Form 8-K AMERICAN TOWER CORP /MA/ For: Feb 23

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of Earliest Event Reported): February 23, 2015

 

 

AMERICAN TOWER CORPORATION

(Exact Name of Registrant as Specified in Charter)

 

 

 

Delaware		001-14195		65-0723837
(State or Other Jurisdiction of Incorporation)		(Commission File Number)		(IRS Employer Identification No.)

116 Huntington Avenue

Boston, Massachusetts 02116

(Address of Principal Executive Offices) (Zip Code)

(617) 375-7500

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

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Item 2.02

Results of Operations and Financial Condition.

On February 23, 2015, American Tower Corporation (the “Company”) issued a press release (the “Press Release”) announcing financial results for the fourth quarter and full year ended December 31, 2014. A copy of the Press Release is furnished herewith as Exhibit 99.1.

Exhibit 99.1 is furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall such exhibit be deemed incorporated by reference in any filing made by the Company under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.

 

Item 9.01

Financial Statements and Exhibits.

 

(d)

Exhibits

 

Exhibit No.		Description
99.1		Press Release, dated February 23, 2015 (Furnished herewith)

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SIGNATURE

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 hereunto duly authorized.

 

						AMERICAN TOWER CORPORATION
						(Registrant)
Date:		February 23, 2015				By:		/s/    THOMAS A. BARTLETT
								Thomas A. Bartlett
								Executive Vice President and Chief Financial Officer

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EXHIBIT INDEX

 

Exhibit No.		Description
99.1		Press Release, dated February 23, 2015 (Furnished herewith)

Exhibit 99.1

 

Contact: Leah Stearns

Senior Vice President, Treasurer and Investor Relations

Telephone: (617) 375-7500

AMERICAN TOWER CORPORATION REPORTS

FOURTH QUARTER AND FULL YEAR 2014 FINANCIAL RESULTS

CONSOLIDATED HIGHLIGHTS

 

 

SEGMENT HIGHLIGHTS

 

 

Boston, Massachusetts – February 23, 2015: American Tower Corporation (NYSE: AMT) today reported financial results for the fourth quarter and full year ended December 31, 2014.

Jim Taiclet, American Tower’s Chief Executive Officer stated, “In 2014, our rental and management segment revenues topped $4 billion for the first time in our history, a 22% increase over the prior year. Our solid top line growth was driven by a combination of continued network expansion and modernization by our tenants around the world, and by our successful construction and acquisition programs, which together added nearly 8,500 new sites in 2014.

Moreover, our recently announced transactions with Verizon, Telecom Italia, and Bharti Airtel are expected to close in the first half of 2015 and will further enhance our strategic positioning in the U.S., Latin America and Africa. We expect that these assets will both strengthen and lengthen the company’s growth trajectory for years to come, as well as advance our global strategy of expanding our business relationships with the world’s leading mobile operators.”

FOURTH QUARTER 2014 OPERATING RESULTS OVERVIEW

American Tower generated the following operating results for the quarter ended December 31, 2014 (unless otherwise indicated, all comparative information is presented against the quarter ended December 31, 2013).

 

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Total revenue increased 11.1% to $1,046 million, and total rental and management revenue increased 11.5% to $1,030 million.

 

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Total rental and management revenue Core Growth was approximately 17.6%, and total rental and management Organic Core Growth was approximately 10.0%.

 

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Total rental and management Gross Margin increased 10.2% to $763 million, and total rental and management Gross Margin percentage was 74%.

 

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Adjusted EBITDA increased 10.2% to $661 million, Core Growth in Adjusted EBITDA was 17.0%, and Adjusted EBITDA Margin was 63%. Adjusted EBITDA was negatively impacted by one-time SG&A items of approximately $4.9 million.

 

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Adjusted Funds From Operations (AFFO) increased 16.8% to $442 million, AFFO per Share increased 15.8% to $1.10, and Core Growth in AFFO was approximately 21.7%

 

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Net income attributable to American Tower per basic common share increased 72.0% to $0.43 and Net income attributable to American Tower per diluted common share increased 68.0% to $0.42.

 

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Cash provided by operating activities increased 24.3% to $565 million.

Segment Results

Domestic Rental and Management Segment

 

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Revenue increased 9.3% to $681 million;

 

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Organic Core Growth in revenue was 9.0%;

 

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Gross Margin increased 9.4% to $547 million;

 

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Gross Margin percentage was 80%;

 

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Operating Profit increased 8.8% to $508 million, which represented 73% of total Operating Profit; and

 

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Operating Profit Margin was 75%.

International Rental and Management Segment

 

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Revenue increased 15.9% to $349 million;

 

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Organic Core Growth in revenue excluding pass-through was 12.9%;

 

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Organic Core Growth in revenue was 12.6%;

 

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Gross Margin increased 12.1% to $216 million;

 

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Gross Margin percentage was 62% (85% excluding the impact of $94 million of pass-through revenues);

 

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Operating Profit increased 9.9% to $179 million, which represented 26% of total Operating Profit; and

 

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Operating Profit Margin was 51% (70%, excluding the impact of $94 million of pass-through revenues).

Network Development Services Segment

 

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Revenue was $16 million;

 

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Gross Margin was $9 million;

 

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Gross Margin percentage was 57%;

 

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Operating Profit was $5 million, which represented 1% of total Operating Profit; and

 

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Operating Profit Margin was 29%.

FULL YEAR 2014 OPERATING RESULTS OVERVIEW

American Tower generated the following operating results for the twelve months ended December 31, 2014 (unless otherwise indicated, all comparative information is presented against the twelve months ended December 31, 2013).

 

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Total revenue increased 22.0% to $4,100 million and total rental and management revenue increased 21.9% to $4,007 million.

 

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Total rental and management revenue Core Growth was approximately 27.5%, and total rental and management revenue Organic Core Growth was approximately 11.1%.

 

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Total rental and management Gross Margin increased 19.4% to $2,963 million, and total rental and management Gross Margin percentage was 74%.

 

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Adjusted EBITDA increased 21.8% to $2,650 million, Core Growth in Adjusted EBITDA was 27.3%, and the Adjusted EBITDA Margin was 65%.

 

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AFFO increased 23.5% to $1,815 million, AFFO per Share increased 23.4% to $4.54, and Core Growth in AFFO was approximately 27.3%.

 

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Net income attributable to American Tower per basic common share increased 44.3% to $2.02, and net income attributable to American Tower per diluted common share increased 44.9% to $2.00.

 

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Cash provided by operating activities increased 33.5% to $2,135 million.

