0001034054-16-000020.txt : 20160510 0001034054-16-000020.hdr.sgml : 20160510 20160510135738 ACCESSION NUMBER: 0001034054-16-000020 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 83 CONFORMED PERIOD OF REPORT: 20160331 FILED AS OF DATE: 20160510 DATE AS OF CHANGE: 20160510 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SBA COMMUNICATIONS CORP CENTRAL INDEX KEY: 0001034054 STANDARD INDUSTRIAL CLASSIFICATION: COMMUNICATION SERVICES, NEC [4899] IRS NUMBER: 650716501 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-30110 FILM NUMBER: 161635038 BUSINESS ADDRESS: STREET 1: 8051 CONGRESS AVENUE CITY: BOCA RATON STATE: FL ZIP: 33487 BUSINESS PHONE: 5612269345 MAIL ADDRESS: STREET 1: 8051 CONGRESS AVENUE CITY: BOCA RATON STATE: FL ZIP: 33487 10-Q 1 sbac-20160331x10q.htm 10-Q 20160331 Q1 10Q



 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



FORM 10-Q



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



For the quarterly period ended March 31, 2016

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: 125,524,099  shares of Class A common stock as of April 26, 2016.




 

Table of Contents





 

 



 

 

 

 

Page

PART I – FINANCIAL INFORMATION 



 

 

Item 1.

Financial Statements



Consolidated Balance Sheets as of March 31, 2016 (unaudited) and December 31, 2015



Consolidated Statements of Operations (unaudited) for the three months ended March 31, 2016 and 2015



Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the three months ended March 31, 2016 and 2015



Consolidated Statement of Shareholders’ Deficit (unaudited) for the three months ended March 31, 2016



Consolidated Statements of Cash Flows (unaudited) for the three months ended March 31, 2016 and 2015



Condensed Notes to Consolidated Financial Statements (unaudited)

Item 2.

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

19 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

30 

Item 4.

Controls and Procedures

32 



PART II – OTHER INFORMATION 



 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

33 



Item 6.

Exhibits

33 





 

SIGNATURES 

34 











 


 

PART I – FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS

SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except par values)





 

 

 

 

 

 



 

 

 

 

 

 



 

March 31,

 

December 31,



 

2016

 

2015

ASSETS

 

(unaudited)

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

103,266 

 

$

118,039 

Restricted cash

 

 

25,138 

 

 

25,353 

Short-term investments

 

 

708 

 

 

706 

Accounts receivable, net of allowance of $2,235 and $1,681

 

 

 

 

 

 

at March 31, 2016 and December 31, 2015, respectively

 

 

87,580 

 

 

83,326 

Costs and estimated earnings in excess of billings on uncompleted contracts

 

 

12,683 

 

 

16,934 

Prepaid expenses and other current assets

 

 

53,177 

 

 

49,602 

Total current assets

 

 

282,552 

 

 

293,960 

Property and equipment, net

 

 

2,802,662 

 

 

2,782,353 

Intangible assets, net

 

 

3,764,036 

 

 

3,735,413 

Other assets

 

 

522,394 

 

 

501,254 

Total assets

 

$

7,371,644 

 

$

7,312,980 



 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' DEFICIT

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

20,716 

 

$

27,105 

Accrued expenses

 

 

56,657 

 

 

63,755 

Current maturities of long-term debt

 

 

20,000 

 

 

20,000 

Deferred revenue

 

 

87,283 

 

 

97,083 

Accrued interest

 

 

38,813 

 

 

53,365 

Other current liabilities

 

 

9,600 

 

 

12,063 

Total current liabilities

 

 

233,069 

 

 

273,371 

Long-term liabilities:

 

 

 

 

 

 

Long-term debt, net

 

 

8,452,270 

 

 

8,432,070 

Other long-term liabilities

 

 

316,865 

 

 

313,683 

Total long-term liabilities

 

 

8,769,135 

 

 

8,745,753 

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, 125,512 and

 

 

 

 

 

 

125,743 shares issued and outstanding at March 31, 2016 and

 

 

 

 

 

 

December 31, 2015, respectively

 

