SBA Communications Corporation
2009 Annual Report
Site Leasing Revenues
(in millions)
Site Leasing Operating Profit
(in millions)
Site Leasing Operating
Profit Margin
3
.
1
6
1
$
2
.
6
5
2
$
8
.
1
2
3
$
5
.
5
9
3
$
0
.
7
7
4
$
0
.
4
1
1
$
5
.
5
8
1
$
8
.
3
3
2
$
4
.
9
9
2
$
2
.
5
6
3
$
%
7
.
0
7
%
4
.
2
7
%
7
.
2
7
%
7
.
5
7
%
6
.
6
7
05
06
07
08
09
05
06
07
08
09
05
06
07
08
09
FiNANCiAL HigHLigHTS 2009 vS 2008
(in thousands, except per share data)
For the year ended December 31,
Revenues:
Site leasing
Site development
Total revenues
Cost of revenues:
Site leasing
Site development
Total cost of revenues
Operating profit:
Site leasing
Site development
Total operating profit
Selling, general and administrative expenses
Net loss attributable to SBA Communications Corporation
Basic and diluted net loss per share
Weighted average number of shares
As of December 31,
Cash, cash equivalents, short-term investments
and short-term restricted cash
Total assets
Total principal amount of indebtedness
2008
2009
Percentage
Change
20.6%
(1.1)%
17.0%
16.3%
(4.6)%
7.4%
22.0%
32.1%
22.2%
8.3%
109.7%
$ 395,541
79,413
$ 477,007
78,506
474,954
555,513
96,175
71,990
168,165
111,842
68,701
180,543
299,366
7,423
365,165
9,805
$ 306,789
$ 374,970
$
$
$
48,721
(67,164)
(0.61)
109,882
$
52,785
$ (140,871)
(1.20)
$
117,165
$ 117,617
$ 3,207,829
$2,557,248
$ 196,954
$ 3,313,646
$2,771,012
Cover Photo by Anton Alimov
2 0 0 9 A n n u A l R e p o R t
1
+21%
Site Leasing Revenue for the year 2009
was $477.0 million compared to $395.5 for the year 2008, an increase of 21%.
+22%
Site Leasing Segment Operating Profit for the year 2009 was $365.2 million
compared to $299.4 million for the year 2008, an increase of 22%.
S B A C o m m u n I C A t I o n S C o R p o R A t I o n
2
to our sh a r eholders,
Perhaps more than most other years, 2009
confirmed the strength and attractiveness of the
wireless industry, our business model and the
manner in which we execute our plan.
the year 2009 was a particularly important and gratifying one for
now having managed SBA through two adverse capital market
SBA. perhaps more than most other years, 2009 confirmed the
cycles and the recent adverse business cycle, I find our 2009
strength and attractiveness of the wireless industry, our business
results logical, predictable and reassuring. In fact, it has been
model and the manner in which we execute our plan. In many
through the weaker capital markets and general business condi-
respects, 2009 was very similar to 2003 for SBA. In both cases,
tions that the strength and resilience of the wireless industry has
the prior year was one of difficult capital market conditions. In
been confirmed. Since we went public in 1999, we have enjoyed
2002 and 2008, companies that used leverage to enhance share-
very strong material year-over-year growth in site leasing revenue,
holder returns, like SBA, were criticized in those markets, and
tower cash flow, adjusted eBItDA and equity free cash flow. the
share prices declined. As capital market conditions improved, as
drivers behind this growth have consistently been the increased
they did in both 2003 and 2009, the strong and predictable oper-
use of wireless communications and the resulting constant need
ational performance of SBA retook center stage in the minds of
for additional wireless infrastructure. these two basic factors have
investors and our shareholders were rewarded with share price
driven operational growth for SBA regardless of the strength or
appreciation materially above market indices. In 2009, SBA com-
weakness of the business climate or capital markets. While the
mon stock appreciated 109%.
detailed reasons behind wireless growth at any given time have
S B A C o m m u n I C A t I o n S C o R p o R A t I o n
S B A C o m m u n I C A t I o n S C o R p o R A t I o n
3
3
+26%
Adjusted EBITDA for 2009 was $338.5 million
compared to $269.2 million for the year 2008, an increase of 26%.
S B A C o m m u n I C A t I o n S C o R p o R A t I o n
4
Because of our expectations around the need for increased wireless
infrastructure, we continue to Be committed to portfolio growth as
a core element of our strategy to increase shareholder value.
varied over the years, the overall results have been the same—
eBItDA margin grew from 58% to 62%. equity free cash flow
wireless growth requires more wireless infrastructure. ten years
grew 22%, with strong Adjusted eBItDA growth offset in part by
ago, growth was fueled primarily by network construction in brand
the higher interest expense resulting from our refinancing of $1.3
new markets by the wireless carriers in order to offer voice service.
billion of debt in 2009. equity free cash flow per share was $1.69
Five years ago, growth was driven by network capacity needs
in 2009 compared to $1.48 in 2008. We ended the year with
resulting from tremendous growth in subscribers and minutes of
fewer shares outstanding than we had at the start of the year.
use, and by the beginnings of major technological upgrades that
would allow for the delivery of wireless data products and services.
today, growth is driven by the exploding demand for wireless data
and, to handle the demand, the continued build-out of third gen-
eration technology by the wireless carriers and the start of the
build-out of fourth generation technology in the form of Wimax
and lte. the wireless transmission of data and video has moved
to the forefront of consumer interest. We are currently in the mid-
dle of a lifestyle and cultural change revolving around the way we
communicate and access data. the iphone is the most prominent
example of this change, but there are many other examples as well.
mobile commerce, banking, television, medical records access,
movies and social networking are all either reality or soon to be
reality. Wireless data use is projected to grow five-fold over the
next five years. Consistent with history, this growth in wireless
use will require more wireless infrastructure, to the direct benefit
of SBA. We see our future as very bright.
Because of our expectations around the need for increased wire-
less infrastructure, we continue to be committed to portfolio growth
as a core element of our strategy to increase shareholder value.
In our planning processes, we typically target at least 5% to 10%
annual growth in the number of towers owned, through both
building and buying. However, 2009 started out differently as our
primary focus was to take the steps necessary to maximize our
prospects around refinancing. For us, that meant scaling back on
our use of cash to acquire towers in order to speed up the pro-
cess of deleveraging until such time as we were able to achieve
our refinancing goals. In early 2009, I did not believe that we
would achieve our typical annual portfolio growth goal of 5% to
10%. In the first quarter of 2009, we acquired only seven towers.
As the year progressed, we began, however, to see signs of
improvement in the capital markets and in our refinancing pros-
pects. In the second quarter of 2009, we issued $500 million of
4.0% convertible senior notes and we felt more comfortable
to turn opportunity into results, we must continue to execute well
investing some of our cash to acquire additional towers. As the
as we did last year. operationally, 2009 was another good year for
year progressed, capital markets conditions continued to improve.
us. Solid customer demand and organic growth combined with a
In the third quarter of 2009 we issued $750 million of 8.0% and
full year of operations from our three sizable 2008 acquisitions of
8.25% senior notes. With that transaction and our observations
tower portfolios produced material growth in 2009 over 2008
around sustainable improvements in our access to capital, we
operational metrics. Site leasing revenue grew 21% and tower cash
resumed a full level of acquisition interest and activity. By the end
flow grew 23%. Adjusted eBItDA grew 26% and our Adjusted
of 2009, we had acquired 376 towers and built 101 new towers,
2 0 0 9 A n n u A l R e p o R t
5
8,324
Total towers owned by SBA
at year-end 2009.
(cid:31)
S B A C o m m u n I C A t I o n S C o R p o R A t I o n
6
Tenant Revenues in 2009
(percentage by customer)
F
e
A
D
C
B
A: At&t 28% | B: Sprint nextel 25% | C: Verizon 16% | D: t-mobile 12%
e: other telephony 13% | F: other non-telephony 6%
2 0 0 9 A n n u A l R e p o R t
7
one of our greatest accomplishments in 2009
was our refinancing success.
bringing our net full year portfolio growth to 470 towers, or 6%. In
Finally, in 2009 we negotiated our investment in extenet Systems,
terms of our ability and willingness to continue to invest capital to
a preeminent owner and developer of distributed antenna systems
increase the number of towers we own, the year ended much bet-
(“DAS”), and closed the investment in early 2010. We first entered
ter than it began. For 2010, we are once again targeting and feel-
the DAS business with our light tower acquisition in late 2008.
ing optimistic about portfolio growth of at least 5% to 10%. We
As we began operating our DAS business we confirmed our belief
are actively pursuing additional tower assets as I write this letter.
that it was a great business that would be a permanent part of
Beyond the beneficial growth in number of towers owned, we
accomplished three items of strategic importance last year which
will aid future asset growth. We entered Canada, we increased
our development activity in a couple of other countries and we
finalized our investment in extenet. We acquired Jade tower in
may, giving us our first entrée into Canada with 52 owned towers
and 360 managed communications sites. With the Canadian
spectrum auctions of 2008 and the reality of at least two new
entrants coming to all of the major Canadian wireless markets,
we believe that Canada will provide us with a number of attractive
asset growth opportunities, primarily to build towers. We think the
Canadian market is very similar to the u.S. We expect to add to
the number of towers we own in Canada in 2010. In 2009, we
wireless infrastructure, complimentary and similar to tower owner-
ship. However, after looking around the industry, we concluded
that we were the sixth or seventh largest player in DAS, and that
we were years behind the market leaders in terms of scale and
capabilities. Consequently, we decided to seek a way to acceler-
ate our investment and competence in DAS, and we succeeded
with extenet. extenet is a world class DAS business provider,
number 1 or 2 in the market with deep resources, technical capa-
bilities and valuable intellectual property. We are very pleased
with our investment in extenet, and it will be the vehicle through
which we channel all DAS opportunities going forward and in
return extenet will look to SBA for tower and macro site solutions.
over time, we would like to increase our investment in extenet.
also took steps to evaluate and position ourselves for additional
one of our greatest accomplishments in 2009 was our refinanc-
asset ownership in several other countries where we believe the
ing success. As we entered the year, the capital markets were
characteristics of tower ownership will be similar to those in the
extremely dislocated and there was concern around our ability to
u.S. and Canada. the characteristics we are looking for include
refinance a large portion of our debt that either matured in 2010
strong wireless growth in general, wireless data growth in particu-
or 2011 or would have borne materially higher interest rates if not
lar, a predictable expense environment, multiple carriers and pre-
refinanced by those dates. Refinancing costs were considerably
dictable land use regulations providing barriers to entry to additional
higher in early 2009. We were faced with the choice of refinancing
tower siting. these characteristics we believe will produce very
early, at high rates, or waiting for market conditions to improve. It
attractive returns on invested capital. We are optimistic that
was a tough choice, as until we did achieve some of our refinanc-
we will add tower assets in one or two new countries in 2010.
ing goals we were holding back on portfolio growth activities and
S B A C o m m u n I C A t I o n S C o R p o R A t I o n
8
today, your company is in excellent shape. we continue to operate in
the center of the fast-growing world of wireless, which will continue
to provide us with many opportunities for growth for years to come.
there was no guarantee that market conditions would improve.
Given our confidence around our capital structure and our goal
Boosted by the confidence we had from our strong operational
to manage our capital structure for the long-term benefit of our
performance, we did decide to wait some period of time for mar-
shareholders, we adopted our first open-market stock repurchase
ket improvement, and I’m happy to say our decision turned out to
plan in october 2009. We believe over time that our desired
be the correct one. market conditions improved all throughout the
capital structure will produce increasing amounts of capital for
year, and into those improving conditions we issued $500 million
reinvestment or return to our shareholders. Stock repurchases
of convertible senior notes in April and $750 million of senior notes
are one way to deploy that capital, and we wanted to have that
in July. We refinanced the majority of our 2010 maturities and a
option available to us. We expect stock repurchases will be a
portion of our 2011 maturities, allowing us to resume investing in
valuable contributor to the growth in equity free cash flow per
portfolio growth and enabling us to put SBA in an excellent posi-
share, but still a secondary use of investment capital behind port-
tion to address its remaining 2010 and 2011 maturities. With each
folio growth. We intend to continue to balance all of our capital
refinancing transaction, investor concerns around our ability to
allocation against a current net debt leverage target of 6.5x to
refinance ebbed and our stock price increased. We have contin-
7.0x which we believe will drive superior value creation over time
ued to successfully pursue our refinancing goals, most recently
through growth in equity free cash flow per share.
with a new five-year $500 million revolving credit facility that
replaced a $320 million facility due to expire January 2011. It is
our goal to repay our 2010 maturities in cash and refinance the
remainder of our 2011 maturities by the end of 2010. We are in
excellent shape to accomplish these goals because of the refi-
nancing work we have done over the past twelve months. As we
move through the various steps of refinancing, observations gained
and conclusions made through the difficult markets of 2008 have
caused us to access multiple funding markets, put in place stag-
gered debt maturities and operate at lower consolidated net debt
leverage levels than that at which we previously operated. As a
result, we believe we have a stronger capital structure designed to
amply fund future growth, create additional shareholder value, and
also to much better weather capital market conditions like those
experienced in the fall of 2008.
today, your company is in excellent shape. We continue to oper-
ate in the center of the fast-growing world of wireless, which will
continue to provide us with many opportunities for growth for
years to come. Remember the basic relationship from which we
benefit—more wireless use requires more wireless infrastructure.
our customers have needs for material additions and enhance-
ments to their wireless networks, and they will call on us and oth-
ers in our industry to address these needs. We have a sound
capital structure with which to take advantage of these opportuni-
ties. our team is in place, and our employees continue to perform
at the highest level of excellence and customer service. more than
ever, we remain confident and optimistic about our prospects for
creating additional value for our shareholders. As always, I want to
thank our shareholders, customers and employees for their part in
our success and we look forward to reporting our future results.
JeFFRey A. StoopS,
president & Chief executive officer
2 0 0 9 A N N U A L R E P O R T
10-K FINANCIAL INFORMATION
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
⌧
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2009
OR
(cid:134)
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the transition period from _________to _________
Commission file number: 000-30110
SBA COMMUNICATIONS CORPORATION
(Exact name of Registrant as specified in its charter)
Florida
(State or other jurisdiction of incorporation or organization)
65-0716501
(I.R.S. Employer Identification No.)
5900 Broken Sound Parkway NW
Boca Raton, Florida
(Address of principal executive offices)
33487
(Zip Code)
Registrant’s telephone number, including area code (561) 995-7670
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Class A Common Stock, $0.01 par value per share
Name of Each Exchange on Which Registered
The NASDAQ Stock Market LLC
(NASDAQ Global Select Market)
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ⌧ No (cid:134)
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes (cid:134) No ⌧
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes ⌧ No (cid:134)
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yes (cid:134) No (cid:134)
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. (cid:134)
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ⌧
Accelerated filer (cid:134)
Non-Accelerated filer (cid:134)
Smaller reporting company (cid:134)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes (cid:134) No ⌧
The aggregate market value of the voting stock held by non-affiliates of the Registrant was approximately $2.8 billion as of June 30, 2009.
The number of shares outstanding of the Registrant’s common stock (as of February 24, 2010): Class A common stock — 117,719,254 shares
Portions of the Registrant’s definitive proxy statement for its 2010 annual meeting of shareholders, which proxy statement will be filed no later
than 120 days after the close of the Registrant’s fiscal year ended December 31, 2009, are hereby incorporated by reference in Part III of this
Annual Report on Form 10-K.
Documents Incorporated By Reference
Table of Contents
PART I
ITEM 1.
ITEM 1A.
ITEM 1B.
ITEM 2.
ITEM 3.
ITEM 4.
BUSINESS
RISK FACTORS
UNRESOLVED STAFF COMMENTS
PROPERTIES
LEGAL PROCEEDINGS
RESERVED
PART II
ITEM 5.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
SECURITIES
SELECTED FINANCIAL DATA
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
ITEM 6.
ITEM 7.
AND RESULTS OF OPERATIONS
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
CONTROLS AND PROCEDURES
OTHER INFORMATION
ITEM 7A.
ITEM 8.
ITEM 9.
ITEM 9A.
ITEM 9B.
PART III
ITEM 10.
ITEM 11.
ITEM 12.
ITEM 13.
ITEM 14.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
EXECUTIVE COMPENSATION
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
DIRECTOR INDEPENDENCE
PRINCIPAL ACCOUNTANT FEES AND SERVICES
PART IV
ITEM 15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
Page
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18
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19
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ITEM 1. BUSINESS
General
We are a leading independent owner and operator of wireless communications towers. Our principal operations
are in the continental United States. In addition, we have towers in Canada, Puerto Rico and the U.S. Virgin Islands. Our
principal business line is our site leasing business, which contributed 97.4% of our total segment operating profit for the
year ended December 31, 2009. In our site leasing business, we lease antenna space primarily to wireless service
providers on towers and other structures that we own, manage or lease from others. The towers that we own have been
constructed by us at the request of a wireless service provider, constructed based on our own initiative or acquired. As of
December 31, 2009, we owned 8,324 tower sites, the substantial majority of which have been built by us or built by
other tower owners or operators who, like us, have built such towers to lease space to multiple wireless service providers.
We also manage or lease approximately 5,100 actual or potential communications sites, approximately 550 of which
were revenue producing as of December 31, 2009. Our other business line is our site development business, through
which we assist wireless service providers in developing and maintaining their own wireless service networks.
Site Leasing Services
Our primary focus is the leasing of antenna space on our multi-tenant towers to a variety of wireless service
providers under long-term lease contracts. Site leasing revenues are received primarily from wireless service provider
tenants, including AT&T, Sprint, T-Mobile and Verizon Wireless. Wireless service providers enter into numerous
different tenant leases with us, each of which relates to the lease or use of space at an individual tower site. Tenant leases
are generally for an initial term of five years with five 5-year renewal periods at the option of the tenant. These tenant
leases typically contain specific rent escalators, which average 3%– 4% per year, including the renewal option periods.
In our new build program, we construct towers in locations that were strategically chosen by us or under build-
to-suit arrangements. Under build-to-suit arrangements, we build towers for wireless service providers at locations that
they have identified. We retain ownership of the tower and the exclusive right to co-locate additional tenants on the
tower. When we construct towers in locations chosen by us, we utilize our knowledge of our customers’ network
requirements to identify locations where we believe multiple wireless service providers need, or will need, to locate
antennas to meet capacity or service demands. We seek to identify attractive locations for new towers and complete pre-
construction procedures necessary to secure the site concurrently with our leasing efforts. We intend to have at least one
signed tenant lease on each new build tower on the day that it is completed and expect that some will have multiple
tenants. We intend to build at least 120 - 140 new towers during 2010.
In our tower acquisition program, we pursue towers that meet or exceed our internal guidelines regarding
current and future potential returns. For each acquisition, we prepare various analyses that include projections of a five-
year unlevered internal rate of return, review of available capacity, future lease up projections and a summary of current
and future tenant/technology mix.
The table below provides information regarding the development and status of our tower sites portfolio over the
past three years.
For the year ended December 31,
2007
2008
2009
Towers owned at beginning of period
Towers acquired (1)
Towers constructed
Towers reclassified/disposed of (2)
Towers owned at end of period
5,551
612
61
(4)
6,220
6,220
1,560
85
(11)
7,854
7,854
376
101
(7)
8,324
(1) 2008 includes 528 towers acquired in the Optasite acquisition, 423 towers acquired in the Tower Co.
acquisition and 340 towers acquired in the Light Tower acquisition.
(2) Reclassifications reflect the combination for reporting purposes of multiple tower structures on a single
parcel of real estate, which we market and customers view as a single location, into a single owned tower
site. Dispositions reflect the decommissioning, sale, conveyance or other legal transfer of owned tower
sites.
1
As of December 31, 2009, we had an average of 2.5 tenants per tower.
Our site leasing business generates substantially all of our total segment operating profit. Our site leasing
business generated 85.9% of our total revenues during the past year and has represented 95.5% or more of our total
segment operating profit for the past three years.
Site Development Services
Our site development business 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 capture
ancillary revenues that are generated by our site leasing activities, such as antenna and equipment installation at our
tower locations. Our site development business consists of two segments, site development consulting and site
development construction. Site development services revenues are received 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. We principally perform services for third parties in our core historical areas of wireless
expertise, specifically site acquisition, zoning, technical services and construction.
In the consulting segment of our site development business, we offer clients the following range of services: (1)
network pre-design; (2) site audits; (3) identification of potential locations for towers and antennas; (4) support in buying
or leasing of the location; and (5) assistance in obtaining zoning approvals and permits. In the construction segment of
our site development business we provide a number of services, including, but not limited to the following: (1) tower and
related site construction; (2) antenna installation; and (3) radio equipment installation, commissioning and maintenance.
Personnel in our site development business also support our leasing and new tower build functions through an integrated
plan across the divisions.
We provide our site development consulting and construction services on a local basis, through regional offices,
territory offices and project offices. The regional offices are responsible for all site development operations, including
hiring employees and opening or closing project offices, and a substantial portion of the sales in such area.
For financial information about our operating segments, please see Note 23 of our Consolidated Financial
Statements included in this Form 10-K.
Industry Overview
We believe that growing wireless traffic, the successful recent spectrum auctions and technology developments
will require wireless service providers to improve their network infrastructure and increase their network capacity
resulting in an increase in the number of communication sites that they use or the number of antennas at existing
communication sites. First, consumers continue to increase minutes of use, whether through wireline to wireless
migration, increasing use of broadband services, new data products or simply talking more. Consumers are demanding
quality wireless networks, and list network coverage and quality as two of the greatest contributors to their
dissatisfaction when terminating or changing service. To decrease subscriber churn rate and drive revenue growth,
wireless carriers have made substantial capital expenditures on wireless networks to improve service quality and expand
coverage. Second, we expect that the roll-out of 3G and 4G wireless services by existing carriers will require our
customers to add a large number of additional cell sites and increase the amount of their equipment at current cell sites.
The Federal Communications Commission’s (the “FCC”) successful advanced wireless service spectrum auction 66 for
advanced broadband services and the more recent FCC spectrum auction 73, relating to the auction of the 700 MHz
band, have provided existing carriers the opportunity to deploy spectrum for 3G and 4G wireless service which will
further drive the demand for communication sites. Finally, the third area of growth in the U.S. market comes from new
market launches for emerging carriers in traditional wireless services or new technologies like WiMAX. For example,
Leap Wireless and Metro PCS acquired spectrum in auction 66 in new coverage areas that have led and continue to lead
to the launch of brand new networks while Clearwire is in the process of building out new markets as well. Despite the
current recessionary conditions affecting the global marketplace, based on these factors, we believe that the U.S. wireless
industry will continue to grow and is well-capitalized, highly competitive and focused on quality and advanced services.
Therefore, we expect that we will see a multi-year trend of strong additional cell site demand from our customers, which
we believe will translate into strong leasing growth for us.
2
Business Strategy
Our primary strategy is to capture the maximum benefits from our position as a leading owner and operator of
wireless communications towers. Key elements of our strategy include:
Focusing on our Site Leasing Business with Stable, Recurring Revenues. We intend to continue to focus on
expanding our site leasing business due to its attractive characteristics such as long-term contracts, built-in rent
escalators, high operating margins and low customer churn. The long-term nature of the revenue stream of our site
leasing business makes it less volatile than our site development business, which is more cyclical. By focusing on our
site leasing business, we believe that we can maintain a stable, recurring cash flow stream and reduce our exposure to
cyclical changes in customer spending.
Maximizing Use of Tower Capacity. We generally have constructed or acquired towers that accommodate
multiple tenants and a substantial majority of our towers are high capacity lattice or guyed towers. Most of our towers
have significant capacity available for additional antennas and we believe that increased use of our towers can be
achieved at a low incremental cost. We actively market space on our towers through our internal sales force.
Disciplined Growth of our Tower Portfolio. During 2010, we intend to grow our tower portfolio, domestically
and internationally, by 5% to 10%. We intend to use our available cash from operating activities and available liquidity,
including borrowings, to build and/or acquire new towers at prices that we believe will be accretive to our shareholders
both short and long term and which allow us to maintain our long-term target leverage ratios. Furthermore, we believe
that our tower operations are highly scalable. Consequently, we believe that we are able to materially increase our tower
portfolio without proportionately increasing selling, general and administrative expenses.
Controlling our Underlying Land Positions. We have purchased and intend to continue to purchase and/or enter
into long-term leases for the land that underlies our towers, to the extent available at commercially reasonable prices. We
believe that these purchases and/or long-term leases will increase our margins, improve our cash flow from operations
and minimize our exposure to increases in ground lease rents in the future. As of December 31, 2009, we own or control,
for a minimum period of fifty years, land under 27.6% of our communication sites.
Using our Local Presence to Build Strong Relationships with Major Wireless Service Providers. Given the
nature of towers as location specific communications facilities, we believe that substantially all of what we do is done
best locally. Consequently, we have a broad field organization that allows us to develop and capitalize on our experience,
expertise and relationships in each of our local markets which in turn enhances our customer relationships. Due to our
presence in local markets, we believe we are well positioned to capture additional site leasing business and new tower
build opportunities in our markets and identify and participate in site development projects across our markets.
Capitalizing on our Management Experience. Our management team has extensive experience in site leasing
and site development. Management believes that its industry expertise and strong relationships with wireless service
providers will allow us to expand our position as a leading provider of site leasing and site development services.
Customers
Since commencing operations, we have performed site leasing and site development services for all of the large
wireless service providers. In both our site development and site leasing businesses, we work with large national
providers and smaller regional, local or private operators.
3
We depend on a relatively small number of customers for our site leasing and site development revenues. The
following customers represented at least 10% of our total revenues during at least one of the last three years:
Percentage of Total Revenues
for the year ended December 31,
2008
2009
2007
AT&T (1)
Sprint (2)
Verizon Wireless (3)
T-Mobile
22.9%
32.6%
13.6%
7.5%
23.1%
25.0%
15.6%
11.2%
23.8%
21.9%
15.4%
13.7%
(1) 2007 and 2008 numbers have been restated due to 2009 merger of AT&T and Centennial
(2) 2007 and 2008 numbers have been restated due to 2009 merger of Sprint and IPCS Wireless
(3) 2007 and 2008 numbers have been restated due to 2009 merger of Verizon and Alltel
During the past two years, we provided services for a number of customers, including:
Aircell
AT&T
Bechtel Corporation
Cellular South
Clearwire
Ericsson
Fibertower
General Dynamics
Goodman Networks
Leap Wireless
M/A-COM
MediaFLO
Metro PCS
Motorola
Nokia-Siemens
Nortel
Northrop Grumman
Nsoro
NYSEG
Pocket Communication
Samsung
Sprint
T-Mobile
U.S. Cellular
Verizon Wireless
Sales and Marketing
Our sales and marketing goals are to:
•
•
use existing relationships and develop new relationships with wireless service providers to lease
antenna space on and sell related services with respect to our owned or managed towers, enabling
us to grow our site leasing business; and
successfully bid and win those site development services contracts that will contribute to our
operating margins and/or provide a financial or strategic benefit to our site leasing business.
We approach sales on a company-wide basis, involving many of our employees. We have a dedicated sales
force that is supplemented by members of our executive management team. Our dedicated salespeople are based
regionally as well as in the corporate office. We also rely on our regional vice presidents, general managers and other
operations personnel to sell our services and cultivate customers. Our strategy is to delegate sales efforts to those
employees of ours who have the best relationships with our customers. Most wireless service providers have national
corporate headquarters with regional and local offices. We believe that wireless service providers make most decisions
for site development and site leasing services at the regional and local levels with input from their corporate
headquarters. Our sales representatives work with wireless service provider representatives at the regional and local
levels and at the national level when appropriate. Our sales staff compensation is heavily weighted to incentive-based
goals and measurements.
4
Our primary marketing and sales support is centralized and directed from our headquarters office in Boca
Raton, Florida and is supplemented by our regional and territory offices. We have a full-time staff dedicated to our
marketing and sales efforts. The marketing and sales support staff is charged with implementing our marketing
strategies, prospecting and producing sales presentation materials and proposals. In addition to our marketing and sales
staff, we rely upon our executive and operations personnel at the regional and local office levels to identify sales
opportunities within existing customer accounts.
Competition
Site Leasing – Our primary competitors for our site leasing activities are (1) the national independent tower
companies, American Tower Corporation, Crown Castle International and Global Tower Partners, (2) a large number of
regional independent tower owners, (3) wireless service providers that own and operate their own towers and lease, or
may in the future decide to lease, antenna space to other providers and (4) alternative facilities such as rooftops, outdoor
and indoor distributed antenna system (“DAS”) networks, billboards and electric transmission towers. There has been
significant consolidation among the large independent tower companies in the past five years. Specifically, American
Tower completed its merger with SpectraSite, Inc. in 2005, we completed our acquisition of AAT Communications
Corporation in 2006 and Crown Castle completed its merger with Global Signal, Inc. in 2007. As a result of these
consolidations, American Tower and Crown Castle have substantially more towers and greater financial resources than
we do. Wireless service providers that own and operate their own tower networks are also generally larger and have
greater financial resources than we do. We believe that tower location and capacity, quality of service to our tenants, and,
to a lesser extent, price have been and will continue to be the most significant competitive factors affecting the site
leasing business.
Site Development – The site development business is extremely competitive and price sensitive. We believe that
the majority of our competitors in the site development business operate within local market areas exclusively, while
some firms appear to offer their services nationally, including Bechtel Corporation, Black & Veatch Corporation,
Goodman Networks, General Dynamics Corporation, Nsoro, and Wireless Facilities, Inc. The market includes
participants from a variety of market segments offering individual, or combinations of, competing services. The field of
competitors includes site development consultants, zoning consultants, real estate firms, right-of-way consulting firms,
construction companies, tower owners/managers, radio frequency engineering consultants, telecommunications
equipment vendors, which provide end-to-end site development services through multiple subcontractors, and wireless
service providers’ internal staff. We believe that providers base their decisions for site development services on a number
of criteria, including: company experience, price, track record, local reputation, geographic reach and time for
completion of a project.
Employees
Our executive, corporate development, accounting, finance, human resources, legal and regulatory, information
technology and site administration personnel, and our network operations center are located in our headquarters in Boca
Raton, Florida. Certain sales, new tower build support and tower maintenance personnel are also located in our Boca
Raton office. Our remaining employees are based in our regional and local offices.
As of December 31, 2009, we had 617 employees, none of whom are represented by a collective bargaining
agreement. We consider our employee relations to be good.
Regulatory and Environmental Matters
Federal Regulations. Both the FCC and the Federal Aviation Administration (the “FAA”) regulate antenna
towers and structures that support wireless communications and radio or television antennas. Many FAA requirements
are implemented in FCC regulations. These regulations govern the construction, lighting and painting or other marking
of towers and structures and may, depending on the characteristics of particular towers or structures, require prior
approval and registration of towers or structures before they may be constructed, altered or used. Wireless
communications equipment and radio or television stations operating on towers or structures are separately regulated and
may require independent customer licensing depending upon the particular frequency or frequency band used. In
addition, any applicant for an FCC antenna tower or structure registration must certify that, consistent with the Anti-
Drug Abuse Act of 1988, neither the applicant nor its principals are subject to a denial of Federal benefits because of a
conviction for the possession or distribution of a controlled substance.
5
Pursuant to the requirements of the Communications Act of 1934, as amended, the FCC, in conjunction with the
FAA, has developed standards to consider proposals involving new or modified antenna towers or structures. These
standards mandate that the FCC and the FAA consider the height of the proposed tower or structure, the relationship of
the tower or structure to existing natural or man-made obstructions and the proximity of the tower or structure to
runways and airports. Proposals to construct or to modify existing towers or structures above certain heights must be
reviewed by the FAA to ensure the structure will not present a hazard to air navigation. The FAA may condition its
issuance of a no-hazard determination upon compliance with specified lighting and/or painting requirements. Antenna
towers that meet certain height and location criteria must also be registered with the FCC. A tower or structure that
requires FAA clearance will not be registered by the FCC until it is cleared by the FAA. Upon registration, the FCC may
also require special lighting and/or painting. Owners of wireless communications antenna towers and structures may
have an obligation to maintain painting and lighting or other marking in conformance with FAA and FCC regulations.
Antenna tower and structure owners and licensees that operate on those towers or structures also bear the responsibility
of monitoring any lighting systems and notifying the FAA of any lighting outage or malfunction.
Owners and operators of antenna towers and structures may be subject to, and therefore must comply with,
environmental laws. Any licensed radio facility on an antenna tower or structure is subject to environmental review
pursuant to the National Environmental Policy Act of 1969, among other statutes, which requires federal agencies to
evaluate the environmental impact of their decisions under certain circumstances. The FCC has issued regulations
implementing the National Environmental Policy Act. These regulations place responsibility on applicants to investigate
potential environmental effects of their operations and to disclose any potential significant effects on the environment in
an environmental assessment prior to constructing or modifying an antenna tower or structure and prior to commencing
certain operations of wireless communications or radio or television stations from the tower or structure. In the event the
FCC determines the proposed structure or operation would have a significant environmental impact based on the
standards the FCC has developed, the FCC would be required to prepare an environmental impact statement, which will
be subject to public comment. This process could significantly delay the registration of a particular tower or structure.
We generally indemnify our customers against any failure to comply with applicable regulatory standards
relating to the construction, modification, or placement of antenna towers or structures. Failure to comply with the
applicable requirements may lead to civil penalties.
The Telecommunications Act of 1996 amended the Communications Act of 1934 by preserving state and local
zoning authorities’ jurisdiction over the construction, modification and placement of towers. The law, however, limits
local zoning authority by prohibiting any action that would discriminate among different providers of personal wireless
services or ban altogether the construction, modification or placement of radio communication towers. Finally, the
Telecommunications Act of 1996 requires the federal government to help licensees for wireless communications services
gain access to preferred sites for their facilities. This may require that federal agencies and departments work directly
with licensees to make federal property available for tower facilities.
As an owner and operator of real property, we are subject to certain environmental laws that impose strict, joint
and several liability for the cleanup of on-site or off-site contamination and related personal or property damage. We are
also subject to certain environmental laws that govern tower or structure placement, including pre-construction
environmental studies. Operators of towers or structures must also take into consideration certain radio frequency (“RF”)
emissions regulations that impose a variety of procedural and operating requirements. Certain proposals to operate
wireless communications and radio or television stations from antenna towers and structures are also reviewed by the
FCC to ensure compliance with requirements relating to human exposure to RF emissions. Exposure to high levels of RF
energy can produce negative health effects. The potential connection between low-level RF energy and certain negative
health effects, including some forms of cancer, has been the subject of substantial study by the scientific community in
recent years. We believe that we are in substantial compliance with and we have no material liability under any
applicable environmental laws. These costs of compliance with existing or future environmental laws and liability related
thereto may have a material adverse effect on our prospects, financial condition or results of operations.
6
State and Local Regulations. Most states regulate certain aspects of real estate acquisition, leasing activities and
construction activities. Where required, we conduct the site acquisition portions of our site development services
business through licensed real estate brokers’ agents, who may be our employees or hired as independent contractors,
and conduct the construction portions of our site development services through licensed contractors, who may be our
employees or independent contractors. Local regulations include city and other local ordinances, zoning restrictions and
restrictive covenants imposed by community developers. These regulations vary greatly from jurisdiction to jurisdiction,
but typically require tower and structure owners to obtain approval from local officials or community standards
organizations, or certain other entities prior to tower or structure construction and establish regulations regarding
maintenance and removal of towers or structures. In addition, many local zoning authorities require tower and structure
owners to post bonds or cash collateral to secure their removal obligations. Local zoning authorities generally have been
unreceptive to construction of new antenna towers and structures in their communities because of the height and
visibility of the towers or structures, and have, in some instances, instituted moratoria.
Backlog
Backlog related to our site leasing business consists of lease agreements and amendments, which have been
signed, but have not yet commenced. As of December 31, 2009, we had 344 new leases which had been executed with
customers but which had not begun generating revenue. These leases will contractually provide for approximately $7.6
million of annual revenue. By comparison, at December 31, 2008 we had 338 new leases which had been executed with
customers but which had not begun generating revenue. These leases contractually provided for approximately $6.7
million of annual revenue.
Our backlog for site development services consists of the value of work that has not yet been completed on
executed contracts. As of December 31, 2009, we had approximately $13.9 million of contractually committed revenue
as compared to approximately $17.4 million as of December 31, 2008.
Availability of Reports and Other Information
Our corporate website is www.sbasite.com. We make available, free of charge, access to our Annual Report on
Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statement on Schedule 14A and
amendments to those materials filed or furnished pursuant to Section 13(a) or 15(d) of the Securities and Exchange Act
of 1934 on our website under “Investor Relations—SEC Filings,” as soon as reasonably practicable after we file
electronically such material with, or furnish it to, the United States Securities and Exchange Commission (the
“Commission”). In addition, the Commission’s website is www.sec.gov. The Commission makes available on this
website, free of charge, reports, proxy and information statements, and other information regarding issuers, such as us,
that file electronically with the Commission. Additionally, our reports, proxy and information statements may be read
and copied at the Commission’s public reference room at 100 F Street, NE, Washington, DC 20549 during the hours of
10 a.m. to 3 p.m. on official business days. Information regarding the operation of the public reference room may be
obtained by calling the Commission at 1-800-SEC-0330. Information on our website or the Commission’s website is not
part of this document.
ITEM 1A. RISK FACTORS
Risks Related to Our Business
If our wireless service provider customers combine their operations to a significant degree, our future operating
results and our ability to service our indebtedness could be adversely affected.
Significant consolidation among our wireless service provider customers may result in our customers failing to
renew existing leases for tower space or reducing future capital expenditures in the aggregate because their existing
networks and expansion plans may overlap or be very similar. For example, in connection with the combinations of
Verizon Wireless and ALLTEL (to form Verizon Wireless), Cingular and AT&T Wireless (to form AT&T Mobility) and
Sprint PCS and Nextel (to form Sprint Nextel), the combined companies have or are considering rationalizing
duplicative parts of their networks, which has led and may continue to lead to the non-renewal of certain leases on our
towers. Furthermore, to the extent that other wireless service providers consolidate in the future, they may not renew any
duplicative leases that they have on our towers and/or may not lease as much space on our towers in the future. If these
consolidations significantly impact the number of tower leases that are not renewed or the number of new leases that the
wireless service providers require to expand their network, our future operating results and our ability to service our
indebtedness could be adversely affected.
7
Similar consequences may occur if wireless service providers engage in extensive sharing or roaming or resale
arrangements as an alternative to leasing our antenna space. Wireless voice service providers frequently enter into roaming
agreements with competitors allowing them to use another’s wireless communications facilities to accommodate customers
who are out of range of their home provider’s services. Wireless voice service providers may view these roaming
agreements as a superior alternative to leasing antenna space on communication sites owned or controlled by us or others.
The proliferation of these roaming agreements could have a material adverse effect on our future revenue.
We depend on a relatively small number of customers for most of our revenue, therefore if any of our significant
customers reduced their demand for tower space or became financially unstable it may materially decrease our revenues.
We derive a significant portion of our revenue from a small number of customers. The loss of any one of our
significant customers, as a result of bankruptcy, merger with other customers of ours or otherwise, could materially
decrease our revenue and have an adverse effect on our growth.