Segment Results

Domestic Rental and Management Segment

 

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Revenue increased 20.6% to $2,640 million;

 

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Organic Core Growth in revenue was 9.6%;

 

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Gross Margin increased 19.1% to $2,124 million;

 

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Gross Margin percentage was 80%;

 

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Operating Profit increased 19.0% to $1,999 million, which represented 73% of total Operating Profit; and

 

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Operating Profit Margin was 76%.

International Rental and Management Segment

 

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Revenue increased 24.5% to $1,367 million;

 

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Organic Core Growth in revenue excluding pass-through was 13.1%;

 

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Organic Core Growth in revenue was 15.5%;

 

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Gross Margin increased 20.2% to $839 million;

 

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Gross Margin percentage was 61% (83% excluding the impact of $363 million of pass-through revenues);

 

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Operating Profit increased 22.7% to $705 million, which represented 26% of total Operating Profit; and

 

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Operating Profit Margin was 52% (70%, excluding the impact of $363 million of pass-through revenues).

Network Development Services Segment

 

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Revenue was $93 million;

 

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Gross Margin was $56 million;

 

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Gross Margin percentage was 60%;

 

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Operating Profit was $43 million, which represented 2% of total Operating Profit; and

 

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Operating Profit Margin was 46%.

Please refer to “Non-GAAP and Defined Financial Measures” below for definitions of Gross Margin, Operating Profit, Operating Profit Margin, Adjusted EBITDA, Adjusted EBITDA Margin, NAREIT Funds From Operations, AFFO, AFFO per Share, Core Growth, Organic Core Growth, New Property Core Growth and Net Leverage Ratio. For additional financial information, including reconciliations to GAAP measures, please refer to the unaudited selected financial information below.

INVESTING OVERVIEW

Distributions – In the fourth quarter, the Company declared its fourth quarter common stock distribution as well as a preferred stock dividend payable in February. On January 13, 2015, the Company paid its fourth quarter common stock distribution of $0.38 per share, or a total of approximately $151 million, to common stockholders of record at the close of business on December 16, 2014. On February 16, 2015, the Company paid a dividend of $1.3125 per share, or approximately $8 million, to preferred stockholders of record at the close of business on February 1, 2015. 

During the twelve months ended December 31, 2014, the Company declared an aggregate of $1.40 per share in distributions, or a total of approximately $555 million, to its common stockholders. The Company also declared an aggregate of $3.9813 per share, or approximately $24 million, to its preferred stockholders. Subject to the discretion of the Company’s Board of Directors, the Company expects to continue paying regular distributions, the amount and timing of which will be determined by the Board.

Cash Paid for Capital Expenditures – During the fourth quarter of 2014, total capital expenditures of $251 million included:

 

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$100 million for discretionary capital projects, including spending to complete the construction of 51 towers and the installation of 15 distributed antenna system networks and 24 shared generators domestically and the construction of 907 towers and the installation of 15 distributed antenna system networks internationally;

 

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$43 million to purchase land under the Company’s communications sites;

 

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$12 million for start-up capital projects in recently launched markets;

 

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$62 million for the redevelopment of existing communications sites to accommodate new tenant equipment; and

 

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$34 million for capital improvements and corporate capital expenditures.

During the twelve months ended December 31, 2014, total capital expenditures of $974 million included:

 

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$522 million for discretionary capital projects, including spending to complete the construction of 618 towers and the installation of 39 distributed antenna system networks and 530 shared generators domestically and the construction of 2,441 towers and the installation of 35 distributed antenna system networks internationally;

 

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$134 million to purchase land under the Company’s communications sites;

 

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$26 million for start-up capital projects in recently launched markets;

 

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$194 million for the redevelopment of existing communications sites to accommodate new tenant equipment; and

 

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$99 million for capital improvements and corporate capital expenditures.

Cash Paid for Acquisitions – During the fourth quarter of 2014, the Company spent $686 million and assumed approximately $261 million of debt for the purchase of 140 towers domestically and 4,625 sites internationally. The international sites included 4,617 sites acquired as part of the Company’s BR Towers acquisition in Brazil, which closed on November 19th, 2014.

 

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Subsequent to the close of the BR Towers acquisition, the Company repaid approximately $122 million in debt that had been assumed as part of the acquisition.

During the twelve months ended December 31, 2014, the Company spent $1,011 million and assumed approximately $458 million of debt for the purchase of 242 towers domestically and 5,075 sites internationally.

During the fourth quarter of 2014, the Company announced that it had entered into definitive agreements to acquire approximately 4,800 communications sites in Nigeria from Airtel for approximately $1.05 billion and approximately 6,500 communications sites from TIM in Brazil for approximately 3.0 billion BRL. In addition, subsequent to the end of the fourth quarter, the Company announced that it had entered into a definitive agreement pursuant to which it will acquire the exclusive right to lease, acquire or otherwise operate and manage up to 11,489 wireless communications sites from Verizon Communications, Inc. (Verizon) in the United States for approximately $5.056 billion. These transactions are expected to close in the first half of 2015.

FINANCING OVERVIEW

Leverage – For the quarter ended December 31, 2014, the Company’s Net Leverage Ratio was approximately 5.4x net debt (total debt less cash and cash equivalents) to fourth quarter 2014 annualized Adjusted EBITDA.

Liquidity – As of December 31, 2014, the Company had approximately $2.7 billion of total liquidity, comprised of approximately $0.3 billion in cash and cash equivalents, plus the ability to borrow an aggregate of approximately $2.4 billion under its revolving credit facilities, net of any outstanding letters of credit.

Upon entering into an agreement for the Verizon transaction in February 2015, the Company obtained commitments to receive up to $5.05 billion in bridge loans to ensure financing for the transaction. After subsequently obtaining $1.75 billion in incremental commitments under its existing bank facilities, the bridge loan commitment was reduced to $3.3 billion.

On February 11, 2015, the Company completed its previously announced redemption of all of its outstanding 4.625% senior notes due 2015, at 100.5898% of the principal amount, plus accrued and unpaid interest. The total aggregate redemption price was approximately $613.6 million, including approximately $10.0 million in accrued interest.

FULL YEAR 2015 OUTLOOK

The following estimates are based on a number of assumptions that management believes to be reasonable and reflect the Company’s expectations as of February 23, 2015. Actual results may differ materially from these estimates as a result of various factors, and the Company refers you to the cautionary language regarding “forward-looking” statements included in this press release when considering this information.

