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EX-32 - EXHIBIT 32 - AMERICAN TOWER CORP /MA/exhibit32q12017.htm
EX-31.2 - EXHIBIT 31.2 - AMERICAN TOWER CORP /MA/exhibit312q12017.htm
EX-31.1 - EXHIBIT 31.1 - AMERICAN TOWER CORP /MA/exhibit311q12017.htm
EX-12 - EXHIBIT 12 - AMERICAN TOWER CORP /MA/exhibit12q12017.htm


 
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
 
FORM 10-Q
 
 
 
(Mark One):
x
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the quarterly period ended March 31, 2017.
¨

Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Commission File Number: 001-14195
 
 
 
AMERICAN TOWER CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
 
65-0723837
(State or other jurisdiction of
Incorporation or Organization)
 
(I.R.S. Employer
Identification No.)
116 Huntington Avenue
Boston, Massachusetts 02116
(Address of principal executive offices)
Telephone Number (617) 375-7500
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:    Yes  x    No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check One):
Large accelerated filer
 
x
  
Accelerated filer
 
¨
 
 
 
 
Non-accelerated filer
 
¨
  
Smaller reporting company
 
¨
 
 
 
 
 
 
 
Emerging growth company
 
¨
 
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):    Yes  ¨    No  x
As of April 20, 2017, there were 425,009,451 shares of common stock outstanding.
 
 
 





AMERICAN TOWER CORPORATION
TABLE OF CONTENTS
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2017

 
 
 
Page Nos.
 
 
 
 
PART I. FINANCIAL INFORMATION
 
 
Item 1.
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
Item 3.
 
Item 4.
 
PART II. OTHER INFORMATION
 
 
Item 1.
 
Item 1A.
 
Item 2.
 
Item 6.
 
 
 





PART I.
FINANCIAL INFORMATION
ITEM 1.
UNAUDITED CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
 
 
March 31, 2017
 
December 31, 2016
ASSETS
 
 
 
 
CURRENT ASSETS:
 
 
 
 
Cash and cash equivalents
 
$
712,778

 
$
787,161

Restricted cash
 
145,478

 
149,281

Short-term investments
 
5,294

 
4,026

Accounts receivable, net
 
369,972

 
308,369

Prepaid and other current assets
 
477,665

 
441,033

Total current assets
 
1,711,187

 
1,689,870

PROPERTY AND EQUIPMENT, net
 
10,717,160

 
10,517,258

GOODWILL
 
5,379,830

 
5,070,680

OTHER INTANGIBLE ASSETS, net
 
11,826,886

 
11,274,611

DEFERRED TAX ASSET
 
206,331

 
195,678

DEFERRED RENT ASSET
 
1,352,642

 
1,289,530

NOTES RECEIVABLE AND OTHER NON-CURRENT ASSETS
 
863,353

 
841,523

TOTAL
 
$
32,057,389

 
$
30,879,150

LIABILITIES
 
 
 
 
CURRENT LIABILITIES:
 
 
 
 
Accounts payable
 
$
109,424

 
$
118,666

Accrued expenses
 
742,500

 
620,563

Distributions payable
 
267,369

 
250,550

Accrued interest
 
98,220

 
157,297

Current portion of long-term obligations
 
1,707,330

 
238,806

Unearned revenue
 
284,215

 
245,387

Total current liabilities
 
3,209,058

 
1,631,269

LONG-TERM OBLIGATIONS
 
17,182,754

 
18,294,659

ASSET RETIREMENT OBLIGATIONS
 
1,011,071

 
965,507

DEFERRED TAX LIABILITY
 
952,893

 
777,572

OTHER NON-CURRENT LIABILITIES
 
1,186,785

 
1,142,723

Total liabilities
 
23,542,561

 
22,811,730

COMMITMENTS AND CONTINGENCIES
 


 


REDEEMABLE NONCONTROLLING INTERESTS
 
1,129,988

 
1,091,220

EQUITY:
 
 
 
 
Preferred stock: $.01 par value; 20,000,000 shares authorized;
 
 
 
 
5.25%, Series A, 6,000,000 shares issued and outstanding; aggregate liquidation value of $600,000
 
60

 
60

5.50%, Series B, 1,375,000 shares issued and outstanding; aggregate liquidation value of $1,375,000
 
14

 
14

Common stock: $.01 par value; 1,000,000,000 shares authorized; 430,931,594 and 429,912,536 shares issued; and 426,247,652 and 427,102,510 shares outstanding, respectively
 
4,309

 
4,299

Additional paid-in capital
 
10,094,017

 
10,043,559

Distributions in excess of earnings
 
(1,053,706
)
 
(1,076,965
)
Accumulated other comprehensive loss
 
(1,759,489
)
 
(1,999,332
)
Treasury stock (4,683,942 and 2,810,026 shares at cost, respectively)
 
(432,731
)
 
(207,740
)
Total American Tower Corporation equity
 
6,852,474

 
6,763,895

Noncontrolling interests
 
532,366

 
212,305

Total equity
 
7,384,840

 
6,976,200

TOTAL
 
$
32,057,389

 
$
30,879,150

See accompanying notes to unaudited consolidated and condensed consolidated financial statements.

1



AMERICAN TOWER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
 
 
 
Three Months Ended March 31,
 
 
2017
 
2016
REVENUES:
 
 
 
 
Property
 
$
1,594,064

 
$
1,267,651

Services
 
22,174

 
21,396

Total operating revenues
 
1,616,238

 
1,289,047

 OPERATING EXPENSES:
 
 
 
 
Costs of operations (exclusive of items shown separately below):
 
 
 
 
Property (including stock-based compensation expense of $655 and $507, respectively)
 
486,167

 
342,290

Services (including stock-based compensation expense of $223 and $151, respectively)
 
6,541

 
9,155

Depreciation, amortization and accretion
 
421,140

 
341,634

Selling, general, administrative and development expense (including stock-based compensation expense of $35,344 and $27,421, respectively)
 
164,796

 
135,315

Other operating expenses
 
6,215

 
8,800

Total operating expenses
 
1,084,859

 
837,194

OPERATING INCOME
 
531,379

 
451,853

OTHER INCOME (EXPENSE):
 
 
 
 
Interest income, TV Azteca, net of interest expense of $291 and $283, respectively
 
2,700

 
2,716

Interest income
 
9,927

 
3,534

Interest expense
 
(183,695
)
 
(159,880
)
Loss on retirement of long-term obligations
 
(55,440
)
 

Other income (including unrealized foreign currency gains of $27,951 and $29,362, respectively)
 
29,302

 
12,208

Total other expense
 
(197,206
)
 
(141,422
)
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
 
334,173

 
310,431

Income tax provision
 
(26,763
)
 
(29,124
)
NET INCOME
 
307,410

 
281,307

Net loss (income) attributable to noncontrolling interests
 
8,670

 
(6,148
)
NET INCOME ATTRIBUTABLE TO AMERICAN TOWER CORPORATION STOCKHOLDERS
 
316,080

 
275,159

Dividends on preferred stock
 
(26,781
)
 
(26,781
)
NET INCOME ATTRIBUTABLE TO AMERICAN TOWER CORPORATION COMMON STOCKHOLDERS
 
$
289,299

 
$
248,378

NET INCOME PER COMMON SHARE AMOUNTS:
 
 
 
 
Basic net income attributable to American Tower Corporation common stockholders
 
$
0.68

 
$
0.59

Diluted net income attributable to American Tower Corporation common stockholders
 
$
0.67

 
$
0.58

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
 
 
 
 
BASIC
 
427,279

 
424,059

DILUTED
 
430,199

 
427,888

DISTRIBUTIONS DECLARED PER COMMON SHARE
 
$
0.62

 
$
0.51

See accompanying notes to unaudited consolidated and condensed consolidated financial statements.

2



AMERICAN TOWER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands)
 
 
 
Three Months Ended March 31,
 
 
2017
 
2016
Net income
 
$
307,410

 
$
281,307

Other comprehensive income (loss):
 
 
 
 
Changes in fair value of cash flow hedges, net of tax of $0
 
(134
)
 
74

Reclassification of unrealized gains on cash flow hedges to net income, net of tax of $0
 
(86
)
 
(8
)
Foreign currency translation adjustments, net of tax expense of $3,505 and $4,188, respectively
 
293,896

 
226,292

Other comprehensive income
 
293,676

 
226,358

Comprehensive income
 
601,086

 
507,665

Comprehensive income attributable to noncontrolling interests
 
(45,163
)
 
(6,102
)
Comprehensive income attributable to American Tower Corporation stockholders
 
$
555,923

 
$
501,563


See accompanying notes to unaudited consolidated and condensed consolidated financial statements.



