American Tower Corporation Reports Fourth Quarter and Full Year 2012 Financial Results
American Tower Corporation Reports Fourth Quarter and Full Year 2012
Financial Results
CONSOLIDATED HIGHLIGHTS
Fourth Quarter 2012
* Total revenue increased 17.6% to $768.4 million
* Operating income increased 12.7% to $279.2 million
* Cash provided by operating activities decreased 5.7% to $297.8 million
Full Year 2012
* Total revenue increased 17.7% to $2,876.0 million
* Operating income increased 21.7% to $1,119.7 million
* Cash provided by operating activities increased 21.3% to $1,414.4 million
SEGMENT HIGHLIGHTS
Fourth Quarter 2012
* Domestic rental and management segment revenue increased 7.5% to $499.9
million
* International rental and management segment revenue increased 36.3% to
$239.8 million
* Network development services segment revenue was $28.7 million
Full Year 2012
* Domestic rental and management segment revenue increased 11.3% to $1,940.7
million
* International rental and management segment revenue increased 34.4% to
$862.8 million
* Network development services segment revenue was $72.5 million
Business Wire
BOSTON -- February 26, 2013
American Tower Corporation (NYSE: AMT) today reported financial results for
the fourth quarter and full year ended December 31, 2012.
Jim Taiclet, American Tower’s Chief Executive Officer stated, “2012
represented another strong year of performance, as we remained focused on two
primary aspirations: strengthening our core U.S. business by securing extended
customer agreements to enable robust, sustained organic growth; and leveraging
the rapid global adoption of wireless services to drive our international
market expansion. As a result, we were able to achieve Core Growth in rental
revenue and Adjusted EBITDA of over 21% and Core Growth in AFFO of nearly 19%.
"Our Outlook for 2013 reflects continued mid-teen Core Growth in rental
revenue, Adjusted EBITDA and AFFO, and we are focused on pursuing our
disciplined global investment strategy to sustain these levels of growth into
the future."
FOURTH QUARTER 2012 OPERATING RESULTS OVERVIEW
American Tower generated the following operating results for the quarter ended
December 31, 2012 (unless otherwise indicated, all comparative information is
presented against the quarter ended December 31, 2011).
Total revenue increased 17.6% to $768.4 million and total rental and
management revenue increased 15.4% to $739.7 million. Total rental and
management revenue Core Growth was approximately 19.3%. Please refer to the
selected statement of operations detail on page 14, which highlights the items
affecting all Core Growth percentages for the quarter ended December 31, 2012.
Total rental and management Gross Margin increased 15.6% to $562.9 million,
which includes the impact of a one-time favorable expense item attributable to
the domestic rental and management segment, as further described below. Total
selling, general, administrative and development expense was $89.4 million,
including $11.9 million of stock-based compensation expense. Adjusted EBITDA
increased 16.8% to $500.6 million, Core Growth in Adjusted EBITDA was 19.6%,
and Adjusted EBITDA Margin was 65%.
Adjusted Funds From Operations (AFFO) increased 4.7% to $289.7 million, which
includes the negative impact of two non-recurring international tax payments
of approximately $15.5 million in aggregate and new market start-up capital
expenditures of approximately $5.6 million. Core Growth in AFFO was
approximately 11.6%, and AFFO per Share increased 2.9% to $0.72.
Operating income increased 12.7% to $279.2 million, while net income
attributable to American Tower Corporation decreased 33.9% to $135.7 million.
The decrease was primarily attributable to a one-time positive net impact of
approximately $121.0 million during the fourth quarter of 2011, as a result of
the reversal of certain deferred tax assets and liabilities resulting from the
Company’s conversion to a real estate investment trust (REIT). In addition,
contributing to the decrease was the negative impact of approximately $39.4
million that the Company recorded during the fourth quarter of 2012 in
relation to valuation allowances attributable to net operating losses
generated by its international rental and management segment. Net income
attributable to American Tower Corporation per both basic and diluted common
share decreased 34.6% to $0.34.
Cash provided by operating activities decreased 5.7% to $297.8 million.
Segment Results
Domestic Rental and Management Segment – Domestic rental and management
segment revenue increased 7.5% to $499.9 million, which represented 65% of
total revenues. Domestic rental and management segment Gross Margin increased
11.3% to $415.5 million, which includes the favorable one-time impact of
approximately $5.7 million related to land rent expense. Domestic rental and
management segment Operating Profit increased 10.7% to $390.5 million, and
domestic rental and management segment Operating Profit Margin was 78%.
International Rental and Management Segment – International rental and
management segment revenue increased 36.3% to $239.8 million, which
represented 31% of total revenues. International rental and management segment
Gross Margin increased 29.7% to $147.4 million, while international rental and
management segment Operating Profit increased 30.5% to $120.2 million.
