Edgar Filing: AMERICAN TOWER CORP /MA/

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

FORM 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One):

x	Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the quarterly period ended September 30, 2012.

¨	Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Commission File Number: 001-14195

AMERICAN TOWER CORPORATION

(Exact name of registrant as specified in its charter)

Delaware

65-0723837

(State or other jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification No.)

116 Huntington Avenue

Boston, Massachusetts 02116

(Address of principal executive offices)

Telephone Number (617) 375-7500

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

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

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 18, 2012, there were 395,352,861 shares of common stock outstanding.

AMERICAN TOWER CORPORATION

INDEX

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, 2012


		Page No.
PART I. FINANCIAL INFORMATION
Item 1.	Unaudited Condensed Consolidated Financial Statements
	Condensed Consolidated Balance Sheets as of September 30, 2012 and December 31, 2011		1
	Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2012 and 2011		2
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2012 and 2011		3
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2012 and 2011		4
	Condensed Consolidated Statements of Equity for the nine months ended September 30, 2012 and 2011		5
	Notes to Condensed Consolidated Financial Statements		6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		38
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		63
Item 4.	Controls and Procedures		65
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings		66
Item 1A.	Risk Factors		66
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		77
Item 6.	Exhibits		77
Signatures			78
Exhibit Index			EX-1

PART I.

FINANCIAL INFORMATION

ITEM 1.

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS—Unaudited

(in thousands, except share data)


	September 30, 2012			December 31, 2011
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	382,312		$	330,191
Restricted cash		43,482			42,770
Short-term investments and available-for-sale securities		—			22,270
Accounts receivable, net		148,807			100,792
Prepaid and other current assets		270,541			254,750
Deferred income taxes		27,641			29,596

Total current assets		872,783			780,369

PROPERTY AND EQUIPMENT, net		5,242,781			4,901,012
GOODWILL		2,763,706			2,676,971
OTHER INTANGIBLE ASSETS, net		2,595,059			2,497,611
DEFERRED INCOME TAXES		233,472			207,044
DEFERRED RENT ASSET		731,343			609,529
NOTES RECEIVABLE AND OTHER LONG-TERM ASSETS		522,160			557,278

TOTAL	$	12,961,304		$	12,229,814

LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable	$	87,380		$	216,448
Accrued expenses		334,034			304,208
Distributions payable		91,063			—
Accrued interest		74,343			65,729
Current portion of long-term obligations		130,209			101,816
Unearned revenue		133,896			92,708

Total current liabilities		850,925			780,909

LONG-TERM OBLIGATIONS		7,359,355			7,134,492
ASSET RETIREMENT OBLIGATIONS		397,362			344,180
OTHER LONG-TERM LIABILITIES		667,680			560,091

Total liabilities		9,275,322			8,819,672

COMMITMENTS AND CONTINGENCIES EQUITY:
Preferred stock: $.01 par value; 20,000,000 shares authorized; no shares issued or outstanding
Common stock: $.01 par value; 1,000,000,000 shares authorized; 395,607,119 and 393,642,079 shares issued; and 395,354,428 and 393,642,079 shares outstanding, respectively		3,956			3,936
Additional paid-in capital		4,971,181			4,903,800
Distributions in excess of earnings		(1,237,569	)		(1,477,899	)
Accumulated other comprehensive loss		(164,081	)		(142,617	)
Treasury stock (252,691 and 0 shares at cost, respectively)		(16,733	)		—

Total American Tower Corporation equity		3,556,754			3,287,220
Non-controlling interest		129,228			122,922

Total equity		3,685,982			3,410,142

TOTAL	$	12,961,304		$	12,229,814

See accompanying notes to unaudited condensed consolidated financial statements.

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS—Unaudited

(in thousands, except per share data)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
REVENUES:
Rental and management	$	697,554		$	614,808		$	2,063,806		$	1,745,302
Network development services		15,781			15,595			43,780			45,031

Total operating revenues		713,335			630,403			2,107,586			1,790,333

OPERATING EXPENSES:
Costs of operations (exclusive of items shown separately below):
Rental and management (including stock-based compensation expense of $195, $853, $594 and $853, respectively)		177,336			160,265			506,120			432,454
Network development services (including stock-based compensation expense of $245, $910, $749 and $910, respectively)		7,568			8,668			22,153			22,884
Depreciation, amortization and accretion		144,061			142,113			465,788			411,902
Selling, general, administrative and development expense (including stock-based compensation expense of $12,618, $10,377, $38,311 and $34,422, respectively)		81,459			76,476			237,891			214,929
Other operating expenses		7,359			14,576			35,150			35,770

Total operating expenses		417,783			402,098			1,267,102			1,117,939

OPERATING INCOME		295,552			228,305			840,484			672,394

OTHER INCOME (EXPENSE):
Interest income, TV Azteca, net of interest expense of $372, $458, $1,114 and $1,186, respectively		3,586			3,498			10,715			10,587
Interest income		1,717			1,822			6,253			6,837
Interest expense		(102,272	)		(77,796	)		(297,622	)		(226,735	)
Loss on retirement of long-term obligations		—			—			(398	)		—
Other income (expense) (including unrealized foreign currency gains (losses) of $46,191, $(145,144), $(12,847) and $(101,505), respectively)		46,294			(150,876	)		(19,468	)		(115,710	)

Total other expense		(50,675	)		(223,352	)		(300,520	)		(325,021	)

INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND INCOME ON EQUITY METHOD INVESTMENTS		244,877			4,953			539,964			347,373
Income tax provision		(13,054	)		(24,681	)		(64,117	)		(161,981	)
Income on equity method investments		2			2			25			14

NET INCOME (LOSS)		231,825			(19,726	)		475,872			185,406
Net loss attributable to non-controlling interest		264			4,025			25,732			5,946

NET INCOME (LOSS) ATTRIBUTABLE TO AMERICAN TOWER CORPORATION	$	232,089		$	(15,701	)	$	501,604		$	191,352

NET INCOME (LOSS) PER COMMON SHARE AMOUNTS:
Basic net income (loss) attributable to American Tower Corporation	$	0.59		$	(0.04	)	$	1.27		$	0.48

Diluted net income (loss) attributable to American Tower Corporation	$	0.58		$	(0.04	)	$	1.26		$	0.48

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic		395,244			395,183			394,626			396,507

Diluted		399,487			395,183			399,084			400,467

DISTRIBUTIONS DECLARED PER SHARE	$	0.23		$	—		$	0.66		$	—

See accompanying notes to unaudited condensed consolidated financial statements.

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)—Unaudited

(in thousands)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Net income (loss)	$	231,825		$	(19,726	)	$	475,872		$	185,406
Other comprehensive income (loss):
Net change in fair value of cash flow hedges, net of tax		(955	)		—			(2,483	)		1,977
Reclassification of unrealized losses on cash flow hedges to net income, net of tax		199			29			397			195
Net unrealized losses on available-for-sale securities, net of tax		—			(6	)		—			(86	)
Reclassification of unrealized losses on available-for-sale securities to net income		—			—			495			—
Foreign currency translation adjustments		38,782			(149,563	)		(36,357	)		(127,209	)

Other comprehensive income (loss)		38,026			(149,540	)		(37,948	)		(125,123	)

Comprehensive income (loss)		269,851			(169,266	)		437,924			60,283

Comprehensive loss attributable to non-controlling interest		1,460			4,025			42,216			5,946

Comprehensive income (loss) attributable to American Tower Corporation	$	271,311		$	(165,241	)	$	480,140		$	66,229

See accompanying notes to the unaudited condensed consolidated financial statements.

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS—Unaudited

(in thousands)


	Nine Months Ended September 30,
	2012			2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	475,872		$	185,406
Adjustments to reconcile net income to cash provided by operating activities:
Stock-based compensation expense		39,654			36,185
Depreciation, amortization and accretion		465,788			411,902
Other non-cash items reflected in statements of operations		79,655			287,286
Increase in net deferred rent asset		(92,296	)		(69,874	)
Increase in restricted cash		(693	)		(825	)
Increase in assets		(36,137	)		(58,891	)
Increase in liabilities		184,704			58,809

Cash provided by operating activities		1,116,547			849,998

CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for purchase of property and equipment and construction activities		(377,026	)		(397,088	)
Payments for acquisitions, net of cash acquired		(822,714	)		(1,220,572	)
Proceeds from sale of short-term investments, available-for-sale securities and other long-term assets		358,707			65,223
Payments for short-term investments		(330,341	)		(20,412	)
Deposits, restricted cash, investments and other		(2,892	)		13,218

Cash used for investing activities		(1,174,266	)		(1,559,631	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term borrowings, net		20,099			101,128
Borrowings under credit facilities		1,325,000			280,014
Proceeds from issuance of senior notes		698,670			—
Proceeds from term loan credit facility		750,000			—
Proceeds from other long-term borrowings		99,132			80,814
Repayments of notes payable, credit facilities and capital leases		(2,655,367	)		(207,120	)
Contributions from non-controlling interest holders, net		48,500			87,183
Purchases of common stock		(33,436	)		(391,098	)
Proceeds from stock options		42,825			60,926
Distributions		(169,816	)		—
Deferred financing costs and other financing activities		(13,512	)		(7,582	)

Cash provided by financing activities		112,095			4,265
Net effect of changes in foreign currency exchange rates on cash and cash equivalents		(2,255	)		(1,089	)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		52,121			(706,457	)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		330,191			883,963

CASH AND CASH EQUIVALENTS, END OF PERIOD	$	382,312		$	177,506

NET CASH PAID FOR INCOME TAXES	$	28,465		$	48,808

CASH PAID FOR INTEREST	$	265,443		$	195,877

NON-CASH INVESTING AND FINANCING ACTIVITIES:
(DECREASE) INCREASE IN ACCOUNTS PAYABLE AND ACCRUED EXPENSES FOR PURCHASES OF PROPERTY AND EQUIPMENT AND CONSTRUCTION ACTIVITIES	$	(1,228	)	$	4,495

PURCHASES OF PROPERTY, PLANT AND EQUIPMENT UNDER CAPITAL LEASES	$	12,219		$	5,060

See accompanying notes to unaudited condensed consolidated financial statements.

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY—Unaudited

(in thousands, except share data)


	Common Stock				Treasury Stock						Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)			Earnings (Distributions) in Excess of Distributions (Earnings)			Non-controlling Interest			Total Equity
	Issued Shares		Amount		Shares			Amount			Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)						Non-controlling Interest			Total Equity
BALANCE, JANUARY 1, 2011		486,056,952	$	4,860		(87,379,718	)	$	(3,381,966	)	$	8,577,093	$	38,053		$	(1,736,596	)	$	3,114		$	3,504,558

Stock-based compensation related activity		2,333,452		23								86,828											86,851
Issuance of common stock-Stock Purchase Plan		43,485		1								1,886											1,887
Treasury stock activity						(7,586,960	)		(393,121	)													(393,121	)
Net change in fair value of cash flow hedges, net of tax														1,977									1,977
Reclassification of unrealized losses on cash flow hedges to net income, net of tax														195									195
Net unrealized losses on available-for-sale securities, net of tax														(86	)								(86	)
Foreign currency translation adjustment														(127,209	)								(127,209	)
Contributions from non-controlling interest																				87,564			87,564
Distributions to non-controlling interest																				(381	)		(381	)
Net income (loss)																	191,352			(5,946	)		185,406

BALANCE, SEPTEMBER 30, 2011		488,433,889	$	4,884		(94,966,678	)	$	(3,775,087	)	$	8,665,807	$	(87,070	)	$	(1,545,244	)	$	84,351		$	3,347,641

BALANCE, JANUARY 1, 2012		393,642,079	$	3,936		—		$	—		$	4,903,800	$	(142,617	)	$	(1,477,899	)	$	122,922		$	3,410,142

Stock-based compensation related activity		1,917,576		19								65,017											65,036
Issuance of common stock—Stock Purchase Plan		47,464		1								2,364											2,365
Treasury stock activity						(252,691	)		(16,733	)													(16,733	)
Net change in fair value of cash flow hedges														(1,862	)					(621	)		(2,483	)
Reclassification of unrealized losses on cash flow hedges to net income														397									397
Reclassification of unrealized losses on available-for-sale securities to net income														495									495
Foreign currency translation adjustment														(20,494	)					(15,863	)		(36,357	)
Contributions from non-controlling interest																				48,963			48,963
Distributions to non-controlling interest																				(441	)		(441	)
Dividends/distributions declared																	(261,274	)					(261,274	)
Net income (loss)																	501,604			(25,732	)		475,872

BALANCE, SEPTEMBER 30, 2012		395,607,119	$	3,956		(252,691	)	$	(16,733	)	$	4,971,181	$	(164,081	)	$	(1,237,569	)	$	129,228		$	3,685,982

See accompanying notes to unaudited condensed consolidated financial statements.

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—Unaudited

1.	Description of Business, Basis of Presentation and Accounting Policies

American Tower Corporation is, through its various subsidiaries (collectively, “ATC” or the “Company”), an independent owner, operator and developer of wireless and broadcast communications sites in the United States, Brazil, Chile, Colombia, Ghana, India, Mexico, Peru, South Africa and Uganda. The Company’s primary business is the leasing of antenna space on multi-tenant communications sites to wireless service providers, radio and television broadcast companies, wireless data providers, government agencies and municipalities and tenants in a number of other industries. The Company also manages rooftop and tower sites for property owners, operates in-building and outdoor distributed antenna system (“DAS”) networks, holds property interests under communications sites and provides network development services that primarily support its rental and management operations and the addition of new tenants and equipment on its sites. The Company began operating as a real estate investment trust (“REIT”) for federal income tax purposes effective January 1, 2012.

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

The accompanying condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The financial information included herein is unaudited; however, the Company believes that all adjustments (consisting primarily of normal recurring adjustments) considered necessary for a fair presentation of the Company’s financial position and results of operations for such periods have been included. Results of interim periods may not be indicative of results for the full year. Subsequent events have been evaluated up to the date of issuance of these financial statements. These condensed consolidated financial statements and related notes should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

REIT Conversion—In May 2011, the Company announced its intention to reorganize to qualify as a REIT for federal income tax purposes (the “REIT Conversion”). Effective December 31, 2011, the Company completed the merger with its predecessor (“American Tower”) that was approved by the Company’s stockholders in November 2011. At the time of the merger all outstanding shares of Class A common stock of American Tower were converted into a right to receive an equal number of shares of common stock of the surviving corporation. In addition, each share of Class A common stock of American Tower held in treasury at December 31, 2011 ceased to be outstanding, and a corresponding adjustment was recorded to additional paid-in capital and common stock.

The Company believes that since January 1, 2012, it has been organized and has operated in a manner that enables it to qualify, and intends to continue to operate in a manner that will allow it to continue to qualify as a REIT for federal income tax purposes.

The Company holds and operates certain of its assets through one or more taxable REIT subsidiaries (“TRSs”). A TRS is a subsidiary of a REIT that is subject to applicable corporate income tax. The Company’s use of TRSs enables it to continue to engage in certain businesses while complying with REIT qualification requirements and also allows the Company to retain income generated by these businesses for reinvestment without the requirement of distributing those earnings. The non-REIT qualified businesses that the Company holds through TRSs include its network development services segment. In addition, the Company has included its international operations and DAS networks business within its TRSs. In the future, the Company may elect to have previously designated TRSs be treated as qualified REIT subsidiaries or other disregarded entities (“QRSs”), or reorganize and transfer certain assets or operations from its TRSs to other subsidiaries, including QRSs.

