IN OUR SITE LEASING BUSINESS
THROUGH OUR SITE DEVELOPMENT SERVICES
SBA leases antenna space on our multi-tenant towers to a
variety of wireless service providers under long-term lease
contracts. SBA owns and operates over 25,000 towers
across the Western Hemisphere. We build our towers at the
request of wireless carriers, leveraging our in-house expertise
in site acquisition, zoning and construction. In addition,
SBA manages approximately 5,000 communication site
locations on behalf of third-party landlords.
SBA offers wireless service providers assistance in
developing their own networks. Our services include site
identification and acquisition as well as obtaining zoning
approvals and permitting for networks representing
numerous technologies. SBA also provides a broad range
of cell site equipment installation, optimization and
integration services. Our extensive site development
experience includes participation in the development of
over 50,000 communication sites over our 27 year history.
2015 Annual Report l SBA Communications Corporation
1
Wireless traffic continues to grow. As the demand for additional
mobile data increases, particularly video, this will fuel the need
for additional infrastructure – which is our sole focus at SBA.
Research shows that smartphones are projected to make up nearly 50% of
the global devices by 2020 – up from 36% in 2015. With projections like
this, wireless infrastructure will be more critical than ever to support wireless
connectivity. Innovations beyond our smartphones such as self-driving cars,
smart city sensor systems, industrial automation, smart homes and mobile
healthcare solutions will continue to place demand on wireless networks.
As the population continues to grow and more people demand network
capabilities for multiple devices in their lives, SBA expects the capacity
requirements on wireless networks to grow exponentially. This supports our
business model by increasing demand for our site leasing and site development
services, as we believe wireless carriers will need to continue to add capacity
to their networks to meet the growing demand.
2
2015 Annual Report l SBA Communications Corporation
Wireless infrastructure
increases as the need for
richer, more robust data
continues to grow.
Our size, experience, capabilities and resources make SBA a preferred partner for wireless service providers both
domestically and internationally. With anticipated ongoing growth in wireless traffic (in particular data and video),
SBA will continue to lead the way in providing innovative business strategies and continuous improvement to
network infrastructure.
Pictured above: Melissa Yu, Manager, Site Development – located in our Montreal, Canada office.
2015 Annual Report l SBA Communications Corporation
3
SBA Communications understands the importance of
“speed to market” for our customers.
With anticipated tremendous growth in wireless traffic, SBA Communications
is well-positioned for the future.
Our principal operations are still in the United States and its territories, but we
also own and operate towers in North, Central and South America. We have a
strong footprint throughout the Western Hemisphere.
4
2015 Annual Report l SBA Communications Corporation
2015
leasing
revenues
We PRIMARILY grew our
business organically
through our wireless
carrier customers’
deployment of new
equipment or additional
equipment on our towers
and other sites.
27% AT&T
19% SPRINT
16% T-MOBILE
14% VERIZON
9%
8%
4%
2%
1%
OI
TELEFÓNICA
AMÉRICA MÓVIL
NON-TELEPHONY
OTHER TELEPHONY
One of the top priorities of SBA Communications is the safety of our tower climbers. It has been a key focus of the
company since we began over 27 years ago. We are very proud to be a safety leader in the wireless infrastructure
industry. We offer our employees a comprehensive training facility, the latest safety equipment and constant education
to maintain our position as a safety leader.
Pictured above: Left: Matthew Womack, Construction Supervisor, Group Shot: Charles Inge, Journeyman - Tower, Matthew Womack and Jonathan
Lark, Tower Training Manager, Climbing Tower: Matthew Womack – all located in our Pelham, Alabama office, home to our training facility, Tower U.
2015 Annual Report l SBA Communications Corporation
5
Pictured above: (top left to right, clockwise) Bryan Weber,
Corporate Counsel, Legal Operations, Cassandra Connette,
Closing Administrator, Real Estate, Khreshmore Spence,
Administrative Assistant, Title Department, Carolina Auster,
Closing Administrator, Real Estate, Tammy Mastrella,
Paralegal, Legal Operations – all located in our Boca Raton,
Florida headquarters.
6
2015 Annual Report l SBA Communications Corporation
SBA Communications
has employees
in nine countries
throughout the
Western Hemisphere.
Our operations and services teams have some of the longest experience in the industry and interact closely
with our wireless customers to provide expertise and services throughout the full life cycle of site and tower
development. Our employees focus on finding the best solutions to provide extraordinary value and help our
customers achieve their business objectives.
Pictured above: (top left to right clockwise) Mauricio Agredo, Construction Manager, Jeanmarie Tocco, Project Accountant and Steve Milana,
Manager, Site Acquisition – all from the New Tower Builds division at our corporate headquarters.
2015 Annual Report l SBA Communications Corporation
7
Corporate philanthropy is an increasingly key focus at
SBA Communications Corporation. We are proud of our
employees who “change lives” in so many ways.
We strive to enhance community commitments, which many
of our employees share, while also creating a workplace setting
that is respectful of each employee’s personal preferences about
donating their money or volunteering their time to nonprofit
organizations of their choice.
We offer the “SBA Cares” program which encourages our
employees to volunteer or donate funds through a company
matching program to charities they choose. To date over 100
nonprofit organizations have benefitted from our employees’
philanthropic initiatives which primarily focus on five key areas:
animals, healthcare, children, social services and the military.
8
2015 Annual Report l SBA Communications Corporation
2015 Annual Report l SBA Communications Corporation
9
Site leasing revenue
for the year 2015 was
$1,481 million compared
to $1,360 million for the
year 2014; an increase
of 9%.
9%
Site leasing segment
operating profit for the year
2015 was $1,156 million
compared to $1,059
million for the year 2014;
an increase of 9%.
Site Leasing Revenues in Millions
Site Leasing Operating Profit in Millions
477
365
535
416
616
484
846
657
1,360
1,481
1,133
862
1,059
1,156
2009
2010
2011
2012
2013
2014
2015
10
2015 Annual Report l SBA Communications Corporation
FINANCIAL HIGHLIGHTS
2015 vs 2014
In thousands (except per share data)
for the year ended December 31,
2014
2015
Percentage
Change
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
$ 1,360,202
$ 1,480,634
$ 166,794
$ 157,840
$ 1,526,996
$ 1,638,474
$ 301,313
$ 324,655
$ 127,172
$ 119,744
$
428,485
$
444,399
$ 1,058,889
$1,155,979
$
39,622
$
38,096
$ 1,098,511
$ 1,194,075
8.9%
–5.4%
7.3%
7.7%
–5.8%
3.7%
9.2%
–3.9%
8.7%
Selling, general and administrative expenses
$ 103,317
$ 114,951
11.3%
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
$
$
(24,295)
$ (175,656)
(0.19)
$
(1.37)
128,919
127,794
$
97,511
$ 144,098
$ 7,841,125
$ 7,403,215
$ 7,870,000
$ 8,555,000
2015 Annual Report l SBA Communications Corporation 11
of our services revenue in 2015. At year end, we
owned 15,778 sites in the United States, repre-
senting 62% of our total portfolio. In 2015, after
record levels of activity in 2013 and 2014 around
4G deployments, our U.S. customers in the aggre-
gate took a breather and activity levels slowed in
both our leasing and services businesses. We still
enjoyed healthy growth in U.S. revenue per tower,
although at a lower rate than we experienced the
previous two years. Our same tower gross organic
cash revenue growth rate in the United States was
7.5% in 2015 compared to over 14% in 2014, in
each case measured in the fourth quarter over the
year earlier period. On a reported basis, growth in
U.S. site leasing revenue and tower cash flow was
6.9% and 8.7%, respectively, in 2015, lower than
the growth we experienced in 2014, impacted
by the slower activity and a greater than average
amount of customer terminations (or “churn”) of
leases, the substantial majority of which we had
expected and had forecasted several years ago.
We believe the level of churn peaked in 2015,
driven by Sprint’s termination of its (former Nextel)
iDen network and, to a lesser extent, from the
termination of Metro, Leap and Clearwire leases
resulting from consolidations.
The slowdown in the United States in 2015 was
not surprising and is consistent with historical
network spending activity in the U.S. wireless
business. Our customers rarely all spend at the
same time and at the same pace, and 2015 was
such a year. In 2015 we experienced a wide vari-
ation in spending levels and activity levels with
the four primary U.S. wireless carriers, and even
greater variation when compared to activity levels
in 2014. Notwithstanding, 2015 was still a very
busy year for us and confirmed the importance
of and need for continued investment by our
customers in their networks. In the United States
last year we processed over 5,500 amendments
to our tenant leases, a number representing over
Directors (standing): Jack L. Langer, George R. Krouse Jr., Brian C. Carr, Kevin L. Beebe,
Duncan H. Cocroft; (seated): Mary S. Chan, Jeffrey A. Stoops, Steven E. Bernstein
We crossed the 25,000
towers owned milestone
and ended the year
with operations in nine
different countries.
TO OUR
SHAREHOLDERS:
The year 2015 was another solid one for SBA,
particularly operationally. We executed well, ben-
efited from continued wireless growth in all of our
markets and allocated capital wisely. In 2015,
we grew site leasing revenue 8.9%, tower cash
flow 9.9%, adjusted EBITDA 9.6%, AFFO 8.0%
and AFFO per share 9.0%. Each of these items
were record results for SBA in absolute dollars.
Our reported results were negatively impacted
by foreign currency translation adjustments. On
a constant currency basis, adjusting for changes
in the Brazilian Real and Canadian Dollar relative
to the U.S. dollar, we grew site leasing revenue
14.0%, tower cash flow 13.8%, adjusted EBITDA
13.4%, AFFO 13.8% and AFFO per share 14.8%.
We crossed the 25,000 towers owned milestone
and we ended the year with operations in nine dif-
ferent countries.
Our U.S. market remains our largest by far, contrib-
uting 84% of our site leasing revenue and 100%
12
2015 Annual Report l SBA Communications Corporation
one-third of our U.S. portfolio. An amendment
results when a customer adds or changes equip-
ment at our tower site. That is an extraordinary
amount of activity and one that underscores
the importance of our towers to our customers’
networks. In 2015, most U.S. activity centered
around new and overlay deployments of AWS-1
and 700 MHz spectrum, and refarming of 2G and
3G spectrum to 4G LTE use. Some of that activity
was in the form of new colocation leases, but the
vast majority came in the form of amendments to
existing cell sites. We expect this type of activity
to continue in 2016, and to increase from deploy-
ments of AWS-3, WCS and 2.5 GHz spectrum as
we move through the year. Our customers have
invested large sums in their spectrum holdings
and cannot earn a return on that spectrum until
it is deployed. We remain extremely optimistic
about future growth for our business in the United
States. Demand for additional mobile data, partic-
ularly video as now offered by all four primary U.S.
wireless carriers, and limited spectrum will fuel a
need for additional infrastructure. We expect to
continue to benefit from this need.
On the cost side, we performed very well across
all U.S. lines of business. We pride ourselves
on our continued industry leadership in operat-
ing efficiency. Our U.S. tower cash flow margin
grew to 81.7% in 2015 from 80.9% in 2014. Our
consolidated adjusted EBITDA margin grew to
68.9% in 2015 from 67.9% in 2014. Compared
to our two public tower company peers in the
United States, both of which are considerably
larger than us, our margins are the highest, and
our operating expenses per tower and selling,
general and administrative expenses as a per-
centage of revenue are the lowest. We continue
to execute very well.
portfolio growth, most of which occurred at the
end of 2014. International leasing revenue grew
20% in 2015 over 2014, and for 2015 represented
16% of our total site leasing revenue. Our interna-
tional results on a reported basis were materially
impacted, however, by translation losses from the
depreciation of the Brazilian Real, which depre-
ciated 42% relative to the U.S. dollar in 2015
compared to 2014. On a constant currency basis,
international leasing revenue would have grown
55%. We enjoyed success in all eight countries
outside the United States in which we oper-
ated, materially increasing leasing revenue and
adjusted EBITDA in each. We established oper-
ations in Ecuador in September, acquiring 130
towers. We experienced the greatest operational
growth in Brazil, our largest market outside the
United States, but recorded the greatest growth
on a reported basis in Central America where our
revenues and expenses are paid in U.S. dollars.
We ended the year with 9,687 sites outside of the
United States, representing approximately 38% of
our total tower portfolio. We ended the year with
over 7,000 sites in Brazil. We have worked hard
to integrate and conform our towers in Brazil to
our standards, processes and documentation,
and ended the year with substantially all of our
integration goals achieved. Our international tow-
ers are high quality with additional capacity. They
are on average much less mature than our U.S.
towers, providing ample opportunity for future
growth. Our customers were and are very active
in each market, with 3G and 4G activity in all mar-
kets and in some cases initial network builds from
new market entrants. The wireless environment in
each of these regions has developed and we think
will continue to develop much like the United
States. We are equally optimistic about the future
growth of our business outside the United States.
Our international activity grew materially again in
2015, from both solid organic growth and from
In addition to growing our business organically
through our wireless carrier customers deploying
SBA Communications
prides itself on our
continued industry
leadership in operating
efficiency. Compared
to our two larger public
tower company peers in
the United States, our
margins are the highest,
and our operating
expenses per tower and
selling, general and
administrative expenses
as a percentage of
revenue are the lowest.