 

1,255 

 

 

1,257 

Additional paid-in capital

 

 

1,973,974 

 

 

1,962,713 

Accumulated deficit

 

 

(3,164,437)

 

 

(3,168,069)

Accumulated other comprehensive loss, net

 

 

(441,352)

 

 

(502,045)

Total shareholders' deficit

 

 

(1,630,560)

 

 

(1,706,144)

Total liabilities and shareholders' deficit

 

$

7,371,644 

 

$

7,312,980 



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

1


 

SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS 

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





 

 

 

 

 

 



 

For the three months



 

ended March 31,



 

2016

 

2015

Revenues:

 

 

 

 

Site leasing

 

$

374,450 

 

$

369,727 

Site development

 

 

25,319 

 

 

40,367 

Total revenues

 

 

399,769 

 

 

410,094 

Operating expenses:

 

 

 

 

 

 

Cost of revenues (exclusive of depreciation, accretion,

 

 

 

 

 

 

and amortization shown below):

 

 

 

 

 

 

Cost of site leasing

 

 

82,762 

 

 

80,217 

Cost of site development

 

 

19,833 

 

 

30,893 

Selling, general, and administrative (1)

 

 

30,406 

 

 

29,884 

Acquisition related adjustments and expenses

 

 

3,182 

 

 

1,339 

Asset impairment and decommission costs

 

 

6,183 

 

 

6,822 

Depreciation, accretion, and amortization

 

 

159,801 

 

 

171,853 

Total operating expenses

 

 

302,167 

 

 

321,008 

Operating income

 

 

97,602 

 

 

89,086 

Other income (expense):

 

 

 

 

 

 

Interest income

 

 

1,866 

 

 

293 

Interest expense

 

 

(83,804)

 

 

(77,654)

Non-cash interest expense

 

 

(455)

 

 

(280)

Amortization of deferred financing fees

 

 

(5,265)

 

 

(4,544)

Other income (expense), net

 

 

45,900 

 

 

(82,968)

Total other expense

 

 

(41,758)

 

 

(165,153)

Income (loss) before provision for income taxes

 

 

55,844 

 

 

(76,067)

Provision for income taxes

 

 

(2,205)

 

 

(2,963)

Net income (loss)

 

$

53,639 

 

$

(79,030)

Net income (loss) per common share

 

 

 

 

 

 

Basic

 

$

0.43 

 

$

(0.61)

Diluted

 

$

0.43 

 

$

(0.61)

Weighted average number of common shares

 

 

 

 

 

 

Basic

 

 

125,398 

 

 

129,235 

Diluted

 

 

126,124 

 

 

129,235 



(1)

Includes non-cash compensation of $7,686 and $6,884 for the three months ended March 31, 2016 and 2015, respectively.

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



2


 

SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited) (in thousands)





 

 

 

 

 

 



 

 

 

 

 

 



 

For the three months



 

ended March 31,



 

 

 

 

 

 



 

2016

 

2015

Net income (loss)

 

$

53,639 

 

$

(79,030)

Foreign currency translation adjustments

 

 

60,693 

 

 

(174,450)

Comprehensive income (loss)

 

$

114,332 

 

$

(253,480)



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



3


 

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, 2015

 

125,743 

 

$

1,257 

 

$

1,962,713 

 

$

(3,168,069)

 

$

(502,045)

 

$

(1,706,144)

Net income

 

 —

 

 

 —

 

 

 —

 

 

53,639 

 

 

 —

 

 

53,639 

Common stock issued in connection with

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

stock purchase/option plans

 

276 

 

 

 

 

3,328 

 

 

 —

 

 

 —

 

 

3,331 

Non-cash compensation

 

 —

 

 

 —

 

 

7,933 

 

 

 —

 

 

 —

 

 

7,933 

Settlement of common stock warrants

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

Repurchase and retirement of common stock

 

(507)

 

 

(5)

 

 

 —

 

 

(50,007)

 

 

 —

 

 

(50,012)

Foreign currency translation adjustments

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

60,693 

 

 

60,693 

BALANCE, March 31, 2016

 

125,512 

 

