UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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x☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2017March 31, 2020
OR
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o☐ | 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)
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| | | |
| Delaware | 76-0470458 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| | |
1220 Augusta Drive, Suite 600, Houston, Texas 77057-2261
(Address of principal executives office) (Zip Code)
| |
(713)
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1220 Augusta Drive, Suite 600, Houston, Texas77057-2261
(Address of principal executives office) (Zip Code)
(713)570-3000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
|
| | |
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| Common Stock, $0.01 par value | CCI | New York Stock Exchange |
| 6.875% Mandatory Convertible Preferred Stock, Series A, $0.01 par value | CCI.PRA | New York Stock Exchange |
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. Yesx☒ No o☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yesx☒ No o
☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company,"company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
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| | | | | | |
| | Large accelerated filer | x☒ | | Accelerated filer | o☐ | |
| | Non-accelerated filer | o☐ | (Do not check if a smaller reporting company) | Smaller reporting company | o☐ | |
| | | | | Emerging growth company | o☐ | |
| | If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o☐ | |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o☐ No x☒
Number of shares of common stock outstanding at November 2, 2017: 406,275,091
April 29, 2020: 416,751,230
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
INDEX
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| ITEM 1. | | | |
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| ITEM 2. | | | |
| ITEM 3. | | | |
| ITEM 4. | | | |
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| ITEM 1. | LEGAL PROCEEDINGS | | |
| ITEM 1A. | | | |
| ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | | |
| ITEM 6. | | | |
| EXHIBIT INDEX | | |
| SIGNATURES | | |
Cautionary Language Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q ("Form 10-Q") contains forward-looking statements that are based on our management's expectations as of the filing date of this report with the Securities and Exchange Commission ("SEC"). Statements that are not historical facts are hereby identified as forward-looking statements. In addition, words such as "estimate," "anticipate," "project," "plan," "intend," "believe," "expect," "likely," "predicted," "positioned," "continue," "target," and any variations of these words and similar expressions are intended to identify forward-looking statements. Such statements include plans, projections and estimates contained in "Part I—Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations" ("MD&A")and , "Part I—Item 3. Quantitative and Qualitative Disclosures About Market Risk"Risk,""Part I—Item 4. Controls and Procedures" and "Part II—Item 1A. Risk Factors" herein. Such forward-looking statements include (1) benefits and opportunities stemming from our strategy, strategic position, business model and capabilities, (2) the strength and growth potential of the U.S. market for shared communications infrastructure investment, (3) expectations regarding anticipated growth in the wireless industry, carriers' investments in their networks, tenant additions, customer consolidation or ownership changes, orand consumption of and demand for our wireless infrastructure, (2) expectations regarding non-renewals of tenant leases (including the impact of our customers' decommissioning of the former Leap Wireless, MetroPCSdata, including growth in, and Clearwire networks (collectively, "Acquired Networks")), (3) availabilityfactors driving, consumption and adequacy of cash flows and liquidity for, or plans regarding, future discretionary investments, including capital expenditures,demand, (4) potential benefits of our discretionary investments,communications infrastructure (on an individual and collective basis) and expectations regarding demand therefore, including acquisitions,potential benefits and continuity of and factors driving such demand, (5) expectations regarding construction, including duration of our construction projects, and acquisition of communications infrastructure, (6) the utilization of our net operating loss carryforwards ("NOLs"), (7) expectations regarding wireless carriers' focus on improving network quality and expanding capacity, (8) expectations regarding continued adoption and increase in usage of high-bandwidth applications by organizations, (9) expected use of net proceeds from issuances under the commercial paper program ("CP Program"), (10) assumed conversion of 6.875% Mandatory Preferred Stock and the impact therefrom and dividends expected to be paid thereon, (11) our full year 2020 outlook and the anticipated growth in our financial results, including future revenues margins, Adjusted EBITDA, segment site rental gross margin, segment network services and other gross margin, segment operating profit, and operating cash flows, (6)and the expectations regarding our 2020 capital expenditures, as well as the factors impacting expected growth in financial results and the levels of capital expenditures, (12) expectations regarding our capital structure and the credit markets, our availability and cost of capital, orcapital allocation, our leverage ratio and interest coverage targets, our ability to service our debt and comply with debt covenants and the plans for and the benefits of any future refinancings, (7)(13) the utility of certain financial measures, including non-GAAP financial measures, (14) expectations related to remainingour ability to remain qualified as a real estate investment trust ("REIT") and the advantages, benefits or impact of, or opportunities created by, our REIT status, (8)(15) adequacy, projected sources and uses of liquidity, (16) impact of the realizationcompleted merger between T-Mobile and utilizationSprint, (17) expectations regarding non-renewals of our net operating loss carryforwards ("NOLs"), and (9)tenant contracts, (18) our dividend policy and the timing, amount, growth or tax characterization of any dividends.dividends, (19) the potential impact of novel coronavirus (COVID-19) pandemic, (20) expectations regarding our remediation efforts related to a material
weakness in our internal control over financial reporting and (21) the outcome of the shareholder litigation. All future dividends are subject to declaration by our board of directors.
Such forward-looking statements should, therefore, be considered in light of various risks, uncertainties and assumptions, including prevailing market conditions, risk factors described in "Part II—Item 1A. Risk Factors" hereinand "Item"Item 1A. Risk Factors" of ourthe Annual Report on Form 10-K for the fiscal year ended December 31, 20162019 ("20162019 Form 10-K") and other factors. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those expected.
Our filings with the SEC are available through the SEC website at www.sec.gov or through our investor relations website at investor.crowncastle.com. We use our investor relations website to disclose information about us that may be deemed to be material. We encourage investors, the media and others interested in us to visit our investor relations website from time to time to review up-to-date information or to sign up for e-mail alerts to be notified when new or updated information is posted on the site.
Interpretation
As used herein, the term "including," and any variation thereof, means "including without limitation." The use of the word "or" herein is not exclusive. Unless this Form 10-Q indicates otherwise or the context otherwise requires, the terms "we," "our," "our company," "the company" or "us" as used in this Form 10-Q refer to Crown Castle International Corp. ("CCIC") and its predecessor (organized in 1995), as applicable, each a Delaware corporation, and their subsidiaries. Additionally, unless the context suggests otherwise, references to "U.S." are to the United States of America and Puerto Rico, collectively. Capitalized terms used but not defined in this Form 10-Q have the same meaning given to them in the 2019 Form 10-K.
Explanatory Note
As previously disclosed in the Explanatory Note of the 2019 Form 10-K, we restated our audited consolidated financial statements for the years ended December 31, 2018 and 2017, and quarterly unaudited financial information for the quarterly and year-to-date periods in the year ended December 31, 2018 and first three quarters for the year ended December 31, 2019. Accordingly, the condensed consolidated financial statements as of and for the quarterly period ended March 31, 2019 included in this Quarterly Report on Form 10-Q have been restated to reflect the Historical Adjustments as described in the 2019 Form 10-K. See also note 2 to our condensed consolidated financial statements for further information on the impact of the Historical Adjustments on the condensed consolidated financial statements as of and for the quarterly period ended March 31, 2019.
PART I—FINANCIAL INFORMATION
| |
| ITEM 1. | FINANCIAL STATEMENTS |
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)
(In thousands of dollars,Amounts in millions, except share amounts)par values)
|
| | | | | | | |
| | March 31,
2020 | | December 31,
2019 |
| ASSETS | | | |
| Current assets: | | | |
| Cash and cash equivalents | $ | 310 |
| | $ | 196 |
|
| Restricted cash | 157 |
| | 137 |
|
| Receivables, net | 495 |
| | 596 |
|
Prepaid expenses
| 107 |
| | 107 |
|
| Other current assets | 178 |
| | 168 |
|
| Total current assets | 1,247 |
| | 1,204 |
|
| Deferred site rental receivables | 1,428 |
| | 1,424 |
|
| Property and equipment, net of accumulated depreciation of $9,953 and $9,668, respectively | 14,815 |
| | 14,666 |
|
| Operating lease right-of-use assets | 6,198 |
| | 6,133 |
|
| Goodwill | 10,078 |
| | 10,078 |
|
Other intangible assets, net
| 4,734 |
| | 4,836 |
|
Other assets, net
| 116 |
| | 116 |
|
| Total assets | $ | 38,616 |
| | $ | 38,457 |
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| | | | |
| LIABILITIES AND EQUITY | | | |
| Current liabilities: | | | |
| Accounts payable | $ | 296 |
| | $ | 334 |
|
| Accrued interest | 119 |
| | 169 |
|
| Deferred revenues | 741 |
| | 657 |
|
Other accrued liabilities
| 264 |
| | 361 |
|
| Current maturities of debt and other obligations | 949 |
| | 100 |
|
| Current portion of operating lease liabilities | 300 |
| | 299 |
|
| Total current liabilities | 2,669 |
| | 1,920 |
|
| Debt and other long-term obligations | 17,746 |
| | 18,021 |
|
| Operating lease liabilities | 5,567 |
| | 5,511 |
|
Other long-term liabilities
| 2,513 |
| | 2,516 |
|
| Total liabilities | 28,495 |
| | 27,968 |
|
| Commitments and contingencies (note 9) | | | |
| CCIC stockholders' equity: | | | |
| Common stock, $0.01 par value; 600 shares authorized; shares issued and outstanding: March 31, 2020—417 and December 31, 2019—416 | 4 |
| | 4 |
|
| 6.875% Mandatory Convertible Preferred Stock, Series A, $0.01 par value; 20 shares authorized; shares issued and outstanding: March 31, 2020—2 and December 31, 2019—2; aggregate liquidation value: March 31, 2020—$1,650 and December 31, 2019—$1,650 | — |
| | — |
|
| Additional paid-in capital | 17,835 |
| | 17,855 |
|
| Accumulated other comprehensive income (loss) | (6 | ) | | (5 | ) |
| Dividends/distributions in excess of earnings | (7,712 | ) | | (7,365 | ) |
| Total equity | 10,121 |
| | 10,489 |
|
| Total liabilities and equity | $ | 38,616 |
| | $ | 38,457 |
|
|
| | | | | | | |
| | September 30,
2017 | | December 31,
2016 |
| ASSETS | | | |
| Current assets: | | | |
| Cash and cash equivalents | $ | 6,719,134 |
| | $ | 567,599 |
|
| Restricted cash | 115,730 |
| | 124,547 |
|
| Receivables, net | 317,856 |
| | 373,532 |
|
| Prepaid expenses | 167,235 |
| | 128,721 |
|
| Other current assets | 154,600 |
| | 130,362 |
|
| Total current assets | 7,474,555 |
| | 1,324,761 |
|
| Deferred site rental receivables | 1,285,547 |
| | 1,317,658 |
|
| Property and equipment, net of accumulated depreciation of $7,247,071 and $6,613,219, respectively | 10,599,604 |
| | 9,805,315 |
|
| Goodwill | 6,905,922 |
| | 5,757,676 |
|
| Other intangible assets, net | 3,885,311 |
| | 3,650,072 |
|
| Long-term prepaid rent and other assets, net | 860,817 |
| | 819,610 |
|
| Total assets | $ | 31,011,756 |
| | $ | 22,675,092 |
|
| | | | |
| LIABILITIES AND EQUITY | | | |
| Current liabilities: | | | |
| Accounts payable | $ | 179,335 |
| | $ | 188,516 |
|
| Accrued interest | 99,467 |
| | 97,019 |
|
| Deferred revenues | 387,447 |
| | 353,005 |
|
| Other accrued liabilities | 268,424 |
| | 221,066 |
|
| Current maturities of debt and other obligations | 114,198 |
| | 101,749 |
|
| Total current liabilities | 1,048,871 |
| | 961,355 |
|
| Debt and other long-term obligations | 15,090,217 |
| | 12,069,393 |
|
| Other long-term liabilities | 2,200,336 |
| | 2,087,229 |
|
| Total liabilities | 18,339,424 |
| | 15,117,977 |
|
| Commitments and contingencies (note 8) |
| |
|
| CCIC stockholders' equity: | | | |
| Common stock, $0.01 par value; 600,000,000 shares authorized; shares issued and outstanding: September 30, 2017—406,274,802 and December 31, 2016—360,536,659 | 4,063 |
| | 3,605 |
|
| 6.875% Mandatory Convertible Preferred Stock, Series A, $0.01 par value; 20,000,000 shares authorized; shares issued and outstanding: September 30, 2017—1,650,000 and December 31, 2016—0; aggregate liquidation value: September 30, 2017—$1,650,000 and December 31, 2016—$0 | 17 |
| | — |
|
| Additional paid-in capital | 16,818,738 |
| | 10,938,236 |
|
| Accumulated other comprehensive income (loss) | (4,959 | ) | | (5,888 | ) |
| Dividends/distributions in excess of earnings | (4,145,527 | ) | | (3,378,838 | ) |
| Total equity | 12,672,332 |
| | 7,557,115 |
|
| Total liabilities and equity | $ | 31,011,756 |
| | $ | 22,675,092 |
|
See notes to condensed consolidated financial statements.
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND
COMPREHENSIVE INCOME (LOSS) (Unaudited)
(In thousands of dollars,Amounts in millions, except per share amounts)
| | | | | | | | | | | | | | | | | | Three Months Ended March 31, |
| | Three Months Ended September 30, | | Nine Months Ended September 30, | 2020 | | 2019 |
| | 2017 | | 2016 | | 2017 | | 2016 | | | (As Restated) |
| Net revenues: | | | | | | | | | | |
| Site rental | $ | 892,763 |
| | $ | 812,032 |
| | $ | 2,618,505 |
| | $ | 2,415,926 |
| $ | 1,310 |
| | $ | 1,242 |
|
| Network services and other | 170,475 |
| | 179,984 |
| | 499,010 |
| | 472,883 |
| |
| Services and other | | 111 |
| | 166 |
|
| Net revenues | 1,063,238 |
| | 992,016 |
| | 3,117,515 |
| | 2,888,809 |
| 1,421 |
| | 1,408 |
|
| Operating expenses: | | | | | | | | | | |
Costs of operations(a): | | | | | | | | | | |
| Site rental | 280,667 |
| | 256,750 |
| | 814,969 |
| | 762,223 |
| 375 |
| | 361 |
|
| Network services and other | 106,707 |
| | 109,228 |
| | 310,137 |
| | 286,066 |
| |
| General and administrative | 100,772 |
| | 89,941 |
| | 299,232 |
| | 278,909 |
| |
| Services and other | | 99 |
| | 124 |
|
| Selling, general and administrative | | 175 |
| | 152 |
|
| Asset write-down charges | 5,312 |
| | 8,339 |
| | 10,284 |
| | 28,251 |
| 4 |
| | 6 |
|
| Acquisition and integration costs | 13,180 |
| | 2,680 |
| | 27,080 |
| | 11,459 |
| 5 |
| | 4 |
|
| Depreciation, amortization and accretion | 296,033 |
| | 280,824 |
| | 880,197 |
| | 834,725 |
| 399 |
| | 394 |
|
| Total operating expenses | 802,671 |
| | 747,762 |
| | 2,341,899 |
| | 2,201,633 |
| 1,057 |
| | 1,041 |
|
| Operating income (loss) | 260,567 |
| | 244,254 |
| | 775,616 |
| | 687,176 |
| 364 |
| | 367 |
|
| Interest expense and amortization of deferred financing costs | (154,146 | ) | | (129,916 | ) | | (430,402 | ) | | (385,656 | ) | (175 | ) | | (168 | ) |
| Gains (losses) on retirement of long-term obligations | — |
| | (10,274 | ) | | (3,525 | ) | | (52,291 | ) | — |
| | (1 | ) |
| Interest income | 11,188 |
| | 175 |
| | 12,585 |
| | 454 |
| 1 |
| | 2 |
|
| Other income (expense) | (32 | ) | | (832 | ) | | 3,462 |
| | (4,623 | ) | — |
| | (1 | ) |
| Income (loss) before income taxes | 117,577 |
| | 103,407 |
| | 357,736 |
| | 245,060 |
| 190 |
| | 199 |
|
| Benefit (provision) for income taxes | (2,383 | ) | | (5,041 | ) | | (11,290 | ) | | (12,797 | ) | (5 | ) | | (6 | ) |
| Net income (loss) attributable to CCIC stockholders | 115,194 |
|
| 98,366 |
|
| 346,446 |
|
| 232,263 |
| 185 |
| | 193 |
|
| Dividends on preferred stock | (29,935 | ) | | (10,997 | ) | | (29,935 | ) | | (32,991 | ) | |
| Dividends/distributions on preferred stock | | (28 | ) | | (28 | ) |
| Net income (loss) attributable to CCIC common stockholders | $ | 85,259 |
| | $ | 87,369 |
| | $ | 316,511 |
| | $ | 199,272 |
| $ | 157 |
| | $ | 165 |
|
| Net income (loss) | $ | 115,194 |
| | $ | 98,366 |
| | $ | 346,446 |
| | $ | 232,263 |
| $ | 185 |
| | $ | 193 |
|
| Other comprehensive income (loss): | | | | | | | | | | |
| Foreign currency translation adjustments | 224 |
| | (1,535 | ) | | 929 |
| | (1,143 | ) | (1 | ) | | — |
|
| Total other comprehensive income (loss) | 224 |
| | (1,535 | ) | | 929 |
| | (1,143 | ) | (1 | ) | | — |
|
| Comprehensive income (loss) attributable to CCIC stockholders | $ | 115,418 |
| | $ | 96,831 |
| | $ | 347,375 |
| | $ | 231,120 |
| $ | 184 |
| | $ | 193 |
|
| Net income (loss) attributable to CCIC common stockholders, per common share: | | | | | | | | | | |
| Net income (loss) attributable to CCIC common stockholders—basic | $ | 0.22 |
| | $ | 0.26 |
| | $ | 0.85 |
| | $ | 0.59 |
| $ | 0.38 |
| | $ | 0.40 |
|
| Net income (loss) attributable to CCIC common stockholders—diluted | $ | 0.21 |
| | $ | 0.26 |
| | $ | 0.84 |
| | $ | 0.59 |
| $ | 0.38 |
| | $ | 0.40 |
|
| Weighted-average common shares outstanding (in thousands): | | | | | | | | |
| Weighted-average common shares outstanding: | | | | |
| Basic | 395,359 | | 337,564 |
| | 373,561 | | 336,426 | 416 | | 415 |
|
| Diluted | 397,035 | | 338,409 |
| | 374,992 | | 337,076 | 418 | | 417 |
|
| Dividends/distributions declared per share of common stock | $ | 0.95 |
| | $ | 0.885 |
| | $ | 2.85 |
| | $ | 2.655 |
| |
________________
| |
| (a) | Exclusive of depreciation, amortization and accretion shown separately. |
See notes to condensed consolidated financial statements.
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
(In thousandsmillions of dollars)
| | | | | | | | | Three Months Ended March 31, |
| | Nine Months Ended September 30, | 2020 | | 2019 |
| | 2017 | | 2016 | | | (As Restated) |
| Cash flows from operating activities: | | | | | | |
| Net income (loss) | $ | 346,446 |
| | $ | 232,263 |
| $ | 185 |
| | $ | 193 |
|
| Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities: | | | | | | |
| Depreciation, amortization and accretion | 880,197 |
| | 834,725 |
| 399 |
| | 394 |
|
| Gains (losses) on retirement of long-term obligations | 3,525 |
| | 52,291 |
| |
| (Gains) losses on retirement of long-term obligations | | — |
| | 1 |
|
| Amortization of deferred financing costs and other non-cash interest | 7,637 |
| | 11,293 |
| 1 |
| | 1 |
|
| Stock-based compensation expense | 67,264 |
| | 60,402 |
| 37 |
| | 29 |
|
| Asset write-down charges | 10,284 |
| | 28,251 |
| 4 |
| | 6 |
|
| Deferred income tax benefit (provision) | 330 |
| | 6,626 |
| |
| Deferred income tax (benefit) provision | | 1 |
| | 1 |
|
| Other non-cash adjustments, net | (3,159 | ) | | 1,548 |
| — |
| | 2 |
|
| Changes in assets and liabilities, excluding the effects of acquisitions: | | | | | | |
| Increase (decrease) in accrued interest | 2,448 |
| | 17,269 |
| (50 | ) | | (41 | ) |
| Increase (decrease) in accounts payable | (28,561 | ) | | (12,469 | ) | (20 | ) | | (5 | ) |
| Increase (decrease) in deferred revenues, deferred ground lease payables, other accrued liabilities and other liabilities | 88,101 |
| | 118,144 |
| |
| Increase (decrease) in other liabilities | | 2 |
| | (7 | ) |
| Decrease (increase) in receivables | 78,520 |
| | 38,231 |
| 102 |
| | (43 | ) |
| Decrease (increase) in prepaid expenses, deferred site rental receivables, long-term prepaid rent, restricted cash and other assets | (35,741 | ) | | (83,859 | ) | |
| Decrease (increase) in other assets | | (8 | ) | | (19 | ) |
| Net cash provided by (used for) operating activities | 1,417,291 |
| | 1,304,715 |
| 653 |
| | 512 |
|
| Cash flows from investing activities: | | | | | | |
| Payments for acquisitions of businesses, net of cash acquired | (2,112,887 | ) | | (545,162 | ) | |
| Capital expenditures | (851,512 | ) | | (614,178 | ) | (447 | ) | | (480 | ) |
| Net (payments) receipts from settled swaps | (328 | ) | | 8,141 |
| |
| Payments for acquisitions, net of cash acquired | | (13 | ) | | (10 | ) |
| Other investing activities, net | (6,147 | ) | | 11,616 |
| (8 | ) | | 1 |
|
| Net cash provided by (used for) investing activities | (2,970,874 | ) | | (1,139,583 | ) | (468 | ) | | (489 | ) |
| Cash flows from financing activities: | | | | | | |
| Proceeds from issuance of long-term debt | 3,092,323 |
| | 5,201,010 |
| — |
| | 996 |
|
| Principal payments on debt and other long-term obligations | (89,817 | ) | | (69,717 | ) | (26 | ) | | (25 | ) |
| Purchases and redemptions of long-term debt | — |
| | (4,044,834 | ) | — |
| | (12 | ) |
| Borrowings under revolving credit facility | 1,755,000 |
| | 3,440,000 |
| 1,340 |
| | 710 |
|
| Payments under revolving credit facility | (1,755,000 | ) | | (4,155,000 | ) | (595 | ) | | (1,140 | ) |
| Net issuances (repayments) under commercial paper program | | (155 | ) | | — |
|
| Payments for financing costs | (26,684 | ) | | (41,471 | ) | — |
| | (10 | ) |
| Net proceeds from issuance of common stock | 4,220,766 |
| | 323,798 |
| |
| Net proceeds from issuance of preferred stock | 1,607,759 |
| | — |
| |
| Purchases of capital stock | (23,037 | ) | | (24,759 | ) | |
| Purchases of common stock | | (73 | ) | | (42 | ) |
| Dividends/distributions paid on common stock | (1,082,015 | ) | | (896,628 | ) | (513 | ) | | (477 | ) |
| Dividends paid on preferred stock | — |
| | (32,991 | ) | |
| Net (increase) decrease in restricted cash | 4,960 |
| | 40 |
| |
| Dividends/distributions paid on preferred stock | | (28 | ) | | (28 | ) |
| Net cash provided by (used for) financing activities | 7,704,255 |
| | (300,552 | ) | (50 | ) | | (28 | ) |
Net increase (decrease) in cash and cash equivalents—continuing operations | 6,150,672 |
| | (135,420 | ) | |
| Discontinued operations: | | | | |
| Net cash provided by (used for) investing activities | — |
| | 113,150 |
| |
Net increase (decrease) in cash and cash equivalents—discontinued operations | — |
|
| 113,150 |
| |
| Net increase (decrease) in cash, cash equivalents, and restricted cash | | 135 |
| | (5 | ) |
| Effect of exchange rate changes | 863 |
| | (321 | ) | (1 | ) | | — |
|
| Cash and cash equivalents at beginning of period | 567,599 |
| | 178,810 |
| |
| Cash and cash equivalents at end of period | $ | 6,719,134 |
| | $ | 156,219 |
| |
| Cash, cash equivalents, and restricted cash at beginning of period | | 338 |
| | 413 |
|
| Cash, cash equivalents, and restricted cash at end of period | | $ | 472 |
| | $ | 408 |
|
See notes to condensed consolidated financial statements.
