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Crown Castle Reports Third Quarter 2016 Results, Provides Outlook for Full Year 2017 and Announces Increase to Common Stock Dividend

HOUSTON, Oct. 20, 2016 (GLOBE NEWSWIRE) -- Crown Castle International Corp. (NYSE:CCI) ("Crown Castle") today reported results for the quarter ended September 30, 2016.    

2017 Outlook for AFFO Growth
2017 Outlook for AFFO Growth


2017 Outlook for Organic Contribution to Site Rental Revenues and Growth in Site Rental Revenues
2017 Outlook for Organic Contribution to Site Rental Revenues and Growth in Site Rental Revenues


"Our business continues to grow at a healthy pace as U.S. wireless carriers further invest to enhance the consumer mobile experience," stated Jay Brown, Crown Castle’s Chief Executive Officer.  "Driven by the continued adoption and introduction of data-intensive applications and consistent with many industry forecasts, we believe over the next decade there will be tremendous growth in wireless data traffic that will necessitate further investment in wireless networks, which we expect will result in revenue and cash flow growth for Crown Castle.  Today, as a result of our investments over the last several years to acquire towers and deploy small cells, we have the leading portfolio of U.S. wireless infrastructure, which we expect will continue to generate significant incremental returns.  Consistent with the growth we are seeing in our business, we are increasing our quarterly stock dividend by 7% to $0.95 per share, commencing with our fourth quarter 2016 dividend payment."
           
RESULTS FOR THE QUARTER
The table below sets forth select financial results for the three month period ended September 30, 2016.  For further information, refer to the financial statements and non-GAAP and other calculation reconciliations included in this press release. 

(in millions) Actual Midpoint
Q3 2016 Outlook(b)
Actual
Compared to Outlook
Q3 2016 Q3 2015 $ Change % Change
Site rental revenues $   812   $ 765   +$ 47     6 % $ 808   +$ 4  
Site rental gross margin $   555   $ 518   +$ 37     7 % $ 552   +$ 3  
Net income (loss) $   98   $ 104   -$ 6     -6 % $ 101   -$ 3  
Adjusted EBITDA(a) $   564   $ 529   +$ 35     7 % $ 560   +$ 4  
AFFO(a)(c) $   416   $ 356   +$ 60     17 % $ 403   +$ 13  
Weighted-average common shares outstanding - diluted     338     334   4     1 %   339   1  
Note: Figures may not tie due to rounding
(a) See reconciliation of this non-GAAP financial measure to net income (loss) included herein.
(b)  As issued on July 21, 2016.
(c) Attributable to CCIC common stockholders.

HIGHLIGHTS FROM THE QUARTER

  • Site rental revenues.  Site rental revenues grew approximately 6%, or $47 million, from third quarter 2015 to third quarter 2016, inclusive of approximately $47 million in Organic Contribution to Site Rental Revenues plus $19 million in contributions from acquisitions and other items, less a $19 million reduction in straight-line revenues.  The $47 million in Organic Contribution to Site Rental Revenues represents approximately 6% growth, comprised of approximately 9% growth from new leasing activity and contracted tenant escalations, net of approximately 3% from tenant non-renewals. 
  • Net income (loss).  Net income (loss) for third quarter 2016 was negatively impacted by approximately $10 million in losses on retirement of long-term obligations related to refinancing activities during the quarter.
  • AFFO.  AFFO for third quarter 2016 benefited from approximately $7 million in lower than expected sustaining capital expenditures during the quarter.  This benefit is primarily attributable to timing, as the unspent amount from third quarter 2016 is expected to be spent during fourth quarter 2016.
  • Capital expenditures. Capital expenditures during the quarter were approximately $221 million, comprised of approximately $17 million of land purchases, approximately $19 million of sustaining capital expenditures and approximately $185 million of revenue generating capital expenditures.
  • Common stock dividend.  During the quarter, Crown Castle paid common stock dividends of approximately $299 million in the aggregate, or $0.885 per common share.
  • Financing activities.  During the quarter, Crown Castle issued $700 million in aggregate principal amount of senior unsecured notes, the proceeds of which were used to refinance existing debt.

"Our excellent third quarter results allowed us to increase our full year 2016 Outlook, setting the stage for expected continued growth in 2017," stated Dan Schlanger, Crown Castle's Chief Financial Officer.  "We expect the healthy leasing environment from 2016 to continue into 2017 as the wireless carriers continue to upgrade and enhance their networks to meet increasing demand for wireless connectivity.  This leasing backdrop combined with the strength of our business model, the quality of our assets and the strength of our balance sheet give us the confidence to increase our dividend and provide us with opportunities to continue to invest in our business to drive long-term growth in AFFO and dividends."

DIVIDEND INCREASE ANNOUNCEMENT
Crown Castle's Board of Directors has declared a quarterly cash dividend of $0.95 per common share, representing an increase of approximately 7% over the previous quarterly dividend of $0.885 per share. The quarterly dividend will be payable on December 30, 2016 to common stockholders of record at the close of business on December 16, 2016. Future dividends are subject to the approval of Crown Castle's Board of Directors.

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 SEC.

The following table sets forth Crown Castle's current Outlook for fourth quarter 2016, full year 2016 and full year 2017:      

(in millions) Fourth Quarter 2016 Full Year 2016 Full Year 2017
Site rental revenues $ 811   to $ 816   $ 3,227   to $ 3,232   $ 3,314   to $ 3,344  
Site rental cost of operations $ 253   to $ 258   $ 1,015   to $ 1,020   $ 1,023   to $ 1,053  
Site rental gross margin $ 556   to $ 561   $ 2,210   to $ 2,215   $ 2,276   to $ 2,306  
Net income (loss) $ 90   to $ 110    $ 318   to $ 338   $ 375   to $ 425  
Adjusted EBITDA(a) $ 566   to $ 571   $ 2,219   to $ 2,224   $ 2,263   to $ 2,293  
Interest expense and amortization of deferred financing costs(b) $ 128   to $ 133   $ 514   to $ 519   $ 515   to $ 545  
FFO(a)(d) $ 383   to $ 388   $ 1,426   to $ 1,431   $ 1,566   to $ 1,596  
AFFO(a)(d) $ 403   to $ 408   $ 1,606   to $ 1,611   $ 1,739   to $ 1,769  
Weighted-average common shares outstanding - diluted(c)   346     340     350  
                   
(a) See reconciliation of this non-GAAP financial measure to net income (loss) included herein.
(b) See the reconciliation of "components of interest expense and amortization of deferred financing costs" herein for a discussion of non-cash interest expense.
(c) The assumption for fourth quarter 2016, full year 2016 and full year 2017 diluted weighted-average common shares outstanding is based on (1) diluted common shares outstanding as of September 30, 2016 and (2) the assumed conversion of the mandatory convertible preferred stock in November 2016.
(d) Attributable to CCIC common stockholders.

Full Year 2016 Outlook
The table below compares the results for full year 2015, the midpoint of the current full year 2016 Outlook and the midpoint of the previously provided full year 2016 Outlook for select metrics. 

