UNITED STATES
SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 29, 2009
Crown Castle International
Corp.
(Exact name of registrant as
specified in its charter)
| Delaware | 001-16441 | 76-0470458 | ||
| (State or other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
| 1220 Augusta Drive Suite 500 Houston, TX |
77057 | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code: (713) 570-3000
| (Former name or former address if changed since last report.) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o Soliciting material pursuant
to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule
14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule
13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
ITEM 2.02 — RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On July 29, 2009, the Company issued a press release disclosing its financial results for the second quarter of 2009. The July 29 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:
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Exhibit No.
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Description | |
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99.1
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Press Release dated July 29, 2009 |
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: July 29, 2009
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EXHIBIT INDEX
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Exhibit No.
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Description | |
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99.1
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Press Release dated July 29, 2009 |
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Exhibit 99.1
| Contacts: | Jay Brown, CFO Fiona McKone, VP — Finance Crown Castle International Corp. |
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FOR IMMEDIATE RELEASE
|
713-570-3050 |
CROWN CASTLE INTERNATIONAL
REPORTS SECOND QUARTER 2009 RESULTS;
RAISES 2009 OUTLOOK
REPORTS SECOND QUARTER 2009 RESULTS;
RAISES 2009 OUTLOOK
July 29, 2009 — HOUSTON, TEXAS — Crown Castle International Corp. (NYSE:CCI) today reported
results for the quarter ended June 30, 2009.
“We had an excellent second quarter, exceeding the top end of our Outlook for site rental
revenue, site rental gross margin, Adjusted EBITDA, and recurring cash flow,” stated Ben Moreland,
President and Chief Executive Officer of Crown Castle. “Despite prevailing macroeconomic
conditions, we continue to enjoy strong leasing demand for our towers, as evidenced by
year-over-year revenue and Adjusted EBITDA growth of 8% and 16%, respectively. Importantly, these
results were achieved almost entirely through organic growth on assets that we owned as of April 1,
2008. Furthermore, we expect net new tenant additions to be significantly higher in the second
half of the year compared to the first half of 2009. In fact, application volume in the second
quarter of 2009 was up 30% over application activity in the second quarter of 2008, which we expect
to translate into revenue growth in the second half of the year. This activity is driven, in part,
by the growing mobile Internet. Based on the strong results in the first half of the year,
including the new tenant application volume, and our expectations for the second half of 2009, we
have raised our full year 2009 Outlook, which now suggests annual site rental revenue and Adjusted
EBITDA growth of 9% and 14%, respectively.”
CONSOLIDATED FINANCIAL RESULTS
Site rental revenues for second quarter 2009 increased $27.9 million, or 8%, to $376.4 million
from $348.5 million for the same period in the prior year. Site rental gross margin, defined as
site rental revenues less site rental cost of operations, increased 12% to $263.1 million, up $28.3
million in the second quarter of 2009 from $234.8 million in the same period in 2008. Adjusted
EBITDA for second quarter 2009 increased $33.9 million, or 16%, to $246.9 million, up from $213.0
million for the same period in 2008.
News Release continued:
Recurring cash flow, defined as Adjusted EBITDA less interest expense less sustaining capital
expenditures, increased from $119.2 million in the second quarter of 2008 to $131.5 million for the
second quarter of 2009, up 10%. Recurring cash flow per share, defined as recurring cash flow
divided by weighted average common shares outstanding, was $0.46 in the second quarter of 2009
compared to $0.43 in the second quarter of 2008, an increase of 8%.
For the second quarter of 2009, approximately 5% of Crown Castle’s consolidated revenues were
from its Australia subsidiary. Crown Castle’s consolidated results were negatively impacted by the
19% decrease in the Australian dollar to US dollar exchange rate from second quarter 2008 to second
quarter 2009. Crown Castle’s consolidated growth rates on a currency-neutral basis are as follows:
site rental revenue 9%, site rental gross margin 13%, Adjusted EBITDA 17%, recurring cash flow 12%,
and recurring cash flow per share 9%.
Net loss attributable to CCIC stockholders was $111.4 million for the second quarter of 2009,
inclusive of $98.7 million of losses on purchases and early redemptions of debt and $59.5 million
of unrealized losses on interest rate swaps, compared to a net income attributable to CCIC
stockholders of $60.3 million for the same period in 2008, inclusive of the recognition of $74.9
million of tax benefits related to previously unrecognized US net operating losses. Net loss
attributable to CCIC stockholders after deduction of dividends on preferred stock was $116.6
million in the second quarter of 2009, compared to a net income attributable to CCIC stockholders
after deduction of dividends on preferred stock of $55.1 million for the same period in 2008.
Diluted second quarter 2009 net loss attributable to CCIC common stockholders per common share was
$0.41, compared to a diluted net income attributable to CCIC common stockholders, after deduction
of dividends on preferred stock, per common share of $0.19 in the second quarter of 2008.
SEGMENT RESULTS
US site rental revenues for the second quarter of 2009 increased $29.5 million, or 9%, to
$358.5 million, compared to second quarter 2008 US site rental revenues of $329.0 million. US site
rental gross margin increased 13%, or $29.1 million, in second quarter 2009 to $250.5 million from
$221.5 million in the same period in 2008.
