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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM 10-Q
----------------
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2001
Commission File Number 000-24737
----------------
CROWN CASTLE INTERNATIONAL CORP.
(Exact name of registrant as specified in its charter)
Delaware 76-0470458
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
510 Bering Drive 77057-1457
Suite 500 (Zip Code)
Houston, Texas
(Address of principal executive
offices)
(713) 570-3000
(Registrant's telephone number, including area code)
----------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes [X] No [_]
Number of shares of common stock outstanding at May 1, 2001: 213,807,453
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CROWN CASTLE INTERNATIONAL CORP.
INDEX
Page
----
PART I--FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet at December 31, 2000 and March 31, 2001....... 3
Consolidated Statement of Operations and Comprehensive Loss for the three
months ended March 31, 2000 and 2001.................................... 4
Consolidated Statement of Cash Flows for the three months ended March 31,
2000 and 2001........................................................... 5
Condensed Notes to Consolidated Financial Statements..................... 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.................................................... 13
Item 3. Quantitative and Qualitative Disclosures About Market Risk........ 19
PART II--OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.................................. 20
Signatures................................................................ 21
2
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In thousands of dollars, except share amounts)
December 31, March 31,
2000 2001
------------ -----------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents............................ $ 453,833 $ 716,941
Receivables:
Trade, net of allowance for doubtful accounts of
$18,722 and $19,608 at December 31, 2000 and March
31, 2001, respectively............................ 168,184 197,116
Other.............................................. 4,942 1,298
Short-term investments.............................. 38,000 37,500
Inventories......................................... 78,640 112,806
Prepaid expenses and other current assets........... 28,535 25,589
---------- ----------
Total current assets............................... 772,134 1,091,250
Property and equipment, net........................... 4,303,037 4,450,622
Investments........................................... 137,000 100,000
Goodwill and other intangible assets, net of
accumulated amortization of $101,085 and $116,235 at
December 31, 2000 and March 31, 2001, respectively... 1,112,876 1,095,530
Deferred financing costs and other assets, net of
accumulated amortization of $10,733 and $12,873 at
December 31, 2000 and March 31, 2001, respectively... 114,794 131,144
---------- ----------
$6,439,841 $6,868,546
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable..................................... $ 100,766 $ 83,191
Accrued interest..................................... 47,604 17,225
Accrued compensation and related benefits............ 11,901 7,952
Deferred rental revenues and other accrued
liabilities......................................... 164,605 289,654
---------- ----------
Total current liabilities.......................... 324,876 398,022
Long-term debt........................................ 2,602,687 2,701,175
Other liabilities..................................... 93,354 99,457
---------- ----------
Total liabilities.................................. 3,020,917 3,198,654
---------- ----------
Commitments and contingencies
Minority interests.................................... 155,344 151,784
Redeemable preferred stock............................ 842,718 851,351
Stockholders' equity:
Common stock, $.01 par value; 690,000,000 shares
authorized; shares issued: December 31, 2000--
198,912,094 and March 31, 2001--213,691,811......... 1,989 2,137
Additional paid-in capital........................... 2,894,095 3,258,380
Accumulated other comprehensive loss................. (25,100) (56,078)
Accumulated deficit.................................. (450,122) (537,682)
---------- ----------
Total stockholders' equity......................... 2,420,862 2,666,757
---------- ----------
$6,439,841 $6,868,546
========== ==========
See condensed notes to consolidated financial statements.
3
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited)
(In thousands of dollars, except per share amounts)
Three Months
Ended
March 31,
------------------
2000 2001
-------- --------
Net revenues:
Site rental and broadcast transmission................... $ 93,741 $134,042
Network services and other............................... 30,503 78,911
-------- --------
124,244 212,953
-------- --------
Operating expenses:
Costs of operations (exclusive of depreciation and
amortization):
Site rental and broadcast transmission.................. 40,287 57,739
Network services and other.............................. 15,901 55,456
General and administrative............................... 14,853 25,895
Corporate development.................................... 2,071 3,453
Non-cash general and administrative compensation
charges................................................. 461 1,395
Depreciation and amortization............................ 45,122 74,091
-------- --------
118,695 218,029
-------- --------
Operating income (loss)................................... 5,549 (5,076)
Other income (expense):
Interest and other income (expense)...................... 5,704 3,092
Interest expense and amortization of deferred financing
costs................................................... (41,761) (66,655)
-------- --------
Loss before income taxes, minority interests and
extraordinary item....................................... (30,508) (68,639)
Provision for income taxes................................ (11) (60)
Minority interests........................................ (1,541) 644
-------- --------
Loss before extraordinary item............................ (32,060) (68,055)
Extraordinary item--loss on early extinguishment of debt.. (1,495) --
-------- --------
Net loss.................................................. (33,555) (68,055)
Dividends on preferred stock.............................. (11,493) (19,505)
-------- --------
Net loss after deduction of dividends on preferred stock.. $(45,048) $(87,560)
======== ========
Net loss.................................................. $(33,555) $(68,055)
Other comprehensive income (loss):
Foreign currency translation adjustments................. (2,380) (27,593)
Derivative instruments:
Net change in fair value of cash flow hedging
instruments............................................ -- (3,341)
Amounts reclassified into results of operations......... -- (222)
-------- --------
Comprehensive loss before cumulative effect of change in
accounting principle..................................... (35,935) (99,211)
Cumulative effect of change in accounting principle for
derivative financial instruments......................... -- 178
-------- --------
Comprehensive loss........................................ $(35,935) $(99,033)
======== ========
Per common share--basic and diluted:
Loss before extraordinary item........................... $ (0.27) $ (0.41)
Extraordinary item....................................... (0.01) --
-------- --------
Net loss................................................. $ (0.28) $ (0.41)
======== ========
Common shares outstanding--basic and diluted (in
thousands)............................................... 158,566 211,195
======== ========
See condensed notes to consolidated financial statements.
