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): August 3, 2006
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 Number) |
510 Bering Drive
Suite 600
Houston, TX 77057
(Address of Principal Executive Office)
Registrant’s telephone number, including area code: (713) 570-3000
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 (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | 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 August 3, 2006, the Company issued a press release disclosing its financial results for the second quarter of 2006. The August 3 press release is furnished herewith as Exhibit 99.1 to this Form 8-K.
ITEM 9.01 - FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
As described in Item 2.02 of this Report, the following exhibit is furnished as part of this Current Report on Form 8-K:
| Exhibit No. | Description | |
| 99.1 | Press Release dated August 3, 2006 |
The information in this Form 8-K and Exhibit 99.1 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.
1
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: August 3, 2006
2
EXHIBIT INDEX
| Exhibit No. | Description | |
| 99.1 | Press Release dated August 3, 2006 |
3
| Contacts: |
Ben Moreland, CFO | |
| Jay Brown, Treasurer Crown Castle International Corp. 713-570-3000 |
FOR IMMEDIATE RELEASE
CROWN CASTLE INTERNATIONAL
REPORTS SECOND QUARTER 2006 RESULTS AND PURCHASE
OF 15.9 MILLION COMMON SHARES
August 3, 2006 – HOUSTON, TEXAS – Crown Castle International Corp. (NYSE:CCI) today reported results for the quarter ended June 30, 2006.
Site rental revenue for the second quarter of 2006 increased $21.8 million, or 14.8%, to $169.2 million from $147.4 million for the same period in the prior year. Site rental gross margin, defined as site rental revenue less site rental cost of operations, increased 19.4% to $118.2 million, up $19.2 million in the second quarter of 2006 from the same period in 2005. Adjusted EBITDA for the second quarter of 2006 increased $21.3 million, or 25.9%, to $103.8 million, up from $82.5 million for the same period in 2005.
Recurring cash flow, defined as Adjusted EBITDA less interest expense less sustaining capital expenditures, increased 44.5% to $64.1 million for the second quarter of 2006, compared to $44.4 million for the second quarter of 2005. Weighted average common shares outstanding decreased to 212.7 million for the second quarter of 2006 from 218.2 million for the same period in the prior year. Recurring cash flow per share, defined as recurring cash flow divided by weighted average common shares outstanding, improved by 48.2% to $0.30 in the second quarter of 2006 compared to $0.20 in the second quarter of 2005.
Net loss was $13.3 million for the second quarter of 2006, compared to a net loss of $225.8 million for the same period in 2005, inclusive of $198.5 million in losses from the early retirement of debt. Net loss after deduction of dividends on preferred stock was $18.5 million in the second quarter of 2006, compared to a loss of $235.3 million for the same period last year. Second quarter 2006 net loss per share was $(0.09), compared to a net loss per share of $(1.08) in last year’s second quarter.
| News Release continued: | Page 2 of 12 |
“We had another excellent quarter of performance as we exceeded our previously provided Outlook for site rental revenue, site rental gross margin, Adjusted EBITDA and recurring cash flow,” stated John P. Kelly, President and Chief Executive Officer of Crown Castle. “During the last four quarters, we have increased annualized site rental revenue by $87.0 million and increased annualized Adjusted EBITDA by $85.4 million. As we enter the second half of 2006, our strong growth in site rental revenue continues to be driven by the robust enhancements wireless carriers are making to their voice and data networks by adding equipment to our towers. Further, as we continue to optimize our balance sheet and control our operating costs, we are focused on converting a high percentage of our expected growth in site rental revenue into recurring cash flow per share.”
The prior year amounts included in this release have been restated as discussed in Crown Castle’s Annual Report or Form 10-K for the year ended December 31, 2005.
SEGMENT RESULTS
US site rental revenue for the second quarter of 2006 increased $20.4 million, or 15.2%, to $154.5 million, compared to second quarter 2005 US site rental revenue of $134.1 million. US site rental gross margin increased 19.9% to $108.2 million, up $18.0 million in the second quarter of 2006 from the same period in 2005.
Australia site rental revenue for the second quarter of 2006 increased $1.4 million, or 10.3%, to $14.7 million, up from $13.3 million for the same period in 2005. Australia site rental gross margin increased 18.4% to $10.5 million, up $1.6 million in the second quarter of 2006 from the same period in 2005. In both the second quarter of 2005 and 2006, Australia site rental revenue and site rental gross margin benefited by approximately $2 million from an annual customer contracted payment.
INVESTMENTS
During the second quarter of 2006, Crown Castle invested $364.3 million in purchases of its common stock and capital expenditures. During the quarter, Crown Castle purchased 10.6 million common shares using $337.1 million in cash at an average price of $31.89 per share. For the second quarter 2006, total capital expenditures were $27.2 million, comprised of $2.3 million of sustaining capital expenditures and $24.9 million of revenue generating capital expenditures, of which $9.3 million was spent on existing sites, $4.2 million on land purchases and $11.4 million on the construction of new sites. In addition, after the end of the second quarter, in July 2006, Crown Castle
| News Release continued: | Page 3 of 12 |
purchased 5.2 million of its common shares using $177.9 million in cash at an average price of $34.22 per share. Pro forma for the common shares purchased in July 2006, common shares outstanding at June 30, 2006 were 200.3 million.
