UNITED STATES
SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to
Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 6, 2008
Crown Castle International
Corp.
(Exact name of registrant as
specified in its charter)
| Delaware | 001-16441 | 76-0470458 | ||
| (State or other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
| 1220 Augusta Drive Suite 500 Houston, TX |
77057 | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code: (713) 570-3000
| (Former name or former address if changed since last report.) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o Soliciting material pursuant
to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule
14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule
13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
ITEM 2.02 — RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On February 6, 2008, the Company issued a press release disclosing its financial results for the fourth quarter and year ended 2007. The February 6 press release is furnished herewith as Exhibit 99.1 to this Form 8-K.
ITEM 9.01 — FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
As described in Item 2.02 of this Report, the following exhibit is furnished as part of this Current Report on Form 8-K:
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Exhibit No.
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Description | |
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99.1
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Press Release dated February 6, 2008 |
The information in this Form 8-K and Exhibit 99.1 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
CROWN CASTLE INTERNATIONAL CORP.
By: /s/ E. Blake
Hawk
Name:
E. Blake Hawk
Title: Executive Vice President
and General Counsel
Date: February 6, 2008
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EXHIBIT INDEX
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Exhibit No.
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Description | |
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99.1
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Press Release dated February 6, 2008 |
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Exhibit 99.1
| Contacts: | Ben Moreland, CFO | |||
| Jay Brown, Treasurer Crown Castle International Corp. |
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| 713-570-3000 |
FOR IMMEDIATE RELEASE
CROWN CASTLE INTERNATIONAL
REPORTS FOURTH QUARTER AND FULL YEAR 2007 RESULTS
REPORTS FOURTH QUARTER AND FULL YEAR 2007 RESULTS
February 6, 2008 — HOUSTON, TEXAS — Crown Castle International Corp. (NYSE:CCI) today
reported results for the quarter and year ended December 31, 2007. On January 12, 2007, Global
Signal Inc. merged into a subsidiary of Crown Castle (“Merger”). The results of the former
subsidiaries of Global Signal Inc. (“Global Signal”) are included in the results from January 12,
2007. These 2007 results are compared to (i) pre-Merger historical results of Crown Castle for
prior fiscal periods and (ii) selected pro forma results for the quarter and year ended December
31, 2006, assuming the Merger was completed on January 1, 2006.
“We had an excellent fourth quarter and full year 2007, exceeding our previously provided
outlook for site rental gross margin, Adjusted EBITDA and recurring cash flow,” stated John P.
Kelly, President and Chief Executive Officer of Crown Castle. “As I look back on 2007, I am very
pleased with our full year results driven by greater than expected cost synergies following our
acquisition of Global Signal and strong site rental revenue growth across our entire portfolio of
towers. In addition to strong operating results, we have substantially completed all of our
integration activities and are on track to finish the few remaining items in the first quarter. I
commend our employees for the tremendous job they did in 2007, exceeding our operating targets and
successfully integrating Global Signal. I believe that our fully integrated portfolio of towers is
well-located to serve our customers, and coupled with the actions we have continued to take to
optimize our capital structure, positions us for strong recurring cash flow per share growth in
2008.”
CONSOLIDATED FINANCIAL RESULTS
Site rental revenue for the fourth quarter of 2007 increased $150.9 million, or 80.8%, to
$337.5 million from $186.7 million for the same period in the prior year. Site rental gross
margin,
defined as site rental revenue less site rental cost of operations, increased 72.8% to $224.8
million, up $94.7 million in the fourth quarter of 2007 from the same period in 2006. Adjusted
EBITDA for the fourth quarter of 2007 increased $92.7 million, or 79.6%, to $209.2 million, up from
$116.5 million for the same period in 2006.
| News Release continued: | Page 2 of 13 |
Recurring cash flow, defined as Adjusted EBITDA less interest expense less sustaining capital
expenditures, increased from $67.5 million in the fourth quarter of 2006 to $110.9 million for the
fourth quarter of 2007, up 64.4%, inclusive of $20.4 million of additional interest expense from
$1.3 billion in borrowings in the fourth quarter 2006 and full year 2007 used to reduce potential
and actual shares outstanding by 36.9 million shares. Weighted average common shares outstanding
increased to 281.7 million for the fourth quarter of 2007, inclusive of the impact from the Merger,
from 200.8 million for the same period in the prior year. Recurring cash flow per share, defined
as recurring cash flow divided by weighted average common shares outstanding, was $0.39 in the
fourth quarter of 2007, inclusive of $0.02 per share of dilution from the previously mentioned
borrowings used to reduce potential and actual shares outstanding, compared to $0.34 in the fourth
quarter of 2006.
Net loss was $80.2 million for the fourth quarter of 2007, inclusive of a $75.6 million charge
to write-down Crown Castle’s investment in FiberTower Corporation, compared to a net loss of $6.3
million for the same period in 2006. Net loss after deduction of dividends on preferred stock was
$85.4 million in the fourth quarter of 2007, compared to a loss of $11.5 million for the same
period in 2006. Fourth quarter 2007 net loss per share was $0.30, compared to a net loss per share
of $0.06 in the fourth quarter of 2006.
Site rental revenue for the full year 2007 increased 84.6% to $1.286 billion, up $589.7
million from $696.7 million for the full year 2006. Site rental gross margin for the full year
2007 increased 74.1% to $843.1 million, up $358.9 million from $484.3 million for the full year
2006. Adjusted EBITDA for the full year 2007 increased $331.2 million, or 77.5%, to $758.6
million, up from $427.4 million for the full year 2006.