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—Unaudited

As a REIT, the Company generally will not be subject to federal income taxes on its income and gains that the Company distributes to its stockholders, including the income derived from leasing towers. However, even as a REIT, the Company will remain obligated to pay income taxes on earnings from all of its TRS assets. In addition, the Company’s international assets and operations continue to be subject to taxation in the foreign jurisdictions where those assets are held or those operations are conducted.

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

Significant Accounting Policies and Use of Estimates—The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results may differ from those estimates, and such differences could be material to the accompanying condensed consolidated financial statements. The Company considers events or transactions that occur after the balance sheet date but before the financial statements are issued as additional evidence for certain estimates or to identify matters that require additional disclosure.

Changes in Presentation—Changes have been made to the presentation of the Company’s condensed consolidated statements of cash flows for the nine months ended September 30, 2011 to be consistent with the current year presentation. Specifically, contributions from non-controlling interest holders, in a net amount of $87.2 million, were previously included in deferred financing costs and other financing activities, but are now stated separately within financing activities in the Company’s condensed consolidated statements of cash flows.

Recently Adopted Accounting Standards—In May 2011, the Financial Accounting Standards Board (“FASB”) amended its guidance related to fair value measurement and disclosure. This guidance clarifies existing measurement and disclosure requirements and results in greater consistency between GAAP and International Financial Reporting Standards. This guidance became effective prospectively for interim and annual periods beginning on or after December 15, 2011. The implementation of this guidance did not have a material impact on the Company’s condensed consolidated results of operations or financial position.

In September 2011, the FASB issued guidance on testing goodwill for impairment that became effective for the interim and annual periods beginning on or after December 15, 2011 (with early adoption permitted). Under the new guidance, an entity has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying value. If the entity determines that it is more likely than not that the carrying value of a reporting unit is less than its fair value, then performing the two-step impairment test is unnecessary. The implementation of this guidance did not have an impact on the Company’s condensed consolidated results of operations or financial position.

2.	Short-Term Investments and Available-For-Sale Securities

As of September 30, 2012, there were no short-term investments with original maturities of three months or more or available-for-sale securities outstanding. As of December 31, 2011, short-term investments included investments with original maturities of three months or more of $22.3 million and available-for-sale securities of less than $0.1 million.

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—Unaudited

3.	Prepaid and Other Current Assets

Prepaid and other current assets consist of the following (in thousands):


	As of September 30, 2012		As of December 31, 2011 (1)
Prepaid assets	$	110,783	$	59,312
Prepaid operating ground leases		61,698		54,756
Other miscellaneous current assets		61,452		59,405
Value added tax and other consumption tax receivables		36,608		81,277

Balance	$	270,541	$	254,750

(1)	December 31, 2011 balances have been revised to reflect purchase accounting measurement period adjustments.

4.	Goodwill and Other Intangible Assets

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


	Rental and Management				Network Development Services		Total
	Domestic		International		Network Development Services		Total
Balance as of January 1, 2012 (1)	$	2,244,612	$	430,359	$	2,000	$	2,676,971
Additions		1,374		84,891		—		86,265
Effect of foreign currency translation		—		470		—		470

Balance as of September 30, 2012	$	2,245,986	$	515,720	$	2,000	$	2,763,706

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

The Company’s other intangible assets subject to amortization consist of the following ($ in thousands):


			As of September 30, 2012							As of December 31, 2011 (1)
	Estimated Useful Lives		Gross Carrying Value		Accumulated Amortization			Net Book Value		Gross Carrying Value		Accumulated Amortization			Net Book Value
	(years)
Acquired network location (2)		Up to 20	$	1,641,639	$	(704,131	)	$	937,508	$	1,538,015	$	(654,137	)	$	883,878
Acquired customer-related intangibles		15-20		2,530,338		(944,760	)		1,585,578		2,389,470		(843,432	)		1,546,038
Acquired licenses and other intangibles		3-20		26,065		(20,743	)		5,322		25,949		(20,045	)		5,904
Economic Rights, TV Azteca		70		29,261		(13,949	)		15,312		26,902		(12,643	)		14,259

Total				4,227,303		(1,683,583	)		2,543,720		3,980,336		(1,530,257	)		2,450,079
Deferred financing costs, net (3)		N/A							51,339							47,532

Other intangible assets, net								$	2,595,059						$	2,497,611

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—Unaudited

(1)	December 31, 2011 balances have been revised to reflect purchase accounting measurement period adjustments.

(2)	Acquired network location intangibles are amortized over periods of up to 20 years, as the Company considers these intangibles to be directly related to the tower assets.

(3)	Deferred financing costs are amortized over the term of the respective debt instruments to which they relate using the effective interest method. This amortization is included in interest expense rather than in amortization expense.

The acquired network location intangibles represent the value to the Company of the incremental revenue growth, which could potentially be obtained from leasing the excess capacity on acquired communications sites. The acquired customer-related intangibles typically represent the value to the Company of customer contracts and relationships in place at the time of an acquisition, including assumptions regarding estimated renewals. The acquired licenses and other intangibles consist primarily of non-competition agreements acquired from SpectraSite, Inc. and in other tower acquisitions.

The Company amortizes these intangibles on a straight-line basis over the estimated useful lives. As of September 30, 2012, the remaining weighted average amortization period of the Company’s intangible assets, excluding the TV Azteca Economic Rights detailed in note 5 to the Company’s consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011, was approximately 12 years. Amortization of intangible assets for the three and nine months ended September 30, 2012 was approximately $46.9 million and $154.3 million (excluding amortization of deferred financing costs, which is included in interest expense), respectively. Amortization of intangible assets for the three and nine months ended September 30, 2011 was approximately $43.3 million and $131.2 million (excluding amortization of deferred financing costs, which is included in interest expense), respectively. The Company expects to record amortization expense (excluding amortization of deferred financing costs) as follows over the next five years (in millions):


Fiscal Year
2012 (remaining year)	$	50.7
2013		197.0
2014		189.2
2015		176.2
2016		168.9
2017		167.3

5.	Financing Transactions

Revolving Credit Facility and Term Loan—On January 31, 2012, the Company repaid and terminated its $1.25 billion senior unsecured revolving credit facility and repaid $325.0 million of related term loan commitments, with proceeds from borrowings under a $1.0 billion unsecured revolving credit facility entered into on April 8, 2011 (the “2011 Credit Facility”) and a new $1.0 billion unsecured revolving credit facility entered into on January 31, 2012 (the “2012 Credit Facility”).

2011 Credit Facility—As of September 30, 2012, the Company did not have any amounts outstanding under the 2011 Credit Facility and had approximately $6.7 million of undrawn letters of credit. The Company continues to maintain the ability to draw down and repay amounts under the 2011 Credit Facility in the ordinary course. The 2011 Credit Facility has a term of five years and matures on April 8, 2016.

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—Unaudited

2012 Credit Facility—On January 31, 2012, the Company entered into the 2012 Credit Facility, which has a term of five years and matures on January 31, 2017. Any outstanding principal and accrued but unpaid interest will be due and payable in full at maturity. The 2012 Credit Facility may be paid prior to maturity in whole or in part at the Company’s option without penalty or premium.

The Company has the option of choosing either a defined base rate or the London Interbank Offered Rate (“LIBOR”) as the applicable base rate for borrowings under the 2012 Credit Facility. The interest rate ranges between 1.075% to 2.400% above LIBOR for LIBOR based borrowings or between 0.075% to 1.400% above the defined base rate for base rate borrowings, in each case based upon the Company’s debt ratings. A quarterly commitment fee on the undrawn portion of the 2012 Credit Facility is required, ranging from 0.125% to 0.450% per annum, based upon the Company’s debt ratings. The current margin over LIBOR that the Company would incur on borrowings is 1.625%, and the current commitment fee on the undrawn portion of the 2012 Credit Facility is 0.225%.

The 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 would not only prevent the Company from being able to borrow additional funds, but would 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, 2012, the Company did not have any amounts outstanding under the 2012 Credit Facility and had approximately $2.7 million of undrawn letters of credit. The Company continues to maintain the ability to draw down and repay amounts under the 2012 Credit Facility in the ordinary course.

2012 Term Loan—On June 29, 2012, the Company entered into a $750.0 million unsecured term loan (“2012 Term Loan”). The Company received net proceeds of approximately $746.4 million, of which $632.0 million were used to repay certain existing indebtedness under the 2012 Credit Facility.

The 2012 Term Loan has a term of five years and matures on June 29, 2017. Any outstanding principal and accrued but unpaid interest will be due and payable in full at maturity. The 2012 Term Loan may be paid prior to maturity in whole or in part at the Company’s option without penalty or premium.

The Company has the option of choosing either a defined base rate or LIBOR as the applicable base rate. The interest rate ranges between 1.25% to 2.50% above LIBOR for LIBOR based borrowings or between 0.25% to 1.50% above the defined base rate for base rate borrowings, in each case based upon the Company’s debt ratings. As of September 30, 2012, the interest rate under the 2012 Term Loan is LIBOR plus 1.75%.

The 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 would 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, 2012, the Company had $750.0 million outstanding under the 2012 Term Loan.

Senior Notes Offering—On March 12, 2012, the Company completed a registered public offering of $700.0 million aggregate principal amount of its 4.70% senior notes due 2022 (the “4.70% Notes”). The net proceeds to the Company from the offering were approximately $693.0 million, after deducting commissions and expenses.

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—Unaudited

The Company used the net proceeds to repay a portion of the outstanding indebtedness incurred under its 2011 Credit Facility and 2012 Credit Facility, which had been used to fund recent acquisitions.

The 4.70% Notes mature on March 15, 2022, and interest is payable semi-annually in arrears on March 15 and September 15. The Company began making interest payments on September 15, 2012. The Company may redeem the 4.70% Notes at any time at a redemption price equal to 100% of the principal amount, plus a make-whole premium, together with accrued interest to the redemption date. Interest on the notes began to accrue on March 12, 2012 and is computed on the basis of a 360-day year comprised of twelve 30-day months.

If the Company undergoes a change of control and ratings decline, each as defined in supplemental indenture no. 5, dated March 12, 2012 (the “Supplemental Indenture”) to the base indenture dated May 13, 2010, as amended and supplemented on December 30, 2011, the Company will be required to offer to repurchase all of the 4.70% Notes at a purchase price equal to 101% of the principal amount, plus accrued and unpaid interest up to but not including the repurchase date. The 4.70% 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.

Colombian Short-Term Credit Facility—The 141.1 billion Colombian Peso (“COP”) denominated short-term credit facility was executed by one of the Company’s Colombian subsidiaries (“ATC Sitios”) on July 25, 2011, to refinance the credit facility entered into in connection with the purchase of the exclusive use rights for towers from Telefónica S.A.’s Colombian subsidiary, Colombia Telecomunicaciones S.A. E.S.P. As of September 30, 2012, 135.0 billion COP (approximately $75.0 million) was outstanding under this credit facility and the facility was scheduled to mature on October 25, 2012 with an interest rate of 7.95%. In October 2012, the maturity date was extended to November 25, 2012, and the facility continues to accrue interest at a rate of 7.95%.

On October 19, 2012, ATC Sitios entered into a loan agreement for a long-term credit facility, which it intends to use to refinance the Colombian short-term credit facility upon completion of certain closing conditions.

Colombian Bridge Loans—In connection with the acquisition of communications sites from Colombia Movil S.A. E.S.P. (“Colombia Movil”), another of the Company’s Colombian subsidiaries entered into five COP denominated bridge loans. As of September 30, 2012, the aggregate principal amount outstanding under these bridge loans was 94.0 billion COP (approximately $52.2 million). The bridge loans have terms ranging from 30 to 90 days, and are extended from time to time in the ordinary course. As of September 30, 2012, the interest rates of these loans ranged from 8.01% to 8.23%.

Colombian Loan—In connection with the establishment of the joint venture with Millicom International Cellular S.A. (“Millicom”) and the acquisition of communications sites in Colombia, ATC Colombia B.V., a 60% owned subsidiary of the Company, entered into a U.S. Dollar-denominated shareholder loan agreement (the “Colombian Loan”), as the borrower, with a wholly owned subsidiary of the Company (the “ATC Colombian Subsidiary”), and a wholly owned subsidiary of Millicom (the “Millicom Subsidiary”), as the lenders. The Colombian Loan accrues interest at 8.30% and matures on February 22, 2022. The portion of the Colombian Loan made by the ATC Colombian Subsidiary is eliminated in consolidation, and the portion of the Colombian Loan made by the Millicom Subsidiary is reported as outstanding debt of the Company. As of September 30, 2012, an aggregate of $16.3 million was payable to the Millicom Subsidiary.

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—Unaudited

South African Facility—The Company’s 1.2 billion South African Rand (“ZAR”) credit facility (the “South African Facility”) was executed in November 2011 to refinance the bridge loan entered into in connection with the acquisition of communications sites from Cell C (Pty) Limited (“Cell C”). On August 8, 2012 and September 14, 2012, the Company borrowed an additional 123.0 million ZAR (approximately $15.1 million) and 24.2 million ZAR (approximately $2.9 million), respectively. The South African Facility matures on March 31, 2020, and accrues interest based on a margin plus the Johannesburg Interbank Agreed Rate (“JIBAR”). As of September 30, 2012, 834.3 million ZAR (approximately $100.3 million) was outstanding under the South African Facility, and after giving effect to the interest rate swap agreements discussed in note 6, the facility accrues interest at a weighted average rate of 9.81%.

Ghana Loan—In connection with the establishment of the Company’s joint venture with MTN Group Limited (“MTN Group”) and the acquisitions of communications sites in Ghana, Ghana Tower Interco B.V., a 51% owned subsidiary of the Company, entered into a U.S. Dollar-denominated shareholder loan agreement (the “Ghana Loan”), as the borrower, with a wholly owned subsidiary of the Company (the “ATC Ghana Subsidiary”), and Mobile Telephone Networks (Netherlands) B.V., a wholly owned subsidiary of MTN Group (the “MTN Ghana Subsidiary”), as the lenders. The Ghana Loan accrues interest at 9.0% and matures on May 4, 2016. The portion of the Ghana Loan made by the ATC Ghana Subsidiary is eliminated in consolidation, and the portion of the Ghana Loan made by the MTN Ghana Subsidiary is reported as outstanding debt of the Company. As of September 30, 2012, an aggregate of $131.0 million was payable to the MTN Ghana Subsidiary.

Uganda Loan—In connection with the establishment of the Company’s joint venture with MTN Group and the acquisitions of communications sites in Uganda, Uganda Tower Interco B.V., a 51% owned subsidiary of the Company, entered into a U.S. Dollar-denominated shareholder loan agreement (the “Uganda Loan”), as the borrower, with a wholly owned subsidiary of the Company (the “ATC Uganda Subsidiary”), and a wholly owned subsidiary of MTN Group (the “MTN Uganda Subsidiary”), as the lenders. The Uganda Loan matures on June 29, 2019 and accrues interest at 5.30% above LIBOR, reset annually, which as of September 30, 2012 was 6.368%. The portion of the Uganda Loan made by the ATC Uganda Subsidiary is eliminated in consolidation, and the portion of the Uganda Loan made by the MTN Uganda Subsidiary is reported as outstanding debt of the Company. As of September 30, 2012, an aggregate of $61.0 million was payable to the MTN Uganda Subsidiary.

6.	Derivative Financial Instruments

The Company is exposed to certain risks related to its ongoing business operations. The primary risk managed through the use of derivative instruments is interest rate risk. From time to time, the Company enters into interest rate protection agreements to manage exposure to variability in cash flows relating to forecasted interest payments. Under these agreements, the Company is exposed to credit risk to the extent that a counterparty fails to meet the terms of a contract. The Company’s credit risk exposure is limited to the current value of the contract at the time the counterparty fails to perform.

