UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2020
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)
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Florida |
65-0716501 |
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(State or other jurisdiction of |
(I.R.S. Employer |
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incorporation or organization) |
Identification No.) |
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8051 Congress Avenue |
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Boca Raton, Florida |
33487 |
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(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:
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Title of Each Class |
Trading Symbol |
Name of Each Exchange on Which Registered |
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Class A Common Stock, $0.01 par value per share |
SBAC |
The NASDAQ Stock Market LLC |
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(NASDAQ Global Select Market) |
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 x No ¨
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes x 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.
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Large Accelerated Filer |
x |
Accelerated Filer |
¨ |
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Non-Accelerated filer |
¨ |
Smaller Reporting Company |
¨ |
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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 x
Indicate the number of shares outstanding of each issuer’s classes of common stock, as of the latest practicable date: 111,938,546 shares of Class A common stock as of July 31, 2020.
Table of Contents
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Page |
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Item 1. |
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Consolidated Balance Sheets as of June 30, 2020 (unaudited) and December 31, 2019 |
1 |
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2 |
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3 |
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4 |
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Consolidated Statements of Cash Flows (unaudited) for the six months ended June 30, 2020 and 2019 |
6 |
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Condensed Notes to Consolidated Financial Statements (unaudited) |
8 |
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Item 2. |
Management's Discussion and Analysis of Financial Condition and Results of Operations |
22 |
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Item 3. |
39 |
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Item 4. |
42 |
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Item 1A. |
42 |
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Item 6. |
43 |
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44 |
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PART I – FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (in thousands, except par values)
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June 30, |
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December 31, |
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2020 |
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2019 |
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ASSETS |
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(unaudited) |
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Current assets: |
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Cash and cash equivalents |
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$ |
207,487 |
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$ |
108,309 |
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Restricted cash |
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41,684 |
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30,243 |
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Accounts receivable, net |
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91,295 |
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132,125 |
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Costs and estimated earnings in excess of billings on uncompleted contracts |
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18,877 |
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26,313 |
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Short-term investments |
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225,853 |
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|
534 |
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Prepaid expenses and other current assets |
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38,890 |
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36,747 |
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Total current assets |
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624,086 |
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334,271 |
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Property and equipment, net |
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2,658,889 |
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2,794,602 |
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Intangible assets, net |
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3,174,567 |
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3,626,773 |
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Right-of-use assets, net |
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2,375,247 |
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2,572,217 |
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Other assets |
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557,750 |
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432,078 |
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Total assets |
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$ |
9,390,539 |
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$ |
9,759,941 |
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LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS, |
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AND SHAREHOLDERS' DEFICIT |
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Current Liabilities: |
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Accounts payable |
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$ |
26,353 |
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$ |
31,846 |
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Accrued expenses |
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65,581 |
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67,618 |
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Current maturities of long-term debt |
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24,000 |
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522,090 |
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Deferred revenue |
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130,670 |
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113,507 |
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Accrued interest |
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50,420 |
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49,269 |
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Current lease liabilities |
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229,850 |
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247,015 |
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Other current liabilities |
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25,785 |
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16,948 |
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Total current liabilities |
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552,659 |
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1,048,293 |
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Long-term liabilities: |
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Long-term debt, net |
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10,555,568 |
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9,812,335 |
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Long-term lease liabilities |
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2,113,602 |
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2,279,400 |
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Other long-term liabilities |
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459,353 |
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270,868 |
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Total long-term liabilities |
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13,128,523 |
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12,362,603 |
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Redeemable noncontrolling interests |
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14,349 |
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16,052 |
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Shareholders' deficit: |
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Preferred stock - par value $0.01, 30,000 shares authorized, no shares issued or outstanding |
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— |
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— |
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Common stock - Class A, par value $0.01, 400,000 shares authorized, 111,918 shares and |
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111,775 shares issued and outstanding at June 30, 2020 and December 31, 2019, |
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respectively |
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1,119 |
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1,118 |
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Additional paid-in capital |
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2,534,423 |
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2,461,335 |
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Accumulated deficit |
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(5,972,657) |
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(5,560,695) |
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Accumulated other comprehensive loss, net |
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(867,877) |
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(568,765) |
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Total shareholders' deficit |
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(4,304,992) |
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(3,667,007) |
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Total liabilities, redeemable noncontrolling interests, and shareholders' deficit |
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$ |
9,390,539 |
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$ |
9,759,941 |
The accompanying condensed notes are an integral part of these consolidated financial statements.
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited) (in thousands, except per share amounts)
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For the three months |
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For the six months |
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ended June 30, |
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ended June 30, |
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2020 |
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2019 |
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2020 |
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2019 |
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Revenues: |
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Site leasing |
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$ |
482,403 |
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$ |
459,003 |
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$ |
974,758 |
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$ |
911,186 |
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Site development |
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24,823 |
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41,144 |
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49,534 |
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82,254 |
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Total revenues |
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507,226 |
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500,147 |
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1,024,292 |
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993,440 |
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Operating expenses: |
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Cost of revenues (exclusive of depreciation, accretion, |
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and amortization shown below): |
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Cost of site leasing |
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91,598 |
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93,460 |
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187,397 |
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186,175 |
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Cost of site development |
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19,904 |
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30,988 |
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39,620 |
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62,089 |
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Selling, general, and administrative expenses (1) |
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49,088 |
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55,524 |
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98,704 |
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106,483 |
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Acquisition and new business initiatives related |
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adjustments and expenses |
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4,634 |
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2,539 |
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8,433 |
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4,976 |
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Asset impairment and decommission costs |
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6,242 |
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9,620 |
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20,597 |
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15,391 |
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Depreciation, accretion, and amortization |
|
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178,706 |
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171,564 |
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|
361,285 |
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342,602 |
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Total operating expenses |
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350,172 |
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|
363,695 |
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|
716,036 |
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717,716 |
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Operating income |
|
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157,054 |
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136,452 |
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308,256 |
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|
275,724 |
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Other income (expense): |
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Interest income |
|
|
699 |
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1,581 |
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|
1,584 |
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|
3,381 |
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Interest expense |
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(95,687) |
|
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(97,447) |
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|
(191,538) |
|
|
(196,114) |
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Non-cash interest expense |
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(2,337) |
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(651) |
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(4,743) |
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(1,292) |
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Amortization of deferred financing fees |
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(5,188) |
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(5,116) |
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(10,328) |
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(10,176) |
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Loss from extinguishment of debt, net |
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— |
|
|
— |
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(16,864) |
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— |
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Other (expense) income, net |
|
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(31,588) |
|
|
12,762 |
|
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(257,885) |
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|
12,254 |
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Total other expense, net |
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(134,101) |
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(88,871) |
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(479,774) |
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(191,947) |
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Income (loss) before income taxes |
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22,953 |
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47,581 |
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(171,518) |
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83,777 |
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Benefit (provision) for income taxes |
|
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165 |
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(15,608) |
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66,702 |
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(25,815) |
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Net income (loss) |
|
|
23,118 |
|
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31,973 |
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(104,816) |
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57,962 |
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Net (income) loss attributable to noncontrolling interests |
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(305) |
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— |
|
|
569 |
|
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— |
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Net income (loss) attributable to SBA Communications |
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Corporation |
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$ |
22,813 |
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$ |
31,973 |
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$ |
(104,247) |
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$ |
57,962 |
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Net income (loss) per common share attributable to SBA |
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Communications Corporation: |
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Basic |
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$ |
0.20 |
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$ |
0.28 |
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$ |
(0.93) |
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$ |
0.51 |
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Diluted |
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$ |
0.20 |
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$ |
0.28 |
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$ |
(0.93) |
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$ |
0.51 |
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Weighted average number of common shares |
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Basic |
|
|
111,738 |
|
|
113,205 |
|
|
111,823 |
|
|
112,958 |
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Diluted |
|
|
113,634 |
|
|
114,940 |
|
|
111,823 |
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|
114,643 |
(1)Includes non-cash compensation of $18,131 and $24,131 for the three months ended June 30, 2020 and 2019, respectively, and $33,684 and $46,736 for the six months ended June 30, 2020 and 2019, respectively.
The accompanying condensed notes are an integral part of these consolidated financial statements.
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(unaudited) (in thousands)
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For the three months |
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For the six months |
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ended June 30, |
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ended June 30, |
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2020 |
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2019 |
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2020 |
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2019 |
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Net income (loss) |
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$ |
23,118 |
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$ |
31,973 |
|
$ |
(104,816) |
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$ |
57,962 |
|
Unrealized loss on interest rate swaps |
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(12,684) |
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|
(36,281) |
|
|
(115,923) |
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|
(51,593) |
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Foreign currency translation adjustments |
|
|
(8,166) |
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|
13,122 |
|
|
(184,193) |
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|
8,578 |
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Comprehensive income (loss) |
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|
2,268 |
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|
8,814 |
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(404,932) |
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|
14,947 |
|
Comprehensive (income) loss attributable to noncontrolling interests |
|
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(485) |
|
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— |
|
|
1,573 |
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— |
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Comprehensive income (loss) attributable to SBA |
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Communications Corporation |
|
$ |
1,783 |
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$ |
8,814 |
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$ |
(403,359) |
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$ |
14,947 |
The accompanying condensed notes are an integral part of these consolidated financial statements.
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ DEFICIT
(unaudited) (in thousands)
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Accumulated |
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Class A |
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Additional |
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Other |
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Total |
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Common Stock |
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Paid-In |
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Accumulated |
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Comprehensive |
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Shareholders' |
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Shares |
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Amount |
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Capital |
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Deficit |
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Loss, Net |
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Equity (Deficit) |
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BALANCE, March 31, 2020 |
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111,559 |
|
$ |
1,116 |
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$ |
2,471,886 |
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$ |
(5,943,386) |
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$ |
(846,847) |
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$ |
(4,317,231) |
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Net income (loss) attributable to SBA |
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Communications Corporation |
|
— |
|
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— |
|
|
— |
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|
22,813 |
|
|
— |
|
|
22,813 |
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Common stock issued in connection with equity |
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awards and stock purchase plans, offset |
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by the impact of net share settlements |
|
359 |
|
|
3 |
|
|
42,932 |
|
|
— |
|
|
— |
|
|
42,935 |
|
Non-cash stock compensation |
|
— |
|
|
— |
|
|
18,991 |
|
|
— |
|
|
— |
|
|
18,991 |
|
Unrealized loss on interest rate swaps |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(12,684) |
|
|
(12,684) |
|
Foreign currency translation adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
attributable to SBA Communications |
|
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|
|
|
|
|
|
|
|
|
|
|
|
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Corporation |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(8,346) |
|
|
(8,346) |
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Dividends on common stock |
|
— |
|
|
— |
|
|
— |
|
|
(52,084) |
|
|
— |
|
|
(52,084) |
|
Adjustment to fair value related to |
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
noncontrolling interests |
|
— |
|
|
— |
|
|
614 |
|
|
— |
|
|
— |
|
|
614 |
|
BALANCE, June 30, 2020 |
|
111,918 |
|
$ |
1,119 |
|
$ |
2,534,423 |
|
$ |
(5,972,657) |
|
$ |
(867,877) |
|
$ |
(4,304,992) |
|
|
|
|
|
|
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|
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Accumulated |
|
|
|
|
|
|
|
Class A |
|
Additional |
|
|
|
|
Other |
|
Total |
||||||
|
|
|
Common Stock |
|
Paid-In |
|
Accumulated |
|
Comprehensive |
|
Shareholders' |
|||||||
|
|
|
Shares |
|
Amount |
|
Capital |
|
Deficit |
|
Loss |
|
Equity (Deficit) |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE, March 31, 2019 |
|
113,205 |
|
$ |
1,132 |
|
$ |
2,359,195 |
|
$ |
(5,131,347) |
|
$ |
(531,761) |
|
$ |
(3,302,781) |
|
Net income (loss) attributable to SBA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Communications Corporation |
|
— |
|
|
— |
|
|
— |
|
|
31,973 |
|
|
— |
|
|
31,973 |
|
Common stock issued in connection with equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
awards and stock purchase plans, offset |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
by the impact of net share settlements |
|
348 |
|
|
3 |
|
|
24,443 |
|
|
— |
|
|
— |
|
|
24,446 |
|
Non-cash stock compensation |
|
— |
|
|
— |
|
|
24,747 |
|
|
— |
|
|
— |
|
|
24,747 |
|
Unrealized loss on interest rate swaps |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(36,281) |
|
|
(36,281) |
|
Repurchase and retirement of common stock |
|
(463) |
|
|
(4) |
|
|
— |
|
|
(94,568) |
|
|
— |
|
|
(94,572) |
|
Foreign currency translation adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
attributable to SBA Communications |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporation |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
13,122 |
|
|
13,122 |
|
BALANCE, June 30, 2019 |
|
113,090 |
|
$ |
1,131 |
|
$ |
2,408,385 |
|
$ |
(5,193,942) |
|
$ |
(554,920) |
|
$ |
(3,339,346) |
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ DEFICIT
(unaudited) (in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
Class A |
|
Additional |
|
|
|
|
Other |
|
Total |
||||||
|
|
|
Common Stock |
|
Paid-In |
|
Accumulated |
|
Comprehensive |
|
Shareholders' |
|||||||
|
|
|
Shares |
|
Amount |
|
Capital |
|
Deficit |
|
Loss |
|
Equity (Deficit) |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE, December 31, 2019 |
|
111,775 |
|
|
1,118 |
|
|
2,461,335 |
|
|
(5,560,695) |
|
|
(568,765) |
|
|
(3,667,007) |
|
Net income (loss) attributable to SBA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Communications Corporation |
|
— |
|
|
— |
|
|
— |
|
|
(104,247) |
|
|
— |
|
|
(104,247) |
|
Common stock issued in connection with equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
awards and stock purchase plans, offset |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
by the impact of net share settlements |
|
980 |
|
|
9 |
|
|
37,307 |
|
|
— |
|
|
— |
|
|
37,316 |
|
Non-cash stock compensation |
|
— |
|
|
— |
|
|
35,651 |
|
|
— |
|
|
— |
|
|
35,651 |
|
Unrealized loss on interest rate swaps |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(115,923) |
|
|
(115,923) |
|
Repurchase and retirement of common stock |
|
(837) |
|
|
(8) |
|
|
— |
|
|
(203,322) |
|
|
— |
|
|
(203,330) |
|
Foreign currency translation adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
attributable to SBA Communications |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporation |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(183,189) |
|
|
(183,189) |
|
Dividends on common stock |
|
— |
|
|
— |
|
|
— |
|
|
(104,393) |
|
|
— |
|
|
(104,393) |
|
Adjustment to fair value related to |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
noncontrolling interests |
|
— |
|
|
— |
|
|
130 |
|
|
— |
|
|
— |
|
|
130 |
|
BALANCE, June 30, 2020 |
|
111,918 |
|
$ |
1,119 |
|
$ |
2,534,423 |
|
$ |
(5,972,657) |
|
$ |
(867,877) |
|
$ |
(4,304,992) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
Class A |
|
Additional |
|
|
|
|
Other |
|
Total |
||||||
|
|
|
Common Stock |
|
Paid-In |
|
Accumulated |
|
Comprehensive |
|
Shareholders' |
|||||||
|
|
|
Shares |
|
Amount |
|
Capital |
|
Deficit |
|
Loss |
|
Equity (Deficit) |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE, December 31, 2018 |
|
112,433 |
|
$ |
1,124 |
|
$ |
2,270,326 |
|
$ |
(5,136,368) |
|
$ |
(511,905) |
|
$ |
(3,376,823) |
|
Net income (loss) attributable to SBA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Communications Corporation |
|
— |
|
|
— |
|
|
— |
|
|
57,962 |
|
|
— |
|
|
57,962 |
|
Common stock issued in connection with equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
awards and stock purchase plans, offset |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
by the impact of net share settlements |
|
1,110 |
|
|
11 |
|
|
87,910 |
|
|
— |
|
|
— |
|
|
87,921 |
|
Non-cash stock compensation |
|
— |
|
|
— |
|
|
48,469 |
|
|
— |
|
|
— |
|
|
48,469 |
|
Common stock issued in connection with |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
acquisitions |
|
10 |
|
|
— |
|
|
1,680 |
|
|
— |
|
|
— |
|
|
1,680 |
|
Unrealized loss on interest rate swaps |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(51,593) |
|
|
(51,593) |
|
Repurchase and retirement of common stock |
|
(463) |
|
|
(4) |
|
|
— |
|
|
(94,568) |
|
|
— |
|
|
(94,572) |
|
Foreign currency translation adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
attributable to SBA Communications |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporation |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
8,578 |
|
|
8,578 |
|
Impact of adoption of ASU 2016-02 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
related to leases |
|
— |
|
|
— |
|
|
— |
|
|
(20,968) |
|
|
— |
|
|
(20,968) |
|
BALANCE, June 30, 2019 |
|
113,090 |
|
$ |
1,131 |
|
$ |
2,408,385 |
|
$ |
(5,193,942) |
|
$ |
(554,920) |
|
$ |
(3,339,346) |
The accompanying condensed notes are an integral part of these consolidated financial statements.
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited) (in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six months ended June 30, |
||||
|
|
|
2020 |
|
2019 |
||
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(104,816) |
|
$ |
57,962 |
|
Adjustments to reconcile net (loss) income to net cash provided by operating activities: |
|
|
|
|
|
|
|
Depreciation, accretion, and amortization |
|
|
361,285 |
|
|
342,602 |
|
Non-cash asset impairment and decommission costs |
|
|
20,160 |
|
|
14,737 |
|
Non-cash compensation expense |
|
|
34,857 |
|
|
47,901 |
|
Amortization of deferred financing fees |
|
|
10,328 |
|
|
10,176 |
|
Loss (gain) on remeasurement of U.S. dollar denominated intercompany loans |
|
|
261,308 |
|
|
(7,007) |
|
Deferred income tax (benefit) expense |
|
|
(77,707) |
|
|
14,822 |
|
Other non-cash items reflected in the Statements of Operations |
|
|
16,875 |
|
|
(3,577) |
|
Changes in operating assets and liabilities, net of acquisitions: |
|
|
|
|
|
|
|
Accounts receivable and costs and estimated earnings in excess of |
|
|
|
|
|
|
|
billings on uncompleted contracts, net |
|
|
34,127 |
|
|
(4,546) |
|
Prepaid expenses and other assets |
|
|
1,979 |
|
|
3,915 |
|
Operating lease right-of-use assets, net |
|
|
59,559 |
|
|
47,237 |
|
Accounts payable and accrued expenses |
|
|
4,093 |
|
|
1,853 |
|
Accrued interest |
|
|
(474) |
|
|
513 |
|
Long-term lease liabilities |
|
|
(49,828) |
|
|
(41,732) |
|
Other liabilities |
|
|
20,672 |
|
|
(18,750) |
|
Net cash provided by operating activities |
|
|
592,418 |
|
|
466,106 |
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
Acquisitions |
|
|
(119,035) |
|
|
(151,182) |
|
Capital expenditures |
|
|
(66,979) |
|
|
(72,785) |
|
Purchase of investments |
|
|
(1,135,026) |
|
|
(285,599) |
|
Proceeds from sale of investments |
|
|
910,000 |
|
|
255,557 |
|
Other investing activities |
|
|
(2,930) |
|
|
(1,466) |
|
Net cash used in investing activities |
|
|
(413,970) |
|
|
(255,475) |
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
Borrowings under Revolving Credit Facility |
|
|
515,000 |
|
|
90,000 |
|
Repayments under Revolving Credit Facility |
|
|
(1,005,000) |
|
|
(335,000) |
|
Proceeds from issuance of Senior Notes, net of fees |
|
|
1,480,206 |
|
|
— |
|
Repayment of Senior Notes |
|
|
(759,143) |
|
|
— |
|
Proceeds from employee stock purchase/stock option plans, net of taxes |
|
|
37,316 |
|
|
87,921 |
|
Repurchase and retirement of common stock |
|
|
(203,330) |
|
|
(94,572) |
|
Payment of dividends on common stock |
|
|
(104,171) |
|
|
— |
|
Other financing activities |
|
|
(12,999) |
|
|
(12,812) |
|
Net cash used in financing activities |
|
|
(52,121) |
|
|
(264,463) |
|
Effect of exchange rate changes on cash, cash equivalents, and restricted cash |
|
|
(15,809) |
|
|
2,344 |
|
NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH |
|
|
110,518 |
|
|
(51,488) |
|
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH: |
|
|
|
|
|
|
|
Beginning of period |
|
|
141,120 |
|
|
178,300 |
|
End of period |
|
$ |
251,638 |
|
$ |
126,812 |
The accompanying condensed notes are an integral part of these consolidated financial statements.
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
The accompanying condensed notes are an integral part of these consolidated financial statements.
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, 2019 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 the consolidated financial statements and accompanying notes. While the Company believes that such estimates are fair when considered in conjunction with the consolidated financial statements and accompanying notes, the actual amounts, when known, may vary from these estimates.
Foreign Currency Translation
All assets and liabilities of foreign subsidiaries that do not utilize the U.S. dollar as its functional currency are translated at period-end exchange rates, while revenues and expenses are translated at monthly average exchange rates during the period. Unrealized remeasurement gains and losses are reported as foreign currency translation adjustments through Accumulated Other Comprehensive Loss in the 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 Statements of Operations.
Intercompany Loans Subject to Remeasurement
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. The Company recorded a $20.4 million loss and a $6.0 million gain, net of taxes, on the remeasurement of intercompany loans for the three months ended June 30, 2020 and 2019, respectively, and a $173.2 million loss and a $4.6 million gain, net of taxes, on the remeasurement of intercompany loans for the six months ended June 30, 2020 and 2019, respectively, due to changes in foreign exchange rates. As of June 30, 2020 and December 31, 2019, the aggregate amount outstanding under the intercompany loan agreements subject to remeasurement with the Company’s foreign subsidiaries was $915.1 million and $899.7 million, respectively.
Coronavirus
On January 20, 2020, the World Health Organization declared a “public health emergency of international concern” related to the emergence of the Coronavirus (“COVID-19”) outbreak which could negatively affect the global economy. As of June 30, 2020, the Company has experienced minimal impact to its business or the consolidated financial statements from COVID-19. The extent to which COVID-19 could adversely affect the Company’s future business operations will depend on future developments such as the duration of the outbreak, new information on the severity of COVID-19, and methods taken to contain or treat the outbreak of COVID-19. While the full impact of COVID-19 is not yet known, the Company will continue to monitor this recent outbreak and the potential effects on its business.
Credit Losses
Effective January 1, 2020, the Company adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”) prospectively. ASU 2016-13 replaces the incurred loss impairment model with an expected credit loss impairment model for financial instruments, including trade receivables. The amendment requires entities to consider forward-looking information to estimate expected credit losses over the lifetime of the asset,
resulting in earlier recognition of losses for receivables that are current or not yet due, which were not considered under the previous accounting guidance. The impact of the adoption of ASU 2016-13 was not material individually or in the aggregate to the Company.
ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments – Credit Losses (“ASU 2018-19”) clarified that operating lease receivables are not within the scope of ASC 326-20 and should instead be accounted for under the new leasing standard, ASC 842. The Company is exposed to credit losses primarily through the site development business segment which provides consulting and construction related services The Company’s expected loss allowance methodology for accounts receivable is developed using historical collection experience, current and future economic and market conditions, and a review of the current status of customers’ trade accounts receivables. Due to the short-term nature of such receivables, the estimate of amount of accounts receivable that may not be collected is based on aging of the accounts receivable balances and the financial condition of customers. Additionally, specific allowance amounts are established to record the appropriate provision for customers that have a higher probability of default. The Company’s monitoring activities include timely account reconciliation, dispute resolution, payment confirmation, consideration of customers’ financial condition and macroeconomic conditions. Balances are written off when determined to be uncollectible.
Reference Rate Reform
ASU 2020-04, Reference Rate Reform, provides optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. The amendments are effective for all entities as of March 12, 2020 through December 31, 2022. As of June 30, 2020, the Company has not modified any contracts as a result of reference rate reform and is evaluating the impact this standard may have on its consolidated financial statements.
2.FAIR VALUE MEASUREMENTS
Items Measured at Fair Value on a Recurring Basis— 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 Consolidated Balance Sheets. The fair value of the asset retirement obligations is calculated using a discounted cash flow model.
Items Measured at Fair Value on a Nonrecurring Basis— The Company’s long-lived and intangible assets 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 and intangible assets 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 |
|
For the six months |
||||||||
|
|
|
ended June 30, |
|
ended June 30, |
||||||||
|
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
||||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Asset impairment (1) |
|
$ |
5,424 |
|
$ |
4,282 |
|
$ |
16,432 |
|
$ |
7,585 |
|
Write-off of carrying value of decommissioned towers |
|
|
739 |
|
|
5,007 |
|
|
3,439 |
|
|
7,164 |
|
Other (including third party decommission costs) |
|
|
79 |
|
|
331 |
|
|
726 |
|
|
642 |
|
Total asset impairment and decommission costs |
|
$ |
6,242 |
|
$ |
9,620 |
|
$ |
20,597 |
|
$ |
15,391 |
(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 shorter maturity of these instruments. The Company’s estimate of its short term investments are based primarily upon Level 1 reported market values. As of June 30, 2020 and December 31, 2019, the Company had $225.9 million and $0.5 million of short-term investments. For the three
months ended June 30, 2020, the Company purchased $525.0 million and sold $300.0 million of short-term investments. For the six months ended June 30, 2020, the Company purchased $1.1 billion and sold $0.9 billion of short-term investments.
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 (112.5 to 175.0 basis points). Refer to Note 10 for the fair values, principal balances, and carrying values of the Company’s debt instruments.
For discussion of the Company’s derivatives and hedging activities, refer to Note 17.
3.CASH, CASH EQUIVALENTS, AND RESTRICTED CASH
The cash, cash equivalents, and restricted cash balances on the Consolidated Statements of Cash Flows consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of |
|
As of |
|
|
||
|
|
|
June 30, 2020 |
|
December 31, 2019 |
|
Included on Balance Sheet |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
|
||||
|
Cash and cash equivalents |
|
$ |
207,487 |
|
$ |
108,309 |
|
|
|
Securitization escrow accounts |
|
|
41,524 |
|
|
30,046 |
|
Restricted cash - current asset |
|
Payment and performance bonds |
|
|
160 |
|
|
197 |
|
Restricted cash - current asset |
|
Surety bonds and workers compensation |
|
|
2,467 |
|
|
2,568 |
|
Other assets - noncurrent |
|
Total cash, cash equivalents, and restricted cash |
|
$ |
251,638 |
|
$ |
141,120 |
|
|
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 June 30, 2020 and December 31, 2019, the Company had $41.3 million and $41.7 million in surety, payment and performance bonds, respectively, for which 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 June 30, 2020 and December 31, 2019, the Company had also pledged $2.3 million as collateral related to its workers’ compensation policy.
4.COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS
The Company’s costs and estimated earnings on uncompleted contracts are comprised of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of |
|
As of |
||
|
|
|
June 30, 2020 |
|
December 31, 2019 |
||
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
||||
|
Costs incurred on uncompleted contracts |
|
$ |
46,688 |
|
$ |
52,339 |
|
Estimated earnings |
|
|
18,244 |
|
|
19,954 |
|
Billings to date |
|
|
(46,647) |
|
|
(47,401) |
|
|
|
$ |
18,285 |
|
$ |
24,892 |
These amounts are included in the Consolidated Balance Sheets under the following captions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of |
|
As of |
||
|
|
|
June 30, 2020 |
|
December 31, 2019 |
||
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
||||
|
Costs and estimated earnings in excess of billings on uncompleted contracts |
|
$ |
18,877 |
|
$ |
26,313 |
|
Billings in excess of costs and estimated earnings on |
|
|
|
|
|
|
|
uncompleted contracts (included in Other current liabilities) |
|
|
(592) |
|
|
(1,421) |
|
|
|
$ |
18,285 |
|
$ |
24,892 |
At June 30, 2020 and December 31, 2019, eight customers comprised 95.8% and 94.4% of the costs and estimated earnings in excess of billings on uncompleted contracts, net of billings in excess of costs and estimated earnings, respectively.
