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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form 10-Q
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(Mark One):
[X]Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934. For the quarterly period ended March 31, 2001.
[_]Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
Commission File Number: 001-14195
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American Tower Corporation
(Exact name of registrant as specified in its charter)
Delaware 65-0723837
(State or other jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
116 Huntington Avenue
Boston, Massachusetts 02116
(Address of principal executive offices)
Telephone Number (617) 375-7500
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days: Yes [X] No [_]
Outstanding
at
Class of Common Stock May 1, 2001
- --------------------- -----------
Class A Common Stock................................................ 180,359,306
Class B Common Stock................................................ 8,073,635
Class C Common Stock................................................ 2,267,813
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Total............................................................. 190,700,754
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AMERICAN TOWER CORPORATION
INDEX
Page No.
--------
PART I. FINANCIAL INFORMATION
Item 1. Unaudited Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets March 31, 2001 and December
31, 2000.............................................................. 1
Condensed Consolidated Statements of Operations Three Months Ended
March 31, 2001 and 2000............................................... 2
Condensed Consolidated Statements of Cash Flows Three Months Ended
March 31, 2001 and 2000............................................... 3
Notes to Condensed Consolidated Financial Statements................... 4
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations......................................................... 9
Item 3. Quantitative and Qualitative Disclosures about Market Risk............. 21
PART II. OTHER INFORMATION
Item 1. Legal Proceedings...................................................... 23
Item 5. Other Information...................................................... 23
Item 6. Exhibits and Reports on Form 8-K....................................... 24
Signatures..................................................................... 26
PART I. FINANCIAL INFORMATION
ITEM 1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS--(Unaudited)
(In Thousands, Except Share Data)
March 31, December 31,
2001 2000
---------- ------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents............................ $ 991,936 $ 82,038
Restricted cash...................................... 128,971 46,036
Short-term investments............................... 122,337
Accounts receivable, net of allowance for doubtful
accounts of $23,321 and $19,809, respectively....... 206,454 194,011
Prepaid and other current assets..................... 64,315 42,377
Inventories.......................................... 52,515 47,872
Cost and earnings in excess of billings on
uncompleted contracts and unbilled receivables...... 61,504 43,652
Deferred income taxes................................ 15,166 15,166
---------- ----------
Total current assets................................. 1,643,198 471,152
---------- ----------
Property and equipment, net........................... 2,431,049 2,296,670
Goodwill and other intangible assets, net............. 2,562,367 2,505,681
Notes receivable...................................... 118,547 123,945
Deposits and other long-term assets................... 83,601 73,298
Investments........................................... 66,954 49,538
Deferred income taxes................................. 171,098 140,395
---------- ----------
Total............................................... $7,076,814 $5,660,679
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term obligations............. $ 8,358 $ 11,178
Accounts payable and accrued expenses................ 160,900 161,337
Accrued tower construction costs..................... 40,169 45,315
Accrued interest..................................... 45,545 31,708
Billings in excess of costs on uncompleted contracts
and unearned revenue................................ 53,690 48,248
---------- ----------
Total current liabilities............................ 308,662 297,786
---------- ----------
Long-term obligations................................. 3,554,347 2,457,045
Other long-term liabilities........................... 39,268 12,472
---------- ----------
Total liabilities.................................... 3,902,277 2,767,303
---------- ----------
Minority interest in subsidiaries..................... 16,677 16,346
---------- ----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred Stock; $0.01 par value; 20,000,000 shares
authorized; no shares issued or outstanding.........
Class A Common Stock; $0.01 par value; 500,000,000
shares authorized; 180,473,428 and 170,180,549
shares issued, 180,328,831 and 170,035,952 shares
outstanding, respectively........................... 1,805 1,701
Class B Common Stock; $0.01 par value; 50,000,000
shares authorized; 8,073,635 and 8,095,005 shares
issued and outstanding, respectively................ 81 81
Class C Common Stock; $0.01 par value; 10,000,000
shares authorized; 2,267,813 shares issued and
outstanding......................................... 23 23
Additional paid-in capital........................... 3,542,854 3,174,622
Accumulated other comprehensive loss................. (15,999)
Accumulated deficit.................................. (366,564) (295,057)
Less: Treasury stock (144,597 shares at cost)........ (4,340) (4,340)
---------- ----------
Total stockholders' equity........................... 3,157,860 2,877,030
---------- ----------
Total............................................... $7,076,814 $5,660,679
========== ==========
See notes to condensed consolidated financial statements.
1
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS--Unaudited
(In Thousands, Except Per Share Data)
Three Months
Ended March 31,
------------------
2001 2000
-------- --------
REVENUES:
Rental and management.................................... $ 91,211 $ 53,707
Network development services............................. 106,514 38,152
Satellite and fiber network access services.............. 64,743 23,658
-------- --------
Total operating revenues............................. 262,468 115,517
-------- --------
OPERATING EXPENSES:
Operating expenses excluding depreciation and
amortization, development and corporate general and
administrative expenses:
Rental and management.................................. 45,590 28,492
Network development services........................... 96,498 32,200
Satellite and fiber network access services............ 56,313 19,016
Depreciation and amortization............................ 94,999 55,198
Development expense...................................... 2,745 988
Corporate general and administrative expense............. 5,127 3,431
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Total operating expenses............................. 301,272 139,325
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LOSS FROM OPERATIONS....................................... (38,804) (23,808)
-------- --------
OTHER INCOME (EXPENSE):
Interest expense......................................... (66,679) (32,150)
Interest income and other, net........................... 8,407 2,586
Interest income, TV Azteca, net of interest expense of
$292 and $160, respectively............................. 3,538 2,308
Minority interest in net earnings of subsidiaries........ (58) (36)
-------- --------
TOTAL OTHER EXPENSE........................................ (54,792) (27,292)
-------- --------
LOSS BEFORE INCOME TAXES AND EXTRAORDINARY LOSSES.......... (93,596) (51,100)
INCOME TAX BENEFIT......................................... 22,089 13,440
-------- --------
LOSS BEFORE EXTRAORDINARY LOSSES........................... (71,507) (37,660)
EXTRAORDINARY LOSSES ON EXTINGUISHMENT OF DEBT, NET OF
INCOME TAX BENEFIT OF $2,892.............................. (4,338)
-------- --------
NET LOSS................................................... $(71,507) $(41,998)
======== ========
BASIC AND DILUTED LOSS PER COMMON SHARE AMOUNTS
Loss before extraordinary losses......................... $ (0.38) $ (0.24)
Extraordinary losses..................................... (0.03)
-------- --------
NET LOSS................................................... $ (0.38) $ (0.27)
======== ========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING................. 187,179 156,515
======== ========
See notes to condensed consolidated financial statements.
2
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS--Unaudited
(In Thousands)
Three Months Ended
March 31,
---------------------
2001 2000
--------- ----------
CASH FLOWS USED FOR OPERATING ACTIVITIES
Net loss.............................................. $ (71,507) $ (41,998)
Non-cash items reflected in statement of operations... 81,613 49,701
Increase in current assets............................ (53,669) (17,512)
Increase (decrease) in current liabilities............ 6,056 (2,620)
--------- ----------
Cash used for operating activities...................... (37,507) (12,429)
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CASH FLOWS USED FOR INVESTING ACTIVITIES:
Payments for purchase of property and equipment and
construction activities.............................. (143,558) (102,757)
Payments for acquisitions, net of cash acquired....... (100,004) (737,909)
Short-term investments................................ (122,337)
Deposits and other.................................... (23,442) (59,576)
--------- ----------
Cash used for investing activities...................... (389,341) (900,242)
--------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under credit facilities.................... 165,000 1,050,000
Proceeds from senior notes offering................... 1,000,000
Proceeds from convertible notes offering.............. 450,000
Repayment of notes payable and credit facilities...... (74,839) (435,526)
Net proceeds from equity offerings and stock options.. 363,309 6,895
Restricted cash....................................... (82,935)
Deferred financing costs and other.................... (33,789) (43,177)
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Cash provided by financing activities................... 1,336,746 1,028,192
--------- ----------
NET INCREASE IN CASH AND CASH EQUIVALENTS............... 909,898 115,521
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD.......... 82,038 25,212
--------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD................ $ 991,936 $ 140,733
========= ==========
CASH PAID FOR INCOME TAXES.............................. $ 212 $ 873
========= ==========
CASH PAID FOR INTEREST.................................. $ 56,635 $ 11,315
========= ==========
NON-CASH TRANSACTIONS:
Issuance of common stock, warrants and assumption of
options for acquisitions............................. $ 1,239 $ 66,544
Issuance of common stock for equity investment........ 3,788
Change in fair value of cash flow hedges (net of
tax)................................................. 15,999
Capital leases........................................ 2,296 1,456
See notes to condensed consolidated financial statements.
3
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--Unaudited
1. Basis of Presentation and Accounting Policies
The accompanying condensed consolidated financial statements have been
prepared by American Tower Corporation (the Company or American Tower) without
audit, pursuant to the rules and regulations of the Securities and Exchange
Commission (SEC). The financial information included herein is unaudited;
however, the Company believes such information and the disclosures are
adequate to make the information presented not misleading and reflect all
adjustments (consisting only of normal recurring adjustments) that are
necessary for a fair presentation of financial position and results of
operations for such periods. Results of interim periods may not be indicative
of results for the full year. These condensed consolidated financial
statements and related notes should be read in conjunction with the Company's
2000 Annual Report on Form 10-K.
Use of Estimates--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the condensed consolidated
financial statements and accompanying notes. Actual results may differ from
those estimates, and such differences could be material to the accompanying
condensed consolidated financial statements.
