Exhibit 99.1
Contact: Michael Powell
Vice President, Investor Relations
Telephone: (617) 375-7500
AMERICAN TOWER CORPORATION REPORTS
FOURTH QUARTER AND FULL YEAR 2009 FINANCIAL RESULTS
FOURTH QUARTER 2009 HIGHLIGHTS
| • | Rental and management segment revenue increased 10.4% to $435.2 million |
| • | $172.2 million of investments to build or acquire nearly 900 new communications sites |
| • | Ended the quarter with over 27,000 communications sites in the Company’s portfolio |
FULL YEAR 2009 HIGHLIGHTS
| • | Rental and management segment revenue increased 7.8% to $1,668.4 million |
| • | Cash provided by operating activities was $842.1 million |
| • | $425.4 million of investments to build or acquire over 3,500 new communications sites |
Boston, Massachusetts – February 24, 2010:American Tower Corporation (NYSE: AMT) today reported financial results for the fourth quarter and full year ended December 31, 2009.
Fourth Quarter 2009 Operating Overview
American Tower generated the following operating results for the quarter ended December 31, 2009 (unless otherwise indicated, all comparative information is presented against the quarter ended December 31, 2008):
Total revenues increased 9.7% to $448.0 million, and rental and management segment revenues increased 10.4% to $435.2 million. Rental and management segment revenue growth was positively impacted by approximately 1.6% due to foreign currency exchange rate fluctuations and negatively impacted by approximately 1.4% due to straight-line revenue recognition. Excluding the impact of these items, Core Growth in rental and management segment revenue was 10.2%. Rental and management segment Gross Margin increased 10.0% to $338.3 million. Network development services revenue and Gross Margin were $12.8 million and $5.7 million, respectively.
Total selling, general, administrative and development expense was $46.3 million, including $10.5 million of stock-based compensation expense.
Adjusted EBITDA increased 10.1% to $308.2 million, and Adjusted EBITDA Margin was 69%. Adjusted EBITDA growth was positively impacted by approximately 1.4% due to foreign currency exchange rate fluctuations and negatively impacted by approximately 1.9% due to straight-line revenue and expense recognition. Excluding the impact of these items, Core Growth in Adjusted EBITDA was 10.6%.
Operating income was $176.4 million, net income was $64.4 million and both net income per basic and diluted common share were $0.16.
Recurring Free Cash Flow increased 23.9% to $221.8 million and Recurring Free Cash Flow per Share increased 25.0% to $0.55.
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Full Year 2009 Operating Overview
American Tower generated the following operating results for the full year ended December 31, 2009 (unless otherwise indicated, all comparative information is presented against the full year ended December 31, 2008):
Total revenues increased 8.2% to $1,724.1 million, and rental and management segment revenues increased 7.8% to $1,668.4 million. Rental and management segment Gross Margin increased 8.4% to $1,298.6 million. Network development services revenue and Gross Margin were $55.7 million and $23.3 million, respectively.
Total selling, general, administrative and development expense was $201.7 million, including $60.7 million of stock-based compensation expense. Adjusted EBITDA increased 8.1% to $1,180.9 million, and Adjusted EBITDA Margin was 68%.
Operating income was $672.3 million and net income was $246.6 million. Net income per basic and diluted common share was $0.62 and $0.61, respectively.
Recurring Free Cash Flow increased 20.5% to $811.6 million and Recurring Free Cash Flow per Share increased 23.6% to $1.99.
Jim Taiclet, American Tower’s Chief Executive Officer stated, “Our Company made substantial progress on all three of our major strategic goals in 2009: we further broadened and deepened our asset base, expanding our portfolio by over 3,500 new communications sites on three continents; we again drove strong operational performance on our existing assets; and we further strengthened our financial position, opening access to investment grade credit markets. All of these achievements contribute to a solid foundation for additional growth in 2010 and beyond.”
Please refer to Non-GAAP and Defined Financial Measures on pages 4 and 5 for definitions of Rental and Management Segment Gross Margin, Network Development Services Segment Gross Margin, Adjusted EBITDA, Adjusted EBITDA Margin, Recurring Free Cash Flow, Recurring Free Cash Flow per Share and Core Growth. For additional financial information, including reconciliations to GAAP measures, please refer to the supplemental schedules of selected financial information on pages 9 through 13.
Fourth Quarter and Full Year 2009 Investing Overview
During the quarter ended December 31, 2009, capital expenditures included $37.8 million for discretionary capital projects and $13.9 million for the purchase of land under the Company’s towers. Additionally, the Company spent $10.4 million for capital improvements and corporate capital expenditures and $5.7 million for the redevelopment of existing sites to accommodate new equipment. Separately, the Company spent $134.4 million on acquisitions.
During the quarter ended December 31, 2009, the Company completed the construction of 366 communications sites, including the completion of its first outdoor distributed antenna system, and purchased 530 communications sites, including the acquisition of 326 communications sites from Transcend in India and 196 communications sites from Cincinnati Bell.
