investors

HOUSTON, Oct. 21, 2013 (GLOBE NEWSWIRE) -- Crown Castle International Corp. (NYSE:CCI) today reported results for the quarter ended September 30, 2013.

"We are thrilled with the announcement of the AT&T tower transaction and the continued performance of our core business, which delivered 38% growth in AFFO per share in the third quarter 2013 compared to the same quarter last year," stated Ben Moreland, Crown Castle's President and Chief Executive Officer. "During the third quarter, we saw a significant increase in new leasing activity as the carriers focused on improving network quality. Based on this activity and our expectations for next year, our 2014 Outlook assumes 25% to 30% more revenue from new leases in 2014 compared to 2013, before additional leasing activity we expect on the AT&T towers."

CONSOLIDATED FINANCIAL RESULTS

Total revenue for the third quarter of 2013 increased 21% to $749 million from $621 million for the same period in 2012. Site rental revenue for the third quarter of 2013 increased $82 million, or 15%, to $621 million from $539 million for the same period in the prior year. Site rental gross margin, defined as site rental revenue less site rental cost of operations, increased $35 million, or 9%, to $439 million in the third quarter of 2013 from $403 million in the same period in 2012. Adjusted EBITDA for the third quarter of 2013 increased $40 million, or 10%, to $441 million from $400 million in the same period in 2012.

Funds from Operations ("FFO") increased 23% to $272 million in the third quarter of 2013, compared to $221 million in the third quarter of 2012. FFO per share increased 22% to $0.93 in the third quarter of 2013, compared to $0.76 in the third quarter of 2012. Adjusted Funds from Operations ("AFFO") increased 38% to $318 million in the third quarter of 2013, compared to $230 million in the third quarter of 2012. AFFO per share increased 38% to $1.09 in the third quarter of 2013, compared to $0.79 in the third quarter of 2012.

Net income attributable to CCIC stockholders for the third quarter of 2013 was $46 million, compared to $42 million of net income for the same period in 2012. Net income attributable to CCIC stockholders per common share was $0.16 for the third quarter of 2013, compared to $0.14 per common share in the third quarter of 2012.

AT&T TOWER TRANSACTION

As announced yesterday, Crown Castle entered into a definitive agreement with AT&T to acquire the exclusive right to lease and operate approximately 9,700 AT&T towers in the US for a weighted average term of approximately 28 years for cash consideration of $4.85 billion. In addition, Crown Castle will have the option, primarily between 2032 and 2048, to purchase the leased towers at the end of the respective lease terms for aggregate option payments of approximately $4.2 billion. Crown Castle expects to fund the transaction with cash on hand and equity and debt financing, including borrowings under its revolving credit facility. The transaction is expected to close in the fourth quarter of 2013.

FINANCING AND INVESTING ACTIVITIES

During the third quarter of 2013, Crown Castle invested approximately $131 million in capital expenditures, comprised of $18 million of land purchases, $10 million of sustaining capital expenditures and $103 million of revenue generating capital expenditures.

Additionally, during the third quarter, Crown Castle borrowed $800 million of incremental Term Loan B under the existing senior secured credit agreement with terms substantially the same as our existing Term Loan B. The proceeds were used to repay a portion of the outstanding revolving credit loans. As of September 30, 2013, Crown Castle had approximately $219 million in cash and cash equivalents (excluding restricted cash) and approximately $1.3 billion of availability under its revolving credit facility.

PLAN TO INITIATE DIVIDEND

On September 9, 2013, Crown Castle announced it expects to elect Real Estate Investment Trust ("REIT") status beginning with the taxable year commencing January 1, 2014. Subject to the successful completion and financing of the aforementioned AT&T tower transaction, Crown Castle expects to initiate a quarterly dividend of 35 cents per share beginning in the first quarter of 2014. Further, Crown Castle expects to utilize its cash flow after dividends consistent with its past practice of investing in acquisitions, the construction of new sites (including small cell networks), land purchases and the purchase of its own securities, including common shares.

"We are excited to announce our strong operating results, the AT&T tower transaction and our plan to initiate a dividend in the first quarter of 2014," stated Jay Brown, Crown Castle's Chief Financial Officer. "Given the significant anticipated cash flow from our existing business and future cash flows from the AT&T towers, we expect to be able to continue to make significant investments to enhance the long-term growth of our business while providing investors with a meaningful dividend. Based on our expectation for growth in our business, we believe that we can grow our dividend over the next five years by at least 15% annually."

OUTLOOK

This Outlook section contains forward-looking statements, and actual results may differ materially. Information regarding potential risks which could cause actual results to differ from the forward-looking statements herein is set forth below and in Crown Castle's filings with the Securities and Exchange Commission ("SEC").