Our current full year 2015 outlook excludes the impact of the pending Verizon, TIM and Airtel transactions. Once closed, we expect the annualized year one contributions from the transactions to be as follows:

 

(in millions)		Revenue				Gross Margin				Incremental SG&A (% of Revenue)
Verizon Wireless		$	410			$	235				~5	%
Airtel Nigeria		$	248			$	87				~11	%
TIM Brazil (in BRL)			435				191				<2	%

The Company’s outlook is based on the following average foreign currency exchange rates to 1.00 U.S. Dollar for the full year 2015: (a) 2.75 Brazilian Reais; (b) 630.00 Chilean Pesos; (c) 2,400.00 Colombian Pesos; (d) 0.90 Euros; (e) 3.50 Ghanaian Cedi; (f) 62.50 Indian Rupees; (g) 14.75 Mexican Pesos; (h) 3.10 Peruvian Soles; (i) 11.65 South African Rand; and (j) 2,900.00 Ugandan Schillings.

A 5% fluctuation in foreign currency exchange rate assumptions versus the rates assumed in the Company’s 2015 outlook would result in an impact of approximately $72 million in revenues, approximately $39 million in Adjusted EBITDA and approximately $35 million in AFFO, relative to the midpoints of the Company’s 2015 outlook.

 

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($ in millions)		Full Year 2015										Midpoint Growth				Midpoint Core Growth
Total rental and management revenue		$	4,250			to		$	4,330				7.1	%			11.7	%
Adjusted EBITDA(1)			2,820			to			2,900				7.9	%			11.7	%
AFFO(1)			1,940			to			2,000				8.6	%			13.4	%
Net Income			945			to			995				20.8	%			N/A

 

(1)	See “Non-GAAP and Defined Financial Measures” below.

The Company’s outlook for total rental and management revenue reflects the following at the midpoint:

 

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Domestic rental and management segment revenue of $2,845 million and Organic Core Growth of over 7%; and

 

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International rental and management segment revenue of $1,445 million and Organic Core Growth excluding pass-through of nearly 10%. International rental and management segment revenue includes approximately $373 million of pass-through revenue.

The calculation of midpoint Core Growth is as follows:

(Totals may not add due to rounding.)

 

		Total Rental and Management Revenue				Adjusted EBITDA(1)				AFFO(1)
Outlook midpoint Core Growth			11.7	%			11.7	%			13.4	%
Estimated impact of fluctuations in foreign currency exchange rates			(4.2	)%			(3.4	)%			(4.6	)%
Impact of straight-line revenue and expense recognition			(0.3	)%			(0.2	)%			—
Impact of significant one-time items			—				(0.1	)%			(0.2	)%
Outlook midpoint growth			7.1	%			7.9	%			8.6	%

 

(1)	See “Non-GAAP and Defined Financial Measures” below.

Total Rental and Management Revenue Core Growth Components⁽¹⁾:

 

(Totals may not add due to rounding.)		Full Year 2015
Organic Core Growth			~8	%
Core New Property Growth(2)			~4	%
Core Growth			~12	%

 

(1)	Reflects growth at the midpoint of outlook ranges.

(2)	Revenue growth attributable to sites added to the portfolio on or after January 1, 2014.

Outlook for Capital Expenditures:

($ in millions)

 

 

(Totals may not add due to rounding.)		Full Year 2015
Discretionary capital projects(1)		$	340				to			$	380
Ground lease purchases			170				to				190
Start-up capital projects			30				to				40
Redevelopment			155				to				175
Capital improvement			90				to				100
Corporate			15				—				15
Total		$	800				to			$	900

 

(1)	Includes the construction of approximately 2,750 to 3,250 communications sites.

 

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Reconciliations of Outlook for Net Income to Adjusted EBITDA:

($ in millions)

 

(Totals may not add due to rounding.)		Full Year 2015
Net income		$	945				to			$	995
Interest expense			590				to				620
Depreciation, amortization and accretion			1,065				to				1,075
Income tax provision			95				to				85
Stock-based compensation expense			90				—				90
Other, including other operating expenses, interest income, loss on retirement of long-term obligations, income (loss) on equity method investments and other income (expense)			35				—				35
Adjusted EBITDA		$	2,820				to			$	2,900

Reconciliations of Outlook for Net Income to AFFO:

($ in millions)

 

(Totals may not add due to rounding.)		Full Year 2015
Net income		$	945				to			$	995
Straight-line revenue			(120	)			—				(120	)
Straight-line expense			32				—				32
Depreciation, amortization and accretion			1,065				to				1,075
Stock-based compensation expense			90				—				90
Non-cash portion of tax provision			11				to				18
Other, including other operating expenses, amortization of deferred financing costs, capitalized interest, debt discounts and premiums, (gain) loss on retirement of long-term obligations, other income (expense), non-cash interest related to joint venture shareholder loans and dividends declared on preferred stock			23				to				26
Capital improvement capital expenditures			(90	)			to				(100	)
Corporate capital expenditures			(15	)			—				(15	)
AFFO		$	1,940				to			$	2,000

Conference Call Information

American Tower will host a conference call tomorrow at 8:30 a.m. ET to discuss its financial results for the fourth quarter and full year ended December 31, 2014 and its outlook for 2015. Supplemental materials for the call will be available on the Company’s website, www.americantower.com. The conference call dial-in numbers are as follows:

U.S./Canada dial-in: (866) 740-9153

International dial-in: (706) 645-9644

Passcode: 74272127

When available, a replay of the call can be accessed until 11:59 p.m. ET on March 3, 2015. The replay dial-in numbers are as follows:

U.S./Canada dial-in: (855) 859-2056

International dial-in: (404) 537-3406

Passcode: 74272127

American Tower will also sponsor a live simulcast and replay of the call on its website, www.americantower.com.

About American Tower

American Tower is a leading independent owner, operator and developer of communications real estate, with a global portfolio of over 75,000 communications sites. For more information about American Tower, please visit the “Earnings Materials” and “Company & Industry Resources” sections of our investor relations website at www.americantower.com.

 

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Non-GAAP and Defined Financial Measures

In addition to the results prepared in accordance with generally accepted accounting principles in the United States (GAAP) provided throughout this press release, the Company has presented the following non-GAAP and defined financial measures: Gross Margin, Operating Profit, Operating Profit Margin, Adjusted EBITDA, Adjusted EBITDA Margin, NAREIT Funds From Operations, AFFO, AFFO per Share, Core Growth, Organic Core Growth, New Property Core Growth and Net Leverage Ratio. The Company uses Funds From Operations as defined by the National Association of Real Estate Investment Trusts (NAREIT), referred to herein as NAREIT Funds From Operations.

