x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 76-0470458 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
1220 Augusta Drive, Suite 600, Houston, Texas 77057-2261 (Address of principal executives office) (Zip Code) | |
(713) 570-3000 (Registrant's telephone number, including area code) |
Large accelerated filer | x | Accelerated filer | o | |||
Non-accelerated filer | o | Smaller reporting company | o |
Page | |||
ITEM 1. | |||
ITEM 2. | |||
ITEM 3. | |||
ITEM 4. | |||
ITEM 1. | LEGAL PROCEEDINGS | ||
ITEM 1A. | |||
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | ||
ITEM 6. | |||
EXHIBIT INDEX |
ITEM 1. | FINANCIAL STATEMENTS |
September 30, 2015 | December 31, 2014 | ||||||
(Unaudited) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 184,116 | $ | 151,312 | |||
Restricted cash | 116,653 | 147,411 | |||||
Receivables, net | 324,566 | 313,308 | |||||
Prepaid expenses | 143,675 | 138,873 | |||||
Deferred income tax assets | 33,110 | 24,806 | |||||
Other current assets | 222,251 | 94,503 | |||||
Assets from discontinued operations (see note 3) | — | 412,783 | |||||
Total current assets | 1,024,371 | 1,282,996 | |||||
Deferred site rental receivables | 1,282,752 | 1,202,058 | |||||
Property and equipment, net of accumulated depreciation of $5,604,110 and $5,052,395, respectively | 9,498,568 | 8,982,783 | |||||
Goodwill | 5,527,134 | 5,196,485 | |||||
Other intangible assets, net | 3,837,360 | 3,681,551 | |||||
Long-term prepaid rent, deferred financing costs and other assets, net | 825,459 | 797,403 | |||||
Total assets | $ | 21,995,644 | $ | 21,143,276 | |||
LIABILITIES AND EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 157,024 | $ | 162,397 | |||
Accrued interest | 69,184 | 66,943 | |||||
Deferred revenues | 314,648 | 279,882 | |||||
Other accrued liabilities | 181,498 | 182,081 | |||||
Current maturities of debt and other obligations | 102,188 | 113,335 | |||||
Liabilities from discontinued operations (see note 3) | — | 127,493 | |||||
Total current liabilities | 824,542 | 932,131 | |||||
Debt and other long-term obligations | 12,039,178 | 11,807,526 | |||||
Deferred income tax liabilities | 32,317 | 39,889 | |||||
Other long-term liabilities | 1,859,304 | 1,626,502 | |||||
Total liabilities | 14,755,341 | 14,406,048 | |||||
Commitments and contingencies (note 10) | |||||||
CCIC stockholders' equity: | |||||||
Common stock, $.01 par value; 600,000,000 shares authorized; shares issued and outstanding: September 30, 2015—333,771,499 and December 31, 2014—333,856,632 | 3,339 | 3,339 | |||||
4.50% Mandatory Convertible Preferred Stock, Series A, $.01 par value; 20,000,000 shares authorized; shares issued and outstanding: September 30, 2015 and December 31, 2014—9,775,000; aggregate liquidation value: September 30, 2015 and December 31, 2014—$977,500 | 98 | 98 | |||||
Additional paid-in capital | 9,532,597 | 9,512,396 | |||||
Accumulated other comprehensive income (loss) | (3,754 | ) | 15,820 | ||||
Dividends/distributions in excess of earnings | (2,291,977 | ) | (2,815,428 | ) | |||
Total CCIC stockholders' equity | 7,240,303 | 6,716,225 | |||||
Noncontrolling interest from discontinued operations | — | 21,003 | |||||
Total equity | 7,240,303 | 6,737,228 | |||||
Total liabilities and equity | $ | 21,995,644 | $ | 21,143,276 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Net revenues: | |||||||||||||||
Site rental | $ | 764,606 | $ | 717,623 | $ | 2,233,077 | $ | 2,143,198 | |||||||
Network services and other | 153,501 | 175,260 | 484,938 | 469,690 | |||||||||||
Net revenues | 918,107 | 892,883 | 2,718,015 | 2,612,888 | |||||||||||
Operating expenses: | |||||||||||||||
Costs of operations(a): | |||||||||||||||
Site rental | 247,000 | 230,599 | 716,244 | 676,275 | |||||||||||
Network services and other | 86,859 | 101,814 | 263,177 | 275,514 | |||||||||||
General and administrative | 76,699 | 65,212 | 223,880 | 187,171 | |||||||||||
Asset write-down charges | 7,477 | 4,932 | 19,652 | 10,673 | |||||||||||
Acquisition and integration costs | 7,608 | 4,068 | 12,001 | 28,852 | |||||||||||
Depreciation, amortization and accretion | 261,662 | 247,206 | 766,621 | 738,965 | |||||||||||
Total operating expenses | 687,305 | 653,831 | 2,001,575 | 1,917,450 | |||||||||||
Operating income (loss) | 230,802 | 239,052 | 716,440 | 695,438 | |||||||||||
Interest expense and amortization of deferred financing costs | (129,877 | ) | (141,287 | ) | (398,782 | ) | (432,221 | ) | |||||||
Gains (losses) on retirement of long-term obligations | — | — | (4,157 | ) | (44,629 | ) | |||||||||
Interest income | 789 | 107 | 1,170 | 329 | |||||||||||
Other income (expense) | (1,214 | ) | (694 | ) | 58,510 | (9,350 | ) | ||||||||
Income (loss) from continuing operations before income taxes | 100,500 | 97,178 | 373,181 | 209,567 | |||||||||||
Benefit (provision) for income taxes | 3,801 | 1,977 | 9,380 | 8,118 | |||||||||||
Income (loss) from continuing operations | 104,301 | 99,155 | 382,561 | 217,685 | |||||||||||
Discontinued operations (see note 3): | |||||||||||||||
Income (loss) from discontinued operations, net of tax | — | 8,882 | 19,690 | 28,502 | |||||||||||
Net gain (loss) from disposal of discontinued operations, net of tax | (522 | ) | — | 981,018 | — | ||||||||||
Income (loss) from discontinued operations, net of tax | (522 | ) | 8,882 | 1,000,708 | 28,502 | ||||||||||
Net income (loss) | 103,779 | 108,037 | 1,383,269 | 246,187 | |||||||||||
Less: Net income (loss) attributable to the noncontrolling interest | — | 1,100 | 3,343 | 3,744 | |||||||||||
Net income (loss) attributable to CCIC stockholders | 103,779 | 106,937 | 1,379,926 | 242,443 | |||||||||||
Dividends on preferred stock | (10,997 | ) | (10,997 | ) | (32,991 | ) | (32,991 | ) | |||||||
Net income (loss) attributable to CCIC common stockholders | $ | 92,782 | $ | 95,940 | $ | 1,346,935 | $ | 209,452 | |||||||
Net income (loss) | $ | 103,779 | $ | 108,037 | $ | 1,383,269 | $ | 246,187 | |||||||
Other comprehensive income (loss): | |||||||||||||||
Amounts reclassified into "interest expense and amortization of deferred financing costs," net of taxes (see note 5) | 3,744 | 15,551 | 18,725 | 47,895 | |||||||||||
Foreign currency translation adjustments | (632 | ) | (24,177 | ) | (13,493 | ) | (5,708 | ) | |||||||
Amounts reclassified into discontinued operations for foreign currency translation adjustments (see note 3) | — | — | (25,678 | ) | — | ||||||||||
Total other comprehensive income (loss) | 3,112 | (8,626 | ) | (20,446 | ) | 42,187 | |||||||||
Comprehensive income (loss) | 106,891 | 99,411 | 1,362,823 | 288,374 | |||||||||||
Less: Comprehensive income (loss) attributable to the noncontrolling interest | — | (327 | ) | — | 3,313 | ||||||||||
Comprehensive income (loss) attributable to CCIC stockholders | $ | 106,891 | $ | 99,738 | $ | 1,362,823 | $ | 285,061 | |||||||
Net income (loss) attributable to CCIC common stockholders, per common share: | |||||||||||||||
Income (loss) from continuing operations, basic | $ | 0.28 | $ | 0.27 | $ | 1.05 | $ | 0.56 | |||||||
Income (loss) from discontinued operations, basic | $ | — | $ | 0.02 | $ | 3.00 | $ | 0.07 | |||||||
Net income (loss) attributable to CCIC common stockholders, basic | $ | 0.28 | $ | 0.29 | $ | 4.05 | $ | 0.63 | |||||||
Income (loss) from continuing operations, diluted | $ | 0.28 | $ | 0.26 | $ | 1.05 | $ | 0.55 | |||||||
Income (loss) from discontinued operations, diluted | $ | — | $ | 0.03 | $ | 2.99 | $ | 0.08 | |||||||
Net income (loss) attributable to CCIC common stockholders, diluted | $ | 0.28 | $ | 0.29 | $ | 4.04 | $ | 0.63 | |||||||
Weighted-average common shares outstanding (in thousands): | |||||||||||||||
Basic | 333,049 | 332,413 | 332,951 | 332,264 | |||||||||||