Page 2 of 15
News Release continued:
On a currency-neutral basis, Australia site rental revenues and site rental gross margin for
second quarter 2009 grew 14% and 17% over second quarter 2008. Australia site rental revenues for
the second quarter of 2009 were $17.9 million, compared to $19.6 million in the second quarter of
2008. Australia site rental gross margin for second quarter 2009 was $12.5 million, compared to
$13.3 million in the second quarter 2008.
INVESTMENTS AND LIQUIDITY
“I am very pleased with our second quarter financial results, our ability to increase our
Outlook for the balance of 2009 and the continued progress that we have made to improve our balance
sheet,” stated Jay Brown, Chief Financial Officer of Crown Castle. “As I’ve previously discussed,
the primary goals of our refinancing efforts have been to extend our debt maturities, spread the
debt maturities over multiple years and maintain flexibility to invest our cash flow while
achieving the lowest possible interest cost. I believe that the recently announced financing of
$250 million of structured notes by certain of our subsidiaries helps achieve all of these goals
and potentially establishes an attractive template for future refinancings. Further, our 2009
financing activities have eliminated our requirement to access the credit markets for almost five
years, as we are able to repay all of our debt maturities between now and 2014 with cash on-hand
and anticipated cash flow.”
During the second quarter of 2009, Crown Castle issued $1.2 billion of 7.75% senior secured
notes due in 2017. The proceeds of these notes, combined with cash-on-hand, were used to repay, in
full, the previously outstanding securitized notes due February 2011.
On July 20, 2009, Crown Castle priced, at par, $250 million of senior secured notes in two
classes, A-1 and A-2. The Class A-1 Notes will consist of $175 million of 6.25% Notes and fully
amortize during the period beginning in January 2010 and ending on the final maturity date in
August 2019. The Class A-2 Notes will consist of $75 million of 9.0% Notes and fully amortize
during the period beginning in September 2019 and ending on the final maturity date in August 2029.
Crown Castle expects the $250 million notes to close on July 31, 2009. The proceeds are required
to be used to repay, in full, the remaining $221.5 million outstanding of the Commercial Mortgage
Pass-Through Certificates, Series 2004-2, issued in 2004 by Global Signal Trust II and due in
December 2009 (“December 2009 Notes”), which is net of the $72 million of notes that Crown Castle
purchased in the open market during the first quarter of 2009.
Page 3 of 15
News Release continued:
During the second quarter of 2009, Crown Castle purchased, at par, $15.8 million of the Senior
Secured Tower Revenue Notes, Series 2005-1 due in June 2035 (“June 2035 Notes”). Since July 1,
2009, Crown Castle has purchased, at par, $180.4 million of the June 2035 Notes. Pro forma for
these purchases, Crown Castle has $1,703.8 million of June 2035 Notes outstanding.
As of June 30, 2009, pro forma for the completion of the $250 million senior secured notes
offering, and after taking into account the repayment of the December 2009 Notes and the
aforementioned purchases in July by Crown Castle of the June 2035 Notes, Crown Castle expects to
have approximately $177 million in cash and cash equivalents (excluding restricted cash) and $188
million of availability under its $188 million revolving credit facility.
During the second quarter of 2009, Crown Castle invested $39.6 million in capital
expenditures, comprised of $5.1 million of sustaining capital expenditures and $34.5 million of
revenue generating capital expenditures, of which $1.7 million was spent on land purchases, $28.2
million on existing sites, and $4.6 million on the construction and acquisition of new sites.
Total capital expenditures were down approximately 72% from the same quarter in 2008.
In addition to the tables and information contained in this press release, Crown Castle will
post supplemental information on its website at http://investor.crowncastle.com that will be
discussed during its conference call tomorrow morning, Thursday, July 30, 2009.
OUTLOOK
This Outlook section contains forward-looking statements, and actual results may differ
materially. Information regarding potential risks which could cause actual results to differ from
the forward-looking statements herein is set forth below and in Crown Castle’s filings with the
Securities and Exchange Commission (“SEC”).
The following Outlook table is based on current expectations and assumptions. The Outlook
table includes the interest expense associated with the $250 million of senior secured notes to be
issued in July 2009, and assumes a US dollar to Australian dollar exchange rate of 0.79 US dollars
and 0.75 US dollars to 1.00 Australian dollar for third quarter and full year 2009 Outlook,
respectively.
For the purposes of this Outlook, interest expense is based on run-rate interest charges and
does not assume early debt retirement prior to the maturity date, with the exception of the
purchases to-date and the repayment of the $221.5 million December 2009 Notes, as discussed above.
Page 4 of 15
News Release continued:
As reflected in the following table, Crown Castle has increased the midpoint of its full year
2009 Outlook, previously issued on April 29, 2009, for site rental revenue by $17.5 million, site
rental gross margin by $25.5 million, Adjusted EBITDA by $22.5 million and recurring cash flow by
$20.5 million.