  Midpoint of FY 2016 Outlook to
FY 2015 Actual Comparison
Previous
Full Year
2016 Outlook(b)
Current
Compared
to Previous Outlook
($ in millions) Current
Full Year
2016 Outlook
Full Year
2015 Actual
$ Change % Change
Site rental revenues $ 3,230   $ 3,018   +$ 212     +7 % $ 3,223   +$ 7  
Site rental gross margin $ 2,213   $ 2,055   +$ 158     +8 % $ 2,207   +$ 6  
Net income (loss) $ 328   $ 1,524   -$ 1,196     -78 % $ 338   -$ 10  
Adjusted EBITDA(a) $ 2,222   $ 2,119   +$ 103     +5 % $ 2,215   +$ 7  
AFFO(a)(d) $ 1,609   $ 1,437   +$ 172     +12 % $ 1,605   +$ 4  
Weighted-average common shares outstanding - diluted(c)   340     334   + 6     +2 %   341   - 1  
 
(a) See reconciliation of this non-GAAP financial measure to net income (loss) included herein.
(b) As issued on July 21, 2016.  Represents midpoint of Outlook.
(c) The assumption for full year 2016 diluted weighted-average common shares outstanding is based on (1) diluted common shares outstanding as of September 30, 2016 and (2) the assumed conversion of the mandatory convertible preferred stock in November 2016. 
(d) Attributable to CCIC common stockholders.


  • The increase in full year 2016 Outlook primarily reflects the higher than expected results from the third quarter and the expected timing benefit from tenant non-renewals occurring later than previously expected, partially offset by an expected increase in sustaining capital expenditures for the full year.

Full Year 2017 Outlook
The table below compares the midpoint of the current full year 2016 Outlook and the midpoint of the full year 2017 Outlook for select metrics:

   Midpoint    
($ in millions) Full Year
2016 Outlook
Full Year
2017 Outlook
$ Change % Change
Site rental revenues $ 3,230   $ 3,329   +$ 99     +3 %
Site rental gross margin $ 2,213   $ 2,291   +$ 78     +4 %
Net income (loss) $ 328   $ 400   +$ 72     +22 %
Adjusted EBITDA(a) $ 2,222   $ 2,278   +$ 56     +3 %
AFFO(a)(c) $ 1,609   $ 1,754   +$ 145     +9 %
Weighted-average common shares outstanding - diluted(b)   340     350   10     +3 %
 
(a) See reconciliation of this non-GAAP financial measure to net income (loss) included herein.
(b) The assumption for full year 2016 and 2017 diluted weighted-average common shares outstanding is based on (1) diluted common shares outstanding as of September 30, 2016 and (2) the assumed conversion of the mandatory convertible preferred stock in November 2016. 
(c) Attributable to CCIC common stockholders.


  • The chart below reconciles the components of expected growth from 2016 to 2017 in site rental revenues of $85 million to $115 million, including expected Organic Contribution to Site Rental Revenues of approximately $140 million to $170 million.

An infographic accompanying this announcement is available at http://www.globenewswire.com/NewsRoom/AttachmentNg/34f28cca-3c9c-49b9-bfec-567ddf46f869

  • At the midpoint, growth from new leasing activity for full year 2017 is approximately $10 million lower than full year 2016. This lower growth reflects similar growth from towers and approximately $15 million higher growth from small cells, offset by approximately $25 million in lower growth from amortization of deferred credits (commonly referred to as prepaid rent). Further, full year 2017 Outlook assumes prepaid rent to be received during the year to be similar to full year 2016.
  • The chart below reconciles the components of expected growth in AFFO from 2016 to 2017 of approximately $145 million at the midpoint.

An infographic accompanying this announcement is available at http://www.globenewswire.com/NewsRoom/AttachmentNg/9c5c9a31-2760-496d-bfe0-f624bad7f7ac

  • Network services gross margin contribution for full year 2017 is expected to be approximately $235 million to $255 million compared to full year 2016 expectation of $255 million to $260 million.
  • The conversion of the 4.5% Mandatory Convertible Preferred Stock ("Preferred Stock") on November 1, 2016 will eliminate $44 million in annual preferred dividend payments, which are deducted to arrive at AFFO.  As a result of the anticipated conversion of the Preferred Stock, 11.6 million common shares are expected to be issued on November 1, 2016.  The amount of common shares to be issued is subject to change depending on the average common share price for the 20 business days preceding November 1, 2016.
  • Additional information is available in Crown Castle's quarterly Supplemental Information Package posted in the Investors section of its website.

CONFERENCE CALL DETAILS
Crown Castle has scheduled a conference call for Friday, October 21, 2016, at 10:30 a.m. Eastern time.  The conference call may be accessed by dialing 888-811-5441 and asking for the Crown Castle call (access code 6156887) 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.  Supplemental materials for the call have been posted on the Crown Castle website at http://investor.crowncastle.com.

A telephonic replay of the conference call will be available from 1:30 p.m. Eastern time on Friday, October 21, 2016, through 1:30 p.m. Eastern time on Thursday, January 19, 2017 and may be accessed by dialing 888-203-1112 and using access code 6156887.  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 17,000 miles of fiber supporting small cells, Crown Castle is the nation's largest provider of shared wireless infrastructure with a significant presence in the top 100 US markets.  For more information on Crown Castle, please visit www.crowncastle.com.

Non-GAAP Financial Measures and Other Calculations

This press release includes presentations of Adjusted EBITDA, Adjusted Funds from Operations ("AFFO"), Funds from Operations ("FFO"), and Organic Contribution to Site Rental Revenues, 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")).

Our measures of Adjusted EBITDA, AFFO, FFO, Organic Contribution to Site Rental Revenues, Segment Site Rental Gross Margin, Segment Network Services and Other Gross Margin and Segment Operating Profit may not be comparable to similarly titled measures of other companies, including other companies in the tower sector or other REITs.  Our definition of FFO is consistent with guidelines from the National Association of Real Estate Investment Trusts with the exception of the impact of income taxes in periods prior to our REIT conversion.

Adjusted EBITDA, AFFO, FFO, and Organic Contribution to Site Rental Revenues are presented as additional information because management believes these measures are useful indicators of the financial performance of our business.  Among other things, management believes that:

• Adjusted EBITDA is useful to investors or other interested parties in evaluating our financial performance.  Adjusted EBITDA is the primary measure used by management (1) to evaluate the economic productivity of our operations and (2) for purposes of making decisions about allocating resources to, and assessing the performance of, our operations.  Management believes that Adjusted EBITDA helps investors or other interested parties meaningfully evaluate and compare the results of our operations (1) from period to period and (2) to our competitors, by excluding the impact of our capital structure (primarily interest charges from our outstanding debt) and asset base (primarily depreciation, amortization and accretion) from our financial results.  Management also believes Adjusted EBITDA is frequently used by investors or other interested parties in the evaluation of REITs.  In addition, Adjusted EBITDA is similar to the measure of current financial performance generally used in our debt covenant calculations.  Adjusted EBITDA should be considered only as a supplement to net income computed in accordance with GAAP as a measure of our performance.