4
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
(In thousands of dollars)
Three Months Ended
March 31,
--------------------
2000 2001
--------- ---------
Cash flows from operating activities:
Net loss................................................ $ (33,555) $ (68,055)
Adjustments to reconcile net loss to net cash provided
by operating activities:
Depreciation and amortization.......................... 45,122 74,091
Amortization of deferred financing costs and discounts
on long-term debt..................................... 19,139 22,161
Non-cash general and administrative compensation
charges............................................... 461 1,395
Minority interests..................................... 1,541 (644)
Extraordinary loss on early extinguishment of debt..... 1,495 --
Changes in assets and liabilities, excluding the
effects of acquisitions:
Increase in deferred rental revenues and other
liabilities.......................................... 38,026 130,806
Increase in inventories, prepaid expenses and other
assets............................................... (11,767) (39,730)
Decrease in accrued interest.......................... (11,541) (30,020)
Increase in receivables............................... (9,842) (29,170)
Decrease in accounts payable.......................... (2,145) (15,945)
--------- ---------
Net cash provided by operating activities............ 36,934 44,889
--------- ---------
Cash flows from investing activities:
Maturities of investments............................... -- 111,000
Capital expenditures.................................... (110,427) (251,860)
Purchase of investments................................. -- (73,500)
Investments in affiliates and other..................... (1,498) (10,568)
Acquisitions of businesses and assets, net of cash
acquired............................................... (287,363) --
--------- ---------
Net cash used for investing activities............... (399,288) (224,928)
--------- ---------
Cash flows from financing activities:
Proceeds from issuance of capital stock................. 6,845 350,830
Net borrowings under revolving credit agreements........ 19,000 95,548
Incurrence of financing costs........................... (18,930) (2,672)
Proceeds from issuance of long-term debt................ 400,000 --
Principal payments on long-term debt.................... (82,000) --
--------- ---------
Net cash provided by financing activities............ 324,915 443,706
--------- ---------
Effect of exchange rate changes on cash.................. (2,384) (559)
--------- ---------
Net increase (decrease) in cash and cash equivalents..... (39,823) 263,108
Cash and cash equivalents at beginning of period......... 549,328 453,833
--------- ---------
Cash and cash equivalents at end of period............... $ 509,505 $ 716,941
========= =========
Supplementary schedule of non-cash investing and
financing activities:
Amounts recorded in connection with acquisitions:
Fair value of net assets acquired, including goodwill
and other intangible assets........................... $ 320,392 $ --
Minority interests..................................... 18,289 --
Issuance of common stock............................... 14,740 --
Supplemental disclosure of cash flow information:
Interest paid........................................... $ 33,096 $ 74,443
Income taxes paid....................................... 23 60
See condensed notes to consolidated financial statements.
5
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. General
The information contained in the following notes to the consolidated
financial statements is condensed from that which would appear in the annual
consolidated financial statements; accordingly, the consolidated financial
statements included herein should be reviewed in conjunction with the
consolidated financial statements for the fiscal year ended December 31, 2000,
and related notes thereto, included in the Annual Report on Form 10-K (the
"Form 10-K") filed by Crown Castle International Corp. with the Securities and
Exchange Commission. All references to the "Company" include Crown Castle
International Corp. and its subsidiary companies unless otherwise indicated or
the context indicates otherwise.
The consolidated financial statements included herein are unaudited;
however, they include all adjustments (consisting only of normal recurring
adjustments) which, in the opinion of management, are necessary to present
fairly the consolidated financial position of the Company at March 31, 2001
and the consolidated results of operations and consolidated cash flows for the
three months ended March 31, 2000 and 2001. Accounting measurements at interim
dates inherently involve greater reliance on estimates than at year end. The
results of operations for the interim periods presented are not necessarily
indicative of the results to be expected for the entire year.
2. New Accounting Pronouncement
On January 1, 2001, the Company adopted the requirements of Statement of
Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities ("SFAS 133"). SFAS 133 requires that derivative
instruments be recognized as either assets or liabilities in the consolidated
balance sheet based on their fair values. Changes in the fair values of such
derivative instruments are recorded either in results of operations or in
other comprehensive income (loss), depending on the intended use of the
derivative instrument. The initial application of SFAS 133 is reported as the
effect of a change in accounting principle. The adoption of SFAS 133 resulted
in a net transition adjustment gain of approximately $178,000 in accumulated
other comprehensive income (loss), the recognition of approximately $363,000
of derivative instrument assets and the recognition of approximately $185,000
of derivative instrument liabilities. The amounts for this transition
adjustment are based on current fair value measurements at the date of
adoption of SFAS 133. The Company expects that the adoption of SFAS 133 will
increase the volatility of other comprehensive income (loss) as reported in
its future financial statements.
The derivative instruments recognized upon the Company's adoption of SFAS
133 consist of interest rate swap agreements. Such agreements are used to
manage interest rate risk on a portion of the Company's floating rate
indebtedness, and are designated as cash flow hedging instruments in
accordance with SFAS 133. The interest rate swap agreements have notional
amounts aggregating $150,000,000 and effectively convert the interest payments
on an equal amount of debt from a floating rate to a fixed rate. As such, the
Company is protected from future increases in market interest rates on that
portion of its indebtedness. To the extent that the interest rate swap
agreements are effective in hedging the Company's interest rate risk, the
changes in their fair values are recorded as other comprehensive income
(loss). Amounts recorded as other comprehensive income (loss) are reclassified
into results of operations in the same periods that the hedged interest costs
are recorded in interest expense. The Company estimates that such reclassified
amounts will be approximately $1,400,000 for the year ending December 31,
2001. To the extent that any portions of the interest rate swap agreements are
deemed ineffective, the related changes in fair values are recognized in
results of operations. As of March 31, 2001, the accumulated other
comprehensive loss in consolidated stockholders' equity includes $3,385,000 in
losses related to derivative instruments.
6
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
3. Long-term Debt
Long-term debt consists of the following:
December 31, March 31,
2000 2001
------------ ----------
(In thousands of
dollars)
2000 Credit Facility............................... $ 500,000 $ 550,000
CCUK Credit Facility............................... 138,932 146,160
Crown Atlantic Credit Facility..................... 239,000 270,000
9% Guaranteed Bonds due 2007....................... 181,820 172,661
10 5/8% Senior Discount Notes due 2007, net of
discount.......................................... 206,768 212,188
10 3/8% Senior Discount Notes due 2011, net of
discount.......................................... 355,482 364,584
9% Senior Notes due 2011........................... 180,000 180,000
11 1/4% Senior Discount Notes due 2011, net of
discount.......................................... 175,685 180,582
9 1/2% Senior Notes due 2011....................... 125,000 125,000
10 3/4% Senior Notes due 2011...................... 500,000 500,000
---------- ----------
$2,602,687 $2,701,175
========== ==========
Crown Atlantic Credit Facility
In March 2001, the Crown Atlantic Credit Facility was amended to increase
the available borrowings to $345,000,000. Under the amended facility, the
amount of available borrowings will begin to decrease on March 31, 2003.
