CROWN CASTLE INTERNATIONAL CORP - FORM 8-K - EX-99.2 - EX 99.2 - October 21, 2015

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8-K - 8-K - CROWN CASTLE INTERNATIONAL CORPq320158-k.htm
EX-99.1 - EX 99.1 - CROWN CASTLE INTERNATIONAL CORPq32015earningsrelease.htm
Exhibit 99.2















Supplemental Information Package
and Non-GAAP Reconciliations
Third Quarter • September 30, 2015




The Foundation for a Wireless World.
CrownCastle.com

Crown Castle International Corp
Third Quarter 2015

TABLE OF CONTENTS
 
Page
Company Overview
 
Company Profile
Strategy
Historical Dividend and AFFO per Share
Portfolio Footprint
Corporate Information
Research Coverage
Historical Common Stock Data
Portfolio and Financial Highlights
7
Outlook
Financials & Metrics
 
Consolidated Balance Sheet
Consolidated Statement of Operations
FFO and AFFO Reconciliations
Consolidated Statement of Cash Flows
Site Rental Revenue Growth
Site Rental Gross Margin Growth
Summary of Straight-Line, Prepaid Rent Activity, and 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
Small Cell Network Overview
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", 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 2015, full year 2015 and full year 2016.

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 measures, including FFO and AFFO, 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.

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Crown Castle International Corp.
Third Quarter 2015
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 wireless infrastructure, including: (1) towers and other structures, such as rooftops (collectively, "towers"), and to a lesser extent, (2) distributed antenna systems, a type of small cell network ("small cells"), and (3) interests in land under third party towers in various forms ("third party land interests") (collectively, "wireless infrastructure"). Crown Castle offers significant wireless communications coverage in each of the top 100 US markets. Crown Castle owns, operates and manages approximately 40,000 towers in the US.
Our core business is providing access, including space or capacity, to our wireless infrastructure via long-term contracts in various forms, including license, sublease and lease agreements (collectively, "leases"). Our wireless infrastructure can accommodate multiple customers for antennas or other equipment necessary for the transmission of signals for wireless communication devices. We seek to increase our site rental revenues by adding more tenants on our wireless infrastructure, which we expect to result in significant incremental cash flows due to our relatively fixed operating costs.
Effective January 1, 2014, Crown Castle commenced operating as a Real Estate Investment Trust ("REIT") for U.S. federal income tax purposes as it relates to our towers and third party land interests. In August 2014, we received a favorable private letter ruling from the IRS, which provides that the real property portion of our small cells and the related rents qualify as real property and rents from real property, respectively, under the rules governing REITs. We are evaluating the impact of this private letter ruling and, subject to board approval, we expect to take appropriate action to include at least some part of our small cells as part of the REIT.
On May 28, 2015, Crown Castle completed the sale of CCAL for an aggregate purchase price of approximately $1.6 billion. At the time of the sale, CCAL was 77.6% owned by Crown Castle. We have classified the historical balances, results of operations, and cash flows of CCAL as amounts from discontinued operations.

STRATEGY 
Our strategy is to create long-term stockholder value via a combination of (1) growing cash flows generated from our portfolio of wireless infrastructure, (2) returning a meaningful portion of our cash provided by operating activities to our stockholders in the form of dividends and (3) investing capital efficiently to grow long-term dividends per share. 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 wireless infrastructure. We seek to maximize the site rental cash flows derived from our wireless infrastructure by adding tenants on our wireless infrastructure through long-term leases as our customers deploy and improve their wireless networks. We seek to maximize new tenant additions or modifications of existing tenant installations (collectively, "new tenant additions") through our focus on customer service and deployment speed. Due to the relatively fixed nature of the costs to operate our wireless infrastructure (which tend to increase at approximately the rate of inflation), we expect increases in our site rental cash flows from new tenant additions and the related subsequent impact from contracted escalations to result in growth in our operating cash flows. We believe there is considerable additional future demand for our existing wireless infrastructure based on their location and the anticipated growth in the wireless communication services industry. Substantially all of our wireless infrastructure can accommodate additional tenancy, either as currently constructed or with appropriate modifications to the structure, which we expect to have high incremental returns.
•
Return cash provided by operating activities to stockholders in the form of dividends. We believe that distributing a meaningful portion of our cash provided by operating activities appropriately provides stockholders with increased certainty for a portion of expected long-term stockholder value while still retaining sufficient flexibility to invest in our business and deliver growth. We believe this decision reflects the translation of the high-quality, long-term contractual cash flows of our business into stable capital returns to stockholders.
•
Invest capital efficiently to grow long-term dividends per share. We seek to invest our capital available, including the net cash provided by our operating activities and external financing sources, in a manner that will increase long-term stockholder value on a risk-adjusted basis. Our historical investments have included the following (in no particular order):
◦
purchase shares of our common stock from time to time;
◦
acquire or construct wireless infrastructure;

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Crown Castle International Corp.
Third Quarter 2015
COMPANY
OVERVIEW
 FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX

◦
acquire land interests under towers;
◦
make improvements and structural enhancements to our existing wireless infrastructure; or
◦
purchase, repay or redeem our debt.
Our strategy to create long-term stockholder value is based on our belief that additional demand for our wireless infrastructure will be created by the expected continued growth in the wireless communication services industry, which is predominately driven by the demand for wireless data services by consumers. We believe that such demand for our wireless infrastructure will continue, will result in growth of our cash flows due to new tenant additions on our existing wireless infrastructure, and will create other growth opportunities for us, such as demand for new wireless infrastructure.


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Crown Castle International Corp.
Third Quarter 2015
COMPANY
OVERVIEW
 FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX


HISTORICAL DIVIDEND AND AFFO PER SHARE (1)

PORTFOLIO FOOTPRINT
(1)
See reconciliations and definitions provided herein. See also "Definitions of Non-GAAP Financial Measures and Other Calculations" in the Appendix for a discussion of the definitions of FFO and AFFO.
(2)
Last quarter annualized ("LQA") calculated as the most recently completed quarterly period times four.


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Crown Castle International Corp.
Third Quarter 2015
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
Ba1
Standard & Poor’s - Long Term Local Issuer Credit Rating
BB+

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
W. Benjamin Moreland
52
15
President and Chief Executive Officer
Jay A. Brown
42
16
Senior Vice President, Chief Financial Officer and Treasurer
James D. Young
54
9
Senior Vice President and Chief Operating Officer
E. Blake Hawk
65
16
Executive Vice President and General Counsel
Patrick Slowey
58
15
Senior Vice President and Chief Commercial Officer
Philip M. Kelley
42
18
Senior Vice President-Corporate Development and Strategy

BOARD OF DIRECTORS
Name
Position
Committees
Age
Years as Director
J. Landis Martin
Chairman
NCG(1) 
69
18
P. Robert Bartolo
Director
Audit, Compensation
43
1
Cindy Christy
Director
Compensation, NCG(1), Strategy
49
8
Ari Q. Fitzgerald
Director
Compensation, Strategy
52
13
Robert E. Garrison II
Director
Audit, Compensation
73
10
Dale N. Hatfield
Director
NCG(1), Strategy
77
14
Lee W. Hogan
Director
Audit, Compensation, Strategy
71
14
Edward C. Hutcheson
Director
Strategy
70
19
John P. Kelly
Director
Strategy
57
15
Robert F. McKenzie
Director
Audit, Strategy
71
20
Anthony J. Melone
Director
NCG(1), Strategy
55
*
W. Benjamin Moreland
Director
 
52
9

(1)
Nominating & Corporate Governance Committee
*
Appointed May 2015

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Crown Castle International Corp.
Third Quarter 2015
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
Burke & Quick Partners
Frederick Moran
(561) 504-0936

Canaccord Genuity
Greg Miller
(212) 389-8128
Citigroup
Michael Rollins
(212) 816-1116
Cowen and Company
Colby Synesael
(646) 562-1355
Credit Suisse
Joseph Mastrogiovanni
(212) 325-3757
Evercore Partners
Jonathan Schildkraut
(212) 497-0864
Goldman Sachs
Brett Feldman
(212) 902-8156
Jefferies
Mike McCormack
(212) 284-2516
JPMorgan
Philip Cusick
(212) 622-1444
Macquarie
Kevin Smithen
(212) 231-0695
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
Michael Bowen
(503) 727-0721
Raymond James
Ric Prentiss
(727) 567-2567
RBC Capital Markets
Jonathan Atkin
(415) 633-8589
Stifel
Matthew Heinz
(443) 224-1382
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
Phil Kibel
(212) 553-1653
Standard & Poor’s
Scott Tan
(212) 438-4162

HISTORICAL COMMON STOCK DATA
 
Three Months Ended
(in millions, except per share data)
9/30/15
6/30/15
3/31/15
12/31/14
9/30/14
High price(1)
$
85.66

$
85.72

$
86.84

$
81.61

$
77.55

Low price(1)
$
75.78

$
79.27

$
76.23

$
71.85

$
69.28

Period end closing price(2)
$
78.87

$
79.46

$
80.37

76.37

$
77.29

Dividends paid per common share
$
0.82

$
0.82

$
0.82

$
0.82

$
0.35

Volume weighted average price for the period(1)
$
80.40

$
81.97

$
82.76

$
76.75

$
73.73

Common shares outstanding - diluted, at period end
334

334

334

334

334

Market value of outstanding common shares, at period end(3)
$
26,325

$
26,521

$
26,991

$
25,496

$
25,805


(1)
Based on the sales price, adjusted for common stock dividends, as reported by Bloomberg.
(2)
Based on the period end closing price, adjusted for dividends, as reported by Bloomberg.
(3)
Period end market value of outstanding common shares is calculated as the product of (a) shares of common stock outstanding at period end and (b) closing share price at period end, adjusted for dividends, as reported by Bloomberg.



