CrownCastle 10Q 063011
 

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 June 30, 2011
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period              to             

Commission File Number 001-16441
____________________________________
CROWN CASTLE INTERNATIONAL
CORP.
(Exact name of registrant as specified in its charter)
 
Delaware
76-0470458
(State or other jurisdiction
of incorporation or organization)
(I.R.S. Employer
Identification No.)
 
 
1220 Augusta Drive, Suite 500, 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 July 29, 2011: 286,388,789
 
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES

INDEX

 
 
 
Page
 
ITEM 1.
 
 
 
 
 
 
 
 
 
 
 
ITEM 2.
 
ITEM 3.
 
ITEM 4.
 
 
ITEM 1A.
 
ITEM 2.
 
ITEM 6.
 
 


Cautionary Language Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements that are based on our management's expectations as of the filing date of this report with the SEC. Statements that are not historical facts are hereby identified as forward-looking statements. In addition, words such as "estimate," "anticipate," "project," "plan," "intend," "believe," "expect," "likely," "predicted" and similar expressions are intended to identify forward-looking statements. Such statements include plans, projections and estimates contained in "Part I—Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Part I—Item 3. Quantitative and Qualitative Disclosures About Market Risk" herein. Such forward-looking statements include (1) expectations regarding anticipated growth in the wireless communication industry, carriers' investments in their networks, new tenant additions, cancellations of customer contracts and demand for our towers, including the potential impact of AT&T's definitive agreement to acquire T-Mobile, (2) availability of cash flows and liquidity for, and plans regarding, future discretionary investments including capital expenditures, (3) anticipated growth in our future revenues, margins, Adjusted EBITDA and operating cash flows, and (4) expectations regarding the credit markets, our availability and cost of capital, and our ability to service our debt and comply with debt covenants.
Such forward-looking statements are subject to certain risks, uncertainties and assumptions, including prevailing market conditions, risk factors described under "Part II—Item 1A. Risk Factors" herein and in "Item 1A. Risk Factors" of our Annual Report on Form 10-K for the fiscal year ended December 31, 2010 ("2010 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.
 



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)
 
June 30,
2011
 
December 31,
2010
 
(Unaudited)
 
 
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
108,116

 
$
112,531

Restricted cash
193,608

 
221,015

Receivables, net
57,093

 
59,912

Prepaid expenses
75,452

 
65,856

Deferred income tax assets
51,986

 
59,098

Deferred site rental receivables and other current assets, net
25,687

 
26,733

Total current assets
511,942

 
545,145

Property and equipment, net of accumulated depreciation of $3,645,339 and $3,451,475, respectively
4,828,564

 
4,893,651

Goodwill
2,030,585

 
2,029,296

Other intangible assets, net of accumulated amortization $717,235 and $636,433, respectively
2,246,507

 
2,313,929

Deferred site rental receivables, long-term prepaid rent, deferred financing costs and other assets, net
767,722

 
687,508

Total assets
$
10,385,320

 
$
10,469,529

 
 
 
 
LIABILITIES AND EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
32,691

 
$
39,649

Accrued interest
65,337

 
65,191

Deferred revenues
176,008

 
202,123

Other accrued liabilities
76,829

 
105,235

Current maturities of debt and other obligations
30,708

 
28,687

Total current liabilities
381,573

 
440,885

Debt and other long-term obligations
6,785,550

 
6,750,207

Deferred income tax liabilities
62,116

 
66,686

Deferred ground lease payable and other liabilities
470,244

 
450,176

Total liabilities
7,699,483

 
7,707,954

 
 
 
 
Commitments and contingencies (note 7)
 
 
 
Redeemable convertible preferred stock, $0.1 par value; 20,000,000 shares authorized; shares issued and outstanding: June 30, 2011 and December 31, 2010—6,361,000; stated net of unamortized issue costs; mandatory redemption and aggregate liquidation value of $318,050
317,045

 
316,581

CCIC stockholders' equity:
 
 
 
Common stock, $.01 par value; 600,000,000 shares authorized; shares issued and outstanding: June 30, 2011—287,099,439 and December 31, 2010—290,826,284
2,871

 
2,908

Additional paid-in capital
5,407,010

 
5,581,525

Accumulated other comprehensive income (loss)
(141,746
)
 
(178,978
)
Accumulated deficit
(2,899,597
)
 
(2,960,082
)
Total CCIC stockholders' equity
2,368,538

 
2,445,373

Noncontrolling interest
254

 
(379
)
Total equity
2,368,792

 
2,444,994

Total liabilities and equity
$
10,385,320

 
$
10,469,529

 
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 June 30,
 
Six Months Ended
 June 30,
 
2011
 
2010
 
2011
 
2010
Net revenues:
 
 
 
 
 
 
 
Site rental
$
457,103

 
$
409,631

 
$
913,299

 
$
816,503

Network services and other
43,233

 
46,496

 
86,076

 
83,951

Net revenues
500,336

 
456,127

 
999,375

 
900,454

Operating expenses:
 
 
 
 
 
 
 
Costs of operations(a):
 
 
 
 
 
 
 