The following table sets forth Crown Castle’s current Outlook for the third quarter of 2009
and full year 2009:
| (in millions, except per share amounts) | Third Quarter 2009 | Full Year 2009 | ||
Site rental revenues |
$385 to $390 | $1,520 to $1,530 | ||
Site rental cost of operations |
$114 to $120 | $455 to $460 | ||
Site rental gross margin |
$268 to $273 | $1,063 to $1,073 | ||
Adjusted EBITDA |
$246 to $251 | $985 to $995 | ||
Interest expense and amortization of deferred financing costs(a) |
$113 to $115 | $441 to $446 | ||
Sustaining capital expenditures |
$8 to $11 | $26 to $31 | ||
Recurring cash flow |
$123 to $128 | $513 to $523 | ||
Net income (loss) attributable to CCIC common stockholders after deduction
of dividends on preferred stock |
$(31) to $12 | $(172) to $(81) | ||
Net income (loss) attributable to CCIC common stockholders per
share(b) |
$(0.11) to $0.04 | $(0.60) to $(0.28) |
| (a) | Inclusive of approximately $17 million and approximately $60 million, respectively, of
non-cash expense. |
|
| (b) | Represents net income (loss) attributable to CCIC common stockholders per common share,
based on 286.5 million shares outstanding as of June 30, 2009. |
Page 5 of 15
News Release continued:
CONFERENCE CALL DETAILS
Crown Castle has scheduled a conference call for Thursday, July 30, 2009, at 10:30 a.m.
eastern time. The conference call may be accessed by dialing 480-629-9678 and asking for the Crown
Castle call at least 30 minutes prior to the start time. The conference call may also be accessed
live over the Internet by logging onto the web at http://investor.crowncastle.com. Any
supplemental materials for the call will be posted at the Crown Castle website at
http://investor.crowncastle.com.
A telephonic replay of the conference call will be available from 12:30 p.m. eastern time on
Thursday, July 30, 2009, through 11:59 p.m. eastern time on Thursday, August 6, 2009, and may be
accessed by dialing 303-590-3030 using access code 4114093. An audio archive will also be
available on the company’s website at http://investor.crowncastle.com shortly after the call and
will be accessible for approximately 90 days.
Crown Castle owns, operates, and leases towers and other communication structures for wireless
communications. Crown Castle offers significant wireless communications coverage to 91 of the top
100 US markets and to substantially all of the Australian population. Crown Castle owns, operates
and manages over 22,000 and approximately 1,600 wireless communication sites in the US and
Australia, respectively. For more information on Crown Castle, please visit
http://www.crowncastle.com.
Page 6 of 15
News Release continued:
The components of interest expense and amortization of deferred financing costs are as follows:
| For the Three Months Ended | ||||||||
| June 30, | June 30, | |||||||
| (in thousands) | 2009 | 2008 | ||||||
Interest expense on debt obligations |
$ | 94,049 | $ | 82,492 | ||||
Amortization of deferred financing costs |
6,739 | 3,842 | ||||||
Amortization of discounts on long-term debt |
3,151 | — | ||||||
Amortization of interest rate swaps |
5,311 | 755 | ||||||
Amortization of purchase price adjustments on long-term debt |
571 | 943 | ||||||
Other |
429 | 725 | ||||||
| $ | 110,250 | $ | 88,757 | |||||
The components of interest expense and amortization of deferred financing costs are forecasted as
follows:
| Q3 2009 | Full Year 2009 | |||
| (in millions) | Outlook | Outlook | ||
Interest expense on debt obligations |
$98 to $100 | $380 to $385 | ||
Amortization of deferred financing costs |
$6 to $8 | $26 to $28 | ||
Amortization of discounts on long-term debt |
$3 to $4 | $11 to $13 | ||
Amortization of interest rate swaps |
$4 to $6 | $16 to $18 | ||
Amortization of purchase price adjustments on long-term debt |
$0 to $0 | $0 to $0 | ||
Other |
$0 to $1 | $1 to $3 | ||
| $113 to $115 | $441 to $446 | |||
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 restructuring charges (credits),
asset write-down charges, acquisition and integration costs, depreciation, amortization and
accretion, interest expense and amortization of deferred financing costs, gains (losses) on
purchases and redemptions of debt, net gain (loss) on interest rate swaps, impairment of
available-for-sale securities, interest and other income (expense), benefit (provision) for income
taxes, cumulative effect of change in accounting principle, income (loss) from discontinued
operations and stock-based compensation expense. Adjusted EBITDA is not intended as an alternative
measure of operating results or cash flow from operations (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. We define sustaining capital expenditures as capital expenditures
(determined in accordance with GAAP) which do not increase the capacity or life of our revenue
generating assets and include capitalized costs related to (i) maintenance activities on our
towers, (ii) vehicles, (iii) information technology equipment, and (iv) office equipment.
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, including other companies in the tower
sector. The tables set forth below reconcile these non-GAAP financial measures to comparable GAAP
financial measures.