During the quarter ended December 31, 2009, the Company repurchased a total of 0.7 million shares of its Class A common stock for approximately $27.6 million pursuant to its stock repurchase program. The Company expects to continue to manage the pacing of the program in response to general market conditions and other relevant factors.
For the full year 2009, the Company spent approximately $250.3 million on capital expenditures, including $178.9 million on discretionary capital projects and land purchases and $30.7 million to augment its existing sites to accommodate new equipment, $295.6 million on acquisitions and $214.7 million to repurchase 6.6 million shares of its Class A common stock pursuant to its stock repurchase program.
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During 2009, the Company increased the size of its communications site portfolio by approximately 15% to over 27,000 communications sites. This included a 47% increase in the size of its portfolio in Brazil to over 1,600 towers and the establishment of a portfolio of over 2,600 towers in India through two acquisitions and the construction of nearly 500 towers.
India Expansion
The Company announced today that its indirectly held wholly owned Indian subsidiary, Transcend, has entered into a definitive stock purchase agreement pursuant to which it will acquire substantially all of the issued and outstanding shares of Essar Telecom Infrastructure Private Limited (“ETIPL”). ETIPL currently owns and operates approximately 4,450 wireless communications sites in India, including a number of sites that are currently under construction. ETIPL’s wireless communications site portfolio averages approximately 1.8 tenants per tower. As a result of this acquisition, the Company’s wireless communications site portfolio in India will increase to approximately 7,000 sites.
The total consideration for the acquisition is estimated to be approximately $430 million and is subject to certain post closing adjustments. The consideration to be provided will be satisfied with cash and the assumption of ETIPL’s net debt and other liabilities at closing. The Company expects to use its senior unsecured revolving credit facility to satisfy the cash requirements at closing. Consummation of the acquisition is subject to certain conditions, including the receipt of regulatory approvals and other customary closing conditions. The acquisition is expected to be close by the end of the second quarter of 2010.
Full Year 2010 Outlook
The following estimates are based on a number of assumptions that management believes to be reasonable, and reflect the Company’s expectations as of February 24, 2010. These estimates do not include the impact of the Company’s pending acquisition of ETIPL described above. Actual results may differ materially from these estimates as a result of various factors, including fluctuations in foreign currency exchange rates and we refer you to the cautionary language regarding “forward-looking” statements included in this press release when considering this information.
The Company’s estimates for the full year 2010 assume the following average foreign exchange rates for the remainder of 2010: (a) 13.25 Mexican Pesos to 1.00 US Dollar; (b) 1.80 Brazilian Reais to 1.00 US Dollar; (c) 46.00 Indian Rupees to 1.00 US Dollar.
($ in millions) | Full Year 2010 | |||||||
Rental and Management Segment Revenue (1) (2) | $ | 1,810 | to | $ | 1,840 | |||
Adjusted EBITDA (3) | 1,260 | to | 1,290 | |||||
Cash Provided by Operating Activities | 950 | to | 980 | |||||
Payments for Purchase of Property and Equipment and Construction Activities (4) | 300 | to | 350 | |||||
Rental and management segment revenue Core Growth for the full year 2010 is expected to be approximately 8%, based on the midpoint. Adjusted EBITDA Core Growth for the full year 2010 is expected to be approximately 7%, based on the midpoint.
| (1) | Outlook for rental and management segment revenue includes an estimated increase in non-cash straight-line revenues of approximately $14 million in 2010 from the full year 2009. (For additional information on straight-line revenues, we refer you to the information contained in the section entitled “Revenue Recognition” of note 1, “Business and Summary of Significant Accounting Policies” within the notes to the consolidated financial statements of the Company’s Annual Report on Form 10-K for the year ended December 31, 2008.) |
| (2) | Outlook reflects the acquisition of approximately 180 sites in the United States which the Company expects to close during the first quarter of 2010. |
| (3) | See Non-GAAP and Defined Financial Measures below. |
| (4) | Outlook for capital expenditures reflects the Company’s expectation that spending on capital improvements, corporate capital expenditures and the redevelopment of existing communications sites will be at comparable levels to spending in 2009. In addition, the Company expects to spend approximately $50 million for ground lease purchases and $165 million to $205 million for other discretionary capital projects including the construction of approximately 1,200 to 1,600 new communications sites. |
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Conference Call Information
American Tower will host a conference call today at 8:30 a.m. ET to discuss its fourth quarter and full year 2009 financial results. Supplemental materials for the call will be available on the Company’s websitewww.americantower.com. The conference call dial-in numbers are as follows:
US/Canada dial-in: (877) 251-8743
International dial-in: (706) 645-9644
Passcode: 50034715
A replay of the call will be available from 10:30 a.m. ET February 24, 2010 until 11:59 p.m. ET March 10, 2010. The replay dial-in numbers are as follows:
US/Canada dial-in: (800) 642-1687
International dial-in: (706) 645-9291
Passcode: 50034715
American Tower will also sponsor a live simulcast of the call on its website,www.americantower.com. When available, a replay of the call will be available on the Company’s website.