Diluted | 333,711 | 333,241 | 333,735 | 333,020 |
(a) | Exclusive of depreciation, amortization and accretion shown separately. |
Nine Months Ended September 30, | ||||||||
2015 | 2014 | |||||||
Cash flows from operating activities: | ||||||||
Net income (loss) from continuing operations | $ | 382,561 | $ | 217,685 | ||||
Adjustments to reconcile net income (loss) from continuing operations to net cash provided by (used for) operating activities: | ||||||||
Depreciation, amortization and accretion | 766,621 | 738,965 | ||||||
Gains (losses) on retirement of long-term obligations | 4,157 | 44,629 | ||||||
Gains (losses) on settled swaps | (54,475 | ) | — | |||||
Amortization of deferred financing costs and other non-cash interest | 32,394 | 61,322 | ||||||
Stock-based compensation expense | 44,711 | 39,497 | ||||||
Asset write-down charges | 19,652 | 10,673 | ||||||
Deferred income tax benefit (provision) | (16,199 | ) | (14,589 | ) | ||||
Other non-cash adjustments, net | (7,240 | ) | (1,967 | ) | ||||
Changes in assets and liabilities, excluding the effects of acquisitions: | ||||||||
Increase (decrease) in accrued interest | 2,241 | 2,461 | ||||||
Increase (decrease) in accounts payable | (8,310 | ) | 28,037 | |||||
Increase (decrease) in deferred revenues, deferred ground lease payables, other accrued liabilities and other liabilities | 214,607 | 259,178 | ||||||
Decrease (increase) in receivables | (703 | ) | (64,079 | ) | ||||
Decrease (increase) in prepaid expenses, deferred site rental receivables, long-term prepaid rent, restricted cash and other assets | (89,141 | ) | (170,886 | ) | ||||
Net cash provided by (used for) operating activities | 1,290,876 | 1,150,926 | ||||||
Cash flows from investing activities: | ||||||||
Payments for acquisitions of businesses, net of cash acquired | (1,083,319 | ) | (174,356 | ) | ||||
Capital expenditures | (658,240 | ) | (498,960 | ) | ||||
Receipts from foreign currency swaps | 54,475 | — | ||||||
Other investing activities, net | (1,561 | ) | 2,787 | |||||
Net cash provided by (used for) investing activities | (1,688,645 | ) | (670,529 | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from issuance of long-term debt | 1,000,000 | 845,750 | ||||||
Principal payments on debt and other long-term obligations | (78,049 | ) | (86,197 | ) | ||||
Purchases and redemptions of long-term debt | (1,069,337 | ) | (836,899 | ) | ||||
Purchases of capital stock | (29,576 | ) | (21,778 | ) | ||||
Borrowings under revolving credit facility | 1,560,000 | 567,000 | ||||||
Payments under revolving credit facility | (1,240,000 | ) | (587,000 | ) | ||||
Payments for financing costs | (17,415 | ) | (15,899 | ) | ||||
Net (increase) decrease in restricted cash | 28,435 | 39,882 | ||||||
Dividends/distributions paid on common stock | (821,056 | ) | (350,535 | ) | ||||
Dividends paid on preferred stock | (32,991 | ) | (33,357 | ) | ||||
Net cash provided by (used for) financing activities | (699,989 | ) | (479,033 | ) | ||||
Net increase (decrease) in cash and cash equivalents - continuing operations | (1,097,758 | ) | 1,364 | |||||
Discontinued operations (see note 3): | ||||||||
Net cash provided by (used for) operating activities | 4,359 | 41,304 | ||||||
Net cash provided by (used for) investing activities | 1,103,577 | (20,154 | ) | |||||
Net increase (decrease) in cash and cash equivalents - discontinued operations | 1,107,936 | 21,150 | ||||||
Effect of exchange rate changes | (1,682 | ) | (7,358 | ) | ||||
Cash and cash equivalents at beginning of period | 175,620 | (a) | 223,394 | (a) | ||||
Cash and cash equivalents at end of period | $ | 184,116 | $ | 238,550 | (a) |
(a) | Inclusive of cash and cash equivalents included in discontinued operations. |
CCIC Stockholders | |||||||||||||||||||||||||||||||||||||
Common Stock | 4.50% Mandatory Convertible Preferred Stock | AOCI | |||||||||||||||||||||||||||||||||||
Shares | ($.01 Par) | Shares | ($.01 Par) | Additional paid-in capital | Foreign Currency Translation Adjustments | Derivative Instruments, net of tax | Dividends/Distributions in Excess of Earnings | Noncontrolling Interest from discontinued operations | Total | ||||||||||||||||||||||||||||
Balance, July 1, 2015 | 333,762,344 | $ | 3,339 | 9,775,000 | $ | 98 | $ | 9,518,103 | $ | (3,122 | ) | $ | (3,744 | ) | $ | (2,110,438 | ) | $ | — | $ | 7,404,236 | ||||||||||||||||
Stock-based compensation related activity, net of forfeitures | 10,198 | — | — | — | 14,579 | — | — | — | — | 14,579 | |||||||||||||||||||||||||||
Purchases and retirement of capital stock | (1,043 | ) | — | — | — | (85 | ) | — | — | — | — | (85 | ) | ||||||||||||||||||||||||
Other comprehensive income (loss)(a) | — | — | — | — | — | (632 | ) | 3,744 | — | — | 3,112 | ||||||||||||||||||||||||||
Common stock dividends/distributions | — | — | — | — | — | — | — | (274,321 | ) | — | (274,321 | ) | |||||||||||||||||||||||||
Preferred stock dividends | — | — | — | — | — | — | — | (10,997 | ) | — | (10,997 | ) | |||||||||||||||||||||||||
Net income (loss) | — | — | — | — | — | — | — | 103,779 | — | 103,779 | |||||||||||||||||||||||||||
Balance, September 30, 2015 | 333,771,499 | $ | 3,339 | 9,775,000 | $ | 98 | $ | 9,532,597 | $ | (3,754 | ) | $ | — | $ | (2,291,977 | ) | $ | — | $ | 7,240,303 |
(a) | See the condensed statement of operations and other comprehensive income (loss) for the components of "other comprehensive income (loss)" and note 5 with respect to the reclassification adjustments. |
CCIC Stockholders | |||||||||||||||||||||||||||||||||||||
Common Stock | 4.50% Mandatory Convertible Preferred Stock | AOCI | |||||||||||||||||||||||||||||||||||
Shares | ($.01 Par) | Shares | ($.01 Par) | Additional paid-in capital | Foreign Currency Translation Adjustments | Derivative Instruments, net of tax | Dividends/Distributions in Excess of Earnings | Noncontrolling Interest from discontinued operations | Total | ||||||||||||||||||||||||||||
Balance, July 1, 2014 | 333,861,080 | $ | 3,339 | 9,775,000 | $ | 98 | $ | 9,488,414 | $ | 75,734 | $ | (49,529 | ) | $ | (2,656,718 | ) | $ | 18,098 | $ | 6,879,436 | |||||||||||||||||
Stock-based compensation related activity, net of forfeitures | (980 | ) | — | — | — | 12,124 | — | — | — | — | 12,124 | ||||||||||||||||||||||||||
Purchases and retirement of capital stock | (653 | ) | — | — | — | (48 | ) | — | — | — | — | (48 | ) | ||||||||||||||||||||||||
Other comprehensive income (loss)(a) | — | — | — | — | — | (22,750 | ) | 15,551 | — | (1,427 | ) | (8,626 | ) | ||||||||||||||||||||||||
Common stock dividends/distributions | — | — | — | — | — | — | — | (117,181 | ) | — | (117,181 | ) | |||||||||||||||||||||||||
Preferred stock dividends | — | — | — | — | — | — | — | (10,997 | ) | — | (10,997 | ) | |||||||||||||||||||||||||
Net income (loss) | — | — | — | — | — | — | — | 106,937 | 1,100 | 108,037 | |||||||||||||||||||||||||||
Balance, September 30, 2014 | 333,859,447 | $ | 3,339 | 9,775,000 | $ | 98 | $ | 9,500,490 | $ | 52,984 | $ | (33,978 | ) | $ | (2,677,959 | ) | $ | 17,771 | $ | 6,862,745 |
(a) | See the condensed statement of operations and other comprehensive income (loss) for the components of "other comprehensive income (loss)" and note 5 with respect to the reclassification adjustments. |
CCIC Stockholders | |||||||||||||||||||||||||||||||||||||
Common Stock | 4.50% Mandatory Convertible Preferred Stock | AOCI | |||||||||||||||||||||||||||||||||||
Shares | ($.01 Par) | Shares | ($.01 Par) | Additional paid-in capital | Foreign Currency Translation Adjustments | Derivative Instruments, net of tax | Dividends/Distributions in Excess of Earnings | Noncontrolling Interest from discontinued operations | Total | ||||||||||||||||||||||||||||