$

1,255 

 

$

1,973,974 

 

$

(3,164,437)

 

$

(441,352)

 

$

(1,630,560)



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



4


 

SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited) (in thousands)



 

 

 

 

 

 



 

 

 

 

 

 



 

For the three months



 

ended March 31,



 

2016

 

2015

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net income (loss)

 

$

53,639 

 

$

(79,030)

Adjustments to reconcile net income (loss) to net cash provided by operating

 

 

 

 

 

 

activities:

 

 

 

 

 

 

Depreciation, accretion, and amortization

 

 

159,801 

 

 

171,853 

Non-cash interest expense

 

 

455 

 

 

280 

Deferred income tax (benefit) expense

 

 

(277)

 

 

557 

Non-cash asset impairment and decommission costs

 

 

4,196 

 

 

5,027 

Non-cash compensation expense

 

 

7,785 

 

 

6,988 

Amortization of deferred financing fees

 

 

5,265 

 

 

4,544 

(Gain) loss on remeasurement of U.S. dollar denominated intercompany loan

 

 

(44,765)

 

 

83,995 

Other non-cash items reflected in the Statements of Operations

 

 

(309)

 

 

(1,531)

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

 

 

 

Accounts receivable and costs and estimated earnings in excess of

 

 

 

 

 

 

billings on uncompleted contracts, net

 

 

90 

 

 

4,445 

Prepaid and other assets

 

 

(12,036)

 

 

(6,286)

Accounts payable and accrued expenses

 

 

(8,277)

 

 

3,834 

Accrued interest

 

 

(14,552)

 

 

(15,212)

Other liabilities

 

 

(6,151)

 

 

(1,056)

Net cash provided by operating activities

 

 

144,864 

 

 

178,408 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

Acquisitions

 

 

(91,832)

 

 

(53,279)

Capital expenditures

 

 

(36,060)

 

 

(68,100)

Other investing activities

 

 

(4,447)

 

 

(175)

Net cash used in investing activities

 

 

(132,339)

 

 

(121,554)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

Borrowings under Revolving Credit Facility

 

 

70,000 

 

 

135,000 

Repayments under Revolving Credit Facility

 

 

(50,000)

 

 

(25,000)

Repayment of Term Loans

 

 

(5,000)

 

 

(7,500)

Payments for settlement of common stock warrants

 

 

 —

 

 

(135,236)

Repurchase and retirement of common stock, inclusive of fees

 

 

(50,012)

 

 

 —

Other financing activities

 

 

1,689 

 

 

1,207 

Net cash used in financing activities

 

 

(33,323)

 

 

(31,529)

Effect of exchange rate changes on cash and cash equivalents

 

 

6,025 

 

 

(2,397)



 

 

 

 

 

 

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

 

 

(14,773)

 

 

22,928 

CASH AND CASH EQUIVALENTS:

 

 

 

 

 

 

Beginning of period

 

 

118,039 

 

 

39,443 

End of period

 

$

103,266 

 

$

62,371 



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

5


 

SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)







 

 

 

 

 

 



 

 

 

 

 

 



 

For the three months



 

ended March 31,



 

2016

 

2015



 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

 

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

 

Interest

 

$

98,434 

 

$

92,911 

Income taxes

 

$

2,359 

 

$

1,514 



 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:

 

 

 

 

 

 

Assets acquired through capital leases

 

$

273 

 

$

1,464 



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



6


 

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, 2015 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 

The functional currency for the Company’s Central American subsidiaries is the U.S. dollar. Monetary assets and liabilities of such subsidiaries which are not denominated in U.S. dollars are remeasured at exchange rates in effect at the balance sheet date, and revenues and expenses are remeasured at monthly average rates prevailing during the year. Unrealized translation gains and losses are reported as Other income (expense), net in the Consolidated Statement of Operations.