Loss Per Common Share--Basic and diluted loss per common share has been
computed by dividing the Company's net loss by the weighted average number of
common shares outstanding during the period. Diluted per share amounts are
computed by adjusting the weighted average number of common shares for
dilutive potential common shares outstanding during the period, if any. In
computing diluted per share amounts, the Company uses the treasury stock
method, whereby unexercised options and warrants are assumed to be exercised
at the beginning of the period or at issuance, if later. The assumed proceeds
are then used to purchase common shares at the average market price during the
period. Shares issuable upon exercise of options, warrants and other dilutive
securities have been excluded from the computation of diluted loss per common
share as the effect is anti-dilutive. Had options, warrants and other dilutive
securities been included in the computation, weighted average shares for the
diluted computation would have increased by approximately 35.6 million and
40.9 million for the three month periods ended March 31, 2001 and 2000,
respectively.
Short-Term Investments--Amounts included in short-term investments include
commercial paper, certificates of deposit and marketable debt securities with
maturity dates in excess of three-months from the date of purchase. Commercial
paper, certificates of deposit and marketable debt securities that the Company
has the positive intent and ability to hold to maturity are classified as
"held-to-maturity" and reported at cost.
Recent Accounting Pronouncement--On January 1, 2001, the Company adopted the
provisions of SFAS No.133 "Accounting for Derivative Instruments and Hedging
Activities." This statement establishes accounting and reporting standards for
derivative instruments. Specifically, it requires that an entity recognize all
derivatives as either assets or liabilities on the balance sheet at fair
value. The accounting for changes in the fair market value of a derivative
(that is unrealized gains or losses) is recorded as a component of an entity's
net income or other comprehensive income, depending upon designation (as
defined in the statement). Such adoption resulted in a charge to other
comprehensive income of $7.9 million, net of tax, from the cumulative effect
of adopting this standard.
The Company is exposed to interest rate risk relating to variable interest
rates on its credit facilities. As part of its overall strategy to manage the
level of exposure to the risk of interest rate fluctuations, the Company uses
interest rate swaps, caps and collars, which qualify and are designated as
cash flow hedges. The Company also uses swaptions to manage interest rate
risk, which have not been designated as cash flow hedges.
During the quarter ended March 31, 2001, the Company recorded an unrealized
loss of approximately $8.1 million (net of a tax benefit of approximately $4.4
million) in other comprehensive loss for the change in fair value of cash
flows hedges. Hedge ineffectiveness resulted in a gain of approximately $0.5
million for the quarter ended March 31, 2001 and was recorded in "interest
income and other, net." The Company records the changes in fair value of its
derivative instruments that are not accounted for as hedges in "interest
income and other, net." At March 31, 2001 the fair value of the Company's
derivative instruments represented a liability of
4
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--Unaudited--(Continued)
approximately $25.0 million and is included in "other long-term liabilities".
The Company estimates that $1.0 million of net derivative losses included in
other comprehensive loss will be reclassified into the statement of operations
within the next twelve months.
Reclassifications--Certain reclassifications have been made to the 2000
condensed consolidated financial statements to conform to the 2001
presentation.
2. Income Taxes
The Company provides for income taxes at the end of each interim period
based on the estimated effective tax rate for the full fiscal year. Cumulative
adjustments to the Company's estimate are recorded in the interim period in
which a change in the estimated annual effective rate is determined.
3. Inventories
Inventories, which consist primarily of finished goods and raw material
component parts, are stated at the lower of cost or market, with cost being
determined on the first-in, first-out (FIFO) basis. The components of
inventories are as follows (in thousands):
March 31, 2001 December 31, 2000
-------------- -----------------
Raw materials.................................. $19,075 $25,947
Work in process................................ 31,409 20,887
Finished goods................................. 2,031 1,038
------- -------
Total........................................ $52,515 $47,872
======= =======
4. Acquisitions
General--The acquisitions consummated during the first quarter of 2001 have
been accounted for by the purchase method of accounting. The purchase prices
have been allocated to the net assets acquired, principally intangible and
tangible assets, and the liabilities assumed based on their estimated fair
values at the date of acquisition. The excess of purchase price over the
estimated fair value of the net assets acquired has been recorded as goodwill
and other intangible assets. For certain acquisitions, the condensed
consolidated financial statements reflect the preliminary allocation of
purchase prices, as the appraisals of assets acquired have not been finalized.
The Company does not expect any changes in depreciation and amortization, as a
result of such appraisals, to be material to the Company's consolidated
results of operations.
During the first quarter of 2001, the Company acquired various communication
sites and related businesses and satellite and fiber network access service
businesses for an aggregate preliminary purchase price of approximately $101.9
million. The total purchase price includes the payment of $100.7 million in
cash and the issuance of 43,899 shares of Class A common stock valued at
approximately $1.2 million.
The following unaudited pro forma summary for the three months ended March
31, 2001 and 2000 presents the condensed consolidated results of operations as
if all of the 2001 acquisitions referred to above had occurred as of January
1, 2000 after giving effect to certain adjustments, including depreciation and
amortization and interest expense on any debt incurred to fund the
acquisitions. These unaudited pro forma results have been prepared for
comparative purposes only and do not purport to be indicative of what would
have occurred had the acquisitions been made as of January 1, 2000 or of
results which may occur in the future.
Three Months Three Months
Ended Ended
March 31, March 31,
2001 2000
------------ ------------
In thousands, except
per share data:
Revenues................ $262,612 $116,092
Net loss before extraor-
dinary losses.......... $(72,354) $(39,879)
Net loss................ $(72,354) $(44,217)
Basic and diluted loss
per common share before
extraordinary losses... $ (0.39) $ (0.25)
Basic and diluted loss
per common share....... $ (0.39) $ (0.28)
5
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--Unaudited--(Continued)
In connection with the AT&T and InterPacket Networks transactions the Company
has recorded liabilities related primarily to assumed contractual obligations
of the acquirees that provide no economic benefit to the Company of
approximately $7.6 million as of March 31, 2001. During the three months ended
March 31, 2001, the Company recorded charges against these liabilities of
approximately $0.7 million. At March 31, 2001, approximately $0.6 million of
the remaining liability relates to the AT&T transaction and is expected to be
fully utilized in the second quarter 2001.
ALLTEL transaction--In December 2000, the Company entered into an agreement
to acquire the rights from ALLTEL to up to 2,193 communications towers through
a 15-year sublease agreement. Under the agreement, the Company will sublease
these towers for consideration of up to $657.9 million in cash. ALLTEL also
granted the Company the option to acquire the rights through sublease
agreements to approximately 200 additional towers to be selected by the
Company on a site-by-site basis for cash consideration of up to $300,000 per
tower. In the second quarter of 2001, the Company leased 597 towers and paid
ALLTEL $179.1 million in cash. The remaining closings are expected to occur
during the balance of 2001.
Since April 1, 2001 (excluding the ALLTEL transaction discussed above), the
Company has consummated several acquisitions for an aggregate preliminary
purchase price of $42.1 million. In addition, the Company is also party to
various agreements, including the remaining portions of the ALLTEL
transaction, relating to the acquisition of assets and businesses from third
parties for an estimated aggregate cost of approximately $637.0 million. Such
transactions are subject to the satisfaction of customary closing conditions,
which are expected to be met during the balance of 2001.
The Company is also pursuing the acquisition of other properties and
businesses in new and existing locations, although no definitive material
agreements have been agreed to with respect to any such acquisitions.
5. Business Segments
The Company operates in three business segments; rental and management (RM),
network development services (Services), and satellite and fiber network
access services (SFNA). The RM segment provides for leasing and subleasing of
antennae sites on multi-tenant towers and other properties for a diverse range
of customers primarily in the wireless communications and broadcast
industries. The Services segment offers a broad range of network development
services, including radio frequency engineering, network design, site
acquisition, construction, zoning and other regulatory approvals, component
part sales and antennae installation. The SFNA segment offers satellite and
fiber network services to telecommunications companies, internet service
providers, broadcasters and maritime customers.
The accounting policies applied in compiling segment information below are
similar to those described in the Company's 2000 Annual Report on Form 10-K.
In evaluating financial performance, management focuses on operating profit
(loss), excluding depreciation and amortization, development and corporate
general and administrative expenses. This measure of operating profit (loss)
is also before interest income and other, net, interest expense, minority
interest in net earnings of subsidiaries, income taxes and extraordinary
losses. Beginning in the fourth quarter of 2000, for segment reporting
purposes the RM segment includes interest income TV Azteca, net. Accordingly,
reclassifications have been made to the 2000 segment information to conform to
the 2001 presentation.
The Company's reportable segments are strategic business units that offer
different services. They are managed separately because each segment requires
different resources, skill sets and marketing strategies. All reported segment
revenues are generated from external customers.
6
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--Unaudited--(Continued)
Summarized financial information concerning the Company's reportable
segments as of and for the three months ended March 31, 2001 and 2000, is
shown in the following table. The "Other" column below represents amounts
excluded from specific segments such as income taxes, extraordinary losses,
corporate general and administrative expense, development expense,
depreciation and amortization and interest. In addition, "Other" also includes
corporate assets such as cash and cash equivalents, tangible and intangible
assets and income tax accounts which have not been allocated to specific
segments (in thousands).
