UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 25, 2020
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | |||||
(Address of principal executives office) (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 (see General Instruction A.2. below):
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | ||
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | ||
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | ||
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | ||
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
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 ☐
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. ☐
ITEM 2.02 — RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On February 26, 2020, Crown Castle International Corp. ("Company") issued a press release disclosing its financial results for fourth quarter and full year ended December 31, 2019. The February 26, 2020 press release is furnished herewith as Exhibit 99.1.
ITEM 4.02 — NON-RELIANCE ON PREVIOUSLY ISSUED FINANCIAL STATEMENTS OR A RELATED AUDIT REPORT OR COMPLETED INTERIM REVIEW
(a)
Correction of Errors in Previously Issued Financial Statements
Following review of the Company's accounting policies for tower installation services, we identified historical errors related to the timing of revenue recognition for such services. Due to these errors, on February 25, 2020, the Audit Committee of the Company’s Board of Directors, after considering the recommendation of management and after discussion with the Company’s independent registered public accounting firm, PricewaterhouseCoopers LLP, concluded that the following financial statements previously issued by the Company should no longer be relied upon: (1) audited consolidated financial statements and related disclosures for years ended December 31, 2016 through and including 2018 and (2) unaudited financial statements and related disclosures for the quarterly and year-to-date periods during 2018 and for the first three quarters of fiscal year 2019. As a result, the Company is restating its financial statements for the years ended December 31, 2018 and 2017 and unaudited financial information for the quarterly and year-to-date periods in the year ended December 31, 2018 and for the first three quarters in the year ended December 31, 2019. The restatement also affects periods prior to 2017, and the cumulative effect of the errors is expected to be reflected in the Company's Annual Report on Form 10-K for the year ended December 31, 2019 ("2019 10-K") as an adjustment to opening “Dividends/distributions in excess of earnings” as of January 1, 2017.
The restated financial statements and financial information will be included in the 2019 10-K, which the Company expects to file by the time period prescribed for such filing, including any available extension if needed to finalize the consolidated financial statements and disclosures and complete the associated audit work. Specifically, the Company intends to include in its 2019 10‑K, the restated 2018 and 2017 year-end financial statements in its consolidated financial statements and include the restated quarterly financial information in the unaudited quarterly financial information note to the consolidated financial statements. The Company does not intend to file amended Quarterly Reports on Form 10-Q to reflect the restatement.
Identification of Material Weakness
The Company has determined that the restatement of the Company's previously issued financial statements as described above indicates the existence of one or more material weaknesses in its internal control over financial reporting and that the Company's internal control over financial reporting and disclosure controls and procedures were ineffective as of December 31, 2019. The Company will report the material weakness(es) in its 2019 10-K and intends to create a plan of remediation to address the material weakness(es).
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 February 26, 2020. 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 | ||
104 | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document | |
The information in Items 2.02 and 7.01 of 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.
Cautionary Language Regarding Forward Looking Statements
This Current Report on Form 8-K contains forward-looking statements and information that are based on the current expectations of the management of the Company. Statements that are not historical facts are hereby identified as forward-looking statements. Words such as “may,” “should,” “could,” “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.
The forward-looking statements included in this report are based on our current expectations, projections, estimates and assumptions. These statements are only predictions, not guarantees. Such forward-looking statements are subject to numerous risks and uncertainties that are difficult to predict. These risks and uncertainties may cause actual results to differ materially from what is indicated in such forward-looking statements, and include, without limitation, the following: the timing of the filing of the 2019 10-K; the financial statements to be restated and the filing in which such restated financial statements will appear; additional restatement-related information that will be reflected in the 2019 10-K; the Company's intent to report one or more material weaknesses in its internal control over financial reporting; the Company's intent to create a remediation plan; and other factors described from time to time in our filings with the Securities and Exchange Commission.
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: February 26, 2020
Exhibit 99.1
 | NEWS RELEASE February 26, 2020 | |
Contacts: Dan Schlanger, CFO | |
Ben Lowe, VP & Treasurer | |
FOR IMMEDIATE RELEASE | Crown Castle International Corp. |
713-570-3050 | |
CROWN CASTLE REPORTS FULL YEAR 2019 RESULTS,
UPDATES OUTLOOK FOR FULL YEAR 2020, AND ANNOUNCES RESTATEMENT OF FINANCIAL RESULTS
February 26, 2020 - HOUSTON, TEXAS - Crown Castle International Corp. (NYSE: CCI) ("Crown Castle") today reported results for the fourth quarter and full year ended December 31, 2019, updated its full year 2020 Outlook, and announced the restatement of previously-issued financial statements.
(in millions, except per share amounts) | Midpoint of Current Full Year 2020 Outlook(c) | Full Year 2019 Actual(d) | Full Year 2018 Actual, as restated(d) | Full Year 2019 to Full Year 2020 Outlook % Change | Full Year 2018 to Full Year 2019 % Change(d) |
Site rental revenues | $5,360 | $5,098 | $4,800 | +5% | +6% |
Net income (loss) | $1,038 | $863 | $625 | +20% | +38% |
Net income (loss) per share—diluted(a) | $2.32 | $1.80 | $1.23 | +29% | +46% |
Adjusted EBITDA(b) | $3,502 | $3,304 | $3,095 | +6% | +7% |
AFFO(a)(b) | $2,595 | $2,376 | $2,228 | +9% | +7% |
AFFO per share(a)(b) | $6.12 | $5.69 | $5.37 | +8% | +6% |
(a) | Attributable to CCIC common stockholders. |
(b) | See "Non-GAAP Financial Measures, Segment Measures and Other Calculations" included herein for further information and reconciliation of this non-GAAP financial measure to net income (loss). |
(c) | Represents no change from the midpoint of full year 2020 Outlook issued on October 16, 2019 ("Previous 2020 Outlook") other than the impact of the restatement described in "Expected Impact of the Restatement of Previously-Issued Financial Statements." |
(d) | Results are preliminary and unaudited. See "Expected Impact of the Restatement of Previously-Issued Financial Statements" included herein for more information regarding the Company's restatement. |
"In 2019, we experienced our highest level of tower leasing activity in more than a decade as the continued growth in mobile data demand is driving our customers to make significant investments in their existing 4G networks, while they are also positioning their businesses for 5G," stated Jay Brown, Crown Castle’s Chief Executive Officer. "We 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. We believe that the U.S. represents the best market in the world for communications infrastructure ownership, and we are pursuing that compelling opportunity with our comprehensive offering.
"Further, we delivered another strong year of results for full year 2019 despite a noticeable slowdown in activity in the fourth quarter of 2019. We anticipate that this slowdown is temporary in nature and see a return to significant activity in the second half of this year. We believe the industry fundamentals are improving further with the competitive landscape for our existing customers coming into focus, the prospect of new customers looking for access to our tower
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and fiber infrastructure at scale, and additional wireless spectrum auctions on the horizon. As we look forward to what will likely be another decade-long investment cycle for our customers with the deployment of 5G, I am excited about the opportunity we see for Crown Castle to deliver long-term value to our shareholders while delivering dividend per share growth of 7% to 8% per year."
DISCUSSION OF TOWER INSTALLATION SERVICES REVENUES
In connection with our year-end procedures and after receiving the previously disclosed subpoena from the U.S. Securities and Exchange Commission ("SEC"), we engaged in a review internally, and in consultation with our independent auditors, PricewaterhouseCoopers LLP ("PwC"), of our accounting policies for our tower installation services. Following that review, we decided with PwC to seek input from the SEC's Office of the Chief Accountant ("OCA") regarding whether a portion of our services revenues should be recognized over the term of the associated lease. The OCA is an office of the SEC that provides guidance to registrants and auditors regarding the application of accounting standards and financial disclosure requirements. The OCA provided advice on the specific revenue recognition question we submitted to them for their review and did not review or address any other aspect of our accounting policies. Our consultation with the OCA was not part of the previously disclosed SEC investigation, which is still ongoing, or the related subpoena, which primarily related to certain of our long-standing capitalization and expense policies for tenant upgrades and installations in our services business.
Our long-standing historical practice with respect to services revenues had been to recognize the entirety of the transaction price from our tower installation services as services revenues upon the completion of the installation services. After consultation with the OCA, we concluded that our historical practice was not acceptable under GAAP. Instead, a portion of the transaction price for our installation services, specifically the amounts associated with permanent improvements recorded as fixed assets, represents a modification to the leases to which the services work is related and, therefore, should be recognized on a ratable basis as site rental revenues over the associated estimated remaining lease term. Cumulatively, over the term of customer lease contracts, we will recognize the same amount of total revenue and total gross margin as our historical practice.
The result of recognizing a portion of the transaction price on a ratable basis will be an increase to site rental revenues and site rental gross margins that offsets, over time, the decreases to services revenues and services gross margins, in both historical and future periods. As a result, the preliminary impact to each of Net Income, Adjusted EBITDA and AFFO is a decrease of approximately $100 million for full year 2019 actuals and a decrease of approximately $90 million to our Previous 2020 Outlook. We have provided tables in this release to reconcile the changes. Recognizing a portion of the transaction price on a ratable basis for tower installation services will have no impact on our net cash flows, business operations or expected dividend per share growth.
Due to the identified errors described above, we will restate our financial statements for the years ended December 31, 2018 and 2017, and unaudited financial information for the quarterly and year-to-date periods in the year ended December 31, 2018 and for the first three quarters in the year ended December 31, 2019. Restated financial statements and financial information for the periods in question will be reflected in Crown Castle's Annual Report on Form 10-K for the year ended December 31, 2019 ("2019 10-K"), which Crown Castle expects to file within the prescribed timeline for such report, including any available extension if needed to finalize the consolidated financial statements and disclosures and complete the associated audit work.
Additional information relating to the restatement is provided in the section of this release titled, "Expected
Impact of the Restatement of Previously-Issued Financial Statements."
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RESULTS FOR THE YEAR
The table below sets forth select preliminary unaudited financial results for the year ended December 31, 2019 that reflect the restatement described above.
(in millions, except per share amounts) | Full Year 2019 Actual(c)(d) | Midpoint of Previous 2019 Outlook(e) | Actual Compared to Previous Outlook | Effect of Restatement(c) |
Site rental revenues | $5,098 | $4,965 | +$133 | +$110 |
Net income (loss) | $863 | $926 | -$63 | -$100 |
Net income (loss) per share—diluted(a) | $1.80 | $1.95 | -$0.15 | -$0.24 |
Adjusted EBITDA(b) | $3,304 | $3,408 | -$104 | -$100 |
AFFO(a)(b) | $2,376 | $2,479 | -$103 | -$100 |
AFFO per share(a)(b) | $5.69 | $5.94 | -$0.25 | -$0.24 |
(a) | Attributable to CCIC common stockholders. |
(b) | See "Non-GAAP Financial Measures, Segment Measures and Other Calculations" included herein for further information and reconciliation of this non- |
GAAP financial measure to net income (loss).
(c) | Results are preliminary and unaudited. See "Expected Impact of the Restatement of Previously-Issued Financial Statements" included herein for more information regarding the Company's restatement. |
(d) | Includes restatement of nine months ended September 30, 2019. |
(e) | As issued on October 16, 2019. |
HIGHLIGHTS FROM THE YEAR
• | Site rental revenues. Site rental revenues grew approximately 6.2%, or $298 million, from full year 2018 to full year 2019, inclusive of approximately $290 million in Organic Contribution to Site Rental Revenues and a $9 million increase in straight-lined revenues. The $290 million in Organic Contribution to Site Rental Revenues represents approximately 6.1% growth, comprised of approximately 9.9% growth from new leasing activity and contracted tenant escalations, net of approximately 3.8% from tenant non-renewals. |
• | Capital Expenditures. Capital expenditures during the year were $2.1 billion, comprised of $53 million of land purchases, $117 million of sustaining capital expenditures, $1.9 billion of discretionary capital expenditures and $9 million of integration capital expenditures. The discretionary capital expenditures included approximately $1.4 billion attributable to Fiber and approximately $454 million attributable to Towers. |
• | Common stock dividend. During 2019, Crown Castle paid common stock dividends of approximately $1.9 billion in the aggregate, or $4.575 per common share, an increase of approximately 7% on a per share basis compared to the same period a year ago. |
"Our solid 2019 results and 2020 Outlook, which remains unchanged with the exception of the impact of the restatement we disclosed today, reflect the strong underlying demand for our communications infrastructure assets and our ability to translate growth in data demand into growth in dividends per share," stated Dan Schlanger, Crown Castle's Chief Financial Officer. "Uncertainty around the outcome of the pending merger between T-Mobile and Sprint led to lower activity levels in the fourth quarter of 2019 that we believe will continue through the first quarter of 2020. However, we expect activity levels across the industry to increase throughout the year and potentially beyond as we believe our customers will accelerate their investments in 5G. As a result, we expect our financial performance in 2020 will be more back-end loaded than we previously expected, particularly for services contribution. Against that backdrop, 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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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 SEC. As indicated in the footnotes to the table below, the only changes to our Previous 2020 Outlook are a result of the impact of the restatement as described in "Expected Impact of the Restatement of Previously-Issued Financial Statements."
The following table sets forth Crown Castle's current Outlook for full year 2020:
(in millions) | Full Year 2020 | ||
Site rental revenues | $5,337 | to | $5,382 |
Site rental cost of operations(a) | $1,482 | to | $1,527 |
Net income (loss) | $998 | to | $1,078 |
Adjusted EBITDA(b) | $3,479 | to | $3,524 |
Interest expense and amortization of deferred financing costs(c) | $691 | to | $736 |
FFO(b)(d) | $2,449 | to | $2,494 |
AFFO(b)(d) | $2,572 | to | $2,617 |
Weighted-average common shares outstanding - diluted | 424 | ||
(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. |
Full Year 2020 Outlook
The table below compares midpoint of the current full year 2020 Outlook and the midpoint of our Previous 2020 Outlook for select metrics.
(in millions, except per share amounts) | Midpoint of Current Full Year 2020 Outlook | Midpoint of Previous Full Year 2020 Outlook | Current Compared to Previous Outlook | Effect of Restatement(c) |
Site rental revenues | $5,360 | $5,219 | +$141 | +$141 |
Net income (loss) | $1,038 | $1,128 | -$90 | -$90 |
Net income (loss) per share—diluted(a) | $2.32 | $2.53 | -$0.21 | -$0.21 |
Adjusted EBITDA(b) | $3,502 | $3,592 | -$90 | -$90 |
AFFO(a)(b) | $2,595 | $2,685 | -$90 | -$90 |
AFFO per share(a)(b) | $6.12 | $6.33 | -$0.21 | -$0.21 |
(a) | Attributable to CCIC common stockholders. |
(b) | See reconciliation of this non-GAAP financial measure to net income (loss) and definition included herein. |
(c) | See "Expected Impact of the Restatement of Previously-Issued Financial Statements" included herein for more information regarding the Company's restatement. |
• | The full year 2020 Outlook assumes the proposed merger between T-Mobile and Sprint closes at the end of the first quarter 2020. |
• | The 2020 Outlook also reflects the impact of the assumed conversion of preferred stock in August 2020. This conversion is expected to increase the diluted weighted average common shares outstanding for 2020 by approximately 6 million and reduce the annual preferred stock dividends paid by approximately $28 million when compared to 2019. |
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• | The chart below reconciles the components of expected growth in site rental revenues from 2019 to 2020 of $250 million to $295 million, inclusive of expected Organic Contribution to Site Rental Revenues during 2020 of $295 million to $335 million. |
• | New leasing activity is expected to contribute $395 million to $425 million to 2020 Organic Contribution to Site Rental Revenues, consisting of new leasing activity from towers of $170 million to $180 million, small cells of $65 million to $75 million, and fiber solutions of $160 million to $170 million. |
• | The chart below reconciles the components of expected growth in AFFO from 2019 to 2020 of $195 million to $240 million. |
• | Additional information is available in Crown Castle's quarterly Supplemental Information Package posted in the Investors section of our website. |
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EXPECTED IMPACT OF THE RESTATEMENT OF PREVIOUSLY-ISSUED FINANCIAL STATEMENTS
As indicated above, we will restate our financial statements for the years ended December 31, 2018 and 2017, and unaudited financial information for the quarterly and year-to-date periods in the year ended December 31, 2018 and for the first three quarters in the year ended December 31, 2019. The expected impact of the restatement described above and in the tables in this release is preliminary and unaudited and is subject to change before we file the 2019 10-K. We believe the restatement will not have an impact on our business operations or our net cash flows.
The tables set forth below summarize (1) the estimated effects of the restatement on historical periods and (2) the estimated effects of other adjustments to previously-issued financial statements for years prior to 2019 to correct errors relating exclusively to our Towers segment that were not material, either individually or in the aggregate, on certain of the Company's select financial results for the quarters and years ending December 31, 2019 and 2018, and the years ended December 31, 2017, 2016, and 2015.
(in millions, except per share amounts) | Q1 2019(c) | Q2 2019(c) | Q3 2019(c) | Q4 2019(c) | Full Year 2019(c) |
Site rental revenues | $24 | $26 | $29 | $31 | $110 |
Services and other revenues | $(41) | $(55) | $(57) | $(57) | $(210) |
Net income (loss) | $(17) | $(29) | $(28) | $(26) | $(100) |
Net income (loss) per share—diluted(a) | $(0.04) | $(0.07) | $(0.07) | $(0.06) | $(0.24) |
Adjusted EBITDA(b) | $(17) | $(29) | $(28) | $(26) | $(100) |
AFFO(a)(b) | $(17) | $(29) | $(28) | $(26) | $(100) |
AFFO per share(a)(b) | $(0.04) | $(0.07) | $(0.07) | $(0.06) | $(0.24) |
(in millions, except per share amounts) | Q1 2018(c) | Q2 2018(c) | Q3 2018(c) | Q4 2018(c) | Full Year 2018(c) |
Site rental revenues | $19 | $20 | $22 | $23 | $84 |
Services and other revenues | $(33) | $(30) | $(34) | $(36) | $(133) |
Net income (loss) | $(13) | $(9) | $(11) | $(13) | $(46) |
Net income (loss) per share—diluted(a) | $(0.03) | $(0.02) | $(0.03) | $(0.03) | $(0.11) |
Adjusted EBITDA(b) | $(13) | $(9) | $(11) | $(13) | $(46) |
AFFO(a)(b) | $(13) | $(9) | $(11) | $(13) | $(46) |
AFFO per share(a)(b) | $(0.03) | $(0.02) | $(0.03) | $(0.03) | $(0.11) |
(in millions, except per share amounts) | Full Year 2017(c) | Full Year 2016(c) | Full Year 2015(c) |
Site rental revenues | $68 | $53 | $40 |
Services and other revenues | $(166) | $(122) | $(111) |
Net income (loss) | $(77) | $(49) | $(68) |
Net income (loss) per share—diluted(a) | $(0.20) | $(0.14) | $(0.20) |
Adjusted EBITDA(b) | $(77) | $(49) | $(68) |
AFFO(a)(b) | $(77) | $(49) | $(68) |
AFFO per share(a)(b) | $(0.20) | $(0.14) | $(0.20) |
(a) | Attributable to CCIC common stockholders. |
(b) | See "Non-GAAP Financial Measures, Segment Measures and Other Calculations" included herein for further information and reconciliation of this non-GAAP financial measure to net income (loss). |
(c) | Results are preliminary and unaudited. See "Expected Impact of the Restatement of Previously-Issued Financial Statements" included herein for more information regarding the Company's restatement. |
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Crown Castle has determined that the restatement of its previously issued financial statements as described above indicates the existence of one or more material weaknesses in its internal control over financial reporting and that its internal control over financial reporting and disclosure controls and procedures were ineffective as of December 31, 2019. Crown Castle will report the material weakness(es) in its 2019 10-K and intends to create a plan of remediation to address the material weakness(es).
CONFERENCE CALL DETAILS
Crown Castle has scheduled a conference call for Thursday, February 27, 2020, at 10:30 a.m. Eastern time to discuss its fourth quarter 2019 results. The conference call may be accessed by dialing 800-367-2403 and asking for the Crown Castle call (access code 8599522) at least 30 minutes prior to the start time. The conference call may also be accessed live over the Internet at investor.crowncastle.com. Supplemental materials for the call have been posted on the Crown Castle website at investor.crowncastle.com.
A telephonic replay of the conference call will be available from 1:30 p.m. Eastern time on Thursday, February 27, 2020, through 1:30 p.m. Eastern time on Wednesday, May 27, 2020, and may be accessed by dialing 888-203-1112 and using access code 8599522. An audio archive will also be available on Crown Castle's website at 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 80,000 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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Non-GAAP Financial Measures, Segment Measures and Other Calculations
This press release includes presentations of Adjusted EBITDA, Adjusted Funds from Operations ("AFFO"), including per share amounts, Funds from Operations ("FFO"), including per share amounts, 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 non-GAAP financial measures 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. 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.
Our non-GAAP financial measures 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, including per share amounts, 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, including per share amounts, 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 tenant 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.
AFFO per share. We define AFFO per share as AFFO divided by diluted weighted-average common shares outstanding.
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.
FFO per share. We define FFO per share as FFO divided by the diluted weighted-average common shares outstanding.
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 tenant 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. Additionally, certain costs are shared across segments and are reflected in our segment measures through allocations that management believes to be reasonable.
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 primarily consist of expansion or development of communications infrastructure (including capital expenditures related to (1) enhancing communications infrastructure in order to add new tenants for the first time or support subsequent tenant equipment augmentations, or (2) modifying the structure of a communications infrastructure asset to accommodate additional tenants), and construction of new communications infrastructure. Discretionary capital expenditures also include purchases of land interests (which primarily relates to land assets under towers as we seek to manage our interests in the land beneath our towers), certain
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technology-related investments necessary to support and scale future customer demand for our communications infrastructure, 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.
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 tenants' ongoing quiet enjoyment of the communications infrastructure and (2) ordinary corporate capital expenditures.
The tables set forth on the following pages 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.
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The expected impacts of the restatement described above and in the tables below are preliminary and unaudited and are subject to change before we file the 2019 10-K. The tables set forth below reflect (1) the estimated effects of the restatement and (2) the estimated effects of other adjustments to previously-issued financial statements for years prior to 2019 to correct errors related exclusively to our Towers segment that were not material, individually or in the aggregate, on certain of the Company's select financial results for the quarters and years ending December 31, 2019 and 2018, and the years ended December 31, 2017, 2016, and 2015.