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF EQUITY
(In thousands of dollars, except share data)Amounts in millions) (Unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Common Stock | | 6.875% Mandatory Convertible Preferred Stock | | | | Accumulated Other Comprehensive Income (Loss) ("AOCI") | | | | |
| | Shares | | ($0.01 Par) | | Shares | | ($0.01 Par) | | Additional paid-in capital | | Foreign Currency Translation Adjustments | | Dividends/Distributions in Excess of Earnings | | Total |
| Balance, December 31, 2019 | 416 |
| | $ | 4 |
| | 2 |
| | $ | — |
| | $ | 17,855 |
| | $ | (5 | ) | | $ | (7,365 | ) | | $ | 10,489 |
|
| Stock-based compensation related activity, net of forfeitures | 1 |
| | — |
| | — |
| | — |
| | 53 |
| | — |
| | — |
| | 53 |
|
| Purchases and retirement of common stock | — |
| | — |
| | — |
| | — |
| | (73 | ) | | — |
| | — |
| | (73 | ) |
Other comprehensive income (loss)(a) | — |
| | — |
| | — |
| | — |
| | — |
| | (1 | ) | | — |
| | (1 | ) |
Common stock dividends/distributions(b) | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (504 | ) | | (504 | ) |
Preferred stock dividends/distributions(b) | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (28 | ) | | (28 | ) |
| Net income (loss) | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 185 |
| | 185 |
|
| Balance, March 31, 2020 | 417 |
| | $ | 4 |
| | 2 |
| | $ | — |
| | $ | 17,835 |
| | $ | (6 | ) | | $ | (7,712 | ) | | $ | 10,121 |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Common Stock | | 6.875% Mandatory Convertible Preferred Stock | | 4.50% Mandatory Convertible Preferred Stock | | | | Accumulated Other Comprehensive Income (Loss) ("AOCI") | | | | |
| | Shares | | ($0.01 Par) | | Shares | | ($0.01 Par) | | Shares | | ($0.01 Par) | | Additional paid-in capital | | Foreign Currency Translation Adjustments | | Dividends/Distributions in Excess of Earnings | | Total |
| Balance, July 1, 2017 | 366,115,800 |
| | $ | 3,661 |
| | — |
| | — |
| | — |
| | $ | — |
| | $ | 11,433,018 |
| | $ | (5,183 | ) | | $ | (3,841,187 | ) | | $ | 7,590,309 |
|
| Stock-based compensation related activity, net of forfeitures | 13,261 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 22,079 |
| | — |
| | — |
| | 22,079 |
|
| Purchases and retirement of common stock | (4,259 | ) | | — |
| | — |
| | — |
| | — |
| | — |
| | (443 | ) | | — |
| | — |
| | (443 | ) |
| Net proceeds from issuance of common stock | 40,150,000 |
| | 402 |
| | — |
| | — |
| | — |
| | — |
| | 3,756,342 |
| | — |
| | — |
| | 3,756,744 |
|
| Net proceeds from issuance of preferred stock | — |
| | — |
| | 1,650,000 |
| | 17 |
| | — |
| | — |
| | 1,607,742 |
| | — |
| | — |
| | 1,607,759 |
|
Other comprehensive income (loss)(a) | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 224 |
| | — |
| | 224 |
|
| Common stock dividends/distributions | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (389,599 | ) | | (389,599 | ) |
| Preferred stock dividends | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (29,935 | ) | | (29,935 | ) |
| Net income (loss) | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 115,194 |
| | 115,194 |
|
| Balance, September 30, 2017 | 406,274,802 |
| | $ | 4,063 |
| | 1,650,000 |
| | $ | 17 |
| | — |
| | $ | — |
| | $ | 16,818,738 |
| | $ | (4,959 | ) | | $ | (4,145,527 | ) | | $ | 12,672,332 |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Common Stock | | 6.875% Mandatory Convertible Preferred Stock | | | | AOCI | | | | |
| | Shares | | ($0.01 Par) | | Shares | | ($0.01 Par) | | Additional
paid-in
capital | | Foreign Currency Translation Adjustments | | Dividends/Distributions in Excess of Earnings | | Total |
| Balance, December 31, 2018 (As Restated) | 415 |
| | $ | 4 |
| | 2 |
| | $ | — |
| | $ | 17,767 |
| | $ | (5 | ) | | $ | (6,195 | ) | | $ | 11,571 |
|
| Stock-based compensation related activity, net of forfeitures | 1 |
| | — |
| | — |
| | — |
| | 45 |
| | — |
| | — |
| | 45 |
|
| Purchases and retirement of common stock | — |
| | — |
| | — |
| | ��� |
| | (42 | ) | | — |
| | — |
| | (42 | ) |
| Net proceeds from issuance of common stock | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
Common stock dividends/distributions(b) | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (472 | ) | | (472 | ) |
Preferred stock dividends/distributions(b) | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (28 | ) | | (28 | ) |
| Net income (loss) (As Restated) | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 193 |
| | 193 |
|
| Balance, March 31, 2019 (As Restated) | 416 |
| | $ | 4 |
| | 2 |
| | $ | — |
| | $ | 17,770 |
| | $ | (5 | ) | | $ | (6,502 | ) | | $ | 11,267 |
|
| |
| (a) | See the condensed consolidated statement of operations and other comprehensive income (loss) for the components of "otherother comprehensive income (loss)." |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Common Stock | | 6.875% Mandatory Convertible Preferred Stock | | 4.50% Mandatory Convertible Preferred Stock | | | | AOCI | | | | |
| | Shares | | ($0.01 Par) | | Shares | | ($0.01 Par) | | Shares | | ($0.01 Par) | | Additional
paid-in
capital | | Foreign Currency Translation Adjustments | | Dividends/Distributions in Excess of Earnings | | Total |
| Balance, July 1, 2016 | 337,562,378 |
| | $ | 3,375 |
| | — |
| | — |
| | 9,775,000 |
| | $ | 98 |
| | $ | 9,894,921 |
| | $ | (4,006 | ) | | $ | (2,946,081 | ) | | $ | 6,948,307 |
|
| Stock-based compensation related activity, net of forfeitures | 10,784 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 20,222 |
| | — |
| | — |
| | 20,222 |
|
| Purchases and retirement of common stock | (3,231 | ) | | — |
| | — |
| | — |
| | — |
| | — |
| | (299 | ) | | — |
| | — |
| | (299 | ) |
| Net proceeds from issuance of common stock | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
Other comprehensive income (loss)(a) | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (1,535 | ) | | — |
| | (1,535 | ) |
| Common stock dividends/distributions | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (300,347 | ) | | (300,347 | ) |
| Preferred stock dividends | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (10,997 | ) | | (10,997 | ) |
| Net income (loss) | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 98,366 |
| | 98,366 |
|
| Balance, September 30, 2016 | 337,569,931 |
| | $ | 3,375 |
| | — |
| | $ | — |
| | 9,775,000 |
| | $ | 98 |
| | $ | 9,914,844 |
| | $ | (5,541 | ) | | $ | (3,159,059 | ) | | $ | 6,753,717 |
|
| |
(a)(b) | See the condensed statement of operationsnote 8 for information regarding common and other comprehensive income (loss) for the components of "other comprehensive income (loss)."preferred stock dividends declared per share. |
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF EQUITY
(In thousands of dollars, except share data) (Unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Common Stock | | 6.875% Mandatory Convertible Preferred Stock | | 4.50% Mandatory Convertible Preferred Stock | | | | AOCI | | | | |
| | Shares | | ($0.01 Par) | | Shares | | ($0.01 Par) | | Shares | | ($0.01 Par) | | Additional
paid-in
capital | | Foreign Currency Translation Adjustments | | Dividends/Distributions in Excess of Earnings | | Total |
| Balance, January 1, 2017 | 360,536,659 |
| | $ | 3,605 |
| | — |
| | — |
| | — |
| | $ | — |
| | $ | 10,938,236 |
| | $ | (5,888 | ) | | $ | (3,378,838 | ) | | $ | 7,557,115 |
|
| Stock-based compensation related activity, net of forfeitures | 739,805 |
| | 7 |
| | — |
| | — |
| | — |
| | — |
| | 75,482 |
| | — |
| | — |
| | 75,489 |
|
| Purchases and retirement of capital stock | (256,820 | ) | | (3 | ) | | — |
| | — |
| | — |
| | — |
| | (23,034 | ) | | — |
| | — |
| | (23,037 | ) |
| Net proceeds from issuance of common stock | 45,255,158 |
| | 454 |
| | — |
| | — |
| | — |
| | — |
| | 4,220,312 |
| | — |
| | — |
| | 4,220,766 |
|
| Net proceeds from issuance of preferred stock | — |
| | — |
| | 1,650,000 |
| | 17 |
| | — |
| | — |
| | 1,607,742 |
| | — |
| | — |
| | 1,607,759 |
|
Other comprehensive income (loss)(a) | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 929 |
| | — |
| | 929 |
|
| Common stock dividends/distributions | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (1,083,200 | ) | | (1,083,200 | ) |
| Preferred stock dividends | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (29,935 | ) | | (29,935 | ) |
| Net income (loss) | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 346,446 |
| | 346,446 |
|
| Balance, September 30, 2017 | 406,274,802 |
| | $ | 4,063 |
| | 1,650,000 |
| | $ | 17 |
| | — |
| | $ | — |
| | $ | 16,818,738 |
| | $ | (4,959 | ) | | $ | (4,145,527 | ) | | $ | 12,672,332 |
|
| |
(a) | See the condensed statement of operations and other comprehensive income (loss) for the components of "other comprehensive income (loss)." |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Common Stock | | 6.875% Mandatory Convertible Preferred Stock | | 4.50% Mandatory Convertible Preferred Stock | | | | AOCI | | | | |
| | Shares | | ($0.01 Par) | | Shares | | ($0.01 Par) | | Shares | | ($0.01 Par) | | Additional
paid-in
capital | | Foreign Currency Translation Adjustments | | Dividends/Distributions in Excess of Earnings | | Total |
| Balance, January 1, 2016 | 333,771,660 |
| | $ | 3,338 |
| | — |
| | — |
| | 9,775,000 |
| | $ | 98 |
| | $ | 9,548,580 |
| | $ | (4,398 | ) | | $ | (2,458,397 | ) | | $ | 7,089,221 |
|
| Stock-based compensation related activity, net of forfeitures | 257,720 |
| | 2 |
| | — |
| | — |
| | — |
| | — |
| | 67,260 |
| | — |
| | — |
| | 67,262 |
|
| Purchases and retirement of capital stock | (287,513 | ) | | (3 | ) | | — |
| | — |
| | — |
| | — |
| | (24,756 | ) | | — |
| | — |
| | (24,759 | ) |
| Net proceeds from issuance of common stock | 3,828,064 |
| | 38 |
| | — |
| | — |
| | — |
| | — |
| | 323,760 |
| | — |
| | — |
| | 323,798 |
|
Other comprehensive income (loss)(a) | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (1,143 | ) | | — |
| | (1,143 | ) |
| Common stock dividends/distributions | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (899,934 | ) | | (899,934 | ) |
| Preferred stock dividends | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (32,991 | ) | | (32,991 | ) |
| Net income (loss) | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 232,263 |
| | 232,263 |
|
| Balance, September 30, 2016 | 337,569,931 |
| | $ | 3,375 |
| | — |
| | $ | — |
| | 9,775,000 |
| | $ | 98 |
| | $ | 9,914,844 |
| | $ | (5,541 | ) | | $ | (3,159,059 | ) | | $ | 6,753,717 |
|
| |
(a) | See the condensed statement of operations and other comprehensive income (loss) for the components of "other comprehensive income (loss)." |
See notes to condensed consolidated financial statements.
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-Unaudited
(Tabular dollars in thousands,millions, except per share amounts)
The information contained in the following notes to the condensed consolidated financial statements is condensed from that which would appear in the annual consolidated financial statements; accordingly, the condensed consolidated financial statements included herein should be reviewed in conjunction with the consolidated financial statements for the fiscal year ended December 31, 2016,2019, and related notes thereto, included in the 20162019 Form 10-K filed by Crown Castle International Corp. ("CCIC") with the SEC. Capitalized terms used but not defined in these notes to the condensed consolidated financial statements have the same meaning given to them in our 2016the 2019 Form 10-K. References to the "Company" includerefer to CCIC and its predecessor, as applicable, and their subsidiaries, unless otherwise indicated or the context indicates otherwise. As used herein, the term "including," and any variation thereof means "including without limitation." The use of the word "or" herein is not exclusive. Unless the context suggests otherwise, references to "U.S." are to the United States of America and Puerto Rico, collectively.
The Company owns, operates and leases shared wirelesscommunications infrastructure that has been acquired or constructed over time and is geographically dispersed throughout the United States and Puerto Rico ("U.S."), including:including (1) towers and other structures, such as rooftops (collectively, "towers"), and (2) fiber primarily supporting small cell networks ("small cells") and fiber based solutions (collectively, "small cells"solutions. The Company's towers, fiber and together with towers, "wireless infrastructure").small cells assets are collectively referred to herein as "communications infrastructure," and the Company's customers on its communications infrastructure are referred to herein as "tenants."
The Company's core business is providing access, including space or capacity, to its shared wirelesscommunications infrastructure via long-term contracts in various forms, including licenses, subleaseslease, license, sublease and lease agreements.service agreements (collectively, " tenant contracts").
The Company's operating segments consist of (1) Towers and (2) Small Cells.Fiber. See note 10.11.
As part of the Company's effort to provide comprehensive wirelesscommunications infrastructure solutions, as an ancillary business, the Company also offers certain network services primarily relating to its wireless infrastructure,Towers segment, predominately consisting of (1) site development services primarily relating to existing or new tenant equipment installations, on its wireless infrastructure, including: site acquisition, architectural and engineering, or zoning and permitting (collectively, "site development services") and (2) tenant equipment installation or subsequent augmentations.augmentations (collectively, "installation services").
The Company operates as a REIT for U.S. federal income tax purposes. In addition, the Company has certain taxable REIT subsidiaries ("TRSs"). See note 6.7.
Approximately 53% of the Company's towers are leased or subleased or operated and managed under master leases, subleases, and other agreements with AT&T, Sprint and T-Mobile. The Company has the option to purchase these towers at the end of their respective lease terms. The Company has no obligation to exercise such purchase options.
Basis of Presentation
The condensed consolidated financial statements included herein are unaudited; however, they include all adjustments (consisting only of normal recurring adjustments) which, in the opinion of management, are necessary to state fairly the consolidated financial position of the Company at September 30, 2017, andMarch 31, 2020, the condensed consolidated results of operations for the three months ended March 31, 2020 and 2019, and the condensed consolidated cash flows for the ninethree months ended September 30, 2017March 31, 2020 and 2016.2019. The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the full year.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
| |
2. | Summary of Significant Accounting Policies
|
The significant accounting policies used in the preparation of the Company's condensed consolidated financial statements are disclosed in the 2016 Form 10-K, other than certain recent accounting pronouncements described below.
Recently Adopted Accounting Pronouncements
No accounting pronouncements adopted during the nine months ended September 30, 2017 had a material impact on the Company's condensed consolidated financial statements.
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-Unaudited (Continued)
(Tabular dollars in thousands,millions, except per share amounts)
| |
| 2. | Restatement of Previously Issued Condensed Consolidated Financial Statements |
Recent Accounting Pronouncements Not Yet Adopted
In May 2014,The following tables summarize the FASB released updated guidance regardingimpact of the recognitionrestatement adjustments that were related to the timing of revenue from contracts with customers, exclusiverecognition on its tower installation services. Specifically, the Company determined that its historical practice of those contracts within lease accounting. The core principlerecognizing the full transaction price as service revenues upon completion of the guidance is that an entity should recognize revenue to depict the transferinstallation was not acceptable under GAAP. Instead, a portion of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps: (1) identify the contracts with the customer; (2) identify the performance obligations in the contract; (3) determine the contract price; (4) allocate the transaction price for the Company's tower installation services, specifically the amounts associated with permanent improvements recorded as fixed assets, represent a lease component and should be recognized as site rental revenues on a ratable basis over the associated estimated lease term. In addition, the Company has also made other adjustments to the performance obligations in the contract; and (5) recognize revenue when (or as) the entity satisfies a performance obligation. This guidance is effective for the Company on January 1, 2018, following the FASB's July 2015 decisionfinancial statements referenced above to defer the effective date of the standard by one year. This guidance is requiredcorrect errors that were not material to be applied, at the Company's election, either (1) retrospectively to each prior reporting period presented, or (2) with the cumulative effect being recognized at the date of initial application. The Company expects to adopt the guidance effective January 1, 2018 with the cumulative effect being recognized at the date of initial application, and does not expect the guidance to have a material impact on its condensed consolidated financial statements. Such immaterial adjustments are related to a revision in the presentation of certain tower installation activities from a gross basis to a net basis, including the associated removal of certain amounts historically categorized as capital expenditures. These immaterial adjustments relate exclusively to the Company's Towers segment. Collectively, the restatement adjustments and other immaterial adjustments are referred to herein as "Historical Adjustments."
In February 2016,addition to the FASB issued new guidance on the recognition, measurement, presentation and disclosure of leases. The new guidance requires lessees to recognize a right-of-use asset and a lease liability, initially measured at the present valuerestatement of the lease payments for all leases with a term greater than 12 months. The accounting for lessors remains largely unchanged from existing guidance. This guidance is effective forcondensed consolidated financial statements, certain historical information in the Company as of January 1, 2019 and is requirednotes to be applied using a modified retrospective approach for all leases existing at, or entered into after, the beginning of the earliest comparative period presented. Early adoption is permitted, however, the Company does not expectcondensed consolidated financial statements have been restated to early adopt the new guidance. The Company (1) has established and is progressing through the various steps of a cross functional project plan to assessreflect the impact of the standard; (2) expects this guidance to have a material impact on its condensed consolidated balance sheet due to the addition of right-of-use assets and lease liabilities for all lessee arrangements with a term greater than 12 months; and (3) continues to assess additional impacts to its condensed consolidated financial statements, including the condensed consolidated statement of operations and the condensed consolidated statement of cash flows.Historical Adjustments.
In February 2017, the FASB issued new guidance which clarifies the scope and application on accounting for the de-recognition of non-financial assets and in substance non-financial assets, including sales and partial sales of real estate assets. The new guidance also eliminates the existing industry specific guidance for partial sales of real estate, and requires full gain recognition upon partial sales of real estate. The guidance is effective for the Company as of January 1, 2018. The guidance may be early adopted, but must be adopted concurrently with the FASB's May 2014 guidance on revenue from contracts with customers. The guidance is required to be applied, at the Company's election, either (1) retrospectively to each prior reporting period presented or (2) with the cumulative effect being recognized at the date of initial application. The Company does not expect this guidance to have a material impact on its condensed consolidated financial statements.
FiberNet Acquisition
On November 1, 2016, the Company announced that it had entered into a definitive agreement to acquire FPL FiberNet Holdings, LLC and certain other subsidiaries of NextEra Energy, Inc. (collectively, "FiberNet") for approximately $1.5 billion in cash, subject to certain limited adjustments ("FiberNet Acquisition"). FiberNet is a fiber services provider in Florida and Texas that, as of the agreement date, owned or had rights to approximately 11,500 route miles of fiber installed or under construction, inclusive of approximately 6,000 route miles in top metro markets. On January 17, 2017, the Company closed the FiberNet Acquisition which was financed using proceeds from its November 2016 Equity Financing and borrowings under the 2016 Revolver (see note 4).
The preliminary purchase price allocation for the FiberNet Acquisition is shown below and is based upon a preliminary valuation which is subject to change as the Company obtains additional information with respect to fixed assets, intangible assets and certain liabilities.Condensed Consolidated Balance Sheet
|
| | | | | | | | | | | | | | | |
| | March 31, 2019 |
| | As Reported | | Restatement Adjustments | | Other Adjustments | | As Restated |
| ASSETS | | | | | | | |
| Property and equipment, net | $ | 13,883 |
| | $ | — |
| | $ | (23 | ) | | $ | 13,860 |
|
| Total assets | 37,778 |
| | — |
| | (23 | ) | | 37,755 |
|
| LIABILITIES AND EQUITY | | | | | | |
|
|
| Current liabilities: | | | | | | |
|
|
| Deferred revenues | 502 |
| | 96 |
| | — |
| | 598 |
|
| Total current liabilities | 1,565 |
| | 96 |
| | — |
| | 1,661 |
|
| Other long-term liabilities | 2,009 |
| | 360 |
| | — |
| | 2,369 |
|
| Total liabilities | 26,032 |
| | 456 |
| | — |
| | 26,488 |
|
| CCIC stockholders' equity: | | | | | | |
|
|
| Dividends/distributions in excess of earnings | (6,022 | ) | | (456 | ) | | (23 | ) | | (6,501 | ) |
| Total equity | 11,746 |
| | (456 | ) | | (23 | ) | | 11,267 |
|
| Total liabilities and equity | $ | 37,778 |
| | $ | — |
| | $ | (23 | ) | | $ | 37,755 |
|
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-Unaudited (Continued)
(Tabular dollars in thousands,millions, except per share amounts)
Condensed Consolidated Statement of Operations and Comprehensive Income (Loss)
|
| | | |
| Preliminary Purchase Price Allocation | |
| Current Assets | $ | 51,791 |
|
| Property and equipment | 439,961 |
|
Goodwill(a) | 779,013 |
|
Other intangible assets, net(b) | 327,338 |
|
| Other non-current assets | 72 |
|
| Current liabilities | (36,438 | ) |
| Other non-current liabilities | (40,907 | ) |
Net assets acquired(c) | $ | 1,520,830 |
|
|
| | | | | | | | | | | | | | | |
| | Three Months Ended March 31, 2019 |
| | As Reported | | Restatement Adjustments | | Other Adjustments | | As Restated |
| Net revenues: | | | | | | | |
| Site rental | $ | 1,219 |
| | $ | 23 |
| | $ | — |
| | $ | 1,242 |
|
| Services and other | 207 |
| | (40 | ) | | (1 | ) | | 166 |
|
| Net revenues | 1,426 |
| | (17 | ) | | (1 | ) | | 1,408 |
|
| Operating expenses: | | | | | | |
|
|
Costs of operations(a): | | | | | | |
|
|
| Services and other | 125 |
| | — |
| | (1 | ) | | 124 |
|
| Total operating expenses | 1,042 |
| | — |
| | (1 | ) | | 1,041 |
|
| Operating income (loss) | 384 |
| | (17 | ) | | — |
| | 367 |
|
| Income (loss) before income taxes | 216 |
| | (17 | ) | | — |
| | 199 |
|
| Net income (loss) attributable to CCIC stockholders | 210 |
| | (17 | ) | | — |
| | 193 |
|
| Net income (loss) attributable to CCIC common stockholders | $ | 182 |
| | $ | (17 | ) | | $ | — |
| | $ | 165 |
|
| Net income (loss) | $ | 210 |
| | $ | (17 | ) | | $ | — |
| | $ | 193 |
|
| Comprehensive income (loss) attributable to CCIC stockholders | $ | 210 |
| | $ | (17 | ) | | $ | — |
| | $ | 193 |
|
| Net income (loss) attributable to CCIC common stockholders, per common share: | | | | | | | |
| Net income (loss) attributable to CCIC common stockholders - basic | $ | 0.44 |
| | $ | (0.04 | ) | | $ | — |
| | $ | 0.40 |
|
| Net income (loss) attributable to CCIC common stockholders - diluted | $ | 0.44 |
| | $ | (0.04 | ) | | $ | — |
| | $ | 0.40 |
|
| |
| (a) | The preliminary purchase price allocation for the FiberNet Acquisition resulted in the recognitionExclusive of goodwill based on:depreciation, amortization and accretion shown separately. |
the Company's expectation to leverage the FiberNet fiber footprint to support new small cell networks and fiber based solutions,Condensed Consolidated Statement of Cash Flows
the complementary nature of the FiberNet fiber to the Company's existing fiber assets and its location in top metro markets where the Company expects to see wireless carrier network investments, |
| | | | | | | | | | | | | | | |
| | Three Months Ended March 31, 2019 |
| | As Reported | | Restatement Adjustments | | Other Adjustments | | As Restated |
| Cash flows from operating activities: | | | | | | | |
| Net income (loss) | $ | 210 |
| | $ | (17 | ) | | $ | — |
| | $ | 193 |
|
| Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities: | | | | | | |
|
|
| Increase (decrease) in other liabilities | (24 | ) | | 17 |
| | — |
| | (7 | ) |
| Net cash provided by (used for) operating activities | 512 |
| | — |
| | — |
| | 512 |
|
| Net increase (decrease) in cash, cash equivalents, and restricted cash | (5 | ) | | — |
| | — |
| | (5 | ) |
| Cash, cash equivalents, and restricted cash at beginning of period | 413 |
| | — |
| | — |
| | 413 |
|
| Cash, cash equivalents, and restricted cash at end of period | $ | 408 |
| | $ | — |
| | $ | — |
| | $ | 408 |
|
the Company's belief that the acquired fiber assets are well-positioned to benefit from the continued growth trends in the wireless industry, and
other intangibles not qualified for separate recognition, including the assembled workforce.
| |
(b) | Predominantly comprised of site rental contracts and customer relationships. |
| |
(c) | For tax purposes, the Fibernet Acquisition was treated as a purchase of assets. As a result of the tax step-up and the expectation that the vast majority of the assets will be included in the Company's REIT, no deferred taxes were recorded in connection with the FiberNet Acquisition. |
Net revenues attributable to the FiberNet Acquisition are included in the Company's consolidated statements of operations and comprehensive income (loss) since the date the acquisition was completed. For the nine months ended September 30, 2017, the FiberNet Acquisition contributed $109.0 million to consolidated net revenues.Wilcon Acquisition
On April 17, 2017, the Company announced that it had entered into a definitive agreement to acquire Wilcon Holdings LLC ("Wilcon") from Pamlico Holdings and other unit holders of Wilcon for approximately $600 million in cash, subject to certain limited adjustments ("Wilcon Acquisition"). Wilcon is a fiber services provider that owns approximately 1,900 route miles of fiber, primarily in Los Angeles and San Diego. On June 26, 2017, the Company closed the Wilcon Acquisition, which was financed using proceeds from the May 2017 Equity Financing (as defined in note 9) and the 4.75% Senior Notes (as defined in note 4).
