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American Tower Corporation Reports Second Quarter 2015 Financial Results

July 29, 2015 7:00 AM

SECOND QUARTER 2015 HIGHLIGHTS

Consolidated Results

Segment Results

BOSTON--(BUSINESS WIRE)-- American Tower Corporation (NYSE: AMT) today reported financial results for the quarter ended June 30, 2015.

Jim Taiclet, American Tower's Chief Executive Officer stated, "Our second quarter 2015 results reflected yet another quarter of strong demand for our tower space both domestically and abroad. In the U.S., we are rapidly integrating our Verizon portfolio, which already has more than 900 lease applications in its pipeline. Internationally, leasing activity from our top customers, including Telefónica, América Móvil and Airtel, drove Organic Core Growth in revenue of nearly 12%.

In addition, we are confident that the customer network investment trends developing in markets like Mexico, India and Brazil position us well to not only deliver 2015 Core Growth of over 20% in rental and management revenue, Adjusted EBITDA and AFFO, but also to drive compelling growth in all three of these metrics well into the future."

SECOND QUARTER 2015 OPERATING RESULTS OVERVIEW

American Tower generated the following operating results for the quarter ended June 30, 2015 (unless otherwise indicated, all comparative information is presented against the quarter ended June 30, 2014).

Segment Results

Domestic Rental and Management Segment

International Rental and Management Segment

Network Development Services Segment

Please refer to “Non-GAAP and Defined Financial Measures” below for definitions of Gross Margin, Operating Profit, Operating Profit Margin, Adjusted EBITDA, Adjusted EBITDA Margin, NAREIT Funds From Operations, AFFO, AFFO per Share, Core Growth, Organic Core Growth, New Property Core Growth and Net Leverage Ratio. For additional financial information, including reconciliations to GAAP measures, please refer to the unaudited selected financial information below.

CAPITAL ALLOCATION OVERVIEW

Common Stock Distributions – During the quarter ended June 30, 2015, the Company paid its first quarter 2015 distribution of $0.42 per share, or a total of approximately $178 million, to common stockholders. Subsequent to the end of the second quarter, the Company paid its second quarter distribution of $0.44 per share, or a total of approximately $186 million, to common stockholders.

Mandatory Convertible Preferred Stock Dividends – During the quarter ended June 30, 2015, the Company paid an aggregate amount of $23 million in Series A and Series B preferred stock dividends. Subsequent to the end of the second quarter, the Company declared dividends on its Series A and Series B preferred stock in an aggregate amount of $27 million, payable on August 17, 2015 to stockholders of record at the close of business on August 1, 2015.

Cash Paid for Capital Expenditures – During the second quarter of 2015, total capital expenditures of $152 million included:

Cash Paid for Acquisitions – During the second quarter of 2015, the Company spent approximately $649 million to acquire four sites in the U.S. and 4,188 sites internationally.

In addition, on July 1, 2015, the Company acquired 4,699 communications sites in Nigeria as part of its previously announced transaction with Bharti Airtel, for a total consideration of approximately $1.09 billion, including VAT. Approximately $736 million of the consideration was paid in July 2015, with the remainder to be paid prior to January 15, 2016. The purchase price is subject to post-closing adjustments.

The Company expects to acquire up to approximately 2,300 additional TIM Brazil sites and up to approximately 200 additional Airtel Nigeria sites within the next 12 months, pursuant to each purchase agreement.

FINANCING OVERVIEW

Leverage – For the quarter ended June 30, 2015, the Company’s Net Leverage Ratio was approximately 5.2x net debt (total debt less cash and cash equivalents) to second quarter 2015 annualized Adjusted EBITDA.

Liquidity – As of June 30, 2015, the Company had approximately $2.8 billion of total liquidity, comprised of the ability to borrow up to an aggregate of approximately $2.5 billion under its revolving credit facilities, net of outstanding letters of credit, and approximately $0.3 billion in cash and cash equivalents. In July, the Company borrowed an additional $850 million under the 2013 credit facility, which was primarily used to fund the acquisition in Nigeria.

FULL YEAR 2015 OUTLOOK

The following estimates are based on a number of assumptions that management believes to be reasonable and reflect the Company’s expectations as of July 29, 2015. Actual results may differ materially from these estimates as a result of various factors, and the Company refers you to the cautionary language regarding “forward-looking” statements included in this press release when considering this information.

As reflected in the table below, the Company has raised the midpoint of its full year 2015 outlook for total rental and management revenue by $90 million, Adjusted EBITDA by $30 million and AFFO by $60 million. The Company’s outlook includes the 4,699 Airtel Nigeria sites acquired on July 1, 2015, which are expected to contribute approximately $110 million in revenue, $30 million in Adjusted EBITDA and $20 million in AFFO to full year 2015 results, at current exchange rates. The Company's revised revenue outlook also reflects a $15 million decline in U.S. straight line revenue expectations for the year.