RM Services SFNA Other Total
---------- -------- -------- --------- ----------
2001
Revenues................... $ 91,211 $106,514 $ 64,743 $ 262,468
Operating profit (loss) ... 49,159 10,016 8,430 $(139,112) (71,507)
Assets..................... 4,057,416 741,685 649,110 1,628,603 7,076,814
2000
Revenues................... $ 53,707 $ 38,152 $ 23,658 $ 115,517
Operating profit (loss).... 27,523 5,952 4,642 $ (80,115) (41,998)
Assets..................... 2,763,657 594,688 233,004 663,791 4,255,140
6. Financing Transactions
Equity offering--In January 2001, the Company completed a public offering of
10.0 million shares of its Class A common stock at $36.50 per share. The net
proceeds of the offering (after deduction of offering expenses) were
approximately $360.8 million. Proceeds from the offering have and will be used
to finance the construction of towers, fund pending and future acquisitions
and for general corporate purposes.
9 3/8% Senior Notes offering--In January 2001, the Company completed a private
notes placement of $1.0 billion 9 3/8% Senior Notes (Senior Notes), issued at
100% of their face amount. The Senior Notes mature on February 1, 2009.
Interest on the Senior Notes is payable semiannually on February 1 and August
1, commencing on August 1, 2001. The indenture governing the Senior Notes
contains certain restrictive convenants including restrictions on the
Company's ability to incur more debt, guarantee debt, pay dividends and make
certain investments. Proceeds from the Senior Notes placement have and will be
used to finance construction of towers, fund pending and future acquisitions
and for general corporate purposes. The amount outstanding under the Senior
Notes was $1.0 billion as of March 31, 2001. Such outstanding amount is
included in long-term obligations in the accompanying March 31, 2001 condensed
consolidated balance sheet.
Mexican credit facility--In February 2001, the Company's Mexican subsidiary
consummated a loan agreement that provides for borrowings of $95.0 million
(U.S. Dollars). If additional lenders are made party to the agreement, the
size of the facility may increase to $140.0 million. The Company has committed
to loan its Mexican subsidiary up to $45.0 million if additional lenders are
not made party to the agreement. The Company's committment will be reduced on
a dollar-for-dollar basis if additional lenders join the loan agreement. This
facility requires the maintenance of various covenants and ratios and is
guaranteed and collateralized by all of the assets of the Mexican subsidiary.
Interest rates on the loan are determined at the Mexican subsidiary's option
at either LIBOR plus margin or the Base Rate plus margin (as defined in the
agreement). The amount borrowed under the loan will be due in 2003. The amount
outstanding under the Mexican credit facility was approximately $95.0 million
as of March 31, 2001. Such outstanding amount is included in long-term
obligations in the accompanying March 31, 2001 condensed consolidated balance
sheet.
7. Information Presented Pursuant to the Indenture for the Senior Notes
The following table sets forth information that is presented solely to
address certain reporting requirements contained in the indenture for our
Senior Notes. This information presents certain financial data of the Company
on a consolidated basis and on a restricted group basis, as defined in the
indenture governing the senior notes. All
7
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--Unaudited--(Continued)
of the Company's subsidiaries are part of the restricted group, except its
wholly owned subsidiary, Verestar and its subsidiaries, whose operations
constitute all of our satellite and fiber network access services business
segment.
Three Months Ended
March 31, 2001
-----------------------
Restricted
Consolidated Group (1)
------------ ----------
(in thousands)
Statement of Operations Data:
Operating revenues.................................... $ 262,468 $ 197,725
---------- ----------
Operating expenses:
Operating expenses excluding depreciation and
amortization, development and corporate general and
administrative expenses.............................. 198,401 142,088
Depreciation and amortization......................... 94,999 80,845
Development expense................................... 2,745 2,456
Corporate general and administrative expense.......... 5,127 5,127
---------- ----------
Total operating expenses............................ 301,272 230,516
---------- ----------
Loss from operations.................................. (38,804) (32,791)
Interest expense...................................... (66,679) (64,081)
Interest income and other, net........................ 8,407 8,423
Interest income, TV Azteca, net of interest expense of
$292................................................. 3,538 3,538
Minority interest in net earning of subsidiaries...... (58) (58)
---------- ----------
Loss before income taxes and extraordinary losses..... $ (93,596) $ (84,969)
========== ==========
March 31, 2001
-----------------------
Restricted
Consolidated Group
------------ ----------
(in thousands)
Balance Sheet Data:
Cash and cash equivalents............................. $ 991,936 $ 981,528
Restricted cash....................................... 128,971 128,971
Property and equipment, net........................... 2,431,049 2,144,021
Total assets.......................................... 7,076,814 6,427,704
Long-term obligations, including current portion...... 3,562,705 3,454,214
Net debt(2)........................................... 2,441,798 2,343,715
Total stockholders' equity............................ 3,157,860 3,157,860
- --------
(1) Corporate overhead allocable to Verestar and interest expense related to
intercompany borrowings by Verestar (unrestricted subsidiary) have not
been excluded from results shown for the restricted group.
(2) Net debt represents long-term obligations, including current portion, less
cash and cash equivalents and restricted cash.
8. Comprehensive Loss
Other comprehensive loss consists of changes in the fair market value of
derivatives and the impact of the Company's adoption of SFAS No. 133 discussed
in note 1. The components of the Company's comprehensive loss are as follows
(in thousands):
Three Months Ended Three Months Ended
March 31, 2001 March 31, 2000
------------------ ------------------
Net loss................................. $(71,507) $(41,998)
Unrealized losses on derivatives
accounted for as hedges, net of tax .... (8,147)
-------- --------
Comprehensive loss before cumulative
effect adjustment....................... (79,654) (41,998)
Cumulative effect adjustment recorded
upon the adoption of SFAS No. 133 (net
of an income tax benefit of $4,227)..... (7,852)
-------- --------
Comprehensive loss....................... $(87,506) $(41,998)
======== ========
8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This Quarterly Report on Form 10-Q contains forward-looking statements
relating to our goals, beliefs, plans or current expectations and other
statements that are not of historical facts. For example, when we use words
such as "project," "believe," "anticipate," "expect," "estimate," "intend,"
"should," "would," "could" or "may," or other words that convey uncertainty of
future events or outcome, we are making forward-looking statements. We refer
you to the caption entitled "Factors that May Affect Future Results" below for
important factors that could cause actual results to differ materially from
those indicated by our forward-looking statements made herein. Forward-looking
statements represent management's current expectations and are inherently
uncertain. We do not undertake any obligation to update forward-looking
statements made by us.
We are a leading wireless and broadcast communications infrastructure
company operating in three business segments.
. Rental and management. We operate the largest network of wireless
communications towers in North America and are the largest independent
operator of broadcast towers in North America, based on number of
towers.
. Network development services. We provide comprehensive network
development services and components for wireless service providers and
broadcasters.
. Satellite and fiber network access services. Our Verestar subsidiary is
a leading provider of integrated satellite and fiber network access
services based upon the number of teleport antennae and facilities. We
provide these services to telecommunications companies, Internet service
providers, broadcasters and maritime customers, both domestic and
international.
Results of Operations
As of March 31, 2001, the Company owned and/or operated approximately 11,400
communications sites, as compared to approximately 8,900 communications sites
as of March 31, 2000. The acquisitions consummated in 2001 and 2000 have
significantly affected operations for the three months ended March 31, 2001,
as compared to the three months ended March 31, 2000. See the notes to the
condensed consolidated financial statements and the Company's Annual Report on
Form 10-K for a description of the acquisitions consummated in 2001 and 2000.
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Three Months Ended March 31, 2001 and 2000 (dollars in thousands)--Unaudited
Three Months Ended
March 31, Amount of Percentage
-------------------- Increase Increase
2001 2000 (Decrease) (Decrease)
--------- --------- ---------- ----------
Revenues:
Rental and management.............. $ 91,211 $ 53,707 $37,504 70%
Network development services....... 106,514 38,152 68,362 180
Satellite and fiber network access
services.......................... 64,743 23,658 41,085 174
--------- --------- -------
Total revenues..................... 262,468 115,517 146,951 128
--------- --------- -------
Operating Expenses:
Rental and management.............. 45,590 28,492 17,098 60
Network development services....... 96,498 32,200 64,298 200
Satellite and fiber network access
services.......................... 56,313 19,016 37,297 197
--------- --------- -------
Total operating expenses excluding
depreciation and amortization,
development and corporate general
and administrative expenses....... 198,401 79,708 118,693 149
--------- --------- -------
Depreciation and amortization...... 94,999 55,198 39,801 72
Development expense................ 2,745 988 1,757 178
Corporate general and administra-
tive expense...................... 5,127 3,431 1,696 49
Interest expense................... 66,679 32,l50 34,529 107
Interest income and other, net..... 8,407 2,586 5,821 225
Interest income, TV Azteca, net of
$292 and $160 of interest expense,
respectively ..................... 3,538 2,308 1,230 53
Minority interest in net earnings
of subsidiaries................... 58 36 22 61
Income tax benefit................. 22,089 13,440 8,649 64
Extraordinary losses............... 4,338 N/A N/A
--------- --------- -------
Net loss........................... $ (71,507) $ (41,998) $29,509 70%
========= ========= =======
Rental and Management Revenue
Rental and management revenue for the three months ended March 31, 2001 was
$91.2 million, an increase of $37.5 million from the three months ended March
31, 2000. The increase resulted primarily from two factors: the acquisition
and construction of additional towers from April 1, 2000 to March 31, 2001 and
increased leasing activity on new and existing towers. From April 1, 2000 to
March 31, 2001, we continued to implement our growth strategy by aggressively
acquiring and building new towers. During that period we acquired more than
1,500 towers and constructed more than 1,700 towers. This acquisition and
construction activity has increased the scope, depth and strength of our
national and international tower footprint, providing us with a much larger
base of towers generating revenue for the three months ended March 31, 2001 as
compared to the three months ended March 31, 2000.
