x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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) |
Large accelerated filer | x | Accelerated filer | o | |||
Non-accelerated filer | o | Smaller reporting company | o |
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 |
ITEM 1. | FINANCIAL STATEMENTS |
June 30, 2015 | December 31, 2014 | ||||||
(Unaudited) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 338,609 | $ | 151,312 | |||
Restricted cash | 143,016 | 147,411 | |||||
Receivables, net | 253,342 | 313,308 | |||||
Prepaid expenses | 138,355 | 138,873 | |||||
Deferred income tax assets | 29,842 | 24,806 | |||||
Other current assets | 214,396 | 94,503 | |||||
Assets from discontinued operations (see note 3) | — | 412,783 | |||||
Total current assets | 1,117,560 | 1,282,996 | |||||
Deferred site rental receivables | 1,256,517 | 1,202,058 | |||||
Property and equipment, net of accumulated depreciation of $5,420,258 and $5,052,395, respectively | 9,042,284 | 8,982,783 | |||||
Goodwill | 5,160,106 | 5,196,485 | |||||
Other intangible assets, net | 3,631,987 | 3,681,551 | |||||
Long-term prepaid rent, deferred financing costs and other assets, net | 803,175 | 797,403 | |||||
Total assets | $ | 21,011,629 | $ | 21,143,276 | |||
LIABILITIES AND EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 153,909 | $ | 162,397 | |||
Accrued interest | 67,067 | 66,943 | |||||
Deferred revenues | 313,355 | 279,882 | |||||
Other accrued liabilities | 151,211 | 182,081 | |||||
Current maturities of debt and other obligations | 94,702 | 113,335 | |||||
Liabilities from discontinued operations (see note 3) | — | 127,493 | |||||
Total current liabilities | 780,244 | 932,131 | |||||
Debt and other long-term obligations | 11,036,602 | 11,807,526 | |||||
Deferred income tax liabilities | 35,117 | 39,889 | |||||
Other long-term liabilities | 1,755,430 | 1,626,502 | |||||
Total liabilities | 13,607,393 | 14,406,048 | |||||
Commitments and contingencies (note 10) | |||||||
CCIC stockholders' equity: | |||||||
Common stock, $.01 par value; 600,000,000 shares authorized; shares issued and outstanding: June 30, 2015—333,762,344 and December 31, 2014—333,856,632 | 3,339 | 3,339 | |||||
4.50% Mandatory Convertible Preferred Stock, Series A, $.01 par value; 20,000,000 shares authorized; shares issued and outstanding: June 30, 2015 and December 31, 2014—9,775,000; aggregate liquidation value: June 30, 2015 and December 31, 2014—$977,500 | 98 | 98 | |||||
Additional paid-in capital | 9,518,103 | 9,512,396 | |||||
Accumulated other comprehensive income (loss) | (6,866 | ) | 15,820 | ||||
Dividends/distributions in excess of earnings | (2,110,438 | ) | (2,815,428 | ) | |||
Total CCIC stockholders' equity | 7,404,236 | 6,716,225 | |||||
Noncontrolling interest from discontinued operations | — | 21,003 | |||||
Total equity | 7,404,236 | 6,737,228 | |||||
Total liabilities and equity | $ | 21,011,629 | $ | 21,143,276 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Net revenues: | |||||||||||||||
Site rental | $ | 737,091 | $ | 710,783 | $ | 1,468,471 | $ | 1,425,575 | |||||||
Network services and other | 162,346 | 167,459 | 331,437 | 294,430 | |||||||||||
Net revenues | 899,437 | 878,242 | 1,799,908 | 1,720,005 | |||||||||||
Operating expenses: | |||||||||||||||
Costs of operations(a): | |||||||||||||||
Site rental | 237,031 | 227,032 | 469,244 | 445,676 | |||||||||||
Network services and other | 89,400 | 101,901 | 176,318 | 173,701 | |||||||||||
General and administrative | 73,125 | 63,318 | 147,181 | 121,959 | |||||||||||
Asset write-down charges | 3,620 | 3,105 | 12,175 | 5,741 | |||||||||||
Acquisition and integration costs | 2,377 | 19,125 | 4,393 | 24,784 | |||||||||||
Depreciation, amortization and accretion | 253,153 | 246,583 | 504,959 | 491,759 | |||||||||||
Total operating expenses | 658,706 | 661,064 | 1,314,270 | 1,263,620 | |||||||||||
Operating income (loss) | 240,731 | 217,178 | 485,638 | 456,385 | |||||||||||
Interest expense and amortization of deferred financing costs | (134,466 | ) | (144,534 | ) | (268,905 | ) | (290,934 | ) | |||||||
Gains (losses) on retirement of long-term obligations | (4,181 | ) | (44,629 | ) | (4,157 | ) | (44,629 | ) | |||||||
Gains (losses) on foreign currency swaps (see note 6) | 59,779 | — | 59,779 | — | |||||||||||
Interest income | 325 | 108 | 381 | 222 | |||||||||||
Other income (expense) | 194 | (5,920 | ) | (55 | ) | (8,656 | ) | ||||||||
Income (loss) from continuing operations before income taxes | 162,382 | 22,203 | 272,681 | 112,388 | |||||||||||
Benefit (provision) for income taxes | 4,144 | 3,101 | 5,579 | 6,141 | |||||||||||
Income (loss) from continuing operations | 166,526 | 25,304 | 278,260 | 118,529 | |||||||||||
Discontinued operations (see note 3): | |||||||||||||||