Reporting Requirements Under the Indentures Governing the Company's Debt
Securities (the "Indentures") and the Certificate of Designations Governing
the Company's 12 3/4% Senior Exchangeable Preferred Stock (the
"Certificate")
The following information (as such capitalized terms are defined in the
Indentures and the Certificate) is presented solely as a requirement of the
Indentures and the Certificate; such information is not intended as an
alternative measure of financial position, operating results or cash flow from
operations (as determined in accordance with generally accepted accounting
principles). Furthermore, the Company's measure of the following information
may not be comparable to similarly titled measures of other companies.
7
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Summarized financial information for (1) the Company and its Restricted
Subsidiaries and (2) the Company's Unrestricted Subsidiaries is as follows:
March 31, 2001
----------------------------------------------------
Company and
Restricted Unrestricted Consolidation Consolidated
Subsidiaries Subsidiaries Eliminations Total
------------ ------------ ------------- ------------
(In thousands of dollars)
Cash and cash
equivalents............ $ 576,246 $ 140,695 $ -- $ 716,941
Other current assets.... 266,764 107,545 -- 374,309
Property and equipment,
net.................... 3,086,113 1,364,509 -- 4,450,622
Investments............. 100,000 -- -- 100,000
Investments in
Unrestricted
Subsidiaries........... 1,609,035 -- (1,609,035) --
Goodwill and other
intangible assets,
net.................... 186,332 909,198 -- 1,095,530
Other assets, net....... 111,504 19,640 -- 131,144
---------- ---------- ----------- ----------
$5,935,994 $2,541,587 $(1,609,035) $6,868,546
========== ========== =========== ==========
Current liabilities..... $ 206,904 $ 191,118 $ -- $ 398,022
Long-term debt.......... 2,112,354 588,821 -- 2,701,175
Other liabilities....... 21,521 77,936 -- 99,457
Minority interests...... 77,107 74,677 -- 151,784
Redeemable preferred
stock.................. 851,351 -- -- 851,351
Stockholders' equity.... 2,666,757 1,609,035 (1,609,035) 2,666,757
---------- ---------- ----------- ----------
$5,935,994 $2,541,587 $(1,609,035) $6,868,546
========== ========== =========== ==========
Three Months Ended March 31, 2001
--------------------------------------
Company and
Restricted Unrestricted Consolidated
Subsidiaries Subsidiaries Total
------------ ------------ ------------
(In thousands of dollars)
Net revenues........................ $125,771 $ 87,182 $212,953
Costs of operations (exclusive of
depreciation and amortization)..... 67,196 45,999 113,195
General and administrative.......... 21,547 4,348 25,895
Corporate development............... 3,405 48 3,453
Non-cash general and administrative
compensation charges............... 872 523 1,395
Depreciation and amortization....... 41,741 32,350 74,091
-------- -------- --------
Operating income (loss)............. (8,990) 3,914 (5,076)
Interest and other income
(expense).......................... 1,577 1,515 3,092
Interest expense and amortization of
deferred financing costs........... (54,605) (12,050) (66,655)
Provision for income taxes.......... -- (60) (60)
Minority interests.................. 725 (81) 644
-------- -------- --------
Net loss............................ $(61,293) $ (6,762) $(68,055)
======== ======== ========
8
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Tower Cash Flow and Adjusted Consolidated Cash Flow for the Company and its
Restricted Subsidiaries is as follows under (1) the indenture governing the 10
5/8% Senior Discount Notes and the Certificate (the "1997 and 1998
Securities") and (2) the indentures governing the 10 3/8% Discount Notes, the
9% Senior Notes, the 11 1/4% Discount Notes, the 9 1/2% Senior Notes and the
10 3/4% Senior Notes (the "1999 and 2000 Securities"):
1997 and 1998 1999 and 2000
Securities Securities
-------------- -------------
(In thousands of dollars)
Tower Cash Flow, for the three months ended March
31, 2001........................................ $ 32,098 $ 32,098
========= =========
Consolidated Cash Flow, for the twelve months
ended March 31, 2001............................ $ 119,838 $ 131,163
Less: Tower Cash Flow, for the twelve months
ended March 31, 2001............................ (104,359) (104,359)
Plus: four times Tower Cash Flow, for the three
months ended March 31, 2001..................... 128,392 128,392
--------- ---------
Adjusted Consolidated Cash Flow, for the twelve
months ended March 31, 2001..................... $ 143,871 $ 155,196
========= =========
4. Redeemable Preferred Stock
Redeemable preferred stock ($.01 par value, 10,000,000 shares authorized)
consists of the following:
December 31, March 31,
2000 2001
------------ ---------
(In thousands of
dollars)
12 3/4% Senior Exchangeable Preferred Stock; shares
issued:
December 31, 2000--257,067 and March 31, 2001--265,261
(stated at mandatory redemption and aggregate
liquidation value)................................... $258,433 $266,670
8 1/4% Cumulative Convertible Redeemable Preferred
Stock; shares issued:
200,000 (stated net of unamortized value of warrants;
mandatory redemption and aggregate liquidation value
of $200,000)......................................... 195,383 195,486
6.25% Convertible Preferred Stock; shares issued:
8,050,000 (stated net of unamortized issue costs;
mandatory redemption and aggregate liquidation value
of $402,500)......................................... 388,902 389,195
-------- --------
$842,718 $851,351
======== ========
5. Stockholders' Equity
On January 11, 2001, the Company sold shares of its common stock in an
underwritten public offering. The Company had granted the underwriters an
over-allotment option to purchase additional shares in the offering. On
January 12, 2001, the over-allotment option was partially exercised. As a
result, the Company sold a total of 13,445,200 shares of its common stock at a
price of $26.25 per share and received proceeds of $342,853,000 (after
underwriting discounts of $10,084,000). The proceeds from this offering will
be used for general corporate purposes.
6. Per Share Information
Per share information is based on the weighted-average number of common
shares outstanding during each period for the basic computation and, if
dilutive, the weighted-average number of potential common shares resulting
from the assumed conversion of outstanding stock options, warrants and
convertible preferred stock for the diluted computation.
