| Business Segments |
BUSINESS 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 December 31, 2017, consisted of the following: | | • | U.S.: property operations in the United States; |
| | • | Asia: property operations in India; |
| | • | Europe, Middle East and Africa (“EMEA”): property operations in France, Germany, Ghana, Nigeria, South Africa and Uganda; and |
| | • | Latin America: property operations in Argentina, Brazil, Chile, Colombia, Costa Rica, Mexico, Paraguay 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 and structural analysis, 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. 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 years ended December 31, 2017, 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), as the amounts are not utilized in assessing each segment’s performance, and (ii) reconciles segment operating profit to Income from continuing operations before income taxes. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Property | Total Property | |
Services | | Other | | Total | Year ended December 31, 2017 | | U.S. | | Asia | | EMEA | | Latin America | | Segment revenues | | $ | 3,605.7 |
| | $ | 1,164.4 |
| | $ | 626.2 |
| | $ | 1,169.6 |
| | $ | 6,565.9 |
| | $ | 98.0 |
| | | | $ | 6,663.9 |
| Segment operating expenses (1) | | 746.5 |
| | 649.0 |
| | 238.3 |
| | 386.1 |
| | 2,019.9 |
| | 33.8 |
| | | | 2,053.7 |
| Interest income, TV Azteca, net | | — |
| | — |
| | — |
| | 10.8 |
| | 10.8 |
| | — |
| | | | 10.8 |
| Segment gross margin | | 2,859.2 |
| | 515.4 |
| | 387.9 |
| | 794.3 |
| | 4,556.8 |
| | 64.2 |
| | | | 4,621.0 |
| Segment selling, general, administrative and development expense (1) | | 151.4 |
| | 82.4 |
| | 67.9 |
| | 77.5 |
| | 379.2 |
| | 13.7 |
| | | | 392.9 |
| Segment operating profit | | $ | 2,707.8 |
| | $ | 433.0 |
| | $ | 320.0 |
| | $ | 716.8 |
| | $ | 4,177.6 |
| | $ | 50.5 |
| | | | $ | 4,228.1 |
| Stock-based compensation expense | | | | | | | | | | | | | | $ | 108.5 |
| | 108.5 |
| Other selling, general, administrative and development expense | | | | | | | | | | | | | | 138.5 |
| | 138.5 |
| Depreciation, amortization and accretion | | | | | | | | | | | | | | 1,715.9 |
| | 1,715.9 |
| Other expense (2) | | | | | | | | | | | | | | 1,009.1 |
| | 1,009.1 |
| Income from continuing operations before income taxes | | | | | | | | | | | | | | | | $ | 1,256.1 |
| Capital expenditures (3) | | $ | 360.6 |
| | $ | 118.0 |
| | $ | 141.7 |
| | $ | 197.4 |
| | $ | 817.7 |
| | $ | — |
| | $ | 17.7 |
| | $ | 835.4 |
|
_______________ | | (1) | Segment operating expenses and segment selling, general, administrative and development expenses exclude stock-based compensation expense of $2.9 million and $105.6 million, respectively. |
| | (2) | Primarily includes interest expense. |
| | (3) | Includes $31.8 million of capital lease payments included in Repayments of notes payable, credit facilities, term loan, senior notes and capital leases in the cash flow from financing activities in the Company’s consolidated statement of cash flows. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Property | | Total Property | |
Services | | Other | | Total | Year ended December 31, 2016 | | U.S. | | Asia | | EMEA | | Latin America | | Segment revenues | | $ | 3,370.1 |
| | $ | 827.6 |
| | $ | 529.5 |
| | $ | 985.9 |
| | $ | 5,713.1 |
| | $ | 72.6 |
| | | | $ | 5,785.7 |
| Segment operating expenses (1) | | 733.4 |
| | 465.9 |
| | 223.7 |
| | 338.0 |
| | 1,761.0 |
| | 27.0 |
| | | | 1,788.0 |
| Interest income, TV Azteca, net | | — |
| | — |
| | — |