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, 2019 | December 31, 2018 | December 31, 2019 | December 31, 2018 | ||||||||||||
(in millions) | (As Restated) | (As Restated) | |||||||||||||
Net income (loss) | $ | 208 | $ | 200 | $ | 863 | $ | 625 | |||||||
Adjustments to increase (decrease) net income (loss): | |||||||||||||||
Asset write-down charges | 6 | 8 | 19 | 26 | |||||||||||
Acquisition and integration costs | 3 | 9 | 13 | 27 | |||||||||||
Depreciation, amortization and accretion | 398 | 390 | 1,574 | 1,528 | |||||||||||
Amortization of prepaid lease purchase price adjustments | 5 | 5 | 20 | 20 | |||||||||||
Interest expense and amortization of deferred financing costs(a) | 173 | 164 | 683 | 642 | |||||||||||
(Gains) losses on retirement of long-term obligations | — | — | 2 | 106 | |||||||||||
Interest income | (1 | ) | (2 | ) | (6 | ) | (5 | ) | |||||||
Other (income) expense | (7 | ) | (1 | ) | (1 | ) | (1 | ) | |||||||
(Benefit) provision for income taxes | 6 | 5 | 21 | 19 | |||||||||||
Stock-based compensation expense | 27 | 25 | 116 | 108 | |||||||||||
Adjusted EBITDA(b)(c) | $ | 818 | $ | 803 | $ | 3,304 | $ | 3,095 | |||||||
For the Twelve Months Ended | |||||||||||
December 31, 2017 | December 31, 2016 | December 31, 2015 | |||||||||
(in millions) | (As Restated) | ||||||||||
Net income (loss) | $ | 368 | $ | 308 | $ | 1,456 | |||||
Adjustments to increase (decrease) net income (loss): | |||||||||||
Income (loss) from discontinued operations | — | — | (999 | ) | |||||||
Asset write-down charges | 17 | 34 | 33 | ||||||||
Acquisition and integration costs | 61 | 17 | 16 | ||||||||
Depreciation, amortization and accretion | 1,242 | 1,109 | 1,036 | ||||||||
Amortization of prepaid lease purchase price adjustments | 20 | 21 | 21 | ||||||||
Interest expense and amortization of deferred financing costs(a) | 591 | 515 | 527 | ||||||||
(Gains) losses on retirement of long-term obligations | 4 | 52 | 4 | ||||||||
Interest income | (19 | ) | (1 | ) | (2 | ) | |||||
Other (income) expense | (1 | ) | 9 | (57 | ) | ||||||
(Benefit) provision for income taxes | 26 | 17 | (51 | ) | |||||||
Stock-based compensation expense | 96 | 97 | 67 | ||||||||
Adjusted EBITDA(b)(c) | $ | 2,405 | $ | 2,179 | $ | 2,051 | |||||
(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 Current Outlook for Adjusted EBITDA:
Full Year 2020 | |||
(in millions) | Outlook | ||
Net income (loss) | $998 | to | $1,078 |
Adjustments to increase (decrease) net income (loss): | |||
Asset write-down charges | $20 | to | $30 |
Acquisition and integration costs | $7 | to | $17 |
Depreciation, amortization and accretion | $1,503 | to | $1,598 |
Amortization of prepaid lease purchase price adjustments | $18 | to | $20 |
Interest expense and amortization of deferred financing costs(a) | $691 | to | $736 |
(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 | $16 | to | $24 |
Stock-based compensation expense | $126 | to | $130 |
Adjusted EBITDA(b)(c) | $3,479 | to | $3,524 |
(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 Twelve Months Ended | ||||||||||||||
(in millions) | December 31, 2019 | December 31, 2018 | December 31, 2019 | December 31, 2018 | |||||||||||
(As Restated) | (As Restated) | ||||||||||||||
Net income (loss) | $ | 208 | $ | 200 | $ | 863 | $ | 625 | |||||||
Real estate related depreciation, amortization and accretion | 384 | 375 | 1,519 | 1,472 | |||||||||||
Asset write-down charges | 6 | 8 | 19 | 26 | |||||||||||
Dividends/distributions on preferred stock | (28 | ) | (28 | ) | (113 | ) | (113 | ) | |||||||
FFO(a)(b)(c)(d) | $ | 570 | $ | 555 | $ | 2,288 | $ | 2,009 | |||||||
Weighted-average common shares outstanding—diluted(e) | 418 | 417 | 418 | 415 | |||||||||||
FFO per share(a)(b)(c)(d)(e) | $ | 1.36 | $ | 1.33 | $ | 5.47 | $ | 4.84 | |||||||
FFO (from above) | $ | 570 | $ | 555 | $ | 2,288 | $ | 2,009 | |||||||
Adjustments to increase (decrease) FFO: | |||||||||||||||
Straight-lined revenue | (18 | ) | (20 | ) | (80 | ) | (72 | ) | |||||||
Straight-lined expense | 23 | 21 | 93 | 90 | |||||||||||
Stock-based compensation expense | 27 | 25 | 116 | 108 | |||||||||||
Non-cash portion of tax provision | 3 | 3 | 5 | 2 | |||||||||||
Non-real estate related depreciation, amortization and accretion | 14 | 15 | 55 | 56 | |||||||||||
Amortization of non-cash interest expense | — | 2 | 1 | 7 | |||||||||||
Other (income) expense | (7 | ) | (1 | ) | (1 | ) | (1 | ) | |||||||
(Gains) losses on retirement of long-term obligations | — | — | 2 | 106 | |||||||||||
Acquisition and integration costs | 3 | 9 | 13 | 27 | |||||||||||
Sustaining capital expenditures | (36 | ) | (30 | ) | (117 | ) | (105 | ) | |||||||
AFFO(a)(b)(c)(d) | $ | 578 | $ | 578 | $ | 2,376 | $ | 2,228 | |||||||
Weighted-average common shares outstanding—diluted(e) | 418 | 417 | 418 | 415 | |||||||||||
AFFO per share(a)(b)(c)(d)(e) | $ | 1.38 | $ | 1.39 | $ | 5.69 | $ | 5.37 | |||||||
(a) | See "Non-GAAP Financial Measures, Segment Measures and Other Calculations" herein for a discussion of our definitions of FFO, including per share amounts, and AFFO, including per share amounts. |
(b) | FFO and AFFO are reduced by cash paid for preferred stock dividends during the period in which they are paid. |
(c) | Attributable to CCIC common stockholders. |
(d) | The above reconciliation excludes line items included in our definition which are not applicable for the periods shown. |
(e) | For all periods presented, the diluted weighted-average common shares outstanding does not include any assumed conversion of preferred stock in the share count. |
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Reconciliation of Historical FFO and AFFO:
For the Twelve Months Ended | |||||||||||
(in millions) | December 31, 2017 | December 31, 2016 | December 31, 2015 | ||||||||
(As Restated) | |||||||||||
Net income (loss)(a) | $ | 368 | $ | 308 | $ | 457 | |||||
Real estate related depreciation, amortization and accretion | 1,211 | 1,082 | 1,018 | ||||||||
Asset write-down charges | 17 | 34 | 33 | ||||||||
Dividends/distributions on preferred stock | (30 | ) | (44 | ) | (44 | ) | |||||
FFO(b)(c)(d)(e) | $ | 1,566 | $ | 1,381 | $ | 1,465 | |||||
Weighted-average common shares outstanding—diluted(f) | 383 | 341 | 334 | ||||||||
FFO per share(b)(c)(d)(e)(f) | $ | 4.09 | $ | 4.05 | $ | 4.39 | |||||
FFO (from above) | $ | 1,566 | $ | 1,381 | $ | 1,465 | |||||
Adjustments to increase (decrease) FFO: | |||||||||||
Straight-lined revenue | — | (47 | ) | (111 | ) | ||||||
Straight-lined expense | 93 | 94 | 99 | ||||||||
Stock-based compensation expense | 96 | 97 | 67 | ||||||||
Non-cash portion of tax provision | 9 | 7 | (64 | ) | |||||||
Non-real estate related depreciation, amortization and accretion | 31 | 26 | 18 | ||||||||
Amortization of non-cash interest expense | 9 | 14 | 37 | ||||||||
Other (income) expense | (1 | ) | 9 | (57 | ) | ||||||
(Gains) losses on retirement of long-term obligations | 4 | 52 | 4 | ||||||||
Acquisition and integration costs | 61 | 17 | 16 | ||||||||
Sustaining capital expenditures | (85 | ) | (90 | ) | (105 | ) | |||||
AFFO(b)(c)(d)(e) | $ | 1,783 | $ | 1,561 | $ | 1,369 | |||||
Weighted-average common shares outstanding—diluted(f) | 383 | 341 | 334 | ||||||||
AFFO per share(b)(c)(d)(e)(f) | $ | 4.65 | $ | 4.58 | $ | 4.10 | |||||
(a) | Exclusive of income (loss) from discontinued operations and related noncontrolling interest of $1.0 billion for the twelve months ended December 31, 2015. |
(b) | See "Non-GAAP Financial Measures, Segment Measures and Other Calculations" herein for a discussion of our definitions of FFO, including per share amounts, and AFFO, including per share amounts. |
(c) | FFO and AFFO are reduced by cash paid for preferred stock dividends during the period in which they are paid. |
(d) | Attributable to CCIC common stockholders. |
(e) | The above reconciliation excludes line items included in our definition which are not applicable for the periods shown. |
(f) | For all periods presented, the diluted weighted-average common shares outstanding does not include any assumed conversion of preferred stock in the share count. |
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Reconciliation of Current Outlook for FFO and AFFO:
Full Year 2020 | |||
(in millions) | Outlook | ||
Net income (loss) | $998 | to | $1,078 |
Real estate related depreciation, amortization and accretion | $1,454 | to | $1,534 |
Asset write-down charges | $20 | to | $30 |
Dividends/distributions on preferred stock | $(85) | to | $(85) |
FFO(a)(b)(c)(d) | $2,449 | to | $2,494 |
Weighted-average common shares outstanding—diluted(e) | 424 | ||
FFO per share(a)(b)(c)(d)(e) | $5.77 | to | $5.88 |
FFO (from above) | $2,449 | to | $2,494 |
Adjustments to increase (decrease) FFO: | |||
Straight-lined revenue | $(53) | to | $(33) |
Straight-lined expense | $70 | to | $90 |
Stock-based compensation expense | $126 | to | $130 |
Non-cash portion of tax provision | $(6) | to | $9 |
Non-real estate related depreciation, amortization and accretion | $49 | to | $64 |
Amortization of non-cash interest expense | $(4) | to | $6 |
Other (income) expense | $(1) | to | $1 |
(Gains) losses on retirement of long-term obligations | $0 | to | $0 |
Acquisition and integration costs | $7 | to | $17 |
Sustaining capital expenditures | $(123) | to | $(103) |
AFFO(a)(b)(c)(d) | $2,572 | to | $2,617 |
Weighted-average common shares outstanding—diluted(e) | 424 | ||
AFFO per share(a)(b)(c)(d)(e) | $6.06 | to | $6.17 |
(a) | See "Non-GAAP Financial Measures, Segment Measures and Other Calculations" herein for a discussion of our definitions of FFO, including per share amounts, and AFFO, including per share amounts. |
(b) | FFO and AFFO are reduced by cash paid for preferred stock dividends during the period in which they are paid. |
(c) | Attributable to CCIC common stockholders. |
(d) | The above reconciliation excludes line items included in our definition which are not applicable for the periods shown. |
(e) | The assumption for diluted weighted-average common shares outstanding for full year 2020 Outlook is based on the diluted common shares outstanding as of December 31, 2019 and is inclusive of the assumed conversion of preferred stock in August 2020, which we expect to result in (1) an increase in the diluted weighted-average common shares outstanding by approximately 6 million shares and (2) a reduction in the amount of annual preferred stock dividends paid by approximately $28 million when compared to full year 2019. |
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For Comparative Purposes - Reconciliation of Previous Outlook for Adjusted EBITDA:
Previously Issued | Previously Issued | ||||||
Full Year 2019 | Full Year 2020 | ||||||
(in millions) | Outlook | Outlook | |||||
Net income (loss) | $896 | to | $956 | $1,088 | to | $1,168 | |
Adjustments to increase (decrease) net income (loss): | |||||||
Asset write-down charges | $23 | to | $33 | $20 | to | $30 | |
Acquisition and integration costs | $11 | to | $21 | $7 | to | $17 | |
Depreciation, amortization and accretion | $1,576 | to | $1,611 | $1,503 | to | $1,598 | |
Amortization of prepaid lease purchase price adjustments | $19 | to | $21 | $18 | to | $20 | |
Interest expense and amortization of deferred financing costs | $674 | to | $704 | $691 | to | $736 | |
(Gains) losses on retirement of long-term obligations | $2 | to | $2 | $0 | to | $0 | |
Interest income | $(8) | to | $(4) | $(7) | to | $(3) | |
Other (income) expense | $2 | to | $4 | $(1) | to | $1 | |
(Benefit) provision for income taxes | $16 | to | $24 | $16 | to | $24 | |
Stock-based compensation expense | $112 | to | $120 | $126 | to | $130 | |
Adjusted EBITDA(a)(b) | $3,393 | to | $3,423 | $3,569 | to | $3,614 | |
(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 | ||||||
Full Year 2019 | Full Year 2020 | ||||||
(in millions) | Outlook | Outlook | |||||
Net income (loss) | $896 | to | $956 | $1,088 | to | $1,168 | |
Real estate related depreciation, amortization and accretion | $1,528 | to | $1,548 | $1,454 | to | $1,534 | |
Asset write-down charges | $23 | to | $33 | $20 | to | $30 | |
Dividends/distributions on preferred stock | $(113) | to | $(113) | $(85) | to | $(85) | |
FFO(a)(b)(c)(d) | $2,363 | to | $2,393 | $2,539 | to | $2,584 | |
Weighted-average common shares outstanding—diluted(e) | 418 | 424 | |||||
FFO per share(a)(b)(c)(d)(e) | $5.66 | to | $5.73 | $5.99 | to | $6.09 | |
FFO (from above) | $2,363 | to | $2,393 | $2,539 | to | $2,584 | |
Adjustments to increase (decrease) FFO: | |||||||
Straight-lined revenue | $(74) | to | $(54) | $(53) | to | $(33) | |
Straight-lined expense | $81 | to | $101 | $70 | to | $90 | |
Stock-based compensation expense | $112 | to | $120 | $126 | to | $130 | |
Non-cash portion of tax provision | $(6) | to | $9 | $(6) | to | $9 | |
Non-real estate related depreciation, amortization and accretion | $48 | to | $63 | $49 | to | $64 | |
Amortization of non-cash interest expense | $(5) | to | $5 | $(4) | to | $6 | |
Other (income) expense | $2 | to | $4 | $(1) | to | $1 | |
(Gains) losses on retirement of long-term obligations | $2 | to | $2 | $0 | to | $0 | |
Acquisition and integration costs | $11 | to | $21 | $7 | to | $17 | |
Sustaining capital expenditures | $(136) | to | $(106) | $(123) | to | $(103) | |
AFFO(a)(b)(c)(d) | $2,464 | to | $2,494 | $2,662 | to | $2,707 | |
Weighted-average common shares outstanding—diluted(e) | 418 | 424 | |||||
AFFO per share(a)(b)(c)(d)(e) | $5.90 | to | $5.97 | $6.28 | to | $6.38 | |
(a) | See "Non-GAAP Financial Measures, Segment Measures and Other Calculations" herein for a discussion of our definitions of FFO, including per share amounts, and AFFO, including per share amounts. |
(b) | FFO and AFFO are reduced by cash paid for preferred stock dividends during the period in which they are paid. |
(c) | Attributable to CCIC common stockholders. |
(d) | The above reconciliation excludes line items included in our definition which are not applicable for the periods shown. |
(e) | The assumption for diluted weighted-average common shares outstanding for full year 2020 Outlook is based on the diluted common shares outstanding as of December 31, 2019 and is inclusive of the assumed conversion of preferred stock in August 2020, which we expect to result in (1) an increase in the diluted weighted-average common shares outstanding by approximately 6 million shares and (2) a reduction in the amount of annual preferred stock dividends paid by approximately $28 million when compared to full year 2019. |
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The components of changes in site rental revenues for the quarters ended December 31, 2019 and 2018 are as follows:
Three Months Ended December 31, | |||||||
(dollars in millions) | 2019 | 2018 | |||||
(As Restated) | |||||||
Components of changes in site rental revenues(a): | |||||||
Prior year site rental revenues exclusive of straight-lined revenues associated with fixed escalators(b)(c) | $ | 1,212 | $ | 1,067 | |||
New leasing activity(b)(c) | 100 | 64 | |||||
Escalators | 22 | 21 | |||||
Non-renewals | (51 | ) | (22 | ) | |||
Organic Contribution to Site Rental Revenues(d) | 71 | 63 | |||||
Straight-lined revenues associated with fixed escalators | 18 | 20 | |||||
Acquisitions(e) | — | 82 | |||||
Other | — | — | |||||
Total GAAP site rental revenues | $ | 1,301 | $ | 1,232 | |||
Year-over-year changes in revenue: | |||||||
Reported GAAP site rental revenues | 5.6 | % | |||||
Organic Contribution to Site Rental Revenues(d)(f) | 5.9 | % | |||||
(a) | Additional information regarding Crown Castle's site rental revenues, including projected revenue from tenant licenses, 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. |
(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. |
The components of the changes in site rental revenues for the years ending December 31, 2019 and December 31, 2020 are forecasted as follows:
(dollars in millions) | Full Year 2019 | Full Year 2020 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) | $4,727 | $5,017 | |
New leasing activity(b)(c) | 385 | 395-425 | |
Escalators | 86 | 90-100 | |
Non-renewals | (181) | (195)-(175) | |
Organic Contribution to Site Rental Revenues(d) | 290 | 295-335 | |
Straight-lined revenues associated with fixed escalators | 81 | 33-53 | |
Acquisitions(e) | — | — | |
Other | — | — | |
Total GAAP site rental revenues | $5,098 | $5,337-$5,382 | |
Year-over-year changes in revenue: | |||
Reported GAAP site rental revenues(f) | 6.2% | 5.1% | |
Organic Contribution to Site Rental Revenues(d)(f)(g) | 6.1% | 6.3% | |
(a) | Additional information regarding Crown Castle's site rental revenues, including projected revenue from tenant licenses, 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. |
(f) | Calculated based on midpoint of full year 2020 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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Components of Historical Interest Expense and Amortization of Deferred Financing Costs:
For the Three Months Ended | |||||||
(in millions) | December 31, 2019 | December 31, 2018 | |||||
Interest expense on debt obligations | $ | 173 | $ | 162 | |||
Amortization of deferred financing costs and adjustments on long-term debt, net | 5 | 5 | |||||
Other, net | (5 | ) | (3 | ) | |||
Interest expense and amortization of deferred financing costs | $ | 173 | $ | 164 | |||
Components of Current Outlook for Interest Expense and Amortization of Deferred Financing Costs:
Full Year 2020 | |||
(in millions) | Outlook | ||
Interest expense on debt obligations | $703 | to | $723 |
Amortization of deferred financing costs and adjustments on long-term debt, net | $20 | to | $25 |
Other, net | $(24) | to | $(19) |
Interest expense and amortization of deferred financing costs | $691 | to | $736 |
Debt balances and maturity dates as of December 31, 2019 are as follows:
(in millions) | Face Value | Final Maturity | |||
Cash, cash equivalents and restricted cash | $ | 338 | |||
3.849% Secured Notes | 1,000 | Apr. 2023 | |||
Secured Notes, Series 2009-1, Class A-2(a) | 68 | Aug. 2029 | |||
Tower Revenue Notes, Series 2015-1(b) | 300 | May 2042 | |||
Tower Revenue Notes, Series 2018-1(b) | 250 | July 2043 | |||
Tower Revenue Notes, Series 2015-2(b) | 700 | May 2045 | |||
Tower Revenue Notes, Series 2018-2(b) | 750 | July 2048 | |||
Finance leases and other obligations | 226 | Various | |||
Total secured debt | $ | 3,294 | |||
2016 Revolver | 525 | June 2024 | |||
2016 Term Loan A | 2,312 | June 2024 | |||
Commercial Paper Notes(c) | 155 | Various | |||
3.400% Senior Notes | 850 | Feb. 2021 | |||
2.250% Senior Notes | 700 | Sept. 2021 | |||
4.875% Senior Notes | 850 | Apr. 2022 | |||
5.250% Senior Notes | 1,650 | Jan. 2023 | |||
3.150% Senior Notes | 750 | July 2023 | |||
3.200% Senior Notes | 750 | Sept. 2024 | |||
4.450% Senior Notes | 900 | Feb. 2026 | |||
3.700% Senior Notes | 750 | June 2026 | |||
4.000% Senior Notes | 500 | Mar. 2027 | |||
3.650% Senior Notes | 1,000 | Sept. 2027 | |||
3.800% Senior Notes | 1,000 | Feb. 2028 | |||
4.300% Senior Notes | 600 | Feb. 2029 | |||
3.100% Senior Notes | 550 | Nov. 2029 | |||
4.750% Senior Notes | 350 | May 2047 | |||
5.200% Senior Notes | 400 | Feb. 2049 | |||
4.000% Senior Notes | 350 | Nov. 2049 | |||
Total unsecured debt | $ | 14,942 | |||
Total net debt | $ | 17,898 | |||
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News Release continued: | Page 19 | |
(a) | The Senior Secured Notes, 2009-1, Class A-2 principal amortizes during the period beginning in September 2019 and ending in August 2029. |
(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 maturities of the Commercial Paper Notes, when outstanding, may vary but may not exceed 397 days from the date of issue. |
Net Debt to Last Quarter Annualized Adjusted EBITDA is computed as follows:
(dollars in millions) | For the Three Months Ended December 31, 2019 | ||
Total face value of debt | $ | 18,236 | |
Ending cash, cash equivalents and restricted cash | 338 | ||
Total Net Debt | $ | 17,898 | |
Adjusted EBITDA for the three months ended December 31, 2019 | $ | 818 | |
Last quarter annualized Adjusted EBITDA | 3,272 | ||
Net Debt to Last Quarter Annualized Adjusted EBITDA | 5.5 | x | |
Components of Capital Expenditures:
For the Three Months Ended | |||||||||||||||||||||||||
(in millions) | December 31, 2019 | December 31, 2018 | |||||||||||||||||||||||
Towers | Fiber | Other | Total | Towers | Fiber | Other | Total | ||||||||||||||||||
Discretionary: | |||||||||||||||||||||||||
Purchases of land interests | $ | 11 | $ | — | $ | — | $ | 11 | $ | 18 | $ | — | $ | — | $ | 18 | |||||||||
Communications infrastructure construction and improvements | 119 | 353 | — | 472 | 98 | 349 | — | 447 | |||||||||||||||||
Sustaining | 12 | 12 | 12 | 36 | 8 | 15 | 7 | 30 | |||||||||||||||||
Integration | — | — | 2 | 2 | — | — | 5 | 5 | |||||||||||||||||
Total | $ | 142 | $ | 365 | $ | 14 | $ | 521 | $ | 124 | $ | 364 | $ | 11 | $ | 500 | |||||||||
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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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, growth, returns, opportunities and tenant and shareholder value which may be derived from our business, assets, investments, acquisitions and dividends, (2) our strategy, business model and capabilities and the strength of our business, (3) industry fundamentals and driving factors for improvements in such fundamentals, (4) our customers' investment, including investment cycles, in network improvements and the trends driving such improvements, (5) our long-term prospects and the trends impacting our business (including growth in mobile data demand), (6) preliminary restatement of financial results, our restatement plans and the expected impact of such restatement, (7) management's intent to report in the 2019 10-K and create a remediation plan to address the material weakness(es) in Crown Castle's internal controls over financial reporting and its ineffective disclosure controls and procedures, (8) leasing environment and activity, including (a) timing and temporary nature of the leasing activity slowdown and our expectation for rebound in leasing activity and (b) growth in leasing activity and the contribution to our financial or operating results therefrom, (9) opportunities we see to deliver long-term value and dividend per share growth, (10) the status of the SEC investigation, (11) our dividends and our dividend (including on a per share basis) growth rate, including its driving factors, and targets, (12) our portfolio of assets, including demand therefor, strategic position thereof and opportunities created thereby, (13) assumed conversion of preferred stock and the impact therefrom, (14) expected timing for the closing of the proposed merger between T-Mobile and Sprint, (15) amount of total revenue and total gross margin we expect to recognize cumulatively over the associated estimated remaining lease term, (16) timing of filing of the 2019 10-K, (17) cash flows, including growth thereof, (18) tenant non-renewals, including the impact and timing thereof, (19) capital expenditures, including sustaining and discretionary capital expenditures, and the timing thereof, (20) straight-line adjustments, (21) site rental revenues and estimated growth thereof, (22) site rental cost of operations, (23) net income (loss) (including on a per share basis) and estimated growth thereof, (24) Adjusted EBITDA, including the impact of the timing of certain components thereof and estimated growth thereof, (25) expenses, including interest expense and amortization of deferred financing costs, (26) FFO (including on a per share basis) and estimated growth thereof, (27) AFFO (including on a per share basis) and estimated growth thereof and corresponding driving factors, (28) Organic Contribution to Site Rental Revenues and its components, including contributions therefrom, (29) our weighted-average common shares outstanding (including on a diluted basis) and estimated growth thereof, (30) services contribution, including the timing thereof, (31) Segment Site Rental Gross Margin, (32) Segment Services and Other Gross Margin, (33) Segment Operating Profit and (34) 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 tenants may materially and adversely affect our business (including reducing demand for our communications infrastructure or services). |
• | A substantial portion of our revenues is derived from a small number of tenants, and the loss, consolidation or financial instability of any of such tenants 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. |
• | 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 lower 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. |
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News Release continued: | Page 21 | |
• | 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, 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 tenants 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. |
• | 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 or other unforeseen events that could adversely affect our operations, business, and reputation. |
• | We have concluded that certain of our previously-issued consolidated financial statements should not be relied upon and we have restated such previously-issued consolidated financial statements, which may result in loss of investor confidence, negative impact on our stock price, shareholder litigation, and certain other risks. |
• | We identified one or more material weaknesses in our internal control over financial reporting. If we are unable to remediate such material weakness(es), or if we experience additional material weaknesses or other deficiencies in the future or otherwise fail to maintain an effective system of internal controls, we may not be able to accurately and timely report our financial results, in which case our business may be harmed, investors may lose confidence in the accuracy and completeness of our financial reports, and the stock price may decline. |
• | 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 (prior to the automatic conversion in August 2020), 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. Our filings with the SEC are available through the SEC website at www.sec.gov or through our investor relations website at investor.crowncastle.com. We use our investor relations website to disclose information about us that may be deemed to be material. We encourage investors, the media and others interested in us to visit our investor relations website from time to time to review up-to-date information or to sign up for e-mail alerts to be notified when new or updated information is posted on the site.
As used in this release, the term "including," and any variation thereof, means "including without limitation."
