EX-99.2 3 q32018supplement.htm EXHIBIT 99.2 Exhibit
Exhibit 99.2








logoa12.jpg



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Supplemental Information Package
and Non-GAAP Reconciliations
Third Quarter • September 30, 2018




The pathway to possible.
CrownCastle.com
Crown Castle International Corp.
Third Quarter 2018

TABLE OF CONTENTS
 
Page
Company Overview
 
Company Profile
Strategy
AFFO per Share
Tower Portfolio Footprint
Corporate Information
Research Coverage
Historical Common Stock Data
Portfolio and Financial Highlights
Outlook
Financials & Metrics
 
Condensed Consolidated Balance Sheet
Condensed Consolidated Statement of Operations
Segment Operating Results
FFO and AFFO Reconciliations
Condensed Consolidated Statement of Cash Flows
Components of Changes in Site Rental Revenues
Summary of Straight-Lined and Prepaid Rent Activity
Summary of Capital Expenditures
Lease Renewal and Lease Distribution
Customer Overview
Asset Portfolio Overview
 
Summary of Tower Portfolio by Vintage
Portfolio Overview
Ground Interest Overview
Ground Interest Activity
Capitalization Overview
 
Capitalization Overview
Debt Maturity Overview
Liquidity Overview
Maintenance and Financial Covenants
Interest Rate Sensitivity
Appendix

Cautionary Language Regarding Forward-Looking Statements
This supplemental information package ("Supplement") contains forward-looking statements and information that are based on our management's current expectations as of the date of this Supplement. Statements that are not historical facts are hereby identified as forward-looking statements. Words such as "Outlook," "guide," "forecast," "estimate," "anticipate," "project," "plan," "intend," "believe," "expect," "likely," "predicted," "positioned," and any variations of these words and similar expressions are intended to identify such forward looking statements. Such statements include, but are not limited to, our Outlook for the fourth quarter 2018, full year 2018 and full year 2019.
Such forward-looking statements are subject to certain risks, uncertainties and assumptions, including, but not limited to, prevailing market conditions. Should one or more of these or other risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those expected. More information about potential risk factors which could affect our results is included in our filings with the Securities and Exchange Commission. Crown Castle assumes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
The components of financial information presented herein, both historical and forward looking, may not sum due to rounding. Definitions and reconciliations of non-GAAP financial measures, segment measures and other calculations are provided in the Appendix to this Supplement.
As used herein, the term "including" and any variation thereof, means "including without limitation." The use of the word "or" herein is not exclusive.

1
Crown Castle International Corp.
Third Quarter 2018
COMPANY
OVERVIEW
 FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX

COMPANY PROFILE 
Crown Castle International Corp. (to which the terms "Crown Castle," "CCIC," "we," "our," "our Company," "the Company" or "us" as used herein refer) owns, operates and leases shared communications infrastructure, including: (1) towers and other structures, such as rooftops (collectively, "towers"), and (2) fiber primarily supporting small cell networks ("small cells") and fiber solutions. Our towers, fiber and small cells assets are collectively referred to herein as "communications infrastructure," and our customers on our communications infrastructure are referred to herein as "tenants." Our towers have a significant presence in each of the top 100 basic trading areas, and the majority of our fiber is located in major metropolitan areas, including a presence within every major U.S. market. Crown Castle owns, operates and leases shared communications infrastructure that has been acquired or constructed over time and is geographically dispersed throughout the U.S., and which consists of (1) approximately 40,000 towers and (2) approximately 65,000 route miles of fiber primarily supporting small cells and fiber solutions.
Our core business is providing access, including space or capacity, to our shared communications infrastructure via long-term contracts in various forms, including licenses, subleases and lease agreements (collectively, "contracts"). We seek to increase our site rental revenues by adding more tenants on our communications infrastructure, which we expect to result in significant incremental cash flows due to our low incremental operating costs.
We operate as a Real Estate Investment Trust ("REIT") for U.S. federal income tax purposes.
Unless otherwise indicated, the Company has changed its presentation to millions and, as a result, any necessary rounding adjustments have been made to prior year disclosed amounts.

STRATEGY 
As a leading provider of shared communications infrastructure in the U.S., our strategy is to create long-term stockholder value via a combination of (1) growing cash flows generated from our portfolio of communications infrastructure, (2) returning a meaningful portion of our cash provided by operating activities to our common stockholders in the form of dividends and (3) investing capital efficiently to grow cash flows and long-term dividends per share. Our U.S. focused strategy is based, in part, on our belief that the U.S. is the most attractive market for shared communications infrastructure investment with the greatest long-term growth potential. We measure our efforts to create "long-term stockholder value" by the combined payment of dividends to stockholders and growth in our per share results. The key elements of our strategy are to:
•
Grow cash flows from our communications infrastructure. We seek to maximize our site rental cash flows by working with our customers to provide them quick access to our communications infrastructure and entering into associated long-term contracts. Tenant additions or modifications of existing tenant equipment (collectively, "tenant additions") enable our customers to expand coverage and capacity in order to meet increasing demand for data, while generating high incremental returns for our business. We believe our product offerings of towers and small cells provide a comprehensive solution to our wireless customers' growing network needs through our shared communications infrastructure model, which is an efficient and cost-effective way to serve our customers. Additionally, we believe our ability to share our fiber assets across multiple customers to deploy both small cells and offer fiber solutions allows us to generate cash flows and increase stockholder return. We also believe that there will be considerable future demand for our communications infrastructure based on the location of our assets and the rapid growth in demand for data.
•
Return cash provided by operating activities to common stockholders in the form of dividends. We believe that distributing a meaningful portion of our cash provided by operating activities appropriately provides common 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 common stockholders.
•
Invest capital efficiently to grow cash flows and long-term dividends per share. We seek to invest our available capital, 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):
◦
acquisitions or construction of towers, fiber and small cells;
◦
acquisitions of land interests under towers;
◦
improvements and structural enhancements to our existing communications infrastructure;

2
Crown Castle International Corp.
Third Quarter 2018
COMPANY
OVERVIEW
 FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX

◦
purchases of shares of our common stock from time to time; and
◦
purchases, repayments or redemptions of our debt.
Our strategy to create long-term stockholder value is based on our belief that additional demand for our communications infrastructure will be created by the expected continued growth in the demand for data. We believe that such demand for our communications infrastructure will continue, will result in growth of our cash flows due to tenant additions on our existing communications infrastructure, and will create other growth opportunities for us, such as demand for new communications infrastructure.

AFFO PER SHARE(a)(b)
affopersharechartq32018a02.jpg

TOWER PORTFOLIO FOOTPRINT
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(a)
See reconciliations and definitions provided herein.
(b)
Attributable to CCIC common stockholders.
(c)
Represents the midpoint of the full year 2018 and full year 2019 Outlook as issued on October 17, 2018.

3
Crown Castle International Corp.
Third Quarter 2018
COMPANY
OVERVIEW
 FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX

GENERAL COMPANY INFORMATION
Principal executive offices
1220 Augusta Drive, Suite 600, Houston, TX 77057
Common shares trading symbol
CCI
Stock exchange listing
New York Stock Exchange
Fiscal year ending date
December 31
Fitch - Long Term Issuer Default Rating
BBB
Moody’s - Long Term Corporate Family Rating
Baa3
Standard & Poor’s - Long Term Local Issuer Credit Rating
BBB-
Note: These credit ratings may not reflect the potential risks relating to the structure or trading of the Company’s securities and are provided solely for informational purposes. Credit ratings are not recommendations to buy, sell or hold any security, and may be revised or withdrawn at any time by the issuing organization in its sole discretion. The Company does not undertake any obligation to maintain the ratings or to advise of any change in the ratings. Each agency’s rating should be evaluated independently of any other agency’s rating. An explanation of the significances of the ratings can be obtained from each of the ratings agencies.

EXECUTIVE MANAGEMENT TEAM
Name
Age
Years with Company
Position
Jay A. Brown
45
19
President and Chief Executive Officer
Daniel K. Schlanger
44
2
Senior Vice President, Chief Financial Officer and Treasurer
James D. Young
57
13
Senior Vice President and Chief Operating Officer - Fiber
Robert C. Ackerman
66
20
Senior Vice President and Chief Operating Officer - Towers and Small Cells
Kenneth J. Simon
57
3
Senior Vice President and General Counsel
Michael J. Kavanagh
50
8
Senior Vice President and Chief Commercial Officer
Philip M. Kelley
45
21
Senior Vice President - Corporate Development and Strategy

BOARD OF DIRECTORS
Name
Position
Committees
Age
Years as Director
J. Landis Martin
Chairman
NCG(a)
72
22
P. Robert Bartolo
Director
Audit, Compensation
46
4
Cindy Christy
Director
Compensation, NCG(a), Strategy
52
11
Ari Q. Fitzgerald
Director
Compensation, NCG(a), Strategy
55
16
Robert E. Garrison II
Director
Audit, Compensation
76
13
Andrea J. Goldsmith
Director
NCG(a), Strategy
53
< 1
Lee W. Hogan
Director
Audit, Compensation, Strategy
74
17
Edward C. Hutcheson Jr.
Director
Strategy
73
23
Robert F. McKenzie
Director
Audit, Strategy
74
23
Anthony J. Melone
Director
NCG(a), Strategy
58
3
W. Benjamin Moreland
Director
 
55
12
Jay A. Brown
Director
 
45
2
(a)
Nominating & Corporate Governance Committee


4
Crown Castle International Corp.
Third Quarter 2018
COMPANY
OVERVIEW
 FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX

RESEARCH COVERAGE
Equity Research
Bank of America
David Barden
(646) 855-1320
Barclays
Amir Rozwadowski
(212) 526-4043
BTIG
Walter Piecyk
(646) 450-9258
Citigroup
Michael Rollins
(212) 816-1116
Cowen and Company
Colby Synesael
(646) 562-1355
Deutsche Bank
Matthew Niknam
(212) 250-4711
Goldman Sachs
Brett Feldman
(212) 902-8156
Guggenheim
Robert Gutman
(212) 518-9148
JPMorgan
Philip Cusick
(212) 622-1444
Macquarie
Amy Yong
(212) 231-2624
MoffettNathanson
Nick Del Deo
(212) 519-0025
Morgan Stanley
Simon Flannery
(212) 761-6432
New Street Research
Spencer Kurn
(212) 921-2067
Oppenheimer & Co.
Timothy Horan
(212) 667-8137
Pacific Crest Securities
Brandon Nispel
(503) 821-3871