Income (loss) from discontinued operations, net of tax | 6,312 | 10,053 | 19,690 | 19,621 | |||||||||||
Net gain (loss) from disposal of discontinued operations, net of tax | 981,540 | — | 981,540 | — | |||||||||||
Income (loss) from discontinued operations, net of tax | 987,852 | 10,053 | 1,001,230 | 19,621 | |||||||||||
Net income (loss) | 1,154,378 | 35,357 | 1,279,490 | 138,150 | |||||||||||
Less: Net income (loss) attributable to the noncontrolling interest | 1,018 | 1,348 | 3,343 | 2,644 | |||||||||||
Net income (loss) attributable to CCIC stockholders | 1,153,360 | 34,009 | 1,276,147 | 135,506 | |||||||||||
Dividends on preferred stock | (10,997 | ) | (10,997 | ) | (21,994 | ) | (21,994 | ) | |||||||
Net income (loss) attributable to CCIC common stockholders | $ | 1,142,363 | $ | 23,012 | $ | 1,254,153 | $ | 113,512 | |||||||
Net income (loss) | $ | 1,154,378 | $ | 35,357 | $ | 1,279,490 | $ | 138,150 | |||||||
Other comprehensive income (loss): | |||||||||||||||
Amounts reclassified into "interest expense and amortization of deferred financing costs", net of taxes (see note 5) | 7,490 | 16,162 | 14,981 | 32,344 | |||||||||||
Foreign currency translation adjustments | 3,401 | 6,332 | (12,861 | ) | 18,469 | ||||||||||
Amounts reclassified into discontinued operations for foreign currency translation adjustments (see note 3) | (25,678 | ) | — | (25,678 | ) | — | |||||||||
Total other comprehensive income (loss) | (14,787 | ) | 22,494 | (23,558 | ) | 50,813 | |||||||||
Comprehensive income (loss) | 1,139,591 | 57,851 | 1,255,932 | 188,963 | |||||||||||
Less: Comprehensive income (loss) attributable to the noncontrolling interest | 1,401 | 1,696 | 2,471 | 3,640 | |||||||||||
Comprehensive income (loss) attributable to CCIC stockholders | $ | 1,138,190 | $ | 56,155 | $ | 1,253,461 | $ | 185,323 | |||||||
Net income (loss) attributable to CCIC common stockholders, per common share: | |||||||||||||||
Income (loss) from continuing operations, basic | $ | 0.47 | $ | 0.04 | $ | 0.77 | $ | 0.29 | |||||||
Income (loss) from discontinued operations, basic | $ | 2.96 | $ | 0.03 | $ | 3.00 | $ | 0.05 | |||||||
Net income (loss) attributable to CCIC common stockholders, basic | $ | 3.43 | $ | 0.07 | $ | 3.77 | $ | 0.34 | |||||||
Income (loss) from continuing operations, diluted | $ | 0.47 | $ | 0.04 | $ | 0.77 | $ | 0.29 | |||||||
Income (loss) from discontinued operations, diluted | $ | 2.95 | $ | 0.03 | $ | 2.99 | $ | 0.05 | |||||||
Net income (loss) attributable to CCIC common stockholders, diluted | $ | 3.42 | $ | 0.07 | $ | 3.76 | $ | 0.34 | |||||||
Weighted-average common shares outstanding (in thousands): | |||||||||||||||
Basic | 333,091 | 332,344 | 332,902 | 332,189 | |||||||||||
Diluted | 333,733 | 333,081 | 333,665 | 333,034 |
(a) | Exclusive of depreciation, amortization and accretion shown separately. |
Six Months Ended June 30, | ||||||||
2015 | 2014 | |||||||
Cash flows from operating activities: | ||||||||
Net income (loss) from continuing operations | $ | 278,260 | $ | 118,529 | ||||
Adjustments to reconcile net income (loss) from continuing operations to net cash provided by (used for) operating activities: | ||||||||
Depreciation, amortization and accretion | 504,959 | 491,759 | ||||||
Gains (losses) on retirement of long-term obligations | 4,157 | 44,629 | ||||||
Gains (losses) on foreign currency swaps | (59,779 | ) | — | |||||
Amortization of deferred financing costs and other non-cash interest | 23,804 | 41,485 | ||||||
Stock-based compensation expense | 30,131 | 27,373 | ||||||
Asset write-down charges | 12,175 | 5,741 | ||||||
Deferred income tax benefit (provision) | (10,170 | ) | (9,882 | ) | ||||
Other non-cash adjustments, net | (1,024 | ) | (1,468 | ) | ||||
Changes in assets and liabilities, excluding the effects of acquisitions: | ||||||||
Increase (decrease) in accrued interest | 124 | 1,266 | ||||||
Increase (decrease) in accounts payable | 1,493 | (23,686 | ) | |||||
Increase (decrease) in deferred revenues, deferred ground lease payables, other accrued liabilities and other liabilities | 130,044 | 183,005 | ||||||
Decrease (increase) in receivables | 60,231 | (54,442 | ) | |||||
Decrease (increase) in prepaid expenses, deferred site rental receivables, long-term prepaid rent, restricted cash and other assets | (55,527 | ) | (101,373 | ) | ||||
Net cash provided by (used for) operating activities | 918,878 | 722,936 | ||||||
Cash flows from investing activities: | ||||||||
Payments for acquisitions of businesses, net of cash acquired | (64,725 | ) | (85,788 | ) | ||||
Capital expenditures | (420,883 | ) | (299,298 | ) | ||||
Receipts from foreign currency swaps | 54,475 | — | ||||||
Other investing activities, net | (8,080 | ) | 2,378 | |||||
