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Q2 2014 8-K


 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 23, 2014
Crown Castle International Corp.
(Exact name of registrant as specified in its charter)
 
 
 
 
 
Delaware
 
001-16441
 
76-0470458
(State or other jurisdiction
of incorporation)
 
(Commission File Number)
 
(IRS Employer Identification No.)
 
 
 
 
1220 Augusta Drive, Suite 600
Houston, TX
 
 
77057
 
(Address of principal executive offices)
 
(Zip Code)
 
Registrant's telephone number, including area code: (713) 570-3000
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 







ITEM 2.02 — RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On July 23, 2014, the Company issued a press release disclosing its financial results for the second quarter of 2014. That press release referred to certain supplemental information that was posted as a supplemental information package on the Company's website on July 23, 2014. The July 23, 2014 press release and supplemental information package are furnished herewith as Exhibits 99.1 and 99.2 to this Form 8-K, respectively.
ITEM 9.01 — FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
As described in Item 2.02 of this Report, the following exhibits are furnished as part of this Current Report on Form 8-K:
Exhibit No.
 
Description
99.1
 
Press Release dated July 23, 2014
99.2
 
Supplemental Information Package for the quarter ended June 30, 2014
The information in this Form 8-K and Exhibits 99.1 and 99.2 attached hereto shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.




SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
 
CROWN CASTLE INTERNATIONAL CORP. 
 
 
By:  
/s/ E. Blake Hawk
 
 
 
Name:  
E. Blake Hawk 
 
 
 
Title:
Executive Vice President
and General Counsel 
 
Date: July 23, 2014




EXHIBIT INDEX
Exhibit No.
 
Description
99.1
 
Press Release dated July 23, 2014
99.2
 
Supplemental Information Package for the quarter ended June 30, 2014



Q2 2014 Earnings Release
Exhibit 99.1

 
NEWS RELEASE
July 23, 2014

 

 
Contacts: Jay Brown, CFO
 
Son Nguyen, VP - Corporate Finance
FOR IMMEDIATE RELEASE
Crown Castle International Corp.
 
713-570-3050

CROWN CASTLE REPORTS SECOND QUARTER 2014 RESULTS
AND RAISES OUTLOOK FOR 2014

July 23, 2014 - HOUSTON, TEXAS - Crown Castle International Corp. (NYSE: CCI) ("Crown Castle") today reported results for the quarter ended June 30, 2014.
"Our excellent second quarter results reflect the continuing network investment being made by all four major wireless carriers as they upgrade their networks for LTE and capacity enhancements," stated Ben Moreland, Crown Castle's President and Chief Executive Officer. "The robust leasing environment contributed to strong Organic Site Rental Revenue growth of 9%, or 7% net of non-renewals, compared to the same period in 2013. In addition, network services continues to see significant demand, driven by strong leasing activity and an increase in the size of our asset portfolio. As we successfully execute on the opportunities resulting from our expanded portfolio of approximately 40,000 towers and 13,000 small cell nodes, we are very pleased with our 2014 projected growth of 13% in AFFO per share compared to 2013, despite the headwind from Sprint's decommissioning of its iDEN network. With carrier investment continuing unabated, we are focused on our core strategic objective of organic growth by adding additional tenants on our sites and are pleased with a growing pipeline of investment opportunities around our core business that we believe will enhance our ability to deliver an attractive combination of growth and increasing dividend payouts for years to come."

CONSOLIDATED FINANCIAL RESULTS
Total revenues for the second quarter of 2014 increased 25% to $916 million from $735 million for the same period in 2013. Site rental revenues for the second quarter of 2014 increased $129 million, or 21%, to $746 million from $617 million for the same period in the prior year. Site rental gross margin, defined as site rental revenues less site rental cost of operations, increased $72 million, or 16%, to $509 million in the second quarter of 2014 from $438 million in the same period in 2013. Adjusted EBITDA for the second quarter of 2014 increased $86 million, or 19%, to $531 million from $444 million in the same period in 2013.
Adjusted Funds from Operations ("AFFO") increased 28% to $351 million in the second quarter of 2014, compared to $273 million in the second quarter of 2013. AFFO per share increased 13% to $1.05 in the second quarter


The Foundation for a Wireless World.
CrownCastle.com


News Release continued:
 
Page 2

of 2014, compared to $0.93 in the second quarter of 2013. Funds from Operations ("FFO") increased 13% to $276 million in the second quarter of 2014, compared to $243 million in the second quarter of 2013. FFO per share was $0.83 in both the second quarter of 2014 and 2013.
Net income attributable to CCIC common stockholders for the second quarter of 2014 was $23 million, inclusive of a $45 million loss on the redemption of debt (see Financing and Investing Activities below), compared to $52 million of net income for the same period in 2013. Net income attributable to CCIC common stockholders per common share was $0.07 for the second quarter of 2014, compared to $0.18 per common share in the second quarter of 2013.
Crown Castle's second quarter 2014 financial results include the contribution from the AT&T tower transaction, which closed on December 16, 2013.

FINANCING AND INVESTING ACTIVITIES
On April 2014, Crown Castle closed an $850 million senior notes offering, with a maturity of April 15, 2022 and a stated interest rate of 4.875% per annum (“Notes Offering”). Net proceeds from the Notes Offering were used to repay, along with certain fees and expenses, $300 million of Senior Secured Tower Revenue Notes, which had an interest rate of 4.5% and an anticipated maturity date of January 2015, and $500 million of 7.125% Senior Notes due 2019. As of June 30, 2014, Crown Castle's outstanding debt had a weighted average coupon of 4.2% per annum and a weighted average maturity of six years. Further, Crown Castle's net debt (total debt less cash and cash equivalents) to second quarter annualized Adjusted EBITDA ratio was approximately 5.3x.
During the second quarter of 2014, Crown Castle invested approximately $167 million in capital expenditures, comprised of $25 million of land purchases, $13 million of sustaining capital expenditures and $129 million of revenue generating capital expenditures.
Further, on June 30, 2014, Crown Castle paid a quarterly common stock dividend of $0.35 per common share, or approximately $117 million in aggregate. Diluted common shares outstanding at June 30, 2014 were 333.1 million.
As of June 30, 2014, Crown Castle had approximately $227 million in cash and cash equivalents (excluding restricted cash) and approximately $1.2 billion of availability under its revolving credit facility.
"The strong second quarter results allow us to increase our full year 2014 Outlook for site rental revenues, Adjusted EBITDA, AFFO and AFFO per share," stated Jay Brown, Crown Castle's Chief Financial Officer. "During the quarter, we made significant progress integrating the AT&T tower transaction, which we expect to substantially complete during the third quarter of 2014. We believe that the AT&T tower transaction, along with the 2012 T-Mobile tower and NextG transactions, will provide meaningful opportunities to enhance our long-term AFFO per share growth. In addition, we continue to find attractive returns investing in our core business, particularly in building small cells and purchasing land beneath our towers. We believe our strategy of investing in the US, which is the largest wireless market in the world, will drive predictable and growing AFFO per share and dividends over the long-term."


The Foundation for a Wireless World.
CrownCastle.com


News Release continued:
 
Page 3

OUTLOOK
This Outlook section contains forward-looking statements, and actual results may differ materially. Information regarding potential risks which could cause actual results to differ from the forward-looking statements herein is set forth below and in Crown Castle's filings with the Securities and Exchange Commission ("SEC"). The following Outlook is based on current expectations and assumptions and assumes a US dollar to Australian dollar exchange rate of 0.93 US dollars to 1.0 Australian dollar ("Exchange Rate") for the remainder of 2014, including the third quarter.
As reflected in the table below, Crown Castle has increased the midpoint of its full year 2014 Outlook for site rental revenues, Adjusted EBITDA and AFFO by $7 million, $34 million and $30 million, respectively. The increase in the midpoint of 2014 Outlook for site rental revenues is primarily attributable to second quarter 2014 results and an increase in the Exchange Rate compared to the previously provided Outlook. At the midpoint of 2014 Outlook for site rental revenues, Crown Castle expects Organic Site Rental Revenue growth, before non-renewals, of approximately 9% compared to 2013, comprised of approximately 5% from new leasing activity and approximately 4% from escalations on existing customer lease contracts.
The increase in the midpoint of 2014 Outlook for Adjusted EBITDA primarily reflects higher expected network services gross margin contribution partially offset by increased general and administrative expenses related to an expansion in the size of the asset portfolio, an increase in small cells activity and growth in network services. The increase in the midpoint of 2014 Outlook for AFFO is primarily attributable to the benefit from the aforementioned increase in Adjusted EBITDA somewhat offset by an expected increase in sustaining capital expenditures related to the expansion of our office facilities.
Further, based on Sprint's stated intention to decommission its iDEN network and Crown Castle's contractual terms with Sprint, Crown Castle expects approximately 3% of its run-rate site rental revenues to be impacted by the iDEN network decommissioning. These iDEN leases have effective term-end dates spread throughout 2014 and 2015. As such, Crown Castle expects its site rental revenues to be impacted by approximately $30 million in 2014 and $60 million to $70 million in 2015.
Sequentially, the third quarter 2014 Outlook for Adjusted EBITDA and AFFO assumes network services gross margin contribution remains consistent with the levels achieved during the second quarter of 2014 and higher general and administrative expenses, as discussed above. Additionally, the third quarter 2014 Outlook for AFFO assumes an increase of $16 million, at the midpoint, in sustaining capital expenditures. The expected sequential increase in sustaining capital expenditures in the third quarter of 2014 is primarily attributable to timing, as sustaining capital expenditures previously expected in the Outlook but not spent during the second quarter of 2014 have been included in the third quarter 2014 Outlook.


The Foundation for a Wireless World.
CrownCastle.com


News Release continued:
 
Page 4

The following table sets forth Crown Castle's current Outlook for third quarter 2014 and full year 2014:
(in millions, except per share amounts)
Third Quarter 2014
Full Year 2014
Site rental revenues
$746 to $751
$2,990 to $3,000
Site rental cost of operations
$237 to $242
$933 to $943
Site rental gross margin
$506 to $511
$2,052 to $2,062
Adjusted EBITDA
$521 to $526
$2,100 to $2,115
Interest expense and amortization of deferred financing costs(a)
$139 to $144
$569 to $579
FFO
$337 to $342
$1,286 to $1,301
AFFO
$332 to $337
$1,376 to $1,391
AFFO per share(b)
$1.00 to $1.01
$4.13 to $4.18
Net income (loss)
$81 to $114
$292 to $376
Net income (loss) per share - diluted(b)
$0.24 to $0.34
$0.88 to $1.13
Net income (loss) attributable to CCIC common stockholders
$69 to $102
$243 to $327
Net income (loss) attributable to CCIC common stockholders per share - diluted(b)
$0.21 to $0.31
$0.73 to $0.98
(a)
See the reconciliation of "components of interest expense and amortization of deferred financing costs" herein for a discussion of non-cash interest expense.
(b)
Based on 333.1 million diluted shares outstanding as of June 30, 2014.


CONFERENCE CALL DETAILS
Crown Castle has scheduled a conference call for Thursday, July 24, 2014, at 10:30 a.m. Eastern Time. The conference call may be accessed by dialing 800-289-0498 and asking for the Crown Castle call (access code 9681950) at least 30 minutes prior to the start time. The conference call may also be accessed live over the Internet at http://investor.crowncastle.com. Any supplemental materials for the call will be posted on the Crown Castle website at http://investor.crowncastle.com.
A telephonic replay of the conference call will be available from 12:30 p.m. Eastern Time on Thursday, July 24, 2014, through 12:30 p.m. Eastern Time on Thursday, July 31, 2014, and may be accessed by dialing 888-203-1112 and using access code 9861950. An audio archive will also be available on the company's website at http://investor.crowncastle.com shortly after the call and will be accessible for approximately 90 days.

ABOUT CROWN CASTLE
Crown Castle provides wireless carriers with the infrastructure they need to keep people connected and businesses running. With approximately 40,000 towers and 13,000 small cell nodes supported by approximately 6,000 miles of fiber, Crown Castle is the nation's largest provider of shared wireless infrastructure with a significant presence in the top 100 US markets. In addition, Crown Castle operates approximately 1,800 towers in Australia. For more information on Crown Castle, please visit www.crowncastle.com.


The Foundation for a Wireless World.
CrownCastle.com


News Release continued:
 
Page 5

Non-GAAP Financial Measures and Other Calculations
This press release includes presentations of Adjusted EBITDA, Funds from Operations, Adjusted Funds from Operations, Organic Site Rental Revenues, and Site Rental Revenues, as Adjusted, which are non-GAAP financial measures. These non-GAAP financial measures are not intended as alternative measures of operating results or cash flow from operations (as determined in accordance with Generally Accepted Accounting Principles ("GAAP")). Each of the amounts included in the calculation of Adjusted EBITDA, FFO, AFFO, Organic Site Rental Revenues, and Site Rental Revenues, as Adjusted, are computed in accordance with GAAP, with the exception of: (1) sustaining capital expenditures, which is not defined under GAAP and (2) our adjustment to the income tax provision in calculations of AFFO for periods prior to our REIT conversion.
Our measures of Adjusted EBITDA, FFO, AFFO, Organic Site Rental Revenues and Site Rental Revenues, as Adjusted, may not be comparable to similarly titled measures of other companies, including other companies in the tower sector or those reported by other REITs. Our FFO and AFFO may not be comparable to those reported in accordance with National Association of Real Estate Investment Trusts, including with respect to the impact of income taxes for periods prior to our REIT conversion.
Adjusted EBITDA, FFO, AFFO, Organic Site Rental Revenues and Site Rental Revenues, as Adjusted, are presented as additional information because management believes these measures are useful indicators of the financial performance of our core businesses. In addition, Adjusted EBITDA is a measure of current financial performance used in our debt covenant calculations.
During the first quarter of 2014, Crown Castle updated its definitions of FFO and AFFO. The updated definitions of FFO and AFFO are intended to reflect the recurring nature of Crown Castle's site rental business and assist in comparing Crown Castle’s performance with the performance of its public tower company peers. Under the updated calculation of AFFO, Crown Castle reflects the benefit of prepaid rent from customers over the weighted-average life of customer contracts rather than in the period in which the prepaid rent was received. The updates to the definition of FFO were primarily made to present the periods shown in a manner which is consistent with our commencement of operations as a REIT on January 1, 2014. These measures are not intended to replace financial performance measures determined in accordance with GAAP. Unless otherwise noted, FFO and AFFO as set forth in this release and the supplemental information package are presented based on the updated definitions. Crown Castle has provided reconciliations of the updated definitions of FFO and AFFO to the prior definitions below.
Adjusted EBITDA. Crown Castle defines Adjusted EBITDA as net income (loss) plus restructuring charges (credits), 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, impairment of available-for-sale securities, interest income, other income (expense), benefit (provision) for income taxes, cumulative effect of change in accounting principle, income (loss) from discontinued operations, and stock-based compensation expense.
Funds from Operations ("FFO"). Crown Castle defines Funds from Operations as net income plus real estate related depreciation, amortization and accretion and asset write-down charges, less noncontrolling interest and cash paid for preferred stock dividends, and is a measure of funds from operations attributable to CCIC common stockholders.
FFO per share. Crown Castle defines FFO per share as FFO divided by the diluted weighted average common shares outstanding.
FFO, as previously defined. Crown Castle defines FFO, as previously defined, as FFO plus non-cash portion of tax provision, less asset write-down charges and noncontrolling interest.
Adjusted Funds from Operations ("AFFO"). Crown Castle defines Adjusted Funds from Operations as FFO before straight-line revenue, straight-line expense, stock-based compensation expense, non-cash portion of tax provision, non-real estate related depreciation, amortization and accretion, amortization of non-cash interest expense, other (income) expense, gain (loss) on retirement of long-term obligations, net gain (loss) on interest rate swaps, acquisition and integration costs, and adjustments for noncontrolling interests, and less capital improvement capital expenditures and corporate capital expenditures.
AFFO per share. Crown Castle defines AFFO per share as AFFO divided by diluted weighted average common shares outstanding.
AFFO, as previously defined. Crown Castle defines AFFO, as previously defined, as AFFO plus prepaid rent received less amortization of prepaid rent.