5.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 |
||
|
|
|
June 30, 2020 |
|
December 31, 2019 |
||
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|||
|
Prepaid ground rent |
|
$ |
2,354 |
|
$ |
1,632 |
|
Prepaid real estate taxes |
|
|
1,927 |
|
|
3,003 |
|
Prepaid taxes |
|
|
6,748 |
|
|
4,924 |
|
Other |
|
|
27,861 |
|
|
27,188 |
|
Total prepaid expenses and other current assets |
|
$ |
38,890 |
|
$ |
36,747 |
The Company’s other assets are comprised of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of |
|
As of |
||
|
|
|
June 30, 2020 |
|
December 31, 2019 |
||
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|||
|
Straight-line rent receivable |
|
$ |
318,791 |
|
$ |
330,660 |
|
Interest rate swap asset (1) |
|
|
116,451 |
|
|
47,583 |
|
Loan receivables |
|
|
11,794 |
|
|
8,295 |
|
Deferred lease costs, net |
|
|
4,781 |
|
|
4,865 |
|
Deferred tax asset - long term |
|
|
69,978 |
|
|
4,342 |
|
Other |
|
|
35,955 |
|
|
36,333 |
|
Total other assets |
|
$ |
557,750 |
|
$ |
432,078 |
(1)Refer to Note 17 for more information on the Company’s interest rate swaps.
6.ACQUISITIONS
The following table summarizes the Company’s acquisition activity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months |
|
For the six months |
||||||||
|
|
|
ended June 30, |
|
ended June 30, |
||||||||
|
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
||||||||||
|
Acquisitions of towers and related intangible assets (1) |
|
$ |
17,150 |
|
$ |
83,264 |
|
$ |
99,424 |
|
$ |
125,412 |
|
Land buyouts and other assets (2) |
|
|
12,354 |
|
|
12,631 |
|
|
19,611 |
|
|
25,770 |
|
Total cash acquisition capital expenditures |
|
$ |
29,504 |
|
$ |
95,895 |
|
$ |
119,035 |
|
$ |
151,182 |
(1)The six months ended June 30, 2019 excludes $1.7 million of acquisition costs funded through the issuance of 10,000 shares of Class A common stock.
(2)In addition, the Company paid $1.6 million and $3.5 million for ground lease extensions and term easements on land underlying the Company’s towers during the three months ended June 30, 2020 and 2019, respectively, and paid $3.6 million and $6.7 million for ground lease extensions and term easements on land underlying the Company’s towers during the six
months ended June 30, 2020 and 2019, respectively. The Company recorded these amounts in prepaid rent on its Consolidated Balance Sheets.
During the six months ended June 30, 2020, the Company allocated the purchase price of 85 acquired towers and related assets and liabilities consisting of $12.9 million of property and equipment, $82.3 million of intangible assets, and $4.2 million of other net assets and liabilities assumed. All acquisitions in the three and six months ended June 30, 2020 were accounted for as asset acquisitions.
Subsequent to June 30, 2020, the Company acquired 25 towers and related assets and one data center for $61.6 million in cash.
The maximum potential obligation related to the performance targets for acquisitions, which have not been recorded on the Company’s Consolidated Balance Sheet, were $27.1 million and $29.7 million as of June 30, 2020 and December 31, 2019, respectively.
7.PROPERTY AND EQUIPMENT, NET
Property and equipment, net consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of |
|
As of |
||
|
|
|
June 30, 2020 |
|
December 31, 2019 |
||
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
||||
|
Towers and related components |
|
$ |
5,122,198 |
|
$ |
5,164,104 |
|
Construction-in-process (1) |
|
|
33,046 |
|
|
33,644 |
|
Furniture, equipment, and vehicles |
|
|
50,247 |
|
|
51,654 |
|
Land, buildings, and improvements |
|
|
751,680 |
|
|
736,378 |
|
Total property and equipment |
|
|
5,957,171 |
|
|
5,985,780 |
|
Less: accumulated depreciation |
|
|
(3,298,282) |
|
|
(3,191,178) |
|
Property and equipment, net |
|
$ |
2,658,889 |
|
$ |
2,794,602 |
(1)Construction-in-process represents costs incurred related to towers that are under development and will be used in the Company’s site leasing operations.
Depreciation expense was $71.3 million and $69.5 million for the three months ended June 30, 2020 and 2019, respectively, and $143.2 million and $138.6 million for the six months ended June 30, 2020 and 2019, respectively. At June 30, 2020 and December 31, 2019, unpaid capital expenditures that are included in accounts payable and accrued expenses were $8.9 million and $14.7 million, respectively.
8.INTANGIBLE ASSETS, NET
The following table provides the gross and net carrying amounts for each major class of intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of June 30, 2020 |
|
As of December 31, 2019 |
||||||||||||||
|
|
|
Gross carrying |
|
Accumulated |
|
Net book |
|
Gross carrying |
|
Accumulated |
|
Net book |
||||||
|
|
|
amount |
|
amortization |
|
value |
|
amount |
|
amortization |
|
value |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
||||||||||||||||
|
Current contract intangibles |
|
$ |
4,703,085 |
|
$ |
(2,298,491) |
|
$ |
2,404,594 |
|
$ |
4,996,591 |
|
$ |
(2,218,404) |
|
$ |
2,778,187 |
|
Network location intangibles |
|
|
1,728,974 |
|
|
(959,001) |
|
|
769,973 |
|
|
1,764,484 |
|
|
(915,898) |
|
|
848,586 |
|
Intangible assets, net |
|
$ |
6,432,059 |
|
$ |
(3,257,492) |
|
$ |
3,174,567 |
|
$ |
6,761,075 |
|
$ |
(3,134,302) |
|
$ |
3,626,773 |
All intangible assets noted above are included in the Company’s site leasing segment. Amortization expense relating to the intangible assets above was $107.4 million and $102.0 million for the three months ended June 30, 2020 and 2019, respectively, and $218.0 million and $203.8 million for the six months ended June 30, 2020 and 2019, respectively.
9.ACCRUED EXPENSES
The Company’s accrued expenses are comprised of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of |
|
As of |
||
|
|
|
June 30, 2020 |
|
December 31, 2019 |
||
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
||||
|
Salaries and benefits |
|
$ |
15,257 |
|
$ |
19,838 |
|
Real estate and property taxes |
|
|
11,134 |
|
|
9,598 |
|
Unpaid capital expenditures |
|
|
8,884 |
|
|
14,669 |
|
Other |
|
|
30,306 |
|
|
23,513 |
|
Total accrued expenses |
|
$ |
65,581 |
|
$ |
67,618 |
10.DEBT
The principal values, fair values, and carrying values of debt consist of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of |
|
As of |
||||||||||||||
|
|
|
|
|
June 30, 2020 |
|
December 31, 2019 |
||||||||||||||
|
|
|
Maturity Date |
|
Principal
|
|
Fair Value |
|
Carrying
|
|
Principal
|
|
Fair Value |
|
Carrying
|
||||||
|
Revolving Credit Facility |
|
Apr. 11, 2023 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
490,000 |
|
$ |
490,000 |
|
$ |
490,000 |
|
2018 Term Loan |
|
Apr. 11, 2025 |
|
|
2,352,000 |
|
|
2,269,680 |
|
|
2,335,750 |
|
|
2,364,000 |
|
|
2,369,910 |
|
|
2,346,183 |
|
2013-2C Tower Securities (1) |
|
Apr. 11, 2023 |
|
|
575,000 |
|
|
606,211 |
|
|
571,459 |
|
|
575,000 |
|
|
585,954 |
|
|
570,866 |
|
2014-2C Tower Securities (1) |
|
Oct. 8, 2024 |
|
|
620,000 |
|
|
678,522 |
|
|
615,663 |
|
|
620,000 |
|
|
644,912 |
|
|
615,205 |
|
2015-1C Tower Securities (1) |
|
Oct. 8, 2020 |
|
|
500,000 |
|
|
502,605 |
|
|
499,298 |
|
|
500,000 |
|
|
502,095 |
|
|
498,090 |
|
2016-1C Tower Securities (1) |
|
Jul. 9, 2021 |
|
|
700,000 |
|
|
712,838 |
|
|
697,930 |
|
|
700,000 |
|
|
704,095 |
|
|
696,936 |
|
2017-1C Tower Securities (1) |
|
Apr. 11, 2022 |
|
|
760,000 |
|
|
781,113 |
|
|
756,104 |
|
|
760,000 |
|
|
763,405 |
|
|
755,061 |
|
2018-1C Tower Securities (1) |
|
Mar. 9, 2023 |
|
|
640,000 |
|
|
679,430 |
|
|
635,187 |
|
|
640,000 |
|
|
658,266 |
|
|
634,344 |
|
2019-1C Tower Securities (1) |
|
Jan. 12, 2025 |
|
|
1,165,000 |
|
|
1,229,017 |
|
|
1,154,002 |
|
|
1,165,000 |
|
|
1,158,057 |
|
|
1,153,086 |
|
2014 Senior Notes |
|
Jul. 15, 2022 |
|
|
— |
|
|
— |
|
|
— |
|
|
750,000 |
|
|
760,313 |
|
|
743,580 |
|
2016 Senior Notes |
|
Sep. 1, 2024 |
|
|
1,100,000 |
|
|
1,126,125 |
|
|
1,087,566 |
|
|
1,100,000 |
|
|
1,142,625 |
|
|
1,086,241 |
|
2017 Senior Notes |
|
Oct. 1, 2022 |
|
|
750,000 |
|
|
753,750 |
|
|
745,728 |
|
|
750,000 |
|
|
764,063 |
|
|
744,833 |
|
2020 Senior Notes |
|
Feb. 15, 2027 |
|
|
1,500,000 |
|
|
1,496,250 |
|
|
1,480,881 |
|
|
— |
|
|
— |
|
|
— |
|
Total debt |
|
|
|
$ |
10,662,000 |
|
$ |
10,835,541 |
|
$ |
10,579,568 |
|
$ |
10,414,000 |
|
$ |
10,543,695 |
|
$ |
10,334,425 |
|
Less: current maturities of long-term debt |
|
|
|
|
|
(24,000) |
|
|
|
|
|
|
|
|
(522,090) |
|||||
|
Total long-term debt, net of current maturities |
|
|
|
|
$ |
10,555,568 |
|
|
|
|
|
|
|
$ |
9,812,335 |
|||||
(1) The maturity date represents the anticipated repayment date for each issuance.
The table below reflects cash and non-cash interest expense amounts recognized by debt instrument for the periods presented:
(1) The 2018 Term Loan has a blended rate of 3.464% which includes the impact of the interest rate swaps entered into in 2019 which swapped $1.95 billion of notional value accruing interest at one month LIBOR plus 175 basis points for a fixed rate of 3.78% per annum through the maturity date of the 2018 Term Loan. Excluding the impact of the interest rate swaps, the 2018 Term Loan was accruing interest at 1.93% as of June 30, 2020.
(2) The 2014-1C Tower Securities, which was repaid September 13, 2019, accrued interest at 2.898%. The 2014-2C Tower Securities accrue interest at 3.869%.
Revolving Credit Facility under the Senior Credit Agreement
During the three months ended June 30, 2020, the Company borrowed $15.0 million and repaid $500.0 million of the outstanding balance under the Revolving Credit Facility. During the six months ended June 30, 2020, the Company borrowed $515.0 million and repaid $1.0 billion of the outstanding balance under the Revolving Credit Facility. As of June 30, 2020, the Company had no amount outstanding under the $1.25 billion Revolving Credit Facility. In addition, SBA Senior Finance II was required to pay a commitment fee of 0.25% per annum on the amount of the unused commitment. As of June 30, 2020, SBA Senior Finance II was in compliance with the financial covenants contained in the Senior Credit Agreement.
As of the date of this filing, the Company had no amount outstanding under the Revolving Credit Facility.
Term Loan under the Senior Credit Agreement
During the three and six months ended June 30, 2020, the Company repaid an aggregate of $6.0 million and $12.0 million, respectively, of principal on the 2018 Term Loan. As of June 30, 2020, the 2018 Term Loan had a principal balance of $2.4 billion.
Secured Tower Revenue Securities
As of June 30, 2020, the entities that are borrowers on the mortgage loan (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. The sole asset of the Trust (defined below) consists of a non-recourse mortgage loan made in favor of the Borrowers.
2020 Tower Securities
On July 14, 2020, the Company, through a New York common law trust (the “Trust”), issued $750.0 million of 1.884% Secured Tower Revenue Securities Series 2020-1C which have an anticipated repayment date of January 9, 2026 and a final maturity date of July 11, 2050 (the “2020-1C Tower Securities”) and $600.0 million of 2.328% Secured Tower Revenue Securities Series 2020-2C which have an anticipated repayment date of January 11, 2028 and a final maturity date of July 9, 2052 (the “2020-2C Tower
Securities”) (collectively the “2020 Tower Securities”). The aggregate $1.35 billion of 2020 Tower Securities have a blended interest rate of 2.081% and a weighted average life through the anticipated repayment date of 6.4 years. Net proceeds from this offering were used to repay the entire aggregate principal amount of the 2015-1C Tower Securities ($500.0 million) and the 2016-1C Tower Securities ($700.0 million). The remaining net proceeds were used for general corporate purposes. The Company has incurred deferred financing fees of $13.6 million to date in relation to this transaction which are being amortized through the anticipated repayment date of the 2020 Tower Securities.
In addition, to satisfy certain risk retention requirements of Regulation RR promulgated under the Exchange Act, SBA Guarantor, LLC, a wholly owned subsidiary, purchased $71.1 million of Secured Tower Revenue Securities Series 2020-2R issued by the Trust. These securities have an anticipated repayment date of January 11, 2028 and a final maturity date of July 9, 2052 (the “2020-2R Tower Securities”). The fixed interest rate on the 2020-2R Tower Securities is 4.336% per annum, payable monthly. Principal and interest payments made on the 2020-2R Tower Securities eliminate in consolidation.
Senior Notes
2014 Senior Notes
On February 20, 2020, the Company redeemed the entire $750.0 million balance of the 2014 Senior Notes with proceeds from the 2020 Senior Notes (defined below). In addition, the Company paid a $9.1 million call premium and expensed $7.7 million for the write-off of the original issue discount and financing fees related to the redemption of the 2014 Senior Notes which are reflected in loss from extinguishment of debt on the Consolidated Statement of Operations.
2020 Senior Notes
On February 4, 2020, the Company issued $1.0 billion of unsecured senior notes at par value (the “2020-1 Senior Notes”). On May 26, 2020, the Company issued $500.0 million of additional unsecured senior notes under the same indenture at 99.500% of par value (the “2020-2 Senior Notes”). These notes, collectively the “2020 Senior Notes,” accrue interest at a rate of 3.875% per annum and are due February 15, 2027. Interest on the 2020 Senior Notes is due semi-annually on February 15 and August 15 of each year, beginning on August 15, 2020. Net proceeds from these offerings were used to redeem all of the outstanding principal amount of the 2014 Senior Notes, repay amounts outstanding under the Revolving Credit Facility, and for general corporate purposes. The Company incurred financing fees of $17.3 million to date in relation to these transactions, which are being amortized through the maturity date.
The 2020 Senior Notes are subject to redemption in whole or in part on or after February 15, 2023 at the redemption prices set forth in the indenture agreement plus accrued and unpaid interest. Prior to February 15, 2023, the Company may, at its option, redeem up to 35% of the aggregate principal amount of the 2020 Senior Notes originally issued at a redemption price of 103.875% of the principal amount of the 2020 Senior Notes to be redeemed on the redemption date plus accrued and unpaid interest with the net proceeds of certain equity offerings. The Company may redeem the 2020 Senior Notes during the twelve-month period beginning on the following dates at the following redemption prices: February 15, 2023 at 101.938%, February 15, 2024 at 100.969%, or February 15, 2025 until maturity at 100.000%, of the principal amount of the 2020 Senior Notes to be redeemed on the redemption date plus accrued and unpaid interest.
11.SHAREHOLDERS’ EQUITY
Common Stock Equivalents
The Company has outstanding stock options, time-based restricted stock units (“RSUs”), and performance-based restricted stock units (“PSUs”) which were considered in the Company’s diluted earnings per share calculation (see Note 15).
Stock Repurchases
The Company’s Board of Directors authorizes the Company to purchase, from time to time, outstanding Class A common stock through open market repurchases in compliance with Rule 10b-18 under the Exchange Act and/or in privately negotiated transactions at management’s discretion based on market and business conditions, applicable legal requirements and other factors. Once authorized, the repurchase plan has no time deadline and will continue until otherwise modified or terminated by the Company’s Board of Directors at any time in its sole discretion. Shares repurchased are retired. As of the date of this filing, the Company had $424.3 million of authorization remaining under the current stock repurchase plan.
The following is a summary of the Company’s share repurchases:
|
|
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|
|
|
|
|
|
|
|
For the three months |
|
For the six months |
||||||||
|
|
|
ended June 30, |
|
ended June 30, |
||||||||
|
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total number of shares purchased (in millions) (1) |
|
|
— |
|
|
0.5 |
|
|
0.8 |
|
|
0.5 |
|
Average price paid per share (1) |
|
$ |
— |
|
$ |
204.06 |
|
$ |
242.86 |
|
$ |
204.06 |
|
Total price paid (in millions) (1) |
|
$ |
— |
|
$ |
94.6 |
|
$ |
200.0 |
|
$ |
94.6 |
(1) Amounts are calculated based on the trade date. For the six months ended June 30, 2020, this differs from the Consolidated Statements of Cash Flows which calculate share repurchases based on the settlement date and includes an additional $3.3 million spent to repurchase 13,870 shares which settled on January 2, 2020.
Dividends
As of June 30, 2020, the Company paid the following cash dividends:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payable to Shareholders |
|
|
|
|
|
|
|
|
|
of Record At the Close |
|
Cash Paid |
|
Aggregate Amount |
|
|
|
Date Declared |
|
of Business on |
|
Per Share |
|
Paid |
|
Date Paid |
|
|
|
|
|
|
|
|
|
|
|
February 20, 2020 |
|
March 10, 2020 |
|
$0.465 |
|
$52.2 million |
|
March 26, 2020 |
|
May 5, 2020 |
|
May 28, 2020 |
|
$0.465 |
|
$52.0 million |
|
June 18, 2020 |
Subsequent to June 30, 2020, the Company declared the following cash dividends:
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payable to Shareholders |
|
Cash to |
|
|
|
|
|
of Record At the Close |
|
be Paid |
|
|
|
Date Declared |
|
of Business on |
|
Per Share |
|
Date to be Paid |
|
|
|
|
|
|
|
|
|
August 3, 2020 |
|
August 25, 2020 |
|
$0.465 |
|
September 22, 2020 |
12.STOCK-BASED COMPENSATION
Commencing with the 2020 equity award, the Company modified the type of equity granted to certain employees to align long-term compensation with Company performance. Under the new structure, the Company continued to issue RSUs; however, RSUs will now vest ratably over three years rather than four years. The Company further replaced stock options with PSUs which will cliff vest at the end of three years. PSUs have performance metrics for which threshold, target, and maximum parameters are established at the time of the grant. The performance metrics are used to calculate the number of shares that will be issuable when the awards vest, which may range from zero to 200% of the target amounts. At the end of each three year performance period, the number of shares that vest will depend on the results achieved against the pre-established performance metrics. The Company recognizes compensation expense for RSUs and PSUs on a straight-line basis over the vesting period; however, compensation expense related to certain PSUs are subject to adjustment on performance relative to the established targets. Furthermore, effective with the 2020 grant, RSUs and PSUs will accrue dividend equivalents prior to vesting, which will be paid out only in respect to shares that actually vest.
On February 25, 2020, the Company’s 2010 Performance and Equity Incentive Plan (the “2010 Plan”) expired by its terms. On May 14, 2020, the Company’s shareholders approved the 2020 Performance and Equity Incentive Plan (the “2020 Plan”) which provides for the issuance of a maximum of 3.0 million shares of the Company’s Class A common stock (of which approximately 3.0 million shares remain available for future issuance as of June 30, 2020). The 2020 Plan also provides for the issuance of additional shares of Class A common stock (a) subject to awards granted under the 2010 Plan that may become available for issuance or reissuance, as applicable, under the 2020 Plan if such awards are forfeited or are settled in cash or otherwise expire or terminate without the delivery of the shares or (b) which become issuable under the 2020 Plan by reason of any stock dividend, stock split, recapitalization or other similar transaction effected without the receipt of consideration which results in an increase in the number of outstanding shares of Class A common stock.
Stock Options
The Company records compensation expense for employee stock options based on the estimated fair value of the options on the date of grant using the Black-Scholes option-pricing model with the assumptions included in the table below. The Company uses a combination of historical data and historical volatility to establish the expected volatility, as well as to estimate the expected option
life. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for the estimated life of the option. The following assumptions were used to estimate the fair value of options granted using the Black-Scholes option-pricing model:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six months ended |
|||
|
|
|
|
|
|
|
June 30, |
|||
|
|
|
|
|
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
Risk free interest rate |
|
|
|
|
|
1.66% |
|
|
1.84% - 2.47% |
|
Dividend yield |
|
|
|
|
|
1.3% |
|
|
1.3% |
|
Expected volatility |
|
|
|
|
|
20% |
|
|
20% |
|
Expected lives |
|
|
|
|
|
4.6 years |
|
|
4.6 years |
The following table summarizes the Company’s activities with respect to its stock option plans for the six months ended June 30, 2020 as follows (dollars and shares in thousands, except for per share data):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted- |
|
Weighted-Average |
|
|
|
|
|
|
|
|
|
Average |
|
Remaining |
|
|
|
|
|
|
|
Number |
|
Exercise Price |
|
Contractual |
|
Aggregate |
||
|
|
|
of Shares |
|
Per Share |
|
Life (in years) |
|
Intrinsic Value |
||
|
Outstanding at December 31, 2019 |
|
4,507 |
|
$ |
133.68 |
|
|
|
|
|
|
Granted |
|
10 |
|
$ |
240.99 |
|
|
|
|
|
|
Exercised |
|
(1,164) |
|
$ |
109.72 |
|
|
|
|
|
|
Forfeited/canceled |
|
(19) |
|
$ |
171.25 |
|
|
|
|
|
|
Outstanding at June 30, 2020 |
|
3,334 |
|
$ |
142.15 |
|
4.2 |
|
$ |
519,323 |
|
Exercisable at June 30, 2020 |
|
1,821 |
|
$ |
124.40 |
|
3.5 |
|
$ |
316,048 |
|
Unvested at June 30, 2020 |
|
1,513 |
|
$ |
163.53 |
|
5.1 |
|
$ |
203,275 |
The weighted-average per share fair value of options granted during the six months ended June 30, 2020 was $41.09. The total intrinsic value for options exercised during the six months ended June 30, 2020 was $211.2 million.
Restricted Stock Units and Performance-Based Restricted Stock Units
The following table summarizes the Company’s RSU and PSU activity for the six months ended June 30, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSUs |
|
PSUs |
||||||
|
|
|
|
|
Weighted-Average |
|
|
|
Weighted-Average |
||
|
|
|
Number of |
|
Grant Date Fair |
|
Number of |
|
Grant Date Fair |
||
|
|
|
Shares |
|
Value per Share |
|
Shares |
|
Value per Share |
||
|
|
|
(in thousands) |
|
|
|
|
(in thousands) |
|
|
|
|
Outstanding at December 31, 2019 |
|
313 |
|
$ |
152.98 |
|
— |
|
$ |
— |
|
Granted (1) |
|
98 |
|
$ |
290.67 |
|
149 |
|
$ |
375.81 |
|
Vested |
|
(129) |
|
$ |
141.90 |
|
— |
|
$ |
— |
|
Forfeited/canceled |
|
(5) |
|
$ |
190.95 |
|
— |
|
$ |
— |
|
Outstanding at June 30, 2020 |
|
277 |
|
$ |
206.26 |
|
149 |
|
$ |
375.81 |
(1)PSUs represent the target number of shares granted that are issuable at the end of the three year performance period. Fair value for a portion of the PSUs was calculated using a Monte Carlo simulation model.
13.INCOME TAXES
The primary reasons for the difference between the Company’s effective tax rate and the U.S. statutory rate are the Company’s REIT election and the Company’s full valuation allowance on the net deferred tax assets of the U.S. taxable REIT subsidiary (“TRS”). The TRS has concluded that it is not more likely than not that its deferred tax assets will be realized and has recorded a full valuation allowance. A foreign tax provision is recognized because certain foreign subsidiaries of the Company have profitable operations or are in a net deferred tax liability position.
The Company elected to be taxed as a REIT commencing with its taxable year ended December 31, 2016. As a REIT, the Company generally will be entitled to a deduction for dividends that it pays, and therefore, not subject to U.S. federal corporate income tax on that portion of its net income that it distributes to its shareholders. As a REIT, the Company will continue to pay U.S. federal income tax on earnings, if any, from assets and operations held through its TRSs. These assets and operations currently consist
primarily of the Company’s site development services and its international operations. The Company’s international operations would continue to be subject, as applicable, to foreign taxes in the jurisdictions in which those operations are located. The Company may also be subject to a variety of taxes, including payroll taxes and state, local, and foreign income, property, and other taxes on its assets and operations. The Company’s determination as to the timing and amount of future dividend distributions will be based on a number of factors, including REIT distribution requirements, its existing federal net operating losses (“NOLs”) of approximately $652.9 million as of December 31, 2019, the Company’s financial condition, earnings, debt covenants, and other possible uses of such funds. The Company may use these NOLs to offset its 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.
14.SEGMENT DATA
The Company operates principally in two business segments: site leasing and site development. The Company’s site leasing business includes two reportable segments, domestic site leasing and international site leasing. The Company’s business segments are strategic business units that offer different services. They are managed separately based on the fundamental differences in their operations. The site leasing segment includes results of the managed and sublease businesses. The site development segment includes the results of both consulting and construction related activities. The Company’s Chief Operating Decision Maker utilizes segment operating profit and operating income as his two measures of segment profit in assessing performance and allocating resources at the reportable segment level. The Company has applied the aggregation criteria to operations within the international site leasing segment on a basis that is consistent with management’s review of information and performance evaluations of the individual markets in this region.