During 2006, Crown Castle has purchased 15.9 million of its common shares using $518.0 million in cash to reduce common shares outstanding by approximately 7%. Since January 1, 2003, Crown Castle has invested over $1.4 billion in purchases of its securities to reduce fully diluted common shares by approximately 66 million shares.
On July 3, 2006, Crown Castle acquired over 98% of the outstanding equity interest of Mountain Union Telecom for approximately $305 million and will have the right to call the remaining equity interest for approximately $5 million commencing in 2007. At closing, Mountain Union’s assets included 474 completed towers and 77 towers in various stages of development.
BALANCE SHEET
On June 1, 2006, Crown Castle announced the completion of a $1.25 billion credit facility, comprised of a $1 billion term loan (“Term Loan”) and a $250 million revolving credit facility (“Revolver”). The proceeds of Term Loan were used in part to repay Crown Castle’s previously existing $295 million credit facility and to acquire Mountain Union Telecom. The balance of the Term Loan proceeds was available for general corporate purposes, including purchases of Crown Castle common shares. At August 3, 2006, total availability under the Revolver was $250 million.
On August 1, 2006, Crown Castle redeemed its 10 3/4% and 9 3/8% Senior Notes, which had approximately $10.0 million and $1.7 million outstanding, respectively, at June 30, 2006, for approximately $12.3 million including accrued interest.
“Thus far in 2006, we have invested approximately $518.0 million to purchase approximately 15.9 million of our common shares and approximately $305 million to acquire 474 completed towers and 77 towers in development,” stated Ben Moreland, Chief Financial Officer of Crown Castle. “We believe these purchases of shares and the acquisition of additional towers were the highest and best use of our capital and will positively impact long-term recurring cash flow per share growth. We continue to strive to make prudent capital investments through the purchase or construction of towers, improvements to our existing towers and the purchase of our common shares. As evidenced by our most recently completed credit facility and share purchases, we are focused on maintaining an appropriate level of debt leverage and making investments that we believe will grow long-term recurring cash flow per share. As we’ve discussed previously, we evaluate our potential capital
| News Release continued: | Page 4 of 12 |
investments based on their expected impact to long-term recurring cash flow per share as we remain focused on our long-term goal of growing recurring cash flow per share by 20% to 25% per year.”
REVIEW OF NON-CASH EQUITY-BASED COMPENSATION
Crown Castle received a letter dated July 17, 2006, from the Securities and Exchange Commission (“SEC”) stating that the SEC is conducting an informal inquiry into various accounting matters related to Crown Castle, including whether grants of stock options may have been backdated. The SEC’s letter states that it should not be construed as an indication by the SEC or its staff that any violations of law have occurred. Crown Castle intends to cooperate fully with the SEC in this matter.
Crown Castle has initiated a voluntary internal review of its equity-based compensation practices, including a review of its underlying stock option and restricted stock grant documentation and procedures and related accounting. During its preliminary review, Crown Castle has found no instances of inappropriate actions relating to the administration of its equity-based compensation plans and, further, that grants were made under its equity-based plans and approved by the board of directors. However, Crown Castle believes that, with respect to certain stock option grants, granted primarily during the period of 1998 through 2001, the proper measurement date for accounting purposes differs from the measurement date used by Crown Castle. Based upon its current estimate of potential unrecorded non-cash equity-based compensation charges associated with such stock option grants, Crown Castle does not believe such amounts would have been material to its financial statements for any of the periods to which such charges would have related. Crown Castle has not completed its review, and in the event it were to determine that any such amounts were material to any such prior periods, Crown Castle would reflect such charges in those prior periods. Crown Castle does not expect its review to result in changes to its historical revenues, Adjusted EBITDA or recurring cash flow.
OUTLOOK
The following Outlook tables are based on current expectations and assumptions and assume a US dollar to Australian dollar exchange rate of 0.735 US dollars to 1.00 Australian dollars. 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.
| News Release continued: | Page 5 of 12 |
As reflected in the following tables, Crown Castle has increased the midpoint of its full year 2006 Outlook, previously issued on June 1, 2006, for site rental revenue by $7 million, site rental gross margin by $8 million, Adjusted EBITDA by $12 million and recurring cash flow by $15 million.
The following tables set forth Crown Castle’s current Outlook:
| (in millions, except per share amounts) |
Third Quarter 2006 | Full Year 2006 | ||
| Site rental revenue |
$177 to $179 | $687 to $692 | ||
| Site rental cost of operations |
$54 to $56 | $212 to $215 | ||
| Site rental gross margin |
$121 to $123 | $474 to $479 | ||
| Adjusted EBITDA |
$106 to $108 | $411 to $416 | ||
| Interest expense |
$46 to $47 | $162 to $164 | ||
| Sustaining capital expenditures |
$4 to $6 | $11 to $15 | ||
| Recurring cash flow |
$55 to 57 | $237 to $242 | ||
| Net loss after deduction of dividends on preferred stock |
$(34) to $(17) | $(110) to $(63) | ||
| Net loss per share* |
$(0.17) to $(0.08) | $(0.52) to $(0.29) | ||
| * | Based on 205.5 million shares outstanding at June 30, 2006 for third quarter 2006 Outlook and 213.6 million weighted average shares outstanding for the six months ended June 30, 2006 for full year 2006 Outlook. |
CONFERENCE CALL DETAILS
Crown Castle has scheduled a conference call for Friday, August 4, 2006, at 11:00 a.m. eastern time to discuss the second quarter of 2006 results and Crown Castle’s Outlook. Please dial 303-205-0033 and ask for the Crown Castle call at least 10 minutes prior to the start time. A telephonic replay of the conference call will be available from 1:00 p.m. eastern time on Friday, August 4, 2006 through 11:59 p.m. eastern time on Friday, August 11, 2006 and may be accessed by dialing 303-590-3000 using passcode 11065135#. An audio archive will also be available on Crown Castle’s website at http://www.crowncastle.com. shortly after the call and will be accessible for approximately 90 days.