2015 Annual Report l SBA Communications Corporation 13
We maintain one of the
lowest aggregate costs
of debt in our industry
and are very comfortable
with our mix of secured
versus unsecured debt –
and have been for many
years.
new equipment or adding additional equipment
on our towers and other sites, we grow our busi-
ness by increasing the number of towers and other
sites that we own or control, and by purchasing
the land under our towers. Portfolio growth is
our preferred use for capital allocation. In 2015,
we added a net of 1,173 towers and grew our
tower portfolio by 5%. We built 451 new towers
and acquired 893 towers. We invested over $50
million buying land or extending ground leases.
We continue to apply rigid investment criteria to
our portfolio growth, seeking to acquire or build
towers in the U.S. that we expect will produce
unlevered internal rates of return comfortably
above our weighted average cost of capital and
that will be accretive to AFFO per share. We seek
even higher returns on our international invest-
ments, particularly if the revenue and expense
from the investment is not denominated in U.S.
dollars (like Brazil). We continue to be extremely
happy with our portfolio growth decisions, as past
transactions are operationally performing ahead
of plan. We are continuing to look for additional
portfolio growth opportunities, with a bias toward
additional assets in the Western Hemisphere
where we currently operate.
We seek each year to allocate a certain amount
of capital to invest to the level at which we want
to maintain and manage our balance sheet. We
review the level frequently, and set it based on an
assessment of current capital market conditions,
financing options, interest rates and our organic
growth rates. When we are operating at and allo-
cating capital within the desired balance sheet
levels, we consider ourselves to be “fully invested.”
Staying “fully invested” is a primary component of
our value creation strategy. As I stated previously,
our preference for that capital allocation is portfolio
growth. Sometimes, however, in our quest to stay
fully invested, we find better relative value in our
common stock than contemporaneously available
portfolio growth opportunities. 2015 was a year
where we found at times a greater degree of rela-
tive value in repurchasing our common stock than
from portfolio growth opportunities. We invested
approximately $1.27 billion of total capital in 2015.
Our mix of investment last year was approximately
41% for acquisitions, 35% for stock repurchases
and 24% for other capital expenditures including
new tower builds and ground lease buyouts. We
invested $450 million in 2015 to repurchase our
common stock at an average price of $113 per
14
2015 Annual Report l SBA Communications Corporation
share. Those repurchases represented a material
return of capital to our shareholders. We believe
we repurchased our common stock at prices well
below its intrinsic value, and we believe this allo-
cation of capital will produce material future value
for our shareholders.
our future growth. Why all the optimism? Because
wireless data traffic continues to grow materially.
The predictions are staggering and very posi-
tive for our future. Here are some findings from
Cisco’s annual Global Mobile Data Traffic Forecast
Update, 2015 - 2020:
Managing our balance sheet to the appropriate
levels is a top priority, as it drives the amount of
capital we seek to allocate each year. We were very
active with balance sheet management in 2015.
We raised $2 billion in debt financings last year, in
new proceeds and refinancing transactions. Our
balance sheet remains stable. We ended the year
with a net debt/annualized adjusted EBITDA ratio
of 7.7x, just above the high end of our target range
of 7.0x to 7.5x. We have been operating within
these levels for many years. We ended the year
in a strong financial position, with ample liquid-
ity and resources to allocate material capital to
growth once again in 2016. Notwithstanding the
fact that we operate with materially higher bal-
ance sheet leverage than our U.S. public tower
company peers and are a non-investment grade
credit, we maintain one of the lowest aggregate
costs of debt in our industry. At year end, our out-
standing indebtedness had a weighted average
interest rate of 3.9% and a weighted average life
of over five years. Of our total indebtedness, 77%
was fixed rate. We are able to achieve a relatively
low cost of debt because 76% of our indebt-
edness at year-end was secured. We are very
comfortable with our mix of secured versus unse-
cured debt, and have been for many years. The
predictable nature of our business provides us
with confidence around the covenant compliance
typically associated with secured financing, and
the organic growth of our business provides us
flexibility and many options for future financings.
n Global mobile data traffic grew an estimated 74
percent in 2015, and is predicted to increase
nearly eightfold by 2020.
n By 2020, 4G connections will handle 72% of
total mobile data traffic, up from 47% in 2015.
n Mobile network connection speeds are pre-
dicted to increase 3-fold by 2020.
n Three-fourths of the world’s mobile data traffic
is predicted to be video by 2020.
n Smartphones will be nearly 50 percent of global
devices by 2020, up from 36% in 2015.
n The number of mobile-connected devices
will exceed the world’s population in 2020 by
approximately 50%.
How will all this growth be possible? With more
wireless infrastructure, particularly towers and
antennas, which is our sole focus here at SBA.
We had another solid year in 2015. We are expect-
ing another year of material growth and record
financial results in 2016. We thank you, our
shareholders, for your support, and we thank our
customers and employees for their contributions
to our success. We look forward to executing well
again this year and reporting our 2016 results.
Respectfully,
We intend to stay “fully invested” in the business
because of the great optimism we have around
Jeffrey A. Stoops
President and Chief Executive Officer
We continue to apply
rigid investment criteria
to our portfolio growth
and look for additional
opportunities, with a
bias toward additional
assets in the Western
Hemisphere where we
currently operate.
2015 Annual Report l SBA Communications Corporation 15
Our mission is to:
Seek and achieve excellence in all that we do at SBA.
Our guiding principles drive our culture:
Integrity, Work Ethic, Ownership Mindset, Quality,
Customer Service, Innovation and Collegiality.
The vision of SBA is:
To be the most respected organization in our
industry by our customers, employees, shareholders
and communities.
16
2015 Annual Report l SBA Communications Corporation
form 10-k
2015 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, 2015
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 000-30110
SBA COMMUNICATIONS CORPORATION
(Exact name of Registrant as specified in its charter)
Florida
(State or other jurisdiction of
incorporation or organization)
8051 Congress Avenue
Boca Raton, Florida
(Address of principal executive offices)
65-0716501
(I.R.S. Employer
Identification No.)
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
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 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
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 No
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.
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
Non-Accelerated filer
Accelerated filer
Smaller reporting company
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes No
The aggregate market value of the voting stock held by non-affiliates of the Registrant was approximately $14.5 billion as of June 30, 2015.
The number of shares outstanding of the Registrant’s common stock (as of February 19, 2016): Class A common stock — 125,257,417
Portions of the Registrant’s definitive proxy statement for its 2016 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, 2015, 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
BUSINESS
ITEM 1.
ITEM 1A. RISK FACTORS
ITEM 2.
ITEM 3.
ITEM 4. MINE SAFETY DISCLOSURE
PROPERTIES
LEGAL PROCEEDINGS
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
ITEM 6.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
SELECTED FINANCIAL DATA
RESULTS OF OPERATIONS
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 8.
ITEM 9.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
ITEM 9A. CONTROLS AND PROCEDURES
ITEM 9B. OTHER INFORMATION
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
ITEM 11. EXECUTIVE COMPENSATION
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
SIGNATURES
Page
1
7
18
18
18
19
21
22
44
47
47
47
50
50
50
50
50
50
50
55
ITEM 1. BUSINESS
General
We are a leading independent owner and operator of wireless communications tower structures, rooftops and other structures
that support antennas used for wireless communications, which we collectively refer to as “towers” or “sites.” Our principal operations
are in the United States and its territories. In addition, we own and operate towers in South America, Central America, and Canada.
Our primary business line is our site leasing business, which contributed 96.8% of our total segment operating profit for the year
ended December 31, 2015. In our site leasing business, we (1) lease antenna space to wireless service providers on towers that we own
or operate and (2) manage rooftop and tower sites for property owners under various contractual arrangements. As of December 31,
2015, we owned 25,465 towers, a substantial portion of which have been built by us or built by other tower owners or operators who,
like us, have built such towers to lease space to multiple wireless service providers. We also managed or leased approximately 5,500
actual or potential towers, approximately 500 of which were revenue producing as of December 31, 2015. Our other business line is
our site development business, through which we assist wireless service providers in developing and maintaining their own wireless
service networks.
Site Leasing Services
Our primary focus is the leasing of antenna space on our multi-tenant towers to a variety of wireless service providers under
long-term lease contracts in the United States, Canada, Central America, and South America. We receive site leasing revenues
primarily from wireless service provider tenants, including AT&T, Sprint, T-Mobile, Verizon Wireless, Oi S.A., Telefonica, Claro,
and Digicel. Wireless service providers enter into tenant leases with us, each of which relates to the lease or use of space at an
individual site. Our site leasing business generates substantially all of our total segment operating profit, representing 96.2% or more
of our total segment operating profit for the past three years. Our site leasing business is classified into two reportable segments,
domestic site leasing and international site leasing.
Domestic Site Leasing
As of December 31, 2015, we had 15,778 sites in the United States. For the year ended December 31, 2015, we generated
83.5% of our total site leasing revenue from these sites. We receive domestic site leasing revenues primarily from AT&T, Sprint,
Verizon Wireless, and T-Mobile. In the United States, wireless service providers typically enter into tenant leases with us, each of
which relates to the lease or use of space at an individual tower. Our tenant leases in the United States are generally for an initial term
of five to ten years with five 5-year renewal periods at the option of the tenant. These tenant leases typically contain specific rent
escalators, which typically average 3-4% per year, for both the initial and renewal option periods. Our ground leases in the United
States are generally for an initial term of five years or more with multiple renewal terms of 5-year periods, at our option, and provide
for rent escalators which typically average 2-3% annually.
International Site Leasing
In 2015, we continued to focus on growing our international site leasing business through the acquisition and development of
towers. We believe that we can create substantial value by expanding our site leasing services into select international markets which
we believe have a high-growth wireless industry and relatively stable political and regulatory environments. As of December 31,
2015, we owned 9,687 towers in our international markets, including Brazil, Canada, Costa Rica, Ecuador, El Salvador, Guatemala,
Nicaragua, and Panama. We receive international site leasing revenues primarily from Oi S.A., Telefonica, Claro, Digicel, and TIM.
Our operations in these countries are solely in the site leasing business, and we expect to continue to expand operations through new
builds and acquisitions.
Our tenant leases in Canada typically have similar terms and conditions as those in the United States with an initial term of five
to ten years with five 5-year renewal periods at the option of the tenant. These tenant leases typically contain specific rent escalators,
which average 3-4% per year. Tenant leases in our Central American and South American markets typically have an initial term of
ten years with multiple five year renewal periods. In Central America, we have similar rent escalators to that of leases in the United
States and Canada while our leases in South America typically escalate in accordance with a standard cost of living index. In Brazil,
site leases are typically governed by master lease agreements, which provide for the material terms and conditions that will govern the
terms of the use of the site. Site leases in South America typically provide for a fixed rental amount and a pass-through charge for the
underlying ground lease rent. Our ground leases in Canada, Central America and South America generally have similar terms and
1
conditions as those in the United States, except that the annual escalators in our South American ground leases are based on a cost of
living index.
Domestic and International Expansion
We expand our tower portfolio, both domestically and internationally, through the acquisition of towers from third parties and
through the construction of new tower structures. 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 majority of our international markets typically have less mature wireless networks with limited wireline infrastructure and
lower wireless data penetration rates than those in the United States. Accordingly, our expansion in these markets is primarily driven
by (i) wireless service providers seeking to increase the quality and coverage of their networks, (ii) increased consumer mobile data
traffic, such as media streaming, mobile apps and games, web browsing, and email, and (iii) incremental spectrum auctions, which
have resulted in new market entrants, as well as incremental voice and data network deployments. Since we first entered the Central
and South American markets, we have built or acquired 9,430 towers and continue to expand in these markets to respond to growing
demand.
We consider various factors when identifying a market for our international expansion, including:
Country analysis – We consider the country’s political stability, and whether the country’s general business, legal and
regulatory environment is conducive to the sustainability and growth of our business.
Market potential – We analyze the expected demand for wireless services, and whether a country has multiple wireless
service providers who are actively seeking to invest in deploying voice and data networks, as well as spectrum auctions that
have occurred or that are anticipated to occur.
Risk adjusted return criteria – We consider whether buying or building towers in a country, and providing our management
and leasing services, will meet our return criteria. As part of this analysis, we consider the risk of entering into an
international market (for example, the impact of foreign currency exchange rates), and how our expansion meets our long-
term strategic objectives for the region and our business generally.
In our new build program, we construct tower structures (1) in locations that are strategically chosen by us or (2) under build-to-
suit arrangements. Under build-to-suit arrangements, we build tower structures for wireless service providers at locations that they
have identified. Under these arrangements, we retain ownership of the tower structure and the exclusive right to co-locate additional
tenants. When we construct tower structures 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 tower structures and complete pre-construction
procedures necessary to secure the site concurrently with our leasing efforts. We generally will have at least one signed tenant lease
for each new build tower structure on the day that it is completed and expect that some will have multiple tenants. During 2016, we
intend to build between 590 and 610 new tower structures, domestically and internationally.
Site Development Services
Our site development business, which is conducted in the United States only, is complementary to our site leasing business and
provides us the ability to keep in close contact with the wireless service providers who generate substantially all of our site leasing
revenue and to capture ancillary revenues that are generated by our site leasing activities, such as antenna and equipment installation
at our towers. We earn site development services revenues primarily from the full range of end to end services we provide to wireless
service providers or companies providing development or project management services to wireless service providers. Our services
include: (1) network pre-design; (2) site audits; (3) identification of potential locations for towers and antennas; (4) support in buying
or leasing of the location; (5) assistance in obtaining zoning approvals and permits; (6) tower and related site construction; (7) antenna
installation; and (8) radio equipment installation, commissioning, and maintenance. We provide site development services on a local
basis, through regional, territory, and project offices. The regional offices are responsible for all site development operations,
including hiring employees and opening or closing project offices, and a substantial portion of the sales in such area.