The Company defines Gross Margin as revenues less operating expenses, excluding stock-based compensation expense recorded in costs of operations, depreciation, amortization and accretion, selling, general, administrative and development expense, and other operating expenses. The Company defines Operating Profit as Gross Margin less selling, general, administrative and development expense, excluding stock-based compensation expense and corporate expenses. For reporting purposes, the international rental and management segment Operating Profit and Gross Margin also include interest income, TV Azteca, net. These measures of Gross Margin and Operating Profit are also before interest income, interest expense, gain (loss) on retirement of long-term obligations, other income (expense), net income (loss) attributable to non-controlling interest, income (loss) on equity method investments and income tax benefit (provision). The Company defines Operating Profit Margin as the percentage that results from dividing Operating Profit by revenue. The Company defines Adjusted EBITDA as net income before income (loss) from discontinued operations, net, income (loss) from equity method investments, income tax benefit (provision), other income (expense), gain (loss) on retirement of long-term obligations, interest expense, interest income, other operating income (expense), depreciation, amortization and accretion and stock-based compensation expense. The Company defines Adjusted EBITDA Margin as the percentage that results from dividing Adjusted EBITDA by total revenue. NAREIT Funds From Operations is defined as net income before gains or losses from the sale or disposal of real estate, real estate related impairment charges, real estate related depreciation, amortization and accretion and dividends declared on preferred stock, and including adjustments for (i) unconsolidated affiliates and (ii) noncontrolling interest. The Company defines AFFO as NAREIT Funds From Operations before (i) straight-line revenue and expense, (ii) stock-based compensation expense, (iii) the non-cash portion of our tax provision, (iv) non-real estate related depreciation, amortization and accretion, (v) amortization of deferred financing costs, capitalized interest, debt discounts and premiums and long-term deferred interest charges, (vi) other income (expense), (vii) gain (loss) on retirement of long-term obligations, (viii) other operating income (expense), and adjustments for (ix) unconsolidated affiliates and (x) noncontrolling interest, less cash payments related to capital improvements and cash payments related to corporate capital expenditures. The Company defines AFFO per Share as AFFO divided by the diluted weighted average common shares outstanding. The Company defines Core Growth in total rental and management revenue, Adjusted EBITDA and AFFO as the increase or decrease, expressed as a percentage, resulting from a comparison of financial results for a current period with corresponding financial results for the corresponding period in a prior year, in each case, excluding the impact of straight-line revenue and expense recognition, foreign currency exchange rate fluctuations and significant one-time items. The Company defines Organic Core Growth in rental and management revenue as the increase or decrease, expressed as a percentage, resulting from a comparison of financial results for a current period with corresponding financial results for the corresponding period in a prior year, in each case, excluding the impact of straight-line revenue and expense recognition, foreign currency exchange rate fluctuations, significant one-time items and revenue associated with new properties that the Company has added to the portfolio since the beginning of the prior period. The Company defines New Property Core Growth in rental and management revenue as the increase or decrease, expressed as a percentage, on the properties the Company has added to its portfolio since the beginning of the prior period, in each case, excluding the impact of straight-line revenue and expense recognition, foreign currency exchange rate fluctuations and significant one-time items. The Company defines Net Leverage Ratio as net debt (total debt, less cash and cash equivalents) divided by last quarter annualized Adjusted EBITDA. These measures are not intended to replace financial performance measures determined in accordance with GAAP. Rather, they are presented as additional information because management believes they are useful indicators of the current financial performance of the Company’s core businesses. The Company believes that these measures can assist in comparing company performances on a consistent basis irrespective of depreciation and amortization or capital structure. Depreciation and amortization can vary significantly among companies depending on accounting methods, particularly where acquisitions or non-operating factors, including historical cost bases, are involved. Notwithstanding the foregoing, the Company’s measures of Gross Margin, Operating Profit, Operating Profit Margin, Adjusted EBITDA, Adjusted EBITDA Margin, NAREIT Funds From Operations, AFFO, AFFO per Share, Core Growth, Organic Core Growth, New Property Core Growth and Net Leverage Ratio may not be comparable to similarly titled measures used by other companies.

Cautionary Language Regarding Forward-Looking Statements

This press release contains “forward-looking statements” concerning our goals, beliefs, expectations, strategies, objectives, plans, future operating results and underlying assumptions, and other statements that are not necessarily based on historical facts. Examples of these statements include, but are not limited to statements regarding our full year 2015 outlook, foreign currency exchange rates and our expectation regarding the leasing demand for communications real estate. Actual results may differ materially from those indicated in our forward-looking statements as a result of various important factors, including: (1) decrease in demand for our communications sites would materially and adversely affect our operating results, and we cannot control that demand; (2) if our tenants share site infrastructure to a significant degree or consolidate or merge, our growth, revenue and ability to generate positive cash flows could be materially and adversely affected; (3) increasing competition for tenants in the tower industry may materially and adversely affect our pricing; (4) competition for assets could adversely affect our ability to achieve our return on investment criteria; (5) our business is subject to government regulations and changes in current or future laws or regulations could restrict our ability to operate our business as we currently do; (6) our leverage and debt service obligations may materially and adversely affect us; (7) failure to successfully and efficiently integrate acquired or leased assets, including from the proposed Verizon transaction, into our operations may adversely affect our business, operations and financial condition; (8) our expansion initiatives involve a number of risks and uncertainties that could adversely affect our operating results, disrupt our operations or expose us to additional risk; (9) our foreign operations are subject to economic, political and other risks that could materially and adversely affect our revenues or financial position, including risks associated with fluctuations in foreign currency exchange rates; (10) a substantial portion of our revenue is derived from a small number of

 

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tenants, and we are sensitive to changes in the creditworthiness and financial strength of our tenants; (11) new technologies or changes in a tenant’s business model could make our tower leasing business less desirable and result in decreasing revenues; (12) if we fail to remain qualified as a REIT, we will be subject to tax at corporate income tax rates, which may substantially reduce funds otherwise available; (13) complying with REIT requirements may limit our flexibility or cause us to forego otherwise attractive opportunities; (14) certain of our business activities may be subject to corporate level income tax and foreign taxes, which reduce our cash flows and may create deferred and contingent tax liabilities; (15) we may need additional financing to fund capital expenditures, future growth and expansion initiatives and to satisfy our REIT distribution requirements; (16) if we are unable to protect our rights to the land under our towers, it could adversely affect our business and operating results; (17) if we are unable or choose not to exercise our rights to purchase towers that are subject to lease and sublease agreements at the end of the applicable period, our cash flows derived from such towers will be eliminated; (18) restrictive covenants in the agreements related to our securitization transactions, our credit facilities and our debt securities could materially and adversely affect our business by limiting flexibility, and we may be prohibited from paying dividends on our common stock if we fail to pay scheduled dividends on our preferred stock, which may jeopardize our qualification for taxation as a REIT; (19) our costs could increase and our revenues could decrease due to perceived health risks from radio emissions, especially if these perceived risks are substantiated; (20) we could have liability under environmental and occupational safety and health laws; and (21) our towers, data centers or computer systems may be affected by natural disasters and other unforeseen events for which our insurance may not provide adequate coverage. For additional information regarding factors that may cause actual results to differ materially from those indicated in our forward-looking statements, we refer you to the information contained in Item 1A of our Form 10-Q for the quarter ended September 30, 2014. We undertake no obligation to update the information contained in this press release to reflect subsequently occurring events or circumstances.

