Document


 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 18, 2018
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 600
 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))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

 






ITEM 2.02 — RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On July 18, 2018, Crown Castle International Corp. ("Company") issued a press release disclosing its financial results for second quarter 2018. The July 18, 2018 press release is furnished herewith as Exhibit 99.1.
ITEM 7.01 — REGULATION FD DISCLOSURE
The press release referenced in Item 2.02 above refers to certain supplemental information that was posted as a supplemental information package on the Company's website on July 18, 2018. The supplemental information package is furnished herewith as Exhibit 99.2.
ITEM 9.01 — FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits
Exhibit Index
As described in Item 2.02 and 7.01 of this Current Report on Form 8-K ("Form 8-K"), the following exhibits are furnished as part of this Form 8-K:
Exhibit No.
 
Description
99.1
 
99.2
 
The information in this Form 8-K and Exhibits 99.1 and 99.2 attached hereto shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended ("Exchange Act"), or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

1



SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
 
CROWN CASTLE INTERNATIONAL CORP. 
 
 
By:  
/s/ Kenneth J. Simon
 
 
 
Name:  
Kenneth J. Simon 
 
 
 
Title:
Senior Vice President
and General Counsel 
 
Date: July 18, 2018


2
Exhibit
Exhibit 99.1

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12360806&doc=22
 
NEWS RELEASE
July 18, 2018

 
 
Contacts: Dan Schlanger, CFO and Treasurer
 
Ben Lowe, VP Corporate Finance
FOR IMMEDIATE RELEASE
Crown Castle International Corp.
 
713-570-3050

CROWN CASTLE REPORTS SECOND QUARTER 2018 RESULTS AND RAISES OUTLOOK FOR FULL YEAR 2018

July 18, 2018 - HOUSTON, TEXAS - Crown Castle International Corp. (NYSE: CCI) ("Crown Castle") today reported results for the quarter ended June 30, 2018.
"We delivered another terrific quarter of results, and remain on track to generate attractive growth in cash flows and dividends per share for the full year 2018," stated Jay Brown, Crown Castle’s Chief Executive Officer. "Over the past two decades, we have built and acquired an unmatched portfolio of more than 40,000 towers and 60,000 route miles of dense, high capacity fiber in the top U.S. markets, where we see the greatest long-term demand from multiple customers. We believe our ability to offer towers, small cells and fiber solutions, which are all integral components of communications networks, is the best strategy to pursue this significant growth opportunity while generating high returns for our shareholders by sharing our assets among multiple tenants.  Based on our experience, we believe that the U.S. represents the best market in the world for communications infrastructure ownership and we have a differentiated strategy to pursue that compelling opportunity.  With the positive momentum we continue to see in our towers and fiber segments, we remain dedicated to investing in our business to generate future growth while delivering near-term dividend per share growth of 7% to 8% per year."

RESULTS FOR THE QUARTER
The table below sets forth select financial results for the three month period ended June 30, 2018 and 2017. For further information, refer to the financial statements and non-GAAP, segment and other calculation reconciliations included in this press release.
(in millions)
Actual
Midpoint Q2 2018 Outlook(b)
Actual Compared to Outlook
Q2 2018
Q2 2017
Change
% Change
Site rental revenues
$1,169
$869
+$300
+35%
$1,158
+$11
Net income (loss)
$180
$112
+$68
+61%
$152
+$28
Adjusted EBITDA(a)
$769
$589
+$180
+31%
$762
+$7
AFFO(a)(c)
$546
$440
+$106
+24%
$544
+$2
Weighted-average common shares outstanding - diluted
416
366
+50
+14%
416
Note: Figures may not tie due to rounding.
(a)
See reconciliation of this non-GAAP financial measure to net income (loss) and definition included herein.
(b)
As issued on April 18, 2018.
(c)
Attributable to CCIC common stockholders.


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News Release continued:
 
Page 2

HIGHLIGHTS FROM THE QUARTER
Site rental revenues. Site rental revenues grew approximately 35%, or $300 million, from second quarter 2017 to second quarter 2018, inclusive of approximately $49 million in Organic Contribution to Site Rental Revenues plus $231 million in contributions from acquisitions and other items, plus a $20 million increase in straight-lined revenues. The $49 million in Organic Contribution to Site Rental Revenues represents approximately 5.6% growth, comprised of approximately 8% growth from new leasing activity and contracted tenant escalations, net of approximately 2.5% from tenant non-renewals. When compared to the prior second quarter 2018 Outlook, site rental revenues benefited by approximately $9 million of additional straight-lined revenues primarily resulting from term extensions associated with leasing activity.
Net income. Net income for second quarter 2018 was $180 million, compared to $112 million during the same period a year ago.
Adjusted EBITDA. When compared to the second quarter 2018 Outlook, Adjusted EBITDA benefited by approximately $9 million of additional straight-lined revenues, partially offset by the timing of certain network services contribution that is now expected to contribute to Adjusted EBITDA during the remainder of 2018.
Capital expenditures. Capital expenditures during the quarter were $393 million, comprised of $10 million of land purchases, $26 million of sustaining capital expenditures, $356 million of revenue generating capital expenditures and $1 million of integration capital expenditures.
Common stock dividend. During the quarter, Crown Castle paid common stock dividends of $1.05 per common share, an increase of approximately 11% compared to the same period a year ago.
Financing activities. During the quarter, Crown Castle increased the commitments under its Senior Unsecured Revolving Credit Facility by $750 million and extended the maturity date on its Senior Unsecured Credit Facility to June 2023. In July, Crown Castle issued $1.0 billion of Senior Secured Tower Revenue Notes with net proceeds from the offering and cash on hand used to retire $1.0 billion of existing Senior Secured Tower Revenue Notes. With these financings, the weighted average maturity of outstanding debt was extended to 6.5 years while the weighted average interest rate was reduced to 3.9%.

"The momentum we see across the business has translated into solid financial results and an 11% year-over-year growth in dividends per share during the first half of 2018, demonstrating how well positioned Crown Castle is to capitalize on the positive tailwinds creating demand for our communications infrastructure," stated Dan Schlanger, Crown Castle's Chief Financial Officer. "With our recent refinancings, we have increased our financial flexibility, positioning us to continue to invest in our business and create significant value for our shareholders by leveraging our leading portfolio of towers and high-capacity fiber assets."



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News Release continued:
 
Page 3

OUTLOOK
This Outlook section contains forward-looking statements, and actual results may differ materially. Information regarding potential risks which could cause actual results to differ from the forward-looking statements herein is set forth below and in Crown Castle's filings with the Securities and Exchange Commission ("SEC").
The following table sets forth Crown Castle's current Outlook for third quarter 2018 and full year 2018:
(in millions)
Third Quarter 2018
Full Year 2018
Site rental revenues
$1,172
to
$1,182
$4,673
to
$4,703
Site rental cost of operations(a)
$345
to
$355
$1,382
to
$1,412
Net income (loss)
$126
to
$151
$603
to
$663
Adjusted EBITDA(b)
$785
to
$795
$3,132
to
$3,162
Interest expense and amortization of deferred financing costs(c)
$156
to
$166
$627
to
$657
FFO(b)(d)
$490
to
$500
$2,014
to
$2,044
AFFO(b)(d)
$568
to
$578
$2,263
to
$2,293
Weighted-average common shares outstanding - diluted(e)
416
415
(a)
Exclusive of depreciation, amortization and accretion.
(b)
See reconciliation of this non-GAAP financial measure to net income (loss) and definition included herein.
(c)
See reconciliation of "components of interest expense and amortization of deferred financing costs" herein for a discussion of non-cash interest expense.
(d)
Attributable to CCIC common stockholders.
(e)
The assumption for third quarter 2018 and full year 2018 diluted weighted-average common shares outstanding is based on the diluted common shares outstanding as of June 30, 2018. For all periods presented, the diluted weighted-average common shares outstanding does not include any assumed conversion of preferred stock in the share count.

Compared to second quarter 2018, the midpoints of third quarter 2018 Outlook for Adjusted EBITDA and AFFO are expected to benefit from a higher network services contribution and lower cash tax payments.

Full Year 2018 Outlook
The table below compares the results for full year 2017, midpoint of the current full year 2018 Outlook and the midpoint of the previously provided full year 2018 Outlook for select metrics.
 