About American Tower
American Tower is a leading independent owner, operator and developer of broadcast and wireless communications sites. American Tower currently owns and operates over 27,000 communications sites in the United States, Mexico, Brazil and India. For more information about American Tower, please visitwww.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: Rental and Management Segment Gross Margin, Network Development Services Segment Gross Margin, Adjusted EBITDA, Adjusted EBITDA Margin, Recurring Free Cash Flow, Recurring Free Cash Flow per Share, and Core Growth. The Company defines Rental and Management Segment Gross Margin as operating income before depreciation, amortization and accretion, other operating expenses, stock-based compensation expense, corporate expenses, international business development expenses, rental and management segment overhead, network development services segment overhead, network development services segment operating expenses, network development services segment revenue, plus interest income, TV Azteca, net. The Company defines Network Development Services Segment Gross Margin as operating income before depreciation, amortization and accretion, other operating expenses, stock-based compensation expense, corporate expenses, international business development expenses, network development services segment overhead, rental and management segment overhead, rental and management segment operating expenses, and rental and management segment revenue. The Company defines Adjusted EBITDA as operating income before depreciation, amortization and accretion, other operating expenses, and stock-based compensation expense, plus interest income, TV Azteca, net. The Company defines Adjusted EBITDA Margin as the percentage that results from dividing Adjusted EBITDA by total revenue. The Company defines Recurring Free Cash Flow as Adjusted EBITDA before straight-line revenue and expense, plus interest income, less interest expense, cash paid for income taxes and cash payments related to redevelopment, capital improvement and corporate capital expenditures. The Company defines Recurring Free Cash Flow per Share as Recurring Free Cash Flow divided by the diluted weighted average common shares outstanding. The Company defines Core Growth in rental and management segment revenue and Adjusted EBITDA 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
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straight-line revenue and expense recognition, foreign currency exchange rate fluctuations, and material one-time items. 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 Rental and Management Segment Gross Margin, Network Development Services Segment Gross Margin, Adjusted EBITDA, Adjusted EBITDA Margin, Recurring Free Cash Flow, Recurring Free Cash Flow per Share, and Core Growth 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 the Company’s 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 2010 outlook, expected net cash consideration of the ETIPL transaction; anticipated closing dates of our contemplated acquisitions and foreign currency exchange rates. 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) if our wireless service provider customers consolidate or merge with each other to a significant degree, our growth, revenue and ability to generate positive cash flows could be materially and adversely affected; (3) substantial leverage and debt service obligations may materially and adversely affect us; (4) restrictive covenants in the loan agreement for the revolving credit facility and term loan, the indentures governing our debt securities, and the loan agreement related to our securitization transaction could materially and adversely affect our business by limiting flexibility; (5) we could suffer adverse tax and other financial consequences if taxing authorities do not agree with our tax positions, or we are unable to utilize our net operating losses; (6) due to the long-term expectations of revenue from tenant leases, the tower industry is sensitive to the creditworthiness and financial strength of its 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 foreign currency exchange rates; (8) a substantial portion of our revenue is derived from a small number of customers; (9) we anticipate that we may need additional financing to fund our stock repurchase programs, to refinance our existing indebtedness and to fund future growth and expansion initiatives; (10) new technologies could make our tower leasing business less desirable to potential tenants and result in decreasing revenues; (11) we could have liability under environmental laws; (12) 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; (13) increasing competition in the tower industry may create pricing pressures that may materially and adversely affect us; (14) if we are unable to protect our rights to the land under our towers, it could adversely affect our business and operating results; (15) 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; (16) our towers may be affected by natural disasters and other unforeseen damage for which our insurance may not provide adequate coverage; (17) our costs could increase and our revenues could decrease due to perceived health risks from radio emissions, especially if these perceived risks are substantiated; and (18) our historical stock option granting practices are subject to ongoing governmental proceedings, which could result in fines, penalties or other liability. 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 contained in Item 1A of our Form 10-Q for the quarter ended September 30, 2009 under the caption “Risk Factors.” We undertake no obligation to update the information contained in this press release to reflect subsequently occurring events or circumstances.
