10-Q
 
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
 
FORM 10-Q
 
 
 
(Mark One):
x
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the quarterly period ended September 30, 2015.
¨
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. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check One):
Large accelerated filer
 
x
  
Accelerated filer
 
¨
 
 
 
 
Non-accelerated filer
 
¨
  
Smaller reporting company
 
¨
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 October 22, 2015, there were 423,570,172 shares of common stock outstanding.
 
 
 



              

AMERICAN TOWER CORPORATION
INDEX
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 2015
 
 
Page No.
 
 
 
 
 
 
 
 


              

PART I.
FINANCIAL INFORMATION
ITEM 1.
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
 
September 30, 2015
 
December 31, 2014
ASSETS
 
 
 
CURRENT ASSETS:
 
 
 
Cash and cash equivalents
$
287,404

 
$
313,492

Restricted cash
137,926

 
160,206

Short-term investments
14,485

 
6,302

Accounts receivable, net
206,154

 
199,074

Prepaid and other current assets
282,068

 
264,793

Deferred income taxes
12,318

 
14,000

Total current assets
940,355

 
957,867

PROPERTY AND EQUIPMENT, net
9,806,190

 
7,590,112

GOODWILL
4,055,171

 
4,032,174

OTHER INTANGIBLE ASSETS, net
10,012,397

 
6,900,162

DEFERRED INCOME TAXES
200,885

 
253,186

DEFERRED RENT ASSET
1,123,009

 
1,030,707

NOTES RECEIVABLE AND OTHER NON-CURRENT ASSETS
788,781

 
567,724

TOTAL
$
26,926,788

 
$
21,331,932

LIABILITIES AND EQUITY
 
 
 
CURRENT LIABILITIES:
 
 
 
Accounts payable
$
99,590

 
$
90,366

Accrued expenses
743,256

 
417,836

Distributions payable
196,833

 
159,864

Accrued interest
80,682

 
130,265

Current portion of long-term obligations
45,852

 
897,624

Unearned revenue
203,295

 
233,819

Total current liabilities
1,369,508

 
1,929,774

LONG-TERM OBLIGATIONS
16,981,556

 
13,711,084

ASSET RETIREMENT OBLIGATIONS
811,620

 
609,035

OTHER NON-CURRENT LIABILITIES
1,079,902

 
1,028,687

Total liabilities
20,242,586

 
17,278,580

COMMITMENTS AND CONTINGENCIES

 

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 and no shares issued and outstanding, respectively; aggregate liquidation value of $1,375,000
14

 

Common stock: $.01 par value; 1,000,000,000 shares authorized; 426,307,336 and 399,508,751 shares issued; and 423,497,310 and 396,698,725 shares outstanding, respectively
4,263

 
3,995

Additional paid-in capital
9,650,129

 
5,788,786

Distributions in excess of earnings
(995,932
)
 
(837,320
)
Accumulated other comprehensive loss
(1,832,903
)
 
(794,221
)
Treasury stock (2,810,026 shares at cost)
(207,740
)
 
(207,740
)
Total American Tower Corporation equity
6,617,891

 
3,953,560

Noncontrolling interest
66,311

 
99,792

Total equity
6,684,202

 
4,053,352

TOTAL
$
26,926,788

 
$
21,331,932

See accompanying notes to unaudited condensed consolidated financial statements.

1


AMERICAN TOWER CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2015
 
2014
 
2015
 
2014
 REVENUES:
 
 
 
 
 
 
 
Rental and management
$
1,212,849

 
$
1,011,119

 
$
3,429,264

 
$
2,977,000

Network development services
25,061

 
27,069

 
62,211

 
76,734

Total operating revenues
1,237,910

 
1,038,188

 
3,491,475

 
3,053,734

OPERATING EXPENSES:
 
 
 
 
 
 
 
Costs of operations (exclusive of items shown separately below):
 
 
 
 
 
 
 
Rental and management (including stock-based compensation expense of $396, $344, $1,218 and $1,059, respectively)
356,082

 
272,355

 
929,624

 
786,374

Network development services (including stock-based compensation expense of $99, $101, $336 and $343, respectively)
9,307

 
11,847

 
22,863

 
30,872

Depreciation, amortization and accretion
341,096

 
249,066

 
932,972

 
740,256

Selling, general, administrative and development expense (including stock-based compensation expense of $17,850, $17,824, $70,697 and $60,306, respectively)
114,832

 
108,909

 
354,460

 
317,437

Other operating expenses
15,668

 
11,204

 
40,891

 
37,852

Total operating expenses
836,985

 
653,381

 
2,280,810

 
1,912,791

OPERATING INCOME
400,925

 
384,807

 
1,210,665

 
1,140,943

OTHER INCOME (EXPENSE):
 
 
 
 
 
 
 
Interest income, TV Azteca, net of interest expense of $40, $371, $780 and $1,112, respectively
2,993

 
2,661

 
8,251

 
7,918

Interest income
4,503

 
3,850

 
11,871

 
8,149

Interest expense
(149,787
)
 
(143,212
)
 
(446,228
)
 
(432,753
)
Gain (loss) on retirement of long-term obligations

 
2,969

 
(78,793
)
 
1,447

Other expense (including unrealized foreign currency losses of $77,864, $36,998, $107,871 and $62,556, respectively)
(66,659
)
 
(34,019
)
 
(123,291
)
 
(54,225
)
Total other expense
(208,950
)
 
(167,751
)
 
(628,190
)
 
(469,464
)
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
191,975

 
217,056

 
582,475

 
671,479

Income tax provision
(94,235
)
 
(10,426
)
 
(132,063
)
 
(49,877
)
NET INCOME
97,740

 
206,630

 
450,412

 
621,602

Net loss attributable to noncontrolling interest
5,259

 
963

 
1,960

 
22,921

NET INCOME ATTRIBUTABLE TO AMERICAN TOWER CORPORATION STOCKHOLDERS
102,999

 
207,593

 
452,372

 
644,523

Dividends on preferred stock
(26,781
)
 
(7,700
)
 
(63,382
)
 
(12,075
)
NET INCOME ATTRIBUTABLE TO AMERICAN TOWER CORPORATION COMMON STOCKHOLDERS
$
76,218

 
$
199,893

 
$
388,990

 
$
632,448

NET INCOME PER COMMON SHARE AMOUNTS:
 
 
 
 
 
 
 
Basic net income attributable to American Tower Corporation common stockholders
$
0.18

 
$
0.50

 
$
0.93

 
$
1.60

Diluted net income attributable to American Tower Corporation common stockholders
$
0.18

 
$
0.50

 
$
0.92

 
$
1.58

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
 
 
 
 
 
 
 
Basic
423,375

 
396,243

 
417,280

 
395,758

Diluted
427,227

 
400,397

 
421,352

 
399,806

DISTRIBUTIONS DECLARED PER COMMON SHARE
$
0.46

 
$
0.36

 
$
1.32

 
$
1.02

See accompanying notes to unaudited condensed consolidated financial statements.

2

              

AMERICAN TOWER CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(in thousands)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2015
 
2014
 
2015
 
2014
Net income
$
97,740

 
$
206,630

 
$
450,412

 
$
621,602

Other comprehensive (loss) income:
 
 
 
 
 
 
 
Changes in fair value of cash flow hedges, net of taxes of ($9), ($7), ($18) and ($31), respectively
710

 
(519
)
 
365

 
(856
)
Reclassification of unrealized losses on cash flow hedges to net income, net of taxes of $20, $36, $66 and $132, respectively
158

 
542

 
2,771

 
2,085

Foreign currency translation adjustments, net of taxes of $(12,863), $(7,969), $(25,275) and $(8,333), respectively
(600,798
)
 
(254,239
)
 
(1,077,788
)
 
(234,851
)
Other comprehensive loss
(599,930
)
 
(254,216
)
 
(1,074,652
)
 
(233,622
)
Comprehensive (loss) income
(502,190
)
 
(47,586
)
 
(624,240
)
 
387,980

Comprehensive loss attributable to noncontrolling interest
807

 
1,760

 
37,930

 
63,424

Comprehensive (loss) income attributable to American Tower Corporation stockholders
$
(501,383
)
 
$
(45,826
)
 
$
(586,310
)
 
$
451,404


See accompanying notes to unaudited condensed consolidated financial statements.

