Fair Value Measurements

6 Months Ended

Jun. 30, 2014

2.FAIR VALUE MEASUREMENTS

Items Measured at Fair Value on a Recurring Basis— The Company’s earnouts related to acquisitions are measured at fair value on a recurring basis using Level 3 inputs. Level 3 valuations rely on unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. The Company determines the fair value of acquisition-related contingent consideration and any subsequent changes in fair value using a discounted probability-weighted approach using Level 3 inputs. The fair value of the earnouts is reviewed quarterly and is based on the payments the Company expects to make based on historical internal observations related to the anticipated performance of the underlying assets. The Company’s estimate of the fair value of its obligation if the performance targets contained in various acquisition agreements were met was $19.8 million and $30.1 million as of June 30, 2014 and December 31, 2013, respectively, which the Company recorded in accrued expenses on its Consolidated Balance Sheets. The maximum potential obligation related to the performance targets was $31.6 million as of June 30, 2014.

The following summarizes the activity of the accrued earnouts:



	2014		2013

	(in thousands)
Beginning balance, December 31,	$	30,063	$	9,840
Additions		5,375		534
Payments		(14,439)		(1,311)
Expirations		(274)		(1,786)
Change in Estimate		(1,373)		(280)
Foreign currency translation adjustments		427		18
Ending balance, June 30,	$	19,779	$	7,015

Items Measured at Fair Value on a Nonrecurring Basis— The Company’s long-lived assets, intangibles, and asset retirement obligations are measured at fair value on a nonrecurring basis using Level 3 inputs. The Company considers many factors and makes certain assumptions when making this assessment, including but not limited to: general market and economic conditions, historical operating results, geographic location, lease-up potential and expected timing of lease-up. The fair value of the long-lived assets, intangibles, and asset retirement obligations is calculated using a discounted cash flow model. During the three and six months ended June 30, 2014, the Company recognized an impairment charge of $4.0 million and $7.6 million, respectively. The impairment charge includes the write off of $3.3 million and $5.6 million in carrying value of decommissioned towers and other third party decommission costs incurred related to the Company’s long-lived assets and intangibles for the three and six months ended June 30, 2014, respectively. During the three and six months ended June 30, 2013, the Company recognized an impairment charge of $6.5 million and $10.2 million, respectively. The impairment charge includes the write off of $6.1 million and $7.4 million in carrying value of decommissioned towers and other third party decommission costs incurred related to the Company’s long-lived assets and intangibles for the three and six months ended June 30, 2013, respectively. These write offs result from the Company’s analysis that the future cash flows from certain towers would not recover the carrying value of the investment in those towers. Impairment charges and the related impaired assets relate to the Company’s site leasing operating segment.

Fair Value of Financial Instruments— The carrying values of cash and cash equivalents, accounts receivable, restricted cash, accounts payable, and short-term investments approximate their estimated fair values due to the short maturity of these instruments. Short-term investments consisted of $5.6 million and $5.2 million in certificate of deposits, as of June 30, 2014 and December 31, 2013, respectively. The Company’s estimate of the fair value of its held-to-maturity investments in treasury and corporate bonds, including current portion, are based primarily upon Level 1 reported market values. As of June 30, 2014, the carrying value and fair value of the held-to-maturity investments, including current portion, were $1.2 million and $1.3 million, respectively. As of December 31, 2013, the carrying value and fair value of the held-to-maturity investments, including current portion, was $1.1 million and $1.3 million, respectively.

The Company determines fair value of its debt instruments utilizing various Level 2 sources including quoted prices and indicative quotes (non-binding quotes) from brokers that require judgment to interpret market information including implied credit spreads for similar borrowings on recent trades or bid/ask prices. The fair value of the Revolving Credit Facility is considered to approximate the carrying value because the interest payments are based on Eurodollar rates that reset every month. The Company does not believe its credit risk has changed materially from the date the applicable Eurodollar Rate plus 187.5 basis points was set for the Revolving Credit Facility. The following table reflects fair values, principal balances, and carrying values of the Company’s debt instruments (see Note 11).



	As of June 30, 2014						As of December 31, 2013
	Fair Value		Principal Balance		Carrying Value		Fair Value		Principal Balance		Carrying Value

	(in thousands)
4.000% Convertible Senior Notes due 2014	$	1,266,140	$	378,370	$	370,200	$	1,479,859	$	499,944	$	468,394
8.250% Senior Notes due 2019		254,719		243,750		242,484		262,031		243,750		242,387
5.625% Senior Notes due 2019		528,750		500,000		500,000		514,375		500,000		500,000
5.750% Senior Notes due 2020		848,000		800,000		800,000		832,000		800,000		800,000
4.254% 2010-1 Tower Securities		680,564		680,000		680,000		689,717		680,000		680,000
5.101% 2010-2 Tower Securities		579,508		550,000		550,000		586,586		550,000		550,000
2.933% 2012-1Tower Securities		618,418		610,000		610,000		604,736		610,000		610,000
2.240% 2013-1C Tower Securities		422,510		425,000		425,000		408,442		425,000		425,000
3.722% 2013-2C Tower Securities		569,543		575,000		575,000		530,098		575,000		575,000
3.598% 2013-1D Tower Securities		332,251		330,000		330,000		318,856		330,000		330,000
Revolving Credit Facility		100,000		100,000		100,000		215,000		215,000		215,000
2011 Term Loan		—		—		—		180,980		180,529		180,234
2012-1 Term Loan		179,550		180,000		180,000		184,538		185,000		185,000
2012-2 Term Loan		—		—		—		110,383		109,971		109,745
2014 Term Loan		1,488,750		1,500,000		1,496,407		—		—		—
BNDES Loans		—		—		—		5,847		5,847		5,847
Totals	$	7,868,703	$	6,872,120	$	6,859,091	$	6,923,448	$	5,910,041	$	5,876,607

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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