Raymond James
Ric Prentiss
(727) 567-2567



RBC Capital Markets
Jonathan Atkin
(415) 633-8589




SunTrust Robinson Humphrey
Greg Miller
(212) 303-4169




UBS
Batya Levi
(212) 713-8824




Wells Fargo Securities, LLC
Jennifer Fritzsche
(312) 920-3548

 
 
 
 
Rating Agency
Fitch
John Culver
(312) 368-3216
Moody’s
Dilara Sukhov
(212) 553-1653
Standard & Poor’s
Ryan Gilmore
(212) 438-0602

HISTORICAL COMMON STOCK DATA
 
Three Months Ended
(in millions, except per share amounts)
9/30/18
6/30/18
3/31/18
12/31/17
9/30/17
High price(a)
$
113.74

$
108.30

$
111.21

$
110.64

$
103.82

Low price(a)
$
105.90

$
96.87

$
97.77

$
95.54

$
88.53

Period end closing price(b)
$
111.33

$
106.81

$
107.46

$
107.81

$
96.18

Dividends paid per common share
$
1.05

$
1.05

$
1.05

$
1.05

$
0.95

Volume weighted average price for the period(a)
$
110.34

$
102.00

$
105.46

$
103.70

$
96.92

Common shares outstanding, at period end
415

415

415

406

406

Market value of outstanding common shares, at period end(c)
$
46,185

$
44,309

$
44,575

$
43,801

$
39,076

(a)
Based on the sales price, adjusted for common stock dividends, as reported by Bloomberg.
(b)
Based on the period end closing price, adjusted for common stock dividends, as reported by Bloomberg.
(c)
Period end market value of outstanding common shares is calculated as the product of (1) shares of common stock outstanding at period end and (2) closing share price at period end, adjusted for common stock dividends, as reported by Bloomberg.


5
Crown Castle International Corp.
Third Quarter 2018
COMPANY
OVERVIEW
 FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX

SUMMARY PORTFOLIO HIGHLIGHTS
(as of September 30, 2018)
 
Towers
Number of towers(a)
40,027

Average number of tenants per tower
2.2

Remaining contracted customer receivables ($ in billions)(b)
$
19

Weighted average remaining customer contract term (years)(c)
6

Percent of towers in the Top 50 / 100 Basic Trading Areas
56% / 71%

Percent of ground leased / owned (by Towers segment site rental gross margin)
61% / 39%

Weighted average maturity of ground leases (years)(d)
35

Fiber
Number of route miles of fiber (in thousands)
65

Remaining contracted customer receivables ($ in billions)(b)
$
5

Weighted average remaining customer contract term (years)(c)
4


SUMMARY FINANCIAL HIGHLIGHTS
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(dollars in millions, except per share amounts)
 
2018
 
2017
 
2018
 
2017
Operating Data:
 
 
 
 
 
 
 
 
Net revenues
 
 
 
 
 
 
 
 
Site rental
 
$
1,184

 
$
893

 
$
3,507

 
$
2,619

Network services and other
 
191

 
170

 
497

 
499

Net revenues
 
$
1,375

 
$
1,063

 
$
4,004

 
$
3,118

 
 
 
 
 
 
 
 
 
Costs of operations (exclusive of depreciation, amortization and accretion)
 
 
 
 
 
 
 
 
Site rental
 
$
355

 
$
281

 
$
1,057

 
$
815

Network services and other
 
119

 
107

 
304

 
310

Total cost of operations
 
$
474

 
$
388

 
$
1,361

 
$
1,125

 
 
 
 
 
 
 
 
 
Net income (loss) attributable to CCIC common stockholders
 
$
136

 
$
85

 
$
373

 
$
316

Net income (loss) attributable to CCIC common stockholders per share—diluted(e)
 
$
0.33

 
$
0.21

 
$
0.90

 
$
0.84

 
 
 
 
 
 
 
 
 
Non-GAAP Data(f):
 
 
 
 
 
 
 
 
Adjusted EBITDA
 
$
793

 
$
605

 
$
2,324

 
$
1,775

FFO(g)
 
515

 
408

 
1,487

 
1,214

AFFO(g)
 
579

 
459

 
1,683

 
1,349

AFFO per share(e)(g)
 
$
1.39

 
$
1.15

 
$
4.06

 
$
3.60

(a)
Excludes third-party land interests.
(b)
Excludes renewal terms at customers' option.
(c)
Excludes renewal terms at customers' option, weighted by site rental revenues.
(d)
Includes all renewal terms at the Company's option, weighted by Towers segment site rental gross margin.
(e)
Based on diluted weighted-average common shares outstanding of 416 million and 397 million for the three months ended September 30, 2018 and 2017, respectively, and 414 million and 375 million for the nine months ended September 30, 2018 and 2017, respectively.
(f)
See reconciliations of Non-GAAP financial measures provided herein. See also "Definitions of Non-GAAP Measures, Segment Measures and Other Calculations" in the Appendix for a discussion of our definitions of Adjusted EBITDA, FFO and AFFO.
(g)
Attributable to CCIC common stockholders.




6
Crown Castle International Corp.
Third Quarter 2018
COMPANY
OVERVIEW
 FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX

SUMMARY FINANCIAL HIGHLIGHTS (CONTINUED)
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(dollars in millions)
 
2018
 
2017
 
2018
 
2017
Summary Cash Flow Data(a):
 
 
 
 
 
 
 
 
Net cash provided by (used for) operating activities
 
$
664

 
$
482

 
$
1,775

 
$
1,413

Net cash provided by (used for) investing activities(b)
 
(503
)
 
(297
)
 
(1,281
)
 
(2,971
)
Net cash provided by (used for) financing activities
 
(44
)
 
6,330

 
(480
)
 
7,699

(dollars in millions)
 
September 30, 2018
 
December 31, 2017
Balance Sheet Data (at period end):
 
 
 
 
Cash and cash equivalents
 
$
323

 
$
314

Property and equipment, net
 
13,433

 
12,933

Total assets
 
32,644

 
32,229

Total debt and other long-term obligations
 
16,424

 
16,159

Total CCIC stockholders' equity
 
12,295

 
12,339

 
 
Three Months Ended September 30, 2018
Other Data:
 
 
Net debt to last quarter annualized Adjusted EBITDA
 
5.1
x
Dividend per common share
 
$
1.05


OUTLOOK FOR FOURTH QUARTER 2018, FULL YEAR 2018 AND FULL YEAR 2019
(dollars in millions, except per share amounts)
Fourth Quarter 2018
Full Year 2018
Full Year 2019
Site rental revenues
$1,189
to
$1,199
$4,696
to
$4,706
$4,898
to
$4,943
Site rental cost of operations(c)
$343
to
$353
$1,400
to
$1,410
$1,438
to
$1,483
Net income (loss)
$201
to
$226
$659
to
$684
$738
to
$818
Net income (loss) attributable to CCIC common stockholders
$173
to
$198
$546
to
$571
$625
to
$705
Net income (loss) per share—diluted(d)(e)
$0.42
to
$0.48
$1.32
to
$1.38
$1.50
to
$1.69
Adjusted EBITDA(f)
$820
to
$830
$3,144
to
$3,154
$3,303
to
$3,348
Interest expense and amortization of deferred financing costs(g)
$160
to
$170
$638
to
$648
$691
to
$736
FFO(e)(f)(h)
$567
to
$577
$2,055
to
$2,065
$2,252
to
$2,297
AFFO(f)(h)
$591
to
$601
$2,273
to
$2,283
$2,413
to
$2,458
AFFO per share(d)(f)(h)
$1.42
to
$1.44
$5.48
to
$5.50
$5.80
to
$5.90
(a)
Includes impacts of restricted cash. See the condensed consolidated statement of cash flows for further information.
(b)
Includes net cash used for acquisitions of approximately $8 million and $9 million for the three months ended September 30, 2018 and 2017, respectively and $26 million and $2.1 billion for the nine months ended September 30, 2018 and 2017, respectively.
(c)
Exclusive of depreciation, amortization and accretion.
(d)
The assumption for fourth quarter 2018, full year 2018 and full year 2019 diluted weighted-average common shares outstanding is 416 million, 415 million and 416 million, respectively, based on diluted common shares outstanding as of September 30, 2018. For all periods presented, the diluted weighted-average common shares outstanding does not include any assumed conversion of preferred stock in the share count.
(e)
Calculated using net income (loss) attributable to CCIC common stockholders.
(f)
See reconciliation of this non-GAAP financial measure to net income (loss) and definition included herein.
(g)
See the reconciliation of "components of current outlook interest expense and amortization of deferred financing costs" in the Appendix.
(h)
Attributable to CCIC common stockholders.