For financial information about our operating segments, please see Note 18 of our Consolidated Financial Statements included
in this Form 10-K.
2
Industry Developments
We believe that growing wireless traffic (particularly data and video), the deployment of additional spectrum, and technology
advancements will require wireless service providers to improve their network infrastructure and increase their network capacity
resulting in an increase in the number of towers that they utilize and additions and changes to the equipment they deploy at existing
towers. We expect that the wireless communications industry will continue to experience growth as a result of the following trends:
As wireless traffic continues to grow, carriers are investing to increase the capacity of their networks; and we believe that
the continued capacity increases will require our customers to add large numbers of additional cell sites and additional new
equipment at current cell sites.
Spectrum licensed by the Federal Communications Commission (the “FCC”) has enabled continued network development.
We expect the deployment of currently fallow spectrum and the potential availability of additional spectrum through a
planned government auction to drive continued network development in the U.S.
Consumers are increasing their use of wireless data services due to expansion of wireless data applications, such as video,
mobile apps and games, web browsing, email and social networking, and continued wireline to wireless migration. Wireless
devices such as smartphones, tablets, laptops, and other emerging and embedded devices continue to trend toward being
more bandwidth-intensive. As a result, according to industry estimates, global mobile data traffic will grow at an
approximately 53% compound annual growth rate from 2015 to 2020 and will grow at a rate three times faster than non-
mobile data traffic over the same period.
Consumers list network quality as one 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. For example, U.S. wireless carriers’
capital expenditures have increased from an estimated $22.9 billion in 2010 to an estimated $31.7 billion in 2015, and we
expect capital expenditures in the foreseeable future to remain elevated as wireless carriers continue to improve their
networks.
We believe that the world-wide wireless industry will continue to grow and is reasonably 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 demand
for tower space from our customers, which we believe will translate into strong leasing growth for us.
Business Strategy
Our primary strategy is 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 and repetitive 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. Key elements of our strategy include:
Maximizing Use of Tower Capacity. We generally have constructed or acquired towers that accommodate multiple tenants and a
majority of our towers are high capacity tower structures. 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. As of December 31, 2015, we had an average of 1.8 tenants per tower structure.
Disciplined Growth of our Tower Portfolio. 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. During 2016, we intend to continue to grow our tower portfolio, domestically and internationally, through tower
acquisitions and the construction of new tower structures. In connection with our international expansion, we have targeted select
international markets that we believe have relatively stable political environments and a growing wireless communications industry.
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 in the short and long term and which allow us to
maintain our long-term target leverage ratios.
Capitalizing on our Scale and Management Experience. We are a large owner, operator and developer of towers, with
substantial capital, human, and operating resources. We have been developing towers for wireless service providers in the U.S. since
1989 and owned and operated towers for ourselves since 1997. We believe our size, experience, capabilities, and resources make us a
preferred partner for wireless service providers both in the U.S. and internationally. Our management team has extensive experience in
site leasing and site development, with some of the longest tenures in the tower and site development industries. We believe that our
3
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.
Controlling our Underlying Land Positions. We have purchased and/or entered into perpetual easements or long-term leases for
the land that underlies our tower structures and intend to continue to do so, to the extent available at commercially reasonable prices.
We believe that these purchases, perpetual easements, 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, 2015, approximately 73%
of our tower structures were located on land that we own or control for more than 20 years and the average remaining life under our
ground leases, including renewal options under our control, was 33 years. As of December 31, 2015, approximately 5.8% of our tower
structures have ground leases maturing in the next 10 years.
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. We are seeking to replicate this operating model internationally. 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.
Customers
Since commencing operations, we have performed site leasing and site development services for all of the large U.S. wireless
service providers. In both our site leasing and site development businesses, we work with large national providers and smaller
regional, local, or private operators.
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 the last three years:
Percentage of Total Revenues
AT&T Wireless (1)
Sprint
T-Mobile
Verizon Wireless
For the year ended December 31,
2015
2014
2013
24.2%
19.6%
16.0%
13.8%
23.0%
23.4%
15.5%
12.0%
20.5%
25.0%
17.3%
11.3%
(1) Prior year amounts have been adjusted to reflect the merger of AT&T Wireless and Leap Wireless (Cricket Wireless).
During the past two years, we provided services or leased space to a number of customers, including:
AT&T Wireless
Cellular South
Claro
Digicel
Ericsson, Inc.
Goodman Networks
NII Holdings
Ntelos
Mastec
Oi S.A.
Overland Contracting
SouthernLinc
Sprint
T-Mobile
TIM
Telefonica
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.
4
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 our
corporate office. We also rely on our vice presidents, general managers, and other operations personnel to sell our services and
cultivate customers. Our strategy is to delegate sales efforts by geographic region or 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’s compensation is heavily weighted to
incentive-based goals and measurements.
Competition
Domestic Site Leasing – In the U.S., our primary competitors for our site leasing activities are (1) the national independent
tower companies including American Tower Corporation and Crown Castle International, (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. American Tower and Crown Castle have significantly more towers
than we do, which could provide them a competitive advantage in negotiating with wireless service providers. Furthermore, these
entities generally have greater financial resources than we do which may provide them with a competitive advantage in connection
with the acquisition of material tower portfolios. However, we believe that tower location and capacity have been and will continue to
be the most significant competitive factors affecting the site leasing business. Other competitive factors are quality of service to our
tenants and price.
International Site Leasing – Our competition consists of wireless service providers that own and operate their own tower
networks, as well as large national and regional independent tower companies.
Site Development – The site development business is extremely competitive and price sensitive. We believe that the majority of
our competitors in the U.S. site development business operate within local market areas exclusively, while some firms offer their
services nationally. 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 international, regional, and local offices.
As of December 31, 2015, we had 1,310 employees of which 230 were based outside of the U.S. and its territories. We consider
our employee relations to be good.
Regulatory and Environmental Matters
Federal Regulations. In the U.S., which accounted for 83.5% of our total site leasing revenue for the year ended December 31,
2015, both the FCC and the Federal Aviation Administration (the “FAA”) regulate towers. Many FAA requirements are implemented
in FCC regulations. These regulations, which were amended in 2014, govern the construction, lighting, and painting or other marking
of towers, as well as the maintenance, inspection, and record keeping related to towers, and may, depending on the characteristics of
particular towers, require prior approval and registration of towers before they may be constructed, altered or used. Wireless
communications equipment and radio or television stations operating on towers 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 tower
structure registration (through the FCC’s Antenna Structure Registration System) 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. New tower construction also requires approval from the state or local governing
5
authority for the proposed site: compliance with the National Environmental Policy Act (“NEPA”); compliance with the National
Historic Preservation Act (“NHPA”); compliance with the Endangered Species Act (“ESA”); and may require notification to the FAA.
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 towers. These standards mandate that the FCC and the FAA
consider the height of the proposed tower, the relationship of the tower to existing natural or man-made obstructions, and the
proximity of the tower to runways and airports. Proposals to construct or to modify existing towers 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. Towers that meet certain height and
location criteria must also be registered with the FCC. A tower 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 towers may have an obligation to maintain painting and lighting or other marking in conformance with FAA and
FCC regulations. Tower owners and licensees that operate on those towers also bear the responsibility of monitoring any lighting
systems and notifying the FAA of any lighting outage or malfunction.
Owners and operators of towers may be subject to, and therefore must comply with, environmental laws, including NEPA,
NHPA and ESA. Any licensed radio facility on a tower is subject to environmental review pursuant to the NEPA, 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 NEPA. 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 a tower and prior to commencing certain operations of wireless communications or
radio or television stations from the tower. 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.
We generally indemnify our customers against any failure to comply with applicable regulatory standards relating to the
construction, modification, or placement of towers. 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 injury or property damage. We are also subject to
certain environmental laws that govern tower placement and may require pre-construction environmental studies. Operators of towers
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 tower 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.
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 owners to obtain approval from local officials or
community standards organizations, or certain other entities prior to tower construction and establish regulations regarding
maintenance and removal of towers. In addition, many local zoning authorities require tower owners to post bonds or cash collateral to
secure their removal obligations. Local zoning authorities generally have been unreceptive to construction of new towers in their
communities because of the height and visibility of the towers, and have, in some instances, instituted moratoria.
6
International. Regulatory regimes outside of the U.S. and its territories vary by country and locality; however, these regulations
typically require tower owners and/or licensees to obtain approval from local officials or government agencies prior to tower
construction or modification or the addition of a new antenna to an existing tower. Additionally, some regulations include ongoing
obligations regarding painting, lighting, and maintenance. Our international operations may also be subject to limitations on foreign
ownership of land in certain areas. Based on our experience to date, these regimes have been similar to, but not more rigorous,
burdensome or comprehensive than, those in the U.S. Non-compliance with such regulations may lead to monetary penalties or
deconstruction orders. Our international operations are also subject to various regulations and guidelines regarding employee relations
and other occupational health and safety matters. As we expand our operations into additional international geographic areas, we will
be subject to regulations in these jurisdictions.
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, 2015, we had 697 new leases and amendments which had been executed with customers but
which had not begun generating revenue. These leases and amendments will contractually provide for approximately $6.6 million of
annual revenue. By comparison, as of December 31, 2014, we had 264 new leases and amendments which had been executed with
customers but which had not begun generating revenue. These leases and amendments contractually provided for approximately $3.8
million of annual revenue.
Our backlog for site development services consists of the value of work that has not yet been completed under executed
contracts. As of December 31, 2015, we had approximately $30.7 million of contractually committed revenue as compared to
approximately $66.2 million as of December 31, 2014.
Availability of Reports and Other Information
SBA Communications Corporation was incorporated in the State of Florida in March 1997. 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, as amended, on our website under “Investor Relations – Reports
and Results – 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”).
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, or acquired technologies may be discontinued. 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), the combined companies have rationalized and may continue to rationalize duplicative parts of their networks,
and, in the case of Sprint, the Nextel iDen network was discontinued, which has led and may continue to lead to the non-renewal of
certain leases on our towers. During 2013, Sprint acquired Clearwire Communications and T-Mobile acquired MetroPCS, and in
2014, AT&T acquired Leap Wireless (Cricket Wireless). This consolidation may also lead to additional non-renewal of certain of our
tower leases. If our wireless service provider customers continue to consolidate as a result of, among other factors, limited wireless
spectrum for commercial use in the U.S., this consolidation could significantly impact the number of tower leases that are not renewed
or the number of new leases that our wireless service provider customers require to expand their networks, which could materially and
adversely affect our future operating results.
7
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 deficit. The
following table sets forth our total principal amount of debt and shareholders’ deficit as of December 31, 2015 and 2014.
Total principal amount of indebtedness
Shareholders' deficit
As of December 31,
2015
2014
(in thousands)
$
$
8,555,000
(1,706,144)
$
$
7,870,000
(660,800)
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 due on our indebtedness. 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. For example, on June 10, 2015, SBA Senior Finance II secured a new $500.0 million senior
secured Term Loan, and on October 14, 2015, we, through a New York common law trust, issued $500.0 million aggregate principal
amount of Secured Tower Revenue Securities.
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 have to pay higher interest rates upon refinancing or on our variable rate indebtedness if interest rates rise,
thereby reducing our cash flows;
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;
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 tower acquisition and new build
capital expenditures;
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 a material 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 Revolving Credit Facility and Term Loans, and may make it difficult to refinance our existing
indebtedness 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.
8
We depend on a relatively small number of customers for most of our revenue, and the loss, consolidation or financial instability of
any of our significant customers may materially decrease our revenues.
We derive a significant portion of our revenue from a small number of customers. Consequently, a reduction in demand for site
leasing, reduced future capital expenditures on the networks, or the loss, as a result of bankruptcy, merger with other customers of
ours or otherwise, of any of our largest customers 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:
Percentage of Total Revenues
AT&T Wireless (1)
Sprint
T-Mobile
Verizon Wireless
For the year ended December 31,
2015
2014
2013
24.2%
19.6%
16.0%
13.8%
23.0%
23.4%
15.5%
12.0%
20.5%
25.0%
17.3%
11.3%
We also have client concentrations with respect to revenues in each of our financial reporting segments:
Percentage of Domestic Site Leasing Revenue
AT&T Wireless (1)
Sprint
T-Mobile
Verizon Wireless
Percentage of International Site Leasing Revenue
Oi S.A.
Telefonica
Digicel
Percentage of Site Development Revenue
Sprint
T-Mobile
Ericsson, Inc.
Verizon Wireless
For the year ended December 31,
2015
2014
2013
31.9%
22.3%
19.0%
16.3%
30.1%
25.6%
19.2%
14.4%
25.5%
30.9%
20.2%
13.3%
For the year ended December 31,
2015
2014
2013
48.8%
24.7%
4.6%
44.3%
28.8%
4.9%
6.3%
44.2%
11.2%
For the year ended December 31,
2015
2014
2013
28.5%
17.6%
15.3%
14.8%
36.7%
8.5%
16.8%
10.1%
1.5%
8.4%
34.5%
4.8%
(1) Prior year amounts have been adjusted to reflect the merger of AT&T Wireless and Leap Wireless (Cricket Wireless).
We derive revenue through numerous site leasing contracts and site development contracts. Each site leasing contract relates to
the lease of space at an individual tower and is generally for an initial term of five to ten years in the U.S. and Canada, and renewable
for five 5-year periods at the option of the tenant. Site leasing contracts in our Central American and South American markets
typically have an initial term of ten years with multiple five year renewal periods. However, if any of our significant site leasing
customers 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
9
in establishing relationships with new customers. Furthermore, our existing customers may not continue to engage us for additional
projects.
