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): October 26, 2004
Crown Castle International Corp.
(Exact Name of Registrant as Specified in its Charter)
| Delaware | 001-16441 | 76-0470458 | ||
| (State or Other | (Commission File | (IRS Employer | ||
| Jurisdiction of | Number) | Identification | ||
| Incorporation) | Number) |
510 Bering Drive
Suite 500
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)) |
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 2.02—RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On October 26, 2004, the Company issued a press release disclosing its financial results for the third quarter of 2004. The October 26 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 October 26, 2004 | |
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: Title: |
E. Blake Hawk Executive Vice President and General Counsel | |
Date: October 26, 2004
3
EXHIBIT INDEX
| Exhibit No. |
Description | |
| 99.1 | Press Release dated October 26, 2004 | |
4
Exhibit 99.1
| Contacts: |
W. Benjamin Moreland, CFO | |
| Jay Brown, Treasurer | ||
| Crown Castle International Corp. | ||
| 713-570-3000 |
FOR IMMEDIATE RELEASE
CROWN CASTLE INTERNATIONAL
REPORTS THIRD QUARTER 2004 RESULTS
October 26, 2004 – HOUSTON, TEXAS – Crown Castle International Corp. (NYSE:CCI) today reported results for the third quarter ended September 30, 2004.
Site rental revenue for the third quarter of 2004 increased 11.6% percent to $134.1 million, up $14.0 million from $120.1 million for the same period in the prior year. Operating income improved to $11.6 million in the third quarter of 2004 from $(7.3) million in the third quarter of 2003, an increase of $18.9 million.
Net loss from continuing operations improved to $(56.1) million for the third quarter of 2004, inclusive of a $13.9 million loss from the retirement of debt, from a loss of $(104.8) million for last year’s third quarter, inclusive of $37.6 million in losses from the retirement of debt and preferred securities. Net income was $461.3 million for the third quarter of 2004, inclusive of $517.4 million in income from discontinued operations and a $13.9 million loss from the retirement of debt, compared to a net loss of $(99.7) million for the same period in 2003, inclusive of $5.1 million in income from discontinued operations and $37.6 million in losses from the retirement of debt and preferred securities. Net income after deduction of dividends on preferred stock was $451.5 million in the third quarter of 2004, inclusive of $517.4 million in income from discontinued operations and a $13.9 million loss from the retirement of debt, compared to a loss of $(109.2) million for the same period last year, inclusive of $5.1 million in income from discontinued operations and $37.6 million in losses from the retirement of debt and preferred securities. Third quarter 2004 net income per share was $2.02, inclusive of $2.32 per share in income from discontinued operations, compared to a loss per share of $(0.50) in last year’s third quarter, inclusive of $0.03 per share in income from discontinued operations.
| News Release continued: | Page 2 of 8 |
OPERATING RESULTS
US site rental revenue for the third quarter of 2004 increased $11.9 million, or 10.5%, to $125.3 million, from $113.4 million for the same period in 2003. US site rental gross margin, defined as site rental revenue less site rental cost of operations, increased 13.2% to $86.1 million, up $10.1 million in the third quarter of 2004 from the same period in 2003.
On a consolidated basis, site rental gross margin increased 14.8% to $91.9 million, up $11.8 million in the third quarter of 2004 from the same period in 2003. Both the US and consolidated results approximate same tower sales and gross margin as over 99% of Crown Castle’s sites were in operation for the 12 months preceding June 30, 2004.
“We are very pleased with our company performance this quarter as we continue to complete over 25% more new tenant leases with our customers in 2004 than in 2003,” stated John P. Kelly, President and Chief Executive Officer of Crown Castle. “As our customers focus on enhancing their wireless networks to meet consumer demand, we are diligently working to provide them rapid coverage and capacity solutions on our extensive portfolio of towers. Moreover, the company-transforming sale of our UK subsidiary that was completed during the quarter affords us the operational and financial flexibility to capitalize on the anticipated growth potential of the US market.”
Net cash from operating activities for the third quarter of 2004 was $19.2 million. Free cash flow, defined as net cash from operating activities less capital expenditures, was a source of cash of $9.5 million for the third quarter of 2004. For the third quarter of 2004, total capital expenditures were $9.8 million, comprised of $1.6 million of maintenance capital expenditures and $8.2 million of revenue generating capital expenditures. Crown Castle had $908.5 million of cash and cash equivalents as of September 30, 2004. During the third quarter, Crown Castle purchased approximately 2.7 million shares of its common stock using approximately $36.0 million in cash, an average of $13.49 per share.
SALE OF UK SUBSIDIARY
On August 31, 2004, Crown Castle completed the sale of its UK subsidiary to National Grid Transco Plc for approximately $2.0 billion in cash. Crown Castle used $1.3 billion of the proceeds from the transaction to fully repay Crown Castle Operating Company’s credit facility. As a result of this transaction, Crown Castle’s UK subsidiary is classified as discontinued operations in the financial results.
| News Release continued: | Page 3 of 8 |
On September 10, 2004, Crown Castle announced cash tender offers for certain of its outstanding 9 3/8% Senior Notes, 10 3/4% Senior Notes, 7.5% Senior Notes and 7.5% Series B Senior Notes (collectively, “the Notes”) in order to satisfy certain provisions of the Notes relating to the sale of its UK subsidiary. On October 8, 2004, Crown Castle retired $465,000 in aggregate principal amount of the Notes received during the tender period.
