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): January 23, 2019
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 January 23, 2019, Crown Castle International Corp. ("Company") issued a press release disclosing its financial results for fourth quarter and full year 2018. The January 23, 2019 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 January 23, 2019. 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: January 23, 2019


2
Exhibit
Exhibit 99.1

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12650491&doc=22
 
NEWS RELEASE
January 23, 2019

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

CROWN CASTLE REPORTS FOURTH QUARTER AND FULL YEAR 2018 RESULTS, RAISES OUTLOOK FOR FULL YEAR 2019

January 23, 2019 - HOUSTON, TEXAS - Crown Castle International Corp. (NYSE: CCI) ("Crown Castle") today reported results for the quarter and year ended December 31, 2018.
"We closed out another year of growth with solid results in the fourth quarter and increased our Outlook for 2019, demonstrating the strong fundamentals across our business," stated Jay Brown, Crown Castle’s Chief Executive Officer. "We are excited about the opportunity we see to leverage the unmatched portfolio of more than 40,000 towers and 65,000 route miles of dense, high capacity fiber that we have built and acquired over the past two decades in the top U.S. markets where we see the greatest long-term demand. We continue to believe our ability to offer towers, small cells and fiber solutions, which are all integral components of communications networks and are shared among multiple tenants, provides us the best opportunity to generate significant growth while delivering high returns for our shareholders. Further, we believe that the U.S. is the best market for communications infrastructure ownership, and we are pursuing that compelling opportunity with our comprehensive offering. With the positive momentum we continue to see in our towers and fiber segments, we remain focused on investing in our business to generate future growth and delivering 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 December 31, 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 Q4 2018 Outlook(b)
Actual Compared to Outlook
Q4 2018
Q4 2017
Change
% Change
Site rental revenues
$1,209
$1,051
+$158
+15%
$1,194
+$15
Net income (loss)
$213
$98
+$115
+117%
$214
-$1
Adjusted EBITDA(a)
$816
$707
+$109
+15%
$825
-$8
AFFO(a)(c)
$591
$512
+$79
+15%
$596
-$5
Weighted-average common shares outstanding - diluted
417
408
+9
+2%
416
+1
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 October 17, 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 15%, or $158 million, from fourth quarter 2017 to fourth quarter 2018, inclusive of approximately $59 million in Organic Contribution to Site Rental Revenues, $82 million in contributions from acquisitions and other items, and a $17 million increase in straight-lined revenues. The $59 million in Organic Contribution to Site Rental Revenues represents approximately 5.6% growth, comprised of approximately 7.7% growth from new leasing activity and contracted tenant escalations, net of approximately 2.1% from tenant non-renewals. When compared to the prior fourth quarter 2018 Outlook issued on October 17, 2018, site rental revenues were approximately $15 million higher than expected and included approximately $10 million of additional straight-lined revenues primarily resulting from term extensions associated with leasing activity.
Net income. Net income for fourth quarter 2018 was $213 million, compared to $98 million during the same period a year ago.
Adjusted EBITDA.  When compared to the prior fourth quarter 2018 Outlook, Adjusted EBITDA was impacted by approximately $10 million of higher costs associated with the combination of additional accruals for annual bonuses relating to full year 2018 results and expenses related to certain natural disasters that occurred during the fourth quarter. In addition, Adjusted EBITDA was also impacted by approximately $5 million of lower services contribution that is now expected to contribute to Adjusted EBITDA in 2019.
Capital expenditures. Capital expenditures during the quarter were $500 million, comprised of $18 million of land purchases, $30 million of sustaining capital expenditures, $447 million of revenue generating capital expenditures and $5 million of integration capital expenditures. The revenue generating capital expenditures of $447 million included $349 million attributable to Fiber and $98 million attributable to Towers.
Common stock dividend. During the quarter, Crown Castle paid common stock dividends of $1.125 per common share, an increase of approximately 7% on a per share basis compared to the same period a year ago.

RESULTS FOR THE YEAR
The table below sets forth select financial results for the year ended December 31, 2018. For further information, refer to the financial statements and non-GAAP and other calculation reconciliations included in this press release.
(in millions)
Actual
Midpoint Full Year 2018 Outlook(b)
Actual Compared to Outlook
2018
2017
Change
% Change
Site rental revenues
$4,716
$3,669
+$1,047
+29%
$4,701
+$15
Net income (loss)
$671
$445
+$226
+51%
$672
-$1
Adjusted EBITDA(a)
$3,141
$2,482
+$659
+27%
$3,149
-$8
AFFO(a)(c)
$2,274
$1,860
+$414
+22%
$2,278
-$5
Weighted-average common shares outstanding - diluted
415
383
+32
+8%
415
Note: Figures may not tie due to rounding
(a)
See reconciliation of this non-GAAP financial measure to net income (loss) included herein.
(b)
As issued on October 17, 2018.
(c)
Attributable to CCIC common stockholders.

