UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2004
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period to
Commission File Number 001-16441
CROWN CASTLE INTERNATIONAL CORP.
(Exact name of registrant as specified in its charter)
| Delaware | 76-0470458 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
| 510 Bering Drive Suite 500 Houston, Texas |
77057-1457 | |
| (Address of principal executive offices) | (Zip Code) |
(713) 570-3000
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
Yes x No ¨
Number of shares of common stock outstanding at October 31, 2004: 223,591,172
CROWN CASTLE INTERNATIONAL CORP.
| Page | ||
| PART I—FINANCIAL INFORMATION |
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| Item 1. Financial Statements |
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| Consolidated Balance Sheet at December 31, 2003 and September 30, 2004 |
3 | |
| 4 | ||
| Consolidated Statement of Cash Flows for the nine months ended September 30, 2003 and 2004 |
5 | |
| 6 | ||
| Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |
22 | |
| Item 3. Quantitative and Qualitative Disclosures About Market Risk |
34 | |
| Item 4. Controls and Procedures |
35 | |
| PART II—OTHER INFORMATION |
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| Item 6. Exhibits |
36 | |
| 37 | ||
2
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In thousands of dollars, except share amounts)
| December 31, 2003 |
September 30, 2004 |
|||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 436,184 | $ | 908,505 | ||||
| Receivables: |
||||||||
| Trade, net of allowance for doubtful accounts of $7,603 and $6,763 at December 31, 2003 and September 30, 2004, respectively |
37,289 | 29,977 | ||||||
| Other |
930 | 10,479 | ||||||
| Inventories |
9,615 | 8,368 | ||||||
| Prepaid expenses and other current assets |
32,133 | 31,916 | ||||||
| Assets of discontinued operations (Notes 1 and 3) |
2,052,510 | — | ||||||
| Total current assets |
2,568,661 | 989,245 | ||||||
| Property and equipment, net of accumulated depreciation of $916,004 and $1,090,112 at December 31, 2003 and September 30, 2004, respectively |
3,755,073 | 3,583,257 | ||||||
| Goodwill |
267,071 | 267,071 | ||||||
| Deferred financing costs and other assets, net of accumulated amortization of $39,692 and $33,189 at December 31, 2003 and September 30, 2004, respectively |
146,786 | 133,105 | ||||||
| $ | 6,737,591 | $ | 4,972,678 | |||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 9,785 | $ | 8,963 | ||||
| Accrued interest |
49,063 | 32,559 | ||||||
| Accrued compensation and related benefits |
13,397 | 9,989 | ||||||
| Deferred rental revenues and other accrued liabilities |
106,384 | 121,303 | ||||||
| Liabilities of discontinued operations (Notes 1 and 3) |
353,544 | — | ||||||
| Long-term debt, current maturities |
267,142 | — | ||||||
| Total current liabilities |
799,315 | 172,814 | ||||||
| Long-term debt, less current maturities |
3,182,850 | 1,898,847 | ||||||
| Other liabilities |
55,978 | 54,037 | ||||||
| Total liabilities |
4,038,143 | 2,125,698 | ||||||
| Commitments and contingencies |
||||||||
| Minority interests |
208,333 | 211,176 | ||||||
| Redeemable preferred stock |
506,702 | 507,706 | ||||||
| Stockholders’ equity: |
||||||||
| Common stock, $.01 par value; 690,000,000 shares authorized; shares issued: |
||||||||
| December 31, 2003 – 220,758,321 and September 30, 2004 – 223,641,905 |
2,208 | 2,236 | ||||||
| Additional paid-in capital |
3,333,402 | 3,363,134 | ||||||
| Accumulated other comprehensive income (loss) |
257,435 | 49,356 | ||||||
| Unearned stock compensation |
(8,122 | ) | (14,026 | ) | ||||
| Accumulated deficit |
(1,600,510 | ) | (1,272,602 | ) | ||||
| Total stockholders’ equity |
1,984,413 | 2,128,098 | ||||||
| $ | 6,737,591 | $ | 4,972,678 | |||||
See condensed notes to consolidated financial statements.