Midpoint of FY 2018 Outlook to FY 2017 Actual Comparison
 
 
(in millions)
Current
Full Year
2018 Outlook
Full Year
2017 Actual
Change
% Change
Previous Full Year 2018 Outlook(d)
Current Compared to Previous Outlook
Site rental revenues
$4,688
$3,669
+$1,019
+28%
$4,662
+$26
Net income (loss)
$633
$445
+$188
+42%
$629
+$4
Adjusted EBITDA(a)
$3,147
$2,482
+$665
+27%
$3,120
+$27
AFFO(a)(b)
$2,278
$1,860
+$418
+22%
$2,278
Weighted-average common shares outstanding - diluted(c)
415
383
+32
+8%
415
(a)
See reconciliation of this non-GAAP financial measure to net income (loss) and definition included herein.
(b)
Attributable to CCIC common stockholders.
(c)
The assumption for full year 2018 diluted weighted-average common shares outstanding is based on diluted common shares outstanding as of June 30, 2018. For all periods presented, the diluted weighted-average common shares outstanding does not include any assumed conversion of preferred stock in the share count.
(d)
As issued on April 18, 2018.



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News Release continued:
 
Page 4

The chart below reconciles the components of expected growth in site rental revenues from 2017 to 2018 of $1,005 million to $1,035 million, inclusive of expected Organic Contribution to Site Rental Revenues during 2018 of $190 million to $220 million.
The increases in full year 2018 Outlook reflect a higher expected contribution from straight-lined revenues. The increase to expected straight-lined revenues primarily reflects the impact of term extensions associated with leasing activity.
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12360806&doc=23
For the above chart, the entire expected contribution to full year 2018 Outlook for growth in site rental revenues from Lightower is included within acquisitions.


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News Release continued:
 
Page 5

The chart below reconciles the components of expected growth in AFFO from 2017 to 2018 of $400 million to $430 million.

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12360806&doc=4
Additional information is available in Crown Castle's quarterly Supplemental Information Package posted in the Investors section of its website.

CONFERENCE CALL DETAILS
Crown Castle has scheduled a conference call for Thursday, July 19, 2018, at 10:30 a.m. Eastern time to discuss its second quarter 2018 results. The conference call may be accessed by dialing 877-260-1479 and asking for the Crown Castle call (access code 9212580) at least 30 minutes prior to the start time. The conference call may also be accessed live over the Internet at http://investor.crowncastle.com. Supplemental materials for the call have been posted on the Crown Castle website at http://investor.crowncastle.com.
A telephonic replay of the conference call will be available from 1:30 p.m. Eastern time on Thursday, July 19, 2018, through 1:30 p.m. Eastern time on Wednesday, October 17, 2018, and may be accessed by dialing 888-203-1112 and using access code 9212580. An audio archive will also be available on the company's website at http://investor.crowncastle.com shortly after the call and will be accessible for approximately 90 days.

ABOUT CROWN CASTLE
Crown Castle owns, operates and leases more than 40,000 cell towers and approximately 60,000 route miles of fiber supporting small cells and fiber solutions across every major U.S. market. This nationwide portfolio of communications infrastructure connects cities and communities to essential data, technology and wireless service - bringing information, ideas and innovations to the people and businesses that need them. For more information on Crown Castle, please visit www.crowncastle.com.

The pathway to possible.
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News Release continued:
 
Page 6

Non-GAAP Financial Measures, Segment Measures and Other Calculations
This press release includes presentations of Adjusted EBITDA, Adjusted Funds from Operations ("AFFO"), Funds from Operations ("FFO") and Organic Contribution to Site Rental Revenues, which are non-GAAP financial measures. These non-GAAP financial measures are not intended as alternative measures of operating results or cash flow from operations (as determined in accordance with Generally Accepted Accounting Principles ("GAAP")).
Our measures of Adjusted EBITDA, AFFO, FFO and Organic Contribution to Site Rental Revenues may not be comparable to similarly titled measures of other companies, including other companies in the communications infrastructure sector or other real estate investment trusts ("REITs"). Our definition of FFO is consistent with guidelines from the National Association of Real Estate Investment Trusts with the exception of the impact of income taxes in periods prior to our REIT conversion in 2014.
In addition to the non-GAAP financial measures used herein, we also provide Segment Site Rental Gross Margin, Segment Network Services and Other Gross Margin and Segment Operating Profit, which are key measures used by management to evaluate our operating segments for purposes of making decisions about allocating capital and assessing performance. These segment measures are provided pursuant to GAAP requirements related to segment reporting. In addition, we provide the components of certain GAAP measures, such as capital expenditures.
Adjusted EBITDA, AFFO, FFO and Organic Contribution to Site Rental Revenues are presented as additional information because management believes these measures are useful indicators of the financial performance of our business. Among other things, management believes that:
Adjusted EBITDA is useful to investors or other interested parties in evaluating our financial performance. Adjusted EBITDA is the primary measure used by management (1) to evaluate the economic productivity of our operations and (2) for purposes of making decisions about allocating resources to, and assessing the performance of, our operations. Management believes that Adjusted EBITDA helps investors or other interested parties meaningfully evaluate and compare the results of our operations (1) from period to period and (2) to our competitors, by removing the impact of our capital structure (primarily interest charges from our outstanding debt) and asset base (primarily depreciation, amortization and accretion) from our financial results. Management also believes Adjusted EBITDA is frequently used by investors or other interested parties in the evaluation of the communications infrastructure sector and other REITs to measure financial performance without regard to items such as depreciation, amortization and accretion which can vary depending upon accounting methods and the book value of assets. In addition, Adjusted EBITDA is similar to the measure of current financial performance generally used in our debt covenant calculations. Adjusted EBITDA should be considered only as a supplement to net income computed in accordance with GAAP as a measure of our performance.
AFFO is useful to investors or other interested parties in evaluating our financial performance. Management believes that AFFO helps investors or other interested parties meaningfully evaluate our financial performance as it includes (1) the impact of our capital structure (primarily interest expense on our outstanding debt and dividends on our preferred stock) and (2) sustaining capital expenditures, and excludes the impact of our (a) asset base (primarily depreciation, amortization and accretion) and (b) certain non-cash items, including straight-lined revenues and expenses related to fixed escalations and rent free periods. GAAP requires rental revenues and expenses related to leases that contain specified rental increases over the life of the lease to be recognized evenly over the life of the lease. In accordance with GAAP, if payment terms call for fixed escalations, or rent free periods, the revenue or expense is recognized on a straight-lined basis over the fixed, non-cancelable term of the contract. Management notes that Crown Castle uses AFFO only as a performance measure. AFFO should be considered only as a supplement to net income computed in accordance with GAAP as a measure of our performance and should not be considered as an alternative to cash flows from operations or as residual cash flow available for discretionary investment.
FFO is useful to investors or other interested parties in evaluating our financial performance. Management believes that FFO may be used by investors or other interested parties as a basis to compare our financial performance with that of other REITs. FFO helps investors or other interested parties meaningfully evaluate financial performance by excluding the impact of our asset base (primarily depreciation, amortization and accretion). FFO is not a key performance indicator used by Crown Castle. FFO should be considered only as a supplement to net income computed in accordance with GAAP as a measure of our performance and should not be considered as an alternative to cash flow from operations.

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News Release continued:
 