The preliminary purchase price of approximately $600 million was primarily comprised of other intangible assets (predominantly comprised of site rental contracts and customer relationships) of approximately $140 million, property and equipment of approximately $150 million, goodwill of approximately $360 million, offset by deferred revenues of approximately $40 million.
The preliminary purchase price allocation for the Wilcon Acquisition resulted in the recognition of goodwill based on (1) the Company's expectation to leverage the Wilcon fiber footprint to support new small cell networks and fiber based solutions, (2) the complementary nature of the Wilcon fiber to the Company's existing fiber assets and its location primarily in Los Angeles and San Diego, where the Company expects to see wireless carrier network investments, (3) the Company's belief that the acquired fiber assets are well positioned to benefit from the continued growth trends in the wireless industry, and (4) other intangibles not qualified for separate recognition, including the assembled workforce. The preliminary purchase price allocation for the Wilcon Acquisition is based upon a preliminary valuation which is subject to change as the Company obtains additional information with respect to fixed assets, intangible assets and certain liabilities.
Lightower Acquisition
On July 18, 2017, the Company announced that it has entered into a definitive agreement to acquire LTS Group Holdings LLC ("Lightower") from Berkshire Partners, Pamlico Capital and other investors for approximately $7.1 billion in cash, subject to certain limited adjustments ("Lightower Acquisition"). Lightower owns or has rights to approximately 32,000 route miles of fiber located primarily in top metro markets in the Northeast, including Boston, New York and Philadelphia. On November 1, 2017, the Company closed the Lightower Acquisition, which was financed using (1) cash on hand, including proceeds from the July 2017 Equity Financings and August 2017 Senior Notes Offering, and (2) borrowings under the 2016 Revolver. Due to the proximity of the closing of the Lightower Acquisition to the 10-Q filing date, the Company was not able to determine the preliminary purchase price allocation or provide pro forma financial information as of the date of this report. See note 12.
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-Unaudited (Continued)
(Tabular dollars in thousands,millions, except per share amounts)
| |
| 3. | Summary of Significant Accounting Policies |
Recently Adopted Accounting Pronouncements
No accounting pronouncements adopted during the three months ended March 31, 2020 had a material impact on the Company's condensed consolidated financial statements.
Recent Accounting Pronouncements Not Yet Adopted
No new accounting pronouncements issued but not yet adopted are expected to have a material impact on the Company's condensed consolidated financial statements.
Site rental revenues
The Company generates site rental revenues from its core business by providing tenants with access, including space or capacity, to its shared communications infrastructure via long-term tenant contracts in various forms, including lease, license, sublease and service agreements. Providing such access over the length of the tenant contract term represents the Company’s sole performance obligation under its tenant contracts.
Site rental revenues from the Company's tenant contracts are recognized on a straight-line, ratable basis over the fixed, non-cancelable term of the relevant tenant contract, which generally ranges from five to 15 years for wireless tenants and three to 20 years for the Company's fiber solutions tenants (including from organizations with high-bandwidth and multi-location demands), regardless of whether the payments from the tenant are received in equal monthly amounts during the life of the tenant contract. Certain of the Company's tenant contracts contain (1) fixed escalation clauses (such as fixed dollar or fixed percentage increases) or inflation-based escalation clauses (such as those tied to the CPI), (2) multiple renewal periods exercisable at the tenant's option and (3) only limited termination rights at the applicable tenant's option through the current term. If the payment terms call for fixed escalations, upfront payments, or rent-free periods, the revenue is recognized on a straight-line basis over the fixed, non-cancelable term of the agreement. When calculating straight-line rental revenues, the Company considers all fixed elements of tenant contractual escalation provisions, even if such escalation provisions contain a variable element in addition to a minimum. The Company's assets related to straight-line site rental revenues include current amounts of $123 million included in "Other current assets" and non-current amounts of $1.4 billion included in "Deferred site rental receivables" as of March 31, 2020. Amounts billed or received prior to being earned are deferred and reflected in "Deferred revenues" and "Other long-term liabilities." Amounts to which the Company has an unconditional right to payment, which are related to both satisfied or partially satisfied performance obligations, are recorded within "Receivables, net" on the Company's condensed consolidated balance sheet.
Services and other revenues
As part of the Company’s effort to provide comprehensive communications infrastructure solutions, as an ancillary business, the Company offers certain services primarily relating to its Towers segment, predominately consisting of (1) site development services and (2) installation services. Upon contract commencement, the Company assesses its services to tenants and identifies performance obligations for each promise to provide a distinct service.
The Company may have multiple performance obligations for site development services, which primarily include: structural analysis, zoning, permitting and construction drawings. For each of the above performance obligations, services revenues are recognized at completion of the applicable performance obligation, which represents the point at which the Company believes it has transferred goods or services to the tenant. The revenue recognized is based on an allocation of the transaction price among the performance obligations in a respective contract based on estimated standalone selling price. The volume and mix of site development services may vary among contracts and may include a combination of some or all of the above performance obligations. Payments generally are due within 45 to 60 days and generally do not contain variable-consideration provisions. The transaction price for the Company's tower installation services consists of amounts for (1) permanent improvements to the Company's towers that represent a lease component and (2) the performance of the service. Amounts under the Company's tower installation service agreements that represent a lease component are recognized as site rental revenues on a straight-line basis over the length of the associated estimated lease term. For the performance of the installation service, the Company has one performance obligation, which is satisfied at the time of the applicable installation or augmentation and recognized as services and other revenues. Since performance obligations are typically satisfied prior to receiving payment from tenants, the unconditional right to payment is
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-Unaudited (Continued)
(Tabular dollars in millions, except per share amounts)
recorded within "Receivables, net" on the Company’s condensed consolidated balance sheet. The vast majority of the Company’s services generally have a duration of one year or less.
Additional information on revenues
The following additional information on revenues reflect the impact of the Historical Adjustments, where applicable, as discussed in note 2. As of January 1, 2020 and March 31, 2020, $2.9 billion and $2.8 billion, respectively, of unrecognized revenue was reported in "Deferred revenues" and "Other long-term liabilities" on our condensed consolidated balance sheet. During the three months ended March 31, 2020, approximately $160 million of the January 1, 2020 unrecognized revenue balance was recognized as revenue. During the three months ended March 31, 2019, approximately $135 million of the January 1, 2019 unrecognized revenue balance was recognized as revenue.
The following table is a summary of the non-cancelable contracted amounts owed to the Company by tenants pursuant to tenant contracts in effect as of March 31, 2020.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Nine Months Ending December 31, | | Years Ending December 31, | | | | |
| | | 2020 | | 2021 | | 2022 | | 2023 | | 2024 | | Thereafter | | Total |
Contracted amounts(a) | | $ | 3,257 |
| | $ | 4,071 |
| | $ | 3,842 |
| | $ | 3,213 |
| | $ | 2,489 |
| | $ | 7,219 |
| | $ | 24,091 |
|
| |
| (a) | Based on the nature of the contract, tenant contracts are accounted for pursuant to relevant lease accounting (ASC 842) or revenue accounting (ASC 606) guidance. Excludes amounts related to services, as those contracts generally have a duration of one year or less. |
See note 11 for further information regarding the Company's operating segments.
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-Unaudited (Continued)
(Tabular dollars in millions, except per share amounts)
| |
| 5. | Debt and Other Obligations |
See note 13 for a discussion of the Company's issuance of the April 2020 Senior Notes (as defined in note 13) and the application of the net proceeds therefrom.
The table below sets forth the Company's debt and other obligations as of March 31, 2020.
| | | | Original Issue Date | | Contractual Maturity Date (a) | | Balance as of September 30, 2017 | | Balance as of December 31, 2016 | | Stated Interest Rate as of September 30, 2017(a) | Original Issue Date | | Final Maturity Date(a) | | Balance as of March 31, 2020 | | Balance as of December 31, 2019 | | Stated Interest Rate as of March 31, 2020(a) | |
| Bank debt - variable rate: | | | | | | | |
| 3.849% Secured Notes | | Dec. 2012 | | Apr. 2023 | | $ | 996 |
| | $ | 995 |
| | 3.9 | % | |
| Secured Notes, Series 2009-1, Class A-2 | | July 2009 | | Aug. 2029 | | 66 |
| | 67 |
| | 9.0 | % | |
| Tower Revenue Notes, Series 2015-1 | | May 2015 | | May 2042 | (b) | 299 |
| | 298 |
| | 3.2 | % | |
| Tower Revenue Notes, Series 2018-1 | | July 2018 | | July 2043 | (b) | 248 |
| | 248 |
| | 3.7 | % | |
| Tower Revenue Notes, Series 2015-2 | | May 2015 | | May 2045 | (b) | 695 |
| | 694 |
| | 3.7 | % | |
| Tower Revenue Notes, Series 2018-2 | | July 2018 | | July 2048 | (b) | 742 |
| | 742 |
| | 4.2 | % | |
| Finance leases and other obligations | | Various | | Various | (c) | 221 |
| | 227 |
| | Various | |
| Total secured debt | | | $ | 3,267 |
| | $ | 3,271 |
| | | |
| 2016 Revolver | Jan. 2016 | | Aug. 2022 | (e) | $ | — |
| (b)(d)(e)(f) | $ | — |
| | 2.6 | % | Jan. 2016 | | June 2024 | | $ | 1,270 |
| (d) | $ | 525 |
| | 2.1 | % | (e) |
| 2016 Term Loan A | Jan. 2016 | | Aug. 2022 | (e) | 2,411,400 |
| (e) | 1,954,173 |
| | 2.6 | % | Jan. 2016 | | June 2024 | | 2,295 |
| | 2,310 |
| | 2.1 | % | (e) |
| Total bank debt | | 2,411,400 |
| | 1,954,173 |
| | | |
| Securitized debt - fixed rate: | | | | | | | |
| Secured Notes, Series 2009-1, Class A-1 | July 2009 | | Aug. 2019 | | 36,595 |
| | 51,416 |
| | 6.3 | % | |
| Secured Notes, Series 2009-1, Class A-2 | July 2009 | | Aug. 2029 | | 69,469 |
| | 68,737 |
| | 9.0 | % | |
| Tower Revenue Notes, Series 2010-3 | Jan. 2010 | | Jan. 2040 | (c) | 1,245,639 |
| | 1,244,237 |
| | 6.1 | % | |
| Tower Revenue Notes, Series 2010-6 | Aug. 2010 | | Aug. 2040 | (c) | 994,905 |
| | 993,557 |
| | 4.9 | % | |
| Tower Revenue Notes, Series 2015-1 | May 2015 | | May 2042 | (c) | 297,051 |
| | 296,573 |
| | 3.2 | % | |
| Tower Revenue Notes, Series 2015-2 | May 2015 | | May 2045 | (c) | 692,065 |
| | 691,285 |
| | 3.7 | % | |
| Total securitized debt | | 3,335,724 |
| | 3,345,805 |
| | | |
| Bonds - fixed rate: | | | | | | | |
| Commercial Paper Notes | | N/A | (f) | N/A | (f) | — |
| (f) | 155 |
| | N/A | |
| 3.400% Senior Notes | | Feb./May 2016 | | Feb. 2021 | | 850 |
| | 850 |
| | 3.4 | % | |
| 2.250% Senior Notes | | Sept. 2016 | | Sept. 2021 | | 698 |
| | 698 |
| | 2.3 | % | |
| 4.875% Senior Notes | | Apr. 2014 | | Apr. 2022 | | 846 |
| | 846 |
| | 4.9 | % | |
| 5.250% Senior Notes | Oct. 2012 | | Jan. 2023 | | 1,638,680 |
| | 1,637,099 |
| | 5.3 | % | Oct. 2012 | | Jan. 2023 | | 1,644 |
| | 1,644 |
| | 5.3 | % | |
| 3.849% Secured Notes | Dec. 2012 | | Apr. 2023 | | 992,317 |
| | 991,279 |
| | 3.8 | % | |
| 4.875% Senior Notes | Apr. 2014 | | Apr. 2022 | | 841,645 |
| | 840,322 |
| | 4.9 | % | |
| 3.400% Senior Notes | Feb./May 2016 | | Feb. 2021 | | 849,836 |
| | 849,698 |
| | 3.4 | % | |
| 3.150% Senior Notes | | Jan. 2018 | | July 2023 | | 744 |
| | 744 |
| | 3.2 | % | |
| 3.200% Senior Notes | | Aug. 2017 | | Sept. 2024 | | 745 |
| | 744 |
| | 3.2 | % | |
| 4.450% Senior Notes | Feb. 2016 | | Feb. 2026 | | 890,887 |
| | 890,118 |
| | 4.5 | % | Feb. 2016 | | Feb. 2026 | | 893 |
| | 893 |
| | 4.5 | % | |
| 3.700% Senior Notes | May 2016 | | June 2026 | | 742,521 |
| | 741,908 |
| | 3.7 | % | May 2016 | | June 2026 | | 745 |
| | 744 |
| | 3.7 | % | |
| 2.250% Senior Notes | Sept. 2016 | | Sept. 2021 | | 695,069 |
| | 693,893 |
| | 2.3 | % | |
| 4.000% Senior Notes | Feb. 2017 | | March 2027 | | 493,810 |
| (d) | — |
| | 4.0 | % | Feb. 2017 | | Mar. 2027 | | 495 |
| | 495 |
| | 4.0 | % | |
| 3.650% Senior Notes | | Aug. 2017 | | Sept. 2027 | | 993 |
| | 993 |
| | 3.7 | % | |
| 3.800% Senior Notes | | Jan. 2018 | | Feb. 2028 | | 990 |
| | 990 |
| | 3.8 | % | |
| 4.300% Senior Notes | | Feb. 2019 | | Feb. 2029 | | 592 |
| | 592 |
| | 4.3 | % | |
| 3.100% Senior Notes | | Aug. 2019 | | Nov. 2029 | | 544 |
| | 543 |
| | 3.1 | % | |
| 4.750% Senior Notes | May 2017 | | May 2047 | | 342,524 |
| (f) | — |
| | 4.8 | % | May 2017 | | May 2047 | | 344 |
| | 344 |
| | 4.8 | % | |
| 3.200% Senior Notes | Aug. 2017 | | Sept. 2024 | | 741,561 |
| (g) | — |
| | 3.2 | % | |
| 3.650% Senior Notes | Aug. 2017 | | Sept. 2027 | | 990,734 |
| (g) | — |
| | 3.7 | % | |
| Total bonds | | 9,219,584 |
| | 6,644,317 |
| | | |
| Other: | | | | | | | |
| Capital leases and other obligations | Various | | Various | | 237,707 |
| | 226,847 |
| | Various |
| |
| 5.200% Senior Notes | | Feb. 2019 | | Feb. 2049 | | 395 |
| | 395 |
| | 5.2 | % | |
| 4.000% Senior Notes | | Aug. 2019 | | Nov. 2049 | | 345 |
| | 345 |
| | 4.0 | % | |
| Total unsecured debt | | | $ | 15,428 |
| | $ | 14,850 |
| | | |
| Total debt and other obligations | | 15,204,415 |
| | 12,171,142 |
| | | | 18,695 |
| | 18,121 |
| | | |
| Less: current maturities and short-term debt and other current obligations | | 114,198 |
| | 101,749 |
| | | Less: current maturities and short-term debt and other current obligations | | 949 |
| | 100 |
| | | |
| Non-current portion of long-term debt and other long-term obligations | | $ | 15,090,217 |
| | $ | 12,069,393 |
| | | Non-current portion of long-term debt and other long-term obligations | | $ | 17,746 |
| | $ | 18,021 |
| | | |
| |
| (a) | See the 20162019 Form 10-K, including note 8,9, for additional information regarding the maturity and principal amortization provisions and interest rates relating to the Company's indebtedness. |
| |
| (b) | As of September 30, 2017, the undrawn availability under the 2016 Revolver was $3.5 billion. In November 2017, the Company used proceeds from its 2016 Revolver to partially fund the Lightower Acqusition. See notes 3 and 12.
|
| |
(c) | If the respective series of such debt isTower Revenue Notes are not paid in full on or prior to an applicable anticipated repayment date, 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 Tower Revenue Notes, and additional interest (of an additional approximately 5% per annum) will accrue on the respective series. SeeTower Revenue Notes. As of March 31, 2020, the 2016 Form 10-K for additional information regarding these provisions.Tower Revenue Notes have principal amounts of $300 million, $250 million, $700 million and $750 million, with anticipated repayment dates in 2022, 2023, 2025 and 2028, respectively. |
| |
| (c) | The Company's finance leases and other obligations relate to land, fiber, vehicles, and other assets and bear interest rates ranging up to 10% and mature in periods ranging from less thanone yearto approximately30 years. |
| |
| (d) | In February 2017, the Company issued $500 million aggregate principal amount of 4.000% senior unsecured notes with a maturity dateAs of March 2027 ("4.0% Senior Notes"). The Company used31, 2020, the net proceeds from the 4.0% Senior Notes offering to repay a portion of the borrowingsundrawn availability under the 2016 Revolver.Revolver was $3.7 billion. |
| |
| (e) | In February 2017,Both the Company entered into an amendment to the Credit Facility to (1) incur additional term loans in an aggregate principal amount of $500 million,2016 Revolver and (2) extend the maturity of both the 2016 Term Loan A andbear interest, at our option, at either (1) LIBOR plus a credit spread ranging from 0.875% to 1.750% per annum or (2) an alternate base rate plus a credit spread ranging from 0.000% to 0.750% per annum, in each case, with the 2016 Revolverapplicable credit spread based on the Company's senior unsecured debt rating. The Company pays a commitment fee ranging from 0.125% to January 2022. In August 2017,0.350%, based on the Company entered into an amendment toCompany's senior unsecured debt rating, per annum on the Credit Facility to (1) increase the commitmentsundrawn available amount under the 2016 Revolver by $1.0 billion, to total commitments of $3.5 billion, and (2) extend the maturity of both the 2016 Term Loan A and the 2016 Revolver to August 2022. |
| |
(f) | In May 2017, the Company issued $350 million aggregate principal amount of 4.750% senior unsecured notes due May 2047 ("4.75% Senior Notes"). The Company used the net proceeds from the 4.75% Senior Notes offering to partially fund the Wilcon Acquisition and to repay a portion of the borrowings under the 2016 Revolver. |
| |
(g) | In August 2017, the Company issued $750 million aggregate principal amount of 3.200% senior unsecured notes due September 2024 ("3.2% Senior Notes") and $1.0 billion aggregate principal amount of 3.650% senior unsecured notes due September 2027 ("3.65% Senior Notes") (collectively, "August 2017 |
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-Unaudited (Continued)
(Tabular dollars in thousands,millions, except per share amounts)
| |
| (f) | Notes under the CP Program may be issued, repaid and re-issued from time to time, with an aggregate principal amount of Commercial Paper Notes outstanding under the CP Program at any time not to exceed $1.0 billion. The net proceeds of the Commercial Paper Notes are expected to be used for general corporate purposes. The maturities of the 2019 Commercial Paper Notes, when outstanding, may vary but may not exceed 397 days from the date of issue. The Commercial Paper Notes are issued under customary terms in the commercial paper market and are issued at a discount from par or, alternatively, can be issued at par and bear varying interest rates on a fixed or floating basis. As of March 31, 2020, there were no outstanding Commercial Paper Notes. At any point in time, the Company intends to maintain available commitments under its 2016 Revolver in an amount at least equal to the amount of Commercial Paper Notes outstanding. While any outstanding commercial paper issuances generally have short-term maturities, the Company classifies the outstanding issuances, when applicable, as long-term based on its ability and intent to refinance the outstanding issuances on a long-term basis. |
Senior Notes Offering"). The Company used the net proceeds of the August 2017 Senior Notes Offering to partially fund the Lightower Acquisition and pay related fees and expenses. See notes 3 and 12.
