SEC Filing | Crown Castle

- ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------- FORM 10-Q ---------------- QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2000 Commission File Number 000-24737 ---------------- CROWN CASTLE INTERNATIONAL CORP. (Exact name of registrant as specified in its charter) Delaware 76-0470458 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 510 Bering Drive Suite 500 Houston, Texas 77057-1457 (Address of principal executive (Zip Code) offices) (713) 570-3000 (Registrant's telephone number, including area code) ---------------- Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [_] Number of shares of common stock outstanding at November 1, 2000: 198,245,002 - ------------------------------------------------------------------------------- - -------------------------------------------------------------------------------

CROWN CASTLE INTERNATIONAL CORP. INDEX Page ---- PART I--FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheet at December 31, 1999 and September 30, 2000... 3 Consolidated Statement of Operations and Comprehensive Loss for the three and nine months ended September 30, 1999 and 2000....................... 4 Consolidated Statement of Cash Flows for the nine months ended September 30, 1999 and 2000....................................................... 5 Condensed Notes to Consolidated Financial Statements..................... 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.................................................... 16 Item 3. Quantitative and Qualitative Disclosures About Market Risk........ 25 PART II--OTHER INFORMATION Item 2. Changes in Securities and Use of Proceeds......................... 26 Item 6. Exhibits and Reports on Form 8-K.................................. 27 Signatures................................................................ 28 2

CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (In thousands of dollars, except share amounts) December 31, September 30, 1999 2000 ------------ ------------- (Unaudited) ASSETS ------ Current assets: Cash and cash equivalents......................... $ 549,328 $ 816,938 Receivables: Trade, net of allowance for doubtful accounts of $3,218 and $11,544 at December 31, 1999 and September 30, 2000, respectively................ 74,290 132,805 Other............................................ 4,327 1,322 Inventories....................................... 19,178 53,960 Prepaid expenses and other current assets......... 14,922 20,148 ---------- ---------- Total current assets........................... 662,045 1,025,173 Property and equipment, net of accumulated depreciation of $119,473 and $248,812 at December 31, 1999 and September 30, 2000, respectively..... 2,468,101 4,081,113 Escrow deposit for acquisition..................... 50,000 -- Goodwill and other intangible assets, net of accumulated amortization of $53,437 and $85,213 at December 31, 1999 and September 30, 2000, respectively...................................... 596,147 1,091,587 Deferred financing costs and other assets, net of accumulated amortization of $4,245 and $7,953 at December 31, 1999 and September 30, 2000, respectively...................................... 60,357 109,281 ---------- ---------- $3,836,650 $6,307,154 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Current liabilities: Accounts payable.................................. $ 45,998 $ 82,120 Accrued interest.................................. 20,912 36,413 Accrued compensation and related benefits......... 4,005 6,849 Deferred rental revenues and other accrued liabilities...................................... 60,366 117,995 ---------- ---------- Total current liabilities...................... 131,281 243,377 Long-term debt..................................... 1,542,343 2,564,896 Other liabilities.................................. 67,064 82,970 ---------- ---------- Total liabilities.............................. 1,740,688 2,891,243 ---------- ---------- Commitments and contingencies Minority interests................................. 55,292 125,468 Redeemable preferred stock......................... 422,923 834,338 Stockholders' equity: Common stock, $.01 par value; 690,000,000 shares authorized: Common Stock; shares issued: December 31, 1999-- 146,074,905 and September 30, 2000-- 197,196,557..................................... 1,461 1,972 Class A Common Stock; shares issued: December 31, 1999--11,340,000 and September 30, 2000--none... 113 -- Additional paid-in capital........................ 1,805,053 2,855,365 Cumulative foreign currency translation adjustment....................................... (3,013) (30,044) Accumulated deficit............................... (185,867) (371,188) ---------- ---------- Total stockholders' equity..................... 1,617,747 2,456,105 ---------- ---------- $3,836,650 $6,307,154 ========== ========== See condensed notes to consolidated financial statements. 3

CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited) (In thousands of dollars, except per share amounts) Three Months Ended Nine Months Ended September 30, September 30, ------------------ ------------------- 1999 2000 1999 2000 -------- -------- -------- --------- Net revenues: Site rental and broadcast transmission........................ $ 75,632 $117,174 $183,135 $ 320,418 Network services and other........... 23,295 57,415 48,428 126,774 -------- -------- -------- --------- 98,927 174,589 231,563 447,192 -------- -------- -------- --------- Operating expenses: Costs of operations (exclusive of depreciation and amortization): Site rental and broadcast transmission....................... 32,934 50,383 78,018 139,233 Network services and other.......... 11,712 34,993 26,869 70,901 General and administrative........... 12,534 18,196 30,076 52,544 Corporate development................ 1,194 2,222 4,134 6,415 Restructuring charges................ -- -- 1,814 -- Non-cash compensation charges........ 501 808 1,672 1,619 Depreciation and amortization........ 39,850 65,596 89,369 167,365 -------- -------- -------- --------- 98,725 172,198 231,952 438,077 -------- -------- -------- --------- Operating income (loss)............... 202 2,391 (389) 9,115 Other income (expense): Interest and other income (expense).. 7,923 10,217 12,802 22,586 Interest expense and amortization of deferred financing costs............ (34,506) (65,498) (72,348) (173,987) -------- -------- -------- --------- Loss before income taxes, minority interests, extraordinary item and cumulative effect of change in accounting principle................. (26,381) (52,890) (59,935) (142,286) Provision for income taxes............ (71) (127) (268) (163) Minority interests.................... (615) 52 (1,187) (1,806) -------- -------- -------- --------- Loss before extraordinary item and cumulative effect of change in accounting principle................. (27,067) (52,965) (61,390) (144,255) Extraordinary item--loss on early extinguishment of debt............... -- -- -- (1,495) Cumulative effect of change in accounting principle for costs of start-up activities.................. -- -- (2,414) -- -------- -------- -------- --------- Net loss.............................. (27,067) (52,965) (63,804) (145,750) Dividends on preferred stock.......... (6,824) (16,353) (19,846) (39,571) -------- -------- -------- --------- Net loss after deduction of dividends on preferred stock................... $(33,891) $(69,318) $(83,650) $(185,321) ======== ======== ======== ========= Net loss.............................. $(27,067) $(52,965) $(63,804) $(145,750) Other comprehensive income (loss): Foreign currency translation adjustments......................... 6,747 (13,901) (1,573) (27,031) -------- -------- -------- --------- Comprehensive loss.................... $(20,320) $(66,866) $(65,377) $(172,781) ======== ======== ======== ========= Per common share--basic and diluted: Loss before extraordinary item and cumulative effect of change in accounting principle................ $ (0.23) $ (0.36) $ (0.66) $ (1.07) Extraordinary item................... -- -- -- (0.01) Cumulative effect of change in accounting principle................ -- -- (0.02) -- -------- -------- -------- --------- Net loss............................. $ (0.23) $ (0.36) $ (0.68) $ (1.08) ======== ======== ======== ========= Common shares outstanding--basic and diluted (in thousands)............... 149,621 191,763 123,067 171,985 ======== ======== ======== ========= See condensed notes to consolidated financial statements. 4

CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) (In thousands of dollars) Nine Months Ended September 30, ---------------------- 1999 2000 ---------- ---------- Cash flows from operating activities: Net loss.............................................. $ (63,804) $ (145,750) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization........................ 89,369 167,365 Amortization of deferred financing costs and discounts on long-term debt......................... 31,238 59,805 Minority interests................................... 1,187 1,806 Non-cash compensation charges........................ 1,672 1,619 Extraordinary loss on early extinguishment of debt... -- 1,495 Cumulative effect of change in accounting principle.. 2,414 -- Changes in assets and liabilities, excluding the effects of acquisitions: Increase in deferred rental revenues and other liabilities........................................ 65,056 86,336 Increase (decrease) in accounts payable............. (13,680) 37,447 Increase in accrued interest........................ 1,812 15,807 Increase in receivables............................. (20,112) (56,357) Increase in inventories, prepaid expenses and other assets............................................. (19,445) (51,983) ---------- ---------- Net cash provided by operating activities.......... 75,707 117,590 ---------- ---------- Cash flows from investing activities: Acquisitions of businesses and assets, net of cash acquired............................................. (1,095,692) (1,091,416) Capital expenditures.................................. (213,627) (437,005) Investments in affiliates............................. (6,826) (1,989) ---------- ---------- Net cash used for investing activities............. (1,316,145) (1,530,410) ---------- ---------- Cash flows from financing activities: Proceeds from issuance of long-term debt.............. 757,206 1,015,020 Proceeds from issuance of capital stock............... 617,297 741,603 Net borrowings under revolving credit agreements...... 84,751 63,000 Principal payments on long-term debt.................. -- (82,000) Incurrence of financing costs......................... (22,283) (47,184) ---------- ---------- Net cash provided by financing activities.......... 1,436,971 1,690,439 ---------- ---------- Effect of exchange rate changes on cash................ (824) (10,009) ---------- ---------- Net increase in cash and cash equivalents.............. 195,709 267,610 Cash and cash equivalents at beginning of period....... 296,450 549,328 ---------- ---------- Cash and cash equivalents at end of period............. $ 492,159 $ 816,938 ========== ========== Supplementary schedule of non-cash investing and financing activities: Amounts recorded in connection with acquisitions: Fair value of net assets acquired, including goodwill and other intangible assets......................... $1,676,582 $1,899,940 Escrow deposits for acquisitions..................... -- 50,000 Issuance of long-term debt........................... 180,000 -- Minority interests................................... 14,330 74,525 Issuance of common stock............................. 386,560 683,999 Supplemental disclosure of cash flow information: Interest paid......................................... $ 38,931 $ 95,071 Income taxes paid..................................... 295 175 See condensed notes to consolidated financial statements. 5

CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. General The information contained in the following notes to the consolidated financial statements is condensed from that which would appear in the annual consolidated financial statements; accordingly, the consolidated financial statements included herein should be reviewed in conjunction with the consolidated financial statements for the fiscal year ended December 31, 1999, and related notes thereto, included in the Annual Report on Form 10-K (the "Form 10-K") filed by Crown Castle International Corp. with the Securities and Exchange Commission. All references to the "Company" include Crown Castle International Corp. and its subsidiary companies unless otherwise indicated or the context indicates otherwise. The consolidated financial statements included herein are unaudited; however, they include all adjustments (consisting only of normal recurring adjustments) which, in the opinion of management, are necessary to present fairly the consolidated financial position of the Company at September 30, 2000, the consolidated results of operations for the three and nine months ended September 30, 1999 and 2000 and the consolidated cash flows for the nine months ended September 30, 1999 and 2000. Accounting measurements at interim dates inherently involve greater reliance on estimates than at year end. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the entire year. Recent Accounting Pronouncements In April 1998, the Accounting Standards Executive Committee of the American Institute of Certified Public Accountants issued Statement of Position 98-5, Reporting on the Costs of Start-Up Activities ("SOP 98-5"). SOP 98-5 requires that costs of start-up activities be charged to expense as incurred and broadly defines such costs. The Company had deferred certain costs incurred in connection with potential business initiatives and new geographic markets, and SOP 98-5 required that such deferred costs be charged to results of operations upon its adoption. The Company has adopted the requirements of SOP 98-5 as of January 1, 1999. The cumulative effect of the change in accounting principle for the adoption of SOP 98-5 resulted in a charge to results of operations for $2,414,000 in the Company's financial statements for the three months ended March 31, 1999. In June 1998, the Financial Accounting Standards Board (the "FASB") issued Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities ("SFAS 133"). SFAS 133 requires that derivative instruments be recognized as either assets or liabilities in the consolidated balance sheet based on their fair values. Changes in the fair values of such derivative instruments will be recorded either in results of operations or in other comprehensive income, depending on the intended use of the derivative instrument. The initial application of SFAS 133 will be reported as the effect of a change in accounting principle. SFAS 133, as amended, is effective for all fiscal quarters of fiscal years beginning after June 15, 2000. The Company will adopt the requirements of SFAS 133 as of January 1, 2001. The Company estimates that the adoption of SFAS 133 will result in a net transition adjustment gain of approximately $3,000,000 in accumulated other comprehensive income, and the recognition of approximately $3,000,000 of derivative instrument assets. The estimated amount for this transition adjustment is based on current fair value measurements, and such measurements could be substantially different at the date of adoption of SFAS 133. As such, the transition adjustment recorded on that date could be substantially different from this estimated amount. The Company also expects that the adoption of SFAS 133 will increase the volatility of other comprehensive income as reported in its future financial statements. 2. Acquisitions Agreement With GTE Corporation ("GTE") On November 7, 1999, the Company entered into an agreement with GTE to form a joint venture ("Crown Castle GT") to own and operate a significant majority of GTE's towers. The agreement contemplates that the transaction will be completed in multiple closings during 2000. On January 31, 2000, the formation of Crown Castle GT took place in connection with the first such closing of towers. During the course of the multiple closings, (1) the Company will contribute an aggregate of approximately $825,000,000 (of which up to $100,000,000 can be in shares of its common stock, with the balance in cash) in exchange for a majority ownership interest in Crown Castle GT, and (2) GTE will contribute approximately 2,300 towers in exchange for 6

CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) cash distributions aggregating approximately $800,000,000 (less any amount contributed in the form of the Company's common stock) from Crown Castle GT and a minority ownership interest in Crown Castle GT. Upon dissolution of Crown Castle GT, GTE will receive (1) any shares of the Company's common stock contributed to Crown Castle GT and (2) a payment equal to approximately 11.4% of the fair market value of Crown Castle GT's other net assets; the Company will then receive the remaining assets and liabilities of Crown Castle GT. The Company is accounting for its investment in Crown Castle GT as a purchase of tower assets, and is including Crown Castle GT's results of operations and cash flows in the Company's consolidated financial statements for periods subsequent to formation. Upon entering into this agreement, the Company placed $50,000,000 into an escrow account. At the January 31, 2000 closing, the Company contributed $223,870,000 in cash to Crown Castle GT, and GTE contributed 637 towers in exchange for a cash distribution of $198,870,000 from Crown Castle GT. On April 3, 2000, the Company contributed $479,671,000 in cash and 5,067,488 shares of its common stock to Crown Castle GT, and GTE contributed 1,607 towers in exchange for a cash distribution of $479,671,000 from Crown Castle GT. The funds in the escrow account were used to pay $50,000,000 of the Company's cash contribution. A portion of the remaining cash contribution was financed with the net proceeds from borrowings under the Term Loans due 2011 (see Note 3). In June 2000, the Company contributed $13,191,000 in cash, and GTE contributed 39 towers in exchange for a cash distribution of $13,191,000 from Crown Castle GT. In addition to the approximately 2,300 towers to be contributed pursuant to the formation agreement, GTE had the right to contribute certain additional towers to Crown Castle GT, including towers acquired by GTE from Ameritech Corp. ("Ameritech"), on terms substantially similar to those in the formation agreement. In April 2000, the Company agreed with GTE that the Ameritech towers would be contributed to Crown Castle GT. In August and September 2000, the Company contributed $181,641,000 in cash, and GTE contributed 497 of the Ameritech towers in exchange for a cash distribution of $181,641,000 from Crown Castle GT. BellSouth Mobility Inc. and BellSouth Telecommunications Inc. ("BellSouth") and BellSouth DCS On February 2, 2000, the Company closed on an additional 90 of the BellSouth towers. In connection with this closing, the Company paid $20,437,000 in cash and issued 441,925 shares of its common stock. On the same date, the Company closed on an additional 26 of the BellSouth DCS towers. In connection with this closing, the Company paid $10,662,000 in cash. On April 20, 2000, the Company closed on an additional 90 of the BellSouth towers. In connection with this closing, the Company paid $20,518,000 in cash and issued 441,926 shares of its common stock. On the same date, the Company closed on an additional 32 of the BellSouth DCS towers. In connection with this closing, the Company paid $13,175,000 in cash. On September 1, 2000, the Company closed on an additional 82 of the BellSouth towers. In connection with this closing, the Company paid $18,726,000 in cash and issued 402,643 shares of its common stock. On the same date, the Company closed on an additional 22 of the BellSouth DCS towers. In connection with this closing, the Company paid $9,098,000 in cash. Crown Castle Australia Holdings Pty Ltd. ("CCAL") In March 2000, CCAL (a 66.7% owned subsidiary of the Company) entered into an agreement to purchase approximately 700 towers in Australia from Cable & Wireless Optus ("Optus"). The total purchase price for the towers will be approximately $135,000,000 in cash (Australian $220,000,000). The Company is accounting for its investment in CCAL as a purchase of tower assets, and is including CCAL's results of operations and cash flows in the Company's consolidated financial statements for periods subsequent to the purchase date. On April 3, 2000, the first closing took place for CCAL. The Company contributed $90,786,000 in cash (Australian $147,500,000) to CCAL. The largest portion of this amount, along with a capital contribution from CCAL's 7

CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) minority shareholder, was used to pay $103,485,000 (Australian $168,131,000) to Optus. In May and June of 2000, CCAL made additional payments to Optus amounting to $6,931,000 (Australian $11,607,000). In August and September of 2000, CCAL made additional payments to Optus amounting to $4,764,000 (Australian $8,727,000). CCUK On July 5, 2000, TeleDiffusion de France International S.A. ("TdF", a subsidiary of France Telecom) and an affiliate of TdF sold their remaining interests in the Company and CCUK to a third party (see Note 5). In connection with this disposition, the Company issued 17,443,500 shares of its Common Stock in exchange for TdF's 20% interest in CCUK. As a result, CCUK became a wholly owned subsidiary of the Company. The Company recognized additional goodwill of approximately $492,702,000 in connection with this transaction. Crown Atlantic In addition to the towers originally contributed to Crown Atlantic by Bell Atlantic Mobile ("BAM"), the Company and BAM agreed that certain additional towers owned by BAM (the "Frontier towers") could be contributed to Crown Atlantic. In August 2000, BAM contributed 136 of the Frontier towers in exchange for additional ownership interests of $37,400,000 from Crown Atlantic. See Note 10. 3. Long-term Debt Long-term debt consists of the following: December 31, September 30, 1999 2000 ------------ ------------- (In thousands of dollars) 2000 Credit Facility............................ $ -- $ 500,000 Senior Credit Facility.......................... 63,000 -- CCUK Credit Facility............................ 133,456 137,213 Crown Atlantic Credit Facility.................. 180,000 224,000 9% Guaranteed Bonds due 2007.................... 195,699 179,629 10 5/8% Senior Discount Notes due 2007, net of discount....................................... 186,434 201,485 10 3/8% Senior Discount Notes due 2011, net of discount....................................... 321,284 346,604 9% Senior Notes due 2011........................ 180,000 180,000 11 1/4% Senior Discount Notes due 2011, net of discount....................................... 157,470 170,965 9 1/2% Senior Notes due 2011.................... 125,000 125,000 10 3/4% Senior Notes due 2011................... -- 500,000 ---------- ---------- $1,542,343 $2,564,896 ========== ========== 2000 Credit Facility In March 2000, a subsidiary of the Company entered into a credit agreement with a syndicate of banks (the "2000 Credit Facility") which consists of two term loan facilities and a revolving line of credit aggregating $1,200,000,000. Available borrowings under the 2000 Credit Facility are generally to be used for the construction and purchase of towers and for general corporate purposes of CCUSA, Crown Castle GT and CCAL. The amount of available borrowings will be determined based on the current financial performance (as defined) of those subsidiaries' assets. In addition, up to $25,000,000 of borrowing availability under the 2000 Credit Facility can be used for letters of credit. On March 15, 2000, the Company used $83,375,000 in borrowings under one of the term loan facilities of the 2000 Credit Facility to repay outstanding borrowings and accrued interest under the Senior Credit Facility. The net proceeds from $316,625,000 in additional borrowing under this term loan facility are being used to fund a portion of the purchase price for Crown Castle GT and for general corporate purposes. As of September 30, 2000, approximately $440,000,000 of borrowings was available under the 2000 Credit Facility, of which $25,000,000 was available for letters of credit. There were no letters of credit outstanding as of September 30, 8

CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 2000. In the first quarter of 2000, CCI recorded an extraordinary loss of $1,495,000 consisting of the write-off of unamortized deferred financing costs related to the Senior Credit Facility. The amount of available borrowings under the 2000 Credit Facility's term loans and revolving line of credit will decrease by stated amounts at the end of each calendar quarter beginning on June 30, 2003. Any remaining borrowings under the term loan currently outstanding must be repaid on March 15, 2008. Any remaining borrowings under the other term loan and the revolving line of credit must be repaid on September 15, 2007. Under certain circumstances, the Company's subsidiaries may be required to make principal prepayments under the 2000 Credit Facility in an amount equal to 50% of excess cash flow (as defined), the net cash proceeds from certain asset sales or the net cash proceeds from certain borrowings. The 2000 Credit Facility is secured by substantially all of the assets of CCUSA and CCAL, and the Company's pledge of the capital stock of those subsidiaries and Crown Castle GT. In addition, the 2000 Credit Facility is guaranteed by CCIC. Borrowings under the 2000 Credit Facility bear interest at rates per annum, at the Company's election, equal to the bank's prime rate plus margins ranging from 1.75% to 2.00% or a Eurodollar interbank offered rate (LIBOR) plus margins ranging from 2.75% to 3.00%. The interest rate margins may be reduced by up to 1.00% (non-cumulatively) based on a financial test, determined quarterly. Interest on prime rate loans is due quarterly, while interest on LIBOR loans is due at the end of the period (from one to six months) for which such LIBOR rate is in effect. The 2000 Credit Facility requires the borrowers to maintain certain financial covenants and places restrictions on their ability to, among other things, incur debt and liens, pay dividends, make capital expenditures, dispose of assets, undertake transactions with affiliates and make investments. Term Loans due 2011 On April 3, 2000, the Company borrowed $400,000,000 under a term loan agreement with a group of lenders (the "Term Loans"). The net proceeds from this borrowing, which amounted to $395,875,000, were used to fund a portion of the cash contribution for the second closing of towers at Crown Castle GT (See Note 2). The Term Loans were repaid in June 2000 with proceeds from the sale of the Company's 10 3/4% Senior Notes. 10 3/4% Senior Notes due 2011 (the "10 3/4% Senior Notes") On June 21, 2000, the Company issued $500,000,000 aggregate principal amount of its 10 3/4% Senior Notes for proceeds of $483,674,000 (after underwriting discounts of $16,326,000). A portion of the proceeds from the sale of these securities were used to repay the Term Loans (as discussed above), and the remaining proceeds are being used to fund the initial interest payments on the 10 3/4% Senior Notes and for general corporate purposes. Semi-annual interest payments for the 10 3/4% Senior Notes are due on each February 1 and August 1, commencing on February 1, 2001. The maturity date of the 10 3/4% Senior Notes is August 1, 2011. The 10 3/4% Senior Notes are redeemable at the option of the Company, in whole or in part, on or after August 1, 2005 at a price of 105.375% of the principal amount plus accrued interest. The redemption price is reduced annually until August 1, 2008, after which time the 10 3/4% Senior Notes are redeemable at par. Prior to August 1, 2003, the Company may redeem up to 35% of the aggregate principal amount of the 10 3/4% Senior Notes, at a price of 110.75% of the principal amount thereof, with the net cash proceeds from a public offering of the Company's common stock. Reporting Requirements Under the Indentures Governing the Company's Debt Securities (the "Indentures") and the Certificate of Designations Governing the Company's 12 3/4% Senior Exchangeable Preferred Stock (the "Certificate") The following information (as such capitalized terms are defined in the Indentures and the Certificate) is presented solely as a requirement of the Indentures and the Certificate; such information is not intended as an 9

CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) alternative measure of financial position, operating results or cash flow from operations (as determined in accordance with generally accepted accounting principles). Furthermore, the Company's measure of the following information may not be comparable to similarly titled measures of other companies. Summarized financial information for (1) the Company and its Restricted Subsidiaries and (2) the Company's Unrestricted Subsidiaries is as follows: September 30, 2000 ---------------------------------------------------- Company and Restricted Unrestricted Consolidation Consolidated Subsidiaries Subsidiaries Eliminations Total ------------ ------------ ------------- ------------ (In thousands of dollars) Cash and cash equivalents............. $ 808,355 $ 8,583 $ -- $ 816,938 Other current assets..... 132,534 75,701 -- 208,235 Property and equipment, net..................... 2,872,274 1,208,839 -- 4,081,113 Investments in Unrestricted Subsidiaries............ 1,492,878 -- (1,492,878) -- Goodwill and other intangible assets, net.. 155,604 935,983 -- 1,091,587 Other assets, net........ 90,898 18,383 -- 109,281 ---------- ---------- ----------- ---------- $5,552,543 $2,247,489 $(1,492,878) $6,307,154 ========== ========== =========== ========== Current liabilities...... $ 145,983 $ 97,394 $ -- $ 243,377 Long-term debt........... 2,024,054 540,842 -- 2,564,896 Other liabilities........ 19,063 63,907 -- 82,970 Minority interests....... 73,000 52,468 -- 125,468 Redeemable preferred stock................... 834,338 -- -- 834,338 Stockholders' equity..... 2,456,105 1,492,878 (1,492,878) 2,456,105 ---------- ---------- ----------- ---------- $5,552,543 $2,247,489 $(1,492,878) $6,307,154 ========== ========== =========== ========== Three Months Ended September 30, 2000 Nine Months Ended September 30, 2000 -------------------------------------- -------------------------------------- Company and Company and Restricted Unrestricted Consolidated Restricted Unrestricted Consolidated Subsidiaries Subsidiaries Total Subsidiaries Subsidiaries Total ------------ ------------ ------------ ------------ ------------ ------------ (In thousands of dollars) Net revenues............ $ 97,033 $77,556 $174,589 $ 218,947 $228,245 $ 447,192 Costs of operations (exclusive of depreciation and amortization).......... 48,371 37,005 85,376 100,983 109,151 210,134 General and administrative......... 14,976 3,220 18,196 41,836 10,708 52,544 Corporate development... 2,132 90 2,222 5,755 660 6,415 Non-cash compensation charges................ 423 385 808 1,170 449 1,619 Depreciation and amortization........... 35,044 30,552 65,596 88,606 78,759 167,365 -------- ------- -------- --------- -------- --------- Operating income (loss)................. (3,913) 6,304 2,391 (19,403) 28,518 9,115 Interest and other income (expense)....... 10,084 133 10,217 21,431 1,155 22,586 Interest expense and amortization of deferred financing costs.................. (53,217) (12,281) (65,498) (136,560) (37,427) (173,987) Provision for income taxes.................. (3) (124) (127) (18) (145) (163) Minority interests...... 969 (917) 52 2,344 (4,150) (1,806) Extraordinary item...... -- -- -- (1,495) -- (1,495) -------- ------- -------- --------- -------- --------- Net loss................ $(46,080) $(6,885) $(52,965) $(133,701) $(12,049) $(145,750) ======== ======= ======== ========= ======== ========= 10

CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) Tower Cash Flow and Adjusted Consolidated Cash Flow for the Company and its Restricted Subsidiaries is as follows under (1) the indenture governing the 10 5/8% Senior Discount Notes and the Certificate (the "1997 and 1998 Securities") and (2) the indentures governing the 10 3/8% Discount Notes, the 9% Senior Notes, the 11 1/4% Discount Notes, the 9 1/2% Senior Notes and the 10 3/4% Senior Notes (the "1999 and 2000 Securities"): 1997 and 1998 1999 and 2000 Securities Securities ------------- ------------- (In thousands of dollars) Tower Cash Flow, for the three months ended September 30, 2000............................... $25,142 $25,142 ======== ======== Consolidated Cash Flow, for the twelve months ended September 30, 2000......................... $ 81,981 $ 88,917 Less: Tower Cash Flow, for the twelve months ended September 30, 2000............................... (73,070) (73,070) Plus: four times Tower Cash Flow, for the three months ended September 30, 2000.................. 100,568 100,568 -------- -------- Adjusted Consolidated Cash Flow, for the twelve months ended September 30, 2000.................. $109,479 $116,415 ======== ======== 4. Redeemable Preferred Stock Redeemable preferred stock ($.01 par value, 10,000,000 shares authorized) consists of the following: December 31, September 30, 1999 2000 ------------ ------------- (In thousands of dollars) 12 3/4% Senior Exchangeable Preferred Stock; shares issued: December 31, 1999--226,745 and September 30, 2000-- 249,126 (stated at mandatory redemption and aggregate liquidation value)...................... $227,950 $250,450 8 1/4% Cumulative Convertible Redeemable Preferred Stock; shares issued: 200,000 (stated net of unamortized value of warrants; mandatory redemption and aggregate liquidation value of $200,000).................... 194,973 195,280 6.25% Convertible Preferred Stock; shares issued: 8,050,000 (stated net of unamortized issuance costs; mandatory redemption and aggregate liquidation value of $402,500)...... -- 388,608 -------- -------- $422,923 $834,338 ======== ======== On July 27, 2000, the Company sold shares of its common stock and preferred stock in concurrent underwritten public offerings (the "July 2000 Offerings"). The Company had granted the underwriters for the July 2000 Offerings over- allotment options to purchase additional shares in both offerings. On August 1, 2000, the over-allotment option for the preferred stock offering was exercised in full. As a result, the Company sold a total of 8,050,000 shares of its 6.25% Convertible Preferred Stock at a price of $50.00 per share and received proceeds of $388,412,000 (after underwriting discounts of $14,088,000). The proceeds from the July 2000 Offerings will be used for general corporate purposes. See Note 5. The holders of the 6.25% Convertible Preferred Stock will be entitled to receive cumulative dividends at the rate of 6.25% per annum payable on February 15, May 15, August 15 and November 15 of each year, beginning on November 15, 2000. The Company will have the option to pay dividends in cash or in shares of its common stock (valued at 95% of the current market value of the common stock, as defined). The Company is required to redeem all outstanding shares of the 6.25% Convertible Preferred Stock on August 15, 2012 at a price equal to the liquidation preference plus accumulated and unpaid dividends. 11

CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) The shares of 6.25% Convertible Preferred Stock are convertible, at the option of the holder, in whole or in part at any time, into shares of the Company's common stock at a conversion price of $36.875 per share of common stock. Beginning on August 15, 2003, under certain circumstances, the Company will have the right to convert the 6.25% Convertible Preferred Stock, in whole or in part, into shares of the Company's common stock at the same conversion price. The Company's obligations with respect to the 6.25% Convertible Preferred Stock are subordinate to all indebtedness and the 12 3/4% Senior Exchangeable Preferred Stock of the Company, and are effectively subordinate to all debt and liabilities of the Company's subsidiaries. The 6.25% Convertible Preferred Stock ranks in parity with the 8 1/4% Cumulative Convertible Redeemable Preferred Stock. 5. Stockholders' Equity Disposition of the Company's Common Shares by France Telecom On July 5, 2000, TdF and an affiliate of TdF sold their remaining interests in the Company and CCUK to a third party. In connection with this disposition, the Company issued 17,443,500 shares of its Common Stock in exchange for TdF's 20% interest in CCUK (see Note 2). In June 2000, the outstanding shares of the Company's Class A Common Stock held by an affiliate of TdF were converted into 11,340,000 shares of the Company's Common Stock in connection with the sale of a portion of TdF's shares to a third party. Upon conversion of the Class A Common Stock, France Telecom relinquished its governance rights with respect to the Company and its subsidiaries. July 2000 Offerings On July 27, 2000, the Company sold shares of its common stock in the July 2000 Offerings (see Note 4). On August 1, 2000, the over-allotment option for the common stock offering was partially exercised. As a result, the Company sold a total of 12,084,200 shares of its common stock at a price of $29.50 per share and received proceeds of $342,225,000 (after underwriting discounts of $14,259,000). 6. Restructuring Charges In connection with the formation of Crown Atlantic, the Company completed a restructuring of its United States operations during the first quarter of 1999. The objective of this restructuring was to transition from a centralized organization to a regionally-based organization in the United States. Coincident with the restructuring, the Company incurred one-time charges of $1,814,000 related to severance payments for staff reductions, as well as costs related to non-cancelable leases of excess office space. 7. Per Share Information Per share information is based on the weighted-average number of common shares outstanding during each period for the basic computation and, if dilutive, the weighted-average number of potential common shares resulting from the assumed conversion of outstanding stock options, warrants and convertible preferred stock for the diluted computation. 12

CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) A reconciliation of the numerators and denominators of the basic and diluted per share computations is as follows: Three Months Ended Nine Months Ended September 30, September 30, ------------------ ------------------- 1999 2000 1999 2000 -------- -------- -------- --------- (In thousands of dollars, except per share amounts) Loss before extraordinary item and cumulative effect of change in accounting principle................. $(27,067) $(52,965) $(61,390) $(144,255) Dividends on preferred stock.......... (6,824) (16,353) (19,846) (39,571) -------- -------- -------- --------- Loss before extraordinary item and cumulative effect of change in accounting principle applicable to common stock for basic and diluted computations......................... (33,891) (69,318) (81,236) (183,826) Extraordinary item.................... -- -- -- (1,495) Cumulative effect of change in accounting principle................. -- -- (2,414) -- -------- -------- -------- --------- Net loss applicable to common stock for basic and diluted computations... $(33,891) $(69,318) $(83,650) $(185,321) ======== ======== ======== ========= Weighted-average number of common shares outstanding during the period for basic and diluted computations (in thousands)....................... 149,621 191,763 123,067 171,985 ======== ======== ======== ========= Per common share--basic and diluted:.. Loss before extraordinary item and cumulative effect of change in accounting principle............... $ (0.23) $ (0.36) $ (0.66) $ (1.07) Extraordinary item.................. -- -- -- (0.01) Cumulative effect of change in accounting principle............... -- -- (0.02) -- -------- -------- -------- --------- Net loss............................ $ (0.23) $ (0.36) $ (0.68) $ (1.08) ======== ======== ======== ========= The calculations of common shares outstanding for the diluted computations exclude the following potential common shares as of September 30, 2000: (1) options to purchase 20,900,261 shares of common stock at exercise prices ranging from $-0- to $39.50 per share, (2) warrants to purchase 639,990 shares of common stock at an exercise price of $7.50 per share, (3) warrants to purchase 1,000,000 shares of common stock at an exercise price of $26.875 per share, (4) shares of the Company's 8 1/4% Cumulative Convertible Redeemable Preferred Stock which are convertible into 7,441,860 shares of common stock and (5) shares of the Company's 6.25% Convertible Preferred Stock which are convertible into 10,915,254 shares of common stock. The inclusion of such potential common shares in the diluted per share computations would be antidilutive since the Company incurred net losses for all periods presented. 8. Contingencies The Company is involved in various claims, lawsuits and proceedings arising in the ordinary course of business. While there are uncertainties inherent in the ultimate outcome of such matters and it is impossible to presently determine the ultimate costs that may be incurred, management believes the resolution of such uncertainties and the incurrence of such costs should not have a material adverse effect on the Company's consolidated financial position or results of operations. 9. Operating Segments The measurement of profit or loss currently used to evaluate the results of operations for the Company and its operating segments is earnings before interest, taxes, depreciation and amortization ("EBITDA"). The Company defines EBITDA as operating income (loss) plus depreciation and amortization, non-cash compensation charges and restructuring charges. 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), 13

CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) and the Company's measure of EBITDA may not be comparable to similarly titled measures of other companies. There are no significant revenues resulting from transactions between the Company's operating segments. The Company is presenting the financial results of CCAL as a reportable operating segment for periods subsequent to the purchase date (see Note 2). The financial results for the Company's operating segments are as follows: Three Months Ended September 30, 2000 ------------------------------------------------------------------- Corporate Crown Office Consolidated CCUSA CCAL CCUK Atlantic and Other Total ---------- -------- ---------- -------- --------- ------------ (In thousands of dollars) Net revenues: Site rental and broadcast transmission......... $ 51,007 $ 2,325 $ 47,503 $ 16,339 $ -- $ 117,174 Network services and other................ 43,701 -- 6,488 7,226 -- 57,415 ---------- -------- ---------- -------- --------- ---------- 94,708 2,325 53,991 23,565 -- 174,589 ---------- -------- ---------- -------- --------- ---------- Costs of operations (exclusive of depreciation and amortization).......... 47,140 1,231 27,046 9,959 -- 85,376 General and administrative......... 11,914 1,504 1,154 2,066 1,558 18,196 Corporate development... -- -- 90 -- 2,132 2,222 ---------- -------- ---------- -------- --------- ---------- EBITDA.................. 35,654 (410) 25,701 11,540 (3,690) 68,795 Non-cash compensation charges................ 82 -- 385 -- 341 808 Depreciation and amortization........... 32,726 2,001 22,109 8,443 317 65,596 ---------- -------- ---------- -------- --------- ---------- Operating income (loss)................. 2,846 (2,411) 3,207 3,097 (4,348) 2,391 Interest and other income (expense)....... 689 114 39 94 9,281 10,217 Interest expense and amortization of deferred financing costs.................. (13,201) (46) (7,783) (4,498) (39,970) (65,498) Provision for income taxes.................. (3) -- -- (124) -- (127) Minority interests...... (155) 1,124 -- (917) -- 52 ---------- -------- ---------- -------- --------- ---------- Net loss................ $ (9,824) $ (1,219) $ (4,537) $ (2,348) $ (35,037) $ (52,965) ========== ======== ========== ======== ========= ========== Capital expenditures.... $ 118,477 $ 1,126 $ 25,933 $ 23,762 $ 9,102 $ 178,400 ========== ======== ========== ======== ========= ========== Total assets (at period end)................... $3,109,399 $133,308 $1,465,164 $782,325 $ 816,958 $6,307,154 ========== ======== ========== ======== ========= ========== Nine Months Ended September 30, 2000 ------------------------------------------------------------------- Corporate Crown Office Consolidated CCUSA CCAL CCUK Atlantic and Other Total ---------- -------- ---------- -------- --------- ------------ (In thousands of dollars) Net revenues: Site rental and broadcast transmission......... $ 126,928 $ 4,139 $ 144,077 $ 45,274 $ -- $ 320,418 Network services and other................ 87,846 -- 18,764 20,130 34 126,774 ---------- -------- ---------- -------- --------- ---------- 214,774 4,139 162,841 65,404 34 447,192 ---------- -------- ---------- -------- --------- ---------- Costs of operations (exclusive of depreciation and amortization).......... 98,672 2,262 80,593 28,558 49 210,134 General and administrative......... 34,122 2,859 4,811 5,897 4,855 52,544 Corporate development... -- -- 660 -- 5,755 6,415 ---------- -------- ---------- -------- --------- ---------- EBITDA.................. 81,980 (982) 76,777 30,949 (10,625) 178,099 Non-cash compensation charges................ 149 -- 449 -- 1,021 1,619 Depreciation and amortization........... 84,389 3,292 54,309 24,450 925 167,365 ---------- -------- ---------- -------- --------- ---------- Operating income (loss)................. (2,558) (4,274) 22,019 6,499 (12,571) 9,115 Interest and other income (expense)....... 3,401 341 365 790 17,689 22,586 Interest expense and amortization of deferred financing costs.................. (28,827) (92) (24,488) (12,939) (107,641) (173,987) Provision for income taxes.................. (18) -- (21) (124) -- (163) Minority interests...... 255 2,089 (2,333) (1,817) -- (1,806) Extraordinary item...... (1,495) -- -- -- -- (1,495) ---------- -------- ---------- -------- --------- ---------- Net loss................ $ (29,242) $ (1,936) $ (4,458) $ (7,591) $(102,523) $ (145,750) ========== ======== ========== ======== ========= ========== Capital expenditures.... $ 283,103 $ 1,566 $ 69,525 $ 72,768 $ 10,043 $ 437,005 ========== ======== ========== ======== ========= ========== 14

CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) Three Months Ended September 30, 1999 ----------------------------------------------------- Corporate Crown Office Consolidated CCUSA CCUK Atlantic and Other Total -------- -------- -------- --------- ------------ (In thousands of dollars) Net revenues: Site rental and broadcast transmission......... $ 19,549 $ 43,863 $12,220 $ -- $ 75,632 Network services and other................ 13,730 5,400 4,008 157 23,295 -------- -------- ------- -------- -------- 33,279 49,263 16,228 157 98,927 -------- -------- ------- -------- -------- Costs of operations (exclusive of depreciation and amortization).......... 13,943 23,091 7,487 125 44,646 General and administrative......... 7,887 1,672 1,802 1,173 12,534 Corporate development... -- 43 -- 1,151 1,194 -------- -------- ------- -------- -------- EBITDA.................. 11,449 24,457 6,939 (2,292) 40,553 Non-cash compensation charges................ -- 161 -- 340 501 Depreciation and amortization........... 15,195 16,283 8,073 299 39,850 -------- -------- ------- -------- -------- Operating income (loss)................. (3,746) 8,013 (1,134) (2,931) 202 Interest and other income (expense)....... 8 137 812 6,966 7,923 Interest expense and amortization of deferred financing costs.................. (1,189) (7,301) (4,145) (21,871) (34,506) Provision for income taxes.................. (12) -- -- (59) (71) Minority interests...... -- (1,012) 397 -- (615) -------- -------- ------- -------- -------- Net loss................ $ (4,939) $ (163) $(4,070) $(17,895) $(27,067) ======== ======== ======= ======== ======== Capital expenditures.... $ 36,991 $ 42,395 $ 6,579 $ 98 $ 86,063 ======== ======== ======= ======== ======== Nine Months Ended September 30, 1999 ----------------------------------------------------- Corporate Crown Office Consolidated CCUSA CCUK Atlantic and Other Total -------- -------- -------- --------- ------------ (In thousands of dollars) Net revenues: Site rental and broadcast transmission......... $ 34,428 $124,600 $24,107 $ -- $183,135 Network services and other................ 27,615 14,866 4,507 1,440 48,428 -------- -------- ------- -------- -------- 62,043 139,466 28,614 1,440 231,563 -------- -------- ------- -------- -------- Costs of operations (exclusive of depreciation and amortization).......... 24,328 66,142 13,335 1,082 104,887 General and administrative......... 18,775 4,732 2,870 3,699 30,076 Corporate development... -- 731 -- 3,403 4,134 -------- -------- ------- -------- -------- EBITDA.................. 18,940 67,861 12,409 (6,744) 92,466 Restructuring charges... 1,814 -- -- -- 1,814 Non-cash compensation charges................ 67 608 -- 997 1,672 Depreciation and amortization........... 25,231 47,404 15,862 872 89,369 -------- -------- ------- -------- -------- Operating income (loss)................. (8,172) 19,849 (3,453) (8,613) (389) Interest and other income (expense)....... (450) 391 3,973 8,888 12,802 Interest expense and amortization of deferred financing costs.................. (2,999) (19,828) (8,070) (41,451) (72,348) Provision for income taxes.................. (57) -- -- (211) (268) Minority interests...... -- (2,608) 1,421 -- (1,187) Cumulative effect of change in accounting principle for costs of start-up activities.... (2,014) -- -- (400) (2,414) -------- -------- ------- -------- -------- Net loss................ $(13,692) $ (2,196) $(6,129) $(41,787) $(63,804) ======== ======== ======= ======== ======== Capital expenditures.... $ 80,209 $125,034 $ 7,697 $ 687 $213,627 ======== ======== ======= ======== ======== 10. Subsequent Events Crown Atlantic In October 2000, BAM contributed an additional 79 of the Frontier towers in exchange for additional ownership interests of $21,725,000 from Crown Atlantic. 15

