American Tower Corporation Reports Third Quarter 2007 Financial Results

American Tower Corporation (NYSE: AMT) today reported financial results for the third quarter ended September 30, 2007: Jim Taiclet, American Tower’s Chief Executive Officer stated, "Continued robust demand for tower space and diligent operational execution by our managers and employees enabled American Tower to deliver another quarter of double digit revenue and Adjusted EBITDA growth. We expect a strong finish for the year, as reflected in our increased 2007 guidance for tower revenue, and anticipate that the favorable leasing environment will extend through 2008. "Strategically, we still seek to add high quality assets to our portfolio while maintaining our track record of investment discipline, both in the US and in selected high growth markets abroad. At the same time, our generation of significant cash from operations and rising Adjusted EBITDA enables American Tower to continue our substantial share repurchase program.” Third Quarter 2007 Operating Highlights American Tower generated the following operating results for the quarter ended September 30, 2007 (unless otherwise indicated, all comparative information is compared against the quarter ended September 30, 2006): Total revenues increased 10% to $367.6 million and rental and management segment revenues increased 10% to $358.6 million. Rental and Management Segment Gross Margin increased 13% to $278.3 million and services segment revenue and Gross Margin increased to $9.0 million and $4.1 million, respectively. Rental and management segment revenue and Gross Margin include approximately $4.3 million and $7.2 million, respectively, of one-time positive items, for the quarter ended September 30, 2007. Total selling, general, administrative and development expense was $49.0 million. The Company’s selling, general, administrative and development expense for the quarter includes stock-based compensation expense of $15.3 million and $6.1 million of additional costs related to the review of the Company’s historical stock option granting practices, related legal and governmental proceedings and other related costs. Including these costs related to the stock option review and the one-time positive items noted above, Adjusted EBITDA increased 14% to $248.6 million and Adjusted EBITDA margin was 68%. Operating income increased to $98.5 million and income from continuing operations increased to $60.1 million. Net income was $59.6 million or $0.15 per basic and $0.14 per diluted common share. Net income for the quarter ended September 30, 2007 includes a $41.7 million income tax benefit related to the realization of future usage of state net operating losses. Free Cash Flow was $142.3 million, consisting of $181.6 million of cash provided by operating activities, less $39.4 million of payments for purchases of property and equipment and construction activities, including $19.2 million of discretionary capital spending. The Company completed the construction of 42 towers and the installation of 6 in-building systems during the quarter and spent approximately $10.6 million on ground lease purchases. Please refer to Non-GAAP and Defined Financial Measures on pages 4 and 5 for definitions of Rental and Management Segment Gross Margin, Services Segment Gross Margin, Adjusted EBITDA, Adjusted EBITDA Margin and Free Cash Flow. For additional financial information, including reconciliations to GAAP measures, please refer to the supplemental schedules of selected financial information on pages 9 through 12. Stock Repurchase Program During the quarter ended September 30, 2007, the Company repurchased a total of 8.2 million shares of its Class A common stock for approximately $339 million. As of October 25, 2007 the Company had repurchased pursuant to its publicly announced stock repurchase programs an aggregate of 46.8 million shares of its Class A common stock for approximately $1,773 million since November 2005, which includes the repurchase of 2.9 million shares of its Class A common stock for approximately $125 million during the period October 1, 2007 to October 25, 2007. The Company expects to complete the remaining $477 million of stock repurchases pursuant to its current $1.5 billion stock repurchase program by the end of February 2008. International Expansion Update The Company announced today that Steven Marshall had joined the Company as Executive