CROWN CASTLE INTERNATIONAL CORP - FORM 8-K - EX-99.2 - EXHIBIT 99.2 - January 24, 2018

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Exhibit 99.2








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Supplemental Information Package
and Non-GAAP Reconciliations
Fourth Quarter • December 31, 2017




The pathway to possible.
CrownCastle.com
Crown Castle International Corp
Fourth Quarter 2017

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

Cautionary Language Regarding Forward-Looking Statements
This supplemental information package ("Supplement") contains forward-looking statements and information that are based on our management's current expectations as of the date of this Supplement. Statements that are not historical facts are hereby identified as forward-looking statements. Words such as "Outlook," "guide," "forecast," "estimate," "anticipate," "project," "plan," "intend," "believe," "expect," "likely," "predicted," 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 first quarter 2018 and full year 2018.

Such forward-looking statements are subject to certain risks, uncertainties and assumptions, including, but not limited to, prevailing market conditions. Should one or more of these or other risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those expected. More information about potential risk factors which could affect our results is included in our filings with the Securities and Exchange Commission. Crown Castle assumes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

The components of financial information presented herein, both historical and forward looking, may not sum due to rounding. Definitions and reconciliations of non-GAAP financial measures, segment measures and other calculations are provided in the Appendix to this Supplement.

As used herein, the term "including" and any variation thereof, means "including without limitation." The use of the word "or" herein is not exclusive.

1
Crown Castle International Corp.
Fourth Quarter 2017
COMPANY
OVERVIEW
 FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX


COMPANY PROFILE 
Crown Castle International Corp. (to which the terms "Crown Castle," "CCIC," "we," "our," "our Company," "the Company" or "us" as used herein refer) owns, operates and leases shared communications infrastructure, including: (1) towers and other structures, such as rooftops (collectively, "towers"), and (2) fiber primarily supporting small cell networks ("small cells") and fiber solutions (collectively, "fiber," and together with towers, "communications infrastructure"). Our towers have a significant presence in each of the top 100 basic trading areas, and the majority of our fiber is located in major metropolitan areas. Crown Castle owns, operates and leases shared communications infrastructure that has been acquired or constructed over time and is geographically dispersed throughout the U.S., and which consists of (1) approximately 40,000 towers and (2) approximately 60,000 route miles of fiber primarily supporting small cells and fiber solutions.
Our core business is providing access, including space or capacity, to our shared communications infrastructure via long-term contracts in various forms, including lease, license, sublease and service agreements (collectively, "contracts"). We seek to increase our site rental revenues by adding more customers on our communications infrastructure, which we expect to result in significant incremental cash flows due to our low incremental operating costs.
We operate as a Real Estate Investment Trust ("REIT") for U.S. federal income tax purposes.
STRATEGY 
Our strategy is to create long-term stockholder value via a combination of (1) growing cash flows generated from our portfolio of communications infrastructure, (2) returning a meaningful portion of our cash provided by operating activities to our stockholders in the form of dividends and (3) investing capital efficiently to grow cash flows and 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 communications infrastructure. We seek to maximize our site rental cash flows by working with our customers to provide them quick access to our communications infrastructure and entering into associated long-term contracts. Customer additions or modifications of existing customer equipment (collectively, "customer additions") enable our customers to expand coverage and capacity in order to meet increasing demand for data connectivity, while generating high incremental returns for our business. We believe our product offerings of towers, small cells and fiber solutions provide a comprehensive solution to our customers' growing connectivity needs through our shared communications infrastructure model, which is an efficient and cost effective way to serve our customers. We also believe that there will be considerable future demand for our communications infrastructure based on the location of our communications infrastructure and the rapid growth in demand for data.
•
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 cash flows and long-term dividends per share. We seek to invest our available capital, including the net cash provided by our operating activities and external financing sources, in a manner that will increase long-term stockholder value on a risk-adjusted basis. Our historical investments have included the following (in no particular order):
◦
purchases of shares of our common stock from time to time;
◦
acquisitions or construction of towers, fiber and small cells;
◦
acquisitions of land interests under towers;
◦
improvements and structural enhancements to our existing communications infrastructure; or
◦
purchases, repayment or redemption of our debt.
Our strategy to create long-term stockholder value is based on our belief that additional demand for our communications infrastructure will be created by the expected continued growth in the demand for data. We believe that such demand for our communications infrastructure will continue, will result in growth of our cash flows due to customer additions on our existing communications infrastructure, and will create other growth opportunities for us, such as demand for new communications infrastructure.

2
Crown Castle International Corp.
Fourth Quarter 2017
COMPANY
OVERVIEW
 FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX


AFFO PER SHARE(1)(2)
affoq417a03.jpg
(1)
See reconciliations and definitions provided herein. Our AFFO for historical periods may not be comparable to those periods presented prospectively from and after January 1, 2018, including our first quarter 2018 and full year 2018 Outlook included herein. See also "Definitions of Non-GAAP Financial Measures, Segment Measures and Other Calculations" in the Appendix for further information.
(2)
Attributable to CCIC common stockholders.
(3)
Full year 2017 AFFO per share was impacted by (a) two months of contribution from the Lightower acquisition, which closed on November 1, 2017 and (b) the associated pre-funding of the Lightower acquisition through (1) our July 2017 common stock offering, (2) our July 2017 preferred stock offering, and (3) our August 2017 senior unsecured notes offering.
(4)
AFFO per share represents the midpoint of the full year 2018 Outlook as issued on January 24, 2018.

TOWER PORTFOLIO FOOTPRINT
footprintmapa35.jpg


3
Crown Castle International Corp.
Fourth Quarter 2017
COMPANY
OVERVIEW
 FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX

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

EXECUTIVE MANAGEMENT TEAM
Name
Age
Years with Company
Position
Jay A. Brown
45
18
President and Chief Executive Officer
Daniel K. Schlanger
44
1
Senior Vice President and Chief Financial Officer
James D. Young
56
12
Senior Vice President and Chief Operating Officer - Fiber
Robert C. Ackerman
65
19
Senior Vice President and Chief Operating Officer - Towers and Small Cells
Kenneth J. Simon
57
2
Senior Vice President and General Counsel
Michael J. Kavanagh
49
7
Senior Vice President and Chief Commercial Officer
Philip M. Kelley
45
20
Senior Vice President - Corporate Development and Strategy

BOARD OF DIRECTORS
Name
Position
Committees
Age
Years as Director
J. Landis Martin
Chairman
NCG(1)
72
21
P. Robert Bartolo
Director
Audit, Compensation
46
3
Cindy Christy
Director
Compensation, NCG(1), Strategy
51
10
Ari Q. Fitzgerald
Director
Compensation, NCG(1), Strategy
55
15
Robert E. Garrison II
Director
Audit, Compensation
75
12
Lee W. Hogan
Director
Audit, Compensation, Strategy
73
16
Edward C. Hutcheson
Director
Strategy
72
22
Robert F. McKenzie
Director
Audit, Strategy
74
22
Anthony J. Melone
Director
NCG(1), Strategy
57
2
W. Benjamin Moreland
Director
 
54
11
Jay A. Brown
Director
 
45
1
(1)
Nominating & Corporate Governance Committee

4
Crown Castle International Corp.
Fourth Quarter 2017
COMPANY
OVERVIEW
 FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX

RESEARCH COVERAGE
Equity Research
Bank of America
David Barden
(646) 855-1320
Barclays
Amir Rozwadowski
(212) 526-4043
BTIG
Walter Piecyk
(646) 450-9258
Citigroup
Michael Rollins
(212) 816-1116
Cowen and Company
Colby Synesael
(646) 562-1355
Deutsche Bank
Matthew Niknam
(212) 250-4711
Goldman Sachs
Brett Feldman
(212) 902-8156
Guggenheim
Robert Gutman
(212) 518-9148
Jefferies
Scott Goldman
(212) 284-4606
JPMorgan
Philip Cusick
(212) 622-1444
Macquarie
Amy Yong
(212) 231-2624
MoffettNathanson
Nick Del Deo
(212) 519-0025
Morgan Stanley
Simon Flannery
(212) 761-6432
New Street Research
Spencer Kurn
(212) 921-2067
Oppenheimer & Co.
Timothy Horan
(212) 667-8137
Pacific Crest Securities
Brandon Nispel
(503) 821-3871

Raymond James
Ric Prentiss
(727) 567-2567


RBC Capital Markets
Jonathan Atkin
(415) 633-8589


SunTrust Robinson Humphrey
Greg Miller
(212) 303-4169


UBS
Batya Levi
(212) 713-8824

Wells Fargo Securities, LLC
Jennifer Fritzsche
(312) 920-3548
 
 
 
Rating Agency
Fitch
John Culver
(312) 368-3216
Moody’s
Dilara Sukhov
(212) 553-1653
Standard & Poor’s
Ryan Gilmore
(212) 438-0602

HISTORICAL COMMON STOCK DATA
 
Three Months Ended
(in millions, except per share data)
12/31/17
9/30/17
6/30/17
3/31/17
12/31/16
High price(1)
$
113.89

$
106.89

$
102.11

$
92.85

$
91.25

Low price(1)
$
98.39

$
91.33

$
90.61

$
80.77

$
75.43

Period end closing price(2)
$
111.01

$
99.04

$
98.34

$
91.85

$
83.49

Dividends paid per common share
$
1.05

$
0.95

$
0.95

$
0.95

$
0.95

Volume weighted average price for the period(1)
$
106.78

$
99.80

$
95.89

$
86.57

$
82.99

Common shares outstanding, at period end
406

406

366

361

361

Market value of outstanding common shares, at period end(3)
$
45,101

$
40,236

$
36,003

$
33,191

$
30,100

(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 common stock 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 common stock dividends, as reported by Bloomberg.


