Document
 

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, 2016
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
____________________________________
ccmarkonlyblacka03.jpg
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 October 28, 2016: 338,916,436
 


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 Securities and Exchange Commission ("SEC"). Statements that are not historical facts are hereby identified as forward-looking statements. In addition, words such as "estimate," "anticipate," "project," "plan," "intend," "believe," "expect," "likely," "predicted," any variations of these words and similar expressions are intended to identify forward-looking statements. Such statements include plans, projections and estimates contained in "Part I—Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations" ("MD&A") and "Part I—Item 3. Quantitative and Qualitative Disclosures About Market Risk" herein. Such forward-looking statements include (1) expectations regarding anticipated growth in the wireless industry, carriers' investments in their networks, tenant additions, customer consolidation or ownership changes, or demand for our wireless infrastructure, (2) expectations regarding non-renewals of tenant leases (including the impact of our customers' decommissioning of the former Leap Wireless, MetroPCS and Clearwire networks (collectively, the "Acquired 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 financial results, including future revenues, margins, Adjusted EBITDA, segment site rental gross margin, segment network services and other gross margin, segment operating profit, and operating cash flows, (6) 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 related to remaining qualified as a real estate investment trust ("REIT") and the advantages, benefits or impact of, or opportunities created by, our REIT status, (8) the realization and utilization of our net operating loss carryforwards ("NOLs"), (9) our dividend policy and the timing, amount, growth or tax characterization of any dividends and (10) the anticipated closing of the Proposed FiberNet Acquisition (as defined in note 13).
Such forward-looking statements should, therefore, be considered in light of various risks, uncertainties and assumptions, including prevailing market conditions, risk factors described in "Item 1A. Risk Factors" of our Annual Report on Form 10-K for the fiscal year ended December 31, 2015 ("2015 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 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,
2016
 
December 31,
2015
 
(Unaudited)
 
 
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
156,219

 
$
178,810

Restricted cash
116,932

 
130,731

Receivables, net
276,259

 
313,296

Prepaid expenses
157,102

 
133,194

Other current assets
133,163

 
225,214

Total current assets
839,675

 
981,245

Deferred site rental receivables
1,321,777

 
1,306,408

Property and equipment, net of accumulated depreciation of $6,410,830 and $5,798,875, respectively
9,714,149

 
9,580,057

Goodwill
5,750,033

 
5,513,551

Other intangible assets, net
3,737,448

 
3,779,915

Long-term prepaid rent and other assets, net
808,641

 
775,790

Total assets
$
22,171,723

 
$
21,936,966

 
 
 
 
LIABILITIES AND EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
148,916

 
$
159,629

Accrued interest
84,244

 
66,975

Deferred revenues
358,683

 
322,623

Other accrued liabilities
204,533

 
199,923

Current maturities of debt and other obligations
101,362

 
106,219

Total current liabilities
897,738

 
855,369

Debt and other long-term obligations
12,491,596

 
12,043,740

Other long-term liabilities
2,028,672

 
1,948,636

Total liabilities
15,418,006

 
14,847,745

Commitments and contingencies (note 9)

 

CCIC stockholders' equity:
 
 
 
Common stock, $.01 par value; 600,000,000 shares authorized; shares issued and outstanding: September 30, 2016—337,569,931 and December 31, 2015—333,771,660
3,375

 
3,338

4.50% Mandatory Convertible Preferred Stock, Series A, $.01 par value; 20,000,000 shares authorized; shares issued and outstanding: September 30, 2016 and December 31, 2015—9,775,000; aggregate liquidation value: September 30, 2016 and December 31, 2015—$977,500
98

 
98

Additional paid-in capital
9,914,844

 
9,548,580

Accumulated other comprehensive income (loss)
(5,541
)
 
(4,398
)
Dividends/distributions in excess of earnings
(3,159,059
)
 
(2,458,397
)
Total equity
6,753,717

 
7,089,221

Total liabilities and equity
$
22,171,723

 
$
21,936,966

 
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,
 
2016
 
2015
 
2016
 
2015
Net revenues:
 
 
 
 
 
 
 
Site rental
$
812,032

 
$
764,606

 
$
2,415,926

 
$
2,233,077

Network services and other
179,984

 
153,501

 
472,883

 
484,938

Net revenues
992,016

 
918,107

 
2,888,809

 
2,718,015

Operating expenses:
 
 
 
 
 
 
 
Costs of operations(a):
 
 
 
 
 
 
 
Site rental
256,750

 
247,000

 
762,223

 
716,244

Network services and other
109,228

 
86,859

 
286,066

 
263,177

General and administrative
89,941

 
76,699

 
278,909

 
223,880

Asset write-down charges
8,339

 
7,477

 
28,251

 
19,652

Acquisition and integration costs
2,680

 
7,608

 
11,459

 
12,001

Depreciation, amortization and accretion
280,824

 
261,662

 
834,725

 
766,621

Total operating expenses
747,762

 
687,305

 
2,201,633

 
2,001,575

Operating income (loss)
244,254

 
230,802

 
687,176

 
716,440

Interest expense and amortization of deferred financing costs
(129,916
)
 
(129,877
)
 
(385,656
)
 
(398,782
)
Gains (losses) on retirement of long-term obligations
(10,274
)
 
—

 
(52,291
)
 
(4,157
)
Interest income
175

 
789

 
454

 
1,170

Other income (expense)
(832
)
 
(1,214
)
 
(4,623
)
 
58,510

Income (loss) from continuing operations before income taxes
103,407

 
100,500

 
245,060

 
373,181

Benefit (provision) for income taxes
(5,041
)
 
3,801

 
(12,797
)
 
9,380

Income (loss) from continuing operations
98,366

 
104,301

 
232,263

 
382,561

Discontinued operations (see note 3):
 
 
 
 
 
 
 
Income (loss) from discontinued operations, net of tax
—

 
—

 
—

 
19,690

Net gain (loss) from disposal of discontinued operations, net of tax
—

 
(522
)
 
