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Crown Castle Reports Full Year 2019 Results, Updates Outlook for Full Year 2020, and Announces Restatement of Financial Results

HOUSTON, Feb. 26, 2020 (GLOBE NEWSWIRE) -- Crown Castle International Corp. (CCI) ("Crown Castle") today reported results for the fourth quarter and full year ended December 31, 2019, updated its full year 2020 Outlook, and announced the restatement of previously-issued financial statements.

(in millions, except per share amounts) Midpoint of
Current Full
Year
2020
Outlook(c)
Full Year 2019
Actual(d)
Full Year 2018
Actual,
as restated(d)
Full Year 2019
to Full Year
2020 Outlook
% Change
Full Year 2018
to Full Year
2019 %
Change(d)
Site rental revenues $5,360 $5,098 $4,800 +5% +6%
Net income (loss) $1,038 $863 $625 +20% +38%
Net income (loss) per share—diluted(a) $2.32 $1.80 $1.23 +29% +46%
Adjusted EBITDA(b) $3,502 $3,304 $3,095 +6% +7%
AFFO(a)(b) $2,595 $2,376 $2,228 +9% +7%
AFFO per share(a)(b) $6.12 $5.69 $5.37 +8% +6%

(a) Attributable to CCIC common stockholders.
(b) See "Non-GAAP Financial Measures, Segment Measures and Other Calculations" included herein for further information and reconciliation of this non-GAAP financial measure to net income (loss).
(c) Represents no change from the midpoint of full year 2020 Outlook issued on October 16, 2019 ("Previous 2020 Outlook") other than the impact of the restatement described in  "Expected Impact of the Restatement of Previously-Issued Financial Statements."
(d) Results are preliminary and unaudited.  See "Expected Impact of the Restatement of Previously-Issued Financial Statements" included herein for more information regarding the Company's restatement.

"In 2019, we experienced our highest level of tower leasing activity in more than a decade as the continued growth in mobile data demand is driving our customers to make significant investments in their existing 4G networks, while they are also positioning their businesses for 5G," stated Jay Brown, Crown Castle’s Chief Executive Officer.  "We believe our ability to offer towers, small cells and fiber solutions, which are all integral components of communications networks and are shared among multiple tenants, provides us the best opportunity to generate significant growth while delivering high returns for our shareholders.  We believe that the U.S. represents the best market in the world for communications infrastructure ownership, and we are pursuing that compelling opportunity with our comprehensive offering.

"Further, we delivered another strong year of results for full year 2019 despite a noticeable slowdown in activity in the fourth quarter of 2019.  We anticipate that this slowdown is temporary in nature and see a return to significant activity in the second half of this year.  We believe the industry fundamentals are improving further with the competitive landscape for our existing customers coming into focus, the prospect of new customers looking for access to our tower and fiber infrastructure at scale, and additional wireless spectrum auctions on the horizon.  As we look forward to what will likely be another decade-long investment cycle for our customers with the deployment of 5G, I am excited about the opportunity we see for Crown Castle to deliver long-term value to our shareholders while delivering dividend per share growth of 7% to 8% per year."

DISCUSSION OF TOWER INSTALLATION SERVICES REVENUES
In connection with our year-end procedures and after receiving the previously disclosed subpoena from the U.S. Securities and Exchange Commission ("SEC"), we engaged in a review internally, and in consultation with our independent auditors, PricewaterhouseCoopers LLP ("PwC"), of our accounting policies for our tower installation services.  Following that review, we decided with PwC to seek input from the SEC's Office of the Chief Accountant ("OCA") regarding whether a portion of our services revenues should be recognized over the term of the associated lease.  The OCA is an office of the SEC that provides guidance to registrants and auditors regarding the application of accounting standards and financial disclosure requirements.  The OCA provided advice on the specific revenue recognition question we submitted to them for their review and did not review or address any other aspect of our accounting policies.  Our consultation with the OCA was not part of the previously disclosed SEC investigation, which is still ongoing, or the related subpoena, which primarily related to certain of our long-standing capitalization and expense policies for tenant upgrades and installations in our services business.

Our long-standing historical practice with respect to services revenues had been to recognize the entirety of the transaction price from our tower installation services as services revenues upon the completion of the installation services.  After consultation with the OCA, we concluded that our historical practice was not acceptable under GAAP.  Instead, a portion of the transaction price for our installation services, specifically the amounts associated with permanent improvements recorded as fixed assets, represents a modification to the leases to which the services work is related and, therefore, should be recognized on a ratable basis as site rental revenues over the associated estimated remaining lease term.  Cumulatively, over the term of customer lease contracts, we will recognize the same amount of total revenue and total gross margin as our historical practice.

