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SBA COMMUNICATIONS CORP - Quarter Report: 2015 September (Form 10-Q)

Table of Contents

 

 

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 September 30, 2015

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from                       to                     

 

Commission file number: 000-30110

 

SBA COMMUNICATIONS CORPORATION

(Exact name of Registrant as specified in its charter)

 

 

 

 

Florida

65-0716501

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

 

 

 

 

8051 Congress Avenue

 

Boca Raton, Florida

33487

(Address of principal executive offices)

(Zip Code)

 

Registrant’s telephone number, including area code (561) 995-7670

 

Securities registered pursuant to Section 12(b) of the Act:

 

 

 

Title of Each Class

Name of Each Exchange on Which Registered

Class A Common Stock, $0.01 par value per share

The NASDAQ Stock Market LLC

 

(NASDAQ Global Select Market)

 

Securities registered pursuant to Section 12(g) of the Act:

None

 

 

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      No   

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes     No  

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

 

 

 

 

Large accelerated filer

Accelerated filer

 

 

 

 

Non-Accelerated filer

Smaller reporting company

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)    Yes      No   

 

Indicate the number of shares outstanding of each issuer’s classes of common stock, as of the latest practicable date: 126,151,128  shares of Class A common stock as of October 30, 2015.

 


 

Table of Contents

Table of Contents

 

 

 

 

 

 

 

 

 

Page

PART I – FINANCIAL INFORMATION 

 

 

 

Item 1.

Financial Statements

 

Consolidated Balance Sheets as of September 30, 2015 (unaudited) and December 31, 2014

 

Consolidated Statements of Operations (unaudited) for the three and nine months ended September 30, 2015 and 2014

 

Consolidated Statements of Comprehensive Loss (unaudited) for the three and nine months ended September 30, 2015 and 2014

 

Consolidated Statement of Shareholders’ Deficit (unaudited) for the nine months ended September 30, 2015

 

Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2015 and 2014

 

Condensed Notes to Consolidated Financial Statements (unaudited)

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

20 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

37 

Item 4.

Controls and Procedures

39 

 

PART II – OTHER INFORMATION 

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

40 

 

Item 6.

Exhibits

40 

 

 

 

SIGNATURES 

41 

 

 

 

 

 

 


 

Table of Contents

PART I – FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS

SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except par values)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30,

 

December 31,

 

 

2015

 

2014

ASSETS

 

(unaudited)

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

73,271 

 

$

39,443 

Restricted cash

 

 

46,785 

 

 

52,519 

Short-term investments

 

 

702 

 

 

5,549 

Accounts receivable, net of allowance of $1,418 and $889

 

 

 

 

 

 

at September 30, 2015 and December 31, 2014, respectively

 

 

73,383 

 

 

104,268 

Costs and estimated earnings in excess of billings on uncompleted contracts

 

 

25,800 

 

 

30,078 

Prepaid expenses and other current assets

 

 

114,930 

 

 

95,031 

Total current assets

 

 

334,871 

 

 

326,888 

Property and equipment, net

 

 

2,720,874 

 

 

2,762,417 

Intangible assets, net

 

 

3,737,105 

 

 

4,189,540 

Deferred financing fees, net

 

 

89,185 

 

 

95,237 

Other assets

 

 

514,722 

 

 

467,043 

Total assets

 

$

7,396,757 

 

$

7,841,125 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' DEFICIT

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

32,197 

 

$

42,851 

Accrued expenses

 

 

65,642 

 

 

65,553 

Current maturities of long-term debt

 

 

40,000 

 

 

32,500 

Deferred revenue

 

 

92,242 

 

 

120,047 

Accrued interest

 

 

39,184 

 

 

53,178 

Other current liabilities

 

 

19,002 

 

 

16,921 

Total current liabilities

 

 

288,267 

 

 

331,050 

Long-term liabilities:

 

 

 

 

 

 

Long-term debt

 

 

8,446,850 

 

 

7,828,299 

Other long-term liabilities

 

 

359,296 

 

 

342,576 

Total long-term liabilities

 

 

8,806,146 

 

 

8,170,875 

Shareholders' deficit:

 

 

 

 

 

 

Preferred stock - par value $.01, 30,000 shares authorized, no shares issued or outstanding

 

 

 —

 

 

 —

Common stock - Class A, par value $.01, 400,000 shares authorized, 126,143 and

 

 

 

 

 

 

129,134 shares issued and outstanding at September 30, 2015 and

 

 

 

 

 

 

December 31, 2014, respectively

 

 

1,261 

 

 

1,291 

Additional paid-in capital

 

 

1,951,657 

 

 

2,062,775 

Accumulated deficit

 

 

(3,149,082)

 

 

(2,542,380)

Accumulated other comprehensive loss, net

 

 

(501,492)

 

 

(182,486)

Total shareholders' deficit

 

 

(1,697,656)

 

 

(660,800)

Total liabilities and shareholders' deficit

 

$

7,396,757 

 

$

7,841,125 

 

The accompanying condensed notes are an integral part of these consolidated financial statements.

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SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS 

(unaudited) (in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months

 

For the nine months

 

 

ended September 30,

 

ended September 30,

 

 

2015

 

2014

 

2015

 

2014

Revenues:

 

 

 

 

 

 

 

 

 

Site leasing

 

$

371,993 

 

$

349,010 

 

$

1,112,182 

 

$

998,781 

Site development

 

 

38,742 

 

 

44,283 

 

 

119,351 

 

 

123,481 

Total revenues

 

 

410,735 

 

 

393,293 

 

 

1,231,533 

 

 

1,122,262 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenues (exclusive of depreciation, accretion,

 

 

 

 

 

 

 

 

 

 

 

 

and amortization shown below):

 

 

 

 

 

 

 

 

 

 

 

 

Cost of site leasing

 

 

81,346 

 

 

77,926 

 

 

243,298 

 

 

223,049 

Cost of site development

 

 

30,387 

 

 

33,950 

 

 

91,662 

 

 

93,432 

Selling, general, and administrative (1)

 

 

27,872 

 

 

26,589 

 

 

86,017 

 

 

76,707 

Acquisition related adjustments and expenses

 

 

364 

 

 

(58)

 

 

7,483 

 

 

10,728 

Asset impairment and decommission costs

 

 

63,353 

 

 

5,992 

 

 

74,185 

 

 

13,554 

Depreciation, accretion, and amortization

 

 

164,330 

 

 

159,410 

 

 

498,560 

 

 

464,858 

Total operating expenses

 

 

367,652 

 

 

303,809 

 

 

1,001,205 

 

 

882,328 

Operating income

 

 

43,083 

 

 

89,484 

 

 

230,328 

 

 

239,934 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

1,276 

 

 

161 

 

 

2,284 

 

 

428 

Interest expense

 

 

(81,877)

 

 

(78,170)

 

 

(238,439)

 

 

(215,695)

Non-cash interest expense

 

 

(449)

 

 

(8,236)

 

 

(1,051)

 

 

(26,832)

Amortization of deferred financing fees

 

 

(4,803)

 

 

(4,599)

 

 

(13,973)

 

 

(13,114)

Loss from extinguishment of debt, net

 

 

 —

 

 

(14,893)

 

 

 —

 

 

(25,080)

Other (expense) income, net

 

 

(111,250)

 

 

611 

 

 

(178,710)

 

 

20,384 

Total other expense

 

 

(197,103)

 

 

(105,126)

 

 

(429,889)

 

 

(259,909)

Loss before provision for income taxes

 

 

(154,020)

 

 

(15,642)

 

 

(199,561)

 

 

(19,975)

Provision for income taxes

 

 

(1,926)

 

 

(982)

 

 

(7,112)

 

 

(4,710)

Net loss

 

 

(155,946)

 

 

(16,624)

 

 

(206,673)

 

 

(24,685)

Net loss per common share

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$

(1.23)

 

$

(0.13)

 

$

(1.61)

 

$

(0.19)

Weighted average number of common shares

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

 

127,170 

 

 

129,046 

 

 

128,397 

 

 

128,854 

 

(1)

Includes non-cash compensation of $6,631 and $6,319 for the three months ended September 30, 2015 and 2014, respectively, and $21,604 and $16,951 for the nine months ended September 30, 2015 and 2014, respectively.

The accompanying condensed notes are an integral part of these consolidated financial statements.

 

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SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(unaudited) (in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months

 

For the nine months

 

 

ended September 30,

 

ended September 30,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2015

 

2014

 

2015

 

2014

Net loss

 

$

(155,946)

 

$

(16,624)

 

$

(206,673)

 

$

(24,685)

Foreign currency translation adjustments

 

 

(171,089)

 

 

(128,461)

 

 

(319,006)

 

 

(60,466)

Comprehensive loss

 

$

(327,035)

 

$

(145,085)

 

$

(525,679)

 

$

(85,151)

 

The accompanying condensed notes are an integral part of these consolidated financial statements.

 

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SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF SHAREHOLDERS’  DEFICIT 

(unaudited) (in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

Class A

 

Additional

 

 

 

 

Other

 

 

 

 

 

Common Stock

 

Paid-In

 

Accumulated

 

Comprehensive

 

 

 

 

 

Shares

 

Amount

 

Capital

 

Deficit

 

Loss

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE, December 31, 2014

 

129,134 

 

$

1,291 

 

$

2,062,775 

 

$

(2,542,380)

 

$

(182,486)

 

$

(660,800)

Net loss

 

 —

 

 

 —

 

 

 —

 

 

(206,673)

 

 

 —

 

 

(206,673)

Common stock issued in connection with

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

stock purchase/option plans

 

509 

 

 

 

 

17,516 

 

 

 —

 

 

 —

 

 

17,521 

Non-cash compensation

 

 —

 

 

 —

 

 

22,240 

 

 

 —

 

 

 —

 

 

22,240 

Settlement of common stock warrants

 

 —

 

 

 —

 

 

(150,874)

 

 

 —

 

 

 —

 

 

(150,874)

Repurchase and retirement of common stock

 

(3,500)

 

 

(35)

 

 

 —

 

 

(400,029)

 

 

 —

 

 

(400,064)

Foreign currency translation adjustments

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(319,006)

 

 

(319,006)

BALANCE, September 30, 2015

 

126,143 

 

$

1,261 

 

$

1,951,657 

 

$

(3,149,082)

 

$

(501,492)

 

$

(1,697,656)

 

The accompanying condensed notes are an integral part of these consolidated financial statements.

 

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SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited) (in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the nine months

 

 

ended September 30,

 

 

2015

 

2014

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net loss

 

$

(206,673)

 

$

(24,685)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation, accretion, and amortization

 

 

498,560 

 

 

464,858 

Non-cash interest expense

 

 

1,051 

 

 

26,832 

Deferred income tax expense (benefit)

 

 

195 

 

 

(1,043)

Non-cash asset impairment and decommission costs

 

 

69,895 

 

 

9,909 

Non-cash compensation expense

 

 

21,903 

 

 

17,231 

Amortization of deferred financing fees

 

 

13,973 

 

 

13,114 

Loss from extinguishment of debt, net

 

 

 —

 

 

25,080 

Loss on remeasurement of U.S. dollar denominated intercompany loan

 

 

180,422 

 

 

 —

Gain on foreign currency swap contract

 

 

 —

 

 

(17,891)

Other non-cash items reflected in the Statements of Operations

 

 

(5,233)

 

 

(1,207)

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

 

 

 

Accounts receivable and costs and estimated earnings in excess of

 

 

 

 

 

 

billings on uncompleted contracts, net

 

 

24,242 

 

 

(10,649)

Prepaid and other assets

 

 

(52,928)

 

 

(43,923)

Accounts payable and accrued expenses

 

 

11,129 

 

 

(6,220)

Accrued interest

 

 

(13,994)

 

 

(659)

Other liabilities

 

 

(7,805)

 

 

34,541 

Net cash provided by operating activities

 

 

534,737 

 

 

485,288 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

Acquisitions

 

 

(408,711)

 

 

(1,048,748)

Capital expenditures

 

 

(162,311)

 

 

(131,347)

Proceeds from foreign currency swap contract

 

 

 —

 

 

17,891 

Other investing activities

 

 

4,291 

 

 

(1,782)

Net cash used in investing activities

 

 

(566,731)

 

 

(1,163,986)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

Borrowings under Revolving Credit Facility

 

 

770,000 

 

 

575,000 

Repayments under Revolving Credit Facility

 

 

(615,000)

 

 

(490,000)

Repayment of Term Loans

 

 

(25,000)

 

 

(303,000)

Proceeds from Term Loans, net of fees

 

 

489,899 

 

 

1,483,337 

Payment for the redemption of 8.25% Notes

 

 

 —

 

 

(253,805)

Proceeds from 4.875% Senior Notes, net of fees

 

 

 —

 

 

732,459 

Payments on settlement of convertible debt

 

 

 —

 

 

(132,592)

Payments for settlement of common stock warrants

 

 

(150,874)

 

 

(602,834)

Repurchase and retirement of common stock

 

 

(400,064)

 

 

 —

Other financing activities

 

 

9,552 

 

 

(18,202)

Net cash provided by financing activities

 

 

78,513 

 

 

990,363 

Effect of exchange rate changes on cash and cash equivalents

 

 

(12,691)

 

 

16,480 

NET INCREASE IN CASH AND CASH EQUIVALENTS

 

 

33,828 

 

 

328,145 

CASH AND CASH EQUIVALENTS:

 

 

 

 

 

 

Beginning of period

 

 

39,443 

 

 

122,112 

End of period

 

$

73,271 

 

$

450,257 

 

The accompanying condensed notes are an integral part of these consolidated financial statements.

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SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the nine months

 

 

ended September 30,

 

 

2015

 

2014

 

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

 

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

 

Interest

 

$

252,425 

 

$

216,103 

Income taxes

 

$

7,569 

 

$

6,377 

 

 

 

 

 

 

 

SUPPLEMENTAL CASH FLOW INFORMATION OF NON-CASH

 

 

 

 

 

 

ACTIVITIES:

 

 

 

 

 

 

Assets acquired through capital leases

 

$

2,627 

 

$

1,290 

Issuance of stock for settlement of convertible debt and warrants,

 

 

 

 

 

 

net of hedges

 

$

 —

 

$

284 

 

The accompanying condensed notes are an integral part of these consolidated financial statements.

 

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SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

1.BASIS OF PRESENTATION

The accompanying consolidated financial statements should be read in conjunction with the Annual Report on Form 10-K for the fiscal year ended December 31, 2014 for SBA Communications Corporation and its subsidiaries (the “Company”). These financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X and, therefore, omit or condense certain footnotes and other information normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States. In the opinion of the Company’s management, all adjustments (consisting of normal recurring accruals) considered necessary for fair financial statement presentation have been made. The results of operations for an interim period may not give a true indication of the results for the year. Certain reclassifications have been made to prior year amounts or balances to conform to the presentation adopted in the current year.

The preparation of financial statements requires management to make estimates and assumptions that affect the amounts reported in consolidated financial statements and accompanying notes. While the Company believes that such estimates are fair when considered in conjunction with the consolidated financial statements and accompanying notes, the actual amounts, when known, may vary from these estimates.

Foreign Currency Translation 

All assets and liabilities of foreign subsidiaries that do not utilize the United States dollar as its functional currency (Brazil and Canada) are translated at period-end rates of exchange, while revenues and expenses are translated at monthly weighted average rates of exchange for the period. Unrealized translation gains and losses are reported as foreign currency translation adjustments through Accumulated other comprehensive loss in the accompanying Consolidated Statement of Shareholders’ Deficit.

Intercompany Loans

In accordance with Accounting Standards Codification (ASC) 830, the Company remeasures intercompany loans not denominated in the functional currency with the corresponding remeasurement adjustment being recorded in Other income (expense), net in the Consolidated Statements of Operations. For the three and nine months ended September 30, 2015, the Company recorded a $112.1 million and $180.4 million foreign exchange loss, respectively, on the remeasurement of an intercompany loan with a Brazilian subsidiary.

Recent Accounting Pronouncements Not Yet Adopted

In May 2014, the Financial Accounting Standards Board ("FASB") released updated guidance regarding the recognition of revenue from contracts with customers, exclusive of those contracts within lease accounting. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps: (1) identify the contracts with the customer; (2) identify the performance obligations in the contract; (3) determine the contract price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the entity satisfies a performance obligation. The new guidance is effective for annual reporting periods (including interim periods within those periods) beginning after December 15, 2017 for public companies. Under the proposal, the standard would be required to be adopted by public business entities in annual periods beginning on or after December 15, 2017. Early adoption is permitted but not before interim and annual reporting periods beginning after December 15, 2016. This guidance is required to be applied (1) retrospectively to each prior reporting period presented, or (2) with the cumulative effect being recognized at the date of initial application. The Company is evaluating the guidance including the impact on its consolidated financial statements.