—

 
981,018

Income (loss) from discontinued operations, net of tax
—

 
(522
)

—


1,000,708

Net income (loss)
98,366

 
103,779

 
232,263

 
1,383,269

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

 
—


—


3,343

Net income (loss) attributable to CCIC stockholders
98,366

 
103,779

 
232,263

 
1,379,926

Dividends on preferred stock
(10,997
)
 
(10,997
)
 
(32,991
)
 
(32,991
)
Net income (loss) attributable to CCIC common stockholders
$
87,369

 
$
92,782

 
$
199,272

 
$
1,346,935

Net income (loss)
$
98,366

 
$
103,779

 
$
232,263

 
$
1,383,269

Other comprehensive income (loss):
 
 
 
 
 
 
 
Interest rate swaps reclassified into "interest expense and amortization of deferred financing costs", net of taxes
—

 
3,744

 
—

 
18,725

Foreign currency translation adjustments
(1,535
)
 
(632
)
 
(1,143
)
 
(13,493
)
Amounts reclassified into discontinued operations for foreign currency translation adjustments (see note 3)
—

 
—

 
—

 
(25,678
)
Total other comprehensive income (loss)
(1,535
)
 
3,112

 
(1,143
)
 
(20,446
)
Comprehensive income (loss)
96,831

 
106,891

 
231,120

 
1,362,823

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

 
—

 


 
—

Comprehensive income (loss) attributable to CCIC stockholders
$
96,831

 
$
106,891

 
$
231,120

 
$
1,362,823

Net income (loss) attributable to CCIC common stockholders, per common share:
 
 
 
 
 
 
 
Income (loss) from continuing operations, basic
$
0.26

 
$
0.28

 
$
0.59

 
$
1.05

Income (loss) from discontinued operations, basic
$
—

 
$
—

 
$
—

 
$
3.00

Net income (loss) attributable to CCIC common stockholders, basic
$
0.26

 
$
0.28

 
$
0.59

 
$
4.05

Income (loss) from continuing operations, diluted
$
0.26

 
$
0.28

 
$
0.59

 
$
1.05

Income (loss) from discontinued operations, diluted
$
—

 
$
—

 
$
—

 
$
2.99

Net income (loss) attributable to CCIC common stockholders, diluted
$
0.26

 
$
0.28

 
$
0.59

 
$
4.04

Weighted-average common shares outstanding (in thousands):
 
 
 
 
 
 
 
Basic
337,564
 
333,049

 
336,426
 
332,951
Diluted
338,409
 
333,711

 
337,076
 
333,735
________________
(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,
 
 
2016
 
2015
 
Cash flows from operating activities:
 
 
 
 
Net income (loss) from continuing operations
$
232,263

 
$
382,561

 
Adjustments to reconcile net income (loss) from continuing operations to net cash provided by (used for) operating activities:
 
 
 
 
Depreciation, amortization and accretion
834,725

 
766,621

 
Gains (losses) on retirement of long-term obligations
52,291

 
4,157

 
Gains (losses) on settled swaps
2,608

 
(54,475
)
 
Amortization of deferred financing costs and other non-cash interest
11,293

 
32,394

 
Stock-based compensation expense
60,402

 
44,711

 
Asset write-down charges
28,251

 
19,652

 
Deferred income tax benefit (provision)
6,626

 
(16,199
)
 
Other adjustments, net
(1,060
)
 
(7,240
)
 
Changes in assets and liabilities, excluding the effects of acquisitions:
 
 
 
 
Increase (decrease) in accrued interest
17,269

 
2,241

 
Increase (decrease) in accounts payable
(12,469
)
 
(8,310
)
 
Increase (decrease) in deferred revenues, deferred ground lease payables, other accrued liabilities and other liabilities
118,144

 
214,607

 
Decrease (increase) in receivables
38,231

 
(703
)
 
Decrease (increase) in prepaid expenses, deferred site rental receivables, long-term prepaid rent, restricted cash and other assets
(83,859
)
 
(89,141
)
 
Net cash provided by (used for) operating activities
1,304,715

 
1,290,876

 
Cash flows from investing activities:
 
 
 
 
Payments for acquisitions of businesses, net of cash acquired
(545,162
)
 
(1,083,319
)
 
Capital expenditures
(614,178
)
 
(658,240
)
 
Net receipts from settled swaps
8,141

 
54,475

 
Other investing activities, net
11,616

 
(1,561
)
 
Net cash provided by (used for) investing activities
(1,139,583
)
 
(1,688,645
)
 
Cash flows from financing activities:
 
 
 
 
Proceeds from issuance of long-term debt
5,201,010

 
1,000,000

 
Principal payments on debt and other long-term obligations
(69,717
)
 
(78,049
)
 
Purchases and redemptions of long-term debt
(4,044,834
)
 
(1,069,337
)
 
Borrowings under revolving credit facility
3,440,000

 
1,560,000

 
Payments under revolving credit facility
(4,155,000
)
 
(1,240,000
)
 
Payments for financing costs
(41,471
)
 
(17,415
)
 
Net proceeds from issuance of capital stock
323,798

 
—

 
Purchases of capital stock
(24,759
)
 
(29,576
)
 
Dividends/distributions paid on common stock
(896,628
)
 
(821,056
)
 
Dividends paid on preferred stock
(32,991
)
 
(32,991
)
 
Net (increase) decrease in restricted cash
40

 
28,435

 
Net cash provided by (used for) financing activities
(300,552
)
 
(699,989
)
 
Net increase (decrease) in cash and cash equivalents - continuing operations
(135,420
)
 
(1,097,758
)
 
Discontinued operations (see note 3):
 
 
 
 
Net cash provided by (used for) operating activities
—

 
4,359

 
Net cash provided by (used for) investing activities
113,150

 
1,103,577

 
Net increase (decrease) in cash and cash equivalents - discontinued operations
113,150


1,107,936

 
Effect of exchange rate changes
(321
)
 