Recurring cash flow increased $129.3 million, or 50.5%, from $255.8 million for the full year
2006 to $385.1 million for the full year 2007, inclusive of $76.7 million of additional interest
expense from $1.3 billion in borrowings in the fourth quarter 2006 and full year 2007 used to
reduce potential and actual shares outstanding by 36.9 million shares. Weighted average common
shares outstanding increased to 279.9 million for the full year 2007, inclusive of the impact of
the Merger, from 207.2 million for the full year 2006. Recurring cash flow per share was $1.38 in
the full year
2007, inclusive of $0.10 per share of dilution from the previously mentioned borrowings used
to reduce potential and actual shares outstanding, compared to $1.23 for the full year 2006.
| News Release continued: | Page 3 of 13 |
Net loss was $222.8 million for the full year 2007, inclusive of a $75.6 million charge to
write-down Crown Castle’s FiberTower investment and $65.5 million of asset write-down charges
primarily related to the Modeo write-down in the third quarter, compared to a net loss of $41.9
million for the full year 2006. Net loss after deduction of dividends on preferred stock was
$243.6 million for the full year 2007, compared to a net loss of $62.7 million in the full year
2006. Full year 2007 net loss per share was $0.87 compared to a net loss per share of $0.30 for
the full year 2006.
PRO FORMA RESULTS
During the fourth quarter of 2007, Crown Castle benefited from $4.1 million of out of run-rate
items in site rental revenue ($4.2 million was included in its fourth quarter 2007 Outlook).
During the fourth quarter of 2006, Crown Castle benefited from $8.9 million of out of run-rate
items in site rental revenue. Pro forma site rental revenue growth was 8.3%, comparing reported
fourth quarter 2007 results to pro forma fourth quarter 2006 results, excluding the out of run-rate
items mentioned above. Pro forma site rental gross margin growth was 10.7%, comparing reported
fourth quarter 2007 results to pro forma fourth quarter 2006 results. Pro forma site rental
revenue growth was 7.9%, comparing pro forma full year 2007 results to pro forma full year 2006
results. Pro forma site rental gross margin growth was 9.5%, comparing pro forma full year 2007
results to pro forma full year 2006 results.
SEGMENT RESULTS
US site rental revenue for the fourth quarter of 2007 increased $143.9 million, or 83.3%, to
$316.8 million, compared to fourth quarter 2006 US site rental revenue of $172.8 million. US site
rental gross margin increased 75.0% to $210.1 million, up $90.0 million in the fourth quarter of
2007 from the same period in 2006.
Australia site rental revenue for the fourth quarter of 2007 increased $6.9 million, or 49.9%,
to $20.8 million, compared to $13.9 million for the fourth quarter of 2006. Australia site rental
gross margin for the fourth quarter of 2007 increased $4.7 million, or 46.7%, to $14.7 million,
compared to fourth quarter 2006 site rental gross margin of $10.0 million.
| News Release continued: | Page 4 of 13 |
INVESTMENTS AND LIQUIDITY
During the fourth quarter of 2007, Crown Castle invested $108.7 million in capital
expenditures comprised of $8.2 million of sustaining capital expenditures and $100.5 million of
revenue generating capital expenditures, of which $17.9 million was spent on existing sites, $35.0
million on land purchases and $47.6 million on the acquisition of 25 towers and construction of new
sites, including the completion of 53 towers.
During the fourth quarter of 2007, Crown Castle purchased 3.2 million of its outstanding
common shares for $126.2 million at an average price of $38.97 per share. During the full year
2007, Crown Castle purchased 21.0 million of its outstanding common shares for $729.8 million at an
average price of $34.68 per share to reduce common shares outstanding by 8%. During the first
quarter of 2008 through February 6, 2008, Crown Castle purchased 1.1 million of its common shares
for $42.0 million at an average price of $36.99 per share. Since January 2003, Crown Castle has
invested over $2.2 billion in purchases of its securities to reduce fully diluted common shares by
88 million, or 29%.
Since October 1, 2007, Crown Castle has borrowed $150 million under its revolving credit
facility. As of February 6, 2008, Crown Castle has $100 million of undrawn capacity under its
revolving credit facility.
“During the last four months, we have continued our long-standing practice of investing
significantly in our tower business,” stated Ben Moreland, Chief Financial Officer of Crown Castle.
“The strong growth that we experienced in Adjusted EBITDA during the second half of 2007 moved us
within our targeted debt to Adjusted EBITDA leverage range of six to eight times, enabling us to
opportunistically borrow funds to make investments that we believe will maximize long-term
recurring cash flow per share. Consistent with our past actions, we have continued to evaluate and
invest in share repurchases, construction of new sites, tower acquisitions and land purchases,
which we believe will be long-term accretive to our business. The investment in our own towers via
share repurchases continues to be motivated by our expectation that we can grow recurring cash flow
per share 20% to 25% per year.”
| News Release continued: | Page 5 of 13 |
OUTLOOK
The following Outlook tables are based on current expectations and assumptions. The Outlook
tables assume a US dollar to Australian dollar exchange rate of 0.85 and 0.83 US dollars to 1.00
Australian dollar for first quarter and full year 2008 Outlook, respectively.
This Outlook section contains forward-looking statements, and actual results may differ
materially. Information regarding potential risks which could cause actual results to differ from
the forward-looking statements herein is set forth below and in Crown Castle’s filings with the
Securities and Exchange Commission (“SEC”).
