AMT 10-Q Quarterly Report Sept. 30, 2018

AMT 10-Q Quarter ended Sept. 30, 2018

Exhibits

Exhibits

AMERICAN TOWER CORP /MA/

10-Ks and 10-Qs

10-Q	Quarter ended Sept. 30, 2025
10-Q	Quarter ended June 30, 2025
10-Q	Quarter ended March 31, 2025
10-K	Fiscal year ended Dec. 31, 2024
10-Q	Quarter ended Sept. 30, 2024
10-Q	Quarter ended June 30, 2024
10-Q	Quarter ended March 31, 2024
10-K	Fiscal year ended Dec. 31, 2023
10-Q	Quarter ended Sept. 30, 2023
10-Q	Quarter ended June 30, 2023
10-Q	Quarter ended March 31, 2023
10-K	Fiscal year ended Dec. 31, 2022
10-Q	Quarter ended Sept. 30, 2022
10-Q	Quarter ended June 30, 2022
10-Q	Quarter ended March 31, 2022
10-K	Fiscal year ended Dec. 31, 2021
10-Q	Quarter ended Sept. 30, 2021
10-Q	Quarter ended June 30, 2021
10-Q	Quarter ended March 31, 2021
10-K	Fiscal year ended Dec. 31, 2020
10-Q	Quarter ended Sept. 30, 2020
10-Q	Quarter ended June 30, 2020
10-Q	Quarter ended March 31, 2020
10-K	Fiscal year ended Dec. 31, 2019
10-Q	Quarter ended Sept. 30, 2019
10-Q	Quarter ended June 30, 2019
10-Q	Quarter ended March 31, 2019
10-K	Fiscal year ended Dec. 31, 2018
10-Q	Quarter ended Sept. 30, 2018
10-Q	Quarter ended June 30, 2018
10-Q	Quarter ended March 31, 2018
10-K	Fiscal year ended Dec. 31, 2017
10-Q	Quarter ended Sept. 30, 2017
10-Q	Quarter ended June 30, 2017
10-Q	Quarter ended March 31, 2017
10-K	Fiscal year ended Dec. 31, 2016
10-Q	Quarter ended Sept. 30, 2016
10-Q	Quarter ended June 30, 2016
10-Q	Quarter ended March 31, 2016
10-K	Fiscal year ended Dec. 31, 2015
10-Q	Quarter ended Sept. 30, 2015
10-Q	Quarter ended June 30, 2015
10-Q	Quarter ended March 31, 2015
10-K	Fiscal year ended Dec. 31, 2014
10-Q	Quarter ended Sept. 30, 2014
10-Q	Quarter ended June 30, 2014
10-Q	Quarter ended March 31, 2014
10-K	Fiscal year ended Dec. 31, 2013
10-Q	Quarter ended Sept. 30, 2013
10-Q	Quarter ended June 30, 2013
10-Q	Quarter ended March 31, 2013
10-K	Fiscal year ended Dec. 31, 2012
10-Q	Quarter ended Sept. 30, 2012
10-Q	Quarter ended June 30, 2012
10-Q	Quarter ended March 31, 2012
10-K	Fiscal year ended Dec. 31, 2011
10-Q	Quarter ended Sept. 30, 2011
10-Q	Quarter ended June 30, 2011
10-Q	Quarter ended March 31, 2011
10-K	Fiscal year ended Dec. 31, 2010
10-Q	Quarter ended Sept. 30, 2010
10-Q	Quarter ended June 30, 2010
10-Q	Quarter ended March 31, 2010
10-K	Fiscal year ended Dec. 31, 2009

PROXIES

DEF 14A	Filed on May 14, 2025
DEF 14A	Filed on April 2, 2025
DEF 14A	Filed on May 22, 2024
DEF 14A	Filed on April 10, 2024
DEF 14A	Filed on April 12, 2023
DEF 14A	Filed on May 18, 2022
DEF 14A	Filed on April 6, 2022
DEF 14A	Filed on April 14, 2021
DEF 14A	Filed on April 6, 2020
DEF 14A	Filed on April 10, 2019
DEF 14A	Filed on April 12, 2018
DEF 14A	Filed on April 19, 2017
DEF 14A	Filed on April 22, 2016
DEF 14A	Filed on April 9, 2015
DEF 14A	Filed on April 4, 2014
DEF 14A	Filed on April 11, 2013
DEF 14A	Filed on April 27, 2012
DEF 14A	Filed on April 7, 2011
DEF 14A	Filed on April 1, 2010

10-Q 1 amt10qq32018.htm 10-Q Document

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, 2018.



¨	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 every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



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 October 23, 2018 , there were 440,487,861 shares of common stock outstanding.

AMERICAN TOWER CORPORATION

TABLE OF CONTENTS

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, 2018



		Page Nos.

PART I. FINANCIAL INFORMATION
Item 1.	Unaudited Consolidated and Condensed Consolidated Financial Statements		1
	Consolidated Balance Sheets as of September 30, 2018 and December 31, 2017		1
	Consolidated Statements of Operations for the three and nine months ended September 30, 2018 and 2017		2
	Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2018 and 2017		3
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2018 and 2017		4
	Consolidated Statements of Equity for the nine months ended September 30, 2018 and 2017		5
	Notes to Consolidated and Condensed Consolidated Financial Statements		6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		34
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		60
Item 4.	Controls and Procedures		60
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings		62
Item 1A.	Risk Factors		62
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		62
Item 6.	Exhibits		63
Signatures			64



PART I.	FINANCIAL INFORMATION



ITEM 1.	UNAUDITED CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in millions, except share count and per share data)



	September 30, 2018			December 31, 2017
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	1,026.5		$	802.1
Restricted cash	266.8			152.8
Short-term investments	68.2			1.0
Accounts receivable, net	511.1			513.6
Prepaid and other current assets	564.4			568.6
Total current assets	2,437.0			2,038.1
PROPERTY AND EQUIPMENT, net	10,996.3			11,101.0
GOODWILL	5,463.4			5,638.4
OTHER INTANGIBLE ASSETS, net	11,481.7			11,783.3
DEFERRED TAX ASSET	173.1			204.4
DEFERRED RENT ASSET	1,547.4			1,499.0
NOTES RECEIVABLE AND OTHER NON-CURRENT ASSETS	978.3			950.1
TOTAL	$	33,077.2		$	33,214.3
LIABILITIES
CURRENT LIABILITIES:
Accounts payable	$	122.9		$	142.9
Accrued expenses	863.1			854.3
Distributions payable	354.2			304.4
Accrued interest	121.6			166.9
Current portion of long-term obligations	2,841.3			774.8
Unearned revenue	276.6			268.8
Total current liabilities	4,579.7			2,512.1
LONG-TERM OBLIGATIONS	18,422.9			19,430.3
ASSET RETIREMENT OBLIGATIONS	1,196.5			1,175.3
DEFERRED TAX LIABILITY	706.2			898.1
OTHER NON-CURRENT LIABILITIES	1,288.4			1,244.2
Total liabilities	26,193.7			25,260.0
COMMITMENTS AND CONTINGENCIES
REDEEMABLE NONCONTROLLING INTERESTS	954.8			1,126.2
EQUITY (shares in thousands):
Preferred stock: $.01 par value; 20,000 shares authorized;
5.50%, Series B, 1,375 shares issued, 0 and 1,375 shares outstanding; aggregate liquidation value of $0.0 and $1.4, respectively	—			0.0
Common stock: $.01 par value; 1,000,000 shares authorized; 451,030 and 437,729 shares issued; and 440,775 and 428,820 shares outstanding, respectively	4.5			4.4
Additional paid-in capital	10,310.0			10,247.5
Distributions in excess of earnings	(1,104.3		)	(1,058.1		)
Accumulated other comprehensive loss	(2,696.3		)	(1,978.3		)
Treasury stock (10,255 and 8,909 shares at cost, respectively)	(1,163.2		)	(974.0		)
Total American Tower Corporation equity	5,350.7			6,241.5
Noncontrolling interests	578.0			586.6
Total equity	5,928.7			6,828.1
TOTAL	$	33,077.2		$	33,214.3

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

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except share and per share data)



	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
REVENUES:
Property	$	1,751.6		$	1,655.4		$	5,211.4		$	4,887.6
Services	33.9			25.3			96.8			71.8
Total operating revenues	1,785.5			1,680.7			5,308.2			4,959.4
OPERATING EXPENSES:
Costs of operations (exclusive of items shown separately below):
Property (including stock-based compensation expense of $0.8, $0.5, $2.0 and $1.8, respectively)	543.1			511.2			1,597.7			1,504.6
Services (including stock-based compensation expense of $0.2, $0.2, $0.7 and $0.6, respectively)	13.6			8.6			39.2			25.1
Depreciation, amortization and accretion	448.9			432.3			1,344.9			1,249.8
Selling, general, administrative and development expense (including stock-based compensation expense of $42.8, $23.7, $108.6 and $84.0, respectively)	177.9			148.0			540.7			465.9
Other operating expenses	34.8			19.5			269.6			44.6
Total operating expenses	1,218.3			1,119.6			3,792.1			3,290.0
OPERATING INCOME	567.2			561.1			1,516.1			1,669.4
OTHER INCOME (EXPENSE):
Interest income (expense), TV Azteca (net of interest expense of $0.9, $0.3, $1.2 and $0.9, respectively)	0.6			2.7			(0.1		)	8.2
Interest income	10.1			8.4			43.9			26.6
Interest expense	(209.2		)	(188.8		)	(616.7		)	(559.5		)
Loss on retirement of long-term obligations	—			(14.2		)	—			(69.9		)
Other income (expense) (including unrealized foreign currency gains (losses) of $7.4, ($5.3), ($6.8) and $30.4, respectively)	21.1			(1.1		)	14.1			39.9
Total other expense	(177.4		)	(193.0		)	(558.8		)	(554.7		)
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	389.8			368.1			957.3			1,114.7
Income tax (provision) benefit	(12.5		)	(33.4		)	14.7			(84.1		)
NET INCOME	377.3			334.7			972.0			1,030.6
Net income attributable to noncontrolling interests	(10.4		)	(17.4		)	(13.2		)	(30.2		)
NET INCOME ATTRIBUTABLE TO AMERICAN TOWER CORPORATION STOCKHOLDERS	366.9			317.3			958.8			1,000.4
Dividends on preferred stock	—			(18.9		)	(9.4		)	(68.5		)
NET INCOME ATTRIBUTABLE TO AMERICAN TOWER CORPORATION COMMON STOCKHOLDERS	$	366.9		$	298.4		$	949.4		$	931.9
NET INCOME PER COMMON SHARE AMOUNTS:
Basic net income attributable to American Tower Corporation common stockholders	$	0.83		$	0.70		$	2.16		$	2.18
Diluted net income attributable to American Tower Corporation common stockholders	$	0.83		$	0.69		$	2.15		$	2.16
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (in thousands):
BASIC	440,889			429,281			439,191			427,960
DILUTED	444,121			432,831			442,468			431,319
DISTRIBUTIONS DECLARED PER COMMON SHARE	$	0.79		$	0.66		$	2.31		$	1.92

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

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions)



	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Net income	$	377.3		$	334.7		$	972.0		$	1,030.6
Other comprehensive income (loss):
Changes in fair value of cash flow hedges, net of tax expense of $0.0 for all periods	0.0			0.0			0.0			(0.3		)
Reclassification of unrealized gains on cash flow hedges to net income, net of tax expense of $0.0 for all periods	0.0			0.0			0.2			(0.1		)
Adjustment to redeemable noncontrolling interest	—			—			78.8			—
Purchase of noncontrolling interest	—			—			0.5			—
Foreign currency translation adjustments, net of tax expense (benefit) of $1.0, $2.3, ($2.8) and $4.7, respectively	(248.5		)	12.6			(957.1		)	252.0
Other comprehensive (loss) income	(248.5		)	12.6			(877.6		)	251.6
Comprehensive income	128.8			347.3			94.4			1,282.2
Comprehensive loss (income) attributable to noncontrolling interests	51.9			(20.2		)	146.4			(121.5		)
Comprehensive income attributable to American Tower Corporation stockholders	$	180.7		$	327.1		$	240.8		$	1,160.7

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

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)



	Nine Months Ended September 30,
	2018			2017
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	972.0		$	1,030.6
Adjustments to reconcile net income to cash provided by operating activities
Depreciation, amortization and accretion	1,344.9			1,249.8
Stock-based compensation expense	111.3			86.4
Loss on early retirement of long-term obligations	—			69.9
Other non-cash items reflected in statements of operations	194.5			(6.6		)
Increase in net deferred rent balances	(23.9		)	(106.0		)
Increase in assets	(143.6		)	(265.6		)
Increase in liabilities	29.9			78.1
Cash provided by operating activities	2,485.1			2,136.6
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for purchase of property and equipment and construction activities	(610.4		)	(555.0		)
Payments for acquisitions, net of cash acquired	(1,437.8		)	(956.9		)
Proceeds from sale of short-term investments and other non-current assets	1,097.0			10.1
Payments for short-term investments	(1,072.2		)	—
Deposits and other	(31.7		)	(8.7		)
Cash used for investing activities	(2,055.1		)	(1,510.5		)
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings under credit facilities	2,913.3			3,667.0
Proceeds from issuance of senior notes, net	584.9			1,279.4
Proceeds from term loan	1,500.0			—
Proceeds from issuance of securities in securitization transaction	500.0			—
Repayments of notes payable, credit facilities, senior notes, secured debt and capital leases	(4,329.2		)	(4,295.7		)
(Distributions to) contributions from noncontrolling interest holders, net	(14.3		)	264.7
Purchases of common stock	(181.2		)	(669.7		)
Proceeds from stock options and ESPP	54.1			105.7
Distributions paid on common stock	(975.1		)	(789.5		)
Distributions paid on preferred stock	(18.9		)	(72.5		)
Payment for early retirement of long-term obligations	—			(75.3		)
Deferred financing costs and other financing activities	(47.4		)	(28.0		)
Purchase of noncontrolling interest	(20.5		)	—
Cash used for financing activities	(34.3		)	(613.9		)
Net effect of changes in foreign currency exchange rates on cash and cash equivalents, and restricted cash	(57.3		)	6.0
NET INCREASE IN CASH AND CASH EQUIVALENTS, AND RESTRICTED CASH	338.4			18.2
CASH AND CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF PERIOD	954.9			936.5
CASH AND CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD	$	1,293.3		$	954.7
CASH PAID FOR INCOME TAXES (NET OF REFUNDS OF $24.9 AND $19.8, RESPECTIVELY)	$	75.3		$	87.7
CASH PAID FOR INTEREST	$	640.8		$	584.3
NON-CASH INVESTING AND FINANCING ACTIVITIES:
(Decrease) increase in accounts payable and accrued expenses for purchases of property and equipment and construction activities	$	(22.9	)	$	21.0
Purchases of property and equipment under capital leases	$	39.4		$	33.7
Acquisition of Commercialization Rights	$	24.8		$	—

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

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

(in millions, share counts in thousands)



	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			Additional Paid-in Capital			Accumulated Other Comprehensive Loss			Distributions in Excess of Earnings			Noncontrolling Interest			Total Equity
BALANCE, JANUARY 1, 2017	6,000		$	0.1		1,375		$	0.0	429,913	$	4.3	(2,810	)	$	(207.7	)	$	10,043.5		$	(1,999.3	)	$	(1,077.0	)	$	212.3		$	6,976.2
Stock-based compensation related activity	—		—			—			—	1,942	0.0		—		—			164.4			—			—			—			164.4
Issuance of common stock—stock purchase plan	—		—			—			—	53	0.0		—		—			4.6			—			—			—			4.6
Conversion of preferred stock	(6,000	)	(0.1		)	0			0.0	5,602	0.1		—		—			(0.0		)	—			—			—			0.0
Treasury stock activity	—		—			—			—	—	—		(5,457	)	(676.9		)	—			—			—			—			(676.9		)
Changes in fair value of cash flow hedges, net of tax	—		—			—			—	—	—		—		—			—			(0.3		)	—			—			(0.3		)
Reclassification of unrealized gains on cash flow hedges to net income	—		—			—			—	—	—		—		—			—			(0.1		)	—			—			(0.1		)
Foreign currency translation adjustment, net of tax	—		—			—			—	—	—		—		—			—			160.7			—			47.9			208.6
Contributions from noncontrolling interest	—		—			—			—	—	—		—		—			—			—			—			314.1			314.1
Distributions to noncontrolling interest	—		—			—			—	—	—		—		—			—			—			—			(0.8		)	(0.8		)
Common stock distributions declared	—		—			—			—	—	—		—		—			—			—			(826.1		)	—			(826.1		)
Preferred stock dividends declared	—		—			—			—	—	—		—		—			—			—			(72.5		)	—			(72.5		)
Net income	—		—			—			—	—	—		—		—			—			—			1,000.4			18.0			1,018.4
BALANCE, SEPTEMBER 30, 2017	—		$	—		1,375		$	0.0	437,510	$	4.4	(8,267	)	$	(884.6	)	$	10,212.5		$	(1,839.0	)	$	(975.2	)	$	591.5		$	7,109.6

BALANCE, JANUARY 1, 2018	—		$	—		1,375		$	0.0	437,729	$	4.4	(8,909	)	$	(974.0	)	$	10,247.5		$	(1,978.3	)	$	(1,058.1	)	$	586.6		$	6,828.1
Stock-based compensation related activity	—		—			—			—	1,236	0.0		—		—			124.5			—			—			—			124.5
Issuance of common stock—stock purchase plan	—		—			—			—	45	0.0		—		—			5.3			—			—			—			5.3
Conversion of preferred stock	—		—			(1,375	)		0.0	12,020	0.1		—		—			(0.1		)	—			—			—			—
Treasury stock activity	—		—			—			—	—	—		(1,346	)	(189.2		)	—			—			—			—			(189.2		)
Changes in fair value of cash flow hedges, net of tax	—		—			—			—	—	—		—		—			—			0.0			—			—			0.0
Reclassification of unrealized losses on cash flow hedges to net income	—		—			—			—	—	—		—		—			—			0.2			—			—			0.2
Foreign currency translation adjustment, net of tax	—		—			—			—	—	—		—		—			—			(797.5		)	—			(30.1		)	(827.6		)
Adjustment to redeemable noncontrolling interest	—		—			—			—	—	—		—		—			(50.7		)	78.8			—			—			28.1
Distributions to noncontrolling interest	—		—			—			—	—	—		—		—			—			—			—			(1.0		)	(1.0		)
Purchase of noncontrolling interest	—		—			—			—	—	—		—		—			(16.5		)	0.5			—			(4.5		)	(20.5		)
Impact of revenue recognition standard adoption	—		—			—			—	—	—		—		—			—			—			38.4			—			38.4
Common stock distributions declared	—		—			—			—	—	—		—		—			—			—			(1,024.5		)	—			(1,024.5		)
Preferred stock dividends declared	—		—			—			—	—	—		—		—			—			—			(18.9		)	—			(18.9		)
Net income	—		—			—			—	—	—		—		—			—			—			958.8			27.0			985.8
BALANCE, SEPTEMBER 30, 2018	—		$	—		—		$	—	451,030	$	4.5	(10,255	)	$	(1,163.2	)	$	10,310.0		$	(2,696.3	)	$	(1,104.3	)	$	578.0		$	5,928.7

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

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(tabular amounts in millions, unless otherwise noted)


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

The Company’s portfolio primarily consists of towers that it owns and towers that it operates pursuant to long-term lease arrangements, as well as distributed antenna system (“DAS”) networks, which provide seamless coverage solutions in certain in-building and 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, fiber and property interests that it leases primarily to communications service providers and third-party tower operators.

