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 March 31, 2019.
¨
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)
Securities registered pursuant to Section 12(b) of the Act:
Title of each Class
 Trading Symbol(s)
Name of exchange on which registered
Common Stock, $0.01 par value
 AMT
New York Stock Exchange
1.375% Senior Notes due 2025
AMT 25A
New York Stock Exchange
1.950% Senior Notes due 2026
AMT 26B
New York Stock Exchange
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 April 26, 2019, there were 442,023,435 shares of common stock outstanding.
 
 
 



AMERICAN TOWER CORPORATION
TABLE OF CONTENTS
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2019

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




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)
 
 
March 31, 2019
 
December 31, 2018
ASSETS
 
 
 
 
CURRENT ASSETS:
 
 
 
 
Cash and cash equivalents
 
$
1,004.8

 
$
1,208.7

Restricted cash
 
94.9

 
96.2

Short-term investments
 
18.4

 
—

Accounts receivable, net
 
473.0

 
459.0

Prepaid and other current assets
 
471.2

 
621.2

Total current assets
 
2,062.3

 
2,385.1

PROPERTY AND EQUIPMENT, net
 
11,202.6

 
11,247.1

GOODWILL
 
5,538.2

 
5,501.9

OTHER INTANGIBLE ASSETS, net
 
11,042.8

 
11,174.3

DEFERRED TAX ASSET
 
132.3

 
157.7

DEFERRED RENT ASSET
 
1,588.6

 
1,581.7

RIGHT-OF-USE ASSET
 
7,080.9

 
—

NOTES RECEIVABLE AND OTHER NON-CURRENT ASSETS
 
279.1

 
962.6

TOTAL
 
$
38,926.8

 
$
33,010.4

LIABILITIES
 
 
 
 
CURRENT LIABILITIES:
 
 
 
 
Accounts payable
 
$
130.0

 
$
130.8

Accrued expenses
 
863.7

 
948.3

Distributions payable
 
403.1

 
377.4

Accrued interest
 
126.5

 
174.5

Current portion of operating lease liability
 
498.4

 
—

Current portion of long-term obligations
 
2,097.2

 
2,754.8

Unearned revenue
 
293.0

 
304.1

Total current liabilities
 
4,411.9

 
4,689.9

LONG-TERM OBLIGATIONS
 
19,107.1

 
18,405.1

OPERATING LEASE LIABILITY
 
6,316.1

 
—

ASSET RETIREMENT OBLIGATIONS
 
1,227.2

 
1,210.0

DEFERRED TAX LIABILITY
 
510.8

 
535.9

OTHER NON-CURRENT LIABILITIES
 
864.4

 
1,265.1

Total liabilities
 
32,437.5

 
26,106.0

COMMITMENTS AND CONTINGENCIES
 


 


REDEEMABLE NONCONTROLLING INTERESTS
 
589.0

 
1,004.8

EQUITY (shares in thousands):
 
 
 
 
Common stock: $.01 par value; 1,000,000 shares authorized; 452,525 and 451,617 shares issued; and 441,968 and 441,060 shares outstanding, respectively
 
4.5

 
4.5

Additional paid-in capital
 
10,447.9

 
10,380.8

Distributions in excess of earnings
 
(1,226.4
)
 
(1,199.5
)
Accumulated other comprehensive loss
 
(2,672.2
)
 
(2,642.9
)
Treasury stock (10,557 shares at cost)
 
(1,206.8
)
 
(1,206.8
)
Total American Tower Corporation equity
 
5,347.0

 
5,336.1

Noncontrolling interests
 
553.3

 
563.5

Total equity
 
5,900.3

 
5,899.6

TOTAL
 
$
38,926.8

 
$
33,010.4

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

1


AMERICAN TOWER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except share and per share data)
 
 
Three Months Ended March 31,
 
 
2019
 
2018
REVENUES:
 
 
 
 
Property
 
$
1,786.0

 
$
1,710.4

Services
 
27.4

 
31.4

Total operating revenues
 
1,813.4

 
1,741.8

 OPERATING EXPENSES:
 
 
 
 
Costs of operations (exclusive of items shown separately below):
 
 
 
 
 Property
 
533.0

 
507.4

 Services
 
10.4

 
12.5

Depreciation, amortization and accretion
 
436.9

 
446.3

Selling, general, administrative and development expense
 
198.1

 
204.9

Other operating expenses
 
20.1

 
167.8

Total operating expenses
 
1,198.5

 
1,338.9

OPERATING INCOME
 
614.9

 
402.9

OTHER INCOME (EXPENSE):
 
 
 
 
Interest income, TV Azteca (net of interest expense of $0.0 and $0.3, respectively)
 
—

 
2.7

Interest income
 
12.4

 
15.4

Interest expense
 
(207.5
)
 
(199.6
)
Loss on retirement of long-term obligations
 
(0.1
)
 
—

Other income (including foreign currency gains of $20.1 and $23.3, respectively)
 
21.9

 
27.8

Total other expense
 
(173.3
)
 
(153.7
)
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
 
441.6

 
249.2

Income tax (provision) benefit
 
(34.0
)
 
31.1

NET INCOME
 
407.6

 
280.3

Net (income) loss attributable to noncontrolling interests
 
(10.2
)
 
4.9

NET INCOME ATTRIBUTABLE TO AMERICAN TOWER CORPORATION STOCKHOLDERS
 
397.4

 
285.2

Dividends on preferred stock
 
—

 
(9.4
)
NET INCOME ATTRIBUTABLE TO AMERICAN TOWER CORPORATION COMMON STOCKHOLDERS
 
$
397.4

 
$
275.8

NET INCOME PER COMMON SHARE AMOUNTS:
 
 
 
 
Basic net income attributable to American Tower Corporation common stockholders
 
$
0.90

 
$
0.63

Diluted net income attributable to American Tower Corporation common stockholders
 
$
0.89

 
$
0.63

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (in thousands):
 
 
 
 
BASIC
 
441,351

 
435,124

DILUTED
 
444,621

 
438,520

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

2


AMERICAN TOWER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions)
 
 
 
Three Months Ended March 31,
 
 
2019
 
2018
Net income
 
$
407.6

 
$
280.3

Other comprehensive income (loss):
 
 
 
 
Changes in fair value of cash flow hedges, each net of tax expense of $0
 
(0.1
)
 
0.0

Reclassification of unrealized losses on cash flow hedges to net income, each net of tax expense of $0
 
0.1

 
0.1

Adjustment to redeemable noncontrolling interest
 
—

 
78.8

Foreign currency translation adjustments, net of tax expense of $1.0 and $1.6, respectively
 