7
Crown Castle International Corp.
Third Quarter 2018
COMPANY
OVERVIEW
 FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX

OUTLOOK FOR FULL YEARS 2018 AND 2019 COMPONENTS OF CHANGES IN SITE RENTAL REVENUES
(dollars in millions)
Full Year 2018 Outlook
 
Full Year 2019 Outlook
Components of changes in site rental revenues(a):
 
 
 
Prior year site rental revenues exclusive of straight-lined revenues associated with fixed escalators(b)(c)
$3,670
 
$4,639
 
 
 
 
New leasing activity(b)(c)
200-210
 
350-380
Escalators
80-90
 
85-95
Non-renewals
(90)-(80)
 
(185)-(165)
Organic Contribution to Site Rental Revenues(d)
200-210
 
260-300
Straight-lined revenues associated with fixed escalators
60-70
 
(9)-11
Acquisitions(e)
755-765
 
—
Other
—
 
—
Total GAAP site rental revenues
$4,696-$4,706
 
$4,898-$4,943
 
 
 
 
Year-over-year changes in revenue:
 
 
 
Reported GAAP site rental revenues(f)
28.1%
 
4.7%
Organic Contribution to Site Rental Revenues(d)(f)(g)
5.6%
 
6.0%
(a)
See additional information regarding Crown Castle's site rental revenues, including projected revenue from customer licenses, tenant non-renewals, straight-lined revenues and prepaid rent herein.
(b)
Includes revenues from amortization of prepaid rent in accordance with GAAP.
(c)
Includes revenues from the construction of new small cell nodes, exclusive of straight-lined revenues related to fixed escalators.
(d)
See definition provided herein.
(e)
Represents the contribution from recent acquisitions. The financial impact of recent acquisitions is excluded from Organic Contribution to Site Rental Revenues until the one-year anniversary of the acquisition, with the exception of the impact of Lightower, which has been reflected as a contribution from acquisitions for the full year 2018 Outlook.
(f)
Calculated based on midpoint of full year 2018 Outlook and full year 2019 Outlook.
(g)
Calculated as the percentage change from prior year site rental revenues, exclusive of straight-lined revenues associated with fixed escalations, compared to Organic Contribution to Site Rental Revenues for the current period.


8
Crown Castle International Corp.
Third Quarter 2018
COMPANY
OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX

CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)
(amounts in millions, except par values)
September 30,
2018
 
December 31,
2017
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
323

 
$
314

Restricted cash
125

 
121

Receivables, net
471

 
398

Prepaid expenses
182

 
162

Other current assets
148

 
139

Total current assets
1,249

 
1,134

Deferred site rental receivables
1,357

 
1,300

Property and equipment, net
13,433

 
12,933

Goodwill
10,074

 
10,021

Other intangible assets, net
5,620

 
5,962

Long-term prepaid rent and other assets, net
911

 
879

Total assets
$
32,644

 
$
32,229

 
 
 
 
LIABILITIES AND EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
302

 
$
249

Accrued interest
101

 
132

Deferred revenues
484

 
457

Other accrued liabilities
306

 
339

Current maturities of debt and other obligations
111

 
115

Total current liabilities
1,304

 
1,292

Debt and other long-term obligations
16,313

 
16,044

Other long-term liabilities
2,732

 
2,554

Total liabilities
20,349

 
19,890

Commitments and contingencies
 
 
 
CCIC stockholders' equity:
 
 
 
Common stock, $0.01 par value; 600 shares authorized; shares issued and outstanding: September 30, 2018—415 and December 31, 2017—406
4

 
4

6.875% Mandatory Convertible Preferred Stock, Series A, $0.01 par value; 20 shares authorized; shares issued and outstanding: September 30, 2018—2 and December 31, 2017—2; aggregate liquidation value: September 30, 2018—$1,650 and December 31, 2017—$1,650
—

 
—

Additional paid-in capital
17,743

 
16,844

Accumulated other comprehensive income (loss)
(5
)
 
(4
)
Dividends/distributions in excess of earnings
(5,447
)
 
(4,505
)
Total equity
12,295

 
12,339

Total liabilities and equity
$
32,644

 
$
32,229




9
Crown Castle International Corp.
Third Quarter 2018
COMPANY
OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(amounts in millions, except per share amounts)
2018
 
2017
 
2018
 
2017
Net revenues:
 
 
 
 
 
 
 
Site rental
$
1,184

 
$
893

 
$
3,507

 
$
2,619

Network services and other
191

 
170

 
497

 
499

Net revenues
1,375

 
1,063

 
4,004

 
3,118

Operating expenses:
 
 
 
 
 
 
 
Costs of operations (exclusive of depreciation, amortization and accretion):
 
 
 
 
 
 
 
Site rental
355

 
281

 
1,057

 
815

Network services and other
119

 
107

 
304

 
310

Selling, general and administrative
145

 
100

 
418

 
300

Asset write-down charges
8

 
5

 
18

 
10

Acquisition and integration costs
4

 
13

 
18

 
27

Depreciation, amortization and accretion
385

 
296

 
1,138

 
880

Total operating expenses
1,016

 
802

 
2,953

 
2,342

Operating income (loss)
359

 
261

 
1,051

 
776

Interest expense and amortization of deferred financing costs
(160
)
 
(154
)
 
(478
)
 
(430
)
Gains (losses) on retirement of long-term obligations
(32
)
 
—

 
(106
)
 
(4
)
Interest income
1

 
11

 
4

 
13

Other income (expense)
1

 
—

 
—

 
3

Income (loss) from continuing operations before income taxes
169

 
118

 
471

 
358

Benefit (provision) for income taxes
(5
)
 
(3
)
 
(13
)
 
(12
)
Net income (loss)
164

 
115

 
458

 
346

Dividends on preferred stock
(28
)
 
(30
)
 
(85
)
 
(30
)
Net income (loss) attributable to CCIC common stockholders
$
136

 
$
85

 
$
373

 
$
316

 
 
 
 
 
 
 
 
Net income (loss) attributable to CCIC common stockholders, per common share:
 
 
 
 
 
 
 
Net income (loss) attributable to CCIC common stockholders, basic
$
0.33

 
$
0.22

 
$
0.90

 
$
0.85

Net income (loss) attributable to CCIC common stockholders, diluted
$
0.33

 
$
0.21

 
$
0.90

 
$
0.84

 
 
 
 
 
 
 
 
Weighted-average common shares outstanding:
 
 
 
 
 
 
 
Basic
415

 
395

 
413

 
374

Diluted
416

 
397

 
414

 
375




10
Crown Castle International Corp.
Third Quarter 2018
COMPANY
OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX




SEGMENT OPERATING RESULTS
 
Three Months Ended September 30, 2018
 
Three Months Ended September 30, 2017
(dollars in millions)
Towers
 
Fiber
 
Other
 
Consolidated Total
 
Towers
 
Fiber
 
Other
 
Consolidated Total
Segment site rental revenues
$
782

 
$
402

 
 
 
$
1,184

 
$
725

 
$
168

 
 
 
$
893

Segment network services and other revenue
189

 
2

 
 
 
191

 
153

 
17

 
 
 
170

Segment revenues
971

 
404

 
 
 
1,375

 
878

 
185

 
 
 
1,063

Segment site rental cost of operations
215

 
131

 
 
 
346

 
212

 
60

 
 
 
272

Segment network services and other cost of operations
115

 
1

 
 
 
116

 
91

 
14

 
 
 
105

Segment cost of operations(a)(b)
330

 
132

 
 
 
462

 
303

 
74

 
 
 
377

Segment site rental gross margin(c)
567

 
271

 
 
 
838

 
513

 
108

 
 
 
621

Segment network services and other gross margin(c)
74

 
1

 
 
 
75

 
62

 
3

 
 
 
65

Segment selling, general and administrative expenses(b)
28

 
45

 
 
 
73

 
22

 
18

 
 
 
40

Segment operating profit(c)
613

 
227

 
 
 
840

 
553

 
93

 
 
 
646

Other selling, general and administrative expenses(b)
 
 
 
 
$
47

 
47

 
 
 
 
 
$
41

 
41

Stock-based compensation expense
 
 
 
 
32

 
32

 
 
 
 
 
25

 
25

Depreciation, amortization and accretion
 
 
 
 
385

 
385

 
 
 
 
 
296

 
296

Interest expense and amortization of deferred financing costs
 
 
 
 
160

 
160

 
 
 
 
 
154

 
154

Other income (expenses) to reconcile to income (loss) from continuing operations before income taxes(d)
 
 
 
 
47

 
47

 
 
 
 
 
12

 
12

Income (loss) from continuing operations before income taxes
 
 
 
 
 
 
$
169

 
 
 
 
 
 
 
$
118


(a)
Exclusive of depreciation, amortization and accretion shown separately.
(b)
Segment cost of operations excludes (1) stock-based compensation expense of $7 million and $6 million for the three months ended September 30, 2018 and 2017, respectively, and (2) prepaid lease purchase price adjustments of $5 million for both of the three months ended September 30, 2018 and 2017. Selling, general and administrative expenses exclude stock-based compensation expense of $25 million and $19 million for the three months ended September 30, 2018 and 2017, respectively.
(c)
See "Non-GAAP Financial Measures, Segment Measures and Other Calculations" herein for a discussion of our definitions of segment site rental gross margin, segment network services and other gross margin and segment operating profit.
(d)
See condensed consolidated statement of operations for further information.














11
Crown Castle International Corp.
Third Quarter 2018
COMPANY
OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX






SEGMENT OPERATING RESULTS
 
Nine Months Ended September 30, 2018
 
Nine Months Ended September 30, 2017
(dollars in millions)
Towers
 
Fiber
 
Other
 
Consolidated Total
 
Towers
 
Fiber
 
Other
 
Consolidated Total
Segment site rental revenues
$
2,318

 
$
1,189

 
 
 
$
3,507

 
$
2,159

 
$
460

 
 
 
$
2,619

Segment network services and other revenue
489

 
8

 
 
 
497

 
461

 
38

 
 
 
499

Segment revenues
2,807

 
1,197

 
 
 
4,004

 
2,620

 
498

 
 
 
3,118

Segment site rental cost of operations
641

 
388

 
 
 
1,029

 
632

 
158

 
 
 
790

Segment network services and other cost of operations
292

 
6

 
 
 
298

 
277

 
31

 
 
 
308

Segment cost of operations(a)(b)
933

 
394

 
 
 
1,327

 
909

 
189

 
 
 
1,098

Segment site rental gross margin(c)
1,677

 
801

 
 
 
2,478

 
1,527

 
302

 
 
 
1,829

Segment network services and other gross margin(c)
197

 
2

 
 
 
199

 
184

 
7

 
 
 
191

Segment selling, general and administrative expenses(b)
81

 
131

 
 
 
212

 
69

 
55

 
 
 
124

Segment operating profit(c)
1,793

 
672

 
 
 
2,465

 
1,642

 
254

 
 
 
1,896

Other selling, general and administrative expenses(b)
 
 
 
 
$
141

 
141

 
 
 
 
 
$
121

 
121

Stock-based compensation expense
 
 
 
 
84

 
84

 
 
 
 
 
67

 
67

Depreciation, amortization and accretion
 
 
 
 
1,138

 
1,138

 
 
 
 
 
880

 
880

Interest expense and amortization of deferred financing costs
 
 
 
 
478

 
478

 
 
 
 
 
430

 
430

Other income (expenses) to reconcile to income (loss) from continuing operations before income taxes(d)
 
 
 
 
153

 
153

 
 
 
 
 
40

 
40

Income (loss) from continuing operations before income taxes
 
 
 
 
 
 
$
471

 
 
 
 
 
 
 
$
358


(a)
Exclusive of depreciation, amortization and accretion shown separately.
(b)
Segment cost of operations excludes (1) stock-based compensation expense of $19 million and $12 million for the nine months ended September 30, 2018 and 2017, respectively, and (2) prepaid lease purchase price adjustments of $15 million for both of the nine months ended September 30, 2018 and 2017. Selling, general and administrative expenses exclude stock-based compensation expense of $65 million and $55 million for the nine months ended September 30, 2018 and 2017, respectively.
(c)
See "Non-GAAP Financial Measures, Segment Measures and Other Calculations" herein for a discussion of our definitions of segment site rental gross margin, segment network services and other gross margin and segment operating profit.
(d)
See condensed consolidated statement of operations for further information.