The Company intends to file a tax election pursuant to which Global Tower Partners (GTP) REIT will no longer operate as a separate REIT for federal and state income tax purposes, effective July 25, 2015. As a result, the Company expects to incur one-time costs of approximately $92 million in the second half of 2015, which are reflected in its current full year 2015 outlook, as noted in the reconciliations below.

The Company's outlook is based on the following average foreign currency exchange rates to 1.00 U.S. Dollar for the remainder of 2015: (a) 3.25 Brazilian Reais; (b) 650 Chilean Pesos; (c) 2,700 Colombian Pesos; (d) 0.94 Euros; (e) 4.20 Ghanaian Cedi; (f) 64.20 Indian Rupees; (g) 15.90 Mexican Pesos; (h) 205 Nigerian Naira; (i) 3.20 Peruvian Soles; (j) 12.70 South African Rand; and (k) 3,340 Ugandan Shillings. These assumptions are based on the more conservative of: (a) the 30-day average spot rate; or (b) the average Bloomberg forecast for each currency.

Midpoint Midpoint Core
($ in millions) Full Year 2015 Growth Growth
Total rental and management revenue $ 4,645 to $ 4,695 16.6% 22.9%
Adjusted EBITDA 3,020 to 3,060 14.7% 21.4%
AFFO 2,095 to 2,135 16.5% 24.6%
Net income 705 to 735 (10.4)% N/A

The Company’s outlook for total rental and management revenue reflects the following at the midpoint:

The calculation of midpoint Core Growth is as follows:
(Totals may not add due to rounding)

Total Rental and

Management Adjusted
Revenue EBITDA AFFO
Outlook midpoint Core Growth 22.9% 21.4% 24.6%
Impact of pass-through revenues (0.3)%

-

-

Estimated impact of fluctuations in foreign currency exchange rates (5.9)% (5.9)% (7.7)%
Impact of straight-line revenue and expense recognition (0.2)% (0.5)%

-

Impact of significant one-time items

-

(0.1)% (0.2)%
Outlook midpoint growth 16.6% 14.7% 16.5%
Total Rental and Management Revenue Core Growth Components((1)):
(Totals may not add due to rounding) Full Year 2015

Organic Core Growth

~8%
New Property Core Growth(2) ~15%
Core Growth ~23%
(1) Reflects growth at the midpoint of outlook ranges. Excludes pass-through revenue.
(2) Revenue growth attributable to sites added to the portfolio on or after January 1, 2014.
Outlook for Capital Expenditures:
($ in millions)
(Totals may not add due to rounding) Full Year 2015
Discretionary capital projects(1) $ 275 to $ 315
Ground lease purchases 150 to 170
Start-up capital projects 85 to 95
Redevelopment 155 to 175
Capital improvement 90 to 100
Corporate 15 — 15
Total $ 770 to $ 870
(1) Includes the construction of approximately 2,750 to 3,250 communications sites.
Reconciliations of Outlook for Net Income to Adjusted EBITDA:
($ in millions)
(Totals may not add due to rounding) Full Year 2015
Net income $ 705 to $ 735
Interest expense 593 to 623
Depreciation, amortization and accretion 1,280 to 1,290
Income tax provision(1) 173 to 148
Stock-based compensation expense 90 — 90

Other, including other operating expenses, interest income, (gain) loss on retirement of

long-term obligations, (income) loss on equity method investments and other expense

(income)

180 to 175
Adjusted EBITDA $ 3,020 to $ 3,060
(1) Includes an approximately $92 million one-time cash tax charge.
Reconciliations of Outlook for Net Income to AFFO:
($ in millions)
(Totals may not add due to rounding) Full Year 2015
Net income $ 705 to $ 735
Straight-line revenue (136 ) — (136 )
Straight-line expense 51 — 51
Depreciation, amortization and accretion 1,280 to 1,290
Stock-based compensation expense 90 — 90
Non-cash portion of tax provision (5 ) to 5
GTP REIT one-time charge 92 92

Other, including other operating expenses, amortization of deferred financing costs,

capitalized interest, debt discounts and premiums, (gain) loss on retirement of long-

term obligations, other expense (income), non-cash interest related to joint venture

shareholder loans and dividends on preferred stock

123 to 124
Capital improvement capital expenditures (90 ) to (100 )
Corporate capital expenditures (15 ) — (15 )
AFFO $ 2,095 to $ 2,135

Conference Call InformationAmerican Tower will host a conference call today at 8:30 a.m. ET to discuss its financial results for the quarter ended June 30, 2015 and its outlook for 2015. Supplemental materials for the call will be available on the Company’s website, www.americantower.com. The conference call dial-in numbers are as follows:

U.S./Canada dial-in: (877) 586-5042International dial-in: (706) 645-9644Passcode: 78024660

When available, a replay of the call can be accessed until 11:59 p.m. ET on August 5, 2015. The replay dial-in numbers are as follows:

U.S./Canada dial-in: (855) 859-2056International dial-in: (404) 537-3406Passcode: 78024660

American Tower will also sponsor a live simulcast and replay of the call on its website, www.americantower.com.

