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, 2018

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: 001-16853

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, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,”  and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-Accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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:  115,185,962  sharesof Class A common stock as of April 26, 2018.

Table of Contents

		Page
PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets as of March 31, 2018 (unaudited) and December 31, 2017	1
	Consolidated Statements of Operations (unaudited) for the three months ended March 31, 2018 and 2017	2
	Consolidated Statements of Comprehensive Income (unaudited) for the three months ended March 31, 2018 and 2017	3
	Consolidated Statement of Shareholders’ Deficit (unaudited) for the three months ended March 31, 2018	4
	Consolidated Statements of Cash Flows (unaudited) for the three months ended March 31, 2018 and 2017	5
	Condensed Notes to Consolidated Financial Statements (unaudited)	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	23
Item3.	Quantitative and Qualitative Disclosures About Market Risk	39
Item 4.	Controls and Procedures	42
PART II – OTHER INFORMATION
Item2.	Unregistered Sales of Equity Securities and Use of Proceeds	42
Item5.	Other Information	42
Item6.	Exhibits	43
SIGNATURES		44

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,
	2018		2017
ASSETS	(unaudited)
Current assets:
Cash and cash equivalents	$	109,350	$	68,783
Restricted cash		28,372		32,924
Accounts receivable, net		101,103		90,673
Costs and estimated earnings in excess of billings on uncompleted contracts		13,039		17,437
Prepaid and other current assets		50,916		49,716
Total current assets		302,780		259,533
Property and equipment, net		2,803,478		2,812,346
Intangible assets, net		3,600,640		3,598,131
Other assets		698,184		650,195
Total assets	$	7,405,082	$	7,320,205
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Accounts payable	$	29,554	$	33,334
Accrued expenses		60,223		69,862
Current maturities of long-term debt		20,000		20,000
Deferred revenue		93,407		97,969
Accrued interest		33,862		48,899
Other current liabilities		13,882		8,841
Total current liabilities		250,928		278,905
Long-term liabilities:
Long-term debt, net		9,363,686		9,290,686
Other long-term liabilities		378,709		349,728
Total long-term liabilities		9,742,395		9,640,414
Shareholders' deficit:
Preferred stock - par value $.01,  30,000 shares authorized, no shares issued or outst.		—		—
Common stock - Class A, par value $.01,  400,000 shares authorized, 116,472
and 116,446 shares issued and outstanding at March 31, 2018
and December 31, 2017, respectively		1,165		1,164
Additional paid-in capital		2,184,989		2,167,470
Accumulated deficit		(4,395,286)		(4,388,288)
Accumulated other comprehensive loss, net		(379,109)		(379,460)
Total shareholders' deficit		(2,588,241)		(2,599,114)
Total liabilities and shareholders' deficit	$	7,405,082	$	7,320,205

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,
	2018		2017
Revenues:
Site leasing	$	430,542	$	397,550
Site development		27,760		25,813
Total revenues		458,302		423,363
Operating expenses:
Cost of revenues (exclusive of depreciation, accretion,
and amortization shown below):
Cost of site leasing		92,817		89,382
Cost of site development		22,520		21,588
Selling, general, and administrative (1)		36,049		34,223
Acquisition related adjustments and expenses		3,044		2,969
Asset impairment and decommission costs		8,506		8,351
Depreciation, accretion, and amortization		165,398		159,031
Total operating expenses		328,334		315,544
Operating income		129,968		107,819
Other income (expense):
Interest income		1,295		3,234
Interest expense		(88,923)		(77,602)
Non-cash interest expense		(733)		(705)
Amortization of deferred financing fees		(5,388)		(6,698)
Loss from extinguishment of debt, net		(645)		—
Other income, net		4,553		14,948
Total other expense		(89,841)		(66,823)
Income before provision for income taxes		40,127		40,996
Provision for income taxes		(8,582)		(3,398)
Net income	$	31,545	$	37,598
Net income per common share
Basic	$	0.27	$	0.31
Diluted	$	0.27	$	0.31
Weighted average number of common shares
Basic		116,494		121,049
Diluted		118,293		121,734

(1) Includes non-cash compensation of $9,893 and $8,826 for the three months ended March 31, 2018 and 2017, respectively.