The following Outlook is based on current expectations and assumptions and assumes a US dollar to Australian dollar exchange rate of 0.91 US dollars, 0.96 US dollars and 0.91 US dollars to 1.0 Australian dollar for fourth quarter, full year 2013 and full year 2014 Outlook, respectively.

The Outlook for fourth quarter and full year 2013 does not include any impact from the AT&T tower transaction. The 2014 Outlook includes the expected operating results from the AT&T tower transaction but excludes the impact of the related expected financing. Crown Castle estimates the AT&T towers will contribute approximately $245 million to $255 million to Crown Castle's 2014 AFFO before the impact of the related expected financing. Further, Crown Castle expects its AFFO per share in 2014 pro forma for the AT&T tower transaction, including the impact of the related expected financing, to be slightly accretive to what its expectation for AFFO per share would have been without the transaction.

As reflected in the following table, Crown Castle has increased the midpoint of its full year 2013 Outlook (previously issued on July 24, 2013) for site rental revenue by $5 million, Adjusted EBITDA by $14 million, and AFFO by $41 million. The increase in the midpoint of Adjusted EBITDA reflects higher expected site rental revenue in addition to higher expected service gross margin contribution. In addition to the aforementioned increase in Adjusted EBITDA, AFFO is also expected to benefit from higher expected contributions related to reimbursements for wireless infrastructure expenditures necessary to accommodate carrier equipment.

With regard to 2014 Outlook, Crown Castle expects revenue from new leases to be 25% to 30% more in 2014 compared to 2013, before additional leasing activity expected on the AT&T towers. The 2014 Outlook for site rental revenue growth of $494 million, or 20%, includes approximately $175 million to $185 million of organic cash revenue growth split approximately evenly between new tenant activity and cash escalators, ignoring the impact from straight-line revenue adjustments. In addition, 2014 Outlook for site rental revenues includes the negative impact from leases that come to the end of their respective term and are not renewed of approximately $50 million or 2% of site rental revenues. Of this 2%, approximately half is expected to come from typical churn activity and approximately half from Sprint's decommissioning of their legacy Nextel iDEN network. Based on Sprint's stated intention to decommission their iDEN network and Crown Castle's contractual terms with Sprint, Crown Castle expects approximately 3% of its run-rate site rental revenues to be impacted by the iDEN network decommissioning. These iDEN leases have effective term-end dates spread evenly throughout 2014 and 2015. As a result, Crown Castle expects the reduction to site rental revenues from the iDEN decommissioning to be approximately 1% in 2014 with the remaining approximately 2% impact coming after 2014.

Further, the 2014 Outlook assumes the contribution to 2014 AFFO from services gross margin to be lower by approximately $25 million than the contribution in 2013 and the contribution from prepaid rent (net of amortization) to be approximately $20 million higher than that of 2013. In addition, the 2014 Outlook for AFFO is negatively impacted by approximately $17 million in expected sustaining capital expenditures to remodel and expand certain of our office facilities.

The following table sets forth Crown Castle's current Outlook for fourth quarter 2013 and full year 2013 and full year 2014:

CONFERENCE CALL DETAILS

Crown Castle has scheduled a conference call for Monday, October 21, 2013, at 7:30 a.m. Eastern Time. The conference call may be accessed by dialing 480-629-9722 and asking for the Crown Castle call at least 30 minutes prior to the start time. The conference call may also be accessed live over the Internet at http://investor.crowncastle.com. Any supplemental materials for the call will be posted on the Crown Castle website at http://investor.crowncastle.com.

A telephonic replay of the conference call will be available from 12:30 p.m. Eastern Time on Monday, October 21, 2013, through 11:59 p.m. Eastern Time on Monday, October 28, 2013, and may be accessed by dialing 303-590-3030 using access code 4644535. An audio archive will also be available on the company's website at http://investor.crowncastle.com shortly after the call and will be accessible for approximately 90 days.

Crown Castle owns, operates and leases towers and other infrastructure for wireless communications. Crown Castle offers significant wireless communications coverage to all of the top 100 US markets and to substantially all of the Australian population. Pro forma for the announced transaction with AT&T, Crown Castle owns, operates and manages approximately 40,000 and 1,700 wireless communication sites in the US and Australia, respectively. For more information on Crown Castle, please visit www.crowncastle.com.

Non-GAAP Financial Measures and Other Calculations

This press release includes presentations of Adjusted EBITDA, Funds from Operations and Adjusted Funds from Operations, 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")). Each of the amounts included in the calculation of Adjusted EBITDA, FFO, and AFFO are computed in accordance with GAAP, with the exception of: (1) sustaining capital expenditures, which is not defined under GAAP and (2) our adjustment to the income tax provision in calculations of FFO and AFFO.