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News Release continued:
 
Page 3

HIGHLIGHTS FROM THE YEAR
Site rental revenues. Site rental revenues grew approximately 29%, or $1,047 million, from full year 2017 to full year 2018, inclusive of approximately $207 million in Organic Contribution to Site Rental Revenues, $767 million in contributions from acquisitions and other items, and a $73 million increase in straight-lined revenues. The $207 million in Organic Contribution to Site Rental Revenues represents approximately 5.6% growth, comprised of approximately 8.0% growth from new leasing activity and contracted tenant escalations, net of approximately 2.4% from tenant non-renewals.
Capital expenditures. Capital expenditures during the year were $1.7 billion, comprised of $56 million of land purchases, $105 million of sustaining capital expenditures, $1.6 billion of revenue generating capital expenditures and $13 million of integration capital expenditures. The revenue generating capital expenditures of $1.6 billion included approximately $1.2 billion attributable to Fiber and approximately $350 million attributable to Towers.
Common stock dividend. During the year, Crown Castle paid common stock dividends of approximately $1.8 billion in the aggregate, or $4.275 per common share, an increase of approximately 10% on a per share basis compared to the same period a year ago.

"Our positive 2018 results and increased full year 2019 Outlook reflect the strong underlying demand for our communications infrastructure assets and our team's continued focus on translating the robust growth in data demand into growth in dividends per share," stated Dan Schlanger, Crown Castle's Chief Financial Officer. "Looking back on 2018, we had a very successful year. We delivered 10% growth in dividends per share year over year, made significant investments in new fiber assets in top markets where we see the greatest demand for small cells and fiber solutions, substantially completed the integration of our recent acquisitions, all while improving our financial flexibility by proactively refinancing upcoming maturities and increasing the average maturity of our debt. Looking forward, we are excited about the growth trends across our business and the long-term opportunity in front of Crown Castle as we continue to target 7% to 8% annual growth in dividends per share."




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News Release continued:
 
Page 4

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"). As previously announced on October 17, 2018, the Outlook section of Crown Castle's quarterly earnings releases now includes Outlook for full year periods only.
The following table sets forth Crown Castle's current Outlook for full year 2019:
(in millions)
Full Year 2019
Site rental revenues
$4,939
to
$4,984
Site rental cost of operations(a)
$1,438
to
$1,483
Net income (loss)
$781
to
$861
Adjusted EBITDA(b)
$3,344
to
$3,389
Interest expense and amortization of deferred financing costs(c)
$687
to
$732
FFO(b)(d)
$2,293
to
$2,338
AFFO(b)(d)
$2,413
to
$2,458
Weighted-average common shares outstanding - diluted(e)
417
(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 current outlook for 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 full year 2019 diluted weighted-average common shares outstanding is based on the diluted common shares outstanding as of December 31, 2018. The diluted weighted-average common shares outstanding does not include any assumed conversion of preferred stock in the share count.

Full Year 2019 Outlook
The table below compares the results for full year 2018, midpoint of the current full year 2019 Outlook and the midpoint of the previously provided full year 2019 Outlook for select metrics.
 
Midpoint of FY 2019 Outlook to FY 2018 Actual Comparison
 
 
(in millions)
Current
Full Year
2019 Outlook
Full Year
2018 Actual
Change
% Change
Previous Full Year 2019 Outlook(d)
Current Compared to Previous Outlook
Site rental revenues
$4,962
$4,716
+$246
+5%
$4,921
+$41
Net income (loss)
$821
$671
+$150
+22%
$778
+$43
Adjusted EBITDA(a)
$3,367
$3,141
+$226
+7%
$3,326
+$41
AFFO(a)(b)
$2,436
$2,274
+$162
+7%
$2,436
Weighted-average common shares outstanding - diluted(c)
417
415
+2
416
+1
(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 2019 diluted weighted-average common shares outstanding is based on the diluted common shares outstanding as of December 31, 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 October 17, 2018.



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Page 5

When compared to the prior full year 2019 Outlook, the increase to the expected growth in site rental revenues relates to the expected increase in straight-lined revenues primarily resulting from term extensions associated with leasing activity.
At the midpoints, the expected Organic Contribution to Site Rental Revenues from 2018 to 2019 represents 6.0% growth year over year compared to 5.6% for full year 2018, comprised of approximately 9.8% growth from new leasing activity and contracted tenant escalations, net of approximately 3.8% from tenant non-renewals.
The chart below reconciles the components of expected growth in site rental revenues from 2018 to 2019 of $223 million to $268 million, inclusive of expected Organic Contribution to Site Rental Revenues during 2019 of $260 million to $300 million.
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12650491&doc=23


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The chart below reconciles the components of expected growth in AFFO from 2018 to 2019 of $140 million to $185 million.
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12650491&doc=4

When compared to the prior full year 2019 Outlook, the Outlook for AFFO is unchanged.
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, January 24, 2019, at 10:30 a.m. Eastern time to discuss its fourth quarter 2018 results. The conference call may be accessed by dialing 888-204-4368 and asking for the Crown Castle call (access code 3601569) 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, January 24, 2019, through 1:30 p.m. Eastern time on Wednesday, April 24, 2019, and may be accessed by dialing 888-203-1112 and using access code 3601569. 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 65,000 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.