Contractual Maturities
The following are the scheduled contractualprincipal payments and final maturities of the total debt and other long-term obligations of the Company outstanding as of September 30, 2017. These maturities reflect contractual maturity dates andMarch 31, 2020, which do not consider the principal payments that will commence following the anticipated repayment dates on the Tower Revenue Notes.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Nine Months Ending December 31, | | Years Ending December 31, | | | | | | Unamortized Adjustments, Net | | Total Debt and Other Obligations Outstanding |
| | 2020 | | 2021 | | 2022 | | 2023 | | 2024 | | Thereafter | | Total Cash Obligations | | |
Scheduled principal payments and final maturities | $ | 76 |
| | $ | 1,675 |
| | $ | 1,000 |
| | $ | 3,604 |
| | $ | 3,917 |
| | $ | 8,532 |
| | $ | 18,804 |
| | $ | (109 | ) | | $ | 18,695 |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ending December 31, | | Years Ending December 31, | | | | | | Unamortized Adjustments, Net | | Total Debt and Other Obligations Outstanding |
| | 2017 | | 2018 | | 2019 | | 2020 | | 2021 | | Thereafter | | Total Cash Obligations | | |
| Scheduled contractual maturities | $ | 29,588 |
| | $ | 113,667 |
| | $ | 166,726 |
| | $ | 154,989 |
| | $ | 1,824,666 |
| | $ | 13,022,295 |
| | $ | 15,311,931 |
| | $ | (107,516 | ) | | $ | 15,204,415 |
|
Interest Expense and Amortization of Deferred Financing Costs
The components of interest expense and amortization of deferred financing costs are as follows:
|
| | | | | | | |
| | Three Months Ended March 31, |
| | 2020 | | 2019 |
| Interest expense on debt obligations | $ | 174 |
| | $ | 167 |
|
| Amortization of deferred financing costs and adjustments on long-term debt | 5 |
| | 5 |
|
| Other, net of capitalized interest | (4 | ) | | (4 | ) |
| Total | $ | 175 |
| | $ | 168 |
|
|
| | | | | | | | | | | | | | | |
| | Three Months Ended September 30, | | Nine Months Ended September 30, |
| | 2017 | | 2016 | | 2017 | | 2016 |
| Interest expense on debt obligations | $ | 151,765 |
| | $ | 126,616 |
| | $ | 422,765 |
| | $ | 374,363 |
|
| Amortization of deferred financing costs and adjustments on long-term debt | 4,882 |
| | 4,601 |
| | 13,973 |
| | 14,522 |
|
| Other, net of capitalized interest | (2,501 | ) | | (1,301 | ) | | (6,336 | ) | | (3,229 | ) |
| Total | $ | 154,146 |
| | $ | 129,916 |
| | $ | 430,402 |
| | $ | 385,656 |
|
| |
5.6. | Fair Value Disclosures |
|
| | | | | | | | | | | | | | | | | |
| | Level in Fair Value Hierarchy | | March 31, 2020 | | December 31, 2019 |
| | | Carrying Amount | | Fair Value | | Carrying Amount | | Fair Value |
| Assets: | | | | | | | | | |
| Cash and cash equivalents | 1 | | $ | 310 |
| | $ | 310 |
| | $ | 196 |
| | $ | 196 |
|
| Restricted cash, current and non-current | 1 | | 162 |
| | 162 |
| | 142 |
| | 142 |
|
| Liabilities: | | | | | | | | | |
| Total debt and other obligations | 2 | | 18,695 |
| | 19,175 |
| | 18,121 |
| | 19,170 |
|
|
| | | | | | | | | | | | | | | | | |
| | Level in Fair Value Hierarchy | | September 30, 2017 | | December 31, 2016 |
| | | Carrying Amount | | Fair Value | | Carrying Amount | | Fair Value |
| Assets: | | | | | | | | | |
| Cash and cash equivalents | 1 | | $ | 6,719,134 |
| | $ | 6,719,134 |
| | $ | 567,599 |
| | $ | 567,599 |
|
| Restricted cash, current and non-current | 1 | | 120,730 |
| | 120,730 |
| | 129,547 |
| | 129,547 |
|
| Liabilities: | | | | | | | | | |
| Total debt and other obligations | 2 | | 15,204,415 |
| | 15,848,408 |
| | 12,171,142 |
| | 12,660,013 |
|
The fair value of cash and cash equivalents and restricted cash approximate the carrying value. The Company determines the fair value of its debt securities based on indicative, non-binding quotes from brokers. Quotes from brokers require judgment and are based on the brokers' interpretation of market information, including implied credit spreads for similar borrowings on recent trades or bid/ask prices or quotes from active markets if available. There wereSince December 31, 2019, there have been no changes since December 31, 2016 in the Company's valuation techniques used to measure fair values.
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-Unaudited (Continued)
(Tabular dollars in millions, except per share amounts)
The Company operates as a REIT for U.S. federal income tax purposes. As a REIT, the Company is generally entitled to a deduction for dividends that it pays and therefore is not subject to U.S. federal corporate income tax on its net taxable income that is currently distributed to its stockholders. The Company also may be subject to certain federal, state, local and foreign taxes on its income and assets, including (1) alternative minimum taxes, (2) taxes on any undistributed income, (3)(2) taxes related to the TRSs, (4) certain state, local, or foreign income taxes, (5)(3) franchise taxes, (6)(4) property taxes, and (7)(5) transfer taxes. In addition, the Company could in certain circumstances be required to pay an excise or penalty tax, which could be significant in amount, in order to utilize one or more relief provisions under the Internal Revenue Code of 1986, as amended, ("Code") to maintain qualification for taxation as a REIT.
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-Unaudited (Continued)
(Tabular dollars in thousands, except per share amounts)
The Company's TRS assets and operations will continue to be subject, as applicable, to federal and state corporate income taxes or to foreign taxes in the jurisdictions in which such assets and operations are located. The Company's foreign assets and operations (including its tower operations in Puerto Rico) most likely will beare subject to foreign income taxes in the jurisdictions in which such assets and operations are located, regardless of whether they are included in a TRS or not.
For the ninethree months ended September 30, 2017March 31, 2020 and 2016,2019, the Company's effective tax rate differed from the federal statutory rate predominately due to the Company's REIT status, including the dividends paid deduction.
| |
7.8. | Per Share Information |
Basic net income (loss) attributable to CCIC common stockholders, per common share, excludes dilution and is computed by dividing net income (loss) attributable to CCIC common stockholders by the weighted-average number of common shares outstanding during the period. For the three and nine months ended September 30, 2017,March 31, 2020 and 2019, diluted net income (loss) attributable to CCIC common stockholders, per common share, is computed by dividing net income (loss) attributable to CCIC common stockholders by the weighted-average number of common shares outstanding during the period, plus any potential dilutive common share equivalents, including shares issuable upon (1) upon the vesting of restricted stock awards and restricted stock units as determined under the treasury stock method and (2) upon conversion of the Company's 6.875% Mandatory Convertible Preferred Stock, (as defined in note 9), as determined under the if-converted method. ForThe table below also gives effect to the three and nine months ended September 30, 2016, diluted net income (loss) attributable to CCIC common stockholders, per common share is computed by dividing net income (loss) attributable to CCIC common stockholders by the weighted-average number of common shares outstanding during the period plus any potential dilutive common share equivalents, including shares issuable (1) upon the vesting of restricted stock awards and restricted stock unitsHistorical Adjustments, as determined under the treasury stock method and (2) upon conversion of the Company's previously outstanding 4.50% Mandatory Convertible Preferred Stock, which converted to common stock during the fourth quarter of 2016, as determined under the if-converted method.described in note 2.
|
| | | | | | | |
| | Three Months Ended March 31, |
| | 2020 | | 2019 |
| | | | (As Restated) |
| Net income (loss) attributable to CCIC stockholders | $ | 185 |
| | $ | 193 |
|
| Dividends on preferred stock | (28 | ) | | (28 | ) |
| Net income (loss) attributable to CCIC common stockholders for basic and diluted computations | $ | 157 |
| | $ | 165 |
|
| | | | |
| Weighted-average number of common shares outstanding (in millions): | | | |
| Basic weighted-average number of common stock outstanding | 416 |
| | 415 |
|
| Effect of assumed dilution from potential issuance of common shares relating to restricted stock units | 2 |
| | 2 |
|
| Diluted weighted-average number of common shares outstanding | 418 |
| | 417 |
|
| | | | |
| Net income (loss) attributable to CCIC common stockholders, per common share: | | | |
| Basic | $ | 0.38 |
| | $ | 0.40 |
|
| Diluted | $ | 0.38 |
| | $ | 0.40 |
|
| | | | |
| Dividends/distributions declared per share of common stock | $ | 1.20 |
| | $ | 1.125 |
|
| Dividends/distributions declared per share of preferred stock | $ | 17.1875 |
| | $ | 17.1875 |
|
|
| | | | | | | | | | | | | | | |
| | Three Months Ended September 30, | | Nine Months Ended September 30, |
| | 2017 | | 2016 | | 2017 | | 2016 |
| Net income (loss) attributable to CCIC stockholders | $ | 115,194 |
| | $ | 98,366 |
| | $ | 346,446 |
| | $ | 232,263 |
|
| Dividends on preferred stock | (29,935 | ) | | (10,997 | ) | | (29,935 | ) | | (32,991 | ) |
| Net income (loss) attributable to CCIC common stockholders for basic and diluted computations | $ | 85,259 |
| | $ | 87,369 |
| | $ | 316,511 |
| | $ | 199,272 |
|
| | | | | | | | |
| Weighted-average number of common shares outstanding (in thousands): | | | | | | | |
| Basic weighted-average number of common stock outstanding | 395,359 |
| | 337,564 |
| | 373,561 |
| | 336,426 |
|
| Effect of assumed dilution from potential common shares relating to restricted stock units and restricted stock awards | 1,676 |
| | 845 |
| | 1,431 |
| | 650 |
|
| Diluted weighted-average number of common shares outstanding | 397,035 |
| | 338,409 |
| | 374,992 |
| | 337,076 |
|
| | | | | | | | |
| Net income (loss) attributable to CCIC common stockholders, per common share: | | | | | | | |
| Basic | $ | 0.22 |
| | $ | 0.26 |
| | $ | 0.85 |
| | $ | 0.59 |
|
| Diluted | $ | 0.21 |
| | $ | 0.26 |
| | $ | 0.84 |
| | $ | 0.59 |
|
During the ninethree months ended September 30, 2017,March 31, 2020, the Company granted 1.3 million1000000 restricted stock units. For both the three and nine months ended September 30, 2017, 15.9March 31, 2020, 15 million common share equivalents related to the 6.875% Mandatory Convertible Preferred Stock were excluded from the dilutive common shares because the impact of such conversion would be anti-dilutive, based on the Company's common stock price as of September 30, 2017. For both the three and nine months ended September 30, 2016, 11.6 million common share equivalents related to the previously outstanding 4.50% Mandatory Convertible Preferred Stock were excluded from the dilutive common shares because the impact of such conversion would be anti-dilutive, based on the Company's common stock price as of September 30, 2016.March 31, 2020.
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-Unaudited (Continued)
(Tabular dollars in thousands,millions, except per share amounts)
| |
8.9. | Commitments and Contingencies |
The Company is involved in various claims, lawsuits or proceedings arising in the ordinary course of business. While there are uncertainties inherent in the ultimate outcome of such matters and it is impossible to presently determine the ultimate costs or losses that may be incurred, if any, management believes the resolution of such uncertainties and the incurrence of such costs should not have a material adverse effect on the Company's condensed consolidated financial position or results of operations. Additionally, the Company and certain of its subsidiaries are contingently liable for commitments or performance guarantees arising in the ordinary course of business, including certain letters of credit or surety bonds. In addition, see note 1 for a discussion of the Company has theCompany's option to purchase approximately 53% of the Company'sits towers at the end of their respective lease terms. The Company has no obligation to exercise such purchase options.
SEC Investigation
In September 2019, the Company received a subpoena from the SEC requesting certain documents from 2015 through the present, primarily related to the Company's long-standing capitalization and expense policies for tenant upgrades and installations in its services business. Prior to receiving this subpoena, the Company previously provided information to the SEC related to certain services-related transactions. The Company is cooperating fully with the SEC's investigation and cannot predict the ultimate timing, scope or outcome of this matter.
Shareholder Litigation
In February and March 2020, putative securities class action suits were filed in the United States District Court for the District of New Jersey against the Company and certain of its current officers. The lawsuits were filed on behalf of investors that purchased or otherwise acquired stock of the Company between February 26, 2018 and February 26, 2020. The allegations relate to allegedly false or misleading statements or other failures to disclose information about the Company's business, operations and prospects. The complaints seek unspecified money damages and the award of plaintiffs' costs and expenses incurred in the respective class action. The Company is currently unable to determine the likelihood of an outcome or estimate a range of reasonably possible losses, if any, with respect to these lawsuits. The Company believes these lawsuits are without merit and intends to defend itself vigorously.
In April 2020, a stockholder derivative lawsuit was filed by Melvyn Klein in the United States District Court for the District of Delaware, against the Company, as a nominal defendant, and its current directors and certain of its current officers. The complaint alleges, among other things, breaches of fiduciary duties, waste of corporate assets, unjust enrichment, and false or misleading statements, between February 27, 2018 through the present. The complaint seeks, among other things, unspecified money damages, costs and expenses, restitution from the defendants, and an order requiring the Company to implement certain corporate governance reforms. As a nominal defendant, no monetary relief is sought against the Company itself.
Declaration and Payment of Dividends
During the ninethree months ended September 30, 2017,March 31, 2020, the following dividendsdividends/distributions were declared andor paid:
| | | Equity Type | | Declaration Date | | Record Date | | Payment Date | | Dividends Per Share | | Aggregate Payment Amount (In millions) | | | Declaration Date | | Record Date | | Payment Date | | Dividends Per Share | | Aggregate Payment Amount | |
| Common Stock | | February 17, 2017 | | March 17, 2017 | | March 31, 2017 | | $ | 0.95 |
| | $ | 343.3 |
| (a) | | February 20, 2020 | | March 13, 2020 | | March 31, 2020 | | $ | 1.20 |
| | $ | 504 |
| (a) |
| Common Stock | | May 18, 2017 | | June 16, 2017 | | June 30, 2017 | | $ | 0.95 |
| | $ | 350.3 |
| (a) | |
| Common Stock | | August 3, 2017 | | September 15, 2017 | | September 29, 2017 | | $ | 0.95 |
| | $ | 389.6 |
| (a) | |
| 6.875% Mandatory Convertible Preferred Stock | | September 21, 2017 | | October 15, 2017 | | November 1, 2017 | | $ | 18.1424 |
| | $ | 29.9 |
| | | December 9, 2019 | | January 15, 2020 | | February 3, 2020 | | $ | 17.1875 |
| | $ | 28 |
| |
| 6.875% Mandatory Convertible Preferred Stock | | | March 12, 2020 | | April 15, 2020 | | May 1, 2020 | | $ | 17.1875 |
| | $ | 28 |
| |
| |
| (a) | Inclusive of dividends accrued for holders of unvested restricted stock units, which will be paid when and if the restricted stock units vest. |
See note 12 for a discussion of the Company's October 2017 declaration of its quarterly common stock dividend.
Purchases of the Company's Common Stock
For the ninethree months ended September 30, 2017,March 31, 2020, the Company purchased 0.30.4 million shares of its common stock utilizing $23.0$73 million in cash. The shares of common stock shares purchased relate to shares withheld in connection with the payment of withholding taxes upon vesting of restricted stock.stock units.
"At the Market"2018 "At-the-Market" Stock Offering Program
TheIn April 2018, the Company maintainsestablished an "at the market""at-the-market" stock offering program ("ATM Program") through which it may from time to time, issue and sell shares of its common stock having an aggregate cumulative gross sales price of up to $500.0$750 million to or through sales agents.("2018 ATM Program"). Sales if any, under the 2018 ATM Program may be made by means of ordinary brokers' transactions on the New York Stock ExchangeNYSE or otherwise at market prices prevailing at the time of sale, at prices related to prevailing market prices or, subject to our specific instructions, of the Company, at negotiated prices. The Company intends to use the net proceeds from any sales under the 2018 ATM Program for general corporate purposes, which may include (1) the funding of future acquisitions or investments andor (2) the repayment or repurchase of any outstanding indebtedness. During the nine months ended September 30, 2017, 0.2 millionThe Company has not sold any shares of common stock were sold under the ATM Program generating net proceeds of $22.0 million after giving effect to sales agent commissions of $0.2 million. As of September 30, 2017, the Company had approximately $150 million of gross sales of common stock availability remaining under the2018 ATM Program.
May 2017 Equity Financing
On May 1, 2017, the Company completed an offering of 4.75 million shares of its common stock, which generated net proceeds of approximately $442 million ("May 2017 Equity Financing"). The Company used the net proceeds of the May 2017 Equity Financing to partially fund the Wilcon Acquisition.
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-Unaudited (Continued)
(Tabular dollars in thousands,millions, except per share amounts)
July 2017 Equity Financings
On July 26, 2017, the Company completed an offering of 40.15 million shares of common stock, including certain additional shares sold pursuant to the underwriters' option, which generated net proceeds of approximately $3.8 billion ("July 2017 Common Stock Offering"). The Company used the net proceeds of the July 2017 Common Stock Offering to partially fund the Lightower Acquisition and pay related fees and expenses. See note 12.
On July 26, 2017, the Company completed an offering of 1.65 million shares of the Company's 6.875% Mandatory Convertible Preferred Stock, Series A, par value $0.01 per share, at $1,000 per share ("6.875% Mandatory Convertible Preferred Stock"), including certain additional shares sold pursuant to the underwriters' option, which generated net proceeds of approximately $1.6 billion ("Mandatory Convertible Preferred Stock Offering"). The Company used the net proceeds from the Mandatory Convertible Preferred Stock Offering to partially fund the Lightower Acquisition and pay related fees and expenses. See note 12.
The holders of the 6.875% Mandatory Convertible Preferred Stock are entitled to receive cumulative dividends, when and if declared by the Company's board of directors, at the rate of 6.875% on the liquidation preference of $1,000 per share. The dividends may be paid in cash or, subject to certain limitations, in shares of the Company's common stock or any combination of cash and shares of common stock on February 1, May 1, August 1 and November 1 of each year, commencing on November 1, 2017 and to, and including, August 1, 2020. The terms of the 6.875% Mandatory Convertible Preferred Stock provide that, unless accumulated dividends have been paid or set aside for payment on all outstanding shares of 6.875% Mandatory Convertible Preferred Stock for all past dividend periods, no dividends may be declared or paid on common stock.
Unless converted earlier, each outstanding share of the 6.875% Mandatory Convertible Preferred Stock will automatically convert on August 1, 2020 into between 8.6806 and 10.4167 shares of the Company's common stock, depending on the applicable market value of the common stock and subject to certain anti-dilution adjustments. At any time prior to August 1, 2020, holders of the 6.875% Mandatory Convertible Preferred Stock may elect to convert all or a portion of their shares into common stock at the minimum conversion rate of 8.6806, subject to certain anti-dilution adjustments.
The July 2017 Common Stock Offering and Mandatory Convertible Preferred Stock Offering are collectively referred to herein as "July 2017 Equity Financings."
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-Unaudited (Continued)
(Tabular dollars in thousands, except per share amounts)
The Company's operating segments areconsist of (1) Towers and (2) Small Cells.Fiber. The Towers segment provides access, including space or capacity, to the Company's approximately 40,000 towers geographically dispersed throughout the U.S. The Towers segment also reflects certain networkancillary services relating to the Company's towers, predominately consisting of site development services and installation services. The Small CellsFiber segment provides access, including space or capacity, to the Company's approximately 32,00080,000 route miles of fiber primarily supporting small cell networks and fiber based solutions.solutions geographically dispersed throughout the U.S.
The measurements of profit or loss used by the Company's chief operating decision maker ("CODM") to evaluate the results of operationsperformance of its operating segments are (1) segment site rental gross margin, (2) segment network services and other gross margin and (3) segment operating profit. The Company defines segment site rental gross margin as segment site rental revenues less segment site rental cost of operations, which excludes stock-based compensation expense and prepaid lease purchase price adjustments recorded in consolidated cost of operations. The Company defines segment network services and other gross margin as segment network services and other revenues less segment network services and other cost of operations, which excludes stock-based compensation expense recorded in consolidated cost of operations. The Company defines segment operating profit as segment site rental gross margin plus segment network services and other gross margin, less selling, general and administrative expenses attributable to the respective segment. All of these measurements of profit or loss are exclusive of depreciation, amortization and accretion, which are shown separately.
The following table set forth the Company's segment operating results for the three months ended March 31, 2020 and 2019. Costs that are directly attributable to Towers and Small CellsFiber are assigned to those respective segments. Additionally, certain costs are shared across segments and are reflected in the Company's segment measures through allocations that management believes to be reasonable. The "Other" column (1) represents amounts excluded from specific segments, such as restructuring charges (credits), asset write-down charges, acquisition and integration costs, depreciation, amortization and accretion, amortization of prepaid lease purchase price adjustments, interest expense and amortization of deferred financing costs, gains (losses) on retirement of long-term obligations, net gain (loss) on interest rate swaps, gains (losses) on foreign currency swaps, impairment of available-for-sale securities, interest income, other income (expense), cumulative effect of a change in accounting principle, income (loss) from discontinued operations, and stock-based compensation expense, and (2) reconciles segment operating profit to income (loss) before income taxes, as the amounts are not utilized in assessing each segment’s performance. The "Other" total assets balance includes corporate assets such as cash and cash equivalents which have not been allocated to specific segments. There are no significant revenues resulting from transactions between the Company's operating segments.
The table below also gives effect to the Historical Adjustments, as described in note 2. Each of the Historical Adjustments for the three months ended March 31, 2019 are attributable only to the Towers segment.
