Business Segments

12 Months Ended

Dec. 31, 2012

Business Segments

Business Segments

20.       BUSINESS SEGMENTS

The Company operates in three business segments: domestic rental and management, international rental and management and network development services.The Company's primary business is leasing antenna space on multi-tenant 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 rental and management operations and is comprised of domestic and international segments:

• Domestic: consisting of rental and management operations in the United States; and
• International: consisting of rental and management operations in Brazil, Chile, Colombia, Germany, Ghana, India, Mexico, Peru, South Africa and Uganda.

The Company has applied the aggregation criteria to operations within the international rental and management operating segments on a basis consistent with management's review of information and performance evaluation.

The Company's network development 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 and the addition of new tenants and equipment on its sites. The network development services segment is a strategic business unit that offers different services from the rental and management operating segments and requires different resources, skill sets and marketing strategies.

The accounting policies applied in compiling segment information below are similar to those described in note 1. 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 international rental and management segment operating profit and segment gross margin also include interest income, TV Azteca, net. These measures of segment gross margin and segment operating profit are also before interest income, interest expense, loss on retirement of long-term obligations, other (expense)income, net income (loss) attributable to noncontrolling interest, income (loss)on equity method investments, income taxes and discontinued operations. 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, 2012, 2011 and 2010 is shown in the following tables. The Other column 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 expense; interest income; interest expense; loss on retirement of long-term obligations; and other (expense)income, as well as reconciles segment operating profit to income from continuing operationsbefore income taxes and income on equity method investments, as the amounts are not utilized in assessing each segment's performance.

			Rental and Management				Total Rental and Management		Network Development Services		Other		Total
Year Ended December 31, 2012			Domestic		International
			(in thousands)
Segment revenues			$	1,940,689	$	862,801	$	2,803,490	$	72,470			$	2,875,960
Segment operating expenses (1)				357,555		328,333		685,888		34,830				720,718
Interest income, TV Azteca, net				-		14,258		14,258		-				14,258
Segment gross margin				1,583,134		548,726		2,131,860		37,640				2,169,500
Segment selling, general, administrative and
	development expense (1)			85,663		95,579		181,242		6,744				187,986
Segment operating profit			$	1,497,471	$	453,147	$	1,950,618	$	30,896			$	1,981,514
Stock-based compensation expense											$	51,983		51,983
Other selling, general, administrative and
	development expense											89,093		89,093
Depreciation, amortization and accretion												644,276		644,276
Other expense (principally interest expense and
	other (expense) income)											494,868		494,868
Income from continuing operations before income
	taxes and income on equity method investments												$	701,294
Capital expenditures			$	268,997	$	279,004	$	548,001	$	-	$	20,047	$	568,048
(1)		Segment operating expenses and segment selling, general, administrative and development expenses exclude stock-based compensation expense of $1.8 million and $50.2 million, respectively.
			Rental and Management				Total Rental and Management		Network Development Services		Other		Total
Year Ended December 31, 2011			Domestic		International
			(in thousands)
Segment revenues			$	1,744,260	$	641,925	$	2,386,185	$	57,347			$	2,443,532
Segment operating expenses (1)				353,458		235,709		589,167		29,460				618,627
Interest income, TV Azteca, net				-		14,214		14,214		-				14,214
Segment gross margin				1,390,802		420,430		1,811,232		27,887				1,839,119
Segment selling, general, administrative and
	development expense (1)			77,041		82,106		159,147		7,864				167,011
Segment operating profit			$	1,313,761	$	338,324	$	1,652,085	$	20,023			$	1,672,108
Stock-based compensation expense											$	47,437		47,437
Other selling, general, administrative and
	development expense											76,705		76,705
Depreciation, amortization and accretion												555,517		555,517
Other expense (principally interest expense and
	other (expense) income)											485,554		485,554
Income from continuing operations before income
	taxes and income on equity method investments												$	506,895
Capital expenditures			$	325,264	$	178,826	$	504,090	$	-	$	18,925	$	523,015
(1)		Segment operating expenses and segment selling, general, administrative and development expenses exclude stock-based compensation expense of $2.3 million and $45.1 million, respectively.
			Rental and Management				Total Rental and Management		Network Development Services		Other		Total
Year Ended December 31, 2010			Domestic		International
			(in thousands)
Segment revenues			$	1,565,474	$	370,899	$	1,936,373	$	48,962			$	1,985,335
Segment operating expenses				325,360		122,269		447,629		26,957				474,586
Interest income, TV Azteca, net				-		14,212		14,212		-				14,212
Segment gross margin				1,240,114		262,842		1,502,956		22,005				1,524,961
Segment selling, general, administrative and
	development expense (1)			62,295		45,877		108,172		6,312				114,484
Segment operating profit			$	1,177,819	$	216,965	$	1,394,784	$	15,693			$	1,410,477
Stock-based compensation expense											$	52,555		52,555
Other selling, general, administrative and
	development expense											62,730		62,730
Depreciation, amortization and accretion												460,726		460,726
Other expense (principally interest expense and
	other (expense) income)											278,441		278,441
Income from continuing operations before income
	taxes and income on equity method investments												$	556,025
Capital expenditures			$	260,739	$	68,827	$	329,566	$	5,496	$	11,602	$	346,664
(1)		Segment selling, general, administrative and development expense excludes stock-based compensation expense of $52.6 million.