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

The Company operates as a real estate investment trust for U.S. federal income tax purposes (“REIT”). Accordingly, the Company generally is not required to pay U.S. federal income taxes on income generated by its REIT operations, including the income derived from leasing space on its towers, as it 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 classification for U.S. tax purposes, continue to be subject to taxation in the 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 September 30, 2018 , the Company’s REIT-qualified businesses included its U.S. tower leasing business, its operations in Nigeria, most of its operations in Costa Rica and Mexico, a majority of its operations in Germany and a majority of its indoor DAS networks 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 “SEC”). The financial information included herein is unaudited. However, the Company believes that all adjustments, which are of a normal and recurring nature, 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, 2017 (the “ 2017 Form 10-K”). The results of operations for the three and nine months ended September 30, 2018 are not necessarily indicative of the results that may be expected for the entire year.

Principles of Consolidation and Basis of Presentation —The accompanying consolidated and condensed consolidated financial statements include the accounts of the Company and those entities in which it has a controlling interest. Investments in entities that the Company does not control are accounted for using the equity or cost method, depending upon the Company’s ability to exercise significant influence over operating and financial policies. All intercompany accounts and transactions have been eliminated. As of September 30, 2018 , the Company holds (i) a 51% controlling interest, and MTN Group Limited holds a 49% noncontrolling interest, in each of two joint ventures, one in Ghana and

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(tabular amounts in millions, unless otherwise noted)

one in Uganda, (ii) a 51% controlling interest, and PGGM holds a 49% noncontrolling interest, in a joint venture that primarily consists of operations in Germany and France, (iii) an approximate 81% controlling interest, and South African investors hold an approximate 19% noncontrolling interest, in a subsidiary of the Company in South Africa and (iv) a 63% controlling interest in ATC Telecom Infrastructure Private Limited (“ATC TIPL”), formerly Viom Networks Limited (“Viom”), in India.

During the nine months ended September 30, 2018, the Company purchased approximately 6% of the interest in a subsidiary of the Company in South Africa from one of its local partners for $20.5 million , which resulted in an increase in the Company’s controlling interest from approximately 75% to approximately 81% . The purchase is reflected in the consolidated statements of equity as a reduction of Additional paid-in capital of $16.5 million , a decrease in Accumulated other comprehensive loss of $0.5 million and a reduction in Noncontrolling interest of $4.5 million .

Significant Accounting Policies —The Company’s significant accounting policies are described in note 1 to the Company’s consolidated financial statements included in the 2017 Form 10-K. There have been no material changes to the Company’s significant accounting policies during the nine months ended September 30, 2018 , except the adoption of new revenue recognition guidance, as discussed below.

Adoption of Highly Inflationary Accounting in Argentina —The Argentinean economy was deemed to be highly inflationary as of the second quarter of 2018 and, as a result, the Company adopted highly inflationary accounting as of July 1, 2018 for its subsidiary in Argentina. Under highly inflationary accounting, the functional currency of its subsidiary in Argentina became the U.S. Dollar. All monetary and non-monetary assets and liabilities were remeasured at the U.S. Dollar to Argentinean Peso exchange rate of 1 to 29.4 as of June 30, 2018. These amounts became the new basis for those assets and liabilities as of July 1, 2018. Non-monetary assets and liabilities, as well as the corresponding income statement activities such as depreciation, amortization and equity, will continue to be measured at the historical exchange rate. This change did not have a material impact on the Company’s financial statements as Argentina’s assets and revenue are each less than 1% of consolidated assets and revenue, respectively.

Changes to Prior-Period Amounts —The Company is now disclosing its results in millions rather than thousands and, as a result, certain rounding adjustments have been made to prior-period amounts.

Cash and Cash Equivalents and Restricted Cash —The reconciliation of cash and cash equivalents and restricted cash reported within the applicable balance sheet that sum to the total of the same such amount shown in the statement of cash flows is as follows:



	Nine Months Ended September 30,
	2018		2017
Cash and cash equivalents	$	1,026.5	$	799.5
Restricted cash	266.8		155.2
Total cash and cash equivalents and restricted cash	$	1,293.3	$	954.7

TV Azteca Note Receivable —In 2000, the Company loaned TV Azteca, S.A. de C.V. (“TV Azteca”), the owner of a major national television network in Mexico, $119.8 million . The loan had an interest rate of 13.11% , payable quarterly, which at the time of issuance was determined to be below market and therefore the Company recorded a corresponding discount. The term of the loan was 70 years , and the Company amortized the discount on the loan to Interest income, TV Azteca, net of interest expense on its consolidated statements of operations using the effective interest method over the term of the loan. As of December 31, 2017, the outstanding balance on the loan was $91.8 million , or $82.9 million , net of discount. On September 25, 2018, TV Azteca paid $59.5 million to extinguish this loan and simultaneously restructured its Economic Rights agreement, which the Company estimates has a fair value of $24.8 million .

In exchange for the issuance of the below market interest rate loan described above and the annual payment of $1.5 million to TV Azteca, which the Company accounted for as a capital lease, the Company had the right to market and lease the unused tower space on the broadcast towers (the “Economic Rights”).

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(tabular amounts in millions, unless otherwise noted)

TV Azteca Economic Rights and Commercialization Rights —In conjunction with the note extinguishment described above, the Company restructured the Economic Rights Agreement, as described in note 5 in the 2017 Form 10-K, into a Commercialization Rights agreement. Under this agreement, the Company has the exclusive right to commercialize available space on approximately 190 TV Azteca broadcast towers for the installation, licensing and operation of equipment for wireless telecommunications service, radio and television broadcasting on the towers (the “Commercialization Rights”) until September 2038, during which time the Company is entitled to all revenues derived from the Commercialization Rights. Subsequent to 2038, the Company is required to pay quarterly to TV Azteca a market rate of 25% of the gross revenues associated with the Commercialization Rights, and annually, TV Azteca has the right to repurchase the Commercialization Rights for the then-market price.

As a result of entering into the Commercialization Rights agreement, the obligations under the capital lease were cancelled and the remaining capital lease liability of $14.1 million , the deferred financing costs of $1.5 million , and the net carrying value of the original Economic Rights asset of $3.0 million were written off, which resulted in a gain of $9.7 million which was recorded in Other income (expense).

Revenue —The new revenue recognition accounting standard requires entities to recognize revenue when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. On January 1, 2018, the Company adopted the new revenue recognition standard using the modified retrospective method applied to contracts that were not completed as of January 1, 2018. Results for reporting periods beginning January 1, 2018 are presented under the new standard, while prior-period amounts are not adjusted and continue to be reported in accordance with accounting under the previously applicable guidance.

The Company recorded a net reduction to opening Distributions in excess of earnings in its consolidated balance sheet of $38.4 million as of January 1, 2018 due to the cumulative impact of adopting the new revenue recognition standard. The impact is primarily related to the Company’s site inspection revenue, which is now recognized at the point in time when the inspection service is completed. For the three and nine months ended September 30, 2018, the impact of applying the new standard was a decrease of $0.6 million and an increase of $4.9 million , respectively.

The adoption of the new revenue recognition accounting standard did not have a material impact on the Company’s revenue recognition patterns. Most of the Company’s revenue is derived from leasing arrangements and is accounted for as lease revenue. A small portion of the Company’s revenue is either derived from non-lease performance obligations within the lease arrangements or from other agreements with its tenants. This revenue, designated non-lease revenue, is recognized when control of the promised goods or services is transferred to the tenants in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.

Since most of the Company’s contracts are leases, costs to enter into lease arrangements are capitalized under the applicable lease accounting guidance. Costs incurred to obtain non-lease contracts that are capitalized primarily relate to DAS and are not material to the consolidated financial statements. The Company has excluded sales tax, value-added tax and similar taxes from non-lease revenue.

Non-lease revenue is disaggregated by geography in a manner consistent with the Company’s business segments, which are discussed further in note 14 to the consolidated and condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. A summary of non-lease revenue disaggregated by source and geography is as follows:

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(tabular amounts in millions, unless otherwise noted)



Three Months Ended September 30, 2018	U.S.		Asia		EMEA		Latin America		Total
Power and fuel pass-through revenue	$	—	$	120.2	$	34.3	$	3.8	$	158.3
Other non-lease revenue	66.7		1.6		0.4		23.6		92.3
Total non-lease property revenue	$	66.7	$	121.8	$	34.7	$	27.4	$	250.6
Services revenue	33.9		—		—		—		33.9
Total non-lease revenue	$	100.6	$	121.8	$	34.7	$	27.4	$	284.5
Property lease revenue	891.0		201.3		131.9		276.8		1,501.0
Total revenue	$	991.6	$	323.1	$	166.6	$	304.2	$	1,785.5



Nine Months Ended September 30, 2018	U.S.		Asia		EMEA		Latin America		Total
Power and fuel pass-through revenue	$	—	$	325.9	$	102.1	$	12.8	$	440.8
Other non-lease revenue	203.4		5.0		1.1		71.9		281.4
Total non-lease property revenue	$	203.4	$	330.9	$	103.2	$	84.7	$	722.2
Services revenue	96.8		—		—		—		96.8
Total non-lease revenue	$	300.2	$	330.9	$	103.2	$	84.7	$	819.0
Property lease revenue	2,642.7		573.1		404.3		869.1		4,489.2
Total revenue	$	2,942.9	$	904.0	$	507.5	$	953.8	$	5,308.2

Power and fuel pass-through revenue —Most of the Company’s leasing arrangements outside of the U.S. require that the Company provide power to the communications site through an electrical grid connection, diesel fuel generators or other sources and permit the Company to pass through the costs of, or otherwise charge for, these services. The Company recognizes revenue received in connection with such services as power and fuel pass-through revenue. Many arrangements require that the communications site has power for a specified percentage of time. In most such cases, if delivery of power falls below the specified service level, a corresponding reduction in revenue is recorded. The Company has determined that this performance obligation is satisfied over time for the duration of the arrangement.

Other significant judgments related to this revenue stream are the (i) determination that the Company is a principal in these transactions and revenue is therefore recorded on a gross basis and (ii) service level related adjustments to revenue.

Other non-lease revenue —Other non-lease revenue consists primarily of revenue generated from DAS, fiber and other property related revenue. DAS and fiber arrangements require that the Company provide the tenant the right to use the applicable communications infrastructure. Performance obligations are satisfied over time for the duration of the arrangements. Other property related revenue streams, which include site inspections, are not material on either an individual or consolidated basis.

Services revenue —The Company offers tower-related services in the United States. These services include AZP and structural analysis services. There is a single performance obligation related to AZP, and revenue is recognized over time based on milestones achieved, which are determined based on costs incurred. Structural analysis services may have more than one performance obligation, contingent upon the number of contracted services. Revenue is recognized at the point in time the services are completed.

Some of the Company’s contracts with tenants contain multiple performance obligations. For these arrangements, the Company allocates revenue to each performance obligation based on its relative standalone selling price, which is typically based on the price charged to tenants.

Information about receivables, contract assets and contract liabilities from contracts with tenants is as follows:

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(tabular amounts in millions, unless otherwise noted)



	January 1, 2018		September 30, 2018
Accounts receivable	$	222.2	$	269.1
Prepaids and other current assets	79.7		134.2
Notes receivable and other non-current assets	24.2		22.0
Unearned revenue	26.6		36.6
Other non-current liabilities	68.5		55.7

The Company records unearned revenue when payments are received from tenants in advance of the completion of the Company’s performance obligations. Long-term unearned revenue is included in Other non-current liabilities. The increase in the Unearned revenue for the three and nine months ended September 30, 2018 is due to payments received, offset by $23.6 million and $61.1 million of revenue recognized in the three months and nine months ended September 30, 2018, respectively, that was included in the Unearned revenue balance as of January 1, 2018. There was $0.2 million and $0.4 million of revenue recognized from Other non-current liabilities during the three and nine months ended September 30, 2018, respectively.

The Company records unbilled receivables, which are included in Prepaids and other current assets, when it has completed a performance obligation prior to its ability to bill under the customer arrangement. Other contract assets are included in Notes receivable and other non-current assets. The decrease in unbilled receivables attributable to revenue recognized during the three and nine months ended September 30, 2018 was $0.4 million and $0.8 million , respectively. The change in contract assets attributable to revenue recognized during each of the three and nine months ended September 30, 2018 was less than $0.1 million .

The Company does not disclose the value of unsatisfied performance obligations for agreements (i) with an original expected length of one year or less or (ii) for which it recognizes revenue at the amount to which it has the right to invoice for services performed.

Accounting Standards Updates

Lease Accounting —In February 2016, the Financial Accounting Standards Board (the “FASB”) issued 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.

In January 2018, the FASB issued guidance on the treatment of land easements. The guidance provides a practical expedient to not evaluate existing or expired land easements under the new lease accounting standards if those easements were not previously accounted for as leases under the existing lease guidance. The Company does not expect the adoption of this guidance to have a material impact on its financial statements or its adoption of the lease accounting guidance.

In July 2018, the FASB issued additional guidance on the accounting for leases. The guidance provides companies with another transition method by allowing entities to recognize a cumulative-effect adjustment to the opening balance of retained earnings as of the date of adoption. Under this method, previously presented years’ financial positions and results would not be adjusted. The new guidance also provides lessors with a practical expedient, by class of underlying asset, to not separate non-lease components from the associated lease component if the non-lease components would otherwise be accounted for under the new revenue recognition standard and both the timing and pattern of transfer are the same for the non-lease components and associated lease component and, if accounted for separately, the lease component would be classified as an operating lease.

The lease accounting guidance is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2018. The Company (i) has established a multidisciplinary team to assess and implement the guidance, (ii) expects the guidance to have a material impact on its consolidated balance sheets due to the recording of right of use assets and lease liabilities for leases in which it is a lessee and which it currently treats as operating leases and (iii) continues to evaluate the impact of the new guidance.

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(tabular amounts in millions, unless otherwise noted)

Other Updates

In January 2016, the FASB issued 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 adoption of this guidance did not have a material impact on the Company’s financial statements.

In January 2017, the FASB issued guidance on accounting for goodwill impairments. The guidance eliminates Step 2 from the goodwill impairment test and requires, among other things, recognition of an impairment loss when the carrying value of a reporting unit exceeds its fair value. The loss recognized is limited to the total amount of goodwill allocated to that reporting unit. The guidance is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company does not expect the adoption of this guidance to have a material impact on its financial statements.

In August 2017, the FASB issued guidance on hedge and derivative accounting. The guidance simplifies accounting rules around hedge accounting and the disclosures of hedging arrangements. Among other things, the guidance eliminates the need to separately measure and report hedge ineffectiveness and generally requires the entire change in fair value of a hedging instrument to be presented in the same income statement line as the hedged item. The guidance is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. The Company does not expect the adoption of this guidance to have a material impact on its financial statements.

In February 2018, the FASB issued guidance on the treatment of tax effects that are presented in other comprehensive income. The guidance allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects as a result of the December 2017 legislation commonly referred to as the Tax Cuts and Jobs Act. The guidance is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. The Company does not expect the adoption of this guidance to have a material impact on its financial statements.

