UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
   
FORM 10-Q
   
(Mark One):
xQuarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the quarterly period ended SeptemberJune 30, 2016.2017.
¨

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, or a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”filer,” “smaller reporting company,” and “smaller reporting“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 OctoberJuly 20, 2016,2017, there were 425,687,843429,177,436 shares of common stock outstanding.
   



AMERICAN TOWER CORPORATION
TABLE OF CONTENTS
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBERJUNE 30, 20162017

 
  Page Nos.
    
PART I. FINANCIAL INFORMATION  
Item 1.
Unaudited Consolidated and Condensed Consolidated Financial Statements
 
1
 
Consolidated Balance Sheets as of SeptemberJune 30, 20162017 and December 31, 20152016
 
1
 
Consolidated Statements of Operations for the three and ninesix months ended SeptemberJune 30, 20162017 and 20152016
 
2
 
Consolidated Statements of Comprehensive Income (Loss) for the three and ninesix months ended SeptemberJune 30, 20162017 and 20152016
 
3
 
Condensed Consolidated Statements of Cash Flows for the ninesix months ended SeptemberJune 30, 20162017 and 20152016
 
4
 
Consolidated Statements of Equity for the ninesix months ended SeptemberJune 30, 20162017 and 20152016
 
5
 
Notes to Consolidated and Condensed Consolidated Financial Statements
 
6
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
3029
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
 
5752
Item 4.
Controls and Procedures
 
5752
PART II. OTHER INFORMATION  
Item 1.
Legal Proceedings
 
5954
Item 1A.
Risk Factors
 
5954
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
54
Item 6.
Exhibits
 
5954
Signatures
 
6055
Exhibit Index
 
EX-1



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)
 September 30, 2016 December 31, 2015 June 30, 2017 December 31, 2016
ASSETS        
CURRENT ASSETS:        
Cash and cash equivalents $530,358
 $320,686
 $770,024
 $787,161
Restricted cash 150,655
 142,193
 143,277
 149,281
Short-term investments 1,012
 4,026
Accounts receivable, net 273,907
 227,354
 322,060
 308,369
Prepaid and other current assets 415,836
 306,235
 566,386
 441,033
Total current assets 1,370,756
 996,468
 1,802,759
 1,689,870
PROPERTY AND EQUIPMENT, net 10,452,038
 9,866,424
 10,725,707
 10,517,258
GOODWILL 4,997,224
 4,091,805
 5,371,165
 5,070,680
OTHER INTANGIBLE ASSETS, net 11,557,964
 9,837,876
 11,728,666
 11,274,611
DEFERRED TAX ASSET 197,914
 212,041
 213,582
 195,678
DEFERRED RENT ASSET 1,265,700
 1,166,755
 1,407,478
 1,289,530
NOTES RECEIVABLE AND OTHER NON-CURRENT ASSETS 813,931
 732,903
 888,853
 841,523
TOTAL $30,655,527
 $26,904,272
 $32,138,210
 $30,879,150
LIABILITIES        
CURRENT LIABILITIES:        
Accounts payable $105,551
 $96,714
 $102,726
 $118,666
Accrued expenses 571,989
 516,413
 727,966
 620,563
Distributions payable 236,608
 210,027
 277,772
 250,550
Accrued interest 108,077
 115,672
 154,926
 157,297
Current portion of long-term obligations 242,992
 50,202
 1,732,035
 238,806
Unearned revenue 254,336
 211,001
 283,486
 245,387
Total current liabilities 1,519,553
 1,200,029
 3,278,911
 1,631,269
LONG-TERM OBLIGATIONS 18,436,144
 17,068,807
 17,509,937
 18,294,659
ASSET RETIREMENT OBLIGATIONS 965,087
 856,936
 1,026,535
 965,507
DEFERRED TAX LIABILITY 792,139
 106,333
 950,299
 777,572
OTHER NON-CURRENT LIABILITIES 1,068,121
 959,349
 1,171,546
 1,142,723
Total liabilities 22,781,044
 20,191,454
 23,937,228
 22,811,730
COMMITMENTS AND CONTINGENCIES 

 

 

 

REDEEMABLE NONCONTROLLING INTERESTS 1,100,202
 —
 1,155,867
 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, respectively; aggregate liquidation value of $1,375,000 14
 14
Common stock: $.01 par value; 1,000,000,000 shares authorized; 428,431,558 and 426,695,279 shares issued; and 425,621,532 and 423,885,253 shares outstanding, respectively 4,284
 4,267
5.25%, Series A, 0 and 6,000,000 shares issued, 0 and 6,000,000 shares outstanding; aggregate liquidation value of $0 and $600,000, respectively —
 60
5.50%, Series B, 1,375,000 shares issued, 1,374,986 and 1,375,000 shares outstanding; aggregate liquidation value of $1,374,986 and $1,375,000, respectively 14
 14
Common stock: $.01 par value; 1,000,000,000 shares authorized; 437,184,947 and 429,912,536 shares issued; and 429,174,983 and 427,102,510 shares outstanding, respectively 4,372
 4,299
Additional paid-in capital 9,817,815
 9,690,609
 10,165,343
 10,043,559
Distributions in excess of earnings (1,030,663) (998,535) (989,153) (1,076,965)
Accumulated other comprehensive loss (1,876,374) (1,836,996) (1,848,803) (1,999,332)
Treasury stock (2,810,026 shares at cost) (207,740) (207,740)
Treasury stock (8,009,964 and 2,810,026 shares at cost, respectively) (849,064) (207,740)
Total American Tower Corporation equity 6,707,396
 6,651,679
 6,482,709
 6,763,895
Noncontrolling interests 66,885
 61,139
 562,406
 212,305
Total equity 6,774,281
 6,712,818
 7,045,115
 6,976,200
TOTAL $30,655,527
 $26,904,272
 $32,138,210
 $30,879,150
See accompanying notes to unaudited consolidated and condensed consolidated financial statements.


AMERICAN TOWER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
 Three Months Ended September 30, Nine Months Ended September 30, Three Months Ended June 30, Six Months Ended June 30,
 2016 2015 2016 2015 2017 2016 2017 2016
REVENUES:                
Property $1,497,936
 $1,212,849
 $4,191,779
 $3,429,264
 $1,638,175
 $1,426,192
 $3,232,239
 $2,693,843
Services 16,909
 25,061
 54,340
 62,211
 24,259
 16,035
 46,433
 37,431
Total operating revenues 1,514,845
 1,237,910
 4,246,119
 3,491,475
 1,662,434
 1,442,227
 3,278,672
 2,731,274
OPERATING EXPENSES:                
Costs of operations (exclusive of items shown separately below):                
Property (including stock-based compensation expense of $426, $396, $1,325 and $1,218, respectively) 485,525
 356,082
 1,280,386
 929,624
Services (including stock-based compensation expense of $172, $99, $578 and $336, respectively) 5,712
 9,307
 22,007
 22,863
Property (including stock-based compensation expense of $645, $392, $1,300 and $899, respectively) 507,234
 452,571
 993,401
 794,861
Services (including stock-based compensation expense of $201, $255, $424 and $406, respectively) 9,949
 7,140
 16,490
 16,295
Depreciation, amortization and accretion 397,999
 341,096
 1,137,398
 932,972
 396,355
 397,765
 817,495
 739,399
Selling, general, administrative and development expense (including stock-based compensation expense of $19,628, $17,850, $68,309 and $70,697, respectively) 131,537
 114,832
 405,086
 354,460
Selling, general, administrative and development expense (including stock-based compensation expense of $24,892, $21,260, $60,236 and $48,681, respectively) 153,148
 138,234
 317,944
 273,549
Other operating expenses 14,998
 15,668
 37,509
 40,891
 18,839
 13,711
 25,054
 22,511
Total operating expenses 1,035,771
 836,985
 2,882,386
 2,280,810
 1,085,525
 1,009,421
 2,170,384
 1,846,615
OPERATING INCOME 479,074
 400,925
 1,363,733
 1,210,665
 576,909
 432,806
 1,108,288
 884,659
OTHER INCOME (EXPENSE):                
Interest income, TV Azteca, net of interest expense of $279, $40, $846 and $780, respectively 2,742
 2,993
 8,206
 8,251
Interest income, TV Azteca, net of interest expense of $291, $284, $582 and $567, respectively 2,770
 2,748
 5,470
 5,464
Interest income 6,376
 4,503
 16,378
 11,871
 8,311
 6,468
 18,238
 10,002
Interest expense (190,160) (149,787) (531,076) (446,228) (187,028) (181,036) (370,723) (340,916)
Gain (loss) on retirement of long-term obligations —
 —
 830
 (78,793)
Other expense (including unrealized foreign currency losses of $8,321, $77,864, $3,544 and $107,871, respectively) (12,260) (66,659) (25,894) (123,291)
(Loss) gain on retirement of long-term obligations (274) 830
 (55,714) 830
Other income (expense) (including unrealized foreign currency gains (losses) of $7,785, ($24,585), $35,736 and $4,777, respectively) 11,782
 (25,842) 41,084
 (13,634)
Total other expense (193,302) (208,950) (531,556) (628,190) (164,439) (196,832) (361,645) (338,254)
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 285,772
 191,975
 832,177
 582,475
 412,470
 235,974
 746,643
 546,405
Income tax provision (22,037) (94,235) (94,671) (132,063) (23,980) (43,510) (50,743) (72,634)
NET INCOME 263,735
 97,740
 737,506
 450,412
 388,490
 192,464
 695,900
 473,771
Net loss (income) attributable to noncontrolling interests 774
 5,259
 (10,288) 1,960
Net income attributable to noncontrolling interests (21,439) (4,914) (12,769) (11,062)
NET INCOME ATTRIBUTABLE TO AMERICAN TOWER CORPORATION STOCKHOLDERS 264,509
 102,999
 727,218
 452,372
 367,051
 187,550
 683,131
 462,709
Dividends on preferred stock (26,781) (26,781) (80,344) (63,382) (22,843) (26,782) (49,624) (53,563)
NET INCOME ATTRIBUTABLE TO AMERICAN TOWER CORPORATION COMMON STOCKHOLDERS $237,728
 $76,218
 $646,874
 $388,990
 $344,208
 $160,768
 $633,507
 $409,146
NET INCOME PER COMMON SHARE AMOUNTS:                
Basic net income attributable to American Tower Corporation common stockholders $0.56
 $0.18
 $1.52
 $0.93
 $0.81
 $0.38
 $1.48
 $0.96
Diluted net income attributable to American Tower Corporation common stockholders $0.55
 $0.18
 $1.51
 $0.92
 $0.80
 $0.37
 $1.47
 $0.95
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:                
BASIC 425,517
 423,375
 424,831
 417,280
 427,298
 424,909
 427,288
 424,484
DILUTED 429,925
 427,227
 429,019
 421,352
 430,487
 429,004
 430,444
 428,529
DISTRIBUTIONS DECLARED PER COMMON SHARE $0.55
 $0.46
 $1.59
 $1.32
 $0.64
 $0.53
 $1.26
 $1.04
See accompanying notes to unaudited consolidated and condensed consolidated financial statements.


AMERICAN TOWER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands)
 
  Three Months Ended September 30, Nine Months Ended September 30,
  2016 2015 2016 2015
Net income $263,735
 $97,740
 $737,506
 $450,412
Other comprehensive (loss) income:        
Changes in fair value of cash flow hedges, net of tax benefit of $0, $9, $0 and $18, respectively (432) 710
 (367) 365
Reclassification of unrealized (gains) losses on cash flow hedges to net income, net of tax benefit of $0, $20, $0 and $66, respectively (108) 158
 (173) 2,771
Foreign currency translation adjustments, net of tax (benefit) expense of ($1,495), ($12,863), $5,388 and ($25,275), respectively (91,608) (600,798) (43,282) (1,077,788)
Other comprehensive loss (92,148) (599,930) (43,822) (1,074,652)
Comprehensive income (loss) 171,587
 (502,190) 693,684
 (624,240)
Comprehensive (income) loss attributable to noncontrolling interests (12,454) 807
 (5,844) 37,930
Comprehensive income (loss) attributable to American Tower Corporation stockholders $159,133
 $(501,383) $687,840
 $(586,310)
  Three Months Ended June 30, Six Months Ended June 30,
  2017 2016 2017 2016
Net income $388,490
 $192,464
 $695,900
 $473,771
Other comprehensive (loss) income:        
Changes in fair value of cash flow hedges, net of tax of $0 (166) (9) (300) 65
Reclassification of unrealized gains on cash flow hedges to net income, net of tax of $0 (32) (57) (118) (65)
Foreign currency translation adjustments, net of tax (benefit) expense of ($1,083), $2,695, $2,422 and $6,883, respectively (54,461) (177,966) 239,435
 48,326
Other comprehensive (loss) income (54,659) (178,032) 239,017
 48,326
Comprehensive income 333,831
 14,432
 934,917
 522,097
Comprehensive (income) loss attributable to noncontrolling interests (56,094) 12,712
 (101,257) 6,610
Comprehensive income attributable to American Tower Corporation stockholders $277,737
 $27,144
 $833,660
 $528,707

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



AMERICAN TOWER CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 Nine Months Ended September 30, Six Months Ended June 30,
 2016 2015 2017 2016
CASH FLOWS FROM OPERATING ACTIVITIES        
Net income $737,506
 $450,412
 $695,900
 $473,771
Adjustments to reconcile net income to cash provided by operating activities        
Depreciation, amortization and accretion 1,137,398
 932,972
 817,495
 739,399
Stock-based compensation expense 70,212
 72,251
 61,960
 49,986
(Gain) loss on early retirement of long-term obligations (830) 78,793
Loss (gain) on early retirement of long-term obligations 55,714
 (830)
Other non-cash items reflected in statements of operations 120,170
 143,412
 (50,222) 53,464
Decrease in restricted cash 4,126
 19,971
 5,659
 12,170
Increase in net deferred rent balances (51,762) (69,019) (71,470) (34,931)
Increase in assets (8,863) (106,535) (101,982) (32,984)
(Decrease) increase in liabilities (29,526) 21,358
Increase in liabilities 65,404
 51,271
Cash provided by operating activities 1,978,431
 1,543,615
 1,478,458
 1,311,316
CASH FLOWS FROM INVESTING ACTIVITIES        
Payments for purchase of property and equipment and construction activities (475,174) (518,018) (371,512) (319,427)
Payments for acquisitions, net of cash acquired (1,309,915) (1,616,205) (857,220) (1,216,467)
Payment for Verizon transaction (4,748) (5,058,895) —
 (4,748)
Proceeds from sale of short-term investments and other non-current assets 4,459
 1,002,214
 7,196
 2,601
Payments for short-term investments —
 (1,011,320)
Deposits, restricted cash, investments and other (824) (2,053) 7,025
 (5,360)
Cash used for investing activities (1,786,202) (7,204,277) (1,214,511) (1,543,401)
CASH FLOW FROM FINANCING ACTIVITIES        
(Repayments of) proceeds from of short-term borrowings, net (7,337) 8,282
Repayments of short-term borrowings, net —
 (2,843)
Borrowings under credit facilities 1,529,477
 5,727,831
 2,508,607
 1,397,672
Proceeds from issuance of senior notes, net 3,236,383
 1,492,298
 1,279,435
 2,237,503
Proceeds from term loan —
 500,000
Proceeds from other borrowings 70,806
 —
Proceeds from issuance of securities in securitization transaction —
 875,000
Repayments of notes payable, credit facilities, senior notes, term loan and capital leases (4,116,645) (6,092,710)
(Distributions to) contributions from noncontrolling interest holders, net (700) 4,449
Repayments of notes payable, credit facilities, senior notes and capital leases (3,126,661) (2,858,415)
Contributions from (distributions to) noncontrolling interest holders, net 265,255
 (503)
Purchases of common stock (641,324) —
Proceeds from stock options and ESPP 76,601
 29,324
 82,641
 60,361
Distributions paid on common stock (651,966) (516,012) (514,905) (426,564)
Distributions paid on preferred stock (80,344) (57,866) (53,562) (53,563)
Proceeds from the issuance of common stock, net —

2,440,327
Proceeds from the issuance of preferred stock, net —

1,337,946
Payment for early retirement of long-term obligations (125) (86,107) (61,764) (125)
Deferred financing costs and other financing activities (29,423) (30,314) (28,311) (23,264)
Cash provided by financing activities 26,727
 5,632,448
Cash (used for) provided by financing activities (290,589) 330,259
Net effect of changes in foreign currency exchange rates on cash and cash equivalents (9,284) 2,126
 9,505
 (8,322)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 209,672
 (26,088)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (17,137) 89,852
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 320,686
 313,492
 787,161
 320,686
CASH AND CASH EQUIVALENTS, END OF PERIOD $530,358
 $287,404
 $770,024
 $410,538
CASH PAID FOR INCOME TAXES (NET OF REFUNDS OF $16,219 AND $5,206, RESPECTIVELY) $71,868
 $130,231
CASH PAID FOR INCOME TAXES (NET OF REFUNDS OF $17,264 AND $14,011, RESPECTIVELY) $60,384
 $50,413
CASH PAID FOR INTEREST $516,382
 $472,079
 $351,991
 $288,880
NON-CASH INVESTING AND FINANCING ACTIVITIES:        
Decrease in accounts payable and accrued expenses for purchases of property and equipment and construction activities $(36,609) $(6,703)
Increase (decrease) in accounts payable and accrued expenses for purchases of property and equipment and construction activities $8,696
 $(36,083)
Purchases of property and equipment under capital leases $37,049
 $19,870
 $21,980
 $21,651
Settlement of accounts receivable related to acquisitions $—
 $735
See accompanying notes to unaudited consolidated and condensed consolidated financial statements.


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
 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, 2015 6,000,000
 $60
 —
 $—
 399,508,751
 $3,995
 (2,810,026) $(207,740) $5,788,786
 $(794,221) $(837,320) $99,792
 $4,053,352
Stock-based compensation related activity —
 —
 —
 —
 904,645
 9
 —
 —
 79,878
 —
 —
 —
 79,887
Issuance of common stock—stock purchase plan —
 —
 —
 —
 43,940
 —
 —
 —
 3,465
 —
 —
 —
 3,465
Issuance of common stock —
 —
 —
 —
 25,850,000
 259
 —
 —
 2,440,068
 —
 —
 —
 2,440,327
Issuance of preferred stock —
 —
 1,375,000
 14
 —
 —
 —
 —
 1,337,932
 —
 —
 —
 1,337,946
Changes in fair value of cash flow hedges, net of tax —
 —
 —
 —
 —
 —
 —
 —
 —
 377
 —
 (12) 365
Reclassification of unrealized losses on cash flow hedges to net income, net of tax —
 —
 —
 —
 —
 —
 —
 —
 —
 2,728
 —
 43
 2,771
Foreign currency translation adjustment, net of tax —
 —
 —
 —
 —
 —
 —
 —
 —
 (1,041,787) —
 (36,001) (1,077,788)
Contributions from noncontrolling interest holders —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 5,105
 5,105
Distributions to noncontrolling interest holders —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 (656) (656)
Common stock dividends/distributions declared —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 (560,993) —
 (560,993)
Preferred stock dividends declared —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 (49,991) —
 (49,991)
Net income (loss) —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 452,372
 (1,960) 450,412
BALANCE, SEPTEMBER 30, 2015 6,000,000
 $60
 1,375,000
 $14
 426,307,336
 $4,263
 (2,810,026) $(207,740) $9,650,129
 $(1,832,903) $(995,932) $66,311
 $6,684,202
                           Issued Shares Amount Issued Shares Amount 
Issued
Shares
 Amount Shares Amount 
Additional
Paid-in
Capital
 
Accumulated Other
Comprehensive
Loss
 
Distributions
in Excess of
Earnings
 
Noncontrolling
Interest
 
Total
Equity
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
 6,000,000
 $60
 1,375,000
 $14
 426,695,279
 $4,267
 (2,810,026) $(207,740) 
Stock-based compensation related activity —
 —
 —
 —
 1,691,546
 17
 —
 —
 123,359
 —
 —
 —
 123,376
 —
 —
 —
 —
 1,331,272
 13
 —
 —
 86,767
 —
 —
 —
 86,780
Issuance of common stock—stock purchase plan —
 —
 —
 —
 44,733
 —
 —
 —
 3,847
 —
 —
 —
 3,847
 —
 —
 —
 —
 44,733
 —
 —
 —
 3,847
 —
 —
 —
 3,847
Changes in fair value of cash flow hedges, net of tax —
 —
 —
 —
 —
 —
 —
 —
 —
 (367) —
 —
 (367) —
 —
 —
 —
 —
 —
 —
 —
 —
 65
 —
 —
 65
Reclassification of unrealized gains on cash flow hedges to net income —
 —
 —
 —
 —
 —
 —
 —
 —
 (173) —
 —
 (173) —
 —
 —
 —
 —
 —
 —
 —
 —
 (65) —
 —
 (65)
Foreign currency translation adjustment, net of tax —
 —
 —
 —
 —
 —
 —
 —
 —
 (38,838) —
 (2,306) (41,144) —
 —
 —
 —
 —
 —
 —
 —
 —
 65,998
 —
 (665) 65,333
Contributions from noncontrolling interest —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 13
 13
Distributions to noncontrolling interest —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 (516) (516)
Common stock distributions declared —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 (443,935) —
 (443,935)
Preferred stock dividends declared —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 (53,563) —
 (53,563)
Net income —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 462,709
 6,739
 469,448
BALANCE, JUNE 30, 2016 6,000,000
 $60
 1,375,000
 $14
 428,071,284
 $4,280
 (2,810,026) $(207,740) $9,781,223
 $(1,770,998) $(1,033,324) $66,710
 $6,840,225
                          
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 —
 —
 —
 —
 1,617,075
 16
 —
 —
 117,232
 —
 —
 —
 117,248
Issuance of common stock—stock purchase plan —
 —
 —
 —
 53,062
 1
 —
 —
 4,554
 —
 —
 —
 4,555
Conversion of preferred stock (6,000,000) (60) (14) 0
 5,602,274
 56
 —
 —
 (2) —
 —
 —
 (6)
Treasury stock activity —
 —
 —
 —
 —
 —
 (5,199,938) (641,324) —
 —
 —
 —
 (641,324)
Changes in fair value of cash flow hedges, net of tax —
 —
 —
 —
 —
 —
 —
 —
 —
 (300) —
 —
 (300)
Reclassification of unrealized gains on cash flow hedges to net income —
 —
 —
 —
 —
 —
 —
 —
 —
 (118) —
 —
 (118)
Foreign currency translation adjustment, net of tax —
 —
 —
 —
 —
 —
 —
 —
 —
 150,947
 —
 32,710
 183,657
Contributions from noncontrolling interest holders —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 47
 47
 —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 314,059
 314,059
Distributions to noncontrolling interest holders —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 (747) (747) —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 (568) (568)
Common stock dividends/distributions declared —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 (679,002) —
 (679,002)
Common stock distributions declared —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 (541,757) —
 (541,757)
Preferred stock dividends declared —
 —
 —
 —
 —
 —
 

 

 

 

 (80,344) —
 (80,344) —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 (53,562) —
 (53,562)
Net income —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 727,218
 8,752
 735,970
 —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 683,131
 3,900
 687,031
BALANCE, SEPTEMBER 30, 2016 6,000,000
 $60
 1,375,000
 $14
 428,431,558
 $4,284
 (2,810,026) $(207,740) $9,817,815
 $(1,876,374) $(1,030,663) $66,885
 $6,774,281
BALANCE, JUNE 30, 2017 —
 $—
 1,374,986
 $14
 437,184,947
 $4,372
 (8,009,964) $(849,064) $10,165,343
 $(1,848,803) $(989,153) $562,406
 $7,045,115

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


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 theindustries. The Company refers to this business as its property operations. Additionally, the Company offers tower-related services referredin the United States, which the Company refers to as its services operations, in the United States, includingoperations. These services include site acquisition, zoning and permitting and structural analysis, which primarily support itsthe Company’s site leasing business, including the addition of new tenants and equipment on its sites.
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 forin 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.

ATCAmerican Tower Corporation 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.

On April 21, 2016, the Company significantly expanded its Asia segment portfolio by acquiring a 51% controlling ownership interest in Viom Networks Limited (“Viom”), a telecommunications infrastructure company that owns and operates over 42,000 wireless communications towers and 200 indoor DAS networks in India (the “Viom Acquisition”). Subsequent to the closing, Viom was renamed ATC Telecom Infrastructure Private Limited (“ATC TIPL”).