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News Release continued: | Page 22 | |
| CROWN CASTLE INTERNATIONAL CORP. CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) (Amounts in millions, except par values) |
December 31, 2019 | December 31, 2018 | ||||||
(As Restated) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 196 | $ | 277 | |||
Restricted cash | 137 | 131 | |||||
Receivables, net | 596 | 501 | |||||
Prepaid expenses(a) | 107 | 172 | |||||
Other current assets | 168 | 148 | |||||
Total current assets | 1,204 | 1,229 | |||||
Deferred site rental receivables | 1,424 | 1,366 | |||||
Property and equipment, net | 14,689 | 13,676 | |||||
Operating lease right-of-use assets(a) | 6,133 | — | |||||
Goodwill | 10,078 | 10,078 | |||||
Other intangible assets, net(a) | 4,836 | 5,516 | |||||
Long-term prepaid rent and other assets, net(a) | 116 | 920 | |||||
Total assets | $ | 38,480 | $ | 32,785 | |||
LIABILITIES AND EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 334 | $ | 313 | |||
Accrued interest | 169 | 148 | |||||
Deferred revenues | 661 | 591 | |||||
Other accrued liabilities(a) | 361 | 351 | |||||
Current maturities of debt and other obligations | 100 | 107 | |||||
Current portion of operating lease liabilities(a) | 299 | — | |||||
Total current liabilities | 1,924 | 1,510 | |||||
Debt and other long-term obligations | 18,021 | 16,575 | |||||
Operating lease liabilities(a) | 5,511 | — | |||||
Other long-term liabilities(a) | 2,526 | 3,123 | |||||
Total liabilities | 27,982 | 21,208 | |||||
Commitments and contingencies | |||||||
CCIC stockholders' equity: | |||||||
Common stock, $0.01 par value; 600 shares authorized; shares issued and outstanding: December 31, 2019—416 and December 31, 2018—415 | 4 | 4 | |||||
6.875% Mandatory Convertible Preferred Stock, Series A, $0.01 par value; 20 shares authorized; shares issued and outstanding: December 31, 2019—2 and December 31, 2018—2; aggregate liquidation value: December 31, 2019—$1,650 and December 31, 2018—$1,650 | — | — | |||||
Additional paid-in capital | 17,855 | 17,767 | |||||
Accumulated other comprehensive income (loss) | (5 | ) | (5 | ) | |||
Dividends/distributions in excess of earnings | (7,356 | ) | (6,189 | ) | |||
Total equity | 10,498 | 11,577 | |||||
Total liabilities and equity | $ | 38,480 | $ | 32,785 | |||
(a) | Effective January 1, 2019, we adopted new guidance on the recognition, measurement, presentation and disclosure of leases. The new guidance requires lessees to recognize a lease liability, initially measured at the present value of the lease payments for all leases, and a corresponding right-of-use asset. The accounting for lessors remained largely unchanged from previous guidance. As a result of the new guidance for leases, on the effective date, certain amounts related to our lessee arrangements that were previously reported separately have been de-recognized and reclassified into "Operating lease right-of-use assets" on the condensed consolidated balance sheet as of December 31, 2019. |
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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, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(As Restated) | (As Restated) | ||||||||||||||
Net revenues: | |||||||||||||||
Site rental | $ | 1,301 | $ | 1,232 | $ | 5,098 | $ | 4,800 | |||||||
Services and other | 128 | 174 | 675 | 574 | |||||||||||
Net revenues | 1,429 | 1,406 | 5,773 | 5,374 | |||||||||||
Operating expenses: | |||||||||||||||
Costs of operations (exclusive of depreciation, amortization and accretion): | |||||||||||||||
Site rental | 367 | 353 | 1,462 | 1,410 | |||||||||||
Services and other | 119 | 135 | 529 | 434 | |||||||||||
Selling, general and administrative | 157 | 145 | 614 | 563 | |||||||||||
Asset write-down charges | 6 | 8 | 19 | 26 | |||||||||||
Acquisition and integration costs | 3 | 9 | 13 | 27 | |||||||||||
Depreciation, amortization and accretion | 398 | 390 | 1,574 | 1,528 | |||||||||||
Total operating expenses | 1,050 | 1,040 | 4,211 | 3,988 | |||||||||||
Operating income (loss) | 379 | 366 | 1,562 | 1,386 | |||||||||||
Interest expense and amortization of deferred financing costs | (173 | ) | (164 | ) | (683 | ) | (642 | ) | |||||||
Gains (losses) on retirement of long-term obligations | — | — | (2 | ) | (106 | ) | |||||||||
Interest income | 1 | 2 | 6 | 5 | |||||||||||
Other income (expense) | 7 | 1 | 1 | 1 | |||||||||||
Income (loss) before income taxes | 214 | 205 | 884 | 644 | |||||||||||
Benefit (provision) for income taxes | (6 | ) | (5 | ) | (21 | ) | (19 | ) | |||||||
Net income (loss) | 208 | 200 | 863 | 625 | |||||||||||
Dividends/distributions on preferred stock | (28 | ) | (28 | ) | (113 | ) | (113 | ) | |||||||
Net income (loss) attributable to CCIC common stockholders | $ | 180 | $ | 172 | $ | 750 | $ | 512 | |||||||
Net income (loss) attributable to CCIC common stockholders, per common share: | |||||||||||||||
Net income (loss) attributable to CCIC common stockholders, basic | $ | 0.43 | $ | 0.41 | $ | 1.80 | $ | 1.24 | |||||||
Net income (loss) attributable to CCIC common stockholders, diluted | $ | 0.43 | $ | 0.41 | $ | 1.80 | $ | 1.23 | |||||||
Weighted-average common shares outstanding: | |||||||||||||||
Basic | 416 | 415 | 416 | 413 | |||||||||||
Diluted | 418 | 417 | 418 | 415 | |||||||||||
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| CROWN CASTLE INTERNATIONAL CORP. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) (In millions of dollars) |
Twelve Months Ended December 31, | ||||||||||||
2019 | 2018 | |||||||||||
(As Restated) | ||||||||||||
Cash flows from operating activities: | ||||||||||||
Net income (loss) | $ | 863 | $ | 625 | ||||||||
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities: | ||||||||||||
Depreciation, amortization and accretion | 1,574 | 1,528 | ||||||||||
(Gains) losses on retirement of long-term obligations | 2 | 106 | ||||||||||
Amortization of deferred financing costs and other non-cash interest | 1 | 7 | ||||||||||
Stock-based compensation expense | 117 | 103 | ||||||||||
Asset write-down charges | 19 | 26 | ||||||||||
Deferred income tax (benefit) provision | 2 | 2 | ||||||||||
Other non-cash adjustments, net | (2 | ) | 2 | |||||||||
Changes in assets and liabilities, excluding the effects of acquisitions: | ||||||||||||
Increase (decrease) in liabilities | 291 | 322 | ||||||||||
Decrease (increase) in assets | (167 | ) | (219 | ) | ||||||||
Net cash provided by (used for) operating activities | 2,700 | 2,502 | ||||||||||
Cash flows from investing activities: | ||||||||||||
Capital expenditures | (2,059 | ) | (1,741 | ) | ||||||||
Payments for acquisitions, net of cash acquired | (17 | ) | (42 | ) | ||||||||
Other investing activities, net | (7 | ) | (12 | ) | ||||||||
Net cash provided by (used for) investing activities | (2,083 | ) | (1,795 | ) | ||||||||
Cash flows from financing activities: | ||||||||||||
Proceeds from issuance of long-term debt | 1,894 | 2,742 | ||||||||||
Principal payments on debt and other long-term obligations | (86 | ) | (105 | ) | ||||||||
Purchases and redemptions of long-term debt | (12 | ) | (2,346 | ) | ||||||||
Borrowings under revolving credit facility | 2,110 | 1,820 | ||||||||||
Payments under revolving credit facility | (2,660 | ) | (1,725 | ) | ||||||||
Net borrowings (repayments) under commercial paper program | 155 | — | ||||||||||
Payments for financing costs | (24 | ) | (31 | ) | ||||||||
Net proceeds from issuance of common stock | — | 841 | ||||||||||
Purchases of common stock | (44 | ) | (34 | ) | ||||||||
Dividends/distributions paid on common stock | (1,912 | ) | (1,782 | ) | ||||||||
Dividends/distributions paid on preferred stock | (113 | ) | (113 | ) | ||||||||
Net cash provided by (used for) financing activities | (692 | ) | (733 | ) | ||||||||
Net increase (decrease) in cash, cash equivalents, and restricted cash | (75 | ) | (26 | ) | ||||||||
Effect of exchange rate changes on cash | — | (1 | ) | |||||||||
Cash, cash equivalents, and restricted cash at beginning of period | 413 | 440 | ||||||||||
Cash, cash equivalents, and restricted cash at end of period | $ | 338 | $ | 413 | ||||||||
Supplemental disclosure of cash flow information: | ||||||||||||
Interest paid | 661 | 619 | ||||||||||
Income taxes paid | 16 | 17 | ||||||||||
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News Release continued: | Page 25 | |
| CROWN CASTLE INTERNATIONAL CORP. SEGMENT OPERATING RESULTS (UNAUDITED) (In millions of dollars) |
SEGMENT OPERATING RESULTS | |||||||||||||||||||||||||||||||
Three Months Ended December 31, 2019 | Three Months Ended December 31, 2018 | ||||||||||||||||||||||||||||||
(As Restated) | |||||||||||||||||||||||||||||||
Towers | Fiber | Other | Consolidated Total | Towers | Fiber | Other | Consolidated Total | ||||||||||||||||||||||||
Segment site rental revenues | $ | 864 | $ | 437 | $ | 1,301 | $ | 821 | $ | 411 | $ | 1,232 | |||||||||||||||||||
Segment services and other revenues | 122 | 6 | 128 | 166 | 8 | 174 | |||||||||||||||||||||||||
Segment revenues | 986 | 443 | 1,429 | 987 | 419 | 1,406 | |||||||||||||||||||||||||
Segment site rental cost of operations | 217 | 141 | 358 | 207 | 138 | 345 | |||||||||||||||||||||||||
Segment services and other cost of operations | 114 | 3 | 117 | 127 | 5 | 132 | |||||||||||||||||||||||||
Segment cost of operations(a)(b) | 331 | 144 | 475 | 334 | 143 | 477 | |||||||||||||||||||||||||
Segment site rental gross margin(c) | 647 | 296 | 943 | 614 | 273 | 887 | |||||||||||||||||||||||||
Segment services and other gross margin(c) | 8 | 3 | 11 | 39 | 3 | 42 | |||||||||||||||||||||||||
Segment selling, general and administrative expenses(b) | 23 | 48 | 71 | 29 | 47 | 76 | |||||||||||||||||||||||||
Segment operating profit(c) | 632 | 251 | 883 | 624 | 229 | 853 | |||||||||||||||||||||||||
Other selling, general and administrative expenses(b) | $ | 65 | 65 | $ | 50 | 50 | |||||||||||||||||||||||||
Stock-based compensation expense | 27 | 27 | 25 | 25 | |||||||||||||||||||||||||||
Depreciation, amortization and accretion | 398 | 398 | 390 | 390 | |||||||||||||||||||||||||||
Interest expense and amortization of deferred financing costs | 173 | 173 | 164 | 164 | |||||||||||||||||||||||||||
Other (income) expenses to reconcile to income (loss) before income taxes(d) | 6 | 6 | 19 | 19 | |||||||||||||||||||||||||||
Income (loss) before income taxes | $ | 214 | $ | 205 | |||||||||||||||||||||||||||
(a) | Exclusive of depreciation, amortization and accretion shown separately. |
(b) | Segment cost of operations excludes (1) stock-based compensation expense of $6 million for both of the three months ended December 31, 2019 and 2018, and (2) prepaid lease purchase price adjustments of $5 million for both of the three months ended December 31, 2019 and 2018. Selling, general and administrative expenses exclude stock-based compensation expense of $21 million and $19 million for the three months ended December 31, 2019 and 2018, 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, 2019 | Twelve Months Ended December 31, 2018 | ||||||||||||||||||||||||||||||
(As Restated) | |||||||||||||||||||||||||||||||
Towers | Fiber | Other | Consolidated Total | Towers | Fiber | Other | Consolidated Total | ||||||||||||||||||||||||
Segment site rental revenues | $ | 3,394 | $ | 1,704 | $ | 5,098 | $ | 3,200 | $ | 1,600 | $ | 4,800 | |||||||||||||||||||
Segment services and other revenues | 658 | 17 | 675 | 558 | 16 | 574 | |||||||||||||||||||||||||
Segment revenues | 4,052 | 1,721 | 5,773 | 3,758 | 1,616 | 5,374 | |||||||||||||||||||||||||
Segment site rental cost of operations | 864 | 559 | 1,423 | 848 | 525 | 1,373 | |||||||||||||||||||||||||
Segment services and other cost of operations | 511 | 11 | 522 | 415 | 11 | 426 | |||||||||||||||||||||||||
Segment cost of operations(a)(b) | 1,375 | 570 | 1,945 | 1,263 | 536 | 1,799 | |||||||||||||||||||||||||
Segment site rental gross margin(c) | 2,530 | 1,145 | 3,675 | 2,352 | 1,075 | 3,427 | |||||||||||||||||||||||||
Segment services and other gross margin(c) | 147 | 6 | 153 | 143 | 5 | 148 | |||||||||||||||||||||||||
Segment selling, general and administrative expenses(b) | 96 | 195 | 291 | 110 | 179 | 289 | |||||||||||||||||||||||||
Segment operating profit(c) | 2,581 | 956 | 3,537 | 2,385 | 901 | 3,286 | |||||||||||||||||||||||||
Other selling, general and administrative expenses(b) | $ | 233 | 233 | $ | 191 | 191 | |||||||||||||||||||||||||
Stock-based compensation expense | 116 | 116 | 108 | 108 | |||||||||||||||||||||||||||
Depreciation, amortization and accretion | 1,574 | 1,574 | 1,528 | 1,528 | |||||||||||||||||||||||||||
Interest expense and amortization of deferred financing costs | 683 | 683 | 642 | 642 | |||||||||||||||||||||||||||
Other (income) expenses to reconcile to income (loss) before income taxes(d) | 47 | 47 | 173 | 173 | |||||||||||||||||||||||||||
Income (loss) before income taxes | $ | 884 | $ | 644 | |||||||||||||||||||||||||||
(a) | Exclusive of depreciation, amortization and accretion shown separately. |
(b) | Segment cost of operations excludes (1) stock-based compensation expense of $26 million and $25 million for the twelve months ended December 31, 2019 and 2018, respectively, and (2) prepaid lease purchase price adjustments of $20 million for both of the twelve months ended December 31, 2019 and 2018. Selling, general and administrative expenses exclude stock-based compensation expense of $90 million and $83 million for the twelve months ended December 31, 2019 and 2018, 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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News Release continued: | Page 27 | |
Expected Impact of Restatement on Previously-Issued Financial Statements
As a result of the identified errors described above, we will restate our financial statements for the years ended December 31, 2018 and 2017, and unaudited financial information for the quarterly and year-to-date periods in the year ended December 31, 2018 and for the first three quarters in the year ended December 31, 2019. We refer to the adjustments to correct the historical errors as "Restatement Adjustments."
In addition to the Restatement Adjustments, we have also made other adjustments to the financial statements referenced above to correct errors which were not material, individually or in the aggregate, to our consolidated financial statements. All such immaterial adjustments relate exclusively to our Towers segment. Collectively, we refer to the Restatement Adjustments and immaterial adjustments as "Historical Adjustments."
We will also restate selected historical consolidated financial and other data for the years ended December 31, 2016 and 2015 to reflect the impact of the Historical Adjustments. Restated financial statements and selected historical consolidated financial and other data for such periods will be reflected in our Annual Report on Form 10-K for the year ended December 31, 2019, which we expect to file within the prescribed timeline for such report, including any available extension if needed to finalize the consolidated financial statements and disclosures and complete the associated audit work.
Preliminary Restatement of Previously-Issued Annual Financial Statements
This section summarizes the expected unaudited effects of the Company's restatement to certain of its previously-issued annual financial statements for the years ended December 31, 2017 and 2018. "As Reported" amounts represent amounts as previously reported on the Company’s respective Annual Reports on Form 10-K. The following tables also reflect the expected unaudited impact of the Historical Adjustments, where applicable, on each annual period below.
Condensed Consolidated Balance Sheet
December 31, 2018 | |||||||||||||||
As Reported | Restatement Adjustments | Other Adjustments | As Restated | ||||||||||||
LIABILITIES AND EQUITY | |||||||||||||||
Current liabilities: | |||||||||||||||
Deferred revenues | $ | 498 | $ | 93 | $ | — | $ | 591 | |||||||
Total current liabilities | 1,417 | 93 | — | 1,510 | |||||||||||
Other long-term liabilities | 2,759 | 364 | — | 3,123 | |||||||||||
Total liabilities | 20,751 | 457 | — | 21,208 | |||||||||||
Dividends/distributions in excess of earnings | (5,732 | ) | (457 | ) | — | (6,189 | ) | ||||||||
Total equity | 12,034 | (457 | ) | — | 11,577 | ||||||||||
Total liabilities and equity | $ | 32,785 | $ | — | $ | — | $ | 32,785 | |||||||
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News Release continued: | Page 28 | |
Condensed Consolidated Statement of Operations
Year Ended December 31, 2018 | |||||||||||||||
As Reported | Restatement Adjustments | Other Adjustments | As Restated | ||||||||||||
Net revenues: | |||||||||||||||
Site rental | $ | 4,716 | $ | 84 | $ | — | $ | 4,800 | |||||||
Services and other | 707 | (130 | ) | (3 | ) | 574 | |||||||||
Net revenues | 5,423 | (46 | ) | (3 | ) | 5,374 | |||||||||
Operating expenses: | |||||||||||||||
Costs of operations(a): | |||||||||||||||
Services and other | 437 | — | (3 | ) | 434 | ||||||||||
Total operating expenses | 3,991 | — | (3 | ) | 3,988 | ||||||||||
Operating income (loss) | 1,432 | (46 | ) | — | 1,386 | ||||||||||
Income (loss) before income taxes | 690 | (46 | ) | — | 644 | ||||||||||
Net income (loss) | 671 | (46 | ) | — | 625 | ||||||||||
Net income (loss) attributable to CCIC common stockholders | $ | 558 | $ | (46 | ) | $ | — | $ | 512 | ||||||
Net income (loss) attributable to CCIC common stockholders, per common share: | |||||||||||||||
Net income (loss) attributable to CCIC common stockholders - basic | $ | 1.35 | $ | (0.11 | ) | $ | — | $ | 1.24 | ||||||
Net income (loss) attributable to CCIC common stockholders - diluted | $ | 1.34 | $ | (0.11 | ) | $ | — | $ | 1.23 | ||||||
Year Ended December 31, 2017 | |||||||||||||||
As Reported | Restatement Adjustments | Other Adjustments | As Restated | ||||||||||||
Net revenues: | |||||||||||||||
Site rental | $ | 3,669 | $ | 68 | $ | — | $ | 3,737 | |||||||
Services and other | 687 | (135 | ) | (31 | ) | 521 | |||||||||
Net revenues | 4,356 | (67 | ) | (31 | ) | 4,258 | |||||||||
Operating expenses: | |||||||||||||||
Costs of operations(a): | |||||||||||||||
Services and other | 420 | — | (21 | ) | 399 | ||||||||||
Total operating expenses | 3,310 | — | (21 | ) | 3,289 | ||||||||||
Operating income (loss) | 1,046 | (67 | ) | (10 | ) | 969 | |||||||||
Income (loss) before income taxes | 471 | (67 | ) | (10 | ) | 394 | |||||||||
Net income (loss) | 445 | (67 | ) | (10 | ) | 368 | |||||||||
Net income (loss) attributable to CCIC common stockholders | $ | 387 | $ | (67 | ) | $ | (10 | ) | $ | 310 | |||||
Net income (loss) attributable to CCIC common stockholders, per common share: | |||||||||||||||
Net income (loss) attributable to CCIC common stockholders - basic | $ | 1.01 | $ | (0.17 | ) | $ | (0.03 | ) | $ | 0.81 | |||||
Net income (loss) attributable to CCIC common stockholders - diluted | $ | 1.01 | $ | (0.17 | ) | $ | (0.03 | ) | $ | 0.81 | |||||
(a) | Exclusive of depreciation, amortization and accretion shown separately. |
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News Release continued: | Page 29 | |
Condensed Consolidated Statement of Cash Flows
Year Ended December 31, 2018 | |||||||||||||||
As Reported | Restatement Adjustments | Other Adjustments | As Restated | ||||||||||||
Cash flows from operating activities: | |||||||||||||||
Net income (loss) | $ | 671 | $ | (46 | ) | $ | — | $ | 625 | ||||||
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities: | |||||||||||||||
Increase (decrease) in liabilities | 276 | 46 | — | 322 | |||||||||||
Net cash provided by (used for) operating activities | 2,502 | — | — | 2,502 | |||||||||||
Net increase (decrease) in cash, cash equivalents, and restricted cash | (26 | ) | — | — | (26 | ) | |||||||||
Cash, cash equivalents, and restricted cash at beginning of period | 440 | — | — | 440 | |||||||||||
Cash, cash equivalents, and restricted cash at end of period | $ | 413 | $ | — | $ | — | $ | 413 | |||||||
Year Ended December 31, 2017 | |||||||||||||||
As Reported | Restatement Adjustments | Other Adjustments | As Restated | ||||||||||||
Cash flows from operating activities: | |||||||||||||||
Net income (loss) | $ | 445 | $ | (67 | ) | $ | (10 | ) | $ | 368 | |||||
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities: | |||||||||||||||
Increase (decrease) in liabilities | 176 | 67 | — | 243 | |||||||||||
Decrease (increase) in assets | 45 | — | 10 | 55 | |||||||||||
Net cash provided by (used for) operating activities | 2,043 | — | — | 2,043 | |||||||||||
Net increase (decrease) in cash, cash equivalents, and restricted cash | (258 | ) | — | — | (258 | ) | |||||||||
Cash, cash equivalents, and restricted cash at beginning of period | 697 | — | — | 697 | |||||||||||
Cash, cash equivalents, and restricted cash at end of period | $ | 440 | $ | — | $ | — | $ | 440 | |||||||
Condensed Consolidated Statement of Equity
December 31, 2016 | |||||||||||||||
As Reported | Restatement Adjustments | Other Adjustments | As Restated | ||||||||||||
Dividends/distributions in excess of earnings | $ | (3,379 | ) | $ | (344 | ) | $ | 10 | $ | (3,713 | ) | ||||
Total stockholders' equity | $ | 7,557 | $ | (344 | ) | $ | 10 | $ | 7,223 | ||||||
December 31, 2017 | |||||||||||||||
As Reported | Restatement Adjustments | Other Adjustments | As Restated | ||||||||||||
Dividends/distributions in excess of earnings | $ | (4,505 | ) | $ | (411 | ) | $ | — | $ | (4,916 | ) | ||||
Total stockholders' equity | $ | 12,339 | $ | (411 | ) | $ | — | $ | 11,928 | ||||||
December 31, 2018 | |||||||||||||||
As Reported | Restatement Adjustments | Other Adjustments | As Restated | ||||||||||||
Dividends/distributions in excess of earnings | $ | (5,732 | ) | $ | (457 | ) | $ | — | $ | (6,189 | ) | ||||
Total stockholders' equity | $ | 12,034 | $ | (457 | ) | $ | — | $ | 11,577 | ||||||
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News Release continued: | Page 30 | |
Preliminary Restatement of Previously-Issued Interim Unaudited Quarterly Financial Information
The following tables represent the Company’s expected impact to previously issued unaudited quarterly financial information for each of the applicable interim periods during the nine months ended September 30, 2019 and twelve months ended December 31, 2018. The amounts previously issued were derived from the Company’s respective Quarterly Reports on Form 10-Q, and, for the fourth quarter of 2018, from its 2018 Annual Report on Form 10-K. The following tables also reflect the expected unaudited impact of the Historical Adjustments, where applicable, on each interim period below.
Condensed Consolidated Balance Sheet
September 30, 2019 | June 30, 2019 | March 31, 2019 | |||||||||
(As Restated) | |||||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 182 | $ | 288 | $ | 245 | |||||
Restricted cash | 138 | 136 | 158 | ||||||||
Receivables, net | 667 | 591 | 545 | ||||||||
Prepaid expenses | 99 | 111 | 85 | ||||||||
Other current assets | 167 | 168 | 160 | ||||||||
Total current assets | 1,253 | 1,294 | 1,193 | ||||||||
Deferred site rental receivables | 1,413 | 1,391 | 1,373 | ||||||||
Property and equipment, net | 14,416 | 14,151 | 13,883 | ||||||||
Operating lease right-of-use assets | 6,112 | 6,053 | 5,969 | ||||||||
Goodwill | 10,078 | 10,078 | 10,078 | ||||||||
Other intangible assets, net | 4,968 | 5,074 | 5,178 | ||||||||
Long-term prepaid rent and other assets, net | 104 | 106 | 104 | ||||||||
Total assets | $ | 38,344 | $ | 38,147 | $ | 37,778 | |||||
LIABILITIES AND EQUITY | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | 368 | $ | 337 | $ | 311 | |||||
Accrued interest | 110 | 166 | 107 | ||||||||
Deferred revenues | 642 | 611 | 602 | ||||||||
Other accrued liabilities | 335 | 305 | 262 | ||||||||
Current maturities of debt and other obligations | 100 | 98 | 96 | ||||||||
Current portion of operating lease liabilities | 296 | 289 | 287 | ||||||||
Total current liabilities | 1,851 | 1,806 | 1,665 | ||||||||
Debt and other long-term obligations | 17,750 | 17,471 | 17,120 | ||||||||
Operating lease liabilities | 5,480 | 5,427 | 5,338 | ||||||||
Other long-term liabilities | 2,469 | 2,423 | 2,383 | ||||||||
Total liabilities | 27,550 | 27,127 | 26,506 | ||||||||
Commitments and contingencies | |||||||||||
CCIC stockholders' equity: | |||||||||||
Common stock, $0.01 par value | 4 | 4 | 4 | ||||||||
6.875% Mandatory Convertible Preferred Stock, Series A, $0.01 par value | — | — | — | ||||||||
Additional paid-in capital | 17,829 | 17,801 | 17,769 | ||||||||
Accumulated other comprehensive income (loss) | (5 | ) | (5 | ) | (5 | ) | |||||
Dividends/distributions in excess of earnings | (7,034 | ) | (6,780 | ) | (6,496 | ) | |||||
Total equity | 10,794 | 11,020 | 11,272 | ||||||||
Total liabilities and equity | $ | 38,344 | $ | 38,147 | $ | 37,778 | |||||
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News Release continued: | Page 31 | |
September 30, 2018 | June 30, 2018 | March 31, 2018 | |||||||||
(As Restated) | |||||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 323 | $ | 206 | $ | 220 | |||||
Restricted cash | 125 | 125 | 120 | ||||||||
Receivables, net | 471 | 455 | 402 | ||||||||
Prepaid expenses | 182 | 197 | 175 | ||||||||
Other current assets | 148 | 181 | 157 | ||||||||
Total current assets | 1,249 | 1,164 | 1,074 | ||||||||
Deferred site rental receivables | 1,357 | 1,303 | 1,304 | ||||||||
Property and equipment, net | 13,433 | 13,218 | 13,051 | ||||||||
Goodwill | 10,074 | 10,075 | 10,075 | ||||||||
Other intangible assets, net | 5,620 | 5,729 | 5,854 | ||||||||
Long-term prepaid rent and other assets, net | 911 | 885 | 892 | ||||||||
Total assets | $ | 32,644 | $ | 32,374 | $ | 32,250 | |||||
LIABILITIES AND EQUITY | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | 302 | $ | 272 | $ | 248 | |||||
Accrued interest | 101 | 154 | 104 | ||||||||
Deferred revenues | 572 | 558 | 543 | ||||||||
Other accrued liabilities | 306 | 272 | 240 | ||||||||
Current maturities of debt and other obligations | 111 | 112 | 130 | ||||||||
Total current liabilities | 1,392 | 1,368 | 1,265 | ||||||||
Debt and other long-term obligations | 16,313 | 15,844 | 15,616 | ||||||||
Other long-term liabilities | 3,088 | 3,029 | 2,961 | ||||||||
Total liabilities | 20,793 | 20,241 | 19,842 | ||||||||
Commitments and contingencies | |||||||||||
CCIC stockholders' equity: | |||||||||||
Common stock, $0.01 par value | 4 | 4 | 4 | ||||||||
6.875% Mandatory Convertible Preferred Stock, Series A, $0.01 par value | — | — | — | ||||||||
Additional paid-in capital | 17,743 | 17,711 | 17,690 | ||||||||
Accumulated other comprehensive income (loss) | (5 | ) | (5 | ) | (4 | ) | |||||
Dividends/distributions in excess of earnings | (5,891 | ) | (5,577 | ) | (5,282 | ) | |||||
Total equity | 11,851 | 12,133 | 12,408 | ||||||||
Total liabilities and equity | $ | 32,644 | $ | 32,374 | $ | 32,250 | |||||
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News Release continued: | Page 32 | |
The following tables illustrate the estimated Historical Adjustments, where applicable, on the Company’s condensed consolidated balance sheet for each period presented. Only line items impacted by the Historical Adjustments are presented, and as such, components will not sum to totals.