3


AMERICAN TOWER CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 
 
Three Months Ended March 31,
 
 
2017
 
2016
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
 
Net income
 
$
307,410

 
$
281,307

Adjustments to reconcile net income to cash provided by operating activities
 
 
 
 
Depreciation, amortization and accretion
 
421,140

 
341,634

Stock-based compensation expense
 
36,222

 
28,079

Loss on early retirement of long-term obligations
 
55,440

 

Other non-cash items reflected in statements of operations
 
(45,258
)
 
12,451

Decrease in restricted cash
 
4,918

 
3,005

Increase in net deferred rent balances
 
(35,057
)
 
(16,171
)
Increase in assets
 
(40,411
)
 
(30,535
)
Decrease in liabilities
 
(21,307
)
 
(56,258
)
Cash provided by operating activities
 
683,097

 
563,512

CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
 
Payments for purchase of property and equipment and construction activities
 
(168,138
)
 
(154,222
)
Payments for acquisitions, net of cash acquired
 
(777,755
)
 
(873
)
Payment for Verizon transaction
 

 
(4,655
)
Proceeds from sale of short-term investments and other non-current assets
 
3,751

 
1,184

Deposits, restricted cash, investments and other
 
21,848

 
(26,950
)
Cash used for investing activities
 
(920,294
)
 
(185,516
)
CASH FLOW FROM FINANCING ACTIVITIES
 
 
 
 
Repayments of short-term borrowings, net
 

 
(8,636
)
Borrowings under credit facilities
 
1,997,039

 
31,504

Proceeds from issuance of senior notes, net
 

 
1,247,463

Repayments of notes payable, credit facilities, senior notes and capital leases
 
(1,633,408
)
 
(1,388,613
)
Contributions from (distributions to) noncontrolling interest holders, net
 
265,392

 
(274
)
Purchases of common stock
 
(147,173
)
 

Proceeds from stock options
 
36,933

 
14,582

Distributions paid on common stock
 
(250,436
)
 
(209,984
)
Distributions paid on preferred stock
 
(26,781
)
 
(26,781
)
Payment for early retirement of long-term obligations
 
(61,764
)
 

Deferred financing costs and other financing activities
 
(21,935
)
 
(25,325
)
Cash provided by (used for) financing activities
 
157,867

 
(366,064
)
Net effect of changes in foreign currency exchange rates on cash and cash equivalents
 
4,947

 
3,785

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
 
(74,383
)
 
15,717

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
 
787,161

 
320,686

CASH AND CASH EQUIVALENTS, END OF PERIOD
 
$
712,778

 
$
336,403

CASH PAID FOR INCOME TAXES (NET OF REFUNDS OF $12,750 AND $3,431, RESPECTIVELY)
 
$
23,074

 
$
19,368

CASH PAID FOR INTEREST
 
$
230,977

 
$
177,574

NON-CASH INVESTING AND FINANCING ACTIVITIES:
 
 
 
 
Decrease in accounts payable and accrued expenses for purchases of property and equipment and construction activities
 
$
10,128

 
$
22,586

Purchases of property and equipment under capital leases
 
$
11,875

 
$
9,958

See accompanying notes to unaudited consolidated and condensed consolidated financial statements.

4



AMERICAN TOWER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY
(in thousands, except share data)
 
 
Preferred Stock - Series A
 
Preferred Stock - Series B
 
Common Stock
 
Treasury Stock
 
Additional
Paid-in
Capital
 
Accumulated Other
Comprehensive
Loss
 
Distributions
in Excess of
Earnings
 
Noncontrolling
Interest
 
Total
Equity
 
 
Issued Shares
 
Amount
 
Issued Shares
 
Amount
 
Issued
Shares
 
Amount
 
Shares
 
Amount
 
BALANCE, JANUARY 1, 2016
 
6,000,000

 
$
60

 
1,375,000

 
$
14

 
426,695,279

 
$
4,267

 
(2,810,026
)
 
$
(207,740
)
 
$
9,690,609

 
$
(1,836,996
)
 
$
(998,535
)
 
$
61,139

 
$
6,712,818

Stock-based compensation related activity
 

 

 

 

 
677,752

 
6

 

 

 
24,343

 

 

 

 
24,349

Changes in fair value of cash flow hedges, net of tax
 

 

 

 

 

 

 

 

 

 
74

 

 

 
74

Reclassification of unrealized gains on cash flow hedges to net income
 

 

 

 

 

 

 

 

 

 
(8
)
 

 

 
(8
)
Foreign currency translation adjustment, net of tax
 

 

 

 

 

 

 

 

 

 
226,338

 

 
(46
)
 
226,292

Distributions to noncontrolling interest
 

 

 

 

 

 

 

 

 

 

 

 
(275
)
 
(275
)
Common stock distributions declared
 

 

 

 

 

 

 

 

 

 

 
(217,561
)
 

 
(217,561
)
Preferred stock dividends declared
 

 

 

 

 

 

 

 

 

 

 
(26,781
)
 

 
(26,781
)
Net income
 

 

 

 

 

 

 

 

 

 

 
275,159

 
6,148

 
281,307

BALANCE, MARCH 31, 2016
 
6,000,000

 
$
60

 
1,375,000

 
$
14

 
427,373,031

 
$
4,273

 
(2,810,026
)
 
$
(207,740
)
 
$
9,714,952

 
$
(1,610,592
)
 
$
(967,718
)
 
$
66,966

 
$
7,000,215

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
BALANCE, JANUARY 1, 2017
 
6,000,000

 
$
60

 
1,375,000

 
$
14

 
429,912,536

 
$
4,299

 
(2,810,026
)
 
$
(207,740
)
 
$
10,043,559

 
$
(1,999,332
)
 
$
(1,076,965
)
 
$
212,305

 
$
6,976,200

Stock-based compensation related activity
 

 

 

 

 
1,019,058

 
10

 

 

 
50,458

 

 

 

 
50,468

Treasury stock activity
 

 

 

 

 

 

 
(1,873,916
)
 
(224,991
)
 

 

 

 

 
(224,991
)
Changes in fair value of cash flow hedges, net of tax
 

 

 

 

 

 

 

 

 

 
(134
)
 

 

 
(134
)
Reclassification of unrealized gains on cash flow hedges to net income
 

 

 

 

 

 

 

 

 

 
(86
)
 

 

 
(86
)
Foreign currency translation adjustment, net of tax
 

 

 

 

 

 

 

 

 

 
240,063

 

 
2,720

 
242,783

Contributions from noncontrolling interest holders
 

 

 

 

 

 

 

 

 

 

 

 
314,020

 
314,020

Distributions to noncontrolling interest holders
 

 

 

 

 

 

 

 

 

 

 

 
(354
)
 
(354
)
Common stock distributions declared
 

 

 

 

 

 

 

 

 

 

 
(266,040
)
 

 
(266,040
)
Preferred stock dividends declared
 

 

 

 

 

 

 

 

 

 

 
(26,781
)
 

 
(26,781
)
Net income
 

 

 

 

 

 

 

 

 

 

 
316,080

 
3,675

 
319,755

BALANCE, MARCH 31, 2017
 
6,000,000

 
$
60

 
1,375,000

 
$
14

 
430,931,594

 
$
4,309

 
(4,683,942
)
 
$
(432,731
)
 
$
10,094,017

 
$
(1,759,489
)
 
$
(1,053,706
)
 
$
532,366

 
$
7,384,840


See accompanying notes to unaudited consolidated and condensed consolidated financial statements.

5



AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



1.
DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
American Tower Corporation (together with its subsidiaries, “ATC” or the “Company”) is one of the largest global real estate investment trusts and a leading independent owner, operator and developer of multitenant communications real estate. The Company’s primary business is the leasing of space on communications sites to wireless service providers, radio and television broadcast companies, wireless data providers, government agencies and municipalities and tenants in a number of other industries, which the Company refers to as its property operations. Additionally, the Company offers tower-related services in the United States, including site acquisition, zoning and permitting and structural analysis, which primarily support its site leasing business, including the addition of new tenants and equipment on its sites, which the Company refers to as its services operations.
The Company’s portfolio primarily consists of towers it owns and towers it operates pursuant to long-term lease arrangements, as well as distributed antenna system (“DAS”) networks, which provide seamless coverage solutions in certain in-building and certain outdoor wireless environments. In addition to the communications sites in its portfolio, the Company manages rooftop and tower sites for property owners under various contractual arrangements. The Company also holds other telecommunications infrastructure and property interests that it leases to communications service providers and third-party tower operators.

ATC is a holding company that conducts its operations through its directly and indirectly owned subsidiaries and its joint ventures. ATC’s principal domestic operating subsidiaries are American Towers LLC and SpectraSite Communications, LLC. ATC conducts its international operations primarily through its subsidiary, American Tower International, Inc., which in turn conducts operations through its various international holding and operating subsidiaries and joint ventures.

The Company operates as a real estate investment trust for U.S. federal income tax purposes (“REIT”). Accordingly, the Company generally is not subject to U.S. federal income taxes on income generated by its REIT operations, including the income derived from leasing space on its towers, as the Company receives a dividends paid deduction for distributions to stockholders that generally offsets its REIT income and gains. However, the Company remains obligated to pay U.S. federal income taxes on earnings from its domestic taxable REIT subsidiaries (“TRSs”). In addition, the Company’s international assets and operations, regardless of their designation for U.S. tax purposes, continue to be subject to taxation in the foreign jurisdictions where those assets are held or those operations are conducted.