In the long term, we believe that our leasing revenues are likely to grow at
a more rapid rate than revenues from other segments of our business because of
increasing utilization of existing tower capacity, recent and pending
acquisitions and build-to-suit and other construction activities.
Network Development Services Revenue
Network development services revenue for the three months ended March 31,
2001 was $106.5 million, an increase of $68.4 million from the three months
ended March 31, 2000. The significant growth in revenues during the three
months ended March 31, 2001 as compared to the three months ended March 31,
2000 resulted primarily from strategic acquisitions and increased demand and
volume for our installation and other turn-key services.
During 2000, we acquired several companies that expanded our in-house
service capabilities to include: radio frequency engineering and design, steel
fabrication, broadcast tower erection and manufacturing and sale
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of tower lighting systems. These acquisitions have provided significant
increases in revenues for the three months ended March 31, 2001. In addition
to acquisitions, increased demand for other core turn-key services, such as
installation of customer equipment, also provided a significant increase in
revenue in 2001.
Satellite and Fiber Network Access Services Revenue
Satellite and fiber network access services revenue for the three months
ended March 31, 2001 was $64.7 million, an increase of $41.1 million from the
three months ended March 31, 2000. The majority of the increase resulted from
the consummation of several key acquisitions that occurred in 2001 and 2000
including: General Telecom, U.S. Electrodynamics, Publicom, Interpacket
Networks and Swisscom. These acquisitions significantly increased our service
capabilities, revenue base, and geographical scope of customers, leading to
significant incremental revenues in 2001. We also experienced an increase in
demand in the internet and data requirements of our internet service provider
customers in 2001.
Rental and Management Expense
Rental and management expense for the three months ended March 31, 2001 was
$45.6 million, an increase of $17.1 million from the three months ended March
31, 2000. A significant portion of the increase resulted from incremental
operating expenses incurred in the three months ended March 31, 2001 for
towers that were acquired or constructed from April 1, 2000 to March 31, 2001
as discussed above. The remaining component of the increase reflected an
increase in operating expenses for towers acquired or constructed in the first
quarter of 2000 and an increase in operating expenses for towers that existed
as of March 31, 2000.
Network Development Services Expense
Network development services expense for the three months ended March 31,
2001 was $96.5 million, an increase of $64.3 million from the three months
ended March 31, 2000. The significant increase in expense is primarily due to
the consummation of strategic acquisitions as discussed above, overall
increases in the amount of services provided to customers and increases in the
overhead costs necessary to support both internal construction and external
sales.
The decline in margins of the network development services segment is
primarily attributable to the acquisition of a lower margin business,
increased price competition for components and other core turn-key services
and, as discussed above, greater overhead costs.
Satellite and Fiber Network Access Services Expense
Satellite and fiber network access services expense for the three months
ended March 31, 2001 was $56.3 million, an increase of $37.3 million from the
three months ended March 30, 2000. The primary reason for the increase was the
strategic acquisitions discussed above. Other components of the increase are
the building of infrastructure to help manage the growth of this segment and
overall increases in volume.
The decrease in margins is attributable to the acquisition of lower margin
businesses in 2001 and 2000 coupled with additional expenses related to build
infrastructure as discussed above.
Depreciation and Amortization
Depreciation and amortization for the three months ended March 31, 2001 was
$94.9 million, an increase of $39.8 million from the three months ended March
31, 2000. A component of the increase is attributable to an increase in
depreciation expense of $19.0 million. This is primarily a result of the
Company's purchase and acquisition of approximately $913.0 million of property
and equipment from April 1, 2000 to March 31, 2001. The other component of the
increase is the increased amortization of $20.8 million, resulting from our
recording and amortizing approximately $806.0 million of goodwill and other
intangible assets related to acquisitions consummated from April 1, 2000 to
March 31, 2001.
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Development Expense
Development expense for the three months ended March 31, 2001 was $2.7
million, an increase of $1.8 million from the three months ended March 31,
2000. The primary reason for the increase is the additional expenses incurred
in the three months ended March 31, 2001 related to acquisition integration,
data gathering for tower sites and other acquisition related costs which under
generally accepted accounting principles are not capitalized.
Corporate General and Administrative Expense
Corporate general and administrative expense for the three months ended
March 31, 2001 were $5.1 million, an increase of $1.7 million from the three
months ended March 31, 2000. The majority of the increase is a result of
higher personnel and information technology costs associated with supporting
our increasing number of towers, expanding revenue base, and growth strategy.
Interest Expense
Interest expense for the three months ended March 31, 2001 was $66.7
million, an increase of $34.5 million from the three months ended March 31,
2000. The primary reason for the increase is the increased interest expense
from our credit facilities, convertible notes and senior notes of an aggregate
of $32.2 million. The remaining component of the increase is the increased
interest on other notes payable and capital leases.
Interest Income and Other, net
Interest income and other, net for the three months ended March 31, 2001,
was $8.4 million, an increase of $5.8 million from the three months ended
March 31, 2000. The increase is primarily related to an increase in interest
earned on invested cash on hand of approximately $9.5 million offset by losses
on equity investments, losses on sale of assets and decreases in the fair
value of derivative instruments not accounted for as hedges.
Interest Income, TV Azteca, net
Interest income, TV Azteca, net for the three months ended March 31, 2001
was $3.5 million, an increase of $1.2 million from the three months ended
March 31, 2001. The increase is primarily a result of a full quarter of
interest earned on the $119.0 million note receivable by us in 2001 as
compared to one month of interest earned in 2000.
Income Tax Benefit
The income tax benefit for the three months ended March 31, 2001 was $22.1
million, an increase of $8.6 million from the three months ended March 31,
2000. The primary reason for the increase is a result of the
increase in our loss before income taxes and extraordinary losses offset by an
increase in amortization of non-deductible goodwill arising from stock
acquisitions. The effective tax rate differs in both periods from the
statutory rate primarily due to the effect of non-deductible items,
principally the amortization of intangible assets, on certain stock
acquisitions for which we have recorded no tax benefit.
In assessing the realizability of the deferred tax asset, we analyzed our
forecast of future taxable income and potential tax planning strategies and
concluded that recoverability of the net deferred tax asset is more likely
than not.
Extraordinary Losses on Extinguishment of Debt, Net
We incurred extraordinary losses on the extinguishment of debt, net in the
first quarter 2000 of $4.3 million. The losses were incurred as a result of an
amendment and restatement of our primary credit facility ($3.0 million, net of
a tax benefit of $2.0 million) and our early retirement of debt assumed as
part of the UNIsite merger ($1.3 million, net of a tax benefit of $1.0
million).
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Liquidity and Capital Resources
Our liquidity needs arise from our acquisition-related activities, debt
service, working capital and capital expenditures associated principally with
our tower construction program. As of March 31, 2001, we had approximately
$991.9 million in cash and cash equivalents, working capital of approximately
$1.3 billion, and had approximately $260.1 million of available borrowings
under our credit facilities.
Historically, we have met our operational liquidity needs primarily with
internally generated funds and have financed our acquisitions and our
construction program with a combination of capital funds from sales of our
equity and debt securities and bank borrowings. We expect that this trend will
continue in 2001.
Our 2001 capital budget provides for expenditures of approximately $600.0
million, which includes towers to be built under existing build-to-suit
agreements. In addition, based on the transactions executed to date, we expect
to close on transactions pending as of March 31, 2001 of approximately $858.2
million in 2001. Lastly, we believe that debt services requirements will be
significant in 2001. We believe our current cash and cash equivalents and
existing borrowing capacity under our credit facilities will be sufficient to
meet these cash requirements. If we were to effect more than one or possibly
two major new acquisitions in the next twelve months, we would likely require
additional funds from external sources.
For the three months ended March 31, 2001, cash flows used for operating
activities were $37.5 million, as compared to cash flows used for operating
activities of $12.4 million for the three months ended March 31, 2000. The
change is primarily attributable to an increase in interest expense and an
increase in other current assets.
For the three months ended March 31, 2001, cash flows used for investing
activities were $389.3 million, as compared to $900.2 million for the three
months ended March 31, 2000. The decrease in 2001 is primarily due to a
decrease in cash expended for mergers and acquisitions of approximately $637.9
million offset by an increase in short-term investments and property and
equipment expenditures.
For the three months ended March 31, 2001, cash flows provided by financing
activities were $1.3 billion as compared to $1.0 billion for the three months
ended March 31, 2000. The change is primarily related to the decrease in
repayments on our notes payable and credit facilities offset by an increase in
restricted cash.
As of March 31, 2001, we had outstanding the indebtedness described below
under "Credit Facilities" and "Equity Offering and Note Placement". In
addition as of March 31, 2001, we had outstanding $212.7 million principal
amount of our 6.25% convertible notes due October 15, 2009, $260.2 million
principal amount of our 2.25% convertible notes due October 15, 2009, $450.0
million principal amount of our 5% convertible notes due February 1, 2010 and
other debt of approximately $197.3 million. We may need to raise cash from
external sources to meet our debt service obligations and to pay the principal
amounts of our indebtedness when due.
Credit Facilities. Our credit facilities provide us with a borrowing
capacity of up to $2.0 billion, with the option to increase the capacity up to
an additional $500.0 million, subject to lender approval. Borrowings under the
credit facilities are subject to certain borrowing base restrictions, such as
operating cash flow and tower construction cost levels. Our credit facilities
currently include a $650.0 million credit facility which was fully available
(subject to the borrowing base restrictions) on March 31, 2001, maturing on
June 30, 2007, an $850.0 million multi-draw Term Loan A, which was fully drawn
on March 31, 2001, maturing on June 30, 2007, and a $500.0 million Term Loan
B, which was fully drawn on March 31, 2001 maturing on December 31, 2007. The
credit facilities are scheduled to amortize quarterly commencing in March
2003.