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Crown Castle International Corp.
Third Quarter 2015
COMPANY
OVERVIEW
 FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX

SUMMARY PORTFOLIO HIGHLIGHTS
(as of September 30, 2015)
 
Number of towers(1)
39,692

Average number of tenants per tower
2.2

Remaining contracted customer receivables ($ in billions)(2)
$
20

Weighted average remaining customer contract term (years)(3)
7

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

Percent of ground leased / owned (by site rental gross margin)
64% / 36%

Weighted average maturity of ground leases (years)(4)
31


SUMMARY FINANCIAL HIGHLIGHTS
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(dollars in thousands, except per share amounts)
2015
 
2014
 
2015
 
2014
Operating Data:
 
 
 
 
 
 
 
Net revenues
 
 
 
 
 
 
 
Site rental
$
764,606

 
$
717,623

 
$
2,233,077

 
$
2,143,198

Network services and other
153,501

 
175,260

 
484,938

 
469,690

Net revenues
$
918,107

 
$
892,883

 
$
2,718,015

 
$
2,612,888

 
 
 
 
 
 
 
 
Gross margin
 
 
 
 
 
 
 
Site rental
$
517,606

 
$
487,024

 
$
1,516,833

 
$
1,466,923

Network services and other
66,642

 
73,446

 
221,761

 
194,176

Total gross margin
$
584,248

 
$
560,470

 
$
1,738,594

 
$
1,661,099

 
 
 
 
 
 
 
 
Net income (loss) attributable to CCIC common stockholders
$
92,782

 
$
95,940

 
$
1,346,935

 
$
209,452

Net income (loss) attributable to CCIC common stockholders per share - diluted
$
0.28

 
$
0.29

 
$
4.04

 
$
0.63

 
 
 
 
 
 
 
 
Non-GAAP Data(5):
 
 
 
 
 
 
 
Adjusted EBITDA
$
529,158

 
$
513,604

 
$
1,579,383

 
$
1,531,673

FFO
357,828

 
336,724

 
1,122,798

 
923,876

AFFO
356,350

 
332,237

 
1,064,412

 
995,747

AFFO per share
$
1.07

 
$
1.00

 
$
3.19

 
$
2.99

 
 
 
 
 
 
 
 
Summary Cash Flow Data:
 
 
 
 
 
 
 
Net cash provided by (used for) operating activities
$
371,998

 
$
427,989

 
$
1,290,876

 
$
1,150,926

Net cash provided by (used for) investing activities(6)
(1,249,432
)
 
(287,821
)
 
(1,688,645
)
 
(670,529
)
Net cash provided by (used for) financing activities
724,176

 
(123,277
)
 
(699,989
)
 
(479,033
)

(1)
Includes towers and rooftops, excludes small cells and third-party land interests.
(2)
Excludes renewal terms at customers' opinion.
(3)
Excludes renewal terms at customers' option, weighted by site rental revenues.
(4)
Includes renewal terms at the Company's option, weighted by site rental gross margin.
(5)
See reconciliations and definitions provided herein. See also "Definitions of Non-GAAP Measures and Other Calculations" in the Appendix for a discussion of our definitions of FFO and AFFO.
(6)
Includes net cash used for acquisitions of approximately $1.0 billion and $89 million for the three months ended September 30, 2015 and 2014, respectively and $1.1 billion and $174 million for the nine months ended September 30, 2015 and 2014, respectively.


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Crown Castle International Corp.
Third Quarter 2015
COMPANY
OVERVIEW
 FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX

SUMMARY FINANCIAL HIGHLIGHTS (CONTINUED)
 
 
Three Months Ended September 30,
(dollars in thousands, except per share amounts)
 
2015
 
2014
Other Data:
 
 
 
 
Net debt to last quarter annualized Adjusted EBITDA
 
5.6
x
(1) 
5.5
x
Dividend per common share
 
$
0.82

 
$
0.35

AFFO payout ratio(2)
 
77
%
 
35
%
 
 
 
 
 
(dollars in thousands)
 
September 30, 2015
 
December 31, 2014
Balance Sheet Data (at period end):
 
 
 
 
Cash and cash equivalents
 
$
184,116

 
$
151,312

Property and equipment, net
 
9,498,568

 
8,982,783

Total assets
 
21,995,644

 
21,143,276

Total debt and other long-term obligations
 
12,141,366

 
11,920,861

Total CCIC stockholders' equity
 
7,240,303

 
6,716,225


OUTLOOK FOR FOURTH QUARTER 2015, FULL YEAR 2015 AND FULL YEAR 2016(3)
(dollars in millions, except per share amounts)
Fourth Quarter 2015
Full Year 2015
Full Year 2016
Site rental revenues
$778
to
$783
$3,011
to
$3,016
$3,152
to
$3,177
Site rental cost of operations
$241
to
$246
$957
to
$962
$989
to
$1,014
Site rental gross margin
$534
to
$539
$2,050
to
$2,055
$2,153
to
$2,178
Adjusted EBITDA(5)
$536
to
$541
$2,115
to
$2,120
$2,156
to
$2,181
Interest expense and amortization of deferred financing costs(4)
$126
to
$131
$525
to
$530
$517
to
$537
FFO(5)
$368
to
$373
$1,491
to
$1,496
$1,467
to
$1,492
AFFO(5)
$368
to
$373
$1,433
to
$1,438
$1,550
to
$1,575
AFFO per share(5)(6)
$1.10
to
$1.12
$4.29
to
$4.31
$4.62
to
$4.69
Net income (loss)
$99
to
$132
$1,481
to
$1,514
$409
to
$508

(1)
Pro forma for Sunesys acquired on August 4, 2015.
(2)
AFFO is calculated exclusive of income from discontinued operations and related noncontrolling interest. See page 2.
(3)
Results of operations and income from the sale of CCAL are classified as amounts from discontinued operations. Outlook amounts are exclusive of income from discontinued operations and related noncontrolling interest, except for net income. See page 2.
(4)
See the reconciliation of "components of interest expense and amortization of deferred financing costs" in the Appendix.
(5)
See reconciliation of this non-GAAP financial measure to net income (loss) included herein.
(6)
Based on diluted shares outstanding as of September 30, 2015 of approximately 334 million shares for fourth quarter 2015 and full year 2015. Full year 2016 assumes diluted shares outstanding of approximately 336 million shares, inclusive of the assumed conversion of the mandatory convertible preferred stock in November 2016.


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Third Quarter 2015
COMPANY
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ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX

OUTLOOK FOR FULL YEARS 2015 AND 2016 SITE RENTAL REVENUE GROWTH
(dollars in millions)
Full Year 2014
Midpoint of Full Year 2015 Outlook
Midpoint of Full Year 2016 Outlook
Reported GAAP site rental revenues
$
2,867

$
3,014

$
3,165

Site rental straight-line revenues
(183
)
(113
)
(41
)
Other - Non-recurring
(5
)
—

—

Site Rental Revenues, as Adjusted(1)(3)
$
2,678

$
2,901

$
3,124

Cash adjustments:
 
 
 
Other
 
—

—

Acquisitions and builds(2)
 
(63
)
(62
)
Organic Site Rental Revenues(1)(3)(4)
 
$
2,838

3,062

Year-Over-Year Revenue Growth
 
 
 
Reported GAAP site rental revenues
 
5.1
%
5.0
%
Site Rental Revenues, as Adjusted
 
8.3
%
7.7
%
Organic Site Rental Revenues(5)
 
6.0
%
5.5
%
OUTLOOK FOR ORGANIC SITE RENTAL REVENUE GROWTH
 
Midpoint of Full Year 2015 Outlook
Midpoint of Full Year 2016 Outlook
New leasing activity
6.3
 %
5.9
 %
Escalators
3.5
 %
3.3
 %
Organic Site Rental Revenue Growth, before non-renewals
9.8
 %
9.2
 %
Non-renewals
(3.8
)%
(3.7
)%
Organic Site Rental Revenue Growth(5)
6.0
 %
5.5
 %
OUTLOOK FOR FULL YEARS 2015 AND 2016 SITE RENTAL GROSS MARGIN GROWTH
(dollars in millions)
Full Year 2014
Midpoint of Full Year 2015 Outlook
Midpoint of Full Year 2016 Outlook
Reported GAAP site rental gross margin
$
1,960

$
2,053

$
2,166

Straight line revenues and expenses, net
(82
)
(15
)
47

Other - Non-recurring
$
(5
)
—

—

Site Rental Gross Margin, as Adjusted(1)(3)
$
1,874

$
2,038

$
2,213

Cash adjustments:
 
 
 
Other
 
—

—

Acquisitions and builds(2)
 
(47
)
(45
)
Organic Site Rental Gross Margin(1)(3)(4)
 
$
1,990

$
2,167

Year-Over-Year Gross Margin Growth
 
 
 
Reported GAAP site rental gross margin
 
4.7
%
5.5
%
Site Rental Gross Margin, as Adjusted
 
8.7
%
8.6
%
Organic Site Rental Gross Margin(6)
 
6.2
%
6.4
%
Year-Over-Year Incremental Margin
 
 
 
Reported GAAP site rental gross margin
 
62.7
%
74.8
%
Site Rental Gross Margin, as Adjusted
 
73.4
%
78.5
%
Organic Site Rental Gross Margin(7)
 
72.6
%
80.6
%

(1)
Includes amortization of prepaid rent.
(2)
The financial impact of acquisitions and tower builds is excluded from organic site rental revenues until the one-year anniversary of the acquisition or build.
(3)
Includes Site Rental Revenues, as Adjusted, from the construction of new small cell nodes.
(4)
See definitions provided herein.
(5)
Calculated as the percentage change from Site Rental Revenues, as Adjusted, for the prior period when compared to Organic Site Rental Revenues for the current period.
(6)
Calculated as the percentage change from Site Rental Gross Margin, as Adjusted for the prior period when compared to Organic Site Rental Gross Margin in the current period.
(7)
Calculated as the change from Site Rental Gross Margin, as Adjusted for the prior period when compared to Organic Site Rental Gross Margin in the current period, divided by the change from Site Rental Revenues, as Adjusted in the prior period when compared to Organic Site Rental Revenues for the current period.