All assets and liabilities of foreign subsidiaries that do not utilize the U.S. dollar as its functional currency are translated at period-end rates of exchange, while revenues and expenses are translated at monthly average rates of exchange prevailing during the period. Unrealized remeasurement 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 ASC 830, the Company remeasures foreign denominated intercompany loans with the corresponding change in the balance being recorded in Other income (expense), net in the Consolidated Statements of Operations. For the three months ended March 31, 2016 and 2015,  the Company recorded  a $44.8 million gain and an $84.0 million loss on the remeasurement of intercompany loans, respectively. 

New Accounting Pronouncements Recently Adopted

In April 2015, the Financial Accounting Standards Board ("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. The Company adopted ASU 2015-03 effective January 1, 2016 and reclassified $90.2 million from deferred financing fees, net to long-term debt in the December 31, 2015 Consolidated Balance Sheet.

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 presenting deferred debt issuance costs for a line of credit arrangement as an asset in the balance sheet. The Company adopted ASU 2015-15 effective January 1, 2016 and has elected to continue to present deferred debt issuance costs for its Revolving Credit Facility as an asset on the accompanying Consolidated Balance Sheet. 

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. The Company adopted

7


 

ASU 2015-16 effective January 1, 2016. The financial statement impact of adopting this standard was not material for all periods presented.

In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, which the Company adopted as of January 1, 2016. The standard simplifies several aspects of the accounting for shared-based payment transactions including accounting for income taxes, forfeitures, statutory tax withholding requirements, classification of awards as either equity or a liability, and classification on the statement of cash flows. The financial statement impact of adopting this standard was not material for all periods presented.

Recent Accounting Pronouncements Not Yet Adopted

In May 2014, the FASB released an updated standard regarding the recognition of revenue from contracts with customers, exclusive of those contracts within lease accounting. The core principle of the standard 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 standard 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 standard 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 standard and does not expect a material financial statement impact upon adoption.

In February 2016, the FASB issued ASU 2016-02, Leases. The standard amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. This standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. ASU 2016-02 is effective for annual and interim periods beginning after December 15, 2018 and early adoption is permitted. The Company is evaluating the standard including the impact on its consolidated financial statements.



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 contained in various acquisitions was $5.0 million and $7.2 million as of March 31, 2016 and December 31, 2015, respectively. The maximum potential obligation related to the performance targets was $7.4 million and $10.2 million as of March 31, 2016 and December 31, 2015, respectively.

The following summarizes the activity of the accrued earnouts:





 

 

 

 

 

 



 

 

 

 

 

 



 

For the three months ended March 31,



 

2016

 

2015



 

 

 

 

 

 



 

(in thousands)

Beginning balance

 

$

7,230 

 

$

15,086 

Additions

 

 

173 

 

 

1,372 

Payments

 

 

(1,360)

 

 

(1,234)

Change in estimate

 

 

(1,023)

 

 

(1,552)

Foreign currency translation adjustments

 

 

 

 

(319)

Ending balance

 

$

5,024 

 

$

13,353 



8


 

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 months ended March 31, 2016, the Company recognized impairment charges of $6.2 million which include the write off of $4.2 million in carrying value of decommissioned towers and $2.0 million of other third party decommission costs.  During the three months ended March 31, 2015, the Company recognized impairment charges of $6.8 million which include the write off of $3.9 million in carrying value of decommissioned towers and $1.8 million of other third party decommission costs. In addition, for the three months ended March 31, 2015,  the impairment charge includes $1.1 million in disposal costs related to the Company’s former corporate headquarters building. Asset impairment and decommission costs for all periods presented 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 in certificate of deposits as of March 31, 2016 and December 31, 2015, and $0.2 million in Treasury securities as of March 31, 2016 and December 31, 2015. 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 March 31, 2016, the carrying value and fair value of the held-to-maturity investments, including current portion, were $0.8 million and $0.9 million, respectively. As of December 31, 2015,  the carrying value and fair value of the held-to-maturity investments, including current portion, were $0.8 million and $0.9 million, respectively. These amounts are recorded in Other assets in the accompanying Consolidated Balance Sheets.