The following is a list of significant customers (representing at least 10% of revenue in any of the last three
years) and the percentage of our total revenues for the specified time periods derived from these customers:
AT&T (1)
Sprint (2)
Verizon Wireless (3)
T-Mobile
Percentage of Total Revenues
for the year ended December 31,
2008
23.1%
25.0%
15.6%
11.2%
2009
23.8%
21.9%
15.4%
13.7%
2007
22.9%
32.6%
13.6%
7.5%
We also have client concentrations with respect to revenues in each of our financial reporting segments:
AT&T (1)
Sprint (2)
Verizon Wireless(3)
T-Mobile
Verizon Wireless (3)
T-Mobile
Metro PCS
Sprint (2)
T-Mobile
Nsoro Mastec, LLC
Metro PCS
Verizon (3)
Sprint (2)
Percentage of Site Leasing Revenues
for the year ended December 31,
2008
27.6%
27.3%
15.7%
10.7%
2009
27.7%
25.3%
16.0%
11.8%
2007
28.0%
29.1%
14.4%
8.4%
Percentage of Site Development
Consulting Revenues
for the year ended December 31,
2008
24.2%
7.6%
13.3%
22.9%
2009
23.6%
13.9%
5.8%
0.5%
2007
17.5%
0.4%
3.9%
59.9%
Percentage of Site Development
Construction Revenues
for the year ended December 31,
2008
15.8%
2.4%
11.9%
12.3%
10.8%
2009
28.2%
24.9%
9.0%
8.3%
1.8%
2007
5.8%
0.3%
1.1%
7.4%
40.1%
(1) 2007 and 2008 numbers have been restated due to 2009 merger of AT&T and Centennial
(2) 2007 and 2008 numbers have been restated due to 2009 merger of Sprint and IPCS Wireless
(3) 2007 and 2008 numbers have been restated due to 2009 merger of Verizon and Alltel
8
Revenue from these clients is derived from numerous different site leasing contracts and site development
contracts. Each site leasing contract relates to the lease of space at an individual tower site and is generally for an initial
term of five years renewable for five 5-year periods at the option of the tenant. However, if any of our significant site
leasing clients were to experience financial difficulty, substantially reduce their capital expenditures or reduce their
dependence on leased tower space and fail to renew their leases with us, our revenues, future revenue growth and results
of operations would be adversely affected.
Our site development customers engage us on a project-by-project basis, and a customer can generally terminate
an assignment at any time without penalty. In addition, a customer’s need for site development services can decrease,
and we may not be successful in establishing relationships with new customers. Furthermore, our existing customers
may not continue to engage us for additional projects.
Increasing competition to acquire existing towers may negatively impact our ability to grow our tower portfolio long-term.
We currently intend to grow our tower portfolio 5% to10% annually through acquisitions and new builds. Our
ability to meet these growth targets significantly depends on our ability to acquire existing towers that meet our
investment requirements. Traditionally, our acquisition strategy has focused on acquiring towers from smaller tower
companies, independent tower developers and wireless service providers. However, as a result of consolidation in the
tower industry there are fewer of these mid-sized tower transactions available and there is more competition to acquire
existing towers. Increased competition for acquisitions may result in fewer acquisition opportunities for us, higher
acquisition prices, reduced willingness of sellers to accept equity as consideration for their towers and increased
difficulty in negotiating and consummating agreements to acquire such towers. Furthermore, to the extent that the tower
acquisition opportunities are for significant tower portfolios, many of our competitors are significantly larger and have
greater financial resources than us. If we are not able to successfully address these challenges, we may not be able to
materially increase our tower portfolio in the long-term.
We have a substantial level of indebtedness, a large portion of which we will need to refinance in the next two years.
In the event we are not able to refinance or repay such indebtedness, we may not be able to access the cash flow from
all of our towers and we may need to take certain actions to service our debt obligations.
As of December 31, 2009, we had $2.8 billion aggregate principal amount of debt outstanding, of which $0.9
billion is scheduled to be repaid in 2011. The amount scheduled to be repaid in 2011 consists solely of the 2006 CMBS
Certificates which have an anticipated repayment date in November 2011.
We do not currently expect to have sufficient cash flow from operations to repay the full principal amount of
the 2006 CMBS Certificates. Consequently, we expect to refinance a significant portion of this debt. The global credit
and capital markets are undergoing a period of substantial volatility and disruption, and the global economy is
experiencing weakness and uncertainty. Although the credit markets have improved during 2009, we believe that this
volatile credit environment has generally resulted in increased interest rates and/or interest rate spread as compared to
periods immediately prior to 2007. Any renewed financial turmoil, worsening credit environment, economic weakness
and uncertainty could impact our ability and the cost of refinancing our 2006 CMBS Certificates.
If we are unable to refinance the 2006 CMBS Certificates by November 2011, the cash flow from the 3,746 tower
sites pledged to secure such mortgage loan underlying the 2006 CMBS Certificates, representing 45% of our total tower
portfolio as of December 31, 2009, will be trapped and unavailable to service our other outstanding debt. If these cash flows
become trapped, they would be applied first to repay the interest, at the original interest rate, on the mortgage loan
components underlying the 2006 CMBS Certificates, second to fund all reserve accounts and operating expenses associated
with the pledged towers, third to pay the management fees, fourth to repay the principal of the 2006 CMBS Certificates in
the order of their investment grade, and fifth to repay the additional interest discussed below. As a result of this cash trap,
we would only have access to the cash flow generated by the remaining approximately 4,578 tower sites (approximately
55% of our total tower portfolio as of December 31, 2009) and the annual management fee (equal to 7.5% of the operating
revenues of the borrowers under the CMBS Certificates for the immediately preceding calendar month) to service our other
indebtedness and pay all other corporate expenses. Furthermore, if we are unable to repay the mortgage loan components
relating to the 2006 CMBS Certificates by November 2011, then the interest rate on the mortgage loan underlying each
subclass of the 2006 CMBS Certificates would increase by the greater of (i) 5% or (ii) the amount, if any, by which the sum
of (x) the ten year U.S. treasury rate plus (y) the credit-based spread for the mortgage loan component underlying the
referenced subclass of the 2006 CMBS Certificates (as set forth in the mortgage loan agreement) plus (z) 5%, exceeds the
original interest rate for such component. Such additional interest will be payable once the principal of the 2006 CMBS
Certificates is repaid. The sole remedy of the lenders if we do not refinance or repay the 2006 CMBS Certificates by
November 2011 is the cash trap and the increased interest rates discussed above, but it is not an event of default under the
mortgage loan, the indenture governing any of our outstanding notes or the Senior Credit Agreement.
9
If we are unable to refinance the 2006 CMBS Certificates and therefore unable to access the cash flow from
pledged towers, it may have an adverse impact on our ability to (i) repay our other indebtedness, or (ii) fund our planned
capital expenditures, which would adversely affect our financial health and/or anticipated growth.
Recent developments in the global economy could result in a slowdown in demand for wireless communications
services or for tower space, which could adversely affect our future growth and revenues.
Due to the recent economic downturn and the resulting unemployment rates in the U.S. and internationally,
consumer discretionary income has been, and may continue to be, adversely impacted. If wireless service subscribers
significantly reduce their minutes of use, or fail to widely adopt and use wireless data applications, our wireless service
provider customers would experience a decrease in demand for their services. As a result, they may scale back their
business plans or otherwise reduce their spending, which could materially and adversely affect demand for our tower
space and our wireless communications services business, which could have a material adverse effect on our business,
results of operations and financial condition.
In addition, the recent volatility and disruption of the global credit and capital markets may adversely affect:
•
•
•
the financial condition of wireless service providers;
the ability and willingness of wireless service providers to maintain or increase capital expenditures; and
interest rates and the overall availability and cost of capital.
As a result of these factors, wireless service providers may delay or abandon implementation of new systems
and technologies, including 3G, 4G or other wireless services or, worse, elect not to renew existing antenna leases in
order to reduce operating expenses.
We have a substantial level of indebtedness which may have an adverse effect on our business or limit our ability to
take advantage of business, strategic or financing opportunities.
As indicated below, we have and will continue to have a significant amount of indebtedness relative to our
equity. The following table sets forth our total principal amount of debt and shareholders’ equity as of December 31,
2008 and 2009.
Total principal amount of indebtedness
Shareholders’ equity
As of December 31,
2008
(as adjusted)
2009
(in thousands)
$
$
2,557,248
650,510
$ 2,771,012
599,949
$
Our substantial level of indebtedness increases the possibility that we may be unable to generate cash sufficient
to pay the principal, interest or other amounts when due. Subject to certain restrictions under our existing indebtedness,
we and our subsidiaries may also incur significant additional indebtedness in the future, some of which may be secured
debt. This may have the effect of increasing our total leverage.
As a consequence of our indebtedness, (1) demands on our cash resources may increase, (2) we are subject to
restrictive covenants that further limit our financial and operating flexibility and (3) we may choose to institute self-
imposed limits on our indebtedness based on certain considerations including market interest rates, our relative leverage
and our strategic plans. For example, as a result of our substantial level of indebtedness and the uncertainties arising in
the credit markets and the U.S. economy:
•
•
we may be more vulnerable to general adverse economic and industry conditions;
we may find it more difficult to obtain additional financing to fund future working capital, capital
expenditures and other general corporate requirements that would be in our best long-term interests;
10
•
•
•
•
•
we may be required to dedicate a substantial portion of our cash flow from operations to the payment
of principal and interest on our debt, reducing the available cash flow to fund other investments,
including capital expenditures;
we may, in the future, be required to reduce our annual tower acquisition and new build goals;
we may have limited flexibility in planning for, or reacting to, changes in our business or in the
industry;
we may have a competitive disadvantage relative to other companies in our industry that are less
leveraged; and
we may be required to sell debt or equity securities or sell some of our core assets, possibly on
unfavorable terms, in order to meet payment obligations.
These restrictions could have an adverse effect on our business by limiting our ability to take advantage of
financing, new tower development, mergers and acquisitions or other opportunities.
In addition, fluctuations in market interest rates may increase interest expense relating to our floating rate
indebtedness, which we expect to incur under our 2010 Credit Facility and may make it difficult to refinance our existing
indebtedness, including our 2006 CMBS Certificates at a commercially reasonable rate or at all. There is no guarantee
that the future refinancing of our indebtedness will have fixed interest rates or that interest rates on such indebtedness
will be equal to or lower than the rates on our current indebtedness.
We may not secure as many site leasing tenants as planned or our lease rates for new tenant leases may decline.
If tenant demand for tower space or our lease rates on new leases decrease, we may not be able to successfully
grow our site leasing business as expected. This may have a material adverse effect on our strategy, revenue growth and
our ability to satisfy our financial and other contractual obligations. Our plan for the growth of our site leasing business
largely depends on our management’s expectations and assumptions concerning future tenant demand and potential lease
rates for our towers.
Delays or changes in the deployment or adoption of new technologies or slowing consumer adoption rates may have a
material adverse effect on our growth rate.
There can be no assurances that 3G, 4G or other new wireless technologies will be deployed or adopted as
rapidly as projected or that these new technologies will be implemented in the manner anticipated. The deployment of
3G experienced delays from the original projected timelines of the wireless and broadcast industries, and deployment of
4G has been limited to date. Additionally, the demand by consumers and the adoption rate of consumers for these new
technologies once deployed may be lower or slower than anticipated. These factors could have a material adverse effect
on our growth rate since growth opportunities and demand for our tower space as a result of such new technologies may
not be realized at the times or to the extent anticipated.
Increasing competition in the tower industry may create pricing pressures that may materially and adversely affect us.
Our industry is highly competitive, and our customers have numerous alternatives for leasing antenna space.
Some of our competitors, such as (1) national wireless carriers that allow collocation on their towers and (2) large
independent tower companies, are substantially larger and have greater financial resources than us. This could provide
them with advantages with respect to establishing favorable leasing terms with wireless service providers or in their
ability to acquire available towers.
In the site leasing business, we compete with:
•
•
•
wireless service providers that own and operate their own towers and lease, or may in the future decide
to lease, antenna space to other providers;
national and regional tower companies; and
alternative facilities such as rooftops, outdoor and indoor DAS networks, billboards and electric
transmission towers.
11
We believe that tower location and capacity, quality of service, density within a geographic market and, to a
lesser extent, price historically have been and will continue to be the most significant competitive factors affecting the
site leasing business. However, competitive pricing pressures for tenants on towers from these competitors could
materially and adversely affect our lease rates. In addition, we may not be able to renew existing customer leases or enter
into new customer leases, resulting in a material adverse impact on our results of operations and growth rate. Increasing
competition could also make the acquisition of high quality tower assets more costly. Any of these factors could
materially and adversely affect our business, results of operations or financial condition.
The site development segment of our industry is also extremely competitive. There are numerous large and
small companies that offer one or more of the services offered by our site development business. As a result of this
competition, margins in this segment continue to be under pressure. Many of our competitors have lower overhead
expenses and therefore may be able to provide services at prices that we consider unprofitable. If margins in this segment
were to further decrease, our consolidated revenues and our site development segment operating profit could be
adversely affected.
If we are unable to protect our rights to the land under our towers, it could adversely affect our business and
operating results.
Our real property interests relating to our towers consist primarily of leasehold and sub-leasehold interests, fee
interests, easements, licenses and rights-of-way. A loss of these interests at a particular tower site may interfere with our
ability to operate a tower and generate revenues. For various reasons, we may not always have the ability to access,
analyze and verify all information regarding title and other issues prior to completing an acquisition of communications
sites, which can affect our rights to access and operate a site. From time to time we also experience disputes with
landowners regarding the terms of ground agreements for land under a tower, which can affect our ability to access and
operate a tower site. Further, for various reasons, landowners may not want to renew their ground agreements with us,
they may lose their rights to the land, or they may transfer their land interests to third parties, including ground lease
aggregators, which could affect our ability to renew ground agreements on commercially viable terms. Our inability to
protect our rights to the land under our towers may have a future material adverse effect on our business, results of
operations or financial condition.
Our foreign operations are subject to economic, political and other risks that could materially and adversely affect
our revenues or financial position, including risks associated with foreign currency exchange rates.
Our current business operations in Canada and our expansion into any other international markets in the future,
could result in adverse financial consequences and operational problems not experienced in the United States. Although
the consolidated revenues generated by our international operations were immaterial during the year ended December 31,
2009, we anticipate that our revenues from our international operations may grow in the future. Accordingly, our
business is subject to risks associated with doing business internationally, including:
•
•
•
•
•
•
•
•
changes in a specific country’s or region’s political or economic conditions;
laws and regulations that tax or otherwise restrict repatriation of earnings or other funds or otherwise
limit distributions of capital;
changes to existing or new tax laws directed specifically at the ownership and operation of tower sites;
expropriation and governmental regulation restricting foreign ownership;
uncertainties regarding legal or judicial systems, including inconsistencies between and within laws,
regulations and decrees, and judicial application thereof;
health or similar issues, such as a pandemic or epidemic;
difficulty in recruiting and retaining trained personnel; and
language and cultural differences.
12
In addition, we face risks associated with changes in foreign currency exchange rates, including those arising
from our operations, investments and financing transactions related to our international business. Volatility in foreign
currency exchange rates can also affect our ability to plan, forecast and budget for our international operations and
expansion efforts.
The market price of our Class A common stock could be affected by significant volatility, which could adversely
impact our ability to use equity to fund our growth plan.
The market price of our Class A common stock has historically experienced significant fluctuations. Since the
fall of 2008, the U.S. stock market has been undergoing a period of very high volatility where changes in the market
prices of equity securities have often been abrupt and profound over short periods of time. The market price of our Class
A common stock is likely to continue to be volatile and subject to significant price and volume fluctuations in response
to market and other factors, including the other factors discussed elsewhere in “Risk Factors” and in “Forward-Looking
Statements.” Volatility or depressed market prices of our Class A common stock could make it difficult for shareholders
to resell their shares of Class A common stock, when they want or at attractive prices. Consequently, volatility of the
market price of our Class A common stock may make it less likely that sellers will accept our equity as consideration in
connection with our tower acquisitions and may make it more difficult for us to use our equity to fund our future growth
plans. If we were unable to use equity to fund the growth of our tower portfolio, we may be required to either use debt to
increase our tower portfolio or reduce our anticipated growth.
Counterparties to our convertible note hedge transactions may be unable to fulfill their obligations and such failure
could subject us to significant costs to replace any such portion of our convertible note hedge transactions or subject
us to potential dilution or additional cost, if settled in cash, upon conversion of our convertible notes.
Concurrently with the pricing of our 0.375% Convertible Senior Notes due 2010 (the “0.375% Notes”), our
1.875% Convertible Senior Notes due 2013 (the “1.875% Notes”), and our 4.0% Convertible Senior Notes due 2014 (the
“4.0% Notes”), we entered into convertible note hedge transactions with affiliates of certain of the initial purchasers of
the convertible note offerings. The initial strike price of the convertible note hedge transactions relating to our 0.375%
Notes is $33.56 per share of our Class A common stock (the same as the initial conversion price of the 0.375% Notes)
and cover 10,429,720 shares of our Class A common stock. As of December 31, 2009, the convertible note hedge
transactions cover 2,559,185 shares of our Class A common stock, as a result of repurchases and termination of
$264.1million in principal of 0.375% Notes and convertible note hedges. The initial strike price of the convertible note
hedge transactions relating to our 1.875% Notes is $41.46 per share of our Class A common stock (the same as the initial
conversion price of our 1.875% convertible notes) and cover 13,265,780 shares of our Class A common stock. The initial
strike price of the convertible note hedge transactions relating to our 4.0% convertible Notes is $30.38 per share of our
Class A common stock (the same as the initial conversion price of the 4.0% Notes) and cover 16,458,196 shares of our
Class A common stock.
Since the fall of 2008, global economic conditions and the financial markets have been and continue to be
volatile. Certain financial institutions have filed for bankruptcy, have sold some or all of their assets, or may be looking
to enter into a merger or other transaction with another financial institution. As a result of these conditions, some of the
counterparties to our convertible note hedge transactions may be unable to perform their obligations under such
instruments. One of the convertible note hedge transactions entered into in connection with our 1.875% Notes was with
Lehman Brothers OTC Derivatives Inc. (“Lehman Derivatives”) which covers 55% of the 13,265,780 shares of our Class
A common stock potentially issuable upon conversion of our 1.875% convertible notes. In October 2008, Lehman
Derivatives filed a voluntary petition for protection under Chapter 11 of the United States Bankruptcy Code which
constituted an “event of default” under the convertible note hedge transaction with Lehman Derivatives. As a result, on
November 7, 2008 we terminated the convertible note hedge transaction with Lehman Derivatives. Based on information
available to us, we have no indication, as of the date of filing this Form 10-K, that any party other than Lehman
Derivatives would be unable to fulfill their obligations to us under the convertible note hedge transactions.
If we were to elect to replace the convertible note hedge transaction with Lehman Derivatives or any other
counterparty, we would incur significant costs to replace such hedge transactions. Additionally, if we do not elect to
replace our convertible note hedge transactions that were previously with Lehman Derivatives or any other counterparty
fails to perform its obligations under our outstanding convertible note hedge transactions, we would be subject to
potential dilution or additional cost, if settled in cash, upon conversion of the applicable 0.375% Notes, 1.875% Notes
and 4.0% Notes.
13
We may not be able to build as many towers as we anticipate.
We currently intend to build at least 120 to 140 new towers during 2010. However, our ability to build these
new towers is dependent upon the availability of sufficient capital to fund construction, our ability to locate, and acquire
at commercially reasonable prices, attractive locations for such towers and our ability to obtain the necessary zoning and
permits.
Due to these risks, it may take longer to complete our new tower builds than anticipated, the costs of
constructing or acquiring these towers may be higher than we expect or we may not be able to add as many towers as we
had planned in 2010. If we are not able to increase our tower portfolio as anticipated, it could negatively impact our
ability to achieve our financial goals.
Our debt instruments contain restrictive covenants that could adversely affect our business by limiting our flexibility.
Our 2010 Credit Facility contains certain restrictive covenants. Among other things, these covenants limit our
ability to:
•
•
•
•
•
•
incur additional indebtedness;
sell assets;
make certain investments;
engage in mergers or consolidations;
incur liens; and
enter into affiliate transactions.
These covenants could place us at a disadvantage compared to some of our competitors which may have fewer
restrictive covenants and may not be required to operate under these restrictions. Further, these covenants could have an
adverse effect on our business by limiting our ability to take advantage of financing, new tower development, merger and
acquisitions or other opportunities. If we fail to comply with these covenants, it could result in an event of default under
the 2010 Credit Facility. In addition, if we default in the payment of our other indebtedness, including under our 2006
CMBS Certificates and our notes, then such default could cause a cross-default under our 2010 Credit Facility.
The mortgage loan relating to our 2006 CMBS Certificates also contains financial covenants that require that
the mortgage loan borrowers maintain, on a consolidated basis, a minimum debt service coverage ratio. To the extent
that the debt service coverage, as of the end of any calendar quarter, (1) is less than 1.30 times, all cash flow generated
by the pledged towers must be deposited into a reserve account and (2) is less than 1.15 times, then an “amortization
period” will commence and all funds on deposit in the reserve account will be applied to prepay the mortgage loan until
such time as the debt service coverage ratio exceeds 1.15 times for a calendar quarter. As lease payments from 3,746
tower sites of our total tower portfolio are pledged as collateral under the mortgage loan, if this cash flow was not
available to us it could adversely impact our ability to pay our indebtedness, other than the mortgage loan, and to operate
our business.
New technologies and their use by carriers may have a material adverse effect on our growth rate and results of
operations.
The emergence of new technologies could reduce the demand for space on our towers. For example, the
increased use by wireless service providers of signal combining and related technologies and products that allow two or
more wireless service providers to provide services on different transmission frequencies using the same
communications antenna and other facilities normally used by only one wireless service provider could reduce the
demand for our tower space. Additionally, the use of technologies that enhance spectral capacity, such as beam forming
or “smart antennae,” that can increase the range and capacity of an antenna could reduce the number of additional sites a
wireless service provider needs to adequately serve a certain subscriber base and therefore reduce demand for our tower
space. The development and growth of communications and other new technologies that do not require ground-based
sites, such as the growth in delivery of video, voice and data services by satellites or other technologies, could also
adversely affect the demand for our tower space.
14
Our dependence on our subsidiaries for cash flow may negatively affect our business.
We are a holding company with no business operations of our own. Our only significant asset is, and is expected to be,
the outstanding capital stock and membership interests of our subsidiaries. We conduct, and expect to continue
conducting, all of our business operations through our subsidiaries. Accordingly, our ability to pay our obligations is
dependent upon dividends and other distributions from our subsidiaries to us. Most of our indebtedness is owed directly
by our subsidiaries, including the mortgage loan underlying the 2006 CMBS Notes, the 2016 Notes, the 2019 Notes and
any amounts that we may borrow under the 2010 Credit Facility. Consequently, the first use of any cash flow from
operations generated by such subsidiaries will be payments of interest and principal, if any, under their respective
indebtedness. Other than the cash required to repay amounts due under our outstanding convertible notes, we currently
expect that substantially all the earnings and cash flow of our subsidiaries will be retained and used by them in their
operations, including servicing their respective debt obligations. The ability of our operating subsidiaries to pay
dividends or transfer assets to us is restricted by applicable state law and contractual restrictions, including the terms of
their outstanding debt instruments.
Our quarterly operating results for our site development services fluctuate and therefore we may not be able to adjust
our cost structure on a timely basis with regard to such fluctuations.
The demand for our site development services fluctuates from quarter to quarter and should not be considered
indicative of long-term results. Numerous factors cause these fluctuations, including:
•
•
•
•
•
•
•
•
the timing and amount of our customers’ capital expenditures;
the size and scope of our projects;
the business practices of customers, such as deferring commitments on new projects until after the end
of the calendar year or the customers’ fiscal year;
delays relating to a project or tenant installation of equipment;
seasonal factors, such as weather, vacation days and total business days in a quarter;
the use of third party providers by our customers;
the rate and volume of wireless service providers’ network development; and
general economic conditions.
Although the demand for our site development services fluctuates, we incur significant fixed costs, such as
maintaining a staff and office space in anticipation of future contracts. In addition, the timing of revenues is difficult to
forecast because our sales cycle may be relatively long. Therefore, we may not be able to adjust our cost structure on a
timely basis to respond to the fluctuations in demand for our site development services.
We are not profitable and expect to continue to incur losses.
We are not profitable. The following chart shows the net losses we incurred for the periods indicated:
2007
(as adjusted)
For the year ended December 31,
2008
(as adjusted)
(in thousands)
2009
Net loss
$
(91,474) $
(67,164) $
(141,119 )
Our losses are principally due to depreciation, amortization and accretion expenses, interest expense (including
non-cash interest expense and amortization of deferred financing fees), and losses from the extinguishment of debt as
well as impairment charges on our towers and auction rate securities in the periods presented above. We expect to
continue to incur significant losses, which may affect our ability to service our indebtedness.
The loss of the services of certain of our key personnel or a significant number of our employees may negatively
affect our business.
15
Our success depends to a significant extent upon performance and active participation of our key personnel. We
cannot guarantee that we will be successful in retaining the services of these key personnel. We have employment
agreements with Jeffrey A. Stoops, our President and Chief Executive Officer, Kurt L. Bagwell, our Senior Vice
President and Chief Operating Officer, Thomas P. Hunt, our Senior Vice President, Chief Administrative Officer and
General Counsel and Brendan T. Cavanagh, our Senior Vice President and Chief Financial Officer. We do not have
employment agreements with any of our other key personnel. If we were to lose any key personnel, we may not be able
to find an appropriate replacement on a timely basis and our results of operations could be negatively affected. Further,
the loss of a significant number of employees or our inability to hire a sufficient number of qualified employees could
have a material adverse effect on our business.
Our costs could increase and our revenues could decrease due to perceived health risks from radio frequency (“RF”)
energy.
The government imposes requirements and other guidelines relating to exposure to RF energy. Exposure to high
levels of RF energy can cause negative health effects. The potential connection between exposure to low levels of RF
energy and certain negative health effects, including some forms of cancer, has been the subject of substantial study by
the scientific community in recent years. According to the Federal Communications Commission (the “FCC”), the
results of these studies to date have been inconclusive. However, public perception of possible health risks associated
with cellular and other wireless communications media could slow the growth of wireless companies, which could in
turn slow our growth. In particular, negative public perception of, and regulations regarding, health risks could cause a
decrease in the demand for wireless communications services. Moreover, if a connection between exposure to low levels
of RF energy and possible negative health effects, including cancer, were demonstrated, we could be subject to numerous
claims. If we were subject to claims relating to exposure to RF energy, even if such claims were not ultimately found to
have merit, our financial condition could be materially and adversely affected.
Our business is subject to government regulations and changes in current or future regulations could harm our
business.
We are subject to federal, state and local regulation of our business. In particular, both the Federal Aviation
Administration (“FAA”) and FCC regulate the construction, modification and maintenance of antenna towers and
structures that support wireless communications and radio and television antennas. In addition, the FCC separately
licenses and regulates wireless communications equipment and television and radio stations operating from such towers
and structures. FAA and FCC regulations govern construction, lighting, painting and marking of towers and structures
and may, depending on the characteristics of the tower or structure, require registration of the tower or structure. Certain
proposals to construct new towers or structures or to modify existing towers or structures are reviewed by the FAA to
ensure that the tower or structure will not present a hazard to air navigation.
Antenna tower owners and antenna structure owners may have an obligation to mark or paint towers or
structures or install lighting to conform to FAA and FCC regulations and to maintain such marking, painting and
lighting. Antenna tower owners and antenna structure owners may also bear the responsibility of notifying the FAA of
any lighting outages. Certain proposals to operate wireless communications and radio or television stations from antenna
towers and structures are also reviewed by the FCC to ensure compliance with environmental impact requirements.
Failure to comply with existing or future applicable requirements may lead to civil penalties or other liabilities and may
subject us to significant indemnification liability to our customers against any such failure to comply. In addition, new
regulations may impose additional costly burdens on us, which may affect our revenues and cause delays in our growth.
Local regulations, including municipal or local ordinances, zoning restrictions and restrictive covenants
imposed by community developers, vary greatly, but typically require antenna tower and structure owners to obtain
approval from local officials or community standards organizations prior to tower or structure construction or
modification. Local regulations can delay, prevent, or increase the cost of new construction, co-locations, or site
upgrades, thereby limiting our ability to respond to customer demand. In addition, new regulations may be adopted that
increase delays or result in additional costs to us. These factors could have a material adverse effect on our future growth
and operations.
16
Our towers are subject to damage from natural disasters.
Our towers are subject to risks associated with natural disasters such as tornadoes, hurricanes and earthquakes.
We maintain insurance to cover the estimated cost of replacing damaged towers, but these insurance policies are subject
to loss limits and deductibles. We also maintain third party liability insurance, subject to loss limits and deductibles, to
protect us in the event of an accident involving a tower. A tower accident for which we are uninsured or underinsured, or
damage to a significant number of our towers, could require us to incur significant expenditures and may have a material
adverse effect on our operations or financial condition.
We could have liability under environmental laws that could have a material adverse effect on our business, financial
condition and results of operations.
Our operations, like those of other companies engaged in similar businesses, are subject to the requirements of
various federal, state, local and foreign environmental and occupational safety and health laws and regulations, including
those relating to the management, use, storage, disposal, emission and remediation of, and exposure to, hazardous and
non-hazardous substances, materials, and wastes. As owner, lessee or operator of numerous tower sites, we may be liable
for substantial costs of remediating soil and groundwater contaminated by hazardous materials, without regard to
whether we, as the owner, lessee or operator, knew of or were responsible for the contamination. We may be subject to
potentially significant fines or penalties if we fail to comply with any of these requirements. The current cost of
complying with these laws is not material to our financial condition or results of operations. However, the requirements
of these laws and regulations are complex, change frequently, and could become more stringent in the future. It is
possible that these requirements will change or that liabilities will arise in the future in a manner that could have a
material adverse effect on our business, financial condition and results of operations.
We have adopted anti-takeover provisions that could make it more difficult for a third party to acquire us.
Provisions of our articles of incorporation, our bylaws and Florida law could make it more difficult for a third
party to acquire us, even if doing so would be beneficial to our shareholders. We adopted a shareholder rights agreement,
which could make it considerably more difficult or costly for a person or group to acquire control of us in a transaction
that our board of directors opposes. These provisions, alone or in combination with each other, may discourage
transactions involving actual or potential changes of control, including transactions that otherwise could involve payment
of a premium over prevailing market prices to holders of our Class A common stock, or could limit the ability of our
shareholders to approve transactions that they may deem to be in their best interests.
Our issuance of equity securities and other associated transactions may trigger a future ownership change which may
negatively impact our ability to utilize net operating loss deferred tax assets in the future.
The issuance of equity securities and other associated transactions may increase the chance that we will have a
future ownership change under Section 382 of the Internal Revenue Code of 1986. We may also have a future ownership
change, outside of our control, caused by future equity transactions by our current shareholders. Depending on our
market value at the time of such future ownership change, an ownership change under Section 382 could negatively
impact our ability to utilize our net operating loss deferred tax assets in the event we generate future taxable income.
Currently, we have recorded a full valuation allowance against our net operating loss deferred tax asset because we have
concluded that our loss history indicates that it is not “more likely than not” that such deferred tax assets will be realized.
We could suffer adverse tax and other financial consequences if taxing authorities do not agree with our tax
positions, or we are unable to utilize our net operating losses.
We are periodically subject to a number of tax examinations by taxing authorities in the states and countries
where we do business. We also have significant deferred tax assets related to our net operating losses (“NOLs”) in U.S.
federal and state taxing jurisdictions. Generally, for U.S. federal and state tax purposes, NOLs can be carried forward
and used for up to twenty years, and all of our tax years will remain subject to examination until three years after our
NOLs are used or expire. We expect that we will continue to be subject to tax examinations in the future. We recognize
tax benefits of uncertain tax positions when we believe the positions are more likely than not of being sustained upon a
challenge by the relevant tax authority. We believe our judgments in this area are reasonable and correct, but there is no
guarantee that we will be successful if challenged by a tax authority. If there are tax benefits, including from our use of
NOLs or other tax attributes, that are challenged successfully by a taxing authority, we may be required to pay additional
taxes or we may seek to enter into settlements with the taxing authorities, which could require significant payments or
otherwise have a material adverse effect on our business, results of operations and financial condition.
17
In addition, we may be limited in our ability to utilize our NOLs to offset future taxable income and thereby
reduce our otherwise payable income taxes. We have substantial federal and state NOLs, including significant portions
obtained through acquisitions and dispositions, as well as those generated through our historic business operations. In
addition, we have disposed of some entities and restructured other entities in conjunction with financing transactions and
other business activities.
To the extent we believe that a position with respect to an NOL is not more likely than not to be sustained, we
do not record the related deferred tax asset. In addition, for NOLs that meet the recognition threshold, we assess the
recoverability of the NOL and establish a valuation allowance against the deferred tax asset related to the NOL if
recoverability is questionable. Given the uncertainty surrounding the recoverability of certain of our NOLs, we have
established a valuation allowance to offset the related deferred tax asset so as to reflect what we believe to be the
recoverable portion of our NOLs.
Our ability to utilize our NOLs is also dependent, in part, upon us having sufficient future earnings to utilize our
NOLs before they expire. If market conditions change materially and we determine that we will be unable to generate
sufficient taxable income in the future to utilize our NOLs, we could be required to record an additional valuation
allowance. We review our uncertain tax position and the valuation allowance for our NOLs periodically and make
adjustments from time to time, which can result in an increase or decrease to the net deferred tax asset related to our
NOLs. Our NOLs are also subject to review and potential disallowance upon audit by the taxing authorities of the
jurisdictions where the NOLs were incurred, and future changes in tax laws or interpretations of such tax laws could
limit materially our ability to utilize our NOLs. If we are unable to use our NOLs or use of our NOLs is limited, we may
have to make significant payments or otherwise record charges or reduce our deferred tax assets, which could have a
material adverse effect on our business, results of operations and financial condition.
Future sales of our Class A common stock in the public market or the issuance of other equity may cause dilution or
adversely affect the market price of our Class A common stock and our ability to raise funds in new equity or equity-
related offerings.
Sales of a substantial number of shares of our Class A common stock or other equity-related securities in the
public market, including sales by any selling shareholder or conversion of the Notes, could depress the market price of
our Class A common stock and impair our ability to raise capital through the sale of additional equity securities. We
cannot predict the effect that future sales of our Class A common stock or other equity-related securities would have on
the market price of our Class A common stock.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
We are headquartered in Boca Raton, Florida, where we currently lease approximately 73,000 square feet of
space. We have entered into long-term leases for regional and certain site development office locations where we expect
our activities to be longer-term. We open and close project offices from time to time in connection with our site
development business. We believe our existing facilities are adequate for our current and planned levels of operations
and that additional office space suited for our needs is reasonably available in the markets within which we operate.
Our interests in towers are comprised of a variety of fee interests, leasehold interests created by long-term lease
agreements, perpetual easements, easements and licenses or rights-of-way granted by government entities. Of the 8,324
tower sites in our portfolio, approximately 27.6% are located on parcels of land that we own, land subject to perpetual
easements, or parcels of land that have a leasehold interest that extends beyond 50 years. In rural areas, a wireless
communications site typically consists of up to a 10,000 square foot tract, which supports towers, equipment shelters and
related equipment. Less than 2,500 square feet is required for a monopole or self-supporting tower structure of the kind
typically used in metropolitan areas for wireless communications tower sites. Land leases generally have an initial term
of five years with five or more additional automatic renewal periods of five years, for a total of thirty years or more.
ITEM 3. LEGAL PROCEEDINGS
We are involved in various legal proceedings relating to claims arising in the ordinary course of business. We
do not believe that the ultimate resolution of these matters will have a material adverse effect on our business, financial
condition, results of operations or liquidity.
18
ITEM 4. RESERVED
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES
Market for our Class A common stock
Our Class A common stock commenced trading under the symbol “SBAC” on The NASDAQ National Market
System on June 16, 1999. We now trade on the NASDAQ Global Select Market, a segment of the NASDAQ Global
Market, formally known as the NASDAQ National Market System.
The following table presents the high and low sales price for our Class A common stock for the periods
indicated:
Quarter ended December 31, 2009
Quarter ended September 30, 2009
Quarter ended June 30, 2009
Quarter ended March 31, 2009
Quarter ended December 31, 2008
Quarter ended September 30, 2008
Quarter ended June 30, 2008
Quarter ended March 31, 2008
High
Low
$ 35.88
$ 28.14
$ 27.54
$ 24.43
$ 25.68
$ 38.50
$ 38.04
$ 34.04
$
$
$
$
$
$
$
$
25.83
22.25
21.87
15.85
9.49
23.10
29.02
23.93
As of February 24, 2010, there were 147 record holders of our Class A common stock.
Dividends
We have never paid a dividend on any class of common stock and anticipate that we will retain future earnings,
if any, to fund the development and growth of our business. Consequently, we do not anticipate paying cash dividends
on our common stock in the foreseeable future.
Equity Compensation Plan Information
The following table gives information about our Class A common stock that may be issued upon the exercise of
options, warrants, and rights under all existing equity compensation plans as of December 31, 2009:
Equity Compensation Plan Information
(in thousands except exercise price)
Number of Securities to be
Issued Upon Exercise of
Outstanding Options,
Warrants and Rights
Weighted Average Exercise
Price of Outstanding
Options, Warrants and
Rights
Number of Securities Remaining
Available for Future Issuance
Under Equity Compensation
Plans (excluding securities
reflected in first column) (1)
10 $
4,182
—
4,192 $
40.83
21.71
—
21.76
—
7,084
—
7,084
Equity compensation plans approved by
security holders
1999 Plan
2001 Plan
Equity compensation plans not approved by
security holders
Total
(1) The maximum number of shares of Class A common stock that may be issued pursuant to awards under the 2001 Equity Participation Plan shall
be 15% of the “adjusted common stock outstanding” as defined in the 2001 Equity Participation Plan, subject to certain limitations for specific types of
awards.
19
Issuer repurchases of equity securities
The following table presents information related to our repurchases of Class A common stock during the fourth quarter
of 2009:
Period
10/1/2009 - 10/31/2009
11/1/2009 - 11/30/2009
12/1/2009 - 12/31/2009
Total
Total Number of Shares
Purchased
Average Price Paid per
Share
— $
—
52,360
52,360 $
—
—
32.84
32.84
Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs (1)
Maximum Number (or
Approximate Dollar
Value) of Shares that
May Yet Be Purchased
Under the Plans or
Programs
— $
—
—
—
52,360
248,280,295
52,360 $
248,280,295
(1) On October 29, 2009, our Board of Directors authorized a $250.0 million share repurchase program pursuant to which we would repurchase
shares of our Class A common stock through open market repurchases in compliance with Rule 10b-18 of the Securities Act of 1933, as
amended, and/or in privately negotiated transactions at management’s discretion based on market and business conditions, applicable legal
requirements and other factors. This program became effective November 3, 2009 and will continue until otherwise modified or terminated by
our Board of Directors at any time in our sole discretion.
ITEM 6. SELECTED FINANCIAL DATA
Effective January 1, 2009, we retrospectively adopted new convertible debt accounting rules which require the
issuer of certain convertible debt instruments that may be settled in cash (including partial cash settlement) on
conversion to separately account for the liability (debt) and equity (conversion option) components of the instrument in a
manner that reflects the issuer’s non-convertible debt borrowing rate. Our 0.375% Notes and 1.875% Notes are subject to
the retrospective restatement requirements required by the new convertible debt accounting. Our consolidated statements
of operations and our consolidated statements of cash flows for the years ended December 31, 2008 and 2007 and
consolidated balance sheets as of December 31, 2008 and 2007 have been retrospectively adjusted to reflect the impact
of adopting the new convertible debt accounting. No periods prior to 2007 were affected by the adoption of the new
convertible debt accounting. See Note 2 and Note 13 to the consolidated financial statements for a summary of the
effects on our consolidated statements of operations for the years ended December 31, 2008 and 2007 and consolidated
balance sheet as of December 31, 2008. The accompanying selected financial data and Management’s Discussion and
Analysis reflects the changes due to the implementation.
The following table sets forth selected historical financial data as of and for each of the five years ended
December 31, 2009. The financial data for the fiscal years ended 2005, 2006, 2007, 2008, and 2009 have been derived
from our audited consolidated financial statements. You should read the information set forth below in conjunction with
our “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated
financial statements and the related notes to those consolidated financial statements included in this Form 10-K.