Crown Castle International Corp. engineers, deploys, owns and operates technologically advanced shared wireless infrastructure, including extensive networks of towers and rooftops. Crown Castle offers significant wireless communications coverage to 76 of the top 100 United States markets and to substantially all of the Australian population. Crown Castle owns, operates and manages over 11,000 and 1,300 wireless communication sites in the U.S. and Australia, respectively. For more information on Crown Castle visit: http://www.crowncastle.com.
| News Release continued: | Page 6 of 12 |
Summary of Non-Cash Amounts In Tower Gross Margin
In accordance with applicable accounting standards, Crown Castle recognizes site rental revenues and ground lease expenses monthly on a straight-line basis, regardless of whether the receipts and payments are in equal monthly amounts. An agreement, related to an acquisition in Australia, provides the seller with a rent-free period at the beginning of the lease term, and other agreements call for rent to be prepaid for a specified period. If, and to the extent the payment terms call for fixed escalations (as in fixed dollar or fixed percentage increases), the effect of such increases is recognized on a straight-line basis over the appropriate lease term. As a result of this accounting method, a portion of the revenue and expense recognized in a given period represents cash collected or paid in other periods.
A summary of the non-cash portions of our site rental revenue, ground lease expense and resulting impact on site rental gross margins is as follows:
| (in thousands) |
For the Three June 30, 2006 |
|||
| Non-cash portion of site rental revenue: |
||||
| Amounts attributable to rent-free periods |
$ | 1,699 | ||
| Amounts attributable to straight-line recognition of fixed escalations |
3,491 | |||
| 5,190 | ||||
| Non-cash portion of ground lease expense: |
||||
| Amounts attributable to straight-line recognition of fixed escalations |
(4,360 | ) | ||
| Non-cash stock-based compensation charges |
(50 | ) | ||
| Non-cash impact on site rental gross margin: |
$ | 780 | ||
Non-GAAP Financial Measures
This press release includes presentations of Adjusted EBITDA and recurring cash flow, which are non-GAAP financial measures.
Crown Castle defines Adjusted EBITDA as net income (loss) plus cumulative effect of change in accounting principle, income (loss) from discontinued operations, minority interests, credit (provision) for income taxes, interest expense, amortization of deferred financing costs, interest and other income (expense), depreciation, amortization and accretion, operating stock-based compensation charges, asset write-down charges and restructuring charges (credits). Adjusted EBITDA is not intended as an alternative measure of cash flow from operations or operating results (as determined in accordance with Generally Accepted Accounting Principles (GAAP)).
Crown Castle defines recurring cash flow to be Adjusted EBITDA, less interest expense and less sustaining capital expenditures. Each of the amounts included in the calculation of recurring cash flow are computed in accordance with GAAP, with the exception of sustaining capital expenditures, which is not defined under GAAP. Sustaining capital expenditures are defined as capital expenditures (determined in accordance with GAAP) which do not increase the capacity or term of an asset. Recurring cash flow is not intended as an alternative measure of cash flow from operations or operating results (as determined in accordance with GAAP).
Adjusted EBITDA and recurring cash flow 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. Our measures of Adjusted EBITDA and recurring cash flow may not be comparable to similarly titled measures of other companies. The tables set forth below reconcile these non-GAAP financial measures to comparable GAAP financial measures.