The Company determines 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

 

 



 

March 31, 2016

 

December 31, 2015

 

Included on Balance Sheet



 

 

 

 

 

 

 

 



 

 

(in thousands)

 

 

Securitization escrow accounts

 

$

24,910 

 

$

25,135 

 

Restricted cash - current asset

Payment and performance bonds

 

 

228 

 

 

218 

 

Restricted cash - current asset

Surety bonds and workers compensation

 

 

3,229 

 

 

3,227 

 

Other assets - noncurrent

Total restricted cash

 

$

28,367 

 

$

28,580 

 

 



Pursuant to the terms of the Tower Securities (see Note 10), the Company is required to establish a securitization escrow account, held by the 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. 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 related to the Company’s tower removal obligations. As of March 31, 2016 and December 31, 2015, the Company had $38.8 million and $38.6 million in surety, payment and performance bonds, respectively, for which it was only

9


 

required to post $0.5 million and $0.7 million in collateral, respectively. The Company periodically evaluates the collateral posted for its bonds to ensure that it meets the minimum requirements. As of March 31, 2016 and December 31, 2015, the Company had also pledged $2.5 million and $2.5 million, respectively, as collateral related to its workers compensation policy.

4.OTHER ASSETS

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





 

 

 

 

 

 



 

 

 

 

 

 



 

As of

 

As of



 

March 31, 2016

 

December 31, 2015



 

 

 

 

 

 



 

 

(in thousands)

Long-term investments

 

$

8,095 

 

$

8,140 

Prepaid land rent

 

 

160,991 

 

 

158,176 

Straight-line rent receivable

 

 

278,670 

 

 

267,682 

Deferred lease costs, net

 

 

30,458 

 

 

30,577 

Deferred financing fees, net

 

 

3,680 

 

 

3,919 

Other

 

 

40,500 

 

 

32,760 

Total other assets

 

$

522,394 

 

$

501,254 

 

5.ACQUISITIONS

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







 

 

 

 

 

 



 

 

 

 

 

 



 

For the three months



 

ended March 31,



 

2016

 

2015



 

 

 

 

 

 



 

(in thousands)

Towers and related intangible assets

 

$

74,844 

 

$

42,630 

Land buyouts and other assets (1)

 

 

16,988 

 

 

10,649 

Total cash acquisition capital expenditures

 

$

91,832 

 

$

53,279 



(1)

In addition, the Company paid $3.6 million and $3.3 million for ground lease extensions and term easements on land underlying the Company’s towers during the three months ended March 31, 2016 and 2015, respectively. The Company recorded these amounts in prepaid rent on its Consolidated Balance Sheets.

During the three months ended March 31, 2016, the Company acquired 117 completed towers and related assets and liabilities for $74.8 million in cash consisting of $24.6 million of property and equipment, $45.8 million of intangible assets, and $4.4 million of working capital adjustments. 

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.

Subsequent to March 31, 2016, the Company acquired 31 completed towers and related assets and liabilities for $32.5 million in cash.



10


 

6.INTANGIBLE ASSETS, NET

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





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

As of March 31, 2016

 

As of December 31, 2015



 

Gross carrying

 

Accumulated

 

Net book

 

Gross carrying

 

Accumulated

 

Net book



 

amount

 

amortization

 

value

 

amount

 

amortization

 

value



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

(in thousands)

Current contract intangibles

 

$

4,003,832 

 

$

(1,191,738)

 

$

2,812,094 

 

$

3,904,864 

 

$

(1,118,493)

 

$

2,786,371 

Network location intangibles

 

 

1,475,428 

 

 

(523,486)

 

 

951,942 

 

 

1,446,293 

 

 

(497,251)

 

 

949,042 

Intangible assets, net

 

$

5,479,260 

 

$

(1,715,224)

 

$

3,764,036 

 

$

5,351,157 

 

$

(1,615,744)

 

$

3,735,413 



All intangible assets noted above are included in the Company’s site leasing segment. The Company amortizes its intangible assets using the straight-line method over 15 years. Amortization expense relating to the intangible assets above was $90.2 million and $91.4 million for the three months ended March 31, 2016  and 2015, respectively.    