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Third Quarter 2015
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ASSET PORTFOLIO OVERVIEW
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APPENDIX


CONSOLIDATED BALANCE SHEET (Unaudited)
(dollars in thousands, except share amounts)
September 30,
2015
 
December 31,
2014
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
184,116

 
$
151,312

Restricted cash
116,653

 
147,411

Receivables, net
324,566

 
313,308

Prepaid expenses
143,675

 
138,873

Deferred income tax assets
33,110

 
24,806

Other current assets
222,251

 
94,503

Assets from discontinued operations
—

 
412,783

Total current assets
1,024,371

 
1,282,996

Deferred site rental receivables
1,282,752

 
1,202,058

Property and equipment, net
9,498,568

 
8,982,783

Goodwill
5,527,134

 
5,196,485

Other intangible assets, net
3,837,360

 
3,681,551

Long-term prepaid rent, deferred financing costs and other assets, net
825,459

 
797,403

Total assets
$
21,995,644

 
$
21,143,276

 
 
 
 
LIABILITIES AND EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
157,024

 
$
162,397

Accrued interest
69,184

 
66,943

Deferred revenues
314,648

 
279,882

Other accrued liabilities
181,498

 
182,081

Current maturities of debt and other obligations
102,188

 
113,335

Liabilities from discontinued operations
—

 
127,493

Total current liabilities
824,542

 
932,131

Debt and other long-term obligations
12,039,178

 
11,807,526

Deferred income tax liabilities
32,317

 
39,889

Other long-term liabilities
1,859,304

 
1,626,502

Total liabilities
14,755,341

 
14,406,048

Commitments and contingencies
 
 
 
CCIC stockholders' equity:
 
 
 
Common stock, $.01 par value; 600,000,000 shares authorized; shares issued and outstanding: September 30, 2015—333,771,499 and December 31, 2014—333,856,632
3,339

 
3,339

4.50% Mandatory Convertible Preferred Stock, Series A, $.01 par value; 20,000,000 shares authorized; shares issued and outstanding: September 30, 2015 and December 31, 2014—9,775,000; aggregate liquidation value: September 30, 2015 and December 31, 2014—$977,500
98

 
98

Additional paid-in capital
9,532,597

 
9,512,396

Accumulated other comprehensive income (loss)
(3,754
)
 
15,820

Dividends/distributions in excess of earnings
(2,291,977
)
 
(2,815,428
)
Total CCIC stockholders' equity
7,240,303

 
6,716,225

Noncontrolling interest from discontinued operations
—

 
21,003

Total equity
7,240,303

 
6,737,228

Total liabilities and equity
$
21,995,644

 
$
21,143,276




10
Crown Castle International Corp.
Third Quarter 2015
COMPANY
OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX

CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(dollars in thousands, except share and per share amounts)
2015
 
2014
 
2015
 
2014
Net revenues:
 
 
 
 
 
 
 
Site rental
$
764,606

 
$
717,623

 
$
2,233,077

 
$
2,143,198

Network services and other
153,501

 
175,260

 
484,938

 
469,690

Net revenues
918,107

 
892,883

 
2,718,015

 
2,612,888

Operating expenses:
 
 
 
 
 
 
 
Costs of operations (exclusive of depreciation, amortization and accretion):
 
 
 
 
 
 
 
Site rental
247,000

 
230,599

 
716,244

 
676,275

Network services and other
86,859

 
101,814

 
263,177

 
275,514

General and administrative
76,699

 
65,212

 
223,880

 
187,171

Asset write-down charges
7,477

 
4,932

 
19,652

 
10,673

Acquisition and integration costs
7,608

 
4,068

 
12,001

 
28,852

Depreciation, amortization and accretion
261,662

 
247,206

 
766,621

 
738,965

Total operating expenses
687,305

 
653,831

 
2,001,575

 
1,917,450

Operating income (loss)
230,802

 
239,052

 
716,440

 
695,438

Interest expense and amortization of deferred financing costs
(129,877
)
 
(141,287
)
 
(398,782
)
 
(432,221
)
Gains (losses) on retirement of long-term obligations
—

 
—

 
(4,157
)
 
(44,629
)
Interest income
789

 
107

 
1,170

 
329

Other income (expense)
(1,214
)
 
(694
)
 
58,510

 
(9,350
)
Income (loss) from continuing operations before income taxes
100,500

 
97,178

 
373,181

 
209,567

Benefit (provision) for income taxes
3,801

 
1,977

 
9,380

 
8,118

Income (loss) from continuing operations
104,301

 
99,155

 
382,561

 
217,685

Discontinued operations:
 
 
 
 
 
 
 
Income (loss) from discontinued operations, net of tax
—

 
8,882

 
19,690

 
28,502

Net gain (loss) from disposal of discontinued operations, net of tax
(522
)
 
—

 
981,018

 
—

Income (loss) from discontinued operations, net of tax
(522
)
 
8,882

 
1,000,708

 
28,502

Net income (loss)
103,779

 
108,037

 
1,383,269

 
246,187

Less: Net income (loss) attributable to the noncontrolling interest
—

 
1,100

 
3,343

 
3,744

Net income (loss) attributable to CCIC stockholders
103,779

 
106,937

 
1,379,926

 
242,443

Dividends on preferred stock
(10,997
)
 
(10,997
)
 
(32,991
)
 
(32,991
)
Net income (loss) attributable to CCIC common stockholders
$
92,782

 
$
95,940

 
$
1,346,935

 
$
209,452

 
 
 
 
 
 
 
 
Net income (loss) attributable to CCIC common stockholders, per common share:
 
 
 
 
 
 
 
Income (loss) from continuing operations, basic
$
0.28

 
$
0.27

 
$
1.05

 
$
0.56

Income (loss) from discontinued operations, basic
$
—

 
$
0.02

 
$
3.00

 
$
0.07

Net income (loss) attributable to CCIC common stockholders, basic
$
0.28

 
$
0.29

 
$
4.05

 
$
0.63

Income (loss) from continuing operations, diluted
$
0.28

 
$
0.26

 
$
1.05

 
$
0.55

Income (loss) from discontinued operations, diluted
$
—

 
$
0.03

 
$
2.99

 
$
0.08

Net income (loss) attributable to CCIC common stockholders, diluted
$
0.28

 
$
0.29

 
$
4.04

 
$
0.63

 
 
 
 
 
 
 
 
Weighted-average common shares outstanding (in thousands):
 
 
 
 
 
 
 
Basic
333,049

 
332,413

 
332,951

 
332,264

Diluted
333,711

 
333,241

 
333,735

 
333,020




11
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COMPANY
OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX

FFO AND AFFO RECONCILIATIONS
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(dollars in thousands, except share and per share amounts)
2015
 
2014
 
2015
 
2014
Net income(1)
$
104,301

 
$
99,155

 
$
382,561

 
$
217,685

Real estate related depreciation, amortization and accretion
257,047

 
243,634

 
753,576

 
728,510

Asset write-down charges
7,477

 
4,932

 
19,652

 
10,673

Dividends on preferred stock
(10,997
)
 
(10,997
)
 
(32,991
)
 
(32,991
)
FFO(2)(3)(5)
$
357,828

 
$
336,724

 
$
1,122,798

 
$
923,876

Weighted average common shares outstanding — diluted(4)
333,711

 
333,241

 
333,735

 
333,020

FFO per share(2)(5)
$
1.07

 
$
1.01

 
$
3.36

 
$
2.77

 
 
 
 
 
 
 
 
FFO (from above)
$
357,828

 
$
336,724

 
$
1,122,798

 
$
923,876

Adjustments to increase (decrease) FFO:
 
 
 
 
 
 
 
Straight-line revenue
(27,144
)
 
(45,708
)
 
(89,009
)
 
(144,707
)
Straight-line expense
24,409

 
24,057

 
73,971

 
75,994

Stock-based compensation expense
16,466

 
13,358

 
49,282

 
43,198

Non-cash portion of tax provision
(5,897
)
 
(4,708
)
 
(20,272
)
 
(14,591
)
Non-real estate related depreciation, amortization and accretion
4,615

 
3,572

 
13,045

 
10,455

Amortization of non-cash interest expense
8,590

 
19,837

 
32,394

 
61,322

Other (income) expense
1,214

 
694

 
(58,510
)
 
9,350

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

 
—

 
4,157

 
44,629

Acquisition and integration costs
7,608

 
4,068

 
12,001

 
28,852

Capital improvement capital expenditures
(14,351
)
 
(7,538
)
 
(32,503
)
 
(15,457
)
Corporate capital expenditures
(16,988
)
 
(12,117
)
 
(42,943
)
 
(27,173
)
AFFO(2)(3)(5)
$
356,350

 
$
332,237

 
$
1,064,412

 
$
995,747

Weighted average common shares outstanding — diluted(4)
333,711

 
333,241

 
333,735

 
333,020

AFFO per share(2)(5)
$
1.07

 
$
1.00

 
$
3.19

 
$
2.99


(1)
Exclusive of income (loss) from discontinued operations and related noncontrolling interest of $(0.5 million) and $9 million for the three months ended September 30, 2015 and 2014, respectively and $1.0 billion and $29 million for the nine months ended September 30, 2015 and 2014, respectively.
(2)
See reconciliations and definitions provided herein. See also "Definitions of Non-GAAP Measures and Other Calculations" in the Appendix for a discussion of the definitions of FFO and AFFO.
(3)
FFO and AFFO are reduced by cash paid for preferred stock dividends.
(4)
The diluted weighted average common shares outstanding assumes no conversion of preferred stock in the share count.
(5)
The above reconciliation excludes line items included in our definition which are not applicable for the periods shown.