If a derivative is designated as a cash flow hedge, the effective portions of changes in the fair value of the derivative are recorded in accumulated other comprehensive income (loss) and are recognized in the results of operations when the hedged item affects earnings. Ineffective portions of changes in the fair value of cash flow hedges are recognized immediately in the results of operations. For derivative instruments not designated as hedging instruments, changes in fair value are recognized in the results of operations in the period in which the change occurs.

The Company has entered into the following interest rate swap agreements to manage its exposure to variability in interest rates on debt in South Africa that accrue interest based on JIBAR: (i) on January 16, 2012, the Company entered into three interest rate swap agreements with an aggregate notional value of 350.0 million

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—Unaudited

ZAR (ii) on August 29, 2012, the Company entered into three additional interest rate swap agreements with an aggregate notional value of 61.5 million ZAR and (iii) on September 28, 2012, the Company entered into three additional interest rate swap agreements with an aggregate notional value of 12.1 million ZAR.

All of the Company’s interest rate swap agreements have been designated as cash flow hedges, have fixed interest rates ranging from 6.09% to 7.25% and expire on March 31, 2020. No interest rate swap agreements were outstanding at December 31, 2011. As of September 30, 2012, the carrying amounts of the Company’s derivative financial instruments, along with the estimated fair values of the related liabilities were as follows (in thousands):


	Balance Sheet Location	Notional Amount (1)		Carrying Amount and Fair Value (1)
Liabilities:
Interest rate swap agreements	Other long-term liabilities		ZAR 423,634		ZAR 20,407

(1)	The interest rate swap agreements are denominated in ZAR and have a notional amount and fair value of $51.0 million and $2.5 million, respectively, as of September 30, 2012.

There were no interest rate swap agreements held by the Company during the three months ended September 30, 2011. During the three months ended September 30, 2012, the interest rate swap agreements held by the Company had the following impact on other comprehensive income (“OCI”) included in the condensed consolidated balance sheets and in the condensed consolidated statements of operations (in thousands):


Three Months Ended September 30, 2012
Amount of Gain/(Loss) Recognized in OCI on Derivatives (Effective Portion)	Location of Gain/(Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	Amount of Gain/(Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	Location of Gain/(Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)	Gain/(Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
$(1,135)	Interest expense	$(181)	N/A	N/A

During the nine months ended September 30, 2011, the Company held twelve LIBOR-based interest rate swap agreements. As of September 30, 2011, none of those agreements were outstanding.

During the nine months ended September 30, 2012 and 2011, the interest rate swap agreements held by the Company had the following impact on OCI included in the consolidated balance sheets and in the condensed consolidated statements of operations (in thousands):


Nine Months Ended September 30, 2012
Amount of Gain/(Loss) Recognized in OCI on Derivatives (Effective Portion)	Location of Gain/(Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	Amount of Gain/(Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	Location of Gain/(Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)	Gain/(Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
$(2,985)	Interest expense	$(502)	N/A	N/A

Nine Months Ended September 30, 2011
Amount of Gain/(Loss) Recognized in OCI on Derivatives (Effective Portion)	Location of Gain/(Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	Amount of Gain/(Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	Location of Gain/(Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)	Gain/(Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
$(228)	Interest expense	$(2,205)	N/A	N/A

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—Unaudited

7.	Fair Value Measurements

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


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

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

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

Items Measured at Fair Value on a Recurring Basis—The fair value of the Company’s financial assets and liabilities that are required to be measured on a recurring basis at fair value is as follows (in thousands):


	September 30, 2012
	Fair Value Measurements Using						Assets/Liabilities at Fair Value
	Level 1		Level 2		Level 3		Assets/Liabilities at Fair Value

Liabilities:
Interest rate swap agreements (1)			$	2,454			$	2,454
Acquisition-related contingent consideration					$	27,209	$	27,209

	December 31, 2011
	Fair Value Measurements Using						Assets/Liabilities at Fair Value
	Level 1		Level 2		Level 3		Assets/Liabilities at Fair Value
Assets:
Short-term investments and available-for-sale securities (2)	$	22,270					$	22,270

Liabilities:
Acquisition-related contingent consideration					$	25,617	$	25,617

(1)	Consists of interest rate swap agreements based on JIBAR whose value is determined using a pricing model with inputs that are observable in the market or can be derived principally from, or corroborated by, observable market data.

(2)	Consists of certain short-term investments that are highly liquid and actively traded in over-the-counter markets as well as available-for-sale securities traded in active markets.

Cash and cash equivalents include short-term investments, including money market funds, with original maturities of three months or less whose fair value approximated cost at September 30, 2012 and December 31, 2011.

The fair value of the Company’s interest rate swap agreements recorded as liabilities is included in other long-term liabilities in the accompanying condensed consolidated balance sheets. Fair valuations of the Company’s interest rate swap agreements reflect the value of the instrument including the values associated with

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—Unaudited

counterparty risk and the Company’s own credit standing. The Company includes in the valuation of the derivative instrument the value of the net credit differential between the counterparties to the derivative contract. There were no interest rate swap agreements outstanding at December 31, 2011.

The Company may be required to pay additional consideration under certain agreements for the acquisitions of communications sites in South Africa, Ghana, Colombia and the United States if specific conditions are met or events occur, such as (i) the collocation of certain wireless carriers subsequent to acquiring the communications sites or (ii) the conversion of certain barter agreements with other wireless carriers to cash-paying master lease agreements.

Acquisition-related contingent consideration is initially measured and recorded at fair value as an element of consideration paid in connection with an acquisition with subsequent adjustments recognized in other operating expenses in the condensed consolidated statements of operations. The Company determines the fair value of acquisition-related contingent consideration, and any subsequent changes in fair value using a discounted probability-weighted approach. This approach takes into consideration Level 3 unobservable inputs including probability assessments of expected future cash flows over the period in which the obligation is expected to be settled and applies a discount factor that captures the uncertainties associated with the obligation. Changes in these unobservable inputs could significantly impact the fair value of the liabilities recorded in the accompanying condensed consolidated balance sheets and operating expenses in the condensed consolidated statements of operations.

As of September 30, 2012, the Company estimates that the value of all potential acquisition-related contingent consideration required payments to be between zero and $44.7 million. During the three months ended September 30, 2012 and 2011, the fair value of the contingent consideration changed as follows (in thousands):


	2012			2011
Balance as of July 1	$	29,897		$	5,671
Additions		1,180			2,108
Payments		(3,951	)		(938	)
Change in fair value		325			1,341
Foreign currency translation adjustment		(242	)		—

Balance as of September 30	$	27,209		$	8,182

During the nine months ended September 30, 2012 and 2011, the fair value of the contingent consideration changed as follows (in thousands):


	2012			2011
Balance as of January 1	$	25,617		$	5,809
Additions		1,533			2,199
Payments		(4,397	)		(1,638	)
Change in fair value		3,791			1,812
Foreign currency translation adjustment		665			—

Balance as of September 30	$	27,209		$	8,182

Items Measured at Fair Value on a Nonrecurring Basis—During the nine months ended September 30, 2012, certain long-lived assets held and used with a carrying value of $299.9 million were written down to their net realizable value of $289.2 million as a result of an asset impairment charge of $10.7 million, which was

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—Unaudited

recorded in other operating expenses in the accompanying condensed consolidated statements of operations. These adjustments were determined by comparing the estimated proceeds from sale of assets or the projected future discounted cash flows to be provided from the long-lived assets (calculated using Level 3 inputs) to the asset’s carrying value. There were no other items measured at fair value on a nonrecurring basis during the nine months ended September 30, 2012.

Fair Value of Financial Instruments—The carrying value of the Company’s financial instruments, with the exception of long-term obligations, including the current portion, reasonably approximate the related fair values as of September 30, 2012 and December 31, 2011. 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 values were estimated using a discounted cash flow analysis using rates for debt with similar terms and maturities. As of September 30, 2012, the carrying value and fair value of long-term obligations, including the current portion, were $7.5 billion and $8.1 billion, respectively, of which $4.8 billion was measured using Level 1 inputs and $3.3 billion was measured using Level 2 inputs. As of December 31, 2011, the carrying value and fair value of long-term obligations, including the current portion, were $7.2 billion and $7.5 billion, respectively, of which $3.8 billion was measured using Level 1 inputs and $3.7 billion was measured using Level 2 inputs.

8.	Income Taxes

The Company provides for income taxes at the end of each interim period based on the estimated effective tax rate for the full fiscal year. Cumulative adjustments to the Company’s estimate are recorded in the interim period in which a change in the estimated annual effective rate is determined. As described in note 1, the Company began operating as a REIT for the taxable year commencing January 1, 2012. As a REIT, the Company will continue to be subject to income taxes on the income of its TRSs. Under the provisions of the Internal Revenue Code of 1986, as amended, the Company may deduct amounts distributed to stockholders against the income generated in its QRSs. Additionally, the Company is able to offset income in both its TRSs and QRSs by utilizing its net operating losses.

The Company provides valuation allowances if, based on the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. At September 30, 2012 and December 31, 2011, the Company has provided a valuation allowance of approximately $56.2 million and $5.8 million, respectively, which primarily relates to foreign items. During the nine months ended September 30, 2012, the Company increased amounts recorded as valuation allowances by $50.4 million due to the uncertainty as to the timing and the Company’s ability to recover net deferred tax assets in certain foreign operations in the foreseeable future. The amount of deferred tax assets considered realizable, however, could be adjusted if objective evidence in the form of cumulative losses is no longer present and additional weight may be given to subjective evidence such as our projections for growth.

As of September 30, 2012 and December 31, 2011, the total amount of unrecognized tax benefits that would impact the effective tax rate, if recognized, was approximately $33.3 million and $34.5 million, respectively. The decrease in the amount of unrecognized tax benefits during the nine months ended September 30, 2012 is primarily attributable to the expiration of the statute of limitations on certain existing tax positions, partially offset by the additions to the Company’s existing tax positions and fluctuations in foreign currency exchange rates. The Company expects the unrecognized tax benefits to change over the next 12 months if certain tax matters ultimately settle with the applicable taxing jurisdiction during this timeframe, as described in note 12 to the Company’s consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011. The impact of the amount of such changes to previously recorded uncertain tax positions could range from zero to $3.1 million.

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—Unaudited

The Company recorded penalties and tax-related interest expense during the three and nine months ended September 30, 2012 of $1.3 million and $3.9 million, respectively, and during the three and nine months ended September 30, 2011 of $1.2 million and $3.5 million, respectively. In addition, due to the expiration of the statute of limitations in certain jurisdictions, the Company reduced its liability for uncertain tax positions by $3.4 million. As of September 30, 2012 and December 31, 2011, the total amount of accrued income tax-related interest and penalties included in other long-term liabilities in the condensed consolidated balance sheets was $32.3 million and $31.5 million, respectively.

9.	Stock-Based Compensation

The Company recognized stock-based compensation expense during the three and nine months ended September 30, 2012 of $13.1 million and $39.7 million, respectively, and stock-based compensation expense during the three and nine months ended September 30, 2011 of $12.1 million and $36.2 million, respectively. Stock-based compensation expense for the nine months ended September 30, 2011 includes $3.0 million related to the modification of the vesting and exercise terms for certain employees’ equity awards. During the nine months ended September 30, 2012 and 2011, the Company capitalized $1.6 million and $2.4 million, respectively, of stock-based compensation expense as property and equipment.

Stock Options—The following table summarizes the Company’s option activity for the nine months ended September 30, 2012:


	Number of Options
Outstanding as of January 1, 2012		6,376,244
Granted		1,230,578
Exercised		(1,316,473	)
Forfeited		(110,825	)
Expired		(2,900	)

Outstanding as of September 30, 2012		6,176,624

The Company estimates the fair value of each option grant on the date of grant using the Black-Scholes pricing model. The following assumptions were used to determine the grant date fair value for options granted during the nine months ended September 30, 2012:


Range of risk-free interest rate		0.67% - 1.03%
Weighted average risk-free interest rate		0.92%
Expected life of option grants		4.4 years
Range of expected volatility of underlying stock price		37.02% - 37.86%
Weighted average expected volatility of underlying stock price		37.85%
Expected annual dividends		1.50%

The weighted average grant date fair value per share during the nine months ended September 30, 2012 was $17.45. As of September 30, 2012, total unrecognized compensation expense related to unvested stock options was $35.1 million and is expected to be recognized over a weighted average period of approximately three years.

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—Unaudited

Restricted Stock Units—The following table summarizes the Company’s restricted stock unit activity during the nine months ended September 30, 2012:


	Number of Units
Outstanding as of January 1, 2012		2,197,460
Granted		827,282
Vested		(867,404	)
Forfeited		(104,894	)

Outstanding as of September 30, 2012		2,052,444

As of September 30, 2012, total unrecognized compensation expense related to unvested restricted stock units was $79.6 million, and is expected to be recognized over a weighted average period of approximately two years. Distributions will accrue with each unvested restricted stock unit award granted subsequent to January 1, 2012.

Employee Stock Purchase Plan—The Company maintains an employee stock purchase plan (the “ESPP”) for all eligible employees as described in note 13 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2011. Under the ESPP, shares of the Company’s common stock may be purchased on the last day of each bi-annual offering period at 85% of the lower of the fair market value on the first or the last day of such offering period. The offering periods run from June 1 through November 30 and from December 1 through May 31 of each year. During the nine months ended September 30, 2012, employee contributions were accumulated to purchase an estimated 71,136 shares under the ESPP and the fair value per share was $13.13.

Key assumptions used to apply the Black-Scholes pricing model for shares purchased through the ESPP during the nine months ended September 30, 2012 are as follows:


Approximate risk-free interest rate		0.05%
Expected life of shares		6 months
Expected volatility of underlying stock price		33.86%
Expected annual dividends		1.50%

10.

Equity

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

During the nine months ended September 30, 2012, the Company repurchased 252,691 shares of its common stock for an aggregate of $16.7 million, including commissions and fees, pursuant to the 2011 Buyback. As of September 30, 2012, the Company had repurchased a total of approximately 3.7 million shares of its common stock under the 2011 Buyback for an aggregate of $197.9 million, including commissions and fees.

Between October 1, 2012 and October 18, 2012, the Company repurchased an additional 16,689 shares of its common stock for an aggregate of $1.2 million, including commissions and fees, pursuant to the 2011 Buyback. As of October 18, 2012, the Company had repurchased a total of approximately 3.7 million shares of its common stock under the 2011 Buyback for an aggregate of $199.1 million, including commissions and fees.

Under the 2011 Buyback, the Company is authorized to purchase shares from time to time through open market purchases or privately negotiated transactions at prevailing prices in accordance with securities laws and

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—Unaudited

other legal requirements, and subject to market conditions and other factors. To facilitate repurchases, the Company makes purchases pursuant to trading plans under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, which allows the Company to repurchase shares during periods when it otherwise might be prevented from doing so under insider trading laws or because of self-imposed trading blackout periods.

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

Distributions—On March 22, 2012, the Company declared a cash distribution of $0.21 per share and on April 25, 2012 paid a total of approximately $82.9 million to stockholders of record at the close of business on April 11, 2012. On June 20, 2012, the Company declared a cash distribution of $0.22 per share and on July 18, 2012 paid a total of approximately $86.9 million to stockholders of record at the close of business on July 2, 2012. On September 19, 2012, the Company declared a cash distribution of $0.23 per share and on October 15, 2012 paid a total of approximately $90.9 million to stockholders of record at the close of business on October 1, 2012.

The Company will accrue distributions on unvested restricted stock unit awards granted subsequent to January 1, 2012, which will be payable upon vesting. As of September 30, 2012, the Company had accrued $0.5 million of distributions payable upon the vesting of restricted stock units.