The following table sets forth Crown Castle’s current Outlook for the first quarter of 2008
and full year 2008:
| (in millions, except per share amounts) | First Quarter 2008 | Full Year 2008 | ||
Site rental revenue
|
$336 to $341 | $1,377 to $1,392 | ||
Site rental cost of operations
|
$108 to $113 | $445 to $455 | ||
Site rental gross margin
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$226 to $231 | $930 to $940 | ||
Adjusted EBITDA
|
$205 to $210 | $850 to $862 | ||
Interest expense and amortization of deferred financing costs(a)
|
$89 to $91 | $355 to $360 | ||
Sustaining capital expenditures
|
$6 to $8 | $21 to $26 | ||
Recurring cash flow
|
$109 to $114 | $474 to $484 | ||
Net loss after deduction of dividends on preferred stock
|
$(41) to $(3) | $(118) to $(16) | ||
Net loss per share(b)
|
$(0.15) to $(0.01) | $(0.42) to $(0.06) |
| (a) | Inclusive of $6 million and $25 million, respectively, from non-cash expense. |
|
| (b) | Based on 280.3 million shares outstanding as of December 31, 2007. |
PRO FORMA CONSOLIDATED RESULTS
The following table provides investors with additional information and does not purport to
represent what the actual consolidated results of operations would have been for the quarter ended
December 31, 2006 and years ended December 31, 2006 and 2007, nor is the table necessarily
indicative of future consolidated results. The pro forma consolidated results are presented for
illustrative purposes only. Cost savings from the Merger are reflected in the periods in which
such savings are achieved. The following table contains pro forma Crown Castle results for the
quarter ended December 31, 2006 and the years ended December 31, 2006 and 2007, assuming the Merger
was completed on January 1 for each of the periods. As such, the pro forma results reflect
adjustments to straight-line revenue and straight-line ground lease expense.
| News Release continued: | Page 6 of 13 |
| Reported | Pro Forma | Pro Forma | Pro Forma | |||||||||||||
| Results | Results | Results | Results | |||||||||||||
| (in millions) | Q4 2007 | Q4 2006 | Full Year 2007 | Full Year 2006 | ||||||||||||
Site rental revenue |
$ | 337.5 | (1) | $ | 316.8 | (1) | $ | 1,302.2 | $ | 1,206.5 | ||||||
Site rental cost of operations |
$ | 112.7 | $ | 113.7 | $ | 450.5 | $ | 429.0 | ||||||||
Site rental gross margin |
$ | 224.8 | $ | 203.1 | $ | 851.7 | $ | 777.5 | ||||||||
| (1) | Includes out of run-rate site rental revenue items as indicated on page 3 of the
release in the “Pro Forma Results” section. |
CONFERENCE CALL DETAILS
Crown Castle has scheduled a conference call for Thursday, February 7, 2008, at 10:30 a.m.
eastern time to discuss the fourth quarter and full year 2007 results and Crown Castle’s Outlook.
Please dial 303-262-2191 and ask for the Crown Castle call at least 10 minutes prior to the start
time. A telephonic replay of the conference call will be available from 12:30 p.m. eastern time on
Thursday, February 7, 2008 through 11:59 p.m. eastern time on Thursday, February 14, 2008 and may
be accessed by dialing 303-590-3000 using passcode 11107434#. An audio archive will also be
available on Crown Castle’s website at http://www.crowncastle.com shortly after the call
and will be accessible for approximately 90 days.
Crown Castle engineers, deploys, owns and operates technologically advanced shared wireless
infrastructure, including extensive networks of towers. Crown Castle offers significant wireless
communications coverage to 91 of the top 100 US markets and to substantially all of the Australian
population. Crown Castle owns, operates and manages over 22,000 and over 1,300 wireless
communication sites in the US and Australia, respectively. For more information on Crown Castle,
please visit http://www.crowncastle.com.
Summary of Non-Cash Amounts in Tower Gross Margin
In accordance with applicable accounting standards, Crown Castle recognizes site rental revenues
and ground lease expenses monthly on a straight-line basis, regardless of whether the receipts and
payments are in equal monthly amounts. An agreement, related to an acquisition in Australia,
provides the seller with a rent-free period at the beginning of the lease term, and other
agreements call for rent to be prepaid for a specified period. If, and to the extent the payment
terms call for fixed escalations (as in fixed dollar or fixed percentage increases), the effect of
such
increases is recognized on a straight-line basis over the appropriate lease term. As a result of
this accounting method, a portion of the revenue and expense recognized in a given period
represents cash collected or paid in other periods.
| News Release continued: | Page 7 of 13 |
A summary of the non-cash portions of our site rental revenue, ground lease expense, stock-based
compensation for those employees directly related to US tower operations, net amortization of
below-market and above-market lease acquired, and resulting impact on site rental gross margins is
as follows:
| For the Three Months Ended | For the Twelve Months Ended | |||||||
| (in thousands) | December 31, 2007 | December 31, 2007 | ||||||
Non-cash portion of site rental revenue attributable to |
$ | 10,681 | $ | 42,921 | ||||
straight-line recognition of revenue
Non-cash portion of ground lease expense attributable |
(11,018 | ) | (41,040 | ) | ||||
to straight-line recognition of expenses
Stock-based compensation charges |
(109 | ) | (396 | ) | ||||
Net amortization of below-market and above-market leases |
166 | 638 | ||||||
Non-cash impact on site rental gross margin |
$ | (280 | ) | $ | 2,123 | |||
Non-GAAP Financial Measures
This press release includes presentations of Adjusted EBITDA and recurring cash flow, which are
non-GAAP financial measures.
Crown Castle defines Adjusted EBITDA as net income (loss) plus restructuring charges (credits),
asset write-down charges, integration costs, depreciation, amortization and accretion, losses on
purchases and redemptions of debt, interest and other income (expense), interest expense and
amortization of deferred financing costs, impairment of available-for-sale securities, benefit
(provision) for income taxes, minority interests, cumulative effect of change in accounting
principle, income (loss) from discontinued operations, and stock-based compensation charges.
Adjusted EBITDA is not intended as an alternative measure of cash flow from operations or operating
results (as determined in accordance with Generally Accepted Accounting Principles (“GAAP”)).
Crown Castle defines recurring cash flow to be Adjusted EBITDA, less interest expense and less
sustaining capital expenditures. Each of the amounts included in the calculation of recurring cash
flow are computed in accordance with GAAP, with the exception of sustaining capital expenditures,
which is not defined under GAAP. Sustaining capital expenditures are defined as capital
expenditures (determined in accordance with GAAP) which do not increase the capacity or life of an
asset. Recurring cash flow is not intended as an alternative measure of cash flow from operations
or operating results (as determined in accordance with GAAP).