12
Crown Castle International Corp.
Third Quarter 2018
COMPANY
OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX

FFO AND AFFO RECONCILIATIONS
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(amounts in millions, except per share amounts)
2018
 
2017
 
2018
 
2017
Net income (loss)
$
164

 
$
115

 
$
458

 
$
346

Real estate related depreciation, amortization and accretion
371

 
288

 
1,097

 
857

Asset write-down charges
8

 
5

 
18

 
10

Dividends on preferred stock
(28
)
 
—

 
(85
)
 
—

FFO(a)(b)(c)(d)
$
515

 
$
408

 
$
1,487

 
$
1,214

Weighted-average common shares outstanding—diluted(e)
416

 
397

 
414

 
375

FFO per share(a)(c)(d)
$
1.24

 
$
1.03

 
$
3.59

 
$
3.24

 
 
 
 
 
 
 
 
FFO (from above)
$
515

 
$
408

 
$
1,487

 
$
1,214

Adjustments to increase (decrease) FFO:
 
 
 
 
 
 
 
Straight-lined revenue
(17
)
 
3

 
(53
)
 
3

Straight-lined expense
23

 
24

 
69

 
70

Stock-based compensation expense
32

 
25

 
84

 
67

Non-cash portion of tax provision
2

 
(1
)
 
(1
)
 
(3
)
Non-real estate related depreciation, amortization and accretion
14

 
8

 
41

 
23

Amortization of non-cash interest expense
2

 
2

 
5

 
8

Other (income) expense
(1
)
 
—

 
—

 
(4
)
(Gains) losses on retirement of long-term obligations
32

 
—

 
106

 
4

Acquisition and integration costs
4

 
13

 
18

 
27

Capital improvement capital expenditures
(15
)
 
(11
)
 
(47
)
 
(27
)
Corporate capital expenditures
(12
)
 
(13
)
 
(28
)
 
(32
)
AFFO(a)(b)(c)(d)
$
579

 
$
459

 
$
1,683

 
$
1,349

Weighted-average common shares outstanding—diluted(e)
416

 
397

 
414

 
375

AFFO per share(a)(c)(d)
$
1.39

 
$
1.15

 
$
4.06

 
$
3.60


(a)
See "Definitions of Non-GAAP Measures, Segment Measures and Other Calculations" in the Appendix for a discussion of our definitions of FFO and AFFO.
(b)
FFO and AFFO are reduced by cash paid for preferred stock dividends during the period in which they are paid.
(c)
The above reconciliation excludes line items included in our definition which are not applicable for the periods shown.
(d)
Attributable to CCIC common stockholders.
(e)
Based on the diluted weighted-average common shares outstanding for the three and nine months ended September 30, 2018 and 2017. For all periods presented, the diluted weighted-average common shares outstanding does not include any assumed conversion of preferred stock in the share count.





13
Crown Castle International Corp.
Third Quarter 2018
COMPANY
OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)(a)
 
Nine Months Ended September 30,
(dollars in millions)
2018
 
2017
Cash flows from operating activities:
 
 
 
Net income (loss)
$
458

 
$
346

Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities:
 
 
 
Depreciation, amortization and accretion
1,138

 
880

(Gains) losses on retirement of long-term obligations
106

 
4

Amortization of deferred financing costs and other non-cash interest
5

 
8

Stock-based compensation expense
79

 
67

Asset write-down charges
18

 
10

Deferred income tax (benefit) provision
2

 
—

Other non-cash adjustments, net
2

 
(3
)
Changes in assets and liabilities, excluding the effects of acquisitions:
 
 
 
Increase (decrease) in liabilities
144

 
62

Decrease (increase) in assets
(177
)
 
39

Net cash provided by (used for) operating activities
1,775

 
1,413

Cash flows from investing activities:
 
 
 
Payments for acquisitions, net of cash acquired
(26
)
 
(2,113
)
Capital expenditures
(1,241
)
 
(852
)
Other investing activities, net
(14
)
 
(6
)
Net cash provided by (used for) investing activities
(1,281
)
 
(2,971
)
Cash flows from financing activities:
 
 
 
Proceeds from issuance of long-term debt
2,743

 
3,092

Principal payments on debt and other long-term obligations
(76
)
 
(90
)
Purchases and redemptions of long-term debt
(2,346
)
 
—

Borrowings under revolving credit facility
1,290

 
1,755

Payments under revolving credit facility
(1,465
)
 
(1,755
)
Payments for financing costs
(33
)
 
(27
)
Net proceeds from issuance of common stock
841

 
4,221

Net proceeds from issuance of preferred stock
—

 
1,608

Purchases of common stock
(34
)
 
(23
)
Dividends/distributions paid on common stock
(1,315
)
 
(1,082
)
Dividends paid on preferred stock
(85
)
 
—

Net cash provided by (used for) financing activities
(480
)
 
7,699

Net increase (decrease) in cash, cash equivalents, and restricted cash
14

 
6,141

Effect of exchange rate changes
(1
)
 
1

Cash, cash equivalents, and restricted cash at beginning of period(a)
440

 
697

Cash, cash equivalents, and restricted cash at end of period(a)
$
453

 
$
6,839

Supplemental disclosure of cash flow information:
 
 
 
Interest paid
503

 
420

Income taxes paid
15

 
14


(a) Effective January 1, 2018, the Company is required to explain the change in restricted cash in addition to the change in cash and cash equivalents in its condensed consolidated statement of cash flows. The Company has applied this approach for all periods presented.





14
Crown Castle International Corp.
Third Quarter 2018
COMPANY
OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX

COMPONENTS OF CHANGES IN SITE RENTAL REVENUES
 
Three Months Ended September 30,
(dollars in millions)
2018
 
2017
Components of changes in site rental revenues(a):
 
 
 
Prior year site rental revenues exclusive of straight-lined revenues associated with fixed escalators(b)(c)
$
896

 
$
803

 
 
 
 
New leasing activity(b)(c)
54

 
40

Escalators
21

 
21

Non-renewals
(23
)
 
(20
)
Organic Contribution to Site Rental Revenues(d)
52

 
41

Straight-lined revenues associated with fixed escalators
17

 
(3
)
Acquisitions(e)
219

 
52

Other
—

 
—

Total GAAP site rental revenues
$
1,184

 
$
893

 
 
 
 
Year-over-year changes in revenue:
 
 
 
Reported GAAP site rental revenues
32.6
%
 
 
Organic Contribution to Site Rental Revenues(d)(f)
5.8
%
 
 

(a)
See additional information regarding Crown Castle's site rental revenues, including projected revenue from customer licenses, tenant non-renewals, straight-lined revenues and prepaid rent herein.
(b)
Includes revenues from amortization of prepaid rent in accordance with GAAP.
(c)
Includes revenues from the construction of new small cell nodes, exclusive of straight-lined revenues related to fixed escalators.
(d)
See definition provided herein.
(e)
Represents the initial contribution of recent acquisitions. The financial impact of recent acquisitions is excluded from Organic Contribution to Site Rental Revenues until the one-year anniversary of the acquisition.
(f)
Calculated as the percentage change from prior year site rental revenues, exclusive of straight-lined revenues associated with fixed escalations, compared to Organic Contribution to Site Rental Revenues for the current period.

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COMPANY
OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX

SUMMARY OF SITE RENTAL STRAIGHT-LINED REVENUES AND EXPENSES ASSOCIATED WITH FIXED
ESCALATORS(a)

Three Months Ended September 30,
 
2018

2017
(dollars in millions)
Towers

Fiber

Total

Towers

Fiber

Total
Site rental straight-lined revenue
$
16


$
1


$
17


$
(5
)

$
2


$
(3
)
Site rental straight-lined expenses
22


1


23


24


—


24


 
Nine Months Ended September 30,
 
2018
 
2017
(dollars in millions)
Towers
 
Fiber
 
Total
 
Towers
 
Fiber
 
Total
Site rental straight-lined revenue
$
52

 
$
1

 
$
53

 
$
(10
)
 
$
7

 
$
(3
)
Site rental straight-lined expenses
67

 
2

 
69

 
69

 
1

 
70


SUMMARY OF PREPAID RENT ACTIVITY(b)

Three Months Ended September 30,
 
2018

2017
(dollars in millions)
Towers

Fiber

Total

Towers

Fiber

Total
Prepaid rent received
$
39


$
79


$
118


$
29


$
62


$
91

Amortization of prepaid rent
33


50


83


31


33


64


 
Nine Months Ended September 30,
 
2018
 
2017
(dollars in millions)
Towers
 
Fiber
 
Total
 
Towers
 
Fiber
 
Total
Prepaid rent received
$
99

 
$
237

 
$
336

 
$
92

 
$
136

 
$
228

Amortization of prepaid rent
97

 
144

 
241

 
88

 
87

 
175

(a)
In accordance with GAAP accounting, if payment terms call for fixed escalations, or rent free periods, the revenue is recognized on a straight-line basis over the fixed, non-cancelable term of the contract. Since the Company recognizes revenue on a straight-line basis, a portion of the site rental revenue in a given period represents cash collected or contractually collectible in other periods.
(b)
Reflects up-front payments received from long-term tenant contracts and other deferred credits (commonly referred to as prepaid rent), and the amortization thereof for GAAP revenue recognition purposes.