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 Companyit 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 SeptemberJune 30, 2016,2017, 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.business and services segment.

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, 20152016 (the “2015“2016 Form 10-K”). The results of operations for the three and ninesix months ended SeptemberJune 30, 20162017 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


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


upon the Company’s ability to exercise significant influence over operating and financial policies. All intercompany accounts and transactions have been eliminated. As of SeptemberJune 30, 2016, the Company has a controlling interest in
two joint ventures in Ghana and Uganda with MTN Group Limited (“MTN Group”). The joint ventures are controlled by a holding company of which a wholly owned subsidiary of2017, the Company holds a 51% controlling interest, and a wholly owned subsidiary of MTN Group Limited holds a 49% interest.interest, in each of two joint ventures, one in Ghana and one in Uganda. The Company


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


holds a 51% 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, in a subsidiary of the Company in South Africa and the South African investors hold an approximate 25% noncontrolling interest. Theinterest, in a subsidiary of the Company alsoin South Africa. In India, the Company holds a 51% controlling interest in ATC TIPL.Telecom Infrastructure Private Limited (“ATC TIPL”), formerly Viom Networks Limited (“Viom”).

Significant Accounting Policies—The Company’s significant accounting policies are described in note 1 to the Company’s consolidated financial statements included in the 20152016 Form 10-K. There have been no material changes to the Company’s significant accounting policies during the ninesix months ended SeptemberJune 30, 2016.2017.
Accounting Standards Updates—In May 2014, the Financial Accounting Standards Board (the “FASB”) issued new guidance on 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 June 30, 2017, this revenue was approximately 13% of total revenue. Although the Company is evaluatingstill assessing the impact of this standard will have 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 evaluatinga lessee and which it currently treats as operating leases and (iii) continues to evaluate the impact this standard will have on its financial statements.of the new guidance.

In MarchNovember 2016, the FASB issued new guidance on amounts described as restricted cash or restricted cash equivalents within the accounting for share-based payment transactions.statement of cash flows. The guidance amendsrequires amounts generally described as restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the accounting for taxes related to stock-based compensation, including how excess tax benefitsbeginning-of-period and a company’s payments for tax withholdings should be classified. Thisend-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, 2016.2017. 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 standard inguidance during the secondfirst quarter of 2016 and elected to account for forfeitures as they occur, effective January 1, 2016. The adoption of this guidance was not material to the Company’s consolidated financial statements. Additionally,2017. As a result, the Company elected to apply the prospective transition method to the amendments related to the presentationexpects that more transactions will be accounted for as asset acquisitions instead of excess tax benefits in the statements of cash flows.business combinations.

In August 2016,January 2017, the FASB issued new guidance on certain classifications within the statement of cash flows.accounting for goodwill impairments. The guidance addresses,eliminates Step 2 from the goodwill impairment test and requires, among other things, how cash receipts and cash payments are presented and classified inrecognition of an impairment loss when the statementcarrying value of cash flows, including payments for costs relateda reporting unit exceeds its fair value. The loss recognized is limited to debt prepayments or extinguishment, as well as paymentsthe total amount of contingent consideration after an acquisition. The guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption within an interim period. The Company is evaluating the impact this standard will have on its financial statements.goodwill



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


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.

In May 2017, the FASB issued new guidance on accounting for stock-based compensation. The guidance clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. The guidance is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017, and the Company early adopted this guidance during the second quarter of 2017. The adoption of this guidance did not have a material effect on the Company’s financial statements.
2.    PREPAID AND OTHER CURRENT ASSETS
Prepaid and other current assets consisted of the following (in thousands):
As ofAs of
September 30, 2016 December 31, 2015June 30, 2017 December 31, 2016
Prepaid operating ground leases$129,515
 $128,542
$148,744
 $134,167
Prepaid income tax109,949
 45,056
130,341
 127,142
Unbilled receivables59,928
 34,173
131,831
 57,661
Prepaid assets54,584
 32,892
51,190
 36,300
Value added tax and other consumption tax receivables24,519
 30,239
23,500
 31,570
Other miscellaneous current assets37,341
 35,333
80,780
 54,193
Total$415,836
 $306,235
Prepaids and other current assets$566,386
 $441,033

3.    GOODWILL AND OTHER INTANGIBLE ASSETS

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

  Property Services Total
  U.S. Asia (1) EMEA Latin America 
Balance as of January 1, 2016 $3,379,163
 $170,719
 $132,570
 $407,365
 $1,988
 $4,091,805
Additions (2) —
 826,735
 42,297
 5,008
 —
 874,040
Effect of foreign currency translation —
 (2,890) (19,703) 53,972
 —
 31,379
Balance as of September 30, 2016 $3,379,163
 $994,564
 $155,164
 $466,345
 $1,988
 $4,997,224
  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) —
 400
 224,270
 49
 —
 224,719
Effect of foreign currency translation —
 53,285
 21,358
 1,123
 —
 75,766
Balance as of June 30, 2017 $3,379,163
 $1,082,998
 $396,139
 $510,877
 $1,988
 $5,371,165
_______________
(1)Includes approximately $826.7 million of goodwill assumed in the Viom Acquisition (see note 13).
(2)Balances have been revised to reflect purchase accounting measurement period adjustments.
(1)    Balances have been revised to reflect purchase accounting measurement period adjustments.


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 September 30, 2016 As of December 31, 2015  As of June 30, 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
Estimated Useful
Lives		 
Gross
Carrying
Value
 
Accumulated
Amortization
 
Net Book
Value
 
Gross
Carrying
Value
 
Accumulated
Amortization
 
Net Book
Value
(years) (in thousands)(years) (in thousands)
Acquired network location intangibles (1)Up to 20
 $4,626,477
 $(1,229,177) $3,397,300
 $3,980,281
 $(1,052,393) $2,927,888
Up to 20
 $4,854,128
 $(1,404,464) $3,449,664
 $4,622,316
 $(1,280,284) $3,342,032
Acquired customer-related intangibles15-20
 10,242,624
 (2,115,242) 8,127,382
 8,640,554
 (1,763,853) 6,876,701
Acquired tenant-related intangibles15-20
 10,737,949
 (2,491,418) 8,246,531
 10,130,466
 (2,224,119) 7,906,347
Acquired licenses and other intangibles3-20
 28,332
 (4,283) 24,049
 28,293
 (5,486) 22,807
3-20
 36,576
 (7,411) 29,165
 28,140
 (4,827) 23,313
Economic Rights, TV Azteca70
 19,376
 (10,143) 9,233
 21,688
 (11,208) 10,480
70
 15,925
 (12,619) 3,306
 13,893
 (10,974) 2,919
Total other intangible assets  $14,916,809
 $(3,358,845) $11,557,964
 $12,670,816
 $(2,832,940) $9,837,876
  $15,644,578
 $(3,915,912) $11,728,666
 $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.


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


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 customer-relatedtenant-related intangibles typically represent the value to the Company of customertenant 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 customer-relatedtenant-related intangibles on a straight-line basis over their estimated useful lives. As of SeptemberJune 30, 2016,2017, 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 20152016 Form 10-K, was 16 years. Amortization of intangible assets for the three and ninesix months ended SeptemberJune 30, 20162017 was $183.9$192.2 million and $521.0$375.4 million, respectively, and amortization of intangible assets for the three and ninesix months ended SeptemberJune 30, 20152016 was $154.4$185.3 million and $412.5$337.1 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 2016$179.6
2017716.2
Remainder of 2017$376.1
2018714.0
750.4
2019711.1
747.3
2020692.3
728.5
2021682.8
719.1
2022714.1



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 ofAs of
September 30, 2016 December 31, 2015June 30, 2017 December 31, 2016
Accrued property and real estate taxes$114,839
 $75,827
$161,404
 $138,361
Payroll and related withholdings63,848
 62,334
57,921
 76,141
Accrued rent52,926
 54,732
50,855
 50,951
Amounts payable to tenants39,508
 32,326
Accrued construction costs19,517
 19,857
29,119
 28,587
Accrued income tax payable2,480
 11,704
20,898
 11,551
Other accrued expenses318,379
 291,959
368,261
 282,646
Total$571,989
 $516,413
Total accrued expenses$727,966
 $620,563



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, and debt issuance costs and fair value adjustments due to interest rate swaps consisted of the following (in thousands):
As of  As of  
September 30, 2016 December 31, 2015 Maturity DateJune 30, 2017 December 31, 2016 Maturity Date
Series 2013-1A securities (1)$498,351
 $497,478
 March 15, 2018
Series 2013-2A securities (2)1,289,872
 1,288,689
 March 15, 2023
Series 2015-1 notes (3)346,897
 346,262
 June 15, 2020
Series 2015-2 notes (4)519,271
 518,776
 June 16, 2025
2012 GTP notes (5)180,846
 281,902
 March 15, 2019
Unison notes (6)200,616
 201,930
 Various
Viom indebtedness (7)593,491
 —
 Various
Viom preference shares (8)25,021
 —
 Various
Shareholder loans (9)151,723
 145,540
 Various
BR Towers debentures (10)103,194
 85,219
 October 15, 2023
Colombian credit facility (11)60,131
 59,640
 April 24, 2021
South African facility (12)50,911
 53,175
 December 17, 2020
Brazil credit facility (13)38,900
 21,868
 January 15, 2022
Indian working capital facility (14)662
 8,752
 October 31, 2016
Total American Tower subsidiary debt4,059,886
 3,509,231
 
    
2013 Credit Facility137,692
 1,225,000
 June 28, 2019
Term Loan994,553
 1,993,601
 January 29, 2021
2014 Credit Facility1,840,000
 1,980,000
 January 29, 2021
4.500% senior notes998,357
 997,693
 January 15, 2018
2013 Credit Facility (1)$853,419
 $539,975
 June 28, 2020
Term Loan (1)994,760
 993,936
 January 31, 2022
2014 Credit Facility (1)1,180,000
 1,385,000
 January 31, 2022
4.500% senior notes (2)999,301
 998,676
 January 15, 2018
3.40% senior notes999,661
 999,769
 February 15, 2019999,781
 999,716
 February 15, 2019
7.25% senior notes296,665
 296,242
 May 15, 2019—
 297,032
 N/A
2.800% senior notes744,557
 743,557
 June 1, 2020745,628
 744,917
 June 1, 2020
5.050% senior notes697,165
 697,216
 September 1, 2020697,684
 697,352
 September 1, 2020
3.300% senior notes744,465
 —
 February 15, 2021745,358
 744,762
 February 15, 2021
3.450% senior notes643,529
 642,786
 September 15, 2021644,454
 643,848
 September 15, 2021
5.900% senior notes497,203
 497,188
 November 1, 2021497,584
 497,343
 November 1, 2021
2.250% senior notes594,903
 —
 January 15, 2022576,621
 572,764
 January 15, 2022
4.70% senior notes695,821
 695,374
 March 15, 2022696,355
 696,013
 March 15, 2022
3.50% senior notes988,820
 987,966
 January 31, 2023990,066
 989,269
 January 31, 2023
5.00% senior notes1,002,816
 1,003,453
 February 15, 20241,002,582
 1,002,742
 February 15, 2024
1.375% senior notes559,995
 —
 April 4, 2025
4.000% senior notes739,717
 739,057
 June 1, 2025740,491
 739,985
 June 1, 2025
4.400% senior notes495,102
 —
 February 15, 2026495,428
 495,212
 February 15, 2026
3.375% senior notes983,007
 —
 October 15, 2026984,093
 983,369
 October 15, 2026
3.125% senior notes396,702
 —
 January 15, 2027396,853
 396,713
 January 15, 2027
3.55% senior notes742,503
 —
 July 15, 2027
Total American Tower Corporation debt14,490,735
 13,498,902
 15,542,956
 14,418,624
 
    
Series 2013-1A securities (3)499,233
 498,642
 March 15, 2018
Series 2013-2A securities (4)1,291,056
 1,290,267
 March 15, 2023
Series 2015-1 notes (5)347,532
 347,108
 June 15, 2020
Series 2015-2 notes (6)519,767
 519,437
 June 16, 2025
2012 GTP notes (7)—
 179,459
 N/A
Unison notes (7)—
 132,960
 N/A
India indebtedness (8)505,664
 549,528
 Various
India preference shares (9)25,808
 24,537
 March 2, 2020
Shareholder loans (10)102,752
 151,045
 Various
Other subsidiary debt (1) (11)265,546
 286,009
 Various
Total American Tower subsidiary debt3,557,358
 3,978,992
 
Other debt, including capital lease obligations128,515
 110,876
 141,658
 135,849
 
Total18,679,136
 17,119,009
 19,241,972
 18,533,465
 
Less current portion of long-term obligations(242,992) (50,202) (1,732,035) (238,806) 
Long-term obligations$18,436,144
 $17,068,807
 $17,509,937
 $18,294,659
 
_______________
(1)    Maturity date represents anticipated repayment date; final legal maturity is March 15, 2043.
(2)    Maturity date represents
(1)Accrues interest at a variable rate.
(2)On June 30, 2017, the Company delivered notice of its election to call for redemption all of its outstanding 4.500% senior unsecured notes due 2018 (the “4.500% Notes”). The 4.500% Notes will be redeemed at a price equal to the principal amount of the 4.500% Notes plus a make-whole premium calculated pursuant to the terms of the 4.500% Notes indenture, together with accrued and unpaid interest, if any, up to, but excluding, the redemption date, which has been set for July 31, 2017.
(3)Maturity date reflects the anticipated repayment date; final legal maturity is March 15, 2043.
(4)Maturity date reflects the anticipated repayment date; final legal maturity is March 15, 2048.
(3)Maturity date represents anticipated repayment date; final legal maturity is June 15, 2045.
(4)Maturity date represents anticipated repayment date; final legal maturity is June 15, 2050.


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


(5)Secured debt assumed by the Company in connection with its acquisition of MIP Tower Holdings LLC. Maturity date representsreflects the anticipated repayment date; final legal maturity is MarchJune 15, 2042. During the nine months ended September 30, 2016, the Company repaid the $94.1 million outstanding under the Secured Tower Cellular Site Revenue Notes, Series 2012-1 Class A and released 472 sites in connection with this repayment.2045.
(6)Secured debt assumed byMaturity date reflects the Company in connection with its acquisition of certain legal entities from Unison Holdings LLC and Unison Site Management II, L.L.C (together, “Unison”). In October 2016, the Company repaid the $67.0 million outstanding under the Secured Cellular Site Revenue Notes, Series 2010-1, Class C. The anticipated repayment date for the remaining series is April 15, 2020;date; final legal maturity date is AprilJune 15, 2040.2050.
(7)Repaid in full on February 15, 2017.
(8)Denominated in Indian Rupees (“INR”). Debt primarilyincludes India working capital facility, remaining debt assumed by the Company in connection with the Viom Acquisition. Maturity dates begin March 31, 2017. DenominatedAcquisition (as defined in Indian Rupees (“INR”). In October 2016,note 9) and debt that has been entered into by ATC TIPL refinanced 3.6 billion INR ($53.5 million as of September 30, 2016) of Viom assumed indebtedness with borrowings under a new short-term committed loan facility with a borrowing capacity of 5.8 billion INR ($87.1 million as of September 30, 2016) and repaid an additional 1.4 billion INR ($21.0 million as of September 30, 2016) of Viom assumed indebtedness with cash on hand.TIPL.
(8)(9)Mandatorily redeemable preference shares (the “Preference Shares”) classified as debt, assumeddebt. On March 2, 2017, ATC TIPL issued the Preference Shares and used the proceeds to redeem the preference shares previously issued by the Company in connection with the Viom Acquisition.(the “Viom Preference Shares”). The sharesPreference Shares are to be redeemed in equal parts on March 26, 20172, 2020 and March 26, 2018.have a dividend rate of 10.25% per annum.
(9)(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 U.S. Dollars.
(10)Publicly issued debentures assumedUgandan 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 Company in connection with its acquisitionholder to a new shareholder note for 114.5 billion UGX ($31.8 million at the time of BR Towers S.A. Denominated in Brazilian Reais (“BRL”).conversion), bearing interest at a fixed rate of 16.8% per annum. The remaining balance of the Uganda loan was converted into equity.
(11)DenominatedIncludes the BR Towers debentures, which are denominated in Colombian PesosBrazilian Reais (“BRL”) and amortizesamortize through April 24, 2021.
(12)DenominatedOctober 15, 2023, the South African credit facility, which is denominated in South African Rand and amortizes through December 17, 2020.
(13)Denominated2020, the Colombian credit facility, which is denominated in BRL.
(14)DenominatedColombian Pesos and amortizes through April 24, 2021 and the Brazil credit facility, which is denominated in INR. This agreement provides that the maturity date may be extended for additional 30-day periods.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) 7.2$999.3 million under the 4.500% Notes, (ii) $499.2 million under the Secured Tower Revenue Securities, Series 2013-1A and (iii) 10.6 billion INR ($108.4164.2 million) of indebtedness primarily assumed by the Company in connection with the Viom Acquisition, (ii) 0.8 billion INR ($12.5 million) related to Preference Shares and (iii) $67.4 million outstanding under the Secured Cellular Site Revenue Notes, Series 2010-1, Class C (included in the Unison notes) assumed in connection with the acquisition of Unison.India indebtedness.

Viom indebtedness—Securitized Debt—Amounts outstanding and key termsCash flows generated by the sites that secure the securitized debt of the Viom indebtedness consistedCompanyare only available for payment of such debt and are not available to pay the Company’s other obligations or the claims of its creditors. However, subject to certain restrictions, the Company holds the right to receive the excess cash flows not needed to pay the securitized debt and other obligations arising out of the following as of September 30, 2016 (in millions, except percentages):
   Amount Outstanding (INR) Amount Outstanding (USD) Interest Rate (Range) Maturity Date (Range)
Term loans 33,533
  $503.4
 10.50% - 11.20%
 March 31, 2017 - November 30, 2024
Debenture 6,000
  $90.1
 9.90% April 28, 2020
Working capital facilities —
  —
 9.85% - 11.80%
 October 23, 2016 - March 18, 2017
securitizations. The Viom indebtedness includes several term loans, ranging from one to ten years, which are generally secured bysecuritized debt is the borrower’s short-term and long-term assets. Eachobligation of the term loans bear interest at theissuers thereof or borrowers thereunder, as applicable, bank’s Marginal Cost of Funds based Lending Rate or base rate, plus a spread. Interest rates on the term loans are fixed until certain annual reset dates. Generally, the term loans can be repaid without penalty on the annual reset dates; earlier repayments require notice to the lenders and are subject to prepayment penalties, typically of 1% to 2%. Scheduled repayment terms include either ratable or staggered amortization with repayments typically commencing between sixtheir subsidiaries, and 36 months after the initial disbursement of funds.
The debentureis secured by the borrower’s long-term assets, including property and equipment and intangible assets. The debenture bears interest at a base rate plus a spread of 0.6%. The base rate is set in advance for each quarterly coupon period. Should the actual base rate be between 9.75% and 10.25%, the revised base rate is assumed to be 10.00% for purposesnot of the reset. Additionally, the spread is subject to reset 36 and 48 months from the issuance date of April 27, 2015. The holders of the debenture must reach a consensus on the revised spread and the borrower must redeem all of the debentures held by holders from whom consensus is not achieved. Additionally, the debenture is required to be redeemed by the borrower if it does not maintain a minimum credit rating.Company or its other subsidiaries.
The Viom indebtedness includes several working capital facilities, most of which are subject to annual renewal, which are generally secured by the borrower’s short-term and long-term assets. The working capital facilities bear interest at rates that are comprised of base rates plus spreads. Generally, the working capital facilities are payable on demand prior to maturity.


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


Senior Notes
Viom preference shares—As of September 30, 2016, ATC TIPL had 166,666,666 Preference Shares outstanding, which are required to be redeemed in cash. Accordingly, the Company recognized debt of 1.67 billion INR ($25.0 million) related to the Preference Shares outstanding on the consolidated balance sheet.
Unless redeemed earlier, the Preference Shares will be redeemed in two equal installments on March 26, 2017 and March 26, 2018 in an amount equal to ten INR per share along with a redemption premium, as defined in the investment agreement, which equates to a compounded return of 13.5% per annum. ATC TIPL, at its option, may redeem the Preference Shares prior to the aforementioned dates, subject to an additional 2% redemption premium.
Senior Notes Offerings
3.300% Senior Notes and 4.400%1.375% Senior Notes Offering—On January 12, 2016,April 6, 2017, the Company completed a registered public offering of $750.0500.0 million Euros ($532.2 million at the date of issuance) aggregate principal amount of 3.300%1.375% senior unsecured notes due 20212025 (the “3.300% Notes”) and $500.0 million aggregate principal amount of 4.400% senior unsecured notes due 2026 (the “4.400%“1.375% Notes”). The net proceeds from this offering were approximately $1,237.2489.8 million Euros (approximately $521.4 million at the date of issuance), after deducting commissions and estimated expenses. The Company used the net proceeds to repay existing indebtedness under its multicurrency senior unsecured revolving credit facility entered into in June 2013, as amended (the “2013 Credit Facility”), and for general corporate purposes.

The 3.300%1.375% Notes will mature on February 15, 2021April 4, 2025 and bear interest at a rate of 3.300% per annum. The 4.400% Notes will mature on February 15, 2026 and bear interest at a rate of 4.400%1.375% per annum. Accrued and unpaid interest on the notes1.375% Notes will be payable in U.S. Dollars semi-annuallyEuros in arrears on February 15 and August 15April 4 of each year, beginning on August 15, 2016.April 4, 2018. Interest on the notes is1.375% Notes will be computed on the basis of a 360-day year comprisedthe actual number of twelve 30-day monthsdays in the period for which interest is being calculated and the actual number of days from and including the last date on which interest was paid on the 1.375% Notes and commenced accruing on January 12, 2016.April 6, 2017.

3.375%3.55% Senior Notes Offering—On May 13, 2016,June 30, 2017, the Company completed a registered public offering of $1.0 billion$750.0 million aggregate principal amount of 3.375%3.55% senior unsecured notes due 20262027 (the “3.375%“3.55% Notes”). The net proceeds from this offering were approximately $981.5$741.8 million, after deducting commissions and estimated expenses. The Company used the net proceeds to repay existing indebtedness under the 2013 Credit Facility.

The 3.375%3.55% Notes will mature on October 15, 2026 and bear interest at a rate of 3.375% per annum. Accrued and unpaid interest on the notes will be payable in U.S. Dollars semi-annually in arrears on April 15 and October 15 of each year, beginning on October 15, 2016. Interest on the notes is computed on the basis of a 360-day year comprised of twelve 30-day months and commenced accruing on May 13, 2016.

2.250% Senior Notes and 3.125% Senior Notes Offering—On September 30, 2016, the Company completed a registered public offering of $600.0 million aggregate principal amount of 2.250% senior unsecured notes due 2022 (the “2.250% Notes”) and $400.0 million aggregate principal amount of 3.125% senior unsecured notes due 2027 (the “3.125% Notes”). The net proceeds from this offering were approximately $990.6 million, after deducting commissions and estimated expenses. The Company used the proceeds to repay existing indebtedness under the Company’s unsecured term loan entered into in October 2013, as amended (the “Term Loan”).

The 2.250% Notes will mature on January 15, 2022 and bear interest at a rate of 2.250% per annum. The 3.125% Notes will mature on JanuaryJuly 15, 2027 and bear interest at a rate of 3.125%3.55% per annum. Accrued and unpaid interest on the notes3.55% Notes will be payable in U.S. Dollars semi-annually in arrears on January 15 and July 15 of each year, beginning on January 15, 2017.2018. Interest on the notes3.55% Notes is computed on the basis of a 360-day year comprised of twelve 30-day months and commenced accruing on SeptemberJune 30, 2016. The Company entered into interest rate swaps, which were designated as fair value hedges at inception, to hedge against changes in fair value of the debt under the 2.250% Notes resulting from changes in interest rates. As of September 30, 2016, the interest rate on the 2.250% Notes, after giving effect to the interest rate swap agreements, was 1.75%.2017.