The Foundation for a Wireless World.
CrownCastle.com


News Release continued:
 
Page 6

Site Rental Revenues, as Adjusted. Crown Castle defines Site Rental Revenues, as Adjusted, as site rental revenues, as reported, less straight-line revenues.
Organic Site Rental Revenues. Crown Castle defines Organic Site Rental Revenues as site rental revenues, as reported, less straight-line revenues, the impact of tower acquisitions and construction, foreign currency adjustments and certain non recurring items.
Sustaining capital expenditures. Crown Castle defines sustaining capital expenditures as either (1) corporate related capital improvements, such as buildings, information technology equipment and office equipment or (2) capital improvements to tower sites that enable our customers' ongoing quiet enjoyment of the tower.
The tables set forth below reconcile these non-GAAP financial measures to comparable GAAP financial measures. The components in these tables may not sum to the total due to rounding.
Reconciliations of Non-GAAP Financial Measures to Comparable GAAP Financial Measures:

Adjusted EBITDA for the three months ended June 30, 2014 and 2013 is computed as follows:
 
For the Three Months Ended
 
June 30, 2014
 
June 30, 2013
(in millions)
 
 
 
Net income (loss)
$
35.4

 
$
53.4

Adjustments to increase (decrease) net income (loss):

 
 
Asset write-down charges
3.1

 
3.1

Acquisition and integration costs
19.2

 
7.2

Depreciation, amortization and accretion
254.2

 
190.7

Amortization of prepaid lease purchase price adjustments
5.7

 
3.9

Interest expense and amortization of deferred financing costs(a)
144.5

 
140.3

Gains (losses) on retirement of long-term obligations
44.6

 
0.6

Interest income
(0.2
)
 
(0.3
)
Other income (expense)
6.1

 
(0.5
)
Benefit (provision) for income taxes
(0.2
)
 
36.6

Stock-based compensation expense
18.2

 
9.6

Adjusted EBITDA(b)
$
530.6

 
$
444.4

(a)
See the reconciliation of "components of interest expense and amortization of deferred financing costs" herein for a discussion of non-cash interest expense.
(b)
The above reconciliation excludes line items included in our Adjusted EBITDA definition which are not applicable for the periods shown.



The Foundation for a Wireless World.
CrownCastle.com


News Release continued:
 
Page 7

Adjusted EBITDA for the quarter ending September 30, 2014 and the year ending December 31, 2014 is forecasted as follows:
 
Q3 2014
 
Full Year 2014
(in millions)
Outlook
 
Outlook
Net income (loss)
$81 to $114
 
$292 to $376
Adjustments to increase (decrease) net income (loss):

 

Asset write-down charges
$2 to $4

$7 to $17
Acquisition and integration costs
$2 to $6

$28 to $38
Depreciation, amortization and accretion
$252 to $257
 
$1,003 to $1,023
Amortization of prepaid lease purchase price adjustments
$4 to $6
 
$18 to $20
Interest expense and amortization of deferred financing costs(a)
$139 to $144
 
$569 to $579
Gains (losses) on retirement of long-term obligations
$0 to $0

$45 to $45
Interest income
$(1) to $1
 
$(2) to $0
Other income (expense)
$2 to $4

$14 to $16
Benefit (provision) for income taxes
$(1) to $3
 
$(1) to $7
Stock-based compensation expense
$13 to $15

$58 to $63
Adjusted EBITDA(b)
$521 to $526
 
$2,100 to $2,115
(a)
See the reconciliation of "components of interest expense and amortization of deferred financing costs" herein for a discussion of non-cash interest expense.
(b)
The above reconciliation excludes line items included in our Adjusted EBITDA definition which are not applicable for the periods shown.

FFO and AFFO for the quarter ending September 30, 2014 and the year ending December 31, 2014 are forecasted as follows (based upon updated definitions):
 
Q3 2014
 
Full Year 2014
(in millions, except share and per share amounts)
Outlook
 
Outlook
Net income
$81 to $114
 
$292 to $376
Real estate related depreciation, amortization and accretion
$248 to $251
 
$985 to $1,000
Asset write-down charges
$2 to $4
 
$7 to $17
Adjustment for noncontrolling interest (a)
$(2) to $2
 
$(7) to $1
Dividends on preferred stock
$(11) to $(11)
 
$(44) to $(44)
FFO(c)
$337 to $342
 
$1,286 to $1,301
 

 

FFO (from above)
$337 to $342
 
$1,286 to $1,301
Adjustments to increase (decrease) FFO:

 

Straight-line revenue
$(49) to $(44)
 
$(193) to $(183)
Straight-line expense
$24 to $29
 
$100 to $110
Stock-based compensation expense
$13 to $15
 
$58 to $63
Non-cash portion of tax provision
$(4) to $1
 
$(13) to $2
Non-real estate related depreciation, amortization and accretion
$4 to $6
 
$18 to $23
Amortization of non-cash interest expense
$19 to $23
 
$75 to $86
Other (income) expense
$2 to $4
 
$14 to $16
Gains (losses) on retirement of long-term obligations
$0 to $0
 
$45 to $45
Acquisition and integration costs
$2 to $6
 
$28 to $38
Adjustment for noncontrolling interest (a)
$2 to $(2)
 
$7 to $(1)
Capital improvement capital expenditures
$(14) to $(12)
 
$(34) to $(32)
Corporate capital expenditures
$(17) to $(15)
 
$(46) to $(44)
AFFO(c)
$332 to $337
 
$1,376 to $1,391
Weighted average common shares outstanding — diluted (b)
333.1
 
333.1
AFFO per share (c)
$1.00 to $1.01
 
$4.13 to $4.18
(a)
Inclusive of the noncontrolling interest related to real estate related depreciation, amortization and accretion and asset write-downs.
(b)
Based on diluted shares outstanding as of June 30, 2014.
(c)
See "Non-GAAP Financial Measures and Other Calculations" herein for a discussion of the definitions of FFO and AFFO.


The Foundation for a Wireless World.
CrownCastle.com


News Release continued:
 
Page 8

Organic Site Rental Revenue growth for the year ending December 31, 2014 is forecasted as follows:
 
Midpoint of Full Year
 
 
(in millions of dollars)
2014 Outlook
 
Full Year 2013
GAAP site rental revenues
$
2,995

 
$
2,504

Site rental straight-line revenues
(188
)
 
(219
)
Site Rental Revenues, as Adjusted(a)(c)
2,807

 
2,285

Cash adjustments:
 
 
 
FX and other
2

 
 
New tower acquisitions and builds
(379
)
 
 
Organic Site Rental Revenues(a)(b)(c)
$
2,430

 


Year-Over-Year Revenue Growth
 
 
 
GAAP site rental revenues
19.6
%
 
 
Site Rental Revenues, as Adjusted
22.9
%
 
 
Organic Site Rental Revenues(d)(e)
6.4
%
 
 

(a)
Includes amortization of prepaid rent.
(b)
Includes Site Rental Revenues, as Adjusted, from the construction of new small cell nodes.
(c)
See "Non-GAAP Financial Measures and Other Calculations" herein.
(d)Year-over-year Organic Site Rental Revenue growth for the year ending December 31, 2014:
 
Midpoint of Full Year 2014 Outlook
New leasing activity
5.4
%
Escalators
3.6
%
Organic Site Rental Revenue growth, before non-renewals
9.0
%
Non-renewals
(2.6
)%
Organic Site Rental Revenue growth
6.4
%
(e)
Calculated as the percentage change from Site Rental Revenues, as Adjusted, for the prior period when compared to Organic Site Rental Revenue for the current period.


The Foundation for a Wireless World.
CrownCastle.com


News Release continued:
 
Page 9

Organic Site Rental Revenue growth for the quarter ending June 30, 2014 is as follows:

 
Three Months Ended June 30,
(in millions of dollars)
2014
 
2013
Beginning towers as of June 30, 2013
31,601

 
 
Net tower additions/(dispositions)
9,760

 
 
Ending towers as of June 30, 2014
41,361

 
 
 
 
 
 
Reported GAAP site rental revenues
$
746

 
$
617

Site rental straight-line revenues
(52
)
 
(57
)
Site Rental Revenues, as Adjusted(a)
$
694

 
$
560

Cash adjustments:
 
 
 
FX and other
2

 
 
New tower acquisitions and builds
(99
)
 
 
Organic Site Rental Revenues(b)(c)
$
597

 
 
Year-Over-Year Revenue Growth
 
 
 
Reported GAAP site rental revenues
21.0
%
 
 
Site Rental Revenues, as Adjusted
24.0
%
 
 
Organic Site Rental Revenues(d)(e)
6.7
%
 
 

(a)
Includes amortization of prepaid rent.
(b)
Includes Site Rental Revenues, as Adjusted from the construction of new small cell nodes
(c)
See "Non-GAAP Financial Measures and Other Calculations" herein.
(d)
Quarter-over-quarter Organic Site Rental Revenue growth for the quarter ending June 30, 2014:
 
Three Months Ended June 30, 2014
New leasing activity
5.5
 %
Escalators
3.6
 %
Organic Site Rental Revenue growth, before non-renewals
9.1
 %
Non-renewals
(2.4
)%
Organic Site Rental Revenue Growth
6.7
 %
(e)
Calculated as the percentage change from Site Rental Revenues, as Adjusted, for the prior period when compared to Organic Site Rental Revenue for the current period.




The Foundation for a Wireless World.
CrownCastle.com


News Release continued:
 
Page 10

FFO and AFFO for the three and six months ended June 30, 2014 and 2013 are computed as follows:
 
For the Three Months Ended
 
For the Six Months Ended
 
(in millions, except share and per share amounts)
June 30, 2014
 
June 30, 2013
 
June 30, 2014
 
June 30, 2013
 
Net income
$
35.4

 
$
53.4

 
$
138.2

 
$
70.1

 
Real estate related depreciation, amortization and accretion
249.5

 
188.0

 
493.9

 
369.8

 
Asset write-down charges
3.1

 
3.1

 
5.9

 
6.8

 
Adjustment for noncontrolling interest (a)
(1.3
)
 
(1.0
)
 
(2.6
)
 
(2.3
)
 
Dividends on preferred stock
(11.0
)
 
—

 
(22.0
)
 
—

 
FFO(c)
$
275.6

(e) 
$
243.5

(d) 
$
613.3

(e) 
$
444.4

(d) 
Weighted average common shares outstanding — diluted
333.1

 
292.7

 
333.0

 
292.6

 
FFO per share(c)
$
0.83

 
$
0.83

 
$
1.84

 
$
1.52

 
 
 
 
 
 
 
 
 
 
FFO (from above)
275.6

 
243.5

 
613.3

 
444.4

 
Adjustments to increase (decrease) FFO:
 
 
 
 
 
 
 
 
Straight-line revenue
(52.1
)
 
(56.9
)
 
(102.9
)
 
(116.3
)
 
Straight-line expense
27.4

 
20.6

 
53.8

 
41.3

 
Stock-based compensation expense
18.2

 
9.6

 
31.1

 
19.7

 
Non-cash portion of tax provision
(2.6
)
 
34.7

(b)
(4.9
)
 
50.8

 
Non-real estate related depreciation, amortization and accretion
4.8

 
2.6

 
10.5

 
7.3

 
Amortization of non-cash interest expense
20.6

 
20.6

 
41.5

 
57.5

 
Other (income) expense
6.1

 
(0.5
)
 
8.8

 
0.1

 
Gains (losses) on retirement of long-term obligations
44.6

 
0.6

 
44.6

 
36.5

 
Acquisition and integration costs
19.2

 
7.2

 
24.9

 
8.8

 
Adjustment for noncontrolling interest (a)
1.3

 
1.0

 
2.6

 
2.3

 
Capital improvement capital expenditures
(4.5
)
 
(2.4
)
 
(8.3
)
 
(5.7
)
 
Corporate capital expenditures
(8.2
)
 
(7.7
)
 
(15.7
)
 
(11.2
)
 
AFFO(c)
$
350.5

 
$
272.9

 
$
699.3

 
$
535.4

 
Weighted average common shares outstanding — diluted
333.1

 
292.7

 
333.0

 
292.6

 
AFFO per share(c)
$
1.05

 
$
0.93

 
$
2.10

 
$
1.83

 
 
 
 
 
 
 
 
 
 
AFFO (from above)
$
350.5

 
$
272.9

 
$
699.3

 
$
535.4

 
Prepaid rent received
83.6

 
45.9

 
151.8

 
89.7

 
Amortization of prepaid rent
(22.1
)
 
(14.9
)
 
(41.5
)
 
(30.0
)
 
AFFO, as previously defined (c)
$
412.0

 
$
303.9

 
$
809.6

 
$
595.2

 
(a)
Inclusive of the noncontrolling interest related to real estate related depreciation, amortization and accretion and asset write-downs.
(b)
Adjusts the income tax provision for 2013 to reflect our estimate of the cash taxes had we been a REIT, which predominately relates to foreign taxes paid. As a result, income tax expense (benefit) is lower by the amount of the adjustment.
(c)
See "Non-GAAP Financial Measures and Other Calculations" herein for a discussion of the definitions of FFO and AFFO.
(d)
FFO, as previously defined, for Q2 and year to date 2013 was previously reported as $276.2 million and $490.8 million, respectively, which is exclusive of the net impact from the update of the definition of $32.7 million and $46.4 million, respectively, which amount includes the adjustment for non-cash portion of tax provision and excludes the adjustments for asset write down charges and noncontrolling interests.
(e)
FFO, as previously defined, for Q2 and year to date 2014 was $271.3 million and $605.2 million respectively, which is exclusive of the net impact from the update of the definition of $4.3 million and $8.1 million, respectively, which amount includes the adjustment for non-cash portion of tax provision and excludes the adjustments for asset write-down charges and noncontrolling interests.


The Foundation for a Wireless World.
CrownCastle.com


News Release continued:
 
Page 11

Other Calculations:

The components of interest expense and amortization of deferred financing costs for the three months ended June 30, 2014 and 2013 are as follows:
 
For the Three Months Ended
(in millions)
June 30, 2014
 
June 30, 2013
Interest expense on debt obligations
$
123.9

 
$
119.7

Amortization of deferred financing costs
5.5

 
5.0

Amortization of adjustments on long-term debt
(0.9
)
 
(1.0
)
Amortization of interest rate swaps(a)
16.2

 
16.2

Other, net
(0.2
)
 
0.3

Interest expense and amortization of deferred financing costs
$
144.5

 
$
140.3

(a)
Relates to the amortization of interest rate swaps; the swaps were cash settled in prior periods.


The components of interest expense and amortization of deferred financing costs for the quarter ending September 30, 2014 and the year ending December 31, 2014 are forecasted as follows:
 
Q3 2014
 
Full Year 2014
(in millions)
Outlook
 
Outlook
Interest expense on debt obligations
$121 to $123

$488 to $498
Amortization of deferred financing costs
$5 to $6

$21 to $23
Amortization of adjustments on long-term debt
$(1) to $0

$(5) to $(3)
Amortization of interest rate swaps (a)
$15 to $17

$60 to $65
Other, net
$0 to $0

$(1) to $1
Interest expense and amortization of deferred financing costs
$139 to $144
 
$569 to $579
(a)
Relates to the amortization of interest rate swaps, all of which has been cash settled in prior periods.




The Foundation for a Wireless World.
CrownCastle.com


News Release continued:
 
Page 12

Debt balances and maturity dates as of June 30, 2014 are as follows:
(in millions)
 
 
 
 
Face Value
 
Final Maturity
Revolver
$
334.0

 
Nov. 2018/Jan 2019
Term Loan A
654.2

 
Nov. 2018/Jan 2019
Term Loan B
2,849.8

 
Jan. 2019/Jan. 2021
4.875% Senior Notes
850.0

 
Apr. 2022
5.25% Senior Notes
1,650.0

 
Jan. 2023
2012 Secured Notes(a)
1,500.0

 
Dec. 2017/Apr. 2023
Senior Secured Notes, Series 2009-1(b)
170.3

 
Various
Senior Secured Tower Revenue Notes, Series 2010-2-2010-3(c)
1,600.0

 
Various
Senior Secured Tower Revenue Notes, Series 2010-4-2010-6(d)
1,550.0

 
Various
WCP Secured Wireless Site Contracts Revenue Notes, Series 2010-1(e)
268.5


Nov. 2040
Capital Leases and Other Obligations
142.0

 
Various
Total Debt
$
11,568.8

 
 
Less: Cash and Cash Equivalents(f)
$
227.5

 
 
Net Debt
$
11,341.3

 
 
(a)
The 2012 Secured Notes consist of $500 million aggregate principal amount of 2.381% secured notes due 2017 and $1.0 billion aggregate principal amount of 3.849% secured notes due 2023.
(b)
The Senior Secured Notes, Series 2009-1 consist of $100.3 million of principal as of June 30, 2014 that amortizes during the period beginning January 2010 and ending in 2019, and $70.0 million of principal that amortizes during the period beginning in 2019 and ending in 2029.
(c)
The Senior Secured Tower Revenue Notes Series 2010-2 and 2010-3 have principal amounts of $350.0 million and $1.25 billion with anticipated repayment dates of 2017 and 2020, respectively.
(d)
The Senior Secured Tower Revenue Notes Series 2010-4, 2010-5 and 2010-6 have principal amounts of $250.0 million, $300.0 million and $1.0 billion with anticipated repayment dates of 2015, 2017 and 2020, respectively.
(e)
The WCP Secured Wireless Site Contracts Revenue Notes, Series 2010-1 ("WCP Securitized Notes") were assumed in connection with the WCP acquisition. If the WCP Securitized Notes are not repaid in full by their anticipated repayment dates in 2015, the applicable interest rate increases by an additional approximately 5% per annum. If the WCP Securitized Notes are not repaid in full by their rapid amortization date of 2017, monthly principal payments commence.
(f)
Excludes restricted cash.