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

2

SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVEINCOME

(unaudited) (in thousands)

	For the three months
	ended March 31,
	2018		2017
Net income	$	31,545	$	37,598
Foreign currency translation adjustments		351		27,285
Comprehensive income	$	31,896	$	64,883

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, 2017	116,446	$	1,164	$	2,167,470	$	(4,388,288)	$	(379,460)	$	(2,599,114)
Net income	—		—		—		31,545		—		31,545
Common stock issued in connection with
stock purchase/option plans	264		3		6,883		—		—		6,886
Non-cash stock compensation	—		—		10,636		—		—		10,636
Repurchase and retirement of common stock	(238)		(2)		—		(38,543)		—		(38,545)
Foreign currency translation adjustments	—		—		—		—		351		351
BALANCE, March 31, 2018	116,472	$	1,165	$	2,184,989	$	(4,395,286)	$	(379,109)	$	(2,588,241)

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,
	2018		2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	31,545	$	37,598
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, accretion, and amortization		165,398		159,031
Non-cash asset impairment and decommission costs		8,446		7,047
Non-cash compensation expense		10,410		9,277
Amortization of deferred financing fees		5,388		6,698
Gain on remeasurement of U.S. dollar denominated intercompany loans		(1,623)		(13,659)
Other non-cash items reflected in the Statements of Operations		1,296		35
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable and costs and estimated earnings in excess of
billings on uncompleted contracts, net		(5,198)		1,444
Prepaid expenses and other assets		(9,277)		(4,777)
Accounts payable and accrued expenses		(14,336)		(3,899)
Accrued interest		(15,137)		(25,290)
Other liabilities		1,665		(1,199)
Net cash provided by operating activities		178,577		172,306
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions		(117,622)		(42,651)
Capital expenditures		(31,096)		(35,747)
Other investing activities		(2,879)		(5,879)
Net cash used in investing activities		(151,597)		(84,277)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under Revolving Credit Facility		265,000		—
Repayments under Revolving Credit Facility		(70,000)		(110,000)
Repayment of Tower Securities		(755,000)		—
Proceeds from issuance of Tower Securities, net of fees		631,848		—
Repayment of Term Loans		(5,000)		(5,000)
Repurchase and retirement of common stock		(38,545)		(4,419)
Other financing activities		5,746		7,147
Net cash provided by (used in) financing activities		34,049		(112,272)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		(504)		3,744
NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH		60,525		(20,499)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH:
Beginning of period		104,295		185,970
End of period	$	164,820	$	165,471

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,
	2018		2017
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest	$	104,011	$	102,875
Income taxes	$	2,148	$	2,806
SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:
Assets acquired through capital leases	$	260	$	—

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, 2017 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.

Revenue Recognition and Accounts Receivable

Revenue from site leasing is recognized on a straight-line basis over the current term of the related lease agreements, which are generally five to ten years. Receivables recorded related to the straight-lining of site leases are reflected in other assets on the Consolidated Balance Sheets. Rental amounts received in advance are recorded as deferred revenue on the Consolidated Balance Sheets. Revenues from site leasing represent 94% of the Company’s total revenues.

Site development projects in which the Company performs consulting services include contracts on a fixed price basis.  Site development projects are billed at contractual rates and revenue is recognized over time based on milestones achieved, which are determined based on costs incurred. Amounts billed in advance (collected or uncollected) are recorded as deferred revenue on the Consolidated Balance Sheets.

Revenue from construction projects is recognized over time, determined by the percentage of cost incurred to date compared to management’s estimated total cost for each contract. This method is used because management considers total cost to be the best available measure of progress on the contracts. These amounts are based on estimates, and the uncertainty inherent in the estimates initially is reduced as work on the contracts nears completion. The asset “costs and estimated earnings in excess of billings on uncompleted contracts” represents costs incurred and revenues recognized in excess of amounts billed. The liability “billings in excess of costs and estimated earnings on uncompleted contracts,” included within other current liabilities on the Consolidated Balance Sheets, represents billings in excess of costs incurred and revenues recognized. Refer to Note 8 for further detail of costs and estimated earnings in excess of billings on uncompleted contracts. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined to be probable.