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News Release continued:
 
Page 7

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 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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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 maintenance 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 Services and Other Gross Margin. We define Segment Services and Other Gross Margin as segment services and other revenues less segment services and other cost of operations, excluding stock-based compensation expense recorded in consolidated services and other cost of operations.
Segment Operating Profit. We define Segment Operating Profit as segment site rental gross margin plus segment services and other gross margin, less selling, general and administrative expenses attributable to the respective segment.
All of these measurements of profit or loss are exclusive of depreciation, amortization and accretion, which are shown separately.
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.
Integration capital expenditures. We define integration capital expenditures as those capital expenditures made as a result of integrating acquired companies into our business.

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Sustaining capital expenditures. We define sustaining capital expenditures as those capital expenditures not otherwise categorized as either discretionary or integration capital expenditures, such as (1) maintenance capital expenditures on our communications infrastructure assets that enable our customers' ongoing quiet enjoyment of the communications infrastructure and (2) corporate capital expenditures.
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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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
 
December 31, 2018
 
December 31, 2017
 
December 31, 2018
 
December 31, 2017
(in millions)
 
 
 
 
 
 
 
Net income (loss)
$
213

 
$
98

 
$
671

 
$
445

Adjustments to increase (decrease) net income (loss):
 
 
 
 
 
 
 
Asset write-down charges
8

 
7

 
26

 
17

Acquisition and integration costs
9

 
34

 
27

 
61

Depreciation, amortization and accretion
390

 
362

 
1,528

 
1,242

Amortization of prepaid lease purchase price adjustments
5

 
5

 
20

 
20

Interest expense and amortization of deferred financing costs(a)
164

 
160

 
642

 
591

(Gains) losses on retirement of long-term obligations

 

 
106

 
4

Interest income
(2
)
 
(6
)
 
(5
)
 
(19
)
Other (income) expense
(1
)
 
2

 
(1
)
 
(1
)
(Benefit) provision for income taxes
5

 
15

 
19

 
26

Stock-based compensation expense
25

 
30

 
108

 
96

Adjusted EBITDA(b)(c)
$
816

 
$
707

 
$
3,141

 
$
2,482

(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.

Reconciliation of Current Outlook for Adjusted EBITDA:
 
Full Year 2019
(in millions)
Outlook
Net income (loss)
$781
to
$861
Adjustments to increase (decrease) net income (loss):
 
 
 
Asset write-down charges
$35
to
$45
Acquisition and integration costs
$15
to
$25
Depreciation, amortization and accretion
$1,606
to
$1,646
Amortization of prepaid lease purchase price adjustments
$19
to
$21
Interest expense and amortization of deferred financing costs(a)
$687
to
$732
(Gains) losses on retirement of long-term obligations
$0
to
$0
Interest income
$(7)
to
$(3)
Other (income) expense
$(1)
to
$1
(Benefit) provision for income taxes
$17
to
$25
Stock-based compensation expense
$111
to
$116
Adjusted EBITDA(b)(c)
$3,344
to
$3,389
(a)
See the reconciliation of "components of current outlook for 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 Twelve Months Ended
(in millions)
December 31, 2018
 
December 31, 2017
 
December 31, 2018
 
December 31, 2017
Net income (loss)
$
213

 
$
98

 
$
671

 
$
445

Real estate related depreciation, amortization and accretion
375

 
354

 
1,472

 
1,211

Asset write-down charges
8

 
7

 
26

 
17

Dividends on preferred stock
(28
)
 
(30
)
 
(113
)
 
(30
)
FFO(a)(b)(c)(d)(e)
$
568


$
429


$
2,055


$
1,643

 
 
 
 
 
 
 
 
FFO (from above)
$
568

 
$
429

 
$
2,055

 
$
1,643

Adjustments to increase (decrease) FFO:
 
 
 
 
 
 
 
Straight-lined revenue
(20
)
 
(3
)
 
(72
)
 

Straight-lined expense
21

 
23

 
90

 
93

Stock-based compensation expense
25

 
30

 
108

 
96

Non-cash portion of tax provision
3

 
12

 
2

 
9

Non-real estate related depreciation, amortization and accretion
15

 
8

 
56

 
31

Amortization of non-cash interest expense
2

 
2

 
7

 
9

Other (income) expense
(1
)
 
2

 
(1
)
 
(1
)
(Gains) losses on retirement of long-term obligations

 

 
106

 
4

Acquisition and integration costs
9

 
34

 
27

 
61

Maintenance capital expenditures
(17
)
 
(13
)
 
(64
)
 
(41
)
Corporate capital expenditures
(13
)
 
(12
)
 
(41
)
 
