ITEM 2.
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
We are a leading independent owner and operator of wireless communica
tions tower structures, rooftops
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
Canada, Central America, and South America
. Our primary business line is our site leasing business, which contributed
98.5%
of our total segment operating profit for the
nine
months
ended
September 30, 2016
. 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, 2016
, we owned
25,878
towers
, 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
tower
s, approximately
500
of which were revenue producing as of
September 30, 2016
. 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
.
As of
September 30, 2016
, we owned
15,845
towers in the United States and its territories and
10,033
towers in our international markets.
Approximately 27% of our total towers are located in Brazil
and less than 3% of our total towers are located in
each of our other international market
s
.
We receive
s
ite leasing revenues primarily from wireless service provider tenants, including AT&T, Sprint, T-Mobile, Verizon Wireless,
Claro, Digicel,
Oi
S.A.
,
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
site
. 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
multiple five 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
Brazilian
, Canadian, and Chilean
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:
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Rental payments on ground leases and other underlying property interests;
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·
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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;
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·
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Site maintenance and monitoring costs (exclusive of employee related costs);
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·
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Property insurance; and
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·
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Deferred lease origination cost amortization.
|
For any given tower, each of the above costs is relatively fixed over a monthly or an annual time period. As such, cost of site leasing revenue for owned towers does not generally increase as a result of adding additional customers to 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.
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.
As of
September 30, 2016
, 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.
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.
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For the three months ended
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For the nine months ended
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September 30,
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September 30,
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Segment operating profit as a percentage of total
|
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2016
|
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2015
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2016
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2015
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Domestic site leasing
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83.0%
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83.5%
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83.7%
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|
82.3%
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International site leasing
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15.7%
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13.7%
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14.8%
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14.6%
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Total site leasing
|
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98.7%
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97.2%
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98.5%
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96.9%
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We believe that over the long-term, site leasing revenues will continue to grow as wireless service providers
increase their use of our towers
due to increasing minutes of network use and data transfer, network expansion and network coverage requirements.
In the current environment, we expect that this activity will primarily be in the form of amendments to current leases as wireless service providers seek to upgrade their antennas
,
and in the long-term, new leases as these providers continue to expand and upgrade their networks.
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
add or
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
other than in connection with customer consolidation or cessations of service (e.g. iD
EN
)
.
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
on a local basis, through regional, territory, and project offices. The regional offices are responsible for all site development operations, including hiring employees and opening or closing project offices, and a substantial portion of the sales in such area
.
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, 2015
. 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.
Proposed REIT Conversion
On October 3, 2016, our Board of Directors authorized us to take all necessary steps to be subject to tax as a REIT for U.S. federal income tax purposes. We believe that our business is currently operated in a manner that complies with the REIT rules, and as a result, we intend to make the election to be subject to tax as a REIT commencing with our taxable year ending December 31, 2016. Because we believe our business is currently operated in a manner that complies with the REIT rules, no further reorganization of our operations is necessary to complete the REIT conversion.
A REIT is a corporation that qualifies for special treatment for U.S. federal income tax purposes because, among other things, it derives most of its income from real estate-based sources and makes a special election under the Code. We intend to operate as a REIT that principally invests in, and derives most of its income from the ownership, operation and leasing of, towers. As a REIT, we generally will be entitled to a deduction for dividends that we pay and therefore not subject to U.S. federal corporate income tax on that portion of our net income that we distribute to our shareholders. As a REIT, we will continue to pay U.S. federal income tax on earnings, if any, from assets and operations held through taxable REIT subsidiaries (“TRSs”). These assets and operations currently consist primarily of our site development services and our international operations. Our international operations would continue to be subject, as applicable, to foreign taxes in the jurisdictions in which those operations are located. We may also be subject to a variety of taxes, including payroll taxes and state, local and foreign income, property and other taxes on our assets and operations. Our determination as to the timing and amount of future dividend distributions will be based on a number of factors, including REIT distribution requirements, our existing federal net operating losses (“NOLs”) of approximately $1.2 billion as of December 31, 2015, our financial condition, earnings, debt covenants, and other possible uses of such funds. We may use these NOLs to offset our REIT taxable income, and thus any required distributions to shareholders may be reduced or eliminated until such time as the NOLs have been fully utilized. We do not expect that we will be required to make any distribution of accumulated earnings and profits (commonly referred to as a "purging" dividend) in connection with
our
REIT conversion.
In connection with this election, we propose to merge with and into SBA Communications REIT Corporation (“SBA REIT”), a Florida corporation and wholly owned subsidiary of SBA
Communications Corporation (“SBAC”)
, which was specifically formed for the purpose of the merger. Effective at the time of the merger, SBA REIT will be renamed “SBA Communications Corporation” and will hold, directly or indirectly through its subsidiaries, the assets currently held by SBA
C
and will conduct the existing businesses of SBA
C
and its subsidiaries. Although the REIT rules do not require the completion of this merger, we intend to complete the merger
to facilitate our compliance with the REIT rules by ensuring the effective adoption of certain REIT-related ownership limitations and transfer restrictions related to our capital stock, subject to approval by our shareholders. On October 3, 2016, we filed with the Securities and Exchange Commission
(the “Commission”)
a preliminary proxy statement which provides information regarding the REIT conversion, the proposed merger and the special meeting, at which shareholders will be given the opportunity to vote on the merger.
See Note 13 of our Condensed Notes to Consolidated Financial Statements included in this quarterly report and “Item 1A—Risk Factors” for additional information concerning the proposed REIT conversion.
RESULTS OF OPERATIONS
This report presents our financial results and other financial metrics after eliminating the impact of changes in foreign currency exchange rates. We believe that providing these financial results and metrics on a constant currency basis, which are non-GAAP measures, gives management and investors the ability to evaluate the performance of our business without the impact of foreign currency exchange rate fluctuations. We eliminate the impact of changes in foreign currency exchange rates by dividing the current period’s financial results by the average monthly exchange rates of the prior year period.
Three
Months Ended
September 30, 2016
Compared to
Three
Months Ended
September 30, 2015
Revenues and Segment Operating Profit:
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For the three months ended
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Constant
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September 30,
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Foreign
|
|
Constant
|
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Currency
|
|
|
2016
|
|
2015
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Currency Impact
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Currency Change
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% Change
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Revenues
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(in thousands)
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Domestic site leasing
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$
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319,109
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$
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313,131
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|
$
|
—
|
|
$
|
5,978
|
|
|
1.9%
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International site leasing
|
|
|
69,059
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58,862
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3,785
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6,412
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10.9%
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Site development
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23,151
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38,742
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—
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(15,591)
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(40.2%)
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Total
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$
|
411,319
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|
$
|
410,735
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$
|
3,785
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$
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(3,201)
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(0.8%)
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Cost of Revenues
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Domestic site leasing
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$
|
65,353
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$
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63,587
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$
|
—
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|
$
|
1,766
|
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2.8%
|
International site leasing
|
|
|
21,001
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|
17,759
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|
1,302
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|
1,940
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|
10.9%
|
Site development
|
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19,114
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|
|
30,387
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|
|
—
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|
(11,273)
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|
(37.1%)
|
Total
|
|
$
|
105,468
|
|
$
|
111,733
|
|
$
|
1,302
|
|
$
|
(7,567)
|
|
|
(6.8%)
|
Operating Profit
|
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|
|
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|
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Domestic site leasing
|
|
$
|
253,756
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|
$
|
249,544
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|
$
|
—
|
|
$
|
4,212
|
|
|
1.7%
|
International site leasing
|
|
|
48,058
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|
41,103
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|
2,483
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|
|
4,472
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|
|
10.9%
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Site development
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|
4,037
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|
|
8,355
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|
—
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(4,318)
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|
(51.7%)
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Revenues
Domestic site leasing revenues
increase
d
$6.0
million for the
three
months ended
September 30, 2016
, as compare
d to the prior year, due
to (i) revenues from
528
towers acquired and
90
towers built since
July
1, 201
5
and (ii) organic site leasing growth,
primarily from monetary lease amendments for additional equipment added to our towers as well as new leases and contractual rent escalators, partially offset by lease non-renewals in 2015 primarily related to Sprint
’s iDEN network
, which impact
ed
our year-over-year growth rates during the first three quarters of 2016.