Adjusted EBITDA and recurring cash flow are presented as additional information because management
believes these measures are useful indicators of the financial performance of our core businesses.
In addition, Adjusted EBITDA is a measure of current financial performance used in our debt
covenant calculations. Our measures of Adjusted EBITDA and recurring cash flow may not be
comparable to similarly titled measures of other companies, including companies in the tower
industry and in the historical financial statements of Global Signal. The tables set forth below
reconcile these non-GAAP financial measures to comparable GAAP financial measures.
| News Release continued: | Page 8 of 13 |
Reconciliations of Non-GAAP Financial Measures to Comparable GAAP Financial Measures:
Adjusted EBITDA, recurring cash flow and recurring cash flow per share for the quarters and
years ended December 31, 2007 and 2006 are computed as follows:
| For the Three Months Ended | For the Twelve Months Ended | |||||||||||||||
| December 31, | December 31, | December 31, | December 31, | |||||||||||||
| (in thousands, except per share amounts) | 2007 | 2006 | 2007 | 2006 | ||||||||||||
Net income (loss) |
$ | (80,169 | ) | $ | (6,275 | ) | $ | (222,813 | ) | $ | (41,893 | ) | ||||
Adjustments to increase (decrease) net income (loss): |
||||||||||||||||
Restructuring charges (credits) (a) |
— | (391 | ) | 3,191 | (391 | ) | ||||||||||
Asset write-down charges |
1,466 | 140 | 65,515 | 2,945 | ||||||||||||
Integration costs (a) |
6,752 | 1,503 | 25,418 | 1,503 | ||||||||||||
Depreciation, amortization and accretion |
132,347 | 71,618 | 539,904 | 285,244 | ||||||||||||
Losses on purchases and redemption of debt |
— | 4,666 | — | 5,843 | ||||||||||||
Interest and other income (expense) |
(181 | ) | (2,891 | ) | (9,351 | ) | 1,629 | |||||||||
Interest expense and amortization of deferred
financing costs |
90,047 | 46,163 | 350,259 | 162,328 | ||||||||||||
Impairment of available-for-sale securities |
75,623 | — | 75,623 | — | ||||||||||||
Benefit (provision) for income taxes |
(24,334 | ) | (855 | ) | (94,039 | ) | 843 | |||||||||
Minority interests |
— | (266 | ) | (151 | ) | (1,666 | ) | |||||||||
Income (loss) from discontinued operations, net of tax |
— | — | — | (5,657 | ) | |||||||||||
Stock-based compensation charges (c) |
7,674 | 3,095 | 25,087 | 16,718 | ||||||||||||
Adjusted EBITDA |
$ | 209,225 | $ | 116,507 | $ | 758,643 | $ | 427,446 | ||||||||
Less: Interest expense and amortization of deferred financing costs |
90,047 | 46,163 | 350,259 | 162,328 | ||||||||||||
Less: Sustaining capital expenditures |
8,238 | 2,852 | 23,318 | 9,306 | ||||||||||||
Recurring cash flow |
$ | 110,940 | $ | 67,492 | $ | 385,066 | $ | 255,812 | ||||||||
Weighted average common shares outstanding |
281,691 | 200,763 | 279,937 | 207,245 | ||||||||||||
Recurring cash flow per share |
$ | 0.39 | $ | 0.34 | $ | 1.38 | $ | 1.23 | ||||||||
Adjusted EBITDA and recurring cash flow for the quarter ending March 31, 2008 and the year
ending December 31, 2008 are forecasted as follows:
| Q1 2008 | Full Year 2008 | |||
| (in millions) | Outlook | Outlook | ||
Net income (loss) |
$(36) to $2 | $(97) to $5 | ||
Adjustments to increase (decrease) net income (loss): |
||||
Restructuring charges(a) |
— | — | ||
Asset write-down charges |
$0 to $3 | $5 to $10 | ||
Integration costs (a) |
$1 to $4 | $1 to $4 | ||
Depreciation, amortization and accretion |
$130 to $140 | $520 to $560 | ||
Losses on purchases and redemptions of debt |
— | — | ||
Interest and other income (expense) |
$(3) to $(1) | $(12) to $(7) | ||
Interest expense and amortization of deferred financing costs(b) |
$89 to $91 | $355 to $360 | ||
Benefit (provision) for income taxes |
$(14) to $(4) | $(35) to $(10) | ||
Minority interests |
— | — | ||
Income (loss) from discontinued operations, net of tax |
— | — | ||
Stock-based compensation charges(c) |
$5 to $8 | $23 to $30 | ||
Adjusted EBITDA |
$205 to $210 | $850 to $862 | ||
Less: Interest expense and amortization of deferred financing costs(b) |
$89 to $91 | $355 to $360 | ||
Less: Sustaining capital expenditures |
$6 to $8 | $21 to $26 | ||
Recurring cash flow |
$109 to $114 | $474 to $484 | ||
| (a) | Inclusive of stock-based compensation charges. |
|
| (b) | Inclusive of $6 million and $25 million, respectively, from non-cash expense. |
|
| (c) | Exclusive of amounts included in restructuring charges and integration costs. |
| News Release continued: | Page 9 of 13 |
Other Calculations:
Sustaining capital expenditures for the quarters and years ended December 31, 2007 and December
31, 2006 is computed as follows:
| For the Three Months Ended | For the Twelve Months Ended | |||||||||||||||
| December 31, | December 31, | December 31, | December 31, | |||||||||||||
| (in thousands) | 2007 | 2006 | 2007 | 2006 | ||||||||||||
Capital Expenditures |
$ | 108,747 | $ | 44,894 | $ | 300,005 | $ | 124,820 | ||||||||
Less: Revenue enhancing on existing sites |
17,913 | 10,419 | 45,818 | 36,378 | ||||||||||||
Less: Land purchases |
35,016 | 11,905 | 133,032 | 27,499 | ||||||||||||
Less: New site acquisition and construction |
47,580 | 19,718 | 97,837 | 51,637 | ||||||||||||
Sustaining capital expenditures |
$ | 8,238 | $ | 2,852 | $ | 23,318 | $ | 9,306 | ||||||||
Site rental gross margin for the quarter ending March 31, 2008 and for the year ending