September 30, 2019 | |||||||||||||||
As Reported | Restatement Adjustments | Other Adjustments | As Restated | ||||||||||||
LIABILITIES AND EQUITY | |||||||||||||||
Current liabilities: | |||||||||||||||
Deferred revenues | $ | 525 | $ | 117 | $ | — | $ | 642 | |||||||
Total current liabilities | 1,734 | 117 | — | 1,851 | |||||||||||
Other long-term liabilities | 2,055 | 414 | 2,469 | ||||||||||||
Total liabilities | 27,019 | 531 | — | 27,550 | |||||||||||
CCIC stockholders' equity: | |||||||||||||||
Dividends/distributions in excess of earnings | (6,503 | ) | (531 | ) | — | (7,034 | ) | ||||||||
Total equity | 11,325 | (531 | ) | — | 10,794 | ||||||||||
Total liabilities and equity | $ | 38,344 | $ | — | $ | — | $ | 38,344 | |||||||
June 30, 2019 | |||||||||||||||
As Reported | Restatement Adjustments | Other Adjustments | As Restated | ||||||||||||
LIABILITIES AND EQUITY | |||||||||||||||
Current liabilities: | |||||||||||||||
Deferred revenues | $ | 503 | $ | 108 | $ | — | $ | 611 | |||||||
Total current liabilities | 1,698 | 108 | — | 1,806 | |||||||||||
Other long-term liabilities | 2,028 | 395 | — | 2,423 | |||||||||||
Total liabilities | 26,624 | 503 | — | 27,127 | |||||||||||
CCIC stockholders' equity: | |||||||||||||||
Dividends/distributions in excess of earnings | (6,277 | ) | (503 | ) | — | (6,780 | ) | ||||||||
Total equity | 11,523 | (503 | ) | — | 11,020 | ||||||||||
Total liabilities and equity | $ | 38,147 | $ | — | $ | — | $ | 38,147 | |||||||
March 31, 2019 | |||||||||||||||
As Reported | Restatement Adjustments | Other Adjustments | As Restated | ||||||||||||
LIABILITIES AND EQUITY | |||||||||||||||
Current liabilities: | |||||||||||||||
Deferred revenues | $ | 502 | $ | 100 | $ | — | $ | 602 | |||||||
Total current liabilities | 1,565 | 100 | — | 1,665 | |||||||||||
Other long-term liabilities | 2,009 | 374 | — | 2,383 | |||||||||||
Total liabilities | 26,032 | 474 | — | 26,506 | |||||||||||
CCIC stockholders' equity: | |||||||||||||||
Dividends/distributions in excess of earnings | (6,022 | ) | (474 | ) | — | (6,496 | ) | ||||||||
Total equity | 11,746 | (474 | ) | — | 11,272 | ||||||||||
Total liabilities and equity | $ | 37,778 | $ | — | $ | — | $ | 37,778 | |||||||
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News Release continued: | Page 33 | |
September 30, 2018 | |||||||||||||||
As Reported | Restatement Adjustments | Other Adjustments | As Restated | ||||||||||||
LIABILITIES AND EQUITY | |||||||||||||||
Current liabilities: | |||||||||||||||
Deferred revenues | $ | 484 | $ | 88 | $ | — | $ | 572 | |||||||
Total current liabilities | 1,304 | 88 | — | 1,392 | |||||||||||
Other long-term liabilities | 2,732 | 356 | — | 3,088 | |||||||||||
Total liabilities | 20,349 | 444 | — | 20,793 | |||||||||||
CCIC stockholders' equity: | |||||||||||||||
Dividends/distributions in excess of earnings | (5,447 | ) | (444 | ) | — | (5,891 | ) | ||||||||
Total equity | 12,295 | (444 | ) | — | 11,851 | ||||||||||
Total liabilities and equity | $ | 32,644 | $ | — | $ | — | $ | 32,644 | |||||||
June 30, 2018 | |||||||||||||||
As Reported | Restatement Adjustments | Other Adjustments | As Restated | ||||||||||||
LIABILITIES AND EQUITY | |||||||||||||||
Current liabilities: | |||||||||||||||
Deferred revenues | $ | 476 | $ | 82 | $ | — | $ | 558 | |||||||
Total current liabilities | 1,286 | 82 | — | 1,368 | |||||||||||
Other long-term liabilities | 2,678 | 351 | — | 3,029 | |||||||||||
Total liabilities | 19,808 | 433 | — | 20,241 | |||||||||||
CCIC stockholders' equity: | |||||||||||||||
Dividends/distributions in excess of earnings | (5,144 | ) | (433 | ) | — | (5,577 | ) | ||||||||
Total equity | 12,566 | (433 | ) | — | 12,133 | ||||||||||
Total liabilities and equity | $ | 32,374 | $ | — | $ | — | $ | 32,374 | |||||||
March 31, 2018 | |||||||||||||||
As Reported | Restatement Adjustments | Other Adjustments | As Restated | ||||||||||||
LIABILITIES AND EQUITY | |||||||||||||||
Current liabilities: | |||||||||||||||
Deferred revenues | $ | 465 | $ | 78 | $ | — | $ | 543 | |||||||
Total current liabilities | 1,187 | 78 | — | 1,265 | |||||||||||
Other long-term liabilities | 2,615 | 346 | — | 2,961 | |||||||||||
Total liabilities | 19,418 | 424 | — | 19,842 | |||||||||||
CCIC stockholders' equity: | |||||||||||||||
Dividends/distributions in excess of earnings | (4,858 | ) | (424 | ) | — | (5,282 | ) | ||||||||
Total equity | 12,832 | (424 | ) | — | 12,408 | ||||||||||
Total liabilities and equity | $ | 32,250 | $ | — | $ | — | $ | 32,250 | |||||||
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News Release continued: | Page 34 | |
Condensed Consolidated Statement of Operations
September 30, 2019 | June 30, 2019 | March 31, 2019 | |||||||||||||||||
Three Months Ended | Nine Months Ended | Three Months Ended | Six Months Ended | Three Months Ended | |||||||||||||||
(As Restated) | |||||||||||||||||||
Net revenues: | |||||||||||||||||||
Site rental | $ | 1,289 | $ | 3,797 | $ | 1,264 | $ | 2,507 | $ | 1,243 | |||||||||
Services and other | 197 | 547 | 185 | 351 | 166 | ||||||||||||||
Net revenues | 1,486 | 4,344 | 1,449 | 2,858 | 1,409 | ||||||||||||||
Operating expenses: | |||||||||||||||||||
Costs of operations(a): | |||||||||||||||||||
Site rental | 369 | 1,095 | 365 | 726 | 361 | ||||||||||||||
Services and other | 147 | 410 | 138 | 263 | 125 | ||||||||||||||
Selling, general and administrative | 150 | 457 | 155 | 307 | 152 | ||||||||||||||
Asset write-down charges | 2 | 13 | 6 | 12 | 6 | ||||||||||||||
Acquisition and integration costs | 4 | 10 | 2 | 6 | 4 | ||||||||||||||
Depreciation, amortization and accretion | 389 | 1,176 | 393 | 787 | 394 | ||||||||||||||
Total operating expenses | 1,061 | 3,161 | 1,059 | 2,101 | 1,042 | ||||||||||||||
Operating income (loss) | 425 | 1,183 | 390 | 757 | 367 | ||||||||||||||
Interest expense and amortization of deferred financing costs | (173 | ) | (510 | ) | (169 | ) | (337 | ) | (168 | ) | |||||||||
Gains (losses) on retirement of long-term obligations | — | (2 | ) | (1 | ) | (2 | ) | (1 | ) | ||||||||||
Interest income | 2 | 5 | 1 | 3 | 2 | ||||||||||||||
Other income (expense) | (5 | ) | (6 | ) | — | (1 | ) | (1 | ) | ||||||||||
Income (loss) before income taxes | 249 | 670 | 221 | 420 | 199 | ||||||||||||||
Benefit (provision) for income taxes | (5 | ) | (15 | ) | (4 | ) | (10 | ) | (6 | ) | |||||||||
Net income (loss) | 244 | 655 | 217 | 410 | 193 | ||||||||||||||
Dividends/distributions on preferred stock | (28 | ) | (85 | ) | (28 | ) | (57 | ) | (28 | ) | |||||||||
Net income (loss) attributable to CCIC common stockholders | $ | 216 | $ | 570 | $ | 189 | $ | 353 | $ | 165 | |||||||||
Net income (loss) attributable to CCIC common stockholders, per common share: | |||||||||||||||||||
Net income (loss) attributable to CCIC common stockholders - basic | $ | 0.52 | $ | 1.37 | $ | 0.45 | $ | 0.85 | $ | 0.40 | |||||||||
Net income (loss) attributable to CCIC common stockholders - diluted | $ | 0.52 | $ | 1.36 | $ | 0.45 | $ | 0.85 | $ | 0.40 | |||||||||
Weighted-average common shares outstanding: | |||||||||||||||||||
Basic | 416 | 416 | 416 | 415 | 415 | ||||||||||||||
Diluted | 418 | 418 | 418 | 417 | 417 | ||||||||||||||
(a) | Exclusive of depreciation, amortization and accretion shown separately. |
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News Release continued: | Page 35 | |
December 31, 2018 | September 30, 2018 | June 30, 2018 | March 31, 2018 | ||||||||||||||||||||
Three Months Ended | Three Months Ended | Nine Months Ended | Three Months Ended | Six Months Ended | Three Months Ended | ||||||||||||||||||
(As Restated) | |||||||||||||||||||||||
Net revenues: | |||||||||||||||||||||||
Site rental | $ | 1,232 | $ | 1,206 | $ | 3,568 | $ | 1,189 | $ | 2,362 | $ | 1,172 | |||||||||||
Services and other | 174 | 157 | 400 | 131 | 244 | 113 | |||||||||||||||||
Net revenues | 1,406 | 1,363 | 3,968 | 1,320 | 2,606 | 1,285 | |||||||||||||||||
Operating expenses: | |||||||||||||||||||||||
Costs of operations(a): | |||||||||||||||||||||||
Site rental | 353 | 355 | 1,057 | 355 | 702 | 347 | |||||||||||||||||
Services and other | 135 | 118 | 301 | 98 | 183 | 85 | |||||||||||||||||
Selling, general and administrative | 145 | 145 | 418 | 138 | 273 | 134 | |||||||||||||||||
Asset write-down charges | 8 | 8 | 18 | 6 | 9 | 3 | |||||||||||||||||
Acquisition and integration costs | 9 | 4 | 18 | 8 | 14 | 6 | |||||||||||||||||
Depreciation, amortization and accretion | 390 | 385 | 1,138 | 379 | 753 | 374 | |||||||||||||||||
Total operating expenses | 1,040 | 1,015 | 2,950 | 984 | 1,934 | 949 | |||||||||||||||||
Operating income (loss) | 366 | 348 | 1,018 | 336 | 672 | 336 | |||||||||||||||||
Interest expense and amortization of deferred financing costs | (164 | ) | (160 | ) | (478 | ) | (158 | ) | (318 | ) | (160 | ) | |||||||||||
Gains (losses) on retirement of long-term obligations | — | (32 | ) | (106 | ) | (3 | ) | (74 | ) | (71 | ) | ||||||||||||
Interest income | 2 | 1 | 4 | 1 | 2 | 1 | |||||||||||||||||
Other income (expense) | 1 | 1 | — | — | (1 | ) | (1 | ) | |||||||||||||||
Income (loss) before income taxes | 205 | 158 | 438 | 176 | 281 | 105 | |||||||||||||||||
Benefit (provision) for income taxes | (5 | ) | (5 | ) | (13 | ) | (5 | ) | (9 | ) | (4 | ) | |||||||||||
Net income (loss) | 200 | 153 | 425 | 171 | 272 | 101 | |||||||||||||||||
Dividends/distributions on preferred stock | (28 | ) | (28 | ) | (85 | ) | (28 | ) | (57 | ) | (28 | ) | |||||||||||
Net income (loss) attributable to CCIC common stockholders | $ | 172 | $ | 125 | $ | 340 | $ | 143 | $ | 215 | $ | 73 | |||||||||||
Net income (loss) attributable to CCIC common stockholders, per common share: | |||||||||||||||||||||||
Net income (loss) attributable to CCIC common stockholders - basic | $ | 0.41 | $ | 0.30 | $ | 0.82 | $ | 0.34 | $ | 0.52 | $ | 0.18 | |||||||||||
Net income (loss) attributable to CCIC common stockholders - diluted | $ | 0.41 | $ | 0.30 | $ | 0.82 | $ | 0.34 | $ | 0.52 | $ | 0.18 | |||||||||||
Weighted-average common shares outstanding: | |||||||||||||||||||||||
Basic | 415 | 415 | 413 | 415 | 412 | 409 | |||||||||||||||||
Diluted | 417 | 416 | 414 | 416 | 413 | 410 | |||||||||||||||||
(a) | Exclusive of depreciation, amortization and accretion shown separately. |
The pathway to possible.
CrownCastle.com
News Release continued: | Page 36 | |
The following tables illustrate the estimated Historical Adjustments, where applicable, on the Company’s condensed consolidated statement of operations and comprehensive income (loss) for each period presented. Only line items impacted by the Historical Adjustments are presented, and as such, components will not sum to totals.
Nine Months Ended September 30, 2019 | |||||||||||||||
As Reported | Restatement Adjustments | Other Adjustments | As Restated | ||||||||||||
Net revenues: | |||||||||||||||
Site rental | $ | 3,718 | $ | 79 | $ | — | $ | 3,797 | |||||||
Services and other | 700 | (153 | ) | — | 547 | ||||||||||
Net revenues | 4,418 | (74 | ) | — | 4,344 | ||||||||||
Operating income (loss) | 1,257 | (74 | ) | — | 1,183 | ||||||||||
Income (loss) before income taxes | 744 | (74 | ) | — | 670 | ||||||||||
Net income (loss) | 729 | (74 | ) | — | 655 | ||||||||||
Net income (loss) attributable to CCIC common stockholders | $ | 644 | $ | (74 | ) | $ | — | $ | 570 | ||||||
Net income (loss) attributable to CCIC common stockholders, per common share: | |||||||||||||||
Net income (loss) attributable to CCIC common stockholders - basic | $ | 1.55 | $ | (0.18 | ) | $ | — | $ | 1.37 | ||||||
Net income (loss) attributable to CCIC common stockholders - diluted | $ | 1.54 | $ | (0.18 | ) | $ | — | $ | 1.36 | ||||||
Three Months Ended September 30, 2019 | |||||||||||||||
As Reported | Restatement Adjustments | Other Adjustments | As Restated | ||||||||||||
Net revenues: | |||||||||||||||
Site rental | $ | 1,260 | $ | 29 | $ | — | $ | 1,289 | |||||||
Services and other | 254 | (57 | ) | — | 197 | ||||||||||
Net revenues | 1,514 | (28 | ) | — | 1,486 | ||||||||||
Operating income (loss) | 453 | (28 | ) | — | 425 | ||||||||||
Income (loss) before income taxes | 277 | (28 | ) | — | 249 | ||||||||||
Net income (loss) | 272 | (28 | ) | — | 244 | ||||||||||
Net income (loss) attributable to CCIC common stockholders | $ | 244 | $ | (28 | ) | $ | — | $ | 216 | ||||||
Net income (loss) attributable to CCIC common stockholders, per common share: | |||||||||||||||
Net income (loss) attributable to CCIC common stockholders - basic | $ | 0.59 | $ | (0.07 | ) | $ | — | $ | 0.52 | ||||||
Net income (loss) attributable to CCIC common stockholders - diluted | $ | 0.58 | $ | (0.06 | ) | $ | — | $ | 0.52 | ||||||
(a) | Exclusive of depreciation, amortization and accretion shown separately. |
The pathway to possible.
CrownCastle.com
News Release continued: | Page 37 | |
Six Months Ended June 30, 2019 | |||||||||||||||
As Reported | Restatement Adjustments | Other Adjustments | As Restated | ||||||||||||
Net revenues: | |||||||||||||||
Site rental | $ | 2,457 | $ | 50 | $ | — | $ | 2,507 | |||||||
Services and other | 447 | (96 | ) | — | 351 | ||||||||||
Net revenues | 2,904 | (46 | ) | — | 2,858 | ||||||||||
Operating income (loss) | 803 | (46 | ) | — | 757 | ||||||||||
Income (loss) before income taxes | 466 | (46 | ) | — | 420 | ||||||||||
Net income (loss) | 456 | (46 | ) | — | 410 | ||||||||||
Net income (loss) attributable to CCIC common stockholders | $ | 399 | $ | (46 | ) | $ | — | $ | 353 | ||||||
Net income (loss) attributable to CCIC common stockholders, per common share: | |||||||||||||||
Net income (loss) attributable to CCIC common stockholders - basic | $ | 0.96 | $ | (0.11 | ) | $ | — | $ | 0.85 | ||||||
Net income (loss) attributable to CCIC common stockholders - diluted | $ | 0.95 | $ | (0.10 | ) | $ | — | $ | 0.85 | ||||||
Three Months Ended June 30, 2019 | |||||||||||||||
As Reported | Restatement Adjustments | Other Adjustments | As Restated | ||||||||||||
Net revenues: | |||||||||||||||
Site rental | $ | 1,238 | $ | 26 | $ | — | $ | 1,264 | |||||||
Services and other | 240 | (55 | ) | — | 185 | ||||||||||
Net revenues | 1,478 | (29 | ) | — | 1,449 | ||||||||||
Operating income (loss) | 419 | (29 | ) | — | 390 | ||||||||||
Income (loss) before income taxes | 250 | (29 | ) | — | 221 | ||||||||||
Net income (loss) | 246 | (29 | ) | — | 217 | ||||||||||
Net income (loss) attributable to CCIC common stockholders | $ | 218 | $ | (29 | ) | $ | — | $ | 189 | ||||||
Net income (loss) attributable to CCIC common stockholders, per common share: | |||||||||||||||
Net income (loss) attributable to CCIC common stockholders - basic | $ | 0.52 | $ | (0.07 | ) | $ | — | $ | 0.45 | ||||||
Net income (loss) attributable to CCIC common stockholders - diluted | $ | 0.52 | $ | (0.07 | ) | $ | — | $ | 0.45 | ||||||
Three Months Ended March 31, 2019 | |||||||||||||||
As Reported | Restatement Adjustments | Other Adjustments | As Restated | ||||||||||||
Net revenues: | |||||||||||||||
Site rental | $ | 1,219 | $ | 24 | $ | — | $ | 1,243 | |||||||
Services and other | 207 | (41 | ) | — | 166 | ||||||||||
Net revenues | 1,426 | (17 | ) | — | 1,409 | ||||||||||
Operating income (loss) | 384 | (17 | ) | — | 367 | ||||||||||
Income (loss) before income taxes | 216 | (17 | ) | — | 199 | ||||||||||
Net income (loss) | 210 | (17 | ) | — | 193 | ||||||||||
Net income (loss) attributable to CCIC common stockholders | $ | 182 | $ | (17 | ) | $ | — | $ | 165 | ||||||
Net income (loss) attributable to CCIC common stockholders, per common share: | |||||||||||||||
Net income (loss) attributable to CCIC common stockholders - basic | $ | 0.44 | $ | (0.04 | ) | $ | — | $ | 0.40 | ||||||
Net income (loss) attributable to CCIC common stockholders - diluted | $ | 0.44 | $ | (0.04 | ) | $ | — | $ | 0.40 | ||||||
(a) | Exclusive of depreciation, amortization and accretion shown separately. |
The pathway to possible.
CrownCastle.com
News Release continued: | Page 38 | |
Three Months Ended December 31, 2018 | |||||||||||||||
As Reported | Restatement Adjustments | Other Adjustments | As Restated | ||||||||||||
Net revenues: | |||||||||||||||
Site rental | $ | 1,209 | $ | 23 | $ | — | $ | 1,232 | |||||||
Services and other | 210 | (36 | ) | — | 174 | ||||||||||
Net revenues | 1,419 | (13 | ) | — | 1,406 | ||||||||||
Operating income (loss) | 379 | (13 | ) | — | 366 | ||||||||||
Income (loss) before income taxes | 218 | (13 | ) | — | 205 | ||||||||||
Net income (loss) | 213 | (13 | ) | — | 200 | ||||||||||
Net income (loss) attributable to CCIC common stockholders | $ | 185 | $ | (13 | ) | $ | — | $ | 172 | ||||||
Net income (loss) attributable to CCIC common stockholders, per common share: | |||||||||||||||
Net income (loss) attributable to CCIC common stockholders - basic | $ | 0.45 | $ | (0.04 | ) | $ | — | $ | 0.41 | ||||||
Net income (loss) attributable to CCIC common stockholders - diluted | $ | 0.44 | $ | (0.03 | ) | $ | — | $ | 0.41 | ||||||
Nine Months Ended September 30, 2018 | |||||||||||||||
As Reported | Restatement Adjustments | Other Adjustments | As Restated | ||||||||||||
Net revenues: | |||||||||||||||
Site rental | $ | 3,507 | $ | 61 | $ | — | $ | 3,568 | |||||||
Services and other | 497 | (94 | ) | (3 | ) | 400 | |||||||||
Net revenues | 4,004 | (33 | ) | (3 | ) | 3,968 | |||||||||
Operating expenses: | |||||||||||||||
Costs of operations(a): | |||||||||||||||
Services and other | 304 | — | (3 | ) | 301 | ||||||||||
Total operating expenses | 2,953 | — | (3 | ) | 2,950 | ||||||||||
Operating income (loss) | 1,051 | (33 | ) | — | 1,018 | ||||||||||
Income (loss) before income taxes | 471 | (33 | ) | — | 438 | ||||||||||
Net income (loss) | 458 | (33 | ) | — | 425 | ||||||||||
Net income (loss) attributable to CCIC common stockholders | $ | 373 | $ | (33 | ) | $ | — | $ | 340 | ||||||
Net income (loss) attributable to CCIC common stockholders, per common share: | |||||||||||||||
Net income (loss) attributable to CCIC common stockholders - basic | $ | 0.90 | $ | (0.08 | ) | $ | — | $ | 0.82 | ||||||
Net income (loss) attributable to CCIC common stockholders - diluted | $ | 0.90 | $ | (0.08 | ) | $ | — | $ | 0.82 | ||||||
(a) | Exclusive of depreciation, amortization and accretion shown separately. |
The pathway to possible.