12.9

 
57.6

Other comprehensive income
 
12.9

 
136.5

Comprehensive income
 
420.5

 
416.8

Allocation of accumulated other comprehensive income resulting from purchase of redeemable noncontrolling interest
 
(52.4
)
 
—

Comprehensive loss attributable to noncontrolling interest
 
0.0

 
12.1

Comprehensive income attributable to American Tower Corporation stockholders
 
$
368.1

 
$
428.9


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



3

AMERICAN TOWER CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
 
 
Three Months Ended March 31,
 
 
2019
 
2018
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
 
Net income
 
$
407.6

 
$
280.3

Adjustments to reconcile net income to cash provided by operating activities
 
 
 
 
Depreciation, amortization and accretion
 
436.9

 
446.3

Amortization of operating leases
 
152.6

 
—

Stock-based compensation expense
 
42.5

 
42.7

Loss on early retirement of long-term obligations
 
0.1

 
—

Other non-cash items reflected in statements of operations
 
28.9

 
96.8

Increase in net deferred rent balances
 
(5.3
)
 
(3.9
)
Reduction in operating lease liability
 
(132.4
)
 
—

Increase in assets
 
(33.0
)
 
(95.4
)
(Decrease) increase in liabilities
 
(112.8
)
 
25.0

Cash provided by operating activities
 
785.1

 
791.8

CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
 
Payments for purchase of property and equipment and construction activities
 
(220.8
)
 
(198.5
)
Payments for acquisitions, net of cash acquired
 
(91.1
)
 
(673.4
)
Proceeds from sale of short-term investments and other non-current assets
 
254.9

 
84.0

Payments for short-term investments
 
(261.5
)
 
(478.1
)
Deposits and other
 
(4.8
)
 
(14.6
)
Cash used for investing activities
 
(323.3
)
 
(1,280.6
)
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
 
Borrowings under credit facilities
 
1,700.0

 
1,748.3

Proceeds from issuance of senior notes, net
 
1,241.6

 
—

Proceeds from term loan
 
1,300.0

 
1,500.0

Proceeds from issuance of securities in securitization transaction
 
—

 
500.0

Repayments of notes payable, credit facilities, senior notes, secured debt, term loan, finance leases and capital leases
 
(4,025.9
)
 
(2,584.9
)
Distributions to noncontrolling interest holders, net
 
(13.8
)

(0.3
)
Proceeds from stock options
 
27.2

 
20.0

Distributions paid on common stock
 
(377.1
)
 
(304.3
)
Distributions paid on preferred stock
 
—

 
(18.9
)
Deferred financing costs and other financing activities
 
(76.7
)
 
(42.6
)
Purchase of redeemable noncontrolling interest
 
(425.7
)
 
—

Cash (used for) provided by financing activities
 
(650.4
)
 
817.3

Net effect of changes in foreign currency exchange rates on cash and cash equivalents, and restricted cash
 
(16.6
)
 
(4.5
)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS, AND RESTRICTED CASH
 
(205.2
)
 
324.0

CASH AND CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF PERIOD
 
1,304.9

 
954.9

CASH AND CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD
 
$
1,099.7

 
$
1,278.9

CASH PAID FOR INCOME TAXES (NET OF REFUNDS OF $0.3 AND $4.7, RESPECTIVELY)
 
$
36.9

 
$
24.7

CASH PAID FOR INTEREST
 
$
249.0

 
$
228.6

NON-CASH INVESTING AND FINANCING ACTIVITIES:
 
 
 
 
Decrease in accounts payable and accrued expenses for purchases of property and equipment and construction activities
 
$
(17.7
)
 
$
(29.3
)
Purchases of property and equipment under finance leases, perpetual easements and capital leases    
 
$
16.0

 
$
9.7

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

4


AMERICAN TOWER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY
(in millions, share counts in thousands)
 
 
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
 
Shares
 
Amount
 
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
 
—

 
—

 
756

 
0.0

 
—

 
—

 
27.3

 
—

 
—

 
—

 
27.3

Conversion of preferred stock
 
(1,375
)
 
(0.0
)
 
12,020

 
0.1

 
—

 
—

 
(0.1
)
 
—

 
—

 
—

 
—

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, net of tax
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
0.1

 
—

 
—

 
0.1

Foreign currency translation adjustment, net of tax
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
64.8

 
—

 
15.1

 
79.9

Adjustment to redeemable noncontrolling interest
 
—

 
—

 
—

 
—

 
—

 
—

 
(50.7
)
 
78.8

 
—

 
—

 
28.1

Distributions to noncontrolling interest
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(0.3
)
 
(0.3
)
Impact of revenue recognition standard adoption
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
38.4

 
—

 
38.4

Common stock distributions declared
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(332.3
)
 
—

 
(332.3
)
Preferred stock dividends declared
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(18.9
)
 
—

 
(18.9
)
Net income
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
285.2

 
5.7

 
290.9

BALANCE, MARCH 31, 2018
 
—

 
$
—

 
450,505

 
$
4.5

 
(8,909
)
 
$
(974.0
)
 
$
10,224.0

 
$
(1,834.6
)
 
$
(1,085.7
)
 
$
607.1

 
$
6,941.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
BALANCE, JANUARY 1, 2019
 
—

 
$
—

 
451,617

 
$
4.5

 
(10,557
)
 
$
(1,206.8
)
 
$
10,380.8

 
$
(2,642.9
)
 
$
(1,199.5
)
 
$
563.5

 
$
5,899.6

Stock-based compensation related activity
 
—

 
—

 
908

 
0.0

 
—

 
—

 
14.7

 
—

 
—

 
—

 
14.7

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

 
—

 
—

 
—

 
—

 
—

 
—

 
(0.1
)
 
—

 
—

 
(0.1
)
Reclassification of unrealized losses on cash flow hedges to net income, net of tax
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
0.1

 
—

 
—

 
0.1

Foreign currency translation adjustment, net of tax
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
23.1

 
—

 
(20.1
)
 
3.0

Distributions to noncontrolling interest
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(0.3
)
 
(0.3
)
Purchase of redeemable noncontrolling interest
 
—

 
—

 
—

 
—

 
—

 
—

 
52.4

 
(52.4
)
 
—

 
—

 
—

Impact of lease accounting standard adoption
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(24.7
)
 
—

 
(24.7
)
Common stock distributions declared
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(399.6
)
 
—

 
(399.6
)
Net income
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
397.4

 
10.2

 
407.6

BALANCE, MARCH 31, 2019
 
—

 
$
—

 
452,525

 
$
4.5

 
(10,557
)
 
$
(1,206.8
)
 
$
10,447.9

 
$
(2,672.2
)
 
$
(1,226.4
)
 
$
553.3

 
$
5,900.3


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

5
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(tabular amounts in millions, unless otherwise noted)


1.
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

The accompanying consolidated and condensed consolidated financial statements have been prepared by American Tower Corporation (together with its subsidiaries, “ATC” or 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, 2018 (the “2018 Form 10-K”). The results of operations for the three months ended March 31, 2019 are not necessarily indicative of the results that may be expected for the entire year.