The site development segment represents approximately 6% of the Company’s total revenues. The Company accounts for site development revenue in accordance with ASC 606, Revenue from Contracts with Customers, which the Company adopted on January 1, 2018 by applying the modified retrospective transition method. Payment terms do not result in any significant financing arrangements. Furthermore, these contracts do not typically include variable consideration; therefore, the transaction price that is recognized over time is generally the amount of the total contract.The cumulative effect of initially applying the new revenue standard had no impact on the Company’s financial results. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. The adoption of the new standard will have no impact to net income on an ongoing basis.

The accounts receivable balance was $101.1 million and $90.7 million as of March 31, 2018 and December 31, 2017, respectively, of which $29.3 million and $20.8 million related to the site development segment as of March 31, 2018 and December 31, 2017, respectively. The Company performs periodic credit evaluations of its customers. In addition, the Company monitors collections and payments from its customers and maintains a provision for estimated credit losses based upon historical experience, specific customer collection issues identified, and past due balances as determined based on contractual terms. Interest is charged on outstanding receivables from customers on a case by case basis in accordance with the terms of the respective contracts or agreements with those customers. Amounts determined to be uncollectible are written off against the allowance for doubtful accounts in the period in which uncollectibility is determined to be probable. Refer to Note 14 for further detail of the site development segment.

7

Foreign Currency Translation

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.

For foreign subsidiaries where the U.S. dollar is the functional currency, 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.

Intercompany Loans Subject to Remeasurement

The Company has two wholly owned subsidiaries, Brazil Shareholder I, LLC, a Florida limited liability company, and SBA Torres Brasil, Limitada, a limitada existing under the laws of the Republic of Brazil, which have entered into intercompany loan agreements pursuant to which the entities may from time to time agree to lend/borrow amounts under the terms of each agreement. The first agreement entered into in November 2014 was for $750.0 million and was created to fund the acquisition of 1,641 towers in Brazil. The second agreement entered into in December 2017 was for $500.0 million and was created to fund the acquisition of 941 towers in Brazil.

In accordance with Accounting Standards Codification (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 Statement of Operations as settlement is anticipated or planned in the foreseeable future.  For the three months ended March 31, 2018 and 2017, the Company recorded a $1.6 million gainand a $13.7 million gain, respectively, on the remeasurement of intercompany loans due to changes in foreign exchange rates.  As of March 31, 2018, the aggregate amount outstanding under the  two intercompany loan agreements with the Company’s Brazilian subsidiary was $560.9 million.

Recent Accounting Pronouncements Not Yet Adopted

In February 2016, the FASB issued ASU 2016-02, Leases. The standard requires lessees to recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments for all leases with a term greater than 12 months. The accounting for lessors remains largely unchanged from existing guidance. This standard is effective for annual and interim periods beginning after December 15, 2018. Early adoption is permitted; however, the Company does not currently plan to early adopt. The Company has established a cross functional project plan and is assessing the impact of the standard on its consolidated financial statements. The Company expects this guidance to have a material impact on its consolidated balance sheet due to the recognition of right-of-use assets and lease liabilities for its ground leases. The Company does not expect adoption to have a significant impact on its lease classification or to have a material impact on its consolidated statement of operations.

2.FAIR VALUE MEASUREMENTS

Items Measured at Fair Value on a Recurring Basis— The Company’s earnout liabilities related to business combinations 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 estimates are recorded in Acquisition related adjustments and expenses in the accompanying Consolidated Statement of Operations. The Company determines the fair value of 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 prior to January 1, 2017 (adoption of ASU 2017-01) was $2.5 million as of March 31, 2018 and December 31, 2017. The maximum potential obligation related to the performance targetsfor thesevarious acquisitions was$3.1 million as of March 31, 2018 and December 31, 2017. The maximum potential obligation related to the performance targets for acquisitions since January 1, 2017, which have not been recorded on the Company’s Consolidated Balance Sheet, were$15.5million and $11.1 million as of March 31, 2018 and December 31, 2017, respectively.

