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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

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FORM 8-K

 

CURRENT REPORT

 

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported):    October 30, 2003

 

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AMERICAN TOWER CORPORATION

(Exact Name of Registrant as Specified in Charter)

 

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Delaware		001-14195		65-0723837
(State or Other Jurisdiction of Incorporation)		(Commission File Number)		(IRS Employer Identification No.)

 

116 Huntington Avenue

Boston, Massachusetts 02116

(Address of Principal Executive Offices) (Zip Code)

 

(617) 375-7500

(Registrant’s telephone number, including area code)

 

Not Applicable

(Former name or former address, if changed since last report)

 

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Item 5. Other Events.

 

On October 30, 2003, American Tower Corporation (the “Company”) issued a press release announcing its financial results for the third quarter ended September 30, 2003 (the “Third Quarter Earnings Release”). The unaudited condensed consolidated financial statements included in the Third Quarter Earnings Release are filed herewith and are incorporated by reference herein as Exhibit 99.1.

 

Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.

 

(c)

Exhibits

 

Exhibit No.		Item
99.1		The Company’s unaudited condensed consolidated financial statements as follows: unaudited condensed consolidated balance sheets as of September 30, 2003 and December 31, 2002, unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2003 and 2002 and unaudited condensed consolidated statements of cash flows for the nine months ended September 30, 2003 and 2002.

 

Item 12. Results of Operations and Financial Condition

 

The Company hereby furnishes the Third Quarter Earnings Release in its entirety, which is included as Exhibit 99.2, and hereby incorporated by reference.

 

The information contained in this Item 12 and in Exhibit 99.2 is furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing made by the Company under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.

 

2

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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

						AMERICAN TOWER CORPORATION (Registrant)
Date:    October 30, 2003						By:		/s/    BRADLEY E. SINGER
								Bradley E. Singer
								Chief Financial Officer and Treasurer

 

3

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EXHIBIT INDEX

 

Exhibit No.		Description
99.1		The Company’s unaudited condensed consolidated financial statements as follows: unaudited condensed consolidated balance sheets as of September 30, 2003 and December 31, 2002, unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2003 and 2002 and unaudited condensed consolidated statements of cash flows for the nine months ended September 30, 2003 and 2002. Filed herewith.
99.2		Press release of American Tower Corporation, dated October 30, 2003, reporting financial results for the third quarter of 2003. Furnished herewith.

 

4

Exhibit 99.1

 

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)		September 30, 2003				December 31, 2002
ASSETS
Current Assets:
Cash and cash equivalents		$	66,131			$	127,292
Restricted cash and investments			283,722
Accounts receivable, net			52,623				64,889
Other current assets			67,414				84,390
Assets held for sale			138,264				314,205
Total current assets			608,154				590,776
Property and equipment, net			2,617,408				2,694,999
Goodwill and other intangible assets, net			1,662,595				1,731,001
Deferred income taxes			428,151				383,431
Other long-term assets			273,999				261,996
Total		$	5,590,307			$	5,662,203
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses		$	92,034			$	113,380
Accrued interest			34,166				63,611
Convertible notes, net – 2.25%			84,089				210,899
Current portion of long-term obligations (excluding 2.25% convertible notes)			101,643				58,959
Other current liabilities			39,359				38,733
Liabilities held for sale			130,977				200,696
Total current liabilities			482,268				686,278
Long-term obligations			3,304,866				3,178,656
Other long-term liabilities			28,471				41,379
Total liabilities			3,815,605				3,906,313
Minority interest in subsidiaries			17,529				15,567
STOCKHOLDERS' EQUITY:
Class A Common Stock			2,107				1,856
Class B Common Stock			73				79
Class C Common Stock			15				23
Additional paid-in capital			3,905,666				3,642,019
Accumulated deficit			(2,139,230	)			(1,887,030	)
Accumulated other comprehensive loss			(372	)			(5,564	)
Note receivable			(6,720	)			(6,720	)
Treasury stock			(4,366	)			(4,340	)
Total stockholders' equity			1,757,173				1,740,323
Total		$	5,590,307			$	5,662,203

 