9
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
A reconciliation of the numerators and denominators of the basic and
diluted per share computations is as follows:
Three Months
Ended March 31,
------------------
2000 2001
-------- --------
(In thousands of
dollars, except
per share
amounts)
Loss before extraordinary item......................... $(32,060) $(68,055)
Dividends on preferred stock........................... (11,493) (19,505)
-------- --------
Loss before extraordinary item applicable to common
stock for basic and diluted computations.............. (43,553) (87,560)
Extraordinary item..................................... (1,495) --
-------- --------
Net loss applicable to common stock for basic and
diluted computations.................................. $(45,048) $(87,560)
======== ========
Weighted-average number of common shares outstanding
during the period for basic and diluted computations
(in thousands)........................................ 158,566 211,195
======== ========
Per common share--basic and diluted:
Loss before extraordinary item....................... $ (0.27) $ (0.41)
Extraordinary item................................... (0.01) --
-------- --------
Net loss............................................. $ (0.28) $ (0.41)
======== ========
The calculations of common shares outstanding for the diluted computations
exclude the following potential common shares as of March 31, 2001: (1)
options to purchase 21,394,339 shares of common stock at exercise prices
ranging from $-0- to $39.75 per share, (2) warrants to purchase 639,990 shares
of common stock at an exercise price of $7.50 per share, (3) warrants to
purchase 1,000,000 shares of common stock at an exercise price of $26.875 per
share, (4) shares of the Company's 8 1/4% Cumulative Convertible Redeemable
Preferred Stock which are convertible into 7,441,860 shares of common stock
and (5) shares of the Company's 6.25% Convertible Preferred Stock which are
convertible into 10,915,254 shares of common stock. The inclusion of such
potential common shares in the diluted per share computations would be
antidilutive since the Company incurred net losses for all periods presented.
7. Contingencies
The Company is involved in various claims, lawsuits and proceedings arising
in the ordinary course of business. While there are uncertainties inherent in
the ultimate outcome of such matters and it is impossible to presently
determine the ultimate costs that may be incurred, management believes the
resolution of such uncertainties and the incurrence of such costs should not
have a material adverse effect on the Company's consolidated financial
position or results of operations.
8. Operating Segments
The measurement of profit or loss currently used to evaluate the results of
operations for the Company and its operating segments is earnings before
interest, taxes, depreciation and amortization ("EBITDA"). The Company defines
EBITDA as operating income (loss) plus depreciation and amortization, non-cash
general and administrative compensation charges and restructuring charges.
EBITDA is not intended as an alternative measure of operating results or cash
flow from operations (as determined in accordance with generally accepted
accounting principles), and the Company's measure of EBITDA may not be
comparable to similarly titled
10
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
measures of other companies. There are no significant revenues resulting from
transactions between the Company's operating segments.
The financial results for the Company's operating segments are as follows:
Three Months Ended March 31, 2001
-------------------------------------------------------------------
Corporate
Crown Office Consolidated
CCUSA CCAL CCUK Atlantic and Other Total
---------- -------- ---------- -------- --------- ------------
(In thousands of dollars)
Net revenues:
Site rental and
broadcast
transmission......... $ 62,176 $ 2,990 $ 49,368 $ 19,508 $ -- $ 134,042
Network services and
other................ 60,605 -- 9,776 8,530 -- 78,911
---------- -------- ---------- -------- -------- ----------
122,781 2,990 59,144 28,038 -- 212,953
---------- -------- ---------- -------- -------- ----------
Costs of operations
(exclusive of
depreciation and
amortization).......... 66,101 1,095 32,029 13,970 -- 113,195
General and
administrative......... 16,322 1,491 1,703 2,645 3,734 25,895
Corporate development... -- -- 48 -- 3,405 3,453
---------- -------- ---------- -------- -------- ----------
EBITDA.................. 40,358 404 25,364 11,423 (7,139) 70,410
Non-cash general and
administrative
compensation charges... 531 -- 523 -- 341 1,395
Depreciation and
amortization........... 39,627 1,696 22,219 10,131 418 74,091
---------- -------- ---------- -------- -------- ----------
Operating income
(loss)................. 200 (1,292) 2,622 1,292 (7,898) (5,076)
Interest and other
income (expense)....... 874 (144) 931 15 1,416 3,092
Interest expense and
amortization of
deferred financing
costs.................. (13,467) (43) (7,035) (5,015) (41,095) (66,655)
Provision for income
taxes.................. -- -- (27) (33) -- (60)
Minority interests...... (198) 923 -- (81) -- 644
---------- -------- ---------- -------- -------- ----------
Net loss................ $ (12,591) $ (556) $ (3,509) $ (3,822) $(47,577) $ (68,055)
========== ======== ========== ======== ======== ==========
Capital expenditures.... $ 113,863 $ 486 $ 110,829 $ 26,101 $ 581 $ 251,860
========== ======== ========== ======== ======== ==========
Total assets (at period
end)................... $3,445,966 $132,461 $1,620,152 $869,866 $800,101 $6,868,546
========== ======== ========== ======== ======== ==========
11
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Three Months Ended March 31, 2000
---------------------------------------------------
Corporate
Crown Office Consolidated
CCUSA CCUK Atlantic and Other Total
------- ------- -------- --------- ------------
(In thousands of dollars)
Net revenues:
Site rental and
broadcast
transmission........... $31,370 $48,579 $13,792 $ -- $ 93,741
Network services and
other.................. 18,055 6,546 5,868 34 30,503
------- ------- ------- -------- --------
49,425 55,125 19,660 34 124,244
------- ------- ------- -------- --------
Costs of operations
(exclusive of
depreciation and
amortization)............ 19,383 27,934 8,822 49 56,188
General and
administrative........... 9,980 1,026 1,797 2,050 14,853
Corporate development..... -- 285 -- 1,786 2,071
------- ------- ------- -------- --------
EBITDA.................... 20,062 25,880 9,041 (3,851) 51,132
Non-cash general and
administrative
compensation charges..... 67 54 -- 340 461
Depreciation and
amortization............. 21,154 15,553 8,119 296 45,122
------- ------- ------- -------- --------
Operating income (loss)... (1,159) 10,273 922 (4,487) 5,549
Interest and other income
(expense)................ 776 185 471 4,272 5,704
Interest expense and
amortization of deferred
financing costs.......... (3,734) (8,285) (4,376) (25,366) (41,761)
Provision for income
taxes.................... (11) -- -- -- (11)
Minority interests........ (100) (1,303) (138) -- (1,541)
Extraordinary item........ (1,495) -- -- -- (1,495)
------- ------- ------- -------- --------
Net income (loss)......... $(5,723) $ 870 $(3,121) $(25,581) $(33,555)
======= ======= ======= ======== ========
Capital expenditures...... $66,941 $20,904 $22,235 $ 347 $110,427
======= ======= ======= ======== ========
9. Subsequent Events
CCUK Letter of Credit
In April 2001, CCUK issued a letter of credit to one of its customers in
connection with a site development agreement. The letter of credit was issued
through one of CCUSA's lenders in the amount of (Pounds)100,000,000
(approximately $141,900,000) and expires on April 16, 2002.
