x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 76-0470458 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
1220 Augusta Drive, Suite 500, Houston, Texas 77057-2261 (Address of principal executives office) (Zip Code) | |
(713) 570-3000 (Registrant's telephone number, including area code) |
Large accelerated filer | x | Accelerated filer | o | |||
Non-accelerated filer | o | Smaller reporting company | o |
Page | |||
ITEM 1. | |||
ITEM 2. | |||
ITEM 3. | |||
ITEM 4. | |||
ITEM 1A. | |||
ITEM 2. | |||
ITEM 6. | |||
ITEM 1. | FINANCIAL STATEMENTS |
March 31, 2012 | December 31, 2011 | ||||||
(Unaudited) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 1,063,684 | $ | 80,120 | |||
Restricted cash | 288,969 | 252,368 | |||||
Receivables, net | 79,872 | 77,258 | |||||
Prepaid expenses | 99,212 | 80,529 | |||||
Deferred income tax assets | 87,262 | 85,385 | |||||
Deferred site rental receivables and other current assets, net | 29,010 | 23,492 | |||||
Total current assets | 1,648,009 | 599,152 | |||||
Deferred site rental receivables, net | 680,876 | 621,103 | |||||
Property and equipment, net of accumulated depreciation of $3,928,242 and $3,824,136, respectively | 4,836,152 | 4,861,227 | |||||
Goodwill | 2,114,624 | 2,035,390 | |||||
Other intangible assets, net | 2,243,389 | 2,178,182 | |||||
Long-term prepaid rent, deferred financing costs and other assets, net | 601,606 | 250,042 | |||||
Total assets | $ | 12,124,656 | $ | 10,545,096 | |||
LIABILITIES AND EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 31,909 | $ | 32,055 | |||
Accrued interest | 55,259 | 65,392 | |||||
Deferred revenues | 174,176 | 167,238 | |||||
Other accrued liabilities | 86,722 | 104,904 | |||||
Current maturities of debt and other obligations | 77,776 | 32,517 | |||||
Total current liabilities | 425,842 | 402,106 | |||||
Debt and other long-term obligations | 8,343,156 | 6,853,182 | |||||
Deferred income tax liabilities | 104,290 | 97,562 | |||||
Deferred ground lease payable and other liabilities | 514,702 | 500,350 | |||||
Total liabilities | 9,387,990 | 7,853,200 | |||||
Commitments and contingencies (note 10) | |||||||
Redeemable convertible preferred stock, $0.1 par value; 20,000,000 shares authorized; shares issued and outstanding: March 31, 2012—0 and December 31, 2011—6,111,000; stated net of unamortized issue costs; mandatory redemption and aggregate liquidation value: March 31, 2012—$0 and December 31, 2011—$305,550 | — | 305,032 | |||||
CCIC stockholders' equity: | |||||||
Common stock, $.01 par value; 600,000,000 shares authorized; shares issued and outstanding: March 31, 2012—292,928,485 and December 31, 2011—284,449,372 | 2,929 | 2,844 | |||||
Additional paid-in capital | 5,591,191 | 5,312,342 | |||||
Accumulated other comprehensive income (loss) | (93,043 | ) | (116,996 | ) | |||
Accumulated deficit | (2,764,543 | ) | (2,811,945 | ) | |||
Total CCIC stockholders' equity | 2,736,534 | 2,386,245 | |||||
Noncontrolling interest | 132 | 619 | |||||
Total equity | 2,736,666 | 2,386,864 | |||||
Total liabilities and equity | $ | 12,124,656 | $ | 10,545,096 |
Three Months Ended March 31, | |||||||
2012 | 2011 | ||||||
Net revenues: | |||||||
Site rental | $ | 497,529 | $ | 456,196 | |||
Network services and other | 54,216 | 42,843 | |||||
Net revenues | 551,745 | 499,039 | |||||
Operating expenses: | |||||||
Costs of operations(a): | |||||||
Site rental | 122,871 | 118,415 | |||||
Network services and other | 31,521 | 27,224 | |||||
General and administrative | 51,001 | 44,744 | |||||
Asset write-down charges | 3,044 | 4,401 | |||||
Acquisition and integration costs | 1,680 | 554 | |||||
Depreciation, amortization and accretion | 139,400 | 137,273 | |||||
Total operating expenses | 349,517 | 332,611 | |||||
Operating income (loss) | 202,228 | 166,428 | |||||
Interest expense and amortization of deferred financing costs | (137,472 | ) | (126,686 | ) | |||
Gains (losses) on retirement of long-term obligations | (7,068 | ) | — | ||||
Interest income | 354 | 171 | |||||
Other income (expense) | (1,077 | ) | (606 | ) | |||
Income (loss) before income taxes | 56,965 | 39,307 | |||||
Benefit (provision) for income taxes | (6,695 | ) | 817 | ||||
Net income (loss) | 50,270 | 40,124 | |||||
Less: Net income (loss) attributable to the noncontrolling interest | 239 | 107 | |||||
Net income (loss) attributable to CCIC stockholders | 50,031 | 40,017 | |||||
Dividends on preferred stock | (2,629 | ) | (5,201 | ) | |||
Net income (loss) attributable to CCIC stockholders after deduction of dividends on preferred stock | $ | 47,402 | $ | 34,816 | |||
Net income (loss) | $ | 50,270 | $ | 40,124 | |||
Other comprehensive income (loss): | |||||||
Available-for-sale securities, net of tax of $0 and $0, respectively: | |||||||
Unrealized gains (losses) on available-for-sale securities, net of taxes | — | (6,377 | ) | ||||
Derivative instruments net of taxes of $0 and $0, respectively: | |||||||
Net change in fair value of cash flow hedging instruments, net of taxes | — | (425 | ) | ||||
Amounts reclassified into results of operations, net of taxes | 16,338 | 17,889 | |||||
Foreign currency translation adjustments | 6,889 | 4,070 | |||||
Total other comprehensive income (loss) | 23,227 | 15,157 | |||||
Comprehensive income (loss) | 73,497 | 55,281 | |||||
Less: Comprehensive income (loss) attributable to the noncontrolling interest | (487 | ) | 483 | ||||
Comprehensive income (loss) attributable to CCIC stockholders | $ | 73,984 | $ | 54,798 | |||
Net income (loss) attributable to CCIC common stockholders, after deduction of dividends on preferred stock, per common share: | |||||||
Basic | $ | 0.17 | $ | 0.12 | |||
Diluted | $ | 0.17 | $ | 0.12 | |||
Weighted-average common shares outstanding (in thousands): | |||||||
Basic | 284,913 | 286,998 | |||||
Diluted | 285,853 | 289,005 |
(a) | Exclusive of depreciation, amortization and accretion shown separately. |
Three Months Ended March 31, | |||||||
2012 | 2011 | ||||||
Cash flows from operating activities: | |||||||
Net income (loss) | $ | 50,270 | $ | 40,124 | |||
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities: | |||||||
Depreciation, amortization and accretion | 139,400 | 137,273 | |||||
Gains (losses) on retirement of long-term obligations | 7,068 | — | |||||
Amortization of deferred financing costs and other non-cash interest | 24,465 | 25,801 | |||||
Stock-based compensation expense | 9,035 | 9,496 | |||||
Asset write-down charges | 3,044 | 4,401 | |||||
Deferred income tax benefit (provision) | 4,813 | (2,012 | ) | ||||
Other adjustments | 4 | 180 | |||||
Changes in assets and liabilities, excluding the effects of acquisitions: | |||||||
Increase (decrease) in accrued interest | (10,853 | ) | (10,670 | ) | |||
Increase (decrease) in accounts payable | (238 | ) | (9,471 | ) | |||
Increase (decrease) in deferred revenues, deferred ground lease payables, other accrued liabilities and other liabilities | (3,270 | ) | (22,113 | ) | |||
Decrease (increase) in receivables | (2,080 | ) | 6,534 | ||||
Decrease (increase) in prepaid expenses, deferred site rental receivables, long-term prepaid rent, restricted cash and other assets | (59,446 | ) | (52,029 | ) | |||
Net cash provided by (used for) operating activities | 162,212 | 127,514 | |||||
Cash flows from investing activities: | |||||||
Payments for acquisitions of businesses, net of cash acquired | (221,316 | ) | (435 | ) | |||
Capital expenditures | (65,052 | ) | (52,650 | ) | |||