The Company may redeem each series of senior notes at any time, in whole or in part, at a redemption price equal to 100% of the principal amount of the notes plus a make-whole premium, together with accrued interest to the redemption date. If the Company redeems the 3.300%1.375% Notes on or after January 15, 2021,4, 2025 or the 4.400%3.55% Notes on or after NovemberApril 15, 2025, the 3.375% Notes on or after July 15, 2026 or the 3.125% Notes on or after October 15, 2026,2027, it will not be required to pay a make-whole premium. In addition, if the Company undergoes a change of control and corresponding ratings decline, each as defined in the applicable supplemental indenture, it may be required to


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


decline, each as defined in the applicable supplemental indenture, it may be required to repurchase all of the applicable notes at a purchase price equal to 101% of the principal amount of such notes, plus accrued and unpaid interest (including additional interest, if any), up to but not including the repurchase date. The notes rank equally with all of the Company’s other senior unsecured debt and are structurally subordinated to all existing and future indebtedness and other obligations of its subsidiaries.

The supplemental indentures contain certain covenants that restrict the Company’s ability to merge, consolidate or sell assets and its (together with its subsidiaries’) ability to incur liens. These covenants are subject to a number of exceptions, including that the Company and its subsidiaries may incur certain liens on assets, mortgages or other liens securing indebtedness if the aggregate amount of such liens does not exceed 3.5x Adjusted EBITDA, as defined in the applicable supplemental indenture.

Bank Facilities
2013 Credit Facility—During the ninesix months ended SeptemberJune 30, 2016,2017, the Company borrowed an aggregate of $1.4$2.3 billion and repaid an aggregate of $2.5$2.0 billion of revolving indebtedness under the 2013 Credit Facility. The Company primarily used the borrowings to fund the Viom Acquisition.acquisitions, repay existing indebtedness and for general corporate purposes.

2014 Credit Facility—During the ninesix months ended SeptemberJune 30, 2016,2017, the Company borrowed an aggregate of $80.0$200.0 million and repaid an aggregate of $220.0$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”). On October 17, 2016, the Company borrowed an additional $140.0 million under the 2014 Credit Facility.

Term Loan—During the nine months ended September 30, 2016, the Company repaid $1.0 billion of indebtedness under the Term Loan.

As of SeptemberJune 30, 2016,2017, the key terms under the 2013 Credit Facility, the 2014 Credit Facility and the Term LoanCompany’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)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$137.7
 $3.2
 June 28, 2019 (3) 1.250% 0.150%$853.4
 $4.6
 June 28, 2020(3)1.250% 0.150%
2014 Credit Facility$1,840.0
 $7.4
 January 29, 2021 (3) 1.250% 0.150%$1,180.0
 $6.4
 January 31, 2022(3)1.250% 0.150%
Term Loan$1,000.0
 $—
 January 29, 2021 1.250% N/A
$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 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.



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


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 1Quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
   
 Level 2Observable 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 3Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.


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



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):
 
 September 30, 2016 December 31, 2015 June 30, 2017 December 31, 2016
 Fair Value Measurements Using Fair Value Measurements Using Fair Value Measurements Using Fair Value Measurements Using
 Level 2 Level 3 Level 2 Level 3 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3
Assets:                    
Short-term investments (1) $1,012
 —
 —
 $4,026
 —
 —
Interest rate swap agreements $212
 —
 $692
 —
 —
 —
 —
 —
 $3
 —
Embedded derivative in lease agreement —
 $13,513
 —
 $14,176
 —
 —
 $12,846
 —
 —
 $13,290
Liabilities:                    
Interest rate swap agreements —
 $23,025
 —
 —
 $24,682
 —
Acquisition-related contingent consideration —
 $21,575
 —
 $12,436
 —
 —
 $16,126
 —
 —
 $15,444

_______________
On September 30, 2016, the Company entered into interest rate swap agreements with an aggregate notional value of $600.0 million related to the 2.250% Notes. The interest rate swap agreements require the Company to pay interest at a variable interest rate of one-month LIBOR plus applicable spreads and to receive fixed interest at a rate of 2.250% through January 15, 2022.
(1)Consists of highly liquid investments with original maturities in excess of three months.

During the ninesix months ended SeptemberJune 30, 2016,2017, the Company has made no changes to the methods described in note 11 to the Company’s consolidated financial statements included in the 20152016 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 ninesix months ended SeptemberJune 30, 20162017 and 20152016 were not material to the consolidated financial statements. As of SeptemberJune 30, 2016,2017, the Company estimated the value of all potential acquisition-related contingent consideration required payments to be between zero and $47.7 million, which includes $22.2 million related to an acquisition in South Africa that occurred during the three months ended September 30, 2016.$47.6 million.
 
Redeemable Noncontrolling Interests
In connection with the Viom Acquisition, the Company entered into a shareholders’ agreement that provides for put options held by certain noncontrolling shareholders. The fair value of the Company’s noncontrolling interests reflected on the consolidated balance sheet are determined using a discounted cash flow approach, which takes into consideration Level 3 unobservable inputs and applies a discount factor.

The fair value of the redeemable noncontrolling interests was $1.1 billion at the date of acquisition and was recorded in  
Redeemable noncontrolling interests in the consolidated balance sheet.

See notes 9 and 13 for more information.

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 and ninesix months ended SeptemberJune 30, 20162017 and 2015,2016, 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 ninesix months ended SeptemberJune 30, 2016 and 2015.2017 or 2016.

Fair Value of Financial Instruments—The Company’s financial instruments for which the carrying value reasonably approximates fair value at SeptemberJune 30, 20162017 and December 31, 20152016 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 September 30, 2016 and December 31, 2015, the carrying value of long-term obligations, including the current portion, was $18.7 billion and $17.1 billion, respectively. As of September 30, 2016,


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


and maturities. As of June 30, 2017 and December 31, 2016, the carrying value of long-term obligations, including the current portion, was $19.2 billion and $18.5 billion, respectively. As of June 30, 2017, the fair value of long-term obligations, including the current portion, was $19.5$19.8 billion, of which $12.3$13.0 billion was measured using Level 1 inputs and $7.2$6.8 billion was measured using Level 2 inputs. As of December 31, 2015,2016, the fair value of long-term obligations, including the current portion, was $17.4$18.8 billion, of which $8.7$11.8 billion was measured using Level 1 inputs and $8.7$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. As a REIT, 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. 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 described in note 1, effective January 1, 2016, the Company adopted new guidance on the accounting for share-based payment transactions. As part of this new guidance, excess windfall tax benefits and tax deficiencies related to the Company’s stock option exercises and restricted stock unit vestings are recognized as an income tax benefit or expense in the consolidated statements of operations in the period in which the deduction occurs. Excess windfall tax benefits and tax deficiencies are, therefore, not anticipated when determining the annual ETR and are instead recognized in the interim period in which those items occur.
As of SeptemberJune 30, 20162017 and December 31, 2015,2016, the total unrecognized tax benefits that would impact the ETR, if recognized, were approximately $74.7$106.2 million and $28.1$102.9 million, respectively. The amount of unrecognized tax benefits during the three and ninesix months ended SeptemberJune 30, 20162017 includes additions to the Company’s existing tax positions of $8.4$1.9 million and $47.7$3.8 million, (including $23.8 million assumed through acquisition), respectively, and reductions due to the expirationforeign currency fluctuations of the statute of limitations in certain jurisdictions of $1.8($0.9 million) and $2.7 million, during each of the three and nine months ended September 30, 2016. The Company expects the unrecognized respectively. 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 20152016 Form 10-K. The impact of the amount of these changes to previously recorded uncertain tax positions could range from zero to $12.4$11.5 million.
The Company recorded penalties and income tax-related interest expense during the three and ninesix months ended SeptemberJune 30, 20162017 of $1.8$1.0 million and $7.0$2.3 million, respectively, and during the three and ninesix months ended SeptemberJune 30, 20152016 of $0.7$2.2 million and $2.3$5.2 million, respectively. In addition, due to the expiration of the statute of limitations in certain jurisdictions, the Company reduced its liability for penalties and income tax-related interest expense related to uncertain tax positions during the three and nine months ended September 30, 2016 by $1.6 million and during the three and nine months ended September 30, 2015 by $3.1 million. As of SeptemberJune 30, 20162017 and December 31, 2015,2016, the total amount of accrued income tax related interest and penalties included in the consolidated balance sheets was $24.5$28.1 million and $20.2$24.3 million, respectively.

During the three months ended June 30, 2017, the Ghana Revenue Authority issued a clarification to its income tax law, which resulted in a benefit to income tax expense of $11.6 million.

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 in the case offor 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 SeptemberJune 30, 2016,2017, the Company had the ability to grant stock-based awards with respect to an aggregate of 9.58.4 million shares of common stock


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


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 offrom 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.


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


During the three and ninesix months ended SeptemberJune 30, 20162017 and 2015,2016, the Company recorded and capitalized the following stock-based compensation expensesexpense (in thousands):
Three Months Ended September 30, Nine Months Ended September 30,Three Months Ended June 30, Six Months Ended June 30,
2016 2015 2016 20152017 2016 2017 2016
Stock-based compensation expense$20,226
 $18,345
 $70,212
 $72,251
$25,738
 $21,907
 $61,960
 $49,986
Stock-based compensation expense capitalized as property and equipment$353
 $495
 $1,115
 $1,554
$444
 $104
 $970
 $762
Stock Options—The fair value of each option granted during the nine months ended September 30, 2016 was estimated on the date of grant using the Black-Scholes option pricing model based on the assumptions noted in the table below. The expected life of stock options (estimated period of time outstanding) was estimated using the vesting term and historical exercise behavior of the Company’s employees. The risk-free interest rate was based on the U.S. Treasury yield with a term that approximated the estimated life in effect at the accounting measurement date. The expected volatility of the underlying stock price was based on historical volatility for a period equal to the expected life of the stock options. The expected annual dividend yield was the Company’s best estimate of expected future dividend yield.

Key assumptions used to apply this pricing model during the nine months ended September 30, 2016 were as follows:
Range of risk-free interest rate1.00% - 1.73%
Weighted average risk-free interest rate1.45%
Range of expected life of stock options4.5 - 5.2 years
Range of expected volatility of the underlying stock price20.64% - 21.45%
Weighted average expected volatility of underlying stock price21.45%
Range of expected annual dividend yield1.85% - 2.40%
The weighted average grant date fair value per share during the nine months ended September 30, 2016 was $14.57. As of SeptemberJune 30, 2016,2017, total unrecognized compensation expense related to unvested stock options was $30.1$18.3 million, which is expected to be recognized over a weighted average period of approximately two years.
The Company’s option activity for the ninesix months ended SeptemberJune 30, 20162017 was as follows:
  Number of Options
Outstanding as of January 1, 20162017 7,680,8197,269,376
Granted 1,140,3666,534
Exercised (1,263,3091,182,551)
Forfeited (16,32021,611)
Expired (800—)
Outstanding as of SeptemberJune 30, 20162017 7,540,7566,071,748
 
Restricted Stock Units—As of SeptemberJune 30, 2016,2017, total unrecognized compensation expense related to unvested RSUs granted under the 2007 Plan was $100.6$131.6 million and is expected to be recognized over a weighted average period of approximately twothree years.



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


Performance-Based Restricted Stock Units—During the ninesix months ended SeptemberJune 30, 2017 and 2016, the Company’s Compensation Committee granted an aggregate of 154,520 PSUs (the “2017 PSUs”) and 169,340 PSUs (the “2016 PSUs”), respectively, to its executive officers (the “2016 PSUs”) and established the performance metrics for this award. During the nine months ended September 30, 2015, the Company’s Compensation Committee granted an aggregate of 70,135 PSUs to its executive officers (the “2015 PSUs”) and established the performance metric for this award.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 thePSUs granted to executive officers in 2015 PSUs(the “2015 PSUs”), and will be used to calculate the number of shares that will be issuable when theeach award vests, which may range from zero to 200% of the target amount.amounts. At the end of theeach 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 theeach 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 vested.vest.

The performance metric related to the 2015 PSUs is tied to year-over-year growth, and actual results for the metric cannot be determined until the end of each respective fiscal year. As a result, as of September 30, 2016, the Company was unable to determine the annual target for the third year of the performance period for this award. Accordingly, an aggregate of 23,377 PSUs was not included in the table below.
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 ninesix months ended SeptemberJune 30, 20162017 was as follows: 
RSUs PSUsRSUs PSUs
Outstanding as of January 1, 2016 (1)1,656,993
 33,377
Outstanding as of January 1, 2017 (1)1,663,743
 242,757
Granted (2)774,739
 192,719
818,539
 177,897
Vested(641,810) —
(644,004) —
Forfeited(84,461) —
(42,668) —
Outstanding as of September 30, 20161,705,461
 226,096
Outstanding as of June 30, 20171,795,610
 420,654
_______________
(1)PSUs representconsist of the shares issuable for the 2015 PSUs at the end of the three-year performance cycle based on exceedingachievement against the performance metric for the first and second year’s performance period.periods and the target number of shares issuable at the end of the three-year performance period for the 2016 PSUs.
(2)PSUs representconsist of the target number of shares issuable at the end of the three-year performance cycle attributable to the secondthird year’s performance period for the 2015 PSUs, or 23,377 shares, and the target number of shares issuable at the end of the three-year performance cycle for the 2016 PSUs.2017 PSUs, or 154,520 shares.

During the three and ninesix months ended SeptemberJune 30, 2016,2017, the Company recorded $2.3$6.0 million and $5.5$11.6 million, respectively, 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 SeptemberJune 30, 20162017 was $14.2$32.5 million based on the Company’s current assessment of the probability of achieving the performance goals. The weighted-averageweighted 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., 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


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


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 following is a reconciliation of the changes in the Redeemable noncontrolling interests for the six months ended June 30, 2017 were as follows (in thousands):


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

Balance as of January 1, 2016 $—
Fair value at acquisition 1,100,804
Net income attributable to noncontrolling interests 1,536
Foreign currency translation adjustment attributable to noncontrolling interests (2,138)
Balance as of September 30, 2016 $1,100,202

Balance as of January 1, 2017 $1,091,220
Net income attributable to noncontrolling interests 8,869
Foreign currency translation adjustment attributable to noncontrolling interests 55,778
Balance as of June 30, 2017 $1,155,867

10.    EQUITY

Series A Preferred StockSt—Theock—In May 2014, the Company hasissued 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”). During the three months ended June 30, 2017, all 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 onconverted at a cumulative basis when, as and if declared byrate of 0.9337 per share into an aggregate of 5,602,153 shares of the Company’s Boardcommon stock pursuant to the provisions of Directors at an annual ratethe Certificate of 5.25% onDesignations governing the liquidation preferenceSeries A Preferred Stock. The Company paid cash in lieu of $100.00 per share, on February 15,fractional shares of the Company’s common stock. These payments were recorded as a reduction to Additional paid-in capital.

On May 15, August 15 and November 152017, the Company paid the final dividend of each year, commencing$7.9 million to holders of record of the Series A Preferred Stock at the close of business on August 15, 2014 to, and including, May 15,1, 2017.

Series B Preferred Stock—The Company has 13,750,00013,749,860 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) outstanding, after giving effect to the early conversion of 140 depositary shares at the option of the holder at a conversion rate of 0.8687 per depositary share in May 2017. The Company paid cash in lieu of fractional shares of the Company’s common stock. This payment was recorded as a reduction to Additional paid-in capital. The Series AB Preferred Stock the “Mandatory Convertible Preferred Stock”) outstanding, which werewas 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 8.59118.6870 and 10.309310.4244 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 ConvertibleSeries B Preferred Stock provide that,


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


unless full cumulative dividends have been paid or set aside for payment on all outstanding Mandatory ConvertibleSeries B 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 itsthe ESPP and upon exercise of stock options granted under its equity incentive plan. During the ninesix months ended SeptemberJune 30, 2016,2017, the Company received an aggregate of $76.6$82.6 million in proceeds upon exercises of stock options and fromsales pursuant to the ESPP.

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 six months ended June 30, 2017, the Company resumed the 2011 Buyback and repurchased 5,199,938 shares of its common stock thereunder for an aggregate of $641.3 million, including commissions and fees. As of June 30, 2017, the Company had repurchased a total of 11,456,842 shares of its common stock under the 2011 Buyback for an aggregate of $1.0 billion, including commissions and fees.


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


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 ninesix months ended SeptemberJune 30, 2016,2017, 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 3, 2015 January 13, 2016 December 16, 2015 $0.49
 $207.7
March 9, 2016 April 28, 2016 April 12, 2016 $0.51
 $216.5
June 2, 2016 July 15, 2016 June 17, 2016 $0.53
 $225.4
September 16, 2016 October 17, 2016 September 30, 2016 $0.55
 $234.1
         
Series A Preferred Stock        
January 14, 2016 February 16, 2016 February 1, 2016 $1.3125
 $7.9
April 16, 2016 May 16, 2016 May 1, 2016 $1.3125
 $7.9
July 22, 2016 August 15, 2016 August 1, 2016 $1.3125
 $7.9
         
Series B Preferred Stock        
January 14, 2016 February 16, 2016 February 1, 2016 $13.75
 $18.9
April 16, 2016 May 16, 2016 May 1, 2016 $13.75
 $18.9
July 22, 2016 August 15, 2016 August 1, 2016 $13.75
 $18.9
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
June 1, 2017 July 14, 2017 June 19, 2017 $0.64
 $274.7
         
Series A Preferred Stock        
January 13, 2017 February 15, 2017 February 1, 2017 $1.3125
 $7.9
April 13, 2017 May 15, 2017 May 1, 2017 $1.3125
 $7.9
         
Series B Preferred Stock        
January 13, 2017 February 15, 2017 February 1, 2017 $13.75
 $18.9
April 13, 2017 May 15, 2017 May 1, 2017 $13.75
 $18.9
The Company accrues distributions on unvested restricted stock units, which are payable upon vesting. As of SeptemberJune 30, 2016,2017, the amount accrued for distributions payable related to unvested restricted stock units was $5.8$6.6 million. During the ninesix months ended SeptemberJune 30, 2016,2017, the Company paid $2.4$2.9 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.



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 September 30, Nine Months Ended September 30,Three Months Ended June 30, Six Months Ended June 30,
2016 2015 2016 20152017 2016 2017 2016
Net income attributable to American Tower Corporation stockholders$264,509
 $102,999
 $727,218
 $452,372
$367,051
 $187,550
 $683,131
 $462,709
Dividends on preferred stock(26,781) (26,781) (80,344) (63,382)(22,843) (26,782) (49,624) (53,563)
Net income attributable to American Tower Corporation common stockholders237,728
 76,218
 646,874
 388,990
344,208
 160,768
 633,507
 409,146
Basic weighted average common shares outstanding425,517
 423,375
 424,831
 417,280
427,298
 424,909
 427,288
 424,484
Dilutive securities4,408
 3,852
 4,188
 4,072
3,189
 4,095
 3,156
 4,045
Diluted weighted average common shares outstanding429,925
 427,227
 429,019
 421,352
430,487
 429,004
 430,444
 428,529
Basic net income attributable to American Tower Corporation common stockholders per common share$0.56
 $0.18
 $1.52
 $0.93
$0.81
 $0.38
 $1.48
 $0.96
Diluted net income attributable to American Tower Corporation common stockholders per common share$0.55
 $0.18
 $1.51
 $0.92
$0.80
 $0.37
 $1.47
 $0.95

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 September 30, Nine Months Ended September 30,Three Months Ended June 30, Six Months Ended June 30,
2016 2015 2016 20152017 2016 2017 2016
Restricted stock awards—
 —
 2
 —
Restricted stock—
 —
 —
 1
Stock options8
 1,996
 1,619
 1,472
5
 1,120
 33
 1,974
Preferred stock17,473
 17,368
 17,473
 14,724
14,528
 17,444
 16,041
 17,444

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 2,3702,350 towers commencing between


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


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 SeptemberJune 30, 2016,2017, the Company has purchased an aggregate of 6077 of the subleased towers upon expiration of the applicable agreement. The aggregate purchase option price for the remaining towers leased and subleased is $748.3$796.9 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 1,5251,523 towers in a single closing, to occurwhich occurred on or before November 30,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 SeptemberJune 30, 2016,2017, the purchase price per tower was $42,844 payable in cash or, at Verizon Wireless’s or its assignee’sthe tower owner’s option, as applicable, with 769 shares of the Company’s common stock per tower. The aggregate cash purchase option price for the subleased towers was $75.7$10.4 million as of SeptemberJune 30, 2016.2017.
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. In certain jurisdictions, taxing authorities may issue preliminary notices or assessments while audits are being conducted. These preliminary notices or assessments do not represent amounts that the Company is obligated to pay and are often not reflective of the actual tax liability for which the Company will ultimately be liable. The Company evaluates the circumstances of each notification or assessment 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 authorities 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 typicallygenerally have initial terms of ten years with multiple renewal terms at the option of the tenant.






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


Future minimum rental receipts expected from tenants under non-cancellable operating lease agreements in effect at SeptemberJune 30, 20162017 were as follows (in millions):
Remainder of 2016$1,271
20174,710
Remainder of 2017$2,540
20184,543
4,897
20194,269
4,662
20203,916
4,367
20213,898
Thereafter13,825
13,196
Total$32,534
$33,560
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


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


revenues from tenant leases, thereby making it reasonably assured that the Company will renew the leases. Such payments at SeptemberJune 30, 20162017 are as follows (in millions):
Remainder of 2016$244
2017912
Remainder of 2017$464
2018886
882
2019854
847
2020815
802
2021758
Thereafter7,370
6,516
Total$11,081
$10,269
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 and ninesix months ended SeptemberJune 30, 20162017 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 impactCompany evaluates each of its acquisitions under the 2016accounting guidance framework to determine whether an acquisition is treated as an asset acquisition or a business combination. For those transactions treated as asset acquisitions, on the Company’s revenues and gross margin for the three months ended September 30, 2016 was approximately $208.1 million and $87.9 million, respectively, and the estimated aggregate impact for the nine months ended September 30, 2016 was approximately $366.1 million and $153.1 million, respectively. The revenues and gross margin amounts also reflect incremental revenues from the addition of new tenants to such sites subsequentpurchase price is allocated to the transaction date.assets acquired, with no recognition of goodwill.

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.received; for transactions accounted for as asset acquisitions, these costs are capitalized as part of the purchase price. Acquisition and merger related expensescosts 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 operate new businesses or assets efficiently. The Company records acquisition and merger related expenses as well as integration costs, in Other operating expenses in the consolidated statements of operations.

During the three and nine months ended September 30, 2016 and 2015, the Company recorded acquisition and merger related expenses and integration costs as follows (in thousands):

  Three Months Ended September 30, Nine Months Ended September 30,
  2016 2015 2016 2015
Acquisition and merger related expenses $1,124
 $8,587
 $7,844
 $16,574
Integration costs $1,846
 $5,938
 $8,351
 $12,218
for business


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


Thecombinations, as well as integration costs for all acquisitions, described below are accountedin Other operating expenses in the consolidated statements of operations.

During the three and six months ended June 30, 2017 and 2016, the Company recorded acquisition and merger related expenses for as business combinations and areintegration costs as follows (in thousands):

  Three Months Ended June 30, Six Months Ended June 30,
  2017 2016 2017 2016
Acquisition and merger related expenses $2,397
 $5,735
 $8,082
 $6,720
Integration costs $3,808
 $3,234
 $8,378
 $6,505
The Company also recorded a purchase price refund of $21.5 million during the six months ended June 30, 2017. This refund related to an acquisition in Brazil in 2014 for which the measurement period has closed.

2017 Transactions

The estimated aggregate impact of the 2017 acquisitions on the Company’s revenues and gross margin for the three months ended June 30, 2017 was approximately $18.0 million and $15.2 million, respectively, and for the six months ended June 30, 2017 was approximately $26.3 million and $22.0 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.

FPS Towers France—OnFebruary 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 727.2 million Euros ($771.2 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 502.2 million Euros ($532.6 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 six months ended June 30, 2017, the Company acquired a total of 174 communications sites in the United States, Brazil, Chile, Germany, Mexico and Nigeria for an aggregate purchase price of $101.1 million. Of the aggregate purchase price, $1.0 million is reflected in Accounts payable in the consolidated balance sheet as of June 30, 2017. These acquisitions were accounted for as asset acquisitions.