About American TowerAmerican Tower, one of the largest global REITs, is a leading independent owner, operator and developer of multitenant communications real estate with a portfolio of approximately 97,000 communications sites. For more information about American Tower, please visit the “Earnings Materials” and “Company & Industry Resources” sections of our investor relations website at www.americantower.com.

Non-GAAP and Defined Financial MeasuresIn addition to the results prepared in accordance with generally accepted accounting principles in the United States (GAAP) provided throughout this press release, the Company has presented the following non-GAAP and defined financial measures: Gross Margin, Operating Profit, Operating Profit Margin, Adjusted EBITDA, Adjusted EBITDA Margin, NAREIT Funds From Operations, AFFO, AFFO per Share, Core Growth, Organic Core Growth, New Property Core Growth and Net Leverage Ratio. The Company uses Funds From Operations as defined by the National Association of Real Estate Investment Trusts (NAREIT), referred to herein as NAREIT Funds From Operations. The Company defines Gross Margin as revenues less 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 Operating Profit as Gross Margin less selling, general, administrative and development expense, excluding stock-based compensation expense and corporate expenses. For reporting purposes, the international rental and management segment Operating Profit and Gross Margin also include interest income, TV Azteca, net. These measures of Gross Margin and Operating Profit are also before interest income, interest expense, gain (loss) on retirement of long-term obligations, other income (expense), net income (loss) attributable to non-controlling interest, income (loss) on equity method investments and income tax benefit (provision). The Company defines Operating Profit Margin as the percentage that results from dividing Operating Profit by revenue. The Company defines Adjusted EBITDA as net income before income (loss) from discontinued operations, net, income (loss) from equity method investments, income tax benefit (provision), other income (expense), gain (loss) on retirement of long-term obligations, interest expense, interest income, other operating income (expense), depreciation, amortization and accretion and stock-based compensation expense. The Company defines Adjusted EBITDA Margin as the percentage that results from dividing Adjusted EBITDA by total revenue. NAREIT Funds From Operations is defined as net income before gains or losses from the sale or disposal of real estate, real estate related impairment charges, real estate related depreciation, amortization and accretion and dividends on preferred stock, and including adjustments for (i) unconsolidated affiliates and (ii) noncontrolling interest. The Company defines AFFO as NAREIT Funds From Operations before (i) straight-line revenue and expense, (ii) stock-based compensation expense, (iii) the non-cash portion of our tax provision, (iv) non-real estate related depreciation, amortization and accretion, (v) amortization of deferred financing costs, capitalized interest, debt discounts and premiums and long-term deferred interest charges, (vi) other income (expense), (vii) gain (loss) on retirement of long-term obligations, (viii) other operating income (expense), and adjustments for (ix) unconsolidated affiliates and (x) noncontrolling interest, less cash payments related to capital improvements and cash payments related to corporate capital expenditures. The Company defines AFFO per Share as AFFO divided by the diluted weighted average common shares outstanding. The Company defines Core Growth in total rental and management revenue, Adjusted EBITDA and AFFO as the increase or decrease, expressed as a percentage, resulting from a comparison of financial results for a current period with corresponding financial results for the corresponding period in a prior year, in each case, excluding the impact of pass-through revenue (expense), where applicable, straight-line revenue and expense recognition, foreign currency exchange rate fluctuations and significant one-time items. The Company defines Organic Core Growth in rental and management revenue as the increase or decrease, expressed as a percentage, resulting from a comparison of financial results for a current period with corresponding financial results for the corresponding period in a prior year, in each case, excluding the impact of pass-through revenue (expense), straight-line revenue and expense recognition, foreign currency exchange rate fluctuations, significant one-time items and revenue associated with new properties that the Company has added to the portfolio since the beginning of the prior period. The Company defines New Property Core Growth in rental and management revenue as the increase or decrease, expressed as a percentage, on the properties the Company has added to its portfolio since the beginning of the prior period, in each case excluding the impact of pass-through revenue (expense), straight-line revenue and expense recognition, foreign currency exchange rate fluctuations and significant one-time items. The Company defines Net Leverage Ratio as net debt (total debt, less cash and cash equivalents) divided by last quarter annualized Adjusted EBITDA. These measures are not intended to replace financial performance measures determined in accordance with GAAP. Rather, they are presented as additional information because management believes they are useful indicators of the current financial performance of the Company's core businesses. The Company believes that these measures can assist in comparing company performances on a consistent basis irrespective of depreciation and amortization or capital structure. Depreciation and amortization can vary significantly among companies depending on accounting methods, particularly where acquisitions or non-operating factors, including historical cost bases, are involved. Notwithstanding the foregoing, the Company's measures of Gross Margin, Operating Profit, Operating Profit Margin, Adjusted EBITDA, Adjusted EBITDA Margin, NAREIT Funds From Operations, AFFO, AFFO per Share, Core Growth, Organic Core Growth, New Property Core Growth and Net Leverage Ratio may not be comparable to similarly titled measures used by other companies.