5
Crown Castle International Corp.
Fourth Quarter 2017
COMPANY
OVERVIEW
 FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX

SUMMARY PORTFOLIO HIGHLIGHTS
(as of December 31, 2017)
 
Towers
Number of towers(1)
40,080

Average number of tenants per tower
2.2

Remaining contracted customer receivables ($ in billions)(2)
$
18

Weighted average remaining customer contract term (years)(3)
5

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

Percent of ground leased / owned (by Towers segment site rental gross margin)
62% / 38%

Weighted average maturity of ground leases (years)(4)
34

Fiber
Number of route miles of fiber (in thousands)
60

Remaining contracted customer receivables ($ in billions)(2)
$
5

Weighted average remaining customer contract term (years)(3)
5


SUMMARY FINANCIAL HIGHLIGHTS
 
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
(dollars in thousands, except per share amounts)
 
2017
 
2016
 
2017
 
2016
Operating Data:
 
 
 
 
 
 
 
 
Net revenues
 
 
 
 
 
 
 
 
Site rental
 
$
1,050,686

 
$
817,381

 
$
3,669,191

 
$
3,233,307

Network services and other
 
187,404

 
215,035

 
686,414

 
687,918

Net revenues
 
$
1,238,090

 
$
1,032,416

 
$
4,355,605

 
$
3,921,225

 
 
 
 
 
 
 
 
 
Costs of operations (exclusive of depreciation, amortization and accretion)
 
 
 
 
 
 
 
 
Site rental
 
$
328,945

 
$
261,127

 
$
1,143,914

 
$
1,023,350

Network services and other
 
109,650

 
131,105

 
419,787

 
417,171

Total cost of operations
 
$
438,595

 
$
392,232

 
$
1,563,701

 
$
1,440,521

 
 
 
 
 
 
 
 
 
Net income (loss) attributable to CCIC common stockholders
 
$
69,745

 
$
124,710

 
$
386,256

 
$
323,982

Net income (loss) attributable to CCIC common stockholders per share—diluted(5)
 
$
0.17

 
$
0.35

 
$
1.01

 
$
0.95

 
 
 
 
 
 
 
 
 
Non-GAAP Data(6):
 
 
 
 
 
 
 
 
Adjusted EBITDA
 
$
707,012

 
$
574,617

 
$
2,481,761

 
$
2,227,523

FFO(7)
 
429,302

 
386,875

 
1,643,297

 
1,429,521

AFFO(7)
 
511,797

 
406,402

 
1,860,405

 
1,609,864

AFFO per share(5)(7)
 
$
1.25

 
$
1.15

 
$
4.85

 
$
4.72

(1)
Excludes small cells and third-party land interests.
(2)
Excludes renewal terms at customers' option.
(3)
Excludes renewal terms at customers' option, weighted by site rental revenues.
(4)
Includes renewal terms at the Company's option, weighted by Towers segment site rental gross margin.
(5)
Based on diluted weighted-average common shares outstanding of 408.1 million, 352.9 million, 383.2 and 340.9 million for the three months ended December 31, 2017 and 2016 and the twelve months ended December 31, 2017 and 2016, respectively.
(6)
See reconciliations of Non-GAAP financial measures provided herein. See also "Definitions of Non-GAAP Measures, Segment Measures and Other Calculations" in the Appendix for a discussion of our definitions of Adjusted EBITDA, FFO and AFFO.
(7)
Attributable to CCIC common stockholders.




6
Crown Castle International Corp.
Fourth Quarter 2017
COMPANY
OVERVIEW
 FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX

SUMMARY FINANCIAL HIGHLIGHTS (CONTINUED)
 
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
(dollars in thousands, except per share amounts)
 
2017
 
2016
 
2017
 
2016
Summary Cash Flow Data:
 
 
 
 
 
 
 
 
Net cash provided by (used for) operating activities
 
$
626,895

 
$
477,549

 
$
2,044,186

 
$
1,782,264

Net cash provided by (used for) investing activities(1)
 
(7,523,147
)
 
(270,649
)
 
(10,494,021
)
 
(1,410,232
)
Net cash provided by (used for) financing activities
 
490,897

 
204,260

 
8,195,152

 
(96,292
)
(dollars in thousands)
 
December 31, 2017
 
December 31, 2016
Balance Sheet Data (at period end):
 
 
 
 
Cash and cash equivalents
 
$
314,094

 
$
567,599

Property and equipment, net
 
12,932,885

 
9,805,315

Total assets
 
32,229,570

 
22,675,092

Total debt and other long-term obligations(2)
 
16,159,620

 
12,171,142

Total CCIC stockholders' equity
 
12,339,082

 
7,557,115

(dollars in thousands, except per share amounts)
 
Three Months Ended December 31, 2017
Other Data:
 
 
Net debt to last quarter annualized Adjusted EBITDA(3)
 
5.6
x
Dividend per common share
 
$
1.05


OUTLOOK FOR FIRST QUARTER 2018 AND FULL YEAR 2018
(dollars in millions, except per share amounts)
First Quarter 2018
Full Year 2018
Site rental revenues
$1,132
to
$1,142
$4,582
to
$4,627
Site rental cost of operations(4)
$341
to
$351
$1,360
to
$1,405
Net income (loss)
$116
to
$141
$511
to
$591
Net income (loss) per share—diluted(5)(6)
$0.28
to
$0.35
$1.25
to
$1.45
Adjusted EBITDA(7)
$745
to
$755
$3,049
to
$3,094
Interest expense and amortization of deferred financing costs(8)
$157
to
$167
$642
to
$687
FFO(6)(7)
$477
to
$487
$1,965
to
$2,010
AFFO(7)(9)
$538
to
$548
$2,219
to
$2,264
AFFO per share(5)(7)(9)
$1.32
to
$1.34
$5.44
to
$5.55
(1)
Includes net cash used for acquisitions of approximately $7.1 billion and $12 million for the three months ended December 31, 2017 and 2016, respectively, and $9.3 billion and $557 million for the twelve months ended December 31, 2017 and 2016, respectively.
(2)
Balances reflect debt issuance costs as a direct reduction from the respective carrying amounts of debt, with the exception of debt issuance costs associated with the Company's revolving credit facilities.
(3)
The Net Debt to Last Quarter Annualized Adjusted EBITDA calculation does not give effect to a full quarter ownership of Lightower, as this acquisition closed on November 1, 2017. For the quarter ended December 31, 2017, Lightower contribution to the Company's Adjusted EBITDA was $83 million.
(4)
Exclusive of depreciation, amortization and accretion.
(5)
The assumption for first quarter 2018 and full year 2018 diluted weighted-average common shares outstanding is 408.1 million based on diluted common shares outstanding as of December 31, 2017. For all periods presented, the diluted weighted-average common shares outstanding does not include any assumed conversion of the 6.875% Mandatory Convertible Preferred Stock in the share count.
(6)
Calculated using net income (loss) attributable to CCIC common stockholders.
(7)
See reconciliation of this non-GAAP financial measure to net income (loss) and definition included herein. Our AFFO for historical periods may not be comparable to those periods presented prospectively from and after January 1, 2018, including our first quarter 2018 and full year 2018 Outlook included herein. See also "Definitions of Non-GAAP Financial Measures, Segment Measures and Other Calculations" in the Appendix for further information.
(8)
See the reconciliation of "components of interest expense and amortization of deferred financing costs" in the Appendix.
(9)
Attributable to CCIC common stockholders.



7
Crown Castle International Corp.
Fourth Quarter 2017
COMPANY
OVERVIEW
 FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX

OUTLOOK FOR FULL YEAR 2018 COMPONENTS OF CHANGES IN SITE RENTAL REVENUES
(dollars in millions)
Full Year 2017
 
Full Year 208 Outlook
Components of changes in site rental revenues(1):
 
 
 
Prior year site rental revenues exclusive of straight-lined revenues associated with fixed escalators(2)(3)
$3,186
 
$3,670
 
 
 
 
New leasing activity(2)(3)
166
 
190-220
Escalators
84
 
80-90
Non-renewals
(90)
 
(95)-(75)
Organic Contribution to Site Rental Revenues(4)
160
 
185-225
Straight-lined revenues associated with fixed escalators
—
 
(40)-(20)
Acquisitions and builds(5)
323
 
745-765
Other
—
 
—
Total GAAP site rental revenues
$3,669
 
$4,582-$4,627
 
 
 
 
Year-over-year changes in revenue:
 
 
 
Reported GAAP site rental revenues
13.5%
 
    25.5%(6)
Organic Contribution to Site Rental Revenues(4)(7)
5.1%
 
     5.6%(6)
(1)
See additional information regarding Crown Castle's site rental revenues including projected revenue from customer licenses, tenant non-renewals, straight-lined revenues and prepaid rent herein.
(2)
Includes revenues from amortization of prepaid rent in accordance with GAAP.
(3)
Includes revenues from the construction of new small cell nodes, exclusive of straight-lined revenues related to fixed escalators.
(4)
See definitions provided herein.
(5)
The financial impact of acquisitions, as measured by the initial contribution, and tower builds is excluded from Organic Contribution to Site Rental Revenues until the one-year anniversary of the acquisition or build.
(6)
Calculated based on midpoint of Full Year 2018 Outlook.
(7)
Calculated as the percentage change from prior year site rental revenues, exclusive of straight-lined revenues associated with fixed escalations, compared to Organic Contribution to Site Rental Revenues for the current period.