Net cash provided by (used for) investing activities | (439,213 | ) | (382,708 | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from issuance of long-term debt | 1,000,000 | 845,750 | ||||||
Principal payments on debt and other long-term obligations | (53,718 | ) | (55,385 | ) | ||||
Purchases and redemptions of long-term debt | (1,069,337 | ) | (836,899 | ) | ||||
Purchases of capital stock | (29,490 | ) | (21,730 | ) | ||||
Borrowings under revolving credit facility | 450,000 | 494,000 | ||||||
Payments under revolving credit facility | (1,145,000 | ) | (534,000 | ) | ||||
Payments for financing costs | (16,348 | ) | (15,834 | ) | ||||
Net (increase) decrease in restricted cash | 9,093 | 24,386 | ||||||
Dividends/distributions paid on common stock | (547,371 | ) | (233,684 | ) | ||||
Dividends paid on preferred stock | (21,994 | ) | (22,360 | ) | ||||
Net cash provided by (used for) financing activities | (1,424,165 | ) | (355,756 | ) | ||||
Net increase (decrease) in cash and cash equivalents - continuing operations | (944,500 | ) | (15,528 | ) | ||||
Discontinued operations (see note 3): | ||||||||
Net cash provided by (used for) operating activities | 4,881 | 40,740 | ||||||
Net cash provided by (used for) investing activities | 1,103,577 | (15,096 | ) | |||||
Net increase (decrease) in cash and cash equivalents - discontinued operations | 1,108,458 | 25,644 | ||||||
Effect of exchange rate changes | (969 | ) | (6,031 | ) | ||||
Cash and cash equivalents at beginning of period | 175,620 | (a) | 223,394 | (a) | ||||
Cash and cash equivalents at end of period | $ | 338,609 | $ | 227,479 | (a) |
(a) | Inclusive of cash and cash equivalents included in discontinued operations. |
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 from discontinued operations | Total | ||||||||||||||||||||||||||||
Balance, April 1, 2015 | 333,761,959 | $ | 3,339 | 9,775,000 | $ | 98 | $ | 9,503,335 | $ | 19,538 | $ | (11,234 | ) | $ | (2,978,356 | ) | $ | 22,073 | $ | 6,558,793 | |||||||||||||||||
Stock-based compensation related activity, net of forfeitures | 1,829 | — | — | — | 14,887 | — | — | — | — | 14,887 | |||||||||||||||||||||||||||
Purchases and retirement of capital stock | (1,444 | ) | — | — | — | (119 | ) | — | — | — | — | (119 | ) | ||||||||||||||||||||||||
Other comprehensive income (loss)(a) | — | — | — | — | — | (22,660 | ) | 7,490 | — | 383 | (14,787 | ) | |||||||||||||||||||||||||
Disposition of CCAL | — | — | — | — | — | — | — | — | (23,474 | ) | (23,474 | ) | |||||||||||||||||||||||||
Common stock dividends/distributions | — | — | — | — | — | — | — | (274,445 | ) | — | (274,445 | ) | |||||||||||||||||||||||||
Preferred stock dividends | — | — | — | — | — | — | — | (10,997 | ) | — | (10,997 | ) | |||||||||||||||||||||||||
Net income (loss) | — | — | — | — | — | — | — | 1,153,360 | 1,018 | 1,154,378 | |||||||||||||||||||||||||||
Balance, June 30, 2015 | 333,762,344 | $ | 3,339 | 9,775,000 | $ | 98 | $ | 9,518,103 | $ | (3,122 | ) | $ | (3,744 | ) | $ | (2,110,438 | ) | $ | — | $ | 7,404,236 |
(a) | See the condensed statement of operations and other comprehensive income (loss) for the components of "other comprehensive income (loss)" and notes 3 and 5 with respect to the reclassification adjustments. |
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 from discontinued operations | Total | ||||||||||||||||||||||||||||
Balance, April 1, 2014 | 333,795,981 | $ | 3,338 | 9,775,000 | $ | 98 | $ | 9,473,311 | $ | 69,750 | $ | (65,691 | ) | $ | (2,562,541 | ) | $ | 16,402 | $ | 6,934,667 | |||||||||||||||||
Stock-based compensation related activity, net of forfeitures | 68,299 | 1 | — | — | 15,416 | — | — | — | — | 15,417 | |||||||||||||||||||||||||||
Purchases and retirement of capital stock | (3,200 | ) | — | — | (313 | ) | — | — | — | — | (313 | ) | |||||||||||||||||||||||||
Other comprehensive income (loss)(a) | — | — | — | — | — | 5,984 | 16,162 | — | 348 | 22,494 | |||||||||||||||||||||||||||
Common stock dividends/distributions | — | — | — | — | — | — | — | (117,189 | ) | — | (117,189 | ) | |||||||||||||||||||||||||
Preferred stock dividends | — | — | — | — | — | — | — | (10,997 | ) | — | (10,997 | ) | |||||||||||||||||||||||||
Net income (loss) | — | — | — | — | — | — | — | 34,009 | 1,348 | 35,357 | |||||||||||||||||||||||||||
Balance, June 30, 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 |
(a) | See the condensed statement of operations and other comprehensive income (loss) for the components of "other comprehensive income (loss)" and note 5 with respect to the reclassification adjustments. |
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 from discontinued operations | Total | ||||||||||||||||||||||||||||