International site leasing revenues
increase
d
$10.2
million for
the
three
months ended
September 30, 2016
, as compared to the prior year. On a constant currency basis, international site leasing revenues
increase
d
$6.4
million. These
increase
s were primarily
due
to (i) revenues from
305
towers acquired and
391
towers built
since
July
1, 2015, (ii) organic site leasing growth from new leases and contractual escalators, and (iii) an increase in reimbursable pass-through expenses
.
Site leasing revenue in Brazil represented
approximately 1
2
% of total
site leasing revenue for the period. No other individual international market represented more
than 3% of
our total site leasing revenue.
Site development revenues
decrease
d $
15.6
million for the
three
months ended
September 30, 2016
, as compared to the prior year,
as a result of a
decrease
in the volume of work performed
,
particularly as it related to Sprint.
Operating Profit
Domestic site leasing segment operating profit
increase
d
$4.2
million for the
three
months ended
September 30, 2016
, as compared to the prior year, primarily due to additional
operating
profit generated by (
i) towers acquired and built since
July
1, 2015 and organic site leasing growth as noted above, (ii)
continued
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
increase
d
$7.0
million for t
he
three
months ended
September 30, 2016
, as compared to the prior year
. On a constant currency basis
,
i
nternational site leasing segment operating prof
it
increased
$4.5
million
. These changes were
primarily due to
additional operating profit generated by towers acquired and
built
since
July
1, 2015 and organic site leasing growth as noted above, partially offset by increases in cost of revenues.
Site development segment operating profit
decrease
d
$4.3
million for the
three
months e
nded
September 30, 2016
,
as compared to the prior year
,
primarily due to
a
decrease
in the volume of work performed
,
particularly as it related to Sprint
.
Selling,
G
eneral, and
A
dministrative
E
xpenses
:
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|
For the three months ended
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|
|
|
|
|
Constant
|
|
|
September 30,
|
|
Foreign
|
|
Constant
|
|
Currency
|
|
|
2016
|
|
2015
|
|
Currency Impact
|
|
Currency Change
|
|
% Change
|
|
|
|
|
|
|
|
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|
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|
(in thousands)
|
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|
Total
|
|
$
|
32,255
|
|
$
|
27,872
|
|
$
|
234
|
|
$
|
4,149
|
|
|
14.9%
|
Selling, general, and administrative expenses
increase
d
$4.4
million
for the
three
months ended
September 30, 2016
, as compared to the prior year
.
On a constant currency basis,
s
elling, general, and administrative expenses
increase
d
$4.1
million.
Th
ese
increase
s
w
ere
primarily as a result of
increase
s
in
bad debt expense
,
legal fees,
non-cash compensation, personnel, salaries, benefits, and other support costs due in large part to our continued portfolio expansion.
Acquisition Related Adjustments and Expenses:
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|
For the three months ended
|
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|
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|
Constant
|
|
|
September 30,
|
|
Foreign
|
|
Constant
|
|
Currency
|
|
|
2016
|
|
2015
|
|
Currency Impact
|
|
Currency Change
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
|
|
Domestic site leasing
|
|
$
|
335
|
|
$
|
253
|
|
$
|
—
|
|
$
|
82
|
|
|
32.4%
|
International site leasing
|
|
|
2,635
|
|
|
111
|
|
|
123
|
|
|
2,401
|
|
|
2,163.1%
|
Total
|
|
$
|
2,970
|
|
$
|
364
|
|
$
|
123
|
|
$
|
2,483
|
|
|
682.1%
|
Acquisition related
adjustments and
expenses
increase
d
$2.6
million
for the
three
months ended
September 30, 2016
, as compared to the prior year
.
On a constant currency basis,
a
cquisition related
adjustments and
expenses
increase
d
$2.5
million.
Th
e
s
e
increase
s
w
ere
primarily as a
result of
a
n
in
crease in the number of acquisitions and integration related expenses, as well as changes in our estimated pre-acquisition contingencies as compared to the prior year period
.
A
sset Impairment and Decommission Costs
:
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|
|
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|
|
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|
|
|
|
|
|
For the three months ended
|
|
|
|
|
|
|
|
Constant
|
|
|
September 30,
|
|
Foreign
|
|
Constant
|
|
Currency
|
|
|
2016
|
|
2015
|
|
Currency Impact
|
|
Currency Change
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
|
|
Domestic site leasing
|
|
$
|
1,974
|
|
$
|
63,225
|
|
$
|
—
|
|
$
|
(61,251)
|
|
|
(96.9%)
|
International site leasing
|
|
|
331
|
|
|
128
|
|
|
8
|
|
|
195
|
|
|
152.3%
|
Total
|
|
$
|
2,305
|
|
$
|
63,353
|
|
$
|
8
|
|
$
|
(61,056)
|
|
|
(96.4%)
|
A
sset impairment and decommission
costs
decrease
d
$61.1
m
illion
, on an actual and constant currency basis,
for
the
three
months ended
September 30, 2016
, as
compared to the prior year
. Th
i
s
decrease
w
as
primarily as a
resul
t o
f a $56.7 million
impairment charge recorded in the third quarter of 2015 related to fiber assets acquired in the 2012 Mobilitie transaction
,
a
$9.0
million gain on the sale of
fiber
assets recorded in the current year period,
and
a
$1.7
million
decrease
in the impairment charge
recorded on decommissioned towers for the
three
months ended
September 30, 2016
, partially offset by a
$6.7
million increase in
impairment charges resulting from
our
analysis that the future cash flows would not recover the c
arrying value of the investment resulting
largely
from
Sprint
lease terminations
experienced
in
2015
.
Depreciation,
A
ccretion, and
A
mortization
E
xpense
s
:
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended
|
|
|
|
|
|
|
|
Constant
|
|
|
September 30,
|
|
Foreign
|
|
Constant
|
|
Currency
|
|
|
2016
|
|
2015
|
|
Currency Impact
|
|
Currency Change
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
|
|
Domestic site leasing
|
|
$
|
126,059
|
|
$
|
134,734
|
|
$
|
—
|
|
$
|
(8,675)
|
|
|
(6.4%)
|
International site leasing
|
|
|
31,453
|
|
|
28,166
|
|
|
1,757
|
|
|
1,530
|
|
|
5.4%
|
Total site leasing
|
|
$
|
157,512
|
|
$
|
162,900
|
|
$
|
1,757
|
|
$
|
(7,145)
|
|
|
(4.4%)
|
Site development
|
|
|
997
|
|
|
780
|
|
|
—
|
|
|
217
|
|
|
27.8%
|
Not identified by segment
|
|
|
1,602
|
|
|
650
|
|
|
—
|
|
|
952
|
|
|
146.5%
|
Total
|
|
$
|
160,111
|
|
$
|
164,330
|
|
$
|
1,757
|
|
$
|
(5,976)
|
|
|
(3.6%)
|
Depreciation, accretion, and amortization expense
decreased
$4.2
million for
the
three
months ended
September 30, 2016
, as compared to the prior year
. On a constant currency basis, d
epreciation, accretion, and amortization expense
decreased
$6.0
million. These changes were primarily
due to
a decrease in depreciation associated with assets that became fully depreciated since the prior year period, partially offset by
additional depreciation associated with the increase in the number of towers we acquired and b
uilt since
July
1, 2015.