•AFFO is useful to investors or other interested parties in evaluating our financial performance.  Management believes that AFFO helps investors or other interested parties meaningfully evaluate our financial performance as they include (1) the impact of our capital structure (primarily interest expense on our outstanding debt and dividends on our preferred stock) and (2) sustaining capital expenditures, and exclude the impact of our (1) asset base (primarily depreciation, amortization and accretion) and (2) certain non-cash items, including straight-lined revenues and expenses related to fixed escalations and rent free periods.  GAAP requires rental revenues and expenses related to leases that contain specified rental increases over the life of the lease to be recognized evenly over the life of the lease.  In accordance with GAAP, if payment terms call for fixed escalations, or rent free periods, the revenue or expense is recognized on a straight-lined basis over the fixed, non-cancelable term of the contract.  Management notes that the Company uses AFFO only as a performance measure.  AFFO should be considered only as a supplement to net income computed in accordance with GAAP as a measure of our performance and should not be considered as an alternative to cash flows from operations or as residual cash flow available for discretionary investment.

•FFO is useful to investors or other interested parties in evaluating our financial performance.  Management believes that FFO may be used by investors or other interested parties as a basis to compare our financial performance with that of other REITs.  FFO helps investors or other interested parties meaningfully evaluate financial performance by excluding the impact of our asset base (primarily depreciation, amortization and accretion). FFO is not a key performance indicator used by the Company.  FFO should be considered only as a supplement to net income computed in accordance with GAAP as a measure of our performance and should not be considered as an alternative to cash flow from operations.

•Organic Contribution to Site Rental Revenues is useful to investors or other interested parties in understanding the components of the year-over year changes in our site rental revenues computed in accordance with GAAP.  Management uses the Organic Contribution to Site Rental Revenues to assess year-over-year growth rates for our rental activities, to evaluate current performance, to capture trends in rental rates, new leasing activities and customer non-renewals in our core business, as well to forecast future results. Organic Contribution to Site Rental Revenues is not meant as an alternative measure of revenue and should be considered only as a supplement in understanding and assessing the performance of our site rental revenues computed in accordance with GAAP.

In addition to the non-GAAP financial measures used herein, we also provide Segment Site Rental Gross Margin, Segment Network Services and Other Gross Margin and Segment Operating Profit, which are key measures used by management to evaluate our operating segments for purposes of making decisions about allocating capital and assessing performance.  These segment measures are provided pursuant to GAAP requirements related to segment reporting.  In addition, we provide the components of certain GAAP measures, such as capital expenditures.

We define our non-GAAP financial measures and other measures as follows:

Adjusted EBITDA. We define 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, gains (losses) on foreign currency swaps, impairment of available-for-sale securities, interest income, other income (expense), benefit (provision) for income taxes, cumulative effect of a change in accounting principle, income (loss) from discontinued operations and stock-based compensation expense.

Adjusted Funds from Operations.  We define Adjusted Funds from Operations as FFO before straight-lined 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, gains (losses) on foreign currency swaps, acquisition and integration costs, and adjustments for noncontrolling interests, and less capital improvement capital expenditures and corporate capital expenditures.

Funds from Operations. We define 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.

Organic Contribution to Site Rental Revenues. We define the Organic Contribution to Site Rental Revenues as the sum of the change in GAAP site rental revenues related to (1) new leasing activity including revenues from the construction of small cells and the impact of prepaid rent, (2) escalators and less (3) non-renewals of customer contracts.

Discretionary capital expenditures.  We define discretionary capital expenditures as those capital expenditures made with respect to activities which we believe exhibit sufficient potential to enhance long-term stockholder value. They consist of (1) improvements to existing wireless infrastructure and construction of new wireless infrastructure (collectively referred to as "revenue generating") and (2) purchases of land assets under towers as we seek to manage our interests in the land beneath our towers.

Sustaining capital expenditures.  We define 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.

Segment Site Rental Gross Margin.  We define Segment Site Rental Gross Margin as segment site rental revenues less segment site rental cost of operations, excluding stock-based compensation expense and prepaid lease purchase price adjustments recorded in cost of operations.

Segment Network Services and Other Gross Margin.  We define Segment Network Services and Other Gross Margin as segment network services and other revenues less segment network services and other cost of operations, excluding stock-based compensation expense recorded in cost of operations.

Segment Operating Profit.  We define Segment Operating Profit as segment revenues less segment cost of operations and segment general and administrative expenses, excluding stock-based compensation expense and prepaid lease purchase price adjustments recorded in cost of operations.

The tables set forth below reconcile the non-GAAP financial measures used herein 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 and Other Calculations:

Reconciliation of Historical Adjusted EBITDA:

  For the Three Months Ended   For the Twelve
Months Ended
  September 30, 2016   September 30, 2015   December 31, 2015
(in millions)          
Net income (loss) $ 98.4     $ 103.8     $ 1,524.3  
Adjustments to increase (decrease) net income (loss):          
Income (loss) from discontinued operations     0.5     (999.0 )
Asset write-down charges 8.3     7.5     33.5  
Acquisition and integration costs 2.7     7.6     15.7  
Depreciation, amortization and accretion 280.8     261.7     1,036.2  
Amortization of prepaid lease purchase price adjustments 5.4     5.1     20.5  
Interest expense and amortization of deferred financing costs(a) 129.9     129.9     527.1  
Gains (losses) on retirement of long-term obligations 10.3         4.2  
Interest income (0.2 )   (0.8 )   (1.9 )
Other income (expense) 0.8     1.2     (57.0 )
Benefit (provision) for income taxes 5.0     (3.8 )   (51.5 )
Stock-based compensation expense 22.6     16.5     67.1  
Adjusted EBITDA(b) $ 564.1     $ 529.2     $ 2,119.2  
                       
(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 definition which are not applicable for the periods shown. 



Reconciliation of Current Outlook for Adjusted EBITDA:

  Q4 2016   Full Year 2016   Full Year 2017
(in millions) Outlook   Outlook   Outlook
Net income (loss) $ 90   to $ 110     $ 318   to $ 338     $ 375   to $ 425  
Adjustments to increase (decrease) net income (loss):                      
Asset write-down charges $ 9   to $ 11     $ 37   to $ 39     $ 35   to $ 45  
Acquisition and integration costs $ 3   to $ 6     $ 14   to $ 17     $ 3   to $ 8  
Depreciation, amortization and accretion $ 283   to $ 298     $ 1,123   to $ 1,138     $ 1,151   to $ 1,177  
Amortization of prepaid lease purchase price adjustments $ 4   to $ 6     $ 20   to $ 22     $ 20   to $ 22  
Interest expense and amortization of deferred financing costs(a) $ 128   to $ 133     $ 514   to $ 519     $ 515   to $ 545  
Gains (losses) on retirement of long-term obligations $ 0   to $ 0     $ 52   to $ 52     $ 0   to $ 0  
Interest income $ (1 ) to $ 0     $ (2 ) to $ (1 )   $ (1 ) to $ 1  
Other income (expense) $ (1 ) to $ 2     $ 3   to $ 6     $ 2   to $ 4  
Benefit (provision) for income taxes $ 4   to $ 8     $ 18   to $ 22     $ 14   to $ 22  
Stock-based compensation expense $ 21   to $ 23     $ 97   to $ 99     $ 94   to $ 99  
Adjusted EBITDA(b) $ 566   to $ 571     $ 2,219   to $ 2,224     $ 2,263   to $ 2,293  
                                               
(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 definition which are not applicable for the periods shown.