| News Release continued: | Page 7 of 12 |
Reconciliations of Non-GAAP Financial Measures to Comparable GAAP Financial Measures:
Adjusted EBITDA, recurring cash flow and recurring cash flow per share for the quarters ended June 30, 2006 and June 30, 2005 are computed as follows:
| For the Three Months Ended |
||||||||
| (in thousands, except per share amounts) |
June 30, 2006 |
June 30, 2005 |
||||||
| Net income (loss) |
$ | (13,335 | ) | $ | (225,751 | ) | ||
| Income (loss) from discontinued operations, net of tax |
— | (2,347 | ) | |||||
| Minority interests |
(4 | ) | (727 | ) | ||||
| Credit (provision) for income taxes |
507 | 147 | ||||||
| Interest expense and amortization of deferred financing costs |
37,455 | 35,393 | ||||||
| Interest and other income (expense) |
2,939 | 202,635 | ||||||
| Depreciation, amortization and accretion |
69,374 | 70,730 | ||||||
| Operating stock-based compensation charges |
5,380 | 1,863 | ||||||
| Asset write-down charges |
1,522 | 555 | ||||||
| Restructuring charges (credits) |
— | — | ||||||
| Adjusted EBITDA |
$ | 103,838 | $ | 82,498 | ||||
| Less: Interest expense and amortization of deferred financing costs |
37,455 | 35,393 | ||||||
| Less: Sustaining capital expenditures |
2,307 | 2,751 | ||||||
| Recurring cash flow |
$ | 64,076 | $ | 44,354 | ||||
| Weighted average common shares outstanding |
212,675 | 218,237 | ||||||
| Recurring cash flow per share |
$ | 0.30 | $ | 0.20 | ||||
Adjusted EBITDA and recurring cash flow for the quarter ending September 30, 2006 and the year ending December 31, 2006 are forecasted as follows:
| (in millions) |
Q3 2006 Outlook |
Full Year 2006 Outlook | ||
| Net income (loss) |
$(29) to $(12) | $(90) to $(43) | ||
| Income (loss) from discontinued operations, net of tax |
— | (5) to (6) | ||
| Minority interests |
0 to (1) | (1) to (3) | ||
| Credit (provision) for income taxes |
0 to 2 | 3 to 5 | ||
| Interest expense and amortization of deferred financing costs |
46 to 47 | 162 to 164 | ||
| Interest and other income (expense) |
0 to 2 | 3 to 7 | ||
| Depreciation, amortization and accretion |
71 to 76 | 281 to 305 | ||
| Operating stock-based compensation charges |
4 to 6 | 15 to 20 | ||
| Asset write-down charges |
0 to 2 | 4 to 6 | ||
| Restructuring charges (credits) |
— | — | ||
| Adjusted EBITDA |
$106 to $108 | $411 to 416 | ||
| Less: Interest expense and amortization of deferred financing costs |
46 to 47 | 162 to 164 | ||
| Less: Sustaining capital expenditures |
4 to 6 | 11 to 15 | ||
| Recurring cash flow |
$55 to 57 | $237 to 242 | ||
| News Release continued: | Page 8 of 12 |
Other Calculations:
Sustaining capital expenditures for the quarters ended June 30, 2006 and June 30, 2005 is computed as follows:
| For the Three Months Ended |
||||||||
| (in thousands) |
June 30, 2006 |
June 30, 2005 |
||||||
| Capital Expenditures |
$ | 27,209 | $ | 12,333 | ||||
| Less: Revenue enhancing on existing sites |
(9,292 | ) | (4,887 | ) | ||||
| Less: Land purchases |
(4,171 | ) | (795 | ) | ||||
| Less: New site construction |
(11,439 | ) | (3,900 | ) | ||||
| Sustaining capital expenditures |
$ | 2,307 | $ | 2,751 | ||||
Site rental gross margin for the quarter ending September 30, 2006 and for the year ending December 31, 2006 is forecasted as follows:
| (in millions) |
Q3 2006 Outlook |
Full Year 2006 Outlook | ||
| Site rental revenue |
$177 to $179 | $687 to $692 | ||
| Less: Site rental cost of operations |
$54 to $56 | $212 to $215 | ||
| Site rental gross margin |
$121 to $123 | $474 to $479 | ||
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 and estimates regarding (i) network development by our customers, (ii) growth in our business, demand for our towers and leasing rates and activity, (iii) operating costs, (iv) our capital investments, including the availability and type of investments and the impact of and return on our investments, (v) our level of debt, (vi) currency exchange rates, (vii) site rental revenue, (viii) site rental cost of operations, (ix) site rental gross margin, (x) Adjusted EBITDA, (xi) interest expense, (xii) sustaining capital expenditures, (xiii) recurring cash flow (including recurring cash flow per share) and (xiv) net loss (including net loss per share). 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 towers, and we may be adversely affected by any slowdown in such demand. |
| • | The loss or consolidation of, network sharing among, or financial instability of any of our limited number of customers may materially decrease revenues. |
| • | An economic or wireless telecommunications industry slowdown may materially and adversely affect our business and the business of our customers. |
| • | Our substantial level of indebtedness may adversely affect our ability to react to changes in our business and limit our ability to use debt to fund future capital needs. |
| • | We operate in a competitive industry, and some of our competitors have significantly more resources or less debt than we do. |
| • | Technology changes may significantly reduce the demand for tower leases and negatively impact the growth in our revenues. |
| • | 3G and other technologies may not deploy or be adopted by customers as rapidly or in the manner projected. |
| • | We generally lease or sublease the land under our towers and may not be able to extend these leases. |
| • | We may need additional financing, which may not be available, for strategic growth opportunities. |
| • | Restrictive covenants on our debt instruments may limit our ability to take actions that may be in our best interests. |
| • | Modeo’s business has certain risk factors different from our core tower business, including an unproven business model, and may fail to operate successfully and produce results that are less than anticipated. In addition, Modeo’s business may require additional financing which may not be available. |
| • | FiberTower’s business has certain risk factors different from our core tower business, including an unproven business model, and may produce results that are less than anticipated, resulting in a write off of all or part of our investment in FiberTower. In addition, FiberTower’s business may require additional financing which may not be available. Further, there can be no assurance that the announced merger between FiberTower and First Avenue Networks, Inc. will be closed successfully, if at all. |
| News Release continued: | Page 9 of 12 |
| • | Laws and regulations, which may change at any time and with which we may fail to comply, regulate our business. |
| • | We are heavily dependent on our senior management. |
| • | Our network services business has historically experienced significant volatility in demand, which reduces the predictability of our results. |
| • | We may suffer from future claims if radio frequency emissions from wireless handsets or equipment on our towers are demonstrated to cause negative health effects. |
| • | 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. |
| • | Sales or issuances of a substantial number of shares of our common stock may adversely affect the market price of our common stock. |
| • | Disputes with customers and suppliers may adversely affect results. |
| • | We may suffer losses due to exposure to changes in foreign currency exchange rates relating to our operations in Australia. |
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.