In August 2018, the FASB issued guidance on fair value disclosures. The guidance modifies the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. An entity is permitted to early adopt any removed or modified disclosures and delay adoption of the additional disclosures until their effective date. The Company does not expect the adoption of this guidance to have a material impact on its financial statements.

Other Disclosure Requirement Updates

In August 2018, the SEC issued a final rule that amends certain of its disclosure requirements. Among other amendments, the final rule extends to interim periods the annual disclosure requirement of presenting changes in stockholders’ equity and the amount of dividends per share for each class of shares and deletes the provisions of the rules that require the presentation of dividends per share on the face of the income statement for interim periods, moving the required disclosure to the analysis of changes in stockholders’ equity. The final rule will be effective as of November 5, 2018. The Company does not expect these requirements to have a material impact on its financial statements.

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(tabular amounts in millions, unless otherwise noted)

2. PREPAID AND OTHER CURRENT ASSETS

Prepaid and other current assets consisted of the following:



	As of
	September 30, 2018		December 31, 2017
Unbilled receivables	$	149.8	$	107.9
Prepaid operating ground leases	150.9		148.6
Prepaid income tax	72.4		136.5
Value added tax and other consumption tax receivables	83.2		64.2
Prepaid assets	47.9		39.6
Other miscellaneous current assets	60.2		71.8
Prepaid and other current assets	$	564.4	$	568.6

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:



	Property											Services		Total
	U.S.		Asia			EMEA			Latin America			Services		Total
Balance as of January 1, 2018	$	3,379.2	$	1,095.0		$	404.9		$	757.3		$	2.0	$	5,638.4
Additions and adjustments (1)	—		45.0			—			(5.8		)	—		39.2
Effect of foreign currency translation	—		(133.3		)	(19.9		)	(61.0		)	—		(214.2		)
Balance as of September 30, 2018	$	3,379.2	$	1,006.7		$	385.0		$	690.5		$	2.0	$	5,463.4

___________


(1)	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 September 30, 2018							As of December 31, 2017
	Estimated Useful Lives	Gross Carrying Value		Accumulated Amortization			Net Book Value		Gross Carrying Value		Accumulated Amortization			Net Book Value
	(years)
Acquired network location intangibles (1)	Up to 20	$	4,840.2	$	(1,669.2	)	$	3,171.0	$	4,858.8	$	(1,525.3	)	$	3,333.5
Acquired tenant-related intangibles	15-20	11,337.5		(3,092.8		)	8,244.7		11,150.9		(2,754.7		)	8,396.2
Acquired licenses and other intangibles	3-20	79.8		(13.8		)	66.0		58.8		(8.1		)	50.7
Economic Rights, TV Azteca (2)	70	—		—			—		14.5		(11.6		)	2.9
Total other intangible assets		$	16,257.5	$	(4,775.8	)	$	11,481.7	$	16,083.0	$	(4,299.7	)	$	11,783.3

_______________


(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.


(2)	As discussed in note 1, in conjunction with the extinguishment of a note from TV Azteca, the Company restructured the Economic Rights Agreement and wrote off the corresponding asset. The intangible asset related to the Commercialization Rights agreement with TV Azteca is included in Acquired licenses and other intangibles.

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(tabular amounts in millions, unless otherwise noted)

The acquired network location intangibles represent the value to the Company of the incremental revenue growth that could potentially be obtained from leasing the excess capacity on acquired communications sites. The acquired tenant-related intangibles typically represent the value to the Company of tenant contracts and relationships in place at the time of an acquisition or similar transaction, including assumptions regarding estimated renewals.

The Company amortizes its acquired network location intangibles and tenant-related intangibles on a straight-line basis over their estimated useful lives. As of September 30, 2018 , the remaining weighted average amortization period of the Company’s intangible assets was 14 years. Amortization of intangible assets for the three and nine months ended September 30, 2018 was $207.4 million and $615.0 million , respectively, and amortization of intangible assets for the three and nine months ended September 30, 2017 was $203.6 million and $579.0 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:




Remainder of 2018 ⁽¹⁾	$	514.3
2019	773.6
2020	754.4
2021	738.5
2022	734.4
2023	730.3


(1)	Reflects the revised amortization for the Tata Teleservices Limited (“Tata Teleservices”) tenant-related intangible asset as discussed in note 15. Subsequent periods have been adjusted accordingly.

4. ACCRUED EXPENSES

Accrued expenses consisted of the following:



	As of
	September 30, 2018		December 31, 2017
Accrued property and real estate taxes	$	166.5	$	154.4
Accrued pass-through costs	74.0		59.7
Payroll and related withholdings	76.1		82.2
Accrued rent	61.6		54.0
Amounts payable to tenants	58.8		60.8
Accrued construction costs	27.0		31.9
Accrued pass-through taxes	5.9		25.3
Accrued treasury stock purchases	8.0		—
Accrued income tax payable	4.7		15.3
Other accrued expenses	380.5		370.7
Total accrued expenses	$	863.1	$	854.3

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(tabular amounts in millions, unless otherwise noted)

5 . LONG-TERM OBLIGATIONS

Outstanding amounts under the Company’s long-term obligations, reflecting discounts, premiums, debt issuance costs and fair value adjustments due to interest rate swaps consisted of the following:



	As of
	September 30, 2018			December 31, 2017			Maturity Date
2018 Term Loan (1)	$	1,499.6		$	—		March 29, 2019
2013 Credit Facility (1)	1,855.0			2,075.6			June 28, 2021
2013 Term Loan (1)	995.3			994.5			January 31, 2023
2014 Credit Facility (1)	—			495.0			January 31, 2023
3.40% senior notes	999.9			999.8			February 15, 2019
2.800% senior notes	747.5			746.3			June 1, 2020
5.050% senior notes	698.6			698.0			September 1, 2020
3.300% senior notes	746.9			746.0			February 15, 2021
3.450% senior notes	646.0			645.1			September 15, 2021
5.900% senior notes	498.2			497.8			November 1, 2021
2.250% senior notes	562.2			572.4			January 15, 2022
4.70% senior notes	697.2			696.7			March 15, 2022
3.50% senior notes	992.1			990.9			January 31, 2023
3.000% senior notes	676.1			692.5			June 15, 2023
5.00% senior notes	1,002.2			1,002.4			February 15, 2024
1.375% senior notes	570.5			589.1			April 4, 2025
4.000% senior notes	741.8			741.0			June 1, 2025
4.400% senior notes	496.0			495.6			February 15, 2026
1.950% senior notes	572.7			—			May 22, 2026
3.375% senior notes	986.0			984.8			October 15, 2026
3.125% senior notes	397.3			397.1			January 15, 2027
3.55% senior notes	743.3			742.8			July 15, 2027
3.600% senior notes	691.7			691.1			January 15, 2028
Total American Tower Corporation debt	17,816.1			16,494.5

Series 2013-1A securities (2)	—			499.8			N/A
Series 2013-2A securities (3)	1,293.0			1,291.8			March 15, 2023
Series 2018-1A securities (3)	493.4			—			March 15, 2028
Series 2015-1 notes (4)	348.6			348.0			June 15, 2020
Series 2015-2 notes (5)	520.6			520.1			June 16, 2025
India indebtedness (6)	357.4			512.6			Various
India preference shares (7)	23.0			26.1			March 2, 2020
Shareholder loans (8)	59.3			100.6			Various
Other subsidiary debt (1) (9)	182.5			246.1			Various
Total American Tower subsidiary debt	3,277.8			3,545.1
Other debt, including capital lease obligations	170.3			165.5
Total	21,264.2			20,205.1
Less current portion of long-term obligations	(2,841.3		)	(774.8		)
Long-term obligations	$	18,422.9		$	19,430.3

_______________


(1)	Accrues interest at a variable rate.


(2)	Repaid in full on the March 2018 payment date.


(3)	Maturity date reflects the anticipated repayment date; final legal maturity is March 15, 2048.


(4)	Maturity date reflects the anticipated repayment date; final legal maturity is June 15, 2045.


(5)	Maturity date reflects the anticipated repayment date; final legal maturity is June 15, 2050.

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(tabular amounts in millions, unless otherwise noted)


(6)	Denominated in Indian Rupees (“INR”). Includes India working capital facility, remaining debt assumed by the Company in connection with the Viom Acquisition (as defined in note 9) and debt that has been entered into by ATC TIPL.


(7)	Mandatorily redeemable preference shares (the “Preference Shares”) classified as debt. The Preference Shares have a dividend rate of 10.25% per annum. Denominated in INR.

(8)

At December 31, 2017, 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 was denominated in Ugandan Shillings. On August 30, 2018, the Company repaid the remaining 127.2 billion UGX ( $33.8 million ) under the Uganda loan, including principal and accrued unpaid interest. As a result, no amounts were outstanding under the Uganda loan as of September 30, 2018.

(9)

Includes the publicly issued simple debentures issued by BR Towers S.A. (the “Brazil Debentures”) and the Brazil credit facility, which are denominated in Brazilian Reais (“BRL”) and have an original amortization through October 15, 2023 and January 15, 2022, respectively, the South African credit facility, which is denominated in South African Rand and amortizes through December 17, 2020 and the Colombian credit facility, which is denominated in Colombian Pesos and amortizes through April 24, 2021. On October 15, 2018, the Brazil Debentures were repaid in full.

Current portion of long-term obligations— The Company’s current portion of long-term obligations primarily includes (i) 14.6 billion INR ( $201.0 million ) of India indebtedness, (ii) 288.1 million BRL ( $72.0 million ) of the Brazil Debentures, (iii) $1.5 billion under its unsecured term loan entered into on March 29, 2018 (the “2018 Term Loan”) and (iv) $999.9 million under the 3.40% senior unsecured notes due 2019.

Securitized Debt— Cash flows generated by the sites that secure the securitized debt of the Company 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 receive 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.

Senior Notes

1.950% Senior Notes Offering— On May 22, 2018, the Company completed a registered public offering of 500.0 million Euros (“EUR”) ( $589.0 million at the date of issuance) aggregate principal amount of 1.950% senior unsecured notes due 2026 (the “ 1.950% Notes”). The net proceeds from this offering were approximately 493.2 million EUR (approximately $581.0 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”).

The 1.950% Notes will mature on May 22, 2026 and bear interest at a rate of 1.950% per annum. Accrued and unpaid interest on the 1.950% Notes will be payable in EUR in arrears on May 22 of each year, beginning on May 22, 2019. Interest on the 1.950% 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 1.950% Notes and commenced accruing on May 22, 2018.

The Company may redeem the 1.950% 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 1.950% Notes on or after February 22, 2026, 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 supplemental indenture, it may be required to repurchase all of the 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 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 3.5 x Adjusted EBITDA, as defined in the supplemental indenture.

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(tabular amounts in millions, unless otherwise noted)

Securitizations

Secured Tower Revenue Securities, Series 2018-1, Subclass A and Series 2018-1, Subclass R— On March 29, 2018, the Company completed a securitization transaction (the “2018 Securitization”), in which the American Tower Trust I (the “Trust”) issued $500.0 million aggregate principal amount of Secured Tower Revenue Securities, Series 2018-1, Subclass A (the “Series 2018-1A Securities”). To satisfy the applicable risk retention requirements of Regulation RR promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act” and, such requirements, the “Risk Retention Rules”), the Trust issued, and one of the Company’s affiliates purchased, $26.4 million aggregate principal amount of Secured Tower Revenue Securities, Series 2018-1, Subclass R (the “Series 2018-1R Securities” and, together with the Series 2018-1A Securities, the “2018 Securities”) to retain an “eligible horizontal residual interest” (as defined in the Risk Retention Rules) in an amount equal to at least 5% of the fair value of the 2018 Securities.

The assets of the Trust consist of a nonrecourse loan (the “Loan”) made by the Trust to American Tower Asset Sub, LLC and American Tower Asset Sub II, LLC (together, the “AMT Asset Subs”). The AMT Asset Subs are jointly and severally liable under the Loan, which is secured primarily by mortgages on the AMT Asset Subs’ interests in 5,116 broadcast and wireless communications towers and related assets (the “Trust Sites”).

The 2018 Securities correspond to components of the Loan made to the AMT Asset Subs pursuant to the Second Amended and Restated Loan and Security Agreement among the Trust and the AMT Asset Subs, dated as of March 29, 2018 (the “Loan Agreement”) and were issued in two separate subclasses of the same series. The 2018 Securities represent a pass-through interest in the components of the Loan corresponding to the 2018 Securities. The Series 2018-1A Securities have an interest rate of 3.652% and the Series 2018-1R Securities have an interest rate of 4.459% . The 2018 Securities have an expected life of approximately ten years with a final repayment date in March 2048.

The debt service on the Loan will be paid solely from the cash flows generated from the operation of the Trust Sites held by the AMT Asset Subs. The AMT Asset Subs are required to make monthly payments of interest on the Loan. Subject to certain limited exceptions described below, no payments of principal will be required to be made on the components of the Loan corresponding to the 2018 Securities prior to the monthly payment date in March 2028, which is the anticipated repayment date for such components.

The AMT Asset Subs may prepay the Loan at any time provided it is accompanied by applicable prepayment consideration. If the prepayment occurs within thirty-six months of the anticipated repayment date for the 2018 Securities, no prepayment consideration is due. The entire unpaid principal balance of the components of the Loan corresponding to the 2018 Securities will be due in March 2048.

Under the Loan Agreement, the AMT Asset Subs are required to maintain reserve accounts, including for ground rents, real estate and personal property taxes and insurance premiums, and, in certain circumstances, to reserve a portion of advance rents from tenants on the Trust Sites. Based on the terms of the Loan Agreement, all rental cash receipts received each month are reserved for the succeeding month and held in an account controlled by the trustee and then released. The $63.5 million held in the reserve accounts as of September 30, 2018 is classified as restricted cash on the Company’s accompanying consolidated balance sheet.

The Secured Tower Revenue Securities, Series 2013-2A (the “Series 2013-2A Securities”) issued in a securitization transaction in March 2013 (the “2013 Securitization” and, together with the 2018 Securitization, the “Trust Securitizations”) remain outstanding and are subject to the terms of the Second Amended and Restated Trust and Servicing Agreement entered into in connection with the 2018 Securitization. The component of the Loan corresponding to the Series 2013-2A Securities also remains outstanding and is subject to the terms of the Loan Agreement. The Loan Agreement includes terms and conditions, including with respect to secured assets, substantially consistent with the First Amended and Restated Loan and Security Agreement dated as of March 15, 2013, and as further described in note 8 to the Company’s consolidated financial statements included in the 2017 Form 10-K.

Bank Facilities

2013 Credit Facility— During the nine months ended September 30, 2018 , the Company borrowed an aggregate of $1.8 billion and repaid an aggregate of $2.0 billion of revolving indebtedness under the 2013 Credit Facility. The Company used the borrowings to fund acquisitions, repay existing indebtedness and for general corporate purposes.

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(tabular amounts in millions, unless otherwise noted)

2014 Credit Facility— During the nine months ended September 30, 2018 , the Company borrowed an aggregate of $1.1 billion and repaid an aggregate of $1.5 billion 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”). The Company used the borrowings to repay existing indebtedness, including the Secured Tower Revenue Securities, Series 2013-1A, and for general corporate purposes.

2018 Term Loan— During the nine months ended September 30, 2018 , the Company entered into the 2018 Term Loan, the net proceeds of which were used to repay $1.1 billion of outstanding indebtedness under the 2013 Credit Facility and $445.0 million of outstanding indebtedness under the 2014 Credit Facility.

The 2018 Term Loan matures on March 29, 2019. Any outstanding principal and accrued but unpaid interest will be due and payable in full at maturity. The 2018 Term Loan may be paid prior to maturity in whole or in part at the Company’s option without penalty or premium.

The loan agreement for the 2018 Term Loan contains certain reporting, information, financial and operating covenants and other restrictions (including limitations on additional debt, guaranties, sales of assets and liens) with which the Company must comply. Any failure to comply with the financial and operating covenants of the loan agreement 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.

As of September 30, 2018 , the key terms under the 2013 Credit Facility, the 2014 Credit Facility, the Company’s unsecured term loan entered into in October 2013, as amended (the “2013 Term Loan”) and the 2018 Term Loan were as follows:



	Outstanding Principal Balance		Undrawn letters of credit		Maturity Date		Current margin over LIBOR (1)		Current commitment fee (2)
2013 Credit Facility	$	1,855.0	$	3.5	June 28, 2021	(3)	1.125	%	0.125	%
2014 Credit Facility	$	—	$	6.2	January 31, 2023	(3)	1.250	%	0.150	%
2013 Term Loan	$	1,000.0	N/A		January 31, 2023		1.250	%	N/A
2018 Term Loan	$	1,500.0	N/A		March 29, 2019		0.875	%	N/A

_______________

(1) LIBOR means the London Interbank Offered Rate.

(2) Fee on undrawn portion of the applicable credit facility.

(3) Subject to two optional renewal periods.