Site rental
121,143

 
115,465

 
239,558

 
229,220

Network services and other
25,906

 
29,927

 
53,130

 
56,223

General and administrative
41,259

 
40,556

 
86,003

 
80,029

Asset write-down charges
6,205

 
2,597

 
10,606

 
4,159

Acquisition and integration costs
490

 
272

 
1,044

 
272

Depreciation, amortization and accretion
138,191

 
134,426

 
275,464

 
267,294

Total operating expenses
333,194

 
323,243

 
665,805

 
637,197

Operating income (loss)
167,142

 
132,884

 
333,570

 
263,257

Interest expense and amortization of deferred financing costs
(126,483
)
 
(120,345
)
 
(253,169
)
 
(241,126
)
Gains (losses) on purchases and redemptions of debt
—

 
—

 
—

 
(66,434
)
Net gain (loss) on interest rate swaps
—

 
(114,598
)
 
—

 
(187,874
)
Interest and other income (expense)
(3,890
)
 
(241
)
 
(4,325
)
 
138

Income (loss) before income taxes
36,769

 
(102,300
)
 
76,076

 
(232,039
)
Benefit (provision) for income taxes
(5,755
)
 
4,686

 
(4,938
)
 
15,025

Net income (loss)
31,014

 
(97,614
)
 
71,138

 
(217,014
)
Less: Net income (loss) attributable to the noncontrolling interest
143

 
(85
)
 
250

 
(210
)
Net income (loss) attributable to CCIC stockholders
30,871

 
(97,529
)
 
70,888

 
(216,804
)
Dividends on preferred stock
(5,202
)
 
(5,202
)
 
(10,403
)
 
(10,403
)
Net income (loss) attributable to CCIC stockholders after deduction of dividends on preferred stock
$
25,669

 
$
(102,731
)
 
$
60,485

 
$
(227,207
)
 
 
 
 
 
 
 
 
Net income (loss)
$
31,014

 
$
(97,614
)
 
$
71,138

 
$
(217,014
)
Other comprehensive income (loss):
 
 
 
 
 
 
 
Available-for-sale securities, net of tax of $0, $0, $0 and $0, respectively:
 
 
 
 
 
 
 
Unrealized gains (losses) on available-for-sale securities, net of taxes
(1,160
)
 
184

 
(7,537
)
 
1,423

Derivative instruments net of taxes of $0, $(866), $0 and $(13,215), respectively:
 
 
 
 
 
 
 
Net change in fair value of cash flow hedging instruments, net of taxes
(425
)
 
(72,613
)
 
(850
)
 
(121,546
)
Amounts reclassified into results of operations, net of taxes
17,959

 
11,484

 
35,848

 
22,680

Foreign currency translation adjustments
6,084

 
(14,772
)
 
10,154

 
(9,011
)
Comprehensive income (loss)
53,472

 
(173,331
)
 
108,753

 
(323,468
)
Less: Comprehensive income (loss) attributable to the noncontrolling interest
150

 
(71
)
 
633

 
(45
)
Comprehensive income (loss) attributable to CCIC stockholders
$
53,322

 
$
(173,260
)
 
$
108,120

 
$
(323,423
)
Net income (loss) attributable to CCIC common stockholders, after deduction of dividends on preferred stock, per common share:
 
 
 
 
 
 
 
Basic
$
0.09

 
$
(0.36
)
 
$
0.21

 
$
(0.79
)
Diluted
$
0.09

 
$
(0.36
)
 
$
0.21

 
$
(0.79
)
Weighted-average common shares outstanding (in thousands):
 
 
 
 
 
 
 
Basic
285,280
 
286,080

 
286,139
 
287,266
Diluted
287,026
 
286,080

 
288,215
 
287,266
________________
(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)
 
Six Months Ended June 30,
 
2011
 
2010
Cash flows from operating activities:
 
 
 
Net income (loss)
$
71,138

 
$
(217,014
)
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities:
 
 
 
Depreciation, amortization and accretion
275,464

 
267,294

Gains (losses) on purchases and redemptions of long-term debt
—

 
66,434

Amortization of deferred financing costs and other non-cash interest
51,482

 
37,550

Stock-based compensation expense
17,254

 
18,143

Asset write-down charges
10,606

 
4,159

Deferred income tax benefit (provision)
2,545

 
(22,319
)
Income (expense) from forward-starting interest rate swaps
—

 
187,874

Other adjustments
4,309

 
443

Changes in assets and liabilities, excluding the effects of acquisitions:
 
 
 
Increase (decrease) in accrued interest
146

 
(4,774
)
Increase (decrease) in accounts payable
(7,094
)
 
(6,796
)
Increase (decrease) in deferred revenues, deferred ground lease payables, other accrued liabilities and
     other liabilities
(40,120
)
 
(10,433
)
Decrease (increase) in receivables
3,468

 
(5,014
)
Decrease (increase) in prepaid expenses, deferred site rental receivables, long-term prepaid rent,
     restricted cash and other assets
(105,389
)
 
(67,340
)
Net cash provided by (used for) operating activities
283,809

 
248,207

Cash flows from investing activities:
 
 
 
Proceeds from disposition of property and equipment
829

 
1,974

Payments for acquisitions of businesses, net of cash acquired
(12,375
)
 