Currency fluctuations may negatively affect our results of operations.
We have business operations in Canada, Central America, and South America. Our operations in Central America and Ecuador
are primarily denominated in United States Dollars, while our operations in Canada and Brazil are denominated in local currencies.
Our foreign currency denominated revenues and expenses are translated into United States dollars at applicable exchange rates for
inclusion in our consolidated financial statements.
For the year ended December 31, 2015, approximately 15% of our total cash site leasing revenue was generated by our
International operations, of which 11.2% was generated in non-US dollar currencies, including 10.5% which was generated in
Brazilian Reais. The exchange rates between our foreign currencies and the United States Dollar have fluctuated significantly recently
and may continue to do so in the future. For example, the Brazilian Real has historically been subject to substantial volatility and
devalued 49.2% when comparing the spot rate on January 1, 2015 and December 31, 2015. This trend has adversely affected, and may
in the future continue to adversely affect, our reported results of operations.
Changes in exchange rates between these local currencies and the United States Dollar will affect the recorded levels of site
leasing revenue, segment operating profit, assets and/or liabilities. Volatility in foreign currency exchange rates can also affect our
ability to plan, forecast and budget for our international operations and expansion efforts.
Furthermore, we have an intercompany loan agreement which permits one of our Brazilian entities to borrow amounts up to
$750.0 million. As of December 31, 2015, the outstanding balance under this agreement was $455.8 million. In accordance with ASC
830, we remeasure foreign denominated intercompany loans with the corresponding change in the balance being recorded in Other
income (expense), net in our Consolidated Statements of Operations. Consequently, if the U.S. Dollar continues to strengthen against
the Brazilian Real, our results of operations would be adversely affected. For the years ended December 31, 2015 and 2014, we
recorded $178.9 million and $23.0 million, respectively, of foreign exchange losses on the remeasurement of intercompany loans.
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 tower structures consist primarily of leasehold and sub-leasehold interests, fee
interests, easements, licenses, rights-of-way, and other similar interests. From time to time, we experience disputes with landowners
regarding the terms of the agreements for the land under our tower structures, which can affect our ability to access and operate such
towers. Further, landowners may not want to renew their 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 and our competitors, which could affect our ability to
renew agreements on commercially viable terms or at all. In addition, the land underlying the 2,113 towers we acquired in 2013 from
Oi S.A., one of Brazil’s largest telecommunications providers, is subject to a concession from the Federal Republic of Brazil that
expires in 2025. At the end of the term, the Brazilian government will have the right to (i) renew the concession upon newly
negotiated terms or (ii) terminate the concession and take possession of the land and the tower on such land. Although Oi S.A. has
entered into a non-terminable lease with us for 35 years, if the concession is not renewed, our site leasing revenue from co-located
tenants would terminate prior to the end of such lease. For the year ended December 31, 2015, we generated 13.0% of our total
international site leasing revenue from these 2,113 towers of which 10.2% related to Oi S.A. and 2.8% represented revenue from co-
located tenants.
As of December 31, 2015, the average remaining life under our ground leases, including renewal options under our control, was
approximately 33 years, and approximately 5.8% of our tower structures have ground leases maturing in the next 10 years. Failure to
protect our rights to the land under our towers may have a material adverse effect on our business, results of operations or financial
condition.
New technologies or network architecture may reduce demand for our wireless infrastructure or negatively impact our revenues.
Improvements or changes in the efficiency, architecture, and design of wireless networks may reduce the demand for our
wireless infrastructure. For example, new technologies that may promote network sharing, joint development, or resale agreements by
our customers, such as signal combining technologies or network functions virtualization, may reduce the need for our wireless
infrastructure. In addition, other technologies and architectures, such as WiFi, DAS, femtocells, other small cells, or satellite (such as
low earth orbiting) and mesh transmission systems may, in the future, serve as substitutes for, or alternatives to, the traditional macro
site cellular architecture that is the basis of substantially all of our site leasing business. In addition, new technologies that enhance the
10
range, efficiency, and capacity of wireless equipment could reduce demand for our wireless infrastructure. Any significant reduction
in demand for our wireless infrastructure resulting from new technologies or new architectures may negatively impact our revenues or
otherwise have a material adverse effect on us.
Increasing competition may negatively impact our ability to grow our communication site portfolio long term.
We intend to continue growing our tower portfolio, domestically and internationally, through acquisitions and new builds. Our
ability to meet our growth targets significantly depends on our ability to build or 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, and increased difficulty in negotiating and
consummating agreements to acquire such towers. For example, in 2015, we passed on more U.S. acquisitions than we did in 2014
due to asset quality, price, or lease terms. 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 we do. Finally, competition
regulations, domestically and internationally, may limit our ability to acquire certain portfolios or apply to us differently than they
apply to our competitors. As a result of these risks, the cost of acquiring these towers may be higher than we expect or we may not be
able to meet our annual and long-term tower portfolio growth targets. 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 currently intend to build 590 to 610 new towers, domestically and internationally, during 2016. 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. 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. With respect to our international new builds, our tower
construction may be delayed or halted as a result of local zoning restrictions, inconsistencies between laws or other barriers to
construction in international markets. Due to these risks, it may take longer to complete our new tower builds, domestically and
internationally, than anticipated, the costs of constructing these towers may be higher than we expect or we may not be able to add as
many towers as we had planned in 2016. If we are not able to increase our tower portfolio as anticipated, it could negatively impact
our ability to achieve our financial goals.
Our international operations are subject to economic, political and other risks that could materially and adversely affect our
revenues or financial position.
Our current business operations in Canada, Central America, and South America, and our expansion into any other international
markets in the future, could result in adverse financial consequences and operational problems not typically experienced in the United
States. The consolidated revenues generated by our international operations were 14.9% during the year ended December 31, 2015,
and we anticipate that our revenues from our international operations will continue to grow in the future. Accordingly, our business is
and will in the future be 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;
laws and regulations that dictate how we operate our towers and conduct business, including zoning, maintenance and
environmental matters, and laws related to ownership of real property;
laws and regulations governing our employee relations, including occupational health and safety matters;
changes to existing or new domestic or international tax laws or fees directed specifically at the ownership and operation
of towers, which may be applied and enforced retroactively;
expropriation and governmental regulation restricting foreign ownership;
laws effecting telecommunications infrastructure including the sharing of such infrastructure;
11
•
•
•
•
•
•
•
restriction or revocation of spectrum licenses;
our ability to comply with, and the costs of compliance with, anti-bribery laws such as the Foreign Corrupt Practices Act
and similar local anti-bribery laws;
our ability to compete with owners and operators of wireless towers that have been in the international market for a longer
period of time than we have;
uncertainties regarding legal or judicial systems, including inconsistencies between and within laws, regulations and
decrees, and judicial application thereof, and delays in the judicial process;
health or similar issues, such as a pandemic or epidemic;
difficulty in recruiting and retaining trained personnel; and
language and cultural differences.
A slowdown in demand for wireless communications services or for tower space could materially and adversely affect our future
growth and revenues, and we cannot control that demand.
Additional revenue growth on our towers other than through contractual escalators comes directly from additional investment by our
wireless service provider customers in their networks. If wireless service subscribers significantly reduce their minutes of use or data
usage, or fail to widely adopt and use wireless data applications, our wireless service provider customers would experience a decrease
in demand for their services. Regardless of consumer demand, each wireless service customer must have substantial capital resources
and capabilities to build out their wireless networks, including licenses for spectrum. In addition, our wireless service customers have
engaged in increased use of network sharing, roaming or resale arrangements. As a result of all of the above, wireless carriers 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.
We may not be able to fully recognize the anticipated benefits of towers that we acquire.
A key element of our growth strategy is to increase our tower portfolio through acquisitions. We rely on our due diligence of
the towers and the representations and financial records of the sellers and other third parties to establish the anticipated revenues and
expenses and whether the acquired towers will meet our internal guidelines for current and future potential returns. In addition, we
may not always have the ability to analyze and verify all information regarding title, access and other issues regarding the land
underlying acquired towers. This is particularly true in our international acquisitions of towers from wireless service providers. To the
extent that these towers were acquired in individually material transactions, we may be required to place enhanced reliance on the
financial and operational representations and warranties of the sellers. If (i) these records are not complete or accurate, (ii) we do not
have complete access to, or use of, the land underlying the acquired towers or (iii) the towers do not achieve the financial results
anticipated, it could adversely affect our revenues and results of operations.
In addition, acquisitions which would be material in the aggregate may exacerbate the risks inherent with our growth strategy,
such as (i) an adverse impact on our overall profitability if the acquired towers do not achieve the financial results projected in our
valuation models, (ii) unanticipated costs associated with the acquisitions that may impact our results of operations for a period, (iii)
increased demands on our cash resources that may, among other things, impact our ability to explore other opportunities, (iv)
undisclosed and assumed liabilities that we may be unable to recover, (v) increased vulnerability to general economic conditions, (vi)
an adverse impact on our existing customer relationships, (vii) additional expenses and exposure to new regulatory, political and
economic risks if such acquisitions were in new jurisdictions and (viii) diversion of managerial attention.
We may not successfully integrate acquired towers into our operations.
As part of our growth strategy, we have made and expect to continue to make acquisitions. The process of integrating any
acquired towers into our operations may result in unforeseen operating difficulties and large expenditures and may absorb significant
management attention that would otherwise be available for the ongoing development of our business. It may also result in the loss of
key customers and/or personnel and expose us to unanticipated liabilities. These risks may be exacerbated in those circumstances in
which we acquire a material number of towers. Further, we may not be able to retain the key employees that may be necessary to
12
operate the business we acquire, and we may not be able to timely attract new skilled employees and management to replace them.
There can be no assurance that we will be successful in integrating acquisitions into our existing business. This is particularly true in
our international acquisitions of towers from wireless service providers.
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, including long-term evolution (“LTE”), advanced wireless service in the 1695-1710
MHz, 1755-1780 MHz, and 2155-2180 MHz bands (the “AWS-3” bands), or other new wireless technologies such as 5G 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 continued
deployment of 4G could experience delays. Additionally, the demand by consumers and the adoption rate of consumers for these new
technologies once deployed may be lower or slower than anticipated, particularly in certain of our international markets. 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 sometimes have alternatives for leasing antenna space. Some of our
competitors, such as (1) U.S. and international wireless carriers that allow co-location on their towers and (2) large independent tower
companies, have been, and based on recent consolidations continue to be, substantially larger and have greater financial resources than
we do. 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.
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, or limit the acquisition opportunities altogether. 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
may come 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 decrease, our consolidated revenues and our site development
segment operating profit could be adversely affected.
The documents governing our indebtedness contain restrictive covenants that could adversely affect our business by limiting our
flexibility.
The indentures governing the 5.75% Notes, the 5.625% Notes and the 4.875% Notes, the Senior Credit Agreement, and the
Secured Tower Revenue Securities contain restrictive covenants imposing significant operational and financial restrictions on us,
including restrictions that may limit our ability to engage in acts that may be in our long-term best interests. Among other things, the
covenants under each indenture limit our ability to:
•
merge, consolidate or sell assets;
13
•
•
•
•
make restricted payments, including pay dividends or make other distributions;
enter into transactions with affiliates;
enter into sale and leaseback transactions; and
issue guarantees of indebtedness.
We are required to maintain certain financial ratios under the Senior Credit Agreement. The Senior Credit Agreement, as
amended, requires SBA Senior Finance II to maintain specific financial ratios, including (1) a ratio of Consolidated Total Debt to
Annualized Borrower EBITDA not to exceed 6.5 times for any fiscal quarter, (2) a ratio of Consolidated Total Debt and Net Hedge
Exposure (calculated in accordance with the Senior Credit Agreement) to Annualized Borrower EBITDA for the most recently ended
fiscal quarter not to exceed 6.5 times for 30 consecutive days and (3) a ratio of Annualized Borrower EBITDA to Annualized Cash
Interest Expense (calculated in accordance with the Senior Credit Agreement) of not less than 2.0 times for any fiscal quarter.
Additionally, the mortgage loan relating to our Tower Securities 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 ratio,
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.
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 our debt instruments. If any default
occurs, all amounts outstanding under our outstanding notes and the Senior Credit Agreement may become immediately due and
payable.
Our variable rate indebtedness and refinancing obligations subject us to interest rate risk, which could cause our debt service
obligations to increase significantly.
Fluctuations in market interest rates may increase interest expense relating to our floating rate indebtedness, which we expect to
incur under the Revolving Credit Facility and Term Loans or upon refinancing our fixed rate debt. As a result, we are exposed to
interest rate risk. If interest rates were to increase, our debt service obligations on the variable rate indebtedness would increase even
though the amount borrowed remained the same, and our net income and cash flows, including cash available for servicing our
indebtedness, will correspondingly decrease. There is no guarantee that any 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. In the
future, we may enter into interest rate swaps that involve the exchange of floating for fixed rate interest payments in order to reduce
interest rate volatility. However, we may not maintain interest rate swaps with respect to all of our variable rate indebtedness, and any
swaps we enter into may not fully mitigate our interest rate risk. We currently have no interest rate swaps.
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 assets are, and are 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 Tower Securities, the 5.75% Notes, the Term Loans and any amounts that we may borrow under the Revolving 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 5.625% Notes and
4.875% 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
14
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, holidays and 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 have not been profitable and may incur losses in the future.