The result of recognizing a portion of the transaction price on a ratable basis will be an increase to site rental revenues and site rental gross margins that offsets, over time, the decreases to services revenues and services gross margins, in both historical and future periods.  As a result, the preliminary impact to each of Net Income, Adjusted EBITDA and AFFO is a decrease of approximately $100 million for full year 2019 actuals and a decrease of approximately $90 million to our Previous 2020 Outlook.  We have provided tables in this release to reconcile the changes.  Recognizing a portion of the transaction price on a ratable basis for tower installation services will have no impact on our net cash flows, business operations or expected dividend per share growth.

Due to the identified errors described above, we will restate our financial statements for the years ended December 31, 2018 and 2017, and unaudited financial information for the quarterly and year-to-date periods in the year ended December 31, 2018 and for the first three quarters in the year ended December 31, 2019.   Restated financial statements and financial information for the periods in question will be reflected in Crown Castle's Annual Report on Form 10-K for the year ended December 31, 2019 ("2019 10-K"), which Crown Castle expects to file within the prescribed timeline for such report, including any available extension if needed to finalize the consolidated financial statements and disclosures and complete the associated audit work.

Additional information relating to the restatement is provided in the section of this release titled, "Expected Impact of the Restatement of Previously-Issued Financial Statements."

RESULTS FOR THE YEAR
The table below sets forth select preliminary unaudited financial results for the year ended December 31, 2019 that reflect the restatement described above.

(in millions, except per share amounts) Full Year
2019
Actual(c)(d)
Midpoint of
Previous
2019 Outlook(e)
Actual
Compared to
Previous
Outlook
Effect of
Restatement(c)
Site rental revenues $5,098 $4,965 +$133 +$110
Net income (loss) $863 $926 -$63 -$100
Net income (loss) per share—diluted(a) $1.80 $1.95 -$0.15 -$0.24
Adjusted EBITDA(b) $3,304 $3,408 -$104 -$100
AFFO(a)(b) $2,376 $2,479 -$103 -$100
AFFO per share(a)(b) $5.69 $5.94 -$0.25 -$0.24

(a) Attributable to CCIC common stockholders.
(b) See "Non-GAAP Financial Measures, Segment Measures and Other Calculations" included herein for further information and reconciliation of this non-GAAP financial measure to net income (loss).

(c) Results are preliminary and unaudited.  See "Expected Impact of the Restatement of Previously-Issued Financial Statements" included herein for more information regarding the Company's restatement.
(d) Includes restatement of nine months ended September 30, 2019.
(e) As issued on October 16, 2019.

HIGHLIGHTS FROM THE YEAR

  • Site rental revenues.  Site rental revenues grew approximately 6.2%, or $298 million, from full year 2018 to full year 2019, inclusive of approximately $290 million in Organic Contribution to Site Rental Revenues and a $9 million increase in straight-lined revenues.  The $290 million in Organic Contribution to Site Rental Revenues represents approximately 6.1% growth, comprised of approximately 9.9% growth from new leasing activity and contracted tenant escalations, net of approximately 3.8% from tenant non-renewals.
  • Capital Expenditures.  Capital expenditures during the year were $2.1 billion, comprised of $53 million of land purchases, $117 million of sustaining capital expenditures, $1.9 billion of discretionary capital expenditures and $9 million of integration capital expenditures.  The discretionary capital expenditures included approximately $1.4 billion attributable to Fiber and approximately $454 million attributable to Towers.
  • Common stock dividend.  During 2019, Crown Castle paid common stock dividends of approximately $1.9 billion in the aggregate, or $4.575 per common share, an increase of approximately 7% on a per share basis compared to the same period a year ago.

"Our solid 2019 results and 2020 Outlook, which remains unchanged with the exception of the impact of the restatement we disclosed today, reflect the strong underlying demand for our communications infrastructure assets and our ability to translate growth in data demand into growth in dividends per share," stated Dan Schlanger, Crown Castle's Chief Financial Officer.  "Uncertainty around the outcome of the pending merger between T-Mobile and Sprint led to lower activity levels in the fourth quarter of 2019 that we believe will continue through the first quarter of 2020.   However, we expect activity levels across the industry to increase throughout the year and potentially beyond as we believe our customers will accelerate their investments in 5G.  As a result, we expect our financial performance in 2020 will be more back-end loaded than we previously expected, particularly for services contribution.  Against that backdrop, we are excited about the growth trends across our business and the long-term opportunity in front of Crown Castle as we continue to target 7% to 8% annual growth in dividends per share."