Balance, January 1, 2015 | 333,856,632 | $ | 3,339 | 9,775,000 | $ | 98 | $ | 9,512,396 | $ | 34,545 | $ | (18,725 | ) | $ | (2,815,428 | ) | $ | 21,003 | $ | 6,737,228 | |||||||||||||||||
Stock-based compensation related activity, net of forfeitures | 250,443 | 2 | — | — | 49,775 | — | — | — | — | 49,777 | |||||||||||||||||||||||||||
Purchases and retirement of capital stock | (335,576 | ) | (2 | ) | — | — | (29,574 | ) | — | — | — | — | (29,576 | ) | |||||||||||||||||||||||
Other comprehensive income (loss)(a) | — | — | — | — | — | (38,299 | ) | 18,725 | — | (872 | ) | (20,446 | ) | ||||||||||||||||||||||||
Disposition of CCAL | — | — | — | — | — | — | — | — | (23,474 | ) | (23,474 | ) | |||||||||||||||||||||||||
Common stock dividends/distributions | — | — | — | — | — | — | — | (823,484 | ) | — | (823,484 | ) | |||||||||||||||||||||||||
Preferred stock dividends | — | — | — | — | — | — | — | (32,991 | ) | — | (32,991 | ) | |||||||||||||||||||||||||
Net income (loss) | — | — | — | — | — | — | — | 1,379,926 | 3,343 | 1,383,269 | |||||||||||||||||||||||||||
Balance, September 30, 2015 | 333,771,499 | $ | 3,339 | 9,775,000 | $ | 98 | $ | 9,532,597 | $ | (3,754 | ) | $ | — | $ | (2,291,977 | ) | $ | — | $ | 7,240,303 |
(a) | See the condensed statement of operations and other comprehensive income (loss) for the components of "other comprehensive income (loss)" and notes 3 and 5 with respect to the reclassification adjustments. |
CCIC Stockholders | |||||||||||||||||||||||||||||||||||||
Common Stock | 4.50% Mandatory Convertible Preferred Stock | AOCI | |||||||||||||||||||||||||||||||||||
Shares | ($.01 Par) | Shares | ($.01 Par) | Additional paid-in capital | Foreign Currency Translation Adjustments | Derivative Instruments, net of tax | Dividends/Distributions in Excess of Earnings | Noncontrolling Interest from discontinued operations | Total | ||||||||||||||||||||||||||||
Balance, January 1, 2014 | 334,070,016 | $ | 3,341 | 9,775,000 | $ | 98 | $ | 9,482,769 | $ | 58,261 | $ | (81,873 | ) | $ | (2,535,879 | ) | $ | 14,458 | $ | 6,941,175 | |||||||||||||||||
Stock-based compensation related activity, net of forfeitures | 81,350 | 1 | — | — | 39,496 | — | — | — | — | 39,497 | |||||||||||||||||||||||||||
Purchases and retirement of capital stock | (291,919 | ) | (3 | ) | — | — | (21,775 | ) | — | — | — | — | (21,778 | ) | |||||||||||||||||||||||
Other comprehensive income (loss)(a) | — | — | — | — | — | (5,277 | ) | 47,895 | — | (431 | ) | 42,187 | |||||||||||||||||||||||||
Common stock dividends/distributions | — | — | — | — | — | — | — | (351,532 | ) | — | (351,532 | ) | |||||||||||||||||||||||||
Preferred stock dividends | — | — | — | — | — | — | — | (32,991 | ) | — | (32,991 | ) | |||||||||||||||||||||||||
Net income (loss) | — | — | — | — | — | — | — | 242,443 | 3,744 | 246,187 | |||||||||||||||||||||||||||
Balance, September 30, 2014 | 333,859,447 | $ | 3,339 | 9,775,000 | $ | 98 | $ | 9,500,490 | $ | 52,984 | $ | (33,978 | ) | $ | (2,677,959 | ) | $ | 17,771 | $ | 6,862,745 |
(a) | See the condensed statement of operations and other comprehensive income (loss) for the components of "other comprehensive income (loss)" and note 5 with respect to the reclassification adjustments. |
1. | General |
2. | Summary of Significant Accounting Policies |
3. | Discontinued Operations |
As of December 31, 2014 | |||||||||||
Assets and liabilities related to discontinued operations: | |||||||||||
Current assets | $ | 61,289 | |||||||||
Property and equipment | 165,528 | ||||||||||
Other non-current assets | 185,966 | ||||||||||
Total assets related to discontinued operations | $ | 412,783 | |||||||||
Current liabilities | 94,297 | ||||||||||
Non-current liabilities | 33,196 | ||||||||||
Total liabilities related to discontinued operations | $ | 127,493 | |||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
2014(b) | 2015 (b)(c) | 2014(b) | |||||||||
Total revenues | $ | 37,142 | $ | 65,293 | $ | 109,432 | |||||
Total cost of operations (a) | 11,720 | 17,498 | 33,732 | ||||||||
Depreciation, amortization, and accretion | 7,656 | 10,168 | 20,323 | ||||||||
Total other expenses | 6,425 | 10,481 | 18,671 | ||||||||
Pre-tax income from discontinued operations | 11,341 | 27,146 | 36,706 | ||||||||
Net income (loss) from discontinued operations(d) | $ | 8,882 | $ | 19,690 | $ | 28,502 |
(a) | Exclusive of depreciation, amortization, and accretion shown seperately. |
(b) | No interest expense has been allocated to discontinued operations. |
(c) | CCAL results are through May 28, 2015, which was the closing date of the Company's sale of CCAL. |
(d) | Exclusive of the gain (loss) from disposal of discontinued operations, net of tax, as presented on the condensed consolidated statement of operations. |
Cash received from sale of CCAL(a) | $ | 1,139,369 | |
Installment payment receivable due January 2016(a) | 117,384 | ||
Total proceeds from sale of CCAL | $ | 1,256,753 | |
Adjusted for: | |||
Net assets and liabilities related to discontinued operations(b)(c) | 258,575 | ||
Transaction fees and expenses | 21,688 | ||
Foreign currency translation reclassification adjustments(d) | (25,678 | ) | |
Pre-tax gain (loss) from disposal of discontinued operations | 1,002,168 | ||
Income taxes related to the sale of CCAL | 21,150 | ||
Gain (loss) from disposal of discontinued operations | $ | 981,018 |
(a) | Exclusive of foreign currency swaps and based on exchange rates as of May 28, 2015, which was the closing date of the Company's sale of CCAL. See note 6. The impact of fluctuations in the exchange rate subsequent to the closing date are reflected as a component of "other income (expense)" on the Company's condensed consolidated statement of operations. |
(b) | Represents net assets attributable to CCIC, net of the disposition of noncontrolling interest of $23.5 million. |
(c) | Inclusive of $11.1 million of cash. |
(d) | Represents foreign currency translation adjustments previously included in "accumulated other comprehensive income (loss)" on the condensed consolidated balance sheet and reclassified to "gain (loss) from disposal of discontinued operations". |
4. | Acquisitions |
Preliminary Purchase Price Allocation | |||
Current assets | $ | 12,821 | |
Property and equipment | 432,106 | ||
Goodwill (a) | 347,547 | ||
Other intangible assets, net | 249,935 | ||
Current liabilities | (25,418 | ) | |
Other non-current liabilities | (29,065 | ) | |
Net assets acquired (b) | $ | 987,926 |
(a) | The preliminary purchase price allocation for the Sunesys Acquisition resulted in the recognition of goodwill based on the Company's expectation to leverage the Sunesys fiber footprint to support new small cell networks. The Sunesys fiber is complementary to the Company's existing fiber assets and is located where the Company expects to see wireless carrier network investments. |
(b) | Assets acquired in the Sunesys Acquisition are included in the Company's REIT and as such, no deferred taxes were recorded in connection with the Sunesys Acquisition. |
5. | Debt and Other Obligations |
Original Issue Date | Contractual Maturity Date (a) | Outstanding Balance as of September 30, 2015 | Outstanding Balance as of December 31, 2014 | Stated Interest Rate as of September 30, 2015(a)(b) | ||||||||||
Bank debt - variable rate: | ||||||||||||||
2012 Revolver | Jan. 2012 | Jan. 2019 | $ | 1,015,000 | (c) | $ | 695,000 | 2.0 | % | |||||
Tranche A Term Loans | Jan. 2012 | Jan. 2019 | 633,516 | 645,938 | 1.9 | % | ||||||||
Tranche B Term Loans | Jan. 2012 | Jan. 2021 | 2,252,747 | (e) | 2,835,509 | 3.0 | % | |||||||
Total bank debt | 3,901,263 | 4,176,447 | ||||||||||||
Securitized debt - fixed rate: | ||||||||||||||
January 2010 Tower Revenue Notes | Jan. 2010 | 2037 - 2040 | (d) | 1,600,000 | 1,600,000 | 6.0 | % | |||||||