Principles of Consolidation and Basis of Presentation—The accompanying consolidated and condensed consolidated financial statements include the accounts of the Company and those entities in which it has a controlling interest. Investments in entities that the Company does not control are accounted for using the equity or cost method, depending upon the Company’s ability to exercise significant influence over operating and financial policies. All intercompany accounts and transactions have been eliminated. As of March 31, 2019, the Company holds (i) a 51% controlling interest in each of two joint ventures, one in Ghana and one in Uganda, (MTN Group Limited holds a 49% noncontrolling interest), (ii) a 51% controlling interest in a joint venture that primarily consists of the Company’s operations in Germany and France (PGGM holds a 49% noncontrolling interest), (iii) an approximate 81% controlling interest in a subsidiary of the Company in South Africa (South African investors hold an approximate 19% noncontrolling interest) and (iv) a 79% controlling interest in ATC Telecom Infrastructure Private Limited (“ATC TIPL”), formerly Viom Networks Limited (“Viom”), in India.

Significant Accounting Policies—The Company’s significant accounting policies are described in note 1 to the Company’s consolidated financial statements included in the 2018 Form 10-K. There have been no material changes to the Company’s significant accounting policies during the three months ended March 31, 2019, except the adoption of new lease accounting guidance, as discussed below.

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 amounts shown in the statement of cash flows is as follows:
 
Three Months Ended March 31,
 
2019
 
2018
Cash and cash equivalents
$
1,004.8

 
$
1,125.4

Restricted cash
94.9

 
153.5

Total cash and cash equivalents and restricted cash
$
1,099.7

 
$
1,278.9


Lease—The new lease standard requires leases to be accounted for using a right-of-use model, which recognizes that, at the date of commencement, a lessee has a financial obligation to make lease payments to the lessor for the right to use the underlying asset during the lease term. The lessee recognizes a corresponding right-of-use asset related to this right.

On January 1, 2019, the Company elected to adopt the new lease standard using the modified retrospective method applied to lease arrangements that were in place on the transition date. Results for reporting periods beginning January 1, 2019 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 elected certain available practical expedients which permit the adopter to not reassess certain items upon adoption, including: (i) whether any existing contracts are or contain leases, (ii) the classification of existing leases and (iii) initial direct costs for existing leases. The Company also elected the practical expedient related to easements, which permits carryforward accounting treatment for land easements on existing agreements.

6
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(tabular amounts in millions, unless otherwise noted)

The Company recorded a net increase to opening Distributions in excess of earnings in its consolidated balance sheet of $24.7 million as of January 1, 2019 due to the cumulative impact of adopting the new lease standard. This adjustment related to right-of-use asset impairments. The Company also recorded a lease liability of $6.9 billion and a corresponding right-of-use asset of $7.1 billion upon adoption of the new lease standard. Those rights and obligations are primarily related to operating leases for ground space underneath the Company’s communications sites. The right-of-use assets recorded include, among other items, amounts previously classified as prepaid rent, deferred lease acquisition costs, fair value adjustments on acquired leases and long-term deferred rent obligations. Finance leases, which primarily relate to towers, equipment and vehicles, were largely unchanged. There was no significant change to the Company’s consolidated statement of operations resulting from the adoption of this standard.
The Company did not elect the practical expedient for short-term leases, which permits an adopter to not apply the lease standard to leases with a remaining maturity of one year or less, and applied the new lease accounting standard to all leases, including short-term leases.
In conjunction with the adoption of the new lease accounting guidance, the Company applied the lessor and lessee practical expedient and no longer separates lease and non-lease components within a lease agreement when the timing and pattern of revenue recognition for the components are the same and the combined single lease component is classified as an operating lease. Certain amounts, such as power and fuel and common area maintenance, which were previously reported as non-lease revenue, are now accounted for as lease revenue. Accordingly, the Company has reclassified certain prior-period amounts within its disclosures.

Revenue—Most of the Company’s revenue is derived from leasing arrangements and is accounted for as lease revenue unless the timing and pattern of revenue recognition differs from the lease components. Revenue related to distributed antenna system (“DAS”) networks and fiber results from agreements with tenants that are not leases.

Non-lease revenue—Non-lease revenue consists primarily of revenue generated from DAS networks, fiber and other property related revenue. DAS networks 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 site acquisition, zoning and permitting (“AZP”) and structural analysis. 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 expected to be 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.

A summary of non-lease revenue disaggregated by source and geography is as follows:
Three Months Ended March 31, 2019
 
U.S.
 
Asia
 
EMEA
 
Latin
America
 
Total
Non-lease property revenue
 
$
58.8

 
$
2.4

 
$
1.6

 
$
35.0

 
$
97.8

Services revenue
 
27.4

 
—

 
—

 
—

 
27.4

Total non-lease revenue
 
$
86.2

 
$
2.4

 
$
1.6

 
$
35.0

 
$
125.2

Property lease revenue
 
927.5

 
286.5

 
175.9

 
298.3

 
1,688.2

Total revenue
 
$
1,013.7

 
$
288.9

 
$
177.5

 
$
333.3

 
$
1,813.4



7
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(tabular amounts in millions, unless otherwise noted)

Three Months Ended March 31, 2018 (1)
 
U.S.
 
Asia
 
EMEA
 
Latin
America
 
Total
Non-lease property revenue
 
$
63.1

 
$
1.9

 
$
0.6

 
$
23.7

 
$
89.3

Services revenue
 
31.4

 
—

 
—

 
—

 
31.4

Total non-lease revenue
 
$
94.5

 
$
1.9

 
$
0.6


$
23.7

 
$
120.7

Property lease revenue
 
868.3

 
271.1

 
173.6

 
308.1

 
1,621.1

Total revenue
 
$
962.8

 
$
273.0

 
$
174.2

 
$
331.8

 
$
1,741.8

_______________
(1)
Prior-period amounts adjusted with the adoption of the new lease accounting guidance, as applicable.

Information about receivables, contract assets and contract liabilities from contracts with tenants is as follows:
 
 
March 31, 2019
 
December 31, 2018 (1)
Accounts receivable
 
$
91.9

 
$
92.6

Prepaids and other current assets
 
7.7

 
7.7

Notes receivable and other non-current assets
 
21.3

 
22.2

Unearned revenue (2)
 
43.2

 
35.0

Other non-current liabilities (3)
 
54.1

 
54.1

_______________
(1)
Prior-period amounts adjusted with the adoption of the new lease accounting guidance, as applicable.
(2)
Excludes $55.9 million and $55.0 million of capital contributions related to DAS networks as of March 31, 2019 and December 31, 2018, respectively.
(3)
Excludes $302.6 million and $313.6 million of capital contributions related to DAS networks as of March 31, 2019 and December 31, 2018, respectively.