Historically, we have not been profitable. The following chart shows the net losses we incurred for the periods indicated:
Net loss
For the year ended December 31,
2015
2014
2013
$
(175,656)
$
(24,295)
$
(55,909)
(in thousands)
Our losses are principally due to depreciation, amortization and accretion expenses, interest expense (including non-cash interest
expense and amortization of deferred financing fees), losses from the extinguishment of debt in the periods presented above, and in
2015, remeasurement losses related to a foreign currency denominated intercompany loan.
The loss of the services of certain of our key personnel or a significant number of our employees may negatively affect our
business.
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 Executive Vice President and President—International,
Thomas P. Hunt, our Executive Vice President, Chief Administrative Officer and General Counsel, and Brendan T. Cavanagh, our
Executive 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.
15
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, both in the U.S. and internationally. In the U.S., both the
FAA and the FCC regulate the construction, modification, and maintenance of towers and structures that support antennas used for
wireless communications and radio and television broadcasts. In addition, the FCC separately licenses and regulates wireless
communications equipment and television and radio stations operating from such towers. FAA and FCC regulations govern
construction, lighting, painting, and marking of towers and may, depending on the characteristics of the tower, require registration of
the tower. Certain proposals to construct new towers or to modify existing towers are reviewed by the FAA to ensure that the tower
will not present a hazard to air navigation.
Tower owners may have an obligation to mark or paint such towers or install lighting to conform to FAA and FCC regulations
and to maintain such marking, painting and lighting. Tower 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 towers are also reviewed
by the FCC to ensure compliance with environmental impact requirements established in federal statutes, including NEPA, NHPA and
ESA. 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 tower owners to obtain approval from local officials or community standards
organizations prior to tower 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. Furthermore, with respect to our international new builds, our
tower construction may be delayed or halted as a result of local zoning restrictions, inconsistencies between laws or other barriers to
construction in international markets. These factors could have a material adverse effect on our future growth and operations.
Security breaches and other disruptions could compromise our information, which would cause our business and reputation to
suffer.
A part of our day-to-day operations, we rely on information technology and other computer resources and infrastructure to carry
out important business activities and to maintain our business records. Our computer systems could fail on their own accord and are
subject to interruption or damage from power outages, computer and telecommunications failures, computer viruses, security breaches
(including through cyber-attack and data theft), errors, catastrophic events such as natural disasters and other events beyond our
control. If our computer systems and our backup systems are compromised, degraded, damaged, or breached, or otherwise cease to
function properly, we could suffer interruptions in our operations or unintentionally allow misappropriation of proprietary or
confidential information (including information about our tenants or landlords). This could damage our reputation and disrupt our
operations and the services we provide to customers, which could adversely affect our business and operating results.
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.
To the extent that we are not able to meet our contractual obligations to our customers, due to a natural disaster or other
catastrophic circumstances, our customers may not be obligated or willing to pay their lease expenses; however, we would be required
to continue paying our fixed expenses related to the affected tower, including ground lease expenses. If we are unable to meet our
contractual obligations to our customers for a material portion of our towers, our operations could be materially and adversely
affected.
16
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 structures, 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 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. In addition, U.S. federal, state and local, as well as international, tax laws and
regulations are extremely complex and subject to varying interpretations. 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.
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.
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 issuance of equity securities and other associated transactions may trigger a future ownership change which may negatively
impact our ability to utilize NOLs 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 NOLs in the event we generate
future taxable income. Currently, we have recorded a full valuation allowance against our NOLs 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.
17
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, 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.
Our costs could increase and our revenues could decrease due to perceived health risks from RF energy.
The U.S. 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 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. Our current policies provide no
coverage for claims based on RF energy exposure. 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 articles of incorporation, our bylaws and Florida law provide for 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. 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.
ITEM 2. PROPERTIES
On November 1, 2013, we purchased a new headquarters in Boca Raton, Florida where we currently own approximately
160,000 square feet of office space. We have entered into long-term leases for international, 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 and the land beneath them are comprised of a variety of fee interests, leasehold interests created by long-
term lease agreements, perpetual easements, easements, licenses, rights-of-way, and other similar interests. As of December 31, 2015,
approximately 73% of our tower structures were located on parcels of land that we own, land subject to perpetual easements, or
parcels of land that have an interest that extends beyond 20 years. The average remaining life under our ground leases, including
renewal options under our control, has been extended to 33 years. In rural areas, support for our towers, equipment shelters, and
related equipment requires a tract of land typically up to 10,000 square feet. Less than 2,500 square feet is required for a monopole or
self-supporting tower of the kind typically used in metropolitan areas for wireless communications towers. Ground leases are
generally for an initial term of five years or more 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.
ITEM 4. MINE SAFETY DISCLOSURE
Not Applicable.
18
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, 2015
Quarter ended September 30, 2015
Quarter ended June 30, 2015
Quarter ended March 31, 2015
Quarter ended December 31, 2014
Quarter ended September 30, 2014
Quarter ended June 30, 2014
Quarter ended March 31, 2014
$
$
$
$
$
$
$
$
High
Low
121.45
128.47
124.98
126.65
122.79
114.37
102.57
99.64
$
$
$
$
$
$
$
$
100.12
102.65
111.58
107.53
103.83
99.70
87.03
87.29
As of February 19, 2016, there were 92 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 Class A common stock
in the foreseeable future. In addition, our ability to pay dividends is limited by the terms of our debt instruments.
Issuer Purchases of Equity Securities
The following table presents information related to our repurchases of Class A common stock during the fourth quarter of 2015:
Period
10/1/2015 - 10/31/2015
11/1/2015 - 11/30/2015
12/1/2015 - 12/31/2015
Total
Total
Number
of Shares
Purchased
Average
Price Paid
Per Share
—
184,215
297,781
481,996
$
$
$
$
—
103.86
103.66
103.74
Total Number of Shares
Approximate Dollar Value
Purchased as Part of
of Shares that May Yet Be
Publicly Announced
Plans or Programs (1)
Purchased Under the
Plans or Programs
—
184,215
297,781
481,996
$
$
$
$
750,002,750
730,869,600
700,002,810
700,002,810
(1) On June 4, 2015, we announced a new $1.0 billion stock repurchase plan. This plan authorizes us to purchase from time to time
our outstanding common stock through open market repurchases in compliance with Rule 10b-18 under the Securities
Exchange Act of 1934, as amended, and/or in privately negotiated transactions at management’s discretion. Shares purchased
will be retired. This plan has no time deadline and will continue until otherwise modified or terminated by our Board at any
time in our sole discretion.
19
Equity Compensation Plan
Equity Compensation Plan Information
(in thousands except exercise price)
Number of Securities
to be Issued
Upon Exercise of
Outstanding Options,
Warrants and Rights
(a)
Weighted Average
Exercise Price
of Outstanding
Options, Warrants
and Rights
(b)
Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation Plans
(Excluding Securities
Reflected in first column (a))
(c)
Equity compensation plans approved by
security holders
2001 Plan (1)
2010 Plan
Equity compensation plans not approved by
security holders
Total
346
$
3,724 (2) $
29.97
83.45
—
4,070
$
78.90
—
10,188
—
10,188
(1)
(2)
This plan has been terminated, and we are no longer eligible to issue shares pursuant to the plan.
Included in the number of securities in column (a) is 277,153 restricted stock units, which have no exercise price. The weighted
average exercise price of outstanding options, warrants, and rights (excluding restricted stock units) is $90.15.
20
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth selected historical financial data as of and for each of the five years in the period ended December 31,
2015. The financial data for the fiscal years ended 2015, 2014, 2013, 2012, and 2011 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.
Revenues:
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 adjustments and expenses
Asset impairment and decommission costs
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 from extinguishment of debt, net
Other income (expense)
Total other expense
Loss before provision for income taxes
(Provision) benefit for income taxes
Net loss from continuing operations
Income from discontinued operations, net of income taxes
Net loss
Net income attributable to the
noncontrolling interest
Net loss attributable to SBA Communications
Corporation
Basic and diluted per common share amounts:
Loss from continuing operations
Income from discontinued operations
$
$
Net loss per common share
$
Basic and diluted weighted avg. number of common shares
For the year ended December 31,
2015
2014
2013
2012
2011
(audited) (in thousands, except for per share data)
$ 1,480,634 $ 1,360,202 $ 1,133,013 $
171,853
166,794
1,638,474 1,526,996 1,304,866
157,840
846,094 $
107,990
954,084
616,294
81,876
698,170
324,655
119,744
114,951
11,864
94,783
660,021
270,772
301,313
137,481
127,172
85,476
103,317
19,198
7,798
28,960
23,801
533,334
627,072
1,326,018 1,190,473 1,075,221
229,645
336,523
312,456
188,951
90,556
72,148
40,433
6,383
408,467
806,938
147,146
131,916
71,005
62,828
7,144
5,472
309,146
587,511
110,659
3,894
(322,366)
(1,505)
(19,154)
(783)
(139,137)
(479,051)
(166,595)
(9,061)
(175,656)
—
(175,656)
677
(292,600)
(27,112)
(17,572)
(26,204)
10,628
(352,183)
(15,660)
(8,635)
(24,295)
—
(24,295)
1,794
(249,051)
(49,085)
(15,560)
(6,099)
31,138
(286,863)
(57,218)
1,309
(55,909)
—
(55,909)
1,128
(196,241)
(70,110)
(12,870)
(51,799)
5,654
(324,238)
(177,092)
(6,594)
(183,686)
2,296
(181,390)
136
(160,896)
(63,629)
(9,188)
(1,696)
(165)
(235,438)
(124,779)
(2,113)
(126,892)
—
(126,892)
—
(175,656) $
—
(24,295) $
—
(55,909) $
353
(181,037) $
436
(126,456)
(1.37) $
—
(1.37) $
127,794
(0.19) $
—
(0.19) $
128,919
(0.44) $
—
(0.44) $
127,769
(1.53) $
0.02
(1.51) $
120,280
(1.14)
—
(1.14)
111,595
21
Balance Sheet Data
Cash and cash equivalents
Restricted cash - current
Short-term investments
Property and equipment, net
Intangibles, net
Total assets
Total debt
Total shareholders' (deficit) equity
2015
2014
2013
2012
2011
(audited) (in thousands)
As of December 31,
$
118,039
25,353
706
2,782,353
3,735,413
7,403,215
8,542,305
(1,706,144)
$
39,443
52,519
5,549
2,762,417
4,189,540
7,841,125
7,860,799
(660,800)
$
122,112
47,305
5,446
2,578,444
3,387,198
6,783,188
5,876,607
356,966
$
233,099
27,708
5,471
2,671,317
3,134,133
6,615,911
5,356,103
652,991
$
47,316
22,266
5,773
1,583,393
1,639,784
3,606,399
3,354,485
(11,313)
Other Data
Cash provided by (used in):
Operating activities
Investing activities
Financing activities
2015
2014
2013
2012
2011
For the year ended December 31,
(audited) (in thousands)
$
$
737,173
(734,521)
88,937
$
671,643
(1,760,127)
991,838
$
497,587
(817,198)
210,837
$
340,914
(2,269,120)
2,110,481
249,058
(503,273)
237,432
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 tower structures, rooftops and other structures
that support antennas used for wireless communications, which we collectively refer to as “towers” or “sites.” Our principal operations
are in the United States and its territories. In addition, we own and operate towers in South America, Central America, and Canada.
Our primary business line is our site leasing business, which contributed 96.8% of our total segment operating profit for the year
ended December 31, 2015. In our site leasing business, we (1) lease antenna space to wireless service providers on towers that we own
or operate and (2) manage rooftop and tower sites for property owners under various contractual arrangements. As of December 31,
2015, we owned 25,465 towers, a substantial portion of which have been built by us or built by other tower owners or operators who,
like us, have built such towers to lease space to multiple wireless service providers. We also managed or leased approximately 5,500
actual or potential towers, approximately 500 of which were revenue producing as of December 31, 2015. Our other business line is
our site development business, through which we assist wireless service providers in developing and maintaining their own wireless
service networks.
Site Leasing Services
Our primary focus is the leasing of antenna space on our multi-tenant towers to a variety of wireless service providers under
long-term lease contracts in the United States, Canada, Central America, and South America. Site leasing revenues are received
primarily from wireless service provider tenants, including AT&T, Sprint, T-Mobile, Verizon Wireless, Oi S.A., Telefonica, Claro,
and Digicel. Wireless service providers enter into tenant leases with us, each of which relates to the lease or use of space at an
individual site. In the United States and Canada, our tenant leases are generally for an initial term of five to ten years with five 5-year
renewal periods at the option of the tenant. These tenant leases typically contain specific rent escalators, which average 3-4% per year,
including the renewal option periods. Tenant leases in our Central American and South American markets typically have an initial
term of ten years with multiple five year renewal periods. In Central America, we have similar rent escalators to that of leases in the
United States and Canada while our leases in South America escalate in accordance with a standard cost of living index.
22
In our Central American markets and Ecuador, significantly all of our revenue, expenses, and capital expenditures arising from
our new build activities are denominated in U.S. dollars. Specifically, most of our ground leases, tenant leases, and tower-related
expenses are due and paid in U.S. dollars. In our Central American markets, our local currency obligations are principally limited to
(1) permitting and other local fees, (2) utilities, and (3) taxes. In our Canadian and Brazilian operations, significantly all of our
revenue, expenses and capital expenditures, including tenant leases, ground leases and other tower-related expenses, are denominated
in local currency.
