CROWN CASTLE INTERNATIONAL CORP - FORM 8-K - EX-99.2 - January 21, 2015

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8-K - 8-K - CROWN CASTLE INTERNATIONAL CORPq420148-k.htm
EX-99.1 - EX-99.1 - CROWN CASTLE INTERNATIONAL CORPq42014earningsrelease.htm
Exhibit 99.2















Supplemental Information Package
and Non-GAAP Reconciliations
Fourth Quarter • December 31, 2014




The Foundation for a Wireless World.
CrownCastle.com

Crown Castle International Corp.
Fourth Quarter 2014



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

Cautionary Language Regarding Forward-Looking Statements
This supplemental information package ("Supplement") contains forward-looking statements and information that are based on our management's current expectations as of the date of this Supplement. Statements that are not historical facts are hereby identified as forward-looking statements. Words such as "Outlook", "guide", "forecast", "estimate", "anticipate", "project", "plan", "intend", "believe", "expect", "likely", "predicted", and any variations of these words and similar expressions are intended to identify such forward looking statements. Such statements include, but are not limited to, our Outlook for the first quarter 2015, and full year 2015.

Such forward-looking statements are subject to certain risks, uncertainties and assumptions, including, but not limited to, prevailing market conditions. Should one or more of these or other risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those expected. More information about potential risk factors which could affect our results is included in our filings with the Securities and Exchange Commission. Crown Castle assumes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

The components of financial information presented herein, both historical and forward looking, may not sum due to rounding. Definitions and reconciliations of non-GAAP measures, including FFO and AFFO, are provided in the Appendix to this Supplement.

As used herein, the term "including" and any variation thereof, means "including without limitation." The use of the word "or" herein is not exclusive.

1
Crown Castle International Corp.
Fourth Quarter 2014
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 wireless infrastructure, including: (1) towers and other structures, such as rooftops (collectively, "towers"), and to a lesser extent, (2) distributed antenna systems, a type of small cell network ("small cells"), and (3) interests in land under third party towers in various forms ("third party land interests") (collectively, "wireless infrastructure"). Crown Castle offers significant wireless communications coverage in each of the top 100 US markets and to substantially all of the Australian population. Crown Castle owns, operates and manages approximately 40,000 and 1,800 towers in the US and Australia, respectively.
Our core business is providing access, including space or capacity, to our wireless infrastructure and can be characterized as a stable cash flow stream generated by recurring revenues via long-term contracts in various forms, including license, sublease and lease agreements (collectively, "contracts"). Our wireless infrastructure can accommodate multiple customers for antennas or other equipment necessary for the transmission of signals for wireless communication devices. We seek to increase our site rental revenues by adding more tenants on our wireless infrastructure, which we expect to result in significant incremental cash flows due to our relatively fixed operating costs.
Effective January 1, 2014, Crown Castle commenced operating as a Real Estate Investment Trust ("REIT") for U.S. federal income tax purposes as it relates to our towers and third party land interests, excluding our operations in Australia. In August 2014, we received a favorable private letter ruling from the IRS, which provides that the real property portion of our small cells and the related rents qualify as real property and rents from real property, respectively, under the rules governing REITs. We are evaluating the impact of this private letter ruling and, subject to board approval, we expect to take appropriate action to include at least some part of our small cells as part of the REIT during 2015.


2
Crown Castle International Corp.
Fourth Quarter 2014
COMPANY
OVERVIEW
 FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX


STRATEGY 
Our strategy is to create long-term stockholder value via a combination of (1) returning a meaningful portion of our capital to our common stockholders in the form of dividends, (2) growing organic cash flows generated from our leading portfolio of wireless infrastructure and (3) allocating capital available after payment of dividends efficiently to enhance organic cash flows. We measure "long-term stockholder value" as the combined payment of dividends to common stockholders and growth in our per share results. The key elements of our strategy are to:

•
Return capital to stockholders in the form of dividends. As a REIT, we are required to distribute at least 90% of our REIT taxable income, after the utilization of our net operating loss carryforwards. We have determined that distributing a meaningful portion of our cash from operations even in advance of exhausting our net operating loss carryforwards, appropriately provides common stockholders with increased certainty for a portion of expected long-term stockholder value while still retaining sufficient flexibility to invest in our business and deliver organic growth. We believe this decision reflects the high-quality, long-term contractual cash flow nature of our business translated into stable capital returns to common stockholders.

•
Grow organic cash flows from our wireless infrastructure. We seek to maximize the site rental cash flows derived from our wireless infrastructure by co-locating additional tenants on our wireless infrastructure through long-term contracts as our customers deploy and improve their wireless networks. We seek to maximize new tenant additions or modifications of existing tenant installations (collectively, "new tenant additions") through our focus on customer service and deployment speed. Due to the relatively fixed nature of the costs to operate our wireless infrastructure (which tend to increase at approximately the rate of inflation), we expect increases in our site rental cash flows from new tenant additions and the related subsequent impact from contracted escalations to result in growth in our operating cash flows. We believe there is considerable additional future demand for our existing wireless infrastructure based on their location and the anticipated growth in the wireless communications industry. Substantially all of our wireless infrastructure can accommodate additional tenancy, either as currently constructed or with appropriate modifications to the structure, which we expect to have high incremental returns.

•
Allocate capital efficiently to enhance organic cash flows. We seek to allocate our capital available after payment of dividends, including the net cash provided by our operating activities as well as external financing sources, in a manner that will increase long-term stockholder value on a risk-adjusted basis. Our historical capital allocation mix have included the following (in no particular order):
▪
purchase shares of our common stock from time to time;
▪
acquire or construct wireless infrastructure;
▪
acquire land interests under towers;
▪
make improvements and structural enhancements to our existing wireless infrastructure; or
▪
purchase, repay or redeem our debt.

Our strategy to create long-term stockholder value is based on our belief that additional demand for our wireless infrastructure will be created by the expected continued growth in the wireless communications industry, which is predominately driven by the demand for wireless data services by consumers. We believe that such demand for our wireless infrastructure will continue, will result in organic growth of our cash flows due to new tenant additions on our existing wireless infrastructure, and will create other growth opportunities for us, such as demand for new wireless infrastructure. To the extent we raise external financing, through debt, equity or equity-related issuances, to fund investment opportunities, our financing strategy emphasizes matching our long-term investments with cost-effective, long-term capital.



3
Crown Castle International Corp.
Fourth Quarter 2014
COMPANY
OVERVIEW
 FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX


HISTORICAL DIVIDEND AND AFFO PER SHARE (1)
GLOBAL FOOTPRINT
U.S. FOOTPRINT
 
AUSTRALIAN FOOTPRINT
 
(1)
See reconciliations and definitions provided herein. See also "Definitions of Non-GAAP Financial Measures and Other Calculations" in the Appendix for a discussion of the definitions of FFO and AFFO.
(2)
Last quarter annualized ("LQA") calculated as the most recently completed quarterly period times four.


4
Crown Castle International Corp.
Fourth Quarter 2014
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
BB
Moody’s - Long Term Corporate Family Rating
Ba2
Standard & Poor’s - Long Term Local Issuer Credit Rating
BB+

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
W. Benjamin Moreland
51
15
President and Chief Executive Officer
Jay A. Brown
41
15
Senior Vice President, Chief Financial Officer and Treasurer
James D. Young
53
9
Senior Vice President and Chief Operating Officer
E. Blake Hawk
65
15
Executive Vice President and General Counsel
Patrick Slowey
57
14
Senior Vice President and Chief Commercial Officer
Philip M. Kelley
42
17
Senior Vice President-Corporate Development and Strategy

BOARD OF DIRECTORS
Name
Position
Committees
Age
Years as Director
J. Landis Martin
Chairman
NCG(1) 
69
18
P. Robert Bartolo
Director
Audit
42
<1
Cindy Christy
Director
NCG(1), Strategy
48
7
Ari Q. Fitzgerald
Director
Compensation, Strategy
52
12
Robert E. Garrison II
Director
Audit, Compensation
72
9
Dale N. Hatfield
Director
NCG(1), Strategy
76
13
Lee W. Hogan
Director
Audit, Compensation, Strategy
70
13
Edward C. Hutcheson
Director
Strategy
69
18
John P. Kelly
Director
Strategy
56
14
Robert F. McKenzie
Director
Audit, Strategy
71
19
W. Benjamin Moreland
Director
 
51
8

(1)
Nominating & Corporate Governance Committee


5
Crown Castle International Corp.
Fourth Quarter 2014
COMPANY
OVERVIEW
 FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX

RESEARCH COVERAGE
Equity Research
Bank of America
David Barden
(646) 855-1320
Barclays
Amir Rozwadowski
(212) 526-4043
Canaccord Genuity
Greg Miller
(212) 389-8128
Citigroup
Michael Rollins
(212) 816-1116
Cowen and Company
Colby Synesael
(646) 562-1355
Credit Suisse
Joseph Mastrogiovanni
(212) 325-3757
Evercore Partners
Jonathan Schildkraut
(212) 497-0864
Goldman Sachs
Brett Feldman
(212) 902-8156
Jefferies
Mike McCormack
(212) 284-2516
JPMorgan
Philip Cusick
(212) 622-1444
Macquarie
Kevin Smithen
(212) 231-0695
Morgan Stanley
Simon Flannery
(212) 761-6432
New Street Research
Jonathan Chaplin
(212) 921-9876
Nomura
Adam Ilkowitz
(212) 298-4121
Oppenheimer & Co.
Timothy Horan
(212) 667-8137
Pacific Crest Securities
Michael Bowen
(503) 727-0721
Raymond James
Ric Prentiss
(727) 567-2567
RBC Capital Markets
Jonathan Atkin
(415) 633-8589
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
Philip Kibel
(212) 553-1653
Standard & Poor’s
Scott Tan
(212) 438-4162

HISTORICAL COMMON STOCK DATA
 
Three Months Ended
(in millions, except per share data)
12/31/14
9/30/14
6/30/14
3/31/14
12/31/13
High price(1)
$
84.06

$
79.92

$
76.41

$
74.69

$
75.36

Low price(1)
$
74.06

$
71.42

$
69.86

$
66.75

$
68.14

Period end closing price(2)
$
78.70

$
79.66

$
73.13

$
72.31

$
71.63

Dividends paid per common share
$
0.82

$
0.35

$
0.35

$
0.35

$
—

Volume weighted average price for the period(1)
$
79.09

$
75.98

$
73.43

$
71.47

$
72.46

Common shares outstanding - diluted, at period end
334

333

333

333

334

Market value of outstanding common shares, at period end(3)
$
26,275

$
26,595

$
24,415

$
24,137

$
23,929


(1)
Based on the sales price, adjusted for common stock dividends, as reported by Bloomberg.
(2)
Based on the period end closing price, adjusted for dividends, as reported by Bloomberg.
(3)
Period end market value of outstanding common shares is calculated as the product of (a) basic shares of common stock outstanding at period end and (b) closing share price at period end, adjusted for dividends, as reported by Bloomberg.