8
Crown Castle International Corp.
Fourth Quarter 2017
COMPANY
OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX


CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)
(dollars in thousands, except share amounts)
December 31,
2017
 
December 31,
2016
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
314,094

 
$
567,599

Restricted cash
121,065

 
124,547

Receivables, net
397,585

 
373,532

Prepaid expenses
162,366

 
128,721

Other current assets
138,670

 
130,362

Total current assets
1,133,780

 
1,324,761

Deferred site rental receivables
1,300,338

 
1,317,658

Property and equipment, net
12,932,885

 
9,805,315

Goodwill
10,021,468

 
5,757,676

Other intangible assets, net
5,961,759

 
3,650,072

Long-term prepaid rent and other assets, net
879,340

 
819,610

Total assets
$
32,229,570

 
$
22,675,092

 
 
 
 
LIABILITIES AND EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
230,279

 
$
188,516

Accrued interest
131,790

 
97,019

Deferred revenues
457,116

 
353,005

Other accrued liabilities
357,646

 
221,066

Current maturities of debt and other obligations
115,251

 
101,749

Total current liabilities
1,292,082

 
961,355

Debt and other long-term obligations
16,044,369

 
12,069,393

Other long-term liabilities
2,554,037

 
2,087,229

Total liabilities
19,890,488

 
15,117,977

Commitments and contingencies
 
 
 
CCIC stockholders' equity:
 
 
 
Common stock, $0.01 par value; 600,000,000 shares authorized; shares issued and outstanding: December 31, 2017—406,280,673 and December 31, 2016—360,536,659
4,063

 
3,605

6.875% Mandatory Convertible Preferred Stock, Series A, $0.01 par value; 20,000,000 shares authorized; shares issued and outstanding: December 31, 2017—1,649,998 and December 31, 2016—0; aggregate liquidation value: December 31, 2017—$1,649,998 and December 31, 2016—$0
17

 
—

Additional paid-in capital
16,843,607

 
10,938,236

Accumulated other comprehensive income (loss)
(3,989
)
 
(5,888
)
Dividends/distributions in excess of earnings
(4,504,616
)
 
(3,378,838
)
Total equity
12,339,082

 
7,557,115

Total liabilities and equity
$
32,229,570

 
$
22,675,092




9
Crown Castle International Corp.
Fourth Quarter 2017
COMPANY
OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
(dollars in thousands, except share and per share amounts)
2017
 
2016
 
2017
 
2016
Net revenues:
 
 
 
 
 
 
 
Site rental
$
1,050,686

 
$
817,381

 
$
3,669,191

 
$
3,233,307

Network services and other
187,404

 
215,035

 
686,414

 
687,918

Net revenues
1,238,090

 
1,032,416

 
4,355,605

 
3,921,225

Operating expenses:
 
 
 
 
 
 
 
Costs of operations (exclusive of depreciation, amortization and accretion):
 
 
 
 
 
 
 
Site rental
328,945

 
261,127

 
1,143,914

 
1,023,350

Network services and other
109,650

 
131,105

 
419,787

 
417,171

General and administrative
127,466

 
92,122

 
426,698

 
371,031

Asset write-down charges
7,038

 
6,202

 
17,322

 
34,453

Acquisition and integration costs
34,351

 
5,994

 
61,431

 
17,453

Depreciation, amortization and accretion
362,211

 
273,826

 
1,242,408

 
1,108,551

Total operating expenses
969,661

 
770,376

 
3,311,560

 
2,972,009

Operating income (loss)
268,429

 
262,040

 
1,044,045

 
949,216

Interest expense and amortization of deferred financing costs
(160,280
)
 
(129,376
)
 
(590,682
)
 
(515,032
)
Gains (losses) on retirement of long-term obligations
—

 
—

 
(3,525
)
 
(52,291
)
Interest income
6,176

 
342

 
18,761

 
796

Other income (expense)
(1,468
)
 
(4,212
)
 
1,994

 
(8,835
)
Income (loss) from continuing operations before income taxes
112,857

 
128,794

 
470,593

 
373,854

Benefit (provision) for income taxes
(14,753
)
 
(4,084
)
 
(26,043
)
 
(16,881
)
Net income (loss)
98,104

 
124,710

 
444,550

 
356,973

Dividends on preferred stock
(28,359
)
 
—

 
(58,294
)
 
(32,991
)
Net income (loss) attributable to CCIC common stockholders
$
69,745

 
$
124,710

 
$
386,256

 
$
323,982

 
 
 
 
 
 
 
 
Net income (loss) attributable to CCIC common stockholders, per common share:
 
 
 
 
 
 
 
Net income (loss) attributable to CCIC common stockholders, basic
$
0.17

 
$
0.35

 
$
1.01

 
$
0.95

Net income (loss) attributable to CCIC common stockholders, diluted
$
0.17

 
$
0.35

 
$
1.01

 
$
0.95

 
 
 
 
 
 
 
 
Weighted-average common shares outstanding (in thousands):
 
 
 
 
 
 
 
Basic
406,278

 
352,116

 
381,740

 
340,349

Diluted
408,130

 
352,878

 
383,221

 
340,879




10
Crown Castle International Corp.
Fourth Quarter 2017
COMPANY
OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX




SEGMENT OPERATING RESULTS
 
Three Months Ended December 31, 2017
 
Three Months Ended December 31, 2016
(dollars in thousands)
Towers
 
Fiber
 
Other
 
Consolidated Total
 
Towers
 
Fiber
 
Other
 
Consolidated Total
Segment site rental revenues
$
740,560

 
$
310,126

 
 
 
$
1,050,686

 
$
712,549

 
$
104,832

 
 
 
$
817,381

Segment network services and other revenue
175,939

 
11,465

 
 
 
187,404

 
169,647

 
45,388

 
 
 
215,035

Segment revenues
916,499

 
321,591

 
 
 
1,238,090

 
882,196

 
150,220

 
 
 
1,032,416

Segment site rental cost of operations
212,090

 
105,633

 
 
 
317,723

 
214,878

 
38,057

 
 
 
252,935

Segment network services and other cost of operations
98,516

 
9,613

 
 
 
108,129

 
95,289

 
34,207

 
 
 
129,496

Segment cost of operations(1)
310,606

 
115,246

 
 
 
425,852

 
310,167

 
72,264

 
 
 
382,431

Segment site rental gross margin(2)
528,470

 
204,493

 
 
 
732,963

 
497,671


66,775

 
 
 
564,446

Segment network services and other gross margin(2)
77,423

 
1,852

 
 
 
79,275

 
74,358


11,181

 
 
 
85,539

Segment general and administrative expenses(1)
24,537

 
34,278

 
46,411

 
105,226

 
24,574

 
14,956

 
35,838

 
75,368

Segment operating profit(2)
581,356

 
172,067

 
(46,411
)
 
707,012

 
547,455


63,000

 
(35,838
)
 
574,617

Stock-based compensation expense
 
 
 
 
29,976

 
29,976

 
 
 
 
 
21,241

 
21,241

Depreciation, amortization and accretion
 
 
 
 
362,211

 
362,211

 
 
 
 
 
273,826

 
273,826

Interest expense and amortization of deferred financing costs
 
 
 
 
160,280

 
160,280

 
 
 
 
 
129,376

 
129,376

Other income (expenses) to reconcile to income (loss) from continuing operations before income taxes(3)
 
 
 
 
41,688

 
41,688

 
 
 
 
 
21,380

 
21,380

Income (loss) from continuing operations before income taxes
 
 
 
 
 
 
$
112,857

 
 
 
 
 
 
 
$
128,794

(1)
Segment cost of operations excludes (1) stock-based compensation expense of $7.7 million and $4.5 million for the three months ended December 31, 2017 and 2016, respectively and (2) prepaid lease purchase price adjustments of $5.0 million and $5.3 million for the three months ended December 31, 2017 and 2016, respectively. Segment general and administrative expenses exclude stock-based compensation expense of $22.3 million and $16.8 million for the three months ended December 31, 2017 and 2016, respectively.
(2)
See "Definitions of Non-GAAP Financial Measures, Segment Measures and Other Calculations" in the Appendix for a discussion of our definitions of segment site rental gross margin, segment network services and other gross margin and segment operating profit.
(3)
See condensed consolidated statement of operations for further information.


11
Crown Castle International Corp.
Fourth Quarter 2017
COMPANY
OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX




SEGMENT OPERATING RESULTS
 
Twelve Months Ended December 31, 2017
 
Twelve Months Ended December 31, 2016
(dollars in thousands)
Towers
 
Fiber
 
Other
 
Consolidated Total
 
Towers
 
Fiber
 
Other
 
Consolidated Total
Segment site rental revenues
$
2,899,554

 
$
769,637

 
 
 
$
3,669,191

 
$
2,830,708

 
$
402,599

 
 
 
$
3,233,307

Segment network services and other revenue
636,532

 
49,882

 
 
 
686,414

 
603,689

 
84,229

 
 
 
687,918

Segment revenues
3,536,086

 
819,519

 
 
 
4,355,605

 
3,434,397

 
486,828

 
 
 
3,921,225

Segment site rental cost of operations
844,795

 
264,059

 
 
 
1,108,854

 
840,209

 
147,459

 
 
 
987,668

Segment network services and other cost of operations
374,134

 
40,691

 
 
 
414,825

 
344,595

 
64,859

 
 
 
409,454

Segment cost of operations(1)
1,218,929

 
304,750

 
 
 
1,523,679

 
1,184,804

 
212,318

 
 
 
1,397,122

Segment site rental gross margin(2)
2,054,759

 
505,578

 
 
 
2,560,337

 
1,990,499

 
255,140

 
 
 
2,245,639

Segment network services and other gross margin(2)
262,398

 
9,191

 
 
 
271,589

 
259,094

 
19,370

 
 
 
278,464

Segment general and administrative expenses(1)
93,662

 
89,048

 
167,455

 
350,165

 
92,903

 
60,676

 
143,001

 
296,580

Segment operating profit(2)
2,223,495

 
425,721

 
(167,455
)
 
2,481,761

 
2,156,690

 
213,834

 
(143,001
)
 
2,227,523

Stock-based compensation expense
 
 
 
 
96,435

 
96,435

 
 
 
 
 
96,538

 
96,538

Depreciation, amortization and accretion
 
 
 
 
1,242,408

 
1,242,408

 
 
 
 
 
1,108,551

 
1,108,551

Interest expense and amortization of deferred financing costs
 
 
 
 
590,682

 
590,682

 
 
 
 
 
515,032

 
515,032

Other income (expenses) to reconcile to income (loss) from continuing operations before income taxes(3)
 
 
 
 
81,643

 
81,643

 
 
 
 
 
133,548

 
133,548

Income (loss) from continuing operations before income taxes
 
 
 
 
 
 
$
470,593

 
 
 
 
 
 
 
$
373,854

(1)
Segment cost of operations excludes (1) stock-based compensation expense of $19.9 million and $22.1 million for the twelve months ended December 31, 2017 and 2016, respectively and (2) prepaid lease purchase price adjustments of $20.1 million and $21.3 million for the twelve months ended December 31, 2017 and 2016, respectively. Segment general and administrative expenses exclude stock-based compensation expense of $76.5 million and $74.5 million for the twelve months ended December 31, 2017 and 2016, respectively.
(2)
See "Definitions of Non-GAAP Financial Measures, Segment Measures and Other Calculations" in the Appendix for a discussion of our definitions of segment site rental gross margin, segment network services and other gross margin and segment operating profit.
(3)
See condensed consolidated statement of operations for further information.