Balance, January 1, 2015 | 333,856,632 | $ | 3,339 | 9,775,000 | $ | 98 | $ | 9,512,396 | $ | 34,545 | $ | (18,725 | ) | $ | (2,815,428 | ) | $ | 21,003 | $ | 6,737,228 | |||||||||||||||||
Stock-based compensation related activity, net of forfeitures | 240,245 | 2 | — | — | 35,195 | — | — | — | — | 35,197 | |||||||||||||||||||||||||||
Purchases and retirement of capital stock | (334,533 | ) | (2 | ) | — | — | (29,488 | ) | — | — | — | — | (29,490 | ) | |||||||||||||||||||||||
Other comprehensive income (loss)(a) | — | — | — | — | — | (37,667 | ) | 14,981 | — | (872 | ) | (23,558 | ) | ||||||||||||||||||||||||
Disposition of CCAL | — | — | — | — | — | — | — | — | (23,474 | ) | (23,474 | ) | |||||||||||||||||||||||||
Common stock dividends/distributions | — | — | — | — | — | — | — | (549,163 | ) | — | (549,163 | ) | |||||||||||||||||||||||||
Preferred stock dividends | — | — | — | — | — | — | — | (21,994 | ) | — | (21,994 | ) | |||||||||||||||||||||||||
Net income (loss) | — | — | — | — | — | — | — | 1,276,147 | 3,343 | 1,279,490 | |||||||||||||||||||||||||||
Balance, June 30, 2015 | 333,762,344 | $ | 3,339 | 9,775,000 | $ | 98 | $ | 9,518,103 | $ | (3,122 | ) | $ | (3,744 | ) | $ | (2,110,438 | ) | $ | — | $ | 7,404,236 |
(a) | See the condensed statement of operations and other comprehensive income (loss) for the components of "other comprehensive income (loss)" and notes 3 and 5 with respect to the reclassification adjustments. |
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 from discontinued operations | 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 | 82,330 | 1 | — | — | 27,372 | — | — | — | — | 27,373 | |||||||||||||||||||||||||||
Purchases and retirement of capital stock | (291,266 | ) | (3 | ) | — | — | (21,727 | ) | — | — | — | — | (21,730 | ) | |||||||||||||||||||||||
Other comprehensive income (loss)(a) | — | — | — | — | — | 17,473 | 32,344 | — | 996 | 50,813 | |||||||||||||||||||||||||||
Common stock dividends/distributions | (234,351 | ) | (234,351 | ) | |||||||||||||||||||||||||||||||||
Preferred stock dividends | (21,994 | ) | (21,994 | ) | |||||||||||||||||||||||||||||||||
Net income (loss) | — | — | — | — | — | — | — | 135,506 | 2,644 | 138,150 | |||||||||||||||||||||||||||
Balance, June 30, 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 |
(a) | See the condensed statement of operations and other comprehensive income (loss) for the components of "other comprehensive income (loss)" and note 5 with respect to the reclassification adjustments. |
1. | General |
2. | Summary of Significant Accounting Policies |
3. | Discontinued Operations |
As of December 31, 2014 | |||||||||||||||
Assets and liabilities related to discontinued operations: | |||||||||||||||
Current assets | $ | 61,289 | |||||||||||||
Property and equipment | 165,528 | ||||||||||||||
Other non-current assets | 185,966 | ||||||||||||||
Total assets related to discontinued operations | $ | 412,783 | |||||||||||||
Current liabilities | 94,297 | ||||||||||||||
Non-current liabilities | 33,196 | ||||||||||||||
Total liabilities related to discontinued operations | $ | 127,493 | |||||||||||||
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
2015 (b)(c) | 2014(b) | 2015 (b)(c) | 2014(b) | ||||||||||||
Total revenues | $ | 24,763 | $ | 38,103 | $ | 65,293 | $ | 72,290 | |||||||
Total cost of operations (a) | 6,771 | 11,505 | 17,498 | 22,011 | |||||||||||
Depreciation, amortization, and accretion | 3,914 | 7,652 | 10,168 | 12,667 | |||||||||||
Total other expenses | 5,026 | 6,000 | 10,481 | 12,246 | |||||||||||
Pre-tax income from discontinued operations | 9,052 | 12,946 | 27,146 | 25,366 | |||||||||||
Net income (loss) from discontinued operations(d) | $ | 6,312 | $ | 10,053 | $ | 19,690 | $ | 19,621 |
(a) | Exclusive of depreciation, amortization, and accretion. |
(b) | No interest expense has been allocated to discontinued operations. |
(c) | CCAL results are through May 28, 2015, which was the closing date of the Company's sale of CCAL. |
(d) | Exclusive of the gain (loss) from disposal of discontinued operations. net of tax, as presented on the condensed consolidated statement of operations. |
Cash received from sale of CCAL(a) | $ | 1,139,791 | |
Installment payment receivable due January 2016(a) | 117,384 | ||
Total proceeds from sale of CCAL | $ | 1,257,175 | |
Adjusted for: | |||
Net assets and liabilities related to discontinued operations(b)(c) | 258,575 | ||
Transaction fees and expenses | 21,588 | ||
Foreign currency translation reclassification adjustments(d) | (25,678 | ) | |
Pre-tax gain (loss) from disposal of discontinued operations | 1,002,690 | ||
Income taxes related to the sale of CCAL | 21,150 | ||
Gain (loss) from disposal of discontinued operations | $ | 981,540 |