3

              

AMERICAN TOWER CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 
Nine Months Ended September 30,
 
2015
 
2014
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
Net income
$
450,412

 
$
621,602

Adjustments to reconcile net income to cash provided by operating activities:
 
 
 
Stock-based compensation expense
72,251

 
61,708

Depreciation, amortization and accretion
932,972

 
740,256

Loss (gain) on early retirement of long-term obligations
78,793

 
(1,447
)
Other non-cash items reflected in statements of operations
143,412

 
73,825

Increase in net deferred rent asset
(69,019
)
 
(65,460
)
Decrease in restricted cash
19,971

 
23,560

Increase in assets
(106,535
)
 
(42,931
)
Increase in liabilities
21,358

 
158,493

Cash provided by operating activities
1,543,615

 
1,569,606

CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
Payments for purchase of property and equipment and construction activities
(518,018
)
 
(723,353
)
Payments for acquisitions, net of cash acquired
(1,616,205
)
 
(324,936
)
Payment for Verizon transaction
(5,058,895
)
 

Proceeds from sale of assets, net of cash

 
15,464

Proceeds from sale of short-term investments and other non-current assets
1,002,214

 
453,396

Payments for short-term investments
(1,011,320
)
 
(460,686
)
Deposits, restricted cash and other
(2,053
)
 
(63,295
)
Cash used for investing activities
(7,204,277
)
 
(1,103,410
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
Proceeds from short-term borrowings, net
8,282

 

Borrowings under credit facilities
5,727,831

 
785,000

Proceeds from issuance of senior notes, net
1,492,298

 
1,415,844

Proceeds from term loan
500,000

 

Proceeds from other long-term borrowings

 
3,033

Proceeds from issuance of securities in securitization transaction
875,000

 

Repayments of notes payable, credit facilities, senior notes and capital leases
(6,092,710
)
 
(2,928,434
)
Contributions from noncontrolling interest holders, net
4,449

 
5,446

Proceeds from stock options and stock purchase plan
29,324

 
47,938

Proceeds from the issuance of common stock, net
2,440,327

 

Proceeds from the issuance of preferred stock, net
1,337,946

 
583,105

Payment for early retirement of long-term obligations
(86,107
)
 
(6,767
)
Deferred financing costs and other financing activities
(30,314
)
 
(32,129
)
Purchase of noncontrolling interest

 
(64,822
)
Distributions paid on common stock
(516,012
)
 
(261,913
)
Distributions paid on preferred stock
(57,866
)
 
(8,138
)
Cash provided by (used for) financing activities
5,632,448

 
(461,837
)
Net effect of changes in foreign currency exchange rates on cash and cash equivalents
2,126

 
(2,322
)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
(26,088
)
 
2,037

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
313,492

 
293,576

CASH AND CASH EQUIVALENTS, END OF PERIOD
$
287,404

 
$
295,613

CASH PAID FOR INCOME TAXES (NET OF REFUNDS OF $5,206 AND $6,642, RESPECTIVELY)
$
130,231

 
$
52,379

CASH PAID FOR INTEREST
$
472,079

 
$
438,404

NON-CASH INVESTING AND FINANCING ACTIVITIES:
 
 
 
(DECREASE) INCREASE IN ACCOUNTS PAYABLE AND ACCRUED EXPENSES FOR PURCHASES OF PROPERTY AND EQUIPMENT AND CONSTRUCTION ACTIVITIES
$
(6,703
)
 
$
16,070

PURCHASES OF PROPERTY AND EQUIPMENT UNDER CAPITAL LEASES
$
19,870

 
$
24,002

SETTLEMENT OF ACCOUNTS RECEIVABLE RELATED TO ACQUISITIONS
$
735

 
$
31,849

CONVERSION OF THIRD-PARTY DEBT TO EQUITY
$

 
$
7,750


See accompanying notes to unaudited condensed consolidated financial statements.

4


AMERICAN TOWER CORPORATION AND SUBSIDIARIES
CONDENSED 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
 
Non-controlling
Interest
 
Total
Equity
 
Issued Shares
 
Amount
 
Issued Shares
 
Amount
 
Issued
Shares
 
Amount
 
Shares
 
Amount
 
BALANCE, JANUARY 1, 2014

 
$

 

 
$

 
397,674,350

 
$
3,976

 
(2,810,026
)
 
$
(207,740
)
 
$
5,130,616

 
$
(311,220
)
 
$
(1,081,467
)
 
$
55,875

 
$
3,590,040

Stock-based compensation related activity

 

 

 

 
1,489,577

 
15

 

 

 
90,982

 

 

 

 
90,997

Issuance of common stock- stock purchase plan

 

 

 

 
43,589

 
1

 

 

 
2,898

 

 

 

 
2,899

Issuance of preferred stock
6,000,000

 
60

 

 

 

 

 

 

 
582,599

 

 

 

 
582,659

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

 

 

 

 

 

 

 

 

 
(969
)
 

 
113

 
(856
)
Reclassification of unrealized losses on cash flow hedges to net income, net of tax

 

 

 

 

 

 

 

 

 
1,941

 

 
144

 
2,085

Foreign currency translation adjustment, net of tax

 

 

 

 

 

 

 

 

 
(194,091
)
 

 
(40,760
)
 
(234,851
)
Contributions from noncontrolling interest

 

 

 

 

 

 

 

 

 

 

 
13,626

 
13,626

Distributions to noncontrolling interest

 

 

 

 

 

 

 

 

 

 

 
(430
)
 
(430
)
Purchase of noncontrolling interest

 

 

 

 

 

 

 

 
(49,862
)
 

 

 
(14,960
)
 
(64,822
)
Common stock distributions declared

 

 

 

 

 

 

 

 

 

 
(405,560
)
 

 
(405,560
)
Preferred stock dividends declared

 

 

 

 

 

 

 

 

 

 
(12,075
)
 

 
(12,075
)
Net income (loss)

 

 

 

 

 

 

 

 

 

 
644,523

 
(22,921
)
 
621,602

BALANCE, SEPTEMBER 30, 2014
6,000,000

 
$
60

 

 
$

 
399,207,516

 
$
3,992

 
(2,810,026
)
 
$
(207,740
)
 
$
5,757,233

 
$
(504,339
)
 
$
(854,579
)
 
$
(9,313
)
 
$
4,185,314

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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

 

 

 

 

 

 

 

 

 

 

 
5,105

 
5,105

Distributions to noncontrolling interest

 

 

 

 

 

 

 

 

 

 

 
(656
)
 
(656
)
Common stock 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

See accompanying notes to unaudited condensed consolidated financial statements.

5

AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


1.
Description of Business, Basis of Presentation and Accounting Policies
Business—American Tower Corporation is, through its various subsidiaries (collectively, “ATC” or the “Company”), 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 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. The Company also manages rooftop and tower sites for property owners, operates in-building and outdoor distributed antenna system (“DAS”) networks, holds property interests under third-party communications sites and provides network development services that primarily support its rental and management operations.

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

The Company operates as a real estate investment trust for U.S. federal income tax purposes (“REIT”) and, therefore, is generally not subject to U.S. federal income taxes in that it receives a dividends paid deduction for distributions to stockholders that generally offsets the Company’s income and gains, including the income derived from leasing space on its towers. However, the Company remains obligated to pay income taxes on earnings from its taxable REIT subsidiaries (“TRSs”). In addition, the Company’s international assets and operations, including those designated as direct or indirect qualified REIT subsidiaries or other disregarded entities of a REIT (collectively, “QRSs”), continue to be subject to taxation in the foreign jurisdictions where those assets are held or those operations are conducted. As of September 30, 2015, the Company’s QRSs included its domestic tower leasing business, most of its operations in Costa Rica, Germany and Mexico and a majority of its network development services segment and indoor DAS networks business.