12
Crown Castle International Corp.
Fourth Quarter 2017
COMPANY
OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX

FFO AND AFFO RECONCILIATIONS
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
(dollars in thousands, except share and per share amounts)
2017
 
2016
 
2017
 
2016
Net income (loss)
$
98,104

 
$
124,710

 
$
444,550

 
$
356,973

Real estate related depreciation, amortization and accretion
354,095

 
266,961

 
1,211,360

 
1,082,083

Asset write-down charges
7,038

 
6,202

 
17,322

 
34,453

Dividends on preferred stock
(29,935
)
 
(10,997
)
 
(29,935
)
 
(43,988
)
FFO(1)(2)(3)(4)
$
429,302

 
$
386,875

 
$
1,643,297

 
$
1,429,521

Weighted average common shares outstanding—diluted(5)
408,130

 
352,878

 
383,221

 
340,879

FFO per share(1)(3)(4)
$
1.05

 
$
1.10

 
$
4.29

 
$
4.19

 
 
 
 
 
 
 
 
FFO (from above)
$
429,302

 
$
386,875

 
$
1,643,297

 
$
1,429,521

Adjustments to increase (decrease) FFO:
 
 
 
 
 
 
 
Straight-lined revenue
(2,640
)
 
(5,001
)
 
314

 
(47,377
)
Straight-lined expense
22,699

 
23,114

 
92,602

 
94,246

Stock-based compensation expense
29,976

 
21,241

 
96,435

 
96,538

Non-cash portion of tax provision
11,916

 
2,091

 
9,214

 
7,322

Non-real estate related depreciation, amortization and accretion
8,116

 
6,865

 
31,048

 
26,468

Amortization of non-cash interest expense
1,731

 
3,040

 
9,368

 
14,333

Other (income) expense
1,468

 
4,212

 
(1,994
)
 
8,835

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

 
—

 
3,525

 
52,291

Acquisition and integration costs
34,351

 
5,994

 
61,431

 
17,453

Capital improvement capital expenditures
(13,519
)
 
(17,467
)
 
(40,844
)
 
(42,818
)
Corporate capital expenditures
(11,604
)
 
(24,563
)
 
(43,991
)
 
(46,948
)
AFFO(1)(2)(3)(4)
$
511,797

 
$
406,402

 
$
1,860,405

 
$
1,609,864

Weighted average common shares outstanding—diluted(5)
408,130

 
352,878

 
383,221

 
340,879

AFFO per share(1)(3)(4)
$
1.25

 
$
1.15

 
$
4.85

 
$
4.72


(1)
See "Definitions of Non-GAAP Measures, Segment Measures and Other Calculations" in the Appendix for a discussion of our definitions of FFO and AFFO.
(2)
FFO and AFFO are reduced by cash paid for preferred stock dividends during the period in which they are paid.
(3)
The above reconciliation excludes line items included in our definition which are not applicable for the periods shown.
(4)
Attributable to CCIC common stockholders.
(5)
Based on the diluted weighted-average common shares outstanding for the three and twelve months ended December 31, 2017 and 2016. For all periods presented, the diluted weighted-average common shares outstanding does not include any assumed conversion of the 6.875% Mandatory Convertible Preferred Stock in the share count.





13
Crown Castle International Corp.
Fourth Quarter 2017
COMPANY
OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
 
Twelve Months Ended December 31,
(dollars in thousands)
2017
 
2016
Cash flows from operating activities:
 
 
 
Net income (loss)
$
444,550

 
$
356,973

Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities:
 
 
 
Depreciation, amortization and accretion
1,242,408

 
1,108,551

(Gains) losses on retirement of long-term obligations
3,525

 
52,291

Amortization of deferred financing costs and other non-cash interest
9,368

 
14,333

Stock-based compensation expense
91,647

 
79,338

Asset write-down charges
17,322

 
34,453

Deferred income tax (benefit) provision
14,888

 
8,603

Other non-cash adjustments, net
(1,320
)
 
5,059

Changes in assets and liabilities, excluding the effects of acquisitions:
 
 
 
Increase (decrease) in liabilities
176,226

 
236,642

Decrease (increase) in assets
45,572

 
(113,979
)
Net cash provided by (used for) operating activities
2,044,186

 
1,782,264

Cash flows from investing activities:
 
 
 
Payments for acquisition of businesses, net of cash acquired
(9,260,135
)
 
(556,854
)
Capital expenditures
(1,228,071
)
 
(873,883
)
Net (payments) receipts from settled swaps
(328
)
 
8,141

Other investing activities, net
(5,487
)
 
12,364

Net cash provided by (used for) investing activities
(10,494,021
)
 
(1,410,232
)
Cash flows from financing activities:
 
 
 
Proceeds from issuance of long-term debt
3,092,323

 
5,201,010

Principal payments on debt and other long-term obligations
(118,880
)
 
(95,787
)
Purchases and redemptions of long-term debt
—

 
(4,044,834
)
Borrowings under revolving credit facility
2,820,000

 
3,440,000

Payments under revolving credit facility
(1,840,000
)
 
(4,565,000
)
Payments for financing costs
(29,240
)
 
(41,533
)
Net proceeds from issuance of common stock
4,221,329

 
1,325,865

Purchases of capital stock
(23,307
)
 
(24,936
)
Net proceeds from issuance of preferred stock
1,607,759

 
—

Dividends/distributions paid on common stock
(1,508,705
)
 
(1,239,158
)
Dividends paid on preferred stock
(29,935
)
 
(43,988
)
Net (increase) decrease in restricted cash
3,808

 
(7,931
)
Net cash provided by (used for) financing activities
8,195,152

 
(96,292
)
Net increase (decrease) in cash and cash equivalents - continuing operations
(254,683
)
 
275,740

Discontinued operations:
 
 
 
Net cash provided by (used for) investing activities
—

 
113,150

Net increase (decrease) in cash and cash equivalents - discontinued operations
—

 
113,150

Effect of exchange rate changes
1,178

 
(101
)
Cash and cash equivalents at beginning of period
567,599

 
178,810

Cash and cash equivalents at end of period
$
314,094

 
$
567,599

Supplemental disclosure of cash flow information:
 
 
 
Interest paid
546,543

 
470,655

Income taxes paid
16,427

 
13,821



14
Crown Castle International Corp.
Fourth Quarter 2017
COMPANY
OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX


COMPONENTS OF CHANGES IN SITE RENTAL REVENUES
 
Three Months Ended December 31,
(dollars in millions)
2017
 
2016
Components of changes in site rental revenues(1):
 
 
 
Prior year site rental revenues exclusive of straight-lined revenues associated with fixed escalators(2)(3)
$
812

 
$
763

 
 
 
 
New leasing activity(2)(3)
42

 
38

Escalators
20

 
22

Non-renewals
(18
)
 
(21
)
Organic Contribution to Site Rental Revenues(4)
44

 
39

Straight-lined revenues associated with fixed escalators
3

 
5

Acquisitions and builds(5)
192

 
10

Other
—

 
—

Total GAAP site rental revenues
$
1,051

 
$
817

 
 
 
 
Year-over-year changes in revenue:
 
 
 
Reported GAAP site rental revenues
28.6
%
 
 
Organic Contribution to Site Rental Revenues(4)(6)
5.5
%
 
 

(1)
See additional information regarding Crown Castle's site rental revenues including projected revenue from customer licenses, tenant non-renewals, straight-lined revenues and prepaid rent herein.
(2)
Includes revenues from amortization of prepaid rent in accordance with GAAP.
(3)
Includes revenues from the construction of new small cell nodes, exclusive of straight-lined revenues related to fixed escalators.
(4)
See definitions provided herein.
(5)
The financial impact of acquisitions, as measured by the initial contribution, and tower builds is excluded from Organic Contribution to Site Rental Revenues until the one-year anniversary of the acquisition or build.
(6)
Calculated as the percentage change from prior year site rental revenues, exclusive of straight-lined revenues associated with fixed escalations, compared to Organic Contribution to Site Rental Revenues for the current period.