International rental and management segment Operating Profit Margin was 50%
(70%, excluding the impact of $67.9 million of pass-through revenues).
Network Development Services Segment – Network development services segment
revenue was $28.7 million, which represented 4% of total revenues. Network
development services segment Gross Margin was $15.3 million, and network
development services segment Operating Profit was $12.9 million. Network
development services segment Operating Profit Margin was 45%.
FULL YEAR 2012 OPERATING RESULTS OVERVIEW
American Tower generated the following operating results for the full year
ended December 31, 2012 (unless otherwise indicated, all comparative
information is presented against the full year ended December 31, 2011).
Total revenue increased 17.7% to $2,876.0 million and total rental and
management revenue increased 17.5% to $2,803.5 million. Total rental and
management revenue Core Growth was approximately 21.1%. Please refer to the
selected statement of operations detail on page 14, which highlights the items
affecting all Core Growth percentages for the year ended December 31, 2012.
Total rental and management Gross Margin increased 17.7% to $2,131.9 million.
Total selling, general, administrative and development expense was $327.3
million, including $50.2 million of stock-based compensation expense. Adjusted
EBITDA increased 18.6% to $1,892.4 million, Core Growth in Adjusted EBITDA was
21.3%, and the Adjusted EBITDA Margin was 66%.
AFFO increased 13.5% to $1,198.1 million, Core Growth in AFFO was
approximately 18.8%, and AFFO per Share increased 13.6% to $3.00.
Operating income increased 21.7% to $1,119.7 million, while net income
attributable to American Tower Corporation increased 60.7% to $637.3 million.
Net income attributable to American Tower Corporation per basic common share
increased 61.0% to $1.61, and net income attributable to American Tower
Corporation per diluted common share increased 61.6% to $1.60.
Cash provided by operating activities increased 21.3% to $1,414.4 million.
Segment Results
Domestic Rental and Management Segment – Domestic rental and management
segment revenue increased 11.3% to $1,940.7 million, which represented 67% of
total revenues. Domestic rental and management segment Gross Margin increased
13.8% to $1,583.1 million, while domestic rental and management segment
Operating Profit increased 14.0% to $1,497.5 million. Domestic rental and
management segment Operating Profit Margin was 77%.
International Rental and Management Segment – International rental and
management segment revenue increased 34.4% to $862.8 million, which
represented 30% of total revenues. International rental and management segment
Gross Margin increased 30.5% to $548.7 million, while international rental and
management segment Operating Profit increased 33.9% to $453.1 million.
International rental and management segment Operating Profit Margin was 53%
(72%, excluding the impact of $229.1 million of pass-through revenues).
Network Development Services Segment – Network development services segment
revenue was $72.5 million, which represented 3% of total revenues. Network
development services segment Gross Margin was $37.6 million, and network
development services segment Operating Profit was $30.9 million. Network
development services segment Operating Profit Margin was 43%.
Please refer to “Non-GAAP and Defined Financial Measures” on pages 6 and 7 for
definitions of Gross Margin, Operating Profit, Operating Profit Margin,
Adjusted EBITDA, Adjusted EBITDA Margin, 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 12 through 16.
INVESTING OVERVIEW
Distributions – On December 31, 2012, the Company paid its fourth quarter
distribution of $0.24 per share, or a total of approximately $94.8 million, to
stockholders of record at the close of business on December 17, 2012.
During the twelve months ended December 31, 2012, the Company paid an
aggregate of $0.90 per share in distributions, or a total of approximately
$355.6 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 fourth quarter of 2012, total
capital expenditures of $191.0 million included $86.9 million for
discretionary capital projects, including spending to complete the
construction of 87 towers and the installation of 6 distributed antenna system
networks and 304 shared generators domestically and the construction of 432
towers and the installation of 2 distributed antenna system networks
internationally; $33.9 million to purchase land under the Company’s
communications sites; $28.0 million for the redevelopment of existing
communications sites to accommodate new tenant equipment; and $42.3 million
for capital improvements and corporate capital expenditures.
During the twelve months ended December 31, 2012, total capital expenditures
of $568.0 million included $279.0 million for discretionary capital projects,
including spending to complete the construction of 235 towers and the
installation of 15 distributed antenna system networks and 603 shared
generators domestically and the construction of 2,109 towers and the
installation of 2 distributed antenna system networks internationally; $82.3
million to purchase land under the Company’s communications sites; $86.7
million for the redevelopment of existing communications sites to accommodate
new tenant equipment; and $120.0 million for capital improvements and
corporate capital expenditures.