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion is intended to assist in understanding our consolidated financial condition as of September 30, 2000 and our consolidated results of operations for the three- and nine-month periods ended September 30, 1999 and 2000. The statements in this discussion regarding the industry outlook, our expectations regarding the future performance of our businesses and the other nonhistorical statements in this discussion are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including but not limited to the uncertainties relating to decisions on capital expenditures to be made in the future by wireless carriers and broadcasters. This discussion should be read in conjunction with the response to Part I, Item 1 of this report and the consolidated financial statements of the Company, including the related notes, and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in the Form 10-K. Any capitalized terms used but not defined in this Item have the same meaning given to them in the Form 10-K. Results of Operations In March 1999, we completed the formation of Crown Atlantic. In June and December of 1999, we completed the acquisition of towers from Powertel. During 1999, we completed the substantial portions of the transactions with BellSouth and BellSouth DCS. In January 2000, the formation of Crown Castle GT took place with the first closing of towers; additional closings took place from April through September of 2000. Finally, in April 2000, the first closing of towers took place for CCAL. Results of operations of these acquired businesses and towers are included in our consolidated financial statements for the periods subsequent to the respective dates of acquisition. As such, our results of operations for the three and nine months ended September 30, 1999 are not comparable to the results of operations for the three and nine months ended September 30, 2000. The following information is derived from our historical Consolidated Statements of Operations for the periods indicated. Three Months Three Months Nine Months Ended Ended September 30, Ended September 30, September 30, Nine Months Ended 1999 2000 1999 September 30, 2000 ----------------------- ----------------------- ------------------ ------------------- Percent Percent Percent Percent of Net of Net of Net of Net Amount Revenues Amount Revenues Amount Revenues Amount Revenues ----------- ---------- ----------- ---------- -------- -------- --------- -------- (Dollars in thousands) Net revenues: Site rental and broadcast transmission.......... $ 75,632 76.5% $ 117,174 67.1% $183,135 79.1% $ 320,418 71.7% Network services and other................. 23,295 23.5 57,415 32.9 48,428 20.9 126,774 28.3 ----------- -------- ----------- -------- -------- ----- --------- ----- Total net revenues... 98,927 100.0 174,589 100.0 231,563 100.0 447,192 100.0 ----------- -------- ----------- -------- -------- ----- --------- ----- Operating expenses: Costs of operations: Site rental and broadcast transmission.......... 32,934 43.5 50,383 43.0 78,018 42.6 139,233 43.5 Network services and other................. 11,712 50.3 34,993 60.9 26,869 55.5 70,901 55.9 ----------- ----------- -------- --------- Total costs of operations.......... 44,646 45.1 85,376 48.9 104,887 45.3 210,134 47.0 General and administrative........ 12,534 12.7 18,196 10.4 30,076 13.0 52,544 11.8 Corporate development........... 1,194 1.2 2,222 1.3 4,134 1.8 6,415 1.4 Restructuring charges............... -- -- -- -- 1,814 0.8 -- -- Non-cash compensation charges............... 501 0.5 808 0.4 1,672 0.7 1,619 0.4 Depreciation and amortization.......... 39,850 40.3 65,596 37.6 89,369 38.6 167,365 37.4 ----------- -------- ----------- -------- -------- ----- --------- ----- Operating income (loss)................. 202 0.2 2,391 1.4 (389) (0.2) 9,115 2.0 Other income (expense): Interest and other income (expense)...... 7,923 8.0 10,217 5.8 12,802 5.5 22,586 5.1 Interest expense and amortization of deferred financing costs................. (34,506) (34.9) (65,498) (37.5) (72,348) (31.2) (173,987) (38.9) ----------- -------- ----------- -------- -------- ----- --------- ----- Loss before income taxes, minority interests, extraordinary item and cumulative effect of change in accounting principle.............. (26,381) (26.7) (52,890) (30.3) (59,935) (25.9) (142,286) (31.8) Provision for income taxes.................. (71) (0.1) (127) (0.1) (268) (0.1) (163) (0.1) Minority interests...... (615) (0.6) 52 0.1 (1,187) (0.5) (1,806) (0.4) ----------- -------- ----------- -------- -------- ----- --------- ----- Loss before extraordinary item and cumulative effect of change in accounting principle.............. (27,067) (27.4) (52,965) (30.3) (61,390) (26.5) (144,255) (32.3) Extraordinary loss on early extinguishment of debt................... -- -- -- -- -- -- (1,495) (0.3) Cumulative effect of change in accounting principle for costs of start-up activities.... -- -- -- -- (2,414) (1.1) -- -- ----------- -------- ----------- -------- -------- ----- --------- ----- Net loss................ $ (27,067) (27.4)% $ (52.965) (30.3)% $(63,804) (27.6)% $(145,750) (32.6)% =========== ======== =========== ======== ======== ===== ========= ===== 16

Comparison of Three Months Ended September 30, 2000 and 1999 Consolidated revenues for the three months ended September 30, 2000 were $174.6 million, an increase of $75.7 million from the three months ended September 30, 1999. This increase was primarily attributable to: (1) a $41.5 million, or 54.9%, increase in site rental and broadcast transmission revenues, of which $3.6 million was attributable to CCUK, $4.1 million was attributable to Crown Atlantic, $2.3 million was attributable to CCAL and $31.5 million was attributable to CCUSA, (2) a $30.0 million increase in network services and other revenues from CCUSA, (3) a $1.1 million increase in network services and other revenues from CCUK, and (4) a $3.2 million increase in network services and other revenues from Crown Atlantic. Costs of operations for the three months ended September 30, 2000 were $85.4 million, an increase of $40.7 million from the three months ended September 30, 1999. This increase was primarily attributable to: (1) a $17.4 million increase in site rental and broadcast transmission costs, of which $1.5 million was attributable to CCUK, $0.9 million was attributable to Crown Atlantic, $1.2 million was attributable to CCAL and $13.8 million was attributable to CCUSA, (2) a $19.4 million increase in network services costs related to CCUSA, (3) a $2.4 million increase in network services costs from CCUK, and (4) a $1.6 million increase in network services costs from Crown Atlantic. Costs of operations for site rental and broadcast transmission as a percentage of site rental and broadcast transmission revenues decreased to 43.0% for the three months ended September 30, 2000 from 43.5% for the three months ended September 30, 1999 because of higher margins attributable to the CCUK and Crown Atlantic operations. Costs of operations for network services and other as a percentage of network services and other revenues increased to 60.9% for the three months ended September 30, 2000 from 50.3% for the three months ended September 30, 1999, primarily due to lower margins from the CCUSA, CCUK and Crown Atlantic operations. General and administrative expenses for the three months ended September 30, 2000 were $18.2 million, an increase of $5.7 million from the three months ended September 30, 1999. This increase was primarily attributable to: (1) a $4.0 million increase in expenses related to the CCUSA operations, (2) a $0.3 million increase in expenses at Crown Atlantic, (3) a $0.4 million increase in expenses at our corporate office, and (4) $1.5 million in expenses at CCAL, partially offset by (5) a $0.5 million decrease in expenses at CCUK. General and administrative expenses as a percentage of revenues decreased for the three months ended September 30, 2000 to 10.4% from 12.7% for the three months ended September 30, 1999 because of lower overhead costs as a percentage of revenues for CCUK, Crown Atlantic and CCUSA. Corporate development expenses for the three months ended September 30, 2000 were $2.2 million, compared to $1.2 million for the three months ended September 30, 1999. This increase was primarily attributable to an increase in expenses at our corporate office. For the three months ended September 30, 2000, we recorded non-cash compensation charges of $0.8 million related to the issuance of stock options to certain employees and executives, compared to $0.5 million for the three months ended September 30, 1999. 17

Depreciation and amortization for the three months ended September 30, 2000 was $65.6 million, an increase of $25.7 million from the three months ended September 30, 1999. This increase was primarily attributable to: (1) a $5.8 million increase in depreciation and amortization related to the property and equipment and goodwill from CCUK, (2) $2.0 million of depreciation and amortization related to the property and equipment from CCAL, and (3) a $17.5 million increase in depreciation and amortization related to the property and equipment, goodwill and other intangible assets related to the CCUSA operations. Interest and other income (expense) for the three months ended September 30, 2000 resulted primarily from the investment of the net proceeds from our recent offerings (see "-Liquidity and Capital Resources"). Interest and other income (expense) for the three months ended September 30, 1999 resulted primarily from: (1) the investment of the remaining portion of the cash contribution from the formation of Crown Atlantic in March 1999, and (2) the investment of the net proceeds from our securities offerings in 1999, partially offset by (3) costs incurred in connection with unsuccessful acquisition attempts and an offering of common stock by one of our shareholders. Interest expense and amortization of deferred financing costs for the three months ended September 30, 2000 was $65.5 million, an increase of $31.0 million, or 89.8%, from the three months ended September 30, 1999. This increase was primarily attributable to interest on indebtedness at CCUSA, amortization of the original issue discount on the 11 1/4% discount notes, and interest on the 9 1/2% senior notes and the 10 3/4% senior notes (see "-- Liquidity and Capital Resources"). Minority interests represent the minority shareholder's 20% interest in CCUK's operations (prior to July 2000), the minority partner's 41.5% interest in Crown Atlantic's operations, the minority partner's 17.5% interest in Crown Castle GT's operations and the minority shareholder's 33.3% interest in CCAL's operations. Comparison of Nine Months Ended September 30, 2000 and 1999 Consolidated revenues for the nine months ended September 30, 2000 were $447.2 million, an increase of $215.6 million from the nine months ended September 30, 1999. This increase was primarily attributable to: (1) a $137.3 million, or 75.0%, increase in site rental and broadcast transmission revenues, of which $19.5 million was attributable to CCUK, $21.2 million was attributable to Crown Atlantic, $4.1 million was attributable to CCAL and $92.5 million was attributable to CCUSA, (2) a $60.2 million increase in network services and other revenues from CCUSA, (3) a $3.9 million increase in network services and other revenues from CCUK, and (4) a $15.6 million increase in network services and other revenues from Crown Atlantic. Costs of operations for the nine months ended September 30, 2000 were $210.1 million, an increase of $105.2 million from the nine months ended September 30, 1999. This increase was primarily attributable to: (1) a $61.2 million increase in site rental and broadcast transmission costs, of which $9.6 million was attributable to CCUK, $7.6 million was attributable to Crown Atlantic, $2.3 million was attributable to CCAL and $41.8 million was attributable to CCUSA, 18