Page 7 of 15
News Release continued:
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, 2009 and 2008 are computed as follows:
| For the Three Months Ended | ||||||||
| June 30, | June 30, | |||||||
| (in thousands, except per share amounts) | 2009 | 2008 | ||||||
Net income (loss) |
$ | (111,767 | ) | $ | 60,339 | |||
Adjustments to increase (decrease) net income (loss): |
||||||||
Asset write-down charges |
7,295 | 4,993 | ||||||
Acquisition and integration costs |
— | — | ||||||
Depreciation, amortization and accretion |
131,597 | 131,896 | ||||||
Interest expense and amortization of deferred financing costs |
110,250 | 88,757 | ||||||
Gains (losses) on purchases and redemptions of debt |
98,676 | — | ||||||
Net gain (loss) on interest rate swaps |
59,528 | — | ||||||
Interest and other income (expense) |
(3,249 | ) | (206 | ) | ||||
Benefit (provision) for income taxes |
(54,949 | ) | (80,324 | ) | ||||
Stock-based compensation charges |
9,481 | 7,559 | ||||||
Adjusted EBITDA |
$ | 246,862 | $ | 213,014 | ||||
Less: Interest expense and amortization of deferred financing
costs |
110,250 | 88,757 | ||||||
Less: Sustaining capital expenditures |
5,109 | 5,017 | ||||||
Recurring cash flow |
$ | 131,503 | $ | 119,240 | ||||
Weighted average common shares outstanding — basic |
286,449 | 279,428 | ||||||
Recurring cash flow per share |
$ | 0.46 | $ | 0.43 | ||||
Adjusted EBITDA and recurring cash flow for the quarter ending September 30, 2009 and the year
ending December 31, 2009 are forecasted as follows:
| Q3 2009 | Full Year 2009 | |||
| (in millions) | Outlook | Outlook | ||
Net income (loss) |
$(26) to $17 | $(151) to $(60) | ||
Adjustments to increase (decrease) net income (loss): |
||||
Asset write-down charges |
$3 to $6 | $17 to $24 | ||
Gains (losses) on purchases and redemptions of debt |
$0 to $1 | $85 to $96 | ||
Depreciation, amortization and accretion |
$130 to $135 | $525 to $535 | ||
Interest and other income (expense) |
$(2) to $1 | $(7) to $(1) | ||
Net gain (loss) on interest rate swaps (a) |
$(5) to $5 | $50 to $60 | ||
Interest expense and amortization of deferred financing costs(b) |
$113 to $115 | $441 to $446 | ||
Benefit (provision) for income taxes |
$(11) to $0 | $(84) to $(60) | ||
Stock-based compensation charges |
$6 to $9 | $28 to $36 | ||
Adjusted EBITDA |
$246 to $251 | $985 to $995 | ||
Less: Interest expense and amortization of deferred financing costs(b) |
$113 to $115 | $441 to $446 | ||
Less: Sustaining capital expenditures |
$8 to $11 | $26 to $31 | ||
Recurring cash flow |
$123 to $128 | $513 to $523 | ||
| (a) | Based on the interest rates and yield curves in effect as of July 24, 2009. |
|
| (b) | Inclusive of approximately $17 million and $60 million, respectively, of non-cash expense. |
Page 8 of 15
News Release continued:
Other Calculations:
Sustaining capital expenditures for the quarters ended June 30, 2009 and 2008 is computed as
follows:
| For the Three Months Ended | ||||||||
| June 30, | June 30, | |||||||
| (in thousands) | 2009 | 2008 | ||||||
Capital Expenditures |
$ | 39,624 | $ | 140,747 | ||||
Less: Revenue enhancing on existing sites |
28,193 | 18,356 | ||||||
Less: Land purchases |
1,741 | 73,525 | ||||||
Less: New site acquisition and construction |
4,581 | 43,849 | ||||||
Sustaining capital expenditures |
$ | 5,109 | $ | 5,017 | ||||
Site rental gross margin for the quarter ending September 30, 2009 and for the year ending
December 31, 2009 is forecasted as follows:
| Q3 2009 | Full Year 2009 | |||
| (in millions) | Outlook | Outlook | ||
Site rental revenues |
$385 to $390 | $1,520 to $1,530 | ||
Less: Site rental cost of operations |
$114 to $120 | $455 to $460 | ||
Site rental gross margin |
$268 to $273 | $1,063 to $1,073 | ||
Cautionary Language Regarding Forward-Looking Statements
This press release contains forward-looking statements and information that are based on our
management’s current expectations. Such statements include, but are not limited to, plans,
projections, Outlook and estimates regarding (i) leasing demand for our sites and towers, including
new tenants and revenues which may result from leasing applications, (ii) the completion, terms,
impact, interest expense and use of proceeds of the $250 million issuance of senior secured notes,
Series 2009-1, (iii) the structure and terms of any future financings, (iv) the repayment,
repurchase or refinancing of our debt, including timing with respect thereto, (v) cash, cash
equivalents and revolving credit facility availability, (vi) currency exchange rates, including the