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UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
| December 31, 2009 | December 31, 2008 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 247,293 | $ | 143,077 | ||||
Restricted cash | 47,836 | 51,866 | ||||||
Short-term investments and available-for-sale securities | 9,776 | 2,028 | ||||||
Accounts receivable, net of allowances | 67,949 | 51,313 | ||||||
Prepaid and other current assets | 89,051 | 61,415 | ||||||
Deferred income taxes | 189,451 | 163,981 | ||||||
Total current assets | 651,356 | 473,680 | ||||||
Property and equipment, net | 3,175,511 | 3,022,636 | ||||||
Goodwill | 2,237,850 | 2,186,233 | ||||||
Other intangible assets, net | 1,598,633 | 1,566,155 | ||||||
Deferred income taxes | 198,185 | 381,428 | ||||||
Notes receivable and other long-term assets | 651,133 | 581,533 | ||||||
Total | $ | 8,512,668 | $ | 8,211,665 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued expenses | $ | 185,138 | $ | 151,985 | ||||
Accrued interest | 23,538 | 28,635 | ||||||
Current portion of long-term obligations | 70,521 | 1,837 | ||||||
Unearned revenue | 112,047 | 120,188 | ||||||
Total current liabilities | 391,244 | 302,645 | ||||||
Long-term obligations | 4,141,060 | 4,331,309 | ||||||
Other long-term liabilities | 662,239 | 583,232 | ||||||
Total liabilities | 5,194,543 | 5,217,186 | ||||||
STOCKHOLDERS’ EQUITY | ||||||||
Class A Common Stock | 4,797 | 4,685 | ||||||
Additional paid-in capital | 8,393,643 | 8,109,224 | ||||||
Accumulated deficit | (2,109,532 | ) | (2,356,127 | ) | ||||
Accumulated other comprehensive loss | (12,649 | ) | (20,031 | ) | ||||
Treasury stock | (2,961,177 | ) | (2,746,429 | ) | ||||
Total American Tower Corporation stockholders’ equity | 3,315,082 | 2,991,322 | ||||||
Non-controlling interest | 3,043 | 3,157 | ||||||
Total stockholders’ equity | 3,318,125 | 2,994,479 | ||||||
Total | $ | 8,512,668 | $ | 8,211,665 | ||||
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UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share data)
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||
REVENUES: | ||||||||||||||||
Rental and management | $ | 435,197 | $ | 394,313 | $ | 1,668,420 | $ | 1,547,035 | ||||||||
Network development services | 12,776 | 14,011 | 55,694 | 46,469 | ||||||||||||
Total operating revenues | 447,973 | 408,324 | 1,724,114 | 1,593,504 | ||||||||||||
OPERATING EXPENSES: | ||||||||||||||||
Costs of operations (exclusive of items shown separately below) | ||||||||||||||||
Rental and management | 100,442 | 90,445 | 383,990 | 363,024 | ||||||||||||
Network development services | 7,061 | 8,121 | 32,385 | 26,831 | ||||||||||||
Depreciation, amortization and accretion | 106,745 | 104,174 | 414,619 | 405,332 | ||||||||||||
Selling, general, administrative and development expense (1) | 46,337 | 44,962 | 201,694 | 180,374 | ||||||||||||
Other operating expenses | 10,939 | 7,881 | 19,168 | 11,189 | ||||||||||||
Total operating expenses | 271,524 | 255,583 | 1,051,856 | 986,750 | ||||||||||||
OPERATING INCOME | 176,449 | 152,741 | 672,258 | 606,754 | ||||||||||||
OTHER INCOME (EXPENSE): | ||||||||||||||||
Interest income, TV Azteca, net | 3,541 | 3,542 | 14,210 | 14,253 | ||||||||||||
Interest income | 5 | 454 | 1,722 | 3,413 | ||||||||||||
Interest expense | (61,459 | ) | (62,016 | ) | (249,803 | ) | (253,584 | ) | ||||||||
Loss on retirement of long-term obligations | (11,809 | ) | (3,709 | ) | (18,194 | ) | (4,904 | ) | ||||||||
Other income | 198 | 7,033 | 1,294 | 5,988 | ||||||||||||
Total other expense | (69,524 | ) | (54,696 | ) | (250,771 | ) | (234,834 | ) | ||||||||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES, MINORITY INTEREST AND INCOME ON EQUITY METHOD INVESTMENTS | 106,925 | 98,045 | 421,487 | 371,920 | ||||||||||||
Income tax provision | (42,682 | ) | (15,255 | ) | (182,565 | ) | (135,509 | ) | ||||||||
Income on equity method investments | 6 | 4 | 26 | 22 | ||||||||||||
INCOME FROM CONTINUING OPERATIONS | 64,249 | 82,794 | 238,948 | 236,433 | ||||||||||||
Income from discontinued operations, net | 53 | 2,948 | 8,179 | 110,982 | ||||||||||||