Cautionary Language Regarding Forward-Looking Statements

This press release contains "forward-looking statements" concerning our goals, beliefs, expectations, strategies, objectives, plans, future operating results and underlying assumptions, and other statements that are not necessarily based on historical facts. Examples of these statements include, but are not limited to, statements regarding our full year 2015 outlook, foreign currency exchange rates, our expectation regarding the leasing demand for communications real estate and the anticipated contributions of recently closed acquisitions. Actual results may differ materially from those indicated in our forward-looking statements as a result of various important factors, including: (1) decrease in demand for our communications sites would materially and adversely affect our operating results, and we cannot control that demand; (2) if our tenants share site infrastructure to a significant degree or consolidate or merge, our growth, revenue and ability to generate positive cash flows could be materially and adversely affected; (3) increasing competition for tenants in the tower industry may materially and adversely affect our pricing; (4) competition for assets could adversely affect our ability to achieve our return on investment criteria; (5) our business is subject to government regulations and changes in current or future laws or regulations could restrict our ability to operate our business as we currently do; (6) our leverage and debt service obligations may materially and adversely affect us; (7) failure to successfully and efficiently integrate acquired or leased assets, including those leased from Verizon, into our operations may adversely affect our business, operations and financial condition; (8) our expansion initiatives involve a number of risks and uncertainties that could adversely affect our operating results, disrupt our operations or expose us to additional risk; (9) our foreign operations are subject to economic, political and other risks that could materially and adversely affect our revenues or financial position, including risks associated with fluctuations in foreign currency exchange rates; (10) a substantial portion of our revenue is derived from a small number of tenants, and we are sensitive to changes in the creditworthiness and financial strength of our tenants; (11) new technologies or changes in a tenant’s business model could make our tower leasing business less desirable and result in decreasing revenues; (12) if we fail to remain qualified as a REIT, we will be subject to tax at corporate income tax rates, which may substantially reduce funds otherwise available; (13) complying with REIT requirements may limit our flexibility or cause us to forego otherwise attractive opportunities; (14) certain of our business activities may be subject to corporate level income tax and foreign taxes, which reduce our cash flows and may create deferred and contingent tax liabilities; (15) we may need additional financing to fund capital expenditures, future growth and expansion initiatives and to satisfy our REIT distribution requirements; (16) if we are unable to protect our rights to the land under our towers, it could adversely affect our business and operating results; (17) if we are unable or choose not to exercise our rights to purchase towers that are subject to lease and sublease agreements at the end of the applicable period, our cash flows derived from such towers will be eliminated; (18) restrictive covenants in the agreements related to our securitization transactions, our credit facilities and our debt securities could materially and adversely affect our business by limiting flexibility, and we may be prohibited from paying dividends on our common stock if we fail to pay scheduled dividends on our preferred stock, which may jeopardize our qualification for taxation as a REIT; (19) our costs could increase and our revenues could decrease due to perceived health risks from radio emissions, especially if these perceived risks are substantiated; (20) we could have liability under environmental and occupational safety and health laws; and (21) our towers, data centers or computer systems may be affected by natural disasters and other unforeseen events for which our insurance may not provide adequate coverage. For additional information regarding factors that may cause actual results to differ materially from those indicated in our forward-looking statements, we refer you to the information contained in Item 1A of our Form 10-K for the year ended December 31, 2014. We undertake no obligation to update the information contained in this press release to reflect subsequently occurring events or circumstances.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS(In thousands)

June 30, 2015 December 31, 2014(1)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 274,702 $ 313,492
Restricted cash 135,149 160,206
Short-term investments 40,387 6,302
Accounts receivable, net 212,919 199,074
Prepaid and other current assets 263,274 264,793
Deferred income taxes 14,144 14,507
Total current assets 940,575 958,374
PROPERTY AND EQUIPMENT, NET 9,586,400 7,588,126
GOODWILL 4,036,642 4,033,174
OTHER INTANGIBLE ASSETS, NET 9,853,199 6,900,637
DEFERRED INCOME TAXES 222,276 253,186
DEFERRED RENT ASSET 1,093,812 1,030,707
NOTES RECEIVABLE AND OTHER NON-CURRENT ASSETS 736,821 567,724
TOTAL $ 26,469,725 $ 21,331,928
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable $ 82,850 $ 90,366
Accrued expenses 412,981 417,754
Distributions payable 187,987 159,864
Accrued interest 120,482 130,265
Current portion of long-term obligations 38,814 897,624
Unearned revenue 193,514 233,819
Total current liabilities 1,036,628 1,929,692
LONG-TERM OBLIGATIONS 16,185,211 13,711,084
ASSET RETIREMENT OBLIGATIONS 824,991 609,035
OTHER NON-CURRENT LIABILITIES 1,049,737 1,028,765
Total liabilities 19,096,567 17,278,576
COMMITMENTS AND CONTINGENCIES
EQUITY:
5.25%, Series A Preferred Stock 60 60
5.50%, Series B Preferred Stock 14 —
Common stock 4,260 3,995
Additional paid-in capital 9,619,406 5,788,786
Distributions in excess of earnings (876,607) (837,320)
Accumulated other comprehensive loss (1,228,521) (794,221)
Treasury stock (207,740) (207,740)
Total American Tower Corporation equity 7,310,872 3,953,560
Noncontrolling interest 62,286 99,792
Total equity 7,373,158 4,053,352
TOTAL $ 26,469,725 $ 21,331,928
(1) December 31, 2014 balances have been revised to reflect purchase accounting measurement period adjustments.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except per share data)