20
2005
(audited)
Operating data:
Revenues:
$ 161,277 $
Site leasing
Site development
Total revenues
Operating expenses:
Cost of revenues (exclusive of depreciation,
accretion and amortization shown below):
Cost of site leasing
Cost of site development
Selling, general and administrative
Acquisition related expenses
Restructuring and other charges (credits)
Asset impairment
Depreciation, accretion and amortization
Total operating expenses
Operating income
Other income (expense):
Interest income
Interest expense
Non-cash interest expense
Amortization of deferred financing fees
(Loss) gain from extinguishment of debt,
net
Other income (expense)
Total other expense
Loss from continuing operations before
2006
(audited)
For the year ended December 31,
2008
2007
(audited)
(audited)
(as adjusted)
(as adjusted)
2009
(audited)
(in thousands except for per share data)
256,170 $
94,932
351,102
321,818 $
86,383
408,201
395,541 $ 477,007
78,506
555,513
79,413
474,954
70,663
85,923
42,277
—
(357)
—
133,088
331,594
88,006
75,347
45,564
5
—
—
169,232
378,154
96,175
71,990
48,721
120
—
921
211,445
429,372
111,842
68,701
52,785
4,810
—
3,884
258,537
500,559
98,714
259,991
47,259
92,693
28,178
—
50
398
87,218
255,796
4,195
19,508
30,047
45,582
54,954
2,096
(40,511)
(26,234)
(2,850)
3,814
(81,283)
(6,845)
(11,584)
10,182
(93,063)
(13,402)
(8,162)
6,883
1,123
(105,328) (130,853)
(49,897)
(33,309)
(10,456)
(10,746)
(29,271)
31
(57,233)
692
(96,739)
(152,439)
(431)
(15,777)
(120,653)
44,269
(13,478)
(5,661)
163
(111,709) (195,581)
income taxes
(92,544)
(132,931)
(90,606)
(66,127) (140,627)
Provision for income taxes
(2,104)
(517)
(868)
(1,037)
(492)
Loss from continuing operations
Loss from discontinued operations, net of
income taxes
Net loss
Less: Net loss attributable to the
noncontrolling interest
Net loss attributable to SBA
(94,648)
(133,448)
(91,474)
(67,164) (141,119)
(61)
—
—
—
—
(94,709)
(133,448)
(91,474)
(67,164) (141,119)
—
—
—
—
248
Communications Corporation
$ (94,709) $ (133,448) $
(91,474) $
(67,164) $ (140,871)
Basic and diluted loss per common share
amounts:
Loss from continuing operations
Loss from discontinued operations
Net loss per common share
Basic and diluted weighted average shares
outstanding
$
$
(1.28) $
—
(1.28) $
(1.36) $
—
(1.36) $
(0.87) $
—
(0.87) $
(0.61) $
—
(0.61) $
(1.20)
—
(1.20)
73,823
98,193
104,743
109,882
117,165
21
Balance Sheet Data:
Cash and cash equivalents
Short-term investments
Restricted cash (1)
Property and equipment, net
Intangibles, net
Total assets
Total debt
Total shareholders’ equity (2)
Other Data:
Cash provided by (used in):
Operating activities
Investing activities
Financing activities
2005
(audited)
2006
(audited)
$
45,934
19,777
19,512
728,333
31,491
952,536
784,392
81,431
$
46,148
—
34,403
1,105,942
724,872
2,046,292
1,555,000
385,921
As of December 31,
$
2007
(audited)
(as adjusted)
(in thousands)
70,272
55,142
37,601
1,191,969
868,999
2,382,863
1,844,573
396,357
2008
(audited)
(as adjusted)
2009
(audited)
$
78,856
162
38,599
1,502,672
1,425,132
3,207,829
2,392,230
650,510
$
161,317
5,352
30,285
1,496,938
1,435,591
3,313,646
2,489,050
599,949
For the year ended December 31,
2005
(audited)
2006
(audited)
2007
(audited)
(as adjusted)
(in thousands)
2008
(audited)
(as adjusted)
2009
(audited)
$
$
49,767
(99,283)
25,823
$
73,730
(738,353)
664,837
$
122,934
(301,884)
203,074
$
173,696
(580,549 )
415,437
222,558
(229,075)
88,978
(1) Restricted cash of $30.3 million as of December 31, 2009 consisted of $29.1 million related to CMBS Mortgage loan
requirements and $1.2 million related to surety bonds issued for our benefit. Restricted cash of $38.6 million as of December 31,
2008 consisted of $36.2 million related to CMBS Mortgage loan requirements and $2.4 million related to surety bonds issued for
our benefit. Restricted cash of $37.6 million as of December 31, 2007 consisted of $35.3 million related to CMBS Mortgage loan
requirements and $2.3 million related to surety bonds issued for our benefit. Restricted cash of $34.4 million as of December 31,
2006 consisted of $30.7 million related to CMBS mortgage loan requirements and $3.7 million related to surety bonds issued for
our benefit. Restricted cash of $19.5 million as of December 31, 2005 consisted of $17.9 million related to CMBS mortgage loan
requirements and $1.6 million related to surety bonds issued for our benefit.
(2) Includes deferred loss from the termination of nine interest rate swap agreements of $4.3 million as of December 31, 2009, $7.4
million as of December 31, 2008, $10.2 million as of December 31, 2007 and $12.5 million as of December 31, 2006. Includes
deferred gain from the termination of two interest rate swap agreements of $5.9 million as of December 31, 2008, $8.9 million as
of December 31, 2007, $11.8 million as of December 31, 2006 and $14.5 million as of December 31, 2005.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion of our financial condition and results of operations should be read in conjunction with
the information contained in our consolidated financial statements and the notes thereto. The following discussion
includes forward-looking statements that involve certain risks and uncertainties, including, but not limited to, those
described in Item 1A. Risk Factors. Our actual results may differ materially from those discussed below. See “Special
Note Regarding Forward-Looking Statements” and Item 1A. Risk Factors.
We are a leading independent owner and operator of wireless communications towers. Our principal operations
are in the Continental United States. In addition, we have towers in Canada, Puerto Rico and the U.S. Virgin Islands. Our
primary business line is our site leasing business, which contributed approximately 97.4% of our total segment operating
profit for the year ended December 31, 2009. In our site leasing business, we lease antenna space to wireless service
providers on towers and other structures that we own, manage or lease from others. The towers that we own have been
constructed by us at the request of a wireless service provider, built or constructed based on our own initiative or
acquired. As of December 31, 2009, we owned 8,324 tower sites, the substantial majority 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. As of December 31, 2009, we also managed or leased approximately 5,100 actual or potential
communications sites, approximately 550 of which were revenue producing as of December 31, 2009. 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.
22
Site Leasing Services
Our primary focus is the leasing of antenna space on our multi-tenant towers to a variety of wireless service
providers under long-term lease contracts. Site leasing revenues are received primarily from wireless service provider
tenants, including AT&T, Sprint, T-Mobile and Verizon Wireless. Wireless service providers enter into numerous
different tenant leases with us, each of which relates to the lease or use of space at an individual tower site. Tenant leases
are generally for an initial term of five years with five 5-year renewal periods at the option of the tenant. These tenant
leases typically contain specific rent escalators, which average 3% - 4% per year, including the renewal option periods.
Tenant leases are generally paid on a monthly basis and revenue from site leasing is recorded monthly on a straight-line
basis over the current term of the related lease agreements. Rental amounts received in advance are recorded in deferred
revenue.
Cost of site leasing revenue primarily consists of:
• Rental payments on ground and other underlying property leases;
•
•
•
Straight-line rent adjustment for the difference between rental payments made and the expense
recorded as if the payments had been made evenly throughout the minimum lease term (which may
include renewal terms) of the underlying property leases;
Property taxes;
Site maintenance and monitoring costs (exclusive of employee related costs);
• Utilities;
•
Property insurance; and
• Deferred lease origination cost amortization.
For any given tower, such costs are relatively fixed over a monthly or an annual time period. As such, operating
costs for owned towers do not generally increase significantly as a result of adding additional customers to the tower.
The amount of other direct costs associated with operating a tower varies from site to site depending on the taxing
jurisdiction and the height and age of the tower but typically do not make up a large percentage of total operating costs.
The ongoing maintenance requirements are typically minimal and include replacing lighting systems, painting a tower or
upgrading or repairing an access road or fencing. Lastly, ground leases are generally for an initial term of five years or
more with multiple renewal terms of five year periods at our option and provide for rent escalators which typically
average 3% - 4% annually or provide for term escalators of approximately 15%.
Our site leasing business generates substantially all of our segment operating profit. The table below details the
percentage of total company revenues and total segment operating profit contributed by the site leasing business over the
last three years. For information regarding our operating segments, see Note 23 of our Notes to Consolidated Financial
Statements included in this annual report.
Revenues
For the year ended December 31,
2008
2007
2009
(in thousands)
Site leasing revenue
Total revenues
Site leasing revenue percentage of total revenues
$
$
477,007
555,513
$
$
85.9%
395,541
474,954
$ 321,818
$ 408,201
83.3%
78.8%
23
Site leasing segment operating profit (1)
Total segment operating profit (1)
Site leasing segment operating profit
percentage of total segment operating profit (1)
Segment Operating Profit
For the year ended December 31,
2008
2007
2009
(in thousands)
$
$
365,165
374,970
$
$
299,366
306,789
$ 233,812
$ 244,848
97.4%
97.6%
95.5%
(1) Site leasing segment operating profit and total segment operating profit are non-GAAP financial measures. We
reconcile these measures and other Regulation G disclosures in this annual report in the section entitled Non-GAAP
Financial Measures.
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, network expansion and network
coverage requirements. We believe our site leasing business is characterized by stable and long-term recurring revenues,
predictable operating costs and minimal 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 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. Furthermore, because our
towers are strategically positioned and our customers typically do not relocate, we have historically experienced low
customer churn as a percentage of revenue.
Site Development Services
Our site development business 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 capture
ancillary revenues that are generated by our site leasing activities, such as antenna and equipment installation at our
tower locations. Our site development business consists of two segments, site development consulting and site
development construction. Site development services revenues are received 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. We principally perform services for third parties in our core, historical areas of wireless
expertise, specifically site acquisition zoning, technical services and construction.
Our site development customers engage us on a project-by-project basis, and a customer can generally terminate
an assignment at any time without penalty. Site development projects, both consulting and construction, include
contracts on a time and materials basis or a fixed price basis. The majority of our site development services are billed on
a fixed price basis. Time and materials based site development contracts are billed and revenue is recognized at
contractual rates as the services are rendered. Our site development projects generally take from three to twelve months
to complete. For those site development consulting contracts in which we perform work on a fixed price basis, we
recognize revenue based on the completion of agreed upon phases of the project on a per site basis.
Our revenue from site development construction contracts is recognized on the percentage-of-completion
method of accounting, determined by the percentage of cost incurred to date compared to management’s estimated total
cost for each contract. This method is used because management considers total cost to be the best available measure of
progress on the contracts. These amounts are based on estimates, and the uncertainty inherent in the estimates initially is
reduced as work on the contracts nears completion. Revenue from our site development construction business may
fluctuate from period to period depending on construction activities, which are a function of the timing and amount of
our clients’ capital expenditures, the number and significance of active customer engagements during a period, weather
and other factors.
Cost of site development consulting revenue and construction revenue includes all costs of materials, salaries
and labor costs, including payroll taxes, subcontract labor, vehicle expense and other costs directly and indirectly related
to the projects. All costs related to site development consulting contracts and construction contracts are recognized as
incurred.
24
The table below provides the percentage of total company revenues contributed by site development services
over the last three years. For information regarding our operating segments, see Note 23 of our Notes to Consolidated
Financial Statements included in this annual report.
Site development consulting
Site development construction
Percentage of Revenues
For the year ended December 31,
2008
2007
2009
(in thousands)
$
$
17,408
61,098
$
$
18,754
60,659
$ 24,349
$ 62,034
Total revenues
$ 555,513
$ 474,954
$ 408,201
Site development consulting
Site development construction
3.1%
11.0%
3.9%
12.8%
6.0%
15.2%
Critical Accounting Policies and Estimates
We have identified the policies and significant estimation processes below 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 3
in the Notes to Consolidated Financial Statements for the year ended December 31, 2009, included herein. 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.
Construction Revenue
Revenue from construction projects is recognized using the percentage-of-completion method of accounting,
determined by the percentage of cost incurred to date compared to management’s estimated total cost for each contract.
This method is used because we consider total cost to be the best available measure of progress on each contract. These
amounts are based on estimates, and the uncertainty inherent in the estimates initially is reduced as work on each
contract nears completion. The asset “Costs and estimated earnings in excess of billings on uncompleted contracts”
represents expenses incurred and revenues recognized in excess of amounts billed. The liability “Billings in excess of
costs and estimated earnings on uncompleted contracts” represents billings in excess of revenues recognized.
Allowance for Doubtful Accounts
We perform periodic credit evaluations of our customers. We continuously monitor collections and payments
from our customers and maintain an allowance for estimated credit losses based upon our historical experience and any
specific customer collection issues that we have identified. Establishing reserves against specific accounts receivable and
the overall adequacy of our allowance is a matter of judgment.
25
Asset Impairment
We evaluate the potential impairment of individual long-lived assets, principally the tower sites. We record an
impairment charge when we believe an investment in towers or intangible assets has been impaired, such that future
undiscounted cash flows would not recover the then current carrying value of the investment in the tower site. We
consider many factors and make 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. In addition, we make certain assumptions in determining an asset’s fair value for purposes of calculating the
amount of an impairment charge. Changes in those assumptions or market conditions may result in a fair value which is
different from management’s estimates. Future adverse changes in market conditions could result in losses or an inability
to recover the carrying value, thereby possibly requiring an impairment charge in the future. In addition, if our
assumptions regarding future undiscounted cash flows and related assumptions are incorrect, a future impairment charge
may be required.
Property Tax Expense
We typically receive notifications and invoices in arrears for property taxes associated with the tangible
personal property and real property used in our site leasing business. As a result, we recognize property tax expense,
which is reflected as a component of site leasing cost of revenue, based on our best estimate of anticipated property tax
payments related to the current period. We consider several factors in establishing this estimate, including our historical
level of incurred property taxes, the location of the property, our awareness of jurisdictional property value assessment
methods and industry related property tax information. If our estimates regarding anticipated property tax expenses are
incorrect, a future increase or decrease in site leasing cost of revenue may be required.
KEY PERFORMANCE INDICATORS
Non-GAAP Financial Measures
This report contains certain non-GAAP measures, including Segment Operating Profit and Adjusted EBITDA
information. We have provided below a description of such non-GAAP measures, a reconciliation of such non-GAAP
measures to their most directly comparable GAAP measures and an explanation as to why management utilizes these
measures.
Segment Operating Profit:
We believe that Segment Operating Profit is an indicator of the operating performance of our site leasing and
site development segments and is used to provide management with the ability to monitor the operating results and
margin of each segment, while excluding the impact of depreciation, accretion and amortization, which is largely fixed
and non-cash in nature. Segment Operating Profit is not intended to be an alternative measure of revenue or segment
gross profit as determined in accordance with GAAP.
For the year ended
December 31,
Dollar
Change
Percentage
Change
Segment Operating Profit
Site leasing
Site development consulting
Site development construction
Total
2009
2008
(in thousands)
$ 365,165 $ 299,366 $ 65,799
632
1,750
$ 374,970 $ 306,789 $ 68,181
3,542
3,881
4,174
5,631
For the year ended
December 31,
2008
2007
(in thousands)
Dollar
Change
22.0% $ 299,366 $ 233,812 $ 65,554
(1,512)
17.8%
45.1%
(2,101)
22.2% $ 306,789 $ 244,848 $ 61,941
3,542
3,881
5,054
5,982
Percentage
Change
28.0%
(29.9)%
(35.1)%
25.3%
The increase in site leasing segment operating profit of $65.8 million in 2009 is primarily related to additional
profit generated by the revenues from the towers that we acquired in the 2008 acquisitions of Optasite, Light Tower and
Tower Co and the other towers that we acquired or constructed subsequent to December 31, 2008, organic site leasing
growth from new leases and contractual rent escalators and lease amendments with current tenants which increased the
related rent to reflect additional equipment added to our towers in the year ended December 31, 2009, control of our site
leasing cost of revenue and the positive impact of our ground lease purchase program.
26
The increase in site leasing segment operating profit of $65.6 million in 2008 compared to 2007 is primarily
related to additional profit generated by the number of towers acquired and constructed for the year ended December 31,
2008, as well as additional revenue from the increased number of tenants and tenant equipment on our sites for the year
ended December 31, 2008 compared to the same period of 2007 without a commensurate increase in site leasing cost of
revenue.
Each respective Segment Operating Profit is defined as segment revenues less segment cost of revenues
(excluding depreciation, accretion and amortization). Total Segment Operating Profit is the total of the operating profits
of the three segments. The reconciliation of Segment Operating Profit is as follows:
Segment revenue
Segment cost of revenues (excluding depreciation, accretion
and amortization)
Segment operating profit
Site leasing segment
For the year ended December 31,
2007
2008
2009
(in thousands)
$ 395,541
$ 321,818
$ 477,007
(111,842)
(96,175)
(88,006)
$ 365,165
$ 299,366
$ 233,812
Segment revenue
Segment cost of revenues (excluding depreciation, accretion
and amortization)
Segment operating profit
$
$
Site development consulting segment
For the year ended December 31,
2007
2008
2009
(in thousands)
$ 18,754
$ 24,349
17,408
(13,234)
4,174
(15,212)
3,542
$
(19,295)
5,054
$
Segment revenue
Segment cost of revenues (excluding depreciation, accretion
and amortization)
Segment operating profit
Adjusted EBITDA
Site development construction segment
For the year ended December 31,
2007
2008
2009
(in thousands)
$ 60,659
$ 62,034
61,098
$
(55,467)
5,631
$
(56,778)
3,881
$
(56,052)
5,982
$
We believe that Adjusted EBITDA is an indicator of the performance of our core operations and reflects the
changes in our operating results. Adjusted EBITDA is a component of the calculation that has been used by our lenders
to determine compliance with certain covenants under our Senior Credit Facility and Senior Notes. Adjusted EBITDA is
not intended to be an alternative measure of operating income or gross profit margin as determined in accordance with
GAAP.
Adjusted EBITDA was $338.5 million for the year ended December 31, 2009 as compared to $269.2 million for
the year ended December 31, 2008. The increase of $69.3 million is primarily the result of increased segment operating
profit from our site leasing segment.
Adjusted EBITDA was $269.2 million for the year ended December 31, 2008 as compared to $209.4 million for
the year ended December 31, 2007. The increase of $59.8 million is primarily the result of increased segment operating
profit from our site leasing segment.
27
We define Adjusted EBITDA as net loss excluding the impact of net interest expenses (including amortization
of deferred financing fees), provision for taxes, depreciation, accretion and amortization, asset impairment and other
charges, non-cash compensation, loss (gain) from extinguishment of debt, net, other income and expenses, acquisition
related expenses, non-cash straight-line leasing revenue and non-cash straight-line ground lease expense. Adjusted
EBITDA excludes acquisition related costs which were previously capitalized but, commencing January 1, 2009, were
required to be expensed and included within operating expenses pursuant to the adoption of new business combination
accounting guidance. The reconciliation of Adjusted EBITDA is as follows:
For the year ended December 31,
2009
2008
(as adjusted)
(in thousands)
2007
Net loss
Interest income
Interest expense
Depreciation, accretion and amortization
Asset impairment
Provision for taxes (1)
Loss (gain) from extinguishment of debt, net
Acquisition related costs (2)
Non-cash compensation
Non-cash leasing revenue
Non-cash ground lease expense
Other (income) expense
Adjusted EBITDA
$ (141,119) $
(1,123)
191,206
258,537
3,884
2,204
5,661
4,810
8,200
(6,176)
12,543
(163)
$ 338,464
$
(67,164) $
(6,883)
149,383
211,445
921
2,371
(44,269)
120
7,207
(7,810)
10,387
13,478
269,186
(as adjusted)
(91,474)
(10,182)
114,627
169,232
—
1,993
431
5
6,612
(8,870)
11,248
15,777
209,399
$
(1)
(2)
Includes $1,712, $1,334, and $1,125 of franchise taxes reflected on the Statement of Operations in
selling, general and administrative expenses for the year ended 2009, 2008 and 2007, respectively.
The years ended December 31, 2007 and 2008 reflect acquisition integration costs that were previously
reflected on the Statement of Operations in selling, general and administrative expenses.
28
RESULTS OF OPERATIONS
Year Ended 2009 Compared to Year Ended 2008
For the year ended December 31,
2009
2008
(as adjusted)
(in thousands, except for percentages)
Dollar
Change
$
$
477,007
17,408
61,098
555,513
395,541
18,754
60,659
474,954
$ 81,466
(1,346)
439
80,559
Revenues:
Site leasing
Site development consulting
Site development construction
Total revenues
Operating expenses:
Cost of revenues (exclusive of depreciation,
accretion and amortization shown below):
Cost of site leasing
Cost of site development consulting
Cost of site development construction
Selling, general and administrative
Asset impairment
Acquisition related expenses
Depreciation, accretion and amortization
Total operating expenses
Operating income
Other income (expense):
Interest income
Interest expense
Non-cash interest expense
Amortization of deferred financing fees
(Loss) gain from extinguishment of debt, net
Other income (expense)
Total other expense
Loss before provision for income taxes
Provision for income taxes
Net loss
Less: Net loss attributable to the noncontrolling
interest
Net loss attributable to SBA
Communications Corporation
Revenues:
Percentage
Change
20.6%
(7.2)%
0.7%
17.0%
16.3%
(13.0)%
(2.3)%
8.3%
100.0%
100.0%
22.3%
16.6%
96,175
15,212
56,778
48,721
921
120
211,445
429,372
15,667
(1,978)
(1,311)
4,064
2,963
4,690
47,092
71,187
45,582
9,372
20.6%
6,883
(105,328)
(33,309)
(10,746)
44,269
(13,478)
(111,709)
(66,127)
(1,037)
(67,164)
(5,760)
(25,525)
(16,588)
290
(49,930)
13,641
(83,872)
(74,500)
545
(73,955)
(83.7)%
24.2%
49.8%
(2.7)%
(100.0)%
100.0%
75.1%
100.0%
(52.6)%
100.0%
111,842
13,234
55,467
52,785
3,884
4,810
258,537
500,559
54,954
1,123
(130,853)
(49,897)
(10,456)
(5,661)
163
(195,581)
(140,627)
(492)
(141,119)
248
—
248
100.0%
$
(140,871)
$
(67,164) $ (73,707)
100.0%
Site leasing revenue increased $81.5 million for the year ended December 31, 2009 largely due to (i) revenues
from the towers that we acquired in the 2008 acquisitions of Optasite, Light Tower and Tower Co and the other towers
that we acquired or constructed subsequent to December 31, 2008 and (ii) organic site leasing growth from new leases
and contractual rent escalators and lease amendments with current tenants which increased the related rent to reflect
additional equipment added to our towers. Average rents per tenant increased in the year ended December 31, 2009 due
primarily to rent escalators, lease amendments and higher rents associated with new leases.
Site development consulting revenue decreased $1.3 million for the year ended December 31, 2009 compared to
the same period in the prior year as a result of a lower volume of work. Site development construction revenues
remained relatively stable for the year ended December 31, 2009 as compared to the year ended December 31, 2008.
Operating Expenses:
Site leasing cost of revenues increased $15.7 million primarily as a result of the growth in the number of tower
sites owned by us, which was 8,324 at December 31, 2009 up from 7,854 at December 31, 2008 offset by the positive
impact of our ground lease purchase program.
29
Site development consulting cost of revenues and site development construction cost of revenues decreased by
$2.0 million and $1.3 million, respectively, for the year ended December 31, 2009 as compared to the same period in the
prior year as a result of lower volume of work and continued effort to manage and reduce fixed overhead costs.
Selling, general, and administrative expenses increased $4.1 million primarily as a result of an increase in
salaries, benefits and other employee related expenses resulting primarily from a higher number of employees, and
increased non-cash compensation expense that we recognized for the year ended December 31, 2009 compared to the
year ended December 31, 2008.
Acquisition related expenses of $4.8 million are associated with acquisitions which effective January 1, 2009, are
required to be expensed and included within operating expenses. We had historically capitalized the majority of these expenses.
Asset impairment of $3.9 million for the year ended December 31, 2009 is a result of a reevaluation of future
cash flow expectations for 21 towers that have not achieved expected lease-up results as determined using a discounted
cash flow analysis compared to the related net book value of the tower assets and an impairment charge on our six DAS
networks based on the estimated fair value of the DAS networks at December 31, 2009. Asset impairment of $0.9
million for the year ended December 31, 2008 is a result of a reevaluation of future cash flow expectations for eight
towers that have not achieved expected lease-up results as determined using a discounted cash flow analysis compared to
the related net book value of the tower asset and related intangibles.
Depreciation, accretion and amortization expense increased $47.1 million to $258.5 million for the year ended
December 31, 2009 from $211.4 million for the year ended December 31, 2008 due to an increase in the number of
towers and associated intangible assets we owned for the year ended December 31, 2009 compared to those owned at
December 31, 2008.
Operating Income:
Operating income increased $9.4 million for year ended December 31, 2009 to $55.0 million compared to $45.6
million for the year ended December 31, 2008 primarily due to the result of higher segment operating profit in the site
leasing segment partially offset by increases in depreciation, accretion and amortization expense, acquisition related
expenses and selling, general and administrative expenses.
Other Income (Expense):
Interest income decreased $5.8 million for the year ended December 31, 2009 compared to the year ended
December 31, 2008. This decrease was primarily the result of lower weighted average interest rates offset by higher
average invested funds during 2009 compared to 2008.
Interest expense for the year ended December 31, 2009 increased $25.5 million from the year ended December
31, 2008. This increase is primarily due to the higher interest rates on the mix of our outstanding debt and the higher
weighted average amount of cash interest bearing debt outstanding for the year ended December 31, 2009 as compared
to the year ended December 31, 2008.
Non-cash interest expense for the year ended December 31, 2009 increased $16.6 million from the year ended
December 31, 2008. This increase primarily reflects the accretion of debt discounts on the Senior Notes which were
issued in July 2009 and the 4.0% Notes which were issued in April 2009 and the Optasite Credit Facility acquired in
September 2008, offset by the impact of the repurchase of an aggregate of $319.6 million in principal of the 0.375%
Notes in the fourth quarter of 2008 and year ended December 31, 2009.
The net loss from extinguishment of debt of $5.7 million for the year ended December 31, 2009 includes a loss
of $7.2 million related to the repurchases and subsequent payoff of our 2005 CMBS Certificates in July 2009, $2.7
million associated with the repurchase of $150.1 million in principal of our 2006 CMBS Certificates and $1.9 million
related to the payoff of our Optasite Credit Facility in July 2009, offset slightly by a gain of $6.1 million associated with
the repurchases of an aggregate of $107.7 million in principal of our 0.375% Notes. The net gain from extinguishment of
debt of $44.3 million for the year ended December 31, 2008 included $25.7 million related to the repurchase of $211.9
million in principal amount of our 0.375% Notes and $18.9 million related to the repurchases of $65.5 million of our
CMBS Certificates offset by the write-off of deferred financing fees related to the portion of the debt extinguished and
the reduction in the aggregate commitment of the lenders under the Senior Credit Facility as a result of Lehman
Commercial Paper Inc.’s default of its funding obligations. See discussion in Note 13 to the Notes to the Consolidated
Financial Statements for more information.
30
Other income (expense) for the year ended December 31, 2009 decreased $13.6 million from the year ended
December 31, 2008. This decrease primarily reflects an other-than-temporary impairment charge on our investments in
auction rate securities during 2008. See Note 5 to the Consolidated Financial Statements for more information on our
investments in auction rate securities and this other-than-temporary impairment charge.
Net Loss:
Net loss was $141.1 million for the year ended December 31, 2009 as compared to $67.2 million for the year
ended December 31, 2008. The increase in 2009 is primarily the result of: the 2009 net losses from the early
extinguishment of debt as opposed to net gains from the early extinguishment of debt in 2008, increases in interest
expense, non-cash interest expense, and depreciation, accretion and amortization expense partially offset by an increase
in site leasing segment operating profit.
Year Ended 2008 Compared to Year Ended 2007
For the year ended December 31,
2008
(as adjusted)
2007
(as adjusted)
Dollar
Change
Percentage
Change
(in thousands, except for percentages)
Revenues:
Site leasing
Site development consulting
Site development construction
Total revenues
Operating expenses:
Cost of revenues (exclusive of depreciation,
accretion and amortization shown below):
Cost of site leasing
Cost of site development consulting
Cost of site development construction
Selling, general and administrative
Asset impairment
Acquisition related expenses
Depreciation, accretion and amortization
Total operating expenses
Operating income
Other income (expense):
Interest income
Interest expense
Non-cash interest expense
Amortization of deferred financing fees
Gain (loss) from extinguishment of debt, net
Other expense
Total other expense
Loss before provision for income taxes
Provision for income taxes
Net loss
Less: Net loss attributable to the
noncontrolling interest
Net loss attributable to SBA
Communications Corporation
$
$
395,541
18,754
60,659
474,954
321,818
24,349
62,034
408,201
$ 73,723
(5,595)
(1,375)
66,753
96,175
15,212
56,778
48,721
921
120
211,445
429,372
88,006
19,295
56,052
45,564
—
5
169,232
378,154
8,169
(4,083)
726
3,157
921
115
42,213
51,218
22.9%
(23.0)%
(2.2)%
16.4%
9.3%
(21.2)%
1.3%
6.9%
100.0%
100.0%
24.9%
13.5%
45,582
30,047
15,535
51.7%
6,883
(105,328)
(33,309)
(10,746)
44,269
(13,478)
(111,709)
(66,127)
(1,037)
(67,164)
10,182
(93,063)
(13,402)
(8,162)
(431)
(15,777)
(120,653)
(90,606)
(868)
(91,474)
(3,299)
(12,265)
(19,907)
(2,584)
44,700
2,299
8,944
24,479
(169)
24,310
(32.4)%
13.2%
100.0%
31.7%
100.0%
(14.6)%
(7.4)%
(27.0)%
19.5%
(26.6)%
—
—
—
$
(67,164) $
(91,474) $ 24,310
(26.6)%
31
Revenues:
Site leasing revenue increased $73.7 million for the year ended December 31, 2008 due to an increase in the
number of tenants and the amount of equipment added to our historical towers and from revenue generated by the towers
that we acquired or constructed subsequent to December 31, 2007. Additionally, we have experienced, on average higher
rents per tenant due to higher rents from new tenants, higher annual rents upon renewal by existing tenants and higher
rents from additional equipment added by existing tenants.
Site development consulting and construction revenue for the year ended December 31, 2008 compared to the
same period of 2007 decreased $7.0 million as a result of a lower volume of work and a wind down of certain of our
prior contracts with Sprint offset by additional contracts with T-Mobile and Metro PCS.
Operating Expenses:
Site leasing cost of revenues increased $8.2 million primarily as a result of the growth in the number of tower
sites owned by us, which was 7,854 at December 31, 2008 up from 6,220 at December 31, 2007 offset by the positive
impact of our ground lease purchase program.
Site development consulting cost of revenues and site development construction cost of revenues for the year
ended December 31, 2008 decreased $3.4 million compared to the same period of 2007 as a result of a decline in the
volume of work performed for Sprint offset by additional contracts with T-Mobile and Metro PCS.
Selling, general, and administrative expenses increased $3.2 million primarily as a result of a $0.9 million one-
time severance expense related to the departure of our former Chief Financial Officer, a $0.6 million one-time settlement
expense associated with the termination of the pension plan we acquired as part of our acquisition of AAT
Communications Corporation in 2006 and an increase in salaries, benefits and other employee related expenses resulting
primarily from a higher number of employees, and increased non-cash compensation expense that we recognized for the
year ended December 31, 2008 compared to the same period of 2007.
Asset impairment of $0.9 million for the year ended December 31, 2008 is the result of a reevaluation of future
cash flow expectations for eight towers that have not achieved expected lease-up results as determined using a
discounted cash flow analysis compared to the related net book value of the tower asset and related intangibles.
Depreciation, accretion and amortization expense increased $42.2 million to $211.4 million for the year ended
December 31, 2008 from $169.2 million for the year ended December 31, 2007 due to an increase in the number of
towers and associated intangible assets we owned for the year ended December 31, 2008 compared to the same period of
2007.
Operating Income:
Operating income was $45.6 million for the year ended December 31, 2008 as compared to $30.0 million for
the year ended December 31, 2007. The increase is primarily the result of higher site leasing segment operating profit,
offset by an increase in selling, general and administrative expenses and depreciation, accretion and amortization
expense.
Other Income (Expense):
Interest income decreased $3.3 million for the year ended December 31, 2008 when compared to the year ended
December 31, 2007. The decrease is primarily the result of lower interest rates coupled with a decrease in the average
cash balances for the year ended December 31, 2008 compared to the same period of 2007.
Interest expense for the year ended December 31, 2008 increased $12.3 million from the year ended December
31, 2007. This increase is primarily due to the higher weighted average amount of cash-interest bearing debt outstanding
for the year ended December 31, 2008 as compared to the year ended December 31, 2007, which is partially offset by a
reduction in our weighted average cash interest rate for the same periods. Specifically, we issued $550.0 million of
1.875% Notes in May 2008, borrowed $465.6 million and paid fees and interest on borrowings under our Senior Credit
Facility, which we entered into in January 2008, and assumed as part of the Optasite acquisition its $150 million fully-
drawn credit facility in September 2008.
32
Non-cash interest expense for the year ended December 31, 2008 increased $19.9 million from the year ended
December 31, 2007. This increase primarily reflects the accretion of interest for the debt discount on the 1.875% Notes
issued in May 2008 and the discount on the credit facility which was assumed as part of the Optasite acquisition in
September 2008.
Amortization of deferred financing fees increased by $2.6 million for the year ended December 31, 2008, as
compared to the year ended December 31, 2007. This increase was primarily a result of the amortization of fees relating
to the Senior Credit Facility entered into during the first quarter of 2008 and the $550.0 million principal amount of
1.875% Notes issued in May 2008.
The net gain from extinguishment of debt was $44.3 million for the year ended December 31, 2008. The net
gain includes the extinguishment of $138.1 million in principal amount of our 0.375% Notes and $65.5 million of our
CMBS Certificates for $147.8 million in cash and the issuance of 3,407,914 shares of our Class A common stock for
$73.8 million in principal amount of 0.375% Notes offset by the write-off of deferred financing fees related to the
portion of the debt extinguished and the reduction in the aggregate commitment of the lenders under the Senior Credit
Facility as a result of Lehman Commercial Paper Inc.’s default of its funding obligations. See discussion in Note 13 to
the Notes to the Consolidated Financial Statements for more information. The loss from write-off of deferred financing
fees and extinguishment of debt was $0.4 million for the year ended December 31, 2007 associated with the termination
of the senior revolving credit facility in April 2007.
Other expense of $13.5 million and $15.8 million for the years ended December 31, 2008 and December 31,
2007, respectively, includes an other-than-temporary impairment loss on investments, associated with our investments in
auction rate securities. See Note 5 to the Consolidated Financial Statements for more information on our investments in
auction rate securities and this other-than-temporary impairment charge.
Net Loss:
Net loss was $67.2 million for the year ended December 31, 2008 as compared to $91.5 million for the year
ended December 31, 2007. The decrease of $24.3 million is primarily the result of the net gains from the early
extinguishment of debt and an increase in site leasing segment operating profit partially offset by an increase in
depreciation, accretion and amortization expense, interest expense, amortization of deferred financing fees and other
expense.
LIQUIDITY AND CAPITAL RESOURCES
SBA Communications Corporation is a holding company with no business operations of its own. SBA
Communications’ only significant asset is the outstanding capital stock of SBA Telecommunications, Inc. which is also a
holding company that owns equity interests in (1) SBA Infrastructure Holdings I, Inc. (the entity that indirectly owns all
of the towers and other assets acquired in the Optasite acquisition), (2) SBA Senior Finance, Inc. (the entity that
indirectly owns all of our other domestic towers and assets) and (3) our international entities. 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:
Summary cash flow information:
Cash provided by operating activities
Cash used in investing activities
Cash provided by financing activities
Increase in cash and cash equivalents
Cash and cash equivalents, December 31, 2008
Cash and cash equivalents, December 31, 2009
33
For the year ended
December 31, 2009
(in thousands)
$
$
222,558
(229,075)
88,978
82,461
78,856
161,317
Sources of Liquidity
We fund our growth, including our tower portfolio growth, through cash flows from operations, long-term
indebtedness and equity issuances. With respect to our debt financing, we have utilized secured and unsecured financings
and issuances at various levels of our organizational structure to minimize our financing costs while maximizing our
operational flexibility.
Cash provided by operating activities was $222.6 million for the year ended December 31, 2009 as compared to
$173.7 million for the year ended December 31, 2008. This increase was primarily the result of an increase in segment
operating profit from the site leasing segment.
On July 24, 2009, Telecommunications issued $750 million of unsecured Senior Notes, which we refer to as the
Senior Notes, $375 million of which are due 2016 (the “2016 Notes”) and $375 million of which are due 2019 (the
“2019 Notes”). The 2016 Notes have an interest rate of 8.00% and were issued at a price of 99.330% of their face value.
The 2019 Notes have an interest rate of 8.25% and were issued at a price of 99.152% of their face value. Net proceeds of
this offering were $727.9 million after deducting expenses and original issue discount. Telecommunications used the net
proceeds to repay the 2005 CMBS Certificates issued by its subsidiary and the related prepayment consideration and
repay the principal amounts outstanding under the Optasite Credit Facility and the Senior Credit Facility.
Telecommunications also intends to use the net proceeds from this offering to repurchase prior to maturity or repay at
maturity our outstanding 0.375% Notes. The remaining net proceeds are being used for general corporate purposes.
On April 24, 2009, SBA Communications issued $500.0 million of 4.0% Notes in a private placement
transaction. The net proceeds of this offering were approximately $488.2 million after deducting discounts, commissions
and expenses. Contemporaneously with the closing of the sale of the 4.0% Notes, a portion of the net proceeds from the
sale of the 4.0% Notes was used to repurchase and subsequently retire 2.0 million shares of our Class A common stock,
valued at approximately $50.0 million based on the closing stock price of $24.80 on April 20, 2009. Concurrently with
the pricing of the 4.0% Notes, we entered into convertible note hedge and warrant transactions. A portion of the net
proceeds from the sale of the 4.0% Notes and the warrants were used to pay for the cost of the convertible note hedge
transactions. The remaining net proceeds of $376.6 million were used for general corporate purposes, including
repurchases or repayments of our outstanding debt.
Effective April 14, 2009, SBA Senior Finance entered into a New Lender Supplement to the Senior Credit
Agreement with Barclays Bank PLC. The New Lender Supplement added Barclays as a lender under the Senior Credit
Facility and increased the aggregate commitment under the Senior Credit Facility from $285.0 million to $320.0 million,
availability of which was based on compliance with certain financial ratios. Availability under the Senior Credit Facility
was $319.9 million as of December 31, 2009. During 2009, SBA Senior Finance borrowed $8.5 million and repaid
$239.1 million under its Senior Credit Facility, which is presented within “Cash flows from financing activities” on our
Consolidated Statements of Cash Flows. We used or designated such proceeds for construction and acquisition of towers
and for ground lease buyouts. On February 11, 2010, SBA Senior Finance terminated the Senior Credit Facility.
On February 11, 2010, SBA Senior Finance II, LLC (“SBA Senior Finance II”), our indirect wholly-owned
subsidiary, entered into a credit agreement for a $500.0 million senior secured revolving credit facility (the “2010 Credit
Facility”) with several banks and other financial institutions or entities from time to time parties to the credit agreement
(the “Credit Agreement”). Amounts borrowed under the 2010 Credit Facility will be secured by a first lien on the capital
stock of SBA Telecommunications, Inc., SBA Senior Finance, Inc. and SBA Senior Finance II, and substantially all of
the assets, other than leasehold, easement or fee interests in real property, of SBA Senior Finance II and the Subsidiary
Guarantors (as defined in the Credit Agreement). The 2010 Credit Facility matures on February 11, 2015 and may be
borrowed, repaid and redrawn, subject to compliance with the financial and other covenants in the Credit Agreement. As
of the date of this filing, availability under the 2010 Credit Facility was $500.0 million. The material terms of the 2010
Credit Facility are described below under “Debt Instruments and Debt Service Requirements – 2010 Credit Facility.”
Equity Issuances
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
year ended December 31, 2009, we issued approximately 0.9 million shares of Class A common stock under this
registration statement. As of December 31, 2009, we had approximately 1.7 million shares of Class A common stock
remaining under this shelf registration statement.