Net Debt to Last Quarter Annualized EBITDA is computed as follows:
 
For the Three Months Ended June 30,
(in millions)
2014
Total face value of debt
$
11,568.8

Ending cash and cash equivalents
227.5

Total Net Debt
$
11,341.3

 
 
Adjusted EBITDA for the three months ended June 30,
$
530.6

Last quarter annualized adjusted EBITDA
2,122.4

Net Debt to Last Quarter Annualized Adjusted EBITDA
5.3x



Sustaining capital expenditures for the three months ended June 30, 2014 and 2013 is computed as follows:
 
For the Three Months Ended
(in millions)
June 30, 2014
 
June 30, 2013
Capital Expenditures
$
166.8

 
$
138.5

Less: Land purchases
24.9

 
26.9

Less: Wireless infrastructure construction and improvements
129.3

 
101.5

Sustaining capital expenditures
$
12.6

 
$
10.1



The Foundation for a Wireless World.
CrownCastle.com


News Release continued:
 
Page 13

Cautionary Language Regarding Forward-Looking Statements

This press release contains forward-looking statements and information that are based on our management's current expectations. Such statements include, but are not limited to, plans, projections, Outlook and estimates regarding (i) carrier network investment, and potential benefits derived therefrom, (ii) our strategic and competitive position, (iii) integration of the AT&T tower transaction, including timing, (iv) potential benefits and returns which may be derived from our business, our investments and our acquisitions, (v) demand for our sites and services, (vi) leasing activity, including the impact on our results and Outlook, (vii) our growth, (viii) dividends, including our dividend plans, timing and the amount and growth of any dividends, (ix) currency exchange rates, (x) capital expenditures, including sustaining capital expenditures, (xi) non-renewal of leases and the impact therefrom, (xii) the impact of the iDEN network decommissioning, (xiii) timing items, (xiv) general and administrative expenses, (xv) site rental revenues and Site Rental Revenues, as Adjusted, (xvi) site rental cost of operations, (xvii) site rental gross margin and network services gross margin, (xviii) Adjusted EBITDA, (xix) interest expense and amortization of deferred financing costs, (xx) FFO, including on a per share basis, (xxi) AFFO, including on a per share basis, (xxii) Organic Site Rental Revenues and Organic Site Rental Revenues growth, (xxiii) net income (loss), including on a per share basis, (xxiv) prepaid rents, (xxv) our common shares outstanding, including on a diluted basis, (xxvi) the utility of certain financial measures, including non-GAAP financial measures, and (xxvii) the utility of our updated definitions of FFO and AFFO. Such forward-looking statements are subject to certain risks, uncertainties and assumptions, including but not limited to prevailing market conditions and the following:

•
Our business depends on the demand for wireless communications and wireless infrastructure, and we may be adversely affected by any slowdown in such demand. Additionally, a reduction in carrier network investment may materially and adversely affect our business (including reducing demand for new tenant additions and network services).
•
A substantial portion of our revenues is derived from a small number of customers, and the loss, consolidation or financial instability of any of our limited number of customers may materially decrease revenues or reduce demand for our wireless infrastructure and network services.
•
Our substantial level of indebtedness could adversely affect our ability to react to changes in our business, and the terms of our debt instruments limit our ability to take a number of actions that our management might otherwise believe to be in our best interests. In addition, if we fail to comply with our covenants, our debt could be accelerated.
•
We have a substantial amount of indebtedness. In the event we do not repay or refinance such indebtedness, we could face substantial liquidity issues and might be required to issue equity securities or securities convertible into equity securities, or sell some of our assets to meet our debt payment obligations.
•
Sales or issuances of a substantial number of shares of our common stock may adversely affect the market price of our common stock.
•
As a result of competition in our industry, including from some competitors with significantly more resources or less debt than we have, we may find it more difficult to achieve favorable rental rates on our new or renewing customer contracts.
•
The business model for our small cell operations contains differences from our traditional site rental business, resulting in different operational risks. If we do not successfully operate that business model or identify or manage those operational risks, such operations may produce results that are less than anticipated.
•
New technologies may significantly reduce demand for our wireless infrastructure and negatively impact our revenues.
•
New wireless technologies may not deploy or be adopted by customers as rapidly or in the manner projected.
•
If we fail to retain rights to our wireless infrastructure, including the land under our sites, our business may be adversely affected.
•
Our network services business has historically experienced significant volatility in demand, which reduces the predictability of our results.
•
The expansion and development of our business, including through acquisitions, increased product offerings, or other strategic growth opportunities, may cause disruptions in our business, which may have an adverse effect on our business, operations or financial results.
•
If we fail to comply with laws and regulations which regulate our business and which may change at any time, we may be fined or even lose our right to conduct some of our business.
•
If radio frequency emissions from wireless handsets or equipment on our wireless infrastructure are demonstrated to cause negative health effects, potential future claims could adversely affect our operations, costs or revenues.
•
Certain provisions of our certificate of incorporation, bylaws and operative agreements and domestic and international competition laws may make it more difficult for a third party to acquire control of us or for us to acquire control of a third party, even if such a change in control would be beneficial to our stockholders.
•
We may be adversely affected by our exposure to changes in foreign currency exchange rates relating to our operations in Australia.


The Foundation for a Wireless World.
CrownCastle.com


News Release continued:
 
Page 14

•
Future dividend payments to our common stockholders will reduce the availability of our cash on hand available to fund future discretionary investments, and may result in a need to incur indebtedness or issue equity securities to fund growth opportunities. In such event, the then current economic, credit market or equity market conditions may impact the availability or cost of such financing, which could hinder our ability to grow our per share results of operations.
•
Qualifying and remaining qualified to be taxed as a REIT involves highly technical and complex provisions of the US Internal Revenue Code. Failure to remain qualified as a REIT would result in our inability to deduct dividends to stockholders when computing our taxable income, which would reduce our available cash.
•
Complying with REIT requirements, including the 90% distribution requirement, may limit our flexibility or cause us to forgo otherwise attractive opportunities, including certain discretionary investments and potential financing alternatives.
•
If we fail to pay scheduled dividends on the 4.50% Mandatory Convertible Preferred Stock, in cash, common stock or any combination of cash and common stock, we will be prohibited from paying dividends on our Common Stock, which may jeopardize our status as a REIT.
•
We have limited experience operating as a REIT. Our failure to successfully operate as a REIT may adversely affect our financial condition, cash flow, the per share trading price of our common stock, or our ability to satisfy debt service obligations.
•
We expect to pursue certain REIT-related ownership limitations and transfer restrictions with respect to our capital stock.
Should one or more of these or other risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those expected. More information about potential risk factors which could affect our results is included in our filings with the SEC.




The Foundation for a Wireless World.
CrownCastle.com


News Release continued:
 
Page 15

CROWN CASTLE INTERNATIONAL CORP.
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
(in thousands)

 
June 30,
2014
 
December 31,
2013
 
 
 
 
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
227,479

 
$
223,394

Restricted cash
155,725

 
183,526

Receivables, net
304,015

 
249,925

Prepaid expenses
150,873

 
132,003

Deferred income tax assets
33,379

 
26,714

Other current assets
76,275

 
77,121

Total current assets
947,746

 
892,683

Deferred site rental receivables
1,180,646

 
1,078,995

Property and equipment, net
8,888,426

 
8,947,677

Goodwill
4,939,755

 
4,916,426

Other intangible assets, net
3,922,063

 
4,057,865

Deferred income tax assets
13,283

 
19,008

Long-term prepaid rent, deferred financing costs and other assets, net
780,140

 
682,254

Total assets
$
20,672,059

 
$
20,594,908

 
 
 
 
LIABILITIES AND EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
132,529

 
$
145,390

Accrued interest
66,848

 
65,582

Deferred revenues
320,134

 
260,114

Other accrued liabilities
170,743

 
181,715

Current maturities of debt and other obligations
105,624

 
103,586

Total current liabilities
795,878

 
756,387

Debt and other long-term obligations
11,464,627

 
11,490,914

Deferred income tax liabilities
54,123

 
56,513

Deferred credits and other liabilities
1,477,995

 
1,349,919

Total liabilities
13,792,623

 
13,653,733

Commitments and contingencies

 

CCIC stockholders' equity:
 
 
 
Common stock, $.01 par value; 600,000,000 shares authorized; shares issued and outstanding: June 30, 2014—333,861,080 and December 31, 2013—334,070,016
3,339

 
3,341

4.50% Mandatory Convertible Preferred Stock, Series A, $.01 par value; 20,000,000 shares authorized; shares issued and outstanding: June 30, 2014 and December 31, 2013—9,775,000; aggregate liquidation value: June 30, 2014 and December 31, 2013—$977,500
98

 
98

Additional paid-in capital
9,488,414

 
9,482,769

Accumulated other comprehensive income (loss)
26,205

 
(23,612
)
Dividends/distributions in excess of earnings
(2,656,718
)
 
(2,535,879
)
Total CCIC stockholders' equity
6,861,338

 
6,926,717

Noncontrolling interest
18,098

 
14,458

Total equity
6,879,436

 
6,941,175

Total liabilities and equity
$
20,672,059

 
$
20,594,908




The Foundation for a Wireless World.
CrownCastle.com


News Release continued:
 
Page 16

CROWN CASTLE INTERNATIONAL CORP.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
(in thousands)

 
Three Months Ended June 30,
 
Six Months Ended
June 30,
 
2014
 
2013
 
2014
 
2013
Net revenues:
 
 
 
 
 
 
 
Site rental
$
746,340

 
$
616,849

 
$
1,493,502

 
$
1,232,264

Network services and other
170,005

 
118,079

 
298,793

 
242,724

Net revenues
916,345

 
734,928

 
1,792,295

 
1,474,988

Operating expenses:
 
 
 
 
 
 
 
Costs of operations (exclusive of depreciation, amortization and accretion):
 
 
 
 
 
 
 
Site rental
236,991

 
179,015

 
465,067

 
356,621

Network services and other
103,447

 
70,199

 
176,321

 
147,576

General and administrative
69,153

 
54,790

 
134,002

 
113,035

Asset write-down charges
3,136

 
3,097

 
5,869

 
6,812

Acquisition and integration costs
19,197

 
7,215

 
24,856

 
8,817

Depreciation, amortization and accretion
254,235

 
190,651

 
504,426

 
377,110

Total operating expenses
686,159

 
504,967

 
1,310,541

 
1,009,971

Operating income (loss)
230,186

 
229,961

 
481,754

 
465,017

Interest expense and amortization of deferred financing costs
(144,534
)
 
(140,256
)
 
(290,934
)
 
(304,625
)
Gains (losses) on retirement of long-term obligations
(44,629
)
 
(577
)
 
(44,629
)
 
(36,486
)
Interest income
189

 
328

 
362

 
625

Other income (expense)
(6,063
)
 
507

 
(8,799
)
 
(122
)
Income (loss) before income taxes
35,149

 
89,963

 
137,754

 
124,409

Benefit (provision) for income taxes
208

 
(36,587
)
 
396

 
(54,295
)
Net income (loss)
35,357

 
53,376

 
138,150

 
70,114

Less: net income (loss) attributable to the noncontrolling interest
1,348

 
1,017

 
2,644

 
2,293

Net income (loss) attributable to CCIC stockholders
34,009

 
52,359

 
135,506

 
67,821

Dividends on preferred stock
(10,997
)
 
—

 
(21,994
)
 
—

Net income (loss) attributable to CCIC common stockholders
$
23,012

 
$
52,359

 
$
113,512

 
$
67,821

 
 
 
 
 
 
 
 
Net income (loss) attributable to CCIC common stockholders, per common share:
 
 
 
 
 
 
 
Basic
$
0.07

 
$
0.18

 
$
0.34

 
$
0.23

Diluted
$
0.07

 
$
0.18

 
$
0.34

 
$
0.23

 
 
 
 
 
 
 
 
Weighted-average common shares outstanding (in thousands):
 
 
 
 
 
 
 
Basic
332,344

 
291,225

 
332,189

 
291,164

Diluted
333,081

 
292,706

 
333,034

 
292,570




The Foundation for a Wireless World.
CrownCastle.com


News Release continued:
 
Page 17

CROWN CASTLE INTERNATIONAL CORP.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(in thousands)
 
Six Months Ended June 30,
 
2014
 
2013
Cash flows from operating activities:
 
 
 
Net income (loss)
$
138,150

 
$
70,114

Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities:
 
 
 
Depreciation, amortization and accretion
504,426

 
377,110

Gains (losses) on retirement of long-term obligations
44,629

 
36,486

Amortization of deferred financing costs and other non-cash interest
41,485

 
57,471

Stock-based compensation expense
27,373

 
19,472

Asset write-down charges
5,869

 
6,812

Deferred income tax benefit (provision)
(4,885
)
 
50,143

Other adjustments, net
(1,328
)
 
1,291

Changes in assets and liabilities, excluding the effects of acquisitions:
 
 
 
Increase (decrease) in liabilities
171,148

 
82,652

Decrease (increase) in assets
(163,191
)
 
(141,524
)
Net cash provided by (used for) operating activities
763,676

 
560,027

Cash flows from investing activities:
 
 
 
Payments for acquisition of businesses, net of cash acquired
(90,442
)
 
(27,280
)
Capital expenditures
(309,740
)
 
(254,820
)
Other investing activities, net
2,378

 
6,644

Net cash provided by (used for) investing activities
(397,804
)
 
(275,456
)
Cash flows from financing activities:
 
 
 
Proceeds from issuance of long-term debt
845,750

 
30,941

Principal payments on debt and other long-term obligations
(55,385
)
 
(51,085
)
Purchases and redemptions of long-term debt
(836,899
)
 
(675,480
)
Purchases of capital stock
(21,730
)
 
(98,867
)
Borrowings under revolving credit facility
494,000

 
48,000

Payments under revolving credit facility
(534,000
)
 
(255,000
)
Payments for financing costs
(15,834
)
 
(5,654
)
Net decrease (increase) in restricted cash
24,386

 
411,048

Dividends/distributions paid on common stock
(233,684
)
 
—

Dividends paid on preferred stock
(22,360
)
 
—

Net cash provided by (used for) financing activities
(355,756
)
 
(596,097
)
Effect of exchange rate changes on cash
(6,031
)
 
(2,952
)
Net increase (decrease) in cash and cash equivalents
4,085

 
(314,478
)
Cash and cash equivalents at beginning of period
223,394

 
441,364

Cash and cash equivalents at end of period
$
227,479

 
$
126,886

Supplemental disclosure of cash flow information:
 
 
 
Interest paid
248,183

 
212,592

Income taxes paid
12,690

 
10,242



The Foundation for a Wireless World.
CrownCastle.com


Q2 2014 Supplement
Exhibit 99.2













Supplemental Information Package
and Non-GAAP Reconciliations
Second Quarter • June 30, 2014




The Foundation for a Wireless World.
CrownCastle.com

Crown Castle International Corp.
Second Quarter 2014



TABLE OF CONTENTS
 
Page
Company Overview
 
Profile and Strategy
Historical Dividend and AFFO per Share
Portfolio Footprint
Corporate Information
Research Coverage
Historical Common Stock Data
Portfolio and Financial Highlights
6-7
Outlook - 3Q14 and Full Year 2014
7-8
Financials & Metrics
 
Consolidated Balance Sheet
Consolidated Statement of Operations
Segment Operating Results
FFO and AFFO Reconciliations
Consolidated Statement of Cash Flows
Site Rental Revenue Growth
Site Rental Gross Margin Growth
Summary of Straight-Line, Prepaid Rent Activity, and Capital Expenditures
Lease Renewal and Lease Distribution
Customer Overview
Asset Portfolio Overview
 
Summary of Tower Portfolio by Vintage
Portfolio Overview
19-20
Ground Interest Overview
Ground Interest Activity
Small Cell Network Overview
Capitalization Overview
 
Capitalization Overview
Debt Maturity Overview
Liquidity Overview
Maintenance and Financial Covenants
26-27
Interest Rate Sensitivity
Appendix

Cautionary Language Regarding Forward-Looking Statements
This supplemental information package ("Supplement") contains forward-looking statements and information that are based on our management's current expectations as of the date of this Supplement. Statements that are not historical facts are hereby identified as forward-looking statements. Words such as "Outlook", "guide", "forecast", "estimate", "anticipate", "project", "plan", "intend", "believe", "expect", "likely", "predicted", and any variations of these words and similar expressions are intended to identify such forward looking statements. Such statements include, but are not limited to, our Outlook for the second quarter of 2014 and full year 2014.