(1,682
)
 
Cash and cash equivalents at beginning of period
178,810

 
175,620

(a) 
Cash and cash equivalents at end of period
$
156,219

 
$
184,116

 
________________
(a)
Inclusive of cash and cash equivalents included in discontinued operations.
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 data) (Unaudited)
 
CCIC Stockholders
 
 
 
 
 
Common Stock
 
4.50% Mandatory Convertible Preferred Stock
 
 
 
Accumulated Other Comprehensive Income (Loss) ("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, July 1, 2016
337,562,378

 
$
3,375

 
9,775,000

 
$
98

 
$
9,894,921

 
$
(4,006
)
 
$
—

 
$
(2,946,081
)
 
$
—

 
$
6,948,307

Stock-based compensation related activity, net of forfeitures
10,784

 
—

 
—

 
—

 
20,222

 
—

 
—

 
—

 
—

 
20,222

Purchases and retirement of capital stock
(3,231
)
 
—

 
—

 
—

 
(299
)
 
—

 
—

 
—

 
—

 
(299
)
Other comprehensive income (loss)(a)
—

 
—

 
—

 
—

 
—

 
(1,535
)
 
—

 
—

 
—

 
(1,535
)
Common stock dividends/distributions
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(300,347
)
 
—

 
(300,347
)
Preferred stock dividends
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(10,997
)
 
—

 
(10,997
)
Net income (loss)
—

 
—

 
—

 
—

 
—

 
—

 
—

 
98,366

 
—

 
98,366

Balance, September 30, 2016
337,569,931

 
$
3,375

 
9,775,000

 
$
98

 
$
9,914,844

 
$
(5,541
)
 
$
—

 
$
(3,159,059
)
 
$
—

 
$
6,753,717

    
(a)
See the condensed statement of operations and other comprehensive income (loss) for the components of "other comprehensive income (loss)."
 
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, July 1, 2015
333,762,344

 
$
3,339

 
9,775,000

 
$
98

 
$
9,518,103

 
$
(3,122
)
 
$
(3,744
)
 
$
(2,110,438
)
 
$
—

 
$
7,404,236

Stock-based compensation related activity, net of forfeitures
10,198

 
—

 
—

 
—

 
14,579

 
—

 
—

 
—

 
—

 
14,579

Purchases and retirement of capital stock
(1,043
)
 
—

 
—

 
—

 
(85
)
 
—

 
—

 
—

 
—

 
(85
)
Other comprehensive income (loss)(a)
—

 
—

 
—

 
—

 
—

 
(632
)
 
3,744

 
—

 
—

 
3,112

Common stock dividends/distributions
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(274,321
)
 
—

 
(274,321
)
Preferred stock dividends
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(10,997
)
 
—

 
(10,997
)
Net income (loss)
—

 
—

 
—

 
—

 
—

 
—

 
—

 
103,779

 
—

 
103,779

Balance, September 30, 2015
333,771,499

 
$
3,339

 
9,775,000

 
$
98

 
$
9,532,597

 
$
(3,754
)
 
$
—

 
$
(2,291,977
)
 
$
—

 
$
7,240,303

    
(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.

5

 
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, 2016
333,771,660

 
$
3,338

 
9,775,000

 
$
98

 
$
9,548,580

 
$
(4,398
)
 
$
—

 
$
(2,458,397
)
 
$
—

 
$
7,089,221

Stock-based compensation related activity, net of forfeitures
257,720

 
2

 
—

 
—

 
67,260

 
—

 
—

 
—

 
—

 
67,262

Purchases and retirement of capital stock
(287,513
)
 
(3
)
 
—

 
—

 
(24,756
)
 
—

 
—

 
—

 
—

 
(24,759
)
Net proceeds from issuance of Common Stock
3,828,064

 
38

 
—

 
—

 
323,760

 
—

 
—

 
—

 
—

 
323,798

Other comprehensive income (loss)(a)
—

 
—

 
—

 
—

 
—

 
(1,143
)
 
—

 
—

 
—

 
(1,143
)
Common stock dividends/distributions
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(899,934
)
 
—

 
(899,934
)
Preferred stock dividends
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(32,991
)
 
—

 
(32,991
)
Net income (loss)
—

 
—

 
—

 
—

 
—

 
—

 
—

 
232,263

 
—

 
232,263

Balance, September 30, 2016
337,569,931

 
$
3,375

 
9,775,000

 
$
98

 
$
9,914,844

 
$
(5,541
)
 
$
—

 
$
(3,159,059
)
 
$
—

 
$
6,753,717

    
(a)
See the condensed statement of operations and other comprehensive income (loss) for the components of "other comprehensive income (loss)."

 
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
250,443

 
2

 
—

 
—

 
49,775

 
—

 
—

 
—

 
—

 
49,777

Purchases and retirement of capital stock
(335,576
)
 
(2
)
 
—

 
—

 
(29,574
)
 
—

 
—

 
—

 
—

 
(29,576
)
Other comprehensive income (loss)(a)
—

 
—

 
—

 
—

 
—

 
(38,299
)
 
18,725

 
—

 
(872
)
 
(20,446
)
Disposition of CCAL
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(23,474
)
 
(23,474
)
Common stock dividends/distributions
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(823,484
)
 
—

 
(823,484
)
Preferred stock dividends
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(32,991
)
 
—

 
(32,991
)
Net income (loss)
—

 
—

 
—

 
—

 
—

 
—

 
—

 
1,379,926

 
3,343

 
1,383,269

Balance, September 30, 2015
333,771,499

 
$
3,339

 
9,775,000

 
$
98

 
$
9,532,597

 
$
(3,754
)
 
$
—

 
$
(2,291,977
)
 
$
—

 
$
7,240,303

    
(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.