Vice President, International Business Development. In this role, Mr. Marshall will be responsible for developing international business opportunities and will report directly to the Company’s Chief Executive Officer, Jim Taiclet. Jim Taiclet said, "Steve Marshall is a tremendous addition to our executive management team -- a truly unique talent, having both led a major multinational tower company and successfully driven significant business development initiatives during his career in all of the regions that we are exploring for possible expansion. I am truly excited to have Steve join our senior management team.” Mr. Marshall comes to American Tower from National Grid Plc, where he served in a number of leadership and business development positions since 1997. Between 2003 and 2007, Mr. Marshall was Chief Executive Officer, National Grid Wireless, where he led National Grid’s wireless tower infrastructure business in the United States and United Kingdom. In addition, during his tenure at National Grid, as well as at Costain Group Plc and Tootal Group Plc, he led operational and business development efforts in Latin America, India, Southeast Asia, Africa and the Middle East. Full Year 2007 and 2008 Outlook The following estimates are based on a number of assumptions that management believes to be reasonable, and reflect the Company’s expectations as of November 7, 2007. Please refer to the cautionary language regarding "forward-looking” statements included in this press release when considering this information. The Company undertakes no obligation to update this information. ($ in millions)   Full Year 2007   Full Year 2008 Rental and management segment revenue (1) $ 1,415   to   $ 1,420 $ 1,505   to   $ 1,530 Rental and management segment gross margin (1)(2) 1,089 to 1,095 1,164 to 1,193   Services segment revenue 30 to 32 35 to 50 Services segment gross margin (2) 14 to 15 15 to 20   Adjusted EBITDA (1)(2)(3) 978 to 984 1,055 to 1,085   Depreciation, amortization and accretion 523 to 527 520 to 526 Interest expense 236 to 234 265 to 255 Income from continuing operations (4) 118 to 122 113 to 130 ($ in millions) Full Year 2007 Full Year 2008 Cash provided by operating activities (5) $ 695 to $ 705 $ 770 to $ 810 Payments for purchase of property and equipment and construction activities (6) 145 to 150 155 to 185 (1) The Company’s full year 2008 outlook includes an estimated decrease in non-cash straight-line revenues of approximately $25 million from the full year 2007. For more information on straight-line revenues, we refer you to the information contained in the section entitled "Revenue Recognition” of note 1 "Business and Summary of Significant Accounting Policies” within the notes to the consolidated financial statements of our Form 10-K for the year ended December 31, 2006. (2) See Non-GAAP and Defined Financial Measures below. (3) The Company’s outlook for Adjusted EBITDA does not include any estimate of future costs associated with the legal and governmental proceedings related to the review of the Company’s historical stock option granting practices and excludes $55 million to $57 million and $55 million to $59 million of stock-based compensation expense from its full year 2007 and 2008 outlook, respectively. (4) The Company’s full year 2007 outlook for income from continuing operations includes a loss on retirement of long-term obligations of approximately $32 million related to the following financing transactions by the Company in 2007: (a) repayment and termination of the SpectraSite and American Tower senior secured credit facilities; (b) tender offer and consent solicitation for the Company’s 7.25% Senior Subordinated Notes due 2011 of American Towers, Inc.; (c) conversions of the Company’s 3.25% Convertible Notes due 2010; (d) the redemption of the Company’s 5.0% Convertible Notes due 2009; and (e) repayment and termination of the Company’s unsecured term loan credit facility. (5) The Company’s full year 2007 outlook for cash provided by operating activities includes: (a) the receipt of approximately $80 million in proceeds by the Company from its previously announced federal income tax refund related to the carry back of certain federal net operating losses; (b) a reduction of approximately $35 million of net cash receipts related to towers included in the Company’s securitization transaction, which are classified as restricted cash until all