,166 $ 83,873
Network development services segment overhead 2,324 1,925 5,225 2,283
Corporate and development expenses 24,097 21,236 49,312 44,583
Stock-based compensation expense 16,649   13,109   37,253   25,693
Total $ 99,803   $ 76,848   $ 200,956   $ 156,432
 

       

UNAUDITED SELECTED FINANCIAL INFORMATION

($ in thousands. Totals may not add due to rounding.)

SELECTED CASH FLOW DETAIL:

 
Three Months Ended
June 30,
Six Months Ended
June 30,
Payments for purchase of property and equipment and construction activities: 2013     2012 2013     2012
Discretionary - capital projects $ 72,856 $ 49,533 $ 130,126 $ 113,271
Discretionary - ground lease purchases 17,060 12,475 31,860 27,189
Start-up capital projects 7,813 6,036 14,536 7,663
Redevelopment 23,371 18,143 45,083 40,955
Capital improvements 26,442 14,469 42,324 28,398
Corporate 9,157   4,714   16,675   8,926
Total $ 156,700   $ 105,370   $ 280,605   $ 226,402
 
           

SELECTED STATEMENT OF OPERATIONS DETAIL:

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

The calculation of Core Growth is as follows:

 
Three Months Ended June 30, 2013 Total Rental and
Management
Revenue
Adjusted
EBITDA
AFFO
Core Growth 18.1 % 14.7 % 18.2 %
Estimated impact of fluctuations in foreign currency exchange rates (0.7 )% (0.3 )% (0.2 )%
Impact of straight-line revenue recognition (1.7 )% (1.9 )%
Impact of material one-time items     1.5 %
Reported growth 15.7 % 12.5 % 19.5 %
 

Six Months Ended June 30, 2013

Core Growth

19.2

%

17.1

%

19.6

%

Estimated impact of fluctuations in foreign currency exchange rates

(1.4

)%

(1.0

)%

(1.4

)%

Impact of straight-line revenue recognition

(1.7

)%

(1.6

)%

-

Impact of material one-time items

(1.3

)%

(1.5

)%

(3.6

)%

Reported growth

14.7

%

12.9

%

14.6

%

 

                   

SELECTED PORTFOLIO DETAIL – OWNED SITES:

 
Tower Count (1): As of
March 31, 2013
Constructed Acquired Adjustments As of
June 30, 2013
United States (2) 22,599 96 34 (9 ) 22,720
Brazil 4,370 19 93 4,482
Chile 1,181 4 (3 ) 1,182
Colombia 3,041 36 26 1 3,104
Germany 2,031 2,031
Ghana 1,929 2 1,931
India 10,685 110 (21 ) 10,774
Mexico (3) 6,673 48 6,721
Peru 499 499
South Africa 1,621 8 1,629
Uganda 1,044   76       1,120
Total 55,673 399 153 (32 ) 56,193
 

(1) Excludes in-building and outdoor distributed antenna system networks.

(2) Includes 274 broadcast towers.

(3) Includes 199 broadcast towers.

 
       

UNAUDITED RECONCILIATIONS TO GAAP MEASURES AND THE CALCULATION OF DEFINED FINANCIAL MEASURES

(In thousands, except per share data and percentages. Totals may not add due to rounding.)

The reconciliation of net income to Adjusted EBITDA and the calculation of Adjusted EBITDA Margin are as follows:

 
Three Months Ended
June 30,
Six Months Ended
June 30,
2013     2012 2013     2012
Net income $ 84,113 $ 33,689 $ 245,061 $ 244,047
Income from equity method investments (5 ) (23 )
Income tax (benefit) provision (11,447 ) 23,815 7,775 51,063
Other expense 141,660 118,623 119,369 65,762
Loss on retirement of long-term obligations 2,669 37,967 398
Interest expense 100,815 100,233 212,581 195,350
Interest income (1,412 ) (2,283 ) (3,126 ) (4,536 )
Other operating expenses 5,898 5,944 20,217 27,791
Depreciation, amortization and accretion 184,608 172,072 370,412 321,727
Stock-based compensation expense 17,055   13,551   38,097   26,596  
Adjusted EBITDA $ 523,959   $ 465,639   $ 1,048,353   $ 928,175  
Divided by total revenue 808,830   697,734   1,611,558   1,394,251  
Adjusted EBITDA Margin 65 % 67 % 65 % 67 %
 

       

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

 
Three Months Ended
June 30,
Six Months Ended
June 30,
2013     2012 2013     2012
Net Income $ 84,113 $ 33,689 $ 245,061 $ 244,047
Real estate related depreciation, amortization and accretion 160,610 152,194 324,352 285,026
Losses from sale or disposal of real estate and real estate related impairment charges 2,401 2,195 2,670 6,010
Adjustments for unconsolidated affiliates and noncontrolling interest 8,813   9,856   11,643   16,473  
NAREIT Funds From Operations 255,937   197,934   583,726   551,556  
Straight-line revenue (34,442 ) (39,056 ) (68,682 ) (77,559 )
Straight-line expense 7,911 8,294 15,026 18,029
Stock-based compensation expense 17,055 13,551 38,097 26,596
Non-cash portion of tax provision (15,057 ) 10,142 (9,378 ) 38,287
Non-real estate related depreciation, amortization and accretion 23,998 19,878 46,060 36,701
Amortization of deferred financing costs, capitalized interest and debt discounts and premiums (1) 7,395 2,410 14,922 4,262
Other expense (2) 141,660 118,623 119,369 65,762
Loss on retirement of long-term obligations 2,669 37,967 398
Other operating expense (3) 3,497 3,749 17,547 21,781
Capital improvement capital expenditures (4) (26,442 ) (14,469 ) (42,324 ) (28,398 )
Corporate capital expenditures (9,157 ) (4,714 ) (16,675 ) (8,926 )
Adjustments for unconsolidated affiliates and noncontrolling interest   (8,813 )   (9,856 )   (11,643 )   (16,473 )
Adjusted Funds From Operations $ 366,211   $ 306,486   $ 724,012   $ 632,016  
Divided by weighted average diluted shares outstanding 399,458 398,811 399,659 398,750
Adjusted Funds From Operations per Share $ 0.92 $ 0.77 $ 1.81 $ 1.58
 

(1) Includes accrued non-cash interest expense attributable to joint-venture loans.

(2) Primarily includes unrealized loss on foreign currency exchange rate fluctuations.

(3) Primarily includes impairments and transaction related costs.

(4) 2012 amounts adjusted to exclude the category of capital expenditures, start-up capital projects.

 

American Tower Corporation
Leah Stearns, 617-375-7500
Vice President, Investor Relations & Capital Markets

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