Other investing activities, net | 1,195 | 293 | |||||
Net cash provided by (used for) investing activities | (285,173 | ) | (52,792 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from issuance of long-term debt | 2,095,000 | — | |||||
Proceeds from issuance of capital stock | 195 | 651 | |||||
Principal payments on debt and other long-term obligations | (13,631 | ) | (8,521 | ) | |||
Purchases and redemptions of long-term debt | (648,385 | ) | — | ||||
Purchases of capital stock | (35,476 | ) | (42,225 | ) | |||
Payments under revolving credit facility | (251,000 | ) | (50,000 | ) | |||
Payments for financing costs | (40,237 | ) | — | ||||
Net (increase) decrease in restricted cash | 948 | (526 | ) | ||||
Dividends on preferred stock | (2,481 | ) | (4,969 | ) | |||
Net cash provided by (used for) financing activities | 1,104,933 | (105,590 | ) | ||||
Effect of exchange rate changes on cash | 1,592 | 657 | |||||
Net increase (decrease) in cash and cash equivalents | 983,564 | (30,211 | ) | ||||
Cash and cash equivalents at beginning of period | 80,120 | 112,531 | |||||
Cash and cash equivalents at end of period | $ | 1,063,684 | $ | 82,320 |
CCIC Stockholders | |||||||||||||||||||||||||||||||||
Redeemable Convertible Preferred Stock | Common Stock | ||||||||||||||||||||||||||||||||
Shares | Amount | Shares | ($.01 Par) | Additional Paid-In Capital | AOCI | Accumulated Deficit | Noncontrolling Interest | Total | |||||||||||||||||||||||||
Balance, January 1, 2012 | 6,111,000 | $ | 305,032 | 284,449,372 | $ | 2,844 | $ | 5,312,342 | $ | (116,996 | ) | $ | (2,811,945 | ) | $ | 619 | $ | 2,386,864 | |||||||||||||||
Stock-based compensation related activity, net of forfeitures | — | — | 883,941 | 9 | 9,221 | — | — | — | 9,230 | ||||||||||||||||||||||||
Conversion of redeemable convertible preferred stock into common stock | (6,111,000 | ) | (305,180 | ) | 8,285,905 | 83 | 305,097 | — | — | — | 305,180 | ||||||||||||||||||||||
Purchases and retirement of capital stock | — | — | (690,733 | ) | (7 | ) | (35,469 | ) | — | — | — | (35,476 | ) | ||||||||||||||||||||
Other comprehensive income (loss)(a) | — | — | — | — | — | 23,953 | — | (726 | ) | 23,227 | |||||||||||||||||||||||
Dividends on preferred stock and amortization of issue costs | — | 148 | — | — | — | — | (2,629 | ) | — | (2,629 | ) | ||||||||||||||||||||||
Net income (loss) | — | — | — | — | — | — | 50,031 | 239 | 50,270 | ||||||||||||||||||||||||
Balance, March 31, 2012 | — | $ | — | 292,928,485 | $ | 2,929 | $ | 5,591,191 | $ | (93,043 | ) | $ | (2,764,543 | ) | $ | 132 | $ | 2,736,666 |
CCIC Stockholders | |||||||||||||||||||||||||||||||||
Redeemable Convertible Preferred Stock | Common Stock | ||||||||||||||||||||||||||||||||
Shares | Amount | Shares | ($.01 Par) | Additional Paid-In Capital | AOCI | Accumulated Deficit | Noncontrolling Interest | Total | |||||||||||||||||||||||||
Balance, January 1, 2011 | 6,361,000 | $ | 316,581 | 290,826,284 | $ | 2,908 | $ | 5,581,525 | $ | (178,978 | ) | $ | (2,960,082 | ) | $ | (379 | ) | $ | 2,444,994 | ||||||||||||||
Stock-based compensation related activity, net of forfeitures | — | — | 917,919 | 9 | 10,138 | — | — | — | 10,147 | ||||||||||||||||||||||||
Purchases and retirement of capital stock | — | — | (1,026,331 | ) | (10 | ) | (42,215 | ) | — | — | — | (42,225 | ) | ||||||||||||||||||||
Other comprehensive income (loss)(a) | — | — | — | — | — | 14,781 | — | 376 | 15,157 | ||||||||||||||||||||||||
Dividends on preferred stock and amortization of issue costs | — | 232 | — | — | — | — | (5,201 | ) | — | (5,201 | ) | ||||||||||||||||||||||
Net income (loss) | — | — | — | — | — | — | 40,017 | 107 | 40,124 | ||||||||||||||||||||||||
Balance, March 31, 2011 | 6,361,000 | $ | 316,813 | 290,717,872 | $ | 2,907 | $ | 5,549,448 | $ | (164,197 | ) | $ | (2,925,266 | ) | $ | 104 | $ | 2,462,996 |
(a) | See the statement of operations and other comprehensive income (loss) for the allocation of the components of "other comprehensive income (loss)." |
1. | General |
2. | Summary of Significant Accounting Policies |
3. | Acquisition |
4. | Goodwill and Intangible Assets |
As of March 31, 2012 | As of December 31, 2011 | ||||||||||||||||||||||
Gross Carrying Value | Accumulated Amortization | Net Book Value | Gross Carrying Value | Accumulated Amortization | Net Book Value | ||||||||||||||||||
Site rental contracts and customer relationships | $ | 2,929,569 | $ | (785,754 | ) | $ | 2,143,815 | $ | 2,823,832 | $ | (748,850 | ) | $ | 2,074,982 | |||||||||
Other intangible assets | 152,235 | (52,661 | ) | 99,574 | 152,375 | (49,175 | ) | 103,200 | |||||||||||||||
Total | $ | 3,081,804 | $ | (838,415 | ) | $ | 2,243,389 | $ | 2,976,207 | $ | (798,025 | ) | $ | 2,178,182 |
Three Months Ended March 31, | |||||
2012 | |||||
Amount | Weighted-Average Amortization Period | ||||
(In years) | |||||
Site rental contracts and customer relationships(a) | $ | 105,502 | 29.5 | ||
Other intangible assets | 573 | 10.8 | |||
Total | $ | 106,075 | 29.4 |
(a) | Predominately related to the WCP acquisition. |
Three Months Ended March 31, | |||||||
Classification | 2012 | 2011 | |||||
Depreciation, amortization and accretion | $ | 40,172 | $ | 39,571 | |||
Site rental costs of operations | 808 | 1,120 | |||||
Total amortization expense | $ | 40,980 | $ | 40,691 |
Nine Months Ended December 31, | Years Ending December 31, | ||||||||||||||||||
2012 | 2013 | 2014 | 2015 | 2016 | |||||||||||||||
Estimated annual amortization | $ | 119,473 | $ | 156,673 | $ | 154,383 | $ | 145,473 | $ | 145,466 |
5. | Debt and Other Obligations |
Original Issue Date | Contractual Maturity Date | Outstanding Balance as of March 31, 2012 | Outstanding Balance as of December 31, 2011 | Stated Interest Rate as of March 31, 2012(a) | |||||||||||
Bank debt - variable rate: | |||||||||||||||
Revolver | Jan. 2007 | Sept. 2013 | $ | — | $ | 251,000 | N/A | ||||||||
2012 Revolver | Jan. 2012 | Jan. 2017 | — | (b) | — | N/A | (c) | ||||||||
2007 Term Loans | Jan./March 2007 | March 2014 | — | 619,125 | N/A | ||||||||||
2012 Term Loans | Jan. 2012 | 2017/2019 | 2,091,000 | — | 3.7 | % | (c) | ||||||||
Total bank debt | 2,091,000 | 870,125 | |||||||||||||
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) | 211,954 | 216,431 | 7.0 | % | ||||||||
WCP Securitized Notes | Nov. 2010 | Nov. 2040 | (f) | 334,638 | (f) | — | 5.4 | % | (g) | ||||||
Total securitized debt | 3,996,592 | 3,666,431 | |||||||||||||
High yield bonds - fixed rate: | |||||||||||||||
9% Senior Notes | Jan. 2009 | Jan. 2015 | 815,914 | 817,799 | 9.0 | % | (h) | ||||||||
7.75% Secured Notes | April 2009 | May 2017 | 959,242 | 978,983 | 7.8 | % | (i) | ||||||||
7.125% Senior Notes | Oct. 2009 | Nov. 2019 | 497,954 | 497,904 | 7.1 | % | (j) | ||||||||
7.5% Senior Notes | Dec. 2003 | Dec. 2013 | 51 | 51 | 7.5 | % | |||||||||
Total high yield bonds | 2,273,161 | 2,294,737 | |||||||||||||
Other: | |||||||||||||||
Capital leases and other obligations | Various | Various | (k) | 60,179 | 54,406 | Various | (k) | ||||||||
Total debt and other obligations | 8,420,932 | 6,885,699 | |||||||||||||
Less: current maturities and short-term debt and other current obligations | 77,776 | 32,517 | |||||||||||||
Non-current portion of long-term debt and other long-term obligations | $ | 8,343,156 | $ | 6,853,182 |
(a) | Represents the weighted-average stated interest rate. |
(b) | As of March 31, 2012, the undrawn availability under the $1.0 billion senior secured revolving credit facility ("2012 Revolver") is $1.0 billion. |