December 31, 2008 is forecasted as follows:
| Q1 2008 | Full Year 2008 | ||||
| (in millions) | Outlook | Outlook | |||
Site rental revenue |
$336 to $341 | $1,377 to $1,392 | |||
Less: Site rental cost of operations |
$108 to $113 | $445 to $455 | |||
Site rental gross margin |
$226 to $231 | $930 to $940 | |||
Cautionary Language Regarding Forward-Looking Statements
This press release contains forward-looking statements and information that are based on our
management’s current expectations. Such statements include, but are not limited to, plans,
projections, Outlook and estimates regarding (i) the Merger and the related integration activities,
including timing and expected benefits derived therefrom, (ii) the impact of and benefits from our
portfolio of towers and actions taken to optimize our capital structure, (iii) recurring cash flow
(including recurring cash flow per share and annual growth), (iv) the impact of and return on our
investments, including the purchase of our securities, land purchases, and the construction and
acquisition of towers, (v) currency exchange rates, (vi) the utility of certain financial measures
in analyzing our results, (vii) site rental revenues, (viii) site rental cost of operations, (ix)
site rental gross margin, (x) Adjusted EBITDA, (xi) interest expense and amortization of deferred
financing costs, (xii) sustaining capital expenditures, and (xiii) net loss (including net loss per
share). Such forward-looking statements are subject to certain risks, uncertainties and
assumptions, including but not limited to prevailing market conditions and the following:
| • | Our business depends on the demand for wireless communications and towers, and we
may be adversely affected by any slowdown in such demand, including a slow down
attributable to wireless carrier consolidation or by the sharing of networks by
wireless carriers. |
| • | The loss or consolidation of, network sharing among, or financial instability of
any of our limited number of customers may materially decrease our revenues. |
| • | Our substantial level of indebtedness may adversely affect our ability to react to
changes in our business and limit our ability to use debt to fund future capital
needs. |
| • | An economic or wireless communications industry slowdown may materially and
adversely affect our business (including reducing demand for our towers and network
services) and the business of our customers. |
| • | We operate in a competitive industry, and some of our competitors have
significantly more resources or less debt than we do. |
| • | Technology changes may significantly reduce the demand for tower leases and
negatively impact the growth in our revenues. |
| • | New wireless technologies may not deploy or be adopted by customers as rapidly or
in the manner projected. |
| • | We generally lease or sublease the land under our towers and may not be able to extend these leases. |
| News Release continued: | Page 10 of 13 |
| • | We may need additional financing, which may not be available, for strategic growth opportunities. |
||
| • | FiberTower’s business has certain risk factors different from our core tower
business (including an unproven business model and the Risk Factors set forth in its
SEC filings) and may produce results that |
||
are less than anticipated, resulting in a write off of all or part of our investment in
FiberTower. In addition, FiberTower’s business may require additional financing which
may not be available. |
|||
| • | Our lease relating to our 1670-1675 MHz US nationwide spectrum license has certain
risk factors different from our core tower business, including that the spectrum lease
may not be renewed or continued, that the option to acquire the spectrum license may
not be exercised, and that the spectrum may not be deployed, which may result in the
revenues derived from the spectrum being less than anticipated. |
| • | Laws and regulations, which may change at any time and with which we may fail to
comply, regulate our business. |
| • | Sales or issuances of a substantial number of shares of our common stock may
adversely affect the market price of our common stock. |
| • | We are heavily dependent on our senior management. |
| • | Our network services business has historically experienced significant volatility
in demand, which reduces the predictability of our results. |
| • | We may suffer from future claims if radio frequency emissions from wireless
handsets or equipment on our towers are demonstrated to cause negative health effects. |
| • | Certain provisions of our certificate of incorporation, bylaws and operative
agreements and domestic and international competition laws may make it more difficult
for a third party to acquire control of us or for us to acquire control of a third
party, even if such a change in control would be beneficial to our stockholders. |
| • | Disputes with customers and suppliers may adversely affect results. |
| • | We may suffer losses due to exposure to changes in foreign currency exchange rates
relating to our operations outside the US |
Should one or more of these or other risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from those expected. More
information about potential risk factors which could affect our results is included in our filings
with the SEC.