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, 2015, and related notes thereto, included in the 2015 Form 10-K filed by Crown Castle International Corp. ("CCIC") with the SEC. References to the "Company" include CCIC and its predecessor, as applicable, and their subsidiaries, unless otherwise indicated or the context indicates otherwise. As used herein, the term "including," and any variation thereof means "including without limitation." The use of the word "or" herein is not exclusive.
The Company owns, operates and leases shared wireless infrastructure, including: (1) towers and other structures, such as rooftops (collectively, "towers"), and (2) small cell networks supported by fiber (collectively, "small cells" and, together with towers, "wireless infrastructure"). The Company's wireless infrastructure is geographically dispersed throughout the United States, including Puerto Rico ("U.S."). See note 3 for a discussion of the May 2015 sale of the Company's formerly 77.6% owned subsidiary that operated towers in Australia (referred to as "CCAL").
The Company's core business is providing access, including space or capacity, to its shared wireless infrastructure via long-term contracts in various forms, including licenses, subleases and lease agreements.
During the first quarter of 2016, the Company changed its operating segments to consist of (1) towers and (2) small cells. The Company has recast its prior period presentation to conform to its current reporting presentation. See note 11.
As part of the Company's effort to provide comprehensive wireless infrastructure solutions, it offers certain network services relating to its wireless infrastructure, consisting of (1) the following site development services relating to existing or new tenant equipment installations on its wireless infrastructure: site acquisition, architectural and engineering, or zoning and permitting and (2) tenant equipment installation or subsequent augmentations.
The Company operates as a REIT for U.S. federal income tax purposes. In addition, the Company has certain taxable REIT subsidiaries ("TRSs"). See note 7.
Approximately 54% of the Company's towers are leased or subleased or operated and managed under master leases, subleases, and other agreements with AT&T, Sprint, and T-Mobile. The Company has the option to purchase these towers at the end of their respective lease terms. The Company has no obligation to exercise such purchase options.
Basis of Presentation
The condensed consolidated financial statements included herein are unaudited; however, they include all adjustments (consisting only of normal recurring adjustments) which, in the opinion of management, are necessary to state fairly the consolidated financial position of the Company at September 30, 2016, and the consolidated results of operations and the consolidated cash flows for the nine months ended September 30, 2016 and 2015. The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the full year.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

2.
Summary of Significant Accounting Policies
The significant accounting policies used in the preparation of the Company's condensed consolidated financial statements are disclosed in the 2015 Form 10-K, other than certain recent accounting pronouncements described below.
Recently Adopted Accounting Pronouncements
In April 2015, the FASB issued new guidance on the presentation of debt issuance costs. The guidance requires debt issuance costs be presented on the balance sheet as a direct deduction from the carrying amount of the related debt liability, consistent with debt discounts and premiums. The Company adopted the guidance as of January 1, 2016, and has applied the guidance

7
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-Unaudited (Continued)
(Tabular dollars in thousands, except per share amounts)


retrospectively. As a result, the Company reclassified $99.3 million of deferred financing costs as of December 31, 2015 from "long-term prepaid rent and other assets, net" as a direct reduction of "debt and other long-term obligations."
In September 2015, the FASB issued new guidance which requires an acquirer to recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The Company adopted the guidance as of January 1, 2016 on a prospective basis. This standard did not have a material impact on the Company's condensed consolidated financial statements upon adoption.
Recent Accounting Pronouncements Not Yet Adopted
In February 2016, the FASB issued new guidance on the recognition, measurement, presentation and disclosure of leases. The new guidance requires lessees to recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments for all leases with a term greater than 12 months. The accounting for lessors remains largely unchanged from existing guidance. This guidance is effective for the Company as of January 1, 2019 and is required to be applied using a modified retrospective approach for all leases existing at, or entered into after, the beginning of the earliest comparative period presented. Early adoption is permitted. The Company expects this guidance to have a material impact on its condensed consolidated financial statements and is currently evaluating the impact.
In June 2016, the FASB issued new guidance on the recognition and measurement of expected credit losses for certain types of financial instruments, including accounts receivable. The new guidance requires entities to estimate the expected credit loss over the life of certain financial instruments at initial recognition of the financial instrument. The guidance is effective for the Company as of January 1, 2020. Early adoption is permitted. The Company does not expect this guidance to have a material impact on its condensed consolidated financial statements.

3.
Discontinued Operations
On May 14, 2015, the Company entered into a definitive agreement to sell CCAL to a consortium of investors led by Macquarie Infrastructure and Real Assets (collectively, “Buyer”). On May 28, 2015, the Company completed the sale. At closing, the Company received net proceeds of approximately $1.1 billion after accounting for the Company's 77.6% ownership interest, repayment of intercompany debt owed to the Company by CCAL and estimated transaction fees and expenses, exclusive of the impact of foreign currency swaps related to the CCAL sale.
As part of the sale of CCAL, in January 2016, the Company received an installment payment from the Buyer totaling approximately $124 million, inclusive of the impact of the related foreign currency swap.
CCAL was historically a separate operating segment of the Company. The sale of the Company's CCAL operating segment is treated as discontinued operations for all periods presented pursuant to ASU 2014-8, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, which the Company adopted on January 1, 2015. The gain from disposal of CCAL is included in discontinued operations on the condensed consolidated statement of operations. The table below sets forth the results of operations related to discontinued operations for the nine months ended September 30, 2015.
 
Nine Months Ended September 30, 2015 (b)(c)
Total revenues
$
65,293

Total cost of operations (a)
17,498

Depreciation, amortization, and accretion
10,168

Total other expenses
10,481

Pre-tax income from discontinued operations
27,146

Income (loss) from discontinued operations, net of tax(d)
$
19,690

    
(a)
Exclusive of depreciation, amortization, and accretion shown separately.
(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 financial statement of operations.