 

8

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UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

 

		December 31, 2014				December 31, 2013(1)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	313,492			$	293,576
Restricted cash			160,206				152,916
Short-term investments			6,302				18,612
Accounts receivable, net			198,714				151,165
Prepaid and other current assets			254,622				347,417
Deferred income taxes			14,632				22,401
Total current assets			947,968				986,087
PROPERTY AND EQUIPMENT, net			7,626,817				7,177,728
GOODWILL			4,017,082				3,854,802
OTHER INTANGIBLE ASSETS, net			6,889,331				6,570,119
DEFERRED INCOME TAXES			253,186				266,909
DEFERRED RENT ASSET			1,030,707				918,847
NOTES RECEIVABLE AND OTHER NON-CURRENT ASSETS			566,454				509,173
TOTAL		$	21,331,545			$	20,283,665
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable		$	90,366			$	172,938
Accrued expenses			417,754				421,188
Distributions payable			159,864				575
Accrued interest			130,265				105,751
Current portion of long-term obligations			897,624				70,132
Unearned revenue			233,819				162,079
Total current liabilities			1,929,692				932,663
LONG-TERM OBLIGATIONS			13,711,084				14,408,146
ASSET RETIREMENT OBLIGATIONS			609,035				549,548
OTHER NON-CURRENT LIABILITIES			1,028,382				803,268
Total liabilities			17,278,193				16,693,625
COMMITMENTS AND CONTINGENCIES
EQUITY:
Preferred stock			60				—
Common stock			3,995				3,976
Additional paid-in capital			5,788,786				5,130,616
Distributions in excess of earnings			(837,320	)			(1,081,467	)
Accumulated other comprehensive loss			(794,221	)			(311,220	)
Treasury stock			(207,740	)			(207,740	)
Total American Tower Corporation equity			3,953,560				3,534,165
Noncontrolling interest			99,792				55,875
Total equity			4,053,352				3,590,040
TOTAL		$	21,331,545			$	20,283,665

 

(1)	December 31, 2013 balances have been revised to reflect purchase accounting measurement period adjustments.

 

9

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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

 

		Three Months Ended								Twelve Months Ended
		December 31,								December 31,
		2014				2013				2014				2013
REVENUES:
Rental and management		$	1,029,854			$	923,883			$	4,006,854			$	3,287,090
Network development services			16,460				18,086				93,194				74,317
Total operating revenues			1,046,314				941,969				4,100,048				3,361,407
OPERATING EXPENSES:
Costs of operations (exclusive of items shown separately below):
Rental and management (including stock-based compensation expense of $338, $226, $1,397 and $977, respectively)			269,803				243,277				1,056,177				828,742
Network development services (including stock-based compensation expense of $97, $127, $440 and $567, respectively)			7,216				8,292				38,088				31,131
Depreciation, amortization and accretion			263,546				244,811				1,003,802				800,145
Selling, general, administrative and development expense (including stock-based compensation expense of $18,010, $14,630, $78,316 and $66,594, respectively)			129,105				116,808				446,542				415,545
Other operating expenses			30,665				35,853				68,517				71,539
Total operating expenses			700,335				649,041				2,613,126				2,147,102
OPERATING INCOME			345,979				292,928				1,486,922				1,214,305
OTHER INCOME (EXPENSE):
Interest income, TV Azteca, net			2,629				11,562				10,547				22,235
Interest income			5,853				4,238				14,002				9,706
Interest expense			(147,481	)			(139,380	)			(580,234	)			(458,296	)
Loss on retirement of long-term obligations			(4,920	)			(734	)			(3,473	)			(38,701	)
Other expense (including unrealized foreign currency (gains) losses of ($13,273), $60,049, $49,319 and $211,722, respectively)			(7,835	)			(58,509	)			(62,060	)			(207,500	)
Total other expense			(151,754	)			(182,823	)			(621,218	)			(672,556	)
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND INCOME ON EQUITY METHOD INVESTMENTS			194,225				110,105				865,704				541,749
Income tax provision			(12,628	)			(36,180	)			(62,505	)			(59,541	)
NET INCOME			181,597				73,925				803,199				482,208
Net loss attributable to noncontrolling interest			(1,210	)			26,057				21,711				69,125
NET INCOME ATTRIBUTABLE TO AMERICAN TOWER CORPORATION STOCKHOLDERS			180,387				99,982				824,910				551,333
Dividends declared on preferred stock			(11,813	)			—				(23,888	)			—
NET INCOME ATTRIBUTABLE TO AMERICAN TOWER CORPORATION COMMON STOCKHOLDERS		$	168,574			$	99,982			$	801,022			$	551,333
NET INCOME PER COMMON SHARE AMOUNTS:
Basic net income attributable to American Tower Corporation common stockholders		$	0.43			$	0.25			$	2.02			$	1.40
Diluted net income attributable to American Tower Corporation common stockholders		$	0.42			$	0.25			$	2.00			$	1.38
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
BASIC			396,553				394,751				395,958				395,040
DILUTED			400,899				398,609				400,086				399,146

 

10

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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 