12
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Third Quarter 2015
COMPANY
OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX

CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
 
 
Nine Months Ended September 30,
 
(dollars in thousands)
2015
 
2014
 
Cash flows from operating activities:
 
 
 
 
Net income (loss) from continuing operations
$
382,561

 
$
217,685

 
Adjustments to reconcile net income (loss) from continuing operations to net cash provided by (used for) operating activities:
 
 
 
 
Depreciation, amortization and accretion
766,621

 
738,965

 
Gains (losses) on retirement of long-term obligations
4,157

 
44,629

 
Gains (losses) on settled swaps
(54,475
)
 
—

 
Amortization of deferred financing costs and other non-cash interest
32,394

 
61,322

 
Stock-based compensation expense
44,711

 
39,497

 
Asset write-down charges
19,652

 
10,673

 
Deferred income tax benefit (provision)
(16,199
)
 
(14,589
)
 
Other non-cash adjustments, net
(7,240
)
 
(1,967
)
 
Changes in assets and liabilities, excluding the effects of acquisitions:
 
 
 
 
Increase (decrease) in liabilities
208,538

 
289,676

 
Decrease (increase) in assets
(89,844
)
 
(234,965
)
 
Net cash provided by (used for) operating activities
1,290,876

 
1,150,926

 
Cash flows from investing activities:
 
 
 
 
Payments for acquisition of businesses, net of cash acquired
(1,083,319
)
 
(174,356
)
 
Capital expenditures
(658,240
)
 
(498,960
)
 
Receipts from foreign currency swaps
54,475

 
—

 
Other investing activities, net
(1,561
)
 
2,787

 
Net cash provided by (used for) investing activities
(1,688,645
)
 
(670,529
)
 
Cash flows from financing activities:
 
 
 
 
Proceeds from issuance of long-term debt
1,000,000

 
845,750

 
Principal payments on debt and other long-term obligations
(78,049
)
 
(86,197
)
 
Purchases and redemptions of long-term debt
(1,069,337
)
 
(836,899
)
 
Purchases of capital stock
(29,576
)
 
(21,778
)
 
Borrowings under revolving credit facility
1,560,000

 
567,000

 
Payments under revolving credit facility
(1,240,000
)
 
(587,000
)
 
Payments for financing costs
(17,415
)
 
(15,899
)
 
Net decrease (increase) in restricted cash
28,435

 
39,882

 
Dividends/distributions paid on common stock
(821,056
)
 
(350,535
)
 
Dividends paid on preferred stock
(32,991
)
 
(33,357
)
 
Net cash provided by (used for) financing activities
(699,989
)
 
(479,033
)
 
Net increase (decrease) in cash and cash equivalents - continuing operations
(1,097,758
)
 
1,364

 
Discontinued operations:
 
 
 
 
Net cash provided by (used for) operating activities
4,359

 
41,304

 
Net cash provided by (used for) investing activities
1,103,577

 
(20,154
)
 
Net increase (decrease) in cash and cash equivalents - discontinued operations
1,107,936

 
21,150

 
Effect of exchange rate changes
(1,682
)
 
(7,358
)
 
Cash and cash equivalents at beginning of period
175,620

(1) 
223,394

(1) 
Cash and cash equivalents at end of period
$
184,116

 
$
238,550

(1) 
Supplemental disclosure of cash flow information:
 
 
 
 
Interest paid
364,147

 
368,437

 
Income taxes paid
23,865

 
15,353

 

(1)
Inclusive of cash and cash equivalents included in discontinued operations.

13
Crown Castle International Corp.
Third Quarter 2015
COMPANY
OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX


SITE RENTAL REVENUE GROWTH
 
Three Months Ended September 30,
(dollars in millions)
2015
 
2014
Reported GAAP site rental revenues
$
765

 
$
718

Site rental straight-line revenues
(27
)
 
(46
)
Other - Non-recurring
—

 
—

Site Rental Revenues, as Adjusted(1)(3)
$
737

 
$
672

Cash adjustments:
 
 
 
Other
—

 
 
Acquisitions and builds(2)
(22
)
 
 
Organic Site Rental Revenues(1)(3)(4)
$
715

 
 
Year-Over-Year Revenue Growth
 
 
 
Reported GAAP site rental revenues
6.5
%
 
 
Site Rental Revenues, as Adjusted
9.8
%
 
 
Organic Site Rental Revenues(5)
6.4
%
 
 

ORGANIC SITE RENTAL REVENUE GROWTH
 
Three Months Ended September 30,
 
2015
New leasing activity
6.6%
Escalators
3.5%
Organic Site Rental Revenue growth, before non-renewals
10.0%
Non-renewals
(3.6)%
Organic Site Rental Revenue Growth(5)
6.4%

(1)
Includes amortization of prepaid rent; see the table "Summary of Prepaid Rent Activity" on page 16 for further details.
(2)
The financial impact of acquisitions and tower builds is excluded from organic site rental revenues until the one-year anniversary of the acquisition or build.
(3)
Includes Site Rental Revenues, as Adjusted from the construction of new small cells.
(4)
See definitions provided herein.
(5)
Calculated as the percentage change from Site Rental Revenues, as Adjusted, for the prior period when compared to Organic Site Rental Revenues for the current period.

14
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Third Quarter 2015
COMPANY
OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX


SITE RENTAL GROSS MARGIN GROWTH
 
Three Months Ended September 30,
(dollars in millions)
2015
 
2014
Reported GAAP site rental gross margin
$
518

 
$
487

Straight line revenues and expenses, net
(3
)
 
(22
)
Other - Non-recurring
—

 
—

Site rental gross margin, as Adjusted(1)(2)
$
515

 
$
465

Cash adjustments:
 
 
 
Other
—

 
 
Acquisitions and builds(3)
(17
)
 
 
Organic Site Rental Gross Margin(1)(2)(4)
$
498

 
 
Year-Over-Year Gross Margin Growth
 
 
 
Reported GAAP site rental gross margin
6.3
%
 
 
Site Rental Gross Margin, as Adjusted
10.6
%
 
 
Organic Site Rental Gross Margin(5)
7.0
%
 
 
Year-Over-Year Incremental Margin
 
 
 
Reported GAAP site rental gross margin
65.1
%
 
 
Site Rental Gross Margin, as Adjusted
75.5
%
 
 
Organic Site Rental Gross Margin(6)
75.5
%
 
 

(1)
Includes amortization of prepaid rent.
(2)
Includes Site Rental Revenues, as Adjusted, from the construction of new small cell nodes.
(3)
The financial impact of acquisitions and tower builds is excluded from organic site rental revenues until the one-year anniversary of the acquisition or build.
(4)
See definitions provided herein.
(5)
Calculated as the percentage change from Site Rental Gross Margin, as Adjusted for the prior period when compared to Organic Site Rental Gross Margin in the current period.
(6)
Calculated as the change from Site Rental Gross Margin, as Adjusted for the prior period when compared to Organic Site Rental Gross Margin in the current period, divided by the change from Site Rental Revenues, as Adjusted in the prior period when compared to Organic Site Rental Revenues for the current period.


15
Crown Castle International Corp.
Third Quarter 2015
COMPANY
OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX


SUMMARY OF SITE RENTAL STRAIGHT-LINE REVENUES AND EXPENSES(1)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(dollars in thousands)
2015
 
2014
 
2015
 
2014
Total site rental straight-line revenue
$
27,144

 
$
45,708

 
$
89,009

 
$
144,707

Total site rental straight-line expenses
24,409

 
24,057

 
73,971

 
75,994


SUMMARY OF PREPAID RENT ACTIVITY(2)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(dollars in thousands)
2015
 
2014
 
2015
 
2014
Prepaid rent received
$
113,883

 
$
81,240

 
$
330,820

 
$
233,070

Amortization of prepaid rent
(40,826
)
 
(27,516
)
 
(109,888
)
 
(68,974
)

SUMMARY OF CAPITAL EXPENDITURES
 
Three Months Ended September 30,
(dollars in thousands)
2015
 
2014
Discretionary:
 
 
 
Purchases of land interests
$
16,004

 
$
15,104

Wireless infrastructure construction and improvements
190,014

 
164,903

Sustaining
31,339

 
19,655

Total
$
237,357

 
$
199,662


(1)
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.
(2)
Reflects prepaid rent received from long-term tenant contracts and the amortization thereof for GAAP revenue recognition purposes.

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


PROJECTED REVENUE FROM EXISTING CUSTOMER CONTRACTS(1)
 
Years Ended December 31,
(as of September 30, 2015; dollars in millions)
2016
2017
2018
2019
Site rental revenue (GAAP)
$
3,074

$
3,084

$
3,100

$
3,119

Site rental straight-line revenue
(37
)
33

87

140

Site Rental Revenues, as Adjusted
$
3,037

$
3,117

$
3,187

$
3,259


PROJECTED GROUND LEASE EXPENSE FROM EXISTING GROUND LEASES(2)
 
Years Ended December 31,
(as of September 30, 2015; dollars in millions)
2016
2017
2018
2019
Ground lease expense (GAAP)
$
666

$
671

$
677

$
683

Site rental straight-line expense
(86
)
(75
)
(64
)
(54
)
Ground Lease Expense, as Adjusted
$
579

$
597

$
613

$
629


ANNUALIZED CASH SITE RENTAL REVENUE AT TIME OF RENEWAL(3)
 
Years Ended December 31,
(as of September 30, 2015; dollars in millions)
2016
2017
2018
2019
AT&T
$
33

$
18

$
40

$
36

Sprint(4)
39

38

36

42

T-Mobile
26

25

33

26

Verizon
14

17

19

19

All Others Combined
38

30

33

30

Total
$
150

$
128

$
161

$
153


(1)
Based on existing contracts as of September 30, 2015. All contracts, except for Sprint contracts associated with the iDen network and contracts where non-renewal notices have been received, are assumed to renew for a new term at current term end date. CPI-linked customer contracts are assumed to escalate at 3% per annum.
(2)
Based on existing ground leases as of September 30, 2015. CPI-linked leases are assumed to escalate at 3% per annum.
(3)
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 Existing Customer Contracts."
(4)
Excludes Sprint leases associated with the iDen network, which are assumed to not renew as reflected in the table "Projected Revenue from Existing Customer Contracts."


