10-Q/APeriod: Q1 FY2006

AMERICAN TOWER CORP /MA/ Quarterly Report (Amendment) for Q1 Ended Mar 31, 2006

Filed November 29, 2006For Securities:AMT

Summary

This 10-Q/A filing for American Tower Corporation (AMT) for the quarter ended March 31, 2006, primarily serves as an amendment to correct previously issued financial statements. The restatements are due to errors in accounting for stock-based compensation, including incorrect grant dates and additional charges for modifications/repricings, as well as adjustments to income taxes related to foreign currency fluctuations. Despite these accounting corrections, the core business operations show significant growth, driven by the recent merger with SpectraSite, Inc. Total revenues increased by 74% year-over-year to $320.4 million, largely due to the inclusion of SpectraSite's operations. The company's primary segment, Rental and Management, saw a 74% revenue increase, reflecting strong performance from both acquired and existing tower sites. While the company reported a net loss of $1.9 million for the quarter, this is an improvement from the $32.4 million net loss in the prior year, partly due to reduced losses from discontinued operations and the impact of restatements. Key financial indicators point to a growing operational scale. The company's property and equipment, along with significant goodwill and intangible assets, underscore its asset-heavy infrastructure model. Debt levels remain substantial, but the company indicates sufficient cash flow to service its obligations. Management is actively engaged in addressing the stock option accounting issues, cooperating with regulatory inquiries, and has outlined steps to improve internal controls. Despite the restatements and ongoing investigations, the underlying business appears to be expanding significantly due to strategic acquisitions.

Key Highlights

  • 1Total revenues surged by 74% to $320.4 million for the three months ended March 31, 2006, primarily driven by the inclusion of SpectraSite, Inc. operations.
  • 2The Rental and Management segment, the company's core business, saw revenues increase by 74% year-over-year to $316.3 million.
  • 3The company reported a net loss of $1.9 million for the quarter, an improvement from a net loss of $32.4 million in the prior year, partly due to reduced losses from discontinued operations and the impact of financial restatements.
  • 4Significant financial restatements were made to correct errors in stock-based compensation accounting and income tax calculations, reflecting a thorough review of historical stock option granting practices.
  • 5As of March 31, 2006, the company had total outstanding indebtedness of approximately $3.6 billion, with a stated belief in sufficient cash flow from operations to service these obligations.
  • 6The company repurchased approximately $165.5 million of its Class A common stock during the first quarter of 2006 as part of an ongoing $750.0 million stock repurchase program.
  • 7The company is cooperating with SEC and U.S. Attorney's Office inquiries related to its historical stock option granting practices, which has led to securities class action and derivative lawsuits.

Frequently Asked Questions

The financial statements were restated to correct errors primarily related to stock-based compensation accounting (including incorrect grant dates and additional charges for modifications/repricings) and adjustments to income taxes arising from foreign currency fluctuations on an intercompany loan. These corrections followed an independent review of the company's historical stock option granting practices.

The merger with SpectraSite, Inc., completed in August 2005, significantly boosted American Tower's scale. For the quarter ended March 31, 2006, SpectraSite's operations contributed $108.5 million to revenues and $71.9 million to segment operating profit, driving the 74% year-over-year increase in total revenues.

As of March 31, 2006, American Tower had approximately $3.6 billion in outstanding debt. The company reported $85.6 million in cash and cash equivalents and had access to approximately $755.6 million in undrawn credit facilities. Management believes cash generated from operations is sufficient to meet capital expenditures and debt service obligations for the next twelve months.

American Tower has an active stock repurchase program, with $750.0 million authorized through December 2006. During the first quarter of 2006, the company repurchased $165.5 million of its Class A common stock. The company expects to continue repurchasing shares and potentially extend the program.