Reconciliation of Historical FFO and AFFO:

  For the Three Months Ended   For the Nine Months Ended   For the Twelve Months Ended
(in millions) September 30, 2016   September 30, 2015   September 30, 2016   September 30, 2015   December 31, 2015
Net income (loss)(a) $ 98.4     $ 104.3     $ 232.3     $ 382.6     $ 525.3  
Real estate related depreciation, amortization and accretion 274.2     257.0     815.1     753.6     1,018.3  
Asset write-down charges 8.3     7.5     28.3     19.7     33.5  
Dividends on preferred stock (11.0 )   (11.0 )   (33.0 )   (33.0 )   (44.0 )
FFO(b)(c)(d)(e)(f) $ 369.9     $ 357.8     $ 1,042.6     $ 1,122.8     $ 1,533.1  
                   
FFO (from above) $ 369.9     $ 357.8     $ 1,042.6     $ 1,122.8     $ 1,533.1  
Adjustments to increase (decrease) FFO:                  
Straight-lined revenue (8.8 )   (27.1 )   (42.4 )   (89.0 )   (111.3 )
Straight-lined expense 23.5     24.4     71.1     74.0     98.7  
Stock-based compensation expense 22.6     16.5     75.3     49.3     67.1  
Non-cash portion of tax provision 3.5     (5.9 )   5.2     (20.3 )   (63.9 )
Non-real estate related depreciation, amortization and accretion 6.6     4.6     19.6     13.0     17.9  
Amortization of non-cash interest expense 3.3     8.6     11.3     32.4     37.1  
Other (income) expense 0.8     1.2     4.6     (58.5 )   (57.0 )
Gains (losses) on retirement of long-term obligations 10.3         52.3     4.2     4.2  
Acquisition and integration costs 2.7     7.6     11.5     12.0     15.7  
Capital improvement capital expenditures (10.0 )   (14.4 )   (25.4 )   (32.5 )   (46.8 )
Corporate capital expenditures (8.5 )   (17.0 )   (22.4 )   (42.9 )   (58.1 )
AFFO(b)(c)(d)(e)(f) $ 415.8     $ 356.4     $ 1,203.5     $ 1,064.4     $ 1,436.6  
 
(a) Exclusive of income (loss) from discontinued operations and related noncontrolling interest of $(0.5 million), $1.0 billion and $1.0 billion for the three months ended September 30, 2015, nine months ended September 30, 2015 and twelve months ended December 31, 2015, respectively.
(b) See "Non-GAAP Financial Measures and Other Calculations" herein for a discussion of our definitions of FFO and AFFO.
(c) FFO and AFFO are reduced by cash paid for preferred stock dividends. 
(d) Diluted weighted-average common shares outstanding were 338.4 million, 333.7 million, 337.1 million, 333.7 million and 334.1 million for the three months ended September 30, 2016 and 2015, the nine months ended September 30, 2016 and 2015 and the twelve months ended December 31, 2015.  The diluted weighted-average common shares outstanding assumes no conversion of preferred stock in the share count.
(e) The above reconciliation excludes line items included in our definition which are not applicable for the periods shown.
(f) Attributable to CCIC common stockholders.



Reconciliation of Current Outlook for FFO and AFFO:

  Q4 2016   Full Year 2016   Full Year 2017
(in millions) Outlook   Outlook   Outlook
Net income (loss) $ 90   to $ 110     $ 318   to $ 338     $ 375   to $ 425  
Real estate related depreciation, amortization and accretion $ 277   to $ 290     $ 1,097   to $ 1,110     $ 1,127   to $ 1,148  
Asset write-down charges $ 9   to $ 11     $ 37   to $ 39     $ 35   to $ 45  
Dividends on preferred stock $ (11 ) to $ (11 )   $ (44 ) to $ (44 )   $ 0   to $ 0  
FFO(a)(b)(c)(d)(e) $ 383   to $ 388     $ 1,426   to $ 1,431     $ 1,566   to $ 1,596  
                       
FFO (from above) $ 383   to $ 388     $ 1,426   to $ 1,431     $ 1,566   to $ 1,596  
Adjustments to increase (decrease) FFO:                      
Straight-lined revenue $ (8 ) to $ (3 )   $ (50 ) to $ (45 )   $ 13   to $ 28  
Straight-lined expense $ 20   to $ 25     $ 90   to $ 95     $ 78   to $ 93  
Stock-based compensation expense $ 21   to $ 23     $ 97   to $ 99     $ 94   to $ 99  
Non-cash portion of tax provision $ 2   to $ 7     $ 9   to $ 14     $ (3 ) to $ 12  
Non-real estate related depreciation, amortization and accretion $ 6   to $ 8     $ 26   to $ 28     $ 24   to $ 29  
Amortization of non-cash interest expense $ 3   to $ 6     $ 12   to $ 15     $ 11   to $ 17  
Other (income) expense $ (1 ) to $ 2     $ 3   to $ 6     $ 2   to $ 4  
Gains (losses) on retirement of long-term obligations $ 0   to $ 0     $ 52   to $ 52     $ 0   to $ 0  
Acquisition and integration costs $ 3   to $ 6     $ 14   to $ 17     $ 3   to $ 8  
Capital improvement capital expenditures $ (20 ) to $ (15 )   $ (46 ) to $ (41 )   $ (45 ) to $ (40 )
Corporate capital expenditures $ (20 ) to $ (15 )   $ (43 ) to $ (38 )   $ (37 ) to $ (32 )
AFFO(a)(b)(c)(d)(e) $ 403   to $ 408     $ 1,606   to $ 1,611     $ 1,739   to $ 1,769  
 
(a) The assumption for fourth quarter 2016, full year 2016 and full year 2017 diluted weighted-average common shares outstanding is 346 million, 340 million and 350 million, respectively, based on (1) diluted common shares outstanding as of September 30, 2016 and (2) the assumed conversion of the mandatory convertible preferred stock in November 2016.
(b) See "Non-GAAP Financial Measures and Other Calculations" herein for a discussion for our definitions of FFO and AFFO.
(c) FFO and AFFO are reduced by cash paid for preferred stock dividends.
(d) The above reconciliation excludes line items included in our definition which are not applicable for the periods shown.
(e) Attributable to CCIC common stockholders.