To maintain its REIT status, the Company expects to continue paying regular distributions, the amount, timing and frequency of which will be determined and be subject to adjustment by the Company’s Board of Directors.

11.

Earnings (Loss) per Common Share

Basic net income (loss) per common share represents net income (loss) attributable to American Tower Corporation divided by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per common share represents net income (loss) attributable to American Tower Corporation divided by the weighted average number of common shares outstanding during the period and any dilutive common share equivalents, including shares issuable upon exercise of stock options and share based awards as determined under the treasury stock method. Dilutive common share equivalents also include the dilutive impact of the ALLTEL transaction (see note 12).

The following table sets forth basic and diluted income (loss) from continuing operations per common share computational data for the three and nine months ended September 30, 2012 and 2011 (in thousands, except per share data):


	Three Months Ended September 30,					Nine Months Ended September 30,
	2012		2011			2012		2011
Net income (loss) attributable to American Tower Corporation	$	232,089	$	(15,701	)	$	501,604	$	191,352

Basic weighted average common shares outstanding		395,244		395,183			394,626		396,507
Dilutive securities		4,243		—			4,458		3,960

Diluted weighted average common shares outstanding		399,487		395,183			399,084		400,467

Basic net income (loss) attributable to American Tower Corporation per common share	$	0.59	$	(0.04	)	$	1.27	$	0.48

Diluted net income (loss) attributable to American Tower Corporation per common share	$	0.58	$	(0.04	)	$	1.26	$	0.48

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—Unaudited

For the three and nine months ended September 30, 2012, the diluted weighted average number of common shares outstanding excluded shares issuable upon exercise of the Company’s stock options and share based awards of 1.2 million and 1.0 million, respectively, as the effect would be anti-dilutive. For the three months ended September 30, 2011, the Company assumed common stock equivalents to be anti-dilutive, as income from continuing operations attributable to American Tower Corporation was in a loss position. For the nine months ended September 30, 2011, the diluted weighted average number of common shares outstanding excluded shares issuable upon exercise of the Company’s stock options and share based awards of 0.9 million, as the effect would be anti-dilutive.

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, other than the legal proceedings discussed below, 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.

SEC Subpoena—On June 2, 2011, the Company received a subpoena from the SEC requesting certain documents from 2007 through the date of the subpoena, including in particular documents related to the Company’s tax accounting and reporting. While the Company believes this investigation may in part relate to a former employee’s complaints, which the Company previously investigated with the assistance of outside counsel and a forensic accounting firm, finding no material issues, the Company cannot at this time predict the scope or the outcome of this investigation. The Company understands that its independent registered public accounting firm and one of its consultants also received subpoenas primarily related to the Company’s tax accounting and reporting during this period and its investigation into this complaint. The Company has cooperated and intends to continue to cooperate fully with the SEC with respect to its investigation.

Mexico Litigation—One of the Company’s subsidiaries, SpectraSite Communications, Inc. (“SCI”), a predecessor to SpectraSite, is involved in a lawsuit brought in Mexico against a former Mexican subsidiary of SCI (the subsidiary of SCI was sold in 2002, prior to the Company’s acquisition of SCI in 2005). The lawsuit concerns a terminated tower construction contract and related agreements with a wireless carrier in Mexico. The primary issue for the Company is whether SCI itself can be found liable to the Mexican carrier. The trial and lower appellate courts initially found that SCI had no such liability in part because Mexican courts do not have the necessary jurisdiction over SCI. In September 2010, following several decisions by Mexican appellate courts, including the Supreme Court of Mexico, and related appeals by both parties, an intermediate appellate court issued a new decision that would, if enforceable, reimpose liability on SCI if the primary defendant in the case is unable to satisfy the judgment. In its decision, the intermediate appellate court identified potential damages, in the form of potential statutory interest, of approximately $6.7 million as of that date. On October 14, 2010, the Company filed a new constitutional appeal to again dispute the decision, which was rejected on January 24, 2012. The case was returned to the trial court to determine whether any actual damages should be awarded to the Mexican carrier. The Mexican carrier sought damages of approximately $7.9 million in the trial court. On August 2, 2012, the trial court entered judgment against the primary defendant and SCI in the amount of approximately $6.5 million. Each of the parties appealed the trial court’s determination and on October 17, 2012, the appellate court entered judgment against the primary defendant in the amount of approximately $7.9 million with SCI responsible for any amount that cannot be recovered from the primary defendant. SCI is currently considering whether to file an additional appeal. Any judgment of the court in Mexico against SCI would need to be enforced in the United States and the Company is unable to determine whether the award of damages is enforceable in the United States.

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—Unaudited

Commitments

AT&T Transaction—The Company has an agreement with SBC Communications Inc., a predecessor entity to AT&T Inc. (“AT&T”), for the lease or sublease of approximately 2,500 towers from AT&T between December 2000 and August 2004. All of the towers are part of the Company’s securitization transaction. The average term of the lease or sublease for all sites at the inception of the agreement was approximately 27 years, assuming renewals or extensions of the underlying ground leases for the sites. The Company has the option to purchase the sites subject to the applicable lease or sublease upon its expiration. Each tower is assigned to an annual tranche, ranging from 2013 to 2032, which represents the outside expiration date for the sublease rights to that tower. The purchase price for each site is a fixed amount stated in the sublease for that site plus the fair market value of certain alterations made to the related tower by AT&T. The aggregate purchase option price for the towers leased and subleased was approximately $532.5 million as of September 30, 2012, and will accrete at a rate of 10% per year to the applicable expiration of the lease or sublease of a site. For all such sites purchased by the Company prior to June 30, 2020, AT&T will continue to lease the reserved space at the then-current monthly fee which shall escalate in accordance with the standard master lease agreement for the remainder of AT&T’s tenancy. Thereafter, AT&T shall have the right to renew such lease for up to four successive five-year terms. For all such sites purchased by the Company subsequent to June 30, 2020, AT&T has the right to continue to lease the reserved space for successive one-year terms at a rent equal to the lesser of the agreed upon market rate and the then current monthly fee, which is subject to an annual increase based on changes in the Consumer Price Index.

ALLTEL Transaction—In December 2000, the Company entered into an agreement with ALLTEL (which completed its merger with Verizon Wireless in January 2009) to acquire towers from ALLTEL through a 15-year sublease agreement. Pursuant to the agreement with ALLTEL, as amended, the Company acquired rights to a total of 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, which will occur in tranches between April 2016 and March 2017 based on the original closing date for such tranche of towers. The purchase price per tower as of the original closing date was $27,500 and will accrete at a rate of 3% per annum through the expiration of the applicable sublease. The aggregate purchase option price for the subleased towers was approximately $68.6 million as of September 30, 2012. At ALLTEL’s option, at the expiration of the sublease, the purchase price would be payable in cash or with 769 shares of the Company’s common stock per tower, which at September 30, 2012 would be valued at approximately $97.5 million.

Chile Remediation Plan—The Company records impairment losses on long-lived assets when events and circumstances indicate that long-lived assets might be impaired and the assets’ carrying value exceeds its undiscounted future cash flows. In June 2012, the Chilean government passed a law that imposes certain zoning restrictions on telecommunications towers located throughout Chile. The new law applies retroactively and may require the Company to modify or remove approximately 22 existing towers. The Company has developed a remediation plan, which requires approval of the Chilean government and cooperation of other impacted parties. As of September 30, 2012, the Company believes that the remediation plan, if approved by the Chilean government, will not have a material impact on the Company’s consolidated balance sheet, results of operations or cash flows.

13.

Acquisitions and Other Transactions

All of the acquisitions described below are being accounted for as business combinations and are consistent with the Company’s strategy to expand in selected geographic areas.

The allocations of purchase price are based on estimates of the fair value of the net assets acquired at the date of the particular acquisition and are subject to adjustment during the particular measurement period (up to

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—Unaudited

one year from the particular acquisition date). The primary areas of the preliminary purchase price allocations that are not yet finalized relate to the fair value of certain tangible and intangible assets acquired and liabilities assumed, including contingent consideration, and residual goodwill. The fair values of these net assets acquired are based on management’s estimates and assumptions, as well as other information compiled by management, including valuations that utilize customary valuation procedures and techniques. During the measurement period, the Company will adjust assets and/or liabilities if new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have resulted in the recognition of those assets and/or liabilities as of that date. The effect of measurement period adjustments to the allocation of the purchase price are as if the adjustments had been completed on the acquisition date. All changes that do not qualify as measurement period adjustments are included in current period earnings. If the actual results differ from the estimates and judgments used in these fair values, the amounts recorded in the condensed consolidated financial statements could result in a possible impairment of the intangible assets and/or goodwill, or require acceleration of the amortization expense of intangible assets. During the nine months ended September 30, 2012, the Company made certain purchase accounting measurement period adjustments related to several acquisitions and therefore retrospectively adjusted the fair value of the assets acquired and liabilities assumed in the condensed consolidated balance sheet for the year ended December 31, 2011.

South Africa Acquisition—On November 4, 2010, the Company entered into a definitive agreement with Cell C to purchase up to approximately 1,400 existing communications sites, and up to 1,800 additional communications sites that either are under construction or will be constructed, for an aggregate purchase price of up to approximately $430.0 million. On March 8, 2011, July 25, 2011, and December 14, 2011 the Company completed the purchase of 959, 329 and 76 existing communications sites, respectively, through its local South African subsidiary for an aggregate purchase price of $214.5 million (including contingent consideration of $2.6 million and value added tax of $12.3 million), using cash on hand, local financing and funds contributed by South African investors who currently hold an approximate 25% non-controlling interest in the Company’s South African subsidiary.

Under the terms of the purchase agreement, legal title to certain of the communications sites acquired on December 14, 2011 will be transferred upon fulfillment of certain conditions by Cell C. Prior to the fulfillment of these conditions, the Company will operate and maintain control of these communications sites, and accordingly, reflect these sites in the allocation of purchase price and the consolidated operating results.

The agreement with Cell C requires the Company to make a one-time payment based on the annualized rent for each collocation installed for a specific wireless carrier on the acquired communications sites occurring within a four-year period after the initial closing date. Based on current estimates, the Company estimates the value of the remaining potential contingent consideration payments required to be made under the agreement to be between zero and $7.0 million. The fair value of the remaining contingent consideration, which had preliminarily been estimated at $2.6 million, is estimated to be $6.7 million using a probability-weighted average of the expected outcomes at September 30, 2012. The Company has previously made payments under this arrangement of $4.0 million. During the three and nine months ended September 30, 2012, the Company recorded changes in fair value of zero and $3.9 million, respectively, as other operating expenses in the condensed consolidated statement of operations.

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—Unaudited

The allocation of the purchase price was finalized during the nine months ended September 30, 2012. The following table summarizes the allocation of the aggregate purchase consideration paid and the amounts of assets acquired and liabilities assumed based upon their estimated fair value at the date of acquisition (in thousands):


	Final Purchase Price Allocation (1)			Preliminary Purchase Price Allocation (2)
Current assets	$	12,262		$	12,262
Property and equipment		81,052			82,225
Intangible assets (3)		118,502			118,781
Current liabilities		(74	)		(74	)
Other long-term liabilities		(31,418	)		(32,908	)

Fair value of net assets acquired	$	180,324		$	180,286

Goodwill (4)		34,159			34,197

(1)	Reflected in the condensed consolidated balance sheets herein.

(2)	Reflected in the consolidated balance sheets in the Form 10-K for the year ended December 31, 2011.

(3)	Consists of customer-related intangibles of approximately $105.0 million and network location intangibles of approximately $13.5 million. The customer-related intangibles and network location intangibles are being amortized on a straight-line basis over periods of up to 20 years.

(4)	The Company expects that the goodwill recorded will not be deductible for tax purposes. The goodwill was allocated to the Company’s international rental and management segment.

Pursuant to the agreement with Cell C entered into on November 4, 2010, the Company completed the purchase of an additional 197 and 39 communications sites on July 31, 2012 and August 31, 2012, respectively, for an aggregate purchase price of $35.0 million (including value added tax of $4.3 million). Under the terms of the agreement, legal title to certain of the communications sites acquired on July 31, 2012 and August 31, 2012 will be transferred upon fulfillment of certain conditions by Cell C. Prior to the fulfillment of these conditions, the Company will operate and maintain control of these communications sites, and accordingly, reflect these sites in the allocation of purchase price and the consolidated operating results.

The following table summarizes the preliminary allocation of the aggregate purchase price consideration paid and the amounts of assets acquired and liabilities assumed based upon their estimated fair value at the date of acquisition (in thousands):


	Preliminary Purchase Price Allocation
Current assets	$	4,295
Non-current assets		340
Property and equipment		16,375
Intangible assets (1)		10,709
Other long-term liabilities		(2,552	)

Fair value of net assets acquired	$	29,167

Goodwill (2)		5,809

(1)	Consists of customer-related intangibles of approximately $8.5 million and network location intangibles of approximately $2.2 million. The customer-related intangibles and network location intangibles are being amortized on a straight-line basis over periods of up to 20 years.

(2)	The Company expects that the goodwill recorded will not be deductible for tax purposes. The goodwill was allocated to the Company’s international rental and management segment.

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—Unaudited

Brazil Acquisition—On March 1, 2011, the Company acquired 100% of the outstanding shares of a company that owned 627 communications sites in Brazil for $553.2 million, which was subsequently increased to $585.4 million as a result of acquiring 39 additional communications sites during the year ended December 31, 2011. During the nine months ended September 30, 2012, the purchase price was reduced to $585.3 million after certain post-closing purchase price adjustments.


	Final Purchase Price Allocation (1)			Preliminary Purchase Price Allocation (2)
Current assets (3)	$	9,922		$	9,922
Non-current assets		71,529			98,047
Property and equipment		83,539			86,062
Intangible assets (4)		368,000			288,000
Current liabilities		(5,536	)		(5,536	)
Other long-term liabilities (5)		(38,519	)		(38,519	)

Fair value of net assets acquired	$	488,935		$	437,976

Goodwill (6)		96,395			147,459

(1)	Reflected in the condensed consolidated balance sheets herein.

(2)	Reflected in the consolidated balance sheets in the Form 10-K for the year ended December 31, 2011.

(3)	Includes approximately $7.7 million of accounts receivable, which approximates the value due to the Company under certain contractual arrangements.

(4)	Consists of customer-related intangibles of approximately $250.0 million and network location intangibles of approximately $118.0 million. The customer-related intangibles and network location intangibles are being amortized on a straight-line basis over periods of up to 20 years.

(5)	Other long-term liabilities includes contingent amounts of approximately $30.0 million primarily related to uncertain tax positions related to the acquisition and non-current assets includes $24.0 million of the related indemnification asset.

(6)	The Company will receive a deduction for income tax purposes for an amount equal to the goodwill recorded. The goodwill was allocated to the Company’s international rental and management segment.

Brazil—Vivo Acquisition—On March 30, 2012, the Company entered into a definitive agreement to purchase up to 1,500 towers from Vivo S.A. (“Vivo”). Pursuant to the agreement, on March 30, 2012, the Company purchased 800 communications sites for an aggregate purchase price of $151.7 million. On June 30, 2012, the Company purchased the remaining 700 communications sites for an aggregate purchase consideration of $126.3 million, subject to post-closing adjustments. In addition, the Company and Vivo amended the asset purchase agreement to allow for the acquisition of up to an additional 300 communications sites by the Company, subject to regulatory approval. On August 31, 2012, the Company purchased an additional 192 communications sites from Vivo for an aggregate purchase consideration of $32.7 million, subject to post-closing adjustments.