Operating Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended
|
|
|
|
|
|
|
|
Constant
|
|
|
September 30,
|
|
Foreign
|
|
Constant
|
|
Currency
|
|
|
2016
|
|
2015
|
|
Currency Impact
|
|
Currency Change
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
|
|
Domestic site leasing
|
|
$
|
106,182
|
|
$
|
34,731
|
|
$
|
—
|
|
$
|
71,451
|
|
|
205.7%
|
International site leasing
|
|
|
8,362
|
|
|
8,498
|
|
|
361
|
|
|
(497)
|
|
|
(5.8%)
|
Total site leasing
|
|
$
|
114,544
|
|
$
|
43,229
|
|
$
|
361
|
|
$
|
70,954
|
|
|
164.1%
|
Site development
|
|
|
(88)
|
|
|
4,836
|
|
|
—
|
|
|
(4,924)
|
|
|
(101.8%)
|
Not identified by segment
|
|
|
(6,246)
|
|
|
(4,982)
|
|
|
—
|
|
|
(1,264)
|
|
|
25.4%
|
Total
|
|
$
|
108,210
|
|
$
|
43,083
|
|
$
|
361
|
|
$
|
64,766
|
|
|
150.3%
|
Domestic site leasing operating
income
increase
d
$71.5
million for the
three
months ended
September 30, 2016
, as compared to the
prior year, primarily due to
decreases in asset impairment and decommission costs
and
depreciation, accretion, and amortization expens
e
and
higher segment operating profit
, partially offset by an increase
in selling, general, and administrative expenses.
International site leasing operating
income
decreased
$0.1
million
for the
three
months ended
September 30, 2016
, as compared to the prior year
. On a constant currency basis, i
nternational site leasing operating
income
decrease
d
$0.5
million. These
decrease
s were
primarily due to
increases
in
acquisition related adjustments
and expenses, depreciation, accretion, and amortization,
and
selling, general, and administrative expenses
, partially offset by
higher segment operating profit.
Site development operating
income
decrease
d
$4.9
million for
the
three
months ended
September 30, 2016
, as compared to the prior year, primarily due to
lower segment operating profit and increases in depreciation, accretion, and amortization expenses and selling, general, and administrative expenses
.
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended
|
|
|
|
|
|
|
|
Constant
|
|
|
September 30,
|
|
Foreign
|
|
Constant
|
|
Currency
|
|
|
2016
|
|
2015
|
|
Currency Impact
|
|
Currency Change
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
|
|
Interest income
|
|
$
|
3,101
|
|
$
|
1,276
|
|
$
|
174
|
|
$
|
1,651
|
|
|
129.4%
|
Interest expense
|
|
|
(83,426)
|
|
|
(81,877)
|
|
|
—
|
|
|
(1,549)
|
|
|
1.9%
|
Non-cash interest expense
|
|
|
(585)
|
|
|
(449)
|
|
|
—
|
|
|
(136)
|
|
|
30.3%
|
Amortization of deferred financing fees
|
|
|
(5,445)
|
|
|
(4,803)
|
|
|
—
|
|
|
(642)
|
|
|
13.4%
|
Loss from extinguishment of debt, net
|
|
|
(34,512)
|
|
|
—
|
|
|
—
|
|
|
(34,512)
|
|
|
—%
|
Other income (expense), net
|
|
|
(1,139)
|
|
|
(111,250)
|
|
|
109,310
|
|
|
801
|
|
|
(0.7%)
|
Total
|
|
$
|
(122,006)
|
|
$
|
(197,103)
|
|
$
|
109,484
|
|
$
|
(34,387)
|
|
|
17.4%
|
Interest income
increase
d
$1.8
million for the
three
months ended
September 30, 2016
, as compared to the prior year.
On a constant currency basis, interest income
increase
d
$1.7
million.
These
increase
s were primarily
due to
a higher amount of in
terest bearing deposits
held as
compared to the prior year
period.
Interest expense
increased
$1.5
million
, on an actual and constant currency basis,
for the
three
months ended
September 30, 2016
, as compared to the prior year,
due to the higher average principal amount of cash-interest bearing debt outstanding
as
compared to the prior year, primarily resulting from
the issuance of
the 2015-1C Tower Securities
(defined below)
in October 2015
,
the 2016
-1C
Tower Securities
(defined below)
in July
2016
,
and the 2016 Senior Notes
(defined below)
in August 2016,
partially offset by the repayment of the
2012 Term Loan
in November 2015, the
2010-
2
C Tower Securities
(defined below)
in July 2016
,
and the 5.75% Senior Notes
(defined below)
in August 2016
,
and a
lower
average balance outstanding on the
R
evolving
C
redit
F
acility in the
current
year period.
Loss from extinguishment of debt
increase
d
$34.5
million for the
three
months ended
September 30, 2016
, as compared to the prior year, due to
the payment of a
$25.8 million
call
premium
and accrued interest
on the redemption of the
5.75% Senior Notes, the write off of $7.7 million in deferred financing fees related to the
5.75% Senior Notes
, and the write off of $1.0 million in deferred financing fees related to the redemption of the
2010-2C Tower Securities.
Other income (expense), net includes
a
$3.2
million
loss
on the remeasurement of intercompany loans for
the
three
months ended
September 30, 2016
, while the prior year period included
a
$112.1
million
loss
.
Net
Loss
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended
|
|
|
|
|
|
|
|
Constant
|
|
|
September 30,
|
|
Foreign
|
|
Constant
|
|
Currency
|
|
|
2016
|
|
2015
|
|
Currency Impact
|
|
Currency Change
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
|
|
Net loss
|
|
$
|
(15,370)
|
|
$
|
(155,946)
|
|
$
|
109,843
|
|
$
|
30,733
|
|
|
(19.7%)
|
Net
loss
decreased
$140.6
million
for the
three
months ended
September 30, 2016
, as
compared to
the prior year. On a constant currency basis, net
loss
decreased
$30.7
million. These changes were
primarily due to
a
n in
crease in operating income
, partially offset by
an increase in loss from extinguishment of debt, net
.
Nine
Months Ended
September 30, 2016
Compared to
Nine
Months Ended
September 30, 2015
Revenues and Segment Operating Profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the nine months ended
|
|
|
|
|
|
|
|
Constant
|
|
|
September 30,
|
|
Foreign
|
|
Constant
|
|
Currency
|
|
|
2016
|
|
2015
|
|
Currency Impact
|
|
Currency Change
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
(in thousands)
|
|
|
|
Domestic site leasing
|
|
$
|
951,181
|
|
$
|
926,442
|
|
$
|
—
|
|
$
|
24,739
|
|
|
2.7%
|
International site leasing
|
|
|
193,280
|
|
|
185,740
|
|
|
(17,120)
|
|
|
24,660
|
|
|
13.3%
|
Site development
|
|
|
72,159
|
|
|
119,351
|
|
|
—
|
|
|
(47,192)
|
|
|
(39.5%)
|
Total
|
|
$
|
1,216,620
|
|
$
|
1,231,533
|
|
$
|
(17,120)
|
|
$
|
2,207
|
|
|
0.2%
|
Cost of Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic site leasing
|
|
$
|
196,027
|
|
$
|
188,841
|
|
$
|
—
|
|
$
|
7,186
|
|
|
3.8%
|
International site leasing
|
|
|
59,582
|
|
|
54,457
|
|
|
(5,964)
|
|
|
11,089
|
|
|
20.4%
|
Site development
|
|
|
59,021
|
|
|
91,662
|
|
|
—
|
|
|
(32,641)
|
|
|
(35.6%)
|
Total
|
|
$
|
314,630
|
|
$
|
334,960
|
|
$
|
(5,964)
|
|
$
|
(14,366)
|
|
|
(4.3%)
|
Operating Profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic site leasing
|
|
$
|
755,154
|
|
$
|
737,601
|
|
$
|
—
|
|
$
|
17,553
|
|
|
2.4%
|
International site leasing
|
|
|
133,698
|
|
|
131,283
|
|
|
(11,156)
|
|
|
13,571
|
|
|
10.3%
|
Site development
|
|
|
13,138
|
|
|
27,689
|
|
|
—
|
|
|
(14,551)
|
|
|
(52.6%)
|
Revenues
Domestic site leasing revenues
increase
d
$24.7
million for the
nine
months ended
September 30, 2016
, as compared to the prior year, due to (i) revenues from
872
towers acquired and
171
towers built since
January
1, 2015 and (ii) organic site leasing growth, primarily from monetary lease amendments for additional equipment added to our towers as well as new leases and contractual rent escalators, partially offset by lease non-renewals in 2015 primarily related to Sprint
’s iDEN network
, which impact
ed
our year-over-year growth rates during the first
three
quarters of 2016.
