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): March 1, 2004
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 500
Houston, TX 77057
(Address of Principal Executive Office)
Registrant’s telephone number, including area code: (713) 570-3000
This document includes “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Other than statements of historical fact, all statements regarding industry prospects, the consummation of the transactions described in this document and the Company’s expectations regarding the future performance of its businesses and its financial position are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
| Exhibit No. |
Description | |
| 99.1 | Press Release dated March 1, 2004 |
ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On March 1, 2004, the Company issued a press release regarding moving the recognition of a loss related to the extinguishment of the tendered 9% and 9.5% Senior Notes from the fourth quarter of 2003 to the first quarter of 2004.
The March 1 press release is furnished herewith as Exhibit 99.1 to this Form 8-K.
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.
2
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: March 2, 2004
3
EXHIBIT INDEX
| Exhibit No. |
Description | |
| 99.1 | Press Release dated March 1, 2004 |
4
Exhibit 99.1
| Contacts: |
W. Benjamin Moreland, CFO | |
| Jay Brown, VP Finance | ||
| Crown Castle International Corp. | ||
| 713-570-3000 |
CROWN CASTLE INTERNATIONAL TO
RECOGNIZE CHARGE RELATED TO TENDERED
SENIOR NOTES IN THE FIRST QUARTER OF 2004
March 1, 2004 – HOUSTON, TEXAS – Crown Castle International Corp. (NYSE:CCI) today announced it will recognize the loss related to the extinguishment of the tendered 9% and 9.5% Senior Notes (together “Senior Notes”) in the first quarter of 2004, which will decrease its previously reported fourth quarter and full year 2003 net loss. The changes have no effect on site rental and broadcast transmission revenue, total revenue, adjusted EBITDA, net cash from operating activities, free cash flow (defined as cash from operating activities less capital expenditures) and 2004 outlook reported on February 18, 2004.
The revision will move the recognition of a loss on the extinguishment of tendered Senior Notes from the fourth quarter of 2003 to the first quarter of 2004. On December 5, 2003, Crown Castle announced cash tender offers for its Senior Notes. The tender offers for these notes expired on January 6, 2004 and Crown Castle paid for these notes on January 7, 2004. In its February 18, 2004 press release reporting fourth quarter and full year 2003 results, Crown Castle reported a loss of $122.8 million for the extinguishment of certain debt and preferred securities in the fourth quarter, inclusive of $22.5 million related to the extinguishment of the Senior Notes that had been irrevocably tendered as of December 31, 2003. Crown Castle’s determination to record the loss of $22.5 million in the fourth quarter of 2003 was made in consultation and with the concurrence of KPMG LLP, its external auditor.
In conjunction with the preparation of Crown Castle’s Form 10-K, Crown Castle, together with KPMG LLP, determined that it is appropriate to recognize the loss of $22.5 million on the extinguishment of such tendered Senior Notes in the first quarter of 2004. The effect of recognizing
Page 2 of 6
the loss on the extinguishment of such tendered Senior Notes in the first quarter of 2004 will decrease the previously reported net loss by $22.5 million and the net loss per share by $0.10 per share in the fourth quarter of 2003. The Senior Notes tendered at December 31, 2003 remain classified as current maturities of long-term debt at year-end.
The revised net loss and net loss per share for fourth quarter and full year 2003 follows:
Net loss was $148.8 million for the fourth quarter of 2003, inclusive of $100.3 million in losses from the retirement of debt and preferred securities, compared to a net loss of $34.9 million for the same period in 2002, inclusive of $49.1 million of gains from the retirement of debt. Net loss after deduction of dividends on preferred stock was $158.8 million in the fourth quarter of 2003, inclusive of $100.3 million in losses from the retirement of debt and preferred securities, compared to a loss of $4.2 million for the same period last year, inclusive of $98.8 million in gains from the retirement of debt and preferred securities. Fourth quarter net loss per share was $(0.73) compared to a loss per share of $(0.02) in last year’s fourth quarter of 2002. Prior to July 1, 2003, gains and losses from purchases of our 12 3/4 % Senior Exchangeable Preferred Stock were presented as part of dividends on preferred stock in our consolidated statement of operations. Since that date, such gains and losses are presented as part of interest and other income (expense) due to the adoption of a new accounting standard for mandatorily redeemable financial instruments.
Net loss for full year 2003 was $398.4 million, inclusive of $137.8 million in losses from the retirement of debt and preferred securities, compared to a net loss of $272.5 million for the same period in 2002, inclusive of $79.1 million of gains from the retirement of debt. Net loss after deduction of dividends on preferred stock was $452.3 million for the full year 2003, inclusive of $137.5 million in losses from the retirement of debt and preferred securities, compared to a loss of $252.9 million for the same period last year, inclusive of $178.6 million in gains from the retirement of debt and preferred securities. Full year 2003 net loss per share was $(2.09) compared to a loss per share of $(1.16) for full year 2002.