OUTLOOK

This Outlook section contains forward-looking statements, and actual results may differ materially.  Information regarding potential risks which could cause actual results to differ from the forward-looking statements herein is set forth below and in Crown Castle's filings with the SEC.  As indicated in the footnotes to the table below, the only changes to our Previous 2020 Outlook are a result of the impact of the restatement as described in "Expected Impact of the Restatement of Previously-Issued Financial Statements."
The following table sets forth Crown Castle's current Outlook for full year 2020:

(in millions) Full Year 2020
Site rental revenues $5,337 to $5,382
Site rental cost of operations(a) $1,482 to $1,527
Net income (loss) $998 to $1,078
Adjusted EBITDA(b) $3,479 to $3,524
Interest expense and amortization of deferred financing costs(c) $691 to $736
FFO(b)(d) $2,449 to $2,494
AFFO(b)(d) $2,572 to $2,617
Weighted-average common shares outstanding - diluted 424

(a) Exclusive of depreciation, amortization and accretion.
(b) See reconciliation of this non-GAAP financial measure to net income (loss) and definition included herein.
(c)See reconciliation of "components of current outlook for interest expense and amortization of deferred financing costs" herein for a discussion of non-cash interest expense.
(d) Attributable to CCIC common stockholders.

Full Year 2020 Outlook
The table below compares midpoint of the current full year 2020 Outlook and the midpoint of our Previous 2020 Outlook for select metrics.

(in millions, except per share amounts) Midpoint of
Current Full
Year
2020 Outlook
Midpoint of
Previous
Full Year
2020 Outlook
Current
Compared to
Previous
Outlook
Effect of
Restatement(c)
Site rental revenues $5,360 $5,219 +$141 +$141
Net income (loss) $1,038 $1,128 -$90 -$90
Net income (loss) per share—diluted(a) $2.32 $2.53 -$0.21 -$0.21
Adjusted EBITDA(b) $3,502 $3,592 -$90 -$90
AFFO(a)(b) $2,595 $2,685 -$90 -$90
AFFO per share(a)(b) $6.12 $6.33 -$0.21 -$0.21

(a) Attributable to CCIC common stockholders.
(b) See reconciliation of this non-GAAP financial measure to net income (loss) and definition included herein.
(c) See "Expected Impact of the Restatement of Previously-Issued Financial Statements" included herein for more information regarding the Company's restatement.

  • The full year 2020 Outlook assumes the proposed merger between T-Mobile and Sprint closes at the end of the first quarter 2020.
  • The 2020 Outlook also reflects the impact of the assumed conversion of preferred stock in August 2020.  This conversion is expected to increase the diluted weighted average common shares outstanding for 2020 by approximately 6 million and reduce the annual preferred stock dividends paid by approximately $28 million when compared to 2019.
  • The chart below reconciles the components of expected growth in site rental revenues from 2019 to 2020 of $250 million to $295 million, inclusive of expected Organic Contribution to Site Rental Revenues during 2020 of $295 million to $335 million.
    Chart 1: https://www.globenewswire.com/NewsRoom/AttachmentNg/41d94009-0f48-47d0-9fcf-ad26bbdb2697 
  • New leasing activity is expected to contribute $395 million to $425 million to 2020 Organic Contribution to Site Rental Revenues, consisting of new leasing activity from towers of $170 million to $180 million, small cells of $65 million to $75 million, and fiber solutions of $160 million to $170 million.
  • The chart below reconciles the components of expected growth in AFFO from 2019 to 2020 of $195 million to $240 million.
    Chart 2: https://www.globenewswire.com/NewsRoom/AttachmentNg/3cd193da-e22b-40b6-b1f1-929b7b54aa2a 
  • Additional information is available in Crown Castle's quarterly Supplemental Information Package posted in the Investors section of our website.

EXPECTED IMPACT OF THE RESTATEMENT OF PREVIOUSLY-ISSUED FINANCIAL STATEMENTS
As indicated above, we will restate our financial statements for the years ended December 31, 2018 and 2017, and unaudited financial information for the quarterly and year-to-date periods in the year ended December 31, 2018 and for the first three quarters in the year ended December 31, 2019. The expected impact of the restatement described above and in the tables in this release is preliminary and unaudited and is subject to change before we file the 2019 10-K.  We believe the restatement will not have an impact on our business operations or our net cash flows.

The tables set forth below summarize (1) the estimated effects of the restatement on historical periods and (2) the estimated effects of other adjustments to previously-issued financial statements for years prior to 2019 to correct errors relating exclusively to our Towers segment that were not material, either individually or in the aggregate, on certain of the Company's select financial results for the quarters and years ending December 31, 2019 and 2018, and the years ended December 31, 2017, 2016, and 2015.