Revenues, cost of revenues (exclusive of depreciation, accretion and amortization), capital expenditures (including assets acquired through the issuance of shares of the Company’s Class A common stock) and identifiable assets pertaining to the segments in which the Company continues to operate are presented below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic Site |
|
Int'l Site |
|
Site |
|
|
|
|
|||||
|
|
|
Leasing |
|
Leasing |
|
Development |
|
Other |
|
Total |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended June 30, 2020 |
|
(in thousands) |
|||||||||||||
|
Revenues |
|
$ |
388,018 |
|
$ |
94,385 |
|
$ |
24,823 |
|
$ |
— |
|
$ |
507,226 |
|
Cost of revenues (2) |
|
|
64,093 |
|
|
27,505 |
|
|
19,904 |
|
|
— |
|
|
111,502 |
|
Operating profit |
|
|
323,925 |
|
|
66,880 |
|
|
4,919 |
|
|
— |
|
|
395,724 |
|
Selling, general, and administrative expenses |
|
|
25,233 |
|
|
9,035 |
|
|
4,494 |
|
|
10,326 |
|
|
49,088 |
|
Acquisition and new business initiatives |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
related adjustments and expenses |
|
|
3,004 |
|
|
1,630 |
|
|
— |
|
|
— |
|
|
4,634 |
|
Asset impairment and decommission costs |
|
|
5,342 |
|
|
900 |
|
|
— |
|
|
— |
|
|
6,242 |
|
Depreciation, amortization and accretion |
|
|
134,569 |
|
|
42,011 |
|
|
597 |
|
|
1,529 |
|
|
178,706 |
|
Operating income (loss) |
|
|
155,777 |
|
|
13,304 |
|
|
(172) |
|
|
(11,855) |
|
|
157,054 |
|
Other expense (principally interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and other income (expense)) |
|
|
|
|
|
|
|
|
|
|
|
(134,101) |
|
|
(134,101) |
|
Income before income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,953 |
|
Cash capital expenditures (3) |
|
|
38,507 |
|
|
17,201 |
|
|
282 |
|
|
1,202 |
|
|
57,192 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended June 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
369,180 |
|
$ |
89,823 |
|
$ |
41,144 |
|
$ |
— |
|
$ |
500,147 |
|
Cost of revenues (2) |
|
|
65,576 |
|
|
27,884 |
|
|
30,988 |
|
|
— |
|
|
124,448 |
|
Operating profit |
|
|
303,604 |
|
|
61,939 |
|
|
10,156 |
|
|
— |
|
|
375,699 |
|
Selling, general, and administrative expenses |
|
|
27,193 |
|
|
8,310 |
|
|
6,885 |
|
|
13,136 |
|
|
55,524 |
|
Acquisition and new business initiatives |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
related adjustments and expenses |
|
|
1,272 |
|
|
1,267 |
|
|
— |
|
|
— |
|
|
2,539 |
|
Asset impairment and decommission costs |
|
|
8,815 |
|
|
805 |
|
|
— |
|
|
— |
|
|
9,620 |
|
Depreciation, amortization and accretion |
|
|
131,413 |
|
|
38,194 |
|
|
678 |
|
|
1,279 |
|
|
171,564 |
|
Operating income (loss) |
|
|
134,911 |
|
|
13,363 |
|
|
2,593 |
|
|
(14,415) |
|
|
136,452 |
|
Other expense (principally interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and other income (expense)) |
|
|
|
|
|
|
|
|
|
|
|
(88,871) |
|
|
(88,871) |
|
Income before income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47,581 |
|
Cash capital expenditures (3) |
|
|
113,200 |
|
|
18,411 |
|
|
883 |
|
|
624 |
|
|
133,118 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic Site |
|
Int'l Site |
|
Site |
|
|
|
|
|||||
|
|
|
Leasing |
|
Leasing |
|
Development |
|
Other |
|
Total |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six months ended June 30, 2020 |
|
(in thousands) |
|||||||||||||
|
Revenues |
|
$ |
774,361 |
|
$ |
200,397 |
|
$ |
49,534 |
|
$ |
— |
|
$ |
1,024,292 |
|
Cost of revenues (2) |
|
|
127,997 |
|
|
59,400 |
|
|
39,620 |
|
|
— |
|
|
227,017 |
|
Operating profit |
|
|
646,364 |
|
|
140,997 |
|
|
9,914 |
|
|
— |
|
|
797,275 |
|
Selling, general, and administrative expenses |
|
|
52,555 |
|
|
16,966 |
|
|
8,950 |
|
|
20,233 |
|
|
98,704 |
|
Acquisition and new business initiatives |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
related adjustments and expenses |
|
|
5,601 |
|
|
2,832 |
|
|
— |
|
|
— |
|
|
8,433 |
|
Asset impairment and decommission costs |
|
|
16,168 |
|
|
4,429 |
|
|
— |
|
|
— |
|
|
20,597 |
|
Depreciation, amortization and accretion |
|
|
268,375 |
|
|
88,623 |
|
|
1,213 |
|
|
3,074 |
|
|
361,285 |
|
Operating income (loss) |
|
|
303,665 |
|
|
28,147 |
|
|
(249) |
|
|
(23,307) |
|
|
308,256 |
|
Other expense (principally interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and other income (expense)) |
|
|
|
|
|
|
|
|
|
|
|
(479,774) |
|
|
(479,774) |
|
Loss before income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(171,518) |
|
Cash capital expenditures (3) |
|
|
139,813 |
|
|
43,634 |
|
|
1,064 |
|
|
2,396 |
|
|
186,907 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six months ended June 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
732,017 |
|
$ |
179,169 |
|
$ |
82,254 |
|
$ |
— |
|
$ |
993,440 |
|
Cost of revenues (2) |
|
|
130,690 |
|
|
55,485 |
|
|
62,089 |
|
|
— |
|
|
248,264 |
|
Operating profit |
|
|
601,327 |
|
|
123,684 |
|
|
20,165 |
|
|
— |
|
|
745,176 |
|
Selling, general, and administrative expenses |
|
|
56,086 |
|
|
13,998 |
|
|
12,591 |
|
|
23,808 |
|
|
106,483 |
|
Acquisition and new business initiatives |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
related adjustments and expenses |
|
|
1,980 |
|
|
2,996 |
|
|
— |
|
|
— |
|
|
4,976 |
|
Asset impairment and decommission costs |
|
|
12,449 |
|
|
2,942 |
|
|
— |
|
|
— |
|
|
15,391 |
|
Depreciation, amortization and accretion |
|
|
261,657 |
|
|
76,989 |
|
|
1,240 |
|
|
2,716 |
|
|
342,602 |
|
Operating income (loss) |
|
|
269,155 |
|
|
26,759 |
|
|
6,334 |
|
|
(26,524) |
|
|
275,724 |
|
Other expense (principally interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and other income (expense)) |
|
|
|
|
|
|
|
|
|
|
|
(191,947) |
|
|
(191,947) |
|
Income before income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
83,777 |
|
Cash capital expenditures (3) |
|
|
174,710 |
|
|
47,928 |
|
|
1,808 |
|
|
1,199 |
|
|
225,645 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic Site |
|
Int'l Site |
|
Site |
|
|
|
|
|||||
|
|
|
Leasing |
|
Leasing |
|
Development |
|
Other (1) |
|
Total |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
(in thousands) |
|||||||||||||
|
As of June 30, 2020 |
|
$ |
5,996,130 |
|
$ |
2,893,042 |
|
$ |
50,702 |
|
$ |
450,665 |
|
$ |
9,390,539 |
|
As of December 31, 2019 |
|
$ |
6,157,511 |
|
$ |
3,381,448 |
|
$ |
81,772 |
|
$ |
139,210 |
|
$ |
9,759,941 |
(1)Assets in Other consist primarily of general corporate assets and short-term investments.
(2)Excludes depreciation, amortization, and accretion.
(3)Includes cash paid for capital expenditures and acquisitions and financing leases.
Other than Brazil, no foreign country represented a material amount of the Company’s total revenues in any of the periods presented. Site leasing revenue in Brazil was $115.3 million and $111.9 million for the six months ended June 30, 2020 and 2019, respectively. Total long-lived assets in Brazil were $1.0 billion and $1.4 billion as of June 30, 2020 and December 31, 2019, respectively.
15.EARNINGS PER SHARE
Basic earnings per share was computed by dividing net income (loss) attributable to SBA Communications Corporation by the weighted-average number of shares of Common Stock outstanding for each respective period. Diluted earnings per share was calculated by dividing net income (loss) attributable to SBA Communications Corporation by the weighted-average number of shares of Common Stock outstanding adjusted for any dilutive Common Stock equivalents, including unvested RSUs, PSUs, and shares issuable upon exercise of stock options as determined under the “Treasury Stock” method.
The following table sets forth basic and diluted net income (loss) per common share attributable to common shareholders for the three and six months ended June 30, 2020 and 2019 (in thousands, except per share data):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months |
|
For the six months |
||||||||
|
|
|
ended June 30, |
|
ended June 30, |
||||||||
|
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
||||
|
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to SBA |
|
|
|
|
|
|
|
|
|
|
|
|
|
Communications Corporation |
|
$ |
22,813 |
|
$ |
31,973 |
|
$ |
(104,247) |
|
$ |
57,962 |
|
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted-average shares outstanding |
|
|
111,738 |
|
|
113,205 |
|
|
111,823 |
|
|
112,958 |
|
Dilutive impact of stock options and restricted shares |
|
|
1,896 |
|
|
1,735 |
|
|
— |
|
|
1,685 |
|
Diluted weighted-average shares outstanding |
|
|
113,634 |
|
|
114,940 |
|
|
111,823 |
|
|
114,643 |
|
Net income (loss) per common share attributable to SBA |
|
|
|
|
|
|
|
|
|
|
|
|
|
Communications Corporation: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.20 |
|
$ |
0.28 |
|
$ |
(0.93) |
|
$ |
0.51 |
|
Diluted |
|
$ |
0.20 |
|
$ |
0.28 |
|
$ |
(0.93) |
|
$ |
0.51 |
For the three months ended June 30, 2020, the diluted weighted average number of common shares outstanding excluded an additional 3,467 shares issuable upon exercise of the Company’s stock options because the impact would be anti-dilutive.
For the six months ended June 30, 2020, all potential common stock equivalents, including 3.3 million shares of stock options outstanding, 0.3 million shares of RSUs outstanding, and 0.1 million shares of PSUs outstanding, were excluded as the effect would be anti-dilutive.
For the three and six months ended June 30, 2019, the diluted weighted average number of common shares outstanding excluded an additional 0.7 million shares issuable upon exercise of the Company’s stock options because the impact would be anti-dilutive.
16. REDEEMABLE NONCONTROLLING INTERESTS
In August 2019, the Company acquired an additional interest of a previously unconsolidated joint venture in South Africa which operated under the name Atlas Tower South Africa (“Atlas SA”). As a result of the transaction, the Company has consolidated the results of the entity into its financial statements. As of June 30, 2020, the fair market value of the 6% noncontrolling interest was $14.3 million. The fair value assigned to the redeemable noncontrolling interest is estimated using Level 3 inputs.
In connection with the acquisition of the additional interest in Atlas SA, the parties agreed to both a put option exercisable by the noncontrolling interest holder and a call option exercisable by the Company. The put option allows the noncontrolling interest holder to sell its 6% noncontrolling interest to the Company for an amount to be determined using a formulaic approach. The call option allows the Company to purchase the remaining 6% minority interest using the same formulaic approach. Both the put and call options can be exercised on or after August 30, 2020. As the put option is outside of the Company’s control, the estimated redemption value of the minority interest is presented as a redeemable noncontrolling interest outside of permanent equity on the Consolidated Balance Sheets.
The Company allocates income and losses to the noncontrolling interest holder based on the applicable membership interest percentage. At each reporting period, the redeemable noncontrolling interest is recognized at the higher of (1) the initial carrying amount of the noncontrolling interest as adjusted for accumulated income or loss attributable to the noncontrolling interest holder, or (2) the contractually-defined redemption value as of the balance sheet date. Adjustments to the carrying amount of redeemable noncontrolling interest are charged against retained earnings (or additional paid-in capital if there are no retained earnings).
The components of the redeemable noncontrolling interest are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended |
|
For the six months ended |
||
|
|
|
June 30, 2020 |
|
June 30, 2020 |
||
|
|
|
|
|
|
||
|
Beginning balance |
|
$ |
14,478 |
|
$ |
16,052 |
|
Foreign currency translation adjustments |
|
|
180 |
|
|
(1,004) |
|
Adjustment to fair value |
|
|
(614) |
|
|
(130) |
|
Net (loss) income attributable to noncontrolling interests |
|
|
305 |
|
|
(569) |
|
Ending balance |
|
$ |
14,349 |
|
$ |
14,349 |
17.DERIVATIVES AND HEDGING ACTIVITIES
The Company enters into interest rate swaps to hedge the future interest expense from variable rate debt and reduce the Company’s exposure to fluctuations in interest rates. The Company has an interest rate swap which has been designated as a cash flow hedge. As of June 30, 2020, the hedge remains highly effective; therefore, subsequent changes in the fair value are recorded in Accumulated other comprehensive loss, net.
The Company has interest rate swaps that are not designated as cash flow hedges. On a quarterly basis, the Company re-evaluates the fair value of the interest rate swaps using Level 2 inputs, and any changes in the fair value are recorded as gains or losses on the interest rate swap in Other income (expense), net.
Additionally, the Company is exposed to counterparty credit risk to the extent that a counterparty fails to meet the terms of a contract. The Company’s exposure is limited to the current value of the contract at the time the counterparty fails to perform.
The disclosures below provide additional information about the effects of these interest rate swaps on the Consolidated Balance Sheets, Consolidated Statements of Operations, Consolidated Statements of Comprehensive Income (Loss), and Consolidated Statements of Shareholders’ Deficit. The cash flows associated with all of these activities are reported in Net cash provided by operating activities on the Consolidated Statements of Cash Flows.
The table below outlines the effects of the Company’s interest rate swaps on the Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value as of |
||||
|
|
|
|
Balance Sheet |
|
June 30, |
|
December 31, |
||
|
|
|
|
Location |
|
2020 |
|
2019 |
||
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives Designated as Hedging Instruments |
|
|
|
|
(in thousands) |
||||
|
Interest rate swap agreement in a fair value liability position |
|
|
Other long-term liabilities |
|
$ |
162,260 |
|
$ |
42,698 |
|
Derivatives Not Designated as Hedging Instruments |
|
|
|
|
|
|
|
|
|
|
Interest rate swap agreements in a fair value asset position |
|
|
Other assets |
|
$ |
116,451 |
|
$ |
47,583 |
|
Interest rate swap agreements in a fair value liability position |
|
|
Other long-term liabilities |
|
$ |
113,259 |
|
$ |
47,583 |
The table below outlines the effects of the Company’s derivatives on the Consolidated Statements of Operations and Consolidated Statements of Shareholders’ Deficit for the three and six month periods ended June 30, 2020 and 2019.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months |
|
For the six months |
||||||||
|
|
|
ended June 30, |
|
ended June 30, |
||||||||
|
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
||||
|
|
|
|
|
|
|
|
|
|
||||
|
Cash Flow Hedge - Interest Rate Swap Agreement |
|
(in thousands) |
||||||||||
|
Change in fair value recorded in Accumulated other comprehensive loss, net |
|
$ |
(17,326) |
|
$ |
— |
|
$ |
(125,208) |
|
$ |
— |
|
Amount recognized in Non-cash interest expense |
|
$ |
(2,822) |
|
$ |
— |
|
$ |
(5,646) |
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives Not Designated as Hedges - Interest Rate Swap Agreements |
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount reclassified from Accumulated other comprehensive |
|
|
|
|
|
|
|
|
|
|
|
|
|
loss, net into Non-cash interest expense |
|
$ |
4,642 |
|
$ |
— |
|
$ |
9,285 |
|
$ |
— |
|
Change in fair value recorded in Other income (expense), net |
|
$ |
(774) |
|
$ |
— |
|
$ |
3,192 |
|
$ |
— |
On August 6, 2020, the Company terminated an interest rate swap designated as a hedged instrument in exchange for a payment of $176.2 million. On the same date, the Company entered into an interest rate swap with $1.95 billion of notional value receiving interest at one month LIBOR for a fixed rate of 0.1239% per annum settled monthly through the maturity date of the 2018 Term Loan.
18. CONCENTRATION OF CREDIT RISK
The Company’s credit risks consist primarily of accounts receivable with national, regional, and local wireless service providers and federal and state government agencies. The Company performs periodic credit evaluations of its customers’ financial
condition and provides allowances for doubtful accounts, as required, based upon factors surrounding the credit risk of specific customers, historical trends, and other information. The Company generally does not require collateral.
On April 1, 2020, T-Mobile finalized a merger with Sprint and now operates as T-Mobile. For the three months ended June 30, 2020, T-Mobile represented 40.4% of the Company’s total domestic site leasing revenue and 53.0% of the Company’s site development revenue. For the six months ended June 30, 2020, T-Mobile represented 40.8% of the Company’s total domestic site leasing revenue and 53.8% of the Company’s site development revenue.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
We are a leading independent owner and operator of wireless communications infrastructure, including 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 South America, Central America, Canada, and South Africa. Our primary business line is our site leasing business, which contributed 98.8% of our total segment operating profit for the six months ended June 30, 2020. 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 June 30, 2020, we owned 32,610 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. 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
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, South America, Central America, Canada, and South Africa. As of June 30, 2020, (1) no U.S. state or territory accounted for more than 10% of our total tower portfolio by tower count, and (2) no U.S. state or territory accounted for more than 10% of our total revenues for the six months ended June 30, 2020. In addition, as of June 30, 2020, approximately 30.4% of our total towers are located in Brazil and less than 4% of our total towers are located in any of our other international markets (each country is considered a market). We derive site leasing revenues primarily from wireless service provider tenants, including T-Mobile, AT&T, Verizon Wireless, Oi S.A., Telefonica, Claro, and TIM. 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 years to 10 years with multiple five 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 South Africa and our Central and South American markets typically have an initial term of 10 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 and South Africa escalate in accordance with a standard cost of living index. Site leases in South America typically provide for a fixed rental amount and a pass through charge for the underlying rent related to ground leases and other property interests.
Cost of site leasing revenue primarily consists of:
Cash and non-cash rental expense on ground leases and other underlying property interests;
Property taxes;
Site maintenance and monitoring costs (exclusive of employee related costs);
Utilities;
Property insurance; and
Lease initial direct cost amortization.
In the United States and our international markets, ground leases and other property interests are generally for an initial term of five years to 10 years with multiple renewal periods, at our option, and provide for rent escalators which typically average 2-3% annually, or in our South American markets and South Africa, adjust in accordance with a standard cost of living index. As of June 30, 2020, approximately 71% of our tower structures were located on parcels of land that we own, land subject to perpetual easements, or parcels of land in which we have a leasehold interest that extends beyond 20 years. For any given tower, costs are relatively fixed over a monthly or an annual time period. As such, operating costs for owned towers do not generally increase as a result of adding additional customers to the tower. The amount of property taxes varies from site to site depending on the taxing jurisdiction and the height and age of the tower. The ongoing maintenance requirements are typically minimal and include replacing lighting systems, painting a tower, or upgrading or repairing an access road or fencing.
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 and other property interests, tenant leases, and tower-related expenses are 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 Brazil, Canada, Chile, and South Africa significantly all of our revenue, expenses, and capital expenditures, including tenant leases, ground leases and other property interests, and other tower-related expenses are denominated in local currency. In Colombia, Argentina, and Peru, our revenue, expenses, and capital expenditures, including tenant leases, ground leases and other property interests, and other tower-related expenses are denominated in a mix of local currency and U.S. dollars.
As indicated in the table below, our site leasing business generates substantially all of our total segment operating profit. For information regarding our operating segments, see Note 14 of our condensed notes to consolidated financial statements included in this quarterly report.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended |
|
For the six months ended |
||||||||
|
|
|
June 30, |
|
June 30, |
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment operating profit as a percentage of total |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic site leasing |
|
|
81.9% |
|
|
80.8% |
|
|
81.1% |
|
|
80.7% |
|
International site leasing |
|
|
16.9% |
|
|
16.5% |
|
|
17.7% |
|
|
16.6% |
|
Total site leasing |
|
|
98.8% |
|
|
97.3% |
|
|
98.8% |
|
|
97.3% |
We believe that the site leasing business continues to be attractive due to its long-term contracts, built-in rent escalators, high operating margins, and low customer churn (which refers to when a customer does not renew its lease or cancels its lease prior to the end of its term) other than in connection with customer consolidation or cessation of a particular technology. We believe that over the long-term, site leasing revenues will continue to grow as wireless service providers lease additional antenna space on our towers due to increasing minutes of network use and data transfer, network expansion and network coverage requirements. During the remainder of 2020, we expect organic site leasing revenue in both our domestic and international segments to increase over 2019 levels due in part to wireless carriers deploying unused spectrum. 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 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, we have historically experienced low tenant lease terminations as a percentage of revenue other than in connection with customer consolidation or cessations of a specific technology.
Site Development
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 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 on existing infrastructure; (4) support in 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, market, and project offices. The market offices are responsible for all site development operations.
For information regarding our operating segments, see Note 14 of our condensed notes to consolidated financial statements in this quarterly report.
Customers
We lease tower space to and perform site development services for all of the large U.S. wireless service providers. In both our site leasing and site development businesses, we work with large national providers and smaller regional, local, or private operators. Internationally, we lease tower space to all major service providers in South America, Central America, Canada, and South Africa.
On April 1, 2020, T-Mobile finalized a merger with Sprint and now operates as T-Mobile. For the three months ended June 30, 2020, T-Mobile represented 40.4% of our total domestic site leasing revenue and 53.0% of our site development revenue. For the six months ended June 30, 2020, T-Mobile represented 40.8% of our total domestic site leasing revenue and 53.8% of our site development revenue.
Capital Allocation Strategy
Our capital allocation strategy is aimed at increasing shareholder value through investment in quality assets that meet our return criteria, stock repurchases when we believe our stock price is below its intrinsic value and by returning cash generated by our operations in the form of cash dividends. While the addition of a cash dividend to our capital allocation strategy has provided us with a new tool to return value to our shareholders, we will also continue to make investments focused on increasing Adjusted Funds From Operations per share. To achieve this, we expect to continue to deploy capital to portfolio growth and stock repurchases, subject to compliance with REIT distribution requirements, available funds and market conditions, while maintaining our target leverage levels. Key elements of our capital allocation strategy include:
Portfolio Growth. We intend to continue to grow our asset portfolio, domestically and internationally, primarily through tower acquisitions and the construction of new towers that meet our internal return on invested capital criteria.
Stock Repurchase Program. We currently utilize stock repurchases as part of our capital allocation policy when we believe our share price is below its intrinsic value. We believe that share repurchases, when purchased at the right price, will facilitate our goal of increasing our Adjusted Funds From Operations per share.
Dividend. In 2019, we added dividends as an additional component of our strategy of returning value to shareholders. We do not expect our dividend to require any changes in our leverage and, we believe, it will allow us to continue to focus on building and buying quality assets and opportunistically buying back our stock. While the timing and amount of future dividends will be subject to approval by our Board of Directors, we believe that our future cash flow generation will permit us to grow our cash dividend in the future.
COVID-19 Update
During the six months ended June 30, 2020, we experienced minimal impact to our business or results of operations from the coronavirus (COVID-19) pandemic. The extent to which COVID-19 could adversely affect our future business operations will depend on future developments such as the duration of the outbreak, new information on the severity of COVID-19, and methods taken to contain or treat the outbreak of COVID-19. While the full impact of COVID-19 is not yet known, we will continue to monitor this recent outbreak and the potential effects on our business.
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, 2019. 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.
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, as well as by eliminating the impact of the remeasurement of our intercompany loans.
Three Months Ended June 30, 2020 Compared to Three Months Ended June 30, 2019
Revenues and Segment Operating Profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended |
|
|
|
|
|
|
|
Constant |
|||||
|
|
|
June 30, |
|
Foreign |
|
Constant |
|
Currency |
|||||||
|
|
|
2020 |
|
2019 |
|
Currency Impact |
|
Currency Change |
|
% Change |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
(in thousands) |
|
|
|
||||||||||
|
Domestic site leasing |
|
$ |
388,018 |
|
$ |
369,180 |
|
$ |
— |
|
$ |
18,838 |
|
|
5.1% |
|
International site leasing |
|
|
94,385 |
|
|
89,823 |
|
|
(21,411) |
|
|
25,973 |
|
|
28.9% |
|
Site development |
|
|
24,823 |
|
|
41,144 |
|
|
— |
|
|
(16,321) |
|
|
(39.7%) |
|
Total |
|
$ |
507,226 |
|
$ |
500,147 |
|
$ |
(21,411) |
|
$ |
28,490 |
|
|
5.7% |
|
Cost of Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic site leasing |
|
$ |
64,093 |
|
$ |
65,576 |
|
$ |
— |
|
$ |
(1,483) |
|
|
(2.3%) |
|
International site leasing |
|
|
27,505 |
|
|
27,884 |
|
|
(6,880) |
|
|
6,501 |
|
|
23.3% |
|
Site development |
|
|
19,904 |
|
|
30,988 |
|
|
— |
|
|
(11,084) |
|
|
(35.8%) |
|
Total |
|
$ |
111,502 |
|
$ |
124,448 |
|
$ |
(6,880) |
|
$ |
(6,066) |
|
|
(4.9%) |
|
Operating Profit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic site leasing |
|
$ |
323,925 |
|
$ |
303,604 |
|
$ |
— |
|
$ |
20,321 |
|
|
6.7% |
|
International site leasing |
|
|
66,880 |
|
|
61,939 |
|
|
(14,531) |
|
|
19,472 |
|
|
31.4% |
|
Site development |
|
|
4,919 |
|
|
10,156 |
|
|
— |
|
|
(5,237) |
|
|
(51.6%) |
Revenues
Domestic site leasing revenues increased $18.8 million for the three months ended June 30, 2020, as compared to the prior year, primarily due to (1) revenues from 180 towers acquired and 28 towers built since April 1, 2019 and (2) 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.
International site leasing revenues increased $4.6 million for the three months ended June 30, 2020, as compared to the prior year. On a constant currency basis, international site leasing revenues increased $26.0 million. These changes were primarily due to (1) revenues from 2,294 towers acquired and 451 towers built since April 1, 2019 and (2) organic site leasing growth from new leases, amendments, and contractual escalators. Site leasing revenue in Brazil represented 10.8% of total site leasing revenue for the period. No other individual international market represented more than 4% of our total site leasing revenue.
Site development revenues decreased $16.3 million for the three months ended June 30, 2020, as compared to prior year, as a result of decreased carrier activity driven primarily by T-Mobile and Sprint.
Operating Profit
Domestic site leasing segment operating profit increased $20.3 million for the three months ended June 30, 2020, as compared to the prior year, primarily due to additional profit generated by (1) towers acquired and built since April 1, 2019 and organic site leasing growth as noted above, (2) continued control of our site leasing cost of revenue, and (3) the positive impact of our ground lease purchase program.
International site leasing segment operating profit increased $4.9 million for the three months ended June 30, 2020, as compared to the prior year. On a constant currency basis, international site leasing segment operating profit increased $19.5 million. These changes were primarily due to additional profit generated by (1) towers acquired and built since April 1, 2019 and organic site leasing growth as noted above, (2) continued control of our site leasing cost of revenue, and (3) the positive impact of our ground lease purchase program.
Site development segment operating profit decreased $5.2 million for the three months ended June 30, 2020, as compared to the prior year, as a result of decreased carrier activity driven primarily by T-Mobile and Sprint.
Selling, General, and Administrative Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended |
|
|
|
|
|
|
|
Constant |
|||||
|
|
|
June 30, |
|
Foreign |
|
Constant |
|
Currency |
|||||||
|
|
|
2020 |
|
2019 |
|
Currency Impact |
|
Currency Change |
|
% Change |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
|
|
||||||||||
|
Domestic site leasing |
|
$ |
25,233 |
|
$ |
27,193 |
|
$ |
— |
|
$ |
(1,960) |
|
|
(7.2%) |
|
International site leasing |
|
|
9,035 |
|
|
8,310 |
|
|
(1,451) |
|
|
2,176 |
|
|
26.2% |
|
Total site leasing |
|
$ |
34,268 |
|
$ |
35,503 |
|
$ |
(1,451) |
|
$ |
216 |
|
|
0.6% |
|
Site development |
|
|
4,494 |
|
|
6,885 |
|
|
— |
|
|
(2,391) |
|
|
(34.7%) |
|
Other |
|
|
10,326 |
|
|
13,136 |
|
|
— |
|
|
(2,810) |
|
|
(21.4%) |
|
Total |
|
$ |
49,088 |
|
$ |
55,524 |
|
$ |
(1,451) |
|
$ |
(4,985) |
|
|
(9.0%) |
Selling, general, and administrative expenses decreased $6.4 million for the three months ended June 30, 2020, as compared to the prior year. On a constant currency basis, selling, general, and administrative expenses decreased $5.0 million. These changes were primarily as a result of decreases in noncash compensation due to the acceleration of unrecognized stock compensation expense in the prior year related to the adoption of the retirement plan, back-office operating expenses, and travel related expenses. These decreases were partially offset by increases in personnel and other support related costs due in part to our continued international expansion and charitable contributions related to COVID-19 relief.