Crown Castle’s outlook for first quarter and full year 2004 remains unchanged from the February 18, 2004 press release.
Crown Castle International Corp. engineers, deploys, owns and operates technologically advanced shared wireless infrastructure, including extensive networks of towers and rooftop sites as well as analog and digital audio and television broadcast transmission systems. Crown Castle offers near-universal broadcast coverage in the United Kingdom and significant wireless communications coverage in the United States, United Kingdom and Australia. The company owns, operates and manages over 15,500 wireless communication sites internationally. For more information on Crown Castle visit: http://www.crowncastle.com.
Page 3 of 6
Cautionary Language Regarding Forward-Looking Statements
This press release contains forward-looking statements that are based on our management’s current expectations. Such forward-looking statements include references to the Company’s previously provided outlook. Such forward-looking statements are subject to certain risks, uncertainties and assumptions, including prevailing market conditions and other factors. Should one or more of these 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.
Non-GAAP Financial Measures:
This press release includes presentations of Free Cash Flow and Adjusted EBITDA, which are non-GAAP financial measures. Crown Castle defines Free Cash Flow as net cash provided by operating activities less capital expenditures (both amounts from the Consolidated Statement of Cash Flows). Crown Castle defines Adjusted EBITDA as net loss plus cumulative effect of change in accounting principle, minority interests, provision for income taxes, interest expense, amortization of deferred financing costs and dividends on preferred stock, interest and other income (expense), depreciation, amortization and accretion, non-cash general and administrative compensation charges, asset write-down charges and restructuring charges (credits). Free Cash Flow and Adjusted EBITDA are not intended as alternative measures of operating results or cash flow from operations (as determined in accordance with generally accepted accounting principles). Further, our measure of Free Cash Flow and Adjusted EBITDA may not be comparable to similarly titled measures of other companies. Free Cash Flow is presented as additional information because management believes it to be a useful indicator of our ability to execute our business strategy without reliance on additional borrowing or the use of our cash and liquid investments. Adjusted EBITDA is presented as additional information because management believes it to be a useful indicator of the current financial performance of our core businesses. In addition, Adjusted EBITDA is the measure of current financial performance generally used in our debt covenant calculations. The tables set forth below reconcile these non-GAAP financial measures to comparable GAAP financial measures. Our results under GAAP are set forth in the financial statements following this press release.
| Reconciliations | of Non-GAAP Financial Measures to Comparable GAAP Financial Measures |
Adjusted EBITDA is computed as follows:
| Three Months Ended December 31, |
Twelve Months Ended December 31, |
|||||||||||||||
| (in thousands of dollars) | 2003 |
2002 |
2003 |
2002 |
||||||||||||
| Net loss |
$ | (148,840 | ) | $ | (34,902 | ) | $ | (398,365 | ) | $ | (272,521 | ) | ||||
| Cumulative effect of change in accounting principle |
— | — | 2,035 | — | ||||||||||||
| Minority interests |
1,258 | 849 | 2,394 | (2,498 | ) | |||||||||||
| Provision for income taxes |
(4,102 | ) | 6,832 | 7,518 | 12,276 | |||||||||||
| Interest expense, amortization of deferred financing costs and dividends on preferred stock |
73,645 | 71,736 | 289,647 | 302,570 | ||||||||||||
| Interest and other income (expense) |
101,605 | (48,089 | ) | 148,474 | (66,418 | ) | ||||||||||
| Depreciation, amortization and accretion |
82,893 | 76,761 | 324,152 | 301,928 | ||||||||||||
| Non-cash general and administrative compensation charges |
84 | 1,358 | 20,654 | 5,349 | ||||||||||||
| Asset write-down charges |
6,800 | 8,550 | 14,317 | 55,796 | ||||||||||||
| Restructuring charges (credits) |
— | 10,538 | 1,291 | 17,147 | ||||||||||||
| Adjusted EBITDA |