3
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(Unaudited)
(In thousands of dollars, except per share amounts)
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
| 2003 |
2004 |
2003 |
2004 |
|||||||||||||
| Net revenues: |
||||||||||||||||
| Site rental |
$ | 120,127 | $ | 134,090 | $ | 350,608 | $ | 394,422 | ||||||||
| Network services and other |
17,396 | 14,956 | 53,944 | 48,172 | ||||||||||||
| 137,523 | 149,046 | 404,552 | 442,594 | |||||||||||||
| Operating expenses: |
||||||||||||||||
| Costs of operations (exclusive of depreciation, amortization and accretion): |
||||||||||||||||
| Site rental |
40,062 | 42,196 | 120,655 | 124,974 | ||||||||||||
| Network services and other |
10,178 | 10,786 | 34,608 | 34,054 | ||||||||||||
| General and administrative |
21,422 | 22,641 | 64,160 | 66,936 | ||||||||||||
| Corporate development |
1,039 | 211 | 3,577 | 1,021 | ||||||||||||
| Restructuring charges (credits) |
(1,058 | ) | (445 | ) | 1,291 | (478 | ) | |||||||||
| Asset write-down charges |
6,137 | — | 7,517 | 3,816 | ||||||||||||
| Non-cash general and administrative compensation charges |
6,205 | 1,442 | 13,933 | 9,860 | ||||||||||||
| Depreciation, amortization and accretion |
60,846 | 60,587 | 183,072 | 182,931 | ||||||||||||
| 144,831 | 137,418 | 428,813 | 423,114 | |||||||||||||
| Operating income (loss) |
(7,308 | ) | 11,628 | (24,261 | ) | 19,480 | ||||||||||
| Other income (expense): |
||||||||||||||||
| Interest and other income (expense) |
(35,104 | ) | (13,590 | ) | (45,938 | ) | (39,966 | ) | ||||||||
| Interest expense, amortization of deferred financing costs and dividends on preferred stock |
(62,408 | ) | (52,281 | ) | (189,928 | ) | (166,171 | ) | ||||||||
| Loss from continuing operations before income taxes, minority interests and cumulative effect of change in accounting principle |
(104,820 | ) | (54,243 | ) | (260,127 | ) | (186,657 | ) | ||||||||
| Provision for income taxes |
(85 | ) | (144 | ) | (328 | ) | (481 | ) | ||||||||
| Minority interests |
151 | (1,729 | ) | (1,136 | ) | (4,538 | ) | |||||||||
| Loss from continuing operations before cumulative effect of change in accounting principle |
(104,754 | ) | (56,116 | ) | (261,591 | ) | (191,676 | ) | ||||||||
| Discontinued operations (Notes 1 and 3): |
||||||||||||||||
| Income from operations of CCUK, net of tax |
5,076 | 20,239 | 12,617 | 51,238 | ||||||||||||
| Net gain on disposal of CCUK, net of tax |
— | 497,210 | — | 497,210 | ||||||||||||
| Income from discontinued operations, net of tax |
5,076 | 517,449 | 12,617 | 548,448 | ||||||||||||
| Income (loss) before cumulative effect of change in accounting principle |
(99,678 | ) | 461,333 | (248,974 | ) | 356,772 | ||||||||||
| Cumulative effect of change in accounting principle for asset retirement obligations |
— | — | (551 | ) | — | |||||||||||
| Net income (loss) |
(99,678 | ) | 461,333 | (249,525 | ) | 356,772 | ||||||||||
| Dividends on preferred stock, net of gains (losses) on purchases of preferred stock |
(9,496 | ) | (9,836 | ) | (43,948 | ) | (28,864 | ) | ||||||||
| Net income (loss) after deduction of dividends on preferred stock, net of gains (losses) on purchases of preferred stock |
$ | (109,174 | ) | $ | 451,497 | $ | (293,473 | ) | $ | 327,908 | ||||||
| Net income (loss) |
$ | (99,678 | ) | $ | 461,333 | $ | (249,525 | ) | $ | 356,772 | ||||||
| Other comprehensive income (loss): |
||||||||||||||||
| Foreign currency translation adjustments |
10,123 | (1,052 | ) | 80,432 | 10,742 | |||||||||||
| Less: reclassification adjustment for foreign currency translation adjustments included in net income (loss) |
— | (232,893 | ) | — | (232,893 | ) | ||||||||||
| Derivative instruments: |
||||||||||||||||
| Net change in fair value of cash flow hedging instruments |
67 | (210 | ) | (1,408 | ) | (40 | ) | |||||||||
| Amounts reclassified into results of operations |
1,810 | 725 | 5,188 | 2,599 | ||||||||||||
| Minimum pension liability adjustment |
— | 11,513 | — | 11,513 | ||||||||||||
| Comprehensive income (loss) |
$ | (87,678 | ) | $ | 239,416 | $ | (165,313 | ) | $ | 148,693 | ||||||
| Per common share – basic and diluted: |
||||||||||||||||
| Loss from continuing operations before cumulative effect of change in accounting principle |
$ | (0.53 | ) | $ | (0.30 | ) | $ | (1.41 | ) | $ | (1.00 | ) | ||||
| Income from discontinued operations |
0.03 | |||||||||||||||