Acquisition and New Business Initiatives Related Adjustments and Expenses:
|
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|
|
|
|
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|
|
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|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended |
|
|
|
|
|
|
|
Constant |
|||||
|
|
|
June 30, |
|
Foreign |
|
Constant |
|
Currency |
|||||||
|
|
|
2020 |
|
2019 |
|
Currency Impact |
|
Currency Change |
|
% Change |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
|
|
||||||||||
|
Domestic site leasing |
|
$ |
3,004 |
|
$ |
1,272 |
|
$ |
— |
|
$ |
1,732 |
|
|
136.2% |
|
International site leasing |
|
|
1,630 |
|
|
1,267 |
|
|
(249) |
|
|
612 |
|
|
48.3% |
|
Total |
|
$ |
4,634 |
|
$ |
2,539 |
|
$ |
(249) |
|
$ |
2,344 |
|
|
92.3% |
Acquisition and new business initiatives related adjustments and expenses increased $2.1 million for the three months ended June 30, 2020, as compared to the prior year. On a constant currency basis, acquisition and new business initiatives related adjustments and expenses increased $2.3 million. These changes were primarily as a result of incremental costs incurred in support of new business initiatives.
Asset Impairment and Decommission Costs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended |
|
|
|
|
|
|
|
Constant |
|||||
|
|
|
June 30, |
|
Foreign |
|
Constant |
|
Currency |
|||||||
|
|
|
2020 |
|
2019 |
|
Currency Impact |
|
Currency Change |
|
% Change |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
|
|
||||||||||
|
Domestic site leasing |
|
$ |
5,342 |
|
$ |
8,815 |
|
$ |
— |
|
$ |
(3,473) |
|
|
(39.4%) |
|
International site leasing |
|
|
900 |
|
|
805 |
|
|
(282) |
|
|
377 |
|
|
46.8% |
|
Total |
|
$ |
6,242 |
|
$ |
9,620 |
|
$ |
(282) |
|
$ |
(3,096) |
|
|
(32.2%) |
Asset impairment and decommission costs decreased $3.4 million for the three months ended June 30, 2020, as compared to the prior year. On a constant currency basis, asset impairment and decommission costs decreased $3.1 million. These changes were primarily as a result of a $4.5 million decrease in the impairment charge recorded due to sites decommissioned in the second quarter of 2020 compared to the prior year period, partially offset by a $1.1 million increase in impairment charges resulting from our regular analysis of whether the future cash flows from certain towers are adequate to recover the carrying value of the investment in those towers.
Depreciation, Accretion, and Amortization Expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended |
|
|
|
|
|
|
|
Constant |
|||||
|
|
|
June 30, |
|
Foreign |
|
Constant |
|
Currency |
|||||||
|
|
|
2020 |
|
2019 |
|
Currency Impact |
|
Currency Change |
|
% Change |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
|
|
||||||||||
|
Domestic site leasing |
|
$ |
134,569 |
|
$ |
131,413 |
|
$ |
— |
|
$ |
3,156 |
|
|
2.4% |
|
International site leasing |
|
|
42,011 |
|
|
38,194 |
|
|
(9,548) |
|
|
13,365 |
|
|
35.0% |
|
Total site leasing |
|
$ |
176,580 |
|
$ |
169,607 |
|
$ |
(9,548) |
|
$ |
16,521 |
|
|
9.7% |
|
Site development |
|
|
597 |
|
|
678 |
|
|
— |
|
|
(81) |
|
|
(11.9%) |
|
Other |
|
|
1,529 |
|
|
1,279 |
|
|
— |
|
|
250 |
|
|
19.5% |
|
Total |
|
$ |
178,706 |
|
$ |
171,564 |
|
$ |
(9,548) |
|
$ |
16,690 |
|
|
9.7% |
Depreciation, accretion, and amortization expense increased $7.1 million for the three months ended June 30, 2020, as compared to the prior year. On a constant currency basis, depreciation, accretion, and amortization expense increased $16.7 million. These changes were primarily due to an increase in the number of towers we acquired and built since April 1, 2019, partially offset by the impact of assets that became fully depreciated since the prior year period.
Operating Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended |
|
|
|
|
|
|
|
Constant |
|||||
|
|
|
June 30, |
|
Foreign |
|
Constant |
|
Currency |
|||||||
|
|
|
2020 |
|
2019 |
|
Currency Impact |
|
Currency Change |
|
% Change |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
|
|
||||||||||
|
Domestic site leasing |
|
$ |
155,777 |
|
$ |
134,911 |
|
$ |
— |
|
$ |
20,866 |
|
|
15.5% |
|
International site leasing |
|
|
13,304 |
|
|
13,363 |
|
|
(3,001) |
|
|
2,942 |
|
|
22.0% |
|
Total site leasing |
|
$ |
169,081 |
|
$ |
148,274 |
|
$ |
(3,001) |
|
$ |
23,808 |
|
|
16.1% |
|
Site development |
|
|
(172) |
|
|
2,593 |
|
|
— |
|
|
(2,765) |
|
|
(106.6%) |
|
Other |
|
|
(11,855) |
|
|
(14,415) |
|
|
— |
|
|
2,560 |
|
|
(17.8%) |
|
Total |
|
$ |
157,054 |
|
$ |
136,452 |
|
$ |
(3,001) |
|
$ |
23,603 |
|
|
17.3% |
Domestic site leasing operating income increased $20.9 million for the three months ended June 30, 2020, as compared to the prior year, primarily due to higher segment operating profit and decreases in asset impairment and decommission costs and selling, general, and administrative expenses, partially offset by increases in depreciation, accretion, and amortization expense and acquisition and new business initiatives related adjustments and expenses.
International site leasing operating income decreased $0.1 million for the three months ended June 30, 2020, as compared to the prior year. On a constant currency basis, international site leasing operating income increased $2.9 million. These changes were primarily due to higher segment operating profit, partially offset by increases in depreciation, accretion, and amortization expense, selling, general, and administrative expenses, acquisition and new business initiatives related adjustments and expenses, and asset impairment and decommission costs.
Site development operating income decreased $2.8 million for the three months ended June 30, 2020, as compared to the prior year, primarily due to lower segment operating profit driven by less activity from Sprint and T-Mobile, partially offset by a decrease in selling, general, and administrative expenses.
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended |
|
|
|
|
|
|
|
Constant |
|||||
|
|
|
June 30, |
|
Foreign |
|
Constant |
|
Currency |
|||||||
|
|
|
2020 |
|
2019 |
|
Currency Impact |
|
Currency Change |
|
% Change |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
|
|
||||||||||
|
Interest income |
|
$ |
699 |
|
$ |
1,581 |
|
$ |
(155) |
|
$ |
(727) |
|
|
(46.0%) |
|
Interest expense |
|
|
(95,687) |
|
|
(97,447) |
|
|
(13) |
|
|
1,773 |
|
|
(1.8%) |
|
Non-cash interest expense |
|
|
(2,337) |
|
|
(651) |
|
|
— |
|
|
(1,686) |
|
|
259.0% |
|
Amortization of deferred financing fees |
|
|
(5,188) |
|
|
(5,116) |
|
|
— |
|
|
(72) |
|
|
1.4% |
|
Other (expense) income, net |
|
|
(31,588) |
|
|
12,762 |
|
|
(40,376) |
|
|
(3,974) |
|
|
(107.6%) |
|
Total |
|
$ |
(134,101) |
|
$ |
(88,871) |
|
$ |
(40,544) |
|
$ |
(4,686) |
|
|
4.8% |
Interest expense decreased $1.8 million for the three months ended June 30, 2020, as compared to the prior year primarily due to a lower weighted average interest rate as compared to the prior year, partially offset by a higher average principal amount of cash-interest bearing debt outstanding as compared to the prior year.
Non-cash interest expense increased $1.7 million for the three months ended June 30, 2020, as compared to the prior year primarily related to amortization on our interest rate swaps de-designated as cash flow hedges.
Other (expense) income, net includes a $31.2 million loss on the remeasurement of U.S. dollar denominated intercompany loans with foreign subsidiaries for the three months ended June 30, 2020. For the three months ended June 30, 2019, other (expense) income, net included a $9.1 million gain on the remeasurement of U.S. dollar denominated intercompany loans with foreign subsidiaries.
Benefit (Provision) for Income Taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended |
|
|
|
|
|
|
|
Constant |
|||||
|
|
|
June 30, |
|
Foreign |
|
Constant |
|
Currency |
|||||||
|
|
|
2020 |
|
2019 |
|
Currency Impact |
|
Currency Change |
|
% Change |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
|
|
||||||||||
|
Benefit (provision) for income taxes |
|
$ |
165 |
|
$ |
(15,608) |
|
$ |
15,113 |
|
$ |
660 |
|
|
(5.3%) |
Benefit for income taxes increased $15.8 million for the three months ended June 30, 2020, as compared to the prior year. On a constant currency basis, provision for income taxes decreased $0.7 million primarily due to a decrease in domestic and foreign income taxes partially offset by an increase in foreign withholding taxes.
Net Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended |
|
|
|
|
|
|
|
Constant |
|||||
|
|
|
June 30, |
|
Foreign |
|
Constant |
|
Currency |
|||||||
|
|
|
2020 |
|
2019 |
|
Currency Impact |
|
Currency Change |
|
% Change |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
|
|
||||||||||
|
Net income |
|
$ |
23,118 |
|
$ |
31,973 |
|
$ |
(28,432) |
|
$ |
19,577 |
|
|
74.7% |
Net income decreased $8.9 million for the three months ended June 30, 2020, as compared to the prior year. This change was primarily due to fluctuations in foreign currency exchange rates including changes recorded on the remeasurement of the U.S. dollar denominated intercompany loans with foreign subsidiaries, partially offset by increases in operating income and benefit for income taxes.
Six Months Ended June 30, 2020 Compared to Six Months Ended June 30, 2019
Revenues and Segment Operating Profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six months ended |
|
|
|
|
|
|
|
Constant |
|||||
|
|
|
June 30, |
|
Foreign |
|
Constant |
|
Currency |
|||||||
|
|
|
2020 |
|
2019 |
|
Currency Impact |
|
Currency Change |
|
% Change |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
(in thousands) |
|
|
|
||||||||||
|
Domestic site leasing |
|
$ |
774,361 |
|
$ |
732,017 |
|
$ |
— |
|
$ |
42,344 |
|
|
5.8% |
|
International site leasing |
|
|
200,397 |
|
|
179,169 |
|
|
(33,469) |
|
|
54,697 |
|
|
30.5% |
|
Site development |
|
|
49,534 |
|
|
82,254 |
|
|
— |
|
|
(32,720) |
|
|
(39.8%) |
|
Total |
|
$ |
1,024,292 |
|
$ |
993,440 |
|
$ |
(33,469) |
|
$ |
64,321 |
|
|
6.5% |
|
Cost of Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic site leasing |
|
$ |
127,997 |
|
$ |
130,690 |
|
$ |
— |
|
$ |
(2,693) |
|
|
(2.1%) |
|
International site leasing |
|
|
59,400 |
|
|
55,485 |
|
|
(10,802) |
|
|
14,717 |
|
|
26.5% |
|
Site development |
|
|
39,620 |
|
|
62,089 |
|
|
— |
|
|
(22,469) |
|
|
(36.2%) |
|
Total |
|
$ |
227,017 |
|
$ |
248,264 |
|
$ |
(10,802) |
|
$ |
(10,445) |
|
|
(4.2%) |
|
Operating Profit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic site leasing |
|
$ |
646,364 |
|
$ |
601,327 |
|
$ |
— |
|
$ |
45,037 |
|
|
7.5% |
|
International site leasing |
|
|
140,997 |
|
|
123,684 |
|
|
(22,667) |
|
|
39,980 |
|
|
32.3% |
|
Site development |
|
|
9,914 |
|
|
20,165 |
|
|
— |
|
|
(10,251) |
|
|
(50.8%) |
Revenues
Domestic site leasing revenues increased $42.3 million for the six months ended June 30, 2020, as compared to the prior year, primarily due to (1) revenues from 208 towers acquired and 35 towers built since January 1, 2019 and (2) 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.
International site leasing revenues increased $21.2 million for the six months ended June 30, 2020, as compared to the prior year. On a constant currency basis, international site leasing revenues increased $54.7 million. These changes were primarily due to (1) revenues from 2,320 towers acquired and 516 towers built since January 1, 2019 and (2) organic site leasing growth from new leases, amendments, and contractual escalators. Site leasing revenue in Brazil represented 11.8% of total site leasing revenue for the period. No other individual international market represented more than 4% of our total site leasing revenue.
Site development revenues decreased $32.7 million for the six months ended June 30, 2020, as compared to prior year, as a result of decreased carrier activity driven primarily by T-Mobile and Sprint.
Operating Profit
Domestic site leasing segment operating profit increased $45.0 million for the six months ended June 30, 2020, as compared to the prior year, primarily due to additional profit generated by (1) towers acquired and built since January 1, 2019 and organic site leasing growth as noted above, (2) continued control of our site leasing cost of revenue, and (3) the positive impact of our ground lease purchase program.
International site leasing segment operating profit increased $17.3 million for the six months ended June 30, 2020, as compared to the prior year. On a constant currency basis, international site leasing segment operating profit increased $40.0 million. These changes were primarily due to additional profit generated by (1) towers acquired and built since January 1, 2019 and organic site leasing growth as noted above, (2) continued control of our site leasing cost of revenue, and (3) the positive impact of our ground lease purchase program.
Site development segment operating profit decreased $10.3 million for the six months ended June 30, 2020, as compared to the prior year, as a result of decreased carrier activity driven primarily by T-Mobile and Sprint.
Selling, General, and Administrative Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six months ended |
|
|
|
|
|
|
|
Constant |
|||||
|
|
|
June 30, |
|
Foreign |
|
Constant |
|
Currency |
|||||||
|
|
|
2020 |
|
2019 |
|
Currency Impact |
|
Currency Change |
|
% Change |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
|
|
||||||||||
|
Domestic site leasing |
|
$ |
52,555 |
|
$ |
56,086 |
|
$ |
— |
|
$ |
(3,531) |
|
|
(6.3%) |
|
International site leasing |
|
|
16,966 |
|
|
13,998 |
|
|
(1,890) |
|
|
4,858 |
|
|
34.7% |
|
Total site leasing |
|
$ |
69,521 |
|
$ |
70,084 |
|
$ |
(1,890) |
|
$ |
1,327 |
|
|
1.9% |
|
Site development |
|
|
8,950 |
|
|
12,591 |
|
|
— |
|
|
(3,641) |
|
|
(28.9%) |
|
Other |
|
|
20,233 |
|
|
23,808 |
|
|
— |
|
|
(3,575) |
|
|
(15.0%) |
|
Total |
|
$ |
98,704 |
|
$ |
106,483 |
|
$ |
(1,890) |
|
$ |
(5,889) |
|
|
(5.5%) |
Selling, general, and administrative expenses decreased $7.8 million for the six months ended June 30, 2020, as compared to the prior year. On a constant currency basis, selling, general, and administrative expenses decreased $5.9 million. These changes were primarily as a result of decreases in noncash compensation due to the acceleration of unrecognized stock compensation expense in the prior year related to the adoption of the retirement plan, back-office operating expenses, and travel related expenses. These decreases were partially offset by increases in personnel and other support related costs due in part to our continued international expansion and charitable contributions related to COVID-19 relief.
Acquisition and New Business Initiatives Related Adjustments and Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six months ended |
|
|
|
|
|
|
|
Constant |
|||||
|
|
|
June 30, |
|
Foreign |
|
Constant |
|
Currency |
|||||||
|
|
|
2020 |
|
2019 |
|
Currency Impact |
|
Currency Change |
|
% Change |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
|
|
||||||||||
|
Domestic site leasing |
|
$ |
5,601 |
|
$ |
1,980 |
|
$ |
— |
|
$ |
3,621 |
|
|
182.9% |
|
International site leasing |
|
|
2,832 |
|
|
2,996 |
|
|
(373) |
|
|
209 |
|
|
7.0% |
|
Total |
|
$ |
8,433 |
|
$ |
4,976 |
|
$ |
(373) |
|
$ |
3,830 |
|
|
77.0% |
Acquisition and new business initiatives related adjustments and expenses increased $3.5 million for the six months ended June 30, 2020, as compared to the prior year. On a constant currency basis, acquisition and new business initiatives related adjustments and expenses increased $3.8 million. These changes were primarily as a result of incremental costs incurred in support of new business initiatives.
Asset Impairment and Decommission Costs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six months ended |
|
|
|
|
|
|
|
Constant |
|||||
|
|
|
June 30, |
|
Foreign |
|
Constant |
|
Currency |
|||||||
|
|
|
2020 |
|
2019 |
|
Currency Impact |
|
Currency Change |
|
% Change |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
|
|
||||||||||
|
Domestic site leasing |
|
$ |
16,168 |
|
$ |
12,449 |
|
$ |
— |
|
$ |
3,719 |
|
|
29.9% |
|
International site leasing |
|
|
4,429 |
|
|
2,942 |
|
|
(379) |
|
|
1,866 |
|
|
63.4% |
|
Total |
|
$ |
20,597 |
|
$ |
15,391 |
|
$ |
(379) |
|
$ |
5,585 |
|
|
36.3% |
Asset impairment and decommission costs increased $5.2 million for the six months ended June 30, 2020, as compared to the prior year. On a constant currency basis, asset impairment and decommission costs increased $5.6 million. These changes were primarily as a result of a $8.8 million increase in impairment charges resulting from our regular analysis of whether the future cash flows from certain towers are adequate to recover the carrying value of the investment in those towers, partially offset by a $3.6 million decrease in the impairment charge recorded due to sites decommissioned in the six months ended June 30, 2020 compared to the prior year period.
Depreciation, Accretion, and Amortization Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six months ended |
|
|
|
|
|
|
|
Constant |
|||||
|
|
|
June 30, |
|
Foreign |
|
Constant |
|
Currency |
|||||||
|
|
|
2020 |
|
2019 |
|
Currency Impact |
|
Currency Change |
|
% Change |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
|
|
||||||||||
|
Domestic site leasing |
|
$ |
268,375 |
|
$ |
261,657 |
|
$ |
— |
|
$ |
6,718 |
|
|
2.6% |
|
International site leasing |
|
|
88,623 |
|
|
76,989 |
|
|
(14,912) |
|
|
26,546 |
|
|
34.5% |
|
Total site leasing |
|
$ |
356,998 |
|
$ |
338,646 |
|
$ |
(14,912) |
|
$ |
33,264 |
|
|
9.8% |
|
Site development |
|
|
1,213 |
|
|
1,240 |
|
|
— |
|
|
(27) |
|
|
(2.2%) |
|
Other |
|
|
3,074 |
|
|
2,716 |
|
|
— |
|
|
358 |
|
|
13.2% |
|
Total |
|
$ |
361,285 |
|
$ |
342,602 |
|
$ |
(14,912) |
|
$ |
33,595 |
|
|
9.8% |
Depreciation, accretion, and amortization expense increased $18.7 million for the six months ended June 30, 2020, as compared to the prior year. On a constant currency basis, depreciation, accretion, and amortization expense increased $33.6 million. These changes were primarily due to an increase in the number of towers we acquired and built since January 1, 2019, partially offset by the impact of assets that became fully depreciated since the prior year period.
Operating Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six months ended |
|
|
|
|
|
|
|
Constant |
|||||
|
|
|
June 30, |
|
Foreign |
|
Constant |
|
Currency |
|||||||
|
|
|
2020 |
|
2019 |
|
Currency Impact |
|
Currency Change |
|
% Change |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
|
|
||||||||||
|
Domestic site leasing |
|
$ |
303,665 |
|
$ |
269,155 |
|
$ |
— |
|
$ |
34,510 |
|
|
12.8% |
|
International site leasing |
|
|
28,147 |
|
|
26,759 |
|
|
(5,113) |
|
|
6,501 |
|
|
24.3% |
|
Total site leasing |
|
$ |
331,812 |
|
$ |
295,914 |
|
$ |
(5,113) |
|
$ |
41,011 |
|
|
13.9% |
|
Site development |
|
|
(249) |
|
|
6,334 |
|
|
— |
|
|
(6,583) |
|
|
(103.9%) |
|
Other |
|
|
(23,307) |
|
|
(26,524) |
|
|
— |
|
|
3,217 |
|
|
(12.1%) |
|
Total |
|
$ |
308,256 |
|
$ |
275,724 |
|
$ |
(5,113) |
|
$ |
37,645 |
|
|
13.7% |
Domestic site leasing operating income increased $34.5 million for the six months ended June 30, 2020, as compared to the prior year, primarily due to higher segment operating profit and a decrease in selling, general, and administrative expenses, partially offset by increases in depreciation, accretion, and amortization expense, asset impairment and decommission costs, and acquisition and new business initiatives related adjustments and expenses.
International site leasing operating income increased $1.4 million for the six months ended June 30, 2020, as compared to the prior year. On a constant currency basis, international site leasing operating income increased $6.5 million. These changes were primarily due to higher segment operating profit, partially offset by increases in depreciation, accretion, and amortization expense, selling, general, and administrative expenses, asset impairment and decommission costs, and acquisition and new business initiatives related adjustments and expenses.
Site development operating income decreased $6.6 million for the six months ended June 30, 2020, as compared to the prior year, primarily due to lower segment operating profit driven by less activity from Sprint and T-Mobile, partially offset by a decrease in selling, general, and administrative expenses.
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six months ended |
|
|
|
|
|
|
|
Constant |
|||||
|
|
|
June 30, |
|
Foreign |
|
Constant |
|
Currency |
|||||||
|
|
|
2020 |
|
2019 |
|
Currency Impact |
|
Currency Change |
|
% Change |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
|
|
||||||||||
|
Interest income |
|
$ |
1,584 |
|
$ |
3,381 |
|
$ |
(220) |
|
$ |
(1,577) |
|
|
(46.6%) |
|
Interest expense |
|
|
(191,538) |
|
|
(196,114) |
|
|
(13) |
|
|
4,589 |
|
|
(2.3%) |
|
Non-cash interest expense |
|
|
(4,743) |
|
|
(1,292) |
|
|
— |
|
|
(3,451) |
|
|
267.1% |
|
Amortization of deferred financing fees |
|
|
(10,328) |
|
|
(10,176) |
|
|
— |
|
|
(152) |
|
|
1.5% |
|
Loss from extinguishment of debt, net |
|
|
(16,864) |
|
|
— |
|
|
— |
|
|
(16,864) |
|
|
—% |
|
Other (expense) income, net |
|
|
(257,885) |
|
|
12,254 |
|
|
(268,906) |
|
|
(1,233) |
|
|
(24.2%) |
|
Total |
|
$ |
(479,774) |
|
$ |
(191,947) |
|
$ |
(269,139) |
|
$ |
(18,688) |
|
|
9.4% |
Interest income decreased $1.8 million for the six months ended June 30, 2020, as compared to the prior year. On a constant currency basis, interest income decreased $1.6 million. These changes were primarily due to a lower amount of interest bearing domestic investments.
Interest expense decreased $4.6 million for the six months ended June 30, 2020, as compared to the prior year. These changes were primarily due to a lower weighted average interest rate as compared to the prior year, partially offset by a higher average principal amount of cash-interest bearing debt outstanding as compared to the prior year.
Non-cash interest expense increased $3.5 million for the six months ended June 30, 2020, as compared to the prior year primarily related to amortization on our interest rate swaps de-designated as cash flow hedges.
Loss from extinguishment of debt was $16.9 million for the six months ended June 30, 2020 due to the payment of a $9.1 million call premium and the write-off of $7.7 million of the original issuance discount and financing fees related to the redemption of the 2014 Senior Notes.
Other (expense) income, net includes a $261.3 million loss on the remeasurement of U.S. dollar denominated intercompany loans with foreign subsidiaries as well as a $3.2 million net gain on the change in fair value related to interest rate swaps not designated as hedges for the six months ended June 30, 2020. Other (expense) income, net includes a $7.0 million gain on the remeasurement of U.S. dollar denominated intercompany loans with foreign subsidiaries for the six months ended June 30, 2019.
Benefit (Provision) for Income Taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six months ended |
|
|
|
|
|
|
|
Constant |
|||||
|
|
|
June 30, |
|
Foreign |
|
Constant |
|
Currency |
|||||||
|
|
|
2020 |
|
2019 |
|
Currency Impact |
|
Currency Change |
|
% Change |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
|
|
||||||||||
|
Benefit (provision) for income taxes |
|
$ |
66,702 |
|
$ |
(25,815) |
|
$ |
90,101 |
|
$ |
2,416 |
|
|
(10.3%) |
Benefit for income taxes increased $92.5 million for the six months ended June 30, 2020, as compared to the prior year. On a constant currency basis, provision for income taxes decreased $2.4 million primarily due to a decrease in domestic and foreign income taxes partially offset by an increase in foreign withholding taxes.
Net (Loss) Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six months ended |
|
|
|
|
|
|
|
Constant |
|||||
|
|
|
June 30, |
|
Foreign |
|
Constant |
|
Currency |
|||||||
|
|
|
2020 |
|
2019 |
|
Currency Impact |
|
Currency Change |
|
% Change |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
|
|
||||||||||
|
Net (loss) income |
|
$ |
(104,816) |
|
$ |
57,962 |
|
$ |
(184,151) |
|
$ |
21,373 |
|
|
39.5% |
Net loss was $104.8 million for the six months ended June 30, 2020, as compared to net income of $58.0 million in the prior year period. This change was primarily due to fluctuations in foreign currency exchange rates including changes recorded on the remeasurement of the U.S. dollar denominated intercompany loans with foreign subsidiaries and a loss from extinguishment of debt in the current year period, partially offset by increases in operating income and benefit for income taxes.
NON-GAAP FINANCIAL MEASURES
This report contains information regarding Adjusted EBITDA, a non-GAAP measure. 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. 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, as well as by eliminating the impact of the remeasurement of our intercompany loans.