6
Crown Castle International Corp.
Fourth Quarter 2014
COMPANY
OVERVIEW
 FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX

SUMMARY PORTFOLIO HIGHLIGHTS
(as of December 31, 2014)
U.S.
Australia
Number of towers(1)
39,697

1,772

Average number of tenants per tower
2.3

2.4

Remaining contracted customer receivables ($ in billions)(2)
$
21

$
1

Weighted average remaining customer contract term (years)(3)
7

12

Percent of towers in the Top 50 / 100 Basic Trading Areas
56% / 71%

Not Applicable

Percent of ground leased / owned (by site rental gross margin)
65% / 35%

88% / 12%

Weighted average maturity of ground leases (years)(4)
31

18


SUMMARY FINANCIAL HIGHLIGHTS
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
(dollars in thousands, except per share amounts)
2014
 
2013
 
2014
 
2013
Operating Data:
 
 
 
 
 
 
 
Net revenues
 
 
 
 
 
 
 
Site rental
$
761,380

 
$
650,590

 
$
3,006,774

 
$
2,503,620

Network services and other
206,184

 
147,831

 
683,110

 
518,764

Net revenues
$
967,564

 
$
798,421

 
$
3,689,884

 
$
3,022,384

 
 
 
 
 
 
 
 
Gross margin
 
 
 
 
 
 
 
Site rental
$
522,891

 
$
464,068

 
$
2,062,108

 
$
1,778,511

Network services and other
79,728

 
55,718

 
277,310

 
197,077

Total gross margin
$
602,619

 
$
519,786

 
$
2,339,418

 
$
1,975,588

 
 
 
 
 
 
 
 
Net income (loss) attributable to CCIC common stockholders
$
137,073

 
$
(34,907
)
 
$
346,525

 
$
78,748

Net income (loss) attributable to CCIC common stockholders per share - diluted
$
0.41

 
$
(0.11
)
 
$
1.04

 
$
0.26

 
 
 
 
 
 
 
 
Non-GAAP Data(5):
 
 
 
 
 
 
 
Adjusted EBITDA
$
546,292

 
$
468,405

 
$
2,136,858

 
$
1,794,147

FFO(6)
389,712

 
179,181

 
1,354,208

 
866,043

AFFO
346,451

 
290,579

 
1,396,139

 
1,097,347

AFFO per share
$
1.04

 
$
0.91

 
$
4.19

 
$
3.67

 
 
 
 
 
 
 
 
Summary Cash Flow Data:
 
 
 
 
 
 
 
Net cash provided by (used for) operating activities
$
473,900

 
$
398,789

 
$
1,666,130

 
$
1,237,656

Net cash provided by (used for) investing activities(7)
(552,222
)
 
(5,087,957
)
 
(1,242,905
)
 
(5,520,969
)
Net cash provided by (used for) financing activities
16,046

 
4,688,130

 
(462,987
)
 
4,063,133


(1)
Includes towers and rooftops, excludes small cells and third-party land interests.
(2)
Excludes renewal terms at customers' opinion.
(3)
Excludes renewal terms at customers' option, weighted by site rental revenues.
(4)
Includes renewal terms at the Company's option, weighted by site rental gross margin.
(5)
See reconciliations and definitions provided herein. See also "Definitions of Non-GAAP Measures and Other Terms" in the Appendix for a discussion of the definition of FFO and AFFO.
(6)
Calculated to present the periods shown in a manner which is consistent with our commencement of operations as a REIT on January 1, 2014.
(7)
Includes net cash used for acquisitions of approximately $286 million and $4.9 billion for the three months ended December 31, 2014 and 2013, respectively, and $466 million and $5.0 billion for the twelve months ended December 31, 2014 and 2013, respectively.




7
Crown Castle International Corp.
Fourth Quarter 2014
COMPANY
OVERVIEW
 FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX

SUMMARY FINANCIAL HIGHLIGHTS (CONTINUED)
 
 
Three Months Ended December 31,
(dollars in thousands, except per share amounts)
 
2014
 
2013
Other Data:
 
 
 
 
Net debt to last quarter annualized adjusted EBITDA
 
5.4x

 
6.1x

Dividend per common share
 
$
0.82

 
$
—

AFFO payout ratio(2)
 
79
%
 
—

 
 
 
 
 
(dollars in thousands)
 
December 31, 2014
 
December 31, 2013
Balance Sheet Data (at period end):
 
 
 
 
Cash and cash equivalents
 
$
175,620

 
$
223,394

Property and equipment, net
 
9,148,311

 
8,947,677

Total assets
 
21,143,276

 
20,594,908

Total debt and other long-term obligations
 
11,920,861

 
11,594,500

Total CCIC stockholders' equity
 
6,716,225

 
6,926,717


OUTLOOK FOR FIRST QUARTER 2015 AND FULL YEAR 2015
(dollars in millions, except per share amounts)
First Quarter 2015
Full Year 2015
Site rental revenues
$762 to $767
$3,058 to $3,078
Site rental cost of operations
$236 to $241
$962 to $977
Site rental gross margin
$523 to $528
$2,086 to $2,106
Adjusted EBITDA(2)
$542 to $547
$2,140 to $2,160
Interest expense and amortization of deferred financing costs(1)
$131 to $136
$528 to $543
FFO(2)
$368 to $373
$1,437 to $1,457
AFFO(2)
$363 to $368
$1,445 to $1,465
AFFO per share(2)(3)
$1.09 to $1.10
$4.33 to $4.39
Net income (loss)
$111 to $144
$445 to $529
Net income (loss) per share - diluted(3)
$0.33 to $0.43
$1.33 to $1.59
Net income (loss) attributable to CCIC common stockholders
$99 to $136
$407 to $498
Net income (loss) attributable to CCIC common stockholders per share - diluted(3)
$0.30 to $0.41
$1.22 to $1.49

(1)
See the reconciliation of "components of interest expense and amortization of deferred financing costs" in the Appendix.
(2)
See reconciliations and definitions provided herein.
(3)
Based on 333.6 million diluted shares outstanding as of December 31, 2014.

8
Crown Castle International Corp.
Fourth Quarter 2014
COMPANY
OVERVIEW
 FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX

OUTLOOK FOR FULL YEAR 2015 SITE RENTAL REVENUE GROWTH
(dollars in millions)
Midpoint of Full Year 2015 Outlook
Full Year 2014
Reported GAAP site rental revenues
$
3,068

$
3,007

Site rental straight-line revenues
(139
)
(197
)
Other - Non-recurring
—

(5
)
Site Rental Revenues, as Adjusted(1)(3)
$
2,930

$
2,805

Cash adjustments:
 
 
FX and other
17

 
New tower acquisitions and builds(2)
(17
)
 
Organic Site Rental Revenues(1)(3)(4)
2,930

 
Year-Over-Year Revenue Growth
 
 
Reported GAAP site rental revenues
2.0
%
 
Site Rental Revenues, as Adjusted
4.5
%
 
Organic Site Rental Revenues(5)
4.5
%
 
OUTLOOK FOR ORGANIC SITE RENTAL REVENUE GROWTH
 
Midpoint of Full Year 2015 Outlook
New leasing activity
5.4
 %
Escalators
3.2
 %
Organic Site Rental Revenue Growth, before non-renewals
8.6
 %
Non-renewals
(4.1
)%
Organic Site Rental Revenue Growth(5)
4.5
 %
OUTLOOK FOR FULL YEAR 2015 SITE RENTAL GROSS MARGIN GROWTH
(dollars in millions)
Midpoint of Full Year 2015 Outlook
Full Year 2014
Reported GAAP site rental gross margin
$
2,096

$
2,062

Straight line revenues and expenses, net
(42
)
(91
)
Other - Non-recurring
 –

(5
)
Site Rental Gross Margin, as Adjusted(1)(3)
$
2,054

$
1,966

Cash adjustments:
 
 
FX and other
13

 
New tower acquisitions and builds(2)
(15
)
 
Organic Site Rental Gross Margin(1)(3)(4)
$
2,052

 
Year-Over-Year Gross Margin Growth
 
 
Reported GAAP site rental gross margin
1.6
%
 
Site Rental Gross Margin, as Adjusted
4.5
%
 
Organic Site Rental Gross Margin(6)
4.4
%
 
Year-Over-Year Incremental Margin

 
Reported GAAP site rental gross margin
55.4
%
 
Site Rental Gross Margin, as Adjusted
70.9
%
 
Organic Site Rental Gross Margin(7)
69.4
%
 

(1)
Includes amortization of prepaid rent.
(2)
The financial impact of new tower acquisitions and builds is excluded from organic site rental revenues until the one-year anniversary of the acquisition or build.
(3)
Includes Site Rental Revenues, as Adjusted, from the construction of new small cell nodes.
(4)
See definitions provided herein.
(5)
Calculated as the percentage change from Site Rental Revenues, as Adjusted, for the prior period when compared to Organic Site Rental Revenues for the current period.
(6)
Calculated as the percentage change from Site Rental Gross Margin, as Adjusted, for the prior period when compared to Organic Site Rental Gross Margin in the current period.
(7)
Calculated as the change from Site Rental Gross Margin, as Adjusted, for the prior period when compared to Organic Site Rental Gross Margin in the current period, divided by the change from Site Rental Revenues, as Adjusted, in the prior period when compared to Organic Site Rental Revenues for the current period.