“After the closing of the sale of our UK subsidiary, we continue to focus on decreasing our cost of debt toward a target rate of approximately 6% and positioning Crown Castle to have the financial flexibility to utilize our internally generated capital for the highest yielding investments, including opportunistic share purchases, new assets and further investments in our existing assets,” stated W. Benjamin Moreland, Chief Financial Officer of Crown Castle. “Further, we continue to evaluate opportunities to replace our higher coupon notes with new senior indebtedness, which we believe would come with much lower interest costs.”
OUTLOOK
The following statements and outlook tables are based on current expectations and assumptions and assume a US dollar to Australian dollar exchange rate of 0.70 US dollars to 1.00 Australian dollar. 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 are set forth below and in Crown Castle’s filings with the Securities and Exchange Commission.
Crown Castle has increased its 2004 Outlook for Site Rental Revenue from between $525 million and $530 million to between $528 million and $530 million and Adjusted EBITDA from between $280 million and $287 million to between $288 million and $291 million. Crown Castle has adjusted its 2004 outlook for revenue generating capital expenditures from between $33 million and $40 million to between $37 million and $38 million.
| News Release continued: | Page 4 of 8 |
The following table sets forth Crown Castle’s current outlook for the fourth quarter and full year 2004 (dollars in millions):
| Fourth Quarter 2004 |
Full Year 2004 | |||
| Site Rental Revenue |
$134 to 136 | $528 to 530 | ||
| Adjusted EBITDA |
$ 72 to 75 | $288 to 291 | ||
| Maintenance capital expenditures |
$ 2 to 333 | $ 7 to 9 | ||
| Revenue generating capital expenditures |
$ 13 to 16 | $ 37 to 38 |
The following table sets forth Crown Castle’s current outlook for 2005 (dollars in millions):
| 2005 Outlook | ||
| Site Rental Revenue |
$565 to 575 | |
| Adjusted EBITDA |
$310 to 320 | |
| Net cash provided by operating activities |
$225 to 245 | |
| Maintenance capital expenditures |
$ 7 to 10 | |
| Revenue generating capital expenditures |
$ 23 to 30 | |
| Free cash flow |
$195 to 215 |
Crown Castle’s 2005 Outlook for net cash provided by operating activities includes expected savings from interest expense reductions that may be achieved through refinancings and further debt reductions associated with the application of UK sales proceeds and cash balances, and refinancings. Free cash flow is defined as net cash provided by operating activities less all capital expenditures (both maintenance and revenue generating capital expenditures).
CONFERENCE CALL DETAILS
Crown Castle has scheduled a conference call for Wednesday, October 27, 2004, at 9:30 a.m. eastern time to discuss third quarter 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 11:30 a.m. eastern time on Wednesday, October 27, 2004, through 11:59 p.m. eastern time on Wednesday, November 3, 2004, and may be accessed by dialing 303-590-3000 using passcode 11011989#. An audio archive will also be available on the company’s website at http://www.crowncastle.com shortly after the call and will be accessible for approximately 90 days.
| News Release continued: | Page 5 of 8 |
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 68 of the top 100 United States markets and to substantially all of the Australian population. Crown Castle owns, operates and manages over 10,600 and 1,300 wireless communication sites in the U.S. and Australia, respectively. For more information on Crown Castle visit: http://www.crowncastle.com.
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 income (loss) plus cumulative effect of change in accounting principle, income from discontinued operations, 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 cash equivalents. 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
Free Cash Flow is computed as follows:
| (In thousands of dollars) | For the Three Months Ended |
|||||||
| September 30, 2004 |
September 30, 2003 |
|||||||
| Net cash provided by operating activities |
$ | 19,228 | $ | (1,000 | ) | |||
| Less: Capital expenditures |
(9,758 | ) | (6,092 | ) | ||||
| Free Cash Flow |
$ | 9,470 | $ | (7,092 | ) | |||
Free Cash Flow for the year ending December 31, 2005 is forecasted as follows:
| (in millions of dollars) | Full Year 2005 |
|||
| Outlook |
||||
| Net cash provided by operating activities |
$ | 225.0 to 245.0 | ||
| Less: Capital expenditures |
$ | (30.0) to (40.0 | ) | |
| Free Cash Flow |
$ | 195.0 to 215.0 | ||
| News Release continued: | Page 6 of 8 |
Adjusted EBITDA is computed as follows:
| (in thousands of dollars) | Three Months Ended September 30, |
|||||||
| 2004 |
2003 |
|||||||
| Net income (loss) |
$ | 461,333 | $ | (99,678 | ) | |||
| Income from discontinued operations, net of tax |
(517,449 | ) | (5,076 | ) | ||||
| Minority interests |
1,729 | (151 | ) | |||||
| Provision for income taxes |
144 | 85 | ||||||
| Interest expense, amortization of deferred financing costs and dividends on preferred stock |
52,281 | 62,408 | ||||||