Adjusted EBITDA
We define Adjusted EBITDA as net 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 and new business initiatives 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 to 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 similar to the measure of current financial performance generally used by our lenders to determine compliance with certain covenants under our Senior Credit Agreement and the indentures relating to the 2016 Senior Notes, 2017 Senior Notes, and 2020 Senior Notes. 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 |
|||||
|
|
|
June 30, |
|
Foreign |
|
Constant |
|
Currency |
|||||||
|
|
|
2020 |
|
2019 |
|
Currency Impact |
|
Currency Change |
|
% Change |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
|
|
||||||||||
|
Net income |
|
$ |
23,118 |
|
$ |
31,973 |
|
$ |
(28,432) |
|
$ |
19,577 |
|
|
74.7% |
|
Non-cash straight-line leasing revenue |
|
|
(346) |
|
|
(2,892) |
|
|
(55) |
|
|
2,601 |
|
|
(89.9%) |
|
Non-cash straight-line ground lease expense |
|
|
3,678 |
|
|
5,268 |
|
|
(16) |
|
|
(1,574) |
|
|
(29.9%) |
|
Non-cash compensation |
|
|
18,579 |
|
|
24,487 |
|
|
(325) |
|
|
(5,583) |
|
|
(22.8%) |
|
Other expense (income), net |
|
|
31,588 |
|
|
(12,762) |
|
|
40,376 |
|
|
3,974 |
|
|
(107.6%) |
|
Acquisition and new business initiatives |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
related adjustments and expenses |
|
|
4,634 |
|
|
2,539 |
|
|
(249) |
|
|
2,344 |
|
|
92.3% |
|
Asset impairment and decommission costs |
|
|
6,242 |
|
|
9,620 |
|
|
(282) |
|
|
(3,096) |
|
|
(32.2%) |
|
Interest income |
|
|
(699) |
|
|
(1,581) |
|
|
155 |
|
|
727 |
|
|
(46.0%) |
|
Total interest expense (1) |
|
|
103,212 |
|
|
103,214 |
|
|
13 |
|
|
(15) |
|
|
(0.0%) |
|
Depreciation, accretion, and amortization |
|
|
178,706 |
|
|
171,564 |
|
|
(9,548) |
|
|
16,690 |
|
|
9.7% |
|
(Benefit) provision for income taxes (2) |
|
|
55 |
|
|
15,808 |
|
|
(15,113) |
|
|
(640) |
|
|
(5.0%) |
|
Adjusted EBITDA |
|
$ |
368,767 |
|
$ |
347,238 |
|
$ |
(13,476) |
|
$ |
35,005 |
|
|
10.1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six months ended |
|
|
|
|
|
|
|
Constant |
|||||
|
|
|
June 30, |
|
Foreign |
|
Constant |
|
Currency |
|||||||
|
|
|
2020 |
|
2019 |
|
Currency Impact |
|
Currency Change |
|
% Change |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
|
|
||||||||||
|
Net (loss) income |
|
$ |
(104,816) |
|
$ |
57,962 |
|
$ |
(184,151) |
|
$ |
21,373 |
|
|
39.5% |
|
Non-cash straight-line leasing revenue |
|
|
(2,687) |
|
|
(5,537) |
|
|
(24) |
|
|
2,874 |
|
|
(51.9%) |
|
Non-cash straight-line ground lease expense |
|
|
7,527 |
|
|
11,357 |
|
|
(22) |
|
|
(3,808) |
|
|
(33.5%) |
|
Non-cash compensation |
|
|
34,857 |
|
|
47,901 |
|
|
(660) |
|
|
(12,384) |
|
|
(25.9%) |
|
Loss from extinguishment of debt, net |
|
|
16,864 |
|
|
— |
|
|
— |
|
|
16,864 |
|
|
—% |
|
Other expense (income), net |
|
|
257,885 |
|
|
(12,254) |
|
|
268,906 |
|
|
1,233 |
|
|
24.2% |
|
Acquisition and new business initiatives |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
related adjustments and expenses |
|
|
8,433 |
|
|
4,976 |
|
|
(373) |
|
|
3,830 |
|
|
77.0% |
|
Asset impairment and decommission costs |
|
|
20,597 |
|
|
15,391 |
|
|
(379) |
|
|
5,585 |
|
|
36.3% |
|
Interest income |
|
|
(1,584) |
|
|
(3,381) |
|
|
220 |
|
|
1,577 |
|
|
(46.6%) |
|
Total interest expense (1) |
|
|
206,609 |
|
|
207,582 |
|
|
13 |
|
|
(986) |
|
|
(0.5%) |
|
Depreciation, accretion, and amortization |
|
|
361,285 |
|
|
342,602 |
|
|
(14,912) |
|
|
33,595 |
|
|
9.8% |
|
(Benefit) provision for income taxes (2) |
|
|
(66,255) |
|
|
26,211 |
|
|
(90,102) |
|
|
(2,364) |
|
|
(9.9%) |
|
Adjusted EBITDA |
|
$ |
738,715 |
|
$ |
692,810 |
|
$ |
(21,484) |
|
$ |
67,389 |
|
|
9.7% |
(1)Total interest expense includes interest expense, non-cash interest expense, and amortization of deferred financing fees.
(2)(Benefit) provision for taxes includes $220 and $200 of franchise taxes for the three months ended June 30, 2020 and 2019, respectively, and $447 and $396 of franchise taxes for the six months ended June 30, 2020 and 2019, respectively, reflected in selling, general, and administrative expenses on the Consolidated Statements of Operations.
Adjusted EBITDA increased $21.5 million for the three months ended June 30, 2020, as compared to the prior year period. On a constant currency basis, Adjusted EBITDA increased $35.0 million. These changes were primarily due to an increase in site leasing segment operating profit, partially offset by a decrease in site development segment operating profit.
Adjusted EBITDA increased $45.9 million for the six months ended June 30, 2020, as compared to the prior year period. On a constant currency basis, Adjusted EBITDA increased $67.4 million. These changes were primarily due to an increase in site leasing segment operating profit, partially offset by a decrease in site development segment operating profit and an increase in cash selling, general, and administrative expenses.
LIQUIDITY AND CAPITAL RESOURCES
SBAC 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 six months ended |
||||
|
|
|
June 30, 2020 |
|
June 30, 2019 |
||
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
||||
|
Cash provided by operating activities |
|
$ |
592,418 |
|
$ |
466,106 |
|
Cash used in investing activities |
|
|
(413,970) |
|
|
(255,475) |
|
Cash used in financing activities |
|
|
(52,121) |
|
|
(264,463) |
|
Change in cash, cash equivalents, and restricted cash |
|
|
126,327 |
|
|
(53,832) |
|
Effect of exchange rate changes on cash, cash equiv., and restricted cash |
|
|
(15,809) |
|
|
2,344 |
|
Cash, cash equivalents, and restricted cash, beginning of period |
|
|
141,120 |
|
|
178,300 |
|
Cash, cash equivalents, and restricted cash, end of period |
|
$ |
251,638 |
|
$ |
126,812 |
Operating Activities
Cash provided by operating activities was $592.4 million for the six months ended June 30, 2020 as compared to $466.1 million for the six months ended June 30, 2019. The increase was primarily due to increases in site leasing segment operating profit and cash inflows associated with working capital changes primarily from timing of customer payments, partially offset by a decrease in site development segment operating profit and an increase in cash selling, general, and administrative expenses.
Investing Activities
A detail of our investing activities is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six months ended June 30, |
||||
|
|
|
2020 |
|
2019 |
||
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
||||
|
Acquisitions of towers and related intangible assets |
|
$ |
(99,424) |
|
$ |
(125,412) |
|
Land buyouts and other assets (1) |
|
|
(19,611) |
|
|
(25,770) |
|
Construction and related costs on new builds |
|
|
(28,012) |
|
|
(28,150) |
|
Augmentation and tower upgrades |
|
|
(21,423) |
|
|
(28,825) |
|
Tower maintenance |
|
|
(15,180) |
|
|
(14,029) |
|
General corporate |
|
|
(2,364) |
|
|
(1,781) |
|
Net purchases of investments |
|
|
(225,026) |
|
|
(30,042) |
|
Other investing activities |
|
|
(2,930) |
|
|
(1,466) |
|
Net cash used in investing activities |
|
$ |
(413,970) |
|
$ |
(255,475) |
(1)Excludes $3.6 million and $6.7 million spent to extend ground lease terms for the six months ended June 30, 2020 and 2019, respectively.
Subsequent to June 30, 2020, we acquired 25 towers and related assets and one data center for $61.6 million in cash. In addition, we agreed to purchase 100 additional sites for $42.0 million.
For 2020, we expect to incur non-discretionary cash capital expenditures associated with tower maintenance and general corporate expenditures of $31.0 million to $41.0 million and discretionary cash capital expenditures, based on current or potential acquisition obligations, planned new tower construction, forecasted tower augmentations, and forecasted ground lease purchases, of $325.0 million to $345.0 million. 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
A detail of our financing activities is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six months ended |
||||
|
|
|
June 30, 2020 |
|
June 30, 2019 |
||
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
||||
|
Net borrowings (repayments) under Revolving Credit Facility (1) |
|
$ |
(490,000) |
|
$ |
(245,000) |
|
Proceeds from Senior Notes, net of fees and original issue discount (1) |
|
|
1,480,206 |
|
|
— |
|
Repayment of Senior Notes (1) |
|
|
(759,143) |
|
|
— |
|
Proceeds from employee stock purchase/stock option plans, net of taxes |
|
|
37,316 |
|
|
87,921 |
|
Repurchase and retirement of common stock (2) |
|
|
(203,330) |
|
|
(94,572) |
|
Payment of dividends on common stock |
|
|
(104,171) |
|
|
— |
|
Other financing activities |
|
|
(12,999) |
|
|
(12,812) |
|
Net cash used in financing activities |
|
$ |
(52,121) |
|
$ |
(264,463) |
(1)For additional information regarding our debt instruments and financings, refer to the Debt Instruments and Debt Service Requirements below.
(2)During the six months ended June 30, 2020, we repurchased 0.8 million shares of our Class A common stock for $200.0 million, at an average price per share of $242.86. Shares repurchased were retired. As of the date of this filing, we had $424.3 million of authorization remaining under the current stock repurchase plan.
Dividend
For the six months ended June 30, 2020, we paid the following cash dividends:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payable to Shareholders |
|
|
|
|
|
|
|
|
|
of Record At the Close |
|
Cash Paid |
|
Aggregate Amount |
|
|
|
Date Declared |
|
of Business on |
|
Per Share |
|
Paid |
|
Date Paid |
|
|
|
|
|
|
|
|
|
|
|
February 20, 2020 |
|
March 10, 2020 |
|
$0.465 |
|
$52.2 million |
|
March 26, 2020 |
|
May 5, 2020 |
|
May 28, 2020 |
|
$0.465 |
|
$52.0 million |
|
June 18, 2020 |
Subsequent to June 30, 2020, we declared the following cash dividends:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payable to Shareholders |
|
Cash to |
|
|
|
|
|
of Record At the Close |
|
be Paid |
|
|
|
Date Declared |
|
of Business on |
|
Per Share |
|
Date to be Paid |
|
|
|
|
|
|
|
|
|
August 3, 2020 |
|
August 25, 2020 |
|
$0.465 |
|
September 22, 2020 |
The amount of future distributions will be determined, from time to time, by our Board of Directors to balance our goal of increasing long-term shareholder value and retaining sufficient cash to implement our current capital allocation policy, which prioritizes investment in quality assets that meet our return criteria, and then stock repurchases when we believe our stock price is below its intrinsic value. The actual amount, timing and frequency of future dividends, will be at the sole discretion of our Board of Directors and will be declared based upon various factors, many of which are beyond our control.
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 six months ended June 30, 2020, we did not issue any shares of Class A common stock under this registration statement. As of June 30, 2020, we had approximately 1.2 million shares of Class A common stock remaining under this shelf registration statement.
On March 5, 2018, 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 securities 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 consists of a revolving loan under which up to $1.25 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 (1) the Eurodollar Rate plus a margin that ranges from 112.5 basis points to 175.0 basis points or (2) the Base Rate plus a margin that ranges from 12.5 basis points to 75.0 basis points, in each case based on the ratio of Consolidated Net 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 between 0.20% and 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, April 11, 2023. 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 the period may not be reflective of the total amounts outstanding during such period.
During the three months ended June 30, 2020, we borrowed $15.0 million and repaid $500.0 million of the outstanding balance under the Revolving Credit Facility. During the six months ended June 30, 2020, we borrowed $515.0 million and repaid $1.0 billion of the outstanding balance under the Revolving Credit Facility. As of June 30, 2020, we had no amount outstanding under the $1.25 billion Revolving Credit Facility. In addition, SBA Senior Finance II was required to pay a commitment fee of 0.25% per annum on the amount of the unused commitment. As of June 30, 2020, SBA Senior Finance II was in compliance with the financial covenants contained in the Senior Credit Agreement.
As of the date of this filing, we had no amount outstanding under the Revolving Credit Facility.
Term Loan under the Senior Credit Agreement
2018 Term Loan
On April 11, 2018, we, through our wholly owned subsidiary, SBA Senior Finance II LLC, obtained a new term loan (the “2018 Term Loan”) under the amended and restated Senior Credit Agreement. The 2018 Term Loan consists of a senior secured term loan with an initial aggregate principal amount of $2.4 billion that matures on April 11, 2025. The 2018 Term Loan accrues interest, at SBA Senior Finance II’s election at either the Base Rate plus 75 basis points (with a zero Base Rate floor) or the Eurodollar Rate plus 175 basis points (with a zero Eurodollar Rate floor). As of June 30, 2020, the 2018 Term Loan was accruing interest at 1.93% per annum. Principal payments on the 2018 Term Loan are being made in quarterly installments on the last day of each March, June, September, and December in an amount equal to $6.0 million.
During the three and six months ended June 30, 2020, we repaid an aggregate of $6.0 million and $12.0 million of principal on the 2018 Term Loan, respectively. As of June 30, 2020, the 2018 Term Loan had a principal balance of $2.4 billion.
On December 3, 2019, we, through our wholly owned subsidiary, SBA Senior Finance II LLC, entered into a series of interest rate swaps on a portion of our 2018 Term Loan. As a result, we swapped $1.95 billion of notional value receiving interest at one month LIBOR plus 175 basis points for a fixed rate of 3.78% per annum settled monthly through the maturity date of the 2018 Term Loan. On August 6, 2020, we, through our wholly owned subsidiary, SBA Senior Finance II LLC, terminated interest rate swaps entered into in 2019 in exchange for a payment of $176.2 million. On the same date, we entered into an interest rate swap with $1.95 billion of notional value receiving interest at one month LIBOR for a fixed rate of 0.1239% per annum settled monthly through the maturity date of the 2018 Term Loan.
Secured Tower Revenue Securities
As of June 30, 2020, we, through a New York common law trust (the “Trust”), had issued and outstanding an aggregate of $5.0 billion of Secured Tower Revenue Securities (“Tower Securities”). The sole asset of the Trust consists of a non-recourse
mortgage loan made in favor of certain of our subsidiaries that are borrowers on the mortgage loan (the “Borrowers”) under which there is a loan tranche for each Tower Security outstanding with the same interest rate and maturity date as the corresponding Tower Security. The mortgage loan is secured by (1) mortgages, deeds of trust, and deeds to secure debt on a substantial portion of the tower sites, (2) a security interest in the tower sites and substantially all of the Borrowers’ personal property and fixtures, (3) the Borrowers’ rights under certain tenant leases, and (4) all of the proceeds of the foregoing. For each calendar month, SBA Network Management, Inc., an indirect subsidiary (“Network Management”), is entitled to receive a management fee equal to 4.5% of the Borrowers’ operating revenues for the immediately preceding calendar month.
The table below sets forth the material terms of our outstanding Tower Securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Security |
|
Issue Date |
|
|
Amount Outstanding |
|
|
Interest Rate |
|
|
Anticipated Repayment Date |
|
|
Final Maturity Date |
|
2013-2C Tower Securities |
|
Apr. 18, 2013 |
|
|
$575.0 million |
|
|
3.722% |
|
|
Apr. 11, 2023 |
|
|
Apr. 9, 2048 |
|
2014-2C Tower Securities |
|
Oct. 15, 2014 |
|
|
$620.0 million |
|
|
3.869% |
|
|
Oct. 8, 2024 |
|
|
Oct. 8, 2049 |
|
2015-1C Tower Securities (1) |
|
Oct. 14, 2015 |
|
|
$500.0 million |
|
|
3.156% |
|
|
Oct. 8, 2020 |
|
|
Oct. 10, 2045 |
|
2016-1C Tower Securities (1) |
|
Jul. 7, 2016 |
|
|
$700.0 million |
|
|
2.877% |
|
|
Jul. 9, 2021 |
|
|
Jul. 10, 2046 |
|
2017-1C Tower Securities |
|
Apr. 17, 2017 |
|
|
$760.0 million |
|
|
3.168% |
|
|
Apr. 11, 2022 |
|
|
Apr. 9, 2047 |
|
2018-1C Tower Securities |
|
Mar. 9, 2018 |
|
|
$640.0 million |
|
|
3.448% |
|
|
Mar. 9, 2023 |
|
|
Mar. 9, 2048 |
|
2019-1C Tower Securities |
|
Sep. 13, 2019 |
|
|
$1.165 billion |
|
|
2.836% |
|
|
Jan. 12, 2025 |
|
|
Jan. 12, 2050 |
(1)On July 14, 2020, we repaid the entire aggregate principal amounts of the 2015-1C Tower Securities and the 2016-1C Tower Securities in connection with the issuance of the 2020 Tower Securities (as defined below).
As of June 30, 2020, 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.
On July 14, 2020, we, through the Trust, issued $750.0 million of 1.884% Secured Tower Revenue Securities Series 2020-1C which have an anticipated repayment date of January 9, 2026 and a final maturity date of July 11, 2050 (the “2020-1C Tower Securities”) and $600.0 million of 2.328% Secured Tower Revenue Securities Series 2020-2C which have an anticipated repayment date of January 11, 2028 and a final maturity date of July 9, 2052 (the “2020-2C Tower Securities”) (collectively the “2020 Tower Securities”). The aggregate $1.35 billion of 2020 Tower Securities have a blended interest rate of 2.081% and a weighted average life through the anticipated repayment date of 6.4 years. Net proceeds from this offering were used to repay the entire aggregate principal amount of the 2015-1C Tower Securities ($500.0 million) and the 2016-1C Tower Securities ($700.0 million). The remaining net proceeds of the 2020 Tower Securities were used for general corporate purposes. We have incurred deferred financing fees of $13.6 million to date in relation to this transaction which are being amortized through the anticipated repayment date of the 2020 Tower Securities.
Risk Retention Tower Securities
In addition, to satisfy certain risk retention requirements of Regulation RR promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), SBA Guarantor, LLC, a wholly owned subsidiary, purchased (1) $40.0 million of Secured Tower Revenue Securities Series 2017-1R (the “2017-1R Tower Securities”) issued by the Trust with a fixed interest rate of 4.459% per annum, payable monthly, and with the same anticipated repayment date and final maturity date as the 2017-1C Tower Securities, (2) $33.7 million of Secured Tower Revenue Securities Series 2018-1R (the “2018-1R Tower Securities”) issued by the Trust with a fixed interest rate of 4.949% per annum, payable monthly, and with the same anticipated repayment date and final maturity date as the 2018-1C Tower Securities, (3) $61.4 million of Secured Tower Revenue Securities Series 2019-1R (the “2019-1R Tower Securities”) issued by the Trust with a fixed interest rate of 4.213% per annum, payable monthly, and with the same anticipated repayment date and final maturity date as the 2019-1C Tower Securities, and (4) $71.1 million of Secured Tower Revenue Securities Series 2020-2R (the “2020-2R Tower Securities”) issued by the Trust with a fixed interest rate of 4.336% per annum, payable monthly, and with the same anticipated repayment date and final maturity date as the 2020-2C Tower Securities. Principal and interest payments made on the 2017-1R Tower Securities, 2018-1R Tower Securities, 2019-1R Tower Securities, and 2020-2R Tower Securities eliminate in consolidation.
Senior Notes
The table below sets forth the material terms of our outstanding senior notes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior Notes |
|
Issue Date |
|
Amount Outstanding |
|
Interest Rate |
|
Maturity Date |
|
Interest Due Dates |
|
% of Par Value |
|
2016 Senior Notes |
|
Aug. 15, 2016 |
|
$1.1 billion |
|
4.875% |
|
Sep. 1, 2024 |
|
Mar. 1 & Sep. 1 |
|
99.178% |
|
2017 Senior Notes |
|
Oct. 13, 2017 |
|
$750.0 million |
|
4.000% |
|
Oct. 1, 2022 |
|
Apr. 1 & Oct. 1 |
|
100.000% |
|
2020-1 Senior Notes (1) |
|
Feb. 4, 2020 |
|
$1.0 billion |
|
3.875% |
|
Feb. 15, 2027 |
|
Feb. 15 & Aug. 15 |
|
100.000% |
|
2020-2 Senior Notes (1) |
|
May 26, 2020 |
|
$500.0 million |
|
3.875% |
|
Feb. 15, 2027 |
|
Feb. 15 & Aug. 15 |
|
99.500% |
(1)On February 4, 2020, we issued $1.0 billion of unsecured senior notes at par value (the “2020-1 Senior Notes”), and on May 26, 2020, we issued $500.0 million of additional unsecured senior notes under the same indenture at 99.500% of par value (the “2020-2 Senior Notes”) (collectively, the “2020 Senior Notes”). Net proceeds from these offerings were used to redeem the entire $750.0 million outstanding principal amount of the 2014 Senior Notes, repay amounts outstanding under the Revolving Credit Facility, and for general corporate purposes. In addition, we paid a $9.1 million call premium and expensed $7.7 million for the write-off of the original issue discount and financing fees related to the redemption of the 2014 Senior Notes which are reflected in loss from extinguishment of debt on the Consolidated Statement of Operations. Interest on the 2020 Senior Notes begins August 15, 2020. We incurred financing fees of $17.3 million to date in relation to this transaction, which are being amortized through the maturity date.
The 2020 Senior Notes are subject to redemption in whole or in part on or after February 15, 2023 at the redemption prices set forth in the indenture agreement plus accrued and unpaid interest. Prior to February 15, 2023, we may, at our option, redeem up to 35% of the aggregate principal amount of the 2020 Senior Notes originally issued at a redemption price of 103.875% of the principal amount of the 2020 Senior Notes to be redeemed on the redemption date plus accrued and unpaid interest with the net proceeds of certain equity offerings. We may redeem the 2020 Senior Notes during the twelve-month period beginning on the following dates at the following redemption prices: February 15, 2023 at 101.938%, February 15, 2024 at 100.969%, or February 15, 2025 until maturity at 100.000%, of the principal amount of the 2020 Senior Notes to be redeemed on the redemption date plus accrued and unpaid interest.
The unsecured senior notes are subject to redemption in whole or in part at the redemption prices set forth in the indenture agreement plus accrued and unpaid interest. We may redeem each of the senior notes during the time periods and at the redemption prices set forth in the indentures.
Debt Service
As of June 30, 2020, we believe that our cash on hand, capacity available under our Revolving Credit Facility, and cash flows from operations for the next twelve months 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 June 30, 2020 and the interest rates accruing on those amounts on such date (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revolving Credit Facility |
|
|
|
|
$ |
3,125 |
|
2018 Term Loan (1) |
|
|
|
|
|
105,469 |
|
2013-2C Tower Securities |
|
|
|
|
|
21,585 |
|
2014-2C Tower Securities |
|
|
|
|
|
24,185 |
|
2015-1C Tower Securities (2)(3) |
|
|
|
|
|
504,559 |
|
2016-1C Tower Securities (3) |
|
|
|
|
|
20,361 |
|
2017-1C Tower Securities |
|
|
|
|
|
24,318 |
|
2018-1C Tower Securities |
|
|
|
|
|
22,270 |
|
2019-1C Tower Securities |
|
|
|
|
|
33,409 |
|
2016 Senior Notes |
|
|
|
|
|
53,625 |
|
2017 Senior Notes |
|
|
|
|
|
30,000 |
|
2020 Senior Notes |
|
|
|
|
|
58,125 |
|
Total debt service for the next 12 months (3) |
|
|
|
|
$ |
901,031 |
(1)Total debt service on the 2018 Term Loan includes the impact of interest rate swaps entered into in 2019 which swapped $1.95 billion of notional value accruing interest at one month LIBOR plus 175 basis points for a fixed rate of 3.78% per
annum through the maturity date of the 2018 Term Loan. Total debt service on the 2018 Term Loan excludes the impact of the interest rate swap entered into on August 6, 2020.
(2)The anticipated repayment date and the final maturity date for the 2015-1C Tower Securities is October 8, 2020 and October 10, 2045, respectively. Interest expense included above is through the anticipated repayment date.
(3)Total debt service excludes interest payments on the $1.35 billion 2020 Tower Securities issued July 14, 2020, proceeds from which were used to repay the entire aggregate principal amount of the 2015-1C Tower Securities ($500.0 million) and the 2016-1C Tower Securities ($700.0 million).
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to certain market risks that are inherent in our financial instruments. These instruments arise from transactions entered into in the normal course of business.
The following table presents the future principal payment obligations and fair values associated with our long-term debt instruments assuming our actual level of long-term indebtedness as of June 30, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020 |
|
2021 |
|
2022 |
|
2023 |
|
2024 |
|
Thereafter |
|
Total |
|
Fair Value |
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
||||||||||||||||||||||
|
2018 Term Loan |
|
$ |
12,000 |
|
$ |
24,000 |
|
$ |
24,000 |
|
$ |
24,000 |
|
$ |
24,000 |
|
$ |
2,244,000 |
|
$ |
2,352,000 |
|
$ |
2,269,680 |
|
2013-2C Tower Securities (1) |
|
|
— |
|
|
— |
|
|
— |
|
|
575,000 |
|
|
— |
|
|
— |
|
|
575,000 |
|
|
606,211 |
|
2014-2C Tower Securities (1) |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
620,000 |
|
|
— |
|
|
620,000 |
|
|
678,522 |
|
2015-1C Tower Securities (1)(2) |
|
|
500,000 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
500,000 |
|
|
502,605 |
|
2016-1C Tower Securities (1)(2) |
|
|
— |
|
|
700,000 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
700,000 |
|
|
712,838 |
|
2017-1C Tower Securities (1) |
|
|
— |
|
|
— |
|
|
760,000 |
|
|
— |
|
|
— |
|
|
— |
|
|
760,000 |
|
|
781,113 |
|
2018-1C Tower Securities (1) |
|
|
— |
|
|
— |
|
|
— |
|
|
640,000 |
|
|
— |
|
|
— |
|
|
640,000 |
|
|
679,430 |
|
2019-1C Tower Securities (1) |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1,165,000 |
|
|
1,165,000 |
|
|
1,229,017 |
|
2016 Senior Notes |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1,100,000 |
|
|
— |
|
|
1,100,000 |
|
|
1,126,125 |
|
2017 Senior Notes |
|
|
— |
|
|
— |
|
|
750,000 |
|
|
— |
|
|
— |
|
|
— |
|
|
750,000 |
|
|
753,750 |
|
2020 Senior Notes |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1,500,000 |
|
|
1,500,000 |
|
|
1,496,250 |
|
Total debt obligation (2) |
|
$ |
512,000 |
|
$ |
724,000 |
|
$ |
1,534,000 |
|
$ |
1,239,000 |
|
$ |
1,744,000 |
|
$ |
4,909,000 |
|
$ |
10,662,000 |
|
$ |
10,835,541 |
(1)For information on the anticipated repayment date and final maturity date for each tower security, refer to Debt Instruments and Debt Service Requirements above.
(2)On July 14, 2020, we, through the trust, issued $750.0 million of 2020-1C Tower Securities and $600.0 million of 2020-2C Tower Securities. Net proceeds from this offering were used to repay the entire aggregate principal amount of the 2015-1C Tower Securities ($500.0 million) and the 2016-1C Tower Securities ($700.0 million). The remaining net proceeds of the 2020 Tower Securities were used for general corporate purposes.