In April 2015, the FASB issued ASU 2015-03, Interest—Imputation of Interest. The standard requires debt issuance costs to be presented on the balance sheet as a direct deduction from the related debt liability rather than as an asset. Once adopted, entities are required to apply the new guidance retrospectively to all prior periods presented. ASU 2015-03 is effective for annual and interim periods beginning after December 15, 2015 and early application is permitted. The Company has not elected to early adopt the standard.

In August 2015, the FASB issued ASU 2015-15, Interest - Imputation of Interest - Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements. The standard indicates the SEC staff would not object to

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presenting deferred debt issuance costs for a line of credit arrangement as an asset in the balance sheet. ASU 2015-15 is effective for annual and interim periods beginning after December 15, 2015 and early application is permitted. The Company has not elected to early adopt the standard.

In September 2015, the FASB issued ASU 2015-16 Business Combinations. The standard requires that the acquirer (1) recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined, (2) record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date, and (3) to present separately on the face of the income statement or disclose in the notes the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. ASU 2015-16 is effective for annual and interim periods beginning after December 15, 2015 and early application is permitted. The Company has not elected to early adopt the standard.

 

2.FAIR VALUE MEASUREMENTS

Items Measured at Fair Value on a Recurring Basis— The Company’s earnout liabilities related to acquisitions are measured at fair value on a recurring basis using Level 3 inputs and are recorded in Accrued expenses in the accompanying Consolidated Balance Sheets. Changes in estimate are recorded in Acquisition related adjustments and expenses in the accompanying Consolidated Statement of Operations. The Company determines the fair value of acquisition-related earnouts (contingent consideration) and any subsequent changes in fair value using a discounted probability-weighted approach using Level 3 inputs. Level 3 valuations rely on unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. The fair value of the earnouts is reviewed quarterly and is based on the payments the Company expects to make based on historical internal observations related to the anticipated performance of the underlying assets. The Company’s estimate of the fair value of its obligation of performance targets contained in various acquisitions was $8.8 million and $15.1 million as of September 30, 2015 and December 31, 2014. The maximum potential obligation related to the performance targets was $14.3 million and $23.1 million as of September 30, 2015 and December 31, 2014, respectively.

The following summarizes the activity of the accrued earnouts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2015

 

2014

 

 

 

 

 

 

 

 

 

(in thousands)

Beginning balance, December 31, 2014 and 2013 , respectively

 

$

15,086 

 

$

30,063 

Additions

 

 

3,228 

 

 

10,384 

Payments

 

 

(3,608)

 

 

(16,346)

Change in estimate

 

 

(5,299)

 

 

(1,519)

Foreign currency translation adjustments

 

 

(588)

 

 

554 

Ending balance, September 30, 2015 and September 30, 2014, respectively

 

$

8,819 

 

$

23,136 

 

Items Measured at Fair Value on a Nonrecurring Basis— The Company’s long-lived assets, intangibles, and asset retirement obligations are measured at fair value on a nonrecurring basis using Level 3 inputs. The Company considers many factors and makes certain assumptions when making this assessment, including but not limited to: general market and economic conditions, historical operating results, geographic location, lease-up potential and expected timing of lease-up. The fair value of the long-lived assets, intangibles, and asset retirement obligations is calculated using a discounted cash flow model.

During the three and nine months ended September 30, 2015, the Company recognized impairment charges of $63.4 million and $74.2 million, respectively. The impairment charges include the write off of $5.3 million and $12.0 million in carrying value of decommissioned towers,  a  $56.7 million impairment charge recorded in the third quarter of 2015 related to fiber assets acquired in the 2012 Mobilitie transaction, and $1.4 million and $4.3 million of other third party decommission costs incurred related to the Company’s long-lived assets and intangibles for the three and nine months ended September 30, 2015, respectively.  The impairment review of the fiber assets was triggered by a strategic decision made by the Company during the third quarter. The undiscounted cash flows were not sufficient to recover the carrying amount of the assets and thus a discounted cash flow valuation was used to determine the fair value. Key assumptions used in the valuation include forecasts of revenue and expenses over an extended period of time, and estimated costs of debt and equity capital to discount the projected cash flows. Certain of these assumptions involve significant judgment, are based on management’s estimate of current and forecasted market conditions and are sensitive and susceptible to change. In addition, for the nine months ended September 30, 2015, the impairment charge includes $1.2 million in exit costs related to the Company’s former corporate headquarters building. During the three and nine months ended September 30, 2014, the Company

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recognized impairment charges of $6.0 million and $13.6 million, respectively. The impairment charges include the write off of $4.7 million and $10.0 million in carrying value of decommissioned towers and $1.3 million and $3.6 million of other third party decommission costs incurred related to the Company’s long-lived assets and intangibles for the three and nine months ended September 30, 2014, respectively. These write offs result from the Company’s analysis that the future cash flows from certain assets would not recover the carrying value of the investment in those assets. Asset impairment and decommission costs and the related impaired assets relate to the Company’s site leasing operating segment.

Fair Value of Financial Instruments— The carrying values of cash and cash equivalents, accounts receivable, restricted cash, accounts payable, and short-term investments approximate their estimated fair values due to the short maturity of these instruments. Short-term investments consisted of $0.5 million and $5.3 million in certificate of deposits, as of September 30, 2015 and December 31, 2014, respectively, and $0.2 million in Treasury securities as of September 30, 2015 and December 31, 2014. The Company’s estimate of the fair value of its held-to-maturity investments in treasury and corporate bonds, including current portion, are based primarily upon Level 1 reported market values. As of September 30, 2015 and December 31, 2014, the carrying value and fair value of the held-to-maturity investments, including current portion, were $1.0 million and $1.1 million, respectively.

The Company determines the fair value of its debt instruments utilizing various Level 2 sources including quoted prices and indicative quotes (non-binding quotes) from brokers that require judgment to interpret market information including implied credit spreads for similar borrowings on recent trades or bid/ask prices. The fair value of the Revolving Credit Facility is considered to approximate the carrying value because the interest payments are based on Eurodollar rates that reset every month. The Company does not believe its credit risk has changed materially from the date the applicable Eurodollar Rate plus 137.5 to 200.0 basis points was set for the Revolving Credit Facility. Refer to Note 10 for the fair values, principal balances, and carrying values of the Company’s debt instruments.

3.RESTRICTED CASH

Restricted cash consists of the following:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of

 

As of

 

 

 

 

September 30, 2015

 

December 31, 2014

 

Included on Balance Sheet

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

 

 

Securitization escrow accounts

 

$

46,381 

 

$

52,117 

 

Restricted cash - current asset

Payment and performance bonds

 

 

404 

 

 

402 

 

Restricted cash - current asset

Surety bonds and workers compensation

 

 

4,270 

 

 

5,934 

 

Other assets - noncurrent

Total restricted cash

 

$

51,055 

 

$

58,453 

 

 

 

Pursuant to the terms of the Tower Securities (see Note 10), the Company is required to establish a securitization escrow account, held by an indenture trustee, into which all rents and other sums due on the towers that secure the Tower Securities are directly deposited by the lessees. These restricted cash amounts are used to fund reserve accounts for the payment of (1) debt service costs, (2) ground rents, real estate and personal property taxes and insurance premiums related to towers, (3) trustee and servicing expenses, and (4) management fees and to reserve a portion of advance rents from tenants. The restricted cash in the securitization escrow account in excess of required reserve balances is subsequently released to the Borrowers (as defined in Note 10) monthly, provided that the Borrowers are in compliance with their debt service coverage ratio and that no event of default has occurred. All monies held by the indenture trustee are classified as Restricted cash on the Company’s Consolidated Balance Sheets.

Payment and performance bonds relate primarily to collateral requirements for tower construction currently in process by the Company. Cash is pledged as collateral related to surety bonds issued for the benefit of the Company or its affiliates in the ordinary course of business and primarily relates to the Company’s tower removal obligations. As of September 30, 2015 and December 31, 2014, the Company had $38.0 million and $38.3 million in surety bonds and payment and performance bonds, respectively, for which it was only required to post $0.8 million in collateral. The Company periodically evaluates the collateral posted for its bonds to ensure that it meets the minimum requirements. As of September 30, 2015 and December 31, 2014, the Company had also pledged $2.5 million and $2.6 million, respectively, as collateral related to its workers compensation policy.

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4.OTHER ASSETS

The Company’s other assets are comprised of the following:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of

 

As of

 

 

September 30, 2015

 

December 31, 2014

 

 

 

 

 

 

 

 

 

 

(in thousands)

Long-term investments

 

$

51,919 

 

$

44,095 

Prepaid land rent

 

 

149,517 

 

 

134,148 

Straight-line rent receivable

 

 

258,534 

 

 

230,384 

Deferred lease costs, net

 

 

30,239 

 

 

28,517 

Other

 

 

24,513 

 

 

29,899 

Total other assets

 

$

514,722 

 

$

467,043 

 

 

 

 

 

 

5.ACQUISITIONS

The Company acquired 225 communication sites during the three months ended September 30, 2015. These acquisitions were not significant to the Company and, accordingly, a preliminary estimate of the fair value of the assets acquired and liabilities assumed has not been presented. The Company evaluates all acquisitions after the applicable closing date of each transaction to determine whether any additional adjustments are needed to the allocation of the purchase price paid for the assets acquired and liabilities assumed by major balance sheet caption, as well as the separate recognition of intangible assets from goodwill if certain criteria are met.

The following table summarizes all of the Company’s cash acquisition capital expenditures:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months

 

For the nine months

 

 

ended September 30,

 

ended September 30,

 

 

2015

 

2014

 

2015

 

2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

Towers and related intangible assets

 

$

76,475 

 

$

71,688 

 

$

358,675 

 

$

1,019,733 

Land buyouts (1)

 

 

9,154 

 

 

9,586 

 

 

50,036 

 

 

29,015 

Total cash acquisition capital expenditures

 

$

85,629 

 

$

81,274 

 

$

408,711 

 

$

1,048,748 

 

(1)

In addition, the Company paid $4.0 million and $2.7 million for ground lease extensions and term easements on land underlying the Company’s towers during the three months ended September 30, 2015 and 2014, respectively, and paid $12.7 million and $7.8 million for ground lease extensions and term easements on land underlying the Company’s towers during the nine months ended September 30, 2015 and 2014, respectively. The Company recorded these amounts in prepaid rent on its Consolidated Balance Sheets.

Subsequent to September 30, 2015, the Company acquired 24 towers for $19.8 million in cash.

6.INTANGIBLE ASSETS, NET

The following table provides the gross and net carrying amounts for each major class of intangible assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of September 30, 2015

 

As of December 31, 2014

 

 

Gross carrying

 

Accumulated

 

Net book

 

Gross carrying

 

Accumulated

 

Net book

 

 

amount

 

amortization

 

value

 

amount

 

amortization

 

value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

Current contract intangibles

 

$

3,859,057 

 

$

(1,053,959)

 

$

2,805,098 

 

$

4,090,129 

 

$

(891,374)

 

$

3,198,755 

Network location intangibles

 

 

1,406,730 

 

 

(474,723)

 

 

932,007 

 

 

1,402,704 

 

 

(411,919)

 

 

990,785 

Intangible assets, net

 

$

5,265,787 

 

$

(1,528,682)

 

$

3,737,105 

 

$

5,492,833 

 

$

(1,303,293)

 

$

4,189,540 

 

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All intangible assets noted above are included in the Company’s site leasing segments. The Company amortizes its intangible assets using the straight-line method over an estimated economic life of 15 years. Amortization expense relating to the intangible assets was $91.4 million and $86.2 million for the three months ended September 30, 2015  and 2014, respectively, and $273.5 million and $250.5 million for the nine months ended September 30, 2015 and 2014, respectively.    

7.PROPERTY AND EQUIPMENT, NET

Property and equipment, net (including assets held under capital leases) consists of the following:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of

 

As of

 

 

September 30, 2015

 

December 31, 2014

 

 

 

 

 

 

 

 

 

(in thousands)

Towers and related components

 

$

4,264,917 

 

$

4,194,375 

Construction-in-process

 

 

29,360 

 

 

35,855 

Furniture, equipment, and vehicles

 

 

55,500 

 

 

51,832 

Land, buildings, and improvements

 

 

507,131 

 

 

426,974 

Total property and equipment

 

 

4,856,908 

 

 

4,709,036 

Less: accumulated depreciation

 

 

(2,136,034)

 

 

(1,946,619)

Property and equipment, net

 

$

2,720,874 

 

$

2,762,417 

 

Construction-in-process represents costs incurred related to towers that are under development and will be used in the Company’s site leasing operations. Depreciation expense was $72.8 million and $73.0 million for the three months ended September 30, 2015 and 2014, respectively, and $224.9 million and $213.7 million for the nine months ended September 30, 2015 and 2014, respectively. At September 30, 2015 and December 31, 2014, non-cash capital expenditures that are included in accounts payable and accrued expenses were $11.4 million and $29.0 million, respectively.

8.COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS

Costs and estimated earnings on uncompleted contracts consist of the following:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of

 

As of

 

 

September 30, 2015

 

December 31, 2014

 

 

 

 

 

 

 

 

 

(in thousands)

Costs incurred on uncompleted contracts

 

$

79,151 

 

$

113,654 

Estimated earnings

 

 

22,593 

 

 

48,949 

Billings to date

 

 

(86,602)

 

 

(143,323)

 

 

$

15,142 

 

$

19,280 

 

These amounts are included in the accompanying Consolidated Balance Sheets under the following captions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of

 

As of

 

 

September 30, 2015

 

December 31, 2014

 

 

 

 

 

 

 

 

 

(in thousands)

Costs and estimated earnings in excess of billings on uncompleted contracts

 

$

25,800 

 

$

30,078 

Billings in excess of costs and estimated earnings on

 

 

 

 

 

 

uncompleted contracts (included in Other current liabilities)

 

 

(10,658)

 

 

(10,798)

 

 

$

15,142 

 

$

19,280 

 

Eight significant customers comprised 93.6% and 92.7% of the costs and estimated earnings in excess of billings on uncompleted contracts, net of billings in excess of costs and estimated earnings on uncompleted contracts at September 30, 2015 and December 31, 2014, respectively.

 

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9.ACCRUED EXPENSES

The Company’s accrued expenses are comprised of the following:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of

 

As of

 

 

September 30, 2015

 

December 31, 2014

 

 

 

 

 

 

 

 

 

(in thousands)

Accrued earnouts

 

$

8,819 

 

$

15,086 

Salaries and benefits

 

 

13,202 

 

 

13,440 

Real estate and property taxes

 

 

9,700 

 

 

5,331 

Other

 

 

33,921 

 

 

31,696 

Total accrued expenses

 

$

65,642 

 

$

65,553 

 

 

 

 

 

 

10.DEBT

The carrying and principal values of debt consist of the following (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of

 

As of

 

 

 

 

September 30, 2015

 

December 31, 2014

 

 

Maturity Date

Principal Balance

 

Fair Value

 

Carrying Value

 

Principal Balance

 

Fair Value

 

Carrying Value

5.625% Senior Notes

 

Oct. 1, 2019

 

$

500,000 

 

$

515,625 

 

$

500,000 

 

$

500,000 

 

$

511,250 

 

$

500,000 

5.750% Senior Notes

 

July 15, 2020

 

 

800,000 

 

 

821,000 

 

 

800,000 

 

 

800,000 

 

 

816,000 

 

 

800,000 

4.875% Senior Notes

 

July 15, 2022

 

 

750,000 

 

 

733,125 

 

 

744,639 

 

 

750,000 

 

 

721,875 

 

 

744,150 

2010-2C Tower Securities

 

April 11, 2017

 

 

550,000 

 

 

563,552 

 

 

550,000 

 

 

550,000 

 

 

576,901 

 

 

550,000 

2012-1C Tower Securities

 

Dec. 11, 2017

 

 

610,000 

 

 

615,435 

 

 

610,000 

 

 

610,000 

 

 

620,175 

 

 

610,000 

2013-1C Tower Securities

 

April 10, 2018

 

 

425,000 

 

 

422,722 

 

 

425,000 

 

 

425,000 

 

 

420,776 

 

 

425,000 

2013-2C Tower Securities

 

April 11, 2023

 

 

575,000 

 

 

582,803 

 

 

575,000 

 

 

575,000 

 

 

584,344 

 

 

575,000 

2013-1D Tower Securities

 

April 10, 2018

 

 

330,000 

 

 

336,059 

 

 

330,000 

 

 

330,000 

 

 

330,551 

 

 

330,000 

2014-1C Tower Securities

 

Oct. 8, 2019

 

 

920,000 

 

 

923,358 

 

 

920,000 

 

 

920,000 

 

 

920,515 

 

 

