10-QPeriod: Q3 FY2011

AMERICAN TOWER CORP /MA/ Quarterly Report for Q3 Ended Sep 30, 2011

Filed November 2, 2011For Securities:AMT

Summary

American Tower Corporation (AMT) reported its third-quarter and year-to-date results for 2011. The company experienced robust revenue growth, primarily driven by its rental and management segments, with a significant increase in international operations. Despite this top-line expansion, net income for the quarter turned negative due to substantial unrealized foreign currency losses and increased interest expenses, although Adjusted EBITDA showed a healthy 14% year-over-year increase for the quarter and a 19% increase year-to-date. The company is actively pursuing its strategy of global expansion through strategic acquisitions, particularly in international markets, while also managing its capital structure through debt and share repurchases. A notable development is the company's ongoing plan to reorganize and elect REIT status for federal income tax purposes, which is targeted for the 2012 tax year, pending shareholder approval.

Financial Highlights

49 data points
Beta

Revenue

$630.40M

Net Income

-$15.70M

-2.5% Net Margin

EPS (Diluted)

$-0.04

Total Assets

$10.90B

Cash & Equivalents

$177.51M

Free Cash Flow

$290.66M

Financial Statements
Beta
Revenue$630.40M
SG&A Expenses$76.48M
Operating Expenses$402.10M
Operating Income$228.31M
Interest Expense$77.80M
Net Income-$15.70M
EPS (Basic)$-0.04
EPS (Diluted)$-0.04
Shares Outstanding (Basic)395.18M
Shares Outstanding (Diluted)395.18M

Key Highlights

  • 1Total revenues increased by 23% year-over-year for the three months ended September 30, 2011, reaching $630.4 million, driven by strong performance in both domestic and international rental and management segments.
  • 2International rental and management segment revenue saw a substantial 79% increase year-over-year for the quarter, highlighting the company's successful global expansion strategy.
  • 3Net income for the three months ended September 30, 2011, was a loss of $19.7 million, a significant decrease from net income of $93.6 million in the prior year period, largely due to unrealized foreign currency losses.
  • 4Adjusted EBITDA increased by 14% to $400.6 million for the three months ended September 30, 2011, indicating continued operational strength despite the net income decline.
  • 5The company reported significant capital deployment through acquisitions, with cash used in investing activities totaling $1,559.6 million for the nine months ended September 30, 2011, primarily for acquisitions.
  • 6American Tower is progressing with its plan to elect REIT status for federal income tax purposes, with a target for the taxable year beginning January 1, 2012, pending shareholder approval.
  • 7Total outstanding indebtedness stood at approximately $5.8 billion as of September 30, 2011, with the company actively managing its debt levels and liquidity through credit facilities and recent debt offerings.

Frequently Asked Questions

The international rental and management segment revenue increased by 79% year-over-year for the third quarter of 2011. This growth was primarily driven by revenue from new sites acquired or constructed in international markets (approximately 69% of the growth) and organic revenue growth (approximately 10% of the growth), which includes new tenants, expanded equipment on existing sites, and positive foreign currency translation effects.

The net loss of $19.7 million for the third quarter of 2011, compared to a net income of $93.6 million in the prior year, was primarily due to a significant increase in 'Other Expense,' which was heavily impacted by unrealized foreign currency losses totaling approximately $145.1 million. This was compounded by increases in depreciation, amortization and accretion, other operating expenses, and interest expense.

American Tower's Board of Directors approved a plan to reorganize to become eligible to elect REIT status for federal income tax purposes, targeting the taxable year beginning January 1, 2012. The company has filed a registration statement and expects to hold a special meeting of stockholders for approval. The plan involves a merger with a newly formed subsidiary and structuring operations into qualified REIT subsidiaries and taxable REIT subsidiaries. The company also anticipates making a special distribution of undistributed earnings and profits in the fourth quarter of 2011.

As of September 30, 2011, total outstanding indebtedness was approximately $5.8 billion. The company has actively managed its liquidity, with approximately $2,049.5 million in total liquidity, including $177.5 million in cash and equivalents and significant borrowing capacity under its revolving credit facilities. In October 2011, the company completed a $500 million senior notes offering, using proceeds to finance acquisitions and repay debt, demonstrating ongoing capital management strategies.