August 2010 Tower Revenue Notes | Aug. 2010 | 2037 - 2040 | (d)(f) | 1,300,000 | 1,550,000 | 4.7 | % | |||||||
May 2015 Tower Revenue Notes | May 2015 | 2042 - 2045 | (d)(f) | 1,000,000 | — | 3.5 | % | |||||||
2009 Securitized Notes | July 2009 | 2019/2029 | 146,399 | 160,822 | 7.6 | % | ||||||||
WCP Securitized Notes | Jan. 2010 | Nov. 2040 | (f) | — | 262,386 | N/A | ||||||||
Total securitized debt | 4,046,399 | 3,573,208 | ||||||||||||
Bonds - fixed rate: | ||||||||||||||
5.25% Senior Notes | Oct. 2012 | Jan. 2023 | 1,649,969 | 1,649,969 | 5.3 | % | ||||||||
2012 Secured Notes | Dec. 2012 | Dec. 2017/Apr. 2023 | 1,500,000 | 1,500,000 | 3.4 | % | ||||||||
4.875% Senior Notes | Apr. 2014 | Apr. 2022 | 846,405 | 846,062 | 4.9 | % | ||||||||
Total bonds | 3,996,374 | 3,996,031 | ||||||||||||
Other: | ||||||||||||||
Capital leases and other obligations | Various | Various | 197,330 | 175,175 | Various | |||||||||
Total debt and other obligations | 12,141,366 | 11,920,861 | ||||||||||||
Less: current maturities and short-term debt and other current obligations | 102,188 | 113,335 | ||||||||||||
Non-current portion of long-term debt and other long-term obligations | $ | 12,039,178 | $ | 11,807,526 |
(a) | See the 2014 Form 10-K, including note 7, for additional information regarding the maturity and principal amortization provisions and interest rates relating to the Company's indebtedness. |
(b) | Represents the weighted-average stated interest rate. |
(c) | During January and February 2015, the Company amended its 2012 Credit Facility agreement and increased the capacity of the 2012 Revolver to an aggregate revolving commitment of approximately $2.2 billion. During August 2015, the Company utilized borrowings under the 2012 Revolver of $835.0 million, along with cash on hand, to fund the Sunesys Acquisition. See note 4. As of September 30, 2015, the undrawn availability under the 2012 Revolver was $1.2 billion. |
(d) | If the respective series of such debt is not paid in full on or prior to an applicable date then Excess Cash Flow (as defined in the indenture) of the issuers of such notes will be used to repay principal of the applicable series, and additional interest (of an additional approximately 5% per annum) will accrue on the respective series. See the 2014 Form 10-K for additional information regarding these provisions. |
(e) | During the second quarter of 2015, the Company repaid the portion of its Tranche B Term Loans that were due January 2019, which had an outstanding balance of $564.1 million. |
(f) | In May 2015, the Company issued $1.0 billion aggregate principal amount of Senior Secured Tower Revenue Notes ("May 2015 Tower Revenue Notes"), which were issued by certain of its indirect subsidiaries pursuant to the existing indenture governing the 2010 Tower Revenue Notes and having similar terms and security as the 2010 Tower Revenue Notes. The 2015 Tower Revenue Notes consist of (1) $300.0 million aggregate principal amount of 3.222% Notes with an expected life of seven years and a final maturity date of May 2042 and (2) $700.0 million aggregate principal amount of 3.663% Notes with an expected life of ten years and a final maturity date of May 2045. The Company used the net proceeds received from the May 2015 Tower Revenue Notes offering (1) to repay $250.0 million aggregate principal amount of August 2010 Tower Revenue Notes with an anticipated repayment date of August 2015, (2) to repay all of the previously outstanding WCP Securitized Notes, (3) to repay portions of outstanding borrowings under its 2012 Credit Facility, and (4) to pay related fees and expenses. Collectively, the 2010 Tower Revenue Notes and the May 2015 Tower Revenue Notes are referred to herein as the "Tower Revenue Notes." |
Three Months Ending December 31, | Years Ending December 31, | Unamortized Adjustments, Net | Total Debt and Other Obligations Outstanding | ||||||||||||||||||||||||||||||||
2015 | 2016 | 2017 | 2018 | 2019 | Thereafter | Total Cash Obligations | |||||||||||||||||||||||||||||
Scheduled contractual maturities | $ | 23,049 | $ | 105,640 | $ | 601,859 | $ | 98,208 | $ | 1,602,265 | $ | 9,713,940 | $ | 12,144,961 | $ | (3,595 | ) | $ | 12,141,366 |
Nine Months Ended September 30, 2015 | |||||||||||
Principal Amount | Cash Paid(a) | Gains (Losses)(b) | |||||||||
August 2010 Tower Revenue Notes | $ | 250,000 | $ | 250,000 | $ | (159 | ) | ||||
WCP Securitized Notes | 252,830 | 252,830 | 2,105 | ||||||||
Tranche B Term Loans | 564,137 | 564,137 | (6,127 | ) | |||||||
Other | 2,394 | 2,370 | 24 | ||||||||
Total | $ | 1,069,361 | $ | 1,069,337 | $ | (4,157 | ) |
(a) | Exclusive of accrued interest. |
(b) | Inclusive of $4.2 million related to the net write off of deferred financing costs, premiums and discounts. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Interest expense on debt obligations | $ | 121,287 | $ | 121,450 | $ | 366,388 | $ | 370,899 | |||||||
Amortization of deferred financing costs | 5,451 | 5,516 | 16,624 | 16,678 | |||||||||||
Amortization of adjustments on long-term debt | 116 | (892 | ) | (1,146 | ) | (2,743 | ) | ||||||||
Amortization of interest rate swaps(a) | 3,744 | 15,551 | 18,725 | 47,895 | |||||||||||
Other, net of capitalized interest | (721 | ) | (338 | ) | (1,809 | ) | (508 | ) | |||||||
Total | $ | 129,877 | $ | 141,287 | $ | 398,782 | $ | 432,221 |
(a) | Amounts reclassified from "accumulated other comprehensive income (loss)." |
6. | Foreign Currency Swaps |
Item Swapped | Notional Amount | Forward Rate | Start Date | End Date | Pay Amount | Receive Amount | Fair Value at September 30, 2015 | ||||||||
May 2015 cash receipt from sale of CCAL | A$1,400,000 | 0.8072 | May 2015 | June 2015 | Australian Dollar | US Dollar | N/A | (a) | |||||||
Installment payment from Buyer | A$155,000 | 0.79835 | May 2015 | January 2016 | Australian Dollar | US Dollar | $15,524 | (b) |
(a) | In conjunction with closing the CCAL sale on May 28, 2015, the Company cash settled the swap with a notional value of Australian dollar $1.4 billion and recorded a gain on foreign currency swaps of $54.5 million, which is included as a component of "other income (expense)" on the Company's condensed consolidated statement of operations. |
(b) | As of September 30, 2015, the Company marked-to-market the swap with a notional value of Australian dollar $155 million and recorded (1) an asset within "other current assets" on the Company's condensed consolidated balance sheet and (2) a corresponding gain on foreign currency swaps, which is included as a component of "other income (expense)" on the Company's condensed consolidated statement of operations. |
7. | Fair Value Disclosures |
Level in Fair Value Hierarchy | September 30, 2015 | December 31, 2014 | |||||||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||||
Assets: | |||||||||||||||||
Cash and cash equivalents | 1 | $ | 184,116 | $ | 184,116 | $ | 151,312 | $ | 151,312 | ||||||||
Restricted cash, current and non-current | 1 | 121,653 | 121,653 | 152,411 | 152,411 | ||||||||||||
Foreign currency swaps | 2 | 15,524 | 15,524 | — | — | ||||||||||||
Liabilities: | |||||||||||||||||
Long-term debt and other obligations | 2 | 12,141,366 | 12,479,140 | 11,920,861 | 12,286,161 |
8. | Income Taxes |
9. | Per Share Information |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Net income (loss) from continuing operations | $ | 104,301 | $ | 99,155 | $ | 382,561 | $ | 217,685 | |||||||
Dividends on preferred stock | (10,997 | ) | (10,997 | ) | (32,991 | ) | (32,991 | ) | |||||||
Net income (loss) from continuing operations attributable to CCIC common stockholders for basic and diluted computations | $ | 93,304 | $ | 88,158 | $ | 349,570 | $ | 184,694 | |||||||