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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS		Three Months Ended September 30,								Nine Months Ended September 30,
(In thousands, except per share data)		2003				2002				2003				2002
REVENUES:
Rental and management		$	158,193			$	138,160			$	456,571			$	396,778
Network development services			28,681				36,786				67,052				100,879
Total operating revenues			186,874				174,946				523,623				497,657
OPERATING EXPENSES:
Rental and management			56,758				56,605				165,659				170,618
Network development services			26,274				35,060				62,486				90,312
Depreciation and amortization			77,687				78,699				236,965				232,342
Corporate general, administrative and development expense			6,493				6,822				20,106				23,592
Restructuring expense							1,190								6,964
Impairments and net loss on sale of long-lived assets			7,646				83,202				19,344				84,513
Total operating expenses			174,858				261,578				504,560				608,341
INCOME (LOSS) FROM OPERATIONS			12,016				(86,632	)			19,063				(110,684	)
OTHER INCOME (EXPENSE):
Interest income, TV Azteca, net			3,523				3,514				10,553				10,414
Interest income			1,177				755				4,033				2,552
Interest expense			(68,906	)			(62,718	)			(211,849	)			(192,025	)
Loss on investments and other expense			(1,449	)			(5,302	)			(27,050	)			(24,670	)
Gain (loss) on retirement of long-term obligations (A)			3,255								(41,068	)			(8,869	)
Minority interest in net earnings of subsidiaries			(907	)			(639	)			(2,270	)			(1,373	)
Total other expense			(63,307	)			(64,390	)			(267,651	)			(213,971	)
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES			(51,291	)			(151,022	)			(248,588	)			(324,655	)
INCOME TAX BENEFIT			13,593				3,168				50,453				52,891
LOSS FROM CONTINUING OPERATIONS BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE			(37,698	)			(147,854	)			(198,135	)			(271,764	)
LOSS FROM DISCONTINUED OPERATIONS, NET (B)			(15,164	)			(206,023	)			(54,065	)			(255,053	)
LOSS BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE			(52,862	)			(353,877	)			(252,200	)			(526,817	)
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE, NET OF INCOME TAX BENEFIT OF $14,438 (C)															(562,618	)
NET LOSS		$	(52,862	)		$	(353,877	)		$	(252,200	)		$	(1,089,435	)
BASIC AND DILUTED NET LOSS PER COMMON SHARE AMOUNTS
Loss from continuing operations before cumulative effect of change in accounting principal		$	(0.18	)		$	(0.76	)		$	(0.97	)		$	(1.39	)
Discontinued operations			(0.07	)			(1.05	)			(0.27	)			(1.31	)
Cumulative effect of change in accounting principle															(2.88	)
BASIC AND DILUTED NET LOSS PER COMMON SHARE		$	(0.25	)		$	(1.81	)		$	(1.24	)		$	(5.58	)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING			213,788				195,565				204,201				195,404

 

NOTES TO CONSOLIDATED STATEMENTS OF OPERATIONS

 

(A)	Gain (loss) on retirement of long-term obligations is the result of the Company's repurchase and/or conversion of its long-term obligations during 2003.

 

(B)

In August 2003, the Company consummated the sale of its Galaxy Engineering Services division (Galaxy). Revenues related to Galaxy were approximately $1.9 million and $4.6 million for the three months ended September 30, 2003 and 2002, respectively, and approximately $8.3 million and $11.3 million for the nine months ended September 30, 2003 and 2002, respectively. Segment operating (loss) profit related to Galaxy was approximately $(0.4) million and $0.9 million for the three months ended September 30, 2003 and 2002 , respectively, and $(0.3) million and $0.5 million for the nine months ended September 30, 2003 and 2002, respectively. The above statements of operations have been adjusted to reflect the results of Galaxy's operations, as well as other previously announced dispositions as discontinued operations.

 

(C)	Effective January 1, 2002, the Company adopted SFAS No. 142 "Goodwill and Intangible Assets" and recognized a $562.6 million charge as the cumulative effect of a change in accounting principle related to the write-down of goodwill to its fair value.

 

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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)		Nine Months Ended September 30,
		2003				2002
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Net loss		$	(252,200	)		$	(1,089,435	)
Cumulative effect of change in accounting principle, net							562,618
Other non-cash items reflected in statements of operations			368,255				551,301
Decrease in assets			12,546				54,589
Decrease in liabilities			(48,576	)			(43,934	)
Cash provided by operating activities			80,025				35,139
CASH FLOWS USED FOR INVESTING ACTIVITIES:
Payments for purchase of property and equipment and construction activities			(45,934	)			(155,856	)
Payments for acquisitions			(75,990	)			(21,651	)
Proceeds from sale of businesses and other long-term assets			74,296				39,726
Deposits, investments and other long-term assets			(10,048	)			(16,765	)
Cash used for investing activities			(57,676	)			(154,546	)
CASH FLOWS (USED FOR) PROVIDED BY FINANCING ACTIVITIES:
Borrowings under credit facilities							160,000
Proceeds from issuance of debt securities and notes payable			632,384
Net proceeds from equity offering, stock options and employee stock purchase plan			125,205				910
Repayment of long-term obligations			(528,745	)			(106,672	)
Restricted cash and investments			(283,722	)			94,071
Deferred financing costs and other			(28,632	)
Cash (used for) provided by financing activities			(83,510	)			148,309
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS			(61,161	)			28,902
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD			127,292				35,958
CASH AND CASH EQUIVALENTS, END OF PERIOD		$	66,131			$	64,860
CASH PAID FOR INCOME TAXES		$	1,613			$	896
CASH PAID FOR INTEREST		$	168,729			$	215,373