| Interest and other income (expense) |
13,590 | 35,104 | ||||||
| Depreciation, amortization and accretion |
60,587 | 60,846 | ||||||
| Non-cash general and administrative compensation charges |
1,442 | 6,205 | ||||||
| Asset write-down charges |
— | 6,137 | ||||||
| Restructuring charges (credits) |
(445 | ) | (1,058 | ) | ||||
| Adjusted EBITDA |
$ | 73,212 | $ | 64,822 | ||||
Adjusted EBITDA for the quarter ending December 31, 2004 is forecasted as follows:
| (in millions of dollars) | Q4 2004 | |
| Outlook | ||
| Net income (loss) |
$(46.5) to $(28.0) | |
| Income from discontinued operations, net of tax |
0 to 0.7 | |
| Minority interests |
0.5 to 2.5 | |
| Provision for income taxes |
0.1 to 0.2 | |
| Interest expense and amortization of deferred financing costs |
40.0 to 45.0 | |
| Interest and other income (expense) |
1.0 to 2.5 | |
| Depreciation, amortization and accretion |
60.0 to 62.0 | |
| Non-cash general and administrative compensation charges |
1.4 to 3.6 | |
| Asset write-down charges |
0 to 2.0 | |
| Restructuring charges |
— | |
| Adjusted EBITDA |
$72.0 to 75.0 | |
| News Release continued: | Page 7 of 8 |
Adjusted EBITDA for the year ending December 31, 2004 and the year ending December 31, 2005 is forecasted as follows:
| (in millions of dollars) | Full Year 2004 |
Full Year 2005 | ||
| Outlook |
Outlook | |||
| Net income (loss) |
$ 310.4 to 328.9 | $(69.3) to (5.2) | ||
| Income from discontinued operations, net of tax |
(548.4) to (547.7) | — | ||
| Minority interests |
5.0 to 7.0 | (1.0) to 4.0 | ||
| Provision for income taxes |
0.6 to 0.7 | 0 to 2.0 | ||
| Interest expense and amortization of deferred financing costs |
206.2 to 211.2 | 71.5 to 81.5 | ||
| Interest and other income (expense) |
41.0 to 42.5 | 19.8 to 23.8 | ||
| Depreciation, amortization and accretion |
243.0 to 245.0 | 221.0 to 251.0 | ||
| Non-cash general and administrative compensation charges |
11.3 to 13.5 | 12.0 to 14.0 | ||
| Asset write-down charges |
3.8 to 5.8 | 1.9 to 3.0 | ||
| Restructuring charges (credits) |
(0.4) | — | ||
| Adjusted EBITDA |
$ 288.0 to 291.0 | $ 310.0 to 320.0 | ||
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) leasing rates for our sites and towers, (ii) growth potential of the US market, (iii) potential cost of debt and interest expense reductions, (iv) the investment of internally generated capital, (v) potential share purchases, (vi) currency exchange rates, (vii) revenues, (viii) Adjusted EBITDA, (ix) capital expenditures, (x) net cash provided by operating activities, (xi) free cash flow, (xii) potential debt and preferred stock refinancings and (xiii) the use of proceeds from the sale of our UK business. Such forward-looking statements are subject to certain risks, uncertainties and assumptions, including but not limited to prevailing market conditions and the following:
| Ø | Our business depends on the demand for wireless communications and towers, and we may be adversely affected by any slowdown in such demand. |
| Ø | The loss, consolidation, network sharing or financial instability of any of our limited number of customers may materially decrease revenues. |
| Ø | An economic or wireless telecommunications industry slowdown may materially and adversely affect our business and the business of our customers. |
| Ø | Restrictive covenants on our debt instruments may limit our ability to take actions that may be in our best interests. |
| Ø | 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. |
| Ø | We operate in a competitive industry and some of our competitors have significantly more resources or less debt than we do. |
| Ø | Technology changes may significantly reduce the demand for site leases and negatively impact our revenues. |
| Ø | 2.5G/3G and other technologies may not deploy or be adopted by customers as rapidly or in the manner projected. |
| Ø | We generally lease or sublease the land under our sites and towers and may not be able to extend these leases. |
| Ø | We may need additional financing, which may not be available, for strategic growth opportunities or contractual obligations. |
| Ø | Laws and regulations, which may change at any time and with which we may fail to comply, regulate our business. |
| Ø | Our network services business has historically experienced significant volatility in demand, which reduces the predictability of our results. |
| Ø | We are heavily dependent on our senior management. |
| News Release continued: | Page 8 of 8 |
| Ø | We may suffer from future claims if radio frequency emissions from wireless handsets or equipment on our sites and towers are demonstrated to cause negative health effects. |
| Ø | 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. |
| Ø | Sales or issuances of a substantial number of shares of our common stock may adversely affect the market price of our common stock. |
| Ø | Disputes with customers and suppliers may adversely affect results. |
Should one or more of these or other risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those expected. More information about potential risk factors which could affect our results is included in our filings with the Securities and Exchange Commission.