(c) | The 2012 Revolver and the Term Loan A bear interest at a per annum rate equal to LIBOR plus 2.0% to 2.75%, based on CCOC's total net leverage ratio. Term Loan B bears interest at a per annum rate equal to LIBOR plus 3.0% (with LIBOR subject to a floor of 1% per annum). The Company pays a commitment fee of 0.4% per annum on the undrawn available amount under the 2012 Revolver. |
(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 (of 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 $142.0 million of principal as of March 31, 2012 that amortizes through 2019, and $70.0 million of principal as of March 31, 2012 that amortizes during the period beginning in 2019 and ending in 2029. |
(f) | The WCP securitized notes ("WCP Securitized Notes") were assumed in connection with the WCP acquisition. The WCP Securitized Notes include a fair |
(g) | The effective yield is approximately 4.0%, inclusive of the fair value adjustment. |
(h) | The effective yield is approximately 11.3%, inclusive of the discount. |
(i) | The effective yield is approximately 8.2%, inclusive of the discount. |
(j) | The effective yield is approximately 7.2%, inclusive of the discount. |
(k) | The Company's capital leases and other obligations bear interest rates up to 10% and mature in periods ranging from less than one year to approximately 20 years. |
Nine Months Ended December 31, | Years Ending December 31, | Unamortized Adjustments, Net | Total Debt and Other Obligations Outstanding | ||||||||||||||||||||||||||||||||
2012 | 2013 | 2014 | 2015 | 2016 | Thereafter | Total Cash Obligations | |||||||||||||||||||||||||||||
Scheduled contractual maturities | $ | 61,715 | $ | 86,360 | $ | 95,984 | $ | 969,577 | $ | 110,499 | $ | 7,148,726 | $ | 8,472,861 | $ | (51,929 | ) | $ | 8,420,932 |
Three Months Ended March 31, 2012 | |||||||||||
Principal Amount | Cash Paid(a) | Gains (Losses)(c) | |||||||||
Revolver | $ | 251,000 | $ | 251,000 | $ | (1,445 | ) | ||||
2007 Term Loans | 619,125 | 619,125 | (1,893 | ) | |||||||
9% Senior Notes | 5,624 | 6,207 | (957 | ) | |||||||
7.75% Secured Notes(b) | 20,988 | 23,053 | (2,773 | ) | |||||||
Total | $ | 896,737 | $ | 899,385 | $ | (7,068 | ) |
(a) | Exclusive of accrued interest. |
(b) | These debt purchases were made by CCIC rather than by the subsidiaries that issued the debt, because of restrictions upon the subsidiaries that issued the debt; as a result, the debt remains outstanding at the Company's subsidiaries. |
(c) | Inclusive of $3.7 million related to the write off of deferred financing costs. |
Three Months Ended March 31, | |||||||
2012 | 2011 | ||||||
Interest expense on debt obligations | $ | 113,007 | $ | 100,885 | |||
Amortization of deferred financing costs | 4,812 | 3,722 | |||||
Amortization of adjustments on long-term debt | 3,763 | 3,865 | |||||
Amortization of interest rate swaps | 16,338 | 17,889 | |||||
Other, net of capitalized interest | (448 | ) | 325 | ||||
Total | $ | 137,472 | $ | 126,686 |
6. | Income Taxes |
7. | Redeemable Convertible Preferred Stock |
8. | Fair Value Disclosures |
Level in Fair Value Hierarchy | March 31, 2012 | December 31, 2011 | |||||||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||||
Assets: | |||||||||||||||||
Cash and cash equivalents | 1 | $ | 1,063,684 | $ | 1,063,684 | $ | 80,120 | $ | 80,120 | ||||||||
Restricted cash, current and non-current | 1 | 293,969 | 293,969 | 257,368 | 257,368 | ||||||||||||
Liabilities: | |||||||||||||||||
Long-term debt and other obligations | 2 | 8,420,932 | 9,007,977 | 6,885,699 | 7,355,652 |
9. | Per Share Information |
Three Months Ended March 31, | |||||||
2012 | 2011 | ||||||
Net income (loss) attributable to CCIC stockholders | $ | 50,031 | $ | 40,017 | |||
Dividends on preferred stock | (2,629 | ) | (5,201 | ) | |||
Net income (loss) attributable to CCIC common stockholders after deduction of dividends on preferred stock for basic and diluted computations | $ | 47,402 | $ | 34,816 | |||
Weighted-average number of common shares outstanding (in thousands): | |||||||
Basic weighted-average number of common stock outstanding | 284,913 | 286,998 | |||||
Effect of assumed dilution from potential common shares relating to stock options and restricted stock awards | 940 | 2,007 | |||||
Diluted weighted-average number of common shares outstanding | 285,853 | 289,005 | |||||
Net income (loss) attributable to CCIC common stockholders after deduction of dividends on preferred stock, per common share: | |||||||
Basic | $ | 0.17 | $ | 0.12 | |||
Diluted | $ | 0.17 | $ | 0.12 |
10. | Commitments and Contingencies |
11. | Operating Segments |
Three Months Ended March 31, 2012 | Three Months Ended March 31, 2011 | ||||||||||||||||||||||||||||||
CCUSA | CCAL | Eliminations | Consolidated Total | CCUSA | CCAL | Eliminations | Consolidated Total | ||||||||||||||||||||||||
Net revenues: | |||||||||||||||||||||||||||||||
Site rental | $ | 468,119 | $ | 29,410 | $ | — | $ | 497,529 | $ | 430,643 | $ | 25,553 | $ | — | $ | 456,196 | |||||||||||||||
Network services and other | 46,968 | 7,248 | — | 54,216 | 37,664 | 5,179 | — | 42,843 | |||||||||||||||||||||||
Net revenues | 515,087 | 36,658 | — | 551,745 | 468,307 | 30,732 | — | 499,039 | |||||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||||||||
Costs of operations:(a) | |||||||||||||||||||||||||||||||
Site rental | 113,944 | 8,927 | — | 122,871 | 110,425 | 7,990 | — | 118,415 | |||||||||||||||||||||||
Network services and other | 26,802 | 4,719 | — | 31,521 | 23,957 | 3,267 | — | 27,224 | |||||||||||||||||||||||
General and administrative | 43,653 | 7,348 | — | 51,001 | 39,597 | 5,147 | — | 44,744 | |||||||||||||||||||||||
Asset write-down charges | 3,033 | 11 | — | 3,044 | 4,357 | 44 | — | 4,401 | |||||||||||||||||||||||
Acquisition and integration costs | 1,652 | 28 | — | 1,680 | 554 | — | — | 554 | |||||||||||||||||||||||
Depreciation, amortization and accretion | 131,641 | 7,759 | — | 139,400 | 129,976 | 7,297 | — | 137,273 | |||||||||||||||||||||||
Total operating expenses | 320,725 | 28,792 | — | 349,517 | 308,866 | 23,745 | — | 332,611 | |||||||||||||||||||||||
Operating income (loss) | 194,362 | 7,866 | — | 202,228 | 159,441 | 6,987 | — | 166,428 | |||||||||||||||||||||||
Interest expense and amortization of deferred financing costs | (137,459 | ) | (5,337 | ) | 5,324 | (137,472 | ) | (126,361 | ) | (5,942 | ) | 5,617 | (126,686 | ) | |||||||||||||||||
Gains (losses) on retirement of long-term obligations | (7,068 | ) | — | — | (7,068 | ) | — | — | — | — | |||||||||||||||||||||
Interest income | 197 | 157 | — | 354 | 70 | 101 | — | 171 | |||||||||||||||||||||||
Other income (expense) | 4,287 | (40 | ) | (5,324 | ) | (1,077 | ) | 5,013 | (2 | ) | (5,617 | ) | (606 | ) | |||||||||||||||||
Benefit (provision) for income taxes | (6,174 | ) | (521 | ) | — | (6,695 | ) | 1,369 | (552 | ) | — | 817 | |||||||||||||||||||
Net income (loss) | 48,145 | 2,125 | — | 50,270 | 39,532 | 592 | — | 40,124 | |||||||||||||||||||||||
Less: Net income (loss) attributable to the noncontrolling interest | (210 | ) | 449 | — | 239 | — | 107 | — | 107 | ||||||||||||||||||||||
Net income (loss) attributable to CCIC stockholders | $ | 48,355 | $ | 1,676 | $ | — | $ | 50,031 | $ | 39,532 | $ | 485 | $ | — | $ | 40,017 | |||||||||||||||
Capital expenditures | $ | 62,214 | $ | 2,838 | $ | — | $ | 65,052 | $ | 51,246 | $ | 1,404 | $ | — | $ | 52,650 |
(a) | Exclusive of depreciation, amortization and accretion shown separately. |