$ | 113,343 | $ | 93,633 | $ | 412,117 | $ | 353,629 | ||||||||
|
|
CROWN CASTLE INTERNATIONAL CORP. CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND OTHER FINANCIAL DATA (in thousands, except per share data) |
Page 4 of 6 |
| Three Months Ended December 31, |
Years Ended December 31, |
|||||||||||||||
| 2003 |
2002 |
2003 |
2002 |
|||||||||||||
| Net revenues: |
||||||||||||||||
| Site rental and broadcast transmission |
$ | 213,971 | $ | 179,280 | $ | 786,788 | $ | 677,839 | ||||||||
| Network services and other |
39,875 | 48,681 | 143,560 | 223,694 | ||||||||||||
| Total net revenues |
253,846 | 227,961 | 930,348 | 901,533 | ||||||||||||
| Costs of operations: |
||||||||||||||||
| Site rental and broadcast transmission |
83,425 | 71,421 | 307,511 | 270,024 | ||||||||||||
| Network services and other |
30,089 | 39,215 | 110,268 | 176,175 | ||||||||||||
| Total costs of operations |
113,514 | 110,636 | 417,779 | 446,199 | ||||||||||||
| General and administrative |
25,002 | 22,241 | 94,888 | 94,222 | ||||||||||||
| Corporate development |
1,987 | 1,451 | 5,564 | 7,483 | ||||||||||||
| Restructuring charges |
— | 10,538 | 1,291 | 17,147 | ||||||||||||
| Asset write-down charges |
6,800 | 8,550 | 14,317 | 55,796 | ||||||||||||
| Non-cash general and administrative compensation charges |
84 | 1,358 | 20,654 | 5,349 | ||||||||||||
| Depreciation, amortization and accretion |
82,893 | 76,761 | 324,152 | 301,928 | ||||||||||||
| Operating income (loss) |
23,566 | (3,574 | ) | 51,703 | (26,591 | ) | ||||||||||
| Interest and other income (expense) |
(101,605 | ) | 48,089 | (148,474 | ) | 66,418 | ||||||||||
| Interest expense, amortization of deferred financing costs and dividends on preferred stock |
(73,645 | ) | (71,736 | ) | (289,647 | ) | (302,570 | ) | ||||||||
| Loss before income taxes, minority interests and cumulative effect of change in accounting principle |
(151,684 | ) | (27,221 | ) | (386,418 | ) | (262,743 | ) | ||||||||
| Provision for income taxes |
4,102 | (6,832 | ) | (7,518 | ) | (12,276 | ) | |||||||||
| Minority interests |
(1,258 | ) | (849 | ) | (2,394 | ) | 2,498 | |||||||||
| Loss before cumulative effect of change in accounting principle |
(148,840 | ) | (34,902 | ) | (396,330 | ) | (272,521 | ) | ||||||||
| Cumulative effect of change in accounting principle for asset retirement obligations, net of related tax benefit of $636 |
— | — | (2,035 | ) | — | |||||||||||
| Net loss |
(148,840 | ) | (34,902 | ) | (398,365 | ) | (272,521 | ) | ||||||||
| Dividends on preferred stock, net of gains (losses) on purchases of preferred stock |
(9,997 | ) | 30,672 | (53,945 | ) | 19,638 | ||||||||||
| Net loss after deduction of dividends on preferred stock, net of gains (losses) on purchases of preferred stock |
$ | (158,837 | ) | $ | (4,230 | ) | $ | (452,310 | ) | $ | (252,883 | ) | ||||
| Per common share – basic and diluted: |
||||||||||||||||
| Loss before cumulative effect of change in accounting principle |
$ | (0.73 | ) | $ | (0.02 | ) | $ | (2.08 | ) | $ | (1.16 | ) | ||||
| Cumulative effect of change in accounting principle |
— | — | (0.01 | ) | — | |||||||||||
| Net loss |
$ | (0.73 | ) | $ | (0.02 | ) | $ | (2.09 | ) | $ | (1.16 | ) | ||||
| Common shares outstanding – basic and diluted |
218,241 | 215,138 | 216,947 | 218,028 | ||||||||||||
| Adjusted EBITDA (before restructuring and asset write-down charges): |
||||||||||||||||
| Site rental and broadcast transmission |
$ | 121,737 | $ | 101,009 | $ | 447,099 | $ | 374,491 | ||||||||
| Network services and other (before corporate development expenses) |
(6,407 | ) | (5,925 | ) | (29,418 | ) | (13,379 | ) | ||||||||
| Adjusted EBITDA before corporate development expenses |
115,330 | 95,084 | 417,681 | 361,112 | ||||||||||||
| Corporate development |
(1,987 | ) | (1,451 | ) | (5,564 | ) | (7,483 | ) | ||||||||
| Total Adjusted EBITDA |
$ | 113,343 | $ | 93,633 | $ | 412,117 | $ | 353,629 | ||||||||
Page 5 of 6
|
|
CROWN CASTLE INTERNATIONAL CORP. CONDENSED CONSOLIDATED BALANCE SHEET (in thousands) |
| December 31, | ||||||
| 2003 |
2002 | |||||
| ASSETS | ||||||
| Current assets: |
||||||
| Cash and cash equivalents |
$ | 462,427 | $ | 516,172 | ||
| Receivables, net of allowance for doubtful accounts |
82,053 | 135,864 | ||||
| Short-term investments |
— | 115,697 | ||||