6. FAIR VALUE MEASUREMENTS

The Company determines the fair value of its financial instruments based on the fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Below are the three levels of inputs that may be used to measure fair value:



	Level 1	Quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

	Level 2	Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

	Level 3	Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(tabular amounts in millions, unless otherwise noted)

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:



	September 30, 2018							December 31, 2017
	Fair Value Measurements Using							Fair Value Measurements Using
	Level 1			Level 2		Level 3		Level 1			Level 2		Level 3
Assets:
Short-term investments (1)	$	—		$	68.2	—		$	1.0		—		—
Embedded derivative in lease agreement	—			—		$	11.7	—			—		$	12.4
Liabilities:
Interest rate swap agreements	—			$	55.1	—		—			$	29.0	—
Acquisition-related contingent consideration	—			—		$	0.9	—			—		$	10.1
Fair value of debt related to interest rate swap agreements (2)	$	(52.6	)	—		—		$	(24.5	)	—		—

_______________


(1)	Consists of mutual funds with a portfolio duration of approximately 90 days and highly liquid investments with original maturities in excess of three months.


(2)	Included in the carrying values of the corresponding debt obligations.

As of September 30, 2018 , the Company had marketable securities with a cost basis of $67.7 million and recognized unrealized gains of $0.5 million on these securities. During the nine months ended September 30, 2018 , the Company made no changes to the methods described in note 11 to its consolidated financial statements included in the 2017 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 nine months ended September 30, 2018 and 2017 were not material to the consolidated financial statements. As of September 30, 2018 , the Company estimated the value of all potential acquisition-related contingent consideration payments to be between zero and $0.9 million .

Items Measured at Fair Value on a Nonrecurring Basis

Assets Held and Used —The Company’s long-lived assets are recorded at amortized cost and, if impaired, are adjusted to fair value using Level 3 inputs. There were no other items measured at fair value on a nonrecurring basis during the nine months ended September 30, 2018 or 2017.

On February 28, 2018, one of the Company’s tenants in Asia, Aircel Ltd. (“Aircel”), filed for bankruptcy protection with the National Company Law Tribunal of India. The bankruptcy process is ongoing and the ultimate outcome has yet to be determined. The Company performed an impairment test based on current expectations of the impact of the bankruptcy on projected cash flows for assets related to Aircel. These assets consisted primarily of towers, which typically are assessed on an individual basis, network location intangibles, which relate directly to towers, and tenant-related intangibles. As a result, an impairment of $40.1 million was taken on the tower and network intangible assets. The Company also fully impaired the tenant-related intangible asset for Aircel, which resulted in an impairment of $107.3 million during the nine months ended September 30, 2018.

The Company recorded an additional $29.5 million of impairments on tower and network intangible assets related to other carrier consolidation-driven churn in India during the nine months ended September 30, 2018. All such impairments were recorded in Other operating expenses in the consolidated statements of operations.

In October 2017, one of the Company’s tenants in Asia, Tata Teleservices, informed the Department of Telecommunications in India of its intent to exit the wireless telecommunications business and announced plans to transfer its business to another telecommunications provider. The Company considered the developments regarding these events, including ongoing negotiations with Tata Teleservices, when updating its impairment test for the Tata Teleservices tenant relationship, and concluded that there was no impairment because the estimated probability-weighted undiscounted cash flows were in excess of the carrying value of this asset, which was $355.7 million as of September 30, 2018 . Developments subsequent to September 30, 2018 are discussed in note 15.

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(tabular amounts in millions, unless otherwise noted)

Fair Value of Financial Instruments —The Company’s financial instruments for which the carrying value reasonably approximates fair value at September 30, 2018 and December 31, 2017 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, 2018 and December 31, 2017 , the carrying value of long-term obligations, including the current portion, was $21.3 billion and $20.2 billion , respectively. As of September 30, 2018 , the fair value of long-term obligations, including the current portion, was $21.2 billion , of which $13.5 billion was measured using Level 1 inputs and $7.7 billion was measured using Level 2 inputs. As of December 31, 2017 , the fair value of long-term obligations, including the current portion, was $20.6 billion , of which $13.3 billion was measured using Level 1 inputs and $7.3 billion was measured using Level 2 inputs.

7. INCOME TAXES

The Company provides for income taxes at the end of each interim period based on the estimated effective tax rate (“ETR”) for the full fiscal year. Cumulative adjustments to the Company’s estimate are recorded in the interim period in which a change in the estimated annual ETR is determined. Under the provisions of the Internal Revenue Code of 1986, as amended, the Company may deduct amounts distributed to stockholders against the income generated by its REIT operations. The Company continues to be subject to income taxes on the income of its TRSs and income taxes in foreign jurisdictions where it conducts operations. In addition, the Company is able to offset certain income by utilizing its net operating losses, subject to specified limitations.

The Company provides valuation allowances if, based on the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. Management assesses the available evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets.

The decrease in the income tax provision for the three months ended September 30, 2018 was primarily attributable to a decrease in foreign earnings. The change in income tax (provision) benefit for the nine months ended September 30, 2018 was primarily attributable to the tax effect of an increase in impairment charges and a one-time benefit for merger-related activity in the Company’s Asia property segment. The nine-month period ended September 30, 2017 was favorably impacted by a clarification in income tax law in Ghana.

As of September 30, 2018 and December 31, 2017 , the total unrecognized tax benefits that would impact the ETR, if recognized, were approximately $94.5 million and $105.8 million , respectively. The amount of unrecognized tax benefits during the three and nine months ended September 30, 2018 includes additions to the Company’s existing tax positions of $1.4 million and $5.0 million , respectively, reductions due to foreign currency fluctuations of $2.4 million and $9.9 million , respectively, and the expiration of the statute of limitations and settlements of $0.5 million and $4.8 million , 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 2017 Form 10-K. The impact of the amount of these changes to previously recorded uncertain tax positions could range from zero to $8.6 million .

The Company recorded the following penalties and income tax-related interest expense during the three and nine months ended September 30, 2018 and 2017:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Penalties and income tax-related interest expense	$	1.0	$	1.1	$	2.7	$	3.4

As of September 30, 2018 and December 31, 2017 , the total amount of accrued income tax related interest and penalties included in the consolidated balance sheets was $27.7 million and $29.0 million , respectively.

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(tabular amounts in millions, unless otherwise noted)

8. STOCK-BASED COMPENSATION

Summary of Stock-Based Compensation Plans —The Company maintains equity incentive plans that provide for the grant of stock-based awards to its directors, officers and employees. The 2007 Equity Incentive Plan, as amended (the “2007 Plan”), provides for the grant of non-qualified and incentive stock options, as well as restricted stock units, restricted stock and other stock-based awards. Exercise prices for non-qualified and incentive stock options are not less than the fair value of the underlying common stock on the date of grant. Equity awards typically vest ratably, generally over four years for time-based restricted stock units (“RSUs”) and stock options and three years for performance-based restricted stock units (“PSUs”). Stock options generally expire 10 years from the date of grant. As of September 30, 2018 , the Company had the ability to grant stock-based awards with respect to an aggregate of 7.6 million shares of common stock under the 2007 Plan. In addition, the Company maintains an employee stock purchase plan (the “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 from 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 three and nine months ended September 30, 2018 and 2017 , the Company recorded and capitalized the following stock-based compensation expense:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Stock-based compensation expense	$	43.8	$	24.4	$	111.3	$	86.4
Stock-based compensation expense capitalized as property and equipment	$	0.6	$	0.3	$	1.6	$	1.3

Stock Options —As of September 30, 2018 , total unrecognized compensation expense related to unvested stock options was $6.3 million , which is expected to be recognized over a weighted average period of approximately one year .

The Company’s option activity for the nine months ended September 30, 2018 was as follows (shares disclosed in full amounts):



	Number of Options
Outstanding as of January 1, 2018	5,557,561
Granted	—
Exercised	(707,018	)
Forfeited	(23,416	)
Expired	—
Outstanding as of September 30, 2018	4,827,127

Restricted Stock Units— As of September 30, 2018 , total unrecognized compensation expense related to unvested RSUs granted under the 2007 Plan was $129.8 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, 2018 , 2017 and 2016, the Company’s Compensation Committee granted an aggregate of 131,311 PSUs (the “2018 PSUs”), 154,520 PSUs (the “2017 PSUs”) and 169,340 PSUs (the “2016 PSUs”), respectively, to its executive officers and established the performance metrics for these awards. Threshold, target and maximum parameters were established for the metrics for a three -year performance period with respect to each of the 2018 PSUs, the 2017 PSUs and the 2016 PSUs, and will be used to calculate the number of shares that will be issuable when each award vests, which may range from zero to 200% of the target amounts. At the end of each three -year performance period, the number of shares that vest will depend on the degree of achievement against the pre-established performance goals. PSUs will be paid out in common stock at the end of each performance period, subject generally to the executive’s continued employment or death, disability or qualified retirement (each as defined in the applicable PSU award agreement). PSUs will accrue dividend equivalents prior to vesting, which will be paid out only in respect of shares that actually vest.

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(tabular amounts in millions, unless otherwise noted)

Restricted Stock Units and Performance-Based Restricted Stock Units —The Company’s RSU and PSU activity for the nine months ended September 30, 2018 was as follows (shares disclosed in full amounts):



	RSUs		PSUs
Outstanding as of January 1, 2018 (1)	1,742,725		444,031
Granted (2)	686,789		131,311
Vested (3)	(667,486	)	(120,171	)
Forfeited	(66,703	)	—
Outstanding as of September 30, 2018	1,695,325		455,171

_______________

(1)

PSUs consist of the target number of shares issuable at the end of the three -year performance period for the 2017 PSUs and the 2016 PSUs, or 154,520 and 169,340 shares, respectively, and the shares issuable at the end of the three-year vesting period for the PSUs granted in 2015 (the “2015 PSUs”), based on achievement against the performance metrics for the the first, second and third year’s performance periods, or 120,171 shares.


(2)	PSUs consist of the target number of shares issuable at the end of the three -year performance period for the 2018 PSUs, or 131,311 shares.


(3)	PSUs consist of shares vested pursuant to the 2015 PSUs. There are no additional shares to be earned related to the 2015 PSUs.

On July 26, 2018, the Company changed the vesting terms of the PSU award agreements in the event of a participant’s death, disability or qualified retirement (each as defined in the applicable award agreement) for all plan participants with the exception of the Chief Executive Officer. During the three and nine months ended September 30, 2018 , the Company recorded $26.6 million and $41.8 million , respectively, in stock-based compensation expense for equity awards in which the performance goals had been established and were probable of being achieved. These amounts included $19.1 million of compensation that was accelerated due to the changes in vesting terms. The remaining unrecognized compensation expense related to these awards at September 30, 2018 was $10.0 million based on the Company’s current assessment of the probability of achieving the performance goals. The weighted average period over which the cost will be recognized is approximately two years .

9. REDEEMABLE NONCONTROLLING INTERESTS

Redeemable Noncontrolling Interests —On April 21, 2016, the Company, through its wholly owned subsidiary, ATC Asia Pacific Pte. Ltd., acquired a 51% controlling ownership interest in ATC TIPL (formerly 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 Sons”), Tata Teleservices, IDFC Private Equity Fund III (“IDFC”), Macquarie SBI Infrastructure Investments Pte Limited and SBI Macquarie Infrastructure Trust (collectively, the “Remaining Shareholders”). During the nine months ended September 30, 2018 , pursuant to the terms of the Shareholders Agreement, the Company merged its other wholly-owned India subsidiaries into ATC TIPL. As a result, the Company’s controlling interest in ATC TIPL increased from 51% to 63% , which resulted in an increase in the Company’s additional paid-in capital of $28.1 million . Similarly, the noncontrolling interest was reduced from 49% to 37% , and a corresponding adjustment to reduce the redeemable noncontrolling interest value by $28.1 million was recorded during the nine months ended September 30, 2018 . In addition, the Company reclassified $78.8 million of previously recorded accumulated other comprehensive loss to additional paid-in capital due to the change in ownership of ATC TIPL.

The Shareholders Agreement also provides certain of the Remaining Shareholders with put options, which allow them to sell outstanding shares of ATC TIPL to the Company, and the Company with call options, which allow it 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 requires classification as redeemable noncontrolling interests in the consolidated balance sheet, separate from equity.

Given the provisions governing the put rights, the redeemable noncontrolling interests are recorded outside of permanent equity at their redemption value. The noncontrolling interests become redeemable after the passage of time, and therefore, the Company records the carrying amount of the noncontrolling interests at the greater of (i) the initial

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(tabular amounts in millions, unless otherwise noted)

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. Due to the impact of impairment charges on net income, the Company adjusted certain noncontrolling interests, which are subject to minimum redemption values, by $28.6 million for the nine months ended September 30, 2018.

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. Developments subsequent to September 30, 2018 are discussed in note 15.

The changes in Redeemable noncontrolling interests for the nine months ended September 30, 2018 and 2017 were as follows:



	Nine Months Ended September 30,
	2018			2017
Balance as of January 1,	$	1,126.2		$	1,091.3
Net (loss) income attributable to noncontrolling interests	(42.4		)	12.2
Adjustment to noncontrolling interest redemption value	28.6			—
Adjustment to noncontrolling interest due to merger	(28.1		)	—
Foreign currency translation adjustment attributable to noncontrolling interests	(129.5		)	43.4
Balance as of September 30,	$	954.8		$	1,146.9

10. EQUITY

Series B Preferred Stock —In March 2015, the Company issued 1,375,000 shares of its 5.50% Mandatory Convertible Preferred Stock, Series B, par value $0.01 per share (the “Series B Preferred Stock”). During the nine months ended September 30, 2018, all outstanding shares of the Series B Preferred Stock converted at a rate of 8.7420 per share of Series B Preferred Stock, or 0.8742 per depositary share, each representing a 1/10th interest in a share of Series B Preferred Stock, into an aggregate of 12,020,064 shares of the Company’s common stock pursuant to the provisions of the Certificate of Designations governing the Series B Preferred Stock. The Company paid cash in lieu of fractional shares of the Company’s common stock. These payments were recorded as a reduction to Additional paid-in capital.

On February 15, 2018, the Company paid the final dividend of $18.9 million to holders of the Series B Preferred Stock at the close of business on February 1, 2018.

Sales of Equity Securities —The Company receives proceeds from the sale of its equity securities pursuant to the ESPP and upon exercise of stock options granted under its equity incentive plan. During the nine months ended September 30, 2018 , the Company received an aggregate of $54.1 million in proceeds upon exercises of stock options and sales pursuant to the ESPP.

Stock Repurchase Programs —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”). In December 2017, the Board of Directors approved an additional stock repurchase program, pursuant to which the Company is authorized to repurchase up to $2.0 billion of its common stock (the “2017 Buyback” and, together with the 2011 Buyback, the “Buyback Programs”).

During the nine months ended September 30, 2018 , the Company repurchased 1,345,543 shares of its common stock under the 2011 Buyback for an aggregate of $189.2 million (of which $8.0 million was accrued as of September 30, 2018), including commissions and fees. As of September 30, 2018, the Company had repurchased a total of 13,701,597

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(tabular amounts in millions, unless otherwise noted)

shares of its common stock under the 2011 Buyback for an aggregate of $1.3 billion , including commissions and fees. There were no repurchases under the 2017 Buyback.

Under the Buyback Programs, the Company is authorized to purchase shares from time to time through open market purchases, in privately negotiated transactions not to exceed market prices, and (with respect to such open market purchases) pursuant to plans adopted in accordance with Rule 10b5-1 under the Exchange Act in accordance with securities laws and other legal requirements and subject to market conditions and other factors.

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 Buyback Programs are subject to the Company having available cash to fund repurchases.

Distributions —During the nine months ended September 30, 2018 , the Company declared or paid the following cash distributions (per share data reflects actual amounts):



Declaration Date	Payment Date	Record Date	Distribution per share		Aggregate Payment Amount (1)
Common Stock
December 6, 2017	January 16, 2018	December 28, 2017	$	0.70	$	300.2
March 8, 2018	April 27, 2018	April 11, 2018	$	0.75	$	331.2
May 24, 2018	July 13, 2018	June 19, 2018	$	0.77	$	339.8
September 6, 2018	October 17, 2018	September 28, 2018	$	0.79	$	348.3

Series B Preferred Stock
January 22, 2018	February 15, 2018	February 1, 2018	$	13.75	$	18.9

_______________


(1)	Does not include amounts accrued for distributions payable related to unvested restricted stock units.

The Company accrues distributions on unvested restricted stock units, which are payable upon vesting. As of September 30, 2018 , the amount accrued for distributions payable related to unvested restricted stock units was $11.5 million . During the nine months ended September 30, 2018 , the Company paid $4.2 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

(tabular amounts in millions, unless otherwise noted)

11. EARNINGS PER COMMON SHARE

The following table sets forth basic and diluted net income per common share computational data (shares in thousands, per share data reflects actual amounts):



	Three Months Ended September 30,					Nine Months Ended September 30,
	2018		2017			2018			2017
Net income attributable to American Tower Corporation stockholders	$	366.9	$	317.3		$	958.8		$	1,000.4
Dividends on preferred stock	—		(18.9		)	(9.4		)	(68.5		)
Net income attributable to American Tower Corporation common stockholders	366.9		298.4			949.4			931.9
Basic weighted average common shares outstanding	440,889		429,281			439,191			427,960
Dilutive securities	3,232		3,550			3,277			3,359
Diluted weighted average common shares outstanding	444,121		432,831			442,468			431,319
Basic net income attributable to American Tower Corporation common stockholders per common share	$	0.83	$	0.70		$	2.16		$	2.18
Diluted net income attributable to American Tower Corporation common stockholders per common share	$	0.83	$	0.69		$	2.15		$	2.16

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,
	2018	2017	2018	2017
Restricted stock units	3	—	2	3
Stock options	—	—	—	11
Preferred stock	—	11,993	1,947	14,693

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 currently provides for the lease, sublease or management of approximately 11,250 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.