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 months ended March 31, 2019 is due to payments received, offset by $14.1 million of revenue recognized this period that was included in the Unearned revenue balance as of December 31, 2018. During the three months ended March 31, 2018, the Company recognized $10.4 million of revenue from the Unearned revenue balance as of January 1, 2018. The Company also recognized revenues of $14.5 million and $13.8 million for capital contributions related to DAS networks during the three months ended March 31, 2019 and 2018, respectively. There was $0.1 million of revenue recognized from Other non-current liabilities during each of the three months ended March 31, 2019 and 2018.

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 each of the three months ended March 31, 2019 and 2018 was less than $0.1 million. The change in contract assets attributable to revenue recognized during the three months ended March 31, 2019 and 2018 was $0.8 million and less than $0.1 million, respectively.

Accounting Standards Updates

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 the Company’s financial statements.

8
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
 
March 31, 2019
 
December 31, 2018
Unbilled receivables
$
131.3

 
$
126.1

Prepaid income tax
102.2

 
125.1

Value added tax and other consumption tax receivables
85.1

 
86.3

Prepaid assets
54.0

 
40.5

Prepaid operating ground leases
—

 
165.0

Other miscellaneous current assets
98.6

 
78.2

Prepaids and other current assets
$
471.2

 
$
621.2


The reduction in Prepaid operating ground leases is a result of the reclassification of assets to the Right-of-use asset in connection with the Company’s adoption of the new lease accounting standard.

3.    PROPERTY AND EQUIPMENT
Property and equipment (including assets held under financing leases) consisted of the following:
 
Estimated Useful  Lives (years) (1)
 
As of
 
 
March 31, 2019
 
December 31, 2018
Towers
Up to 20
 
$
12,850.9

 
$
12,777.9

Equipment (2)
2 - 20
 
1,700.7

 
1,667.3

Buildings and improvements
3 - 32
 
632.6

 
628.5

Land and improvements (3)
Up to 20
 
2,318.3

 
2,285.4

Construction-in-progress
 
 
364.8

 
358.1

Total
 
 
17,867.3

 
17,717.2

Less accumulated depreciation
 
 
(6,664.7
)
 
(6,470.1
)
Property and equipment, net
 
 
$
11,202.6

 
$
11,247.1

_______________
(1)
Assets on leased land are depreciated over the shorter of the estimated useful life of the asset or the term of the corresponding ground lease taking into consideration lease renewal options and residual value.
(2)
Includes fiber and DAS assets.
(3)
Estimated useful lives apply to improvements only.

Depreciation expense for the three months ended March 31, 2019 and 2018 was $223.7 million and $222.5 million, respectively. Included in depreciation expense for the three months ended March 31, 2019 was $42.4 million related to finance lease assets.

As of December 31, 2018, property and equipment included $4,369.5 million of capital lease assets with related equipment and improvements and $1,016.2 million of accumulated depreciation.

9
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(tabular amounts in millions, unless otherwise noted)

Information about finance lease-related balances is as follows:
 
 
 
 
As of
Finance leases:
 
Classification
 
March 31, 2019
Property and equipment
 
Towers
 
$
2,780.9

Accumulated depreciation
 
 
 
(1,042.6
)
Property and equipment, net
 
 
 
1,738.3

 
 
 
 
 
Property and equipment
 
Buildings and improvements
 
$
171.1

Accumulated depreciation
 
 
 
(60.4
)
Property and equipment, net
 
 
 
$
110.7

 
 
 
 
 
Property and equipment
 
Land
 
$
130.3

 
 
 
 
 
Property and equipment
 
Equipment
 
$
38.1

Accumulated depreciation
 
 
 
(9.6
)
Property and equipment, net
 
 
 
$
28.5


As of March 31, 2019, the Company had $1,458.1 million of perpetual land easements which are not depreciable.

4.   LEASES-50-3, 842-20-50-9]

The Company determines if an arrangement is a lease at the inception of the agreement. The Company determines an arrangement is a lease if it conveys the right to control the use of the communications site or ground space underneath a communications site for a period of time in exchange for consideration. The Company is both a lessor and a lessee.
Lessor—The Company is a lessor in most of its revenue arrangements, as property revenue is derived from tenant leases of specifically-identified, physically distinct space on the Company’s communications real estate assets. The Company’s lease arrangements with its tenants vary depending upon the region and the industry of the tenant and generally have initial non-cancellable terms of five to ten years with multiple renewal terms. The leases also contain provisions that periodically increase the rent due, typically annually, based on a fixed escalation percentage or an inflationary index, or a combination of both. The Company structures its leases to include financial penalties if a tenant terminates the lease, which serve to disincentivize tenants from terminating the lease prior to the expiration of the lease term.
The Company’s leasing arrangements outside of the U.S. may 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. Many arrangements require that the communications site has power for a specified percentage of time. In most 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 lease.
The Company typically has more than one tenant on a site and, by performing repair and maintenance work, can often lease a site, either through renewing existing agreements or leasing to new tenants, for periods beyond the existing tenant lease term. Accordingly, the Company has minimal risk with respect to the residual value of its leased assets. Communications sites are depreciated over their estimated useful lives, which generally does not exceed twenty years.
As of March 31, 2019, the Company does not have any material related party leases as a lessor. The Company generally does not enter into sales-type leases or direct financing leases. The Company’s leases generally do not include any incentives for the lessee and do not include any lessee purchase options. The Company assesses its right-of-use asset and other lease-related assets for impairment, as described in note 1 to the Company’s consolidated financial statements included in the 2018 Form 10-K. As of March 31, 2019, there was no impairment recorded related to these assets.



10
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(tabular amounts in millions, unless otherwise noted)

Historically, the Company has been able to successfully renew its ground leases as needed to ensure its tower revenue. Accordingly, the Company assumes that it will have access to the land underneath its tower sites when calculating future minimum rental receipts. Future minimum rental receipts expected under non-cancellable operating lease agreements as of March 31, 2019 were as follows:
Fiscal Year
 
 Amount (1)
Remainder of 2019
 
$
3,987.3

2020
 
5,143.4

2021
 
4,739.9

2022
 
3,821.5

2023
 
3,516.4

Thereafter
 
13,254.4

Total
 
$
34,462.9

_______________
(1)
Balances are translated at the applicable period-end exchange rate, which may impact comparability between periods.    