The use of TRSs enables the Company to continue to engage in certain businesses while complying with REIT qualification requirements. The Company may, from time to time, change the election of previously designated TRSs to be included as part of the REIT. As of March 31, 2017, the Company’s REIT-qualified businesses included its U.S. tower leasing business, most of its operations in Costa Rica, Germany and Mexico and a majority of its services segment and indoor DAS networks business.

The accompanying consolidated and condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. The financial information included herein is unaudited. However, the Company believes that all adjustments considered necessary for a fair presentation of its financial position and results of operations for such periods have been included herein. The consolidated and condensed consolidated financial statements and related notes should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 (the “2016 Form 10-K”). The results of operations for the three months ended March 31, 2017 are not necessarily indicative of the results that may be expected for the entire year.

Principles of Consolidation and Basis of Presentation—The accompanying consolidated and condensed consolidated financial statements include the accounts of the Company and those entities in which it has a controlling interest. Investments in entities that the Company does not control are accounted for using the equity or cost method, depending upon the Company’s ability to exercise significant influence over operating and financial policies. All intercompany accounts and transactions have been eliminated. As of March 31, 2017, the Company has a controlling interest in two joint ventures, one in Ghana and one in Uganda, with MTN Group Limited (“MTN Group”). The joint ventures are controlled by holding companies of which a wholly owned subsidiary of the Company holds a 51% controlling interest and a wholly owned subsidiary of MTN Group holds a 49% noncontrolling interest. The Company holds a 51%

6



AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


controlling interest, and PGGM holds a 49% noncontrolling interest, in a joint venture (“ATC Europe”) in Europe. In addition, the Company holds an approximate 75% controlling interest, and the South African investors hold an approximate 25% noncontrolling interest, in a subsidiary of the Company in South Africa. The Company also holds a 51% controlling interest in ATC Telecom Infrastructure Private Limited (“ATC TIPL”), formerly Viom Networks Limited (“Viom”) in India.

Significant Accounting Policies—The Company’s significant accounting policies are described in note 1 to the Company’s consolidated financial statements included in the 2016 Form 10-K. There have been no material changes to the Company’s significant accounting policies during the three months ended March 31, 2017.
Accounting Standards Updates—In May 2014, the Financial Accounting Standards Board (the “FASB”) issued new revenue recognition guidance, which requires an entity to recognize revenue in an amount that reflects the consideration to which the entity expects to be entitled in exchange for the transfer of promised goods or services to customers. The standard will replace most existing revenue recognition guidance and will become effective for the Company on January 1, 2018. Early adoption is permitted for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2016. The standard permits the use of either the retrospective or cumulative effect transition method. Leases are not included in the scope of this standard. The revenue to which the Company must apply this standard is generally limited to services revenue, certain power and fuel charges and other fees charged to customers. As of March 31, 2017, this revenue was approximately 13% of total revenue. Although the Company is still assessing the impact of this standard on its financial statements, it does not expect changes in the timing of revenue recognition to be material to its financial statements.

In January 2016, the FASB issued new guidance on the recognition and measurement of financial assets and financial liabilities. The guidance amends certain aspects of recognition, measurement, presentation and disclosure of financial instruments. This standard is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017. The Company does not expect the adoption of this guidance to have a material effect on its financial statements.

In February 2016, the FASB issued new guidance on the accounting for leases. The guidance amends the existing accounting standards for lease accounting, including the requirement that lessees recognize right of use assets and lease liabilities for leases with terms greater than twelve months in the statement of financial position. Under the new guidance, lessor accounting is largely unchanged. This guidance is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2018. The standard is required to be applied using a modified retrospective approach for all leases existing at, or entered into after, the beginning of the earliest comparative period presented. The Company (i) has established a multidisciplinary team to assess and implement the new guidance, (ii) expects the guidance to have a material impact on its consolidated balance sheets due to the recording of right of use assets and lease liabilities for leases in which it is a lessee and which it is currently treating as operating leases and (iii) continues to evaluate the impact of the new guidance.

In November 2016, the FASB issued new guidance on amounts described as restricted cash or restricted cash equivalents within the statement of cash flows. The guidance requires amounts generally described as restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period balances on the statement of cash flows. The guidance is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017. The standard is required to be applied using a retrospective transition method to each period presented. The Company does not expect the adoption of this guidance to have a material effect on its financial statements.

In January 2017, the FASB issued new guidance that clarifies the definition of a business that an entity uses to determine whether a transaction should be accounted for as an asset acquisition (or disposal) or a business combination. The Company early adopted this guidance during the quarter ended March 31, 2017. As a result, the Company expects that more transactions will be accounted for as asset acquisitions instead of business combinations.

In January 2017, the FASB issued new guidance that simplifies the accounting for goodwill impairments by eliminating Step 2 from the goodwill impairment test. The guidance requires, among other things, recognition of an impairment loss when the carrying value of a reporting unit exceeds its fair value. The loss recognized is limited to the total amount of

7



AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


goodwill allocated to that reporting unit. The guidance is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company does not expect the adoption of this guidance to have a material effect on its financial statements.
2.    PREPAID AND OTHER CURRENT ASSETS
Prepaid and other current assets consisted of the following (in thousands):
 
As of
 
March 31, 2017
 
December 31, 2016
Prepaid operating ground leases
$
136,330

 
$
134,167

Prepaid income tax
128,821

 
127,142

Unbilled receivables
78,760

 
57,661

Prepaid assets
37,608

 
36,300

Value added tax and other consumption tax receivables
32,760

 
31,570

Other miscellaneous current assets
63,386

 
54,193

Prepaids and other current assets
$
477,665

 
$
441,033


3.    GOODWILL AND OTHER INTANGIBLE ASSETS

The changes in the carrying value of goodwill for the Company’s business segments were as follows (in thousands):

 
 
Property
 
Services
 
Total
 
 
U.S.
 
Asia
 
EMEA
 
Latin America
 
Balance as of January 1, 2017
 
$
3,379,163

 
$
1,029,313

 
$
150,511

 
$
509,705

 
$
1,988

 
$
5,070,680

Additions and adjustments (1)
 

 
(4,805
)
 
230,306

 

 

 
225,501

Effect of foreign currency translation
 

 
46,732

 
18,526

 
18,391

 

 
83,649

Balance as of March 31, 2017
 
$
3,379,163

 
$
1,071,240

 
$
399,343

 
$
528,096

 
$
1,988

 
$
5,379,830

_______________
(1)    Balances have been revised to reflect purchase accounting measurement period adjustments.

8



AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



The Company’s other intangible assets subject to amortization consisted of the following:
 
 
 
 
As of March 31, 2017
 
As of December 31, 2016
 
Estimated Useful
Lives
 
Gross
Carrying
Value
 
Accumulated
Amortization
 
Net Book
Value
 
Gross
Carrying
Value
 
Accumulated
Amortization
 
Net Book
Value
 
(years)
 
(in thousands)
Acquired network location intangibles (1)
Up to 20

 
$
4,847,575

 
$
(1,358,780
)
 
$
3,488,795

 
$
4,622,316

 
$
(1,280,284
)
 
$
3,342,032

Acquired tenant-related intangibles
15-20

 
10,652,893

 
(2,349,560
)
 
8,303,333

 
10,130,466

 
(2,224,119
)
 
7,906,347

Acquired licenses and other intangibles
3-20

 
36,963

 
(5,407
)
 
31,556

 
28,140

 
(4,827
)
 
23,313

Economic Rights, TV Azteca
70

 
15,346

 
(12,144
)
 
3,202

 
13,893

 
(10,974
)
 
2,919

Total other intangible assets
 
 
$
15,552,777

 
$
(3,725,891
)
 
$
11,826,886

 
$
14,794,815

 
$
(3,520,204
)
 
$
11,274,611

_______________
(1)
Acquired network location intangibles are amortized over the shorter of the term of the corresponding ground lease taking into consideration lease renewal options and residual value or up to 20 years, as the Company considers these intangibles to be directly related to the tower assets.
The acquired network location intangibles represent the value to the Company of the incremental revenue growth that could potentially be obtained from leasing the excess capacity on acquired communications sites. The acquired tenant-related intangibles typically represent the value to the Company of tenant contracts and relationships in place at the time of an acquisition or similar transaction, including assumptions regarding estimated renewals.
The Company amortizes its acquired network location intangibles and tenant-related intangibles on a straight-line basis over their estimated useful lives. As of March 31, 2017, the remaining weighted average amortization period of the Company’s intangible assets, excluding the TV Azteca Economic Rights detailed in note 5 to the Company’s consolidated financial statements included in the 2016 Form 10-K, was 16 years. Amortization of intangible assets for the three months ended March 31, 2017 and 2016 was $183.2 million and $151.8 million, respectively. Based on current exchange rates, the Company expects to record amortization expense as follows over the remaining current year and the five subsequent years (in millions):
 