On March 27, 2015, the Company significantly expanded its domestic portfolio by obtaining the exclusive right to lease, acquire or otherwise operate and manage 11,448 wireless communications sites from Verizon Communications Inc. (“Verizon”) in the United States (the “Verizon Transaction”). On July 1, 2015, the Company expanded into a new country by acquiring 4,699 communications sites in Nigeria.

The accompanying 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 (consisting primarily of normal recurring adjustments) considered necessary for a fair presentation of its financial position and results of operations for such periods have been included. These 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, 2014 (the “2014 Form 10-K”).

Principles of Consolidation and Basis of Presentation—The accompanying condensed consolidated financial statements include the accounts of the Company and those entities in which it has a controlling interest. Investments in entities that the Company does not control are accounted for using the equity or cost method, depending upon the Company’s ability to exercise significant influence over operating and financial policies. All intercompany accounts and transactions have been eliminated.

Significant Accounting Policies and Use of Estimates—The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results may differ from those estimates, and such differences could be material to the accompanying condensed consolidated financial statements. The significant estimates in the accompanying condensed consolidated financial statements include impairment of long-lived assets (including goodwill), asset retirement obligations, revenue recognition, rent expense, stock-based compensation, income taxes and accounting for business combinations and acquisitions of assets. The Company considers events or transactions that occur after the balance sheet date but before the financial statements are issued as additional evidence for certain estimates or to identify matters that require additional disclosure.

Accounting Standards Updates—In May 2014, the Financial Accounting Standards Board (the “FASB”) issued new revenue recognition guidance, which requires an entity to recognize revenue in an amount that reflects the consideration to which the entity expects to be entitled in exchange for the transfer of promised goods or services to customers. The standard will replace most existing revenue recognition guidance in GAAP and will become effective for the Company on January 1,

6

AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

2018. Early adoption is permitted for fiscal years, and interim periods within those years, beginning after December 15, 2016. The standard permits the use of either the retrospective or cumulative effect transition method and leases are not included in the scope of this standard. The Company is evaluating the impact this standard will have on its financial statements.

In June 2014, the FASB issued stock-based compensation guidance, which requires a performance target that could be achieved after the requisite service period be treated as a performance condition that affects vesting, rather than a condition that affects the grant-date fair value. The Company early adopted this guidance on a prospective basis during the nine months ended September 30, 2015, and it did not have a material effect on the Company’s financial statements.

In April 2015, the FASB issued new guidance on the presentation of debt issuance costs. The guidance requires debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability, consistent with debt discounts and premiums. In August 2015, the FASB clarified that debt issuance costs associated with line of credit arrangements may continue to be presented as an asset, regardless of whether there are any outstanding borrowings on the line of credit arrangement. The update requires retrospective application and the update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015, with early adoption permitted. The Company does not expect the adoption of this guidance to have a material effect on its financial statements.

In September 2015, the FASB issued new guidance on the accounting for measurement-period adjustments. The guidance requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined rather than retrospectively. The effect on earnings as a result of the change to the provisional amounts is calculated as if the accounting had been completed as of the acquisition date. The update requires prospective application and the update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015, with early adoption permitted. The Company does not expect the adoption of this guidance to have a material effect on its financial statements.
    
2.
Prepaid and Other Current Assets
Prepaid and other current assets consisted of the following as of (in thousands): 

 
September 30, 2015
 
December 31, 2014 (1)
Prepaid operating ground leases
$
112,965

 
$
88,053

Prepaid assets
41,294

 
23,848

Prepaid income tax
34,332

 
34,512

Unbilled receivables
31,878

 
25,352

Value added tax and other consumption tax receivables
20,727

 
23,228

Other miscellaneous current assets
40,872

 
69,800

Balance
$
282,068

 
$
264,793

 (1) December 31, 2014 balances have been revised to reflect purchase accounting measurement period adjustments.

3.    Goodwill and Other Intangible Assets
The changes in the carrying value of goodwill for the Company’s business segments were as follows (in thousands):
 
 
 
 Rental and Management
 
Network
Development
Services
 
Total
 
 
Domestic
 
International
 
Balance as of January 1, 2015 (1)
 
$
3,356,096

 
$
674,090

 
$
1,988

 
$
4,032,174

Additions
 
19,677

 
145,431

 

 
165,108

Effect of foreign currency translation
 

 
(142,111
)
 

 
(142,111
)
Balance as of September 30, 2015
 
$
3,375,773

 
$
677,410

 
$
1,988

 
$
4,055,171

(1)
January 1, 2015 balances have been revised to reflect purchase accounting measurement period adjustments.
The Company’s other intangible assets subject to amortization consisted of the following as of (in thousands):
 

7

AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 
 
 
 
September 30, 2015
 
December 31, 2014 (1)
 
 
Estimated
Useful
Lives
 
Gross
Carrying
Value
 
Accumulated
Amortization
 
Net Book
Value
 
Gross
Carrying
Value
 
Accumulated
Amortization
 
Net Book
Value
 
 
(years)
 
 
Acquired network location intangibles (2)
 
Up to 20

 
$
3,952,072

 
$
(1,000,656
)
 
$
2,951,416

 
$
2,513,788

 
$
(901,903
)
 
$
1,611,885

Acquired customer-related intangibles
 
15-20

 
8,606,612

 
(1,666,473
)
 
6,940,139

 
6,594,469

 
(1,429,572
)
 
5,164,897

Acquired licenses and other intangibles
 
3-20

 
28,267

 
(5,333
)
 
22,934

 
38,443

 
(3,514
)
 
34,929

Economic Rights, TV Azteca
 
70

 
22,021

 
(11,331
)
 
10,690

 
25,522

 
(12,960
)
 
12,562

Total
 
 
 
$
12,608,972

 
$
(2,683,793
)
 
$
9,925,179

 
$
9,172,222

 
$
(2,347,949
)
 
$
6,824,273

Deferred financing  costs, net (3)
 
N/A

 
 
 
 
 
87,218

 
 
 
 
 
75,889

Other intangible assets, net
 
 
 
 
 
 
 
$
10,012,397

 
 
 
 
 
$
6,900,162

(1)
December 31, 2014 balances have been revised to reflect purchase accounting measurement period adjustments.
(2)
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.
(3)
Deferred financing costs are amortized over the term of the respective debt instruments to which they relate using the effective interest method. This amortization is included in Interest expense rather than in Depreciation, amortization and accretion expense.
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-related intangibles typically represent the value to the Company of customer contracts and relationships in place at the time of an acquisition, including assumptions regarding estimated renewals.

The Company amortizes its acquired network location intangibles and customer-related intangibles on a straight-line basis over their estimated useful lives. As of September 30, 2015, the remaining weighted average amortization period of the Company’s intangible assets, excluding deferred financing costs and the TV Azteca Economic Rights detailed in note 5 to the Company’s consolidated financial statements included in the 2014 Form 10-K, was approximately 16 years. Amortization of intangible assets for the three and nine months ended September 30, 2015 was approximately $154.4 million and $412.5 million, respectively, and amortization of intangible assets for the three and nine months ended September 30, 2014 was approximately $103.3 million and $307.5 million, respectively. Amortization expense excludes amortization of deferred financing costs, which is included in Interest expense on the condensed consolidated statements of operations. Based on current exchange rates, the Company expects to record amortization expense (excluding amortization of deferred financing costs) as follows over the remaining current year and the five subsequent years (in millions):
 
Fiscal Year
 
2015 (remaining year)
$
149.5

2016
594.7

2017
593.2

2018
592.0

2019
589.7

2020
572.0







8

AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

4.    Accrued Expenses
Accrued expenses consisted of the following as of (in thousands):
 
 
September 30, 2015
 
December 31, 2014 (1)
Acquisition liability (2)
$
300,000

 
$

Accrued property and real estate taxes
74,352

 
61,206

Accrued rent
54,686

 
34,074

Payroll and related withholdings
50,852

 
57,110

Accrued construction costs
22,030

 
46,024

Other accrued expenses
241,336

 
219,422

Balance
$
743,256

 
$
417,836

(1)    December 31, 2014 balances have been revised to reflect purchase accounting measurement period adjustments.
(2)    Represents the remaining liability related to the Airtel acquisition on July 1, 2015 (see note 14).