Page 7

Organic Contribution to Site Rental Revenues is useful to investors or other interested parties in understanding the components of the year-over-year changes in our site rental revenues computed in accordance with GAAP. Management uses the Organic Contribution to Site Rental Revenues to assess year-over-year growth rates for our rental activities, to evaluate current performance, to capture trends in rental rates, new leasing activities and customer non-renewals in our core business, as well to forecast future results. Organic Contribution to Site Rental Revenues is not meant as an alternative measure of revenue and should be considered only as a supplement in understanding and assessing the performance of our site rental revenues computed in accordance with GAAP.
We define our non-GAAP financial measures, segment measures and other calculations as follows:
Non-GAAP Financial Measures
Adjusted EBITDA. We define Adjusted EBITDA as net income (loss) plus restructuring charges (credits), asset write-down charges, acquisition and integration costs, depreciation, amortization and accretion, amortization of prepaid lease purchase price adjustments, interest expense and amortization of deferred financing costs, (gains) losses on retirement of long-term obligations, net (gain) loss on interest rate swaps, (gains) losses on foreign currency swaps, impairment of available-for-sale securities, interest income, other (income) expense, (benefit) provision for income taxes, cumulative effect of a change in accounting principle, (income) loss from discontinued operations and stock-based compensation expense.
Adjusted Funds from Operations. We define Adjusted Funds from Operations as FFO before straight-lined revenue, straight-lined expense, stock-based compensation expense, non-cash portion of tax provision, non-real estate related depreciation, amortization and accretion, amortization of non-cash interest expense, other (income) expense, (gains) losses on retirement of long-term obligations, net (gain) loss on interest rate swaps, (gains) losses on foreign currency swaps, acquisition and integration costs, and adjustments for noncontrolling interests, and less sustaining capital expenditures (comprised of capital improvement capital expenditures and corporate capital expenditures).
Funds from Operations. We define Funds from Operations as net income plus real estate related depreciation, amortization and accretion and asset write-down charges, less noncontrolling interest and cash paid for preferred stock dividends, and is a measure of funds from operations attributable to CCIC common stockholders.
Organic Contribution to Site Rental Revenues. We define the Organic Contribution to Site Rental Revenues as the sum of the change in GAAP site rental revenues related to (1) new leasing activity, including revenues from the construction of small cells and the impact of prepaid rent, (2) escalators and less (3) non-renewals of customer contracts.
Segment Measures
Segment Site Rental Gross Margin. We define Segment Site Rental Gross Margin as segment site rental revenues less segment site rental cost of operations, excluding stock-based compensation expense and prepaid lease purchase price adjustments recorded in consolidated site rental cost of operations.
Segment Network Services and Other Gross Margin. We define Segment Network Services and Other Gross Margin as segment network services and other revenues less segment network services and other cost of operations, excluding stock-based compensation expense recorded in consolidated network services and other cost of operations.
Segment Operating Profit. We define Segment Operating Profit as segment site rental gross margin plus segment network services and other gross margin, less general and administrative expenses attributable to the respective segment.
Other Calculations
Discretionary capital expenditures. We define discretionary capital expenditures as those capital expenditures made with respect to activities which we believe exhibit sufficient potential to enhance long-term stockholder value. They consist of expansion or development of existing communications infrastructure, construction of new communications infrastructure, and, to a lesser extent, purchases of land interests (which primarily relate to land assets under towers as we seek to manage our interests in the land beneath our towers) and other capital projects.
Sustaining capital expenditures. We define sustaining capital expenditures as those capital expenditures made with respect to either (1) corporate capital expenditures or (2) capital improvement capital expenditures on our communications infrastructure assets that enable our customers' ongoing quiet enjoyment of the communications infrastructure.
Integration capital expenditures. We define integration capital expenditures as those capital expenditures made specifically with respect to recent acquisitions that are essential to integrating acquired companies into our business.

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Page 8

The tables set forth below reconcile the non-GAAP financial measures used herein to comparable GAAP financial measures. The components in these tables may not sum to the total due to rounding. The Company has changed its presentation to millions and, as a result, any necessary rounding adjustments have been made to prior year disclosed amounts.


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Page 9

Reconciliations of Non-GAAP Financial Measures, Segment Measures and Other Calculations to Comparable GAAP Financial Measures:


Reconciliation of Historical Adjusted EBITDA:
 
For the Three Months Ended
 
For the Twelve Months Ended
 
June 30, 2018
 
June 30, 2017
 
December 31, 2017
(in millions)
 
 
 
 
 
Net income (loss)
$
180

 
$
112

 
$
445

Adjustments to increase (decrease) net income (loss):
 
 
 
 
 
Asset write-down charges
6

 
4

 
17

Acquisition and integration costs
8

 
8

 
61

Depreciation, amortization and accretion
379

 
296

 
1,242

Amortization of prepaid lease purchase price adjustments
5

 
5

 
20

Interest expense and amortization of deferred financing costs(a)
158

 
142

 
591

(Gains) losses on retirement of long-term obligations
3

 

 
4

Interest income
(1
)
 
(1
)
 
(19
)
Other (income) expense

 
1

 
(1
)
(Benefit) provision for income taxes
5

 
5

 
26

Stock-based compensation expense
26

 
17

 
96

Adjusted EBITDA(b)(c)
$
769

 
$
589

 
$
2,482

(a)
See the reconciliation of "components of interest expense and amortization of deferred financing costs" herein for a discussion of non-cash interest expense.
(b)
See "Non-GAAP Financial Measures, Segment Measures and Other Calculations" herein for a discussion of our definition of Adjusted EBITDA.
(c)
The above reconciliation excludes line items included in our definition which are not applicable for the periods shown.

Reconciliation of Current Outlook for Adjusted EBITDA:
 
Q3 2018
 
Full Year 2018
(in millions)
Outlook
 
Outlook
Net income (loss)
$126
to
$151
 
$603
to
$663
Adjustments to increase (decrease) net income (loss):
 
 
 
 
 
 
 
Asset write-down charges
$9
to
$11
 
$25
to
$35
Acquisition and integration costs
$16
to
$20
 
$45
to
$55
Depreciation, amortization and accretion
$378
to
$398
 
$1,513
to
$1,548
Amortization of prepaid lease purchase price adjustments
$4
to
$6
 
$19
to
$21
Interest expense and amortization of deferred financing costs(a)
$156
to
$166
 
$627
to
$657
(Gains) losses on retirement of long-term obligations
$33
to
$33
 
$107
to
$107
Interest income
$(1)
to
$1
 
$(4)
to
$0
Other (income) expense
$(1)
to
$3
 
$2
to
$4
(Benefit) provision for income taxes
$7
to
$11
 
$24
to
$32
Stock-based compensation expense
$25
to
$29
 
$101
to
$109
Adjusted EBITDA(b)(c)
$785
to
$795
 
$3,132
to
$3,162
(a)
See the reconciliation of "components of historical interest expense and amortization of deferred financing costs" herein for a discussion of non-cash interest expense.
(b)
See "Non-GAAP Financial Measures, Segment Measures and Other Calculations" herein for a discussion of our definition of Adjusted EBITDA.
(c)
The above reconciliation excludes line items included in our definition which are not applicable for the periods shown.


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Reconciliation of Historical FFO and AFFO:
 
For the Three Months Ended
 
For the Six Months Ended
 
For the Twelve Months Ended
(in millions)
June 30, 2018
 
June 30, 2017
 
June 30, 2018
 
June 30, 2017
 
December 31, 2017
Net income (loss)
$
180

 
$
112

 
$
294

 
$
231

 
$
445

Real estate related depreciation, amortization and accretion
367

 
289

 
726

 
569

 
1,211

Asset write-down charges
6

 
4

 
9

 
5

 
17

Dividends on preferred stock
(28
)
 

 
(57
)
 

 
(30
)
FFO(a)(b)(c)(d)(e)
$
525

 
$
405

 
$
973

 
$
806

 
$
1,643

 
 
 
 
 
 
 
 
 
 
FFO (from above)
$
525

 
$
405

 
$
973

 
$
806

 
$
1,643

Adjustments to increase (decrease) FFO:
 
 
 
 
 
 
 
 
 
Straight-lined revenue
(20
)
 
1

 
(36
)
 

 

Straight-lined expense
23

 
23

 
47

 
46

 
93

Stock-based compensation expense
26

 
17

 
52

 
42

 
96

Non-cash portion of tax provision
(7
)
 
(5
)
 
(3
)
 
(1
)
 
9

Non-real estate related depreciation, amortization and accretion
12

 
7

 
27

 
15

 
31

Amortization of non-cash interest expense
1

 
3

 
4

 
5

 
9

Other (income) expense

 
1

 
1

 
(4
)
 
(2
)
(Gains) losses on retirement of long-term obligations
3

 

 
74

 
4

 
4

Acquisition and integration costs
8

 
8

 
14

 
14

 
61

Capital improvement capital expenditures
(18
)
 
(9
)
 
(31
)
 
(16
)
 
(41
)
Corporate capital expenditures
(8
)
 
(10
)
 
(17
)
 
(19
)
 
(44
)
AFFO(a)(b)(c)(d)(e)
$
546

 
$
440

 
$
1,104

 
$
890

 
$
1,860

(a)
See "Non-GAAP Financial Measures, Segment Measures and Other Calculations" herein for a discussion of our definitions of FFO and AFFO.
(b)
FFO and AFFO are reduced by cash paid for preferred stock dividends during the period in which they are paid.
(c)
Diluted weighted-average common shares outstanding were 416 million, 366 million, 413 million, 364 million and 383 million for the three months ended June 30, 2018 and 2017, the six months ended June 30, 2018 and 2017 and the twelve months ended December 31, 2017, respectively. For all periods presented, the diluted weighted-average common shares outstanding does not include any assumed conversion of preferred stock in the share count.
(d)
The above reconciliation excludes line items included in our definition which are not applicable for the periods shown.
(e)
Attributable to CCIC common stockholders.