(in millions, except per share amounts) Q1 2019(c) Q2 2019(c) Q3 2019(c) Q4 2019(c) Full Year
2019(c)
Site rental revenues $24 $26 $29 $31 $110
Services and other revenues $(41) $(55) $(57) $(57) $(210)
Net income (loss) $(17) $(29) $(28) $(26) $(100)
Net income (loss) per share—diluted(a) $(0.04) $(0.07) $(0.07) $(0.06) $(0.24)
Adjusted EBITDA(b) $(17) $(29) $(28) $(26) $(100)
AFFO(a)(b) $(17) $(29) $(28) $(26) $(100)
AFFO per share(a)(b) $(0.04) $(0.07) $(0.07) $(0.06) $(0.24)


(in millions, except per share amounts) Q1 2018(c) Q2 2018(c) Q3 2018(c) Q4 2018(c) Full Year
2018(c)
Site rental revenues $19 $20 $22 $23 $84
Services and other revenues $(33) $(30) $(34) $(36) $(133)
Net income (loss) $(13) $(9) $(11) $(13) $(46)
Net income (loss) per share—diluted(a) $(0.03) $(0.02) $(0.03) $(0.03) $(0.11)
Adjusted EBITDA(b) $(13) $(9) $(11) $(13) $(46)
AFFO(a)(b) $(13) $(9) $(11) $(13) $(46)
AFFO per share(a)(b) $(0.03) $(0.02) $(0.03) $(0.03) $(0.11)


(in millions, except per share amounts) Full Year
2017(c)
Full Year
2016(c)
Full Year
2015(c)
Site rental revenues $68 $53 $40
Services and other revenues $(166) $(122) $(111)
Net income (loss) $(77) $(49) $(68)
Net income (loss) per share—diluted(a) $(0.20) $(0.14) $(0.20)
Adjusted EBITDA(b) $(77) $(49) $(68)
AFFO(a)(b) $(77) $(49) $(68)
AFFO per share(a)(b) $(0.20) $(0.14) $(0.20)

(a) Attributable to CCIC common stockholders.
(b) See "Non-GAAP Financial Measures, Segment Measures and Other Calculations" included herein for further information and reconciliation of this non-GAAP financial measure to net income (loss).
(c) Results are preliminary and unaudited.  See "Expected Impact of the Restatement of Previously-Issued Financial Statements" included herein for more information regarding the Company's restatement.

Crown Castle has determined that the restatement of its previously issued financial statements as described above indicates the existence of one or more material weaknesses in its internal control over financial reporting and that its internal control over financial reporting and disclosure controls and procedures were ineffective as of December 31, 2019.  Crown Castle will report the material weakness(es) in its 2019 10-K and intends to create a plan of remediation to address the material weakness(es).

CONFERENCE CALL DETAILS
Crown Castle has scheduled a conference call for Thursday, February 27, 2020, at 10:30 a.m. Eastern time to discuss its fourth quarter 2019 results.  The conference call may be accessed by dialing 800-367-2403 and asking for the Crown Castle call (access code 8599522) at least 30 minutes prior to the start time.  The conference call may also be accessed live over the Internet at investor.crowncastle.com. Supplemental materials for the call have been posted on the Crown Castle website at investor.crowncastle.com.

A telephonic replay of the conference call will be available from 1:30 p.m. Eastern time on Thursday, February 27, 2020, through 1:30 p.m. Eastern time on Wednesday, May 27, 2020, and may be accessed by dialing 888-203-1112 and using access code 8599522.  An audio archive will also be available on Crown Castle's website at investor.crowncastle.com shortly after the call and will be accessible for approximately 90 days.

ABOUT CROWN CASTLE
Crown Castle owns, operates and leases more than 40,000 cell towers and approximately 80,000 route miles of fiber supporting small cells and fiber solutions across every major U.S. market.  This nationwide portfolio of communications infrastructure connects cities and communities to essential data, technology and wireless service - bringing information, ideas and innovations to the people and businesses that need them.  For more information on Crown Castle, please visit www.crowncastle.com. 

Non-GAAP Financial Measures, Segment Measures and Other Calculations

This press release includes presentations of Adjusted EBITDA, Adjusted Funds from Operations ("AFFO"), including per share amounts, Funds from Operations ("FFO"), including per share amounts, 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 non-GAAP financial measures may not be comparable to similarly titled measures of other companies, including other companies in the communications infrastructure sector or other real estate investment trusts ("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 Services and Other Gross Margin and Segment Operating Profit, which are key measures used by management to evaluate our operating segments.  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.

Our non-GAAP financial measures 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, including per share amounts, is useful to investors or other interested parties in evaluating our financial performance.  Management believes that AFFO helps investors or other interested parties meaningfully evaluate our financial performance as it includes (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 Crown Castle uses AFFO only as a performance measure.  AFFO 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, including per share amounts, is 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 helps investors or other interested parties meaningfully evaluate financial performance by excluding the impact of our asset base (primarily depreciation, amortization and accretion). FFO is not a key performance indicator used by Crown Castle.  FFO 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.

  • 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 tenant non-renewals in our core business, as well to forecast future results. Organic Contribution to Site Rental Revenues is not meant as an alternative measure of revenue and should be considered only as a supplement in understanding and assessing the performance of our site rental revenues computed in accordance with GAAP.