15
Crown Castle International Corp.
Fourth Quarter 2017
COMPANY
OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX

SUMMARY OF SITE RENTAL STRAIGHT-LINED REVENUES AND EXPENSES ASSOCIATED WITH FIXED ESCALATORS(1)
 
Three Months Ended December 31,
 
2017
 
2016
(dollars in thousands)
Towers
 
Fiber
 
Total
 
Towers
 
Fiber
 
Total
Site rental straight-lined revenue
$
1,620

 
$
1,020

 
$
2,640

 
$
2,647

 
$
2,354

 
$
5,001

Site rental straight-lined expenses
22,265

 
434

 
22,699

 
23,010

 
104

 
23,114

 
Twelve Months Ended December 31,
 
2017
 
2016
(dollars in thousands)
Towers
 
Fiber
 
Total
 
Towers
 
Fiber
 
Total
Site rental straight-lined revenue
$
(8,263
)
 
$
7,949

 
$
(314
)
 
$
37,976

 
$
9,401

 
$
47,377

Site rental straight-lined expenses
91,510

 
1,092

 
92,602

 
93,993

 
253

 
94,246


SUMMARY OF PREPAID RENT ACTIVITY(2)
 
Three Months Ended December 31,
 
2017
 
2016
(dollars in thousands)
Towers
 
Fiber
 
Total
 
Towers
 
Fiber
 
Total
Prepaid rent received
$
44,608

 
$
69,346

 
$
113,954

 
$
37,576

 
$
64,169

 
$
101,745

Amortization of prepaid rent
30,674

 
38,634

 
69,308

 
27,124

 
25,512

 
52,636

 
Twelve Months Ended December 31,
 
2017
 
2016
(dollars in thousands)
Towers
 
Fiber
 
Total
 
Towers
 
Fiber
 
Total
Prepaid rent received
$
137,174

 
$
205,169

 
$
342,343

 
$
149,913

 
$
165,186

 
$
315,099

Amortization of prepaid rent
118,587

 
125,539

 
244,126

 
103,975

 
99,518

 
203,493

(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 up front payments received from long-term tenant contracts and other deferred credits (commonly referred to as prepaid rent), and the amortization thereof for GAAP revenue recognition purposes.


16
Crown Castle International Corp.
Fourth Quarter 2017
COMPANY
OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX

SUMMARY OF CAPITAL EXPENDITURES
 
Three Months Ended December 31,
 
2017
 
2016
(dollars in thousands)
Towers
 
Fiber
 
Other
 
Total
 
Towers
 
Fiber
 
Other
 
Total
Discretionary:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Purchases of land interests
$
14,634

 
$
—

 
$
—

 
$
14,634

 
$
16,718

 
$
—

 
$
—

 
$
16,718

Communications infrastructure construction and improvements
76,184

 
260,618

 
—

 
336,802

 
77,028

 
123,929

 
—

 
200,957

Sustaining:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Capital improvement and corporate
10,608

 
7,785

 
6,730

 
25,123

 
16,880

 
6,293

 
18,857

 
42,030

Total
$
101,426

 
$
268,403

 
$
6,730

 
$
376,559

 
$
110,626

 
$
130,222

 
$
18,857

 
$
259,705


PROJECTED REVENUE FROM CUSTOMER LICENSES(1)
 
Years Ended December 31,
(as of December 31, 2017; dollars in millions)
2018
2019
2020
2021
2022
Components of site rental revenue:
 
 
 
 
 
Site rental revenues exclusive of straight-line associated with fixed escalators
4,534

$
4,617

$
4,708

$
4,797

$
4,870

Straight-lined site rental revenues associated with fixed escalators
(8
)
(84
)
(159
)
(220
)
(251
)
GAAP site rental revenue
$
4,526

$
4,533

$
4,549

$
4,576

$
4,619


PROJECTED GROUND LEASE EXPENSE FROM EXISTING GROUND LEASES(2)
 
Years Ended December 31,
(as of December 31, 2017; dollars in millions)
2018
2019
2020
2021
2022
Components of ground lease expense:
 
 
 
 
 
Ground lease expense exclusive of straight-line associated with fixed escalators
$
785

$
800

$
817

$
836

$
856

Straight-lined site rental ground lease expense associated with fixed escalators
83

72

60

48

36

GAAP ground lease expense
$
867

$
871

$
877

$
884

$
892

(1)
Based on customer licenses as of December 31, 2017. All customer licenses 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 December 31, 2017. CPI-linked leases are assumed to escalate at 3% per annum.


17
Crown Castle International Corp.
Fourth Quarter 2017
COMPANY
OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX

ANNUALIZED RENTAL CASH PAYMENTS AT TIME OF RENEWAL(1)
 
Years Ended December 31,
(as of December 31, 2017; dollars in millions)
2018
2019
2020
2021
2022
AT&T
$
45

$
40

$
50

$
77

$
62

Sprint
11

29

18

29

23

T-Mobile
24

59

25

43

615

Verizon
25

28

36

34

41

All Others Combined
206

162

142

81

84

Total
$
312

$
319

$
271

$
264

$
825


CUSTOMER OVERVIEW
(as of December 31, 2017)
Percentage of Q4 2017 LQA Site
Rental Revenues
Weighted Average Current
Term Remaining(2)
Long-Term Credit Rating
(S&P / Moody’s)
AT&T
22%
5
BBB+ / Baa1
T-Mobile
20%
5
BB+
Verizon
19%
7
BBB+ / Baa1
Sprint
15%
7
B / B2
All Others Combined
23%
3
N/A
Total / Weighted Average
100%
5
 
(1)
Reflects lease renewals by year by customer; dollar amounts represent annualized cash site rental revenues from assumed renewals or extension as reflected in the table "Projected Revenue from Customer Contracts."
(2)
Weighted by site rental revenue contributions; excludes renewals at the customers' option.


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ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX

SUMMARY OF TOWER PORTFOLIO BY VINTAGE
(as of December 31, 2017; dollars in thousands)
 
YIELD(1)
NUMBER OF TENANTS PER TOWER

chart-93135d97e51e5641b0b.jpgchart-2d172037ec3450d4935.jpg
LQA SITE RENTAL REVENUE PER TOWER
LQA TOWERS SEGMENT SITE RENTAL GROSS MARGIN PER TOWER
chart-fc2a87b1ca6d5416ada.jpgchart-5e2c5eaf53e35c57a94.jpg
INVESTED CAPITAL PER TOWER(2)
NUMBER OF TOWERS
chart-3ef6632dba965376bf4.jpgchart-38ff063d022d58eca26.jpg
(1)
Yield is calculated as LQA Towers segment 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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ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX


PORTFOLIO OVERVIEW(1)
(as of December 31, 2017; dollars in thousands)
NUMBER OF TOWERS
TENANTS PER TOWER
LQA SITE RENTAL REVENUE PER TOWER
chart-abbb35d8682b5a8195e.jpgchart-f095363603eb5ff49a8.jpgchart-94b3a4b027b354b1bb2.jpg


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


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ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX


DISTRIBUTION OF TOWER TENANCY (as of December 31, 2017)
PERCENTAGE OF TOWERS BY TENANTS PER TOWER(1)
SITES ACQUIRED AND BUILT 2006 AND PRIOR
SITES ACQUIRED AND BUILT 2007 TO PRESENT
chart-f3ca1217a11c5525b7a.jpgchart-3485338d467c5c9f883.jpg
Average: 2.6
Average: 2.0
 
 
GEOGRAPHIC TOWER DISTRIBUTION (as of December 31, 2017)(1)
PERCENTAGE OF TOWERS BY GEOGRAPHIC LOCATION
PERCENTAGE OF LQA SITE RENTAL REVENUE BY GEOGRAPHIC LOCATION
chart-5504abac06a15ec2bca.jpgchart-b0f3d4a5c8dc5aac971.jpg
(1)
Includes towers and rooftops, excludes small cells and third-party land interests.

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CAPITALIZATION OVERVIEW
APPENDIX

GROUND INTEREST OVERVIEW
(as of December 31, 2017; dollars in millions)
LQA Site Rental Revenue
Percentage of LQA Site Rental Revenue
LQA Towers Segment Site Rental Gross Margin
Percentage of LQA Towers Segment Site Rental Gross Margin
Number of Towers(1)
Percentage of Towers
Weighted Average Term Remaining (by years)(2)
Less than 10 years
$
356

12
%
$
196

10
%
5,724

14
%
 
10 to 20 years
463

16
%
250

12
%
7,721

19
%
 
Greater 20 years
1,239

42
%
826

40
%
16,946

43
%
 
Total leased
$
2,058

70
%
$
1,272

62
%
30,391

76
%
34

 
 
 
 
 
 
 
 
Owned
858

30
%
790

38
%
9,689

24
%
 
Total / Average
$
2,916

100
%
$
2,062

100
%
40,080

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 Towers segment site rental gross margin.

GROUND INTEREST ACTIVITY
(dollars in millions)
Three Months Ended December 31, 2017
Twelve Months Ended December 31, 2017
Ground Extensions Under Crown Castle Towers:
 
 
  Number of ground leases extended
427

1,609

  Average number of years extended
36

33

Percentage increase in consolidated cash ground lease expense due to extension activities(1)
0.1
%
0.4
%
 
 
 
Ground Purchases Under Crown Castle Towers:
 
 
  Number of ground leases purchased
81

370

  Land lease purchases (including capital expenditures, acquisitions and capital leases)
$
22

$
113

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

1
%
(1)
Includes the impact from the amortization of lump sum payments.