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-Unaudited (Continued)
(Tabular dollars in thousands,millions, except per share amounts)
| | | | Three Months Ended September 30, 2017 | | Three Months Ended September 30, 2016 | Three Months Ended March 31, 2020 | | Three Months Ended March 31, 2019 (As Restated) |
| | Towers | | Small Cells | | Other | | Consolidated Total | | Towers | | Small Cells | | Other | | Consolidated Total | Towers | | Fiber | | Other | | Consolidated Total | | Towers | | Fiber | | Other | | Consolidated Total |
| Segment site rental revenues | $ | 724,813 |
| | $ | 167,950 |
| | | | $ | 892,763 |
| | $ | 709,603 |
| | $ | 102,429 |
| | | | $ | 812,032 |
| $ | 867 |
| | $ | 443 |
| | | | $ | 1,310 |
| | $ | 828 |
| | $ | 414 |
| | | | $ | 1,242 |
|
| Segment network services and other revenues | 153,001 |
| | 17,474 |
| | | | 170,475 |
| | 166,979 |
| | 13,005 |
| | | | 179,984 |
| |
| Segment services and other revenues | | 108 |
| | 3 |
| | | | 111 |
| | 162 |
| | 4 |
| | | | 166 |
|
| Segment revenues | 877,814 |
| | 185,424 |
| | | | 1,063,238 |
| | 876,582 |
| | 115,434 |
| | | | 992,016 |
| 975 |
| | 446 |
| | | | 1,421 |
| | 990 |
| | 418 |
| | | | 1,408 |
|
| Segment site rental cost of operations | 212,037 |
| | 59,319 |
| | | | 271,356 |
| | 210,322 |
| | 37,754 |
| | | | 248,076 |
| 214 |
| | 152 |
| | | | 366 |
| | 211 |
| | 140 |
| | | | 351 |
|
| Segment network services and other cost of operations | 90,845 |
| | 14,245 |
| | | | 105,090 |
| | 97,395 |
| | 10,194 |
| | | | 107,589 |
| |
| Segment services and other cost of operations | | 95 |
| | 2 |
| | | | 97 |
| | 120 |
| | 3 |
| | | | 123 |
|
Segment cost of operations (a)(b) | 302,882 |
| | 73,564 |
| | | | 376,446 |
| | 307,717 |
| | 47,948 |
| | | | 355,665 |
| 309 |
| | 154 |
| | | | 463 |
| | 331 |
| | 143 |
| | | | 474 |
|
| Segment site rental gross margin | 512,776 |
| | 108,631 |
| | | | 621,407 |
| | 499,281 |
| | 64,675 |
| | | | 563,956 |
| 653 |
| | 291 |
| | | | 944 |
| | 617 |
| | 274 |
| | | | 891 |
|
| Segment network services and other gross margin | 62,156 |
| | 3,229 |
| | | | 65,385 |
| | 69,584 |
| | 2,811 |
| | | | 72,395 |
| |
Segment general and administrative expenses (a) | 22,490 |
| | 18,415 |
| | 41,085 |
| | 81,990 |
| | 22,225 |
| | 14,480 |
| | 35,526 |
| | 72,231 |
| |
| Segment services and other gross margin | | 13 |
| | 1 |
| | | | 14 |
| | 42 |
| | 1 |
| | | | 43 |
|
Segment selling, general and administrative expenses(b) | | 24 |
| | 51 |
| | | | 75 |
| | 26 |
| | 48 |
| | | | 74 |
|
| Segment operating profit (loss) | 552,442 |
| | 93,445 |
| | (41,085 | ) | | 604,802 |
| | 546,640 |
| | 53,006 |
| | (35,526 | ) | | 564,120 |
| 642 |
| | 241 |
| |
| | 883 |
| | 633 |
| | 227 |
| |
| | 860 |
|
| Other selling, general and administrative expenses | | | | | | $ | 70 |
| | 70 |
| | | | | | $ | 55 |
| | 55 |
|
| Stock-based compensation expense | | | | | 24,681 |
| | 24,681 |
| | | | | | 22,594 |
| | 22,594 |
| | | | | 36 |
| | 36 |
| | | | | | 29 |
| | 29 |
|
| Depreciation, amortization and accretion | | | | | 296,033 |
| | 296,033 |
| | | | | | 280,824 |
| | 280,824 |
| | | | | 399 |
| | 399 |
| | | | | | 394 |
| | 394 |
|
| Interest expense and amortization of deferred financing costs | | | | | 154,146 |
| | 154,146 |
| | | | | | 129,916 |
| | 129,916 |
| | | | | 175 |
| | 175 |
| | | | | | 168 |
| | 168 |
|
Other income (expenses) to reconcile to income (loss) before income taxes(b) | | | | | 12,365 |
| | 12,365 |
| | | | | | 27,379 |
| | 27,379 |
| |
Other (income) expenses to reconcile to income (loss) before income taxes(c) | | | | | | 13 |
| | 13 |
| | | | | | 15 |
| | 15 |
|
| Income (loss) before income taxes | | | | | | | $ | 117,577 |
| | | | | | | | $ | 103,407 |
| | | | | | | $ | 190 |
| | | | | | | | $ | 199 |
|
| Capital expenditures | $ | 108,625 |
| | $ | 171,650 |
| | $ | 7,876 |
| | $ | 288,151 |
| | $ | 103,679 |
| | $ | 111,885 |
| | $ | 5,617 |
| | $ | 221,181 |
| $ | 105 |
| | $ | 328 |
| | $ | 14 |
| | $ | 447 |
| | $ | 119 |
| | $ | 355 |
| | $ | 6 |
| | $ | 480 |
|
| Total assets (at period end) | $ | 18,099,103 |
| | $ | 5,927,354 |
| | $ | 6,985,299 |
| | $ | 31,011,756 |
| | $ | 18,466,528 |
| | $ | 3,298,927 |
| | $ | 406,268 |
| | $ | 22,171,723 |
| $ | 22,234 |
| | $ | 15,520 |
| | $ | 862 |
| | $ | 38,616 |
| | $ | 22,091 |
| | $ | 14,930 |
| | $ | 734 |
| | $ | 37,755 |
|
| |
| (a) | Exclusive of depreciation, amortization and accretion shown separately. |
| |
| (b) | Segment cost of operations excludes (1) stock-based compensation expense of $5.9 million and $4.9$6 million for both of the three months ended September 30, 2017March 31, 2020 and 2016, respectively,2019, and (2) prepaid lease purchase price adjustments of $5.0$5 million and $5.4 million for both of the three months ended September 30, 2017March 31, 2020 and 2016, respectively. Segment2019. Selling, general and administrative expenses exclude stock-based compensation expense of $18.8$30 million and $17.7$23 million for the three months ended September 30, 2017March 31, 2020 and 2016,2019, respectively. |
| |
(b)(c) | See condensed consolidated statement of operations for further information. |
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-Unaudited (Continued)
(Tabular dollars in thousands,millions, except per share amounts)
| |
| 12. | Supplemental Cash Flow Information |
The following table is a summary of the Company's supplemental cash flow information:
|
| | | | | | | |
| | Three Months Ended March 31, |
| | 2020 | | 2019 |
| Supplemental disclosure of cash flow information: | | | |
Cash payments related to operating lease liabilities(a) | $ | 135 |
| | $ | 145 |
|
| Interest paid | 223 |
| | 208 |
|
| Income taxes paid | 1 |
| | — |
|
| Supplemental disclosure of non-cash operating, investing and financing activities: | | | |
| New ROU assets obtained in exchange for operating lease liabilities | 133 |
| | 36 |
|
| Increase (decrease) in accounts payable for purchases of property and equipment | (18 | ) | | 2 |
|
| Purchase of property and equipment under finance leases and installment purchases | 5 |
| | 9 |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Nine Months Ended September 30, 2017 | | Nine Months Ended September 30, 2016 |
| | Towers | | Small Cells | | Other | | Consolidated Total | | Towers | | Small Cells | | Other | | Consolidated Total |
| Segment site rental revenues | $ | 2,158,994 |
| | $ | 459,511 |
| | | | $ | 2,618,505 |
| | $ | 2,118,159 |
| | $ | 297,767 |
| | | | $ | 2,415,926 |
|
| Segment network services and other revenues | 460,593 |
| | 38,417 |
| | | | 499,010 |
| | 434,042 |
| | 38,841 |
| | | | 472,883 |
|
| Segment revenues | 2,619,587 |
| | 497,928 |
| | | | 3,117,515 |
| | 2,552,201 |
| | 336,608 |
| | | | 2,888,809 |
|
| Segment site rental cost of operations | 632,705 |
| | 158,426 |
| | | | 791,131 |
| | 625,331 |
| | 109,402 |
| | | | 734,733 |
|
| Segment network services and other cost of operations | 275,618 |
| | 31,078 |
| | | | 306,696 |
| | 249,306 |
| | 30,652 |
| | | | 279,958 |
|
Segment cost of operations (a) | 908,323 |
| | 189,504 |
| | | | 1,097,827 |
| | 874,637 |
| | 140,054 |
| | | | 1,014,691 |
|
| Segment site rental gross margin | 1,526,289 |
| | 301,085 |
| | | | 1,827,374 |
| | 1,492,828 |
| | 188,365 |
| | | | 1,681,193 |
|
| Segment network services and other gross margin | 184,975 |
| | 7,339 |
| | | | 192,314 |
| | 184,736 |
| | 8,189 |
| | | | 192,925 |
|
Segment general and administrative expenses (a) | 69,125 |
| | 54,770 |
| | 121,045 |
| | 244,940 |
| | 68,329 |
| | 45,720 |
| | 107,161 |
| | 221,210 |
|
| Segment operating profit (loss) | 1,642,139 |
| | 253,654 |
| | (121,045 | ) | | 1,774,748 |
| | 1,609,235 |
| | 150,834 |
| | (107,161 | ) | | 1,652,908 |
|
| Stock-based compensation expense | | | | | 66,458 |
| | 66,458 |
| | | | | | 75,297 |
| | 75,297 |
|
| Depreciation, amortization and accretion | | | | | 880,197 |
| | 880,197 |
| | | | | | 834,725 |
| | 834,725 |
|
| Interest expense and amortization of deferred financing costs | | | | | 430,402 |
| | 430,402 |
| | | | | | 385,656 |
| | 385,656 |
|
Other income (expenses) to reconcile to income (loss) from continuing operations before income taxes(b) | | | | | 39,955 |
| | 39,955 |
| | | | | | 112,170 |
| | 112,170 |
|
| Income (loss) from continuing operations before income taxes | | | | | | | $ | 357,736 |
| | | | | | | | $ | 245,060 |
|
| Capital expenditures | $ | 317,050 |
| | $ | 514,006 |
| | $ | 20,456 |
| | $ | 851,512 |
| | $ | 318,900 |
| | $ | 279,488 |
| | $ | 15,790 |
| | $ | 614,178 |
|
| |
| (a) | Segment cost of operations excludes (1) stock-based compensationExcludes the Company's contingent payment pursuant to operating leases, which are recorded as expense of $12.2 million and $17.6 million forin the nine months ended September 30, 2017 and 2016, respectively, and (2) prepaid lease purchase price adjustments of $15.1 million and $16.0 million for the nine months ended September 30, 2017 and 2016, respectively. Segment general and administrative expenses exclude stock-based compensation expense of $54.3 million and $57.7 million for the nine months ended September 30, 2017 and 2016, respectively. |
| |
(b) | See condensed consolidated statement of operations for further information.
period such contingencies are resolved. |
The reconciliation of cash, cash equivalents, and restricted cash reported within various lines on the condensed consolidated balance sheet to amounts reported in the condensed consolidated statement of cash flows is shown below.
|
| | | | | | | |
| | March 31, 2020 | | December 31, 2019 |
| Cash and cash equivalents | $ | 310 |
| | $ | 196 |
|
| Restricted cash, current | 157 |
| | 137 |
|
| Restricted cash reported within other assets, net | 5 |
| | 5 |
|
| Cash, cash equivalents and restricted cash | $ | 472 |
| | $ | 338 |
|
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-Unaudited (Continued)
(Tabular dollars in thousands, except per share amounts)
| |
11. | Supplemental Cash Flow Information |
|
| | | | | | | |
| | Nine Months Ended September 30, |
| | 2017 | | 2016 |
| Supplemental disclosure of cash flow information: | | | |
| Interest paid | $ | 420,317 |
| | $ | 357,094 |
|
| Income taxes paid | 13,853 |
| | 11,740 |
|
| Supplemental disclosure of non-cash investing and financing activities: | | | |
| Increase (decrease) in accounts payable for purchases of property and equipment | (5,282 | ) | | 1,390 |
|
| Purchase of property and equipment under capital leases and installment purchases | 25,189 |
| | 40,295 |
|
| Preferred stock dividends declared but not paid (see note 9) | 29,935 |
| | 10,997 |
|
Lightower AcquisitionApril 2020 Senior Notes Offering
On November 1, 2017,April 3, 2020, the Company closedissued $1.25 billion aggregate principal amount of senior unsecured notes ("April 2020 Senior Notes"), which consisted of (1) $750 million aggregate principal amount of 3.300% senior unsecured notes due July 2030 and (2) $500 million aggregate principal amount of 4.150% senior unsecured notes due July 2050. The Company used the Lightower Acquisition. See note 3 for further discussionnet proceeds of the Lightower Acquisition.April 2020 Senior Notes offering to repay outstanding indebtedness under the 2016 Revolver.
Common Stock Dividend
On October 15, 2017, the Company's board of directors declared a quarterly common stock cash dividend of $1.05 per share. The common stock dividend will be paid on December 29, 2017 to common stockholders of record as of December 15, 2017.
| |
| ITEM 2. | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
The following discussion should be read in conjunction with the response to Part I, Item 1 of this report and the consolidated financial statements of the Company including the related notes and "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" ("MD&A")included in our 2016the 2019 Form 10-K. Capitalized terms used but not definedAs discussed in this Item have the same meaning given"Explanatory Note" to them in our 2016 Form 10-K. Unless this Form 10-Q indicates otherwise orand in further detail in the context otherwise requires,2019 Form 10-K, amounts reflected for the terms "we," "our," "our company," "the company," or "us" as used in this Form 10-Q referfirst quarter of 2019 have been restated to Crown Castle International Corp., and its predecessor, as applicable, and their subsidiaries.reflect the impact of the Historical Adjustments.
General Overview
Overview
We own, operate and lease shared wirelesscommunications infrastructure that has been acquired or constructed over time and is geographically dispersed throughout the U.S., and which consists ofincluding approximately (1) approximately 40,000 towers and (2) over 60,00080,000 route miles of fiber after giving effect to the Lightower Acquisition, primarily supporting small cell networkscells and fiber based solutions.
Our towers have a significant presence in the top 100 basic trading areas ("BTAs"), and the majority of our small cells and fiber is located in major metropolitan areas. Site rental revenues represented 84%92% of our thirdfirst quarter 20172020 consolidated net revenues. Our Towers operating segment and Small Cells operatingFiber segment accounted for 81%66% and 19%34%, respectively, of our thirdfirst quarter 20172020 site rental revenues, respectively.revenues. See note 1011 to our condensed consolidated financial statements. The vast majority of our site rental revenues is of a recurring nature and was contracted for in a prior year.is subject to long-term tenant contracts with our tenants.
Strategy
OurAs a leading provider of shared communications infrastructure in the U.S., our strategy is to create long-term stockholder value via a combination of (1) growing cash flows generated from our existing portfolio of wirelesscommunications infrastructure, (2) returning a meaningful portion of our cash providedgenerated by operating activities to our common stockholders in the form of dividends and (3) investing capital efficiently to grow cash flows and long-term dividends per share. Our strategy is based, in part, on our belief that the U.S. is the most attractive market for shared communications infrastructure investment with the greatest long-term growth potential. We measure our efforts to create "long-term stockholder value" by the combined payment of dividends to stockholders and growth in our per shareper-share results. The key elements of our strategy are to:
| |
| • | Grow cash flows from our existing communications infrastructure. We are focused on maximizing the recurring site rental cash flows generated from providing our tenants with long-term access to our shared infrastructure assets, which we believe is the core driver of value for our stockholders. Tenant additions or modifications of existing tenant equipment (collectively, "tenant additions") enable our tenants to expand coverage and capacity in order to meet increasing demand for data while generating high incremental returns for our business. We believe our product offerings of towers and small cells provide a comprehensive solution to our wireless tenants' growing network needs through our shared communications infrastructure model, which is an efficient and cost-effective way to serve our tenants. Additionally, we believe our ability to share our fiber assets across multiple tenants to deploy both small cells and offer fiber solutions allows us to generate cash flows and increase stockholder return. |
| |
| • | Return cash generated by operating activities to common stockholders in the form of dividends. We believe that distributing a meaningful portion of our cash generated by operating activities appropriately provides common stockholders with increased certainty for a portion of expected long-term stockholder value while still allowing us to retain sufficient flexibility to invest in our business and deliver growth. We believe this decision reflects the translation of the high-quality, long-term contractual cash flows of our business into stable capital returns to common stockholders. |
| |
| • | Invest capital efficiently to grow cash flows and long-term dividends per share. In addition to adding tenants to existing communications infrastructure, we seek to invest our available capital, including the net cash generated by our operating activities and external financing sources, in a manner that will increase long-term stockholder value on a risk-adjusted basis. These investments include constructing and acquiring new communications infrastructure that we expect will generate future cash flow growth and attractive long-term returns by adding tenants to those assets over time. Our historical investments have included the following (in no particular order): |
| |
| ◦ | construction of towers, fiber and small cells; |
| |
| ◦ | acquisitions of towers, fiber and small cells; |
| |
| ◦ | acquisitions of land interests (which primarily relate to land assets under towers); |
| |
| ◦ | improvements and structural enhancements to our existing communications infrastructure; |
Grow cash flows from our wireless infrastructure. We seek to maximize our site rental cash flows by working with our customers to provide them quick access to our wireless infrastructure and entering into associated long-term leases. Tenant additions or modifications of existing tenant equipment (collectively, "tenant additions") enable our customers to expand coverage and capacity in order to meet increasing demand for wireless connectivity, while generating high incremental returns for our business. We believe our product offerings of towers and small cells provide a comprehensive solution to our customers' growing connectivity needs through our shared wireless infrastructure model, which is an efficient and cost effective way to serve our customers. We also believe that there will be considerable future demand for our wireless infrastructure based on the location of our wireless infrastructure and the rapid growth in wireless connectivity, which will lead to future growth in the wireless industry.
Return cash provided by operating activities to stockholders in the form of dividends. We believe that distributing a meaningful portion of our cash provided by operating activities appropriately provides stockholders with increased certainty for a portion of expected long-term stockholder value while still retaining sufficient flexibility to invest in our business and deliver growth. We believe this decision reflects the translation of the high-quality, long-term contractual cash flows of our business into stable capital returns to stockholders.
Invest capital efficiently to grow cash flows and long-term dividends per share. We seek to invest our available capital, including the net cash provided by our operating activities and external financing sources, in a manner that will increase long-term stockholder value on a risk-adjusted basis. Our historical investments have included the following (in no particular order):
| |
| ◦ | purchases of shares of our common stock from time to time; and |
| |
| ◦ | acquisitions or construction of towers, fiber and small cells; |
| |
◦ | acquisitions of land interests under towers; |
| |
◦ | improvements and structural enhancements to our existing wireless infrastructure; or |
| |
◦ | purchases, repayments or redemptions of our debt. |
Our strategy to create long-term stockholder value is based on our belief that additionalthere will be considerable future demand for our wirelesscommunications infrastructure will be created bybased on the expected continuedlocation of our assets and the rapid growth in the demand for wireless connectivity.data. We believe that such demand for our wirelesscommunications infrastructure will continue, will result in growth of our cash flows due to tenant additions on our existing wirelesscommunications infrastructure, and will create other growth opportunities for us, such as demand for new wireless infrastructure.newly constructed or acquired communications infrastructure, as described above. Further, we seek to augment the long-term value creation associated with growing our recurring site rental cash flows by offering certain ancillary site development and installation services within our Towers segment.
Business Fundamentals and Results
The following are certain highlights of our business fundamentals and results as of and for the ninethree months ended September 30, 2017.March 31, 2020.
We operate as a REIT for U.S. federal income tax purposes.purposes
| |
| ◦ | As a REIT, we are generally entitled to a deduction for dividends that we pay and therefore are not subject to U.S. federal corporate income tax on our taxable income that is distributed to our stockholders. |
| |
| ◦ | To qualifyremain qualified and be taxed as a REIT, we will generally be required to annually distribute to our stockholders at least 90% of our REIT taxable income, after the utilization of our NOLs (determined without regard to the dividends paid deduction and excluding net capital gain), each year to our stockholders.. |
| |
| ◦ | See note 67 to our condensed consolidated financial statements for further discussion of our REIT status. |
Potential growth resulting from wireless network expansion and new entrants caused bythe increasing demand for data and connectivity
| |
◦ | We expect wireless carriers will continue their focus on improving network quality and expanding capacity by utilizing a combination of towers and small cells solutions. We believe our product offerings of towers and small cells provide a comprehensive wireless solution to our customers' growing wireless infrastructure needs. |
| |
| ◦ | We expect existing and potential new customertenant demand for our wirelesscommunications infrastructure will result from (1) new technologies, (2) increased usage of wireless applications (including mobile entertainment, mobile internet, usage, and machine-to-machine applications),applications, (3) adoption of other emerging and embedded wireless devices (including smartphones, laptops, tablets, wearables and other devices), (4) increasing smartphone penetration, (5) wireless carrier focus on expanding both network quality and capacity, including the use of both towers and small cells, or (6) the adoption of other bandwidth-intensive applications (such as cloud services and video communications) and (7) the availability of additional spectrum. |
| |
| ◦ | We expect U.S. wireless carriers will continue to focus on improving network quality and expanding capacity (including through 5G initiatives) by utilizing a combination of towers and small cells. We believe our product offerings of towers and small cells provide a comprehensive solution to our wireless tenants' growing communications infrastructure needs. |
| |
| ◦ | We expect organizations will continue to increase the usage of high-bandwidth applications that will require the utilization of more fiber infrastructure and fiber solutions, such as those we provide. |
| |
| ◦ | Within our Fiber segment, we are able to generate growth and returns for our stockholders by deploying our fiber for both small cells and fiber solutions tenants. |
| |
| ◦ | Tenant additions on our existing communications infrastructure are achieved at a low incremental operating cost, delivering high incremental returns. |
Substantially all of our wireless | |
| • | Substantially all of our communications infrastructure can accommodate additional tenancy, either as currently constructed or with appropriate modifications. |
| |
| • | Investing capital efficiently to grow long-term dividends per share (see also "Item 2. MD&A—General Overview—Strategy") |
| |
| ◦ | U.S. wireless carriers continueDiscretionary capital expenditures of $426 million for the three months ended March 31, 2020, predominately resulting from the construction of new communications infrastructure and improvements to investexisting communications infrastructure in their networks.order to support additional tenants. |
Site rental revenues under long-term tenant leases with contractual escalations
| |
| ◦ | We expect to continue to construct and acquire new communications infrastructure based on our tenants' needs and generate attractive long-term returns by adding additional tenants over time. |
| |
| • | Site rental revenues under long-term tenant contracts |
| |
| ◦ | Initial terms of five to 15 years for site rental revenues derived from wireless tenants, with contractual escalations and multiple renewal periods, at the option of the tenant, of five to ten10 years each. |
| |
| ◦ | Initial terms that generally vary between three to 20 years for site rental revenues derived from our fiber solutions tenants (including from organizations with high-bandwidth and multi-location demands). |
| |
| ◦ | Weighted-average remaining term of approximately five years, exclusive of renewals exercisable at the tenants' option, currently representing approximately $18$24 billion of expected future cash inflows. |
Revenues predominately | |
| • | Majority of our revenues from large wireless carriers |
| |
| ◦ | Approximately 84%74% of our site rental revenues were derived from T-Mobile, AT&T, Verizon Wireless and Sprint for the three months ended March 31, 2020.
|
| |
| ▪ | On April 1, 2020, T-Mobile and Verizon Wireless. See also Sprint announced the completion of their previously disclosed merger. For additional information, see "Item 2. MD&A—General Overview—Outlook Highlights" presented below.1A. Risk Factors" in the 2019 Form 10-K. |
| |
| • | Majority of land interests under our towers under long-term control |
| |
| ◦ | Approximately 90% of our Towers segment site rental gross margin and more than 75%approximately 80% of our Towers segment site rental gross margin is derived from towers that reside on land that we own or control for greater than ten10 and 20 years, respectively. The aforementioned amountspercentages include towers that reside on land interests that are owned, including through fee interests and perpetual easements, which represent over one-thirdapproximately 40% of our Towers segment site rental gross margin. |
Minimal sustaining capital expenditure requirements | |
| • | Majority of our fiber assets are located in major metropolitan areas and are on public rights-of-way. |
| |
| • | Minimal sustaining capital expenditure requirements |
| |
| ◦ | Sustaining capital expenditures represented less than 2%approximately 1% of net revenues. |
Debt portfolio with long-dated maturities extended over multiple years, with the majority of such debt having a fixed rate (see "Item 3. Quantitative and Qualitative Disclosures About Market Risk" for a further discussion of our debt)
| |
| • | Debt portfolio with long-dated maturities extended over multiple years, with the vast majority of such debt having a fixed rate (see "Item 3. Quantitative and Qualitative Disclosures About Market Risk" for a further discussion of our debt) |
| |
| ◦ | AfterAs of March 31, 2020, after giving effect to our April 2020 Senior Notes issuance and the closingapplication of the Lightower Acquisition, 81%net proceeds therefrom, our outstanding debt has a weighted-average interest rate of 3.7% and weighted-average maturity of approximately seven years (assuming anticipated repayment dates on our Tower Revenue Notes). See note 13 to our condensed consolidated financial statements. |
| |
| ◦ | 88% of our debt ishas fixed rate.rate coupons, after giving effect to our April 2020 Senior Notes issuance (see note 13 to our condensed consolidated financial statements). |
| |
| ◦ | Our debt service coverage and leverage ratios were comfortablyare within their respective financial maintenance covenants. |
During 2017,2020, we have completed the following debt and equity financing transactions (see notes 4, and 9note 13 to our condensed consolidated financial statements and "Item 2. MD&A—Liquidity and Capital Resources")
statements) | |
| ◦ | In February 2017,April 2020, we issued the 4.0%$1.25 billion aggregate principal amount of senior unsecured notes ("April 2020 Senior NotesNotes"), which consisted of (1) $750 million aggregate principal amount of 3.300% senior unsecured notes due July 2030 and (2) $500 million aggregate principal amount of 4.150% senior unsecured notes due July 2050. We used the net proceeds of the April 2020 Senior Notes offering to repay a portion of the borrowings under the 2016 Revolver. |
| |
◦ | In February 2017, we entered into an amendment to the Credit Facility to (1) incur additional term loans in an aggregate principal amount of $500 million and (2) extend the maturity of both the 2016 Term Loan A and the 2016 Revolver to January 2022. |
| |
◦ | In May 2017, we issued the 4.75% Senior Notes and used the net proceeds (1) to partially fund the Wilcon Acquisition and (2) to repay a portion of theoutstanding borrowings under the 2016 Revolver. |
| |
◦ | During May 2017, we completed the May 2017 Equity Financing, which generated net proceeds of approximately $442 million, and used the net proceeds to partially fund the Wilcon Acquisition. |
| |
◦ | During July and August 2017, we completed the following financings, the aggregate proceeds of which we used to partially fund the Lightower Acquisition and pay related fees and expenses (see note 12): |
| |
◦ | the July 2017 Common Stock Offering, which generated net proceeds of approximately $3.8 billion; |
| |
◦ | the Mandatory Convertible Preferred Stock Offering, which generated net proceeds of approximately $1.6 billion; and |
| |
◦ | the August 2017 Senior Notes Offering, which generated net proceeds of approximately $1.7 billion. |
| |
◦ | During August 2017, we entered into an amendment to the Credit Facility to (1) increase the commitments under the 2016 Revolver by $1.0 billion, for total commitments of $3.5 billion, and (2) extend the maturity of both the 2016 Term Loan A and the 2016 Revolver to August 2022. |
Significant cash flows from operations
| |
◦• | NetSignificant cash provided by operating activities was $1.4 billion.flows from operations
|
| |
| ◦ | Net cash provided by operating activities was $653 million for the three months ended March 31, 2020. |
| |
| ◦ | In addition to the positive impact of contractual escalators, we expect to grow our core business of providing access to our wirelesscommunications infrastructure as a result of future anticipated additional demand for our wirelesscommunications infrastructure. |
Returning cash flows provided by operations to stockholders in the form of dividends
| |
| ◦ | During each of the first three quarters of 2017,March 2020, we paid a common stock cash dividend of $0.95$1.20 per share, totaling approximately $1.1 billion. In October 2017, we increased our quarterly common stock dividend to $1.05 per share, from an annualized amount of $3.80 per share to an annualized amount of $4.20 per share. As such, our board of directors declared a quarterly common stock cash dividend of $1.05 per share in October 2017, which represents an increase of 11% from the quarterly common stock cash dividend declared during the first three quarters of 2017. $513 million. |
| |
| ◦ | We currently expect our anticipated common stock cash dividends over the next 12 months to be a cumulative amount of at least $4.20$4.80 per share, or an aggregate amount of at least $1.7approximately $2.0 billion. |
| |
| ◦ | Over time, we expect to increase our dividend per share generally commensurate with our realized growth in cash flows. Any future common stock dividends are subject to the approval ofdeclaration by our board of directors. |
Investing capital efficiently to grow long-term dividends per share
| |
◦ | Discretionary capital expenditures were $791.8 million, including wireless infrastructure improvements in order See note 10 to support additional site rentals, construction of wireless infrastructureour condensed consolidated financial statements for further information regarding our common stock and land purchases.
dividends. |
| |
| ◦ | See note 3During February 2020, we paid a preferred stock dividend of $17.1875 per share, totaling approximately $28 million. We currently expect our preferred stock dividends, prior to the mandatory conversion of our condensed consolidated financial statements for6.875% Mandatory Convertible Preferred Stock in August 2020, to be a discussioncumulative amount of the FiberNet Acquisition and the Wilcon Acquisition and notes 3 and 12$17.1875 per share, or an aggregate amount of approximately $28 million. Any future preferred stock dividends are subject to declaration by our condensed consolidated financial statements and "Lightower Acquisition" below for a discussion of the Lightower Acquisition, all of which we expect to leverage to support the construction of new small cells and fiber.
board directors. |
Lightower Acquisition
In July 2017, we entered into a definitive agreement to acquire Lightower for approximately $7.1 billion in cash, subject to certain limited adjustments. On November 1, 2017, we closed the Lightower Acquisition, which was financed using (1) cash on hand, including the proceeds from the July 2017 Equity Offerings and August 2017 Senior Notes Offering, and (2) borrowings under the 2016 Revolver. Lightower owns or has rights to approximately 32,000 route miles of fiber located primarily in top metro markets in the Northeast, including Boston, New York and Philadelphia. See notes 3 and 12 to our condensed consolidated financial statements.