impact on our results, (vii) site rental revenues, (viii) site rental cost of operations, (ix) site
rental gross margin, (x) Adjusted EBITDA, (xi) interest expense and amortization of deferred
financing costs, (xii) capital expenditures, including sustaining capital expenditures, (xiii)
recurring cash flow, including on a per share basis, (xiv) net income (loss), including on a per
share basis, and (xv) the utility of certain financial measures in analyzing our results. Such
forward-looking statements are subject to certain risks, uncertainties and assumptions, including
but not limited to prevailing market conditions and the following:
| • | We have a substantial amount of indebtedness, including our tower revenue notes
which we anticipate refinancing or repaying within the next three years. In the event
we do not repay or refinance such indebtedness, we could face substantial liquidity
issues and might be required to issue equity securities or securities convertible into
equity securities, or sell some of our assets to meet our debt payment obligations. |
| • | Our substantial level of indebtedness could adversely affect our ability to react
to changes in our business, and the terms of our debt instruments limit our ability to
take a number of actions that our management might otherwise believe to be in our best
interests. In addition, if we fail to comply with our covenants, our debt could be
accelerated. |
| • | Our interest rate swaps are currently in a substantial liability position and will
need to be cash settled within the next three years, which could adversely affect our
financial condition. |
| • | Our business depends on the demand for wireless communications and towers, and we
may be adversely affected by any slowdown in such demand. |
Page 9 of 15
News Release continued:
| • | A substantial portion of our revenues is derived from a small number of customers,
and the loss, consolidation or financial instability of, or network sharing among, any
of our limited number of customers may materially decrease revenues. |
| • | Consolidation among our customers may result in duplicate or overlapping parts of
networks, which may result in a reduction of sites and have a negative effect on
revenues and cash flows. |
| • | Sales or issuances of a substantial number of shares of our common stock may
adversely affect the market price of our common stock. |
| • | A wireless communications industry slowdown may materially and adversely affect our
business (including reducing demand for our towers and network services) and the
business of our customers. |
| • | As a result of competition in our industry, including from some competitors with
significantly more resources or less debt than we have, we may find it more difficult
to achieve favorable rental rates on our towers. |
| • | New technologies may significantly reduce demand for our towers and negatively
impact our revenues. |
| • | New wireless technologies may not deploy or be adopted by customers as rapidly or
in the manner projected. |
| • | If we fail to retain rights to the land under our towers, our business may be
adversely affected. |
| • | If we are unable to raise capital in the future when needed, we may not be able to
fund future growth opportunities. |
| • | Our lease relating to our Spectrum has certain risk factors different from our core
tower business, including that the Spectrum lease may not be renewed or continued,
that the option to acquire the Spectrum may not be exercised, and that the Spectrum
may not be deployed, which may result in the revenues derived from the Spectrum being
less than those that may otherwise have been anticipated. |
| • | If we fail to comply with laws and regulations which regulate our business and
which may change at any time, we may be fined or even lose our right to conduct some
of our business. |
| • | Our network services business has historically experienced significant volatility
in demand, which reduces the predictability of our results. |
| • | If radio frequency emissions from wireless handsets or equipment on our towers are
demonstrated to cause negative health effects, potential future claims could adversely
affect our operations, costs and revenues. |
| • | Certain provisions of our certificate of incorporation, bylaws and operative
agreements and domestic and international competition laws may make it more difficult
for a third party to acquire control of us or for us to acquire control of a third
party, even if such a change in control would be beneficial to our stockholders. |