5.    Long-Term Obligations
Refinancing of GTP Acquisition Partners Securitization—On May 29, 2015, GTP Acquisition Partners I, LLC (“GTP Acquisition Partners”), one of the Company’s wholly owned subsidiaries, repaid all amounts outstanding under the Secured Tower Revenue Notes, Global Tower Series 2011-1, Class C, Secured Tower Revenue Notes, Global Tower Series 2011-2, Class C and Class F and Secured Tower Revenue Notes, Global Tower Series 2013-1, Class C and Class F (collectively, the “Existing GTP AP Notes”), plus prepayment consideration and other costs and expenses related thereto, with cash on hand and proceeds from a private issuance (the “2015 Securitization”) of $350.0 million of American Tower Secured Revenue Notes, Series 2015-1, Class A (the “Series 2015-1 Notes”) and $525.0 million of 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”). During the nine months ended September 30, 2015, the Company recorded a loss on retirement of long-term obligations of $0.8 million, consisting of prepayment consideration, primarily offset by the write-off of the unamortized premium recorded in connection with the assumption of the Existing GTP AP Notes.

The 2015 Notes were issued by GTP Acquisition Partners pursuant to a Third Amended and Restated Indenture and related series supplements, each dated as of May 29, 2015 (collectively, the “Indenture”), between GTP Acquisition Partners and its subsidiaries (the “GTP Entities”) and The Bank of New York Mellon, as trustee. The Series 2015-1 Notes have an interest rate of 2.350%, an anticipated repayment date of June 15, 2020 and a final repayment date of June 15, 2045. The Series 2015-2 Notes have an interest rate of 3.482%, an anticipated repayment date of June 16, 2025 and a final repayment date of June 15, 2050.

Amounts due under the 2015 Notes will be paid solely from the cash flows generated from the operation of the 3,621 communications sites (the “Secured Sites”) owned by the GTP Entities. GTP Acquisition Partners is required to make monthly payments of interest on the 2015 Notes, commencing in July 2015. Subject to certain limited exceptions (described below), no payments of principal will be required to be made prior to June 15, 2020, which is the anticipated repayment date for the Series 2015-1 Notes. On a monthly basis, after payment of all required amounts under the applicable agreement, the excess cash flows generated from the operation of the Secured Sites are released to GTP Acquisition Partners, which can then be distributed to, and used by, the Company. However, if the debt service coverage ratio (“DSCR”), generally calculated as the ratio of the net cash flow (as defined in the Indenture) 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 that will be outstanding on the next payment date were equal to or below 1.30x (the “Cash Trap DSCR”) for such quarter, then 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 transaction documents, referred to as excess cash flow, will be deposited into a reserve account instead of being released to GTP Acquisition Partners. The funds in the reserve account will not be released to GTP Acquisition Partners unless the DSCR exceeds the Cash Trap DSCR for two consecutive calendar quarters.

Additionally, an “amortization period” commences if, as of the end of any calendar quarter, the DSCR falls below 1.15x (the “Minimum DSCR”) and will continue to exist until the DSCR exceeds the Minimum DSCR for two consecutive calendar quarters. During an amortization period, all excess cash flow and any amounts then in the reserve account because the Cash Trap DSCR was not met would be applied to payment of the principal on the 2015 Notes.


9

AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The 2015 Notes may be prepaid in whole or in part at any time, provided such payment is accompanied by the applicable prepayment consideration. If prepayment occurs within 12 months of the anticipated repayment date with respect to the Series 2015-1 Notes, or 18 months of the anticipated repayment date with respect to the Series 2015-2 Notes, no prepayment consideration is due. If the Series 2015-1 Notes or the Series 2015-2 Notes have not been repaid in full on the applicable anticipated repayment date, additional interest will accrue on the unpaid principal balance of the applicable series of the 2015 Notes, and such series will begin to amortize on a monthly basis from excess cash flow.

The 2015 Notes are secured by (i) mortgages, deeds of trust and deeds to secure debt on substantially all of the Secured Sites and their operating cash flows, (ii) a security interest in substantially all of the personal property and fixtures of the GTP Entities, including GTP Acquisition Partners’ equity interests in its subsidiaries and (iii) the rights of the GTP Entities under a management agreement. American Tower Holding Sub II, LLC, whose only material assets are its equity interests in GTP Acquisition Partners, has guaranteed repayment of the 2015 Notes and pledged its equity interests in GTP Acquisition Partners as security for such payment obligations.

The Indenture includes covenants customary for notes issued in rated securitizations. Among other things, the GTP Entities are prohibited from incurring other indebtedness for borrowed money or further encumbering their assets. The organizational documents of the GTP Entities contain provisions consistent with rating agency securitization criteria for special purpose entities, including the requirement that they maintain independent directors. The Indenture also contains certain covenants that require GTP Acquisition Partners to provide the trustee with regular financial reports and operating budgets, promptly notify the trustee of events of default and material breaches under the Indenture and other agreements related to the Secured Sites and allow the trustee reasonable access to the Secured Sites, including the right to conduct site investigations. Further, under the Indenture, GTP Acquisition Partners is required to maintain reserve accounts, including for amounts received or due from tenants related to future periods, property taxes, insurance, ground rents, certain expenses and debt service. The $16.0 million held in the reserve accounts as of September 30, 2015 is classified as restricted cash on the Company’s accompanying condensed consolidated balance sheet.

Securitized Debt—The Company has several securitizations in place.  Cash flows generated by the sites that secure the securitized debt are 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 the excess cash flows not needed to pay the securitized debt and other obligations arising out of the securitizations. The securitized debt is the obligation of the issuers thereof or borrowers thereunder, as applicable, and their subsidiaries, and not of the Company or its other subsidiaries.

Mexican Loan—In May 2015, upon maturity of its 5.2 billion Mexican Peso (“MXN”) denominated unsecured bridge loan, the Company repaid the remaining outstanding principal balance of 3.9 billion MXN (approximately $251.2 million on the date of repayment) with cash on hand and borrowings under its multi-currency senior unsecured revolving credit facility entered into in June 2013, as amended (the “2013 Credit Facility”).

BR Towers Credit Facility—On March 30, 2015, the Company repaid all amounts outstanding and terminated the Brazilian Reais (“BRL”) denominated credit facility with Banco Nacional de Desenvolvimento Econômico e Social (“BNDES”), which allowed a subsidiary of BR Towers S.A. (“BR Towers”) to borrow up to 48.1 million BRL through an intermediary bank, and which the Company assumed in connection with the acquisition of BR Towers in November 2014.

Brazil Credit Facility—In December 2014, one of the Company’s Brazilian subsidiaries entered into a 271.0 million BRL-denominated credit facility with BNDES, which matures on January 15, 2022 (the “Brazil Credit Facility”). The Brazilian subsidiary borrowed 40.0 million BRL (approximately $13.3 million on the date of borrowing) on May 18, 2015 and an additional 9.1 million BRL (approximately $2.5 million on the date of borrowing) on August 25, 2015. The Brazilian subsidiary maintains the ability to draw on the Brazil Credit Facility until December 30, 2016. The Brazil Credit Facility bears interest at a margin over the long-term interest rate, as defined by BNDES (“TJLP”), and the Special Clearance and Escrow System (“SELIC”) as follows (BRL in millions):

 
 
Maximum Borrowing Amount
 
Contractual Interest Rate
Tranche A
 
BRL 34.8
 
TJLP + 4.25%

Tranche B
 
BRL 34.8
 
SELIC + 4.25%

Tranche C
 
BRL 200.0
 
6.00
%
Tranche D
 
BRL 1.4
 
TJLP



10

AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of September 30, 2015, the Company had 49.8 million BRL (approximately $12.5 million) outstanding under the Brazil Credit Facility, including capitalized interest, and the weighted average interest rate on the borrowings was 11.2%.