Such forward-looking statements are subject to certain risks, uncertainties and assumptions, including, but not limited to, prevailing market conditions. Should one or more of these or other risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those expected. More information about potential risk factors which could affect our results is included in our filings with the Securities and Exchange Commission. Crown Castle assumes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

The components of financial information presented herein, both historical and forward looking, may not sum due to rounding. Definitions and reconciliations of non-GAAP measures, including FFO and AFFO, are provided in the Appendix to this Supplement.

As used herein, the term "including" and any variation thereof, means "including without limitation." The use of the word "or" herein is not exclusive.

1
Crown Castle International Corp.
Second Quarter 2014
COMPANY
OVERVIEW
 FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX


COMPANY PROFILE 
Crown Castle International Corp. (to which the terms "Crown Castle," "CCIC," "we," "our," "our Company," "the Company" or "us" as used herein refer) owns, operates and leases shared wireless infrastructure, including: (1) towers and other structures, such as rooftops (collectively, "towers"), and to a lesser extent, (2) distributed antenna systems, a type of small cell network ("small cells"), and (3) interests in land under third party towers in various forms ("third party land interests") (collectively, "wireless infrastructure"). Crown Castle offers significant wireless communications coverage in each of the top 100 US markets and to substantially all of the Australian population. Crown Castle owns, operates and manages approximately 40,000 and 1,800 towers in the US and Australia, respectively.
Our core business is providing access, including space or capacity, to our towers, and to a lesser extent, to our small cells and third party land interests via long-term contracts in various forms, including license, sublease and lease agreements (collectively, "contracts"). Our wireless infrastructure can accommodate multiple customers ("co-location") for antennas or other equipment necessary for the transmission of signals for wireless communication devices. We seek to increase our site rental revenues by adding more tenants on our wireless infrastructure, which we expect to result in significant incremental cash flows due to our relatively fixed operating costs.
Effective January 1, 2014, Crown Castle commenced operating as a Real Estate Investment Trust ("REIT") for U.S. federal income tax purposes as it relates to our towers and third party land interests, excluding our operations in Australia.

STRATEGY 
Our strategy is to translate anticipated demand for our wireless infrastructure into growth in our cash flows and long-term stockholder value. We measure "long-term stockholder value" as the combined growth in our per share results and dividends to common stockholders. The key elements of our strategy are to:
•
Organically grow the cash flows from our wireless infrastructure. We seek to maximize the site rental cash flows derived from our wireless infrastructure by co-locating additional tenants on our wireless infrastructure through long-term contracts as our customers deploy and improve their wireless networks. We seek to maximize new tenant additions or modifications of existing installations (collectively, "new tenant additions") through our focus on customer service and deployment speed. Due to the relatively fixed nature of the costs to operate our wireless infrastructure (which tend to increase at approximately the rate of inflation), we expect increases in cash rental receipts from new tenant additions and the related subsequent impact from contracted escalations to result in growth in our operating cash flows. We believe there is considerable additional future demand for our existing wireless infrastructure based on their location and the anticipated growth in the wireless communications industry. Substantially all of our wireless infrastructure can accommodate additional tenancy, either as currently constructed or with appropriate modifications to the structure, which we expect to have high incremental returns.

•
Allocate capital efficiently. We seek to allocate our available capital, including the net cash provided by our operating activities, in a manner that will increase long-term stockholder value, including dividends to common stockholders. Our historical discretionary investments have included the following (in no particular order):
▪
purchase shares of our common stock ("common stock") from time to time;
▪
acquire or construct wireless infrastructure;
▪
acquire land interests under towers;
▪
make improvements and structural enhancements to our existing wireless infrastructure; or
▪
purchase, repay or redeem our debt.

Our long-term strategy is based on our belief that additional demand for our wireless infrastructure will be created by the expected continued growth in the wireless communications industry, which is predominately driven by the demand for wireless data services by consumers. We believe that additional demand for wireless infrastructure will create future growth opportunities for us. We believe that such demand for our wireless infrastructure will continue, will result in organic growth of our cash flows due to new tenant additions on our existing wireless infrastructure, and will create other growth opportunities for us, such as demand for new wireless infrastructure.




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Crown Castle International Corp.
Second Quarter 2014
COMPANY
OVERVIEW
 FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX


HISTORICAL DIVIDEND AND AFFO PER SHARE (1)

GLOBAL FOOTPRINT
U.S. FOOTPRINT
 
AUSTRALIAN FOOTPRINT
    
    
(1)
See reconciliations and definitions provided herein. See also "Definitions of Non-GAAP Financial Measures and Other Calculations" in the Appendix for a discussion of the definitions of FFO and AFFO.
(2)
Last quarter annualized ("LQA") calculated as the most recently completed quarterly period times four.

3
Crown Castle International Corp.
Second Quarter 2014
COMPANY
OVERVIEW
 FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX


GENERAL COMPANY INFORMATION
Principal executive offices
1220 Augusta Drive, Suite 600, Houston, TX 77057
Common shares trading symbol
CCI
Stock exchange listing
New York Stock Exchange
Fiscal year ending date
December 31
Fitch - Long Term Issuer Default Rating
BB
Moody’s - Long Term Corporate Family Rating
Ba2
Standard & Poor’s - Long Term Local Issuer Credit Rating
BB

Note: These credit ratings may not reflect the potential risks relating to the structure or trading of the Company’s securities and are provided solely for informational purposes. Credit ratings are not recommendations to buy, sell or hold any security, and may be revised or withdrawn at any time by the issuing organization in its sole discretion. The Company does not undertake any obligation to maintain the ratings or to advise of any change in the ratings. Each agency’s rating should be evaluated independently of any other agency’s rating. An explanation of the significances of the ratings can be obtained from each of the ratings agencies.

EXECUTIVE MANAGEMENT TEAM
Name
Age
Years with Company
Position
W. Benjamin Moreland
50
14
President and Chief Executive Officer
Jay A. Brown
41
14
Senior Vice President, Chief Financial Officer and Treasurer
James D. Young
52
8
Senior Vice President and Chief Operating Officer
E. Blake Hawk
64
15
Executive Vice President and General Counsel
Patrick Slowey
57
13
Senior Vice President and Chief Commercial Officer
Philip M. Kelley
41
17
Senior Vice President-Corporate Development and Strategy

BOARD OF DIRECTORS
Name
Position
Committees
Age
Years as Director
J. Landis Martin
Chairman
NCG(1) 
68
17
P. Robert Bartolo
Director
Audit
42
<1
Cindy Christy
Director
NCG(1), Strategy
48
6
Ari Q. Fitzgerald
Director
Compensation, Strategy
51
11
Robert E. Garrison II
Director
Audit, Compensation
72
9
Dale N. Hatfield
Director
NCG(1), Strategy
76
12
Lee W. Hogan
Director
Audit, Compensation, Strategy
69
13
Edward C. Hutcheson
Director
Strategy
68
17
John P. Kelly
Director
Strategy
56
14
Robert F. McKenzie
Director
Audit, Strategy
70
19
W. Benjamin Moreland
Director
 
50
7
    
(1)
Nominating & Corporate Governance Committee


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Crown Castle International Corp.
Second Quarter 2014
COMPANY
OVERVIEW
 FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX

RESEARCH COVERAGE
Equity Research
Bank of America
David Barden
(646) 855-1320
Barclays
Amir Rozwadowski
(212) 526-4043
Canaccord Genuity
Greg Miller
(212) 389-8128
Citigroup
Michael Rollins
(212) 816-1116
Cowen and Company
Colby Synesael
(646) 562-1355
Credit Suisse
Joseph Mastrogiovanni
(212) 325-3757
Evercore Partners
Jonathan Schildkraut
(212) 497-0864
Jefferies
Mike McCormack
(212) 284-2516
JPMorgan
Philip Cusick
(212) 622-1444
Macquarie
Kevin Smithen
(212) 231-0695
Morgan Stanley
Simon Flannery
(212) 761-6432
New Street Research
Jonathan Chaplin
(212) 921-9876
Nomura
Adam Ilkowitz
(212) 298-4121
Oppenheimer & Co.
Timothy Horan
(212) 667-8137
Pacific Crest Securities
Michael Bowen
(503) 727-0721
Raymond James
Ric Prentiss
(727) 567-2567
RBC Capital Markets
Jonathan Atkin
(415) 633-8589
UBS
Batya Levi
(212) 713-8824
Wells Fargo Securities, LLC
Jennifer Fritzsche
(312) 920-3548
 
 
 
 
 
Rating Agency
Fitch
John Culver
(312) 368-3216
Moody’s
Christopher Wimmer
(212) 553-2947
Standard & Poor’s
Michael Weinstein
(212) 438-4861

HISTORICAL COMMON STOCK DATA
 
Three Months Ended
(in millions, except per share data)
6/30/14
3/31/14
12/31/13
9/30/13
6/30/13
High price(1)
$
77.58

$
75.82

$
76.49

$
77.26

$
80.39

Low price(1)
$
70.95

$
67.79

$
69.21

$
66.10

$
66.32

Period end closing price(2)
$
74.26

$
73.43

$
72.74

$
72.34

71.71

Dividends paid per common share
$
0.35

$
0.35

—

—

—

Volume weighted average price for the period(1)
$
74.56

$
72.58

$
73.58

$
70.99

$
72.06

Common shares outstanding - diluted, at period end
333

333

334

293

294

Market value of outstanding common shares, at period end(3)
$
24,793

$
24,510

$
24,299

$
21,173

20,988

    
(1)
Based on the sales price, adjusted for dividends, as reported by Bloomberg.
(2)
Based on the period end closing price as reported by Bloomberg.
(3)
Period end market value of outstanding common shares is calculated as the product of (a) basic shares of common stock outstanding at period end and (b) closing share price at period end, adjusted for dividends, as reported by Bloomberg.



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OVERVIEW
 FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX

SUMMARY PORTFOLIO HIGHLIGHTS
(as of June 30, 2014)
U.S.
Australia
Number of towers(1)
39,600

1,761

Average number of tenants per tower
2.3

2.3

Remaining contracted customer receivables ($ in billions)(2)
$
21

$
1

Weighted average remaining customer contract term (years)(3)
7

6

Percent of towers in the Top 50 / 100 Basic Trading Areas
56% / 71%

Not Applicable

Percent of ground leased / owned (by site rental gross margin)
66% / 34%

87% / 13%

Weighted average maturity of ground leases (years)(4)
30

18


SUMMARY FINANCIAL HIGHLIGHTS
 
Three Months Ended June 30,
 
Six Months Ended June 30,
(dollars in thousands, except per share amounts)
2014
 
2013
 
2014
 
2013
Operating Data:
 
 
 
 
 
 
 
Net revenues
 
 
 
 
 
 
 
Site rental
$
746,340

 
$
616,849

 
$
1,493,502

 
$
1,232,264

Network services and other
170,005

 
118,079

 
298,793

 
242,724

Net revenues
$
916,345

 
$
734,928

 
$
1,792,295

 
$
1,474,988

 
 
 
 
 
 
 
 
Gross margin
 
 
 
 
 
 
 
Site rental
$
509,349

 
$
437,834

 
$
1,028,435

 
$
875,643

Network services and other
66,558

 
47,880

 
122,472

 
95,148

Total gross margin
$
575,907

 
$
485,714

 
$
1,150,907

 
$
970,791

 
 
 
 
 
 
 
 
Net income (loss) attributable to CCIC common stockholders
$
23,012

 
$
52,359

 
$
113,512

 
$
67,821

Net income (loss) attributable to CCIC common stockholders per share - diluted
0.07

 
0.18

 
0.34

 
0.23

 
 
 
 
 
 
 
 
Non-GAAP Data(5):
 
 
 
 
 
 
 
Adjusted EBITDA
$
530,629

 
$
444,395

 
$
1,057,612

 
$
885,189

FFO(6)
275,632

 
243,496

 
613,285

 
444,428

AFFO
350,526

 
272,877

 
699,270

 
535,449

AFFO per share
$
1.05

 
$
0.93

 
$
2.10

 
$
1.83

 
 
 
 
 
 
 
 
Summary Cash Flow Data:
 
 
 
 
 
 
 
Net cash provided by (used for) operating activities
$
401,393

 
$
273,401

 
763,676

 
560,027

Net cash provided by (used for) investing activities(7)
(193,585
)
 
(146,440
)
 
(397,804
)
 
(275,456
)
Net cash provided by (used for) financing activities
(181,297
)
 
(159,610
)
 
(355,756
)
 
(596,097
)
    
(1)
Includes towers and rooftops, excludes small cells and third-party land interests.
(2)
Excludes renewal terms at customers' opinion.
(3)
Excludes renewal terms at customers' option, weighted by site rental revenues.
(4)
Includes renewal terms at the Company's option, weighted by site rental gross margin.
(5)
See reconciliations and definitions provided herein. See also "Definitions of Non-GAAP Measures and Other Terms" in the Appendix for a discussion of the definition of FFO and AFFO.
(6)
Calculated to present the periods shown in a manner which is consistent with our commencement of operations as a REIT on January 1, 2014.
(7)
Includes net cash used for acquisitions of approximately $28 million and $14 million for the three months ended June 30, 2014 and 2013, respectively, and $90 million and $27 million for the six months ended June 30, 2014 and 2013, respectively.




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OVERVIEW
 FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX

SUMMARY FINANCIAL HIGHLIGHTS (CONTINUED)
 
 
Three Months Ended June 30,
(dollars in thousands)
 
2014
 
2013
Other Data:
 
 
 
 
Net debt to last quarter annualized adjusted EBITDA
 
5.3x

 
6.0x

Dividend per common share
 
$
0.35

 
$
—

AFFO payout ratio(2)
 
33
%
 
—

 
 
 
 
 
(in thousands of dollars)
 
June 30, 2014
 
December 31, 2013
Balance Sheet Data (at period end):
 
 
 
 
Cash and cash equivalents
 
$
227,479

 
$
223,394

Property and equipment, net
 
8,888,426

 
8,947,677

Total assets
 
20,672,059

 
20,594,908

Total debt and other long-term obligations
 
11,570,251

 
11,594,500

Total CCIC stockholders' equity
 
6,861,338

 
6,926,717


OUTLOOK FOR THIRD QUARTER 2014 AND FULL YEAR 2014
(dollars in millions, except per share amounts)
Third Quarter 2014
Full Year 2014
Site rental revenues
$746 to $751
$2,990 to $3,000
Site rental cost of operations
$237 to $242
$933 to $943
Site rental gross margin
$506 to $511
$2,052 to $2,062
Adjusted EBITDA(2)
$521 to $526
$2,100 to $2,115
Interest expense and amortization of deferred financing costs(1)
$139 to $144
$569 to $579
FFO(2)
$337 to $342
$1,286 to $1,301
AFFO(2)
$332 to $337
$1,376 to $1,391
AFFO per share(2)(3)
$1.00 to $1.01
$4.13 to $4.18
Net income (loss)
$81 to $114
$292 to $376
Net income (loss) per share - diluted(3)
$0.24 to $0.34
$0.88 to $1.13
Net income (loss) attributable to CCIC common stockholders
$69 to $102
$243 to $327
Net income (loss) attributable to CCIC common stockholders per share - diluted(3)
$0.21 to $0.31
$0.73 to $0.98
    
(1)
See the reconciliation of "components of interest expense and amortization of deferred financing costs" in the Appendix.
(2)
See reconciliations and definitions provided herein.
(3)
Based on 333.1 million diluted shares outstanding as of June 30, 2014.