 

EXHIBIT 99.2

 

 

FOR IMMEDIATE RELEASE

 

ATC Contact: Anne Alter

Vice President of Finance, Investor Relations

Telephone: (617) 375-7500

 

AMERICAN TOWER CORPORATION REPORTS THIRD QUARTER RESULTS

 

·

Income from operations increased to $12.0 million and net loss decreased to $52.9 million

·

Same tower revenue and same tower cash flow growth of 11% and 15%, respectively

·

Adjusted EBITDA increased to $100.9 million and adjusted EBITDA margin increased to 54.0%

·

Free cash flow of $20.6 million

 

Boston, Massachusetts – October 30, 2003 – American Tower Corporation (NYSE: AMT) today reported financial results for the quarter ended September 30, 2003.

 

For the three months ended September 30, 2003, rental and management segment revenues increased to $158.2 million from $138.2 million for the same period in 2002. Total revenues increased to $186.9 million for the three months ended September 30, 2003, from $174.9 million for the same period in 2002. Loss from continuing operations decreased to $37.7 million, or $0.18 per share, for the three months ended September 30, 2003 from $147.9 million, or $0.76 per share, for the same period in 2002. Net loss decreased to $52.9 million, or $0.25 per share, for the three months ended September 30, 2003 from $353.9 million, or $1.81 per share, for the same period in 2002.

 

Adjusted EBITDA (“income (loss) from operations before depreciation and amortization and impairments and net loss on sale of long-lived assets plus interest income, TV Azteca, net”) increased 28% to $100.9 million for the three months ended September 30, 2003 from $78.8 million for the same period in 2002. The Company generated free cash flow (“adjusted EBITDA less interest expense and capital expenditures incurred, excluding acquisitions and divestitures”) of $20.6 million for the three months ended September 30, 2003.

 

Jim Taiclet, American Tower’s Chief Executive Officer, stated, “Our strong third quarter performance, year-over-year increases of 15% in tower revenue and 28% in adjusted EBITDA, was driven by continued focus on operational execution. Our demonstrated ability to sustain top line growth while managing costs and capital expenditures resulted in our third consecutive quarter of increasing, positive free cash flow.

 

“This steady expansion of free cash flow has enabled us to strengthen our balance sheet. The cash flow from operations, combined with the proceeds from non-core business divestitures and our recent equity offering have provided us with the liquidity to reduce our overall level of net debt. Moreover, our sustained operational performance and balance sheet de-leveraging have improved our access to capital, as we continue to reward stakeholders across our entire capital structure.

 

“You can expect all of these trends to continue, as we anticipate a stable to improving lease up environment ahead. I have great confidence in this company’s management team—they are energetic, committed to driving customer satisfaction and shareholder value, and know what it takes to win.”

 

Operating Highlights

 

Organic same tower revenue and same tower cash flow growth on approximately 13,200 towers owned as of the beginning of the third quarter 2002 and the end of the third quarter 2003 was 11% and 15%,

 

(Continued)

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respectively, for the three months ended September 30, 2003 as compared to the three months ended September 30, 2002.

 

Rental and management segment operating profit increased 23% to $105.0 million for the three months ended September 30, 2003, from $85.1 million for the same period in 2002. Rental and management segment operating profit margins increased to 66.4% for the three months ended September 30, 2003, from 61.6% for the same period in 2002. Adjusted EBITDA margin improved to 54.0% for the three months ended September 30, 2003, from 45.0% for the same period in 2002.

 

The Company generated free cash flow of $20.6 million in the third quarter 2003, which includes a deduction of approximately $20.3 million for non-cash interest expense from the accretion of our senior subordinated discount notes due 2008 and our 2.25% discount convertible notes due 2009 and amortization of deferred financing costs (excluding the $20.3 million of non-cash interest expense would result in free cash flow of $40.9 million).

 

Asset Transactions

 

The Company made progress on strategically divesting non-core portions of its business and acquiring complementary core tower assets. During the third quarter of 2003 the Company closed on $6.6 million of divestitures including certain non-core tower assets, a non-revenue generating office building and Galaxy, its radio frequency engineering services business. The Company has adjusted its September 30, 2003 and 2002 financial statements, as well as its 2003 Outlook, to reflect Galaxy as a discontinued operation. In addition, the Company anticipates that it may receive in excess of $30 million of proceeds from the sale of additional non-core tower assets during the remainder of 2003.

 

The Company has entered into an agreement to sell a majority interest in Verestar and expects the sale to close by the end of 2003. The sale is subject to certain closing conditions, including the buyer obtaining certain concessions from Verestar’s vendors, and there can be no assurance that the closing will occur.