The Company’s asset retirement obligations are measured at fair value on a recurring basis using Level 3 inputs and are recorded in Other long-term liabilities in the accompanying Consolidated Balance Sheets. The fair value of the asset retirement obligations is calculated using a discounted cash flow model.

8

Items Measured at Fair Value on a Nonrecurring Basis— The Company’s long-lived assets and intangibles 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 and intangibles is calculated using a discounted cash flow model.

Asset impairment and decommission costs for all periods presented and the related impaired assets primarily relate to the Company’s site leasing operating segment. The following summarizes the activity of asset impairment and decommission costs (in thousands):

	For the three months
	ended March 31,
	2018		2017
Asset impairment (1)	$	5,855	$	3,014
Write-off of carrying value of decommissioned towers		2,001		3,971
Other third party decommission costs		650		1,366
Total asset impairment and decommission costs	$	8,506	$	8,351

(1) Represents impairment charges resulting from the Company’s regular analysis of whether the future cash flows from certain towers are adequate to recover the carrying value of the investment in those towers.

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 consistedof $0.2 million in Treasury securities as of March 31, 2018 and December 31, 2017. 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, 2018and December 31, 2017,  the carrying value and fair value of the held-to-maturity investments, including current portion, were $0.5 million. The current portion is recorded in Prepaid and other current assets in the accompanying Consolidated Balance Sheets, while held-to-maturity investments are recorded in Other assets.

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 monthly or more frequently.  The Company does not believe its credit risk has changed materially from the date the applicable Eurodollar Rate was set for the Revolving Credit Facility (137.5 to 200.0 basis points as of March 31, 2018 and 112.5 to 175.0 basis points as of the date of this filing). Refer to Note 10 for the fair values, principal balances, and carrying values of the Company’s debt instruments.

3.RESTRICTED CASH

The cash, cash equivalents, and restricted cash balances on the consolidated statement of cash flows consists of the following:

	As of		As of
	March 31, 2018		December 31, 2017		Included on Balance Sheet
		(in thousands)
Cash and cash equivalents	$	109,350	$	68,783
Securitization escrow accounts		28,143		32,699	Restricted cash - current asset
Payment and performance bonds		229		225	Restricted cash - current asset
Surety bonds and workers compensation		2,596		2,588	Other assets - noncurrent
Cash held in escrow for acquisitions		24,502		—	Other assets - noncurrent
Total cash, cash equivalents, and restricted cash	$	164,820	$	104,295

9

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, 2018 and December 31, 2017, the Company had $39.6 million and $39.5 million in surety, payment and performance bonds, respectively.  As of March 31, 2018 andDecember 31, 2017,no  collateral was required to be posted. The Company periodically evaluates the collateral posted for its bonds to ensure that it meets the minimum requirements. As of March 31, 2018 and December 31, 2017, the Company had also pledged $2.5 million as collateral related to its workers compensation policy.

During the quarter ended March 31, 2018, the Company placed $24.5 million into escrow accounts in anticipation of pending acquisitions. These amounts are designated for use in the acquisition of towers and their use is restricted for this activity. Should the acquisitions not be consummated and the Company is not in breach of the purchase and sale agreement, the funds would be returned back to the Company without penalty. Subsequent to March 31, 2018, the Company closed on one of the pending acquisitions and $10.0 million of the escrow deposits were transferred from the escrow account to the seller.