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News Release continued:
 
Page 11

Reconciliation of Current Outlook for FFO and AFFO:
 
Q3 2018
 
Full Year 2018
(in millions)
Outlook
 
Outlook
Net income (loss)
$126
to
$151
 
$603
to
$663
Real estate related depreciation, amortization and accretion
$370
to
$380
 
$1,469
to
$1,489
Asset write-down charges
$9
to
$11
 
$25
to
$35
Dividends on preferred stock
$(28)
to
$(28)
 
$(113)
to
$(113)
FFO(a)(b)(c)(d)(e)
$490
to
$500
 
$2,014
to
$2,044
 
 
 
 
 
 
 
 
FFO (from above)
$490
to
$500
 
$2,014
to
$2,044
Adjustments to increase (decrease) FFO:
 
 
 
 
 
 
 
Straight-lined revenue
$(18)
to
$(8)
 
$(65)
to
$(45)
Straight-lined expense
$16
to
$26
 
$79
to
$99
Stock-based compensation expense
$25
to
$29
 
$101
to
$109
Non-cash portion of tax provision
$1
to
$11
 
$0
to
$15
Non-real estate related depreciation, amortization and accretion
$8
to
$18
 
$44
to
$59
Amortization of non-cash interest expense
$(1)
to
$4
 
$2
to
$12
Other (income) expense
$(1)
to
$3
 
$2
to
$4
(Gains) losses on retirement of long-term obligations
$33
to
$33
 
$107
to
$107
Acquisition and integration costs
$16
to
$20
 
$45
to
$55
Capital improvement capital expenditures
$(14)
to
$(4)
 
$(71)
to
$(56)
Corporate capital expenditures
$(26)
to
$(16)
 
$(59)
to
$(44)
AFFO(a)(b)(c)(d)(e)
$568
to
$578
 
$2,263
to
$2,293
(a)
The assumption for third quarter 2018 and full year 2018 diluted weighted-average common shares outstanding is 416 million and 415 million, respectively, based on diluted common shares outstanding as of June 30, 2018. For all periods presented, the diluted weighted-average common shares outstanding does not include any assumed conversion of preferred stock in the share count.
(b)
See "Non-GAAP Financial Measures, Segment Measures and Other Calculations" herein for a discussion for our definitions of FFO and AFFO.
(c)
FFO and AFFO are reduced by cash paid for preferred stock dividends during the period in which they are paid.
(d)
The above reconciliation excludes line items included in our definition which are not applicable for the periods shown.
(e)
Attributable to CCIC common stockholders.


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News Release continued:
 
Page 12

For Comparative Purposes - Reconciliation of Previous Outlook for Adjusted EBITDA:
 
Previously Issued
 
Previously Issued
 
Q2 2018
 
Full Year 2018
(in millions)
Outlook
 
Outlook
Net income (loss)
$139
to
$164
 
$589
to
$669
Adjustments to increase (decrease) net income (loss):
 
 
 
 
 
 
 
Asset write-down charges
$9
to
$11
 
$28
to
$38
Acquisition and integration costs
$13
to
$17
 
$45
to
$55
Depreciation, amortization and accretion
$373
to
$393
 
$1,517
to
$1,552
Amortization of prepaid lease purchase price adjustments
$4
to
$6
 
$19
to
$21
Interest expense and amortization of deferred financing costs
$154
to
$164
 
$616
to
$661
(Gains) losses on retirement of long-term obligations
$0
to
$0
 
$71
to
$71
Interest income
$(1)
to
$1
 
$(3)
to
$1
Other (income) expense
$(1)
to
$3
 
$3
to
$5
(Benefit) provision for income taxes
$8
to
$12
 
$28
to
$36
Stock-based compensation expense
$26
to
$30
 
$104
to
$112
Adjusted EBITDA(a)(b)
$757
to
$767
 
$3,097
to
$3,142
(a)
See "Non-GAAP Financial Measures, Segment Measures and Other Calculations" herein for a discussion of our definition of Adjusted EBITDA.
(b)
The above reconciliation excludes line items included in our definition which are not applicable for the periods shown.

For Comparative Purposes - Reconciliation of Previous Outlook for FFO and AFFO:
 
Previously Issued
 
Previously Issued
 
Q2 2018
 
Full Year 2018
(in millions)
Outlook
 
Outlook
Net income (loss)
$139
to
$164
 
$589
to
$669
Real estate related depreciation, amortization and accretion
$363
to
$373
 
$1,466
to
$1,486
Asset write-down charges
$9
to
$11
 
$28
to
$38
Dividends on preferred stock
$(28)
to
$(28)
 
$(113)
to
$(113)
FFO(a)(b)(c)(d)
$496
to
$506
 
$2,002
to
$2,047
 
 
 
 
 
 
 
 
FFO (from above)
$496
to
$506
 
$2.002
to
$2,047
Adjustments to increase (decrease) FFO:
 
 
 
 
 
 
 
Straight-lined revenue
$(16)
to
$(6)
 
$(39)
to
$(19)
Straight-lined expense
$17
to
$27
 
$77
to
$97
Stock-based compensation expense
$26
to
$30
 
$104
to
$112
Non-cash portion of tax provision
$(7)
to
$3
 
$3
to
$18
Non-real estate related depreciation, amortization and accretion
$10
to
$20
 
$51
to
$66
Amortization of non-cash interest expense
$(1)
to
$4
 
$3
to
$13
Other (income) expense
$(1)
to
$3
 
$3
to
$5
(Gains) losses on retirement of long-term obligations
$0
to
$0
 
$71
to
$71
Acquisition and integration costs
$13
to
$17
 
$45
to
$55
Capital improvement capital expenditures
$(19)
to
$(9)
 
$(67)
to
$(52)
Corporate capital expenditures
$(18)
to
$(8)
 
$(64)
to
$(49)
AFFO(a)(b)(c)(d)
$539
to
$549
 
$2,255
to
$2,300
(a)
Previously issued second quarter 2018 and full year 2018 Outlook assumes diluted weighted-average common shares outstanding as of March 31, 2018 of 416 million and 415 million, respectively. For all periods presented, the diluted weighted-average common shares outstanding does not include any assumed conversion of preferred stock in the share count.
(b)
See "Non-GAAP Financial Measures, Segment Measures and Other Calculations" herein for a discussion for our definitions of FFO and AFFO.
(c)
The above reconciliation excludes line items included in our definition which are not applicable for the periods shown.
(d)
Attributable to CCIC common stockholders.


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News Release continued:
 
Page 13

The components of changes in site rental revenues for the quarters ended June 30, 2018 and 2017 are as follows:
 
Three Months Ended June 30,
(in millions)
2018
 
2017
Components of changes in site rental revenues(a):
 
 
 
Prior year site rental revenues exclusive of straight-lined revenues associated with fixed escalators(b)(c)
$
870

 
$
788

 
 
 
 
New leasing activity(b)(c)
51

 
45

Escalators
20

 
21

Non-renewals
(22
)
 
(24
)
Organic Contribution to Site Rental Revenues(d)
49

 
42

Straight-lined revenues associated with fixed escalators
20

 
(1
)
Acquisitions(e)
231

 
40

Other

 

Total GAAP site rental revenues
$
1,169

 
$
869

 
 
 
 
Year-over-year changes in revenue:
 
 
 
Reported GAAP site rental revenues
34.5
%
 
 
Organic Contribution to Site Rental Revenues(d)(f)
5.6
%
 
 
(a)
Additional information regarding Crown Castle's site rental revenues, including projected revenue from customer licenses, tenant non-renewals, straight-lined revenues and prepaid rent is available in Crown Castle's quarterly Supplemental Information Package posted in the Investors section of its website.
(b)
Includes revenues from amortization of prepaid rent in accordance with GAAP.
(c)
Includes revenues from the construction of new small cell nodes, exclusive of straight-lined revenues related to fixed escalators.
(d)
See "Non-GAAP Financial Measures, Segment Measures and Other Calculations" herein.
(e)
Represents the initial contribution of recent acquisitions. The financial impact of recent acquisitions is excluded from Organic Contribution to Site Rental Revenues until the one-year anniversary of the acquisition.
(f)
Calculated as the percentage change from prior year site rental revenues, exclusive of straight-lined revenues associated with fixed escalations, compared to Organic Contribution to Site Rental Revenues for the current period.


