Operating Segments and Concentrations of Credit Risk

12 Months Ended

Dec. 31, 2013

Operating Segments and Concentrations of Credit Risk [Abstract]

Operating Segments and Concentrations of Credit Risks

Operating Segments and Concentrations of Credit Risk

Operating Segments

The Company's reportable operating segments are (1) CCUSA, consisting of the Company's U.S. operations, and (2) CCAL, the Company's Australian operations. Financial results for the Company are reported to management and the board of directors in this manner.

The measurement of profit or loss currently used by management to evaluate the results of operations for the Company and its operating segments is earnings before interest, taxes, depreciation, amortization, and accretion, as adjusted ("Adjusted EBITDA"). The Company defines Adjusted EBITDA as net income (loss) plus restructuring charges (credits), asset write-down charges, acquisition and integration costs, depreciation, amortization and accretion, amortization of prepaid lease purchase price adjustments, interest expense and amortization of deferred financing costs, gains (losses) on retirement of long-term obligations, net gain (loss) on interest rate swaps, impairment of available-for-sale securities, interest income, other income (expense), benefit (provision) for income taxes, cumulative effect of change in accounting principle, income (loss) from discontinued operations, and stock-based compensation expense. Adjusted EBITDA is not intended as an alternative measure of operating results or cash flows 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. Noncontrolling interests primarily represent the noncontrolling shareholders' 22.4% interests in CCAL, the Company's 77.6% majority-owned subsidiary.

The financial results for the Company's operating segments are as follows:

	Year Ended December 31, 2013												Year Ended December 31, 2012												Year Ended December 31, 2011
	CCUSA			CCAL			Elim(a)			Consolidated Total			CCUSA			CCAL			Elim(a)			Consolidated Total			CCUSA			CCAL			Elim(a)			Consolidated Total
Net revenues:
Site rental	$	2,371,380		$	132,240		$	—		$	2,503,620		$	2,001,049		$	123,141		$	—		$	2,124,190		$	1,744,993		$	108,557		$	—		$	1,853,550
Network services and other	494,371			24,393			—			518,764			285,287			23,203			—			308,490			161,522			17,657			—			179,179
Net revenues	2,865,751			156,633			—			3,022,384			2,286,336			146,344			—			2,432,680			1,906,515			126,214			—			2,032,729
Operating expenses:
Costs of operations(b):
Site rental	686,873			38,236			—			725,109			503,661			35,578			—			539,239			446,868			34,530			—			481,398
Network services and other	304,144			17,543			—			321,687			173,762			15,988			—			189,750			96,057			10,930			—			106,987
General and administrative	213,519			25,183			—			238,702			184,911			27,661			—			212,572			151,737			21,756			—			173,493
Asset write-down charges	13,595			1,268			—			14,863			15,226			322			—			15,548			21,986			299			—			22,285
Acquisition and integration costs	25,574			431			—			26,005			18,216			82			—			18,298			3,310			—			—			3,310
Depreciation, amortization and accretion	741,342			32,873			—			774,215			591,428			31,164			—			622,592			522,681			30,270			—			552,951
Total operating expenses	1,985,047			115,534			—			2,100,581			1,487,204			110,795			—			1,597,999			1,242,639			97,785			—			1,340,424
Operating income (loss)	880,704			41,099			—			921,803			799,132			35,549			—			834,681			663,876			28,429			—			692,305
Interest expense and amortization of deferred financing costs	(589,630		)	(16,545		)	16,545			(589,630		)	(601,031		)	(19,330		)	19,317			(601,044		)	(507,264		)	(22,974		)	22,651			(507,587		)
Gains (losses) on retirement of long-term obligations	(37,127		)	—			—			(37,127		)	(131,974		)	—			—			(131,974		)	—			—			—			—
Interest income	956			399			—			1,355			4,089			467			—			4,556			187			479			—			666
Other income (expense)	12,643			30			(16,545		)	(3,872		)	13,954			(29		)	(19,317		)	(5,392		)	17,048			26			(22,651		)	(5,577		)
Benefit (provision) for income taxes	(191,000		)	(7,628		)	—			(198,628		)	60,144			39,917			—			100,061			(6,126		)	(2,221		)	—			(8,347		)
Net income (loss)	76,546			17,355			—			93,901			144,314			56,574			—			200,888			167,721			3,739			—			171,460
Less: Net income (loss) attributable to the noncontrolling interest	—			3,790			—			3,790			(268		)	12,572			—			12,304			(348		)	731			—			383
Net income (loss) attributable to CCIC stockholders	$	76,546		$	13,565		$	—		$	90,111		$	144,582		$	44,002		$	—		$	188,584		$	168,069		$	3,008		$	—		$	171,077
Capital expenditures	$	534,809		$	33,001		$	—		$	567,810		$	419,980		$	21,403		$	—		$	441,383		$	333,862		$	14,080		$	—		$	347,942
Total assets (at year end)	$	20,466,369		$	411,679		$	(283,140	)	$	20,594,908		$	15,969,084		$	440,395		$	(320,770	)	$	16,088,709
Goodwill (at year end)	$	4,902,950		$	13,476		$	—		$	4,916,426		$	3,116,824		$	3,133		$	—		$	3,119,957

(a) Elimination of inter-company borrowings and related interest expense.