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OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX


ESTIMATED REDUCTION TO SITE RENTAL REVENUES FROM NON-RENEWALS FROM LEAP, METROPCS AND CLEARWIRE NETWORK DECOMMISSIONING(1)(2) (dollars in millions)
2016
2017
Thereafter
Total
$80-$90
$45-$55
$40-$60
$165-$205



HISTORICAL ANNUAL NON-RENEWALS AS PERCENTAGE OF SITE RENTAL REVENUES, AS ADJUSTED
Years Ended December 31,
2014
2013
2012
2011
2010
2.6%
1.7%
2.2%
2.0%
2.1%



CUSTOMER OVERVIEW
(as of September 30, 2015)
Percentage of Q2 2015 LQA Site
Rental Revenues
Percentage of Q3 2015 LQA Site
Rental Revenues
Weighted Average Current
Term Remaining(3)
Long-Term Credit Rating
(S&P / Moody’s)
AT&T
31%
30%
7
BBB+ / Baa1
T-Mobile
24%
23%
7
BB
Sprint
20%
19%
6
B+ / B3
Verizon
17%
17%
8
BBB+ / Baa1
All Others Combined
8%
10%
4
N/A
Total / Weighted Average
100%
100%
7
 

(1)
Estimated impact to site rental revenues in the applicable period based on the anticipated timing and amount of decommissioning activity, as of September 30, 2015.
(2)
Depending on the eventual network deployment and decommissioning plans of AT&T, T-Mobile and Sprint, the impact and timing of such renewals may vary from Crown Castle's expectations.
(3)
Weighted by site rental revenue contributions; excludes renewals at the customers' option.


18
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COMPANY
OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX

SUMMARY OF TOWER PORTFOLIO BY VINTAGE
(as of September 30, 2015; dollars in thousands)
 
YIELD(1)
NUMBER OF TENANTS PER TOWER


LQA SITE RENTAL REVENUE PER TOWER
LQA SITE RENTAL GROSS MARGIN PER TOWER
INVESTED CAPITAL PER TOWER(2)
NUMBER OF TOWERS

(1)
Yield is calculated as LQA site rental gross margin divided by invested capital.
(2)
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(1)
(as of September 30, 2015; dollars in thousands)
NUMBER OF TOWERS
TENANTS PER TOWER
LQA SITE RENTAL REVENUE PER TOWER


(1)
Includes towers and rooftops, excludes small cells and third-party land interests.


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FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX


DISTRIBUTION OF TOWER TENANCY (as of September 30, 2015)
PERCENTAGE OF TOWERS BY TENANTS PER TOWER(1)
SITES OPERATED GREATER THAN 10 YEARS
SITES OPERATED LESS THAN OR EQUAL TO 10 YEARS
Average: 2.8
Average: 2.0
 
 
GEOGRAPHIC TOWER DISTRIBUTION (as of September 30, 2015)(1)
PERCENTAGE OF TOWERS BY GEOGRAPHIC LOCATION
PERCENTAGE OF LQA SITE RENTAL REVENUE BY GEOGRAPHIC LOCATION

(1)
Includes towers and rooftops, excludes small cells and third-party land interests.

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APPENDIX


GROUND INTEREST OVERVIEW
(as of September 30, 2015;
dollars in millions)
LQA Site Rental Revenue
Percentage of LQA Site Rental Revenue
LQA Site Rental Gross Margin
Percentage of LQA Site Rental Gross Margin
Number of Towers(1)
Percentage of Towers
Weighted Average Term Remaining (by years)(2)
Less than 10 years
$
340

13
%
$
192

10
%
5,578

14
%
 
10 to 20 years
485

18
%
251

13
%
9,146

23
%
 
Greater 20 years
1,134

42
%
747

40
%
16,391

41
%
 
Total leased
$
1,959

73
%
$
1,190

64
%
31,115

78
%
31

 
 
 
 
 
 
 
 
Owned
737

27
%
678

36
%
8,577

22
%
 
Total / Average
$
2,696

100
%
$
1,868

100
%
39,692

100
%
 

(1)
Includes towers and rooftops, excludes small cells and third-party land interests.
(2)
Includes renewal terms at the Company’s option; weighted by site rental gross margin.


GROUND INTEREST ACTIVITY
(dollars in millions)
Three Months Ended September 30, 2015
Nine Months Ended September 30, 2015
Ground Extensions Under Crown Castle Towers:
 
 
  Number of ground leases extended
492

1,461
  Average number of years extended
36

35
Percentage increase in consolidated cash ground lease expense due to extension activities(1)
0.2
%
0.2
%
 
 
 
Ground Purchases Under Crown Castle Towers:
 
 
  Number of ground leases purchased
132

361
  Land lease purchases (including capital expenditures, acquisitions and capital leases)
$
33

$
101

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

<1%


SMALL CELL NETWORK OVERVIEW
Number of Nodes(3) 
(in thousands)
Miles of Fiber
(in thousands)
Percentage of LQA Site Rental Revenues(4)
Weighted Average Current
Term Remaining for
Customer Contracts(2)
15
16
11%
7

(1)
Includes the impact from the amortization of lump sum payments.
(2)
Excludes renewal terms at customers’ option; weighted by site rental revenue.
(3)
Includes nodes currently in-process.
(4)
Pro forma for Sunesys acquired on August 4, 2015.



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ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX



CAPITALIZATION OVERVIEW
(dollars in millions)
Face Value as Reported 9/30/15
Fixed vs. Floating
Secured vs. Unsecured
Interest Rate(1)
Net Debt to LQA EBITDA(2)(3)
Maturity
Cash
$
184

 
 
 
 
 
 
 
 
 
 
 
 
Senior Secured Tower Revenue Notes, Series 2010-2-2010-3(4)
1,600

Fixed
Secured
6.0%
 
Various(8)
Senior Secured Tower Revenue Notes, Series 2010-5-2010-6(4)
1,300

Fixed
Secured
4.7%
 
Various(8)
Senior Secured Tower Revenue Notes, Series 2015-1-2015-2(4)
1,000

Fixed
Secured
3.5%
 
Various(8)
2012 Secured Notes(5)
1,500

Fixed
Secured
3.4%
 
2017/2023
Senior Secured Notes, Series 2009-1(6)
146

Fixed
Secured
7.6%
 
Various(8)
Subtotal
$
5,546

 
 
4.6%
2.6x
 
Revolving Credit Facility(7)
1,015

Floating
Secured
2.0%
 
2019
Term Loan A
634

Floating
Secured
1.9%
 
2019
Term Loan B
2,253

Floating
Secured
3.0%
 
2021
Total CCOC Facility Debt
$
3,901

 
 
2.6%
1.8x
 
4.875% Senior Notes
850

Fixed
Unsecured
4.9%
 
2022
5.250% Senior Notes
1,650

Fixed
Unsecured
5.3%
 
2023
Capital Leases & other debt
197

Various
Various
Various
 
Various
Total HoldCo and other debt
$
2,697

 
 
5.2%
1.3x
 
Total net debt
$
11,961

 
 
4.0%
5.6x
 
Preferred Stock, at liquidation value
978

 
 
 
 
 
Market Capitalization(9)
26,325

 
 
 
 
 
Firm Value(10)
$
39,263

 
 
 
 
 

(1)
Represents the weighted-average stated interest rate.
(2)
Represents the applicable amount of debt divided by LQA consolidated Adjusted EBITDA.
(3)
Pro forma for Sunesys acquired on August 4, 2015.
(4)
If the Senior Secured Tower Revenue Notes 2010-2, 2010-3 and Senior Secured Tower Revenue Notes 2010-5, and 2010-6 ("2010 Tower Revenue Notes") and Senior Secured Tower Revenue Notes 2015-1 and 2015-2 ("2015 Tower Revenue Notes") are not paid in full on or prior to 2017, 2020, 2022 and 2025, as applicable, then Excess Cash Flow (as defined in the indenture) of the issuers (of such notes) will be used to repay principal of the applicable series and class of the 2010 Tower Revenue Notes and 2015 Tower Revenue Notes, and additional interest (of an additional approximately 5% per annum) will accrue on the respective 2010 Tower Revenue Notes and 2015 Tower Revenue Notes. The Senior Secured Tower Revenue Notes, 2010-2, and 2010-3 consist of two series of notes with principal amounts of $350 million and $1.3 billion, having anticipated repayment dates in 2017 and 2020, respectively. The Senior Secured Tower Revenue Notes, 2010-5 and 2010-6 consist of two series of notes with principal amounts of $300 million and $1.0 billion, having anticipated repayment dates in 2017 and 2020, respectively. The Senior Secured Tower Revenue Notes, 2015-1 and 2015-2 consist of two series of notes with principal amounts of $300 million and $700 million, having anticipated repayment dates in 2022 and 2025, respectively.
(5)
The 2012 Secured Notes consist of $500 million aggregate principal amount of 2.381% secured notes due 2017 and $1.0 billion aggregate principal amount of 3.849% secured notes due 2030.
(6)
The Senior Secured Notes, Series 2009-1 consist of $76 million of principal as of September 30, 2015 that amortizes through 2019, and $70 million of principal as of September 30, 2015 that amortizes during the period beginning in 2019 and ending in 2029.
(7)
As of September 30, 2015, the undrawn availability under the $2.2 billion Revolving Credit Facility is $1.2 billion.
(8)
Notes are prepayable at par if voluntarily repaid six months or less prior to maturity; earlier prepayment may require additional consideration.
(9)
Market capitalization calculated based on $78.87 closing price and 333.8 million shares outstanding as of September 30, 2015.
(10)
Represents the sum of net debt, preferred stock (at liquidation value) and market capitalization.

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FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX



DEBT MATURITY OVERVIEW(1)


(1)
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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FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX



LIQUIDITY OVERVIEW(3)
(dollars in thousands)
September 30, 2015
Cash and cash equivalents(1)
$
184,116

Undrawn revolving credit facility availability(2)
1,215,000

Restricted cash
121,653

Debt and other long-term obligations
12,141,366

Total equity
7,240,303


(1)
Exclusive of restricted cash.
(2)
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 senior credit facilities ("2012 Credit Facility").
(3)
In addition in August 2015, we established an ATM stock offering 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 $500.0 million to or through sales agents. As of September 30, 2015, no shares of common stock were sold under the ATM Program.