Three Months Ended Six Months Ended
June 30, June 30,
2015

2014

2015 2014
REVENUES:
Rental and management $ 1,154,235 $ 1,005,761 $ 2,216,415 $ 1,965,881
Network development services 20,140 25,696 37,150 49,665
Total operating revenues 1,174,375 1,031,457 2,253,565 2,015,546
OPERATING EXPENSES:
Costs of operations (exclusive of items shown separately below):

Rental and management (including stock-based compensation

expense of $390, $343, $822 and $715, respectively)

314,285

263,184

573,542

514,019

Network development services (including stock-based

compensation expense of $98, $110, $237 and $242, respectively)

8,173

9,091

13,556

19,025

Depreciation, amortization and accretion 328,356 245,427 591,876 491,190

Selling, general, administrative and development expense (including

stock-based compensation expense of $23,557, $18,382, $52,847

and $42,482, respectively)

116,338 98,499 239,628 208,528
Other operating expenses 17,449 12,757 25,223 26,648
Total operating expenses 784,601 628,958 1,443,825 1,259,410
OPERATING INCOME 389,774 402,499 809,740 756,136

OTHER INCOME (EXPENSE):

Interest income, TV Azteca, net 2,662 2,662 5,258 5,257
Interest income 4,404 2,281 7,368 4,299
Interest expense (148,507 ) (146,234 ) (296,441 ) (289,541 )
Loss on retirement of long-term obligations (75,068 ) (1,284 ) (78,793 ) (1,522 )

Other expense (including unrealized foreign currency gains (losses)

of $25,461, ($23,553), ($30,007) and ($25,558), respectively)

(2,129 ) (16,463 ) (56,632 ) (20,206 )
Total other expense (218,638 ) (159,038 ) (419,240 ) (301,713 )
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 171,136 243,461 390,500 454,423
Income tax provision (13,956 ) (21,802 ) (37,828 ) (39,451 )
NET INCOME 157,180 221,659 352,672 414,972
Net (income) loss attributable to noncontrolling interest (1,124 ) 12,772 (3,299 ) 21,958
NET INCOME ATTRIBUTABLE TO AMERICAN TOWER CORPORATION
STOCKHOLDERS 156,056 234,431 349,373 436,930
Dividends on preferred stock (26,782 ) (4,375 ) (36,601 ) (4,375 )
NET INCOME ATTRIBUTABLE TO AMERICAN TOWER CORPORATION

COMMON STOCKHOLDERS

$ 129,274 $ 230,056 $ 312,772 $ 432,555
NET INCOME PER COMMON SHARE AMOUNTS:

Basic net income attributable to American Tower Corporation common

stockholders

$ 0.31 $ 0.58 $ 0.76 $ 1.09

Diluted net income attributable to American Tower Corporation

common stockholders

$ 0.30 $ 0.58 $ 0.75 $ 1.08
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic 423,154 395,872 414,182 395,511
Diluted 426,933 399,588 418,303 399,452

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands)

Six Months Ended June 30,
2015 2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 352,672 $ 414,972
Adjustments to reconcile net income to cash provided by operating activities:
Stock-based compensation expense 53,906 43,439
Depreciation, amortization and accretion 591,876 491,190
Loss on early retirement of long-term obligations 78,793 1,269
Other non-cash items reflected in statements of operations 75,531 48,636
Increase in net deferred rent asset (46,653 ) (46,293 )
Decrease (increase) in restricted cash 26,804 (194 )
Increase in assets (99,179 ) (28,473 )
Increase in liabilities 2,710 147,836
Cash provided by operating activities 1,036,460 1,072,382
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for purchase of property and equipment and construction activities (311,122 ) (466,247 )
Payments for acquisitions, net of cash acquired (670,246 ) (315,527 )
Payment for Verizon transaction (5,060,416 ) —
Proceeds from sale of short-term investments and other non-current assets 781,469 338,787
Payments for short-term investments (816,038 ) (332,684 )
Deposits, restricted cash and other (3,087 ) (61,134 )
Cash used for investing activities (6,079,440 ) (836,805 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under credit facilities 4,740,308 360,000
Proceeds from issuance of senior notes, net 1,492,298 769,640
Proceeds from term loan 500,000 —
Proceeds from other long-term borrowings — 3,033
Proceeds from issuance of securities in securitization transaction 875,000 —
Repayments of notes payable, credit facilities, senior notes and capital leases (5,931,401 ) (1,838,728 )
Distributions to noncontrolling interest holders, net (383 ) (291 )
Proceeds from stock options and stock purchase plan 17,364 30,738
Proceeds from the issuance of common stock, net 2,440,327 —
Proceeds from the issuance of preferred stock, net 1,337,946 583,326
Payment for early retirement of long-term obligations (86,107 ) (6,767 )
Deferred financing costs and other financing activities (34,284 ) (22,914 )
Distributions paid on common stock (329,766 ) (127,269 )
Distributions paid on preferred stock (31,085 ) —
Cash provided by (used for) financing activities 4,990,217 (249,232 )
Net effect of changes in foreign currency exchange rates on cash and cash equivalents 13,973 3,038
NET DECREASE IN CASH AND CASH EQUIVALENTS (38,790 ) (10,617 )
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 313,492 293,576
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 274,702 $ 282,959
CASH PAID FOR INCOME TAXES, NET $ 29,911 $ 35,776
CASH PAID FOR INTEREST $ 291,103 $ 270,257