Our measures of Adjusted EBITDA, FFO and AFFO may not be comparable to similarly titled measures of other companies, including other companies in the tower sector or those reported by REITs. FFO and AFFO presented are not necessarily indicative of the operating results that would have been achieved had we converted to a REIT, nor are they necessarily indicative of future financial position or operating results. Our FFO and AFFO may not be comparable to those reported in accordance with National Association of Real Estate Investment Trusts, including as a result of our adjustment to the income tax provision to reflect our estimate of the cash taxes had we been a REIT.

Adjusted EBITDA, FFO and AFFO are presented as additional information because management believes these measures are useful indicators of the financial performance of our core businesses.  In addition, Adjusted EBITDA is a measure of current financial performance used in our debt covenant calculations.

Adjusted EBITDA. Crown Castle defines Adjusted EBITDA as net income (loss) plus restructuring charges (credits), asset write-down charges, acquisition and integration costs, depreciation, amortization and accretion, amortization of prepaid lease purchase price adjustments, interest expense and amortization of deferred financing costs, gains (losses) on retirement of long-term obligations, net gain (loss) on interest rate swaps, impairment of available-for-sale securities, interest income, other income (expense), benefit (provision) for income taxes, cumulative effect of change in accounting principle, income (loss) from discontinued operations and stock-based compensation expense.

Funds from Operations. Crown Castle defines Funds from Operations as net income plus adjusted tax provision plus real estate depreciation, amortization and accretion.

Adjusted Funds from Operations. Crown Castle defines Adjusted Funds from Operations as Funds from Operations before straight-line revenue, straight-line expense, stock-based compensation expense, non-real estate related depreciation, amortization and accretion, amortization of deferred financing costs, debt discounts and interest rate swaps, other (income) expense, gain (loss) on retirement of long-term obligations, net gain (loss) on interest rate swaps, acquisition and integration costs, and asset write-down charges and less capital improvement capital expenditures and corporate capital expenditures.

Sustaining capital expenditures. Crown Castle defines sustaining capital expenditures as either (1) corporate related capital improvements, such as information technology equipment and office equipment or (2) capital improvements to tower sites that enable our customers' ongoing quiet enjoyment of the tower.

The tables set forth below reconcile these non-GAAP financial measures to comparable GAAP financial measures. The components in these tables may not sum to the total due to rounding.

Reconciliations of Non-GAAP Financial Measures to Comparable GAAP Financial Measures:

Adjusted EBITDA for the three months ended September 30, 2013 and 2012 is computed as follows:

Adjusted EBITDA for the quarter ending December 31, 2013 and the years ending December 31, 2013 and  December 31, 2014 is forecasted as follows:

FFO and AFFO for the quarter ending December 31, 2013 and the year ending December 31, 2013 are forecasted as follows:

FFO and AFFO for the year ending December 31, 2014 are forecasted as follows:

FFO and AFFO for the three months ended September 30, 2013 and 2012 are computed as follows:

Other Calculations:

The components of interest expense and amortization of deferred financing costs for the three months ended September 30, 2013 and 2012 are as follows:

The components of interest expense and amortization of deferred financing costs for the quarter ending December 31, 2013 and the years ending December 31, 2013 and December 31, 2014 are forecasted as follows:

Debt balances and maturity dates as of September 30, 2013:

Sustaining capital expenditures for the three months ended September 30, 2013 and 2012 is computed as follows:

Cautionary Language Regarding Forward-Looking Statements

This press release contains forward-looking statements and information that are based on our management's current expectations. Such statements include, but are not limited to, plans, projections, Outlook and estimates regarding (i) the potential impact of the AT&T tower transaction ("AT&T Transaction") on our financial and operational results, including revenues, AFFO and leasing, (ii) timing of the AT&T Transaction, (iii) financing and funding of the AT&T Transaction, (iv) our potential election of REIT status, including the timing thereof, (v) dividends, including our dividend plans, timing and the amount and growth of any dividends, (vi) our investments, including the types of such investments and the potential benefits which may be derived therefrom, (vii) cash flows, including from the AT&T towers, (viii) currency exchange rates, (ix) reimbursements for wireless infrastructure expenditures, (x) organic cash revenue growth and its components, including new tenant activity and cash escalators, (xi) tenant churn, (xii) impact of the iDEN network decommissioning, (xiii) capital expenditures, including sustaining capital expenditures, (xiv) site rental revenues, (xv) site rental cost of operations,(xvi) site rental gross margin and services gross margin, (xvii) Adjusted EBITDA, (xviii) interest expense and amortization of deferred financing costs, (xix) FFO, (xx) AFFO, including on a per share basis, (xxi) net income (loss), including on a per share basis, (xxii) prepaid rents, (xxiii) our common shares outstanding, including on a diluted basis and (xxiv) the utility of certain financial measures in analyzing our results.