4.PREPAID EXPENSES AND OTHER CURRENT ASSETS AND OTHER ASSETS

The Company’s prepaid expenses and other current assets are comprised of the following:

	As of		As of
	March 31, 2018		December 31, 2017
		(in thousands)
Prepaid ground rent	$	31,257	$	32,505
Other		19,659		17,211
Total prepaid expenses and other current assets	$	50,916	$	49,716

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

	As of		As of
	March 31, 2018		December 31, 2017
		(in thousands)
Prepaid ground rent	$	230,327	$	220,493
Straight-line rent receivable		318,841		313,650
Deferred lease costs, net		27,519		27,703
Cash held in escrow for acquisitions		24,502		—
Other		96,995		88,349
Total other assets	$	698,184	$	650,195

10

5.ACQUISITIONS

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

	For the three months
	ended March 31,
	2018		2017
	(in thousands)
Acquisitions of towers and related intangible assets	$	108,355	$	31,147
Land buyouts and other assets (1)		9,267		11,504
Total cash acquisition capital expenditures	$	117,622	$	42,651

(1) In addition, the Company paid $6.6 million and $2.7 million for ground lease extensions and term easements on land underlying the Company’s towers during the three months ended March 31, 2018 and 2017, respectively. The Company recorded these amounts in prepaid rent on its Consolidated Balance Sheets.

For acquisitions which qualify as asset acquisitions, the aggregate purchase price is allocated on a relative fair value basis to towers and related intangible assets.The fair values of these net assets acquired are based on management’s estimates and assumptions, as well as other information compiled by management, including valuations that utilize customary valuation procedures and techniques. The fair value estimates are based on available historical information and on future expectations and assumptions deemed reasonable by management at the time. If the actual results differ from the estimates and judgments used in these fair values, the amounts recorded in the consolidated financial statements could be subject to a possible impairment of the intangible assets, or require acceleration of the amortization expense of intangible assets in subsequent periods.

For business combinations, the estimates of the fair value of the assets acquired and liabilities assumed at the date of an acquisition are subject to adjustment during the measurement period (up to one year from the particular acquisition date). During the measurement period, the Company will adjust assets and/or liabilities if new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have resulted in a revised estimated value of those assets and/or liabilities as of that date. As of March 31, 2018, there were no purchase price allocations that were preliminary.

During the three months ended March 31, 2018, the Company acquired 334 completed towers and related assets and liabilities consisting of $23.2 million of property and equipment, $101.3 million of intangible assets, and $16.2million of working capital adjustments. All acquisitions in the quarter ended March 31, 2018 were accounted for as asset acquisitions.

Subsequent to March 31, 2018, the Company acquired 190 towers and related assets for $119.5 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 March 31, 2018						As of December 31, 2017
	Gross carrying		Accumulated		Net book		Gross carrying		Accumulated		Net book
	amount		amortization		value		amount		amortization		value
	(in thousands)
Current contract intangibles	$	4,425,965	$	(1,746,160)	$	2,679,805	$	4,355,171	$	(1,673,270)	$	2,681,901
Network location intangibles		1,649,246		(728,411)		920,835		1,617,441		(701,211)		916,230
Intangible assets, net	$	6,075,211	$	(2,474,571)	$	3,600,640	$	5,972,612	$	(2,374,481)	$	3,598,131

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 $100.3 million and $94.9 million for the three months ended March 31, 2018 and 2017, respectively. 

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7.PROPERTY AND EQUIPMENT, NET

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

	As of		As of
	March 31, 2018		December 31, 2017
	(in thousands)
Towers and related components	$	4,817,195	$	4,772,807
Construction-in-process		35,175		34,689
Furniture, equipment, and vehicles		53,485		53,260
Land, buildings, and improvements		638,609		630,370
Total property and equipment		5,544,464		5,491,126
Less: accumulated depreciation		(2,740,986)		(2,678,780)
Property and equipment, net	$	2,803,478	$	2,812,346

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 $65.0 million and $64.1 million for the three months ended March 31, 2018 and 2017, respectively. At March 31, 2018 and December 31, 2017, non-cash capital expenditures that are included in accounts payable and accrued expenses were $10.4 million and $12.4 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, 2018		December 31, 2017
	(in thousands)
Costs incurred on uncompleted contracts	$	33,232	$	31,404
Estimated earnings		11,836		10,541
Billings to date		(32,495)		(24,771)
	$	12,573	$	17,174

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

	As of		As of
	March 31, 2018		December 31, 2017
	(in thousands)
Costs and estimated earnings in excess of billings on uncompleted contracts	$	13,039	$	17,437
Billings in excess of costs and estimated earnings on
uncompleted contracts (included in Other current liabilities)		(466)		(263)
	$	12,573	$	17,174

At  March 31, 2018 and December 31, 2017,eight customers comprised 87.4% and 87.9% of the costs and estimated earnings in excess of billings on uncompleted contracts, net of billings in excess of costs and estimated earnings,respectively.