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FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX


SUMMARY OF MAINTENANCE AND FINANCIAL COVENANTS
Debt
Borrower / Issuer
Covenant(1)
Covenant Level Requirement
 
As of September 30, 2015
Maintenance Financial Covenants(2)
2012 Credit Facility
CCOC
Total Net Leverage Ratio
≤ 5.50x
 
4.4x
2012 Credit Facility
CCOC
Consolidated Interest Coverage Ratio
≥ 2.50x
 
5.9x
 
 
 
 
 
 
Restrictive Negative Financial Covenants
 
 
 
 
Financial covenants restricting ability to make restricted payments, including dividends
4.875% Senior Notes
CCIC
Debt to Adjusted Consolidated Cash Flow Ratio
≤ 7.00x
 
5.7x
5.25% Senior Notes
CCIC
Debt to Adjusted Consolidated Cash Flow Ratio
≤ 7.00x
 
5.7x
2012 Credit Facility
CCOC
Total Net Leverage Ratio
≤ 5.50x
 
4.4x
 
 
 
 
 
 
Financial covenants restricting ability to incur additional debt
4.875% Senior Notes
CCIC
Debt to Adjusted Consolidated Cash Flow Ratio
≤ 7.00x
 
5.7x
5.25% Senior Notes
CCIC
Debt to Adjusted Consolidated Cash Flow Ratio
≤ 7.00x
 
5.7x
2012 Credit Facility
CCOC
Total Net Leverage Ratio
≤ 5.50x
(3) 
4.4x
2012 Credit Facility
CCOC
Holdings Leverage Ratio
≤ 7.00x
(4) 
5.7x
2012 Credit Facility
CCOC
Consolidated Interest Coverage Ratio
≥ 2.50x
 
5.9x
2012 Secured Notes
CC Holdings GS V LLC and Crown Castle GS III Corp.
Debt to Adjusted Consolidated Cash Flow Ratio
≤ 3.50x
 
3.9x
 
 
 
 
 
 
Financial covenants restricting ability to make investments
2012 Credit Facility
CCOC
Total Net Leverage Ratio
≤ 5.50x
 
4.4x

(1)
As defined in the respective debt agreement.
(2)
Failure to comply with the financial maintenance covenants would, absent a waiver, result in an event of default under the credit agreement governing our 2012 Credit Facility.
(3)
Applicable for debt issued at CCOC or its subsidiaries.
(4)
Applicable for debt issued at CCIC or its subsidiaries.

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FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX


SUMMARY OF MAINTENANCE AND FINANCIAL COVENANTS (CONTINUED)
Debt
Borrower / Issuer
Covenant(1)
Covenant Level Requirement
 
As of September 30, 2015
Restrictive Negative Financial Covenants
Financial covenants requiring excess cash flows to be deposited in a cash trap reserve account and not released
2010 Tower Revenue Notes
Crown Castle Towers LLC and its Subsidiaries
Debt Service Coverage Ratio
> 1.75x
(2) 
3.5x
2015 Tower Revenue Notes
Crown Castle Towers LLC and its Subsidiaries
Debt Service Coverage Ratio
> 1.75x
(2) 
3.5x
2009 Securitized Notes
Pinnacle Towers Acquisition Holdings LLC and its Subsidiaries
Debt Service Coverage Ratio
> 1.30x
(2) 
5.1x
 
 
 
 
 
 
Financial covenants restricting ability of relevant issuer to issue additional notes under the applicable indenture
2010 Tower Revenue Notes
Crown Castle Towers LLC and its Subsidiaries
Debt Service Coverage Ratio
≥ 2.00x
(3) 
3.5x
2015 Tower Revenue Notes
Crown Castle Towers LLC and its Subsidiaries
Debt Service Coverage Ratio
≥ 2.00x
(3) 
3.5x
2009 Securitized Notes
Pinnacle Towers Acquisition Holdings LLC and its Subsidiaries
Debt Service Coverage Ratio
≥ 2.34x
(3) 
5.1x

(1)
As defined in the respective debt agreement. In the indentures for the 2010 Tower Revenue Notes, WCP Securitized Notes, and the 2009 Securitized Notes, the defined term for Debt Service Coverage Ratio is "DSCR".
(2)
The 2010 Tower Revenue Notes, 2015 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 2010 Tower Revenue Notes, 2015 Tower Revenue Notes, or 2009 Securitized Notes, respectively.
(3)
Rating Agency Confirmation (as defined in the respective debt agreement) is also required.

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FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX



INTEREST RATE SENSITIVITY(1)
 
Remaining three months,
Years Ended December 31,
(as of September 30, 2015; dollars in millions)
2015
2016
2017
Fixed Rate Debt:
 
 
 
Face Value of Principal Outstanding(2)
$
8,046

$
8,022

$
8,003

Current Interest Payment Obligations(3)
95

381

380

Effect of 0.125% Change in Interest Rates(4)
<1

<1

1

Floating Rate Debt:
 
 
 
Face Value of Principal Outstanding(2)
$
3,901

$
3,835

$
3,779

Current Interest Payment Obligations(5)
25

104

116

Effect of 0.125% Change in Interest Rates(6)
<1

2

5


(1)
Excludes capital lease and other obligations.
(2)
Face value net of required amortizations; assumes no maturity or balloon principal payments; excludes capital leases.
(3)
Interest expense calculated based on current interest rates.
(4)
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.
(5)
Interest expense calculated based on current interest rates. Forward LIBOR assumptions are derived from the 1-month LIBOR forward curve as of September 30, 2015. Calculation takes into account any LIBOR floors in place and assumes no changes to future interest rate margin spread over LIBOR due to changes in the Borrower’s net leverage ratio.
(6)
Interest expense calculated based on current interest rates using forward LIBOR assumptions until the stated maturity date, at which time the face value amount outstanding of such indebtedness is refinanced at current rates plus 12.5 bps. Absent the effect of LIBOR floors, a 12.5 bps increase to forward LIBOR assumptions would increase interest expense for the remaining three months of 2015, 2016, and 2017, by approximately $1 million, $5 million, and $5 million, respectively.



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FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX



DEFINITIONS
Non-GAAP Financial Measures and Other Calculations

This Supplement includes presentations of Adjusted EBITDA, Funds from Operations, Adjusted Funds from Operations, Organic Site Rental Revenues, Site Rental Revenues, as Adjusted, Organic Site Rental Gross Margin, and Site Rental Gross Margin, as Adjusted, and Ground Lease Expense, as Adjusted, 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, AFFO, Organic Site Rental Revenues, Site Rental Revenues, as Adjusted, Organic Site Rental Gross Margin, and Site Rental Gross Margin, as Adjusted, and Ground Lease Expense, as Adjusted, 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 AFFO for periods prior to our REIT conversion.
Our measures of Adjusted EBITDA, FFO, AFFO, Organic Site Rental Revenues, Site Rental Revenues, as Adjusted, Organic Site Rental Gross Margin, and Site Rental Gross Margin, as Adjusted, and Ground Lease Expense, as Adjusted, may not be comparable to similarly titled measures of other companies, including other companies in the tower sector or those reported by other REITs. Our FFO and AFFO may not be comparable to those reported in accordance with National Association of Real Estate Investment Trusts, including with respect to the impact of income taxes for periods prior to our REIT conversion.
Adjusted EBITDA, FFO, AFFO, Organic Site Rental Revenues, Site Rental Revenues, as Adjusted, Organic Site Rental Gross Margin, and Site Rental Gross Margin, as Adjusted, and Ground Lease Expense, as Adjusted, 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, 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.
Funds from Operations ("FFO"). Crown Castle defines Funds from Operations as net income plus real estate related depreciation, amortization and accretion and asset write-down charges, less non controlling interest and cash paid for preferred stock dividends, and is a measure of funds from operations attributable to CCIC common stockholders.
FFO per share. Crown Castle defines FFO per share as FFO divided by the diluted weighted average common shares outstanding.
Adjusted Funds from Operations ("AFFO"). Crown Castle defines Adjusted Funds from Operations as FFO before straight-line revenue, straight-line 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 (loss) 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 capital improvement capital expenditures and corporate capital expenditures.
AFFO per share. Crown Castle defines AFFO per share as AFFO divided by diluted weighted average common shares outstanding.
AFFO payout ratio. Dividends per common share divided by AFFO per share.
Site Rental Revenues, as Adjusted. Crown Castle defines Site Rental Revenues, as Adjusted, as site rental revenues, as reported, less straight-line revenues.

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APPENDIX



DEFINITIONS (continued)
Organic Site Rental Revenues. Crown Castle defines Organic Site Rental Revenues as site rental revenues, as reported, less straight-line revenues, the impact of tower acquisitions and construction, foreign currency adjustments and certain non recurring items.
Site Rental Gross Margins, as Adjusted. Crown Castle defines Site Rental Gross Margins, as Adjusted, as site rental gross margin as reported less straight-line revenues and straight-line expenses.
Organic Site Rental Gross Margins. Crown Castle defines Organic Site Rental Gross Margins as site rental gross margins, as reported less straight-line revenues, straight-line expenses, the impact of tower acquisitions and construction, foreign currency adjustments and certain non recurring items.
Ground Lease Expense, as Adjusted. Crown Castle defines Ground Lease Expense, as Adjusted as ground lease expense, as reported, less straight line ground lease expense.
Sustaining capital expenditures. Crown Castle defines sustaining capital expenditures as either (1) corporate related capital improvements, such as buildings, 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 non-GAAP financial measures to comparable GAAP financial measures and provide certain other calculations. The components in these tables may not sum to the total due to rounding.
Amounts reflected herein are adjusted to reflect the sale of our CCAL segment as discontinued operations following the sale on May 28, 2015. See page 2.