(629
)
Capital expenditures
(116,690
)
 
(91,765
)
Payments for investments and other
—

 
(21,800
)
Net cash provided by (used for) investing activities
(128,236
)
 
(112,220
)
Cash flows from financing activities:
 
 
 
Proceeds from issuance of long-term debt
—

 
1,900,000

Proceeds from issuance of capital stock
757

 
8,397

Principal payments on long-term debt and other long-term obligations
(16,792
)
 
(8,685
)
Purchases and redemptions of long-term debt
—

 
(2,149,653
)
Purchases of capital stock
(192,563
)
 
(146,884
)
Borrowings under revolving credit agreement
102,000

 
—

Payments under revolving credit agreement
(71,000
)
 
—

Payments for financing costs
(82
)
 
(31,510
)
Payments for forward-starting interest rate swap settlements
—

 
(232,703
)
Net (increase) decrease in restricted cash
27,088

 
11,719

Dividends on preferred stock
(9,939
)
 
(9,940
)
Net cash provided by (used for) financing activities
(160,531
)
 
(659,259
)
Effect of exchange rate changes on cash
543

 
(787
)
Net increase (decrease) in cash and cash equivalents
(4,415
)
 
(524,059
)
Cash and cash equivalents at beginning of period
112,531

 
766,146

Cash and cash equivalents at end of period
$
108,116

 
$
242,087


See notes to condensed consolidated financial statements.

4
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF EQUITY
(In thousands of dollars, except share amounts) (Unaudited)

 
CCIC Stockholders
 
 
 
 
 
Common Stock
 
 
 
 
 
 
 
 
 
 
 
Shares
 
($.01 Par)
 
Additional
Paid-In
Capital
 
AOCI
 
Accumulated
Deficit
 
Noncontrolling
Interest
 
Total
Balance, April 1, 2011
290,717,872

 
$
2,907

 
$
5,549,448

 
$
(164,197
)
 
$
(2,925,266
)
 
$
104

 
$
2,462,996

Issuances of capital stock, net of forfeitures
(6,404
)
 
—

 
106

 
—

 
—

 
—

 
106

Purchases and retirement of capital stock
(3,612,029
)
 
(36
)
 
(150,302
)
 
—

 
—

 
—

 
(150,338
)
Stock-based compensation expense
—

 
—

 
7,758

 
—

 
—

 
—

 
7,758

Other comprehensive income (loss)(a)
—

 
—

 
—

 
22,451

 
—

 
7

 
22,458

Dividends on preferred stock
—

 
—

 
—

 
—

 
(5,202
)
 
—

 
(5,202
)
Net income (loss)
—

 
—

 
—

 
—

 
30,871

 
143

 
31,014

Balance, June 30, 2011
287,099,439

 
$
2,871

 
$
5,407,010

 
$
(141,746
)
 
$
(2,899,597
)
 
$
254

 
$
2,368,792


 
CCIC Stockholders
 
 
 
 
 
Common Stock
 
 
 
 
 
 
 
 
 
 
 
Shares
 
($.01 Par)
 
Additional
Paid-In
Capital
 
AOCI
 
Accumulated
Deficit
 
Noncontrolling
Interest
 
Total
Balance, April 1, 2010
291,230,613

 
$
2,912

 
$
5,592,251

 
$
(155,112
)
 
$
(2,752,812
)
 
$
(130
)
 
$
2,687,109

Issuances of capital stock, net of forfeitures
51,316

 
1

 
1,571

 
—

 
—

 
—

 
1,572

Purchases and retirement of capital stock
(1,030,966
)
 
(10
)
 
(38,148
)
 
—

 
—

 
—

 
(38,158
)
Stock-based compensation expense
—

 
—

 
9,880

 
—

 
—

 
—

 
9,880

Other comprehensive income (loss)(a)
—

 
—

 
—

 
(75,731
)
 
—

 
14

 
(75,717
)
Dividends on preferred stock
—

 
—

 
—

 
—

 
(5,202
)
 
—

 
(5,202
)
Net income (loss)
—

 
—

 
—

 
—

 
(97,529
)
 
(85
)
 
(97,614
)
Balance, June 30, 2010
290,250,963

 
$
2,903

 
$
5,565,554

 
$
(230,843
)
 
$
(2,855,543
)
 
$
(201
)
 
$
2,481,870


 
CCIC Stockholders
 
 
 
 
 
Common Stock
 
 
 
 
 
 
 
 
 
 
 
Shares
 
($.01 Par)
 
Additional
Paid-In
Capital
 
AOCI
 
Accumulated
Deficit
 
Noncontrolling
Interest
 
Total
Balance, January 1, 2011
290,826,284

 
$
2,908

 
$
5,581,525

 
$
(178,978
)
 
$
(2,960,082
)
 
$
(379
)
 
$
2,444,994

Issuances of capital stock, net of forfeitures
911,515

 
9

 
748

 
—

 
—

 
—

 
757

Purchases and retirement of capital stock
(4,638,360
)
 
(46
)
 
(192,517
)
 