RaiWay S.p.A.
On April 27, 2001, a wholly owned subsidiary of the Company entered into a
Share Purchase Agreement for the acquisition of 49% of the outstanding capital
stock of RaiWay S.p.A. ("RaiWay", a corporation organized under the laws of
Italy). RaiWay is a subsidiary of RAI Radio Televisione Italiana S.p.A.
("RAI"), the Italian state-owned television and radio broadcaster. RaiWay
manages over 2,300 broadcast transmission sites across Italy. The cost of the
Company's investment in RaiWay will amount to approximately $383,820,000 in
cash, and such amount was deposited into an escrow account upon execution of
the Share Purchase Agreement. The transaction is expected to close by the end
of the third quarter of 2001, and is subject to approval by the Italian
regulatory authorities. The Company will account for its investment in RaiWay
utilizing the equity method of accounting. The Share Purchase Agreement
contemplates that the Company may transfer up to 5% of its shares in RaiWay to
Poste Italiana S.p.A. ("Poste"), the Italian state-owned post office service.
Long-term Debt
On May 10, 2001, the Company issued $450,000,000 aggregate principal amount
of its 9 3/8% Senior Notes for proceeds of $441,000,000 (after underwriting
discounts of $9,000,000). The proceeds from the sale of these securities will
be used to fund the initial interest payments on the 9 3/8% Senior Notes and
for general corporate purposes. Semi-annual interest payments for the 9 3/8%
Senior Notes are due on each February 1 and August 1, commencing on August 1,
2001. The maturity date of the 9 3/8% Senior Notes is August 1, 2011.
12
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion is intended to assist in understanding our
consolidated financial condition as of March 31, 2001 and our consolidated
results of operations for the three-month periods ended March 31, 2000 and
2001. The statements in this discussion regarding the industry outlook, our
expectations regarding the future performance of our businesses and the other
nonhistorical statements in this discussion are forward-looking statements.
These forward-looking statements are subject to numerous risks and
uncertainties, including but not limited to the uncertainties relating to
decisions on capital expenditures to be made in the future by wireless
carriers and broadcasters. This discussion should be read in conjunction with
the response to Part I, Item 1 of this report and the consolidated financial
statements of the Company, including the related notes, and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included in the Form 10-K. Any capitalized terms used but not defined in this
Item have the same meaning given to them in the Form 10-K.
Results of Operations
During 2000 we completed the transactions with BellSouth, BellSouth DCS and
GTE. Additionally, during 2000 Crown Atlantic acquired the Frontier towers
from Bell Atlantic Mobile, and CCAL completed the substantial portion of the
transaction with Cable & Wireless Optus. Results of operations of these
acquired towers are included in our consolidated financial statements for the
periods subsequent to the respective dates of acquisition. As such, our
results of operations for the three months ended March 31, 2000 are not
comparable to the results of operations for the three months ended March 31,
2001.
The following information is derived from our historical Consolidated
Statements of Operations for the periods indicated.
Three Months Three Months
Ended March 31, Ended March 31,
2000 2001
------------------ ------------------
Percent Percent
of Net of Net
Amount Revenues Amount Revenues
-------- -------- -------- --------
(In thousands of dollars)
Net revenues:
Site rental and broadcast
transmission........................ $ 93,741 75.4% $134,042 62.9%
Network services and other........... 30,503 24.6 78,911 37.1
-------- ----- -------- -----
Total net revenues................. 124,244 100.0 212,953 100.0
-------- ----- -------- -----
Operating expenses:
Costs of operations:
Site rental and broadcast
transmission........................ 40,287 43.0 57,739 43.1
Network services and other........... 15,901 52.1 55,456 70.3
-------- --------
Total costs of operations.......... 56,188 45.2 113,195 53.2
General and administrative........... 14,853 12.0 25,895 12.2
Corporate development................ 2,071 1.7 3,453 1.6
Non-cash general and administrative
compensation charges................ 461 0.4 1,395 0.6
Depreciation and amortization........ 45,122 36.3 74,091 34.8
-------- ----- -------- -----
Operating income (loss)................ 5,549 4.4 (5,076) (2.4)
Other income (expense):
Interest and other income (expense).. 5,704 4.6 3,092 1.5
Interest expense and amortization of
deferred financing costs............ (41,761) (33.6) (66,655) (31.3)
-------- ----- -------- -----
Loss before income taxes, minority
interests and extraordinary item...... (30,508) (24.6) (68,639) (32.2)
Provision for income taxes............. (11) -- (60) (0.1)
Minority interests..................... (1,541) (1.2) 644 0.3
-------- ----- -------- -----
Loss before extraordinary item......... (32,060) (25.8) (68,055) (32.0)
Extraordinary item--loss on early
extinguishment of debt................ (1,495) (1.2) -- --
-------- ----- -------- -----
Net loss............................... $(33,555) (27.0)% $(68,055) (32.0)%
======== ===== ======== =====
13
Comparison of Three Months Ended March 31, 2001 and 2000
Consolidated revenues for the three months ended March 31, 2001 were $213.0
million, an increase of $88.7 million from the three months ended March 31,
2000. This increase was primarily attributable to:
(1) a $40.3 million, or 43.0%, increase in site rental and broadcast
transmission revenues, of which $0.8 million was attributable to CCUK,
$5.7 million was attributable to Crown Atlantic, $3.0 million was
attributable to CCAL and $30.8 million was attributable to CCUSA,
(2) a $42.6 million increase in network services and other revenues from
CCUSA,
(3) a $3.2 million increase in network services and other revenues from
CCUK, and
(4) a $2.7 million increase in network services and other revenues from
Crown Atlantic.