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News Release continued:
 
Page 14

The components of the changes in site rental revenues for the year ending December 31, 2018 are forecasted as follows:
(dollars in millions)
Full Year 2017
 
Full Year 2018 Outlook
Components of changes in site rental revenues(a):
 
 
 
Prior year site rental revenues exclusive of straight-lined revenues associated with fixed escalators(b)(c)
$3,186
 
$3,670
 

 

New leasing activity(b)(c)
166
 
$190-$220
Escalators
84
 
$80-$90
Non-renewals
(90)
 
($90)-($80)
Organic Contribution to Site Rental Revenues(d)
160
 
$190-$220
Straight-lined revenues associated with fixed escalators
 
$45-$65
Acquisitions(e)
323
 
$745-$765
Other
 
Total GAAP site rental revenues
$3,669
 
$4,673-$4,703
 
 
 
 
Year-over-year changes in revenue:
 
 
 
Reported GAAP site rental revenues(f)
 
 
27.8%
Organic Contribution to Site Rental Revenues(d)(f)(g)
 
 
5.6%

(a)
Additional information regarding Crown Castle's site rental revenues, including projected revenue from customer licenses, tenant non-renewals, straight-lined revenues and prepaid rent is available in Crown Castle's quarterly Supplemental Information Package posted in the Investors section of its website.
(b)
Includes revenues from amortization of prepaid rent in accordance with GAAP.
(c)
Includes revenues from the construction of new small cell nodes, exclusive of straight-lined revenues related to fixed escalators.
(d)
See "Non-GAAP Financial Measures, Segment Measures and Other Calculations" herein.
(e)
Represents the contribution from recent acquisitions. The financial impact of recent acquisitions is excluded from Organic Contribution to Site Rental Revenues until the one-year anniversary of the acquisition, with the exception of the impact of Lightower, which has been reflected as a contribution from acquisitions for the Full Year 2018 Outlook.
(f)
Calculated based on midpoint of Full Year 2018 Outlook.
(g)
Calculated as the percentage change from prior year site rental revenues, exclusive of straight-lined revenues associated with fixed escalations, compared to Organic Contribution to Site Rental Revenues for the current period.


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News Release continued:
 
Page 15

Components of Historical Interest Expense and Amortization of Deferred Financing Costs:
 
For the Three Months Ended
(in millions)
June 30, 2018
 
June 30, 2017
Interest expense on debt obligations
$
157

 
$
139

Amortization of deferred financing costs and adjustments on long-term debt, net
5

 
5

Other, net
(4
)
 
(2
)
Interest expense and amortization of deferred financing costs
$
158

 
$
142


Components of Current Outlook for Interest Expense and Amortization of Deferred Financing Costs:
 
Q3 2018
 
Full Year 2018
(in millions)
Outlook
 
Outlook
Interest expense on debt obligations
$157
to
$162
 
$630
to
$640
Amortization of deferred financing costs and adjustments on long-term debt, net
$4
to
$7
 
$19
to
$24
Other, net
$(5)
to
$(3)
 
$(17)
to
$(12)
Interest expense and amortization of deferred financing costs
$156
to
$166
 
$627
to
$657

Debt balances and maturity dates as of June 30, 2018 are as follows:
(in millions)
Face Value
 
Final Maturity
Bank debt - variable rate:
 
 
 
2016 Revolver
$
315

 
Jun. 2023
2016 Term Loan A
2,386

 
Jun. 2023
Total bank debt
2,701

 
 
Securitized debt - fixed rate:
 
 
 
Secured Notes, Series 2009-1, Class A-1(a)
23

 
Aug. 2019
Secured Notes, Series 2009-1, Class A-2(a)
70

 
Aug. 2029
Tower Revenue Notes, Series 2010-6(b)
1,000

 
Aug. 2040
Tower Revenue Notes, Series 2015-1(b)
300

 
May 2042
Tower Revenue Notes, Series 2015-2(b)
700

 
May 2045
Total securitized debt
2,093

 
 
Bonds - fixed rate:
 
 
 
5.250% Senior Notes
1,650

 
Jan. 2023
3.849% Secured Notes
1,000

 
Apr. 2023
4.875% Senior Notes
850

 
Apr. 2022
3.400% Senior Notes
850

 
Feb. 2021
4.450% Senior Notes
900

 
Feb. 2026
3.700% Senior Notes
750

 
June 2026
2.250% Senior Notes
700

 
Sept. 2021
4.000% Senior Notes
500

 
Mar. 2027
4.750% Senior Notes
350

 
May 2047
3.200% Senior Notes
750

 
Sept. 2024
3.650% Senior Notes
1,000

 
Sept. 2027
3.150% Senior Notes
750

 
Feb. 2023
3.800% Senior Notes
1,000

 
Feb. 2028
Total bonds
11,050

 
 
Capital leases and other obligations
222

 
Various
Total Debt
$
16,066

 
 
Less: Cash and Cash Equivalents(c)
$
206

 
 
Net Debt
$
15,860

 
 
(a)
The Senior Secured Notes, Series 2009-1, Class A-1 principal amortizes during the period beginning in January 2010 and ending in 2019 and the Senior Secured Notes, 2009-1, Class A-2 principal amortizes during the period beginning in 2019 and ending in 2029.
(b)
The Senior Secured Tower Revenue Notes Series 2015-1 and 2015-2 have anticipated repayment dates in 2022 and 2025, respectively. In July 2018, the Company issued $1.0 billion of Senior Secured Tower Revenue Notes, Series 2018-1 and Series 2018-2 with anticipated repayment dates in 2023 and 2028, respectively. The Company used the proceeds from such offering, together with cash on hand, to repay the previously outstanding Senior Secured Tower Revenue Notes, Series 2010-6, which had an anticipated repayment date in 2020.
(c)
Excludes restricted cash.

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News Release continued:
 
Page 16

Net Debt to Last Quarter Annualized Adjusted EBITDA is computed as follows:
(dollars in millions)
For the Three Months Ended June 30, 2018
Total face value of debt
$
16,066

Ending cash and cash equivalents(a)
206

Total Net Debt
$
15,860

 
 
Adjusted EBITDA for the three months ended June 30, 2018
$
769

Last quarter annualized Adjusted EBITDA
3,076

Net Debt to Last Quarter Annualized Adjusted EBITDA
5.2
x
(a)
Excludes restricted cash.

Components of Capital Expenditures:
 
For the Three Months Ended
(in millions)
June 30, 2018
 
June 30, 2017
 
Towers
Fiber
Other
Total
 
Towers
Fiber
Other
Total
Discretionary:
 
 
 
 
 
 
 
 
 
Purchases of land interests
$
10

$

$

$
10

 
$
21

$

$

$
21

Communications infrastructure construction and improvements
77

279


356

 
76

184


260

Sustaining:






 
 




 
Capital improvement and corporate
11

11

4

26

 
9

4

6

19

Integration


1

1

 




Total
$
98

$
289

$
6

$
393

 
$
107

$
188

$
6

$
301

Note: See "Non-GAAP Financial Measures, Segment Measures and Other Calculations" herein for further discussion of our components of capital expenditures.