 |
CROWN CASTLE INTERNATIONAL CORP. | |
| CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS | ||
| AND OTHER FINANCIAL DATA | ||
| (in thousands, except per share data) |
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||
| Net revenues: |
||||||||||||||||
| Site rental |
$ | 134,090 | $ | 120,127 | $ | 394,422 | $ | 350,608 | ||||||||
| Network services and other |
14,956 | 17,396 | 48,172 | 53,944 | ||||||||||||
| Total net revenues |
149,046 | 137,523 | 442,594 | 404,552 | ||||||||||||
| Costs of operations: |
||||||||||||||||
| Site rental |
42,196 | 40,062 | 124,974 | 120,655 | ||||||||||||
| Network services and other |
10,786 | 10,178 | 34,054 | 34,608 | ||||||||||||
| Total costs of operations |
52,982 | 50,240 | 159,028 | 155,263 | ||||||||||||
| General and administrative |
22,641 | 21,422 | 66,936 | 64,160 | ||||||||||||
| Corporate development |
211 | 1,039 | 1,021 | 3,577 | ||||||||||||
| Restructuring charges (credits) |
(445 | ) | (1,058 | ) | (478 | ) | 1,291 | |||||||||
| Asset write-down charges |
— | 6,137 | 3,816 | 7,517 | ||||||||||||
| Non-cash general and administrative compensation charges |
1,442 | 6,205 | 9,860 | 13,933 | ||||||||||||
| Depreciation, amortization and accretion |
60,587 | 60,846 | 182,931 | 183,072 | ||||||||||||
| Operating income (loss) |
11,628 | (7,308 | ) | 19,480 | (24,261 | ) | ||||||||||
| Interest and other income (expense) |
(13,590 | ) | (35,104 | ) | (39,966 | ) | (45,938 | ) | ||||||||
| Interest expense, amortization of deferred financing costs and dividends on preferred stock |
(52,281 | ) | (62,408 | ) | (166,171 | ) | (189,928 | ) | ||||||||
| Loss from continuing operations before income taxes, minority interests and cumulative effect of change in accounting principle |
(54,243 | ) | (104,820 | ) | (186,657 | ) | (260,127 | ) | ||||||||
| Provision for income taxes |
(144 | ) | (85 | ) | (481 | ) | (328 | ) | ||||||||
| Minority interests |
(1,729 | ) | 151 | (4,538 | ) | (1,136 | ) | |||||||||
| Loss from continuing operations before cumulative effect of change in accounting principle |
(56,116 | ) | (104,754 | ) | (191,676 | ) | (261,591 | ) | ||||||||
| Discontinued operations: |
||||||||||||||||
| Income from operations of CCUK, net of tax |
20,239 | 5,076 | 51,238 | 12,617 | ||||||||||||
| Net gain on disposal of CCUK, net of tax |
497,210 | — | 497,210 | — | ||||||||||||
| Income from discontinued operations, net of tax |
517,449 | 5,076 | 548,448 | 12,617 | ||||||||||||
| Income (loss) before cumulative effect of change in accounting principle |
461,333 | (99,678 | ) | 356,772 | (248,974 | ) | ||||||||||
| Cumulative effect of change in accounting principle for asset retirement obligations |
— | — | — | (551 | ) | |||||||||||
| Net income (loss) |
461,333 | (99,678 | ) | 356,772 | (249,525 | ) | ||||||||||
| Dividends on preferred stock, net of gains (losses) on purchases of preferred stock |
(9,836 | ) | (9,496 | ) | (28,864 | ) | (43,948 | ) | ||||||||
| Net income (loss) after deduction of dividends on preferred stock, net of gains (losses) on purchases of preferred stock |
$ | 451,497 | $ | (109,174 | ) | $ | 327,908 | $ | (293,473 | ) | ||||||
| Per common share – basic and diluted: |
||||||||||||||||
| Loss from continuing operations before cumulative effect of change in accounting principle |
$ | (0.30 | ) | $ | (0.53 | ) | $ | (1.00 | ) | $ | (1.41 | ) | ||||
| Income from discontinued operations |
2.32 | 0.03 | 2.48 | 0.06 | ||||||||||||
| Cumulative effect of change in accounting principle |
— | — | — | (0.01 | ) | |||||||||||
| Net income (loss) |
$ | 2.02 | $ | (0.50 | ) | $ | 1.48 | $ | (1.36 | ) | ||||||
| Common shares outstanding – basic and diluted |
222,841 | 216,621 | 221,329 | 216,516 | ||||||||||||
| Adjusted EBITDA (before restructuring and asset write-down charges): |
||||||||||||||||
| Site rental |
$ | 85,175 | $ | 73,709 | $ | 248,784 | $ | 210,590 | ||||||||
| Network services and other (before corporate development expenses) |
(11,752 | ) | (7,848 | ) | (32,154 | ) | (25,461 | ) | ||||||||
| Adjusted EBITDA before corporate development expenses |
73,423 | 65,861 | 216,630 | 185,129 | ||||||||||||
| Corporate development |
(211 | ) | (1,039 | ) | (1,021 | ) | (3,577 | ) | ||||||||
| Total Adjusted EBITDA |
$ | 73,212 | $ | 64,822 | $ | 215,609 | $ | 181,552 | ||||||||
|
|
CROWN CASTLE INTERNATIONAL CORP. | |
| CONDENSED CONSOLIDATED BALANCE SHEET | ||
| (in thousands) | ||
| September 30, 2004 |
December 31, 2003 | |||||
| ASSETS | ||||||
| Current assets: |
||||||
| Cash and cash equivalents |