| News Release continued: | Page 11 of 13 |
|
CROWN CASTLE INTERNATIONAL CORP. CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) AND OTHER FINANCIAL DATA (in thousands, except per share data) |
| Three Months Ended | Years Ended | |||||||||||||||
| December 31, | December, | |||||||||||||||
| 2007 | 2006 | 2007 | 2006 | |||||||||||||
Net revenues: |
||||||||||||||||
Site rental |
$ | 337,543 | $ | 186,672 | $ | 1,286,468 | $ | 696,724 | ||||||||
Network services and other |
37,620 | 24,169 | 99,018 | 91,497 | ||||||||||||
Total net revenues |
375,163 | 210,841 | 1,385,486 | 788,221 | ||||||||||||
Costs of operations (exclusive of depreciation, amortization and accretion): |
||||||||||||||||
Site rental |
112,718 | 56,576 | 443,342 | 212,454 | ||||||||||||
Network services and other |
22,258 | 16,106 | 65,742 | 60,507 | ||||||||||||
Total costs of operations |
134,976 | 72,682 | 509,084 | 272,961 | ||||||||||||
General and administrative |
38,636 | 24,747 | 142,846 | 104,532 | ||||||||||||
Restructuring charges (credits) |
— | (391 | ) | 3,191 | (391 | ) | ||||||||||
Asset write-down charges |
1,466 | 140 | 65,515 | 2,945 | ||||||||||||
Integration costs |
6,752 | 1,503 | 25,418 | 1,503 | ||||||||||||
Depreciation, amortization and accretion |
132,347 | 71,618 | 539,904 | 285,244 | ||||||||||||
Operating income (loss) |
60,986 | 40,542 | 99,528 | 121,427 | ||||||||||||
Losses on purchases and redemptions of debt |
— | (4,666 | ) | — | (5,843 | ) | ||||||||||
Interest and other income (expense) |
181 | 2,891 | 9,351 | (1,629 | ) | |||||||||||
Interest expense and amortization of deferred financing costs |
(90,047 | ) | (46,163 | ) | (350,259 | ) | (162,328 | ) | ||||||||
Impairment of available-for-sale securities |
(75,623 | ) | — | (75,623 | ) | — | ||||||||||
Income (loss) from continuing operations before income taxes and
minority interests |
(104,503 | ) | (7,396 | ) | (317,003 | ) | (48,373 | ) | ||||||||
Benefit (provision) for income taxes |
24,334 | 855 | 94,039 | (843 | ) | |||||||||||
Minority interests |
— | 266 | 151 | 1,666 | ||||||||||||
Income (loss) from continuing operations |
(80,169 | ) | (6,275 | ) | (222,813 | ) | (47,550 | ) | ||||||||
Income (loss) from discontinued operations, net of tax |
— | — | — | 5,657 | ||||||||||||
Net income (loss) |
(80,169 | ) | (6,275 | ) | (222,813 | ) | (41,893 | ) | ||||||||
Dividends on preferred stock . |
(5,201 | ) | (5,202 | ) | (20,805 | ) | (20,806 | ) | ||||||||
Net income (loss) after deduction of dividends on preferred stock |
$ | (85,370 | ) | $ | (11,477 | ) | $ | (243,618 | ) | $ | (62,699 | ) | ||||
Per common share — basic and diluted: |
||||||||||||||||
Income (loss) from continuing operations |
$ | (0.30 | ) | $ | (0.06 | ) | $ | (0.87 | ) | $ | (0.33 | ) | ||||
Income (loss) from discontinued operations |
— | — | — | 0.03 | ||||||||||||
Net income (loss) |
$ | (0.30 | ) | $ | (0.06 | ) | $ | (0.87 | ) | $ | (0.30 | ) | ||||
Weighted average common shares outstanding — basic and diluted |
281,691 | 200,763 | 279,937 | 207,245 | ||||||||||||
Adjusted EBITDA |
$ | 209,225 | $ | 116,507 | $ | 758,643 | $ | 427,446 | ||||||||
Stock-based compensation expenses: |
||||||||||||||||
Site rental cost of operations |
$ | 109 | $ | 58 | $ | 396 | $ | 174 | ||||||||
Network services and other cost of operations |
98 | 58 | 371 | 198 | ||||||||||||
General and administrative |
7,467 | 2,979 | 24,320 | 16,346 | ||||||||||||
Restructuring charges |
— | — | 2,377 | — | ||||||||||||
Integration costs |
— | — | 790 | — | ||||||||||||
Total |
$ | 7,674 | $ | 3,095 | $ | 28,254 | $ | 16,718 | ||||||||
| News Release continued: | Page 12 of 13 |
|
|
CROWN CASTLE INTERNATIONAL CORP. CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) (in thousands) |
| December 31, | December 31, | |||||||
| 2007 | 2006 | |||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 75,245 | $ | 592,716 | ||||
Restricted cash |
165,556 | 115,503 | ||||||
Receivables, net of allowance for doubtful accounts |
37,134 | 30,774 | ||||||
Deferred income tax asset |
113,492 | 1,980 | ||||||
Prepaid expenses and other current assets |
104,331 | 60,350 | ||||||
Total current assets |
495,758 | 801,323 | ||||||
Restricted cash |
5,000 | 5,000 | ||||||
Deferred site rental receivable |
127,388 | 98,527 | ||||||
Available-for-sale securities |
60,085 | 154,955 | ||||||
Property and equipment, net |
5,051,055 | 3,246,446 | ||||||
Goodwill |
1,996,692 | 391,448 | ||||||
Other intangible assets, net |
2,676,288 | 235,379 | ||||||
Deferred financing costs and other assets, net of accumulated amortization |
100,561 | 74,386 | ||||||
| $ | 10,512,827 | $ | 5,007,464 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 37,366 | $ | 18,545 | ||||
Deferred rental revenues and other accrued liabilities |
254,924 | 182,250 | ||||||