We are currently in the process of negotiating the terms of an additional
$500.0 million of borrowings under our credit facilities as discussed in the
preceding paragraph, although no agreements have been executed. If an
agreement is reached, we expect the additional borrowing to occur during the
summer of 2001. We cannot, however, assure you we will negotiate and close any
additional borrowings.
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Our credit facilities contain certain financial and operational covenants
and other restrictions with which the borrower subsidiaries and restricted
subsidiaries must comply, whether or not there are any borrowings outstanding.
We and the restricted subsidiaries have guaranteed all of the loans. We have
secured the loans by liens on substantially all assets of the borrower
subsidiaries and the restricted subsidiaries and substantially all outstanding
capital stock and other debt and equity interests of all of our direct and
indirect subsidiaries.
Under our credit facilities, we are also required to maintain an interest
reserve for our convertible notes and our senior notes. These funds can only
be used to make scheduled interest payments on our outstanding convertible
notes and senior notes. As of March 31, 2001 we had approximately $128.9
million of restricted cash related to such interest reserve.
In February 2001, our Mexican subsidiary, American Tower Corporation de
Mexico, S. de R.L. de C.V., which we refer to as ATC Mexico, and two of its
subsidiaries consummated a loan agreement with a group of banks providing a
credit facility of an initial aggregate amount of $95.0 million. If additional
lenders are made party to the agreement, the size of the facility may increase
to $140.0 million. We have committed to ATC Mexico to loan up to $45.0 million
if additional lenders are not made party to the agreement. Our commitment will
be reduced on a dollar-for-dollar basis if additional lenders join the
ATC Mexico loan agreement. This loan agreement requires maintenance of various
financial covenants and ratios and is guaranteed and collateralized by
substantially all of the assets of ATC Mexico and the assets of its
subsidiaries. All amounts borrowed under the loan agreement are due on
September 30, 2003. The lenders' commitment to make loans under the loan
agreement expires on March 31, 2002. As of March 31, 2001, an aggregate of
$95.0 million was outstanding under the loan agreement.
Equity Offering and Note Placement. In January 2001, we completed a public
offering of 10.0 million shares of our Class A common stock for total net
proceeds of approximately $360.8 million. We also completed a private
placement of $1.0 billion of senior notes that mature in February 2009 for
total net proceeds of $969.0 million. These notes require semi-annual interest
payments and contain certain financial and operational covenants and other
restrictions similar to those in our credit facilities. We have used and will
use the proceeds from these two transactions to finance the construction of
towers, fund pending and future acquisitions and for general corporate
purposes.
ATC Separation--We continue to be obligated under the ATC Separation
agreement for certain tax liabilities to CBS Corporation and American Radio
Systems. As of March 31, 2001 no matters covered under this indemnification
have been brought to our attention.
Acquisitions and Construction. We expect that the consummated acquisitions
and current and future construction activities will have a material impact on
liquidity. We believe that the acquisitions, once integrated, will have a
favorable impact on liquidity and will offset the initial effects of the
funding requirements. We also believe that the construction activitites may
initially have an adverse effect on our future liquidity as newly constructed
towers will initially decrease overall liquidity. However, as such sites
become fully operational and achieve higher utilization, we expect that they
will generate tower cash flow and, in the long-term, increase liquidity. As of
March 31, 2001, we were a party to various agreements relating to the
acquisition of assets or businesses from various third parties and were
involved in the construction of numerous towers, pursuant to build-to-suit
agreements and for other purposes (see note 4 of the condensed consolidated
financial statements).
Economic Conditions. The slow down in the economy could reduce consumer
demand for wireless services, thereby causing providers to delay
implementation of new systems and technologies. We believe that the economic
slow down in 2001 has harmed, and may continue to harm, the financial
condition of some wireless service providers.
Factors That May Affect Future Results
We operate in a rapidly changing environment that involves a number of
risks, some of which are beyond our control. The following discussion
highlights some of the risks that may affect future operating results.
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DECREASE IN DEMAND FOR TOWER SPACE WOULD MATERIALLY AND ADVERSELY AFFECT OUR
OPERATING RESULTS AND WE CANNOT CONTROL THAT DEMAND
Many of the factors affecting the demand for tower space, and to a lesser
extent our services business, affect our operating results. Those factors
include:
. consumer demand for wireless services;
. the financial condition of wireless service providers and their
preference for owning rather than leasing antenna sites;
. the growth rate of wireless communications or of a particular wireless
segment;
. the number of wireless service providers in a particular segment,
nationally or locally;
. governmental licensing of broadcast rights;
. increased use of roaming and resale arrangements by wireless service
providers. These arrangements enable a provider to serve customers
outside its license area, to give licensed providers the right to enter
into arrangements to serve overlapping license areas and to permit
nonlicensed providers to enter the wireless marketplace. Wireless
service providers might consider such roaming and resale arrangements as
superior to constructing their own facilities or leasing antenna space
from us;
. zoning, environmental and other government regulations;
. any new legislation, or interpretation of existing federal
communications laws, that would give wireless service providers the
right to place their antennae on public utility poles and other
structures at regulated rates; and
. technological changes.
The demand for antenna space is dependent, to a significantly lesser extent,
on the needs of television and radio broadcasters. Among other things,
technological advances, including the development of satellite-delivered
radio, may reduce the need for tower-based broadcast transmission. We could
also be affected adversely should the development of digital television be
delayed or impaired, or if demand for it were to be less than anticipated
because of delays, disappointing technical performance or cost to the
consumer.
A significant general slow down in the economy could negatively affect the
foregoing factors influencing demand for tower space and tower related
services. For example, such a slow down could reduce consumer demand for
wireless services, thereby causing providers to delay implementation of new
systems and technologies. We believe that the economic slow down in 2001 has
already harmed, and may continue to harm, the financial condition of some
wireless service providers.
OUR SUBSTANTIAL LEVERAGE AND DEBT SERVICE OBLIGATIONS MAY ADVERSELY AFFECT OUR
CASH FLOW AND OUR ABILITY TO MAKE PAYMENTS ON OUR SENIOR NOTES
As of March 31, 2001 we had outstanding $3.6 billion of consolidated debt.
Our substantial level of indebtedness increases the possibility that we may be
unable to generate cash sufficient to pay when due the principal of, interest
on or other amounts due in respect of our indebtedness. We may also obtain
additional long-term debt and working capital lines of credit to meet future
financing needs. This would have the effect of increasing our total leverage.
Our substantial leverage could have significant negative consequences,
including:
. increasing our vulnerability to general adverse economic and industry
conditions;
. limiting our ability to obtain additional financing;
. requiring the dedication of a substantial portion of our cash flow from
operations to service our indebtedness, thereby reducing the amount of
our cash flow available for other purposes, including capital
expenditures;
. requiring us to sell debt or equity securities or to sell some of our
core assets, possibly on unfavorable terms, to meet payment obligations;
. limiting our flexibility in planning for, or reacting to, changes in our
business and the industries in which we compete; and
. placing us at a possible competitive disadvantage with less leveraged
competitors and competitors that may have better access to capital
resources.
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A significant portion of our outstanding indebtedness bears interest at
floating rates. As a result, our interest payment obligations on such
indebtedness will increase if interest rates increase.
RESTRICTIVE COVENANTS IN OUR DOMESTIC CREDIT FACILITIES AND OUR SENIOR NOTES
COULD ADVERSELY AFFECT OUR BUSINESS BY LIMITING FLEXIBILITY
The indenture for our senior notes and our domestic credit facilities
contain restrictive covenants that limit our ability to take various actions
and engage in various types of transactions. These restrictions include:
. paying dividends and making distributions or other restricted payments;
. incurring more debt, guaranteeing indebtedness and issuing preferred
stock;
. issuing stock of some types of subsidiaries;
. making specified types of investments;
. creating liens;
. entering into transactions with affiliates;
. entering into sale-leaseback transactions; and
. merging, consolidating or selling assets.
These covenants could have an adverse effect on our business by limiting our
ability to take advantage of financing, merger and acquisition or other
corporate opportunities.
BUILD-TO-SUIT CONSTRUCTION PROJECTS AND MAJOR ACQUISITIONS FROM WIRELESS
SERVICE PROVIDERS INCREASE OUR DEPENDENCE ON A LIMITED NUMBER OF CUSTOMERS,
THE LOSS OF WHICH COULD MATERIALLY DECREASE REVENUES, AND MAY ALSO INVOLVE
LESS FAVORABLE TERMS
Our focus on major build-to-suit projects for wireless service providers and
related acquisitions entail several unique risks. First is our greater
dependence on a limited number of customers and the risk that customer losses
could materially decrease revenues. Another risk is that our agreements with
these wireless service providers have lease and control terms that are more
favorable to them than the terms we give our tenants generally. In addition,
although we have the benefit of an anchor tenant in build-to-suit projects, we
may not be able to find a sufficient number of additional tenants. In fact,
one reason wireless service providers may prefer build-to-suit arrangements is
to share or escape the costs of an undesirable site. A site may be undesirable
because it has high construction costs or may be considered a poor location by
other providers.
OUR EXPANDED CONSTRUCTION PROGRAM INCREASES OUR EXPOSURE TO RISKS THAT COULD
INCREASE COSTS AND ADVERSELY AFFECT OUR EARNINGS AND GROWTH
Our expanded construction activities involve substantial risks. These risks
include:
. increasing our debt and the amount of payments required on it;
. increasing competition for construction sites and experienced tower
construction, companies, resulting in significantly higher costs and
failure to meet time schedules;
. failing to meet time schedules, which could result in our paying
significant penalties to prospective tenants, particularly in build-to-
suit situations; and
. possible lack of sufficient experienced personnel to manage an expanded
construction program.