(44
)
AFFO(a)(b)(c)(d)(e)
$
591


$
512


$
2,274


$
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 417 million, 408 million, 415 million and 383 million for the three months ended December 31, 2018 and 2017, and the twelve months ended December 31, 2018 and 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 12

Reconciliation of Current Outlook for FFO and AFFO:
 
Full Year 2019
(in millions)
Outlook
Net income (loss)
$781
to
$861
Real estate related depreciation, amortization and accretion
$1,557
to
$1,577
Asset write-down charges
$35
to
$45
Dividends on preferred stock
$(113)
to
$(113)
FFO(a)(b)(c)(d)(e)
$2,293
to
$2,338
 
 
 
 
FFO (from above)
$2,293
to
$2,338
Adjustments to increase (decrease) FFO:
 
 
 
Straight-lined revenue
$(50)
to
$(30)
Straight-lined expense
$70
to
$90
Stock-based compensation expense
$111
to
$116
Non-cash portion of tax provision
$(4)
to
$6
Non-real estate related depreciation, amortization and accretion
$49
to
$69
Amortization of non-cash interest expense
$(2)
to
$8
Other (income) expense
$(1)
to
$1
(Gains) losses on retirement of long-term obligations
$0
to
$0
Acquisition and integration costs
$15
to
$25
Maintenance capital expenditures
$(80)
to
$(70)
Corporate capital expenditures
$(45)
to
$(35)
AFFO(a)(b)(c)(d)(e)
$2,413
to
$2,458
(a)
The assumption for full year 2019 diluted weighted-average common shares outstanding is 417 million based on the diluted common shares outstanding as of December 31, 2018. 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 13

For Comparative Purposes - Reconciliation of Previous Outlook for Adjusted EBITDA:
 
Previously Issued
 
Previously Issued
 
Previously Issued
 
Q4 2018
 
Full Year 2018
 
Full Year 2019
(in millions)
Outlook
 
Outlook
 
Outlook
Net income (loss)
$201
to
$226
 
$659
to
$684
 
$738
to
$818
Adjustments to increase (decrease) net income (loss):
 
 
 
 
 
 
 
 
 
 
 
Asset write-down charges
$9
to
$11
 
$27
to
$29
 
$35
to
$45
Acquisition and integration costs
$8
to
$12
 
$26
to
$30
 
$15
to
$25
Depreciation, amortization and accretion
$381
to
$401
 
$1,519
to
$1,539
 
$1,609
to
$1,644
Amortization of prepaid lease purchase price adjustments
$4
to
$6
 
$19
to
$21
 
$19
to
$21
Interest expense and amortization of deferred financing costs
$160
to
$170
 
$638
to
$648
 
$691
to
$736
(Gains) losses on retirement of long-term obligations
$0
to
$0
 
$106
to
$106
 
$0
to
$0
Interest income
$(2)
to
$0
 
$(6)
to
$(4)
 
$(7)
to
$(3)
Other (income) expense
$(1)
to
$3
 
$(1)
to
$3
 
$(1)
to
$1
(Benefit) provision for income taxes
$3
to
$8
 
$16
to
$21
 
$16
to
$24
Stock-based compensation expense
$23
to
$27
 
$107
to
$111
 
$111
to
$115
Adjusted EBITDA(a)(b)
$820
to
$830
 
$3,144
to
$3,154
 
$3,303
to
$3,348
(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
 
Previously Issued
 
Q4 2018
 
Full Year 2018
 
Full Year 2019
(in millions)
Outlook
 
Outlook
 
Outlook
Net income (loss)
$201
to
$226
 
$659
to
$684
 
$738
to
$818
Real estate related depreciation, amortization and accretion
$372
to
$382
 
$1,469
to
$1,479
 
$1,560
to
$1,580
Asset write-down charges
$9
to
$11
 
$27
to
$29
 
$35
to
$45
Dividends on preferred stock
$(28)
to
$(28)
 
$(113)
to
$(113)
 
$(113)
to
$(113)
FFO(a)(b)(c)(d)
$567
to
$577
 
$2,055
to
$2,065
 
$2,252
to
$2,297
 
 
 
 
 
 
 
 
 
 
 
 
FFO (from above)
$567
to
$577
 
$2,055
to
$2,065
 
$2,252
to
$2,297
Adjustments to increase (decrease) FFO:
 
 
 
 
 
 
 
 
 
 
 
Straight-lined revenue
$(15)
to
$(5)
 
$(67)
to
$(57)
 
$(9)
to
$11
Straight-lined expense
$16
to
$26
 
$85
to
$95
 
$68
to
$88
Stock-based compensation expense
$23
to
$27
 
$107
to
$111
 
$111
to
$115
Non-cash portion of tax provision
$(2)
to
$3
 
$(4)
to
$1
 
$(7)
to
$8
Non-real estate related depreciation, amortization and accretion
$9
to
$19
 