| News Release continued: | Page 10 of 12 |
 |
CROWN CASTLE INTERNATIONAL CORP. CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND OTHER FINANCIAL DATA (in thousands, except per share data) |
| Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
| 2006 | 2005 | 2006 | 2005 | |||||||||||||
| (As restated) | (As restated) | |||||||||||||||
| Net revenues: |
||||||||||||||||
| Site rental |
$ | 169,160 | $ | 147,409 | $ | 331,057 | $ | 288,877 | ||||||||
| Network services and other |
24,616 | 20,818 | 45,384 | 36,997 | ||||||||||||
| Total net revenues |
193,776 | 168,227 | 376,441 | 325,874 | ||||||||||||
| Costs of operations (exclusive of depreciation, amortization and accretion): |
||||||||||||||||
| Site rental |
50,927 | 48,402 | 100,617 | 96,725 | ||||||||||||
| Network services and other |
15,880 | 14,403 | 29,666 | 25,871 | ||||||||||||
| Total costs of operations |
66,807 | 62,805 | 130,283 | 122,596 | ||||||||||||
| General and administrative |
25,825 | 23,992 | 49,988 | 46,481 | ||||||||||||
| Corporate development |
2,686 | 795 | 4,364 | 1,284 | ||||||||||||
| Restructuring charges |
— | — | — | 8,477 | ||||||||||||
| Asset write-down charges |
1,522 | 555 | 1,857 | 991 | ||||||||||||
| Depreciation, amortization and accretion |
69,374 | 70,730 | 141,465 | 140,917 | ||||||||||||
| Operating income (loss) |
27,562 | 9,350 | 48,484 | 5,128 | ||||||||||||
| Interest and other income (expense) |
(2,939 | ) | (202,635 | ) | (4,275 | ) | (285,652 | ) | ||||||||
| Interest expense and amortization of deferred financing costs |
(37,455 | ) | (35,393 | ) | (69,715 | ) | (74,662 | ) | ||||||||
| Income (loss) from continuing operations before income taxes and minority interests |
(12,832 | ) | (228,678 | ) | (25,506 | ) | (355,186 | ) | ||||||||
| Provision for income taxes |
(507 | ) | (147 | ) | (1,123 | ) | (291 | ) | ||||||||
| Minority interests |
4 | 727 | 915 | 1,931 | ||||||||||||
| Income (loss) from continuing operations |
(13,335 | ) | (228,098 | ) | (25,714 | ) | (353,546 | ) | ||||||||
| Income (loss) from discontinued operations, net of tax |
— | 2,347 | 5,657 | 848 | ||||||||||||
| Net income (loss) |
(13,335 | ) | (225,751 | ) | (20,057 | ) | (352,698 | ) | ||||||||
| Dividends on preferred stock |
(5,202 | ) | (9,568 | ) | (10,403 | ) | (19,221 | ) | ||||||||
| Net income (loss) after deduction of dividends on preferred stock |
$ | (18,537 | ) | $ | (235,319 | ) | $ | (30,460 | ) | $ | (371,919 | ) | ||||
| Per common share – basic and diluted: |
||||||||||||||||
| Income (loss) from continuing operations |
$ | (0.09 | ) | $ | (1.09 | ) | $ | (0.17 | ) | $ | (1.68 | ) | ||||
| Income (loss) from discontinued operations |
— | 0.01 | 0.03 | — | ||||||||||||
| Net income (loss) |
$ | (0.09 | ) | $ | (1.08 | ) | $ | (0.14 | ) | $ | (1.68 | ) | ||||
| Weighted average common shares outstanding – basic and diluted |
212,675 | 218,237 | 213,574 | 220,919 | ||||||||||||
| Adjusted EBITDA |
$ | 103,838 | $ | 82,498 | $ | 200,700 | $ | 158,923 | ||||||||
| Stock-based compensation charges: |
||||||||||||||||
| Site rental cost of operations |
50 | 71 | 66 | 118 | ||||||||||||
| Network services and other cost of operations |
60 | 35 | 80 | 59 | ||||||||||||
| General and administrative |
4,708 | 1,696 | 7,998 | 3,172 | ||||||||||||
| Corporate development |
562 | 61 | 750 | 61 | ||||||||||||
| Total operating stock-based compensation |
5,380 | 1,863 | 8,894 | 3,410 | ||||||||||||
| Restructuring stock-based compensation |
— | — | — | 6,424 | ||||||||||||
| Total stock-based compensation |
$ | 5,380 | $ | 1,863 | $ | 8,894 | $ | 9,834 | ||||||||
| News Release continued: | Page 11 of 12 |
|
|
CROWN CASTLE INTERNATIONAL CORP. CONDENSED CONSOLIDATED BALANCE SHEET (in thousands) |
| June 30, 2006 |
December 31, 2005 | |||||
| ASSETS |
||||||
| Current assets: |
||||||
| Cash and cash equivalents |
$ | 522,595 | $ | 65,408 | ||
| Receivables, net of allowance for doubtful accounts |
22,777 | 16,830 | ||||
| Deferred site rental receivable |
11,042 | 9,307 | ||||
| Prepaid expenses and other current assets |
42,375 | 37,811 | ||||
| Restricted cash |
102,660 | 91,939 | ||||
| Total current assets |
701,449 | 221,295 | ||||
| Restricted cash |
5,168 | 3,814 | ||||
| Property and equipment, net of accumulated depreciation |
3,207,025 | 3,294,333 | ||||
| Goodwill |
340,412 | 340,412 | ||||
| Deferred site rental receivable |
93,093 | 87,392 | ||||
| Deferred financing costs and other assets, net of accumulated amortization |
214,971 | 184,071 | ||||