34
On March 3, 2009, 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. For the year ended December 31, 2009, we did not issue any securities under this
automatic shelf registration statement.
Uses of Liquidity
Traditionally, our principal use of liquidity has been cash capital expenditures associated with the growth of our
tower portfolio. During the recent market disruptions that occurred from October 2008 through 2009, we utilized our
liquidity to take advantage of certain market opportunities and repurchase our outstanding debt. However, based on the
normalization of the capital markets and our recent financing activity, we currently believe that our principal use of
liquidity will be to fund tower growth and, secondarily, our stock repurchase program. However, in the future, we may
continue to repurchase, for cash or equity, our outstanding indebtedness in privately-negotiated or open market
transactions in order to optimize our liquidity and leverage and take advantage of market opportunities.
Our cash capital expenditures, including cash used for acquisitions, for the year ended December 31, 2009 were
$227.5 million. The $227.5 million includes cash capital expenditures of $169.2 million that we incurred in connection
with the acquisition of 376 completed towers, net of related working capital adjustments and net of related prorated
rental receipts and payments and earnouts associated with previous acquisitions. The $227.5 million also includes $30.2
million related to new tower construction, $6.6 million for maintenance tower capital expenditures, $8.3 million for
augmentations and tower upgrades, $1.6 million for general corporate expenditures, and $11.6 million for ground lease
purchases. The $30.2 million of new tower construction includes costs associated with the completion of 101 new towers
for the year ended December 31, 2009 and costs incurred on sites currently in process. In addition, we paid $4.2 million
in cash to amend and extend existing ground leases.
Subsequent to December 31, 2009, we acquired 14 towers from third party sellers and an equity interest in DAS
provider Extenet Systems, inc. in exchange for $42.9 million in cash and a contribution of our six DAS networks.
During the year ended December 31, 2009, we repurchased, in privately negotiated or open market transactions
an aggregate of $107.7 million of our 0.375% Notes and $150.1 million in principal of our 2006 CMBS Certificates for
aggregate consideration of 618,000 shares of our Class A common stock and $241.1 million in cash. In addition, in July
2009 we used the proceeds from the issuance of our Senior Notes to repay the remaining outstanding balances of our
2005 CMBS Certificates and our Senior Credit Facility and repay and terminate the Optasite Credit Facility.
Subsequent to December 31, 2009, we repurchased an aggregate of $2.0 million of our 2006 CMBS Certificates
for $2.1 million in cash.
The Board of Directors authorized a stock repurchase program effective November 3, 2009. This program
authorizes us to purchase, from time to time, up to $250.0 million of our outstanding Class A common stock through
open market repurchases in compliance with Rule 10b-18 of the Securities Act of 1933, as amended, and/or in privately
negotiated transactions at management’s discretion based on market and business conditions, applicable legal
requirements and other factors. This program will continue until otherwise modified or terminated by our Board of
Directors at any time in our sole discretion. In connection with the stock repurchase program, in December 2009, we
repurchased and retired approximately 52,000 shares for an aggregate of $1.7 million including commissions and fees.
Subsequent to December 31, 2009, we have repurchased 207,000 shares for an aggregate of $6.7 million
including commissions and fees.
In order to manage our leverage position and/or to ensure continued compliance with our financial covenants,
we may decide to pursue a variety of other financial transactions. These transactions may include the issuance of
additional indebtedness, the repurchase of outstanding indebtedness for cash or equity, selling certain assets or lines of
business, issuing common stock or securities convertible into shares of common stock, or pursuing other financing
alternatives, including securitization transactions. If either our debt repurchases or exchanges or any of the other
financial transactions are implemented, these actions could materially impact the amount and composition of
indebtedness outstanding, increase our interest expense and/or dilute our existing shareholders. We cannot assure you
that we will not implement any of these strategies or that, if implemented, these strategies could be implemented on
terms favorable to us and our shareholders.
35
During 2010, we expect to incur non-discretionary cash capital expenditures associated with tower maintenance
and general corporate expenditures of $7 million to $11 million and discretionary cash capital expenditures, based on
current obligations, of $120 million to $140 million primarily associated with the towers we intend to build in 2010,
tower acquisitions currently under contract, tower augmentations and ground lease purchases. We intend to spend
additional capital in 2010 on acquiring revenue producing assets not yet identified and under contract.
We estimate we will incur approximately $1,000 per tower per year for capital improvements or modifications
to our towers. All of these planned cash capital expenditures are expected to be funded by cash on hand, cash flow from
operations and borrowings under the 2010 Credit Facility. The exact amount of our future capital expenditures will
depend on a number of factors including amounts necessary to support our tower portfolio, our new tower build and
tower acquisition program, and our ground lease purchase program.
Debt Instruments and Debt Service Requirements
As of December 31, 2009, we believe that our cash on hand and cash flows from operations for the next twelve
months will be sufficient to service our outstanding debt during the next twelve months.
CMBS Certificates
In November 2005, an indirect subsidiary of SBA Senior Finance (the “Trust”), issued $405 million of CMBS
Certificates (the “2005 CMBS Certificates”). In November 2006, the Trust subsequently issued $1.15 billion of CMBS
Certificates (the “2006 CMBS Certificates” and collectively with the 2005 CMBS Certificates, the “CMBS
Certificates”).
The 2005 CMBS Certificates consisted of five classes with annual pass-through interest rates ranging from
5.369% to 6.706%. The 2005 CMBS Certificates had an anticipated repayment date of November 2010 with a final
repayment date in 2035. During 2009 we repurchased, in privately negotiated and open market transactions, an aggregate
of $18.6 million, in principal amount of the 2005 CMBS Certificates for cash consideration of $16.6 million. On July 28,
2009, we repaid the remaining outstanding balance of the 2005 CMBS Certificates for $390.3 million in cash (including
$10.1 million in prepayment consideration). In addition, during 2008 we repurchased, in privately negotiated and open
market transactions, an aggregate of $6.2 million, in principal amount of the 2005 CMBS Certificates for cash
consideration of $5.5 million.
The 2006 CMBS Certificates consist of nine classes with annual pass-through interest rates ranging from
5.314% to 7.825%. The weighted average annual fixed interest rate of the 2006 CMBS Certificates as of December 31,
2009 is 5.9%, payable monthly, and the effective weighted average annual fixed interest rate is 6.2% after giving effect
to the settlement of the nine interest rate swap agreements entered into in contemplation of the transaction. The 2006
CMBS Certificates have an anticipated repayment date of November 2011 with a final repayment date in 2036.
However, to the extent that the full amount of the mortgage loan component corresponding to the 2006 CMBS
Certificates are not fully repaid by their anticipated repayment dates, the interest rate of each component would increase
by the greater of (i) 5% or (ii) the amount, if any, by which the sum of (x) the ten-year U.S. treasury rate plus (y) the
credit-based spread for such component (as set forth in the mortgage loan agreement) plus (z) 5%, exceeds the original
interest rate for such component.
During the year ended December 31, 2009, we repurchased an aggregate of $150.1 million in principal amount
of 2006 CMBS Certificates for $150.5 million in cash. At December 31, 2009, we had $940.6 million outstanding of
2006 CMBS Certificates. Based on the amounts outstanding at December 31, 2009, debt service for the next twelve
months on the 2006 CMBS Certificates will be approximately $55.5 million.
Subsequent to December 31, 2009, we repurchased an aggregate of $2.0 million in principal amount of 2006
CMBS Certificates for $2.1 million in cash. Our outstanding balance on the 2006 CMBS Certificates was $938.6 million
as of the date of this filing.
The CMBS Certificates are repayable with the proceeds of a non-recourse mortgage loan, the sole asset of the
Trust, made in favor of certain operating subsidiaries of SBA Senior Finance (the “CMBS Borrowers”). The CMBS
Borrowers are special purpose vehicles which exist solely to hold the towers that are subject to the securitization (the
“CMBS Towers”). Each of the CMBS Borrowers, who are jointly and severally liable under the mortgage loan, have
pledged the cash flows from the CMBS Towers owned by the entity as security under the mortgage loan. As of
December 31, 2009, the CMBS Borrowers owned an aggregate 3,746 tower sites.
36
If the CMBS Borrowers are in compliance with the required debt service coverage ratio set forth in the
mortgage loan underlying the 2006 CMBS Certificates, and the anticipated repayment date has not yet occurred, then the
cash flow generated by the CMBS Towers after (1) payment of the interest on the mortgage loan, (2) funding of all
reserve accounts and operating expenses associated with the CMBS Towers, and (3) payment of the management fees
due to SBA Network Management, Inc. (equal to 7.5% of the CMBS Borrowers’ operating revenues for the immediately
preceding calendar month), will be distributed to the CMBS Borrowers.
However, if the debt service coverage ratio (“Net Cash Flow” (as defined in the mortgage loan agreement)
divided by the sum of the interest on the mortgage loan, servicing fees and trustee fees that the CMBS Borrowers will be
required to pay over the succeeding twelve months) falls to 1.30x or lower as of the end of any calendar quarter, then all
operating cash flow from the CMBS Towers in excess of amounts required to (i) pay interest, at the original interest rate,
on the mortgage loan underlying the 2006 CMBS Certificates, (ii) fund all reserve accounts and operating expenses
associated with the pledged towers, and (iii) pay the SBA Network management fees, will be deposited into a reserve
account instead of being released to the CMBS Borrowers. The funds in the reserve account will not be released to the
CMBS Borrowers unless the debt service coverage ratio exceeds 1.30x for two consecutive calendar quarters. If the debt
service coverage ratio falls below 1.15x as of the end of any calendar quarter, then an “amortization period” will
commence and all funds on deposit in the reserve account and all excess cash flow generated thereafter will be applied to
prepay the components of the mortgage loan in the order of their investment grade until such time as the debt service
coverage ratio exceeds 1.15x for a calendar quarter. In addition, if the 2006 CMBS Certificates are not fully repaid by
their repayment date, the cash flow from the CMBS Towers will be trapped by the trustee for the 2006 CMBS
Certificates and applied first to repay the interest on the mortgage loan, calculated at the original interest rate, second to
fund all reserve accounts and operating expenses associated with the CMBS Towers, third to pay the SBA Network
management fees, fourth to repay principal of the 2006 CMBS Certificates in the order of their investment grade and
fifth to repay the additional interest discussed above. As of December 31, 2009, we were in compliance with the required
debt service coverage ratio as defined by the mortgage loan agreement.
At any time prior to November 2011, the CMBS Borrowers may prepay the mortgage loan in whole or in part
for the components of the mortgage loan corresponding to the 2006 CMBS Certificates upon payment of the applicable
prepayment consideration. The prepayment consideration is determined per class and consists of an amount equal to the
excess, if any, of (1) the present value on the date of prepayment of all future installments of principal and interest
required to be paid from the date of prepayment to and including the first due date that is nine months prior to the
anticipated repayment date, assuming the entire unpaid principal amount of such class is required to be paid, over (2) that
portion of the principal balance of such class prepaid on the date of such prepayment. If the prepayment occurs (i) within
nine months of the anticipated repayment date, (ii) with proceeds received as a result of any condemnation or casualty of
the CMBS Borrowers’ sites or (iii) during an amortization period, no prepayment consideration is due. The entire unpaid
principal balance of the mortgage loan components corresponding to the 2006 CMBS Certificates will be due in
November 2036. The mortgage loan may be defeased in whole at any time prior to the anticipated repayment date.
The mortgage loan is secured by (1) mortgages, deeds of trust and deeds to secure debt on substantially all of
the tower sites and their operating cash flows, (2) a security interest in substantially all of the CMBS Borrowers’
personal property and fixtures, (3) the CMBS Borrowers’ rights under the management agreement they entered into with
SBA Network Management, Inc. (“SBA Network Management”) relating to the management of the CMBS Borrowers’
tower sites by SBA Network Management pursuant to which SBA Network Management arranges for the payment of all
operating expenses and the funding of all capital expenditures out of amounts on deposit in one or more operating
accounts maintained on the CMBS Borrowers’ behalf, (4) the CMBS Borrowers’ right under certain site management
agreements, (5) the CMBS Borrowers’ rights under certain tenant leases, (6) the pledge by SBA CMBS-1 Guarantor,
LLC and SBA CMBS-1 Holdings, LLC of equity interest of the initial borrower and SBA CMBS-1 Guarantor, LLC, (7)
the various deposit accounts and collection accounts of the CMBS Borrowers and (8) all proceeds of the foregoing.
Convertible Senior Notes
0.375% Convertible Senior Notes - On March 26, 2007, we issued $350.0 million of our 0.375% Notes. Interest
is payable semi-annually on June 1 and December 1. The 0.375% Notes have a maturity date of December 1, 2010. The
0.375% Notes are convertible, at the holder’s option, into shares of our Class A common stock, at an initial conversion
rate of 29.7992 shares of Class A common stock per $1,000 principal amount of 0.375% Notes (subject to certain
customary adjustments), which is equivalent to an initial conversion price of approximately $33.56 per share or a 19%
conversion premium based on the last reported sale price of $28.20 per share of Class A common stock on the Nasdaq
Global Select Market on March 20, 2007, the purchase agreement date.
37
Concurrently with the pricing of the 0.375% Notes, we entered into convertible note hedge transactions
whereby we purchased from affiliates of two of the initial purchasers of the 0.375% Notes, an option covering
10,429,720 shares of our Class A common stock at an initial price of $33.56 per share. Separately and concurrently with
the pricing of the 0.375% Notes, we entered into warrant transactions whereby we sold to affiliates of two of the initial
purchasers of the 0.375% Notes warrants to acquire 10,429,720 shares of our Class A common stock at an initial exercise
price of $55.00 per share. The convertible note hedge transactions and the warrant transactions, taken as a whole,
effectively increase the conversion price of the 0.375% Notes from $33.56 per share to $55.00 per share. As we cannot
determine when, or whether, the 0.375% Notes will be converted, the convertible note hedge transactions and the
warrant transactions, taken as a whole, minimize the dilution risk associated with early conversion of the 0.375% Notes
until such time that our Class A common stock is trading at a price above $55.00 per share (the upper strike of the
warrants).
During the year ended December 31, 2009, we consummated privately negotiated exchanges of the 0.375%
Notes for Class A common stock in reliance on Section 3(a)(9) of the Securities Act of 1933, as amended. Pursuant to
these exchanges, we issued approximately 618,000 shares of our Class A common stock in exchange for $12.5 million in
principal amount of 0.375% Notes. In addition, we also repurchased an aggregate of $95.2 million in principal amount of
0.375% Notes for $90.6 million in cash.
In April 2009, we also terminated the portion of the convertible note hedge and warrant transactions that we
entered into in March 2007 with respect to our 0.375% Notes which related to the $264.1 million principal amount of
0.375% Notes that we previously repurchased for cash or stock. We received a net settlement of approximately 546,000
shares from the counterparties of the hedge and warrant transactions which is reflected in the Consolidated Statements of
Shareholders’ Equity. As of December 31, 2009, 2,559,185 shares of our Class A common stock remain under
convertible note hedge transactions.
At December 31, 2009, we had $30.4 million outstanding of 0.375% Notes. Based on the maturity date of
December 1, 2010 of the 0.375% Notes, debt service for 2010 will be $30.4 million in principal and approximately $0.1
million in interest. We intend to use a portion of the net proceeds from the Senior Notes issued in July 2009 to
repurchase prior to maturity or repay at maturity our remaining 0.375% Notes outstanding.
1.875% Convertible Senior Notes - On May 16, 2008 we issued $550.0 million of our 1.875% Notes. Interest is
payable semi-annually on May 1 and November 1. The maturity date of the 1.875% Notes is May 1, 2013. The 1.875%
Notes are convertible, at the holder’s option, into shares of our Class A common stock, at an initial conversion rate of
24.1196 shares of Class A common stock per $1,000 principal amount of 1.875% Notes (subject to certain customary
adjustments), which is equivalent to an initial conversion price of approximately $41.46 per share or a 20% conversion
premium based on the last reported sale price of $34.55 per share of Class A common stock on the Nasdaq Global Select
Market on May 12, 2008, the purchase agreement date.
Concurrently with the pricing of the 1.875% Notes, we entered into convertible note hedge transactions
originally covering 13,265,780 shares of our Class A common stock at an initial price of $41.46 per share. Separately
and concurrently with the pricing of the 1.875% Notes, we entered into warrant transactions whereby we sold warrants to
each of the hedge counterparties to acquire 13,265,780 shares of our Class A common stock at an initial exercise price of
$67.37 per share. The convertible note hedge transactions and the warrant transactions, taken as a whole, effectively
increase the conversion price of the 1.875% Notes from $41.46 per share to $67.37 per share. As we cannot determine
when, or whether, the 1.875% Notes will be converted, the convertible note hedge transactions and the warrant
transactions, taken as a whole, minimize the dilution risk associated with early conversion of the 1.875% Notes until
such time that our Class A common stock is trading at a price above $67.37 per share (the upper strike of the warrants).
One of the convertible note hedge transactions entered into in connection with the 1.875% Notes was with
Lehman Brothers OTC Derivatives Inc. (“Lehman Derivatives”). The convertible note hedge transaction with Lehman
Derivatives covers 55% of the 13,265,780 shares of our Class A common stock potentially issuable upon conversion of
the 1.875% Notes. In October 2008, Lehman Derivatives filed a voluntary petition for protection under Chapter 11 of the
United States Bankruptcy Code. The filing by Lehman Derivatives of a voluntary Chapter 11 bankruptcy petition
constituted an “event of default” under the convertible note hedge transaction with Lehman Derivatives. As a result, on
November 7, 2008 we terminated the convertible note hedge transaction with Lehman Derivatives. Based on information
available to us, we have no indication, as of the date of filing this Form 10-K, that any party other than Lehman
Derivatives would be unable to fulfill their obligations to us under the convertible note hedge transactions.
38
The net cost of the convertible note hedge transaction with Lehman Derivatives was recorded as an adjustment
to Additional Paid in Capital and did not have any impact on our consolidated balance sheet. However, we could incur
significant costs to replace this hedge transaction if we elect to do so. If we do not elect to replace the convertible note
hedge transaction, then we will be subject to potential dilution upon conversion of the 1.875% Notes, if on the date of
conversion the per share market price of our Class A common stock exceeds the conversion price of $41.46.
At December 31, 2009, we had $550.0 million outstanding of 1.875% Notes. Based on the amounts outstanding
at December 31, 2009, debt service for the next twelve months on the 1.875% Notes will be approximately $10.3
million.
4.0% Convertible Senior Notes - On April 24, 2009, we issued $500.0 million of our 4.0% Notes in a private
placement transaction. Interest on the 4.0% Notes is payable semi-annually on April 1 and October 1. The maturity date
of the 4.0% Notes is October 1, 2014. The 4.0% Notes are convertible, at the holder’s option, into shares of our Class A
common stock, at an initial conversion rate of 32.9164 shares of our Class A common stock per $1,000 principal amount
of 4.0% Notes (subject to certain customary adjustments), which is equivalent to an initial conversion price of
approximately $30.38 per share or a 22.5% conversion premium based on the last reported sale price of $24.80 per share
of our Class A common stock on the Nasdaq Global Select Market on April 20, 2009, the purchase agreement date.
Concurrently with the pricing of the 4.0% Notes, we entered into convertible note hedge transactions whereby
we purchased from affiliates of the initial purchasers of the 4.0% Notes an option covering 16,458,196 shares of our
Class A common stock at an initial price of $30.38 per share (the same as the initial conversion price of the notes).
Separately and concurrently with the pricing of the 4.0% Notes, we entered into warrant transactions whereby we sold to
affiliates of the initial purchasers of the 4.0% Notes warrants to acquire 16,458,196 shares of our Class A common stock
at an initial exercise price of $44.64 per share. We used approximately $61.6 million of the net proceeds from the 4.0%
Notes offering plus the proceeds from the warrant transactions to fund the cost of the convertible note hedge
transactions. The convertible note hedge transactions and the warrant transactions, taken as a whole, effectively increase
the conversion price of the 4.0% Notes from $30.38 per share to $44.64 per share, reflecting a premium of 80% based on
the closing stock price of $24.80 per share of our Class A common stock on April 20, 2009. The remaining net proceeds
of $376.6 million were used for general corporate purposes, including repurchases or repayments of our outstanding
debt.
As of December 31, 2009, we had outstanding $500.0 million of our 4.0% Notes. Based on the amounts
outstanding at December 31, 2009, debt service for the next twelve months on the 4.0% Notes would be approximately
$20.0 million.
Convertible Senior Notes conversion options - The 0.375% Notes, 1.875% Notes and 4.0% Notes (collectively
“the Notes”) are convertible only under the following circumstances:
•
•
•
•
during any calendar quarter, if the last reported sale price of our Class A common stock for at least 20
trading days in the 30 consecutive trading day period ending on the last trading day of the preceding
calendar quarter is more than 130% of the applicable conversion price per share of Class A common
stock on the last day of such preceding calendar quarter,
during the five business day period after any ten consecutive trading day period in which the trading
price per $1,000 principal amount of the Notes for each day in the measurement period was less than
95% of the product of the last reported sale price of Class A common stock and the applicable
conversion rate,
if specified distributions to holders of Class A common stock are made or specified corporate
transactions occur, and
at any time on or after October 12, 2010 for the 0.375% Notes, February 19, 2013 for the 1.875%
Notes and July 22, 2014 for the 4.0% Notes.
Upon conversion, we have the right to settle our conversion obligation in cash, shares of Class A common stock
or a combination of cash and shares of our Class A common stock. From time to time, upon notice to the holders of the
Notes, we may change our election regarding the form of consideration that we will use to settle our conversion
obligation; provided, however, that we are not permitted to change our settlement election after October 11, 2010 for the
0.375% Notes, February 18, 2010 for the 1.875% Notes and July 21, 2014 for the 4.0% Notes.
39
Senior Credit Facility
On July 24, 2009, SBA Senior Finance, Inc. entered into an Amendment and Restatement, dated as of July 24,
2009, of the Credit Agreement, dated as of January 18, 2008 (the “Restated Credit Agreement”) for the $320.0 million
revolving credit facility (the “Senior Credit facility”). The Senior Credit Facility was scheduled to mature on January 18,
2011. As of December 31, 2009, the availability under the Senior Credit Facility was $319.9 million. As of December
31, 2009, we did not have any amounts outstanding under this facility and had approximately $0.1 million in letters of
credit posted against the availability of this Senior Credit Facility. On February 11, 2010 the Senior Credit Facility was
terminated.
Amounts borrowed under the Senior Credit Facility accrued interest at the Eurodollar rate plus a margin that
ranges from 150 basis points to 300 basis points or at a Base Rate (as defined in the Restated Credit Agreement) plus a
margin that ranges from 50 basis points to 200 basis points, based upon the leverage ratio. The weighted average interest
rate for amounts borrowed under the Senior Credit Facility for the year ended December 31, 2009 was 2.46%.
The Restated Credit Agreement required SBA Senior Finance and SBA Communications to maintain specific
financial ratios, including, at the SBA Senior Finance level, a Consolidated Total Debt to Annualized Borrower EBITDA
ratio (as defined in the Restated Credit Agreement) that did not exceed 5.0x for any fiscal quarter and an Annualized
Borrower EBITDA to Annualized Cash Interest Expense ratio (as defined in the Restated Credit Agreement) of not less
than 2.0x for any fiscal quarter. In addition, our ratio of Consolidated Total Net Debt to Consolidated Adjusted EBITDA
ratio (as defined in the Restated Credit Agreement) for any fiscal quarter could not exceed 9.9x. The Restated Credit
Agreement also contained customary affirmative and negative covenants. As of December 31, 2009, SBA Senior
Finance was in full compliance with the terms of the Senior Credit Facility.
Upon the occurrence of certain bankruptcy and insolvency events with respect to SBA or certain of our
subsidiaries, the revolving credit loans automatically would terminate and all amounts due under the Restated Credit
Agreement and other loan documents would have become immediately due and payable. If certain other events of default
occur, including failure to pay the principal and interest when due, then, with the permission of a majority of the lenders,
the revolving credit commitments would have terminated and all amounts due under the Restated Credit Agreement and
other loan documents would have become immediately due and payable. Amounts borrowed under the Senior Credit
Facility were secured by a first lien on substantially all of SBA Senior Finance’s assets not pledged under the CMBS
Certificates and substantially all of the assets, other than leasehold, easement or fee interests in real property, of SBA
Senior Finance’s subsidiaries.
On February 11, 2010 the Senior Credit Facility was terminated.
2010 Credit Facility
On February 11, 2010, SBA Senior Finance II, LLC (“SBA Senior Finance II”), our indirect wholly-owned
subsidiary, entered into a credit agreement for a $500.0 million senior secured revolving credit facility (the “2010 Credit
Facility”) with several banks and other financial institutions or entities from time to time parties to the credit agreement
(the “Credit Agreement”). Amounts borrowed under the 2010 Credit Facility will be secured by a first lien on the capital
stock of SBA Telecommunications, Inc., SBA Senior Finance, Inc. and SBA Senior Finance II (which now includes
SBA Infrastructure Holdings I, Inc.), and substantially all of the assets, other than leasehold, easement or fee interests in
real property, of SBA Senior Finance II and the Subsidiary Guarantors (as defined in the Credit Agreement). As of
February 26, 2010, availability under the 2010 Credit Facility was $500.0 million.
The 2010 Credit Facility consists of a revolving loan under which up to $500 million may be borrowed, repaid
and redrawn, subject to compliance with specific financial ratios and the satisfaction of other customary conditions to
borrowing as set forth in the Credit Agreement. Amounts borrowed under the 2010 Credit Facility accrue interest at the
Eurodollar rate plus a margin that ranges from 187.5 basis points to 237.5 basis points or at a Base Rate (as defined in
the Credit Agreement) plus a margin that ranges from 87.5 basis points to 137.5 basis points, in each case based on the
ratio of Consolidated Total Debt to Annualized Borrower EBITDA (as defined in the Credit Agreement). A 0.375% to
0.5% per annum fee is charged on the amount of unused commitment. If it is not terminated earlier by SBA Senior
Finance II, the 2010 Credit Facility will terminate on, and SBA Senior Finance II will repay all amounts outstanding on
or before, February 11, 2015. Proceeds available under the 2010 Credit Facility may be used for general corporate
purposes.
40
The Credit Agreement requires SBA Senior Finance II and SBA Communications to maintain specific financial
ratios, including, at the SBA Senior Finance II level, a ratio of Consolidated Total Debt to Annualized Borrower
EBITDA (as defined in the Credit Agreement) that does not exceed 5.0x for any fiscal quarter, a ratio of Consolidated
Total Debt and Net Hedge Exposure (as defined in the Credit Agreement) to Annualized Borrower EBITDA for the most
recently ended fiscal quarter not to exceed 5.0x for 30 consecutive days and a ratio of Annualized Borrower EBITDA to
Annualized Cash Interest Expense (as defined in the Credit Agreement) of not less than 2.0x for any fiscal quarter. In
addition, our ratio of Consolidated Total Net Debt to Consolidated Adjusted EBITDA (as defined in the Credit
Agreement) for any fiscal quarter on an annualized basis cannot exceed 8.9x. The Credit Agreement also contains
customary affirmative and negative covenants that, among other things, limit SBA Senior Finance II’s ability to incur
indebtedness, grant certain liens, make certain investments, enter into sale leaseback transactions or engage in certain
asset dispositions, including a sale of all or substantially all of our assets.
The 2010 Credit Facility also permits us to request that one or more lenders (1) increase their proportionate
share of the 2010 Credit Facility commitment, up to an additional $200 million in the aggregate and (2) provide SBA
Senior Finance II term loans for an aggregate amount up to $800 million, without requesting consent of the other lenders.
SBA Senior Finance II’s ability to request such increase of the 2010 Credit Facility or term loans is subject to its
compliance with the conditions set forth in the Credit Agreement including, with respect to any term loan, compliance,
on a pro forma basis, with the financial covenants and ratios set forth therein. Upon SBA Senior Finance II’s request,
each lender may decide, in its sole discretion, whether to increase all or a portion of its revolving credit facility
commitment or whether to provide SBA Senior Finance II term loans and if so upon what terms. As of December 31,
2009, SBA Senior Finance II would have had the ability to request term loans up to an aggregate principal amount of
$325.0 million upon compliance with the terms of the Credit Agreement.
Optasite Credit Facility
On September 16, 2008, in connection with the acquisition of Optasite, we assumed Optasite’s fully drawn
$150 million senior credit facility (the “Optasite Credit Facility”). We recorded the Optasite Credit Facility at its fair
value of $147.0 million on the date of acquisition. Interest on the Optasite Credit Facility accrued at the one month
Eurodollar Rate plus 165 basis points and interest payments were due monthly. Commencing November 1, 2008, we
began paying the required installment payments on the Optasite Credit Facility. On July 31, 2009, we paid off the facility
in full and the facility was subsequently terminated.
Senior Notes
On July 24, 2009, our wholly-owned subsidiary, Telecommunications issued $750 million of unsecured Senior
Notes, $375 million of which are due August 15, 2016 and $375 million of which are due August 15, 2019. The 2016
Notes and the 2019 Notes are guaranteed by SBA.
The 2016 Notes have an interest rate of 8.00% and were issued at a price of 99.330% of their face value. The
2019 Notes have an interest rate of 8.25% and were issued at a price of 99.152% of their face value. Interest on the 2016
Notes and 2019 Notes is due semi-annually on February 15, and August 15 of each year beginning on February 15, 2010.
The 2016 Notes and the 2019 Notes are subject to redemption in whole or in part on or after August 15, 2012
and on or after August 15, 2014, respectively, at the redemption prices set forth in the indenture agreement plus accrued
and unpaid interest. Prior to August 15, 2012 for the 2016 Notes and August 15, 2014 for the 2019 Notes, we may at our
option redeem all or a portion of the 2016 Notes or 2019 Notes at a redemption price equal to 100% of the principal
amount thereof plus a “make whole” premium plus accrued and unpaid interest. In addition, we may redeem up to 35%
of the originally issued aggregate principal amount of each of the 2016 Notes and 2019 Notes with the net proceeds of
certain equity offerings at a redemption price of 108.000% and 108.250%, respectively, of the principal amount of the
redeemed notes plus accrued and unpaid interest.
The Indenture governing the 2016 Notes and the 2019 Notes contains customary covenants, subject to a number
of exceptions and qualifications, including restrictions on Telecommunications’ ability to (1) incur additional
indebtedness unless its Consolidated Indebtedness to Annualized Consolidated Adjusted EBITDA Ratio (as defined in
the Indenture), pro forma for the additional indebtedness, does not exceed 7.0 times for the fiscal quarter, (2) merge,
consolidate or sell assets, (3) make restricted payments, including dividends or other distributions, (4) enter into
transactions with affiliates, and (5) enter into sale and leaseback transactions and restrictions on the ability of
Telecommunications’ Restricted Subsidiaries (as defined in the Indenture) to incur liens securing indebtedness.
41
At December 31, 2009, we had outstanding $375 million 2016 Senior Notes and $375 million 2019 Senior
Notes. Based on the amounts outstanding at December 31, 2009, debt service for the next twelve months on the 2016
Senior Notes and the 2019 Senior Notes will be approximately $30.0 million and $30.9 million, respectively.
Inflation
The impact of inflation on our operations has not been significant to date. However, we cannot assure you that a
high rate of inflation in the future will not adversely affect our operating results particularly in light of the fact that our
site leasing revenues are governed by long-term contracts with pre-determined pricing that we will not be able to
increase in response to increases in inflation.
Recent Accounting Pronouncements
For a description of accounting changes and recent accounting pronouncements, including the expected dates of
adoption and estimated effects, if any, on our Consolidated Financial Statements, see “Note 2: Restatement for Adoption
of New Accounting Pronouncement” and “Note 4: Current Accounting Pronouncements” in the Notes to Consolidated
Financial Statements of this Form 10-K.
Commitments and Contractual Obligations
The following table summarizes our scheduled contractual commitments as of December 31, 2009:
Contractual Obligations
2010
2011
2012
2013
(in thousands)
2014
Thereafter
Total
Long-term debt
Interest payments(1)
Operating leases
Capital leases
Employment agreements
$
30,403 $ 940,609 $
149,033
59,157
496
1,732
140,134
58,602
344
1,393
$ 240,821 $ 1,141,082 $
— $
91,250
57,255
136
875
149,516 $
550,000 $
84,469
56,857
43
—
691,369 $
500,000 $ 750,000 $ 2,771,012
732,707
191,815
76,006
1,368,961
1,079,547
57,543
1,019
—
—
4,000
—
—
633,549 $ 2,021,362 $ 4,877,699
(1) Represents interest payments based on the CMBS Certificates with a weighted average coupon fixed interest rate of 5.9%,
the Convertible Senior Notes interest rate of 0.375%, 1.875% and 4.0%, and the Senior Notes interest rate of 8.0% and
8.25%.
Off-Balance Sheet Arrangements
We are not involved in any off-balance sheet arrangements.
ITEM 7A. 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 December 31, 2009:
2010
2011
2012
2013
2014
Thereafter
Total
(in thousands)
Fair
Value
Debt:
Fixed rate 2006 CMBS Certificates (1)
0.375% Convertible Senior Notes
1.875% Convertible Senior Notes
4.00% Convertible Senior Notes
2016 Senior Notes
2019 Senior Notes
$ —
$ 30,403
$ —
$ —
$ —
$ —
$ 940,609
—
$
—
$
—
$
—
$
—
$
$ —
$ —
$ —
$ —
$ —
$ —
—
$
$
—
$ 550,000
—
$
—
$
—
$
—
$
—
$
$
—
$ 500,000
—
$
—
$
$
$
$
$
$
$
—
—
—
—
375,000
375,000
$ 940,609
$ 30,403
$ 550,000
$ 500,000
$ 375,000
$ 375,000
$ 961,486
$
34,203
$ 564,438
$ 652,500
$ 388,125
$ 393,750
(1)
The anticipated repayment date is November 2011 for the 2006 CMBS Certificates with a weighted average interest rate of
5.9%. The maturity date for the 2006 CMBS Certificates is November 2036.
42
Our current primary market risk exposure is interest rate risk relating to (1) the impact of interest rate
movements on our ability to refinance the 2006 CMBS Certificates on its anticipated repayment date or at maturity at
market rates, (2) our ability to meet financial covenants and (3) the impact of interest rate movements on any borrowings
that we may incur under our 2010 Credit Facility, which are all floating rate. We manage the interest rate risk on our
outstanding debt through our large percentage of fixed rate debt. While we cannot predict our ability to refinance
existing debt or the impact interest rate movements will have on our existing debt, we continue to evaluate our financial
position on an ongoing basis.
Special Note Regarding Forward-Looking Statements
This annual report contains “forward-looking statements” within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. 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 annual report contains forward-looking statements regarding:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
our expectation that we will continue to incur losses;
our expectations that site leasing revenues will continue to grow as wireless service providers
lease additional space on our towers due to increasing minutes of use, network expansion and
network coverage requirements;
our belief that our site leasing business is characterized by stable and long-term recurring
revenues, predictable operating costs and minimal maintenance and non-discretionary capital
expenditures;
our expectations regarding the growth of our cash flows by 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;
our intent to grow our tower portfolio, domestically and internationally, by 5% to 10% through
opportunities that meet our investment criteria and are available at prices which we believe will
be accretive to our shareholders and allow us to maintain our long-term target leverage ratios;
our expectation that revenues from our international operations may grow in the future;
our intent to build at least 120 to 140 new towers in 2010 and our intent to have at least one
signed tenant lease on each new tower on the day it is completed;
our expectations regarding the amount of future cash capital expenditures, both discretionary
and non-discretionary, including expenditures required to maintain, improve and modify our
towers;
our belief that our towers have significant capacity to accommodate additional tenants, that
our tower operations are highly scalable and that we can add tenants to our towers at minimal
incremental costs;
our belief regarding our position to capture additional site leasing business in our markets and
identify and participate in site development projects across our markets;
our ability to capture 3G and 4G network build-out work;
actions we may pursue to manage our leverage position and ensure continued compliance
with our financial covenants;
our intentions regarding the share repurchase program;
our estimates regarding our liquidity, our sources and principal uses of liquidity and our
ability to fund operations, and refinance or repay our obligations as they become due;
our estimates regarding our annual debt service in 2010 and thereafter, and our belief that our
cash flows from operations for the next twelve months will be sufficient to service our
outstanding debt during the next twelve months;
our expectations regarding the impact of our convertible note hedge transactions, and the
termination of such transactions, with Lehman Derivatives;
43
•
•
•
our intent and ability to continue to purchase and/or enter into long-term leases for the land
that underlies our towers and the effect of such ground lease purchases on our margins and
long-term financial condition;
our estimates regarding certain accounting and tax matters, including the adoption of certain
accounting pronouncements and the availability of sufficient net operating losses to offset
future taxable income; and
our use of the net proceeds from the our recent debt offerings.
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:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
our ability to successfully refinance our indebtedness ahead of their maturity dates or
anticipated repayment dates, on favorable terms, or at all;
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 and estimated portfolio growth;
the ability of our clients to access sufficient capital or their willingness to expend capital to
fund network expansion or enhancements;
our ability to continue to comply with covenants and the terms of our credit instruments;
our ability to secure as many site leasing tenants as planned, including our ability to retain
current leases on towers and deal with the impact, if any, of recent consolidation among
wireless service providers;
our ability to identify towers and land underneath towers that would be attractive to our
clients and accretive to our financial results; and to negotiate and consummate agreements to
acquire such towers and land;
our ability to identify, acquire at acceptable prices and terms and integrate into our leasing
business towers and tower assets, domestically and internationally, that meet our investment
criteria and, to the extent that any such towers are located internationally, our ability to
successfully manage the risks associated with international operations, including foreign
exchange risk, currency restrictions and foreign regulatory and legal risks;
our ability to build at least 120 to 140 new towers in 2010;
our ability to secure and deliver anticipated services business at contemplated margins;
our ability to successfully and timely address zoning issues, permitting and other issues that
arise in connection with the building of new towers;
our ability to realize economies of scale from our tower portfolio;
the business climate for the wireless communications industry in general and the wireless
communications infrastructure providers in particular;
the state of the credit markets and capital markets, including the level of volatility, illiquidity
and interest rates that may affect our ability to pursue actions to manage our leverage position;
the continued use of towers and dependence on outsourced site development services by the
wireless communications industry; and
our ability to successfully estimate certain accounting and tax matters, including the effect on
our company of adopting certain accounting pronouncements and the availability of sufficient
net operating losses to offset taxable income.
44
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial statements and supplementary data are on pages F-1 through F-54.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures - We maintain disclosure controls and procedures that are designed to
ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s
rules and forms, and that such information is accumulated and communicated to management, including our Chief
Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding
required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any
controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving
the desired control objectives, as ours are designed to do, and management necessarily was required to apply its
judgment in evaluating the cost-benefit relationship of possible controls and procedures.
In connection with the preparation of this Annual Report on Form 10-K, as of December 31, 2009, an
evaluation was performed under the supervision and with the participation of our management, including the CEO and
CFO, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange
Act). Based on such evaluation, our CEO and CFO concluded that, as of December 31, 2009, our disclosure controls and
procedures were effective.
There has been no change in our internal control over financial reporting during the quarter ended December 31,
2009 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Management’s Annual Report on Internal Control over Financial Reporting -Management is responsible
for establishing and maintaining adequate internal control over financial reporting, and for performing an assessment of
the effectiveness of internal control over financial reporting as of December 31, 2009. Internal control over financial
reporting is a process designed 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.
Our system of internal control over financial reporting includes those policies and procedures that (i) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the
assets of SBA; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of
SBA are being made only in accordance with authorizations of management and directors of SBA; and (iii) provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of SBA’s
assets that could have a material effect on the financial statements.
Management performed an assessment of the effectiveness of SBA’s internal control over financial reporting as
of December 31, 2009 based upon criteria in Internal Control – Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). Based on our assessment, management determined
that SBA’s internal control over financial reporting was effective as of December 31, 2009 based on the criteria in
Internal Control-Integrated Framework issued by COSO.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls
may become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
Ernst & Young LLP, the independent registered certified public accounting firm that audited the financial
statements included in this Annual Report on Form 10-K, has issued an attestation report on SBA’s internal control over
financial reporting.