Income (loss) from discontinued operations, net of tax | (522 | ) | 8,882 | 1,000,708 | 28,502 | ||||||||||
Less: Net income (loss) attributable to the noncontrolling interest | — | 1,100 | 3,343 | 3,744 | |||||||||||
Net income (loss) from discontinued operations attributable to CCIC common stockholders for basic and diluted computations | $ | (522 | ) | $ | 7,782 | $ | 997,365 | $ | 24,758 | ||||||
Weighted-average number of common shares outstanding (in thousands): | |||||||||||||||
Basic weighted-average number of common stock outstanding | 333,049 | 332,413 | 332,951 | 332,264 | |||||||||||
Effect of assumed dilution from potential common shares relating to restricted stock units and restricted stock awards | 662 | 828 | 784 | 756 | |||||||||||
Diluted weighted-average number of common shares outstanding | 333,711 | 333,241 | 333,735 | 333,020 | |||||||||||
Net income (loss) attributable to CCIC common stockholders, per common share: | |||||||||||||||
Income (loss) from continuing operations, basic | 0.28 | 0.27 | 1.05 | 0.56 | |||||||||||
Income (loss) from discontinued operations, basic | — | 0.02 | 3.00 | 0.07 | |||||||||||
Net income (loss) attributable to CCIC common stockholders, basic | 0.28 | 0.29 | 4.05 | 0.63 | |||||||||||
Income (loss) from continuing operations, diluted | 0.28 | 0.26 | 1.05 | 0.55 | |||||||||||
Income (loss) from discontinued operations, diluted | — | 0.03 | 2.99 | 0.08 | |||||||||||
Net income (loss) attributable to CCIC common stockholders, diluted | 0.28 | 0.29 | 4.04 | 0.63 |
10. | Commitments and Contingencies |
11. | Equity |
Equity Type | Declaration Date | Record Date | Payment Date | Dividends Per Share | Aggregate Payment Amount (In millions) | ||||||||||
Common Stock | February 12, 2015 | March 20, 2015 | March 31, 2015 | $ | 0.82 | $ | 274.7 | (a) | |||||||
Common Stock | May 29, 2015 | June 19, 2015 | June 30, 2015 | $ | 0.82 | $ | 274.5 | (a) | |||||||
Common Stock | July 30, 2015 | September 18, 2015 | September 30, 2015 | $ | 0.82 | $ | 274.3 | (a) | |||||||
Convertible Preferred Stock | December 22, 2014 | January 15, 2015 | February 2, 2015 | $ | 1.1250 | $ | 11.0 | ||||||||
Convertible Preferred Stock | March 27, 2015 | April 15, 2015 | May 1, 2015 | $ | 1.1250 | $ | 11.0 | ||||||||
Convertible Preferred Stock | June 21, 2015 | July 15, 2015 | August 3, 2015 | $ | 1.1250 | $ | 11.0 | ||||||||
Convertible Preferred Stock | September 23, 2015 | October 15, 2015 | November 2, 2015 | $ | 1.1250 | $ | 11.0 | (b) |
(a) | Inclusive of dividends accrued for holders of unvested restricted stock units. |
(b) | Represents amount paid on November 2, 2015 based on holders of record on October 15, 2015. |
12. | Operating Segments |
13. | Supplemental Cash Flow Information |
Nine Months Ended September 30, | |||||||
2015 | 2014 | ||||||
Supplemental disclosure of cash flow information: | |||||||
Interest paid | $ | 364,147 | $ | 368,437 | |||
Income taxes paid | 23,865 | 15,353 | |||||
Supplemental disclosure of non-cash investing and financing activities: | |||||||
Increase (decrease) in accounts payable for purchases of property and equipment | (5,399 | ) | 2,827 | ||||
Purchase of property and equipment under capital leases and installment purchases | 41,331 | 27,772 | |||||
Installment payment receivable for sale of CCAL (see note 3) | 117,384 | — |
14. | Subsequent Events |
ITEM 2. | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
• | Grow cash flows from our wireless infrastructure. We seek to maximize the site rental cash flows derived from our wireless infrastructure by adding tenants on our wireless infrastructure through long-term leases as our customers deploy and improve their wireless networks. We seek to maximize new tenant additions or modifications of existing tenant installations (collectively, "new tenant additions") through our focus on customer service and deployment speed. Due to the relatively fixed nature of the costs to operate our wireless infrastructure (which tend to increase at approximately the rate of inflation), we expect increases in our site rental cash flows from new tenant additions and the related subsequent impact from contracted escalations to result in growth in our operating cash flows. We believe there is considerable additional future demand for our existing wireless infrastructure based on their location and the anticipated growth in the wireless communication services industry. Substantially all of our wireless infrastructure can accommodate additional tenancy, either as currently constructed or with appropriate modifications to the structure, which we expect to have high incremental returns. |
• | Return cash provided by operating activities to stockholders in the form of dividends. We believe that distributing a meaningful portion of our cash provided by operating activities appropriately provides stockholders with increased certainty for a portion of expected long-term stockholder value while still retaining sufficient flexibility to invest in our business and deliver growth. We believe this decision reflects the translation of the high-quality, long-term contractual cash flows of our business into stable capital returns to stockholders. |
• | Invest capital efficiently to grow long-term dividends per share. We seek to invest our capital available, including the net cash provided by our operating activities and external financing sources, in a manner that will increase long-term stockholder value on a risk-adjusted basis. Our historical investments have included the following (in no particular order): |
◦ | purchase shares of our common stock from time to time; |
◦ | acquire or construct wireless infrastructure; |
◦ | acquire land interests under towers; |
◦ | make improvements and structural enhancements to our existing wireless infrastructure; or |
◦ | purchase, repay or redeem our debt. |
• | Effective January 1, 2014, we commenced operating as a REIT for U.S. federal income tax purposes. |
◦ | As a REIT, we are generally entitled to a deduction for dividends that we pay and therefore are not subject to U.S. federal corporate income tax on our taxable income that is distributed to our stockholders. |
◦ | To qualify and be taxed as a REIT, we will generally be required to distribute at least 90% of our REIT taxable income, after the utilization of our NOLs (determined without regard to the dividends paid deduction and excluding net capital gain), each year to our stockholders. |
◦ | See note 8 to our condensed consolidated financial statements for further discussion of our REIT status. |
• | Potential growth resulting from wireless network expansion and new entrants |
◦ | We expect wireless carriers will continue their focus on improving network quality and expanding capacity by adding additional antennas or other equipment on our wireless infrastructure. |
◦ | We expect existing and potential new customer demand for our wireless infrastructure will result from (1) new technologies, (2) increased usage of wireless data applications (including mobile entertainment, mobile internet usage, and machine-to-machine applications), (3) adoption of other emerging and embedded wireless devices (including laptops, tablets, and other devices), (4) increasing smartphone penetration, (5) wireless carrier focus on expanding quality and capacity, or (6) the availability of additional spectrum. |
◦ | Substantially all of our wireless infrastructure can accommodate additional tenancy, either as currently constructed or with appropriate modifications to the structure. |
◦ | U.S. wireless carriers continue to invest in their networks. |