Fiscal Year
 
Remainder of 2017
$
560.2

2018
744.8

2019
741.7

2020
722.9

2021
713.4

2022
708.7



9



AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


4.    ACCRUED EXPENSES
Accrued expenses consisted of the following (in thousands):
 
As of
 
March 31, 2017
 
December 31, 2016
Accrued property and real estate taxes
$
149,792

 
$
138,361

Accrued treasury stock purchases
77,817

 

Payroll and related withholdings
52,788

 
76,141

Accrued rent
50,742

 
50,951

Amounts payable to tenants
35,356

 
32,326

Accrued construction costs
33,334

 
28,587

Accrued income tax payable
7,181

 
11,551

Other accrued expenses
335,490

 
282,646

Accrued expenses
$
742,500

 
$
620,563



10



AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


5.    LONG-TERM OBLIGATIONS

Outstanding amounts under the Company’s long-term obligations, reflecting discounts, premiums, debt issuance costs and fair value adjustments due to interest rate swaps consisted of the following (in thousands):
 
As of
 
 
 
March 31, 2017
 
December 31, 2016
 
Maturity Date
2013 Credit Facility (1)
$
1,788,566

 
$
539,975

 
June 28, 2020
Term Loan (1)
994,249

 
993,936

 
January 31, 2022
2014 Credit Facility (1)
1,180,000

 
1,385,000

 
January 31, 2022
4.500% senior notes
998,987

 
998,676

 
January 15, 2018
3.40% senior notes
999,748

 
999,716

 
February 15, 2019
7.25% senior notes

 
297,032

 
N/A
2.800% senior notes
745,271

 
744,917

 
June 1, 2020
5.050% senior notes
697,517

 
697,352

 
September 1, 2020
3.300% senior notes
745,053

 
744,762

 
February 15, 2021
3.450% senior notes
644,149

 
643,848

 
September 15, 2021
5.900% senior notes
497,463

 
497,343

 
November 1, 2021
2.250% senior notes
572,372

 
572,764

 
January 15, 2022
4.70% senior notes
696,183

 
696,013

 
March 15, 2022
3.50% senior notes
989,666

 
989,269

 
January 31, 2023
5.00% senior notes
1,002,661

 
1,002,742

 
February 15, 2024
4.000% senior notes
740,237

 
739,985

 
June 1, 2025
4.400% senior notes
495,320

 
495,212

 
February 15, 2026
3.375% senior notes
983,730

 
983,369

 
October 15, 2026
3.125% senior notes
396,782

 
396,713

 
January 15, 2027
Total American Tower Corporation debt
15,167,954

 
14,418,624

 
 
 
 
 
 
 
 
Series 2013-1A securities (2)
498,933

 
498,642

 
March 15, 2018
Series 2013-2A securities (3)
1,290,661

 
1,290,267

 
March 15, 2023
Series 2015-1 notes (4)
347,320

 
347,108

 
June 15, 2020
Series 2015-2 notes (5)
519,602

 
519,437

 
June 16, 2025
2012 GTP notes (6)

 
179,459

 
N/A
Unison notes (7)

 
132,960

 
N/A
India indebtedness (8)
515,730

 
549,528

 
Various
India preference shares (9)
25,700

 
24,537

 
March 2, 2020
Shareholder loans (10)
101,635

 
151,045

 
Various
Other subsidiary debt (11)
284,067

 
286,009

 
Various
Total American Tower subsidiary debt
3,583,648

 
3,978,992

 
 
Other debt, including capital lease obligations
138,482

 
135,849

 
 
Total
18,890,084

 
18,533,465

 
 
Less current portion of long-term obligations
(1,707,330
)
 
(238,806
)
 
 
Long-term obligations
$
17,182,754

 
$
18,294,659

 
 
_______________
(1)
Accrues interest at a variable rate.
(2)
Maturity date reflects the anticipated repayment date; final legal maturity is March 15, 2043.
(3)
Maturity date reflects the anticipated repayment date; final legal maturity is March 15, 2048.
(4)
Maturity date reflects the anticipated repayment date; final legal maturity is June 15, 2045.
(5)
Maturity date reflects the anticipated repayment date; final legal maturity is June 15, 2050.
(6)
Secured debt assumed by the Company in connection with its acquisition of MIP Tower Holdings LLC. Repaid in full on February 15, 2017.
(7)
Secured debt assumed in connection with the acquisition of certain legal entities holding a portfolio of property interests from Unison Holdings, LLC and Unison Site Management II, L.L.C. Repaid in full on February 15, 2017.
(8)
Denominated in Indian Rupees (“INR”). Debt includes India working capital facility, remaining debt assumed by the Company in connection with the acquisition of Viom (see note 9) and debt that has been entered into by ATC TIPL.

11



AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(9)
Mandatorily redeemable preference shares (the “Preference Shares”) classified as debt. On March 2, 2017, ATC TIPL issued the Preference Shares and used the proceeds to redeem the preference shares previously issued by Viom (the “Viom Preference Shares”). The Preference Shares are to be redeemed on March 2, 2020 and have a dividend rate of 10.25% per annum.
(10)
Reflects balances owed to the Company’s joint venture partners in Ghana and Uganda. The Ghana loan is denominated in Ghanaian Cedi and the Uganda loan is denominated in Ugandan Shillings (“UGX”). Effective January 1, 2017, the Uganda loan, which had an outstanding balance of $80.0 million and accrued interest at a variable rate, was converted by the holder to a new shareholder note for 114.5 million UGX ($31.8 million at the time of conversion), bearing interest at a fixed rate of 16.8% per annum. The remaining balance of the Uganda loan was converted into equity.
(11)
Includes the BR Towers debentures, which are denominated in Brazilian Reais (“BRL”) and amortize through October 15, 2023, the South African credit facility, which is denominated in South African Rand and amortizes through December 17, 2020, the Colombian credit facility, which is denominated in Colombian Pesos and amortizes through April 24, 2021 and the Brazil credit facility, which is denominated in BRL and matures on January 15, 2022.

Current portion of long-term obligations—The Company’s current portion of long-term obligations primarily includes (i) $999.0 million under the 4.500% senior unsecured notes due 2018, (ii) $498.9 million under the Secured Tower Revenue Securities, Series 2013-1A and (iii) 9.1 billion INR ($140.4 million) of India indebtedness.

Bank Facilities
2013 Credit Facility—During the three months ended March 31, 2017, the Company borrowed an aggregate of $1.8 billion and repaid an aggregate of $517.9 million of revolving indebtedness under its multicurrency senior unsecured revolving credit facility entered into in June 2013, as amended (the “2013 Credit Facility”). The Company used the borrowings to fund acquisitions, repay existing indebtedness and for general corporate purposes.

2014 Credit Facility—During the three months ended March 31, 2017, the Company borrowed an aggregate of $200.0 million and repaid an aggregate of $405.0 million of revolving indebtedness under its senior unsecured revolving credit facility entered into in January 2012 and amended and restated in September 2014, as further amended (the “2014 Credit Facility”).

As of March 31, 2017, the key terms under the 2013 Credit Facility, the 2014 Credit Facility and the Company’s unsecured term loan entered into in October 2013, as amended (the “Term Loan”) were as follows:
 
Outstanding Principal Balance (in millions)
 
Undrawn letters of credit (in millions)
 
Maturity Date
 
Current margin over LIBOR (1)
 
Current commitment fee (2)
2013 Credit Facility
$
1,788.6

 
$
4.6

 
June 28, 2020
(3)
1.250
%
 
0.150
%
2014 Credit Facility
$
1,180.0

 
$
6.4

 
January 31, 2022
(3)
1.250
%
 
0.150
%
Term Loan
$
1,000.0

 
$

 
January 31, 2022
 
1.250
%
 
N/A

_______________
(1)    LIBOR means the London Interbank Offered Rate.
(2)    Fee on undrawn portion of each credit facility.
(3)    Subject to two optional renewal periods.

Repayment of 2012 GTP Notes and Unison Notes and Redemption of Senior Notes—On February 15, 2017, the Company repaid the $173.5 million remaining principal amount outstanding under the Secured Cellular Site Revenue Notes, Series 2012-2 Class A, Series 2012-2 Class B and Series 2012-2 Class C issued by GTP Cellular Sites, LLC, plus prepayment consideration and accrued and unpaid interest. The Company recorded a loss on retirement of long-term obligations of $1.8 million, which includes prepayment consideration of $7.2 million offset by the remaining portion of the unamortized premium.

On February 15, 2017, the Company repaid the $129.0 million principal amount outstanding under the Secured Cellular Site Revenue Notes, Series 2010-2, Class C and Series 2010-2, Class F issued by Unison Ground Lease Funding, LLC, plus prepayment consideration and accrued and unpaid interest. The Company recorded a loss on retirement of long-term obligations of $14.5 million, which includes prepayment consideration of $18.3 million offset by the remaining portion of the unamortized premium.