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—Unaudited


	Preliminary Purchase Price Allocation
Non-current assets	$	23,760
Property and equipment		129,174
Intangible assets (1)		129,833
Other long-term liabilities		(18,195	)

Fair value of net assets acquired	$	264,572

Goodwill (2)		46,123

(1)	Consists of customer-related intangibles of approximately $68.7 million and network location intangibles of approximately $61.1 million. The customer-related intangibles and network location intangibles are being amortized on a straight-line basis over periods of up to 20 years.

(2)	The Company will receive a deduction for income tax purposes for an amount equal to the goodwill recorded. The goodwill was allocated to the Company’s international rental and management segment.

Ghana Acquisition—On December 6, 2010, the Company entered into a definitive agreement with MTN Group to establish a joint venture in Ghana. The joint venture is controlled by a holding company of which the ATC Ghana Subsidiary holds a 51% interest and the MTN Ghana Subsidiary holds a 49% interest. The joint venture is managed and controlled by the Company and owns a tower operations company in Ghana.

Pursuant to the agreement, on May 6, 2011, August 11, 2011 and December 23, 2011, the joint venture acquired 400, 770 and 686 communications sites, respectively, from MTN Group’s operating subsidiary in Ghana for an aggregate purchase price of $515.6 million (including contingent consideration of $2.3 million and value added tax of $65.6 million). The aggregate purchase price was subsequently increased to $517.7 million (including contingent consideration of $2.3 million and value added tax of $65.6 million) after certain post-closing adjustments.

Under the terms of the purchase agreement, legal title to certain of the communications sites acquired on December 23, 2011 will be transferred upon fulfillment of certain conditions by MTN Group. Prior to the fulfillment of these conditions, the Company will operate and maintain control of these communications sites, and accordingly, reflect these sites in the allocation of purchase price and the consolidated operating results.

In December 2011, the Company signed an amendment to its agreement with MTN Group, which requires the Company to make additional payments upon the conversion of certain barter agreements with other wireless carriers to cash-paying master lease agreements. The Company currently estimates the value of potential contingent consideration payments required to be made under the amended agreement to be between zero and $4.0 million. The fair value of the contingent consideration payable is estimated to be $3.7 million using a probability weighted average of the expected outcomes at September 30, 2012. During the three and nine months ended September 30, 2012, the Company recorded a reduction in fair value of $0.1 million and an increase in fair value of $0.6 million, respectively, which are included in other operating expenses in the condensed consolidated statements of operations.

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—Unaudited

The allocation of the purchase price was finalized during the nine months ended September 30, 2012. The following table summarizes the allocation of the aggregate purchase price consideration paid and the amounts of assets acquired and liabilities assumed based upon their estimated fair value at the date of acquisition (in thousands):


	Final Purchase Price Allocation (1)			Preliminary Purchase Price Allocation (2)
Current assets	$	6,969		$	69,147
Non-current assets		69,145			5,405
Property and equipment		319,641			304,478
Intangible assets (3)		112,025			82,217
Other long-term liabilities		(11,477	)		(13,356	)

Fair value of net assets acquired	$	496,303		$	447,891

Goodwill (4)		21,375			67,755

(1)	Reflected in the condensed consolidated balance sheets herein.

(2)	Reflected in the consolidated balance sheets in the Form 10-K for the year ended December 31, 2011.

(3)	Consists of customer-related intangibles of approximately $58.0 million and network location intangibles of approximately $54.0 million. The customer-related intangibles and network location intangibles are being amortized on a straight-line basis over periods of up to 20 years.

(4)	The Company will receive a deduction for income tax purposes for an amount equal to the goodwill recorded. The goodwill was allocated to the Company’s international rental and management segment.

Mexico Acquisition—On November 3, 2011, the Company entered into a definitive agreement to purchase up to approximately 730 communications sites from Telefónica’s Mexican subsidiary, Pegaso PCS, S.A. de C.V. (“Telefónica Mexico”). On December 15, 2011, the Company completed the purchase of 584 communications sites, for an aggregate purchase price of $121.9 million (including value added tax of $16.7 million). On December 7, 2011, the Company entered into a definitive agreement to purchase up to approximately 1,778 additional communications sites from Telefónica Mexico. On December 28, 2011, April 3, 2012, June 29, 2012 and July 10, 2012, the Company completed the purchase of 1,422, 55, 74 and 3 communications sites, respectively, for an aggregate purchase price of $323.3 million (including value added tax of $44.7 million).

The following table summarizes the allocation of the aggregate purchase consideration paid and the amounts of assets acquired and liabilities assumed based upon their estimated fair value at the date of acquisition (in thousands):


	Updated Purchase Price Allocation (1)			Preliminary Purchase Price Allocation (2)
Current assets	$	61,402		$	57,414
Non-current assets		16,350			26,845
Property and equipment		187,275			174,767
Intangible assets (3)		147,692			97,182
Current liabilities		(148	)		(148	)
Other long-term liabilities		(9,449	)		(8,836	)

Fair value of net assets acquired	$	403,122		$	347,224

Goodwill (4)		42,044			69,030

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—Unaudited

(1)	Reflected in the condensed consolidated balance sheets herein.

(2)	Reflected in the consolidated balance sheets in the Form 10-K for the year ended December 31, 2011.

(3)	Consists of customer-related intangibles of approximately $75.0 million and network location intangibles of approximately $72.7 million. The customer-related intangibles and network location intangibles are being amortized on a straight-line basis over periods of up to 20 years.

(4)	The Company will receive a deduction for income tax purposes for an amount equal to the goodwill recorded. The goodwill was allocated to the Company’s international rental and management segment.

On September 12, 2012, the Company entered into a definitive agreement to purchase up to approximately 348 additional communications sites from Telefónica Mexico. On September 27, 2012, the Company completed the purchase of 279 communications sites, for an aggregate purchase price of $63.1 million (including value added tax of $8.7 million).

The following table summarizes the preliminary allocation of the aggregate purchase consideration paid and the amounts of assets acquired and liabilities assumed based upon their estimated fair value at the date of acquisition (in thousands):


	Preliminary Purchase Price Allocation
Current assets	$	8,700
Non-current assets		2,316
Property and equipment		26,520
Intangible assets (1)		20,928
Other long-term liabilities		(1,339	)

Fair value of net assets acquired	$	57,125

Goodwill (2)		5,955

(1)	Consists of customer-related intangibles of approximately $10.6 million and network location intangibles of approximately $10.3 million. The customer-related intangibles and network location intangibles are being amortized on a straight-line basis over periods of up to 20 years.

(2)	The Company will receive a deduction for income tax purposes for an amount equal to the goodwill recorded. The goodwill was allocated to the Company’s international rental and management segment.

Colombia—Telefónica Moviles Acquisition—During the year ended December 31, 2011, the Company acquired 125 communications sites from Telefónica Moviles Colombia S.A. (“Telefónica Colombia”) for an aggregate purchase price of $17.5 million.


	Final Purchase Price Allocation (1)			Preliminary Purchase Price Allocation (2)
Non-current assets	$	110		$	217
Property and equipment		13,526			12,456
Intangible assets (3)		4,008			4,675
Other long-term liabilities		(341	)		(341	)

Fair value of net assets acquired	$	17,303		$	17,007

Goodwill (4)		227			523

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—Unaudited

(1)	Reflected in the condensed consolidated balance sheets herein.

(2)	Reflected in the consolidated balance sheets in the Form 10-K for the year ended December 31, 2011.

(3)	Consists of customer-related intangibles of approximately $1.5 million and network location intangibles of approximately $2.5 million. The customer-related intangibles and network location intangibles are being amortized on a straight-line basis over periods of up to 20 years.

(4)	The Company will receive a deduction for income tax purposes for an amount equal to the goodwill recorded. The goodwill was allocated to the Company’s international rental and management segment.

During the three months ended September 30, 2012, the Company acquired an additional 31 communications sites from Telefónica Colombia for an aggregate purchase price of $4.7 million.


	Preliminary Purchase Price Allocation
Non-current assets	$	2
Property and equipment		3,590
Intangible assets (1)		1,062
Other long-term liabilities		(91	)

Fair value of net assets acquired	$	4,563

Goodwill (2)		89

(1)	Consists of customer-related intangibles of approximately $0.4 million and network location intangibles of approximately $0.7 million. The customer-related intangibles and network location intangibles are being amortized on a straight-line basis over periods of up to 20 years.

(2)	The Company will receive a deduction for income tax purposes for an amount equal to the goodwill recorded. The goodwill was allocated to the Company’s international rental and management segment.

Colombia—Colombia Movil Acquisition—On July 17, 2011, the Company entered into a definitive agreement with Colombia Movil, whereby ATC Sitios Infraco, S.A.S., a Colombian subsidiary of the Company (“ATC Infraco”), would purchase up to 2,126 communications sites from Colombia Movil for an aggregate purchase price of approximately $182.0 million.

From December 21, 2011 through the nine months ended September 30, 2012, ATC Infraco completed the purchase of 1,484 communications sites for an aggregate purchase price of $132.3 million (including contingent consideration of $16.8 million), subject to post-closing adjustments. Through a Millicom subsidiary, Millicom exercised its option to acquire an indirect, substantial non-controlling interest in ATC Infraco.

Under the terms of the agreement, the Company is required to make additional payments upon the conversion of certain barter agreements with other wireless carriers to cash paying lease agreements. Based on the Company’s current estimates, the value of potential contingent consideration payments required to be made under the amended agreement is expected to be between zero and $31.6 million. The fair value of the contingent consideration is estimated to be $16.1 million using a probability weighted average of the expected outcomes at September 30, 2012. During the three and nine months ended September 30, 2012, the Company recorded an

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—Unaudited

increase in fair value of $0.4 million and a reduction in fair value of $1.8 million, respectively, which are included in other operating expenses in the condensed consolidated statements of operations.


	Updated Purchase Price Allocation (1)			Preliminary Purchase Price Allocation (2)
Non-current assets	$	1,125		$	1,126
Property and equipment		100,346			95,052
Intangible assets (3)		28,835			26,132
Current liabilities		(708	)		(639	)
Other long-term liabilities		(3,817	)		(3,416	)

Fair value of net assets acquired	$	125,781		$	118,255

Goodwill (4)		6,469			1,067

(1)	Reflected in the condensed consolidated balance sheets herein.

(2)	Reflected in the consolidated balance sheets in the Form 10-K for the year ended December 31, 2011.

(3)	Consists of customer-related intangibles of approximately $9.5 million and network location intangibles of approximately $19.3 million. The customer-related intangibles and network location intangibles are being amortized on a straight-line basis over periods of up to 20 years.

(4)	The Company will receive a deduction for income tax purposes for an amount equal to the goodwill recorded. The goodwill was allocated to the Company’s international rental and management segment.

Chile—Telefónica Moviles Acquisition—On December 30, 2011, the Company purchased 100% of the outstanding shares of a subsidiary of Telefónica Moviles Chile S.A. that owned 558 communications sites, for an aggregate purchase price of $94.9 million. The purchase price is subject to additional post-closing adjustments, following completion of the Company’s post-closing due diligence of the communications sites acquired.

The following table summarizes the allocation of the aggregate purchase price consideration paid and the amounts of assets acquired and liabilities assumed based upon their estimated fair value at the date of acquisition (in thousands):


	Updated Purchase Price Allocation (1)			Preliminary Purchase Price Allocation (2)
Non-current assets	$	1,892		$	2,772
Property and equipment		55,100			43,140
Intangible assets (3)		35,300			39,916
Other long-term liabilities		(4,505	)		(4,505	)

Fair value of net assets acquired	$	87,787		$	81,323

Goodwill (4)		7,073			13,537

(1)	Reflected in the condensed consolidated balance sheets herein.

(2)	Reflected in the consolidated balance sheets in the Form 10-K for the year ended December 31, 2011.

(3)	Consists of customer-related intangibles of approximately $15.5 million and network location intangibles of approximately $19.8 million. The customer-related intangibles and network location intangibles are being amortized on a straight-line basis over periods of up to 20 years.

(4)	The Company will receive a deduction for income tax purposes for an amount equal to the goodwill recorded. The goodwill was allocated to the Company’s international rental and management segment.

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—Unaudited

Uganda Acquisition—On December 8, 2011, the Company entered into a definitive agreement with MTN Group to establish a joint venture in Uganda. The joint venture is controlled by a holding company of which the ATC Uganda Subsidiary holds a 51% interest and the MTN Uganda Subsidiary holds a 49% interest. The joint venture is managed and controlled by the Company and owns a tower operations company in Uganda.

Pursuant to the agreement, the joint venture agreed to purchase a total of up to 1,000 existing communications sites from MTN Group’s operating subsidiary in Uganda, subject to customary closing conditions. On June 29, 2012, the joint venture acquired 962 communications sites for an aggregate purchase price of $171.5 million, subject to post-closing adjustments. The aggregate purchase price was subsequently increased to $173.2 million, subject to future post-closing adjustments.

Under the terms of the purchase agreement, legal title to certain of these communications sites will be transferred upon fulfillment of certain conditions by MTN Group. Prior to the fulfillment of these conditions, the Company will operate and maintain control of these communications sites, and accordingly, reflect these sites in the allocation of purchase price and the consolidated operating results.


	Preliminary Purchase Price Allocation
Non-current assets	$	2,258
Property and equipment		102,366
Intangible assets (1)		64,000
Other long-term liabilities		(7,528	)

Fair value of net assets acquired	$	161,096

Goodwill (2)		12,064

(1)	Consists of customer-related intangibles of approximately $43.0 million and network location intangibles of approximately $21.0 million. The customer-related intangibles and network location intangibles are being amortized on a straight-line basis over periods of up to 20 years.

(2)	The Company expects that the goodwill will not be deductible for tax purposes. The goodwill was allocated to the Company’s international rental and management segment.

U.S. Acquisitions—During the nine months ended September 30, 2012, the Company acquired a total of 86 communications sites in the United States for an aggregate purchase price of $39.4 million.

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—Unaudited

The following table summarizes the preliminary allocation of the aggregate purchase consideration paid for acquisitions that closed during the nine months ended September 30, 2012 and the amounts of assets acquired and liabilities assumed based on the estimated fair value at the date of acquisition (in thousands):


	Preliminary Purchase Price Allocation
Non-current assets	$	153
Property and equipment		13,825
Intangible assets (1)		24,694
Other long-term liabilities		(686	)

Fair value of net assets acquired	$	37,986

Goodwill (2)		1,420

(1)	Consists of customer relationships of approximately $14.1 million and network location intangibles of approximately $10.6 million. The customer relationships and network location are being amortized on a straight-line basis over periods of up to 20 years.

(2)	The Company will receive a deduction for income tax purposes for an amount equal to the goodwill recorded. The goodwill was allocated to the Company’s domestic rental and management segment.

The following table summarizes the allocation of the aggregate purchase consideration paid and the amounts of assets acquired and liabilities assumed based upon the estimated fair value at the acquisition date for acquisitions which closed during the year ended December 31, 2011 (in thousands):


	Updated Purchase Price Allocation (1)			Preliminary Purchase Price Allocation (2)
Non-current assets	$	289		$	—
Property and equipment		21,088			23,270
Intangible assets (3)		61,107			61,626
Other long-term liabilities		(4,288	)		(4,118	)

Fair value of net assets acquired	$	78,196		$	80,778

Goodwill (4)		4,604			2,022

(1)	Reflected in the condensed consolidated balance sheets herein.

(2)	Reflected in the consolidated balance sheets in the Form 10-K for the year ended December 31, 2011.