◦ | Our site rental revenues grew $89.9 million, or 4%, from the nine months ended September 30, 2014 to the nine months ended September 30, 2015. This growth was predominately comprised of the following, exclusive of the impact of straight-line accounting: |
▪ | An approximate 6% increase from new leasing activity. |
▪ | An approximate 3% increase from cash escalations. |
▪ | An approximate 4% decrease in site rental revenues caused by the non-renewal of tenant leases. |
• | Site rental revenues under long-term tenant leases with contractual escalations |
◦ | Initial terms of five to 15 years with multiple renewal periods at the option of the tenant of five to ten years each. |
◦ | Weighted-average remaining term of approximately seven years, exclusive of renewals at the tenant's option, currently representing approximately $20 billion of expected future cash inflows. |
• | Revenues predominately from large wireless carriers |
◦ | Approximately 91% of our consolidated site rental revenues were derived from AT&T, Sprint, T-Mobile, and Verizon Wireless. See also "Item 2. MD&A—General Overview—Outlook Highlights" presented below. |
• | Majority of land interests under our towers under long-term control |
◦ | Nearly 90% and 75% of our site rental gross margin is derived from towers that reside on land that we own or control for greater than ten and 20 years, respectively. The aforementioned amounts include towers that reside on land interests that are owned, including fee interests and perpetual easements, which represent approximately one-third of our site rental gross margin. |
• | Relatively fixed wireless infrastructure operating costs |
◦ | Our wireless infrastructure operating costs tend to increase at approximately the rate of inflation and are not typically influenced by new tenant additions. |
• | Minimal sustaining capital expenditure requirements |
◦ | Sustaining capital expenditures represented approximately 3% of net revenues. |
• | Debt portfolio with long-dated maturities extended over multiple years, with the majority of such debt having a fixed rate (see "Item 3. Quantitative and Qualitative Disclosures About Market Risk" for a further discussion of our debt) |
◦ | 68% of our debt is fixed rate. |
◦ | Our debt service coverage and leverage ratios were comfortably within their respective financial maintenance covenants. |
◦ | During January and February 2015, we amended our 2012 Credit Facility agreement and increased the capacity of the 2012 Revolver to an aggregate revolving commitment of approximately $2.2 billion. |
◦ | During the second quarter 2015, we (1) issued $1.0 billion aggregate principal amount of the May 2015 Tower Revenue Notes, (2) repaid $250.0 million of August 2010 Tower Revenue Notes with an anticipated repayment date of August 2015, (3) repaid all of the previously outstanding WCP Securitized Notes, and (4) repaid a portion of our outstanding borrowings under our 2012 Credit Facility. See note 5 to our condensed consolidated financial statements. |
• | Significant cash flows from operations |
◦ | Net cash provided by operating activities was $1.3 billion. |
◦ | We expect to grow our core business of providing access to our wireless infrastructure as a result of contractual escalators and future anticipated demand for our wireless infrastructure. |
• | Returning cash flows provided by operations to stockholders in the form of dividends |
◦ | During each of the first three quarters of 2015, we paid common stock cash dividends totaling approximately $821.1 million. See "Item 2. MD&A—General Overview—Common Stock Dividend" below for a discussion of the increase to our quarterly cash dividend in the fourth quarter of 2015. |
• | Investing capital efficiently to grow long-term dividends per share |
◦ | Discretionary capital expenditures were $582.8 million, including wireless infrastructure improvements in order to support additional site rentals, construction of wireless infrastructure and land purchases. |
• | We expect that our full year 2015 site rental revenue growth will be benefited by similar levels of tenant additions as in 2014, as large U.S. wireless carriers upgrade and enhance their networks, partially offset by an increase in non-renewals of tenant leases. During 2015, we expect non-renewals of tenant leases to primarily result from Sprint's decommissioning of its legacy Nextel iDEN network. |
• | We expect that our full year 2016 site rental revenue growth will be benefited by similar levels of tenant additions as in 2015, as large U.S. wireless carriers upgrade and enhance their networks, partially offset by non-renewals of tenant leases primarily resulting from anticipated non-renewals of $80 million to $90 million from our customers' decommissioning of the former Leap Wireless, MetroPCS and Clearwire networks, at least in part. |
• | We expect sustaining capital expenditures to be approximately 3% of net revenues for full year 2015 due to expansion of our office facilities. We expect sustaining capital expenditures to be approximately 2% of net revenues for full year 2016. |
Three Months Ended September 30, | Percent Change(b) | |||||||||
2015 | 2014 | |||||||||
(Dollars in thousands) | ||||||||||
Net revenues: | ||||||||||
Site rental | $ | 764,606 | $ | 717,623 | 7 | % | ||||
Network services and other | 153,501 | 175,260 | (12 | )% | ||||||
Net revenues | 918,107 | 892,883 | 3 | % | ||||||
Operating expenses: | ||||||||||
Costs of operations(a): | ||||||||||
Site rental | 247,000 | 230,599 | 7 | % | ||||||
Network services and other | 86,859 | 101,814 | (15 | )% | ||||||
Total costs of operations | 333,859 | 332,413 | — | % | ||||||
General and administrative | 76,699 | 65,212 | 18 | % | ||||||
Asset write-down charges | 7,477 | 4,932 | * | |||||||
Acquisition and integration costs | 7,608 | 4,068 | * | |||||||
Depreciation, amortization and accretion | 261,662 | 247,206 | 6 | % | ||||||
Total operating expenses | 687,305 | 653,831 | 5 | % | ||||||
Operating income (loss) | 230,802 | 239,052 | (3 | )% | ||||||
Interest expense and amortization of deferred financing costs | (129,877 | ) | (141,287 | ) | (8 | )% | ||||
Gains (losses) on retirement of long-term obligations | — | — | ||||||||
Interest income | 789 | 107 | ||||||||
Other income (expense) | (1,214 | ) | (694 | ) | ||||||
Income (loss) from continuing operations before income taxes | 100,500 | 97,178 | ||||||||
Benefit (provision) for income taxes | 3,801 | 1,977 | ||||||||
Income (loss) from continuing operations | 104,301 | 99,155 | ||||||||
Discontinued operations: | ||||||||||
Income (loss) from discontinued operations, net of tax | — | 8,882 | ||||||||
Net gain (loss) from disposal of discontinued operations, net of tax | (522 | ) | — | |||||||
Income (loss) from discontinued operations, net of tax | (522 | ) | 8,882 | |||||||
Net income (loss) | 103,779 | 108,037 | ||||||||
Less: net income (loss) attributable to the noncontrolling interest | — | 1,100 | ||||||||
Net income (loss) attributable to CCIC stockholders | 103,779 | 106,937 | ||||||||
Dividends on preferred stock | (10,997 | ) | (10,997 | ) | ||||||
Net income (loss) attributable to CCIC common stockholders | $ | 92,782 | $ | 95,940 |
* | Percentage is not meaningful |
(a) | Exclusive of depreciation, amortization and accretion shown separately. |
(b) | Inclusive of the impact of foreign exchange rate fluctuations. |
Nine Months Ended September 30, | Percent Change(b) | |||||||||
2015 | 2014 | |||||||||
(Dollars in thousands) | ||||||||||
Net revenues: | ||||||||||
Site rental | $ | 2,233,077 | $ | 2,143,198 | 4 | % | ||||
Network services and other | 484,938 | 469,690 | 3 | % | ||||||
Net revenues | 2,718,015 | 2,612,888 | 4 | % | ||||||
Operating expenses: | ||||||||||
Costs of operations(a): | ||||||||||