Cash Paid for Acquisitions – During the fourth quarter of 2012, the Company
spent $1,175.2 million for the purchase of 627 domestic towers, 24 domestic
property interests under third-party communications sites and 2,263
international towers. The international towers consisted of those acquired
pursuant to previously announced agreements, including 2,031 towers in
Germany, 190 towers in Mexico and 42 towers in Colombia. Subsequent to the end
of the fourth quarter of 2012, the Company acquired an additional 883 towers
in Mexico for an aggregate purchase price of $248.5 million, subject to
post-closing adjustments and value added tax.
During the twelve months ended December 31, 2012, the Company spent $1,998.0
million for the purchase of 713 domestic towers, 24 domestic property
interests under third-party communications sites, 5,733 international towers
and amounts due for acquisitions completed in December of 2011.
Stock Repurchase Program – During the fourth quarter of 2012, the Company
repurchased a total of approximately 0.6 million shares of its common stock
for approximately $46.0 million pursuant to its stock repurchase program.
Between January 1, 2013 and January 21, 2013, the Company repurchased an
additional 15,790 shares of its common stock for an aggregate of $1.2 million.
During the twelve months ended December 31, 2012, the Company repurchased a
total of approximately 0.9 million shares of its common stock for
approximately $62.7 million pursuant to its stock repurchase program.
FINANCING UPDATE
Leverage – For the quarter ended December 31, 2012, the Company’s net leverage
ratio was approximately 4.2x net debt (total debt less cash and cash
equivalents) to fourth quarter 2012 annualized Adjusted EBITDA.
Liquidity – As of December 31, 2012, the Company had approximately $1.1
billion of total liquidity, comprised of approximately $368.6 million in cash
and cash equivalents, plus the ability to borrow an aggregate of approximately
$734.6 million under its two revolving credit facilities, net of any
outstanding letters of credit.
Subsequent to the end of the fourth quarter of 2012, the Company increased its
liquidity by approximately $1.0 billion through the issuance of 3.50% senior
unsecured notes due 2023, the net proceeds of which were used to repay
borrowings under the Company’s revolving credit facilities.
FULL YEAR 2013 OUTLOOK
The following estimates are based on a number of assumptions that management
believes to be reasonable and reflect the Company’s expectations as of
February 26, 2013. These estimates include the impact of the Company’s
acquisition of 883 towers in Mexico, which closed subsequent to the end of the
fourth quarter of 2012 and the construction of between 2,250 to 2,750 new
sites. Actual results may differ materially from these estimates as a result
of various factors, and the Company refers you to the cautionary language
regarding “forward-looking” statements included in this press release when
considering this information.
The Company’s outlook is based on the following average foreign currency
exchange rates to 1.00 U.S. Dollar for the full year 2013: (a) 2.00 Brazilian
Reais; (b) 475.00 Chilean Pesos; (c) 1,800.00 Colombian Pesos; (d) 0.78 Euros;
(e) 1.90 Ghanaian Cedi; (f) 53.00 Indian Rupees; (g) 12.50 Mexican Pesos; (h)
2.55 Peruvian Soles; (i) 8.70 South African Rand; and (j) 2,650.00 Ugandan
Schillings.
($ in millions) Full Year 2013 Midpoint Midpoint Core
Growth Growth
Total rental and $3,160 to $3,210 13.6% 16.5%
management revenue
Adjusted EBITDA ^(1) $2,080 to $2,130 11.2% 14.8%
Adjusted Funds From $1,360 to $1,410 15.6% 16.3%
Operations^(1)
Net Income $765 to $840 35.1% 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 $2,080 million; and (2) international rental and management segment revenue
of $1,105 million, which includes approximately $285 million of pass-through
revenue.
The calculation of
midpoint Core Growth is as Total Rental
follows: and Adjusted AFFO
Management EBITDA
(Totals may not add due to Revenue
rounding.)
Outlook midpoint Core 16.5% 14.8% 16.3%
Growth
Estimated impact of
fluctuations in foreign (0.2)% (0.0)% 0.0%
currency exchange rates
Impact of straight-line
revenue and expense (2.0)% (2.4)% -
recognition
Impact of significant (0.6)% (1.1)% (0.8)%
one-time items(1)
Outlook midpoint growth 13.6% 11.2% 15.6%
___
(1) Attributable to 2012 one-time items and new market start-up capital
expenditures of approximately $20 million in 2013.
Outlook for Capital Expenditures:
($ in millions) Full Year 2013
(Totals may not add due to rounding.)
Discretionary capital projects^(1) $240 to $300
Ground lease purchases 85 to 105
Redevelopment 95 to 105
Capital improvement^(2) 105 to 115
Corporate 25 - 25
Total $550 to $650
___
(1) Includes the construction of approximately 2,250 to 2,750 new
communications sites.
(2) Includes new market start-up capital expenditures of approximately $20
million and 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)
Full Year 2013
(Totals may not add due to rounding.)