Our current primary market risk exposure is (1) interest rate risk relating to our ability to refinance our debt at commercially reasonable rates, if at all, and (2) interest rate risk relating to the impact of interest rate movements on the variable portion of our 2018 Term Loan and any borrowings that we may incur under our Revolving Credit Facility, which are at floating rates. We manage the interest rate risk on our outstanding debt through our large percentage of fixed rate debt, including interest rate swaps. During 2019, we, through our wholly owned subsidiary, SBA Senior Finance II, LLC, entered into interest rate swaps on a portion of our 2018 Term Loan, which as of December 31, 2019, swapped $1.95 billion of notional value accruing interest at one month LIBOR plus 175 basis points for a fixed rate of 3.78% per annum through the maturity date of the 2018 Term Loan. On August 6, 2020, we terminated the interest rate swap entered into in 2019 and entered into a new interest rate swap for $1.95 billion of notional value receiving interest at one month LIBOR and paying a fixed rate of 0.1239% per annum settled monthly through the maturity date of the 2018 Term Loan. While we cannot predict our ability to refinance existing debt or the impact interest rate movements will have on our existing debt, we continue to evaluate our financial position on an ongoing basis. In addition, there is currently uncertainty about whether LIBOR will continue to exist after 2021. The discontinuation of LIBOR after 2021 and the replacement with an alternative reference rate may adversely impact interest rates and our interest expense could increase.
We are exposed to market risk from changes in foreign currency exchange rates in connection with our operations in Brazil, Canada, Chile, Peru, Argentina, Colombia, South Africa, and to a lesser extent, our markets in Central America. In each of these countries, we pay most of our selling, general, and administrative expenses and a portion of our operating expenses, such as taxes and utilities incurred in the country in local currency. In addition, in Brazil, Canada, Chile, and South Africa, we receive significantly all of our revenue and pay significantly all of our operating expenses in local currency. In Colombia, Argentina, and Peru, we receive our revenue and pay our operating expenses in a mix of local currency and U.S. dollars. All transactions denominated in currencies other than the U.S. Dollar are reported in U.S. Dollars at the applicable exchange rate. All assets and liabilities are translated into U.S.
Dollars at exchange rates in effect at the end of the applicable fiscal reporting period, and all revenues and expenses are translated at average rates for the period. The cumulative translation effect is included in equity as a component of Accumulated other comprehensive income (loss). For the six months ended June 30, 2020, approximately 14.1% of our revenues and approximately 17.4% of our total operating expenses were denominated in foreign currencies.
We have performed a sensitivity analysis assuming a hypothetical 10% adverse movement in the Brazilian Real from the quoted foreign currency exchange rates at June 30, 2020. As of June 30, 2020, the analysis indicated that such an adverse movement would have caused our revenues and operating income to decline by approximately 1.0% and 0.6%, respectively, for the six months ended June 30, 2020.
As of June 30, 2020, we had intercompany debt, which is denominated in a currency other than the functional currency of the subsidiary in which it is recorded. As settlement of this debt is anticipated or planned in the foreseeable future, any changes in the foreign currency exchange rates will result in unrealized gains or losses, which will be included in our determination of net income. A change of 10% in the underlying exchange rates of our unsettled intercompany debt at June 30, 2020 would have resulted in approximately $79.9 million of unrealized gains or losses that would have been included in Other income (expense), net in our Consolidated Statements of Operations for the six months ended June 30, 2020.
Special Note Regarding Forward-Looking Statements
This quarterly report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements concern expectations, beliefs, projections, plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. Specifically, this quarterly report contains forward-looking statements regarding:
our expectations on the future growth and financial health of the wireless industry and the industry participants, the drivers of such growth, the demand for our towers, the future capital investments of our customers, future spectrum auctions, the trends developing in our industry, and competitive factors;
our ability to capture and capitalize on industry growth and the impact of such growth on our financial and operational results;
our intent to grow our tower portfolio domestically and internationally and expand through acquisitions, new builds, and organic lease up on existing towers;
our belief 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;
our expectation regarding site leasing revenue growth, on an organic basis, in our domestic and international segments, and the drivers of such growth;
our focus on our site leasing business and belief that our site leasing business is characterized by stable and long-term recurring revenues, reduced exposure to changes in customer spending, predictable operating costs, and minimal non-discretionary capital expenditures;
our expectation that, due to the relatively young age and mix of our tower portfolio, future expenditures required to maintain these towers will be minimal;
our expectation that we will grow our cash flows by adding tenants to our towers at minimal incremental costs and executing monetary amendments;
our expectations regarding churn rates;
our election to be subject to tax as a REIT and our intent to continue to operate as a REIT;
our belief that our business is currently operated in a manner that complies with the REIT rules and our intent to continue to do so;
our plans regarding our distribution policy, and the amount and timing of, and source of funds for, any such distributions;
our expectations regarding the use of NOLs to reduce REIT taxable income;
our expectations regarding our capital allocation strategy, including future allocation decisions among portfolio growth, stock repurchases and dividends, the impact of our election to be taxed as a REIT on that strategy, and our goal of increasing our Adjusted Funds From Operations per share;
our expectations regarding dividends and our ability to grow our dividend in the future and the drivers of such growth;
our expectations regarding our future cash capital expenditures, both discretionary and non-discretionary, including expenditures required for new builds and to maintain, improve, and modify our towers, ground lease purchases, and general corporate expenditures, and the source of funds for these expenditures;
our expectations regarding our business strategies, including our strategy for securing rights to the land underlying our towers, and the impact of such strategies on our financial and operational results;
our intended use of our liquidity;
our intent to maintain our target leverage levels, including in light of our dividend;
our expectations regarding our debt service in 2020 and our belief that our cash on hand, capacity under our Revolving Credit Facility, and our cash flows from operations for the next twelve months will be sufficient to service our outstanding debt during the next twelve months; and
our expectations and estimates regarding certain tax and accounting matters, including the impact on our financial statements.
These forward-looking statements reflect our current views about future events and are subject to risks, uncertainties and assumptions. We wish to caution readers that certain important factors may have affected and could in the future affect our actual results and could cause actual results to differ significantly from those expressed in any forward-looking statement. The most important factors that could prevent us from achieving our goals, and cause the assumptions underlying forward-looking statements and the actual results to differ materially from those expressed in or implied by those forward-looking statements include, but are not limited to, the following:
the impact of consolidation among wireless service providers, including the impact of the merger between Sprint and T-Mobile, on our leasing revenue;
the ability of Dish Network to become and compete as a nationwide carrier;
our ability to continue to comply with covenants and the terms of our credit instruments and our ability to obtain additional financing to fund our capital expenditures;
our ability to successfully manage the risks associated with international operations, including risks relating to political or economic conditions, inflation, tax laws, currency restrictions and exchange rate fluctuations, legal or judicial systems, and land ownership;
our ability to successfully manage the risks associated with our acquisition initiatives, including our ability to satisfactorily complete due diligence on acquired towers, the amount and quality of due diligence that we are able to complete prior to closing of any acquisition, our ability to accurately anticipate the future performance of the acquired towers, our ability to receive required regulatory approval, the ability and willingness of each party to fulfill their respective closing conditions and their contractual obligations, and, once acquired, our ability to effectively integrate acquired towers into our business and to achieve the financial results projected in our valuation models for the acquired towers;
the health of the South Africa economy and wireless communications market, and the willingness of carriers to invest in their networks in that market;
developments in the wireless communications industry in general, and for wireless communications infrastructure providers in particular, that may slow growth or affect the willingness or ability of the wireless service providers to expend capital to fund network expansion or enhancements;
our ability to secure as many site leasing tenants as anticipated, recognize our expected economies of scale with respect to new tenants on our towers, and retain current leases on towers;
our ability to secure and deliver anticipated services business at contemplated margins;
our ability to build new towers, including our ability to identify and acquire land that would be attractive for our customers and to successfully and timely address zoning, permitting, weather, availability of labor and supplies and other issues that arise in connection with the building of new towers;
competition for the acquisition of towers and other factors that may adversely affect our ability to purchase towers that meet our investment criteria and are available at prices which we believe will be accretive to our shareholders and allow us to maintain our long-term target leverage ratios while achieving our expected portfolio growth levels;
our capital allocation decisions and the impact on our ability to achieve our expected tower portfolio growth levels;
our ability to protect our rights to the land under our towers, and our ability to acquire land underneath our towers on terms that are accretive;
our ability to sufficiently increase our revenues and maintain expenses and cash capital expenditures at appropriate levels to permit us to meet our anticipated uses of liquidity for operations, debt service and estimated portfolio growth;
the impact of rising interest rates on our results of operations and our ability to refinance our existing indebtedness at commercially reasonable rates or at all;
the extent and duration of the impact of the COVID-19 crisis on the global economy, on our business and results of operations, and on foreign currency exchange rates;
our ability to successfully estimate the impact of regulatory and litigation matters;
natural disasters and other unforeseen damage for which our insurance may not provide adequate coverage;
a decrease in demand for our towers;
the introduction of new technologies or changes in a tenant’s business model that may make our tower leasing business less desirable to existing or potential tenants;
our ability to qualify for treatment as a REIT for U.S. federal income tax purposes and to comply with and conduct our business in accordance with such rules;
our ability to utilize available NOLs to reduce REIT taxable income; and
our ability to successfully estimate the impact of certain accounting and tax matters, including the effect on our company of adopting certain accounting pronouncements and the availability of sufficient NOLs to offset future REIT taxable income.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
In order to ensure that the information we must disclose in our filings with the Commission is recorded, processed, summarized and reported on a timely basis, we have formalized our disclosure controls and procedures. Our principal executive officer and principal financial officer have reviewed and evaluated the effectiveness of our disclosure controls and procedures, as defined in Securities and Exchange Act Rule 13a-15(e) as of June 30, 2020. Based on such evaluation, such officers have concluded that, as of June 30, 2020, our disclosure controls and procedures were effective.
PART II – OTHER INFORMATION
ITEM 1A. RISK FACTORS
“Item 1A. Risk Factors” of our Form 10-K for the year ended December 31, 2019 includes a discussion of our risk factors. The information presented below updates, and should be read in conjunction with, the risk factors and information disclosed in our Form 10-K. Many of the following risks and uncertainties, as well as the risk factors contained in our Form 10-K are, and will be, exacerbated by the COVID-19 pandemic and any worsening of the global business and economic environment as a result.
The recent COVID-19 pandemic has significantly impacted worldwide economic conditions and could have a material adverse effect on our business operations, results of operations, cash flows and financial condition.
In December 2019, a novel strain of coronavirus, COVID-19, was identified in China. This virus continues to spread globally and in March 2020, the World Health Organization declared COVID-19 a pandemic. Public and private sector responsive measures, such as the imposition of travel restrictions, quarantines, adoption of remote working, and suspension of non-essential business and government services, could impact our operations. In addition, COVID-19 continues to significantly impact worldwide economic conditions, including negatively impacting economic growth and creating disruption and volatility in the global financial and capital markets. Among other things, COVID-19 and the responsive measures that have been adopted may adversely affect:
the ability of our suppliers and vendors to provide products and services to us;
demand for our wireless infrastructure;
our ability to build new towers or the ability of our customers to install new antennae on an existing tower, including as a result of delays or suspensions in the issuance of permits or other authorizations needed to increase the number of our tenants or amend our tenant leases;
interest rates and the overall availability and cost of capital, which could affect our ability to continue to grow our asset portfolio or pursue new business initiatives;
the financial condition of wireless service providers;
the ability and willingness of wireless service providers to maintain or increase capital expenditures;
the ability of our tenants to make lease payments on a timely basis; and
the willingness of our tenants to renew their existing leases for additional terms.
In addition, our results of operations may be negatively affected by foreign currency adjustments resulting from the COVID-19 pandemic, including the recent strengthening of the U.S. Dollar against the currencies in certain international markets in which we operate. The extent of the impact of COVID-19 on our business operations, results of operations, cash flows, and financial condition, will depend on future developments, including the duration and spread of the pandemic and related government restrictions, all of which are uncertain and cannot be predicted. Additionally, if the COVID-19 pandemic results in a global recession, the negative impacts of the pandemic on our operating results may worsen or be prolonged.
ITEM 6. EXHIBITS
|
|
|
|
Exhibit No. |
Description of Exhibits |
|
10.90* |
SBA Communications Corporation 2020 Performance and Equity Incentive Plan. |
|
31.1 |
|
|
31.2 |
|
|
32.1 |
|
|
32.2 |
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|
101.INS |
XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
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101.SCH |
XBRL Taxonomy Extension Schema Document. |
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101.DEF |
XBRL Taxonomy Extension Definition Linkbase Document. |
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101.CAL |
XBRL Taxonomy Extension Calculation Linkbase Document. |
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101.LAB |
XBRL Taxonomy Extension Label Linkbase Document. |
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101.PRE |
XBRL Taxonomy Extension Presentation Linkbase Document. |
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104 |
Cover Page Interactive File (formatted in Inline XBRL and contained in Exhibit 101). |
*Management contract or compensatory plan or arrangement.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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SBA COMMUNICATIONS CORPORATION |
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August 6, 2020 |
/s/ Jeffrey A. Stoops |
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Jeffrey A. Stoops |
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Chief Executive Officer |
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(Duly Authorized Officer) |
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August 6, 2020 |
/s/ Brendan T. Cavanagh |
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Brendan T. Cavanagh |
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Chief Financial Officer |
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(Principal Financial Officer) |
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SBA COMMUNICATIONS CORPORATION
2020 PERFORMANCE AND EQUITY INCENTIVE PLAN
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1. Establishment, Effective Date and Term |
SBA COMMUNICATIONS CORPORATION, a Florida corporation (the “Company”), hereby establishes the “SBA Communications Corporation 2020 Performance and Equity Incentive Plan” (as amended from time to time, the “Plan”). The effective date of the Plan shall be the date the Plan is approved by the shareholders of the Company (the “Effective Date”). Unless earlier terminated pursuant to Section 25 hereof, the Plan shall terminate on the tenth anniversary of the Effective Date.
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2. Purpose |
The purpose of the Plan is to promote the interests of the Company, its Subsidiaries and its shareholders by (i) attracting and retaining officers, employees and directors of, and consultants to, the Company and its Subsidiaries and Affiliates; (ii) motivating such individuals by means of performance-related incentives to achieve long-range performance goals; (iii) enabling such individuals to participate in the long-term growth and financial success of the Company; (iv) encouraging ownership of stock in the Company by such individuals; and (v) linking their compensation to the long-term interests of the Company and its shareholders.
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3. Definitions |
Whenever used in the Plan, the following terms shall have the meanings set forth below:
“Affiliate” means any entity that is directly or indirectly controlled by the Company or any entity in which the Company has a significant ownership interest as determined by the Committee provided that the entity is one with respect to which the Class A Common Stock will qualify as “service recipient stock” under Code Section 409A.
“Applicable Laws” shall mean the requirements relating to the administration of stock option plans under U.S. federal and state laws, any stock exchange or quotation system on which the Company has listed or submitted for quotation the Class A Common Stock to the extent provided under the terms of the Company’s agreement with such exchange or quotation system and, with respect to Awards subject to the laws of any foreign jurisdiction where Awards are, or will be, granted under the Plan, the laws of such jurisdiction.
“Appreciation Date” shall mean the date designated by a holder of Stock Appreciation Rights for measurement of the appreciation in the value of rights awarded to him or her, which date shall be the date notice of such designation is received by the Committee, or its designee.
“Award” shall mean any Option, Restricted Stock Award, Restricted Stock Unit, Stock Appreciation Right, Stock Bonus, Performance Award, Other Stock-Based Award or other award granted under the Plan, whether singly, in combination or in tandem, to a Participant by the Committee pursuant to such terms, conditions, restrictions and/or limitations, if any, as the Committee may establish or which are required by applicable legal requirements.
“Award Agreement” shall mean an agreement, contract or other instrument or document evidencing the terms and conditions of an individual Award, which may be in written or electronic format, in such form and with such terms as may be specified by the Committee. Each Award Agreement is subject to the terms and conditions of the Plan. An Award Agreement may be in the form of either (i) an agreement to be either executed by both the Participant and the Company or offered and accepted electronically as the Committee shall determine or (ii) certificates, notices or similar instruments as approved by the Committee.
“Beneficial Ownership” (including correlative terms) shall have the meaning given such term in Rule 13d-3 promulgated under the Exchange Act and any successor to such Rule.
“Board” shall mean the Board of Directors of the Company.
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“Cause” shall mean, unless otherwise defined in the applicable Award Agreement, (i) failure or refusal of the Participant to perform the duties and responsibilities that the Company requires to be performed by him or her, (ii) gross negligence or willful misconduct by the Participant in the performance of his or her duties, (iii) commission by the Participant of an act of dishonesty affecting the Company, or the commission of an act constituting common law fraud or a felony, (iv) the Participant’s commission of an act (other than the good faith exercise of his or her business judgment in the exercise of his or her responsibilities) resulting in material damages or reputational harm to the Company or (v) the Participant’s material violation of the Company’s Code of Ethics, Code of Conduct, Insider Trading Policy, International Anti-Corruption Compliance Policy or other policy the Company has adopted governing the ethical behavior of Company employees or directors; provided, however, that if the Participant and the Company have entered into an employment agreement which defines “cause” for purposes of such agreement, “cause” shall be defined in accordance with such agreement. The Committee, in its sole and absolute discretion, shall determine whether a termination of employment or service is for Cause.
“Change in Control” shall mean the occurrence, in a single transaction or in a series of related transactions, of any one or more of the following events:
(i) any Person or related group of Persons (other than the Company or a Person that, prior to such transaction, directly or indirectly controls, is controlled by, or is under common control with, the Company) directly or indirectly acquires Beneficial Ownership of securities possessing more than fifty percent (50%) of the total combined voting power of the Company’s outstanding securities unless such acquisition is approved by the majority of the Board members in office immediately preceding such acquisition;
(ii) there is a change in the composition of the Board over a period of twenty four (24) consecutive months (or less) such that a majority of the Board members (rounded up to the nearest whole number) ceases to be comprised of individuals who either (i) have been Board members continuously since the beginning of such period or (ii) have been elected or nominated for election as Board members during such period by at least a majority of the Board members described in clause (i) who were (x) still in office at the time such election or nomination was approved by the Board and (y) not initially (a) appointed or elected to office as a result of either an actual or threatened election and/or proxy contest by or on behalf of a Person other than the Board, or (b) designated by a Person who has entered into an agreement with the Company to effect a transaction described in (i) above or (iii) or (iv) below;
(iii) the consummation of a merger or consolidation of the Company with any other corporation (or other entity), other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation in substantially the same proportions as their ownership of the outstanding voting securities of the Company immediately prior to such merger or consolidation; provided, however, that a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person acquires more than 25% of the combined voting power of the Company’s then outstanding securities shall not constitute a Change in Control;
(iv) the consummation of a sale, lease, license or other disposition of all or substantially all of the consolidated assets of the Company and its Subsidiaries, other than a sale, lease, license or other disposition of all or substantially all of the consolidated assets of the Company and its Subsidiaries to an entity, more than fifty percent (50%) of the combined voting power of which are owned by shareholders of the Company in substantially the same proportions as their ownership of the outstanding voting securities of the Company immediately prior to such sale, lease, license or other disposition; or
(v) the complete liquidation of the Company.
The term “Change in Control” shall not include a sale of assets, merger or other transaction effected exclusively for the purpose of changing the domicile of the Company. Solely with respect to any Award that constitutes “deferred compensation” subject to Section 409A of the Code and that is payable on account of a Change in Control (including any installments or stream of payments that are accelerated on account of a Change in Control), a Change in Control shall occur only if such event also constitutes a “change in the ownership”, “change in effective control”, and/or a “change in the ownership of a substantial portion of assets” of the Company as those terms are defined under Treasury Regulation §1.409A-3(i)(5), but only to the extent necessary to establish a time or form of payment that complies with Section 409A of the Code, without altering the definition of Change in Control
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for purposes of determining whether a Participant’s rights to such Award become vested or otherwise unconditional upon the Change in Control.
“Class A Common Stock” shall mean the Class A Common Stock of the Company, par value $0.01 per share.
“Code” shall mean the Internal Revenue Code of 1986, as amended.
“Committee” shall mean the Compensation Committee or any other committee appointed by the Board to administer the Plan pursuant to Section 5 of the Plan. However, with respect to grants made to Independent Directors, the Committee shall mean the Board. In its absolute discretion, the Board may at any time and from time to time exercise any and all rights of the Committee under this Plan, except with respect to matters which under Rule 16b-3 of the Exchange Act or any regulations or rules issued thereunder are required to be determined in the sole discretion of the Committee.
“Compensation Committee” shall mean the Compensation Committee of the Board, which shall consist of two or more Independent Directors, each of whom shall be a “non-employee director” as defined by Rule 16b-3 of the Exchange Act.
“Disability” shall mean, unless otherwise provided in the applicable Award Agreement, “permanent and total disability” within the meaning of Section 22(e)(3) of the Code.
“Eligible Individual” shall mean any individual who is either: (i) an officer (whether or not a director) or employee of the Company or one of its Subsidiaries or Affiliates; (ii) a director of the Company or one of its Subsidiaries; or (iii) an individual consultant or advisor who renders or has rendered bona fide services to the Company or one of its Subsidiaries or Affiliates and who is selected to participate in this Plan by the Committee; provided, however, that an individual who is otherwise an Eligible Individual under clause (iii) above may participate in this Plan only if such participation would not adversely affect either the Company’s eligibility to use Form S-8 to register under the Securities Act, the offering and sale of shares issuable under this Plan by the Company or the Company’s compliance with any other Applicable Laws.
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
“Fair Market Value” means, as of any date, unless otherwise determined or provided by the Committee in the circumstances, (i) the closing sales price of a share of Class A Common Stock as furnished by the NASDAQ Global Select Market (“NASDAQ”) or other principal stock exchange on which the Company’s Class A Common Stock is then listed for the trading date preceding the date in question or (ii) if no sales of Class A Common Stock were reported by NASDAQ or other such exchange on that date, the closing sales price for a share of Class A Common Stock as furnished by NASDAQ or other such exchange for the next preceding day on which sales of shares of Class A Common Stock were reported by NASDAQ. If the Class A Common Stock is no longer listed or is no longer actively traded on NASDAQ or listed on a principal stock exchange as of the applicable date, the Fair Market Value of a share of Class A Common Stock shall be the value as reasonably determined by the Committee for purposes of the award in the circumstances.
“Grant Date” shall mean the date upon which an Award is granted to a Participant pursuant to this Plan or such later date as specified in advance by the Committee.
“Incentive Stock Option” shall mean an Option which is an “incentive stock option” within the meaning of Section 422 of the Code and which is identified as an Incentive Stock Option in the applicable Award Agreement.
“Independent Director” shall mean a member of the Board who is a “non-employee director,” as defined in Rule 16b-3 of the Exchange Act.
“Insider Trading Policy” shall mean the Company’s Insider Trading Policy, as may be amended from time to time.
“Issue Date” shall mean the date established by the Committee on which certificates representing shares of Class A Common Stock shall be issued by the Company.
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“Non-qualified Stock Option” shall mean an Option that is not intended to meet the requirements of Section 422 of the Code.
“Option” shall mean any stock option granted pursuant to Section 7 of the Plan.
“Other Stock-Based Award” shall mean an Award granted pursuant to Section 13 of the Plan.
“Participant” shall mean any Eligible Individual with an outstanding Award.
“Performance Award” shall mean any Award granted under Section 12 of the Plan. For purposes of the share counting provisions of Section 4.1 hereof, a Performance Award that is not settled in cash shall be treated as (i) an Option Award if the amounts payable thereunder will be determined by reference to the appreciation of a Share, and (ii) a Restricted Stock Award or a Restricted Stock Unit Award, as the case may be, if the amounts payable thereunder will be determined by reference to the full value of a Share.
“Performance Period” shall mean a period of time within which performance criteria is measured for the purpose of determining whether an Award subject to performance restrictions has been earned.
“Person” shall mean any person, corporation, partnership, joint venture or other entity or any group (as such term is defined for purposes of Section 13(d) of the Exchange Act), other than a parent or Subsidiary of the Company.
“Prior Plan Award” shall mean a grant of a restricted stock unit, an option or other stock-based award granted under the Prior Plan and is outstanding as of the Effective Date.
“Prior Plan” shall mean the SBA Communications Corporation 2010 Performance and Equity Incentive Plan, as amended, which expired by its terms on February 25, 2020.
“Reorganization” shall be deemed to occur if an entity is a party to a merger, consolidation, reorganization, or other business combination with one or more entities in which said entity is not the surviving entity, if such entity disposes of substantially all of its assets, or if such entity is a party to a spin–off, split–off, split–up or similar transaction; provided, however, that the transaction shall not be a Reorganization if the Company or any Subsidiary is the surviving entity.
“Restricted Stock Award” shall mean Awards granted pursuant to Section 8 of the Plan.
“Restricted Stock Unit” or “RSU” shall mean Awards granted pursuant to Section 9 of the Plan.
“Restriction Period” shall mean the period during which applicable restrictions apply to a Restricted Stock Award or Restricted Stock Units.
“Section 424 Employee” shall mean an employee of the Company or any “subsidiary corporation” or “parent corporation” as defined in and in accordance with Code Section 424. Such term shall also include employees of a corporation issuing or assuming a stock option in a transaction to which Code Section 424(a) applies.
“Securities Act” shall mean the Securities Act of 1933, as amended.
“Share” shall mean a share of Class A Common Stock, as adjusted in accordance with Section 16.1 of the Plan.
“Stock Appreciation Right” or “SAR” shall mean an Award granted pursuant to Section 10 of the Plan.
“Stock Bonus” shall mean an Award granted pursuant to Section 11 of the Plan.
“Stock Ownership Guidelines” shall mean the stock ownership guidelines adopted by the Board from time to time.
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“Subsidiary” shall mean any Person (other than the Company) of which a majority of its voting power or its equity securities or equity interest is owned directly or indirectly by the Company.
“Vesting Date” shall mean the date established by the Committee on which an award, such as a share of a Restricted Stock Award, may vest.