		Twelve Months Ended December 31,
		2014				2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$	803,199			$	482,208
Adjustments to reconcile net income to cash provided by operating activities:
Stock-based compensation expense			80,153				68,138
Depreciation, amortization and accretion			1,003,802				800,145
Loss on early retirement of long-term obligations			3,379				35,288
Other non-cash items reflected in statement of operations			86,790				231,764
Increase in net deferred rent asset			(83,852	)			(115,443	)
Decrease (increase) in restricted cash			7,522				(52,717	)
Increase in assets			(85,966	)			(115,118	)
Increase in liabilities			319,562				264,782
Cash provided by operating activities			2,134,589				1,599,047
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for purchase of property and equipment and construction activities			(974,404	)			(724,532	)
Payments for acquisitions			(1,010,637	)			(4,461,764	)
Net proceeds from sale of assets			15,464				—
Proceeds from sales of short-term investments, available-for-sale securities and other long-term assets			1,434,831				421,714
Payments for short-term investments			(1,395,316	)			(427,267	)
Deposits, restricted cash and other			(19,486	)			18,512
Cash used in investing activities			(1,949,548	)			(5,173,337	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from (repayments of) short-term borrowings, net			—				8,191
Borrowings under credit facilities			2,187,000				3,507,000
Proceeds from issuance of senior notes, net			1,415,844				2,221,792
Proceeds from term loan			—				1,500,000
Proceeds from other long-term borrowings			102,070				402,688
Proceeds from issuance of Securities in Securitization transaction, net			—				1,778,496
Repayments of notes payable, credit facilities and capital leases			(3,903,144	)			(5,337,339	)
Contributions from noncontrolling interest holders, net			9,098				17,447
Purchases of common stock			—				(145,012	)
Proceeds from stock options and stock purchase plan			62,276				45,496
Proceeds from the issuance of preferred stock, net			583,105				—
Purchase of preferred stock assumed in an acquisition			(59,111	)			—
Payment for early retirement of long-term obligations			(11,593	)			(29,234	)
Deferred financing costs and other financing activities			(34,670	)			(9,273	)
Purchase of noncontrolling interest			(64,822	)			—
Distributions paid on common stock			(404,631	)			(434,687	)
Distributions paid on preferred stock			(16,013	)			—
Cash (used in) provided by financing activities			(134,591	)			3,525,565
Net effect of changes in foreign currency exchange rates on cash and cash equivalents			(30,534	)			(26,317	)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS			19,916				(75,042	)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR			293,576				368,618
CASH AND CASH EQUIVALENTS, END OF YEAR		$	313,492			$	293,576
CASH PAID FOR INCOME TAXES, NET		$	69,212			$	51,676
CASH PAID FOR INTEREST		$	548,089			$	397,366

 

11

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UNAUDITED RESULTS FROM OPERATIONS, BY SEGMENT

(In thousands, except percentages)

 

Three months ended December 31, 2014
		Rental and Management												Network Development Services				Total
		Domestic				International				Total
Segment revenues		$	680,698			$	349,156			$	1,029,854			$	16,460			$	1,046,314
Segment operating expenses(1)			133,942				135,523				269,465				7,119				276,584
Interest income, TV Azteca, net			—				2,629				2,629				—				2,629
Segment Gross Margin			546,756				216,262				763,018				9,341				772,359
Segment selling, general, administrative and development expense(1)			38,267				36,849				75,116				4,593				79,709
Segment Operating Profit		$	508,489			$	179,413			$	687,902			$	4,748			$	692,650
Segment Operating Profit Margin			75	%			51	%			67	%			29	%			66	%
Three months ended December 31, 2013
		Rental and Management												Network Development Services				Total
		Domestic				International				Total
Segment revenues		$	622,705			$	301,178			$	923,883			$	18,086			$	941,969
Segment operating expenses(1)			123,146				119,905				243,051				8,165				251,216
Interest income, TV Azteca, net(2)			—				11,562				11,562				—				11,562
Segment Gross Margin			499,559				192,835				692,394				9,921				702,315
Segment selling, general, administrative and development expense(1)			32,325				29,585				61,910				2,152				64,062
Segment Operating Profit		$	467,234			$	163,250			$	630,484			$	7,769			$	638,253
Segment Operating Profit Margin			75	%			54	%			68	%			43	%			68	%
Twelve months ended December 31, 2014
		Rental and Management												Network Development Services				Total
		Domestic				International				Total
Segment revenues		$	2,639,790			$	1,367,064			$	4,006,854			$	93,194			$	4,100,048
Segment operating expenses(1)			515,742				539,038				1,054,780				37,648				1,092,428
Interest income, TV Azteca, net			—				10,547				10,547				—				10,547
Segment Gross Margin			2,124,048				838,573				2,962,621				55,546				3,018,167
Segment selling, general, administrative and development expense(1)			124,944				133,978				258,922				12,469				271,391
Segment Operating Profit		$	1,999,104			$	704,595			$	2,703,699			$	43,077			$	2,746,776
Segment Operating Profit Margin			76	%			52	%			67	%			46	%			67	%
Twelve months ended December 31, 2013
		Rental and Management												Network Development Services				Total
		Domestic				International				Total
Segment revenues		$	2,189,365			$	1,097,725			$	3,287,090			$	74,317			$	3,361,407
Segment operating expenses(1)			405,419				422,346				827,765				30,564				858,329
Interest income, TV Azteca, net(2)			—				22,235				22,235				—				22,235
Segment Gross Margin			1,783,946				697,614				2,481,560				43,753				2,525,313
Segment selling, general, administrative and development expense(1)			103,989				123,338				227,327				9,257				236,584
Segment Operating Profit		$	1,679,957			$	574,276			$	2,254,233			$	34,496			$	2,288,729
Segment Operating Profit Margin			77	%			52	%			69	%			46	%			68	%

 

(1)	Excludes stock-based compensation expense.

(2)	Includes approximately $8.0 million of interest income received in connection with a partial loan prepayment by TV Azteca.

 

12

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UNAUDITED SELECTED FINANCIAL INFORMATION

(In thousands, except where noted. Totals may not add due to rounding.)

SELECTED BALANCE SHEET DETAIL:

 

Long-term obligations summary, including current portion		December 31, 2014				Pro Forma December 31, 2014(1)
2013 Credit Facility		$	—			$	115,000
2013 Term Loan			1,500,000				2,000,000
2014 Credit Facility			1,100,000				1,145,000
3.400% Senior Notes due 2019			1,005,509				1,005,509
3.450% Senior Notes due 2021			646,394				646,394
3.500% Senior Notes due 2023			993,230				993,230
4.500% Senior Notes due 2018			999,631				999,631
4.625% Senior Notes due 2015			599,958				—
4.700% Senior Notes due 2022			698,987				698,987
5.000% Senior Notes due 2024			1,010,834				1,010,834
5.050% Senior Notes due 2020			699,496				699,496
5.900% Senior Notes due 2021			499,474				499,474
7.000% Senior Notes due 2017			500,000				500,000
7.250% Senior Notes due 2019			297,260				297,260
Total unsecured debt at American Tower Corporation			10,550,773				10,610,815
Secured Tower Revenue Securities, Series 2013-1A			500,000				500,000
Secured Tower Revenue Securities, Series 2013-2A			1,300,000				1,300,000
GTP Notes(2)			1,263,983				1,263,983
Unison Notes(3)			203,683				203,683
South African Facility(4)			75,133				75,133
Colombian Credit Facility(4)			83,596				83,596
BR Towers Debentures(4)(5)			118,688				118,688
BR Towers Credit Facility(4)(5)			16,389				16,389
Mexican loan(4)			263,426				263,426
Shareholder loans(6)			137,655				137,655
Capital leases			95,382				95,382
Total secured or subsidiary debt			4,057,935				4,057,935
Total debt		$	14,608,708			$	14,668,750
Cash and cash equivalents			313,492
Net debt (total debt less cash and cash equivalents)		$	14,295,216

 

(1)

Pro Forma for the following activity in 2015, (i) net borrowings of $115 million under the 2013 credit facility, (ii) net borrowings of $45 million under the 2014 credit facility, (iii) the redemption of all of the outstanding 4.625% senior notes due 2015 in accordance with the terms thereof and (iv) borrowings of $500 million under the 2013 Term Loan.