$50
to
$60
 
$49
to
$64
Amortization of non-cash interest expense
$0
to
$4
 
$5
to
$9
 
$2
to
$12
Other (income) expense
$(1)
to
$3
 
$(1)
to
$3
 
$(1)
to
$1
(Gains) losses on retirement of long-term obligations
$0
to
$0
 
$106
to
$106
 
$0
to
$0
Acquisition and integration costs
$8
to
$12
 
$26
to
$30
 
$15
to
$25
Maintenance capital expenditures
$(20)
to
$(10)
 
$(66)
to
$(56)
 
$(85)
to
$(75)
Corporate capital expenditures
$(30)
to
$(20)
 
$(59)
to
$(49)
 
$(40)
to
$(30)
AFFO(a)(b)(c)(d)
$591
to
$601
 
$2,273
to
$2,283
 
$2,413
to
$2,458
(a)
Previously issued fourth quarter 2018, full year 2018 and full year 2019 Outlook assumes diluted weighted-average common shares outstanding as of September 30, 2018 of approximately 416 million, 415 million and 416 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 14

The components of changes in site rental revenues for the quarters ended December 31, 2018 and 2017 are as follows:

 
Three Months Ended
 December 31,
(dollars 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)
$
1,048

 
$
812

 

 

New leasing activity(b)(c)
60

 
42

Escalators
21

 
20

Non-renewals
(22
)
 
(18
)
Organic Contribution to Site Rental Revenues(d)
59

 
44

Straight-lined revenues associated with fixed escalators
20

 
3

Acquisitions(e)
82

 
192

Other

 

Total GAAP site rental revenues
$
1,209

 
$
1,051

 
 
 
 
Year-over-year changes in revenue:
 
 
 
Reported GAAP site rental revenues
15.0
%
 
 
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, with the exception of the impact of Lightower. To be consistent with prior presentations of the 2018 Outlook for Organic Contributions to Site Rental Revenues, the entire contribution to growth in site rental revenues in 2018 attributable to Lightower is included within acquisitions.
(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 15

The components of the changes in site rental revenues for the years ending December 31, 2018 and 2019 are forecasted as follows:

(dollars in millions)
Full Year 2018
 
Full Year
2019 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)
$3,670
 
$4,643
 

 
 
New leasing activity(b)(c)
213
 
350-380
Escalators
83
 
85-95
Non-renewals
(89)
 
(185)-(165)
Organic Contribution to Site Rental Revenues(d)
207
 
260-300
Straight-lined revenues associated with fixed escalators
72
 
30-50
Acquisitions(e)
767
 
Other
 
Total GAAP site rental revenues
$4,716
 
$4,939-$4,984
 
 
 
 
Year-over-year changes in revenue:

 
 
Reported GAAP site rental revenues
28.5%
 
5.2%(f)
Organic Contribution to Site Rental Revenues(d)(g)
5.6%
 
6.0%(f)

(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. To be consistent with prior presentations of the 2018 Outlook for Organic Contributions to Site Rental Revenues, the entire contribution to growth in site rental revenues in 2018 attributable to Lightower is included within acquisitions.
(f)
Calculated based on midpoint of full year 2019 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 16

Components of Historical Interest Expense and Amortization of Deferred Financing Costs:
 
For the Three Months Ended
(in millions)
December 31, 2018
 
December 31, 2017
Interest expense on debt obligations
$
162

 
$
158

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

 
5

Other, net
(3
)
 
(3
)
Interest expense and amortization of deferred financing costs
$
164

 
$
160


Components of Current Outlook for Interest Expense and Amortization of Deferred Financing Costs:
 
Full Year 2019
(in millions)
Outlook
Interest expense on debt obligations
$696
to
$716
Amortization of deferred financing costs and adjustments on long-term debt, net
$17
to
$22
Other, net
$(19)
to
$(14)
Interest expense and amortization of deferred financing costs
$687
to
$732

Debt balances and maturity dates as of December 31, 2018 are as follows:
(in millions)
Face Value
 
Final Maturity
Cash and cash equivalents(a)
$
277

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

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

 
May 2045
Tower Revenue Notes, Series 2018-1(b)
250

 
July 2043
Tower Revenue Notes, Series 2018-2(b)
750

 
July 2048
3.849% Secured Notes
1,000

 
Apr. 2023
Secured Notes, Series 2009-1, Class A-1(c)
13

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

 
Aug. 2029
Capital leases and other obligations
227

 
Various
Total secured debt
$
3,310

 
 
2016 Revolver
1,075

 
June 2023
2016 Term Loan A
2,356

 
June 2023
5.250% Senior Notes
1,650

 
Jan. 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

 
July 2023
3.800% Senior Notes
1,000

 
Feb. 2028
Total unsecured debt
$
13,481

 
 
Total net debt
$
16,514

 
 
(a)
Excludes restricted cash.
(b)
The Senior Secured Tower Revenue Notes, Series 2015-1 and 2015-2 have anticipated repayment dates in 2022 and 2025, respectively. The Senior Secured Tower Revenue Notes, Series 2018-1 and 2018-2 have anticipated repayment dates in 2023 and 2028, respectively.
(c)
The Senior Secured Notes, Series 2009-1, Class A-1 principal amortizes during the period beginning in January 2010 and ending in August 2019 and the Senior Secured Notes, 2009-1, Class A-2 principal amortizes during the period beginning in September 2019 and ending in August 2029.