CrownCastle.com
News Release continued: | Page 39 | |
Three Months Ended September 30, 2018 | |||||||||||||||
As Reported | Restatement Adjustments | Other Adjustments | As Restated | ||||||||||||
Net revenues: | |||||||||||||||
Site rental | $ | 1,184 | $ | 22 | $ | — | $ | 1,206 | |||||||
Services and other | 191 | (33 | ) | (1 | ) | 157 | |||||||||
Net revenues | 1,375 | (11 | ) | (1 | ) | 1,363 | |||||||||
Operating expenses: | |||||||||||||||
Costs of operations(a): | |||||||||||||||
Services and other | 119 | — | (1 | ) | 118 | ||||||||||
Total operating expenses | 1,016 | — | (1 | ) | 1,015 | ||||||||||
Operating income (loss) | 359 | (11 | ) | — | 348 | ||||||||||
Income (loss) before income taxes | 169 | (11 | ) | — | 158 | ||||||||||
Net income (loss) | 164 | (11 | ) | — | 153 | ||||||||||
Net income (loss) attributable to CCIC common stockholders | $ | 136 | $ | (11 | ) | $ | — | $ | 125 | ||||||
Net income (loss) attributable to CCIC common stockholders, per common share: | |||||||||||||||
Net income (loss) attributable to CCIC common stockholders - basic | $ | 0.33 | $ | (0.03 | ) | $ | — | $ | 0.30 | ||||||
Net income (loss) attributable to CCIC common stockholders - diluted | $ | 0.33 | $ | (0.03 | ) | $ | — | $ | 0.30 | ||||||
Six Months Ended June 30, 2018 | |||||||||||||||
As Reported | Restatement Adjustments | Other Adjustments | As Restated | ||||||||||||
Net revenues: | |||||||||||||||
Site rental | $ | 2,323 | $ | 39 | $ | — | $ | 2,362 | |||||||
Services and other | 307 | (61 | ) | (2 | ) | 244 | |||||||||
Net revenues | 2,630 | (22 | ) | (2 | ) | 2,606 | |||||||||
Operating expenses: | |||||||||||||||
Costs of operations(a): | |||||||||||||||
Services and other | 185 | — | (2 | ) | 183 | ||||||||||
Total operating expenses | 1,936 | — | (2 | ) | 1,934 | ||||||||||
Operating income (loss) | 694 | (22 | ) | — | 672 | ||||||||||
Income (loss) before income taxes | 303 | (22 | ) | — | 281 | ||||||||||
Net income (loss) | 294 | (22 | ) | — | 272 | ||||||||||
Net income (loss) attributable to CCIC common stockholders | $ | 237 | $ | (22 | ) | $ | — | $ | 215 | ||||||
Net income (loss) attributable to CCIC common stockholders, per common share: | |||||||||||||||
Net income (loss) attributable to CCIC common stockholders - basic | $ | 0.58 | $ | (0.06 | ) | $ | — | $ | 0.52 | ||||||
Net income (loss) attributable to CCIC common stockholders - diluted | $ | 0.57 | $ | (0.05 | ) | $ | — | $ | 0.52 | ||||||
(a) | Exclusive of depreciation, amortization and accretion shown separately. |
The pathway to possible.
CrownCastle.com
News Release continued: | Page 40 | |
Three Months Ended June 30, 2018 | |||||||||||||||
As Reported | Restatement Adjustments | Other Adjustments | As Restated | ||||||||||||
Net revenues: | |||||||||||||||
Site rental | $ | 1,169 | $ | 20 | $ | — | $ | 1,189 | |||||||
Services and other | 161 | (29 | ) | (1 | ) | 131 | |||||||||
Net revenues | 1,330 | (9 | ) | (1 | ) | 1,320 | |||||||||
Operating expenses: | |||||||||||||||
Costs of operations(a): | |||||||||||||||
Services and other | 99 | — | (1 | ) | 98 | ||||||||||
Total operating expenses | 985 | — | (1 | ) | 984 | ||||||||||
Operating income (loss) | 345 | (9 | ) | — | 336 | ||||||||||
Income (loss) before income taxes | 185 | (9 | ) | — | 176 | ||||||||||
Net income (loss) | 180 | (9 | ) | — | 171 | ||||||||||
Net income (loss) attributable to CCIC common stockholders | $ | 152 | $ | (9 | ) | $ | — | $ | 143 | ||||||
Net income (loss) attributable to CCIC common stockholders, per common share: | |||||||||||||||
Net income (loss) attributable to CCIC common stockholders - basic | $ | 0.37 | $ | (0.03 | ) | $ | — | $ | 0.34 | ||||||
Net income (loss) attributable to CCIC common stockholders - diluted | $ | 0.36 | $ | (0.02 | ) | $ | — | $ | 0.34 | ||||||
Three Months Ended March 31, 2018 | |||||||||||||||
As Reported | Restatement Adjustments | Other Adjustments | As Restated | ||||||||||||
Net revenues: | |||||||||||||||
Site rental | $ | 1,153 | $ | 19 | $ | — | $ | 1,172 | |||||||
Services and other | 146 | (32 | ) | (1 | ) | 113 | |||||||||
Net revenues | 1,299 | (13 | ) | (1 | ) | 1,285 | |||||||||
Operating expenses: | |||||||||||||||
Costs of operations(a): | |||||||||||||||
Services and other | 86 | — | (1 | ) | 85 | ||||||||||
Total operating expenses | 950 | — | (1 | ) | 949 | ||||||||||
Operating income (loss) | 349 | (13 | ) | — | 336 | ||||||||||
Income (loss) before income taxes | 118 | (13 | ) | — | 105 | ||||||||||
Net income (loss) | 114 | (13 | ) | — | 101 | ||||||||||
Net income (loss) attributable to CCIC common stockholders | $ | 86 | $ | (13 | ) | $ | — | $ | 73 | ||||||
Net income (loss) attributable to CCIC common stockholders, per common share: | |||||||||||||||
Net income (loss) attributable to CCIC common stockholders - basic | $ | 0.21 | $ | (0.03 | ) | $ | — | $ | 0.18 | ||||||
Net income (loss) attributable to CCIC common stockholders - diluted | $ | 0.21 | $ | (0.03 | ) | $ | — | $ | 0.18 | ||||||
(a) | Exclusive of depreciation, amortization and accretion shown separately. |
The pathway to possible.
CrownCastle.com
News Release continued: | Page 41 | |
Condensed Consolidated Statement of Cash Flows
September 30, 2019 | June 30, 2019 | March 31, 2019 | |||||||||
Nine Months Ended | Six Months Ended | Three Months Ended | |||||||||
(As Restated) | |||||||||||
Cash flows from operating activities: | |||||||||||
Net income (loss) | $ | 655 | $ | 410 | $ | 193 | |||||
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities: | |||||||||||
Depreciation, amortization and accretion | 1,176 | 787 | 394 | ||||||||
(Gains) losses on retirement of long-term obligations | 2 | 2 | 1 | ||||||||
Amortization of deferred financing costs and other non-cash interest | 1 | 1 | 1 | ||||||||
Stock-based compensation expense | 91 | 62 | 29 | ||||||||
Asset write-down charges | 13 | 12 | 6 | ||||||||
Deferred income tax (benefit) provision | 2 | 1 | 1 | ||||||||
Other non-cash adjustments, net | 4 | 3 | 2 | ||||||||
Changes in assets and liabilities, excluding the effects of acquisitions: | |||||||||||
Increase (decrease) in liabilities | 175 | 100 | (53 | ) | |||||||
Decrease (increase) in assets | (228 | ) | (151 | ) | (62 | ) | |||||
Net cash provided by (used for) operating activities | 1,891 | 1,227 | 512 | ||||||||
Cash flows from investing activities: | |||||||||||
Capital expenditures | (1,538 | ) | (998 | ) | (480 | ) | |||||
Payments for acquisitions, net of cash acquired | (15 | ) | (13 | ) | (10 | ) | |||||
Other investing activities, net | 3 | 1 | 1 | ||||||||
Net cash provided by (used for) investing activities | (1,550 | ) | (1,010 | ) | (489 | ) | |||||
Cash flows from financing activities: | |||||||||||
Proceeds from issuance of long-term debt | 1,895 | 995 | 996 | ||||||||
Principal payments on debt and other long-term obligations | (59 | ) | (36 | ) | (25 | ) | |||||
Purchases and redemptions of long-term debt | (12 | ) | (12 | ) | (12 | ) | |||||
Borrowings under revolving credit facility | 1,585 | 1,195 | 710 | ||||||||
Payments under revolving credit facility | (2,270 | ) | (1,785 | ) | (1,140 | ) | |||||
Net issuances (repayments) under commercial paper program | — | 500 | — | ||||||||
Payments for financing costs | (24 | ) | (14 | ) | (10 | ) | |||||
Purchases of common stock | (44 | ) | (43 | ) | (42 | ) | |||||
Dividends/distributions paid on common stock | (1,415 | ) | (944 | ) | (477 | ) | |||||
Dividends/distributions paid on preferred stock | (85 | ) | (57 | ) | (28 | ) | |||||
Net cash provided by (used for) financing activities | (429 | ) | (201 | ) | (28 | ) | |||||
Net increase (decrease) in cash, cash equivalents, and restricted cash | (88 | ) | 16 | (5 | ) | ||||||
Effect of exchange rate changes on cash | — | — | — | ||||||||
Cash, cash equivalents, and restricted cash at beginning of period | 413 | 413 | 413 | ||||||||
Cash, cash equivalents, and restricted cash at end of period | $ | 325 | $ | 429 | $ | 408 | |||||
The pathway to possible.
CrownCastle.com
News Release continued: | Page 42 | |
September 30, 2018 | June 30, 2018 | March 31, 2018 | |||||||||
Nine Months Ended | Six Months Ended | Three Months Ended | |||||||||
(As Restated) | |||||||||||
Cash flows from operating activities: | |||||||||||
Net income (loss) | $ | 425 | $ | 272 | $ | 101 | |||||
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities: | |||||||||||
Depreciation, amortization and accretion | 1,138 | 753 | 374 | ||||||||
(Gains) losses on retirement of long-term obligations | 106 | 74 | 71 | ||||||||
Amortization of deferred financing costs and other non-cash interest | 5 | 4 | 2 | ||||||||
Stock-based compensation expense | 79 | 47 | 23 | ||||||||
Asset write-down charges | 18 | 9 | 3 | ||||||||
Deferred income tax (benefit) provision | 2 | 1 | 1 | ||||||||
Other non-cash adjustments, net | 2 | 1 | 2 | ||||||||
Changes in assets and liabilities, excluding the effects of acquisitions: | |||||||||||
Increase (decrease) in liabilities | 177 | 100 | (77 | ) | |||||||
Decrease (increase) in assets | (177 | ) | (150 | ) | (48 | ) | |||||
Net cash provided by (used for) operating activities | 1,775 | 1,111 | 452 | ||||||||
Cash flows from investing activities: | |||||||||||
Capital expenditures | (1,241 | ) | (763 | ) | (370 | ) | |||||
Payments for acquisitions, net of cash acquired | (26 | ) | (18 | ) | (14 | ) | |||||
Other investing activities, net | (14 | ) | 3 | — | |||||||
Net cash provided by (used for) investing activities | (1,281 | ) | (778 | ) | (384 | ) | |||||
Cash flows from financing activities: | |||||||||||
Proceeds from issuance of long-term debt | 2,743 | 1,743 | 1,743 | ||||||||
Principal payments on debt and other long-term obligations | (76 | ) | (47 | ) | (32 | ) | |||||
Purchases and redemptions of long-term debt | (2,346 | ) | (1,318 | ) | (1,318 | ) | |||||
Borrowings under revolving credit facility | 1,290 | 485 | 170 | ||||||||
Payments under revolving credit facility | (1,465 | ) | (1,150 | ) | (1,050 | ) | |||||
Payments for financing costs | (33 | ) | (20 | ) | (15 | ) | |||||
Net proceeds from issuance of common stock | 841 | 841 | 843 | ||||||||
Purchases of common stock | (34 | ) | (34 | ) | (33 | ) | |||||
Dividends/distributions paid on common stock | (1,315 | ) | (879 | ) | (443 | ) | |||||
Dividends/distributions paid on preferred stock | (85 | ) | (57 | ) | (28 | ) | |||||
Net cash provided by (used for) financing activities | (480 | ) | (436 | ) | (163 | ) | |||||
Net increase (decrease) in cash, cash equivalents, and restricted cash | 14 | (103 | ) | (95 | ) | ||||||
Effect of exchange rate changes on cash | (1 | ) | (1 | ) | — | ||||||
Cash, cash equivalents, and restricted cash at beginning of period | 440 | 440 | 440 | ||||||||
Cash, cash equivalents, and restricted cash at end of period | $ | 453 | $ | 336 | $ | 345 | |||||
The pathway to possible.
CrownCastle.com
News Release continued: | Page 43 | |
The following tables illustrate the estimated Historical Adjustments, where applicable, on the Company’s condensed consolidated statement of cash flows for each period. Only line items impacted by the Historical Adjustments are presented, and as such, components will not sum to totals.
Nine Months Ended September 30, 2019 | |||||||||||||||
As Reported | Restatement Adjustments | Other Adjustments | As Restated | ||||||||||||
Cash flows from operating activities: | |||||||||||||||
Net income (loss) | $ | 729 | $ | (74 | ) | $ | — | $ | 655 | ||||||
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities: | |||||||||||||||
Increase (decrease) in liabilities | 101 | 74 | — | 175 | |||||||||||
Net cash provided by (used for) operating activities | 1,891 | — | — | 1,891 | |||||||||||
Net increase (decrease) in cash, cash equivalents, and restricted cash | (88 | ) | — | — | (88 | ) | |||||||||
Cash, cash equivalents, and restricted cash at beginning of period | 413 | — | 413 | ||||||||||||
Cash, cash equivalents, and restricted cash at end of period | $ | 325 | $ | — | $ | — | $ | 325 | |||||||
Six Months Ended June 30, 2019 | |||||||||||||||
As Reported | Restatement Adjustments | Other Adjustments | As Restated | ||||||||||||
Cash flows from operating activities: | |||||||||||||||
Net income (loss) | $ | 456 | $ | (46 | ) | $ | — | $ | 410 | ||||||
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities: | |||||||||||||||
Increase (decrease) in liabilities | 54 | 46 | — | 100 | |||||||||||
Net cash provided by (used for) operating activities | 1,227 | — | — | 1,227 | |||||||||||
Net increase (decrease) in cash, cash equivalents, and restricted cash | 16 | — | — | 16 | |||||||||||
Cash, cash equivalents, and restricted cash at beginning of period | 413 | — | 413 | ||||||||||||
Cash, cash equivalents, and restricted cash at end of period | $ | 429 | $ | — | $ | — | $ | 429 | |||||||
Three Months Ended March 31, 2019 | |||||||||||||||
As Reported | Restatement Adjustments | Other Adjustments | As Restated | ||||||||||||
Cash flows from operating activities: | |||||||||||||||
Net income (loss) | $ | 210 | $ | (17 | ) | $ | — | $ | 193 | ||||||
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities: | |||||||||||||||
Increase (decrease) in liabilities | (70 | ) | 17 | — | (53 | ) | |||||||||
Net cash provided by (used for) operating activities | 512 | — | — | 512 | |||||||||||
Net increase (decrease) in cash, cash equivalents, and restricted cash | (5 | ) | — | — | (5 | ) | |||||||||
Cash, cash equivalents, and restricted cash at beginning of period | 413 | — | 413 | ||||||||||||
Cash, cash equivalents, and restricted cash at end of period | $ | 408 | $ | — | $ | — | $ | 408 | |||||||
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News Release continued: | Page 44 | |
Nine Months Ended September 30, 2018 | |||||||||||||||
As Reported | Restatement Adjustments | Other Adjustments | As Restated | ||||||||||||
Cash flows from operating activities: | |||||||||||||||
Net income (loss) | $ | 458 | $ | (33 | ) | $ | — | $ | 425 | ||||||
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities: | |||||||||||||||
Increase (decrease) in liabilities | 144 | 33 | — | 177 | |||||||||||
Net cash provided by (used for) operating activities | 1,775 | — | — | 1,775 | |||||||||||
Net increase (decrease) in cash, cash equivalents, and restricted cash | 14 | — | — | 14 | |||||||||||
Cash, cash equivalents, and restricted cash at beginning of period | 440 | — | 440 | ||||||||||||
Cash, cash equivalents, and restricted cash at end of period | $ | 453 | $ | — | $ | — | $ | 453 | |||||||
Six Months Ended June 30, 2018 | |||||||||||||||
As Reported | Restatement Adjustments | Other Adjustments | As Restated | ||||||||||||
Cash flows from operating activities: | |||||||||||||||
Net income (loss) | $ | 294 | $ | (22 | ) | $ | — | $ | 272 | ||||||
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities: | |||||||||||||||
Increase (decrease) in liabilities | 78 | 22 | — | 100 | |||||||||||
Net cash provided by (used for) operating activities | 1,111 | — | — | 1,111 | |||||||||||
Net increase (decrease) in cash, cash equivalents, and restricted cash | (103 | ) | — | — | (103 | ) | |||||||||
Cash, cash equivalents, and restricted cash at beginning of period | 440 | — | 440 | ||||||||||||
Cash, cash equivalents, and restricted cash at end of period | $ | 336 | $ | — | $ | — | $ | 336 | |||||||
Three Months Ended March 31, 2018 | |||||||||||||||
As Reported | Restatement Adjustments | Other Adjustments | As Restated | ||||||||||||
Cash flows from operating activities: | |||||||||||||||
Net income (loss) | $ | 114 | $ | (13 | ) | $ | — | $ | 101 | ||||||
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities: | |||||||||||||||
Increase (decrease) in liabilities | (90 | ) | 13 | — | (77 | ) | |||||||||
Net cash provided by (used for) operating activities | 452 | — | — | 452 | |||||||||||
Net increase (decrease) in cash, cash equivalents, and restricted cash | (95 | ) | — | — | (95 | ) | |||||||||
Cash, cash equivalents, and restricted cash at beginning of period | 440 | — | 440 | ||||||||||||
Cash, cash equivalents, and restricted cash at end of period | $ | 345 | $ | — | $ | — | $ | 345 | |||||||
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CrownCastle.com
News Release continued: | Page 45 | |
Impact of Restatement on Selected Financial Data
Years Ended December 31, | |||||||||||||||||||
(In millions of dollars, except per share amounts) | 2019 | 2018 | 2017 | 2016 | 2015 | ||||||||||||||
As Restated | |||||||||||||||||||
Statement of Operations Data(a)(c): | |||||||||||||||||||
Net revenues: | |||||||||||||||||||
Site rental | $ | 5,098 | $ | 4,800 | $ | 3,737 | $ | 3,286 | $ | 3,058 | |||||||||
Services and other | 675 | 574 | 521 | 566 | 534 | ||||||||||||||
Net revenues | 5,773 | 5,374 | 4,258 | 3,852 | 3,592 | ||||||||||||||
Operating expenses: | |||||||||||||||||||
Costs of operations(b): | |||||||||||||||||||
Site rental | 1,462 | 1,410 | 1,144 | 1,024 | 964 | ||||||||||||||
Services and other | 529 | 434 | 399 | 397 | 355 | ||||||||||||||
Total costs of operations | 1,991 | 1,844 | 1,543 | 1,421 | 1,319 | ||||||||||||||
Selling, general and administrative | 614 | 563 | 426 | 371 | 310 | ||||||||||||||
Asset write-down charges | 19 | 26 | 17 | 34 | 33 | ||||||||||||||
Acquisition and integration costs | 13 | 27 | 61 | 17 | 16 | ||||||||||||||
Depreciation, amortization and accretion | 1,574 | 1,528 | 1,242 | 1,109 | 1,036 | ||||||||||||||
Operating income (loss) | 1,562 | 1,386 | 969 | 900 | 878 | ||||||||||||||
Interest expense and amortization of deferred financing costs | (683 | ) | (642 | ) | (591 | ) | (515 | ) | (527 | ) | |||||||||
Gains (losses) on retirement of long-term obligations | (2 | ) | (106 | ) | (4 | ) | (52 | ) | (4 | ) | |||||||||
Interest income | 6 | 5 | 19 | 1 | 2 | ||||||||||||||
Other income (expense) | 1 | 1 | 1 | (9 | ) | 57 | |||||||||||||
Income (loss) from continuing operations before income taxes | 884 | 644 | 394 | 325 | 406 | ||||||||||||||
Benefit (provision) for income taxes | (21 | ) | (19 | ) | (26 | ) | (17 | ) | 51 | ||||||||||
Income (loss) from continuing operations | 863 | 625 | 368 | 308 | 457 | ||||||||||||||
Discontinued operations: | |||||||||||||||||||
Income (loss) from discontinued operations, net of tax | — | — | — | — | 20 | ||||||||||||||
Net gain (loss) from disposal of discontinued operations, net of tax | — | — | — | — | 979 | ||||||||||||||
Income (loss) from discontinued operations, net of tax | — | — | — | — | 999 | ||||||||||||||
Net income (loss) | 863 | 625 | 368 | 308 | 1,456 | ||||||||||||||
Less: Net income (loss) attributable to the noncontrolling interest | — | — | — | — | 3 | ||||||||||||||
Net income (loss) attributable to CCIC stockholders | 863 | 625 | 368 | 308 | 1,453 | ||||||||||||||
Dividends/distributions on preferred stock | (113 | ) | (113 | ) | (58 | ) | (33 | ) | (44 | ) | |||||||||
Net income (loss) attributable to CCIC common stockholders | $ | 750 | $ | 512 | $ | 310 | $ | 275 | $ | 1,409 | |||||||||
Income (loss) from continuing operations attributable to CCIC common stockholders, per common share - basic | $ | 1.80 | $ | 1.24 | $ | 0.81 | $ | 0.81 | $ | 1.24 | |||||||||
Income (loss) from continuing operations attributable to CCIC common stockholders, per common share - diluted | $ | 1.80 | $ | 1.23 | $ | 0.81 | $ | 0.81 | $ | 1.24 | |||||||||
Weighted-average common shares outstanding (in millions): | |||||||||||||||||||
Basic | 416 | 413 | 382 | 340 | 333 | ||||||||||||||
Diluted | 418 | 415 | 383 | 341 | 334 | ||||||||||||||
Other Data(a)(c): | |||||||||||||||||||
Summary cash flow information: | |||||||||||||||||||
Net cash provided by (used for) operating activities | $ | 2,700 | $ | 2,502 | $ | 2,043 | $ | 1,787 | $ | 1,790 | |||||||||
Net cash provided by (used for) investing activities | (2,083 | ) | (1,795 | ) | (10,493 | ) | (1,429 | ) | (1,956 | ) | |||||||||
Net cash provided by (used for) financing activities | (692 | ) | (733 | ) | 8,192 | (89 | ) | (952 | ) | ||||||||||
Balance Sheet Data (at period end)(a)(c): | |||||||||||||||||||
Cash and cash equivalents | $ | 196 | $ | 277 | $ | 314 | $ | 568 | $ | 179 | |||||||||
Property and equipment, net | 14,689 | 13,676 | 12,933 | 9,805 | 9,580 | ||||||||||||||
Total assets | 38,480 | 32,785 | 32,229 | 22,685 | 21,937 | ||||||||||||||
Total debt and other long-term obligations | 18,121 | 16,682 | 16,159 | 12,171 | 12,150 | ||||||||||||||
Total CCIC stockholders' equity | 10,498 | 11,577 | 11,928 | 7,223 | 6,805 | ||||||||||||||
(a) | Inclusive of the impact of acquisitions. |
(b) | Exclusive of depreciation, amortization and accretion, which are shown separately. |
(c) | Amounts reflect the impact of all applicable adopted accounting pronouncements during the periods presented. |
The pathway to possible.
CrownCastle.com
Exhibit 99.2
Supplemental Information Package
and Non-GAAP Reconciliations
Fourth Quarter • December 31, 2019
The pathway to possible.
CrownCastle.com
Crown Castle International Corp.
Fourth Quarter 2019
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 | |
Tenant 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 | |
1
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 plans, projections and estimates regarding (1) demand for data and our communications infrastructure, and benefits derived therefrom, (2) cash flow growth, (3) tenant additions, (4) our Outlook for full year 2020, (5) preliminary restatement of financial results, our restatement plans and the expected impact of such restatement, (6) timing of the filing of our Annual Report on Form 10-K for the year ended December 31, 2019 (the "2019 10-K"), (7) our strategy, (8) strategic position of our assets, and (9) assumed conversion of preferred stock and the impact therefrom.
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. Crown Castle assumes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. More information about potential risk factors which could affect our results is included in our filings with the Securities and Exchange Commission (the "SEC"). Our filings with the SEC are available through the SEC website at www.sec.gov or through our investor relations website at investor.crowncastle.com. We use our investor relations website to disclose information about us that may be deemed to be material. We encourage investors, the media and others interested in us to visit our investor relations website from time to time to review up-to-date information or to sign up for e-mail alerts to be notified when new or updated information is posted on the site.
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.
Expected Restatement of Previously Issued Financial Statements
We will restate our financial statements for the years ended December 31, 2018 and 2017, and unaudited financial information for the quarterly and year-to-date periods in the year ended December 31, 2018 and for the first three quarters in the year ended December 31, 2019. Restated financial statements for the periods in question will be reflected in our2019 10-K, which we expect to file within the prescribed timeline for such report, including any available extension if needed to finalize the consolidated financial statements and disclosures and complete the associated audit work. The expected impacts of the restatement described in this supplement and set forth in the tables on the following pages are preliminary and unaudited and are subject to change before we file the 2019 10-K. We believe the restatement will not have an impact on our business operations or our net cash flows.
For further information on the expected restatement, see our Form 8-K filed with the SEC on February 26, 2020.
2
Crown Castle International Corp.
Fourth Quarter 2019
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 that is geographically dispersed throughout the U.S., including (1) more than 40,000 towers and other structures, such as rooftops (collectively, "towers"), and (2) approximately 80,000 route miles of fiber primarily supporting small cell networks ("small cells") and fiber solutions. We refer to our towers, fiber and small cells assets collectively as "communications infrastructure," and to our customers on our communications infrastructure as "tenants." Our towers have a significant presence in each of the top 100 basic trading areas, and the majority of our small cells and fiber are located in major metropolitan areas, including a presence within every major U.S. market.
Our operating segments consist of (1) Towers and (2) Fiber. Our core business is providing access, including space or capacity, to our shared communications infrastructure via long-term contracts in various forms, including lease, license, sublease and service agreements (collectively, "tenant contracts"). We seek to increase our site rental revenues by adding more tenants on our shared 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.
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 generated 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 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 are focused on maximizing the recurring site rental cash flows generated from providing our tenants with long-term access to our shared infrastructure assets, which we believe is the core driver of value for our stockholders. Tenant additions or modifications of existing tenant equipment (collectively, "tenant additions") enable our tenants 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 tenants' growing network needs through our shared communications infrastructure model, which is an efficient and cost-effective way to serve our tenants. Additionally, we believe our ability to share our fiber assets across multiple tenants to deploy both small cells and offer fiber solutions allows us to generate cash flows and increase stockholder return. |
• | Return cash generated by operating activities to common stockholders in the form of dividends. We believe that distributing a meaningful portion of our cash generated by operating activities appropriately provides common stockholders with increased certainty for a portion of expected long-term stockholder value while still allowing us to retain 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 generated 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; |
◦ | 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. |
3
Crown Castle International Corp.