—

 
—

 
—

 
(192,563
)
Stock-based compensation expense
—

 
—

 
17,254

 
—

 
—

 
—

 
17,254

Other comprehensive income (loss)(a)
—

 
—

 
—

 
37,232

 
—

 
383

 
37,615

Dividends on preferred stock
—

 
—

 
—

 
—

 
(10,403
)
 
—

 
(10,403
)
Net income (loss)
—

 
—

 
—

 
—

 
70,888

 
250

 
71,138

Balance, June 30, 2011
287,099,439

 
$
2,871

 
$
5,407,010

 
$
(141,746
)
 
$
(2,899,597
)
 
$
254

 
$
2,368,792


 
CCIC Stockholders
 
 
 
 
 
Common Stock
 
 
 
 
 
 
 
 
 
 
 
Shares
 
($.01 Par)
 
Additional
Paid-In
Capital
 
AOCI
 
Accumulated
Deficit
 
Noncontrolling
Interest
 
Total
Balance January 1, 2010
292,729,684

 
$
2,927

 
$
5,685,874

 
$
(124,224
)
 
$
(2,628,336
)
 
$
(156
)
 
$
2,936,085

Issuances of capital stock, net of forfeitures
1,354,448

 
14

 
8,383

 
—

 
—

 
—

 
8,397

Purchases and retirement of capital stock
(3,833,169
)
 
(38
)
 
(146,846
)
 
—

 
—

 
—

 
(146,884
)
Stock-based compensation expense
—

 
—

 
18,143

 
—

 
—

 
—

 
18,143

Other comprehensive income (loss)(a)
—

 
—

 
—

 
(106,619
)
 
—

 
165

 
(106,454
)
Dividends on preferred stock
—

 
—

 
—

 
—

 
(10,403
)
 
—

 
(10,403
)
Net income (loss)
—

 
—

 
—

 
—

 
(216,804
)
 
(210
)
 
(217,014
)
Balance, June 30, 2010
290,250,963

 
$
2,903

 
$
5,565,554

 
$
(230,843
)
 
$
(2,855,543
)
 
$
(201
)
 
$
2,481,870

___________________________
(a)
See the statement of operations and other comprehensive income (loss) for the allocation of the components of "other comprehensive income (loss)."
See notes to condensed consolidated financial statements.

5
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, 2010, and related notes thereto, included in the 2010 Form 10-K filed by Crown Castle International Corp. ("CCIC") with the SEC. All references to the "Company" include CCIC and its subsidiary companies unless otherwise indicated or the context indicates otherwise.
The Company owns, operates and leases towers. The Company's primary business is the renting of antenna space to wireless communication companies via long-term contracts. To a lesser extent, the Company also provides certain network services relating to its towers, primarily consisting of installation services, as well as the following additional services: site acquisition, architectural and engineering, zoning and permitting, other construction and other services related to network development. The Company conducts its operations through tower portfolios in the United States, including Puerto Rico and Australia.
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 present fairly the consolidated financial position of the Company at June 30, 2011, and the consolidated results of operations and the consolidated cash flows for the three and six months ended June 30, 2011 and 2010. Accounting measurements at interim dates inherently involve greater reliance on estimates than at year end. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the entire year.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Summary of Significant Accounting Policies
The significant accounting policies used in the preparation of the Company's consolidated financial statements are disclosed in the Company's 2010 Form 10-K.
New Accounting Pronouncements
No accounting pronouncements adopted during the six months ended June 30, 2011 had a material impact on the Company's consolidated financial statements. No new accounting pronouncements issued during the six months ended June 30, 2011 but not yet adopted are expected to have a material impact on the Company's consolidated financial statements.

6
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—Unaudited (Continued)
(Tabular dollars in thousands, except per share amounts)

2.
Debt and Other Obligations
 
Original
Issue Date
 
Contractual
Maturity Date
 
Outstanding
Balance as of
June 30, 2011
 
Outstanding
Balance as of
December 31, 2010
 
Stated Interest
Rate as of
June 30, 2011(a)
 
Bank debt - variable rate:
 
 
 
 
 
 
 
 
 
 
Revolver
Jan. 2007
 
Sept. 2013
 
$
188,000

(b)
$
157,000

 
2.4
%
(c)
2007 Term Loans
Jan./March 2007
 
March 2014
 
622,375

 
625,625

 
1.7
%
(c)
Total bank debt
 
 
 
 
810,375

 
782,625

 
 
 
Securitized debt - fixed rate:
 
 
 
 
 
 
 
 
 
 
January 2010 Tower Revenue Notes
Jan. 2010
 
2035 - 2040
(d)
1,900,000

 
1,900,000

 
5.8
%
(d)
August 2010 Tower Revenue Notes
Aug. 2010
 
2035 - 2040
(d)
1,550,000

 
1,550,000

 
4.5
%
(d)
2009 Securitized Notes
July 2009
 
2019/2029
(e)
225,290

 
233,085

 
7.0
%
 
Total securitized debt
 
 
 
 
3,675,290

 
3,683,085

 
 
 
High yield bonds - fixed rate:
 
 
 
 
 
 
 
 
 