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News Release continued:
 
Page 17

Net Debt to Last Quarter Annualized Adjusted EBITDA is computed as follows:
(dollars in millions)
For the Three Months Ended December 31, 2018
Total face value of debt
$
16,791

Ending cash and cash equivalents(a)
277

Total Net Debt
$
16,514

 
 
Adjusted EBITDA for the three months ended December 31, 2018
$
816

Last quarter annualized Adjusted EBITDA
3,264

Net Debt to Last Quarter Annualized Adjusted EBITDA
5.1
x
(a)
Excludes restricted cash.

Components of Capital Expenditures:
 
For the Three Months Ended
(in millions)
December 31, 2018
 
December 31, 2017
 
Towers
Fiber
Other
Total
 
Towers
Fiber
Other
Total
Discretionary:
 
 
 
 
 
 
 
 
 
Purchases of land interests
$
18

$

$

$
18

 
$
15

$

$

$
15

Communications infrastructure construction and improvements
98

349


447

 
76

261


337

Sustaining:








 





Maintenance and corporate
8

15

7

30

 
11

8

7

25

Integration


5

5

 




Total
$
124

$
364

$
11

$
500

 
$
101

$
268

$
7

$
377

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 18

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 and fundamentals 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, including the contribution to or impact on our financial or operating results, (5) leasing environment and activity, including the contribution to our financial or operating results therefrom, (6) our investments in our business and communications infrastructure assets and the potential growth, returns and benefits therefrom, (7) our dividends and our dividend growth rate, including its driving factors, and targets, (8) the strength of the US market, (9) our portfolio of assets, including demand therefor, strategic position thereof and opportunities created thereby, (10) benefits which may be derived from refinancings, (11) cash flows, (12) tenant non-renewals, including the impact thereof, (13) capital expenditures, including sustaining and discretionary capital expenditures, and the timing thereof, (14) straight-line adjustments, (15) site rental revenues and estimated growth thereof, (16) site rental cost of operations, (17) net income (loss), (18) Adjusted EBITDA, including the impact of the timing of certain components thereof, (19) expenses, including interest expense and amortization of deferred financing costs, (20) FFO, (21) AFFO and estimated growth thereof, (22) Organic Contribution to Site Rental Revenues, (23) our weighted-average common shares outstanding, including on a diluted basis, (24) services contribution, including the timing thereof, and (25) 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 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 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 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 19

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 20

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12650491&doc=22
CROWN CASTLE INTERNATIONAL CORP.
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
(Amounts in millions, except par values)

 
December 31,
2018
 
December 31,
2017
 
 
 
 
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
277

 
$
314

Restricted cash
131

 
121

Receivables, net
501

 
398

Prepaid expenses
172

 
162

Other current assets
148

 
139

Total current assets
1,229

 
1,134

Deferred site rental receivables
1,366

 
1,300

Property and equipment, net
13,676

 
12,933

Goodwill
10,078

 
10,021

Other intangible assets, net
5,516

 
5,962

Long-term prepaid rent and other assets, net
920

 
879

Total assets
$
32,785

 
$
32,229

 
 
 
 
LIABILITIES AND EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
313

 
$
249

Accrued interest
148

 
132

Deferred revenues
498

 
457

Other accrued liabilities
351

 
339

Current maturities of debt and other obligations
107

 
115

Total current liabilities
1,417

 
1,292

Debt and other long-term obligations
16,575

 
16,044

Other long-term liabilities
2,759

 
2,554

Total liabilities
20,751

 
19,890

Commitments and contingencies
 
 
 
CCIC stockholders' equity:
 
 
 
Common stock, $0.01 par value; 600 shares authorized; shares issued and outstanding: December 31, 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: December 31, 2018—2 and December 31, 2017—2; aggregate liquidation value: December 31, 2018—$1,650 and December 31, 2017—$1,650

 

Additional paid-in capital
17,767

 
16,844

Accumulated other comprehensive income (loss)
(5
)
 
(4
)
Dividends/distributions in excess of earnings
(5,732
)
 
(4,505
)
Total equity
12,034

 
12,339

Total liabilities and equity
$
32,785

 
$
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 December 31,
 
Twelve Months Ended December 31,
 
2018
 
2017
 
2018
 
2017
Net revenues:
 
 
 
 
 
 
 
Site rental
$
1,209


$
1,051


$
4,716


$
3,669

Services and other
210


187


707


687

Net revenues
1,419


1,238


5,423


4,356

Operating expenses:











Costs of operations (exclusive of depreciation, amortization and accretion):