| | 10.9 |
| | 10.9 |
| | — |
| | | | 10.9 |
| Segment gross margin | | 2,636.7 |
| | 361.7 |
| | 305.8 |
| | 658.8 |
| | 3,963.0 |
| | 45.6 |
| | | | 4,008.6 |
| Segment selling, general, administrative and development expense (1) | | 147.6 |
| | 48.2 |
| | 60.9 |
| | 60.7 |
| | 317.4 |
| | 12.5 |
| | | | 329.9 |
| Segment operating profit | | $ | 2,489.1 |
| | $ | 313.5 |
| | $ | 244.9 |
| | $ | 598.1 |
| | $ | 3,645.6 |
| | $ | 33.1 |
| | | | $ | 3,678.7 |
| Stock-based compensation expense | | | | | | | | | | | | | | $ | 89.9 |
| | 89.9 |
| Other selling, general, administrative and development expense | | | | | | | | | | | | | | 126.0 |
| | 126.0 |
| Depreciation, amortization and accretion | | | | | | | | | | | | | | 1,525.6 |
| | 1,525.6 |
| Other expense (2) | | | | | | | | | | | | | | 811.3 |
| | 811.3 |
| Income from continuing operations before income taxes | | | | | | | | | | | | | | | | $ | 1,125.9 |
| Capital expenditures (3) | | $ | 310.7 |
| | $ | 115.5 |
| | $ | 86.1 |
| | $ | 172.6 |
| | $ | 684.9 |
| | $ | — |
| | $ | 16.5 |
| | $ | 701.4 |
|
_______________ | | (1) | Segment operating expenses and segment selling, general, administrative and development expenses exclude stock-based compensation expense of $2.4 million and $87.5 million, respectively. |
| | (2) | Primarily includes interest expense. |
| | (3) | Includes $18.9 million of capital lease payments included in Repayments of notes payable, credit facilities, term loan, senior notes and capital leases in the cash flow from financing activities in the Company’s consolidated statement of cash flows. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Property | | Total Property | |
Services
| | Other | | Total | Year ended December 31, 2015 | | U.S. | | Asia | | EMEA | | Latin America | | Segment revenues | | $ | 3,157.5 |
| | $ | 242.2 |
| | $ | 395.1 |
| | $ | 885.6 |
| | $ | 4,680.4 |
| | $ | 91.1 |
| | | | $ | 4,771.5 |
| Segment operating expenses (1) | | 678.5 |
| | 126.9 |
| | 163.8 |
| | 304.6 |
| | 1,273.8 |
| | 33.0 |
| | | | 1,306.8 |
| Interest income, TV Azteca, net | | — |
| | — |
| | — |
| | 11.2 |
| | 11.2 |
| | — |
| | | | 11.2 |
| Segment gross margin | | 2,479.0 |
| | 115.3 |
| | 231.3 |
| | 592.2 |
| | 3,417.8 |
| | 58.1 |
| | | | 3,475.9 |
| Segment selling, general, administrative and development expense (1) | | 138.6 |
| | 22.7 |
| | 48.7 |
| | 62.2 |
| | 272.2 |
| | 15.7 |
| | | | 287.9 |
| Segment operating profit | | $ | 2,340.4 |
| | $ | 92.6 |
| | $ | 182.6 |
| | $ | 530.0 |
| | $ | 3,145.6 |
| | $ | 42.4 |
| | | | $ | 3,188.0 |
| Stock-based compensation expense | | | | | | | | | | | | | | $ | 90.5 |
| | 90.5 |
| Other selling, general, administrative and development expense | | | | | | | | | | | | | | 121.4 |
| | 121.4 |
| Depreciation, amortization and accretion | | | | | | | | | | | | | | 1,285.3 |
| | 1,285.3 |
| Other expense (2) | | | | | | | | | | | | | | 860.8 |
| | 860.8 |
| Income from continuing operations before income taxes | | | | | | | | | | | | | | | | $ | 830.0 |
| Capital expenditures | | $ | 367.7 |
| | $ | 75.4 |
| | $ | 66.6 |
| | $ | 201.8 |
| | $ | 711.5 |
| | $ | — |
| | $ | 17.3 |
| | $ | 728.8 |
|
_______________ | | (1) | Segment operating expenses and segment selling, general, administrative and development expenses exclude stock-based compensation expense of $2.0 million and $88.5 million, respectively. |
| | (2) | Primarily includes interest expense. |
Additional information relating to the total assets of the Company’s operating segments is as follows for the years ended December 31,: | | | | | | | | | | | | | | 2017 | | 2016 | | 2015 | U.S. property | $ | 19,032.6 |