45
Report of Independent Registered Certified Public Accounting Firm
The Board of Directors and Shareholders of SBA Communications Corporation and Subsidiaries
We have audited SBA Communications Corporation and Subsidiaries’ internal control over financial reporting as of
December 31, 2009, based on criteria established in Internal Control—Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (the COSO criteria). SBA Communications Corporation and
Subsidiaries’ management is responsible for maintaining effective internal control over financial reporting, and for its
assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s
Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the
company’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether
effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and
evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such
other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis
for our opinion.
A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies
and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
In our opinion, SBA Communications Corporation and Subsidiaries maintained, in all material respects, effective
internal control over financial reporting as of December 31, 2009, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States), the consolidated balance sheets of SBA Communications Corporation and Subsidiaries as of December 31, 2009
and 2008, and the related consolidated statements of operations, shareholders’ equity and cash flows for each of the three
years in the period ended December 31, 2009 of SBA Communications Corporation and Subsidiaries and our report
dated February 26, 2010 expressed an unqualified opinion thereon.
West Palm Beach, Florida
February 26, 2010
/s/ Ernst & Young LLP
46
Item 9B. Other Information
None.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
We have adopted a Code of Ethics that applies to our Chief Executive Officer, Chief Financial Officer and
Chief Accounting Officer. The Code of Ethics is located on our internet web site at www.sbasite.com under “Investor
Relations-Corporate Governance – Other Documents.” We intend to provide disclosure of any amendments or waivers of
our Code of Ethics on our website within four business days following the date of the amendment or waiver.
The remaining items required by Part III, Item 10 are incorporated herein by reference from the Registrant’s
Proxy Statement for its 2010 Annual Meeting of Shareholders to be filed on or before April 30, 2010.
ITEM 11. EXECUTIVE COMPENSATION
The items required by Part III, Item 11 are incorporated herein by reference from the Registrant’s Proxy
Statement for its 2010 Annual Meeting of Shareholders to be filed on or before April 30, 2010.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The items required by Part III, Item 12 are incorporated herein by reference from the Registrant’s Proxy
Statement for its 2010 Annual Meeting of Shareholders to be filed on or before April 30, 2010.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
The items required by Part III, Item 13 are incorporated herein by reference from the Registrant’s Proxy
Statement for its 2010 Annual Meeting of Shareholders to be filed on or before April 30, 2010.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The items required by Part III, Item 14 are incorporated herein by reference from the Registrant’s Proxy
Statement for its 2010 Annual Meeting of Shareholders to be filed on or before April 30, 2010.
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Documents filed as part of this report:
(1) Financial Statements
See Item 8 for Financial Statements included with this Annual Report on Form 10-K.
(2) Financial Statement Schedules
None.
(3) Exhibits
47
Exhibit N Description of Exhibits
3.4
Fourth Amended and Restated Articles of Incorporation of SBA Communications Corporation. (1)
3.5A
Amended and Restated Bylaws of SBA Communications Corporation, effective as of July 30, 2009. (24)
4.6
4.6A
4.11
4.12
4.13
4.14
4.15
4.16
4.17
4.18
4.19
10.1
Rights Agreement, dated as of January 11, 2002, between SBA Communications Corporation and the
Rights Agent. (4)
First Amendment to Rights Agreement, dated as of March 17, 2006, between SBA Communications
Corporation and Computershare Trust Company, N.A (8)
Indenture, dated March 26, 2007, between SBA Communications Corporation and U.S. Bank National
Association. (10)
Form of 0.375% Convertible Senior Notes due 2010 (included in Exhibit 4.11). (10)
Indenture, dated May 16, 2008, between SBA Communications Corporation and U.S. Bank National
Association. (16)
Form of 1.875% Convertible Senior Notes due 2013 (included in Exhibit 4.13). (16)
Indenture, dated April 24, 2009, between SBA Communications Corporation and U.S. Bank National
Association. (22)
Form of 4.0% Convertible Senior Note due 2014 (included in Exhibit 4.15). (22)
Indenture, dated July 24, 2009, between SBA Communications Corporation and U.S. Bank National
Association. (25)
Form of 8.000% Senior Notes due 2016 (included in Exhibit 4.17). (25)
Form of 8.250% Senior Notes due 2019 (included in Exhibit 4.17). (25)
SBA Communications Corporation Registration Rights Agreement dated as of March 5, 1997, among the
Company, Steven E. Bernstein, Ronald G. Bizick, II and Robert Grobstein. (2)
10.23
1996 Stock Option Plan. (1)+
10.24
1999 Equity Participation Plan. (1)+
10.25
1999 Employee Stock Purchase Plan. (1)+
10.27
10.28
Incentive Stock Option Agreement, dated as of September 5, 2000, between SBA Communications
Corporation and Thomas P. Hunt. (3)+
Restricted Stock Agreement, dated as of September 5, 2000, between SBA Communications Corporation
and Thomas P. Hunt. (3)+
10.33
2001 Equity Participation Plan as Amended and Restated on May 16, 2002. (5)+
10.35C
Amended and Restated Employment Agreement, made and entered into as of January 1, 2008, between
SBA Communications Corporation and Jeffrey A. Stoops. (14) +
48
10.35D
Amendment No. 1 to Amended and Restated Employment Agreement made and entered into as of
September 18, 2008, between SBA Communications Corporation and Jeffrey A. Stoops. (18) +
10.49
10.50
10.51
10.57B
10.58B
10.60
10.61
10.63
10.64
10.65
10.66
10.66A
10.66B
Amended and Restated Loan and Security Agreement, dated as of November 18, 2005, by and between
SBA Properties, Inc. and the Additional Borrower or Borrowers that may become a party thereto and SBA
CMBS 1 Depositor LLC. (6)
Management Agreement, dated as of November 18, 2005, by and among SBA Properties, Inc., SBA
Network Management, Inc. and SBA Senior Finance, Inc. (6)
Stock Purchase Agreement, dated March 17, 2006, by and among AAT Holdings, LLC II, AAT
Communications Corp., AAT Acquisition LLC and SBA Communications Corporation. (7)
Amended and Restated Employment Agreement, made and entered into as of January 1, 2010, between
SBA Communications Corporation and Kurt L. Bagwell. + *
Amended and Restated Employment Agreement, made and entered into as of January 1, 2010, between
SBA Communications Corporation and Thomas P. Hunt. + *
Joinder and Amendment to Management Agreement, dated November 6, 2006, by and among SBA
Properties, Inc., SBA Towers, Inc., SBA Puerto Rico, Inc., SBA Sites, Inc., SBA Towers USVI, Inc., and
SBA Structures, Inc., and SBA Network Management, Inc., and SBA Senior Finance, Inc. (9)
Second Loan and Security Agreement Supplement and Amendment, dated as of November 6, 2006, by and
among SBA Properties, Inc., and SBA Towers, Inc., SBA Puerto Rico, Inc., SBA Sites, Inc., SBA Towers
USVI, Inc., and SBA Structures, Inc. and Midland Loan Services, Inc., as Servicer on behalf of LaSalle
Bank National Association, as Trustee. (9)
Registration Rights Agreement, dated March 26, 2007 by and among SBA Communications Corporation
and Lehman Brothers Inc., Citigroup Global Markets Inc. and Deutsche Bank Securities Inc. as
representatives of the several initial purchasers. (10)
Form of Convertible Bond Hedge Transaction Agreement entered into by SBA Communications
Corporation with Citibank, N.A. and Deutsche Bank AG, London Branch. (11)
Form of Issuer Warrant Transaction Letter Agreement entered into by SBA Communications Corporation
with Citibank, N.A. and Deutsche Bank AG, London Branch. (11)
$285,000,000 Credit Agreement, dated as of January 18, 2008, among SBA Senior Finance, Inc., as
borrower, the several banks and other financial institutions or entities from time to time parties to the credit
agreement (the “Lenders”),Wachovia Bank, National Association and Lehman Commercial Paper Inc., as
co-syndication agents, Citicorp North America, Inc. and JPMorgan Chase Bank, N.A. as co-documentation
agents, and Toronto Dominion (Texas) LLC, as administrative agent. (12)
First Amendment, dated as of July 18, 2008, to the Credit Agreement, dated as of January 18, 2008, among
SBA Senior Finance, Inc., as Borrower, the Several Lenders from time to time parties thereto, Toronto
Dominion (Texas) LLC, As Administrative Agent and the other agents parties thereto. (18)
Second Amendment, dated as of April 13, 2009, to the Credit Agreement, dated as of January 18, 2008, as
amended by the First Amendment dated as of July 18, 2008, among SBA Senior Finance, Inc., as
Borrower, the Several Lenders from time to time parties thereto, Toronto Dominion (Texas) LLC, As
Administrative Agent and the other agents parties thereto. (22)
10.67
Guarantee and Collateral Agreement, dated as of January 18, 2008, by SBA Communications Corporation,
SBA Telecommunications, Inc., SBA Senior Finance, Inc. and certain of its subsidiaries in favor of Toronto
Dominion (Texas) LLC, as administrative agent. (12)
49
10.68
10.69
10.70
10.71
10.72
10.73
10.74
New Lender Supplement, effective March 6, 2008, entered into between SBA Senior Finance, Inc. and The
Royal Bank of Scotland Group plc and accepted by Toronto Dominion (Texas) LLC, as Administrative
Agent, and The Toronto-Dominion Bank, as Issuing Lender. (13)
Purchase Agreement, dated May 12, 2008, among SBA Communications Corporation and Deutsche Bank
Securities Inc., Citigroup Global Markets Inc. and Lehman Brothers Inc., as representatives of the several
initial purchasers listed on Schedule I of the Purchase Agreement. (15)
Registration Rights Agreement, dated May 16, 2008, among SBA Communications Corporation and
Deutsche Bank Securities Inc., Citigroup Global Markets Inc. and Lehman Brothers Inc., as representatives
of the several initial purchasers listed on Schedule 1 of the Purchase Agreement. (16)
Form of Convertible Bond Hedge Transaction Agreement entered into by SBA Communications
Corporation with each of Lehman Brothers OTC Derivatives Inc., Citibank, N.A., Deutsche Bank AG
London Branch, and Wachovia Capital Markets, LLC and Wachovia Bank, National Association. (17)
Form of Issuer Warrant Transaction Letter Agreement entered into by SBA Communications Corporation
with each of Lehman Brothers OTC Derivatives Inc., Citibank, N.A., Deutsche Bank AG London Branch,
and Wachovia Capital Markets, LLC and Wachovia Bank, National Association. (17)
Second Amended and Restated Credit Agreement, made and entered into as of July 18, 2008, among
Optasite Towers LLC as borrower, the lenders from time to time party thereto, and Morgan Stanley Asset
Funding Inc. as administrative agent and collateral agent. (18)
Resignation Agreement, made and entered into as of August 26, 2008, between SBA Communications
Corporation and Anthony J. Macaione. (18) +
10.75
SBA Communications Corporation 2008 Employee Stock Purchase Plan. (19)
10.76
10.77
10.78
10.79
10.80
10.81
10.82
Form of Indemnification Agreement dated January 15, 2009 between SBA Communications Corporation
and its directors and certain officers.
New Lender Supplement, effective April 14, 2009, entered into between SBA Senior Finance, Inc. and
Barclays Bank PLC and accepted by Toronto Dominion (Texas) LLC, as Administrative Agent, and The
Toronto-Dominion Bank, as Issuing Lender. (20)
Purchase Agreement, dated April 20, 2009, among SBA Communications Corporation and Citigroup
Global Markets Inc., Barclays Capital Inc., Deutsche Bank Securities Inc., J.P. Morgan Securities Inc. and
Wachovia Capital Markets, LLC, as representatives of the several initial purchasers listed on Schedule I of
the Purchase Agreement. (21)
Form of Convertible Bond Hedge Transaction Agreement entered into by SBA Communications
Corporation with each of Citibank, N.A., Barclays Bank PLC, Deutsche Bank AG, London Branch, JP
Morgan Chase Bank, National Association and Wachovia Capital Markets, LLC. (22)
Form of Issuer Warrant Transaction Letter Agreement entered into by SBA Communications Corporation
with each of Citibank, N.A., Barclays Bank PLC, Deutsche Bank AG, London Branch, JP Morgan Chase
Bank, National Association and Wachovia Capital Markets, LLC. (22)
Purchase Agreement, dated July 21, 2009, among SBA Communications Corporation, SBA
Telecommunications, Inc. and Barclays Capital Inc., Deutsche Bank Securities Inc. and J.P. Morgan
Securities Inc., as representatives of the several initial purchasers listed on Schedule 1 thereto.(23)
Registration Rights Agreement, dated July 24, 2009, among SBA Communications Corporation, SBA
Telecommunications, Inc. and Barclays Capital Inc., Deutsche Bank Securities Inc. and J.P. Morgan
Securities Inc., as representatives of the several initial purchasers listed on Schedule 2 of the Registration
Rights Agreement. (25)
50
10.83
10.84
10.85
10.86
10.87
21
23.1
31.1
31.2
32.1
32.2
+
*
(1)
(2)
(3)
$320,000,000 Amendment and Restatement of the Credit Agreement dated July 24, 2009, among SBA
Senior Finance, Inc., the several banks and other financial institutions or entities from time to time parties
thereto, Toronto Dominion (Texas) LLC, as Administrative Agent, Wachovia Bank, National Association
and Lehman Commercial Paper, Inc., as Co-Syndication Agents and Citicorp North America, Inc. and
JPMorgan Chase Bank, N.A., as Co-Documentation Agents. (25)
Amendment and Restatement of the Guarantee and Collateral Agreement, dated July 28, 2009, among SBA
Communications Corporation, SBA Telecommunications, Inc., SBA Senior Finance, Inc. and certain of its
subsidiaries in favor of Toronto Dominion (Texas) LLC, as administrative agent. (25)
Employment Agreement, made and entered into as of October 28, 2009, between SBA Communications
Corporation and Brendan T. Cavanagh. + *
$500,000,000 Credit Agreement, dated as of February 11, 2010, among SBA Senior Finance II, LLC, as
borrower, the several banks and other financial institutions or entities from time to time parties thereto,
RBS Securities Inc., as syndication agent, Wells Fargo Bank, National Association, as co-syndication
agent, Citibank, N.A. and JPMorgan Chase Bank, N.A., as co-documentation agents, and Toronto
Dominion (Texas) LLC, as administrative agent. *
Guarantee and Collateral Agreement, dated as of February 11, 2010, by SBA Communications
Corporation, SBA Telecommunications, Inc., SBA Senior Finance, Inc., SBA Senior Finance II, LLC and
certain of its subsidiaries in favor of Toronto Dominion (Texas) LLC, as administrative agent. *
Subsidiaries.*
Consent of Ernst & Young LLP.*
Certification by Jeffrey A. Stoops, Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.*
Certification by Brendan T. Cavanagh, Chief Financial Officer, pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002.*
Certification by Jeffrey A. Stoops, Chief Executive Officer, pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.*
Certification by Brendan T. Cavanagh, Chief Financial Officer, pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002.*
Management contract or compensatory plan or arrangement.
Filed herewith
Incorporated by reference to the Registration Statement on Form S-1/A, previously filed by the Registrant
(Registration No. 333-76547).
Incorporated by reference to the Registration Statement on Form S-4, previously filed by the Registrant
(Registration No. 333-50219).
Incorporated by reference to the Form 10-K for the year ended December 31, 2000, previously filed by the
Registrant.
(4)
Incorporated by reference to the Form 8-K dated January 11, 2002, previously filed by the Registrant.
(5)
Incorporated by reference to the Schedule 14A Preliminary Proxy Statement dated May 16, 2002, previously
filed by the Registrant.
51
(6)
Incorporated by reference to the Form 10-K for the year ended December 31, 2005, previously filed by the
Registrant.
(7)
Incorporated by reference to the Form 8-K dated March 20, 2006, previously filed by the Registrant.
(8)
(9)
Incorporated by reference to the Form 10-Q for the quarter ended March 31, 2006, previously filed by the
Registrant.
Incorporated by reference to the Form 10-K for the year ended December 31, 2006, previously filed by the
Registrant.
(10)
Incorporated by reference to the Form 8-K dated March 26, 2007, previously filed by the Registrant.
(11)
Incorporated by reference to the Form 10-Q for the quarter ended March 31, 2007, previously filed by the
Registrant.
(12)
Incorporated by reference to the Form 8-K dated January 24, 2008, previously filed by the Registrant.
(13)
Incorporated by reference to the Form 8-K dated March 7, 2008, previously filed by the Registrant.
(14)
Incorporated by reference to the Form 10-Q for the quarter ended March 31, 2008, previously filed by the
Registrant.
(15)
Incorporated by reference to the Form 8-K dated May 16, 2008, previously filed by the Registrant.
(16)
Incorporated by reference to the Form 8-K dated May 22, 2008, previously filed by the Registrant.
(17)
Incorporated by reference to the Form 10-Q for the quarter ended June 30, 2008, previously filed by the
Registrant.
(18)
Incorporated by reference to the Form 10-Q for the quarter ended September 30, 2008, previously filed by the
Registrant.
(19)
Incorporated by reference to the Form S-8 dated November 12, 2008, previously filed by the Registrant.
(20)
Incorporated by reference to the Form 8-K dated April 20, 2009, previously filed by the Registrant.
(21)
Incorporated by reference to the Form 8-K dated April 24, 2009, previously filed by the Registrant.
(22)
Incorporated by reference to the Form 10-Q for the quarter ended March 31, 2009, previously filed by the
Registrant.
(23)
Incorporated by reference to the Form 8-K dated July 24, 2009, previously filed by the Registrant.
(24)
Incorporated by reference to the Form 8-K dated July 31, 2009, previously filed by the Registrant.
(25)
Incorporated by reference to the Form 10-Q for the quarter ended June 30, 2009, previously filed by the
Registrant.
52
Pursuant to the requirements of Section 13 or 15(d) 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.
SIGNATURES
SBA COMMUNICATIONS CORPORATION
By:
/s/ Jeffrey A. Stoops
Jeffrey A. Stoops
Chief Executive Officer and President
Date: February 26, 2010
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
Date
Chairman of the Board of Directors
February 26, 2010
/s/ Steven E. Bernstein
Steven E. Bernstein
/s/ Jeffrey A. Stoops
Jeffrey A. Stoops
Chief Executive Officer and President
(Principal Executive Officer)
February 26, 2010
February 26, 2010
February 26, 2010
February 26, 2010
February 26, 2010
February 26, 2010
February 26, 2010
February 26, 2010
/s/ Brendan T. Cavanagh
Brendan T. Cavanagh
Chief Financial Officer
(Principal Financial Officer)
/s/ Brian D. Lazarus
Brian D. Lazarus
/s/ Brian C. Carr
Brian C. Carr
/s/ Duncan H. Cocroft
Duncan H. Cocroft
/s/ George R. Krouse Jr
George R. Krouse Jr.
/s/ Jack Langer
Jack Langer
/s/ Kevin L. Beebe
Kevin L. Beebe
Chief Accounting Officer
(Principal Accounting Officer)
Director
Director
Director
Director
Director
53
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
Table of Contents
Report of Independent Registered Certified Public Accounting Firm
Consolidated Balance Sheets as of December 31, 2009 and 2008 (as adjusted)
Page
F-1
F-2
Consolidated Statements of Operations for the years ended December 31, 2009, 2008 (as adjusted)
F-3
and 2007 (as adjusted)
Consolidated Statements of Shareholders’ Equity for the years ended
December 31, 2009, 2008 (as adjusted) and 2007 (as adjusted)
F-4
Consolidated Statements of Cash Flows for the years ended December 31, 2009, 2008 (as adjusted)
F-6
and 2007 (as adjusted)
Notes to Consolidated Financial Statements
F-8
REPORT OF INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTING FIRM
The Board of Directors and Shareholders of SBA Communications Corporation and Subsidiaries
We have audited the accompanying consolidated balance sheets of SBA Communications Corporation and Subsidiaries
as of December 31, 2009 and 2008, and the related consolidated statements of operations, shareholders’ equity and cash
flows for each of the three years in the period ended December 31, 2009. These financial statements are the
responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial
position of SBA Communications Corporation and Subsidiaries at December 31, 2009 and 2008, and the consolidated
results of their operations and their cash flows for each of the three years in the period ended December 31, 2009, in
conformity with U.S. generally accepted accounting principles.
As discussed in Note 2 to the consolidated financial statements, the Company adopted Financial Accounting Standards
Board Staff Position No. APB 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash Upon
Conversion (Including Partial Cash Settlement) (codified in FASB ASC Topic 470, Debt with Conversions and Other
Options) effective as of January 1, 2009.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States), SBA Communications Corporation and Subsidiaries’ internal control over financial reporting as of December 31,
2009, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission, and our report dated February 26, 2010 expressed an unqualified opinion
thereon.
/s/ Ernst & Young LLP
West Palm Beach, Florida
February 26, 2010
F-1
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
Current assets:
ASSETS
Cash and cash equivalents
Short-term investments
Restricted cash
Accounts receivable, net of allowance of $350 and $852 in 2009 and 2008,
respectively
Costs and estimated earnings in excess of billings on uncompleted
contracts
Prepaid and other current assets
Total current assets
Property and equipment, net
Intangible assets, net
Deferred financing fees, net
Other assets
Total assets
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current maturities of long-term debt
Accounts payable
Accrued expenses
Deferred revenue
Accrued interest
Other current liabilities
Total current liabilities
Long-term liabilities:
Long-term debt
Other long-term liabilities
Total long-term liabilities
Commitments and contingencies
Shareholders’ equity:
Preferred stock - par value $.01, 30,000 shares authorized, none issued or
outstanding
Common stock - Class A, par value $.01, 200,000 shares authorized,
117,082 and 117,525 shares issued and outstanding at December 31,
2009 and 2008, respectively
Additional paid-in capital
Accumulated deficit
Accumulated other comprehensive loss, net
Noncontrolling interests
Total shareholders’ equity
Total liabilities and shareholders’ equity
December 31, 2009
December 31, 2008
(as adjusted)
$
$
$
$
$
$
$
161,317
5,352
30,285
19,644
10,392
9,848
236,838
1,496,938
1,435,591
37,902
106,377
3,313,646
28,648
9,219
28,110
54,013
35,551
3,184
158,725
78,856
162
38,599
16,351
10,658
9,689
154,315
1,502,672
1,425,132
29,705
96,005
3,207,829
6,000
8,963
21,529
45,306
5,946
2,850
90,594
2,460,402
94,570
2,554,972
2,386,230
80,495
2,466,725
—
—
1,171
2,228,268
(1,627,602)
(2,803)
915
599,949
3,313,646
$
1,175
2,085,915
(1,435,031)
(1,549)
—
650,510
3,207,829
The accompanying notes are an integral part of these consolidated financial statements.
F-2
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
2009
For the year ended December 31,
2008
(as adjusted)
2007
(as adjusted)
Revenues:
Site leasing
Site development
Total revenues
Operating expenses:
Cost of revenues (exclusive of depreciation, accretion and
$
$
477,007
78,506
555,513
$
395,541
79,413
474,954
321,818
86,383
408,201
amortization shown below):
Cost of site leasing
Cost of site development
Selling, general and administrative
Acqusition related expenses
Asset impairment
Depreciation, accretion and amortization
Total operating expenses
Operating income
Other income (expense):
Interest income
Interest expense
Non-cash interest expense
Amortization of deferred financing fees
(Loss) gain from extinguishment of debt, net
Other income (expense)
Total other expense
Loss before provision for income taxes
Provision for income taxes
Net loss
Less: Net loss attributable to the noncontrolling interest
Net loss attributable to SBA Communications Corporation
Basic and diluted loss per common share amounts attributable to
SBA Communications Corporation
$
$
111,842
68,701
52,785
4,810
3,884
258,537
500,559
54,954
96,175
71,990
48,721
120
921
211,445
429,372
45,582
1,123
(130,853)
(49,897)
(10,456)
(5,661)
163
(195,581)
(140,627)
(492)
(141,119)
248
(140,871) $
6,883
(105,328)
(33,309)
(10,746)
44,269
(13,478)
(111,709)
(66,127)
(1,037)
(67,164)
—
(67,164) $
(1.20) $
(0.61) $
Basic and diluted weighted average number of common shares
117,165
109,882
The accompanying notes are an integral part of these consolidated financial statements.
88,006
75,347
45,564
5
—
169,232
378,154
30,047
10,182
(93,063)
(13,402)
(8,162)
(431)
(15,777)
(120,653)
(90,606)
(868)
(91,474)
—
(91,474)
(0.87)
104,743
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SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
2009
For the year ended December 31,
2008
(as adjusted)
2007
(as adjusted)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss
Adjustments to reconcile net loss to net cash provided by operating
$
(141,119)
$
(67,164 )
$
(91,474)
activities:
Depreciation, accretion, and amortization
Non-cash interest expense
Deferred income tax (benefit) provision
Asset impairment
Write-down of investments
Gain on sale of assets
Non-cash compensation expense
Provision (credit) for doubtful accounts
Amortization of deferred financing fees
Loss (gain) from extinguishment of debt, net
Changes in operating assets and liabilities:
Accounts receivable and costs and estimated earnings in excess of
billings on uncompleted contracts, net
Prepaid and other assets
Accounts payable and accrued expenses
Accrued interest
Other liabilities
Net cash provided by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions and related earn-outs
Capital expenditures
Purchase of investments
Proceeds from sales/maturities of investments
Proceeds from disposition of fixed assets
Proceeds (payment) of restricted cash relating to tower removal
obligations
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of senior notes, net of original issue discount
and fees paid
Proceeds from issuance of convertible senior notes, net of fees paid
Repurchase and retirement of common stock
Payment on early extinguishment of CMBS Certificates
Payments on early extinguishment of convertible debt
Borrowings under Senior Credit Facility
Repayment of Senior Credit Facility
Repayment of Optasite Credit Facility
Proceeds from issuance of common stock warrants
Purchase of convertible note hedges
Payment related to termination of derivative instruments
Proceeds from employee stock purchase/stock option plans
Release (payment) of restricted cash relating to CMBS Certificates
Payment of deferred financing fees
Net cash provided by financing activities
258,537
49,897
(265)
3,884
—
85
8,200
465
10,456
5,661
(3,497)
(8,546)
(4,008)
29,605
13,203
222,558
(180,798)
(46,743)
(9,164)
980
608
6,042
(229,075)
727,918
488,195
(51,720)
(557,316)
(90,554)
8,507
(239,060)
(149,117)
98,491
(160,100)
—
7,045
7,073
(384)
88,978
211,445
33,309
159
921
13,256
341
7,207
(81 )
10,746
(44,269 )
14,408
(10,906 )
(6,189 )
2,423
8,090
173,696
(584,498 )
(36,166 )
—
41,044
51
(980 )
(580,549 )
—
536,815
(120,000 )
(45,353 )
(102,486 )
465,552
(235,000 )
(1,000 )
56,183
(137,698 )
(3,890 )
6,503
(928 )
(3,261 )
415,437
NET INCREASE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS:
Beginning of year
End of year
82,461
8,584
78,856
161,317
$
$
70,272
78,856
$
(continued)
F-6
169,232
13,402
201
—
15,558
397
6,612
150
8,162
431
(1,183)
(18,319)
3,645
(558)
16,678
122,934
(201,466)
(27,771)
(208,251)
137,551
131
(2,078)
(301,884)
—
341,452
(91,236)
—
—
—
—
—
27,261
(77,200)
—
7,750
(4,564)
(389)
203,074
24,124
46,148
70,272
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
For the year ended December 31,
2008
2009
2007
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Interest
Income taxes
SUPPLEMENTAL CASH FLOW INFORMATION OF NON-
CASH ACTIVITIES:
Assets acquired through capital leases
Class A common stock issued relating to acquisitions and
earnouts
Fair value of debt assumed through acquisition
Stock issued in connection with early extinguishment of debt
$
$
$
$
$
$
101,409
684
239
20,312
—
11,199
$
$
$
$
$
$
103,085
359
781
295,631
147,000
55,031
$
$
$
$
$
$
93,868
860
960
155,546
—
—
The accompanying notes are an integral part of these consolidated financial statements.
F-7
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1.
GENERAL
SBA Communications Corporation (the “Company” or “SBA”) was incorporated in the State of Florida in
March 1997. The Company is a holding company that holds all of the outstanding capital stock of SBA
Telecommunications, Inc. (“Telecommunications”). Telecommunications is a holding company that holds the
outstanding capital stock of the International Subsidiaries, SBA Infrastructure Holdings I, Inc. (“Infrastructure” formerly
known as Optasite) and SBA Senior Finance, Inc. (“SBA Senior Finance”). SBA Senior Finance is a holding company
that holds, directly and indirectly, the equity interest in certain subsidiaries that issued the Commercial Mortgage-Backed
Pass Through Certificates, Series 2005-1 (the “2005 CMBS Certificates”) and the Commercial Mortgage-Backed Pass
Through Certificates, Series 2006-1 (the “2006 CMBS Certificates”) (collectively, the “CMBS Certificates”) and certain
subsidiaries that were not involved in the issuance of the CMBS Certificates. With respect to the subsidiaries involved in
the issuance of the CMBS Certificates, SBA Senior Finance is the sole member of SBA CMBS-1 Holdings, LLC and
SBA CMBS-1 Depositor, LLC. SBA CMBS-1 Holdings, LLC is the sole member of SBA CMBS-1 Guarantor, LLC.
SBA CMBS-1 Guarantor, LLC holds all of the capital stock of the companies included in the CMBS certificates referred
to as the “Borrowers” (see Note 13). With respect to the subsidiaries not involved in the issuance of the CMBS
Certificates, SBA Senior Finance holds all of the membership interests of SBA Senior Finance II, LLC (“SBA Senior
Finance II”) and certain non-operational subsidiaries. SBA Senior Finance II holds, directly and indirectly, all the capital
stock and/or membership interests of certain other tower companies (“Other Tower Companies”) (collectively with the
Borrowers known as “Tower Companies”). SBA Senior Finance II also holds, directly or indirectly, all the capital stock
and/or membership interests of certain other subsidiaries involved in providing services, including SBA Network
Services, Inc. (“Network Services”). SBA Senior Finance II also holds all the capital stock of SBA Network
Management, Inc. (“Network Management”) which manages and administers the operations of the Borrowers.
The table below outlines the legal structure of the Company at December 31, 2009:
SBA Communications Corporation
SBA Telecommunications, Inc.
International Subsidiaries
SBA Infrastructure Holdings I Inc.
SBA Senior Finance, Inc.
SBA CMBS-1
Depositor, LLC
SBA CMBS-1
Holdings, LLC
SBA Senior Finance II, LLC
SBA CMBS-1
Guarantor, LLC
Borrowers
Other Tower
Companies
Network
Management
Network
Services
As of December 31, 2009, the Tower Companies owned and operated wireless communications towers in the
Continental United States, Puerto Rico, Canada and the U.S. Virgin Islands. Space on these towers is leased primarily to
wireless service providers. As of December 31, 2009, the Company owned 8,324 tower sites.
Network Services provides comprehensive turnkey services for the telecommunications industry in the areas of
site development services for wireless carriers and the construction and repair of transmission towers. Site development
consulting services include (1) network pre-design; (2) site audits; (3) identification of potential locations for towers and
antennas; (4) support in buying or leasing of the location; and (5) assistance in obtaining zoning approvals and permits.
Site construction services of the Company’s site development business provides a number of services, including, but not
limited to the following: (1) tower and related site construction; (2) antenna installation; and (3) radio equipment
installation, commissioning and maintenance.
F-8
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2.
RESTATEMENT FOR ADOPTION OF NEW ACCOUNTING PRONOUNCEMENT
Effective January 1, 2009, the Company retrospectively adopted new convertible debt accounting which
requires the issuer of certain convertible debt instruments that may be settled in cash (including partial cash settlement)
on conversion to separately account for the liability (debt) and equity (conversion option) components of the instrument
in a manner that reflects the issuer’s non-convertible debt borrowing rate. The Company’s 0.375% Convertible Senior
Notes due 2010 (“0.375% Notes”) and 1.875% Convertible Senior Notes due 2013 (“1.875% Notes” and collectively
with the 0.375% Notes, the “Notes”) are subject to the retroactive restatement required by the new convertible debt
accounting. As a result of the adoption of the new convertible debt accounting, the Company recorded a debt discount
and corresponding increase to additional paid-in capital of approximately $74.4 million for the 0.375% Notes and
approximately $163.0 million for the 1.875% Notes as of their dates of issuance (March 26, 2007 for the 0.375% Notes
and May 16, 2008 for the 1.875% Notes). The Company’s consolidated balance sheet as of December 31, 2008 has been
retrospectively adjusted to reduce the carrying value of the 0.375% Notes and 1.875% Notes and reflect the conversion
option as a reduction in shareholders’ equity. In addition, as of their respective issuance dates, the Company reclassified,
as a reduction to equity, deferred financing fees of $1.8 million and $3.8 million for the 0.375% Notes and 1.875%
Notes, respectively, relating to debt issuance costs of the equity component of the Notes. The Company’s consolidated
statements of operations and consolidated statements of cash flows for the years ended December 31, 2008 and
December 31, 2007 have been retrospectively adjusted to reflect the non-cash interest expense related to the accretion of
the reduced carrying value of the Notes back to their full principal balance over the term of the Notes. In addition, the
amortization of deferred financing fees has been restated to reflect the amortization of the fees related only to the liability
component of the Notes. See Note 13 for further information on the Notes.
The following is a summary of the effects of these changes on the Company’s consolidated balance sheet as of
December 31, 2008 and consolidated statements of operations for the years ended December 31, 2008 and December 31,
2007:
CONSOLIDATED BALANCE SHEET
Current assets
Property and equipment, net
Intangible assets, net
Deferred financing fees, net
Other assets
Total assets
Current liabilities
Long-term debt, net of current maturities
Other long-term liabilities
Total liabilities
Total shareholders’ equity
Total liabilities and shareholders’ equity
As of December 31, 2008
As previously
reported
As adjusted
(audited)
(in thousands)
$
$
$
$
154,315
1,502,672
1,425,132
33,384
96,005
3,211,508
90,594
2,548,660
80,495
2,719,749
491,759
3,211,508
$
$
$
$
154,315
1,502,672
1,425,132
29,705
96,005
3,207,829
90,594
2,386,230
80,495
2,557,319
650,510
3,207,829
F-9
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF OPERATIONS
For the year ended December 31,
2008
2007
As previously
reported
As adjusted
(audited)
As previously
reported
As adjusted
(audited)
(in thousands, except per share amounts)
Revenues
Operating expenses
Operating income
Other income (expense):
Interest income
Interest expense (1)
Non-cash interest expense
Amortization of deferred financing fees
Gain (loss) from extinguishment of
debt, net
Other expense
Total other expense
Loss before provision for income
taxes
Provision for income taxes
Net loss
Basic and diluted loss per common share
amounts:
Net loss per common share
Basic and diluted weighted average
number of common shares
$
$
$
$
474,954
429,372
45,582
$
474,954
429,372
45,582
$
408,201
378,154
30,047
6,883
(104,253)
(412)
(11,671)
31,623
(13,478)
(91,308)
6,883
(105,328)
(33,309)
(10,746)
44,269
(13,478)
(111,709)
10,182
(92,498)
—
(8,534)
(431)
(15,777)
(107,058)
(45,726)
(1,037)
(46,763) $
(66,127)
(1,037)
(67,164) $
(77,011)
(868)
(77,879) $
408,201
378,154
30,047
10,182
(93,063)
(13,402)
(8,162)
(431)
(15,777)
(120,653)
(90,606)
(868)
(91,474)
(0.43) $
(0.61) $
(0.74) $
(0.87)
109,882
109,882
104,743
104,743
(1)
Includes a reclassification from interest expense to non-cash interest expense for the non-cash amortization of
net deferred gains from settlement of derivative financial instruments.
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting policies applied in the preparation of the accompanying consolidated
financial statements is as follows:
a.
Principles of Consolidation
The consolidated financial statements have been prepared in accordance with accounting principles generally
accepted in the United States of America (“U.S. GAAP”) and include the Company and its majority and wholly-owned
subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.
b.
Use of Estimates
The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management
to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and
accompanying notes. The significant estimates made by management relate to the allowance for doubtful accounts, the
costs and revenue relating to the Company’s construction contracts, stock-based compensation, valuation allowance
related to deferred tax assets, fair value of long-lived assets, the useful lives of towers and intangible assets, anticipated
property tax assessments, fair value of investments and asset retirement obligations. Management develops estimates
based on historical experience and on various assumptions about the future that are believed to be reasonable based on
the information available. These estimates ultimately may differ from actual results and such differences could be
material.
F-10
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
c.
Cash and Cash Equivalents
Cash and cash equivalents consist primarily of cash in banks, money market funds, commercial paper and other
marketable securities with an original maturity of three months or less at the time of purchase. These investments are
carried at cost, which approximates fair value.
d.
Investments
Investment securities with original maturities of more than three months but less than one year at time of
purchase are considered short-term investments. The Company’s short-term investments primarily consist of certificates
of deposit with maturities of less than a year. Investment securities with maturities of more than a year are considered
long-term investments and are classified in other assets on the accompanying Consolidated Balance Sheets. Long-term
investments primarily consist of U.S. Treasuries, corporate bonds and auction rate securities. The auction rate securities
have a fair value of approximately $1.0 million and a par value of $29.8 million at December 31, 2009 and 2008 and
consist of 98 shares of FGIC Series C Perpetual Preferred Stock, which were received in April 2009, and 800 shares of
Ambac Preferred Stock, which were received in October 2008, as a result of both FGIC and Ambac exercising their put
rights associated with the original auction rate security investment (see Note 5 for fair value disclosures). Gross
purchases and sales of the Company’s investments are presented within “Cash flows from investing activities” on the
Company’s Consolidated Statements of Cash Flows.
e.
Restricted Cash
The Company classifies all cash pledged as collateral to secure certain obligations and all cash whose use is
limited as restricted cash. This includes cash held in escrow to fund certain reserve accounts relating to the CMBS
Certificates, for payment and performance bonds, and surety bonds issued for the benefit of the Company in the ordinary
course of business (see Note 6).
In connection with the issuance of the CMBS Certificates (as defined in Note 13), the Company is required to
fund a restricted cash amount, which represents the cash held in escrow pursuant to the mortgage loan agreement
governing the CMBS Certificates. This restricted cash amount is used to fund certain reserve accounts for the payment of
debt service costs, ground rents, real estate and personal property taxes, insurance premiums related to tower sites,
trustee and servicing expenses, management fees and to reserve a portion of advance rents from tenants. Pursuant to the
terms of the mortgage loan agreement, all rents and other sums due on the towers that secure the CMBS Certificates are
directly deposited into a controlled deposit account by the lessees and are held by the indenture trustee. The restricted
cash held by the indenture trustee in excess of required reserve balances is subsequently released to the Borrowers (as
defined in Note 13) on or before the 15 th calendar day of the following month providing that the Company is in
compliance with its debt service coverage ratio and that no Event of Default has occurred. All monies held by the
indenture trustee are classified as restricted cash in current assets on the Company’s Consolidated Balance Sheets.
f.
Property and Equipment
Property and equipment are recorded at cost or at estimated fair value (in case of acquired properties), adjusted
for asset impairment and estimated asset retirement obligations. Costs associated with the development and construction
of towers are capitalized as a cost of the towers. Costs for self-constructed towers include direct materials and labor,
indirect costs and capitalized interest. Approximately $0.2 million of interest cost was capitalized in both 2009 and 2008,
respectively.
Depreciation on towers and related components is provided using the straight-line method over the estimated
useful lives, not to exceed the minimum lease term of the underlying ground lease. The Company defines the minimum
lease term as the shorter of the period from lease inception through the end of the term of all tenant lease obligations in
existence at ground lease inception, including renewal periods, or the ground lease term, including renewal periods. If no
tenant lease obligation exists at the date of ground lease inception, the initial term of the ground lease is considered the
minimum lease term. Leasehold improvements are amortized on a straight-line basis over the shorter of the useful life of
the improvement or the minimum lease term of the lease. For all other property and equipment, depreciation is provided
using the straight-line method over the estimated useful lives.