NET INCOME | 64,302 | 85,742 | 247,127 | 347,415 | ||||||||||||
Net loss (income) income attributable to non-controlling interest | 48 | 97 | (532 | ) | (169 | ) | ||||||||||
NET INCOME ATTRIBUTABLE TO AMERICAN TOWER CORPORATION (ATC) | $ | 64,350 | $ | 85,839 | $ | 246,595 | $ | 347,246 | ||||||||
NET INCOME PER COMMON SHARE AMOUNTS: | ||||||||||||||||
BASIC: | ||||||||||||||||
Income from continuing operations attributable to ATC | $ | 0.16 | $ | 0.21 | $ | 0.60 | $ | 0.60 | ||||||||
Income from discontinued operations attributable to ATC | — | 0.01 | 0.02 | 0.28 | ||||||||||||
Net income attributable to ATC | $ | 0.16 | $ | 0.22 | $ | 0.62 | $ | 0.88 | ||||||||
DILUTED: | ||||||||||||||||
Income from continuing operations attributable to ATC | $ | 0.16 | $ | 0.20 | $ | 0.59 | $ | 0.58 | ||||||||
Income from discontinued operations attributable to ATC | — | 0.01 | 0.02 | 0.27 | ||||||||||||
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Net income attributable to ATC | $ | 0.16 | $ | 0.21 | $ | 0.61 | $ | 0.84 | ||||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | ||||||||||||||||
BASIC | 401,552 | 396,106 | 398,375 | 395,947 | ||||||||||||
DILUTED | 405,716 | 408,942 | 406,948 | 418,357 | ||||||||||||
| (1) | Selling, general, administrative and development expense includes $10,546 and $11,696 of stock-based compensation expense for the three months ended December 31, 2009 and December 31, 2008, respectively, and $60,670 and $54,807 of stock-based compensation expense for the twelve months ended December 31, 2009 and December 31, 2008, respectively. |
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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
| Twelve Months Ended December 31, | ||||||||
| 2009 | 2008 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income | $ | 247,127 | $ | 347,415 | ||||
Stock-based compensation expense | 60,670 | 54,807 | ||||||
Depreciation, amortization and accretion | 414,619 | 405,332 | ||||||
Deferred income taxes related to discontinued operations | (3,140 | ) | (107,914 | ) | ||||
Other non-cash items reflected in statements of operations | 186,245 | 116,025 | ||||||
Increase in net deferred rent asset | (9,716 | ) | (22,751 | ) | ||||
Decrease (increase) in restricted cash | 7,612 | (2,048 | ) | |||||
Increase in assets | (42,397 | ) | (19,573 | ) | ||||
(Decrease) increase in liabilities | (18,894 | ) | 1,965 | |||||
Cash provided by operating activities | 842,126 | 773,258 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Payments for purchase of property and equipment and construction activities | (250,262 | ) | (243,484 | ) | ||||
Payments for acquisitions | (295,603 | ) | (42,817 | ) | ||||
Proceeds from sale of available-for-sale securities and other long term assets | 9,103 | 5,373 | ||||||
Deposits, restricted cash and investments | (6,304 | ) | 5,988 | |||||
Cash used for investing activities | (543,066 | ) | (274,940 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Proceeds from issuance of senior debt | 900,000 | — | ||||||
Borrowings under credit facilities | — | 575,000 | ||||||
Repayments of notes payable, credit facilities and capital leases | (931,199 | ) | (327,453 | ) | ||||
Purchases of Class A common stock | (213,288 | ) | (714,655 | ) | ||||
Proceeds from stock options, warrants and stock purchase plan | 65,973 | 82,928 | ||||||
Deferred financing costs and other financing activities | (16,428 | ) | (3,992 | ) | ||||
Cash used for financing activities | (194,942 | ) | (388,172 | ) | ||||
Net effect of changes in foreign currency exchange rates on cash and cash equivalents | 98 | (192 | ) | |||||
NET INCREASE IN CASH AND CASH EQUIVALENTS | 104,216 | 109,954 | ||||||
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR | 143,077 | 33,123 | ||||||
CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 247,293 | $ | 143,077 | ||||
CASH PAID FOR INCOME TAXES | $ | 40,214 | $ | 35,062 | ||||
CASH PAID FOR INTEREST | $ | 242,649 | $ | 248,551 | ||||
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UNAUDITED SELECTED FINANCIAL INFORMATION
(In thousands, except where noted. Totals may not add due to rounding.)