Costs of operations for the three months ended March 31, 2001 were $113.2
million, an increase of $57.0 million from the three months ended March 31,
2000. This increase was primarily attributable to:
(1) a $17.5 million increase in site rental and broadcast transmission
costs, of which $0.3 million was attributable to CCUK, $2.4 million was
attributable to Crown Atlantic, $1.1 million was attributable to CCAL
and $13.7 million was attributable to CCUSA,
(2) a $33.0 million increase in network services costs related to CCUSA,
(3) a $3.8 million increase in network services costs from CCUK, and
(4) a $2.8 million increase in network services costs from Crown Atlantic.
Costs of operations for site rental and broadcast transmission as a percentage
of site rental and broadcast transmission revenues were 43.1% for the three
months ended March 31, 2001 as compared to 43.0% for the three months ended
March 31, 2000, as lower margins attributable to the CCUSA operations were
largely offset by higher margins from the CCAL and Crown Atlantic operations.
Costs of operations for network services and other as a percentage of network
services and other revenues increased to 70.3% for the three months ended
March 31, 2001 from 52.1% for the three months ended March 31, 2000, primarily
due to lower margins from the CCUSA, CCUK and Crown Atlantic operations.
General and administrative expenses for the three months ended March 31,
2001 were $25.9 million, an increase of $11.0 million from the three months
ended March 31, 2000. This increase was primarily attributable to:
(1) a $6.3 million increase in expenses related to the CCUSA operations,
(2) a $1.7 million increase in expenses at our corporate office,
(3) a $0.8 million increase in expenses at Crown Atlantic,
(4) a $0.7 million increase in expenses at CCUK, and
(5) $1.5 million in expenses at CCAL.
General and administrative expenses as a percentage of revenues were 12.2% for
the three months ended March 31, 2001 as compared to 12.0% for the three
months ended March 31, 2000 because of higher overhead costs as a percentage
of revenues for CCUK, CCAL and Crown Atlantic, largely offset by lower
overhead costs as a percentage of revenues for CCUSA.
Corporate development expenses for the three months ended March 31, 2001
were $3.5 million, compared to $2.1 million for the three months ended March
31, 2000. This increase was primarily attributable to an increase in expenses
at our corporate office.
For the three months ended March 31, 2001, we recorded non-cash general and
administrative compensation charges of $1.4 million related to the issuance of
stock and stock options to certain employees and executives, compared to $0.5
million for the three months ended March 31, 2000.
14
Depreciation and amortization for the three months ended March 31, 2001 was
$74.1 million, an increase of $29.0 million from the three months ended March
31, 2000. This increase was primarily attributable to:
(1) a $6.7 million increase in depreciation and amortization related to the
property and equipment and goodwill from CCUK,
(2) a $2.0 million increase in depreciation and amortization related to the
property and equipment and goodwill from Crown Atlantic,
(3) $1.7 million of depreciation and amortization related to property and
equipment from CCAL, and
(4) an $18.5 million increase in depreciation and amortization related to
the property and equipment, goodwill and other intangible assets
related to the CCUSA operations.
Interest and other income (expense) for the three months ended March 31,
2001 resulted primarily from:
(1) the investment of the net proceeds from our recent offerings, partially
offset by
(2) costs incurred in connection with unsuccessful acquisition attempts.
Interest expense and amortization of deferred financing costs for the three
months ended March 31, 2001 was $66.7 million, an increase of $24.9 million,
or 59.6%, from the three months ended March 31, 2000. This increase was
primarily attributable to interest on indebtedness at CCUSA, CCUK and Crown
Atlantic, and interest on the 10 3/4% senior notes.
Minority interests represent the minority shareholder's 20% interest in
CCUK's operations (prior to July 2000), the minority partner's 43.1% interest
in Crown Atlantic's operations, the minority partner's 18.0% interest in the
operations of the GTE joint venture and the minority shareholder's 33.3%
interest in the CCAL operations.
The extraordinary loss on early extinguishment of debt for the three months
ended March 31, 2000 represents the write-off of unamortized deferred
financing costs related to CCUSA's prior credit facility.
Liquidity and Capital Resources
Our business strategy contemplates substantial capital expenditures:
(1) in connection with the expansion of our tower portfolios by partnering
with wireless carriers to assume ownership or control of their existing
towers, by pursuing build-to-suit opportunities, and by pursuing other
tower acquisition opportunities, and
(2) to acquire existing transmission networks globally as opportunities
arise.
Since its inception, CCIC has generally funded its activities, other than
acquisitions and investments, through excess proceeds from contributions of
equity capital and cash provided by operations. CCIC has financed acquisitions
and investments with the proceeds from equity contributions, borrowings under
our senior credit facilities, issuances of debt securities and the issuance of
promissory notes to sellers. Since its inception, CCUK has generally funded
its activities, other than the acquisition of the BBC home service
transmission business, through cash provided by operations and borrowings
under CCUK's credit facility. CCUK financed the acquisition of the BBC home
service transmission business with the proceeds from equity contributions and
the issuance of the CCUK bonds.
For the three months ended March 31, 2000 and 2001, our net cash provided
by operating activities was $36.9 million and $44.9 million, respectively. For
the three months ended March 31, 2000 and 2001, our net cash provided by
financing activities was $324.9 million and $443.7 million, respectively. Our
primary financing-related activities in the first five months of 2001 included
the following:
15
January 2001 Offering
On January 11, 2001, we sold shares of our common stock in an underwritten
public offering. We had granted the underwriters an over-allotment option to
purchase additional shares in the offering. On January 12, 2001, the over-
allotment option was partially exercised. As a result, we sold a total of
13,445,200 shares of our common stock at a price of $26.25 per share and
received proceeds of $342.9 million (after underwriting discounts of $10.1
million). The proceeds from this offering will be used for general corporate
purposes.
Crown Atlantic Credit Facility
In March 2001, the Crown Atlantic credit facility was amended to increase
the available borrowings to $345.0 million. Under the amended facility, the
amount of available borrowings will begin to decrease on March 31, 2003.
During the first quarter of 2001, Crown Atlantic borrowed an additional $31.0
million under the Crown Atlantic credit facility for general corporate
purposes.
May 2001 Debt Offering
On May 10, 2001, we issued $450.0 million aggregate principal amount of our
9 3/8% senior notes for proceeds of $441.0 million (after underwriting
discounts of $9.0 million). The proceeds from the sale of these securities
will be used to fund the initial interest payments on the 9 3/8% senior notes
and for general corporate purposes.