F-11
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company performs ongoing evaluations of the estimated useful lives of its property and equipment for
depreciation purposes. The estimated useful lives are determined and continually evaluated based on the period over
which services are expected to be rendered by the asset. If the useful lives of assets are reduced, depreciation may be
accelerated in future years. Property and equipment under capital leases are amortized on a straight-line basis over the
term of the lease or the remaining estimated life of the leased property, whichever is shorter, and the related amortization
is included in depreciation expense. Expenditures for maintenance and repair are expensed as incurred.
Asset classes and related estimated useful lives are as follows:
Towers and related components
3 - 15 years
Furniture, equipment and vehicles
2 - 7 years
Buildings and improvements
5 – 10 years
Betterments, improvements and extraordinary repairs, which increase the value or extend the life of an asset, are
capitalized and depreciated over the remaining estimated useful life of the respective asset. Changes in an asset’s
estimated useful life are accounted for prospectively, with the book value of the asset at the time of the change being
depreciated over the revised remaining useful life. There has been no material impact for changes in estimated useful
lives for any years presented.
g.
Deferred Financing Fees
Financing fees related to the issuance of debt have been deferred and are being amortized using the effective
interest rate method over the expected length of related indebtedness.
h.
Deferred Lease Costs
The Company defers certain initial direct costs associated with the origination of tenant leases and lease
amendments and amortizes these costs over the initial lease term, generally five years, or over the lease term remaining if
related to a lease amendment. Such deferred costs were approximately $4.0 million, $3.8 million, and $3.6 million in
2009, 2008, and 2007, respectively. Amortization expense was $3.3 million, $2.7 million, and $2.5 million for the years
ended December 31, 2009, 2008 and 2007, respectively, and is included in cost of site leasing on the accompanying
Consolidated Statements of Operations. As of December 31, 2009 and 2008, unamortized deferred lease costs were $8.3
million and $7.6 million, respectively, and are included in other assets on the accompanying Consolidated Balance
Sheets.
i.
Intangible Assets
The Company classifies as intangible assets the fair value of current leases in place at the acquisition date of
towers and related assets (referred to as the “current contract intangibles”), and the fair value of future tenant leases
anticipated to be added to the acquired towers (referred to as the “network location intangibles”). These intangibles are
estimated to have an economic useful life consistent with the economic useful life of the related tower assets, which is
typically 15 years. For all intangible assets, amortization is provided using the straight-line method over the estimated
useful lives as the benefit associated with these intangible assets is anticipated to be derived evenly over the life of the
asset.
j.
Impairment of Long-Lived Assets
The Company records an impairment charge when the Company believes an investment in towers or related
assets has been impaired, such that future undiscounted cash flows would not recover the then current carrying value of
the investment in the tower site and related intangible. Estimates and assumptions inherent in the impairment evaluation
include, but are not limited to, general market and economic conditions, historical operating results, geographic location,
lease-up potential and expected timing of lease-up. In addition, the Company makes certain assumptions in determining
an asset’s fair value for the purpose of calculating the amount of an impairment charge. The Company recorded an
impairment charge of $3.9 million and $0.9 million for the twelve months ended December 31, 2009 and 2008,
respectively (see Note 17).
F-12
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
k.
Fair Value of Financial Instruments
The Company determines the fair market values of its financial instruments based on the fair value hierarchy
established by the Fair Value Measurements and Disclosures accounting guidance, which requires an entity to maximize
the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
l.
Revenue Recognition and Accounts Receivable
Revenue from site leasing is recorded monthly and recognized on a straight-line basis over the current term of
the related lease agreements, which are generally five years. Receivables recorded related to the straight-lining of site
leases are reflected in other assets on the Consolidated Balance Sheets. Rental amounts received in advance are recorded
as deferred revenue on the Consolidated Balance Sheets.
Site development projects in which the Company performs consulting services include contracts on a time and
materials basis or a fixed price basis. Time and materials based contracts are billed at contractual rates as the services are
rendered. For those site development contracts in which the Company performs work on a fixed price basis, site
development billing (and revenue recognition) is based on the completion of agreed upon phases of the project on a per
site basis. Upon the completion of each phase on a per site basis, the Company recognizes the revenue related to that
phase. Site development projects generally take from 3 to 12 months to complete.
Revenue from construction projects is recognized on the percentage-of-completion method of accounting,
determined by the percentage of cost incurred to date compared to management’s estimated total cost for each contract.
This method is used because management considers total cost to be the best available measure of progress on the
contracts. These amounts are based on estimates, and the uncertainty inherent in the estimates initially is reduced as work
on the contracts nears completion. The asset “costs and estimated earnings in excess of billings on uncompleted
contracts” represents expenses incurred and revenues recognized in excess of amounts billed. The liability “billings in
excess of costs and estimated earnings on uncompleted contracts” represents billings in excess of revenues recognized.
Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined to
be probable.
The Company performs periodic credit evaluations of its customers. The Company monitors collections and
payments from its customers and maintains a provision for estimated credit losses based upon historical experience,
specific customer collection issues identified and past due balances as determined based on contractual terms. Interest is
charged on outstanding receivables from customers on a case by case basis in accordance with the terms of the respective
contracts or agreements with those customers. Amounts determined to be uncollectible are written off against the
allowance for doubtful accounts in the period in which uncollectability is determined to be probable.
The following is a rollforward of the allowance for doubtful accounts for the years ended December 31, 2009,
2008, and 2007:
Beginning balance
Allowance recorded relating to acquisitions
Provision (credits) for doubtful accounts
Write-offs, net of recoveries
Ending balance
m.
Cost of Revenue
$
2009
2007
For the year ended December 31,
2008
(in thousands)
1,186 $
—
(81)
(253)
852 $
852 $
10
465
(977)
350 $
1,316
(280)
150
—
1,186
$
Cost of site leasing revenue includes ground lease rent, property taxes, maintenance (exclusive of employee
related costs) and other tower operating expenses. Liabilities recorded related to the straight-lining of ground leases are
reflected in other long-term liabilities on the Consolidated Balance Sheets. Cost of site development revenue includes the
cost of materials, salaries and labor costs, including payroll taxes, subcontract labor, vehicle expense and other costs
directly and indirectly related to the projects. All costs related to site development projects are recognized as incurred.
All rental obligations due to be paid out over the minimum lease term, including fixed escalations, are recorded on a
straight-line basis over the minimum lease term.
F-13
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
n.
Income Taxes
The Company had taxable losses during the years ended December 31, 2009, 2008 and 2007, and as a result, net
operating loss carry-forwards have been generated. These net operating loss carry-forwards are fully reserved as
management believes it is not “more-likely-than-not” that the Company will generate sufficient taxable income in future
periods to recognize the losses.
The Company determines whether it is “more-likely-than-not” that a tax position taken in an income tax return
will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the
technical merits of the position. Once it is determined that a position meets the more-likely-than-not recognition
threshold, the position is measured to determine the amount of benefit to recognize in the financial statements. The
Company has not identified any tax exposures that require adjustment. In the future, to the extent that the Company
records unrecognized tax exposures, any related interest and penalties will be recognized as interest expense in the
Company’s Consolidated Statements of Operations.
The Company does not calculate U.S. taxes on undistributed earnings of foreign subsidiaries because
substantially all such earnings are expected to be reinvested indefinitely.
o.
Stock-Based Compensation
The Company measures and recognizes compensation expense for all share-based payment awards made to
employees and directors, including stock options and employee stock purchases under employee stock purchase plans.
The Company records compensation expense on a straight-line basis over the vesting period for employee stock options
based on the estimated fair value of the options on the date of the grant using the Black-Scholes option-pricing model.
The stock options granted to non-employees are valued using the Black-Scholes option-pricing model based on the
market price of the underlying common stock on the “valuation date,” which for options to non-employees is the vesting
date. Expense related to the options granted to non-employees is recognized on a straight-line basis over the shorter of
the period over which services are to be received or the vesting period.
p.
Asset Retirement Obligations
The Company recognizes asset retirement obligations in the period in which they are incurred, if a reasonable
estimate of a fair value can be made, and accretes such liability through the obligation’s estimated settlement date. The
associated asset retirement costs are capitalized as part of the carrying amount of the related tower fixed assets, and over
time, the liability is accreted to its present value each period and the capitalized cost is depreciated over the estimated
useful life of the tower.
The Company has entered into ground leases for the land underlying the majority of the Company’s towers. A
majority of these leases require the Company to restore leaseholds to their original condition upon termination of the
ground lease. The asset retirement obligation at December 31, 2009 and December 31, 2008 was $4.6 million and $4.2
million, respectively, and is included in other long-term liabilities on the Consolidated Balance Sheets. Upon settlement
of the obligations, any difference between the cost to retire an asset and the recorded liability is recorded in the
Consolidated Statements of Operations as a gain or loss. In determining the impact of the asset retirement obligations,
the Company considered the nature and scope of the contractual restoration obligations contained in the Company’s third
party ground leases, the historical retirement experience as an indicator of future restoration probabilities, intent in
renewing existing ground leases through lease termination dates, current and future value and timing of estimated
restoration costs and the credit adjusted risk-free rate used to discount future obligations.
F-14
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following summarizes the activity of the asset retirement obligation liability:
For the year ended December 31,
2009
2008
Asset retirement obligation at January 1
Fair value of liability recorded for the Optasite,
$
Light Tower and Tower Co acquisitions
Additional liabilities accrued
Accretion expense
Revision in estimates
Ending balance
q.
Loss Per Share
$
(in thousands)
4,198 $
—
160
314
(31)
4,641 $
2,869
723
348
316
(58)
4,198
The Company has potential common stock equivalents related to its outstanding stock options and convertible
senior notes. These potential common stock equivalents were not included in diluted loss per share because the effect
would have been anti-dilutive in calculating the full year earnings per share. Accordingly, basic and diluted loss per
common share and the weighted average number of shares used in the computations are the same for all periods
presented in the Consolidated Statements of Operations.
r.
Comprehensive Loss
Comprehensive loss is defined as the change in equity (net assets) of a business enterprise during a period from
transactions and other events and circumstances from non-owner sources, and is comprised of net loss and “other
comprehensive loss.” Comprehensive loss is presented in the Consolidated Statements of Shareholders’ Equity.
s.
Foreign Currency Translation
All assets and liabilities of foreign subsidiaries that do not utilize the United States dollar as its functional
currency are translated at period-end rates of exchange, while revenues and expenses are translated at monthly weighted
average rates of exchange for the year. Unrealized translation gains and losses are reported as foreign currency
translation adjustments through other comprehensive loss in shareholders’ equity.
t.
Reclassifications
Certain reclassifications have been made to prior year amounts or balances to conform to the presentation
adopted in the current year.
4.
CURRENT ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2009-
01, Amendments Based on Statement of Financial Accounting Standards No. 168 – The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles (“ASU 2009-01”), which states that the
FASB Accounting Standards Codification (“Codification”) will become the source of authoritative U.S. generally
accepted accounting principles (“GAAP”) recognized by the FASB. The codification does not change existing GAAP
but instead is a major restructuring of accounting and reporting standards designed to simplify user access to all
authoritative GAAP by providing the authoritative literature in a topically organized structure. On the effective date the
Codification supersedes all then-existing non-SEC accounting and reporting standards. The FASB will no longer issue
new standards in the form of statements, instead it will issue accounting standard updates. ASU 2009-01 became
effective for financial statements issued for interim and annual reporting periods ending after September 15, 2009 and
the adoption did not have any impact on the Company’s financial condition, results of operations and cash flows.
The FASB issued business combination accounting guidance which amends and clarifies the accounting for
assets acquired and liabilities assumed in a business combination that arise from contingencies. This accounting guidance
is effective for assets or liabilities arising from contingencies in business combinations for which the acquisition date is
on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The adoption of
this accounting guidance did not have a material impact on the Company’s consolidated financial position, results of
operations or cash flows.
F-15
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The FASB also issued business combinations accounting guidance which requires the acquiring entity in a
business combination to record all assets acquired and liabilities assumed at their respective acquisition-date fair values
and changes other practices some of which could have a material impact on how the Company accounts for business
combinations. These changes include, among other things, expensing acquisition costs as incurred as a component of
operating expense. Effective January 1, 2009, these costs are reflected as acquisition related expenses in the Company’s
consolidated statement of operations. The Company historically capitalized these acquisition costs as part of the purchase
price and then amortized these costs using the straight-line method over the life of the acquired intangible assets. This
accounting guidance also requires additional disclosure of information surrounding a business combination, such that
users of the entity’s financial statements can fully understand the nature and financial impact of a business combination.
This accounting guidance is effective for fiscal years beginning after December 15, 2008 and interim periods within
those fiscal years. The Company adopted this accounting guidance effective January 1, 2009.
The FASB issued accounting guidance for intangibles other than goodwill which amends the factors that should be
considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible
asset. This accounting guidance is effective for fiscal years beginning after December 15, 2008 and the adoption did not
have a material impact on the Company’s consolidated financial position, results of operations or cash flows.
The FASB issued ASU No. 2010-06, Improving Disclosures about Fair Value Measurements (“ASU 2010-06”)
which will require new disclosures about recurring or nonrecurring fair-value measurements including significant
transfers into and out of Level 1 and Level 2 fair value measurements and information on purchases, sales, issuances, and
settlements on a gross basis in the reconciliation of Level 3 fair value measurements. The FASB also clarified existing
fair value measurement disclosure guidance about the level of disaggregation, inputs, and valuation techniques. ASU
2010-06 is effective for fiscal years beginning after December 15, 2009. The Company will incorporate the disclosure
requirements of ASU No. 2010-06 in the first quarter of 2010.
The FASB issued ASU No. 2009-05, Measuring Liabilities at Fair Value (“ASU 2009-05”). ASU 2009-05
amends fair value accounting by providing additional guidance clarifying the measurement of liabilities at fair value.
ASU 2009-05 addresses several key issues with respect to estimating the fair value of liabilities and clarifies how the
price of a traded debt security should be considered in estimating the fair value of the issuer’s liability. ASU 2009-05
became effective for financial statements issued for interim and annual reporting periods ending after its issuance
(August 2009). The adoption of ASU 2009-05 did not have a material impact on the Company’s consolidated financial
position, results of operations or cash flows.
The FASB issued fair value accounting guidance which requires disclosures about fair value of financial
instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. This
accounting guidance is effective for interim reporting periods ending after June 15, 2009 and does not require disclosures
for earlier periods presented for comparative purposes at initial adoption. The Company adopted this accounting
guidance and have incorporated all applicable disclosures.
The FASB issued fair value accounting guidance which provides additional guidance for estimating fair value
when the volume and level of activity for the asset or liability have significantly decreased. This accounting guidance is
effective for interim and annual reporting periods ending after June 15, 2009, and is applied prospectively. The adoption
of this accounting guidance did not have any impact on the Company’s consolidated financial position, results of
operations or cash flows.
The FASB issued fair value accounting guidance which defines fair value, establishes guidelines for measuring
fair value and expands disclosures regarding fair value measurements. This accounting guidance was effective for fiscal
years beginning after November 15, 2007. In February 2008, FASB issued additional guidance which excluded leases
and other accounting pronouncements that address fair value measurements for purposes of lease classification or
measurement. In addition the additional guidance delayed the effective date to fiscal years beginning after November 15,
2008, or in fiscal 2009 for the Company, and interim periods within those fiscal years for fair value measurements for all
nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial
statements on a recurring basis (at least annually). In October 2008, the FASB issued additional accounting guidance
which clarifies the application of fair value measurements in an inactive market by providing an illustrative example to
demonstrate how the fair value of a financial asset is determined when the market for the financial asset is inactive.
Effective January 1, 2008, the guidelines of fair value measurement were applied in recording the Company’s
investments. Effective January 1, 2009, the guidelines of fair value measurements were applied to non-financial assets
and non-financial liabilities (see Note 5).
F-16
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The FASB issued subsequent events accounting guidance which established principles and requirements for
disclosing subsequent events. This accounting guidance is effective for interim or annual financial periods ending after
June 15, 2009, and is applied prospectively. The Company adopted this accounting guidance.
The FASB issued accounting guidance on investment in debt and equity securities which changed the existing
accounting requirements for other-than-temporary impairments. This accounting guidance is effective for interim and
annual reporting periods ending after June 15, 2009 and the adoption did not have any impact on the Company’s
consolidated financial position, results of operations or cash flows.
The FASB issued derivative and hedging accounting guidance which addresses the determination of whether an
instrument (or an embedded feature) is indexed to an entity’s own stock. This accounting guidance is effective for fiscal
years beginning after December 15, 2008 and interim periods within those fiscal years and the adoption did not have a
material impact on the Company’s consolidated financial position, results of operations or cash flows.
The FASB issued derivative and hedging accounting guidance which expands the disclosure requirements for
derivative instruments and hedging activities. This accounting guidance is effective for financial statements issued for
fiscal years and interim periods beginning after November 15, 2008 and the adoption did not have any impact on the
Company’s consolidated financial position, results of operations or cash flows.
The FASB issued consolidation accounting guidance which requires entities to report non-controlling (minority)
interests in subsidiaries as equity in the consolidated financial statements. This accounting guidance is effective for fiscal
years beginning after December 15, 2008. The Company adopted this accounting guidance effective January 1, 2009 and
the noncontrolling interests are reflected in the Company’s consolidated balance sheet, consolidated statements of
operations and consolidated statement of shareholders’ equity.
5.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Items Measured at Fair Value on a Recurring Basis— The carrying values of the Company’s financial
instruments that approximate fair value due to the short maturity of those instruments primarily includes cash and cash
equivalents, short-term investments, restricted cash, accounts receivable, and accounts payable. These financial
instruments are valued using Level 1 inputs. Level 1 valuations rely on quoted prices in active markets for identical
assets or liabilities that the Company has the ability to access at the measurement date. Long-term investments which are
included in other assets on the Company’s Consolidated Balance Sheet consist of U.S. treasuries, corporate bonds and
auction rate securities (see Note 3 for additional information).
During the year ended December 31, 2009, there were no changes in the fair value of the auction rate securities.
The Company recorded $13.3 million of other–than–temporary impairment charges in other income (expense) on its
Consolidated Statements of Operations for the year ended December 31, 2008. The Company determined the other-than-
temporary impairment charge for the year ended December 31, 2008 based on a variety of factors, including the
significant decline in fair value indicated for the individual investments, the adverse market conditions impacting auction
rate securities and the exercise of the put rights that resulted in the Company owning shares of FGIC Preferred Stock and
shares of Ambac Preferred Stock.
The Company has estimated the fair value of these auction rate securities based on values provided by a third
party valuation firm utilizing a Level 3 valuation methodology. Level 3 valuations rely on unobservable inputs for the
asset or liability, and include situations where there is little, if any, market activity for the asset or liability. Management
validated the assumptions used in the valuation including the ultimate time horizon over which dividends are anticipated
to be paid on the preferred stock, the coupon rate for these securities, and the appropriate discount margins. The
Company continues to monitor market and other conditions in assessing whether further changes in the fair value of
these securities are warranted. Due to the lack of a market for Ambac Preferred Stock and FGIC Preferred Stock, the
established fair value of these securities is a matter of judgment. These estimated fair values could change based on
future market conditions and as such, the Company may be required to record additional unrealized losses for
impairment if the Company determines there are further declines in their fair value.
F-17
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A reconciliation of the beginning and ending balances for the auction rate investments that use significant
unobservable inputs (Level 3) as of December 31, 2009 and 2008 is as follows (in thousands):
Beginning balance, December 31, 2007
Sales
Other-than-temporary impairment charge
Ending balance, December 31, 2008
Sales
Realized/unrealized gains and losses
Ending balance, December 31, 2009
Auction Rate
Securities
(in thousands)
55,142
$
(40,900)
(13,256)
986
—
—
986
$
Items Measured at Fair Value on a Nonrecurring Basis—The Company’s long-lived assets (see Note 3),
intangibles, asset retirement obligations (see Note 3) and earnouts related to acquisitions (see Note 7) are measured at
fair value on a nonrecurring basis using level 3 inputs. The fair value of the long-lived assets, intangibles and asset
retirement obligations are calculated using a discount cash flow model. The fair value of the earnouts is based on the
estimated earnout payments. During the year ended December 31, 2009 the Company recorded a $3.9 million
impairment on its long-lived and intangible assets (see Note 17).
Fair Value of Financial Instruments— The carrying value of the Company’s financial instruments, with the
exception of long-term debt including current portion, reasonably estimate the related fair values as of December 31,
2009 and December 31, 2008.
The following table reflects fair values, principal values and carrying values of the Company’s debt
instruments. The Company determines fair value of its debt securities utilizing various sources including quoted prices
and indicative quotes (that is 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.
At December 31, 2009
At December 31, 2008
Fair Value
Principal
Value
Accreted
Carrying
Value
Fair Value
Principal
Value
Accreted
Carrying
Value
8.0% Senior Notes due 2016
8.25% Senior Notes due 2019
0.375% Convertible Senior Notes
1.875% Convertible Senior Notes
4.0% Convertible Senior Notes
2006 CMBS Certificates
2005 CMBS Certificates
Senior Secured Revolving Credit Facility
Optasite Credit Facility
$
$
$
$
$
$
$
$
$
388.1 $
393.8 $
34.2 $
564.4 $
652.5 $
961.5 $
— $
— $
— $
375.0 $
375.0 $
30.4 $
550.0 $
500.0 $
940.6 $
— $
— $
— $
(in millions)
372.6 $
371.9 $
28.6 $
432.5 $
342.8 $
940.6 $
— $
— $
— $
— $
— $
112.5 $
314.5 $
— $
839.0 $
334.8 $
205.9 $
135.7 $
— $
— $
138.1 $
550.0 $
— $
1,090.7 $
398.8 $
230.6 $
149.0 $
—
—
122.0
403.7
—
1,090.7
398.8
230.6
146.4
6.
RESTRICTED CASH
Restricted cash consists of the following:
As of
December 31, 2009
As of
December 31, 2008
Included on Balance Sheet
CMBS Certificates
Payment and performance bonds
Surety bonds and workers compensation
$
Total restricted cash
$
(in thousands)
29,108 $
1,177
11,097
41,382 $
36,182 Restricted cash - current asset
2,417 Restricted cash - current asset
16,660 Other assets - noncurrent
55,259
F-18
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CMBS Certificates relate to cash held in escrow to fund certain reserve accounts relating to the CMBS
Certificates (see Note 3). 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 December 31, 2009, the Company had $18.3 million in bonds for which it is only required to
post $9.2 million in collateral. In addition, as of December 31, 2009 and December 31, 2008, the Company had pledged
$2.4 million and $2.0 million, respectively, as collateral related to its workers compensation policy. These amounts are
included in other assets on the Company’s Consolidated Balance Sheets.
7.
ACQUISITIONS
During the year ended December 31, 2009, the Company acquired 376 completed towers and related assets and
liabilities from various sellers and an interest in a Canadian entity whose holdings consisted of 52 towers and related assets
and liabilities. The aggregate consideration paid for these towers and the equity interest and related assets was
approximately $187.0 million, consisting of $171.4 million of cash and approximately 642,000 shares of Class A common
stock (excluding any working capital adjustments). The Company accounted for the above tower acquisitions under the
acquisition method of accounting. The acquisitions are recorded at fair market value at the date of each acquisition. The
results of operations of the acquired assets are included with those of the Company from the dates of the respective
acquisitions. In addition, in 2009 as part of the ground lease purchase program, the Company paid $4.2 million in cash for
long-term lease extensions and $15.0 million for land and perpetual easement purchases, consisting of $11.6 million paid in
cash and $3.4 million paid through the issuance of approximately 143,000 shares of the Company’s Class A common stock.
On September 16, 2008, a wholly-owned subsidiary of the Company merged with Optasite Holding Company
Inc. (“Optasite”) and Optasite became a wholly-owned subsidiary of the Company. As of the closing, Optasite owned
528 tower sites, located in 31 states, Puerto Rico and the U.S. Virgin Islands and had approximately 38 managed site
locations. Pursuant to the terms of the merger agreement, the Company issued 7.25 million shares of SBA Class A
common stock to the Optasite security holders, assumed Optasite’s fully-drawn $150 million senior credit facility (see
Note 13) and assumed approximately $26.9 million of additional liabilities. The aggregate consideration paid for
Optasite was approximately $433.3 million (excluding any working capital adjustments). The results of operations of
Optasite are included with those of the Company from the date of the acquisition.
On October 20, 2008, a wholly-owned subsidiary of the Company acquired Light Tower Wireless, LLC (“Light
Tower”), the wireless infrastructure subsidiary of Light Tower, LLC. Light Tower became a wholly-owned subsidiary of
the Company. As of the closing, Light Tower owned 340 wireless communications towers, five managed sites and five
distributed antenna system (“DAS”) networks. The aggregate purchase price paid for these towers and related assets was
approximately $224.0 million (excluding any working capital adjustments) which was paid in cash. The results of
operations of Light Tower are included with those of the Company from the date of the acquisition.
In addition to the Optasite and Light Tower acquisitions, during the year ended December 31, 2008, the Company
acquired 587 completed towers (including 423 towers from the TowerCo, LLC acquisition) and related assets and liabilities
from various sellers as well as the equity interest of six entities, whose holdings consisted of 114 towers and related assets
and liabilities. The aggregate consideration paid for these towers and related assets was $479.6 million, consisting of $441.1
million in cash and approximately 1.2 million shares of Class A common stock valued at $38.5 million (excluding any
working capital adjustments). The Company accounted for all of the above tower acquisitions at fair market value at the
date of each acquisition. The results of operations of the acquired assets are included with those of the Company from the
dates of the respective acquisitions. Also, during 2008, the Company paid in cash $19.9 million for land and easement
purchases and $3.3 million for long-term lease extensions related to the land underneath the Company’s towers.
During the year ended December 31, 2007, the Company acquired 529 completed towers, related assets and
liabilities from various sellers as well as the equity interest of three entities, whose assets consisted of approximately 83
towers and related assets and liabilities. The aggregate net consideration paid for these additional assets was $330.0
million, consisting of $166.3 million in cash and approximately 4.7 million shares of Class A common stock valued at
$163.7 million (excluding any working capital adjustments). The Company accounted for all of the above tower
acquisitions at fair market value at the date of each acquisition. The results of operations of the acquired assets are
included with those of the Company from the dates of their respective acquisitions. Also, during 2007, the Company paid
in cash $23.4 million for land and easement purchases in addition to $10.9 million spent for long-term lease extensions
related to the land underneath the Company’s towers.
F-19
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The acquisitions consummated were not significant to the Company and accordingly, pro forma financial
information has not been presented. The Company continues to evaluate all acquisitions within one year after the
applicable closing date of each transaction to determine whether any additional adjustments are needed to the allocation
of the purchase price paid for the assets acquired and liabilities assumed by major balance sheet caption, as well as the
separate recognition of intangible assets from goodwill if certain criteria are met. These intangible assets represent the
value associated with current leases in place at the acquisition date (“Current Contract Intangibles”) and future tenant
leases anticipated to be added to the acquired towers (“Network Location Intangible”) and were calculated using the
discounted values of the current or future expected cash flows. The intangible assets are estimated to have an economic
useful life consistent with the economic useful life of the related tower assets, which is typically 15 years.
From time to time, the Company agrees to pay additional consideration in connection with its acquisitions if the
towers or businesses that are acquired meet or exceed certain performance targets in the one to three years after they
have been acquired. In certain acquisitions, the additional consideration may be paid in cash or shares of Class A
common stock at the Company’s option (see Note 20). The Company accrues for contingent consideration at fair value
based on the expected contingent payments. Prior to January 1, 2009, the Company recorded such obligations as
additional consideration when it became probable that the targets would be met.
Subsequent to December 31, 2009, the Company acquired 14 towers from third party sellers and an equity
interest in DAS provider Extenet Systems, inc. in exchange for $42.9 million in cash and a contribution of the
Company’s six DAS networks.
8.
INTANGIBLE ASSETS, NET
The following table provides the gross and net carrying amounts for each major class of intangible assets:
As of December 31, 2009
Gross carrying
amount
Accumulated
amortization
Net book
value
Gross carrying
amount
As of December 31, 2008
Accumulated
amortization
Net book
value
(in thousands)
Current Contract Intangibles
Network Location Intangibles
$
1,099,164 $
610,222
(173,351)
(100,444)
$
925,813 $
509,778
1,022,022 $
569,301
(103,837) $
(62,354)
918,185
506,947
Intangible assets, net
$
1,709,386 $
(273,795)
$ 1,435,591 $
1,591,323 $
(166,191) $
1,425,132
All intangibles noted above are contained in the Company’s site leasing segment. The Company amortizes its
intangibles using the straight line method over fifteen years. Amortization expense relating to the intangible assets above
was $107.6 million, $77.5 million and $54.3 million for the years ended December 31, 2009, 2008 and 2007,
respectively. These amounts are subject to changes in estimates until the preliminary allocation of the purchase price is
finalized for each acquisition.
Estimated amortization expense on the Company’s current contract and network location intangibles is as
follows:
For the year ended
December 31,
(in thousands)
2010
2011
2012
2013
2014
Thereafter
Total
$
$
113,959
113,959
113,959
113,959
113,959
865,796
1,435,591
F-20
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9.
PROPERTY AND EQUIPMENT, NET
Property and Equipment, net (including assets held under capital leases) consists of the following:
As of
December 31, 2009
As of
December 31, 2008
(in thousands)
Towers and related components
Construction-in-process
Furniture, equipment and vehicles
Land, buildings and improvements
Less: accumulated depreciation
Property and equipment, net
$
$
2,259,405
11,477
22,804
117,926
2,411,612
(914,674)
1,496,938
$
$
2,136,179
10,295
29,563
102,898
2,278,935
(776,263)
1,502,672
Construction-in-process represents costs incurred related to towers that are under development and will be used
in the Company’s operations.
Depreciation expense was $150.6 million, $133.7 million, and $114.8 million for the years ended December 31,
2009, 2008, and 2007, respectively. At December 31, 2009 and 2008, non-cash capital expenditures that are included in
accounts payable and accrued expenses were $1.9 million and $2.7 million, respectively.
10.
COSTS AND ESTIMATED EARNINGS IN EXCESS OF BILLINGS ON UNCOMPLETED
CONTRACTS
Costs and estimated earnings in excess of billings on uncompleted contracts consist of the following:
As of
December 31, 2009
As of
December 31, 2008
Costs incurred on uncompleted contracts
Estimated earnings
Billings to date
$
$
$
(in thousands)
32,567
11,282
(33,800)
10,049
$
43,945
13,486
(47,132)
10,299
These amounts are included in the accompanying consolidated balance sheets under the following captions:
Costs and estimated earnings in excess of
billings on uncompleted contracts
Billings in excess of costs and estimated
earnings on uncompleted contracts
As of
December 31, 2009
As of
December 31, 2008
(in thousands)
$
$
10,392
$
(343)
10,049
$
10,658
(359)
10,299
At December 31, 2009, five significant customers comprised 83.2% of the costs and estimated earnings in
excess of billings on uncompleted contracts, net of billings in excess of costs and estimated earnings, while at December
31, 2008, five significant customers comprised 66.7% of the costs and estimated earnings in excess of billings on
uncompleted contracts, net of billings in excess of costs and estimated earnings.
11.
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. The following is a list of significant customers and the percentage of total revenue derived from such customers.
F-21
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AT&T (1)
Sprint (2)
Verizon Wireless (3)
T-Mobile
Percentage of Total Revenues
for the year ended December 31,
2007
2008
2009
23.8%
21.9%
15.4%
13.7%
23.1%
25.0%
15.6%
11.2%
22.9%
32.6%
13.6%
7.5%
The Company’s site leasing, site development consulting and site development construction segments derive
revenue from these customers. Client percentages of total revenue in each of the segments are as follows:
AT&T (1)
Sprint (2)
Verizon Wireless (3)
T-Mobile
Verizon Wireless (3)
T-Mobile
Metro PCS
Sprint (2)
T-Mobile
Nsoro Mastec, LLC
Metro PCS
Verizon (3)
Sprint (2)
Percentage of Site Leasing Revenues
for the year ended December 31,
2007
2008
2009
27.7%
25.3%
16.0%
11.8%
27.6%
27.3%
15.7%
10.7%
28.0%
29.1%
14.4%
8.4%
Percentage of Site Development
Consulting Revenues
for the year ended December 31,
2007
2008
2009
23.6%
13.9%
5.8%
0.5%
24.2%
7.6%
13.3%
22.9%
17.5%
0.4%
3.9%
59.9%
Percentage of Site Development
Construction Revenues
for the year ended December 31,
2007
2008
2009
28.2%
24.9%
9.0%
8.3%
1.8%
15.8%
2.4%
11.9%
12.3%
10.8%
5.8%
0.3%
1.1%
7.4%
40.1%
(1) 2007 and 2008 numbers have been restated due to 2009 merger of AT&T and Centennial
(2) 2007 and 2008 numbers have been restated due to 2009 merger of Sprint and IPCS Wireless
(3) 2007 and 2008 numbers have been restated due to 2009 merger of Verizon and Alltel
Five significant customers comprised 48.3% of total gross accounts receivable at December 31, 2009 compared
to five significant customers which comprised 41.7% of total gross accounts receivable at December 31, 2008.
F-22
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
12.
ACCRUED EXPENSES
The Company’s accrued expenses are comprised of the following:
As of
December 31, 2009
As of
December 31, 2008
Accrued earnouts
Salaries and benefits
Real estate and property taxes
Other
$
$
13.
DEBT
Debt consists of the following:
Commercial mortgage pass-through certificates, series
2005-1, secured. Interest at fixed rates ranging from
5.369% to 6.706%. Paid off in July 2009.
Commercial mortgage pass-through certificates, series
2006-1, secured. Interest at fixed rates ranging from
5.314% to 7.825%. Anticipated repayment date of
November 9, 2011.
0.375% Convertible Senior Notes due 2010. Principal
balance of $30.4 million and $138.1 million as of
December 31, 2009 and December 31, 2008,
respectively.
1.875% Convertible Senior Notes due 2013. Principal
balance of $550.0 million as of December 31, 2009 and
December 31, 2008.
4.0% Convertible Senior Notes due 2014. Principal balance
of $500.0 million as of December 31, 2009.
8.0% Senior Notes due 2016. Principal balance of $375.0
million as of December 31, 2009.
8.25% Senior Notes due 2019. Principal balance of $375.0
million as of December 31, 2009.
Senior Credit Facility originated in January 2008. Maturity
date of January 18, 2011.
Optasite Credit Facility paid off and terminated in July
2009. Principal balance of $149.0 million as of December
31, 2008.
$
(in thousands)
8,039
4,819
5,674
9,578
28,110
$
—
3,956
7,734
9,839
21,529
As of
December 31, 2009
As of
December 31, 2008
(as adjusted)
(in thousands)
$
—
$
398,800
940,609
1,090,747
28,648
121,965
432,459
342,820
372,604
371,910
—
—
403,754
—
—
—
230,552
146,412
2,392,230
(6,000)
2,386,230
Total debt
Less: current maturities of long-term debt
Total long-term debt, net of current maturities
2,489,050
(28,648)
2,460,402
$
$
The aggregate principal amount of long-term debt maturing in each of the next five years is $30.4 million in
2010, $940.6 million in 2011, $0 in 2012, $550.0 million in 2013, $500.0 million in 2014 and $750.0 million thereafter.
F-23
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The CMBS Certificates
Commercial Mortgage Pass-Through Certificates, Series 2005-1
On November 18, 2005, an indirect subsidiary of SBA Communications established a trust (the “Trust”), which
sold in a private transaction, $405.0 million of 2005 CMBS Certificates, Series 2005-1 (the “2005 CMBS Certificates”).
The 2005 CMBS Certificates consisted of five classes with annual pass-through interest rates ranging from
5.369% to 6.706%. The weighted average annual fixed coupon interest rate of the 2005 CMBS Certificates was 5.6%,
payable monthly, and the effective weighted average annual fixed interest rate was 4.8%, after giving effect to the
settlement of two interest rate swap agreements entered into in contemplation of the transaction (see Note 14).
On July 28, 2009, the Company repaid the remaining principal balance of $380.2 million of the 2005 CMBS
Certificates and paid $10.1 million for related prepayment consideration plus accrued interest and fees. During the year
ended December 31, 2009, but prior to the payoff of the principal balance, the Company repurchased an aggregate of
$18.6 million, in principal amount of 2005 CMBS Certificates for $16.6 million in cash. The Company recorded in its
Consolidated Statements of Operations for the year ended December 31, 2009 a $7.2 million net loss on the early
extinguishment of debt. During 2008, the Company repurchased an aggregate of $6.2 million in principal amount of the
2005 CMBS Certificates for $5.5 million in cash. The Company recorded in its Consolidated Statements of Operations
for the year ended December 31, 2008 a $0.7 million gain on early extinguishment of debt.
Commercial Mortgage Pass-Through Certificates, Series 2006-1
On November 6, 2006, the Trustee issued in a private transaction $1.15 billion of 2006 CMBS Certificates,
Series 2006-1 (the “2006 CMBS Certificates” and collectively with the 2005 CMBS Certificates referred to as the
“CMBS Certificates”).
The 2006 CMBS Certificates consist of nine classes with annual pass-through interest rates ranging from 5.314%
to 7.825%. The weighted average annual fixed coupon interest rate of the 2006 CMBS Certificates at December 31, 2009
was 5.9%, payable monthly, and the effective weighted average annual fixed interest rate was 6.2% after giving effect to the
settlement of the nine interest rate swap agreements entered into in contemplation of the transaction (see Note 14). The 2006
CMBS Certificates have an anticipated repayment date in November 2011 with a final repayment date in 2036.
During the year ended 2009, the Company repurchased an aggregate of $150.1 million in principal amount of
2006 CMBS Certificates for $150.5 million in cash. The Company recorded in its Consolidated Statements of Operations
for the year ended December 31, 2009 a $2.7 million loss on the early extinguishment of debt. During 2008, the
Company repurchased an aggregate of $59.3 million in principal amount of 2006 CMBS Certificates for $39.8 million in
cash and recorded in its Consolidated Statements of Operations for the year ended December 31, 2008 a $18.2 million
gain on early extinguishment of debt.
Subsequent to December 31, 2009, the Company repurchased an aggregate of $2.0 million in principal amount
of 2006 CMBS Certificates for $2.1 million in cash.
The assets of the Trust, which issued both the 2005 CMBS Certificates and the 2006 CMBS Certificates, consist
of a non-recourse mortgage loan initially made in favor of SBA Properties as the initial borrower. In connection with the
issuance of the 2006 CMBS Certificates, each of SBA Sites, Inc., SBA Structures, Inc., SBA Towers, Inc., SBA Puerto
Rico, Inc. and SBA Towers USVI, Inc. were added as additional borrowers under the mortgage loan and the principal
amount of the mortgage loan was increased by $1.15 billion to an aggregate of $1.56 billion.
On July 28, 2009, in connection with the repayment of the 2005 CMBS Certificates, SBA Towers, Inc., SBA
Puerto Rico, Inc. and SBA Towers USVI, Inc. were released from their obligations under the mortgage loan underlying
the CMBS Certificates. Effective July 28, 2009, SBA Properties Inc., SBA Sites, Inc., and SBA Structures, Inc., (the
“Borrowers”) were the remaining borrowers under the mortgage loan and the mortgage loan is to be paid from the
operating cash flows from the aggregate 3,746 tower sites owned by the Borrowers (the “CMBS Towers”). Subject to
certain limited exceptions described below, no payments of principal will be required to be made in relation to the
components of the mortgage loan corresponding to the 2006 CMBS Certificates prior to November 2011, which is the
anticipated repayment date for the remaining components of the mortgage loan. The Borrowers are special purpose
vehicles which exist solely to hold the towers which are subject to the securitization. The Borrowers are jointly and
severally liable under the mortgage loan.