Three Months Ended March 31, 2012 | Three Months Ended March 31, 2011 | ||||||||||||||||||||||||||||||
CCUSA | CCAL | Eliminations | Consolidated Total | CCUSA | CCAL | Eliminations | Consolidated Total | ||||||||||||||||||||||||
Net income (loss) | $ | 48,145 | $ | 2,125 | $ | — | $ | 50,270 | $ | 39,532 | $ | 592 | $ | — | $ | 40,124 | |||||||||||||||
Adjustments to increase (decrease) net income (loss): | |||||||||||||||||||||||||||||||
Asset write-down charges | 3,033 | 11 | — | 3,044 | 4,357 | 44 | — | 4,401 | |||||||||||||||||||||||
Acquisition and integration costs | 1,652 | 28 | — | 1,680 | 554 | — | — | 554 | |||||||||||||||||||||||
Depreciation, amortization and accretion | 131,641 | 7,759 | — | 139,400 | 129,976 | 7,297 | — | 137,273 | |||||||||||||||||||||||
Amortization of prepaid lease purchase price adjustments | 2,550 | — | — | 2,550 | — | — | — | — | |||||||||||||||||||||||
Interest expense and amortization of deferred financing costs | 137,459 | 5,337 | (5,324 | ) | 137,472 | 126,361 | 5,942 | (5,617 | ) | 126,686 | |||||||||||||||||||||
Gains (losses) on retirement of long-term obligations | 7,068 | — | — | 7,068 | — | — | — | — | |||||||||||||||||||||||
Interest income | (197 | ) | (157 | ) | — | (354 | ) | (70 | ) | (101 | ) | — | (171 | ) | |||||||||||||||||
Other income (expense) | (4,287 | ) | 40 | 5,324 | 1,077 | (5,013 | ) | 2 | 5,617 | 606 | |||||||||||||||||||||
Benefit (provision) for income taxes | 6,174 | 521 | — | 6,695 | (1,369 | ) | 552 | — | (817 | ) | |||||||||||||||||||||
Stock-based compensation expense | 9,035 | 2,123 | — | 11,158 | 9,496 | 1,169 | — | 10,665 | |||||||||||||||||||||||
Adjusted EBITDA | $ | 342,273 | $ | 17,787 | $ | — | $ | 360,060 | $ | 303,824 | $ | 15,497 | $ | — | $ | 319,321 |
12. | Stock-Based Compensation |
Number of Shares | ||
(In thousands of shares) | ||
Shares outstanding at January 1, 2012 | 3,403 | |
Shares granted(a) | 836 | |
Shares vested(b) | (1,942 | ) |
Shares forfeited | (8 | ) |
Shares outstanding at March 31, 2012 | 2,289 |
(a) | Weighted-average grant-date fair value of $38.28 per share and a weighted-average requisite service period of 2.5 years. The awards with market conditions included an expected volatility of 31% in the Monte Carlo simulation used to measure grant-date fair value. |
(b) | Fair value on vesting date of $99.7 million. |
13. | Supplemental Cash Flow Information |
Three Months Ended March 31, | |||||||
2012 | 2011 | ||||||
Supplemental disclosure of cash flow information: | |||||||
Interest paid | $ | 123,140 | $ | 111,555 | |||
Income taxes paid | 884 | 642 | |||||
Supplemental disclosure of non-cash financing activities: | |||||||
Assets acquired through capital leases and installment sales | 7,782 | 7,061 | |||||
Conversion of redeemable convertible preferred stock (note 7) | 305,180 | — |
14. | Subsequent Events |
ITEM 2. | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
• | Potential growth resulting from wireless network expansion and new entrants (see also the discussion below of wireless industry reports) |
◦ | We expect wireless carriers will continue their focus on improving network quality and expanding capacity by adding additional antennas and other equipment on our wireless infrastructure. |
◦ | We expect existing and potential new wireless carrier demand for our wireless infrastructure will result from (1) next generation technologies, (2) continued development of mobile internet applications, (3) adoption of other emerging and embedded wireless devices, (4) increasing smartphone penetration, and (5) wireless carrier focus on improving coverage and capacity. |
◦ | Substantially all of our wireless infrastructure can accommodate another tenant, either as currently constructed or with appropriate modifications to the structure. |
◦ | U.S. wireless carriers continue to invest in their networks. |
◦ | We expect our site rental revenues will grow approximately 10% from full year 2011 to full year 2012, inclusive of the impacts of the WCP and NextG acquisitions. We expect our new tenant additions, inclusive of the estimated impact from Sprint as it deploys network enhancements (referred to as Network Vision), will result in an approximately 5% year-over-year growth in site rental revenues from full year 2011 to full year 2012. Our 2012 site rental revenue growth expectations do not assume any net contribution to growth from the existing base of business (which has historically contributed approximately 4% per annum to our site rental revenue growth) as the increase attributable to lease escalations and straight-line impact of renewals is expected to be offset by the timing of expected cancellation of customer contracts due to prior wireless carrier consolidation. |
• | Site rental revenues under long-term customer contracts with contractual escalations |
◦ | Initial terms of five to 15 years with multiple renewal periods at the option of the tenant of five to ten years each. |
◦ | Weighted-average remaining term of approximately nine years, exclusive of renewals at the customer's option, representing approximately $18 billion of expected future cash inflows, pro forma for the NextG acquisition. |
• | Revenues predominately from large wireless carriers |
◦ | Verizon Wireless, AT&T, Sprint Nextel and T-Mobile accounted for 75% of consolidated revenues. |
• | Majority of land interests under our towers under long-term control |
◦ | Approximately 89% and 72% of our site rental gross margin is derived from towers that we own or control for greater than ten and 20 years, respectively. The aforementioned percentages include towers that reside on land interests that are owned in fee or where we have perpetual or long-term easements in the land and other property interests, which represent approximately 34% of our site rental gross margin. |
• | Relatively fixed wireless infrastructure operating costs with high incremental margins and cash flows on organic revenue growth |
◦ | Our wireless infrastructure operating costs tend to increase at approximately the rate of inflation and are not |
◦ | Our incremental margin on additional site rental revenues represents 91% of the related increase in site rental revenues. |
• | Minimal sustaining capital expenditure requirements |
◦ | Sustaining capital expenditures were $4.2 million, which represented less than one quarter of a percent of net revenues. |
• | Debt portfolio with long-dated maturities extended over multiple years, with the vast majority of such debt having a fixed rate (see "Item 3. Quantitative and Qualitative Disclosures About Market Risk" for a further discussion of our debt) |
◦ | 75% of our debt has fixed rate coupons. |
◦ | Our debt service coverage and leverage ratios were comfortably within their respective covenant requirements. See "Item 2. MD&A—Liquidity and Capital Resources" for a further discussion of our debt covenants. |
• | Significant cash flows from operations |
◦ | Net cash provided by operating activities was $162.2 million. |
◦ | We believe our site rental business can be characterized as a stable cash flow stream, which we expect to grow as a result of future demand for our wireless infrastructure. |
• | Capital allocated to drive long-term shareholder value (per share) (see also "Item 2. MD&A—Liquidity and Capital Resources") |
◦ | Historical discretionary investments include (in no particular order): purchasing our own common stock, acquiring or constructing wireless infrastructure, acquiring land interests under our towers, improving and structurally enhancing our existing wireless infrastructure, and purchasing or redeeming our debt. |