necessary payments and reserves are satisfied and the balance is disbursed to the Company on a monthly basis; and (c) the expected payment of $32 million related to the Verestar bankruptcy settlement and related litigation. (6) The Company’s full year 2007 outlook for capital expenditures includes costs for the construction of approximately 165 new sites, including in-building systems, and approximately $40 million of ground lease purchases. The Company’s full year 2008 outlook for capital expenditures includes costs for the construction of approximately 250 to 350 new sites, including in-building systems, and approximately $40 million to $50 million of ground lease purchases. Conference Call Information American Tower will host a conference call today at 8:30 a.m. ET to discuss its third quarter 2007 results and the Company’s outlook for the full year 2007 and 2008. The call will be hosted by Brad Singer, Chief Financial Officer, who will be joined by Jim Taiclet, Chief Executive Officer. The conference call dial-in numbers are as follows: US/Canada dial-in: (877) 235-9047 International dial-in: (706) 645-9644 Passcode: 20977029 A replay of the call will be available from 9:30 a.m. ET November 7, 2007 until 11:59 p.m. November 14, 2007. The replay dial-in numbers are as follows: US/Canada dial-in: (800) 642-1687 International dial-in: (706) 645-9291 Passcode: 20977029 American Tower will also sponsor a live simulcast of the call on its website, www.americantower.com. When available, a replay of the call will be available on the Company’s website. About American Tower American Tower is a leading independent owner, operator and developer of broadcast and wireless communications sites. American Tower owns and operates over 22,500 sites in the United States, Mexico and Brazil. Additionally, American Tower manages approximately 2,000 revenue producing rooftop and tower sites. For more information about American Tower, please visit www.americantower.com. Non-GAAP and Defined Financial Measures In addition to the results prepared in accordance with generally accepted accounting principles (GAAP) provided throughout this press release, the Company has presented the following non-GAAP and defined financial measures: Rental and Management Segment Gross Margin, Services Segment Gross Margin, Adjusted EBITDA, Adjusted EBITDA Margin and Free Cash Flow. American Tower defines Rental and Management Segment Gross Margin as operating income before depreciation, amortization and accretion, impairments, net loss on sale of long-lived assets, restructuring and merger related expense, stock-based compensation expense, corporate expenses, rental and management segment overhead, services segment overhead, services segment operating expenses, services segment revenue, plus interest income, TV Azteca, net. American Tower defines Services Segment Gross Margin as operating income before depreciation, amortization and accretion, impairments, net loss on sale of long-lived assets, restructuring and merger related expense, stock-based compensation expense, corporate expenses, services segment overhead, rental and management segment overhead, rental and management segment operating expenses, and rental and management segment revenue. American Tower defines Adjusted EBITDA as operating income before depreciation, amortization and accretion, impairments, net loss on sale of long-lived assets, restructuring and merger related expense, and stock-based compensation expense, plus interest income, TV Azteca, net. American Tower defines Adjusted EBITDA Margin as a percentage of Adjusted EBITDA over total revenue. American Tower defines Free Cash Flow as cash provided by operating activities less payments for purchase of property and equipment and construction activities. These measures are not intended as substitutes for other measures of financial performance determined in accordance with GAAP. They are presented as additional information because management believes they are useful indicators of the current financial performance of our core businesses. We believe that these measures can assist in comparing company performances on a consistent basis irrespective of depreciation and amortization or capital structure. Depreciation and amortization can vary significantly among companies depending on accounting methods, particularly where acquisitions or non-operating factors including historical cost bases