9
Crown Castle International Corp.
Fourth Quarter 2014
COMPANY
OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX


CONSOLIDATED BALANCE SHEET (Unaudited)
(dollars in thousands, except share amounts)
December 31,
2014
 
December 31,
2013
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
175,620

 
$
223,394

Restricted cash
147,411

 
183,526

Receivables, net
350,829

 
249,925

Prepaid expenses
155,070

 
132,003

Deferred income tax assets
29,961

 
26,714

Other current assets
94,211

 
77,121

Total current assets
953,102

 
892,683

Deferred site rental receivables
1,260,614

 
1,078,995

Property and equipment, net
9,148,311

 
8,947,677

Goodwill
5,188,491

 
4,916,426

Other intangible assets, net
3,715,700

 
4,057,865

Deferred income tax assets
20,914

 
19,008

Long-term prepaid rent, deferred financing costs and other assets, net
856,144

 
682,254

Total assets
$
21,143,276

 
$
20,594,908

 
 
 
 
LIABILITIES AND EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
167,662

 
$
145,390

Accrued interest
66,943

 
65,582

Deferred revenues
348,338

 
260,114

Other accrued liabilities
202,657

 
181,715

Current maturities of debt and other obligations
113,335

 
103,586

Total current liabilities
898,935

 
756,387

Debt and other long-term obligations
11,807,526

 
11,490,914

Deferred income tax liabilities
39,889

 
56,513

Other long-term liabilities
1,659,698

 
1,349,919

Total liabilities
14,406,048

 
13,653,733

Commitments and contingencies
 
 
 
CCIC stockholders' equity:
 
 
 
Common stock, $.01 par value; 600,000,000 shares authorized; shares issued and outstanding: December 31, 2014—333,856,632 and December 31, 2013—334,070,016
3,339

 
3,341

4.50% Mandatory Convertible Preferred Stock, Series A, $.01 par value; 20,000,000 shares authorized; shares issued and outstanding: December 31, 2014 and 2013—9,775,000; aggregate liquidation value: December 31, 2014 and 2013—$977,500
98

 
98

Additional paid-in capital
9,512,396

 
9,482,769

Accumulated other comprehensive income (loss)
15,820

 
(23,612
)
Dividends/distributions in excess of earnings
(2,815,428
)
 
(2,535,879
)
Total CCIC stockholders' equity
6,716,225

 
6,926,717

Noncontrolling interest
21,003

 
14,458

Total equity
6,737,228

 
6,941,175

Total liabilities and equity
$
21,143,276

 
$
20,594,908




10
Crown Castle International Corp.
Fourth Quarter 2014
COMPANY
OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX

CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
(dollars in thousands, except share and per share amounts)
2014
 
2013
 
2014
 
2013
Net revenues:
 
 
 
 
 
 
 
Site rental
$
761,380

 
$
650,590

 
$
3,006,774

 
$
2,503,620

Network services and other
206,184

 
147,831

 
683,110

 
518,764

Net revenues
967,564

 
798,421

 
3,689,884

 
3,022,384

Operating expenses:
 
 
 
 
 
 
 
Costs of operations (exclusive of depreciation, amortization and accretion):
 
 
 
 
 
 
 
Site rental
238,489

 
186,522

 
944,666

 
725,109

Network services and other
126,456

 
92,113

 
405,800

 
321,687

General and administrative
77,299

 
67,163

 
282,696

 
238,702

Asset write-down charges
3,896

 
4,158

 
15,040

 
14,863

Acquisition and integration costs
6,118

 
12,820

 
35,042

 
26,005

Depreciation, amortization and accretion
253,776

 
201,697

 
1,013,064

 
774,215

Total operating expenses
706,034

 
564,473

 
2,696,308

 
2,100,581

Operating income (loss)
261,530

 
233,948

 
993,576

 
921,803

Interest expense and amortization of deferred financing costs
(141,070
)
 
(142,989
)
 
(573,291
)
 
(589,630
)
Gains (losses) on retirement of long-term obligations
—

 
(640
)
 
(44,629
)
 
(37,127
)
Interest income
62

 
494

 
616

 
1,355

Other income (expense)
21,339

 
(3,117
)
 
11,862

 
(3,872
)
Income (loss) before income taxes
141,861

 
87,696

 
388,134

 
292,529

Benefit (provision) for income taxes
10,726

 
(110,374
)
 
10,640

 
(198,628
)
Net income (loss)
152,587

 
(22,678
)
 
398,774

 
93,901

Less: Net income (loss) attributable to the noncontrolling interest
4,517

 
866

 
8,261

 
3,790

Net income (loss) attributable to CCIC stockholders
148,070

 
(23,544
)
 
390,513

 
90,111

Dividends on preferred stock
(10,997
)
 
(11,363
)
 
(43,988
)
 
(11,363
)
Net income (loss) attributable to CCIC common stockholders
$
137,073

 
$
(34,907
)
 
$
346,525

 
$
78,748

 
 
 
 
 
 
 
 
Net income (loss) attributable to CCIC common stockholders, per common share:
 
 
 
 
 
 
 
Basic
$
0.41

 
$
(0.11
)
 
$
1.04

 
$
0.26

Diluted
$
0.41

 
$
(0.11
)
 
$
1.04

 
$
0.26

 
 
 
 
 
 
 
 
Weighted-average common shares outstanding (in thousands):
 
 
 
 
 
 
 
Basic
332,416

 
319,634

 
332,302

 
298,083

Diluted
333,554

 
319,634

 
333,265

 
299,293




11
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COMPANY
OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX

SEGMENT OPERATING RESULTS
 
Three Months Ended December 31, 2014
(dollars in thousands)
CCUSA
 
CCAL
 
Consolidated Total
Net Revenues
 
 
 
 
 
Site rental
$
723,416

 
$
37,964

 
$
761,380

Services
202,453

 
3,731

 
206,184

Total net revenues
925,869

 
41,695

 
967,564

 
 
 
 
 
 
Operating expenses(1)
 
 
 
 
 
Site rental
229,877

 
8,612

 
238,489

Services
124,939

 
1,517

 
126,456

Total operating expenses
354,816

 
10,129

 
364,945

 
 
 
 
 
 
General and administrative
70,125

 
7,174

 
77,299

 
 
 
 
 
 
Adjusted EBITDA
$
519,589

 
$
26,703

 
$
546,292

FFO AND AFFO RECONCILIATIONS
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
(dollars in thousands, except share and per share amounts)
2014
 
2013
 
2014
 
2013
Net income
$
152,587

 
$
(22,678
)
 
$
398,774

 
$
93,901

Real estate related depreciation, amortization and accretion
248,745

 
198,569

 
992,643

 
761,070

Asset write-down charges
3,896

 
4,158

 
15,040

 
14,863

Adjustment for noncontrolling interest(2)
(4,517
)
 
(866
)
 
(8,261
)
 
(3,790
)
Dividends on preferred stock
(10,997
)
 
—

 
(43,988
)
 
—

FFO(3)
$
389,712

 
$
179,181

 
$
1,354,208

 
$
866,043

Weighted average common shares outstanding — diluted
333,554

 
319,634

 
333,265

 
299,293

FFO per share(3)
$
1.17

 
$
0.56

 
$
4.06

 
$
2.89

 
 
 
 
 
 
 
 
FFO (from above)
$
389,712

 
$
179,181

 
$
1,354,208

 
$
866,043

Adjustments to increase (decrease) FFO:
 
 
 
 
 
 
 
Straight-line revenue
(46,905
)
 
(49,019
)
 
(196,598
)
 
(218,631
)
Straight-line expense
26,626

 
19,071

 
105,376

 
80,953

Stock-based compensation expense
15,545

 
11,904

 
60,164

 
41,788

Non-cash portion of tax provision(4)
(12,845
)
 
108,411

 
(20,359
)
 
191,729

Non-real estate related depreciation, amortization and accretion
5,031

 
3,128

 
20,421

 
13,145

Amortization of non-cash interest expense
19,532

 
21,003

 
80,854

 
99,244

Other (income) expense
(21,339
)
 
3,117

 
(11,862
)
 
3,872

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

 
640

 
44,629

 
37,127

Acquisition and integration costs
6,118

 
12,820

 
35,042

 
26,005

Adjustment for noncontrolling interest(2)
4,517

 
866

 
8,261

 
3,790

Capital improvement capital expenditures
(15,987
)
 
(9,858
)
 
(32,227
)
 
(19,312
)
Corporate capital expenditures
(23,555
)
 
(10,685
)
 
(51,772
)
 
(28,409
)
AFFO(3)
$
346,451

 
$
290,579

 
$
1,396,139

 
$
1,097,347

Weighted average common shares outstanding — diluted
333,554

 
319,634

 
333,265

 
299,293

AFFO per share(3)
$
1.04

 
$
0.91

 
$
4.19

 
$
3.67


(1)    Exclusive of depreciation, amortization and accretion.
(2)
Inclusive of the noncontrolling interest related to real estate related depreciation, amortization and accretion and asset write-downs.
(3)
See reconciliations and definitions provided herein. See also "Definitions of Non-GAAP Measures and Other Calculations" in the Appendix for a discussion of the definitions of FFO and AFFO.
(4)
Adjusts the income tax provision to reflect our estimate of cash taxes paid had we been a REIT for all periods presented, and is primarily comprised of foreign taxes.  As a result, income tax expense (benefit) is lower by the amount of the adjustment.

12
Crown Castle International Corp.
Fourth Quarter 2014
COMPANY
OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX



CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
 
Twelve Months Ended December 31,
(dollars in thousands)
2014
 
2013
Cash flows from operating activities:
 
 
 
Net income (loss)
$
398,774

 
$
93,901

Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities:
 
 
 
Depreciation, amortization and accretion
1,013,064

 
774,215

Gains (losses) on retirement of long-term obligations
44,629

 
37,127

Amortization of deferred financing costs and other non-cash interest
80,854

 
99,245

Stock-based compensation expense
51,497

 
39,030

Asset write-down charges
15,040

 
14,863

Deferred income tax benefit (provision)
(25,579
)
 
180,275

Other non-cash adjustments, net
(25,798
)
 
2,974

Changes in assets and liabilities, excluding the effects of acquisitions:
—

 
 
Increase (decrease) in liabilities
412,952

 
284,120

Decrease (increase) in assets
(299,303
)
 
(288,094
)
Net cash provided by (used for) operating activities
1,666,130

 
1,237,656

Cash flows from investing activities:
 
 
 
Payments for acquisition of businesses, net of cash acquired
(466,305
)
 
(4,960,435
)
Capital expenditures
(780,077
)
 
(567,810
)
Other investing activities, net
3,477

 
7,276

Net cash provided by (used for) investing activities
(1,242,905
)
 
(5,520,969
)
Cash flows from financing activities:
 
 
 
Proceeds from issuance of long-term debt
845,750

 
1,618,430

Net proceeds from issuance of capital stock
—

 
2,980,586

Principal payments on debt and other long-term obligations
—

 
950,886

Principal payments on debt and other long-term obligations
(116,426
)
 
(101,322
)
Purchases and redemptions of long-term debt
(836,899
)
 
(762,970
)
Purchases of capital stock
(21,872
)
 
(99,458
)
Borrowings under revolving credit facility
1,019,000

 
976,032

Payments under revolving credit facility
(698,000
)
 
(1,855,032
)
Payments for financing costs
(15,899
)
 
(30,001
)
Net decrease (increase) in restricted cash
30,010

 
385,982

Dividends/distributions paid on common stock
(624,297
)
 