Net income $765 to $840
Interest expense 460 to 450
Depreciation, amortization and accretion 755 to 725
Income tax provision 63 to 73
Stock-based compensation expense 65 - 65
Other, including other operating expenses, interest
income, loss on retirement of long-term obligations, (28) to (23)
(income) loss on equity method investments and other
(income) expense
Adjusted EBITDA $2,080 to $2,130
Reconciliations of Outlook for Net Income to Adjusted Funds From Operations:
($ in millions)
Full Year 2013
(Totals may not add due to rounding.)
Net income $765 to $840
Straight-line revenue (135) - (135)
Straight-line expense 31 - 31
Depreciation, amortization and accretion 755 to 725
Stock-based compensation expense 65 - 65
Non-cash portion of tax provision 5 to 10
Other, including other operating expenses, interest
expense, amortization of deferred financing costs, debt
discounts and capitalized interest, loss on retirement 4 to 14
of long-term obligations, other (income) expense and
non-cash interest related to joint venture shareholder
loans
Capital improvement capital expenditures (105) to (115)
Corporate capital expenditures (25) - (25)
Adjusted Funds From Operations $1,360 to $1,410
Conference Call Information
American Tower will host a conference call today at 8:30 a.m. ET to discuss
its financial results for the fourth quarter and full year ended December 31,
2012 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: 94770658
When available, a replay of the call can be accessed until 11:59 p.m. ET on
March 12, 2013. The replay dial-in numbers are as follows:
U.S./Canada dial-in: (855) 859-2056
International dial-in: (404) 537-3406
Passcode: 94770658
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 54,000 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, Funds From Operations, Adjusted Funds
From Operations, Adjusted Funds From Operations per Share, Core Growth and Net
Leverage Ratio.
The Company defines Gross Margin as revenues less operating expenses,
excluding stock-based compensation expense. 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, income
taxes and discontinued operations. 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) from
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
expenses, 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. The
Company defines Funds From Operations as net income before real estate related
depreciation, amortization and accretion. The Company defines Adjusted Funds
From Operations as Funds From Operations before straight-line revenue and
expense, stock-based compensation expense, non-cash portion of tax provision,
non-real estate related depreciation, amortization and accretion, amortization
of deferred financing costs, debt discounts and capitalized interest, other
(income) expense, loss on retirement of long-term obligations, other operating
(income) expense, 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. Funds From
Operations for the three and twelve months ended December 31, 2011 are
presented on a pro forma basis and reflect adjustments for income tax
provision as if the REIT conversion had occurred on January 1, 2011. 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, 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 fail 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
agreements 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
nine months ended September 30, 2012. 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)
December 31, December 31,
2012 2011^(1)
ASSETS:
Current assets:
Cash and cash equivalents $368,618 $330,191
Restricted cash 69,316 42,215
Short-term investments and 6,018 22,270
available-for-sale securities
Accounts receivable, net 136,971 100,610
Prepaid and other current assets 222,851 250,273
Deferred income taxes 25,754 29,596
Total current assets 829,528 775,155
Property and equipment, net 5,789,995 4,981,722
Goodwill 2,912,046 2,676,290
Other intangible assets, net 3,115,053 2,495,053
Deferred income taxes 213,518 209,031
Deferred rent asset 776,201 609,529
Notes receivable and other non-current 452,788 495,615
assets
Total $14,089,129 $12,242,395
LIABILITIES AND EQUITY:
Current liabilities:
Accounts payable $89,578 $215,931
Accrued expenses 286,962 305,538
Distributions payable 189 -
Accrued interest 71,271 65,729
Current portion of long-term 60,031 101,816
obligations
Unearned revenue 124,147 92,483
Total current liabilities 632,178 781,497
Long-term obligations 8,693,345 7,134,492
Asset retirement obligations 435,724 344,180
Other non-current liabilities 643,701 572,084
Total liabilities 10,404,948 8,832,253
COMMITMENTS AND CONTINGENCIES
EQUITY :
Common stock 3,959 3,936
Additional paid-in capital 5,012,124 4,903,800
Distributions in excess of earnings (1,196,907) (1,477,899)
Accumulated other comprehensive loss (183,347) (142,617)
Treasury stock(2) (62,728) -
Total American Tower Corporation equity 3,573,101 3,287,220
Noncontrolling interest 111,080 122,922
Total equity 3,684,181 3,410,142
Total $14,089,129 $12,242,395
(1) December 31, 2011 balances have been revised to reflect purchase
accounting measurement period adjustments.