| • | We are exposed to counterparty risk through our interest rate swaps and a
counterparty default could adversely affect our financial condition. |
| • | We may be adversely affected by our 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 SEC.
Page 10 of 15
News Release continued:
|
CROWN CASTLE INTERNATIONAL CORP. CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) (in thousands) |
| June 30, | December 31, | |||||||
| 2009 | 2008 | |||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 334,989 | $ | 155,219 | ||||
Restricted cash |
190,886 | 147,852 | ||||||
Receivables, net of allowance for doubtful accounts |
35,927 | 37,621 | ||||||
Deferred income tax assets |
72,885 | 28,331 | ||||||
Prepaid expenses, deferred site rental receivables and other current assets |
106,547 | 116,145 | ||||||
Total current assets |
741,234 | 485,168 | ||||||
Restricted cash |
5,000 | 5,000 | ||||||
Deferred site rental receivables |
185,157 | 144,474 | ||||||
Property and equipment, net |
4,964,104 | 5,060,126 | ||||||
Goodwill |
1,984,183 | 1,983,950 | ||||||
Other intangible assets, net |
2,478,757 | 2,551,332 | ||||||
Deferred financing costs and other assets, net of accumulated amortization |
193,978 | 131,672 | ||||||
| $ | 10,552,413 | $ | 10,361,722 | |||||
LIABILITIES AND EQUITY |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 27,324 | $ | 33,808 | ||||
Deferred rental revenues and other accrued liabilities |
294,641 | 281,794 | ||||||
Interest rate swaps |
161,805 | 52,539 | ||||||
Short-term debt and current maturities of long-term debt |
248,720 | 466,217 | ||||||
Total current liabilities |
732,490 | 834,358 | ||||||
Long-term debt, less current maturities |
6,024,623 | 5,630,527 | ||||||
Deferred income tax liability |
72,747 | 40,446 | ||||||
Interest rate swaps |
119,783 | 488,632 | ||||||
Other liabilities |
363,931 | 337,168 | ||||||
Total liabilities |
7,313,574 | 7,331,131 | ||||||
Redeemable preferred stock |
315,190 | 314,726 | ||||||
CCIC Stockholders’ equity |
2,924,695 | 2,715,865 | ||||||
Noncontrolling interest |
(1,046 | ) | — | |||||
Total equity |
2,923,649 | 2,715,865 | ||||||
| $ | 10,552,413 | $ | 10,361,722 | |||||
Page 11 of 15
News Release continued:
|
|
CROWN CASTLE INTERNATIONAL CORP. CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) AND OTHER FINANCIAL DATA (in thousands, except per share data) |
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||
Net revenues: |
||||||||||||||||
Site rental |
$ | 376,444 | $ | 348,523 | $ | 744,111 | $ | 693,556 | ||||||||
Network services and other |
33,430 | 30,990 | 68,673 | 56,578 | ||||||||||||
Total net revenues |
409,874 | 379,513 | 812,784 | 750,134 | ||||||||||||
Costs of operations (exclusive of depreciation, amortization and
accretion): |
||||||||||||||||
Site rental |
113,382 | 113,746 | 223,080 | 226,126 | ||||||||||||
Network services and other |
21,009 | 21,820 | 43,070 | 40,231 | ||||||||||||
Total costs of operations |
134,391 | 135,566 | 266,150 | 266,357 | ||||||||||||
General and administrative |
38,102 | 38,492 | 74,739 | 73,478 | ||||||||||||
Asset write-down charges |
7,295 | 4,993 | 11,386 | 6,297 | ||||||||||||
Acquisition and integration costs |
— | — | — | 2,504 | ||||||||||||
Depreciation, amortization and accretion |
131,597 | 131,896 | 264,773 | 263,929 | ||||||||||||
Operating income (loss) |
98,489 | 68,566 | 195,736 | 137,569 | ||||||||||||
Interest expense and amortization of deferred financing costs |
(110,250 | ) | (88,757 | ) | (215,837 | ) | (177,902 | ) | ||||||||
Gains (losses) on purchases and redemptions of debt |
(98,676 | ) | — | (85,326 | ) | — | ||||||||||
Net gain (loss) on interest rate swaps |
(59,528 | ) | — | (55,733 | ) | — | ||||||||||
Interest and other income (expense) |
3,249 | 206 | 3,003 | 2,516 | ||||||||||||
Income (loss) before income taxes |
(166,716 | ) | (19,985 | ) | (158,157 | ) | (37,817 | ) | ||||||||
Benefit (provision) for income taxes |
54,949 | 80,324 | 56,440 | 84,983 | ||||||||||||
Net income (loss) |
(111,767 | ) | 60,339 | (101,717 | ) | 47,166 | ||||||||||
Less: Net income (loss) attributable to the noncontrolling interest |
(349 | ) | — | (876 | ) | — | ||||||||||
Net income (loss) attributable to CCIC stockholders |
(111,418 | ) | 60,339 | (100,841 | ) | 47,166 | ||||||||||
Dividends on preferred stock |
(5,201 | ) | (5,201 | ) | (10,402 | ) | (10,403 | ) | ||||||||
Net income (loss) attributable to CCIC stockholders after deduction
of dividends on preferred stock |
$ | (116,619 | ) | $ | 55,138 | $ | (111,243 | ) | $ | 36,763 | ||||||