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


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


  EMEA Other
  FPS Towers France (1) 
Current assets $31,048
 $4,511
Non-current assets 9,142
 2,022
Property and equipment 113,981
 30,804
Intangible assets (2):    
     Tenant-related intangible assets 400,901
 53,635
     Network location intangible assets 164,441
 12,670
     Other intangible assets 7,954
 —
Current liabilities (29,326) (1,539)
Deferred tax liability (134,488) —
Other non-current liabilities (16,703) (999)
Net assets acquired 546,950
 101,104
Goodwill (3) 224,270
 —
Fair value of net assets acquired 771,220
 101,104
Debt assumed —
 —
Purchase Price $771,220
 $101,104
_______________
(1)Accounted for as a business combination. Amounts represent preliminary purchase price allocation.
(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 AcquisitionsTransactions

During the six months ended June 30, 2017, post-closing adjustments impacted the following 2016 acquisitions:

Viom Acquisition—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 over 42,000 wireless communications towers and 200 indoor DAS networks in India, from certain Viom shareholders, including the managing shareholder, SREI Infrastructure Finance Limited, several other minority shareholders and Tata Teleservices Limited, pursuant to its previously announced share purchase agreement.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 acquisition) of mandatorily redeemable preference shares issued by Viom.
On April 21, 2016, the closing dateacquisition) of the Viom Acquisition, ATC Asia’s Shareholders Agreement with the Remaining Shareholders became effective. The Shareholders Agreement provides that, among other things, the Remaining Shareholders will have certain governance, anti-dilution and contractual rights. The Remaining Shareholders will have put options, and ATC Asia will have a call option, subject to the time periods and conditions outlined in the Shareholders Agreement.

Preference Shares.
Other Acquisitions—During the nine monthsyear ended September 30,December 31, 2016, the Company acquired a total of 784891 communications sites in the United States, Brazil, Chile, Germany, Mexico, Nigeria and South Africa, and a company holding urban telecommunications assets and fiber in Argentina, for an aggregate purchase price of $185.6$304.4 million (including contingent consideration of $8.7$8.8 million). Of the total purchase price, $2.1 million is reflected in Accounts payable in the condensed consolidated balance sheet as of September 30, 2016. The purchase prices of certain transactions are subject to post-closing adjustments.


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


The following table summarizes the preliminary allocationand updated allocations of the purchase priceprices paid and the amounts of assets acquired and liabilities assumed for the fiscal year 2016 acquisitions based upon their estimated fair value at the date of acquisition (in thousands). Balances are reflected in the accompanying consolidated balance sheet as of SeptemberJune 30, 2016.2017.
 Preliminary Allocation (1) Updated Allocation
 Asia Other Asia Other (2) Asia Other
 Viom  Viom Viom (3) 
Current assets $281,888
 $12,619
 $276,560
 $25,477
 $281,930
 $25,477
Non-current assets 37,737
 145
 57,645
 2,336
 52,275
 2,336
Property and equipment 707,560
 46,026
 701,988
 81,521
 705,849
 81,472
Intangible assets (1):    
Customer-related intangible assets 1,435,164
 86,779
Intangible assets (4):        
Tenant-related intangible assets 1,369,580
 105,557
 1,369,580
 105,557
Network location intangible assets 691,484
 21,258
 666,364
 83,645
 666,364
 83,645
Current liabilities (181,101) (7,701) (195,900) (14,782) (201,142) (14,782)
Deferred tax liability (657,810) (14,290) (619,070) (43,756) (619,074) (43,756)
Other non-current liabilities (105,458) (6,477) (102,751) (29,472) (101,766) (29,472)
Net assets acquired 2,209,464
 138,359
 2,154,416
 210,526
 2,154,016
 210,477
Goodwill (2) 826,735
 47,200
Goodwill (5) 881,783
 93,856
 882,183
 93,905
Fair value of net assets acquired 3,036,199
 185,559
 3,036,199
 304,382
 3,036,199
 304,382
Debt assumed (786,889) —
 (786,889) —
 (786,889) —
Redeemable noncontrolling interests (1,100,804) —
 (1,100,804) —
 (1,100,804) —
Purchase Price $1,148,506
 $185,559
 $1,148,506
 $304,382
 $1,148,506
 $304,382
_______________
(1)Customer-relatedAs reported for the year ended December 31, 2016.
(2)Of the total purchase price, $12.1 million was reflected in Accounts payable in the consolidated balance sheet as of December 31, 2016.
(3)The allocation of the purchase price for the Viom Acquisition was finalized during the six months ended June 30, 2017.
(4)Tenant-related intangible assets and network location intangible assets are amortized on a straight-line basis over periods of up to 20 years.
(2)(5)Primarily results from purchase accounting adjustments, which are notat least partially deductible for tax purposes in any foreign jurisdiction.purposes.



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


2015 Acquisitions

The estimates of the fair value of the assets or rights acquired and liabilities assumed at the date of the applicable acquisition are subject to adjustment during the measurement period (up to one year from the applicable acquisition date). During the nine months ended September 30, 2016, the Company adopted new guidance on the accounting for measurement-period adjustments related to business combinations. This guidance requires that an acquirer make adjustments to the provisional amounts recognized at acquisition date with a corresponding adjustment to goodwill in the current period. Additionally, the effects on earnings of all measurement-period adjustments are included in current period earnings.

During the nine months ended September 30, 2016, post-closing adjustments impacted the following 2015 acquisitions:

TIM Acquisition—On April 29, 2015, the Company acquired 4,176 communications sites from TIM Celular S.A. (“TIM”) for an initial aggregate purchase price of $644.3 million, which was subsequently reduced by $0.8 million during the nine months ended September 30, 2016. On September 30, 2015, the Company acquired an additional 1,125 communications sites from TIM for an initial aggregate purchase price of $130.9 million. On December 16, 2015, the Company acquired an additional 182 communications sites from TIM for an initial aggregate purchase price of $21.7 million. The purchase price for the December 2015 TIM acquisition remains subject to post-closing adjustments. Pursuant to the terms of the agreement, the Company has the ability to purchase the remaining communications sites as they become available through October 2016, a portion of which was acquired during the nine months ended September 30, 2016.

Other—The initial aggregate purchase price of other 2015 acquisitions was subsequently reduced by $0.2 million during the nine months ended September 30, 2016.

The following table summarizes the preliminary and updated allocations of the purchase prices paid and the amounts of assets acquired and liabilities assumed for the fiscal year 2015 acquisitions based upon their estimated fair value at the date of acquisition (in thousands).
  Preliminary Allocation Updated Allocation
  Latin America Other Latin America Other
  TIM  TIM (1) 
Current assets $—
 $1,113
 $—
 $1,113
Non-current assets —
 995
 —
 995
Property and equipment 275,630
 42,716
 274,530
 42,716
Intangible assets (2):        
     Customer-related intangible assets 361,822
 63,001
 361,765
 62,832
     Network location intangible assets 115,562
 37,691
 115,795
 37,691
Current liabilities (3,192) (624) (3,192) (624)
Deferred tax liability —
 —
 —
 —
Other non-current liabilities (74,966) (4,028) (74,966) (4,028)
Net assets acquired 674,856
 140,864
 673,932
 140,695
Goodwill 122,011
 24,011
 122,116
 24,011
Fair value of net assets acquired 796,867
 164,875
 796,048
 164,706
Debt assumed —
 —
 —
 —
Purchase Price $796,867
 $164,875
 $796,048
 $164,706
_______________
(1)The allocation of the purchase price related to the 5,301 communications sites acquired from TIM on April 29, 2015 and September 30, 2015 was finalized during the nine months ended September 30, 2016.
(2)Customer-related intangible assets and network location intangible assets are amortized on a straight-line basis over periods of up to 20 years.




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



Pro Forma Consolidated Results (Unaudited)
The following table presents the unaudited pro forma financial results as if the 2016 acquisitionsFPS Acquisition had occurred on January 1, 20152016 and the acquisitions completed in 20152016 had occurred on January 1, 2014.2015. 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 September 30, Nine Months Ended September 30, Three Months Ended June 30, Six Months Ended June 30,
 2016 2015 2016 2015 2017 2016 2017 2016
Pro forma revenues $1,517,197
 $1,449,460
 $4,498,458
 $4,372,304
 $1,663,200
 $1,515,150
 $3,288,907
 $3,027,457
Pro forma net income attributable to American Tower Corporation common stockholders $238,364
 $72,885
 $643,780
 $346,097
 $344,344
 $162,170
 $634,274
 $402,288
Pro forma net income per common share amounts:                
Basic net income attributable to American Tower Corporation common stockholders $0.56
 $0.17
 $1.52
 $0.82
 $0.81
 $0.38
 $1.48
 $0.95
Diluted net income attributable to American Tower Corporation common stockholders $0.55
 $0.17
 $1.50
 $0.81
 $0.80
 $0.38
 $1.47
 $0.94


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



Other Signed Acquisitions

Paraguay—On April 25, 2017, the Company entered into a definitive agreement to acquire up to approximately 1,400 sites in Paraguay from Millicom International Cellular’s subsidiary, Tigo Paraguay, for a total consideration of approximately 700.0 billion Paraguayan Guaraní (approximately $125.0 million at the date of signing). The transaction is expected to close during the second half of 2017, subject to customary closing conditions.

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 maycould, subject to a number of conditions, acquire approximately 1,350certain of Airtel Tanzania’s communications sites in Tanzania, for total consideration of approximately $179.0 million, subject to customary adjustments. Under the definitive agreement, the Company may pay additional consideration to acquire up to approximately 100 additional communications sites currently in development. The closing of this transaction is subject to customary closing conditions.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 negotiating potential adjustments to the definitive agreementno longer in the event a waiver of such legislation is not obtained.effect. 

14.    BUSINESS SEGMENTS

In 2015, as a result of recent investment activity, including signed acquisitions, the Company reviewed and changed its reportable segments to divide its international segment into three regional segments: (i) Asia property, (ii) Europe, Middle East and Africa (“EMEA”) property and (iii) Latin America property, resulting in five total segments. The change in reportable segments had no impact on the Company’s consolidated and condensed consolidated financial statements for any periods. However, certain expenses previously reflected in segment selling, general, administrative and development expense have been reclassified and are now reflected as Other selling, general, administrative and development expense. Historical financial information included in this Quarterly Report on Form 10-Q has been adjusted to reflect the change in reportable 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 SeptemberJune 30, 2016,2017, consisted of the following:
 
U.S.: property operations in the United States;
Asia: property operations in India;
EMEA: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.


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


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 20152016 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.

Summarized financial information concerning the Company’s reportable segments for the three and ninesix months ended SeptemberJune 30, 20162017 and 20152016 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, as the amounts are not utilized in assessing each segment’s performance.taxes.
  Property
Total 
Property
 

Services
 Other Total
Three Months Ended June 30, 2017 U.S. Asia EMEA Latin America 
  (in thousands)
Segment revenues $897,296
 $294,556
 $159,628
 $286,695
 $1,638,175
 $24,259
   $1,662,434
Segment operating expenses (1) 183,625
 167,993
 59,069
 95,902
 506,589
 9,748
   516,337
Interest income, TV Azteca, net —
 —
 —
 2,770
 2,770
 —
   2,770
Segment gross margin 713,671
 126,563
 100,559
 193,563
 1,134,356
 14,511
   1,148,867
Segment selling, general, administrative and development expense (1) 36,223
 16,571
 17,949
 19,482
 90,225
 3,422
   93,647
Segment operating profit $677,448
 $109,992
 $82,610
 $174,081
 $1,044,131
 $11,089
   $1,055,220
Stock-based compensation expense             $25,738
 25,738
Other selling, general, administrative and development expense             34,609
 34,609
Depreciation, amortization and accretion             396,355
 396,355
Other expense (2)             186,048
 186,048
Income from continuing operations before income taxes               $412,470
Total assets $18,717,076
 $4,808,551
 $3,189,403
 $5,100,443
 $31,815,473
 $43,366
 $279,371
 $32,138,210
_______________
(1)Segment operating expenses and segment selling, general, administrative and development expenses exclude stock-based compensation expense of $0.8 million and $24.9 million, respectively.
(2)Primarily includes interest expense.


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


  Property
Total 
Property
 

Services
 Other Total
Three Months Ended June 30, 2016 U.S. Asia EMEA Latin America 
  (in thousands)
Segment revenues $829,680
 $224,611
 $134,762
 $237,139
 $1,426,192
 $16,035
   $1,442,227
Segment operating expenses (1) 182,376
 127,855
 58,462
 83,486
 452,179
 6,885
   459,064
Interest income, TV Azteca, net —
 —
 —
 2,748
 2,748
 —
   2,748
Segment gross margin 647,304
 96,756
 76,300
 156,401
 976,761
 9,150
   985,911
Segment selling, general, administrative and development expense (1) 34,721
 14,770
 16,685
 15,031
 81,207
 3,346
   84,553
Segment operating profit $612,583
 $81,986
 $59,615
 $141,370
 $895,554
 $5,804
   $901,358
Stock-based compensation expense             $21,907
 21,907
Other selling, general, administrative and development expense             32,421
 32,421
Depreciation, amortization and accretion             397,765
 397,765
Other expense (2)             213,291
 213,291
Income from continuing operations before income taxes               $235,974
Total assets $18,949,936
 $4,557,692
 $2,025,767
 $4,929,052
 $30,462,447
 $62,766
 $214,985
 $30,740,198
  Property
Total 
Property
 

Services
 Other Total
Three Months Ended September 30, 2016 U.S. Asia EMEA Latin America 
  (in thousands)
Segment revenues $837,002
 $269,907
 $130,664
 $260,363
 $1,497,936
 $16,909
   $1,514,845
Segment operating expenses (1) 188,777
 154,139
 53,787
 88,396
 485,099
 5,540
   490,639
Interest income, TV Azteca, net —
 —
 —
 2,742
 2,742
 —
   2,742
Segment gross margin 648,225
 115,768
 76,877
 174,709
 1,015,579
 11,369
   1,026,948
Segment selling, general, administrative and development expense (1) 35,526
 15,030
 12,958
 15,454
 78,968
 2,726
   81,694
Segment operating profit $612,699
 $100,738
 $63,919
 $159,255
 $936,611
 $8,643
   $945,254
Stock-based compensation expense             $20,226
 20,226
Other selling, general, administrative and development expense             30,215
 30,215
Depreciation, amortization and accretion             397,999
 397,999
Other expense (2)             211,042
 211,042
Income from continuing operations before income taxes               $285,772
Total assets $18,837,629
 $4,612,766
 $2,120,592
 $4,885,066
 $30,456,053
 $60,810
 $138,664
 $30,655,527
_______________
(1)Segment operating expenses and segment selling, general, administrative and development expenses exclude stock-based compensation expense of $0.6 million and $19.6$21.3 million, respectively.
(2)Primarily includes interest expense.
 Property
Total 
Property
 

Services
 Other Total Property
Total 
Property
 

Services
 Other Total
Three Months Ended September 30, 2015 U.S. Asia EMEA Latin America 
Six Months Ended June 30, 2017 U.S. Asia EMEA Latin America 
Total 
Property
 

Services
 Other Total
 (in thousands) (in thousands)
Segment revenues $807,978
 $61,563
 $124,545
 $218,763
 $1,212,849
 $25,061
   $1,237,910
 $1,789,180
 $570,087
 $310,035
 $562,937
 $3,232,239
 $46,433
   $3,278,672
Segment operating expenses (1) 187,368
 32,629
 57,492
 78,197
 355,686
 9,208
   364,894
 364,960
 317,394
 120,564
 189,183
 992,101
 16,066
   1,008,167
Interest income, TV Azteca, net —
 —
 —
 2,993
 2,993
 —
   2,993
 —
 —
 —
 5,470
 5,470
 —
   5,470
Segment gross margin 620,610
 28,934
 67,053
 143,559
 860,156
 15,853
   876,009
 1,424,220
 252,693
 189,471
 379,224
 2,245,608
 30,367
   2,275,975
Segment selling, general, administrative and development expense (1) 31,374
 5,824
 13,009
 14,296
 64,503
 3,730
   68,233
 70,871
 37,066
 34,402
 38,043
 180,382
 6,593
   186,975
Segment operating profit $589,236
 $23,110
 $54,044
 $129,263
 $795,653
 $12,123
   $807,776
 $1,353,349
 $215,627
 $155,069
 $341,181
 $2,065,226
 $23,774
   $2,089,000
Stock-based compensation expense             $18,345
 18,345
             $61,960
 61,960
Other selling, general, administrative and development expense (2)             28,749
 28,749
             70,733
 70,733
Depreciation, amortization and accretion             341,096
 341,096
             817,495
 817,495
Other expense (3)(2)             227,611
 227,611
             392,169
 392,169
Income from continuing operations before income taxes               $191,975
               $746,643
Total assets (4) $19,353,820
 $746,355
 $2,301,888
 $4,301,308
 $26,703,371
 $70,006
 $153,411
 $26,926,788
_______________
(1)Segment operating expenses and segment selling, general, administrative and development expenses exclude stock-based compensation expense of $0.5$1.7 million and $17.9$60.2 million, respectively.
(2)Includes $1.6 million of expense previously recorded as segment selling, general, administrative and development expense.
(3)Primarily includes interest expense.
(4)$12.0 million of assets previously recorded within the Asia, EMEA, and Latin America Property segments have been reclassified to the Other segment.



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


 Property
Total 
Property
 

Services
 Other Total Property 
Total 
Property
 

Services
 Other Total
Nine Months Ended September 30, 2016 U.S. Asia EMEA Latin America 
Six Months Ended June 30, 2016 U.S. Asia EMEA Latin America 
Total 
Property
 

Services
 Other Total
 (in thousands) (in thousands)
Segment revenues $2,518,426
 $557,734
 $395,066
 $720,553
 $4,191,779
 $54,340
   $4,246,119
 $1,681,424
 $287,827
 $264,402
 $460,190
 $2,693,843
 $37,431
   $2,731,274
Segment operating expenses (1) 548,875
 315,074
 167,908
 247,204
 1,279,061
 21,429
   1,300,490
 360,098
 160,935
 114,121
 158,808
 793,962
 15,889
   809,851
Interest income, TV Azteca, net —
 —
 —
 8,206
 8,206
 —
   8,206
 —
 —
 —
 5,464
 5,464
 —
   5,464
Segment gross margin 1,969,551
 242,660
 227,158
 481,555
 2,920,924
 32,911
   2,953,835
 1,321,326
 126,892
 150,281
 306,846
 1,905,345
 21,542
 
 1,926,887
Segment selling, general, administrative and development expense (1) 107,533
 36,376
 45,795
 45,069
 234,773
 8,988
   243,761
 72,007
 21,346
 32,837
 29,615
 155,805
 6,262
 
 162,067
Segment operating profit $1,862,018
 $206,284
 $181,363
 $436,486
 $2,686,151
 $23,923
   $2,710,074
 $1,249,319
 $105,546
 $117,444
 $277,231
 $1,749,540
 $15,280
   $1,764,820
Stock-based compensation expense             $70,212
 70,212
             $49,986
 49,986
Other selling, general, administrative and development expense             93,016
 93,016
             62,801
 62,801
Depreciation, amortization and accretion             1,137,398
 1,137,398
             739,399
 739,399
Other expense (2)             577,271
 577,271
             366,229
 366,229
Income from continuing operations before income taxes               $832,177
               $546,405
_______________
(1)Segment operating expenses and segment selling, general, administrative and development expenses exclude stock-based compensation expense of $1.9$1.3 million and $68.3$48.7 million, respectively.
(2)Primarily includes interest expense.

  Property 
Total 
Property
 

Services
 Other Total
Nine Months Ended September 30, 2015 U.S. Asia EMEA Latin America 
  (in thousands)
Segment revenues $2,328,699
 $178,699
 $270,754
 $651,112
 $3,429,264
 $62,211
   $3,491,475
Segment operating expenses (1) 502,572
 93,917
 110,205
 221,712
 928,406
 22,527
   950,933
Interest income, TV Azteca, net —
 —
 —
 8,251
 8,251
 —
   8,251
Segment gross margin 1,826,127
 84,782
 160,549
 437,651
 2,509,109
 39,684
 
 2,548,793
Segment selling, general, administrative and development expense (1) 89,439
 17,133
 33,820
 44,548
 184,940
 10,605
 
 195,545
Segment operating profit $1,736,688
 $67,649
 $126,729
 $393,103
 $2,324,169
 $29,079
   $2,353,248
Stock-based compensation expense             $72,251
 72,251
Other selling, general, administrative and development expense (2)             88,218
 88,218
Depreciation, amortization and accretion             932,972
 932,972
Other expense (3)             677,332
 677,332
Income from continuing operations before income taxes               $582,475
_______________
(1)Segment operating expenses and segment selling, general, administrative and development expenses exclude stock-based compensation expense of $1.6 million and $70.7 million, respectively.
(2)Includes $3.8 million of expense previously recorded as segment selling, general, administrative and development expense.
(3)Primarily includes interest expense and loss on retirement of long-term obligations.

15.    SUBSEQUENT EVENTS

On October 21, 2016, the Company entered into a definitive agreement to form a joint venture (“ATC Europe”) with PGGM. The joint venture will focus on pursuing telecommunications real estate investment opportunities in select countries on the continent. At closing, the Company will contribute its German assets into ATC Europe and PGGM will acquire a 49% interest in ATC Europe for a purchase price of 248.2 million Euro ($270.2 million as of October 21, 2016), subject to various adjustments at closing. The Company will retain operational control and day-to-day oversight of ATC Europe.


ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Quarterly Report on Form 10-Q contains forward-looking statements relating to our goals, beliefs, plans or current expectations and other statements that are not of historical facts. For example, when we use words such as “project,” “believe,” “anticipate,” “expect,” “forecast,” “estimate,” “intend,” “should,” “would,” “could,” “may” or other words that convey uncertainty of future events or outcomes, we are making forward-looking statements. Certain important factors may cause actual results to differ materially from those indicated by our forward-looking statements, including those set forth under the caption “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 20152016 (the “2015“2016 Form 10-K”). Forward-looking statements represent management’s current expectations and are inherently uncertain. We do not undertake any obligation to update forward-looking statements made by us.

The discussion and analysis of our financial condition and results of operations that follow are based upon our consolidated and condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The preparation of our financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities at the date of our financial statements. Actual results may differ from these estimates and such differences could be material to ourthe financial statements. This discussion should be read in conjunction with our consolidated and condensed consolidated financial statements herein and the accompanying notes thereto, information set forth under the caption “Critical Accounting Policies and Estimates” in the 20152016 Form 10-K, and in particular, the information set forth therein under Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Overview

We are one of the largest global real estate investment trusts and a leading independent owner, operator and developer of multitenant communications real estate. Our 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. In addition to the communications sites in our portfolio, we manage rooftop and tower sites for property owners under various contractual arrangements. We also hold other telecommunications infrastructure and property interests that we lease to communications service providers and third-party tower operators. We refer to this business as our property operations, which accounted for 99% of our total revenues for the ninesix months ended SeptemberJune 30, 20162017 and includes our U.S. property segment, Asia property segment, Europe, Middle East and Africa (“EMEA”) property segment and Latin America property segment. On February 15, 2017, we expanded into a new market by acquiring FPS Towers in France through our European joint venture (the “FPS Acquisition”).

Through our services segment, weWe also offer tower-related services in the United States, including site acquisition, zoning and permitting and structural analysis, services, which primarily support our site leasing business, including the addition of new tenants and equipment on our sites.

On April 21, 2016, we acquired a 51% controlling ownership interest in Viom Networks Limited (“Viom”), a telecommunications infrastructure company that owns and operates over 42,000 wireless communications towers and 200 indoor distributed antenna system (“DAS”) networks in India (the “Viom Acquisition”). Subsequent to the closing, Viom was renamed ATC Telecom Infrastructure Private Limited (“ATC TIPL”). The results of operations for ATC TIPL have been included since the date of acquisition.