SELECTED BALANCE SHEET DETAIL:
| December 31, 2009 | |||
Long-term obligations summary, including current portion: | |||
Commercial Mortgage Pass-Through Certificates, Series 2007-1 | $ | 1,750,000 | |
Senior Unsecured Revolving Credit Facility | 550,000 | ||
Senior Unsecured Term Loan | 325,000 | ||
4.625% Senior Notes due 2015 | 599,210 | ||
7.000% Senior Notes due 2017 | 500,000 | ||
7.250% Senior Notes due 2019 | 295,038 | ||
5.000% Convertible Notes due 2010 (1) | 59,683 | ||
7.250% Senior Subordinated Notes due 2011 | 288 | ||
XCEL Telecom Credit Facility (2) | 73,367 | ||
Other debt, including capital leases | 58,995 | ||
Total debt | $ | 4,211,581 | |
Cash and cash equivalents | 247,293 | ||
Net debt (Total debt less cash and cash equivalents) | $ | 3,964,288 | |
| (1) | The Company’s 5.000% Convertible Notes due 2010 matured on February 15, 2010. The Company used cash on hand to repay the full amount outstanding on its 5.000% Convertible Notes due 2010. |
| (2) | The Indian rupee-denominated debt was an outstanding obligation of XCEL Telecom Private Limited (“XCEL”) at the time of the Company’s acquisition of XCEL. |
| Fourth Quarter 2009 | Full Year 2009 | |||||
Share count rollforward:(In millions of shares) | ||||||
Total shares outstanding, beginning of period | 401.1 | 397.0 | ||||
Shares repurchased | (0.7 | ) | (6.6 | ) | ||
Shares issued (1) | 1.2 | 11.2 | ||||
Total shares outstanding, end of period | 401.6 | 401.6 | ||||
| (1) | Full year 2009 includes 7.9 million shares issued in connection with the conversion of $162 million of the Company’s 3.0% Convertible Notes. |
Aggregate potential dilutive shares from other securities (1):(In millions of shares) | ||
Vested and exercisable stock options with an average exercise price of $29.20 per share (2) | 5.9 | |
Warrants – reflects shares issuable upon exercise with an effective exercise price of $4.48 per share (3) | 1.7 | |
Potential dilution, as of December 31, 2009 | 7.6 | |
| (1) | Excludes shares related to the Company’s 5.000% Convertible Notes due 2010, which were convertible at $51.50 per share prior to their maturity on February 15, 2010. |
| (2) | Excludes (a) 5.5 million unvested stock options and (b) 2.0 million unvested restricted stock units outstanding, as of December 31, 2009. |
| (3) | Subsequent to December 31, 2009 and prior to the expiration of the warrants on February 10, 2010, the Company issued 1.6 million shares upon warrant exercises. |
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UNAUDITED SELECTED FINANCIAL INFORMATION
(In thousands, except where noted. Totals may not add due to rounding.)
SELECTED INCOME STATEMENT 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 rental and management segment revenue and Adjusted EBITDA:
| Three Months Ended December 31, 2009 | Twelve Months Ended December 31, 2009 | |||||
Rental and management segment revenue growth components: | ||||||
Rental and management segment revenue Core Growth | 10.2 | % | 10.1 | % | ||
Estimated impact of fluctuations in foreign currency exchange rates | 1.6 | % | (1.5 | )% | ||
Impact of straight-line revenue recognition | (1.4 | )% | (1.2 | )% | ||
Impact of material one-time revenue item | — | 0.4 | % | |||
Rental and management segment revenue growth | 10.4 | % | 7.8 | % | ||
Adjusted EBITDA growth components: | ||||||
Adjusted EBITDA Core Growth | 10.6 | % | 9.8 | % | ||
Estimated impact of fluctuations in foreign currency exchange rates | 1.4 | % | (1.0 | )% | ||
Net impact of straight-line revenue and expense recognition | (1.9 | )% | (1.4 | )% | ||
Impact of material one-time revenue item | — | 0.7 | % | |||
Adjusted EBITDA growth | 10.1 | % | 8.1 | % | ||
Rental and management segment straight-line revenue and expense:
In accordance with GAAP, the Company recognizes rental and management segment revenue and expense related to non-cancelable 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 customer 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, 2008. A summary of rental and management segment 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 December 31, | Twelve Months Ended December 31, | |||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||
Rental and management segment straight-line revenue | $ | 7,587 | $ | 11,963 | $ | 36,306 | $ | 50,369 | ||||
Rental and management segment straight-line expense | 6,200 | 5,863 | 26,590 | 27,618 | ||||||||
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||
Selling, general, administrative and development expense breakout: | ||||||||||||
Rental and management segment overhead | $ | 22,686 | $ | 18,112 | $ | 86,186 | $ | 68,104 | ||||
Network development services segment overhead | 1,433 | 1,291 | 5,816 | 4,351 | ||||||||
Corporate and development expenses (1) | 11,672 | 13,863 | 49,022 | 53,112 | ||||||||
Stock-based compensation expense (2) | 10,546 | 11,696 | 60,670 | 54,807 | ||||||||
Total | $ | 46,337 | $ | 44,962 | $ | 201,694 | $ | 180,374 | ||||
| (1) | Includes a $3.1 million one-time reduction during the twelve months ended December 31, 2008 related to payroll tax expense. |
| (2) | Includes $6.6 million related to the modification of certain stock option awards during the twelve months ended December 31, 2009. |
10
UNAUDITED SELECTED FINANCIAL INFORMATION
(In thousands, except where noted. Totals may not add due to rounding.)