920,000 

2014-2C Tower Securities

 

Oct. 8, 2024

 

 

620,000 

 

 

626,913 

 

 

620,000 

 

 

620,000 

 

 

629,474 

 

 

620,000 

Revolving Credit Facility

 

Feb. 5, 2020

 

 

280,000 

 

 

280,000 

 

 

280,000 

 

 

125,000 

 

 

125,000 

 

 

125,000 

2012-1 Term Loan

 

May 9, 2017

 

 

160,000 

 

 

159,800 

 

 

160,000 

 

 

172,500 

 

 

171,422 

 

 

172,500 

2014 Term Loan

 

Mar. 24, 2021

 

 

1,481,250 

 

 

1,466,438 

 

 

1,478,265 

 

 

1,492,500 

 

 

1,458,919 

 

 

1,489,149 

2015 Term Loan

 

June 10, 2022

 

 

498,750 

 

 

491,269 

 

 

493,946 

 

 

 —

 

 

 —

 

 

 —

Total debt

 

 

 

$

8,500,000 

 

$

8,538,099 

 

$

8,486,850 

 

$

7,870,000 

 

$

7,887,202 

 

$

7,860,799 

Less: current maturities of long-term debt

 

 

 

 

 

(40,000)

 

 

 

 

 

 

 

 

(32,500)

Total long-term debt, net of current maturities

 

 

 

 

$

8,446,850 

 

 

 

 

 

 

 

$

7,828,299 

 

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The table below reflects cash and non-cash interest expense amounts recognized by debt instrument for the periods presented:  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended September 30,

 

For the nine months ended September 30,

 

 

2015

 

2014

 

2015

 

2014

 

 

Cash

 

Non-cash

 

Cash

 

Non-cash

 

Cash

 

Non-cash

 

Cash

 

Non-cash

 

 

Interest

 

Interest

 

Interest

 

Interest

 

Interest

 

Interest

 

Interest

 

Interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

4.0% Convertible Senior Notes

 

$

 —

 

$

 —

 

$

3,675 

 

$

7,934 

 

 

 —

 

 

 —

 

 

12,520 

 

 

26,266 

8.25% Senior Notes

 

 

 —

 

 

 —

 

 

2,458 

 

 

24 

 

 

 —

 

 

 —

 

 

12,513 

 

 

121 

5.625% Senior Notes

 

 

7,031 

 

 

 —

 

 

7,031 

 

 

 —

 

 

21,094 

 

 

 —

 

 

21,094 

 

 

 —

5.75% Senior Notes

 

 

11,500 

 

 

 —

 

 

11,500 

 

 

 —

 

 

34,500 

 

 

 —

 

 

34,500 

 

 

 —

4.875% Senior Notes

 

 

9,141 

 

 

165 

 

 

9,141 

 

 

157 

 

 

27,422 

 

 

488 

 

 

9,141 

 

 

157 

2010 Tower Securities

 

 

7,058 

 

 

 —

 

 

14,346 

 

 

 —

 

 

21,173 

 

 

 —

 

 

43,036 

 

 

 —

2012 Tower Securities

 

 

4,525 

 

 

 —

 

 

4,521 

 

 

 —

 

 

13,588 

 

 

 —

 

 

13,564 

 

 

 —

2013 Tower Securities

 

 

10,804 

 

 

 —

 

 

10,804 

 

 

 —

 

 

32,413 

 

 

 —

 

 

32,413 

 

 

 —

2014 Tower Securities

 

 

12,785 

 

 

 —

 

 

 —

 

 

 —

 

 

38,354 

 

 

 —

 

 

 —

 

 

 —

Revolving Credit Facility

 

 

1,378 

 

 

 —

 

 

1,007 

 

 

 —

 

 

4,714 

 

 

 —

 

 

3,279 

 

 

 —

2011 Term Loan

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

696 

 

 

2012-1 Term Loan

 

 

1,135 

 

 

 —

 

 

1,222 

 

 

 —

 

 

3,384 

 

 

 —

 

 

3,336 

 

 

 —

2012-2 Term Loan

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

424 

 

 

2014 Term Loan

 

 

12,333 

 

 

125 

 

 

12,458 

 

 

121 

 

 

36,690 

 

 

366 

 

 

28,911 

 

 

277 

2015 Term Loan

 

 

4,153 

 

 

159 

 

 

 —

 

 

 —

 

 

5,101 

 

 

197 

 

 

 —

 

 

 —

Other

 

 

34 

 

 

 —

 

 

 

 

 —

 

 

 

 

 —

 

 

268 

 

 

 —

Total

 

$

81,877 

 

$

449 

 

$

78,170 

 

$

8,236 

 

$

238,439 

 

$

1,051 

 

$

215,695 

 

$

26,832 

 

Revolving Credit Facility under the Senior Credit Agreement

The Revolving Credit Facility is governed by the Senior Credit Agreement. On February 5, 2015, SBA Senior Finance II entered into the 2015 Revolving Refinancing Amendment with several banks and other financial institutions or entities from time to time parties to the Senior Credit Agreement to, among other things, (i) increase the availability under the Company’s Revolving Credit Facility from $770.0 million to $1.0 billion, (ii) extend the maturity date of the Revolving Credit Facility to February 5, 2020, (iii) provide for the ability to borrow in U.S. dollars and certain designated foreign currencies, and (iv) lower the applicable interest rate margins and commitment fees under the Revolving Credit Facility.

As amended February 2015, the Revolving Credit Facility consists of a revolving loan under which up to $1.0 billion aggregate principal amount may be borrowed, repaid and redrawn, subject to compliance with specific financial ratios and the satisfaction of other customary conditions to borrowing.  Amounts borrowed under the Revolving Credit Facility accrue interest, at SBA Senior Finance II’s election, at either (i) the Eurodollar Rate plus a margin that ranges from 137.5 basis points to 200.0 basis points or (ii) the Base Rate plus a margin that ranges from 37.5 basis points to 100.0 basis points, in each case based on the ratio of Consolidated Total Debt to Annualized Borrower EBITDA, calculated in accordance with the Senior Credit Agreement.  In addition, SBA Senior Finance II is required to pay a commitment fee of 0.25% per annum on the amount of unused commitment.  If not earlier terminated by SBA Senior Finance II, the Revolving Credit Facility will terminate on, and SBA Senior Finance II will repay all amounts outstanding on or before, February 5, 2020.  The proceeds available under the Revolving Credit Facility may be used for general corporate purposes.  SBA Senior Finance II may, from time to time, borrow from and repay the Revolving Credit Facility. Consequently, the amount outstanding under the Revolving Credit Facility at the end of a period may not be reflective of the total amounts outstanding during such period. As of September 30, 2015, the Revolving Credit Facility was accruing interest at 2.28% per annum.

During the three and nine months ended September 30, 2015, the Company borrowed $320.0 million and $770.0 million, respectively, under the Revolving Credit Facility and repaid $80.0 million and $615.0 million, respectively, of the outstanding balance under the Revolving Credit Facility. As of September 30, 2015,  $280.0 million was outstanding under the Revolving Credit Facility.

Subsequent to September 30, 2015, the Company repaid the $280.0 million balance outstanding on the Revolving Credit Facility with proceeds from the 2015 Tower Securities (as defined below), and as of the date of this filing, no amounts were outstanding under the Revolving Credit Facility. 

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As of September 30, 2015, SBA Senior Finance II was in compliance with the financial covenants contained in the Senior Credit Agreement. 

Term Loans under the Senior Credit Agreement

2012-1 Term Loan

The 2012-1 Term Loan consists of a senior secured term loan with an initial aggregate principal amount of $200.0 million that matures on May 9, 2017. The 2012-1 Term Loan accrues interest, at SBA Senior Finance II’s election, at either the Base Rate plus a margin that ranges from 100 to 150 basis points or the Eurodollar Rate plus a margin that ranges from 200 to 250 basis points, in each case based on the ratio of Consolidated Total Debt to Annualized Borrower EBITDA (calculated in accordance with the Senior Credit Agreement). As of September 30, 2015, the 2012-1 Term Loan was accruing interest at 2.70% per annum. Principal payments on the 2012-1 Term Loan commenced on September 30, 2012 and are being made in quarterly installments on the last day of each March, June, September, and December, in an amount equal to $2.5 million for each of the first eight quarters, $3.8 million for the next four quarters and $5.0 million for each quarter thereafter. SBA Senior Finance II has the ability to prepay any or all amounts under the 2012-1 Term Loan without premium or penalty. The 2012-1 Term Loan was issued at par. The Company incurred deferred financing fees of $2.7 million in relation to this transaction which are being amortized through the maturity date.

During the three and nine months ended September 30, 2015, the Company repaid $5.0 million and $12.5 million, respectively, of principal on the 2012-1 Term Loan. As of September 30, 2015, the 2012-1 Term Loan had a principal balance of $160.0 million.

2014 Term Loan

The 2014 Term Loan consists of a senior secured term loan with an initial aggregate principal amount of $1.5 billion that matures on March 24, 2021. The 2014 Term Loan accrues interest, at SBA Senior Finance II’s election, at either the Base Rate plus 150 basis points (with a Base Rate floor of 1.75%) or the Eurodollar Rate plus 250 basis points (with a Eurodollar Rate floor of 0.75%). The 2014 Term Loan was issued at 99.75% of par value. As of September 30, 2015, the 2014 Term Loan was accruing interest at 3.25% per annum. Principal payments on the 2014 Term Loan commenced on September 30, 2014 and are being made in quarterly installments on the last day of each March, June, September, and December in an amount equal to $3.8 million. SBA Senior Finance II has the ability to prepay any or all amounts under the 2014 Term Loan without premium or penalty. The Company incurred deferred financing fees of approximately $12.9 million in relation to this transaction which are being amortized through the maturity date.

During the three and nine months ended September 30, 2015, the Company repaid $3.8 million and $11.3 million, respectively, of principal on the 2014 Term Loan. As of September 30, 2015, the 2014 Term Loan had a principal balance of $1.5 billion.

2015 Term Loan

On June 10, 2015, SBA Senior Finance II obtained a new senior secured term loan with an initial aggregate principal amount of $500.0 million that matures on June 10, 2022 (the “2015 Term Loan”). The 2015 Term Loan accrues interest, at SBA Senior Finance II’s election, at either the Base Rate plus 150 basis points (with a Base Rate floor of 1.75%) or the Eurodollar Rate plus 250 basis points (with a Eurodollar Rate floor of 0.75%). The 2015 Term Loan was issued at 99.0% of par value. As of September 30, 2015, the 2015 Term Loan was accruing interest at 3.25% per annum. Principal payments on the 2015 Term Loan commenced on September 30, 2015 and will be made in quarterly installments on the last day of each March, June, September, and December in an amount equal to $1.3 million. SBA Senior Finance II has the ability to prepay any or all amounts under the 2015 Term Loan. However, to the extent the 2015 Term Loan is prepaid prior to December 10, 2015 from proceeds of certain refinancing or repricing transactions, a prepayment fee equal to 1.0% of the aggregate principal amount of such prepayment will apply.  The Company incurred deferred financing fees of approximately $5.1 million to date in relation to this transaction which are being amortized through the maturity date.

During the three and nine months ended September 30, 2015, the Company repaid $1.3 million of principal on the 2015 Term Loan. As of September 30, 2015, the 2015 Term Loan had a principal balance of $498.8 million.

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Secured Tower Revenue Securities

2010 Tower Securities

On April 16, 2010, the Company, through a New York common law trust (the “Trust”), issued $550.0 million of Secured Tower Revenue Securities Series 2010-2C (the “2010 Tower Securities”). The 2010 Tower Securities have an annual interest rate of 5.101%. The anticipated repayment date and the final maturity date for the 2010 Tower Securities are April 11, 2017 and April 9, 2042, respectively. The sole asset of the Trust consists of a non-recourse mortgage loan made in favor of those entities that are borrowers on the mortgage loan (the “Borrowers”). The Company incurred deferred financing fees of $8.1 million in relation to this transaction which are being amortized through the anticipated repayment date of the 2010 Tower Securities.

2012 Tower Securities

On August 9, 2012, the Company, through the Trust, issued $610.0 million of Secured Tower Revenue Securities Series 2012-1C (the “2012 Tower Securities”) which have an anticipated repayment date of December 11, 2017 and a final maturity date of December 9, 2042. The fixed interest rate of the 2012 Tower Securities is 2.933% per annum, payable monthly. The Company incurred deferred financing fees of $14.9 million in relation to this transaction which are being amortized through the anticipated repayment date of the 2012 Tower Securities.

2013 Tower Securities

On April 18, 2013, the Company, through the Trust, issued $425.0 million of 2.240% Secured Tower Revenue Securities Series 2013-1C which have an anticipated repayment date of April 10, 2018 and a final maturity date of April 9, 2043,  $575.0 million of 3.722% Secured Tower Revenue Securities Series 2013-2C which have an anticipated repayment date of April 11, 2023 and a final maturity date of April 9, 2048, and $330.0 million of 3.598% Secured Tower Revenue Securities Series 2013-1D which have an anticipated repayment date of April 10, 2018 and a final maturity date of April 9, 2043 (collectively the “2013 Tower Securities”). The aggregate $1.33 billion of 2013 Tower Securities have a blended interest rate of 3.218% per annum, payable monthly. The Company incurred deferred financing fees of $25.5 million in relation to this transaction which are being amortized through the anticipated repayment date of each of the 2013 Tower Securities.

2014 Tower Securities

On October 15, 2014, the Company, through the Trust, issued $920.0 million of 2.898% Secured Tower Revenue Securities Series 2014-1C which have an anticipated repayment date of October 8, 2019 and a final maturity date of October 11, 2044, and $620.0 million of 3.869% Secured Tower Revenue Securities Series 2014-2C which have an anticipated repayment date of October 8, 2024 and a final maturity date of October 8, 2049 (collectively the “2014 Tower Securities”). The aggregate $1.54 billion of 2014 Tower Securities have a blended interest rate of 3.289% per annum, payable monthly. The Company incurred deferred financing fees of $22.5 million in relation to this transaction which are being amortized through the anticipated repayment date of each of the 2014 Tower Securities.

2015 Tower Securities

On October 14, 2015, the Company, through the Trust, issued $500.0 million of Secured Tower Revenue Securities Series 2015-1C which have an anticipated repayment date of October 8, 2020 and a final maturity date of October 10, 2045 (the “2015 Tower Securities”). The fixed interest rate of the 2015 Tower Securities is 3.156% per annum, payable monthly. The Company has incurred deferred financing fees of $9.7 million to date in relation to this transaction which are being amortized through the anticipated repayment date of the 2015 Tower Securities. In connection with the issuance of the 2015 Tower Securities, the advance rents reserve requirement was modified such that the Borrowers will only be required to maintain an advance rents reserve at any time the monthly tenant debt service coverage ratio is equal to or less than 2:1 and for two calendar months after such coverage ratio again exceeds 2:1.

As of September 30, 2015, the Borrowers met the debt service coverage ratio required by the mortgage loan agreement and were in compliance with all other covenants as set forth in the agreement. 

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4.0% Convertible Senior Notes due 2014

The 4.0% Convertible Senior Notes (the “4.0% Notes”) matured and were repaid on October 1, 2014. During the nine months ended September 30, 2015, the Company settled the remaining outstanding warrants originally sold in connection with its 4.0% Notes. The warrants represented approximately 2.1 million underlying shares of Class A common stock, and the Company satisfied its obligations by paying $150.9 million in cash.

Senior Notes

5.75% Senior Notes

On July 13, 2012, SBA Telecommunications, LLC (“Telecommunications”) issued $800.0 million of unsecured senior notes due July 15, 2020 (the “5.75% Notes”). The 5.75% Notes accrue interest at a rate of 5.75% and were issued at par. Interest on the 5.75% Notes is due semi-annually on July 15 and January 15 of each year. The Company incurred deferred financing fees of $14.0 million in relation to this transaction which are being amortized through the maturity date.

SBA Communications Corporation (“SBAC”) is a holding company with no business operations of its own and its only significant asset is the outstanding capital stock of Telecommunications. Telecommunications is 100% owned by SBAC.  SBAC has fully and unconditionally guaranteed the Senior Notes issued by Telecommunications.

5.625% Senior Notes

On September 28, 2012, the Company issued $500.0 million of unsecured senior notes due October 1, 2019 (the “5.625% Notes”). The 5.625% Notes accrue interest at a rate of 5.625% per annum and were issued at par. Interest on the 5.625% Notes is due semi-annually on April 1 and October 1 of each year. The Company incurred deferred financing fees of $8.6 million in relation to this transaction which are being amortized through the maturity date.