$ | 908,505 | $ | 436,184 | ||
| Receivables, net of allowance for doubtful accounts |
40,456 | 38,219 | ||||
| Inventories |
8,368 | 9,615 | ||||
| Prepaid expenses and other current assets |
31,916 | 32,133 | ||||
| Assets of discontinued operations |
— | 2,052,510 | ||||
| Total current assets |
989,245 | 2,568,661 | ||||
| Property and equipment, net of accumulated depreciation |
3,583,257 | 3,755,073 | ||||
| Goodwill |
267,071 | 267,071 | ||||
| Deferred financing costs and other assets, net of accumulated amortization |
133,105 | 146,786 | ||||
| $ | 4,972,678 | $ | 6,737,591 | |||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||
| Current liabilities: |
||||||
| Accounts payable |
$ | 8,963 | $ | 9,785 | ||
| Accrued interest |
32,559 | 49,063 | ||||
| Accrued compensation and related benefits |
9,989 | 13,397 | ||||
| Deferred rental revenues and other accrued liabilities |
121,303 | 106,384 | ||||
| Liabilities of discontinued operations |
— | 353,544 | ||||
| Long-term debt, current maturities |
— | 267,142 | ||||
| Total current liabilities |
172,814 | 799,315 | ||||
| Long-term debt, less current maturities |
1,898,847 | 3,182,850 | ||||
| Other liabilities |
54,037 | 55,978 | ||||
| Total liabilities |
2,125,698 | 4,038,143 | ||||
| Minority interests |
211,176 | 208,333 | ||||
| Redeemable preferred stock |
507,706 | 506,702 | ||||
| Stockholders’ equity |
2,128,098 | 1,984,413 | ||||
| $ | 4,972,678 | $ | 6,737,591 | |||
|
|
CROWN CASTLE INTERNATIONAL CORP. | |
| CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS | ||
| (in thousands) | ||
| Three Months Ended September 30, |
||||||||
| 2004 |
2003 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net income (loss) |
$ | 461,333 | $ | (99,678 | ) | |||
| Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities: |
||||||||
| Depreciation, amortization and accretion |
60,587 | 60,847 | ||||||
| Losses on purchases and redemption of long-term debt |
13,886 | 18,858 | ||||||
| Amortization of deferred financing costs, discounts on long-term debt and dividends on preferred stock |
2,205 | 20,215 | ||||||
| Minority interests |
1,729 | (151 | ) | |||||
| Non-cash general and administrative compensation charges |
1,442 | 6,205 | ||||||
| Equity in losses (earnings) and write-downs of unconsolidated affiliates |
1,413 | (3,026 | ) | |||||
| Income from discontinued operations |
(517,449 | ) | (5,076 | ) | ||||
| Losses on purchases of preferred stock |
— | 18,718 | ||||||
| Asset write-down charges |
— | 6,137 | ||||||
| Changes in assets and liabilities: |
||||||||
| Decrease in receivables |
4,369 | 1,088 | ||||||
| Increase (decrease) in deferred rental revenues and other liabilities |
3,980 | (3,397 | ) | |||||
| Decrease in accrued interest |
(11,146 | ) | (21,360 | ) | ||||
| Increase in inventories, prepaid expenses and other assets |
(2,993 | ) | (1,362 | ) | ||||
| Increase (decrease) in accounts payable |
(128 | ) | 982 | |||||
| Net cash provided by (used for) operating activities |
19,228 | (1,000 | ) | |||||
| Cash flows from investing activities: |
||||||||
| Investments in affiliates and other |
3,214 | (22 | ) | |||||
| Proceeds from disposition of property and equipment |
1,246 | 4,220 | ||||||
| Capital expenditures |
(9,758 | ) | (6,092 | ) | ||||
| Maturities of investments |
— | 63,456 | ||||||
| Net cash provided by (used for) investing activities |
(5,298 | ) | 61,562 | |||||
| Cash flows from financing activities: |
||||||||
| Proceeds from issuance of capital stock |
3,801 | 2,581 | ||||||
| Principal payments on long-term debt |
(1,275,385 | ) | (4,750 | ) | ||||
| Purchases of capital stock |
(35,981 | ) | (229,222 | ) | ||||
| Incurrence of financing costs |
(32 | ) | (7,441 | ) | ||||
| Proceeds from issuance of long-term debt |
— | 230,000 | ||||||
| Purchases and redemption of long-term debt |
— | (251,867 | ) | |||||
| Net borrowings (payments) under revolving credit agreements |
— | (10,000 | ) | |||||
| Net cash used for financing activities |
(1,307,597 | ) | (270,699 | ) | ||||
| Effect of exchange rate changes on cash |
816 | 89 | ||||||
| Discontinued operations |
2,008,699 | (75 | ) | |||||
| Net increase (decrease) in cash and cash equivalents |
715,848 | (210,123 | ) | |||||
| Cash and cash equivalents at beginning of period |
192,657 | 384,634 | ||||||
| Cash and cash equivalents at end of period |
$ | 908,505 | $ | 174,511 | ||||
| Supplemental disclosure of cash flow information: |
||||||||
| Interest paid |
$ | 60,451 | $ | 60,914 | ||||
| Income taxes paid |
144 | 85 | ||||||
CROWN CASTLE INTERNATIONAL CORP.