Indian Working Capital Facility—In April 2013, one of the Company’s Indian subsidiaries (“ATC India”) entered into a working capital facility agreement (the “Indian Working Capital Facility”), which allows ATC India to borrow an amount not to exceed the Indian Rupee (“INR”) equivalent of $10.0 million through two separate facilities. Advances under one facility (“Facility A”) are payable on the earlier of demand or six months following the borrowing date and advances under the other facility (“Facility B”) are payable on the earlier of demand or 30 days following the borrowing date, with the option to extend for additional 30-day periods. The interest rate is determined at the time of advance by the bank. As of September 30, 2015, the Company had no amounts outstanding under Facility A and 530.0 million INR (approximately $8.1 million) outstanding under Facility B, with an interest rate of 10.0%. ATC India maintains the ability to draw down and repay amounts under the Indian Working Capital Facility in the ordinary course.

2014 Credit Facility—During the nine months ended September 30, 2015, the Company increased the maximum Revolving Loan Commitment (as defined in the loan agreement) under its senior unsecured revolving credit facility entered into in January 2012, as amended and restated in September 2014 (the “2014 Credit Facility”) to $2.5 billion. Effective February 20, 2015, the Company received incremental commitments of $500.0 million, and as a result, has the ability to borrow up to $2.0 billion.

During the nine months ended September 30, 2015, the Company borrowed an aggregate of $2.1 billion and repaid an aggregate of $1.3 billion of revolving indebtedness under the 2014 Credit Facility. The Company primarily used the borrowings to fund a portion of the Verizon Transaction.
2013 Credit Facility—During the nine months ended September 30, 2015, the Company increased the maximum Revolving Loan Commitment (as defined in the loan agreement) under the 2013 Credit Facility to $3.5 billion. Effective February 20, 2015, the Company received incremental commitments of $750.0 million, and as a result, has the ability to borrow up to $2.75 billion.

During the nine months ended September 30, 2015, the Company borrowed an aggregate of $3.6 billion and repaid an aggregate of $2.5 billion of revolving indebtedness under the 2013 Credit Facility. The Company primarily used the borrowings to (i) fund a portion of the Verizon Transaction, (ii) fund the Company’s acquisition in Nigeria, (iii) fund the TIM Celular S.A. (“TIM”) acquisition and (iv) repay other indebtedness.
The 2014 Credit Facility and the 2013 Credit Facility do not require amortization of principal and may be paid prior to maturity in whole or in part at the Company’s option without penalty or premium. The Company maintains the ability to draw down and repay amounts under each of the credit facilities in the ordinary course.

Term Loan—In October 2013, the Company entered into an unsecured term loan (the “Term Loan”). During the nine months ended September 30, 2015, the Company increased the maximum Incremental Term Loan Commitments (as defined in the agreement), giving the Company the ability to increase commitments to an aggregate of $2.5 billion. Effective February 20, 2015, the Company borrowed an additional $500.0 million under the Term Loan.

The key terms under the 2014 Credit Facility, the 2013 Credit Facility and the Term Loan as of September 30, 2015 are as follows ($ in millions):

 
Outstanding Balance
 
Undrawn LOC
 
Maturity Date(1)
 
Current margin over LIBOR (3)
 
Current commitment fee (4)
2014 Credit Facility
$
1,980

 
$
7.5

 
January 31, 2020 (2)
 
1.250
%
 
0.150
%
2013 Credit Facility
$
1,080

 
$
3.2

 
June 28, 2018 (2)
 
1.250
%
 
0.150
%
Term Loan
$
2,000

 
N/A

 
January 3, 2019
 
1.250
%
 
N/A

(1)    In October 2015, the Company entered into amendment agreements, which, among other things, extended the maturity dates for the 2014 Credit Facility, the 2013 Credit Facility and the Term Loan to January 29, 2021, June 28, 2019 and January 29, 2021, respectively (see note 16).
(2)    Subject to two optional renewal periods.
(3)    LIBOR means the London Interbank Offered Rate.
(4)    Fee on undrawn portion of the credit facility.
Amendments to Bank Facilities—In February 2015, the Company entered into amendment agreements with respect to the 2014 Credit Facility, the 2013 Credit Facility and the Term Loan. After giving effect to these amendments, the Company’s

11

AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

permitted ratio of Total Debt to Adjusted EBITDA (as defined in the loan agreements for each of the facilities) is (i) 7.00 to 1.00 for the quarters ended September 30, 2015 and December 31, 2015 and (ii) 6.00 to 1.00 thereafter. Effective October 28, 2015, the Company entered into additional amendment agreements to the 2013 Credit Facility, the 2014 Credit Facility and the Term Loan (see note 16).

Redemption of Senior Notes—On February 11, 2015, the Company redeemed all of the outstanding 4.625% senior notes due 2015 (the “4.625% Notes”), in accordance with the redemption provisions in the indenture, at a price equal to 100.5898% of the principal amount, plus accrued interest up to, but excluding, February 11, 2015, for an aggregate redemption price of approximately $613.6 million, including approximately $10.0 million in accrued and unpaid interest. On April 29, 2015, the Company redeemed all of the outstanding 7.000% senior notes due 2017 (the “7.000% Notes”), in accordance with the redemption provisions in the indenture, at a price equal to 114.0629% of the principal amount, plus accrued and unpaid interest up to, but excluding, April 29, 2015, for an aggregate redemption price of approximately $571.7 million, including approximately $1.4 million in accrued and unpaid interest.

During the nine months ended September 30, 2015, the Company recorded a loss on retirement of long-term obligations of $74.3 million related to the redemption of the 7.000% Notes, and $3.7 million related to the redemption of the 4.625% Notes, each of which included prepayment consideration and the remaining portion of the unamortized discount and deferred financing costs, and with respect to the 7.000% Notes, the write-off of the unamortized portion of the settlement cost of a treasury rate lock. These redemptions were funded with borrowings under the Company’s existing credit facilities and cash on hand. Upon completion of these redemptions, none of the 4.625% Notes or the 7.000% Notes remained outstanding.

2.800% Senior Notes and 4.000% Senior Notes Offering—On May 7, 2015, the Company completed a registered public offering of $750.0 million aggregate principal amount of 2.800% senior unsecured notes due 2020 (the “2.800% Notes”) and $750.0 million aggregate principal amount of 4.000% senior unsecured notes due 2025 (the “4.000% Notes”). The net proceeds from this offering were approximately $1,480.1 million, after deducting commissions and estimated expenses. The Company used the proceeds to repay existing indebtedness under the 2013 Credit Facility.

The 2.800% Notes will mature on June 1, 2020 and bear interest at a rate of 2.800% per annum. The 4.000% Notes will mature on June 1, 2025 and bear interest at a rate of 4.000% per annum. Accrued and unpaid interest on the notes will be payable in U.S. Dollars semi-annually in arrears on June 1 and December 1 of each year, beginning on December 1, 2015. Interest on the notes will accrue from May 7, 2015 and will be computed on the basis of a 360-day year comprised of twelve 30-day months.

The Company may redeem the notes at any time, in whole or in part, at the applicable redemption price. If the Company redeems the 2.800% Notes prior to May 1, 2020 or the 4.000% Notes prior to March 1, 2025, it will pay 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 2.800% Notes on or after May 1, 2020 or the 4.000% Notes on or after March 1, 2025, it will not be required to pay a make-whole premium. In addition, if the Company undergoes a change of control and ratings decline, each as defined in the supplemental indenture, it may be required to repurchase all of the notes at a purchase price equal to 101% of the principal amount of the 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 indenture contains 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 supplemental indenture.