On February 10, 2017, the Company redeemed all of the outstanding 7.25% senior unsecured notes due 2019 (the “7.25% Notes”) at a price equal to 112.0854% of the principal amount, plus accrued and unpaid interest up to, but excluding, February 10, 2017, for an aggregate redemption price of $341.4 million, including $5.1 million in accrued and

12



AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


unpaid interest. The Company recorded a loss on retirement of long-term obligations of $39.2 million, which includes prepayment consideration of $36.3 million and the remaining portion of the unamortized discount and deferred financing costs. Upon completion of the redemption, none of the 7.25% Notes remained outstanding.

The repayments and the redemption were funded with borrowings under the 2013 Credit Facility and cash on hand.


6.    FAIR VALUE MEASUREMENTS
The Company determines the fair value of its financial instruments based on the fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Below are the three levels of inputs that may be used to measure fair value:
 
 
Level 1
Quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
 
 
 
 
Level 2
Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
 
 
 
 
Level 3
Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Items Measured at Fair Value on a Recurring Basis—The fair values of the Company’s financial assets and liabilities that are required to be measured on a recurring basis at fair value were as follows (in thousands):
 
 
 
March 31, 2017
 
December 31, 2016
 
 
Fair Value Measurements Using
 
Fair Value Measurements Using
 
 
Level 1
 
Level 2
 
Level 3
 
Level 1
 
Level 2
 
Level 3
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
Short-term investments (1)
 
$
5,294

 

 

 
$
4,026

 

 

Interest rate swap agreements
 

 

 

 

 
$
3

 

Embedded derivative in lease agreement
 

 

 
$
13,068

 

 

 
$
13,290

Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate swap agreements
 

 
$
25,978

 

 

 
$
24,682

 

Acquisition-related contingent consideration
 

 

 
$
16,030

 

 

 
$
15,444

_______________
(1)
Consists of highly liquid investments with original maturities in excess of three months.

During the three months ended March 31, 2017, the Company has made no changes to the methods described in note 11 to the Company’s consolidated financial statements in the 2016 Form 10-K that it used to measure the fair value of its interest rate swap agreements, the embedded derivative in one of its lease agreements and acquisition-related contingent consideration. The changes in fair value during the three months ended March 31, 2017 and 2016 were not material to the consolidated financial statements. As of March 31, 2017, the Company estimated the value of all potential acquisition-related contingent consideration payments to be between zero and $48.4 million.
 
Items Measured at Fair Value on a Nonrecurring Basis
Assets Held and Used—The Company’s long-lived assets are recorded at amortized cost and, if impaired, are adjusted to fair value using Level 3 inputs. During the three months ended March 31, 2017 and 2016, the Company did not record any material asset impairment charges. There were no other items measured at fair value on a nonrecurring basis during the three months ended March 31, 2017 or 2016.


13



AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Fair Value of Financial Instruments—The Company’s financial instruments for which the carrying value reasonably approximates fair value at March 31, 2017 and December 31, 2016 include cash and cash equivalents, restricted cash, accounts receivable and accounts payable. The Company’s estimates of fair value of its long-term obligations, including the current portion, are based primarily upon reported market values. For long-term debt not actively traded, fair value is estimated using either indicative price quotes or a discounted cash flow analysis using rates for debt with similar terms and maturities. As of March 31, 2017 and December 31, 2016, the carrying value of long-term obligations, including the current portion, was $18.9 billion and $18.5 billion, respectively. As of March 31, 2017, the fair value of long-term obligations, including the current portion, was $19.3 billion, of which $11.6 billion was measured using Level 1 inputs and $7.7 billion was measured using Level 2 inputs. As of December 31, 2016, the fair value of long-term obligations, including the current portion, was $18.8 billion, of which $11.8 billion was measured using Level 1 inputs and $7.0 billion was measured using Level 2 inputs.

7.    INCOME TAXES
The Company provides for income taxes at the end of each interim period based on the estimated effective tax rate (“ETR”) for the full fiscal year. Cumulative adjustments to the Company’s estimate are recorded in the interim period in which a change in the estimated annual ETR is determined. Under the provisions of the Internal Revenue Code of 1986, as amended, the Company may deduct amounts distributed to stockholders against the income generated by its REIT operations. The Company continues to be subject to income taxes on the income of its TRSs and income taxes in foreign jurisdictions where it conducts operations. In addition, the Company is able to offset certain income by utilizing its net operating losses, subject to specified limitations.
The Company provides valuation allowances if, based on the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets.
As of March 31, 2017 and December 31, 2016, the total unrecognized tax benefits that would impact the ETR, if recognized, were approximately $106.7 million and $102.9 million, respectively. The amount of unrecognized tax benefits during the three months ended March 31, 2017 includes additions to the Company’s existing tax positions of $1.9 million and foreign currency fluctuations of $3.5 million. Unrecognized tax benefits are expected to change over the next 12 months if certain tax matters ultimately settle with the applicable taxing jurisdiction during this time frame, as described in note 12 to the Company’s consolidated financial statements included in the 2016 Form 10-K. The impact of the amount of these changes to previously recorded uncertain tax positions could range from zero to $11.2 million.
The Company recorded penalties and income tax-related interest expense during the three months ended March 31, 2017 and 2016 of $1.3 million and $3.2 million, respectively. As of March 31, 2017 and December 31, 2016, the total amount of accrued income tax related interest and penalties included in the consolidated balance sheets was $27.0 million and $24.3 million, respectively.

8.    STOCK-BASED COMPENSATION
Summary of Stock-Based Compensation Plans—The Company maintains equity incentive plans that provide for the grant of stock-based awards to its directors, officers and employees. The 2007 Equity Incentive Plan, as amended (the “2007 Plan”) provides for the grant of non-qualified and incentive stock options, as well as restricted stock units, restricted stock and other stock-based awards. Exercise prices for non-qualified and incentive stock options are not less than the fair value of the underlying common stock on the date of grant. Equity awards typically vest ratably, generally over four years for time-based restricted stock units (“RSUs”) and stock options and three years for performance-based restricted stock units (“PSUs”). Stock options generally expire ten years from the date of grant. As of March 31, 2017, the Company had the ability to grant stock-based awards with respect to an aggregate of 8.4 million shares of common stock under the 2007 Plan. In addition, the Company maintains an employee stock purchase plan (“ESPP”) pursuant to which eligible employees may purchase shares of the Company’s common stock on the last day of each bi-annual offering period at a 15% discount of the lower of the closing market value on the first or last day of such offering period. The offering periods run from June 1 through November 30 and from December 1 through May 31 of each year.

14



AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


During the three months ended March 31, 2017 and 2016, the Company recorded and capitalized the following stock-based compensation expense (in thousands):
 
Three Months Ended March 31,
 
2017
 
2016
Stock-based compensation expense
$
36,222

 
$
28,079

Stock-based compensation expense capitalized as property and equipment
$
526

 
$
658

Stock Options—As of March 31, 2017, total unrecognized compensation expense related to unvested stock options was $21.6 million, which is expected to be recognized over a weighted average period of approximately two years.
The Company’s option activity for the three months ended March 31, 2017 was as follows:
 
 
Number of Options
Outstanding as of January 1, 2017
 
7,269,376

Granted
 
1,286

Exercised
 
(596,101
)
Forfeited
 

Expired
 

Outstanding as of March 31, 2017
 
6,674,561

 
Restricted Stock Units—As of March 31, 2017, total unrecognized compensation expense related to unvested RSUs granted under the 2007 Plan was $148.9 million and is expected to be recognized over a weighted average period of approximately three years.
Performance-Based Restricted Stock Units—During the three months ended March 31, 2017, 2016 and 2015, the Company’s Compensation Committee granted an aggregate of 154,520 PSUs (the “2017 PSUs”), 169,340 PSUs (the “2016 PSUs”) and 70,135 PSUs (the “2015 PSUs”), respectively, to its executive officers and established the performance metrics for these awards. Threshold, target and maximum parameters were established for the metrics for a three-year performance period with respect to the 2017 PSUs and the 2016 PSUs, and for each year in the three-year performance period with respect to the 2015 PSUs, and will be used to calculate the number of shares that will be issuable when each award vests, which may range from zero to 200% of the target amounts. At the end of each three-year performance period, the number of shares that vest will depend on the degree of achievement against the pre-established performance goals. PSUs will be paid out in common stock at the end of each performance period, subject generally to the executive’s continued employment. In the event of the executive’s death, disability or qualifying retirement, PSUs will be paid out pro rata in accordance with the terms of the applicable award agreement. PSUs will accrue dividend equivalents prior to vesting, which will be paid out only in respect of shares that actually vest.