| $ | 4,562,118 | $ | 4,131,317 | |||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||
| Current liabilities: |
||||||
| Accounts payable |
$ | 16,686 | $ | 12,230 | ||
| Accrued interest |
9,781 | 8,281 | ||||
| Deferred rental revenues and other accrued liabilities |
141,308 | 148,703 | ||||
| Short-term debt and current portion of long-term debt |
10,000 | 295,000 | ||||
| Total current liabilities |
177,775 | 464,214 | ||||
| Long-term debt, less current maturities |
2,965,586 | 1,975,686 | ||||
| Deferred ground lease payable |
127,643 | 118,747 | ||||
| Other liabilities |
55,377 | 55,559 | ||||
| Total liabilities |
3,326,381 | 2,614,206 | ||||
| Minority interests |
26,159 | 26,792 | ||||
| Redeemable preferred stock |
312,407 | 311,943 | ||||
| Stockholders’ equity |
897,171 | 1,178,376 | ||||
| $ | 4,562,118 | $ | 4,131,317 | |||
| Note: | In accordance with the Indenture Agreement governing the Notes, all rental cash receipts for the month are restricted and held by the trustee. Amounts in excess of reserve balances as calculated by the trustee are returned to the Company on the 15th of the subsequent month. |
| News Release continued: | Page 12 of 12 |
|
|
CROWN CASTLE INTERNATIONAL CORP. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (in thousands) |
| Six Months Ended June 30, |
||||||||
| 2006 | 2005 | |||||||
| (As restated) | ||||||||
| Cash flows from operating activities: |
||||||||
| Net income (loss) |
$ | (20,057 | ) | $ | (352,698 | ) | ||
| Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities: |
||||||||
| Depreciation, amortization and accretion |
141,465 | 140,917 | ||||||
| Losses on purchases of long-term debt |
740 | 281,121 | ||||||
| Amortization of deferred financing costs and discounts on long-term debt |
4,083 | 2,370 | ||||||
| Stock-based compensation charges |
8,894 | 9,834 | ||||||
| Asset write-down charges |
1,857 | 991 | ||||||
| Minority interests |
(915 | ) | (1,931 | ) | ||||
| Equity in losses and write-downs of unconsolidated affiliates |
7,250 | 4,921 | ||||||
| (Income) loss from discontinued operations |
(5,657 | ) | (848 | ) | ||||
| Interest rate swap (income) expense |
189 | 655 | ||||||
| Changes in assets and liabilities: |
||||||||
| Increase (decrease) in accrued interest |
1,500 | (34,607 | ) | |||||
| Increase (decrease) in accounts payable |
4,436 | (1,750 | ) | |||||
| Increase (decrease) in deferred rental revenues, deferred site rental receivable and other liabilities |
(2,312 | ) | 362 | |||||
| Decrease (increase) in receivables |
(5,913 | ) | 15,151 | |||||
| Decrease (increase) in inventories, prepaid expenses, deferred site rental receivable and other assets |
(17,188 | ) | (2,917 | ) | ||||
| Net cash provided by (used for) operating activities |
118,372 | 61,571 | ||||||
| Cash flows from investing activities: |
||||||||
| Proceeds from investments and disposition of property and equipment |
1,079 | 1,602 | ||||||
| Capital expenditures |
(49,274 | ) | (21,932 | ) | ||||
| Investments in unconsolidated affiliates and other |
(1,000 | ) | — | |||||
| Net cash provided by (used for) investing activities |
(49,195 | ) | (20,330 | ) | ||||
| Cash flows from financing activities: |
||||||||
| Proceeds from issuance of long-term debt |
1,000,000 | 1,900,000 | ||||||
| Proceeds from issuance of capital stock |
37,909 | 25,086 | ||||||
| Purchases and redemption of long-term debt |
— | (1,793,291 | ) | |||||
| Payments under revolving credit agreements |
(295,000 | ) | (180,000 | ) | ||||
| Purchases of capital stock |
(340,104 | ) | (179,875 | ) | ||||
| Incurrence of financing costs |
(4,272 | ) | (29,665 | ) | ||||
| Initial funding of restricted cash |
— | (48,968 | ) | |||||
| Net (increase) decrease in restricted cash |
(12,075 | ) | (35,208 | ) | ||||
| Interest rate swap receipts (payments) |
5,915 | (6,381 | ) | |||||
| Dividends on preferred stock |
(9,938 | ) | (4,125 | ) | ||||
| Net cash provided by (used for) financing activities |
382,435 | (352,427 | ) | |||||
| Effect of exchange rate changes on cash |
(82 | ) | (532 | ) | ||||
| Discontinued operations |
5,657 | 3,973 | ||||||
| Net decrease in cash and cash equivalents |
457,187 | (307,745 | ) | |||||
| Cash and cash equivalents at beginning of period |
65,408 | 566,707 | ||||||
| Cash and cash equivalents at end of period |
$ | 522,595 | $ | 258,962 | ||||
| Supplemental disclosure of cash flow information: |
||||||||
| Interest paid |
$ | 61,292 | $ | 104,782 | ||||
| Income taxes paid |
1,393 | 7,291 | ||||||
CROWN CASTLE INTERNATIONAL CORP.