Current maturities of long-term debt |
81,500 | — | ||||||
Total current liabilities |
373,790 | 200,795 | ||||||
Long-term debt, less current maturities |
5,987,695 | 3,513,890 | ||||||
Deferred income tax liability |
304,150 | 1,296 | ||||||
Other liabilities |
366,483 | 193,279 | ||||||
Total liabilities |
7,032,118 | 3,909,260 | ||||||
Minority interests |
— | 29,052 | ||||||
Redeemable preferred stock |
313,798 | 312,871 | ||||||
Stockholders’ equity |
3,166,911 | 756,281 | ||||||
| $ | 10,512,827 | $ | 5,007,464 | |||||
| News Release continued: | Page 13 of 13 |
|
|
CROWN CASTLE INTERNATIONAL CORP. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) (in thousands) |
| Twelve Months Ended | ||||||||
| December 31, | ||||||||
| 2007 | 2006 | |||||||
Cash flows from operating activities: |
||||||||
Net income (loss) |
$ | (222,813 | ) | $ | (41,893 | ) | ||
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating
activities: |
||||||||
Depreciation, amortization and accretion |
539,904 | 285,244 | ||||||
Asset write-down charges |
65,515 | 2,945 | ||||||
Deferred income tax (benefit) provision |
(100,718 | ) | (2,303 | ) | ||||
Impairment of available-for-sale securities |
75,623 | — | ||||||
Other adjustments, net |
53,648 | 35,633 | ||||||
Changes in assets and liabilities, excluding the effects of acquisitions: |
||||||||
Increase (decrease) in liabilities |
7,841 | 33,853 | ||||||
Decrease (increase) in assets |
(68,645 | ) | (37,720 | ) | ||||
Net cash provided by (used for) operating activities |
350,355 | 275,759 | ||||||
Cash flows from investing activities: |
||||||||
Proceeds from investments and disposition of property and equipment |
3,664 | 2,282 | ||||||
Payments for acquisitions (net of cash acquired) of businesses |
(494,352 | ) | (303,611 | ) | ||||
Capital expenditures |
(300,005 | ) | (124,820 | ) | ||||
Investments and loans |
(755 | ) | (6,350 | ) | ||||
Net cash provided by (used for) investing activities |
(791,448 | ) | (432,499 | ) | ||||
Cash flows from financing activities: |
||||||||
Proceeds from issuance of long-term debt |
650,000 | 2,550,000 | ||||||
Proceeds from issuance of capital stock |
31,176 | 45,540 | ||||||
Principal payments on long-term debt |
(4,875 | ) | (1,000,585 | ) | ||||
Purchases and redemptions of long-term debt |
— | (12,108 | ) | |||||
Payments under revolving credit agreements |
— | (295,000 | ) | |||||
Purchases of capital stock |
(729,811 | ) | (518,028 | ) | ||||
Borrowings under revolving credit agreements |
75,000 | — | ||||||
Incurrence of financing costs |
(9,108 | ) | (36,918 | ) | ||||
Initial funding of restricted cash |
— | (4,321 | ) | |||||
Net decrease (increase) in restricted cash |
(33,089 | ) | (20,429 | ) | ||||
Interest rate swap receipts (payments) |
— | (9,360 | ) | |||||
Dividends on preferred stock |
(19,879 | ) | (19,877 | ) | ||||
Capital distribution to minority interest holders of CCAL |
(37,196 | ) | — | |||||
Net cash provided by (used for) financing activities |
(77,782 | ) | 678,914 | |||||
Effect of exchange rate changes on cash |
1,404 | (523 | ) | |||||
Cash flows from discontinued operations |
— | 5,657 | ||||||
Net increase (decrease) in cash and cash equivalents |
(517,471 | ) | 527,308 | |||||
Cash and cash equivalents at beginning of period |
592,716 | 65,408 | ||||||
Cash and cash equivalents at end of period |
$ | 75,245 | $ | 592,716 | ||||
Supplemental disclosure of cash flow information: |
||||||||
Interest paid |
$ | 324,605 | $ | 145,528 | ||||
Income taxes paid |
4,218 | 3,378 | ||||||
CROWN CASTLE INTERNATIONAL CORP.
Summary Fact Sheet
(dollars in thousands)
Summary Fact Sheet
(dollars in thousands)
| Quarter Ended 3/31/07 | Quarter Ended 6/30/07 | Quarter Ended 9/30/07 | Quarter Ended 12/31/07 | |||||||||||||||||||||||||||||||||||||||||||||
| CCUSA | CCAL | CCIC | CCUSA | CCAL | CCIC | CCUSA | CCAL | CCIC | CCUSA | CCAL | CCIC | |||||||||||||||||||||||||||||||||||||
Revenues |
||||||||||||||||||||||||||||||||||||||||||||||||
Site Rental |
$ | 284,752 | $ | 15,040 | $ | 299,792 | $ | 303,665 | $ | 18,671 | $ | 322,336 | $ | 309,798 | $ | 16,999 | $ | 326,797 | $ | 316,750 | $ | 20,793 | $ | 337,543 | ||||||||||||||||||||||||
Services |
14,146 | 1,771 | 15,917 | 18,652 | 1,882 | 20,534 | 23,035 | 1,912 | 24,947 | 33,873 | 3,747 | 37,620 | ||||||||||||||||||||||||||||||||||||
Total Revenues |
298,898 | 16,811 | 315,709 | 322,317 | 20,553 | 342,870 | 332,833 | 18,911 | 351,744 | 350,623 | 24,540 | 375,163 | ||||||||||||||||||||||||||||||||||||
Operating Expenses |
||||||||||||||||||||||||||||||||||||||||||||||||
Site Rental |
101,878 | 4,717 | 106,595 | 106,979 | 5,187 | 112,166 | 106,014 | 5,849 | 111,863 | 106,636 | 6,082 | 112,718 | ||||||||||||||||||||||||||||||||||||
Services |