Capital expenditures were $251.9 million for the three months ended March
31, 2001, of which $0.6 million were for CCIC, $113.9 million were for CCUSA,
$26.1 million were for Crown Atlantic, $110.8 million were for CCUK and $0.5
million were for CCAL. We anticipate that we will build, through the end of
2001, approximately 1,000 towers in the United States at a cost of
approximately $230.0 million and approximately 500 towers in the United
Kingdom at a cost of approximately $100.0 million. We also expect to spend
approximately $120.0 million in the United States to improve the structural
capacity of our domestic towers.
In addition to capital expenditures in connection with build-to-suits, we
have applied a significant amount of capital to finance the cash consideration
paid in connection with an investment in Italy. On April 27, 2001, we entered
into a Share Purchase Agreement for the acquisition of 49% of the outstanding
capital stock of RaiWay S.p.A. ("RaiWay"). RaiWay is a subsidiary of RAI Radio
Televisione Italiana S.p.A. ("RAI"), the Italian state-owned television and
radio broadcaster. RaiWay manages over 2,300 broadcast transmission sites
across Italy. The cost of our investment in RaiWay will amount to
approximately $383.8 million in cash, and such amount was deposited into an
escrow account upon execution of the Share Purchase Agreement. The transaction
is expected to close by the end of the third quarter of 2001, and is subject
to approval by the Italian regulatory authorities. We will account for our
investment in RaiWay utilizing the equity method of accounting. The Share
Purchase Agreement contemplates that we may transfer up to 5% of our shares in
RaiWay to Poste Italiana S.p.A. ("Poste"), the Italian state-owned post office
service.
We expect that the completion of the recent transactions and the execution
of our new tower build, or build-to-suit program, will have a material impact
on our liquidity. We expect that once integrated, these transactions will have
a positive impact on liquidity, but will require some period of time to offset
the initial adverse impact on liquidity. In addition, we believe that as new
towers become operational and we begin to add tenants, they should result in a
long-term increase in liquidity.
To fund the execution of our business strategy, including the recent
transactions described above and the construction of new towers that we have
agreed to build, we expect to use the net proceeds of our recent offerings and
borrowings available under our U.S. and U.K. credit facilities. We will have
additional cash needs to fund our operations in the future. We may also have
additional cash needs in the future if additional tower acquisitions or build-
to-suit opportunities arise. Some of the opportunities that we are currently
pursuing could require significant additional capital. If we do not otherwise
have cash available, or borrowings under our credit facilities have otherwise
been utilized, when our cash need arises, we would be forced to seek
additional debt or equity financing or to forego the opportunity. In the event
we determine to seek additional debt or equity financing, there can be no
assurance that any such financing will be available, on commercially
acceptable terms or at all, or permitted by the terms of our existing
indebtedness.
16
As of March 31, 2001, we had consolidated cash and cash equivalents of
$716.9 million (including $47.1 million at CCUSA, $75.4 million at CCUK, $13.7
million at Crown Atlantic and $2.6 million at CCAL), consolidated long-term
debt of $2,701.2 million, consolidated redeemable preferred stock of $851.4
million and consolidated stockholders' equity of $2,666.8 million.
As of May 10, 2001, Crown Atlantic had unused borrowing availability under
its amended credit facility of approximately $75.0 million, and CCUK had
unused borrowing availability under its credit facility of approximately
(Pounds)35.0 million ($49.7 million). As of May 10, 2001, our subsidiaries had
approximately $394.0 million of unused borrowing availability under the 2000
credit facility. Our various credit facilities require our subsidiaries to
maintain certain financial covenants and place restrictions on the ability of
our subsidiaries to, among other things, incur debt and liens, pay dividends,
make capital expenditures, undertake transactions with affiliates and make
investments. These facilities also limit the ability of the borrowing
subsidiaries to pay dividends to CCIC.
If we are unable to refinance our subsidiary debt or renegotiate the terms
of such debt, we may not be able to meet our debt service requirements,
including interest payments on the notes, in the future. Our 9% senior notes,
our 9 1/2% senior notes, our 10 3/4% senior notes and our 9 3/8% senior notes
require annual cash interest payments of approximately $16.2 million, $11.9
million, $53.8 million and $42.2 million, respectively. Prior to November 15,
2002, May 15, 2004 and August 1, 2004, the interest expense on our 10 5/8%
discount notes, our 10 3/8% discount notes and our 11 1/4% discount notes,
respectively, will be comprised solely of the amortization of original issue
discount. Thereafter, the 10 5/8% discount notes, the 10 3/8% discount notes
and the 11 1/4% discount notes will require annual cash interest payments of
approximately $26.7 million, $51.9 million and $29.3 million, respectively.
Prior to December 15, 2003, we do not expect to pay cash dividends on our
exchangeable preferred stock or, if issued, cash interest on the exchange
debentures. Thereafter, assuming all dividends or interest have been paid-in-
kind, our exchangeable preferred stock or, if issued, the exchange debentures
will require annual cash dividend or interest payments of approximately $47.8
million. Annual cash interest payments on the CCUK bonds are (Pounds)11.25
million ($16.0 million). In addition, our various credit facilities will
require periodic interest payments on amounts borrowed thereunder, which
amounts could be substantial.
As a holding company, CCIC will require distributions or dividends from its
subsidiaries, or will be forced to use capital raised in debt and equity
offerings, to fund its debt obligations, including interest payments on the
cash-pay notes and eventually the 10 5/8% discount notes, the 10 3/8% discount
notes and the 11 1/4% discount notes. The terms of the indebtedness of our
subsidiaries significantly limit their ability to distribute cash to CCIC. As
a result, we will be required to apply a portion of the net proceeds from the
recent debt offerings to fund interest payments on the cash-pay notes. If we
do not retain sufficient funds from the offerings or any future financing, we
may not be able to make our interest payments on the cash-pay notes.
Our ability to make scheduled payments of principal of, or to pay interest
on, our debt obligations, and our ability to refinance any such debt
obligations, will depend on our future performance, which, to a certain
extent, is subject to general economic, financial, competitive, legislative,
regulatory and other factors that are beyond our control. We anticipate that
we may need to refinance all or a portion of our indebtedness on or prior to
its scheduled maturity. There can be no assurance that we will be able to
effect any required refinancings of our indebtedness on commercially
reasonable terms or at all.
Reporting Requirements Under the Indentures Governing the Company's Debt
Securities (the "Indentures") and the Certificate of Designations
Governing the Company's 12 3/4% Senior Exchangeable Preferred Stock the
"Certificate")
The following information (as such capitalized terms are defined in the
Indentures and the Certificate) is presented solely as a requirement of the
Indentures and the Certificate; such information is not intended as an
alternative measure of financial position, operating results or cash flow from
operations (as determined in accordance with generally accepted accounting
principles). Furthermore, our measure of the following information may not be
comparable to similarly titled measures of other companies.