Summary Fact Sheet
($ in thousands)
| Quarter Ended 9/30/05 | Quarter Ended 12/31/05 | Quarter Ended 3/31/06 | Quarter Ended 6/30/06 | |||||||||||||||||||||||||||||||||||||||||||||
| CCUSA | CCAL | EmB(a) | CCIC | CCUSA | CCAL | EmB(a) | CCIC | CCUSA | CCAL | EmB(a) | CCIC | CCUSA | CCAL | EmB(a) | CCIC | |||||||||||||||||||||||||||||||||
| Revenues |
||||||||||||||||||||||||||||||||||||||||||||||||
| Site Rental |
140,358 | 12,444 | — | 152,802 | 143,933 | 11,513 | — | 155,446 | 150,138 | 11,759 | — | 161,897 | 154,491 | 14,669 | — | 169,160 | ||||||||||||||||||||||||||||||||
| Services |
17,519 | 1,938 | — | 19,457 | 21,798 | 1,382 | — | 23,180 | 18,982 | 1,786 | — | 20,768 | 22,696 | 1,920 | — | 24,616 | ||||||||||||||||||||||||||||||||
| Total Revenues |
157,877 | 14,382 | — | 172,259 | 165,731 | 12,895 | — | 178,626 | 169,120 | 13,545 | — | 182,665 | 177,187 | 16,589 | — | 193,776 | ||||||||||||||||||||||||||||||||
| Operating Expenses |
||||||||||||||||||||||||||||||||||||||||||||||||
| Site Rental |
46,272 | 4,314 | 85 | 50,671 | 45,461 | 4,299 | 199 | 49,959 | 45,307 | 4,122 | 261 | 49,690 | 46,310 | 4,175 | 442 | 50,927 | ||||||||||||||||||||||||||||||||
| Services |
12,579 | 754 | — | 13,333 | 14,693 | 733 | — | 15,426 | 12,717 | 1,069 | — | 13,786 | 14,867 | 1,013 | — | 15,880 | ||||||||||||||||||||||||||||||||
| Total Operating Expenses |
58,851 | 5,068 | 85 | 64,004 | 60,154 | 5,032 | 199 | 65,385 | 58,024 | 5,191 | 261 | 63,476 | 61,177 | 5,188 | 442 | 66,807 | ||||||||||||||||||||||||||||||||
| General & Administrative |
31,142 | 2,835 | — | 33,977 | 22,042 | 2,861 | — | 24,903 | 20,200 | 3,963 | — | 24,163 | 23,026 | 2,799 | — | 25,825 | ||||||||||||||||||||||||||||||||
| Operating Cash Flow |
67,884 | 6,479 | (85 | ) | 74,278 | 83,535 | 5,002 | (199 | ) | 88,338 | 90,896 | 4,391 | (261 | ) | 95,026 | 92,984 | 8,602 | (442 | ) | 101,144 | ||||||||||||||||||||||||||||
| Corporate Development |
— | — | 1,172 | 1,172 | 194 | — | 1,648 | 1,842 | 358 | — | 1,320 | 1,678 | 489 | — | 2,197 | 2,686 | ||||||||||||||||||||||||||||||||
| Add: Non-Cash Compensation |
12,200 | 109 | 281 | 12,590 | 3,775 | 114 | 58 | 3,947 | 2,234 | 1,155 | 125 | 3,514 | 4,835 | 171 | 374 | 5,380 | ||||||||||||||||||||||||||||||||
| Adjusted EBITDA |
80,084 | 6,588 | (976 | ) | 85,696 | 87,116 | 5,116 | (1,789 | ) | 90,443 | 92,772 | 5,546 | (1,456 | ) | 96,862 | 97,330 | 8,773 | (2,265 | ) | 103,838 | ||||||||||||||||||||||||||||
| Quarter Ended 9/30/05 | Quarter Ended 12/31/05 | Quarter Ended 3/31/06 | Quarter Ended 6/30/06 | |||||||||||||||||||||||||||||||||||||||||||||
| CCUSA | CCAL | EmB(a) | CCIC | CCUSA | CCAL | EmB(a) | CCIC | CCUSA | CCAL | EmB(a) | CCIC | CCUSA | CCAL | EmB(a) | CCIC | |||||||||||||||||||||||||||||||||
| Gross Margins: |
||||||||||||||||||||||||||||||||||||||||||||||||
| Site Rental |
67 | % | 66 | % | N/M | 67 | % | 68 | % | 63 | % | N/M | 68 | % | 70 | % | 65 | % | N/M | 69 | % | 70 | % | 72 | % | N/M | 70 | % | ||||||||||||||||||||
| Services |