Outlook Highlights
The following are certain highlights of our full year 2017 and 20182020 outlook that impact our business fundamentals described above.
We expect that, when compared to full year 2019, our full year 2017 and 20182020 site rental revenue growth will be positively impacted by (1) a healthy environment forhigher tenant additions, as large wireless carriers upgrade and enhance their networksfiber solutions tenants attempt to meet the increasing needdemand for wireless connectivity, (2) a contribution of $885 to $905 million to site rental revenue during 2018 from the FiberNet Acquisition, the Wilcon Acquisition and the Lightower Acquisition, collectively (see notes 3 and 12 to our condensed consolidated financial statements), and (3) anticipated non-renewals of tenant leases primarily resulting from our customers' decommissioning of the Acquired Networks.
data.
We expect to continue to invest a meaningful amount of our available capital in the form of discretionary capital expenditures for 2017 and 20182020, as we continue to exceed levels from 2016 with a continued increase in the construction ofconstruct new small cells.cells and fiber as a result of the anticipated returns on such discretionary investments. We also expect sustaining capital expenditures to beremain approximately 2% of net revenues for full year 20172020.
Coronavirus (COVID-19)
The global outbreak of the novel coronavirus (COVID-19) was declared a pandemic by the World Health Organization and 2018.a national emergency by the U.S. government in March 2020 and has adversely affected the United States. In response, both the public and private sectors have introduced certain policies and initiatives in an effort to reduce the transmission of COVID-19 ("Initiatives"), such as the imposition of travel restrictions; mandates from federal, state and local authorities to close non-essential businesses and avoid large gatherings of people; quarantine or "shelter-in-place;" and the promotion of social distancing and the adoption of work-from-home and online learning by companies and institutions. In addition, the continued spread of COVID-19 and the resulting Initiatives have led to a significant economic downturn, global supply chain disruptions and volatility in the global capital markets.
In accordance with the U.S. Department of Homeland Security guidance issued in March 2020 designating telecommunications infrastructure and networks as critical infrastructure, we have continued our operations to ensure viability of communications networks, which are essential to public health and safety. To date, we have taken a variety of measures to ensure the availability of our critical infrastructure, promote the health and safety of our employees, and support the communities in which we operate. These measures include providing support for our tenants as reflected in the FCC's "Keep Americans Connected" pledge, requiring work-from-home arrangements for a large portion of our workforce and imposing travel restrictions for our employees where practicable, canceling physical participation in meetings, events and conferences, and other modifications to our business practices. We will continue to actively monitor the situation and may take further actions as may be required by governmental authorities or that we determine are in the best interests of our employees, tenants, business partners and stockholders.
We do not believe that COVID-19 had a material impact on our financial position, results of operations and cash flows in the first quarter of 2020. Given the Company’s access to various sources of liquidity, we currently anticipate that we will be able to maintain sufficient liquidity as we manage through the current environment. See also "Item 2. MD&A—Liquidity and Capital Resources—Liquidity Position" and "Item 1A. Risk Factors."
Results of Operations
The following discussion of our results of operations should be read in conjunction with our condensed consolidated financial statements and our 2016the 2019 Form 10-K. Amounts for three months ended March 31, 2019, and any discussion relating to those amounts, give effect to the impact of the Historical Adjustments as described in the "Explanatory Note."
The following discussion of our results of operations is based on our condensed consolidated financial statements prepared in accordance with GAAP, which requires us to make estimates and judgments that affect the reported amounts (see "Item 2. MD&A—Accounting and Reporting Matters—Critical Accounting Policies and Estimates" and note 23 to our consolidated financial statements in our 2016the 2019 Form 10-K).
Our operating segments consist of (1) Towers and (2) Small Cells.Fiber. See note 1011 to our condensed consolidated financial statements for further discussion of our operating segments.
See "Item 2. MD&A—Accounting and Reporting Matters—Non-GAAP and Segment Financial Measures" for a discussion of our use of (1) segment site rental gross margin, (2) segment network services and other gross margin, (3) segment operating profit, including their respective definitions, and (4) Adjusted EBITDA, including its definition, and a reconciliation to net income (loss).
Highlights of the Company'sour results of operations for the three months ended September 30, 2017March 31, 2020 and 20162019 are depicted below.
| | | ($ in thousands) | | Three Months Ended September 30, | | |
| | 2017 | | 2016 | | $ Change | | % Change | |
| (In millions of dollars) | | Three Months Ended March 31, | |
| 2020 | | 2019 | | $ Change | | % Change |
| | | (As Restated) | |
| Site rental revenues: | | | | | | |
| Towers site rental revenues | | $724,813 | | $709,603 | | +$15,210 | | +2% | $867 | | $828 | | +$39 | | +5% |
| Small Cells site rental revenues | | $167,950 | | $102,429 | | +$65,521 | | +64% | |
| Fiber site rental revenues | | $443 | | $414 | | +$29 | | +7% |
| Total site rental revenues | | $892,763 | | $812,032 | | +$80,731 | | +10% | $1,310 | | $1,242 | | +$68 | | +5% |
| Segment site rental gross margin: | | |
Towers site rental gross margin(a) | | $512,776 | | $499,281 | | +$13,495 | | +3% | $653 | | $617 | | +$36 | | +6% |
Small Cells site rental gross margin(a) | | $108,631 | | $64,675 | | +$43,956 | | +68% | |
| Segment network services and other gross margin: | | |
Towers network services and other gross margin(a) | | $62,156 | | $69,584 | | -$7,428 | | -11% | |
Small Cells network services and other gross margin(a) | | $3,229 | | $2,811 | | $418 | | 15% | |
Fiber site rental gross margin(a) | | $291 | | $274 | | +$17 | | +6% |
| Services and other gross margin: | | |
Towers services and other gross margin(a) | | $13 | | $42 | | $(29) | | (69)% |
Fiber services and other gross margin(a) | | $1 | | $1 | | — | | —% |
| Segment operating profit: | | |
Towers operating profit(a) | | $552,442 | | $546,640 | | +$5,802 | | +1% | $642 | | $633 | | +$9 | | +1% |
Small Cells operating profit(a) | | $93,445 | | $53,006 | | +$40,439 | | +76% | |
Fiber operating profit(a) | | $241 | | $227 | | +$14 | | +6% |
| Net income attributable to CCIC stockholders | | $185 | | $193 | | $(8) | | (4)% |
Adjusted EBITDA(b) | | $604,802 | | $564,120 | | +$40,682 | | +7% | $814 | | $804 | | +$10 | | +1% |
| Net income attributable to CCIC common stockholders | | $85,259 | | $87,369 | | -$2,110 | | -2% | |
| |
| (a) | See note 1011 to our condensed consolidated financial statements for further discussion of our definitions of segment site rental gross margin, segment network services and other gross margin and segment operating profit. |
| |
| (b) | See reconciliation of Adjusted EBITDAthis non-GAAP financial measure to net income (loss) and definition included in "Item"Item 2. MD&A—Accounting and Reporting Matters—Non-GAAP and Segment Financial Measures." |
Site rental revenues grew $80.7$68 million, or 10%5%, fromfor the three months ended September 30, 2016March 31, 2020 compared to the three months ended September 30, 2017.March 31, 2019. This growth was predominately comprised of the factors depicted in the chart below:
(In millions of dollars)
| |
| (b) | Includes (1) amortization of up frontup-front payments received from long-term tenant contracts and other deferred credits (commonly referred to as prepaid rent) and (2) the construction of small cells.. |
| |
(b)(c) | Represents initial contribution of acquisitions and tower builds untilThe components in this chart may not sum to the one-year anniversary of the acquisition or build.total due to rounding. |
Towers site rental revenues for the thirdfirst quarter of 20172020 were $724.8$867 million and increased by $15.2$39 million, or 2%5%, from $709.6$828 million during the same period in the prior year. The increase in Towers site rental revenues was impacted by the following items, inclusive of straight-line accounting, in no particular order:accounting: tenant additions across our entire portfolio, renewals or extensions of tenant leases,contracts, escalations acquisitions, and non-renewals of tenant leases predominately arising from our customers' decommissioning of the Acquired Networks.tenants contracts. Tenant additions were influenced by our customers'tenants' ongoing efforts to improve network quality and capacity.
Small CellsFiber site rental revenues for the thirdfirst quarter of 20172020 were $168.0$443 million and increased by $65.5$29 million, or 64%7%, from $102.4$414 million during the same period in the prior year. The increase in Small CellsFiber site rental revenues was predominately impacted by (1) $37.9 million from the FiberNet Acquisition completed in January 2017, (2) $13.3 million from the Wilcon Acquisition completed in June 2017increased demand for small cells and (3) the leasing of newly constructed small cells. Demandfiber solutions. Increased demand for small cells was influenceddriven by our customers' growing adoption of small cells astenants' network strategy in an important component of their network strategyeffort to provide capacity and relieve network congestion.congestion, and increased demand for fiber solutions was driven by increasing demand for data.
The increase in Towers site rental gross margin was related to the previously mentioned 2%previously-mentioned 5% increase in Towers site rental revenues and relatively fixed costs to operate our towers. The increase in Small CellsFiber site rental gross margin was predominately related to the previously mentioned 64%previously-mentioned 7% increase in Small CellsFiber site rental revenues.
Towers network services and other gross margin was $62.2$13 million for the thirdfirst quarter of 20172020 and decreased by $7.4$29 million, or 11%69%, from $69.6$42 million during the same period in the prior year, which is a reflection of (1) the volume of activity from carriercarriers' network enhancements and (2) the volume and mix of network services and other work. Our network services and other offerings are of a variable nature as these revenues are not under long-term contracts.
General and administrative expenses for the third quarter of 2017 were $100.8 million and increased by $10.9 million, or approximately 12%, from $89.9 million during the same period in the prior year. The increase in general and administrative expenses was primarily related to the growth in our Small Cells business as a result of activities such as (1) the FiberNet Acquisition, (2) the Wilcon Acquisition and (3) the continued expansion of our Small Cells segment.
Towers operating profit for the thirdfirst quarter of 20172020 increased by $5.8$9 million, or 1%, from the same period in the prior year. The increase in Towers operating profit was primarily impacted byrelated to the growth in our Towers site rental revenues and relatively fixed costs to operate our towers.towers and partially offset by the previously-mentioned decrease in Towers service activity.
Small CellsFiber operating profit for the thirdfirst quarter of 20172020 increased by $40.4$14 million, or 76%6%, from the same period in the prior year. Small CellsFiber operating profit was positively impacted by the FiberNet Acquisition, the Wilcon Acquisitionincreased demand for small cells and the leasing of newly constructed small cells.
Adjusted EBITDA increased $40.7 million, or 7%, from the third quarter of 2016 to the third quarter of 2017. Adjusted EBITDAfiber solutions and was primarily impactedpartially offset by the growth in our site rental activities in both Towers and Small Cells, including the FiberNet Acquisition and Wilcon Acquisition as discussed above.
Depreciation, amortization and accretion was $296.0 million for the third quarter of 2017 and increased by $15.2 million, or 5%, from $280.8 million during the same period in the prior year. This increase predominately resulted from a correspondingan increase in our gross propertyFiber-related selling, general and equipment due to capital expenditures and acquisitions, including the FiberNet Acquisition and Wilcon Acquisition.administrative expenses.
Interest expense and amortization of deferred financing costs were $154.1$175 million for the thirdfirst quarter of 20172020 and increased by $24.2$7 million, or 4%, from $129.9$168 million during the same period in the prior year. The increase predominately resulted from a corresponding increase in our outstanding indebtedness due to acquisitions, including the FiberNet Acquisition, the Wilcon Acquisition and the Lightower Acquisition. See notes 3 and 12 to our condensed consolidated financial statements. As a result of repaying certainfinancing of our debt, in conjunction with our refinancing activities, we incurred a loss of $10.3 million for the third quarter of 2016. See our 2016 Form 10-K for further discussion of our first quarter 2016 refinancing activities.discretionary capital expenditures.
For the thirdfirst quarter of 20172020 and 2016,2019, the effective tax rate differs from the federal statutory rate predominately due to our REIT status, including the dividends paid deduction. See note 67 to our condensed consolidated financial statements and also note 11 to our consolidated financial statements in our 2016the 2019 Form 10-K.
Net income (loss) attributable to CCIC stockholders was income of $115.2$185 million during the thirdfirst quarter of 20172020 compared to income of $98.4$193 million during the thirdfirst quarter of 2016.2019. The increase was predominately related to net growth in both our Towers and Small Cells segments as well as a decrease in the losses on retirement of long-term obligations, partially offset by an increase in expenses, including (1) interest expense and amortization of deferred financing costs, (2) depreciation, amortization, and accretion, and (3) general and administrative expenses.
Highlights of the Company's results of operations for the nine months ended September 30, 2017 and 2016 are depicted below.
|
| | | | | | | | |
| ($ in thousands) | | Nine Months Ended September 30, | | | | |
| | 2017 | | 2016 | | $ Change | | % Change |
| Site rental revenues: | | | | | | | | |
| Towers site rental revenues | | $2,158,994 | | $2,118,159 | | +$40,835 | | +2% |
| Small cells site rental revenues | | $459,511 | | $297,767 | | +$161,744 | | +54% |
| Total site rental revenues | | $2,618,505 | | $2,415,926 | | +$202,579 | | +8% |
| Segment site rental gross margin: | | | | | | | | |
Towers site rental gross margin(a) | | $1,526,289 | | $1,492,828 | | +$33,461 | | +2% |
Small Cells site rental gross margin(a) | | $301,085 | | $188,365 | | +$112,720 | | +60% |
| Segment network services and other gross margin: | | | | | | | | |
Towers network services and other gross margin(a) | | $184,975 | | $184,736 | | +$239 | | —% |
Small Cells network services and other gross margin(a) | | $7,339 | | $8,189 | | -$850 | | -10% |
| Segment operating profit: | | | | | | | | |
Towers operating profit(a) | | $1,642,139 | | $1,609,235 | | +$32,904 | | +2% |
Small Cells operating profit(a) | | $253,654 | | $150,834 | | +$102,820 | | +68% |
Adjusted EBITDA(b) | | $1,774,748 | | $1,652,908 | | +$121,840 | | +7% |
| Net income attributable to CCIC common stockholders | | $316,511 | | $199,272 | | +$117,239 | | +59% |
| |
(a) | See note 10 to our condensed consolidated financial statements for further discussion of our definitions of segment site rental gross margin, segment network services and other gross margin and segment operating profit. |
| |
(a) | See reconciliation of Adjusted EBITDA in "Item 2. MD&A—Accounting and Reporting Matters—Non-GAAP and Segment Financial Measures."
|
Site rental revenues grew $202.6 million, or 8%, from the nine months ended September 30, 2016 to the nine months ended September 30, 2017. This growth was predominately comprised of the factors depicted in the chart below:
| |
(a) | Includes (1) amortization of up front payments received from long-term tenant contracts and other deferred credits (commonly referred to as prepaid rent) and (2) the construction of small cells. |
| |
(b) | Represents initial contribution of acquisitions and tower builds until the one-year anniversary of the acquisition or build. |
Towers site rental revenues for the first nine months of 2017 were $2.2 billion and increased by $40.8 million, or 2%, from the same period in the prior year. The increase in Towers site rental revenues was impacted by the following items, inclusive of straight-line accounting, in no particular order: tenant additions across our entire portfolio, renewals or extensions of tenant leases, escalations, acquisitions (including the TDC Acquisition in April 2016), and non-renewals of tenant leases predominately arising from our customers' decommissioning of the Acquired Networks. Tenant additions were influenced by our customers' ongoing efforts to improve network quality and capacity.
Small Cells site rental revenues for the first nine months of 2017 were $459.5 million and increased by $161.7 million, or 54%, from $297.8 million during the same period in the prior year. The increase in Small Cells site rental revenue was predominately impacted by (1) an increase of $106.7 million from the FiberNet Acquisition completed in January 2017, (2) an increase of $13.3 million from the Wilcon Acquisition completed in June 2017 and (3) the leasing of newly constructed small cells. Demand for small cells was influenced by our customers' growing adoption of small cells as an important component of their network strategy to provide capacity and relieve network congestion.
The increase in Towers site rental gross margin was related to the previously mentioned 2% increase in Towers site rental revenues and relatively fixed costs to operate our towers. The increase in Small Cells site rental gross margin was predominately related to the previously mentioned 54%impact from the aforementioned Towers service activity as well as an increase in Small Cells site rental revenues.
Towers network services and other gross margin was $185.0 million for the first nine months of 2017 and remained consistent with the same period in the prior year. Towers network service and other gross margin can fluctuate based on (1) the volume of activity from carrier network enhancements and (2) the volume and mix of network services and other work. Our network services and other offerings are of a variable nature as these revenues are not under long-term contracts.
General and administrative expenses for the first nine months of 2017 were $299.2 million and increased by $20.3 million, or approximately 7%, from $278.9 million during the same period in the prior year. The increase inselling, general and administrative expenses, was primarily related to the growth in our Small Cells business as a result of activities such as (1) the FiberNet Acquisition, (2) the Wilcon Acquisition and (3) the continued expansion of our Small Cells segment.
Towers operating profit for the first nine months of 2017 increasedpartially offset by $32.9 million, or 2%, from the same period in the prior year. Towers operating profit was positively impacted by the growth in our site rental activities in both our Towers and relatively fixed costs to operate our towers.
Small Cells operating profit for the first nine months of 2017 increased by $102.8 million, or 68%, from the same period in the prior year. Small Cells operating profit was positively impacted by the previously mentioned FiberNet Acquisition, Wilcon Acquisition and the leasing of newly constructed small cells.Fiber segments.
Adjusted EBITDA increased $121.8$10 million, or 7%1%, from the first nine monthsquarter of 20162019 to the first nine monthsquarter of 2017. Adjusted EBITDA was positively impacted by2020, reflecting the growth in our site rental activities in both Towers and Small Cells, including the TDC Acquisition, the FiberNet Acquisition and the Wilcon Acquisition.
Depreciation, amortization and accretion was $880.2 million for the first nine months of 2017 and increased by $45.5 million, or 5%, from $834.7 million during the same period in the prior year. This increase predominately resulted from a corresponding increase in our gross property and equipment due to capital expenditures and acquisitions, including the FiberNet Acquisition and Wilcon Acquisition.
Interest expense and amortization of deferred financing costs were $430.4 million for the first nine months of 2017 and increased $44.7 million, or 12%, from $385.7 million during the first nine months of 2016. The increase predominately resulted from a corresponding increase in our outstanding indebtedness due to acquisitions, including the FiberNet Acquisition, the Wilcon Acquisition and the Lightower Acquisition. As a result of repaying certain of our debt, in conjunction with our refinancing activities, we incurred losses of $3.5 million and $52.3 million for the first nine months of 2017 and 2016, respectively. See note 4 to our condensed consolidated financial statements.
For the first nine months of 2017 and 2016, the effective tax rate differs from the federal statutory rate predominately due to our REIT status, including the dividends paid deduction. See note 6 to our condensed consolidated financial statements and also note 11 to our consolidated financial statements in our 2016 Form 10-K.
Net income (loss) attributable to CCIC stockholders was income of $346.4 million compared to income of $232.3 million during the first nine months of 2016. The increase was predominately due to growth in both our Towers and Small CellsFiber segments,as well as a decrease in the losses on retirement of long-term obligations, partially offset by an increasethe previously-mentioned decrease in expenses, including (1) interest expense and amortization of deferred financing costs, (2) depreciation, amortization, and accretion, and (3) general and administrative expenses.Towers service activity.
Liquidity and Capital Resources
Overview
General. Our core business generates revenues under long-term leasestenant contracts (see "Item 2. MD&A—General Overview—Overview") predominately from (1) the largest U.S. wireless carriers. Ourcarriers and (2) fiber solutions tenants. As a leading provider of shared communications infrastructure in the U.S., our strategy is to create long-term stockholder value via a combination of (1) growing cash flows generated from our portfolio of wirelesscommunications infrastructure, (2) returning a meaningful portion of our cash providedgenerated by operating activities to our stockholders in the form of dividends, and (3) investing capital efficiently to grow cash flows and
long-term dividends per share. Our strategy is based, in part, on our belief that the U.S. is the most attractive market for shared communications infrastructure investment with the greatest long-term growth potential. We measure our efforts to create "long-term stockholder value" by the combined payment of dividends to stockholders and growth in our per share results.