F-24
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The mortgage loan consists of multiple tranches, or components, each of which has terms that are identical to
the subclass of CMBS Certificates to which it relates. Any time prior to November 2011, the Borrowers may prepay the
mortgage loan in whole or in part for the components of the mortgage loan corresponding to the 2006 CMBS Certificates
upon payment of the applicable prepayment consideration. The prepayment consideration is determined per class and
consists of an amount equal to the excess, if any, of (1) the present value on the date of prepayment of all future
installments of principal and interest required to be paid from the date of prepayment to and including the first due date
that is nine months prior to the anticipated repayment date, assuming the entire unpaid principal amount of such class is
required to be paid, over (2) that portion of the principal balance of such class prepaid on the date of such prepayment. If
the prepayment occurs (i) within nine months of the anticipated repayment date, (ii) with proceeds received as a result of
any condemnation or casualty of the Borrowers’ sites or (iii) during an amortization period, no prepayment consideration
is due. The entire unpaid principal balance of the mortgage loan components corresponding to the 2006 CMBS
Certificates will be due in November 2036. However, to the extent that the full amount of the mortgage loan component
corresponding to the 2006 CMBS Certificates are not fully repaid by their respective anticipated repayment dates, the
interest rate of each component would increase by the greater of (i) 5% or (ii) the amount, if any, by which the sum of (x)
the ten-year U.S. treasury rate plus (y) the credit-based spread for such component (as set forth in the mortgage loan
agreement) plus (z) 5%, exceeds the original interest rate for such component.
The mortgage loan is secured by (1) mortgages, deeds of trust and deeds to secure debt on substantially all of
the CMBS tower sites and their operating cash flows, (2) a security interest in substantially all of the Borrowers’
personal property and fixtures, (3) the Borrowers’ rights under the management agreement they entered into with SBA
Network Management, Inc. (“SBA Network Management”), relating to the management of the Borrowers’ tower sites by
SBA Network Management pursuant to which SBA Network Management arranges for the payment of all operating
expenses and the funding of all capital expenditures out of amounts on deposit in one or more operating accounts
maintained on the Borrowers’ behalf, (4) the Borrowers’ rights under certain site management agreements, (5) the
Borrowers’ rights under certain tenant leases, (6) the pledge by SBA CMBS-1 Guarantor, LLC and SBA CMBS-1
Holdings, LLC of equity interests of the initial borrower and SBA CMBS-1 Guarantor, LLC, (7) the various deposit
accounts and collection accounts of the Borrowers and (8) all proceeds of the foregoing. For each calendar month, SBA
Network Management is entitled to receive a management fee equal to 7.5% of the Borrowers’ operating revenues for
the immediately preceding calendar month.
In connection with the issuance of the CMBS Certificates, the Company established a deposit account into
which all rents and other sums due on the CMBS Towers are directly deposited by the lessees and are held by the
indenture trustee. The monies held by the indenture trustee after the release date are classified as restricted cash on the
Company’s Consolidated Balance Sheets (see Note 6). However, if the debt service coverage ratio, defined as the net
cash flow (as defined in the Mortgage Loan Agreement) divided by the amount of interest on the mortgage loan,
servicing fees and trustee fees that the Borrowers will be required to pay over the succeeding twelve months, as of the
end of any calendar quarter, falls to 1.30 times or lower, then all cash flow in excess of amounts required to make debt
service payments, to fund required reserves, to pay management fees and budgeted operating expenses and to make other
payments required under the loan documents, referred to as “excess cash flow,” will be deposited into a reserve account
instead of being released to the Borrowers. The funds in the reserve account will not be released to the Borrowers unless
the debt service coverage ratio exceeds 1.30 times for two consecutive calendar quarters. If the debt service coverage
ratio falls below 1.15 times as of the end of any calendar quarter, then an “amortization period” will commence and all
funds on deposit in the reserve account will be applied to prepay the mortgage loan until such time that the debt service
coverage ratio exceeds 1.15 times for a calendar quarter. As of December 31, 2009, the Borrowers met the required debt
service coverage ratio as defined by the mortgage loan agreement.
0.375% Convertible Senior Notes due 2010
On March 26, 2007, the Company issued $350.0 million of its 0.375% Convertible Senior Notes (the “0.375%
Notes”). Interest is payable semi-annually on June 1 and December 1. The 0.375% Notes have a maturity date of
December 1, 2010. The Company incurred fees of $8.6 million with the issuance of the 0.375% Notes of which $6.8
million was recorded as deferred financing fees and $1.8 million was recorded as a reduction of shareholders’ equity.
F-25
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The 0.375% Notes are convertible, at the holder’s option, into shares of the Company’s Class A common stock,
at an initial conversion rate of 29.7992 shares of Class A common stock per $1,000 principal amount of 0.375% Notes
(subject to certain customary adjustments), which is equivalent to an initial conversion price of approximately $33.56 per
share or a 19% conversion premium based on the last reported sale price of $28.20 per share of Class A common stock
on the Nasdaq Global Select Market on March 20, 2007, the purchase agreement date. The 0.375% Notes are convertible
only under the following certain circumstances: (1) during any calendar quarter commencing at any time after June 30,
2007 and only during such calendar quarter, if the last reported sale price of the Company’s Class A common stock for at
least 20 trading days in the 30 consecutive trading day period ending on the last trading day of the preceding calendar
quarter is more than 130% of the applicable conversion price per share of Class A common stock on the last day of such
preceding calendar quarter, (2) during the five business day period after any ten consecutive trading day period in which
the trading price of a 0.375% Note for each day in the measurement period was less than 95% of the product of the last
reported sale price of Class A common stock and the applicable conversion rate, (3) if specified distributions to holders
of Class A common stock are made or specified corporate transactions occur, and (4) at any time on or after October 12,
2010.
Upon conversion, the Company has the right to settle the conversion of each $1,000 principal amount of
0.375% Notes with any of the three following alternatives, at its option, delivery of (1) 29.7992 shares of the Company’s
Class A common stock, (2) cash equal to the value of 29.7992 shares of the Company’s Class A common stock
calculated at the market price per share of the Company’s Class A common stock at the time of conversion or (3) a
combination of cash and shares of our Class A common stock.
The net proceeds from this offering were approximately $341.4 million after deducting discounts, commissions
and expenses. A portion of the net proceeds from the sale of the 0.375% Notes was used to repurchase approximately
3.24 million shares of Class A common stock, valued at approximately $91.2 million based on the closing stock price of
$28.20 on March 20, 2007. These repurchased shares were immediately retired by the Company. The repurchased shares
were recorded as a reduction to Class A common stock for the par value of the Class A common stock as well as an
increase to accumulated deficit on the Company’s Consolidated Balance Sheet.
Concurrently with the sale of the 0.375% Notes, the Company entered into convertible note hedge transactions
with affiliates of two of the initial purchasers of the 0.375% Notes. The initial strike price of the convertible note hedge
transactions is $33.56 per share of the Company’s Class A common stock (the same as the initial conversion price of the
0.375% Notes) and is similarly subject to certain customary adjustments. The convertible note hedge transactions cover
10,429,720 shares of Class A common stock. The cost of the convertible note hedge transactions was $77.2 million. A
portion of the net proceeds from the sale of the 0.375% Notes and the warrants discussed below were used to pay for the
cost of the convertible note hedge transactions. The cost of the convertible note hedge transactions was recorded as a
reduction to additional paid-in capital on the Company’s Consolidated Balance Sheet.
Separately and concurrently with entering into the convertible note hedge transactions, the Company entered
into warrant transactions whereby the Company sold warrants to each of the hedge counterparties to acquire 10,429,720
shares of Class A common stock at an initial exercise price of $55.00 per share. The aggregate proceeds from the
issuance of the warrants were $27.3 million. The proceeds for the issuance of the warrants were recorded as an increase
to additional paid-in capital on the Company’s Consolidated Balance Sheet.
During the year ended December 31, 2009, the Company consummated privately negotiated exchanges of the
0.375% Notes for Class A common stock in reliance on Section 3(a)(9) of the Securities Act of 1933, as amended.
Pursuant to these exchanges, the Company issued approximately 618,000 shares of the Company’s Class A common
stock in exchange for $12.5 million in principal amount of 0.375% Notes. In addition, the Company also repurchased an
aggregate of $95.2 million in principal amount of 0.375% Notes for $90.6 million in cash. The Company recorded a gain
on the early extinguishment of debt of $6.1 million and a net reduction to additional paid in capital of $0.6 million
related to these transactions.
During the year ended December 31, 2008, the Company consummated privately negotiated exchanges of the
0.375% Notes for Class A common stock in reliance on Section 3(a)(9) of the Securities Act of 1933, as amended.
During the fourth quarter of 2008, the Company issued approximately 3,407,914 shares of the Company’s Class A
common stock in exchange for $73.8 million in principal amount of 0.375% Notes. In addition, the Company also
repurchased an aggregate of $138.1 million in principal amount of 0.375% Notes for $102.5 million in cash. The
Company recorded a gain on the early extinguishment of debt of $25.7 million and a net increase to additional paid in
capital of $54.3 million related to these transactions.
F-26
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In April 2009, the Company also terminated the portion of the convertible note hedge and warrant transactions
that it entered into in March 2007 with respect to its 0.375% Notes which related to the $264.1 million principal amount
of 0.375% Notes that the Company previously repurchased for cash or stock. The Company received a net settlement of
approximately 546,000 shares from the counterparties of the hedge and warrant transactions.
The Company is amortizing the debt discount on the 0.375% Notes utilizing the effective interest method over
the life of the 0.375% Notes which increases the effective interest rate of the 0.375% Notes from its coupon rate of
0.375% to 6.9%. The Company incurred cash interest expense of $0.2 million, $1.2 million and $1.0 million for the
years ended December 31, 2009, 2008 and 2007, respectively. The Company recorded non-cash interest expense of $3.7
million, $17.2 million and $14.0 million for the years ended December 31, 2009, 2008 and 2007, respectively. As of
December 31, 2009, the carrying amount of the equity component related to the 0.375% Notes was $60.1 million.
The maturity date of the 0.375% Notes is December 1, 2010, as such, the Notes are reflected in current
maturities of long-term debt in the Company’s Consolidated Balance Sheets at carrying value. The following table
summarizes the balances for the 0.375% Notes:
As of
December 31, 2009
As of
December 31, 2008
(as adjusted)
Principal balance
Debt discount
Carrying value
$
$
(in thousands)
30,403
(1,755)
28,648
$
$
138,149
(16,184)
121,965
1.875% Convertible Senior Notes due 2013
On May 16, 2008, the Company issued $550.0 million of its 1.875% Convertible Senior Notes (the “1.875%
Notes”). Interest is payable semi-annually on May 1 and November 1. The 1.875% Notes have a maturity date of May 1,
2013. The Company incurred fees of $12.9 million with the issuance of the 1.875% Notes of which $9.1 million was
recorded as deferred financing fees and $3.8 million was recorded as a reduction of shareholders’ equity.
The 1.875% Notes are convertible, at the holder’s option, into shares of the Company’s Class A common stock,
at an initial conversion rate of 24.1196 shares of Class A common stock per $1,000 principal amount of 1.875% Notes
(subject to certain customary adjustments), which is equivalent to an initial conversion price of approximately $41.46 per
share or a 20% conversion premium based on the last reported sale price of $34.55 per share of Class A common stock
on the Nasdaq Global Select Market on May 12, 2008, the purchase agreement date. The 1.875% Notes are convertible
only under the following certain circumstances: (1) during any calendar quarter commencing at any time after June 30,
2008 and only during such calendar quarter, if the last reported sale price of the Company’s Class A common stock for at
least 20 trading days during the 30 consecutive trading days ending on the last trading day of the preceding calendar
quarter is more than 130% of the applicable conversion price per share of the Company’s Class A common stock on the
last trading day of such preceding calendar quarter, (2) during the five business day period after any ten consecutive
trading day period in which the trading price per $1,000 principal amount of 1.875% Notes for each day in the
measurement period was less than 95% of the product of the last reported sale price of the Company’s Class A common
stock and the applicable conversion rate, (3) if specified distributions to holders of the Company’s Class A common
stock are made or specified corporate transactions occur, and (4) at any time on or after February 19, 2013.
Upon conversion, the Company has the right to settle the conversion of each $1,000 principal amount of
1.875% Notes with any of the three following alternatives, at its option: delivery of (1) 24.1196 shares of the Company’s
Class A common stock, (2) cash equal to the value of 24.1196 shares of the Company’s Class A common stock
calculated at the market price per share of the Company’s Class A common stock at the time of conversion or (3) a
combination of cash and shares of the Company’s Class A common stock.
The net proceeds from this offering were approximately $536.8 million after deducting discounts, commissions
and expenses. A portion of the net proceeds from the sale of the 1.875% Notes was used to repurchase and retire
approximately 3.47 million shares of Class A common stock, valued at $120.0 million based on the closing stock price
of $34.55 on May 12, 2008. The repurchased shares were recorded as a reduction to Class A common stock for the par
value of the Class A common stock as well as an increase to accumulated deficit on the Company’s Consolidated
Balance Sheets.
F-27
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Concurrently with the pricing of the 1.875% Notes, the Company entered into convertible note hedge
transactions with affiliates of four of the initial purchasers of the 1.875% Notes. The initial strike price of the convertible
note hedge transactions is $41.46 per share of the Company’s Class A common stock (the same as the initial conversion
price of the 1.875% Notes) and is similarly subject to certain customary adjustments. The convertible note hedge
transactions originally covered 13,265,780 shares of Class A common stock. The cost of the convertible note hedge
transactions was $137.7 million. A portion of the net proceeds from the sale of the 1.875% Notes and the warrant
transactions discussed below were used to pay for the cost of the convertible note hedge transactions. The cost of the
convertible note hedge transactions was recorded as a reduction to additional paid-in capital on the Company’s
Consolidated Balance Sheets.
Separately and concurrently with entering into the convertible note hedge transactions, the Company entered
into warrant transactions whereby the Company sold warrants to each of the hedge counterparties to acquire an aggregate
of 13,265,780 shares of Class A common stock at an initial exercise price of $67.37 per share. The aggregate proceeds
from the warrant transactions were $56.2 million. The proceeds from issuance of the warrants were recorded as an
increase to additional paid-in capital on the Company’s Consolidated Balance Sheets.
One of the convertible note hedge transactions entered into in connection with the 1.875% Notes was with
Lehman Brothers OTC Derivatives Inc. (“Lehman Derivatives”). The convertible note hedge transaction with Lehman
Derivatives covers 55% of the 13,265,780 shares of the Company’s Class A common stock potentially issuable upon
conversion of the 1.875% Notes. In October 2008, Lehman Derivatives filed a motion for protection under Chapter 11 of
the United States Bankruptcy Code. The filing by Lehman Derivatives of a voluntary Chapter 11 bankruptcy petition
constituted an “event of default” under the convertible note hedge transaction with Lehman Derivatives. As a result, on
November 7, 2008 the Company terminated the convertible note hedge transaction with Lehman Derivatives. Based on
information available to the Company, there is no indication, as of the date of filing this Form 10-K, that any party other
than Lehman Derivatives would be unable to fulfill their obligations under the convertible note hedge transactions.
The net cost of the convertible note hedge transaction with Lehman Derivatives was recorded as an adjustment
to additional paid in capital and therefore the “event of default” did not have any impact on the Company’s financial
position or results of operations. However, the Company could incur significant costs to replace this hedge transaction if
it elects to do so. If the Company does not elect to replace the convertible note hedge transaction, then the Company
would be subject to potential dilution or additional cost (depending on if the note is settled with shares or cash) upon
conversion of the 1.875% Notes, if on the date of conversion the per share market price of the Company’s Class A
common stock exceeded the conversion price of $41.46.
The Company is amortizing the debt discount on the 1.875% Notes utilizing the effective interest method over
the life of the 1.875% Notes which increases the effective interest rate of the 1.875% Notes from its coupon rate of
1.875% to 9.4%. The Company incurred cash interest expense of $10.3 million and $6.5 million for each of the years
ended December 31, 2009 and 2008, respectively and non-cash interest expense of $28.7 million and $16.8 million for
the years ended December 31, 2009 and 2008, respectively. As of December 31, 2009, the carrying amount of the equity
component related to the 1.875% Notes was $159.2 million.
The 1.875% Notes are reflected in long-term debt in the Company’s Consolidated Balance Sheets at carrying
value. The following table summarizes the balances for the 1.875% Notes:
As of
December 31, 2009
As of
December 31, 2008
(as adjusted)
Principal balance
Debt discount
Carrying value
$
$
(in thousands)
550,000
(117,541)
432,459
$
$
550,000
(146,246)
403,754
4.0% Convertible Senior Notes due 2014
On April 24, 2009, the Company issued $500.0 million of its 4.0% Convertible Senior Notes (“4.0% Notes”) in
a private placement transaction. Interest on the 4.0% Notes is payable semi-annually on April 1 and October 1. The
maturity date of the 4.0% Notes is October 1, 2014. The Company incurred fees of $11.7 million with the issuance of the
4.0% Notes of which $7.7 million was recorded as deferred financing fees and $4.0 million was recorded as a reduction
to shareholders’ equity.
F-28
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The 4.0% Notes are convertible, at the holder’s option, into shares of the Company’s Class A common stock, at
an initial conversion rate of 32.9164 shares of Class A common stock per $1,000 principal amount of 4.0% Notes
(subject to certain customary adjustments), which is equivalent to an initial conversion price of approximately $30.38 per
share or a 22.5% conversion premium based on the last reported sale price of $24.80 per share of the Company’s Class A
common stock on the Nasdaq Global Select Market on April 20, 2009, the purchase agreement date. The 4.0% Notes are
convertible only under the following circumstances: (1) during any calendar quarter commencing at any time after June
30, 2009 and only during such calendar quarter, if the last reported sale price of the Company’s Class A common stock
for at least 20 trading days in the 30 consecutive trading day period ending on the last trading day of the preceding
calendar quarter is more than 130% of the applicable conversion price per share of Class A common stock on the last day
of such preceding calendar quarter; (2) during the five business day period after any 10 consecutive trading day period
(the “measurement period”) in which the trading price per $1,000 principal amount of notes for each day in the
measurement period was less than 95% of the product of the last reported sale price of the Company’s Class A common
stock and the applicable conversion rate; (3) if specified distributions to holders of the Company’s Class A common
stock are made or specified corporate transactions occur; or (4) at any time on or after July 22, 2014. Upon conversion,
the Company has the right to settle its conversion obligation in cash, shares of Class A common stock or a combination
of cash and shares of its Class A common stock. From time to time, upon notice to the holders of the 4.0% Notes, the
Company may change its election regarding the form of consideration that the Company will use to settle its conversion
obligation; provided, however, that the Company is not permitted to change its settlement election after July 21, 2014.
The net proceeds of this offering were approximately $488.2 million after deducting discounts, commissions
and expenses. Contemporaneously with the closing of the sale of the 4.0% Notes, a portion of the net proceeds from the
sale of the 4.0% Notes was used to repurchase 2.0 million shares of the Company’s Class A common stock, valued at
$50.0 million based on the closing stock price of $24.80 on April 20, 2009. These repurchased shares were immediately
retired by the Company. The repurchased shares will be recorded as a reduction to Class A common stock for the par
value of the Class A common stock as well as an increase to accumulated deficit.
Concurrently with the pricing of the 4.0% Notes, the Company entered into convertible note hedge transactions
whereby the Company purchased from affiliates of certain of the initial purchasers of the 4.0% Notes an option covering
16,458,196 shares of its Class A common stock at an initial strike price of $30.38 per share (the same as the initial
conversion price of the notes). Separately and concurrently with the pricing of the 4.0% Notes, the Company entered into
warrant transactions whereby it sold to affiliates of certain of the initial purchasers of the 4.0% Notes warrants to acquire
16,458,196 shares of its Class A common stock at an initial price of $44.64 per share. The Company used approximately
$61.6 million of the net proceeds from the 4.0% Notes offering plus the proceeds from the warrant transactions to fund
the cost of the convertible note hedge transactions. The convertible note hedge transactions and the warrant transactions,
taken as a whole, effectively increase the conversion price of the 4.0% Notes from $30.38 per share to $44.64 per share,
reflecting a premium of 80% based on the closing stock price of $24.80 per share of the Company’s Class A common
stock on April 20, 2009. The remaining net proceeds of $376.6 million were used for general corporate purposes,
including repurchases or repayments of the Company’s outstanding debt.
The Company is amortizing the debt discount on the 4.0% Notes utilizing the effective interest method over the
life of the 4.0% Notes which increases the effective interest rate of the 4.0% Notes from its coupon rate of 4.0% to
13.0%. The Company incurred cash interest expense of $13.8 million for the year ended December 31, 2009 and non-
cash interest expense of $15.8 million for the year ended December 31, 2009. As of December 31, 2009, the carrying
amount of the equity component related to the 4.0% Notes was $169.0 million.
The 4.0 % Notes are reflected in long-term debt in the Company’s Consolidated Balance Sheets at carrying
value. The following table summarizes the balances for the 4.0% Notes:
Principal balance
Debt discount
Carrying value
As of
December 31, 2009
(in thousands)
$
$
500,000
(157,180)
342,820
F-29
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Senior Notes
On July 24, 2009, the Company’s wholly-owned subsidiary Telecommunications issued $750 million of
unsecured senior notes (“Senior Notes”), $375 million of which are due August 15, 2016 (“2016 Notes”) and $375
million of which are due August 15, 2019 (“2019 Notes”). The 2016 Notes have an interest rate of 8.00% and were
issued at a price of 99.330% of their face value. The 2019 Notes have an interest rate of 8.25% and were issued at a price
of 99.152% of their face value. Interest on the 2016 Notes and 2019 Notes is due semi-annually on February 15, and
August 15 of each year beginning on February 15, 2010. Net proceeds of this offering were $727.9 million after
deducting expenses and original issue discount.
Telecommunications used the net proceeds from this offering to repay the 2005 CMBS Certificates issued by its
subsidiary and the related prepayment consideration, repay the Senior Credit Facility and repay and terminate the
Optasite Credit Facility. Telecommunications also intends to repurchase prior to maturity or repay at maturity SBA’s
outstanding 0.375% Notes. The remaining net proceeds are being used for general corporate purposes.
The 2016 Notes and the 2019 Notes are subject to redemption in whole or in part on or after August 15, 2012
and on or after August 15, 2014, respectively, at the redemption prices set forth in the indenture agreement plus accrued
and unpaid interest. Prior to August 15, 2012 for the 2016 Notes and August 15, 2014 for the 2019 Notes,
Telecommunications may at its option redeem all or a portion of the 2016 Notes or 2019 Notes at a redemption price
equal to 100% of the principal amount thereof plus a “make whole” premium plus accrued and unpaid interest. In
addition, Telecommunications may redeem up to 35% of the originally issued aggregate principal amount of each of the
2016 Notes and 2019 Notes with the net proceeds of certain equity offerings at a redemption price of 108.000% and
108.250%, respectively, of the principal amount of the redeemed notes plus accrued and unpaid interest.
The Company is amortizing the debt discount on the 2016 Notes and the 2019 Notes utilizing the effective
interest method over the life of the 2016 Notes and 2019 Notes, respectively. The Company incurred cash interest
expense of $13.1 million and non-cash interest expense of $0.1 million for the year ended December 31, 2009, related to
the 2016 Notes. The Company incurred cash interest expense of $13.5 million and non-cash interest expense of $0.1
million for the year ended December 31, 2009, related to the 2019 Notes.
The Indenture governing the Senior Notes contains customary covenants, subject to a number of exceptions and
qualifications, including restrictions on Telecommunications’ ability to (1) incur additional indebtedness unless its
Consolidated Indebtedness to Annualized Consolidated Adjusted EBITDA Ratio (as defined in the Indenture), pro forma
for the additional indebtedness does not exceed 7.0 times for the fiscal quarter, (2) merge, consolidate or sell assets, (3)
make restricted payments, including dividends or other distributions, (4) enter into transactions with affiliates, and (5)
enter into sale and leaseback transactions and restrictions on the ability of Telecommunications’ Restricted Subsidiaries
(as defined in the Indenture) to incur liens securing indebtedness.
The Company is a holding company with no business operations of its own. The Company’s only significant
asset is the outstanding capital stock of Telecommunications. The Company has fully and unconditionally guaranteed the
Senior Notes issued by Telecommunications. The Company and Telecommunications have agreed to file a registration
statement with the Securities and Exchange Commission (“SEC”) pursuant to which Telecommunications will either
offer to exchange each series of notes for substantially similar registered notes of the respective series or register the
resale of the respective series of notes. The Company intends to consummate the exchange offer by July 19, 2010. To the
extent that the exchange offer has not been consummated by July 19, 2010, the interest rate on the 2016 Notes and the
2019 Notes will increase 0.25% per annum for each 90-day period that the exchange offer has not been consummated
following such date up to a maximum of 1.00% per annum.
Senior Credit Facility
On January 18, 2008, SBA Senior Finance, Inc. (“SBA Senior Finance”), an indirect wholly-owned subsidiary
of the Company, entered into a $285.0 million Senior Credit Facility (the “Senior Credit Facility”) with several banks
and other financial institutions or entities from time to time parties to the credit agreement. On March 5, 2008, SBA
Senior Finance entered into a new lender supplement with The Royal Bank of Scotland Group in connection with the
Senior Credit Facility, which increased the aggregate commitment of the lenders to $335.0 million. The Company
incurred deferred financing fees of $2.8 million associated with the closing of this transaction.
F-30
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In September 2008, the Company made a drawing request under the Senior Credit Facility and Lehman
Commercial Paper, Inc. (“LCPI”), who was a lender under the Senior Credit Facility, did not fund its share of such
request. As a result of such failure to fund, SBA delivered a letter to LCPI declaring that LCPI was in default of its
obligations under the Senior Credit Facility agreement. In October 2008, LCPI filed a voluntary petition for protection
under Chapter 11 of the United States Bankruptcy Code. LCPI, a subsidiary of Lehman Brothers Holding Inc. had
committed $50.0 million of the original aggregate of $335.0 million in commitments under the Senior Credit Facility. As
a result, the aggregate commitment of the Senior Credit Facility was reduced to $285.0 million. As a result of the
bankruptcy filing of LCPI, the Company has written off unamortized deferred financing fees of $0.4 million in its
Consolidated Statement of Operations for the year ended December 31, 2008.
Effective April 14, 2009, SBA Senior Finance entered into a New Lender Supplement with Barclays Bank PLC
(“Barclays”). The New Lender Supplement added Barclays as a lender under the Senior Credit Facility and increased the
aggregate commitment under the Senior Credit Facility from $285.0 million to $320.0 million, the availability of which
is based on compliance with certain financial ratios. All other terms of the Senior Credit Facility remained the same.
Effective July 31, 2009, SBA Senior Finance entered into an Amendment and Restatement of the Credit
Agreement (the “Restated Credit Agreement”). The Restated Credit Agreement primarily mirrors the material terms of
the Senior Credit Facility and clarifies that the credit facility was scheduled to terminate on January 18, 2011. All other
changes to the Senior Credit Facility have been incorporated within this disclosure.
The Senior Credit Facility may be borrowed, repaid and redrawn, subject to compliance with the financial and
other covenants in the Restated Credit Agreement. Proceeds available under the facility may be used for the construction
or acquisition of towers and for ground lease buyouts, and general corporate purposes including distributions to
Telecommunications. Amounts borrowed under the facility accrue interest at the Eurodollar rate plus a margin that
ranges from 150 basis points to 300 basis points or at a Base Rate (as defined in the Restated Credit Agreement) plus a
margin that ranges from 50 basis points to 200 basis points, in each case based on the Consolidated Total Debt to
Annualized Borrower EBITDA ratio (as defined in the Restated Credit Agreement and discussed below). A 0.5% per
annum fee is charged on the amount of unused commitment.
The Restated Credit Agreement requires SBA Senior Finance and SBA Communications to maintain specific
financial ratios, including, at the SBA Senior Finance level, a Consolidated Total Debt to Annualized Borrower EBITDA
ratio (as defined in the Restated Credit Agreement) that does not exceed 5.0x for any fiscal quarter and an Annualized
Borrower EBITDA to Annualized Cash Interest Expense ratio (as defined in the Restated Credit Agreement) of not less
than 2.0x for any fiscal quarter. In addition, the Company’s ratio of Consolidated Total Net Debt to Consolidated Adjusted
EBITDA ratio (as defined in the Restated Credit Agreement) for any fiscal quarter cannot exceed 9.9x. The Restated Credit
Agreement also contains customary affirmative and negative covenants that, among other things, limit SBA Senior
Finance’s ability to incur indebtedness, grant certain liens, make certain investments, enter into sale leaseback transactions
or merge or consolidate, or engage in certain asset dispositions, including a sale of all or substantially all of our assets. As of
December 31, 2009, SBA Senior Finance was in full compliance with the terms of the Senior Credit Facility.
Upon the occurrence of certain bankruptcy and insolvency events with respect to the Company or certain of our
subsidiaries, the revolving credit loans automatically terminate and all amounts due under the Restated Credit Agreement
and other loan documents become immediately due and payable. If certain other events of default occur, including
failure to pay the principal and interest when due, a breach of the Company’s negative covenants, or failure to perform
any other requirement in the Restated Credit Agreement, the Restated Guarantee and Collateral Agreement (as described
below) and/or certain other debt instruments, including the Notes and the CMBS Certificates, then, with the permission
of a majority of the lenders, the revolving credit commitments will terminate and all amounts due under the Restated
Credit Agreement and other loan documents become immediately due and payable.
Amounts borrowed under the Senior Credit Facility will be secured by a first lien on substantially all of SBA
Senior Finance’s assets not pledged under the CMBS Certificates and substantially all of the assets, other than leasehold,
easement or fee interests in real property, of the guarantors. In connection with the Restated Credit Agreement, on July
28, 2009, SBA Communications, Telecommunications, SBA Senior Finance and certain of SBA Senior Finance’s
subsidiaries, entered into an Amendment and Restatement of the Guarantee and Collateral Agreement in favor of
Toronto Dominion (Texas) LLC, as administrative agent (the “Restated Guarantee and Collateral Agreement”). The
Restated Guarantee and Collateral Agreement clarifies that only subsidiaries of SBA Senior Finance, rather than of SBA
Communications (other than Telecommunications), are required to guarantee SBA Senior Finance’s obligations under
the credit facility and added SBA Towers, Inc., SBA Puerto Rico, Inc. and SBA Towers USVI, Inc. as guarantors, as
each of these entities had been released from its obligations under the mortgage loan underlying the CMBS Certificates.
F-31
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
During 2009, SBA Senior Finance borrowed $8.5 million and repaid $239.1 million under its senior credit
facility, which is presented within “Cash flows from financing activities” on the Company’s Consolidated Statements of
Cash Flows. The Company used or designated such proceeds for construction and acquisition of towers and for ground
lease buyouts. As of December 31, 2009, the Company did not have any amounts outstanding under this facility. The
Company had approximately $0.1 million of letters of credit posted against the availability of this credit facility
outstanding. The weighted average interest rate for amounts borrowed under the Senior Credit Facility during the year
ended December 31, 2009 and 2008 was 2.46% and 4.3%, respectively. As of December 31, 2009, availability under the
credit facility was approximately $319.9 million.
On February 11, 2010, the Company terminated the Senior Credit Facility.
2010 Credit Facility
On February 11, 2010, SBA Senior Finance II, LLC (“SBA Senior Finance II”), an indirect wholly-owned
subsidiary of the Company, entered into a credit agreement for a $500.0 million senior secured revolving credit facility
(the “2010 Credit Facility”) with several banks and other financial institutions or entities from time to time parties to the
credit agreement (the “Credit Agreement”). Amounts borrowed under the 2010 Credit Facility will be secured by a first
lien on the capital stock of SBA Telecommunications, Inc., SBA Senior Finance, Inc. and SBA Senior Finance II, and
substantially all of the assets, other than leasehold, easement or fee interests in real property, of SBA Senior Finance II
and the Subsidiary Guarantors (as defined in the Credit Agreement). The Company incurred deferred financing fees of
$4.8 million associated with the closing of this transaction. As of February 26, 2010, availability under the 2010 Credit
Facility was $500.0 million.
The 2010 Credit Facility consists of a revolving loan under which up to $500 million may be borrowed, repaid
and redrawn, subject to compliance with specific financial ratios and the satisfaction of other customary conditions to
borrowing as set forth in the Credit Agreement. Amounts borrowed under the 2010 Credit Facility accrue interest at the
Eurodollar rate plus a margin that ranges from 187.5 basis points to 237.5 basis points or at a Base Rate (as defined in
the Credit Agreement) plus a margin that ranges from 87.5 basis points to 137.5 basis points, in each case based on the
ratio of Consolidated Total Debt to Annualized Borrower EBITDA (as defined in the Credit Agreement). A 0.375% to
0.5% per annum fee is charged on the amount of unused commitment. If it is not earlier terminated by SBA Senior
Finance II, the 2010 Credit Facility will terminate on, and SBA Senior Finance II will repay all amounts outstanding on
or before, February 11, 2015. Proceeds available under the 2010 Credit Facility may be used for general corporate
purposes.
The Credit Agreement requires SBA Senior Finance II and SBA Communications to maintain specific financial
ratios, including, at the SBA Senior Finance II level, a ratio of Consolidated Total Debt to Annualized Borrower
EBITDA (as defined in the Credit Agreement) that does not exceed 5.0x for any fiscal quarter, a ratio of Consolidated
Total Debt and Net Hedge Exposure (as defined in the Credit Agreement) to Annualized Borrower EBITDA for the most
recently ended fiscal quarter not to exceed 5.0x for 30 consecutive days and a ratio of Annualized Borrower EBITDA to
Annualized Cash Interest Expense (as defined in the Credit Agreement) of not less than 2.0x for any fiscal quarter. In
addition, the Company’s ratio of Consolidated Total Net Debt to Consolidated Adjusted EBITDA (as defined in the
Credit Agreement) for any fiscal quarter on an annualized basis cannot exceed 8.9x. The Credit Agreement also contains
customary affirmative and negative covenants that, among other things, limit SBA Senior Finance II’s ability to incur
indebtedness, grant certain liens, make certain investments, enter into sale leaseback transactions or engage in certain
asset dispositions, including a sale of all or substantially all of its assets.
The 2010 Credit Facility also permits the Company to request that one or more lenders (1) increase their
proportionate share of the 2010 Credit Facility commitment, up to an additional $200 million in the aggregate and (2)
provide SBA Senior Finance II term loans for an aggregate amount up to $800 million, without requesting consent of the
other lenders. SBA Senior Finance II’s ability to request such increase of the 2010 Credit Facility or term loans is subject
to its compliance with the conditions set forth in the Credit Agreement including, with respect to any term loan,
compliance, on a pro forma basis, with the financial covenants and ratios set forth therein. Upon SBA Senior Finance II’s
request, each lender may decide, in its sole discretion, whether to increase all or a portion of its revolving credit facility
commitment or whether to provide SBA Senior Finance II term loans and if so upon what terms. As of December 31,
2009, had the 2010 Credit Facility been in place, SBA Senior Finance II would have had the ability to request term loans
up to an aggregate principal amount of $325.0 million upon compliance with the terms of the Credit Agreement.
F-32
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Optasite Credit Facility
On September 16, 2008, in connection with the acquisition of Optasite, the Company assumed Optasite’s fully
drawn $150 million senior credit facility (the “Optasite Credit Facility”). The Company recorded the Optasite Credit
Facility at its fair value of $147.0 million on the date of acquisition. Interest on the Optasite Credit Facility accrued at the
one month Eurodollar Rate plus 165 basis points and interest payments were due monthly. Commencing November 1,
2008, the Company began paying the required installment payments on the Optasite Credit Facility. On July 31, 2009,
the Company paid off the facility in full and the facility was subsequently terminated. The Company recorded a loss on
the early extinguishment of debt of $1.9 million.
The Company incurred cash interest expense of $1.8 million and $1.9 million for the years ended December 31,
2009 and 2008, respectively. The Company incurred non-cash interest expense of $0.8 million and $0.4 million for the
years ended December 31, 2009 and 2008, respectively.
14.
DERIVATIVE FINANCIAL INSTRUMENT
Optasite Derivative Instruments
The Company acquired various derivative instruments as part of the Optasite acquisition on September 16, 2008
which were valued at $4.4 million. The derivative instruments did not qualify for hedge accounting. The Company
terminated the majority of the derivative instruments on October 3, 2008 for $3.9 million. For the year ended December
31, 2008, the Company recognized a net gain of $0.5 million on these derivatives, which is included in interest expense
on the Company’s Consolidated Statements of Operations.
2006 CMBS Certificate Swaps
During 2006, an indirect wholly-owned subsidiary of the Company entered into nine forward-starting swap
agreements (the “2006 CMBS Certificate Swaps”) in anticipation of the 2006 CMBS Transaction. In October 2006, the
Company terminated the 2006 CMBS Certificate Swaps in connection with entering into the purchase and sale
agreement for the 2006 CMBS Certificates (see Note 13). The Company determined a portion of the swaps to be an
effective cash flow hedge and as a result, recorded a deferred loss of $12.8 million in accumulated other comprehensive
loss, net of applicable income taxes on the Company’s Consolidated Balance Sheets. The deferred loss is being
amortized utilizing the effective interest method over the anticipated five year life of the 2006 CMBS Certificates and
increases the effective interest rate on these certificates by 0.3%.
The Company recorded amortization of $2.3 million, $2.4 million and $2.3 million as non-cash interest expense
on the Company’s Consolidated Statements of Operations for year ended December 31, 2009, 2008 and 2007,
respectively.
2005 CMBS Certificate Swaps
On June 22, 2005, an indirect wholly-owned subsidiary of the Company entered into two forward-starting
interest rate swap agreements (the “2005 CMBS Certificate Swaps”) in anticipation of the 2005 CMBS Transaction. On
November 4, 2005, the Company entered into a purchase agreement regarding the purchase and sale of 2005 CMBS
Certificates (see Note 13). In connection with this agreement, the Company terminated the 2005 CMBS Certificate
Swaps. The Company determined the swaps to be an effective cash flow hedge and as a result, recorded a deferred gain
of $14.8 million in accumulated other comprehensive loss, net of applicable income taxes on the Company’s
Consolidated Balance Sheets. The deferred gain was being amortized utilizing the effective interest method over the
anticipated five year life of the 2005 CMBS Certificates and reduced the effective interest rate on these certificates by
0.8%. On July 28, 2009, the Company recognized the remaining unamortized net deferred gain of $3.9 million in
connection with the repayment of the 2005 CMBS Certificates.
The Company recorded amortization of $1.7 million, $3.0 million and $2.8 million as an offset to non-cash
interest expense on the Company’s Consolidated Statements of Operations for the year ended December 31, 2009, 2008
and 2007, respectively.
F-33
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
15.
SHAREHOLDERS’ EQUITY
Common Stock equivalents
The Company has potential common stock equivalents related to its outstanding stock options (see Note 16) and
Convertible Senior Notes (see Note 13). These potential common stock equivalents were not included in diluted loss per
share because the effect would have been anti-dilutive for the years ended December 31, 2009, 2008 and 2007.
Accordingly, basic and diluted loss per common share and the weighted average number of shares used in the
computation are the same for the years presented.
Stock Repurchases
The Company’s Board of Directors authorized a stock repurchase program effective November 3, 2009. This
program authorizes the Company to purchase, from time to time, up to $250.0 million of the Company’s outstanding
common stock through open market repurchases in compliance with Rule 10b-18 of the Securities Act of 1933, as
amended, and/or in privately negotiated transactions at management’s discretion based on market and business
conditions, applicable legal requirements and other factors. This program will continue until otherwise modified or
terminated by the Company’s Board of Directors at any time in the Company’s sole discretion. In connection with the
stock repurchase program, in December 2009, the Company repurchased and retired approximately 52,000 shares for an
aggregate of $1.7 million including commissions and fees.
In April 2009, the Company repurchased and retired approximately 2.0 million shares, valued at approximately
$50.0 million based on the closing stock price of $24.80 on April 20, 2009, in connection with the issuance of the 4.0%
Notes (See Note 13).
In May 2008, the Company repurchased and retired approximately 3.47 million shares, valued at approximately
$120.0 million based on the closing stock price of $34.55 on May 12, 2008, in connection with the issuance of the
1.875% Notes (See Note 13).
In March 2007, the Company repurchased and retired approximately 3.24 million shares valued at
approximately $91.2 million based on the closing price of $28.20 on March 20, 2007, in connection with the issuance of
the 0.375% Notes (see Note 13).
Subsequent to December 31, 2009, the Company repurchased 207,000 shares for an aggregate of $6.7 million
including commissions and fees.