Fourth Quarter 2019
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
Our strategy to create long-term stockholder value is based on our belief that there will be considerable future demand for our communications infrastructure based on the location of our assets and the rapid 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. Further, we seek to augment the long-term value creation associated with growing our recurring site rental cash flows by offering certain ancillary site development and installation services within our Towers segment.
4
Crown Castle International Corp.
Fourth Quarter 2019
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
AFFO PER SHARE(a)(b) |
2015(c) | 2016(c) | 2017(c) | 2018(c) | 2019 | Midpoint of Full Year 2020 Outlook(d) |
TOWER PORTFOLIO FOOTPRINT | ||
 | ||
(a) | See reconciliations and definitions provided herein. |
(b) | Attributable to CCIC common stockholders. |
(c) | As restated. |
(d) | Represents the midpoint of Outlook as issued on February 26, 2020. The only changes to our previously issued 2020 Outlook are a result of the impact of the restatement as described in "Expected Restatement of Previously Issued Financial Statements." |
5
Crown Castle International Corp.
Fourth Quarter 2019
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 | 47 | 20 | President and Chief Executive Officer |
Daniel K. Schlanger | 46 | 3 | Senior Vice President and Chief Financial Officer |
James D. Young | 58 | 14 | Senior Vice President and Chief Operating Officer - Fiber |
Robert C. Ackerman | 67 | 21 | Senior Vice President and Chief Operating Officer - Towers and Small Cells |
Kenneth J. Simon | 59 | 4 | Senior Vice President and General Counsel |
Michael J. Kavanagh | 51 | 9 | Senior Vice President and Chief Commercial Officer |
Philip M. Kelley | 47 | 22 | Senior Vice President - Corporate Development and Strategy |
BOARD OF DIRECTORS | ||||
Name | Position | Committees | Age | Years as Director |
J. Landis Martin | Chairman | NCG(a) | 74 | 23 |
P. Robert Bartolo | Director | Audit, Compensation | 48 | 6 |
Cindy Christy | Director | Compensation, NCG(a), Strategy | 54 | 12 |
Ari Q. Fitzgerald | Director | Compensation, NCG(a), Strategy | 57 | 17 |
Robert E. Garrison II | Director | Audit, Compensation | 77 | 14 |
Andrea J. Goldsmith | Director | NCG(a), Strategy | 55 | 1 |
Lee W. Hogan | Director | Audit, Compensation, Strategy | 75 | 18 |
Edward C. Hutcheson Jr. | Director | Strategy | 74 | 24 |
Robert F. McKenzie | Director | Audit, Strategy | 76 | 24 |
Anthony J. Melone | Director | NCG(a), Strategy | 59 | 4 |
W. Benjamin Moreland | Director | Strategy | 56 | 13 |
Jay A. Brown | Director | 47 | 3 | |
(a) | Nominating & Corporate Governance Committee |
6
Crown Castle International Corp.
Fourth Quarter 2019
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
RESEARCH COVERAGE | ||
Equity Research | ||
Bank of America David Barden (646) 855-1320 | Citigroup Michael Rollins (212) 816-1116 | Cowen and Company Colby Synesael (646) 562-1355 |
Goldman Sachs Brett Feldman (212) 902-8156 | Guggenheim Robert Gutman (212) 518-9148 | JPMorgan Philip Cusick (212) 622-1444 |
KeyBanc Brandon Nispel (503) 821-3871 | MoffettNathanson Nick Del Deo (212) 519-0025 | Morgan Stanley Simon Flannery (212) 761-6432 |
New Street Research Spencer Kurn (212) 921-2067 | Oppenheimer & Co. Timothy Horan (212) 667-8137 | Raymond James Ric Prentiss (727) 567-2567 |
RBC Capital Markets Jonathan Atkin (415) 633-8589 | SunTrust Robinson Humphrey Greg Miller (212) 303-4169 | UBS Batya Levi (212) 713-8824 |
Wells Fargo Securities, LLC Jennifer Fritzsche (312) 920-3548 | ||
Rating Agency | ||
Fitch John Culver (312) 368-3216 | Moody’s Lori Marks (212) 553-1098 | Standard & Poor’s Ryan Gilmore (212) 438-0602 |
HISTORICAL COMMON STOCK DATA | |||||||||||||||
Three Months Ended | |||||||||||||||
(in millions, except per share amounts) | 12/31/19 | 9/30/19 | 6/30/19 | 3/31/19 | 12/31/18 | ||||||||||
High price(a) | $ | 143.71 | $ | 146.94 | $ | 135.53 | $ | 124.98 | $ | 112.56 | |||||
Low price(a) | $ | 128.69 | $ | 121.72 | $ | 116.73 | $ | 100.61 | $ | 98.80 | |||||
Period end closing price(b) | $ | 142.15 | $ | 137.77 | $ | 128.14 | $ | 124.78 | $ | 104.95 | |||||
Dividends paid per common share | $ | 1.2 | $ | 1.125 | $ | 1.125 | $ | 1.125 | $ | 1.125 | |||||
Volume weighted average price for the period(a) | $ | 135.12 | $ | 135.00 | $ | 125.64 | $ | 113.45 | $ | 105.19 | |||||
Common shares outstanding, at period end | 416 | 416 | 416 | 416 | 415 | ||||||||||
Market value of outstanding common shares, at period end(c) | $ | 59,103 | $ | 57,280 | $ | 53,275 | $ | 51,876 | $ | 43,538 | |||||
(a) | Based on the sales price, adjusted for common stock dividends, as reported by Bloomberg. |
(b) | Based on the period end closing price, adjusted for common stock dividends, as reported by Bloomberg. |
(c) | Period end market value of outstanding common shares is calculated as the product of (1) shares of common stock outstanding at period end and (2) closing share price at period end, adjusted for common stock dividends, as reported by Bloomberg. |
7
Crown Castle International Corp.
Fourth Quarter 2019
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
SUMMARY PORTFOLIO HIGHLIGHTS | |||
(as of December 31, 2019) | |||
Towers | |||
Number of towers(a) | 40,061 | ||
Average number of tenants per tower | 2.1 | ||
Remaining contracted tenant receivables ($ in billions)(b) | $ | 19 | |
Weighted average remaining tenant contract term (years)(c) | 5 | ||
Percent of towers in the Top 50 / 100 Basic Trading Areas | 56%/71% | ||
Percent of ground leased / owned (d) | 60%/40% | ||
Weighted average maturity of ground leases (years)(d)(e) | 36 | ||
Fiber | |||
Number of route miles of fiber (in thousands) | 80 | ||
Remaining contracted tenant receivables ($ in billions)(b) | $ | 5 | |
Weighted average remaining tenant contract term (years)(c) | 5 | ||
SUMMARY FINANCIAL HIGHLIGHTS | ||||||||||||||||
Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
(dollars in millions, except per share amounts) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
(As Restated) | (As Restated) | |||||||||||||||
Operating Data: | ||||||||||||||||
Net revenues | ||||||||||||||||
Site rental | $ | 1,301 | $ | 1,232 | $ | 5,098 | $ | 4,800 | ||||||||
Services and other | 128 | 174 | 675 | 574 | ||||||||||||
Net revenues | $ | 1,429 | $ | 1,406 | $ | 5,773 | $ | 5,374 | ||||||||
Costs of operations (exclusive of depreciation, amortization and accretion) | ||||||||||||||||
Site rental | $ | 367 | $ | 353 | $ | 1,462 | $ | 1,410 | ||||||||
Services and other | 119 | 135 | 529 | 434 | ||||||||||||
Total cost of operations | $ | 486 | $ | 488 | $ | 1,991 | $ | 1,844 | ||||||||
Net income (loss) attributable to CCIC common stockholders | $ | 180 | $ | 172 | $ | 750 | $ | 512 | ||||||||
Net income (loss) attributable to CCIC common stockholders per share—diluted(f) | $ | 0.43 | $ | 0.41 | $ | 1.80 | $ | 1.23 | ||||||||
Non-GAAP Data(g): | ||||||||||||||||
Adjusted EBITDA | $ | 818 | $ | 803 | $ | 3,304 | $ | 3,095 | ||||||||
FFO(h) | 570 | 555 | 2,288 | 2,009 | ||||||||||||
AFFO(h) | 578 | 578 | 2,376 | 2,228 | ||||||||||||
AFFO per share(f)(h) | $ | 1.38 | $ | 1.39 | $ | 5.69 | $ | 5.37 | ||||||||
(a) | Excludes third-party land interests. |
(b) | Excludes renewal terms at tenants' option. |
(c) | Excludes renewal terms at tenants' option, weighted by site rental revenues exclusive of straight-line revenues and amortization of prepaid rent. |
(d) | Weighted by Towers segment site rental gross margin exclusive of straight-line revenues, amortization or prepaid rent, and straight-line expenses. |
(e) | Includes all renewal terms at the Company's option. |
(f) | Based on diluted weighted-average common shares outstanding of 418 million and 417 million for the three months ended December 31, 2019 and 2018, respectively, and 418 million and 415 million for the twelve months ended December 31, 2019 and 2018, respectively. |
(g) | See reconciliations of Non-GAAP financial measures provided herein. See also "Definitions of Non-GAAP Measures, Segment Measures and Other Calculations" in the Appendix for a discussion of our definitions of Adjusted EBITDA, FFO and AFFO, including per share amounts. |
(h) | Attributable to CCIC common stockholders. |
8
Crown Castle International Corp.
Fourth Quarter 2019
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
SUMMARY FINANCIAL HIGHLIGHTS (CONTINUED) | ||||||||||||||||
Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
(dollars in millions) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
(As Restated) | (As Restated) | |||||||||||||||
Summary Cash Flow Data(a): | ||||||||||||||||
Net cash provided by (used for) operating activities | $ | 809 | $ | 727 | $ | 2,700 | $ | 2,502 | ||||||||
Net cash provided by (used for) investing activities(b) | (533 | ) | (514 | ) | (2,083 | ) | (1,795 | ) | ||||||||
Net cash provided by (used for) financing activities | (263 | ) | (253 | ) | (692 | ) | (733 | ) | ||||||||
(dollars in millions) | December 31, 2019 | December 31, 2018 | ||||||
(As Restated) | ||||||||
Balance Sheet Data (at period end): | ||||||||
Cash and cash equivalents | $ | 196 | $ | 277 | ||||
Property and equipment, net | 14,689 | 13,676 | ||||||
Total assets | 38,480 | 32,785 | ||||||
Total debt and other long-term obligations | 18,121 | 16,682 | ||||||
Total CCIC stockholders' equity | 10,498 | 11,577 | ||||||
Three Months Ended December 31, 2019 | ||||
Other Data: | ||||
Net debt to last quarter annualized Adjusted EBITDA(c) | 5.5 | x | ||
Dividend per common share | $ | 1.20 | ||
OUTLOOK FOR FULL YEAR 2020 | |||
(dollars in millions, except per share amounts) | Full Year 2020(i) | ||
Site rental revenues | $5,337 | to | $5,382 |
Site rental cost of operations(d) | $1,482 | to | $1,527 |
Net income (loss) | $998 | to | $1,078 |
Net income (loss) attributable to CCIC common stockholders | $941 | to | $1,021 |
Net income (loss) per share—diluted(e)(f)(i) | $2.22 | to | $2.41 |
Adjusted EBITDA(g) | $3,479 | to | $3,524 |
Interest expense and amortization of deferred financing costs(h) | $691 | to | $736 |
FFO(g)(i) | $2,449 | to | $2,494 |
AFFO(g)(i) | $2,572 | to | $2,617 |
AFFO per share(e)(g)(i) | $6.06 | to | $6.17 |
(a) | Includes impacts of restricted cash. See the condensed consolidated statement of cash flows for further information. |
(b) | Includes net cash used for acquisitions of approximately $2 million and $16 million for the three months ended December 31, 2019 and 2018, respectively, and $17 million and $42 million for the twelve months ended December 31, 2019 and 2018, respectively. |
(c) | See the "Net debt to Last Quarter Annualized Adjusted EBITDA calculation" in the Appendix. |
(d) | Exclusive of depreciation, amortization and accretion. |
(e) | The assumption for diluted weighted-average common shares outstanding for full year 2020 Outlook is based on the diluted common shares outstanding as of December 31, 2019 and is inclusive of the assumed conversion of preferred stock in August 2020, which we expect to result in (1) an increase in the diluted weighted-average common shares outstanding by approximately 6 million shares and (2) a reduction in the amount of annual preferred stock dividends paid by approximately $28 million when compared to full year 2019. |
(f) | Calculated using net income (loss) attributable to CCIC common stockholders. |
(g) | See reconciliation of this non-GAAP financial measure to net income (loss) and definition included herein. |
(h) | See the reconciliation of "Components of Current Outlook for Interest Expense and Amortization of Deferred Financing Costs" in the Appendix. |
(i) | Attributable to CCIC common stockholders. |
(i) | The only changes to our previously issued 2020 Outlook are a result of the impact of the restatement as described in "Expected Restatement of Previously Issued Financial Statements." |
9
Crown Castle International Corp.
Fourth Quarter 2019
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
FULL YEAR 2019 AND OUTLOOK FOR FULL YEAR 2020 COMPONENTS OF CHANGES IN SITE RENTAL REVENUES | |||
(dollars in millions) | Full Year 2019 | Full Year 2020 Outlook(h) | |
Components of changes in site rental revenues(a): | |||
Prior year site rental revenues exclusive of straight-lined revenues associated with fixed escalators(b)(c) | $4,727 | $5,017 | |
New leasing activity(b)(c) | 385 | 395-425 | |
Escalators | 86 | 90-100 | |
Non-renewals | (181) | (195)-(175) | |
Organic Contribution to Site Rental Revenues(d) | 290 | 295-335 | |
Straight-lined revenues associated with fixed escalators | 81 | 33-53 | |
Acquisitions(e) | — | — | |
Other | — | — | |
Total GAAP site rental revenues | $5,098 | $5,337-$5,382 | |
Year-over-year changes in revenues: | |||
Reported GAAP site rental revenues(f) | 6.2% | 5.1% | |
Organic Contribution to Site Rental Revenues(d)(f)(g) | 6.1% | 6.3% | |
(a) | See additional information regarding Crown Castle's site rental revenues, including projected revenues from tenant licenses, straight-lined revenues and prepaid rent herein. |
(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 "Definitions of Non-GAAP Measures, Segment Measures and Other Calculations" in the Appendix for a discussion of our definition of Organic Contribution to Site Rental Revenues. |
(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. |
(f) | Calculated based on midpoint of full year 2020 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. |
(h) | The only changes to our previously issued 2020 Outlook are a result of the impact of the restatement as described in "Expected Restatement of Previously Issued Financial Statements." |
10
Crown Castle International Corp.
Fourth Quarter 2019
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) | |||||||
(amounts in millions, except par values) | December 31, 2019 | December 31, 2018 | |||||
(As Restated) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 196 | $ | 277 | |||
Restricted cash | 137 | 131 | |||||
Receivables, net | 596 | 501 | |||||
Prepaid expenses(a) | 107 | 172 | |||||
Other current assets | 168 | 148 | |||||
Total current assets | 1,204 | 1,229 | |||||
Deferred site rental receivables | 1,424 | 1,366 | |||||
Property and equipment, net | 14,689 | 13,676 | |||||
Operating lease right-of-use assets(a) | 6,133 | — | |||||
Goodwill | 10,078 | 10,078 | |||||
Other intangible assets, net(a) | 4,836 | 5,516 | |||||
Long-term prepaid rent and other assets, net(a) | 116 | 920 | |||||
Total assets | $ | 38,480 | $ | 32,785 | |||
LIABILITIES AND EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 334 | $ | 313 | |||
Accrued interest | 169 | 148 | |||||
Deferred revenues | 661 | 591 | |||||
Other accrued liabilities(a) | 361 | 351 | |||||
Current maturities of debt and other obligations | 100 | 107 | |||||
Current portion of operating lease liabilities(a) | 299 | — | |||||
Total current liabilities | 1,924 | 1,510 | |||||
Debt and other long-term obligations | 18,021 | 16,575 | |||||
Operating lease liabilities(a) | 5,511 | — | |||||
Other long-term liabilities(a) | 2,526 | 3,123 | |||||
Total liabilities | 27,982 | 21,208 | |||||
Commitments and contingencies | |||||||
CCIC stockholders' equity: | |||||||
Common stock, $0.01 par value; 600 shares authorized; shares issued and outstanding: December 31, 2019—416 and December 31, 2018—415 | 4 | 4 | |||||
6.875% Mandatory Convertible Preferred Stock, Series A, $0.01 par value; 20 shares authorized; shares issued and outstanding: December 31, 2019—2 and December 31, 2018—2; aggregate liquidation value: December 31, 2019—$1,650 and December 31, 2018—$1,650 | — | — | |||||
Additional paid-in capital | 17,855 | 17,767 | |||||
Accumulated other comprehensive income (loss) | (5 | ) | (5 | ) | |||
Dividends/distributions in excess of earnings | (7,356 | ) | (6,189 | ) | |||
Total equity | 10,498 | 11,577 | |||||
Total liabilities and equity | $ | 38,480 | $ | 32,785 | |||
(a) | Effective January 1, 2019, we adopted new guidance on the recognition, measurement, presentation and disclosure of leases. The new guidance requires lessees to recognize a lease liability, initially measured at the present value of the lease payments for all leases, and a corresponding right-of-use asset. The accounting for lessors remained largely unchanged from previous guidance. As a result of the new guidance for leases, on the effective date, certain amounts related to our lessee arrangements that were previously reported separately have been de-recognized and reclassified into "Operating lease right-of-use assets" on the condensed consolidated balance sheet as of December 31, 2019. |
11
Crown Castle International Corp.
Fourth Quarter 2019
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) | |||||||||||||||
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||
(amounts in millions, except per share amounts) | 2019 | 2018 | 2019 | 2018 | |||||||||||
(As Restated) | (As Restated) | ||||||||||||||
Net revenues: | |||||||||||||||
Site rental | $ | 1,301 | $ | 1,232 | $ | 5,098 | $ | 4,800 | |||||||
Services and other | 128 | 174 | 675 | 574 | |||||||||||
Net revenues | 1,429 | 1,406 | 5,773 | 5,374 | |||||||||||
Operating expenses: | |||||||||||||||
Costs of operations (exclusive of depreciation, amortization and accretion): | |||||||||||||||
Site rental | 367 | 353 | 1,462 | 1,410 | |||||||||||
Services and other | 119 | 135 | 529 | 434 | |||||||||||
Selling, general and administrative | 157 | 145 | 614 | 563 | |||||||||||
Asset write-down charges | 6 | 8 | 19 | 26 | |||||||||||
Acquisition and integration costs | 3 | 9 | 13 | 27 | |||||||||||
Depreciation, amortization and accretion | 398 | 390 | 1,574 | 1,528 | |||||||||||
Total operating expenses | 1,050 | 1,040 | 4,211 | 3,988 | |||||||||||
Operating income (loss) | 379 | 366 | 1,562 | 1,386 | |||||||||||
Interest expense and amortization of deferred financing costs | (173 | ) | (164 | ) | (683 | ) | (642 | ) | |||||||
Gains (losses) on retirement of long-term obligations | — | — | (2 | ) | (106 | ) | |||||||||
Interest income | 1 | 2 | 6 | 5 | |||||||||||
Other income (expense) | 7 | 1 | 1 | 1 | |||||||||||
Income (loss) before income taxes | 214 | 205 | 884 | 644 | |||||||||||
Benefit (provision) for income taxes | (6 | ) | (5 | ) | (21 | ) | (19 | ) | |||||||
Net income (loss) | 208 | 200 | 863 | 625 | |||||||||||
Dividends/distributions on preferred stock | (28 | ) | (28 | ) | (113 | ) | (113 | ) | |||||||
Net income (loss) attributable to CCIC common stockholders | $ | 180 | $ | 172 | $ | 750 | $ | 512 | |||||||
Net income (loss) attributable to CCIC common stockholders, per common share: | |||||||||||||||
Net income (loss) attributable to CCIC common stockholders, basic | $ | 0.43 | $ | 0.41 | $ | 1.80 | $ | 1.24 | |||||||
Net income (loss) attributable to CCIC common stockholders, diluted | $ | 0.43 | $ | 0.41 | $ | 1.80 | $ | 1.23 | |||||||
Weighted-average common shares outstanding: | |||||||||||||||
Basic | 416 | 415 | 416 | 413 | |||||||||||
Diluted | 418 | 417 | 418 | 415 | |||||||||||
12
Crown Castle International Corp.
Fourth Quarter 2019
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
SEGMENT OPERATING RESULTS | |||||||||||||||||||||||||||||||
Three Months Ended December 31, 2019 | Three Months Ended December 31, 2018 | ||||||||||||||||||||||||||||||
(As Restated) | |||||||||||||||||||||||||||||||
(dollars in millions) | Towers | Fiber | Other | Consolidated Total | Towers | Fiber | Other | Consolidated Total | |||||||||||||||||||||||
Segment site rental revenues | $ | 864 | $ | 437 | $ | 1,301 | $ | 821 | $ | 411 | $ | 1,232 | |||||||||||||||||||
Segment services and other revenues | 122 | 6 | 128 | 166 | 8 | 174 | |||||||||||||||||||||||||
Segment revenues | 986 | 443 | 1,429 | 987 | 419 | 1,406 | |||||||||||||||||||||||||
Segment site rental cost of operations | 217 | 141 | 358 | 207 | 138 | 345 | |||||||||||||||||||||||||
Segment services and other cost of operations | 114 | 3 | 117 | 127 | 5 | 132 | |||||||||||||||||||||||||
Segment cost of operations(a)(b) | 331 | 144 | 475 | 334 | 143 | 477 | |||||||||||||||||||||||||
Segment site rental gross margin(c) | 647 | 296 | 943 | 614 | 273 | 887 | |||||||||||||||||||||||||
Segment services and other gross margin(c) | 8 | 3 | 11 | 39 | 3 | 42 | |||||||||||||||||||||||||
Segment selling, general and administrative expenses(b) | 23 | 48 | 71 | 29 | 47 | 76 | |||||||||||||||||||||||||
Segment operating profit(c) | 632 | 251 | 883 | 624 | 229 | 853 | |||||||||||||||||||||||||
Other selling, general and administrative expenses(b) | $ | 65 | 65 | $ | 50 | 50 | |||||||||||||||||||||||||
Stock-based compensation expense | 27 | 27 | 25 | 25 | |||||||||||||||||||||||||||
Depreciation, amortization and accretion | 398 | 398 | 390 | 390 | |||||||||||||||||||||||||||
Interest expense and amortization of deferred financing costs | 173 | 173 | 164 | 164 | |||||||||||||||||||||||||||
Other (income) expenses to reconcile to income (loss) before income taxes(d) | 6 | 6 | 19 | 19 | |||||||||||||||||||||||||||
Income (loss) before income taxes | $ | 214 | $ | 205 | |||||||||||||||||||||||||||
(a) | Exclusive of depreciation, amortization and accretion shown separately. |
(b) | Segment cost of operations excludes (1) stock-based compensation expense of $6 million for both of the three months ended December 31, 2019 and 2018, and (2) prepaid lease purchase price adjustments of $5 million for both of the three months ended December 31, 2019 and 2018. Selling, general and administrative expenses exclude stock-based compensation expense of $21 million and $19 million for the three months ended December 31, 2019 and 2018, 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. |
13
Crown Castle International Corp.
Fourth Quarter 2019
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
SEGMENT OPERATING RESULTS | |||||||||||||||||||||||||||||||
Twelve Months Ended December 31, 2019 | Twelve Months Ended December 31, 2018 | ||||||||||||||||||||||||||||||
(As Restated) | |||||||||||||||||||||||||||||||
(dollars in millions) | Towers | Fiber | Other | Consolidated Total | Towers | Fiber | Other | Consolidated Total | |||||||||||||||||||||||
Segment site rental revenues | $ | 3,394 | $ | 1,704 | $ | 5,098 | $ | 3,200 | $ | 1,600 | $ | 4,800 | |||||||||||||||||||
Segment services and other revenues | 658 | 17 | 675 | 558 | 16 | 574 | |||||||||||||||||||||||||
Segment revenues | 4,052 | 1,721 | 5,773 | 3,758 | 1,616 | 5,374 | |||||||||||||||||||||||||
Segment site rental cost of operations | 864 | 559 | 1,423 | 848 | 525 | 1,373 | |||||||||||||||||||||||||
Segment services and other cost of operations | 511 | 11 | 522 | 415 | 11 | 426 | |||||||||||||||||||||||||
Segment cost of operations(a)(b) | 1,375 | 570 | 1,945 | 1,263 | 536 | 1,799 | |||||||||||||||||||||||||
Segment site rental gross margin(c) | 2,530 | 1,145 | 3,675 | 2,352 | 1,075 | 3,427 | |||||||||||||||||||||||||
Segment services and other gross margin(c) | 147 | 6 | 153 | 143 | 5 | 148 | |||||||||||||||||||||||||
Segment selling, general and administrative expenses(b) | 96 | 195 | 291 | 110 | 179 | 289 | |||||||||||||||||||||||||
Segment operating profit(c) | 2,581 | 956 | 3,537 | 2,385 | 901 | 3,286 | |||||||||||||||||||||||||
Other selling, general and administrative expenses(b) | $ | 233 | 233 | $ | 191 | 191 | |||||||||||||||||||||||||
Stock-based compensation expense | 116 | 116 | 108 | 108 | |||||||||||||||||||||||||||
Depreciation, amortization and accretion | 1,574 | 1,574 | 1,528 | 1,528 | |||||||||||||||||||||||||||
Interest expense and amortization of deferred financing costs | 683 | 683 | 642 | 642 | |||||||||||||||||||||||||||
Other (income) expenses to reconcile to income (loss) before income taxes(d) | 47 | 47 | 173 | 173 | |||||||||||||||||||||||||||
Income (loss) before income taxes | $ | 884 | $ | 644 | |||||||||||||||||||||||||||
(a) | Exclusive of depreciation, amortization and accretion shown separately. |
(b) | Segment cost of operations excludes (1) stock-based compensation expense of $26 million and $25 million for the twelve months ended December 31, 2019 and 2018, respectively, and (2) prepaid lease purchase price adjustments of $20 million for both of the twelve months ended December 31, 2019 and 2018. Selling, general and administrative expenses exclude stock-based compensation expense of $90 million and $83 million for the twelve months ended December 31, 2019 and 2018, 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. |
14
Crown Castle International Corp.