8
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-Unaudited (Continued)
(Tabular dollars in thousands, except per share amounts)


4.
Acquisitions
In April 2016, the Company acquired Tower Development Corporation ("TDC"), a portfolio of approximately 330 towers, for approximately $461 million in cash ("TDC Acquisition"). The Company funded the acquisition with cash on hand, cash from borrowings under the 2016 Revolver, and cash from equity issuances under the ATM Program (see note 10). As of September 30, 2016, the preliminary purchase price allocation was primarily composed of other intangible assets of approximately $155 million, property and equipment of approximately $106 million, and goodwill of approximately $200 million. The preliminary purchase price allocation, including the valuation of fixed assets and intangible assets, is based upon a preliminary valuation, which is subject to change as the Company obtains additional information.
See note 13.


9
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-Unaudited (Continued)
(Tabular dollars in thousands, except per share amounts)


5.
Debt and Other Obligations
 
Original
Issue Date
 
Contractual
Maturity
Date (a)
 
Balance as of
September 30, 2016(g)
 
Balance as of
December 31, 2015(g)
 
Stated Interest
Rate as of
September 30, 2016(a)
Bank debt - variable rate:
 
 
 
 
 
 
 
 
 
2016 Revolver
Jan. 2016
 
Jan. 2021
(d)(e)(f) 
$
410,000

(b) 
$
—

 
1.8
%
2016 Term Loan A
Jan. 2016
 
Jan. 2021
 
1,966,109

(b) 
—

 
1.9
%
2012 Revolver
Jan. 2012
 
Jan. 2019
 
—

(b) 
1,125,000

 
N/A

Tranche A Term Loans
Jan. 2012
 
Jan. 2019
 
—

(b) 
627,846

 
N/A

Tranche B Term Loans
Jan. 2012
 
Jan. 2021
 
—

(b) 
2,219,602

 
N/A

Total bank debt
 
 
 
 
2,376,109

 
3,972,448

 
 
Securitized debt - fixed rate:
 
 
 
 
 
 
 
 
 
Secured Notes, Series 2009-1, Class A-1
July 2009
 
Aug. 2019
 
56,122

 
70,219

 
6.3
%
Secured Notes, Series 2009-1, Class A-2
July 2009
 
Aug. 2029
 
68,718

 
68,658

 
9.0
%
Tower Revenue Notes, Series 2010-2
Jan. 2010
 
Jan. 2037
(e) 
—

 
349,171

 
N/A

Tower Revenue Notes, Series 2010-3
Jan. 2010
 
Jan. 2040
(c) 
1,243,769

 
1,242,368

 
6.1
%
Tower Revenue Notes, Series 2010-5
Aug. 2010
 
Aug. 2037
(e) 
—

 
298,774

 
N/A

Tower Revenue Notes, Series 2010-6
Aug. 2010
 
Aug. 2040
(c) 
993,097

 
991,749

 
4.9
%
Tower Revenue Notes, Series 2015-1
May 2015
 
May 2042
(c) 
296,414

 
295,937

 
3.2
%
Tower Revenue Notes, Series 2015-2
May 2015
 
May 2045
(c) 
691,025

 
690,247

 
3.7
%
Total securitized debt
 
 
 
 
3,349,145

 
4,007,123

 
 
Bonds - fixed rate:
 
 
 
 
 
 
 
 
 
5.250% Senior Notes
Oct. 2012
 
Jan. 2023
 
1,636,571

 
1,634,989

 
5.3
%
2.381% Secured Notes
Dec. 2012
 
Dec. 2017
(f) 
—

 
497,160

 
2.4
%
3.849% Secured Notes
Dec. 2012
 
Apr. 2023
 
990,933

 
989,895

 
3.9
%
4.875% Senior Notes
Apr. 2014
 
Apr. 2022
 
839,884

 
838,579

 
4.9
%
3.400% Senior Notes
Feb./May 2016
 
Feb. 2021
 
849,706

(d)(e) 
—

 
3.4
%
4.450% Senior Notes
Feb. 2016
 
Feb. 2026
 
889,804

(d) 
—

 
4.5
%
3.700% Senior Notes
May 2016
 
June 2026
 
741,705

(e) 
—

 
3.7
%
2.250% Senior Notes
Sept. 2016
 
Sept. 2021
 
693,630

(f) 
—

 
2.3
%
Total bonds
 
 
 
 
6,642,233

 
3,960,623

 
 
Other:
 
 
 
 
 
 
 
 
 
Capital leases and other obligations
Various
 
Various
 
225,471

 
209,765

 
Various

Total debt and other obligations
 
 
 
 
12,592,958

 
12,149,959

 
 
Less: current maturities and short-term debt and other current obligations
 
 
 
 
101,362

 
106,219

 
 
Non-current portion of long-term debt and other long-term obligations
 
 
 
 
$
12,491,596

 
$
12,043,740

 
 
    
(a)
See the 2015 Form 10-K, including note 8, for additional information regarding the maturity and principal amortization provisions and interest rates relating to the Company's indebtedness.
(b)
In January 2016, the Company completed a Senior Unsecured Credit Facility ("2016 Credit Facility"), comprised of (1) a $2.5 billion Senior Unsecured Revolving Credit Facility ("2016 Revolver") maturing in January 2021, (2) a $2.0 billion Senior Unsecured Term Loan A Facility ("2016 Term Loan A") maturing in January 2021 and (3) a previously outstanding $1.0 billion Senior Unsecured 364-Day Revolving Credit Facility ("364-Day Facility") maturing in January 2017.  The 2016 Credit Facility bears interest at a per annum rate equal to LIBOR plus 1.125% to 2.000%, based on the Company's senior unsecured debt rating. The Company used the net proceeds from the 2016 Credit Facility (1) to repay the previously outstanding 2012 Credit Facility and (2) for general corporate purposes. In February 2016, the Company used a portion of the net proceeds from the 2016 Senior Notes offering to repay in full all outstanding borrowings under the previously outstanding 364-Day Facility. As of September 30, 2016, the undrawn availability under the 2016 Revolver was $2.1 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 2015 Form 10-K for additional information regarding these provisions.