◦ | Discretionary investments included: (1) the acquisitions of WCP and NextG for an aggregate purchase price of approximately $1.5 billion, (2) $60.8 million in capital expenditures, (3) the purchase of 0.7 million shares of common stock for $35.5 million, and (4) the purchase of $26.6 million of face value of debt using $29.6 million. |
◦ | In December 2011, we entered into a definitive agreement to acquire NextG for approximately $1.0 billion in cash, subject to certain adjustments. Upon closing in April 2012, NextG had over 7,000 nodes on-air and approximately 1,500 nodes under construction. |
◦ | In January 2012, we acquired certain subsidiaries of WCP for a purchase price of $214.7 million, including $39.2 million of restricted cash and excluding the assumption of $336.3 million (after fair value adjustments) of debt.. Upon closing in January 2012, WCP held various contracts with wireless site owners, including approximately 2,300 ground lease related assets. |
◦ | In January 2012, we refinanced and repaid our credit facility and term loans with the proceeds of a $3.1 billion senior secured credit facility; the proceeds of such credit facility were also used to fund the cash consideration of the WCP and NextG acquisitions. |
• | Consumers have increased their use of wireless data services according to recent U.S. wireless industry reports.(a) |
◦ | U.S. mobile data traffic grew 172% during 2011; |
◦ | The number of smartphones in the U.S. grew 59% during 2011, reaching 128 million, and is expected to grow to 232 million by 2016; |
◦ | Smartphones accounted for 24% of total mobile data traffic in the U.S. at the end of 2011 and are expected to account for 60% in 2016; and |
◦ | While 4G connections represent only 0.2% of mobile connections, they account for 6% of mobile data traffic. In 2011, a 4G connection generated 28 times more mobile data traffic on average than a non-4G connection. |
(a) | Source: Cisco |
Three Months Ended March 31, 2012 | Three Months Ended March 31, 2011 | |||||||||||||||
Amount | Percent of Net Revenues | Amount | Percent of Net Revenues | Percent Change(b) | ||||||||||||
(Dollars in thousands) | ||||||||||||||||
Net revenues: | ||||||||||||||||
Site rental | $ | 497,529 | 90 | % | $ | 456,196 | 91 | % | 9 | % | ||||||
Network services and other | 54,216 | 10 | % | 42,843 | 9 | % | 27 | % | ||||||||
Net revenues | 551,745 | 100 | % | 499,039 | 100 | % | 11 | % | ||||||||
Operating expenses: | ||||||||||||||||
Costs of operations(a): | ||||||||||||||||
Site rental | 122,871 | 25 | % | 118,415 | 26 | % | 4 | % | ||||||||
Network services and other | 31,521 | 58 | % | 27,224 | 64 | % | 16 | % | ||||||||
Total costs of operations | 154,392 | 28 | % | 145,639 | 29 | % | 6 | % | ||||||||
General and administrative | 51,001 | 9 | % | 44,744 | 9 | % | 14 | % | ||||||||
Asset write-down charges | 3,044 | 1 | % | 4,401 | 1 | % | * | |||||||||
Acquisition and integration costs | 1,680 | — | 554 | — | * | |||||||||||
Depreciation, amortization and accretion | 139,400 | 25 | % | 137,273 | 28 | % | 2 | % | ||||||||
Total operating expenses | 349,517 | 63 | % | 332,611 | 67 | % | 5 | % | ||||||||
Operating income (loss) | 202,228 | 37 | % | 166,428 | 33 | % | 22 | % | ||||||||
Interest expense and amortization of deferred financing costs | (137,472 | ) | (126,686 | ) | ||||||||||||
Gains (losses) on retirement of long-term obligations | (7,068 | ) | — | |||||||||||||
Interest income | 354 | 171 | ||||||||||||||
Other income (expense) | (1,077 | ) | (606 | ) | ||||||||||||
Income (loss) before income taxes | 56,965 | 39,307 | ||||||||||||||
Benefit (provision) for income taxes | (6,695 | ) | 817 | |||||||||||||
Net income (loss) | 50,270 | 40,124 | ||||||||||||||
Less: Net income (loss) attributable to the noncontrolling interest | 239 | 107 | ||||||||||||||
Net income (loss) attributable to CCIC stockholders | $ | 50,031 | $ | 40,017 |
* | Percentage is not meaningful |
(a) | Exclusive of depreciation, amortization and accretion shown separately. |
(b) | Inclusive of the impact of foreign exchange rate fluctuations. See "Item 2. MD&A—Comparison of Operating Segments—CCAL." |
March 31, 2012 | |||
(In thousands of dollars) | |||
Cash and cash equivalents(a) | $ | 94,874 | |
Undrawn revolving credit facility availability(b) | 1,000,000 | ||
Debt and other long-term obligations | 8,429,875 | ||
Stockholders' equity | 2,724,699 |
(a) | Exclusive of restricted cash. |
(b) | Availability at any point in time is subject to certain restrictions based on the maintenance of financial covenants contained in our credit agreement. See "Item 2. MD&A—Liquidity and Capital Resources—Financing Activities" and "Item 2. MD&A—Liquidity and Capital Resources—Debt Covenants." |
• | We expect that our cash on hand, undrawn revolving credit facility availability and net cash provided by operating activities (net of cash interest payments) should be sufficient to cover our expected (1) debt service obligations of $77.8 million (principal payments) and (2) capital expenditures of roughly $300 million (sustaining and discretionary). As CCIC and CCOC are holding companies, this cash flow from operations is generated by our operating subsidiaries. |
• | We have no debt maturities other than principal payments on amortizing debt. We do not anticipate the need to access the capital markets to refinance our existing debt until at least 2015. See "Item 3. Quantitative and Qualitative Disclosures About Market Risk" for a tabular presentation of our debt maturities as of March 31, 2012. |
Three Months Ended March 31, | |||||||||||
2012 | 2011 | Change | |||||||||
(In thousands of dollars) | |||||||||||
Net cash provided by (used for): | |||||||||||
Operating activities | $ | 162,212 | $ | 127,514 | $ | 34,698 | |||||
Investing activities | (285,173 | ) | (52,792 | ) | (232,381 | ) | |||||
Financing activities | 1,104,933 | (105,590 | ) | 1,210,523 | |||||||
Effect of exchange rate changes on cash | 1,592 | 657 | 935 | ||||||||
Net increase (decrease) in cash and cash equivalents | $ | 983,564 | $ | (30,211 | ) | $ | 1,013,775 |
Three Months Ended March 31, | |||||||||||
2012 | 2011 | Change | |||||||||
(In thousands of dollars) | |||||||||||
Discretionary: | |||||||||||
Purchases of land interests | $ | 27,949 | $ | 22,379 | $ | 5,570 | |||||
Wireless infrastructure improvements and other | 25,898 | 16,077 | 9,821 | ||||||||
Construction of wireless infrastructure | 6,986 | 11,067 | (4,081 | ) | |||||||
Sustaining | 4,219 | 3,127 | 1,092 | ||||||||
Total | $ | 65,052 | $ | 52,650 | $ | 12,402 |
Covenant Description | Type | Debt | Current Covenant Requirement | As of March 31, 2012(a) | Latest Issuance Date | |||||
CCIC: | ||||||||||
Leverage ratio | Restrictive | (g) | 9% Senior Notes | ≤7.00 | 6.0 | 6.7 | ||||
Leverage ratio | Restrictive | (g) | 7.125% Senior Notes | ≤7.00 | 6.0 | 6.3 | ||||
CCOC: | ||||||||||
Net leverage ratio(b) | Maintenance | (h) | Credit Agreement | ≤6.0 | 4.9 | 4.8 | ||||
Interest coverage ratio(c) | Maintenance | (h) | Credit Agreement | ≥2.5 | 4.0 | 3.9 | ||||
Tower and third party land interest companies: | ||||||||||
Debt service coverage ratio(d)(e) | Cash Trap | (i) | 2010 Tower Revenue Notes | >1.75 | 3.6 | 3.1 | ||||
Debt service coverage ratio(d)(e) | Cash Trap | (i) | 2009 Securitized Notes | >1.30 | 3.1 | 2.4 | ||||