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Crown Castle International Corp.
Third Quarter 2018
COMPANY
OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX

SUMMARY OF CAPITAL EXPENDITURES
 
Three Months Ended September 30,
 
2018
 
2017
(dollars in millions)
Towers
 
Fiber
 
Other
 
Total
 
Towers
 
Fiber
 
Other
 
Total
Discretionary:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Purchases of land interests
$
14

 
$
—

 
$
—

 
$
14

 
$
24

 
$
—

 
$
—

 
$
24

Communications infrastructure construction and improvements
100

 
336

 
—

 
436

 
73

 
168

 
—

 
240

Sustaining:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Capital improvement and corporate
9

 
12

 
5

 
27

 
12

 
4

 
8

 
24

Integration
—

 
—

 
1

 
1

 
—

 
—

 
—

 
—

Total
$
123

 
$
348

 
$
7

 
$
478

 
$
109

 
$
172

 
$
8

 
$
288


PROJECTED REVENUE FROM CUSTOMER CONTRACTS(a)
 
Years Ending December 31,
(as of September 30, 2018; dollars in millions)
2019
2020
2021
2022
Components of site rental revenue:
 
 
 
 
Site rental revenues exclusive of straight-line associated with fixed escalators
$
4,747

$
4,856

$
4,964

$
5,059

Straight-lined site rental revenues associated with fixed escalators
(15
)
(110
)
(192
)
(250
)
GAAP site rental revenue
$
4,732

$
4,746

$
4,772

$
4,809


PROJECTED GROUND LEASE EXPENSE FROM EXISTING GROUND LEASES(b)
 
Years Ending December 31,
(as of September 30, 2018; dollars in millions)
2019
2020
2021
2022
Components of ground lease expense:
 
 
 
 
Ground lease expense exclusive of straight-line associated with fixed escalators
$
814

$
831

$
852

$
872

Straight-lined site rental ground lease expense associated with fixed escalators
77

66

53

42

GAAP ground lease expense
$
891

$
897

$
905

$
914

(a)
Based on customer licenses as of September 30, 2018. All customer licenses are assumed to renew for a new term no later than the respective current term end date. CPI-linked customer contracts are assumed to escalate at 3% per annum.
(b)
Based on existing ground leases as of September 30, 2018. CPI-linked leases are assumed to escalate at 3% per annum.


17
Crown Castle International Corp.
Third Quarter 2018
COMPANY
OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX

ANNUALIZED RENTAL CASH PAYMENTS AT TIME OF RENEWAL(a)
 
Years Ending December 31,
(as of September 30, 2018; dollars in millions)
2019
2020
2021
2022
AT&T
$
34

$
39

$
60

$
46

Sprint
30

17

29

23

T-Mobile
55

22

40

560

Verizon
27

35

35

40

All Others Combined
194

157

128

81

Total
$
340

$
270

$
292

$
750


CUSTOMER OVERVIEW
(as of September 30, 2018)
Percentage of Q3 2018 LQA Site
Rental Revenues
Weighted Average Current
Term Remaining(b)
Long-Term Credit Rating
(S&P / Moody’s)
AT&T
22%
6
BBB / Baa2
T-Mobile
20%
5
BB+
Verizon
18%
6
BBB+ / Baa1
Sprint
14%
7
B / B2
All Others Combined
26%
3
N/A
Total / Weighted Average
100%
5
 
(a)
Reflects lease renewals by year by customer; dollar amounts represent annualized cash site rental revenues from assumed renewals or extension as reflected in the table "Projected Revenue from Customer Contracts."
(b)
Weighted by site rental revenue contributions; excludes renewals at the customers' option.


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Third Quarter 2018
COMPANY
OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX

SUMMARY OF TOWER PORTFOLIO BY VINTAGE
(as of September 30, 2018; dollars in thousands)
 
YIELD(a)
NUMBER OF TENANTS PER TOWER

chart-656de38541155c4097e.jpgchart-fd4cca17c984565db3a.jpg
LQA SITE RENTAL REVENUE PER TOWER
LQA TOWERS SEGMENT SITE RENTAL GROSS MARGIN PER TOWER
chart-4a515da70229525bafa.jpgchart-7334d14999d85027b00.jpg
INVESTED CAPITAL PER TOWER(b)
NUMBER OF TOWERS
chart-201d47ce6a695aadaef.jpgchart-afb45d33f59d5c94bbb.jpg
(a)
Yield is calculated as LQA Towers segment site rental gross margin divided by invested capital.
(b)
Reflects gross total assets, including incremental capital invested by the Company since time of acquisition or construction completion. Inclusive of invested capital related to land at the tower site.

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FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX


PORTFOLIO OVERVIEW(a)
(as of September 30, 2018; dollars in thousands)
NUMBER OF TOWERS
TENANTS PER TOWER
LQA SITE RENTAL REVENUE PER TOWER
chart-209273b6427e5e1fb6c.jpgchart-3c1044076d955055840.jpgchart-53a415aae0845522968.jpg


(a)
Includes towers and rooftops, excludes small cells, fiber and third-party land interests.


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COMPANY
OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX


DISTRIBUTION OF TOWER TENANCY (as of September 30, 2018)
PERCENTAGE OF TOWERS BY TENANTS PER TOWER(a)
SITES ACQUIRED AND BUILT 2006 AND PRIOR
SITES ACQUIRED AND BUILT 2007 TO PRESENT
chart-20b9ca70ed825c1da7e.jpgchart-383703bf175d5e54b3d.jpg
Average: 2.6
Average: 2.0
 
 
GEOGRAPHIC TOWER DISTRIBUTION (as of September 30, 2018)(a)
PERCENTAGE OF TOWERS BY GEOGRAPHIC LOCATION
PERCENTAGE OF LQA SITE RENTAL REVENUE BY GEOGRAPHIC LOCATION
chart-a1de273558285ee7bc2.jpgchart-3e30aa0e717d54dd9eb.jpg
(a)
Includes towers and rooftops, excludes small cells, fiber and third-party land interests.

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FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX

GROUND INTEREST OVERVIEW
(as of September 30, 2018; dollars in millions)
LQA Site Rental Revenue
Percentage of LQA Site Rental Revenue
LQA Towers Segment Site Rental Gross Margin
Percentage of LQA Towers Segment Site Rental Gross Margin
Number of Towers(a)
Percentage of Towers
Weighted Average Term Remaining (by years)(b)
Less than 10 years
$
359

12
%
$
202

9
%
5,498

14
%
 
10 to 20 years
458

15
%
250

11
%
7,288

18
%
 
Greater than 20 years
1,324

43
%
904

41
%
17,127

43
%
 
Total leased
$
2,141

70
%
$
1,356

61
%
29,913

75
%
35

 
 
 
 
 
 
 
 
Owned
937

30
%
869

39
%
10,114

25
%
 
Total / Average
$
3,078

100
%
$
2,225

100
%
40,027

100
%
 

GROUND INTEREST ACTIVITY
(dollars in millions)
Three Months Ended September 30, 2018
 
Nine Months Ended September 30, 2018
Ground Extensions Under Crown Castle Towers:
 
 
 
Number of ground leases extended
317

 
970

Average number of years extended
32

 
33

Percentage increase in consolidated cash ground lease expense due to extension activities(c)
0.1
%
 
0.3
%
 
 
 
 
Ground Purchases Under Crown Castle Towers:
 
 
 
Number of ground leases purchased
81

 
206

Ground lease purchases (including capital expenditures, acquisitions and installment purchases)
$
24

 
$
59

Percentage of Towers segment site rental gross margin from towers residing on land purchased
<1%

 
<1%

(a)
Includes towers and rooftops, excludes small cells, fiber and third-party land interests.
(b)
Includes all renewal terms at the Company’s option; weighted by Towers segment site rental gross margin.
(c)
Includes the impact from the amortization of lump sum payments.

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APPENDIX


CAPITALIZATION OVERVIEW
(dollars in millions)
Face Value as of 9/30/2018
Fixed vs. Variable
Secured vs. Unsecured
Interest Rate(b)
Net Debt to LQA EBITDA(c)
Maturity
Cash and cash equivalents(a)
$
323

 
 
 
 
 
 
 
 
 
 
 
 
Senior Secured Tower Revenue Notes, Series 2015-1(d)
300

Fixed
Secured
3.2%
 
2042(d)
Senior Secured Tower Revenue Notes, Series 2015-2(d)
700

Fixed
Secured
3.7%
 
2045(d)
Senior Secured Tower Revenue Notes, Series 2018-1(d)
250

Fixed
Secured
3.7%
 
2043(d)
Senior Secured Tower Revenue Notes, Series 2018-2(d)
750

Fixed
Secured
4.2%
 
2048(d)
3.849% Secured Notes
1,000

Fixed
Secured
3.9%
 
2023
Senior Secured Notes, Series 2009-1, Class A-1
18

Fixed
Secured
6.3%
 
2019
Senior Secured Notes, Series 2009-1, Class A-2
70

Fixed
Secured
9.0%
 
2029
Capital leases & other obligations
224

Various
Secured
Various
 
Various
Total secured debt
$
3,312

 
 