 

As of September 30, 2003, the Company has satisfied its obligation under the NII Holdings tower acquisition for approximately $101.8 million, including approximately $34.7 million during the third quarter of 2003. The Company expects to close on an additional $12.5 million of the NII Holdings assets in stages over the next six months. This would bring the total acquisition from NII Holdings to approximately $114.3 million.

 

Financing Highlights

 

The Company strengthened its financial position during the third quarter of 2003 by increasing liquidity and reducing leverage. As previously announced, the Company issued approximately 14.3 million shares of Class A common stock for net proceeds of approximately $120.4 million, after deducting underwriting discounts and commissions and expenses of the offering. The net proceeds of the equity offering will be used to repurchase outstanding indebtedness and for general corporate purposes. In addition to the equity offering, the Company received approximately $202.8 million in net proceeds from the issuance of 3.25% convertible notes due 2010. Of the $202.8 million in net proceeds, $100.0 million was used to repay indebtedness under the credit facilities and $102.8 million was used to repurchase convertible notes. Please refer to the supplemental schedule on page 8 of the press release for a more complete summary of our offerings and the use of the proceeds from our restricted cash accounts.

 

The combination of increasing operating profit, proceeds from financing activities and paying down debt reduced the Company’s Net Leverage Ratio (“total debt less cash and cash equivalents and restricted cash and investments on hand divided by third quarter 2003 annualized Adjusted EBITDA”) as of September 30, 2003 to 7.8 from 10.7 for the same period in 2002.

 

As of September 30, 2003 the Company had $587.7 million in total liquidity, which is comprised of $349.9 million in cash and cash equivalents, including $283.7 million of restricted cash and investments, and the ability to draw upon the available $237.8 million of its revolving loan.

 

(Continued)

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As previously announced, the Company completed a tender offer on October 22, 2003 for substantially all of the remaining $84.2 million of 2.25% convertible notes ($55,000 of 2.25% convertible notes remains outstanding).

 

Fourth Quarter and Full Year 2003

 

On page 10 of this release, the Company has provided its fourth quarter 2003 and full year 2003 outlook and full year 2004 outlook for each of its two operating segments.

 

The Company maintains its fourth quarter 2003 and full year 2003 rental and management outlook. The high end of the outlook has been adjusted by $1 million to reflect third quarter 2003 actual results.

 

The Company has adjusted its expectation for full year 2003 total capital expenditures incurred to between $46 million and $48 million. Rental and management capital expenditures incurred are expected to range from $36 million to $38 million, including $18 million to $20 million for the construction of approximately 50-70 new wireless towers, and approximately $18 million for tower improvements and augmentation. Services and corporate capital expenditures incurred are expected to be approximately $5 million, and Verestar capital expenditures incurred are expected to be approximately $5 million.

 

2004 Outlook

 

The Company’s full year 2004 outlook for rental and management revenue is $667 million to $690 million based on an expected continuation of current new business levels producing annual revenue growth of 8% to 11%. Full year 2004 outlook for rental and management segment operating profit is $451 million to $476 million based on an expectation of new business contribution margins of approximately 90%.

 

The Company’s full year 2004 outlook for services revenue and segment operating profit is $60 million to $90 million and $7 million to $10 million, respectively.

 

The Company’s full year 2004 outlook for corporate expense is $26 million to $28 million, or 3% to 4% of total revenue.

 

The Company’s full year 2004 outlook for interest expense is $260 million to $275 million, including $83 million of non-cash interest.

 

The Company’s full year 2004 outlook for capital expenditures is $45 million to $60 million. Rental and management capital expenditures incurred are expected to range from $42 million to $55 million, including $24 million to $33 million for the construction of approximately 120 to 180 new wireless towers, and approximately $18 to $22 million for tower improvements and augmentation. Services and corporate capital expenditures incurred are expected to range from $3 million to $5 million.

 

Conference Call Information

 

American Tower will host a conference call today at 11:00 a.m. Eastern to discuss quarterly results and the Company’s outlook for the fourth quarter of 2003, full year 2003 and full year 2004. The call will be hosted by Brad Singer, Chief Financial Officer, who will be joined by Jim Taiclet, Chief Executive Officer, and other members of the executive management team. The dial-in numbers are US/Canada: 888-428-4472, international: 651-291-0344, no access codes required. A replay of the call will be available from 2:30 p.m. Eastern Thursday, October 30, 2003 until 11:59 p.m. Eastern Thursday, November 6, 2003. The replay dial-in numbers are US: 800-475-6701, and international: 320-365-3844, access code 702181. American Tower will also sponsor a live simulcast of the call on its web site, http://investor.americantower.com. A replay of the call will be available on the web site shortly after the conclusion of the call.