15



AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Restricted Stock Units and Performance-Based Restricted Stock Units—The Company’s RSU and PSU activity for the three months ended March 31, 2017 was as follows: 
 
RSUs
 
PSUs
Outstanding as of January 1, 2017 (1)
1,663,743

 
242,757

Granted (2)
799,012

 
177,897

Vested
(628,150
)
 

Forfeited
(10,853
)
 

Outstanding as of March 31, 2017
1,823,752

 
420,654

_______________
(1)
PSUs represent the shares issuable for the 2015 PSUs at the end of the three-year performance cycle based on exceeding the performance metric for the first and second year’s performance periods and the target number of shares issuable at the end of the three-year performance period for the 2016 PSUs.
(2)
PSUs represent the target number of shares issuable at the end of the three-year performance cycle attributable to the third year’s performance period for the 2015 PSUs and the target number of shares issuable at the end of the three-year performance cycle for the 2017 PSUs.

During the three months ended March 31, 2017, the Company recorded $5.5 million in stock-based compensation expense for equity awards in which the performance goals had been established and were probable of being achieved. The remaining unrecognized compensation expense related to these awards at March 31, 2017 was $35.9 million based on the Company’s current assessment of the probability of achieving the performance goals. The weighted average period over which the cost will be recognized is approximately two years.

9.    REDEEMABLE NONCONTROLLING INTERESTS

Redeemable Noncontrolling Interests—On April 21, 2016, the Company, through its wholly owned subsidiary, ATC Asia Pacific Pte. Ltd. (“ATC Asia”), acquired a 51% controlling ownership interest in Viom, a telecommunications infrastructure company that owns and operates wireless communications towers and indoor DAS networks in India (the “Viom Acquisition”).

In connection with the Viom Acquisition, the Company, through one of its subsidiaries, entered into a shareholders agreement (the “Shareholders Agreement”) with Viom and the following remaining Viom shareholders: Tata Sons Limited, Tata Teleservices Limited, IDFC Private Equity Fund III, Macquarie SBI Investments Pte Limited and SBI Macquarie Infrastructure Trust (collectively, the “Remaining Shareholders”). The Shareholders Agreement provides for, among other things, put options held by certain of the Remaining Shareholders, which allow the Remaining Shareholders to sell outstanding shares of ATC TIPL, and call options held by the Company, which allow the Company to buy the noncontrolling shares of ATC TIPL. The put options, which are not under the Company’s control, cannot be separated from the noncontrolling interests. As a result, the combination of the noncontrolling interests and the redemption feature require classification as redeemable noncontrolling interests in the consolidated balance sheet, separate from equity.

Given the provisions governing the put rights, the redeemable noncontrolling interests are recorded outside of permanent equity at their redemption value. The noncontrolling interests become redeemable after the passage of time, and therefore, the Company records the carrying amount of the noncontrolling interests at the greater of (i) the initial carrying amount, increased or decreased for the noncontrolling interests’ share of net income or loss and foreign currency translation adjustments, and (ii) the redemption value. If required, the Company will adjust the redeemable noncontrolling interests to redemption value on each balance sheet date with changes in redemption value recognized as an adjustment to Distributions in excess of earnings.

The put options may be exercised, requiring the Company to purchase the Remaining Shareholders’ equity interests, on specified dates beginning April 1, 2018 through March 31, 2021. The price of the put options will be based on the fair market value of the exercising Remaining Shareholder’s interest in the Company’s India operations at the time the option is exercised. Put options held by certain of the Remaining Shareholders are subject to a floor price of 216 INR per share.

The changes in Redeemable noncontrolling interests for the three months ended March 31, 2017 were as follows (in thousands):
Balance as of January 1, 2017
 
$
1,091,220

Net loss attributable to noncontrolling interests
 
(12,345
)
Foreign currency translation adjustment attributable to noncontrolling interests
 
51,113

Balance as of March 31, 2017
 
$
1,129,988


10.    EQUITY

Series A Preferred Stock—The Company has 6,000,000 shares of its 5.25% Mandatory Convertible Preferred Stock, Series A, par value $0.01 per share (the “Series A Preferred Stock”) outstanding, which were issued in May 2014. 

Unless converted or redeemed earlier, each share of the Series A Preferred Stock will automatically convert on May 15, 2017, into between 0.9272 and 1.1591 shares of the Company’s common stock, depending on the applicable market value of the Company’s common stock and subject to anti-dilution adjustments. Subject to certain restrictions, at any time prior to May 15, 2017, holders of the Series A Preferred Stock may elect to convert all or a portion of their shares into common stock at the minimum conversion rate then in effect.

Dividends on shares of the Series A Preferred Stock are payable on a cumulative basis when, as and if declared by the Company’s Board of Directors at an annual rate of 5.25% on the liquidation preference of $100.00 per share, on February 15, May 15, August 15 and November 15 of each year, commencing on August 15, 2014 to, and including, May 15, 2017.

Series B Preferred Stock—The Company has 13,750,000 depositary shares, each representing a 1/10th interest in a share of its 5.50% Mandatory Convertible Preferred Stock, Series B, par value $0.01 per share (the “Series B Preferred Stock” and, together with the Series A Preferred Stock, the “Mandatory Convertible Preferred Stock”) outstanding, which were issued in March 2015.

Unless converted or redeemed earlier, each share of the Series B Preferred Stock will automatically convert on February 15, 2018, into between 8.6870 and 10.4244 shares of the Company’s common stock, depending on the applicable market value of the Company’s common stock and subject to anti-dilution adjustments. Subject to certain restrictions, at any time prior to February 15, 2018, holders of the Series B Preferred Stock may elect to convert all or a portion of their shares into common stock at the minimum conversion rate then in effect.

Dividends on shares of the Series B Preferred Stock are payable on a cumulative basis when, as and if declared by the Company’s Board of Directors at an annual rate of 5.50% on the liquidation preference of $1,000.00 per share (and, correspondingly, $100.00 per share with respect to the depositary shares) on February 15, May 15, August 15 and November 15 of each year, commencing on May 15, 2015 to, and including, February 15, 2018.

The Company may pay dividends in cash or, subject to certain limitations, in shares of common stock or any combination of cash and shares of common stock. The terms of the Mandatory Convertible Preferred Stock provide that, unless full cumulative dividends have been paid or set aside for payment on all outstanding Mandatory Convertible Preferred Stock for all prior dividend periods, no dividends may be declared or paid on common stock.

Sales of Equity Securities—The Company receives proceeds from the sale of its equity securities pursuant to the ESPP and upon exercise of stock options granted under its equity incentive plan. During the three months ended March 31, 2017, the Company received an aggregate of $36.9 million in proceeds upon exercises of stock options.

Stock Repurchase Program—In March 2011, the Board of Directors approved a stock repurchase program, pursuant to which the Company is authorized to repurchase up to $1.5 billion of its common stock (the “2011 Buyback”).

During the three months ended March 31, 2017, the Company resumed the 2011 Buyback and repurchased 1,873,916 shares of its common stock for an aggregate of $225.0 million (of which $77.8 million was accrued as of March 31, 2017), including commissions and fees, pursuant to the 2011 Buyback. As of March 31, 2017, the Company had

16



AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


repurchased a total of 8,130,820 shares of its common stock under the 2011 Buyback for an aggregate of $614.0 million, including commissions and fees.
Under the 2011 Buyback, the Company is authorized to purchase shares from time to time through open market purchases or privately negotiated transactions at prevailing prices in accordance with securities laws and other legal requirements, and subject to market conditions and other factors. To facilitate repurchases, the Company makes purchases pursuant to trading plans under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, which allows the Company to repurchase shares during periods when it otherwise might be prevented from doing so under insider trading laws or because of self-imposed trading blackout periods.

The Company expects to fund any further repurchases of its common stock through a combination of cash on hand, cash generated by operations and borrowings under its credit facilities. Purchases under the 2011 Buyback are subject to the Company having available cash to fund repurchases.

Distributions—During the three months ended March 31, 2017, the Company declared or paid the following cash distributions:
Declaration Date
 
Payment Date
 
Record Date
 
Distribution per share
 
Aggregate Payment Amount (in millions)
Common Stock
 
 
 
 
 
 
 
 
December 14, 2016
 
January 13, 2017
 
December 28, 2016
 
$
0.58

 
$
247.7

March 9, 2017
 
April 28, 2017
 
April 12, 2017
 
$
0.62

 
$
264.3

 
 
 
 
 
 
 
 
 
Series A Preferred Stock
 
 
 
 
 
 
 
 
January 13, 2017
 
February 15, 2017
 
February 1, 2017
 
$
1.3125

 
$
7.9

 
 
 
 
 
 
 
 
 
Series B Preferred Stock
 
 
 
 
 
 
 
 
January 13, 2017
 
February 15, 2017
 
February 1, 2017
 
$
13.75

 
$
18.9

The Company accrues distributions on unvested restricted stock units, which are payable upon vesting. As of March 31, 2017, the amount accrued for distributions payable related to unvested restricted stock units was $5.4 million. During the three months ended March 31, 2017, the Company paid $2.7 million of distributions upon the vesting of restricted stock units. To maintain its qualification for taxation as a REIT, the Company expects to continue paying distributions, the amount, timing and frequency of which will be determined, and subject to adjustment, by the Company’s Board of Directors.