10
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-Unaudited (Continued)
(Tabular dollars in thousands, except per share amounts)


(d)
In February 2016, the Company issued $1.5 billion aggregate principal amount of senior unsecured notes ("2016 Senior Notes"), which consist of (1) $600.0 million aggregate principal amount of 3.40% senior notes with a final maturity date of February 2021 and (2) $900.0 million aggregate principal amount of 4.45% senior notes with a final maturity date of February 2026. The Company used net proceeds from the 2016 Senior Notes offering, together with cash on hand, to (1) repay in full all outstanding borrowings under the previously outstanding 364-Day Facility and (2) repay $500.0 million of outstanding borrowings under the 2016 Revolver.
(e)
In May 2016, the Company issued $1.0 billion aggregate principal amount of senior unsecured notes ("May 2016 Senior Notes"), which consist of (1) $250.0 million aggregate principal amount of 3.40% senior notes that were issued pursuant to the same indenture as the 3.40% senior notes of the 2016 Senior Notes with a final maturity date of February 2021 and (2) $750.0 million aggregate principal amount of 3.70% senior notes with a final maturity date of June 2026. The Company used net proceeds from the May 2016 Senior Notes offering to repay in full the Tower Revenue Notes, Series 2010-2 and Series 2010-5, each issued by certain of its subsidiaries, and to repay a portion of the outstanding borrowings under the 2016 Revolver.
(f)
In September 2016, the Company issued $700.0 million aggregate principal amount of 2.25% senior unsecured notes ("September 2016 Senior Notes"). The Company used net proceeds from the September 2016 Senior Notes offering (1) to repay in full the 2.381% Secured Notes issued by certain of its subsidiaries and (2) to repay a portion of the outstanding borrowings under the 2016 Revolver.
(g)
Balances reflect debt issuance costs as a direct reduction from the respective carrying amounts of debt, with the exception of debt issuance costs associated with the Company's revolving credit facilities. See note 2.
Contractual Maturities
The following are the scheduled contractual maturities of the total debt and other long-term obligations of the Company outstanding as of September 30, 2016. 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.
 
Three Months Ending
December 31,
 
Years Ending December 31,
 
 
 
 
 
Unamortized Adjustments, Net
 
Total Debt and Other Obligations Outstanding
 
2016
 
2017
 
2018
 
2019
 
2020
 
Thereafter
 
Total Cash Obligations
 
 
Scheduled contractual maturities
$
25,054

 
$
101,049

 
$
134,864

 
$
138,883

 
$
202,640

 
$
12,085,120

 
$
12,687,610

 
$
(94,652
)
 
$
12,592,958

Purchases and Redemptions of Long-Term Debt
The following is a summary of purchases and redemptions of long-term debt during the three months ended September 30, 2016.
 
Three Months Ended September 30, 2016
 
Principal Amount
 
Cash Paid(a)
 
Gains (Losses)(b)
2.381% Secured Notes
$
500,000

 
$
508,472

 
$
(10,274
)
    
(a)
Exclusive of accrued interest.
(b)
Inclusive of $1.8 million related to the write off of deferred financing costs.
The following is a summary of purchases and redemptions of long-term debt during the nine months ended September 30, 2016.
 
Nine Months Ended September 30, 2016
 
Principal Amount
 
Cash Paid(a)
 
Gains (Losses)(b)
2012 Revolver (c)
$
—

 
$
—

 
$
(1,930
)
Tranche A Term Loans
629,375

 
629,375

 
(1,498
)
Tranche B Term Loans
2,247,015

 
2,247,015

 
(27,122
)
Tower Revenue Notes, Series 2010-2
350,000

 
352,796

 
(3,338
)
Tower Revenue Notes, Series 2010-5
300,000

 
307,176

 
(8,129
)
2.381% Secured Notes
500,000

 
508,472

 
(10,274
)
Total
$
4,026,390

 
$
4,044,834

 
$
(52,291
)
    
(a)
Exclusive of accrued interest.
(b)
Inclusive of $33.8 million related to the write off of deferred financing costs.
(c)
See discussion of the repayment of the Company's 2012 Credit Facility above.

11
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-Unaudited (Continued)
(Tabular dollars in thousands, except per share amounts)


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,
 
2016
 
2015
 
2016
 
2015
Interest expense on debt obligations
$
126,616

 
$
121,287

 
$
374,363

 
$
366,388

Amortization of deferred financing costs and adjustments on long-term debt
4,601

 
5,567

 
14,522

 
15,478

Amortization of interest rate swaps(a)
—

 
3,744

 
—

 
18,725

Other, net of capitalized interest
(1,301
)
 
(721
)
 
(3,229
)
 
(1,809
)
Total
$
129,916

 
$
129,877

 
$
385,656

 
$
398,782

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

6.
Fair Value Disclosures
 
Level in Fair Value Hierarchy
 
September 30, 2016
 
December 31, 2015
 
 
Carrying
 Amount
 
Fair
Value
 
Carrying
 Amount
 
Fair
Value
Assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
1
 
$
156,219

 
$
156,219

 
$
178,810

 
$
178,810

Restricted cash, current and non-current
1
 
121,932

 
121,932

 
135,731

 
135,731

Foreign currency swaps
2
 
—

 
—

 
10,749

 
10,749

Liabilities:
 
 
 
 
 
 
 
 
 
Total debt and other obligations
2
 
12,592,958

 
13,523,464

 
12,149,959

 
12,555,143

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. Foreign currency swaps are valued at settlement amounts using observable exchange rates and, if material, reflect an adjustment for the Company's and contract counterparty's credit risk. There were no changes since December 31, 2015 in the Company's valuation techniques used to measure fair values.