 

American Tower is the leading independent owner, operator and developer of broadcast and wireless communications sites in North America. Giving effect to pending transactions, American Tower operates approximately 15,000 sites in the United States, Mexico, and Brazil, including approximately 300

 

(Continued)

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broadcast tower sites. Of the 15,000 sites, approximately 14,000 are owned or leased towers and approximately 1,000 are managed and lease/sublease sites. For more information about American Tower Corporation, please visit our website www.americantower.com.

 

Non-GAAP Financial Measures

 

In addition to the results prepared in accordance with generally accepted accounting principles (GAAP) provided throughout this press release, we have presented the following non-GAAP financial measures: Adjusted EBITDA, Adjusted EBITDA Margin, Same Tower Cash Flow, Free Cash Flow and Net Leverage Ratio. These measures are not intended as substitutes for other measures of financial performance determined in accordance with GAAP. They are presented as additional information because management believes they are useful indicators of the current financial performance of our core businesses. We believe that these measures can assist in comparing company performances on a consistent basis without regard to depreciation and amortization or capital structure. Our concern is that depreciation and amortization can vary significantly among companies depending on accounting methods, particularly where acquisitions or non-operating factors including historical cost bases are involved. Additionally, interest expense may vary significantly depending on capital structure. Notwithstanding the foregoing, our measure of Adjusted EBITDA, Adjusted EBITDA Margin, Same Tower Cash Flow, Free Cash Flow and Net Leverage Ratio may not be comparable to similarly titled measures of other companies. Reconciliations of these measures to GAAP are included on pages 11 and 12 of this release. Our results under GAAP are set forth in the financial statements attached on pages 5-7 of this release.

 

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, our revised quarterly and full year 2003 and full year 2004 Outlook, and planned future asset sales. Actual results may differ materially from those indicated in our forward-looking statements as a result of various important factors, including: (1) a decrease in demand for tower space, which would materially and adversely affect our operating results; (2) continuation of the current U.S. economic slowdown, which could materially and adversely affect our business; (3) our substantial leverage and debt service obligations may adversely affect our operating results by restricting our ability to allocate capital to income producing assets; (4) restrictive covenants in our credit facilities and our senior and subordinated notes could adversely affect our business by further limiting our flexibility; (5) if our wireless service provider customers consolidate or merge with each other to a significant degree, our growth, our revenue and our ability to generate positive cash flows could be adversely affected; (6) due to the long-term expectations of revenue from tenant leases, we are dependent on the creditworthiness of our tenants; (7) if we issue a significant amount of equity securities, the trading price for our shares of Class A Common Stock could be adversely affected; (8) operations in foreign countries could lead to expropriations, government regulations, funds inaccessibility and foreign exchange exposure; (9) new technologies could make our tower antenna leasing services less desirable to potential tenants and result in decreasing revenues; and (10) our inability to complete our planned asset sales or realize the amount of proceeds we currently expect from such sales. For other important factors that may cause actual results to differ materially from those indicated in our forward-looking statements, we refer you to the information under the caption entitled “Business Factors That May Affect Future Results” in our Form 10-Q for the quarter ended June 30, 2003, which we incorporate herein by reference. We undertake no obligation to update the information contained in this press release to reflect subsequently occurring events or circumstances.

 

(Continued)

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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS		Three Months Ended September 30,								Nine Months Ended September 30,
(In thousands, except per share data)		2003				2002				2003				2002
REVENUES:
Rental and management		$	158,193			$	138,160			$	456,571			$	396,778
Network development services			28,681				36,786				67,052				100,879
Total operating revenues			186,874				174,946				523,623				497,657
OPERATING EXPENSES:
Rental and management			56,758				56,605				165,659				170,618
Network development services			26,274				35,060				62,486				90,312
Depreciation and amortization			77,687				78,699				236,965				232,342
Corporate general, administrative and development expense			6,493				6,822				20,106				23,592
Restructuring expense							1,190								6,964
Impairments and net loss on sale of long-lived assets			7,646				83,202				19,344				84,513
Total operating expenses			174,858				261,578				504,560				608,341
INCOME (LOSS) FROM OPERATIONS			12,016				(86,632	)			19,063				(110,684	)
OTHER INCOME (EXPENSE):
Interest income, TV Azteca, net			3,523				3,514				10,553				10,414
Interest income			1,177				755				4,033				2,552
Interest expense			(68,906	)			(62,718	)			(211,849	)			(192,025	)
Loss on investments and other expense			(1,449	)			(5,302	)			(27,050	)			(24,670	)
Gain (loss) on retirement of long-term obligations (A)			3,255								(41,068	)			(8,869	)
Minority interest in net earnings of subsidiaries			(907	)			(639	)			(2,270	)			(1,373	)
Total other expense			(63,307	)			(64,390	)			(267,651	)			(213,971	)
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES			(51,291	)			(151,022	)			(248,588	)			(324,655	)
INCOME TAX BENEFIT			13,593				3,168				50,453				52,891
LOSS FROM CONTINUING OPERATIONS BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE			(37,698	)			(147,854	)			(198,135	)			(271,764	)
LOSS FROM DISCONTINUED OPERATIONS, NET (B)			(15,164	)			(206,023	)			(54,065	)			(255,053	)
LOSS BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE			(52,862	)			(353,877	)			(252,200	)			(526,817	)
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE, NET OF INCOME TAX BENEFIT OF $14,438 (C)															(562,618	)
NET LOSS		$	(52,862	)		$	(353,877	)		$	(252,200	)		$	(1,089,435	)
BASIC AND DILUTED NET LOSS PER COMMON SHARE AMOUNTS
Loss from continuing operations before cumulative effect of change in accounting principle		$	(0.18	)		$	(0.76	)		$	(0.97	)		$	(1.39	)
Discontinued operations			(0.07	)			(1.05	)			(0.27	)			(1.31	)
Cumulative effect of change in accounting principle															(2.88	)
BASIC AND DILUTED NET LOSS PER COMMON SHARE		$	(0.25	)		$	(1.81	)		$	(1.24	)		$	(5.58	)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING			213,788				195,565				204,201				195,404