—

Dividends paid on preferred stock
(44,354
)
 
—

Net cash provided by (used for) financing activities
(462,987
)
 
4,063,133

Effect of exchange rate changes on cash
(8,012
)
 
2,210

Net increase (decrease) in cash and cash equivalents
(47,774
)
 
(217,970
)
Cash and cash equivalents at beginning of period
223,394

 
441,364

Cash and cash equivalents at end of period
$
175,620

 
$
223,394

Supplemental disclosure of cash flow information:
 
 
 
Interest paid
491,076

 
477,395

Income taxes paid
18,770

 
15,591



13
Crown Castle International Corp.
Fourth Quarter 2014
COMPANY
OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX


SITE RENTAL REVENUE GROWTH
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
(dollars in millions)
2014
 
2013
 
2014
 
2013
Reported GAAP site rental revenues
$
761

 
$
651

 
$
3,007

 
$
2,504

Site rental straight-line revenues
(47
)
 
(49
)
 
(197
)
 
(219
)
Other - Non-recurring
—

 
(4
)
 
(5
)
 
(4
)
Site Rental Revenues, as Adjusted(1)(3)
$
714

 
$
597

 
$
2,805

 
$
2,281

Cash adjustments:
 
 
 
 
 
 
 
FX and other
3

 
 
 
10

 
 
New tower acquisitions and builds(2)
(81
)
 
 
 
(379
)
 
 
Organic Site Rental Revenues(1)(3)(4)
$
637

 
 
 
$
2,437

 
 
Year-Over-Year Revenue Growth
 
 
 
 
 
 
 
Reported GAAP site rental revenues
17.0
%
 
 
 
20.1
%
 
 
Site Rental Revenues, as Adjusted
19.6
%
 
 
 
23.0
%
 
 
Organic Site Rental Revenues(5)
6.6
%
 
 
 
6.8
%
 
 

ORGANIC SITE RENTAL REVENUE GROWTH
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
 
2014
 
2014
New leasing activity
6.7%
 
5.9%
Escalators
3.6%
 
3.6%
Organic Site Rental Revenue growth, before non-renewals
10.3%
 
9.5%
Non-renewals
(3.7)%
 
(2.6)%
Organic Site Rental Revenue Growth(5)
6.6%
 
6.8%

(1)
Includes amortization of prepaid rent; see the table “Summary of Prepaid Rent Activity” on page 16 for further details.
(2)
The financial impact of new tower acquisitions and builds is excluded from organic site rental revenues until the one-year anniversary of the acquisition or build.
(3)
Includes Site Rental Revenues, as Adjusted, from the construction of new small cells.
(4)
See definitions provided herein.
(5)
Calculated as the percentage change from Site Rental Revenues, as Adjusted, for the prior period when compared to Organic Site Rental Revenues for the current period.

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FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX


SITE RENTAL GROSS MARGIN GROWTH
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
(dollars in millions)
2014
 
2013
 
2014
 
2013
Reported GAAP site rental gross margin
$
523

 
$
464

 
$
2,062

 
$
1,779

Straight line revenues and expenses, net
(20
)
 
(30
)
 
(91
)
 
(138
)
Other - Non-recurring
—

 
(4
)
 
(5
)
 
(4
)
Site rental gross margin, as adjusted(1)(2)
$
503

 
$
430

 
$
1,966

 
$
1,637

Cash adjustments:
 
 
 
 
 
 
 
FX and other
(2
)
 
 
 
(7
)
 
 
New tower acquisitions and builds(3)
(45
)
 
 
 
(217
)
 
 
Organic Site Rental Gross Margin(1)(2)(4)
$
455

 
 
 
$
1,742

 
 
Year-Over-Year Gross Margin Growth
 
 
 
 
 
 
 
Reported GAAP site rental gross margin
12.7
%
 
 
 
15.9
%
 
 
Site Rental Gross Margin, as Adjusted
16.9
%
 
 
 
20.1
%
 
 
Organic Site Rental Gross Margin(5)
5.9
%
 
 
 
6.4
%
 
 
Year-Over-Year Incremental Margin
 
 
 
 
 
 
 
Reported GAAP site rental gross margin
53.1
%
 
 
 
56.3
%
 
 
Site Rental Gross Margin, as Adjusted
62.1
%
 
 
 
62.7
%
 
 
Organic Site Rental Gross Margin(6)
64.4
%
 
 
 
67.2
%
 
 

(1)
Includes amortization of prepaid rent.
(2)
Includes Site Rental Revenues, as Adjusted, from the construction of new small cell nodes.
(3)
The financial impact of new tower acquisitions and builds is excluded from organic site rental revenues until the one-year anniversary of the acquisition or build.
(4)
See definitions provided herein.
(5)
Calculated as the percentage change from Site Rental Gross Margin, as Adjusted, for the prior period when compared to Organic Site Rental Gross Margin in the current period.
(6)
Calculated as the change from Site Rental Gross Margin, as Adjusted, for the prior period when compared to Organic Site Rental Gross Margin in the current period, divided by the change from Site Rental Revenues, as Adjusted, in the prior period when compared to Organic Site Rental Revenues for the current period.


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OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX


SUMMARY OF SITE RENTAL STRAIGHT-LINE REVENUES AND EXPENSES(1)
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
(dollars in thousands)
2014
 
2013
 
2014
 
2013
Total site rental straight-line revenue
$
46,905

 
$
49,019

 
$
196,598

 
$
218,631

Total site rental straight-line expenses
26,626

 
19,071

 
105,376

 
80,953


SUMMARY OF PREPAID RENT ACTIVITY(2)
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
(dollars in thousands)
2014
 
2013
 
2014
 
2013
Prepaid rent received
$
117,832

 
$
87,822

 
$
350,901

 
$
241,451

Amortization of prepaid rent
(28,014
)
 
(19,671
)
 
(97,069
)
 
(66,728
)

SUMMARY OF CAPITAL EXPENDITURES
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
(dollars in thousands)
2014
 
2013
 
2014
 
2013
Discretionary:
 
 
 
 
 
 
 
Purchases of land interests
$
34,963

 
$
24,026

 
$
96,680

 
$
84,555

Wireless infrastructure construction and improvements
192,019

 
137,759

 
599,398

 
435,535

Sustaining
39,542

 
20,543

 
83,999

 
47,720

Total
$
266,524

 
$
182,328

 
$
780,077

 
$
567,810


(1)
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.
(2)
Reflects prepaid rent received from long-term tenant contracts and the amortization thereof for GAAP revenue recognition purposes.

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FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX


PROJECTED REVENUE FROM EXISTING CUSTOMER CONTRACTS(1)
 
Years Ended December 31,
(dollars in millions)
2015
2016
2017
2018
2019
Site rental revenue (GAAP)
$
3,013

$
3,020

$
3,043

$
3,066

$
3,094

Site rental straight-line revenue
(134
)
(55
)
13

68

123

Site Rental Revenues, as Adjusted
$
2,880

$
2,965

$
3,056

$
3,134

$
3,216


PROJECTED GROUND LEASE EXPENSE FROM EXISTING GROUND LEASES(2)
 
 
Years Ended December 31,
(dollars in millions)
2015
2016
2017
2018
2019
Ground lease expense (GAAP)
$
676

$
681

$
688

$
695

$
703

Site rental straight-line expense
(92
)
(78
)
(67
)
(56
)
(46
)
Ground Lease Expense, as Adjusted
$
584

$
603

$
622

$
639

$
657


ANNUALIZED CASH SITE RENTAL REVENUE AT TIME OF RENEWAL(3)
 
Years Ended December 31,
(as of December 31, 2014; dollars in millions)
2015
2016
2017
2018
2019
AT&T
$
26

$
46

$
21

$
40

$
36

Sprint(4)
25

42

39

36

26

T-Mobile
14

34

25

34

42

Verizon
12

12

17

18

18

Optus
3

—

—

—

—

VHA
3

6

10

2

—

Telstra
1

3

1

1

1

All Others Combined
50

40

29

31

30

Total
$
133

$
183

$
143

$
163

$
154


(1)
Based on existing contracts as of December 31, 2014. All contracts, except for Sprint contracts associated with the iDen network and contracts where non-renewal notices have been received, are assumed to renew for a new term at current term end date. CPI-linked customer contracts are assumed to escalate at 3% per annum. Assumes a US dollar to Australian dollar exchange rate of 0.81 US dollar to 1.0 Australian dollar.
(2)
Based on existing ground leases as of December 31, 2014. CPI-linked leases are assumed to escalate at 3% per annum. Assumes a US dollar to Australian dollar exchange rate of 0.81 US dollar to 1.0 Australian dollar.
(3)
Reflects lease renewals by year by customer; dollar amounts represent annualized cash site rental revenues from assumed renewals or extension as reflected in the table "Projected Revenue from Existing Customer Contracts."
(4)
Excludes Sprint leases associated with the iDen network, which are assumed to not renew as reflected in the table "Projected Revenue from Existing Customer Contracts."


17
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OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX


ESTIMATED REDUCTION TO SITE RENTAL REVENUES FROM NON-RENEWALS FROM LEAP, METROPCS AND CLEARWIRE NETWORK DECOMMISSIONING(1)(2) (dollars in millions)
2015
2016
2017
2018
Thereafter
Total
$35-$45
$60-$70
$25-$35
$20-$30
$35-$45
$175-$225

TOTAL SITE RENTAL REVENUES FROM LEAP, METROPCS AND CLEARWIRE BY LEASE MATURITY(1)
(dollars in millions)
2015
2016
2017
2018
Thereafter
Total
Towers Leasing
$70
$70
$45
$30
$45
$260
Small Cells Leasing
—
5
5
5
80
95
Total
$70
$75
$50
$35
$125
$355

HISTORICAL ANNUAL NON-RENEWALS AS PERCENTAGE OF SITE RENTAL REVENUES, AS ADJUSTED
Years Ended December 31,
2014
2013
2012
2011
2010
2.6%
1.7%
2.2%
1.9%
2.0%


CUSTOMER OVERVIEW
(as of December 31, 2014)
Percentage of Q4 2014 LQA Site
Rental Revenues
Weighted Average Current
Term Remaining(3)
Long-Term Credit Rating
(S&P / Moody’s)
AT&T
29%
8
A- / A3
T-Mobile
22%
7
BB
Sprint
20%
6
BB- / B1
Verizon
15%
8
BBB+ / Baa1
Optus Communications
2%
15
A+ / Aa3
VHA
1%
5
A- / Baa1 (4)
Telstra
1%
16
A / A2
All Others Combined
9%
4
N/A
Total / Weighted Average
100%
7


(1)
Figures are approximate and based on run-rate site rental revenues as of December 31, 2014.
(2)
Depending on the eventual network deployment and decommissioning plans of AT&T, T-Mobile and Sprint, the impact and timing of such renewals may vary from Crown Castle's expectations.
(3)
Weighted by site rental revenue contributions; excludes renewals at the customers' option.
(4)
Vodafone Hutchison Australia ("VHA") is a joint venture between Vodafone Group Plc and Hutchison Telecommunications Australia, a subsidiary of Hutchison Whompoa; Vodafone Group Plc is rated A- and Baa1 and Hutchison Whompoa is rated A- and A3 by S&P and Moody's, respectively, as of December 31, 2014.