7.PROPERTY AND EQUIPMENT, NET

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





 

 

 

 

 

 



 

 

 

 

 

 



 

As of

 

As of



 

March 31, 2016

 

December 31, 2015



 

 

 

 

 

 



 

(in thousands)

Towers and related components

 

$

4,435,036 

 

$

4,370,664 

Construction-in-process

 

 

35,579 

 

 

32,730 

Furniture, equipment, and vehicles

 

 

49,084 

 

 

48,018 

Land, buildings, and improvements

 

 

542,223 

 

 

524,847 

Total property and equipment

 

 

5,061,922 

 

 

4,976,259 

Less: accumulated depreciation

 

 

(2,259,260)

 

 

(2,193,906)

Property and equipment, net

 

$

2,802,662 

 

$

2,782,353 



Construction-in-process represents costs incurred related to towers that are under development and will be used in the Company’s operations. Depreciation expense was $69.5 million and $80.4 million for the three months ended March 31, 2016 and 2015, respectively. At March 31, 2016 and December 31, 2015, non-cash capital expenditures that are included in accounts payable and accrued expenses were $5.2 million and $9.5 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



 

March 31, 2016

 

December 31, 2015



 

 

 

 

 

 



 

(in thousands)

Costs incurred on uncompleted contracts

 

$

65,088 

 

$

78,849 

Estimated earnings

 

 

24,958 

 

 

29,333 

Billings to date

 

 

(77,916)

 

 

(95,055)



 

$

12,130 

 

$

13,127 



11


 

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





 

 

 

 

 

 



 

 

 

 

 

 



 

As of

 

As of



 

March 31, 2016

 

December 31, 2015



 

 

 

 

 

 



 

(in thousands)

Costs and estimated earnings in excess of billings on uncompleted contracts

 

$

12,683 

 

$

16,934 

Billings in excess of costs and estimated earnings on

 

 

 

 

 

 

uncompleted contracts (included in Other current liabilities)

 

 

(553)

 

 

(3,807)



 

$

12,130 

 

$

13,127 



Eight significant customers comprised 88.8% and 95.9% of the costs and estimated earnings in excess of billings on uncompleted contracts, net of billings in excess of costs and estimated earnings at March 31, 2016 and December 31, 2015, respectively.



9.ACCRUED EXPENSES

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





 

 

 

 

 

 



 

 

 

 

 

 



 

As of

 

As of



 

March 31, 2016

 

December 31, 2015



 

 

 

 

 

 



 

(in thousands)

Accrued earnouts

 

$

5,024 

 

$

7,230 

Salaries and benefits

 

 

9,647 

 

 

14,253 

Real estate and property taxes

 

 

7,562 

 

 

7,899 

Other

 

 

34,424 

 

 

34,373 

Total accrued expenses

 

$

56,657 

 

$

63,755 

 

10.DEBT

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





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

As of

 

As of



 

 

 

March 31, 2016

 

December 31, 2015



 

Maturity Date

Principal Balance

 

Fair Value

 

Carrying Value

 

Principal Balance

 

Fair Value

 

Carrying Value

5.625% Senior Notes

 

Oct. 1, 2019

 

$

500,000 

 

$

517,500 

 

$

495,258 

 

$

500,000 

 

$

521,250 

 

$

494,955 

5.750% Senior Notes

 

July 15, 2020

 

 

800,000 

 

 

822,000 

 

 

791,666 

 

 

800,000 

 

 

832,000 

 

 

791,243 

4.875% Senior Notes

 

July 15, 2022

 

 

750,000 

 

 

755,625 

 

 

735,497 

 

 

750,000 

 

 

744,375 

 

 

735,010 

2010-2C Tower Securities

 

April 11, 2017

 

 

550,000 

 

 

554,169 

 

 

548,594 

 

 

550,000 

 

 

558,223 

 

 

548,268 

2012-1C Tower Securities

 

Dec. 11, 2017

 

 

610,000 

 

 

611,562 

 

 

604,952 

 

 

610,000 

 

 

611,879 

 

 

604,229 

2013-1C Tower Securities

 

April 10, 2018

 

 

425,000 

 

 

420,793 

 

 

421,513 

 

 

425,000 

 

 

416,959 

 

 

421,099 

2013-2C Tower Securities

 