International site leasing revenues
increase
d
$7.5
million for the
nine
months ended
September 30, 2016
, as compared to the prior year
.
O
n a constant currency basis,
i
nternational site leasing revenues
increase
d
$24.7
million
. These changes were primarily
due to (i) revenues from
337
towers acquired and
534
towers built since
January
1, 2015
,
(ii) organic site leasing growth from new leases and contractual escalators
, and (iii) an increase in reimbursable pass-through expenses
.
Site leasing revenue in Brazil represented
approximately
11
% of
total site leasing revenue for the period. No other individual international market represented more
than 3% of
our total site leasing revenue.
Site development revenues
decrease
d
$47.2
million for the
nine
months ended
September 30, 2016
, as compared to the prior year, as a result of
a
decrease
in
the volume of work performed
, particularly as it related to Sprint.
Operating Profit
Domestic site leasing segment operating profit
increase
d
$17.6
million for the
nine
months ended
September 30, 2016
, as compared to the prior year, primarily due to additional
operating
profit generated by (i) towers acquired and built since
January
1, 2015 and organic site leasing growth as noted above, (ii)
continued
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
increase
d
$2.4
million
for the
nine
months ended
September 30, 2016
, as compared to the prior year
. O
n a constant currency basis,
i
nternational site leasing segment operating profit
increase
d
$13.6
million
. These changes were
primarily due to towers acquired and built since
January
1, 2015 and organic site leasing growth as noted above,
partially
offset by increases in cost of revenues.
Site development segment operating profit
decrease
d
$14.6
million for the
nine
months ended
September 30, 2016
,
as compared to the prior year, primarily due to a
decrease
in the volume of work performed, particularly as it related to Sprint
.
Selling,
G
eneral, and
A
dministrative
E
xpenses
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the nine months ended
|
|
|
|
|
|
|
|
Constant
|
|
|
September 30,
|
|
Foreign
|
|
Constant
|
|
Currency
|
|
|
2016
|
|
2015
|
|
Currency Impact
|
|
Currency Change
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
|
|
Total
|
|
$
|
110,326
|
|
$
|
86,017
|
|
$
|
(657)
|
|
$
|
24,966
|
|
|
29.0%
|
Selling, general, and administrative expenses
increase
d
$24.3
million for the
nine
months ended
September 30, 2016
,
as compared to the prior year
. O
n a constant currency basis,
sel
ling, general, and administrative expenses
increase
d
$25.0
million
. These
increase
s were
primarily as a result of
the
$16.5
million Oi reserve recorded in the second quarter of 2016 and
i
ncrease
s
in
bad debt expense
,
non-cash compensation,
personnel, salaries, benefits, and other support costs due in large part to our continued portfolio expansion.
Acquisition Related Adjustments and Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the nine months ended
|
|
|
|
|
|
|
|
Constant
|
|
|
September 30,
|
|
Foreign
|
|
Constant
|
|
Currency
|
|
|
2016
|
|
2015
|
|
Currency Impact
|
|
Currency Change
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
|
|
Domestic site leasing
|
|
$
|
3,533
|
|
$
|
7,295
|
|
$
|
—
|
|
$
|
(3,762)
|
|
|
(51.6%)
|
International site leasing
|
|
|
5,441
|
|
|
188
|
|
|
(248)
|
|
|
5,501
|
|
|
2,926.1%
|
Total
|
|
$
|
8,974
|
|
$
|
7,483
|
|
$
|
(248)
|
|
$
|
1,739
|
|
|
23.2%
|
Acquisition related adjustments and expenses
increase
d
$1.5
million
for the
nine
months ended
September 30, 2016
, as compared to the prior year
. On
a constant currency basis
, a
cquisition related adjustments and expenses
increase
d
$1.7
million. These
increase
s were
primarily as a result of changes in our estimated pre-acquisition contingencies as compared to the prior year period
, partially offset by
a
decrease
in the number of acquisitions and integration related expenses
as compared to the prior year period.
Asset Impairment and Decommission Costs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the nine months ended
|
|
|
|
|
|
|
|
Constant
|
|
|
September 30,
|
|
Foreign
|
|
Constant
|
|
Currency
|
|
|
2016
|
|
2015
|
|
Currency Impact
|
|
Currency Change
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
|
|
Domestic site leasing
|
|
$
|
19,359
|
|
$
|
73,781
|
|
$
|
—
|
|
$
|
(54,422)
|
|
|
(73.8%)
|
International site leasing
|
|
|
1,476
|
|
|
404
|
|
|
(92)
|
|
|
1,164
|
|
|
288.1%
|
Total site leasing
|
|
$
|
20,835
|
|
$
|
74,185
|
|
$
|
(92)
|
|
$
|
(53,258)
|
|
|
(71.8%)
|
Not identified by segment
|
|
|
2,345
|
|
|
—
|
|
|
—
|
|
|
2,345
|
|
|
—%
|
Total
|
|
$
|
23,180
|
|
$
|
74,185
|
|
$
|
(92)
|
|
$
|
(50,913)
|
|
|
(68.6%)
|
Asset impairment and decommission costs
decrease
d by
$51.0
million
for the
nine
months ended
September 30, 2016
, as compared to the prior year
. O
n a constant currency basis
,
a
sset impairment and decommission costs
decrease
d
$50.9
million
. These
decrease
s were
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
,
a
$9.0
million gain
on the sale of
fiber
assets recorded in the current year period,
a
$0.6
millio
n
decrease
in the impairment charge recorded on decommissioned towers,
partially offset by
a
$14.1
million
increase in
impairment charges resulting from
our
analysis that the future cash flows would not recover the c
arrying value of the investment resulting from
Sprint
lease terminations
experience
d in
2015
and an increase
in
write off and
disposal costs related to our former corporate headquarters building for the
nine
months ended
September 30, 2016
.