Future minimum rental receipts expected under non-cancellable operating lease agreements in effect at December 31, 2018 were as follows:
Year Ended December 31,
 
 Amount (1)
2019
 
$
5,251.2

2020
 
5,062.2

2021
 
4,676.1

2022
 
3,754.6

2023
 
3,457.3

Thereafter
 
12,641.1

Total
 
$
34,842.5

_______________
(1)
Balances are translated at the applicable period-end exchange rate, which may impact comparability between periods.    

Lessee—The Company enters into arrangements as a lessee primarily for ground space underneath its communications sites. These arrangements are typically long-term lease agreements with initial non-cancellable terms of approximately five to ten years with one or more automatic or exercisable renewal periods and specified increases in lease payments upon exercise of the renewal options. The Company typically exercises its ground lease renewal options in order to provide ongoing tenant space on its communications sites through the end of the tenant lease term. Escalation clauses present in operating leases, excluding those tied to a consumer price index (“CPI”) or other inflation-based indices, are recognized on a straight-line basis over the estimated lease term of the applicable lease. Additionally, the escalations tied to CPI or another inflation-based index are considered variable lease payments. In certain circumstances, the Company enters into revenue sharing arrangements with the ground space owner, which results in variability in lease payments. In most markets outside of the U.S., in the event there are no tenants on the communications site, the Company generally has unilateral termination rights and in certain situations, the lease is structured to allow for termination by the Company with minimal or no penalties. Ground lease arrangements usually include annual escalations and do not contain any residual value guarantees or restrictions on dividends, other financial obligations or other similar terms. The Company has entered into certain transactions whereby at the end of a lease, sublease or similar arrangement, the Company has the option to purchase the corresponding communications sites. These transactions are further described in note 15.
The Company’s lease liability is the present value of the remaining minimum rental payments to be made over the remaining lease term, including renewal options reasonably certain to be exercised. The Company also considers termination options and factors those into the determination of lease payments when appropriate. To determine the lease term, the Company considers all renewal periods that are reasonably certain to be exercised, taking into consideration all economic factors, including the communications site’s estimated economic life (generally 20 years) and the respective lease terms of the Company’s tenants under the existing lease arrangements on such site.
As of the adoption date and new lease inception, the Company’s right-of-use asset is equal to its lease liability, plus payments made prior to the commencement date and initial direct costs, net of any impairment losses, lease incentives,

11
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(tabular amounts in millions, unless otherwise noted)

fair value adjustments on acquired leases and deferred rent amount recorded under the prior lease accounting guidance. As of March 31, 2019, the Company does not have any material related party leases as a lessee. The Company does not have any sale-leaseback arrangements as lessee and typically does not enter into leveraged leases.
The Company leases certain land and office space under operating leases and land and improvements, towers and vehicles under finance leases. As of March 31, 2019, operating lease assets were included in Right-of-use asset and finance lease assets were included in Property and equipment, net in the consolidated balance sheet.
Information about other lease-related balances as of March 31, 2019 is as follows:
Operating leases:
 
 
Right-of-use asset
 
$
7,080.9

 
 
 
Current portion of lease liabilities
 
$
498.4

Lease liabilities
 
6,316.1

Total operating lease liabilities
 
$
6,814.5

 
 
 
Finance leases:
 
 
Current portion of lease liabilities
 
$
6.5

Lease liabilities
 
21.8

Total finance lease liabilities
 
$
28.3

As most of the Company’s leases do not specifically state an implicit rate, the Company uses a market-specific incremental borrowing rate consistent with the lease term as of the lease commencement date when calculating the present value of remaining lease payments. The incremental borrowing rate reflects the cost to borrow on a securitized basis in each market. The remaining lease term does not reflect all renewal options available to the Company, only those renewal options that the Company has assessed as reasonably certain taking into consideration the economic factors noted above.
The weighted-average remaining lease terms and incremental borrowing rates as of March 31, 2019 are as follows:
Operating leases:
 
 
Weighted-average remaining lease term (years)
 
13.0

Weighted-average incremental borrowing rate
 
6.1
%
 
 
 
Finance leases:
 
 
Weighted-average remaining lease term (years)
 
9.2

Weighted-average incremental borrowing rate
 
6.0
%

The following table sets forth the components of lease cost for the three months ended March 31, 2019:
Operating lease cost
 
$
255.0

Variable lease costs not included in lease liability (1)
 
52.3

 
 
 
Finance lease cost:
 
 
Amortization of right-of-use asset
 
$
1.8

Interest on lease liabilities
 
0.4

Total finance lease cost
 
$
2.2

_______________
(1)
Includes property tax paid on behalf of the landlord.


12
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(tabular amounts in millions, unless otherwise noted)

Supplemental cash flow information for the three months ended March 31, 2019 is as follows:
Cash paid for amounts included in the measurement of lease liabilities:
 
 
Operating cash flows from operating leases
 
$
(234.9
)
Operating cash flows from finance leases
 
$
(0.3
)
Financing cash flows from finance leases
 
$
(1.3
)
 
 
 
Non-cash items:
 
 
New operating leases
 
$
62.1

Operating lease modifications and reassessments
 
$
30.1


As of March 31, 2019, the Company does not have material operating or financing leases that have not yet commenced.

Maturities of operating and finance lease liabilities as of March 31, 2019 were as follows:
Fiscal Year
 
Operating Lease (1)
 
Finance Lease (1)
Remainder of 2019
 
$
658.0

 
$
6.0

2020
 
870.7

 
6.8

2021
 
853.1

 
3.9

2022
 
813.3

 
3.3

2023
 
773.6

 
2.0

Thereafter
 
6,137.5

 
24.8

Total lease payments
 
10,106.2

 
46.8

Less amounts representing interest
 
(3,291.7
)
 
(18.5
)
Total lease liabilities
 
6,814.5

 
28.3

Less current portion of lease liabilities
 
(498.4
)
 
(6.5
)
Non-current lease liabilities
 
$
6,316.1

 
$
21.8

_______________
(1)
Balances are translated at the applicable period-end exchange rate, which may impact comparability between periods.

Future minimum rental payments under non-cancellable operating leases as of December 31, 2018 is as follows:
Year Ended December 31,
 
 Amount (1)
2019
 
$
926.0

2020
 
904.2

2021
 
879.8

2022
 
834.2

2023
 
792.6

Thereafter
 
6,173.1

Total
 
$
10,509.9

_______________
(1)
Balances are translated at the applicable period-end exchange rate, which may impact comparability between periods.


13
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(tabular amounts in millions, unless otherwise noted)

Future minimum rental payments under capital leases in effect as of December 31, 2018 were as follows:
Year Ended December 31,
 
 Amount (1)
2019
 
$
40.7

2020
 
32.7

2021
 
27.8

2022
 
23.7

2023
 
19.2

Thereafter
 
117.5

Total
 
261.6

Less amounts representing interest
 
(82.1
)
Present value of capital lease obligations
 
$
179.5

_______________
(1)
Balances are translated at the applicable period-end exchange rate, which may impact comparability between periods.