Fourth Quarter 2019
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
FFO AND AFFO RECONCILIATIONS | |||||||||||||||
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||
(amounts in millions, except per share amounts) | 2019 | 2018 | 2019 | 2018 | |||||||||||
(As Restated) | (As Restated) | ||||||||||||||
Net income (loss) | $ | 208 | $ | 200 | $ | 863 | $ | 625 | |||||||
Real estate related depreciation, amortization and accretion | 384 | 375 | 1,519 | 1,472 | |||||||||||
Asset write-down charges | 6 | 8 | 19 | 26 | |||||||||||
Dividends/distributions on preferred stock | (28 | ) | (28 | ) | (113 | ) | (113 | ) | |||||||
FFO(a)(b)(c)(d) | $ | 570 | $ | 555 | $ | 2,288 | $ | 2,009 | |||||||
Weighted-average common shares outstanding—diluted(e) | 418 | 417 | 418 | 415 | |||||||||||
FFO per share(a)(b)(c)(d)(e) | $ | 1.36 | $ | 1.33 | $ | 5.47 | $ | 4.84 | |||||||
FFO (from above) | $ | 570 | $ | 555 | $ | 2,288 | $ | 2,009 | |||||||
Adjustments to increase (decrease) FFO: | |||||||||||||||
Straight-lined revenue | (18 | ) | (20 | ) | (80 | ) | (72 | ) | |||||||
Straight-lined expense | 23 | 21 | 93 | 90 | |||||||||||
Stock-based compensation expense | 27 | 25 | 116 | 108 | |||||||||||
Non-cash portion of tax provision | 3 | 3 | 5 | 2 | |||||||||||
Non-real estate related depreciation, amortization and accretion | 14 | 15 | 55 | 56 | |||||||||||
Amortization of non-cash interest expense | — | 2 | 1 | 7 | |||||||||||
Other (income) expense | (7 | ) | (1 | ) | (1 | ) | (1 | ) | |||||||
(Gains) losses on retirement of long-term obligations | — | — | 2 | 106 | |||||||||||
Acquisition and integration costs | 3 | 9 | 13 | 27 | |||||||||||
Sustaining capital expenditures | (36 | ) | (30 | ) | (117 | ) | (105 | ) | |||||||
AFFO(a)(b)(c)(d) | $ | 578 | $ | 578 | $ | 2,376 | $ | 2,228 | |||||||
Weighted-average common shares outstanding—diluted(e) | 418 | 417 | 418 | 415 | |||||||||||
AFFO per share(a)(b)(c)(d)(e) | $ | 1.38 | $ | 1.39 | $ | 5.69 | $ | 5.37 | |||||||
(a) | See "Non-GAAP Financial Measures, Segment Measures and Other Calculations" herein for a discussion of our definitions of FFO, including per share amounts, and AFFO, including per share amounts. |
(b) | FFO and AFFO are reduced by cash paid for preferred stock dividends during the period in which they are paid. |
(c) | Attributable to CCIC common stockholders. |
(d) | The above reconciliation excludes line items included in our definition which are not applicable for the periods shown. |
(e) | For all periods presented, the diluted weighted-average common shares outstanding does not include any assumed conversion of preferred stock in the share count. |
15
Crown Castle International Corp.
Fourth Quarter 2019
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) | ||||||||||||
Twelve Months Ended December 31, | ||||||||||||
(dollars in millions) | 2019 | 2018 | ||||||||||
(As Restated) | ||||||||||||
Cash flows from operating activities: | ||||||||||||
Net income (loss) | $ | 863 | $ | 625 | ||||||||
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities: | ||||||||||||
Depreciation, amortization and accretion | 1,574 | 1,528 | ||||||||||
(Gains) losses on retirement of long-term obligations | 2 | 106 | ||||||||||
Amortization of deferred financing costs and other non-cash interest | 1 | 7 | ||||||||||
Stock-based compensation expense | 117 | 103 | ||||||||||
Asset write-down charges | 19 | 26 | ||||||||||
Deferred income tax (benefit) provision | 2 | 2 | ||||||||||
Other non-cash adjustments, net | (2 | ) | 2 | |||||||||
Changes in assets and liabilities, excluding the effects of acquisitions: | ||||||||||||
Increase (decrease) in liabilities | 291 | 322 | ||||||||||
Decrease (increase) in assets | (167 | ) | (219 | ) | ||||||||
Net cash provided by (used for) operating activities | 2,700 | 2,502 | ||||||||||
Cash flows from investing activities: | ||||||||||||
Capital expenditures | (2,059 | ) | (1,741 | ) | ||||||||
Payments for acquisitions, net of cash acquired | (17 | ) | (42 | ) | ||||||||
Other investing activities, net | (7 | ) | (12 | ) | ||||||||
Net cash provided by (used for) investing activities | (2,083 | ) | (1,795 | ) | ||||||||
Cash flows from financing activities: | ||||||||||||
Proceeds from issuance of long-term debt | 1,894 | 2,742 | ||||||||||
Principal payments on debt and other long-term obligations | (86 | ) | (105 | ) | ||||||||
Purchases and redemptions of long-term debt | (12 | ) | (2,346 | ) | ||||||||
Borrowings under revolving credit facility | 2,110 | 1,820 | ||||||||||
Payments under revolving credit facility | (2,660 | ) | (1,725 | ) | ||||||||
Net borrowings (repayments) under commercial paper program | 155 | — | ||||||||||
Payments for financing costs | (24 | ) | (31 | ) | ||||||||
Net proceeds from issuance of common stock | — | 841 | ||||||||||
Purchases of common stock | (44 | ) | (34 | ) | ||||||||
Dividends/distributions paid on common stock | (1,912 | ) | (1,782 | ) | ||||||||
Dividends/distributions paid on preferred stock | (113 | ) | (113 | ) | ||||||||
Net cash provided by (used for) financing activities | (692 | ) | (733 | ) | ||||||||
Net increase (decrease) in cash, cash equivalents, and restricted cash | (75 | ) | (26 | ) | ||||||||
Effect of exchange rate changes on cash | — | (1 | ) | |||||||||
Cash, cash equivalents, and restricted cash at beginning of period | 413 | 440 | ||||||||||
Cash, cash equivalents, and restricted cash at end of period | $ | 338 | $ | 413 | ||||||||
Supplemental disclosure of cash flow information: | ||||||||||||
Interest paid | 661 | 619 | ||||||||||
Income taxes paid | 16 | 17 | ||||||||||
16
Crown Castle International Corp.
Fourth Quarter 2019
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
COMPONENTS OF CHANGES IN SITE RENTAL REVENUES | |||||||
Three Months Ended December 31, | |||||||
(dollars in millions) | 2019 | 2018 | |||||
(As Restated) | |||||||
Components of changes in site rental revenues(a): | |||||||
Prior year site rental revenues exclusive of straight-lined revenues associated with fixed escalators(b)(c) | $ | 1,212 | $ | 1,067 | |||
New leasing activity(b)(c) | 100 | 64 | |||||
Escalators | 22 | 21 | |||||
Non-renewals | (51 | ) | (22 | ) | |||
Organic Contribution to Site Rental Revenues(d) | 71 | 63 | |||||
Straight-lined revenues associated with fixed escalators | 18 | 20 | |||||
Acquisitions(e) | — | 82 | |||||
Other | — | — | |||||
Total GAAP site rental revenues | $ | 1,301 | $ | 1,232 | |||
Year-over-year changes in revenue: | |||||||
Reported GAAP site rental revenues | 5.6 | % | |||||
Organic Contribution to Site Rental Revenues(d)(f) | 5.9 | % | |||||
Twelve Months Ended December 31, | |||||||||||||||
(dollars in millions) | 2018 | 2017 | 2016 | 2015 | |||||||||||
(As Restated) | |||||||||||||||
Components of changes in site rental revenues(a): | |||||||||||||||
Prior year site rental revenues exclusive of straight-lined revenues associated with fixed escalators(b)(c) | $ | 3,737 | $ | 3,239 | $ | 2,947 | $ | 2,707 | |||||||
New leasing activity(b)(c) | 229 | 181 | 187 | 182 | |||||||||||
Escalators | 83 | 84 | 89 | 91 | |||||||||||
Non-renewals | (89 | ) | (90 | ) | (74 | ) | (96 | ) | |||||||
Organic Contribution to Site Rental Revenues(d) | 223 | 175 | 202 | 177 | |||||||||||
Straight-lined revenues associated with fixed escalators | 72 | — | 47 | 111 | |||||||||||
Acquisitions(e) | 767 | 323 | 90 | 63 | |||||||||||
Other | — | — | — | — | |||||||||||
Total GAAP site rental revenues | $ | 4,799 | $ | 3,737 | $ | 3,286 | $ | 3,058 | |||||||
Year-over-year changes in revenue: | |||||||||||||||
Reported GAAP site rental revenues | 28.4 | % | 13.7 | % | 7.5 | % | |||||||||
Organic Contribution to Site Rental Revenues(d)(f) | 6.0 | % | 5.4 | % | 6.9 | % | |||||||||
(a) | See additional information herein regarding Crown Castle's site rental revenues, including projected revenue from tenant licenses, straight-lined revenues and prepaid rent. |
(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 "Definitions of Non-GAAP Measures, Segment Measures and Other Calculations" in the Appendix for a discussion of our definition of Organic Contribution to Site Rental Revenues. |
(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. |
17
Crown Castle International Corp.
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COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
SUMMARY OF SITE RENTAL STRAIGHT-LINED REVENUES AND EXPENSES ASSOCIATED WITH FIXED | |||||||||||||||||||||||
ESCALATORS(a) | |||||||||||||||||||||||
Three Months Ended December 31, | |||||||||||||||||||||||
2019 | 2018 | ||||||||||||||||||||||
(dollars in millions) | Towers | Fiber | Total | Towers | Fiber | Total | |||||||||||||||||
Site rental straight-lined revenues | $ | 17 | $ | 1 | $ | 18 | $ | 20 | $ | — | $ | 20 | |||||||||||
Site rental straight-lined expenses | 22 | 1 | 23 | 21 | — | 21 | |||||||||||||||||
Twelve Months Ended December 31, | |||||||||||||||||||||||
2019 | 2018 | ||||||||||||||||||||||
(dollars in millions) | Towers | Fiber | Total | Towers | Fiber | Total | |||||||||||||||||
Site rental straight-lined revenues | $ | 78 | $ | 2 | $ | 80 | $ | 71 | $ | 1 | $ | 72 | |||||||||||
Site rental straight-lined expenses | 90 | 3 | 93 | 88 | 2 | 90 | |||||||||||||||||
SUMMARY OF PREPAID RENT ACTIVITY(b) | |||||||||||||||||||||||
Three Months Ended December 31, | |||||||||||||||||||||||
2019 | 2018 | ||||||||||||||||||||||
(As Restated) | |||||||||||||||||||||||
(dollars in millions) | Towers | Fiber | Total | Towers | Fiber | Total | |||||||||||||||||
Prepaid rent additions | $ | 104 | $ | 67 | $ | 171 | $ | 84 | $ | 67 | $ | 151 | |||||||||||
Amortization of prepaid rent | 73 | 50 | 123 | 57 | 51 | 108 | |||||||||||||||||
Twelve Months Ended December 31, | |||||||||||||||||||||||
2019 | 2018 | ||||||||||||||||||||||
(As Restated) | |||||||||||||||||||||||
(dollars in millions) | Towers | Fiber | Total | Towers | Fiber | Total | |||||||||||||||||
Prepaid rent additions | $ | 397 | $ | 258 | $ | 655 | $ | 277 | $ | 303 | $ | 580 | |||||||||||
Amortization of prepaid rent | 262 | 199 | 461 | 215 | 195 | 410 | |||||||||||||||||
Twelve Months Ended December 31, | |||||||||||||||||||||||||||||||||||
2017 | 2016 | 2015 | |||||||||||||||||||||||||||||||||
(As Restated) | |||||||||||||||||||||||||||||||||||
(dollars in millions) | Towers | Fiber | Total | Towers | Fiber | Total | Towers | Fiber | Total | ||||||||||||||||||||||||||
Prepaid rent additions | $ | 272 | $ | 205 | $ | 477 | $ | 262 | $ | 165 | $ | 427 | $ | 350 | $ | 205 | $ | 555 | |||||||||||||||||
Amortization of prepaid rent | 187 | 125 | 312 | 157 | 99 | 256 | 119 | 74 | 193 | ||||||||||||||||||||||||||
(a) | In accordance with GAAP accounting, if payment terms call for fixed escalations or rent free periods, the revenue is recognized on a straight-line basis over the fixed, non-cancelable term of the contract. Since the Company recognizes revenue on a straight-line basis, a portion of the site rental revenue in a given period represents cash collected or contractually collectible in other periods. |
(b) | Reflects up-front consideration from long-term tenants and other deferred credits (commonly referred to as prepaid rent), and the amortization thereof for GAAP revenue recognition purposes. |
18
Crown Castle International Corp.
Fourth Quarter 2019
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
SUMMARY OF CAPITAL EXPENDITURES | |||||||||||||||||||||||||||||||
Three Months Ended December 31, | |||||||||||||||||||||||||||||||
2019 | 2018 | ||||||||||||||||||||||||||||||
(dollars in millions) | Towers | Fiber | Other | Total | Towers | Fiber | Other | Total | |||||||||||||||||||||||
Discretionary: | |||||||||||||||||||||||||||||||
Purchases of land interests | $ | 11 | $ | — | $ | — | $ | 11 | $ | 18 | $ | — | $ | — | $ | 18 | |||||||||||||||
Communications infrastructure construction and improvements | 119 | 353 | — | 472 | 98 | 349 | — | 447 | |||||||||||||||||||||||
Sustaining | 12 | 12 | 12 | 36 | 8 | 15 | 7 | 30 | |||||||||||||||||||||||
Integration | — | — | 2 | 2 | — | — | 5 | 5 | |||||||||||||||||||||||
Total | $ | 142 | $ | 365 | $ | 14 | $ | 521 | $ | 124 | $ | 364 | $ | 11 | $ | 500 | |||||||||||||||
PROJECTED REVENUE FROM TENANT CONTRACTS(a) | |||||||||||||||
Years Ending December 31, | |||||||||||||||
(as of December 31, 2019; dollars in millions) | 2020 | 2021 | 2022 | 2023 | 2024 | ||||||||||
Components of site rental revenue: | |||||||||||||||
Site rental revenues exclusive of straight-line associated with fixed escalators | $ | 5,168 | $ | 5,292 | $ | 5,386 | $ | 5,436 | $ | 5,444 | |||||
Straight-lined site rental revenues associated with fixed escalators | 4 | (102 | ) | (180 | ) | (184 | ) | (148 | ) | ||||||
GAAP site rental revenue | $ | 5,172 | $ | 5,190 | $ | 5,206 | $ | 5,252 | $ | 5,296 | |||||
PROJECTED GROUND LEASE EXPENSE FROM EXISTING GROUND LEASES(b) | |||||||||||||||
Years Ending December 31, | |||||||||||||||
(as of December 31, 2019; dollars in millions) | 2020 | 2021 | 2022 | 2023 | 2024 | ||||||||||
Components of ground lease expense: | |||||||||||||||
Ground lease expense exclusive of straight-line associated with fixed escalators | $ | 855 | $ | 875 | $ | 896 | $ | 915 | $ | 934 | |||||
Straight-lined site rental ground lease expense associated with fixed escalators | 75 | 61 | 48 | 36 | 26 | ||||||||||
GAAP ground lease expense | $ | 930 | $ | 936 | $ | 944 | $ | 951 | $ | 960 | |||||
(a) | Based on tenant licenses as of December 31, 2019. All tenant licenses are assumed to renew for a new term no later than the respective current term end date, and as such, projected revenue does not reflect the impact of estimated annual churn. CPI-linked tenant contracts are assumed to escalate at 3% per annum. |
(b) | Based on existing ground leases as of December 31, 2019. CPI-linked leases are assumed to escalate at 3% per annum. |
19
Crown Castle International Corp.
Fourth Quarter 2019
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
ANNUALIZED RENTAL CASH PAYMENTS AT TIME OF RENEWAL(a) | |||||||||||||||
Years Ending December 31, | |||||||||||||||
(as of December 31, 2019; dollars in millions) | 2020 | 2021 | 2022 | 2023 | 2024 | ||||||||||
AT&T | $ | 30 | $ | 38 | $ | 34 | $ | 367 | $ | 34 | |||||
Sprint | 17 | 29 | 25 | 204 | 37 | ||||||||||
T-Mobile | 14 | 21 | 356 | 52 | 57 | ||||||||||
Verizon | 38 | 37 | 44 | 48 | 560 | ||||||||||
All Others Combined | 227 | 180 | 163 | 114 | 150 | ||||||||||
Total | $ | 326 | $ | 305 | $ | 622 | $ | 785 | $ | 838 | |||||
TENANT OVERVIEW | |||
(as of December 31, 2019) | Percentage of Q4 2019 LQA Site Rental Revenues | Weighted Average Current Term Remaining(b) | Long-Term Credit Rating (S&P / Moody’s) |
AT&T | 22% | 6 | BBB / Baa2 |
T-Mobile | 21% | 6 | BB+ |
Verizon | 18% | 5 | BBB+ / Baa1 |
Sprint | 14% | 6 | B / B2 |
All Others Combined | 25% | 3 | N/A |
Total / Weighted Average | 100% | 5 | |
(a) | Reflects lease renewals by year by tenant; dollar amounts represent annualized cash site rental revenues from assumed renewals or extension as reflected in the table "Projected Revenue from Tenant Contracts." |
(b) | Weighted by site rental revenue contributions; excludes renewals at the tenants' option. |
20
Crown Castle International Corp.
Fourth Quarter 2019
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
SUMMARY OF TOWER PORTFOLIO BY VINTAGE | |
(as of December 31, 2019; dollars in thousands) | |
CASH YIELD(a) | NUMBER OF TENANTS PER TOWER |
LQA CASH SITE RENTAL REVENUE PER TOWER(b) | LQA TOWERS SEGMENT SITE RENTAL GROSS CASH MARGIN PER TOWER(c) |
NET INVESTED CAPITAL PER TOWER(d) | NUMBER OF TOWERS |
(a) | Yield is calculated as LQA Towers segment site rental gross margin, exclusive of straight-line revenues and amortization of prepaid rent, divided by invested capital. |
(b) | Exclusive of straight-line revenues and amortization of prepaid rent. |
(c) | Exclusive of straight-line revenues, amortization of prepaid rent, and straight-line expenses. |
(d) | Reflects gross total assets (including incremental capital invested by the Company since time of acquisition or construction completion), less any prepaid rent. Inclusive of invested capital related to land at the tower site. |
21
Crown Castle International Corp.
Fourth Quarter 2019
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
PORTFOLIO OVERVIEW(a) | ||
(as of December 31, 2019; dollars in thousands) | ||
NUMBER OF TOWERS | TENANTS PER TOWER | LQA CASH SITE RENTAL REVENUE PER TOWER(b) |
(a) | Excludes small cells, fiber and third-party land interests. |
(b) | Exclusive of straight-line revenues and amortization of prepaid rent. |
22
Crown Castle International Corp.
Fourth Quarter 2019
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
DISTRIBUTION OF TOWER TENANCY (as of December 31, 2019) | |||||
PERCENTAGE OF TOWERS BY TENANTS PER TOWER(a) | |||||
SITES ACQUIRED AND BUILT 2006 AND PRIOR | SITES ACQUIRED AND BUILT 2007 TO PRESENT | ||||
Average: 2.6 | Average: 2.0 |
GEOGRAPHIC TOWER DISTRIBUTION (as of December 31, 2019)(a) | |
PERCENTAGE OF TOWERS BY GEOGRAPHIC LOCATION | PERCENTAGE OF LQA CASH SITE RENTAL REVENUE BY GEOGRAPHIC LOCATION(b) |
(a) | Excludes small cells, fiber and third-party land interests. |
(b) | Exclusive of straight-line revenues and amortization of prepaid rent. |
23
Crown Castle International Corp.
Fourth Quarter 2019
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
GROUND INTEREST OVERVIEW | ||||||||||||||||
(as of December 31, 2019; dollars in millions) | LQA Cash Site Rental Revenue(a) | Percentage of LQA Cash Site Rental Revenue(a) | LQA Towers Segment Site Rental Gross Cash Margin(b) | Percentage of LQA Towers Segment Site Rental Gross Cash Margin(b) | Number of Towers(c) | Percentage of Towers | Weighted Average Term Remaining (by years)(d) | |||||||||
Less than 10 years | $ | 319 | 10 | % | $ | 169 | 7 | % | 4,947 | 12 | % | |||||
10 to 20 years | 420 | 14 | % | 242 | 11 | % | 6,535 | 16 | % | |||||||
Greater than 20 years | 1,336 | 44 | % | 954 | 42 | % | 17,755 | 44 | % | |||||||
Total leased | $ | 2,075 | 68 | % | $ | 1,365 | 60 | % | 29,237 | 72 | % | 36 | ||||
Owned | $ | 974 | 32 | % | $ | 921 | 40 | % | 10,824 | 27 | % | |||||
Total / Average | $ | 3,049 | 100 | % | $ | 2,286 | 100 | % | 40,061 | 99 | % | |||||
GROUND INTEREST ACTIVITY | |||||||
(dollars in millions) | Three Months Ended December 31, 2019 | Twelve Months Ended December 31, 2019 | |||||
Ground Extensions Under Crown Castle Towers: | |||||||
Number of ground leases extended | 300 | 1,114 | |||||
Average number of years extended | 26 | 30 | |||||
Percentage increase in consolidated cash ground lease expense due to extension activities(e) | 0.1 | % | 0.3 | % | |||
Ground Purchases Under Crown Castle Towers: | |||||||
Number of ground leases purchased | 56 | 245 | |||||
Ground lease purchases (including capital expenditures, acquisitions and installment purchases) | $ | 16 | $ | 75 | |||
Percentage of Towers segment site rental gross margin from towers residing on land purchased | <1% | <1% | |||||
(a) | Exclusive of straight-line revenues and amortization of prepaid rent. |
(b) | Exclusive of straight-line revenues, amortization of prepaid rent, and straight-line expenses |
(c) | Excludes small cells, fiber and third-party land interests. |
(d) | Includes all renewal terms at the Company's option; weighted by Towers segment cash site rental gross margin. |
(e) | Includes the impact from the amortization of lump sum payments. |
24
Crown Castle International Corp.