We define our non-GAAP financial measures, segment measures and other calculations as follows:

Non-GAAP Financial Measures

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

Adjusted Funds from Operations.  We define Adjusted Funds from Operations as FFO before straight-lined revenue, straight-lined expense, stock-based compensation expense, non-cash portion of tax provision, non-real estate related depreciation, amortization and accretion, amortization of non-cash interest expense, other (income) expense, (gains) losses on retirement of long-term obligations, net (gain) loss on interest rate swaps, (gains) losses on foreign currency swaps, acquisition and integration costs, and adjustments for noncontrolling interests, and less sustaining capital expenditures.

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 tenant 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 Services and Other Gross Margin.  We define Segment Services and Other Gross Margin as segment services and other revenues less segment services and other cost of operations, excluding stock-based compensation expense recorded in consolidated services and other cost of operations.

Segment Operating Profit.  We define Segment Operating Profit as segment site rental gross margin plus segment services and other gross margin, less selling, general and administrative expenses attributable to the respective segment.

All of these measurements of profit or loss are exclusive of depreciation, amortization and accretion, which are shown separately.  Additionally, certain costs are shared across segments and are reflected in our segment measures through allocations that management believes to be reasonable.

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 primarily consist of expansion or development of communications infrastructure (including capital expenditures related to (1) enhancing communications infrastructure in order to add new tenants for the first time or support subsequent tenant equipment augmentations: or (2) modifying the structure of a communications infrastructure asset to accommodate additional tenants). and construction of new communications infrastructure. Discretionary capital expenditures also include purchases of land interests (which primarily relates to land assets under towers as we seek to manage our interests in the land beneath our towers). certain technology-related investments necessary to support and scale future customer demand for our communications infrastructure. and other capital projects.

Integration capital expenditures.  We define integration capital expenditures as those capital expenditures made as a result of integrating acquired companies into our business.

Sustaining capital expenditures.  We define sustaining capital expenditures as those capital expenditures not otherwise categorized as either discretionary or integration capital expenditures, such as (1) maintenance capital expenditures on our communications infrastructure assets that enable our tenants' ongoing quiet enjoyment of the communications infrastructure and (2) ordinary corporate capital expenditures.

The tables set forth on the following pages 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.

The expected impacts of the restatement described above and in the tables below are preliminary and unaudited and are subject to change before we file the 2019 10-K.  The tables set forth below reflect (1) the estimated effects of the restatement and (2) the estimated effects of other adjustments to previously-issued financial statements for years prior to 2019 to correct errors related exclusively to our Towers segment that were not material, individually or in the aggregate, on certain of the Company's select financial results for the quarters and years ending December 31, 2019 and 2018, and the years ended December 31, 2017, 2016, and 2015.

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

Reconciliation of Historical Adjusted EBITDA:

  For the Three Months Ended   For the Twelve Months Ended
  December 31, 2019   December 31, 2018   December 31, 2019   December 31, 2018
(in millions)     (As Restated)       (As Restated)
Net income (loss) $ 208     $ 200     $ 863     $ 625  
Adjustments to increase (decrease) net income (loss):              
Asset write-down charges 6     8     19     26  
Acquisition and integration costs 3     9     13     27  
Depreciation, amortization and accretion 398     390     1,574     1,528  
Amortization of prepaid lease purchase price adjustments 5     5     20     20  
Interest expense and amortization of deferred financing costs(a) 173     164     683     642  
(Gains) losses on retirement of long-term obligations         2     106  
Interest income (1 )   (2 )   (6 )   (5 )
Other (income) expense (7 )   (1 )   (1 )   (1 )
(Benefit) provision for income taxes 6     5     21     19  
Stock-based compensation expense 27     25     116     108  
Adjusted EBITDA(b)(c) $ 818     $ 803     $ 3,304     $ 3,095  


  For the Twelve Months Ended
  December 31, 2017   December 31, 2016   December 31, 2015
(in millions) (As Restated)   (As Restated)   (As Restated)
Net income (loss) $ 368     $ 308     $ 1,456  
Adjustments to increase (decrease) net income (loss):          
Income (loss) from discontinued operations         (999 )
Asset write-down charges 17     34     33  
Acquisition and integration costs 61     17     16  
Depreciation, amortization and accretion 1,242     1,109     1,036  
Amortization of prepaid lease purchase price adjustments 20     21     21  
Interest expense and amortization of deferred financing costs(a) 591     515     527  
(Gains) losses on retirement of long-term obligations 4     52     4  
Interest income (19 )   (1 )   (2 )
Other (income) expense (1 )   9     (57 )
(Benefit) provision for income taxes 26     17     (51 )
Stock-based compensation expense 96     97     67  
Adjusted EBITDA(b)(c) $ 2,405     $ 2,179     $ 2,051  
  1. See the reconciliation of "components of historical interest expense and amortization of deferred financing costs" herein for a discussion of non-cash interest expense.
  2. See "Non-GAAP Financial 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.