6.    Derivative Financial Instruments
Interest rate swap agreements—Certain of the Company’s foreign subsidiaries have entered into interest rate swap agreements, which have been designated as cash flow hedges, to manage exposure to variability in interest rates on debt. The notional amount and fair value of the interest rate swap agreements were as follows (in thousands): 

12

AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 
September 30, 2015
 
December 31, 2014
 
Local
 
USD
 
Local
 
USD
South Africa (Rand)
 
 
 
 
 
 
 
Notional
404,478

 
29,194

 
440,614

 
38,080

Fair Value
3,205

 
231

 
1,016

 
88

Colombia (Colombian Peso)
 
 
 
 
 
 
 
Notional
96,250,000

 
30,830

 
100,000,000

 
41,798

Fair Value
858,788

 
275

 
(1,548,688
)
 
(647
)

As of September 30, 2015 the South African and Colombian agreements were in asset positions, and as of December 31, 2014, the South African agreements were in an asset position and the Colombian agreement was in a liability position. Asset positions were included in Notes receivable and other non-current assets and liability positions were included in Other non-current liabilities on the condensed consolidated balance sheets.
    
Embedded derivative—In connection with the acquisition of communications sites in Nigeria on July 1, 2015, the Company entered into a lease agreement where a portion of the monthly rent to be received is escalated based on an index outside the lessor’s economic environment. The fair value of the portion of the lease tied to the US Consumer Price Index was $14.6 million at the date of acquisition and was recorded in Notes receivable and other non-current assets on the condensed consolidated balance sheets.
     
Treasury rate lock—The Company was amortizing the settlement cost of a treasury rate lock as additional interest expense over the term of the 7.000% Notes. In connection with the redemption of the 7.000% Notes, the Company recognized $2.0 million of the remaining deferred loss on the settlement cost as a loss on retirement of long-term obligations in the condensed consolidated statements of operations.

During the three months ended September 30, 2015 and 2014, the interest rate swap agreements had the following impact on the Company’s condensed consolidated financial statements (in thousands): 
Three Months Ended September 30,
 
Gain(Loss) Recognized in OCI - Effective Portion
 
Gain(Loss)
Reclassified from
AOCI into
Income -
Effective Portion
 
Location of Gain(Loss) Reclassified from AOCI into Income- Effective Portion
 
Gain(Loss) Recognized
in Income - Ineffective Portion
 
Location of Gain(Loss) Recognized in Income -
Ineffective Portion
2015
 
$701
 
$(178)
 
Interest Expense
 
N/A
 
N/A
 
 
 
2014
 
$(526)
 
$(578)
 
Interest Expense
 
N/A
 
N/A
During the nine months ended September 30, 2015 and 2014, the interest rate swap agreements and treasury rate lock had the following impact on the Company’s condensed consolidated financial statements (in thousands): 
Nine Months Ended September 30,
 
Gain(Loss) Recognized in OCI - Effective Portion
 
Gain(Loss)
Reclassified from
AOCI into
Income -
Effective Portion
 
Location of Gain(Loss) Reclassified from AOCI into Income- Effective Portion
 
Gain(Loss) Recognized
in Income - Ineffective Portion
 
Location of Gain(Loss) Recognized in Income -
Ineffective Portion
2015
 
$347
 
$(2,837)
 
Interest Expense/Loss on Retirement of Long-Term Obligations
 
N/A
 
N/A
 
 
 
2014
 
$(887)
 
$(2,217)
 
Interest Expense
 
N/A
 
N/A
As of September 30, 2015, approximately $0.1 million of the amount related to derivatives designated as cash flow hedges and recorded in Accumulated other comprehensive loss was expected to be reclassified into earnings in the next 12 months.

For additional information on the Company’s interest rate swap agreements, see note 7.


13

AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

7.
Fair Value Measurements
The Company determines the fair value of its financial instruments based on the fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Below are the three levels of inputs that may be used to measure fair value:
 
 
Level 1
Quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
 
 
 
 
Level 2
Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
 
 
 
 
Level 3
Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
Items Measured at Fair Value on a Recurring Basis—The fair value of the Company’s financial assets and liabilities that are required to be measured on a recurring basis at fair value is as follows (in thousands):
 
September 30, 2015
 
Fair Value Measurements Using
 
Assets/Liabilities
at Fair Value
 
Level 1
 
Level 2
 
Level 3
 
Assets:
 
 
 
 
 
 
 
Short-term investments (1)
 
 
$
14,485

 
 
 
$
14,485

Interest rate swap agreements
 
 
$
506

 
 
 
$
506

Embedded derivative in lease agreement
 
 
 
 
$
14,564

 
$
14,564

Liabilities:
 
 
 
 
 
 
 
Acquisition-related contingent consideration
 
 
 
 
$
18,488

 
$
18,488

 
 
December 31, 2014
 
Fair Value Measurements Using
 
Assets/Liabilities
at Fair Value
 
Level 1
 
Level 2
 
Level 3
 
Assets:
 
 
 
 
 
 
 
Short-term investments (1)

 
$
6,302

 
 
 
$
6,302

Interest rate swap agreements
 
 
$
88

 
 
 
$
88

Liabilities:
 
 
 
 
 
 
 
Acquisition-related contingent consideration
 
 
 
 
$
28,524

 
$
28,524

Interest rate swap agreements
 
 
$
647

 
 
 
$
647

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

Interest Rate Swap Agreements

The fair value of the Company’s interest rate swap agreements is determined using pricing models with inputs that are observable in the market or can be derived principally from, or corroborated by, observable market data. Fair valuations of the interest rate swap agreements reflect the value of the instrument including the values associated with counterparty risk, the Company’s own credit standing and the value of the net credit differential between the counterparties to the derivative contract.

Embedded Derivative in Lease Agreement
The fair value of the Company’s embedded derivative is determined using a discounted cash flow approach. This approach takes into consideration Level 3 unobservable inputs including expected future cash flows over the period in which the associated payment is expected to be received and applies a discount factor that captures uncertainties in the future periods associated with the expected payment.

Acquisition-Related Contingent Consideration
Acquisition-related contingent consideration is initially measured and recorded at fair value as an element of consideration paid in connection with an acquisition with subsequent adjustments recognized in Other operating expenses in the condensed consolidated statements of operations. The Company determines the fair value of acquisition-related contingent consideration, and

14

AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

any subsequent changes in fair value, using a discounted probability-weighted approach. This approach takes into consideration Level 3 unobservable inputs including probability assessments of expected future cash flows over the period in which the obligation is expected to be settled and applies a discount factor that captures the uncertainties associated with the obligation.
Changes in the unobservable inputs of Level 3 assets or liabilities could significantly impact the fair value of these assets or liabilities recorded in the accompanying condensed consolidated balance sheets, with the adjustments being recorded in the condensed consolidated statements of operations.
As of September 30, 2015, the Company estimated the value of all potential acquisition-related contingent consideration required payments to be between zero and $26.0 million. During the three months ended September 30, 2015 and 2014, the fair value of the contingent consideration changed as follows (in thousands):
 
 
2015
 
2014
Balance as of July 1
$
24,867

 
$
31,025

Additions

 
106

Settlements
(3,408
)
 
(209
)
Change in fair value
99

 
(974
)
Foreign currency translation adjustment
(3,070
)
 
(1,794
)
Other (1)

 
(730
)
Balance as of September 30
$
18,488

 
$
27,424

During the nine months ended September 30, 2015 and 2014, the fair value of the contingent consideration changed as follows (in thousands):
 
2015
 
2014
Balance as of January 1
$
28,524

 
$
31,890

Additions
1,311

 
512

Settlements
(6,761
)
 
(1,498
)
Change in fair value
99

 
(1,344
)
Foreign currency translation adjustment
(4,685
)
 
(1,406
)
Other (1)

 
(730
)
Balance as of September 30
$
18,488

 
$
27,424

(1)
In connection with the sale of operations in Panama in September 2014, the buyer assumed the Company’s potential obligations related to additional purchase price consideration.
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 nine months ended September 30, 2015 and 2014, the Company did not record any asset impairment charges.

Sale of Assets—During the nine months ended September 30, 2014, the Company completed the sale of its operations in Panama and its third-party structural analysis business for an aggregate sale price of $17.9 million, plus a working capital adjustment. At the time of sale, the carrying value of these assets primarily included $8.1 million of property and equipment, $7.8 million of intangible assets and $3.6 million of goodwill. The Company recorded a net impairment charge of $2.2 million in Other operating expenses in the accompanying condensed consolidated statements of operations.