(3)	Consists of customer relationships of approximately $46.4 million and network location intangibles of approximately $14.7 million as of September 30, 2012. The customer relationships and network location intangibles are being amortized on a straight-line basis over periods of up to 20 years.

(4)	The Company will receive a deduction for income tax purposes for an amount equal to the goodwill recorded. The goodwill was allocated to the Company’s domestic rental and management segment.

U.S. Property Interests—Unison Acquisition—On October 14, 2011, the Company acquired from Unison Holdings, LLC and Unison Site Management II, L.L.C. (collectively, “Unison”) various limited liability companies holding a portfolio of approximately 12 communications sites and 1,910 property interests, including property interests that the Company leases to communications service providers and other third-party tower operators under 1,810 communications sites for an aggregate purchase price of $312.0 million and assumed $196.0 million in existing indebtedness (the fair value of which was $209.3 million at the acquisition date). The acquisition includes property interests (easements, prepaid operating ground leases, term easements and managed sites) under the Company’s existing communications sites, as well as property interests under carrier tenant and other third-party communications sites, providing recurring cash flow and complementary leasing arrangements.

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—Unaudited

The deferred rent liability associated with the underlying ground leases for existing communications sites of the Company was approximately $2.6 million on the date of acquisition. As a result of the Company’s acquisition of these property interests from Unison, the preexisting land leases were considered to be effectively settled. The terms of these land leases were determined to represent fair value at the acquisition date. As such, the Company did not record any gain or loss separately from the acquisition and the $2.6 million unamortized deferred rent liability was included as part of the acquisition-date fair value of consideration transferred.

The fair value of the consideration transferred consists of the following (in thousands):


Cash consideration	$	312,002
Settlement of preexisting arrangement		(2,584	)

Total consideration	$	309,418


	Updated Purchase Price Allocation (1)			Preliminary Purchase Price Allocation (2)
Current assets (3)(4)	$	15,985		$	16,203
Non-current assets (4)		154,769			154,817
Property and equipment (5)		340,474			340,602
Intangible assets		4,200			3,297
Current liabilities		(7,093	)		(7,703	)
Long-term obligations		(209,321	)		(209,321	)
Other long-term liabilities		(773	)		(1,508	)

Fair value of net assets acquired	$	298,241		$	296,387

Goodwill (6)		11,177			13,031

(1)	Reflected in the condensed consolidated balance sheets herein.

(2)	Reflected in the consolidated balance sheets in the Form 10-K for the year ended December 31, 2011.

(3)	Includes approximately $0.2 million of accounts receivable which approximates the value due to the Company under certain contractual arrangements.

(4)	Includes prepaid operating leases, term easements and managed sites.

(5)	Includes perpetual easements.

(6)	With the exception of interests in land and perpetual easements, the Company will receive a deduction for income tax purposes for an amount equal to the goodwill recorded. The goodwill was allocated to the Company’s domestic rental and management segment.

U.S. Property Interests-Other—On October 21, 2011, the Company acquired property interests under approximately 240 communications sites in the United States for an aggregate purchase price of $72.6 million.

The property interests acquired are located underneath existing communications sites owned or subleased by the Company. The deferred rent liability associated with the underlying ground leases was approximately $4.3 million on the date of acquisition. As a result of the Company’s acquisition of these property interests, the preexisting land leases were considered to be effectively settled. The terms of these land leases were determined to represent fair value at the acquisition date. As such, the Company did not record any gain or loss separately from the acquisition and the $4.3 million unamortized deferred rent liability was included as part of the fair value of consideration transferred.

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—Unaudited

The fair value of the consideration transferred consists of the following (in thousands):


Cash consideration	$	72,595
Settlement of preexisting arrangement		(4,256	)

Total consideration	$	68,339

The property interests acquired included perpetual easements, prepaid operating ground leases and term easements for land located under the Company’s communications sites and sites owned by communications service providers and third-party tower operators.


	Updated Purchase Price Allocation (1)		Preliminary Purchase Price Allocation (2)
Current assets (3)	$	359	$	363
Non-current assets (3)		13,357		13,394
Property and equipment (4)		47,898		47,898
Intangible assets		490		383

Fair value of net assets acquired	$	62,104	$	62,038

Goodwill (5)		6,235		6,301

(1)	Reflected in the condensed consolidated balance sheets herein.

(2)	Reflected in the consolidated balance sheets in the Form 10-K for the year ended December 31, 2011.

(3)	Includes prepaid operating leases, term easements and managed sites.

(4)	Includes perpetual easements.

(5)	With the exception of interests in land and perpetual easements, the Company will receive a deduction for income tax purposes for an amount equal to the goodwill recorded. The goodwill was allocated to the Company’s domestic rental and management segment.

14.

Business Segments

The Company operates in three business segments: domestic rental and management, international rental and management and network development services. The domestic rental and management segment provides for the leasing of antenna space on multi-tenant communications sites primarily to wireless service providers and radio and television broadcast companies in the United States. The international rental and management segment provides for the leasing of antenna space on multi-tenant communications sites to wireless service providers and radio and television broadcast companies in Brazil, Chile, Colombia, Ghana, India, Mexico, Peru, South Africa and Uganda. Through its network development services segment, the Company offers tower-related services in the United States, including site acquisition, zoning and permitting services and structural analysis services, which primarily support the Company’s site leasing business and the addition of new tenants and equipment on its sites.

The accounting policies applied in compiling segment information below are similar to those described in note 1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2011. 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

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—Unaudited

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 international rental and management segment operating profit and segment gross margin also include interest income, TV Azteca, net. These measures of segment gross margin and segment operating profit are also before interest income, interest expense, loss on retirement of long-term obligations, other income (expense), net income (loss) attributable to non-controlling interest, income (loss) on equity method investments, income taxes and discontinued operations.

Summarized financial information concerning the Company’s reportable segments for the three and nine months ended September 30, 2012 and 2011 is shown in the tables below. The Other column 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 expense; interest income; interest expense; loss on retirement of long-term obligations; and other income (expense), as well as reconciles segment operating profit to income from continuing operations before income taxes and income on equity method investments, as these amounts are not utilized in assessing each segment’s performance.


	Rental and Management				Total Rental and Management		Network Development Services		Other		Total
Three months ended September 30, 2012	Domestic		International		Total Rental and Management		Network Development Services		Other		Total
	(in thousands)
Segment revenues	$	480,351	$	217,203	$	697,554	$	15,781			$	713,335
Segment operating expenses (1)		92,072		85,069		177,141		7,323				184,464
Interest income, TV Azteca, net		—		3,586		3,586		—				3,586

Segment gross margin		388,279		135,720		523,999		8,458				532,457

Segment selling, general, administrative and development expense (1)		20,141		25,057		45,198		2,127				47,325

Segment operating profit	$	368,138	$	110,663	$	478,801	$	6,331			$	485,132

Stock-based compensation expense									$	13,058		13,058
Other selling, general, administrative and development expense										21,516		21,516
Depreciation, amortization and accretion										144,061		144,061
Other expense (principally interest expense and other (expense) income)										61,620		61,620

Income from continuing operations before income taxes and income on equity method investments											$	244,877

(1)	Segment operating expenses and segment selling, general, administrative and development expenses exclude stock-based compensation expense of $0.4 million and $12.6 million, respectively.

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—Unaudited


	Rental and Management				Total Rental and Management		Network Development Services		Other		Total
Three months ended September 30, 2011	Domestic		International		Total Rental and Management		Network Development Services		Other		Total
	(in thousands)
Segment revenues	$	436,783	$	178,025	$	614,808	$	15,595			$	630,403
Segment operating expenses (1)		91,076		68,336		159,412		7,758				167,170
Interest income, TV Azteca, net		—		3,498		3,498		—				3,498

Segment gross margin		345,707		113,187		458,894		7,837				466,731

Segment selling, general, administrative and development expense (1)		20,516		21,641		42,157		1,918				44,075

Segment operating profit	$	325,191	$	91,546	$	416,737	$	5,919			$	422,656

Stock-based compensation expense									$	12,140		12,140
Other selling, general, administrative and development expense										22,024		22,024
Depreciation, amortization and accretion										142,113		142,113
Other expense (principally interest expense and other (expense) income)										241,426		241,426

Income from continuing operations before income taxes and income on equity method investments											$	4,953

(1)	Segment operating expenses and segment selling, general, administrative and development expenses exclude stock-based compensation expense of $1.8 million and $10.4 million, respectively.

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—Unaudited


	Rental and Management				Total Rental and Management		Network Development Services		Other		Total
Nine months ended September 30, 2012	Domestic		International		Total Rental and Management		Network Development Services		Other		Total
	(in thousands)
Segment revenues	$	1,440,824	$	622,982	$	2,063,806	$	43,780			$	2,107,586
Segment operating expenses (1)		273,188		232,338		505,526		21,404				526,930
Interest income, TV Azteca, net		—		10,715		10,715		—				10,715

Segment gross margin		1,167,636		401,359		1,568,995		22,376				1,591,371

Segment selling, general, administrative and development expense (1)		60,638		68,433		129,071		4,410				133,481

Segment operating profit	$	1,106,998	$	332,926	$	1,439,924	$	17,966			$	1,457,890

Stock-based compensation expense									$	39,654		39,654
Other selling, general, administrative and development expense										66,099		66,099
Depreciation, amortization and accretion										465,788		465,788
Other expense (principally interest expense and other (expense) income)										346,385		346,385

Income from continuing operations before income taxes and income on equity method investments											$	539,964

(1)	Segment operating expenses and segment selling, general, administrative and development expenses exclude stock-based compensation expense of $1.3 million and $38.3 million, respectively.

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—Unaudited


	Rental and Management				Total Rental and Management		Network Development Services		Other		Total
Nine months ended September 30, 2011	Domestic		International		Total Rental and Management		Network Development Services		Other		Total
	(in thousands)
Segment revenues	$	1,279,315	$	465,987	$	1,745,302	$	45,031			$	1,790,333
Segment operating expenses (1)		261,856		169,745		431,601		21,974				453,575
Interest income, TV Azteca, net		—		10,587		10,587		—				10,587

Segment gross margin		1,017,459		306,829		1,324,288		23,057				1,347,345

Segment selling, general, administrative and development expense (1)		56,528		60,619		117,147		5,130				122,277

Segment operating profit	$	960,931	$	246,210	$	1,207,141	$	17,927				1,225,068

Stock-based compensation expense									$	36,185		36,185
Other selling, general, administrative and development expense										58,230		58,230
Depreciation, amortization and accretion										411,902		411,902
Other expense (principally interest expense and other (expense) income)										371,378		371,378

Income from continuing operations before income taxes and income on equity method investments											$	347,373

(1)	Segment operating expenses and segment selling, general, administrative and development expenses exclude stock-based compensation expense of $1.8 million and $34.4 million, respectively.

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” or “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 II, Item 1A. of this Quarterly Report on Form 10-Q. 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 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 judgments 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 significantly from these estimates under different assumptions or conditions. This discussion should be read in conjunction with our condensed consolidated financial statements herein and the accompanying notes thereto, information set forth under the caption “Critical Accounting Policies and Estimates” beginning on page 54 of our Annual Report on Form 10-K for the year ended December 31, 2011, 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 a leading wireless and broadcast communications infrastructure company that owns, operates and develops communications sites. Our primary business is leasing antenna space on multi-tenant 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 property interests that we lease to communications service providers and third-party tower operators under approximately 1,810 communications sites. We refer to this business as our rental and management operations, which accounted for approximately 98% of our total revenues for the nine months ended September 30, 2012 and includes our domestic rental and management segment and our international rental and management segment. We began operating as a real estate investment trust (“REIT”) for federal income tax purposes effective January 1, 2012.

Our communications site portfolio of 50,966 sites, as of September 30, 2012, includes wireless and broadcast communications towers and distributed antenna system (“DAS”) networks, which provide seamless coverage solutions in certain in-building and outdoor wireless applications. Our portfolio consists of towers that we own and towers that we operate pursuant to long-term lease arrangements, including, as of September 30, 2012, approximately 21,668 towers domestically and approximately 29,031 towers internationally. In addition, our portfolio includes approximately 267 DAS networks that we operate in malls, casinos and other in-building applications, and select outdoor environments.

The following table details the number of communications sites we own or operate in the countries in which we operate as of September 30, 2012:


Country	Number of Owned Sites		Number of Operated Sites (1)
United States		15,508		6,421
International:
Brazil		4,159		155
Chile		1,180		—
Colombia		2,141		706
Ghana		1,908		—
India		10,116		—
Mexico		5,366		199
Peru		475		—
South Africa		1,601		—
Uganda		1,031		—

(1)	All of the sites we operate are held pursuant to long-term capital leases, including those subject to purchase options.

Our continuing operations are reported in three segments, domestic rental and management, international rental and management and network development services. Among other factors, management uses segment gross margin and segment operating profit in its assessment of operating performance in each business segment. We define 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 expense. We define 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. Segment gross margin and segment operating profit for the international rental and management segment also include interest income, TV Azteca, net (see note 14 to our condensed consolidated financial statements included herein). These measures of segment gross margin and segment operating profit are also before interest income, interest expense, loss on retirement of long-term obligations, other income (expense), net income (loss) attributable to non-controlling interest, income (loss) on equity method investments, income taxes and discontinued operations.

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 quarter-to-date and year-to-date 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. Our rental and management segments operate over 50,000 communications sites. Due to our diversified communications site portfolio, our tenant lease rates vary considerably depending upon various factors, including but not limited to, tower location, amount of tenant equipment on the tower, ground space required by the tenant and remaining tower capacity. We measure the remaining tower capacity by assessing several factors, including tower height, tower type, environmental conditions, existing equipment on the tower and zoning and permitting regulations in effect in the jurisdiction where the tower is located. In many instances, tower capacity can be increased through tower augmentation.

The primary sources of revenue growth for our domestic and international rental and management segments are:

•

Recurring revenues from tenant leases generated from sites which existed in our portfolio as of the beginning of the prior year period (“legacy sites”);

•

Contractual rent escalations on existing tenant leases, net of cancellations;

•

New revenue generated from leasing additional space on our legacy sites; and

•

New revenue generated from new sites acquired or constructed since the beginning of the prior year period (“new sites”).

The majority of our tenant leases with wireless carriers are typically for an initial non-cancellable term of five to ten years, with multiple five-year renewal terms thereafter. Accordingly, nearly all of the revenue generated by our rental and management operations during the nine months ended September 30, 2012 is 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, 2012, we expect to generate approximately $19 billion of non-cancellable tenant lease revenue over future periods, absent the impact of straight-line lease accounting. In addition, most of our tenant leases have provisions that periodically increase the rent due under the lease, typically annually based on a fixed percentage (on average approximately 3.5% in the U.S.), inflation or a fixed percentage plus inflation. Revenue lost from either cancellations of leases at the end of their terms or rent negotiations historically have not had a material adverse effect on the revenues generated by our rental and management operations. During the nine months ended September 30, 2012, loss of revenue from tenant lease cancellations or renegotiations represented approximately 1.3% of the total revenue of our rental and management segments.

Demand Drivers. We continue to believe that our site leasing revenue is likely to increase due to the growing use of wireless communications services and our ability to meet that demand by adding new tenants and new equipment for existing tenants on our legacy sites, which increases the utilization and profitability of our sites. In addition, we believe the majority of our site leasing activity will continue to come from wireless service providers as they seek to increase the coverage and capacity of their networks as well as roll out next generation technologies. In addition, we intend to continue to supplement the organic growth on our legacy sites by selectively developing or acquiring new sites in our existing and new markets where we can achieve our return on investment criteria.