Additional information relating to the total assets of the Company's operating segments for the years ended December 31, is as follows (in thousands):
		December 31,
		2012		2011 (1)
Domestic rental and management		$	8,471,269	$	7,789,578
International rental and management (2)			5,190,587		3,942,258
Network development services			63,956		33,941
Other (3)			363,317		476,618
		$	14,089,129	$	12,242,395
(1)	Balances have been revised to reflect purchase accounting measurement period adjustments.
(2)	Balances are translated at the applicable period end exchange rate and therefore may impact comparability between periods.
(3)	Balances include corporate assets such as cash and cash equivalents, certain tangible and intangible assets and income tax accounts which have not been allocated to specific segments.

Summarized geographic information related to the Company's operating revenues and long-lived assets as of and for the years ended December 31, 2012, 2011 and 2010, is as follows (in thousands):

				December 31,
				2012		2011		2010
Operating Revenues:
	United States		$	2,013,159	$	1,801,607	$	1,614,436
	International:
		Brazil		198,068		177,526		104,922
		Chile		22,114		7,380		735
		Colombia		48,424		13,690		1,553
		Germany		4,030		-		-
		Ghana		81,818		41,464		-
		India		181,863		170,680		98,799
		Mexico		217,473		183,175		164,039
		Peru		5,310		4,546		851
		South Africa		80,202		43,464		-
		Uganda		23,499		-		-
		Total international		862,801		641,925		370,899
		Total operating revenues	$	2,875,960	$	2,443,532	$	1,985,335
						December 31,
						2012		2011 (1)
Long-Lived Assets (2):
	United States				$	7,558,076	$	7,053,599
	International (3):
		Brazil				909,330		695,923
		Chile				196,387		178,670
		Colombia				380,326		316,096
		Germany				539,670		-
		Ghana				377,553		427,759
		India				676,049		671,091
		Mexico				709,341		546,678
		Peru				65,756		63,956
		South Africa				230,833		199,293
		Uganda				173,773		-
		Total international				4,259,018		3,099,466
		Total long-lived assets			$	11,817,094	$	10,153,065
(1)	Balances have been revised to reflect purchase accounting measurement period adjustments.
(2)	Includes property, equipment, goodwill and other intangible assets.
(3)	Balances are translated at the applicable period end exchange rate and therefore may impact comparability between periods.

Three tenantswithin the domestic and international rental and management segments and network development services segmentaccounted for 10% or more of the Company's consolidated operating revenues for the years ended December 31, 2012, 2011 and 2010 is as follows:

	2012	2011	2010
AT&T Mobility	18%	20%	20%
Sprint Nextel	14%	14%	16%
Verizon Wireless	11%	12%	15%