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News Release continued:
 
Page 17

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 our Outlook and plans, projections, and estimates regarding (1) potential benefits, returns, opportunities and customer and shareholder value which may be derived from our business, assets, investments, acquisitions and dividends, including on a long-and short-term basis, (2) our strategy, strategic position, business model and capabilities and the strength of our business, (3) our growth, including growth in our cash flows and dividends per share, long-term prospects and the trends impacting our business, (4) the potential benefits and contributions which may be derived from our recent acquisitions, such as Lightower, including the contribution to or impact on our financial or operating results, inclusive of site rental revenues, Adjusted EBITDA, AFFO and Organic Contribution to Site Rental Revenues, (5) impact of the recent refinancings and the potential benefits which may be derived therefrom, (6) leasing environment and activity, including the contribution to our financial or operating results therefrom, (7) our investments in our business and communications infrastructure assets and the potential growth, returns and benefits therefrom, (8) our dividends and our dividend growth rate and targets, (9) strategic position of and demand for our communications infrastructure and services, (10) cash flows, (11) tenant non-renewals, including the impact thereof, (12) capital expenditures, including sustaining capital expenditures, (13) straight-line adjustments, (14) site rental revenues and estimated growth thereof, (15) site rental cost of operations, (16) net income (loss), (17) Adjusted EBITDA, including the impact thereon of timing items, (18) expenses, including interest expense, and amortization of deferred financing costs, (19) FFO, (20) AFFO and estimated growth thereof, (21) Organic Contribution to Site Rental Revenues, (22) our weighted-average common shares outstanding, including on a diluted basis, (23) network services contribution and (24) the utility of certain financial measures, including non-GAAP financial measures. Such forward-looking statements are subject to certain risks, uncertainties and assumptions prevailing market conditions and the following:

Our business depends on the demand for our communications infrastructure, driven primarily by demand for data, and we may be adversely affected by any slowdown in such demand. Additionally, a reduction in the amount or change in the mix of network investment by our customers may materially and adversely affect our business (including reducing demand for tenant additions and network services).
A substantial portion of our revenues is derived from a small number of customers, and the loss, consolidation or financial instability of any of such customers may materially decrease revenues or reduce demand for our communications infrastructure and network services.
The expansion or development of our business, including through acquisitions, increased product offerings or other strategic growth opportunities may cause disruptions in our business, which may have an adverse effect on our business, operations or financial results. Additionally, we may fail to realize all of the anticipated benefits of the Lightower acquisition, or those benefits may take longer to realize than expected.
Our fiber segment has expanded rapidly, and the fiber business model contains certain differences from our towers business model, resulting in different operational risks. If we do not successfully operate our Fiber business model or identify or manage the related operational risks, such operations may produce results that are less than anticipated.
Failure to timely and efficiently execute on our construction projects could adversely affect our business.
Our substantial level of indebtedness could adversely affect our ability to react to changes in our business, and the terms of our debt instruments and our 6.875% Mandatory Convertible Preferred Stock limit our ability to take a number of actions that our management might otherwise believe to be in our best interests. In addition, if we fail to comply with our covenants, our debt could be accelerated.
We have a substantial amount of indebtedness. In the event we do not repay or refinance such indebtedness, we could face substantial liquidity issues and might be required to issue equity securities or securities convertible into equity securities, or sell some of our assets to meet our debt payment obligations.
Sales or issuances of a substantial number of shares of our common stock or securities convertible into shares of our common stock may adversely affect the market price of our common stock.
As a result of competition in our industry, we may find it more difficult to negotiate favorable rates on our new or renewing tenant contracts.
New technologies may reduce demand for our communications infrastructure or negatively impact our revenues.
If we fail to retain rights to our communications infrastructure, including the land interests under our towers and the right-of-way and other agreements related to our small cells and fiber solutions, our business may be adversely affected.
Our network services business has historically experienced significant volatility in demand, which reduces the predictability of our results.
New wireless technologies may not deploy or be adopted by customers as rapidly or in the manner projected.
If we fail to comply with laws or regulations which regulate our business and which may change at any time, we may be fined or even lose our right to conduct some of our business.

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News Release continued:
 
Page 18

If radio frequency emissions from wireless handsets or equipment on our communications infrastructure are demonstrated to cause negative health effects, potential future claims could adversely affect our operations, costs or revenues.
Certain provisions of our restated certificate of incorporation, amended and restated by-laws and operative agreements, and domestic and international competition laws may make it more difficult for a third party to acquire control of us or for us to acquire control of a third party, even if such a change in control would be beneficial to our stockholders.
We may be vulnerable to security breaches that could adversely affect our business, operations, and reputation.
Future dividend payments to our stockholders will reduce the availability of our cash on hand available to fund future discretionary investments, and may result in a need to incur indebtedness or issue equity securities to fund growth opportunities. In such event, the then current economic, credit market or equity market conditions will impact the availability or cost of such financing, which may hinder our ability to grow our per share results of operations.
Remaining qualified to be taxed as a REIT involves highly technical and complex provisions of the U.S. Internal Revenue Code. Failure to remain qualified as a REIT would result in our inability to deduct dividends to stockholders when computing our taxable income, which would reduce our available cash.
If we fail to pay scheduled dividends on our 6.875% Mandatory Convertible Preferred Stock, in cash, common stock, or any combination of cash and common stock, we will be prohibited from paying dividends on our common stock, which may jeopardize our status as a REIT.
Complying with REIT requirements, including the 90% distribution requirement, may limit our flexibility or cause us to forgo otherwise attractive opportunities, including certain discretionary investments and potential financing alternatives.
REIT related ownership limitations and transfer restrictions may prevent or restrict certain transfers of our capital stock.
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. As used in this release, the term "including," and any variation thereof, means "including without limitation."


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Page 19

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12360806&doc=22
CROWN CASTLE INTERNATIONAL CORP.
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
(Amounts in millions, except par values)

 
June 30,
2018

December 31,
2017
 
 
 
 
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
206


$
314

Restricted cash
125


121

Receivables, net
455


398

Prepaid expenses
197


162

Other current assets
181


139

Total current assets
1,164


1,134

Deferred site rental receivables
1,303


1,300

Property and equipment, net
13,218


12,933

Goodwill
10,075


10,021

Other intangible assets, net
5,729


5,962

Long-term prepaid rent and other assets, net
885


879

Total assets
$
32,374


$
32,229

 



LIABILITIES AND EQUITY


 
Current liabilities:


 
Accounts payable
$
272


$
249

Accrued interest
154


132

Deferred revenues
476


457

Other accrued liabilities
272


339

Current maturities of debt and other obligations
112


115

Total current liabilities
1,286


1,292

Debt and other long-term obligations
15,844


16,044

Other long-term liabilities
2,678


2,554

Total liabilities
19,808


19,890

Commitments and contingencies



CCIC stockholders' equity:



Common stock, $0.01 par value; 600 shares authorized; shares issued and outstanding: June 30, 2018—415 and December 31, 2017—406
4


4

6.875% Mandatory Convertible Preferred Stock, Series A, $0.01 par value; 20 shares authorized; shares issued and outstanding: June 30, 2018—2 and December 31, 2017—2; aggregate liquidation value: June 30, 2018—$1,650 and December 31, 2017—$1,650



Additional paid-in capital
17,711


16,844

Accumulated other comprehensive income (loss)
(5
)

(4
)
Dividends/distributions in excess of earnings
(5,144
)

(4,505
)
Total equity
12,566


12,339

Total liabilities and equity
$
32,374


$
32,229



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CROWN CASTLE INTERNATIONAL CORP.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
(Amounts in millions, except per share amounts)

 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2018

2017

2018

2017
Net revenues:







Site rental
$
1,169


$
869


$
2,323


$
1,726

Network services and other
161


169


307


328

Net revenues
1,330

 
1,038

 
2,630

 
2,054

Operating expenses:
 
 
 
 
 
 
 
Costs of operations (exclusive of depreciation, amortization and accretion):
 
 
 
 
 
 
 
Site rental
355


269


702


534

Network services and other
99


104


185


203

General and administrative
138


98


273


199

Asset write-down charges
6


4


9


5

Acquisition and integration costs
8


8


14


14

Depreciation, amortization and accretion
379


296


753


584

Total operating expenses
985

 
779

 
1,936

 
1,539

Operating income (loss)
345

 
259

 
694

 
515

Interest expense and amortization of deferred financing costs
(158
)

(142
)

(318
)

(276
)
Gains (losses) on retirement of long-term obligations
(3
)



(74
)

(4
)
Interest income
1


1


2


1

Other income (expense)


(1
)

(1
)

4

Income (loss) from continuing operations before income taxes
185

 
117

 
303

 
240

Benefit (provision) for income taxes
(5
)

(5
)

(9
)

(9
)
Net income (loss)
180

 
112

 
294

 
231

Dividends on preferred stock
(28
)



(57
)


Net income (loss) attributable to CCIC common stockholders
$
152

 
$
112

 
$
237

 
$
231

 
 
 
 
 
 
 
 
Net income (loss) attributable to CCIC common stockholders, per common share:
 
 
 
 
 
 
 
Net income (loss) attributable to CCIC common stockholders, basic
$
0.37


$
0.31


$
0.58


$
0.64

Net income (loss) attributable to CCIC common stockholders, diluted
$
0.36


$
0.31


$
0.57


$
0.64

 
 
 
 
 
 
 
 
Weighted-average common shares outstanding:
 
 
 
 
 
 
 
Basic
415


364


412


363

Diluted
416


366


413


364


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CROWN CASTLE INTERNATIONAL CORP.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)(a)
(In millions of dollars)
 