 
9% Senior Notes
Jan. 2009
 
Jan. 2015
 
811,206

 
804,971

 
9.0
%
(f)
7.75% Secured Notes
April 2009
 
May 2017
 
977,416

 
975,913

 
7.8
%
(g)
7.125% Senior Notes
Oct. 2009
 
Nov. 2019
 
497,806

 
497,712

 
7.1
%
(h)
7.5% Senior Notes
Dec. 2003
 
Dec. 2013
 
51

 
51

 
7.5
%
 
Total high yield bonds
 
 
 
 
2,286,479

 
2,278,647

 
 
 
Other:
 
 
 
 
 
 
 
 
 
 
Capital leases and other obligations
Various
 
Various
(i)
44,114

 
34,537

 
Various

(i)
Total debt and other obligations
 
 
 
 
6,816,258

 
6,778,894

 
 
 
Less: current maturities and short-term debt and other current obligations
 
 
 
 
30,708

 
28,687

 
 
 
Non-current portion of long-term debt and other long-term obligations
 
 
 
 
$
6,785,550

 
$
6,750,207

 
 
 
________________
(a)
Represents the weighted-average stated interest rate.
(b)
In June 2011, CCOC amended the senior secured revolving credit facility ("Revolver") to increase the aggregate revolving commitment availability by $50.0 million to a total revolving commitment availability of $450.0 million, subject to certain restrictions based on the maintenance of financial covenants in the 2007 Credit Agreement. As of June 30, 2011, the undrawn availability under the Revolver is $262.0 million.
(c)
The Revolver bears interest at a rate per annum, at the election of CCOC, equal to (i) the greater of the prime rate of The Royal Bank of Scotland plc and the Federal Funds Effective Rate plus 0.5%, plus a credit spread ranging from 1.0% to 1.4% or (ii) LIBOR plus a credit spread ranging from 2.0% to 2.4%, in each case based on the Company's consolidated leverage ratio. The 2007 Term Loans bear interest at a rate per annum, at CCOC's election, equal to (i) the greater of the prime rate of The Royal Bank of Scotland plc and the Federal Funds Effective Rate plus 0.5% or (ii) LIBOR plus 1.5%.
(d)
If the respective series of the January 2010 Tower Revenue Notes and August 2010 Tower Revenue Notes are not paid in full on or prior to 2015, 2017 and 2020, as applicable, then Excess Cash Flow (as defined in the indenture) of the issuers (of such notes) will be used to repay principal of the applicable series and class of the 2010 Tower Revenue Notes, and additional interest (by an additional approximately 5% per annum) will accrue on the respective 2010 Tower Revenue Notes. The January 2010 Tower Revenue Notes consist of three series of notes with principal amounts of $300.0 million, $350.0 million and $1.3 billion, having anticipated repayment dates in 2015, 2017 and 2020, respectively. The August 2010 Tower Revenue Notes consist of three series of notes with principal amounts of $250.0 million, $300.0 million and $1.0 billion, having anticipated repayment dates in 2015, 2017 and 2020, respectively.
(e)
The 2009 Securitized Notes consist of $155.3 million of principal as of June 30, 2011 that amortizes through 2019, and $70.0 million of principal as of June 30, 2011 that amortizes during the period beginning in 2019 and ending in 2029.
(f)
The effective yield is approximately 11.3%, inclusive of the discount.
(g)
The effective yield is approximately 8.2%, inclusive of the discount.
(h)
The effective yield is approximately 7.2%, inclusive of the discount.
(i)
The Company's capital leases and other obligations bear interest rates up to 9% and mature in periods ranging from less than one year to approximately 20 years.





7
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 June 30,
 
Six Months Ended June 30,
 
2011
 
2010
 
2011
 
2010
Interest expense on debt obligations
$
100,802

 
$
101,666

 
$
201,687

 
$
203,576

Amortization of deferred financing costs
3,754

 
3,986

 
7,476

 
7,880

Amortization of discounts on long-term debt
3,968

 
3,571

 
7,833

 
7,050

Amortization of interest rate swaps
17,959

 
10,836

 
35,848

 
21,825

Other
—

 
286

 
325

 
795

Total
$
126,483

 
$
120,345

 
$
253,169

 
$
241,126


3.
Income Taxes
During the six months ended June 30, 2011 and 2010, the Company's provision for federal income taxes was reduced by a partial reversal of the valuation allowance on the Company's federal deferred tax assets, as a result of utilizing net operating losses that previously had a full valuation allowance. For the six months ended June 30, 2011 and 2010, the effective tax rate differed from the federal statutory rate predominately due to the Company's federal deferred tax valuation allowances and the net impact of state taxes.