SELECTED INCOME STATEMENT DETAIL:
| Three Months Ended December 31, | ||||||
| 2009 | 2008 | |||||
Interest expense detail: | ||||||
Commercial Mortgage Pass-Through Certificates, Series 2007-1 | $ | 24,547 | $ | 24,541 | ||
Senior Unsecured Revolving Credit Facility and Term Loan, net of interest rate swap agreements | 7,980 | 11,319 | ||||
7.500% Senior Notes due 2012 (1) | — | 4,219 | ||||
7.125% Senior Notes due 2012 (1) | 4,233 | 8,801 | ||||
4.625% Senior Notes due 2015 | 5,422 | — | ||||
7.000% Senior Notes due 2017 | 8,750 | 8,750 | ||||
7.250% Senior Notes due 2019 | 5,529 | — | ||||
5.000% Convertible Notes due 2010 (2) | 746 | 746 | ||||
3.000% Convertible Notes due 2012 (1) | — | 1,239 | ||||
XCEL Telecom Credit Facility | 2,596 | — | ||||
Other debt, including capital leases and amortization of deferred financing costs | 1,656 | 2,401 | ||||
Total | $ | 61,459 | $ | 62,016 | ||
| (1) | During 2009, the Company (a) repurchased and redeemed all of its outstanding 7.500% Senior Notes due 2012; (b) redeemed all of its outstanding 7.125% Senior Notes due 2012; and (c) redeemed all of its outstanding 3.000% Convertible Notes due 2012. |
| (2) | The Company’s 5.000% Convertible Notes due 2010 matured on February 15, 2010. The Company used cash on hand to repay the full amount outstanding on its 5.000% Convertible Notes due 2010. |
SELECTED CASH FLOW DETAIL:
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||
Payments for purchase of property and equipment and construction activities: | ||||||||||||
Discretionary – capital projects | $ | 37,810 | $ | 41,678 | $ | 129,808 | $ | 90,701 | ||||
Discretionary – ground lease purchases | 13,940 | 10,863 | 49,123 | 41,733 | ||||||||
Redevelopment | 5,671 | 15,880 | 30,702 | 72,933 | ||||||||
Capital improvement | 8,783 | 8,592 | 33,107 | 32,545 | ||||||||
Corporate | 1,632 | 1,278 | 7,522 | 5,572 | ||||||||
Total | $ | 67,836 | $ | 78,291 | $ | 250,262 | $ | 243,484 | ||||
SELECTED PORTFOLIO DETAIL – OWNED SITES:
| Three Months Ended December 31, 2009 | Wireless | Broadcast | DAS | Total | ||||||
Beginning balance, October 1, 2009 | 25,773 | 423 | 178 | 26,374 | ||||||
New construction | 355 | — | 11 | 366 | ||||||
Acquisitions | 524 | 6 | — | 530 | ||||||
Adjustments/Reductions | (14 | ) | — | — | (14 | ) | ||||
Ending balance, December 31, 2009 | 26,638 | 429 | 189 | 27,256 | ||||||
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UNAUDITED RECONCILIATIONS TO GAAP MEASURES AND THE CALCULATION OF DEFINED FINANCIAL MEASURES
(In thousands, except where noted. Totals may not add due to rounding.)
The reconciliation of Operating income to Adjusted EBITDA and the calculation of Rental and Management Segment Operating Profit, Rental and Management Segment Gross Margin, Network Development Services Segment Operating Profit, Network Development Services Segment Gross Margin, Recurring Free Cash Flow, Recurring Free Cash Flow per Share and Adjusted EBITDA Margin are as follows:
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||
Operating income | $ | 176,449 | $ | 152,741 | $ | 672,258 | $ | 606,754 | ||||||||
Depreciation, amortization and accretion | 106,745 | 104,174 | 414,619 | 405,332 | ||||||||||||
Other operating expenses | 10,939 | 7,881 | 19,168 | 11,189 | ||||||||||||
Stock-based compensation expense | 10,546 | 11,696 | 60,670 | 54,807 | ||||||||||||
Plus: Interest income, TV Azteca, net | 3,541 | 3,542 | 14,210 | 14,253 | ||||||||||||
Adjusted EBITDA | $ | 308,220 | $ | 280,034 | $ | 1,180,925 | $ | 1,092,335 | ||||||||
Corporate expenses (1) | 11,672 | 13,863 | 49,022 | 53,112 | ||||||||||||
Network development services segment overhead | 1,433 | 1,291 | 5,816 | 4,351 | ||||||||||||
Network development services segment operating expenses | 7,061 | 8,121 | 32,385 | 26,831 | ||||||||||||
Network development services segment revenue | (12,776 | ) | (14,011 | ) | (55,694 | ) | (46,469 | ) | ||||||||
Rental and Management segment overhead | 22,686 | 18,112 | 86,186 | 68,104 | ||||||||||||
Rental and Management Segment Gross Margin | $ | 338,296 | $ | 307,410 | $ | 1,298,640 | $ | 1,198,264 | ||||||||