For Comparative Purposes - Reconciliation of Previous Outlook for Adjusted EBITDA:

  Previously Issued   Previously Issued
  Q3 2016   Full Year 2016
(in millions) Outlook   Outlook
Net income (loss) $ 91   to $ 111     $ 318   to $ 358  
Adjustments to increase (decrease) net income (loss):              
Asset write-down charges $ 9   to $ 11     $ 35   to $ 45  
Acquisition and integration costs $ 3   to $ 6     $ 14   to $ 19  
Depreciation, amortization and accretion $ 275   to $ 290     $ 1,107   to $ 1,133  
Amortization of prepaid lease purchase price adjustments $ 4   to $ 6     $ 20   to $ 22  
Interest expense and amortization of deferred financing costs $ 127   to $ 132     $ 508   to $ 528  
Gains (losses) on retirement of long-term obligations $ 0   to $ 0     $ 42   to $ 42  
Interest income $ (1 ) to $ 0     $ (1 ) to $ 0  
Other income (expense) $ (1 ) to $ 2     $ 4   to $ 6  
Benefit (provision) for income taxes $ 3   to $ 7     $ 15   to $ 23  
Stock-based compensation expense $ 21   to $ 23     $ 93   to $ 98  
Adjusted EBITDA(a) $ 557   to $ 562     $ 2,205   to $ 2,225  
                               
(a) The above reconciliation excludes line items included in our definition which are not applicable for the periods shown.



For Comparative Purposes - Reconciliation of Previous Outlook for FFO and AFFO:

  Previously Issued   Previously Issued
  Q3 2016   Full Year 2016
(in millions) Outlook   Outlook
Net income (loss) $ 91   to $ 111     $ 318   to $ 358  
Real estate related depreciation, amortization and accretion $ 269   to $ 282     $ 1,083   to $ 1,104  
Asset write-down charges $ 9   to $ 11     $ 35   to $ 45  
Dividends on preferred stock $ (11 ) to $ (11 )   $ (44 ) to $ (44 )
FFO(a)(b)(c)(e) $ 375   to $ 380     $ 1,421   to $ 1,441  
               
FFO (from above) $ 375   to $ 380     $ 1,421   to $ 1,441  
Adjustments to increase (decrease) FFO:              
Straight-line revenue $ (13 ) to $ (8 )   $ (56 ) to $ (41 )
Straight-line expense $ 21   to $ 26     $ 85   to $ 100  
Stock-based compensation expense $ 21   to $ 23     $ 93   to $ 98  
Non-cash portion of tax provision $ 1   to $ 6     $ 3   to $ 18  
Non-real estate related depreciation, amortization and accretion $ 6   to $ 8     $ 24   to $ 29  
Amortization of non-cash interest expense $ 3   to $ 6     $ 12   to $ 18  
Other (income) expense $ (1 ) to $ 2     $ 4   to $ 6  
Gains (losses) on retirement of long-term obligations $ 0   to $ 0     $ 42   to $ 42  
Acquisition and integration costs $ 3   to $ 6     $ 14   to $ 19  
Capital improvement capital expenditures $ (13 ) to $ (11 )   $ (41 ) to $ (36 )
Corporate capital expenditures $ (14 ) to $ (12 )   $ (43 ) to $ (38 )
AFFO(a)(b)(c)(e) $ 400   to $ 405     $ 1,595   to $ 1,615  
                               
(a) Previously issued third quarter 2016 outlook assumes diluted common shares outstanding as of June 30, 2016 of approximately 339 million shares. Previously issued full year 2016 outlook assumes diluted common shares outstanding of approximately 341 million shares, inclusive of the assumed conversion of the mandatory convertible preferred stock in November 2016.
(b) See "Non-GAAP Financial Measures and Other Calculations" herein for a discussion for our definitions of FFO and AFFO.
(c) FFO and AFFO are reduced by cash paid for preferred stock dividends.
(d) The above reconciliation excludes line items included in our definition which are not applicable for the periods shown.
(e)  Attributable to CCIC common stockholders.



The components of changes in site rental revenues for the quarters ended September 30, 2016 and 2015 are as follows:

  Three Months Ended September 30,
(in millions) 2016   2015
Components of changes in site rental revenues(f):      
Prior year site rental revenues exclusive of straight-line associated with fixed escalators(a)(c) $ 737     $ 672  
       
New leasing activity(a)(c) 45     44  
Escalators 22     23  
Non-renewals (20 )   (24 )
Organic Contribution to Site Rental Revenues(d) 47     43  
Straight-lined revenues associated with fixed escalators 9     27  
Acquisitions and builds(b) 19     23  
Other      
Total GAAP site rental revenues $ 812     $ 765  
       
Year-over-year changes in revenue:      
Reported GAAP site rental revenues 6.1 %    
Organic Contribution to Site Rental Revenues(d)(e) 6.4 %    
         
(a) Includes revenues from amortization of prepaid rent in accordance with GAAP.
(b) The financial impact of acquisitions, as measured by the initial contribution, and tower builds is excluded from Organic Contribution to Site Rental Revenues until the one-year anniversary of the acquisition or build.
(c) Includes revenues from the construction of new small cell nodes, exclusive of straight-lined revenues related to fixed escalators.
(d) See "Non-GAAP Financial Measures and Other Calculations" herein.
(e) Calculated as the percentage change from prior year site rental revenues exclusive of straight-line associated with fixed escalations compared to Organic Contribution to Site Rental Revenues for the current period.
(f) Additional information regarding Crown Castle's site rental revenues including projected revenue from customer licenses, tenant non-renewals, straight-lined revenues and prepaid rent is available in Crown Castle's quarterly Supplemental Information Package posted in the Investors section of its website.

The components of the changes in site rental revenues for the years ending December 31, 2016 and 2017 are forecasted as follows:

         
(in millions) Midpoint of
Full Year
2016 Outlook
  Full Year
2017 Outlook
 
Components of changes in site rental revenues(g):        
Prior year site rental revenues exclusive of straight-line associated with fixed escalators(a)(c) $ 2,907     $ 3,184    
         
New leasing activity(a)(c)   171     150 to 170  
Escalators   89     80 to 85  
Non-renewals   (74 )   (95) to (75)  
Organic Contribution to Site Rental Revenues(d)   186     140 to 170  
Straight-lined revenues associated with fixed escalators   48     (28) to (13)  
Acquisitions and builds(b)   89       11    
Other    
Total GAAP site rental revenues $ 3,230     $3,314 to $3,344  
         
Year-over-year changes in revenue:        
Reported GAAP site rental revenues   7.0 %     3.1 %  
Organic Contribution to Site Rental Revenues(d)(e)   6.4 %     4.9 % (f)
 
(a) Includes revenues from amortization of prepaid rent in accordance with GAAP.
(b) The financial impact of acquisitions, as measured by the initial contribution, and tower builds is excluded from Organic Contribution to Site Rental Revenues until the one-year anniversary of the acquisition or build.
(c) Includes revenues from the construction of new small cell nodes, exclusive of straight-lined revenues related to fixed escalators.
(d) See "Non-GAAP Financial Measures and Other Calculations" herein.
(e) Calculated as the percentage change from prior year site rental revenues exclusive of straight-lined associated with fixed escalations compared to Organic Contribution to Site Rental Revenues for the current period.
(f) Calculated based on midpoint of Full Year 2017 Outlook.
(g) Additional information regarding Crown Castle's site rental revenues including projected revenue from customer licenses, tenant non-renewals, straight-lined revenues and prepaid rent is available in Crown Castle's quarterly Supplemental Information Package posted in the Investors section of its website.