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APPENDIX


CAPITALIZATION OVERVIEW
(dollars in millions)
Face Value as of 12/31/2017
Fixed vs. Variable
Secured vs. Unsecured
Interest Rate(1)
Net Debt to LQA EBITDA(2)
Maturity
Cash and cash equivalents
$
314

 
 
 
 
 
 
 
 
 
 
 
 
Senior Secured Tower Revenue Notes, Series 2010-3(3)
1,250

Fixed
Secured
6.1%
 
2040(3)
Senior Secured Tower Revenue Notes, Series 2010-6(3)
1,000

Fixed
Secured
4.9%
 
2040(3)
Senior Secured Tower Revenue Notes, Series 2015-1(3)
300

Fixed
Secured
3.2%
 
2042(3)
Senior Secured Tower Revenue Notes, Series 2015-2(3)
700

Fixed
Secured
3.7%
 
2045(3)
3.849% Secured Notes
1,000

Fixed
Secured
3.8%
 
2023
Senior Secured Notes, Series 2009-1, Class A-1
33

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

Fixed
Secured
9.0%
 
2029
Capital leases & other obligations
228

Various
Secured
Various
 
Various
Total secured debt
$
4,581

 
 
4.8%
1.6x
 
Senior Unsecured Revolving Credit Facility(3)(4)
980

Variable
Unsecured
2.6%
 
2022
Senior Unsecured Term Loan A
2,401

Variable
Unsecured
2.6%
 
2022
5.250% Senior Notes
1,650

Fixed
Unsecured
5.3%
 
2023
4.875% Senior Notes
850

Fixed
Unsecured
4.9%
 
2022
3.400% Senior Notes
850

Fixed
Unsecured
3.4%
 
2021
4.450% Senior Notes
900

Fixed
Unsecured
4.5%
 
2026
3.700% Senior Notes
750

Fixed
Unsecured
3.7%
 
2026
2.250% Senior Notes
700

Fixed
Unsecured
2.3%
 
2021
4.000% Senior Notes
500

Fixed
Unsecured
4.0%
 
2027
4.750% Senior Notes
350

Fixed
Unsecured
4.8%
 
2047
3.200% Senior Notes
750

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

Fixed
Unsecured
3.7%
 
2027
Total unsecured debt
$
11,681

 
 
3.7%
4.1x
 
Total net debt
$
15,948

 
 
4.0%
5.6x
 
Preferred Stock, at liquidation value
1,650

 
 
 
 
 
Market Capitalization(5)
45,101

 
 
 
 
 
Firm Value(6)
$
62,699

 
 
 
 
 

(1)
Represents the weighted-average stated interest rate.
(2)
Represents the applicable amount of debt divided by LQA consolidated Adjusted EBITDA. The Net Debt to Last Quarter Annualized Adjusted EBITDA calculation does not give effect to a full quarter ownership of Lightower, as this acquisition closed on November 1, 2017. For the quarter ended December 31, 2017, Lightower contribution to the Company's Adjusted EBITDA was $83 million.
(3)
If the respective series of such debt is not paid in full on or prior to an applicable date then the Excess Cash Flow (as defined in the indenture) of the issuers of such notes will be used to repay principal of the applicable series, and additional interest (of an additional approximately 5% per annum) will accrue on the respective series. The Senior Secured Tower Revenue Notes, Series 2010-3 and 2010-6 have anticipated repayment dates in 2020. The Senior Secured Tower Revenue Notes, Series 2015-1 and 2015-2 have anticipated repayment dates of 2022 and 2025, respectively. Notes are prepayable at par if voluntarily repaid six months or less prior to maturity; earlier prepayment may require additional consideration. In January 2018, the Company issued $750.0 million aggregate principal amount of 3.150% senior unsecured notes due July 2023 and $1.0 billion aggregate principal amount of 3.800% senior unsecured notes due February 2028 and used the net proceeds of such offering to repay (a) in full the Senior Secured Tower Revenue Notes, Series 2010-3 and (b) a portion of the outstanding borrowings under the 2016 Revolver.
(4)
As of December 31, 2017, the undrawn availability under the $3.5 billion Revolving Credit Facility is $2.5 billion.
(5)
Market capitalization calculated based on $111.01 closing price and 406 million shares outstanding as of December 31, 2017.
(6)
Represents the sum of net debt, preferred stock (at liquidation value) and market capitalization.

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APPENDIX



DEBT MATURITY OVERVIEW(1)(2)
chart-4c80c3ffe728996c091.jpg
(as of December 31, 2017; dollars in millions)chart-09292f2263db6fb12e3.jpg
(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.
(2)
The debt maturity overview does not reflect the Company's January 2018 senior unsecured notes offering and the use of proceeds from such offering, including the repayment in full of the Senior Secured Tower Revenue Notes, Series 2010-3, which had an Anticipated Repayment Date in 2020.

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CAPITALIZATION OVERVIEW
APPENDIX



LIQUIDITY OVERVIEW(1)
(dollars in thousands)
December 31, 2017
Cash and cash equivalents(2)
$
314,094

Undrawn revolving credit facility availability(3)(4)
2,500,967

Restricted cash
126,065

Debt and other long-term obligations(4)(5)
16,159,620

Total equity
12,339,082

(1)
We have an At-The-Market stock offering program ("ATM Program") through which we may, from time to time, issue and sell shares of our common stock having an aggregate cumulative gross sales price of up to $500.0 million to or through sales agents. As of December 31, 2017, 4.1 million shares of common stock had been sold under the ATM Program generating net proceeds of $346.3 million.
(2)
Exclusive of restricted cash.
(3)
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 Unsecured Credit Facility.
(4)
Does not give effect to our January 2018 issuance of $750.0 million aggregate principal amount of 3.150% senior unsecured notes due July 2023 and $1.0 billion aggregate principal amount of 3.800% senior unsecured notes due February 2028, and the associated use of proceeds.
(5)
Balances reflect debt issuance costs as a direct reduction from the respective carrying amounts of debt, with the exception of debt issuance costs associated with the Company's revolving credit facilities.


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FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX



SUMMARY OF MAINTENANCE AND FINANCIAL COVENANTS(6)
Debt
Borrower / Issuer
Covenant(1)
Covenant Level Requirement
 
As of December 31, 2017
Maintenance Financial Covenants(2)
2016 Credit Facility
CCIC
Total Net Leverage Ratio
≤ 6.50x
 
5.5x
2016 Credit Facility
CCIC
Total Senior Secured Leverage Ratio
≤ 3.50x
 
1.5x
2016 Credit Facility
CCIC
Consolidated Interest Coverage Ratio(3)
N/A
 
N/A
 
 
 
 
 
 
Restrictive Negative Financial Covenants
 
 
 
 
Financial covenants restricting ability to incur additional debt
2012 Secured Notes
CC Holdings GS V LLC and Crown Castle GS III Corp.
Debt to Adjusted Consolidated Cash Flow Ratio
≤ 3.50x
 
2.5x
 
 
 
 
 
 
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
(4) 
4.7x
2015 Tower Revenue Notes
Crown Castle Towers LLC and its Subsidiaries
Debt Service Coverage Ratio
> 1.75x
(4) 
4.7x
2009 Securitized Notes
Pinnacle Towers Acquisition Holdings LLC and its Subsidiaries
Debt Service Coverage Ratio
> 1.30x
(4) 
7.7x
 
 
 
 
 
 
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
(5) 
4.7x
2015 Tower Revenue Notes
Crown Castle Towers LLC and its Subsidiaries
Debt Service Coverage Ratio
≥ 2.00x
(5) 
4.7x
2009 Securitized Notes
Pinnacle Towers Acquisition Holdings LLC and its Subsidiaries
Debt Service Coverage Ratio
≥ 2.34x
(5) 
7.7x
(1)
As defined in the respective debt agreement. In the indentures for the 2010 Tower Revenue Notes, 2015 Tower Revenue Notes and the 2009 Securitized Notes, the defined term for Debt Service Coverage Ratio is "DSCR".
(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 2016 Credit Facility.
(3)
Applicable solely to the extent that the senior unsecured debt rating by any two of S&P, Moody's and Fitch is lower than BBB-, Baa3 or BBB-, respectively. If applicable, the consolidated interest coverage ratio must be greater than or equal to 2.50.
(4)
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.
(5)
Rating Agency Confirmation (as defined in the respective debt agreement) is also required.
(6)
Does not give effect to our January 2018 issuance of $750.0 million aggregate principal amount of 3.150% senior unsecured notes due July 2023 and $1.0 billion aggregate principal amount of 3.800% senior unsecured notes due February 2028, and the associated use of proceeds.




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ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX



INTEREST RATE SENSITIVITY(1)(7)
 
Years Ended December 31,
(as of December 31, 2017; dollars in millions)
2018
2019
Fixed Rate Debt:
 
 
Face Value of Principal Outstanding(2)
$
12,633

$
12,617

Current Interest Payment Obligations(3)
544

543

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

—

Floating Rate Debt:
 
 
Face Value of Principal Outstanding(2)
$
3,319

$
3,196

Current Interest Payment Obligations(5)
107

116

Effect of 0.125% Change in Interest Rates(6)
4

4

(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 December 31, 2017. Calculation assumes no changes to future interest rate margin spread over LIBOR due to changes in the Borrower’s senior unsecured credit rating.
(6)
Interest expense calculated based on current interest rates using the 1-month LIBOR forward curve as of December 31, 2017 plus 12.5 bps.
(7)
Does not give effect to our January 2018 issuance of $750.0 million aggregate principal amount of 3.150% senior unsecured notes due July 2023 and $1.0 billion aggregate principal amount of 3.800% senior unsecured notes due February 2028, and the associated use of proceeds.