31 | % | 61 | % | N/M | 31 | % | 33 | % | 47 | % | N/M | 33 | % | 33 | % | 40 | % | N/M | 34 | % | 34 | % | 47 | % | N/M | 35 | % | ||||||||||||||||||||
| Operating Cash Flow Margins |
45 | % | 45 | % | N/M | 44 | % | 50 | % | 39 | % | N/M | 49 | % | 54 | % | 32 | % | N/M | 52 | % | 52 | % | 52 | % | N/M | 52 | % | ||||||||||||||||||||
| Adjusted EBITDA Margin |
52 | % | 46 | % | N/M | 50 | % | 53 | % | 40 | % | N/M | 51 | % | 55 | % | 41 | % | N/M | 53 | % | 55 | % | 53 | % | N/M | 54 | % | ||||||||||||||||||||
| (a) | EmB = Emerging Businesses |
Reconciliation of Non-GAAP Financial Measure (Adjusted EBITDA) to GAAP Financial Measure:
($ in thousands)
| Quarter Ended | ||||||||||||||||
| 9/30/2005 | 12/31/2005 | 3/31/2006 | 6/30/2006 | |||||||||||||
| Net income (loss) |
$ | (25,536 | ) | $ | (23,303 | ) | $ | (6,722 | ) | $ | (13,335 | ) | ||||
| Income (loss) from discontinued operations, net of tax |
— | — | (5,657 | ) | — | |||||||||||
| Minority interests |
(834 | ) | (760 | ) | (911 | ) | (4 | ) | ||||||||
| Credit (provision) for income taxes |
117 | 2,818 | 616 | 507 | ||||||||||||
| Interest expense, amortization of deferred financing costs |
28,600 | 30,544 | 32,260 | 37,455 | ||||||||||||
| Interest and other income (expense) |
(617 | ) | (2,592 | ) | 1,336 | 2,939 | ||||||||||
| Depreciation, amortization and accretion |
70,215 | 69,986 | 72,091 | 69,374 | ||||||||||||
| Operating stock-based compensation charges |
12,590 | 3,947 | 3,514 | 5,380 | ||||||||||||
| Asset write-down charges |
1,161 | 773 | 335 | 1,522 | ||||||||||||
| Cumulative effect of change in accounting principle |
— | 9,031 | — | — | ||||||||||||
| Restructuring charges (credits) |
— | — | — | — | ||||||||||||
| Adjusted EBITDA |
$ | 85,696 | $ | 90,443 | $ | 96,862 | $ | 103,838 | ||||||||
CCI FACT SHEET Q2 2006
$ in thousands
| Q2 ‘05 | Q2 ‘06 | % Change | |||||||||
| CCUSA |
|||||||||||
| Site Rental Revenue |
$ | 134,104 | $ | 154,491 | 15 | % | |||||
| Ending Sites |
10,606 | 11,056 | 4 | % | |||||||
| CCAL |
|||||||||||
| Site Rental Revenue |
$ | 13,305 | $ | 14,669 | 10 | % | |||||
| Ending Sites |
1,388 | 1,385 | 0 | % | |||||||
| Emerging Businesses |
|||||||||||
| Site Rental Revenue |
$ | — | $ | — | N/A | ||||||
| Ending Sites |
— | — | N/A | ||||||||
| TOTAL CCIC |
|||||||||||
| Site Rental Revenue |
$ | 147,409 | $ | 169,160 | 15 | % | |||||
| Ending Sites |
11,994 | 12,441 | 4 | % | |||||||
| Ending Cash and Investments |
$ | 258,962 | * | $ | 522,595 | * | |||||
| Debt |
|||||||||||
| Bank Debt |
$ | 0 | $ | 1,000,000 | |||||||
| Bonds |
$ | 2,028,613 | $ | 1,975,586 | |||||||
| 6 1/4% & 8 1/4% Convertible Preferred Stock |
$ | 508,709 | $ | 312,407 | |||||||
| Total Debt |
$ | 2,537,322 | $ | 3,287,993 | |||||||
| Leverage Ratios |
|||||||||||
| Net Bank Debt / EBITDA |
N/A | 1.1X | |||||||||
| Net Bank Debt + Bonds / EBITDA |
5.4X | 5.9X | |||||||||
| Total Net Debt / EBITDA |
6.9X | 6.7X | |||||||||
| Last Quarter Annnualized Adjusted EBITDA |
$ | 329,992 | $ | 415,352 | |||||||
| * | Excludes Restricted Cash of $84.2 million in Q2 ‘05 and $107.8 million in Q2 ‘06 |