Cost of site leasing revenue primarily consists of:
•
•
•
•
•
•
•
Rental payments on ground leases and other underlying property interests;
Straight-line rent adjustment for the difference between rental payments made and the expense recorded as if the
payments had been made evenly throughout the lease term (which may include renewal terms) of the underlying
property interests;
Property taxes;
Site maintenance and monitoring costs (exclusive of employee related costs);
Utilities;
Property insurance; and
Deferred lease origination cost amortization.
Ground leases are generally for an initial term of five years or more with multiple renewal terms of five year periods at our
option and provide for rent escalators which typically average 2-3% annually, or in our South American markets, adjust in accordance
with a standard cost of living index. As of December 31, 2015, approximately 73% of our tower structures were located on parcels of
land that we own, land subject to perpetual easements, or parcels of land in which we have a leasehold interest that extends beyond 20
years. For any given tower, costs are relatively fixed over a monthly or an annual time period. As such, operating costs for owned
towers do not generally increase as a result of adding additional customers to the tower. The amount of 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. The ongoing
maintenance requirements are typically minimal and include replacing lighting systems, painting a tower, or upgrading or repairing an
access road or fencing.
As indicated in the table below, our site leasing business generates substantially all of our total segment operating profit. For
information regarding our operating segments, see Note 18 of our Consolidated Financial Statements included in this annual report.
Segment operating profit as a percentage of total
2015
2014
2013
For the year ended
Domestic site leasing
International site leasing
Total site leasing
82.4%
14.4%
96.8%
82.8%
13.5%
96.3%
89.9%
6.3%
96.2%
We believe that over the long-term, site leasing revenues will continue to grow as wireless service providers lease additional
antenna space on our towers due to increasing minutes of network use and data transfer, network expansion and network coverage
requirements. During 2016, we expect organic site leasing revenue in both our domestic and international segments to be consistent
with our growth in 2015. We believe our site leasing business is characterized by stable and long-term recurring revenues, predictable
operating costs and minimal non-discretionary capital expenditures. Due to the relatively young age and mix of our tower portfolio,
we expect future expenditures required to maintain these towers to be minimal. Consequently, we expect to grow our cash flows by
(1) adding tenants to our towers at minimal incremental costs by using existing tower capacity or requiring wireless service providers
to bear all or a portion of the cost of tower modifications and (2) executing monetary amendments as wireless service providers add or
upgrade their equipment. Furthermore, because our towers are strategically positioned and our customers typically do not relocate, we
have historically experienced low tenant lease terminations as a percentage of revenue other than in connection with customer
consolidation or cessations of service (e.g. iDen).
23
Site Development Services
Our site development business, which is conducted in the United States only, is complementary to our site leasing business and
provides us the ability to keep in close contact with the wireless service providers who generate substantially all of our site leasing
revenue and to capture ancillary revenues that are generated by our site leasing activities, such as antenna and equipment installation
at our tower locations. Site development services revenues are earned primarily from providing a full range of end to end services to
wireless service providers or companies providing development or project management services to wireless service providers. Our
services include: (1) network pre-design; (2) site audits; (3) identification of potential locations for towers and antennas; (4) support in
buying or leasing of the location; (5) assistance in obtaining zoning approvals and permits; (6) tower and related site construction;
(7) antenna installation; and (8) radio equipment installation, commissioning, and maintenance. We provide site development services
on a local basis, through regional, territory, and project offices. The regional offices are responsible for all site development
operations, including hiring employees and opening or closing project offices, and a substantial portion of the sales in such area.
For information regarding our operating segments, see Note 18 of our Consolidated Financial Statements included in this annual
report.
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 2 of our Consolidated Financial Statements for the year ended December 31, 2015, 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.
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 to ten years. Receivables recorded related to the straight-lining of site leases are reflected in other
assets on the Consolidated Balance Sheets. Rental amounts received in advance are recorded as deferred revenue on the Consolidated
Balance Sheets.
Site development projects in which we perform 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 and revenue is recognized as the services are rendered.
For those site development contracts in which we perform 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, we recognize the revenue related to that phase. Site development projects generally take from 3 to 12 months to
complete. Amounts billed in advance (collected or uncollected) are recorded as deferred revenue on the Company’s Consolidated
Balance Sheets.
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 costs incurred and revenues recognized in excess of
amounts billed. The liability “billings in excess of costs and estimated earnings on uncompleted contracts,” included within other
current liabilities on our Consolidated Balance Sheets, represents billings in excess of costs incurred and revenues recognized.
Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined to be probable.
24
We perform periodic credit evaluations of our customers. We monitor collections and payments from our customers and
maintain a provision for estimated credit losses based upon historical experience, specific customer collection issues identified, and
past due balances as determined based on contractual terms. Interest is charged on outstanding receivables from customers on a case
by case basis in accordance with the terms of the respective contracts or agreements with those customers. Amounts determined to be
uncollectible are written off against the allowance for doubtful accounts in the period in which uncollectibility is determined to be
probable.
Asset Impairment
We evaluate individual long-lived and related assets with finite lives for indicators of impairment to determine when an
impairment analysis should be performed. We evaluate our tower assets and current contract intangibles at the tower level, which is
the lowest level for which identifiable cash flows exists. We evaluate our network location intangibles for impairment at the tower
leasing business level whenever indicators of impairment are present. We have established a policy to at least annually evaluate our
tower assets and current contract intangibles for impairment.
We record an impairment charge when we believe 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 and related intangible. If the
future undiscounted cash flows are lower than the carrying value of the investment in the tower and related intangible, we calculate
future discounted cash flows and compare those amounts to the carrying value. We record an impairment charge for any amounts
lower than the carrying value. 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, we make certain assumptions in determining an asset’s fair value for the purpose of calculating the amount of an
impairment charge.
Business Combinations
We account for business combinations under the acquisition method of accounting. The assets and liabilities we acquire are
recorded at fair market value at the date of each acquisition and the results of operations of the acquired assets are included with our
results of operations from the dates of the respective acquisitions. We continue to evaluate all acquisitions for a period not to exceed
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 as a result of information available at the
acquisition date. The intangible assets represent the value associated with the current leases at the acquisition date (“Current contract
intangibles”) and future tenant leases anticipated to be added to the communication sites (“Network location intangibles”) and were
calculated using the discounted values of the current or future expected cash flows. The intangible assets are estimated to have a useful
life consistent with the useful life of the related communication site assets, which is typically 15 years.
In connection with certain acquisitions, we may agree to pay contingent consideration (or earnouts) in cash or stock if the
communication sites or businesses that are acquired meet or exceed certain performance targets over a period of one to three years
after they have been acquired. We accrue for contingent consideration in connection with acquisitions at fair value as of the date of the
acquisition. All subsequent changes in fair value of contingent consideration are recorded through Consolidated Statements of
Operations.
25
RESULTS OF OPERATIONS
Year Ended 2015 Compared to Year Ended 2014
Revenues and Segment Operating Profit:
Revenues
Domestic site leasing
International site leasing
Site development
Total
Cost of Revenues
Domestic site leasing
International site leasing
Site development
Total
Operating Profit
Domestic site leasing
International site leasing
Site development
Revenues
For the year ended
December 31,
2015
2014
Dollar
Change
Percentage
Change
$
$
$
$
$
(in thousands)
1,236,758 $
243,876
157,840
1,638,474 $
1,157,293 $
202,909
166,794
1,526,996 $
79,465
40,967
(8,954)
111,478
252,493 $
72,162
119,744
444,399 $
247,237 $
54,076
127,172
428,485 $
984,265 $
171,714
38,096
910,056 $
148,833
39,622
5,256
18,086
(7,428)
15,914
74,209
22,881
(1,526)
6.9%
20.2%
(5.4%)
7.3%
2.1%
33.4%
(5.8%)
3.7%
8.2%
15.4%
(3.9%)
Total revenues increased $111.5 million for the year ended December 31, 2015, as compared to the prior year, due largely to (i)
revenues from 4,923 towers acquired and 848 towers built since January 1, 2014 and (ii) organic site leasing growth from new leases,
contractual rent escalators, and monetary lease amendments for additional equipment added to our towers. The increase in total
revenues includes the negative impact of $43.2 million from fluctuations in foreign currency exchange rates as compared to the prior
year.
Domestic site leasing revenues increased $79.5 million for the year ended December 31, 2015, as compared to the prior year,
due largely to (i) revenues from 1,007 towers acquired and 266 towers built since January 1, 2014 and (ii) organic site leasing growth
from new leases, contractual rent escalators, and monetary lease amendments for additional equipment added to our towers.
International site leasing revenues increased $41.0 million for the year ended December 31, 2015, as compared to the prior year,
due largely to (i) revenues from 3,916 towers acquired, primarily from the acquisition of 3,648 towers from Oi S.A. in March 2014
and December 2014, and 582 towers built since January 1, 2014, and (ii) organic site leasing growth from new leases, contractual rent
escalators, and monetary lease amendments for additional equipment added to our towers. The increase in international site leasing
revenues includes the negative impact of $43.2 million from fluctuations in foreign currency exchange rates as compared to the prior
year.
Site development revenues decreased $9.0 million for the year ended December 31, 2015, as compared to the prior year, as a
result of a decrease in the volume of work performed due to the timing of our wireless carrier customers’ initiatives.
Operating Profit
Domestic site leasing segment operating profit increased $74.2 million for the year ended December 31, 2015, as compared to
the prior year, primarily due to additional profit generated by (i) towers acquired and built since January 1, 2014 and organic site
leasing growth as noted above, (ii) improving control of our site leasing cost of revenue, and (iii) the positive impact of our ground
lease purchase program.
International site leasing segment operating profit increased $22.9 million for the year ended December 31, 2015, as compared
to the prior year, primarily due to additional profit generated by (i) towers acquired and built since January 1, 2014 and organic site
leasing growth as noted above and (ii) the positive impact of our ground lease purchase program, partially offset by increased costs
26
resulting from the integration of towers acquired in 2014. The increase in international site leasing segment operating profit includes
the negative impact of $31.2 million from fluctuations in foreign currency exchange rates as compared to the prior year.
Site development segment operating profit decreased $1.5 million for the year ended December 31, 2015, as compared to the
prior year, primarily due to lower services revenue.
Selling, General, and Administrative Expenses:
For the year ended
December 31,
2015
2014
(in thousands)
Dollar
Change
Percentage
Change
Total
$
114,951 $
103,317 $
11,634
11.3%
Selling, general, and administrative expenses increased $11.6 million for the year ended December 31, 2015, as compared to the
prior year, primarily as a result of an increase in personnel, salaries, benefits, non-cash compensation, and other support costs due in
large part to our continued portfolio expansion. The increase in selling, general, and administrative expenses includes the positive
impact of $1.8 million from fluctuations in foreign currency exchange rates as compared to the prior year.
Acquisition Related Adjustments and Expenses:
Domestic site leasing
International site leasing
Total
For the year ended
December 31,
2015
2014
(in thousands)
Dollar
Change
Percentage
Change
$
$
9,975 $
1,889
11,864 $
3,351 $
4,447
7,798 $
6,624
(2,558)
4,066
197.7%
(57.5%)
52.1%
Domestic acquisition related adjustments and expenses increased $6.6 million for the year ended December 31, 2015, primarily
as a result of an increase in the number of towers we acquired as compared to the prior year.
International acquisition related adjustments and expenses decreased $2.6 million for the year ended December 31, 2015
primarily as a result of a decrease in the number of towers we acquired, partially offset by changes in our estimated pre-acquisition
contingencies as compared to the prior year. The decrease in International acquisition related adjustments and expenses includes the
positive impact of $0.4 million from fluctuations in foreign currency exchange rates as compared to the prior year.
Asset Impairment and Decommission Costs:
Domestic site leasing
International site leasing
Total
For the year ended
December 31,
2015
2014
(in thousands)
Dollar
Change
Percentage
Change
$
$
93,977 $
806
94,783 $
21,538 $
2,263
23,801 $
72,439
(1,457)
70,982
336.3%
(64.4%)
298.2%
Asset impairment and decommission costs increased $71.0 million for the year ended December 31, 2015, as compared to the
prior year, primarily as a result of a $56.7 million impairment charge in the third quarter of 2015 related to fiber assets acquired in the
2012 Mobilitie transaction and $7.3 million of additional impairment charges resulting from the Company’s analysis that the future
cash flows would not recover the carrying value of the investment. In addition, the increase in the asset impairment and decommission
costs includes $5.5 million related to higher net book value of towers decommissioned in the current year as compared against the
prior year and $1.2 million in exit costs related to our former corporate headquarters building. The impact from fluctuations in foreign
currency exchange rates as compared to the prior year was not material.
27
Depreciation, Accretion, and Amortization Expense:
Domestic site leasing
International site leasing
Total site leasing
Site development
Not identified by segment
Total
For the year ended
December 31,
2015
2014
Dollar
Change
Percentage
Change
(in thousands)
$
$
$
534,436 $
118,886
653,322 $
3,662
3,037
660,021 $
515,150 $
104,447
619,597 $
2,453
5,022
627,072 $
19,286
14,439
33,725
1,209
(1,985)
32,949
3.7%
13.8%
5.4%
49.3%
(39.5%)
5.3%
Depreciation, accretion, and amortization expense increased $32.9 million for the year ended December 31, 2015, as compared
to the prior year, due to an increase in the number of towers we acquired and built since January 1, 2014. The increase in depreciation,
accretion, and amortization expense includes the positive impact of $22.7 million from fluctuations in foreign currency exchange rates
as compared to the prior year.