Net income (loss) attributable to CCIC common stockholders, after
deduction of dividends on preferred stock, per common share: |
||||||||||||||||
Basic |
$ | (0.41 | ) | $ | 0.20 | $ | (0.39 | ) | $ | 0.13 | ||||||
Diluted |
$ | (0.41 | ) | $ | 0.19 | $ | (0.39 | ) | $ | 0.13 | ||||||
Weighted average common shares outstanding: |
||||||||||||||||
Basic |
286,449 | 279,428 | 286,181 | 279,384 | ||||||||||||
Diluted |
286,449 | 288,427 | 286,181 | 288,242 | ||||||||||||
Adjusted EBITDA |
$ | 246,862 | $ | 213,014 | $ | 489,258 | $ | 424,013 | ||||||||
Stock-based compensation expenses: |
||||||||||||||||
Site rental cost of operations |
$ | 266 | $ | 210 | $ | 469 | $ | 508 | ||||||||
Network services and other cost of operations |
343 | 238 | 595 | 371 | ||||||||||||
General and administrative |
8,872 | 7,111 | 16,299 | 12,835 | ||||||||||||
Total |
$ | 9,481 | $ | 7,559 | $ | 17,363 | $ | 13,714 | ||||||||
Page 12 of 15
News Release continued:
|
|
CROWN CASTLE INTERNATIONAL CORP. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) (in thousands) |
| Six Months Ended | ||||||||
| June 30, | ||||||||
| 2009 | 2008 | |||||||
Cash flows from operating activities: |
||||||||
Net income (loss) |
$ | (101,717 | ) | $ | 47,166 | |||
Adjustments to reconcile net income (loss) to net cash provided by (used
for) operating activities: |
||||||||
Depreciation, amortization and accretion |
264,773 | 263,929 | ||||||
Gains (losses) on purchases and redemptions of long-term debt |
85,326 | — | ||||||
Amortization of deferred financing costs and other non-cash interest |
25,662 | 11,070 | ||||||
Stock-based compensation expense |
15,031 | 12,040 | ||||||
Asset write-down charges |
11,386 | 6,297 | ||||||
Deferred income tax benefit (provision) |
(59,780 | ) | (83,312 | ) | ||||
Income (expense) from forward-starting interest rate swaps |
55,733 | — | ||||||
Other adjustments, net |
380 | 742 | ||||||
Changes in assets and liabilities, excluding the effects of acquisitions: |
||||||||
Increase (decrease) in liabilities |
8,105 | (4,519 | ) | |||||
Decrease (increase) in assets |
(35,441 | ) | (37,302 | ) | ||||
Net cash provided by (used for) operating activities |
269,458 | 216,111 | ||||||
Cash flows from investing activities: |
||||||||
Proceeds from disposition of property and equipment |
3,172 | 1,117 | ||||||
Payment for acquisitions (net of cash acquired) of businesses |
(1,739 | ) | — | |||||
Capital expenditures |
(78,908 | ) | (202,434 | ) | ||||
Net cash provided by (used for) investing activities |
(77,475 | ) | (201,317 | ) | ||||
Cash flows from financing activities: |
||||||||
Proceeds from issuance of long-term debt |
1,978,848 | — | ||||||
Proceeds from issuance of capital stock |
9,778 | 6,506 | ||||||
Principal payments on long-term debt |
(3,250 | ) | (3,250 | ) | ||||
Purchases and redemptions of long-term debt |
(1,721,486 | ) | — | |||||
Purchases of capital stock |
(1,218 | ) | (44,338 | ) | ||||
Borrowings under revolving credit agreements |
50,000 | 75,000 | ||||||
Payments under revolving credit agreements |
(219,400 | ) | — | |||||
Payments for financing costs |
(49,815 | ) | (1,538 | ) | ||||
Net (increase) decrease in restricted cash |
(43,034 | ) | (15,082 | ) | ||||
Dividends on preferred stock |
(9,938 | ) | (9,939 | ) | ||||
Net cash provided by (used for) financing activities |
(9,515 | ) | 7,359 | |||||
Effect of exchange rate changes on cash |
(2,698 | ) | 1,356 | |||||
Net increase (decrease) in cash and cash equivalents |
179,770 | 23,509 | ||||||
Cash and cash equivalents at beginning of period |
155,219 | 75,245 | ||||||
Cash and cash equivalents at end of period |
$ | 334,989 | $ | 98,754 | ||||
Supplemental disclosure of cash flow information: |
||||||||
Interest paid |
$ | 145,643 | $ | 164,867 | ||||
Income taxes paid |
4,424 | 3,382 | ||||||
Page 13 of 15
CROWN CASTLE INTERNATIONAL CORP.
Summary Fact Sheet
(dollars in thousands)
Summary Fact Sheet
(dollars in thousands)
| Quarter Ended 9/30/08 | Quarter Ended 12/31/08 | Quarter Ended 3/31/09 | Quarter Ended 6/30/09 | |||||||||||||||||||||||||||||||||||||||||||||
| CCUSA | CCAL | CCIC | CCUSA | CCAL | CCIC | CCUSA | CCAL | CCIC | CCUSA | CCAL | CCIC | |||||||||||||||||||||||||||||||||||||
Revenues |
||||||||||||||||||||||||||||||||||||||||||||||||
Site Rental |
$ | 332,715 | $ | 21,269 | $ | 353,984 | $ | 339,262 | $ | 15,757 | $ | 355,019 | $ | 350,695 | $ | 16,972 | $ | 367,667 | $ | 358,511 | $ | 17,933 | $ | 376,444 | ||||||||||||||||||||||||
Services |