Included in the future minimum rental payments under capital leases and amounts representing interest as of December 31, 2018 were $220.3 million and $69.3 million, respectively, related to perpetual land easements, which are not accounted for as finance leases under the new lease accounting standard.

5.    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
 
Balance as of January 1, 2019
 
$
3,382.5

 
$
1,045.5

 
$
381.3

 
$
690.6

 
$
2.0

 
$
5,501.9

Additions and adjustments (1)
 
30.1

 
—

 
—

 
—

 
—

 
30.1

Effect of foreign currency translation
 
—

 
9.2

 
(6.8
)
 
3.8

 
—

 
6.2

Balance as of March 31, 2019
 
$
3,412.6

 
$
1,054.7

 
$
374.5

 
$
694.4

 
$
2.0

 
$
5,538.2

_______________
(1)
Additions consist of $30.9 million resulting from 2019 acquisitions offset by $0.8 million from revisions to prior-year acquisitions due to measurement period adjustments.

The Company’s other intangible assets subject to amortization consisted of the following:
 
 
 
 
As of March 31, 2019
 
As of December 31, 2018
 
Estimated Useful
Lives (years)
 
Gross
Carrying
Value
 
Accumulated
Amortization
 
Net Book
Value
 
Gross
Carrying
Value
 
Accumulated
Amortization
 
Net Book
Value
Acquired network location intangibles (1)
Up to 20
 
$
4,780.2

 
$
(1,762.3
)
 
$
3,017.9

 
$
4,780.3

 
$
(1,704.9
)
 
$
3,075.4

Acquired tenant-related intangibles
15-20
 
11,212.8

 
(3,278.0
)
 
7,934.8

 
11,156.5

 
(3,147.2
)
 
8,009.3

Acquired licenses and other intangibles
3-20
 
105.3

 
(15.2
)
 
90.1

 
104.1

 
(14.5
)
 
89.6

Total other intangible assets
 
 
$
16,098.3

 
$
(5,055.5
)
 
$
11,042.8

 
$
16,040.9

 
$
(4,866.6
)
 
$
11,174.3

_______________
(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.

14
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 March 31, 2019, the remaining weighted average amortization period of the Company’s intangible assets was 14 years. Amortization of intangible assets for the three months ended March 31, 2019 and 2018 was $192.7 million and $202.4 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:
 
Fiscal Year
 
Amount
Remainder of 2019
 
$
586.7

2020
 
763.4

2021
 
746.9

2022
 
742.5

2023
 
738.2

2024
 
734.9


6.    NOTES RECEIVABLE AND OTHER NON-CURRENT ASSETS
Notes receivable and other non-current assets consisted of the following:
 
As of
 
March 31, 2019
 
December 31, 2018
Long-term prepaid ground rent
—

 
607.5

Notes receivable
0.9

 
1.0

Other miscellaneous assets
278.2

 
354.1

Notes receivable and other non-current assets
$
279.1

 
$
962.6


The reduction in Long-term prepaid ground rent is a result of the reclassification of assets to the Right-of-use asset in connection with the Company’s adoption of the new lease accounting standard.

7.    ACCRUED EXPENSES
Accrued expenses consisted of the following:
 
As of
 
March 31, 2019
 
December 31, 2018
Accrued property and real estate taxes
$
177.1

 
$
169.7

Accrued pass-through costs
80.1

 
71.2

Amounts payable to tenants
78.2

 
93.5

Accrued rent
69.6

 
61.4

Payroll and related withholdings
60.5

 
90.4

Accrued construction costs
28.1

 
41.5

Accrued income tax payable
23.3

 
57.9

Accrued pass-through taxes
9.5

 
2.2

Other accrued expenses
337.3

 
360.5

Total accrued expenses
$
863.7

 
$
948.3



15
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(tabular amounts in millions, unless otherwise noted)

8.    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
 
 
 
March 31, 2019
 
December 31, 2018
 
Maturity Date
2018 Term Loan (1) (2)
$
—

 
$
1,499.8

 
March 29, 2019
2019 Term Loan (1)
1,299.4

 
—

 
February 13, 2020
2013 Credit Facility (1)
2,340.0

 
1,875.0

 
June 28, 2022
2013 Term Loan (1)
995.0

 
994.8

 
January 31, 2024
2014 Credit Facility (1)
—

 
—

 
January 31, 2024
3.40% senior notes (3)
—

 
1,000.0

 
February 15, 2019
2.800% senior notes
748.2

 
747.8

 
June 1, 2020
5.050% senior notes (4)
698.9

 
698.7

 
September 1, 2020
3.300% senior notes
747.5

 
747.2

 
February 15, 2021
3.450% senior notes
646.7

 
646.3

 
September 15, 2021
5.900% senior notes
498.5

 
498.4

 
November 1, 2021
2.250% senior notes
578.9

 
572.7

 
January 15, 2022
4.70% senior notes
697.6

 
697.4

 
March 15, 2022
3.50% senior notes
993.0

 
992.6

 
January 31, 2023
3.000% senior notes
694.1

 
687.5

 
June 15, 2023
5.00% senior notes
1,002.2

 
1,002.1

 
February 15, 2024
3.375% senior notes
643.5

 
—

 
May 15, 2024
1.375% senior notes
552.2

 
564.0

 
April 4, 2025
4.000% senior notes
742.3

 
742.1

 
June 1, 2025
4.400% senior notes
496.2

 
496.1

 
February 15, 2026
1.950% senior notes
554.0

 
566.0

 
May 22, 2026
3.375% senior notes
986.7

 
986.3

 
October 15, 2026
3.125% senior notes
397.4

 
397.3

 
January 15, 2027
3.55% senior notes
743.6

 
743.5

 
July 15, 2027
3.600% senior notes
692.1

 
691.9

 
January 15, 2028
3.950% senior notes
588.9

 
—

 
March 15, 2029
Total American Tower Corporation debt
18,336.9

 
17,847.5

 
 
 
 
 
 
 
 
Series 2013-2A securities (5)
1,293.8

 
1,293.4

 
March 15, 2023
Series 2018-1A securities (5)
493.7

 
493.5

 
March 15, 2028
Series 2015-1 notes (6)
349.0

 
348.8

 
June 15, 2020
Series 2015-2 notes (7)
520.9

 
520.8

 
June 16, 2025
India indebtedness (8)
—

 
240.1

 
Various
India preference shares (9)
—

 
23.9

 
March 2, 2020
Shareholder loan (10)
53.4

 
59.9

 
December 31, 2019
Other subsidiary debt (11)
128.3

 
152.5

 
Various
Total American Tower subsidiary debt
2,839.1

 
3,132.9

 
 
Finance and capital lease obligations
28.3

 
179.5

 
 
Total
21,204.3

 
21,159.9

 
 
Less current portion of long-term obligations
(2,097.2
)
 
(2,754.8
)
 
 
Long-term obligations
$
19,107.1

 
$
18,405.1

 
 
_______________
(1)
Accrues interest at a variable rate.
(2)
Repaid in full on February 14, 2019 using proceeds from the 2019 Term Loan (as defined below) and cash on hand.