UNAUDITED RESULTS FROM OPERATIONS, BY SEGMENT(In thousands, except percentages. Totals may not add due to rounding.)

Three Months Ended June 30, 2015
Rental and Management

NetworkDevelopment Services

Total

Domestic International Total
Segment revenues $ 802,841 $ 351,394 $ 1,154,235 $ 20,140 $ 1,174,375
Segment operating expenses (1) 182,172 131,723 313,895 8,075 321,970
Interest income, TV Azteca, net — 2,662 2,662 — 2,662
Segment Gross Margin 620,669 222,333 843,002 12,065 855,067

Segment selling, general, administrative and

development expense ((1))

31,243 29,981 61,224 3,439 64,663
Segment Operating Profit $ 589,426 $ 192,352 $ 781,778 $ 8,626 $ 790,404
Segment Operating Profit Margin 73 % 55 % 68 % 43 % 67 %
Percent of total Operating Profit 75 % 24 % 99 % 1 % 100 %
Three Months Ended June 30, 2014
Rental and Management NetworkDevelopment Services Total
Domestic International Total
Segment revenues $ 659,743 $ 346,018 $ 1,005,761 $ 25,696 $ 1,031,457
Segment operating expenses (1) 126,340 136,501 262,841 8,981 271,822
Interest income, TV Azteca, net — 2,662 2,662 — 2,662
Segment Gross Margin 533,403 212,179 745,582 16,715 762,297

Segment selling, general, administrative and

development expense ((1))

28,313 34,472 62,785 2,326 65,111
Segment Operating Profit $ 505,090 $ 177,707 $ 682,797 $ 14,389 $ 697,186
Segment Operating Profit Margin 77 % 51 % 68 % 56 % 68 %
Percent of total Operating Profit 72 % 26 % 98 % 2 % 100 %
(1) Excludes stock-based compensation expense.

UNAUDITED SELECTED FINANCIAL INFORMATION(In thousands, except where noted. Totals may not add due to rounding.)

SELECTED BALANCE SHEET DETAIL:

Pro Forma
Long-term obligations summary, including current portion June 30, 2015

June 30, 2015 (1)

2013 Credit Facility $ 250,000 $ 1,100,000
2013 Term Loan 2,000,000 2,000,000
2014 Credit Facility 1,980,000 1,980,000
2.800% senior notes due 2020 748,265 748,265
3.40% senior notes due 2019 1,004,874 1,004,874
3.450% senior notes due 2021 646,634 646,634
3.50% senior notes due 2023 993,594 993,594
4.000% senior notes due 2025 744,339 744,339
4.500% senior notes due 2018 999,688 999,688
4.70% senior notes due 2022 699,047 699,047
5.00% senior notes due 2024 1,010,351 1,010,351
5.050% senior notes due 2020 699,539 699,539
5.900% senior notes due 2021 499,506 499,506
7.25% senior notes due 2019 297,530 297,530
Total unsecured at American Tower Corporation $ 12,573,367 $ 13,423,367
Secured Tower Revenue Securities, Series 2013-1A 500,000 500,000
Secured Tower Revenue Securities, Series 2013-2A 1,300,000 1,300,000
American Tower Secured Revenue Notes, Series 2015-1 Class A 350,000 350,000
American Tower Secured Revenue Notes, Series 2015-2 Class A 525,000 525,000

Secured Tower Cellular Side Revenue Notes, Series, 2012-1 Class A, Series 2012-2

Class A, Series 2012-2 Class B and Series 2012-2 Class C((2))

286,597 286,597
Unison Notes(2) 202,807 202,807
South African facility(3) 68,315 68,315
Colombian credit facility(3) 75,432 75,432
BR Towers debentures(3)(4) 105,776 105,776
Brazil credit facility(3) 12,955 12,955
India credit facility(3) — 7,800
Shareholder loans(5) 126,772 126,772
Capital leases 97,004 97,004
Total secured or subsidiary debt $ 3,650,658 $ 3,658,458
Total debt $ 16,224,025 $ 17,081,825
Cash and cash equivalents 274,702
Net debt (total debt less cash and cash equivalents) $ 15,949,323
(1) Pro Forma for the following activity in July 2015: (i) borrowings of $850 million under the 2013 credit facility, which were primarily used to fund the Company's acquisition in Nigeria and (ii) borrowings of $7.8 million under the India credit facility .
(2) The notes are secured debt and were assumed in connection with an acquisition.
(3) Denominated in local currency.
(4) The BR Towers debentures were assumed in connection with an acquisition.
(5) Reflects balances attributable to minority shareholder loans in the Company's joint ventures in Ghana and Uganda. The Ghana shareholder loan is denominated in Ghanaian Cedi and the Uganda shareholder loan is denominated in USD.