12
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-Unaudited (Continued)
(Tabular dollars in thousands, except per share amounts)


7.
Income Taxes
The Company operates as a REIT for U.S. federal income tax purposes. As a REIT, the Company is generally entitled to a deduction for dividends that it pays and therefore is not subject to U.S. federal corporate income tax on its net taxable income that is currently distributed to its stockholders. The Company also may be subject to certain federal, state, local, and foreign taxes on its income and assets, including (1) alternative minimum taxes, (2) taxes on any undistributed income, (3) 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 of 1986, as amended ("Code") to maintain qualification for taxation as a REIT.
During the fourth quarter of 2015, the Company completed the necessary steps to include small cells that were previously included in one or more TRSs in the REIT. As a result, during the fourth quarter 2015, the Company de-recognized the net deferred tax liabilities in conjunction with the inclusion of small cells in the REIT. Effective January 4, 2016 the Company's small cells that were previously included in one or more TRSs are included in the REIT.
The Company's TRS assets and operations will continue to be subject, as applicable, to federal and state corporate income taxes or to foreign taxes in the jurisdictions in which such assets and operations are located. The Company's foreign assets and operations (including its tower operations in Puerto Rico) most likely will 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.
For the nine months ended September 30, 2016 and 2015, 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.

8.
Per Share Information
Basic net income (loss) attributable to CCIC common stockholders, per common share, excludes dilution and is computed by dividing net income (loss) attributable to CCIC common stockholders by the weighted-average number of common shares outstanding during the period. 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 Convertible Preferred Stock, as determined under the if-converted method.

13
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,
 
2016
 
2015
 
2016
 
2015
Net income (loss) from continuing operations
$
98,366

 
$
104,301

 
$
232,263

 
$
382,561

Dividends on preferred stock
(10,997
)
 
(10,997
)
 
(32,991
)
 
(32,991
)
Net income (loss) from continuing operations attributable to CCIC common stockholders for basic and diluted computations
$
87,369

 
$
93,304

 
$
199,272

 
$
349,570

 
 
 
 
 
 
 
 
Income (loss) from discontinued operations, net of tax
—

 
(522
)
 
—

 
1,000,708

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

 
—

 
—

 
3,343

Net income (loss) from discontinued operations attributable to CCIC common stockholders for basic and diluted computations
$
—

 
$
(522
)
 
$
—

 
$
997,365

 
 
 
 
 
 
 
 
Weighted-average number of common shares outstanding (in thousands):
 
 
 
 
 
 
 
Basic weighted-average number of common stock outstanding
337,564

 
333,049

 
336,426

 
332,951

Effect of assumed dilution from potential common shares relating to restricted stock units and restricted stock awards
845

 
662

 
650

 
784

Diluted weighted-average number of common shares outstanding
338,409

 
333,711

 
337,076

 
333,735

 
 
 
 
 
 
 
 
Net income (loss) attributable to CCIC common stockholders, per common share:
 
 
 
 
 
 
 
Income (loss) from continuing operations, basic
0.26

 
0.28

 
0.59

 
1.05

Income (loss) from discontinued operations, basic
—

 
—

 
—

 
3.00

Net income (loss) attributable to CCIC common stockholders, basic
0.26

 
0.28

 
0.59

 
4.05

Income (loss) from continuing operations, diluted
0.26

 
0.28

 
0.59

 
1.05

Income (loss) from discontinued operations, diluted
—

 
—

 
—

 
2.99

Net income (loss) attributable to CCIC common stockholders, diluted
0.26

 
0.28

 
0.59

 
4.04

During the nine months ended September 30, 2016, the Company granted 1.3 million restricted stock units. For the nine months ended September 30, 2016 and 2015, 11.6 million and 12.4 million common share equivalents, respectively, related to the 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 the end of the respective periods. See note 13 for a discussion of the October and November 2016 conversion of the Company's previously outstanding Convertible Preferred Stock to common stock.

9.
Commitments and Contingencies
The Company is involved in various claims, lawsuits or proceedings arising in the ordinary course of business. While there are uncertainties inherent in the ultimate outcome of such matters and it is impossible to presently determine the ultimate costs or losses that may be incurred, if any, management believes the resolution of such uncertainties and the incurrence of such costs should not have a material adverse effect on the Company's 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 54% of the Company's towers at the end of their respective lease terms. The Company has no obligation to exercise such purchase options.


14
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-Unaudited (Continued)
(Tabular dollars in thousands, except per share amounts)


10.
Equity
Declaration and Payment of Dividends
During the nine months ended September 30, 2016, 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 18, 2016
 
March 18, 2016
 
March 31, 2016
 
$
0.885

 
$
300.0

(a) 
Common Stock
 
May 20, 2016
 
June 17, 2016
 
June 30, 2016
 
$
0.885

 
$
300.8

(a) 
Common Stock
 
August 2, 2016
 
September 16, 2016
 
September 30, 2016
 
$
0.885

 
$
300.3

(a) 
Convertible Preferred Stock
 
December 16, 2015
 
January 16, 2016
 
February 1, 2016
 
$
1.1250

 
$
11.0

 
Convertible Preferred Stock
 
March 22, 2016
 
April 15, 2016
 
May 2, 2016
 
$
1.1250

 
$
11.0

 
Convertible Preferred Stock
 
June 28, 2016
 
July 15, 2016
 
August 1, 2016
 
$
1.1250

 
$
11.0

 
Convertible Preferred Stock
 
September 17, 2016
 
October 15, 2016
 
November 1, 2016
 
$
1.1250

 
$
11.0

 
    
(a)
Inclusive of dividends accrued for holders of unvested restricted stock units and payments of previously accrued dividends for holders of restricted stock units that have vested during the nine months ended September 30, 2016.
See note 13 for a discussion of (1) the October and November 2016 conversion of the Company's previously outstanding Convertible Preferred Stock to common stock and (2) the Company's October 2016 declaration of its quarterly cash common stock dividend.
Purchases of the Company's Common Stock
For the nine months ended September 30, 2016, the Company purchased 0.3 million shares of its common stock utilizing $24.8 million in cash. The common stock shares purchased relate to shares withheld in connection with the payment of withholding taxes upon vesting of restricted stock.
"At the Market" Stock Offering Program
In August 2015, the Company established an "at the market" stock offering program ("ATM Program") through which it may, from time to time, issue and sell shares of its common stock having an aggregate cumulative gross sales price of up to $500.0 million to or through sales agents. Sales, if any, under the ATM Program may be made by means of ordinary brokers' transactions on the New York Stock Exchange or otherwise at market prices prevailing at the time of sale, at prices related to prevailing market prices or, subject to specific instructions of the Company, at negotiated prices. The Company intends to use the net proceeds from any sales under the ATM Program for general corporate purposes, which may include the funding of future acquisitions or investments and the repayment or repurchase of any outstanding indebtedness. During the nine months ended September 30, 2016, 3.8 million shares of common stock were sold under the ATM Program generating net proceeds of $323.8 million after giving effect to sales agent commissions of $3.3 million. The net proceeds from the sales under the ATM Program were used, in part, to fund the TDC Acquisition. See note 4.