17
Summarized financial information for (1) CCIC and our Restricted
Subsidiaries and (2) our Unrestricted Subsidiaries is as follows:
March 31, 2001
----------------------------------------------------
Company and
Restricted Unrestricted Consolidation Consolidated
Subsidiaries Subsidiaries Eliminations Total
------------ ------------ ------------- ------------
(In thousands of dollars)
Cash and cash
equivalents............. $ 576,246 $ 140,695 $ -- $ 716,941
Other current assets..... 266,764 107,545 -- 374,309
Property and equipment,
net..................... 3,086,113 1,364,509 -- 4,450,622
Investments.............. 100,000 -- -- 100,000
Investments in
Unrestricted
Subsidiaries............ 1,609,035 -- (1,609,035) --
Goodwill and other
intangible assets, net.. 186,332 909,198 -- 1,095,530
Other assets, net........ 111,504 19,640 -- 131,144
---------- ---------- ----------- ----------
$5,935,994 $2,541,587 $(1,609,035) $6,868,546
========== ========== =========== ==========
Current liabilities...... $ 206,904 $ 191,118 $ -- $ 398,022
Long-term debt........... 2,112,354 588,821 -- 2,701,175
Other liabilities........ 21,521 77,936 -- 99,457
Minority interests....... 77,107 74,677 -- 151,784
Redeemable preferred
stock................... 851,351 -- -- 851,351
Stockholders' equity..... 2,666,757 1,609,035 (1,609,035) 2,666,757
---------- ---------- ----------- ----------
$5,935,994 $2,541,587 $(1,609,035) $6,868,546
========== ========== =========== ==========
Three Months Ended March 31, 2001
--------------------------------------
Company and
Restricted Unrestricted Consolidated
Subsidiaries Subsidiaries Total
------------ ------------ ------------
(In thousands of dollars)
Net revenues........................... $125,771 $ 87,182 $212,953
Costs of operations (exclusive of
depreciation and amortization)........ 67,196 45,999 113,195
General and administrative............. 21,547 4,348 25,895
Corporate development.................. 3,405 48 3,453
Non-cash general and administrative
compensation charges.................. 872 523 1,395
Depreciation and amortization.......... 41,741 32,350 74,091
-------- -------- --------
Operating income (loss)................ (8,990) 3,914 (5,076)
Interest and other income (expense).... 1,577 1,515 3,092
Interest expense and amortization of
deferred financing costs.............. (54,605) (12,050) (66,655)
Provision for income taxes............. -- (60) (60)
Minority interests..................... 725 (81) 644
-------- -------- --------
Net loss............................... $(61,293) $ (6,762) $(68,055)
======== ======== ========
18
Tower Cash Flow and Adjusted Consolidated Cash Flow for CCIC and our
Restricted Subsidiaries is as follows under (1) the indenture governing the 10
5/8% Discount Notes and the Certificate (the "1997 and 1998 Securities") and
(2) the indentures governing the 10 3/8% Discount Notes, the 9% Senior Notes,
the 11 1/4% Discount Notes, the 9 1/2% Senior Notes and the 10 3/4% Senior
Notes (the "1999 and 2000 Securities"):
1997 and 1998 1999 and 2000
Securities Securities
------------- -------------
(In thousands of dollars)
Tower Cash Flow, for the three months ended March
31, 2001......................................... $ 32,098 $ 32,098
======== ========
Consolidated Cash Flow, for the twelve months
ended March 31, 2001............................. $119,838 $131,163
Less: Tower Cash Flow, for the twelve months ended
March 31, 2001................................... (104,359) (104,359)
Plus: four times Tower Cash Flow, for the three
months ended March 31, 2001...................... 128,392 128,392
-------- --------
Adjusted Consolidated Cash Flow, for the twelve
months ended March 31, 2001...................... $143,871 $155,196
======== ========
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As a result of our international operating, investing and financing
activities, we are exposed to market risks, which include changes in foreign
currency exchange rates and interest rates which may adversely affect our
results of operations and financial position. In attempting to minimize the
risks and/or costs associated with such activities, we seek to manage exposure
to changes in interest rates and foreign currency exchange rates where
economically prudent to do so.
Certain of the financial instruments we have used to obtain capital are
subject to market risks from fluctuations in market interest rates. The
majority of our financial instruments, however, are long-term fixed interest
rate notes and debentures. Therefore, fluctuations in market interest rates of
1% in 2001 would not have a material effect on our consolidated financial
results.
The majority of our foreign currency transactions are denominated in the
British pound sterling or the Australian dollar, which are the functional
currencies of CCUK and CCAL, respectively. As a result of CCUK's and CCAL's
transactions being denominated and settled in such functional currencies, the
risks associated with currency fluctuations are generally limited to foreign
currency translation adjustments. We do not currently hedge against foreign
currency translation risks and believe that foreign currency exchange risk is
not significant to our operations.
19
PART II--OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
11.1 Computation of Net Loss Per Common Share
12.1 Computation of Ratios of Earnings to Fixed Charges and Earnings to
Combined Fixed Charges and Preferred Stock Dividends
(b) Reports on Form 8-K:
The Registrant filed a Current Report on Form 8-K dated January 16, 2001
and filed with the Securities and Exchange Commission on January 16, 2001,
reporting under Item 7 thereof certain unaudited pro forma condensed
consolidated financial statements of the Company.
The Registrant filed a Current Report on Form 8-K dated January 12, 2001
and filed with the Securities and Exchange Commission on January 16, 2001,
reporting under Item 5 thereof that the Company had priced a public
offering of 12,000,000 shares of Common Stock, with an over-allotment
option of 1,800,000 shares of Common Stock.
20
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CROWN CASTLE INTERNATIONAL CORP.
Date: May 11, 2001 /s/ W. Benjamin Moreland
By: _________________________________
W. Benjamin Moreland
Senior Vice President, Chief
Financial Officer and
Treasurer (Principal Financial
Officer)
Date: May 11, 2001 /s/ Wesley D. Cunningham
By: _________________________________
Wesley D. Cunningham
Senior Vice President, Chief
Accounting
Officer and Corporate Controller
(Principal Accounting Officer)
21