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FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX

SUMMARY OF TOWER PORTFOLIO BY VINTAGE
(as of December 31, 2014; dollars in thousands)
 
YIELD(1)
NUMBER OF TENANTS PER TOWER


LQA SITE RENTAL REVENUE PER TOWER
LQA SITE RENTAL GROSS MARGIN PER TOWER
INVESTED CAPITAL PER TOWER(2)
NUMBER OF TOWERS

(1)
Yield is calculated as LQA site rental gross margin divided by invested capital.
(2)
Reflects gross total assets, including incremental capital invested by the Company since time of acquisition or construction completion. Inclusive of invested capital related to land at the tower site.

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FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX



PORTFOLIO OVERVIEW(1)
(as of December 31, 2014; dollars in thousands)
NUMBER OF TOWERS
TENANTS PER TOWER
LQA SITE RENTAL REVENUE PER TOWER


(1)
Includes towers and rooftops, excludes small cells and third-party land interests.


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ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX


DISTRIBUTION OF TOWER TENANCY (as of December 31, 2014)
PERCENTAGE OF TOWERS BY TENANTS PER TOWER(1)
U.S. PORTFOLIO
AUSTRALIA PORTFOLIO
Average: 2.3
Average: 2.4
 
 
GEOGRAPHIC TOWER DISTRIBUTION (as of December 31, 2014)(1)
PERCENTAGE OF TOWERS BY GEOGRAPHIC LOCATION
PERCENTAGE OF LQA SITE RENTAL REVENUE BY GEOGRAPHIC LOCATION

(1)
Includes towers and rooftops, excludes small cells and third-party land interests.

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CAPITALIZATION OVERVIEW
APPENDIX


U.S. GROUND INTEREST OVERVIEW
(as of December 31, 2014;
dollars in millions)
LQA Site Rental Revenue
Percentage of U.S. LQA Site Rental Revenue
LQA Site Rental Gross Margin
Percentage of U.S. LQA Site Rental Gross Margin
Number of U.S. Towers(1)
Percentage of U.S. Towers
Weighted Average Term Remaining (by years)(2)
Less than 10 years
$
340

13
%
$
191

10
%
5,714

14
%
 
10 to 20 years
538

20
%
293

16
%
10,113

26
%
 
Greater 20 years
1,063

40
%
694

38
%
15,654

39
%
 
Total leased
$
1,941

74
%
$
1,179

65
%
31,481

79
%
31

 
 
 
 
 
 
 
 
Owned
699

26
%
643

35
%
8,216

21
%
 
Total / Average
$
2,640

100
%
$
1,822

100
%
39,697

100
%
 


AUSTRALIA GROUND INTEREST OVERVIEW
(as of December 31, 2014;
dollars in millions)
LQA Site Rental Revenue
Percentage of Australia LQA Site Rental Revenue
LQA Site Rental
Gross Margin
Percentage of Australia LQA Site Rental Gross Margin
Number of Australia Towers(1)
Percentage of Australia Towers
Weighted Average Term Remaining (by years)(2)
Less than 10 years
$
47

31
%
$
35

28
%
535

30
%
 
10 to 20 years
49

33
%
39

32
%
593

33
%
 
Greater 20 years
40

27
%
35

28
%
500

28
%
 
Total leased
$
136

90
%
$
108

88
%
1,628

92
%
18

 
 
 
 
 
 
 
 
Owned
14

10
%
14

12
%
144

8
%
 
Total / Average
$
150

100
%
$
123

100
%
1,772

100
%
 

(1)
Includes towers and rooftops, excludes small cells and third-party land interests.
(2)
Includes renewal terms at the Company’s option; weighted by site rental gross margin.

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ASSET PORTFOLIO OVERVIEW
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APPENDIX


U.S. GROUND INTEREST ACTIVITY
(dollars in millions)
Three Months Ended December 31,
Twelve Months Ended December 31,
Ground Extensions Under Crown Castle Towers:
 
 
Number of ground leases extended
544

1,696
Average number of years extended
32
29
Percentage increase in consolidated cash ground lease expense due to extension activities(1)
0.2
%
0.6
%
 
 
 
Ground Purchases Under Crown Castle Towers:
 
 
Number of ground leases purchased
312

706
Land lease purchases (including capital expenditures, acquisitions and capital leases)
$
81

$
172

Percentage of consolidated site rental gross margin from towers residing on land purchased
<1%

2
%

AUSTRALIA GROUND INTEREST ACTIVITY
(dollars in millions)
Three Months Ended December 31,
Twelve Months Ended December 31,
Ground Extensions Under Crown Castle Towers:
 
 
Number of ground leases extended
29

110

Average number of years extended
15

14

Percentage increase in consolidated cash ground lease expense due to extension activities(1)
Not Meaningful

Not Meaningful

 
 
 
Ground Purchases Under Crown Castle Towers:
 
 
Number of ground leases purchased
4

12

Land lease purchases (including capital expenditures, acquisitions and capital leases)
$
2

$
6

Percentage of consolidated site rental gross margin from towers residing on land purchased
Not Meaningful

Not Meaningful


SMALL CELL NETWORK OVERVIEW
Number of Nodes(3) 
(in thousands)
Miles of Fiber
(in thousands)
Percentage of LQA Site Rental Revenues
Weighted Average Current
Term Remaining for
Customer Contracts(2)
14
7
7%
8

(1)
Includes the impact from the amortization of lump sum payments.
(2)
Excludes renewal terms at customers’ option; weighted by site rental revenue.
(3)
Includes nodes currently in-process.



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ASSET PORTFOLIO OVERVIEW
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APPENDIX



CAPITALIZATION OVERVIEW
(dollars in millions)
Face Value as Reported 12/31/14
Fixed vs. Floating
Secured vs. Unsecured
Interest Rate(1)
Net Debt to LQA EBITDA(2)
Maturity
Cash
$
176

 
 
 
 
 
 
 
 
 
 
 
 
Senior Secured Tower Revenue Notes, Series 2010-2-2010-3(3)
1,600

Fixed
Secured
5.98%
 
Various(8)
Senior Secured Tower Revenue Notes, Series 2010-4-2010-6(3)
1,550

Fixed
Secured
4.48%
 
Various(8)
2012 Secured Notes(4)
1,500

Fixed
Secured
3.36%
 
2017/2023
Senior Secured Notes, Series 2009-1(5)
161

Fixed
Secured
7.45%
 
Various(8)
WCP Secured Wireless Site Contracts Revenue Notes, Series 2010-1(6)
259

Fixed
Secured
5.70%
 
2040
Subtotal
$
5,070

 
 
4.78%
2.3x
 
Revolving Credit Facility(7)
695

Floating
Secured
1.91%
 
2018/2019
Term Loan A
646

Floating
Secured
1.92%
 
2018/2019
Term Loan B
2,836

Floating
Secured
3.00%
 
2019/2021
Total CCOC Facility Debt
$
4,176

 
 
2.65%
1.9x
 
4.875% Senior Notes
850

Fixed
Unsecured
4.88%
 
2022
5.250% Senior Notes
1,650

Fixed
Unsecured
5.25%
 
2023
Capital Leases & Other Debt
175

Various
Various
Various
 
Various
Total HoldCo and other Debt
$
2,675

 
 
5.12%
1.2x
 
Total Net Debt
$
11,746

 
 
4.10%
5.4x
 
Preferred Stock, at liquidation value
978

 
 
 
 
 
Market Capitalization(9)
26,275

 
 
 
 
 
Firm Value(10)
$
38,998

 
 
 
 
 

(1)
Represents the weighted-average stated interest rate.
(2)
Represents the applicable amount of debt divided by LQA consolidated Adjusted EBITDA.
(3)
If the Senior Secured Tower Revenue Notes 2010-2, and 2010-3 and Senior Secured Tower Revenue Notes, 2010-4, 2010-5, and 2010-6 ("2010 Tower Revenue Notes") are not paid in full on or prior to 2015, 2017 and 2020, as applicable, then 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 class of the 2010 Tower Revenue Notes, and additional interest (of an additional approximately 5% per annum) will accrue on the respective 2010 Tower Revenue Notes. The Senior Secured Tower Revenue Notes, 2010-2, and 2010-3 consist of two series of notes with principal amounts of $350 million and $1.3 billion, having anticipated repayment dates in 2017 and 2020, respectively. The Senior Secured Tower Revenue Notes, 2010-4, 2010-5, and 2010-6 consist of three series of notes with principal amounts of $250 million, $300 million and $1.0 billion, having anticipated repayment dates in 2015, 2017 and 2020, respectively.
(4)
The 2012 Secured Notes consist of $500 million aggregate principal amount of 2.381% secured notes due 2017 and $1.0 billion aggregate principal amount of 3.849% secured notes due 2030.
(5)
The Senior Secured Notes, Series 2009-1 consist of $91 million of principal as of December 31, 2014 that amortizes through 2019, and $70 million of principal as of December 31, 2014 that amortizes during the period beginning in 2019 and ending in 2029.
(6)
The anticipated repayment date is 2015 for each class of the WCP Secured Wireless Site Contracts Revenue Notes, Series 2010-1 ("WCP Securitized Notes"). If the WCP Securitized Notes are not repaid in full by their anticipated repayment dates, the applicable interest rate increases by an additional approximately 5% per annum. If the WCP Securitized Notes are not repaid in full by their rapid amortization date of 2017, monthly principal payments commence using the excess cash flows of the issuers of the WCP Securitized Notes.
(7)
As of December 31, 2014, the undrawn availability under the $1.5 billion Revolving Credit Facility is $805 million. Subsequent to fourth quarter 2014, Crown Castle Operating Company, a wholly owned subsidiary of Crown Castle, increased the size of its $1.5 billion Revolving Credit Facility ("Revolver") by $630 million to a total capacity of $2.13 billion. All other existing terms of the Revolver remain unchanged. After giving effect to the increase in the Revolver, Crown Castle has approximately $1.4 billion of availability under its Revolver.
(8)
Notes are prepayable at par if voluntarily repaid six months or less prior to maturity; earlier prepayment may require additional consideration.
(9)
Market capitalization calculated based on $78.70 closing price and 333.9 million shares outstanding as of December 31, 2014.
(10)
Represents the sum of net debt, preferred stock (at liquidation value) and market capitalization.