Reconciliation of Current Outlook for Adjusted EBITDA:

  Full Year 2020
(in millions) Outlook
Net income (loss) $ 998   to $ 1,078  
Adjustments to increase (decrease) net income (loss):      
Asset write-down charges $ 20   to $ 30  
Acquisition and integration costs $ 7   to $ 17  
Depreciation, amortization and accretion $ 1,503   to $ 1,598  
Amortization of prepaid lease purchase price adjustments $ 18   to $ 20  
Interest expense and amortization of deferred financing costs(a) $ 691   to $ 736  
(Gains) losses on retirement of long-term obligations $ 0   to $ 0  
Interest income $ (7 ) to $ (3 )
Other (income) expense $ (1 ) to $ 1  
(Benefit) provision for income taxes $ 16   to $ 24  
Stock-based compensation expense $ 126   to $ 130  
Adjusted EBITDA(b)(c) $ 3,479   to $ 3,524  
  1. See the reconciliation of "components of historical interest expense and amortization of deferred financing costs" herein for a discussion of non-cash interest expense.
  2. See "Non-GAAP Financial 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.

Reconciliation of Historical FFO and AFFO:

  For the Three Months Ended   For the Twelve Months Ended
(in millions) December 31, 2019   December 31, 2018   December 31, 2019   December 31, 2018
    (As Restated)       (As Restated)
Net income (loss) $ 208     $ 200     $ 863     $ 625  
Real estate related depreciation, amortization and accretion 384     375     1,519     1,472  
Asset write-down charges 6     8     19     26  
Dividends/distributions on preferred stock (28 )   (28 )   (113 )   (113 )
FFO(a)(b)(c)(d) $ 570     $ 555     $ 2,288     $ 2,009  
Weighted-average common shares outstanding—diluted(e) 418     417     418     415  
FFO per share(a)(b)(c)(d)(e) $ 1.36     $ 1.33     $ 5.47     $ 4.84  
               
FFO (from above) $ 570     $ 555     $ 2,288     $ 2,009  
Adjustments to increase (decrease) FFO:              
Straight-lined revenue (18 )   (20 )   (80 )   (72 )
Straight-lined expense 23     21     93     90  
Stock-based compensation expense 27     25     116     108  
Non-cash portion of tax provision 3     3     5     2  
Non-real estate related depreciation, amortization and accretion 14     15     55     56  
Amortization of non-cash interest expense     2     1     7  
Other (income) expense (7 )   (1 )   (1 )   (1 )
(Gains) losses on retirement of long-term obligations         2     106  
Acquisition and integration costs 3     9     13     27  
Sustaining capital expenditures (36 )   (30 )   (117 )   (105 )
AFFO(a)(b)(c)(d) $ 578     $ 578     $ 2,376     $ 2,228  
Weighted-average common shares outstanding—diluted(e) 418     417     418     415  
AFFO per share(a)(b)(c)(d)(e) $ 1.38     $ 1.39     $ 5.69     $ 5.37  
  1. See "Non-GAAP Financial Measures, Segment Measures and Other Calculations" herein for a discussion of our definitions of FFO, including per share amounts, and AFFO, including per share amounts.
  2. FFO and AFFO are reduced by cash paid for preferred stock dividends during the period in which they are paid. 
  3. Attributable to CCIC common stockholders. 
  4. The above reconciliation excludes line items included in our definition which are not applicable for the periods shown.
  5. For all periods presented, the diluted weighted-average common shares outstanding does not include any assumed conversion of preferred stock in the share count.

Reconciliation of Historical FFO and AFFO:

  For the Twelve Months Ended
(in millions) December 31, 2017   December 31, 2016   December 31, 2015
(As Restated)
Net income (loss)(a) $ 368     $ 308     $ 457  
Real estate related depreciation, amortization and accretion 1,211     1,082     1,018  
Asset write-down charges 17     34     33  
Dividends/distributions on preferred stock (30 )   (44 )   (44 )
FFO(b)(c)(d)(e) $ 1,566     $ 1,381     $ 1,465  
Weighted-average common shares outstanding—diluted(f) 383     341     334  
FFO per share(b)(c)(d)(e)(f) $ 4.09     $ 4.05     $ 4.39  
           