The following table details the number of communications sites, excluding managed sites, that we owned or operated as of SeptemberJune 30, 2016:2017: 
 
Number of
Owned Towers
 
Number of
Operated 
Towers (1)
 Number of
Owned DAS Sites		 
Number of
Owned Towers
 
Number of
Operated 
Towers (1)
 Number of
Owned DAS Sites
U.S. 21,857
 18,221
 341
 23,122
 16,677
 349
Asia:            
India 57,739
 —
 248
 57,772
 —
 318
EMEA:            
France 2,472
 —
 —
Germany 2,197
 —
 —
 2,208
 —
 —
Ghana 2,137
 —
 18
 2,165
 —
 21
Nigeria 4,729
 —
 —
 4,748
 —
 —
South Africa 2,309
 —
 —
 2,438
 —
 —
Uganda 1,393
 

 

 1,425
 

 

EMEA total 12,765
 —
 18
 15,456
 —
 21
Latin America:      
Latin America (2):      
Brazil 16,134
 2,268
 65
 16,411
 2,269
 69
Chile 1,213
 —
 7
 1,281
 —
 8
Colombia 3,066
 706
 1
 2,995
 777
 1
Costa Rica 484
 —
 1
 488
 —
 2
Mexico 8,607
 199
 64
 8,720
 199
 69
Peru 635
 —
 —
 661
 —
 —
Latin America total 30,139
 3,173
 138
 30,556
 3,245
 149
_______________
(1)Approximately 96%97% of the operated towers are held pursuant to long-term capital leases, including those subject to purchase options.
(2)In Argentina, we own or operate urban telecommunications assets, fiber and the rights to utilize certain existing utility infrastructure for future telecommunications equipment installation.
    
We operate in five reportable segments: U.S. property, Asia property, EMEA property, Latin America property and services. In evaluating operating performance in each business segment, management uses, among other factors, segment gross margin and segment operating profit (see note 14 to our consolidated and condensed consolidated financial statements included herein)in this Quarterly Report on Form 10-Q).
In the section that follows, we provide information regarding management’s expectations of long-term drivers of demand for our communications sites, as well as our current results of operations, financial position and sources and uses of liquidity. In addition, we highlight key trends, which management believes provide valuable insight into our operating and financial resource allocation decisions.

Revenue Growth. The primary factors affecting the revenue growth in our property segments are:

•Growth in tenant billings, including:
New revenue attributable to leases in place at the commencement of operationson day one on sites acquired or constructed since the beginning of the prior-year period;
Contractual rent escalations on existing tenant leases, net of churn (as defined below); and
New revenue attributable to leasing additional space on our sites (“colocations”) and lease amendments.amendments; and
Contractual rent escalations on existing tenant leases, net of churn (as defined below).
Revenue growth from other items, including additional tenant payments to cover costs, such as ground rent or power and fuel costs (“pass-through”) included in certain tenant leases, straight-line revenue and decommissioning.



Due to our diversified communications site portfolio, our tenant lease rates vary considerably depending upon numerous factors, including, but not limited to, thetower location, amount, type and typeposition of tenant equipment on the tower, ground space required by the tenant and remaining tower capacity and tower location.capacity. We measure the remaining tower capacity by assessing several factors, including tower height, tower type, environmental conditions, existing equipment on the tower and zoning and permitting regulations in


effect in the jurisdiction where the tower is located. In many instances, tower capacity can be increased with relatively modest tower augmentation capital expenditures.

The majority ofIn general, our tenant leases with wireless carriers have an initial non-cancellable term of at least ten years, with multiple renewal terms. Accordingly, nearly all of the revenue generated by our property operations during the three and ninesix months ended SeptemberJune 30, 20162017 was recurring revenue that we should continue to receive in future periods. Based upon foreign currency exchange rates and the tenant leases in place as of SeptemberJune 30, 2016,2017, we expect to generate over $32nearly $34 billion of non-cancellable tenant lease revenue over future periods, absentbefore the impact of straight-line lease accounting. Most of our tenant leases have provisions that periodically increase the rent due under the lease, typically based on an annual fixed escalation (averaging approximately 3% in the United States) or an inflationary index in our international markets, or a combination of both. In addition, certain of our tenant leases provide for additional revenue to cover costs, such as ground rent or power and fuel costs.pass-through revenue.

The revenues generated by our property operations may be affected by cancellations of existing tenant leases. As discussed above, most of our tenant leases with wireless carriers and broadcasters are multiyear contracts, which typically are non-cancellable; however, in some instances, a lease may be cancelled upon the payment of a termination fee.

Revenue lost from either cancellations or the non-renewal of leases or rent negotiationsrenegotiations historically has not had a material adverse effect on the revenues generated by our property operations. We define churn as revenuetenant billings lost when a tenant cancels or does not renew its lease or, in limited circumstances, when the lease rates on existing leases are reduced. We derive our churn rate for a given period by dividing our revenue lost on this basis by our prior-year period property segment revenue. During the ninesix months ended SeptemberJune 30, 2016,2017, churn represented approximately 1.3%2% of our property operations revenue.tenant billings.

Demand Drivers. We continue to believe that our site leasing revenue is likely to increase due to the growing use of wireless services globally and our ability to meet the corresponding incremental demand for our wirelesscommunications real estate. By adding new tenants and new equipment for existing tenants on our sites, we are able to increase these sites’ utilization and profitability. We believe the majority of our site leasing activity will continue to come from wireless service providers.providers, with tenants in a number of other industries contributing incremental leasing demand. Our site portfolio and our established tenant base providesprovide us with new business opportunities, which have historically resulted in consistent and predictable organic revenue growth as wireless carriers seek to increase the coverage and capacity of their existing networks, while also deploying next generation wireless technologies. In addition, we intend to continue to supplement our organic growth by selectively developing or acquiring new sites in our existing and new markets where we can achieve our risk-adjusted return on investment objectives.

Consistent with our strategy to increase the utilization and return on investment of our sites, our objective is to add new tenants and new equipment for existing tenants through colocation and lease amendments. Our ability to lease additional space on our sites is primarily a function of the rate at which wireless carriers and other tenants deploy capital to improve and expand their wireless networks. This rate, in turn, is influenced by the growth of wireless services, the penetration of advanced wireless devices, the level of emphasis on network quality and capacity in carrier competition, the financial performance of our tenants and their access to capital and general economic conditions.

Based on industry research and projections, we expect that a number of key industry trends will result in incremental revenue opportunities for us:

In less advanced wireless markets where initial voice and data networks are still being deployed, we expect these deployments to drive demand for our tower space as carriers seek to expand their footprints and increase the scope and density of their networks. We have established operations in many of these markets at the early stages of wireless development, which we believe will enable us to meaningfully participate in these deployments.deployments over the long term.
Subscribers’ use of wireless data continues to grow rapidly given increasing smartphone and other advanced device penetration, the proliferation of bandwidth-intensive applications on these devices and the continuing


evolution of the mobile ecosystem. We believe carriers will be compelled to deploy additional equipment on


existing networks while also rolling out more advanced wireless networks to address coverage and capacity needs resulting from this increasing wireless data usage.
The deployment of advanced wireless technology across existing wireless networks will provide higher speed data services and further enable fixed broadband substitution. As a result, we expect that our tenants will continue deploying additional equipment across their existing networks.
Wireless service providers compete based on the quality of their existing wireless networks, which is driven by capacity and coverage. To maintain or improve their network performance as overall network usage increases, our tenants continue deploying additional equipment across their existing sites while also adding new cell sites. We anticipate increasing network densification over the next several years, as existing network infrastructure is anticipated to be insufficient to account for rapidly increasing levels of wireless data usage.
Wireless service providers continue to acquire additional spectrum, and as a result are expected to add additional sites and equipment to their networks as they seek to optimize their network configuration and utilize additional spectrum.
Next generation technologies centered on wireless connections have the potential to provide incremental revenue opportunities for us. These technologies may include autonomous vehicle networks and a number of other internet-of-things, or IoT, applications.

As part of our international expansion initiatives, we have targeted markets in various stages of network development to diversify our international exposure and position us to benefit from a number of different wireless technology deployments over the long term. In addition, we have focused on building relationships with large multinational carriers such as Bharti Airtel Limited, (“Airtel”), Telefónica S.A. and Vodafone Group PLC. We believe that consistent carrier investments in their networks across our international markets position us to generate meaningful organic revenue growth going forward.

In emerging markets, such as Ghana, India, Nigeria and Uganda, wireless networks tend to be significantly less advanced than those in the United States, and initial voice networks continue to be deployed in underdeveloped areas. A majority of consumers in these markets still utilize basic wireless services, predominantly on feature phones, while advanced device penetration remains low.

In more developed urban locations within these markets, early-stage data network deployments are underway. Carriers are focused on completing voice network build-outs while also investing in initial data networks as wireless data usage and smartphone penetration within their customer bases begin to accelerate.

In markets with rapidly evolving network technology, such as South Africa and most of the countries in Latin America where we do business, initial voice networks, for the most part, have already been built out, and carriers are focused on third generation (3G) and fourth generation (4G) network build outs. Consumers in these regions are increasingly adopting smartphones and other advanced devices and, as a result, the usage of bandwidth-intensive mobile applications is growing materially. Recent spectrum auctions in these rapidly evolving markets have allowed incumbent carriers to accelerate their data network deployments and have also enabled new entrants to begin initial investments in data networks. Smartphone penetration and wireless data usage in these markets are growing rapidly, which typically requires that carriers continue to invest in their networks in order to maintain and augment their quality of service.

Finally, in markets with more mature network technology, such as Germany and France, carriers are focused on deploying 4G data networks to account for rapidly increasing wireless data usage among their customer base. With higher smartphone and advanced device penetration and significantly higher per capita data usage, carrier investment in networks is focused on 4G coverage and capacity.

We believe that the network technology migration we have seen in the United States, which has led to significantly denser networks and meaningful new business commencements for us over a number of years, will ultimately be replicated in our less advanced international markets. As a result, we expect to be able to leverage our extensive international portfolio of approximately 104,220107,515 communications sites and the relationships we have built with our carrier customerstenants to drive sustainable, long-term growth.



We have master lease agreements with certain of our tenants that provide for consistent, long-term revenue and reduce the likelihood of churn. Our holisticCertain of those master lease agreements are holistic in nature and further build and augment strong strategic partnerships with


our tenants and have significantly reduced colocation cycle times, thereby providing our tenants with the ability to rapidly and efficiently deploy equipment on our sites.

Property Operations Expenses. Direct operating expenses incurred by our property segments include direct site level expenses and consist primarily of ground rent and power and fuel costs, some or all of which may be passed through to our tenants, as well as property taxes, repairs and maintenance. These segment direct operating expenses exclude all segment and corporate selling, general, administrative and development expenses, which are aggregated into one line item entitled Selling, general, administrative and development expense in our consolidated statements of operations. In general, our property segments’ selling, general, administrative and development expenses do not significantly increase as a result of adding incremental tenants to our sites and typically increase only modestly year-over-year. As a result, leasing additional space to new tenants on our sites provides significant incremental cash flow. We may, however, incur additional segment selling, general, administrative and development expenses as we increase our presence in our existing markets or expand into new markets. Our profit margin growth is therefore positively impacted by the addition of new tenants to our sites but can be temporarily diluted by our development activities.

Services Segment Revenue Growth. As we continue to focus on growing our property operations, we anticipate that our services revenue will continue to represent a small percentage of our total revenues.

Non-GAAP Financial Measures

Included in our analysis of our results of operations are discussions regarding earnings before interest, taxes, depreciation, amortization and accretion, as adjusted (“Adjusted EBITDA”), Funds From Operations, as defined by the National Association of Real Estate Investment Trusts (“NAREIT FFO”) attributable to American Tower Corporation common stockholders, Consolidated Adjusted Funds From Operations (“Consolidated AFFO”) and AFFO attributable to American Tower Corporation common stockholders.

We define Adjusted EBITDA as Net income before Income (loss) onfrom equity method investments; Income tax benefit (provision); Other income (expense); Gain (loss) on retirement of long-term obligations; Interest expense; Interest income; Other operating income (expense); Depreciation, amortization and accretion; and stock-based compensation expense.

NAREIT FFO attributable to American Tower Corporation common stockholders is defined as net income before gains or losses from the sale or disposal of real estate, real estate related impairment charges, real estate related depreciation, amortization and accretion and dividends on preferred stock, and including adjustments for (i) unconsolidated affiliates and (ii) noncontrolling interests. In this section, we refer to NAREIT FFO attributable to American Tower Corporation common stockholders as “NAREIT FFO (common stockholders).”.

We define Consolidated AFFO as NAREIT FFO (common stockholders) before (i) straight-line revenue and expense; (ii) stock-based compensation expense; (iii) the deferred portion of income tax; (iv) non-real estate related depreciation, amortization and accretion; (v) amortization of deferred financing costs, capitalized interest, debt discounts and premiums and long-term deferred interest charges; (vi) other income (expense); (vii) gain (loss) on retirement of long-term obligations; (viii) other operating income (expense); and adjustments for (ix) unconsolidated affiliates and (x) noncontrolling interests, less cash payments related to capital improvements and cash payments related to corporate capital expenditures.

We define AFFO attributable to American Tower Corporation common stockholders as Consolidated AFFO, excluding the impact of noncontrolling interests on both NAREIT FFO (common stockholders) as well asand the other adjustments included in the calculation of Consolidated AFFO. In this section, we refer to AFFO attributable to American Tower Corporation common stockholders as “AFFO (common stockholders).”.

Adjusted EBITDA, NAREIT FFO (common stockholders), Consolidated AFFO and AFFO (common stockholders) are not intended to replace net income or any other performance measures determined in accordance with GAAP. None


of Adjusted EBITDA, NAREIT FFO (common stockholders), Consolidated AFFO noror AFFO (common stockholders) representrepresents cash flows from operating activities in accordance with GAAP and, therefore, these measures should not be considered indicative of cash flows from operating activities, as a measure of liquidity or a measure of funds available to fund our cash needs,


including our ability to make cash distributions. Rather, Adjusted EBITDA, NAREIT FFO (common stockholders), Consolidated AFFO and AFFO (common stockholders) are presented as we believe each is a useful indicator of our current operating performance. We believe that these metrics are useful to an investor in evaluating our operating performance because (1) each is a key measure used by our management team for decision making purposes and for evaluating our operating segments’ performance; (2) Adjusted EBITDA is a component underlying our credit ratings; (3) Adjusted EBITDA is widely used in the telecommunications real estate sector to measure operating performance as depreciation, amortization and accretion may vary significantly among companies depending upon accounting methods and useful lives, particularly where acquisitions and non-operating factors are involved; (4) Consolidated AFFO is widely used in the telecommunications real estate sector to adjust NAREIT FFO (common stockholders) for items that may otherwise cause material fluctuations in NAREIT FFO (common stockholders) growth from period to period that would not be representative of the underlying performance of property assets in those periods; (5) each provides investors with a meaningful measure for evaluating our period-to-period operating performance by eliminating items that are not operational in nature; and (6) each provides investors with a measure for comparing our results of operations to those of other companies, particularly those in our industry.
 
Our measurement of Adjusted EBITDA, NAREIT FFO (common stockholders), Consolidated AFFO and AFFO (common stockholders) may not, however, be fully comparable to similarly titled measures used by other companies. Reconciliations of Adjusted EBITDA, NAREIT FFO (common stockholders), Consolidated AFFO and AFFO (common stockholders) to net income, the most directly comparable GAAP measure, have been included below.


Results of Operations
Three and NineSix Months Ended SeptemberJune 30, 20162017 and 20152016
(in thousands, except percentages)

Revenue
Three Months Ended September 30, Percent Increase (Decrease) Nine Months Ended September 30,Percent Increase (Decrease)Three Months Ended June 30, Percent Increase (Decrease) Six Months Ended June 30,Percent Increase (Decrease)
2016 2015 2016 2015 2017 2016 2017 2016 
Property                      
U.S.$837,002
 $807,978
 4 % $2,518,426
 $2,328,699
 8 %$897,296
 $829,680
 8% $1,789,180
 $1,681,424
 6%
Asia269,907
 61,563
 338
 557,734
 178,699
 212
294,556
 224,611
 31
 570,087
 287,827
 98
EMEA130,664
 124,545
 5
 395,066
 270,754
 46
159,628
 134,762
 18
 310,035
 264,402
 17
Latin America260,363
 218,763
 19
 720,553
 651,112
 11
286,695
 237,139
 21
 562,937
 460,190
 22
Total property1,497,936
 1,212,849
 24
 4,191,779
 3,429,264
 22
1,638,175
 1,426,192
 15
 3,232,239
 2,693,843
 20
Services16,909
 25,061
 (33) 54,340
 62,211
 (13)24,259
 16,035
 51
 46,433
 37,431
 24
Total revenues$1,514,845
 $1,237,910
 22 % $4,246,119
 $3,491,475
 22 %$1,662,434
 $1,442,227
 15% $3,278,672
 $2,731,274
 20%

Three Months Ended SeptemberJune 30, 20162017

U.S. property segment revenue growth of $29.0$67.6 million or 4%, was attributable to tenantto:
Tenant billings growth of $43.4$50.2 million, which was driven by:
$32.538.4 million due to colocations and amendments;
$7.910.5 million from contractual escalations, net of churn;
$1.01.6 million generated from newly acquired or constructed sites; and
$2.0A decrease of $0.3 million from other tenant billings.billings; and
Segment$17.4 million of other revenue growth, was offset by a decrease in revenue of $14.4 million, primarily due to the $11.9a $15.6 million impact of straight-line accounting.

Asia property segment revenue growth of $208.3$69.9 million or 338%, was attributable to:
Tenant billings growth of $129.0$41.8 million, which was driven by:
$123.128.6 million generated from newly acquired or constructed sites, primarily due to the acquisition of Viom Acquisition;Networks Limited (“Viom”) in India (the “Viom Acquisition”);
$5.215.3 million due to colocations and amendments; and
$1.9A decrease of $2.1 million generatedresulting from newly constructed sites;churn in excess of contractual escalations;
Partially offset by,
▪A decrease of $0.9 million resulting from churn in excess of contractual escalations; and
▪A decrease of $0.3 million from other tenant billings.
Pass-through revenue growth of $86.5$24.6 million, primarily due to the Viom Acquisition; and
$2.2A decrease of $6.8 million ofin other revenue growth, primarilypartially due to thean increase of $3.2 million in revenue reserves, partially offset by a $0.7 million impact of straight-line accounting.

Segment revenue growth was partially offsetalso increased by a decrease of $9.4$10.3 million attributable to the negative impact of foreign currency translation related to fluctuations in Indian RupeeRupees (“INR”).

EMEA property segment revenue growth of $6.1$24.9 million or 5%, was attributable to:
Tenant billings growth of $13.2$25.4 million, which was driven by:
$5.516.6 million generated from newly acquired or constructed sites;
$4.8 million due to colocations and amendments;
$4.64.5 million from contractual escalations, net of churn;
$2.2 million generated from newly acquired or constructed sites; and
$0.9A decrease of $0.5 million from other tenant billings;


and
Pass-through revenue growth of $12.2 million;$14.0 million.
Partially offset by a decrease in revenue of $3.6 million, partially attributable to an $0.8 million impact of straight-line accounting.


Segment revenue growth was partially offset by a decrease of $15.7$14.5 million attributable to the negative impact of foreign currency translation, which included, among others, $13.6$12.8 million related to fluctuations in the Nigerian Naira (“NGN”) and $2.0$3.7 million related to fluctuations in Ghanaian Cedi (“GHS”), and was partially offset by an increase of $3.3 million related to fluctuations in South African Rand (“ZAR”).

Latin America property segment revenue growth of $41.6$49.6 million or 19%, was attributable to:
Tenant billings growth of $30.7$22.9 million, which was driven by:
$10.99.4 million from contractual escalations, net of churn;
$9.68.9 million due to colocations and amendments;
$4.1 million generated from newly acquired or constructed sites;
$9.6 million due to colocations and amendments; and
$0.60.5 million from other tenant billings;
Pass-through revenue growth of $10.2$5.7 million; and
$2.4 million of other revenue growth, due to a $4.1 million increase attributable to the impact of straight-line accounting.
Segment revenue growth was partially offset by a decrease of $1.7 million attributable to the negative impact of foreign currency translation, which included, among others, $11.3 million related to fluctuations in Mexican Peso (“MXN”), partially offset by the positive impact of $9.7 million related to fluctuations in Brazilian Real (“BRL”).

The decrease in services segment revenue of $8.2 million, or 33%, was primarily attributable to a decrease in zoning, permitting and site acquisition projects.

Nine Months Ended September 30, 2016

U.S. property segment revenue growth of $189.7 million, or 8%, was attributable to:
Tenant billings growth of $212.1 million, which was driven by:
$94.5 million due to colocations and amendments;
$90.4 million generated from newly acquired or constructed sites, including sites associated with our transaction with Verizon Communications Inc. (“Verizon”);
$26.6 million from contractual escalations, net of churn; and
$0.6 million from other tenant billings.
Segment revenue growth was partially offset by a decrease of $22.4 million, primarily due to the impact of straight-line accounting.

Asia property segment revenue growth of $379.0 million, or 212%, was attributable to:
Tenant billings growth of $239.7 million, which was driven by:
$220.8 million generated from newly acquired sites, primarily due to the Viom Acquisition;
$14.3 million due to colocations and amendments;
$6.9 million generated from newly constructed sites;
Partially offset by,
▪A decrease of $1.7 million resulting from churn in excess of contractual escalations; and
▪A decrease of $0.6 million from other tenant billings;
Pass-through revenue growth of $159.6 million, primarily due to the Viom Acquisition; and
• $6.88.5 million of other revenue growth, primarily due to the impact of straight-line accounting.
Segment revenue growth was partially offset by a decrease of $27.1 million attributable to the negative impact of foreign currency translation related to fluctuations in INR.



EMEA property segment revenue growth of $124.3 million, or 46%, was attributable to:
Tenant billings growth of $109.5 million, which was driven by:
$78.5 million generated from newly acquired or constructed sites, including sites acquired from Airtel in Nigeria;
$16.9 million due to colocations and amendments;
$12.9 million from contractual escalations, net of churn; and
$1.2 million from other tenant billings;
Pass-through revenue growth of $50.5 million;
Partially offset by a decrease of $2.2 million, primarily due to the $1.7 million impact of straight-line accounting.
Segment revenue growth was partially offset by a decrease of $33.5 million attributable to the negative impact of foreign currency translation, which included, among others, $13.6 million related to fluctuations in NGN, $12.6 million related to fluctuations in ZAR, $3.7 million related to fluctuations in Ugandan Shilling and $3.6 million related to fluctuations in Ghanaian Cedi (“GHS”).

Latin America property segment revenue growth of $69.4 million, or 11%, was attributable to:
Tenant billings growth of $104.8 million, which was driven by:
$42.7 million generated from newly acquired or constructed sites;
$32.3 million from contractual escalations, net of churn;
$28.1 million due to colocations and amendments; and
$1.7 million from other tenant billings;
Pass-through revenue growth of $57.1 million; and
An increase of $12.5 million in other revenue, primarily due to a $20.1 million impact of straight-line accounting offset in part by a $7.0 million reduction in revenue in the prior-year period resulting from a judicial reorganization of a tenant in Brazil.    

Segment revenue growth was partially offsetalso increased by a decrease of $105.0$12.5 million attributable to the negative impact of foreign currency translation, which included, among others, $49.3$14.0 million related to fluctuations in Brazilian Real (“BRL”), which was partially offset by a decrease of $2.3 million related to fluctuations in Mexican Peso (“MXN”).

The increase in services segment revenue of $8.2 million was primarily attributable to an increase in site acquisition projects.

Six Months Ended June 30, 2017
U.S. property segment revenue growth of $107.8 million was attributable to:
Tenant billings growth of $101.3 million, which was driven by:
$78.2 million due to colocations and amendments;
$18.7 million from contractual escalations, net of churn;
$2.6 million generated from newly acquired or constructed sites; and
$1.8 million from other tenant billings; and
$6.5 million of other revenue growth, primarily due to a $34.7 million impact of straight-line accounting, partially offset by a $28.3 million net decrease in other revenue, primarily due to the absence of $31.2 million in decommissioning revenue recognized in the prior year.

Asia property segment revenue growth of $282.3 million was attributable to:
Tenant billings growth of $171.8 million, which was driven by:
$147.7 million generated from newly acquired or constructed sites, primarily due to the Viom Acquisition;
$27.9 million due to collocations and amendments;
A decrease of $3.6 million resulting from churn in excess of contractual escalations; and
A decrease of $0.2 million from other tenant billings;    
Pass-through revenue growth of $108.4 million, primarily due to the Viom Acquisition; and
A decrease of $9.5 million in other revenue primarily due to an increase of $9.8 million in revenue reserves.

Segment revenue also increased by $11.6 million attributable to the impact of foreign currency translation related to fluctuations in INR.