 

NOTES TO CONSOLIDATED STATEMENTS OF OPERATIONS

 

(A)	Gain (loss) on retirement of long-term obligations is the result of the Company's repurchase and/or conversion of its long-term obligations during 2003.

 

(B)

In August 2003, the Company consummated the sale of its Galaxy Engineering Services division (Galaxy). Revenues related to Galaxy were approximately $1.9 million and $4.6 million for the three months ended September 30, 2003 and 2002, respectively, and approximately $8.3 million and $11.3 million for the nine months ended September 30, 2003 and 2002, respectively. Segment operating (loss) profit related to Galaxy was approximately $(0.4) million and $0.9 million for the three months ended September 30, 2003 and 2002 , respectively, and $(0.3) million and $0.5 million for the nine months ended September 30, 2003 and 2002, respectively. The above statements of operations have been adjusted to reflect the results of Galaxy's operations, as well as other previously announced dispositions as discontinued operations.

 

(C)	Effective January 1, 2002, the Company adopted SFAS No. 142 "Goodwill and Intangible Assets" and recognized a $562.6 million charge as the cumulative effect of a change in accounting principle related to the write-down of goodwill to its fair value.

 

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UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)		September 30, 2003				December 31, 2002
ASSETS
Current Assets:
Cash and cash equivalents		$	66,131			$	127,292
Restricted cash and investments			283,722
Accounts receivable, net			52,623				64,889
Other current assets			67,414				84,390
Assets held for sale			138,264				314,205
Total current assets			608,154				590,776
Property and equipment, net			2,617,408				2,694,999
Goodwill and other intangible assets, net			1,662,595				1,731,001
Deferred income taxes			428,151				383,431
Other long-term assets			273,999				261,996
Total		$	5,590,307			$	5,662,203
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses		$	92,034			$	113,380
Accrued interest			34,166				63,611
Convertible notes, net – 2.25%			84,089				210,899
Current portion of long-term obligations (excluding 2.25% convertible notes)			101,643				58,959
Other current liabilities			39,359				38,733
Liabilities held for sale			130,977				200,696
Total current liabilities			482,268				686,278
Long-term obligations			3,304,866				3,178,656
Other long-term liabilities			28,471				41,379
Total liabilities			3,815,605				3,906,313
Minority interest in subsidiaries			17,529				15,567
STOCKHOLDERS' EQUITY:
Class A Common Stock			2,107				1,856
Class B Common Stock			73				79
Class C Common Stock			15				23
Additional paid-in capital			3,905,666				3,642,019
Accumulated deficit			(2,139,230	)			(1,887,030	)
Accumulated other comprehensive loss			(372	)			(5,564	)
Note receivable			(6,720	)			(6,720	)
Treasury stock			(4,366	)			(4,340	)
Total stockholders' equity			1,757,173				1,740,323
Total		$	5,590,307			$	5,662,203

 