Summary Fact Sheet
(in $ thousands)
| Quarter Ended 12/31/03 |
Quarter Ended 3/31/04 |
Quarter Ended 6/30/04 |
Quarter Ended 9/30/04 |
|||||||||||||||||||||||||||||||||
| US |
AUS |
CCIC |
US |
AUS |
CCIC |
US |
AUS |
CCIC |
US |
AUS |
CCIC |
|||||||||||||||||||||||||
| Revenues |
||||||||||||||||||||||||||||||||||||
| Site Rental |
117,686 | 7,860 | 125,546 | 120,695 | 8,274 | 128,969 | 120,827 | 10,536 | 131,363 | 125,315 | 8,775 | 134,090 | ||||||||||||||||||||||||
| Services |
17,561 | 811 | 18,372 | 13,499 | 1,204 | 14,703 | 17,390 | 1,123 | 18,513 | 13,981 | 975 | 14,956 | ||||||||||||||||||||||||
| Total Revenues |
135,247 | 8,671 | 143,918 | 134,194 | 9,478 | 143,672 | 138,217 | 11,659 | 149,876 | 139,296 | 9,750 | 149,046 | ||||||||||||||||||||||||
| Operating Expenses |
||||||||||||||||||||||||||||||||||||
| Site Rental |
39,353 | 3,167 | 42,520 | 37,233 | 3,702 | 40,935 | 38,332 | 3,511 | 41,843 | 39,169 | 3,027 | 42,196 | ||||||||||||||||||||||||
| Services |
11,604 | 534 | 12,138 | 10,268 | 728 | 10,996 | 11,591 | 681 | 12,272 | 9,894 | 892 | 10,786 | ||||||||||||||||||||||||
| Total Operating Expenses |
50,957 | 3,701 | 54,658 | 47,501 | 4,430 | 51,931 | 49,923 | 4,192 | 54,115 | 49,063 | 3,919 | 52,982 | ||||||||||||||||||||||||
| General & Administrative |
||||||||||||||||||||||||||||||||||||
| Site Rental |
4,889 | 2,451 | 7,340 | 4,242 | 2,380 | 6,622 | 4,693 | 2,630 | 7,323 | 4,211 | 2,508 | 6,719 | ||||||||||||||||||||||||
| Services |
15,561 | — | 15,561 | 14,988 | — | 14,988 | 15,362 | — | 15,362 | 15,922 | — | 15,922 | ||||||||||||||||||||||||
| Total General & Administrative |
20,450 | 2,451 | 22,901 | 19,230 | 2,380 | 21,610 | 20,055 | 2,630 | 22,685 | 20,133 | 2,508 | 22,641 | ||||||||||||||||||||||||
| Operating Cash Flow |
||||||||||||||||||||||||||||||||||||
| Site Rental |
73,444 | 2,242 | 75,686 | 79,220 | 2,192 | 81,412 | 77,802 | 4,395 | 82,197 | 81,935 | 3,240 | 85,175 | ||||||||||||||||||||||||
| Services |
(9,604 | ) | 277 | (9,327 | ) | (11,757 | ) | 476 | (11,281 | ) | (9,563 | ) | 442 | (9,121 | ) | (11,835 | ) | 83 | (11,752 | ) | ||||||||||||||||
| Total Pre-Overhead Cash Flow |
63,840 | 2,519 | 66,359 | 67,463 | 2,668 | 70,131 | 68,239 | 4,837 | 73,076 | 70,100 | 3,323 | 73,423 | ||||||||||||||||||||||||
| Corporate Overhead |
1,987 | — | 1,987 | 439 | — | 439 | 371 | — | 371 | 211 | — | 211 | ||||||||||||||||||||||||
| Adjusted EBITDA |
61,853 | 2,519 | 64,372 | 67,024 | 2,668 | 69,692 | 67,868 | 4,837 | 72,705 | 69,889 | 3,323 | 73,212 | ||||||||||||||||||||||||
| Quarter Ended 12/31/03 |
Quarter Ended 3/31/04 |
Quarter Ended 6/30/04 |
Quarter Ended 9/30/04 |
|||||||||||||||||||||||||||||||||
| US |
AUS |
CCIC |
US |
AUS |
CCIC |
US |
AUS |
CCIC |
US |
AUS |
CCIC |
|||||||||||||||||||||||||
| Gross Margins: |
||||||||||||||||||||||||||||||||||||
| Site Rental |
67 | % | 60 | % | 66 | % | 69 | % | 55 | % | 68 | % | 68 | % | 67 | % | 68 | % | 69 | % | 66 | % | 69 | % | ||||||||||||
| Services |
34 | % | 34 | % | 34 | % | 24 | % | 40 | % | 25 | % | 33 | % | 39 | % | 34 | % | 29 | % | 9 | % | 28 | % | ||||||||||||
| Operating Cash Flow Margins |
||||||||||||||||||||||||||||||||||||
| Site Rental |
62 | % | 29 | % | 60 | % | 66 | % | 26 | % | 63 | % | 64 | % | 42 | % | 63 | % | 65 | % | 37 | % | 64 | % | ||||||||||||
| Services |
-55 | % | 34 | % | -51 | % | -87 | % | 40 | % | -77 | % | -55 | % | 39 | % | -49 | % | -85 | % | 9 | % | -79 | % | ||||||||||||
| Adjusted EBITDA Margin |
46 | % | 29 | % | 45 | % | 50 | % | 28 | % | 49 | % | 49 | % | 41 | % | 49 | % | 50 | % | 34 | % | 49 | % | ||||||||||||
Reconciliation of Non-GAAP Financial Measure (Adjusted EBITDA) to GAAP Financial Measure:
(in $ thousands)
| Quarter Ended |
||||||||||||||||
| 12/31/2003 |
3/31/2004 |
6/30/2004 |
9/30/2004 |
|||||||||||||
| Net income (loss) |
$ | (148,840 | ) | $ | (64,967 | ) | $ | (39,594 | ) | $ | 461,333 | |||||
| Income from discontinued operations, net of tax |
2,159 | (14,544 | ) | (16,455 | ) | (517,449 | ) | |||||||||
| Minority interests |
1,258 | 1,346 | 1,463 | 1,729 | ||||||||||||
| Provision for income taxes |
137 | 153 | 184 | 144 | ||||||||||||
| Interest expense, amortization of deferred financing costs and dividends on preferred stock |
68,906 | 57,322 | 56,568 | 52,281 | ||||||||||||
| Interest and other income (expense) |
72,521 | 25,027 | 1,349 | 13,590 | ||||||||||||
| Depreciation, amortization and accretion |
61,378 | 61,225 | 61,119 | 60,587 | ||||||||||||
| Non-cash general and administrative compensation charges |
53 | 2,215 | 6,203 | 1,442 | ||||||||||||
| Asset write-down charges |
6,800 | 1,948 | 1,868 | 0 | ||||||||||||
| Restructuring charges (credits) |
— | (33 | ) | — | (445 | ) | ||||||||||
| Adjusted EBITDA |
$ | 64,372 | $ | 69,692 | $ | 72,705 | $ | 73,212 | ||||||||
CROWN CASTLE INTERNATIONAL CORP.
