BUSINESS SEGMENTS

3 Months Ended

Mar. 31, 2020

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.

During the fourth quarter of 2019, as a result of recent acquisitions, including the Eaton Towers Acquisition, and changes to its organizational structure, the Company reviewed and changed its reportable segments to divide its EMEA property segment into two segments: Africa property and Europe property. Prior to this revision, the Company operated in five business segments: (i) U.S. property, (ii) Asia property, (iii) EMEA property, (iv) Latin America property and (v) services. The change is consistent with how the chief operating decision maker reviews financial performance and operating and business management strategies for each of the six segments. The change in reportable segments had no impact on the Company’s consolidated financial statements for any periods. Historical financial information included in this Quarterly Report has been adjusted to reflect the change in reportable segments.

As of March 31, 2020, the Company’s property operations consisted of the following:

•U.S.: property operations in the United States;

•Asia: property operations in India;

•Africa: property operations in Burkina Faso, Ghana, Kenya, Niger, Nigeria, South Africa and Uganda;

•Europe: property operations in France and Germany; and

•Latin America: property operations in Argentina, Brazil, Chile, Colombia, Costa Rica, Mexico, Paraguay and Peru.

The Company’s services segment offers tower-related services in the United States, including AZP 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 to the Company’s consolidated financial statements included in the 2019 Form 10-K and as updated in note 1 above. 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. 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 months ended March 31, 2020 and 2019 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.


	Property																		Total Property	Services	Other	Total
Three Months Ended March 31, 2020	U.S.		Asia		Africa		Europe		Latin America
Segment revenues	$	1,089.9	$	286.6	225.5		$	34.5	$	336.7	$	1,973.2	$	19.9			$	1,993.1
Segment operating expenses (1)	190.0		164.0		77.7		6.6		105.2		543.5		7.6				551.1
Segment gross margin	899.9		122.6		147.8		27.9		231.5		1,429.7		12.3				1,442.0
Segment selling, general, administrative and development expense (1)	42.0		32.6		17.1		5.5		26.6		123.8		3.5				127.3
Segment operating profit	$	857.9	$	90.0	$	130.7	$	22.4	$	204.9	$	1,305.9	$	8.8			$	1,314.7
Stock-based compensation expense															$	47.7	47.7
Other selling, general, administrative and development expense															43.7		43.7
Depreciation, amortization and accretion															472.3		472.3
Other expense (2)															311.3		311.3
Income from continuing operations before income taxes																	$	439.7
Total assets	$	22,486.9	$	4,986.0	$	4,510.3	$	1,554.5	$	6,739.0	$	40,276.7	$	29.0	$	483.4	$	40,789.1

_______________

(1) Segment operating expenses and segment selling, general, administrative and development expenses exclude stock-based compensation expense of $0.9 million and $46.8 million, respectively.

(2) Primarily includes interest expense.


	Property																		Total Property	Services	Other	Total
Three Months Ended March 31, 2019	U.S.		Asia		Africa		Europe		Latin America
Segment revenues	$	986.3	$	288.9	$	144.0	$	33.5	$	333.3	$	1,786.0	$	27.4			$	1,813.4
Segment operating expenses (1)	191.3		178.0		53.5		6.2		103.4		532.4		10.1				542.5

Segment gross margin	795.0		110.9		90.5		27.3		229.9		1,253.6		17.3				1,270.9
Segment selling, general, administrative and development expense (1)	41.7		26.6		13.2		5.2		27.7		114.4		3.4				117.8
Segment operating profit	$	753.3	$	84.3	$	77.3	$	22.1	$	202.2	$	1,139.2	$	13.9			$	1,153.1
Stock-based compensation expense															$	42.5	42.5
Other selling, general, administrative and development expense															38.7		38.7
Depreciation, amortization and accretion															436.9		436.9
Other expense (2)															193.4		193.4
Income from continuing operations before income taxes																	$	441.6
Total assets	$	22,160.9	$	5,427.6	$	2,085.5	$	1,552.0	$	7,306.4	$	38,532.4	$	43.8	$	350.6	$	38,926.8

_______________

(1) Segment operating expenses and segment selling, general, administrative and development expenses exclude stock-based compensation expense of $0.9 million and $41.6 million, respectively.

(2) Primarily includes interest expense.