4.875% Senior Notes

On July 1, 2014, the Company issued $750.0 million of unsecured senior notes due July 15, 2022 (the “4.875% Notes”). The 4.875% Notes accrue interest at a rate of 4.875% per annum and were issued at 99.178% of par value. Interest on the 4.875% Notes is due semi-annually on January 15 and July 15 of each year. The Company incurred deferred financing fees of $11.6 million in relation to this transaction which are being amortized through the maturity date.

11.SHAREHOLDERS’ EQUITY

Common Stock equivalents

The Company has common stock equivalents related to its outstanding stock options (see Note 12) and restricted stock units.  These common stock equivalents were not included in diluted loss per share because the effect would have been anti-dilutive for each of the three and nine months ended September 30, 2015 and 2014.  

Stock Repurchases

During the second quarter of 2015, the Company repurchased the remaining $150.0 million of Class A common stock authorized under its previously announced $300.0 million stock repurchase plan, completing this plan. The Company repurchased 1.305 million shares at a weighted average price per share of $114.96.  

On June 4, 2015, the Company announced the authorization of a new $1.0 billion stock repurchase plan. This new plan authorizes the Company to purchase from time to time the Companys outstanding common stock through open market repurchases in compliance with Rule 10b-18 of the Securities Exchange Act of 1934, as amended, and/or in privately negotiated transactions at management's discretion. Shares purchased will be retired.

During the third quarter of 2015, the Company repurchased 2.2 million shares of its Class A common stock for $250.0 million, at a weighted average price per share of  $113.87. The Company currently has $750.0 million of repurchase authorization remaining under its $1.0 billion stock repurchase program.    

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12.STOCK-BASED COMPENSATION

Stock Options

The Company records compensation expense for employee stock options based on the estimated fair value of the options on the date of grant using the Black-Scholes option-pricing model with the assumptions included in the table below. The Company uses a combination of historical data and historical volatility to establish the expected volatility. Historical data is used to estimate the expected option life and the expected forfeiture rate. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for the estimated life of the option. The following assumptions were used to estimate the fair value of options granted using the Black-Scholes option-pricing model:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the nine months ended

 

 

 

 

 

 

September 30,

 

 

 

 

 

 

2015

 

 

2014

Risk free interest rate

 

 

 

 

 

1.21% - 1.45%

 

 

1.15% - 1.37%

Dividend yield

 

 

 

 

 

0.0%

 

 

0.0%

Expected volatility

 

 

 

 

 

20.0%

 

 

22.0%

Expected lives

 

 

 

 

 

4.6 years

 

 

4.4 years

 

The following table summarizes the Company’s activities with respect to its stock option plans for the nine months ended September 30, 2015 as follows (dollars and number of shares in thousands, except for per share data):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-

 

 

 

 

 

 

 

Weighted-

 

Average

 

 

 

 

 

 

 

Average

 

Remaining

 

 

 

 

 

Number

 

Exercise Price

 

Contractual

 

Aggregate

 

 

of Shares

 

Per Share

 

Life (in years)

 

Intrinsic Value

Outstanding at December 31, 2014

 

3,275 

 

$

66.85 

 

 

 

 

 

Granted

 

1,071 

 

$

124.28 

 

 

 

 

 

Exercised

 

(416)

 

$

52.04 

 

 

 

 

 

Canceled

 

(55)

 

$

92.84 

 

 

 

 

 

Outstanding at September 30, 2015

 

3,875 

 

$

83.93 

 

4.7 

 

$

101,301 

Exercisable at September 30, 2015

 

1,429 

 

$

54.56 

 

3.2 

 

$

71,696 

Unvested at September 30, 2015

 

2,446 

 

$

101.08 

 

5.6 

 

$

29,605 

 

The weighted-average per share fair value of options granted during the nine months ended September 30, 2015 was $24.76. The total intrinsic value for options exercised during the nine months ended September 30, 2015 was $29.0 million.

Restricted Stock Units

The following table summarizes the Company’s restricted stock unit activity for the nine months ended September 30, 2015:  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-

 

 

 

 

 

 

 

 

 

Average

 

 

 

 

 

 

 

 

 

Grant Date

 

 

 

 

 

 

 

Number of

 

Fair Value per

 

 

 

 

 

 

 

Units

 

Share

 

 

 

 

 

 

 

(in thousands)

 

 

 

Outstanding at December 31, 2014

 

 

 

 

 

 

295 

 

$

73.55 

Granted

 

 

 

 

 

 

110 

 

$

123.97 

Vested

 

 

 

 

 

 

(122)

 

$

64.35 

Forfeited/canceled

 

 

 

 

 

 

(6)

 

$

94.25 

Outstanding at September 30, 2015

 

 

 

 

 

 

277 

 

$

97.12 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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13.INCOME TAXES

The primary reason for the difference in the Company’s effective tax rate and the US statutory rate is a result of the Company having a full valuation allowance on its US net deferred tax assets. The Company has concluded that it is not more likely than not that its deferred tax assets will be realized and has recorded a full valuation allowance. A foreign tax provision is recognized because certain international subsidiaries of the Company have profitable operations or are in a net deferred tax liability position.

14.SEGMENT DATA

The Company operates in two business segments  (site leasing and site development) and has three reportable segments (domestic site leasing, international site leasing, and site development).  The Company’s site leasing segments offer different services than its site development segment, and each are strategic business units. They are managed separately based on the fundamental differences in their operations. The domestic and international site leasing segments include results of the managed and sublease businesses. The site development segment includes the results of both consulting and construction related activities.

Revenues, cost of revenues (exclusive of depreciation, accretion and amortization), capital expenditures (including assets acquired through the issuance of shares of the Company’s Class A common stock) and identifiable assets pertaining to the segments in which the Company continues to operate are presented below.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Not

 

 

 

 

Domestic Site

 

Int'l Site

 

Site

 

Identified by

 

 

 

 

Leasing

 

Leasing

 

Development

 

Segment

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended September 30, 2015

 

(in thousands)

Revenues

 

$

313,131 

 

$

58,862 

 

$

38,742 

 

$

 —

 

$

410,735 

Cost of revenues (2)

 

 

63,587 

 

 

17,759 

 

 

30,387 

 

 

 —

 

 

111,733 

Operating profit

 

 

249,544 

 

 

41,103 

 

 

8,355 

 

 

 —

 

 

299,002 

Selling, general, and administrative

 

 

16,601 

 

 

4,200 

 

 

2,739 

 

 

4,332 

 

 

27,872 

Acquisition related adjustments and expenses

 

 

253 

 

 

111 

 

 

 —

 

 

 —

 

 

364 

Asset impairment and decommission costs

 

 

63,225 

 

 

128 

 

 

 —

 

 

 —

 

 

63,353 

Depreciation, amortization and accretion

 

 

134,734 

 

 

28,166 

 

 

780 

 

 

650 

 

 

164,330 

Operating income (loss)

 

 

34,731 

 

 

8,498 

 

 

4,836 

 

 

(4,982)

 

 

43,083 

Other expense (principally interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

and other expense)

 

 

 

 

 

 

 

 

 

 

 

(197,103)

 

 

(197,103)

Loss before provision for income taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(154,020)

Cash capital expenditures (3)

 

 

92,033 

 

 

35,353 

 

 

698 

 

 

2,115 

 

 

130,199 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended September 30, 2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

293,775 

 

$

55,235 

 

$

44,283 

 

$

 —

 

$

393,293 

Cost of revenues (2)

 

 

63,108 

 

 

14,818 

 

 

33,950 

 

 

 —

 

 

111,876 

Operating profit

 

 

230,667 

 

 

40,417 

 

 

10,333 

 

 

 —

 

 

281,417 

Selling, general, and administrative

 

 

16,456 

 

 

4,413 

 

 

3,046 

 

 

2,674 

 

 

26,589 

Acquisition related adjustments and expenses

 

 

2,242 

 

 

(2,300)

 

 

 —

 

 

 —

 

 

(58)

Asset impairment and decommission costs

 

 

5,536 

 

 

456 

 

 

 —

 

 

 —

 

 

5,992 

Depreciation, amortization and accretion

 

 

128,781 

 

 

28,792 

 

 

660 

 

 

1,177 

 

 

159,410 

Operating income (loss)

 

 

77,652 

 

 

9,056 

 

 

6,627 

 

 

(3,851)

 

 

89,484 

Other expense (principally interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

and other expense)

 

 

 

 

 

 

 

 

 

 

 

(105,126)

 

 

(105,126)

Loss before provision for income taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(15,642)

Cash capital expenditures (3)

 

 

113,231 

 

 

17,514 

 

 

1,141 

 

 

8,938 

 

 

140,824 

 

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Table of Contents

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Not

 

 

 

 

Domestic Site

 

Int'l Site

 

Site

 

Identified by

 

 

 

 

Leasing

 

Leasing

 

Development

 

Segment

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the nine months ended September 30, 2015

 

(in thousands)

Revenues

 

$

926,442 

 

$

185,740 

 

$

119,351 

 

$

 —

 

$

1,231,533 

Cost of revenues (2)

 

 

188,841 

 

 

54,457 

 

 

91,662 

 

 

 —

 

 

334,960 

Operating profit

 

 

737,601 

 

 

131,283 

 

 

27,689 

 

 

 —

 

 

896,573 

Selling, general, and administrative

 

 

51,069 

 

 

12,157 

 

 

7,475 

 

 

15,316 

 

 

86,017 

Acquisition related adjustments and expenses

 

 

7,295 

 

 

188 

 

 

 —

 

 

 —

 

 

7,483 

Asset impairment and decommission costs

 

 

73,781 

 

 

404 

 

 

 —

 

 

 —

 

 

74,185 

Depreciation, amortization and accretion

 

 

401,873 

 

 

91,636 

 

 

2,246 

 

 

2,805 

 

 

498,560 

Operating income (loss)

 

 

203,583 

 

 

26,898 

 

 

17,968 

 

 

(18,121)

 

 

230,328 

Other expense (principally interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

and other expense)

 

 

 

 

 

 

 

 

 

 

 

(429,889)

 

 

(429,889)

Loss before provision for income taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(199,561)

Cash capital expenditures (3)

 

 

479,129 

 

 

78,427 

 

 

3,429 

 

 

12,664 

 

 

573,649 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the nine months ended September 30, 2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

854,003 

 

$

144,778 

 

$

123,481 

 

$

 —

 

$

1,122,262 

Cost of revenues (2)

 

 

185,637 

 

 

37,412 

 

 

93,432 

 

 

 —

 

 

316,481 

Operating profit

 

 

668,366 

 

 

107,366 

 

 

30,049 

 

 

 —

 

 

805,781 

Selling, general, and administrative

 

 

48,591 

 

 

12,518 

 

 

7,047 

 

 

8,551 

 

 

76,707 

Acquisition related adjustments and expenses

 

 

8,878 

 

 

1,850 

 

 

 —

 

 

 —

 

 

10,728 

Asset impairment and decommission costs

 

 

12,263 

 

 

1,291 

 

 

 —

 

 

 —

 

 

13,554 

Depreciation, amortization and accretion

 

 

384,117 

 

 

75,160 

 

 

1,788 

 

 

3,793 

 

 

464,858 

Operating income (loss)

 

 

214,517 

 

 

16,547 

 

 

21,214 

 

 

(12,344)

 

 

239,934 

Other expense (principally interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

and other expense)

 

 

 

 

 

 

 

 

 

 

 

(259,909)

 

 

(259,909)

Loss before provision for income taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(19,975)

Cash capital expenditures (3)

 

 

449,874 

 

 

712,920 

 

 

3,549 

 

 

15,042 

 

 

1,181,385 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Not

 

 

 

 

Domestic Site

 

Int'l Site

 

Site

 

Identified by

 

 

 

 

Leasing

 

Leasing

 

Development

 

Segment (1)

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of September 30, 2015

 

$

5,570,376 

 

$

1,557,010 

 

$

61,192 

 

$

208,179 

 

$

7,396,757 

As of December 31, 2014

 

$

5,554,753 

 

$

1,989,571 

 

$

78,633 

 

$

218,168 

 

$

7,841,125 

 

(1)

Assets not identified by segment consist primarily of general corporate assets.

(2)

Excludes depreciation, amortization, and accretion.

(3)

Includes cash paid for capital expenditures and acquisitions and vehicle capital lease additions.

 

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

We are a leading independent owner and operator of wireless communications tower structures, rooftop and other structures that support antennas used for wireless communications, which we collectively refer to as “towers” or “sites.” Our principal operations are in the United States and its territories. In addition, we own and operate towers in South America, Central America, and Canada. Our primary business line is our site leasing business, which contributed 96.9% of our total segment operating profit for the nine months ended September 30, 2015. In our site leasing business, we (1) lease antenna space to wireless service providers on towers that we own or operate and (2) manage rooftop and tower sites for property owners under various contractual arrangements. As of September 30, 2015, we owned 25,111 sites, a substantial portion of which have been built by us or built by other tower owners or operators who, like us, have built such towers to lease space to multiple wireless service providers. We also managed or leased approximately 5,500 actual or potential sites, approximately 500 of which were revenue producing as of September 30, 2015. Our other business line is our site development business, through which we assist wireless service providers in developing and maintaining their own wireless service networks.

Site Leasing Services

Our primary focus is the leasing of antenna space on our multi-tenant towers to a variety of wireless service providers under long-term lease contracts in the United States, Canada, Central America, and South America. Site leasing revenues are received primarily from wireless service provider tenants, including AT&T, Sprint, Verizon Wireless, T-Mobile, Oi S.A., Digicel, America Movil, and Telefonica. Wireless service providers enter into tenant leases with us, each of which relates to the lease or use of space at an individual tower. In the United States and Canada, our tenant leases are generally for an initial term of five to ten years with five 5-year renewal periods at the option of the tenant. These tenant leases typically contain specific rent escalators, which average 3-4% per year, including the renewal option periods. Tenant leases in our Central American and South American markets typically have an initial term of ten years with 5-year renewal periods. In Central America, we have similar rent escalators to that of leases in the United States and Canada while our leases in South America escalate in accordance with a standard cost of living index.

In our Central American markets and Ecuador, significantly all of our revenue, expenses, and capital expenditures arising from our new build activities are denominated in U.S. dollars. Specifically, most of our ground leases, tenant leases, and tower-related expenses are due and paid in U.S. dollars. In our Central American markets, our local currency obligations are principally limited to (1) permitting and other local fees, (2) utilities, and (3) taxes. In our Canadian and Brazil operations, significantly all of our revenue, expenses, and capital expenditures, including tenant leases, ground leases, and other tower-related expenses are denominated in local currency.

Cost of site leasing revenue primarily consists of:

·

Rental payments on ground leases and other underlying property interests;

·

Straight-line rent adjustment for the difference between rental payments made and the expense recorded as if the payments had been made evenly throughout the lease term (which may include renewal terms) of the underlying property interests;

·

Property taxes;

·

Site maintenance and monitoring costs (exclusive of employee related costs);

·

Utilities;

·

Property insurance; and

·

Deferred lease origination cost amortization.

Ground leases are generally for an initial term of five years or more with multiple renewal terms of five-year periods at our option and provide for rent escalators which typically average 2-3% annually, or in our South American markets, adjust in accordance with a standard cost of living index. Ground lease rental expense in our South American markets are reimbursed to us by our customers. As of September 30, 2015, approximately 73% of our tower structures were located on parcels of land that we own, land subject to perpetual easements, or parcels of land in which we have a leasehold interest that extends beyond 20 years. For any given tower, costs are relatively fixed over a monthly or an annual time period. As such, operating costs for owned towers do not generally increase as a result of adding additional customers to the tower. The amount of direct costs associated with operating a tower varies from site to site depending on the taxing jurisdiction and the height and age of the tower. The ongoing maintenance requirements are typically minimal and include replacing lighting systems, painting a tower, or upgrading or repairing an access road or fencing.

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As indicated in the table below, our site leasing business generates substantially all of our total segment operating profit. For information regarding our operating segments, see Note 14 of our Condensed Notes to Consolidated Financial Statements included in this quarterly report.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended

 

For the nine months ended

 

 

September 30,

 

September 30,

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment operating profit as a percentage of total

 

2015

 

2014

 

2015

 

2014

 

 

 

 

 

 

 

 

 

 

 

 

 

Domestic site leasing

 

 

83.5% 

 

 

81.9% 

 

 

82.3% 

 

 

83.0% 

International site leasing

 

 

13.7% 

 

 

14.4% 

 

 

14.6% 

 

 

13.3% 

Total site leasing

 

 

97.2% 

 

 

96.3% 

 

 

96.9% 

 

 

96.3% 

We believe that over the long-term, site leasing revenues will continue to grow as wireless service providers lease additional antenna space on our towers due to increasing minutes of network use and data transfer, network expansion and network coverage requirements. We believe our site leasing business is characterized by stable and long-term recurring revenues, predictable operating costs and minimal non-discretionary capital expenditures. Due to the relatively young age and mix of our tower portfolio, we expect future expenditures required to maintain these towers to be minimal. Consequently, we expect to grow our cash flows on existing towers by (1) adding tenants to our towers at minimal incremental costs by using existing tower capacity or requiring wireless service providers to bear all or a portion of the cost of tower modifications and (2) executing monetary amendments as wireless service providers upgrade their equipment. Furthermore, because our towers are strategically positioned and our customers typically do not relocate, we have historically experienced low tenant lease terminations as a percentage of revenue.