are involved. Notwithstanding the foregoing, the Company’s measures of Rental and Management Segment Gross Margin, Services Segment Gross Margin, Adjusted EBITDA, Adjusted EBITDA Margin and Free Cash Flow may not be comparable to similarly titled measures used by other companies. Cautionary Language Regarding Forward-Looking Statements This press release contains "forward-looking” statements concerning the Company’s goals, beliefs, expectations, strategies, objectives, plans, future operating results and underlying assumptions, and other statements that are not necessarily based on historical facts. Actual results may differ materially from those indicated in our forward-looking statements as a result of various important factors, including: (1) a decrease in demand for tower space would materially and adversely affect our operating results and we cannot control that demand; (2) if our wireless service provider customers consolidate or merger with each other to a significant degree, our growth, revenue and ability to generate positive cash flows could be adversely affected; (3) substantial leverage and debt service obligations may adversely affect us; (4) restrictive covenants in our Revolving Credit Facility, the indentures governing our debt securities, and the loan agreement related to our Securitization could adversely affect our business by limiting flexibility; (5) we could suffer adverse tax and other financial consequences if taxing authorities do not agree with our tax positions, including with respect to our utilization of net operating losses; (6) due to the long-term expectations of revenue from tenant leases, the tower industry is sensitive to the creditworthiness of it tenants; (7) our foreign operations are subject to economic, political and other risks that could adversely affect our revenues or financial position; (8) a substantial portion of our revenue is derived from a small number of customers; (9) new technologies could make our tower leasing business less desirable to potential tenants and result in decreasing revenues; (10) we could have liability under environmental laws; (11) our business is subject to governmental regulations and changes in current or future laws or regulations could restrict our ability to operate our business as we currently do; (12) increasing competition in the tower industry may create pricing pressures that may adversely affect us; (13) if we are unable to protect our rights to the land under our towers, it could adversely affect our business and operating results; (14) if we are unable or choose not to exercise our rights to purchase towers that are subject to lease and sublease agreements at the end of the applicable period, our cash flows derived from such towers would be eliminated; (15) our towers may be affected by natural disasters and other unforeseen damage for which our insurance may not provide adequate coverage; (16) our costs could increase and our revenues could decrease due to perceived health risks from radio emissions, especially if these risks are substantiated; (17) our stock option granting practices are subject to ongoing governmental proceedings, which could result in fines, penalties or other liability; and (18) pending civil litigation relating to our stock option granting practices exposes us to risks and uncertainties. For other important information regarding these risk factors, we refer you to the information contained in Item 1A of our Form 10-Q for the quarter ended June 30, 2007 under the caption "Risk Factors”. Forward-looking statements represent the Company’s current expectations and are inherently uncertain. We undertake no obligation to update the information contained in this press release to reflect subsequently occurring events or circumstances. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)   September 30, 2007   December 31, 2006 ASSETS Current assets: Cash and cash equivalents $ 82,735 $ 281,264 Restricted cash (1) 41,154 Short-term investments and available-for-sale securities 5,219 22,986 Accounts receivable, net 46,426 29,368 Prepaid and other current assets 86,630 63,919 Deferred income taxes   23,494     88,485   Total current assets   285,658     486,022   Property and equipment, net 3,071,125 3,218,124 Goodwill 2,180,544 2,189,767 Other intangible assets, net 1,722,185 1,820,876 Deferred income taxes 497,190 482,710 Notes receivable and other long-term assets   446,736     415,720   Total $ 8,203,438   $ 8,613,219     LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable and accrued expenses $ 203,864 $ 187,634 Accrued interest 36,938 41,319 Current portion of long-term obligations 1,770 253,907 Unearned revenue   95,990     86,769   Total current liabilities   338,562     569,629   Long-term obligations 4,025,145 3,289,109 Other long-term liabilities   460,621     365,974   Total liabilities   4,824,328     4,224,712     Minority interest in subsidiaries   3,405     3,591     STOCKHOLDERS’ EQUITY Class A Common Stock 4,504 4,378 Additional paid-in capital 7,734,641 7,502,472 Accumulated deficit (2,697,824 ) (2,733,920 ) Accumulated other comprehensive (loss) income (2,853 ) 16,079 Treasury stock   (1,662,763 )   (404,093 ) Total stockholders’ equity   3,375,705     4,384,916   Total $ 8,203,438   $ 8,613,219   (1) The amounts classified as restricted cash reflect funds held in reserve accounts by the two special-purpose subsidiaries of the Company formed in connection with the Company’s completed securitization transaction with respect to debt service payments, ground rents, real estate and personal property taxes, insurance premiums and management fees, and to reserve a portion of advance rents from tenants on the tower sites. UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (In thousands, except per share data)   Three Months Ended September 30,   Nine Months Ended September 30,   2007       2006     2007       2006   REVENUES: Rental and management $ 358,623 $ 326,403 $ 1,055,427 $ 962,831 Network development services   8,962     7,064     23,055     16,908   Total operating revenues   367,585     333,467     1,078,482     979,739   OPERATING EXPENSES: Costs of operations (exclusive of items shown separately below) Rental and management 83,936 84,601 253,607 247,270 Network development services 4,841 2,961 12,495 7,641 Depreciation, amortization and accretion 131,484 131,357 393,315 397,429 Selling, general, administrative and development expense (1) 49,030 42,384 139,736 115,307 Impairments, net (gain) loss on sale of long-lived assets, restructuring and merger related expense   (197 )   157     1,432     1,604   Total operating expenses   269,094     261,460     800,585     769,251   OPERATING INCOME   98,491     72,007     277,897     210,488   OTHER INCOME (EXPENSE) Interest income, TV Azteca, net 3,584 3,584 10,666 10,666 Interest income 2,345 2,292 9,186 5,021 Interest expense (59,919 ) (54,448 ) (171,577 ) (162,395 ) Loss on retirement of long-term obligations (108 ) (893 ) (33,168 ) (25,967 ) Other income (expense)   1,341     (5,416 )   18,213     974   Total other expense   (52,757 )   (54,881 )   (166,680 )   (171,701 ) INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES, MINORITY INTEREST AND INCOME ON EQUITY METHOD INVESTMENTS   45,734     17,126     111,217     38,787   Income tax benefit (provision) 14,483 (13,350 ) (17,714 ) (28,112 ) Minority interest in net earnings of subsidiaries (80 ) (60 ) (264 ) (597 ) Income on equity method investments   2     6     10     16   INCOME FROM CONTINUING OPERATIONS 60,139 3,722 93,249 10,094   LOSS FROM DISCONTINUED OPERATIONS, NET   (511 )   (250 )   (31,384 )   (895 )   NET INCOME $ 59,628   $ 3,472   $ 61,865   $ 9,199     NET INCOME (LOSS) PER COMMON SHARE AMOUNTS: BASIC Income from continuing operations $ 0.15 $ 0.01 $ 0.22 $ 0.02 Loss from discontinued operations       (0.07 )   Net income $ 0.15   $ 0.01   $ 0.15   $ 0.02     DILUTED Income from continuing operations $ 0.14 $ 0.01 $ 0.22 $ 0.02 Loss from discontinued operations       (0.07 )   Net income $ 0.14   $ 0.01   $ 0.15   $ 0.02     WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: BASIC   410,071     425,942     416,418     423,612   DILUTED   418,012     435,138     426,430     435,035   (1) Selling, general, administrative and development expense includes $15,266 and $10,683 of stock-based compensation expense for the three months ended September 30, 2007 and September 30, 2006, respectively, and $43,480 and $29,541 of stock-based compensation expense for the nine months ended September 30, 2007 and September 30, 2006, respectively. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)   Nine Months Ended September 30,   2007       2006   CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 61,865 $ 9,199 Stock-based compensation expense 43,480 29,541 Other non-cash items reflected in statements of operations 477,738 461,420 Increase in restricted cash (1) (34,968 ) Increase in net deferred rent asset (32,107 ) (24,670 ) Decrease (increase) in other assets (2) 41,191 (19,403 ) Increase in liabilities   6,602     19,082   Cash provided by operating activities   563,801     475,169     CASH FLOWS FROM INVESTING ACTIVITIES: Payments for purchase of property and equipment and construction activities (106,966 ) (90,662 ) Payments for acquisitions (20,694 ) (10,103 ) Payments for acquisitions of minority interests (22,944 ) Proceeds from sale of available-for-sale securities and other assets 20,068 26,688 Deposits, restricted cash, short-term investments and other assets   (9,774 )   (246 ) Cash used for investing activities   (117,366 )   (97,267 )   CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of Certificates in securitization transaction 1,750,000 Proceeds from term loan credit facility 500,000 232,000 Borrowings under revolving credit facilities 1,400,000 10,000 Repayments of notes payable, credit facilities and capital leases (3,111,766 ) (272,427 ) Purchases of Class A common stock (1,252,702 ) (289,459 ) Proceeds from stock options, warrants and stock purchase plan 110,415 38,780 Deferred financing costs   (40,911 )   (2,295 ) Cash used for financing activities   (644,964 )   (283,401 )   NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (198,529 ) 94,501 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR   281,264     112,701   CASH AND CASH EQUIVALENTS, END OF PERIOD $ 82,735   $ 207,202     CASH PAID FOR INCOME TAXES $ 20,042   $ 19,588   CASH PAID FOR INTEREST $ 170,996   $ 137,362     (1) Reflects the net increase in cash held in reserve accounts related to the Company’s securitization transaction as these accounts are classified as restricted cash.   (2) Includes the receipt of approximately $80 million in proceeds by the Company from its previously announced federal income tax refund related to the carry back of certain federal net operating losses. UNAUDITED SELECTED FINANCIAL INFORMATION (In thousands, except where noted) SELECTED BALANCE SHEET DETAIL: Long-term obligations summary, including current portion:   September 30, 2007   As Adjusted (1) Commercial Mortgage Pass-Through Certificates, Series 2007-1 $1,750,000 $1,750,000 Unsecured Revolving Credit Facility 550,000 550,000 Unsecured Term Loan Credit Facility (2) 500,000 7.000% Senior Notes due 2017 500,000 7.500% Senior Notes due 2012 225,000 225,000 7.125% Senior Notes due 2012 502,530 502,530 5.000% Convertible Notes due 2010 59,683 59,683 3.250% Convertible Notes due 2010 34,833 18,333 3.000% Convertible Notes due 2012 344,546 344,546 7.250% Senior Subordinated Notes due 2011 288 288 Other debt, including capital leases 60,035 60,035 Total debt $4,026,915 $4,010,415 Cash and cash equivalents 82,735 Net debt (Total debt less cash and cash equivalents) $3,944,180 Share count rollforward (in millions):   Total shares outstanding, as of June 30, 2007 413.5 Shares repurchased (8.2 ) Shares issued – warrant exercises 0.1 Shares issued – employee stock option exercises 0.7   Total shares outstanding, as of September 30, 2007 406.1   (1) Long-term obligations as adjusted reflects the following transactions: (a) on October 1, 2007, the Company completed an institutional private placement of $500.0 million aggregate principal amount of its 7.000% Senior Notes due 2017. The net proceeds from this offering were approximately $493.5 million, and were used, together with cash on hand, to repay all of the outstanding indebtedness incurred under the Company’s $500.0 million senior unsecured term loan credit facility. The Company terminated the term loan upon repayment; and (b) in October 2007, a holder of approximately $16.5 million principal amount of the Company’s 3.250% Convertible Notes due 2010 converted its notes into 1.3 million shares of the Company’s Class A common stock. In connection with the conversion, the Company paid the noteholder approximately $0.5 million calculated based on accrued and unpaid interest and discounted value of future interest payments on the notes. (2) On August 30, 2007, the Company entered into a new $500.0 million senior unsecured term loan credit facility. In connection with that transaction, the Company received $498.5 million of net proceeds from the term loan, which were used to repay $450.0 million of borrowings under the