(a) | Exclusive of foreign currency swaps and based on exchange rates as of May 28, 2015, which was the closing date of the Company's sale of CCAL. See note 6. |
(b) | Represents net assets attributable to CCIC, net of the disposition of noncontrolling interest of $23.5 million. |
(c) | Inclusive of $11.1 million of cash. |
(d) | Represents foreign currency translation adjustments previously included in "accumulated other comprehensive income (loss)" on the condensed consolidated balance sheet and reclassified to gain (loss) from disposal of discontinued operations. |
4. | Acquisitions |
5. | Debt and Other Obligations |
Original Issue Date | Contractual Maturity Date (a) | Outstanding Balance as of June 30, 2015 | Outstanding Balance as of December 31, 2014 | Stated Interest Rate as of June 30, 2015(a)(b) | ||||||||||
Bank debt - variable rate: | ||||||||||||||
2012 Revolver | Jan. 2012 | Jan. 2019 | $ | — | (c) | $ | 695,000 | 1.9 | % | |||||
Tranche A Term Loans | Jan. 2012 | Jan. 2019 | 637,656 | 645,938 | 1.9 | % | ||||||||
Tranche B Term Loans | Jan. 2012 | Jan. 2021 | 2,258,479 | (e) | 2,835,509 | 3.0 | % | |||||||
Total bank debt | 2,896,135 | 4,176,447 | ||||||||||||
Securitized debt - fixed rate: | ||||||||||||||
January 2010 Tower Revenue Notes | Jan. 2010 | 2037 - 2040 | (d) | 1,600,000 | 1,600,000 | 6.0 | % | |||||||
August 2010 Tower Revenue Notes | Aug. 2010 | 2035 - 2040 | (d)(f) | 1,300,000 | 1,550,000 | 4.7 | % | |||||||
May 2015 Tower Revenue Notes | May 2015 | 2042 - 2045 | (d)(f) | 1,000,000 | — | 3.5 | % | |||||||
2009 Securitized Notes | July 2009 | 2019/2029 | 151,207 | 160,822 | 7.5 | % | ||||||||
WCP Securitized Notes | Jan. 2010 | Nov. 2040 | (f) | — | 262,386 | N/A | ||||||||
Total securitized debt | 4,051,207 | 3,573,208 | ||||||||||||
Bonds - fixed rate: | ||||||||||||||
5.25% Senior Notes | Oct. 2012 | Jan. 2023 | 1,649,969 | 1,649,969 | 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 | 846,289 | 846,062 | 4.9 | % | ||||||||
Total bonds | 3,996,258 | 3,996,031 | ||||||||||||
Other: | ||||||||||||||
Capital leases and other obligations | Various | Various | 187,704 | 175,175 | Various | |||||||||
Total debt and other obligations | 11,131,304 | 11,920,861 | ||||||||||||
Less: current maturities and short-term debt and other current obligations | 94,702 | 113,335 | ||||||||||||
Non-current portion of long-term debt and other long-term obligations | $ | 11,036,602 | $ | 11,807,526 |
(a) | See the 2014 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. |
(b) | Represents the weighted-average stated interest rate. |
(c) | During January and February 2015, the Company amended its 2012 Credit Facility agreement and increased the capacity of the 2012 Revolver to an aggregate revolving commitment of approximately $2.2 billion. As of June 30, 2015, the undrawn availability under the 2012 Revolver was $2.2 billion. See note 14. |
(d) | 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 2014 Form 10-K for additional information regarding these provisions. |
(e) | During the second quarter of 2015, the Company repaid the portion of its Tranche B Term Loans that were due January 2019, which had an outstanding balance of $564.1 million. As of June 30, 2015, the entire outstanding amount of the Company's Tranche B Term Loans was due January 2021. |
(f) | In May 2015, the Company issued $1.0 billion aggregate principal amount of Senior Secured Tower Revenue Notes ("May 2015 Tower Revenue Notes"), which were issued by certain of its indirect subsidiaries pursuant to the existing indenture governing the 2010 Tower Revenue Notes and having similar terms and security as the 2010 Tower Revenue Notes. The 2015 Tower Revenue Notes consist of (1) $300 million aggregate principal amount of 3.222% Notes with an expected life of seven years and a final maturity date of May 2042, and (2) $700 million aggregate principal amount of 3.663% Notes with an expected |
Six Months Ending December 31, | Years Ending December 31, | Unamortized Adjustments, Net | Total Debt and Other Obligations Outstanding | ||||||||||||||||||||||||||||||||
2015 | 2016 | 2017 | 2018 | 2019 | Thereafter | Total Cash Obligations | |||||||||||||||||||||||||||||
Scheduled contractual maturities | $ | 45,050 | $ | 101,405 | $ | 598,612 | $ | 96,212 | $ | 586,102 | $ | 9,707,634 | $ | 11,135,015 | $ | (3,711 | ) | $ | 11,131,304 |
Six Months Ended June 30, 2015 | |||||||||||
Principal Amount | Cash Paid(a) | Gains (Losses)(b) | |||||||||
August 2010 Tower Revenue Notes | $ | 250,000 | $ | 250,000 | $ | (159 | ) | ||||
WCP Securitized Notes | 252,830 | 252,830 | 2,105 | ||||||||
Tranche B Term Loans | 564,137 | 564,137 | (6,127 | ) | |||||||
Other | 2,394 | 2,370 | 24 | ||||||||
Total | $ | 1,069,361 | $ | 1,069,337 | $ | (4,157 | ) |
(a) | Exclusive of accrued interest. |