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ASSET PORTFOLIO OVERVIEW
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APPENDIX



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

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APPENDIX


•
Organic Contribution to Site Rental Revenues is useful to investors or other interested parties in understanding the components of the year-over-year changes in our site rental revenues computed in accordance with GAAP. Management uses the Organic Contribution to Site Rental Revenues to assess year-over-year growth rates for our rental activities, to evaluate current performance, to capture trends in rental rates, new leasing activities and customer non-renewals in our core business, as well to forecast future results. Organic Contribution to Site Rental Revenues is not meant as an alternative measure of revenue and should be considered only as a supplement in understanding and assessing the performance of our site rental revenues computed in accordance with GAAP.
We define our non-GAAP financial measures, segment measures and other calculations as follows:
Non-GAAP Financial Measures
Adjusted EBITDA. We define Adjusted EBITDA as net income (loss) plus restructuring charges (credits), asset write-down charges, acquisition and integration costs, depreciation, amortization and accretion, amortization of prepaid lease purchase price adjustments, interest expense and amortization of deferred financing costs, (gains) losses on retirement of long-term obligations, net (gain) loss on interest rate swaps, (gains) losses on foreign currency swaps, impairment of available-for-sale securities, interest income, other (income) expense, (benefit) provision for income taxes, cumulative effect of a change in accounting principle, (income) loss from discontinued operations and stock-based compensation expense.
Adjusted Funds from Operations. We define Adjusted Funds from Operations as FFO before straight-lined revenue, straight-lined expense, stock-based compensation expense, non-cash portion of tax provision, non-real estate related depreciation, amortization and accretion, amortization of non-cash interest expense, other (income) expense, (gains) losses on retirement of long-term obligations, net (gain) loss on interest rate swaps, (gains) losses on foreign currency swaps, acquisition and integration costs, and adjustments for noncontrolling interests, and less capital improvement capital expenditures and corporate capital expenditures (i.e., sustaining capital expenditures). See "Sustaining capital expenditures" and "Integration capital expenditures" below for further information regarding our calculation of certain components of AFFO.
AFFO per share. We define AFFO per share as AFFO divided by diluted weighted average common shares outstanding.
Funds from Operations. We define Funds from Operations as net income plus real estate related depreciation, amortization and accretion and asset write-down charges, less noncontrolling interest and cash paid for preferred stock dividends, and is a measure of funds from operations attributable to CCIC common stockholders.
FFO per share. We define FFO per share as FFO divided by the diluted weighted average common shares outstanding.
Organic Contribution to Site Rental Revenues. We define the Organic Contribution to Site Rental Revenues as the sum of the change in GAAP site rental revenues related to (1) new leasing activity, including revenues from the construction of small cells and the impact of prepaid rent, (2) escalators and less (3) non-renewals of customer contracts.
Segment Measures
Segment Site Rental Gross Margin. We define Segment Site Rental Gross Margin as segment site rental revenues less segment site rental cost of operations, excluding stock-based compensation expense and prepaid lease purchase price adjustments recorded in consolidated site rental cost of operations.
Segment Network Services and Other Gross Margin. We define Segment Network Services and Other Gross Margin as segment network services and other revenues less segment network services and other cost of operations, excluding stock-based compensation expense recorded in consolidated network services and other cost of operations.
Segment Operating Profit. We define Segment Operating Profit as segment revenues less segment cost of operations and segment general and administrative expenses, excluding stock-based compensation expense and prepaid lease purchase price adjustments recorded in cost of operations.

As a result of our 2017 acquisitions of fiber assets, we have changed the name of our "Small Cells" operating segment to "Fiber". The change did not impact the composition of the aforementioned segment.
Other Calculations
Discretionary capital expenditures. We define discretionary capital expenditures as those capital expenditures made with respect to activities which we believe exhibit sufficient potential to enhance long-term stockholder value. They consist of (1) improvements to existing communications infrastructure and construction of new communications infrastructure (collectively referred to as "revenue generating") and (2) purchases of land assets under towers as we seek to manage our interests in the land beneath our towers.

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Sustaining capital expenditures. We define sustaining capital expenditures as those capital expenditures made with respect to either (1) corporate capital expenditures, such as buildings, information technology equipment and office equipment or (2) capital improvement capital expenditures to our communications infrastructure assets that enable our customers' ongoing quiet enjoyment of the communications infrastructure. For periods presented prior to 2018, integration capital expenditures are included within sustaining capital expenditures, as discussed in "Integration capital expenditures" below.
Integration capital expenditures. We anticipate incurring initial capital expenditures related to integrating Lightower into our existing business. We anticipate that the majority of these expected capital expenditures will be incurred beginning in 2018 and will primarily relate to the overall integration of Lightower’s information technology assets into our business. We believe these expenditures are not indicative of our ongoing financial performance, and therefore their inclusion in our AFFO may hinder usefulness to investors and other interested parties. Moreover, integration capital expenditures were approximately $3.6 million and $0.1 million the years ended December 31, 2017 and 2016, respectively, and as such, we believe that these costs have not previously been significant enough to warrant separate consideration with regard to the impact to AFFO.
As such, for periods presented prior to 2018, integration capital expenditures were included as a component within sustaining capital expenditures. For periods presented beginning January 1, 2018, including our Outlook for first quarter and full year 2018 included herein, we no longer reflect integration capital expenditures within sustaining capital expenditures and consider integration capital expenditures as its own component of our capital expenditures.
Because of our reclassification of integration capital expenditures, our AFFO for historical periods may not be comparable to those periods presented prospectively from and after January 1, 2018, including our Outlook for first quarter 2018 and full year 2018 Outlook included herein.
We define integration capital expenditures as those capital expenditures made specifically with respect to recent acquisitions that are essential to integrating acquired companies into our business.
The tables set forth below reconcile the non-GAAP financial measures used herein to comparable GAAP financial measures. The components in these tables may not sum to the total due to rounding.

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Crown Castle International Corp.
Fourth Quarter 2017
COMPANY OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX


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


Reconciliation of Historical Adjusted EBITDA:
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
(dollars in thousands)
2017
 
2016
 
2017

2016
Net income (loss)
$
98,104

 
$
124,710

 
$
444,550

 
$
356,973

Adjustments to increase (decrease) net income (loss):
 
 
 
 
 
 
 
Asset write-down charges
7,038

 
6,202

 
17,322

 
34,453

Acquisition and integration costs
34,351

 
5,994

 
61,431

 
17,453

Depreciation, amortization and accretion
362,211

 
273,826

 
1,242,408

 
1,108,551

Amortization of prepaid lease purchase price adjustments
5,007

 
5,314

 
20,120

 
21,312

Interest expense and amortization of deferred financing costs(1)
160,280

 
129,376

 
590,682

 
515,032

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

 
—

 
3,525

 
52,291

Interest income
(6,176
)
 
(342
)
 
(18,761
)
 
(796
)
Other (income) expense
1,468

 
4,212

 
(1,994
)
 
8,835

(Benefit) provision for income taxes
14,753

 
4,084

 
26,043

 
16,881

Stock-based compensation expense
29,976

 
21,241

 
96,435

 
96,538

Adjusted EBITDA(2)(3)
$
707,012

 
$
574,617

 
$
2,481,761

 
$
2,227,523

(1)
See the reconciliation of "components of historical interest expense and amortization of deferred financing costs" herein.
(2)
See "Definitions of Non-GAAP Measures, Segment Measures and Other Calculations" herein for a discussion of our definition of Adjusted EBITDA.
(3)
The above reconciliation excludes line items included in our definition which are not applicable for the periods shown.


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Crown Castle International Corp.
Fourth Quarter 2017
COMPANY OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX


Reconciliation of Current Outlook for Adjusted EBITDA:
 
Q1 2018
 
Full Year 2018
(dollars in millions)
Outlook
 
Outlook
Net income (loss)
$116
to
$141
 
$511
to
$591
Adjustments to increase (decrease) net income (loss):
 
 
 
 
 
 
 
Asset write-down charges
$9
to
$11
 
$35
to
$45
Acquisition and integration costs
$13
to
$17
 
$45
to
$55
Depreciation, amortization and accretion
$380
to
$400
 
$1,566
to
$1,601
Amortization of prepaid lease purchase price adjustments
$4
to
$6
 
$19
to
$21
Interest expense and amortization of deferred financing costs(1)
$157
to
$167
 
$642
to
$687
(Gains) losses on retirement of long-term obligations
$0
to
$0
 
$0
to
$0
Interest income
$(1)
to
$1
 
$(2)
to
$2
Other (income) expense
$(1)
to
$3
 
$3
to
$5
(Benefit) provision for income taxes
$8
to
$12
 
$34
to
$42
Stock-based compensation expense
$27
to
$31
 
$116
to
$124
Adjusted EBITDA(2)(3)
$745
to
$755
 
$3,049
to
$3,094

Components of Historical Interest Expense and Amortization of Deferred Financing Costs:
 
Three Months Ended December 31,
(dollars in thousands)
2017
 
2016
Interest expense on debt obligations
$
158,549


$
126,336

Amortization of deferred financing costs and adjustments on long-term debt, net
5,062

 
4,565

Other, net
(3,331
)
 
(1,525
)
Interest expense and amortization of deferred financing costs
$
160,280

 
$
129,376


Components of Current Outlook for Interest Expense and Amortization of Deferred Financing Costs:
 
Q1 2018
 
Full Year 2018
(dollars in millions)
Outlook
 
Outlook
Interest expense on debt obligations
$157
to
$162
 
$645
to
$665
Amortization of deferred financing costs and adjustments on long-term debt, net
$4
to
$7
 
$18
to
$23
Other, net
$(4)
to
$(2)
 
$(13)
to
$(8)
Interest expense and amortization of deferred financing costs
$157
to
$167
 
$642
to
$687
(1)
See the reconciliation of "components of current outlook for interest expense and amortization of deferred financing costs" herein.
(2)
See "Definitions of Non-GAAP Measures, Segment Measures and Other Calculations" herein for a discussion of our definition of Adjusted EBITDA.
(3)
The above reconciliation excludes line items included in our definition which are not applicable for the periods shown.





