Operating Segments

3 Months Ended

Mar. 31, 2020

The Company's operating segments consist of (1) Towers and (2) Fiber. The Towers segment provides access, including space or capacity, to the Company's approximately 40,000 towers geographically dispersed throughout the U.S. The Towers segment also reflects certain ancillary services relating to the Company's towers, predominately consisting of site development services and installation services. The Fiber segment provides access, including space or capacity, to the Company's approximately 80,000 route miles of fiber primarily supporting small cell networks and fiber solutions geographically dispersed throughout the U.S.

The measurements of profit or loss used by the Company's chief operating decision maker ("CODM") to evaluate the performance of its operating segments are (1) segment site rental gross margin, (2) segment services and other gross margin and (3) segment operating profit. The Company defines segment site rental gross margin as segment site rental revenues less segment site rental cost of operations, which excludes stock-based compensation expense and prepaid lease purchase price adjustments recorded in consolidated cost of operations. The Company defines segment services and other gross margin as segment services and other revenues less segment services and other cost of operations, which excludes stock-based compensation expense recorded in consolidated cost of operations. The Company defines segment operating profit as segment site rental gross margin plus segment services and other gross margin, less selling, general and administrative expenses attributable to the respective segment. All of these measurements of profit or loss are exclusive of depreciation, amortization and accretion, which are shown separately.

The following table set forth the Company's segment operating results for the three months ended March 31, 2020 and 2019. Costs that are directly attributable to Towers and Fiber are assigned to those respective segments. Additionally, certain costs are shared across segments and are reflected in the Company's segment measures through allocations that management believes to be reasonable. The "Other" column (1) represents amounts excluded from specific segments, such as asset write-down charges, acquisition and integration costs, depreciation, amortization and accretion, amortization of prepaid lease purchase price adjustments, interest expense and amortization of deferred financing costs, gains (losses) on retirement of long-term obligations, net gain (loss) on interest rate swaps, gains (losses) on foreign currency swaps, interest income, other income (expense), income (loss) from discontinued operations, and stock-based compensation expense, and (2) reconciles segment operating profit to income (loss) before income taxes, as the amounts are not utilized in assessing each segment’s performance. The "Other" total assets balance includes corporate assets such as cash and cash equivalents which have not been allocated to specific segments. There are no significant revenues resulting from transactions between the Company's operating segments.

The table below also gives effect to the Historical Adjustments, as described in note 2. Each of the Historical Adjustments for the three months ended March 31, 2019 are attributable only to the Towers segment.



	Three Months Ended March 31, 2020								Three Months Ended March 31, 2019 (As Restated)
	Towers		Fiber		Other		Consolidated Total		Towers		Fiber		Other		Consolidated Total
Segment site rental revenues	$	867	$	443			$	1,310	$	828	$	414			$	1,242
Segment services and other revenues	108		3				111		162		4				166
Segment revenues	975		446				1,421		990		418				1,408
Segment site rental cost of operations	214		152				366		211		140				351
Segment services and other cost of operations	95		2				97		120		3				123
Segment cost of operations^(a)(b)	309		154				463		331		143				474
Segment site rental gross margin	653		291				944		617		274				891
Segment services and other gross margin	13		1				14		42		1				43
Segment selling, general and administrative expenses^(b)	24		51				75		26		48				74
Segment operating profit (loss)	642		241				883		633		227				860
Other selling, general and administrative expenses					$	70	70						$	55	55
Stock-based compensation expense					36		36						29		29
Depreciation, amortization and accretion					399		399						394		394
Interest expense and amortization of deferred financing costs					175		175						168		168
Other (income) expenses to reconcile to income (loss) before income taxes^(c)					13		13						15		15
Income (loss) before income taxes							$	190							$	199
Capital expenditures	$	105	$	328	$	14	$	447	$	119	$	355	$	6	$	480
Total assets (at period end)	$	22,234	$	15,520	$	862	$	38,616	$	22,091	$	14,930	$	734	$	37,755


(a)	Exclusive of depreciation, amortization and accretion shown separately.

(b)

Segment cost of operations excludes (1) stock-based compensation of $6 million for both of the three months ended March 31, 2020 and 2019, and (2) prepaid lease purchase price adjustments of $5 million for both of the three months ended March 31, 2020 and 2019. Selling, general and administrative expenses exclude stock-based compensation expense of $30 million and $23 million for the three months ended March 31, 2020 and 2019, respectively.

(c)

See condensed consolidated statement of operations for further information.