Summary Fact Sheet
Restricted and Unrestricted Subsidiaries
(in $ thousands)
| Quarter Ended 12/31/03 |
Quarter Ended 3/31/04 |
Quarter Ended 6/30/04 |
Quarter Ended 9/30/04 |
|||||||||||||||||||||||||||||||||||||||||||||
| Restricted |
Crown Atlantic |
Other |
CCIC |
Restricted |
Crown Atlantic |
Other |
CCIC |
Restricted |
Crown Atlantic |
Other |
CCIC |
Restricted |
Crown Atlantic |
Other |
CCIC |
|||||||||||||||||||||||||||||||||
| Revenues |
||||||||||||||||||||||||||||||||||||||||||||||||
| Site Rental |
98,047 | 27,499 | — | 125,546 | 100,896 | 28,073 | — | 128,969 | 103,650 | 27,713 | — | 131,363 | 105,585 | 28,505 | — | 134,090 | ||||||||||||||||||||||||||||||||
| Services |
15,227 | 3,145 | — | 18,372 | 13,178 | 1,525 | — | 14,703 | 16,110 | 2,138 | 265 | 18,513 | 13,087 | 1,869 | — | 14,956 | ||||||||||||||||||||||||||||||||
| Total Revenues |
113,274 | 30,644 | — | 143,918 | 114,074 | 29,598 | — | 143,672 | 119,760 | 29,851 | 265 | 149,876 | 118,672 | 30,374 | — | 149,046 | ||||||||||||||||||||||||||||||||
| Operating Expenses |
||||||||||||||||||||||||||||||||||||||||||||||||
| Site Rental |
32,724 | 9,796 | — | 42,520 | 31,427 | 9,508 | — | 40,935 | 32,561 | 9,282 | — | 41,843 | 32,549 | 9,647 | — | 42,196 | ||||||||||||||||||||||||||||||||
| Services |
10,010 | 2,128 | — | 12,138 | 9,373 | 1,623 | — | 10,996 | 10,284 | 1,670 | 318 | 12,272 | 8,854 | 1,837 | 95 | 10,786 | ||||||||||||||||||||||||||||||||
| Total Operating Expenses |
42,734 | 11,924 | — | 54,658 | 40,800 | 11,131 | — | 51,931 | 42,845 | 10,952 | 318 | 54,115 | 41,403 | 11,484 | 95 | 52,982 | ||||||||||||||||||||||||||||||||
| General & Administrative |
||||||||||||||||||||||||||||||||||||||||||||||||
| Site Rental |
6,769 | 571 | 7,340 | 6,163 | 459 | 6,622 | 6,847 | 476 | — | 7,323 | 6,278 | 441 | — | 6,719 | ||||||||||||||||||||||||||||||||||
| Services |
12,680 | 1,198 | 1,683 | 15,561 | 12,325 | 989 | 1,674 | 14,988 | 13,365 | 802 | 1,195 | 15,362 | 12,903 | 848 | 2,171 | 15,922 | ||||||||||||||||||||||||||||||||
| Total General & Administrative |
19,449 | 1,769 | 1,683 | 22,901 | 18,488 | 1,448 | 1,674 | 21,610 | 20,212 | 1,278 | 1,195 | 22,685 | 19,181 | 1,289 | 2,171 | 22,641 | ||||||||||||||||||||||||||||||||
| Operating Cash Flow |
||||||||||||||||||||||||||||||||||||||||||||||||
| Site Rental |
58,554 | 17,132 | — | 75,686 | 63,306 | 18,106 | — | 81,412 | 64,242 | 17,955 | — | 82,197 | 66,758 | 18,417 | — | 85,175 | ||||||||||||||||||||||||||||||||
| Services |
(7,463 | ) | (181 | ) | (1,683 | ) | (9,327 | ) | (8,520 | ) | (1,087 | ) | (1,674 | ) | (11,281 | ) | (7,539 | ) | (334 | ) | (1,248 | ) | (9,121 | ) | (8,670 | ) | (816 | ) | (2,266 | ) | (11,752 | ) | ||||||||||||||||
| Total Pre-Overhead Cash Flow |
51,091 | 16,951 | (1,683 | ) | 66,359 | 54,786 | 17,019 | (1,674 | ) | 70,131 | 56,703 | 17,621 | (1,248 | ) | 73,076 | 58,088 | 17,601 | (2,266 | ) | 73,423 | ||||||||||||||||||||||||||||
| Corporate Overhead |
1,987 | — | — | 1,987 | 439 | — | — | 439 | 371 | — | — | 371 | 211 | — | — | 211 | ||||||||||||||||||||||||||||||||
| Adjusted EBITDA |
49,104 | 16,951 | (1,683 | ) | 64,372 | 54,347 | 17,019 | (1,674 | ) | 69,692 | 56,332 | 17,621 | (1,248 | ) | 72,705 | 57,877 | 17,601 | (2,266 | ) | 73,212 | ||||||||||||||||||||||||||||
| Quarter Ended 12/31/03 |
Quarter Ended 3/31/04 |
Quarter Ended 6/30/04 |
Quarter Ended 9/30/04 |
|||||||||||||||||||||||||||||||||||||||||||||
| Restricted |
Crown Atlantic |
Other |
CCIC |
Restricted |
