CrownCastle 10Q 093014

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________
 
FORM 10-Q
____________________________________
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2014
OR
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)
 
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) 570-3000
(Registrant's telephone number, including area code)
____________________________________
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  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).    Yes  x    No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

 
Large accelerated filer
x
 
Accelerated filer
o
 
 
Non-accelerated filer
o
 
Smaller reporting company
o
 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  o    No  x

Number of shares of common stock outstanding at November 3, 2014: 333,857,810
 


CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES

INDEX

 
 
 
Page
 
ITEM 1.
 
 
 
 
 
 
 
 
 
 
 
ITEM 2.
 
ITEM 3.
 
ITEM 4.
 
 
ITEM 1.
LEGAL PROCEEDINGS
 
ITEM 1A.
 
ITEM 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 
ITEM 6.
 
 
EXHIBIT INDEX
 

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 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," 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" and "Part I—Item 3. Quantitative and Qualitative Disclosures About Market Risk" herein. Such forward-looking statements include (1) expectations regarding anticipated growth in the wireless communication industry, carriers' investments in their networks, new tenant additions, customer consolidation or ownership changes, or demand for our wireless infrastructure, (2) expectations regarding non-renewals of customer contracts (including the impact of Sprint decommissioning its iDEN network and the impact of the decommissioning of the former Leap Wireless, MetroPCS and Clearwire networks), (3) availability and adequacy of cash flows and liquidity for, or plans regarding, future discretionary investments including capital expenditures, (4) potential benefits of our discretionary investments, (5) anticipated growth in our future revenues, margins, Adjusted EBITDA, and operating cash flows, (6) expectations regarding our capital structure and the credit markets, our availability and cost of capital, or our ability to service our debt and comply with debt covenants and the benefits of any future refinancings, (7) expectations for sustaining capital expenditures, (8) the potential advantages, benefits or impact of, or opportunities created by, our real estate investment trust ("REIT") status, (9) expectations regarding the inclusion of portions of our small cells within our REIT, (10) our intention to pursue certain steps and corporate actions in connection with our REIT conversion, including our future inclusion of REIT-related ownership limitations and transfer restrictions related to our capital stock and (11) our dividend policy, including the timing, amount or growth of any dividends.
Such forward-looking statements are subject to certain risks, uncertainties and assumptions, including prevailing market conditions, risk factors described under "Part II—Item 1A. Risk Factors" herein and in "Item 1A. Risk Factors" of our Annual Report on Form 10-K for the fiscal year ended December 31, 2013 ("2013 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. As used herein, the term "including," and any variation of thereof, means "including without limitation." The use of the word "or" herein is not exclusive.

1

PART I—FINANCIAL INFORMATION
ITEM 1.
FINANCIAL STATEMENTS

CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands of dollars, except share amounts)
 
September 30,
2014
 
December 31,
2013
 
(Unaudited)
 
 
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
238,550

 
$
223,394

Restricted cash
137,824

 
183,526

Receivables, net
311,798

 
249,925

Prepaid expenses
154,240

 
132,003

Deferred income tax assets
40,201

 
26,714

Other current assets
96,182

 
77,121

Total current assets
978,795

 
892,683

Deferred site rental receivables
1,220,050

 
1,078,995

Property and equipment, net of accumulated depreciation of $5,279,593 and $4,732,956, respectively
8,870,817

 
8,947,677

Goodwill
5,091,800

 
4,916,426

Other intangible assets, net
3,795,426

 
4,057,865

Deferred income tax assets
10,855

 
19,008

Long-term prepaid rent, deferred financing costs and other assets, net
817,117

 
682,254

Total assets
$
20,784,860

 
$
20,594,908

 
 
 
 
LIABILITIES AND EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
175,110

 
$
145,390

Accrued interest
68,044

 
65,582

Deferred revenues
327,265

 
260,114

Other accrued liabilities
168,475

 
181,715

Current maturities of debt and other obligations
106,673

 
103,586

Total current liabilities
845,567

 
756,387

Debt and other long-term obligations
11,467,005

 
11,490,914

Deferred income tax liabilities
57,118

 
56,513

Deferred credits and other liabilities
1,552,425

 
1,349,919

Total liabilities
13,922,115

 
13,653,733

Commitments and contingencies (note 8)

 

CCIC stockholders' equity:
 
 
 
Common stock, $.01 par value; 600,000,000 shares authorized; shares issued and outstanding: September 30, 2014—333,859,447 and December 31, 2013—334,070,016
3,339

 
3,341

4.50% Mandatory Convertible Preferred Stock, Series A, $.01 par value; 20,000,000 shares authorized; shares issued and outstanding: September 30, 2014 and December 31, 2013—9,775,000; aggregate liquidation value: September 30, 2014 and December 31, 2013—$977,500
98

 
98

Additional paid-in capital
9,500,490

 
9,482,769

Accumulated other comprehensive income (loss)
19,006

 
(23,612
)
Dividends/distributions in excess of earnings
(2,677,959
)
 
(2,535,879
)
Total CCIC stockholders' equity
6,844,974

 
6,926,717

Noncontrolling interest
17,771

 
14,458

Total equity
6,862,745

 
6,941,175

Total liabilities and equity
$
20,784,860

 
$
20,594,908

 
See notes to condensed consolidated financial statements.