Company’s senior unsecured revolving credit facility and the remainder for general corporate purposes. UNAUDITED SELECTED FINANCIAL INFORMATION, CONTINUED (In thousands, except where noted) SELECTED INCOME STATEMENT DETAIL: Selling, general, administrative and development expense breakout:   Three Months Ended September 30,   Nine Months Ended September 30,   2007     2006   2007     2006 Rental and management segment overhead $ 15,885 $ 13,990 $ 48,847 $ 45,600 Services segment overhead 871 1,063 2,674 2,975 Corporate expenses (1) 17,008 16,648 44,735 37,191 Stock-based compensation expense   15,266   10,683   43,480   29,541 Total $ 49,030 $ 42,384 $ 139,736 $ 115,307 (1) Includes $6,052 and $8,195 of costs related to the review of the Company’s historical stock option granting practices, related legal and governmental proceedings and other related costs for the three months ended September 30, 2007 and September 30, 2006, respectively. Includes $10,599 and $9,529 of costs related to the review of the Company’s historical stock option granting practices, related legal and governmental proceedings and other related costs for the nine months ended September 30, 2007 and September 30, 2006, respectively. Interest expense detail:   Three Months Ended September 30,   2007     2006 Commercial Mortgage Pass-Through Certificates, Series 2007-1 $ 25,863 Unsecured Revolving Credit Facility 13,698 Unsecured Term Loan Credit Facility 2,423 7.500% Senior Notes due 2012 4,219 $ 4,219 7.125% Senior Notes due 2012 8,580 8,858 5.000% Convertible Notes due 2010 746 3,248 3.250% Convertible Notes due 2010 283 876 3.000% Convertible Notes due 2012 2,610 2,610 Secured OpCo Credit Facilities 27,178 7.250% Senior Subordinated Notes due 2011 5 6,411 Other debt, including capital leases   1,492   1,048 Total $ 59,919 $ 54,448 SELECTED CASH FLOW DETAIL:     Payments for purchase of property and equipment and construction activities: Three Months Ended September 30, Nine Months Ended September 30, 2007   2006 2007   2006 Discretionary – new tower build and in-building installation $8,547 $11,364 $20,036 $35,671 Discretionary – ground lease purchases 10,628 4,437 30,956 6,903 Redevelopment 8,704 7,168 24,218 21,306 Capital improvements 7,791 7,664 20,363 19,485 Corporate 3,710 2,985 11,393 7,297 Total $39,380 $33,618 $106,966 $90,662 SELECTED PORTFOLIO DETAIL – OWNED SITES: Three Months Ended September 30, 2007   Wireless   Broadcast   In-building   Total Beginning balance, July 1, 2007 21,926 407 144 22,477 New construction 42 6 48 Acquisitions 51 51 Reductions (18 )     (18 ) Ending balance, September 30, 2007 22,001   407 150 22,558   UNAUDITED RECONCILIATIONS TO GAAP MEASURES AND THE CALCULATION OF DEFINED FINANCIAL MEASURES (In thousands, except where noted)   The reconciliation of net income to Adjusted EBITDA and the calculation of Rental and Management Segment Operating Profit, Rental and Management Gross Margin, Services Segment Operating Profit, Services Segment Gross Margin and Adjusted EBITDA Margin are as follows:   Three Months Ended September 30,   Nine Months Ended September 30,   2007       2006     2007       2006   Net income $ 59,628 $ 3,472 61,865 9,199 Loss from discontinued operations, net   511     250     31,384     895   Income from continuing operations   60,139     3,722     93,249     10,094   Interest expense 59,919 54,448 171,577 162,395 Interest income (2,345 ) (2,292 ) (9,186 ) (5,021 ) Income tax (benefit) provision (14,483 ) 13,350 17,714 28,112 Depreciation, amortization and accretion 131,484 131,357 393,315 397,429 Impairments, net (gain) loss on sale of long-lived assets, restructuring and merger related expense (197 ) 157 1,432 1,604 Loss on retirement of long-term obligations 108 893 33,168 25,967 Minority interest in net earnings of subsidiaries 80 60 264 597 Income on equity method investments (2 ) (6 ) (10 ) (16 ) Stock-based compensation expense 15,266 10,683 43,480 29,541 Other (income) expense   (1,341 )   5,416     (18,213 )   (974 ) Adjusted EBITDA $ 248,628   $ 217,788   $ 726,790   $ 649,728   Corporate expenses, excluding stock-based compensation expense 17,008 16,648 44,735 37,191 Services segment overhead 871 1,063 2,674 2,975 Services segment operating expenses 4,841 2,961 12,495 7,641 Services segment revenue   (8,962 )   (7,064 )   (23,055 )   (16,908 ) Rental and Management Segment Operating Profit $ 262,386   $ 231,396   $ 763,639   $ 