Operating Income (Loss):
Domestic site leasing
International site leasing
Total site leasing
Site development
Not identified by segment
Total
For the year ended
December 31,
2015
2014
Dollar
Change
Percentage
Change
(in thousands)
$
$
$
278,464 $
33,937
312,401 $
22,187
(22,132)
312,456 $
302,406 $
20,914
323,320 $
28,095
(14,892)
336,523 $
(23,942)
13,023
(10,919)
(5,908)
(7,240)
(24,067)
(7.9%)
62.3%
(3.4%)
(21.0%)
48.6%
(7.2%)
Domestic site leasing operating income decreased $23.9 million for the year ended December 31, 2015, as compared to the prior
year, primarily due to increases in asset impairment and decommission costs, depreciation, accretion, and amortization expense,
acquisition related adjustments and expenses, and selling, general, and administrative expenses, partially offset by higher segment
operating profit.
International site leasing operating income increased $13.0 million for the year ended December 31, 2015, as compared to the
prior year, primarily due to higher segment operating profit and a reduction in acquisition related adjustments and expenses and asset
impairment and decommission costs, partially offset by an increase in depreciation, accretion, and amortization expense. The increase
in international site leasing operating income includes the negative impact of $5.4 million from fluctuations in foreign currency
exchange rates as compared to the prior year.
Site development operating income decreased $5.9 million for the year ended December 31, 2015, as compared to the prior
year, primarily due to a decrease in segment operating profit, as well as increases in selling, general, and administrative expenses and
depreciation, accretion, and amortization expense.
28
Other Income (Expense):
Interest income
Interest expense
Non-cash interest expense
Amortization of deferred financing fees
Loss from extinguishment of debt, net
Other (expense) income, net
Total
For the year ended
December 31,
2015
2014
Dollar
Change
Percentage
Change
$
3,894 $
677 $
(in thousands)
(322,366)
(1,505)
(19,154)
(783)
(139,137)
(479,051) $
(292,600)
(27,112)
(17,572)
(26,204)
10,628
(352,183) $
$
3,217
(29,766)
25,607
(1,582)
25,421
(149,765)
(126,868)
475.2%
10.2%
(94.4%)
9.0%
(97.0%)
(1,409.2%)
36.0%
Interest income increased $3.2 million due to a higher amount of investments held and a higher average interest rate on those
investments held for the year ended December 31, 2015 as compared to the prior year.
Interest expense increased $29.8 million for the year ended December 31, 2015, as compared to the prior year, due to the higher
average principal amount of cash-interest bearing debt outstanding for the year ended December 31, 2015 compared to the prior year,
primarily resulting from the issuance of the 2014 Tower Securities in October 2014, the 2015 Tower Securities in October 2015, the
2014 Term Loan in March 2014, the 2015 Term Loan in June 2015, and the 4.875% Notes in July 2014, partially offset by the full
repayment of the 2010-1C Tower Securities in October 2014, the full redemption of the 8.25% Notes in August 2014, and the
settlement of the 4.0% Notes during 2014.
Non-cash interest expense decreased $25.6 million from the year ended December 31, 2015, compared to the prior year,
primarily due to the maturity of the 4.0% Notes during the prior year.
Amortization of deferred financing fees increased $1.6 million for the year ended December 31, 2015, as compared to the prior
year, primarily resulting from the issuance of the 2014 and 2015 Tower Securities, 2014 Term Loan, 2015 Term Loan, and 4.875%
Notes, partially offset by the full repayment of the 8.25% Notes and 2010-1C Tower Securities and the settlement of the 4.0% Notes
during the prior year.
Loss from extinguishment of debt decreased $25.4 million for the year ended December 31, 2015, as compared to the prior year,
primarily due to the repayment of the 2010-1C Tower Securities, 2011 Term Loan and the 2012-2 Term Loan, early settlement of the
4.0% Notes, and the early redemption of the 8.25% Notes during the prior year, partially offset by the early redemption of the 2012-1
Term Loan during 2015.
Other (expense) income, net increased $149.8 million for the year ended December 31, 2015, as compared to the prior year,
primarily due to a $178.9 million loss related to the remeasurement of an intercompany loan not denominated in the functional
currency of the subsidiary in which it is recorded during the year ended December 31, 2015 as compared to a $23.0 million loss in the
prior year, as well as a $17.9 million gain realized on the settlement of two foreign currency contracts entered into to hedge the
purchase price of the Oi S.A. acquisition in Brazil in 2014. This was partially offset by a $37.2 million gain realized on the sale of a
cost-method investment in 2015 as compared to a $12.5 million gain on the sale of a cost-method investment in the prior year.
Net Loss:
For the year ended
December 31,
2015
2014
(in thousands)
Dollar
Change
Percentage
Change
Net loss
$
(175,656) $
(24,295) $
(151,361)
623.0%
Net loss was $175.7 million for the year ended December 31, 2015, an increase of $151.4 million compared to a loss of $24.3
million in the prior year. The increase is primarily due to increases in other (expense) income, net, asset impairment and
decommission costs, depreciation, accretion, and amortization expense, selling, general and administrative expenses, and acquisition
related adjustments and expenses, partially offset by an increase in our total segment operating profit as compared to the prior year.
29
The increase in net loss includes the negative impact of $170.0 million from fluctuations in foreign currency exchange rates as
compared to the prior year.
Year Ended 2014 Compared to Year Ended 2013
Revenues and Segment Operating Profit:
Revenues
Domestic site leasing
International site leasing
Site development
Total
Cost of Revenues
Domestic site leasing
International site leasing
Site development
Total
Operating Profit
Domestic site leasing
International site leasing
Site development
Revenues
$
$
$
$
$
Dollar
Change
Percentage
Change
For the year ended
December 31,
2014
2013
(in thousands)
1,157,293 $
202,909
166,794
1,526,996 $
1,048,756 $
84,257
171,853
1,304,866 $
247,237 $
54,076
127,172
428,485 $
242,839 $
27,933
137,481
408,253 $
108,537
118,652
(5,059)
222,130
4,398
26,143
(10,309)
20,232
910,056 $
148,833
39,622
805,917 $
56,324
34,372
104,139
92,509
5,250
10.3%
140.8%
(2.9%)
17.0%
1.8%
93.6%
(7.5%)
5.0%
12.9%
164.2%
15.3%
Total revenues increased $222.1 million for the year ended December 31, 2014, as compared to the prior year, due largely to (i)
revenues from 6,532 towers acquired and 731 towers built since January 1, 2013 and (ii) organic site leasing growth from new leases,
contractual rent escalators, and lease amendments which increased the related rent to compensate for additional equipment added to
our towers. The increase in total revenues includes the negative impact of $3.1 million from fluctuations in foreign currency exchange
rates as compared to the prior year.
Domestic site leasing revenues increased $108.5 million for the year ended December 31, 2014, as compared to the prior year,
due largely to (i) revenues from 426 towers acquired and 228 towers built since January 1, 2013 and (ii) organic site leasing growth
from new leases, contractual rent escalators, and lease amendments which increased the related rent to compensate for additional
equipment added to our towers.
International site leasing revenues increased $118.7 million for the year ended December 31, 2014, as compared to the prior
year, due largely to (i) revenues from 6,106 towers acquired and 503 towers built since January 1, 2013 and (ii) organic site leasing
growth from new leases, contractual rent escalators, and lease amendments which increased the related rent to compensate for
additional equipment added to our towers. The increase in international site leasing revenues includes the negative impact of $3.1
million from fluctuations in foreign currency exchange rates as compared to the prior year.
Site development revenues decreased $5.1 million for the year ended December 31, 2014, as compared to the prior year, as a
result of a reduction in the volume of work performed due to the timing of our wireless carrier customers’ initiatives.
Operating Profit
Domestic site leasing segment operating profit increased $104.1 million for the year ended December 31, 2014, as compared to
the prior year, primarily due to additional profit generated by (i) towers acquired and built since January 1, 2013 as noted above and
(ii) organic site leasing growth from new leases, contractual rent escalators, and lease amendments with current tenants which
increased the related rent as a result of additional equipment added to our towers in addition to improving control of our site leasing
cost of revenue, and the positive impact of our ground lease purchase program.
30
International site leasing segment operating profit increased $92.5 million for the year ended December 31, 2014, as compared
to the prior year, primarily due to additional profit generated by (i) towers acquired and built since January 1, 2013 as noted above and
(ii) organic site leasing growth from new leases, contractual rent escalators, and lease amendments with current tenants which
increased the related rent as a result of additional equipment added to our towers in addition to improving control of our site leasing
cost of revenue, and the positive impact of our ground lease purchase program. The increase in international segment operating profit
includes the negative impact of $1.8 million from fluctuations in foreign currency exchange rates as compared to the prior year.
Site development segment operating profit increased $5.2 million for the year ended December 31, 2014, as compared to the
prior year, primarily due to higher margin carrier direct work performed in the current year, in particular the Sprint 2.5 GHz initiative.
Selling, General, and Administrative Expenses:
For the year ended
December 31,
2014
2013
(in thousands)
Dollar
Change
Percentage
Change
Total
$
103,317 $
85,476 $
17,841
20.9%
Selling, general, and administrative expenses increased $17.8 million for the year ended December 31, 2014, as compared to the
prior year, primarily as a result of an increase in personnel, salaries, benefits, non-cash compensation, and other expenses due in large
part to our continued portfolio expansion primarily in Brazil. The increase in selling, general, and administrative expenses includes the
positive impact of $0.2 million from fluctuations in foreign currency exchange rates as compared to the prior year.
Acquisition Related Adjustments and Expenses:
Domestic site leasing
International site leasing
Total
For the year ended
December 31,
2014
2013
(in thousands)
Dollar
Change
Percentage
Change
$
$
3,351 $
4,447
7,798 $
6,525 $
12,673
19,198 $
(3,174)
(8,226)
(11,400)
(48.6%)
(64.9%)
(59.4%)
Acquisition related adjustments and expenses decreased $11.4 million for the year ended December 31, 2014, as compared to
the prior year, primarily as a result of a reduction in an estimated pre-acquisition contingency, partially offset by an increase in
acquisition and integration related activities including two acquisitions from Oi S.A. which closed during the first and fourth quarters
of fiscal year 2014. The decrease in acquisition related adjustments and expenses includes the positive impact of $1.1 million from
fluctuations in foreign currency exchange rates as compared to the prior year.
Asset Impairment and Decommission Costs:
Domestic site leasing
International site leasing
Total
For the year ended
December 31,
2014
2013
(in thousands)
Dollar
Change
Percentage
Change
$
$
21,538 $
2,263
23,801 $
26,478 $
2,482
28,960 $
(4,940)
(219)
(5,159)
(18.7%)
(8.8%)
(17.8%)
Asset impairment and decommission costs decreased $5.2 million for the year ended December 31, 2014, as compared to the
prior year, primarily as a result of the write-off of assets and related costs associated with the decommissioning of 214 towers during
the year ended December 31, 2014 as compared to the decommissioning of 248 towers during the prior year. The decrease in asset
impairment and decommission costs includes the positive impact of $0.1 million from fluctuations in foreign currency exchange rates
as compared to the prior year.
31
Depreciation, Accretion, and Amortization Expense:
Domestic site leasing
International site leasing
Total site leasing
Site development
Not identified by segment
Total
For the year ended
December 31,
2014
2013
Dollar
Change
Percentage
Change
(in thousands)
$
$
$
515,150 $
104,447
619,597 $
2,453
5,022
627,072 $
484,053 $
44,973
529,026 $
2,280
2,028
533,334 $
31,097
59,474
90,571
173
2,994
93,738
6.4%
132.2%
17.1%
7.6%
147.6%
17.6%
Depreciation, accretion, and amortization expense increased $93.7 million for the year ended December 31, 2014, as compared
to the prior year, due to an increase in the number of towers we acquired and built since January 1, 2013. The increase in depreciation,
accretion, and amortization expense includes the positive impact of $1.8 million from fluctuations in foreign currency exchange rates
as compared to the prior year.
Operating Income (Loss):
Domestic site leasing
International site leasing
Total site leasing
Site development
Not identified by segment
Total
For the year ended
December 31,
2014
2013
(in thousands)
Dollar
Change
Percentage
Change
$
$
$
302,406 $
20,914
323,320 $
28,095
(14,892)
336,523 $
229,541 $
(13,869)
215,672 $
24,332
(10,359)
229,645 $
72,865
34,783
107,648
3,763
(4,533)
106,878
31.7%
(250.8%)
49.9%
15.5%
43.8%
46.5%
Domestic site leasing operating income increased $72.9 million for the year ended December 31, 2014, as compared to the prior
year, primarily due to higher segment operating profit and a reduction in asset impairment and decommission costs, and acquisition
related adjustments and expenses, partially offset by increases in selling, general, and administrative expenses and depreciation,
accretion, and amortization expense.
International site leasing operating income increased $34.8 million for the year ended December 31, 2014, as compared to the
prior year, primarily due to higher segment operating profit and a reduction in acquisition related adjustments and expenses, partially
offset by increases in selling, general, and administrative expenses, and depreciation, accretion, and amortization expense.
Site development operating income increased $3.8 million for the year ended December 31, 2014, as compared to the prior year,
primarily due to higher segment operating profit, partially offset by increases in selling, general, and administrative expenses and
depreciation, accretion, and amortization expense.