EMEA property segment revenue growth of $45.6 million was attributable to:
Tenant billings growth of $48.8 million, which was driven by:
$29.2 million generated from newly acquired or constructed sites, primarily due to the FPS Acquisition;
$9.6 million due to collocations and amendments;


$8.9 million from contractual escalations, net of churn; and
$1.1 million from other tenant billings;
Pass-through revenue growth of $30.8 million; and
A decrease of $2.0 million in other revenue, partially offset by a $1.8 million impact of straight-line accounting.

Segment growth was partially offset by a decrease of $32.0 million attributable to the impact of foreign currency translation, which included, among others, $29.1 million related to fluctuations in NGN and $7.9 million related to fluctuations in GHS, and was partially offset by an increase of $7.4 million related to fluctuations in ZAR.

Latin America property segment revenue growth of $102.7 million was attributable to:
Tenant billings growth of $49.0 million, which was driven by:
$18.8 million from contractual escalations, net of churn;
$17.5 million due to collocations and amendments;
$11.7 million generated from newly acquired or constructed sites; and
$1.0 million from other tenant billings;
Pass-through revenue growth of $10.7 million; and
$7.4 million of other revenue growth, primarily due to the impact of a $7.0 million reduction in revenue in the prior-year period resulting from a judicial reorganization of a tenant in Brazil.

Segment revenue also increased $35.6 million attributable to the impact of foreign currency translation, which included, among others, $43.9 million related to fluctuations in BRL $43.4 million related to fluctuations in MXN and $9.8$2.8 million related to fluctuations in Colombian Peso, (“COP”).and was partially offset by a decrease of $12.2 million related to fluctuations in MXN.

The decreaseincrease in services segment revenue of $7.9$9.0 million or 13%, was primarily attributable to a decreasean increase in zoning, permitting and site acquisition projects.

Gross Margin
 Three Months Ended September 30, Percent Increase (Decrease) Nine Months Ended September 30,Percent Increase (Decrease)
 2016 2015  2016 2015 
Property           
U.S.$648,225
 $620,610
 4 % $1,969,551
 $1,826,127
 8 %
Asia115,768
 28,934
 300
 242,660
 84,782
 186
EMEA76,877
 67,053
 15
 227,158
 160,549
 41
Latin America174,709
 143,559
 22
 481,555
 437,651
 10
Total property1,015,579
 860,156
 18
 2,920,924
 2,509,109
 16
Services11,369
 15,853
 (28)% 32,911
 39,684
 (17)%



 Three Months Ended June 30, Percent Increase (Decrease) Six Months Ended June 30,Percent Increase (Decrease)
 2017 2016  2017 2016 
Property           
U.S.$713,671
 $647,304
 10% $1,424,220
 $1,321,326
 8%
Asia126,563
 96,756
 31
 252,693
 126,892
 99
EMEA100,559
 76,300
 32
 189,471
 150,281
 26
Latin America193,563
 156,401
 24
 379,224
 306,846
 24
Total property1,134,356
 976,761
 16
 2,245,608
 1,905,345
 18
Services14,511
 9,150
 59% 30,367
 21,542
 41%

Three Months Ended SeptemberJune 30, 20162017
The increase in U.S. property segment gross margin was primarily attributable to the increase in revenue described above, partially offset by an increase in direct expenses of $1.4$1.2 million.

The increase in Asia property segment gross margin was primarily attributable to the increase in revenue described above, and a benefit of $5.3 million attributable to the impact of foreign currency translation on direct expenses, partially offset by an increase in direct expenses of $126.8 million. Direct expense growth was$34.2 million, primarily due to sites associated with the Viom Acquisition. Direct expenses increased by an additional $5.9 million attributable to the impact of foreign currency translation.

The increase in EMEA property segment gross margin was primarily attributable to the increase in revenue described above and a benefit of $14.1$12.5 million attributable to the impact of foreign currency translation on direct expenses, partially offset by an increase in direct expenses of $10.4$13.1 million.



The increase in Latin America property segment gross margin was primarily attributable to the increase in revenue described above, partially offset by an increase in direct expenses of $7.8 million. Direct expenses increased by an additional $4.6 million due to the impact of foreign currency translation.

The increase in services segment gross margin was primarily due to higher-margin projects.

Six Months Ended June 30, 2017

The increase in U.S. property segment gross margin was primarily attributable to the increase in revenue described above, partially offset by an increase in direct expenses of $4.9 million.

The increase in Asia property segment gross margin was primarily attributable to the increase in revenue described above, partially offset by an increase in direct expenses of $149.9 million, primarily due to the Viom Acquisition. Direct expenses increased by an additional $6.6 million attributable to the impact of foreign currency translation.

The increase in EMEA property segment gross margin was primarily attributable to the increase in revenue described above and a benefit of $28.2 million attributable to the impact of foreign currency translation on direct expenses, partially offset by an increase in direct expenses of $34.6 million.

The increase in Latin America property segment gross margin was primarily attributable to the increase in revenue described above, partially offset by an increase in direct expenses of $10.0$16.5 million. Direct expenses increased by an additional $0.2$13.8 million due to the impact of foreign currency translation. Direct expense growth was primarily due to newly acquired or constructed sites.

The decreaseincrease in services segment gross margin was primarily due to the decrease in revenue described above.

Nine Months Ended September 30, 2016

The increase in U.S. property segment gross margin was primarily attributable to the increase in revenue described above, partially offset by an increase in direct expenses of $46.3 million. Direct expense growth was primarily due to sites associated with our transaction with Verizon.

The increase in Asia property segment gross margin was primarily attributable to the increase in revenue described above and a benefit of $15.1 million attributable to the impact of foreign currency translation on direct expenses, partially offset by an increase in direct expenses of $236.2 million. Direct expense growth was primarily due to sites associated with the Viom Acquisition.

The increase in EMEA property segment gross margin was primarily attributable to the increase in revenue described above and a benefit of $20.7 million attributable to the impact of foreign currency translation on direct expenses, partially offset by an increase in direct expenses of $78.4 million. Direct expense growth was primarily due to sites acquired from Airtel.

The increase in Latin America property segment gross margin was primarily attributable to the increase in revenue described above and a benefit of $35.9 million attributable to the impact of foreign currency translation on direct expenses, partially offset by an increase in direct expenses of $61.4 million. Direct expense growth was primarily due to newly acquired or constructed sites.

The decrease in services segment gross margin was attributable to the decrease in revenue described above.


higher-margin projects.

Selling, General, Administrative and Development Expense (“SG&A”)
Three Months Ended September 30, Percent Increase (Decrease) Nine Months Ended September 30, Percent Increase (Decrease)Three Months Ended June 30, Percent Increase (Decrease) Six Months Ended June 30, Percent Increase (Decrease)
2016 2015 2016 2015 2017 2016 2017 2016 
Property                      
U.S.$35,526
 $31,374
 13 % $107,533
 $89,439
 20 %$36,223
 $34,721
 4% $70,871
 $72,007
 (2)%
Asia15,030
 5,824
 158
 36,376
 17,133
 112
16,571
 14,770
 12
 37,066
 21,346
 74
EMEA12,958
 13,009
 —
 45,795
 33,820
 35
17,949
 16,685
 8
 34,402
 32,837
 5
Latin America15,454
 14,296
 8
 45,069
 44,548
 1
19,482
 15,031
 30
 38,043
 29,615
 28
Total property78,968
 64,503
 22
 234,773
 184,940
 27
90,225
 81,207
 11
 180,382
 155,805
 16
Services2,726
 3,730
 (27) 8,988
 10,605
 (15)3,422
 3,346
 2
 6,593
 6,262
 5
Other (1)49,843
 46,599
 7
 161,325
 158,915
 2
59,501
 53,681
 11
 130,969
 111,482
 17
Total selling, general, administrative and development expense$131,537
 $114,832
 15 % $405,086
 $354,460
 14 %$153,148
 $138,234
 11% $317,944
 $273,549
 16 %
_______________
(1)Certain expenses previously reflected in segment SG&A for the three and nine months ended September 30, 2015 have been reclassified and are now reflected as Other SG&A.

Three Months Ended SeptemberJune 30, 2016

The increases in each of our U.S., Asia and Latin America property segments’ SG&A were primarily driven by increased personnel costs to support our business, including additional costs associated with the Viom Acquisition in our Asia property segment.

The increase in other SG&A was primarily attributable to an increase in corporate SG&A and an increase in stock-based compensation expense of $1.8 million.

The decrease in our services segment SG&A was primarily attributable to a decrease in personnel costs from a lower volume of business in our tower services group.

Nine Months Ended September 30, 2016

2017
The increases in each of our property segments’ SG&A were primarily driven by increased personnel costs to support our business, including additional costs associated with the transaction with Verizon in our U.S. property segment,as a result of the Viom Acquisition in our Asia property segment and the Airtel acquisitionFPS Acquisition in our EMEA property segment. The EMEA and Asia property segments’ SG&A increases also included increases in bad debt expense of $3.4 million and $1.6 million, respectively. The EMEA and Latin America property segments’ SG&A increases were partially offset by decreases attributable to the impacts of foreign currency fluctuations.

The increase in other SG&A was primarily attributable to an increase in corporate SG&A, partially offset by a decrease in stock-based compensation expense of $2.4$3.6 million and an increase in corporate SG&A.



Six Months Ended June 30, 2017
The decrease in our U.S. property segment SG&A was due to a decrease in cancelled-project costs.

The increases in each of our Asia, EMEA and Latin America property segments’ SG&A were primarily driven by increased personnel costs to support our business, including additional costs as a result of the Viom Acquisition in our Asia property segment and the FPS Acquisition in our EMEA property segment. The Asia property segment SG&A increase was also partially driven by an increase in bad debt expense of $6.4 million.

The decreaseincrease in our services segment SG&A was primarily attributable to a decreasean increase in personnel costs from a lower volume of business inwithin our tower services group.


The increase in other SG&A was primarily attributable to an increase in stock-based compensation expense of $11.6 million and an increase in corporate SG&A.

Operating Profit
Three Months Ended September 30, Percent Increase (Decrease) Nine Months Ended September 30, Percent Increase (Decrease)Three Months Ended June 30, Percent Increase (Decrease) Six Months Ended June 30, Percent Increase (Decrease)
2016 2015 2016 2015 2017 2016 2017 2016 
Property                      
U.S.$612,699
 $589,236
 4 % $1,862,018
 $1,736,688
 7 %$677,448
 $612,583
 11% $1,353,349
 $1,249,319
 8%
Asia100,738
 23,110
 336
 206,284
 67,649
 205
109,992
 81,986
 34
 215,627
 105,546
 104
EMEA63,919
 54,044
 18
 181,363
 126,729
 43
82,610
 59,615
 39
 155,069
 117,444
 32
Latin America159,255
 129,263
 23
 436,486
 393,103
 11
174,081
 141,370
 23
 341,181
 277,231
 23
Total property936,611
 795,653
 18
 2,686,151
 2,324,169
 16
1,044,131
 895,554
 17
 2,065,226
 1,749,540
 18
Services8,643
 12,123
 (29)% 23,923
 29,079
 (18)%11,089
 5,804
 91% 23,774
 15,280
 56%

The growth in operating profit for the three and ninesix months ended SeptemberJune 30, 20162017 for each of our property segments was primarily attributable to an increase in our segment gross margin. The increasesgrowth in operating profit for the three and six months ended June 30, 2017 in our U.S., Asia, EMEA and Latin America property segments, as well as our U.S. property segment for the three and nine months ended SeptemberJune 30, 20162017, were partially offset by increases in our segment SG&A.

The growth in operating profit for the ninethree and six months ended SeptemberJune 30, 2016 in our EMEA property segment was partially offset by an increase in our segment SG&A, while for the three months ended September 30, 2016, a slight decrease in our segment SG&A contributed to operating profit growth.

The decrease in operating profit for the three and nine months ended September 30, 20162017 for our services segment was primarily attributable to a decreasean increase in our segment gross margin, partially offset by a decreasean increase in our segment SG&A.

Depreciation, Amortization and Accretion
 Three Months Ended September 30, Percent Increase (Decrease) Nine Months Ended September 30, Percent Increase (Decrease)
 2016 2015  2016 2015 
Depreciation, amortization and accretion$397,999
 $341,096
 17% $1,137,398
 $932,972
 22%
 Three Months Ended June 30, Percent Increase (Decrease) Six Months Ended June 30, Percent Increase (Decrease)
 2017 2016  2017 2016 
Depreciation, amortization and accretion$396,355
 $397,765
 0% $817,495
 $739,399
 11%

The increase in depreciation, amortization and accretion expense for the six months ended June 30, 2017 was primarily attributable to costs associated with the acquisition, lease or construction of new sites since the beginning of the prior-year period, which resulted in an increase in property and equipment and intangible assets subject to amortization.



Other Operating Expenses
 
 Three Months Ended September 30, Percent Increase (Decrease) Nine Months Ended September 30, Percent Increase (Decrease)
 2016 2015  2016 2015 
Other operating expenses$14,998
 $15,668
 (4)% $37,509
 $40,891
 (8)%
 Three Months Ended June 30, Percent Increase (Decrease) Six Months Ended June 30, Percent Increase (Decrease)
 2017 2016  2017 2016 
Other operating expenses$18,839
 $13,711
 37% $25,054
 $22,511
 11%

The decreaseincrease in other operating expenses for the three months ended SeptemberJune 30, 20162017 was primarily attributable to a net increase of $7.5 million in losses from sale or disposal of assets, partially offset by a decrease of $11.6$2.8 million in integration, acquisition and merger related expenses.

The increase in other operating expenses partially offset byfor the six months ended June 30, 2017 was primarily attributable to an increase of $10.9$10.2 million in losses on sales or disposals of assets and impairments.

The decrease in other operating expenses for the nine months ended September 30, 2016 was primarily attributable to a decrease of $12.6 millionimpairments, an increase in integration, acquisition and merger related expenses of $3.2 million and $10.0 million to fund our charitable foundation. These items were partially offset by the refund of $21.5 million of acquisition costs relating to an increase of $9.2 millionacquisition in losses on sales or disposals of assets and impairments.Brazil completed in 2014.



Total Other Expense

 Three Months Ended September 30, Percent Increase (Decrease) Nine Months Ended September 30, Percent Increase (Decrease)
 2016 2015  2016 2015 
Other expense$193,302
 $208,950
 (7)% $531,556
 $628,190
 (15)%
 Three Months Ended June 30, Percent Increase (Decrease) Six Months Ended June 30, Percent Increase (Decrease)
 2017 2016  2017 2016 
Total other expense$164,439
 $196,832
 (16)% $361,645
 $338,254
 7%

The decrease in total other expense during the three months ended SeptemberJune 30, 20162017 was primarily due to foreign currency lossesgains of $12.4$6.9 million in the current period, compared to foreign currency losses of $69.1$28.1 million in the prior-year period,period. The decrease was partially offset by incremental interest expense of $40.4$6.0 million due to ana $0.6 billion increase in our average debt outstanding and a 17 basis point increase in our annualized weighted-average cost of borrowing of 52 basis points and a $1.8 billion increase in our average debt outstanding.borrowing.

The decreaseincrease in total other expense during the ninesix months ended SeptemberJune 30, 20162017 was primarily due to foreign currency lossesa loss on retirement of $29.9long-term obligations of $55.7 million inattributable to the current period,redemption of the 7.25% senior unsecured notes due 2019 (the “7.25% Notes”), and the repayment of 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 and Secured Cellular Site Revenue Notes, Series 2010-2, Class C and Series 2010-2, Class F issued by Unison Ground Lease Funding, LLC, compared to foreign currency losses of $121.9 million in the prior-year period, andsix months ended June 30, 2016, where we recorded a gain on retirement of long-term obligations of $0.8 million attributable to the repayment of the Secured Tower Cellular Site Revenue Notes, Series 2012-1 Class A comparedissued by GTP Cellular Sites, LLC. The increase was also attributable to the nine months ended September 30, 2015, where we recorded a loss of $78.8 million, primarily due to the redemption of the 7.000% senior notes due 2017. This decrease was partially offset by incrementaladditional interest expense of $84.8$29.8 million due to a $2.3$1.0 billion increase in our average debt outstanding.outstanding and a four basis point increase in our annualized weighted average cost of borrowing. These items were partially offset by foreign currency gains of $35.0 million compared to foreign currency losses of $17.5 million in the prior-year period, as well as an additional $8.2 million in interest income compared to the prior year period.

Income Tax Provision
Three Months Ended September 30, Percent Increase (Decrease) Nine Months Ended September 30, Percent Increase (Decrease)Three Months Ended June 30, Percent Increase (Decrease) Six Months Ended June 30, Percent Increase (Decrease)
2016 2015 2016 2015 2017 2016 2017 2016 
Income tax provision$22,037
 $94,235
 (77)% $94,671
 $132,063
 (28)%$23,980
 $43,510
 (45)% $50,743
 $72,634
 (30)%
Effective tax rate7.7% 49.1%   11.4% 22.7%  5.8% 18.4%   6.8% 13.3%  

As a real estate investment trust for U.S. federal income tax purposes (“REIT”), we may deduct earnings distributed to stockholders against the income generated by our REIT operations. In addition, we are able to offset certain income by utilizing our net operating losses (“NOLs”), subject to specified limitations. Consequently, the effective tax rate on income from continuing operations for the three and ninesix months ended SeptemberJune 30, 20162017 and 20152016 differs from the federal statutory rate.



The decrease in the income tax provision for the three and ninesix months ended SeptemberJune 30, 20162017 was primarily attributable to fewer uncertain tax positions taken than in 2016 and a one-time chargeclarification of income tax law in 2015 related to the MIP Tower Holdings LLC (“MIPT”)Ghana, which resulted in an income tax election described below,benefit of $11.6 million, offset by an increase in foreign taxable earnings, largely due to the Viom Acquisition, as well as uncertain tax positions.

Effective July 25, 2015, the Company filed a tax election, pursuant to which MIPT no longer operates as a separate REIT for federal and state income tax purposes. In connection with this and related elections, the Company incurred a one-time cash tax charge of $93.0 million, net of a one-time deferred income tax benefit during the three and nine months ended September 30, 2015.


earnings.

Net Income/Adjusted EBITDA and Net Income/NAREIT FFO/Consolidated AFFO
 
 Three Months Ended September 30, Percent Increase (Decrease) Nine Months Ended September 30, Percent Increase (Decrease) Three Months Ended June 30, Percent Increase (Decrease) Six Months Ended June 30, Percent Increase (Decrease)
 2016 2015 2016 2015  2017 2016 2017 2016 
Net income $263,735
 $97,740
 170 % $737,506
 $450,412
 64 % $388,490
 $192,464
 102 % $695,900
 $473,771
 47 %
Income tax provision 22,037
 94,235
 (77) 94,671
 132,063
 (28) 23,980
 43,510
 (45) 50,743
 72,634
 (30)
Other expense 12,260
 66,659
 (82) 25,894
 123,291
 (79)
(Gain) loss on retirement of long-term obligations —
 —
 —
 (830) 78,793
 (101)
Other (income) expense (11,782) 25,842
 (146) (41,084) 13,634
 (401)
Loss (gain) on retirement of long-term obligations 274
 (830) (133) 55,714
 (830) (6,813)
Interest expense 190,160
 149,787
 27
 531,076
 446,228
 19
 187,028
 181,036
 3
 370,723
 340,916
 9
Interest income (6,376) (4,503) 42
 (16,378) (11,871) 38
 (8,311) (6,468) 28
 (18,238) (10,002) 82
Other operating expenses 14,998
 15,668
 (4) 37,509
 40,891
 (8) 18,839
 13,711
 37
 25,054
 22,511
 11
Depreciation, amortization and accretion 397,999
 341,096
 17
 1,137,398
 932,972
 22
 396,355
 397,765
 0
 817,495
 739,399
 11
Stock-based compensation expense 20,226
 18,345
 10
 70,212
 72,251
 (3) 25,738
 21,907
 17
 61,960
 49,986
 24
Adjusted EBITDA $915,039
 $779,027
 17 % $2,617,058
 $2,265,030
 16 % $1,020,611
 $868,937
 17 % $2,018,267
 $1,702,019
 19 %


Three Months Ended September 30, Percent Increase (Decrease) Nine Months Ended September 30, Percent Increase (Decrease)Three Months Ended June 30, Percent Increase (Decrease)Six Months Ended June 30, Percent Increase (Decrease)
2016 2015 2016 2015 2017 2016 2017 2016 
Net income$263,735
 $97,740
 170 % $737,506
 $450,412
 64 %$388,490
 $192,464
 102 %$695,900
 $473,771
 47 %
Real estate related depreciation, amortization and accretion355,721
 297,263
 20
 1,013,567
 817,274
 24
352,566
 360,333
 (2)730,530
 657,846
 11
Losses from sale or disposal of real estate and real estate related impairment charges12,150
 1,200
 913
 21,882
 11,656
 88
12,370
 5,130
 141
19,740
 9,732
 103
Dividends on preferred stock(26,781) (26,781) —
 (80,344) (63,382) 27
(22,843) (26,782) (15)(49,624) (53,563) (7)
Adjustments for unconsolidated affiliates and noncontrolling interests(27,224) 804
 (3,486) (61,182) (12,278) 398
(51,284) (22,942) 124
(82,938) (33,958) 144
NAREIT FFO attributable to American Tower Corporation common stockholders$577,601
 $370,226
 56 % $1,631,429
 $1,203,682
 36 %$679,299
 $508,203
 34 %$1,313,608
 $1,053,828
 25 %
Straight-line revenue(34,645) (38,798) (11) (101,889) (108,177) (6)(50,759) (35,236) 44
(102,785) (67,244) 53
Straight-line expense17,814
 16,433
 8
 50,127
 39,158
 28
14,346
 16,476
 (13)31,315
 32,313
 (3)
Stock-based compensation expense20,226
 18,345
 10
 70,212
 72,251
 (3)25,738
 21,907
 17
61,960
 49,986
 24
Deferred portion of income tax582
 (6,085) (110) 22,803
 1,832
 1,145
(13,330) 12,465
 (207)(9,641) 22,221
 (143)
Non-real estate related depreciation, amortization and accretion42,278
 43,833
 (4) 123,831
 115,698
 7
43,789
 37,432
 17
86,965
 81,553
 7
Amortization of deferred financing costs, capitalized interest, debt discounts and premiums and long-term deferred interest charges5,578
 7,292
 (24) 17,424
 16,192
 8
8,027
 4,417
 82
14,061
 11,846
 19
Other expense (1)12,260
 66,659
 (82) 25,894
 123,291
 (79)
(Gain) loss on retirement of long-term obligations—
 —
 —
 (830) 78,793
 (101)
Other operating expenses (2)2,848
 14,468
 (80) 15,627
 29,235
 (47)
Other (income) expense (1)(11,782) 25,842
 (146)(41,084) 13,634
 (401)
Loss (gain) on retirement of long-term obligations274
 (830) (133)55,714
 (830) (6,813)
Other operating expense (2)6,468
 8,581
 (25)5,313
 12,779
 (58)
Capital improvement capital expenditures(27,975) (22,202) 26
 (70,452) (58,835) 20
(24,785) (25,753) (4)(45,299) (42,477) 7
Corporate capital expenditures(2,508) (4,343) (42) (9,732) (9,880) (1)(3,521) (4,557) (23)(6,672) (7,224) (8)
Adjustments for unconsolidated affiliates and noncontrolling interests27,224
 (804) (3,486) 61,182
 12,278
 398
51,284
 22,942
 124
82,938
 33,958
 144
MIPT one-time cash tax charge (3)—
 93,044
 (100) —
 93,044
 (100)
Consolidated AFFO$641,283
 $558,068
 15 % $1,835,626
 $1,608,562
 14 %$725,048
 $591,889
 22 %$1,446,393
 $1,194,343
 21 %
Adjustments for unconsolidated affiliates and noncontrolling interests(29,315) (5,834) 402 % (66,439) (31,495) 111 %
Adjustments for unconsolidated affiliates and noncontrolling interests (3)(43,869) (21,434) 105 %(84,658) (37,124) 128 %
AFFO attributable to American Tower Corporation common stockholders$611,968
 $552,234
 11 % $1,769,187
 $1,577,067
 12 %$681,179
 $570,455
 19 %$1,361,735
 $1,157,219
 18 %
_______________
(1)Primarily includes realized andIncludes unrealized (gains) losses on foreign currency exchange rate fluctuations.fluctuations of ($7.8 million), $24.6 million, ($35.7 million) and ($4.8 million), respectively.
(2)Primarily includesIncludes integration and acquisition-related costs. For the six months ended June 30, 2017, amount also includes a refund for acquisition costs and a charitable contribution.
(3)As the one-time tax charge incurred in connection with the MIPT tax election is nonrecurring, we do not believe it is an indication of our operating performance and believe it is more meaningful to reflect our AFFO metrics excluding this impact. Accordingly, we present our AFFO metricsIncludes adjustments for the three and nine months ended September 30, 2015 excluding this charge.impact on both NAREIT FFO attributable to American Tower Corporation common stockholders as well as the other line items included in the calculation of Consolidated AFFO. 