Adjusted EBITDA (from above) | $ | 308,220 | $ | 280,034 | $ | 1,180,925 | $ | 1,092,335 | ||||||||
Corporate expenses (1) | 11,672 | 13,863 | 49,022 | 53,112 | ||||||||||||
Rental and Management segment overhead | 22,686 | 18,112 | 86,186 | 68,104 | ||||||||||||
Rental and Management segment operating expenses | 100,442 | 90,445 | 383,990 | 363,024 | ||||||||||||
Interest income, TV Azteca, net | (3,541 | ) | (3,542 | ) | (14,210 | ) | (14,253 | ) | ||||||||
Rental and Management segment revenue | (435,197 | ) | (394,313 | ) | (1,668,420 | ) | (1,547,035 | ) | ||||||||
Network development services segment overhead | 1,433 | 1,291 | 5,816 | 4,351 | ||||||||||||
Network Development Services Segment Gross Margin | $ | 5,715 | $ | 5,890 | $ | 23,309 | $ | 19,638 | ||||||||
Adjusted EBITDA (from above) | $ | 308,220 | $ | 280,034 | $ | 1,180,925 | $ | 1,092,335 | ||||||||
Interest expense | (61,459 | ) | (62,016 | ) | (249,803 | ) | (253,584 | ) | ||||||||
Interest income | 5 | 454 | 1,722 | 3,413 | ||||||||||||
Cash paid for income taxes | (7,454 | ) | (7,620 | ) | (40,214 | ) | (35,062 | ) | ||||||||
Straight-line revenue | (7,587 | ) | (11,963 | ) | (36,306 | ) | (50,369 | ) | ||||||||
Straight-line expense | 6,200 | 5,863 | 26,590 | 27,618 | ||||||||||||
Redevelopment capital expenditures | (5,671 | ) | (15,880 | ) | (30,702 | ) | (72,933 | ) | ||||||||
Capital improvement capital expenditures | (8,783 | ) | (8,592 | ) | (33,107 | ) | (32,545 | ) | ||||||||
Corporate capital expenditures | (1,632 | ) | (1,278 | ) | (7,522 | ) | (5,572 | ) | ||||||||
Recurring Free Cash Flow | $ | 221,839 | $ | 179,002 | $ | 811,583 | $ | 673,301 | ||||||||
Divided by weighted average diluted shares outstanding | 405,716 | 408,942 | 406,948 | 418,357 | ||||||||||||
Recurring Free Cash Flow per Share | $ | 0.55 | $ | 0.44 | $ | 1.99 | $ | 1.61 | ||||||||
Adjusted EBITDA (from above) | $ | 308,220 | $ | 280,034 | $ | 1,180,925 | $ | 1,092,335 | ||||||||
Divided by total operating revenues | 447,973 | 408,324 | 1,724,114 | 1,593,504 | ||||||||||||
Adjusted EBITDA Margin | 69 | % | 69 | % | 68 | % | 69 | % | ||||||||
| (1) | Excludes stock-based compensation expense. |
12
UNAUDITED RECONCILIATIONS OF OUTLOOK TO GAAP MEASURES AND DEFINED FINANCIAL MEASURES
(In millions, except where noted. Totals may not add due to rounding.)
The reconciliation of Income from continuing operations to Adjusted EBITDA outlook is as follows:
| Full Year 2010 | ||||||||
Income from continuing operations (1) | $ | 300 | to | $ | 310 | |||
Interest expense | 240 | to | 230 | |||||
Depreciation, amortization and accretion | 425 | to | 435 | |||||
Non-cash stock-based compensation expense | 55 | to | 60 | |||||
Other, including other operating expenses, interest income, loss on retirement of long-term obligations, income (loss) on equity method investments, other income (expense), income tax provision and non-controlling interest in net earnings of subsidiaries | 240 | to | 255 | |||||
Adjusted EBITDA | $ | 1,260 | to | $ | 1,290 | |||
| (1) | The Company has not reconciled Adjusted EBITDA Outlook to net income because it does not provide guidance for net income (loss) from discontinued operations, net, which is the reconciling item between income from continuing operations and net income. As items that impact income (loss) from discontinued operations are out of the Company’s control and/or cannot be reasonably predicted, the Company is unable to provide such guidance. Accordingly, a reconciliation to net income is not available without unreasonable effort. |
The calculation of Core Growth outlook is as follows:
| Rental and Management Segment Revenue | Adjusted EBITDA | |||||
Outlook midpoint Core growth | 8.4 | % | 7.0 | % | ||
Estimated impact of fluctuations in foreign currency exchange rates | 0.8 | % | 0.6 | % | ||
Impact of straight-line revenue and expense recognition | 0.6 | % | 1.1 | % | ||
Impact of material one-time item (1) | (0.4 | )% | (0.7 | )% | ||
Outlook midpoint growth | 9.4 | % | 8.0 | % | ||
| (1) | Material one-time item related to a termination agreement with one of the Company’s broadcast customers. |
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