Site rental | 716,244 | 676,275 | 6 | % | ||||||
Network services and other | 263,177 | 275,514 | (4 | )% | ||||||
Total costs of operations | 979,421 | 951,789 | 3 | % | ||||||
General and administrative | 223,880 | 187,171 | 20 | % | ||||||
Asset write-down charges | 19,652 | 10,673 | * | |||||||
Acquisition and integration costs | 12,001 | 28,852 | * | |||||||
Depreciation, amortization and accretion | 766,621 | 738,965 | 4 | % | ||||||
Total operating expenses | 2,001,575 | 1,917,450 | 4 | % | ||||||
Operating income (loss) | 716,440 | 695,438 | 3 | % | ||||||
Interest expense and amortization of deferred financing costs | (398,782 | ) | (432,221 | ) | (8 | )% | ||||
Gains (losses) on retirement of long-term obligations | (4,157 | ) | (44,629 | ) | ||||||
Interest income | 1,170 | 329 | ||||||||
Other income (expense) | 58,510 | (9,350 | ) | |||||||
Income (loss) from continuing operations before income taxes | 373,181 | 209,567 | ||||||||
Benefit (provision) for income taxes | 9,380 | 8,118 | ||||||||
Income (loss) from continuing operations | 382,561 | 217,685 | ||||||||
Discontinued operations: | ||||||||||
Income (loss) from discontinued operations, net of tax | 19,690 | 28,502 | ||||||||
Net gain (loss) from disposal of discontinued operations, net of tax | 981,018 | — | ||||||||
Income (loss) from discontinued operations, net of tax | 1,000,708 | 28,502 | ||||||||
Net income (loss) | 1,383,269 | 246,187 | ||||||||
Less: net income (loss) attributable to the noncontrolling interest | 3,343 | 3,744 | ||||||||
Net income (loss) attributable to CCIC stockholders | 1,379,926 | 242,443 | ||||||||
Dividends on preferred stock | (32,991 | ) | (32,991 | ) | ||||||
Net income (loss) attributable to CCIC common stockholders | $ | 1,346,935 | $ | 209,452 |
* | Percentage is not meaningful |
(a) | Exclusive of depreciation, amortization and accretion shown separately. |
(b) | Inclusive of the impact of foreign exchange rate fluctuations. |
September 30, 2015 | |||
(In thousands of dollars) | |||
Cash and cash equivalents(a) | $ | 184,116 | |
Undrawn 2012 Revolver availability(b) | 1,215,000 | ||
Total debt and other long-term obligations | 12,141,366 | ||
Total equity | 7,240,303 |
(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 the 2012 Credit Facility. See our 2014 Form 10-K. |
• | Our liquidity sources may include (1) cash on hand, (2) net cash provided by operating activities (net of cash interest payments), (3) undrawn availability from our 2012 Revolver, and (4) issuances of equity pursuant to our ATM Program. Our liquidity uses over the next 12 months are expected to include (1) debt service obligations of $102.2 million (principal payments), (2) common stock dividend payments expected to be $3.54 per share, or an aggregate of approximately $1.2 billion, subject to future approval by our board of directors (see "Item 2. MD&A—Common Stock Dividend"), (3) Convertible Preferred Stock dividend payments of approximately $45 million, and (4) sustaining and discretionary capital expenditures (expect to be equal to or greater than current levels). During the next 12 months, we expect that our liquidity sources should be sufficient to cover our expected uses. As CCIC and CCOC are holding companies, our cash flow from operations is generated by our operating subsidiaries. |
• | We have no scheduled contractual debt maturities other than principal payments on amortizing debt. See "Item 3. Quantitative and Qualitative Disclosures About Market Risk" for a tabular presentation as of September 30, 2015 of our scheduled contractual debt maturities and a discussion of anticipated repayment dates. |
Nine Months Ended September 30, | |||||||||||
2015 | 2014 | Change | |||||||||
(In thousands of dollars) | |||||||||||
Net increase (decrease) in cash and cash equivalents provided by (used for) from continuing operations: | |||||||||||
Operating activities | $ | 1,290,876 | $ | 1,150,926 | $ | 139,950 | |||||
Investing activities | (1,688,645 | ) | (670,529 | ) | (1,018,116 | ) | |||||
Financing activities | (699,989 | ) | (479,033 | ) | (220,956 | ) | |||||
Net increase (decrease) in cash and cash equivalents from continuing operations | (1,097,758 | ) | 1,364 | (1,099,122 | ) | ||||||
Net increase (decrease) in cash and cash equivalents from discontinued operations | 1,107,936 | 21,150 | 1,086,786 | ||||||||
Effect of exchange rate changes on cash | (1,682 | ) | (7,358 | ) | 5,676 | ||||||
Net increase (decrease) in cash and cash equivalents | $ | 8,496 | $ | 15,156 | $ | (6,660 | ) |
• | Discretionary capital expenditures made with respect to activities which we believe exhibit sufficient potential to enhance long-term stockholder value. They consist of wireless infrastructure construction and improvements and, to a lesser extent, purchases of land assets under towers as we seek to manage our interests in the land beneath our towers. Improvements to existing wireless infrastructure to accommodate new leasing typically vary based on, among other factors: (1) the type of wireless infrastructure, (2) the scope, volume, and mix of work performed on the wireless infrastructure, (3) existing capacity prior to installation, or (4) changes in structural engineering regulations and standards. Our decisions regarding capital expenditures are influenced by the availability and cost of capital and expected returns on alternative uses of cash, such as payments of dividends and investments. |
• | Sustaining capital expenditures consist of (1) corporate-related capital improvements and (2) maintenance on our wireless infrastructure assets that enable our customers' ongoing quiet enjoyment of the wireless infrastructure. |
Nine Months Ended September 30, | |||||||||||
2015 | 2014 | Change | |||||||||
(In thousands of dollars) | |||||||||||
Discretionary: | |||||||||||
Purchases of land interests | $ | 67,786 | $ | 54,889 | $ | 12,897 | |||||
Wireless infrastructure construction and improvements | 515,008 | 401,441 | 113,567 | ||||||||
Sustaining | 75,446 | 42,630 | 32,816 | ||||||||
Total | $ | 658,240 | $ | 498,960 | $ | 159,280 |
Three Months Ended September 30, | |||||||
2015 | 2014 | ||||||
Net income (loss) | $ | 103,779 | $ | 108,037 | |||
Adjustments to increase (decrease) net income (loss): | |||||||
Income (loss) from discontinued operations | 522 | (8,882 | ) | ||||
Asset write-down charges | 7,477 | 4,932 | |||||
Acquisition and integration costs | 7,608 | 4,068 | |||||
Depreciation, amortization and accretion | 261,662 | 247,206 | |||||
Amortization of prepaid lease purchase price adjustments | 5,143 | 4,988 | |||||
Interest expense and amortization of deferred financing costs | 129,877 | 141,287 | |||||
Interest income | (789 | ) | (107 | ) | |||
Other income (expense) | 1,214 | 694 | |||||
Benefit (provision) for income taxes | (3,801 | ) | (1,977 | ) | |||
Stock-based compensation expense | 16,466 | 13,358 | |||||
Adjusted EBITDA(a) | $ | 529,158 | $ | 513,604 |
(a) | The above reconciliation excludes the items included in the Company's Adjusted EBITDA definition which are not applicable to the periods shown. |
Nine Months Ended September 30, | |||||||
2015 | 2014 | ||||||
Net income (loss) | $ | 1,383,269 | $ | 246,187 | |||
Adjustments to increase (decrease) net income (loss): | |||||||
Income (loss) from discontinued operations | (1,000,708 | ) | (28,502 | ) | |||
Asset write-down charges | 19,652 | 10,673 | |||||
Acquisition and integration costs | 12,001 | 28,852 | |||||
Depreciation, amortization and accretion | 766,621 | 738,965 | |||||
Amortization of prepaid lease purchase price adjustments | 15,387 | 14,546 | |||||
Interest expense and amortization of deferred financing costs | 398,782 | 432,221 | |||||