16
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(tabular amounts in millions, unless otherwise noted)

(3)
Repaid in full on the maturity date in February 2019 with borrowings from the 2013 Credit Facility and the 2014 Credit Facility (each defined below).
(4)
Repaid in full on April 22, 2019 with borrowings from the 2014 Credit Facility and cash on hand.
(5)
Maturity date reflects the anticipated repayment date; final legal maturity is March 15, 2048.
(6)
Maturity date reflects the anticipated repayment date; final legal maturity is June 15, 2045.
(7)
Maturity date reflects the anticipated repayment date; final legal maturity is June 15, 2050.
(8)
Denominated in Indian Rupees (“INR”). Included India working capital facilities, remaining debt assumed by the Company in connection with the Viom Acquisition (as defined in note 12) and debt that has been entered into by ATC TIPL. During the three months ended March 31, 2019, the Company repaid all remaining debt assumed in connection with the Viom Acquisition and debt entered into by ATC TIPL.
(9)
Mandatorily redeemable preference shares (the “Preference Shares”) denominated in INR and classified as debt. The Preference Shares were redeemed on March 2, 2019.
(10)
Reflects balance owed to the Company’s joint venture partner in Ghana. The Ghana loan is denominated in Ghanaian Cedi (“GHS”).
(11)
Includes the South African credit facility, which is denominated in South African Rand and amortizes through December 17, 2020, the Colombian credit facility, which is denominated in Colombian Pesos and amortizes through April 24, 2021, the Brazil credit facility, which is denominated in Brazilian Reais and amortizes through January 15, 2022, the Kenya debt, which is denominated in U.S. Dollars (“USD”) and is payable either (i) in future installments subject to the satisfaction of specified conditions or (ii) three years from the note origination date, and U.S. subsidiary debt related to a seller-financed acquisition.

Current portion of long-term obligations—The Company’s current portion of long-term obligations primarily includes (i) $1.3 billion under its unsecured term loan entered into on February 14, 2019 (the “2019 Term Loan”), (ii) $698.9 million under the 5.050% senior unsecured notes due 2020 (the “5.050% Notes”) and (iii) 294.4 million GHS ($53.4 million) of the shareholder loan owed to the Company’s joint venture partner in Ghana.

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
Repayment of 3.40% Senior Notes—On the February 15, 2019 maturity date, the Company repaid $1.0 billion aggregate principal amount of 3.40% senior unsecured notes due 2019 (the “3.40% Notes”). The 3.40% Notes were repaid with borrowings from the Company’s multicurrency senior unsecured revolving credit facility entered into in June 2013, as amended (the “2013 Credit Facility”) and the Company’s senior unsecured revolving credit facility entered into in January 2012 and amended and restated in September 2014, as further amended (the “2014 Credit Facility”). Upon completion of the repayment, none of the 3.40% Notes remain outstanding.

3.375% Senior Notes and 3.950% Senior Notes Offering—On March 15, 2019, the Company completed a registered public offering of $650.0 million aggregate principal amount of 3.375% senior unsecured notes due 2024 (the “3.375% Notes”) and $600.0 million aggregate principal amount of 3.950% senior unsecured notes due 2029 (the “3.950% Notes” and, collectively with the 3.375% Notes, the “Notes”). The net proceeds from this offering were approximately $1,231.0 million, after deducting commissions and estimated expenses. The Company used the net proceeds to repay existing indebtedness under the 2013 Credit Facility and 2014 Credit Facility.

The 3.375% Notes will mature on May 15, 2024 and bear interest at a rate of 3.375% per annum. The 3.950% Notes will mature on March 15, 2029 and bear interest at a rate of 3.950% per annum. Accrued and unpaid interest on the 3.375% Notes will be payable in U.S. Dollars semi-annually in arrears on May 15 and November 15 of each year, beginning on November 15, 2019. Accrued and unpaid interest on the 3.950% Notes will be payable in U.S. Dollars semi-annually in arrears on March 15 and September 15 of each year, beginning on September 15, 2019. Interest on the Notes will accrue from March 15, 2019 and will be computed on the basis of a 360-day year comprised of twelve 30-day months. 

The Company may redeem the Notes at any time, in whole or in part, at a redemption price equal to 100% of the principal amount of the Notes plus a make-whole premium, together with accrued interest to the redemption date. If the Company redeems the 3.375% Notes on or after April 15, 2024 or the 3.950% Notes on or after December 15, 2028, 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

17
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(tabular amounts in millions, unless otherwise noted)

(including additional interest, if any), up to but not including the repurchase date. The Notes rank equally with all of the Company’s other senior unsecured debt and are structurally subordinated to all existing and future indebtedness and other obligations of its subsidiaries.

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

Bank Facilities
2013 Credit Facility—During the three months ended March 31, 2019, the Company borrowed an aggregate of $995.0 million and repaid an aggregate of $530.0 million of revolving indebtedness under the 2013 Credit Facility. The Company used the borrowings to fund acquisitions, to purchase noncontrolling interests in its Indian subsidiary, ATC TIPL, to repay existing indebtedness and for general corporate purposes.

2014 Credit Facility—During the three months ended March 31, 2019, the Company borrowed an aggregate of $705.0 million and repaid an aggregate of $705.0 million of revolving indebtedness under the 2014 Credit Facility. The Company used the borrowings to repay existing indebtedness and for general corporate purposes.