(2)	The GTP Notes are secured debt and were assumed in connection with the acquisition of MIPT. In August 2014, the Company repaid in full the aggregate principal amount outstanding of $250 million under the Series 2010-1 notes.

(3)	The Unison Notes are secured debt and were assumed in connection with an acquisition.

(4)	Denominated in local currency.

(5)	The BR Towers debt was assumed in connection with the acquisition of BR Towers.

(6)	Reflects balances attributable to minority shareholder loans in the Company’s joint ventures in Ghana and Uganda. The Ghana shareholder loan is denominated in Ghanaian Cedi and the Uganda shareholder loan is denominated in USD.

 

13

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UNAUDITED SELECTED FINANCIAL INFORMATION

(In thousands, except where noted. Totals may not add due to rounding.)

SELECTED BALANCE SHEET DETAIL (CONTINUED):

 

Calculation of Net Leverage Ratio ($ in thousands)		Three Months Ended December 31, 2014
Total debt		$	14,608,708
Cash and cash equivalents			313,492
Numerator: net debt (total debt less cash and cash equivalents)		$	14,295,216
Adjusted EBITDA		$	661,264
Denominator: annualized Adjusted EBITDA			2,645,056
Net Leverage Ratio			5.4x
Share count rollforward: (in millions of shares)		Three months ended December 31, 2014
Total common shares, beginning of period			396.4
Common shares repurchased			—
Common shares issued			0.3
Total common shares outstanding, end of period(1)			396.7

 

(1)

As of December 31, 2014, excludes (a) 3.0 million potentially dilutive shares associated with vested and exercisable stock options with an average exercise price of $46.77 per share; (b) 3.5 million potentially dilutive shares associated with unvested stock options; (c) 1.7 million potentially dilutive shares associated with unvested restricted stock units; and (d) the potentially dilutive common shares associated with the Company’s mandatory convertible preferred stock.

SELECTED STATEMENT OF OPERATIONS DETAIL:

Rental and management straight-line revenue and expense⁽¹⁾:

 

		Three Months Ended December 31,								Twelve Months Ended December 31,
Domestic straight-line revenue and expense detail:		2014				2013				2014				2013
Straight-line revenue		$	20,801			$	34,120			$	91,490			$	125,367
Straight-line expense		$	6,229			$	5,562			$	29,197			$	19,225
		Three Months Ended December 31,								Twelve Months Ended December 31,
International straight-line revenue and expense detail:		2014				2013				2014				2013
Straight-line revenue		$	6,595			$	7,576			$	32,226			$	22,297
Straight-line expense		$	2,435			$	2,851			$	9,181			$	10,507

 

(1)

In accordance with GAAP, the Company recognizes rental and management revenue and expense related to non-cancellable tenant and ground lease agreements with fixed escalations on a straight-line basis, over the applicable lease term. As a result, the Company’s revenue recognized may differ materially from the amount of cash collected per tenant lease, and the Company’s expense incurred may differ materially from the amount of cash paid per ground lease. Additional information regarding straight-line accounting can be found in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 in the section entitled “Revenue Recognition,” in note 1, “Business and Summary of Significant Accounting Policies” within the notes to the consolidated financial statements. The above table sets forth a summary of total rental and management straight-line revenue and expense, which represents the non-cash revenue and expense recorded due to straight-line recognition.

 

		Three Months Ended December 31,								Twelve Months Ended December 31,
International pass-through revenue detail:		2014				2013				2014				2013
Pass-through revenue		$	93,707			$	83,337			$	362,761			$	295,547

 

14

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UNAUDITED SELECTED FINANCIAL INFORMATION

($ in thousands. Totals may not add due to rounding.)

SELECTED STATEMENT OF OPERATIONS DETAIL (CONTINUED):

 

		Three Months Ended December 31,								Twelve Months Ended December 31,
Prepaid rent detail(1):		2014				2013				2014				2013
Beginning balance		$	447,329			$	244,037			$	326,177			$	198,792
Cash			80,750				101,064				285,256				189,057
Amortization(2)			(31,555	)			(18,924	)			(114,909	)			(61,672	)
Ending balance		$	496,524			$	326,177			$	496,524			$	326,177

 

(1)	Reflects capital contributions and prepayments associated with long-term tenant leases and amortization of those amounts as GAAP revenue over the terms of the associated leases.

(2)	Includes the impact of fluctuations in foreign currency exchange rates.

 

		Three Months Ended December 31,								Twelve Months Ended December 31,
Selling, general, administrative and development expense breakout:		2014				2013				2014				2013
Total rental and management overhead		$	75,116			$	61,910			$	258,922			$	227,327
Network development services segment overhead			4,593				2,152				12,469				9,257
Corporate and development expenses(1)			31,386				38,116				96,835				112,367
Stock-based compensation expense			18,010				14,630				78,316				66,594
Total		$	129,105			$	116,808			$	446,542			$	415,545

 

(1)	2013 includes approximately $10.0 million of legal-related expenses, most of which were subsequently reimbursed to the Company in 2014. The reimbursements are reflected in the 2014 totals.