4.
Fair Value Disclosures

 
June 30, 2011
 
December 31, 2010
 
Carrying
 Amount
 
Fair
Value
 
Carrying
 Amount
 
Fair
Value
Assets:
 
 
 
 
 
 
 
Cash and cash equivalents
$
108,116

 
$
108,116

 
$
112,531

 
$
112,531

Restricted cash, current and non-current
198,608

 
198,608

 
226,015

 
226,015

Liabilities:
 
 
 
 
 
 
 
Long-term debt and other obligations
6,816,258

 
7,222,647

 
6,778,894

 
7,121,156

Interest rate swaps(a)
3,003

 
3,003

 
5,198

 
5,198

________________
(a)
Variable to fixed interest rate swaps hedging a portion of the 2007 Term Loans until December 2011 with a notional value of $600.0 million.
The fair value of cash and cash equivalents and restricted cash approximate the carrying value. The Company determines fair value of its debt securities based on indicative quotes (that is non-binding quotes) from brokers that require judgment to interpret market information including implied credit spreads for similar borrowings on recent trades or bid/ask prices or quotes from active markets if available. The fair value of interest rate swaps is determined using the income approach and is predominately based on observable interest rates and yield curves and, to a lesser extent, the Company's and the contract counterparty's credit risk. There were no changes since December 31, 2010 in the Company's valuation techniques used to measure fair values.
As of June 30, 2011, the fair value of the Company's cash and cash equivalents and restricted cash is measured on a recurring basis and are classified as Level 1 fair value measurements. The following table is a summary of the activity during the six months ended June 30, 2010 for interest rate swap liabilities previously classified as Level 3 fair value measurements. During the six months ended June 30, 2011, all interest rate swap liabilities were classified as Level 2 fair value measurements.


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

 
Fair Value Measurement
Using Significant Unobservable
 Inputs (Level 3)
 
Interest Rate Swaps, Net
 
Three Months Ended
 June 30, 2010
 
Six Months
 Ended
 June 30, 2010
Beginning balance
$
352,267

 
$
300,040

Settlements
(178,248
)
 
(235,674
)
Less: Total (gains) losses:


 
 
Included in earnings(a)
113,802

 
186,506

Included in other comprehensive income (loss)
71,895

 
108,844

Ending balance
$
359,716

 
$
359,716

________________
(a)
Includes $88.1 million and $123.6 million, respectively, for the three and six months ended June 30, 2010, of losses that are attributable to the change in unrealized gains or losses relating to liabilities still held at the reporting date.

5.
Per Share Information
Basic net income (loss) attributable to CCIC common stockholders, after deduction of dividends on preferred stock, per common share excludes dilution and is computed by dividing net income (loss) attributable to CCIC stockholders after deduction of dividends on preferred stock by the weighted-average number of common shares outstanding during the period. Diluted net income (loss) attributable to CCIC common stockholders, after deduction of dividends on preferred stock, per common share is computed by dividing net income (loss) attributable to CCIC stockholders after deduction of dividends on preferred stock by the weighted-average number of common shares outstanding during the period plus any potential dilutive common share equivalents, including shares issuable (1) upon exercise of stock options and the vesting of restricted stock awards as determined under the treasury stock method and (2) upon conversion of the Company's preferred stock, as determined under the if-converted method. The Company's restricted stock awards are considered participating securities and may be included in the computation pursuant to the two-class method. However, the Company does not present the two-class method when there is no difference between the per share amount under the two-class method and the treasury stock method.
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2011
 
2010
 
2011
 
2010
Net income (loss) attributable to CCIC stockholders
$
30,871

 
$
(97,529
)
 
$
70,888

 
$
(216,804
)
Dividends on preferred stock
(5,202
)
 
(5,202
)
 
(10,403
)
 
(10,403
)
Net income (loss) attributable to CCIC common stockholders after deduction of dividends on preferred stock for basic and diluted computations
$
25,669

 
$
(102,731
)
 
$
60,485

 
$
(227,207
)
Weighted-average number of common shares outstanding (in thousands):
 
 
 
 
 
 
 
Basic weighted-average number of common stock outstanding
285,280

 
286,080

 
286,139

 
287,266

Effect of assumed dilution from potential common shares relating to stock options and restricted stock awards
1,746

 
—

 
2,076

 
—

Diluted weighted-average number of common shares outstanding
287,026

 
286,080

 
288,215

 
287,266

Net income (loss) attributable to CCIC common stockholders after deduction of dividends on preferred stock, per common share:
 
 
 
 
 
 
 
Basic
$
0.09

 
$
(0.36
)
 
$
0.21

 
$
(0.79
)
Diluted
$
0.09

 
$
(0.36
)
 
$
0.21

 
$
(0.79
)
 For both the three and six months ended June 30, 2011, 0.9 million restricted stock awards were excluded from the dilutive common shares because certain stock price hurdles would not have been achieved assuming that June 30, 2011 was the end of the contingency period. For the three and six months ended June 30, 2010, all of the CCIC stock options and unvested restricted stock awards are excluded from dilutive common shares because the net impact is anti-dilutive. In addition, 8.6 million shares reserved for issuance upon conversion of the 6.25% convertible preferred stock are excluded from dilutive common shares for the three and six months ended June 30, 2011 and 2010 because the impact is anti-dilutive as determined under the if-converted method. See note 9.


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

6.
Leases
Tenant Contracts
The following table is an updated summary of the rental cash payments owed to the Company, as a lessor, by tenants pursuant to contractual agreements in effect as of June 30, 2011. Generally, the Company's contracts with its tenants provide for (1) annual escalations and multiple renewal periods at the tenant's option and (2) only limited termination rights at the tenant's option through the current term. As of June 30, 2011, the weighted-average remaining term of tenant contracts is approximately nine years, exclusive of renewals at the tenant's option. The tenants' rental payments included in the table below are through the current terms with a maximum current term of 20 years and do not assume exercise of tenant renewal options.
 