Site rental
353


329


1,410


1,144

Services and other
135


110


437


420

Selling, general and administrative
145


127


563


426

Asset write-down charges
8


7


26


17

Acquisition and integration costs
9


34


27


61

Depreciation, amortization and accretion
390


362


1,528


1,242

Total operating expenses
1,040


969


3,991


3,310

Operating income (loss)
379


269


1,432


1,046

Interest expense and amortization of deferred financing costs
(164
)

(160
)

(642
)

(591
)
Gains (losses) on retirement of long-term obligations




(106
)

(4
)
Interest income
2


6


5


19

Other income (expense)
1


(2
)

1


1

Income (loss) before income taxes
218


113


690


471

Benefit (provision) for income taxes
(5
)

(15
)

(19
)

(26
)
Net income (loss)
213


98


671


445

Dividends on preferred stock
(28
)

(28
)

(113
)

(58
)
Net income (loss) attributable to CCIC common stockholders
$
185


$
70


$
558


$
387













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











Net income (loss) attributable to CCIC common stockholders, basic
$
0.45


$
0.17


$
1.35


$
1.01

Net income (loss) attributable to CCIC common stockholders, diluted
$
0.44

 
$
0.17

 
$
1.34

 
$
1.01













Weighted-average common shares outstanding:











Basic
415


406


413


382

Diluted
417


408


415


383


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CROWN CASTLE INTERNATIONAL CORP.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)(a)
(In millions of dollars)
 
Twelve Months Ended December 31,
 
2018
 
2017
Cash flows from operating activities:
 
 
 
Net income (loss)
$
671


$
445

Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities:
 
 
 
Depreciation, amortization and accretion
1,528


1,242

(Gains) losses on retirement of long-term obligations
106


4

Amortization of deferred financing costs and other non-cash interest
7

 
9

Stock-based compensation expense
103

 
92

Asset write-down charges
26

 
17

Deferred income tax (benefit) provision
2

 
15

Other non-cash adjustments, net
2

 
(2
)
Changes in assets and liabilities, excluding the effects of acquisitions:


 


Increase (decrease) in liabilities
276

 
176

Decrease (increase) in assets
(219
)
 
45

Net cash provided by (used for) operating activities
2,502

 
2,043

Cash flows from investing activities:


 


Payments for acquisitions, net of cash acquired
(42
)
 
(9,260
)
Capital expenditures
(1,741
)
 
(1,228
)
Other investing activities, net
(12
)
 
(5
)
Net cash provided by (used for) investing activities
(1,795
)
 
(10,493
)
Cash flows from financing activities:


 


Proceeds from issuance of long-term debt
2,742

 
3,093

Principal payments on debt and other long-term obligations
(105
)
 
(119
)
Purchases and redemptions of long-term debt
(2,346
)
 

Borrowings under revolving credit facility
1,820

 
2,820

Payments under revolving credit facility
(1,725
)
 
(1,840
)
Payments for financing costs
(31
)
 
(29
)
Net proceeds from issuance of common stock
841

 
4,221

Net proceeds from issuance of preferred stock

 
1,608

Purchases of common stock
(34
)
 
(23
)
Dividends/distributions paid on common stock
(1,782
)
 
(1,509
)
Dividends paid on preferred stock
(113
)
 
(30
)
Net cash provided by (used for) financing activities
(733
)
 
8,192

Net increase (decrease) in cash, cash equivalents, and restricted cash
(26
)
 
(258
)
Effect of exchange rate changes on cash
(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)
$
413

 
$
440

Supplemental disclosure of cash flow information:


 


Interest paid
619

 
547

Income taxes paid
17

 
16


(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 December 31, 2018
 
Three Months Ended December 31, 2017
 
Towers
 
Fiber
 
Other
 
Consolidated Total
 
Towers
 
Fiber
 
Other
 
Consolidated Total
Segment site rental revenues
$
798


$
411

 
 
 
$
1,209

 
$
741


$
310

 
 
 
$
1,051

Segment services and other revenues
202


8

 
 
 
210

 
176


11

 
 
 
187

Segment revenues
1,000

 
419

 
 
 
1,419

 
917

 
321

 
 
 
1,238

Segment site rental cost of operations
207


138

 
 
 
345

 
212


106

 
 
 
318

Segment services and other cost of operations
127


5

 
 
 
132

 
98


10

 
 
 
108

Segment cost of operations(a)(b)
334

 
143

 
 
 
477

 
310

 
116

 
 
 
426

Segment site rental gross margin(c)
591

 
273

 
 
 
864

 
529

 
204

 
 
 
733

Segment services and other gross margin(c)
75

 
3

 
 
 
78

 
78

 
1

 
 
 
79

Segment selling, general and administrative expenses(b)
29


47

 
 
 
76

 
26


33

 
 
 
59

Segment operating profit(c)
637

 
229

 

 
866

 
581

 
172

 

 
753

Other selling, general and administrative expenses(b)
 
 
 
 
$
50

 
50

 
 
 
 
 
$
46

 
46

Stock-based compensation expense
 
 
 
 
25

 
25

 
 
 
 
 
30

 
30

Depreciation, amortization and accretion
 
 
 