Depreciation, Accretion, and Amortization Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the nine months ended
|
|
|
|
|
|
|
|
Constant
|
|
|
September 30,
|
|
Foreign
|
|
Constant
|
|
Currency
|
|
|
2016
|
|
2015
|
|
Currency Impact
|
|
Currency Change
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
|
|
Domestic site leasing
|
|
$
|
384,208
|
|
$
|
401,873
|
|
$
|
—
|
|
$
|
(17,665)
|
|
|
(4.4%)
|
International site leasing
|
|
|
88,111
|
|
|
91,636
|
|
|
(7,802)
|
|
|
4,277
|
|
|
4.7%
|
Total site leasing
|
|
$
|
472,319
|
|
$
|
493,509
|
|
$
|
(7,802)
|
|
$
|
(13,388)
|
|
|
(2.7%)
|
Site development
|
|
|
2,661
|
|
|
2,246
|
|
|
—
|
|
|
415
|
|
|
18.5%
|
Not identified by segment
|
|
|
4,655
|
|
|
2,805
|
|
|
—
|
|
|
1,850
|
|
|
66.0%
|
Total
|
|
$
|
479,635
|
|
$
|
498,560
|
|
$
|
(7,802)
|
|
$
|
(11,123)
|
|
|
(2.2%)
|
Depreciation, accretion, and amortization expense
decrease
d
$18.9
million for the
nine
months ended
September 30, 2016
, as compared to the prior year
. O
n a constant currency basis,
d
epreciation, accretion, and amortization expense
decrease
d
$11.1
million
. These
decrease
s were primarily
due
to a decrease in depreciation associated with
assets that became fully depreciated
since the prior year period
, partially of
fset by additional depreciation associated with
the increase in
the number of towers we acquired and built since
January
1, 2015.
Operating Income
(Expense)
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the nine months ended
|
|
|
|
|
|
|
|
Constant
|
|
|
September 30,
|
|
Foreign
|
|
Constant
|
|
Currency
|
|
|
2016
|
|
2015
|
|
Currency Impact
|
|
Currency Change
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
|
|
Domestic site leasing
|
|
$
|
292,913
|
|
$
|
203,583
|
|
$
|
—
|
|
$
|
89,330
|
|
|
43.9%
|
International site leasing
|
|
|
7,943
|
|
|
26,898
|
|
|
(2,357)
|
|
|
(16,598)
|
|
|
(61.7%)
|
Total site leasing
|
|
$
|
300,856
|
|
$
|
230,481
|
|
$
|
(2,357)
|
|
$
|
72,732
|
|
|
31.6%
|
Site development
|
|
|
517
|
|
|
17,968
|
|
|
—
|
|
|
(17,451)
|
|
|
(97.1%)
|
Not identified by segment
|
|
|
(21,498)
|
|
|
(18,121)
|
|
|
—
|
|
|
(3,377)
|
|
|
18.6%
|
Total
|
|
$
|
279,875
|
|
$
|
230,328
|
|
$
|
(2,357)
|
|
$
|
51,904
|
|
|
22.5%
|
Domestic site leasing operating income
increase
d
$89.3
million for the
nine
months ended
September 30, 2016
, as compared to the prior year, primarily due to higher segment
operating profit and decreases in
asset impairment and decommission costs
,
depreciation, accretion, and amortization expense
,
and
acquisition related adjustments and expenses, partially
offset by
an
increase
in
selling, general, and administrative expenses.
International site leasing operating
income
decrease
d
$19.0
million for the
nine
months ended
September 30, 2016
, as compared to the prior year
. O
n a constant currency basis,
i
nternational site leasing operating income
decrease
d
$16.6
million
. These
decrease
s were
primarily due
to
the
$16.5
million Oi reserve recorded in the second quarter of 2016
,
increases in acquisition related adjustments and expenses
,
depreciation, accretion, and amortization expense
, and
asset impai
rment and decommission costs
, partially offset by
higher segment operating profit
.
Site development
operating
income
decrease
d
$17.5
million for the
nine
months ended
September 30, 2016
, as compared to the prior year, primarily due to lower segment operating profit and increases in selling, general, and administrative expenses
and depreciation, accretion, and amortization expense
.
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the nine months ended
|
|
|
|
|
|
|
|
Constant
|
|
|
September 30,
|
|
Foreign
|
|
Constant
|
|
Currency
|
|
|
2016
|
|
2015
|
|
Currency Impact
|
|
Currency Change
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
|
|
Interest income
|
|
$
|
7,704
|
|
$
|
2,284
|
|
$
|
(771)
|
|
$
|
6,191
|
|
|
271.1%
|
Interest expense
|
|
|
(250,913)
|
|
|
(238,439)
|
|
|
2
|
|
|
(12,476)
|
|
|
5.2%
|
Non-cash interest expense
|
|
|
(1,500)
|
|
|
(1,051)
|
|
|
—
|
|
|
(449)
|
|
|
42.7%
|
Amortization of deferred financing fees
|
|
|
(16,035)
|
|
|
(13,973)
|
|
|
—
|
|
|
(2,062)
|
|
|
14.8%
|
Loss from extinguishment of debt, net
|
|
|
(34,512)
|
|
|
—
|
|
|
—
|
|
|
(34,512)
|
|
|
—%
|
Other income (expense), net
|
|
|
92,137
|
|
|
(178,710)
|
|
|
270,272
|
|
|
575
|
|
|
(0.3%)
|
Total
|
|
$
|
(203,119)
|
|
$
|
(429,889)
|
|
$
|
269,503
|
|
$
|
(42,733)
|
|
|
9.9%
|
Interest income
increase
d
$5.4
million
for the
nine
months ended
September 30, 2016
, as compared to the prior year. O
n a constant currency basis,
interest income
increase
d
$6.2
million
. These
increase
s were primarily
due to a higher amount of in
terest bearing deposit
s held as compared to the prior year period.
Interest expense
increase
d
$12.5
million
, on an actual and constant currency basis,
for the
nine
months ended
September 30, 2016
, as compared to the prior year,
due to the higher average principal amount of cash-interest bearing debt outstanding
as
compared to the prior year, primarily resulting from
the issuance of the
2015 Term Loan
(defined below)
in June 2015,
the
2015-1C Tower Securities
(defined below)
in October 2015
,
the 2016
-1C
Tower Securities
(defined below)
in July
2016,
and the 2016 Senior Notes
(defined below)
in August 2016,
partially offset by the repayment of the 2012 Term Loan in November 2015
, the
2010-2
C Tower Securities
(defined below)
in July 2016, and the 5.75% S
enior Notes
(defined below)
in August 2016,
and a
lower
average balance outstanding
under
the
R
evolving
C
redit
F
acility in the
current
year period.
Loss from extinguishment of debt
increase
d
$34.5
million for the
nine
months ended
September 30, 2016
, as compared to the prior year,
due to
the payment of a
$25.8 million
call
premium
and accrued interest
on the redemption of the
5.75% Senior Notes, the write off of $7.7 million in deferred financing fees related to the 5.75% Senior Notes, and the write off of $1.0 million in deferred financing fees related to the redemption of the 2010-2C Tower Securities.
O
ther income (expense), net includes
an
$89.0
million gain on the remeasurement of intercompany loans for the
nine
months ended
September 30, 2016
, while the prior year period included a
$180.4
million
loss
.
Net
Income (
Loss
)
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the nine months ended
|
|
|
|
|
|
|
|
Constant
|
|
|
September 30,
|
|
Foreign
|
|
Constant
|
|
Currency
|
|
|
2016
|
|
2015
|
|
Currency Impact
|
|
Currency Change
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
|
|
Net income (loss)
|
|
$
|
70,976
|
|
$
|
(206,673)
|
|
$
|
267,157
|
|
$
|
10,492
|
|
|
(5.1%)
|
Net income
(loss)
increase
d
$277.6
million, for the
nine
months ended
September 30, 2016
, as compared to the prior year
. O
n a constant currency basis,
net income (loss)
increased
$10.5
million
. These changes were
primarily due to
a
n in
crease in operating income
, partially offset by
increases in loss from extinguishment of debt, net and interest expense
.
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.