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Crown Castle International Corp.
Fourth Quarter 2017
COMPANY OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX



Reconciliation of Historical FFO and AFFO:
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
(dollars in thousands, except share and per share amounts)
2017
 
2016
 
2017
 
2016
Net income (loss)
$
98,104

 
$
124,710

 
$
444,550

 
$
356,973

Real estate related depreciation, amortization and accretion
354,095

 
266,961

 
1,211,360

 
1,082,083

Asset write-down charges
7,038

 
6,202

 
17,322

 
34,453

Dividends on preferred stock
(29,935
)
 
(10,997
)
 
(29,935
)
 
(43,988
)
FFO(1)(2)(3)(4)
$
429,302

 
$
386,875

 
$
1,643,297

 
$
1,429,521

 
 
 
 
 
 
 
 
FFO (from above)
$
429,302

 
$
386,875

 
$
1,643,297

 
$
1,429,521

Adjustments to increase (decrease) FFO:
 
 
 
 
 
 
 
Straight-lined revenue
(2,640
)
 
(5,001
)
 
314

 
(47,377
)
Straight-lined expense
22,699

 
23,114

 
92,602

 
94,246

Stock-based compensation expense
29,976

 
21,241

 
96,435

 
96,538

Non-cash portion of tax provision
11,916

 
2,091

 
9,214

 
7,322

Non-real estate related depreciation, amortization and accretion
8,116

 
6,865

 
31,048

 
26,468

Amortization of non-cash interest expense
1,731

 
3,040

 
9,368

 
14,333

Other (income) expense
1,468

 
4,212

 
(1,994
)
 
8,835

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

 
—

 
3,525

 
52,291

Acquisition and integration costs
34,351

 
5,994

 
61,431

 
17,453

Capital improvement capital expenditures
(13,519
)
 
(17,467
)
 
(40,844
)
 
(42,818
)
Corporate capital expenditures
(11,604
)
 
(24,563
)
 
(43,991
)
 
(46,948
)
AFFO(1)(2)(3)(4)
$
511,797

 
$
406,402

 
$
1,860,405

 
$
1,609,864

Weighted average common shares outstanding—diluted(5)
408,130

 
352,878

 
383,221

 
340,879

AFFO per share(1)(3)(4)
$
1.25

 
$
1.15

 
$
4.85

 
$
4.72

(1)
See “Definitions of Non-GAAP Financial Measures, Segment Measures and Other Calculations” herein for a discussion of our definitions of FFO and AFFO.
(2)
FFO and AFFO are reduced by cash paid for preferred stock dividends during the period in which they are paid.
(3)
The above reconciliation excludes line items included in our definition which are not applicable for the periods shown.
(4)
Attributable to CCIC common stockholders.
(5)
Based on the diluted weighted-average common shares outstanding for the three and twelve months ended December 31, 2017 and 2016. For all periods presented, the diluted weighted-average common shares outstanding does not include any assumed conversion of the 6.875% Mandatory Convertible Preferred Stock in the share count.



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Crown Castle International Corp.
Fourth Quarter 2017
COMPANY OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX



Reconciliation of Historical FFO and AFFO:
 
Years Ended December 31,
(in thousands of dollars, except share and per share amounts)
2016
 
2015
 
2014
Net income (loss)
$
356,973

 
$
525,286

 
$
346,314

Real estate related depreciation, amortization and accretion
1,082,083

 
1,018,303

 
971,562

Asset write-down charges
34,453

 
33,468

 
14,246

Dividends on preferred stock
(43,988
)
 
(43,988
)
 
(43,988
)
FFO(1)(2)(3)(4)
$
1,429,521

 
$
1,533,069

 
$
1,288,133

 
 
 
 
 
 
FFO (from above)
$
1,429,521

 
$
1,533,069

 
$
1,288,133

Adjustments to increase (decrease) FFO:
 
 
 
 
 
Straight-lined revenue
(47,377
)
 
(111,263
)
 
(183,393
)
Straight-lined expense
94,246

 
98,738

 
101,890

Stock-based compensation expense
96,538

 
67,148

 
56,431

Non-cash portion of tax provision(5)
7,322

 
(63,935
)
 
(19,490
)
Non-real estate related depreciation, amortization and accretion
26,468

 
17,875

 
14,219

Amortization of non-cash interest expense
14,333

 
37,126

 
80,854

Other (income) expense
8,835

 
(57,028
)
 
(11,992
)
(Gains) losses on retirement of long-term obligations
52,291

 
4,157

 
44,629

Acquisition and integration costs
17,453

 
15,678

 
34,145

Capital improvement capital expenditures
(42,818
)
 
(46,789
)
 
(31,056
)
Corporate capital expenditures
(46,948
)
 
(58,142
)
 
(50,317
)
AFFO(1)(2)(3)(4)
$
1,609,864

 
$
1,436,635

 
$
1,324,054

Weighted average common shares outstanding—diluted(6)
340,879

 
334,062

 
333,265

AFFO per share(1)(3)(4)
$
4.72

 
$
4.30

 
$
3.97

(1)
See "Definitions of Non-GAAP Measures, Segment Measures and Other Calculations" herein for a discussion of our definitions of FFO and AFFO.
(2)
FFO and AFFO are reduced by cash paid for preferred stock dividends during the period in which they are paid.
(3)
The above reconciliation excludes line items included in our definition which are not applicable for the periods shown.
(4)
Attributable to CCIC common stockholders.
(5)
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.
(6)
Based on the diluted weighted-average common shares outstanding for the twelve months ended December 31, 2016, 2015, 2014 and 2013.

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Crown Castle International Corp.
Fourth Quarter 2017
COMPANY OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX



Reconciliation of Current Outlook for FFO and AFFO:
 
Q1 2018
 
Full Year 2018
(in millions of dollars, except share and per share amounts)
Outlook
 
Outlook
Net income (loss)
$116
to
$141
 
$511
to
$591
Real estate related depreciation, amortization and accretion
$367
to
$377
 
$1,500
to
$1,520
Asset write-down charges
$9
to
$11
 
$35
to
$45
Dividends on preferred stock
$(28)
to
$(28)
 
$(113)
to
$(113)
FFO(1)(2)(3)
$477
to
$487
 
$1,965
to
$2,010
Weighted-average common shares outstanding—diluted(4)
408.1
 
408.1
FFO per share(1)(2)(3)
$1.17
to
$1.19
 
$4.81
to
$4.92
 
 
 
 
 
 
 
 
FFO (from above)
$477
to
$487
 
$1,965
to
$2,010
Adjustments to increase (decrease) FFO:
 
 
 
 
 
 
 
Straight-lined revenue
$(7)
to
$3
 
$21
to
$41
Straight-lined expense
$17
to
$27
 
$72
to
$92
Stock-based compensation expense
$27
to
$31
 
$116
to
$124
Non-cash portion of tax provision
$3
to
$13
 
$(8)
to
$7
Non-real estate related depreciation, amortization and accretion
$13
to
$23
 
$66
to
$81
Amortization of non-cash interest expense
$0
to
$5
 
$5
to
$15
Other (income) expense
$(1)
to
$3
 
$3
to
$5
(Gains) losses on retirement of long-term obligations
$0
to
$0
 
$0
to
$0
Acquisition and integration costs
$13
to
$17
 
$45
to
$55
Capital improvement capital expenditures
$(22)
to
$(12)
 
$(76)
to
$(61)
Corporate capital expenditures
$(21)
to
$(11)
 
$(56)
to
$(41)
AFFO(1)(2)(3)
$538
to
$548
 
$2,219
to
$2,264
Weighted-average common shares outstanding—diluted(4)
408.1
 
408.1
AFFO per share(1)(2)(3)
$1.32
to
$1.34
 
$5.44
to
$5.55
(1)
See “Definitions of Non-GAAP Financial Measures, Segment Measures and Other Calculations” herein for a discussion of our definitions of FFO and AFFO. Our AFFO for historical periods may not be comparable to those periods presented prospectively from and after January 1, 2018, including our first quarter 2018 and full year 2018 Outlook included herein. See also "Definitions of Non-GAAP Financial Measures, Segment Measures and Other Calculations" in the Appendix for further information.
(2)
The above reconciliation excludes line items included in our definition which are not applicable for the periods shown.
(3)
Attributable to CCIC common stockholders.
(4)
The assumption for first quarter 2018 and full year 2018 diluted weighted-average common shares outstanding is 408.1 million based on diluted common shares outstanding as of December 31, 2017. For all periods presented, the diluted weighted-average common shares outstanding does not include any assumed conversion of the 6.875% Mandatory Convertible Preferred Stock in the share count.

35
Crown Castle International Corp.
Fourth Quarter 2017
COMPANY OVERVIEW
FINANCIALS & METRICS
ASSET PORTFOLIO OVERVIEW
CAPITALIZATION OVERVIEW
APPENDIX



Net debt to Last Quarter Annualized Adjusted EBITDA calculation:
 
Three Months Ended December 31,
(dollars in millions)
2017
 
2016
Total face value of debt
$
16,261.8

 
$
12,261.7

Ending cash and cash equivalents(1)
314.1

 
567.6

Total net debt
$
15,947.7


$
11,694.1

 
 
 
 
Adjusted EBITDA for the three months ended December 31,
$
707.0

 
$
574.6

Last quarter annualized Adjusted EBITDA
2,828.0


2,298.5

Net debt to Last Quarter Annualized Adjusted EBITDA
5.6
x
(2) 
5.1
x

Cash Interest Coverage Ratio Calculation:
 
Three Months Ended December 31,
(dollars in thousands)
2017
 
2016
Adjusted EBITDA
$
707,012

 
$
574,617

Interest expense on debt obligations
158,943

 
126,336

Interest Coverage Ratio
4.4
x
 
4.5
x
(1)
Excludes restricted cash.
(2)
The Net Debt to Last Quarter Annualized Adjusted EBITDA calculation does not give effect to a full quarter ownership of Lightower, as this acquisition closed on November 1, 2017. For the quarter ended December 31, 2017, Lightower contribution to the Company's Adjusted EBITDA was $83 million.



36

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