680,627   Rental and Management segment overhead   15,885     13,990     48,847     45,600   Rental and Management Segment Gross Margin $ 278,271   $ 245,386   $ 812,486   $ 726,227     Adjusted EBITDA (from above) $ 248,628 $ 217,788 $ 726,790 $ 649,728 Corporate expenses, excluding stock-based compensation expense 17,008 16,648 44,735 37,191 Rental and Management segment overhead 15,885 13,990 48,847 45,600 Rental and Management segment operating expenses 83,936 84,601 253,607 247,270 Interest income, TV Azteca, net (3,584 ) (3,584 ) (10,666 ) (10,666 ) Rental and Management segment revenue   (358,623 )   (326,403 )   (1,055,427 )   (962,831 ) Services Segment Operating Profit $ 3,250   $ 3,040   $ 7,886   $ 6,292   Services segment overhead   871     1,063     2,674     2,975   Services Segment Gross Margin $ 4,121   $ 4,103     10,560     9,267     Adjusted EBITDA (from above) $ 248,628 $ 217,788 $ 726,790 $ 649,728 Divided by total operating revenues   367,585     333,467     1,078,482     979,739   Adjusted EBITDA Margin   68 %   65 %   67 %   66 % UNAUDITED CALCULATION OF DEFINED FINANCIAL MEASURES, CONTINUED (In thousands)   The calculation of Free Cash Flow is as follows:   Three Months Ended September 30,   Nine Months Ended September 30, 2007     2006   2007     2006   Cash provided by operating activities (1) (2) $181,637 $182,528 $563,801 $475,169 Payments for purchase of property and equipment and construction activities (39,380 ) (33,618 ) (106,966 ) (90,662 ) Free Cash Flow $142,257   $148,910   $456,835   $384,507   (1) Cash provided by operating activities for the three months ended September 30, 2007 includes a reduction of approximately $13 million of net cash receipts related to towers included in the Company’s securitization transaction, which are classified as restricted cash until all necessary payments and reserves are satisfied and the balance is disbursed to the Company on a monthly basis. (2) Cash provided by operating activities for the nine months ended September 30, 2007 includes the receipt of approximately $80 million in proceeds by the Company from its previously announced federal income tax refund related to the carry back of certain federal net operating losses and a reduction of approximately $35 million of net cash receipts related to towers included in the Company’s securitization transaction, as further described above. UNAUDITED RECONCILIATIONS OF OUTLOOK TO GAAP MEASURES (In millions)   The reconciliation of Income from continuing operations to Adjusted EBITDA Outlook is as follows:   Full Year 2007   Full Year 2008 Income from continuing operations (1) $ 118   to   $ 122 $ 113   to   $ 130 Interest expense 236 to 234 265 to 255 Depreciation, amortization and accretion 523 to 527 520 to 526 Stock-based compensation expense 55 to 57 55 to 59 Other, including impairments, net loss on sale of long-lived assets, restructuring and merger related expense, interest income, loss on retirement of long-term obligations, income (loss) on equity method investments, other income (expense), income tax benefit (provision) and minority interest in net earnings of subsidiaries (2)   46 to   44   102 to   115 Adjusted EBITDA $ 978 to $ 984 $ 1,055 to $ 1,085 (1) The company has not reconciled Adjusted EBITDA Outlook to net income because it does not provide guidance for net income (loss) from discontinued operations, net, which is the reconciling item between income from continuing operations and net income. As items that impact income (loss) from discontinued operations are out of the Company’s control and/or cannot be reasonable predicted, the Company is unable to provide such guidance. Accordingly, a reconciliation to net income is not available without unreasonable effort. (2) The Company’s full year 2007 outlook for income from continuing operations includes approximately $32 million loss on retirement of long-term obligations related to the following financing transactions by the Company in 2007: (a) repayment and termination of the Spectrasite and American Tower senior secured credit facilities; (b) tender offer and consent solicitation for the Company’s 7.25% Senior Subordinated Notes due 2011 of American Towers, Inc.; (c) conversions of the Company’s 3.25% Convertible Notes due 2010; (d) the redemption of the Company’s 5.0% Convertible Notes due 2009; and (e) repayment and termination of the Company’s unsecured term loan credit facility.