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4. Class A Common Stock Subject to the Plan. |
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4.1. Aggregate Limits. Subject to the provisions of Section 16 of the Plan, the aggregate number of Shares that may be issued pursuant to Awards granted under the Plan is equal to (a) 3,000,000 Shares plus (b) any Shares subject to Prior Plan Awards which, on or after the Effective Date, become available for Awards pursuant to Section 4.2 (collectively, the “Share Limit”). The Shares subject to the Plan may be either Shares reacquired by the Company, including Shares purchased in the open market, or authorized but unissued Shares. |
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4.2. Issuance of Shares. For purposes of Section 4.1, the aggregate number of Shares issued under the Plan at any time shall equal only the number of Shares actually issued upon exercise or settlement of an Award. If any Shares subject to an Award granted under the Plan or a Prior Plan Award are forfeited or such Award or Prior Plan Award is settled in cash or otherwise expires or terminates without the delivery of such Shares, the Shares subject to such Award or Prior Plan Award, as applicable, to the extent of any such forfeiture, cash settlement, expiration or termination, shall again be available for grant under the Plan. If any Shares subject to an Award or a Prior Plan Award are tendered by a Participant or withheld by the Company to satisfy any tax withholding obligation with respect to an Award or Prior Plan Award other than an Option or a SAR (or an option or stock appreciation right granted under the Prior Plan), such tendered or withheld Shares shall again be available for Awards under the Plan. Notwithstanding the foregoing, Shares subject to an Award under the Plan or a Prior Plan Award may not again be made available for grant under the Plan if such Shares are (i) Shares tendered to or withheld by the Company to pay the exercise price of an Option, (ii) Shares tendered to or withheld by the Company to pay the withholding taxes related to Options or SARs or (iii) Shares repurchased by the Company on the open market with the proceeds of an Award or Prior Plan Award paid to the Company by or on behalf of the Participant. With respect to SARs, if the payment upon exercise of a SAR is in the form of Shares, the Shares subject to the SAR shall be counted against the available Shares as one Share for every Share subject to the SAR, regardless of the number of Shares used to settle the SAR upon exercise. |
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4.3. Participant and Code Section 422 Limits. Subject to the provisions of Section 16 of the Plan, the aggregate number of Shares that may be subject to all Incentive Stock Options granted under the Plan is 3,000,000 Shares. Notwithstanding anything to the contrary in the Plan, the limitations set forth in this Section 4.3 shall be subject to adjustment under Section 16 of the Plan only to the extent that such adjustment will not affect the status of the qualification of Incentive Stock Options under the Plan. |
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4.4. Reservation of Shares; No Fractional Shares; Minimum Issue. The Company shall at all times reserve a number of Shares sufficient to cover the Company’s obligations and contingent obligations to deliver shares with respect to awards then outstanding under this Plan (exclusive of any dividend equivalent obligations to the extent the Company has the right to settle such rights in cash). No fractional shares shall be delivered under this Plan. The Committee may pay cash in lieu of any fractional shares in settlements of awards under this Plan. |
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5. Administration |
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5.1. Authority of Committee. The Plan shall be administered, construed and interpreted by the Committee, which shall be appointed by and serve at the pleasure of the Board; provided, however, with respect to Awards to Independent Directors, all references in the Plan to the Committee shall be deemed to be references to the Board. Subject to the terms of the Plan and Applicable Laws, and in addition to other express powers and authorizations conferred on the Committee by the Plan, the Committee shall have full power and authority in its discretion to: |
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(i) designate Participants, determine eligibility for participation in the Plan and decide all questions concerning eligibility for, and the amount of, Awards under the Plan; |
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(ii) determine the type or types of Awards to be granted to a Participant; |
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(iii) determine the number of Shares to be covered by, or with respect to which payments, rights or other matters are to be calculated in connection with Awards; |
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(iv) determine the timing, terms, and conditions of any Award; |
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(v) accelerate the time at which all or any part of an Award may be settled or exercised; |
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(vi) determine whether, to what extent, and under what circumstances, Awards may be settled or exercised in cash, Shares, other securities, other Awards or other property, or canceled, forfeited or suspended and the method or methods by which Awards may be settled, exercised, canceled, forfeited or suspended; |
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(vii) determine whether, to what extent, and under what circumstances cash, Shares, other securities, other Awards, other property, and other amounts payable with respect to an Award shall be deferred either automatically or at the election of the holder thereof or of the Committee; |
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(viii) grant Awards as an alternative to, or as the form of payment for, grants or rights earned or payable under, other bonus or compensation plans, arrangements or policies of the Company or a Subsidiary or Affiliate; |
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(ix) make all determinations under the Plan concerning the termination of any Participant’s employment or service with the Company or a Subsidiary or Affiliate, including whether such termination occurs by reason of Cause, Disability, death, or in connection with a Change in Control and whether a leave constitutes a termination of employment; |
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(x) interpret and administer the Plan and any instrument or Award Agreement relating to, or Award made under, the Plan; |
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(xi) except to the extent prohibited by Section 25.4, amend or modify the terms of any Award at or after grant with the consent of the holder of the Award; |
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(xii) establish, amend, suspend or waive such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; and |
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(xiii) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan, subject to the exclusive authority of the Board under this Section 5 to amend or terminate the Plan. |
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5.2. Delegation of Authority. |
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(i) Delegation With Respect to Awards. Subject to the terms of the Plan, the Committee’s charter and Applicable Law, the Committee may, but need not, delegate from time to time some or all of its authority under the Plan to a committee consisting of one or more members of the Committee to (a) grant Awards, (b) to cancel, modify or waive rights with respect to Awards, or (c) to alter, discontinue, suspend or terminate Awards held by Participants; provided, however, that the Committee may not delegate its authority to take any action with respect to any Awards held by, or to be granted to, any individual who is subject on the date of the grant to the reporting rules under Section 16(a) of the Exchange Act. Any delegation hereunder shall be subject to the restrictions and limits that the Committee specifies at the time of such delegation of authority and may be rescinded at any time by the Committee. At all times, any committee appointed under this Section 5.2 shall serve in such capacity at the pleasure of the Committee. |
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(ii) Delegation of Ministerial Functions. The Committee may delegate ministerial, non-discretionary functions to individuals who are officers or employees of the Company or any of its Subsidiaries or to third parties. |
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5.3. Committee Discretion Binding. Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations, and other decisions under or with respect to the Plan or any Award shall be within the sole discretion of the Committee, may be made at any time and shall be final, conclusive, and binding upon all
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Persons, including the Company, any Subsidiary or Affiliate, any Participant and any holder or beneficiary of any Award. A Participant or other holder of an Award may contest a decision or action by the Committee with respect to such Person or Award only on the grounds that such decision or action was arbitrary or capricious or was unlawful, and any review of such decision or action shall be limited to determining whether the Committee’s decision or action was arbitrary or capricious or was unlawful. |
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5.4. Reliance on Experts. In making any determination or in taking or not taking any action under this Plan, the Board or a committee, as the case may be, may obtain and may rely upon the advice of experts, including employees and professional advisors to the Company. No director, officer or agent of the Company or any of its Subsidiaries shall be liable for any such action or determination taken or made or omitted in good faith. |
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5.5. No Liability. No member of the Committee shall be liable for any action or determination made in good faith with respect to the Plan, any Award granted or any Award Agreement entered into hereunder, and the Company shall fully indemnify all members of the Committee with respect to any such action or determination. |
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6. Eligibility. The Committee may grant awards under this Plan only to those individuals that the Committee determines to be Eligible Individuals. An Eligible Individual who has been granted an award, if otherwise eligible, may be granted additional awards if the Committee shall so determine. |
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7. Options. |
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7.1. Types of Options. Each Option granted under the Plan may be designated by the Committee, in its sole discretion, either as (i) an Incentive Stock Option or (ii) as a Non-qualified Stock Option. Options designated as Incentive Stock Options that fail to continue to meet the requirements of Section 422 of the Code shall be redesignated as Non-qualified Stock Options automatically on the date of such failure to continue to meet such requirements without further action by the Committee. In the absence of any designation, Options granted under the Plan will be deemed to be Incentive Stock Options to the extent that such Options meet the requirements of Section 422 of the Code. |
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7.2. Grant of Options. Subject to the terms and conditions of the Plan, the Committee may, at any time and from time to time, prior to the date of termination of the Plan, grant to such Eligible Individuals as the Committee may determine, Options to purchase such number of shares of Class A Common Stock on such terms and conditions as the Committee may determine. The date on which the Committee approves the grant of an Option (or such later date as is specified by the Committee) shall be considered the Grant Date. All Options granted pursuant to the Plan shall be evidenced by an Award Agreement in such form or forms as the Committee shall determine. Award Agreements may contain different provisions, provided, however, that all such Award Agreements shall comply with all terms of the Plan. |
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7.3. Limitation on Incentive Stock Options. |
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(i) Section 424 Employees. Incentive Stock Options may only be granted to Section 424 Employees. Subject to the terms and conditions of this Plan and the Award Agreement (including all vesting provisions and option periods), any and all Incentive Stock Options which an employee fails to exercise within ninety (90) days after the date said employee ceases to be a Section 424 Employee shall automatically be classified as Non-qualified Stock Options to the extent that said Options have not otherwise been terminated. |
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(ii) Ten Percent Shareholder. Notwithstanding any other provision of this Plan to the contrary, no individual may receive an Incentive Stock Option under the Plan if such individual, at the time the award is granted, owns (after application of the rules contained in Section 424(d) of the Code) stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company, unless (a) the exercise price for each share of Class A Common Stock subject to such Incentive Stock Option is at least one hundred ten percent (110%) of the Fair Market Value of a share of Class A Common Stock on the date of grant and (b) such Incentive Stock Option is not exercisable after the fifth (5th) anniversary of the date of grant. |
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(iii) Limitation on Grants. The aggregate Fair Market Value (determined with respect to each Incentive Stock Option at the time such Incentive Stock Option is granted) of the shares of Class A Common Stock with respect to which Incentive Stock Options are exercisable for the first time by an individual during
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any calendar year (under this Plan or any other plan of the Company) shall not exceed $100,000. If an Incentive Stock Option is granted pursuant to which the aggregate Fair Market Value of shares with respect to which it first becomes exercisable in any calendar year by an individual exceeds such $100,000 limitation, the portion of such Option which is in excess of the $100,000 limitation, and any Options issued subsequently in the same calendar year, shall be treated as a Non-qualified Stock Option pursuant to Section 422(d)(1) of the Code. In the event that an individual is eligible to participate in any other stock option plan of the Company which is also intended to comply with the provisions of Section 422 of the Code, such $100,000 limitation shall apply to the aggregate number of shares for which Incentive Stock Options may be granted under this Plan and all such other plans. |
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(iv) Other Terms. Award Agreements evidencing Incentive Stock Options shall contain such other terms and conditions as may be necessary to qualify, to the extent determined desirable by the Committee, with the applicable provisions of Section 422 of the Code. |
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7.4. Exercise Price. The per share exercise price for the Shares to be issued pursuant to exercise of an Option shall be determined by the Committee, subject to the following: |
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(i) The per Share exercise price of an Option shall be no less than 100% of the Fair Market Value per Share on the Grant Date. |
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(ii) Notwithstanding the foregoing, at the Committee’s discretion, Options may be granted in substitution and/or conversion of options or stock appreciation rights of an acquired entity, with a per Share exercise price of less than 100% of the Fair Market Value per Share on the date of such substitution and/or conversion if such exercise price is based on a formula set forth in the terms of such options/stock appreciation rights or in the terms of the agreement providing for such acquisition. |
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7.5. Option Period. Subject to the provisions of Sections 7.3 and 14.2, each Option granted pursuant to Section 7 under the Plan shall terminate and all rights to purchase shares thereunder shall cease on the tenth (10th) anniversary of the date such Option is granted, or on such date prior thereto as may be fixed by the Committee and stated in the Award Agreement relating to such Option. Notwithstanding the foregoing, the Committee may in its discretion, at any time prior to the expiration or termination of any Option, extend the term of any such Option for such additional period as the Committee in its discretion may determine; provided, however, that in no event shall the aggregate option period with respect to any Option, including the initial term of such Option and any extensions thereof, exceed ten (10) years. Notwithstanding the foregoing, other than as would otherwise result in the violation of Section 409A of the Code, an Award Agreement may provide that the term of the Options, other than Options that are intended to qualify as Incentive Stock Options, shall be extended automatically if the Options would expire at a time when trading in Shares is prohibited by law or the Company’s Insider Trading Policy to the 30th day after the expiration of the prohibition; provided that no extension will be made if the per Share exercise price of such Option at the date the term would otherwise expire is above the Fair Market Value of such Share. |
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7.6. Vesting. Each Award Agreement will specify the vesting schedule applicable to the Option granted thereunder. Notwithstanding the foregoing, the Committee may in its discretion provide that any vesting requirement or other such limitation on the exercise of an Option may be rescinded, modified or waived by the Committee, in its sole discretion, at any time and from time to time after the date of grant of such Option, so as to accelerate the time at which the Option may be exercised. |
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7.7. Exercise of Option. |
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(i) Procedure for Exercise. |
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(a) Any Option granted hereunder shall be exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Committee and set forth in the respective Award Agreement. Unless the Committee provides otherwise: (1) no Option may be exercised during any leave of absence other than an approved personal or medical leave with an employment guarantee upon return; and (2) an Option shall continue to vest during any authorized leave of absence and such Option may be exercised to the extent vested and exercisable upon the Participant’s return to active employment status. |
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(b) An Option shall be deemed exercised when the Company, or its agent appointed pursuant to 5.2(ii) receives (1) written, electronic or verbal, to the extent expressly permitted by the third party or Company, notice of exercise (in accordance with the Award Agreement) from the person entitled to exercise the Option; (2) full payment for the Shares with respect to which the related Option is exercised; and (3) with respect to Non-qualified Stock Option, payment of all applicable withholding taxes. |
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(c) Shares issued upon exercise of an Option shall be issued in the name of the Participant or, if requested by the Participant, in the name of the Participant and his or her spouse. |
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(d) The Company shall issue (or cause to be issued) such Shares as soon as administratively practicable after the Option is exercised. |
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(ii) Rights as Shareholders. Unless provided otherwise by the Committee or pursuant to this Plan, until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the Shares subject to an Option, notwithstanding the exercise of the Option. |
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(iii) Failure to Exercise. An Award Agreement may specify that, if on the last day of the Option period, the Fair Market Value of the stock exceeds the exercise price, the Participant has not exercised the Option, and the Option has not lapsed, such Option shall be deemed to have been exercised by the Participant on such last day and the Company shall make the appropriate payment therefor. |
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7.8. Form of Consideration. Unless provided otherwise in the Award Agreement, the following shall be deemed to be acceptable forms of consideration for exercising an Option: |
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(i) cash; |
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(ii) check or wire transfer (denominated in U.S. Dollars); |
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(iii) subject to any conditions or limitations established by the Committee in the applicable Award Agreement, other Shares which have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Option shall be exercised; |
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(iv) subject to any conditions or limitations established by the Committee in the applicable Award Agreement, withholding of Shares deliverable upon exercise, which have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Option shall be exercised; |
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(v) consideration received by the Company under a broker-assisted sale and remittance program, or “cashless” exercise/sale procedure; |
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(vi) such other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws; or |
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(vii) any combination of the foregoing methods of payment. |
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8. Restricted Stock Award. |
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8.1. Grant of a Restricted Stock Award. Subject to the provisions of the Plan, the Committee may grant a Restricted Stock Award. Each grant of a Restricted Stock Award shall be evidenced by an Award Agreement in such form as the Committee shall from time to time approve. |
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8.2. Issue Date and Vesting Date. At the time of the grant of a Restricted Stock Award, the Committee shall establish an Issue Date(s) and a Vesting Date(s) with respect to such Restricted Stock Award. The Committee may divide a Restricted Stock Award into classes and assign a different Issue Date and/or Vesting Date for each class. Upon an Issue Date with respect to a share of a Restricted Stock Award, a share of a Restricted Stock Award
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shall be issued in accordance with the provisions of Section 8.4. Provided that all conditions to the vesting of a share of a Restricted Stock Award imposed pursuant to Section 8.3 are satisfied, upon the occurrence of the Vesting Date with respect to a share of Restricted Stock, such share of Restricted Stock shall vest. |
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8.3. Vesting. At the time of the grant of a Restricted Stock Award, the Committee may impose such restrictions or conditions, not inconsistent with the provisions hereof, to the vesting of such Restricted Stock as it, in its absolute discretion, deems appropriate. By way of example and not by way of limitation, the Committee may require, as a condition to the vesting of any class or classes of shares underlying a Restricted Stock Award, that the Participant or the Company achieve certain performance criteria, the Class A Common Stock attain certain stock price or prices, or such other criteria to be specified by the Committee at the time of the grant of such Shares in the applicable Award Agreement. |
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8.4. Issuance of Certificates. |
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(i) Reasonably promptly after the Issue Date with respect to a Restricted Stock Award, the Company shall cause to be issued and delivered, either physically or electronically shares of Class A Common Stock, registered in the name of the Participant to whom such shares were granted; provided, that the Company shall not cause a physical stock certificate to be issued unless it has received a stock power duly endorsed in blank with respect to such shares. Each stock certificate representing unvested shares of Restricted Stock shall bear the following legend: |
“THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES OF STOCK REPRESENTED HEREBY IS SUBJECT TO THE RESTRICTIONS, TERMS AND CONDITIONS (INCLUDING FORFEITURE AND RESTRICTIONS AGAINST TRANSFER) CONTAINED IN THE SBA COMMUNICATIONS CORPORATION 2020 PERFORMANCE AND EQUITY INCENTIVE PLAN AND AN AWARD AGREEMENT ENTERED INTO BETWEEN THE REGISTERED OWNER OF SUCH SHARES AND SBA COMMUNICATIONS CORPORATION. A COPY OF THE PLAN AND AGREEMENT IS ON FILE IN THE OFFICE OF THE SECRETARY OF SBA COMMUNICATIONS CORPORATION. SUCH LEGEND SHALL NOT BE REMOVED FROM THE CERTIFICATE EVIDENCING SUCH SHARES UNTIL SUCH SHARES VEST PURSUANT TO THE TERMS HEREOF.”
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(ii) To the extent that the shares of Restricted Stock are delivered electronically, the Company may make such provisions as it deems necessary to ensure that each share of Restricted Stock is subject to the same terms and conditions as shares that are represented by a physical stock certificate. Each certificate issued pursuant to Section 8.4(i) hereof, together with the stock powers relating to the shares of Restricted Stock evidenced by such certificate, shall be deposited by the Company with a custodian designated by the Company. The Company shall cause such custodian to issue to the Participant a receipt evidencing the certificates held by it which are registered in the name of the Participant. |
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8.5. Dividends and Splits. As a condition to the grant of an award of a Restricted Stock Award, the Committee may require or permit a Participant to elect that any cash dividends paid on a share of a Restricted Stock Award be automatically reinvested in additional shares of Restricted Stock or applied to the purchase of additional awards under this Plan. Stock distributed in connection with a stock split or stock dividend, and other property distributed as a dividend, shall be subject to restrictions and a risk of forfeiture to the same extent as the Restricted Stock Award with respect to which such stock or other property has been distributed. |
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8.6. Consequences Upon Vesting. Upon the vesting of a share of a Restricted Stock Award pursuant to the terms hereof, the vesting restrictions shall cease to apply to such share. Reasonably promptly after a share of a Restricted Stock Award vests pursuant to the terms hereof, the Company shall cause to be issued and delivered to the Participant to whom such shares were granted, either (i) a certificate evidencing such shares of Class A Common Stock or (ii) an electronic issuance evidencing such shares of Class A Common Stock, together with any other property of the Participant held by the custodian pursuant to Section 8.4 hereof; provided, however, that to the extent that the Participant is then subject to Stock Ownership Guidelines and that such shares are subject to transfer restrictions pursuant to such Stock Ownership Guidelines then such shares (i) shall be issued with a legend indicating that “THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES OF STOCK REPRESENTED HEREBY IS SUBJECT TO TRANSFERABILITY RESTRICTIONS CONTAINED IN THE SBA COMMUNICATIONS CORPORATION STOCK OWNERSHIP GUIDELINES” or (ii) if delivered electronically, the Company may make such provisions as it deems necessary to ensure that each share of Class A Common Stock is subject to the same terms and conditions as shares that are represented by a physical stock certificate. |
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9. Restricted Stock Units. |
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9.1. Grant of Restricted Stock Units. Subject to the terms of the Plan, the Committee may grant awards of Restricted Stock Units or RSUs. An award of RSUs may be subject to the attainment of specified performance goals or targets, forfeitability provisions and such other terms and conditions as the Committee may determine, subject to the provisions of this Plan. At the time an award of RSUs is made, the Committee shall establish a period of time during which the RSUs shall vest. Each grant of a RSU shall be evidenced by an Award Agreement in such form as the Committee shall from time to time approve. |
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9.2. Dividend Equivalent Accounts. If (and only if) required by the applicable Award Agreement, prior to the expiration of the applicable vesting period of an RSU, the Company shall pay dividend equivalent rights with respect to RSUs, in which case, the Company shall establish an account for the Participant and reflect in that account any securities, cash or other property comprising any dividend or property distribution with respect to the Class A Common Stock underlying each RSU. Each amount or other property credited to any such account shall be subject to the same vesting conditions as the RSU to which it relates. The Participant shall be paid the amounts or other property credited to such account upon vesting of the RSU. |
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9.3. Rights as a Shareholder. Subject to the restrictions imposed under the terms and conditions of this Plan and the applicable Award Agreement, each Participant receiving RSUs shall have no rights as a shareholder with respect to such RSUs until such time as Class A Common Stock are issued to the Participant. Except as otherwise provided in the applicable Award Agreement, Class A Common Stock issuable under an RSU shall be treated as issued on the first date that the holder of the RSU is no longer subject to a substantial risk of forfeiture as determined for purposes of Section 409A of the Code, and the holder shall be the owner of such Class A Common Stock on such date. |
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9.4. Consequences Upon Vesting. Reasonably promptly after the vesting of an RSU, the Company shall cause to be issued and delivered to the Participant to whom such shares were granted, either (i) a certificate evidencing such shares of Class A Common Stock or (ii) an electronic issuance evidencing such shares of Class A Common Stock, together with any other property of the Participant held by the custodian pursuant to Section 9.2 hereof; provided, however, that to the extent that the Participant is then subject to Stock Ownership Guidelines and that such shares are subject to transfer restrictions pursuant to such Stock Ownership Guidelines then such shares (a) shall be issued with a legend indicating that “THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES OF STOCK REPRESENTED HEREBY IS SUBJECT TO TRANSFERABILITY RESTRICTIONS CONTAINED IN THE SBA COMMUNICATIONS CORPORATION STOCK OWNERSHIP GUIDELINES” or (b) if delivered electronically, the Company may make such provisions as it deems necessary to ensure that each share of Class A Common Stock is subject to the same terms and conditions as shares that are represented by a physical stock certificate. |
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10. Stock Appreciation Rights. |
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10.1. Grant of Stock Appreciation Rights. Subject to the terms of the Plan, any Option granted under the Plan may include a SAR, either at the time of grant or by amendment except that in the case of an Incentive Stock Option, such SAR shall be granted only at the time of grant of the related Option. The Committee may also award to Participants SARs independent of any Option, and the per Share exercise price of any such SAR shall be no less than 100% of the Fair Market Value per Share on the Grant Date. A SAR shall be subject to such terms and conditions not inconsistent with the Plan as the Committee shall impose. Each grant of a SAR shall be evidenced by an Award Agreement in such form as the Committee shall from time to time approve. |
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10.2. Vesting. A SAR granted in connection with an Option shall become exercisable, be transferable and shall lapse according to the same vesting schedule, transferability and lapse rules that are established by the Committee for the Option. A SAR granted independent of an Option shall become exercisable, be transferable and shall lapse in accordance with a vesting schedule, transferability and lapse rules established by the Committee. |
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10.4. Payment. The amount of additional compensation which may be received pursuant to the award of one SAR is the excess, if any, of the Fair Market Value of one share of Class A Common Stock on the Appreciation Date over the exercise price, in the case of a SAR granted in connection with an Option, or the Fair Market Value of one (1) share of Class A Common Stock on the date the SAR is granted, in the case of a SAR granted independent of an Option. The Company shall pay such excess in cash, in shares of Class A Common Stock valued at Fair Market Value, or any combination thereof, as determined by the Committee. Fractional shares shall be settled in cash. |
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10.5. Designation of Appreciation Date. A Participant may designate an Appreciation Date at such time or times as may be determined by the Committee at the time of grant by filing an irrevocable written notice with the Committee or its designee, specifying the number of SARs to which the Appreciation Date relates, and the date on which such SARs were awarded. Such time or times determined by the Committee may take into account any applicable “window periods” required by Rule 16b-3 under the Exchange Act. |
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10.6. Expiration. Except as otherwise provided in the case of SARs granted in connection with Options, the SARs shall expire on a date designated by the Committee which, in either event, shall not be later than ten (10) years after the date on which the SAR was awarded. Notwithstanding the foregoing, other than as would otherwise result in the violation of Section 409A of the Code, an Award Agreement may specify that the term of Awards of SARs shall be extended automatically if the SARs would expire at a time when trading in Shares is prohibited by law or the Company’s Insider Trading Policy to the 30th day after the expiration of the prohibition; provided that no extension will be made if the per Share exercise price of such SAR at the date the term would otherwise expire is above the Fair Market Value of such Share. |
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11. Stock Bonuses. Subject to the provisions of the Plan, the Committee may grant Stock Bonuses in such amounts as it shall determine from time to time. A Stock Bonus shall be paid at such time and subject to such conditions as the Committee shall determine at the time of the grant of such Stock Bonus. Shares of Class A Common Stock granted as a Stock Bonus shall be issued in certificated form or electronically and delivered to such Participant as soon as practicable after the date on which such Stock Bonus is required to be paid. |
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12. Performance Awards. |
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12.2. Terms and Conditions. Each Performance Award shall contain provisions regarding (a) the target and maximum amount payable to the Participant, (b) the performance criteria and level of achievement versus these criteria which shall determine the amount of such payment, (c) the period as to which performance shall be measured for establishing the amount of any payment, (d) the timing of any payment earned by virtue of performance, (e) restrictions on the alienation or transfer of the Performance Award prior to actual payment, (f) forfeiture provisions, and (g) such further terms and conditions, in each case not inconsistent with the Plan, as may be determined from time to time by the Committee. In the event the Committee provides for dividends or dividend equivalents to be payable with respect to any Performance Awards denominated in Shares, actual payment of such dividends or dividend equivalents shall be conditioned upon the performance goals underlying the Performance Award being met. |
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12.3. Performance Criteria. The Committee shall establish the performance criteria and level of achievement versus these criteria which shall determine the amount payable under a Performance Award, which criteria may be based on Company financial or operational performance and/or personal performance evaluations. |
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12.4. Timing and Form of Payment. The Committee shall determine the timing of payment of any Performance Award. The Committee may provide for or, subject to such terms and conditions as the Committee
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may specify, may permit a Participant to elect (in a manner consistent with Section 409A of the Code) for the payment of any Performance Award to be deferred to a specified date or event. |
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12.5. Extraordinary Events. At, or at any time after, the time an Award is granted, the Committee, in its sole discretion, may provide for the manner in which performance will be measured against the performance criteria (or may adjust the performance criteria ) to reflect the impact of specific corporate transactions, accounting or tax law changes, asset write-downs, significant litigation or claim adjustment, foreign exchange gains and losses, disposal of a segment of a business, discontinued operations, refinancing or repurchase of bank loans or debt securities, unbudgeted capital expenditures and other unusual or infrequently occurring events. |
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13. Other Stock-Based Awards. |
Awards of shares of Class A Common Stock, stock appreciation rights, phantom stock and other awards that are valued in whole or in part by reference to, or otherwise based on, Class A Common Stock, may also be made, from time to time, to Eligible Individuals as may be selected by the Committee. Such awards may be made alone or in addition to or in connection with any Option, Restricted Stock Unit or any other award granted hereunder. The Committee may determine the terms and conditions of any such award. Each award shall be evidenced by an Award Agreement that shall specify the number of shares of Class A Common Stock subject to the award, any consideration therefor, any vesting or performance requirements and such other terms and conditions as the Committee shall determine.