Such forward-looking statements are subject to certain risks, uncertainties and assumptions, including but not limited to prevailing market conditions and the following:

• Our business depends on the demand for wireless communications and wireless infrastructure, and we may be adversely affected by any slowdown in such demand. Additionally, a reduction in carrier network investment may materially and adversely affect our business (including reducing demand for new tenant additions and network services).
• A substantial portion of our revenues is derived from a small number of customers, and the loss, consolidation or financial instability of any of our limited number of customers may materially decrease revenues and reduce demand for our wireless infrastructure and network services.
• Our substantial level of indebtedness could adversely affect our ability to react to changes in our business, and the terms of our debt instruments limit our ability to take a number of actions that our management might otherwise believe to be in our best interests. In addition, if we fail to comply with our covenants, our debt could be accelerated.
• We have a substantial amount of indebtedness. In the event we do not repay or refinance such indebtedness, we could face substantial liquidity issues and might be required to issue equity securities or securities convertible into equity securities, or sell some of our assets to meet our debt payment obligations.
• Sales or issuances of a substantial number of shares of our common stock may adversely affect the market price of our common stock.
• As a result of competition in our industry, including from some competitors with significantly more resources or less debt than we have, we may find it more difficult to achieve favorable rental rates on our new or renewing customer contracts.
• The business model for our small cell operations contains differences from our traditional site rental business, resulting in different operational risks. If we do not successfully operate that business model or identify and manage those operational risks, such operations may produce results that are less than anticipated.
• New technologies may significantly reduce demand for our wireless infrastructure and negatively impact our revenues.
• New wireless technologies may not deploy or be adopted by customers as rapidly or in the manner projected.
• If we fail to retain rights to the land under our wireless infrastructure, our business may be adversely affected.
• Our network services business has historically experienced significant volatility in demand, which reduces the predictability of our results.
• The expansion and development of our business, including through acquisitions, increased product offerings, and other strategic growth opportunities, may cause disruptions in our business, which may have an adverse effect on our business, operations and financial results.
• If we fail to comply with laws and regulations which regulate our business and which may change at any time, we may be fined or even lose our right to conduct some of our business.
• If radio frequency emissions from wireless handsets or equipment on our wireless infrastructure are demonstrated to cause negative health effects, potential future claims could adversely affect our operations, costs and revenues.
• The proposed AT&T transaction may not be completed within the expected timeframe, if at all, and the pendency of the proposed AT&T transaction could adversely affect our business and operations.
• There are a number of implementation and operational complexities to address before Crown Castle expects to convert to a REIT, including completing internal reorganizations. Crown Castle can provide no assurance as to when the conversion to a REIT will be successful, if at all. If Crown Castle fails to elect REIT status for the taxable year commencing January 1, 2014, the next earliest date on which Crown Castle can elect REIT status would be for the taxable year commencing January 1, 2015. In addition, Crown Castle can provide no assurance that any proposed implementation of REIT-related ownership and transfer restrictions will be adopted.
• REIT qualification involves the application of highly technical and complex provisions of the Internal Revenue Code of 1986, as amended, to Crown Castle's operations, as well as various factual determinations concerning matters and circumstances not entirely within Crown Castle's control. Although, if Crown Castle converts to a REIT, Crown Castle plans to operate in a manner consistent with REIT qualification rules, Crown Castle cannot give assurance that it will so qualify or remain so qualified.
• While Crown Castle currently intends to take the steps necessary to convert to a REIT, the REIT election decision is subject to final approval by the Crown Castle Board of Directors. Crown Castle can give no assurances that its Board of Directors will continue to pursue a conversion to a REIT, even if there are no impediments to such conversion.
• Crown Castle has considered a variety of strategies, including alternative financing, capital and tax strategies, designed to maximize long-term shareholder value, but there can be no assurances that conversion to a REIT will be the most beneficial alternative considered.
• Changes in legislation or the federal tax rules can adversely impact Crown Castle's ability to convert to a REIT or the benefits of being a REIT.
• Certain provisions of our certificate of  incorporation, bylaws and operative agreements and domestic and international competition laws may make it more difficult for a third party to acquire control of us or for us to acquire control of a third party, even if such a change in control would be beneficial to our stockholders.
• We may be adversely affected by our exposure to changes in foreign currency exchange rates relating to our operations in Australia.

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 SEC. As used in this press release, the term "including", and any variation thereof, means "including, without limitation."

CONTACT: Jay Brown, CFO
         Fiona McKone, VP - Corporate Finance
         Crown Castle International Corp.
         713-570-3050