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ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX


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


Adjusted EBITDA for the three and nine months ended September 30, 2015 and 2014 is computed as follows:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(dollars in thousands)
2015
 
2014
 
2015

2014
Net income (loss)
$
103,779

 
$
108,037

 
$
1,383,269

 
$
246,187

Adjustments to increase (decrease) net income (loss):
 
 
 
 
 
 
 
Income (loss) from discontinued operations
522

 
(8,882
)
 
(1,000,708
)
 
(28,502
)
Asset write-down charges
7,477

 
4,932

 
19,652

 
10,673

Acquisition and integration costs
7,608

 
4,068

 
12,001

 
28,852

Depreciation, amortization and accretion
261,662

 
247,206

 
766,621

 
738,965

Amortization of prepaid lease purchase price adjustments
5,143

 
4,988

 
15,387

 
14,546

Interest expense and amortization of deferred financing costs(1)
129,877

 
141,287

 
398,782

 
432,221

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

 
—

 
4,157

 
44,629

Interest income
(789
)
 
(107
)
 
(1,170
)
 
(329
)
Other income (expense)
1,214

 
694

 
(58,510
)
 
9,350

Benefit (provision) for income taxes
(3,801
)
 
(1,977
)
 
(9,380
)
 
(8,118
)
Stock-based compensation expense
16,466

 
13,358

 
49,282

 
43,199

Adjusted EBITDA(2)
$
529,158

 
$
513,604

 
$
1,579,383

 
$
1,531,673

(1)
See the reconciliation of "components of interest expense and amortization of deferred financing costs" herein.
(2)
The above reconciliation excludes line items included in our definition which are not applicable for the periods shown.


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APPENDIX


Adjusted EBITDA for the quarter ending December 31, 2015 and the years ending December 31, 2015 and December 31, 2016 are forecasted as follows:
 
Q4 2015
 
Full Year 2015
 
Full Year 2016
(dollars in millions)
Outlook
 
Outlook
 
Outlook
Net income (loss)
$99
to
$132
 
$1,481
to
$1,514
 
$409
to
$508
Adjustments to increase (decrease) net income (loss):
 
 
 
 
 
 
 
 
 
 
 
Income (loss) from discontinued operations
$0
to
$0
 
$(1,001)
to
$(1,001)
 
$0
to
$0
Asset write-down charges
$4
to
$6
 
$24
to
$26
 
$15
to
$25
Acquisition and integration costs
$2
to
$5
 
$14
to
$17
 
$10
to
$15
Depreciation, amortization and accretion
$263
to
$268
 
$1,030
to
$1,035
 
$1,050
to
$1,070
Amortization of prepaid lease purchase price adjustments
$4
to
$6
 
$20
to
$22
 
$20
to
$22
Interest expense and amortization of deferred financing costs(1)
$126
to
$131
 
$525
to
$530
 
$517
to
$537
Gains (losses) on retirement of long-term obligations
$0
to
$0
 
$4
to
$4
 
$0
to
$0
Interest income
$(2)
to
$0
 
$(3)
to
$(1)
 
$(3)
to
$(1)
Other income (expense)
$0
to
$3
 
$(59)
to
$(56)
 
$1
to
$3
Benefit (provision) for income taxes
$(3)
to
$1
 
$(13)
to
$(9)
 
$(10)
to
$(2)
Stock-based compensation expense
$15
to
$17
 
$65
to
$67
 
$73
to
$78
Adjusted EBITDA(2)
$536
to
$541
 
$2,115
to
$2,120
 
$2,156
to
$2,181

The components of interest expense and amortization of deferred financing costs for the quarters ending September 30, 2015 and 2014 are as follows:
 
Three Months Ended September 30,
(dollars in thousands)
2015
 
2014
Interest expense on debt obligations
$
121,287


$
121,450

Amortization of deferred financing costs
5,451

 
5,516

Amortization of adjustments on long-term debt
116

 
(892
)
Amortization of interest rate swaps(3)
3,744

 
15,551

Other, net
(721
)
 
(338
)
Interest expense and amortization of deferred financing costs
$
129,877

 
$
141,287


The components of interest expense and amortization of deferred financing costs for the quarter ending December 31, 2015 and the years ending December 31, 2015 and December 31, 2016 are forecasted as follows:
 
Q4 2015
 
Full Year 2015
 
Full Year 2016
(dollars in millions)
Outlook
 
Outlook
 
Outlook
Interest expense on debt obligations
$123
to
$125
 
$489
to
$491
 
$502
to
$512
Amortization of deferred financing costs
$4
to
$6
 
$21
to
$23
 
$21
to
$23
Amortization of adjustments on long-term debt
$0
to
$1
 
$(1)
to
$0
 
$(1)
to
$1
Amortization of interest rate swaps(3)
$0
to
$0
 
$19
to
$19
 
$0
to
$0
Other, net
$0
to
$0
 
$(2)
to
$(2)
 
$(3)
to
$(1)
Interest expense and amortization of deferred financing costs
$126
to
$131
 
$525
to
$530
 
$517
to
$537

(1)
See the reconciliation of "components of interest expense and amortization of deferred financing costs" herein.
(2)
The above reconciliation excludes line items included in our definition which are not applicable for the periods shown.
(3)
Relates to the amortization of interest rate swaps; the swaps were cash settled in prior periods.



32
Crown Castle International Corp.
Third Quarter 2015
COMPANY OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX



FFO and AFFO for the three and nine months ended September 30, 2015 and 2014 are computed as follows:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(dollars in thousands, except share and per share amounts)
2015
 
2014
 
2015
 
2014
Net income(1)
$
104,301

 
$
99,155

 
$
382,561

 
$
217,685

Real estate related depreciation, amortization and accretion
257,047

 
243,634

 
753,576

 
728,510

Asset write-down charges
7,477

 
4,932

 
19,652

 
10,673

Dividends on preferred stock
(10,997
)
 
(10,997
)
 
(32,991
)
 
(32,991
)
FFO(2)(3)(5)
$
357,828

 
$
336,724

 
$
1,122,798

 
$
923,876

 
 
 
 
 
 
 
 
FFO (from above)
$
357,828

 
$
336,724

 
$
1,122,798

 
$
923,876

Adjustments to increase (decrease) FFO:
 
 
 
 
 
 
 
Straight-line revenue
(27,144
)
 
(45,708
)
 
(89,009
)
 
(144,707
)
Straight-line expense
24,409

 
24,057

 
73,971

 
75,994

Stock-based compensation expense
16,466

 
13,358

 
49,282

 
43,198

Non-cash portion of tax provision
(5,897
)
 
(4,708
)
 
(20,272
)
 
(14,591
)
Non-real estate related depreciation, amortization and accretion
4,615

 
3,572

 
13,045

 
10,455

Amortization of non-cash interest expense
8,590

 
19,837

 
32,394

 
61,322

Other (income) expense
1,214

 
694

 
(58,510
)
 
9,350

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

 
—

 
4,157

 
44,629

Acquisition and integration costs
7,608

 
4,068

 
12,001

 
28,852

Capital improvement capital expenditures
(14,351
)
 
(7,538
)
 
(32,503
)
 
(15,457
)
Corporate capital expenditures
(16,988
)
 
(12,117
)
 
(42,943
)
 
(27,173
)
AFFO(2)(3)(5)
$
356,350

 
$
332,237

 
$
1,064,412

 
$
995,747

Weighted average common shares outstanding — diluted(4)
333,711

 
333,241

 
333,735

 
333,020

AFFO per share(2)(5)
$
1.07

 
$
1.00

 
$
3.19

 
$
2.99


(1)
Exclusive of income (loss) from discontinued operations and related noncontrolling interest of $(0.5 million) and $9 million for the three months ended September 30, 2015 and 2014, respectively and $1.0 billion and $29 million for the nine months ended September 30, 2015 and 2014, respectively.
(2)
See definitions herein. See also “Definitions of Non-GAAP Financial Measures and Other Calculations” herein for a discussion of our definitions of FFO and AFFO.
(3)
FFO and AFFO are reduced by cash paid for preferred stock dividends.
(4)
The diluted weighted average common shares outstanding assumes no conversion for preferred stock in the share count.
(5)
The above reconciliation excludes line items included in our definition which are not applicable for the periods shown.



33
Crown Castle International Corp.
Third Quarter 2015
COMPANY OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX



FFO and AFFO for the years ended December 31, 2014, 2013, 2012, 2011, 2010, 2009, 2008 and 2007 are computed as follows:
 
Years Ended December 31,
(in thousands of dollars, except share and per share amounts)
2014
 
2013
 
2012
 
2011
 
2010
 
2009
 
2008
 
2007
Net income(1)
$
346,314

 
$
60,001

 
$
124,997

 
$
145,070

 
$
(330,183
)
 
$
(128,893
)
 
$
(60,675
)
 
$
(228,228
)
Real estate related depreciation, amortization and accretion
971,562

 
730,076

 
572,007

 
503,388

 
496,584

 
494,191

 
491,459

 
502,046

Asset write-down charges
14,246

 
13,595

 
15,226

 
21,986

 
13,243

 
18,611

 
16,696

 
65,515

Adjustment for noncontrolling interest(2)
—

 
—

 
268

 
349

 
—

 
—

 
—

 
362

Dividends on preferred stock
(43,988
)
 
—

 
(2,481
)
 
(19,487
)
 
(19,878
)
 
(19,878
)
 
(19,878
)
 
(19,878
)
FFO(4)(5)(7)
$
1,288,133

 
$
803,672

 
$
710,014

 
$
651,305

 
$
159,766

 
$
364,032

 
$
427,602

 
$
319,817

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FFO (from above)
$
1,288,133

 
$
803,672

 
$
710,014

 
$
651,305

 
$
159,766


$
364,032


$
427,602

 
$
319,817

Adjustments to increase (decrease) FFO:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Straight-line revenue
(183,393
)
 
(212,856
)
 
(248,227
)
 
(195,456
)
 
(149,314
)
 
(90,269
)
 
(28,133
)
 
(30,912
)
Straight-line expense
101,890

 
78,619

 
52,271

 
38,141

 
37,617

 
37,469

 
39,172

 
40,026

Stock-based compensation expense
56,431

 
39,031

 
41,785

 
32,611

 
36,541

 
29,225

 
25,897

 
20,375

Non-cash portion of tax provision(3)
(19,490
)
 
185,723

 
(64,939
)
 
4,970

 
(29,033
)
 
(78,304
)
 
(106,857
)
 