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ASSET PORTFOLIO OVERVIEW
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APPENDIX



DEBT MATURITY OVERVIEW(1)


(1)
Where applicable, maturities reflect the Anticipated Repayment Date as defined in the respective debt agreement; excludes capital leases and other obligations; amounts presented at face value net of repurchases held at CCIC.

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ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX



LIQUIDITY OVERVIEW
(dollars in thousands)
December 31, 2014
Cash and cash equivalents(1)
$
175,620

Undrawn revolving credit facility availability(2)(3)
805,000

Restricted cash
152,411

Debt and other long-term obligations
11,920,861

Total equity
6,737,228


(1)
Exclusive of restricted cash.
(2)
Availability at any point in time is subject to reaffirmation of the representations and warranties in, and there being no default under, our credit agreement governing our senior credit facilities ("2012 Credit Facility").
(3)
Subsequent to fourth quarter 2014, Crown Castle Operating Company, a wholly owned subsidiary of Crown Castle, increased the size of its $1.5 billion Revolver by $630 million to a total capacity of $2.13 billion. All other existing terms of the Revolver remain unchanged. After giving effect to the increase in the Revolver, Crown Castle has approximately $1.4 billion of availability under its Revolver.

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ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX



SUMMARY OF MAINTENANCE AND FINANCIAL COVENANTS
Debt
Borrower / Issuer
Covenant(1)
Covenant Level Requirement
 
As of December 31, 2014
Maintenance Financial Covenants(2)
2012 Credit Facility
CCOC
Total Net Leverage Ratio
≤ 5.50x
 
4.3x
2012 Credit Facility
CCOC
Consolidated Interest Coverage Ratio
≥ 2.50x
 
5.9x
 
 
 
 
 
 
Restrictive Negative Financial Covenants
 
 
 
 
Financial covenants restricting ability to make restricted payments, including dividends
4.875% Senior Notes
CCIC
Debt to Adjusted Consolidated Cash Flow Ratio
≤ 7.00x
 
5.6x
5.25% Senior Notes
CCIC
Debt to Adjusted Consolidated Cash Flow Ratio
≤ 7.00x
 
5.6x
2012 Credit Facility
CCOC
Total Net Leverage Ratio
≤ 5.50x
 
4.3x
 
 
 
 
 
 
Financial covenants restricting ability to incur additional debt
4.875% Senior Notes
CCIC
Debt to Adjusted Consolidated Cash Flow Ratio
≤ 7.00x
 
5.6x
5.25% Senior Notes
CCIC
Debt to Adjusted Consolidated Cash Flow Ratio
≤ 7.00x
 
5.6x
2012 Credit Facility
CCOC
Total Net Leverage Ratio
≤ 5.50x
(3) 
4.3x
2012 Credit Facility
CCOC
Holdings Leverage Ratio
≤ 7.00x
(4) 
5.6x
2012 Credit Facility
CCOC
Consolidated Interest Coverage Ratio
≥ 2.50x
 
5.9x
2012 Secured Notes
CC Holdings GS V LLC and Crown Castle GS III Corp.
Debt to Adjusted Consolidated Cash Flow Ratio
≤ 3.50x
 
3.9x
 
 
 
 
 
 
Financial covenants restricting ability to make investments
2012 Credit Facility
CCOC
Total Net Leverage Ratio
≤ 5.50x
 
4.3x

(1)
As defined in the respective debt agreement.
(2)
Failure to comply with the financial maintenance covenants would, absent a waiver, result in an event of default under the credit agreement governing our 2012 Credit Facility.
(3)
Applicable for debt issued at CCOC or its subsidiaries.
(4)
Applicable for debt issued at CCIC or its subsidiaries.

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ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX


SUMMARY OF MAINTENANCE AND FINANCIAL COVENANTS (CONTINUED)
Debt
Borrower / Issuer
Covenant(1)
Covenant Level Requirement
 
As of December 31, 2014
Restrictive Negative Financial Covenants
Financial covenants requiring excess cash flows to be deposited in a cash trap reserve account and not released
2010 Tower Revenue Notes
Crown Castle Towers LLC and its Subsidiaries
Debt Service Coverage Ratio
> 1.75x
(2) 
4.0x
WCP Securitized Notes
Certain WCP Subsidiaries
Debt Service Coverage Ratio
> 1.30x
(2) 
1.3x
2009 Securitized Notes
Pinnacle Towers Acquisition Holdings LLC and its Subsidiaries
Debt Service Coverage Ratio
> 1.30x
(2) 
4.6x
 
 
 
 
 
 
Financial covenants restricting ability of relevant issuer to issue additional notes under the applicable indenture
2010 Tower Revenue Notes
Crown Castle Towers LLC and its Subsidiaries
Debt Service Coverage Ratio
≥ 2.00x
(3) 
4.0x
WCP Securitized Notes
Certain WCP Subsidiaries
Debt Service Coverage Ratio
≥ 1.50x
(3) 
1.3x
2009 Securitized Notes
Pinnacle Towers Acquisition Holdings LLC and its Subsidiaries
Debt Service Coverage Ratio
≥ 2.34x
(3) 
4.6x

(1)
As defined in the respective debt agreement. In the indentures for the 2010 Tower Revenue Notes, WCP Securitized Notes, and the 2009 Securitized Notes, the defined term for Debt Service Coverage Ratio is "DSCR".
(2)
The 2010 Tower Revenue Notes, WCP Securitized 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, 1.15x or 1.15x, in each case as described under the indentures for the 2010 Tower Revenue Notes, WCP Securitized Notes, or 2009 Securitized Notes, respectively.
(3)
Rating Agency Confirmation (as defined in the respective debt agreement) is also required.

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ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX



INTEREST RATE SENSITIVITY(1)
 
Years Ended December 31,
(as of December 31, 2014; dollars in millions)
2015
2016
2017
Fixed Rate Debt:
 
 
 
Face Value of Principal Outstanding(2)
$
7,536

$
7,517

$
7,498

Current Interest Payment Obligations(3)
369

368

367

Effect of 0.125% Change in Interest Rates(4)
<1

1

1

Floating Rate Debt:
 
 
 
Face Value of Principal Outstanding(2)
$
4,131

$
4,069

$
4,008

Current Interest Payment Obligations(5)
113

136

164

Effect of 0.125% Change in Interest Rates(6)
2

5

5


(1)
Excludes capital lease and other obligations.
(2)
Face value net of required amortizations; assumes no maturity or balloon principal payments; excludes capital leases.
(3)
Interest expense calculated based on current interest rates.
(4)
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.
(5)
Interest expense calculated based on current interest rates. Forward LIBOR assumptions are derived from the 1-month LIBOR forward curve as of December 31, 2014. Calculation takes into account any LIBOR floors in place and assumes no changes to future interest rate margin spread over LIBOR due to changes in the Borrower’s net leverage ratio.
(6)
Interest expense calculated based on current interest rates using forward LIBOR assumptions until the stated maturity date, at which time the face value amount outstanding of such indebtedness is refinanced at current rates plus 12.5 bps.



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ASSET PORTFOLIO OVERVIEW
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APPENDIX



DEFINITIONS
Non-GAAP Financial Measures and Other Calculations

This Supplement includes presentations of Adjusted EBITDA, Funds from Operations, Adjusted Funds from Operations, Organic Site Rental Revenues, Site Rental Revenues, as Adjusted, Organic Site Rental Gross Margin, and Site Rental Gross Margin, as Adjusted, and Ground Lease Expense, as Adjusted, 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")). Each of the amounts included in the calculation of Adjusted EBITDA, FFO, AFFO, Organic Site Rental Revenues, Site Rental Revenues, as Adjusted, Organic Site Rental Gross Margin, and Site Rental Gross Margin, as Adjusted, and Ground Lease Expense, as Adjusted, are computed in accordance with GAAP, with the exception of: (1) sustaining capital expenditures, which is not defined under GAAP and (2) our adjustment to the income tax provision in calculations of AFFO for periods prior to our REIT conversion.
Our measures of Adjusted EBITDA, FFO, AFFO, Organic Site Rental Revenues, Site Rental Revenues, as Adjusted, Organic Site Rental Gross Margin, and Site Rental Gross Margin, as Adjusted, and Ground Lease Expense, as Adjusted, may not be comparable to similarly titled measures of other companies, including other companies in the tower sector or those reported by other REITs. Our FFO and AFFO may not be comparable to those reported in accordance with National Association of Real Estate Investment Trusts, including with respect to the impact of income taxes for periods prior to our REIT conversion.
Adjusted EBITDA, FFO, AFFO, Organic Site Rental Revenues, Site Rental Revenues, as Adjusted, Organic Site Rental Gross Margin, and Site Rental Gross Margin, as Adjusted, and Ground Lease Expense, as Adjusted, are presented as additional information because management believes these measures are useful indicators of the financial performance of our core businesses. In addition, Adjusted EBITDA is a measure of current financial performance used in our debt covenant calculations.
During the first quarter of 2014, Crown Castle updated its definitions of FFO and AFFO. The updated definitions of FFO and AFFO are intended to reflect the recurring nature of Crown Castle's site rental business and assist in comparing Crown Castle’s performance with the performance of its public tower company peers. Under the updated calculation of AFFO, Crown Castle reflects the benefit of prepaid rent from customers over the weighted-average life of customer contracts rather than in the period in which the prepaid rent was received. The updates to the definition of FFO were primarily made to present the periods shown in a manner which is consistent with our commencement of operations as a REIT on January 1, 2014. These measures are not intended to replace financial performance measures determined in accordance with GAAP. Unless otherwise noted, FFO and AFFO as set forth in this Supplement are presented based on the updated definitions. Crown Castle has provided reconciliations of the updated definitions of FFO and AFFO to the prior definitions on pages 35-37 of this Supplement.
Adjusted EBITDA. Crown Castle defines 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, impairment of available-for-sale securities, interest income, other income (expense), benefit (provision) for income taxes, cumulative effect of change in accounting principle, income (loss) from discontinued operations, and stock-based compensation expense.
Funds from Operations ("FFO"). Crown Castle defines Funds from Operations as net income plus real estate related depreciation, amortization and accretion and asset write-down charges, less non controlling interest and cash paid for preferred stock dividends, and is a measure of funds from operations attributable to CCIC common stockholders.
FFO per share. Crown Castle defines FFO per share as FFO divided by the diluted weighted average common shares outstanding.