2

CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND
COMPREHENSIVE INCOME (LOSS) (Unaudited)
(In thousands of dollars, except per share amounts)
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2014
 
2013
 
2014
 
2013
Net revenues:
 
 
 
 
 
 
 
Site rental
$
751,893

 
$
620,766

 
$
2,245,395

 
$
1,853,030

Network services and other
178,132

 
128,211

 
476,925

 
370,935

Net revenues
930,025

 
748,977

 
2,722,320

 
2,223,965

Operating expenses:
 
 
 
 
 
 
 
Costs of operations(a):
 
 
 
 
 
 
 
Site rental
241,110

 
181,966

 
706,177

 
538,587

Network services and other
103,023

 
81,998

 
279,344

 
229,574

General and administrative
71,395

 
58,504

 
205,397

 
171,539

Asset write-down charges
5,275

 
3,893

 
11,144

 
10,705

Acquisition and integration costs
4,068

 
4,369

 
28,924

 
13,186

Depreciation, amortization and accretion
254,862

 
195,408

 
759,288

 
572,518

Total operating expenses
679,733

 
526,138

 
1,990,274

 
1,536,109

Operating income (loss)
250,292

 
222,839

 
732,046

 
687,856

Interest expense and amortization of deferred financing costs
(141,287
)
 
(142,016
)
 
(432,221
)
 
(446,641
)
Gains (losses) on retirement of long-term obligations
—

 
(1
)
 
(44,629
)
 
(36,487
)
Interest income
192

 
236

 
554

 
861

Other income (expense)
(678
)
 
(631
)
 
(9,477
)
 
(753
)
Income (loss) before income taxes
108,519

 
80,427

 
246,273

 
204,836

Benefit (provision) for income taxes
(482
)
 
(33,959
)
 
(86
)
 
(88,254
)
Net income (loss)
108,037

 
46,468

 
246,187

 
116,582

Less: net income (loss) attributable to the noncontrolling interest
1,100

 
632

 
3,744

 
2,925

Net income (loss) attributable to CCIC stockholders
106,937

 
45,836

 
242,443

 
113,657

Dividends on preferred stock
(10,997
)
 
—

 
(32,991
)
 
—

Net income (loss) attributable to CCIC common stockholders
$
95,940

 
$
45,836

 
$
209,452

 
$
113,657

Net income (loss)
$
108,037

 
$
46,468

 
$
246,187

 
$
116,582

Other comprehensive income (loss):
 
 
 
 
 
 
 
Interest rate swaps, net of taxes of $0, $5,678, $0, and $17,054, respectively:
 
 
 
 
 
 
 
Amounts reclassified into "interest expense and amortization deferred financing costs", net of taxes (see note 4)
15,551

 
10,544

 
47,895

 
31,671

Foreign currency translation adjustments
(24,177
)
 
5,874

 
(5,708
)
 
(32,344
)
Total other comprehensive income (loss)
(8,626
)
 
16,418

 
42,187

 
(673
)
Comprehensive income (loss)
99,411

 
62,886

 
288,374

 
115,909

Less: Comprehensive income (loss) attributable to the noncontrolling interest
(327
)
 
898

 
3,313

 
1,800

Comprehensive income (loss) attributable to CCIC stockholders
$
99,738

 
$
61,988

 
$
285,061

 
$
114,109

Net income (loss) attributable to CCIC common stockholders, per common share:
 
 
 
 
 
 
 
Basic
$
0.29

 
$
0.16

 
$
0.63

 
$
0.39

Diluted
$
0.29

 
$
0.16

 
$
0.63

 
$
0.39

Weighted-average common shares outstanding (in thousands):
 
 
 
 
 
 
 
Basic
332,413
 
290,372

 
332,264
 
290,900
Diluted
333,241
 
291,378

 
333,020
 
292,043
 
 
 
 
 
 
 
 
Dividends/distributions declared per common share
$
0.35

 
$
—

 
$
1.05

 
$
—

________________
(a)
Exclusive of depreciation, amortization and accretion shown separately.

See notes to condensed consolidated financial statements.

3

CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
(In thousands of dollars)
 
Nine Months Ended
September 30,
 
2014
 
2013
Cash flows from operating activities:
 
 
 
Net income (loss)
$
246,187

 
$
116,582

Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities:
 
 
 
Depreciation, amortization and accretion
759,288

 
572,518

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

 
36,487

Amortization of deferred financing costs and other non-cash interest
61,322

 
78,241

Stock-based compensation expense
39,497

 
29,334

Asset write-down charges
11,144

 
10,705

Deferred income tax benefit (provision)
(7,512
)
 
80,999

Other adjustments
(2,088
)
 
2,167

Changes in assets and liabilities, excluding the effects of acquisitions:
 
 
 
Increase (decrease) in accrued interest
2,462

 
11,979

Increase (decrease) in accounts payable
27,047

 
8,279

Increase (decrease) in deferred revenues, deferred ground lease payables, other accrued liabilities and
     other liabilities
253,110

 
127,463

Decrease (increase) in receivables
(61,347
)
 
(45,689
)
Decrease (increase) in prepaid expenses, deferred site rental receivables, long-term prepaid rent,
     restricted cash and other assets
(181,509
)
 
(190,199
)
Net cash provided by (used for) operating activities
1,192,230

 
838,866

Cash flows from investing activities:
 
 
 
Payments for acquisitions of businesses, net of cash acquired
(179,918
)
 
(55,131
)
Capital expenditures
(513,552
)
 
(385,482
)
Other investing activities, net
2,787

 
7,601

Net cash provided by (used for) investing activities
(690,683
)
 
(433,012
)
Cash flows from financing activities:
 
 
 
Proceeds from issuance of long-term debt
845,750

 
830,941

Principal payments on debt and other long-term obligations
(86,197
)
 
(77,986
)
Purchases and redemptions of long-term debt
(836,899
)
 
(675,481
)
Purchases of capital stock
(21,778
)
 
(99,217
)
Borrowings under revolving credit facility
567,000

 
94,000

Payments under revolving credit facility
(587,000
)
 
(1,092,000
)
Payments for financing costs
(15,899
)
 
(20,753
)
Net (increase) decrease in restricted cash
39,882

 
415,498

Dividends/distributions paid on common stock
(350,535
)
 
—

Dividends paid on preferred stock
(33,357
)
 
—

Net cash provided by (used for) financing activities
(479,033
)
 
(624,998
)
Effect of exchange rate changes on cash
(7,358
)
 
(3,571
)
Net increase (decrease) in cash and cash equivalents
15,156

 
(222,715
)
Cash and cash equivalents at beginning of period
223,394

 
441,364

Cash and cash equivalents at end of period
$
238,550

 
$
218,649


See notes to condensed consolidated financial statements.