FFO (from above) $ 1,566     $ 1,381     $ 1,465  
Adjustments to increase (decrease) FFO:          
Straight-lined revenue     (47 )   (111 )
Straight-lined expense 93     94     99  
Stock-based compensation expense 96     97     67  
Non-cash portion of tax provision 9     7     (64 )
Non-real estate related depreciation, amortization and accretion 31     26     18  
Amortization of non-cash interest expense 9     14     37  
Other (income) expense (1 )   9     (57 )
(Gains) losses on retirement of long-term obligations 4     52     4  
Acquisition and integration costs 61     17     16  
Sustaining capital expenditures (85 )   (90 )   (105 )
AFFO(b)(c)(d)(e) $ 1,783     $ 1,561     $ 1,369  
Weighted-average common shares outstanding—diluted(f) 383     341     334  
AFFO per share(b)(c)(d)(e)(f) $ 4.65     $ 4.58     $ 4.10  
  1. Exclusive of income (loss) from discontinued operations and related noncontrolling interest of $1.0 billion for the twelve months ended December 31, 2015.
  2. See "Non-GAAP Financial Measures, Segment Measures and Other Calculations" herein for a discussion of our definitions of FFO, including per share amounts, and AFFO, including per share amounts.
  3. FFO and AFFO are reduced by cash paid for preferred stock dividends during the period in which they are paid. 
  4. Attributable to CCIC common stockholders. 
  5. The above reconciliation excludes line items included in our definition which are not applicable for the periods shown.
  6. For all periods presented, the diluted weighted-average common shares outstanding does not include any assumed conversion of preferred stock in the share count.

Reconciliation of Current Outlook for FFO and AFFO:

  Full Year 2020
(in millions) Outlook
Net income (loss) $ 998   to $ 1,078  
Real estate related depreciation, amortization and accretion $ 1,454   to $ 1,534  
Asset write-down charges $ 20   to $ 30  
Dividends/distributions on preferred stock $ (85 ) to $ (85 )
FFO(a)(b)(c)(d) $ 2,449   to $ 2,494  
Weighted-average common shares outstanding—diluted(e)   424  
FFO per share(a)(b)(c)(d)(e) $ 5.77   to $ 5.88  
       
FFO (from above) $ 2,449   to $ 2,494  
Adjustments to increase (decrease) FFO:      
Straight-lined revenue $ (53 ) to $ (33 )
Straight-lined expense $ 70   to $ 90  
Stock-based compensation expense $ 126   to $ 130  
Non-cash portion of tax provision $ (6 ) to $ 9  
Non-real estate related depreciation, amortization and accretion $ 49   to $ 64  
Amortization of non-cash interest expense $ (4 ) to $ 6  
Other (income) expense $ (1 ) to $ 1  
(Gains) losses on retirement of long-term obligations $ 0   to $ 0  
Acquisition and integration costs $ 7   to $ 17  
Sustaining capital expenditures $ (123 ) to $ (103 )
AFFO(a)(b)(c)(d) $ 2,572   to $ 2,617  
Weighted-average common shares outstanding—diluted(e)   424  
AFFO per share(a)(b)(c)(d)(e) $ 6.06   to $ 6.17  
  1. See "Non-GAAP Financial Measures, Segment Measures and Other Calculations" herein for a discussion of our definitions of FFO, including per share amounts, and AFFO, including per share amounts.
  2. FFO and AFFO are reduced by cash paid for preferred stock dividends during the period in which they are paid. 
  3. Attributable to CCIC common stockholders. 
  4. The above reconciliation excludes line items included in our definition which are not applicable for the periods shown.
  5. The assumption for diluted weighted-average common shares outstanding for full year 2020 Outlook is based on the diluted common shares outstanding as of December 31, 2019 and is inclusive of the assumed conversion of preferred stock in August 2020, which we expect to result in (1) an increase in the diluted weighted-average common shares outstanding by approximately 6 million shares and (2) a reduction in the amount of annual preferred stock dividends paid by approximately $28 million when compared to full year 2019.

For Comparative Purposes - Reconciliation of Previous Outlook for Adjusted EBITDA:

  Previously Issued   Previously Issued
  Full Year 2019   Full Year 2020
(in millions) Outlook   Outlook
Net income (loss) $ 896   to $ 956     $ 1,088   to $ 1,168  
Adjustments to increase (decrease) net income (loss):              
Asset write-down charges $ 23   to $ 33     $ 20   to $ 30  
Acquisition and integration costs $ 11   to $ 21     $ 7   to $ 17  
Depreciation, amortization and accretion $ 1,576   to $ 1,611     $ 1,503   to $ 1,598  
Amortization of prepaid lease purchase price adjustments $ 19   to $ 21     $ 18   to $ 20  
Interest expense and amortization of deferred financing costs $ 674   to $ 704     $ 691   to $ 736  
(Gains) losses on retirement of long-term obligations $ 2   to $ 2     $ 0   to $ 0  
Interest income $ (8 ) to $ (4 )   $ (7 ) to $ (3 )
Other (income) expense $ 2   to $ 4     $ (1 ) to $ 1  
(Benefit) provision for income taxes $ 16   to $ 24     $ 16   to $ 24  
Stock-based compensation expense $ 112   to $ 120     $ 126   to $ 130  
Adjusted EBITDA(a)(b) $ 3,393   to $ 3,423     $ 3,569   to $ 3,614  
  1. See "Non-GAAP Financial Measures, Segment Measures and Other Calculations" herein for a discussion of our definition of Adjusted EBITDA.
  2. The above reconciliation excludes line items included in our definition which are not applicable for the periods shown.