4.0%
1.0x
 
2016 Revolver(e)
805

Variable
Unsecured
3.5%
 
2023
2016 Term Term Loan A
2,371

Variable
Unsecured
3.5%
 
2023
5.250% Senior Notes
1,650

Fixed
Unsecured
5.3%
 
2023
4.875% Senior Notes
850

Fixed
Unsecured
4.9%
 
2022
3.400% Senior Notes
850

Fixed
Unsecured
3.4%
 
2021
4.450% Senior Notes
900

Fixed
Unsecured
4.5%
 
2026
3.700% Senior Notes
750

Fixed
Unsecured
3.7%
 
2026
2.250% Senior Notes
700

Fixed
Unsecured
2.3%
 
2021
4.000% Senior Notes
500

Fixed
Unsecured
4.0%
 
2027
4.750% Senior Notes
350

Fixed
Unsecured
4.8%
 
2047
3.200% Senior Notes
750

Fixed
Unsecured
3.2%
 
2024
3.650% Senior Notes
1,000

Fixed
Unsecured
3.7%
 
2027
3.150% Senior Notes
750

Fixed
Unsecured
3.2%
 
2023
3.800% Senior Notes
1,000

Fixed
Unsecured
3.8%
 
2028
Total unsecured debt
$
13,226

 
 
3.9%
4.2x
 
Total net debt
$
16,215

 
 
3.9%
5.1x
 
Preferred Stock, at liquidation value
1,650

 
 
 
 
 
Market Capitalization(f)
46,185

 
 
 
 
 
Firm Value(g)
$
64,050

 
 
 
 
 

(a)
Excludes restricted cash.
(b)
Represents the weighted-average stated interest rate.
(c)
Represents the applicable amount of debt divided by LQA consolidated Adjusted EBITDA.
(d)
If the respective series of such debt is not paid in full on or prior to an applicable date then the 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. The Senior Secured Tower Revenue Notes, Series 2015-1 and 2015-2 have anticipated repayment dates in 2022 and 2025, respectively. The Senior Secured Tower Revenue Notes, 2018-1 and 2018-2 have anticipated repayment dates in 2023 and 2028, respectively. Notes are prepayable at par if voluntarily repaid six months or less prior to maturity; earlier prepayment may require additional consideration.
(e)
As of September 30, 2018, the undrawn availability under the $4.25 billion 2016 Revolver was $3.4 billion.
(f)
Market capitalization calculated based on $111.33 closing price and 415 million shares outstanding as of September 30, 2018.
(g)
Represents the sum of net debt, preferred stock (at liquidation value) and market capitalization.

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APPENDIX



DEBT MATURITY OVERVIEW(a)
chart-7dbd6b702cab5d5f951.jpg
(as of September 30, 2018; dollars in millions)chart-8d80cd60a637596689e.jpg
(a)
Where applicable, maturities reflect the Anticipated Repayment Date as defined in the respective debt agreement; excludes capital leases and other obligations; amounts presented at face value net of repurchases held at CCIC.

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LIQUIDITY OVERVIEW(a)
(dollars in millions)
September 30, 2018
Cash and cash equivalents(b)
$
323

Undrawn 2016 Revolver availability(c)
3,426

Restricted cash(d)
130

Debt and other long-term obligations
16,424

Total equity
12,295

(a)
In addition, in April 2018, we established an at-the-market stock offering program ("ATM Program") through which we may, from time to time, issue and sell shares of our common stock having an aggregate gross sales price of up to $750 million to or through sales agents. No shares of common stock have been sold under the ATM Program.
(b)
Exclusive of restricted cash.
(c)
Availability at any point in time is subject to reaffirmation of the representations and warranties in, and there being no default under, our credit agreement governing our 2016 Revolver.
(d)
Inclusive of $5 million included within "long-term prepaid rent and other assets, net" on our condensed consolidated balance sheet.


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APPENDIX


SUMMARY OF MAINTENANCE AND FINANCIAL COVENANTS
Debt
Borrower / Issuer
Covenant(a)
Covenant Level Requirement
 
As of September 30, 2018
Maintenance Financial Covenants(b)
2016 Credit Facility
CCIC
Total Net Leverage Ratio
≤ 6.50x
 
5.2x
2016 Credit Facility
CCIC
Total Senior Secured Leverage Ratio
≤ 3.50x
 
1.0x
2016 Credit Facility
CCIC
Consolidated Interest Coverage Ratio(c)
N/A
 
N/A
 
 
 
 
 
 
Restrictive Negative Financial Covenants
 
 
 
 
Financial covenants restricting ability to incur additional debt
2012 Secured Notes
CC Holdings GS V LLC and Crown Castle GS III Corp.
Debt to Adjusted Consolidated Cash Flow Ratio
≤ 3.50x
 
2.4x
 
 
 
 
 
 
Financial covenants requiring excess cash flows to be deposited in a cash trap reserve account and not released
2015 Tower Revenue Notes
Crown Castle Towers LLC and its Subsidiaries
Debt Service Coverage Ratio
> 1.75x
(d) 
10.3x
2018 Tower Revenue Notes
Crown Castle Towers LLC and its Subsidiaries
Debt Service Coverage Ratio
> 1.75x
(d) 
10.3x
2009 Securitized Notes
Pinnacle Towers Acquisition Holdings LLC and its Subsidiaries
Debt Service Coverage Ratio
> 1.30x
(d) 
9.8x
 
 
 
 
 
 
Financial covenants restricting ability of relevant issuer to issue additional notes under the applicable indenture
2015 Tower Revenue Notes
Crown Castle Towers LLC and its Subsidiaries
Debt Service Coverage Ratio
≥ 2.00x
(e) 
10.3x
2018 Tower Revenue Notes
Crown Castle Towers LLC and its Subsidiaries
Debt Service Coverage Ratio
≥ 2.00x
(e) 
10.3x
2009 Securitized Notes
Pinnacle Towers Acquisition Holdings LLC and its Subsidiaries
Debt Service Coverage Ratio
≥ 2.34x
(e) 
9.8x
(a)
As defined in the respective debt agreement. In the indentures for the 2015 Tower Revenue Notes, 2018 Tower Revenue Notes and the 2009 Securitized Notes, the defined term for Debt Service Coverage Ratio is "DSCR."
(b)
Failure to comply with the financial maintenance covenants would, absent a waiver, result in an event of default under the credit agreement governing our 2016 Credit Facility.
(c)
Applicable solely to the extent that the senior unsecured debt rating by any two of S&P, Moody's and Fitch is lower than BBB-, Baa3 or BBB-, respectively. If applicable, the consolidated interest coverage ratio must be greater than or equal to 2.50.
(d)
The 2015 Tower Revenue Notes, 2018 Tower Revenue Notes and 2009 Securitized Notes also include the potential for amortization events, which could result in applying current and future cash flow to the prepayment of debt with applicable prepayment consideration. An amortization event occurs when the Debt Service Coverage Ratio falls below 1.45x, 1.45x or 1.15x, in each case as described under the indentures for the 2015 Tower Revenue Notes, 2018 Tower Revenue Notes or 2009 Securitized Notes, respectively.
(e)
Rating Agency Confirmation (as defined in the respective debt agreement) is also required.





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INTEREST RATE SENSITIVITY(a)
 
Years Ending December 31,
(as of September 30, 2018; dollars in millions)
2019
2020
Fixed Rate Debt:
 
 
Face Value of Principal Outstanding(b)
$
13,117

$
13,110

Current Interest Payment Obligations(c)
519

519

Effect of 0.125% Change in Interest Rates(d)
—

—

Floating Rate Debt:
 
 
Face Value of Principal Outstanding(b)
$
3,101

$
2,997

Current Interest Payment Obligations(e)
128

131

Effect of 0.125% Change in Interest Rates(f)
4

4

(a)
Excludes capital lease and other obligations.
(b)
Face value net of required amortizations; assumes no maturity or balloon principal payments; excludes capital leases.
(c)
Interest expense calculated based on current interest rates.
(d)
Interest expense calculated based on current interest rates until the sooner of the (1) stated maturity date or (2) the Anticipated Repayment Date, at which time the face value amount outstanding of such indebtedness is refinanced at current rates plus 12.5 bps.
(e)
Interest expense calculated based on current interest rates. Forward LIBOR assumptions are derived from the 1-month LIBOR forward curve as of September 30, 2018. Calculation assumes no changes to future interest rate margin spread over LIBOR due to changes in the borrower’s senior unsecured credit rating.
(f)
Interest expense calculated based on current interest rates using the 1-month LIBOR forward curve as of September 30, 2018 plus 12.5 bps.





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APPENDIX


DEFINITIONS
Non-GAAP Financial Measures, Segment Measures and Other Calculations
This Supplement includes presentations of Adjusted EBITDA, Adjusted Funds from Operations ("AFFO"), Funds from Operations ("FFO") and Organic Contribution to Site Rental Revenues, which are non-GAAP financial measures. These non-GAAP financial measures are not intended as alternative measures of operating results or cash flow from operations (as determined in accordance with Generally Accepted Accounting Principles ("GAAP")).
Our measures of Adjusted EBITDA, AFFO, FFO and Organic Contribution to Site Rental Revenues may not be comparable to similarly titled measures of other companies, including other companies in the communications infrastructure sector or other REITs. Our definition of FFO is consistent with guidelines from the National Association of Real Estate Investment Trusts with the exception of the impact of income taxes in periods prior to our REIT conversion in 2014.
In addition to the non-GAAP financial measures used herein, we also provide Segment Site Rental Gross Margin, Segment Network Services and Other Gross Margin and Segment Operating Profit, which are key measures used by management to evaluate our operating segments for purposes of making decisions about allocating capital and assessing performance. These segment measures are provided pursuant to GAAP requirements related to segment reporting. In addition, we provide the components of certain GAAP measures, such as capital expenditures.
Adjusted EBITDA, AFFO, FFO and Organic Contribution to Site Rental Revenues, are presented as additional information because management believes these measures are useful indicators of the financial performance of our business. Among other things, management believes that:
•
Adjusted EBITDA is useful to investors or other interested parties in evaluating our financial performance. Adjusted EBITDA is the primary measure used by management (1) to evaluate the economic productivity of our operations and (2) for purposes of making decisions about allocating resources to, and assessing the performance of, our operations. Management believes that Adjusted EBITDA helps investors or other interested parties 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 financial results. Management also believes Adjusted EBITDA is frequently used by investors or other interested parties in the evaluation of the communications infrastructure sector and other REITs to measure financial performance without regard to items such as depreciation, amortization and accretion, which can vary depending upon accounting methods and the book value of assets. In addition, Adjusted EBITDA is similar to the measure of current financial performance generally used in our debt covenant calculations. Adjusted EBITDA should be considered only as a supplement to net income computed in accordance with GAAP as a measure of our performance.
•
AFFO and AFFO per share are useful to investors or other interested parties in evaluating our financial performance. Management believes that AFFO and AFFO per share help investors or other interested parties meaningfully evaluate our financial performance as they include (1) the impact of our capital structure (primarily interest expense on our outstanding debt and dividends on our preferred stock) and (2) sustaining capital expenditures and excludes the impact of our (a) asset base (primarily depreciation, amortization and accretion) and (b) certain non-cash items, including straight-lined revenues and expenses related to fixed escalations and rent free periods. GAAP requires rental revenues and expenses related to leases that contain specified rental increases over the life of the lease to be recognized evenly over the life of the lease. In accordance with GAAP, if payment terms call for fixed escalations, or rent free periods, the revenue or expense is recognized on a straight-lined basis over the fixed, non-cancelable term of the contract. Management notes that the Company uses AFFO and AFFO per share only as a performance measure. AFFO and AFFO per share should be considered only as a supplement to net income computed in accordance with GAAP as a measure of our performance and should not be considered as an alternative to cash flows from operations or as residual cash flow available for discretionary investment.
•
FFO and FFO per share are useful to investors or other interested parties in evaluating our financial performance. Management believes that FFO may be used by investors or other interested parties as a basis to compare our financial performance with that of other REITs. FFO and FFO per share help investors or other interested parties meaningfully evaluate financial performance by excluding the impact of our asset base (primarily depreciation, amortization and accretion). FFO and FFO per share are not key performance indicators used by the Company. FFO and FFO per share should be considered only as a supplement to net income computed in accordance with GAAP as a measure of our performance and should not be considered as an alternative to cash flow from operations.