Six Months Ending
December 31,
 
Years Ending December 31,
 
2011
 
2012
 
2013
 
2014
 
2015
 
Thereafter
 
Total
Tenant Contracts
$
803,088

 
$
1,595,216

 
$
1,561,351

 
$
1,529,769

 
$
1,469,150

 
$
10,228,184

 
$
17,186,758


7.
Commitments and Contingencies
The Company is involved in various claims, lawsuits and 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.

8.
Operating Segments
The Company's reportable operating segments are (1) CCUSA, primarily consisting of the Company's U.S. tower operations and (2) CCAL, the Company's Australian tower operations. Financial results for the Company are reported to management and the board of directors in this manner.
The measurement of profit or loss currently used by management to evaluate the results of operations for the Company and its operating segments is earnings before interest, taxes, depreciation, amortization and accretion, as adjusted ("Adjusted EBITDA"). The Company defines Adjusted EBITDA as net income (loss) plus restructuring charges (credits), asset write-down charges, acquisition and integration costs, depreciation, amortization and accretion, interest expense and amortization of deferred financing costs, gains (losses) on purchases and redemptions of debt, net gain (loss) on interest rate swaps, impairment of available-for-sale securities, interest and other income (expense), benefit (provision) for income taxes, cumulative effect of change in accounting principle, income (loss) from discontinued operations and stock-based compensation expense. Adjusted EBITDA is not intended as an alternative measure of operating results or cash flow from operations (as determined in accordance with GAAP), and the Company's measure of Adjusted EBITDA may not be comparable to similarly titled measures of other companies. There are no significant revenues resulting from transactions between the Company's operating segments. Inter-company borrowings and related interest between segments are eliminated to reconcile segment results and assets to the consolidated basis.

10
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 June 30, 2011
 
Three Months Ended June 30, 2010
 
CCUSA
 
CCAL
 
Eliminations
 
Consolidated
Total
 
CCUSA
 
CCAL
 
Eliminations
 
Consolidated
Total
Net revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Site rental
$
429,454

 
$
27,649

 
$
—

 
$
457,103

 
$
387,970

 
$
21,661

 
$
—

 
$
409,631

Network services and other
40,017

 
3,216

 
—

 
43,233

 
44,274

 
2,222

 
—

 
46,496

Net revenues
469,471

 
30,865

 
—

 
500,336

 
432,244

 
23,883

 
—

 
456,127

Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Costs of operations:(a)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Site rental
112,153

 
8,990

 
—

 
121,143

 
108,671

 
6,794

 
—

 
115,465

Network services and other
23,576

 
2,330

 
—

 
25,906

 
28,511

 
1,416

 
—

 
29,927

General and administrative
36,702

 
4,557

 
—

 
41,259

 
36,875

 
3,681

 
—

 
40,556

Asset write-down charges
5,930

 
275

 
—

 
6,205

 
2,574

 
23

 
—

 
2,597

Acquisition and integration costs
490

 
—

 
—

 
490

 
272

 
—

 
—

 
272

Depreciation, amortization and accretion
130,488

 
7,703

 
—

 
138,191

 
127,557

 
6,869

 
—

 
134,426

Total operating expenses
309,339

 
23,855

 
—

 
333,194

 
304,460

 
18,783

 
—

 
323,243

Operating income (loss)
160,132

 
7,010

 
—

 
167,142

 
127,784

 
5,100

 
—

 
132,884

Interest expense and amortization of deferred financing costs
(126,484
)
 
(5,816
)
 
5,817

 
(126,483
)
 
(120,058
)
 
(4,967
)
 
4,680

 
(120,345
)
Net gain (loss) on interest rate swaps
—

 
—

 
—

 
—

 
(114,598
)
 
—

 
—

 
(114,598
)
Interest and other income (expense)
1,787

 
140

 
(5,817
)
 
(3,890
)
 
4,394

 
45

 
(4,680
)
 
(241
)
Benefit (provision) for income taxes
(5,184
)
 
(571
)
 
—

 
(5,755
)
 
5,145

 
(459
)
 
—

 
4,686

Net income (loss)
30,251

 
763

 
—

 
31,014

 
(97,333
)
 
(281
)
 
—

 
(97,614
)
Less: Net income (loss) attributable to the noncontrolling interest
—

 
143

 
—

 
143

 
—

 
(85
)
 
—

 
(85
)
Net income (loss) attributable to CCIC stockholders
$
30,251

 
$
620

 
$
—

 
$
30,871

 
$
(97,333
)
 
$
(196
)
 
$
—

 
$
(97,529
)
Capital expenditures
$
61,080

 
$
2,960

 
$
—

 
$
64,040

 
$
52,417

 
$
2,485

 
$
—

 
$
54,902

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

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

 
Six Months Ended June 30, 2011
 
Six Months Ended June 30, 2010
 
CCUSA
 
CCAL
 
Eliminations
 
Consolidated
Total
 
CCUSA
 
CCAL
 
Eliminations
 
Consolidated
Total
Net revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Site rental
$
860,097