Registration of Additional Shares
The Company filed shelf registration statements on Form S-4 with the Securities and Exchange Commission
registering 4.0 million, 4.0 million, 5.0 million and 3.0 million of its Class A common stock in 2007, 2006, 2001 and
2000, respectively. These shares may be issued in connection with acquisitions of wireless communication towers or
antenna sites and related assets or companies that own wireless communication towers, antenna sites or related assets.
During the years ended December 31, 2009, 2008 and 2007, the Company issued approximately 0.9 million shares, 1.3
million shares and 4.7 million shares, respectively, of its Class A common stock pursuant to these registration statements
in connection with acquisitions. At December 31, 2009, approximately 1.7 million shares remain available for issuance
under this shelf registration statement.
On November 12, 2008, the Company filed a registration statement on Form S-8 with the Securities and
Exchange Commission registering 500,000 shares of its Class A common stock issuable under the 2008 Employee Stock
Purchase Plan.
On November 27, 2006, the Company filed a registration statement on Form S-8 with the Securities and
Exchange Commission registering an additional 2.5 million shares of its Class A common stock issuable under the 2001
Equity Participation Plan.
F-34
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
On March 3, 2009, the Company filed with the Commission an automatic shelf registration statement for well-
known seasoned issuers on Form S-3ASR. This registration statement enables the Company to issue shares of the
Company’s 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, the Company will file a prospectus supplement and advise the Commission of the amount and
type of securities each time the Company issue securities under this registration statement. For the year ended December
31, 2009, the Company did not issue any securities under this automatic shelf registration statement.
On May 17, 2007, the Company filed with the Commission an automatic shelf registration statement on Form
S-3 registering the resale by selling security holders of our 0.375% Notes and shares of our Class A Common Stock
which are issuable upon conversion of the 0.375% Notes. The 0.375% Notes were originally issued in a private
placement on March 26, 2007 (see Note 13).
Other Common Stock Transactions
During 2008, in connection with the Optasite acquisition, the Company issued 7.25 million shares of its Class A
common stock.
Shareholder Rights Plan and Preferred Stock
During January 2002, the Company’s Board of Directors adopted a shareholder rights plan and declared a
dividend of one preferred stock purchase right for each outstanding share of the Company’s common stock. Each of
these rights which are currently not exercisable will entitle the holder to purchase one one-thousandth (1/1000) of a share
of the Company’s newly designated Series E Junior Participating Preferred Stock. In the event that any person or group
acquires beneficial ownership of 15% or more of the outstanding shares of the Company’s common stock or commences
or announces an intention to commence a tender offer that would result in such person or group owning 15% or more of
the Company’s common stock, each holder of a right (other than the acquirer) will be entitled to receive, upon payment
of the exercise price, a number of shares of common stock having a market value equal to two times the exercise price of
the right. In order to retain flexibility and the ability to maximize shareholder value in the event of transactions that may
arise in the future, the Board retains the power to redeem the rights for a set amount. The rights were distributed on
January 25, 2002 and expire on January 10, 2012, unless earlier redeemed or exchanged or terminated in accordance
with the Rights Agreement.
16.
STOCK-BASED COMPENSATION
Stock Options
The Company has two equity participation plans (the 1999 Equity Participation Plan and the 2001 Equity
Participation Plan) whereby options (both non-qualified and incentive stock options), stock appreciation rights and
restricted stock may be granted to directors, employees and consultants. Upon adoption of the 2001 Equity Participation
Plan, no further grants are permitted under the 1999 Equity Participation Plan. The 2001 Equity Participation Plan
provides for a maximum issuance of shares, together with all outstanding options and unvested shares of restricted stock
under all three of the plans, equal to 15% of the Company’s Class A common stock outstanding, adjusted for shares
issued and the exercise of certain options. These options generally vest between three to five years from the date of grant
on a straight-line basis and generally have a seven-year or a ten-year life.
From time to time, restricted shares of Class A common stock or options to purchase Class A common stock
have been granted under the Company’s equity participation plans at prices below market value at the time of grant. The
Company did not have any non-cash compensation expense during the years ended December 31, 2009, 2008 and 2007,
respectively, relating to the issuance of restricted shares or options to purchase Class A common stock.
F-35
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 implied volatility to establish the expected volatility.
Historical data is used to estimate the expected option life and the expected forfeiture rate. The risk-free rate is based on
the U.S. Treasury yield curve in effect at the time of grant for the estimated life of the option. The following assumptions
were used to estimate the fair value of options granted using the Black-Scholes option-pricing model:
For the year ended December 31,
2008
2009
2007
Risk free interest rate
Dividend yield
Expected volatility
Expected lives
1.30% - 1.92%
0.0%
55.7%
3.21 - 4.08 years
2.10% - 2.97%
0.0%
41.6%
3.35 - 3.73 years
4.60% - 5.12%
0.0%
42.7%
3.28 - 4.13 years
A summary of shares reserved for future issuance under these plans as of December 31, 2009 is as follows:
Reserved for 1999 Equity Participation Plan
Reserved for 2001 Equity Participation Plan
Number of shares
(in thousands)
10
11,266
11,276
The following table summarizes the Company’s activities with respect to its stock option plans for the years
ended 2009, 2008 and 2007 as follows (dollars and number of shares in thousands, except for per share data):
Options
Outstanding at December 31, 2006
Granted
Exercised
Canceled
Outstanding at December 31, 2007
Granted
Exercised
Canceled
Outstanding at December 31, 2008
Granted
Exercised
Canceled
Outstanding at December 31, 2009
Exercisable at December 31, 2009
Unvested at December 31, 2009
Weighted-
Average
Exercise Price
Per Share
Weighted-
Average
Remaining
Contractual
Life (in years)
Aggregate
Intrinsic Value
(in thousands)
5.3
4.8
5.7
$
$
$
52,087
29,940
22,147
9.87
28.90
5.63
22.67
15.71
32.55
8.45
25.84
20.31
20.26
9.69
30.43
21.76
17.99
24.72
Number
of Shares
$
4,158
$
1,028
(1,196) $
(193) $
$
3,797
$
917
(655) $
(271) $
3,788
$
$
1,151
(659) $
(88) $
$
$
$
4,192
1,847
2,345
The weighted-average fair value of options granted during the years ended December 31, 2009, 2008 and 2007
was $8.79, $10.96 and $11.04, respectively.
F-36
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The total intrinsic value for options exercised during the years ended December 31, 2009, 2008 and 2007 was
$12.2 million, $14.6 million and $30.6 million, respectively. Cash received from option exercises under all plans for the
years ended December 31, 2009, 2008 and 2007 was approximately $6.4 million, $5.5 million and $6.7 million,
respectively. No tax benefit was realized for the tax deductions from option exercises under all plans for the years ended
December 31, 2009, 2008 and 2007, respectively.
Additional information regarding options outstanding and exercisable at December 31, 2009 is as follows:
Range
$0.00 -$5.25
$5.26- $10.50
$10.51 - $21.00
$21.01 - $31.50
$31.51 - $52.50
Outstanding
(in thousands)
288
416
1,738
931
819
4,192
Options Outstanding
Weighted Average
Contractual Life
(in years)
3.9
4.6
6.1
4.8
5.1
Weighted
Average
Exercise Price
3.61
$
8.48
$
19.30
$
28.27
$
32.69
$
Options Exercisable
Exercisable
(in thousands)
288
416
486
437
220
1,847
Weighted
Average
Exercise Price
3.61
$
8.48
$
18.56
$
28.32
$
33.04
$
The following table summarizes the activity of options outstanding that had not yet vested:
Number
of Shares
Weighted-
Average
Fair Value
Per Share
(in thousands, except for per share amounts)
Unvested as of December 31, 2008
Shares granted
Vesting during period
Forfeited or cancelled
Unvested as of December 31, 2009
$
2,188
1,151
$
(963) $
(31) $
$
2,345
8.91
8.79
7.59
10.08
9.54
The aggregate intrinsic value for stock options in the preceding tables represents the total intrinsic value, based
on the Company’s closing stock price of $34.16 as of December 31, 2009. The amount represents the total intrinsic value
that would have been received by the holders of the stock-based awards had these awards been exercised and sold as of
that date.
As of December 31, 2009, the total unrecognized compensation cost related to unvested stock options
outstanding under the Plans is $12.8 million. That cost is expected to be recognized over a weighted average period of
2.6 years.
The total fair value of shares vested during 2009, 2008, and 2007 was $7.2 million, $6.2 million, and $4.7
million, respectively.
Employee Stock Purchase Plan
In 1999, the Board of Directors of the Company adopted the 1999 Stock Purchase Plan (the “1999 Purchase
Plan”). A total of 500,000 shares of Class A common stock were reserved for purchase under the 1999 Purchase Plan.
During 2003, an amendment to the 1999 Purchase Plan was adopted which increased the number of shares reserved for
purchase from 500,000 to 1,500,000 shares. In April 2009, the 1999 Plan expired and no shares were issued under the
1999 Plan during 2009. During 2008, the Company adopted the 2008 Employee Stock Purchase Plan (“2008 Purchase
Plan”) which reserved 500,000 shares of Class A common stock for purchase. The 2008 Purchase Plan permits eligible
employee participants to purchase Class A common stock at a price per share which is equal to 85% of the fair market
value of Class A common stock on the last day of an offering period.
F-37
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2009, 30,692 shares of Class A common stock were issued under the 2008
Purchase Plan, which resulted in cash proceeds to the Company of approximately $0.7 million compared to the year
ended December 31, 2008 when approximately 41,000 shares of Class A common stock were issued under the 1999
Purchase Plan, which resulted in cash proceeds to the Company of $1.0 million. At December 31, 2009, 469,308 shares
remained available for issuance under the 2008 Purchase Plan. In addition, the Company recorded $0.1 million, $0.2
million and $0.2 million of non-cash compensation expense relating to the shares issued under the 2008 and 1999
Purchase Plans for each of the years ended December 31, 2009, 2008, and 2007, respectively.
Non-Cash Compensation Expense
The table below reflects a break out by category of the non-cash compensation expense amounts recognized on
the Company’s Statements of Operations for the years ended December 31, 2009, 2008 and 2007, respectively (in
thousands, except per share data):
Cost of revenues
Selling, general and administrative
Total cost of non-cash compensation included
in loss before provision for income taxes
Amount of income tax recognized in earnings
Amount charged against loss
Impact on net loss per common share:
Basic and diluted
$
$
$
For the year ended
December 31,
2008
2007
2009
192
8,008
8,200
—
8,200
$
$
295
6,912
7,207
—
7,207
$
$
286
6,326
6,612
—
6,612
(0.07) $
(0.07) $
(0.06)
In addition, the Company capitalized $0.1 million, $0.2 million and $1.2 million relating to non-cash
compensation for the years ended December 31, 2009, 2008 and 2007, respectively, to fixed and intangible assets.
17.
ASSET IMPAIRMENT
The Company evaluates its individual long-lived and related assets with finite lives for impairment. In 2009, as
a result of the annual impairment evaluation, the Company recorded a $2.0 million impairment charge on 21 towers and
related assets that are not expected to achieve previously anticipated lease-up results. The amount of impairment was
determined by using a discounted cash flow analysis. In addition, the Company recorded a $1.9 million impairment
charge on its six DAS networks based on the estimated fair value of the DAS networks. In 2008, as a result of the annual
impairment evaluation, the Company recorded a $0.9 million impairment charge on eight towers that had not achieved
expected lease-up results as determined by using a discounted cash flow analysis.
F-38
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
18.
ACCUMULATED OTHER COMPREHENSIVE LOSS, NET
Accumulated other comprehensive loss, net has no impact on the Company’s net loss but is reflected in the
Consolidated Balance Sheet through adjustments to shareholders’ equity. Accumulated other comprehensive loss, net
derives from the amortization of deferred (gain) loss from settlement of derivative financial instruments relating to the
CMBS Certificates issuance (see Note 13), the unfunded projected benefit obligation relating to the Company’s pension
plan (see Note 22) and the Company’s foreign currency translation adjustment. A rollforward of accumulated other
comprehensive loss, net for the years ended December 31, 2009, 2008 and 2007 is as follows:
Deferred
(Gain) Loss
from Settlement
of Swaps
Change in
Unfunded
Projected
Benefit
Obligation
Foreign
Currency
Translation
Adjustment
Total
(746) $
(in thousands)
$
80
— $
(666)
Balance, December 31, 2006
Amortization of net deferred gain from settlement of
$
derivative financial instruments
Change in unfunded projected benefit obligation
Balance, December 31, 2007
Amortization of net deferred gain from settlement of
derivative financial instruments
Write-off of net deferred loss from derivative
instruments related to repurchase of debt
Change in unfunded projected benefit obligation as a
result of plan termination
Balance, December 31, 2008
Amortization of net deferred loss from settlement of
derivative financial instruments
Write-off of net deferred gain from derivative
instruments related to repurchase of debt
Foreign currency translation adjustments
Balance, December 31, 2009
(565)
—
(1,311)
(557)
319
—
(1,549)
622
(3,350)
—
(4,277) $
$
—
(49)
31
—
—
(31)
—
—
—
—
—
—
—
—
—
—
—
—
(565)
(49)
(1,280)
(557)
319
(31)
(1,549)
622
(3,350)
—
1,474
1,474
1,474 $ (2,803)
$
There is no net tax impact for the components of other comprehensive income (loss) due to the full valuation
allowance on the Company’s deferred tax assets.
19.
INCOME TAXES
Loss before provision for income taxes by geographic area is as follows:
For the year ended December 31,
2009
2008
(as adjusted)
(in thousands)
2007
(as adjusted)
$
$
(140,425) $
(202)
(140,627) $
(65,950) $
(177)
(66,127) $
(90,552)
(54)
(90,606)
Domestic
Foreign
Total
F-39
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The provision for income taxes consists of the following components:
For the year ended December 31,
2008
(in thousands)
2007
2009
Current provision for taxes:
Federal
Foreign
State
Total current
Deferred (benefit) provision for taxes:
Federal income tax
State and local taxes
Foreign tax
Increase in valuation allowance
Total deferred
Total provision for income taxes
$
$
(127) $
69
730
672
127
4
747
878
(46,835)
(5,314)
220
51,749
(180)
492
(17,854)
(3,987)
(2)
22,002
159
1,037
$
$
$
—
—
667
667
(25,406)
(3,693)
(4)
29,304
201
868
A reconciliation of the provision for income taxes at the statutory U.S. Federal tax rate (35%) and the effective
income tax rate is as follows:
2007
2009
For the year ended December 31,
2008
(in thousands)
$ (48,586) $ (16,004) $ (26,954)
(4)
(1,966)
—
488
29,304
868
(4)
(2,106)
(3,514)
663
22,002
1,037
$
158
(2,980)
(1,029)
1,180
51,749
492
$
$
Statutory Federal benefit
Foreign tax
State and local taxes
Convertible debt interest expense and COD income
Other
Valuation allowance
Provision for income taxes
F-40
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The components of the net deferred income tax asset (liability) accounts are as follows:
Current deferred tax assets:
Allowance for doubtful accounts
Deferred revenue
Accrued liabilities
Valuation allowance
Total current deferred tax assets, net
Noncurrent deferred tax assets:
Net operating losses
Property, equipment & intangible basis
Accrued liabilities
Straight-line rents
Non-cash Compensation
Other
Total noncurrent deferred tax assets
Noncurrent deferred tax liabilities:
Property, equipment & intangible basis
Convertible Debt Instruments
Early extinguishment of debt
Other
Valuation allowance
Total noncurrent deferred tax liabilities, net
As of December 31,
2008
2009
(in thousands)
$
$
$
$
$
$
70
21,190
839
(22,099)
—
362,752
32,022
8,912
8,723
4,644
517
417,570
(335,230)
(7,163)
(1,587)
(1,503)
(74,592)
$
(2,505) $
327
17,289
1,210
(18,826)
—
344,958
31,894
11,823
6,430
3,505
617
399,227
(372,813)
—
(606)
—
(25,808)
—
The Company has recorded a valuation allowance for deferred tax assets as management believes that it is not
“more likely than not” that the Company will be able to generate sufficient taxable income in future periods to recognize
the assets. The net change in the valuation allowance for the years ended December 31, 2009 and 2008 was $52.1 million
and $(47.4) million, respectively. Additionally, at December 31, 2009 the Company recorded a valuation allowance
relating to federal and state tax credit carryovers of approximately $0.2 million and $0.4 million, respectively. These tax
credits expire beginning 2017.
The Company has available at December 31, 2009, a net federal operating tax loss carry-forward of
approximately $1.0 billion and an additional $97.3 million of net operating tax loss carry forward from stock options
which will benefit additional paid-in capital when the loss is utilized. These net operating tax loss carry-forwards will
expire between 2019 and 2029. The Internal Revenue Code places limitations upon the future availability of net
operating losses based upon changes in the equity of the Company. If these occur, the ability of the Company to offset
future income with existing net operating losses may be limited. In addition, the Company has available at December 31,
2009, a net state operating tax loss carry-forward of approximately $601.1 million. These net operating tax loss carry-
forwards will expire between 2010 and 2029.
In accordance with the Company’s methodology for determining when stock option deductions are deemed
realized, the Company utilizes a “with-and-without” approach that will result in a benefit not being recorded in APIC if
the amount of available net operating loss carry-forwards generated from operations is sufficient to offset the current
year taxable income.
F-41
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
20.
COMMITMENTS AND CONTINGENCIES
a. Operating Leases and Capital Leases
The Company is obligated under various non-cancelable operating leases for land, office space, equipment and
site leases that expire at various times through December 2109. In addition, the Company is obligated under various non-
cancelable capital leases for vehicles that expire at various times through December 2013. The amounts applicable to
capital leases for vehicles included in property and equipment, net was:
As of
December 31, 2009
As of
December 31, 2008
Vehicles
Less: accumulated depreciation
Vehicles, net
$
$
(in thousands)
1,980
(758)
1,222
$
$
1,741
(397)
1,344
The annual minimum lease payments under non-cancelable operating and capital leases in effect as of
December 31, 2009 are as follows (in thousands):
For the year ended
December 31,
2010
2011
2012
2013
2014
Thereafter
Total minimum lease payments
Less: amount representing interest
Present value of future payments
Less: current obligations
Long-term obligations
Capital
Leases
496
344
136
43
—
—
1,019
(50)
969
(469)
500
$
$
$
Operating Leases
59,157
58,602
57,255
56,857
57,543
1,079,547
1,368,961
$
The majority of operating leases provide for renewal at varying escalations. Fixed rate escalations have been
included in the table disclosed above.
Rent expense for operating leases was $72.6 million, $63.3 million and $57.9 million for the years ended
December 31, 2009, 2008 and 2007, respectively. In addition, certain of the Company’s leases include contingent rent
provisions which provide for the lessor to receive additional rent upon the attainment of certain tower operating results
and or lease-up. Contingent rent expense for the years ended December 31, 2009, 2008 and 2007 was $9.9 million, $8.1
million and $7.2 million, respectively.
b. Tenant Leases
The annual minimum tower lease income to be received for tower space and antenna rental under non-
cancelable operating leases in effect as of December 31, 2009 is as follows:
For the year ended December 31,
2010
2011
2012
2013
2014
Thereafter
Total
(in thousands)
436,846
343,982
270,018
197,113
112,651
180,199
1,540,809
$
$
Principally, all of the leases provide for renewal, generally at the tenant’s option, at varying escalations. Fixed
rate escalations have been included in the table disclosed above.
F-42
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
c. Litigation
The Company is involved in various claims, lawsuits and proceedings arising in the ordinary course of business.
While there are uncertainties inherent in the ultimate outcome of such matters and it is impossible to presently determine
the ultimate costs that may be incurred, management believes the resolution of such uncertainties and the incurrence of
such costs will not have a material adverse effect on the Company’s consolidated financial position, results of operations
or liquidity.
d. Capital Lease Obligations
The Company’s capital lease obligations outstanding were $1.0 million as of December 31, 2009 and $1.2
million as of December 31, 2008. These obligations bear interest rates ranging from 0.9% to 4.9% and mature in periods
ranging from approximately one to five years.
e. Contingent Purchase Obligations
From time to time, the Company agrees to pay additional consideration for acquisitions if the towers or
businesses that are acquired meet or exceed certain performance targets in the one to three years after they have been
acquired. As of December 31, 2009, the Company has an obligation to pay up to an additional $11.5 million in
consideration if the targets contained in various acquisition agreements are met. These obligations are associated with
new build and tower acquisition programs within the Company’s site leasing segment. On certain acquisitions, at the
Company’s option, additional consideration may be paid in cash or shares of Class A common stock. For the years ended
December 31, 2009 and 2008, certain earnings targets associated with the acquired towers were achieved, and therefore,
the Company paid in cash $3.4 million and $3.5 million, respectively. For the years ended December 31, 2009 and 2008,
the Company issued approximately 78,000 shares and 67,000 shares, respectively, of Class A common stock as a result
of acquired towers exceeding certain performance targets.
21.
DEFINED CONTRIBUTION PLAN
The Company has a defined contribution profit sharing plan under Section 401(k) of the Internal Revenue Code
that provides for voluntary employee contributions up to the limitations set forth in Section 402(g) of the Internal
Revenue Code. Employees have the opportunity to participate following completion of three months of employment and
must be 21 years of age. Employer matching begins immediately upon the employee’s participation in the plan. For the
years ended December 31, 2009, 2008 and 2007, the Company made a discretionary matching contribution of 50% of an
employee’s contributions up to a maximum of $3,000. Company matching contributions were approximately $0.7
million, $0.7 million and $0.7 million for years ended December 31, 2009, 2008 and 2007, respectively.
22.
PENSION PLANS
The Company had a defined benefit pension plan (the “Pension Plan”) which was included in the acquisition of
AAT Communications in 2006. The Pension Plan was for all employees of AAT Communications hired on or before
January 1, 1996. AAT ceased all benefit accruals for active participants on December 31, 1996. The Pension Plan
provided for defined benefits based on the number of years of service and average salary.
During 2008, the Company began the process of terminating the Pension Plan. During the fourth quarter of
2008, the Company received a favorable determination letter from the Internal Revenue Service on the termination of the
Pension Plan. As a result of terminating the plan, the Company recorded a settlement expense of $0.6 million in
connection with the projected final benefit settlement which is included in selling, general and administrative expenses in
the Consolidated Statement of Operations for the year ended December 31, 2008. In addition, in 2008 due to the
termination of the plan, the Company recognized as a component of net periodic pension cost all amounts in
accumulated other comprehensive income. As of December 31, 2009, the Company has made all benefit payments
related to the termination of the Pension Plan.
F-43
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table includes the components of pension costs, the fair value of plan assets, and the funded
status of the Pension Plan for the year ended December 31, 2008:
As of December 31, 2008
(in thousands)
Change in benefit obligation
Obligation at beginning of year
Interest Cost
Actuarial gain (loss)
Benefit payments
Settlement
Obligation at end of year
Change in fair value of plan assets
Fair value of plan assets at beginning of year
Actual return on plan assets
Employer contributions
Benefits payments and plan expenses
Settlements
Fair value of plan assets at end of year
Funded status at the end of the year
$
$
$
$
$
1,883
95
271
(139)
(2,110)
—
1,863
(260)
646
(139)
(2,110)
—
—
As of December 31, 2009 and 2008, accumulated benefit obligation for the Pension Plan, the projected benefit
obligation and fair value of plan assets were zero due to the termination of the Pension Plan.
The following table summarizes the components of net periodic pension costs:
Interest cost
Expected return on plan assets
Net periodic pension (income) / cost
Settlement loss
Net periodic pension cost after settlements
As of December 31, 2008
(in thousands)
$
$
95
(109)
(14)
609
595
Assumptions used to develop the net periodic pension cost were:
Discount rate
Expected long-term rate of return on assets
23.
SEGMENT DATA
As of December 31, 2008
4.52 %
0.00 %
The Company operates principally in three business segments: site leasing, site development consulting, and
site development construction. The Company’s reportable 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, sublease and DAS businesses. The Company’s net sales originating and long-lived
assets held outside of the United States during each of the last three fiscal years were not material.
F-44
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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:
Site
Leasing
Site
Development
Consulting
Site
Development
Construction
(in thousands)
Not
Identified by
Segment (1)
Total
For the year ended December 31, 2009
$
Revenues
Cost of revenues
$
Depreciation, amortization and accretion $
$
Operating income (loss)
Capital expenditures(2)
$
For the year ended December 31, 2008
$
Revenues
Cost of revenues
$
Depreciation, amortization and accretion $
$
Operating income (loss)
Capital expenditures(2)
$
For the year ended December 31, 2007
$
Revenues
$
Cost of revenues
Depreciation, amortization and accretion $
$
Operating income (loss)
Capital expenditures(2)
$
477,007 $
111,842 $
256,703 $
60,542 $
246,569 $
395,541 $
96,175 $
209,298 $
50,290 $
915,452 $
321,818 $
88,006 $
166,785 $
39,878 $
384,430 $
Assets
17,408 $
13,234 $
183 $
2,366 $
104 $
18,754 $
15,212 $
181 $
1,747 $
188 $
24,349 $
19,295 $
177 $
2,468 $
138 $
61,098 $
55,467 $
811 $
(887) $
794 $
60,659 $
56,778 $
759 $
(2,100) $
688 $
— $
— $
840 $
(7,067) $
625 $
555,513
180,543
258,537
54,954
248,092
— $
— $
1,207 $
(4,355) $
748 $
474,954
168,165
211,445
45,582
917,076
62,034 $
56,052 $
749 $
(906) $
408 $
— $
— $
1,521 $
(11,393) $
682 $
408,201
163,353
169,232
30,047
385,658
As of December 31, 2009
As of December 31, 2008 (as adjusted)
$ 3,093,379 $
$ 3,092,965 $
4,651 $
4,375 $
27,587 $
25,413 $
188,029 $ 3,313,646
85,076 $ 3,207,829
(1)
(2)
Assets not identified by segment consist primarily of general corporate assets.
Includes acquisitions and related earn-outs and vehicle capital lease additions.
F-45
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
24.
QUARTERLY FINANCIAL DATA (unaudited)
Revenues
Operating income
Depreciation, accretion and amortization
(Loss) gain from extinguishment of debt, net
Net loss attributable to SBA Communications
Corporation
Net loss per share - basic and diluted
Revenues
Operating income
Depreciation, accretion, and amortization
Gain (loss) from extinguishment of debt, net
Net income (loss) attributable to SBA
Communications Corporation
Net income (loss) per share - basic
Net income (loss) per share - diluted
December 31,
2009
September 30,
2009
June 30,
2009
March 31,
2009
Quarter Ended
$
(in thousands, except per share amounts)
144,979 $
12,054
(65,687)
(1,472)
139,289 $
136,195 $
14,952
(64,946)
(12,518)
13,598
(64,251)
2,381
$
$
(43,512) $
(0.37) $
(50,109) $
(0.43) $
(29,360) $
(0.25) $
135,050
14,350
(63,653)
5,948
(17,890)
(0.15)
Quarter Ended
December 31,
2008
(as adjusted)
September 30,
2008
(as adjusted)
June 30,
2008
March 31,
2008
(as adjusted) (as adjusted)
(in thousands, except per share amounts)
$
$
$
$
134,429 $
11,527
(62,114)
44,683
5,953 $
0.05 $
0.05 $
118,656 $
11,427
(52,725)
(414)
(27,648) $
(0.26) $
(0.26) $
111,952 $
10,790
(49,253)
—
(26,243) $
(0.24) $
(0.24) $
109,917
11,838
(47,353)
—
(19,226)
(0.18)
(0.18)
Basic net income (loss) per share is computed by dividing net income by the weighted average number of shares
for the period. Diluted net income per share for the quarter ended December 31, 2008 is computed by dividing net
income by the weighted average number of common shares outstanding during the period plus potentially dilutive
common shares arising from the assumed exercise of stock options and convertible debt, if dilutive. The dilutive impact
of potentially dilutive stock options is determined by applying the treasury stock method and the dilutive impact of the
convertible debt is determined by applying the “if converted” method. Potentially dilutive shares for the periods prior to
the quarter ended December 31, 2008 and subsequent quarters have been excluded from the computation of diluted loss
per share as their impact would have been anti-dilutive.
Because loss per share amounts are calculated using the weighted average number of common and dilutive
common shares outstanding during each quarter, the sum of the per share amounts for the four quarters may not equal the
total loss per share amounts for the year.
F-46
Exhibit 21
Subsidiaries of SBA Communications Corporation
Name
Relationship
Jurisdiction
SBA Telecommunications, Inc.
100% owned by SBA Communications Corporation
Florida
SBA Infrastructure Holdings I, Inc. 100% owned by SBA Telecommunications, Inc.
Delaware
SBA Infrastructure, LLC
100% owned by SBA Infrastructure Holdings I, Inc.
Delaware
SBA Senior Finance, Inc.
100% owned by SBA Telecommunications, Inc.
SBA Senior Finance II, LLC
100% owned by SBA Senior Finance, Inc.
SBA Towers II, LLC
100% owned by SBA Senior Finance II, LLC
Florida
Florida
Florida
SBA CMBS-1 Holdings, LLC
100% owned by SBA Senior Finance, Inc.
Delaware
SBA CMBS-1 Guarantor, LLC
100% owned by SBA CMBS-1 Holdings, LLC
Delaware
SBA Towers, Inc.
100% owned by SBA Senior Finance II, LLC
SBA Properties, Inc.
100% owned by SBA CMBS-1 Guarantor, LLC
SBA Structures, Inc.
100% owned by SBA CMBS-1 Guarantor, LLC
Florida
Florida
Florida
As of December 31, 2009, SBA Communications Corporation owned, directly or indirectly, 26 additional
subsidiaries, 20 of which are incorporated in U.S. jurisdictions and 6 of which are organized in foreign jurisdictions.
These subsidiaries, in the aggregate as a single subsidiary, would not constitute a “Significant Subsidiary” as defined in
Rule 405 under the Securities Act as of December 31, 2009.
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in the following Registration Statements:
1.
2.
3.
4.
5.
6.
7.
8.
Registration Statement (Form S-3 No. 333-41306)
Registration Statement (Form S-3 No. 333-143033)
Registration Statement (Form S-3 No. 333-157647)
Registration Statement (Form S-4 No. 333-147473)
Registration Statement (Form S-8 No. 333-155289) pertaining to 2008 Employee Stock Purchase Plan
Registration Statement (Form S-8 No. 333-69236) pertaining to 2001 Equity Participation Plan
Registration Statement (Form S-8 No. 333-46734) pertaining to 1999 Equity Participation Plan
Registration Statement (Form S-8 No. 333-139006) pertaining to 2001 Equity Participation Plan, as
Amended and Restated on May 16, 2002
of our reports dated February 26, 2010 with respect to the consolidated financial statements of SBA Communications
Corporation and Subsidiaries and the effectiveness of internal control over financial reporting of SBA Communications
Corporation and Subsidiaries, included in this Annual Report (Form 10-K) for the year ended December 31, 2009.
/s/ Ernst & Young LLP
West Palm Beach, Florida
February 26, 2010
Exhibit 31.1
I, Jeffrey A. Stoops, Chief Executive Officer, certify that:
CERTIFICATION
1
2.
3.
4.
I have reviewed this annual report on Form 10-K of SBA Communications Corporation;
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;
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;
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.
b.
c.
d.
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;
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;
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
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 (the registrant’s fourth fiscal quarter in the
case of an annual report) 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.
b.
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
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.
Date: February 26, 2010
/s/ Jeffrey A. Stoops
By:
Name: Jeffrey A. Stoops
Title: Chief Executive Officer
Exhibit 31.2
I, Brendan T. Cavanagh, Chief Financial Officer, certify that:
CERTIFICATION
1.
2.
3.
4.
I have reviewed this annual report on Form 10-K of SBA Communications Corporation;
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;
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;
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.
b.
c.
d.
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;
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;
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
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 (the registrant’s fourth fiscal quarter in the
case of an annual report) 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.
b.
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
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.
Date: February 26, 2010
/s/ Brendan T. Cavanagh
By:
Name: Brendan T. Cavanagh
Title: Chief Financial Officer
Exhibit 32.1
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 Annual Report of SBA Communications Corporation (the “Company”), on Form 10-K
for the period ended December 31, 2009, 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.
Date: February 26, 2010
/s/ Jeffrey A. Stoops
Jeffrey A. Stoops
Chief Executive Officer
Exhibit 32.2
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 Annual Report of SBA Communications Corporation (the “Company”), on Form 10-K
for the period ended December 31, 2009, 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.
Date: February 26, 2010
/s/ Brendan T. Cavanagh
Brendan T. Cavanagh
Chief Financial Officer
Performance Graph
SBA's Class A Common Stock began trading on The NASDAQ National Market on June 16, 1999 when its initial public
offering commenced and is currently traded on the NASDAQ Global Select Market. The following graph shows the
total return to the shareholders of an investment in SBA's Class A Common Stock as compared to (i) an investment in
the NASDAQ Composite Index; and (ii) an investment in a peer group made up of American Tower Corporation, Crown
Castle International Corporation, Global Signal, Inc.1 and SpectraSite, Inc.2 (the "Peer Group"). The Peer Group was
selected because it is a comprehensive peer group comprised of all of the comparable public companies in the business
of owning and operating wireless communications towers, including companies that have emerged from bankruptcy
proceedings.
Total shareholder return is determined by dividing (i) the sum of (A) the cumulative amount of dividends for a given
period (assuming dividend reinvestment) and (B) the change in share price between the beginning and end of the
measurement period, by (ii) the share price at the beginning of the measurement period.
Total Shareholder Returns
SBA Communications Corporation
Nasdaq Composite Index
Peer Group
$500
$400
$300
$200
$100
$0
s
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I
Dec. 31, 2004
Dec. 31, 2005
Dec. 31, 2006
Dec. 31, 2007
Dec. 31, 2008
Dec. 31, 2009
Base
Period
INDEXED RETURNS
Years Ending
Company Name / Index
12/31/04
2005
2006
2007
2008
2009
SBA Communications Corporation
Nasdaq Composite Index
Peer Group
$100.00
$100.00
$100.00
$192.89
$101.33
$152.23
$296.34
$114.01
$199.08
$364.66
$123.71
$232.49
$ 175.86
$ 73.11
$ 134.38
$368.10
$105.61
$230.06
Reflects $100 invested on December 31, 2004 in (i) the Class A Common Stock of SBA, (ii) the basket of companies
comprising the NASDAQ Composite Index, and (iii) the companies comprising the Peer Group.
1
2
Global Signal, Inc. emerged from Chapter 11 bankruptcy in 2002 and completed its initial public offering in June
2004. Information about Global Signal, Inc. is included in the Peer Group through January 2007, when it was
acquired by Crown Castle International Corporation.
SpectraSite, Inc. emerged from Chapter 11 bankruptcy in February 2003, at which time it cancelled its outstanding
common stock and issued new common stock in accordance with its plan of reorganization. Information about
SpectraSite, Inc. is included in the Peer Group through August 2005, when it was acquired by American Tower
Corporation.
Non-GAAP Financial Measures Required Disclosures in Accordance with Regulation G
SBA Communications Corporation (“SBA” or “We”) often makes disclosures of non-GAAP financial measures, such as
Equity Free Cash Flow and Equity Free Cash Flow Per Share. Following is a reconciliation of these non-GAAP financial
measures to their most comparable GAAP measures and the other information required by Regulation G. Additional
non-GAAP financial information is included in our 10-K which accompanies this annual report.
Equity Free Cash Flow is defined as Adjusted EBITDA minus net cash interest expense, non-discretionary cash capital
expenditures and cash taxes paid. Equity Free Cash Flow Per Share is defined as Equity Free Cash Flow divided by the
weighted average shares outstanding for the period. We discuss Equity Free Cash Flow and Equity Free Cash Flow Per
Share because we believe that these measures are indicators of the amount of cash produced by our business and thus
reflect the amount that may be available for reinvestment in the business through discretionary capital expenditures,
repayment of indebtedness or return to shareholders. Equity Free Cash Flow is not intended to be an alternative measure
of cash flow from operations or operating income as determined in accordance with GAAP. Equity Free Cash Flow Per
Share is not intended to be an alternative measure of earnings per share as determined in accordance with GAAP. The
reconciliation of Equity Free Cash Flow and Equity Free Cash Flow Per Share is as follows:
Adjusted EBITDA (see page 28 of Form 10-K)
Net cash interest expense
Non-discretionary cash capital expenditures
Cash taxes paid
Equity Free Cash Flow
Weighted average number of common shares
Outstanding – basic and diluted
Equity Free Cash Flow Per Share – basic and diluted
Special Note Regarding Forward-Looking Statements
For the year ended December 31,
2009
(in thousands, except
per share prices)
338,464
(129,731)
(8,290)
(1,975)
198,468
$
$
2008
269,186
(98,444)
(6,357)
(1,893)
162,492
117,165
109,882
1.69
$
1.48
$
$
$
This annual report contains forward-looking statements that concern expectations, beliefs, projections, strategies,
anticipated events or trends concerning our future operational and financial performance. These forward-looking
statements are qualified in their entirely by cautionary statements and risk factor disclosures contained in our Form10-K
filed with the Securities and Exchange Commission on March 1, 2010 and our quarterly earning press releases included
as exhibits to our Form8-K’s previously furnished to the Securities and Exchange Commission.
HEADQUARTERS
5900 Broken Sound Parkway NW
Boca Raton, FL 33487
561.995.7670
800.487.SITE (7483)
REGIONAL OFFICES
Pelham, AL
Beverly, MA
Las Vegas, NV
Woodbridge, NJ
Montreal, Canada
AUDITORS
Ernst & Young LLP
One Clearlake Centre, Suite 900
250 Australian Avenue
West Palm Beach, FL 33401
TRANSFER AGENT
Computershare Trust Company, N.A.
P.O. Box 43069
Providence, RI 02940-3069
www.computershare.com/equiserve
INVESTOR RELATIONS
SBA Communications Corporation
5900 Broken Sound Parkway NW
Boca Raton, FL 33487
invest@sbasite.com
NOTICE OF ANNUAL MEETING
The annual meeting of shareholders will
be held at 10:00 a.m. on May 6, 2010 at
Corporate Headquarters
5900 Broken Sound Parkway NW
Boca Raton, FL 33487
INTERNET WEB SITE
www.sbasite.com
COMMON STOCK
TRADING SYMBOL
Class A shares of SBA Communications
Corporation are traded on the NASDAQ
Global Select Market under the symbol SBAC.
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DIRECTORS
Steven E. Bernstein,
Chairman of the Board
Jeffrey A. Stoops,
Director, President and Chief
Executive Officer
Kevin L. Beebe,
Director
Brian C. Carr,
Director
OFFICERS
Jeffrey A. Stoops,
President and
Chief Executive Officer
Kurt L. Bagwell,
Senior Vice President and
Chief Operating Officer
William J. Bates,
Vice President—Business
Development
Reid Boynton,
Vice President—Northeast
Brendan T. Cavanagh,
Senior Vice President and
Chief Financial Officer
Mark R. Ciarfella,
Vice President—Tower
Development
Johnny R. Crawford,
Vice President—Business
Development
Brian J. Gottfried,
Vice President—National Sales
Jorge Grau,
Vice President and
Chief Information Officer
Larry M. Harris,
Vice President—Mergers and
Acquisitions
Thomas G. Hoffman,
Vice President—Southeast Region
Duncan H. Cocroft,
Director
George R. Krouse,
Director
Jack Langer,
Director
Thomas P. Hunt,
Senior Vice President,
Chief Administrative Officer and
General Counsel
Pamela J. Kline,
Vice President—Capital Markets
Joseph M. Lane,
Vice President—Site Management
Brian D. Lazarus,
Vice President and
Chief Accounting Officer
Don R. Mueller,
Vice President—Managed Sites
Jo Carol Rutherford,
Vice President—Human Resources
Neil H. Seidman,
Vice President—Mergers and
Acquisitions
Jason V. Silberstein,
Senior Vice President—Property
Management
David L. Tribble,
Vice President—Construction
Services
Jim D. Williamson,
Vice President—Southeast
SBA Communications Corporation
5900 Broken Sound Parkway NW
Boca Raton, FL 33487
www.sbasite.com