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9. ACCRUED EXPENSES

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

	As of		As of
	March 31, 2018		December 31, 2017
	(in thousands)
Accrued earnouts on business combinations	$	2,503	$	2,470
Salaries and benefits		5,755		13,506
Real estate and property taxes		6,900		7,125
Non-cash capital expenditures		10,352		12,408
Other		34,713		34,353
Total accrued expenses	$	60,223	$	69,862

10.DEBT

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

		As of						As of
		March 31, 2018						December 31, 2017
	Maturity Date	Principal Balance		Fair Value		Carrying Value		Principal Balance		Fair Value		Carrying Value
2014 Senior Notes	Jul. 15, 2022	$	750,000	$	753,750	$	739,617	$	750,000	$	770,625	$	739,079
2016 Senior Notes	Sep. 1, 2024		1,100,000		1,075,250		1,081,857		1,100,000		1,127,500		1,081,262
2017 Senior Notes	Oct. 1, 2022		750,000		718,125		741,846		750,000		750,938		741,437
2013-1C Tower Securities	Apr. 10, 2018		—		—		—		425,000		423,853		424,482
2013-2C Tower Securities	Apr. 11, 2023		575,000		568,071		568,881		575,000		578,433		568,609
2013-1D Tower Securities	Ap. 10, 2018		—		—		—		330,000		330,145		329,585
2014-1C Tower Securities	Oct. 8, 2019		920,000		910,395		915,621		920,000		915,216		914,929
2014-2C Tower Securities	Oct. 8, 2024		620,000		607,067		613,672		620,000		620,942		613,461
2015-1C Tower Securities	Oct. 8, 2020		500,000		492,260		494,028		500,000		496,840		493,474
2016-1C Tower Securities	Jul. 9, 2021		700,000		691,726		693,578		700,000		691,166		693,118
2017-1C Tower Securities	Apr. 11, 2022		760,000		740,992		751,548		760,000		751,404		751,076
2018-1C Tower Securities	Mar. 9, 2023		640,000		638,650		631,939		—		—		—
Revolving Credit Facility	Feb. 5, 2020		235,000		235,000		235,000		40,000		40,000		40,000
2014 Term Loan	Mar. 24, 2021		1,443,750		1,447,359		1,436,207		1,447,500		1,451,119		1,439,373
2015 Term Loan	Jun. 10, 2022		486,250		486,250		479,892		487,500		488,109		480,801
Total debt		$	9,480,000	$	9,364,895	$	9,383,686	$	9,405,000	$	9,436,290	$	9,310,686
Less: current maturities of long-term debt							(20,000)						(20,000)
Total long-term debt, net of current maturities						$	9,363,686					$	9,290,686

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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 March 31,
	2018				2017
	Cash		Non-cash		Cash		Non-cash
	Interest		Interest		Interest		Interest
	(in thousands)
2014 Senior Notes	$	9,141	$	187	$	9,141	$	178
2016 Senior Notes		13,406		246		13,406		234
2017 Senior Notes		7,500		—		—		—
2012 Tower Securities		—		—		4,524		—
2013 Tower Securities		9,475		—		10,804		—
2014 Tower Securities		12,785		—		12,785		—
2015-1C Tower Securities		3,985		—		3,985		—
2016-1C Tower Securities		5,090		—		5,090		—
2017-1C Tower Securities		6,085		—		—		—
2018-1C Tower Securities		1,362		—		—		—
Revolving Credit Facility		1,601