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CAPITALIZATION OVERVIEW
APPENDIX

OUTLOOK FOR FULL YEAR 2014
SITE RENTAL REVENUE GROWTH
(dollars in millions)
Midpoint of Full Year 2014 Outlook
Full Year 2013
Reported GAAP site rental revenues
$
2,995

$
2,504

Site rental straight-line revenues
(188
)
(219
)
Site Rental Revenues, as Adjusted(1)
$
2,807

$
2,285

Cash adjustments:
 
 
FX and other
2

 
New tower acquisitions and builds
(379
)
 
Organic Site Rental Revenues(2)(3)
$
2,430

 
Year-Over-Year Revenue Growth
 
 
Reported GAAP site rental revenues
19.6
%
 
Site Rental Revenues, as Adjusted
22.9
%
 
Organic Site Rental Revenues(4)
6.4
%
 
OUTLOOK FOR ORGANIC SITE RENTAL REVENUE GROWTH
 
Midpoint of Full Year 2014 Outlook
New leasing activity
5.4%
Escalators
3.6%
Organic Site Rental Revenue Growth, before non-renewals
9.0%
Non-renewals
(2.6)%
Organic Site Rental Revenue Growth(4)
6.4%
 
 
OUTLOOK FOR FULL YEAR 2014
SITE RENTAL GROSS MARGIN GROWTH
(dollars in millions)
Midpoint of Full Year 2014 Outlook
Full Year 2013
Reported GAAP site rental gross margin
$
2,057

$
1,779

Straight line revenues and expenses, net
(83
)
(138
)
Site Rental Gross Margin, as Adjusted(1)
$
1,974

$
1,640

Cash adjustments:
 
 
FX and other
—

 
New tower acquisitions and builds
(218
)
 
Organic Site Rental Gross Margin(2)(3)
$
1,756

 
Year-Over-Year Gross Margin Growth
 
 
Reported GAAP site rental gross margin
15.7
%
 
Site Rental Gross Margin, as Adjusted
20.3
%
 
Organic Site Rental Gross Margin(5)
7.0
%
 
Year-Over-Year Incremental Margin
 
 
Reported GAAP site rental gross margin
56.7
%
 
Site Rental Gross Margin, as Adjusted
63.9
%
 
Organic Site Rental Gross Margin(6)
79.6
%
 
    
(1)
Includes amortization of prepaid rent.
(2)
Includes Site Rental Revenues, as Adjusted, from the construction of new small cell nodes.
(3)
See definitions provided herein.
(4)
Calculated as the percentage change from Site Rental Revenues, as Adjusted, for the prior period when compared to Organic Site Rental Revenues for the current period.
(5)
Calculated as the percentage change from Site Rental Gross Margin, as Adjusted for the prior period when compared to Organic Site Rental Gross Margin in the current period.

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 FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX

(6)
Calculated as the change from Site Rental Gross Margin, as Adjusted for the prior period when compared to Organic Site Rental Gross Margin in the current period, divided by the change from Site Rental Revenues, as Adjusted in the prior period when compared to Organic Site Rental Revenues for the current period.

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FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX


CONSOLIDATED BALANCE SHEET (Unaudited)
(dollars in thousands, except share amounts)
June 30,
2014
 
December 31,
2013
 
 
 
 
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
227,479

 
$
223,394

Restricted cash
155,725

 
183,526

Receivables, net
304,015

 
249,925

Prepaid expenses
150,873

 
132,003

Deferred income tax assets
33,379

 
26,714

Other current assets
76,275

 
77,121

Total current assets
947,746

 
892,683

Deferred site rental receivables
1,180,646

 
1,078,995

Property and equipment, net
8,888,426

 
8,947,677

Goodwill
4,939,755

 
4,916,426

Other intangible assets, net
3,922,063

 
4,057,865

Deferred income tax assets
13,283

 
19,008

Long-term prepaid rent, deferred financing costs and other assets, net
780,140

 
682,254

Total assets
$
20,672,059

 
$
20,594,908

 
 
 
 
LIABILITIES AND EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
132,529

 
$
145,390

Accrued interest
66,848

 
65,582

Deferred revenues
320,134

 
260,114

Other accrued liabilities
170,743

 
181,715

Current maturities of debt and other obligations
105,624

 
103,586

Total current liabilities
795,878

 
756,387

Debt and other long-term obligations
11,464,627

 
11,490,914

Deferred income tax liabilities
54,123

 
56,513

Deferred credits and other liabilities
1,477,995

 
1,349,919

Total liabilities
13,792,623

 
13,653,733

Commitments and contingencies

 

CCIC stockholders' equity:
 
 
 
Common stock, $.01 par value; 600,000,000 shares authorized; shares issued and outstanding: June 30, 2014—333,861,080 and December 31, 2013—334,070,016
3,339

 
3,341

4.50% Mandatory Convertible Preferred Stock, Series A, $.01 par value; 20,000,000 shares authorized; shares issued and outstanding: June 30, 2014 and December 31, 2013—9,775,000; aggregate liquidation value: June 30, 2014 and December 31, 2013—$977,500
98

 
98

Additional paid-in capital
9,488,414

 
9,482,769

Accumulated other comprehensive income (loss)
26,205

 
(23,612
)
Dividends/distributions in excess of earnings
(2,656,718
)
 
(2,535,879
)
Total CCIC stockholders' equity
6,861,338

 
6,926,717

Noncontrolling interest
18,098

 
14,458

Total equity
6,879,436

 
6,941,175

Total liabilities and equity
$
20,672,059

 
$
20,594,908




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ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX

CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
(dollars in thousands, except share and per share amounts)
2014
 
2013
 
2014
 
2013
Net revenues:
 
 
 
 
 
 
 
Site rental
$
746,340

 
$
616,849

 
$
1,493,502

 
$
1,232,264

Network services and other
170,005

 
118,079

 
298,793

 
242,724

Net revenues
916,345

 
734,928

 
1,792,295

 
1,474,988

Operating expenses:
 
 
 
 
 
 
 
Costs of operations(1):
 
 
 
 
 
 
 
Site rental
236,991

 
179,015

 
465,067

 
356,621

Network services and other
103,447

 
70,199

 
176,321

 
147,576

Total costs of operations
340,438

 
249,214

 
641,388

 
504,197

General and administrative
69,153

 
54,790

 
134,002

 
113,035

Asset write-down charges
3,136

 
3,097

 
5,869

 
6,812

Acquisition and integration costs
19,197

 
7,215

 
24,856

 
8,817

Depreciation, amortization and accretion
254,235

 
190,651

 
504,426

 
377,110

Total operating expenses
686,159

 
504,967

 
1,310,541

 
1,009,971

Operating income (loss)
230,186

 
229,961

 
481,754

 
465,017

Interest expense and amortization of deferred financing costs
(144,534
)
 
(140,256
)
 
(290,934
)
 
(304,625
)
Gains (losses) on retirement of long-term obligations
(44,629
)
 
(577
)
 
(44,629
)
 
(36,486
)
Interest income
189

 
328

 
362

 
625

Other income (expense)
(6,063
)
 
507

 
(8,799
)
 
(122
)
Income (loss) before income taxes
35,149

 
89,963

 
137,754

 
124,409

Benefit (provision) for income taxes
208

 
(36,587
)
 
396

 
(54,295
)
Net income (loss)
35,357

 
53,376

 
138,150

 
70,114

Less: net income (loss) attributable to the noncontrolling interest
1,348

 
1,017

 
2,644

 
2,293

Net income (loss) attributable to CCIC stockholders
34,009

 
52,359

 
135,506

 
67,821

Dividends on preferred stock
(10,997
)
 
—

 
(21,994
)
 
—

Net income (loss) attributable to CCIC common stockholders
$
23,012

 
$
52,359

 
$
113,512

 
$
67,821

 
 
 
 
 
 
 
 
Net income (loss) attributable to CCIC common stockholders, per common share:
 
 
 
 
 
 
 
Basic
$
0.07

 
$
0.18

 
$
0.34

 
$
0.23

Diluted
$
0.07

 
$
0.18

 
$
0.34

 
$
0.23

 
 
 
 
 
 
 
 
Weighted-average common shares outstanding (in thousands):
 
 
 
 
 
 
 
Basic
332,344

 
291,225

 
332,189

 
291,164

Diluted
333,081

 
292,706

 
333,034

 
292,570

    
(1)
Exclusive of depreciation, amortization and accretion shown separately



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ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX

SEGMENT OPERATING RESULTS
 
Three Months Ended June 30, 2014
(dollars in thousands)
CCUSA
 
CCAL
 
Consolidated Total
Net Revenues
 
 
 
 
 
Site rental
$
710,783

 
$
35,557

 
$
746,340

Services
167,459

 
2,546

 
170,005

Total net revenues
878,242

 
38,103

 
916,345

 
 
 
 
 
 
Operating expenses(1)
 
 
 
 
 
Site rental
227,032

 
9,959

 
236,991

Services
101,901

 
1,546

 
103,447

Total operating expenses
328,933

 
11,505

 
340,438

 
 
 
 
 
 
General and administrative
63,318

 
5,835

 
69,153

 
 
 
 
 
 
Adjusted EBITDA
$
509,537

 
$
21,092

 
$
530,629

    
(1)
Exclusive of depreciation, amortization and accretion.
FFO AND AFFO RECONCILIATIONS
 
Three Months Ended June 30,
 
Six Months Ended June 30,
(dollars in thousands, except share and per share amounts)
2014
 
2013
 
2014
 
2013
Net income
$
35,357

 
$
53,376

 
$
138,150

 
$
70,114

Real estate related depreciation, amortization and accretion
249,484

 
188,039

 
493,904

 
369,794

Asset write-down charges
3,136

 
3,097

 
5,869

 
6,812

Adjustment for noncontrolling interest(1)
(1,348
)
 
(1,017
)
 
(2,644
)
 
(2,293
)
Dividends on preferred stock
(10,997
)
 
—

 
(21,994
)
 
—

FFO(2)
$
275,632

 
$
243,496

 
$
613,285

 
$
444,428

Weighted average common shares outstanding — diluted
333,081

 
292,706

 
333,034

 
292,570

FFO per share(2)
$
0.83

 
$
0.83

 
$
1.84

 
$
1.52

 
 
 
 
 
 
 
 
FFO (from above)
275,632

 
243,496

 
613,285

 
444,428

Adjustments to increase (decrease) FFO:
 
 
 
 
 
 
 
Straight-line revenue
(52,134
)
 
(56,919
)
 
(102,940
)
 
(116,318
)
Straight-line expense
27,416

 
20,572

 
53,796

 
41,278

Stock-based compensation expense
18,212

 
9,608

 
31,149

 
19,707

Non-cash portion of tax provision(3)
(2,553
)
 
34,747

 
(4,885
)
 
50,808

Non-real estate related depreciation, amortization and accretion
4,751

 
2,612

 
10,521

 
7,316

Amortization of non-cash interest expense
20,604

 
20,551

 
41,485

 
57,471

Other (income) expense
6,063

 
(507
)
 
8,799

 
122

Gains (losses) on retirement of long-term obligations
44,629

 
577

 
44,629

 
36,486

Acquisition and integration costs
19,197

 
7,215

 
24,856

 
8,817

Adjustment for noncontrolling interest(1)
1,348

 
1,017

 
2,644

 
2,293

Capital improvement capital expenditures
(4,469
)
 
(2,399
)
 
(8,329
)
 
(5,713
)
Corporate capital expenditures
(8,171
)
 
(7,694
)
 
(15,742
)
 
(11,246
)
AFFO(2)
$
350,526

 
$
272,877

 
$
699,270

 
$
535,449

Weighted average common shares outstanding — diluted
333,081

 
292,706

 
333,034

 
292,570

AFFO per share(2)
$
1.05

 
$
0.93

 
$
2.10

 
$
1.83

    
(1)
Inclusive of the noncontrolling interest related to real estate related depreciation, amortization and accretion and asset write-downs.
(2)
See reconciliations and definitions provided herein. See also "Definitions of Non-GAAP Measures and Other Calculations"in the Appendix for a discussion of the definitions of FFO and AFFO.
(3)
Adjusts the income tax provision for 2013 to reflect our estimate of the cash taxes had we been a REIT, which predominately relates to foreign taxes paid. As a result, income tax expense (benefit) is lower by the amount of the adjustment.

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COMPANY
OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX

CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
 
Six Months Ended June 30,
(dollars in thousands)
2014
 
2013
Cash flows from operating activities:
 
 
 
Net income (loss)
$
138,150

 
$
70,114

Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities:
 
 
 
Depreciation, amortization and accretion
504,426

 
377,110

Gains (losses) on retirement of long-term obligations
44,629

 
36,486

Amortization of deferred financing costs and other non-cash interest
41,485

 
57,471

Stock-based compensation expense
27,373

 
19,472

Asset write-down charges
5,869

 
6,812

Deferred income tax benefit (provision)
(4,885
)
 
50,143

Other adjustments, net
(1,328
)
 
1,291

Changes in assets and liabilities, excluding the effects of acquisitions:
 
 
 
Increase (decrease) in liabilities
171,148

 
82,652

Decrease (increase) in assets
(163,191
)
 
(141,524
)
Net cash provided by (used for) operating activities
763,676

 
560,027

Cash flows from investing activities:
 
 
 
Payments for acquisition of businesses, net of cash acquired
(90,442
)
 
(27,280
)
Capital expenditures
(309,740
)
 
(254,820
)
Other investing activities, net
2,378

 
6,644

Net cash provided by (used for) investing activities
(397,804
)
 
(275,456
)
Cash flows from financing activities:
 
 
 
Proceeds from issuance of long-term debt
845,750

 
30,941

Principal payments on debt and other long-term obligations
(55,385
)
 
(51,085
)
Purchases and redemptions of long-term debt
(836,899
)
 
(675,480
)
Purchases of capital stock
(21,730
)
 
(98,867
)
Borrowings under revolving credit facility
494,000

 
48,000

Payments under revolving credit facility
(534,000
)
 
(255,000
)
Payments for financing costs
(15,834
)
 
(5,654
)
Net decrease (increase) in restricted cash
24,386

 
411,048

Dividends/distributions paid on common stock
(233,684
)
 
—

Dividends paid on preferred stock
(22,360
)
 
—

Net cash provided by (used for) financing activities
(355,756
)
 
(596,097
)
Effect of exchange rate changes on cash
(6,031
)
 
(2,952
)
Net increase (decrease) in cash and cash equivalents
4,085

 
(314,478
)
Cash and cash equivalents at beginning of period
223,394

 
441,364

Cash and cash equivalents at end of period
$
227,479

 
$
126,886

Supplemental disclosure of cash flow information:
 
 
 
Interest paid
248,183

 
212,592

Income taxes paid
12,690

 
10,242



13
Crown Castle International Corp.
Second Quarter 2014
COMPANY
OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX


SITE RENTAL REVENUE GROWTH
 
Three Months Ended June 30,
(dollars in millions)
2014
 
2013
Beginning towers as of June 30, 2013
31,601

 
 
Net tower additions/(dispositions)
9,760

 
 
Ending towers as of June 30, 2014
41,361

 
 
 
 
 
 
Reported GAAP site rental revenues
$
746

 
$
617

Site rental straight-line revenues
(52
)
 
(57
)
Site Rental Revenues, as Adjusted(1)
$
694

 
$
560

Cash adjustments:
 
 
 
FX and other
2

 
 
New tower acquisitions and builds
(99
)
 
 
Organic Site Rental Revenues(2)(3)
$
597

 
 
Year-Over-Year Revenue Growth
 
 
 
Reported GAAP site rental revenues
21.0
%
 
 
Site Rental Revenues, as Adjusted
24.0
%
 
 
Organic Site Rental Revenues(4)
6.7
%
 
 

ORGANIC SITE RENTAL REVENUE GROWTH
 
Three Months Ended June 30,
 
2014
New leasing activity
5.5%
Escalators
3.6%
Organic Site Rental Revenue growth, before non-renewals
9.1%
Non-renewals
(2.4)%
Organic Site Rental Revenue Growth(4)
6.7%
    
(1)
Includes amortization of prepaid rent; see the table “Summary of Prepaid Rent Activity” on page 15 for further details.
(2)
Includes Site Rental Revenues, as Adjusted from the construction of new small cell nodes.
(3)
See definitions provided herein.
(4)
Calculated as the percentage change from Site Rental Revenues, as Adjusted, for the prior period when compared to Organic Site Rental Revenues for the current period.

14
Crown Castle International Corp.
Second Quarter 2014
COMPANY
OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX


SITE RENTAL GROSS MARGIN GROWTH
 
Three Months Ended June 30,
(dollars in millions)
2014
 
2013
Reported GAAP site rental gross margin
$
509

 
$
438

Straight line revenues and expenses, net
(25
)
 
(36
)
Site rental gross margin, as adjusted
$
485

 
$
402

Cash adjustments:
 
 
 
FX and other
2

 
 
New tower acquisitions and builds
(57
)
 
 
Organic Site Rental Gross Margin(1)(2)
$
429

 
 
Year-Over-Year Gross Margin Growth
 
 
 
Reported GAAP site rental gross margin
16.3
%
 
 
Site Rental Gross Margin, as Adjusted
20.7
%
 
 
Organic Site Rental Gross Margin(3)
6.9
%
 
 
Year-Over-Year Incremental Margin
 
 
 
Reported GAAP site rental gross margin
55.2
%
 
 
Site Rental Gross Margin, as Adjusted
61.8
%
 
 
Organic Site Rental Gross Margin(4)
73.9
%
 
 
    
(1)
Includes Site Rental Revenues, as Adjusted, from the construction of new small cell nodes.
(2)
See definitions provided herein.
(3)
Calculated as the percentage change from Site Rental Gross Margin, as Adjusted for the prior period when compared to Organic Site Rental Gross Margin in the current period.
(4)
Calculated as the change from Site Rental Gross Margin, as Adjusted for the prior period when compared to Organic Site Rental Gross Margin in the current period, divided by the change from Site Rental Revenues, as Adjusted in the prior period when compared to Organic Site Rental Revenues for the current period.