We have engaged, and expect to continue to engage, in discretionary investments that we believe will maximize long-term stockholder value. Our historical discretionary investments include (in no particular order): purchasing our common stock,constructing communications infrastructure, acquiring or constructing wirelesscommunications infrastructure, acquiring land interests (which primarily relate to land assets under towers,towers), improving and structurally enhancing our existing wirelesscommunications infrastructure, purchasing shares of our common stock, and purchasing, repaying, or redeeming our debt. We have recently spent, and expect to continue to spend, a significant percentage of our discretionary investments on the construction of small cell networks.cells and fiber. We seek to fund our discretionary investments with both net cash providedgenerated by operating activities and cash available from financing capacity, such as the use of our undrawn availability from the 2016 Revolver, issuances under our CP Program, debt financings and issuances of equity or equity relatedequity-related securities, including under our 2018 ATM Program.
We seek to maintain a capital structure that we believe drives long-term stockholder value and optimizes our weighted-average cost of capital. We target a leverage ratio of approximately four to five times Adjusted EBITDA and interest coverage of Adjusted EBITDA to interest expense of approximately three times, Adjusted EBITDA, subject to various factors, such as the availability and cost of capital and the potential long-term return on our discretionary investments. We may choose to increase or decrease our leverage or coverage from these targets for various periods of time. We have no significant contractual debt maturities until 2021 (other than principal payments on certain outstanding debt).
We operate as a REIT for U.S. federal income tax purposes. We expect to continue to pay minimal cash income taxes as a result of our REIT status and our NOLs. See note 67 to our condensed consolidated financial statements and our 2016the 2019 Form 10-K.
Liquidity Position. The following is a summary of our capitalization and liquidity position as of September 30, 2017,March 31, 2020, after giving effect to our April 2020 Senior Notes offering and the closingapplication of the Lightower Acquisition.net proceeds therefrom. See "Item 3. Quantitative and Qualitative Disclosures About Market Risk" and note 4notes 5 and 13 to our condensed consolidated financial statements for additional information regarding our debt.debt, as well as note 10 to our condensed consolidated financial statements for additional information regarding our 2018 ATM Program.
| | | | September 30, 2017 | |
| | (In thousands of dollars) | |
Cash and cash equivalents(a) | $ | 199,134 |
| |
| (In millions of dollars) | | |
Cash, cash equivalents, and restricted cash(a) | | $ | 472 |
|
Undrawn 2016 Revolver availability(b) | 2,835,316 |
| 4,935 |
|
| Debt and other long-term obligations (current and non-current) | 15,859,415 |
| |
Debt and other long-term obligations (current and non-current)(c) | | 18,695 |
|
| Total equity | 12,672,332 |
| 10,121 |
|
| |
| (a) | ExclusiveInclusive of restricted cash.$5 million included within "Other assets, net" on our condensed consolidated balance sheet. |
| |
| (b) | Availability at any point in time is subject to certain restrictions based on the maintenance of financial covenants contained in the 2016 Credit Facility. See our2016the2019 Form 10-K. At any point in time, we intend to maintain available commitments under our 2016 Revolver in an amount at least equal to the amount of outstanding Commercial Paper Notes. |
| |
| (c) | See "Item 2. MD&A—General Overview—Overview" and note 5 to our condensed consolidated financial statements for further information regarding the CP Program. |
Over the next 12 months:
Our liquidity sources may include (1) cash on hand, (2) net cash provided by operating activities, (3) undrawn availability from our 2016 Revolver, and (4) issuances of equity pursuant to our ATM Program. Our liquidity uses over the next 12 months are expected to include (1) debt service obligations of $114.2 million (principal payments), (2) common stock dividend payments expected to be at least $4.20 per share, or an aggregate amount of at least $1.7 billion, subject to future approval by our board of directors (see "Item 2. MD&A—Business Fundamentals and Results"), (3) 6.875% Mandatory Convertible Preferred Stock dividend payments of approximately $113 million, and (4) capital expenditures (expected to be greater than current levels). During the next 12 months, we expect that our liquidity sources should be sufficient to cover our expected uses. As CCIC is a holding company, our cash flow from operations is generated by our operating subsidiaries.
We have no scheduled contractual debt maturities other than principal payments on amortizing debt. See "Item 3. Quantitative and Qualitative Disclosures About Market Risk" for a tabular presentation as of September 30, 2017 of our scheduled contractual debt maturities and a discussion of anticipated repayment dates.
| |
| • | Our liquidity sources may include (1) cash on hand, (2) net cash generated by our operating activities, (3) undrawn availability under our 2016 Revolver, (4) issuances under our CP Program, and (5) issuances of equity pursuant to our 2018 ATM Program. Our liquidity uses over the next 12 months are expected to include (1) debt service obligations of $949 million (principal payments), (2) cumulative common stock dividend payments expected to be at least $4.80 per share, or an aggregate amount of approximately $2.0 billion (see "Item 2. MD&A—Business Fundamentals and Results"), (3) prior to the automatic conversion of our 6.875% Convertible Preferred Stock in August 2020, dividend payments related to such preferred stock of approximately $28 million and (4) capital expenditures. Additionally, amounts available under the CP Program may be repaid and re-issued from time to time. During the next 12 months, while our liquidity uses are expected to exceed our net cash provided by operating activities, we expect that our liquidity sources described above should be sufficient to cover our expected uses. Historically, from time to time, we have accessed the capital markets to issue debt and equity. |
| |
| • | See "Item 3. Quantitative and Qualitative Disclosures About Market Risk" for a tabular presentation of our debt maturities and a discussion of anticipated repayment dates. |
Summary Cash Flow Information
| | | | Nine Months Ended September 30, | Three Months Ended March 31, |
| (In millions of dollars) | | 2020 | | 2019 | | Change |
| | 2017 | | 2016 | | Change | | | (As Restated) | | |
| | (In thousands of dollars) | |
| Net increase (decrease) in cash and cash equivalents provided by (used for) continuing operations: | | | | | | |
| Net increase (decrease) in cash, cash equivalents, and restricted cash: | | | | | | |
| Operating activities | $ | 1,417,291 |
| | $ | 1,304,715 |
| | $ | 112,576 |
| $ | 653 |
| | $ | 512 |
| | $ | 141 |
|
| Investing activities | (2,970,874 | ) | | (1,139,583 | ) | | (1,831,291 | ) | (468 | ) | | (489 | ) | | 21 |
|
| Financing activities | 7,704,255 |
| | (300,552 | ) | | 8,004,807 |
| (50 | ) | | (28 | ) | | (22 | ) |
| Net increase (decrease) in cash and cash equivalents from continuing operations | 6,150,672 |
| | (135,420 | ) | | 6,286,092 |
| |
| Net increase (decrease) in cash and cash equivalents from discontinued operations | — |
| | 113,150 |
| | (113,150 | ) | |
| Net increase (decrease) in cash, cash equivalents, and restricted cash | | 135 |
| | (5 | ) | | 140 |
|
| Effect of exchange rate changes on cash | 863 |
| | (321 | ) | | 1,184 |
| (1 | ) | | — |
| | (1 | ) |
| Net increase (decrease) in cash and cash equivalents | $ | 6,151,535 |
| | $ | (22,591 | ) | | $ | 6,174,126 |
| |
| Net increase (decrease) in cash, cash equivalents, and restricted cash | | $ | 134 |
| | $ | (5 | ) | | $ | 139 |
|
Operating Activities
Net cash provided by operating activities from continuing operationsof $653 million for the first ninethree months of 20172020 increased $112.6by $141 million, or 9%28%, compared to the first ninethree months of 2016,2019, due primarily to the growth in our core business and a net benefitincrease from other changes in working capital. Changes in working capital contribute to variability in net cash provided by operating activities, largely due to the timing of advanced payments by us and advanced receipts from tenants. We expect to grow our net cash provided by operating activities in the future (exclusive of movementschanges in working capital) if we realize expected growth in our core business.
Investing Activities
Net cash used for investing activities of $468 million for the first ninethree months of 2017 increased $1.8 billion2020 decreased by $21 million, or 4%, from the first ninethree months of 20162019 as a result of a decrease in discretionary capital expenditures related to the FiberNet Acquisitionconstruction of small cells and the Wilcon Acquisition (see note 3 to our condensed consolidated financial statements for further discussion).
Acquisitions. See note 3 to our condensed consolidated financial statements for a discussion of the FiberNet Acquisition and the Wilcon Acquisition. See notes 3 and 12 to our condensed consolidated financial statements for a discussion of the Lightower Acquisition.fiber.
Capital Expenditures
Our capital expenditures arehave been categorized as discretionary, sustaining or sustaining,integration as described below.
Discretionary capital expenditures are made with respect to activities which we believe exhibit sufficient potential to enhance long-term stockholder value. They consist of improvements to existing wireless infrastructure, construction of new wireless infrastructure, and, to a lesser extent, purchases of land assets under towers as we seek to manage our interests in the land beneath our towers. Improvements to existing wireless infrastructure to accommodate new leasing typically vary based on, among other factors: (1) the type of wireless infrastructure, (2) the scope, volume, and mix of work performed on the wireless infrastructure, (3) existing capacity prior to installation, or (4) changes in structural engineering regulations and standards. Construction of new wireless infrastructure is predominately comprised of the design and construction of fiber and small cells. | |
| • | Discretionary capital expenditures are made with respect to activities which we believe exhibit sufficient potential to enhance long-term stockholder value. They primarily consist of expansion or development of communications infrastructure (including capital expenditures related to (1) enhancing communications infrastructure in order to add new tenants for the first time or support subsequent tenant equipment augmentations or (2) modifying the structure of a communications infrastructure asset to accommodate additional tenants) and construction of new communications infrastructure. Discretionary capital expenditures also include purchases of land interests (which primarily relates to land assets under towers as we seek to manage our interests in the land beneath our towers), certain technology-related investments necessary to support and scale future customer demand for our communications infrastructure, and other capital projects. The expansion or development of existing communications infrastructure to accommodate new leasing typically varies based on, among other factors: (1) the type of communications infrastructure, (2) the scope, volume, and mix of work performed on the communications infrastructure, (3) existing capacity prior to installation, or (4) changes in structural engineering regulations and standards. Currently, construction of new communications infrastructure is predominately comprised of the construction of small cells and fiber. Our decisions regarding discretionary capital expenditures are influenced by the availability and cost of capital and expected returns on alternative uses of cash, such as payments of dividends and investments. |
| |
| • | Integration capital expenditures consist of those capital expenditures made as a result of integrating acquired companies into our business. |
Sustaining capital expenditures consist of (1) corporatethose capital expenditures and (2)not otherwise categorized as discretionary or integration capital improvementexpenditures, such as (1) maintenance capital expenditures on our wirelesscommunications infrastructure assets that enable our customers'tenants' ongoing quiet enjoyment of the wireless infrastructure.communications infrastructure and (2) ordinary corporate capital expenditures.
Capital expenditures for the ninethree months ended September 30, 2017March 31, 2020 and 20162019 were as follows:
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended |
| (In millions of dollars) | March 31, 2020 | | March 31, 2019(a) |
| | Towers | Fiber | Other | Total | | Towers | Fiber | Other | Total |
| Discretionary: | | | | | | | | | |
| Purchases of land interests | $ | 13 |
| $ | — |
| $ | — |
| $ | 13 |
| | $ | 15 |
| $ | — |
| $ | — |
| $ | 15 |
|
Communications infrastructure improvements and other capital projects(b) | 87 |
| 319 |
| 7 |
| 413 |
| | 98 |
| 344 |
| — |
| 442 |
|
| Sustaining | 5 |
| 9 |
| 7 |
| 21 |
| | 6 |
| 11 |
| 4 |
| 21 |
|
| Integration | — |
| — |
| — |
| — |
| | — |
| — |
| 2 |
| 2 |
|
| Total | $ | 105 |
| $ | 328 |
| $ | 14 |
| $ | 447 |
| | 119 |
| 355 |
| 6 |
| 480 |
|
| |
| (b) | Towers segment includes $42 million and $41 million of capital expenditures incurred during the three months ended March 31, 2020 and 2019, respectively, in connection with tenant installations and upgrades on our towers. |
Discretionary capital expenditures were primarily impacted by the construction of small cell networkscells and lower amounts of improvementsfiber (including certain construction projects that may take 18 to existing towers.36 months to complete) to address our tenants' growing demand for data. See also "Item 2. MD&A—General Overview—Outlook Highlights" for our expectations surrounding 2017 and 20182020 capital expenditures.
Financing Activities
Activities. We seek to allocate cash generated by our operations in a manner that will enhance long-term stockholder value, which may include various financing activities such as (in no particular order): (1) paying dividends on our common stock (currently expected to total at least $4.80 per share over the next 12 months, at least $4.20 per share, or an aggregate amount of at least $1.7 billion, subject to future approval by our board of directors),approximately $2.0 billion); (2) paying dividends on our 6.875% Mandatory Convertible Preferred Stock (expected to total overapproximately $28 million, prior to the next 12 months approximately $113 million),automatic conversion of such preferred stock in August 2020); (3) purchasing our common stock,stock; or (4) purchasing, repaying, or redeeming our debt.
Net cash provided by financing activities for the first nine months of 2017 increased $8.0 billion from the first nine months of 2016 as a result of our financing activities during the first nine months of 2017 described below.
Credit Facility. In February 2017, we entered into an amendment to the 2016 Credit Facility to (1) incur additional term loans in an aggregate principal amount of $500 million See notes 5, 10 and (2) extend the maturity of both the 2016 Term Loan A and the 2016 Revolver to January 2022. See note 413 to our condensed consolidated financial statements.
Net cash used for financing activities of $50 million for the first three months of 2020 increased by $22 million, or 79%, from the first three months of 2019 as a result of the net impact from our common and preferred stock dividend payments, purchases of common stock and our issuances, purchases and repayments of debt (including with respect to our 2016 Revolver and CP Program). See Item 2. MD&A—General Overview—Business Fundamentals and Results and notes 5 and 10 to our condensed consolidated financial statements for further information.
In August 2017,April 2020, we entered into an amendmentissued $1.25 billion aggregate principal amount of senior unsecured notes, the proceeds of which were used to the 2016 Credit Facility to (1) increase the commitmentsrepay outstanding indebtedness under the 2016 Revolver by $1.0 billion, for total commitments of $3.5 billion, and (2) extend the maturity of both the 2016 Term Loan A and the 2016 Revolver to August 2022.Revolver. See note 413 to our condensed consolidated financial statements.
Credit Facility.
The proceeds of our 2016 Revolver may be used for general corporate purposes, which may include the financing of capital expenditures, acquisitions and purchases of our common stock. As of November 2, 2017,April 29, 2020, there was $655 millionwere no amounts outstanding and $2.8$5.0 billion in undrawn availability under our 2016 Revolver. See notes 45 and 12 to our condensed consolidated financial statements.
Incurrence, Purchases, and Repayments of Debt. In February 2017, we issued $500 million aggregate principal amount of 4.0% Senior Notes with a final maturity date of March 2027. We utilized the proceeds to repay a portion of the borrowings under the 2016 Revolver. See note 4 to our condensed consolidated financial statements.
In May 2017, we issued $350 million aggregate principal amount of 4.75% Senior Notes due May 2047. We used the proceeds of the 4.75% Senior Notes offering to partially fund the Wilcon Acquisition and to repay a portion of the borrowings under the 2016 Revolver. See notes 3 and 413 to our condensed consolidated financial statements.
In August 2017, we issued $750 million aggregate principal amount of 3.2% Senior Notes due September 2024Commercial Paper Program. See "Item 2. MD&A—General Overview—Overview" and $1.0 billion aggregate principal amount of 3.65% Senior Notes due September 2027. The Company used the net proceeds of the August 2017 Senior Notes Offering to partially fund the Lightower Acquisition and pay related fees and expenses. See notes 3, 4 and 12note 5 to our condensed consolidated financial statements.
Common Stock Activity. statements for further information regarding our CP Program. As of September 30, 2017April 29, 2020, there were no amounts outstanding under our CP Program.
Incurrence, Purchases, and December 31, 2016, we had 406.3 millionRepayments of Debt. See Item 2. MD&A—General Overview—Business Fundamentals and 360.5 million common shares outstanding, respectively.
In May 2017, we completed the May 2017 Equity Financing, in which we issued 4.75 million shares of common stockResults and generated net proceeds of approximately $443 million. We used the proceeds of the May 2017 Equity Financing to partially fund the Wilcon Acquisition. See notes 3 and 9 to our condensed consolidated financial statements.
In July 2017, we completed the July 2017 Common Stock Offering, in which we issued 40.15 million shares of common stock and generated net proceeds of approximately $3.8 billion. We used the net proceeds of the July 2017 Common Stock Offering to partially fund the Lightower Acquisition and pay related fees and expenses. See notes 3 and 12 to our condensed consolidated financial statements.
See notes 9 and 12note 13 to our condensed consolidated financial statements for further discussion of our recent issuances, purchases and repayments of debt.
Common Stock Activity. See note 10 to our condensed consolidated financial statements for further information regarding our common stock and dividends. See below for a discussion of the anticipated automatic conversion of 6.875% Mandatory Convertible Preferred Stock.
Convertible Preferred Stock Activity. In July 2017,As of both March 31, 2020 and December 31, 2019, we issued 1.65had 2 million shares of the 6.875% Mandatory Convertible Preferred Stock and generated net proceeds of approximately $1.6 billion. We used the net proceeds of the Mandatory Convertible Preferred Stock Offering to partially fund the Lightower Acquisition and pay related fees and expenses.outstanding. Unless converted earlier, each outstanding share of the 6.875% Mandatory Convertible Preferred Stock will automatically convert into shares of our common stock on August 1, 2020. Currently, each share of the 6.875% Mandatory Convertible Preferred Stock will convert into between 8.68068.7914 shares (based on the current maximum conversion price of $115.20)$113.75) and 10.416710.5496 shares (based on the current minimum conversion price of $96.00)$94.79) of common stock, depending on the applicable market value of the common stock and subject to certain anti-dilution adjustments. At any time prior to August 1, 2020, holders of the 6.875% Mandatory Convertible Preferred Stock may elect to convert all or a portion of their shares into common stock at the minimum conversion rate of 8.68068.7914 shares of common stock per share of 6.875% Mandatory Convertible Preferred Stock, subject to certain anti-dilution adjustments. See note 910 to our condensed consolidated financial statements for further discussion of the 6.875% Mandatory Convertible Preferred Stock Offering.dividends.
ATM Program. We maintain an ATM stock offering program through which we may, from time to time, issue and sell shares of our common stock having an aggregate cumulative gross sales price of up to $500.0 million to or through sales agents. Sales, if any, under the ATM Program may be made by means of ordinary brokers' transactions on the New York Stock Exchange or otherwise at market prices prevailing at the time of sale, at prices related to prevailing market prices or, subject to our specific instructions, at negotiated prices. We intend to use the net proceeds from any sales under the ATM Program for general corporate purposes, which may include the funding of future acquisitions or investments and the repayment or repurchase of any outstanding indebtedness. During the nine months ended September 30, 2017, 0.2 million shares of common stock were sold under the ATM Program generating net proceeds of $22.0 million. As of November 2, 2017, we had approximately $150 million of gross sales of common stock availability remaining on our ATM Program. See note 910 to our condensed consolidated financial statements.statements for further information regarding our 2018 ATM Program.
Debt Covenants
The credit agreement governing the 2016Covenants. Our Credit FacilityAgreement contains financial maintenance covenants. We are currently in compliance with these financial maintenance covenants and, based upon our current expectations, we believe we will continue to comply with our financial maintenance covenants. In addition, certain of our debt agreements also contain restrictive covenants that place restrictions on us and may limit our ability to, among other things, incur additional debt and liens, purchase our securities, make capital expenditures, dispose of assets, undertake transactions with affiliates, make other investments, pay dividends or distribute excess cash flow. See our 2016the 2019 Form 10-K for a further discussion of our debt covenants, certain restrictive covenants and factors that are likely to determine our subsidiaries' ability to comply with current and future debt covenants.
Accounting and Reporting Matters
Critical Accounting Policies and Estimates
Our critical accounting policies and estimates are those that we believe (1) are most important to the portrayal of our financial condition and results of operations or (2) require our most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. The critical accounting policies and estimates for 2017 are not intended to be a comprehensive list of our accounting policies and estimates. In many cases, the accounting treatment of a particular transaction is specifically prescribed by GAAP. In other cases, management is required to exercise judgment in the application of accounting principles with respect to particular transactions. The critical accounting policies and estimates for 2020 are not intended to be a comprehensive list of our accounting policies and estimates. Our critical accounting policies and estimates as of December 31, 20162019 are described in "Item 7. MD&A—Accounting and Reporting Matters" and in note 23 of our consolidated financial statements in our 2016the 2019 Form 10-K. The critical accounting policies and estimates for the first nine months of 2017 have not changed from the critical accounting policies for the year ended December 31, 2016.
Accounting Pronouncements
Recently Adopted Accounting Pronouncements.
See note 23 to our condensed consolidated financial statements.
Recent Accounting Pronouncements Not Yet Adopted.
See note 23 to our condensed consolidated financial statements.
Non-GAAP and Segment Financial Measures
We use earnings before interest, taxes, depreciation, amortization and accretion, as adjusted ("Adjusted EBITDA"), which is a non-GAAP financial measure, as an indicator of consolidated financial performance. Our measure of Adjusted EBITDA may not be comparable to similarly titled measures of other companies, including companies in the wirelesscommunications infrastructure sector or other REITs, and is not a measure of performance calculated in accordance with GAAP. Adjusted EBITDA should not be considered in isolation or as a substitute for operating income or loss,(loss), net income or loss,(loss), net cash provided by (used for) operating, investing and financing activities or other income statement or cash flow statement data prepared in accordance with GAAP and should be considered only as a supplement to net income or loss(loss) computed in accordance with GAAP as a measure of our performance. There are material limitations to using a measure such as Adjusted EBITDA, including the difficulty associated with comparing results among more than one company, including our competitors, and the inability to analyze certain significant items, including depreciation and interest expense, that directly affect our net income or loss. Management compensates for these limitations by considering the economic effect of the excluded expense items independently as well as in connection with their analysis of net income (loss).