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(tabular amounts in millions, unless otherwise noted)

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 2,340 towers commencing between December 2000 and August 2004. Substantially all of the towers are part of the Trust Securitizations. 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 September 30, 2018 , the Company has purchased an aggregate of 88 of the subleased towers upon expiration of the applicable agreement. The aggregate purchase option price for the remaining towers leased and subleased is $892.5 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, AT&T has the right to continue to lease the reserved space through June 30, 2020 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.

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. During the year ended December 31, 2016, the Company exercised the purchase options for 1,523 towers and 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 September 30, 2018 , the purchase price per tower was $42,844 payable in cash or, at the tower owner’s option, with 769 shares of the Company’s common stock per tower. The aggregate cash purchase option price for the subleased towers was $10.4 million as of September 30, 2018 .

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”) from the India Income Tax Department (the “Tax Department”) 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 challenged the assessment before the Office of Commissioner of Income Tax - Appeals, which ruled in the Company’s favor in January 2018. However, the Tax Department has appealed this ruling at a higher appellate authority. The Company estimates that there is a more likely than not probability that the Company’s position will be sustained upon appeal. Accordingly, no liability has been recorded. Additionally, the assessment was made with respect to transactions that took place in the tax year commencing in 2007, prior to the Company’s acquisition of ETIPL. Under the Company’s definitive acquisition agreement of ETIPL, the seller is obligated to indemnify and defend the Company with respect to any tax-related liability that may arise from activities prior to March 31, 2010.

Tenant Leases —The Company’s lease agreements with its tenants vary depending upon the region and the industry of the tenant, and generally have initial terms of ten years with multiple renewal terms at the option of the tenant.

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(tabular amounts in millions, unless otherwise noted)

Future minimum rental receipts expected from tenants under non-cancellable operating lease agreements in effect at September 30, 2018 were as follows (in billions):



Remainder of 2018 ⁽¹⁾	$	1.3
2019	5.0
2020	4.8
2021	4.4
2022	3.5
Thereafter	11.9
Total	$	30.9

^{(1) Does not reflect the impact of the Tata Teleservices settlement as discussed in note 15.}

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 applicable lease.

Future minimum rental payments under non-cancellable operating leases include payments for certain renewal periods at the Company’s option because failure to renew could result in a loss of the applicable communications sites and related revenues from tenant leases, thereby making it reasonably assured that the Company will renew the leases. Such payments at September 30, 2018 are as follows (in billions):



Remainder of 2018	$	0.2
2019	0.9
2020	0.9
2021	0.8
2022	0.8
Thereafter	6.8
Total	$	10.4

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 nine months ended September 30, 2018 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 Company evaluates each of its acquisitions under the accounting guidance framework to determine whether to treat an acquisition as an asset acquisition or a business combination. For those transactions treated as asset acquisitions, the purchase price is allocated to the 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; for transactions accounted for as asset acquisitions, these costs are capitalized as part of the purchase price. Acquisition and merger related costs may include finder’s fees, advisory, legal, accounting, valuation and other professional or consulting fees and general administrative costs directly related to the transaction. Integration costs include incremental and non-recurring costs necessary to

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(tabular amounts in millions, unless otherwise noted)

convert data, retain employees and otherwise enable the Company to operate acquired businesses or assets efficiently. The Company records acquisition and merger related expenses for business combinations, as well as integration costs for all acquisitions, in Other operating expenses in the consolidated statements of operations.

During the three and nine months ended September 30, 2018 and 2017 , the Company recorded acquisition and merger related expenses for business combinations and non-capitalized asset acquisition costs and integration costs as follows:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Acquisition and merger related expenses	$	0.9	$	4.2	$	6.8	$	12.3
Integration costs	$	9.8	$	2.8	$	15.0	$	11.2

2018 Transactions

The estimated aggregate impact of the acquisitions completed in 2018 on the Company’s revenues and gross margin for the three months ended September 30, 2018 was approximately $81.5 million and $27.4 million , respectively, and for the nine months ended September 30, 2018 was approximately $136.5 million and $47.7 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.

Idea Acquisition— On May 31, 2018, the Company acquired 100% of the outstanding shares of Idea Cellular Infrastructure Services Limited, a telecommunications company that owns and operates approximately 9,700 communications sites in India, for total consideration of approximately 42.8 billion INR ( $635.5 million at the date of acquisition). This acquisition was accounted for as a business combination and is subject to post-closing adjustments. During the three months ended September 30, 2018, the purchase price was reduced to approximately 42.2 billion INR ( $625.9 million at the date of acquisition).

Vodafone Acquisition— On March 31, 2018, the Company acquired approximately 10,200 communications sites from Vodafone India Limited and Vodafone Mobile Services Limited (together, “Vodafone”) for an aggregate total purchase price of 38.3 billion INR ( $587.9 million at the date of acquisition). Of the aggregate purchase price, $1.1 million is reflected in Accounts payable in the consolidated balance sheet as of September 30, 2018. This acquisition was accounted for as an asset acquisition.

Other Acquisitions— During the nine months ended September 30, 2018, the Company acquired a total of 1,114 communications sites in the United States, Colombia, Mexico, Paraguay and Peru for an aggregate purchase price of $259.2 million . Of the aggregate purchase price, $7.8 million is reflected in Accounts payable in the consolidated balance sheet as of September 30, 2018. These acquisitions were accounted for as asset acquisitions.

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(tabular amounts in millions, unless otherwise noted)

The following table summarizes the allocations of the purchase prices for the fiscal year 2018 acquisitions based upon their estimated fair value at the date of acquisition:



	Asia
	Idea						Vodafone (1)			Other (2)
	Preliminary Allocation			Updated Allocation
Current assets	$	100.7		$	82.1		$	15.1		$	2.8
Non-current assets	2.6			11.6			5.8			4.9
Property and equipment	161.2			161.2			194.6			94.4
Intangible assets (3):
Tenant-related intangible assets	321.2			323.4			309.5			104.2
Network location intangible assets	82.9			83.5			88.5			62.3
Current liabilities	(52.5		)	(47.4		)	(13.1		)	(1.5		)
Deferred tax liability	(20.7		)	(17.4		)	—			—
Other non-current liabilities	(10.5		)	(16.1		)	(12.5		)	(7.9		)
Net assets acquired	584.9			580.9			587.9			259.2
Goodwill (4)	50.6			45.0			—			—
Fair value of net assets acquired	635.5			625.9			587.9			259.2
Debt assumed	—			—			—			—
Purchase price	$	635.5		$	625.9		$	587.9		$	259.2

_______________


(1)	Includes $1.3 million in acquisition and merger related expenses that were capitalized as part of the purchase price.


(2)	Includes 99 sites in Peru held pursuant to long-term capital leases.


(3)	Tenant-related intangible assets and network location intangible assets are amortized on a straight-line basis over periods of up to 20 years.


(4)	The Company expects the majority of goodwill to be deductible for tax purposes.

2017 Transactions

During the nine months ended September 30, 2018 , post-closing adjustments impacted the following acquisition completed in 2017:

Mexico Acquisition— On November 17, 2017, the Company acquired 100% of the outstanding shares of entities holding urban telecommunications assets in Mexico, including more than 50,000 concrete poles and approximately 2,100 route miles of fiber, for total initial consideration of $505.8 million , including value-added tax. During the nine months ended September 30, 2018, the purchase price was reduced to $499.7 million .

The following table summarizes the preliminary and updated allocation of the purchase price paid and the amounts of assets acquired and liabilities assumed for the acquisition based upon its estimated fair value at the date of acquisition. Balances are reflected in the accompanying consolidated balance sheet as of September 30, 2018.

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(tabular amounts in millions, unless otherwise noted)



	Latin America
	Mexico
	Preliminary Allocation			Updated Allocation
Current assets	$	44.4		$	42.5
Non-current assets	—			—
Property and equipment	94.0			94.0
Intangible assets (1):
Tenant-related intangible assets	153.3			153.3
Network location intangible assets	—			—
Other intangible assets	22.0			22.0
Current liabilities	(28.8		)	(27.2		)
Deferred tax liability	(38.8		)	(38.8		)
Other non-current liabilities	(4.5		)	(4.5		)
Net assets acquired	241.6			241.3
Goodwill (2)	264.2			258.4
Fair value of net assets acquired	505.8			499.7
Debt assumed	—			—
Purchase price	$	505.8		$	499.7

_______________


(1)	Tenant-related intangible assets, network location intangible assets and other intangible assets are amortized on a straight-line basis over periods of up to 20 years.


(2)	Primarily results from purchase accounting adjustments, which are not deductible for tax purposes.

Pro Forma Consolidated Results (Unaudited)

The following table presents the unaudited pro forma financial results as if the acquisitions completed in 2018 had occurred on January 1, 2017 and acquisitions completed in 2017 had occurred on January 1, 2016. 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,
	2018		2017		2018		2017
Pro forma revenues	$	1,786.7	$	1,791.1	$	5,416.8	$	5,292.4
Pro forma net income attributable to American Tower Corporation common stockholders	$	366.6	$	294.4	$	947.4	$	917.2
Pro forma net income per common share amounts:
Basic net income attributable to American Tower Corporation common stockholders	$	0.83	$	0.69	$	2.16	$	2.14
Diluted net income attributable to American Tower Corporation common stockholders	$	0.83	$	0.68	$	2.14	$	2.13

Other Signed Acquisitions

Kenya Acquisition —On April 3, 2018, the Company, through its recently formed Kenyan subsidiary, entered into a definitive agreement to acquire over 700 communications sites in Kenya. The transaction closed on October 1, 2018 (see note 15).

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(tabular amounts in millions, unless otherwise noted)

Cemig Acquisition —On August 24, 2018, the Company, through one of its Brazilian subsidiaries, entered into a definitive agreement with Cia Energetica de Minas Gerais SA (“Cemig”), pursuant to which it may acquire a portfolio of fiber assets and the right to use certain telecommunication poles in Brazil for total consideration of approximately 571.0 million Brazilian Reais ( $138.9 million at the date of signing). The transaction is expected to close in the fourth quarter of 2018, subject to customary closing conditions. The purchase price was held in escrow as of September 30, 2018 and is reported within Restricted cash.

14 . BUSINESS SEGMENTS

The Company’s primary business is leasing space on multitenant communications sites to wireless service providers, radio and television broadcast companies, wireless data providers, government agencies and municipalities and tenants in a number of other industries. This business is referred to as the Company’s property operations, which as of September 30, 2018 , consisted of the following:


•	U.S.: property operations in the United States;


•	Asia: property operations in India;


•	Europe, Middle East and Africa (“EMEA”): property operations in France, Germany, Ghana, Nigeria, South Africa and Uganda; and


•	Latin America: property operations in Argentina, Brazil, Chile, Colombia, Costa Rica, Mexico, Paraguay and Peru.

The Company’s services segment offers tower-related services in the United States, including AZP and structural analysis, 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 in the 2017 form 10-K and as updated in note 1 above. 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 (expense), 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 nine months ended September 30, 2018 and 2017 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.

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(tabular amounts in millions, unless otherwise noted)



	Property								Total Property		Services		Other		Total
Three Months Ended September 30, 2018	U.S.		Asia		EMEA		Latin America		Total Property		Services		Other		Total
Segment revenues	$	957.7	$	323.1	$	166.6	$	304.2	$	1,751.6	$	33.9			$	1,785.5
Segment operating expenses (1)	193.3		194.7		57.5		96.8		542.3		13.4				555.7
Interest income, TV Azteca, net	—		—		—		0.6		0.6		—				0.6
Segment gross margin	764.4		128.4		109.1		208.0		1,209.9		20.5				1,230.4
Segment selling, general, administrative and development expense (1)	37.9		13.5		16.2		20.7		88.3		6.3				94.6
Segment operating profit	$	726.5	$	114.9	$	92.9	$	187.3	$	1,121.6	$	14.2			$	1,135.8
Stock-based compensation expense													$	43.8	43.8
Other selling, general, administrative and development expense													40.5		40.5
Depreciation, amortization and accretion													448.9		448.9
Other expense (2)													212.8		212.8
Income from continuing operations before income taxes															$	389.8
Total assets	$	18,664.5	$	5,093.7	$	3,272.7	$	5,677.5	$	32,708.4	$	50.6	$	318.2	$	33,077.2

_______________


(1)	Segment operating expenses and segment selling, general, administrative and development expenses exclude stock-based compensation expense of $1.0 million and $42.8 million , respectively.


(2)	Primarily includes interest expense and $1.8 million in impairment charges.



	Property								Total Property		Services		Other		Total
Three Months Ended September 30, 2017	U.S.		Asia		EMEA		Latin America		Total Property		Services		Other		Total
Segment revenues	$	904.2	$	297.5	$	155.5	$	298.2	$	1,655.4	$	25.3			$	1,680.7
Segment operating expenses (1)	187.6		164.9		59.9		98.3		510.7		8.4				519.1
Interest income, TV Azteca, net	—		—		—		2.7		2.7		—				2.7
Segment gross margin	716.6		132.6		95.6		202.6		1,147.4		16.9				1,164.3
Segment selling, general, administrative and development expense (1)	41.4		12.4		15.2		18.6		87.6		3.6				91.2
Segment operating profit	$	675.2	$	120.2	$	80.4	$	184.0	$	1,059.8	$	13.3			$	1,073.1
Stock-based compensation expense													$	24.4	24.4
Other selling, general, administrative and development expense													33.1		33.1
Depreciation, amortization and accretion													432.3		432.3
Other expense (2)													215.2		215.2
Income from continuing operations before income taxes															$	368.1
Total assets	$	18,639.0	$	4,851.5	$	3,137.6	$	5,391.3	$	32,019.4	$	47.9	$	252.0	$	32,319.3

_______________


(1)	Segment operating expenses and segment selling, general, administrative and development expenses exclude stock-based compensation expense of $0.7 million and $23.7 million , respectively.


(2)	Primarily includes interest expense.

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(tabular amounts in millions, unless otherwise noted)



	Property									Total Property			Services		Other		Total
Nine Months Ended September 30, 2018	U.S.		Asia		EMEA		Latin America			Total Property			Services		Other		Total
Segment revenues	$	2,846.1	$	904.0	$	507.5	$	953.8		$	5,211.4		$	96.8			$	5,308.2
Segment operating expenses (1)	578.4		532.7		175.1		309.5			1,595.7			38.5				1,634.2
Interest expense, TV Azteca, net	—		—		—		(0.1		)	(0.1		)	—				(0.1		)
Segment gross margin	2,267.7		371.3		332.4		644.2			3,615.6			58.3				3,673.9
Segment selling, general, administrative and development expense (1)	117.1		72.8		50.6		64.4			304.9			12.7				317.6
Segment operating profit	$	2,150.6	$	298.5	$	281.8	$	579.8		$	3,310.7		$	45.6			$	3,356.3
Stock-based compensation expense															$	111.3	111.3
Other selling, general, administrative and development expense															114.5		114.5
Depreciation, amortization and accretion															1,344.9		1,344.9
Other expense (2)															828.3		828.3
Income from continuing operations before income taxes																	$	957.3

_______________


(1)	Segment operating expenses and segment selling, general, administrative and development expenses exclude stock-based compensation expense of $2.7 million and $108.6 million , respectively.


(2)	Primarily includes interest expense and $182.4 million in impairment charges.



	Property								Total Property		Services		Other		Total
Nine Months Ended September 30, 2017	U.S.		Asia		EMEA		Latin America		Total Property		Services		Other		Total
Segment revenues	$	2,693.4	$	867.6	$	465.5	$	861.1	$	4,887.6	$	71.8			$	4,959.4
Segment operating expenses (1)	552.6		482.3		180.4		287.5		1,502.8		24.5				1,527.3
Interest income, TV Azteca, net	—		—		—		8.2		8.2		—				8.2
Segment gross margin	2,140.8		385.3		285.1		581.8		3,393.0		47.3				3,440.3
Segment selling, general, administrative and development expense (1)	112.3		49.5		49.6		56.6		268.0		10.2				278.2
Segment operating profit	$	2,028.5	$	335.8	$	235.5	$	525.2	$	3,125.0	$	37.1			$	3,162.1
Stock-based compensation expense													$	86.4	86.4
Other selling, general, administrative and development expense													103.7		103.7
Depreciation, amortization and accretion													1,249.8		1,249.8
Other expense (2)													607.5		607.5
Income from continuing operations before income taxes															$	1,114.7

_______________


(1)	Segment operating expenses and segment selling, general, administrative and development expenses exclude stock-based compensation expense of $2.4 million and $84.0 million , respectively.


(2)	Primarily includes interest expense.

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(tabular amounts in millions, unless otherwise noted)

15. SUBSEQUENT EVENTS

Kenya Acquisition— On October 1, 2018, the Company acquired over 700 sites in Kenya for total consideration of $171.6 million , including value added tax, a portion of which was paid in cash and a portion of which will be paid in future installments subject to the satisfaction of specified conditions. A preliminary purchase price allocation is not available due to the timing of the closing.

Tata Teleservices Agreements— On October 23, 2018, the Company entered into agreements with Tata Teleservices and related entities for a settlement and release of certain contractual lease obligations effective November 1, 2018. As part of the arrangement, the Company will receive an upfront one-time INR-denominated cash payment equal to approximately $320.0 million for the termination of lease obligations with Tata Teleservices in India. In addition, the Company entered into new leasing arrangements with a number of Tata-affiliated entities. The Company expects the net impact of these two transactions to represent an approximate 80% reduction in the contracted tenant revenues generated from the terminated leases. In connection with the acceleration of the contractual arrangements, the Company will also revise the amortization of its tenant-related intangible asset with Tata Teleservices.