4

CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF EQUITY
(In thousands of dollars, except share amounts) (Unaudited)

 
CCIC Stockholders
 
 
 
 
 
Common Stock
 
4.50% Mandatory Convertible Preferred Stock
 
 
 
AOCI
 
 
 
 
 
 
 
Shares
 
($.01 Par)
 
Shares
 
($.01 Par)
 
Additional
Paid-In
Capital
 
Foreign Currency Translation Adjustments
 
Derivative Instruments, net of tax
 
Dividends/Distributions in Excess of Earnings
 
Noncontrolling
Interest
 
Total
Balance, July 1, 2014
333,861,080

 
$
3,339

 
9,775,000

 
$
98

 
$
9,488,414

 
$
75,734

 
$
(49,529
)
 
$
(2,656,718
)
 
$
18,098

 
$
6,879,436

Stock-based compensation related activity, net of forfeitures
(980
)
 
—

 
—

 
—

 
12,124

 
—

 
—

 
—

 
—

 
12,124

Purchases and retirement of capital stock
(653
)
 
—

 
—

 
—

 
(48
)
 
—

 
—

 
—

 
—

 
(48
)
Other comprehensive income (loss)(a)
—

 
—

 
—

 
—

 


 
(22,750
)
 
15,551

 
—

 
(1,427
)
 
(8,626
)
Common stock dividends/distributions
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(117,181
)
 
—

 
(117,181
)
Preferred stock dividends
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(10,997
)
 
—

 
(10,997
)
Net income (loss)
—

 
—

 
—

 
—

 
—

 
—

 
—

 
106,937

 
1,100

 
108,037

Balance, September 30, 2014
333,859,447

 
$
3,339

 
9,775,000

 
$
98

 
$
9,500,490

 
$
52,984

 
$
(33,978
)
 
$
(2,677,959
)
 
$
17,771

 
$
6,862,745

___________________________
(a)
See the condensed statement of operations and other comprehensive income (loss) for the components of "other comprehensive income (loss)" and note 4 with respect to the reclassification adjustment.

 
CCIC Stockholders
 
 
 
 
 
 
 
Common Stock
 
4.50% Mandatory Convertible Preferred Stock
 
 
 
AOCI
 
 
 
 
 
 
 
Shares
 
($.01 Par)
 
Shares
 
($.01 Par)
 
Additional
Paid-In
Capital
 
Foreign Currency Translation Adjustments
 
Derivative Instruments, net of tax
 
Dividends/Distributions in Excess of Earnings
 
Noncontrolling
Interest
 
Total
Balance, July 1, 2013
292,685,462

 
$
2,927

 
—

 
$
—

 
$
5,544,205

 
$
65,298

 
$
(142,789
)
 
$
(2,558,169
)
 
$
13,420

 
$
2,924,892

Stock-based compensation related activity, net of forfeitures
(5,001
)
 
—

 
—

 
—

 
9,862

 
—

 
—

 
—

 
—

 
9,862

Purchases and retirement of capital stock
(5,031
)
 
—

 
—

 
—

 
(350
)
 
—

 
—

 
—

 
—

 
(350
)
Other comprehensive income (loss)(a)
—

 
—

 
—

 
—

 
—

 
5,608

 
10,544

 
—

 
266

 
16,418

Net income (loss)
—

 
—

 
—

 
—

 
—

 
—

 
—

 
45,836

 
632

 
46,468

Balance, September 30, 2013
292,675,430

 
$
2,927

 
—

 
$
—

 
$
5,553,717

 
$
70,906

 
$
(132,245
)
 
$
(2,512,333
)
 
$
14,318

 
$
2,997,290

___________________________
(a)
See the condensed statement of operations and other comprehensive income (loss) for the components of "other comprehensive income (loss)" and note 4 with respect to the reclassification adjustment.

See notes to condensed consolidated financial statements.


5

CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF EQUITY
(In thousands of dollars, except share amounts) (Unaudited)

 
CCIC Stockholders
 
 
 
 
 
Common Stock
 
4.50% Mandatory Convertible Preferred Stock
 
 
 
AOCI
 
 
 
 
 
 
 
Shares
 
($.01 Par)
 
Shares
 
($.01 Par)
 
Additional
Paid-In
Capital
 
Foreign Currency Translation Adjustments
 
Derivative Instruments, net of tax
 
Dividends/Distributions in Excess of Earnings
 
Noncontrolling
Interest
 
Total
Balance, January 1, 2014
334,070,016

 
$
3,341

 
9,775,000

 
$
98

 
$
9,482,769

 
$
58,261

 
$
(81,873
)
 
$
(2,535,879
)
 
$
14,458

 
$
6,941,175

Stock-based compensation related activity, net of forfeitures
81,350

 
1

 
—

 
—

 
39,496

 
—

 
—

 
—

 
—

 
39,497

Purchases and retirement of capital stock
(291,919
)
 
(3
)
 
—

 
—

 
(21,775
)
 
—

 
—

 
—

 
—

 
(21,778
)
Other comprehensive income (loss)(a)
—

 
—

 
—

 
—

 
—

 
(5,277
)
 
47,895

 
—

 
(431
)
 
42,187

Common stock dividends/distributions
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(351,532
)
 
—

 
(351,532
)
Preferred stock dividends
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(32,991
)
 
—

 
(32,991
)
Net income (loss)
—

 
—

 
—

 
—

 
—

 
—

 
—

 
242,443

 
3,744

 
246,187

Balance, September 30, 2014
333,859,447

 
$
3,339

 
9,775,000

 
$
98

 
$
9,500,490

 
$
52,984

 
$
(33,978
)
 
$
(2,677,959
)
 
$
17,771

 
$
6,862,745

___________________________
(a)
See the condensed statement of operations and other comprehensive income (loss) for the components of "other comprehensive income (loss)" and note 4 with respect to the reclassification adjustment.