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APPENDIX



DEFINITIONS (continued)

FFO, as previously defined. Crown Castle defines FFO, as previously defined, as FFO plus non cash portion of tax provision, less asset write-down charges and non controlling interests.
Adjusted Funds from Operations ("AFFO"). Crown Castle defines Adjusted Funds from Operations as FFO before straight-line revenue, straight-line 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 (loss) on retirement of long-term obligations, net gain (loss) on interest rate swaps, acquisition and integration costs, and adjustments for noncontrolling interests, and less capital improvement capital expenditures and corporate capital expenditures.
AFFO per share. Crown Castle defines AFFO per share as AFFO divided by diluted weighted average common shares outstanding.
AFFO, as previously defined. Crown Castle defines AFFO, as previously defined, as AFFO plus prepaid rent received less amortization of prepaid rent.
AFFO payout ratio. Dividends per common share divided by AFFO per share.
Site Rental Revenues, as Adjusted. Crown Castle defines Site Rental Revenues, as Adjusted, as site rental revenues, as reported, less straight-line revenues.
Organic Site Rental Revenues. Crown Castle defines Organic Site Rental Revenues as site rental revenues, as reported, less straight-line revenues, the impact of tower acquisitions and construction, foreign currency adjustments and certain non recurring items.
Site Rental Gross Margins, as Adjusted. Crown Castle defines Site Rental Gross Margins, as Adjusted, as site rental gross margin as reported less straight-line revenues and straight-line expenses.
Organic Site Rental Gross Margins. Crown Castle defines Organic Site Rental Gross Margins as site rental gross margins, as reported less straight-line revenues, straight-line expenses, the impact of tower acquisitions and construction, foreign currency adjustments and certain non recurring items.
Ground Lease Expense, as Adjusted. Crown Castle defines Ground Lease Expense, as Adjusted as ground lease expense, as reported, less straight line ground lease expense.
Sustaining capital expenditures. Crown Castle defines sustaining capital expenditures as either (1) corporate related capital improvements, such as buildings, information technology equipment and office equipment or (2) capital improvements to tower sites that enable our customers' ongoing quiet enjoyment of the tower.
The tables set forth below reconcile non-GAAP financial measures to comparable GAAP financial measures and provide certain other calculations. The components in these tables may not sum to the total due to rounding.

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APPENDIX



Adjusted EBITDA for the three and twelve months ended December 31, 2014 and 2013 is computed as follows:
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
(dollars in thousands)
2014
 
2013
 
2014

2013
Net income (loss)
$
152,587

 
$
(22,678
)
 
$
398,774

 
$
93,901

Adjustments to increase (decrease) net income (loss):
 
 
 
 
 
 
 
Asset write-down charges
3,896

 
4,158

 
15,040

 
14,863

Acquisition and integration costs
6,118

 
12,820

 
35,042

 
26,005

Depreciation, amortization and accretion
253,776

 
201,697

 
1,013,064

 
774,215

Amortization of prepaid lease purchase price adjustments
5,427

 
3,878

 
19,972

 
15,473

Interest expense and amortization of deferred financing costs(1)
141,070

 
142,989

 
573,291

 
589,630

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

 
640

 
44,629

 
37,127

Interest income
(62
)
 
(494
)
 
(616
)
 
(1,355
)
Other income (expense)
(21,339
)
 
3,117

 
(11,862
)
 
3,872

Benefit (provision) for income taxes
(10,726
)
 
110,374

 
(10,640
)
 
198,628

Stock-based compensation expense
15,545

 
11,904

 
60,164

 
41,788

Adjusted EBITDA(2)
$
546,292

 
$
468,405

 
$
2,136,858

 
$
1,794,147





Adjusted EBITDA for the three months ended December 31, 2014 is computed as follows:
 
Three Months Ended December 31, 2014
(dollars in thousands)
CCUSA
 
CCAL
 
Eliminations
 
Consolidated
Total
Net income (loss)
$
132,175

 
$
20,412

 
$
—

 
$
152,587

Adjustments to increase (decrease) net income (loss):
 
 
 
 
 
 
 
Asset write-down charges
3,573

 
323

 
—

 
3,896

Acquisition and integration costs
5,293

 
825

 
—

 
6,118

Depreciation, amortization and accretion
246,816

 
6,960

 
—

 
253,776

Amortization of prepaid lease purchase price adjustments
5,427

 
—

 
—

 
5,427

Interest expense and amortization of deferred financing costs(1)
141,070

 
3,545

 
(3,545
)
 
141,070

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

 
—

 
—

 
—

Interest income
14

 
(76
)
 
—

 
(62
)
Other income (expense)
(24,888
)
 
4

 
3,545

 
(21,339
)
Benefit (provision) for income taxes
(3,125
)
 
(7,601
)
 
—

 
(10,726
)
Stock-based compensation expense
13,234

 
2,311

 
—

 
15,545

Adjusted EBITDA(2)
$
519,589

 
$
26,703

 
$
—

 
$
546,292


(1)
See the reconciliation of "components of interest expense and amortization of deferred financing costs" herein.
(2)
The above reconciliation excludes line items included in our Adjusted EBITDA definition which are not applicable for the periods shown.


32
Crown Castle International Corp.
Fourth Quarter 2014
COMPANY OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX



Adjusted EBITDA for the quarter ending March 31, 2015 and the year ending December 31, 2015 is forecasted as follows:
 
Q1 2015
 
Full Year 2015
(dollars in millions)
Outlook
 
Outlook
Net income (loss)
$111 to $144
 
$445 to $529
Adjustments to increase (decrease) net income (loss):
 
 
 
Asset write-down charges
$3 to $5
 
$11 to $21
Acquisition and integration costs
$0 to $3
 
$2 to $2
Depreciation, amortization and accretion
$252 to $257
 
$1,003 to $1,023
Amortization of prepaid lease purchase price adjustments
$4 to $6
 
$19 to $21
Interest expense and amortization of deferred financing costs(1)
$131 to $136
 
$528 to $543
Gains (losses) on retirement of long-term obligations
$0 to $0
 
$0 to $0
Interest income
$(1) to $1
 
$(2) to $0
Other income (expense)
$0 to $3
 
$6 to $8
Benefit (provision) for income taxes
$(1) to $3
 
$(1) to $7
Stock-based compensation expense
$15 to $17
 
$65 to $70
Adjusted EBITDA(2)
$542 to $547
 
$2,140 to $2,160

(1)
See the reconciliation of “components of interest expense and amortization of deferred financing costs” herein.
(2)
The above reconciliation excludes line items included in our Adjusted EBITDA definition which are not applicable for the periods shown.


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Crown Castle International Corp.
Fourth Quarter 2014
COMPANY OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX



The components of interest expense and amortization of deferred financing costs for the quarters ending December 31, 2014 and 2013 are as follows:
 
Three Months Ended December 31,
(dollars in thousands)
2014
 
2013
Interest expense on debt obligations
$
121,539

 
$
121,986

Amortization of deferred financing costs
5,512

 
5,694

Amortization of adjustments on long-term debt
(886
)
 
(959
)
Amortization of interest rate swaps(1)
15,253

 
16,202

Other, net
(348
)
 
75

Interest expense and amortization of deferred financing costs
$
141,070

 
$
142,998



The components of interest expense and amortization of deferred financing costs for the quarter ending March 31, 2015 and the year ending December 31, 2015 are forecasted as follows:
 
Q1 2015
 
Full Year 2015
(dollars in millions)
Outlook
 
Outlook
Interest expense on debt obligations
$121 to $123
 
$495 to $505
Amortization of deferred financing costs
$6 to $7
 
$21 to $23
Amortization of adjustments on long-term debt
$(1) to $0
 
$(4) to $(2)
Amortization of interest rate swaps (1)
$6 to $8
 
$16 to $21
Other, net
$0 to $0
 
$(2) to $0
Interest expense and amortization of deferred financing costs
$131 to $136
 
$528 to $543

(1)
Relates to the amortization of interest rate swaps; the swaps were cash settled in prior periods.



34
Crown Castle International Corp.
Fourth Quarter 2014
COMPANY OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX



FFO and AFFO for the three and twelve months ended December 31, 2014 and 2013 are computed as follows:
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
(dollars in thousands, except share and per share amounts)
2014
 
2013
 
2014
 
2013
Net income
$
152,587

 
$
(22,678
)
 
$
398,774

 
$
93,901

Real estate related depreciation, amortization and accretion
248,745

 
198,569

 
992,643

 
761,070

Asset write-down charges
3,896

 
4,158

 
15,040

 
14,863

Adjustment for noncontrolling interest(1)
(4,517
)
 
(866
)
 
(8,261
)
 
(3,790
)
Dividends on preferred stock
(10,997
)
 
—

 
(43,988
)
 
—

FFO(3)
$
389,712

 
$
179,181

 
$
1,354,208

 
$
866,043

 
 
 
 
 
 
 
 
FFO (from above)
$
389,712

 
$
179,181

 
$
1,354,208

 
$
866,043

Adjustments to increase (decrease) FFO:
 
 
 
 
 
 
 
Straight-line revenue
(46,905
)
 
(49,019
)
 
(196,598
)
 
(218,631
)
Straight-line expense
26,626

 
19,071

 
105,376

 
80,953

Stock-based compensation expense
15,545

 
11,904

 
60,164

 
41,788

Non-cash portion of tax provision(4)
(12,845
)
 
108,411

 
(20,359
)
 
191,729

Non-real estate related depreciation, amortization and accretion
5,031

 
3,128

 
20,421

 
13,145

Amortization of non-cash interest expense
19,532

 
21,003

 
80,854

 
99,244

Other (income) expense
(21,339
)
 
3,117

 
(11,862
)
 
3,872

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

 
640

 
44,629

 
37,127

Acquisition and integration costs
6,118

 
12,820

 
35,042

 
26,005

Adjustment for noncontrolling interest(1)
4,517

 
866

 
8,261

 
3,790

Capital improvement capital expenditures
(15,987
)
 
(9,858
)
 
(32,227
)
 
(19,312
)
Corporate capital expenditures
(23,555
)
 
(10,685
)
 
(51,772
)
 
(28,409
)
AFFO(2)
$
346,451

 
$
290,579

 
$
1,396,139

 
$
1,097,347

Weighted average common shares outstanding — diluted
333,554

 
319,634

 
333,265

 
299,293

AFFO per share(2)
$
1.04

 
$
0.91

 
$
4.19

 
$
3.67

 
 
 
 
 
 
 
 
AFFO (from above)
$
346,451

 
$
290,579

 
$
1,396,139

 
$
1,097,347

Prepaid rent received
117,832

 
87,822

 
350,901

 
241,451

Amortization of prepaid rent
(28,014
)
 
(19,671
)
 
(97,069
)
 
(66,728
)
AFFO, as previously defined(2)
$
436,268

 
$
358,730

 
$
1,649,971

 
$
1,272,070


(1)
Inclusive of the noncontrolling interest related to real estate related depreciation, amortization and accretion and asset write-downs.
(2)
See definitions herein. See also “Definitions of Non-GAAP Financial Measures and Other Calculations” herein for a discussion of the definitions of FFO and AFFO.
(3)
FFO, as previously defined, for the three and twelve months ended December 31, 2014 was $377.5 million and $1.327 billion respectively, which is exclusive of the net impact from the update of the definition of $(12.2) million and $(27.1) million, respectively, which amount includes the adjustment for non-cash portion of tax provision and excludes the adjustments for asset write-down charges and noncontrolling interests. FFO, as previously defined, for the three and twelve months ended December 31, 2013 was previously reported as $284.3 million and $1.047 billion, respectively, which is exclusive of the net impact from the update of the definition of $105.1 million and $180.7 million, respectively, which amount includes the adjustment for non-cash portion of tax provision and excludes the adjustments for asset write down charges and noncontrolling interests.
(4)
Adjusts the income tax provision to reflect our estimate of cash taxes paid had we been a REIT for all periods presented, and is primarily comprised of foreign taxes.  As a result, income tax expense (benefit) is lower by the amount of the adjustment.