(2) a $32.6 million increase in network services costs related to CCUSA, (3) a $4.9 million increase in network services costs from CCUK, and (4) a $7.6 million increase in network services costs from Crown Atlantic. Costs of operations for site rental and broadcast transmission as a percentage of site rental and broadcast transmission revenues increased to 43.5% for the nine months ended September 30, 2000 from 42.6% for the nine months ended September 30, 1999 because of lower margins attributable to the CCUK, CCAL and CCUSA operations. Costs of operations for network services and other as a percentage of network services and other revenues increased to 55.9% for the nine months ended September 30, 2000 from 55.5% for the nine months ended September 30, 1999, primarily due to lower margins from the CCUSA, CCUK and Crown Atlantic operations. General and administrative expenses for the nine months ended September 30, 2000 were $52.5 million, an increase of $22.5 million from the nine months ended September 30, 1999. This increase was primarily attributable to: (1) a $15.3 million increase in expenses related to the CCUSA operations, (2) a $1.2 million increase in expenses at our corporate office, (3) a $3.0 million increase in expenses at Crown Atlantic, (4) a $0.1 million increase in expenses at CCUK, and (5) $2.9 million in expenses at CCAL. General and administrative expenses as a percentage of revenues decreased for the nine months ended September 30, 2000 to 11.8% from 13.0% for the nine months ended September 30, 1999 because of lower overhead costs as a percentage of revenues for CCUSA, CCUK and Crown Atlantic. Corporate development expenses for the nine months ended September 30, 2000 were $6.4 million, compared to $4.1 million for the nine months ended September 30, 1999. This increase was primarily attributable to an increase in expenses at our corporate office. In connection with the formation of Crown Atlantic, we completed a restructuring of our United States operations during the first quarter of 1999. The objective of this restructuring was to transition from a centralized organization to a regionally-based organization in the United States. In the first quarter of 1999, we recorded one-time charges of $1.8 million related to severance payments for staff reductions, as well as costs related to non- cancelable leases of excess office space. For the nine months ended September 30, 2000, we recorded non-cash compensation charges of $1.6 million related to the issuance of stock options to certain employees and executives, compared to $1.7 million for the nine months ended September 30, 1999. Depreciation and amortization for the nine months ended September 30, 2000 was $167.4 million, an increase of $78.0 million from the nine months ended September 30, 1999. This increase was primarily attributable to: (1) a $6.9 million increase in depreciation and amortization related to the property and equipment and goodwill from CCUK, (2) an $8.6 million increase in depreciation and amortization related to the property and equipment and goodwill from Crown Atlantic, (3) $3.3 million of depreciation and amortization related to the property and equipment from CCAL, and (4) a $59.2 million increase in depreciation and amortization related to the property and equipment, goodwill and other intangible assets related to the CCUSA operations. 19

Interest and other income (expense) for the nine months ended September 30, 2000 resulted primarily from: (1) the investment of the net proceeds from our recent offerings (see "- Liquidity and Capital Resources") and (2) a gain recognized upon the disposition of an investment in an affiliate. Interest and other income (expense) for the nine months ended September 30, 1999 resulted primarily from: (1) the investment of the net proceeds from our securities offerings in 1998 and 1999, partially offset by (2) costs incurred in connection with unsuccessful acquisition attempts and an offering of common stock by one of our shareholders, and (3) a loss incurred upon the disposition of an investment in an affiliate. Interest expense and amortization of deferred financing costs for the nine months ended September 30, 2000 was $174.0 million, an increase of $101.6 million, or 140.5%, from the nine months ended September 30, 1999. This increase was primarily attributable to interest on indebtedness at CCUSA, CCUK and Crown Atlantic, amortization of the original issue discount on the 10 3/8% discount notes and the 11 1/4% discount notes, interest on the 9% senior notes, the 9 1/2% senior notes and the 10 3/4% senior notes, and the write-off of unamortized deferred financing costs related to the term loans (see "-- Liquidity and Capital Resources"). Minority interests represent the minority shareholder's 20% interest in CCUK's operations (prior to July 2000), the minority partner's 41.5% interest in Crown Atlantic's operations, the minority partner's 17.5% interest in Crown Castle GT's operations and the minority shareholder's 33.3% interest in CCAL's operations. The extraordinary loss on early extinguishment of debt represents the write-off of unamortized deferred financing costs related to the senior credit facility. See "--Liquidity and Capital Resources". The cumulative effect of the change in accounting principle for costs of start-up activities represents the charge we recorded upon the adoption of SOP 98-5 on January 1, 1999. Liquidity and Capital Resources Our business strategy contemplates substantial capital expenditures: (1) in connection with the expansion of our tower portfolios by partnering with wireless carriers to assume ownership or control of their existing towers, by pursuing build-to-suit opportunities, and by pursuing other tower acquisition opportunities, and (2) to acquire existing transmission networks globally as opportunities arise. Since its inception, CCIC has generally funded its activities, other than acquisitions and investments, through excess proceeds from contributions of equity capital and cash provided by operations. CCIC has financed acquisitions and investments with the proceeds from equity contributions, borrowings under our senior credit facilities, issuances of debt securities and the issuance of promissory notes to sellers. Since its inception, CCUK has generally funded its activities, other than the acquisition of the BBC home service transmission business, through cash provided by operations and borrowings under CCUK's credit facility. CCUK financed the acquisition of the BBC home service transmission business with the proceeds from equity contributions and the issuance of the CCUK bonds. For the nine months ended September 30, 1999 and 2000, our net cash provided by operating activities was $75.7 million and $117.6 million, respectively. For the nine months ended September 30, 1999 and 2000, our net cash provided by financing activities was $1,437.0 million and $1,690.4 million, respectively. Our primary financing-related activities in the first nine months of 2000 included the following: 2000 Credit Facility In March 2000, a subsidiary of CCIC entered into a credit agreement with a syndicate of banks which consists of two term loan facilities and a revolving line of credit aggregating $1,200.0 million. Available borrowings under the 2000 credit facility are generally to be used for the construction and purchase of towers 20

and for general corporate purposes of CCUSA, Crown Castle GT and CCAL. The amount of available borrowings will be determined based on the current financial performance (as defined) of those subsidiaries' assets. In addition, up to $25.0 million of borrowing availability under the 2000 credit facility can be used for letters of credit. On March 15, 2000, we used $83.4 million in borrowings under the 2000 credit facility to repay outstanding borrowings and accrued interest under the Crown Communication senior credit facility. The net proceeds from $316.6 million in additional borrowings are being used to fund a portion of the purchase price for the GTE joint venture and for general corporate purposes. Term Loans due 2011 On April 3, 2000, we borrowed $400.0 million under a term loan agreement with a group of lenders. The net proceeds from this borrowing, which amounted to $395.9 million, were used to fund a portion of the cash contribution for the second closing of towers at the GTE joint venture (as discussed below). The term loans were repaid in June 2000 with proceeds from the sale of our 10 3/4% senior notes. June 2000 Debt Offering On June 21, 2000, we issued $500.0 million aggregate principal amount of our 10 3/4% senior notes for proceeds of $483.7 million (after underwriting discounts of $16.3 million). A portion of the proceeds from the sale of these securities were used to repay the term loans (as discussed above), and the remaining proceeds are being used to fund the initial interest payments on the 10 3/4% senior notes and for general corporate purposes. July 2000 Offerings On July 27, 2000, we sold shares of our common stock and preferred stock in concurrent underwritten public offerings (the "July 2000 Offerings"). We had granted the underwriters for the July 2000 Offerings over-allotment options to purchase additional shares in both offerings. On August 1, 2000, the over- allotment option for the common stock offering was partially exercised and the over-allotment option for the preferred stock offering was exercised in full. As a result, we sold (1) a total of 12,084,200 shares of our common stock at a price of $29.50 per share and received proceeds of $342.2 million (after underwriting discounts of $14.3 million) and (2) a total of 8,050,000 shares of our 6.25% convertible preferred stock at a price of $50.00 per share and received proceeds of $388.4 million (after underwriting discounts of $14.1 million). The proceeds from the July 2000 Offerings will be used for general corporate purposes. Capital expenditures were $437.0 million for the nine months ended September 30, 2000, of which $10.0 million were for CCIC, $283.1 million were for CCUSA, $72.8 million were for Crown Atlantic, $69.5 million were for CCUK and $1.6 million were for CCAL. We anticipate that we will build, through the end of 2000, approximately 900 towers in the United States at a cost of approximately $225.0 million and approximately 270 towers in the United Kingdom at a cost of approximately $45.0 million. We also expect that the capital expenditure requirements related to the roll-out of digital broadcast transmission in the United Kingdom will be approximately (Pounds)17.5 million ($25.9 million). In addition to capital expenditures in connection with build-to-suits, we expect to apply a significant amount of capital to finance the remaining cash portion of the consideration being paid in connection with the recent and agreed to transactions discussed below. In connection with the BellSouth transaction, through September 2000, we have issued approximately 9.0 million shares of our common stock and paid BellSouth $429.8 million in cash. In connection with the BellSouth DCS transaction, through September 2000, we have paid BellSouth DCS $299.8 million in cash. On November 7, 1999, we entered into an agreement with GTE to form a joint venture to own and operate a significant majority of GTE's towers. The agreement contemplates that the transaction will be completed in multiple closings during 2000. On January 31, 2000, the formation of the joint venture took place in connection 21