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•
Organic Contribution to Site Rental Revenues is useful to investors or other interested parties in understanding the components of the year-over-year changes in our site rental revenues computed in accordance with GAAP. Management uses the Organic Contribution to Site Rental Revenues to assess year-over-year growth rates for our rental activities, to evaluate current performance, to capture trends in rental rates, new leasing activities and customer non-renewals in our core business, as well to forecast future results. Organic Contribution to Site Rental Revenues is not meant as an alternative measure of revenue and should be considered only as a supplement in understanding and assessing the performance of our site rental revenues computed in accordance with GAAP.
We define our non-GAAP financial measures, segment measures and other calculations as follows:
Non-GAAP Financial Measures
Adjusted EBITDA. We define 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, (gains) losses on foreign currency swaps, impairment of available-for-sale securities, interest income, other (income) expense, (benefit) provision for income taxes, cumulative effect of a change in accounting principle, (income) loss from discontinued operations and stock-based compensation expense.
Adjusted Funds from Operations. We define Adjusted Funds from Operations as FFO before straight-lined revenue, straight-lined expense, stock-based compensation expense, non-cash portion of tax provision, non-real estate related depreciation, amortization and accretion, amortization of non-cash interest expense, other (income) expense, (gains) losses on retirement of long-term obligations, net (gain) loss on interest rate swaps, (gains) losses on foreign currency swaps, acquisition and integration costs, and adjustments for noncontrolling interests, and less sustaining capital expenditures (comprised of capital improvement capital expenditures and corporate capital expenditures).
AFFO per share. We define AFFO per share as AFFO divided by diluted weighted average common shares outstanding.
Funds from Operations. We define Funds from Operations as net income plus real estate related depreciation, amortization and accretion and asset write-down charges, less noncontrolling interest and cash paid for preferred stock dividends, and is a measure of funds from operations attributable to CCIC common stockholders.
FFO per share. We define FFO per share as FFO divided by the diluted weighted average common shares outstanding.
Organic Contribution to Site Rental Revenues. We define the Organic Contribution to Site Rental Revenues as the sum of the change in GAAP site rental revenues related to (1) new leasing activity, including revenues from the construction of small cells and the impact of prepaid rent, (2) escalators and less (3) non-renewals of customer contracts.
Segment Measures
Segment Site Rental Gross Margin. We define Segment Site Rental Gross Margin as segment site rental revenues less segment site rental cost of operations, excluding stock-based compensation expense and prepaid lease purchase price adjustments recorded in consolidated site rental cost of operations.
Segment Network Services and Other Gross Margin. We define Segment Network Services and Other Gross Margin as segment network services and other revenues less segment network services and other cost of operations, excluding stock-based compensation expense recorded in consolidated network services and other cost of operations.
Segment Operating Profit. We define Segment Operating Profit as segment site rental gross margin plus segment network services and other gross margin, less selling, general and administrative expenses attributable to the respective segment.
All of these measurements of profit or loss are exclusive of depreciation, amortization and accretion, which are shown separately.
Other Calculations
Discretionary capital expenditures. We define discretionary capital expenditures as those capital expenditures made with respect to activities which we believe exhibit sufficient potential to enhance long-term stockholder value. They consist of expansion or development of existing communications infrastructure, construction of new communications infrastructure, and, to a lesser extent, purchases of land interests (which primarily relate to land assets under towers as we seek to manage our interests in the land beneath our towers) and other capital projects.

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Sustaining capital expenditures. We define sustaining capital expenditures as those capital expenditures made with respect to either (1) corporate capital expenditures or (2) capital improvement capital expenditures on our communications infrastructure assets that enable our customers' ongoing quiet enjoyment of the communications infrastructure.
Integration capital expenditures. We define integration capital expenditures as those capital expenditures made specifically with respect to acquisitions that are essential to integrating acquired companies into our business.
The tables set forth below reconcile the non-GAAP financial measures used herein to comparable GAAP financial measures. The components in these tables may not sum to the total due to rounding.


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Reconciliations of Non-GAAP Financial Measures to Comparable GAAP Financial Measures and Other Calculations:


Reconciliation of Historical Adjusted EBITDA:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
Twelve Months Ended December 31,
(dollars in millions)
2018
 
2017
 
2018
 
2017
 
2017
Net income (loss)
$
164

 
$
115

 
$
458

 
$
346

 
$
445

Adjustments to increase (decrease) net income (loss):
 
 
 
 
 
 
 
 
 
Asset write-down charges
8

 
5

 
18

 
10

 
17

Acquisition and integration costs
4

 
13

 
18

 
27

 
61

Depreciation, amortization and accretion
385

 
296

 
1,138

 
880

 
1,242

Amortization of prepaid lease purchase price adjustments
5

 
5

 
15

 
15

 
20

Interest expense and amortization of deferred financing costs(a)
160

 
154

 
478

 
430

 
591

(Gains) losses on retirement of long-term obligations
32

 
—

 
106

 
4

 
4

Interest income
(1
)
 
(11
)
 
(4
)
 
(13
)
 
(19
)
Other (income) expense
(1
)
 
—

 
—

 
(3
)
 
(1
)
(Benefit) provision for income taxes
5

 
3

 
13

 
12

 
26

Stock-based compensation expense
32

 
25

 
84

 
67

 
96

Adjusted EBITDA(b)(c)
$
793

 
$
605

 
$
2,324

 
$
1,775

 
$
2,482

(a)
See the reconciliation of "components of historical interest expense and amortization of deferred financing costs" herein.
(b)
See "Definitions of Non-GAAP Measures, Segment Measures and Other Calculations" herein for a discussion of our definition of Adjusted EBITDA.
(c)
The above reconciliation excludes line items included in our definition which are not applicable for the periods shown.


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Reconciliation of Current Outlook for Adjusted EBITDA:
 
Q4 2018
 
Full Year 2018
 
Full Year 2019
(dollars in millions)
Outlook
 
Outlook
 
Outlook
Net income (loss)
$201
to
$226
 
$659
to
$684
 
$738
to
$818
Adjustments to increase (decrease) net income (loss):
 
 
 
 
 
 
 
 
 
 
 
Asset write-down charges
$9
to
$11
 
$27
to
$29
 
$35
to
$45
Acquisition and integration costs
$8
to
$12
 
$26
to
$30
 
$15
to
$25
Depreciation, amortization and accretion
$381
to
$401
 
$1,519
to
$1,539
 
$1,609
to
$1,644
Amortization of prepaid lease purchase price adjustments
$4
to
$6
 
$19
to
$21
 
$19
to
$21
Interest expense and amortization of deferred financing costs(a)
$160
to
$170
 
$638
to
$648
 
$691
to
$736
(Gains) losses on retirement of long-term obligations
$0
to
$0
 
$106
to
$106
 
$0
to
$0
Interest income
$(2)
to
$0
 
$(6)
to
$(4)
 
$(7)
to
$(3)
Other (income) expense
$(1)
to
$3
 
$(1)
to
$3
 
$(1)
to
$1
(Benefit) provision for income taxes
$3
to
$8
 
$16
to
$21
 
$16
to
$24
Stock-based compensation expense
$23
to
$27
 
$107
to
$111
 
$111
to
$115
Adjusted EBITDA(b)(c)
$820
to
$830
 
$3,144
to
$3,154
 
$3,303
to
$3,348

Components of Historical Interest Expense and Amortization of Deferred Financing Costs:
 
Three Months Ended September 30,
(dollars in millions)
2018
 
2017
Interest expense on debt obligations
$
158

 
$
152

Amortization of deferred financing costs and adjustments on long-term debt, net
5

 
5

Other, net
(3
)
 
(3
)
Interest expense and amortization of deferred financing costs
$
160

 
$
154


Components of Current Outlook for Interest Expense and Amortization of Deferred Financing Costs:
 
Q4 2018
 
Full Year 2018
 
Full Year 2019
(dollars in millions)
Outlook
 
Outlook
 
Outlook
Interest expense on debt obligations
$161
to
$166
 
$634
to
$639
 
$696
to
$716
Amortization of deferred financing costs and adjustments on long-term debt, net
$4
to
$6
 
$20
to
$22
 
$18
to
$23
Other, net
$(4)
to
$(2)
 
$(15)
to
$(13)
 
$(16)
to
$(11)
Interest expense and amortization of deferred financing costs
$160
to
$170
 
$638
to
$648
 
$691
to
$736
(a)
See the reconciliation of "components of current outlook for interest expense and amortization of deferred financing costs" herein.
(b)
See "Definitions of Non-GAAP Measures, Segment Measures and Other Calculations" herein for a discussion of our definition of Adjusted EBITDA.
(c)
The above reconciliation excludes line items included in our definition which are not applicable for the periods shown.