 
$
53,202

 
$
—

 
$
913,299

 
$
772,011

 
$
44,492

 
$
—

 
$
816,503

Network services and other
77,681

 
8,395

 
—

 
86,076

 
79,121

 
4,830

 
—

 
83,951

Net revenues
937,778

 
61,597

 
—

 
999,375

 
851,132

 
49,322

 
—

 
900,454

Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Costs of operations:(a)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Site rental
222,578

 
16,980

 
—

 
239,558

 
215,694

 
13,526

 
—

 
229,220

Network services and other
47,533

 
5,597

 
—

 
53,130

 
52,792

 
3,431

 
—

 
56,223

General and administrative
76,299

 
9,704

 
—

 
86,003

 
71,840

 
8,189

 
—

 
80,029

Asset write-down charges
10,287

 
319

 
—

 
10,606

 
4,136

 
23

 
—

 
4,159

Acquisition and integration costs
1,044

 
—

 
—

 
1,044

 
272

 
—

 
—

 
272

Depreciation, amortization and accretion
260,464

 
15,000

 
—

 
275,464

 
253,249

 
14,045

 
—

 
267,294

Total operating expenses
618,205

 
47,600

 
—

 
665,805

 
597,983

 
39,214

 
—

 
637,197

Operating income (loss)
319,573

 
13,997

 
—

 
333,570

 
253,149

 
10,108

 
—

 
263,257

Interest expense and amortization of deferred financing costs
(252,845
)
 
(11,758
)
 
11,434

 
(253,169
)
 
(240,330
)
 
(10,012
)
 
9,216

 
(241,126
)
Gains (losses) on purchases and redemptions of debt
—

 
—

 
—

 
—

 
(66,434
)
 
—

 
—

 
(66,434
)
Net gain (loss) on interest rate swaps
—

 
—

 
—

 
—

 
(187,874
)
 
—

 
—

 
(187,874
)
Interest and other income (expense)
6,870

 
239

 
(11,434
)
 
(4,325
)
 
9,279

 
75

 
(9,216
)
 
138

Benefit (provision) for income taxes
(3,815
)
 
(1,123
)
 
—

 
(4,938
)
 
15,929

 
(904
)
 
—

 
15,025

Net income (loss)
69,783

 
1,355

 
—

 
71,138

 
(216,281
)
 
(733
)
 
—

 
(217,014
)
Less: Net income (loss) attributable to the noncontrolling interest
—

 
250

 
—

 
250

 
—

 
(210
)
 
—

 
(210
)
Net income (loss) attributable to CCIC stockholders
$
69,783

 
$
1,105

 
$
—

 
$
70,888

 
$
(216,281
)
 
$
(523
)
 
$
—

 
$
(216,804
)
Capital expenditures
$
112,326

 
$
4,364

 
$
—

 
$
116,690

 
$
87,452

 
$
4,313

 
$
—

 
$
91,765

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


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


The following are reconciliations of net income (loss) to Adjusted EBITDA for the three and six months ended June 30, 2011 and 2010.
 
Three Months Ended June 30, 2011
 
Three Months Ended June 30, 2010
 
CCUSA
 
CCAL
 
Eliminations
 
Consolidated
Total
 
CCUSA
 
CCAL
 
Eliminations
 
Consolidated
Total
Net income (loss)
$
30,251

 
$
763

 
$
—

 
$
31,014

 
$
(97,333
)
 
$
(281
)
 
$
—

 
$
(97,614
)
Adjustments to increase (decrease) net income (loss):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Asset write-down charges
5,930

 
275

 
—

 
6,205

 
2,574

 
23

 
—

 
2,597

Acquisition and integration costs
490

 
—

 
—

 
490

 
272

 
—

 
—

 
272

Depreciation, amortization and accretion
130,488

 
7,703

 
—

 
138,191

 
127,557

 
6,869

 
—

 
134,426

Interest expense and amortization of deferred financing costs
126,484

 
5,816

 
(5,817
)
 
126,483

 
120,058

 
4,967

 
(4,680
)
 
120,345

Gains (losses) on purchases and redemptions of debt
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Net gain (loss) on interest rate swaps
—

 
—

 
—

 
—

 
114,598

 
—

 
—

 
114,598

Interest and other income (expense)
(1,787
)
 
(140
)
 
5,817

 
3,890

 
(4,394
)
 
(45
)
 
4,680

 
241

Benefit (provision) for income taxes
5,184

 
571

 
—

 
5,755

 
(5,145
)
 
459

 
—

 
(4,686
)
Stock-based compensation expense
7,758

 
109

 
—

 
7,867

 
9,880

 
25

 
—

 
9,905

Adjusted EBITDA
$
304,798

 
$
15,097

 
$
—

 
$
319,895

 
$
268,067

 
$
12,017

 
$
—

 
$
280,084


 
Six Months Ended June 30, 2011
 
Six Months Ended June 30, 2010
 
CCUSA
 
CCAL
 
Eliminations
 
Consolidated
Total
 
CCUSA
 
CCAL
 
Eliminations
 
Consolidated
Total
Net income (loss)
$
69,783

 
$
1,355

 
$
—

 
$
71,138

 
$
(216,281
)
 
$
(733
)
 
$
—

 
$
(217,014
)
Adjustments to increase (decrease) net income (loss):