Site Development Services

Our site development business, which is conducted in the United States only, is complementary to our site leasing business and provides us the ability to keep in close contact with the wireless service providers who generate substantially all of our site leasing revenue and to capture ancillary revenues that are generated by our site leasing activities, such as antenna and equipment installation at our tower locations. Site development services revenues are earned primarily from providing a full range of end to end services to wireless service providers or companies providing development or project management services to wireless service providers. Our services include: (1) network pre-design; (2) site audits; (3) identification of potential locations for towers and antennas; (4) support in buying or leasing of the location; (5) assistance in obtaining zoning approvals and permits; (6) tower and related site construction; (7) antenna installation; and (8) radio equipment installation, commissioning, and maintenance. We provide site development services at our towers and at towers owned by others.

Critical Accounting Policies and Estimates

We have identified the policies and significant estimation processes listed in the Annual Report on Form 10-K as critical to our business operations and the understanding of our results of operations. The listing is not intended to be a comprehensive list. In many cases, the accounting treatment of a particular transaction is specifically dictated by accounting principles generally accepted in the United States, with no need for management’s judgment in their application. In other cases, management is required to exercise judgment in the application of accounting principles with respect to particular transactions. The impact and any associated risks related to these policies on our business operations is discussed throughout “Management’s Discussion and Analysis of Financial Condition and Results of Operations” where such policies affect reported and expected financial results. For a detailed discussion on the application of these and other accounting policies, see Note 2 of our Consolidated Financial Statements contained in our Annual Report on Form 10-K for the year ended December 31, 2014. Our preparation of our financial statements requires us to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of our financial statements, and the reported amounts of revenue and expenses during the reporting periods. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. There can be no assurance that actual results will not differ from those estimates and such differences could be significant.

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RESULTS OF OPERATIONS

Three months ended September 30, 2015 compared to three months ended September 30, 2014 

 

 

Revenues and Segment Operating Profit:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended

 

 

 

 

 

 

 

 

September 30,

 

Dollar

 

Percentage

 

 

2015

 

2014

 

Change

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

(in thousands)

 

 

 

Domestic site leasing

 

$

313,131 

 

$

293,775 

 

$

19,356 

 

 

6.6% 

International site leasing

 

 

58,862 

 

 

55,235 

 

 

3,627 

 

 

6.6% 

Site development

 

 

38,742 

 

 

44,283 

 

 

(5,541)

 

 

(12.5%)

Total

 

$

410,735 

 

$

393,293 

 

$

17,442 

 

 

4.4% 

Cost of Revenues

 

 

 

 

 

 

 

 

 

 

 

 

Domestic site leasing

 

$

63,587 

 

$

63,108 

 

$

479 

 

 

0.8% 

International site leasing

 

 

17,759 

 

 

14,818 

 

 

2,941 

 

 

19.8% 

Site development

 

 

30,387 

 

 

33,950 

 

 

(3,563)

 

 

(10.5%)

Total

 

$

111,733 

 

$

111,876 

 

$

(143)

 

 

(0.1%)

Operating Profit

 

 

 

 

 

 

 

 

 

 

 

 

Domestic site leasing

 

$

249,544 

 

$

230,667 

 

$

18,877 

 

 

8.2% 

International site leasing

 

 

41,103 

 

 

40,417 

 

 

686 

 

 

1.7% 

Site development

 

 

8,355 

 

 

10,333 

 

 

(1,978)

 

 

(19.1%)

 

Revenues

Total revenues increased  $17.4 million for the three months ended September 30, 2015, as compared to the prior year, due largely to (i) revenues from 2,398 towers acquired and 640 towers built since July 1, 2014 and (ii) organic site leasing growth from new leases, contractual rent escalators, and monetary lease amendments for additional equipment added to our towers. The increase in total revenues includes the negative impact of $14.3 million from fluctuations in foreign currency exchange rates as compared to the prior year period.

Domestic site leasing revenues increased  $19.4 million for the three months ended September 30, 2015, as compared to the prior year, due largely to (i) revenues from 506 towers acquired and 196 towers built since July 1, 2014 and (ii) organic site leasing growth from new leases, contractual rent escalators, and monetary lease amendments for additional equipment added to our towers.

International site leasing revenues increased  $3.6 million for the three months ended September 30, 2015, as compared to the prior year, due largely to (i) revenues from 1,892 towers acquired, primarily from the acquisition of 1,641 towers from Oi S.A. in December 2014, and 444 towers built since July 1, 2014 and (ii) organic site leasing growth from new leases, contractual rent escalators, and monetary lease amendments for additional equipment added to our towers. The increase in international site leasing revenues includes the negative impact of $14.3 million from fluctuations in foreign currency exchange rates as compared to the prior year period.

Site development revenues decreased $5.5 million for the three months ended September 30, 2015, as compared to the prior year, as a result of a decrease in the volume of work performed due to the timing of our wireless carrier customers’ initiatives.

Operating Profit

 

Domestic site leasing segment operating profit increased  $18.9 million for the three months ended September 30, 2015, as compared to the prior year, primarily due to additional profit generated by (i) towers acquired and built since July 1, 2014  and organic site leasing growth as noted above, (ii) improving control of our site leasing cost of revenues, and (iii) the positive impact of our ground lease purchase program.

 

International site leasing segment operating profit increased  $0.7 million for the three months ended September 30, 2015, as compared to the prior year, primarily due to additional profit generated by (i) towers acquired and built since July 1, 2014 and organic site leasing growth as noted above and (ii) the positive impact of our ground lease purchase program, partially offset by increased 

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costs in the current quarter resulting from the integration of towers acquired in 2014. The increase in international segment operating profit includes the negative impact of $10.4 million from fluctuations in foreign currency exchange rates as compared to the prior year period.

Site development segment operating profit decreased  $2.0 million for the three months ended September 30, 2015 as compared to the prior year, primarily due to a decrease in the volume of work performed due to the timing of our wireless carrier customers’ initiatives.

Selling, General, and Administrative Expenses: 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended

 

 

 

 

 

 

 

 

September 30,

 

Dollar

 

Percentage

 

 

2015

 

2014

 

Change

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

 

 

 

Total

 

$

27,872 

 

$

26,589 

 

$

1,283 

 

 

4.8% 

Selling, general, and administrative expenses increased  $1.3 million for the three months ended September 30, 2015, as compared to the prior year, primarily as a result of an increase in personnel, salaries, benefits, non-cash compensation, and other support costs due in large part to our continued portfolio expansion. The increase in selling, general, and administrative expenses includes the positive impact of $0.6 million from fluctuations in foreign currency exchange rates as compared to the prior year period.

Acquisition Related Adjustments and Expenses: 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended

 

 

 

 

 

 

 

 

September 30,

 

Dollar

 

Percentage

 

 

2015

 

2014

 

Change

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

 

 

 

Domestic site leasing

 

$

253 

 

$

2,242 

 

$

(1,989)

 

 

(88.7%)

International site leasing

 

 

111 

 

 

(2,300)

 

 

2,411 

 

 

(104.8%)

Total

 

$

364 

 

$

(58)

 

$

422 

 

 

(727.6%)

Acquisition related adjustments and expenses increased  $0.4 million for the three months ended September 30, 2015, as compared to the prior year, primarily as a result of changes in our estimated pre-acquisition contingencies, partially offset by a reduction in the number of acquisitions compared to the prior year period.  

Asset Impairment and Decommission Costs:  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended

 

 

 

 

 

 

 

 

September 30,

 

Dollar

 

Percentage

 

 

2015

 

2014

 

Change

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

 

 

 

Domestic site leasing

 

$

63,225 

 

$

5,536 

 

$

57,689 

 

 

1,042.1% 

International site leasing

 

 

128 

 

 

456 

 

 

(328)

 

 

(71.9%)

Total

 

$

63,353 

 

$

5,992 

 

$

57,361 

 

 

957.3% 

Asset impairment and decommission costs increased  $57.4  million for the three months ended September 30, 2015, as compared to the prior year, primarily as a result of a $56.7 million impairment charge recorded in the third quarter of 2015 related to fiber assets acquired in the 2012 Mobilitie transaction resulting from the Company’s analysis that the future cash flows would not recover the carrying value of the investment.  

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Depreciation, Accretion, and Amortization Expenses:  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended

 

 

 

 

 

 

 

 

September 30,

 

Dollar

 

Percentage

 

 

2015

 

2014

 

Change

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

 

 

 

Domestic site leasing

 

$

134,734 

 

$

128,781 

 

$

5,953 

 

 

4.6% 

International site leasing

 

 

28,166 

 

 

28,792 

 

 

(626)

 

 

(2.2%)

Total site leasing

 

$

162,900 

 

$

157,573 

 

$

5,327 

 

 

3.4% 

Site development

 

 

780 

 

 

660 

 

 

120 

 

 

18.2% 

Not identified by segment

 

 

650 

 

 

1,177 

 

 

(527)

 

 

(44.8%)

Total

 

$

164,330 

 

$

159,410 

 

$

4,920 

 

 

3.1% 

Depreciation, accretion, and amortization expense increased  $4.9 million for the three months ended September 30, 2015, as compared to the prior year, due to the increase in the number of towers we acquired and built since July 1, 2014. The increase in depreciation, accretion, and amortization expense includes the positive impact of $7.6 million from fluctuations in foreign currency exchange rates as compared to the prior year period.

Operating Income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended

 

 

 

 

 

 

 

 

September 30,

 

Dollar

 

Percentage

 

 

2015

 

2014

 

Change

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

 

 

 

Domestic site leasing

 

$

34,731 

 

$

77,652 

 

$

(42,921)

 

 

(55.3%)

International site leasing

 

 

8,498 

 

 

9,056 

 

 

(558)

 

 

(6.2%)

Total site leasing

 

$

43,229 

 

$

86,708 

 

$

(43,479)

 

 

(50.1%)

Site development

 

 

4,836 

 

 

6,627 

 

 

(1,791)

 

 

(27.0%)

Not identified by segment

 

 

(4,982)

 

 

(3,851)

 

 

(1,131)

 

 

29.4% 

Total

 

$

43,083 

 

$

89,484 

 

$

(46,401)

 

 

(51.9%)

Domestic site leasing operating income decreased  $42.9 million for the three months ended September 30, 2015, as compared to the prior year, primarily due to an increase in asset impairment and decommission costs and depreciation, accretion, and amortization expense, partially offset by higher segment operating profit and a decrease in acquisition related adjustments and expenses.

International site leasing operating income decreased  $0.6 million for the three months ended September 30, 2015, as compared to the prior year, primarily due to an increase in acquisition related adjustments and expenses, partially offset by higher segment operating profit and decreases in asset impairment and decommission costs and depreciation, accretion, and amortization expense. The decrease in international site leasing operating income includes the negative impact of $3.1 million from fluctuations in foreign currency exchange rates as compared to the prior year period.

Site development operating income decreased  $1.8 million for the three months ended September 30, 2015, as compared to the prior year, primarily due to lower segment operating profit and an increase in depreciation, accretion, and amortization expense, partially offset by a decrease in selling, general, and administrative expenses.

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Other Income (Expense): 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended

 

 

 

 

 

 

 

 

September 30,

 

Dollar

 

Percentage

 

 

2015

 

2014

 

Change

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

 

 

 

Interest income

 

$

1,276 

 

$

161 

 

$

1,115 

 

 

692.5% 

Interest expense

 

 

(81,877)

 

 

(78,170)

 

 

(3,707)

 

 

4.7% 

Non-cash interest expense

 

 

(449)

 

 

(8,236)

 

 

7,787 

 

 

(94.5%)

Amortization of deferred financing fees

 

 

(4,803)

 

 

(4,599)

 

 

(204)

 

 

4.4% 

Loss from extinguishment of debt, net

 

 

 —

 

 

(14,893)

 

 

14,893 

 

 

(100.0%)

Other (expense) income, net

 

 

(111,250)

 

 

611 

 

 

(111,861)

 

 

(18,307.9%)

Total

 

$

(197,103)

 

$

(105,126)

 

$

(91,977)

 

 

87.5% 

Interest income increased  $1.1 million due to a higher amount of investments held and a higher average interest rate on those investments held for the three months ended September 30, 2015 as compared to the prior year period.

Interest expense increased  $3.7 million due to the higher average principal amount of cash-interest bearing debt outstanding for the three months ended September 30, 2015 compared to the prior year, primarily resulting from the issuance of the 2014 Tower Securities in October 2014 and the borrowing of the 2015 Term Loan in June 2015, partially offset by the full repayment of the 2010-1C Tower Securities, the full redemption of the 8.25% Notes, and the settlement of a portion of the 4.0% Notes during the prior year period.

Non-cash interest expense decreased  $7.8 million for the three months ended September 30, 2015, as compared to the prior year, primarily due to the maturity of the 4.0% Notes during the prior year period.

Loss from extinguishment of debt decreased  $14.9 million for the three months ended September 30, 2015, as compared to the prior year, primarily due to the early redemption of the 8.25% Notes during the prior year period.

Other expense increased by $111.9 million for the three months ended September 30, 2015, as compared to the prior year, primarily due to a  $112.1 million loss related to the remeasurement of an  intercompany loan not denominated in the functional currency during the three months ended September 30, 2015.

Net Loss:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended

 

 

 

 

 

 

 

 

September 30,

 

Dollar

 

Percentage

 

 

2015

 

2014

 

Change

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

 

 

 

Net loss

 

$

(155,946)

 

$

(16,624)

 

$

(139,322)

 

 

838.1% 

 

Net loss was $155.9 million for the three months ended September 30, 2015 as compared to  a net loss of $16.6 million in the prior year, an increase of $139.3 million. The increase is primarily due to increases in other expense, asset impairment and decommission costs, depreciation, accretion, and amortization expense, and selling, general and administrative expenses, partially offset by an increase in our total segment operating profit as compared to the prior year period. The increase in net loss includes the negative impact of $108.8 million from fluctuations in foreign currency exchange rates as compared to the prior year period.

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Nine months ended September 30, 2015 compared to nine months ended September 30, 2014 

 

 

Revenues and Segment Operating Profit:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the nine months ended

 

 

 

 

 

 

 

 

September 30,

 

Dollar

 

Percentage

 

 

2015

 

2014

 

Change

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

(in thousands)

 

 

 

Domestic site leasing

 

$

926,442 

 

$

854,003 

 

$

72,439 

 

 

8.5% 

International site leasing

 

 

185,740 

 

 

144,778 

 

 

40,962 

 

 

28.3% 

Site development

 

 

119,351 

 

 

123,481 

 

 

(4,130)

 

 

(3.3%)

Total

 

$

1,231,533 

 

$

1,122,262 

 

$

109,271 

 

 

9.7% 

Cost of Revenues

 

 

 

 

 

 

 

 

 

 

 

 

Domestic site leasing

 

$

188,841 

 

$

185,637 

 

$

3,204 

 

 

1.7% 

International site leasing

 

 

54,457 

 

 

37,412 

 

 

17,045 

 

 

45.6% 

Site development

 

 

91,662 

 

 

93,432 

 

 

(1,770)

 

 

(1.9%)

Total

 

$

334,960 

 

$

316,481 

 

$

18,479 

 

 

5.8% 

Operating Profit

 

 

 

 

 

 

 

 

 

 

 

 

Domestic site leasing

 

$

737,601 

 

$

668,366 

 

$

69,235 

 

 

10.4% 

International site leasing

 

 

131,283 

 

 

107,366 

 

 

23,917 

 

 

22.3% 

Site development

 

 

27,689 

 

 

30,049 

 

 

(2,360)

 

 

(7.9%)

 

Revenues

Total revenues increased  $109.3 million for the nine months ended September 30, 2015, as compared to the prior year, due largely to (i) revenues from 4,631 towers acquired and 748 towers built since January 1, 2014 and (ii) organic site leasing growth from new leases, contractual rent escalators, and monetary lease amendments for additional equipment added to our towers. The increase in total revenues includes the negative impact of $29 million from fluctuations in foreign currency exchange rates as compared to the prior year period.

Domestic site leasing revenues increased  $72.4 million for the nine months ended September 30, 2015, as compared to the prior year, due largely to (i) revenues from 723 towers acquired and 244 towers built since January 1, 2014 and (ii) organic site leasing growth from new leases, contractual rent escalators, and monetary lease amendments for additional equipment added to our towers.