15
Crown Castle International Corp.
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COMPANY
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FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX


SUMMARY OF SITE RENTAL STRAIGHT-LINE REVENUES AND EXPENSES(1)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
(dollars in thousands)
2014
 
2013
 
2014
 
2013
Total site rental straight-line revenue
$
52,134

 
$
56,919

 
$
102,940

 
$
116,318

Total site rental straight-line expenses
27,416

 
20,572

 
53,796

 
41,278


SUMMARY OF PREPAID RENT ACTIVITY(2)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
(dollars in thousands)
2014
 
2013
 
2014
 
2013
Prepaid rent received
$
83,607

 
$
45,947

 
$
151,830

 
$
89,690

Amortization of prepaid rent
(22,143
)
 
(14,932
)
 
(41,514
)
 
(29,952
)

SUMMARY OF CAPITAL EXPENDITURES
 
Three Months Ended June 30,
(dollars in thousands)
2014
 
2013
Discretionary:
 
 
 
Purchases of land interests
$
24,861

 
$
26,909

Wireless infrastructure construction and improvements
129,296

 
101,465

Sustaining
12,640

 
10,093

Total
$
166,797

 
$
138,467

    
(1)
In accordance with GAAP accounting, if payment terms call for fixed escalations, or rent free periods, the revenue is recognized on a straight-line basis over the fixed, non-cancelable term of the contract. Since the Company recognizes revenue on a straight-line basis, a portion of the site rental revenue in a given period represents cash collected or contractually collectible in other periods.
(2)
Reflects prepaid rent received from long-term tenant contracts and the amortization thereof for GAAP revenue recognition purposes.

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COMPANY
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FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX


PROJECTED REVENUE FROM EXISTING CUSTOMER CONTRACTS(1)
 
Remaining six months
Years Ended December 31,
(as of June 30, 2014; dollars in millions)
2014
2015
2016
2017
2018
Site rental revenue (GAAP)
$
1,474

$
2,913

$
2,926

$
2,951

$
2,977

Site rental straight-line revenue
(82
)
(100
)
(27
)
37

88

Site Rental Revenues, as Adjusted
$
1,392

$
2,813

$
2,899

$
2,989

$
3,065


PROJECTED GROUND LEASE EXPENSE FROM EXISTING GROUND LEASES(2)
 
Remaining six months
Years Ended December 31,
(as of June 30, 2014; dollars in millions)
2014
2015
2016
2017
2018
Ground lease expense (GAAP)
$
339

$
681

$
685

$
692

$
698

Site rental straight-line expense
(47
)
(86
)
(73
)
(61
)
(50
)
Ground Lease Expense, as Adjusted
$
291

$
595

$
613

$
631

$
648


ANNUALIZED CASH SITE RENTAL REVENUE AT TIME OF RENEWAL(3)
 
Remaining six months
Years Ended December 31,
(as of June 30, 2014; dollars in millions)
2014
2015
2016
2017
2018
AT&T
$
6

$
27

$
45

$
20

$
38

Sprint(4)
12

29

45

41

38

T-Mobile
6

12

33

24

33

Verizon
5

11

11

16

17

Optus
—

29

3

9

2

VHA
—

2

7

11

2

Telstra
—

2

4

2

1

All Others Combined
18

45

39

28

32

Total
$
48

$
156

$
187

$
152

$
164


HISTORICAL ANNUAL NON-RENEWALS AS PERCENTAGE OF SITE RENTAL REVENUES, AS ADJUSTED
Years Ended December 31,
2013
2012
2011
2010
2009
1.7%
2.2%
1.9%
2.0%
2.6%
    
(1)
Based on existing contracts as of June 30, 2014. All contracts, except for Sprint contracts associated with the iDen network and contracts where non-renewal notices have been received, are assumed to renew for a new term at current term end date. CPI-linked customer contracts are assumed to escalate at 3% per annum. Assumes a US dollar to Australian dollar exchange rate of 0.93 US dollar to 1.0 Australian dollar.
(2)
Based on existing ground leases as of June 30, 2014. CPI-linked leases are assumed to escalate at 3% per annum. Assumes a US dollar to Australian dollar exchange rate of 0.93 US dollar to 1.0 Australian dollar.
(3)
Reflects lease renewals by year by customer; dollar amounts represent annualized cash site rental revenues from assumed renewals or extension as reflected in the table “Projected Revenue from Existing Customer Contracts.”
(4)
Excludes Sprint leases associated with the iDen network, which are assumed to not renew as reflected in the table “Projected Revenue from Existing Customer Contracts.”


17
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Second Quarter 2014
COMPANY
OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX


CUSTOMER OVERVIEW
(as of June 30, 2014)
Percentage of Q2 2014 LQA Site
Rental Revenues
Weighted Average Current
Term Remaining(1)
Long-Term Credit Rating
(S&P / Moody’s)
AT&T
29
%
8

A- / A3
Sprint
22
%
6

BB- / Ba3
T-Mobile
22
%
8

BB
Verizon
15
%
9

BBB+ / Baa1
Optus
1
%
2

A+ / Aa3
VHA
1
%
6

A- / A3(2)
Telstra
1
%
13

A / A2
All Others Combined
9
%
4

N/A
Total / Weighted Average
100
%
7


    
(1)
Weighted by site rental revenue contributions; excludes renewals at the customers' option.
(2)
Vodafone Hutchison Australia ("VHA") is a joint venture between Vodafone Group Plc and Hutchison Telecommunications Australia, a subsidiary of Hutchison Whompoa; Vodafone Group Plc and Hutchison Whompoa each are rated A- and A3 by S&P and Moody's, respectively, as of June 30, 2014.

18
Crown Castle International Corp.
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COMPANY
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FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX

SUMMARY OF TOWER PORTFOLIO BY VINTAGE
(as of June 30, 2014; dollars in thousands)
 
YIELD(1)
NUMBER OF TENANTS PER TOWER


LQA SITE RENTAL REVENUE PER TOWER
LQA SITE RENTAL GROSS MARGIN PER TOWER
INVESTED CAPITAL PER TOWER(2)
NUMBER OF TOWERS
_______________________________
(1)
Yield is calculated as LQA site rental gross margin divided by invested capital.
(2)
Reflects gross total assets, including incremental capital invested by the Company since time of acquisition or construction completion.

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FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX


PORTFOLIO OVERVIEW(1)
(as of June 30, 2014; dollars in thousands)
NUMBER OF TOWERS
TENANTS PER TOWER
LQA SITE RENTAL REVENUE PER TOWER

    
(1)
Includes towers and rooftops, excludes small cells and third-party land interests.


20
Crown Castle International Corp.
Second Quarter 2014
COMPANY
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FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX


DISTRIBUTION OF TOWER TENANCY (as of June 30, 2014)
PERCENTAGE OF TOWERS BY TENANTS PER TOWER(1)
U.S. PORTFOLIO
AUSTRALIA PORTFOLIO
Average: 2.3
Average: 2.3
 
 
GEOGRAPHIC TOWER DISTRIBUTION (as of June 30, 2014)(1)
PERCENTAGE OF TOWERS BY GEOGRAPHIC LOCATION
PERCENTAGE OF LQA SITE RENTAL REVENUE BY GEOGRAPHIC LOCATION
    
(1)
Includes towers and rooftops, excludes small cells and third-party land interests.

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COMPANY
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FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX


U.S. GROUND INTEREST OVERVIEW
(as of June 30, 2014;
dollars in millions)
LQA Site Rental Revenue
Percentage of U.S. LQA Site Rental Revenue
LQA Site Rental Gross Margin
Percentage of U.S. LQA Site Rental Gross Margin
Number of U.S. Towers(1)
Percentage of U.S. Towers
Weighted Average Term Remaining (by years)(2)
Less than 10 years
$
341

13
%
$
194

11
%
5,768

15
%
 
10 to 20 years
551

21
%
318

17
%
10,550

27
%
 
Greater 20 years
1,033

40
%
697

38
%
15,571

39
%
 
Total leased
$
1,926

75
%
$
1,210

66
%
31,889

81
%
30

 
 
 
 
 
 
 
 
Owned
658

25
%
616

34
%
7,711

19
%
 
Total / Average
$
2,583

100
%
$
1,825

100
%
39,600

100
%
 


AUSTRALIA GROUND INTEREST OVERVIEW
(as of June 30, 2014;
dollars in millions)
LQA Site Rental Revenue
Percentage of Australia LQA Site Rental Revenue
LQA Site Rental
Gross Margin
Percentage of Australia LQA Site Rental Gross Margin
Number of Australia Towers(1)
Percentage of Australia Towers
Weighted Average Term Remaining (by years)(2)
Less than 10 years
$
43

32
%
$
29

29
%
572

32
%
 
10 to 20 years
43

32
%
32

32
%
555

32
%
 
Greater 20 years
34

26
%
27

26
%
497

28
%
 
Total leased
$
119

90
%
$
88

87
%
1,624

92
%
18

 
 
 
 
 
 
 
 
Owned
13

10
%
13

13
%
137

8
%
 
Total / Average
$
132

100
%
$
101

100
%
1,761

100
%
 
    
(1)
Includes towers and rooftops, excludes small cells and third-party land interests.
(2)
Includes renewal terms at the Company’s option; weighted by site rental gross margin.

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FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX


U.S. GROUND INTEREST ACTIVITY
(dollars in millions)
Three Months Ended June 30, 2014
Six Months Ended June 30, 2014
Ground Extensions Under Crown Castle Towers:
 
 
  Number of ground leases extended
370
699

  Average number of years extended
26
26

  Percentage increase in consolidated cash ground lease expense due to extension activities(1)
0.1
%
0.2
%
 
 
 
Ground Purchases Under Crown Castle Towers:
 
 
  Number of ground leases purchased
121
251

  Land lease purchases (including capital expenditures, acquisitions and capital leases)
$
31

$
62

Percentage of consolidated site rental gross margin from towers residing on land purchased
<1%

<1%


AUSTRALIA GROUND INTEREST ACTIVITY
(dollars in millions)
Three Months Ended June 30, 2014
Six Months Ended June 30, 2014
Ground Extensions Under Crown Castle Towers:
 
 
  Number of ground leases extended
19

30

  Average number of years extended
19

18

  Percentage increase in consolidated cash ground lease expense due to extension activities(1)
Not Meaningful

Not Meaningful

 
 
 
Ground Purchases Under Crown Castle Towers:
 
 
  Number of ground leases purchased
4

6

  Land lease purchases (including capital expenditures, acquisitions and capital leases)
$
2

$
3

Percentage of consolidated site rental gross margin from towers residing on land purchased
Not Meaningful

Not Meaningful


SMALL CELL NETWORK OVERVIEW
Number of Nodes(3) 
(in thousands)
Miles of Fiber
(in thousands)
Percentage of LQA Site Rental Revenues
Weighted Average Current
Term Remaining for
Customer Contracts(2)
13
6
6%
8
    
(1)
Includes the impact from the amortization of lump sum payments.
(2)
Excludes renewal terms at customers’ option; weighted by site rental revenue.
(3)
Includes nodes currently in-process.



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FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX



CAPITALIZATION OVERVIEW
 
Face Value as Reported 6/30/14
Fixed vs. Floating
Secured vs. Unsecured
Interest Rate(1)
Net Debt to LQA EBITDA(2)
Maturity
Cash
$
227

 
 
 
 
 
 
 
 
 
 
 
 
Senior Secured Tower Revenue Notes, Series 2010-2-2010-3(3)
1,600

Fixed
Secured
5.98%
 
Various(8)
Senior Secured Tower Revenue Notes, Series 2010-4-2010-6(3)
1,550

Fixed
Secured
4.48%
 
Various(8)
2012 Secured Notes(4)
1,500

Fixed
Secured
3.36%
 
2017/2023
Senior Secured Notes, Series 2009-1(5)
170

Fixed
Secured
7.38%
 
Various(8)
WCP Secured Wireless Site Contracts Revenue Notes, Series 2010-1(6)
268

Fixed
Secured
5.64%
 
2040
Subtotal
$
5,088

 
 
4.78%
2.4x
 
Revolving Credit Facility(7)
334

Floating
Secured
1.9%
 
2018
Term Loan A
654

Floating
Secured
1.9%
 
2018
Term Loan B
2,850

Floating
Secured
3.0%
 
2019/2021(9)
Total CCOC Facility Debt
$
3,838

 
 
2.72%
1.8x
 
4.875% Senior Notes
850

Fixed
Unsecured
4.88%
 
2022
5.250% Senior Notes
1,650

Fixed
Unsecured
5.25%
 
2023
Capital Leases & Other Debt
142

Various
Various
Various
 
Various
Total HoldCo and other Debt
$
2,642

 
 
5.12%
1.3x
 
Total Net Debt
$
11,341

 
 
4.16%
5.3x
 
Preferred Stock, at liquidation value
978

 
 
 
 
 
Market Capitalization(10)
24,793

 
 
 
 
 
Firm Value(11)
$
37,112

 
 
 
 
 
    
(1)
Represents the weighted-average stated interest rate.
(2)
Represents the applicable amount of debt divided by LQA consolidated Adjusted EBITDA.
(3)
If the Senior Secured Tower Revenue Notes 2010-2, and 2010-3 and Senior Secured Tower Revenue Notes, 2010-4, 2010-5, and 2010-6 (“2010 Tower Revenue Notes”) are not paid in full on or prior to 2015, 2017 and 2020, as applicable, then Excess Cash Flow (as defined in the indenture) of the issuers (of such notes) will be used to repay principal of the applicable series and class of the 2010 Tower Revenue Notes, and additional interest (of an additional approximately 5% per annum) will accrue on the respective 2010 Tower Revenue Notes. The Senior Secured Tower Revenue Notes, 2010-2, and 2010-3 consist of two series of notes with principal amounts of $350 million and $1.3 billion, having anticipated repayment dates in 2017 and 2020, respectively. The Senior Secured Tower Revenue Notes, 2010-4, 2010-5, and 2010-6 consist of three series of notes with principal amounts of $250 million, $300 million and $1.0 billion, having anticipated repayment dates in 2015, 2017 and 2020, respectively.
(4)
The 2012 Secured Notes consist of $500 million aggregate principal amount of 2.381% secured notes due 2017 and $1.0 billion aggregate principal amount of 3.849% secured notes due 2030.
(5)
The Senior Secured Notes, Series 2009-1 consist of $100 million of principal as of June 30, 2014 that amortizes through 2019, and $70 million of principal as of June 30, 2014 that amortizes during the period beginning in 2019 and ending in 2029.
(6)
The anticipated repayment date is 2015 for each class of the WCP Secured Wireless Site Contracts Revenue Notes, Series 2010-1 ("WCP Securitized Notes"). If the WCP Securitized Notes are not repaid in full by their anticipated repayment dates, the applicable interest rate increases by an additional approximately 5% per annum. If the WCP Securitized Notes are not repaid in full by their rapid amortization date of 2017, monthly principal payments commence using the excess cash flows of the issuers of the WCP Securitized Notes.
(7)
As of June 30, 2014, the undrawn availability under the $1.5 billion Revolving Credit Facility is $1.2 billion.
(8)
Notes are prepayable at par if voluntarily repaid six months or less prior to maturity; earlier prepayment may require additional consideration.
(9)
As of June 30, 2014, approximately $570 million of the Term Loan B have 101 soft call until the next call date.
(10)
Market capitalization calculated based on $74.26 closing price and 333.9 million shares outstanding as of June 30, 2014.
(11)
Represents the sum of net debt, preferred stock (at liquidation value) and market capitalization.

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APPENDIX



DEBT MATURITY OVERVIEW(1)

    
(1)
Where applicable, maturities reflect the Anticipated Repayment Date as defined in the respective debt agreement; excludes capital leases and other obligations; amounts presented at face value net of repurchases held at CCIC.

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APPENDIX



LIQUIDITY OVERVIEW
(dollars in thousands)
June 30, 2014
Cash and cash equivalents(1)
227,479

Undrawn revolving credit facility availability(2)
1,166,000

Restricted cash
160,725

Debt and other long-term obligations
11,570,251

Total equity
6,879,436

    
(1)
Exclusive of restricted cash.
(2)
Availability at any point in time is subject to reaffirmation of the representations and warranties in, and there being no default under, our credit agreement governing our senior credit facilities (“2012 Credit Facility”).