There were no items measured at fair value on a nonrecurring basis during the nine months ended September 30, 2015.
Fair Value of Financial Instruments—The Company’s financial instruments for which the carrying value reasonably approximates fair value at September 30, 2015 and December 31, 2014 included 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, 2015, the carrying value and fair value of long-term obligations, including the current portion, were $17.0 billion and $17.3 billion, respectively, of which $9.9 billion was measured using Level 1 inputs and $7.4 billion was measured using Level 2 inputs. As of December 31, 2014, the carrying value and fair value of long-term obligations, including the current portion,

15

AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

were $14.6 billion and $15.0 billion, respectively, of which $9.7 billion was measured using Level 1 inputs and $5.3 billion was measured using Level 2 inputs.

8.
Accumulated Other Comprehensive Loss
The changes in Accumulated other comprehensive loss for the three months ended September 30, 2015 and 2014 were as follows (in thousands):
 
Unrealized Losses on Cash Flow Hedges
 
Foreign
Currency
Items
 
Total
 Balance as of July 1, 2015
$
(1,333
)
 
$
(1,227,188
)
 
$
(1,228,521
)
Other comprehensive income (loss) before reclassifications, net of tax
717

 
(605,244
)
 
(604,527
)
Amounts reclassified from accumulated other comprehensive loss, net of tax
145

 

 
145

Net current-period other comprehensive income (loss)
862

 
(605,244
)
 
(604,382
)
 Balance as of September 30, 2015
$
(471
)
 
$
(1,832,432
)
 
$
(1,832,903
)

 
Unrealized Losses on Cash Flow Hedges
 
Deferred Loss on the Settlement of the Treasury Rate Lock
 
Foreign
Currency
Items
 
Total
 Balance as of July 1, 2014
$
(1,301
)
 
$
(2,630
)
 
$
(246,989
)
 
$
(250,920
)
Other comprehensive loss before reclassifications, net of tax
(514
)
 

 
(253,424
)
 
(253,938
)
Amounts reclassified from accumulated other comprehensive loss, net of tax
319

 
200

 

 
519

Net current-period other comprehensive (loss) income
(195
)
 
200

 
(253,424
)
 
(253,419
)
 Balance as of September 30, 2014
$
(1,496
)
 
$
(2,430
)
 
$
(500,413
)
 
$
(504,339
)

The changes in Accumulated other comprehensive loss for the nine months ended September 30, 2015 and 2014 were as follows (in thousands):
 
Unrealized Losses on Cash Flow Hedges
 
Deferred Loss on the Settlement of the Treasury Rate Lock
 
Foreign
Currency
Items
 
Total
 Balance as of January 1, 2015
$
(1,345
)
 
$
(2,231
)
 
$
(790,645
)
 
$
(794,221
)
Other comprehensive loss before reclassifications, net of tax
377

 

 
(1,041,787
)
 
(1,041,410
)
Amounts reclassified from accumulated other comprehensive loss, net of tax
497

 
2,231

 

 
2,728

Net current-period other comprehensive income (loss)
874

 
2,231

 
(1,041,787
)
 
(1,038,682
)
 Balance as of September 30, 2015
$
(471
)
 
$

 
$
(1,832,432
)
 
$
(1,832,903
)


16

AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 
Unrealized Losses on Cash Flow Hedges
 
Deferred Loss on the Settlement of the Treasury Rate Lock
 
Foreign
Currency
Items
 
Total
 Balance as of January 1, 2014
$
(1,869
)
 
$
(3,029
)
 
$
(306,322
)
 
$
(311,220
)
Other comprehensive loss before reclassifications, net of tax
(969
)
 

 
(194,091
)
 
(195,060
)
Amounts reclassified from accumulated other comprehensive loss, net of tax
1,342

 
599

 

 
1,941

Net current-period other comprehensive income (loss)
373

 
599

 
(194,091
)
 
(193,119
)
 Balance as of September 30, 2014
$
(1,496
)
 
$
(2,430
)
 
$
(500,413
)
 
$
(504,339
)

During the nine months ended September 30, 2015, $2.0 million related to the deferred loss on the settlement of the treasury rate lock was reclassified from Accumulated other comprehensive loss into Gain (loss) on retirement of long-term obligations in connection with redemption of the 7.000% Notes. The remaining losses on cash flow hedges have been reclassified into Interest expense in the accompanying condensed consolidated statements of operations and the associated tax effect of less than $0.1 million for each of the three and nine months ended September 30, 2015 and 2014 is included in Income tax provision.

9.
Income Taxes
The Company provides for income taxes at the end of each interim period based on the estimated effective tax rate for the full fiscal year. Cumulative adjustments to the Company’s estimate are recorded in the interim period in which a change in the estimated annual effective tax rate is determined. As a REIT, the Company continues to be subject to income taxes on the income of its TRSs and income taxation in foreign jurisdictions where it conducts international 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 in its QRSs. The Company is able to offset income in both its TRSs and QRSs by utilizing their respective net operating losses.

In 2013, the Company acquired MIP Tower Holdings LLC (“MIPT”), which had been organized and qualified as a REIT. The Company filed a tax election pursuant to which MIPT no longer operates as a separate REIT for federal and state income tax purposes, effective July 25, 2015. In connection with this and related elections, the Company incurred a one-time cash tax charge of approximately $93.0 million and a one-time deferred income tax benefit of $5.4 million in the third quarter of 2015.
The Company provides valuation allowances if, based on the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets.
As of September 30, 2015 and December 31, 2014, the total amount of unrecognized tax benefits that would impact the effective tax rate, if recognized, was approximately $26.5 million and $31.9 million, respectively. The amount of unrecognized tax benefits during the three and nine months ended September 30, 2015 includes additions to the Company’s existing tax positions, offset by foreign currency fluctuations and the expiration of the statute of limitations in certain jurisdictions. The Company expects the unrecognized tax benefits to change over the next 12 months if certain tax matters ultimately settle with the applicable taxing jurisdiction during this timeframe, as described in note 14 to the Company’s consolidated financial statements included in the 2014 Form 10-K. The impact of the amount of these changes to previously recorded uncertain tax positions could range from zero to $5.1 million.
The Company recorded penalties and income tax-related interest expense during the three and nine months ended September 30, 2015 of $0.7 million and $2.3 million, respectively, and during the three and nine months ended September 30, 2014 of $1.8 million and $4.8 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 each of the three and nine months ended September 30, 2015 by $3.1 million and during each of the three and nine months ending September 30, 2014 by $1.4 million. As of September 30, 2015 and December 31, 2014, the total amount of accrued income tax related interest and penalties included in Other non-current liabilities in the condensed consolidated balance sheets was $19.4 million and $24.9 million, respectively.



17

AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

10.
Stock-Based Compensation
The Company recognized stock-based compensation expense during the three and nine months ended September 30, 2015 of $18.3 million and $72.3 million, respectively, and stock-based compensation expense during the three and nine months ended September 30, 2014 of $18.3 million and $61.7 million, respectively. The Company capitalized stock-based compensation expense of $0.5 million and $1.6 million during the three and nine months ended September 30, 2015, respectively, and $0.4 million and $1.2 million during the three and nine months ended September 30, 2014, respectively, as property and equipment.
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 (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 of 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 over various periods, generally 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 September 30, 2015, the Company had the ability to grant stock-based awards with respect to an aggregate of 11.7 million shares of common stock under the 2007 Plan.
The Company’s Compensation Committee adopted a death, disability and retirement benefits program, which applies to equity awards granted on or after January 1, 2013 and provides for accelerated vesting and extended exercise periods of stock options and restricted stock units upon an employee’s death or permanent disability, or upon an employee’s qualified retirement provided certain eligibility criteria are met. Accordingly, for grants made on or after January 1, 2013, the Company recognizes compensation expense for stock options and RSUs over the shorter of (i) the four-year vesting period or (ii) the period from the date of grant to the date the employee becomes eligible for such retirement benefits, which may occur upon grant; and recognizes compensation expense for PSUs over the three-year vesting period, subject to adjustment based on the date the employee becomes eligible for such retirement benefits.
Stock Options—The Company’s option activity for the nine months ended September 30, 2015 was as follows:
 
Number of
Options
Outstanding as of January 1, 2015
6,508,435

Granted
2,004,100

Exercised
(441,626
)
Forfeited
(105,226
)
Expired
(1,475
)
Outstanding as of September 30, 2015
7,964,208

 
The fair value of each option granted during the nine months ended September 30, 2015 was estimated on the date of grant using the Black-Scholes option pricing model based on the assumptions noted in the table below.