UNAUDITED SELECTED FINANCIAL INFORMATION(In thousands, except where noted. Totals may not add due to rounding.)

SELECTED BALANCE SHEET DETAIL (CONTINUED):

Three Months Ended

Calculation of Net Leverage Ratio ($ in thousands)

June 30, 2015
Total debt $ 16,224,025
Cash and cash equivalents 274,702
Numerator: net debt (total debt less cash and cash equivalents) $ 15,949,323
Adjusted EBITDA $ 762,286
Denominator: annualized Adjusted EBITDA 3,049,144

Net Leverage Ratio

5.2x

Three Months Ended

Share count rollforward: (in millions of shares)

June 30, 2015

Total common shares, beginning of period

423.1

Common shares repurchased

—

Common shares issued

0.2

Total common shares outstanding, end of period (1)

423.3

(1) As of June 30, 2015, excludes (a) 4.0 million potentially dilutive common shares associated with vested and exercisable stock options with an average exercise price of $53.79 per common share, (b) 4.1 million potentially dilutive common shares associated with unvested stock options, (c) 1.6 million potentially dilutive common shares associated with unvested restricted stock units and (d) the potentially dilutive common shares associated with the Company’s preferred stock .

SELECTED STATEMENT OF OPERATIONS DETAIL:

Rental and management segment straight-line revenue and expense (1):

Three Months Ended June 30,

Domestic straight-line revenue and expense detail: 2015 2014
Straight-line revenue $ 30,516 $ 22,725
Straight-line expense

$

12,114 $ 6,470

Three Months Ended June 30,

International straight-line revenue and expense detail:

2015

2014

Straight-line revenue

$

5,025

$

10,423

Straight-line expense

$

1,847

$

1,402

(1) In accordance with GAAP, the Company recognizes rental and management revenue and expense related to non-cancellable tenant and ground lease agreements with fixed escalations on a straight-line basis, over the applicable lease term. As a result, the Company’s revenue recognized may differ materially from the amount of cash collected per tenant lease, and the Company’s expense incurred may differ materially from the amount of cash paid per ground lease. Additional information regarding straight-line accounting can be found in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 in the section entitled “Revenue Recognition,” in note 1, “Business and Summary of Significant Accounting Policies” within the notes to the consolidated financial statements. The above table sets forth a summary of total rental and management straight-line revenue and expense, which represents the non-cash revenue and expense recorded due to straight-line recognition .

UNAUDITED SELECTED FINANCIAL INFORMATION($ in thousands. Totals may not add due to rounding.)

SELECTED STATEMENT OF OPERATIONS DETAIL (CONTINUED)

Three Months Ended June 30,

International pass-through revenue detail: 2015 2014
Pass-through revenue

$

94,400 $ 93,236

Three Months Ended June 30,

Pre-paid rent detail(1)(2):

2015

2014

Beginning balance

$

519,381

$

414,196

Cash

13,287

37,379

Amortization(3)

(20,028)

(16,880)

Ending balance

$

512,641

$

434,695

(1) Reflects cash received for capital contributions and prepayments associated with long-term tenant leases and amortization of GAAP revenue associated with the leases corresponding to the capital contributions or prepayments .
(2) Excludes the impacts of decommissioning revenues and termination fees.
(3) Includes the impact of foreign currency exchange rate fluctuations
Three Months Ended June 30,
Selling, general, administrative and development expense breakout: 2015 2014
Total rental and management overhead $ 61,224 $ 62,785
Network development services segment overhead 3,439 2,326
Corporate and development expenses 28,118 15,006
Stock-based compensation expense 23,557 18,382
Total $ 116,338 $ 98,499

The following table reflects the estimated impact of foreign currency exchange rate fluctuations, pass-through revenue (expense), straight-line revenue and expense recognition and material one-time items on total rental and management revenue, Adjusted EBITDA and AFFO:

The calculation of Core Growth is as follows:

Total Rental and

Management

Adjusted
Three Months Ended June 30, 2015 Revenue EBITDA AFFO
Core Growth 23.2% 21.1% 25.4 %
Impact of pass-through (1.4)% — —
Estimated impact of fluctuations in foreign currency exchange rates (6.8)% (7.1)% (9.2 )%
Estimated Impact of straight-line revenue recognition (0.3)% (1.1)% —
Estimated Impact of material one-time items — (1.1)% (2.6 )%
Reported growth 14.8% 11.7% 13.3%

The components of Core Growth in rental and management revenue are as follows:

Three Months Ended June 30, 2015 Domestic International Total
Organic Core Growth 5.8% 11.6% 7.3%
New Property Core Growth(1) 15.4% 16.9% 15.9%
Core Growth 21.2% 28.5% 23.2%
(1) Revenue growth attributable to sites added to the portfolio on or after April 1, 2014.