(2) As part of the Company’s reorganization to qualify as a REIT for federal
income tax purposes, effective December 31, 2011, the Company completed the
merger with its predecessor, approved by the Company’s stockholders in
November 2011. At the time of the merger, each share of Class A common stock
of American Tower held in treasury at December 31, 2011 ceased to be
outstanding, and a corresponding adjustment was recorded to additional paid‐in
capital and common stock.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three Months Ended Twelve Months Ended
December 31, December 31,
2012 2011 2012 2011
REVENUES:
Rental and management $739,684 $640,883 $2,803,490 $2,386,185
Network development services 28,690 12,316 72,470 57,347
Total operating revenues 768,374 653,199 2,875,960 2,443,532
OPERATING EXPENSES:
Costs of operations
(exclusive of items shown
separately below):
Rental and management
(including stock-based
compensation expense of $199, 180,561 157,818 686,681 590,272
$252, $793 and $1,105,
respectively)
Network development services
(including stock-based
compensation expense $219, 13,645 7,800 35,798 30,684
$314, $968 and $1,224,
respectively)
Depreciation, amortization 178,488 143,615 644,276 555,517
and accretion
Selling, general,
administrative and
development expense
(including stock-based 89,410 73,895 327,301 288,824
compensation expense of
$11,911, $10,686, $50,222,
and $45,108 respectively)
Other operating expenses 27,035 22,333 62,185 58,103
Total operating expenses 489,139 405,461 1,756,241 1,523,400
OPERATING INCOME 279,235 247,738 1,119,719 920,132
OTHER INCOME (EXPENSE):
Interest income, TV Azteca, 3,543 3,627 14,258 14,214
net
Interest income 1,427 541 7,680 7,378
Interest expense (104,043) (85,119) (401,665) (311,854)
Loss on retirement of - - (398) -
long-term obligations
Other expense (including
unrealized foreign currency
losses of $21,483, $29,548, (18,832) (7,265) (38,300) (122,975)
$34,330 and $131,053,
respectively)
Total other expense (117,905) (88,216) (418,425) (413,237)
INCOME FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES
AND
INCOME ON EQUITY METHOD 161,330 159,522 701,294 506,895
INVESTMENTS
Income tax provision (43,187) 36,901 (107,304) (125,080)
Income on equity method 10 11 35 25
investments
NET INCOME $118,153 $196,434 $594,025 $381,840
Net loss (income)
attributable to 17,526 8,676 43,258 14,622
noncontrolling interest
NET INCOME ATTRIBUTABLE TO $135,679 $205,110 $637,283 $396,462
AMERICAN TOWER CORPORATION
NET INCOME PER COMMON SHARE
AMOUNTS
Basic net income attributable $0.34 $0.52 $1.61 $1.00
to American Tower Corporation
Diluted net income
attributable to American $0.34 $0.52 $1.60 $0.99
Tower Corporation
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING:
BASIC 395,195 393,347 394,772 395,711
DILUTED 399,625 397,724 399,287 400,195
DISTRIBUTIONS DECLARED PER $0.24 $0.35 $0.90 $0.35
SHARE:
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Twelve Months Ended
December 31,
2012 2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $594,025 $381,840
Adjustments to reconcile net income to cash
provided by operating activities:
Stock-based compensation expense 51,983 47,437
Depreciation, amortization and accretion 644,276 555,517
Other non-cash items reflected in statements of 130,517 243,648
operations
Increase in net deferred rent asset (130,512) (113,042)
(Increase) decrease in restricted cash (26,500) 11,867
Decrease (increase) in assets 40,961 (72,516)
Increase in liabilities 109,641 111,191
Cash provided by operating activities 1,414,391 1,165,942
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for purchase of property and equipment (568,048) (523,015)
and construction activities
Payments for acquisitions, net of cash acquired (1,997,955) (2,320,673)
Proceeds from sales of short-term investments,
available-for-sale securities and other
long-term assets 374,682 69,971
Payment for short-term investments (352,306) (42,590)
Deposits, restricted cash and other (14,758) 25,495
Cash used in investing activities (2,558,385) (2,790,812)
CASH FLOWS FROM FINANCING ACTIVITIES:
(Repayments of) proceeds from short-term (55,264) 128,121
borrowings, net
Borrowings under credit facilities 2,582,000 1,005,014
Proceeds from issuance of senior notes 698,670 499,290
Proceeds from term loan credit facility 750,000 -
Proceeds from other long-term borrowings 177,299 212,783
Repayments of notes payable, credit facilities and (2,658,566) (395,384)
capital leases
Contributions from noncontrolling interest 52,761 140,880
holders, net
Purchases of common stock (62,728) (437,402)
Proceeds from stock options, warrants and stock 55,441 85,642
purchase plan