with the first such closing of towers. During the course of the multiple closings, (1) we will contribute an aggregate of approximately $825.0 million (of which up to $100.0 million can be in shares of our common stock, with the balance in cash) in exchange for a majority ownership interest in the joint venture, and (2) GTE will contribute approximately 2,300 towers in exchange for cash distributions aggregating approximately $800.0 million (less any amount contributed in the form of our common stock) from the joint venture and a minority ownership interest in the joint venture. Upon dissolution of the joint venture, GTE will receive (1) any shares of our common stock contributed to the joint venture and (2) a payment equal to approximately 11.4% of the fair market value of the joint venture's other net assets; we will then receive the remaining assets and liabilities of the joint venture. We are accounting for our investment in the GTE joint venture as a purchase of tower assets, and are including the joint venture's results of operations and cash flows in our consolidated financial statements for periods subsequent to formation. Upon entering into this agreement, we placed $50.0 million into an escrow account. At the January 31, 2000 closing, we contributed $223.9 million in cash to the joint venture, and GTE contributed 637 towers in exchange for a cash distribution of $198.9 million from the joint venture. On April 3, 2000, we contributed $479.7 million in cash and 5.1 million shares of our common stock to the joint venture, and GTE contributed 1,607 towers in exchange for a cash distribution of $479.7 million from the joint venture. The funds in the escrow account were used to pay $50.0 million of our cash contribution. A portion of our remaining cash contribution was financed with the net proceeds from borrowings under term loans (as discussed above). In June 2000, we contributed $13.2 million in cash, and GTE contributed 39 towers in exchange for a cash distribution of $13.2 million from the joint venture. In addition to the approximately 2,300 towers to be contributed pursuant to the formation agreement, GTE had the right to contribute certain additional towers to the joint venture, including towers acquired by GTE from Ameritech, on terms substantially similar to those in the formation agreement. In April 2000, we agreed with GTE that the Ameritech towers would be contributed to the joint venture. In August and September 2000, we contributed $181.6 million in cash, and GTE contributed 497 of the Ameritech towers in exchange for a cash distribution of $181.6 million from Crown Castle GT. In March 2000, CCAL (our 66.7% owned subsidiary) entered into an agreement to purchase approximately 700 towers in Australia from Cable & Wireless Optus. The total purchase price for the towers will be approximately $135.0 million in cash (Australian $220.0 million). We are accounting for our investment in CCAL as a purchase of tower assets, and are including CCAL's results of operations and cash flows in our consolidated financial statements for periods subsequent to the purchase date. On April 3, 2000, the first closing took place for CCAL. We contributed $90.8 million in cash (Australian $147.5 million) to CCAL. The largest portion of this amount, along with a capital contribution from CCAL's minority shareholder, was used to pay $103.5 million (Australian $168.1 million) to Optus. In May and June of 2000, CCAL made additional payments to Optus amounting to $6.9 million (Australian $11.6 million). In August and September of 2000, CCAL made additional payments to Optus amounting to $4.8 million (Australian $8.7 million). We expect to use borrowings under our 2000 credit facility to finance our remaining portion of the cash purchase price for this transaction. We expect that the completion of the recent and agreed to transactions and the execution of our new tower build, or build-to-suit program, will have a material impact on our liquidity. We expect that once integrated, these transactions will have a positive impact on liquidity, but will require some period of time to offset the initial adverse impact on liquidity. In addition, we believe that as new towers become operational and we begin to add tenants, they should result in a long-term increase in liquidity. To fund the execution of our business strategy, including the recent and agreed to transactions described above and the construction of new towers that we have agreed to build, we expect to use the net proceeds of our recent offerings and borrowings available under our U.S. and U.K. credit facilities. We will have additional cash needs to fund our operations in the future. We may also have additional cash needs in the future if additional tower acquisitions or build-to-suit opportunities arise. Some of the opportunities that we are currently pursuing could require significant additional capital. If we do not otherwise have cash available, or borrowings under our credit facilities have otherwise been utilized, when our cash need arises, we would be forced to seek additional 22

debt or equity financing or to forego the opportunity. In the event we determine to seek additional debt or equity financing, there can be no assurance that any such financing will be available, on commercially acceptable terms or at all, or permitted by the terms of our existing indebtedness. As of September 30, 2000, we had consolidated cash and cash equivalents of $816.9 million (including $42.1 million at CCUSA, $7.5 million at CCUK, $20.3 million at CCAL and $1.0 million at Crown Atlantic), consolidated long-term debt of $2,564.9 million, consolidated redeemable preferred stock of $834.3 million and consolidated stockholders' equity of $2,456.1 million. As of November 1, 2000, Crown Atlantic had unused borrowing availability under its credit facility of approximately $11.0 million, and CCUK had unused borrowing availability under its credit facility of approximately (Pounds)55.0 million ($81.3 million). As of November 1, 2000, our subsidiaries had approximately $440.0 million of unused borrowing availability under the 2000 credit facility. Our various credit facilities require our subsidiaries to maintain certain financial covenants and place restrictions on the ability of our subsidiaries to, among other things, incur debt and liens, pay dividends, make capital expenditures, undertake transactions with affiliates and make investments. These facilities also limit the ability of the borrowing subsidiaries to pay dividends to CCIC. If we are unable to refinance our subsidiary debt or renegotiate the terms of such debt, we may not be able to meet our debt service requirements, including interest payments on the notes, in the future. Our 9% senior notes, our 9 1/2% senior notes and our 10 3/4% senior notes will require annual cash interest payments of approximately $16.2 million, $11.9 million and $53.8 million, respectively. Prior to November 15, 2002, May 15, 2004 and August 1, 2004, the interest expense on our 10 5/8% discount notes, our 10 3/8% discount notes and our 11 1/4% discount notes, respectively, will be comprised solely of the amortization of original issue discount. Thereafter, the 10 5/8% discount notes, the 10 3/8% discount notes and the 11 1/4% discount notes will require annual cash interest payments of approximately $26.7 million, $51.9 million and $29.3 million, respectively. Prior to December 15, 2003, we do not expect to pay cash dividends on our exchangeable preferred stock or, if issued, cash interest on the exchange debentures. Thereafter, assuming all dividends or interest have been paid-in-kind, our exchangeable preferred stock or, if issued, the exchange debentures will require annual cash dividend or interest payments of approximately $47.8 million. Annual cash interest payments on the CCUK bonds are (Pounds)11.25 million ($17.0 million). In addition, our various credit facilities will require periodic interest payments on amounts borrowed thereunder. As a holding company, CCIC will require distributions or dividends from its subsidiaries, or will be forced to use capital raised in debt and equity offerings, to fund its debt obligations, including interest payments on the cash-pay notes and eventually the 10 5/8% discount notes, the 10 3/8% discount notes and the 11 1/4% discount notes. The terms of the indebtedness of our subsidiaries significantly limit their ability to distribute cash to CCIC. As a result, we will be required to apply a portion of the net proceeds from the recent debt offerings to fund interest payments on the cash-pay notes. If we do not retain sufficient funds from the offerings or any future financing, we may not be able to make our interest payments on the cash-pay notes. Our ability to make scheduled payments of principal of, or to pay interest on, our debt obligations, and our ability to refinance any such debt obligations, will depend on our future performance, which, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. We anticipate that we may need to refinance all or a portion of our indebtedness on or prior to its scheduled maturity. There can be no assurance that we will be able to effect any required refinancings of our indebtedness on commercially reasonable terms or at all. Reporting Requirements Under the Indentures Governing the Company's Debt Securities (the "Indentures") and the Certificate of Designations Governing the Company's 12 3/4% Senior Exchangeable Preferred Stock (the "Certificate") The following information (as such capitalized terms are defined in the Indentures and the Certificate) is presented solely as a requirement of the Indentures and the Certificate; such information is not intended as an 23

alternative measure of financial position, operating results or cash flow from operations (as determined in accordance with generally accepted accounting principles). Furthermore, the Company's measure of the following information may not be comparable to similarly titled measures of other companies. Summarized financial information for (1) the Company and its Restricted Subsidiaries and (2) the Company's Unrestricted Subsidiaries is as follows: September 30, 2000 ---------------------------------------------------- Company and Restricted Unrestricted Consolidation Consolidated Subsidiaries Subsidiaries Eliminations Total ------------ ------------ ------------- ------------ (In thousands of dollars) Cash and cash equivalents............. $ 808,355 $ 8,583 $ -- $ 816,938 Other current assets..... 132,534 75,701 -- 208,235 Property and equipment, net..................... 2,872,274 1,208,839 -- 4,081,113 Investments in Unrestricted Subsidiaries............ 1,492,878 -- (1,492,878) -- Goodwill and other intangible assets, net.. 155,604 935,983 -- 1,091,587 Other assets, net........ 90,898 18,383 -- 109,281 ---------- ---------- ----------- ---------- $5,552,543 $2,247,489 $(1,492,878) $6,307,154 ========== ========== =========== ========== Current liabilities...... $ 145,983 $ 97,394 $ -- $ 243,377 Long-term debt........... 2,024,054 540,842 -- 2,564,896 Other liabilities........ 19,063 63,907 -- 82,970 Minority interests....... 73,000 52,468 -- 125,468 Redeemable preferred stock................... 834,338 -- -- 834,338 Stockholders' equity..... 2,456,105 1,492,878 (1,492,878) 2,456,105 ---------- ---------- ----------- ---------- $5,552,543 $2,247,489 $(1,492,878) $6,307,154 ========== ========== =========== ========== Three Months Ended September 30, 2000 Nine Months Ended September 30, 2000 -------------------------------------- -------------------------------------- Company and Company and Restricted Unrestricted Consolidated Restricted Unrestricted Consolidated Subsidiaries Subsidiaries Total Subsidiaries Subsidiaries Total ------------ ------------ ------------ ------------ ------------ ------------ (In thousands of dollars) Net revenues............ $ 97,033 $77,556 $174,589 $ 218,947 $228,245 $ 447,192 Costs of operations (exclusive of depreciation and amortization).......... 48,371 37,005 85,376 100,983 109,151 210,134 General and administrative......... 14,976 3,220 18,196 41,836 10,708 52,544 Corporate development... 2,132 90 2,222 5,755 660 6,415 Non-cash compensation charges................ 423 385 808 1,170 449 1,619 Depreciation and amortization........... 35,044 30,552 65,596 88,606 78,759 167,365 -------- ------- -------- --------- -------- --------- Operating income (loss)................. (3,913) 6,304 2,391 (19,403) 28,518 9,115 Interest and other income (expense)....... 10,084 133 10,217 21,431 1,155 22,586 Interest expense and amortization of deferred financing costs.................. (53,217) (12,281) (65,498) (136,560) (37,427) (173,987) Provision for income taxes.................. (3) (124) (127) (18) (145) (163) Minority interests...... 969 (917) 52 2,344 (4,150) (1,806) Extraordinary item...... -- -- -- (1,495) -- (1,495) -------- ------- -------- --------- -------- --------- Net loss................ $(46,080) $(6,885) $(52,965) $(133,701) $(12,049) $(145,750) ======== ======= ======== ========= ======== ========= 24