IF WE ARE UNABLE TO CONSTRUCT OR ACQUIRE NEW TOWERS AT THE PACE, IN THE
LOCATIONS AND AT THE COSTS WE DESIRE, OUR BUSINESS WOULD BE ADVERSELY AFFECTED
Our growth strategy depends in part on our ability to construct and acquire
towers in locations and on a time schedule that meets the requirements of our
customers. If our tower construction and acquisition projects fail to meet the
requirements of our customers, or fail to meet their requirements at our
projected costs, our business would be adversely affected. If we are unable to
build new towers where and when our customers require them, or where and when
we believe the best opportunity to add tenants exists, we could fail to meet
our
16
contractual obligations under build-to-suit agreements, thereby incurring
substantial penalties and possibly contract terminations. In addition, we
could lose opportunities to lease space on our towers. Our ability to
construct a tower at a location, on a schedule, and at a cost we project can
be affected by a number of factors beyond our control, including:
. zoning, and local permitting requirements and national regulatory
approvals;
. environmental opposition;
. availability of skilled construction personnel and construction
equipment;
. adverse weather conditions; and
. increased competition for tower sites, construction materials and labor.
INCREASING COMPETITION IN THE SATELLITE AND FIBER NETWORK ACCESS SERVICES
MARKET MAY SLOW VERESTAR'S GROWTH AND ADVERSELY AFFECT ITS BUSINESS
In the satellite and fiber network access services market, Verestar competes
with other satellite communications companies that provide similar services,
as well as other communications service providers. Some of Verestar's existing
and potential competitors consist of companies from whom Verestar currently
leases satellite and fiber network access in connection with the provision of
Verestar's services to its customers. Increased competition could result in
Verestar being forced to reduce the fees it charges for its services and may
limit Verestar's ability to obtain, on economical terms, services that are
critical to its business. We anticipate that Verestar's competitors may
develop or acquire services that provide functionality that is similar to that
provided by Verestar's services and that those competitive services may be
offered at significantly lower prices or bundled with other services. Many of
the existing and potential competitors have financial and other resources
significantly greater than those available to Verestar.
IF WE CANNOT KEEP RAISING CAPITAL, OUR GROWTH WILL BE IMPEDED
Without additional capital, we would need to curtail our acquisition and
construction programs that are essential for our long-term success. We expect
to use borrowed funds to satisfy a substantial portion of our capital needs.
However, we must continue to satisfy financial ratios and to comply with
financial and other covenants in order to do so. If our revenues and cash flow
do not meet expectations, we may lose our ability to borrow money or to do so
on terms we consider to be favorable. Conditions in the capital markets also
will affect our ability to borrow, as well as the terms of those borrowings.
All of these factors could also make it difficult or impossible for us
otherwise to raise capital, particularly on terms we would consider favorable.
IF WE CANNOT SUCCESSFULLY INTEGRATE ACQUIRED SITES OR BUSINESSES OR MANAGE OUR
OPERATIONS AS WE GROW, OUR BUSINESS WILL BE ADVERSELY AFFECTED AND OUR GROWTH
MAY SLOW OR STOP
A significant part of our growth strategy is the continued pursuit of
strategic acquisitions of independent tower operators and consolidators,
wireless service providers and service and teleport businesses. We cannot
assure you, however, that we will be able to integrate successfully acquired
businesses and assets into our existing business. Our growth has placed, and
will continue to place, a significant strain on our management and our
operating and financial systems. Successful integration of these and any
future acquisitions will depend primarily on our ability to manage these
assets and combined operations and, with respect to the services and satellite
and fiber network access services businesses, to integrate new management and
employees into our existing operations.
IF OUR CHIEF EXECUTIVE OFFICER LEFT, WE WOULD BE ADVERSELY AFFECTED BECAUSE WE
RELY ON HIS REPUTATION AND EXPERTISE, AND BECAUSE OF OUR RELATIVELY SMALL
SENIOR MANAGEMENT TEAM
The loss of our chief executive officer, Steven B. Dodge, has a greater
likelihood of having a material adverse effect upon us than it would on most
other companies of our size because of our comparatively smaller executive
group and our reliance on Mr. Dodge's expertise. Our growth strategy is highly
dependent on the efforts of Mr. Dodge. Our ability to raise capital also
depends significantly on the reputation of Mr. Dodge.
17
You should be aware that we have not entered into an employment agreement with
Mr. Dodge. The tower industry is relatively new and does not have a large
group of seasoned executives from which we could recruit a replacement for Mr.
Dodge.
EXPANDING OPERATIONS INTO FOREIGN COUNTRIES COULD CREATE EXPROPRIATION,
GOVERNMENTAL REGULATION, FUNDS INACCESSIBILITY, FOREIGN EXCHANGE EXPOSURE AND
MANAGEMENT PROBLEMS
Our expansion into Mexico, Canada and Brazil, and other possible foreign
operations in the future, could result in adverse financial consequences and
operational problems not experienced in the United States. We have made a
substantial loan to a Mexican company and have acquired and are constructing a
sizable number of towers in that country. We have invested in a Canadian joint
venture that intends to acquire and construct towers in that country. We also
acquired the rights to 156 communications towers in Brazil and entered into a
build-to-suit agreement for an additional 400 towers. As a result of recent
acquisitions by Verestar, we have network operation centers in Europe, Asia,
South America and Africa. We may also engage in comparable transactions in
other countries in the future. Among the risks of foreign operations are
governmental expropriation and regulation, inability to repatriate earnings or
other funds, currency fluctuations, difficulty in recruiting trained
personnel, and language and cultural differences, all of which could adversely
affect these operations.
NEW TECHNOLOGIES COULD MAKE OUR TOWER ANTENNA LEASING SERVICES LESS DESIRABLE
TO POTENTIAL TENANTS AND RESULT IN DECREASING REVENUES
The development and implementation of signal combining technologies, which
permit one antenna to service two different transmission frequencies and,
thereby, two customers, may reduce the need for tower-based broadcast
transmission and hence demand for our antenna space.
Mobile satellite systems and other new technologies could compete with land-
based wireless communications systems, thereby reducing the demand for tower
lease space and other services we provide. The Federal Communications
Commission has granted license applications for several low-earth orbiting
satellite systems that are intended to provide mobile voice or data services.
In addition, the emergence of new technologies could reduce the need for
tower-based transmission and reception and have an adverse effect on our
operations. The growth in delivery of video services by direct broadcast
satellites could also adversely affect demand for our antenna space.
WE COULD HAVE LIABILITY UNDER ENVIRONMENTAL LAWS
As the owner, lessee and operator of real property and facilities, we are
subject to federal, state and local and foreign environmental laws relating to
the management, use, storage, disposal, emission and remediation of, and
exposure to, hazardous and non-hazardous substances, materials and waste. We
are also subject to related registration, permitting, record keeping and
financial assurance requirements. See "Legal Proceedings" for a description of
a civil complaint filed against us by the District Attorney for the County of
Santa Clara, California regarding certain alleged recordkeeping, registration,
hazardous materials management and filing violations under California
environmental laws. Various environmental laws require us to investigate,
remove or remediate soil and groundwater contaminated by hazardous substances
or wastes on property we own or lease or which is associated with tower
operations, and may subject us to penalties and fines for violations of those
environmental laws. Some of those laws impose cleanup responsibility and
liability without regard to whether the owner, lessee or operator of the
property or facility knew of or was responsible for the contamination, or
whether operations at the property have been discontinued or the property has
been transferred. The owner, lessee or operator of contaminated property also
may be subject to common law claims by third parties based on damages and
costs resulting from off-site migration of the contamination. In connection
with our former and current ownership, lease or operation of our properties,
we may be liable for those types of environmental costs. Fines or penalties
resulting from any failure to comply with those environmental laws and
addressing claims or obligations arising under them could have a material
adverse effect on our financial condition, results of operations and
liquidity.
18
OUR BUSINESS IS SUBJECT TO GOVERNMENT REGULATIONS AND CHANGES IN CURRENT OR
FUTURE LAWS OR REGULATIONS COULD HARM OUR BUSINESS
We are subject to federal, state and local and foreign regulation of our
business. Both the FCC and the FAA regulate towers used for wireless
communications and radio and television antennae. In addition, the FCC
separately regulates wireless communication devices operating on towers and
licenses and regulates television and radio stations broadcasting from towers.
Similar regulations exist in Mexico, Canada and other foreign countries
regarding wireless communications and the operation of communications towers.
Failure to comply with applicable requirements may lead to monetary penalties
and other sanctions, including being disqualified from holding licenses for
our Verestar business or registrations for our towers and may require us to
indemnify our customers against any such failure to comply. New regulations
may impose additional costly burdens on us, which may affect our revenues and
cause delays in our growth.
In January 2001, the FCC concluded investigations of several operators of
communications towers, including us. The FCC sent us a Notice of Apparent
Liability for Forfeiture preliminarily determining that we had failed to file
specified informational forms, had failed to properly post specified
information at various tower sites and on one occasion had failed to properly
light a tower. The FCC has proposed a fine of $0.2 million and intends to
undertake an additional review of our overall procedures for and degree of
compliance with the FCC's regulations. The proposed fine represents a
significant increase from the amount that otherwise might be imposed in
similar situations because of the number of violations and the FCC's negative
perception of our compliance. Depending on the outcome of the further
investigation, the FCC could take additional adverse action against us. We are
conducting our own internal investigation into our regulatory compliance
policies. As permitted by the FCC's regulations, on March 1, 2001 we filed a
response to the Notice of Apparent Liability for Forfeiture requesting that
the forfeiture be reduced. The matter remains under consideration by the FCC.