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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)		Nine Months Ended September 30,
		2003				2002
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Net loss		$	(252,200	)		$	(1,089,435	)
Cumulative effect of change in accounting principle, net							562,618
Other non-cash items reflected in statements of operations			368,255				551,301
Decrease in assets			12,546				54,589
Decrease in liabilities			(48,576	)			(43,934	)
Cash provided by operating activities			80,025				35,139
CASH FLOWS USED FOR INVESTING ACTIVITIES:
Payments for purchase of property and equipment and construction activities			(45,934	)			(155,856	)
Payments for acquisitions			(75,990	)			(21,651	)
Proceeds from sale of businesses and other long-term assets			74,296				39,726
Deposits, investments and other long-term assets			(10,048	)			(16,765	)
Cash used for investing activities			(57,676	)			(154,546	)
CASH FLOWS (USED FOR) PROVIDED BY FINANCING ACTIVITIES:
Borrowings under credit facilities							160,000
Proceeds from issuance of debt securities and notes payable			632,384
Net proceeds from equity offering, stock options and employee stock purchase plan			125,205				910
Repayment of long-term obligations			(528,745	)			(106,672	)
Restricted cash and investments			(283,722	)			94,071
Deferred financing costs and other			(28,632	)
Cash (used for) provided by financing activities			(83,510	)			148,309
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS			(61,161	)			28,902
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD			127,292				35,958
CASH AND CASH EQUIVALENTS, END OF PERIOD		$	66,131			$	64,860
CASH PAID FOR INCOME TAXES		$	1,613			$	896
CASH PAID FOR INTEREST		$	168,729			$	215,373

 

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UNAUDITED SUPPLEMENTAL INFORMATION

 

SELECTED CAPITAL EXPENDITURE DETAIL (in millions)		Three Months Ended September 30, 2003
CAPITAL EXPENDITURES INCURRED
Wireless tower construction		$	5
Broadcast tower construction			0
Improvements/Augmentation			4
Land			0
Services			0
Verestar			1
Corporate			1
Total capital expenditures incurred		$	11
SELECTED INTEREST EXPENSE DETAIL (in millions)		Three Months Ended September 30, 2003
Credit facilities		$	13
12.25% Senior subordinated discount notes due 2008			13
Discount amortization of $0.01 warrants expiring 2008			2
9.375% Senior notes due 2009			23
Convertible notes due 2009 and 2010			11
Hedging instruments			1
Deferred financing amortization			4
Other			2
Total interest expense incurred		$	69
SELECTED BALANCE SHEET DETAIL (in millions)		September 30, 2003
LIQUIDITY
Cash and cash equivalents		$	66
Restricted cash and investments			284
Total cash and cash equivalents			350
Available borrowings (a)			238
Total liquidity		$	588
LONG TERM OBLIGATIONS BREAKOUT, INCLUDING CURRENT PORTION
Revolving line of credit		$	119
Term loan A			605
Term loan B			408
12.25% Senior subordinated discount notes due 2008			408
9.375% Senior notes due 2009			1,000
6.25% Convertible notes due 2009			213
2.25% Discounted convertible notes due 2009			84
5.00% Convertible notes due 2010			381
3.25% Convertible notes due 2010			210
Capital leases			45
Other			18
Total long term obligations		$	3,491
Net debt (Total long term obligations less total cash and cash equivalents)		$	3,141

 

SELECTED DEBT AND EQUITY OFFERING DETAIL

(in millions)

RESTRICTED CASH BALANCE ADJUSTMENTS

 

		June 30, 2003				Equity Offering			3.25% Convertible Notes				September 30, 2003				October 22, 2003
Beginning Balance		$	192.9										$	192.9			$	283.7
Third Quarter Proceeds						$	120.4		$	202.8				323.2
Interest Income			0.5				0.2			0.1				0.8
Prepayment of Revolver										(37.9	)			(37.9	)
Prepayment of Term Loan A			(8.4	)						(61.7	)			(70.1	)
Prepayment of Term Loan B			(5.6	)						(0.4	)			(6.0	)
Repurchase of 2.25% Convertible Notes			(1.7	)						(55.7	)			(57.4	)
Repurchase of 5.0% Convertible Notes			(14.6	)						(47.2	)			(61.8	)
Retirement of 2.25% Convertible Notes (b)														—				(84.2	)
Ending Balance		$	163.1			$	120.6		$	0.0			$	283.7			$	199.5

 

(a)	Available borrowings under Revolving Loan based on most restrictive covenant as of 9/30/03, adjusted for outstanding letters of credit of $27.2 million.

(b)	On October 22, 2003 $84.2 million (99.9% of the outstanding issue) in accreted value of the 2.25% Convertible Notes was put to the Company under the terms of the notes.

 

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UNAUDITED SUPPLEMENTAL INFORMATION

 

SELECTED SHARE DETAIL

 

TOTAL SHARES OUTSTANDING (in millions)								219.4
SELECTED TOWER PORTFOLIO DETAIL								Three Months Ended
								September 30, 2003
Same tower revenue growth (a)								11	%
Same tower cash flow growth (a)								15	%
ACTIVE TOWER COUNTS		Owned Wireless Towers			Broadcast Towers			Managed or Lease/Sublease			Total
Beginning Balance, 7/1/03		13,464			334			972			14,770
New Construction		11									11
Acquisitions		217									217
Reductions		(27	)		(3	)		(2	)		(32	)
Ending Balance, 9/30/03		13,665			331			970			14,966

 

(a)	Same tower revenue and cash flow growth include U.S., Mexico and Brazil owned wireless and broadcast towers.