 
390

 
390

 
 
 
 
 
362

 
362

Interest expense and amortization of deferred financing costs
 
 
 
 
164

 
164

 
 
 
 
 
160

 
160

Other (income) expenses to reconcile to income (loss) before income taxes(d)
 
 
 
 
19

 
19

 
 
 
 
 
42

 
42

Income (loss) before income taxes
 
 
 
 
 
 
$
218

 
 
 
 
 
 
 
$
113

(a)
Exclusive of depreciation, amortization and accretion shown separately.
(b)
Segment cost of operations excludes (1) stock-based compensation expense of $6 million and $8 million for the three months ended December 31, 2018 and 2017, respectively, and (2) prepaid lease purchase price adjustments of $5 million for both of the three months ended December 31, 2018 and 2017. Selling, general and administrative expenses exclude stock-based compensation expense of $19 million and $22 million for the three months ended December 31, 2018 and 2017, respectively.
(c) See "Non-GAAP Financial Measures, Segment Measures and Other Calculations" herein for a discussion of our definitions of segment site rental gross margin, segment services and other gross margin and segment operating profit.
(d)
See condensed consolidated statement of operations for further information.



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SEGMENT OPERATING RESULTS
 
Twelve Months Ended December 31, 2018
 
Twelve Months Ended December 31, 2017
 
Towers
 
Fiber
 
Other
 
Consolidated Total
 
Towers
 
Fiber
 
Other
 
Consolidated Total
Segment site rental revenues
$
3,116


$
1,600

 
 
 
$
4,716

 
$
2,900


$
769

 
 
 
$
3,669

Segment services and other revenues
691


16

 
 
 
707

 
637


50

 
 
 
687

Segment revenues
3,807

 
1,616

 
 
 
5,423

 
3,537

 
819

 
 
 
4,356

Segment site rental cost of operations
848


525

 
 
 
1,373

 
845


264

 
 
 
1,109

Segment services and other cost of operations
418


11

 
 
 
429

 
374


41

 
 
 
415

Segment cost of operations(a)(b)
1,266

 
536

 
 
 
1,802

 
1,219

 
305

 
 
 
1,524

Segment site rental gross margin(c)
2,268

 
1,075

 
 
 
3,343

 
2,055

 
505

 
 
 
2,560

Segment services and other gross margin(c)
273

 
5

 
 
 
278

 
263

 
9

 
 
 
272

Segment selling, general and administrative expenses(b)
110


179

 
 
 
289

 
94


89

 
 
 
183

Segment operating profit(c)
2,431

 
901

 

 
3,332

 
2,224

 
425

 

 
2,649

Other selling, general and administrative expenses(b)
 
 
 
 
$
191

 
191

 
 
 
 
 
$
167

 
167

Stock-based compensation expense
 
 
 
 
108

 
108

 
 
 
 
 
96

 
96

Depreciation, amortization and accretion
 
 
 
 
1,528

 
1,528

 
 
 
 
 
1,242

 
1,242

Interest expense and amortization of deferred financing costs
 
 
 
 
642

 
642

 
 
 
 
 
591

 
591

Other (income) expenses to reconcile to income (loss) before income taxes(d)
 
 
 
 
173

 
173

 
 
 
 
 
82

 
82

Income (loss) before income taxes
 
 
 
 
 
 
$
690

 

 
 
 
 
 
$
471

(a)
Exclusive of depreciation, amortization and accretion shown separately.
(b)
Segment cost of operations excludes (1) stock-based compensation expense of $25 million and $20 million for the twelve months ended December 31, 2018 and 2017, respectively, and (2) prepaid lease purchase price adjustments of $20 million for both of the twelve months ended December 31, 2018 and 2017. Selling, general and administrative expenses exclude stock-based compensation expense of $83 million and $76 million for the twelve months ended December 31, 2018 and 2017, respectively.
(c) See "Non-GAAP Financial Measures, Segment Measures and Other Calculations" herein for a discussion of our definitions of segment site rental gross margin, segment services and other gross margin and segment operating profit.
(d)
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
Fourth Quarter • December 31, 2018




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Crown Castle International Corp.
Fourth 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 full year 2019.
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.
Fourth 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 65,000 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 existing 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 existing communications infrastructure. We seek to maximize our site rental cash flows by working with our customers to provide them quick access to our existing 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. In addition to adding tenants to existing communications infrastructure, 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. These investments include constructing and acquiring new communications infrastructure that we expect will generate future cash flow growth and attractive long-term returns by adding tenants to those assets over time. Our historical investments have included the following (in no particular order):
construction of towers, fiber and small cells;

2

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

acquisitions of towers, fiber and small cells;
acquisitions of land interests (which primarily relate to land assets under towers);
improvements and structural enhancements to our existing communications infrastructure;
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 newly constructed or acquired communications infrastructure, as described above.
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 2019 Outlook as issued on January 23, 2019.

3

Crown Castle International Corp.
Fourth 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