International site leasing revenues increased  $41.0 million for the nine months ended September 30, 2015, as compared to the prior year, due largely to (i) revenues from 3,908 towers acquired, primarily the acquisition of 3,648 towers from Oi S.A. in March 2014 and December 2014, and 504 towers built since January 1, 2014 and (ii) organic site leasing growth from new leases, contractual rent escalators, and monetary lease amendments for additional equipment added to our towers. The increase in international site leasing revenues includes the negative impact of $29 million from fluctuations in foreign currency exchange rates as compared to the prior year period.

Site development revenues decreased  $4.1 million for the nine months ended September 30, 2015, as compared to the prior year, as a result of a decrease in the volume of work performed due to the timing of our wireless carrier customers’ initiatives.

Operating Profit

 

Domestic site leasing segment operating profit increased  $69.2 million for the nine months ended September 30, 2015, as compared to the prior year, primarily due to additional profit generated by (i) towers acquired and built since January 1, 2014 and organic site leasing growth as noted above, (ii) improving control of our site leasing cost of revenues, and (iii) the positive impact of our ground lease purchase program.

 

International site leasing segment operating profit increased  $23.9 million for the nine months ended September 30, 2015, as compared to the prior year, primarily due to additional profit generated by (i) towers acquired and built since January 1, 2014 and organic site leasing growth as noted above and (ii) the positive impact of our ground lease purchase program, partially offset by increased costs resulting from the integration of towers acquired in 2014. The increase in international segment operating profit includes the negative impact of $21.3 million from fluctuations in foreign currency exchange rates as compared to the prior year period.

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Site development segment operating profit decreased  $2.4 million for the nine months ended September 30, 2015 as compared to the prior year, primarily due to lower services revenue.

Selling, General, and Administrative Expenses: 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the nine months ended

 

 

 

 

 

 

 

 

September 30,

 

Dollar

 

Percentage

 

 

2015

 

2014

 

Change

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

 

 

 

Total

 

$

86,017 

 

$

76,707 

 

$

9,310 

 

 

12.1% 

Selling, general, and administrative expenses increased  $9.3 million for the nine months ended September 30, 2015, as compared to the prior year, primarily as a result of an increase in personnel, salaries, benefits, non-cash compensation, and other support costs due in large part to our continued portfolio expansion. The increase in selling, general, and administrative expenses includes the positive impact of $1.3 million from fluctuations in foreign currency exchange rates as compared to the prior year period.

Acquisition Related Adjustments and Expenses:  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the nine months ended

 

 

 

 

 

 

 

 

September 30,

 

Dollar

 

Percentage

 

 

2015

 

2014

 

Change

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

 

 

 

Domestic site leasing

 

$

7,295 

 

$

8,878 

 

$

(1,583)

 

 

(17.8%)

International site leasing

 

 

188 

 

 

1,850 

 

 

(1,662)

 

 

(89.8%)

Total

 

$

7,483 

 

$

10,728 

 

$

(3,245)

 

 

(30.2%)

 

Acquisition related adjustments and expenses decreased  $3.2 million for the nine months ended September 30, 2015, as compared to the prior year, primarily as a result of a reduction in the number of acquisitions compared to the prior year period, as well as, changes in our estimated pre-acquisition contingencies. The  decrease in acquisition related adjustments and expenses includes the negative impact of $0.4 million from fluctuations in foreign currency exchange rates as compared to the prior year period.

Asset Impairment and Decommission Costs:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the nine months ended

 

 

 

 

 

 

 

 

September 30,

 

Dollar

 

Percentage

 

 

2015

 

2014

 

Change

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

 

 

 

Domestic site leasing

 

$

73,781 

 

$

12,263 

 

$

61,518 

 

 

501.7% 

International site leasing

 

 

404 

 

 

1,291 

 

 

(887)

 

 

(68.7%)

Total

 

$

74,185 

 

$

13,554 

 

$

60,631 

 

 

447.3% 

 

Asset impairment and decommission costs increased  $60.6 million for the nine months ended September 30, 2015, as compared to the prior year, primarily as a result of a $56.7 million impairment charge recorded in the third quarter of 2015 related to fiber assets acquired in the 2012 Mobilitie transaction resulting from the Company’s analysis that the future cash flows would not recover the carrying value of the investment. In addition, the increase in the asset impairment and decommission costs includes $1.2 million in exit costs related to our former corporate headquarters building.

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Depreciation, Accretion, and Amortization Expenses:  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the nine months ended

 

 

 

 

 

 

 

 

September 30,

 

Dollar

 

Percentage

 

 

2015

 

2014

 

Change

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

 

 

 

Domestic site leasing

 

$

401,873 

 

$

384,117 

 

$

17,756 

 

 

4.6% 

International site leasing

 

 

91,636 

 

 

75,160 

 

 

16,476 

 

 

21.9% 

Total site leasing

 

$

493,509 

 

$

459,277 

 

$

34,232 

 

 

7.5% 

Site development

 

 

2,246 

 

 

1,788 

 

 

458 

 

 

25.6% 

Not identified by segment

 

 

2,805 

 

 

3,793 

 

 

(988)

 

 

(26.0%)

Total

 

$

498,560 

 

$

464,858 

 

$

33,702 

 

 

7.2% 

Depreciation, accretion, and amortization expense increased  $33.7 million for the nine months ended September 30, 2015, as compared to the prior year, due to the increase in the number of towers we acquired and built since January 1, 2014. The increase in depreciation, accretion, and amortization expense includes the positive impact of $15.3 million from fluctuations in foreign currency exchange rates as compared to the prior year period.

Operating Income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the nine months ended

 

 

 

 

 

 

 

 

September 30,

 

Dollar

 

Percentage

 

 

2015

 

2014

 

Change

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

 

 

 

Domestic site leasing

 

$

203,583 

 

$

214,517 

 

$

(10,934)

 

 

(5.1%)

International site leasing

 

 

26,898 

 

 

16,547 

 

 

10,351 

 

 

62.6% 

Total site leasing

 

$

230,481 

 

$

231,064 

 

$

(583)

 

 

(0.3%)

Site development

 

 

17,968 

 

 

21,214 

 

 

(3,246)

 

 

(15.3%)

Not identified by segment

 

 

(18,121)

 

 

(12,344)

 

 

(5,777)

 

 

46.8% 

Total

 

$

230,328 

 

$

239,934 

 

$

(9,606)

 

 

(4.0%)

Domestic site leasing operating income decreased  $10.9 million for the nine months ended September 30, 2015, as compared to the prior year, primarily due to increases in asset impairment and decommission costs, depreciation, accretion, and amortization expense, and selling, general, and administrative expenses, partially offset by higher segment operating profit and a reduction in acquisition related adjustments and expenses.

International site leasing operating income increased  $10.4 million for the nine months ended September 30, 2015, as compared to the prior year, primarily due to higher segment operating profit and a reduction in acquisition related adjustments and expenses, partially offset by an increase in depreciation, accretion, and amortization expense. The increase in international site leasing operating income includes the negative impact of $4.4 million from fluctuations in foreign currency exchange rates as compared to the prior year period.

Site development operating income decreased  $3.2 million for the nine months ended September 30, 2015, as compared to the prior year, primarily due to a decrease in segment operating profit, as well as increases in selling, general, and administrative expenses and depreciation, accretion, and amortization expense.

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Other Income (Expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the nine months ended

 

 

 

 

 

 

 

 

September 30,

 

Dollar

 

Percentage

 

 

2015

 

2014

 

Change

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

 

 

 

Interest income

 

$

2,284 

 

$

428 

 

$

1,856 

 

 

433.6% 

Interest expense

 

 

(238,439)

 

 

(215,695)

 

 

(22,744)

 

 

10.5% 

Non-cash interest expense

 

 

(1,051)

 

 

(26,832)

 

 

25,781 

 

 

(96.1%)

Amortization of deferred financing fees

 

 

(13,973)

 

 

(13,114)

 

 

(859)

 

 

6.6% 

Loss from extinguishment of debt, net

 

 

 —

 

 

(25,080)

 

 

25,080 

 

 

(100.0%)

Other (expense) income, net

 

 

(178,710)

 

 

20,384 

 

 

(199,094)

 

 

(976.7%)

Total

 

$

(429,889)

 

$

(259,909)

 

$

(169,980)

 

 

65.4% 

 

Interest income increased  $1.9 million due to a higher amount of investments held and a higher average interest rate on those investments held for the nine months ended September 30, 2015 as compared to the prior year period.

 

Interest expense increased  $22.7 million due to the higher average principal amount of cash-interest bearing debt outstanding for the nine months ended September 30, 2015 compared to the prior year, primarily resulting from the issuance of the 2014 Tower Securities in October 2014, the 2015 Term Loan in June 2015, and the 4.875% Notes, partially offset by the full repayment of the 2010-1C Tower Securities, the full redemption of the 8.25% Notes, and the settlement of the 4.0% Notes during the prior year period.

Non-cash interest expense decreased  $25.8 million for the nine months ended September 30, 2015, as compared to the prior year, primarily due to the maturity of the 4.0% Notes during the prior year period.

Loss from extinguishment of debt decreased  $25.1 million for the nine months ended September 30, 2015, as compared to the prior year, primarily due to the repayment of the 2011 Term Loan and the 2012-2 Term Loan, maturity of the 4.0% Notes, and the early redemption of the 8.25% Notes during the prior year period.

Other expense increased by $199.1 million for the nine months ended September 30, 2015, as compared to the prior year, primarily due to a $180.4 million loss related to the remeasurement of an intercompany loan not denominated in the functional currency during the nine months ended September 30, 2015, as well as, a $17.9 million gain realized on the settlement of two foreign currency contracts entered into to hedge the purchase price of the Oi S.A. acquisition in Brazil, which were entered into and settled during the first quarter of 2014.

Net Loss:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the nine months ended

 

 

 

 

 

 

 

 

September 30,

 

Dollar

 

Percentage

 

 

2015

 

2014

 

Change

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

 

 

 

Net loss

 

$

(206,673)

 

$

(24,685)

 

$

(181,988)

 

 

737.2% 

 

Net loss was $206.7 million for the nine months ended September 30, 2015 as compared to a net loss of $24.7 million in the prior year, an increase of $182.0 million. The increase is primarily due to increases in other expense, asset impairment and decommission costs, depreciation, accretion, and amortization expense,  and selling, general and administrative expenses, partially offset by an increase in our total segment operating profit and a decrease in acquisition related adjustments and expenses as compared to the prior year period. The increase in net loss includes the negative impact of $175.7 million from fluctuations in foreign currency exchange rates as compared to the prior year period.

NON-GAAP FINANCIAL MEASURES

This report contains information regarding a non-GAAP measure, Adjusted EBITDA. We have provided below a description of Adjusted EBITDA, a reconciliation of Adjusted EBITDA to its most directly comparable GAAP measure and an explanation as to why management utilizes this measure.

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Adjusted EBITDA

We define Adjusted EBITDA as net (loss) income excluding the impact of non-cash straight-line leasing revenue, non-cash straight-line ground lease expense, non-cash compensation, net loss from extinguishment of debt, other income and expenses, acquisition related adjustments and expenses, asset impairment and decommission costs, interest income, interest expenses, depreciation, accretion, and amortization, and provision for or benefit from taxes.

We believe that Adjusted EBITDA is an indicator of the financial performance of our core businesses. Adjusted EBITDA is a component of the calculation that has been used by our lenders to determine compliance with certain covenants under our Senior Credit Agreement and the indentures relating to our 5.625% Notes, 5.75% Notes, and 4.875% Notes. Adjusted EBITDA is not intended to be an alternative measure of operating income or gross profit margin as determined in accordance with GAAP.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended

 

 

 

 

 

 

 

 

September 30,

 

Dollar

 

Percentage

 

 

2015

 

2014

 

Change

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

 

 

 

Net loss

 

$

(155,946)

 

$

(16,624)

 

$

(139,322)

 

 

838.1% 

Non-cash straight-line leasing revenue

 

 

(11,642)

 

 

(16,489)

 

 

4,847 

 

 

(29.4%)

Non-cash straight-line ground lease expense

 

 

8,555 

 

 

9,225 

 

 

(670)

 

 

(7.3%)

Non-cash compensation

 

 

6,702 

 

 

6,416 

 

 

286 

 

 

4.5% 

Loss from extinguishment of debt, net

 

 

 —

 

 

14,893 

 

 

(14,893)

 

 

(100.0%)

Other expense (income)

 

 

111,250 

 

 

(611)

 

 

111,861 

 

 

(18,307.9%)

Acquisition related adjustments and expenses

 

 

364 

 

 

(58)

 

 

422 

 

 

(727.6%)

Asset impairment and decommission costs

 

 

63,353 

 

 

5,992 

 

 

57,361 

 

 

957.3% 

Interest income

 

 

(1,276)

 

 

(161)

 

 

(1,115)

 

 

692.5% 

Interest expense (1)

 

 

87,129 

 

 

91,005 

 

 

(3,876)

 

 

(4.3%)

Depreciation, accretion, and amortization

 

 

164,330 

 

 

159,410 

 

 

4,920 

 

 

3.1% 

Provision for taxes (2)

 

 

2,369 

 

 

1,342 

 

 

1,027 

 

 

76.5% 

Adjusted EBITDA

 

$

275,188 

 

$

254,340 

 

$

20,848 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the nine months ended

 

 

 

 

 

 

 

 

September 30,

 

Dollar

 

Percentage

 

 

2015

 

2014

 

Change

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

 

 

 

Net loss

 

$

(206,673)

 

$

(24,685)

 

$

(181,988)

 

 

737.2% 

Non-cash straight-line leasing revenue

 

 

(39,101)

 

 

(42,734)

 

 

3,633 

 

 

(8.5%)

Non-cash straight-line ground lease expense

 

 

25,794 

 

 

27,370 

 

 

(1,576)

 

 

(5.8%)

Non-cash compensation

 

 

21,903 

 

 

17,231 

 

 

4,672 

 

 

27.1% 

Loss from extinguishment of debt, net

 

 

 —

 

 

25,080 

 

 

(25,080)

 

 

(100.0%)

Other expense (income)

 

 

178,710 

 

 

(20,384)

 

 

199,094 

 

 

(976.7%)

Acquisition related adjustments and expenses

 

 

7,483 

 

 

10,728 

 

 

(3,245)

 

 

(30.2%)

Asset impairment and decommission costs

 

 

74,185 

 

 

13,554 

 

 

60,631 

 

 

447.3% 

Interest income

 

 

(2,284)

 

 

(428)

 

 

(1,856)

 

 

433.6% 

Interest expense (1)

 

 

253,463 

 

 

255,641 

 

 

(2,178)

 

 

(0.9%)

Depreciation, accretion, and amortization

 

 

498,560 

 

 

464,858 

 

 

33,702 

 

 

7.2% 

Provision for taxes (2)

 

 

8,415 

 

 

5,832 

 

 

2,583 

 

 

44.3% 

Adjusted EBITDA

 

$

820,455 

 

$

732,063 

 

$

88,392 

 

 

 

 

(1)

Interest expense includes interest expense, non-cash interest expense, and amortization of deferred financing fees.

(2)

Provision for taxes includes $443 and $360 of franchise taxes for the three months ended September 30, 2015 and 2014, respectively, and $1,303 and $1,122 of franchise taxes for the nine months ended September 30, 2015 and 2014, respectively, reflected in selling, general, and administrative expenses on the Consolidated Statement of Operations.

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Adjusted EBITDA was $275.2 million for the three months ended September 30, 2015 as compared to $254.3 million for the three months ended September 30, 2014. The increase of $20.8 million is primarily the result of increased segment operating profit from our domestic site leasing and international site leasing segments, partially offset by the decrease in our site development segment operating profit and the increase in our cash selling, general, and administrative expenses. The increase in Adjusted EBITDA includes the negative impact of $7.8 million from fluctuations in foreign currency exchange rates as compared to the prior year period.

Adjusted EBITDA was $820.5 million for the nine months ended September 30, 2015 as compared to $732.1 million for the nine months ended September 30, 2014. The increase of $88.4 million is primarily the result of increased segment operating profit from our domestic site leasing and international site leasing segments, partially offset by the decrease in our site development segment operating profit and the increase in our cash selling, general, and administrative expenses. The increase in Adjusted EBITDA includes the negative impact of $15.8 million from fluctuations in foreign currency exchange rates as compared to the prior year period.

LIQUIDITY AND CAPITAL RESOURCES 

SBA Communications Corporation (“SBAC”) is a holding company with no business operations of its own. SBAC’s only significant asset is the outstanding capital stock of SBA Telecommunications, LLC (“Telecommunications”), which is also a holding company that owns equity interests in entities that directly or indirectly own all of our domestic and international towers and assets. We conduct all of our business operations through Telecommunications’ subsidiaries. Accordingly, our only source of cash to pay our obligations, other than financings, is distributions with respect to our ownership interest in our subsidiaries from the net earnings and cash flow generated by these subsidiaries.