The following table reflects the estimated impact of foreign currency exchange rate fluctuations, straight-line revenue and expense recognition and material one-time items on total rental and management revenue, Adjusted EBITDA and AFFO:

The calculation of Core Growth is as follows:

 

Three months ended December 31, 2014		Total Rental and Management Revenue				Adjusted EBITDA				AFFO
Core Growth			17.6	%			17.0	%			21.7	%
Estimated impact of fluctuations in foreign currency exchange rates			(3.8	)%			(3.0	)%			(4.2	)%
Impact of straight-line revenue recognition			(2.2	)%			(3.2	)%			—
Impact of material one-time items			—				(0.5	)%			(0.8	)%
Reported growth			11.5	%			10.2	%			16.8	%

 

Twelve months ended December 31, 2014		Total Rental and Management Revenue				Adjusted EBITDA				AFFO
Core Growth			27.5	%			27.3	%			27.3	%
Estimated impact of fluctuations in foreign currency exchange rates			(3.8	)%			(2.8	)%			(3.6	)%
Impact of straight-line revenue recognition			(1.8	)%			(2.8	)%			—
Impact of material one-time items			—				0.2	%			(0.1	)%
Reported growth			21.9	%			21.8	%			23.5	%

 

15

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UNAUDITED SELECTED FINANCIAL INFORMATION

($ in thousands. Totals may not add due to rounding.)

The components of Core Growth in rental and management revenue are as follows:

 

Three months ended December 31, 2014		Domestic				International				Total
Organic Core Growth			9.0	%			12.6	%			10.0	%
Core New Property Growth(1)			3.1	%			16.1	%			7.6	%
Core Growth			12.1	%			28.7	%			17.6	%

 

(1)	Defined as revenue growth associated with properties that the Company has added to the portfolio since the beginning of the prior period.

 

Twelve months ended December 31, 2014		Domestic				International				Total
Organic Core Growth			9.6	%			15.5	%			11.1	%
Core New Property Growth			13.8	%			19.8	%			16.5	%
Core Growth			23.5	%			35.3	%			27.5	%

SELECTED CASH FLOW DETAIL:

 

		Three Months Ended December 31,								Twelve Months Ended December 31,
Payments for purchase of property and equipment and construction activities:		2014				2013				2014				2013
Discretionary - capital projects		$	100,056			$	170,772			$	521,543			$	381,632
Discretionary - ground lease purchases			42,903				29,326				133,729				83,842
Start-up capital projects			11,542				4,527				25,515				26,660
Redevelopment			62,487				45,710				194,430				120,797
Capital improvements			24,740				20,170				75,041				81,218
Corporate			9,322				5,778				24,146				30,383
Total		$	251,050			$	276,283			$	974,404			$	724,532

SELECTED PORTFOLIO DETAIL – OWNED SITES:

 

Tower Count(1):		As of September 30, 2014				Constructed				Acquired				Adjustments				As of December 31, 2014
United States			28,394				51				140				(19	)			28,566
Brazil			6,959				297				4,611				6				11,873
Chile			1,156				2				—				(2	)			1,156
Colombia			3,555				35				—				(1	)			3,589
Costa Rica			460				3				—				1				464
Germany			2,031				—				—				—				2,031
Ghana			2,022				16				—				—				2,038
India			12,533				499				—				(55	)			12,977
Mexico			8,701				6				8				1				8,716
Peru			528				43				—				—				571
South Africa			1,917				1				—				—				1,918
Uganda			1,263				5				—				(3	)			1,265
Total			69,519				958				4,759				(72	)			75,164

 

(1)	Excludes in-building and outdoor distributed antenna system networks.

 

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UNAUDITED RECONCILIATIONS TO GAAP MEASURES AND THE CALCULATION OF DEFINED FINANCIAL MEASURES

(In thousands, except percentages. Totals may not add due to rounding.)

The reconciliation of net income to Adjusted EBITDA and the calculation of Adjusted EBITDA Margin are as follows:

 

		Three Months Ended December 31,								Twelve Months Ended December 31,
		2014				2013				2014				2013
Net income		$	181,597			$	73,925			$	803,199			$	482,208
Income tax provision			12,628				36,180				62,505				59,541
Other expense			7,835				58,509				62,060				207,500
Loss on retirement of long-term obligations			4,920				734				3,473				38,701
Interest expense			147,481				139,380				580,234				458,296
Interest income			(5,853	)			(4,238	)			(14,002	)			(9,706	)
Other operating expenses			30,665				35,853				68,517				71,539
Depreciation, amortization and accretion			263,546				244,811				1,003,802				800,145
Stock-based compensation expense			18,445				14,983				80,153				68,138
Adjusted EBITDA		$	661,264			$	600,137			$	2,649,941			$	2,176,362
Divided by total revenue			1,046,314				941,969				4,100,048				3,361,407
Adjusted EBITDA Margin			63	%			64	%			65	%			65	%

The reconciliation of net income to NAREIT Funds From Operations and the calculation of AFFO and AFFO per Share are presented below:

 

		Three Months Ended December 31,								Twelve Months Ended December 31,
		2014				2013				2014				2013
Net Income		$	181,597			$	73,925			$	803,199			$	482,208
Real estate related depreciation, amortization and accretion			222,548				215,964				878,714				701,292
Losses from sale or disposal of real estate and real estate related impairment charges			15,305				23,645				18,160				32,475
Dividends declared on preferred stock			(11,813	)			—				(23,888	)			—
Adjustments for unconsolidated affiliates and noncontrolling interest			(7,177	)			18,841				(1,815	)			41,000
NAREIT Funds From Operations			400,460				332,375				1,674,370				1,256,975
Straight-line revenue			(27,396	)			(41,696	)			(123,716	)			(147,664	)
Straight-line expense			8,664				8,413				38,378				29,732
Stock-based compensation expense			18,445				14,983				80,153				68,138
Non-cash portion of tax provision			(4,205	)			7,676				(6,707	)			7,865
Non-real estate related depreciation, amortization and accretion			40,998				28,847				125,088				98,853
Amortization of deferred financing costs, capitalized interest and debt discounts and premiums and long-term deferred interest charges(1)			3,489				906				8,622				22,955
Other expense(2)			7,835				58,509				62,060				207,500
Loss on retirement of long-term obligations			4,920				734				3,473				38,701
Other operating expense(3)			15,360				12,208				50,357				39,064
Capital improvement capital expenditures			(24,740	)			(20,170	)			(75,041	)			(81,218	)
Corporate capital expenditures			(9,323	)			(5,778	)			(24,146	)			(30,383	)
Adjustments for unconsolidated affiliates and noncontrolling interest			7,177				(18,841	)			1,815				(41,000	)
AFFO		$	441,684			$	378,166			$	1,814,706			$	1,469,518
Divided by weighted average diluted shares outstanding			400,899				398,609				400,086				399,146
AFFO per Share		$	1.10			$	0.95			$	4.54			$	3.68

 

(1)	Includes accrued non-cash interest expense attributable to joint-venture loans.

(2)	Primarily includes unrealized loss on foreign currency exchange rate fluctuations.

(3)	Primarily includes impairments and transaction related costs.

 

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