2019 Term Loan—During the three months ended March 31, 2019, the Company entered into the 2019 Term Loan, the net proceeds of which were used, together with cash on hand, to repay all outstanding indebtedness under its unsecured term loan entered into on March 29, 2018.
The 2019 Term Loan matures on February 13, 2020. Any outstanding principal and accrued but unpaid interest will be due and payable in full at maturity. The 2019 Term Loan may be paid prior to maturity in whole or in part at the Company’s option without penalty or premium.
The 2019 Term Loan agreement 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 March 31, 2019, 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 2019 Term Loan were as follows:
 
Outstanding Principal Balance (in millions)
 
Undrawn letters of credit (in millions)
 
Maturity Date
 
Current margin over LIBOR (1)
 
Current commitment fee (2)
2013 Credit Facility
$
2,340.0

 
$
3.8

 
June 28, 2022
(3)
1.125
%
 
0.125
%
2014 Credit Facility
$
—

 
$
6.2

 
January 31, 2024
(3)
1.125
%
 
0.125
%
2013 Term Loan
$
1,000.0

 
N/A

 
January 31, 2024
 
1.125
%
 
N/A

2019 Term Loan
$
1,300.0

 
N/A

 
February 13, 2020
 
0.800
%
 
N/A

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


18
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(tabular amounts in millions, unless otherwise noted)

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

Items Measured at Fair Value on a Recurring Basis—The fair values of the Company’s financial assets and liabilities that are required to be measured on a recurring basis at fair value were as follows:
 
 
 
March 31, 2019
 
December 31, 2018
 
 
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)
 
—

 
$
18.4

 
—

 
—

 
—

 
—

Embedded derivative in lease agreement
 
—

 
—

 
$
11.3

 
—

 
—

 
$
11.5

Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate swap agreements
 
—

 
$
21.8

 
—

 
—

 
$
33.8

 
—

Acquisition-related contingent consideration
 
—

 
—

 
$
0.8

 
—

 
—

 
$
0.9

Fair value of debt related to interest rate swap agreements (2)
 
$
(19.0
)
 
—

 
—

 
$
(31.3
)
 
—

 
—

Redeemable noncontrolling interests
 
—

 
—

 
$
589.0

 
—

 
—

 
$
1,004.8

_______________
(1)
Consists of mutual funds with a portfolio duration of approximately 90 days.
(2)
Included in the carrying values of the corresponding debt obligations.

As of March 31, 2019, the Company had marketable securities with a cost basis of $18.1 million and recognized unrealized gains of $0.3 million on these securities.

During the three months ended March 31, 2019, the Company made no changes to the methods described in note 11 to its consolidated financial statements included in the 2018 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, acquisition-related contingent consideration and redeemable noncontrolling interests. The changes in fair value for the embedded derivative in one of its lease agreements and acquisition-related contingent consideration during the three months ended March 31, 2019 and 2018 were not material to the consolidated financial statements. The changes in the carrying amount of the redeemable noncontrolling interests are described in note 12. As of March 31, 2019, the Company estimated the value of all potential acquisition-related contingent consideration payments to be between zero and $0.8 million.
 
Items Measured at Fair Value on a Nonrecurring Basis
Assets Held and Used—The Company’s long-lived assets are recorded at amortized cost and, if impaired, are adjusted to fair value using Level 3 inputs. During the three months ended March 31, 2019 and 2018, the Company recorded $18.1 million and $147.4 million of impairments, respectively. These impairments were recorded in Other operating expenses in the consolidated statements of operations. There were no other items measured at fair value on a nonrecurring basis during the three months ended March 31, 2019 or 2018.

19
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 March 31, 2019 and December 31, 2018 include cash and cash equivalents, restricted cash, accounts receivable and accounts payable. The Company’s estimates of fair value of its long-term obligations, including the current portion, are based primarily upon reported market values. For long-term debt not actively traded, fair value is estimated using either indicative price quotes or a discounted cash flow analysis using rates for debt with similar terms and maturities. As of March 31, 2019 and December 31, 2018, the carrying value of long-term obligations, including the current portion, was $21.2 billion and $21.2 billion, respectively. As of March 31, 2019, the fair value of long-term obligations, including the current portion, was $21.5 billion, of which $14.0 billion was measured using Level 1 inputs and $7.5 billion was measured using Level 2 inputs. As of December 31, 2018, the fair value of long-term obligations, including the current portion, was $21.1 billion, of which $13.4 billion was measured using Level 1 inputs and $7.7 billion was measured using Level 2 inputs.

10.    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 real estate investment trust (“REIT”) operations. The Company continues to be subject to income taxes on the income of its domestic taxable REIT subsidiaries 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 change in the Income tax (provision) benefit for the three months ended March 31, 2019 was primarily attributable to an increase in foreign earnings subject to taxation in the current period, as well as the nonrecurrence of events during the three months ended March 31, 2018, including a one-time benefit for merger-related activity in the Company’s Asia property segment and the tax effect of certain impairment charges.
As of March 31, 2019 and December 31, 2018, the total unrecognized tax benefits that would impact the ETR, if recognized, were approximately $94.6 million and $93.7 million, respectively. The amount of unrecognized tax benefits during the three months ended March 31, 2019 includes additions to the Company’s existing tax positions of $1.5 million and foreign currency exchange rate fluctuations of $0.3 million. Unrecognized tax benefits are expected to change over the next 12 months if certain tax matters ultimately settle with the applicable taxing jurisdiction during this time frame, as described in note 12 to the Company’s consolidated financial statements included in the 2018 Form 10-K. The impact of the amount of these changes to previously recorded uncertain tax positions could range from zero to $2.8 million.
The Company recorded the following penalties and income tax-related interest expense during the three months ended March 31, 2019 and 2018:
 
Three Months Ended March 31,
 
2019
 
2018
Penalties and income tax-related interest expense
$
1.1

 
$
1.0

As of March 31, 2019 and December 31, 2018, the total amount of accrued income tax related interest and penalties included in the consolidated balance sheets were $20.3 million and $19.1 million, respectively.


20
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(tabular amounts in millions, unless otherwise noted)

11.    STOCK-BASED COMPENSATION
Summary of Stock-Based Compensation Plans—The Company maintains equity incentive plans that provide for the grant of stock-based awards to its directors, officers and employees. The 2007 Equity Incentive Plan, as amended (the “2007 Plan”), provides for the grant of non-qualified and incentive stock options, as well as restricted stock units, restricted stock and other stock-based awards. Exercise prices for non-qualified and incentive stock options are not less than the fair value of the underlying common stock on the date of grant. Equity awards typically vest ratably, generally over four years for time-based restricted stock units (“RSUs”) and stock options and three years for performance-based restricted stock units (“PSUs”). Stock options generally expire ten years from the date of grant. As of March 31, 2019, the Company had the ability to grant stock-based awards with respect to an aggregate of 6.9 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 months ended March 31, 2019 and 2018, the Company recorded and capitalized the following stock-based compensation expense:
 
 
Three Months Ended March 31,
 
 
2019
 
2018
Stock-based compensation expense Property
 
$
0.6

 
$
0.7

Stock-based compensation expense Services
 
0.3

 
0.3

Stock-based compensation expense SG&A
 
41.6

 
41.7

Total stock-based compensation expense
 
$
42.5

 
$
42.7

 
 
 
 
 
Stock-based compensation expense capitalized as property and equipment
 
$
0.5