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American Tower Corporation Financial Summary

October 30, 2003

(In millions, except per share data)

 

 

QUARTERLY AND FULL YEAR 2003 OUTLOOK

 

The following estimates are based on a number of assumptions that management believes to be reasonable, and reflect the Company's expectations as of October 30, 2003. Company outlook is based on assumptions about the number of new builds constructed, tenant lease-up and the timing of tower closings. Please refer to the cautionary language included in this press release when considering this information. The Company undertakes no obligation to update this information.

 

“Segment operating profit” is defined as segment revenues less segment operating expenses before depreciation and amortization, corporate general, administrative and development expense, and impairments and net loss on sale of long-lived assets. Segment operating profit for rental and management includes interest income, TV Azteca, net.

 

“Adjusted EBITDA” is defined as income (loss) from operations before depreciation and amortization and impairments and net loss on sale of long-lived assets, plus interest income, TV Azteca, net.

 

		Q4 2003												Full Year 2003												Full Year 2004
		Outlook Ranges												Outlook Ranges												Outlook Ranges
Rental and management revenue		$	162			to		$	164					$	619			to		$	621					$	667		to		$	690
Rental and management segment operating profit (Includes interest income, TV Azteca, net)			108			to			111						409			to			412						451		to			476
Services revenue			22			to			30						89			to			97						60		to			90
Services segment operating profit			2			to			4						7			to			9						7		to			10
Total revenue			184			to			194						708			to			718						727		to			780
Total segment operating profit			110			to			115						416			to			421						458		to			486
Corporate and development expense			7			to			6						27			to			26						28		to			26
Adjusted EBITDA			103			to			109						389			to			395						430		to			460
Depreciation and amortization			80			to			77						317			to			314						NA					NA
Total interest expense			69			to			67						281			to			279						275		to			260
Loss from continuing operations			(45	)		to			(37	)					(243	)		to			(235	)					NA					NA
Basic and diluted net loss per common share from continuing operations		$	(0.20	)		to		$	(0.17	)				$	(1.17	)		to		$	(1.14	)					NA					NA
Capital expenditures incurred			15			to			13						48			to			46						60		to			45
Non-cash interest expense included in Total interest expense above:
Accretion of discount notes (2.25% and 12.25%)			14			to			14						53			to			53						59		to			59
Accretion of warrants discount			2			to			2						8			to			8						9		to			9
Amortization of deferred financing fees			4			to			4						15			to			15						15		to			15
Total non-cash interest expense			20						20						76						76						83					83

 

Acquisition spending for the year 2003 is expected to be approximately $80-90 million, substantially all of which is for the NII Holdings transaction, and $76 million of which had been spent through the third quarter of 2003.

 

RECONCILIATION OF OUTLOOK TO GAAP MEASURES⁽¹⁾

 

The reconciliation of loss from continuing operations to		Q4 2003												Full Year 2003
Adjusted EBITDA is as follows:		Outlook Ranges												Outlook Ranges
Loss from continuing operations		$	(45	)		to		$	(37	)				$	(243	)		to		$	(235	)
Interest expense			69			to			67						281			to			279
Depreciation and amortization			80			to			77						317			to			314
Other, including interest income, note conversion expense, loss on investment and other expense, and income tax benefit			(1	)		to			2						34			to			37
Adjusted EBITDA		$	103			to		$	109					$	389			to		$	395

 

(1)	We have not reconciled our adjusted EBITDA outlook to net loss because we do not provide guidance for the reconciling items between loss from continuing operations and net loss (loss from discontinued operations).

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UNAUDITED RECONCILIATIONS TO GAAP MEASURES

In thousands

 

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UNAUDITED RECONCILIATIONS TO GAAP MEASURES

In thousands

 

Net Leverage Ratio
The reconciliation of net leverage for the end of the third quarter 2003 and 2002
is as follows:		September 30,
		2003			2002(1)
Cash and cash equivalents		$	66,131		$	64,860
Restricted cash and investments			283,722			—
Total cash and cash equivalents			349,853			64,860
Current portion of long-term obligations			185,732			45,326
Long-term obligations			3,304,866			3,403,078
Total debt			3,490,598			3,448,404
Net debt (Total debt less cash and cash equivalents)			3,140,745			3,383,544
Respective 3Q Adjusted EBITDA			100,872			78,783
Annualized			x 4			x 4
Respective 3Q Adjusted EBITDA Annualized		$	403,488		$	315,132
Net Leverage Ratio (Net debt divided by respective 3Q adjusted EBITDA annualized)			7.8			10.7

 

⁽¹⁾ Excludes long-term obligations associated with discontinued operations

 

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