This report also presents our financial results and other financial metrics after eliminating the impact of changes in foreign currency exchange
rates and the Oi reserve recorded in the second quarter of 2016. We believe that providing these financial results and metrics on a constant currency basis, which are non-GAAP measures, gives management and investors the ability to evaluate the performance of our business without the impact of foreign currency exchange rate fluctuations. We eliminate the impact of changes in foreign currency exchange rates by dividing the current period’s financial results by the average monthly exchange rates of the prior year period. We believe that excluding the Oi reserve, which represents a
$16.5
million one-time bad debt provision for all amounts owed or potentially owed by Oi prior to the date of Oi’s June 2016 petition for judicial
reorganization, provides management and investors the ability to better analyze our core results without the impact of what we believe is a non-recurring event.
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 useful to investors or other interested parties in evaluating our financial performance. Adjusted EBITDA is the primary measure used by management (1) to evaluate the economic productivity of our operations and (2) for purposes of making decisions about allocating resources to, and assessing the performance of, our operations. Management believes that Adjusted EBITDA helps investors or other interested parties meaningfully evaluate and compare the results of our operations (1) from period to period and (2) to our competitors, by excluding the impact of our capital structure (primarily interest charges from our outstanding debt) and asset base (primarily depreciation, amortization and accretion) from our financial results. Management also believes Adjusted EBITDA is frequently used by investors or other interested parties in the evaluation of REITs. In addition, 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 the 2014 Senior Notes
and 2016 Senior Notes
(defined below)
. Adjusted EBITDA should be considered only as a supplement to net income computed in accordance with GAAP as a measure of our performance.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended
|
|
|
|
|
|
|
|
Constant
|
|
|
September 30,
|
|
Foreign
|
|
Constant
|
|
Currency
|
|
|
2016
|
|
2015
|
|
Currency Impact
|
|
Currency Change
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
|
|
Net loss
|
|
$
|
(15,370)
|
|
$
|
(155,946)
|
|
$
|
109,843
|
|
$
|
30,733
|
|
|
(19.7%)
|
Non-cash straight-line leasing revenue
|
|
|
(7,334)
|
|
|
(11,642)
|
|
|
329
|
|
|
3,979
|
|
|
(34.2%)
|
Non-cash straight-line ground lease expense
|
|
|
8,323
|
|
|
8,555
|
|
|
33
|
|
|
(265)
|
|
|
(3.1%)
|
Non-cash compensation
|
|
|
8,076
|
|
|
6,702
|
|
|
18
|
|
|
1,356
|
|
|
20.2%
|
Loss from extinguishment of debt, net
|
|
|
34,512
|
|
|
—
|
|
|
—
|
|
|
34,512
|
|
|
—%
|
Other income
|
|
|
1,139
|
|
|
111,250
|
|
|
(109,310)
|
|
|
(801)
|
|
|
(0.7%)
|
Acquisition related adjustments and expenses
|
|
|
2,970
|
|
|
364
|
|
|
123
|
|
|
2,483
|
|
|
682.1%
|
Asset impairment and decommission costs
|
|
|
2,305
|
|
|
63,353
|
|
|
8
|
|
|
(61,056)
|
|
|
(96.4%)
|
Interest income
|
|
|
(3,101)
|
|
|
(1,276)
|
|
|
(174)
|
|
|
(1,651)
|
|
|
129.4%
|
Interest expense
(1)
|
|
|
89,456
|
|
|
87,129
|
|
|
—
|
|
|
2,327
|
|
|
2.7%
|
Depreciation, accretion, and amortization
|
|
|
160,111
|
|
|
164,330
|
|
|
1,757
|
|
|
(5,976)
|
|
|
(3.6%)
|
Provision for taxes
(2)
|
|
|
2,123
|
|
|
2,369
|
|
|
2
|
|
|
(248)
|
|
|
(10.5%)
|
Adjusted EBITDA
|
|
$
|
283,210
|
|
$
|
275,188
|
|
$
|
2,629
|
|
$
|
5,393
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the nine months ended
|
|
|
|
|
|
|
|
Constant
|
|
|
September 30,
|
|
Foreign
|
|
Constant
|
|
Currency
|
|
|
2016
|
|
2015
|
|
Currency Impact
|
|
Currency Change
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
|
|
Net income (loss)
|
|
$
|
70,976
|
|
$
|
(206,673)
|
|
$
|
267,157
|
|
$
|
10,492
|
|
|
(5.1%)
|
Non-cash straight-line leasing revenue
|
|
|
(24,955)
|
|
|
(39,101)
|
|
|
(1,568)
|
|
|
15,714
|
|
|
(40.2%)
|
Non-cash straight-line ground lease expense
|
|
|
26,610
|
|
|
25,794
|
|
|
(161)
|
|
|
977
|
|
|
3.8%
|
Non-cash compensation
|
|
|
24,752
|
|
|
21,903
|
|
|
(15)
|
|
|
2,864
|
|
|
13.1%
|
Loss from extinguishment of debt, net
|
|
|
34,512
|
|
|
—
|
|
|
—
|
|
|
34,512
|
|
|
—%
|
Other (income) expense
|
|
|
(92,137)
|
|
|
178,710
|
|
|
(270,272)
|
|
|
(575)
|
|
|
(0.3%)
|
Acquisition related adjustments and expenses
|
|
|
8,974
|
|
|
7,483
|
|
|
(248)
|
|
|
1,739
|
|
|
23.2%
|
Asset impairment and decommission costs
|
|
|
23,180
|
|
|
74,185
|
|
|
(92)
|
|
|
(50,913)
|
|
|
(68.6%)
|
Interest income
|
|
|
(7,704)
|
|
|
(2,284)
|
|
|
771
|
|
|
(6,191)
|
|
|
271.1%
|
Interest expense
(1)
|
|
|
268,448
|
|
|
253,463
|
|
|
(2)
|
|
|
14,987
|
|
|
5.9%
|
Depreciation, accretion, and amortization
|
|
|
479,635
|
|
|
498,560
|
|
|
(7,802)
|
|
|
(11,123)
|
|
|
(2.2%)
|
Provision for taxes
(2)
|
|
|
7,185
|
|
|
8,415
|
|
|
(11)
|
|
|
(1,219)
|
|
|
(14.5%)
|
Adjusted EBITDA
|
|
$
|
819,476
|
|
$
|
820,455
|
|
$
|
(12,243)
|
|
$
|
11,264
|
|
|
|
Oi reserve
|
|
|
16,498
|
|
|
—
|
|
|
—
|
|
|
16,498
|
|
|
|
Adjusted EBITDA net of the Oi reserve
|
|
$
|
835,974
|
|
$
|
820,455
|
|
$
|
(12,243)
|
|
$
|
27,762
|
|
|
|
|
(1)
|
|
Interest expense includes interest expense, non-cash interest expense, and amortization of deferred financing fees.
|
|
(2)
|
|
Provision for taxes includes
$549
and
$443
of franchise
and gross receipts
taxes for the
three
months ended
September 30, 2016
and
2015
, respectively
,
and
$1,405
and
$1,303
of franchise
and gross receipts
taxes for the
nine
months ended
September 30, 2016
and
2015
, respectively
,
reflected in selling, general, and administrative expenses on the Consolidated Statement of Operations.
|
Adjusted
EBITDA
increase
d
$8.0
million for the
three
months ended
September 30, 2016
, as compared to the prior year period. On a constant
currency basis, adjusted EBITDA
increase
d
$5.4
million. The
increase
s were primarily due to increases in domestic and international site leasing segment operating profit, partially offset by
an
increase in selling, general, and administrative expenses and a decrease in site development segment operating profit.