15
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-Unaudited (Continued)
(Tabular dollars in thousands, except per share amounts)


11.
Operating Segments
During the first quarter of 2016, the Company changed its operating segments to consist of (1) towers and (2) small cells. This change was as a result of growth in small cells from a combination of organic growth, capital expenditures, and acquisitions, as well as the continued progression of the integration of Quanta Fiber Networks, Inc. ("Sunesys"), which led to changes in how the Company's chief operating decision maker ("CODM") reviews financial information.
The Company's operating segment change aligns with how the CODM views and evaluates the Company's operations, including how the CODM allocates capital and assesses segment performance. The Company has recast its prior period presentation to conform to its current reporting presentation.
The towers segment provides access, including space or capacity, to the Company's approximately 40,000 towers geographically dispersed throughout the United States. The tower segment also reflects certain network services relating to the Company's towers, consisting of site development services and installation services. The small cells segment provides access, including space or capacity, to the Company's small cell networks designed to facilitate wireless connectivity and supported by 17,000 miles of fiber. To a lesser extent, the small cells segment offers other fiber based solutions, including dark fiber (dedicated fiber strands lit by the customer) and lit fiber (bandwidth provided to the customer using the Company's own optronics).


16
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-Unaudited (Continued)
(Tabular dollars in thousands, except per share amounts)


The measurement of profit or loss used by the CODM to evaluate the results of operations of its operating segments are (1) segment site rental gross margin, (2) segment network services and other gross margin, and (3) segment operating profit. The Company defines segment site rental gross margin as segment site rental revenues less segment site rental cost of operations, which excludes stock-based compensation expense and prepaid lease purchase price adjustments recorded in consolidated cost of operations. The Company defines segment network services and other gross margin as segment network services and other revenues less segment network services and other cost of operations, which excludes stock-based compensation expense recorded in consolidated cost of operations. The Company defines segment operating profit as segment site rental gross margin plus segment network services and other gross margin, less general and administrative expenses attributable to the respective segment.
Costs that are directly attributable to towers and small cells are assigned to those respective segments. The "Other" column (1) represents amounts excluded from specific segments, such as restructuring charges (credits), asset write-down charges, acquisition and integration costs, depreciation, amortization and accretion, amortization of prepaid lease purchase price adjustments, interest expense and amortization of deferred financing costs, gains (losses) on retirement of long-term obligations, net gain (loss) on interest rate swaps, gains (losses) on foreign currency swaps, impairment of available-for-sale securities, interest income, other income (expense), cumulative effect of a change in accounting principle, income (loss) from discontinued operations, and stock-based compensation expense, and (2) reconciles segment operating profit to income (loss) before income taxes, as the amounts are not utilized in assessing each segment’s performance. The "Other" total assets balance includes corporate assets such as cash and cash equivalents which have not been allocated to specific segments. There are no significant revenues resulting from transactions between the Company's operating segments.
 
Three Months Ended September 30, 2016
 
Three Months Ended September 30, 2015
 
Towers
 
Small Cells
 
Other
 
Consolidated
Total
 
Towers
 
Small Cells
 
Other
 
Consolidated
Total
Segment site rental revenues
$
709,603

 
$
102,429

 
 
 
$
812,032

 
$
686,934

 
$
77,672

 
 
 
$
764,606

Segment network services and other revenues
166,979

 
13,005

 
 
 
179,984

 
138,566

 
14,935

 
 
 
153,501

Segment revenues
876,582

 
115,434

 
 
 
992,016

 
825,500

 
92,607

 
 
 
918,107

Segment site rental cost of operations
210,322

 
37,754

 
 
 
248,076

 
209,056

 
30,449

 
 
 
239,505

Segment network services and other cost of operations
97,395

 
10,194

 
 
 
107,589

 
75,302

 
10,213

 
 
 
85,515

Segment cost of operations (a)
307,717

 
47,948

 
 
 
355,665

 
284,358

 
40,662

 
 
 
325,020

Segment site rental gross margin
499,281

 
64,675

 
 
 
563,956

 
477,878

 
47,223

 
 
 
525,101

Segment network services and other gross margin
69,584

 
2,811

 
 
 
72,395

 
63,264

 
4,722

 
 
 
67,986

Segment general and administrative expenses (a)
22,225

 
14,480

 
35,526

 
72,231

 
22,994

 
10,194

 
30,741

 
63,929

Segment operating profit
546,640

 
53,006

 
(35,526
)
 
564,120

 
518,148

 
41,751

 
(30,741
)
 
529,158

Stock-based compensation expense
 
 
 
 
22,594

 
22,594

 
 
 
 
 
16,466

 
16,466

Depreciation, amortization and accretion
 
 
 
 
280,824

 
280,824

 
 
 
 
 
261,662

 
261,662

Interest expense and amortization of deferred financing costs
 
 
 
 
129,916

 
129,916

 
 
 
 
 
129,877

 
129,877

Other income (expenses) to reconcile to income (loss) from continuing operations before income taxes
 
 
 
 
27,379

 
27,379

 
 
 
 
 
20,653

 
20,653

Income (loss) from continuing operations before income taxes