Six Months Ended June 30,
 
2018
 
2017
Cash flows from operating activities:
 
 
 
Net income (loss)
$
294


$
231

Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities:





Depreciation, amortization and accretion
753


584

(Gains) losses on retirement of long-term obligations
74


4

Amortization of deferred financing costs and other non-cash interest
4


5

Stock-based compensation expense
47


45

Asset write-down charges
9


5

Deferred income tax (benefit) provision
1



Other non-cash adjustments, net
1


(3
)
Changes in assets and liabilities, excluding the effects of acquisitions:





Increase (decrease) in liabilities
78


17

Decrease (increase) in assets
(150
)

43

Net cash provided by (used for) operating activities
1,111


931

Cash flows from investing activities:





Payments for acquisitions, net of cash acquired
(18
)

(2,104
)
Capital expenditures
(763
)

(563
)
Other investing activities, net
3


(8
)
Net cash provided by (used for) investing activities
(778
)

(2,675
)
Cash flows from financing activities:





Proceeds from issuance of long-term debt
1,743


1,345

Principal payments on debt and other long-term obligations
(47
)

(60
)
Purchases and redemptions of long-term debt
(1,318
)


Borrowings under revolving credit facility
485


1,755

Payments under revolving credit facility
(1,150
)

(1,405
)
Payments for financing costs
(20
)

(11
)
Net proceeds from issuance of common stock
841


464

Purchases of common stock
(34
)

(23
)
Dividends/distributions paid on common stock
(879
)

(696
)
Dividends paid on preferred stock
(57
)


Net cash provided by (used for) financing activities
(436
)
 
1,369

Net increase (decrease) in cash, cash equivalents, and restricted cash
(103
)
 
(375
)
Effect of exchange rate changes
(1
)

1

Cash, cash equivalents, and restricted cash at beginning of period(a)
440


697

Cash, cash equivalents, and restricted cash at end of period(a)
$
336

 
$
323

Supplemental disclosure of cash flow information:
 
 
 
Interest paid
292


260

Income taxes paid
12


10


(a) Effective January 1, 2018, the Company is required to explain the change in restricted cash in addition to the change in cash and cash equivalents in its condensed consolidated statement of cash flows. The Company has applied this approach for all periods presented.


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CROWN CASTLE INTERNATIONAL CORP.
SEGMENT OPERATING RESULTS (UNAUDITED)
(In millions of dollars)

SEGMENT OPERATING RESULTS
 
Three Months Ended June 30, 2018
 
Three Months Ended June 30, 2017
 
Towers
 
Fiber
 
Other
 
Consolidated Total
 
Towers
 
Fiber
 
Other
 
Consolidated Total
Segment site rental revenues
$
771


$
398

 
 
 
$
1,169

 
$
718


$
151

 
 
 
$
869

Segment network services and other revenue
158


3

 
 
 
161

 
158


11

 
 
 
169

Segment revenues
929

 
401

 
 
 
1,330

 
876

 
162

 
 
 
1,038

Segment site rental cost of operations
216


130

 
 
 
346

 
211


52

 
 
 
263

Segment network services and other cost of operations
94


3

 
 
 
97

 
96


8

 
 
 
104

Segment cost of operations(a)
310

 
133

 
 
 
443

 
307

 
60

 
 
 
367

Segment site rental gross margin(b)
555

 
268

 
 
 
823

 
507

 
99

 
 
 
606

Segment network services and other gross margin(b)
64

 

 
 
 
64

 
62

 
3

 
 
 
65

Segment general and administrative expenses(a)
27


44

 
 
 
71

 
23


19

 
 
 
42

Segment operating profit(b)
592

 
224

 
 
 
816

 
546

 
83

 
 
 
629

Other general and administrative expenses(a)
 
 
 
 
$
47

 
47

 
 
 
 
 
$
41

 
41

Stock-based compensation expense
 
 
 
 
26

 
26

 
 
 
 
 
17

 
17

Depreciation, amortization and accretion
 
 
 
 
379

 
379

 
 
 
 
 
296

 
296

Interest expense and amortization of deferred financing costs
 
 
 
 
158

 
158

 
 
 
 
 
142

 
142

Other income (expenses) to reconcile to income (loss) from continuing operations before income taxes(c)
 
 
 
 
21

 
21

 
 
 
 
 
16

 
16

Income (loss) from continuing operations before income taxes
 
 
 
 
 
 
$
185

 
 
 
 
 
 
 
$
117

(a)
Segment cost of operations excludes (1) stock-based compensation expense of $6 million and $2 million for the three months ended June 30, 2018 and 2017, respectively and (2) prepaid lease purchase price adjustments of $5 million for both of the three months ended June 30, 2018 and 2017. General and administrative expenses exclude stock-based compensation expense of $20 million and $15 million for the three months ended June 30, 2018 and 2017, respectively.
(b) See "Non-GAAP Financial Measures, Segment Measures and Other Calculations" herein for a discussion of our definitions of segment site rental gross margin, segment network services and other gross margin and segment operating profit.
(c)
See condensed consolidated statement of operations for further information.








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Page 23

SEGMENT OPERATING RESULTS
 
Six Months Ended June 30, 2018
 
Six Months Ended June 30, 2017
 
Towers
 
Fiber
 
Other
 
Consolidated Total
 
Towers
 
Fiber
 
Other
 
Consolidated Total
Segment site rental revenues
$
1,536


$
787

 
 
 
$
2,323

 
$
1,434


$
292

 
 
 
$
1,726

Segment network services and other revenue
300


7

 
 
 
307

 
308


20

 
 
 
328

Segment revenues
1,836

 
794

 
 
 
2,630

 
1,742

 
312

 
 
 
2,054

Segment site rental cost of operations
427


256

 
 
 
683

 
420


99

 
 
 
519

Segment network services and other cost of operations
176


5

 
 
 
181

 
185


17

 
 
 
202

Segment cost of operations(a)
603

 
261

 
 
 
864

 
605

 
116

 
 
 
721

Segment site rental gross margin(b)
1,109

 
531

 
 
 
1,640

 
1,014

 
193

 
 
 
1,207

Segment network services and other gross margin(b)
124

 
2

 
 
 
126

 
123

 
3

 
 
 
126

Segment general and administrative expenses(a)
53


87

 
 
 
140

 
47


36

 
 
 
83

Segment operating profit(b)
1,180

 
446

 
 
 
1,626

 
1,090

 
160

 
 
 
1,250

Other general and administrative expenses(a)
 
 
 
 
$
94

 
94

 
 
 
 
 
$
80

 
80

Stock-based compensation expense
 
 
 
 
52

 
52

 
 
 
 
 
42

 
42

Depreciation, amortization and accretion
 
 
 
 
753

 
753

 
 
 
 
 
584

 
584

Interest expense and amortization of deferred financing costs
 
 
 
 
318

 
318

 
 
 
 
 
276

 
276

Other income (expenses) to reconcile to income (loss) from continuing operations before income taxes(c)
 
 
 
 
106

 
106

 
 
 
 
 
28

 
28

Income (loss) from continuing operations before income taxes
 
 
 
 
 
 
$
303

 
 
 
 
 
 
 
$
240

(a)
Segment cost of operations excludes (1) stock-based compensation expense of $13 million and $6 million for the six months ended June 30, 2018 and 2017, respectively and (2) prepaid lease purchase price adjustments of $10 million for both of the six months ended June 30, 2018 and 2017. General and administrative expenses exclude stock-based compensation expense of $39 million and $36 million for the six months ended June 30, 2018 and 2017, respectively.
(b) See "Non-GAAP Financial Measures, Segment Measures and Other Calculations" herein for a discussion of our definitions of segment site rental gross margin, segment network services and other gross margin and segment operating profit.
(c)
See condensed consolidated statement of operations for further information.


