10-QPeriod: Q3 FY2007

AMERICAN TOWER CORP /MA/ Quarterly Report for Q3 Ended Sep 30, 2007

Filed November 9, 2007For Securities:AMT

Summary

This 10-Q filing for American Tower Corp. (AMT) for the period ending September 29, 2007, reveals a company experiencing growth in its core rental and management segment, with total revenues up 10% year-over-year for both the quarter and the nine-month period. The company has also significantly restructured its debt and financing during this period. A notable highlight is the completion of a $1.75 billion securitization transaction in May 2007, which was used to repay existing debt and improve financial flexibility. Financially, the company reported increased revenues and improved net income compared to the prior year's third quarter. However, a substantial loss from discontinued operations due to a significant settlement in the Verestar bankruptcy case impacted overall profitability for the nine-month period. The company also continued its aggressive share repurchase program, demonstrating a commitment to returning capital to shareholders. Management is also reviewing the useful lives of its tower assets, which could lead to future reductions in depreciation and amortization expenses.

Key Highlights

  • 1Total revenues increased by 10% to $367.6 million for the third quarter and to $1.08 billion for the nine months ended September 30, 2007, driven primarily by the rental and management segment.
  • 2The company completed a $1.75 billion securitization transaction (Commercial Mortgage Pass-Through Certificates, Series 2007-1) in May 2007 to repay debt and increase financial flexibility.
  • 3Net income for the third quarter of 2007 was $59.6 million, a significant increase from $3.5 million in the prior year's quarter.
  • 4Despite strong operational performance, the nine-month net income was impacted by a $31.4 million loss from discontinued operations, largely due to a $32.0 million settlement for the Verestar bankruptcy.
  • 5The company continued a substantial stock repurchase program, buying back approximately 31.0 million shares for $1.2 billion during the first nine months of 2007.
  • 6Interest expense increased by 10% for the quarter and 6% for the nine-month period due to higher average outstanding debt resulting from financing activities.
  • 7American Tower is reviewing the estimated useful lives of its tower assets, which could lead to prospective decreases in depreciation and amortization expenses.

Frequently Asked Questions

Revenue growth was primarily driven by the rental and management segment, which saw an increase in revenue from adding new tenants, existing tenants expanding their equipment on sites, contractual escalators, and favorable currency exchange rates.

The $1.75 billion securitization transaction provided significant liquidity, which was used to repay substantial amounts of existing debt, including the SpectraSite credit facilities and borrowings under American Tower's credit facilities. This improved the company's financial flexibility and extended its debt maturity profile.

The settlement of the Verestar bankruptcy proceedings and related litigation resulted in a significant loss from discontinued operations ($31.4 million for the nine-month period) due to the $32.0 million settlement payment. While this impacted net income, the company expects to recognize additional tax benefits related to Verestar's net operating losses in the fourth quarter of 2007.

American Tower continued an aggressive stock repurchase program, buying back approximately $1.2 billion of its Class A common stock during the first nine months of 2007. This demonstrates a commitment to returning capital to shareholders and potentially increasing earnings per share.