Exercise of Put Options— Tata Teleservices delivered to the Company notice of exercise of their put options under the Shareholders Agreement with respect to 50% of their combined holdings with Tata Sons of ATC TIPL. Additionally, IDFC delivered notice to the Company of exercise of its put option under the Shareholders Agreement with respect of 100% of its holdings of ATC TIPL. The Company expects to complete the redemption of the put shares, subject to regulatory approval, for total consideration of INR 29.4 billion (approximately $400.0 million ) in the first quarter of 2019.



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, 2017 (the “2017 Form 10-K”), as updated in Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2018. 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 the 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 2017 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, fiber and property interests that we lease primarily to communications service providers and third-party tower operators. We refer to this business as our property operations, which accounted for 98% of our total revenues for the nine months ended September 30, 2018 and includes our U.S. property segment, Asia property segment, Europe, Middle East and Africa (“EMEA”) property segment and Latin America property segment. In October 2018, we expanded into a new market through our acquisition of communications sites in Kenya.

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

The following table details the number of communications sites, excluding managed sites, that we owned or operated as of September 30, 2018 :



	Number of Owned Towers	Number of Operated Towers (1)	Number of Owned DAS Sites
U.S.	24,305	15,975	388
Asia:
India	75,355	—	1,057
EMEA:
France	2,173	307	10
Germany	2,209	—	—
Ghana	2,270	—	24
Nigeria	4,758	—	—
South Africa (2)	2,608	—	—
Uganda	1,508
EMEA total	15,526	307	34
Latin America:
Argentina (3)	14	—	1
Brazil	16,580	2,257	88
Chile	1,297	—	12
Colombia	4,093	777	1
Costa Rica	517	—	2
Mexico (4)	9,019	186	84
Paraguay	1,276	—	—
Peru	747	226	—
Latin America total	33,543	3,446	188

_______________


(1)	Approximately 98% of the operated towers are held pursuant to long-term capital leases, including those subject to purchase options.


(2)	In South Africa, we also own fiber.


(3)	In Argentina, we also own or operate urban telecommunications assets, fiber and the rights to utilize certain existing utility infrastructure for future telecommunications equipment installation.


(4)	In Mexico, we also own or operate urban telecommunications assets, including fiber, concrete poles and other infrastructure.

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 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 on day one on sites acquired or constructed since the beginning of the prior-year period;


•	New revenue attributable to leasing additional space on our sites (“colocations”) and lease 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, included in certain tenant leases (“pass-through”), 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, amount, type and position of tenant equipment on the tower, remaining tower capacity and tower location. 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.

In most of our markets, our tenant leases with wireless carriers have an initial non-cancellable term of at least ten years, with multiple renewal terms. Accordingly, the vast majority of the revenue generated by our property operations during the three and nine months ended September 30, 2018 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 September 30, 2018 , we expect to generate nearly $31 billion of non-cancellable tenant lease revenue over future periods, before the impact of straight-line lease accounting and the settlement discussed below. 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 primarily to cover costs, such as ground rent or power and fuel costs.

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 renegotiations, which we refer to as churn, historically has not had a material adverse effect on the revenues generated by our property operations. This was again the case during the nine months ended September 30, 2018 , in which loss of tenant billings from tenant lease cancellations, non-renewal or renegotiations represented approximately 3% of our tenant billings.

We are experiencing, and expect to continue to experience, an increase in revenue lost from cancellations or non-renewals in 2018 primarily due to carrier consolidation-driven churn in India, which we expect will continue to result in a higher impact on our revenues, including tenant billings, as compared to the historical average, particularly in our Asia property segment. We also expect this churn will compress our gross margin and operating profit for the duration of the carrier consolidation process, particularly in our Asia property segment, although we expect this to be partially offset by lower expenses due to reduced tenancy on existing sites. In addition, we expect to periodically evaluate the carrying value of our Indian assets, which may result in the realization of impairment expense or other similar charges. For more information, please see Item 7 of the 2017 Form 10-K under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates.”

In October 2018, we entered into agreements with one of our tenants in India, Tata Teleservices Limited and related entities (collectively, “Tata”), for a settlement and release of certain contractual lease obligations of Tata.

For the nine months ended September 30, 2018 , carrier consolidation-driven churn in India negatively impacted our consolidated property revenue by $109.8 million, including approximately $40.5 million in pass-through revenue, and negatively impacted our gross margin and operating profit by $66.0 million. We have also recorded impairment charges of $176.9 million, primarily as a result of Aircel Ltd.’s (“Aircel”) filing for bankruptcy protection in February 2018. For the full year ending December 31, 2018, after taking into account an additional $20.0 million in churn as a result of the settlement with Tata, we expect carrier consolidation-driven churn in India to negatively impact our consolidated property revenue by approximately $200.0 million, including approximately $60.0 million in pass-through revenue, and our operating profit by approximately $135.0 million.

The effects of carrier consolidation-driven churn described above are expected to be more than offset by the impact of the settlement payment from Tata in the fourth quarter of 2018, which we anticipate will result in a positive impact to property revenue and operating profit of $320.0 million.

On a net basis, carrier consolidation-driven churn and our settlement with Tata are expected to positively impact our full year 2018 consolidated property revenue by $120.0 million and our full year 2018 operating profit by $185.0 million. We expect the balance of the anticipated churn related to the settlement agreement with Tata of approximately $100.0 million to occur in 2019.

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 communications 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, with tenants in a number of other industries contributing incremental leasing demand. Our site portfolio and our established tenant base provide 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 from 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 over the long term.

•

Subscribers’ use of mobile 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 mobile data usage.


•	The deployment of advanced mobile 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 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 requiring wireless connectivity 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 well as other potential use cases for wireless services.

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, Telefónica S.A. and Vodafone Group PLC, among others. We believe that consistent carrier network investments across our international markets position us to generate meaningful organic revenue growth going forward.

In emerging markets, such as Ghana, India, Kenya, 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, data network deployments are underway. Carriers are focused on completing voice network build-outs while also investing in initial data networks as mobile data usage and smartphone penetration within their customer bases begin to accelerate.

In India, the ongoing transition from second generation (2G) technology to fourth generation (4G) technology has included and is expected to continue to include a period of carrier consolidation over the next several years, whereby the number of carriers operating in the marketplace will be reduced through mergers, acquisitions and select carrier exits from the marketplace. Over the long term, this consolidation process is expected to result in a more favorable structural environment for both the wireless carriers as well as communications infrastructure providers. In the shorter term, as discussed above, we expect the consolidation process to continue to result in elevated levels of churn within our India business as merging carriers rationalize redundant legacy equipment installations and as select carriers exit the marketplace.

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 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 advancing rapidly, which typically requires that carriers continue to invest in their networks 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 129,500 communications sites and the relationships we have built with our carrier tenants 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. Certain 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) from equity method investments; Income tax benefit (provision); Other income (expense); Gain (loss) on retirement of long-term obligations; Interest expense; Interest income; Other operating income (expense); Depreciation, amortization and accretion; and stock-based compensation expense.

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) and 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 or AFFO (common stockholders) represents 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 Nine Months Ended September 30, 2018 and 2017

(in millions, except percentages)

We are now disclosing our results in millions rather than thousands and, as a result, certain rounding adjustments have been made to prior-period amounts.

Revenue



	Three Months Ended September 30,				Percent Increase (Decrease)		Nine Months Ended September 30,				Percent Increase (Decrease)
	2018		2017		Percent Increase (Decrease)		2018		2017		Percent Increase (Decrease)
Property
U.S.	$	957.7	$	904.2	6	%	$	2,846.1	$	2,693.4	6	%
Asia	323.1		297.5		9		904.0		867.6		4
EMEA	166.6		155.5		7		507.5		465.5		9
Latin America	304.2		298.2		2		953.8		861.1		11
Total property	1,751.6		1,655.4		6		5,211.4		4,887.6		7
Services	33.9		25.3		34		96.8		71.8		35
Total revenues	$	1,785.5	$	1,680.7	6	%	$	5,308.2	$	4,959.4	7	%

Three Months Ended September 30, 2018

U.S. property segment revenue growth of $53.5 million was attributable to:


•	Tenant billings growth of $67.5 million, which was driven by:


•	$49.6 million due to colocations and amendments;


•	$13.7 million from contractual escalations, net of churn; and


•	$5.5 million generated from newly acquired or constructed sites;


•	Partially offset by a decrease of $1.3 million from other tenant billings; and


•	A decrease of $14.0 million in other revenue, which includes a $20.6 million decrease due to straight-line accounting.

Asia property segment revenue growth of $25.6 million was attributable to:


•	Tenant billings growth of $24.1 million, which was driven by:


•	$46.0 million generated from newly acquired or constructed sites, including $44.6 million from the transactions with Vodafone India Limited and Vodafone Mobile Services Limited (the “Vodafone Acquisition”) and Idea Cellular Limited (the “Idea Acquisition”);


•	$12.2 million due to colocations and amendments; and


•	$0.1 million from other tenant billings;


•	Partially offset by a decrease of $34.2 million resulting from churn in excess of contractual escalations, including $31.0 million due to carrier consolidation-driven churn in India;


•	Pass-through revenue growth of $21.4 million; and


•	An increase of $7.6 million in other revenue, primarily due to a decrease in revenue reserves.

Segment revenue growth was partially offset by a decrease of $27.5 million attributable to the negative impact of foreign currency translation related to fluctuations in Indian Rupees (“INR”).

In the fourth quarter of 2018, we expect the net impact of our settlement agreements with Tata to contribute $300.0 million to property revenue, as a result of the approximately $320.0 million cash payment, partially offset by incremental churn, the impact of straight-line accounting and other amounts directly related to the agreements.

EMEA property segment revenue growth of $11.1 million was attributable to:


•	Tenant billings growth of $9.3 million, which was driven by:


•	$4.4 million due to colocations and amendments;


•	$3.3 million from contractual escalations, net of churn;


•	$1.2 million generated from newly acquired or constructed sites; and


•	$0.4 million from other tenant billings;


•	An increase of $2.5 million in other revenue; and


•	Pass-through revenue growth of $6.0 million.

Segment revenue growth was partially offset by a decrease of $6.7 million attributable to the negative impact of foreign currency translation, which included, among others, $2.6 million related to fluctuations in Ghanaian Cedi (“GHS”), $1.8 million related to fluctuations in South African Rand (“ZAR”) and $1.4 million related to fluctuations in the Nigerian Naira (“NGN”).

Latin America property segment revenue growth of $6.0 million was attributable to:


•	Tenant billings growth of $30.6 million, which was driven by:


•	$11.6 million due to colocations and amendments;


•	$9.3 million from contractual escalations, net of churn;


•	$6.8 million generated from newly acquired or constructed sites; and


•	$2.9 million from other tenant billings;


•	Pass-through revenue growth of $5.9 million; and


•	An increase of $13.6 million in other revenue, due to $16.9 million from our newly acquired fiber business, partially offset by a decrease of $3.3 million in other revenue.

Segment revenue growth was partially offset by a decrease of $44.1 million attributable to the negative impact of foreign currency translation, which included, among others, $33.1 million related to fluctuations in Brazilian Real (“BRL”), $7.2 million related to fluctuations in Mexican Peso (“MXN”) and $3.4 million related to fluctuations in Argentinean Peso (“ARS”).

The increase in services segment revenue of $8.6 million was primarily attributable to an increase in site acquisition projects.

Nine Months Ended September 30, 2018

U.S. property segment revenue growth of $152.7 million was attributable to:


•	Tenant billings growth of $193.9 million, which was driven by:


•	$133.5 million due to colocations and amendments;


•	$44.9 million from contractual escalations, net of churn; and


•	$19.1 million generated from newly acquired or constructed sites;


•	Partially offset by a decrease of $3.6 million from other tenant billings; and


•	A decrease of $41.2 million in other revenue, which includes a $69.3 million decrease due to straight-line accounting.

Asia property segment revenue growth of $36.4 million was attributable to:


•	Tenant billings growth of $29.6 million, which was driven by:


•	$77.6 million generated from newly acquired or constructed sites, including $73.4 million from the Vodafone Acquisition and the Idea Acquisition.


•	$35.0 million due to colocations and amendments; and


•	$0.2 million from other tenant billings;


•	Partially offset by a decrease of $83.2 million resulting from churn in excess of contractual escalations, including $69.8 million due to carrier consolidation-driven churn in India;


•	Pass-through revenue growth of $29.9 million; and


•	An increase of $3.4 million in other revenue.

Segment revenue growth was partially offset by a decrease of $26.5 million attributable to the negative impact of foreign currency translation related to fluctuations in INR.

EMEA property segment revenue growth of $42.0 million was attributable to:


•	Tenant billings growth of $32.9 million, which was driven by:


•	$12.4 million due to colocations and amendments;


•	$11.6 million from contractual escalations, net of churn;


•	$8.2 million generated from newly acquired or constructed sites, primarily due to the acquisition of FPS Towers in France through our European joint venture (the “FPS Acquisition”); and


•	$0.7 million from other tenant billings;


•	An increase of $8.3 million in other revenue; and


•	Pass-through revenue growth of $4.3 million.

Segment growth was partially offset by a decrease of $3.5 million attributable to the negative impact of foreign currency translation, which included, among others, $8.2 million related to fluctuations in NGN and $4.7 million related to fluctuations in GHS, and was partially offset by an increase of $7.2 million related to fluctuations in the Euro (“EUR”) and $3.0 million related to fluctuations in ZAR.

Latin America property segment revenue growth of $92.7 million was attributable to:


•	Tenant billings growth of $91.3 million, which was driven by:


•	$37.5 million due to colocations and amendments;


•	$26.7 million from contractual escalations, net of churn;


•	$20.5 million generated from newly acquired or constructed sites; and


•	$6.6 million from other tenant billings;


•	Pass-through revenue growth of $20.5 million; and


•	An increase of $42.4 million in other revenue, due in part to $46.6 million from our newly acquired fiber business and a $6.0 million reduction in revenue reserves from a settlement related to the judicial reorganization of a tenant in Brazil, partially offset by the impact of straight-line accounting.

Segment revenue growth was partially offset by a decrease of $61.5 million attributable to the negative impact of foreign currency translation, which included, among others, $54.4 million related to fluctuations in BRL, $7.4 million related to fluctuations in ARS and $2.5 million related to fluctuations in MXN.

The increase in services segment revenue of $25.0 million was primarily attributable to an increase in site acquisition projects.

Gross Margin



	Three Months Ended September 30,				Percent Increase (Decrease)		Nine Months Ended September 30,				Percent Increase (Decrease)
	2018		2017		Percent Increase (Decrease)		2018		2017		Percent Increase (Decrease)
Property
U.S.	$	764.4	$	716.6	7	%	$	2,267.7	$	2,140.8	6	%
Asia	128.4		132.6		(3	)	371.3		385.3		(4	)
EMEA	109.1		95.6		14		332.4		285.1		17
Latin America	208.0		202.6		3		644.2		581.8		11
Total property	1,209.9		1,147.4		5		3,615.6		3,393.0		7
Services	20.5		16.9		21	%	58.3		47.3		23	%

Three Months Ended September 30, 2018


•	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 $5.7 million.

•

As discussed above, Asia property segment gross margin was negatively impacted by carrier consolidation-driven churn. The decrease was also due to an increase in direct expenses of $46.4 million as a result of the Vodafone Acquisition and the Idea Acquisition, partially offset by the increase in revenue described above and a benefit of $16.6 million attributable to the impact of foreign currency translation on direct expenses.


•	The increase in EMEA property segment gross margin was primarily attributable to the increase in revenue described above and a benefit of $3.3 million attributable to the impact of foreign currency translation on direct expenses, partially offset by an increase in direct expenses of $0.9 million.


•	The increase in Latin America property segment gross margin was primarily attributable to the increase in revenue described above and a benefit of $14.3 million attributable to the impact of foreign currency translation on direct expenses, partially offset by an increase in direct expenses of $12.8 million and a reduction of $2.1 million in interest income related to TV Azteca.


•	The increase in services segment gross margin was primarily due to an increase in revenue, as described above.

Nine Months Ended September 30, 2018


•	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 $25.8 million.

•

As discussed above, Asia property segment gross margin was negatively impacted by carrier consolidation-driven churn. The decrease was also due to an increase in direct expenses of $66.6 million, primarily due to the Vodafone Acquisition and the Idea Acquisition, partially offset by the increase in revenue described above and a benefit of $16.2 million attributable to the impact of foreign currency translation on direct expenses.


•	The increase in EMEA property segment gross margin was primarily attributable to the increase in revenue described above and a benefit of $7.1 million attributable to the impact of foreign currency translation on direct expenses, partially offset by an increase in direct expenses of $1.8 million.


•	The increase in Latin America property segment gross margin was primarily attributable to the increase in revenue described above and a benefit of $20.6 million attributable to the impact of foreign currency translation on direct expenses, partially offset by an increase in direct expenses of $42.6 million and a reduction of $8.3 million in interest income related to TV Azteca.


•	The increase in services segment gross margin was primarily due to an increase in revenue, as described above.