(b) | Inclusive of $4.2 million related to the net write off of deferred financing costs, premiums and discounts. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Interest expense on debt obligations | 122,398 | 123,930 | $ | 245,101 | $ | 249,449 | |||||||||
Amortization of deferred financing costs | 5,554 | 5,521 | 11,173 | 11,162 | |||||||||||
Amortization of adjustments on long-term debt | (381 | ) | (896 | ) | (1,262 | ) | (1,851 | ) | |||||||
Amortization of interest rate swaps(a) | 7,490 | 16,162 | 14,981 | 32,344 | |||||||||||
Other, net of capitalized interest | (595 | ) | (183 | ) | (1,088 | ) | (170 | ) | |||||||
Total | $ | 134,466 | $ | 144,534 | $ | 268,905 | $ | 290,934 |
(a) | Amounts reclassified from "accumulated other comprehensive income (loss)." |
6. | Foreign Currency Swaps |
Item Swapped | Notional Amount | Forward Rate | Start Date | End Date | Pay Amount | Receive Amount | Fair Value at June 30, 2015 | ||||||||
May 2015 cash receipt from sale of CCAL | A$1,400,000 | 0.8072 | May 2015 | June 2015 | Australian Dollar | US Dollar | N/A | (a) | |||||||
Installment payment from Buyer | A$155,000 | 0.79835 | May 2015 | January 2016 | Australian Dollar | US Dollar | $5,304 | (b) |
(a) | In conjunction with closing the CCAL sale on May 28, 2015, the Company cash settled the Australian dollar $1.4 billion swap and recorded a gain on foreign currency swaps of $54.5 million. |
(b) | As of June 30, 2015, the Company marked-to-market this foreign currency swap and recorded (1) an asset within "other current assets" on the Company's condensed consolidated balance sheet and (2) a corresponding gain on foreign currency swaps on the Company's condensed consolidated statement of operations. |
7. | Fair Value Disclosures |
Level in Fair Value Hierarchy | June 30, 2015 | December 31, 2014 | |||||||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||||
Assets: | |||||||||||||||||
Cash and cash equivalents | 1 | $ | 338,609 | $ | 338,609 | $ | 151,312 | $ | 151,312 | ||||||||
Restricted cash, current and non-current | 1 | 148,016 | 148,016 | 152,411 | 152,411 | ||||||||||||
Foreign currency swaps | 2 | 5,304 | 5,304 | — | — | ||||||||||||
Liabilities: | |||||||||||||||||
Long-term debt and other obligations | 2 | 11,131,304 | 11,383,915 | 11,920,861 | 12,286,161 |
8. | Income Taxes |
9. | Per Share Information |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Net income (loss) from continuing operations | $ | 166,526 | $ | 25,304 | $ | 278,260 | $ | 118,529 | |||||||
Dividends on preferred stock | (10,997 | ) | (10,997 | ) | (21,994 | ) | (21,994 | ) | |||||||
Net income (loss) from continuing operations attributable to CCIC common stockholders for basic and diluted computations | $ | 155,529 | $ | 14,307 | $ | 256,266 | $ | 96,535 | |||||||
Income (loss) from discontinued operations, net of tax | 987,852 | 10,053 | 1,001,230 | 19,621 | |||||||||||
Less: Net income (loss) attributable to the noncontrolling interest | 1,018 | 1,348 | 3,343 | 2,644 | |||||||||||
Net income (loss) from discontinued operations attributable to CCIC common stockholders for basic and diluted computations | $ | 986,834 | $ | 8,705 | $ | 997,887 | $ | 16,977 | |||||||
Weighted-average number of common shares outstanding (in thousands): | |||||||||||||||
Basic weighted-average number of common stock outstanding | 333,091 | 332,344 | 332,902 | 332,189 | |||||||||||
Effect of assumed dilution from potential common shares relating to restricted stock units and restricted stock awards | 642 | 737 | 763 | 845 | |||||||||||
Diluted weighted-average number of common shares outstanding | 333,733 | 333,081 | 333,665 | 333,034 | |||||||||||
Net income (loss) attributable to CCIC common stockholders, per common share: | |||||||||||||||
Income (loss) from continuing operations, basic | 0.47 | 0.04 | 0.77 | 0.29 | |||||||||||
Income (loss) from discontinued operations, basic | 2.96 | 0.03 | 3.00 | 0.05 | |||||||||||
Net income (loss) attributable to CCIC common stockholders, basic | 3.43 | 0.07 | 3.77 | 0.34 | |||||||||||
Income (loss) from continuing operations, diluted | 0.47 | 0.04 | 0.77 | 0.29 | |||||||||||
Income (loss) from discontinued operations, diluted | 2.95 | 0.03 | 2.99 | 0.05 | |||||||||||
Net income (loss) attributable to CCIC common stockholders, diluted | 3.42 | 0.07 | 3.76 | 0.34 |
10. | Commitments and Contingencies |
11. | Equity |
Equity Type | Declaration Date | Record Date | Payment Date | Dividends Per Share | Aggregate Payment Amount (In millions) | ||||||||||
Common Stock | February 12, 2015 | March 20, 2015 | March 31, 2015 | $ | 0.82 | $ | 274.7 | (a) | |||||||
Common Stock | May 29, 2015 | June 19, 2015 | June 30, 2015 | $ | 0.82 | $ | 274.5 | (a) | |||||||