For Comparative Purposes - Reconciliation of Previous Outlook for FFO and AFFO:

  Previously Issued   Previously Issued
  Full Year 2019   Full Year 2020
(in millions) Outlook   Outlook
Net income (loss) $ 896   to $ 956     $ 1,088   to $ 1,168  
Real estate related depreciation, amortization and accretion $ 1,528   to $ 1,548     $ 1,454   to $ 1,534  
Asset write-down charges $ 23   to $ 33     $ 20   to $ 30  
Dividends/distributions on preferred stock $ (113 ) to $ (113 )   $ (85 ) to $ (85 )
FFO(a)(b)(c)(d) $ 2,363   to $ 2,393     $ 2,539   to $ 2,584  
Weighted-average common shares outstanding—diluted(e)   418       424  
FFO per share(a)(b)(c)(d)(e) $ 5.66   to $ 5.73     $ 5.99   to $ 6.09  
               
FFO (from above) $ 2,363   to $ 2,393     $ 2,539   to $ 2,584  
Adjustments to increase (decrease) FFO:              
Straight-lined revenue $ (74 ) to $ (54 )   $ (53 ) to $ (33 )
Straight-lined expense $ 81   to $ 101     $ 70   to $ 90  
Stock-based compensation expense $ 112   to $ 120     $ 126   to $ 130  
Non-cash portion of tax provision $ (6 ) to $ 9     $ (6 ) to $ 9  
Non-real estate related depreciation, amortization and accretion $ 48   to $ 63     $ 49   to $ 64  
Amortization of non-cash interest expense $ (5 ) to $ 5     $ (4 ) to $ 6  
Other (income) expense $ 2   to $ 4     $ (1 ) to $ 1  
(Gains) losses on retirement of long-term obligations $ 2   to $ 2     $ 0   to $ 0  
Acquisition and integration costs $ 11   to $ 21     $ 7   to $ 17  
Sustaining capital expenditures $ (136 ) to $ (106 )   $ (123 ) to $ (103 )
AFFO(a)(b)(c)(d) $ 2,464   to $ 2,494     $ 2,662   to $ 2,707  
Weighted-average common shares outstanding—diluted(e)   418       424  
AFFO per share(a)(b)(c)(d)(e) $ 5.90   to $ 5.97     $ 6.28   to $ 6.38  
  1. See "Non-GAAP Financial Measures, Segment Measures and Other Calculations" herein for a discussion of our definitions of FFO, including per share amounts, and AFFO, including per share amounts.
  2. FFO and AFFO are reduced by cash paid for preferred stock dividends during the period in which they are paid.
  3. Attributable to CCIC common stockholders.
  4. The above reconciliation excludes line items included in our definition which are not applicable for the periods shown.
  5. The assumption for diluted weighted-average common shares outstanding for full year 2020 Outlook is based on the diluted common shares outstanding as of December 31, 2019 and is inclusive of the assumed conversion of preferred stock in August 2020, which we expect to result in (1) an increase in the diluted weighted-average common shares outstanding by approximately 6 million shares and (2) a reduction in the amount of annual preferred stock dividends paid by approximately $28 million when compared to full year 2019.

The components of changes in site rental revenues for the quarters ended December 31, 2019 and 2018 are as follows:

  Three Months Ended December 31,
(dollars in millions) 2019   2018
    (As Restated)
Components of changes in site rental revenues(a):      
Prior year site rental revenues exclusive of straight-lined revenues associated with fixed escalators(b)(c) $1,212    $1,067 
       
New leasing activity(b)(c) 100    64 
Escalators 22    21 
Non-renewals (51)   (22)
Organic Contribution to Site Rental Revenues(d) 71    63 
Straight-lined revenues associated with fixed escalators 18    20 
Acquisitions(e) —    82 
Other —    — 
Total GAAP site rental revenues $1,301    $1,232 
       
Year-over-year changes in revenue:      
Reported GAAP site rental revenues 5.6%    
Organic Contribution to Site Rental Revenues(d)(f) 5.9%    
  1. Additional information regarding Crown Castle's site rental revenues, including projected revenue from tenant licenses, straight-lined revenues and prepaid rent is available in Crown Castle's quarterly Supplemental Information Package posted in the Investors section of its website.
  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 "Non-GAAP Financial Measures, Segment Measures and Other Calculations" herein.
  5. Represents the contribution from recent acquisitions.  The financial impact of recent acquisitions is excluded from Organic Contribution to Site Rental Revenues until the one-year anniversary of the acquisition.
  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.

The...