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CAPITALIZATION OVERVIEW
APPENDIX


SUMMARY OF MAINTENANCE AND FINANCIAL COVENANTS
Debt
Borrower / Issuer
Covenant(1)
Covenant Level Requirement
 
As of June 30, 2014
Maintenance Financial Covenants(2)
2012 Credit Facility
CCOC
Total Net Leverage Ratio
≤ 5.50x
 
4.2x
2012 Credit Facility
CCOC
Consolidated Interest Coverage Ratio
≥ 2.50x
 
6.0x
 
 
 
 
 
 
Restrictive Negative Financial Covenants
 
 
 
 
Financial covenants restricting ability to make restricted payments, including dividends
4.875% Senior Notes
CCIC
Debt to Adjusted Consolidated Cash Flow Ratio
≤ 7.00x
 
 5.6x
5.25% Senior Notes
CCIC
Debt to Adjusted Consolidated Cash Flow Ratio
≤ 7.00x
 
 5.6x
2012 Credit Facility
CCOC
Total Net Leverage Ratio
≤ 5.50x
 
4.2x
 
 
 
 
 
 
Financial covenants restricting ability to incur additional debt
4.875% Senior Notes
CCIC
Debt to Adjusted Consolidated Cash Flow Ratio
≤ 7.00x
 
 5.6x
5.25% Senior Notes
CCIC
Debt to Adjusted Consolidated Cash Flow Ratio
≤ 7.00x
 
 5.6x
2012 Credit Facility
CCOC
Total Net Leverage Ratio
≤ 6.00x
(3) 
4.2x
2012 Credit Facility
CCOC
Holdings Leverage Ratio
≤ 7.00x
(4) 
 5.6x
2012 Credit Facility
CCOC
Consolidated Interest Coverage Ratio
≥ 2.50x
 
6.0x
2012 Secured Notes
CC Holdings GS V LLC and Crown Castle GS III Corp.
Debt to Adjusted Consolidated Cash Flow Ratio
≤ 3.50x
 
3.8x
 
 
 
 
 
 
Financial covenants restricting ability to make investments
2012 Credit Facility
CCOC
Total Net Leverage Ratio
≤ 5.50x
 
4.2x
    
(1)
As defined in the respective debt agreement.
(2)
Failure to comply with the financial maintenance covenants would, absent a waiver, result in an event of default under the credit agreement governing our 2012 Credit Facility.
(3)
Applicable for debt issued at CCOC or its subsidiaries.
(4)
Applicable for debt issued at CCIC or its subsidiaries.

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APPENDIX


SUMMARY OF MAINTENANCE AND FINANCIAL COVENANTS (CONTINUED)
Debt
Borrower / Issuer
Covenant(1)
Covenant Level Requirement
 
As of June 30, 2014
Restrictive Negative Financial Covenants
Financial covenants requiring excess cash flows to be deposited in a cash trap reserve account and not released
2010 Tower Revenue Notes
Crown Castle Towers LLC and its Subsidiaries
Debt Service Coverage Ratio
> 1.75x
(2) 
4.3x
WCP Securitized Notes
Certain WCP Subsidiaries
Debt Service Coverage Ratio
> 1.30x
(2) 
1.4x
2009 Securitized Notes
Pinnacle Towers Acquisition Holdings LLC and its Subsidiaries
Debt Service Coverage Ratio
> 1.30x
(2) 
4.4x
 
 
 
 
 
 
Financial covenants restricting ability of relevant issuer to issue additional notes under the applicable indenture
2010 Tower Revenue Notes
Crown Castle Towers LLC and its Subsidiaries
Debt Service Coverage Ratio
≥ 2.00x
(3) 
4.3x
WCP Securitized Notes
Certain WCP Subsidiaries
Debt Service Coverage Ratio
≥ 1.50x
(3) 
1.4x
2009 Securitized Notes
Pinnacle Towers Acquisition Holdings LLC and its Subsidiaries
Debt Service Coverage Ratio
≥ 2.34x
(3) 
4.4x
    
(1)
As defined in the respective debt agreement. In the indentures for the 2010 Tower Revenue Notes, WCP Securitized Notes, and the 2009 Securitized Notes, the defined term for Debt Service Coverage Ratio is "DSCR".
(2)
The 2010 Tower Revenue Notes, WCP Securitized Notes, and 2009 Securitized Notes also include the potential for amortization events, which could result in applying current and future cash flow to the prepayment of debt with applicable prepayment consideration. An amortization event occurs when the Debt Service Coverage Ratio falls below 1.45x, 1.15x or 1.15x, in each case as described under the indentures for the 2010 Tower Revenue Notes, WCP Securitized Notes, or 2009 Securitized Notes, respectively.
(3)
Rating Agency Confirmation (as defined in the respective debt agreement) is also required.

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APPENDIX


INTEREST RATE SENSITIVITY(1)
 
Remaining six months,
Years Ended December 31,
(as of June 30, 2014; dollars in millions)
2014
2015
2016
Fixed Rate Debt:
 
 
 
Face Value of Principal Outstanding(2)
$
7,570

$
7,536

$
7,517

Current Interest Payment Obligations(3)
185

369

368

Effect of 0.125% Change in Interest Rates(4)
—

1

2

Floating Rate Debt:
 
 
 
Face Value of Principal Outstanding(2)
$
3,815

$
3,770

$
3,708

Current Interest Payment Obligations(5)
52

109

143

Effect of 0.125% Change in Interest Rates(6)
1

2

2

    
(1)
Excludes capital lease and other obligations.
(2)
Face value net of required amortizations; assumes no maturity or balloon principal payments; excludes capital leases.
(3)
Interest expense calculated based on current interest rates.
(4)
Interest expense calculated based on current interest rates until the sooner of the (1) stated maturity date or (2) the Anticipated Repayment Date, at which time the face value amount outstanding of such indebtedness is refinanced at current rates plus 12.5 bps.
(5)
Interest expense calculated based on current interest rates. Forward LIBOR assumptions are derived from the 1-month LIBOR forward curve as of June 30, 2014. Calculation takes into account any LIBOR floors in place and assumes no changes to future interest rate margin spread over LIBOR due to changes in the Borrower’s net leverage ratio.
(6)
Interest expense calculated based on current interest rates using forward LIBOR assumptions until the stated maturity date, at which time the face value amount outstanding of such indebtedness is refinanced at current rates plus 12.5 bps.



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ASSET PORTFOLIO OVERVIEW
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APPENDIX



DEFINITIONS
Non-GAAP Financial Measures and Other Calculations

This Supplement includes presentations of Adjusted EBITDA, Funds from Operations, Adjusted Funds from Operations, Organic Site Rental Revenues, Site Rental Revenues, as Adjusted, Organic Site Rental Gross Margin, and Site Rental Gross Margin, as Adjusted, and Ground Lease Expense, as Adjusted, which are non-GAAP financial measures. These non-GAAP financial measures are not intended as alternative measures of operating results or cash flow from operations (as determined in accordance with Generally Accepted Accounting Principles ("GAAP")). Each of the amounts included in the calculation of Adjusted EBITDA, FFO, AFFO, Organic Site Rental Revenues, Site Rental Revenues, as Adjusted, Organic Site Rental Gross Margin, and Site Rental Gross Margin, as Adjusted, and Ground Lease Expense, as Adjusted, are computed in accordance with GAAP, with the exception of: (1) sustaining capital expenditures, which is not defined under GAAP and (2) our adjustment to the income tax provision in calculations of AFFO for periods prior to our REIT conversion.
Our measures of Adjusted EBITDA, FFO, AFFO, Organic Site Rental Revenues, Site Rental Revenues, as Adjusted, Organic Site Rental Gross Margin, and Site Rental Gross Margin, as Adjusted, and Ground Lease Expense, as Adjusted, may not be comparable to similarly titled measures of other companies, including other companies in the tower sector or those reported by other REITs. Our FFO and AFFO may not be comparable to those reported in accordance with National Association of Real Estate Investment Trusts, including with respect to the impact of income taxes for periods prior to our REIT conversion.
Adjusted EBITDA, FFO, AFFO, Organic Site Rental Revenues, Site Rental Revenues, as Adjusted, Organic Site Rental Gross Margin, and Site Rental Gross Margin, as Adjusted, and Ground Lease Expense, as Adjusted, are presented as additional information because management believes these measures are useful indicators of the financial performance of our core businesses. In addition, Adjusted EBITDA is a measure of current financial performance used in our debt covenant calculations.
During the first quarter of 2014, Crown Castle updated its definitions of FFO and AFFO. The updated definitions of FFO and AFFO are intended to reflect the recurring nature of Crown Castle's site rental business and assist in comparing Crown Castle’s performance with the performance of its public tower company peers. Under the updated calculation of AFFO, Crown Castle reflects the benefit of prepaid rent from customers over the weighted-average life of customer contracts rather than in the period in which the prepaid rent was received. The updates to the definition of FFO were primarily made to present the periods shown in a manner which is consistent with our commencement of operations as a REIT on January 1, 2014. These measures are not intended to replace financial performance measures determined in accordance with GAAP. Unless otherwise noted, FFO and AFFO as set forth in this Supplement are presented based on the updated definitions. Crown Castle has provided reconciliations of the updated definitions of FFO and AFFO to the prior definitions on pages 34-36 of this Supplement.
Adjusted EBITDA. Crown Castle defines Adjusted EBITDA as net income (loss) plus restructuring charges (credits), 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, impairment of available-for-sale securities, interest income, other income (expense), benefit (provision) for income taxes, cumulative effect of change in accounting principle, income (loss) from discontinued operations, and stock-based compensation expense.
Funds from Operations ("FFO"). Crown Castle defines Funds from Operations as net income plus real estate related depreciation, amortization and accretion and asset write-down charges, less non controlling interest and cash paid for preferred stock dividends, and is a measure of funds from operations attributable to CCIC common stockholders.
FFO per share. Crown Castle defines FFO per share as FFO divided by the diluted weighted average common shares outstanding.

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APPENDIX



DEFINITIONS (continued)

FFO, as previously defined. Crown Castle defines FFO, as previously defined, as FFO plus non cash portion of tax provision, less asset write-down charges and non controlling interests.
Adjusted Funds from Operations ("AFFO"). Crown Castle defines Adjusted Funds from Operations as FFO before straight-line revenue, straight-line expense, stock-based compensation expense, non-cash portion of tax provision, non-real estate related depreciation, amortization and accretion, amortization of non-cash interest expense, other (income) expense, gains (loss) on retirement of long-term obligations, net gain (loss) on interest rate swaps, acquisition and integration costs, and adjustments for noncontrolling interests, and less capital improvement capital expenditures and corporate capital expenditures.
AFFO per share. Crown Castle defines AFFO per share as AFFO divided by diluted weighted average common shares outstanding.
AFFO, as previously defined. Crown Castle defines AFFO, as previously defined, as AFFO plus prepaid rent received less amortization of prepaid rent.
AFFO payout ratio. Dividends per common share divided by AFFO per share.
Site Rental Revenues, as Adjusted. Crown Castle defines Site Rental Revenues, as Adjusted, as site rental revenues, as reported, less straight-line revenues.
Organic Site Rental Revenues. Crown Castle defines Organic Site Rental Revenues as site rental revenues, as reported, less straight-line revenues, the impact of tower acquisitions and construction, foreign currency adjustments and certain non recurring items.
Site Rental Gross Margins, as Adjusted. Crown Castle defines Site Rental Gross Margins, as Adjusted, as site rental gross margin as reported less straight-line revenues and straight-line expenses.
Organic Site Rental Gross Margins. Crown Castle defines Organic Site Rental Gross Margins as site rental gross margins, as reported less straight-line revenues, straight-line expenses, the impact of tower acquisitions and construction, foreign currency adjustments and certain non recurring items.
Ground Lease Expense, as Adjusted. Crown Castle defines Ground Lease Expense, as Adjusted as ground lease expense, as reported, less straight line ground lease expense.
Sustaining capital expenditures. Crown Castle defines sustaining capital expenditures as either (1) corporate related capital improvements, such as buildings, information technology equipment and office equipment or (2) capital improvements to tower sites that enable our customers' ongoing quiet enjoyment of the tower.
The tables set forth below reconcile non-GAAP financial measures to comparable GAAP financial measures and provide certain other calculations. The components in these tables may not sum to the total due to rounding.

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Adjusted EBITDA for the three and six months ended June 30, 2014 and 2013 is computed as follows:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
(dollars in thousands)
2014
 
2013
 
2014

2013
Net income (loss)
$
35,357

 
$
53,376

 
$
138,150

 
$
70,114

Adjustments to increase (decrease) net income (loss):
 
 
 
 
 
 
 
Asset write-down charges
3,136

 
3,097

 
5,869

 
6,812

Acquisition and integration costs
19,197

 
7,215

 
24,856

 
8,817

Depreciation, amortization and accretion
254,235

 
190,651

 
504,426

 
377,110

Amortization of prepaid lease purchase price adjustments
5,663

 
3,863

 
9,558

 
7,726

Interest expense and amortization of deferred financing costs(1)
144,534

 
140,256

 
290,934

 
304,625

Gains (losses) on retirement of long-term obligations
44,629

 
577

 
44,629

 
36,486

Interest income
(189
)
 
(328
)
 
(362
)
 
(625
)
Other income (expense)
6,063

 
(507
)
 
8,799

 
122

Benefit (provision) for income taxes
(208
)
 
36,587

 
(396
)
 
54,295

Stock-based compensation expense
18,212

 
9,608

 
31,149

 
19,707

Adjusted EBITDA(2)
$
530,629

 
$
444,395

 
$
1,057,612

 
$
885,189


Adjusted EBITDA for the three months ended September 30, 2013 and 2012 and years ended December 31, 2013 and 2012 is computed as follows:
 
Three Months Ended September 30,
 
Years Ended December 31,
(dollars in thousands)
2013
 
2012
 
2013
 
2012
Net income (loss)
$
46,468

 
$
43,178

 
$
93,901

 
$
200,888

Adjustments to increase (decrease) net income (loss):
 
 
 
 
 
 
 
Asset write-down charges
3,893

 
1,560

 
14,863

 
15,548

Acquisition and integration costs
4,369

 
2,937

 
26,005

 
18,298

Depreciation, amortization and accretion
195,408

 
154,867

 
774,215

 
622,592

Amortization of prepaid lease purchase price adjustments
3,870

 
3,858

 
15,473

 
14,166

Interest expense and amortization of deferred financing costs(1)
142,016

 
144,949

 
589,630

 
601,044

Gains (losses) on retirement of long-term obligations
1

 
—

 
37,127

 
131,974

Interest income
(236
)
 
(291
)
 
(1,355
)
 
(4,556
)
Other income (expense)
631

 
632

 
3,872

 
5,392

Benefit (provision) for income taxes
33,959

 
32,300

 
198,628

 
(100,061
)
Stock-based compensation expense
10,178

 
16,182

 
41,788

 
47,382

Adjusted EBITDA(2)
$
440,557

 
$
400,172

 
$
1,794,147


$
1,552,667

    
(1)
See the reconciliation of “components of interest expense and amortization of deferred financing costs” herein.
(2)
The above reconciliation excludes line items included in our Adjusted EBITDA definition which are not applicable for the periods shown.













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APPENDIX




Adjusted EBITDA for the three months ended June 30, 2014 is computed as follows:
 
Three Months Ended June 30, 2014
(dollars in thousands)
CCUSA
 
CCAL
 
Eliminations
 
Consolidated
Total
Net income (loss)
$
29,234

 
$
6,123

 
$
—

 
$
35,357

Adjustments to increase (decrease) net income (loss):
 
 
 
 
 
 
 
Asset write-down charges
3,105

 
31

 
—

 
3,136

Acquisition and integration costs
19,125

 
72

 
—

 
19,197

Depreciation, amortization and accretion
246,583

 
7,652

 
—

 
254,235

Amortization of prepaid lease purchase price adjustments
5,663

 
—

 
—

 
5,663

Interest expense and amortization of deferred financing costs(1)
144,534

 
3,930

 
(3,930
)
 
144,534

Gains (losses) on retirement of long-term obligations
44,629

 
—

 
—

 
44,629

Interest income
(108
)
 
(81
)
 
—

 
(189
)
Other income (expense)
1,990

 
143

 
3,930

 
6,063

Benefit (provision) for income taxes
(3,101
)
 
2,893

 
—

 
(208
)
Stock-based compensation expense
17,883

 
329

 
—

 
18,212

Adjusted EBITDA(2)
$
509,537

 
$
21,092

 
$
—

 
$
530,629


Adjusted EBITDA for the quarter ending September 30, 2014 and the year ending December 31, 2014 is forecasted as follows:
 
Q3 2014
 
Full Year 2014
(dollars in millions)
Outlook
 
Outlook
Net income (loss)
$81 to $114
 
$292 to $376
Adjustments to increase (decrease) net income (loss):
 
 
 
Asset write-down charges
$2 to $4
 
$7 to $17
Acquisition and integration costs
$2 to $6
 
$28 to $38
Depreciation, amortization and accretion
$252 to $257
 
$1,003 to $1,023
Amortization of prepaid lease purchase price adjustments
$4 to $6
 
$18 to $20
Interest expense and amortization of deferred financing costs(1)
$139 to $144
 
$569 to $579
Gains (losses) on retirement of long-term obligations
$0 to $0
 
$45 to $45
Interest income
$(1) to $1
 
$(2) to $0
Other income (expense)
$2 to $4
 
$14 to $16
Benefit (provision) for income taxes
$(1) to $3
 
$(1) to $7
Stock-based compensation expense
$13 to $15
 
$58 to $63
Adjusted EBITDA(2)
$521 to $526
 
$2,100 to $2,115
    
(1)
See the reconciliation of “components of interest expense and amortization of deferred financing costs” herein.
(2)
The above reconciliation excludes line items included in our Adjusted EBITDA definition which are not applicable for the periods shown.