Convertible Preferred Stock | December 22, 2014 | January 15, 2015 | February 2, 2015 | $ | 1.1250 | $ | 11.0 | ||||||||
Convertible Preferred Stock | March 27, 2015 | April 15, 2015 | May 1, 2015 | $ | 1.1250 | $ | 11.0 | ||||||||
Convertible Preferred Stock | June 21, 2015 | July 15, 2015 | August 3, 2015 | $ | 1.1250 | $ | 11.0 | (b) |
(a) | Inclusive of dividends accrued for holders of unvested restricted stock units. |
(b) | Represents amount paid on August 3, 2015 based on holders of record on July 15, 2015. |
12. | Operating Segments |
13. | Supplemental Cash Flow Information |
Six Months Ended June 30, | |||||||
2015 | 2014 | ||||||
Supplemental disclosure of cash flow information: | |||||||
Interest paid | $ | 244,977 | $ | 248,183 | |||
Income taxes paid | 8,489 | 12,690 | |||||
Supplemental disclosure of non-cash investing and financing activities: | |||||||
Increase (decrease) in accounts payable for purchases of property and equipment | (10,102 | ) | 7,201 | ||||
Purchase of property and equipment under capital leases and installment purchases | 25,769 | 18,129 | |||||
Installment payment receivable for sale of CCAL (see note 3) | 117,384 | — |
14. | Subsequent Events |
ITEM 2. | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
• | Grow cash flows from our wireless infrastructure. We seek to maximize the site rental cash flows derived from our wireless infrastructure by adding tenants on our wireless infrastructure through long-term leases as our customers deploy and improve their wireless networks. We seek to maximize new tenant additions or modifications of existing tenant installations (collectively, "new tenant additions") through our focus on customer service and deployment speed. Due to the relatively fixed nature of the costs to operate our wireless infrastructure (which tend to increase at approximately the rate of inflation), we expect increases in our site rental cash flows from new tenant additions and the related subsequent impact from contracted escalations to result in growth in our operating cash flows. We believe there is considerable additional future demand for our existing wireless infrastructure based on their location and the anticipated growth in the wireless communication services industry. Substantially all of our wireless infrastructure can accommodate additional tenancy, either as currently constructed or with appropriate modifications to the structure, which we expect to have high incremental returns. |
• | 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 long-term dividends per share. We seek to invest our capital available, 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): |
◦ | purchase shares of our common stock from time to time; |
◦ | acquire or construct wireless infrastructure; |
◦ | acquire land interests under towers; |
◦ | make improvements and structural enhancements to our existing wireless infrastructure; or |
◦ | purchase, repay or redeem our debt. |
• | Effective January 1, 2014, we commenced operating as a REIT for U.S. federal income tax 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 qualify and be taxed as a REIT, we will generally be required to distribute 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 8 to our condensed consolidated financial statements for further discussion of our REIT status. |
• | Potential growth resulting from wireless network expansion and new entrants |
◦ | We expect wireless carriers will continue their focus on improving network quality and expanding capacity by adding additional antennas or other equipment on our wireless infrastructure. |
◦ | We expect existing and potential new wireless carrier demand for our wireless infrastructure will result from (1) new technologies, (2) increased usage of wireless data applications (including mobile entertainment, mobile internet usage, and machine-to-machine applications), (3) adoption of other emerging and embedded wireless devices (including laptops, tablets, and other devices), (4) increasing smartphone penetration, (5) wireless carrier focus on expanding quality and capacity, or (6) the availability of additional spectrum. |
◦ | Substantially all of our wireless infrastructure can accommodate additional tenancy, either as currently constructed or with appropriate modifications to the structure. |
◦ | U.S. wireless carriers continue to invest in their networks. |
◦ | Our site rental revenues grew $42.9 million, or 3%, from the six months ended June 30, 2014 to the six months ended June 30, 2015. This growth was predominately comprised of the following, exclusive of the impact of straight-line accounting: |
▪ | An approximate 6% increase from new leasing activity. |
▪ | An approximate 3% increase from cash escalations. |
▪ | An approximate 4% decrease in site rental revenues caused by the non-renewal of tenant leases. |