A summary of our cash flows is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the nine months ended

 

 

September 30,

 

 

2015

 

2014

 

 

 

 

 

 

 

 

 

(in thousands)

Cash provided by operating activities

 

$

534,737 

 

$

485,288 

Cash used in investing activities

 

 

(566,731)

 

 

(1,163,986)

Cash provided by financing activities

 

 

78,513 

 

 

990,363 

Increase in cash and cash equivalents

 

 

46,519 

 

 

311,665 

Effect of exchange rate changes on cash and cash equivalents

 

 

(12,691)

 

 

16,480 

Cash and cash equivalents, beginning of the period

 

 

39,443 

 

 

122,112 

Cash and cash equivalents, end of the period

 

$

73,271 

 

$

450,257 

 

Operating Activities

Cash provided by operating activities was $534.7 million for the nine months ended September 30, 2015 as compared to $485.3 million for the nine months ended September 30, 2014. This increase was primarily due to an increase in segment operating profit from domestic site leasing and international site leasing operating segments and a decrease in acquisition related adjustments and expenses partially offset by increases in cash outflows associated with working capital changes, increased selling, general, and administrative expenses, and increased cash interest payments relating to the higher average amount of cash-interest bearing debt outstanding for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014.

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Investing Activities

A detail of our cash capital expenditures is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the nine months

 

 

ended September 30,

 

 

2015

 

2014

 

 

 

 

 

 

 

 

 

(in thousands)

Acquisitions (1)

 

$

358,675 

 

$

1,019,733 

Construction and related costs on new tower builds

 

 

76,688 

 

 

57,953 

Augmentation and tower upgrades

 

 

48,693 

 

 

42,257 

Land buyouts (2)

 

 

50,036 

 

 

29,015 

Refurbishment of headquarters building

 

 

12,288 

 

 

11,131 

Tower maintenance

 

 

21,363 

 

 

14,205 

General corporate

 

 

3,279 

 

 

5,801 

Total cash capital expenditures

 

$

571,022 

 

$

1,180,095 

 

(1)

Included in our cash capital expenditures for the nine months ended September 30, 2014 is $673.9 million related to our acquisition of 2,007 towers from Oi S.A. which closed on March 31, 2014.

(2)

Excludes $12.7 million and $7.8 million spent on ground lease extensions and term easements on land underlying our towers for the nine months ended September 30, 2015 and 2014, respectively.

Subsequent to September 30, 2015,  we acquired 24 towers for $19.8 million in cash.

During all of 2015, inclusive of the capital expenditures made during the nine months ended September 30, 2015, we expect to incur non-discretionary cash capital expenditures associated with tower maintenance and general corporate expenditures of $32.6 million to $33.6 million and discretionary cash capital expenditures, based on current acquisition obligations, planned new tower construction, forecasted tower augmentations, and forecasted ground lease purchases, of $801.4 million to $811.4 million as well as potential, additional tower acquisitions not yet under contract. We expect to fund these cash capital expenditures from cash on hand, cash flow from operations, and borrowings under the Revolving Credit Facility or new financings. The exact amount of our future cash capital expenditures will depend on a number of factors including amounts necessary to support our tower portfolio, our new tower build and acquisition programs, and our ground lease purchase program.

Financing Activities

On February 5, 2015, we entered into an amendment to our Revolving Credit Facility to (1) increase the size of the facility by $230.0 million to $1.0 billion, (2) extend the maturity date to February 5, 2020, and (3) lower the applicable interest rate margins and commitment fees depending on Borrower leverage (as defined in the Senior Credit Agreement).

During the nine months ended September 30, 2015, we borrowed $770.0 million and repaid $615.0 million under the Revolving Credit Facility. As of September 30, 2015, we had $280.0 million outstanding under the $1.0 billion Revolving Credit Facility. Subsequent to September 30, 2015, we repaid the $280.0 million balance outstanding under the Revolving Credit Facility with proceeds from the 2015 Tower Securities (as defined below), and as of the date of this filing, no amounts were outstanding under the Revolving Credit Facility.

On June 10, 2015,  we, through our wholly owned subsidiary, SBA Senior Finance II LLC, obtained a new senior secured Term Loan with an aggregate principal amount of $500.0 million that was issued at 99.0% of par value and matures on June 10, 2022 (the “2015 Term Loan). Net proceeds from the 2015 Term Loan were used to repay $490.0 million of the outstanding balance under our Revolving Credit Facility.

During the first quarter of 2015,  we settled the remaining outstanding warrants originally sold in connection with the 4.0% Notes. The warrants represented approximately 2.1 million underlying shares of Class A common stock, and we satisfied our obligations by paying $150.9 million in cash.

During the second quarter of 2015, we repurchased the remaining $150.0 million of our Class A common stock authorized under our $300.0 million stock repurchase plan, completing this plan.

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On June 4, 2015, we announced the authorization of a new $1.0 billion stock repurchase plan. This new plan authorizes us to purchase from time to time our outstanding common stock through open market repurchases in compliance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended, and/or in privately negotiated transactions at management’s discretion. Shares purchased will be retired.

During the third quarter of 2015, we repurchased 2.2 million shares of our Class A common stock for $250.0 million at a weighted average price per share of $113.87. We currently have $750.0 million of repurchase authorization remaining under our $1.0 billion stock repurchase program. Since the beginning of 2015, we have reduced our shares of Class A common stock outstanding from 129.1 million to 126.1 million through stock repurchases.

On October 14, 2015, we, through our existing SBA Tower Trust, issued $500.0 million of 3.156% Secured Tower Revenue Securities Series 2015-1C which have an anticipated repayment date of October 8, 2020 and a final maturity date of October 10, 2045 (the “2015 Tower Securities”). Net proceeds from this offering were used to make a cash distribution to SBA Guarantor LLC which were further distributed (1) to repay outstanding amounts on the Revolving Credit Facility of SBA Senior Finance II LLC and (2) for general corporate purposes.

Registration Statements

We have on file with the Commission a shelf registration statement on Form S-4 registering shares of Class A common stock that we may issue in connection with the acquisition of wireless communication towers or antenna sites and related assets or companies who own wireless communication towers, antenna sites, or related assets. During the nine months ended September 30, 2015, we did not issue any shares of Class A common stock under this registration statement. As of September 30, 2015, we had approximately 1.7 million shares of Class A common stock remaining under this shelf registration statement.

On March 3, 2015, we filed with the Commission an automatic shelf registration statement for well-known seasoned issuers on Form S-3ASR. This registration statement enables us to issue shares of our Class A common stock, preferred stock or debt securities either separately or represented by warrants, or depositary shares as well as units that include any of these securities. Under the rules governing automatic shelf registration statements, we will file a prospectus supplement and advise the Commission of the amount and type of securities each time we issue securities under this registration statement. No shares were issued under this registration statement through the date of this filing.

Debt Instruments and Debt Service Requirements 

Revolving Credit Facility under the Senior Credit Agreement

The Revolving Credit Facility is governed by the Senior Credit Agreement. On February 5, 2015, SBA Senior Finance II entered into the 2015 Revolving Refinancing Amendment with several banks and other financial institutions or entities from time to time parties to the Senior Credit Agreement to, among other things, (i) increase the availability under our Revolving Credit Facility from $770.0 million to $1.0 billion, (ii) extend the maturity date of the Revolving Credit Facility to February 5, 2020, (iii) provide for the ability to borrow in U.S. dollars and certain designated foreign currencies, and (iv) lower the applicable interest rate margins and commitment fees under the Revolving Credit Facility.

As amended February 2015, the Revolving Credit Facility consists of a revolving loan under which up to $1.0 billion aggregate principal amount may be borrowed, repaid and redrawn, subject to compliance with specific financial ratios and the satisfaction of other customary conditions to borrowing. Amounts borrowed under the Revolving Credit Facility accrue interest, at SBA Senior Finance II’s election, at either (i) the Eurodollar Rate plus a margin that ranges from 137.5 basis points to 200.0 basis points or (ii) the Base Rate plus a margin that ranges from 37.5 basis points to 100.0 basis points, in each case based on the ratio of Consolidated Total Debt to Annualized Borrower EBITDA, calculated in accordance with the Senior Credit Agreement. In addition, SBA Senior Finance II is required to pay a commitment fee of 0.25% per annum on the amount of unused commitment. If not earlier terminated by SBA Senior Finance II, the Revolving Credit Facility will terminate on, and SBA Senior Finance II will repay all amounts outstanding on or before, February 5, 2020. The proceeds available under the Revolving Credit Facility may be used for general corporate purposes. SBA Senior Finance II may, from time to time, borrow from and repay the Revolving Credit Facility. Consequently, the amount outstanding under the Revolving Credit Facility at the end of a period may not be reflective of the total amounts outstanding during such period. As of September 30, 2015, the Revolving Credit Facility was accruing interest at 2.28% per annum.

During the three and nine months ended September 30, 2015, we borrowed $320.0 million and $770.0 million, respectively, under the Revolving Credit Facility and repaid $80.0 million and $615.0 million, respectively, of the outstanding balance under the Revolving Credit Facility. As of September 30, 2015,  $280.0 million was outstanding under the Revolving Credit Facility.

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Subsequent to September 30, 2015, we repaid the $280.0 million balance outstanding on the Revolving Credit Facility with proceeds from the 2015 Tower Securities, and as of the date of this filing, no amounts were outstanding under the Revolving Credit Facility.

As of September 30, 2015, SBA Senior Finance II was in compliance with the financial covenants contained in the Senior Credit Agreement.

Term Loans under the Senior Credit Agreement

2012-1 Term Loan

The 2012-1 Term Loan consists of a senior secured term loan with an initial aggregate principal amount of $200.0 million that matures on May 9, 2017. The 2012-1 Term Loan accrues interest, at SBA Senior Finance II’s election, at either the Base Rate plus a margin that ranges from 100 to 150 basis points or the Eurodollar Rate plus a margin that ranges from 200 to 250 basis points, in each case based on the ratio of Consolidated Total Debt to Annualized Borrower EBITDA (calculated in accordance with the Senior Credit Agreement). As of September 30, 2015, the 2012-1 Term Loan was accruing interest at 2.70% per annum. Principal payments on the 2012-1 Term Loan commenced on September 30, 2012 and are being made in quarterly installments on the last day of each March, June, September, and December, in an amount equal to $2.5 million for each of the first eight quarters, $3.8 million for the next four quarters and $5.0 million for each quarter thereafter. SBA Senior Finance II has the ability to prepay any or all amounts under the 2012-1 Term Loan without premium or penalty. The 2012-1 Term Loan was issued at par. We incurred deferred financing fees of $2.7 million in relation to this transaction which are being amortized through the maturity date.

During the three and nine months ended September 30, 2015, we repaid $5.0 million and $12.5 million, respectively, of principal on the 2012-1 Term Loan. As of September 30, 2015, the 2012-1 Term Loan had a principal balance of $160.0 million.

2014 Term Loan

The 2014 Term Loan consists of a senior secured term loan with an initial aggregate principal amount of $1.5 billion that matures on March 24, 2021. The 2014 Term Loan accrues interest, at SBA Senior Finance II’s election, at either the Base Rate plus 150 basis points (with a Base Rate floor of 1.75%) or the Eurodollar Rate plus 250 basis points (with a Eurodollar Rate floor of 0.75%). The 2014 Term Loan was issued at 99.75% of par value. As of September 30, 2015, the 2014 Term Loan was accruing interest at 3.25% per annum.  Principal payments on the 2014 Term Loan commenced on September 30, 2014 and are being made in quarterly installments on the last day of each March, June, September, and December in an amount equal to $3.8 million. SBA Senior Finance II has the ability to prepay any or all amounts under the 2014 Term Loan without premium or penalty. We incurred deferred financing fees of approximately $12.9 million in relation to this transaction which are being amortized through the maturity date.

During the three and nine months ended September 30, 2015,  we repaid $3.8 million and $11.3 million, respectively, of principal on the 2014 Term Loan. As of September 30, 2015, the 2014 Term Loan had a principal balance of $1.5 billion.

2015 Term Loan

On June 10, 2015, SBA Senior Finance II obtained a new senior secured term loan with an initial aggregate principal amount of $500.0 million that matures on June 10, 2022. The 2015 Term Loan accrues interest, at SBA Senior Finance II’s election, at either the Base Rate plus 150 basis points (with a Base Rate floor of 1.75%) or the Eurodollar Rate plus 250 basis points (with a Eurodollar Rate floor of 0.75%). The 2015 Term Loan was issued at 99.0% of par value. As of September 30, 2015, the 2015 Term Loan was accruing interest at 3.25% per annum. Principal payments on the 2015 Term Loan commenced on September 30, 2015 and will be made in quarterly installments on the last day of each March, June, September, and December in an amount equal to $1.3 million. SBA Senior Finance II has the ability to prepay any or all amounts under the 2015 Term Loan. However, to the extent the 2015 Term Loan is prepaid prior to December 10, 2015 from proceeds of certain refinancing or repricing transactions, a prepayment fee equal to 1.0% of the aggregate principal amount of such prepayment will apply. We incurred deferred financing fees of approximately $5.1 million to date in relation to this transaction which are being amortized through the maturity date.

During the three and nine months ended September 30, 2015, we repaid $1.3 million of principal on the 2015 Term Loan. As of September 30, 2015, the 2015 Term Loan had a principal balance of $498.8 million.

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Secured Tower Revenue Securities

2010 Tower Securities

On April 16, 2010, we, through a New York common law trust (the “Trust”), issued $550.0 million of Secured Tower Revenue Securities Series 2010-2C (the “2010 Tower Securities”). The 2010 Tower Securities have an annual interest rate of 5.101%. The anticipated repayment date and the final maturity date for the 2010 Tower Securities are April 11, 2017 and April 9, 2042, respectively. The sole asset of the Trust consists of a non-recourse mortgage loan made in favor of those entities that are borrowers on the mortgage loan (the “Borrowers”). We incurred deferred financing fees of $8.1 million in relation to this transaction which are being amortized through the anticipated repayment date of the 2010 Tower Securities.

2012 Tower Securities

On August 9, 2012, we, through the Trust, issued $610.0 million of Secured Tower Revenue Securities Series 2012-1C (the “2012 Tower Securities”) which have an anticipated repayment date of December 11, 2017 and a final maturity date of December 9, 2042. The fixed interest rate of the 2012 Tower Securities is 2.933% per annum, payable monthly. We incurred deferred financing fees of $14.9 million in relation to this transaction which are being amortized through the anticipated repayment date of the 2012 Tower Securities.

2013 Tower Securities

On April 18, 2013, we, through the Trust, issued $425.0 million of 2.240% Secured Tower Revenue Securities Series 2013-1C which have an anticipated repayment date of April 10, 2018 and a final maturity date of April 9, 2043, $575.0 million of 3.722% Secured Tower Revenue Securities Series 2013-2C which have an anticipated repayment date of April 11, 2023 and a final maturity date of April 9, 2048, and $330.0 million of 3.598% Secured Tower Revenue Securities Series 2013-1D which have an anticipated repayment date of April 10, 2018 and a final maturity date of April 9, 2043 (collectively the “2013 Tower Securities”). The aggregate $1.33 billion of 2013 Tower Securities have a blended interest rate of 3.218% per annum, payable monthly. We incurred deferred financing fees of $25.5 million in relation to this transaction which are being amortized through the anticipated repayment date of each of the 2013 Tower Securities.

2014 Tower Securities

On October 15, 2014, we, through the Trust, issued $920.0 million of 2.898% Secured Tower Revenue Securities Series 2014-1C which have an anticipated repayment date of October 8, 2019 and a final maturity date of October 11, 2044 and $620.0 million of 3.869% Secured Tower Revenue Securities Series 2014-2C which have an anticipated repayment date of October 8, 2024 and a final maturity date of October 8, 2049 (collectively the “2014 Tower Securities”). The aggregate $1.54 billion of 2014 Tower Securities have a blended interest rate of 3.289% per annum, payable monthly.  We incurred deferred financing fees of $22.5 million in relation to this transaction which are being amortized through the anticipated repayment date of each of the 2014 Tower Securities.