(95,622
)
Non-real estate related depreciation, amortization and accretion
14,219

 
11,266

 
19,421

 
19,293

 
16,848

 
7,825

 
7,375

 
10,343

Amortization of non-cash interest expense
80,854

 
99,244

 
109,337

 
102,944

 
85,454

 
61,357

 
24,831

 
23,913

Other (income) expense
(11,992
)
 
3,902

 
5,363

 
5,603

 
824

 
(1,139
)
 
61,837

 
80,551

Gains (losses) on retirement of long-term obligations
44,629

 
37,127

 
131,974

 
—

 
138,367

 
91,079

 
(42
)
 
—

Net gain (loss) on interest rate swaps
—

 
—

 
—

 
—

 
286,435

 
92,966

 
37,888

 
—

Acquisition and integration costs
34,145

 
25,574

 
18,216

 
3,310

 
2,102

 
—

 
2,504

 
25,418

Adjustment for noncontrolling interest(2)
—

 
—

 
(268
)
 
(349
)
 
—

 
—

 
—

 
(362
)
Capital improvement capital expenditures
(31,056
)
 
(17,520
)
 
(19,997
)
 
(12,442
)
 
(13,727
)
 
(17,355
)
 
(13,780
)
 
(9,073
)
Corporate capital expenditures
(50,317
)
 
(27,099
)
 
(14,049
)
 
(8,421
)
 
(8,392
)
 
(9,335
)
 
(12,039
)
 
(12,206
)
AFFO(4)(5)(7)
$
1,324,054

 
$
1,026,684

 
$
740,901

 
$
641,510

 
$
563,487

 
$
487,550

 
$
466,255

 
$
372,266

Weighted average common shares outstanding — diluted(6)
333,265

 
299,293

 
291,270

 
285,947

 
287,764

 
286,622

 
282,007

 
279,937

AFFO per share(4)(7)
$
3.97

 
$
3.43

 
$
2.54

 
$
2.24

 
$
1.96

 
$
1.70

 
$
1.66

 
$
1.33


(1)    Exclusive of income from discontinued operations and related noncontrolling interest.
(2)    Inclusive of the noncontrolling interest related to real estate related depreciation, amortization and accretion and asset write-downs.
(3)
Adjusts the income tax provision to reflect our estimate of the cash taxes paid had we been a REIT for all periods presented, and is primarily comprised of foreign taxes. As a result income tax expense (benefit) is lower by the amount of the adjustment.
(4)
See reconciliations and definitions provided herein. See also "Definitions of Non-GAAP Measures and Other Calculations" herein for a discussion of our definitions of FFO and AFFO.
(5)
FFO and AFFO are reduced by cash paid for preferred stock dividends.
(6)
The diluted weighted average common shares outstanding assumes no conversion for preferred stock in the share count.
(7)
The above reconciliation excludes line items included in our definition which are not applicable for the periods shown.

34
Crown Castle International Corp.
Third Quarter 2015
COMPANY OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX



FFO and AFFO for the three months ended December 31, 2014 and 2013 are computed as follows:
 
Three Months Ended December 31,
(in thousands of dollars, except share and per share amounts)
2014
 
2013
Net income(1)
$
128,629

 
$
(30,483
)
Real estate related depreciation, amortization and accretion
243,052

 
189,815

Asset write-down charges
3,573

 
3,962

Dividends on preferred stock
(10,997
)
 
—

FFO(3)(4)(6)
$
364,257

 
$
163,294

 
 
 
 
FFO (from above)
$
364,257

 
$
163,294

Adjustments to increase (decrease) FFO:
 
 
 
Straight-line revenue
(38,686
)
 
(47,050
)
Straight-line expense
25,896

 
18,459

Stock-based compensation expense
13,234

 
9,697

Non-cash portion of tax provision(2)
(4,899
)
 
106,958

Non-real estate related depreciation, amortization and accretion
3,764

 
2,576

Amortization of non-cash interest expense
19,532

 
21,003

Other (income) expense
(21,341
)
 
3,112

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

 
641

Acquisition and integration costs
5,293

 
12,701

Capital improvement capital expenditures
(15,598
)
 
(9,159
)
Corporate capital expenditures
(23,146
)
 
(10,257
)
AFFO(3)(4)(6)
$
328,306

 
$
271,974

Weighted average common shares outstanding — diluted(5)
333,554

 
319,634

AFFO per share(3)(6)
$
0.98

 
$
0.85


(1)    Exclusive of income from discontinued operations and related noncontrolling interest.
(2)
Adjusts the income tax provision to reflect our estimate of the cash taxes paid had we been a REIT for all periods presented, and is primarily comprised of foreign taxes. As a result income tax expense (benefit) is lower by the amount of the adjustment.
(3)
See reconciliations and definitions provided herein. See also "Definitions of Non-GAAP Measures and Other Calculations" herein for a discussion of our definitions of FFO and AFFO.
(4)
FFO and AFFO are reduced by cash paid for preferred stock dividends.
(5)
The diluted weighted average common shares outstanding assumes no conversion for preferred stock in the share count.
(6)
The above reconciliation excludes line items included in our definition which are not applicable for the periods shown.

35
Crown Castle International Corp.
Third Quarter 2015
COMPANY OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX



FFO and AFFO for the quarter ending December 31, 2015 and the years ending December 31, 2015 and December 31, 2016 are forecasted as follows:
 
Q4 2015
 
Full Year 2015
 
Full Year 2016
(in millions of dollars, except share and per share amounts)
Outlook
 
Outlook
 
Outlook
Net income(1)
$99
to
$132
 
$480
to
$513
 
$409
to
$508
Real estate related depreciation, amortization and accretion
$259
to
$262
 
$1,013
to
$1,016
 
$1,034
to
$1,049
Asset write-down charges
$4
to
$6
 
$24
to
$26
 
$15
to
$25
Dividends on preferred stock
$(11)
to
$(11)
 
$(44)
to
$(44)
 
$(44)
to
$(44)
FFO(3)(4)(6)
$368
to
$373
 
$1,491
to
$1,496
 
$1,467
to
$1,492
 
 
 
 
 
 
 
 
 
 
 
 
FFO (from above)
$368
to
$373
 
$1,491
to
$1,496
 
$1,467
to
$1,492
Adjustments to increase (decrease) FFO:
 
 
 
 
 
 
 
 
 
 
 
Straight-line revenue
$(26)
to
$(21)
 
$(115)
to
$(110)
 
$(48)
to
$(33)
Straight-line expense
$21
to
$26
 
$95
to
$100
 
$80
to
$95
Stock-based compensation expense
$15
to
$17
 
$65
to
$67
 
$73
to
$78
Non-cash portion of tax provision
$(6)
to
$(1)
 
$(26)
to
$(21)
 
$(21)
to
$(6)
Non-real estate related depreciation, amortization and accretion
$4
to
$6
 
$17
to
$19
 
$16
to
$21
Amortization of non-cash interest expense
$4
to
$7
 
$37
to
$40
 
$17
to
$23
Other (income) expense
$0
to
$3
 
$(59)
to
$(56)
 
$1
to
$3
Gains (losses) on retirement of long-term obligations
$0
to
$0
 
$4
to
$4
 
$0
to
$0
Acquisition and integration costs
$2
to
$5
 
$14
to
$17
 
$10
to
$15
Capital improvement capital expenditures
$(13)
to
$(11)
 
$(45)
to
$(43)
 
$(48)
to
$(43)
Corporate capital expenditures
$(16)
to
$(14)
 
$(59)
to
$(57)
 
$(31)
to
$(26)
AFFO(3)(4)(6)
$368
to
$373
 
$1,433
to
$1,438
 
$1,550
to
$1,575
Weighted-average common shares outstanding—diluted(2)(5)
333.8
 
333.8
 
335.8
AFFO per share(3)(6)
$1.10
to
$1.12
 
$4.29
to
$4.31
 
$4.62
to
$4.69

(1)
For full year 2015 Outlook, net income is exclusive of income from discontinued operations of $1.0 billion and related noncontrolling interest.
(2)
Based on diluted shares outstanding as of September 30, 2015 of approximately 334 million shares for fourth quarter 2015 and full year 2015. Full year 2016 assumes diluted shares outstanding of approximately 336 million shares, inclusive of the assumed conversion of the mandatory convertible preferred stock in November 2016.
(3)
See definitions herein. See also “Definitions of Non-GAAP Financial Measures and Other Calculations” herein for a discussion of our definitions of FFO and AFFO.
(4)
FFO and AFFO are reduced by cash paid for preferred stock dividends.
(5)
The diluted weighted average common shares outstanding assumes no conversion for preferred stock in the share count other than as discussed in footnote (2).
(6)
The above reconciliation excludes line items included in our definition which are not applicable for the periods shown.


36
Crown Castle International Corp.
Third Quarter 2015
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)
2015
 
2014
Total face value of debt
$
12,145.0

 
$
11,573.1

Ending cash and cash equivalents
184.1

 
218.1

Total net debt
$
11,960.9


$
11,355.0

 
 
 
 
Adjusted EBITDA for the three months ended September 30,
$
534.8

(1) 
$
513.6

Last quarter annualized Adjusted EBITDA
2,139.2

(1) 
2,054.4

Net debt to Last Quarter Annualized Adjusted EBITDA
5.6
x
(1) 
5.5
x
(1)
Pro forma for Sunesys acquired on August 4, 2015.

Cash Interest Coverage Ratio Calculation:
 
Three Months Ended September 30,
(dollars in thousands)
2015
 
2014
Adjusted EBITDA
$
529,158

 
$
513,604

Interest expense on debt obligations
121,287

 
121,450

Interest Coverage Ratio
4.4
x
 
4.2
x
AFFO Payout Ratio Calculation:
 
Three Months Ended September 30,
(per share)
2015
 
2014
Dividend per share
$
0.82

 
$
0.35

AFFO per share
$
1.07

 
$
1.00

AFFO Payout Ratio(1)
77
%
 
35
%

(1)
AFFO is calculated exclusive of income from discontinued operations and related noncontrolling interest. See page 2.


37

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