Distributions (355,574) (137,765)
Deferred financing costs and other financing (13,673) (15,084)
activities
Cash provided by financing activities 1,170,366 1,086,095
Net effect of changes in foreign currency exchange 12,055 (14,997)
rates on cash and cash equivalents
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 38,427 (553,772)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 330,191 883,963
CASH AND CASH EQUIVALENTS, END OF PERIOD $368,618 $330,191
CASH PAID FOR INCOME TAXES, NET $69,277 $53,909
CASH PAID FOR INTEREST $366,458 $274,234
UNAUDITED RESULTS FROM OPERATIONS, BY SEGMENT
(In thousands,
except
percentages)
Three Months Ended, December 31, 2012
Rental and Management Network
Development Total
Domestic International Total Services
Segment revenues $499,865 $239,819 $739,684 $28,690 $768,374
Segment
operating 84,367 95,995 180,362 13,426 193,788
expenses(1)
Interest income, - 3,543 3,543 - 3,543
TV Azteca, net
Segment Gross 415,498 147,367 562,865 15,264 578,129
Margin
Segment selling,
general,
administrative
and
development 25,025 27,146 52,171 2,334 54,505
expense(1)
Segment $390,473 $120,221 $510,694 $12,930 $523,624
Operating Profit
Segment
Operating Profit 78% 50% 69% 45% 68%
Margin
Three Months Ended, December 31, 2011
Rental and Management Network
Development Total
Domestic International Total Services
Segment revenues $464,945 $175,938 $640,883 $12,316 $653,199
Segment
operating 91,602 65,964 157,566 7,486 165,052
expenses(1)
Interest income, - 3,627 3,627 - 3,627
TV Azteca, net
Segment Gross 373,343 113,601 486,944 4,830 491,774
Margin
Segment selling,
general,
administrative
and
development 20,513 21,487 42,000 2,734 44,734
expense(1)
Segment $352,830 $92,114 $444,944 $2,096 $447,040
Operating Profit
Segment
Operating Profit 76% 52% 69% 17% 68%
Margin
Twelve Months Ended, December 31, 2012
Rental and Management Network
Development Total
Domestic International Total Services
Segment revenues $1,940,689 $862,801 $2,803,490 $72,470 $2,875,960
Segment
operating 357,555 328,333 685,888 34,830 720,718
expenses(1)
Interest income, - 14,258 14,258 - 14,258
TV Azteca, net
Segment Gross 1,583,134 548,726 2,131,860 37,640 2,169,500
Margin
Segment selling,
general,
administrative
and
development 85,663 95,579 181,242 6,744 187,986
expense(1)
Segment $1,497,471 $453,147 $1,950,618 $30,896 $1,981,514
Operating Profit
Segment
Operating Profit 77% 53% 70% 43% 69%
Margin
Twelve Months Ended, December 31, 2011
Rental and Management Network
Development Total
Domestic International Total Services
Segment revenues $1,744,260 $641,925 $2,386,185 $57,347 $2,443,532
Segment
operating 353,458 235,709 589,167 29,460 618,627
expenses(1)
Interest income, - 14,214 14,214 - 14,214
TV Azteca, net
Segment Gross 1,390,802 420,430 1,811,232 27,887 1,839,119
Margin
Segment selling,
general,
administrative
and
development 77,041 82,106 159,147 7,864 167,011
expense(1)
Segment $1,313,761 $338,324 $1,652,085 $20,023 $1,672,108
Operating Profit
Segment
Operating Profit 75% 53% 69% 35% 68%
Margin
Excludes
(1) stock-based
compensation
expense.
UNAUDITED SELECTED FINANCIAL INFORMATION
(In thousands, except where noted. Totals may not add due
to rounding.)
Selected Balance Sheet Detail:
December 31,
2012
Long-term obligations summary, December 31, Pro Forma (1)
including current portion 2012
2011 Credit Facility $265,000 $-
2012 Credit Facility 992,000 322,000
2012 Term Loan 750,000 750,000
4.625% Senior Notes due 2015 599,638 599,638
7.000% Senior Notes due 2017 500,000 500,000
4.500% Senior Notes due 2018 999,414 999,414
7.250% Senior Notes due 2019 296,272 296,272
5.050% Senior Notes due 2020 699,333 699,333
5.900% Senior Notes due 2021 499,356 499,356
4.700% Senior Notes due 2022 698,760 698,760
3.500% Senior Notes due 2023 - 991,850
Total Unsecured at American Tower $6,299,773 $6,356,624
Corporation
Commercial Mortgage Pass-Through 1,750,000 1,750,000
Certificates, Series 2007-1
Unison Notes (2) 207,188 207,188
South African Facility (3) 98,456 98,456
Colombian long-term credit 76,347 76,347
facility (3)
Colombian bridge loans (3) 53,169 53,169
Shareholder loans (4) 211,150 211,150
Capital leases 57,293 57,293
Total Secured or Subsidiary Debt $2,453,603 $2,453,603
Total debt $8,753,376 $8,810,227
Cash and cash equivalents 368,618
Net debt (total debt less cash and $8,384,758
cash equivalents)
Pro Forma as of February 26, 2013 for: (a) the registered public
offering of $1.0 billion aggregate principal amount of senior
(1) unsecured notes and associated repayment of certain indebtedness under
the 2011 and 2012 Credit Facilities; and (b) the aggregate borrowing
of an additional $49 million under the 2012 Credit Facility.