According to industry data, we believe the following key trends will provide opportunities for organic growth in our domestic rental and management segment:

•

Wireless subscribers continue to upgrade their traditional handsets to smartphones while also acquiring incremental connected devices such as tablets and wireless data cards.

•

Wireless service providers continue to invest in their third generation (3G) networks by adding new cell sites as well as additional equipment to their existing cell sites.

•

Wireless service providers continue to pursue new avenues for growth, such as deploying fourth generation (4G) technology based wireless networks to provide higher speed data services and enable fixed broadband substitution.

According to industry data, we believe the following key trends will provide opportunities for organic growth in our international rental and management segment:

•

In India, nationwide voice networks continue to be deployed as wireless service providers are beginning their initial investments in wireless data networks.

•

In Ghana and Uganda, wireless service providers continue to build their voice and data networks to satisfy increasing demand for wireless service.

•

In South Africa, carriers are beginning to deploy wireless data networks across spectrum made available through recent spectrum auctions.

•

In Mexico and Brazil, nationwide voice networks have been initially deployed and certain incumbent wireless service providers continue to invest in their wireless data networks. Recent spectrum auctions in both markets have enabled other incumbent wireless service providers and new market entrants to begin their initial investments in wireless data networks.

•

In markets such as Chile, Colombia and Peru, recent or anticipated spectrum auctions are expected to drive investment in nationwide voice and wireless data networks.

Direct Operating Expenses. Direct operating expenses incurred by our domestic and international rental and management segments include direct site level expenses and consist primarily of ground rent, property taxes, repairs and maintenance and power and fuel costs, some of which may be passed through to our tenants. 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 condensed consolidated statements of operations. In general, our domestic and international rental and management segments selling, general, administrative and development expenses do not significantly increase as a result of adding incremental tenants to our legacy sites and typically increase only modestly year-over-year. As a result, leasing additional space to new tenants on our legacy sites provides significant incremental cash flow. We may incur additional segment selling, general, administrative and development expenses as we increase our presence in geographic areas where we have recently launched operations or are focused on expanding our communications site footprint. Our profit margin growth is therefore positively impacted by the addition of new tenants to our legacy sites and can be temporarily diluted by our development activities.

As we continue to focus on growing our rental and management operations, we anticipate that our network development services revenue will continue to represent a small percentage of our total revenues. Through our network development services segment, we offer tower-related services, including site acquisition, zoning and permitting services and structural analysis services, which primarily support our site leasing business and the addition of new tenants and equipment on our sites.

REIT Conversion. Effective January 1, 2012, we reorganized our operations to qualify as a REIT for federal income tax purposes (the “REIT Conversion”). The REIT tax rules require that we derive most of our income, other than income generated by a taxable REIT subsidiary (“TRS”), from investments in real estate, which for us will primarily consist of income from the leasing of our communications sites. Under the Internal Revenue Code of 1986, as amended ( the “Code”), maintaining REIT status generally requires that no more than 25% of the value of the REIT’s assets be represented by securities of one or more TRSs and other non-qualifying assets.

A REIT must annually distribute to its stockholders an amount equal to at least 90% of its REIT taxable income (determined before the deduction for dividends paid and excluding any net capital gain). On October 15, 2012, we made our third regular distribution of $0.23 per share of common stock, or a total of approximately $90.9 million, to stockholders of record at the close of business on October 1, 2012. The amount, timing and frequency of future distributions will be at the sole discretion of our Board of Directors and will be declared based upon various factors, a number of which may be beyond our control, including, our financial condition and operating cash flows, the amount required to maintain REIT status and reduce any income and excise taxes that we otherwise would be required to pay, limitations on distributions in our existing and future debt instruments, our ability to utilize net operating losses (“NOLs”) to offset, in whole or in part, our distribution requirements, limitations on our ability to fund distributions using cash generated through our TRSs and other factors that our Board of Directors may deem relevant.

For more information on the requirements to qualify as a REIT, see Item 1 of our Annual Report on Form 10-K for the year ended December 31, 2011 under the caption “Business—Overview,” and Item 1A of this Quarterly Report under the caption “Risk Factors.”

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”). We define Adjusted EBITDA as net income before: income (loss) on discontinued operations, net; income (loss) from equity method investments; income tax provision (benefit); other income (expense); loss on retirement of long-term obligations; interest expense; interest income; other operating expenses; depreciation, amortization and accretion; and stock-based compensation expense.

Adjusted EBITDA is not intended to replace net income or any other performance measures determined in accordance with GAAP. Rather, Adjusted EBITDA is presented as we believe it is a useful indicator of our current operating performance. We believe that Adjusted EBITDA is useful to an investor in evaluating our operating performance because (1) it is the primary measure used by our management team for purposes of decision making and for evaluating the performance of our operating segments; (2) it is a component of the calculation used by our lenders to determine compliance with certain debt covenants; (3) it is widely used in the tower leasing business 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) it provides investors with a meaningful measure for evaluating our period to period operating performance by eliminating items which are not operational in nature; and (5) it provides investors with a measure for comparing our results of operations to those of different companies by excluding the impact of long-term strategic decisions which can differ significantly from company to company, such as decisions with respect to capital structure, capital investments and the tax jurisdictions in which companies operate.

Our measurement of Adjusted EBITDA may not be comparable to similarly titled measures used by other companies. A reconciliation of Adjusted EBITDA to net income, the most directly comparable GAAP measure, has been included below.

Results of Operations

Three Months Ended September 30, 2012 and 2011 (in thousands, except percentages)

Revenue


	Three Months Ended September 30,				Amount of Increase (Decrease)		Percent Increase (Decrease)
	2012		2011		Amount of Increase (Decrease)		Percent Increase (Decrease)
Rental and management
Domestic	$	480,351	$	436,783	$	43,568		10	%
International		217,203		178,025		39,178		22

Total rental and management		697,554		614,808		82,746		13
Network development services		15,781		15,595		186		1

Total revenues	$	713,335	$	630,403	$	82,932		13	%

Total revenues for the three months ended September 30, 2012, increased 13% to $713.3 million. The increase was primarily attributable to an increase in both of our rental and management segments, including organic revenue growth attributable to our legacy sites, and revenue growth attributable to the approximately 12,860 new sites that we have constructed or acquired since July 1, 2011.

Domestic rental and management segment revenue for the three months ended September 30, 2012 increased 10% to $480.4 million, which was comprised of:

•

Revenue growth from legacy sites of approximately 6%, which includes approximately 4% due to incremental revenue primarily generated from new tenant leases and amendments to existing tenant leases on our legacy sites and approximately 2% attributable to contractual rent escalations, net of tenant lease cancellations;

•

Revenue growth from new sites of approximately 3%, resulting from the construction or acquisition of approximately 480 new sites, as well as land interests under third-party sites, since July 1, 2011; and

•

An increase of over 1% from the impact of straight-line lease accounting.

International rental and management segment revenue for the three months ended September 30, 2012 increased 22% to $217.2 million, which was comprised of:

•

Revenue growth from new sites of approximately 32%, resulting from the construction or acquisition of approximately 12,380 new sites since July 1, 2011;

•

Revenue growth from legacy sites of over 7%, which includes over 5% due to incremental revenue primarily generated from new tenant leases and amendments to existing tenant leases on our legacy sites and approximately 2% attributable to contractual rent escalations, net of tenant lease cancellations;

•

An increase of approximately 1% from the impact of straight-line lease accounting; and

•

A decline of approximately 18% attributable to the negative impact from foreign currency translation.

Network development services segment revenue for the three months ended September 30, 2012 increased 1% to $15.8 million. The increase was primarily attributable to an increase in structural engineering services provided to our tenants during the three months ended September 30, 2012.

Gross Margin


	Three Months Ended September 30,				Amount of Increase (Decrease)		Percent Increase (Decrease)
	2012		2011		Amount of Increase (Decrease)		Percent Increase (Decrease)
Rental and management
Domestic	$	388,279	$	345,707	$	42,572		12	%
International		135,720		113,187		22,533		20

Total rental and management		523,999		458,894		65,105		14
Network development services		8,458		7,837		621		8	%

Domestic rental and management segment gross margin for the three months ended September 30, 2012 increased 12% to $388.3 million, which was comprised of:

•

Gross margin growth from legacy sites of over 9%, primarily associated with the increase in revenue, as described above, as well as a 1% decrease in expenses as a result of cost management initiatives; and

•

Gross margin growth from new sites of approximately 3%, resulting from the construction or acquisition of approximately 480 new sites, as well as land interests under third-party sites since July 1, 2011.

International rental and management segment gross margin for the three months ended September 30, 2012 increased 20% to $135.7 million, which was comprised of:

•

Gross margin growth from new sites of approximately 28%, resulting from the construction or acquisition of approximately 12,380 new sites since July 1, 2011;

•

Gross margin growth from legacy sites of approximately 10%, primarily associated with the increase in revenue, as described above; and

•

A decline of approximately 18% attributable to the negative impact from foreign currency translation.

Network development services segment gross margin for the three months ended September 30, 2012 increased 8% to $8.5 million. The increase was primarily attributable to an increase in structural engineering services provided to our tenants, as described above, as well as a reduction in direct labor and certain third-party costs.

Selling, General, Administrative and Development Expense


	Three Months Ended September 30,				Amount of Increase (Decrease)			Percent Increase (Decrease)
	2012		2011		Amount of Increase (Decrease)			Percent Increase (Decrease)
Rental and management
Domestic	$	20,141	$	20,516	$	(375	)		(2	)%
International		25,057		21,641		3,416			16

Total rental and management		45,198		42,157		3,041			7
Network development services		2,127		1,918		209			11
Other		34,134		32,401		1,733			5

Total selling, general, administrative and development expense	$	81,459	$	76,476	$	4,983			7	%

Total selling, general, administrative and development expense (“SG&A”) for the three months ended September 30, 2012 increased 7% to $81.5 million. The increase was primarily attributable to an increase in our international rental and management segment, as well as an increase in our Other SG&A.

Domestic rental and management segment SG&A for the three months ended September 30, 2012 decreased 2% to $20.1 million. The decrease was primarily attributable to a non-recurring charge recorded during the three months ended September 30, 2011 associated with employee related costs.

International rental and management segment SG&A for the three months ended September 30, 2012 increased 16% to $25.1 million. The increase was primarily attributable to our continued expansion initiatives in foreign operations.

Network development services segment SG&A for the three months ended September 30, 2012 increased 11% to $2.1 million. The increase was primarily attributable to higher personnel related costs.

Other SG&A for the three months ended September 30, 2012 increased 5% to $34.1 million. The increase was primarily due to a $2.2 million increase in SG&A related stock-based compensation expense, partially offset by a $0.5 million decrease in corporate expenses.

Operating Profit


	Three Months Ended September 30,				Amount of Increase (Decrease)		Percent Increase (Decrease)
	2012		2011		Amount of Increase (Decrease)		Percent Increase (Decrease)
Rental and management
Domestic	$	368,138	$	325,191	$	42,947		13	%
International		110,663		91,546		19,117		21

Total rental and management		478,801		416,737		62,064		15
Network development services		6,331		5,919		412		7	%

Domestic rental and management segment operating profit for the three months ended September 30, 2012 increased 13% to $368.1 million. The growth was primarily attributable to the increase in our domestic rental and management segment gross margin (12%), as described above, and a decrease in our domestic rental and management segment SG&A (2%), as described above.

International rental and management segment operating profit for the three months ended September 30, 2012 increased 21% to $110.7 million. The growth was primarily attributable to the increase in our international rental and management segment gross margin (20%), as described above, and was partially offset by an increase in our international rental and management segment SG&A (16%), as described above.

Network development services segment operating profit for the three months ended September 30, 2012 increased 7% to $6.3 million. The increase was primarily attributable to the increase in network development services segment gross margin (8%), as described above, and was partially offset by an increase in our network development services segment SG&A (11%), as described above.

Depreciation, Amortization and Accretion


	Three Months Ended September 30,				Amount of Increase (Decrease)		Percent Increase (Decrease)
	2012		2011		Amount of Increase (Decrease)		Percent Increase (Decrease)
Depreciation, amortization and accretion	$	144,061	$	142,113	$	1,948		1	%

Depreciation, amortization and accretion for the three months ended September 30, 2012 increased 1% to $144.1 million. The increase was primarily attributable to the depreciation, amortization and accretion associated with the acquisition or construction of approximately 12,860 sites since July 1, 2011, which resulted in an increase in property and equipment.

Other Operating Expenses


	Three Months Ended September 30,				Amount of Increase (Decrease)			Percent Increase (Decrease)
	2012		2011		Amount of Increase (Decrease)			Percent Increase (Decrease)
Other operating expenses	$	7,359	$	14,576	$	(7,217	)		(50	)%

Other operating expenses for the three months ended September 30, 2012 decreased 50% to $7.4 million. This decrease was primarily attributable to a decrease of approximately $4.5 million in acquisition related costs and non-recurring consulting and legal costs incurred in 2011 associated with our REIT Conversion as well as a decrease of approximately $2.7 million in losses recognized upon the disposal of assets.

Interest Expense


	Three Months Ended September 30,				Amount of Increase (Decrease)		Percent Increase (Decrease)
	2012		2011		Amount of Increase (Decrease)		Percent Increase (Decrease)
Interest expense	$	102,272	$	77,796	$	24,476		31	%

Interest expense for the three months ended September 30, 2012 increased 31% to $102.3 million. The increase was attributable to an increase in our average debt outstanding of approximately $1.7 billion, primarily used to fund our recent acquisitions.

Other Income (Expense)


	Three Months Ended September 30,					Amount of Increase (Decrease)		Percent Increase (Decrease)
	2012		2011			Amount of Increase (Decrease)		Percent Increase (Decrease)
Other income (expense)	$	46,294	$	(150,876	)	$	197,170		131	%

During the three months ended September 30, 2012, we recorded unrealized foreign currency gains resulting primarily from fluctuations in the foreign currency exchange rates associated with our intercompany notes and similar unaffiliated balances denominated in a currency other than the subsidiaries’ functional currencies of approximately $46.2 million and other income of approximately $0.1 million. During the three months ended September 30, 2011, we recorded unrealized foreign currency losses of approximately $145.1 million and miscellaneous expenses of approximately $6.0 million.

Income Tax Provision


	Three Months Ended September 30,						Amount of Increase (Decrease)			Percent Increase (Decrease)
	2012			2011			Amount of Increase (Decrease)			Percent Increase (Decrease)
Income tax provision	$	13,054		$	24,681		$	(11,627	)		(47	)%
Effective tax rate		5.3	%		498.3	%

The income tax provision for the three months ended September 30, 2012 decreased 47% to $13.1 million. The effective tax rate (“ETR”) for the three months ended September 30, 2012 decreased to 5.3% from 498.3%. The decrease in ETR was primarily attributable to our REIT Conversion and recording of certain favorable adjustments during the three months ended September 30, 2012. The ETR for the three months ended September 30, 2011 reflected unrealized foreign currency losses, which had an impact of reducing income from continuing operations before income taxes and income from equity method investments by approximately $145.1 million.

As a REIT, while we will continue to be subject to income taxes on the income of our TRSs, under the provisions of the Code, we may deduct amounts distributed to stockholders against the income generated in our qualified REIT subsidiaries or other REIT disregarded entities (“QRSs”). Additionally, we are able to offset income in both our TRSs and QRSs by utilizing our NOLs. In addition, our international assets and operations continue to be subject to taxation in the foreign jurisdictions where those assets are held or those operations are conducted.