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

The following are reconciliations of net income (loss) to Adjusted EBITDA for the years ended December 31, 2013, 2012 and 2011:

	Year Ended December 31, 2013												Year Ended December 31, 2012												Year Ended December 31, 2011
	CCUSA			CCAL			Elim(a)			Consolidated Total			CCUSA			CCAL			Elim(a)			Consolidated Total			CCUSA			CCAL			Elim(a)			Consolidated Total
Net income (loss)	$	76,546		$	17,355		$	—		$	93,901		$	144,314		$	56,574		$	—		$	200,888		$	167,721		$	3,739		$	—		$	171,460
Adjustments to increase (decrease) net income (loss):
Asset write-down charges	13,595			1,268			—			14,863			15,226			322			—			15,548			21,986			299			—			22,285
Acquisition and integration costs	25,574			431			—			26,005			18,216			82			—			18,298			3,310			—			—			3,310
Depreciation, amortization and accretion	741,342			32,873			—			774,215			591,428			31,164			—			622,592			522,681			30,270			—			552,951
Amortization of prepaid lease purchase price adjustments	15,473			—			—			15,473			14,166			—			—			14,166			—			—			—			—
Interest expense and amortization of deferred financing costs	589,630			16,545			(16,545		)	589,630			601,031			19,330			(19,317		)	601,044			507,264			22,974			(22,651		)	507,587
Gains (losses) on retirement of long-term obligations	37,127			—			—			37,127			131,974			—			—			131,974			—			—			—			—
Interest income	(956		)	(399		)	—			(1,355		)	(4,089		)	(467		)	—			(4,556		)	(187		)	(479		)	—			(666		)
Other income (expense)	(12,643		)	(30		)	16,545			3,872			(13,954		)	29			19,317			5,392			(17,048		)	(26		)	22,651			5,577
Benefit (provision) for income taxes	191,000			7,628			—			198,628			(60,144		)	(39,917		)	—			(100,061		)	6,126			2,221			—			8,347
Stock-based compensation expense	39,030			2,758			—			41,788			41,785			5,597			—			47,382			32,610			3,381			—			35,991
Adjusted EBITDA	$	1,715,718		$	78,429		$	—		$	1,794,147		$	1,479,953		$	72,714		$	—		$	1,552,667		$	1,244,463		$	62,379		$	—		$	1,306,842

____________________

(a) Elimination of inter-company borrowings and related interest expense.

Geographic Information

A summary of net revenues by country, based on the location of the Company's subsidiaries, is as follows:

	Years Ended December 31,
	2013		2012		2011
United States	$	2,862,397	$	2,283,088	$	1,902,536
Australia	156,633		146,344		126,214
Other countries	3,354		3,248		3,979
Total net revenues	$	3,022,384	$	2,432,680	$	2,032,729

A summary of long-lived assets (property and equipment, goodwill and other intangible assets) by country of location is as follows:

	December 31,
	2013		2012
United States	$	17,670,665	$	12,730,337
Australia	235,493		232,099
Other countries	15,810		16,748
Total long-lived assets	$	17,921,968	$	12,979,184

Major Customers

The following table summarizes the percentage of the consolidated revenues for those customers accounting for more than 10% of the consolidated revenues (all of such customer revenues relate to the CCUSA segment). The following table is after giving effect to T-Mobile's acquisition of MetroPCS (completed in April 2013), Sprint's acquisition of Clearwire (completed in July 2013), and AT&T's pending acquisition of Leap Wireless.

	Years Ended December 31,
	2013			2012		2011
Sprint	27	%	(a)	28	%	24	%
T-Mobile	23	%	(b)	15	%	14	%
AT&T	22	%	(c)	23	%	26	%
Verizon Wireless	16	%		17	%	19	%
Total	88	%		83	%	83	%

________________

(a) For the year ended December 31, 2013, Sprint and Clearwire accounted for 24% and 3%, respectively, of consolidated net revenues. As of December 31, 2013, Sprint and Clearwire are co-residents on approximately 7% of the Company's towers. The weighted-average remaining term on these tower tenant contracts with Sprint and Clearwire is approximately six years and three years, respectively. Revenue from Clearwire on these towers represented approximately 2% of consolidated site rental revenues for the year ended December 31, 2013.

(b) For the year ended December 31, 2013, T-Mobile and MetroPCS accounted for 18% and 5%, respectively, of consolidated net revenues. As of December 31, 2013, T-Mobile and MetroPCS are co-residents on approximately 4% of the Company's towers. The weighted-average remaining term on these tower tenant contracts with T-Mobile and MetroPCS is approximately nine years and five years , respectively. Revenue from MetroPCS on these towers represented approximately 2% of consolidated site rental revenues for the year ended December 31, 2013.

(c) For the year ended December 31, 2013, AT&T and Leap Wireless accounted for 19% and 3%, respectively, of consolidated net revenues. As of December 31, 2013, AT&T and Leap Wireless are co-residents on approximately 6% of the Company's towers. The weighted-average remaining term on these tower tenant contracts with AT&T and Leap Wireless is approximately eight years and three years, respectively. Revenue from Leap Wireless on these towers represented approximately 1% of consolidated site rental revenues for the year ended December 31, 2013.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk are primarily cash and cash equivalents, restricted cash and trade receivables. The Company mitigates its risk with respect to cash and cash equivalents by maintaining such deposits at high credit quality financial institutions and monitoring the credit ratings of those institutions. The Company's restricted cash is predominately held and directed by a trustee (see note 2).

The Company derives the largest portion of its revenues from customers in the wireless communications industry. The Company also has a concentration in its volume of business with Sprint, T-Mobile, AT&T, and Verizon Wireless or their agents that accounts for a significant portion of the Company's revenues, receivables, and deferred site rental receivables. The Company mitigates its concentrations of credit risk with respect to trade receivables by actively monitoring the creditworthiness of its customers, the use of customer leases with contractually determinable payment terms, or proactive management of past due balances.