Adjusted EBITDA net of the Oi reserve
increase
d
$15.5
million for the
nine
months ended
September 30, 2016
, as compared to the prior year period. On a constant currency basis, adjusted EBITDA net of the Oi reserve
increase
d
$27.8
million. The
increase
s were primarily due to increases in domestic and international site leasing segment operating profit, partially offset by an increase in selling, general, and administrative expenses and a decrease in site development segment operating profit
.
LIQUIDITY AND CAPITAL RESOURCES
SBA
C
is a holding company with no business operations of its own. SBAC’s only significant asset is 100% of 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, 2016
|
|
September 30, 2015
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
Cash provided by operating activities
|
|
$
|
514,181
|
|
$
|
534,737
|
Cash used in investing activities
|
|
|
(300,213)
|
|
|
(566,731)
|
Cash (used in) provided by financing activities
|
|
|
(180,531)
|
|
|
78,513
|
Increase in cash and cash equivalents
|
|
|
33,437
|
|
|
46,519
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
13,749
|
|
|
(12,691)
|
Cash and cash equivalents, beginning of the period
|
|
|
118,039
|
|
|
39,443
|
Cash and cash equivalents, end of the period
|
|
$
|
165,225
|
|
$
|
73,271
|
Operating Activities
Cash provided by operating
activities was
$514.2
million for the
nine
months
ended
September 30, 2016
as compared to
$534.7
million for the
nine
months
ended
September 30, 2015
. The
decrease
of
$20.6
million
was primarily due to increases in cash outflows associated with working capital changes,
decreased site development segment operating profit,
increased selling, general, and administrative expenses
,
increased cash interest payments relating to the higher average amount of cash-interest bearing debt outstanding
and the payment of accrued interest associated with the redemption of the 5.625% Senior Notes
, and the negative impact of changes in foreign currency exchange rates on cash flows from operating activities, partially offset by
an increase in segment operating profit from domestic site leasing
and
international site leasing
operating segments
.
Investing Activities
A detail of our cash capital expenditures is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the nine months
|
|
|
ended September 30,
|
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
Acquisitions
|
|
$
|
144,535
|
|
$
|
358,675
|
Construction and related costs on new tower builds
|
|
|
51,487
|
|
|
76,688
|
Augmentation and tower upgrades
|
|
|
28,201
|
|
|
48,693
|
Land buyouts and other assets
(1)
|
|
|
46,867
|
|
|
50,036
|
Refurbishment of headquarters building
|
|
|
—
|
|
|
12,288
|
Tower maintenance
|
|
|
21,125
|
|
|
21,363
|
General corporate
|
|
|
3,507
|
|
|
3,279
|
Total cash capital expenditures
|
|
$
|
295,722
|
|
$
|
571,022
|
|
(1)
|
|
Excludes
$8.7
million and
$12.7
million spent on ground lease extensions and term easements
on land
underlying our towers
for
the
nine
months ended
September 30, 2016
and
2015
, respectively.
|
During all of
2016
, inclusive of the capital expenditures made during the
nine
months ended
September 30, 2016
, 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
$346.1
million to
$356.1
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
During the
nine
months
ended
September 30, 2016
, we borrowed
$290.0
million and repaid
$140.0
million under the Revolving Credit
Facility.
As of
September 30, 2016
, we had
$150.0
million outstanding under the $1.0 billion Revolving Credit Facility. Subsequent to
September 30, 2016
, we
borrowed
$20.0
million
and
repaid
$50.0
million
of the
outstanding
balance
under the Revolving Credit Facility.
During the
nine
months ended
September 30, 2016
, we repurchased
2.0
million shares of our Class A common stock for
$202.4
million at a weighted average price per share of
$100.61
.
On July 7, 2016,
we
, through
our
existing SBA Tower Trust, issued $700.0 million of 2.877% Secured Tower Revenue Securities Series 2016-1C which have an anticipated repayment date of July
9,
2021 and a final maturity date of July
10,
2046 (the “2016
-1C
Tower Securities”). Net proceeds from this offering were used to prepay the full $550.0 million outstanding on the
2010-2C
Tower Securities and for general corporate purposes.
Additionally,
we
wrote off $1.0 million of deferred financing fees related to the re
demption
of the
2010-2C Tower Securities
.
On
August 15, 2016, we issued $1.1 billion of unsecured senior notes due September 1, 2024 (the “2016 Senior Notes”). The 2016 Senior Notes accrue interest at a rate of 4.875% per annum and were issued at 99.178% of par value. Net proceeds from this offering and cash on hand were used to redeem $800.0 million, the aggregate principal amount outstanding, of Telecommunications’ 5.75% Senior Notes and $250.0 million of our 5.625
% Senior Notes and pay the associated call premiums
.
On
August 15, 2016, we used proceeds from the 2016 Senior Notes to redeem the full $800.0 million in aggregate principal amount of the 5.75% Senior Notes and to pay $25.8 million
for the
call
premium
and accrued interest
on the redemption of the notes. Additionally, we wrote off $7.7 million of deferred financing fees related to the redemption of the notes.
On October 1, 2016, we redeemed the 5.625% Senior Notes in full. On October
3, 2016,
we
repaid $500.0 million in outstanding principal, $14.1 million related to the call premium on the early redemption of the notes, and $14.1 million in accrued interest. Repayment was made using
(
1) the proc
eeds from the 2016 Senior Notes
,
(
2) borrowings under the Revolving Credit Facility, and
(
3) cash on hand. In addition,
we
wrote off $4.1 million of deferred financing fees in connection with the extinguishment of the debt.
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, 2016
, we did not issue any shares of Class A common stock under this registration statement. As of
September 30, 2016
, 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.
T
he Revolving Credit Facility consists of a revolving loan under which up to $1.0 billion
aggregate principal amount may be borrowed, repaid and redrawn,
based upon
specific financial ratios and
subject to
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 1
3
7.5 basis points to 2
00.0
basis points or
(ii) the
Base Rate plus a margin that ranges from
3
7.5 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
and
nine
months
ended
September 30, 2016
, we borrowed
$150.0
million and
$290.0
million
, respectively, and
repaid
$30.0
million and
$140.0
million
, respectively,
of the outstanding balance under the Revolving Credit Facility. As of
September 30, 2016
,
$150.0
million
was outstanding under the Revolving Credit
Facility.
As of
September 30, 2016
, SBA Senior Finance II was
in compliance with the financial covenants contained in the Senior Credit Agreement.
Subsequent to
September 30, 2016
, we
borrowed
$20.0
million
and
repaid
$50.0
million
of the
outstanding
balance under
the Revolving Credit Facility.
Term Loans under the Senior Credit
Agreement
2012 Term Loan
The 2012 Term Loan consisted of a senior secured term loan with an initial aggregate principal amount of $200.0 million that was to mature on May 9, 2017. The 2012 Term Loan accrued interest, at SBA Senior Finance II’s election, at either the Base Rate plus a margin that range
d
from 100 to 150 basis points or the Eurodollar Rate plus a margin that range
d
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). The 2012 Term Loan was issued at par.
We
incurred deferred financing fees of $2.7 million in relation to this transaction which were being amortized through the maturity date.
On November 18,
2015,
we
repaid the outstanding principal balance on the 2012 Term Loan.
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, 2016
, the 2014 Term Loan was accruing interest at
3.34%
per annum. Principal payments on the 2014 Term Loan commence
d
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. 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, 2016
,
we
repaid
$3.8
million
and
$11.3
million
of principal on the 2014 Term Loan. As of
September 30, 2016
, the 2014 Term Loan had a principal balance of
$1.47
billion.
2015 Term Loan
The 2015 Term Loan consists of a
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, 2016
, the 2015 Term Loan was accruing interest at
3.34%
per annum. Principal payments
on the 2015 Term Loan commence
d
on September 30, 2015 and
are being
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.