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AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


11.    EARNINGS PER COMMON SHARE

The following table sets forth basic and diluted net income per common share computational data (in thousands, except per share data):
 
 
 
Three Months Ended March 31,
 
 
2017
 
2016
Net income attributable to American Tower Corporation stockholders
 
$
316,080

 
$
275,159

Dividends on preferred stock
 
(26,781
)
 
(26,781
)
Net income attributable to American Tower Corporation common stockholders
 
289,299

 
248,378

Basic weighted average common shares outstanding
 
427,279

 
424,059

Dilutive securities
 
2,920

 
3,829

Diluted weighted average common shares outstanding
 
430,199

 
427,888

Basic net income attributable to American Tower Corporation common stockholders per common share
 
$
0.68

 
$
0.59

Diluted net income attributable to American Tower Corporation common stockholders per common share
 
$
0.67

 
$
0.58


Shares Excluded From Dilutive Effect—The following shares were not included in the computation of diluted earnings per share because the effect would be anti-dilutive (in thousands, on a weighted average basis):

 
Three Months Ended March 31,
 
2017
 
2016
Restricted stock
159

 
152

Stock options
30

 
2,322

Preferred stock
17,547

 
17,413


12.    COMMITMENTS AND CONTINGENCIES
Litigation—The Company periodically becomes involved in various claims, lawsuits and proceedings that are incidental to its business. In the opinion of Company management, after consultation with counsel, there are no matters currently pending that would, in the event of an adverse outcome, materially impact the Company’s consolidated financial position, results of operations or liquidity.
Verizon Transaction—In March 2015, the Company entered into an agreement with various operating entities of Verizon Communications Inc. (“Verizon”) that provides for the lease, sublease or management of 11,286 wireless communications sites commencing March 27, 2015. The average term of the lease or sublease for all sites at the inception of the agreement was approximately 28 years, assuming renewals or extensions of the underlying ground leases for the sites. The Company has the option to purchase the leased sites in tranches, subject to the applicable lease, sublease or management rights upon its scheduled expiration. Each tower is assigned to an annual tranche, ranging from 2034 to 2047, which represents the outside expiration date for the sublease rights to the towers in that tranche. The purchase price for each tranche is a fixed amount stated in the lease for such tranche plus the fair market value of certain alterations made to the related towers. The aggregate purchase option price for the towers leased and subleased is approximately $5.0 billion. Verizon will occupy the sites as a tenant for an initial term of ten years with eight optional
successive five-year terms; each such term shall be governed by standard master lease agreement terms established as a part of the transaction.
AT&T Transaction—The Company has an agreement with SBC Communications Inc., a predecessor entity to AT&T Inc. (“AT&T”), that currently provides for the lease or sublease of approximately 2,350 towers commencing between December 2000 and August 2004. Substantially all of the towers are part of the Company’s 2013 securitization transaction. The average term of the lease or sublease for all sites at the inception of the agreement was approximately 27 years, assuming renewals or extensions of the underlying ground leases for the sites. The Company has the option to purchase the sites subject to the applicable lease or sublease upon its expiration. Each tower is assigned to an annual tranche, ranging from 2013 to 2032, which represents the outside expiration date for the sublease rights to that tower. The purchase price for each site is a fixed amount stated in the lease for that site plus the fair market value of certain alterations made to the related tower by AT&T. As of March 31, 2017, the Company has purchased an aggregate of 77 of the subleased towers upon expiration of the applicable agreement. The aggregate purchase option price for the remaining towers leased and subleased is $778.2 million and will accrete at a rate of 10% per annum through the applicable expiration of the lease or sublease of a site. For all such sites purchased by the Company prior to June 30, 2020, AT&T will continue to lease the reserved space at the then-current monthly fee, which shall escalate in accordance with the standard master lease agreement for the remainder of AT&T’s tenancy. Thereafter, AT&T shall have the right to renew such lease for up to four successive five-year terms. For all such sites purchased by the Company subsequent to June 30, 2020, AT&T has the right to continue to lease the reserved space for successive one-year terms at a rent equal to the lesser of the agreed upon market rate or the then-current monthly fee, which is subject to an annual increase based on changes in the U.S. Consumer Price Index.
ALLTEL Transaction—In December 2000, the Company entered into an agreement with ALLTEL Communications, LLC, a predecessor entity to Verizon Wireless, to acquire towers through a 15-year sublease agreement. Pursuant to the agreement, as amended, with Verizon Wireless, the Company acquired rights to approximately 1,800 towers in tranches between April 2001 and March 2002. The Company has the option to purchase each tower at the expiration of the applicable sublease. The Company exercised the purchase options for approximately 1,523 towers in a single closing, which occurred on December 8, 2016. The Company has provided notice to the tower owner, Verizon’s assignee, of its intent to exercise the purchase options related to the 243 remaining towers. As of March 31, 2017, the purchase price per tower was $42,844 payable in cash or, at the tower owner’s option, with 769 shares of the Company’s common stock per tower. The aggregate cash purchase option price for the subleased towers was $10.4 million as of March 31, 2017.
Other Contingencies—The Company is subject to income tax and other taxes in the geographic areas where it operates, and periodically receives notifications of audits, assessments or other actions by taxing authorities. The Company evaluates the circumstances of each notification based on the information available and records a liability for any potential outcome that is probable or more likely than not unfavorable if the liability is also reasonably estimable. On December 5, 2016, the Company received an income tax assessment of Essar Telecom Infrastructure Private Limited (“ETIPL”) for the fiscal year ending 2008 in the amount of 4.75 billion INR ($69.8 million on the date of assessment) related to capital contributions. The Company is challenging the assessment before India’s tax authority Commissioner of Income Tax (Appeals) and estimates that there is a more likely than not probability that the Company’s position will be sustained. Accordingly, no such liability has been recorded. Additionally, the assessment was made with respect to transactions that took place in the tax year commencing in 2007, prior to the Company’s acquisition of ETIPL. Under the Company’s definitive acquisition agreement of ETIPL, the seller is obligated to indemnify and defend the Company with respect to any tax-related liability that may arise from activities prior to March 31, 2010.
Tenant Leases—The Company’s lease agreements with its tenants vary depending upon the region and the industry of the tenant, and generally have initial terms of ten years with multiple renewal terms at the option of the tenant.
Future minimum rental receipts expected from tenants under non-cancellable operating lease agreements in effect at March 31, 2017 were as follows (in millions):

18



AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Remainder of 2017
$
3,750

2018
4,859

2019
4,625

2020
4,335

2021
3,861

Thereafter
12,965

Total
$
34,395

Lease Obligations—The Company leases certain land, office and tower space under operating leases that expire over various terms. Many of the leases contain renewal options with specified increases in lease payments upon exercise of the renewal option. Escalation clauses present in operating leases, excluding those tied to a consumer price index or other inflation-based indices, are recognized on a straight-line basis over the non-cancellable term of the leases.
Future minimum rental payments under non-cancellable operating leases include payments for certain renewal periods at the Company’s option because failure to renew could result in a loss of the applicable communications sites and related revenues from tenant leases, thereby making it reasonably assured that the Company will renew the leases. Such payments at March 31, 2017 are as follows (in millions):
Remainder of 2017
$
703

2018
888

2019
856

2020
812

2021
770

Thereafter
6,840

Total
$
10,869


13.    ACQUISITIONS

Impact of current year acquisitions—The Company typically acquires communications sites from wireless carriers or other tower operators and subsequently integrates those sites into its existing portfolio of communications sites. The financial results of the Company’s acquisitions have been included in the Company’s consolidated statements of operations for the three months ended March 31, 2017 from the date of the respective acquisition. The date of acquisition, and by extension the point at which the Company begins to recognize the results of an acquisition, may depend on, among other things, the receipt of contractual consents, the commencement and extent of leasing arrangements and the timing of the transfer of title or rights to the assets, which may be accomplished in phases. Sites acquired from communications service providers may never have been operated as a business and may instead have been utilized solely by the seller as a component of its network infrastructure. An acquisition may or may not involve the transfer of business operations or employees.

The estimated aggregate impact of the 2017 acquisitions on the Company’s revenues and gross margin for the three months ended March 31, 2017 was approximately $8.3 million and $6.8 million, respectively. The revenues and gross margin amounts also reflect incremental revenues from the addition of new tenants to such sites subsequent to the transaction date.

For those acquisitions accounted for as business combinations, the Company recognizes acquisition and merger related expenses in the period in which they are incurred and services are received; for transactions accounted for as asset acquisitions, these costs are capitalized as part of the purchase price. Acquisition and merger related costs may include finder’s fees, advisory, legal, accounting, valuation and other professional or consulting fees, fair value adjustments to contingent consideration and general administrative costs directly related to the transaction. Integration costs include incremental and non-recurring costs necessary to convert data, retain employees and otherwise enable the Company to

19



AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


operate new businesses efficiently. The Company records acquisition and merger related expenses for business combinations, as well as integration costs, in Other operating expenses in the consolidated statements of operations.