Fourth Quarter 2019
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
CAPITALIZATION OVERVIEW | |||||||
(As of December 31, 2019; dollars in millions) | Face Value | Fixed vs. Variable | Interest Rate(a) | Net Debt to LQA EBITDA(b) | Maturity | ||
Cash, cash equivalents and restricted cash | $ | 338 | |||||
3.849% Secured Notes | 1,000 | Fixed | 3.9% | 2023 | |||
Senior Secured Notes, Series 2009-1, Class A-2 | 68 | Fixed | 9.0% | 2029 | |||
Senior Secured Tower Revenue Notes, Series 2015-1(c) | 300 | Fixed | 3.2% | 2042(c) | |||
Senior Secured Tower Revenue Notes, Series 2018-1(c) | 250 | Fixed | 3.7% | 2043(c) | |||
Senior Secured Tower Revenue Notes, Series 2015-2(c) | 700 | Fixed | 3.7% | 2045(c) | |||
Senior Secured Tower Revenue Notes, Series 2018-2(c) | 750 | Fixed | 4.2% | 2048(c) | |||
Finance leases & other obligations | 226 | Various | Various | Various | |||
Total secured debt | $ | 3,294 | 4.0% | 1.0x | |||
2016 Revolver(d) | 525 | Variable | 2.8% | 2024 | |||
2016 Term Loan A | 2,312 | Variable | 2.9% | 2024 | |||
Commercial Paper Notes(e) | 155 | Variable | 2.1% | 2020 | |||
3.400% Senior Notes | 850 | Fixed | 3.4% | 2021 | |||
2.250% Senior Notes | 700 | Fixed | 2.3% | 2021 | |||
4.875% Senior Notes | 850 | Fixed | 4.9% | 2022 | |||
5.250% Senior Notes | 1,650 | Fixed | 5.3% | 2023 | |||
3.150% Senior Notes | 750 | Fixed | 3.2% | 2023 | |||
3.200% Senior Notes | 750 | Fixed | 3.2% | 2024 | |||
4.450% Senior Notes | 900 | Fixed | 4.5% | 2026 | |||
3.700% Senior Notes | 750 | Fixed | 3.7% | 2026 | |||
4.000% Senior Notes | 500 | Fixed | 4.0% | 2027 | |||
3.650% Senior Notes | 1,000 | Fixed | 3.7% | 2027 | |||
3.800% Senior Notes | 1,000 | Fixed | 3.8% | 2028 | |||
4.300% Senior Notes | 600 | Fixed | 4.3% | 2029 | |||
3.100% Senior Notes | 550 | Fixed | 3.1% | 2029 | |||
4.750% Senior Notes | 350 | Fixed | 4.8% | 2047 | |||
5.200% Senior Notes | 400 | Fixed | 5.2% | 2049 | |||
4.000% Senior Notes | 350 | Fixed | 4.0% | 2049 | |||
Total unsecured debt | $ | 14,942 | 3.8% | 4.6x | |||
Total net debt | $ | 17,898 | 3.8% | 5.5x | |||
Preferred Stock, at liquidation value | 1,650 | ||||||
Market Capitalization(f) | 59,103 | ||||||
Firm Value(g) | $ | 78,651 | |||||
(a) | Represents the weighted-average stated interest rate, as applicable. |
(b) | Represents the applicable amount of debt divided by LQA consolidated Adjusted EBITDA. See the "Net debt to Last Quarter Annualized Adjusted EBITDA calculation" in the Appendix. |
(c) | If the respective series of such debt is not paid in full on or prior to an applicable date, then the Excess Cash Flow (as defined in the indenture) of the issuers of such notes will be used to repay principal of the applicable series, and additional interest (of an additional approximately 5% per annum) will accrue on the respective series. 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, 2018-1 and 2018-2 have anticipated repayment dates in 2023 and 2028, respectively. Notes are prepayable at par if voluntarily repaid six months or less prior to maturity; earlier prepayment may require additional consideration. |
(d) | As of December 31, 2019, the undrawn availability under the $5.0 billion 2016 Revolver was $4.5 billion. |
(e) | As of December 31, 2019, the Company had $845 million available for issuance under the $1.0 billion unsecured commercial paper program ("CP Program"). The maturities of commercial paper notes under the CP Program, when outstanding, may vary but may not exceed 397 days from the date of issue. |
(f) | Market capitalization calculated based on $142.15 closing price and 416 million shares outstanding as of December 31, 2019. |
(g) | Represents the sum of net debt, preferred stock (at liquidation value) and market capitalization. |
25
Crown Castle International Corp.
Fourth Quarter 2019
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
DEBT MATURITY OVERVIEW(a) |
(as of December 31, 2019; dollars in millions)
(a) | Where applicable, maturities reflect the Anticipated Repayment Date as defined in the respective debt agreement; excludes finance leases and other obligations; amounts presented at face value, net of repurchases held at CCIC. |
26
Crown Castle International Corp.
Fourth Quarter 2019
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
LIQUIDITY OVERVIEW(a) | |||
(dollars in millions) | December 31, 2019 | ||
Cash and cash equivalents(b) | $ | 196 | |
Undrawn 2016 Revolver availability(c) | 4,455 | ||
Restricted cash(d) | 142 | ||
Debt and other long-term obligations | 18,121 | ||
Total equity | 10,498 | ||
(a) | In addition, we have the following sources of liquidity: |
i. | In April 2018, we established an at-the-market stock offering program ("ATM Program") through which we may, from time to time, issue and sell shares of our common stock having an aggregate gross sales price of up to $750 million to or through sales agents. No shares of common stock have been sold under the ATM Program. |
ii. | In April 2019, we established a CP Program through which we may issue short term, unsecured commercial paper notes ("CP Notes"). Amounts available under the CP Program may be issued, repaid and re-issued from time to time, with the aggregate principal amount of CP Notes outstanding under the CP Program at any time not to exceed $1.0 billion. As of December 31, 2019, there were $155 million of CP Notes outstanding under our CP Program. We intend to maintain available commitments under our 2016 Revolver in an amount at least equal to the amount of CP Notes outstanding at any point in time. |
(b) | Exclusive of restricted cash. |
(c) | Availability at any point in time is subject to reaffirmation of the representations and warranties in, and there being no default under, the credit agreement governing our 2016 Revolver. |
(d) | Inclusive of $5 million included within "long-term prepaid rent and other assets, net" on our condensed consolidated balance sheet. |
27
Crown Castle International Corp.
Fourth Quarter 2019
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
SUMMARY OF MAINTENANCE AND FINANCIAL COVENANTS | |||||
Debt | Borrower / Issuer | Covenant(a) | Covenant Level Requirement | As of December 31, 2019 | |
Maintenance Financial Covenants(b) | |||||
2016 Credit Facility | CCIC | Total Net Leverage Ratio | ≤ 6.50x | 5.4x | |
2016 Credit Facility | CCIC | Total Senior Secured Leverage Ratio | ≤ 3.50x | 0.9x | |
2016 Credit Facility | CCIC | Consolidated Interest Coverage Ratio(c) | N/A | N/A | |
Restrictive Negative Financial Covenants | |||||
Financial covenants restricting ability to incur additional debt | |||||
2012 Secured Notes | CC Holdings GS V LLC and Crown Castle GS III Corp. | Debt to Adjusted Consolidated Cash Flow Ratio | ≤ 3.50x | 2.3x | |
Financial covenants requiring excess cash flows to be deposited in a cash trap reserve account and not released | |||||
2015 Tower Revenue Notes | Crown Castle Towers LLC and its Subsidiaries | Debt Service Coverage Ratio | > 1.75x | (d) | 10.7x |
2018 Tower Revenue Notes | Crown Castle Towers LLC and its Subsidiaries | Debt Service Coverage Ratio | > 1.75x | (d) | 10.7x |
2009 Securitized Notes | Pinnacle Towers Acquisition Holdings LLC and its Subsidiaries | Debt Service Coverage Ratio | > 1.30x | (d) | 11.3x |
Financial covenants restricting ability of relevant issuer to issue additional notes under the applicable indenture | |||||
2015 Tower Revenue Notes | Crown Castle Towers LLC and its Subsidiaries | Debt Service Coverage Ratio | ≥ 2.00x | (e) | 10.7x |
2018 Tower Revenue Notes | Crown Castle Towers LLC and its Subsidiaries | Debt Service Coverage Ratio | ≥ 2.00x | (e) | 10.7x |
2009 Securitized Notes | Pinnacle Towers Acquisition Holdings LLC and its Subsidiaries | Debt Service Coverage Ratio | ≥ 2.34x | (e) | 11.3x |
(a) | As defined in the respective debt agreement. In the indentures for the 2015 Tower Revenue Notes, 2018 Tower Revenue Notes and the 2009 Securitized Notes, the defined term for Debt Service Coverage Ratio is "DSCR." |
(b) | Failure to comply with the financial maintenance covenants would, absent a waiver, result in an event of default under the credit agreement governing our 2016 Credit Facility. |
(c) | Applicable solely to the extent that the senior unsecured debt rating by any two of S&P, Moody's and Fitch is lower than BBB-, Baa3 or BBB-, respectively. If applicable, the consolidated interest coverage ratio must be greater than or equal to 2.50. |
(d) | The 2015 Tower Revenue Notes, 2018 Tower Revenue Notes and 2009 Securitized Notes also include the potential for amortization events, which could result in applying current and future cash flow to the prepayment of debt with applicable prepayment consideration. An amortization event occurs when the Debt Service Coverage Ratio falls below 1.45x, 1.45x or 1.15x, in each case as described under the indentures for the 2015 Tower Revenue Notes, 2018 Tower Revenue Notes or 2009 Securitized Notes, respectively. |
(e) | Rating Agency Confirmation (as defined in the respective debt agreement) is also required. |
28
Crown Castle International Corp.
Fourth Quarter 2019
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
INTEREST RATE SENSITIVITY(a) | ||||||
Years Ending December 31, | ||||||
(as of December 31, 2019; dollars in millions) | 2020 | 2021 | ||||
Fixed Rate Debt: | ||||||
Face Value of Principal Outstanding(b) | $ | 15,010 | $ | 15,002 | ||
Current Interest Payment Obligations(c) | 597 | 597 | ||||
Effect of 0.125% Change in Interest Rates(d) | — | — | ||||
Floating Rate Debt: | ||||||
Face Value of Principal Outstanding(b) | $ | 2,933 | $ | 2,845 | ||
Current Interest Payment Obligations(e) | 80 | 72 | ||||
Effect of 0.125% Change in Interest Rates(f) | 4 | 4 | ||||
(a) | Excludes finance lease and other obligations. |
(b) | Face value, net of required amortizations; assumes no maturity or balloon principal payments; excludes finance leases. |
(c) | Interest expense calculated based on current interest rates. |
(d) | Interest expense calculated based on current interest rates until the sooner of the (1) stated maturity date or (2) the Anticipated Repayment Date, at which time the face value amount outstanding of such indebtedness is refinanced at current rates, plus 12.5 bps. |
(e) | Interest expense calculated based on current interest rates as of December 31, 2019. Calculation assumes no changes to future interest rate margin spread over LIBOR due to changes in the borrower’s senior unsecured credit rating. |
(f) | Interest expense calculated based on current interest rates as of December 31, 2019, plus 12.5 bps. |
29
Crown Castle International Corp.
Fourth Quarter 2019
COMPANY OVERVIEW | FINANCIALS & METRICS | ASSET PORTFOLIO OVERVIEW | CAPITALIZATION OVERVIEW | APPENDIX |
DEFINITIONS |
Non-GAAP Financial Measures, Segment Measures and Other Calculations
This Supplement includes presentations of Adjusted EBITDA, Adjusted Funds from Operations ("AFFO"), including per share amounts, Funds from Operations ("FFO"), including per share amounts, 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 non-GAAP financial measures may not be comparable to similarly titled measures of other companies, including other companies in the communications infrastructure sector or other 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. 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.
Our non-GAAP financial measures 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, including per share amounts, 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, including per share amounts, 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 tenant 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.
AFFO per share. We define AFFO per share as AFFO divided by diluted weighted average common shares outstanding.
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.
FFO per share. We define FFO per share as FFO divided by the diluted weighted average common shares outstanding.
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 tenant 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. Additionally, certain costs are shared across segments and are reflected in our segment measures through allocations that management believes to be reasonable.
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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 primarily consist of expansion or development of communications infrastructure (including capital expenditures related to (1) enhancing communications infrastructure in order to add new tenants for the first time or support subsequent tenant equipment augmentations, or (2) modifying the structure of a communications infrastructure asset to accommodate additional tenants), and construction of new communications infrastructure. Discretionary capital expenditures also include purchases of land interests (which primarily relates to land assets under towers as we seek to manage our interests in the land beneath our towers), certain technology-related investments necessary to support and scale future customer demand for our communications infrastructure, 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.
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 tenants' ongoing quiet enjoyment of the communications infrastructure and (2) ordinary corporate capital expenditures.
The tables set forth on the following pages 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.
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Reconciliations of Non-GAAP Financial Measures to Comparable GAAP Financial Measures and Other Calculations:
Reconciliation of Historical Adjusted EBITDA:
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||
(dollars in millions) | 2019 | 2018 | 2019 | 2018 | |||||||||||
(As Restated) | (As Restated) | ||||||||||||||
Net income (loss) | $ | 208 | $ | 200 | $ | 863 | $ | 625 | |||||||
Adjustments to increase (decrease) net income (loss): | |||||||||||||||
Asset write-down charges | 6 | 8 | 19 | 26 | |||||||||||
Acquisition and integration costs | 3 | 9 | 13 | 27 | |||||||||||
Depreciation, amortization and accretion | 398 | 390 | 1,574 | 1,528 | |||||||||||
Amortization of prepaid lease purchase price adjustments | 5 | 5 | 20 | 20 | |||||||||||
Interest expense and amortization of deferred financing costs(a) | 173 | 164 | 683 | 642 | |||||||||||
(Gains) losses on retirement of long-term obligations | — | — | 2 | 106 | |||||||||||
Interest income | (1 | ) | (2 | ) | (6 | ) | (5 | ) | |||||||
Other (income) expense | (7 | ) | (1 | ) | (1 | ) | (1 | ) | |||||||
(Benefit) provision for income taxes | 6 | 5 | 21 | 19 | |||||||||||
Stock-based compensation expense | 27 | 25 | 116 | 108 | |||||||||||
Adjusted EBITDA(b)(c) | $ | 818 | $ | 803 | $ | 3,304 | $ | 3,095 | |||||||
Twelve Months Ended December 31, | |||||||||||
(dollars in millions) | 2017 | 2016 | 2015 | ||||||||
(As Restated) | |||||||||||
Net income (loss) | $ | 368 | $ | 308 | $ | 1,456 | |||||
Adjustments to increase (decrease) net income (loss): | |||||||||||
Income (loss) from discontinued operations | — | — | (999 | ) | |||||||
Asset write-down charges | 17 | 34 | 33 | ||||||||
Acquisition and integration costs | 61 | 17 | 16 | ||||||||
Depreciation, amortization and accretion | 1,242 | 1,109 | 1,036 | ||||||||
Amortization of prepaid lease purchase price adjustments | 20 | 21 | 21 | ||||||||
Interest expense and amortization of deferred financing costs(a) | 591 | 515 | 527 | ||||||||
(Gains) losses on retirement of long-term obligations | 4 | 52 | 4 | ||||||||
Interest income | (19 | ) | (1 | ) | (2 | ) | |||||
Other (income) expense | (1 | ) | 9 | (57 | ) | ||||||
(Benefit) provision for income taxes | 26 | 17 | (51 | ) | |||||||
Stock-based compensation expense | 96 | 97 | 67 | ||||||||
Adjusted EBITDA(b)(c) | $ | 2,405 | $ | 2,179 | $ | 2,051 | |||||
(a) | See the reconciliation of "components of historical interest expense and amortization of deferred financing costs" herein. |
(b) | See "Definitions of Non-GAAP 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 Current Outlook for Adjusted EBITDA:
Full Year 2020(d) | |||
(dollars in millions) | Outlook | ||
Net income (loss) | $998 | to | $1,078 |
Adjustments to increase (decrease) net income (loss): | |||
Asset write-down charges | $20 | to | $30 |
Acquisition and integration costs | $7 | to | $17 |
Depreciation, amortization and accretion | $1,503 | to | $1,598 |
Amortization of prepaid lease purchase price adjustments | $18 | to | $20 |
Interest expense and amortization of deferred financing costs(a) | $691 | to | $736 |
(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 | $16 | to | $24 |
Stock-based compensation expense | $126 | to | $130 |
Adjusted EBITDA(b)(c) | $3,479 | to | $3,524 |
Components of Historical Interest Expense and Amortization of Deferred Financing Costs:
Three Months Ended December 31, | |||||||
(dollars in millions) | 2019 | 2018 | |||||
Interest expense on debt obligations | $ | 173 | $ | 162 | |||
Amortization of deferred financing costs and adjustments on long-term debt, net | 5 | 5 | |||||
Other, net | (5 | ) | (3 | ) | |||
Interest expense and amortization of deferred financing costs | $ | 173 | $ | 164 | |||
Components of Current Outlook for Interest Expense and Amortization of Deferred Financing Costs:
Full Year 2020 | |||
(dollars in millions) | Outlook | ||
Interest expense on debt obligations | $703 | to | $723 |
Amortization of deferred financing costs and adjustments on long-term debt, net | $20 | to | $25 |
Other, net | $(24) | to | $(19) |
Interest expense and amortization of deferred financing costs | $691 | to | $736 |
(a) | See the reconciliation of "components of current outlook for interest expense and amortization of deferred financing costs" herein. |
(b) | See "Definitions of Non-GAAP 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. |
(d) | The only changes to our previously issued 2020 Outlook are a result of the impact of the restatement as described in "Expected Restatement of Previously Issued Financial Statements." |
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FFO AND AFFO RECONCILIATIONS | |||||||||||||||
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||
(amounts in millions, except per share amounts) | 2019 | 2018 | 2019 | 2018 | |||||||||||
(As Restated) | (As Restated) | ||||||||||||||
Net income (loss) | $ | 208 | $ | 200 | $ | 863 | $ | 625 | |||||||
Real estate related depreciation, amortization and accretion | 384 | 375 | 1,519 | 1,472 | |||||||||||
Asset write-down charges | 6 | 8 | 19 | 26 | |||||||||||
Dividends/distributions on preferred stock | (28 | ) | (28 | ) | (113 | ) | (113 | ) | |||||||
FFO(a)(b)(c)(d) | $ | 570 | $ | 555 | $ | 2,288 | $ | 2,009 | |||||||
Weighted-average common shares outstanding—diluted(e) | 418 | 417 | 418 | 415 | |||||||||||
FFO per share(a)(b)(c)(d)(e) | $ | 1.36 | $ | 1.33 | $ | 5.47 | $ | 4.84 | |||||||
FFO (from above) | $ | 570 | $ | 555 | $ | 2,288 | $ | 2,009 | |||||||
Adjustments to increase (decrease) FFO: | |||||||||||||||
Straight-lined revenue | (18 | ) | (20 | ) | (80 | ) | (72 | ) | |||||||
Straight-lined expense | 23 | 21 | 93 | 90 | |||||||||||
Stock-based compensation expense | 27 | 25 | 116 | 108 | |||||||||||
Non-cash portion of tax provision | 3 | 3 | 5 | 2 | |||||||||||
Non-real estate related depreciation, amortization and accretion | 14 | 15 | 55 | 56 | |||||||||||
Amortization of non-cash interest expense | — | 2 | 1 | 7 | |||||||||||
Other (income) expense | (7 | ) | (1 | ) | (1 | ) | (1 | ) | |||||||
(Gains) losses on retirement of long-term obligations | — | — | 2 | 106 | |||||||||||
Acquisition and integration costs | 3 | 9 | 13 | 27 | |||||||||||
Sustaining capital expenditures | (36 | ) | (30 | ) | (117 | ) | (105 | ) | |||||||
AFFO(a)(b)(c)(d) | $ | 578 | $ | 578 | $ | 2,376 | $ | 2,228 | |||||||
Weighted-average common shares outstanding—diluted(e) | 418 | 417 | 418 | 415 | |||||||||||
AFFO per share(a)(b)(c)(d)(e) | $ | 1.38 | $ | 1.39 | $ | 5.69 | $ | 5.37 | |||||||
(a) | See "Non-GAAP Financial Measures, Segment Measures and Other Calculations" herein for a discussion of our definitions of FFO, including per share amounts, and AFFO, including per share amounts. |
(b) | FFO and AFFO are reduced by cash paid for preferred stock dividends during the period in which they are paid. |
(c) | Attributable to CCIC common stockholders. |
(d) | The above reconciliation excludes line items included in our definition which are not applicable for the periods shown. |
(e) | For all periods presented, the diluted weighted-average common shares outstanding does not include any assumed conversion of preferred stock in the share count. |
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FFO AND AFFO RECONCILIATIONS | |||||||||||
Twelve Months Ended December 31, | |||||||||||
(amounts in millions, except per share amounts) | 2017 | 2016 | 2015 | ||||||||
(As Restated) | |||||||||||
Net income (loss) | $ | 368 | $ | 308 | $ | 457 | |||||
Real estate related depreciation, amortization and accretion | 1,211 | 1,082 | 1,018 | ||||||||
Asset write-down charges | 17 | 34 | 33 | ||||||||
Dividends/distributions on preferred stock | (30 | ) | (44 | ) | (44 | ) | |||||
FFO(a)(b)(c)(d) | $ | 1,566 | $ | 1,381 | $ | 1,465 | |||||
Weighted-average common shares outstanding—diluted(e) | 383 | 341 | 334 | ||||||||
FFO per share(a)(b)(c)(d)(e) | $ | 4.09 | $ | 4.05 | $ | 4.39 | |||||
FFO (from above) | $ | 1,566 | $ | 1,381 | $ | 1,465 | |||||
Adjustments to increase (decrease) FFO: | |||||||||||
Straight-lined revenue | — | (47 | ) | (111 | ) | ||||||
Straight-lined expense | 93 | 94 | 99 | ||||||||
Stock-based compensation expense | 96 | 97 | 67 | ||||||||
Non-cash portion of tax provision | 9 | 7 | (64 | ) | |||||||
Non-real estate related depreciation, amortization and accretion | 31 | 26 | 18 | ||||||||
Amortization of non-cash interest expense | 9 | 14 | 37 | ||||||||
Other (income) expense | (1 | ) | 9 | (57 | ) | ||||||
(Gains) losses on retirement of long-term obligations | 4 | 52 | 4 | ||||||||
Acquisition and integration costs | 61 | 17 | 16 | ||||||||
Sustaining capital expenditures | (85 | ) | (90 | ) | (105 | ) | |||||
AFFO(a)(b)(c)(d) | $ | 1,783 | $ | 1,561 | $ | 1,369 | |||||
Weighted-average common shares outstanding—diluted(e) | 383 | 341 | 334 | ||||||||
AFFO per share(a)(b)(c)(d)(e) | $ | 4.65 | $ | 4.58 | $ | 4.10 | |||||
(a) | See "Non-GAAP Financial Measures, Segment Measures and Other Calculations" herein for a discussion of our definitions of FFO, including per share amounts, and AFFO, including per share amounts. |
(b) | FFO and AFFO are reduced by cash paid for preferred stock dividends during the period in which they are paid. |
(c) | Attributable to CCIC common stockholders. |
(d) | The above reconciliation excludes line items included in our definition which are not applicable for the periods shown. |
(e) | For all periods presented, the diluted weighted-average common shares outstanding does not include any assumed conversion of preferred stock in the share count. |
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Reconciliation of Current Outlook for FFO and AFFO:
Full Year 2020 | |||
(amounts in millions, except per share amounts) | Outlook(f) | ||
Net income (loss) | $998 | to | $1,078 |
Real estate related depreciation, amortization and accretion | $1,454 | to | $1,534 |
Asset write-down charges | $20 | to | $30 |
Dividends/distributions on preferred stock | $(85) | to | $(85) |
FFO(a)(b)(c)(d) | $2,449 | to | $2,494 |
Weighted-average common shares outstanding—diluted(e) | 424 | ||
FFO per share(a)(b)(c)(d)(e) | $5.77 | to | $5.88 |
FFO (from above) | $2,449 | to | $2,494 |
Adjustments to increase (decrease) FFO: | |||
Straight-lined revenue | $(53) | to | $(33) |
Straight-lined expense | $70 | to | $90 |
Stock-based compensation expense | $126 | to | $130 |
Non-cash portion of tax provision | $(6) | to | $9 |
Non-real estate related depreciation, amortization and accretion | $49 | to | $64 |
Amortization of non-cash interest expense | $(4) | to | $6 |
Other (income) expense | $(1) | to | $1 |
(Gains) losses on retirement of long-term obligations | $0 | to | $0 |
Acquisition and integration costs | $7 | to | $17 |
Sustaining capital expenditures | $(123) | to | $(103) |
AFFO(a)(b)(c)(d) | $2,572 | to | $2,617 |
Weighted-average common shares outstanding—diluted(e) | 424 | ||
AFFO per share(a)(b)(c)(d)(e) | $6.06 | to | $6.17 |
(a) | See "Non-GAAP Financial Measures, Segment Measures and Other Calculations" herein for a discussion of our definitions of FFO, including per share amounts, and AFFO, including per share amounts. |
(b) | FFO and AFFO are reduced by cash paid for preferred stock dividends during the period in which they are paid. |
(c) | Attributable to CCIC common stockholders. |
(d) | The above reconciliation excludes line items included in our definition which are not applicable for the periods shown. |
(e) | The assumption for diluted weighted-average common shares outstanding for full year 2020 Outlook is based on the diluted common shares outstanding as of December 31, 2019 and is inclusive of the assumed conversion of preferred stock in August 2020, which we expect to result in (1) an increase in the diluted weighted-average common shares outstanding by approximately 6 million shares and (2) a reduction in the amount of annual preferred stock dividends paid by approximately $28 million when compared to full year 2019. |
(f) | The only changes to our previously issued 2020 Outlook are a result of the impact of the restatement as described in "Expected Restatement of Previously Issued Financial Statements." |
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Net debt to Last Quarter Annualized Adjusted EBITDA calculation:
Three Months Ended December 31, | ||||||||
(dollars in millions) | 2019 | 2018 | ||||||
Total face value of debt | $ | 18,236 | $ | 16,791 | ||||
Ending cash, cash equivalents and restricted cash(a) | 338 | 277 | ||||||
Total net debt | $ | 17,898 | $ | 16,514 | ||||
Adjusted EBITDA | $ | 818 | $ | 803 | (b) | |||
Last quarter annualized Adjusted EBITDA | 3,272 | 3,212 | (b) | |||||
Net debt to Last Quarter Annualized Adjusted EBITDA(a) | 5.5 | x | 5.1 | x | (b) | |||
Cash Interest Coverage Ratio Calculation:
Three Months Ended December 31, | ||||||||
(dollars in millions) | 2019 | 2018 | ||||||
Adjusted EBITDA | $ | 818 | $ | 803 | (b) | |||
Interest expense on debt obligations | 173 | 162 | ||||||
Interest Coverage Ratio | 4.7 | x | 5.0 | x | ||||
(a) | For purposes of calculating Net Debt to Last Quarter Annualized Adjusted EBITDA, beginning in the second quarter 2019, we changed our calculation of ending cash and cash equivalents to include restricted cash and as such, our calculation is not comparable to similar calculations previously provided. Our restricted cash is predominately comprised of the cash rental receipts held in reserve in accordance with certain of our debt instruments; any excess of such required reserve balances are subsequently released to us each month. If we would have excluded restricted cash from our calculation for the fourth quarter of 2019, our Net Debt to Last Quarter Annualized Adjusted EBITDA would have been 5.5x. |
(b) | As restated. |
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