Components of Historical Interest Expense and Amortization of Deferred Financing Costs:

  For the Three Months Ended
(in millions) September 30,
2016
  September 30,
2015
Interest expense on debt obligations $ 126.6     $ 121.3  
Amortization of deferred financing costs and adjustments on long-term debt, net 4.6     5.6  
Amortization of interest rate swaps(a)     3.7  
Other, net (1.3 )   (0.7 )
Interest expense and amortization of deferred financing costs $ 129.9     $ 129.9  
               
(a) Relates to the amortization of interest rate swaps; the swaps were cash settled in prior periods.



Components of Current Outlook for Interest Expense and Amortization of Deferred Financing Costs:

  Q4 2016   Full Year 2016   Full Year 2017
(in millions) Outlook   Outlook   Outlook
Interest expense on debt obligations $ 126   to $ 128     $ 501   to $ 503     $ 509   to $ 524  
Amortization of deferred financing costs and adjustments on long-term debt, net $ 4   to $ 7     $ 17   to $ 21     $ 17   to $ 21  
Other, net $ (1 ) to $ (1 )   $ (5 ) to $ (5 )   $ (6 ) to $ (4 )
Interest expense and amortization of deferred financing costs $ 128   to $ 133     $ 514   to $ 519     $ 515   to $ 545  



Debt balances and maturity dates as of September 30, 2016 are as follows:

(in millions) Face Value   Final Maturity
Bank debt - variable rate:      
2016 Revolver $ 410.0   Jan. 2021
2016 Term Loan A 1,975.0   Jan. 2021
Total bank debt 2,385.0    
Securitized debt - fixed rate:      
Secured Notes, Series 2009-1, Class A-1(a) 57.2   Aug. 2019
Secured Notes, Series 2009-1, Class A-2(a) 70.0   Aug. 2029
Tower Revenue Notes, Series 2010-3(b) 1,250.0   Jan. 2040
Tower Revenue Notes, Series 2010-6(b) 1,000.0   Aug. 2040
Tower Revenue Notes, Series 2015-1(b) 300.0   May 2042
Tower Revenue Notes, Series 2015-2(b) 700.0   May 2045
Total securitized debt 3,377.2    
Bonds - fixed rate:      
5.250% Senior Notes 1,650.0   Jan. 2023
3.849% Secured Notes 1,000.0   Apr. 2023
4.875% Senior Notes 850.0   Apr. 2022
3.400% Senior Notes 850.0   Feb. 2021
4.450% Senior Notes 900.0   Feb. 2026
3.700% Senior Notes 750.0   June 2026
2.250% Senior Notes 700.0   Sept. 2021
Total bonds 6,700.0    
Capital leases and other obligations 225.5     Various
Total Debt $ 12,687.7      
Less: Cash and Cash Equivalents(c) $ 156.2      
Net Debt $ 12,531.5      
 
(a) The Senior Secured Notes, Series 2009-1, Class A-1 principal amortizes during the period beginning January 2010 and ending in 2019 and the Senior Secured Notes, 2009-1, Class A-2 principal amortizes during the period beginning in 2019 and ending in 2029.
(b) The Senior Secured Tower Revenue Notes, Series 2010-3 and 2010-6 have anticipated repayment dates in 2020.  The Senior Secured Tower Revenue Notes, Series 2015-1 and 2015-2 have anticipated repayment dates in 2022 and 2025, respectively.
(c) Excludes restricted cash.



Net Debt to Last Quarter Annualized Adjusted EBITDA is computed as follows:

(in millions) For the Three Months Ended
September 30, 2016
Total face value of debt $ 12,687.7  
Ending cash and cash equivalents(a) 156.2  
Total Net Debt $ 12,531.5  
   
Adjusted EBITDA for the three months ended September 30, 2016 $ 564.1  
Last quarter annualized adjusted EBITDA 2,256.5  
Net Debt to Last Quarter Annualized Adjusted EBITDA 5.6 x
 
(a) Excludes restricted cash.



Components of Capital Expenditures:

  For the Three Months Ended
(in millions) September 30, 2016   September 30, 2015
  Towers Small Cells Other Total   Towers Small Cells Other Total
Discretionary:                  
Purchases of land interests $ 17.4   $   $   $ 17.4     $ 16.0   $   $   $ 16.0  
Wireless infrastructure construction and improvements 76.6   108.6     185.2     98.0   92.1     190.1  
Sustaining:                  
Capital improvement and corporate 9.7   3.2   5.6   18.5     22.4   3.0   5.9   31.3  
Total $ 103.7   $ 111.8   $ 5.6   $ 221.1     $ 136.4   $ 95.1   $ 5.9   $ 237.4  


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 our Outlook and plans, projections, and estimates regarding (1) potential benefits, returns and shareholder value which may be derived from our business, assets, investments, dividends and acquisitions, including on a long-term basis, (2) our strategy, strategic position and strength of our business, (3) carrier network investments and upgrades, and the benefits which may be derived therefrom, (4) demand for wireless connectivity and the benefits which may be derived therefrom, (5) our dividends, including our dividend plans and the amount and growth of our dividends, (6) leasing activity,  (7) our investments, including in towers and small cells, and the potential growth, returns and benefits therefrom, (8) demand for our wireless infrastructure and services, (9) our growth and long-term prospects, (10) tenant non-renewals, including the impact and timing thereof, (11) capital expenditures, including sustaining capital expenditures, (12) straight-line adjustments, (13) expenses, (14) site rental revenues, (15) site rental cost of operations, (16) site rental gross margin and network services gross margin, (17) net income (loss), (18) Adjusted EBITDA, (19) interest expense and amortization of deferred financing costs, (20) FFO, (21) AFFO, (22) Organic Contribution to Site Rental Revenues and Organic Contribution to Site Rental Revenue growth, (23) our common shares outstanding, including on a diluted basis, and the conversion of our Preferred Stock, and (24) the utility of certain financial measures, including non-GAAP financial measures.  Such forward-looking statements are subject to certain risks, uncertainties and assumptions prevailing market conditions and the following:

• Our business depends on the demand for our wireless infrastructure, driven primarily by demand for wireless connectivity, 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.
• 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.
• Our substantial level of indebtedness could adversely affect our ability to react to changes in our business, and the terms of our debt instruments and Preferred Stock 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, we may find it more difficult to achieve favorable rental rates on our new or renewing tenant leases.
• New technologies may reduce demand for our wireless infrastructure or negatively impact our revenues.
• 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 retain rights to our wireless infrastructure, including the land interests under our towers, our business may be adversely affected.
• Our network services business has historically experienced significant volatility in demand, which reduces the predictability of our results.
• New wireless technologies may not deploy or be adopted by customers as rapidly or in the manner projected.
• 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 restated certificate of incorporation, amended and restated by-laws 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 vulnerable to security breaches that could adversely affect our business, operations, and reputation.
• Future dividend payments to our 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 will impact the availability or cost of such financing, which may hinder our ability to grow our per share results of operations.
• 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 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.
• REIT related ownership limitations and transfer restrictions may prevent or restrict certain transfers of 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.  As used in this release, the term "including," and any variation thereof, means "including without limitation."