Fixed charge coverage ratio(d)(e) | Cash Trap | (i) | 7.75% Secured Notes | >1.35 | 3.2 | 2.5 | ||||
Debt service coverage ratio(f) | Cash Trap | (i) | WCP Securitized Notes | ≥1.30 | 1.9 | N/A |
(a) | Pro forma for the NextG acquisition. |
(b) | The Total Net Leverage Ratio for CCOC is calculated as the ratio of Total Indebtedness (excluding debt held by CCIC) less Unrestricted Cash (as defined in the credit agreement and calculated in accordance with GAAP) to Consolidated EBITDA (as defined in the credit agreement) for the most recently completed quarter multiplied by four. In March 2014, the covenant requirement decreases to a maximum Total Net Leverage Ratio of 5.5 to 1.0. Consolidated EBITDA is calculated in substantially the same manner as Adjusted EBITDA used in our segment reporting, which is discussed further in "Item 2. MD&A—Accounting and Reporting Matters—Non-GAAP Financial Measures" and note 11 to our consolidated financial statements. |
(c) | The Consolidated Interest Coverage Ratio for CCOC is calculated as the ratio of Consolidated EBITDA for the most recently completed quarter multiplied by four to Consolidated Pro forma Debt Service (as defined in the credit agreement). Consolidated Pro forma Debt Service is calculated as interest to be paid over the succeeding 12 months on the principal balance of debt (excluding debt held by CCIC, CCOC or any restricted subsidiary) then outstanding based on the then current interest rate for such debt. |
(d) | The 2009 securitized notes and 2010 tower revenue notes also have amortization coverage thresholds of 1.15 and 1.45, respectively, which could result in applying current and future cash in the reserve account to prepay the debt with applicable prepayment consideration. For the 7.75% secured notes, if the Consolidated Fixed Charge Coverage Ratio is equal to or less than 1.20 and the aggregate amount of cash deposited in the Cash Trap Reserve Sub-account (as defined in the indenture) exceeds $100.0 million, the issuing subsidiaries will be required to commence an offer to purchase the 7.75% secured notes using the cash in such account. See note (e) below for a discussion of the calculation of the Debt Service Coverage Ratio and Consolidated Fixed Charge Coverage Ratio. |
(e) | The Debt Service Coverage Ratio and Consolidated Fixed Charge Coverage Ratio are both calculated as site rental revenue (in accordance with GAAP), less: (1) cost of operations (in accordance with GAAP), (2) straight-line rental revenues, (3) straight-line ground lease expenses, (4) management fees, and (5) sustaining capital expenditures, using the results for the previous 12 months then ended to the amount of interest to be paid over the succeeding 12 months per the terms of the respective agreement. |
(f) | We assumed $320.1 million face value of debt in connection with the WCP acquisition. The Debt Service Coverage Ratio on the WCP securitized debt is calculated as Net Cash Flow (as defined in the indenture) less: (1) the Series 2010-1 Class A Targeted Amortization Amounts (as defined in the indenture) for the immediately succeeding 12 payment dates and (2) the Unpaid Series 2010-1 Class A Monthly Amortization Amount (as defined in the indenture) to the payments of interest that the issuers of such debt will be required to pay on the succeeding 12 payment dates on the principal balance of the WCP securitized notes plus the Indenture Trustee Fee and Servicing Fee (as defined in the indenture) payable during such 12 month period. The WCP securitized debt also has an amortization threshold of 1.15, which could result in applying all Excess Cash Flow (as defined in the indenture) to prepay principal amounts with applicable prepayment consideration. In addition, if the Non-Performing Wireless Site Contract Ratio (as defined in the indenture) on the WCP securitized notes is greater than 10%, it could result in applying all Excess Cash Flow to prepay principal amounts with applicable prepayment consideration. |
(g) | The 9% senior notes and 7.125% senior notes contain restrictive covenants with which CCIC and our restricted subsidiaries must comply, subject to a number of exceptions and qualifications, including restrictions on our ability to incur incremental debt, issue preferred stock, guarantee debt, pay dividends, repurchase our capital stock, use assets as security in other transactions, sell assets or merge with or into other companies, and make certain investments. Certain of these covenants are not applicable if there is no event of default and if the ratio of our Consolidated Debt (as defined in the senior notes indenture) to our Adjusted Consolidated Cash Flows (as defined in the senior notes indenture) is less than 7.0 to 1.0. |
(h) | Failure to comply with the ratios applicable to the financial maintenance could result in default under our credit agreement. |
(i) | Failure to comply with the cash trap reserve covenants would require the cash flows generated by the issuers and their subsidiaries to be deposited in a reserve account and not released to us. |
• | it is the primary measure used by our management to evaluate the economic productivity of our operations, including the efficiency of our employees and the profitability associated with their performance, the realization of contract revenues under our long-term contracts, our ability to obtain and maintain our customers and our ability to operate our site rental business effectively; |
• | it is the primary measure of profit and loss used by our management for purposes of making decisions about allocating resources to, and assessing the performance of, our operating segments; |
• | it is similar to the measure of current financial performance generally used in our debt covenant calculations; |
• | although specific definitions may vary, it is widely used in the tower sector and other similar providers of wireless infrastructure to measure operating performance without regard to items such as depreciation, amortization and accretion which can vary depending upon accounting methods and the book value of assets; and |
• | we believe it helps investors meaningfully evaluate and compare the results of our operations (1) from period to period and (2) to our competitors by removing the impact of our capital structure (primarily interest charges from our outstanding debt) and asset base (primarily depreciation, amortization and accretion) from our operating results. |
• | with respect to compliance with our debt covenants, which require us to maintain certain financial ratios including, or similar to, Adjusted EBITDA; |
• | as the primary measure of profit and loss for purposes of making decisions about allocating resources to, and assessing the performance of, our operating segments; |
• | as a performance goal in employee annual incentive compensation; |
• | as a measurement of operating performance because it assists us in comparing our operating performance on a consistent basis as it removes the impact of our capital structure (primarily interest charges from our outstanding debt) and asset base (primarily depreciation, amortization and accretion) from our operating results; |
• | in presentations to our board of directors to enable it to have the same measurement of operating performance used by management; |
• | for planning purposes, including preparation of our annual operating budget; |
• | as a valuation measure in strategic analyses in connection with the purchase and sale of assets; and |