We intend to cooperate with any further investigation to resolve these
matters.
The construction and reconstruction of a substantial number of antennae
needed to deliver digital television service to our customers may require
state and local regulatory approvals. The FCC has indicated that it may adopt
preemptive guidelines. If adopted, these regulations may be more or less
restrictive than existing state and local regulations and may increase our
construction costs.
OUR COSTS COULD INCREASE AND OUR REVENUES COULD DECREASE DUE TO PERCEIVED
HEALTH RISKS FROM RADIO EMISSIONS, ESPECIALLY IF THESE PERCEIVED RISKS ARE
SUBSTANTIATED
Public perception of possible health risks associated with cellular and
other wireless communications media could slow the growth of wireless
companies, which could in turn slow our growth. In particular, negative public
perception of, and regulations regarding, these perceived health risks could
slow the market acceptance of wireless communications services.
If a connection between radio emissions and possible negative health
effects, including cancer, were established, our operations, costs and
revenues would be materially and adversely affected. We do not maintain any
significant insurance with respect to these matters.
CONTROL BY OUR PRINCIPAL STOCKHOLDERS COULD DETER MERGERS WHERE YOU COULD GET
MORE THAN CURRENT MARKET PRICE FOR YOUR STOCK
Steven B. Dodge, together with his affiliates, owned approximately 26.0% of
our total voting power as of February 28, 2001. Control by Mr. Dodge and
others may discourage a merger or other takeover of our company in which
holders of common stock might be paid a premium for their shares over then-
current market prices. Mr. Dodge, together with a limited number of our
directors, may be able to control or block the vote on mergers and other
matters submitted to the common stockholders.
19
Information Presented Pursuant to the Indenture for the Senior Notes
The following table sets forth information that is presented solely to
address certain reporting requirements contained in the indenture for our
senior notes. This information presents certain financial data for us on a
consolidated basis and on a restricted group basis, which means only for
American Tower and its subsidiaries that comprise the restricted group under
the indenture. All of our subsidiaries are part of this restricted group,
except Verestar and its subsidiaries, whose operations constitute all of our
satellite and fiber network access services business segment. This restricted
group data is not intended to represent an alternative measure of operating
results, financial position or cash flow from operations, as determined in
accordance with generally accepted accounting principles.
Three months ended
March 31, 2001
----------------------------------
Consolidated Restricted Group (1)
------------ --------------------
(in thousands)
Statement of Operations Data:
Operating revenues......................... $ 262,468 $ 197,725
----------- -----------
Operating expenses:........................
Operating expenses(2)...................... 198,401 142,088
Depreciation and amortization.............. 94,999 80,845
Development expense(3)..................... 2,745 2,456
Corporate general and administrative
expense................................... 5,127 5,127
----------- -----------
Total operating expense.................. 301,272 230,516
----------- -----------
Loss from operations....................... (38,804) (32,791)
Interest expense........................... (66,679) (64,081)
Interest income and other, net............. 8,407 8,423
Interest income--TV Azteca, net(4)......... 3,538 3,538
Minority interest in net earnings of
subsidiaries(5)........................... (58) (58)
----------- -----------
Loss before income taxes and extraordinary
losses.................................... $ (93,596) $ (84,969)
=========== ===========
March 31, 2001
------------------------------
Consolidated Restricted Group
------------- ----------------
Balance Sheet Data:
Cash and cash equivalents...................... $ 991,936 $ 981,528
Restricted cash................................ 128,971 128,971
Property and equipment, net.................... 2,431,049 2,144,021
Total assets................................... 7,076,814 6,427,704
Long-term obligations, including current
portion....................................... 3,562,705 3,454,214
Net debt(6).................................... 2,441,798 2,343,715
Total stockholders' equity..................... 3,157,860 3,157,860
- --------
(1) Corporate overhead allocable to Verestar and interest expense related to
intercompany borrowings by Verestar (unrestricted subsidiary) have not
been excluded from results shown for the restricted group.
(2) Consists of operating expenses other than depreciation and amortization,
and development and corporate general and administrative expenses.
(3) Development expense includes uncapitalized acquisition costs, costs to
integrate acquisitions, costs associated with new business initiatives,
abandoned acquisition costs and costs associated with tower site
inspections and related data gathering.
(4) Interest income, TV Azteca, net of interest expense of $292.
(5) Represents the minority interest in net earnings of our non-wholly-owned
subsidiaries.
(6) Net debt represents long-term obligations, including current portion, less
cash and cash equivalents and restricted cash.
20
Tower Cash Flow, Adjusted Consolidated Cash Flow and Non-Tower Cash Flow for
the Company and its restricted subsidiaries, as defined in the indenture for
our senior notes, are as follows:
Tower Cash Flow, for the three months ended March 31, 2001....... $ 49,159
===========
Consolidated Cash Flow, for the twelve months ended March 31,
2001............................................................ $ 216,331
Less: Tower Cash Flow, for the twelve months ended March 31,
2001.......................................................... (173,228)
Plus: four times Tower Cash Flow, for the three months ended
March 31, 2001................................................ 196,636
-----------
Adjusted Consolidated Cash Flow, for the twelve months ended
March 31, 2001.................................................. $ 239,739
===========
Non-Tower Cash Flow, for the twelve months ended March 31, 2001.. $ 27,202
===========
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risk from changes in interest rates on our long-
term debt obligations. We attempt to reduce these risks by utilizing
derivative financial instruments, namely interest rate caps, swaps and
swaptions pursuant to our policies. All derivative financial instruments are
for purposes other than trading.
For the three months ended March 31, 2001, we increased our borrowings under
our credit facilities by approximately $95.0 million. In addition, we also
completed a private placement of $1.0 billion of our senior notes issued at
100% of their face amount. We expect to use the proceeds from the above to
finance construction and acquisitions. However, in the short-term, we invested
the proceeds in marketable debt securities, commercial paper and cash and cash
equivalents.
The following table provides information as of March 31, 2001, about our
market risk exposure associated with changing interest rates. For long-term
debt obligations, the table presents principal cash flows and related average
interest rates by contractual maturity dates. For interest rate caps, swaps,
collars and swaptions, the table presents notional principal amounts and
weighted-average interest rates by contractual maturity dates.
As of March 31, 2001
Principal Payments and Interest Rate Detail by Contractual Maturity Dates (in
thousands)
Long-Term Debt 2001 2002 2003 2004 2005 Thereafter Total Fair Value
- -------------- ---------- ---------- ---------- -------- -------- ---------- ---------- ----------
Fixed Rate Debt(a)...... $ 389 $ 591 $ 641 $ 696 $ 37,107 $1,938,607 $1,978,031 $1,916,190
Average Interest
Rate(a)................ 7.60% 7.59% 7.58% 7.58% 7.55% 7.55%
Variable Rate Debt (a).. $ $ $ 151,000 $192,000 $243,000 $ 859,000 $1,445,000 $1,445,000
Aggregate Notional Amounts Associated with Interest Rate Caps, Swaps, Collars and Swaptions in Place
As of March 31, 2001 and Interest Rate Detail by Contractual Maturity Dates (in thousands)
Interest Rate CAPS
- ------------------
Notional Amount......... $ 364,980 $ 364,980(c)
Cap Rate................ 9.00% 9.00%
Interest Rate SWAPS
- -------------------
Notional Amount......... $ 395,000 $ 395,000(d) $ 365,000(e) $ (14,512)
Weighted-
Average Fixed Rate
Payable(b)............. 6.69% 6.69% 6.67%
Interest Rate COLLARS
- ---------------------
National Amount......... $ 465,000 $ 465,000(f) $ 185,000(g) $ (12,762)
Weighted-
Average Below Floor
Rate Payable, Above Cap
Rate Receivable(b)..... 6.35%-8.90% 6.35%-8.90% 6.46%-9.00%
Interest Rate SWAPTIONS
- -----------------------
Notional Amount......... $ 290,000(h) $ 2,302
Weighted-
Average Swaption
Rate(b)................ 6.00%
- -------
21
(a) March 31, 2001 variable rate debt consists of our domestic and Mexican
credit facilities ($1.45 billion) and fixed rate debt consists of the
2.25% and 6.25% convertible notes ($472.9 million), the 5.0% convertible
notes ($450.0 million), the senior notes ($1.0 billion) and mortgage
payables ($55.1 million). Interest on the credit facilities is payable in
accordance with the applicable London Interbank Offering Rate (LIBOR)
agreement or quarterly and accrues at our option either at LIBOR plus
margin (as defined) or the Base Rate plus margin (as defined). The
average interest rate in effect at March 31, 2001 for the credit
facilities was 8.86%. For the three months ended March 31, 2001, the
weighted average interest rate under the credit facilities was 9.42%. The
2.25% and 6.25% convertible notes each bear interest (after giving effect
to the accretion of the original discount on the 2.25% convertible notes)
at 6.25%, which is payable semiannually on April 15 and October 15 of
each year beginning April 15, 2000. The 5.0% convertible notes bear
interest at 5.0% which is payable semiannually on February 15 and August
15 of each year. The senior notes bear interest at 9 3/8% which is
payable semiannually on February 1 and August 1 of each year beginning
August 1, 2001. The mortgage payables bear interest at rates ranging from
7.93% to 8.42% and are payable on a monthly basis.
(b) Represents the weighted-average fixed range of interest based on contract
notional amount as a percentage of total notional amounts in a given
year.