CROWN CASTLE INTERNATIONAL CORP.
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
(in thousands, except share amounts)

  September 30,
 2016
  December 31,
 2015
       
ASSETS      
Current assets:      
Cash and cash equivalents $ 156,219     $ 178,810  
Restricted cash 116,932     130,731  
Receivables, net 276,259     313,296  
Prepaid expenses 157,102     133,194  
Other current assets 133,163     225,214  
Total current assets 839,675     981,245  
Deferred site rental receivables 1,321,777     1,306,408  
Property and equipment, net 9,714,149     9,580,057  
Goodwill 5,750,033     5,513,551  
Other intangible assets, net 3,737,448     3,779,915  
Long-term prepaid rent and other assets, net 808,641     775,790  
Total assets $ 22,171,723     $ 21,936,966  
       
LIABILITIES AND EQUITY      
Current liabilities:      
Accounts payable $ 148,916     $ 159,629  
Accrued interest 84,244     66,975  
Deferred revenues 358,683     322,623  
Other accrued liabilities 204,533     199,923  
Current maturities of debt and other obligations 101,362     106,219  
Total current liabilities 897,738     855,369  
Debt and other long-term obligations 12,491,596     12,043,740  
Other long-term liabilities 2,028,672     1,948,636  
Total liabilities 15,418,006     14,847,745  
Commitments and contingencies      
CCIC stockholders' equity:      
Common stock, $.01 par value; 600,000,000 shares authorized; shares issued and outstanding: September 30, 2016—337,569,931 and December 31, 2015—333,771,660 3,375     3,338  
4.50% Mandatory Convertible Preferred Stock, Series A, $.01 par value; 20,000,000 shares authorized; shares issued and outstanding: September 30, 2016 and December 31, 2015—9,775,000; aggregate liquidation value: September 30, 2016 and December 31, 2015—$977,500 98     98  
Additional paid-in capital 9,914,844     9,548,580  
Accumulated other comprehensive income (loss) (5,541 )   (4,398 )
Dividends/distributions in excess of earnings (3,159,059 )   (2,458,397 )
Total equity 6,753,717     7,089,221  
Total liabilities and equity $ 22,171,723     $ 21,936,966  


                     CROWN CASTLE INTERNATIONAL CORP.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
(in thousands, except share and per share amounts)
  Three Months Ended September 30,   Nine Months Ended September 30,
  2016   2015   2016   2015
Net revenues:              
Site rental $ 812,032     $ 764,606     $ 2,415,926     $ 2,233,077  
Network services and other 179,984     153,501     472,883     484,938  
Net revenues 992,016     918,107     2,888,809     2,718,015  
Operating expenses:              
Costs of operations (exclusive of depreciation, amortization and accretion):              
Site rental 256,750     247,000     762,223     716,244  
Network services and other 109,228     86,859     286,066     263,177  
General and administrative 89,941     76,699     278,909     223,880  
Asset write-down charges 8,339     7,477     28,251     19,652  
Acquisition and integration costs 2,680     7,608     11,459     12,001  
Depreciation, amortization and accretion 280,824     261,662     834,725     766,621  
Total operating expenses 747,762     687,305     2,201,633     2,001,575  
Operating income (loss) 244,254     230,802     687,176     716,440  
Interest expense and amortization of deferred financing costs (129,916 )   (129,877 )   (385,656 )   (398,782 )
Gains (losses) on retirement of long-term obligations (10,274 )       (52,291 )   (4,157 )
Interest income 175     789     454     1,170  
Other income (expense) (832 )   (1,214 )   (4,623 )   58,510  
Income (loss) from continuing operations before income taxes 103,407     100,500     245,060     373,181  
Benefit (provision) for income taxes (5,041 )   3,801     (12,797 )   9,380  
Income (loss) from continuing operations 98,366     104,301     232,263     382,561  
Discontinued operations:              
Income (loss) from discontinued operations, net of tax     (522 )       1,000,708  
Net income (loss) 98,366     103,779     232,263     1,383,269  
Less: Net income (loss) attributable to the noncontrolling interest             3,343  
Net income (loss) attributable to CCIC stockholders 98,366     103,779     232,263     1,379,926  
Dividends on preferred stock (10,997 )   (10,997 )   (32,991 )   (32,991 )
Net income (loss) attributable to CCIC common stockholders $ 87,369     $ 92,782     $ 199,272     $ 1,346,935  
               
Net income (loss) attributable to CCIC common stockholders, per common share:              
Income (loss) from continuing operations, basic $ 0.26     $ 0.28     $ 0.59     $ 1.05  
Income (loss) from discontinued operations, basic $     $     $     $ 3.00  
Net income (loss) attributable to CCIC common stockholders, basic $ 0.26     $ 0.28     $ 0.59     $ 4.05  
Income (loss) from continuing operations, diluted $ 0.26     $ 0.28     $ 0.59     $ 1.05  
Income (loss) from discontinued operations, diluted $     $     $     $ 2.99  
Net income (loss) attributable to CCIC common stockholders, diluted $ 0.26     $ 0.28     $ 0.59     $ 4.04  
               
Weighted-average common shares outstanding (in thousands):              
Basic 337,564     333,049     336,426     332,951  
Diluted 338,409     333,711     337,076     333,735  


CROWN CASTLE INTERNATIONAL CORP.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(in thousands)
 
  Nine Months Ended September 30,  
  2016   2015  
Cash flows from operating activities:        
Net income (loss) from continuing operations $ 232,263     $ 382,561    
Adjustments to reconcile net income (loss) from continuing operations to net cash provided by (used for) operating activities:        
Depreciation, amortization and accretion 834,725     766,621    
Gains (losses) on retirement of long-term obligations 52,291     4,157    
Gains (losses) on settled swaps 2,608     (54,475 )  
Amortization of deferred financing costs and other non-cash interest 11,293     32,394    
Stock-based compensation expense 60,402     44,711    
Asset write-down charges 28,251     19,652    
Deferred income tax benefit (provision) 6,626     (16,199 )  
Other adjustments, net (1,060 )   (7,240 )  
Changes in assets and liabilities, excluding the effects of acquisitions:        
Increase (decrease) in liabilities 122,944     208,538    
Decrease (increase) in assets (45,628 )   (89,844 )  
Net cash provided by (used for) operating activities 1,304,715     1,290,876    
Cash flows from investing activities:        
Payments for acquisition of businesses, net of cash acquired (545,162 )   (1,083,319 )  
Capital expenditures (614,178 )   (658,240 )  
Net receipts from settled swaps 8,141     54,475    
Other investing activities, net 11,616     (1,561 )  
Net cash provided by (used for) investing activities (1,139,583 )   (1,688,645 )  
Cash flows from financing activities:        
Proceeds from issuance of long-term debt 5,201,010     1,000,000    
Principal payments on debt and other long-term obligations (69,717 )   (78,049 )  
Purchases and redemptions of long-term debt (4,044,834 )   (1,069,337 )  
Borrowings under revolving credit facility 3,440,000     1,560,000    
Payments under revolving credit facility (4,155,000 )   (1,240,000 )  
Payments for financing costs (41,471 )   (17,415 )  
Net proceeds from issuance of capital stock 323,798        
Purchases of capital stock (24,759 )   (29,576 )  
Dividends/distributions paid on common stock (896,628 )   (821,056 )  
Dividends paid on preferred stock (32,991 )   (32,991 )  
Net (increase) decrease in restricted cash 40     28,435    
Net cash provided by (used for) financing activities (300,552 )   (699,989 )  
Net increase (decrease) in cash and cash equivalents - continuing operations (135,420 )   (1,097,758 )  
Discontinued operations:        
Net cash provided by (used for) operating activities     4,359    
Net cash provided by (used for) investing activities 113,150     1,103,577    
Net increase (decrease) in cash and cash equivalents - discontinued operations 113,150     1,107,936    
Effect of exchange rate changes (321 )   (1,682 )  
Cash and cash equivalents at beginning of period 178,810     175,620   (a)
Cash and cash equivalents at end of period $ 156,219     $ 184,116    
Supplemental disclosure of cash flow information:        
Interest paid 357,094     364,147    
Income taxes paid 11,740     23,865    
             