• | in determining self-imposed limits on our debt levels, including the evaluation of our leverage ratio and interest coverage ratio. |
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
• | the potential refinancing of our existing debt ($8.5 billion and $7.0 billion outstanding at March 31, 2012 and December 31, 2011, respectively); |
• | our $2.1 billion of floating rate debt representing approximately 25% of our total debt, compared to 13% of our total debt as of December 31, 2011; and |
• | potential future borrowings of incremental debt. |
Future Principal Payments and Interest Rates by the Debt Instruments' Contractual Year of Maturity | |||||||||||||||||||||||||||||||
2012 | 2013 | 2014 | 2015 | 2016 | Thereafter | Total | Fair Value(a) | ||||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||||||||
Debt: | |||||||||||||||||||||||||||||||
Fixed rate(c) | $ | 30,965 | $ | 45,360 | $ | 45,609 | $ | 906,702 | $ | 44,499 | $ | 5,308,726 | (c) | $ | 6,381,861 | (c) | $ | 6,933,915 | |||||||||||||
Average interest rate(b)(c) | 5.1 | % | 4.8 | % | 4.9 | % | 8.8 | % | 5.0 | % | 9.2 | % | (c) | 9.0 | % | (c) | |||||||||||||||
Variable rate | $ | 30,750 | $ | 41,000 | $ | 50,375 | $ | 62,875 | $ | 66,000 | $ | 1,840,000 | $ | 2,091,000 | $ | 2,074,062 | |||||||||||||||
Average interest rate(d) | 3.2 | % | 3.2 | % | 3.1 | % | 3.1 | % | 3.1 | % | 3.8 | % | 3.7 | % |
(a) | The fair value of our debt is based on indicative, non-binding quotes from brokers. Quotes from the 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 offers. These fair values are not necessarily indicative of the amount which could be realized in a current market exchange. |
(b) | The average interest rate represents the weighted-average stated coupon rate (see footnote (c)). |
(c) | The impact of principal payments that commence if the applicable debt is not repaid or refinanced on or prior to the anticipated repayment dates are not considered. The anticipated repayment dates are 2015, 2017 and 2020, as applicable, for the 2010 tower revenue notes. If the tower revenue notes are not repaid in full by their anticipated repayment dates, the applicable interest rate increases by an additional approximately 5% per annum and monthly principal payments commence using the Excess Cash Flow of the issuers of the tower revenue notes. The tower revenue notes are presented based on their contractual maturity dates between 2035 and 2040 and include the impact of an assumed 5% increase in interest rate that would occur following the anticipated repayment dates but exclude the impact of monthly principal payments that would commence using Excess Cash Flow of the issuers of the tower revenue notes. The full year 2011 Excess Cash Flow of the issuers was approximately $456 million. The anticipated repayment date is 2015 for each class of the WCP securitized notes. If the WCP securitized notes are not repaid in full by their anticipated repayment dates, the applicable interest rate increases by an additional approximately 5% per annum. If the WCP securitized notes are not repaid in full by their rapid amortization date of 2017, monthly principal payments commence using the Excess Cash Flow of the Issuers of the WCP securitized notes. The WCP securitized notes are presented based on their contractual maturity dates in 2040. The full year 2011 Excess Cash Flow of Issuers of the WCP securitized notes was approximately $17 million. We acquired restricted cash of $29.5 million that if not spent on third party land interests by November 2012 will be required to be used to repay principal amounts outstanding on the WCP debt. |
ITEM 4. | CONTROLS AND PROCEDURES |
ITEM 1A. | RISK FACTORS |
• | disrupt our business relationships with our customers, depending on the nature of or counterparty to such transactions and activities; |
• | direct the time and attention of management away from other business operations toward such transactions and activities, including integrations; |
• | fail to achieve revenue or margin targets, operational synergies or other benefits contemplated; |
• | increase operational risk or volatility in our business; or |
• | result in current and prospective employees experiencing uncertainty about their future roles with us, which might adversely affect our ability to retain or attract key managers and other employees. |
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs | |||||||||
(In thousands) | |||||||||||||
January 1 - January 31, 2012 | — | $ | — | — | — | ||||||||
February 1 - February 29, 2012 | 690 | 51.36 | — | — | |||||||||
March 1 - March 31, 2012 | 1 | 53.89 | — | — | |||||||||
Total | 691 | $ | 51.36 | — | — |
ITEM 6. | EXHIBITS |
Exhibit No. | Description | |
(d) 3.1 | Composite Certificate of Incorporation of Crown Castle International Corp. | |
(d) 3.2 | Composite By-laws of Crown Castle International Corp. | |
(a) 4.1 | Indenture dated as of November 9, 2010, between WCP Wireless Site Funding LLC, WCP Wireless Site RE Funding LLC, WCP Wireless Site Non-RE Funding LLC, WCP Wireless Lease Subsidiary, LLC, MW Cell REIT 1 LLC and MW Cell TRS 1 LLC, and Deutsche Bank Trust Company Americas, as indenture trustee | |
(a) 4.2 | Series 2010-1 Indenture Supplement dated as of November 9, 2010, between WCP Wireless Site Funding LLC, WCP Wireless Site RE Funding LLC, WCP Wireless Site Non-RE Funding LLC, WCP Wireless Lease Subsidiary, LLC, MW Cell REIT 1 LLC and MW Cell TRS 1 LLC, and Deutsche Bank Trust Company Americas, as indenture trustee | |
(d) 4.3 | Form of Indenture between Crown Castle International Corp. and The Bank of New York Mellon Trust Company, N.A., as trustee | |
(a) 10.1 | Credit Agreement dated as of January 31, 2012, among Crown Castle International Corp., Crown Castle Operating Company, as borrower, the lenders and issuing banks party thereto, The Royal Bank of Scotland plc, as administrative agent, and Morgan Stanley Senior Funding Inc., as co-documentation agent | |
(b) 10.2 | Agreement and Plan of Merger, dated as of December 15, 2011, by and among Crown Castle International Corp., Crown Castle NG Acquisitions Corp., NextG Networks, Inc. and Madison Dearborn Capital Partners V-A, L.P., solely in its capacity as the Representative | |
(c) 10.3 | 2012 EMT Annual Incentive Plan | |
(c) 10.4 | Summary of Non-Employee Director Compensation | |
31.2 | Certification of Chief Financial Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002 | |
32.1 | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002 | |
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema Document | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
(a) | Incorporated by reference to the exhibit previously filed by the Registrant on Form 8-K (Registration No. 001-16441) on February 3,2012. |
(b) | Incorporated by reference to the exhibit previously filed by the Registrant on Form 10-K (Registration No. 001-16441) on February 13, 2012. |
(c) | Incorporated by reference to the exhibit previously filed by the Registrant on Form 8-K (Registration No. 001-16441) on February 24, 2012. |
(d) | Incorporated by reference to the exhibit previously filed by the Registrant on Form S-3 (Registration No. 333-180526) on April 3, 2012. |
CROWN CASTLE INTERNATIONAL CORP. | ||||
Date: | May 3, 2012 | By: | /s/ Jay A. Brown | |
Jay A. Brown | ||||
Senior Vice President, | ||||
Chief Financial Officer and Treasurer | ||||
(Principal Financial Officer) | ||||
Date: | May 3, 2012 | By: | /s/ Rob A. Fisher | |
Rob A. Fisher | ||||
Vice President and Controller | ||||