Tower Cash Flow and Adjusted Consolidated Cash Flow for the Company and its Restricted Subsidiaries is as follows under (1) the indenture governing the 10 5/8% Senior Discount Notes and the Certificate (the "1997 and 1998 Securities") and (2) the indentures governing the 10 3/8% Discount Notes, the 9% Senior Notes, the 11 1/4% Discount Notes, the 9 1/2% Senior Notes and the 10 3/4% Senior Notes (the "1999 and 2000 Securities"): 1997 and 1998 1999 and 2000 Securities Securities ------------- ------------- (In thousands of dollars) Tower Cash Flow, for the three months ended September 30, 2000............................... $ 25,142 $ 25,142 ======== ======== Consolidated Cash Flow, for the twelve months ended September 30, 2000......................... $ 81,981 $ 88,917 Less: Tower Cash Flow, for the twelve months ended September 30, 2000............................... (73,070) (73,070) Plus: four times Tower Cash Flow, for the three months ended September 30, 2000.................. 100,568 100,568 -------- -------- Adjusted Consolidated Cash Flow, for the twelve months ended September 30, 2000.................. $109,479 $116,415 ======== ======== Impact of Recently Issued Accounting Standards In April 1998, the Accounting Standards Executive Committee of the American Institute of Certified Public Accountants issued Statement of Position 98-5, Reporting on the Costs of Start-Up Activities ("SOP 98-5"). SOP 98-5 requires that costs of start-up activities be charged to expense as incurred and broadly defines such costs. The Company had deferred certain costs incurred in connection with potential business initiatives and new geographic markets, and SOP 98-5 required that such deferred costs be charged to results of operations upon its adoption. The Company has adopted the requirements of SOP 98-5 as of January 1, 1999. The cumulative effect of the change in accounting principle for the adoption of SOP 98-5 resulted in a charge to results of operations for $2.4 million in the Company's financial statements for the three months ended March 31, 1999. In June 1998, the FASB issued Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities ("SFAS 133"). SFAS 133 requires that derivative instruments be recognized as either assets or liabilities in the consolidated balance sheet based on their fair values. Changes in the fair values of such derivative instruments will be recorded either in results of operations or in other comprehensive income, depending on the intended use of the derivative instrument. The initial application of SFAS 133 will be reported as the effect of a change in accounting principle. SFAS 133, as amended, is effective for all fiscal quarters of fiscal years beginning after June 15, 2000. The Company will adopt the requirements of SFAS 133 as of January 1, 2001. The Company estimates that the adoption of SFAS 133 will result in a net transition adjustment gain of approximately $3.0 million in accumulated other comprehensive income, and the recognition of approximately $3.0 million of derivative instrument assets. The estimated amount for this transition adjustment is based on current fair value measurements, and such measurements could be substantially different at the date of adoption of SFAS 133. As such, the transition adjustment recorded on that date could be substantially different from this estimated amount. The Company also expects that the adoption of SFAS 133 will increase the volatility of other comprehensive income as reported in its future financial statements. Item 3. Quantitative and Qualitative Disclosures About Market Risk As a result of our international operating, investing and financing activities, we are exposed to market risks, which include changes in foreign currency exchange rates and interest rates which may adversely affect our results of operations and financial position. In attempting to minimize the risks and/or costs associated with such activities, we seek to manage exposure to changes in interest rates and foreign currency exchange rates where economically prudent to do so. Certain of the financial instruments we have used to obtain capital are subject to market risks from fluctuations in market interest rates. The majority of our financial instruments, however, are long-term fixed interest rate notes and debentures. Therefore, fluctuations in market interest rates of 1% in 2000 would not have a material effect on our consolidated financial results. 25

The majority of our foreign currency transactions are denominated in the British pound sterling or the Australian dollar, which are the functional currencies of CCUK and CCAL, respectively. As a result of CCUK's and CCAL's transactions being denominated and settled in such functional currency, the risks associated with currency fluctuations are generally limited to foreign currency translation adjustments. We do not currently hedge against foreign currency translation risks and believe that foreign currency exchange risk is not significant to our operations. PART II--OTHER INFORMATION Item 2. Changes in Securities and Use of Proceeds On February 2, 2000, April 20, 2000 and September 1, 2000, the Company issued 441,925, 441,926 and 402,643 unregistered shares of common stock, respectively, to an affiliate of BellSouth Corporation in connection with closings relating to the BellSouth transaction. The agreement of sublease relating to the BellSouth transaction will close in a series of closings, with approximately 30% of the consideration being paid with our common stock. As of November 1, 2000, we have issued a total of 9,015,281 shares of common stock to BellSouth in connection with closings relating to the BellSouth transaction. We contemplate that a total of up to 9.1 million shares of our common stock will be issued to BellSouth in connection with the BellSouth transaction. The shares were issued in exempt transactions pursuant to Section 4(2) of the Securities Act of 1933, as amended (the "Act"). On July 5, 2000, the Company issued 17,443,500 unregistered shares of common stock to a subsidiary of France Telecom upon the exercise and conversion by such subsidiary of convertible securities it held in Crown Castle UK Holdings Limited ("CCUK"). The shares were issued in an exempt transaction pursuant to Section 4(2) of the Act. All of such shares of common stock were subsequently sold on July 5, 2000 in connection with the sale of 17,713,536 shares of the Company's common stock by France Telecom to Salomon Brothers International Limited. On July 14, 2000, in connection with the acquisition of Terracom Estates Limited by CCUK, the Company issued an aggregate 199,473 unregistered shares of common stock to the holders of the outstanding share capital of Terracom Estates Limited. The shares were issued in an exempt transaction pursuant to Rule 506 of Regulation D promulgated under the Act. On September 1, 2000, in connection with the acquisition of Tacit Communications, Inc. by the Company, the Company issued 336,600 unregistered shares of common stock to the prior shareholders of Tacit Communications, Inc. The shares were issued in an exempt transaction pursuant to Rule 506 of Regulation D promulgated under the Act. On October 6, 2000, in connection with the acquisition of SiteSafe, Inc. by the Company, the Company issued 1,043,320 unregistered shares of common stock to the prior shareholders of SiteSafe, Inc. The shares were issued in an exempt transaction pursuant to Rule 506 of Regulation D promulgated under the Act. On September 5, 2000, pursuant to cashless exercises of warrants, 23,269, 28,582, and 3,826 unregistered shares of common stock were issued to Berkshire Fund IV, Limited Partnership; Berkshire Fund III, A Limited Partnership; and Berkshire Investors LLC, respectively. The shares issued to the Berkshire entities were issued in exempt transactions pursuant to Section 4(2) of the Act. On September 22, 2000, pursuant to cashless exercises of warrants, 98,089 unregistered shares of common stock were issued to New York Life Insurance Company. The shares were issued in exempt transactions pursuant to Section 4(2) of the Act. 26

Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: 11.1 Computation of Net Loss Per Common Share 12.1 Computation of Ratios of Earnings to Fixed Charges and Earnings to Combined Fixed Charges and Preferred Stock Dividends 27.1 Financial Data Schedule (b) Reports on Form 8-K: None. 27

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 thereunto duly authorized. Crown Castle International Corp. Date: November 13, 2000 /s/ W. Benjamin Moreland By: _________________________________ W. Benjamin Moreland Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer) Date: November 13, 2000 /s/ Wesley D. Cunningham By: _________________________________ Wesley D. Cunningham Senior Vice President, Chief Accounting Officer and Corporate Controller (Principal Accounting Officer) 28

EXHIBIT 11.1 CROWN CASTLE INTERNATIONAL CORP. COMPUTATION OF NET LOSS PER COMMON SHARE (IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS) THREE MONTHS NINE MONTHS ENDED SEPTEMBER 30, ENDED SEPTEMBER 30, -------------------- --------------------- 1999 2000 1999 2000 -------- -------- -------- --------- Loss before extraordinary item and cumulative effect of change in accounting principle..... $(27,067) $(52,965) $(61,390) $(144,255) Dividends on preferred stock.................. (6,824) (16,353) (19,846) (39,571) -------- -------- -------- --------- Loss before extraordinary item and cumulative effect of change in accounting principle applicable to common stock for basic and diluted computations......................... (33,891) (69,318) $(81,236) (183,826) Extraordinary item............................ -- -- -- (1,495) Cumulative effect of change in accounting principle.................................... -- -- (2,414) -- -------- -------- -------- --------- Net loss applicable to common stock for basic and diluted computations..................... $(33,891) $(69,318) $(83,650) $(185,321) ======== ======== ======== ========= Weighted-average number of common shares outstanding during the period for basic and diluted computations (in thousands).......... 149,621 191,763 123,067 171,985 ======== ======== ======== ========= Per common share--basic and diluted: Loss before extraordinary item and cumulative effect of change in accounting principle... $ (0.23) $ (0.36) $ (0.66) $ (1.07) Extraordinary item............................ -- -- -- (0.01) Cumulative effect of change in accounting principle.................................... -- -- (0.02) -- -------- -------- -------- --------- Net loss................................... $ (0.23) $ (0.36) $ (0.68) $ (1.08) ======== ======== ======== =========

EXHIBIT 12.1 CROWN CASTLE INTERNATIONAL CORP. COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES AND EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS (DOLLARS IN THOUSANDS) NINE MONTHS ENDED SEPTEMBER 30, ----------------------- 1999 2000 -------- --------- Computation of Earnings: Income (loss) before income taxes, minority interests, extraordinary item and cumulative effect of change in accounting principle $ (59,935) $(142,286) Add: Fixed charges (as computed below) 83,319 188,387 --------- --------- $ 23,384 $ 46,101 ========= ========= Computation of Fixed Charges and Combined Fixed Charges and Preferred Stock Dividends: Interest expense $ 41,110 $ 114,182 Amortization of deferred financing costs and discounts on long-term debt 31,238 59,805 Interest component of operating lease expense 10,971 14,400 --------- --------- Fixed charges 83,319 188,387 Preferred stock dividends 19,846 39,571 --------- --------- Combined fixed charges and preferred stock dividends $ 103,165 $ 227,958 ========= ========= Ratio of Earnings to Fixed Charges -- -- ========= ========= Deficiency of Earnings to Cover Fixed Charges $ 59,935 $ 142,286 ========= ========= Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends -- -- ========= ========= Deficiency of Earnings to Cover Combined Fixed Charges and Preferred Stock Dividends $ 79,781 $ 181,857 ========= =========

5 This schedule contains summary financial information extracted from the Company's consolidated balance sheet and consolidated statement of operations and is qualified in its entirety by reference to such consolidated financial statements together with the related footnotes thereto. 1,000 U.S. DOLLARS 9-MOS DEC-31-2000 JAN-01-2000 SEP-30-2000 1 816,938 0 144,349 11,544 53,960 1,025,173 4,329,925 248,812 6,307,154 243,377 2,564,896 834,338 0 1,972 2,454,133 6,307,154 0 447,192 0 210,134 227,943 0 173,987 (142,286) 163 (144,255) 0 (1,495) 0 (145,750) (1.08) (1.08)