We
incurred deferred financing fees of approximately
$5.1
million in relation to this transaction which are being amort
ized through the maturity date.
During
the
three
and
nine
months
ended
September 30, 2016
, we repaid
$1.3
million and
$3.8
million
of principal on the 201
5
Term Loan.
As of
September 30, 2016
, the 2015 Term Loan had a principal balance of
$493.8
million.
Secured Tower Revenue Securities
2010-2C 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
2010-2
C
(the “2010-2C
Tower Securities”). The 2010
-2C
Tower Securities ha
d
an annual interest rate of 5.101%. The anticipated repayment date and the final maturity date for the
2010
-2C
Tower Securities
were
April 1
1
, 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 o
f $8.1 million
in relation to this transaction which
we
re being amortized
through the anticipated repayment date of the 2010-2C Tower Securities
.
On July 15, 2016, we repaid the full
$550.0 million outstanding o
f
the 2010
-2C
Tower Securities
using net proceeds from the 2016-1C Tower Securities.
Additionally, we wrote off $1.0 million of deferred financing fees related to the re
demption
of the 2010-2C Tower Securities
, which are reflected in loss from extinguishment of debt on the Consolidated Statement of Operations
.
2012
-1C
Tower Securities
On August 9, 2012, we, through the Trust, issued $610.0 million of
Secured Tower Revenue Securities Series 2012
-1C
(the “2012
-1C
Tower Securities”) which have an anticipated repayment date of December 1
1
, 2017 and a final maturity date
of
December
9
, 2042. The fixed interest rate of the 2012
-1C
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
-1C
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 1
0
, 2018 and a final maturity date
of
April
9
, 2043
(the “2013-1C Tower Securities”)
, $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
(the “2013-2C Tower Securities”)
, and $330.0 million of 3.598% Secured Tower Revenue Securities Series 2013-1D which have an anticipated repayment date of April 1
0
, 2018 and a final maturity date
of
April
9
, 2043
(the “2013-1D Tower Securities”)
(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
(the “2014-1C Tower Securities”)
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
(the “2014-2C Tower Securities”)
(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
-1C
Tower Securities
On October 14, 2015,
we
, 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 1
0
, 2045 (the “2015
-1C
Tower Securities”).
The fixed
interest rate of the 2015
-1C
Tower Securities is 3.156% per annum, payable monthly.
We
incurred deferred financing fees of
$11.2
million in relation to this transaction which are being amortized through the anticipated repayment date of the 2015
-1C
Tower Securities
.
201
6-1C
Tower Securities
On July 7, 2016,
we
, through
the Trust
, issued $700.0 million of Secured Tower Revenue Securities Series 2016-1
C
which have an anticipated repayment date of July
9,
2021 and a final maturity date of July
10,
2046.
The fixed interest rate of the 2016-1C
Tower Securities is 2.877
%
per annum, payable monthly.
Net proceeds from this offering were used to prepay the full $550.0 million outstanding on the 2010
-2C Tower Securities
and for general corporate purposes.
We incurred deferred financing fees of
$9.4
million to date in relation to this transaction which are being amortized through the anticipated repayment date of the 2016-1C Tower Securities.
Debt Covenants
As of
September 30, 2016
, 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.
Senior Notes
5.75% Senior Notes
O
n July 13, 2012,
Telecommunications issued $800.0 million of unsecured senior notes due July 15, 2020 (the “5.75%
Senior
Notes”).
The 5.75% Senior Notes accrued interest at a rate of 5.75% and were issued at par.
We incurred deferred financing fees
of $14.0 million
in relation to this transaction which
we
re being amortized
through the maturity date
.
SBAC ha
d
fully and unconditionally guaranteed the Senior Notes issued by Telecommunications.
On
August 15, 2016, we used proceeds from the 2016 Senior Notes to redeem the full $800.0 million in aggregate principal amount of the 5.75% Senior Notes and to pay $25.8 million
for the
call
premium
and accrued interest
on the redemption of the notes. Additionally, we wrote off $7.7 million of deferred financing fees related to the redemption of the notes. The
call
premium and the write off of deferred financing fees are reflected in loss from extinguishment of debt on
the Consolidated Statement of Operations.
SBA
C 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 ha
d
fully and unconditionally guaranteed the Senior Notes issued by Telecommunications.
5.625% Senior Notes
On September 28, 2012, we issued $500.0 million of unsecured senior notes due October 1, 2019 (the “5.625%
Senior
Notes”). The 5.625%
Senior
Notes accrue
d
interest at a rate of 5.625% per annum and were issued at par. Interest on the 5.625%
Senior
Notes
wa
s 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
we
re being amortized through the maturity date.
On October 1, 2016, we redeemed the 5.625% Senior Notes in full. On October 3, 2016, we repaid $500.0 million in outstanding principal, $14.1 million related to the call premium on the early redemption of the notes, and $14.1 million in accrued interest. Repayment was made using
(
1) the proceeds from the 2016 Senior Notes,
(
2) borrowings under the Revolving Credit Facility, and
(
3) cash on hand. In addition, we wrote off $4.1 million of deferred financing fees in connection with the
extinguishment of the debt.
2014 Senior Notes
On July 1, 2014, we issued $750.0 million of unsecured senior notes due July 15, 2022 (the “2014 Senior Notes”). The 2014 Senior Notes accrue interest at a rate of 4.875% per annum and were issued at 99.178% of par value. Interest on the 2014 Senior 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.
2016 Senior Notes
On
August 15, 2016, we issued $1.1 billion of unsecured senior notes due September 1, 2024. The 2016 Senior Notes accrue interest at a rate of 4.875% per annum and were issued at 99.178% of par value. Interest on the 2016 Senior Notes is due semi-annually on March 1 and September 1 of each year, beginning on March 1, 2017. We incurred deferred financing fees of
$12.6
million in relation to this transaction which are being amortized through the maturity date. Net proceeds from th
is
offering and cash on hand were used to redeem $800.0 million, the aggregate principal amount outstanding, of Telecommunications’ 5.75% Senior Notes and $250.0 million of our 5.625% Senior Notes and pay the associated call premiums
.
Debt Service
As of
September 30, 2016
, 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, 2016
and the
interest rates accruing on those amounts on such date (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5.625% Senior Notes
(1)
|
|
|
|
|
$
|
528,126
|
2014 Senior Notes
|
|
|
|
|
|
36,563
|
2016 Senior Notes
|
|
|
|
|
|
53,625
|
2012-1C Tower Securities
|
|
|
|
|
|
18,085
|
2013-1C Tower Securities
|
|
|
|
|
|
9,655
|
2013-2C Tower Securities
|
|
|
|
|
|
21,584
|
2013-1D Tower Securities
|
|
|
|
|
|
11,978
|
2014-1C Tower Securities
|
|
|
|
|
|
26,954
|
2014-2C Tower Securities
|
|
|
|
|
|
24,185
|
2015-1C Tower Securities
|
|
|
|
|
|
15,939
|
2016-1C Tower Securities
|
|
|
|
|
|
20,361
|
Revolving Credit Facility
|
|
|
|
|
|
5,800
|
2014 Term Loan
|
|
|
|
|
|
62,800
|
2015 Term Loan
|
|
|
|
|
|
21,097
|
Total debt service for next twelve months
|
|
|
|
|
$
|
856,752
|
|
(1)
|
|
On October 1, 2016, we redeemed in full the $500.0 million outstanding on the 5.625% Senior Notes and on October 3, 2016, used proceeds from the 2016 Senior Notes, borrowings under the Revolving Credit Facility, and cash on hand to
pay the principal
, a $14.1 million
call
premium on the redemption of the notes, and $14.1 million in accrued interest.
|