(Principal Accounting Officer) |
1. | I have reviewed this report on Form 10-Q of Crown Castle International Corp. (“registrant”); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ W. Benjamin Moreland | ||
W. Benjamin Moreland President and Chief Executive Officer |
1. | I have reviewed this report on Form 10-Q of Crown Castle International Corp. (“registrant”); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ Jay A. Brown | ||
Jay A. Brown Senior Vice President, Chief Financial Officer and Treasurer |
1) | the Report complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of March 31, 2012 (the last date of the period covered by the Report). |
/s/ W. Benjamin Moreland | ||
W. Benjamin Moreland President and Chief Executive Officer | ||
May 3, 2012 | ||
/s/ Jay A. Brown | ||
Jay A. Brown Senior Vice President, Chief Financial Officer and Treasurer | ||
May 3, 2012 |
Per Share Information (Reconciliation of the Numerators and Denominators of the Basic and Diluted Per Share Computations) (Details) (USD $)
In Thousands, except Share data, unless otherwise specified |
3 Months Ended | |
---|---|---|
Mar. 31, 2012
|
Mar. 31, 2011
|
|
Per Share Information | ||
Net income (loss) attributable to CCIC stockholders | $ 50,031 | $ 40,017 |
Dividends on preferred stock | (2,629) | (5,201) |
Net income (loss) attributable to CCIC stockholders after deduction of dividends on preferred stock for basic and diluted computations | $ 47,402 | $ 34,816 |
Basic weighted-average number of common stock outstanding | 284,913,000 | 286,998,000 |
Effect of assumed dilution from potential common shares relating to stock options and restricted stock awards | 940,000 | 2,007,000 |
Diluted weighted-average number of common shares outstanding | 285,853,000 | 289,005,000 |
Basic | $ 0.17 | $ 0.12 |
Diluted | $ 0.17 | $ 0.12 |
Subsequent Events (Details) (USD $)
|
3 Months Ended | ||||
---|---|---|---|---|---|
Mar. 31, 2012
|
Jun. 30, 2012
NextG Networks Inc. [Member]
|
Apr. 30, 2012
NextG Networks Inc. [Member]
mi
|
Apr. 30, 2012
On-Air [Member]
NextG Networks Inc. [Member]
|
Apr. 30, 2012
In Construction [Member]
NextG Networks Inc. [Member]
|
|
Subsequent Event [Line Items] | |||||
Business acquisition, cost of acquired entity, purchase price | $ 1,000,000,000 | ||||
Nodes | 7,000 | 1,500 | |||
Length of fiber | 4,600 | ||||
Percentage of total nodes | 80.00% | ||||
Business acquisition, cost of acquired entity, cash paid | 1,000,000,000 | ||||
Percentage of purchase price allocated to goodwill, minimum | 50.00% | ||||
Expected valuation allowance reversal amount, maximum amount | $ 100,000,000 |
Debt and Other Obligations (Indebtedness) (Textuals) (Details) (USD $)
|
3 Months Ended | 3 Months Ended | 3 Months Ended | ||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2012
|
Dec. 31, 2011
|
Mar. 31, 2011
|
Dec. 31, 2010
|
Mar. 31, 2012
Fixed Rate Securitized Debt 2010 Tower Revenue Notes [Member]
|
Mar. 31, 2012
Fixed Rate Securitized Debt January 2010 Tower Revenue Notes First Tranche [Member]
|
Mar. 31, 2012
Fixed Rate Securitized Debt January 2010 Tower Revenue Notes Second Tranche [Member]
|
Mar. 31, 2012
Fixed Rate Securitized Debt January 2010 Tower Revenue Notes Third Tranche [Member]
|
Mar. 31, 2012
Fixed Rate Securitized Debt August 2010 Tower Revenue Notes First Tranche [Member]
|
Mar. 31, 2012
Fixed Rate Securitized Debt August 2010 Tower Revenue Notes Second Tranche [Member]
|
Mar. 31, 2012
Fixed Rate Securitized Debt August 2010 Tower Revenue Notes Third Tranche [Member]
|
Mar. 31, 2012
Fixed Rate Debt 2009 Securitized Notes First Tranche [Member]
|
Mar. 31, 2012
Fixed Rate Debt 2009 Securitized Notes Second Tranche [Member]
|
Mar. 31, 2012
WCP Securitized Notes [Member]
|
Mar. 31, 2012
Fixed Rate - High Yield Bonds, 9% Senior Notes [Member]
|
Mar. 31, 2012
Fixed Rate - High Yield Bonds, 7.75% Secured Notes [Member]
|
Mar. 31, 2012
Fixed Rate - High Yield Bonds, 7.125% Senior Notes [Member]
|
Mar. 31, 2012
Capital Lease Obligations and Other [Member]
|
Mar. 31, 2012
2012 Credit Facility [Member]
|
Mar. 31, 2012
CCOC [Member]
2012 Credit Facility [Member]
|
Mar. 31, 2012
CCOC [Member]
2012 Credit Facility [Member]
Senior Secured 2012 Revolver [Member]
|
Mar. 31, 2012
CCOC [Member]
2012 Credit Facility [Member]
Senior Secured Term Loan A [Member]
|
Mar. 31, 2012
CCOC [Member]
2012 Credit Facility [Member]
Senior Secured Term Loan B [Member]
|
Mar. 31, 2012
CCOC [Member]
2012 Credit Facility [Member]
Security Interest [Member]
|
Mar. 31, 2012
CCOC [Member]
Senior Secured Term Loan B [Member]
|
Mar. 31, 2012
Minimum [Member]
CCOC [Member]
2012 Credit Facility [Member]
Senior Secured 2012 Revolver [Member]
|
Mar. 31, 2012
Maximum [Member]
CCOC [Member]
2012 Credit Facility [Member]
Senior Secured 2012 Revolver [Member]
|
|
Debt Instrument [Line Items] | |||||||||||||||||||||||||||
Total revolving commitment | $ 1,000,000,000 | ||||||||||||||||||||||||||
Availablity on revolver | 1,000,000,000 | ||||||||||||||||||||||||||
Debt instrument, basis spread on variable rate | 3.00% | 2.00% | 2.75% | ||||||||||||||||||||||||
Debt Instrument, LIBOR Floor | 1.00% | ||||||||||||||||||||||||||
Line of Credit Facility, Commitment Fee Percentage | 0.40% | ||||||||||||||||||||||||||
Additional interest accruing following anticipated repayment dates | 5.00% | 5.00% | |||||||||||||||||||||||||
Debt instrument, face amount | 300,000,000 | 350,000,000 | 1,300,000,000 | 250,000,000 | 300,000,000 | 1,000,000,000 | 3,100,000,000 | 500,000,000 | 1,600,000,000 | ||||||||||||||||||
Total cash obligations | 8,472,861,000 | 142,000,000 | 70,000,000 | ||||||||||||||||||||||||
Effective yield rate, inclusive of discount | 4.00% | 11.30% | 8.20% | 7.20% | |||||||||||||||||||||||
Debt instrument interest rate stated percentage rate range maximum | 10.00% | ||||||||||||||||||||||||||
Contractual maturity date, start | 1Y | ||||||||||||||||||||||||||
Contractual maturity date, end | 20Y | ||||||||||||||||||||||||||
Cash and cash equivalents | 1,063,684,000 | 80,120,000 | 82,320,000 | 112,531,000 | 46,100,000 | ||||||||||||||||||||||
Business acquisition, purchase price allocation, face value of debt assumed | 320,100,000 | ||||||||||||||||||||||||||
Restricted cash acquired to be spent on third-party land interests | $ 29,500,000 |
Fair Value Disclosures (Tables)
|
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2012
|
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Fair Value Disclosures | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Estimated Fair Values and Carrying Amounts of Assets and Liabilities |
|
Redeemable Convertible Preferred Stock (Details) (Common Stock [Member])
In Millions, unless otherwise specified |
3 Months Ended |
---|---|
Mar. 31, 2012
|
|
Common Stock [Member]
|
|
Conversion of Stock [Line Items] | |
Stock Issued During Period, Shares, Conversion of Convertible Securities | 8.3 |
Summary of Significant Accounting Policies
|
3 Months Ended |
---|---|
Mar. 31, 2012
|
|
Summary of Significant Accounting Policies [Abstract] | |
Significant Accounting Policies | 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 2011 Form 10-K. New Accounting Pronouncements No accounting pronouncements adopted during the three months ended March 31, 2012 had a material impact on the Company's consolidated financial statements. No new accounting pronouncements issued during the three months ended March 31, 2012 but not yet adopted are expected to have a material impact on the Company's consolidated financial statements. |