(c) Includes notional amounts of $364,980 that will expire in February 2002.
(d) Includes notional amounts of $30,000 that will expire in March 2002.
(e) Includes notional amounts of $75,000 and $290,000 that will expire in
January and February 2003, respectively.
(f) Includes notional amounts of $185,000 and $95,000 that will expire in May
and July 2002, respectively.
(g) Includes notional amounts of $185,000 that will expire in May 2003.
(h) Includes notional amounts of $290,000 that will expire in August 2001.
We maintain a portion of our cash and cash equivalents and short-term
investments in financial instruments which are subject to interest rate risks.
Due to the relatively short duration of such instruments, fluctuations in
interest rates should not materially affect our financial condition or results
of operations.
Our foreign operations have not been significant to date. Accordingly,
foreign currency risk has not been material for the three months ended March
31, 2001.
Except as discussed above, for the three months ended March 31, 2001, we
have not incurred any material changes with respect to the interest rates,
long-term debt and interest rate caps and swaps disclosed under this section
in our Annual Report on Form 10-K. Accordingly, refer to such report for a
more detailed discussion.
22
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On April 23, 2001, the District Attorney for the County of Santa Clara,
California filed a civil complaint against the Company in the Superior Court
of California. The complaint alleges record keeping, registration, hazardous
materials management and filing violations under California environmental
laws. The alleged violations arise from our operation of equipment necessary
to provide back-up power generation at various sites located in the county.
The complaint also alleges the Company violated the state unfair business
practices statute because of operations conducted in violation of those
environmental laws. The complaint does not allege any contamination of the
environment occurred as a result of the alleged violations. The complaint
seeks substantial monetary penalties and injunctive relief requiring the
Company to comply with California environmental laws and to retain the
services of an expert to reduce the risk of such violations in the future. The
Company has taken measures to ensure that these sites are in compliance with
applicable California environmental laws and believes that they are currently
in compliance with such laws. The Company believes that the resolution of the
violations alleged in the complaint will not have a material adverse effect on
its financial condition or results of operations.
ITEM 5. OTHER INFORMATION
The following information serves to update the status of the ALLTEL
transaction and AirTouch transaction as originally disclosed by us on a
Current Report on Form 8-K dated December 20, 2000 and on a Quarterly Report
on Form 10-Q dated August 16, 1999, respectively.
On May 1, 2001 we closed on the sublease of 322 towers pursuant to the
agreement with ALLTEL. These towers were used by ALLTEL primarily in
connection with its business of providing consumer wireless services. We plan
to lease space on the towers to third parties. Total consideration in
connection with this closing was approximately $96.6 million in cash. The
amount of consideration and the terms of the agreement were based upon arms'
length negotiations between unaffiliated parties. There are no material
relationships between us, ALLTEL or any of their respective affiliates,
officers or directors. We financed the transaction through available cash-on-
hand, including proceeds from our recent equity and debt financings. For more
information about our agreement with ALLTEL, see the Company's Current Reports
on Form 8-K filed on December 20, 2000 and April 17, 2001, note 4 to the
condensed consolidated financial statements set forth herein, and the exhibits
incorporated by reference into this Quarterly Report on Form 10-Q.
On May 1, 2001 we closed on the sublease of 47 towers pursuant to the
agreement with AirTouch. These towers were used by AirTouch primarily in
connection with its business of providing consumer wireless services. We plan
to lease additional space on the towers to third parties. Total consideration
in connection with this closing was approximately $17.9 million in cash. The
amount of consideration and the terms of the agreement were based upon arms'
length negotiations between unaffiliated parties. There are no material
relationships between us, AirTouch or any of their respective affiliates,
officers or directors. We financed the transaction through available cash-on-
hand, including proceeds from its recent equity and debt financings. This
closing represents the final acquisition of towers by us from AirTouch
pursuant to the agreement. In total, we acquired 1,862 towers under the
agreement for an aggregate of $709.3 million in cash and warrants to purchase
up to 3.0 million shares of the our Class A Common Stock at $22 per share. For
more information about our agreement with AirTouch, see our Quarterly Report
on Form 10-Q filed on August 16, 1999 and the exhibits incorporated by
reference into this Quarterly Report on Form 10-Q.
23
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
Listed below are the exhibits which are filed as part of this Form 10-Q
(according to the number assigned to them in Item 601 of Regulation S-K).
Exhibit No. Description of Exhibit
----------- ----------------------
1.1 Underwriting Agreement, dated January 18, 2001, between American Tower
Corporation and Goldman, Sachs & Co. (incorporated by reference to Exhibit 1.1
from the Registrant's Current Report on Form 8-K (File No. 001-14195) filed on
January 22, 2001).
1.2 Terms Agreement, dated January 18, 2001, between American Tower Corporation and
Goldman, Sachs & Co. (incorporated by reference to Exhibit 1.1 from the
Registrant's Current Report on Form 8-K (File No. 001-14195) filed on January
22, 2001).
4.0 Indenture, by and between the Registrant and The Bank of New York as Trustee,
for the 9 3/8% Senior Notes due 2009, dated as of January 31, 2001, including
the form of 9 3/8% Senior Note (incorporated by reference to Exhibit 4.9 from
the Registrant's Annual Report on Form 10-K (File No. 001-14195) filed on April
2, 2001).
4.1 Registration Rights Agreement, by and between the Registrant and the Initial
Purchasers named therein, dated as of January 31, 2001 (incorporated by
reference to Exhibit 4.10 from the Registrant's Annual Report on Form 10-K (File
No. 001-14195) filed on April 2, 2001).
10.1 Amended and Restated Loan Agreement dated as of January 6, 2000, by and among
American Tower, L.P., American Towers, Inc. and ATC Teleports, Inc., as
Borrowers, and Toronto Dominion (Texas) Inc., as Administrative Agent, and the
banks party thereto (incorporated by reference to Exhibit 10.1 from the
Registrant's Current Report on Form 8-K (File No. 001-14195) filed on January
28, 2000).
10.2 First Amendment and Waiver Agreement, dated as of February 9, 2000, by and among
American Tower, L.P., American Towers, Inc. and ATC Teleports, Inc., as
Borrowers, and Toronto Dominion (Texas) Inc., as Administrative Agent, and the
banks party thereto (incorporated by reference to Exhibit 10.1 from the
Registrant's Quarterly Report on Form 10-Q (File No. 001-14195) filed on
November 13, 2000).
10.3 Second Amendment to Amended and Restated Loan Agreement, dated as of May 11,
2000, by and among American Tower, L.P., American Towers, Inc. and ATC
Teleports, Inc., as Borrowers, and Toronto Dominion (Texas) Inc., as
Administrative Agent, and the banks party thereto (incorporated by reference to
Exhibit 10.2 from the Registrant's Quarterly Report on Form 10-Q (File No. 001-
14195) filed on November 13, 2000).
10.4 Waiver and Third Amendment to Amended and Restated Loan Agreement, dated as of
October 13, 2000, by and among American Tower, L.P., American Towers, Inc. and
ATC Teleports, Inc., as Borrowers, and Toronto Dominion (Texas) Inc., as
Adminstrative Agent, and the banks party thereto (incorporated by reference to
Exhibit 10.3 from the Registrant's Quarterly Report on Form 10-Q (File No. 001-
14195) filed on November 13, 2000).
10.5 Fourth Amendment to Amended and Restated Loan Agreement, dated as of January 23,
2001, by and among American Tower, L.P., American Towers, Inc. and Verestar,
Inc., as Borrowers, and Toronto Dominion (Texas) Inc., as Adminstrative Agent,
and the banks party thereto (incorporated by reference to Exhibit 10.5 from the
Registrants' Registration Statement on Form S-4 (File No. 333-59852)).
24
Exhibit No. Description of Exhibit
----------- ----------------------
10.6 Fifth Amendment and Waiver to Amended and Restated Loan Agreement, dated as of
March 26, 2001, by and among American Tower, L.P., American Towers, Inc. and
Verestar, Inc., as Borrowers, and Toronto Dominion (Texas) Inc., as
Administrative Agent, and the banks party thereto (incorporated by reference to
Exhibit 10.6 from the Registrants' Registration Statement on Form S-4 (File No.
333-59852)).
10.7 Credit Agreement, dated December 22, 2000, by and among American Tower
Corporation de Mexico, S. de R.L. de C.V., MATC Holdings Mexico, S. de R.L. de
C.V., MATC TV, S. de R.L. de C.V. and Toronto Dominion (Texas),
Inc.(incorporated by reference to Exhibit 10.7 from the Registrants'
Registration Statement on Form S-4 (File No. 333-59852)).
10.8 Purchase Agreement, dated as of January 24, 2001, by and among the Company and
the Purchasers Named therein with respect to the 9 3/8 % Senior Notes
(incorporated by reference to Exhibit 10.21 from the Registrant's Annual Report
in Form 10-K (File No. 001-14195) filed on April 2, 2001).
(b) Reports on Form 8-K.
During the quarter ended March 31, 2001, the Registrant filed with the
Commission Current Reports on Form 8-K on January 17, 2001, January 19, 2001,
January 22, 2001, January 29, 2001, February 1, 2001, February 16, 2001 and
March 29, 2001.
25
SIGNATURES
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, thereunto duly authorized.
American Tower Corporation
By: /s/ Joseph L. Winn
Date: May 15, 2001 ----------------------------------
Joseph L. Winn
Treasurer & Chief Financial
Officer
(Duly Authorized Officer)
Date: May 15, 2001 By: /s/ Justin D. Benincasa
----------------------------------
Justin D. Benincasa
Senior Vice President & Corporate
Controller
(Duly Authorized Officer)