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Exhibit
Exhibit 99.2








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Supplemental Information Package
and Non-GAAP Reconciliations
Second QuarterJune 30, 2018




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Crown Castle International Corp
Second Quarter 2018

TABLE OF CONTENTS
 
Page
Company Overview
 
Company Profile
Strategy
AFFO per Share
Tower Portfolio Footprint
Corporate Information
Research Coverage
Historical Common Stock Data
Portfolio and Financial Highlights
Outlook
Financials & Metrics
 
Condensed Consolidated Balance Sheet
Condensed Consolidated Statement of Operations
Segment Operating Results
FFO and AFFO Reconciliations
Condensed Consolidated Statement of Cash Flows
Components of Changes in Site Rental Revenues
Summary of Straight-Lined and Prepaid Rent Activity
Summary of Capital Expenditures
Lease Renewal and Lease Distribution
Customer Overview
Asset Portfolio Overview
 
Summary of Tower Portfolio by Vintage
Portfolio Overview
Ground Interest Overview
Ground Interest Activity
Capitalization Overview
 
Capitalization Overview
Debt Maturity Overview
Liquidity Overview
Maintenance and Financial Covenants
Interest Rate Sensitivity
Appendix

Cautionary Language Regarding Forward-Looking Statements
This supplemental information package ("Supplement") contains forward-looking statements and information that are based on our management's current expectations as of the date of this Supplement. Statements that are not historical facts are hereby identified as forward-looking statements. Words such as "Outlook," "guide," "forecast," "estimate," "anticipate," "project," "plan," "intend," "believe," "expect," "likely," "predicted," "positioned," and any variations of these words and similar expressions are intended to identify such forward looking statements. Such statements include, but are not limited to, our Outlook for the third quarter 2018 and full year 2018.
Such forward-looking statements are subject to certain risks, uncertainties and assumptions, including, but not limited to, prevailing market conditions. Should one or more of these or other risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those expected. More information about potential risk factors which could affect our results is included in our filings with the Securities and Exchange Commission. Crown Castle assumes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
The components of financial information presented herein, both historical and forward looking, may not sum due to rounding. Definitions and reconciliations of non-GAAP financial measures, segment measures and other calculations are provided in the Appendix to this Supplement.
As used herein, the term "including" and any variation thereof, means "including without limitation." The use of the word "or" herein is not exclusive.

1

Crown Castle International Corp.
Second Quarter 2018
COMPANY
OVERVIEW
 FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX

COMPANY PROFILE 
Crown Castle International Corp. (to which the terms "Crown Castle," "CCIC," "we," "our," "our Company," "the Company" or "us" as used herein refer) owns, operates and leases shared communications infrastructure, including: (1) towers and other structures, such as rooftops (collectively, "towers"), and (2) fiber primarily supporting small cell networks ("small cells") and fiber solutions. Our towers, fiber and small cells assets are collectively referred to herein as "communications infrastructure," and our customers on our communications infrastructure are referred to herein as "tenants." Our towers have a significant presence in each of the top 100 basic trading areas, and the majority of our fiber is located in major metropolitan areas, including a presence within every major U.S. market. Crown Castle owns, operates and leases shared communications infrastructure that has been acquired or constructed over time and is geographically dispersed throughout the U.S., and which consists of (1) approximately 40,000 towers and (2) approximately 60,000 route miles of fiber primarily supporting small cells and fiber solutions.
Our core business is providing access, including space or capacity, to our shared communications infrastructure via long-term contracts in various forms, including licenses, subleases and lease agreements (collectively, "contracts"). We seek to increase our site rental revenues by adding more tenants on our communications infrastructure, which we expect to result in significant incremental cash flows due to our low incremental operating costs.
We operate as a Real Estate Investment Trust ("REIT") for U.S. federal income tax purposes.
Unless otherwise indicated, the Company has changed its presentation to millions and, as a result, any necessary rounding adjustments have been made to prior year disclosed amounts.

STRATEGY 
As a leading provider of shared communications infrastructure in the U.S., our strategy is to create long-term stockholder value via a combination of (1) growing cash flows generated from our portfolio of communications infrastructure, (2) returning a meaningful portion of our cash provided by operating activities to our common stockholders in the form of dividends and (3) investing capital efficiently to grow cash flows and long-term dividends per share. Our U.S. focused strategy is based, in part, on our belief that the U.S. is the most attractive market for shared communications infrastructure investment with the greatest long-term growth potential. We measure our efforts to create "long-term stockholder value" by the combined payment of dividends to stockholders and growth in our per share results. The key elements of our strategy are to:
Grow cash flows from our communications infrastructure. We seek to maximize our site rental cash flows by working with our customers to provide them quick access to our communications infrastructure and entering into associated long-term contracts. Tenant additions or modifications of existing tenant equipment (collectively, "tenant additions") enable our customers to expand coverage and capacity in order to meet increasing demand for data, while generating high incremental returns for our business. We believe our product offerings of towers and small cells provide a comprehensive solution to our wireless customers' growing network needs through our shared communications infrastructure model, which is an efficient and cost-effective way to serve our customers. Additionally, we believe our ability to share our fiber assets across multiple customers to deploy both small cells and offer fiber solutions allows us to generate cash flows and increase stockholder return. We also believe that there will be considerable future demand for our communications infrastructure based on the location of our assets and the rapid growth in demand for data.
Return cash provided by operating activities to common stockholders in the form of dividends. We believe that distributing a meaningful portion of our cash provided by operating activities appropriately provides common stockholders with increased certainty for a portion of expected long-term stockholder value while still retaining sufficient flexibility to invest in our business and deliver growth. We believe this decision reflects the translation of the high-quality, long-term contractual cash flows of our business into stable capital returns to common stockholders.
Invest capital efficiently to grow cash flows and long-term dividends per share. We seek to invest our available capital, including the net cash provided by our operating activities and external financing sources, in a manner that will increase long-term stockholder value on a risk-adjusted basis. Our historical investments have included the following (in no particular order):
acquisitions or construction of towers, fiber and small cells;
acquisitions of land interests under towers;
improvements and structural enhancements to our existing communications infrastructure;

2

Crown Castle International Corp.
Second Quarter 2018
COMPANY
OVERVIEW
 FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX

purchases of shares of our common stock from time to time; and
purchases, repayments or redemptions of our debt.
Our strategy to create long-term stockholder value is based on our belief that additional demand for our communications infrastructure will be created by the expected continued growth in the demand for data. We believe that such demand for our communications infrastructure will continue, will result in growth of our cash flows due to tenant additions on our existing communications infrastructure, and will create other growth opportunities for us, such as demand for new communications infrastructure.

AFFO PER SHARE(a)(b)
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TOWER PORTFOLIO FOOTPRINT
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(a)
See reconciliations and definitions provided herein.
(b)
Attributable to CCIC common stockholders.
(c)
Represents the midpoint of the full year 2018 Outlook as issued on July 18, 2018.

3

Crown Castle International Corp.
Second Quarter 2018
COMPANY
OVERVIEW
 FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX

GENERAL COMPANY INFORMATION
Principal executive offices
1220 Augusta Drive, Suite 600, Houston, TX 77057
Common shares trading symbol
CCI
Stock exchange listing
New York Stock Exchange
Fiscal year ending date
December 31
Fitch - Long Term Issuer Default Rating
BBB-
Moody’s - Long Term Corporate Family Rating
Baa3
Standard & Poor’s - Long Term Local Issuer Credit Rating
BBB-
Note: These credit ratings may not reflect the potential risks relating to the structure or trading of the Company’s securities and are provided solely for informational purposes. Credit ratings are not recommendations to buy, sell or hold any security, and may be revised or withdrawn at any time by the issuing organization in its sole discretion. The Company does not undertake any obligation to maintain the ratings or to advise of any change in the ratings. Each agency’s rating should be evaluated independently of any other agency’s rating. An explanation of the significances of the ratings can be obtained from each of the ratings agencies.

EXECUTIVE MANAGEMENT TEAM
Name
Age
Years with Company
Position
Jay A. Brown
45
18
President and Chief Executive Officer
Daniel K. Schlanger
44
2
Senior Vice President, Chief Financial Officer and Treasurer
James D. Young
57
12
Senior Vice President and Chief Operating Officer - Fiber
Robert C. Ackerman
65
19
Senior Vice President and Chief Operating Officer - Towers and Small Cells
Kenneth J. Simon
57
2
Senior Vice President and General Counsel
Michael J. Kavanagh
50
7
Senior Vice President and Chief Commercial Officer
Philip M. Kelley
45
21
Senior Vice President - Corporate Development and Strategy

BOARD OF DIRECTORS
Name
Position
Committees
Age
Years as Director
J. Landis Martin
Chairman
NCG(a)
72
22
P. Robert Bartolo
Director
Audit, Compensation
46
4
Cindy Christy
Director
Compensation, NCG(a), Strategy
52
10
Ari Q. Fitzgerald
Director
Compensation, NCG(a), Strategy
55
15
Robert E. Garrison II
Director
Audit, Compensation
76
13
Andrea J. Goldsmith
Director
NCG(a), Strategy
53