Crown Atlantic |
Other |
CCIC |
Restricted |
Crown Atlantic |
Other |
CCIC |
Restricted |
Crown Atlantic |
Other |
CCIC |
|||||||||||||||||||||||||||||||||
| Gross Margins: |
||||||||||||||||||||||||||||||||||||||||||||||||
| Site Rental |
67 | % | 64 | % | — | 66 | % | 69 | % | 66 | % | — | 68 | % | 69 | % | 67 | % | — | 68 | % | 69 | % | 66 | % | — | 69 | % | ||||||||||||||||||||
| Services |
34 | % | 32 | % | — | 34 | % | 29 | % | -6 | % | — | 25 | % | 36 | % | 22 | % | -20 | % | 34 | % | 32 | % | 2 | % | — | 28 | % | |||||||||||||||||||
| Operating Cash Flow Margins |
||||||||||||||||||||||||||||||||||||||||||||||||
| Site Rental |
60 | % | 62 | % | — | 60 | % | 63 | % | 64 | % | — | 63 | % | 62 | % | 65 | % | — | 63 | % | 63 | % | 65 | % | — | 64 | % | ||||||||||||||||||||
| Services |
-49 | % | -6 | % | — | -51 | % | -65 | % | -71 | % | — | -77 | % | -47 | % | -16 | % | -471 | % | -49 | % | -66 | % | -44 | % | — | -79 | % | |||||||||||||||||||
| Adjusted EBITDA Margin |
43 | % | 55 | % | N/A | 45 | % | 48 | % | 58 | % | N/A | 49 | % | 47 | % | 59 | % | -471 | % | 49 | % | 49 | % | 58 | % | N/A | 49 | % | |||||||||||||||||||
Reconciliation of Non-GAAP Financial Measure (Adjusted EBITDA) to GAAP Financial Measure:
(in $ thousands)
| Quarter Ended |
||||||||||||||||
| 12/31/2003 |
3/31/2004 |
6/30/2004 |
9/30/2004 |
|||||||||||||
| Net income (loss) |
$ | (148,840 | ) | $ | (64,967 | ) | $ | (39,594 | ) | $ | 461,333 | |||||
| Income from discontinued operations, net of tax |
2,159 | (14,544 | ) | (16,455 | ) | (517,449 | ) | |||||||||
| Minority interests |
1,258 | 1,346 | 1,463 | 1,729 | ||||||||||||
| Provision for income taxes |
137 | 153 | 184 | 144 | ||||||||||||
| Interest expense, amortization of deferred financing costs and dividends on preferred stock |
68,906 | 57,322 | 56,568 | 52,281 | ||||||||||||
| Interest and other income (expense) |
72,521 | 25,027 | 1,349 | 13,590 | ||||||||||||
| Depreciation, amortization and accretion |
61,378 | 61,225 | 61,119 | 60,587 | ||||||||||||
| Non-cash general and administrative compensation charges |
53 | 2,215 | 6,203 | 1,442 | ||||||||||||
| Asset write-down charges |
6,800 | 1,948 | 1,868 | 0 | ||||||||||||
| Restructuring charges (credits) |
— | (33 | ) | — | (445 | ) | ||||||||||
| Adjusted EBITDA |
$ | 64,372 | $ | 69,692 | $ | 72,705 | $ | 73,212 | ||||||||
CCI FACT SHEET Q3 2004
$ in thousands
| Q3 '03 |
Q3 '04 |
% Change |
|||||||
| CCUSA and Crown Atlantic |
|||||||||
| Site Rental Revenue |
$ | 113,387 | $ | 125,315 | 11 | % | |||
| Ending Sites |
10,718 | 10,609 | -1 | % | |||||
| CCAUS |
|||||||||
| Site Rental Revenue |
$ | 6,740 | $ | 8,775 | 30 | % | |||
| Ending Sites |
1,387 | 1,388 | 0 | % | |||||
| TOTAL CCIC |
|||||||||
| Site Rental Revenue |
$ | 120,127 | $ | 134,090 | 12 | % | |||
| Ending Sites |
12,105 | 11,997 | -1 | % | |||||
| Ending Cash and Investments |
$ | 255,672 | $ | 908,505 | |||||
| Debt |
|||||||||
| Bank Debt |
$ | 980,290 | $ | 180,000 | |||||
| Bonds |
$ | 2,174,948 | $ | 1,718,847 | |||||
| 12 3/4% Preferred Stock |
$ | 46,769 | $ | 0 | |||||
| 6 1/4% & 8 1/4% Convertible Preferred Stock |
$ | 506,367 | $ | 507,706 | |||||
| Total Debt |
$ | 3,708,374 | $ | 2,406,553 | |||||
| Leverage Ratios |
|||||||||
| Net Bank Debt / EBITDA* |
2.8X | N/A | |||||||
| Net Bank Debt + Bonds / EBITDA* |
11.4X | 3.4X | |||||||
| Total Net Debt / EBITDA* |
13.3X | 5.1X | |||||||
| *Last Quarter Annualized Adjusted EBITDA |
$ | 259,288 | $ | 292,848 | |||||