 
CCIC Stockholders
 
 
 
 
 
 
 
Common Stock
 
4.50% Mandatory Convertible Preferred Stock
 
 
 
AOCI
 
 
 
 
 
 
 
Shares
 
($.01 Par)
 
Shares
 
($.01 Par)
 
Additional
Paid-In
Capital
 
Foreign Currency Translation Adjustments
 
Derivative Instruments, net of tax
 
Dividends/Distributions in Excess of Earnings
 
Noncontrolling
Interest
 
Total
Balance, January 1, 2013
293,164,786

 
$
2,932

 
—

 
$
—

 
$
5,623,595

 
$
102,125

 
$
(163,916
)
 
$
(2,625,990
)
 
$
12,518

 
$
2,951,264

Stock-based compensation related activity, net of forfeitures
936,946

 
9

 
—

 
—

 
29,325

 
—

 
—

 
—

 
—

 
29,334

Purchases and retirement of capital stock
(1,426,302
)
 
(14
)
 
—

 
—

 
(99,203
)
 
—

 
—

 
—

 
—

 
(99,217
)
Other comprehensive income (loss)(a)
—

 
—

 
—

 
—

 
—

 
(31,219
)
 
31,671

 
—

 
(1,125
)
 
(673
)
Net income (loss)
—

 
—

 
—

 
—

 
—

 
—

 
—

 
113,657

 
2,925

 
116,582

Balance, September 30, 2013
292,675,430

 
$
2,927

 
—

 
$
—

 
$
5,553,717

 
$
70,906

 
$
(132,245
)
 
$
(2,512,333
)
 
$
14,318

 
$
2,997,290

___________________________
(a)
See the condensed statement of operations and other comprehensive income (loss) for the components of "other comprehensive income (loss)" and note 4 with respect to the reclassification adjustment.

See notes to condensed consolidated financial statements.

6

CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-Unaudited
(Tabular dollars in thousands, except per share amounts)


1.
General
The information contained in the following notes to the consolidated financial statements is condensed from that which would appear in the annual consolidated financial statements; accordingly, the consolidated financial statements included herein should be reviewed in conjunction with the consolidated financial statements for the fiscal year ended December 31, 2013, and related notes thereto, included in the 2013 Form 10-K filed by Crown Castle International Corp. ("CCIC") with the SEC. All references to the "Company" include CCIC and its subsidiary companies unless otherwise indicated or the context indicates otherwise.
The Company owns, operates and leases shared wireless infrastructure, including: (1) towers, and to a lesser extent, (2) small cell networks, and (3) third party land interests. The Company conducts operations through subsidiaries of CCOC, including (1) certain subsidiaries which operate wireless infrastructure portfolios in the United States, including Puerto Rico ("U.S." or "CCUSA") and (2) a 77.6% owned subsidiary that operates towers in Australia (referred to as "CCAL"). The Company's core business is providing access, including space or capacity, to its wireless infrastructure via long-term contracts in various forms, including licenses, subleases and lease agreements. Our wireless infrastructure can accommodate multiple customers for antennas or other equipment necessary for the transmission of signals for wireless communication.
As part of CCUSA's effort to provide comprehensive wireless infrastructure solutions, it offers certain network services relating to its wireless infrastructure, consisting of (1) customer equipment installation or subsequent augmentations (collectively, "installation services") and (2) the following additional site development services relating to existing or new antenna installations on its wireless infrastructure: site acquisition, architectural and engineering, zoning or permitting, other construction, or network development related services.
Effective January 1, 2014, the Company commenced operating as a REIT for U.S. federal income tax purposes. In addition, the Company has certain taxable REIT subsidiaries ("TRSs"). See note 5.
Approximately 53% of the Company's towers are leased or subleased or operated and managed under master leases, subleases, and other agreements with Sprint, T-Mobile, and AT&T. 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 fairly state the consolidated financial position of the Company at September 30, 2014, and the consolidated results of operations and the consolidated cash flows for the nine months ended September 30, 2014 and 2013. The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. Accounting measurements at interim dates inherently involve greater reliance on estimates than at year end. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the entire 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.


7

CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-Unaudited (Continued)
(Tabular dollars in thousands, except per share amounts)


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 2013 Form 10-K.
Recently Adopted Accounting Pronouncements
No accounting pronouncements adopted during the nine months ended September 30, 2014 had a material impact on the Company's consolidated financial statements.
Recent Accounting Pronouncements Not Yet Adopted
In May 2014, the Financial Accounting Standards Board ("FASB") released updated guidance regarding the recognition of revenue from contracts with customers, exclusive of those contracts within lease accounting. The core principle of the guidance is that an entity should recognize revenue to depict the transfer 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 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 as of January 1, 2017.  This guidance is required to be applied (1) retrospectively to each prior reporting period presented, or (2) with the cumulative effect being recognized at the date of initial application. The Company is evaluating the guidance including the impact on its consolidated financial statements.