April 11, 2023

 

 

575,000 

 

 

572,395 

 

 

566,774 

 

 

575,000 

 

 

565,541 

 

 

566,523 

2013-1D Tower Securities

 

April 10, 2018

 

 

330,000 

 

 

335,240 

 

 

327,240 

 

 

330,000 

 

 

332,676 

 

 

326,918 

2014-1C Tower Securities

 

Oct. 8, 2019

 

 

920,000 

 

 

912,410 

 

 

910,243 

 

 

920,000 

 

 

910,368 

 

 

909,595 

2014-2C Tower Securities

 

Oct. 8, 2024

 

 

620,000 

 

 

618,878 

 

 

612,047 

 

 

620,000 

 

 

608,084 

 

 

611,853 

2015-1C Tower Securities

 

Oct. 8, 2020

 

 

500,000 

 

 

501,330 

 

 

489,725 

 

 

500,000 

 

 

489,680 

 

 

489,496 

Revolving Credit Facility

 

Feb. 5, 2020

 

 

20,000 

 

 

20,000 

 

 

20,000 

 

 

 —

 

 

 —

 

 

 —

2014 Term Loan

 

Mar. 24, 2021

 

 

1,473,750 

 

 

1,466,381 

 

 

1,461,581 

 

 

1,477,500 

 

 

1,447,950 

 

 

1,464,774 

2015 Term Loan

 

June 10, 2022

 

 

496,250 

 

 

491,288 

 

 

487,180 

 

 

497,500 

 

 

486,306 

 

 

488,107 

Total debt

 

 

 

$

8,570,000 

 

$

8,599,571 

 

$

8,472,270 

 

$

8,555,000 

 

$

8,525,291 

 

$

8,452,070 

Less: current maturities of long-term debt

 

 

 

 

 

(20,000)

 

 

 

 

 

 

 

 

(20,000)

Total long-term debt, net of current maturities

 

 

 

 

$

8,452,270 

 

 

 

 

 

 

 

$

8,432,070 

12


 

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







 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

For the three months ended March 31,



 

2016

 

2015



 

Cash

 

Non-cash

 

Cash

 

Non-cash



 

Interest

 

Interest

 

Interest

 

Interest



 

 

 

 

 

 

 

 

 

 

 

 



 

(in thousands)

5.625% Senior Notes

 

$

7,031 

 

$

 —

 

$

7,031 

 

$

 —

5.75% Senior Notes

 

 

11,500 

 

 

 —

 

 

11,500 

 

 

 —

4.875% Senior Notes

 

 

9,141 

 

 

169 

 

 

9,141 

 

 

161 

2010 Tower Securities

 

 

7,058 

 

 

 —

 

 

7,058 

 

 

 —

2012 Tower Securities

 

 

4,534 

 

 

 —

 

 

4,531 

 

 

 —

2013 Tower Securities

 

 

10,804 

 

 

 —

 

 

10,804 

 

 

 —

2014 Tower Securities

 

 

12,785 

 

 

 —

 

 

12,785 

 

 

 —

2015 Tower Securities

 

 

3,985 

 

 

 —

 

 

 —

 

 

 —

Revolving Credit Facility

 

 

833 

 

 

 —

 

 

1,571 

 

 

 —

2012-1 Term Loan

 

 

 —

 

 

 —

 

 

1,153 

 

 

 —

2014 Term Loan

 

 

12,138 

 

 

125 

 

 

12,125 

 

 

119 

2015 Term Loan

 

 

4,087 

 

 

161 

 

 

 —

 

 

 —

Other

 

 

(92)

 

 

 —

 

 

(45)

 

 

 —

Total

 

$

83,804 

 

$

455 

 

$

77,654 

 

$

280 



Revolving Credit Facility under the Senior Credit Agreement

The Revolving Credit Facility is governed by the Senior Credit Agreement. 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. 

During the three months ended March 31, 2016, the Company borrowed $70.0 million and repaid $50.0 million of the outstanding balance under the Revolving Credit Facility. As of March 31, 2016,  $20.0 million was outstanding under the Revolving Credit Facility. A