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Reconciliation of Historical FFO and AFFO:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(amounts in millions, except per share amounts)
2018
 
2017
 
2018
 
2017
Net income (loss)
$
164

 
$
115

 
$
458

 
$
346

Real estate related depreciation, amortization and accretion
371

 
288

 
1,097

 
857

Asset write-down charges
8

 
5

 
18

 
10

Dividends on preferred stock
(28
)
 
—

 
(85
)
 
—

FFO(a)(b)(c)(d)
$
515

 
$
408

 
$
1,487

 
$
1,214

 
 
 
 
 
 
 
 
FFO (from above)
$
515

 
$
408

 
$
1,487

 
$
1,214

Adjustments to increase (decrease) FFO:
 
 
 
 
 
 
 
Straight-lined revenue
(17
)
 
3

 
(53
)
 
3

Straight-lined expense
23

 
24

 
69

 
70

Stock-based compensation expense
32

 
25

 
84

 
67

Non-cash portion of tax provision
2

 
(1
)
 
(1
)
 
(3
)
Non-real estate related depreciation, amortization and accretion
14

 
8

 
41

 
23

Amortization of non-cash interest expense
2

 
2

 
5

 
8

Other (income) expense
(1
)
 
—

 
—

 
(4
)
Gains (losses) on retirement of long-term obligations
32

 
—

 
106

 
4

Acquisition and integration costs
4

 
13

 
18

 
27

Capital improvement capital expenditures
(15
)
 
(11
)
 
(47
)
 
(27
)
Corporate capital expenditures
(12
)
 
(13
)
 
(28
)
 
(32
)
AFFO(a)(b)(c)(d)
$
579

 
$
459

 
$
1,683

 
$
1,349

Weighted-average common shares outstanding—diluted(e)
416

 
397

 
414

 
375

AFFO per share(a)(c)(d)
$
1.39

 
$
1.15

 
$
4.06

 
$
3.60

(a)
See “Definitions of Non-GAAP Financial Measures, Segment Measures and Other Calculations” herein for a discussion of our definitions of FFO and AFFO.
(b)
FFO and AFFO are reduced by cash paid for preferred stock dividends during the period in which they are paid.
(c)
The above reconciliation excludes line items included in our definition which are not applicable for the periods shown.
(d)
Attributable to CCIC common stockholders.
(e)
Based on the diluted weighted-average common shares outstanding for the three and nine months ended September 30, 2018 and 2017. For all periods presented, the diluted weighted-average common shares outstanding does not include any assumed conversion of preferred stock in the share count.



33
Crown Castle International Corp.
Third Quarter 2018
COMPANY OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX


Reconciliation of Historical FFO and AFFO:
 
Years Ended December 31,
(amounts in millions, except per share amounts)
2017
 
2016
 
2015
 
2014
Net income (loss)
$
445

 
$
357

 
$
525

 
$
346

Real estate related depreciation, amortization and accretion
1,211

 
1,082

 
1,018

 
972

Asset write-down charges
17

 
34

 
33

 
14

Dividends on preferred stock
(30
)
 
(44
)
 
(44
)
 
(44
)
FFO(a)(b)(c)(d)
$
1,643

 
$
1,430

 
$
1,533

 
$
1,288

 
 
 
 
 
 
 
 
FFO (from above)
$
1,643

 
$
1,430

 
$
1,533

 
$
1,288

Adjustments to increase (decrease) FFO:
 
 
 
 
 
 
 
Straight-lined revenue
—

 
(47
)
 
(111
)
 
(183
)
Straight-lined expense
93

 
94

 
99

 
102

Stock-based compensation expense
96

 
97

 
67

 
56

Non-cash portion of tax provision
9

 
7

 
(64
)
 
(19
)
Non-real estate related depreciation, amortization and accretion
31

 
26

 
18

 
14

Amortization of non-cash interest expense
9

 
14

 
37

 
81

Other (income) expense
(2
)
 
9

 
(57
)
 
(12
)
(Gains) losses on retirement of long-term obligations
4

 
52

 
4

 
45

Acquisition and integration costs
61

 
17

 
16

 
34

Capital improvement capital expenditures
(41
)
 
(43
)
 
(47
)
 
(31
)
Corporate capital expenditures
(44
)
 
(47
)
 
(58
)
 
(50
)
AFFO(a)(b)(c)(d)
$
1,860

 
$
1,610

 
$
1,437

 
$
1,324

Weighted-average common shares outstanding—diluted(e)
383

 
341

 
334

 
333

AFFO per share(a)(c)(d)
$
4.85

 
$
4.72

 
$
4.30

 
$
3.97

(a)
See "Definitions of Non-GAAP Measures, Segment Measures and Other Calculations" herein for a discussion of our definitions of FFO and AFFO.
(b)
FFO and AFFO are reduced by cash paid for preferred stock dividends during the period in which they are paid.
(c)
The above reconciliation excludes line items included in our definition which are not applicable for the periods shown.
(d)
Attributable to CCIC common stockholders.
(e)
Based on the diluted weighted-average common shares outstanding for the twelve months ended December 31, 2017, 2016, 2015 and 2014.

34
Crown Castle International Corp.
Third Quarter 2018
COMPANY OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX


Reconciliation of Current Outlook for FFO and AFFO:
 
Q4 2018
 
Full Year 2018
 
Full Year 2019
(amounts in millions, except per share amounts)
Outlook
 
Outlook
 
Outlook
Net income (loss)
$201
to
$226
 
$659
to
$684
 
$738
to
$818
Real estate related depreciation, amortization and accretion
$372
to
$382
 
$1,469
to
$1,479
 
$1,560
to
$1,580
Asset write-down charges
$9
to
$11
 
$27
to
$29
 
$35
to
$45
Dividends on preferred stock
$(28)
to
$(28)
 
$(113)
to
$(113)
 
$(113)
to
$(113)
FFO(a)(b)(c)
$567
to
$577
 
$2,055
to
$2,065
 
$2,252
to
$2,297
Weighted-average common shares outstanding—diluted(d)
416
 
415
 
416
FFO per share(a)(b)(c)
$1.37
to
$1.39
 
$4.96
to
$4.98
 
$5.41
to
$5.51
 
 
 
 
 
 
 
 
 
 
 
 
FFO (from above)
$567
to
$577
 
$2,055
to
$2,065
 
$2,252
to
$2,297
Adjustments to increase (decrease) FFO:
 
 
 
 
 
 
 
 
 
 
 
Straight-lined revenue
$(15)
to
$(5)
 
$(67)
to
$(57)
 
$(9)
to
$11
Straight-lined expense
$16
to
$26
 
$85
to
$95
 
$68
to
$88
Stock-based compensation expense
$23
to
$27
 
$107
to
$111
 
$111
to
$115
Non-cash portion of tax provision
$(2)
to
$3
 
$(4)
to
$1
 
$(7)
to
$8
Non-real estate related depreciation, amortization and accretion
$9
to
$19
 
$50
to
$60
 
$49
to
$64
Amortization of non-cash interest expense
$0
to
$4
 
$5
to
$9
 
$2
to
$12
Other (income) expense
$(1)
to
$3
 
$(1)
to
$3
 
$(1)
to
$1
(Gains) losses on retirement of long-term obligations
$0
to
$0
 
$106
to
$106
 
$0
to
$0
Acquisition and integration costs
$8
to
$12
 
$26
to
$30
 
$15
to
$25
Capital improvement capital expenditures
$(20)
to
$(10)
 
$(66)
to
$(56)
 
$(85)
to
$(75)
Corporate capital expenditures
$(30)
to
$(20)
 
$(59)
to
$(49)
 
$(40)
to
$(30)
AFFO(a)(b)(c)
$591
to
$601
 
$2,273
to
$2,283
 
$2,413
to
$2,458
Weighted-average common shares outstanding—diluted(d)
416
 
415
 
416
AFFO per share(a)(b)(c)
$1.42
to
$1.44
 
$5.48
to
$5.50
 
$5.80
to
$5.90
(a)
See “Definitions of Non-GAAP Financial Measures, Segment Measures and Other Calculations” herein for a discussion of our definitions of FFO and AFFO.
(b)
The above reconciliation excludes line items included in our definition which are not applicable for the periods shown.
(c)
Attributable to CCIC common stockholders.
(d)
The assumption for fourth quarter 2018, full year 2018 and full year 2019 diluted weighted-average common shares outstanding is 416 million, 415 million and 416 million, respectively, based on diluted common shares outstanding as of September 30, 2018. For all periods presented, the diluted weighted-average common shares outstanding does not include any assumed conversion of preferred stock in the share count.

35
Crown Castle International Corp.
Third Quarter 2018
COMPANY OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX


Net debt to Last Quarter Annualized Adjusted EBITDA calculation:
 
Three Months Ended September 30,
(dollars in millions)
2018
 
2017
Total face value of debt
$
16,538

 
$
15,312

Ending cash and cash equivalents(a)
323

 
6,719

Total net debt
$
16,215


$
8,593

 
 
 
 
Adjusted EBITDA for the three months ended September 30,
$
793

 
$
605

Last quarter annualized Adjusted EBITDA
3,172


2,420

Net debt to Last Quarter Annualized Adjusted EBITDA
5.1
x
 
3.6x(b)


Cash Interest Coverage Ratio Calculation:
 
Three Months Ended September 30,
(dollars in millions)
2018
 
2017
Adjusted EBITDA
$
793

 
$
605

Interest expense on debt obligations
158

 
152

Interest Coverage Ratio
5.0
x
 
4.0
x

(a)
Excludes restricted cash.
(b)
The Net debt to Last Quarter Annualized Adjusted EBITDA for the three months ended September 30, 2017 was impacted by the pre-funding of the Lightower acquisition, which closed on November 1, 2017.




36