Selling, General, Administrative and Development Expense (“SG&A”)



	Three Months Ended September 30,				Percent Increase (Decrease)		Nine Months Ended September 30,				Percent Increase (Decrease)
	2018		2017		Percent Increase (Decrease)		2018		2017		Percent Increase (Decrease)
Property
U.S.	$	37.9	$	41.4	(8	)%	$	117.1	$	112.3	4	%
Asia	13.5		12.4		9		72.8		49.5		47
EMEA	16.2		15.2		7		50.6		49.6		2
Latin America	20.7		18.6		11		64.4		56.6		14
Total property	88.3		87.6		1		304.9		268.0		14
Services	6.3		3.6		75		12.7		10.2		25
Other	83.3		56.8		47		223.1		187.7		19
Total selling, general, administrative and development expense	$	177.9	$	148.0	20	%	$	540.7	$	465.9	16	%

Three Months Ended September 30, 2018


•	The decrease in our U.S. property segment SG&A was primarily driven by a decrease in costs associated with site development activities.


•	The increases in our Asia and EMEA property segment SG&A were primarily driven by increases in bad debt expense.


•	The increase in our Latin America property segment SG&A was primarily driven by an increase in personnel costs.


•	The increase in our services segment SG&A was primarily attributable to an increase in personnel costs within our tower services group.


•	The increase in other SG&A was primarily attributable to a $19.1 million increase in stock-based compensation expense due to the acceleration of expense associated with amendments to existing grants as well as an increase in corporate SG&A.

Nine Months Ended September 30, 2018


•	The increases in each of our U.S., EMEA and Latin America property segment SG&A were primarily driven by increased personnel costs to support our business, including our acquisition of urban telecommunications assets in our Latin America property segment. The increase in our U.S. property segment was also attributable to an increase in project costs.


•	The increase in our Asia property segment SG&A was primarily driven by an increase in bad debt expense of $26.4 million as a result of receivable reserves with certain tenants, including Aircel.


•	The increase in our services segment SG&A was primarily attributable to an increase in the allocation of personnel costs to our tower services group.


•	The increase in other SG&A was primarily attributable to an increase in stock-based compensation expense of $24.6 million, principally due to the acceleration of expense associated with amendments to existing grants, 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)
	2018		2017		Percent Increase (Decrease)		2018		2017		Percent Increase (Decrease)
Property
U.S.	$	726.5	$	675.2	8	%	$	2,150.6	$	2,028.5	6	%
Asia	114.9		120.2		(4	)	298.5		335.8		(11	)
EMEA	92.9		80.4		16		281.8		235.5		20
Latin America	187.3		184.0		2		579.8		525.2		10
Total property	1,121.6		1,059.8		6		3,310.7		3,125.0		6
Services	14.2		13.3		7	%	45.6		37.1		23	%


•	The increases in operating profit for the three and nine months ended September 30, 2018 for each of our U.S., EMEA and Latin America property segments, as well as our services segment, were primarily attributable to an increase in our segment gross margin.


•	The decreases in operating profit for the three and nine months ended September 30, 2018 in our Asia property segment were attributable to increases in our segment SG&A, which were primarily driven by $3.0 million and $26.4 million increases in bad debt expense, respectively, and decreases in our segment gross margin.

Depreciation, Amortization and Accretion



	Three Months Ended September 30,				Percent Increase (Decrease)		Nine Months Ended September 30,				Percent Increase (Decrease)
	2018		2017		Percent Increase (Decrease)		2018		2017		Percent Increase (Decrease)
Depreciation, amortization and accretion	$	448.9	$	432.3	4	%	$	1,344.9	$	1,249.8	8	%

The increases in depreciation, amortization and accretion expense for the three and nine months ended September 30, 2018 were primarily attributable to the acquisition, lease or construction of new sites since the beginning of the prior-year period, which resulted in increases in property and equipment and intangible assets subject to amortization.

We expect amortization expense to increase by approximately $312.0 million in the fourth quarter of 2018 as a result of revised amortization of tenant-related intangibles in India.

Other Operating Expenses



	Three Months Ended September 30,				Percent Increase (Decrease)		Nine Months Ended September 30,				Percent Increase (Decrease)
	2018		2017		Percent Increase (Decrease)		2018		2017		Percent Increase (Decrease)
Other operating expenses	$	34.8	$	19.5	78	%	$	269.6	$	44.6	504	%

The increase in other operating expenses for the three months ended September 30, 2018 was primarily attributable to an increase of $9.7 million in losses on sales or disposals of assets and impairment charges and an increase in acquisition-related expenses of $3.7 million.

The increase in other operating expenses for the nine months ended September 30, 2018 was primarily attributable to an increase in impairment charges of $180.2 million and an increase of $33.0 million in losses on sales or disposals of assets. The impairment charges included $69.6 million related to tower and network intangible assets and $107.3 million related to tenant-related intangible assets in our Asia property segment due to Aircel’s filing for bankruptcy protection and other carrier consolidation-driven churn in India. The increase was also attributable to the nonrecurrence of a $22.2 million refund of acquisition costs recorded in the prior-year period related to an acquisition in Brazil, partially offset by $10.0 million to fund our charitable foundation in the prior-year period.

Total Other Expense



	Three Months Ended September 30,				Percent Increase (Decrease)		Nine Months Ended September 30,				Percent Increase (Decrease)
	2018		2017		Percent Increase (Decrease)		2018		2017		Percent Increase (Decrease)
Total other expense	$	177.4	$	193.0	(8	)%	$	558.8	$	554.7	1	%

The decrease in total other expense during the three months ended September 30, 2018 was primarily due to an increase in other income of $15.7 principally due to the write-offs of the capital lease liability and Economic Rights Agreement and related amortization in conjunction with the note extinguishment with TV Azteca, S.A. de C.V. (“TV Azteca”) (as described in note 1 to our consolidated and condensed consolidated financial statements included in this Quarterly Report on Form 10-Q), a loss on retirement of long-term obligations of $14.2 million recorded in the prior-year period primarily attributable to the redemption of the 4.500% senior unsecured notes due 2018 and foreign currency gains of $2.2 million in the current period, compared to foreign currency losses of $4.3 million in the prior-year period. These were partially offset by incremental interest expense of $20.4 million due to a $2.0 billion increase in our average debt outstanding.

The increase in total other expense during the nine months ended September 30, 2018 was primarily due to additional interest expense of $57.2 million due to a $2.2 billion increase in our average debt outstanding and foreign currency losses of $14.9 million in the current period, compared to foreign currency gains of $30.7 million in the prior-year period. The increase was partially offset by (i) the nonrecurrence of a loss on retirement of long-term obligations of $69.9 million recorded in the prior-year period attributable to the redemption of the 7.25% senior unsecured notes due 2019 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 and Secured Cellular Site Revenue Notes, Series 2010-2, Class C and Series 2010-2, Class F and (ii) an increase in other income of $19.8 primarily due to the write-offs of the capital lease liability and Economic Rights Agreement and related amortization in conjunction with the note extinguishment with TV Azteca.

Income Tax Provision (Benefit)



	Three Months Ended September 30,						Percent Increase (Decrease)		Nine Months Ended September 30,						Percent Increase (Decrease)
	2018			2017			Percent Increase (Decrease)		2018			2017			Percent Increase (Decrease)
Income tax provision (benefit)	$	12.5		$	33.4		(63	)%	$	(14.7	)	$	84.1		(117	)%
Effective tax rate	3.2		%	9.1		%			(1.5		)%	7.5		%

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 nine months ended September 30, 2018 and 2017 differs from the federal statutory rate.

The decrease in the income tax provision for the three months ended September 30, 2018 was primarily attributable a decrease in foreign earnings. The change in the income tax provision (benefit) for the nine months ended September 30, 2018 was primarily attributable to the tax effect of an increase in impairment charges and a one-time benefit for merger-related activity in our Asia property segment offset by the nonrecurrence of prior-year benefit from a clarification in income tax law in Ghana.

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)
	2018			2017			Percent Increase (Decrease)		2018			2017			Percent Increase (Decrease)
Net income	$	377.3		$	334.7		13	%	$	972.0		$	1,030.6		(6	)%
Income tax provision (benefit)	12.5			33.4			(63	)	(14.7		)	84.1			(117	)
Other (income) expense	(21.1		)	1.1			(2,018	)	(14.1		)	(39.9		)	(65	)
Loss on retirement of long-term obligations	—			14.2			(100	)	—			69.9			(100	)
Interest expense	209.2			188.8			11		616.7			559.5			10
Interest income	(10.1		)	(8.4		)	20		(43.9		)	(26.6		)	65
Other operating expenses	34.8			19.5			78		269.6			44.6			504
Depreciation, amortization and accretion	448.9			432.3			4		1,344.9			1,249.8			8
Stock-based compensation expense	43.8			24.4			80		111.3			86.4			29
Adjusted EBITDA	$	1,095.3		$	1,040.0		5	%	$	3,241.8		$	3,058.4		6	%



	Three Months Ended September 30,						Percent Increase (Decrease)		Nine Months Ended September 30,						Percent Increase (Decrease)
	2018			2017			Percent Increase (Decrease)		2018			2017			Percent Increase (Decrease)
Net income	$	377.3		$	334.7		13	%	$	972.0		$	1,030.6		(6	)%
Real estate related depreciation, amortization and accretion	399.7			387.1			3		1,197.1			1,117.6			7
Losses from sale or disposal of real estate and real estate related impairment charges	22.5			12.9			74		245.5			32.6			653
Dividends on preferred stock	—			(18.9		)	(100	)	(9.4		)	(68.5		)	(86	)
Adjustments for unconsolidated affiliates and noncontrolling interests	(51.1		)	(47.8		)	7		(198.2		)	(130.7		)	52
Nareit FFO attributable to American Tower Corporation common stockholders	$	748.4		$	668.0		12	%	$	2,207.0		$	1,981.6		11	%
Straight-line revenue	(25.4		)	(48.6		)	(48	)	(70.7		)	(151.4		)	(53	)
Straight-line expense	12.1			14.1			(14	)	46.7			45.4			3
Stock-based compensation expense	43.8			24.4			80		111.3			86.4			29
Deferred portion of income tax ⁽¹⁾	(18.2		)	6.1			(398	)	(90.0		)	(3.6		)	2,400
Non-real estate related depreciation, amortization and accretion	49.2			45.2			9		147.8			132.2			12
Amortization of deferred financing costs, capitalized interest, debt discounts and premiums and long-term deferred interest charges	3.6			7.2			(50	)	12.6			21.4			(41	)
Other (income) expense ⁽²⁾	(21.1		)	1.1			(2,018	)	(14.1		)	(39.9		)	(65	)
Loss on retirement of long-term obligations	—			14.2			(100	)	—			69.9			(100	)
Other operating expense ⁽³⁾	12.3			6.8			81		24.1			12.0			101
Capital improvement capital expenditures	(32.0		)	(32.6		)	(2	)	(93.3		)	(77.9		)	20
Corporate capital expenditures	(2.4		)	(5.7		)	(58	)	(7.1		)	(12.4		)	(43	)
Adjustments for unconsolidated affiliates and noncontrolling interests	51.1			47.8			7		198.2			130.7			52
Consolidated AFFO	$	821.4		$	748.0		10	%	$	2,472.5		$	2,194.4		13	%
Adjustments for unconsolidated affiliates and noncontrolling interests ⁽⁴⁾	(41.8		)	(43.3		)	(3	)%	(158.9		)	(128.0		)	24	%
AFFO attributable to American Tower Corporation common stockholders	$	779.6		$	704.7		11	%	$	2,313.6		$	2,066.4		12	%

_______________


(1)	For the nine months ended September 30, 2018, amount includes a tax benefit primarily attributable to the tax effect of an increase in impairment charges and a one-time benefit for merger-related activity in our Asia property segment.


(2)	Includes unrealized (gains) losses on foreign currency exchange rate fluctuations of ($7.4 million), $5.3 million, $6.8 million and ($30.4 million), respectively.


(3)	Includes integration and acquisition-related costs.


(4)	Includes adjustments for the 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 September 30, 2018

The increase in net income was primarily attributable to an increase in our operating profit and a decrease in our other expenses primarily due to the write-off of the capital lease liability and Economic Rights Agreement and related amortization in conjunction with the note extinguishment with TV Azteca and the absence of a loss on retirement of long-term obligations of $14.2 million recorded in the prior-year period, partially offset by increases in interest expense and depreciation, amortization and accretion 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 $10.8 million, excluding the impact of stock-based compensation expense.

The growth in Consolidated AFFO and AFFO attributable to American Tower Corporation common stockholders was primarily attributable to the increase in our operating profit, a decrease in dividends on preferred stock and a decrease in the adjustment for straight-line revenue, partially offset by an increase in cash paid for interest.

We expect our agreement with Tata to result in increases in Adjusted EBITDA and AFFO in the fourth quarter of 2018 of $300.0 million and $250.0 million, respectively. We do not expect the impact to net income to be material.

Nine Months Ended September 30, 2018

The decrease in net income was primarily due to an increase in other operating expenses, primarily related to an increase in impairment charges of $180.2 million, and increases in depreciation, amortization and accretion expense and interest expense, partially offset by an increase in our operating profit, the change in the income tax provision (benefit) and the nonrecurrence of a loss on retirement of long-term obligations of $69.9 million recorded in the prior-year period.

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 $50.2 million, excluding the impact of stock-based compensation expense.

Liquidity and Capital Resources

The information in this section updates as of September 30, 2018 the “Liquidity and Capital Resources” section of the 2017 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 millions):



	As of September 30, 2018
Available under the 2013 Credit Facility	$	895.0
Available under the 2014 Credit Facility	2,000.0
Letters of credit	(9.7		)
Total available under credit facilities, net	2,885.3
Cash and cash equivalents	1,026.5
Total liquidity	$	3,911.8

Subsequent to September 30, 2018 , we borrowed an additional $350.0 million under our multicurrency senior unsecured revolving credit facility entered into in June 2013, as amended (the “2013 Credit Facility”), which we used for general corporate purposes.

Summary cash flow information is set forth below (in millions):



	Nine Months Ended September 30,
	2018			2017
Net cash provided by (used for):
Operating activities	$	2,485.1		$	2,136.6
Investing activities	(2,055.1		)	(1,510.5		)
Financing activities	(34.3		)	(613.9		)
Net effect of changes in foreign currency exchange rates on cash and cash equivalents	(57.3		)	6.0
Net increase in cash and cash equivalents, and restricted cash	$	338.4		$	18.2

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. Two of our minority holders in India have exercised their put options with respect to shares in our Indian subsidiary, ATC Telecom Infrastructure Private Limited (see note 15 to our consolidated and condensed consolidated financial statements included in this Quarterly Report on Form 10-Q). Accordingly, we expect to pay an amount equivalent to approximately $400.0 million to redeem the put shares in the first quarter of 2019.

As of September 30, 2018 , we had total outstanding principal indebtedness of $21.4 billion, with a current portion of $2.8 billion. During the nine months ended September 30, 2018 , 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, 2018 , 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 September 30, 2018 , we had $899.0 million of cash and cash equivalents held by our foreign subsidiaries, of which $339.7 million was held by our joint ventures. 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 nine months ended September 30, 2018 was attributable to an increase in the operating profit of most of our property segments, a decrease in the impact of straight-line revenue and an increase in interest income, partially offset by an increase in cash used for working capital.

Cash Flows from Investing Activities

Our significant investing activities during the nine months ended September 30, 2018 are highlighted below:


•	We spent $1,437.8 million for acquisitions, primarily to fund the Vodafone Acquisition and the Idea Acquisition.


•	We spent $626.4 million for capital expenditures, as follows (in millions):



Discretionary capital projects (1)	$	175.6
Ground lease purchases	116.7
Capital improvements and corporate expenditures (2)	100.4
Redevelopment	160.4
Start-up capital projects	73.3
Total capital expenditures (3)	$	626.4

_______________


(1)	Includes the construction of 1,468 communications sites globally.


(2)	Includes $22.4 million of capital lease payments included in Repayments of notes payable, credit facilities, senior notes, secured debt and capital leases in the cash flow from financing activities in our condensed consolidated statements of cash flows.


(3)	Net of purchase credits of $6.4 million on certain assets, which are reported in investing 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 maintaining our commitment to our long-term financial policies. Accordingly, we expect to continue to deploy capital through our annual capital expenditure program, including land purchases and new site construction, and through acquisitions. A review is also being conducted of our tower portfolios as to whether any additional capital expenditures are required to upgrade our towers in certain jurisdictions to our structural standards or address capacity, structural or permitting issues. We expect that our 2018 total capital expenditures will be between $850 million and $950 million, as follows (in millions):



Discretionary capital projects (1)	$	250	to	$	290
Ground lease purchases	150		to	170
Capital improvements and corporate expenditures	150		to	160
Redevelopment	210		to	230
Start-up capital projects	90		to	100
Total capital expenditures	$	850	to	$	950

_______________

(1) Includes the construction of approximately 2,000 to 3,000 communications sites globally.

Cash Flows from Financing Activities

Our significant financing activities were as follows (in millions):



	Nine Months Ended September 30,
	2018			2017
Proceeds from issuance of senior notes, net	$	584.9		$	1,279.4
(Repayments of) proceeds from credit facilities, net	(715.9		)	1,073.6
Proceeds from term loan	1,500.0			—
Proceeds from issuance of securities in securitization transaction	500.0			—
Repayments of securitized debt	(500.0		)	(302.5		)
Repayment of senior notes	—			(1,300.0		)
(Distributions to) contributions from noncontrolling interest holders, net (1)	(14.3		)	264.7
Distributions paid on common and preferred stock	(994.0		)	(862.0		)
Purchases of common stock	(181.2		)	(669.7		)

_______________

(1) 2017 contributions primarily relate to the funding of the FPS Acquisition.