Three Months Ended SeptemberJune 30, 2016

2017
The increase in net income was primarily due to an increase in our operating profit, and decreasesan increase in income tax provision and foreign currency lossesgains included in other expense and a decrease in the income tax provision, partially offset by increases in depreciation, amortization and accretionother SG&A, including stock-based compensation expense, and interest expense.



The increase in Adjusted EBITDA was primarily attributable to the increase in our gross margin and was partially offset by an increase in SG&A of $14.9$11.3 million, excluding the impact of stock-based compensation expense.

The growth in consolidatedConsolidated AFFO and AFFO attributable to American Tower Corporation common stockholders was primarily attributable to the increase in our operating profit, partially offset by increases in straight-line revenue, interest and income tax,taxes, including adjustments.adjustments, and corporate SG&A.

NineSix Months Ended SeptemberJune 30, 2016

2017
The increase in net income was primarily due to an increase in our operating profit a decreaseand an increase in foreign currency lossesgains included in other expense, a reduction of $79.6 million in loss on retirement of long-term obligations, partially offset by increases in depreciation, amortization and accretion expense and interest expense.expense, and a loss on retirement of long-term obligations of $55.7 million.

The increase in Adjusted EBITDA was primarily attributable to the increase in our gross margin and was partially offset by an increase in SG&A of $53.0$32.8 million, excluding the impact of stock-based compensation expense.

The growth in consolidatedConsolidated AFFO and AFFO attributable to American Tower Corporation common stockholders was primarily attributable to the increase in our operating profit, partially offset by increases in straight-line revenue, interest and income tax,taxes, including adjustments, and an increase in dividends on preferred stock.corporate SG&A.



Liquidity and Capital Resources
The information in this section updates as of SeptemberJune 30, 20162017 the “Liquidity and Capital Resources” section of the 20152016 Form 10-K and should be read in conjunction with that report.
 
Overview
As a holding company, our cash flows are derived primarily from the operations of, and distributions from, our operating subsidiaries or funds raised through borrowings under our credit facilities and debt or equity offerings.
The following table summarizes the significant components of our liquidity (in thousands):
As of September 30, 2016As of June 30, 2017
Available under the 2013 Credit Facility$2,612,308
$1,896,581
Available under the 2014 Credit Facility160,000
820,000
Letters of credit(10,624)(10,967)
Total available under credit facilities, net2,761,684
2,705,614
Cash and cash equivalents530,358
770,024
Total liquidity$3,292,042
$3,475,638
Subsequent to SeptemberJune 30, 2016,2017, we borrowed an additional $140.0$105.0 million under our multicurrency senior unsecured revolving credit facility entered into in January 2012 and amended and restated in September 2014,June 2013, as further amended (the “2014“2013 Credit Facility”).
Summary cash flow information is set forth below (in thousands):
Nine Months Ended September 30,Six Months Ended June 30,
2016 20152017 2016
Net cash provided by (used for):      
Operating activities$1,978,431
 $1,543,615
$1,478,458
 $1,311,316
Investing activities(1,786,202) (7,204,277)(1,214,511) (1,543,401)
Financing activities26,727
 5,632,448
(290,589) 330,259
Net effect of changes in foreign currency exchange rates on cash and cash equivalents(9,284) 2,126
9,505
 (8,322)
Net increase (decrease) in cash and cash equivalents$209,672
 $(26,088)
Net (decrease) increase in cash and cash equivalents$(17,137) $89,852
We use our cash flows to fund our operations and investments in our business, including tower maintenance and improvements, communications site construction and managed network installations and tower and land acquisitions. Additionally, we use our cash flows to make distributions, including distributions of our REIT taxable income to maintain our qualification for taxation as a REIT under the Internal Revenue Code of 1986, as amended. We may also repay or repurchase our existing indebtedness or equity from time to time. We typically fund our international expansion efforts primarily through a combination of cash on hand, intercompany debt and equity contributions.
As of SeptemberJune 30, 2016,2017, we had total outstanding indebtedness of $18.8$19.4 billion with a current portion of $242.6 million.$1.7 billion. During the ninesix months ended SeptemberJune 30, 2016,2017, we generated sufficient cash flow from operations to fund our capital expenditures and debt service obligations, as well as our required distributions. We believe cash generated by operating activities during the year ending December 31, 2016,2017, together with our borrowing capacity under our credit facilities, will be sufficient to fund our required distributions, capital expenditures, debt service obligations (interest and principal repayments) and signed acquisitions. As of SeptemberJune 30, 2016,2017, we had $399.4$601.4 million of cash and cash equivalents held by our foreign subsidiaries, of which $149.0$232.7 million was held by our joint ventures and minority interest holders. While certain subsidiaries may pay us interest or principal on intercompany debt, it has not been our practice to repatriate earnings from our foreign subsidiaries primarily due to our ongoing expansion efforts and related capital needs. However, in the event that we do repatriate any funds, we may be required to accrue and pay taxes.



Cash Flows from Operating Activities

The increase in cash provided by operating activities for the ninesix months ended SeptemberJune 30, 20162017 was attributable to an increase in the operating profit of our property segments, decreasespartially offset by an increase in cash paid for taxes andinterest, as well as an increase in cash used for working capital, partially offset by higher cash paid for interest.capital.

Cash Flows from Investing Activities

Our significant investing activities during the ninesix months ended SeptemberJune 30, 20162017 are highlighted below:

We spent approximately $1.1 billion$857.2 million for acquisitions, primarily related to the Viomfunding of the FPS Acquisition.

We spent $489.1$387.6 million for capital expenditures, as follows (in millions):
Discretionary capital projects (1)$137.2
$66.3
Ground lease purchases112.5
62.9
Capital improvements and corporate expenditures (2)80.2
52.0
Redevelopment90.2
108.1
Start-up capital projects69.0
98.3
Total capital expenditures$489.1
$387.6
_______________
(1)Includes the construction of 1,255928 communications sites globally.
(2)Includes $13.8$16.1 million of capital lease payments included in Repayments of notes payable, credit facilities, senior notes term loan and capital leases in the cash flow from financing activities in our condensed consolidated statements of cash flows.

We plan to continue to allocate our available capital, after satisfying our distribution requirements, among investment alternatives that meet our return on investment criteria, while taking into account the repayment of debt, as necessary, consistent withmaintaining our commitment to our long-term financial policies. Accordingly, we expect to continue to deploy our capital through our annual capital expenditure program, including land purchases and new site construction, and through acquisitions. We expect that our 20162017 total capital expenditures including expected capital expenditures related to ATC TIPL, will be between $685$800.0 million and $785$900.0 million, as follows (in millions):

Discretionary capital projects (1)$170
to$200
$145
to$175
Ground lease purchases140
to160
150
to160
Capital improvements and corporate expenditures125
to135
145
to155
Redevelopment155
to175
195
to225
Start-up capital projects95
to115
165
to185
Total capital expenditures$685
to$785
$800
to$900
_______________
(1)    Includes the construction of approximately 1,7502,000 to 2,2503,000 communications sites globally.



Cash Flows from Financing Activities

Our significant financing activities were as follows (in millions):
 Nine Months Ended September 30,
 2016 2015
Proceeds from issuance of senior notes, net3,236.4
 1,492.3
(Repayments of) proceeds from credit facilities, net(1,227.1) 1,960.0
(Repayments of) proceeds from term loan(1,000.0) 500.0
Distributions paid on common and preferred stock(732.3) (573.9)
Proceeds from the issuance of common stock, net—
 2,440.3
Proceeds from the issuance of preferred stock, net—
 1,337.9
Proceeds from issuance of securitized notes—
 875.0
Repayments of securitized notes(94.1) (960.0)
Repayment of senior notes—
 (1,100.0)
 Six Months Ended June 30,
 2017 2016
Proceeds from issuance of senior notes, net$1,279.4
 $2,237.5
Proceeds from (repayments of) credit facilities, net93.6
 (1,292.1)
Repayments of securitized notes(302.7) (94.1)
Repayment of senior notes(300.0) —
Contributions from (distributions to) noncontrolling interest holders, net (1)265.3
 (0.5)
Distributions paid on common and preferred stock(568.5) (480.1)
Purchases of common stock(641.3) —
_______________
(1)     2017 contributions primarily relate to the funding of the FPS Acquisition.    

Senior Notes Offerings

3.300% Senior Notes and 4.400%1.375% Senior Notes Offering. On January 12, 2016,April 6, 2017, we completed a registered public offering of 500.0 million Euros ($532.2 million at the date of issuance) aggregate principal amount of 1.375% senior unsecured notes due 2025 (the “1.375% Notes”). The net proceeds from this offering were approximately 489.8 million Euros (approximately $521.4 million at the date of issuance), after deducting commissions and estimated expenses. We used the net proceeds to repay existing indebtedness under the 2013 Credit Facility and for general corporate purposes.

The 1.375% Notes will mature on April 4, 2025 and bear interest at a rate of 1.375% per annum. Accrued and unpaid interest on the 1.375% Notes will be payable in Euros in arrears on April 4 of each year, beginning on April 4, 2018. Interest on the 1.375% Notes will be computed on the basis of the actual number of days in the period for which interest is being calculated and the actual number of days from and including the last date on which interest was paid on the 1.375% Notes and commenced accruing on April 6, 2017.

3.55% Senior Notes Offering. On June 30, 2017, we completed a registered public offering of $750.0 million aggregate principal amount of 3.300%3.55% senior unsecured notes due 20212027 (the “3.300% Notes”) and $500.0 million aggregate principal amount of 4.400% senior unsecured notes due 2026 (the “4.400%“3.55% Notes”). The net proceeds from this offering were approximately $1,237.2$741.8 million, after deducting commissions and estimated expenses. We used the proceeds to repay existing indebtedness under our multicurrency senior unsecured revolving credit facility entered into in June 2013, as amended (the “2013 Credit Facility”), and for general corporate purposes.
The 3.300% Notes will mature on February 15, 2021 and bear interest at a rate of 3.300% per annum. The 4.400% Notes will mature on February 15, 2026 and bear interest at a rate of 4.400% per annum. Accrued and unpaid interest on the notes will be payable in U.S. Dollars semi-annually in arrears on February 15 and August 15 of each year, beginning on August 15, 2016. Interest on the notes is computed on the basis of a 360-day year comprised of twelve 30-day months and commenced accruing on January 12, 2016.

3.375% Senior Notes Offering. On May 13, 2016, we completed a registered public offering of $1.0 billion aggregate principal amount of 3.375% senior unsecured notes due 2026 (the “3.375% Notes”). The net proceeds from this offering were approximately $981.5 million, after deducting commissions and estimated expenses. We used the proceeds to repay existing indebtedness under the 2013 Credit Facility.

The 3.375%3.55% Notes will mature on October 15, 2026 and bear interest at a rate of 3.375% per annum. Accrued and unpaid interest on the notes will be payable in U.S. Dollars semi-annually in arrears on April 15 and October 15 of each year, beginning on October 15, 2016. Interest on the notes is computed on the basis of a 360-day year comprised of twelve 30-day months and commenced accruing on May 13, 2016.

2.250% Senior Notes and 3.125% Senior Notes Offering. On September 30, 2016, we completed a registered public offering of $600.0 million aggregate principal amount of 2.250% senior unsecured notes due 2022 (the “2.250% Notes”) and $400.0 million aggregate principal amount of 3.125% senior unsecured notes due 2027 (the “3.125% Notes”). The net proceeds from this offering were approximately $990.6 million, after deducting commissions and estimated expenses. We used the proceeds to repay existing indebtedness under our unsecured term loan entered into in October 2013, as amended (the “Term Loan”).

The 2.250% Notes will mature on January 15, 2022 and bear interest at a rate of 2.250% per annum. The 3.125% Notes will mature on JanuaryJuly 15, 2027 and bear interest at a rate of 3.125%3.55% per annum. Accrued and unpaid interest on the notes3.55% Notes will be payable in U.S. Dollars semi-annually in arrears on January 15 and July 15 of each year, beginning on January 15, 2017.2018. Interest on the notes3.55% Notes is computed on the basis of a 360-day year comprised of twelve 30-


day30-day months and commenced accruing on SeptemberJune 30, 2016. We entered into interest rate swaps, which were designated as fair value hedges at inception, to hedge against changes in fair value of the debt under the 2.250% Notes resulting from changes in interest rates. As of September 30, 2016, the interest rate on the 2.250% Notes, after giving effect to the interest rate swap agreements, was 1.75%.2017.

We may redeem each series of senior notes at any time, in whole or in part, at a redemption price equal to 100% of the principal amount of the notes plus a make-whole premium, together with accrued interest to the redemption date. If we redeem the 3.300%1.375% Notes on or after January 15, 2021,4, 2025 or the 4.400%3.55% Notes on or after NovemberApril 15, 2025, the 3.375% Notes on or after July 15, 2026 or the 3.125% Notes on or after October 15, 2026,2027, we will not be required to pay a make-whole premium. In addition, if we undergo a change of control and corresponding ratings decline, each as defined in the applicable supplemental indenture, we may be required to repurchase all of the applicable notes at a purchase price equal to 101% of the principal amount of such notes, plus accrued and unpaid interest (including additional interest, if any), up to but not including the repurchase date. The notes rank equally with all of our other senior unsecured debt and are structurally subordinated to all existing and future indebtedness and other obligations of our subsidiaries.

The supplemental indentures contain certain covenants that restrict our ability to merge, consolidate or sell assets and our (together with our subsidiaries’) ability to incur liens. These covenants are subject to a number of exceptions, including that we and our subsidiaries may incur certain liens on assets, mortgages or other liens securing indebtedness if


the aggregate amount of such liens does not exceed 3.5x Adjusted EBITDA, as defined in the applicable supplemental indenture.

Redemption of 7.25% Senior Notes. On February 10, 2017, we redeemed all of 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 unpaid interest. The redemption was funded with borrowings under the 2013 Credit Facility and cash on hand. Upon completion of the redemption, none of the 7.25% Notes remained outstanding.

Notice of Redemption of 4.500% Senior Notes. On June 30, 2017, we delivered notice of our election to call for redemption all of our outstanding 4.500% senior unsecured notes due 2018 (the “4.500% Notes”). The 4.500% Notes will be redeemed at a price equal to the principal amount of the 4.500% Notes plus a make-whole premium calculated pursuant to the terms of the 4.500% Notes indenture, together with accrued and unpaid interest, if any, up to, but excluding, the redemption date, which has been set for July 31, 2017.

Bank Facilities

2013 Credit Facility. During the ninesix months ended SeptemberJune 30, 2016,2017, we borrowed an aggregate of $1.4$2.3 billion which included borrowings of 38.0 million Euro ($42.7 million as of September 30, 2016) by one of our Germany subsidiaries, and repaid an aggregate of $2.5$2.0 billion of revolving indebtedness under the 2013 Credit Facility. We primarily used the borrowings to fund the Viom Acquisition.acquisitions, repay existing indebtedness and for general corporate purposes. We currently have $3.2$4.6 million of undrawn letters of credit and maintain the ability to draw down and repay amounts under the 2013 Credit Facility in the ordinary course.

2014 Credit Facility. During the ninesix months ended SeptemberJune 30, 2016,2017, we borrowed an aggregate of $80.0$200.0 million and repaid an aggregate of $220.0$405.0 million of revolving indebtedness under theour senior unsecured revolving credit facility entered into in January 2012 and amended and restated in September 2014, as further amended (the “2014 Credit Facility.Facility”). We currently have $7.4$6.4 million of undrawn letters of credit and maintain the ability to draw down and repay amounts under the 2014 Credit Facility in the ordinary course.

Term Loan—During the nine months ended September 30, 2016, we repaidOur $1.0 billion of indebtedness under the Term Loan.

The Term Loan,unsecured term loan entered into in October 2013, as amended (the “Term Loan”), the 2013 Credit Facility and the 2014 Credit Facility do not require amortization of principal and may be paid prior to maturity in whole or in part at our option without penalty or premium. We have the option of choosing either a defined base rate or the London Interbank Offered Rate (“LIBOR”) as the applicable base rate for borrowings under the Term Loan, the 2013 Credit Facility and the 2014 Credit Facility. The interest rates range between 1.000% to 2.000% above LIBOR for LIBOR based borrowings or up to 1.000% above the defined base rate for base rate borrowings, in each case based upon our debt ratings. The current margin over LIBOR and the base rate for each of the Term Loan, the 2013 Credit Facility and the 2014 Credit Facility is 1.250%. and 0.250%, respectively.
The 2013 Credit Facility and the 2014 Credit Facility are subject to two optional renewal periods. We must pay a quarterly commitment fee on the undrawn portion of the 2013 Credit Facility and the 2014 Credit Facility, which ranges from 0.100% to 0.400% per annum, based upon our debt ratings, and is currently 0.150%.
The loan agreements for each of the Term Loan, the 2013 Credit Facility and the 2014 Credit Facility contain certain reporting, information, financial and operating covenants and other restrictions (including limitations on additional debt, guaranties, sales of assets and liens) with which we must comply. Failure to comply with the financial and operating covenants of the loan agreements could not only prevent us from being able to borrow additional funds under the revolving credit facilities, but may constitute a default, which could result in, among other things, the amounts outstanding, including all accrued interest and unpaid fees, becoming immediately due and payable.


Viom indebtedness. Amounts outstanding and key terms of the Viom indebtedness, primarily assumed by us in connection with the Viom Acquisition, consisted of the following as of September 30, 2016 (in millions, except percentages):

   Amount Outstanding (INR) Amount Outstanding (USD) Interest Rate (Range) Maturity Date (Range)
Term loans 33,533
  $503.4
 10.50% - 11.20%
 March 31, 2017 - November 30, 2024
Debenture 6,000
  $90.1
 9.90% April 28, 2020
Working capital facilities —
  —
 9.85% - 11.80%
 October 23, 2016 - March 18, 2017

The Viom indebtedness includes several term loans, ranging from one to ten years, which are generally secured by the borrower’s short-term and long-term assets. Each of the term loans bear interest at the applicable bank’s Marginal Cost of Funds based Lending Rate or base rate, plus a spread. Interest rates on the term loans are fixed until certain annual reset dates. Generally, the term loans can be repaid without penalty on the annual reset dates; earlier repayments require notice to the lenders and are subject to prepayment penalties, typically of 1% to 2%. Scheduled repayment terms include either ratable or staggered amortization with repayments typically commencing between six and 36 months after the initial disbursement of funds.
The debentureis secured by the borrower’s long-term assets, including property and equipment and intangible assets. The debenture bears interest at a base rate plus a spread of 0.6%. The base rate is set in advance for each quarterly coupon period. Should the actual base rate be between 9.75% and 10.25%, the revised base rate is assumed to be 10.00% for purposes of the reset. Additionally, the spread is subject to reset 36 and 48 months from the issuance date of April 27, 2015. The holders of the debenture must reach a consensus on the revised spread and the borrower must redeem all of the debentures held by holders from whom consensus is not achieved. Additionally, the debenture is required to be redeemed by the borrower if it does not maintain a minimum credit rating.
The Viom indebtedness includes several working capital facilities, most of which are subject to annual renewal, which are generally secured by the borrower’s short-term and long-term assets. The working capital facilities bear interest at rates that are comprised of base rates plus spreads. Generally, the working capital facilities are payable on demand prior to maturity.
Viom preference shares. As of September 30, 2016, ATC TIPL had 166,666,666 mandatorily redeemable preference shares (the “Preference Shares”) outstanding, which are required to be redeemed in cash. Accordingly, we recognized debt of 1.67 billion INR ($25.0 million) related to the Preference Shares.
Unless redeemed earlier, the Preference Shares will be redeemed in two equal installments on March 26, 2017 and March 26, 2018 in an amount equal to ten INR per share along with a redemption premium, as defined in the investment agreement, which equates to a compounded return of 13.5% per annum. ATC TIPL, at its option, may redeem the Preference Shares prior to the aforementioned dates, subject to an additional 2% redemption premium.
Stock Repurchase Program.In March 2011, our Board of Directors approved a $1.5 billion stock repurchase program, pursuant to which we are authorized to repurchase up to an additional $1.1$1.5 billion of our common stock. Since September 2013,stock (the “2011 Buyback”).
During the six months ended June 30, 2017, we have temporarily suspended repurchasesresumed the 2011 Buyback and repurchased 5,199,938 shares of our common stock thereunder for an aggregate of $641.3 million, including commissions and fees.



We expect to continue managing the pacing of the remaining $469.7 million under the program.2011 Buyback in response to general market conditions and other relevant factors. We expect to fund further repurchases of our common stock through a combination of cash on hand, cash generated by operations and borrowings under our credit facilities. Purchases under the 2011 Buyback are subject to us having available cash to fund repurchases. For more information on the 2011 Buyback, see Part II, Item 2 in this Quarterly Report on Form 10-Q.
Sales of Equity Securities. We receive proceeds from sales of our equity securities pursuant to our employee stock purchase plan (“ESPP”) and upon exercise of stock options granted under our equity incentive plans. For the ninesix months ended SeptemberJune 30, 2016,2017, we received an aggregate of $76.6$82.6 million in proceeds upon exercises of stock options and fromsales pursuant to the ESPP.
Distributions. As a REIT, we must annually distribute to our stockholders an amount equal to at least 90% of our REIT taxable income (determined before the deduction for distributed earnings and excluding any net capital gain). Generally, we have distributed, and expect to continue to distribute, all or substantially all of our REIT taxable income after taking into consideration our utilization of NOLs. We have distributed an aggregate of approximately $2.9$3.7 billion to our common stockholders, including the dividend paid in October 2016,July 2017, primarily subject to taxation as ordinary income.


The amount, timing and frequency of future distributions will be at the sole discretion of our Board of Directors and will depend on various factors, a number of which may be beyond our control, including our financial condition and operating cash flows, the amount required to maintain our qualification for taxation as a REIT and reduce any income and excise taxes that we otherwise would be required to pay, limitations on distributions in our existing and future debt and preferred equity instruments, our ability to utilize NOLs to offset our distribution requirements, limitations on our ability to fund distributions using cash generated through our taxable REIT subsidiaries and other factors that our Board of Directors may deem relevant.

We have twoone series of preferred stock outstanding, 5.25% Mandatory Convertible Preferred Stock, Series A, par value $0.01 per share (the “Series A”), with a dividend rate of 5.25%, andour 5.50% Mandatory Convertible Preferred Stock, Series B, par value $0.01 per share (the “Series B”), with a dividend rate of 5.50%. Dividends are payable quarterly in arrears, subject to declaration by our Board of Directors. During the ninequarter ended June 30, 2017, pursuant to the terms of the Certificate of Designations governing our 5.25% Mandatory Convertible Preferred Stock, Series A, par value $0.01 per share (the “Series A”), all outstanding shares of the Series A converted into shares of our common stock at a conversion rate of 0.9337 per share.

During the six months ended SeptemberJune 30, 2016,2017, we paid dividends of $3.9375$2.625 per share, or $23.6$15.8 million, to Series A preferred stockholders of record and $41.25$27.50 per share, or $56.7$37.8 million, to Series B preferred stockholders of record.

In addition, in October 2016,July 2017, we declared dividendsa dividend of $1.3125 per share, or $7.9 million, payable on November 15, 2016 to Series A preferred stockholders of record at the close of business on November 1, 2016 and $13.75 per share, or $18.9 million, payable on NovemberAugust 15, 20162017 to Series B preferred stockholders of record at the close of business on NovemberAugust 1, 2016.2017.
During the ninesix months ended SeptemberJune 30, 2016,2017, we paid $1.53$1.20 per share, or $649.6$512.0 million, to common stockholders of record. In addition, we declared a distribution of $0.55$0.64 per share, or $234.1$274.7 million, payablepaid on October 17, 2016July 14, 2017 to our common stockholders of record at the close of business on September 30, 2016.June 19, 2017.
We accrue distributions on unvested restricted stock units, which are payable upon vesting. As of SeptemberJune 30, 2016,2017, the amount accrued for distributions payable related to unvested restricted stock units was $5.8$6.6 million. During the ninesix months ended SeptemberJune 30, 2016,2017, we paid $2.4$2.9 million of distributions upon the vesting of restricted stock units.