3.
Acquisitions
AT&T Acquisition
During October 2013, the Company entered into a definitive agreement with AT&T to acquire, for $4.827 billion in cash at closing, exclusive rights to towers which, as of September 30, 2014, comprised approximately 23% of the Company's towers ("AT&T Acquisition"). On December 16, 2013, the Company closed on the acquisition. The Company utilized net proceeds from the October Equity Financings and additional borrowings under the 2012 Revolver and Term Loans to finance the AT&T Acquisition, as well as cash on hand.
The preliminary purchase price allocation related to the AT&T Acquisition is not finalized as of September 30, 2014 and is based upon preliminary valuation which is subject to change as the Company obtains additional information, including information regarding fixed assets, intangible assets and certain liabilities. The preliminary purchase price allocation for the AT&T Acquisition, as of September 30, 2014, is shown below.
Current assets
$
18,337

 
Property and equipment
1,889,875

 
Goodwill
1,895,942

 
Other intangible assets, net
1,189,000

 
Other assets
60,497

 
Current liabilities
(9,757
)
 
Deferred credits and other liabilities
(217,295
)
(a) 
Net assets acquired
$
4,826,599

(b)(c) 
    
(a)
Inclusive of above-market leases for land interests under the Company's towers.
(b)
The principal changes in the preliminary purchase price allocation for the AT&T Acquisition between December 31, 2013 and September 30, 2014 relate to (1) a $127.4 million increase to goodwill, (2) a $91.1 million decrease to other intangible assets, net, (3) a $75.5 million decrease to property and equipment, net, and (4) a $57.2 million increase to other assets. The effect of the change in the preliminary price allocation on the Company's statement of operations and comprehensive income (loss) is immaterial to the periods presented.
(c)
No deferred taxes were recorded as a result of the Company's REIT election. See note 5.

8

CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-Unaudited (Continued)
(Tabular dollars in thousands, except per share amounts)


Unaudited Pro Forma Operating Results
The unaudited pro forma condensed consolidated results of operations combine the historical results of the Company, along with the historical results of the AT&T Acquisition for the period presented below. The following table presents the unaudited pro forma condensed consolidated results of operations of the Company for the period presented as if the AT&T Acquisition was completed as of January 1, 2012. The unaudited pro forma amounts are presented for illustrative purposes only and are not necessarily indicative of future consolidated results of operations.
 
Nine Months Ended September 30, 2013
 
Net revenues
$
2,535,916

(a) 
Net income (loss)
$
96,441

(b)(c) 
Basic net income (loss) attributable to CCIC common stockholders
$
0.18

(d) 
Diluted net income (loss) attributable to CCIC common stockholders
$
0.18

(d) 
    
(a)
Amounts are inclusive of pro forma adjustments to increase net revenues of $165.4 million that the Company expects to recognize from AT&T under AT&T's contracted lease of space on the towers acquired in the AT&T Acquisition.
(b)
Amounts are inclusive of pro forma adjustments to increase depreciation and amortization of $165.6 million related to property and equipment and intangibles recorded as a result of the AT&T Acquisition.
(c)
The pro forma adjustments reflect the federal statutory rate and an estimated state rate. No adjustment was made with respect to the Company's REIT election. See note 5.
(d)
Pro forma amounts include the impact of the interest expense associated with the related debt financing as well as the impact of the common stock and preferred stock offerings completed in October 2013.


9

CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-Unaudited (Continued)
(Tabular dollars in thousands, except per share amounts)


4.
Debt and Other Obligations
 
Original
Issue Date
 
Contractual
Maturity
Date (d)
 
Outstanding
Balance as of
September 30, 2014
 
Outstanding
Balance as of
December 31, 2013
 
Stated Interest
Rate as of
September 30, 2014(a)(d)
Bank debt - variable rate:
 
 
 
 
 
 
 
 
 
2012 Revolver
Jan. 2012
 
Nov. 2018/Jan. 2019
 
$
354,000

(b) 
$
374,000

 
1.9
%
Tranche A Term Loans
Jan. 2012
 
Nov. 2018/Jan. 2019
 
650,078

 
662,500

 
1.9
%
Tranche B Term Loans
Jan. 2012
 
Jan. 2019/Jan. 2021
(e) 
2,842,669

(e) 
2,864,150

 
3.0
%
Total bank debt
 
 
 
 
3,846,747

 
3,900,650

 
 
Securitized debt - fixed rate:
 
 
 
 
 
 
 
 
 
January 2010 Tower Revenue Notes
Jan. 2010
 
2035 - 2040
(c) 
1,600,000

(f) 
1,900,000

 
6.0
%
August 2010 Tower Revenue Notes
Aug. 2010
 
2035 - 2040
(c) 
1,550,000

 
1,550,000

 
4.5
%
2009 Securitized Notes
July 2009
 
2019/2029
 
165,591

 
179,792

 
7.4
%
WCP Securitized Notes
Jan. 2010
 
Nov. 2040
(c) 
268,313

 
286,171

 
5.7
%
Total securitized debt
 
 
 
 
3,583,904

 
3,915,963

 
 
Bonds - fixed rate:
 
 
 
 
 
 
 
 
 
7.125% Senior Notes
Oct. 2009
 
Nov. 2019
 
—

(f) 
498,332

 
N/A

5.25% Senior Notes
Oct. 2012
 
Jan. 2023
 
1,649,970

 
1,649,970

 
5.3
%
2012 Secured Notes
Dec. 2012
 
Dec. 2017/Apr. 2023
 
1,500,000

 
1,500,000

 
3.4
%
4.875% Senior Notes
Apr. 2014
 
Apr. 2022
 
845,951

(f) 
—

 
4.9
%
Total bonds
 
 
 
 
3,995,921

 
3,648,302

 
 
Other:
 
 
 
 
 
 
 
 
 
Capital leases and other obligations
Various
 
Various
 
147,106

 
129,585

 
Various

Total debt and other obligations
 
 
 
 
11,573,678

 
11,594,500

 
 
Less: current maturities and short-term debt and other current obligations
 
 
 