| | $ | 18,846.9 |
| | $ | 19,286.5 |
| Asia property (1) | 4,770.8 |
| | 4,535.3 |
| | 736.1 |
| EMEA property (1) | 3,213.6 |
| | 2,062.4 |
| | 2,249.6 |
| Latin America property (1) | 5,868.4 |
| | 4,938.1 |
| | 4,401.3 |
| Services | 42.3 |
| | 48.3 |
| | 68.4 |
| Other (2) | 286.6 |
| | 448.2 |
| | 162.4 |
| Total assets | $ | 33,214.3 |
| | $ | 30,879.2 |
| | $ | 26,904.3 |
|
_______________ | | (1) | Balances are translated at the applicable period end exchange rate, which may impact comparability between periods. |
| | (2) | Balances include corporate assets such as cash and cash equivalents, certain tangible and intangible assets and income tax accounts that have not been allocated to specific segments. |
Summarized geographic information related to the Company’s operating revenues for the years ended December 31, 2017, 2016 and 2015 and long-lived assets as of December 31, 2017 and 2016 is as follows: | | | | | | | | | | | | | | 2017 | | 2016 | | 2015 | Operating Revenues: | | | | | | United States | $ | 3,703.7 |
| | $ | 3,442.7 |
| | $ | 3,248.6 |
| Asia (1): | | | | | | India | 1,164.4 |
| | 827.6 |
| | 242.2 |
| EMEA (1): | | | | | | France | 59.5 |
| | — |
| | — |
| Germany | 63.1 |
| | 60.2 |
| | 56.0 |
| Ghana | 122.9 |
| | 116.2 |
| | 94.5 |
| Nigeria | 213.9 |
| | 215.4 |
| | 109.7 |
| South Africa | 106.5 |
| | 80.0 |
| | 80.5 |
| Uganda | 60.3 |
| | 57.7 |
| | 54.4 |
| Latin America (1): | | | | | | Argentina | 15.9 |
| | 1.0 |
| | — |
| Brazil | 620.1 |
| | 506.2 |
| | 408.6 |
| Chile | 40.4 |
| | 33.8 |
| | 29.7 |
| Colombia | 89.3 |
| | 79.7 |
| | 78.4 |
| Costa Rica | 19.4 |
| | 19.0 |
| | 17.2 |
| Mexico | 364.3 |
| | 331.2 |
| | 340.5 |
| Paraguay | 2.7 |
| | — |
| | — |
| Peru | 17.5 |
| | 15.0 |
| | 11.2 |
| Total International | 2,960.2 |
| | 2,343.0 |
| | 1,522.9 |
| Total operating revenues | $ | 6,663.9 |
| | $ | 5,785.7 |
| | $ | 4,771.5 |
|
_______________ | | (1) | Balances are translated at the applicable exchange rate, which may impact comparability between periods. |
| | | | | | | | | | 2017 | | 2016 | Long-Lived Assets (1): | | | | United States | $ | 16,930.2 |
| | $ | 16,969.6 |
| Asia (2): | | | | India | 4,052.6 |
| | 4,094.2 |
| EMEA (2): | | | | France | 1,009.6 |
| | — |
| Germany | 428.0 |
| | 397.3 |
| Ghana | 171.4 |
| | 192.2 |
| Nigeria | 587.2 |
| | 640.6 |
| South Africa | 330.4 |
| | 271.8 |
| Uganda | 136.9 |
| | 141.5 |
| Latin America (2): | | | | Argentina | 117.9 |
| | 137.6 |
| Brazil | 2,557.4 |
| | 2,626.4 |
| Chile | 151.2 |
| | 137.2 |
| Colombia | 369.0 |
| | 272.3 |
| Costa Rica | 112.9 |
| | 117.5 |
| Mexico | 1,396.8 |
| | 797.8 |
| Paraguay | 77.5 |
| | — |
| Peru | 93.7 |
| | 66.6 |
| Total International | 11,592.5 |
| | 9,893.0 |
| Total long-lived assets | $ | 28,522.7 |
| | $ | 26,862.6 |
|
_______________ | | (1) | Includes Property and equipment, net, Goodwill and Other intangible assets, net. |
| | (2) | Balances are translated at the applicable period end exchange rate, which may impact comparability between periods. |
The following tenants within the property and services segments individually accounted for 10% or more of the Company’s consolidated operating revenues for the years ended December 31, is as follows: | | | | | | | | | | | 2017 | | 2016 | | 2015 | AT&T | 19 | % | | 21 | % | | 24 | % | Verizon Wireless | 16 | % | | 15 | % | | 16 | % | Sprint | 9 | % | | 11 | % | | 13 | % | T-Mobile | 9 | % | | 9 | % | | 10 | % |
|