BUSINESS SEGMENTS | BUSINESS SEGMENTS In 2015, as a result of recent investment activity, including signed acquisitions, the Company reviewed and changed its reportable segments to divide its international segment into three regional segments: (i) Asia property, (ii) Europe, Middle East and Africa (“EMEA”) property and (iii) Latin America property, resulting in five total segments. The change in reportable segments had no impact on the Company’s consolidated and condensed consolidated financial statements for any periods. However, certain expenses previously reflected in segment selling, general, administrative and development expense have been reclassified and are now reflected as Other selling, general, administrative and development expense. Historical financial information included in this Quarterly Report on Form 10-Q has been adjusted to reflect the change in reportable segments. The Company’s primary business is leasing space on multitenant communications sites to wireless service providers, radio and television broadcast companies, wireless data providers, government agencies and municipalities and tenants in a number of other industries. This business is referred to as the Company’s property operations, which as of June 30, 2016 , consisted of the following: • U.S.: property operations in the United States; • Asia: property operations in India; • EMEA: property operations in Germany, Ghana, Nigeria, South Africa and Uganda; and • Latin America: property operations in Brazil, Chile, Colombia, Costa Rica, Mexico and Peru. The Company has applied the aggregation criteria to operations within the EMEA and Latin America property operating segments on a basis that is consistent with management’s review of information and performance evaluations of these regions. The Company’s services segment offers tower-related services in the United States, including site acquisition, zoning and permitting services and structural analysis services, which primarily support its site leasing business, including the addition of new tenants and equipment on its sites. The services segment is a strategic business unit that offers different services from, and requires different resources, skill sets and marketing strategies than, the property operating segments. The accounting policies applied in compiling segment information below are similar to those described in note 1 to the Company’s consolidated financial statements included in the 2015 Form 10-K. Among other factors, in evaluating financial performance in each business segment, management uses segment gross margin and segment operating profit. The Company defines segment gross margin as segment revenue less segment operating expenses excluding stock-based compensation expense recorded in costs of operations; Depreciation, amortization and accretion; Selling, general, administrative and development expense; and Other operating expenses. The Company defines segment operating profit as segment gross margin less Selling, general, administrative and development expense attributable to the segment, excluding stock-based compensation expense and corporate expenses. For reporting purposes, the Latin America property segment gross margin and segment operating profit also include Interest income, TV Azteca, net. These measures of segment gross margin and segment operating profit are also before Interest income, Interest expense, Gain (loss) on retirement of long-term obligations, Other income (expense), Net income (loss) attributable to noncontrolling interests and Income tax benefit (provision). The categories of expenses indicated above, such as depreciation, have been excluded from segment operating performance as they are not considered in the review of information or the evaluation of results by management. There are no significant revenues resulting from transactions between the Company’s operating segments. All intercompany transactions are eliminated to reconcile segment results and assets to the consolidated statements of operations and consolidated balance sheets. Summarized financial information concerning the Company’s reportable segments for the three and six months ended June 30, 2016 and 2015 is shown in the following tables. The “Other” column (i) represents amounts excluded from specific segments, such as business development operations, stock-based compensation expense and corporate expenses included in Selling, general, administrative and development expense; Other operating expenses; Interest income; Interest expense; Gain (loss) on retirement of long-term obligations; and Other income (expense), and (ii) reconciles segment operating profit to Income from continuing operations before income taxes, as the amounts are not utilized in assessing each segment’s performance. Property Total Property Services Other Total Three Months Ended June 30, 2016 U.S. Asia EMEA Latin America (in thousands) Segment revenues $ 829,680 $ 224,611 $ 134,762 $ 237,139 $ 1,426,192 $ 16,035 $ 1,442,227 Segment operating expenses (1) 182,376 127,855 58,462 83,486 452,179 6,885 459,064 Interest