27,972 | 2,392 | 30,364 | 34,570 | 2,433 | 37,003 | 33,451 | 1,792 | 35,243 | 32,098 | 1,332 | 33,430 | ||||||||||||||||||||||||||||||||||||
Total Revenues |
360,687 | 23,661 | 384,348 | 373,832 | 18,190 | 392,022 | 384,146 | 18,764 | 402,910 | 390,609 | 19,265 | 409,874 | ||||||||||||||||||||||||||||||||||||
Operating Expenses |
||||||||||||||||||||||||||||||||||||||||||||||||
Site Rental |
109,757 | 6,001 | 115,758 | 109,233 | 5,006 | 114,239 | 104,979 | 4,719 | 109,698 | 107,983 | 5,399 | 113,382 | ||||||||||||||||||||||||||||||||||||
Services |
18,878 | 1,663 | 20,541 | 20,803 | 877 | 21,680 | 20,919 | 1,142 | 22,061 | 19,915 | 1,094 | 21,009 | ||||||||||||||||||||||||||||||||||||
Total Operating Expenses |
128,635 | 7,664 | 136,299 | 130,036 | 5,883 | 135,919 | 125,898 | 5,861 | 131,759 | 127,898 | 6,493 | 134,391 | ||||||||||||||||||||||||||||||||||||
General & Administrative |
33,220 | 4,217 | 37,437 | 35,342 | 3,329 | 38,671 | 33,309 | 3,328 | 36,637 | 34,069 | 4,033 | 38,102 | ||||||||||||||||||||||||||||||||||||
Add: Stock-Based Compensation |
6,346 | 754 | 7,100 | 7,510 | 443 | 7,953 | 6,976 | 906 | 7,882 | 8,055 | 1,426 | 9,481 | ||||||||||||||||||||||||||||||||||||
Adjusted EBITDA |
$ | 205,178 | $ | 12,534 | $ | 217,712 | $ | 215,964 | $ | 9,421 | $ | 225,385 | $ | 231,915 | $ | 10,481 | $ | 242,396 | $ | 236,697 | $ | 10,165 | $ | 246,862 | ||||||||||||||||||||||||
| Quarter Ended 9/30/08 | Quarter Ended 12/31/08 | Quarter Ended 3/31/09 | Quarter Ended 6/30/09 | |||||||||||||||||||||||||||||||||||||||||||||
| CCUSA | CCAL | CCIC | CCUSA | CCAL | CCIC | CCUSA | CCAL | CCIC | CCUSA | CCAL | CCIC | |||||||||||||||||||||||||||||||||||||
Gross Margins: |
||||||||||||||||||||||||||||||||||||||||||||||||
Site Rental |
67 | % | 72 | % | 67 | % | 68 | % | 68 | % | 68 | % | 70 | % | 72 | % | 70 | % | 70 | % | 70 | % | 70 | % | ||||||||||||||||||||||||
Services |
33 | % | 30 | % | 32 | % | 40 | % | 64 | % | 41 | % | 37 | % | 36 | % | 37 | % | 38 | % | 18 | % | 37 | % | ||||||||||||||||||||||||
Adjusted EBITDA Margin |
57 | % | 53 | % | 57 | % | 58 | % | 52 | % | 57 | % | 60 | % | 56 | % | 60 | % | 61 | % | 53 | % | 60 | % | ||||||||||||||||||||||||
Reconciliation of Non-GAAP Financial Measure (Adjusted EBITDA) to GAAP Financial Measure:
(dollars in thousands)
(dollars in thousands)
| Quarter Ended | ||||||||||||||||
| 9/30/2008 | 12/31/2008 | 3/31/2009 | 6/30/2009 | |||||||||||||
Net income (loss) |
$ | (32,207 | ) | $ | (63,817 | ) | $ | 10,050 | $ | (111,767 | ) | |||||
Adjustments to increase (decrease) net income (loss): |
||||||||||||||||
Asset write-down charges |
2,902 | 7,689 | 4,091 | 7,295 | ||||||||||||
Acquisition and integration costs |
— | — | — | — | ||||||||||||
Depreciation, amortization and accretion |
131,714 | 130,799 | 133,176 | 131,597 | ||||||||||||
Gains (losses) on purchases and redemptions of debt |
— | (42 | ) | (13,350 | ) | 98,676 | ||||||||||
Interest and other income (expense) |
847 | (431 | ) | 246 | (3,249 | ) | ||||||||||
Net gain (loss) on interest rate swaps |
(2,404 | ) | 40,292 | (3,795 | ) | 59,528 | ||||||||||
Interest expense, amortization of deferred
financing costs |
88,138 | 88,074 | 105,587 | 110,250 | ||||||||||||
Impairment of available-for-sale securities |
23,718 | 32,150 | — | — | ||||||||||||
Benefit (provision) for income taxes |
(2,096 | ) | (17,282 | ) | (1,491 | ) | (54,949 | ) | ||||||||
Stock-based compensation |
7,100 | 7,953 | 7,882 | 9,481 | ||||||||||||
Adjusted EBITDA |
$ | 217,712 | $ | 225,385 | $ | 242,396 | $ | 246,862 | ||||||||
Page 14 of 15
CCI FACT SHEET Q2 2008 to Q2 2009
dollars in thousands
dollars in thousands
| Q2 ’08 | Q2 ’09 | % Change | ||||||||||
CCUSA |
||||||||||||
Site Rental Revenues |
$ | 328,952 | $ | 358,511 | 9 | % | ||||||
Ending Sites |
22,461 | 22,425 | 0 | % | ||||||||
CCAL |
||||||||||||
Site Rental Revenues |
$ | 19,571 | $ | 17,933 | -8 | % | ||||||
Ending Sites |
1,449 | 1,591 | 10 | % | ||||||||
TOTAL CCIC |
||||||||||||
Site Rental Revenues |
$ | 348,523 | $ | 376,444 | 8 | % | ||||||
Ending Sites |
23,910 | 24,016 | 0 | % | ||||||||
Ending Cash and Cash Equivalents |
$ | 98,754 | * | $ | 334,989 | * | ||||||
Debt |
||||||||||||
Bank Debt |
$ | 791,875 | $ | 635,375 | ||||||||
Securitized Debt & Other Notes |
$ | 5,350,870 | $ | 5,637,968 | ||||||||
Total Debt |
$ | 6,142,745 | $ | 6,273,343 | ||||||||
Leverage Ratios |
||||||||||||
Net Debt / EBITDA |
7.1 | x | 6.0 | x | ||||||||
Last Quarter Annualized Adjusted EBITDA |
$ | 852,056 | $ | 987,448 | ||||||||
| * | Excludes Restricted Cash |
Page 15 of 15