 
106,673

 
103,586

 
 
Non-current portion of long-term debt and other long-term obligations
 
 
 
 
$
11,467,005

 
$
11,490,914

 
 
________________
(a)
Represents the weighted-average stated interest rate.
(b)
As of September 30, 2014, the undrawn availability under the $1.5 billion 2012 Revolver is $1.1 billion.
(c)
If the respective series of such debt is not paid in full on or prior to an applicable 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 additional interest (of an additional approximately 5% per annum) will accrue on the respective series. See the 2013 Form 10-K for additional information regarding these provisions.
(d)
See the 2013 Form 10-K, including note 7, for additional information regarding the maturity and principal amortization provisions and interest rates relating to the Company's indebtedness.
(e)
During January 2014, the Company amended its senior credit facility (as amended, "2012 Credit Facility") by extending the maturity date on a portion of the Tranche B Term Loans, including Incremental Tranche B Term Loans, to January 2021. As of September 30, 2014, the Company's Tranche B Term Loans, including the Incremental Tranche B Term Loans and the Incremental Tranche B-2 Term Loans, consist of $2.3 billion aggregate principal amount due January 2021 and $567.0 million aggregate principal amount due January 2019.
(f)
In April 2014, the Company issued $850.0 million of senior notes due in April 2022 ("4.875% Senior Notes"). The 4.875% Senior Notes are general obligations of CCIC and rank equally with all existing and future senior debt of CCIC. The net proceeds from the offering were approximately $839 million, after the deduction of associated fees. The Company utilized the net proceeds from the 4.875% Senior Notes offering (1) to repay $300.0 million of the January 2010 Tower Revenue Notes with an anticipated repayment date of January 2015 and (2) to redeem all of the previously outstanding 7.125% Senior Notes (collectively, "2014 Refinancings").


10

CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-Unaudited (Continued)
(Tabular dollars in thousands, except per share amounts)


Contractual Maturities
The following are the scheduled contractual maturities of the total debt and other long-term obligations outstanding as of September 30, 2014. These maturities reflect contractual maturity dates and do not consider the principal payments that will commence following the anticipated repayment dates on the Tower Revenue Notes and the rapid amortization date on the WCP Securitized Notes.
 
Three Months Ending
December 31,
 
Years Ending December 31,
 
 
 
 
 
Unamortized Adjustments, Net
 
Total Debt and Other Obligations Outstanding
 
2014
 
2015
 
2016
 
2017
 
2018
 
Thereafter
 
Total Cash Obligations
 
 
Scheduled contractual maturities
$
26,124

 
$
103,831

 
$
118,523

 
$
615,990

 
$
979,754

 
$
9,728,904

 
$
11,573,126

 
$
552

 
$
11,573,678

Purchases and Redemptions of Long-Term Debt
The following is a summary of purchases and redemptions of long-term debt during the nine months ended September 30, 2014.
 
Nine Months Ended September 30, 2014
 
Principal Amount
 
Cash Paid(a)
 
Gains (Losses)(b)
January 2010 Tower Revenue Notes
$
300,000

 
$
302,990

 
$
(3,740
)
7.125% Senior Notes
500,000

 
533,909

 
(40,889
)
Total
$
800,000

 
$
836,899

 
$
(44,629
)
    
(a)
Exclusive of accrued interest.
(b)
The losses predominantly relate to cash losses, including make whole payments and are inclusive of $7.7 million related to the write off of deferred financing costs and discounts.
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 September 30,
 
Nine Months Ended September 30,
 
2014
 
2013
 
2014
 
2013
Interest expense on debt obligations
$
121,450

 
$
121,246

 
$
370,899

 
$
368,400

Amortization of deferred financing costs
5,516

 
5,366

 
16,678

 
19,426

Amortization of adjustments on long-term debt
(892
)
 
(971
)
 
(2,743
)
 
9,500

Amortization of interest rate swaps(a)
15,551

 
16,222

 
47,895

 
48,726

Other, net of capitalized interest
(338
)
 
153

 
(508
)
 
589

Total
$
141,287

 
$
142,016

 
$
432,221

 
$
446,641

    
(a)
Amounts reclassified from accumulated other comprehensive income (loss).

5.
Income Taxes
Effective January 1, 2014, the Company commenced operating as a REIT for U.S. federal income tax purposes. As a REIT, the Company will generally be entitled to a deduction for dividends that it pays and therefore will not be 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) taxes related to the TRSs, (4) certain state, local, or foreign income taxes, (5) franchise taxes, (6) property taxes, and (7) 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 1986, as amended ("Code") to maintain qualification for taxation as a REIT.

11

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 small cells are currently included in one or more wholly owned TRSs. In August 2014, the Company received a favorable private letter ruling from the Internal Revenue Service ("IRS"), which provides that the real property portion of the Company's small cells and the related rents qualify as real property and rents from real property, respectively, under the rules governing REITs. The Company is evaluating the impact of this private letter ruling and, subject to board approval, expects to take appropriate action to include at least some part of the Company's small cells as part of the REIT during 2015. Once the Company has completed its evaluation and necessary actions to include small cells in the REIT, the Company expects to de-recognize its net deferred tax liabilities related to such part of the Company's small cells.
Additionally, the Company has included in TRSs its tower operations in Australia and certain other assets and operations. Those TRS assets and operations (along with any part of the Company's small cells that may remain in a TRS) 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 and Australia) most likely will be 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. The Company will be subject to a federal corporate level tax rate (currently 35%) on the gain recognized from the sale of assets occurring within a specified period (generally 10 years) after the REIT conversion up to the amount of the built in gain that existed on January 1, 2014, which is based upon the fair market value of those assets in excess of our tax basis on January 1, 2014.  This gain can be offset by any remaining federal net operating loss carryforwards.
For the nine months ended September 30, 2014, 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. The income tax provision for the nine months ended September 30, 2014 primarily related to the TRSs. For the nine months ended September 30, 2013, the Company's effective tax rate differed from the federal statutory rate predominately due to state taxes of $21.7 million.