35
Crown Castle International Corp.
Fourth Quarter 2014
COMPANY OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX



FFO and AFFO for the years ended December 31, 2012, 2011, and 2010 are computed as follows:
 
Years Ended December 31,
(in thousands of dollars, except share and per share amounts)
2012
 
2011
 
2010
Net income
$
200,888

 
$
171,460

 
$
(311,259
)
Real estate related depreciation, amortization and accretion
601,372

 
531,869

 
522,514

Asset write-down charges
15,548

 
22,285

 
13,687

Adjustment for noncontrolling interest(1)
(12,304
)
 
(383
)
 
319

Dividends on preferred stock
(2,481
)
 
(19,487
)
 
(19,879
)
FFO(3)
$
803,023

 
$
705,744

 
$
205,381

 
 
 
 
 
 
FFO (from above)
803,023

 
705,744

 
205,381

Adjustments to increase (decrease) FFO:
 
 
 
 
 
Straight-line revenue
(251,327
)
 
(199,969
)
 
(161,716
)
Straight-line expense
54,069

 
39,025

 
38,759

Stock-based compensation expense
47,382

 
35,991

 
39,965

Non-cash portion of tax provision(2)
(106,742
)
 
4,970

 
(29,033
)
Non-real estate related depreciation, amortization and accretion
21,220

 
21,082

 
18,257

Amortization of non-cash interest expense
109,337

 
102,944

 
85,454

Other (income) expense
5,392

 
5,577

 
603

Gains (losses) on retirement of long-term obligations
131,974

 
—

 
138,367

Net gain (loss) on interest rate swaps
—

 
—

 
286,435

Acquisition and integration costs
18,298

 
3,310

 
2,102

Adjustment for noncontrolling interest(1)
12,304

 
383

 
(319
)
Capital improvement capital expenditures
(21,647
)
 
(13,965
)
 
(14,795
)
Corporate capital expenditures
(15,459
)
 
(9,429
)
 
(9,531
)
AFFO(3)
$
807,823

 
$
695,661

 
$
599,931

Weighted average common shares outstanding — diluted
291,270

 
285,947

 
286,764

AFFO per share(3)
$
2.77

 
$
2.43

 
$
2.09

 
 
 
 
 
 
AFFO (from above)
$
807,823

 
$
695,661

 
$
599,931

Prepaid rent received
117,419

 
34,395

 
16,965

Amortization of prepaid rent
(41,592
)
 
(12,890
)
 
(5,598
)
Dividends on preferred stock
2,481

 
19,487

 
19,879

AFFO, as previously defined(3)
$
886,131

 
$
736,653

 
$
631,177


(1)
Inclusive of the noncontrolling interest related to real estate related depreciation, amortization and accretion and asset write-downs.
(2)
Adjusts the income tax provision to reflect our estimate of cash taxes paid had we been a REIT for all periods presented, and is primarily comprised of foreign taxes.  As a result, income tax expense (benefit) is lower by the amount of the adjustment.
(3)
See reconciliations and definitions provided herein. See also "Definitions of Non-GAAP Measures and Other Terms" herein for a discussion of the definitions of FFO and AFFO.


36
Crown Castle International Corp.
Fourth Quarter 2014
COMPANY OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX



FFO and AFFO for the three months ended March 31, 2014 and 2013 are computed as follows:
 
Three Months Ended March 31,
(in thousands of dollars, except share and per share amounts)
2014
 
2013
Net income
$
102,793

 
$
16,737

Real estate related depreciation, amortization and accretion
244,420

 
181,755

Asset write-down charges
2,736

 
3,715

Adjustment for noncontrolling interest(1)
(1,296
)
 
(1,275
)
Dividends on preferred stock
(10,997
)
 
—

FFO(3)
$
337,654

 
$
200,931

 
 
 
 
FFO (from above)
$
337,654

 
$
200,931

Adjustments to increase (decrease) FFO:
 
 
 
Straight-line revenue
(50,806
)
 
(59,399
)
Straight-line expense
26,380

 
20,707

Stock-based compensation expense
12,937

 
10,098

Non-cash portion of tax provision(2)
(2,332
)
 
16,061

Non-real estate related depreciation, amortization and accretion
5,770

 
4,704

Amortization of non-cash interest expense
20,882

 
36,920

Other (income) expense
2,736

 
629

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

 
35,909

Acquisition and integration costs
5,659

 
1,602

Adjustment for noncontrolling interest(1)
1,296

 
1,275

Capital improvement capital expenditures
(3,860
)
 
(3,314
)
Corporate capital expenditures
(7,571
)
 
(3,552
)
AFFO(3)
$
348,744

 
$
262,572

Weighted average common shares outstanding — diluted
333,045

 
292,570

AFFO per share(3)
$
1.05

 
$
0.90

 
 
 
 
AFFO (from above)
$
348,744

 
$
262,572

Prepaid rent received
68,222

 
43,742

Amortization of prepaid rent
(19,086
)
 
(15,021
)
AFFO, as previously defined(3)
$
397,881

 
$
291,294


(1)
Inclusive of the noncontrolling interest related to real estate related depreciation, amortization and accretion and asset write-downs.
(2)
Adjusts the income tax provision to reflect our estimate of cash taxes paid had we been a REIT for all periods presented, and is primarily comprised of foreign taxes.  As a result, income tax expense (benefit) is lower by the amount of the adjustment.
(3)
See reconciliations and definitions provided herein. See also "Definitions of Non-GAAP Measures and Other Terms" herein for a discussion of the definitions of FFO and AFFO.



37
Crown Castle International Corp.
Fourth Quarter 2014
COMPANY OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX



FFO and AFFO for the quarter ending March 31, 2015 and the year ending December 31, 2015 are forecasted as follows:
 
Q1 2015
 
Full Year 2015
(in millions of dollars, except share and per share amounts)
Outlook
 
Outlook
Net income
$111 to $144
 
$445 to $529
Real estate related depreciation, amortization and accretion
$248 to $251
 
$987 to $1,002
Asset write-down charges
$3 to $5
 
$11 to $21
Adjustment for noncontrolling interest(1)
$(3) to $1
 
$(13) to $(6)
Dividends on preferred stock
$(11) to $(11)
 
$(44) to $(44)
FFO(3)
$368 to $373
 
$1,437 to $1,457
 
 
 
 
FFO (from above)
$368 to $373
 
$1,437 to $1,457
Adjustments to increase (decrease) FFO:
 
 
 
Straight-line revenue
$(44) to $(39)
 
$(146) to $(131)
Straight-line expense
$23 to $28
 
$89 to $104
Stock-based compensation expense
$15 to $17
 
$65 to $70
Non-cash portion of tax provision
$(5) to $0
 
$(22) to $(7)
Non-real estate related depreciation, amortization and accretion
$4 to $6
 
$16 to $21
Amortization of non-cash interest expense
$11 to $15
 
$31 to $42
Other (income) expense
$0 to $3
 
$6 to $8
Gains (losses) on retirement of long-term obligations
$0 to $0
 
$0 to $0
Acquisition and integration costs
$0 to $3
 
$2 to $2
Adjustment for noncontrolling interest(1)
$3 to $(1)
 
$13 to $6
Capital improvement capital expenditures
$(10) to $(8)
 
$(40) to $(35)
Corporate capital expenditures
$(15) to $(13)
 
$(42) to $(37)
AFFO(3)
$363 to $368
 
$1,445 to $1,465
Weighted-average common shares outstanding—diluted(2)
333.6
 
333.6
AFFO per share(3)
$1.09 to $1.10
 
$4.33 to $4.39

(1)
Inclusive of the noncontrolling interest related to real estate related depreciation, amortization and accretion and asset write-downs.
(2)
Based on 333.6 million diluted shares outstanding as of December 31, 2014.
(3)
See definitions herein. See also “Definitions of Non-GAAP Financial Measures and Other Calculations” herein for a discussion of the definitions of FFO and AFFO.


38
Crown Castle International Corp.
Fourth Quarter 2014
COMPANY OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX



Net Debt to Last Quarter Annualized EBITDA calculation:
 
Three Months Ended December 31,
(dollars in millions)
2014
2013
Total face value of debt
$
11,921.2

$
11,588.6

Ending cash and cash equivalents
175.6

223.4

Total Net Debt
$
11,745.6

$
11,365.2

 
 
 
Adjusted EBITDA for the three months ended December 31,
$
546.3

$
468.4

Last quarter annualized adjusted EBITDA
2,185.2

1,873.6

Net Debt to Last Quarter Annualized Adjusted EBITDA
5.4x

6.1x


Cash Interest Coverage Ratio Calculation:
 
Three Months Ended December 31,
(dollars in thousands)
2014
 
2013
Adjusted EBITDA
$
546,292

 
$
468,405

Interest expense on debt obligations
121,539

 
121,986

Interest Coverage Ratio
4.5x

 
3.8x


AFFO Payout Ratio Calculation:
 
Three Months Ended December 31,
(per share)
2014
Dividend per share
$
0.82

AFFO per share
$
1.04

AFFO Payout Ratio
79
%


39

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