We define Adjusted EBITDA as net income (loss) plus restructuring charges (credits), asset write-down charges, acquisition and integration costs, depreciation, amortization and accretion, amortization of prepaid lease purchase price adjustments, interest expense and amortization of deferred financing costs, gains (losses)(gains) losses on retirement of long-term obligations, net gain (loss)(gain) loss on interest rate swaps, gains (losses)(gains) losses on foreign currency swaps, impairment of available-for-sale securities, interest income, other income (expense), benefit (provision)(income) expense, (benefit) provision for income taxes, cumulative effect of a change in accounting principle, income (loss)(income) loss from discontinued operations and stock-based compensation expense. The reconciliation of Adjusted EBITDA to our net income (loss) is set forth below and excludes items in the Company's Adjusted EBITDA definition which are not applicable to the periods shown.
below.
| | | | Three Months Ended September 30, | |
| | 2017 | | 2016 | |
| (In millions of dollars) | | Three Months Ended March 31, |
| 2020 | | 2019 |
| | | (As Restated) |
| Net income (loss) | $ | 115,194 |
| | $ | 98,366 |
| $ | 185 |
| | $ | 193 |
|
| Adjustments to increase (decrease) net income (loss): | | | | | | |
| Asset write-down charges | 5,312 |
| | 8,339 |
| 4 |
| | 6 |
|
| Acquisition and integration costs | 13,180 |
| | 2,680 |
| 5 |
| | 4 |
|
| Depreciation, amortization and accretion | 296,033 |
| | 280,824 |
| 399 |
| | 394 |
|
| Amortization of prepaid lease purchase price adjustments | 5,029 |
| | 5,429 |
| 5 |
| | 5 |
|
| Interest expense and amortization of deferred financing costs | 154,146 |
| | 129,916 |
| 175 |
| | 168 |
|
| Gains (losses) on retirement of long-term obligations | — |
| | 10,274 |
| |
| (Gains) losses on retirement of long-term obligations | | — |
| | 1 |
|
| Interest income | (11,188 | ) | | (175 | ) | (1 | ) | | (2 | ) |
| Other income (expense) | 32 |
| | 832 |
| |
| Benefit (provision) for income taxes | 2,383 |
| | 5,041 |
| |
| Other (income) expense | | — |
| | 1 |
|
| (Benefit) provision for income taxes | | 5 |
| | 6 |
|
| Stock-based compensation expense | 24,681 |
| | 22,594 |
| 36 |
| | 29 |
|
| Adjusted EBITDA | $ | 604,802 |
| | $ | 564,120 |
| |
Adjusted EBITDA(a)(b) | | $ | 814 |
|
| $ | 804 |
|
|
| | | | | | | |
| | Nine Months Ended September 30, |
| | 2017 | | 2016 |
| Net income (loss) | $ | 346,446 |
| | $ | 232,263 |
|
| Adjustments to increase (decrease) net income (loss): | | | |
| Asset write-down charges | 10,284 |
| | 28,251 |
|
| Acquisition and integration costs | 27,080 |
| | 11,459 |
|
| Depreciation, amortization and accretion | 880,197 |
| | 834,725 |
|
| Amortization of prepaid lease purchase price adjustments | 15,113 |
| | 16,000 |
|
| Interest expense and amortization of deferred financing costs | 430,402 |
| | 385,656 |
|
| Gains (losses) on retirement of long-term obligations | 3,525 |
| | 52,291 |
|
| Interest income | (12,585 | ) | | (454 | ) |
| Other income (expense) | (3,462 | ) | | 4,623 |
|
| Benefit (provision) for income taxes | 11,290 |
| | 12,797 |
|
| Stock-based compensation expense | 66,458 |
| | 75,297 |
|
| Adjusted EBITDA | $ | 1,774,748 |
| | $ | 1,652,908 |
|
| |
| (a) | The components in this table may not sum to the total due to rounding. |
| |
| (b) | The above reconciliation excludes the items included in our Adjusted EBITDA definition which are not applicable to the periods shown. |
We believe Adjusted EBITDA is useful to investors or other interested parties in evaluating our financial performance because:
it is the primary measure used by our management (1) to evaluate the economic productivity of our operations and (2) for purposes of making decisions about allocating resources to, and assessing the performance of our operations;
although specific definitions may vary, it is widely used by investors or other interested parties in evaluation of the wireless infrastructure sector and other REITs to measure financial performance without regard to items such as depreciation, amortization and accretion, which can vary depending upon accounting methods and the book value of assets;
we believe it helps investors and other interested parties meaningfully evaluate and compare the results of our operations (1) from period to period and (2) to our competitors by removing the impact of our capital structure (primarily interest charges from our outstanding debt) and asset base (primarily depreciation, amortization and accretion) from our financial results; and
it is similar to the measure of current financial performance generally used in our debt covenant calculations. | |
| • | it is the primary measure used by our management (1) to evaluate the economic productivity of our operations and (2) for purposes of making decisions about allocating resources to, and assessing the performance of our operations; |
| |
| • | although specific definitions may vary, it is widely used by investors or other interested parties in evaluation of the communications infrastructure sector and other REITs to measure financial performance without regard to items such as depreciation, amortization and accretion, which can vary depending upon accounting methods and the book value of assets; |
| |
| • | we believe it helps investors and other interested parties meaningfully evaluate and compare the results of our operations (1) from period to period and (2) to our competitors by removing the impact of our capital structure (primarily interest charges from our outstanding debt) and asset base (primarily depreciation, amortization and accretion) from our financial results; and |
| |
| • | it is similar to the measure of current financial performance generally used in our debt covenant calculations. |
Our management uses Adjusted EBITDA:
as a performance goal in employee annual incentive compensation;
as a measurement of financial performance because it assists us in comparing our financial performance on a consistent basis as it removes the impact of our capital structure (primarily interest charges from our outstanding debt) and asset base (primarily depreciation, amortization and accretion) from our operating results; | |
| • | as a performance goal in employee annual incentive compensation; |
| |
| • | as a measurement of financial performance because it assists us in comparing our financial performance on a consistent basis as it removes the impact of our capital structure (primarily interest charges from our outstanding debt) and asset base (primarily depreciation, amortization and accretion) from our operating results; |
| |
| • | in presentations to our board of directors to enable it to have the same measurement of financial performance used by management; |
| |
| • | for planning purposes, including preparation of our annual operating budget; |
| |
| • | as a valuation measure in strategic analyses in connection with the purchase and sale of assets; |
| |
| • | in determining self-imposed limits on our debt levels, including the evaluation of our leverage ratio and interest coverage ratio; and |
in presentations to our board of directors to enable it to have the same measurement of financial performance used by management;
for planning purposes, including preparation of our annual operating budget;
as a valuation measure in strategic analyses in connection with the purchase and sale of assets;
in determining self-imposed limits on our debt levels, including the evaluation of our leverage ratio and interest coverage ratio; and
| |
| • | with respect to compliance with our debt covenants, which require us to maintain certain financial ratios that incorporate concepts such as, or similar to, Adjusted EBITDA. |
In addition to the non-GAAP measures used herein and as discussed in note 1011 to our condensed consolidated financial statements, we also provide (1) segment site rental gross margin, (2) segment network services and other gross margin, and (3) segment operating profit, which are key measures used by management to evaluate the performance of our operating segments for purposes of making decisions about allocating capital and assessing performance.segments. These segment measures are provided pursuant to GAAP requirements related to segment reporting.
We define segment site rental gross margin as segment site rental revenues less segment site rental cost of operations, which excludes stock-based compensation expense and prepaid lease purchase price adjustments recorded in consolidated site rental cost of operations. We define segment network services and other gross margin as segment network services and other revenues less segment network services and other cost of operations, which excludes stock-based compensation expense recorded in consolidated network services and other cost of operations. We define segment operating profit as segment site rental gross margin plus segment network services and other gross margin, less selling, general and administrative expenses attributable to the respective segment. All of these measurements of profit or loss are exclusive of depreciation, amortization and accretion, which are shown separately. Additionally, certain costs are shared across segments and are reflected in our segment measures through allocations that management believes to be reasonable.
| |
| ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
The following section updates "Item 7A. Quantitative and Qualitative Disclosures About Market Risk" in our 2016the 2019 Form 10-K and should be read in conjunction with that report as well as our condensed consolidated financial statements included in Part 1, Item 1 of this report.Quarterly Report on Form 10-Q.
Interest Rate Risk
Our interest rate risk relates primarily to the impact of interest rate movements on the following, after giving effect to our April 2020 Senior Notes offering and the closingapplication of the Lightower Acquisition:net proceeds therefrom:
the potential refinancing of our existing debt ($15.918.7 billion outstanding at September 30, 2017March 31, 2020 and $12.2$18.1 billion at December 31, 2016)2019);
our $3.1$2.3 billion and $2.0$3.0 billion of floating rate debt at September 30, 2017March 31, 2020 and December 31, 2016,2019, respectively, which represented approximately 19%12% and 16%17% of our total debt, as of September 30, 2017March 31, 2020 and as of December 31, 2016,2019, respectively; and
potential future borrowings of incremental debt, including borrowings under our 2016 Credit Facility.Facility and issuances under the CP Program.
Over the next 12 months, we have no debt maturities other than principal payments on amortizing debt. We currently have no interest rate swaps.
Sensitivity Analysis
We manage our exposure to market interest rates on our existing debt by controlling the mix of fixed and floating rate debt. As of September 30, 2017,March 31, 2020, after giving effect to our April 2020 Senior Notes offering and the closingapplication of the Lightower Acquisition,net proceeds therefrom, we had $3.1$2.3 billion of floating rate debt, none of which had LIBOR floors. As a result, a hypothetical unfavorable fluctuation in market interest rates on our existing debt of 1/8 of a percent point over a 12 month period would increase our interest expense by approximately $4$3 million.
Tabular Information
The following table provides information about our market risk related to changes in interest rates. The future principal payments and weighted-average interest rates are presented as of September 30, 2017,March 31, 2020, after giving effect to our April 2020 Senior Notes offering and the the closingapplication of the Lightower Acquisition.net proceeds therefrom. These debt maturities reflect contractualfinal maturity dates and do not consider the impact of the principal payments that commence if the applicable debt is not repaid or refinanced on or prior tofollowing the anticipated repayment dates on the Tower Revenue Notesof certain debt (see footnote (c) to the table below)footnotes (b) and (d)). The information presented below regarding the variable rate debt is supplementary to our sensitivity analysis regarding the impact of changes in the interest rates. See notes 45 and 56 to our condensed consolidated financial statements and our 2016the 2019 Form 10-K for additional information regarding our debt.
| | | | Future Principal Payments and Interest Rates by the Debt Instruments' Contractual Year of Maturity | Future Principal Payments and Interest Rates by the Debt Instruments' Contractual Year of Maturity |
| | 2017 | | 2018 | | 2019 | | 2020 | | 2021 | | Thereafter | | Total | | Fair Value(a) | |
| | (Dollars in thousands) | |
| (In millions of dollars) | | 2020 | | 2021 | | 2022 | | 2023 | | 2024 | | Thereafter | | Total | | Fair Value(a) |
| Debt: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Fixed rate(c) | $ | 14,197 |
| | $ | 52,104 |
| | $ | 43,601 |
| | $ | 31,864 |
| | $ | 1,578,416 |
| | $ | 11,175,420 |
| | $ | 12,895,602 |
| | $ | 13,444,162 |
| |
Fixed rate(b) | | $ | 32 |
| | $ | 1,587 |
| | $ | 883 |
| | $ | 3,428 |
| | $ | 774 |
| | $ | 9,782 |
| | $ | 16,486 |
| | $ | 16,846 |
|
Average interest rate(b)(c)(d) | 4.5 | % | | 4.5 | % | | 4.6 | % | | 4.6 | % | | 2.9 | % | | 5.9 | % | | | | | 4.3 | % | | 2.9 | % | | 5.2 | % | | 4.2 | % | | 3.3 | % | | 5.0 | % | | 4.5 | % | | |
Variable rate(e) | $ | 15,391 |
| | $ | 61,563 |
| | $ | 123,125 |
| | $ | 123,125 |
| | $ | 246,250 |
| | $ | 2,501,875 |
| | $ | 3,071,329 |
| | $ | 3,059,246 |
| $ | 44 |
| | $ | 88 |
| | $ | 117 |
| | $ | 176 |
| | $ | 1,917 |
| | $ | — |
| | $ | 2,342 |
| | $ | 2,342 |
|
Average interest rate(b) | 2.7 | % | | 3.0 | % | | 3.2 | % | | 3.4 | % | | 3.5 | % | | 3.6 | % | | | | | |
Average interest rate(e) | | 1.5 | % | | 1.4 | % | | 1.4 | % | | 1.5 | % | | 1.6 | % | | — | % | | 1.6 | % | | |
| |
| (a) | The fair value of our debt is based on indicative quotes (that is, non-binding quotes) from brokers that require judgment to interpret market information, including implied credit spreads for similar borrowings on recent trades or bid/ask offers. These fair values are not necessarily indicative of the amount which could be realized in a current market exchange. |
| |
| (b) | The impact of principal payments that will commence following the anticipated repayment dates is not considered. The Tower Revenue Notes have principal amounts of $300 million, $250 million, $700 million and $750 million, with anticipated repayment dates in 2022, 2023, 2025 and 2028, respectively. |
| |
| (c) | The average interest rate represents the weighted-average stated coupon rate (see footnotes (c) andfootnote (d)). |
| |
(c) | The impact of principal payments that will commence following the anticipated repayment dates is not considered. The Tower Revenue Notes have a principal amount of $2.3 billion, $300 million, and $700 million, with anticipated repayment dates in 2020, 2022 and 2025, respectively.
|
| |
| (d) | If the Tower Revenue Notes are not repaid in full by the applicable anticipated repayment dates, the applicable interest rate increases by approximately 5% per annum and monthly principal payments commence using the Excess Cash Flow (as defined in the indenture governing the applicable Tower Revenue Notes) of the issuers of the Tower Revenue Notes. The Tower Revenue Notes are presented based on their contractual maturity dates ranging from 20402042 to 20452048 and include the impact of an assumed 5% increase in interest rate that would occur following the anticipated repayment dates but exclude the impact of monthly principal payments that would commence using Excess Cash Flow of the issuers of the Tower Revenue Notes. Notes. The full year 2016 2019 Excess Cash Flow of the issuers of the Tower Revenue Notes was approximately $563.8 $764 million. We currently expect to refinance these notes on or prior to the respective anticipated repayment dates. |
| |
| (e) | Predominantly consistsConsists of our 2016 Term Loan A and 2016 Revolver borrowings, each of which maturematures in 2022.2024. |
| |
| ITEM 4. | CONTROLS AND PROCEDURES |
Disclosure Controls and Procedures
The Company conducted an evaluation, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company's disclosure controls and procedures as of the end of the period covered by this report. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that due to the material weakness in the Company's internal control over financial reporting described below, the Company's disclosure controls and procedures were not effective in alerting them in a timely manner to material information relating to the Company required to be included in the Company's periodic reports under the Securities Exchange Act of 1934, as amended.
Material Weakness in Internal Control over Financial Reporting
As previously disclosed in the Company's 2019 Form 10-K, management concluded that a material weakness existed in the Company's internal control over financial reporting, as it did not effectively design and maintain controls related to the accounting for tower installation services.
Remediation of Material Weakness
Management has created a plan of remediation to strengthen its internal control over financial reporting. The remediation efforts include 1) revising its accounting policies for its tower installation services to identify and account for lease components and the related calculation of deferred revenue, and 2) making improvements to existing processes and controls related to the determination of the accuracy of capital expenditures made for permanent improvements associated with tower installation services. Management is implementing training with respect to the new processes and evaluating the need for additional resources.
Management believes that the measures described above will remediate the identified material weakness and strengthen the Company’s internal control over financial reporting. Management has begun to take these actions to remediate the material weakness and may take additional measures to strengthen its internal control environment.
Changes in Internal Control Over Financial Reporting
There have been no changes in the Company's internal control over financial reporting during the fiscal quarter covered by this report that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
PART II—OTHER INFORMATION
See the disclosure in note 89 to our condensed consolidated financial statements set forth in Part I, Item 1 of this Quarterly Report on Form 10-Q, which disclosure is hereby incorporated herein by reference.10-Q.
You should carefully considerThe following risk factor is provided to update the risk factors below,previously discussed in "Item 1A. Risk Factors" in the 2019 Form 10-K.
The impact of COVID-19 and related risks could materially affect our financial position, results of operations and cash flows.
The global spread of COVID-19 has created significant uncertainty and economic disruption. We have modified, and might further modify, our business practices as a result of the COVID-19 pandemic, the economic and social ramifications of the disease, and the societal and governmental responses in the communities in which we operate. See "Item 2. MD&A—General Overview—Coronavirus (COVID-19)" for further information. The extent to which the COVID-19 pandemic will affect our financial position, results of operations and cash flows is difficult to predict with certainty and depends on numerous evolving factors, including: the duration and scope of the pandemic; government, social, business and other actions that have been and will be taken in response to the pandemic; and the effect of the pandemic on short- and long-term general economic conditions. Among other things, COVID-19 and the Initiatives could (1) adversely affect the ability of our suppliers and vendors to provide products and services
to us; (2) result in decreased demand for our communications infrastructure; (3) make it more difficult for us to serve our tenants, including as a result of delays or suspensions in the issuance of permits or other authorizations needed to conduct our business; and (4) increase our cost of capital and adversely impact our access to capital. The potential effects of COVID-19 could also heighten the risks disclosed in many of our risk factors that are included in "Item 1A. Risk Factors" in the 2019 Form 10-K. Due to the speed with which the situation is developing and factors beyond our knowledge or control, including the duration and severity of COVID-19, as well as third-party actions taken to contain its spread and mitigate its public health effects, at this time we cannot estimate or predict with certainty the other information containedimpact of COVID-19, the Initiatives, or the measures we take in this document and our 2016 Form 10-K. Based on recent activities, including the Lightower Acquisition, we have added the following risk factors.
We may fail to realize all of the anticipated benefits of the Lightower Acquisition or those benefits may take longer to realize than expected. We may also encounter significant difficulties in integrating Lightower’s business.
Our ability to realize the anticipated benefits of the Lightower Acquisition will depend, to a large extent,response thereto on our ability to integrate the Lightower business into ours. The integration of an independent business into our business is a complex, costly and time-consuming process. As a result, we will be required to devote significant management attention and resources to integrate Lightower’s business practices and operations with ours, including a larger fiber solutions business than we currently manage. The integration process may disrupt the businesses and, if implemented ineffectively, would restrict the realization of the full expected benefits. The failure to meet the challenges involved in integrating Lightower’s business and to realize the anticipated benefits of the transaction could cause an interruption of, or a loss of momentum in, the activities of the Company after the acquisition and could adversely affect ourfinancial position, results of operations. In addition, weoperations and cash flows, particularly over the near to medium term, but the impact could also encounter additional transaction-related costs or other factors, which could cause dilution or decrease or delay the expected benefits of the Lightower Acquisition and cause a decrease in the market price of our common stock.be material.
Finally, if the Lightower Acquisition does not provide the level of contribution we currently anticipate, our expectation of future dividends, including dividend growth, on our common stock would be negatively impacted.
If we fail to pay scheduled dividends on the 6.875% Mandatory Convertible Preferred Stock, in cash, common stock, or any combination of cash and common stock, we will be prohibited from paying dividends on our common stock, which may jeopardize our status as a REIT.
The terms of the 6.875% Mandatory Convertible Preferred Stock provide that, unless accumulated dividends have been paid or set aside for payment on all outstanding 6.875% Mandatory Convertible Preferred Stock for all past dividend periods, no dividends may be declared or paid on our common stock. If that were to occur, the inability to pay dividends on our common stock might jeopardize our status as a REIT for U.S. federal income tax purposes. See note 9 to our condensed consolidated financial statements.
| |
| ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
The following table summarizes information with respect to purchase of our equity securities during the thirdfirst quarter of 2017:2020:
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| | | | | | | | | | | | | |
| Period | | Total Number of Shares Purchased | | Average Price Paid per Share | | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | | Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs |
| | | (In thousands) | | | | | | |
| July 1 - July 31, 2017 | | 1 |
| | $ | 100.50 |
| | — |
| | — |
|
| August 1 - August 31, 2017 | | 1 |
| | 101.47 |
| | — |
| | — |
|
| September 1 - September 30, 2017 | | 2 |
| | 105.49 |
| | — |
| | — |
|
| Total | | 4 |
| | $ | 103.92 |
| | — |
| | — |
|
|
| | | | | | | | | | | | | |
| Period | | Total Number of Shares Purchased | | Average Price Paid per Share | | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | | Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs |
| | | (In thousands) | | | | | | |
| January 1 - January 31 2020 | | 1 |
| | $ | 141.24 |
| | — |
| | — |
|
| February 1 - February 29, 2020 | | 439 |
| | 166.18 |
| | — |
| | — |
|
| March 1 - March 31, 2020 | | 1 |
| | 150.54 |
| | — |
| | — |
|
| Total | | 441 |
| | $ | 166.06 |
| | — |
| | — |
|
We paid $0.4$73 million in cash to effect these purchases. The shares purchased relate to shares withheld in connection with the payment of withholding taxes upon vesting of restricted stock.stock units.
Exhibit Index
|
| | | |
Exhibit No. | | Description |
| | | |
(b) | 2.1 | | Agreement and Plan of Merger, dated as of July 18, 2017, by and among Crown Castle International Corp., LTS Group Holdings LLC, Berkshire Fund VII-A (LTS) Acquisition Partners, Berkshire Fund VIII-A (LTS) Acquisition Partners, LTS Berkshire Fund VII-A Blocker Corporation, LTS Berkshire Fund VIII-A Blocker Corporation, LTS Co-Invest Blocker LLC, LTS Co-Invest Blocker II LLC, LTS Rollover Blocker LLC, LTS BF VII-A Blocker Merger Sub, Inc., LTS BF VIII-A Blocker Merger Sub, Inc., LTS Co-Invest Blocker Merger Sub, Inc., LTS Co-Invest Blocker II Merger Sub, Inc., LTS Rollover Blocker Merger Sub, Inc., LTS Group Holdings Merger Sub, Inc. and BSR LLC, as equityholders’ representative |
| | | |
(c) | 3.1 | | |
| | | |
(c) | 3.2 | | |
| | | |
(a) | 3.3 | | |
| | | |
(d) | 4.1 | |
|
| | | |
(e) | 10.1 | | Amendment No. 2 dated as of August 29, 2017, among Crown Castle International Corp., the lenders and issuing banks party thereto, and JPMorgan Chase Bank, N.A., as administrative agent, to the Credit Agreement dated as of January 21, 2016, by and among Crown Castle International Corp., the lenders and issuing banks from time to time party thereto and JPMorgan Chase Bank, N.A., as administrative agent |
| | | |
(b) | 10.2 | | |
| | | |
* | 31.1 | | |
| | | |
* | 31.2 | | |
| | | |
† | 32.1 | | |
| | | |
* | 101.INS | | XBRL Instance Document |
| | | |
* | 101.SCH | | XBRL Taxonomy Extension Schema Document |
| | | |
* | 101.DEF | | XBRL Taxonomy Extension Definition Linkbase Document |
| | | |
* | 101.CAL | | XBRL Taxonomy Extension Calculation Linkbase Document |
| | | |
* | 101.LAB | | XBRL Taxonomy Extension Label Linkbase Document |
| | | |
* | 101.PRE | | XBRL Taxonomy Extension Presentation Linkbase Document |
|
| | | | | | | | | | |
| | | | | Incorporated by Reference |
Exhibit Number | | Exhibit Description | | Form | | File Number | | Date of Filing | | Exhibit Number |
| 3.1 | | | | 8-K | | 001-16441 | | July 26, 2017 | | 3.1 |
| 3.2 | | | | 8-K | | 001-16441 | | July 26, 2017 | | 3.2 |
| 3.3 | | | | 10-K | | 001-16441 | | February 25, 2019 | | 3.3 |
| 4.1 | | | | 8-K | | 001-16441 | | April 3, 2020 | | 4.1 |
| 10.1 | |
| | 8-K | | 001-16441 | | February 21, 2020 | | 10.1 |
| 31.1* | | | | — | | — | | — | | — |
| 31.2* | | | | — | | — | | — | | — |
| 32.1† | | | | — | | — | | — | | — |
| 101* | | The following financial statements from Crown Castle International Corp.'s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, formatted in Inline XBRL: (i) Condensed Consolidated Balance Sheet, (ii) Condensed Consolidated Statement of Operations and Comprehensive Income (Loss), (iii) Condensed Consolidated Statement of Cash Flows, (iv) Condensed Consolidated Statement of Equity, and (v) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text and including detailed tags | | — | | — | | — | | — |
| 104* | | The cover page from Crown Castle International Corp.'s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, formatted in Inline XBRL | | — | | — | | — | | — |
| |
(a) | Incorporated by reference to the exhibit previously filed by the Registrant on Form 8-K (File No. 001-16441) on August 4, 2015. |
| |
(b) | Incorporated by reference to the exhibit previously filed by the Registrant on Form 8-K (File No. 001-16441) on July 19, 2017. |
| |
(c) | Incorporated by reference to the exhibit previously filed by the Registrant on Form 8-K (File No. 001-16441) on July 26, 2017. |
| |
(d) | Incorporated by reference to the exhibit previously filed by the Registrant on Form 8-K (File No. 001-16441) on August 1, 2017. |
| |
(e) | Incorporated by reference to the exhibit previously filed by the Registrant on Form 8-K (File No. 001-16441) on August 29, 2017. |
* Filed herewith.
† Furnished herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
| | | | |
| | | CROWN CASTLE INTERNATIONAL CORP. |
| | | | |
| Date: | November 6, 2017May 1, 2020 | | By: | /s/ DANIEL K. SCHLANGER |
| | | | | Daniel K. Schlanger |
| | | | | SeniorExecutive Vice President and Chief Financial Officer |
| | | | | (Principal Financial Officer) |
| | | | | |
| | | | |
| Date: | November 6, 2017May 1, 2020 | | By: | /s/ ROBERT S. COLLINS |
| | | | | Robert S. Collins |
| | | | | Vice President and Controller |
| | | | | (Principal Accounting Officer) |