6.
Fair Value Disclosures
 
Level in Fair Value Hierarchy
 
September 30, 2014
 
December 31, 2013
 
 
Carrying
 Amount
 
Fair
Value
 
Carrying
 Amount
 
Fair
Value
Assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
1
 
$
238,550

 
$
238,550

 
$
223,394

 
$
223,394

Restricted cash, current and non-current
1
 
142,824

 
142,824

 
188,526

 
188,526

Liabilities:
 
 
 
 
 
 
 
 
 
Long-term debt and other obligations
2
 
11,573,678

 
11,921,454

 
11,594,500

 
11,892,587

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 were no changes since December 31, 2013 in the Company's valuation techniques used to measure fair values.

7.
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. 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 units as determined under the treasury stock method and (2) upon conversion of the Company's 4.50% Mandatory Convertible Preferred Stock as determined under the if-converted method. The Company's restricted stock awards are considered participating securities and may be included in the computation pursuant to the two-class method. However, the Company does not present the two-class method when there is no difference between the per share amount under the two-class method and the treasury stock method.

12

CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-Unaudited (Continued)
(Tabular dollars in thousands, except per share amounts)


 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2014
 
2013
 
2014
 
2013
Net income (loss) attributable to CCIC stockholders
$
106,937

 
$
45,836

 
$
242,443

 
$
113,657

Dividends on preferred stock
(10,997
)
 
—

 
(32,991
)
 
—

Net income (loss) attributable to CCIC common stockholders
$
95,940

 
$
45,836

 
$
209,452

 
$
113,657

Weighted-average number of common shares outstanding (in thousands):
 
 
 
 
 
 
 
Basic weighted-average number of common stock outstanding
332,413

 
290,372

 
332,264

 
290,900

Effect of assumed dilution from potential common shares relating to restricted stock units and restricted stock awards
828

 
1,006

 
756

 
1,143

Diluted weighted-average number of common shares outstanding
333,241

 
291,378

 
333,020

 
292,043

Net income (loss) attributable to CCIC common stockholders, per common share:
 
 
 
 
 
 
 
Basic
$
0.29

 
$
0.16

 
$
0.63

 
$
0.39

Diluted
$
0.29

 
$
0.16

 
$
0.63

 
$
0.39

During the nine months ended September 30, 2014, the Company issued 1.0 million restricted stock units. For the three and nine months ended September 30, 2014, 12.3 million common share equivalents related to the 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, 2014.

8.
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 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, the Company has the option to purchase approximately 53% of the Company's towers at the end of their respective lease terms. The Company has no obligation to exercise such purchase options.

9.
Equity
Declaration and Payment of Dividends
During the nine months ended September 30, 2014, the following dividends were declared or paid:
Equity Type
 
Declaration Date
 
Record Date
 
Payment Date
 
Dividends Per Share
 
Aggregate
Payment
Amount
(In millions)
 
Common Stock
 
February 20, 2014
 
March 20, 2014
 
March 31, 2014
 
$
0.35

 
$
117.2

(a) 
Common Stock
 
May 30, 2014
 
June 20, 2014
 
June 30, 2014
 
$
0.35

 
$
117.2

(a) 
Common Stock
 
August 8, 2014
 
September 19, 2014
 
September 30, 2014
 
$
0.35

 
$
117.2

(a) 
4.50% Mandatory Convertible Preferred Stock
 
December 31, 2013
 
January 14, 2014
 
February 3, 2014
 
$
1.1625

 
$
11.4

 
4.50% Mandatory Convertible Preferred Stock
 
March 25, 2014
 
April 15, 2014
 
May 1, 2014
 
$
1.1250

 
$
11.0

 
4.50% Mandatory Convertible Preferred Stock
 
June 25, 2014
 
July 15, 2014
 
August 1, 2014
 
$
1.1250

 
$
11.0

 
4.50% Mandatory Convertible Preferred Stock
 
September 26, 2014
 
October 15, 2014
 
November 3, 2014
 
$
1.1250

 
$
11.0

(b) 
        
(a)
Inclusive of dividends accrued for holders of unvested restricted stock units.
(b)
Represents amount paid on November 3, 2014 based on holders of record on October 15, 2014.

13

CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-Unaudited (Continued)
(Tabular dollars in thousands, except per share amounts)


See also note 13.
Purchases of the Company's Common Stock
For the nine months ended September 30, 2014, the Company purchased 0.3 million shares of its common stock utilizing $21.8 million in cash.

10.
Operating Segments
The Company's reportable operating segments are (1) CCUSA, primarily consisting of the Company's U.S. operations and (2) CCAL, the Company's Australian operations. Financial results for the Company are reported to management and the board of directors in this manner.
The measurement of profit or loss currently used by management to evaluate the results of operations for the Company and its operating segments is earnings before interest, taxes, depreciation, amortization and accretion, as adjusted ("Adjusted EBITDA"). The Company defines Adjusted EBITDA as net income (loss) plus restructuring charges (credits), asset write-down charges, acquisition and integration costs, depreciation, amortization and accretion, amortization of prepaid lease purchase price adjustments, interest expense and amortization of deferred financing costs, gains (losses) on retirement of long-term obligations, net gain (loss) on interest rate swaps, impairment of available-for-sale securities, interest income, other income (expense), benefit (provision) for income taxes, cumulative effect of change in accounting principle, income (loss) from discontinued operations and stock-based compensation expense. Adjusted EBITDA is not intended as an alternative measure of operating results or cash flow from operations (as determined in accordance with GAAP), and the Company's measure of Adjusted EBITDA may not be comparable to similarly titled measures of other companies. There are no significant revenues resulting from transactions between the Company's operating segments. Inter-company borrowings and related interest between segments are eliminated to reconcile segment results and assets to the consolidated basis.