The Unison Notes are secured debt and were assumed as a result of the
(2) acquisition of certain legal entities holding a portfolio of property
interests from Unison Holdings LLC and Unison Site Management II,
L.L.C.
(3) Denominated in local currency.
Denominated in USD, reflects balances attributable to minority
(4) shareholder loans in the Company’s joint ventures in Colombia, Ghana
and Uganda.
Three Months Ended
Calculation of Net Leverage Ratio December 31, 2012
($ in thousands)
Total debt $8,753,376
Cash and cash equivalents 368,618
Numerator: net debt (total debt less cash and cash $8,384,758
equivalents)
Adjusted EBITDA $500,630
Denominator: annualized Adjusted EBITDA 2,002,520
Net leverage ratio 4.2x
UNAUDITED SELECTED FINANCIAL INFORMATION
(In thousands, except where noted. Totals may not add due to rounding.)
Three Months Twelve
Ended Months
Ended
Share count rollforward: (in December December
millions of shares) 31,2012 31,2012
Total common shares, beginning of period 395.4 393.6
Common shares repurchased (0.6) (0.9)
Common shares issued 0.3 2.3
Total common shares outstanding, 395.1 395.1
end of period (1)
As of December 31, 2012, excludes (a) 3.2 million potentially
dilutive shares associated with vested and exercisable stock options
(1) with an average exercise price of $37.07 per share, (b) 2.7 million
potentially dilutive shares associated with unvested stock options,
and (c) 1.9 million potentially dilutive shares associated with
unvested restricted stock units.
Total rental and management straight-line revenue and expense:
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, 2011 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 Twelve Months Ended
December 31, December 31,
2012 2011 2012 2011
Total rental and
management operations $47,260 $50,994 $165,806 $143,994
straight-line revenue
Total rental and
management operations $7,553 $7,827 $33,700 $30,952
straight-line expense
Three Months Ended Twelve Months Ended
December 31, December 31,
Selling, general,
administrative and 2012 2011 2012 2011
development expense
breakout:
Total rental and $52,171 $42,000 $181,242 $159,147
management overhead
Network development 2,334 2,734 6,744 7,864
services segment overhead
Corporate and development 22,994 18,475 89,093 76,705
expenses
Stock-based compensation 11,911 10,686 50,222 45,108
expense
Total $89,410 $73,895 $327,301 $288,824
Three Months Ended Twelve Months Ended
December 31, December 31,
International
pass-through revenue 2012 2011 2012 2011
detail:
Pass-through revenue $67,933 $49,388 $229,105 $176,085
SELECTED CASH FLOW
DETAIL:
Three Months Ended Twelve Months Ended
December 31, December 31,
Payments for purchase of
property and equipment 2012 2011 2012 2011
and construction
activities:
Discretionary - capital $86,850 $74,996 $279,015 $296,906
projects
Discretionary - ground 33,887 11,012 82,349 91,292
lease purchases
Redevelopment 27,954 18,020 86,656 55,301
Capital improvements (1) 36,477 16,714 99,981 60,829
Corporate 5,853 5,184 20,047 18,687
Total $191,021 $125,926 $568,048 $523,015
____
Includes new market start-up capital expenditures of: (a) approximately
(1) $5.6 million during the three months ended December 31, 2012; and (b)
approximately $24.5 million during the twelve months ended December 31,
2012.
UNAUDITED SELECTED FINANCIAL INFORMATION
(Totals may not add due to rounding.)