Gains (losses) on retirement of long-term obligations | 4,157 | 44,629 | |||||
Interest income | (1,170 | ) | (329 | ) | |||
Other income (expense) | (58,510 | ) | 9,350 | ||||
Benefit (provision) for income taxes | (9,380 | ) | (8,118 | ) | |||
Stock-based compensation expense | 49,282 | 43,199 | |||||
Adjusted EBITDA(a) | $ | 1,579,383 | $ | 1,531,673 |
(a) | The above reconciliation excludes the items included in the Company's Adjusted EBITDA definition which are not applicable to the periods shown. |
• | 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 lease revenues under our long-term leases, our ability to obtain and maintain our tenants, and our ability to operate our wireless infrastructure effectively; |
• | it is the primary measure of profit and loss historically used by 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 historically used 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 ($12.1 billion outstanding at September 30, 2015 and $11.9 billion at December 31, 2014); |
• | our $3.9 billion and $4.2 billion of floating rate debt at September 30, 2015 and December 31, 2014, respectively, which represented approximately 32% and 35% of our total debt, as of September 30, 2015 and as of December 31, 2014, respectively; and |
• | potential future borrowings of incremental debt, including borrowings on our 2012 Credit Facility. |
Future Principal Payments and Interest Rates by the Debt Instruments' Contractual Year of Maturity | |||||||||||||||||||||||||||||||
2015 | 2016 | 2017 | 2018 | 2019 | Thereafter | Total | Fair Value(a) | ||||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||||||||
Debt: | |||||||||||||||||||||||||||||||
Fixed rate(c) | $ | 13,176 | $ | 49,586 | $ | 545,805 | (f) | $ | 42,154 | $ | 34,336 | $ | 7,558,640 | (c)(d) | $ | 8,243,697 | (c)(d) | $ | 8,588,875 | ||||||||||||
Average interest rate(b)(c)(d) | 4.4 | % | 4.3 | % | 2.6 | % | 4.8 | % | 5.0 | % | 7.5 | % | (c)(d) | 7.1 | % | (c)(d) | |||||||||||||||
Variable rate | $ | 9,873 | $ | 56,054 | $ | 56,054 | $ | 56,054 | $ | 1,567,929 | (g) | $ | 2,155,300 | $ | 3,901,264 | $ | 3,890,265 | ||||||||||||||
Average interest rate(e) | 2.6 | % | 2.8 | % | 3.3 | % | 3.7 | % | 3.7 | % | 4.8 | % | 4.3 | % |
(a) | The fair value of our debt is 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 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 footnotes (c) and (d)). |
(c) | The impact of principal payments that will commence following the anticipated repayment dates is not considered. The January 2010 Tower Revenue Notes consist of two series of notes with principal amounts of $350.0 million and $1.3 billion, having anticipated repayment dates in 2017 and 2020, respectively. The August 2010 Tower Revenue Notes consist of two series of notes with principal amounts of $300.0 million and $1.0 billion, having anticipated repayment dates in 2017 and 2020, respectively. See note 5 to our condensed consolidated financial statements for a discussion of our issuance of $1.0 billion of the May 2015 Tower Revenue Notes with anticipated repayment dates ranging between 2022 and 2025. |
(d) | If the Tower Revenue Notes are not repaid in full by the applicable anticipated repayment dates, the applicable interest rate increases by 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 ranging from 2037 to 2045 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 2014 Excess Cash Flow of the issuers of the Tower Revenue Notes was approximately $502.9 million. We currently expect to refinance these notes on or prior to the respective anticipated repayment dates. |
(e) | The average variable interest rate is based on the currently observable forward rates. The 2012 Revolver and the Tranche A Term Loans bear interest at a per annum rate equal to LIBOR plus 1.5% to 2.25%, based on CCOC's total net leverage ratio. The Tranche B Term Loans bear interest at a per annum rate equal to LIBOR (with LIBOR subject to a floor of 75 basis points per annum) plus 2.25% to 2.5%, based on CCOC's total net leverage ratio. |
(f) | Predominantly consists of $500.0 million in aggregate principal of 2.381% secured notes due 2017. |
(g) | Predominantly consists of the Tranche A Term Loans due January 2019 and the 2012 Revolver. See notes 4 and 5 to our condensed consolidated financial statements. |
ITEM 4. | CONTROLS AND PROCEDURES |
ITEM 1. | LEGAL PROCEEDINGS |
ITEM 1A. | RISK FACTORS |
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) | |||||||||||||
July 1 - July 31, 2015 | — | — | — | ||||||||||
August 1 - August 31, 2015 | 1 | 81.98 | — | — | |||||||||
September 1 - September 30, 2015 | — | — | — | ||||||||||
Total | 1 | $ | 81.98 | — | — |
ITEM 6. | EXHIBITS |
CROWN CASTLE INTERNATIONAL CORP. | ||||
Date: | November 6, 2015 | By: | /s/ Jay A. Brown | |
Jay A. Brown | ||||
Senior Vice President, | ||||
Chief Financial Officer and Treasurer | ||||
(Principal Financial Officer) | ||||
Date: | November 6, 2015 | By: | /s/ Rob A. Fisher | |
Rob A. Fisher | ||||
Vice President and Controller | ||||
(Principal Accounting Officer) |
Exhibit No. | Description | ||
(c) | 1.1 | Form of Sales Agreement, dated August 28, 2015, between Crown Castle International Corp. and each of Merrill Lynch, Pierce, Fenner & Smith Incorporated, Barclays Capital Inc., Citigroup Global Markets Inc., Credit Agricole Securities (USA) Inc., J.P. Morgan Securities LLC, Mizuho Securities USA Inc., Mitsubishi UFJ Securities (USA), Inc., Morgan Stanley & Co. LLC, RBC Capital Markets, LLC, SMBC Nikko Securities America, Inc., SunTrust Robinson Humphrey, Inc. and Wells Fargo Securities, LLC | |
(a) | 3.1 | Restated Certificate of Incorporation of Crown Castle International Corp. (including the Certificate of Designations of 4.50% Mandatory Convertible Preferred Stock, Series A, incorporated therein as Exhibit I) | |
(b) | 3.2 | Amended and Restated By-Laws of Crown Castle International Corp., dated July 30, 2015 | |
(d) | 10.1 | Agency Resignation and Appointment Agreement and Amendment to Credit Agreement dated as of August 7, 2015, among Crown Castle International Corp., Crown Castle Operating Company, certain subsidiaries of Crown Castle Operating Company party thereto, The Royal Bank of Scotland plc, as the retiring administrative agent, issuing bank and swingline lender, Mizuho Bank, Ltd., as the successor administrative agent, issuing bank and swingline lender, and the lenders party thereto | |
* | 31.1 | Certification of Chief Executive Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002 | |
* | 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 |
* | Filed herewith. |
(a) | Incorporated by reference to the exhibit previously filed by the Registrant on Form 8-K (File No. 001-16441) on December 16, 2014. |
(b) | Incorporated by reference to the exhibit previously filed by the Registrant on Form 8-K (File No. 001-16441) on August 4, 2015. |
(c) | Incorporated by reference to the exhibit previously filed by the Registrant on Form 8-K (File No. 001-16441) on August 28, 2015. |
(d) | Incorporated by reference to the exhibit previously filed by the Registrant on Form 8-K (File No. 001-16441) on August 31, 2015. |
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 September 30, 2015 (the last date of the period covered by the Report). |
/s/ W. Benjamin Moreland | ||
W. Benjamin Moreland President and Chief Executive Officer | ||
November 6, 2015 | ||
/s/ Jay A. Brown | ||
Jay A. Brown Senior Vice President, Chief Financial Officer and Treasurer | ||
November 6, 2015 |
Equity Other Equity Activity (Details) $ in Millions |
Sep. 30, 2015
USD ($)
|
---|---|
Equity [Abstract] | |
Common Stock, Capital Shares Reserved for Future Issuance | $ 500.0 |
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