During the three months ended March 31, 2017 and 2016, the Company recorded acquisition and merger related expenses for business combinations and integration costs as follows (in thousands):

 
 
Three Months Ended March 31,
 
 
2017
 
2016
Acquisition and merger related expenses
 
$
5,685

 
$
985

Integration costs
 
$
4,570

 
$
3,271

 
The Company also recorded a purchase price refund of $21.5 million during the three months ended March 31, 2017. This refund related to an acquisition in Brazil in 2014 for which the measurement period has closed.

2017 Transactions

FPS Towers France—On February 15, 2017, ATC Europe acquired 100% of the outstanding shares of FPS Towers (“FPS”) from Antin Infrastructure Partners and the individuals party to the purchase agreement (the “FPS Acquisition”), for total consideration of 727.3 million Euros ($771.3 million at the date of acquisition). FPS owns and operates nearly 2,500 wireless tower sites in France. The Company made a loan to fund 225.0 million Euros ($238.6 million at the date of acquisition) of the total consideration. The remainder of the purchase price of 502.3 million Euros ($532.7 million at the date of acquisition) was funded by the Company and PGGM in proportion to their respective interests in ATC Europe. The Company funded its portion of the purchase price with borrowings under the 2013 Credit Facility and cash on hand. The acquisition is consistent with the Company’s strategy to expand in selected geographic areas. The acquisition was accounted for as a business combination and is subject to post-closing adjustments.

Other Acquisitions—During the three months ended March 31, 2017, the Company acquired a total of 22 communications sites in the United States, Nigeria and Germany, for an aggregate purchase price of $9.5 million. These acquisitions were accounted for as asset acquisitions.

The following table summarizes the preliminary allocation of the purchase prices for fiscal year 2017 acquisitions based upon their estimated fair value at the date of acquisition (in thousands):

20



AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


 
 
EMEA
 
Other
 
 
FPS Towers France(1)
 
Current assets
 
$
26,714

 
$
8

Non-current assets
 
9,082

 

Property and equipment
 
113,798

 
3,585

Intangible assets (2):
 
 
 
 
     Tenant-related intangible assets
 
381,716

 
3,566

     Network location intangible assets
 
159,393

 
2,502

     Other intangible assets
 
7,958

 

Current liabilities
 
(13,451
)
 
(104
)
Deferred tax liability
 
(127,535
)
 

Other non-current liabilities
 
(16,703
)
 
(59
)
Net assets acquired
 
540,972

 
9,498

Goodwill (3)
 
230,306

 

Fair value of net assets acquired
 
771,278

 
9,498

Debt assumed
 

 

Purchase Price
 
$
771,278

 
$
9,498

_______________
(1)
Accounted for as a business combination.
(2)
Tenant-related intangible assets and network location intangible assets are amortized on a straight-line basis over periods of up to 20 years.
(3)
Primarily results from purchase accounting adjustments, which are not deductible for tax purposes.

2016 Transactions

During the three months ended March 31, 2017, post-closing adjustments impacted the Viom Acquisition.

Viom Acquisition—On April 21, 2016, the Company acquired a 51% controlling ownership interest in Viom. Consideration for the acquisition included 76.4 billion INR in cash ($1.1 billion at the date of acquisition), as well as the assumption of approximately 52.3 billion INR ($0.8 billion at the date of the acquisition) of existing debt, which included 1.7 billion INR ($25.1 million at the date of the acquisition) of the Viom Preference Shares.

21



AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


The following table summarizes the preliminary and updated allocations of the purchase prices for the Viom Acquisition based upon their estimated fair value at the date of acquisition (in thousands). Balances are reflected in the accompanying consolidated balance sheet as of March 31, 2017.
 
 
Preliminary Allocation
 
Updated Allocation
 
 
Asia
 
Asia
 
 
Viom
 
Viom
Current assets
 
$
276,560

 
$
281,930

Non-current assets
 
57,645

 
52,275

Property and equipment
 
701,988

 
705,849

Intangible assets (1):
 
 
 
 
     Tenant-related intangible assets
 
1,369,580

 
1,369,580

     Network location intangible assets
 
666,364

 
666,364

Current liabilities
 
(195,900
)
 
(194,609
)
Deferred tax liability
 
(619,070
)
 
(620,402
)
Other non-current liabilities
 
(102,751
)
 
(101,766
)
Net assets acquired
 
2,154,416

 
2,159,221

Goodwill (2)
 
881,783

 
876,978

Fair value of net assets acquired
 
3,036,199

 
3,036,199

Debt assumed
 
(786,889
)
 
(786,889
)
Redeemable noncontrolling interests
 
(1,100,804
)
 
(1,100,804
)
Purchase Price
 
$
1,148,506

 
$
1,148,506

_______________
(1)
Tenant-related intangible assets and network location intangible assets are amortized on a straight-line basis over periods of up to 20 years.
(2)
Primarily results from purchase accounting adjustments, which are at least partially deductible for tax purposes.

Pro Forma Consolidated Results (Unaudited)
The following table presents the unaudited pro forma financial results as if the FPS Acquisition had occurred on January 1, 2016 and the acquisitions completed in 2016 had occurred on January 1, 2015. The pro forma results do not include any anticipated cost synergies, costs or other integration impacts. Accordingly, such pro forma amounts are not necessarily indicative of the results that actually would have occurred had the transactions been completed on the date indicated, nor are they indicative of the future operating results of the Company.

 
 
Three Months Ended March 31,
 
 
2017
 
2016
Pro forma revenues
 
$
1,624,377

 
$
1,510,977

Pro forma net income attributable to American Tower Corporation common stockholders
 
$
289,679

 
$
239,867

Pro forma net income per common share amounts:
 
 
 
 
Basic net income attributable to American Tower Corporation common stockholders
 
$
0.68

 
$
0.57

Diluted net income attributable to American Tower Corporation common stockholders
 
$
0.67

 
$
0.56


Other Signed Acquisitions

Airtel Tanzania—On March 17, 2016, the Company entered into a definitive agreement with Bharti Airtel Limited, through its subsidiary company Airtel Tanzania Limited (“Airtel Tanzania”), pursuant to which the Company could, subject to a number of conditions, acquire certain of Airtel Tanzania’s communications sites in Tanzania. In light of recent legislation in Tanzania, the Company did not extend the agreement beyond the expiration date therein. Accordingly, on March 17, 2017, the agreement expired pursuant to its terms and is no longer in effect. 


22



AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


14.    BUSINESS SEGMENTS

The Company’s primary business is leasing space on multitenant communications sites to wireless service providers, radio and television broadcast companies, wireless data providers, government agencies and municipalities and tenants in a number of other industries. This business is referred to as the Company’s property operations, which as of March 31, 2017, consisted of the following:
 
U.S.: property operations in the United States;
Asia: property operations in India;
Europe, Middle East and Africa (“EMEA”): property operations in France, Germany, Ghana, Nigeria, South Africa and Uganda; and
Latin America: property operations in Argentina, Brazil, Chile, Colombia, Costa Rica, Mexico and Peru.
The Company has applied the aggregation criteria to operations within the EMEA and Latin America property operating segments on a basis that is consistent with management’s review of information and performance evaluations of these regions.
The Company’s services segment offers tower-related services in the United States, including site acquisition, zoning and permitting services and structural analysis services, which primarily support its site leasing business, including the addition of new tenants and equipment on its sites. The services segment is a strategic business unit that offers different services from, and requires different resources, skill sets and marketing strategies than, the property operating segments.
The accounting policies applied in compiling segment information below are similar to those described in note 1 to the Company’s consolidated financial statements included in the 2016 Form 10-K. Among other factors, in evaluating financial performance in each business segment, management uses segment gross margin and segment operating profit. The Company defines segment gross margin as segment revenue less segment 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 segment operating profit as segment gross margin less Selling, general, administrative and development expense attributable to the segment, excluding stock-based compensation expense and corporate expenses. For reporting purposes, the Latin America property segment gross margin and segment operating profit also include Interest income, TV Azteca, net. These measures of segment gross margin and segment 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 noncontrolling interests and Income tax benefit (provision). The categories of expenses indicated above, such as depreciation, have been excluded from segment operating performance as they are not considered in the review of information or the evaluation of results by management. There are no significant revenues resulting from transactions between the Company’s operating segments. All intercompany transactions are eliminated to reconcile segment results and assets to the consolidated statements of operations and consolidated balance sheets.


23



AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Summarized financial information concerning the Company’s reportable segments for the three months ended March 31, 2017 and 2016 is shown in the following tables. The “Other” column (i) represents amounts excluded from specific segments, such as business development operations, stock-based compensation expense and corporate expenses included in Selling, general, administrative and development expense; Other operating expenses; Interest income; Interest expense; Gain (loss) on retirement of long-term obligations; and Other income (expense), and (ii) reconciles segment operating profit to Income from continuing operations before income taxes.