Key assumptions used to apply this pricing model are as follows:
 
Range of risk-free interest rate
  
1.32%-1.62%

Weighted average risk-free interest rate
  
1.62
%
Expected life of option grants
  
4.5 years

Range of expected volatility of underlying stock price
  
21.09%-21.20%

Weighted average expected volatility of underlying stock price
  
21.09
%
Range of expected annual dividend yield
  
1.50%-1.85%


The weighted average grant date fair value per share during the nine months ended September 30, 2015 was $15.09. As of September 30, 2015, total unrecognized compensation expense related to unvested stock options was $33.7 million and is expected to be recognized over a weighted average period of approximately two years.
Restricted Stock Units and Performance-Based Restricted Stock Units—The Company’s RSU and PSU activity for the nine months ended September 30, 2015 was as follows:

18

AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 
RSUs
 
PSUs (1)
Outstanding as of January 1, 2015
1,758,817

 

Granted
692,340

 
23,379

Vested
(688,811
)
 

Forfeited
(93,746
)
 

Outstanding as of September 30, 2015
1,668,600

 
23,379

(1)
Represents the target number of shares issuable at the end of the three-year performance cycle attributable to the first year’s performance period.

Restricted Stock Units—As of September 30, 2015, total unrecognized compensation expense related to unvested RSUs granted under the 2007 Plan was $87.4 million and is expected to be recognized over a weighted average period of approximately two years.

Performance-Based Restricted Stock Units—During the nine months ended September 30, 2015, the Compensation Committee granted an aggregate of 70,135 PSUs to its executive officers and established the performance metric for this award. Threshold, target and maximum parameters were established for the metric for each year in the three-year performance period, and will be used to calculate the number of shares that will be issuable when the award vests, which may range from zero to 200 percent of the target amount. At the end of the three-year performance period, the number of shares that are earned and vest will depend on the degree of achievement against the pre-established performance goal. PSUs that have been earned over the performance period will be paid out in common stock at the end of the performance period, subject generally to the executive’s continued employment and will accrue dividend equivalents prior to vesting, which will be paid out only in respect of shares actually earned and vested. As the performance metric is tied to year-over-year growth and actual results for the metric will not be determined until the end of each respective fiscal year, the Company is unable to determine the annual target for the second and third years of the performance period for this award at this time. Accordingly, an aggregate of 46,756 PSUs granted on March 10, 2015 are not included in the table above. The grant date fair value per share of the PSUs for which terms have been established was $94.57.

During the three and nine months ended September 30, 2015, the Company recorded $0.8 million and $1.5 million, respectively, in stock-based compensation expense for equity awards in which the performance goals have been established and are probable of being achieved. The remaining unrecognized compensation expense related to these awards at September 30, 2015 was $1.3 million based on the Company’s current assessment of the probability of achieving the performance goals. The weighted-average period over which the cost will be recognized is approximately one year.

Employee Stock Purchase Plan—The Company maintains an employee stock purchase plan (“ESPP”) pursuant to which eligible employees may purchase shares of the Company’s common stock on the last day of each bi-annual offering period at a 15% discount of the lower of the closing market value on the first or last day of such offering period. The offering periods run from June 1 through November 30 and from December 1 through May 31 of each year. During the nine months ended September 30, 2015, employee contributions were accumulated to purchase approximately 66,000 shares under the ESPP.
    
Key assumptions used to apply the Black-Scholes pricing model for shares purchased through the ESPP during the nine months ended September 30, 2015, which resulted in a fair value per share of $16.40, were as follows:

Approximate risk-free interest rate
0.06
%
Expected life of shares
6 months

Expected volatility of underlying stock price over the option period
13.91
%
Expected annual dividend yield
1.85
%

11.    Equity
Common Stock Offering—On March 3, 2015, the Company completed a registered public offering of 23,500,000 shares of its common stock, par value $0.01 per share, at $97.00 per share. On March 5, 2015, the Company issued an additional 2,350,000 shares of common stock in connection with the underwriters’ exercise in full of their over-allotment option. Aggregate net proceeds were approximately $2.44 billion after deducting commissions and estimated expenses. The Company used the net proceeds from this offering to fund a portion of the Verizon Transaction.


19

AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Series B Preferred Stock Offering—On March 3, 2015, the Company completed a registered public offering of 12,500,000 depositary shares, each representing a 1/10th interest in a share of its 5.50% Mandatory Convertible Preferred Stock, Series B, par value $0.01 per share (the “Series B Preferred Stock”), at $100.00 per depositary share. On March 5, 2015, the Company issued an additional 1,250,000 depositary shares in connection with the underwriters’ exercise in full of their over-allotment option. Aggregate net proceeds were approximately $1.34 billion after deducting commissions and estimated expenses. The Company used the net proceeds from this offering to fund a portion of the Verizon Transaction. On March 3, 2015, upon receipt of the proceeds of this offering and the common stock offering described above, the Company terminated the commitment letter dated February 5, 2015 with Goldman Sachs Bank USA and Goldman Sachs Lending Partners LLC entered into in connection with the Verizon Transaction.

Unless converted or redeemed earlier, each share of the Series B Preferred Stock will convert automatically on February 15, 2018, into between 8.5911 and 10.3093 shares of common stock, depending on the applicable market value of the 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 Series B Preferred Stock provide that, unless full cumulative dividends have been paid or set aside for payment on all outstanding Series B Preferred Stock for all prior dividend periods, no dividends may be declared or paid on common stock.

Series A Preferred Stock—The Company has 6,000,000 shares outstanding of its 5.25% Mandatory Convertible Preferred Stock, Series A, par value $0.01 per share (the “Series A Preferred Stock” and, together with the Series B Preferred Stock, the “Mandatory Convertible Preferred Stock”). 

Unless converted earlier, each share of the Series A Preferred Stock will automatically convert on May 15, 2017, into between 0.9174 and 1.1468 shares of common stock, depending on the applicable market value of the common stock and subject to anti-dilution adjustments. Subject to certain restrictions, at any time prior to May 15, 2017, holders of the Series A Preferred Stock may elect to convert all or a portion of their shares into common stock at the minimum conversion rate then in effect.

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

Sales of Equity Securities—The Company receives proceeds from sales of its equity securities pursuant to the ESPP and upon exercise of stock options granted under its equity incentive plans. During the nine months ended September 30, 2015, the Company received an aggregate of $29.3 million in proceeds upon exercises of stock options and from the ESPP.
Distributions—During the nine months ended September 30, 2015, the Company declared or paid the following cash distributions:

20

AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Declaration Date
 
Payment Date
 
Record Date
 
Distribution per share
 
Aggregate Payment Amount (in millions)
Common Stock
 
 
 
 
 
 
 
 
December 2, 2014
 
January 13, 2015
 
December 16, 2014
 
$
0.38

 
$
150.7

March 5, 2015
 
April 28, 2015
 
April 10, 2015
 
$
0.42

 
$
177.7

May 21, 2015
 
July 16, 2015
 
June 17, 2015
 
$
0.44

 
$
186.2

September 10, 2015
 
October 7, 2015
 
September 23, 2015
 
$
0.46

 
$
194.8

 
 
 
 
 
 
 
 
 
Series A Preferred Stock
 
 
 
 
 
 
 
 
December 2, 2014
 
February 16, 2015
 
February 1, 2015
 
$
1.3125

 
$
7.9

April 14, 2015
 
May 15, 2015
 
May 1, 2015
 
$
1.3125

 
$
7.9

July 15, 2015
 
August 17, 2015
 
August 1, 2015
 
$
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