14

CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-Unaudited (Continued)
(Tabular dollars in thousands, except per share amounts)


 
Three Months Ended September 30, 2014
 
Three Months Ended September 30, 2013
 
CCUSA
 
CCAL
 
Eliminations
 
Consolidated
Total
 
CCUSA
 
CCAL
 
Eliminations
 
Consolidated
Total
Net revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Site rental
$
717,623

 
$
34,270

 
$
—

 
$
751,893

 
$
589,415

 
$
31,351

 
$
—

 
$
620,766

Network services and other
175,260

 
2,872

 
—

 
178,132

 
122,063

 
6,148

 
—

 
128,211

Net revenues
892,883

 
37,142

 
—

 
930,025

 
711,478

 
37,499

 
—

 
748,977

Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Costs of operations(a):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Site rental
230,599

 
10,511

 
—

 
241,110

 
172,791

 
9,175

 
—

 
181,966

Network services and other
101,814

 
1,209

 
—

 
103,023

 
77,929

 
4,069

 
—

 
81,998

General and administrative
65,212

 
6,183

 
—

 
71,395

 
52,312

 
6,192

 
—

 
58,504

Asset write-down charges
4,932

 
343

 
—

 
5,275

 
3,022

 
871

 
—

 
3,893

Acquisition and integration costs
4,068

 
—

 
—

 
4,068

 
4,243

 
126

 
—

 
4,369

Depreciation, amortization and accretion
247,206

 
7,656

 
—

 
254,862

 
186,521

 
8,887

 
—

 
195,408

Total operating expenses
653,831

 
25,902

 
—

 
679,733

 
496,818

 
29,320

 
—

 
526,138

Operating income (loss)
239,052

 
11,240

 
—

 
250,292

 
214,660

 
8,179

 
—

 
222,839

Interest expense and amortization of deferred financing costs
(141,287
)
 
(3,862
)
 
3,862

 
(141,287
)
 
(142,016
)
 
(3,949
)
 
3,949

 
(142,016
)
Gains (losses) on retirement of long-term obligations
—

 
—

 
—

 
—

 
(1
)
 
—

 
—

 
(1
)
Interest income
107

 
85

 
—

 
192

 
144

 
92

 
—

 
236

Other income (expense)
3,168

 
16

 
(3,862
)
 
(678
)
 
3,295

 
23

 
(3,949
)
 
(631
)
Benefit (provision) for income taxes
1,977

 
(2,459
)
 
—

 
(482
)
 
(32,538
)
 
(1,421
)
 
—

 
(33,959
)
Net income (loss)
103,017

 
5,020

 
—

 
108,037

 
43,544

 
2,924

 
—

 
46,468

Less: net income (loss) attributable to the noncontrolling interest
—

 
1,100

 
—

 
1,100

 
—

 
632

 
—

 
632

Net income (loss) attributable to CCIC stockholders
$
103,017

 
$
3,920

 
$
—

 
$
106,937

 
$
43,544

 
$
2,292

 
$
—

 
$
45,836

Capital expenditures
$
199,662

 
$
4,150

 
$
—

 
$
203,812

 
$
125,941

 
$
4,722

 
$
—

 
$
130,663

________________
(a)
Exclusive of depreciation, amortization and accretion shown separately.


15

CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-Unaudited (Continued)
(Tabular dollars in thousands, except per share amounts)


 
Nine Months Ended September 30, 2014
 
Nine Months Ended September 30, 2013
 
CCUSA
 
CCAL
 
Eliminations
 
Consolidated
Total
 
CCUSA
 
CCAL
 
Eliminations
 
Consolidated
Total
Net revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Site rental
$
2,143,198

 
$
102,197

 
$
—

 
$
2,245,395

 
$
1,754,266

 
$
98,764

 
$
—

 
$
1,853,030

Network services and other
469,690

 
7,235

 
—

 
476,925

 
352,982

 
17,953

 
—

 
370,935

Net revenues
2,612,888

 
109,432

 
—

 
2,722,320

 
2,107,248

 
116,717

 
—

 
2,223,965

Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Costs of operations(a):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Site rental
676,275

 
29,902

 
—

 
706,177

 
509,617

 
28,970

 
—

 
538,587

Network services and other
275,514

 
3,830

 
—

 
279,344

 
215,812

 
13,762

 
—

 
229,574

General and administrative
187,171

 
18,226

 
—

 
205,397

 
154,098

 
17,441

 
—

 
171,539

Asset write-down charges
10,673

 
471

 
—

 
11,144

 
9,633

 
1,072

 
—

 
10,705

Acquisition and integration costs
28,852

 
72

 
—

 
28,924

 
12,875

 
311

 
—

 
13,186

Depreciation, amortization and accretion
738,965

 
20,323

 
—

 
759,288

 
548,951

 
23,567

 
—

 
572,518

Total operating expenses
1,917,450

 
72,824

 
—

 
1,990,274

 
1,450,986

 
85,123

 
—

 
1,536,109

Operating income (loss)
695,438

 
36,608

 
—

 
732,046

 
656,262

 
31,594

 
—

 
687,856

Interest expense and amortization of deferred financing costs
(432,221
)
 
(11,475
)
 
11,475

 
(432,221
)
 
(446,641
)
 
(12,710
)
 
12,710

 
(446,641
)
Gains (losses) on retirement of long-term obligations
(44,629
)
 
—

 
—

 
(44,629
)
 
(36,487
)
 
—

 
—

 
(36,487
)
Interest income
329

 
225

 
—

 
554

 
592

 
269

 
—

 
861