The ETR on income from continuing operations for the three months ended September 30, 2012 differs from the federal statutory rate primarily due to our expected election to be taxed as a REIT commencing January 1, 2012 and to adjustments for foreign items. The ETR on income from continuing operations for the three months ended September 30, 2011 differs from the federal statutory rate due primarily to adjustments for foreign items, non-deductible stock-based compensation expense, tax reserves and state taxes. The adjustments for foreign items during the three months ended September 30, 2012 and 2011 primarily relate to the difference in the U.S. statutory tax rate of 35% and ETR in our international markets.

Net Income (Loss)/Adjusted EBITDA


	Three Months Ended September 30,						Amount of Increase (Decrease)			Percent Increase (Decrease)
	2012			2011			Amount of Increase (Decrease)			Percent Increase (Decrease)
Net income (loss)	$	231,825		$	(19,726	)	$	251,551			1,275	%
Income from equity method investments		(2	)		(2	)		—			—
Income tax provision		13,054			24,681			(11,627	)		(47	)
Other (income) expense		(46,294	)		150,876			197,170			131
Interest expense		102,272			77,796			24,476			31
Interest income		(1,717	)		(1,822	)		(105	)		(6	)
Other operating expenses		7,359			14,576			(7,217	)		(50	)
Depreciation, amortization and accretion		144,061			142,113			1,948			1
Stock-based compensation expense		13,058			12,140			918			8

Adjusted EBITDA	$	463,616		$	400,632		$	62,984			16	%

Net income for the three months ended September 30, 2012 was $231.8 million as compared to a net loss of $19.7 million for the three months ended September 30, 2011. The increase was primarily attributable to an increase in our rental and management segments operating profit, as described above, as well as an increase in unrealized foreign currency gains.

Adjusted EBITDA for the three months ended September 30, 2012 increased 16% to $463.6 million. Adjusted EBITDA growth was primarily attributable to the increase in our rental and management segments gross margin, and was partially offset by an increase in SG&A.

Results of Operations

Nine Months Ended September 30, 2012 and 2011 (in thousands, except percentages)

Revenue


	Nine Months Ended September 30,				Amount of Increase (Decrease)			Percent Increase (Decrease)
	2012		2011		Amount of Increase (Decrease)			Percent Increase (Decrease)
Rental and management
Domestic	$	1,440,824	$	1,279,315	$	161,509			13	%
International		622,982		465,987		156,995			34

Total rental and management		2,063,806		1,745,302		318,504			18
Network development services		43,780		45,031		(1,251	)		(3	)

Total revenues	$	2,107,586	$	1,790,333	$	317,253			18	%

Total revenues for the nine months ended September 30, 2012, increased 18% to $2,107.6 million. The increase was primarily attributable to an increase in both of our rental and management segments, including organic revenue growth attributable to our legacy sites and revenue growth attributable to the approximately 15,860 new sites that we have constructed or acquired since January 1, 2011.

Domestic rental and management segment revenue for the nine months ended September 30, 2012 increased 13% to $1,440.8 million, which was comprised of:

•

Revenue growth from legacy sites of approximately 8%, which includes approximately 2% attributable to contractual rent escalations, net of tenant lease cancellations and approximately 6% due to incremental revenue primarily generated from new tenant leases and amendments to existing tenant leases on our legacy sites, which includes the impact of approximately 1% due to a customer billing settlement during the first quarter of 2012;

•

Revenue growth from new sites of approximately 3%, resulting from the construction or acquisition of approximately 710 new sites, as well as land interests under third-party sites since January 1, 2011; and

•

An increase of over 2% from the impact of straight-line lease accounting.

International rental and management segment revenue for the nine months ended September 30, 2012 increased 34% to $623.0 million, which was comprised of:

•

Revenue growth from new sites of over 41%, resulting from the construction or acquisition of approximately 15,150 new sites since January 1, 2011;

•

Revenue growth from legacy sites of approximately 10%, which includes over 6% due to incremental revenue primarily generated from new tenant leases and amendments to existing tenant leases on our legacy sites, approximately 3% attributable to contractual rent escalations, net of tenant lease cancellations and approximately 1% for the reversal of revenue reserves;

•

An increase of approximately 1% from the impact of straight-line lease accounting; and

•

A decline of approximately 18% attributable to the negative impact from foreign currency translation.

Network development services segment revenue for the nine months ended September 30, 2012 decreased 3% to $43.8 million. The decrease was primarily attributable to a favorable one-time item recognized during the nine months ended September 30, 2011, partially offset by an increase in structural engineering services provided to our tenants during the nine months ended September 30, 2012.

Gross Margin


	Nine Months Ended September 30,				Amount of Increase (Decrease)			Percent Increase (Decrease)
	2012		2011		Amount of Increase (Decrease)			Percent Increase (Decrease)
Rental and management
Domestic	$	1,167,636	$	1,017,459	$	150,177			15	%
International		401,359		306,829		94,530			31

Total rental and management		1,568,995		1,324,288		244,707			18
Network development services		22,376		23,057		(681	)		(3	)

Domestic rental and management segment gross margin for the nine months ended September 30, 2012 increased 15% to $1,167.6 million, which was comprised of:

•

Gross margin growth from legacy sites of approximately 12%, primarily associated with the increase in revenue, as described above, and was partially offset by an increase in direct operating costs primarily from increased straight-line rent expense and higher than normal repairs and maintenance activity; and

•

Gross margin growth from new sites of over 3%, resulting from the construction or acquisition of approximately 710 new sites, as well as land interests under third-party sites since January 1, 2011.

International rental and management segment gross margin for the nine months ended September 30, 2012 increased 31% to $401.4 million, which was comprised of:

•

Gross margin growth from new sites of 37%, resulting from the construction or acquisition of approximately 15,150 new sites since January 1, 2011;

•

Gross margin growth from legacy sites of approximately 11%, primarily associated with the increase in revenue, as described above; and

•

A decline of approximately 17% attributable to the negative impact from foreign currency translation.

Network development services segment gross margin for the nine months ended September 30, 2012 decreased 3% to $22.4 million. The decrease was primarily attributable to the favorable one-time item recognized during the nine months ended September 30, 2011, partially offset by an increase in structural engineering services provided to our tenants, as described above.

Selling, General, Administrative and Development Expense


	Nine Months Ended September 30,				Amount of Increase (Decrease)			Percent Increase (Decrease)
	2012		2011		Amount of Increase (Decrease)			Percent Increase (Decrease)
Rental and management
Domestic	$	60,638	$	56,528	$	4,110			7	%
International		68,433		60,619		7,814			13

Total rental and management		129,071		117,147		11,924			10
Network development services		4,410		5,130		(720	)		(14	)
Other		104,410		92,652		11,758			13

Total selling, general, administrative and development expense	$	237,891	$	214,929	$	22,962			11	%

Total SG&A for the nine months ended September 30, 2012 increased 11% to $237.9 million. The increase was attributable to an increase in our Other SG&A, as well as an increase in both of our rental and management segments.

Domestic rental and management segment SG&A for the nine months ended September 30, 2012 increased 7% to $60.6 million. The increase was primarily attributable to the impact of initiatives, which we launched in 2011, designed to drive growth and to support a growing portfolio, including increased staffing in field operations, sales and finance and other functions supporting the expansion of our business.

International rental and management segment SG&A for the nine months ended September 30, 2012 increased 13% to $68.4 million. The increase was primarily attributable to our new markets as well as continued international expansion initiatives in foreign operations, partially offset by the reversal of approximately $3.8 million of bad debt expense in Mexico for amounts previously reserved.

Network development services segment SG&A for the nine months ended September 30, 2012 decreased 14% to $4.4 million. The decrease was primarily attributable to the reversal of bad debt expense upon the receipt of a customer payment for amounts previously reserved, partially offset by higher personnel related costs.

Other SG&A for the nine months ended September 30, 2012 increased 13% to $104.4 million. The increase was primarily due to a $7.9 million increase in corporate expenses and a $3.9 million increase in SG&A related stock-based compensation expense. The increase in corporate expenses was primarily attributable to a $3.7 million non-recurring state tax expense and incremental employee costs of approximately $3.3 million associated with supporting a growing global organization.

Operating Profit


	Nine Months Ended September 30,				Amount of Increase (Decrease)		Percent Increase (Decrease)
	2012		2011		Amount of Increase (Decrease)		Percent Increase (Decrease)
Rental and management
Domestic	$	1,106,998	$	960,931	$	146,067		15	%
International		332,926		246,210		86,716		35

Total rental and management		1,439,924		1,207,141		232,783		19
Network development services		17,966		17,927		39		—

Domestic rental and management segment operating profit for the nine months ended September 30, 2012 increased 15% to $1,107.0 million. The growth was primarily attributable to the increase in our domestic rental and management segment gross margin (15%) as described above, and was partially offset by an increase in our domestic rental and management segment SG&A (7%), as described above.

International rental and management segment operating profit for the nine months ended September 30, 2012 increased 35% to $332.9 million. The growth was primarily attributable to the increase in our international rental and management segment gross margin (31%) as described above, and was partially offset by an increase in our international rental and management segment SG&A (13%), as described above.

Network development services segment operating profit for the nine months ended September 30, 2012 and 2011 remained constant at approximately $18.0 million.

Depreciation, Amortization and Accretion


	Nine Months Ended September 30,				Amount of Increase (Decrease)		Percent Increase (Decrease)
	2012		2011		Amount of Increase (Decrease)		Percent Increase (Decrease)
Depreciation, amortization and accretion	$	465,788	$	411,902	$	53,886		13	%

Depreciation, amortization and accretion for the nine months ended September 30, 2012 increased 13% to $465.8 million. The increase was primarily attributable to the depreciation, amortization and accretion associated with the acquisition or construction of approximately 15,860 sites since January 1, 2011, which resulted in an increase in property and equipment.

Other Operating Expenses


	Nine Months Ended September 30,				Amount of Increase (Decrease)			Percent Increase (Decrease)
	2012		2011		Amount of Increase (Decrease)			Percent Increase (Decrease)
Other operating expenses	$	35,150	$	35,770	$	(620	)		(2	)%

Other operating expenses for the nine months ended September 30, 2012 decreased 2% to $35.2 million. This decrease was primarily attributable to a decrease of approximately $13.3 million in acquisition related costs and non-recurring consulting and legal costs incurred in 2011 associated with our REIT Conversion. This decrease was partially offset by an increase of approximately $12.7 million in impairment charges and loss on disposal of assets, which included the impairment of one of our outdoor DAS networks upon the termination of a tenant lease during the nine months ended September 30, 2012.

Interest Expense


	Nine Months Ended September 30,				Amount of Increase (Decrease)		Percent Increase (Decrease)
	2012		2011		Amount of Increase (Decrease)		Percent Increase (Decrease)
Interest expense	$	297,622	$	226,735	$	70,887		31	%

Interest expense for the nine months ended September 30, 2012 increased 31% to $297.6 million. The increase was primarily attributable to an increase in our average debt outstanding of approximately $1.7 billion, primarily used to fund our recent acquisitions, and an increase in our annualized weighted average cost of borrowing from 5.34% to 5.45%.

Other Expense


	Nine Months Ended September 30,						Amount of Increase (Decrease)			Percent Increase (Decrease)
	2012			2011			Amount of Increase (Decrease)			Percent Increase (Decrease)
Other expense	$	(19,468	)	$	(115,710	)	$	(96,242	)		(83	)%

During the nine months ended September 30, 2012, we recorded unrealized foreign currency losses of approximately $12.9 million resulting primarily from fluctuations in the foreign currency exchange rates associated with our intercompany notes and similar unaffiliated balances denominated in a currency other than the subsidiaries’ functional currencies and other expenses of approximately $6.6 million. During the nine months ended September 30, 2011, we recorded unrealized foreign currency losses of approximately $101.5 million and miscellaneous expenses of $14.5 million.

Income Tax Provision


	Nine Months Ended September 30,						Amount of Increase (Decrease)			Percent Increase (Decrease)
	2012			2011			Amount of Increase (Decrease)			Percent Increase (Decrease)
Income tax provision	$	64,117		$	161,981		$	(97,864	)		(60	)%
Effective tax rate		11.9	%		46.6	%

The income tax provision for the nine months ended September 30, 2012 decreased 60% to $64.1 million. The ETR for the nine months ended September 30, 2012 decreased to 11.9% from 46.6%. This decrease was primarily attributable to our REIT Conversion, as well as a favorable item recorded during the nine months ended September 30, 2012, partially offset by an increase in valuation allowance on certain deferred tax assets. The deferred tax assets arose primarily as a result of purchase accounting and existing NOLs, which were generated partly from interest on intercompany debt.

As a REIT, we may deduct amounts distributed to stockholders against the income generated in our QRSs and we are able to offset income in both our TRSs and QRSs by utilizing our NOLs.

The ETR on income from continuing operations for the nine months ended September 30, 2012 differs from the federal statutory rate primarily due to our expected election to be taxed as a REIT commencing January 1, 2012 and to adjustments for foreign items. The ETR on income from continuing operations for the nine months ended September 30, 2011 differs from the federal statutory rate due primarily to adjustments for foreign items, non-deductible stock-based compensation expense, tax reserves and state taxes.

Net Income/Adjusted EBITDA


	Nine Months Ended September 30,						Amount of Increase (Decrease)			Percent Increase (Decrease)
	2012			2011			Amount of Increase (Decrease)			Percent Increase (Decrease)
Net income	$	475,872		$	185,406		$	290,466			157	%
Income from equity method investments		(25	)		(14	)		11			79
Income tax provision		64,117			161,981			(97,864	)		(60	)
Other expense		19,468			115,710			(96,242	)		(83	)
Loss on retirement of long-term obligations		398			—			398			N/A
Interest expense		297,622			226,735			70,887			31
Interest income		(6,253	)		(6,837	)		(584	)		(9	)
Other operating expenses		35,150			35,770			(620	)		(2	)
Depreciation, amortization and accretion		465,788			411,902			53,886			13
Stock-based compensation expense		39,654			36,185			3,469			10

Adjusted EBITDA	$	1,391,791		$	1,166,838		$	224,953			19	%

Net income for the nine months ended September 30, 2012 increased 157% to $475.9 million. The increase was primarily attributable to an increase in our rental and management segments operating profit, as described above, as well as decreases in unrealized foreign currency losses and income tax provision.

Adjusted EBITDA for the nine months ended September 30, 2012 increased 19% to $1,391.8 million. Adjusted EBITDA growth was primarily attributable to the increase in our rental and management segments gross margin, and was partially offset by an increase in SG&A.

Liquidity and Capital Resources

The information in this section updates as of September 30, 2012 the “Liquidity and Capital Resources” section of our Annual Report on Form 10-K for the year ended December 31, 2011 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 offerings. As of September 30, 2012, we had approximately $2,372.9 million of total liquidity, comprised of approximately $382.3 million in cash and cash equivalents and the ability to borrow up to $1,990.6 million, net of any outstanding letters of credit, under our unsecured revolving credit facilities. Summary cash flow information for the nine months ended September 30, 2012 and 2011 is set forth below (in thousands).


	Nine Months Ended September 30,
	2012			2011
Net cash provided by (used for):
Operating activities	$	1,116,547		$	849,998
Investing activities		(1,174,266	)		(1,559,631	)
Financing activities		112,095			4,265
Net effect of changes in exchange rates on cash and cash equivalents		(2,255	)		(1,089	)

Net increase (decrease) in cash and cash equivalents	$	52,121		$	(706,457	)

We use our cash flows to fund our operations and investments in our business, including tower maintenance and improvements, communications site construction and installation, and tower and land acquisitions. Additionally, we use our cash flows to make distributions of our REIT taxable income in order to maintain our REIT qualification under the Code, as well as fund refinancings and repurchases of our outstanding indebtedness and our stock repurchase program.

As of Se