Contractual Obligations. The following table summarizes our contractual obligations as of September 30, 2016 (in thousands):
IndebtednessBalance Outstanding Maturity Date
 American Tower subsidiary debt:   
  Series 2013-1A securities (1)$500,000
 March 15, 2018
  Series 2013-2A securities (2)1,300,000
 March 15, 2023
  Series 2015-1 notes (3)350,000
 June 15, 2020
  Series 2015-2 notes (4)525,000
 June 16, 2025
  2012 GTP notes (5)174,489
 March 15, 2019
  Unison notes (6)196,000
 Various
  Viom indebtedness (7)593,491
 Various
  Viom Preference Shares (8)25,021
 Various
  Shareholder loans (9)151,723
 Various
  BR Towers debentures (10)103,194
 October 15, 2023
  Colombian credit facility (11)60,765
 April 24, 2021
  South African facility (12)51,412
 December 17, 2020
  Brazil credit facility (13)39,298
 January 15, 2022
  Indian working capital facility (14)662
 October 31, 2016
 Total American Tower subsidiary debt4,071,055
  
 American Tower Corporation debt:   
  2013 Credit Facility137,692
 June 28, 2019
  Term Loan1,000,000
 January 29, 2021
  2014 Credit Facility1,840,000
 January 29, 2021
  4.500% senior notes1,000,000
 January 15, 2018
  3.40% senior notes1,000,000
 February 15, 2019
  7.25% senior notes300,000
 May 15, 2019
  2.800% senior notes750,000
 June 1, 2020
  5.050% senior notes700,000
 September 1, 2020
  3.300% senior notes750,000
 February 15, 2021
  3.450% senior notes650,000
 September 15, 2021
  5.900% senior notes500,000
 November 1, 2021
  2.250% senior notes600,000
 January 15, 2022
  4.70% senior notes700,000
 March 15, 2022
  3.50% senior notes1,000,000
 January 31, 2023
  5.00% senior notes1,000,000
 February 15, 2024
  4.000% senior notes750,000
 June 1, 2025
  4.400% senior notes500,000
 February 15, 2026
  3.375% senior notes1,000,000
 October 15, 2026
  3.125% senior notes400,000
 January 15, 2027
 Total American Tower Corporation debt14,577,692
  
 Other debt, including capital lease obligations130,281
  
 Total obligations18,779,028
  
 Discounts, premiums and debt issuance costs(99,892)  
 Total carrying value of obligations$18,679,136
  
_______________
(1)    Maturity date represents anticipated repayment date; final legal maturity is March 15, 2043.
(2)    Maturity date represents anticipated repayment date; final legal maturity is March 15, 2048.
(3)    Maturity date represents anticipated repayment date; final legal maturity is June 15, 2045.
(4)    Maturity date represents anticipated repayment date; final legal maturity is June 15, 2050.


(5)Secured debt assumed by us in connection with our acquisition of MIPT. Maturity date represents anticipated repayment date; final legal maturity is March 15, 2042. During the nine months ended September 30, 2016, we repaid the $94.1 million outstanding under the Secured Tower Cellular Site Revenue Notes, Series 2012-1 Class A and released 472 sites in connection with this repayment.
(6)Secured debt assumed by us in connection with our acquisition of certain legal entities from Unison Holdings LLC and Unison Site Management II, L.L.C. In October 2016, we repaid the $67.0 million outstanding under the Secured Cellular Site Revenue Notes, Series 2010-1, Class C. The anticipated repayment date for the remaining series is April 15, 2020; final legal maturity date is April 15, 2040.
(7)Debt primarily assumed by us in connection with the Viom Acquisition. Maturity dates begin March 31, 2017. Denominated in INR. In October 2016, ATC TIPL refinanced 3.6 billion INR ($53.5 million as of September 30, 2016) of Viom assumed indebtedness with borrowings under a new short-term committed loan facility with a borrowing capacity of 5.8 billion INR ($87.1 million as of September 30, 2016) and repaid an additional 1.4 billion INR ($21.0 million as of September 30, 2016) of Viom assumed indebtedness with cash on hand.
(8)Mandatorily redeemable preference shares classified as debt, assumed by us in connection with the Viom Acquisition. The shares are to be redeemed in equal parts on March 26, 2017 and March 26, 2018.
(9)Reflects balances owed to our joint venture partners in Ghana and Uganda. The Ghana loan is denominated in GHS and the Uganda loan is denominated in U.S. Dollars.
(10)Publicly issued debentures assumed by us in connection with our acquisition of BR Towers S.A. Denominated in BRL.
(11)Denominated in COP and amortizes through April 24, 2021.
(12)Denominated in ZAR and amortizes through December 17, 2020.
(13)Denominated in BRL.
(14)Denominated in INR. This agreement provides that the maturity date may be extended for additional 30-day periods.
Additional information regarding our contractual debt obligations is set forth under the caption “Quantitative and Qualitative Disclosures about Market Risk” in Part I, Item 3 of this Quarterly Report on Form 10-Q.

Factors Affecting Sources of Liquidity
    
As discussed in the “Liquidity and Capital Resources” section of the 20152016 Form 10-K, our liquidity depends on our ability to generate cash flow from operating activities, borrow funds under our credit facilities and maintain compliance with the contractual agreements governing our indebtedness. We believe that the debt agreements discussed below represent those of our material debt agreements withthat contain covenants, with respect to which our compliance with which would be material to an investor’s understanding of our financial results and the impact of those results on our liquidity.
         
Restrictions Under Loan Agreements Relating to Our Credit Facilities. The loan agreements for the 20142013 Credit Facility, the 20132014 Credit Facility and the Term Loan contain certain financial and operating covenants and other


restrictions applicable to us and our subsidiaries that are not designated as unrestricted subsidiaries on a consolidated basis. These restrictions include limitations on additional debt, distributions and dividends, guaranties, sales of assets and liens. The loan agreements also contain covenants that establish financial tests with which we and our restricted subsidiaries must comply related to total leverage and senior secured leverage, as set forth in the table below. In the event that our debt ratings fall below investment grade, we must maintain an interest coverage ratio of Adjusted EBITDA to Interest Expense (each as defined in the applicable loan agreement) of at least 2.50:1.00. As of SeptemberJune 30, 2016,2017, we were in compliance with each of these covenants.

    
Compliance Tests For The 12 Months Ended
SeptemberJune 30, 20162017
($ in billions)
  Ratio (1) Additional Debt Capacity Under Covenants (2) Capacity for Adjusted EBITDA Decrease Under Covenants (3)
Consolidated Total Leverage Ratio 
Total Debt to Adjusted EBITDA
≤ 6.00:1.00
 ~ $3.0$4.5 ~ $0.5$0.8
Consolidated Senior Secured Leverage Ratio 
Senior Secured Debt to Adjusted EBITDA
≤ 3.00:1.00
 ~ $6.8$8.3 (4) ~ $2.3 (4)$2.8
_______________
(1)    Each component of the ratio as defined in the applicable loan agreement.
(2)    Assumes no change to Adjusted EBITDA.
(3)    Assumes no change to our debt levels.
(4)    Effectively, however, the capacityadditional Senior Secured Debt under this ratio would be limited to the capacity under the Consolidated Total Leverage Ratio.

The loan agreements for our credit facilities also contain reporting and information covenants that require us to provide financial and operating information to the lenders within certain time periods. If we are unable to provide the required information on a timely basis, we would be in breach of these covenants.



Failure to comply with the financial maintenance tests and certain other covenants of the loan agreements for our credit facilities could not only prevent us from being able to borrow additional funds under these credit facilities, but may constitute a default under these credit facilities, which could result in, among other things, the amounts outstanding, including all accrued interest and unpaid fees, becoming immediately due and payable. If this were to occur, we may not have sufficient cash on hand to repay such indebtedness. The key factors affecting our ability to comply with the debt covenants described above are our financial performance relative to the financial maintenance tests defined in the loan agreements for these credit facilities and our ability to fund our debt service obligations. Based upon our current expectations, we believe our operating results during the next 12 months will be sufficient to comply with these covenants.

Restrictions Under Agreements Relating to the 2015 Securitization and the 2013 Securitization. The indenture and related supplemental indentures (collectively, the “2015 Indenture”) governing the American Tower Secured Revenue Notes, Series 2015-1, Class A (the “Series 2015-1 Notes”) and the American Tower Secured Revenue Notes, Series 2015-2, Class A (the “Series 2015-2 Notes,” and, together with the Series 2015-1 Notes, the “2015 Notes”) issued by GTP Acquisition Partners I, LLC (“GTP Acquisition Partners”) in a private securitization transaction in May 2015 (the “2015 Securitization”) and the loan agreement related to the securitization transaction completed in March 2013 (the “2013 Securitization”) include certain financial ratios and operating covenants and other restrictions customary for transactions subject to rated securitizations. Among other things, American Tower Asset Sub, LLC and American Tower Asset Sub II, LLC (together, the “AMT Asset Subs”) and GTP Acquisition Partners are prohibited from incurring other indebtedness for borrowed money or further encumbering their assets, subject to customary carve-outs for ordinary course trade payables and permitted encumbrances (as defined in the applicable agreement).
Under the agreements, amounts due will be paid from the cash flows generated by the assets securing the 2015 Notes or the assets securing the nonrecourse loan that secures the Secured Tower Revenue Securities, Series 2013-1A and Series 2013-2A issued in the 2013 Securitization (the “Loan”), as applicable, which must be deposited into certain reserve accounts, and thereafter distributed, solely pursuant to the terms of the applicable agreement. On a monthly basis, after payment of all required amounts under the applicable agreement, subject to the conditions described in the table


below, the excess cash flows generated from the operation of such assets are released to GTP Acquisition Partners or the AMT Asset Subs, as applicable, which can then be distributed to, and used by, us. As of SeptemberJune 30, 2016, $102.12017, $96.2 million held in such reserve accounts was classified as restricted cash.

Certain information with respect to the 2015 Securitization and the 2013 Securitization is set forth below ($ in millions).below. The debt service coverage ratio (“DSCR”) is generally calculated as the ratio of the net cash flow (as defined in the applicable agreement) to the amount of interest, servicing fees and trustee fees required to be paid over the succeeding 12 months on the principal amount of the 2015 Notes or the Loan, as applicable, that will be outstanding on the payment date following such date of determination.


Issuer or BorrowerNotes/Securities IssuedConditions Limiting Distributions of Excess CashExcess Cash Distributed During the Six Months Ended June 30, 2017DSCR as of June 30, 2017Capacity for Decrease in Net Cash Flow Before Triggering Cash Trap DSCR (1)Capacity for Decrease in Net Cash Flow Before Triggering Minimum DSCR (1)
Issuer or BorrowerNotes/Securities IssuedConditions Limiting Distributions of Excess CashExcess Cash Distributed During the Nine Months Ended September 30, 2016
DSCR as of
September 30, 2016
Capacity for Decrease in Net Cash Flow Before Triggering Cash Trap DSCR (1)Capacity for Decrease in Net Cash Flow Before Triggering Minimum DSCR (1)Cash Trap DSCRAmortization Period
Cash Trap DSCRAmortization Period (in millions) (in millions)(in millions)
2015 SecuritizationGTP Acquisition PartnersAmerican Tower Secured Revenue Notes, Series 2015-1 and Series 2015-21.30x, Tested Quarterly (2)(3)(4)$138.47.48x$165.1$169.1GTP Acquisition PartnersAmerican Tower Secured Revenue Notes, Series 2015-1 and Series 2015-21.30x, Tested Quarterly (2)(3)(4)$99.48.30x$187.0$191.0
2013 SecuritizationAMT Asset SubsSecured Tower Revenue Securities, Series 2013-1A and Series 2013-2A1.30x, Tested Quarterly (2)(3)(5)$424.910.95x$463.8$471.0AMT Asset SubsSecured Tower Revenue Securities, Series 2013-1A and Series 2013-2A1.30x, Tested Quarterly (2)(3)(5)$267.411.83x$506.3$513.5
_______________
(1)Based on the net cash flow of the applicable issuer or borrower as of SeptemberJune 30, 20162017 and the expenses payable over the next 12 months on the 2015 Notes or the Loan, as applicable.
(2)Once triggered, a Cash Trap DSCR condition continues to exist until the DSCR exceeds the Cash Trap DSCR for two consecutive calendar quarters. During a Cash Trap DSCR condition, all cash flow in excess of amounts required to make debt service payments, to fund required reserves, to pay management fees and budgeted operating expenses and to make other payments required under the loan documents, referred to as excess cash flow, will be deposited into a reserve account (the “Cash Trap Reserve Account”) instead of being released to the applicable issuer or borrower. 
(3)An amortization period commences if the DSCR is equal to or below 1.15x (the “Minimum DSCR”) at the end of any calendar quarter and continues to exist until the DSCR exceeds the Minimum DSCR for two consecutive calendar quarters.
(4)No amortization period is triggered if the outstanding principal amount of a series has not been repaid in full on the applicable anticipated repayment date. However, in such event, additional interest will accrue on the unpaid principal balance of the applicable series, and such series will begin to amortize on a monthly basis from excess cash flow.
(5)An amortization period exists if the outstanding principal amount has not been paid in full on the applicable anticipated repayment date and continues to exist until such principal has been repaid in full.

A failure to meet the noted DSCR tests could prevent GTP Acquisition Partners or the AMT Asset Subs from distributing excess cash flow to us, which could affect our ability to fund our capital expenditures, including tower construction and acquisitions, meet REIT distribution requirements and make preferred stock dividend payments. During an “amortization period”,period,” all excess cash flow and any amounts then in the reserve accounts because the DSCR was equal to or below theapplicable Cash Trap DSCRReserve Account would be applied to pay principal of the 2015 Notes or the Loan, as applicable, on each monthly payment date, and so would not be available for distribution to us. Further, additional interest will begin to accrue with respect to any series of the 2015 Notes or subclass of Loan from and after the anticipated repayment date at a per annum rate determined in accordance with the applicable agreement. With respect to the 2015 Notes, upon the occurrence and during an event of default, the applicable trustee may, in its discretion or at the direction of holders of more than 50% of the aggregate outstanding principal of any series of the 2015 Notes, declare such series of 2015 Notes immediately due and payable, in which case any excess cash flow would need to be used to pay holders of such notes. Furthermore, if GTP Acquisition Partners or the AMT Asset Subs were to default on a series of the 2015 Notes or the Loan, the applicable trustee may seek to foreclose upon or otherwise convert the ownership of all or any portion of the 3,6033,584 communications sites that secure the 2015 Notes or the 5,1855,180 wireless and broadcast towers that secure the Loan, respectively, in which case we could lose such sites and the revenue associated with those assets.



As discussed above, we use our available liquidity and seek new sources of liquidity to repay or repurchase our outstanding indebtedness. In addition, in order to fund capital expenditures, future growth and expansion initiatives, and satisfy our distribution requirements we may need to raise additional capital through financing activities.and repay or repurchase our debt. If we determine that it is desirable or necessary to raise additional capital, we may be unable to do so, or such additional financing may be prohibitively expensive or restricted by the terms of our outstanding indebtedness. If we are unable to raise capital when our needs arise, we may not be able to fund capital expenditures, future growth and expansion initiatives, satisfy our REIT distribution requirements and debt service obligations, pay preferred stock dividends or refinance our existing indebtedness.
In addition, our liquidity depends on our ability to generate cash flow from operating activities. As set forth under the caption “Risk Factors” in Item 1A of the 20152016 Form 10-K, we derive a substantial portion of our revenues from a small number of tenants and, consequently, a failure by a significant tenant to satisfyperform its contractual obligations to us could adversely affect our cash flow and liquidity.


For more information regarding the terms of our outstanding indebtedness, please see note 8 to our consolidated financial statements included in the 20152016 Form 10-K.
Critical Accounting Policies and Estimates
Management’s discussion and analysis of financial condition and results of operations are based upon our consolidated and condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, as well as related disclosures of contingent assets and liabilities. We evaluate our policies and estimates on an ongoing basis, including those related to impairment of long-lived assets, asset retirement obligations, revenue recognition, rent expense, stock-based compensation, income taxes and accounting for business combinations and acquisitions of assets, which we discussed in the 20152016 Form 10-K. Management bases its estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
We have reviewed our policies and estimates to determine our critical accounting policies for the ninesix months ended SeptemberJune 30, 2016.2017. We have made no material changes to the critical accounting policies described in the 20152016 Form 10-K.

Accounting Standards Update
For a discussion of recent accounting standards updates, see note 1 to our consolidated and condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.



ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk
As of SeptemberJune 30, 2016,2017, we have one interest rate swap agreement related to debt in Colombia. This swap has been designated as a cash flow hedge, has a notional amount of $30.4$25.5 million, andhas an interest rate of 5.74% and expires in April 2021. We also have three interest rate swap agreements related to the 2.250% Notes.senior unsecured notes due 2022 (the “2.250% Notes”). These swaps have been designated as fair value hedges, have an aggregate notional amount of $600.0 million, andhave an interest rate of one-month LIBOR plus applicable spreads and expire in January 2022.
Changes in interest rates can cause interest charges to fluctuate on our variable rate debt. Variable rate debt as of SeptemberJune 30, 20162017 consisted of $1,840.0$1,180.0 million under the 2014 Credit Facility, $137.7$853.4 million under the 2013 Credit Facility, $1,000.0 million under the Term Loan, $600.0 million under the interest rate swap agreements related to the 2.250% Notes, $51.4$77.9 million under the South African credit facility, $30.4$25.5 million under the Colombian credit facility after giving effect to our interest rate swap agreement, related to the Colombian credit facility, $103.2$96.8 million under the BR Towers debentures and $39.3$41.6 million under the Brazil credit facility. A 10% increase in current interest rates would result in an additional $6.3$5.5 million of interest expense for the ninesix months ended SeptemberJune 30, 2016.2017.

Foreign Currency Risk
We are exposed to market risk from changes in foreign currency exchange rates primarily in connection with our foreign subsidiaries and joint ventures internationally. Any transaction denominated in a currency other than the U.S. Dollar is reported in U.S. Dollars at the applicable exchange rate. All assets and liabilities are translated into U.S. Dollars at exchange rates in effect at the end of the applicable fiscal reporting period and all revenues and expenses are translated at average rates for the period. The cumulative translation effect is included in equity as a component of Accumulated other comprehensive loss. We may enter into additional foreign currency financial instruments in anticipation of future transactions to minimize the impact of foreign currency fluctuations. For the ninesix months ended SeptemberJune 30, 2016, 39%2017, 44% of our revenues and 44%50% of our total operating expenses were denominated in foreign currencies.
As of SeptemberJune 30, 2016,2017, we have incurred intercompany debt that is not considered to be permanently reinvested and similar unaffiliated balances that were denominated in a currency other than the functional currency of the subsidiary in which it is recorded. As this debt had not been designated as being a long-term investment in nature, any changes in the foreign currency exchange rates will result in unrealized gains or losses, which will be included in our determination of net income. An adverse change of 10% in the underlying exchange rates of our unsettled intercompany debt and similar unaffiliated balances would result in $42.0$101.7 million of unrealized losses that would be included in Other expense in our consolidated statements of operations for the ninesix months ended SeptemberJune 30, 2016.2017.

ITEM 4.CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
We have established disclosure controls and procedures designed to ensure that material information relating to us, including our consolidated subsidiaries, is made known to the officers who certify our financial reports and to other members of senior management and the Board of Directors.
Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our principal executive officer and principal financial officer concluded that these disclosure controls and procedures were effective as of SeptemberJune 30, 20162017 and designed to ensure that the information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the requisite time periods specified in the applicable rules and forms, and that it is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.




Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the three monthsfiscal quarter ended SeptemberJune 30, 20162017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.



PART II. OTHER INFORMATION
ITEM 1.LEGAL PROCEEDINGS

We periodically become involved in various claims and lawsuits that are incidental to our business. In the opinion of management, after consultation with counsel, there are no matters currently pending that would, in the event of an adverse outcome, have a material impact on our consolidated financial position, results of operations or liquidity.
 
ITEM 1A.RISK FACTORS

There were no material changes to the risk factors discussed in Item 1A of the 20152016 Form 10-K.

ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

During the three months ended June 30, 2017, we repurchased a total of 3,326,022 shares of our common stock for an aggregate of $416.3 million, including commissions and fees, pursuant to the 2011 Buyback. The table below sets forth details of our repurchases during the three months ended June 30, 2017.
Period Total Number of Shares Purchased (1) Average Price Paid per Share (2) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs
        (in millions)
April 1, 2017 - April 30, 2017 1,926,858
 $123.26
 1,926,858
 $648.5
May 1, 2017 - May 31, 2017 1,279,664
 $127.62
 1,279,664
 $485.2
June 1, 2017 - June 30, 2017 119,500
 $129.43
 119,500
 $469.7
Total Second Quarter 3,326,022
 $125.16
 3,326,022
 $469.7
_______________
(1)Repurchases made pursuant to the 2011 Buyback. Under this program, our management is authorized to purchase shares from time to time through open market purchases or privately negotiated transactions at prevailing prices as permitted by securities laws and other legal requirements, and subject to market conditions and other factors. To facilitate repurchases, we make purchases pursuant to trading plans under Rule 10b5-1 of the Exchange Act, which allows us to repurchase shares during periods when we otherwise might be prevented from doing so under insider trading laws or because of self-imposed trading blackout periods. This program may be discontinued at any time.
(2)Average price paid per share is a weighted average calculation using the aggregate price, excluding commissions and fees.

We have repurchased a total of 11.5 million shares of our common stock under the 2011 Buyback for an aggregate of $1.0 billion, including commissions and fees. We expect to continue to manage the pacing of the remaining $469.7 million under the 2011 Buyback in response to general market conditions and other relevant factors. We expect to fund any further repurchases of our common stock through a combination of cash on hand, cash generated by operations and borrowings under our credit facilities. Purchases under the 2011 Buyback are subject to our having available cash to fund repurchases.


ITEM 6.EXHIBITS
See Page EX-1 of this Quarterly Report on Form 10-Q, which is incorporated herein by reference.



SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
AMERICAN TOWER CORPORATION
    
  Date: OctoberJuly 27, 20162017By:
/S/   THOMAS A. BARTLETT   
    
Thomas A. Bartlett
Executive Vice President, and Chief Financial Officer and Treasurer
(Duly Authorized Officer and Principal Financial Officer)





EXHIBIT INDEX
Exhibit No.  Description of Document
  
4.1 
Supplemental Indenture No. 6,7, dated as of SeptemberApril 6, 2017, to Indenture dated as of May 23, 2013, by and between the Company, U.S. Bank National Association, as trustee, and Elavon Financial Services DAC, UK Branch, as paying agent, for the 1.375% Senior Notes due 2025 (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K on April 6, 2017, and incorporated herein by reference)
4.2
Supplemental Indenture No. 8, dated as of June 30, 2016,2017, to Indenture dated as of May 23, 2013, by and between the Company and U.S. Bank National Association, as trustee, for the 2.250% Senior Notes due 2022 and the 3.125%3.55% Senior Notes due 2027 (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K on SeptemberJune 30, 2016,2017, and incorporated herein by reference)
10.1Letter Agreement, dated as of May 4, 2016, as amended, by and between the Company and William H. Hess
   
12  
Statement Regarding Computation of Ratio of Earnings to Fixed Charges and Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends
  
31.1  
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
  
31.2  
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
  
32  
Certifications filed pursuant to 18. U.S.C. Section 1350
   
101.INS  XBRL Instance Document
  
101.SCH  XBRL Taxonomy Extension Schema Document
  
101.CAL  XBRL Taxonomy Extension Calculation Linkbase Document
  
101.LAB  XBRL Taxonomy Extension Label Linkbase Document
  
101.PRE  XBRL Taxonomy Extension Presentation Linkbase Document
  
101.DEF  XBRL Taxonomy Extension Definition



 

 

 

 


EX-1