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:
Total Rental
and Adjusted
Three Months Ended December 31, EBITDA AFFO
2012 Management
Revenue
Core Growth 19.3% 19.6% 11.6%
Estimated impact of fluctuations
in foreign currency exchange (1.8)% (1.4)% (1.4)%
rates
Impact of straight-line revenue (2.0)% (2.8)% -
recognition
Impact of material one-time items - 1.4% (5.6)%
Reported growth 15.4% 16.8% 4.7%
Total Rental
and Adjusted AFFO
Twelve Months Ended December 31, Management EBITDA
2012 Revenue
Core Growth 21.1% 21.3% 18.8%
Estimated impact of fluctuations
in foreign currency exchange (3.8)% (3.1)% (3.8)%
rates
Impact of straight-line revenue (0.2)% (0.1)% -
recognition
Impact of material one-time items 0.5% 0.6% (1.4)%
Reported growth 17.5% 18.6% 13.5%
SELECTED PORTFOLIO DETAIL - OWNED
SITES:
Tower As of As of
Count(1):
September Constructed Acquired Adjustments December
30, 2012 31, 2012
United 21,668 87 627 152 22,534
States(2)
Brazil 4,311 28 - 6 4,345
Chile 1,180 1 - - 1,181
Colombia 2,847 58 42 57 3,004
Germany - - 2,031 - 2,031
Ghana 1,908 18 - - 1,926
India 10,116 287 - (25) 10,378
Mexico(3) 5,562 26 190 (1) 5,777
Peru 475 - - 25 500
South 1,601 2 - 1 1,604
Africa
Uganda 1,031 12 - - 1,043
___ Total 50,699 519 2,890 215 54,323
(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 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 Twelve Months Ended
December 31, December 31,
2012 2011 2012 2011
Net income $118,153 $196,434 $594,025 $381,840
Income from equity method (10) (11) (35) (25)
investments
Income tax provision 43,187 (36,901) 107,304 125,080
(benefit)
Other expense 18,832 7,265 38,300 122,975
Loss on retirement of - - 398 -
long-term obligations
Interest expense 104,043 85,119 401,665 311,854
Interest income (1,427) (541) (7,680) (7,378)
Other operating expenses 27,035 22,333 62,185 58,103
Depreciation, amortization 178,488 143,615 644,276 555,517
and accretion
Stock-based compensation 12,329 11,252 51,983 47,437
expense
Adjusted EBITDA $500,630 $428,565 $1,892,421 $1,595,403
Divided by total revenue 768,374 653,199 2,875,960 2,443,532
Adjusted EBITDA Margin 65% 66% 66% 65%
UNAUDITED REIT MEASURES AND RECONCILIATIONS TO
GAAP MEASURES
(In thousands, except per share data. Totals may
not add due to rounding.)
The reconciliation of net income to Funds From Operations and the calculation
of Adjusted Funds From Operations and Adjusted Funds From Operations per Share
are presented below:
Three Months Ended Twelve Months Ended
December 31, December 31,
2012 2011 2012 2011
Net Income $118,153 $196,434 $594,025 $381,840
Adjustment for
pro forma income - (40,570) - 82,908
tax provision
(benefit) (1)
Pro forma 118,153 155,864 594,025 464,748
net income
Real estate
related
depreciation, 154,329 124,977 562,298 481,926
amortization and
accretion
Funds From Operations 272,482 280,841 1,156,323 946,674
Straight-line (47,260) (50,994) (165,806) (143,994)
revenue
Straight-line 7,553 7,827 33,700 30,952
expense
Stock-based
compensation 12,329 11,252 51,983 47,437
expense
Non-cash portion 2,375 (1,432) 38,027 (11,737)
of tax provision
Non-real estate
related
depreciation, 24,159 18,638 81,978 73,591
amortization and
accretion
Amortization of
deferred
financing costs,
capitalized 14,492 2,742 21,008 11,021
interest and
debt discounts
and premiums (2)
Other expense 18,832 7,265 38,300 122,975
(3)
Loss on
retirement of - - 398 -
long-term
obligations
Other operating 27,035 22,333 62,185 58,103
expense (4)
Capital
improvement (36,477) (16,714) (99,981) (60,829)
capital
expenditures
Corporate
capital (5,853) (5,184) (20,047) (18,687)
expenditures
Adjusted Funds From $289,667 $276,574 $1,198,068 $1,055,505
Operations
Divided by
weighted average 399,625 397,724 399,287 400,195
diluted shares
outstanding
Adjusted Funds From $0.72 $0.70 $3.00 $2.64
Operations per Share
___
Adjustment for three and twelve months ended December 31, 2011 assumes the
REIT election occurred effective as of January 1, 2011, and that as a
result, income taxes would no longer be payable on certain of the
Company’s activities. As a result, on a pro forma basis, income tax
expense is lower by the amount of the adjustment. For more information,
see Note (B) to Unaudited Pro Forma Consolidated Financial Statements in
the Company’s Definitive Proxy Statement, filed with the SEC on October
11, 2011. The pro forma adjustment set forth in this footnote has been
(1) made solely for the purpose of this pro forma information. This
information is not necessarily indicative of the financial position or
operating results that would have been achieved had the REIT election been
effective as of January 1, 2011, nor is it necessarily indicative of
future financial position or operating results. It also does not reflect
one-time transaction costs related to the REIT election and the potential
immaterial effect of lower cash balances these transactions have on
interest income, higher borrowing costs or foregone investment
opportunities.
(2) Reflects accrued non-cash interest expense attributable to joint-venture
loans.
(3) Primarily includes unrealized (gain) loss on foreign currency exchange
rate fluctuations.
(4) Primarily includes impairments and transaction related costs.
Contact:
American Tower Corporation
Leah Stearns, 617-375-7500
Vice President, Investor Relations & Capital Markets
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