2015 Tower Securities

On October 14, 2015, the Company, through the Trust, issued $500.0 million of Secured Tower Revenue Securities Series 2015-1C which have an anticipated repayment date of October 8, 2020 and a final maturity date of October 10, 2045 (the “2015 Tower Securities”). The fixed interest rate of the 2015 Tower Securities is 3.156% per annum, payable monthly. We have incurred deferred financing fees of $9.7 million to date in relation to this transaction which are being amortized through the anticipated repayment date of the 2015 Tower Securities. In connection with the issuance of the 2015 Tower Securities, the advance rents reserve requirement was modified such that the Borrowers will only be required to maintain an advance rents reserve at any time the monthly tenant debt service coverage ratio is equal to or less than 2:1 and for two calendar months after such coverage ratio again exceeds 2:1.

As of September 30, 2015, the Borrowers met the debt service coverage ratio required by the mortgage loan agreement and were in compliance with all other covenants as set forth in the agreement.

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Senior Notes

5.75% Senior Notes

On July 13, 2012, Telecommunications issued $800.0 million of unsecured senior notes due July 15, 2020 (the “5.75% Notes”). The 5.75% Notes accrue interest at a rate of 5.75% and were issued at par. Interest on the 5.75% Notes is due semi-annually on July 15 and January 15 of each year. We incurred deferred financing fees of $14.0 million in relation to this transaction which are being amortized through the maturity date.

5.625% Senior Notes

On September 28, 2012, we issued $500.0 million of unsecured senior notes due October 1, 2019 (the “5.625% Notes”). The 5.625% Notes accrue interest at a rate of 5.625% per annum and were issued at par. Interest on the 5.625% Notes is due semi-annually on April 1 and October 1 of each year. We incurred deferred financing fees of $8.6 million in relation to this transaction which are being amortized through the maturity date.

4.875% Senior Notes

On July 1, 2014, we issued $750.0 million of unsecured senior notes due July 15, 2022 (the “4.875% Notes”). The 4.875% Notes accrue interest at a rate of 4.875% per annum and were issued at 99.178% of par value. Interest on the 4.875% Notes is due semi-annually on January 15 and July 15 of each year. We incurred deferred financing fees of $11.6 million in relation to this transaction which are being amortized through the maturity date.  

Debt Service

As of September 30, 2015, we believe that our cash on hand, capacity available under our Revolving Credit Facility, our cash flows from operations for the next twelve months, and future financings will be sufficient to service our outstanding debt during the next twelve months.

The following table illustrates our estimate of our debt service requirement over the next twelve months based on the amounts outstanding as of September 30, 2015 and the interest rates accruing on those amounts on such date (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5.625% Senior Notes due 2019

 

 

 

 

$

28,125 

5.750% Senior Notes due 2020

 

 

 

 

 

46,000 

4.875% Senior Notes due 2022

 

 

 

 

 

36,563 

5.101% Secured Tower Revenue Securities Series 2010-2

 

 

 

 

 

28,230 

2.933% Secured Tower Revenue Securities Series 2012

 

 

 

 

 

18,085 

2.240% Secured Tower Revenue Securities Series 2013-1C

 

 

 

 

 

9,655 

3.722% Secured Tower Revenue Securities Series 2013-2C

 

 

 

 

 

21,584 

3.598% Secured Tower Revenue Securities Series 2013-1D

 

 

 

 

 

11,978 

2.898% Secured Tower Revenue Securities Series 2014-1C

 

 

 

 

 

26,954 

3.869% Secured Tower Revenue Securities Series 2014-2C

 

 

 

 

 

24,185 

Revolving Credit Facility

 

 

 

 

 

8,178 

2012-1 Term Loan A

 

 

 

 

 

24,118 

2014 Term Loan B

 

 

 

 

 

62,958 

2015 Term Loan B

 

 

 

 

 

21,148 

Total debt service for next 12 months

 

 

 

 

$

367,760 

 

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to certain market risks that are inherent in our financial instruments. These risks arise from transactions entered into in the normal course of business.

The following table presents the future principal payment obligations and fair values associated with our long-term debt instruments assuming our actual level of long-term indebtedness as of September 30, 2015: 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2015

 

2016

 

2017

 

2018

 

2019

 

Thereafter

 

Total

 

Fair Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt:

 

(in thousands)

5.625% Senior Notes due 2019

 

$

 —

 

$

 —

 

$

 —

 

$

 —

 

$

500,000 

 

$

 —

 

$

500,000 

 

$

515,625 

5.750% Senior Notes due 2020

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

800,000 

 

 

800,000 

 

 

821,000 

4.875% Senior Notes due 2022

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

750,000 

 

 

750,000 

 

 

733,125 

5.101% 2010-2 Tower

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Securities (1)

 

 

 —

 

 

 —

 

 

550,000 

 

 

 —

 

 

 —

 

 

 —

 

 

550,000 

 

 

563,552 

2.933% 2012 Tower

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Securities (1)

 

 

 —

 

 

 —

 

 

610,000 

 

 

 —

 

 

 —

 

 

 —

 

 

610,000 

 

 

615,435 

2.240% 2013-1C Tower

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Securities (1)

 

 

 —

 

 

 —

 

 

 —

 

 

425,000 

 

 

 —

 

 

 —

 

 

425,000 

 

 

422,722 

3.722% 2013-2C Tower

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Securities (1)

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

575,000 

 

 

575,000 

 

 

582,803 

3.598% 2013-1D Tower

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Securities (1)

 

 

 —

 

 

 —

 

 

 —

 

 

330,000 

 

 

 —

 

 

 —

 

 

330,000 

 

 

336,059 

2.898% 2014-1C Tower

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Securities (1)

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

920,000 

 

 

 —

 

 

920,000 

 

 

923,358 

3.869% 2014-2C Tower

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Securities (1)

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

620,000 

 

 

620,000 

 

 

626,913 

Revolving Credit Facility

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

280,000 

 

 

280,000 

 

 

280,000 

2012-1 Term Loan

 

 

5,000 

 

 

20,000 

 

 

135,000 

 

 

 —

 

 

 —

 

 

 —

 

 

160,000 

 

 

159,800 

2014 Term Loan

 

 

3,750 

 

 

15,000 

 

 

15,000 

 

 

15,000 

 

 

15,000 

 

 

1,417,500 

 

 

1,481,250 

 

 

1,466,438 

2015 Term Loan

 

 

1,250 

 

 

5,000 

 

 

5,000 

 

 

5,000 

 

 

5,000 

 

 

477,500 

 

 

498,750 

 

 

491,269 

Total debt obligation

 

$

10,000 

 

$

40,000 

 

$

1,315,000 

 

$

775,000 

 

$

1,440,000 

 

$

4,920,000 

 

$

8,500,000 

 

$

8,538,099 

 

(1)

The anticipated repayment date and the final maturity date for the 2010-2 Tower Securities is April 11, 2017 and April 9, 2042, respectively.

The anticipated repayment date and the final maturity date for the 2012 Tower Securities is December 11, 2017 and December 9, 2042, respectively.

The anticipated repayment date and the final maturity date for the 2013-1C Tower Securities is April 10, 2018 and April 9, 2043, respectively.

The anticipated repayment date and the final maturity date for the 2013-2C Tower Securities is April 11, 2023 and April 9, 2048, respectively.

The anticipated repayment date and the final maturity date for the 2013-1D Tower Securities is April 10, 2018 and April 9, 2043, respectively.

The anticipated repayment date and the final maturity date for the 2014-1C Tower Securities is October 8, 2019 and October 11, 2044, respectively.

The anticipated repayment date and the final maturity date for the 2014-2C Tower Securities is October 8, 2024 and October 8, 2049, respectively.

Our current primary market risk exposure is interest rate risk relating to (1) our ability to refinance our debt at commercially reasonable rates, if at all, and (2) the impact of interest rate movements on our 2012-1 Term Loan, 2014 Term Loan, and 2015 Term Loan and any borrowings that we may incur under our Revolving Credit Facility, which are at floating rates. We manage the interest rate risk on our outstanding debt through our large percentage of fixed rate debt. While we cannot predict our ability to refinance existing debt or the impact interest rate movements will have on our existing debt, we continue to evaluate our financial position on an ongoing basis.

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We are exposed to market risk from changes in foreign currency exchange rates in connection with our operations in Brazil and Canada and to a lesser extent in Costa Rica, Guatemala, Nicaragua, El Salvador, and Panama. In each of these countries, we pay most of our selling, general, and administrative expenses and a portion of our operating expenses, such as taxes and utilities incurred in the country in local currency. In addition, in Brazil and Canada, we receive all of our revenue and pay all of our operating expenses in local currency. All transactions denominated in currencies other than the U.S. Dollar are reported in U.S. Dollars at the applicable exchange rate. All assets and liabilities are translated into U.S. Dollars at exchange rates in effect at the end of the applicable fiscal reporting period and all revenues and expenses are translated at average rates for the period. The cumulative translation effect is included in equity as a component of Accumulated other comprehensive income (loss). For the nine months ended September 30, 2015, approximately 11.3% of our revenues and approximately 12.0% of our total operating expenses were denominated in foreign currencies.

We have performed a sensitivity analysis assuming a hypothetical 10% adverse movement in the Brazilian Reais from the quoted foreign currency exchange rates at September 30, 2015. As of September 30, 2015, the analysis indicated that such an adverse movement would have caused our revenues and operating results to fluctuate by approximately 1.5% and 1.4%, respectively, for the nine months ended September 30, 2015.

As of September 30, 2015, we have incurred intercompany debt, which is denominated in a currency other than the functional currency of the subsidiary in which it is recorded. As this debt had not been designated as being a long-term investment in nature, any changes in the foreign currency exchange rates will result in unrealized gains or losses, which will be included in our determination of net income. A change of 10% in the underlying exchange rates of our unsettled intercompany debt at September 30, 2015 would have resulted in approximately $46.4 million of unrealized gains or losses that would have been included in Other expense in our condensed consolidated statements of operations for the nine months ended September 30, 2015.

Special Note Regarding Forward-Looking Statements

This quarterly report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements concern expectations, beliefs, projections, plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. Specifically, this quarterly report contains forward-looking statements regarding:

·

our expectations on the future growth and financial health of the wireless industry and the industry participants, and the drivers of such growth;

·

our beliefs regarding our ability to capture and capitalize on industry growth and the impact of such growth on our financial and operational results; 

·

our expectation that over the long-term, site leasing revenues will continue to grow as wireless service providers lease additional antenna space on our towers due to increasing minutes of network use and data transfer, network expansion and network coverage requirements and the rate of such growth, on an organic basis, in our domestic and international segments;

·

our belief that our site leasing business is characterized by stable and long-term recurring revenues, predictable operating costs, and minimal non-discretionary capital expenditures;

·

our expectation that, due to the relatively young age and mix of our tower portfolio, future expenditures required to maintain these towers will be minimal;

·

our expectation that we will grow our cash flows by adding tenants to our towers at minimal incremental costs and executing monetary amendments;

·

our expectations regarding foreign currency exchange rates;

·

our expectations regarding our future cash capital expenditures, both discretionary and non-discretionary, including expenditures required to acquire or build additional towers, to maintain, improve, and modify our towers, to conduct ground lease purchases, and for general corporate expenditures, and the source of funds for these expenditures;

·

our intended use of our liquidity;

·

our expectations regarding our annual debt service in 2015 and thereafter, and our belief that our cash on hand, cash flows from operations for the next twelve months and availability under our Revolving Credit Facility will be sufficient to service our outstanding debt during the next twelve months; and

·

our estimates regarding certain accounting and tax matters.

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These forward-looking statements reflect our current views about future events and are subject to risks, uncertainties and assumptions. We wish to caution readers that certain important factors may have affected and could in the future affect our actual results and could cause actual results to differ significantly from those expressed in any forward-looking statement. The most important factors that could prevent us from achieving our goals, and cause the assumptions underlying forward-looking statements and the actual results to differ materially from those expressed in or implied by those forward-looking statements include, but are not limited to, the following: 

·

the impact of consolidation among wireless service providers on our leasing revenue;

·

our ability to continue to comply with covenants and the terms of our credit instruments and our ability to obtain additional financing to fund our capital expenditures;

·

our ability to successfully manage the risks associated with international operations, including risks relating to political or economic conditions, tax laws, currency restrictions, legal or judicial systems, land ownership, and foreign currency exchange rates;  

·

our ability to successfully manage the risks associated with our acquisition initiatives, including our ability to effectively integrate acquired towers into our business and to achieve the financial results projected in our valuation models for the acquired towers;

·

developments in the wireless communications industry in general, and for wireless communications infrastructure providers in particular, that may slow growth or affect the willingness or ability of the wireless service providers to expend capital to fund network expansion or enhancements;

·

our ability to secure as many site leasing tenants as anticipated, recognize our expected economies of scale with respect to new tenants on our towers, and retain current leases on towers; 

·

our ability to secure and deliver anticipated services business at contemplated margins;

·

our ability to build new towers, including our ability to identify and acquire land that would be attractive for our clients and to successfully and timely address zoning, permitting, weather, availability of labor and supplies and other issues that arise in connection with the building of new towers;

·

competition for the acquisition of towers and other factors that may adversely affect our ability to purchase towers that meet our investment criteria and are available at prices which we believe will be accretive to our shareholders and allow us to maintain our long-term target leverage ratios;

·

our ability to protect our rights to the land under our towers, and our ability to acquire land underneath our towers on terms that are accretive;

·

our ability to sufficiently increase our revenues and maintain expenses and cash capital expenditures at appropriate levels to permit us to meet our anticipated uses of liquidity for operations, debt service and estimated portfolio growth;

·

our ability to successfully estimate the impact of regulatory and litigation matters;

·

our ability to successfully estimate the impact of certain accounting and tax matters, including the effect on our company of adopting certain accounting pronouncements, the availability of sufficient net operating losses to offset future taxable income, and the effect of asset impairment and decommission costs;  

·

natural disasters and other unforeseen damage for which our insurance may not provide adequate coverage;

·

a decrease in demand for our towers; and

·

the introduction of new technologies or changes in a tenant’s business model that may make our tower leasing business less desirable to potential tenants.  

ITEM 4. CONTROLS AND PROCEDURES

In order to ensure that the information we must disclose in our filings with the Commission is recorded, processed, summarized and reported on a timely basis, we have formalized our disclosure controls and procedures. Our principal executive officer and principal financial officer have reviewed and evaluated the effectiveness of our disclosure controls and procedures, as defined in Securities and Exchange Act Rule 13a-15(e) as of September 30, 2015. Based on such evaluation, such officers have concluded that, as of September 30, 2015, our disclosure controls and procedures were effective.

There have been no changes in our internal control over financial reporting during the quarter ended September 30, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

The following table presents information related to our repurchases of Class A common stock during the third quarter of 2015:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

Total Number of Shares

 

Approximate Dollar Value

 

 

Number

 

Average

 

Purchased as Part of

 

of Shares that May Yet Be

 

 

of Shares

 

Price Paid

 

Publicly Announced

 

Purchased Under the

Period

 

Purchased

 

Per Share

 

Plans or Programs (1)

 

Plans or Programs

 

 

 

 

 

 

 

 

 

 

 

7/1/2015 - 7/31/2015

 

795,720 

 

$

115.50 

 

 

 

 

 

8/1/2015 - 8/31/2015

 

506,468 

 

$

114.70 

 

 

 

 

 

9/1/2015 - 9/30/2015

 

893,335 

 

$

111.94 

 

 

 

 

 

Total

 

2,195,523 

 

$

113.87 

 

2,195,523 

 

$

750,002,750 

 

(1)

On June 4, 2015, we announced a new $1.0 billion stock repurchase plan.  This plan authorizes us to purchase from time to time our outstanding common stock through open market repurchases in compliance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended, and/or in privately negotiated transactions at management’s discretion. Shares purchased will be retired. This plan has no time deadline and will continue until otherwise modified or terminated by our Board at any time in our sole discretion.

ITEM 6. EXHIBITS 

 

 

 

 

 

Exhibit No.

Description of Exhibits

*31.1

Certification by Jeffrey A. Stoops, Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

 

 *31.2

Certification by Brendan T. Cavanagh, Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

 

*32.1

Certification by Jeffrey A. Stoops, Chief Executive Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

*32.2

Certification by Brendan T. Cavanagh, Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

**101.INS

XBRL Instance Document.

 

 

**101.SCH

XBRL Taxonomy Extension Schema Document.

 

 

**101.DEF

XBRL Taxonomy Extension Definition Linkbase Document.

 

 

**101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document.

 

 

**101.LAB

XBRL Taxonomy Extension Label Linkbase Document.

 

 

**101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document.

 

*Filed herewith

**Furnished herewith

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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.

 

 

 

 

SBA COMMUNICATIONS CORPORATION

 

 

November 9, 2015

/s/ Jeffrey A. Stoops

 

Jeffrey A. Stoops

 

Chief Executive Officer

 

(Duly Authorized Officer)

 

 

November 9, 2015

/s/ Brendan T. Cavanagh

 

Brendan T. Cavanagh

 

Chief Financial Officer

 

(Principal Financial Officer)

 

 

 

 

 

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