(a) Inclusive of cash and cash equivalents included in discontinued operations.            


CROWN CASTLE INTERNATIONAL CORP.
SEGMENT OPERATING RESULTS (UNAUDITED)
(in thousands)
 
SEGMENT OPERATING RESULTS
  Three Months Ended September 30, 2016   Three Months Ended September 30, 2015
  Towers   Small Cells   Other   Consolidated Total   Towers   Small Cells   Other   Consolidated Total
Segment site rental revenues $ 709,603     $ 102,429         $ 812,032     $ 686,934     $ 77,672         $ 764,606  
Segment network services and other revenue 166,979     13,005         179,984     138,566     14,935         153,501  
Segment revenues 876,582     115,434         992,016     825,500     92,607         918,107  
Segment site rental cost of operations 210,322     37,754         248,076     209,056     30,449         239,505  
Segment network services and other cost of operations 97,395     10,194         107,589     75,302     10,213         85,515  
Segment cost of operations(a) 307,717     47,948         355,665     284,358     40,662         325,020  
Segment site rental gross margin(b) 499,281     64,675         563,956     477,878     47,223         525,101  
Segment network services and other gross margin(b) 69,584     2,811         72,395     63,264     4,722         67,986  
Segment general and administrative expenses(a) 22,225     14,480     35,526     72,231     22,994     10,194     30,741     63,929  
Segment operating profit(b) 546,640     53,006     (35,526 )   564,120     518,148     41,751     (30,741 )   529,158  
Stock-based compensation expense         22,594     22,594             16,466     16,466  
Depreciation, amortization and accretion         280,824     280,824             261,662     261,662  
Interest expense and amortization of deferred financing costs         129,916     129,916             129,877     129,877  
Other (income) expenses to reconcile to income (loss) from continuing operations before income taxes(c)         27,379     27,379             20,653     20,653  
Income (loss) from continuing operations before income taxes             $ 103,407                 $ 100,500  
                                       
(a) Segment cost of operations exclude (1) stock-based compensation expense of $4.9 million and $3.7 million for the three months ended September 30, 2016 and 2015, respectively and (2) prepaid lease purchase price adjustments of $5.4 million and $5.1 million for the three months ended September 30, 2016 and 2015, respectively.  Segment general and administrative expenses exclude stock-based compensation expense of $17.7 million and $12.8 million for the three months ended September 30, 2016 and 2015, respectively. 
(b) See "Non-GAAP Financial Measures and Other Calculations" herein for a discussion of our definitions of segment site rental gross margin, segment network service and other gross margin and segment operating profit.
(c) Other (income) expenses to reconcile to income (loss) from continuing operations before income taxes includes (1) losses on retirement of long-term obligations of approximately $10.3 million and $0 for the three months ended September 30, 2016 and 2015, respectively and (2) gains (losses) on swaps of approximately $0 and $10.2 million for the three months ended September 30, 2016 and 2015, respectively.

 

 

SEGMENT OPERATING RESULTS
  Nine Months Ended September 30, 2016   Nine Months Ended September 30, 2015
  Towers   Small Cells   Other   Consolidated Total   Towers   Small Cells   Other   Consolidated Total
Segment site rental revenues $ 2,118,159     $ 297,767         $ 2,415,926     $ 2,040,147     $ 192,930         $ 2,233,077  
Segment network services and other revenue 434,042     38,841         472,883     445,683     39,255         484,938  
Segment revenues 2,552,201     336,608         2,888,809     2,485,830     232,185         2,718,015  
Segment site rental cost of operations 625,331     109,402         734,733     620,726     73,818         694,544  
Segment network services and other cost of operations 249,306     30,652         279,958     229,164     30,034         259,198  
Segment cost of operations(a) 874,637     140,054         1,014,691     849,890     103,852         953,742  
Segment site rental gross margin(b) 1,492,828     188,365         1,681,193     1,419,421     119,112         1,538,533  
Segment network services and other gross margin(b) 184,736     8,189         192,925     216,519     9,221         225,740  
Segment general and administrative expenses(a) 68,329     45,720     107,161     221,210     68,245     25,664     90,981     184,890  
Segment operating profit(b) 1,609,235     150,834     (107,161 )   1,652,908     1,567,695     102,669     (90,981 )   1,579,383  
Stock-based compensation expense         75,297     75,297             49,282     49,282  
Depreciation, amortization and accretion         834,725     834,725             766,621     766,621  
Interest expense and amortization of deferred financing costs         385,656     385,656             398,782     398,782  
Other income (expenses) to reconcile to income (loss) from continuing operations before income taxes(c)         112,170     112,170             (8,483 )   (8,483 )
Income (loss) from continuing operations before income taxes             $ 245,060                 $ 373,181  
                                       
 
(a)  Segment cost of operations exclude (1) stock-based compensation expense of $17.6 million and $10.3 million for the nine months ended September 30, 2016 and 2015, respectively and (2) prepaid lease purchase price adjustments of $16.0 million and $15.4 million for the nine months ended September 30, 2016 and 2015, respectively. Segment general and administrative expenses exclude stock-based compensation expense of $57.7 million and $39.0 million for the nine months ended September 30, 2016 and 2015, respectively. 
(b)  See "Non-GAAP Financial Measures and Other Calculations" herein for a discussion of our definitions of segment site rental gross margin, segment network service and other gross margin and segment operating profit.
(c)  Other income (expenses) to reconcile to income (loss) from continuing operations before income taxes includes (1) losses on retirement of long-term obligations of approximately $52.3 million and $4.2 million for the nine months ended September 30, 2016 and 2015, respectively and (2) gains (losses) on swaps of approximately $(2.6 million) and $70.0 million for the nine months ended September 30, 2016 and 2015, respectively.

 
Contacts: Dan Schlanger, CFO
                Son Nguyen, VP & Treasurer
                Crown Castle International Corp.
                713-570-3050

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