| Inventories |
15,542 | 45,616 | ||||
| Prepaid expenses and other current assets |
81,738 | 53,732 | ||||
| Total current assets |
641,760 | 867,081 | ||||
| Property and equipment, net of accumulated depreciation |
4,741,945 | 4,828,033 | ||||
| Goodwill |
1,206,713 | 1,067,041 | ||||
| Deferred financing costs and other assets, net of accumulated amortization |
147,173 | 130,446 | ||||
| $ | 6,737,591 | $ | 6,892,601 | |||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||
| Current liabilities: |
||||||
| Accounts payable |
$ | 40,749 | $ | 63,852 | ||
| Accrued interest |
49,063 | 59,811 | ||||
| Accrued compensation and related benefits |
19,117 | 14,661 | ||||
| Deferred rental revenues and other accrued liabilities |
267,459 | 208,195 | ||||
| Long-term debt, current maturities |
267,142 | 14,250 | ||||
| Total current liabilities |
643,530 | 360,769 | ||||
| Long-term debt, less current maturities |
3,182,850 | 3,212,710 | ||||
| Other liabilities |
211,763 | 183,227 | ||||
| Total liabilities |
4,038,143 | 3,756,706 | ||||
| Minority interests |
208,333 | 171,383 | ||||
| Redeemable preferred stock |
506,702 | 756,014 | ||||
| Stockholders’ equity |
1,984,413 | 2,208,498 | ||||
| $ | 6,737,591 | $ | 6,892,601 | |||
Page 6 of 6
|
|
CROWN CASTLE INTERNATIONAL CORP. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (in thousands) |
| Three Months Ended December 31, |
||||||||
| 2003 |
2002 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net loss |
$ | (148,840 | ) | $ | (34,902 | ) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities: |
||||||||
| (Gains) losses on purchases and redemption of long-term debt |
97,170 | (49,140 | ) | |||||
| Depreciation, amortization and accretion |
82,893 | 76,761 | ||||||
| Amortization of deferred financing costs, discounts on long-term debt and dividends on preferred stock |
17,633 | 19,708 | ||||||
| Asset write-down charges |
6,800 | 8,550 | ||||||
| Losses on purchases and redemptions of preferred stock |
3,085 | — | ||||||
| Minority interests |
1,258 | 849 | ||||||
| Equity in losses (earnings) and write-downs of unconsolidated affiliates |
1,010 | 1,398 | ||||||
| Non-cash general and administrative compensation charges |
84 | 1,358 | ||||||
| Changes in assets and liabilities: |
||||||||
| Increase in deferred rental revenues and other liabilities |
39,241 | 8,316 | ||||||
| Increase in accrued interest |
15,377 | 27,277 | ||||||
| Decrease in receivables |
12,880 | 39,959 | ||||||
| Decrease in accounts payable |
(8,856 | ) | (13,350 | ) | ||||
| (Increase) decrease in inventories, prepaid expenses and other assets |
(3,750 | ) | 39,775 | |||||
| Net cash provided by operating activities |
115,985 | 126,559 | ||||||
| Cash flows from investing activities: |
||||||||
| Proceeds from disposition of property and equipment |
1,828 | 7,845 | ||||||
| Capital expenditures |
(23,697 | ) | (39,983 | ) | ||||
| Investments in affiliates and other |
(63 | ) | 2,647 | |||||
| Maturities of investments |
— | 29,500 | ||||||
| Purchases of investments |
— | (36,893 | ) | |||||
| Acquisition of assets |
— | (3,252 | ) | |||||
| Net cash used for investing activities |
(21,932 | ) | (40,136 | ) | ||||
| Cash flows from financing activities: |
||||||||
| Proceeds from issuance of long-term debt |
1,302,000 | — | ||||||
| Proceeds from issuance of capital stock |
3,460 | 123 | ||||||
| Purchases and redemptions of long-term debt |
(913,171 | ) | (97,520 | ) | ||||
| Principal payments on long-term debt |
(102,750 | ) | (30,910 | ) | ||||
| Net borrowings (payments) under revolving credit agreements |
(94,948 | ) | — | |||||
| Purchases and redemption of capital stock |
(62,266 | ) | (49,017 | ) | ||||
| Incurrence of financing costs |
(22,093 | ) | (2,673 | ) | ||||
| Net cash provided by (used for) financing activities |
110,232 | (179,997 | ) | |||||
| Effect of exchange rate changes on cash |
2,470 | 4,427 | ||||||
| Net increase (decrease) in cash and cash equivalents |
206,755 | (89,147 | ) | |||||
| Cash and cash equivalents at beginning of period |
255,672 | 605,319 | ||||||
| Cash and cash equivalents at end of period |
$ | 462,427 | $ | 516,172 | ||||
| Supplemental disclosure of cash flow information: |
||||||||
| Interest paid |
$ | 35,946 | $ | 23,733 | ||||
| Income taxes paid |
138 | 109 | ||||||