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14. Effect of Termination of Service on Awards. |
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14.1. Termination of Employment. The Committee shall establish the effect of a termination of employment or service on the rights and benefits under each award under this Plan and in so doing may make distinctions based upon, inter alia, the cause of termination and type of award. If the Participant is not an employee of the Company or one of its Subsidiaries and provides other services to the Company or one of its Subsidiaries, the Committee shall be the sole judge for purposes of this Plan (unless a contract or the Award Agreement otherwise provides) of whether the Participant continues to render services to the Company or one of its Subsidiaries and the date, if any, upon which such services shall be deemed to have terminated. |
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14.2. Termination of Employment Without Cause. Unless otherwise provided in an Award Agreement, upon the termination of the employment or other service of a Participant with the Company, a Subsidiary or Affiliate, other than by reason of Cause, death or Disability, any Option or SAR granted to such Participant which has vested as of the date upon which the termination occurs shall be exercisable for a period not to exceed ninety (90) days after such termination. Upon such termination, (i) the Participant’s unvested Options or SARs shall expire and the Participant shall have no further right to exercises such Options or SARs and (ii) any Restricted Stock or RSU that is subject to restrictions at the time of termination shall be forfeited and reacquired by the Company. Notwithstanding the provisions of this Section 14.2, the Committee may provide, by rule or regulation, in any Award Agreement, or in any individual case, in its sole discretion, that following the termination of employment or service of a Participant with the Company, a Subsidiary or Affiliate, other than a termination resulting from Cause, a Participant may (a) exercise an Option, in whole or in part, at any time subsequent to such termination of employment or service and prior to termination of the Option pursuant to Section 7.6 above, either subject to or without regard to any vesting or other limitation on exercise imposed pursuant to the applicable Award Agreement and (b) any restrictions or forfeiture conditions relating to the vesting of a Restricted Stock Award or Restricted Stock Unit shall be waived in whole or in part in the event of such termination. |
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14.3. Termination of Employment for Cause. Upon termination of the employment or other service of a Participant with the Company, a Subsidiary or Affiliate, as the case may be, for Cause, (i) any Option or SAR granted to the Participant shall expire immediately and the Participant shall have no further right to exercise such Option or SAR, as the case may be and (ii) any Restricted Stock or RSU that is subject to restrictions at the time of termination shall be forfeited and reacquired by the Company. The Committee shall determine whether Cause exists for purposes of this Plan. |
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14.4. Termination of Employment by Disability or Death. Unless otherwise provided in an Award Agreement, if a Participant’s employment or service with the Company, the Subsidiary or Affiliate, as the case may be, terminates by reason of Disability or death, all outstanding Options and SARs held by the Participant at the time of death or Disability (the “Date of Termination by Death or Disability”) shall immediately vest and, (i) in the case of termination by Disability, the Participant, or (ii) in the case of termination by death, the Participant’s estate, the
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devisee named in the Participant’s valid last will and testament or the Participant’s heir at law who inherits the Option (whichever is applicable), has the right, at any time prior to the one (1) year anniversary of the Date of Termination by Death or Disability to exercise, in whole or in part, any portion of the Options or SARs held by the Participant on the Date of Termination by Death or Disability. Unless otherwise provided in a Award Agreement, if a Participant’s employment or service with the Company, the Subsidiary or Affiliate, as the case may be, terminates by reason of Disability or death, any time-based restrictions applicable to any outstanding RSU or Restricted Stock shall be deemed waived. |
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14.5. Events Not Deemed Terminations of Service. Unless the express policy of the Company or one of its Subsidiaries or Affiliates, as the case may be, or the Committee, otherwise provides, the employment relationship shall not be considered terminated in the case of (i) sick leave, (ii) military leave, or (iii) any other leave of absence authorized by the Company or one of its Subsidiaries, or the Committee; provided that such leave is for a period not exceeding the period permitted by applicable law. In the case of any employee of the Company or one of its Subsidiaries on an approved leave of absence, continued vesting of the award while on leave from the employ of the Company or one of its Subsidiaries may be suspended until the employee returns to service, unless the Committee otherwise provides or Applicable Laws otherwise require. In no event shall an award be exercised after the expiration of the term set forth in the Award Agreement. |
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14.6. Effect of Change of Entity Status. Unless otherwise provided in an Award Agreement or by the Committee, in its sole and absolute discretion, on a case-by case basis, for purposes of this Plan and any Award, if an entity ceases to be a Subsidiary or Affiliate of the Company, a termination of employment or service shall be deemed to have occurred with respect to each Eligible Individual in respect of such Subsidiary or Affiliate who does not continue as an Eligible Individual in respect of another entity within the Company or another Subsidiary or Affiliate that continues as such after giving effect to the transaction or other event giving rise to the change in status. |
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15. Awards to Independent Directors. |
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15.1. Initial Grants of Options to Independent Directors. Each person who is initially elected to the Board after the Effective Date and who is an Independent Director at the time of such initial election shall automatically be granted Non-qualified Stock Options, Restricted Stock and/or Restricted Stock Units with an aggregate value as established by the Board from time to time; provided, however, that the number of shares of Class A Common Stock subject to any Non-qualified Stock Option, Restricted Stock or RSU awarded under this Section 15.1 shall be reduced by the number of shares of Class A Common Stock subject to any Option, Restricted Stock or RSU granted to an Independent Director pursuant to any other stock incentive plan maintained by the Company. |
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15.2. Annual Grants to Independent Directors. The Committee may make an annual grant of Non-qualified Stock Options, Restricted Stock and/or RSUs to all Independent Directors, in an amount to be determined by the Committee in its sole discretion and subject to the applicable limitations of the Plan. |
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15.3. Additional Awards to Independent Directors. In addition to any other grants made to Independent Directors under this Section 15.3, the Committee may from time to time grant Options, Restricted Stock, Restricted Stock Units, Stock Bonuses and Other Stock-Based Awards to any Independent Director, in its sole discretion, and subject to the applicable limitations of the Plan. |
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15.4. Exercise Price. The price per share of the shares subject to each Option or SAR granted to an Independent Director shall equal 100% of the Fair Market Value of a share of Class A Common Stock on the date the option is granted. |
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15.5. Vesting. Except as set forth in the Award Agreement, subject to the provisions of this Section 15, (i) any Option, SAR, Restricted Stock or RSU granted to an Independent Director pursuant to Section 15.1 shall vest and, in the case of Options or SARs, become exercisable, in cumulative annual installments of 20% each on the first, second, third, fourth and fifth anniversaries of the date the Award, (ii) any other Options, SARs, Restricted Stock or RSUs granted to an Independent Director pursuant to Section 15.2 or Section 15.3 shall vest and become exercisable in accordance with the terms set forth in the applicable Award Agreement, as determined by the Committee in its sole discretion; provided, however, any Option or SAR granted to an Independent Director may in the sole discretion of the Committee vest and become immediately exercisable and any Restricted Stock or RSU which were granted pursuant to time-based restrictions may have such restrictions waived upon the retirement of the Independent Director in accordance with the Company’s retirement policy applicable to directors. |
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15.6. Vesting of Restricted Stock or Restricted Stock Units. Reasonably promptly after the vesting of a Restricted Stock Award or a RSU, the Company shall cause to be issued and delivered, either physically or electronically, to the Independent Director to whom such shares were granted, either (i) a certificate evidencing such shares of Class A Common Stock or (ii) an electronic issuance evidencing such shares of Class A Common Stock; provided, however, that to the extent that the Independent Director is then subject to Stock Ownership Guidelines and that such shares are subject to transfer restrictions pursuant to such Stock Ownership Guidelines then such shares (a) shall be issued with a legend indicating that “THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES OF STOCK REPRESENTED HEREBY IS SUBJECT TO THE RESTRICTIONS, TERMS AND CONDITIONS (INCLUDING FORFEITURE AND RESTRICTIONS AGAINST TRANSFER) CONTAINED IN THE SBA COMMUNICATIONS CORPORATION STOCK OWNERSHIP GUIDELINES” or (b) if delivered electronically, the Company may make such provisions as it deems necessary to ensure that each share of Class A Common Stock is subject to the same terms and conditions as shares that are represented by a physical stock certificate. |
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15.7. Term. Unless a shorter term is otherwise provided in the applicable Award Agreement, the term of any Non-qualified Stock Option, SAR, or RSU granted to an Independent Director shall be ten (10) years from the date the Option, SAR, or RSU is granted. |
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15.8. Effect of Termination of Service. Unless otherwise provided in an Award Agreement, upon a termination of the Independent Director’s services with the Company for any reason, any unvested Option or SAR shall immediately expire and any Restricted Stock or RSU that is subject to restrictions at the time of termination shall be forfeited and reacquired by the Company. Unless otherwise provided in an Award Agreement, vested portions of any Options granted to an Independent Director are exercisable until the first to occur of the following events: |
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(i) the expiration of twelve (12) months from the date of the Independent Director’s death or a termination of the Independent Director’s services with the Company by reason of a Disability; |
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(ii) the expiration of three (3) months from the date the Independent Director’s services with the Company are terminated for any reason other than death or Disability; or |
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(iii) the expiration of ten (10) years from the date the Option was granted. |
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16. Recapitalization, Change In Control And Other Corporate Events. |
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16.1. Recapitalization. If the outstanding shares of Class A Common Stock are increased or decreased or changed into or exchanged for a different number or kind of shares or other securities of the Company by reason of any recapitalization, or reclassification, stock split, reverse split, combination of shares, exchange of shares, stock dividend, other distribution payable in capital stock of the Company or extraordinary cash dividend, or other increase or decrease in such shares effected without receipt of consideration by the Company occurring after the Effective Date, a corresponding appropriate and proportionate adjustment shall be made by the Committee (i) in the aggregate number and kind of shares of Class A Common Stock available under the Plan, (ii) in the number and kind of shares of Class A Common Stock issuable upon exercise or vesting of an outstanding Award or upon termination of the Restriction Period applicable to a Restricted Stock Unit granted under the Plan, (iii) in the exercise price per share of outstanding Options or SARs granted under the Plan and (iv) to the terms and conditions of any outstanding Awards (including, without limitation, any applicable performance targets or criteria with respect thereto). |
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16.2. Reorganization. Unless otherwise provided in an Award Agreement, in the event of a Reorganization of the Company, the Committee may, in its sole and absolute discretion, provide on a case-by-case basis that some or all outstanding Awards shall become immediately exercisable, vested or entitled to payment. In the event of a Reorganization of the Company the Committee may, in its sole and absolute discretion, provide on a case-by-case basis that Options or SARs shall terminate upon the Reorganization, provided however, that any holder of Options or SARs shall have the right, immediately prior to the occurrence of such Reorganization and during such reasonable period as the Committee in its sole discretion shall determine and designate, to exercise any vested Option or SAR in whole or in part. In the event that the Committee does not terminate an Option or SAR upon a Reorganization of the Company then each outstanding Option or SAR shall upon exercise thereafter entitle the holder thereof to such number of shares of Class A Common Stock or other securities or property to which a holder of shares of Class A Common Stock would have been entitled to upon such Reorganization. |
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(i) Acceleration of Vesting of Awards. With respect to any Award, in connection with a Change in Control, the Committee may, in its discretion, either by the terms of the Award Agreement applicable to any Award or by resolution adopted prior to the occurrence of the Change in Control, (a) provide for the assumption or substitution of, or adjustment to, each outstanding Award, (b) accelerate the vesting of Awards and terminate any restrictions on Awards, and/or (c) provide for the cancellation of Awards for a cash payment per share/unit in an amount based on Fair Market Value of the Award with reference to the Change in Control, which amount may be zero (0) if applicable. Notwithstanding the foregoing, if the surviving company in a Change in Control assumes any Award or substitutes an equivalent award, then the acceleration of vesting and termination of any restrictions shall only be provided for, if at all, with respect to such Awards, in the event that a Termination of Employment has occurred with respect to such Participant and such termination was not a result of Termination of Employment by the Company or its successor with Cause. |
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(ii) Performance Awards. In the event of a Change in Control, all incomplete Performance Periods in effect on the date the Change in Control occurs shall end on the date immediately prior to the date of such Change in Control, and the Committee shall determine the extent to which the applicable performance criteria with respect to each such Performance Period have been met based upon such audited or unaudited financial information or market returns then available as it deems relevant and the extent to which the Performance Award may be subject to ongoing service-based vesting requirements. |
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16.4. Successors. The obligations of the Company under the Plan shall be binding upon any successor corporation or organization resulting from the merger, consolidation or other reorganization of the Company, or upon any successor corporation or organization succeeding to substantially all of the assets and business of the Company. The Company agrees that it will make appropriate provisions for the preservation of Participant’s rights under the Plan in any agreement or plan which it may enter into or adopt to effect any such merger, consolidation, reorganization or transfer of assets. |
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16.5. Adjustments. Adjustments under this Section 16 related to stock or securities of the Company shall be made by the Committee whose determination in that respect shall be final, binding, and conclusive. No fractional shares of Class A Common Stock or units of other securities shall be issued pursuant to any such adjustment, and any fractions resulting from any such adjustment shall be eliminated in each case by rounding downward to the nearest whole share or unit. |
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16.6. No Limitations. The grant of an Award pursuant to the Plan shall not affect or limit in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure or to merge, consolidate, dissolve or liquidate, or to sell or transfer all or any part of its business or assets. |
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17. Assignment or Transfer. Except as otherwise provided under the Plan, no Award under the Plan or any rights or interests therein shall be transferable other than by will or the laws of descent and distribution. The Committee may, in its discretion, provide that an Award (other than an Incentive Stock Option) is transferable without the payment of any consideration to a Participant’s family member, whether directly or by means of a trust or otherwise, subject to such terms and conditions as the Committee may impose. For this purpose, “family member” has the meaning given to such term in the General Instructions to the Form S-8 registration statement under the Securities Act. All Awards under the Plan shall be exercisable, during the Participant’s lifetime, only by the Participant or a person who is a permitted transferee pursuant to this Section 17. |
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18. Ownership and Transfer Restrictions. The Committee, in its sole discretion, may impose such restrictions on the ownership and transferability of Shares received pursuant to any Award at it deems appropriate, including any restrictions as may be imposed pursuant to the Company’s Stock Ownership Guidelines or Insider Trading Policy. Any such restriction shall be set forth in the respective Award Agreement and may be referred to on the certificates evidencing such shares. The holder shall give the Company prompt notice of any disposition of shares of Class A Common Stock acquired by exercise of an Incentive Stock Option within (i) two (2) years from the date of granting (including the date the Option is modified, extended or renewed for purposes of Section 424(h) of the Code) such Option to such holder or (ii) one (1) year after the transfer of such shares to such holder. |
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19. Limitations on Re-Pricing and Exchange of Options and SARs. The approval by a majority of the votes present and entitled to vote at a duly held meeting of the shareholders of the Company at which a quorum representing a majority of all outstanding voting stock is, either in person or by proxy, present and voting on the matter, or by written consent in accordance with applicable state law and the Articles of Incorporation and Bylaws of the Company shall be required prior to the Committee effecting any of the following, except for adjustments pursuant to Section 16 hereof: (i) re-pricing of any Option or SAR granted under the Plan by canceling and regranting Options or SARs or by lowering the exercise price, (ii) conducting a cash buyout of any underwater Options or SARs, (iii) replacing an underwater Option or SAR with another Award, or (iv) taking any other action that would be treated as a repricing under generally accepted accounting principles. For purposes of this Section 19, Options and SARs will be deemed to be “underwater” at any time when the Fair Market Value of the Class A Common Stock is less than the exercise price of the Option or SAR. |
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20. Disclaimer of Rights. No provision in the Plan, any Award granted or any Award Agreement entered into pursuant to the Plan shall be construed to confer upon any individual the right to remain in the employ of the Company or to interfere in any way with the right and authority of the Company either to increase or decrease the compensation of any individual, including any Participant, at any time, or to terminate any employment or other relationship between any individual and the Company. A holder of an Award shall not be deemed for any purpose to be shareholder of the Company with respect to such Award except to the extent that such Award shall have been exercised with respect thereto and, in addition, a stock certificate shall have been issued theretofore and delivered to the holder, or except as expressly provided by the Committee in writing. No adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property) or distributions or other rights for which the record date is prior to the date such stock certificate is issued, except as expressly provided in Section 16 hereof. |
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21. Nonexclusivity of the Plan. The adoption of the Plan shall not be construed as creating any limitations upon the right and authority of the Committee to adopt such other incentive compensation arrangements (which arrangements may be applicable either generally to a class or classes of individuals or specifically to a particular individual or individuals) as the Committee in its discretion determines desirable, including, without limitation, the granting of stock options or stock appreciation rights other than under the Plan. |
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22. Securities Matters. |
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22.1. Compliance with Laws. Notwithstanding anything herein to the contrary, the Company shall not be obligated to cause to be issued or delivered any shares of Class A Common Stock pursuant to the Plan unless and until the Company is advised by its counsel that the issuance and delivery of such shares is in compliance with all Applicable Laws, regulations of governmental authority and the requirements of any securities exchange on which Class A Common Stock are traded. The Committee may require, as a condition of the issuance and delivery of certificates evidencing Class A Common Stock pursuant to the terms hereof, that the recipient of such shares make such covenants, agreements and representations, and that such certificates bear such legends, as the Committee, in its sole discretion, deems necessary or desirable. To the extent that there is not an effective registration statement available for the issuance of shares of Class A Common Stock upon the vesting of a RSU or the exercise of an Option, the Company may, in its sole discretion, either (i) deliver shares that are subject to additional transferability restrictions pursuant to the Securities Act and may make such provisions as it deems necessary to ensure compliance by the Participant with such restrictions or (ii) defer the effectiveness of any exercise of an Option granted hereunder in order to allow the issuance of Class A Common Stock pursuant thereto to be made pursuant to registration or an exemption from the registration or other methods for compliance available under federal or state securities laws. During the period that the effectiveness of the exercise of an Option has been deferred, the Participant may, by written notice, withdraw such exercise and obtain the refund of any amount paid with respect thereto. |
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22.2. Section 16 Compliance. With respect to persons subject to Section 16 of the Exchange Act, transactions under this Plan are intended to comply with all applicable conditions of Rule 16b-3 of the Exchange Act or its successors under the Exchange Act. To the extent any provision of the Plan, the grant of an award, or action by the Committee fails to so comply, it shall be deemed null and void, to the extent permitted by Applicable Law and deemed advisable by the Committee. |
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23. Withholding Obligation. The Committee may make such provisions and take such steps as it may deem necessary or appropriate for the withholding of any taxes that the Company is required by any Applicable Law or regulation of any governmental authority, whether federal, state or local, domestic or foreign, to withhold in
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connection with the exercise of any Option or SAR, the vesting of any Restricted Stock or RSU or the grant of Class A Common Stock pursuant to an Award. The Award Agreement may provide, subject to any limitations set forth therein, that the following forms of consideration may be used by the Participant for payment of any withholding due: cash or check, other Shares which have a Fair Market Value on the date of surrender equal to the amount of withholding due; withholding of Shares deliverable upon exercise or vesting, which have a Fair Market Value on the date of surrender equal to the amount of withholding due; consideration received by the Company under a broker-assisted sale and remittance program, or “cashless” exercise/sale procedure, acceptable to the Committee; such other consideration and method of payment for the withholding due to the extent permitted by Applicable Laws; or any combination of the foregoing methods of payment. The amount of withholding tax paid with respect to an Award by the withholding of Shares otherwise deliverable pursuant to the Award or by delivering Shares already owned shall not exceed the maximum statutory withholding required with respect to that Award (or such other limit as the Committee shall impose, including without limitation, any limit imposed to avoid or limit any financial accounting expense relating to the Award). |
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24. Plan Construction. |
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24.1. Rule 16b-3. Notwithstanding any other provision of the Plan, the Plan, and any Award granted or awarded to any individual who is then subject to Section 16 of the Exchange Act, shall be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of the Exchange Act) that are requirements for the application of such exemptive rule. To the extent permitted by Applicable Laws, the Plan and Awards granted or awarded hereunder shall be deemed amended to the extent necessary to conform to such applicable exemptive rule. Notwithstanding the foregoing, the Company shall have no liability to any Participant for Section 16 consequences of awards or events under awards if an award or event does not so qualify. |
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24.2. Code Section 409A Compliance. The Board intends that, except as may be otherwise determined by the Committee, any awards under the Plan are either exempt from or satisfy the requirements of Section 409A of the Code and related regulations and Treasury pronouncements (“Section 409A”) to avoid the imposition of any taxes, including additional income or penalty taxes, thereunder. If the Committee determines that an award, Award Agreement, acceleration, adjustment to the terms of an award, payment, distribution, deferral election, transaction or any other action or arrangement contemplated by the provisions of the Plan would, if undertaken, cause a Participant’s award to violate Section 409A, unless the Committee expressly determines otherwise, such award, Award Agreement, payment, acceleration, adjustment, distribution, deferral election, transaction or other action or arrangement shall not be undertaken and the related provisions of the Plan and/or Award Agreement will be deemed modified or, if necessary, rescinded in order to comply with the requirements of Section 409A to the extent determined by the Committee without the consent of or notice to the Participant. |
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24.3. No Guarantee of Favorable Tax Treatment. Although the Company intends that awards under the Plan will be exempt from, or will comply with, the requirements of Section 409A of the Code, the Company does not warrant that any award under the Plan will qualify for favorable tax treatment under Section 409A of the Code or any other provision of federal, state, local or foreign law. The Company shall not be liable to any Participant for any tax, interest or penalties the Participant might owe as a result of the grant, holding, vesting, exercise or payment of any award under the Plan. |
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25. Amendment And Termination of the Plan. |
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25.1. Board Authorization. The Board may, at any time, terminate or, from time to time, amend, modify or suspend this Plan, in whole or in part. No awards may be granted during any period that the Board suspends this Plan. |
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25.2. Shareholder Approval. To the extent then required by Applicable Laws or any applicable listing agency or required under Sections 422 or 424 of the Code to preserve the intended tax consequences of this Plan, or deemed necessary or advisable by the Board, any amendment to this Plan shall be subject to shareholder approval. |
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25.3. Amendments to Awards. Without limiting any other express authority of the Committee under (but subject to) the express limits of this Plan, the Committee by agreement or resolution may waive conditions of, or limitations on, awards to Participants that the Committee in the prior exercise of its discretion has imposed, without the consent of a Participant, and, subject to the requirements of Sections 5 and 25.4, may make other changes to
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the terms and conditions of awards. Any amendment or other action that would constitute a repricing, exchange or repurchase of an underwater Option or SAR as contemplated by Section 19 of the Plan is subject to the limitations set forth therein. |
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25.4. Limitations on Amendments to Plan and Awards. No amendment, suspension or termination of this Plan or change of or affecting any outstanding award shall, without written consent of the Participant, affect in any manner materially adverse to the Participant any rights or benefits of the Participant or obligations of the Company under any award granted under this Plan prior to the effective date of such change. |
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25.5. Suspension or Termination of Award. In addition to the remedies of the Company elsewhere provided for herein, failure by a Participant to comply with any of the terms and conditions of the Plan or the Award Agreement executed by such Participant evidencing an award, unless such failure is remedied by such Participant within ten (10) days after having been notified of such failure by the Committee, shall be grounds for the cancellation and forfeiture of such award, in whole or in part, as the Committee may determine. |
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26. Notices. Any communication or notice required or permitted to be given under the Plan shall be in writing, and mailed by registered or certified mail or delivered by hand, if to the Company, to its principal place of business, attention: Stock Plan Administrator, and if to the Participant, to the address of the Participant as appearing on the records of the Company. |
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27. Stock-Based Awards in Substitution for Stock Options or Awards Granted by Other Company. Awards may be granted to Eligible Individuals in substitution for or in connection with an assumption of Options, SARs, a Restricted Stock Award or other stock-based awards granted by other entities to persons who are or who will become Eligible Individuals in respect of the Company or one of its Subsidiaries, in connection with a distribution, merger or other reorganization by or with the granting entity or an affiliated entity, or the acquisition by the Company or one of its Subsidiaries, directly or indirectly, of all or a substantial part of the stock or assets of the employing entity. The awards so granted need not comply with other specific terms of this Plan, provided the awards reflect only adjustments giving effect to the assumption or substitution consistent with the conversion applicable to the Class A Common Stock in the transaction and any change in the issuer of the security. Any shares that are delivered and any awards that are granted by, or become obligations of, the Company, as a result of the assumption by the Company of, or in substitution for, outstanding awards previously granted by an acquired company (or previously granted by a predecessor employer (or direct or indirect parent thereof) in the case of persons that become employed by the Company or one of its Subsidiaries in connection with a business or asset acquisition or similar transaction) shall not be counted against the Share Limit or other limits on the number of shares available for issuance under this Plan. Any adjustment, substitution or assumption made pursuant to this Section 27 shall be made in a manner that, in the good faith determination of the Committee, will not likely result in the imposition of additional taxes or interest under Section 409A of the Code. |
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28. Treatment of Dividends and Dividend Equivalents on Unvested Awards. In no event shall dividends or dividend equivalents be paid with respect to Options or Stock Appreciation Rights. Notwithstanding any other provision of the Plan to the contrary, with respect to any Award that provides for or includes a right to dividends or dividend equivalents, if dividends are declared during the period that an equity Award is outstanding, such dividends (or dividend equivalents) shall either (i) not be paid or credited with respect to such Award or (ii) be accumulated but remain subject to vesting requirement(s) to the same extent as the applicable Award and shall only be paid at the time or times such vesting requirement(s) are satisfied. |
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29. Clawback of Certain Benefits. All Awards shall be subject to reduction, cancelation, forfeiture, or recoupment to the extent necessary to comply with (i) the Company’s Executive Compensation Recoupment Policy or any other clawback, forfeiture, or other similar policy as in effect at the time such Award was granted or (ii) as required by applicable law or the listing rules of NASDAQ or other principal stock exchange on which the Company’s Class A Common Stock is then listed. In addition, the Company may provide in an Award Agreement that if the Participant receives any amount in excess of the amount that the Participant should otherwise have received under the terms of the Award due to a determination by the Committee that a financial, operational or other metric upon which such Award was based was inaccurate, the Participant shall be required to repay any such excess amount or Shares to the Company. |
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30. Governing Law; Severability. |
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30.1. Violations of Law. The Company shall not be required to sell or issue any shares of Class A Common Stock under any Award if the sale or issuance of such shares would constitute a violation by the individual holding the Award, the Participant or the Company of any provisions of any law or regulation of any governmental authority, including without limitation any federal or state securities laws or regulations. Any determination in this connection by the Committee shall be final, binding, and conclusive. The Company shall not be obligated to take any affirmative action in order to cause the exercisability or vesting of an Option, the exercise of an Option or the issuance of shares pursuant to the exercise of an Option or expiration of a Restriction Period to comply with any law or regulation of any governmental authority. |
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30.2. Governing Law. This Plan shall be governed by, and construed and enforced in accordance with, the laws of the State of Florida, without regard to conflicts of laws thereof. |
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30.3. Non-U.S. Laws. The Committee shall have the authority to adopt such modifications, procedures, and subplans as may be necessary or desirable to comply with provisions of the laws of foreign countries in which the Company or its Subsidiaries may operate to assure the viability of the benefits from Awards granted to Participants performing services in such countries and to meet the objectives of the Plan. |
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30.4. Severability. If any provision of the Plan or any Award Agreement shall be determined to be illegal or unenforceable by any court of law in any jurisdiction, the remaining provisions hereof and thereof shall be severable and enforceable in accordance with their terms, and all provisions shall remain enforceable in any other jurisdiction. |
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CERTIFICATION
I, Jeffrey A. Stoops, Chief Executive Officer, certify that:
1.I have reviewed this quarterly report on Form 10-Q of SBA Communications Corporation;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes, in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date: August 6, 2020 |
By: |
/s/ Jeffrey A. Stoops |
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Name: |
Jeffrey A. Stoops |
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Title: |
Chief Executive Officer |
CERTIFICATION
I, Brendan T. Cavanagh, Chief Financial Officer, certify that:
1.I have reviewed this quarterly report on Form 10-Q of SBA Communications Corporation;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes, in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date: August 6, 2020 |
By: |
/s/ Brendan T. Cavanagh |
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Name: |
Brendan T. Cavanagh |
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Title: |
Chief Financial Officer |
Certification Required by 18 U.S.C. Section 1350
(as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)
In connection with the Quarterly Report of SBA Communications Corporation (the “Company”), on Form 10-Q for the period ended June 30, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jeffrey A. Stoops, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act, that to the best of my knowledge:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Date: August 6, 2020 |
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/s/ Jeffrey A. Stoops |
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Jeffrey A. Stoops |
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Chief Executive Officer |
Certification Required by 18 U.S.C. Section 1350
(as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)
In connection with the Quarterly Report of SBA Communications Corporation (the “Company”), on Form 10-Q for the period ended June 30, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Brendan T. Cavanagh, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act, that to the best of my knowledge:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Date: August 6, 2020 |
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/s/ Brendan T. Cavanagh |
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Brendan T. Cavanagh |
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Chief Financial Officer |