UNAUDITED SELECTED FINANCIAL INFORMATION($ in thousands. Totals may not add due to rounding.)

SELECTED CASH FLOW DETAIL:

Three Months Ended June 30,
Payments for purchase of property and equipment and construction activities: 2015 2014
Discretionary - capital projects $ 57,715 $ 155,401
Discretionary - ground lease purchases 29,168 22,835
Start-up capital projects 9,372 4,589
Redevelopment 32,608 48,367
Capital improvements 19,849 17,225
Corporate 3,225 3,939
Total $ 151,937 $ 252,356
Six Months Ended June 30,
Payments for purchase of property and equipment and construction activities: 2015 2014
Discretionary - capital projects $ 128,706 $ 266,573
Discretionary - ground lease purchases 58,162 67,695
Start-up capital projects 14,415 9,622
Redevelopment 67,669 78,739
Capital improvements 36,633 34,456
Corporate 5,537 9,162
Total $ 311,122 $ 466,247

SELECTED PORTFOLIO DETAIL – OWNED AND OPERATED SITES:

Tower Count (1): As of March 31, 2015 Constructed Acquired Adjustments As of June 30, 2015
United States 40,048 12 4 — 40,064
Brazil 11,989 160 4,185 (7) 16,327
Chile 1,159 6 — — 1,165
Colombia 3,626 54 — (3) 3,677
Costa Rica 464 — — — 464
Germany 2,031 — — (1) 2,030
Ghana 2,052 10 — 5 2,067
India 13,289 624 — (30) 13,883
Mexico 8,717 4 — — 8,721
Peru 578 1 — — 579
South Africa 1,918 1 — (1) 1,918
Uganda 1,326 51 3

—

1,380
Total 87,197 923 4,192 (37) 92,275
(1)

Excludes in-building and outdoor distributed antenna system networks, as well as the 4,699 sites acquired in Nigeria on July 1, 2015.

UNAUDITED RECONCILIATIONS TO GAAP MEASURES AND THE CALCULATION OF DEFINED FINANCIAL MEASURES(In thousands, except per share data and percentages. Totals may not add due to rounding.)

The reconciliation of net income to Adjusted EBITDA and the calculation of Adjusted EBITDA Margin are as follows:

Three Months Ended June 30,
2015 2014
Net income $ 157,180 $ 221,659
Income tax provision 13,956 21,802
Other expense 2,129 16,463
Loss on retirement of long-term obligations 75,068 1,284
Interest expense 148,507 146,234
Interest income (4,404 ) (2,281)
Other operating expenses 17,449 12,757
Depreciation, amortization and accretion 328,356 245,427
Stock-based compensation expense 24,045 18,835
Adjusted EBITDA $ 762,286 $ 682,180
Divided by total revenue 1,174,375 1,031,457
Adjusted EBITDA Margin 65 % 66%

The reconciliation of net income to NAREIT Funds From Operations and the calculation of AFFO and AFFO per Share are presented below:

Three Months Ended June 30,
2015 2014
Net income $ 157,180 $ 221,659
Real estate related depreciation, amortization and accretion 291,183 219,171
Losses from sale or disposal of real estate and real estate related impairment charges 6,775 559
Dividends on preferred stock (26,782) (4,375)
Adjustments for unconsolidated affiliates and noncontrolling interest (5,856) 6,965
NAREIT Funds From Operations 422,500 443,979
Straight-line revenue (35,541) (33,148)
Straight-line expense 13,961 7,872
Stock-based compensation expense 24,045 18,835
Non-cash portion of tax (benefit) provision (1,241) 5,120
Non-real estate related depreciation, amortization and accretion 37,173 26,256

Amortization of deferred financing costs, capitalized interest, debt discounts and premiums

and long-term deferred interest charges

5,297 3,176
Other expense(1) 2,129 16,463
Loss on retirement of long-term obligations 75,068 1,284
Other operating expenses(2) 10,674 12,198
Capital improvement capital expenditures (19,849) (17,225)
Corporate capital expenditures (3,225) (3,939)

Adjustments for unconsolidated affiliates and noncontrolling interest

5,856 (6,965)
AFFO $ 536,847 $ 473,906
Divided by weighted average diluted shares outstanding 426,933 399,588
AFFO per Share $ 1.26 $ 1.19
(1) Primarily includes unrealized losses on foreign currency exchange rate fluctuations.
(2) Primarily includes acquisition related costs, integration costs, losses from sale of assets and impairment charges.

American Tower Corporation

Leah Stearns, (617) 375-7500

Senior Vice President, Treasurer & Investor Relations

Source: American Tower Corporation

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