10,650 | 1,123 | 11,773 | 13,608 | 1,071 | 14,679 | 15,864 | 1,168 | 17,032 | 19,906 | 2,352 | 22,258 | ||||||||||||||||||||||||||||||||||||
Total Operating Expenses |
112,528 | 5,840 | 118,368 | 120,587 | 6,258 | 126,845 | 121,878 | 7,017 | 128,895 | 126,542 | 8,434 | 134,976 | ||||||||||||||||||||||||||||||||||||
General & Administrative |
31,333 | 3,669 | 35,002 | 33,064 | 3,263 | 36,327 | 29,319 | 3,562 | 32,881 | 32,392 | 6,244 | 38,636 | ||||||||||||||||||||||||||||||||||||
Operating Cash Flow |
155,037 | 7,302 | 162,339 | 168,666 | 11,032 | 179,698 | 181,636 | 8,332 | 189,968 | 191,689 | 9,862 | 201,551 | ||||||||||||||||||||||||||||||||||||
Add: Stock-Based Compensation (a) |
3,586 | 1,333 | 4,919 | 6,252 | 430 | 6,682 | 5,373 | 439 | 5,812 | 5,164 | 2,510 | 7,674 | ||||||||||||||||||||||||||||||||||||
Adjusted EBITDA |
$ | 158,623 | $ | 8,635 | $ | 167,258 | $ | 174,918 | $ | 11,462 | $ | 186,380 | $ | 187,009 | $ | 8,771 | $ | 195,780 | $ | 196,853 | $ | 12,372 | $ | 209,225 | ||||||||||||||||||||||||
| (a) | Exclusive of charges included in restructuring charges
and integration costs. |
| Quarter Ended 3/31/07 | Quarter Ended 6/30/07 | Quarter Ended 9/30/07 | Quarter Ended 12/31/07 | |||||||||||||||||||||||||||||||||||||||||||||
| CCUSA | CCAL | CCIC | CCUSA | CCAL | CCIC | CCUSA | CCAL | CCIC | CCUSA | CCAL | CCIC | |||||||||||||||||||||||||||||||||||||
Gross Margins: |
||||||||||||||||||||||||||||||||||||||||||||||||
Site Rental |
65 | % | 69 | % | 64 | % | 65 | % | 72 | % | 65 | % | 66 | % | 66 | % | 66 | % | 66 | % | 71 | % | 67 | % | ||||||||||||||||||||||||
Services |
25 | % | 37 | % | 26 | % | 27 | % | 43 | % | 29 | % | 31 | % | 39 | % | 32 | % | 41 | % | 37 | % | 41 | % | ||||||||||||||||||||||||
Operating Cash Flow Margins |
53 | % | 43 | % | 52 | % | 52 | % | 54 | % | 52 | % | 55 | % | 44 | % | 54 | % | 55 | % | 40 | % | 54 | % | ||||||||||||||||||||||||
Adjusted EBITDA Margin |
54 | % | 51 | % | 53 | % | 54 | % | 56 | % | 54 | % | 56 | % | 46 | % | 56 | % | 56 | % | 50 | % | 56 | % | ||||||||||||||||||||||||
Reconciliation of Non-GAAP Financial Measure (Adjusted EBITDA) to GAAP Financial Measure:
(dollars in thousands)
(dollars in thousands)
| Quarter Ended | ||||||||||||||||
| 3/31/2007 | 6/30/2007 | 9/30/2007 | 12/31/2007 | |||||||||||||
Net income (loss) |
$ | (42,891 | ) | $ | (32,740 | ) | $ | (67,013 | ) | $ | (80,169 | ) | ||||
Adjustments to increase (decrease) net income (loss): |
||||||||||||||||
Restructuring charges (credits) (1) |
— | — | 3,191 | — | ||||||||||||
Asset write-down charges |
1,352 | 3,391 | 59,306 | 1,466 | ||||||||||||
Integration costs (1) |
8,848 | 5,069 | 4,749 | 6,752 | ||||||||||||
Depreciation, amortization and accretion |
138,693 | 133,324 | 135,540 | 132,347 | ||||||||||||
Losses on purchases and redemptions of debt |
— | — | — | — | ||||||||||||
Interest and other income (expense) |
(3,299 | ) | (2,906 | ) | (2,965 | ) | (181 | ) | ||||||||
Interest expense, amortization of deferred
financing costs |
82,015 | 88,790 | 89,407 | 90,047 | ||||||||||||
Impairment of available-for-sale securities |
— | — | — | 75,623 | ||||||||||||
Benefit (provision) for income taxes |
(22,162 | ) | (15,620 | ) | (31,923 | ) | (24,334 | ) | ||||||||
Minority interests |
(217 | ) | 390 | (324 | ) | — | ||||||||||
Cumulative effect of change in accounting principle |
— | — | — | — | ||||||||||||
Income (loss) from discontinued operations, net of
tax |
— | — | — | — | ||||||||||||
Stock-based compensation (2) |
4,919 | 6,682 | 5,812 | 7,674 | ||||||||||||
Adjusted EBITDA |
$ | 167,258 | $ | 186,380 | $ | 195,780 | $ | 209,225 | ||||||||
| (1) | Inclusive of stock-based compensation charges |
|
| (2) | Exclusive of amounts included in restructuring charges (credits) and integration costs |
CCI FACT SHEET Q4 2006 to Q4 2007
dollars in thousands
dollars in thousands
| Q4 '06 | Q4 '07 | % Change | ||||||||||
CCUSA |
||||||||||||
Site Rental Revenue |
$ | 172,801 | $ | 316,750 | 83 | % | ||||||
Ending Sites |
11,525 | 22,405 | 94 | % | ||||||||
CCAL |
||||||||||||
Site Rental Revenue |
$ | 13,871 | $ | 20,793 | 50 | % | ||||||
Ending Sites |
1,387 | 1,441 | 4 | % | ||||||||
TOTAL CCIC |
||||||||||||
Site Rental Revenue |
$ | 186,672 | $ | 337,543 | 81 | % | ||||||
Ending Sites |
12,912 | 23,846 | 85 | % | ||||||||
Ending Cash and Cash Equivalents |
$ | 592,716 | * | $ | 75,245 | * | ||||||
Debt |
||||||||||||
Bank Debt |
$ | 0 | $ | 720,125 | ||||||||
Securitized Debt & Other Notes |
$ | 3,513,890 | $ | 5,349,070 | ||||||||
6 1/4% Convertible Preferred Stock |
$ | 312,871 | $ | 313,798 | ||||||||
Total Debt |
$ | 3,826,761 | $ | 6,382,993 | ||||||||
Leverage Ratios |
||||||||||||
Net Bank Debt + Bonds / EBITDA |
6.3X | 7.2X | ||||||||||
Total Net Debt / EBITDA |
6.9X | 7.5X | ||||||||||
Last Quarter Annualized Adjusted EBITDA |
$ | 466,028 | $ | 836,900 | ||||||||
*Excludes Restricted Cash