Senior Notes

1.950% Senior Notes Offering— On May 22, 2018, we completed a registered public offering of 500.0 million EUR ( $589.0 million at the date of issuance) aggregate principal amount of 1.950% senior unsecured notes due 2026 (the “ 1.950% Notes”). The net proceeds from this offering were approximately 493.2 million EUR (approximately $581.0 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.

We may redeem the 1.950% 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 1.950% Notes on or after February 22, 2026, 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 supplemental indenture, we may be required to repurchase all of the 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 indenture contains 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 3.5 x Adjusted EBITDA, as defined in the supplemental indenture.

Securitizations

Repayment of Series 2013-1A Securities . On the March 2018 payment date, we repaid the $500.0 million aggregate principal amount outstanding under the Secured Tower Revenue Securities, Series 2013-1A (the “Series 2013-1A Securities”), pursuant to the terms of the agreements governing such securities. The repayment was funded with borrowings under our multicurrency senior unsecured revolving credit facility entered into in January 2012 and amended and restated in September 2014, as further amended (the “2014 Credit Facility”) and cash on hand.

Secured Tower Revenue Securities, Series 2018-1, Subclass A and Series 2018-1, Subclass R . On March 29, 2018, we completed a securitization transaction (the “2018 Securitization”), in which the American Tower Trust I (the “Trust”) issued $500.0 million aggregate principal amount of Secured Tower Revenue Securities, Series 2018-1, Subclass A (the “Series 2018-1A Securities”). To satisfy the applicable risk retention requirements of Regulation RR promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act” and, such requirements, the “Risk Retention Rules”), the Trust issued, and one of our affiliates purchased, $26.4 million aggregate principal amount of Secured Tower Revenue Securities, Series 2018-1, Subclass R (the “Series 2018-1R Securities” and, together with the Series 2018-1A Securities, the “2018 Securities”) to retain an “eligible horizontal residual interest” (as defined in the Risk Retention Rules) in an amount equal to at least 5% of the fair value of the 2018 Securities.

The 2018 Securities correspond to components of the Loan made to the AMT Asset Subs pursuant to the Second Amended and Restated Loan and Security Agreement among the Trust and the AMT Asset Subs, dated as of March 29, 2018 (the “Loan Agreement”) and were issued in two separate subclasses of the same series. The 2018 Securities represent a pass-through interest in the components of the Loan corresponding to the 2018 Securities. The Series 2018-1A Securities have an interest rate of 3.652% and the Series 2018-1R Securities have an interest rate of 4.459%. The 2018 Securities have an expected life of approximately ten years with a final repayment date in March 2048.

The Loan is secured by (1) mortgages, deeds of trust and deeds to secure debt on substantially all of the Trust Sites and their operating cash flows, (2) a security interest in substantially all of the AMT Asset Subs’ personal property and fixtures and (3) the AMT Asset Subs’ rights under that certain management agreement among the AMT Asset Subs and SpectraSite Communications, LLC entered into in March 2013. American Tower Holding Sub, LLC (the “Guarantor”), whose only material assets are its equity interests in each of the AMT Asset Subs, and American Tower Guarantor Sub, LLC whose only material asset is its equity interests in the Guarantor, have each guaranteed repayment of the Loan and pledged their equity interests in their respective subsidiary or subsidiaries as security for such payment obligations.

For more information regarding the Trust Securitizations, see “—Factors Affecting Sources of Liquidity” below.

Bank Facilities

2013 Credit Facility. During the nine months ended September 30, 2018 , we borrowed an aggregate of $1.8 billion and repaid an aggregate of $2.0 billion of revolving indebtedness under the 2013 Credit Facility. We used the borrowings to fund acquisitions, repay existing indebtedness and for general corporate purposes. We currently have $3.5 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 nine months ended September 30, 2018 , we borrowed an aggregate of $1.1 billion and repaid an aggregate of $1.5 billion of revolving indebtedness under the 2014 Credit Facility. We used the borrowings to repay existing indebtedness, including the Series 2013-1A Securities, and for general corporate purposes. We currently

have $6.2 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.

2018 Term Loan. On March 29, 2018, we entered into a $1.5 billion unsecured term loan (the “2018 Term Loan”), the net proceeds of which were used to repay $1.1 billion of outstanding indebtedness under the 2013 Credit Facility and $445.0 million of outstanding indebtedness under the 2014 Credit Facility. Any outstanding principal and accrued but unpaid interest will be due and payable in full at maturity.

Our $1.0 billion unsecured term loan entered into in October 2013, as amended (the “2013 Term Loan”), the 2013 Credit Facility, the 2014 Credit Facility and the 2018 Term Loan 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 these bank facilities.

As of September 30, 2018, the key terms under the 2013 Credit Facility, the 2014 Credit Facility, the 2013 Term Loan and the 2018 Term Loan were as follows:



Bank Facility (1)	Outstanding Principal Balance		Maturity Date		LIBOR borrowing interest rate range (2)	Base rate borrowing interest rate range (2)	Current margin over LIBOR and the base rate, respectively
2013 Credit Facility	$	1,855.0	June 28, 2021	(3)	0.875% - 1.750%	0.000% - 0.750%	1.125% and 0.125%
2014 Credit Facility	$	—	January 31, 2023	(3)	1.000% - 2.000%	0.000% - 1.000%	1.250% and 0.250%
2013 Term Loan	$	1,000.0	January 31, 2023		1.000% - 2.000%	0.000% - 1.000%	1.250% and 0.250%
2018 Term Loan	$	1,500.0	March 29, 2019		0.625% - 1.500%	0.000% - 0.500%	0.875% and 0.000%

_______________

(1) Currently borrowed at LIBOR.


(2)	Represents interest rate above LIBOR for LIBOR based borrowings and the interest rate above the defined base rate for base rate borrowings, in each case based on our debt ratings.


(3)	Subject to two optional renewal periods.

We must pay a quarterly commitment fee on the undrawn portion of each of the 2013 Credit Facility and the 2014 Credit Facility. The commitment fee for the 2013 Credit Facility ranges from 0.100% to 0.350% per annum, based upon our debt ratings, and is currently 0.125%. The commitment fee for the 2014 Credit Facility 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 2013 Term Loan, the 2013 Credit Facility, the 2014 Credit Facility and the 2018 Term Loan 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.

Stock Repurchase Programs. In March 2011, our Board of Directors approved a stock repurchase program, pursuant to which we are authorized to repurchase up to $1.5 billion of our common stock (the “2011 Buyback”). In December 2017, our Board of Directors approved an additional stock repurchase program, pursuant to which we are authorized to repurchase up to $2.0 billion of our common stock (the “2017 Buyback” and, together with the 2011 Buyback, the “Buyback Programs”).

During the nine months ended September 30, 2018, we repurchased 1,345,543 shares of our common stock under the 2011 Buyback for an aggregate of $189.2 million , including commissions and fees. We had no repurchases under the 2017 Buyback.

We expect to continue managing the pacing of the remaining $2.1 billion (as of October 23, 2018) under the Buyback Programs 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 Buyback Programs are subject to us having available cash to fund repurchases.

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 nine months ended September 30, 2018 , we received an aggregate of $54.1 million in proceeds upon exercises of stock options and sales 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 $5.3 billion to our common stockholders, including the dividend paid in October 2018, primarily classified as ordinary income.

During the nine months ended September 30, 2018 , we paid $2.22 per share, or $971.2 million , to common stockholders of record. In addition, we declared a distribution of $0.79 per share, or $348.3 million , paid on October 17, 2018 to our common stockholders of record at the close of business on September 28, 2018.

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, 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.

During the nine months ended September 30, 2018, all outstanding shares of our 5.50% Mandatory Convertible Preferred Stock, Series B, par value $0.01 per share (the “Series B Preferred Stock”), converted automatically at a rate of 8.7420 per share of Series B Preferred Stock, or 0.8742 per depositary share, each representing a 1/10th interest in a share of Series B Preferred Stock, into an aggregate of 12,020,064 shares of our common stock pursuant to the provisions of the Certificate of Designations governing the Series B Preferred Stock.

During the nine months ended September 30, 2018, we paid the final dividend of $13.75 per share, or $18.9 million, to holders of the Series B Preferred Stock of record at the close of business on February 1, 2018.

We accrue distributions on unvested restricted stock units, which are payable upon vesting. As of September 30, 2018 , the amount accrued for distributions payable related to unvested restricted stock units was $11.5 million . During the nine months ended September 30, 2018 , we paid $4.2 million of distributions upon the vesting of restricted stock units.

Factors Affecting Sources of Liquidity

As discussed in the “Liquidity and Capital Resources” section of the 2017 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 our material debt agreements that contain covenants, 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 2013 Credit Facility, the 2014 Credit Facility, the 2013 Term Loan and the 2018 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 also 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 September 30, 2018 , we were in compliance with each of these covenants.

_______________


(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, additional 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 Trust Securitizations . The indenture and related supplemental indentures 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 include certain financial ratios and operating covenants and other restrictions customary for transactions subject to rated securitizations. Among other things, 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 and the assets securing 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 September 30, 2018 , $79.9 million held in such reserve accounts was classified as restricted cash.

Certain information with respect to the 2015 Securitization and the Trust Securitizations is set forth 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 Borrower	Notes/Securities Issued	Conditions Limiting Distributions of Excess Cash		Excess Cash Distributed During the Nine Months Ended September 30, 2018	DSCR as of September 30, 2018	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)
	Issuer or Borrower	Notes/Securities Issued	Cash Trap DSCR	Amortization Period		DSCR as of September 30, 2018
					(in millions)		(in millions)	(in millions)
2015 Securitization	GTP Acquisition Partners	American Tower Secured Revenue Notes, Series 2015-1 and Series 2015-2	1.30x, Tested Quarterly (2)	(3)(4)	$154.7	8.58x	$194.5	$198.5
Trust Securitizations	AMT Asset Subs	Secured Tower Revenue Securities, Series 2013-2A, Secured Tower Revenue Securities, Series 2018-1, Subclass A and Secured Tower Revenue Securities, Series 2018-1, Subclass R	1.30x, Tested Quarterly (2)	(3)(5)	$481.3	10.38x	$542.7	$551.6

_______________


(1)	Based on the net cash flow of the applicable issuer or borrower as of September 30, 2018 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, fund required reserves, pay management fees and budgeted operating expenses and make other payments required under the applicable transaction 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 and meet REIT distribution requirements. During an “amortization period,” all excess cash flow and any amounts then in the applicable Cash Trap Reserve 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 the 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 of, 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 3,556 communications sites that secure the 2015 Notes or the 5,116 sites 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 fund capital expenditures, future growth and expansion initiatives, satisfy our distribution requirements 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 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 2017 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 perform 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 2017 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 2017 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 nine months ended September 30, 2018 . We have made no material changes to the critical accounting policies described in the 2017 Form 10-K.

During the nine months ended September 30, 2018 , no potential goodwill impairment was identified as the fair value of each of our reporting units was in excess of its carrying amount. The fair value of our India reporting unit, which is based on the present value of forecasted future cash flows (the income approach) exceeded the carrying value by approximately $129.8 million, or 3%. As a result of the telecommunications carrier consolidation occurring in the India market, we lowered our discounted cash flow projections, which increases the sensitivity of these projections to changes in the key assumptions used in determining the fair value of the India reporting unit as of September 30, 2018. Key assumptions include future revenue growth rates and operating margins, capital expenditures, terminal period growth rate and the weighted-average cost of capital, which were determined considering historical data and current assumptions related to the impacts of the carrier consolidation.

For this reporting unit, we performed a sensitivity analysis on our significant assumptions as of September 30, 2018 and determined that a (i) 2% reduction on projected revenues, (ii) 25 basis point increase in the weighted-average cost of capital or (iii) 12% reduction in terminal sales growth rate, individually, each of which we determined to be reasonable, would impact our conclusion that the fair value of the India reporting unit exceeds its carrying value. There have been no material adverse changes to these sensitivities during the nine months ended September 30, 2018. Events that could negatively affect our India reporting unit’s financial results include increased customer attrition exceeding our forecast resulting from the ongoing carrier consolidation, carrier tenant bankruptcies and other factors set forth under the caption “Risk Factors” in Item 1A of the 2017 Form 10-K.

The carrying value of goodwill in the India reporting unit was $1,006.7 million as of September 30, 2018, which represents 18% of our consolidated balance of $5,463.4 million.

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 September 30, 2018 , 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 $19.8 million , has an interest rate of 5.74% and expires in April 2021. We also have three interest rate swap agreements related to the 2.250% 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 , have an interest rate of one-month LIBOR plus applicable spreads and expire in January 2022. In addition, we have three interest rate swap agreements related to a portion of the 3.000% senior unsecured notes due 2023 (the “3.000% Notes”). These swaps have been designated as fair value hedges, have an aggregate notional amount of $500.0 million and an interest rate of one-month LIBOR plus applicable spreads and expire in June 2023.

Changes in interest rates can cause interest charges to fluctuate on our variable rate debt. Variable rate debt as of September 30, 2018 consisted of $1,855.0 million under the 2013 Credit Facility, $1.0 billion under the 2013 Term Loan, $1.5 billion under the 2018 Term Loan, $600.0 million under the interest rate swap agreements related to the 2.250% Notes, $500.0 million under the interest rate swap agreements related to the 3.000% Notes, $46.3 million under the South African credit facility, $19.8 million under the Colombian credit facility after giving effect to our interest rate swap agreement, $72.0 million under the publicly issued simple debentures issued by BR Towers S.A. and $25.7 million under the Brazil credit facility. A 10% increase in current interest rates would result in an additional $14.4 million of interest expense for the nine months ended September 30, 2018 .

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 nine months ended September 30, 2018 , 44% of our revenues and 53% of our total operating expenses were denominated in foreign currencies.

As of September 30, 2018 , 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 $116.3 million of unrealized losses that would be included in Other expense in our consolidated statements of operations for the nine months ended September 30, 2018 .



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 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 September 30, 2018 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 fiscal quarter ended September 30, 2018 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 2017 Form 10-K, as updated in Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2018.



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

Issuer Purchases of Equity Securities

During the three months ended September 30, 2018, we repurchased a total of 623,511 shares of our common stock for an aggregate of $89.2 million , including commissions and fees, pursuant to the 2011 Buyback. We had no repurchases under the 2017 Buyback. The table below sets forth details of our repurchases during the three months ended September 30, 2018.



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)
July 1, 2018 - July 31, 2018	508,634	$	142.61	508,634	$	172.3
August 1, 2018 - August 31, 2018	—	$	—	—	$	172.3
September 1, 2018 - September 30, 2018	114,877	$	144.93	114,877	$	155.6
Total Third Quarter	623,511	$	143.03	623,511	$	155.6

_______________

(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 continued to repurchase shares of our common stock pursuant to the 2011 Buyback subsequent to September 30, 2018. Between October 1, 2018 and October 23, 2018, we repurchased an additional 301,946 shares of our common stock for an aggregate of $43.6 million, including commissions and fees. As a result, as of October 23, 2018, we had repurchased a total of 14.0 million shares of our common stock under the 2011 Buyback for an aggregate of $1.4 billion, including commissions and fees.

We expect to continue to manage the pacing of the remaining $2.1 billion under the Buyback Programs 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 and the 2017 Buyback are subject to our having available cash to fund repurchases.



ITEM 6.	EXHIBITS



Exhibit No.		Description of Document

10.1		Form of Notice of Grant of Performance-Based Restricted Stock Units and PSU Agreement (U.S. Employee) Pursuant to the American Tower Corporation 2007 Equity Incentive Plan, as amended (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K on July 31, 2018, and incorporated herein by reference)

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

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.



	A MERICAN T OWER C ORPORATION

Date: October 30, 2018	By:	/S/ THOMAS A. BARTLETT
		Thomas A. Bartlett Executive Vice President and Chief Financial Officer (Duly Authorized Officer and Principal Financial Officer)

TABLE OF CONTENTS

Part I Item 1. Unaudited Consolidated and Condensed Consolidated Financial Statements Item 2. Management S Discussion and Analysis Of Financial Condition and Results Of Operations Item 3. Quantitative and Qualitative Disclosures About Market Risk Item 4. Controls and Procedures Part II. Other Information Item 1. Legal Proceedings Item 1A. Risk Factors Item 1A Of The 2017 Form 10-k, As Updated in Part Ii, Item 1A Of Our Quarterly Report on Form 10-q For The Quarter Ended June 30, 2018 Item 2. Unregistered Sales Of Equity Securities and Use Of Proceeds Item 6. Exhibits

10.1 Form of Notice of Grant of Performance-Based Restricted Stock Units and PSU Agreement (U.S. Employee) Pursuant to the American Tower Corporation 2007 Equity Incentive Plan, as amended (filed as Exhibit 10.1 to the Companys Current Report on Form 8-K on July 31, 2018, and incorporated herein by reference) 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

Compliance Tests For The 12 Months Ended

September 30, 2018

($ in billions)

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

Consolidated Senior Secured Leverage Ratio

Senior Secured Debt to Adjusted EBITDA

≤ 3.00:1.00

~ $9.9 (4)