income, TV Azteca, net — — — 2,748 2,748 — 2,748 Segment gross margin 647,304 96,756 76,300 156,401 976,761 9,150 985,911 Segment selling, general, administrative and development expense (1) 34,721 14,770 16,685 15,031 81,207 3,346 84,553 Segment operating profit $ 612,583 $ 81,986 $ 59,615 $ 141,370 $ 895,554 $ 5,804 $ 901,358 Stock-based compensation expense $ 21,907 21,907 Other selling, general, administrative and development expense 32,421 32,421 Depreciation, amortization and accretion 397,765 397,765 Other expense (2) 213,291 213,291 Income from continuing operations before income taxes $ 235,974 Total assets $ 18,949,936 $ 4,557,692 $ 2,025,767 $ 4,929,052 $ 30,462,447 $ 62,766 $ 214,985 $ 30,740,198 _______________ (1) Segment operating expenses and segment selling, general, administrative and development expenses exclude stock-based compensation expense of $0.6 million and $21.3 million , respectively. (2) Primarily includes interest expense. Property Total Property Services Other Total Three Months Ended June 30, 2015 U.S. Asia EMEA Latin America (in thousands) Segment revenues $ 802,841 $ 60,009 $ 70,408 $ 220,977 $ 1,154,235 $ 20,140 $ 1,174,375 Segment operating expenses (1) 182,172 31,628 24,198 75,897 313,895 8,075 321,970 Interest income, TV Azteca, net — — — 2,662 2,662 — 2,662 Segment gross margin 620,669 28,381 46,210 147,742 843,002 12,065 855,067 Segment selling, general, administrative and development expense (1) 31,243 4,480 11,952 12,990 60,665 3,439 64,104 Segment operating profit $ 589,426 $ 23,901 $ 34,258 $ 134,752 $ 782,337 $ 8,626 $ 790,963 Stock-based compensation expense $ 24,045 24,045 Other selling, general, administrative and development expense (2) 28,677 28,677 Depreciation, amortization and accretion 328,356 328,356 Other expense (3) 238,749 238,749 Income from continuing operations before income taxes $ 171,136 Total assets (4) $ 19,383,596 $ 748,268 $ 1,159,978 $ 4,930,775 $ 26,222,617 $ 71,268 $ 175,840 $ 26,469,725 _______________ (1) Segment operating expenses and segment selling, general, administrative and development expenses exclude stock-based compensation expense of $0.5 million and $23.6 million , respectively. (2) Includes $0.6 million of expense previously recorded as segment selling, general, administrative and development expense. (3) Primarily includes interest expense and loss on retirement of long-term obligations. (4) $21.2 million of assets previously recorded within the Asia, EMEA, and Latin America Property segments have been reclassified to the Other segment. Property Total Property Services Other Total Six Months Ended June 30, 2016 U.S. Asia EMEA Latin America (in thousands) Segment revenues $ 1,681,424 $ 287,827 $ 264,402 $ 460,190 $ 2,693,843 $ 37,431 $ 2,731,274 Segment operating expenses (1) 360,098 160,935 114,121 158,808 793,962 15,889 809,851 Interest income, TV Azteca, net — — — 5,464 5,464 — 5,464 Segment gross margin 1,321,326 126,892 150,281 306,846 1,905,345 21,542 1,926,887 Segment selling, general, administrative and development expense (1) 72,007 21,346 32,837 29,615 155,805 6,262 162,067 Segment operating profit $ 1,249,319 $ 105,546 $ 117,444 $ 277,231 $ 1,749,540 $ 15,280 $ 1,764,820 Stock-based compensation expense $ 49,986 49,986 Other selling, general, administrative and development expense 62,801 62,801 Depreciation, amortization and accretion 739,399 739,399 Other expense (2) 366,229 366,229 Income from continuing operations before income taxes $ 546,405 _______________ (1) Segment operating expenses and segment selling, general, administrative and development expenses exclude stock-based compensation expense of $1.3 million and $48.7 million , respectively. (2) Primarily includes interest expense. Property Total Property Services Other Total Six Months Ended June 30, 2015 U.S. Asia EMEA Latin America (in thousands) Segment revenues $ 1,520,721 $ 117,136 $ 146,209 $ 432,349 $ 2,216,415 $ 37,150 $ 2,253,565 Segment operating expenses (1) 315,204 61,288 52,713 143,515 572,720 13,319 586,039 Interest income, TV Azteca, net — — — 5,258 5,258 — 5,258 Segment gross margin 1,205,517 55,848 93,496 294,092 1,648,953 23,831 1,672,784 Segment selling, general, administrative and development expense (1) 58,065 11,309 20,811 30,252 120,437 6,875 127,312 Segment operating profit $ 1,147,452 $ 44,539 $ 72,685 $ 263,840 $ 1,528,516 $ 16,956 $ 1,545,472 Stock-based compensation expense $ 53,906 53,906 Other selling, general, administrative and development expense (2) 59,469 59,469 Depreciation, amortization and accretion 591,876 591,876 Other expense (3) 449,721 449,721 Income from continuing operations before income taxes $ 390,500 _______________ (1) Segment operating expenses and segment selling, general, administrative and development expenses exclude stock-based compensation expense of $1.1 million and $52.8 million , respectively. (2) Includes $2.2 million of expense previously recorded as segment selling, general, administrative and development expense. (3) Primarily includes interest expense and loss on retirement of long-term obligations. |