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The components of interest expense and amortization of deferred financing costs for the quarters ending June 30, 2014 and 2013 are as follows:
 
Three Months Ended June 30,
(dollars in thousands)
2014
 
2013
Interest expense on debt obligations
$
123,930


$
119,705

Amortization of deferred financing costs
5,521

 
5,013

Amortization of adjustments on long-term debt
(896
)
 
(965
)
Amortization of interest rate swaps(1)
16,162

 
16,242

Other, net
(183
)
 
261

Interest expense and amortization of deferred financing costs
$
144,534

 
$
140,256



The components of interest expense and amortization of deferred financing costs for the quarter ending September 30, 2014 and the year ending December 31, 2014 are forecasted as follows:
 
Q3 2014
 
Full Year 2014
(dollars in millions)
Outlook
 
Outlook
Interest expense on debt obligations
$121 to $123
 
$488 to $498
Amortization of deferred financing costs
$5 to $6
 
$21 to $23
Amortization of adjustments on long-term debt
$(1) to $0
 
$(5) to $(3)
Amortization of interest rate swaps (1)
$15 to $17
 
$60 to $65
Other, net
$0 to $0
 
$(1) to $1
Interest expense and amortization of deferred financing costs
$139 to $144
 
$569 to $579
    
(1)
Relates to the amortization of interest rate swaps; the swaps were cash settled in prior periods.



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APPENDIX



FFO and AFFO for the three and six months ended June 30, 2014 and 2013 are computed as follows:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
(dollars in thousands, except share and per share amounts)
2014
 
2013
 
2014
 
2013
Net income
$
35,357

 
$
53,376

 
$
138,150

 
$
70,114

Real estate related depreciation, amortization and accretion
249,484

 
188,039

 
493,904

 
369,794

Asset write-down charges
3,136

 
3,097

 
5,869

 
6,812

Adjustment for noncontrolling interest(1)
(1,348
)
 
(1,017
)
 
(2,644
)
 
(2,293
)
Dividends on preferred stock
(10,997
)
 
—

 
(21,994
)
 
—

FFO(3)
$
275,632

 
$
243,496

 
$
613,285

 
$
444,428

 
 
 
 
 
 
 
 
FFO (from above)
275,632

 
243,496

 
613,285

 
444,428

Adjustments to increase (decrease) FFO:
 
 
 
 
 
 
 
Straight-line revenue
(52,134
)
 
(56,919
)
 
(102,940
)
 
(116,318
)
Straight-line expense
27,416

 
20,572

 
53,796

 
41,278

Stock-based compensation expense
18,212

 
9,608

 
31,149

 
19,707

Non-cash portion of tax provision(4)
(2,553
)
 
34,747

 
(4,885
)
 
50,808

Non-real estate related depreciation, amortization and accretion
4,751

 
2,612

 
10,521

 
7,316

Amortization of non-cash interest expense
20,604

 
20,551

 
41,485

 
57,471

Other (income) expense
6,063

 
(507
)
 
8,799

 
122

Gains (losses) on retirement of long-term obligations
44,629

 
577

 
44,629

 
36,486

Acquisition and integration costs
19,197

 
7,215

 
24,856

 
8,817

Adjustment for noncontrolling interest(1)
1,348

 
1,017

 
2,644

 
2,293

Capital improvement capital expenditures
(4,469
)
 
(2,399
)
 
(8,329
)
 
(5,713
)
Corporate capital expenditures
(8,171
)
 
(7,694
)
 
(15,742
)
 
(11,246
)
AFFO(2)
$
350,526

 
$
272,877

 
$
699,270

 
$
535,449

Weighted average common shares outstanding — diluted
333,081

 
292,706

 
333,034

 
292,570

AFFO per share(2)
$
1.05

 
$
0.93

 
$
2.10

 
$
1.83

 
 
 
 
 
 
 
 
AFFO (from above)
$
350,526

 
$
272,877

 
$
699,270

 
$
535,449

Prepaid rent received
83,607

 
45,947

 
151,830

 
89,690

Amortization of prepaid rent
(22,143
)
 
(14,932
)
 
(41,514
)
 
(29,952
)
AFFO, as previously defined(2)
$
411,990

 
$
303,892

 
$
809,586

 
$
595,186

        
(1)
Inclusive of the noncontrolling interest related to real estate related depreciation, amortization and accretion and asset write-downs.
(2)
See definitions herein. See also “Definitions of Non-GAAP Financial Measures and Other Calculations” herein for a discussion of the definitions of FFO and AFFO.
(3)
FFO, as previously defined, for Q2 and year to date 2014 was $271.3 million and $605.2 million respectively, which is exclusive of the net impact from the update of the definition of $4.3 million and $8.1 million, respectively, which amount includes the adjustment for non-cash portion of tax provision and excludes the adjustments for asset write-down charges and noncontrolling interests. FFO, as previously defined, for Q2 and year to date 2013 was previously reported as $276.2 million and $490.8 million, respectively, which is exclusive of the net impact from the update of the definition of $32.7 million and $46.4 million, respectively, which amount includes the adjustment for non-cash portion of tax provision and excludes the adjustments for asset write down charges and noncontrolling interests.
(4)
Adjusts the income tax provision for 2013 to reflect our estimate of the cash taxes had we been a REIT, which predominately relates to foreign taxes paid. As a result, income tax expense (benefit) is lower by the amount of the adjustment.



35
Crown Castle International Corp.
Second Quarter 2014
COMPANY OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX


FFO and AFFO for the years ended December 31, 2013, 2012, 2011, 2010, 2009, 2008 and 2007 are computed as follows:
 
Years Ended December 31,
 
 
 
 
 
 
(in thousands of dollars, except share and per share amounts)
2013
 
2012
 
2011
 
2010
 
2009
 
2008
 
2007
Net income
$
93,901

 
$
200,888

 
$
171,460

 
$
(311,259
)
 
$
(114,123
)
 
$
(48,858
)
 
$
(222,964
)
Real estate related depreciation, amortization and accretion
761,070

 
601,372

 
531,869

 
522,514

 
520,820

 
492,319

 
502,550

Asset write-down charges
14,863

 
15,548

 
22,285

 
13,687

 
19,237

 
16,888

 
65,515

Adjustment for noncontrolling interest(1)
(3,790
)
 
(12,304
)
 
(383
)
 
319

 
(209
)
 
—

 
151

Dividends on preferred stock
—

 
(2,481
)
 
(19,487
)
 
(19,879
)
 
(19,878
)
 
(19,878
)
 
(19,879
)
FFO(3)
$
866,043

 
$
803,023

 
$
705,744

 
$
205,381

 
$
405,847

 
$
440,471

 
$
325,373

 
 
 
 
 
 
 
 
 
 
 
 
 
 
FFO (from above)
866,043

 
803,023

 
705,744

 
205,381

 
405,847

 
440,471

 
325,373

Adjustments to increase (decrease) FFO:
 
 
 
 
 
 
 
 
 
 
 
 
 
Straight-line revenue
(218,631
)
 
(251,327
)
 
(199,969
)
 
(161,716
)
 
(100,721
)
 
(39,926
)
 
(42,910
)
Straight-line expense
80,953

 
54,069

 
39,025

 
38,759

 
37,625

 
39,381

 
41,223

Stock-based compensation expense
41,788

 
47,382

 
35,991

 
39,965

 
30,305

 
28,767

 
25,087

Non-cash portion of tax provision(2)
191,729

 
(106,742
)
 
4,970

 
(29,033
)
 
(78,304
)
 
(106,857
)
 
(95,622
)
Non-real estate related depreciation, amortization and accretion
13,145

 
21,220

 
21,082

 
18,257

 
8,919

 
34,123

 
37,354

Amortization of non-cash interest expense
99,244

 
109,337

 
102,944

 
85,454

 
61,357

 
24,831

 
23,913

Other (income) expense
3,872

 
5,392

 
5,577

 
603

 
(2,447
)
 
62,103

 
80,444

Gains (losses) on retirement of long-term obligations
37,127

 
131,974

 
—

 
138,367

 
91,079

 
(42
)
 
—

Net gain (loss) on interest rate swaps
—

 
—

 
—

 
286,435

 
92,966

 
37,888

 
—

Acquisition and integration costs
26,005

 
18,298

 
3,310

 
2,102

 
—

 
2,504

 
25,418

Adjustment for noncontrolling interest(1)
3,790

 
12,304

 
383

 
(319
)
 
209

 
—

 
(151
)
Capital improvement capital expenditures
(19,312
)
 
(21,647
)
 
(13,965
)
 
(14,795
)
 
(17,781
)
 
(14,203
)
 
(9,489
)
Corporate capital expenditures
(28,409
)
 
(15,459
)
 
(9,429
)
 
(9,531
)
 
(10,278
)
 
(12,862
)
 
(13,829
)
AFFO(3)
$
1,097,347

 
$
807,823

 
$
695,661

 
$
599,931

 
$
518,776

 
$
496,178

 
$
396,811

Weighted average common shares outstanding — diluted
299,293

 
291,270

 
285,947

 
286,764

 
286,622

 
282,007

 
279,937

AFFO per share(3)
$
3.67

 
$
2.77

 
$
2.43

 
$
2.09

 
$
1.81

 
$
1.76

 
$
1.42

 
 
 
 
 
 
 
 
 
 
 
 
 
 
AFFO (from above)
$
1,097,347

 
$
807,823

 
$
695,661

 
$
599,931

 
$
518,776

 
$
496,178

 
$
396,811

Prepaid rent received
241,451

 
117,419

 
34,395

 
16,965

 
17,096

 
17,881

 
12,623

Amortization of prepaid rent
(66,728
)
 
(41,592
)
 
(12,890
)
 
(5,598
)
 
(1,060
)
 
(833
)
 
(761
)
Dividends on preferred stock
—

 
2,481

 
19,487

 
19,879

 
19,878

 
19,878

 
19,879

AFFO, as previously defined(3)
$
1,272,070

 
$
886,131

 
$
736,653

 
$
631,177

 
$
554,690

 
$
533,104

 
$
428,552

        
(1)
Inclusive of the noncontrolling interest related to real estate related depreciation, amortization and accretion and asset write-downs.
(2)
Adjusts the income tax provision to reflect our estimate of the cash taxes had we been a REIT, which predominately relates to foreign taxes paid. As a result income tax expense (benefit) is lower by the amount of the adjustment.
(3)
See reconciliations and definitions provided herein. See also "Definitions of Non-GAAP Measures and Other Terms" herein for a discussion of the definitions of FFO and AFFO.

36
Crown Castle International Corp.
Second Quarter 2014
COMPANY OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX



FFO and AFFO for the three months ended September 30, 2013 and 2012 are computed as follows:
 
Three Months Ended September 30,
(in thousands of dollars, except share and per share amounts)
2013
 
2012
Net income
$
46,468

 
$
43,178

Real estate related depreciation, amortization and accretion
192,707

 
149,484

Asset write-down charges
3,893

 
1,560

Adjustment for noncontrolling interest(1)
(632
)
 
(1,133
)
FFO(3)
$
242,434

 
$
193,089

 
 
 
 
FFO (from above)
242,434

 
193,089

Adjustments to increase (decrease) FFO:
 
 
 
Straight-line revenue
(53,294
)
 
(69,244
)
Straight-line expense
20,604

 
13,079

Stock-based compensation expense
10,178

 
16,182

Non-cash portion of tax provision(2)
32,510

 
28,687

Non-real estate related depreciation, amortization and accretion
2,701

 
5,383

Amortization of non-cash interest expense
20,771

 
24,879

Other (income) expense
631

 
632

Gains (losses) on retirement of long-term obligations
1

 
—

Acquisition and integration costs
4,369

 
2,937

Adjustment for noncontrolling interest(1)
632

 
1,133

Capital improvement capital expenditures
(3,741
)
 
(4,259
)
Corporate capital expenditures
(6,478
)
 
(3,218
)
AFFO(3)
$
271,319

 
$
209,279

Weighted average common shares outstanding — diluted
291,378

 
292,098

AFFO per share(3)
$
0.93

 
$
0.72

 
 
 
 
AFFO (from above)
$
271,319

 
$
209,279

Prepaid rent received
63,940

 
34,086

Amortization of prepaid rent
(17,105
)
 
(13,415
)
AFFO, as previously defined(3)
$
318,154

 
$
229,950

        
(1)
Inclusive of the noncontrolling interest related to real estate related depreciation, amortization and accretion and asset write-downs.
(2)
Adjusts the income tax provision to reflect our estimate of the cash taxes had we been a REIT, which predominately relates to foreign taxes paid. As a result income tax expense (benefit) is lower by the amount of the adjustment.
(3)
See reconciliations and definitions provided herein. See also "Definitions of Non-GAAP Measures and Other Terms" herein for a discussion of the definitions of FFO and AFFO.



37
Crown Castle International Corp.
Second Quarter 2014
COMPANY OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX



FFO and AFFO for the quarter ending September 30, 2014 and the year ending December 31, 2014 are forecasted as follows:
 
Q3 2014
 
Full Year 2014
(in millions of dollars, except share and per share amounts)
Outlook
 
Outlook
Net income
$81 to $114
 
$292 to $376
Real estate related depreciation, amortization and accretion
$248 to $251
 
$985 to $1,000
Asset write-down charges
$2 to $4
 
$7 to $17
Adjustment for noncontrolling interest(1)
$(2) to $2
 
$(7) to $1
Dividends on preferred stock
$(11) to $(11)
 
$(44) to $(44)
FFO(3)
$337 to $342
 
$1,286 to $1,301
 
 
 
 
FFO (from above)
$337 to $342
 
$1,286 to $1,301
Adjustments to increase (decrease) FFO:
 
 
 
Straight-line revenue
$(49) to $(44)
 
$(193) to $(183)
Straight-line expense
$24 to $29
 
$100 to $110
Stock-based compensation expense
$13 to $15
 
$58 to $63
Non-cash portion of tax provision
$(4) to $1
 
$(13) to $2
Non-real estate related depreciation, amortization and accretion
$4 to $6
 
$18 to $23
Amortization of non-cash interest expense
$19 to $23
 
$75 to $86
Other (income) expense
$2 to $4
 
$14 to $16
Gains (losses) on retirement of long-term obligations
$0 to $0
 
$45 to $45
Acquisition and integration costs
$2 to $6
 
$28 to $38
Adjustment for noncontrolling interest(1)
$2 to $(2)
 
$7 to $(1)
Capital improvement capital expenditures
$(14) to $(12)
 
$(34) to $(32)
Corporate capital expenditures
$(17) to $(15)
 
$(46) to $(44)
AFFO(3)
$332 to $337
 
$1,376 to $1,391
Weighted-average common shares outstanding—diluted(2)
333.1
 
333.1
AFFO per share(3)
$1.00 to $1.01
 
$4.13 to $4.18
    
(1)
Inclusive of the noncontrolling interest related to real estate related depreciation, amortization and accretion and asset write-downs.
(2)
Based on 333.1 million diluted shares outstanding as of June 30, 2014.
(3)
See definitions herein. See also “Definitions of Non-GAAP Financial Measures and Other Calculations” herein for a discussion of the definitions of FFO and AFFO.





38
Crown Castle International Corp.
Second Quarter 2014
COMPANY OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX



Net Debt to Last Quarter Annualized EBITDA calculation:
 
Three Months Ended June 30,
(dollars in millions)
2014
2013
Total face value of debt
$
11,568.8

$
10,780.6

Ending cash and cash equivalents
227.5

126.9

Total Net Debt
$
11,341.3

$
10,653.7

 
 
 
Adjusted EBITDA for the three months ended June 30,
$
530.6

$
444.4

Last quarter annualized adjusted EBITDA
2,122.4

1,777.6

Net Debt to Last Quarter Annualized Adjusted EBITDA
5.3x

6.0x


Cash Interest Coverage Ratio Calculation:
 
Three Months Ended June 30,
(dollars in thousands)
2014
 
2013
Adjusted EBITDA
$
530,629

 
$
444,395

Interest expense on debt obligations
123,930

 
119,705

Interest Coverage Ratio
4.3x

 
3.7x




AFFO Payout Ratio Calculation:
 
Three Months Ended June 30,
(per share)
2014
Dividend per share
$
0.35

AFFO per share
$
1.05

AFFO Payout Ratio
33
%


39