• | Site rental revenues under long-term tenant leases with contractual escalations |
◦ | Initial terms of five to 15 years with multiple renewal periods at the option of the tenant of five to ten years each. |
◦ | Weighted-average remaining term of approximately seven years, exclusive of renewals at the tenant's option, currently representing approximately $20 billion of expected future cash inflows. |
• | Revenues predominately from large wireless carriers |
◦ | Approximately 92% of our consolidated site rental revenues were derived from AT&T, Sprint, T-Mobile, and Verizon Wireless. See also "Item 2. MD&A—General Overview—Outlook Highlights" presented below. |
• | Majority of land interests under our towers under long-term control |
◦ | Nearly 90% and 75% of our site rental gross margin is derived from towers that reside on land that we own or control for greater than ten and 20 years, respectively. The aforementioned amounts include towers that reside on land interests that are owned, including fee interests and perpetual easements, which represent approximately one-third of our site rental gross margin. |
• | Relatively fixed wireless infrastructure operating costs |
◦ | Our wireless infrastructure operating costs tend to increase at approximately the rate of inflation and are not typically influenced by new tenant additions. |
• | Minimal sustaining capital expenditure requirements |
◦ | Sustaining capital expenditures represented approximately 2% 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) |
◦ | 74% of our debt is fixed rate. |
◦ | Our debt service coverage and leverage ratios were comfortably within their respective financial maintenance covenants. |
◦ | During January and February 2015, we amended our 2012 Credit Facility agreement and increased the capacity of the 2012 Revolver to an aggregate revolving commitment of approximately $2.2 billion. |
◦ | During the second quarter 2015, we (1) issued $1.0 billion aggregate principal amount of the May 2015 Tower Revenue Notes, (2) repaid $250.0 million of August 2010 Tower Revenue Notes with an anticipated repayment date of August 2015, (3) repaid all of the previously outstanding WCP Securitized Notes, and (4) repaid a portion of our outstanding borrowings under our 2012 Credit Facility. See note 5 to our condensed consolidated financial statements. |
• | Significant cash flows from operations |
◦ | Net cash provided by operating activities was $918.9 million. |
◦ | We expect to grow our core business of providing access to our wireless infrastructure as a result of contractual escalators and future anticipated demand for our wireless infrastructure. |
• | Returning cash flows provided by operations to stockholders in the form of dividends |
◦ | During each of March and June 2015, we paid a common stock cash dividend of $0.82 per share, totaling approximately $547.4 million. During July 2015, we declared a common stock cash dividend of $0.82 per share to be paid in September 2015. See notes 11 and 14 to our condensed consolidated financial statements for discussion of our common stock dividends. We currently expect our anticipated quarterly dividends to result in aggregate annual cash payments of approximately $1.1 billion during 2015, or an annual amount of $3.28 per share. Over time, we expect to increase our dividend per share generally commensurate with our realized growth in cash flows. Future dividends are subject to the approval of our board of directors. See note 8 to our condensed consolidated financial statements for discussion surrounding the tax treatment of our dividends. |
• | Investing capital efficiently to grow long-term dividends per share |
◦ | Discretionary capital expenditures were $376.8 million, including wireless infrastructure improvements in order to support additional site rentals, construction of wireless infrastructure and land purchases. |
• | We expect that our full year 2015 site rental revenue growth will be benefited by similar levels of tenant additions as in 2014, as large U.S. wireless carriers upgrade their networks, partially offset by an increase in non-renewals of tenant leases. During 2015, we expect non-renewals of tenant leases to result from (1) Sprint's decommissioning of its legacy Nextel iDEN network and (2) the decommissioning of the former Leap Wireless, MetroPCS and Clearwire networks, at least in part, which we expect to occur predominately from 2015 through 2018. See "Item 1A—Risk Factors" in our 2014 Form 10-K. |
• | We expect sustaining capital expenditures to be slightly higher than 2% of net revenues for full year 2015 due to expansion of our office facilities. |
Three Months Ended June 30, | Percent Change(b) | |||||||||
2015 | 2014 |