32
Other Income (Expense):
Interest income
Interest expense
Non-cash interest expense
Amortization of deferred financing fees
Loss from extinguishment of debt, net
Other income
Total
For the year ended
December 31,
2014
2013
Dollar
Change
Percentage
Change
$
677 $
1,794 $
(in thousands)
(292,600)
(27,112)
(17,572)
(26,204)
10,628
(352,183) $
(249,051)
(49,085)
(15,560)
(6,099)
31,138
(286,863) $
$
(1,117)
(43,549)
21,973
(2,012)
(20,105)
(20,510)
(65,320)
(62.3%)
17.5%
(44.8%)
12.9%
329.6%
(65.9%)
22.8%
Interest expense increased $43.5 million for the year ended December 31, 2014, as compared to the prior year, primarily due to
the higher average principal amount of cash-interest bearing debt outstanding for the year ended December 31, 2014 compared to the
prior year, primarily resulting from the issuance of the 2013 and 2014 Tower Securities, 2014 Term Loan, and 4.875% Notes, partially
offset by the maturity of the 1.875% Notes and 4.0% Notes and full repayment of the 2011 Term Loan, 2012-2 Term Loan, 2010-1
Tower Securities, and 8.25% Notes.
Non-cash interest expense decreased $22.0 million for the year ended December 31, 2014 as compared to the prior year. This
decrease primarily reflects the full repayment of the 1.875% Notes in May of 2013 and 4.0% Notes in October of 2014.
Amortization of deferred financing fees increased $2.0 million for the year ended December 31, 2014, as compared to the prior
year, primarily resulting from the issuance of the 2013 and 2014 Tower Securities, 2014 Term Loan, and 4.875% Notes, partially
offset by the full repayment of the 2011 Term Loan, 2012-2 Term Loan, 8.25% Notes, and 2010-1 Tower Securities, and the maturity
of the 1.875% and 4.0% Notes.
Loss from extinguishment of debt increased $20.1 million for the year ended December 31, 2014, as compared to the prior year,
primarily due to the premium paid and write-off of the debt discount and deferred financing fees associated with the full redemption of
the 8.25% Notes, the write-off of a portion of the related debt discount and deferred financing fees associated with the repayment of
the 2011 Term Loan, 2012-2 Term Loan, and 2010-1 Tower Securities, and the early settlement of a portion of the 4.0% Notes.
Other income decreased $20.5 million for the year ended December 31, 2014, as compared to the prior year, primarily due to a
gain of $27.3 million recognized in the prior year related to the sale of a bankruptcy claim. The current year reflects a $17.9 million
gain realized on the settlement of two foreign currency contracts which were entered into and settled during the first quarter of 2014 in
order to hedge the purchase price of the Oi S.A. acquisition in Brazil which closed March 31, 2014 and a $12.5 million gain on the
sale of a cost-method investment during the fourth quarter of 2014. These gains were partially offset by a $23.0 million loss related to
the remeasurement of a foreign denominated intercompany loan.
Net Loss:
For the year ended
December 31,
2014
2013
(in thousands)
Dollar
Change
Percentage
Change
Net loss
$
(24,295) $
(55,909) $
31,614
(56.5%)
Net loss was $24.3 million for the year ended December 31, 2014, a decrease of $31.6 million compared to a loss of $55.9
million in the prior year. The decrease in net loss is primarily due to an increase in our total segment operating profit and a decrease in
non-cash interest expense as compared to the prior year, offset by increases in selling, general, and administrative expenses, loss from
extinguishment of debt, depreciation, amortization, and accretion, and interest expense, as well as, a decrease in other income as
compared to the prior year.
33
NON-GAAP FINANCIAL MEASURES
This report contains information regarding a non-GAAP measure, Adjusted EBITDA. We have provided below a description of
Adjusted EBITDA, a reconciliation of Adjusted EBITDA to its most directly comparable GAAP measure and an explanation as to
why management utilizes this measure.
Adjusted EBITDA
We define Adjusted EBITDA as net loss excluding the impact of non-cash straight-line leasing revenue, non-cash straight-line
ground lease expense, non-cash compensation, net loss from extinguishment of debt, other income and expenses, acquisition related
adjustments and expenses, asset impairment and decommission costs, interest income, interest expenses, depreciation, accretion, and
amortization, and provision for or benefit from taxes.
We believe that Adjusted EBITDA is an indicator of the financial performance of our core businesses. Adjusted EBITDA is a
component of the calculation that has been used by our lenders to determine compliance with certain covenants under our Senior
Credit Agreement and the indentures relating to our 5.625% Notes, 5.75% Notes, and 4.875% Notes. Adjusted EBITDA is not
intended to be an alternative measure of operating income or gross profit margin as determined in accordance with GAAP.
For the year ended December 31,
2015
2014
2013
(in thousands)
Net loss
$
Non-cash straight-line leasing revenue
Non-cash straight-line ground lease expense
Non-cash compensation
Loss from extinguishment of debt, net
Other expense (income)
Acquisition related adjustments and expenses
Asset impairment and decommission costs
Interest income
Interest expense (1)
Depreciation, accretion, and amortization
Provision (benefit) for taxes (2)
Adjusted EBITDA
(175,656) $
(49,064)
34,204
28,747
783
139,137
11,864
94,783
(3,894)
343,025
660,021
(24,295) $
(56,867)
36,271
22,671
26,204
(10,628)
7,798
23,801
(677)
337,284
627,072
10,827
1,094,777 $
10,120
998,754 $
$
(55,909)
(65,611)
33,621
17,205
6,099
(31,138)
19,198
28,960
(1,794)
313,696
533,334
(492)
797,169
Interest expense includes interest expense, non-cash interest expense, and amortization of deferred financing fees.
(1)
(2) Provision (benefit) for taxes includes $1,766, $1,485, and $817 of franchise taxes reflected in selling, general, and
administrative expenses on the Consolidated Statement of Operations for the year ended 2015, 2014, and 2013, respectively.
Adjusted EBITDA was $1.1 billion for the year ended December 31, 2015 as compared to $998.8 million for the year ended
December 31, 2014. The increase of $96.0 million is primarily the result of increased segment operating profit from our domestic site
leasing and international site leasing segments offset partially by the decrease in our site development segment operating profit and the
increase in our cash selling, general, and administrative expenses. The increase in Adjusted EBITDA includes the negative impact of
$23.3 million from fluctuations in foreign currency exchange rates as compared to the prior year.
Adjusted EBITDA was $998.8 million for the year ended December 31, 2014 as compared to $797.2 million for the year ended
December 31, 2013. The increase of $201.6 million is primarily the result of increased segment operating profit from our domestic site
leasing, international site leasing, and site development segments offset partially by the increase in our cash selling, general, and
administrative expenses. The increase in Adjusted EBITDA includes the negative impact of $1.4 million from fluctuations in foreign
currency exchange rates as compared to the prior year.
34
LIQUIDITY AND CAPITAL RESOURCES
SBA Communications Corporation (“SBAC”) is a holding company with no business operations of its own. SBAC’s only
significant asset is the outstanding capital stock of SBA Telecommunications, LLC (“Telecommunications”), which is also a holding
company that owns equity interests in entities that directly or indirectly own all of our domestic and international towers and assets.
We conduct all of our business operations through Telecommunications’ subsidiaries. Accordingly, our only source of cash to pay our
obligations, other than financings, is distributions with respect to our ownership interest in our subsidiaries from the net earnings and
cash flow generated by these subsidiaries.
A summary of our cash flows is as follows:
Summary cash flow information
Cash provided by operating activities
Cash used in investing activities
Cash provided by financing activities
Increase (decrease) in cash and cash equivalents
Effect of exchange rate changes on cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
Operating Activities
For the year ended December 31,
2015
2014
2013
(in thousands)
$
$
737,173 $
(734,521)
88,937
91,589
(12,993)
39,443
118,039 $
671,643 $
(1,760,127)
991,838
(96,646)
13,977
122,112
39,443 $
497,587
(817,198)
210,837
(108,774)
(2,213)
233,099
122,112
Cash provided by operating activities was $737.2 million for the year ended December 31, 2015 as compared to $671.6
million for the year ended December 31, 2014. This increase was primarily due to an increase in segment operating profit from
domestic site leasing and international site leasing operating segments, partially offset by increases in cash outflows associated with
working capital changes, increased selling, general, and administrative expenses and acquisition related adjustments and expenses and
increased cash interest payments relating to the higher average amount of cash-interest bearing debt outstanding for the year ended
December 31, 2015 compared to the year ended December 31, 2014.
Investing Activities
A detail of our cash capital expenditures is as follows:
Acquisitions (1)
Construction and related costs on new builds
Augmentation and tower upgrades
Land buyouts (2)
Purchase and refurbishment of headquarters building
Tower maintenance
General corporate
Total cash capital expenditures
For the year ended
December 31,
2015
2014
2013
$
(in thousands)
525,802 $ 1,540,258 $
100,736
61,410
83,728
12,961
28,626
4,974
92,207
72,329
44,964
19,471
20,047
7,197
$
818,237 $ 1,796,473 $
628,423
77,427
47,970
48,956
24,516
12,909
6,071
846,272
(1)
(2)
Included in our cash capital expenditures for the year ended December 31, 2013 is $175.9 million related to our acquisition of
800 towers from Vivo in the fourth quarter of 2012.
Excludes $16.3 million, $10.8 million, and $9.1 million spent to extend ground lease terms for the years ended December 31,
2015, 2014, and 2013, respectively.
35
Subsequent to December 31, 2015, we acquired 102 towers and related assets for $62.5 million in cash.
During fiscal year 2016, we expect to incur non-discretionary cash capital expenditures associated with tower maintenance and
general corporate expenditures of $30.0 million to $40.0 million and discretionary cash capital expenditures, based on current
acquisition obligations, planned new tower construction, forecasted tower augmentations, and forecasted ground lease purchases, of
$220.0 million to $240.0 million as well as potential, additional tower acquisitions not yet under contract. We expect to fund these
cash capital expenditures from cash on hand, cash flow from operations, and borrowings under the Revolving Credit Facility or new
financings. The exact amount of our future cash capital expenditures will depend on a number of factors including amounts necessary
to support our tower portfolio, our new tower build and acquisition programs, and our ground lease purchase program.
Financing Activities
On February 5, 2015, we entered into an amendment to our Revolving Credit Facility to (1) increase the size of the facility by
$230.0 million to $1.0 billion, (2) extend the maturity date to February 5, 2020, and (3) lower the applicable interest rate margins and
commitment fees depending on Borrower leverage (as defined in the Senior Credit Agreement).
During the year ended December 31, 2015, we borrowed $770.0 million and repaid $895.0 million under the Revolving Credit
Facility, resulting in no outstanding balance on the Revolving Credit Facility at year-end. As of December 31, 2015, the remaining
borrowing capacity under the Revolving Credit Facility was $1.0 billion, subject to compliance with specified financial ratios and
satisfaction of other customary conditions to borrowing.
On June 10, 2015, we, through our wholly owned subsidiary, SBA Senior Finance II LLC, obtained a new senior secured term
loan with an aggregate principal amount of $500.0 million that was issued at 99.0% of par value and matures on June 10, 2022 (the
“2015 Term Loan”). Net proceeds from the 2015 Term Loan were used to repay $490.0 million of the outstanding balance under our
Revolving Credit Facility.
On October 14, 2015, we, through our existing SBA Tower Trust, issued $500.0 million of 3.156% Secured Tower Revenue
Securities Series 2015-1C which have an anticipated repayment date of October 8, 2020 and a final maturity date of October 10, 2045
(the “2015 Tower Securities”). Net proceeds from this offering were used to make a cash distribution to SBA Guarantor LLC which
was further distributed (1) to repay outstanding amounts on the Revolving Credit Facility and (2) for general corporate purposes.
During the year ended December 31, 2015, we repaid the entire $172.5 million outstanding principal balance on the 2012-1
Term Loan. In connection with the prepayment, we expensed $0.8 million of net deferred financing fees.
During the year ended December, 31 2015, we settled the remaining outstanding warrants originally sold in connection with the
4.0% Notes. The warrants represented approximately 2.1 million underlying shares of Class A common stock, and we satisfied our
obligations by paying $150.9 million in cash.
During the second quarter of 2015, we repurchased the remaining $150.0 million of our Class A common stock authorized
under our $300.0 million stock repurchase plan, completing this plan.
On June 4, 2015, we announced the authorization of a new $1.0 billion stock repurchase plan. This new plan authorizes us to
purchase from time to time our outstanding common stock through open market repurchases in compliance with Rule 10b-18 under
the Securities Exchange Act of 1934, as amended, and/or in privately negotiated transactions at management’s discretion. Shares
purchased will be retired. During the year ended December 31, 2015, we repurchased 2.7 million shares of our Class A common stock
under our stock repurchase program for $300.1 million at a weighted average price per share of $112.04. As of December 31, 2015,
we had a remaining authorization to repurchase $700.0 million of Class A common stock under our current $1.0 billion stock
repurchase program.
Subsequent to December 31, 2015, we repurchased 0.5 million shares of our Class A common stock under our stock repurchase
program for $50.0 million at a weighted average price per share of $98.65. As of the date of this filing, we had a remaining
authorization to repurchase $650.0 million of Class A common stock under our current $1.0 billion stock repurchase program.
36
Registration Statements
We have on file with the Commission a shelf registration statement on Form S-4 registering shares of Class A common stock
that we may issue in connection with the acquisition of wireless communication towers or antenna sites and related assets or
companies who own wireless communication towers, antenna sites, or related assets. During the year ended December 31, 2015, we
did not issue any shares of Class A common stock under this registration statement. As of December 31, 2015, we had approximately
1.7 million shares of Class A common stock remaining under this shelf registration statement.
On March 3, 2015, we filed with the Commission an automatic shelf registration statement for well-known seasoned issuers on
Form S-3ASR. This registration statement enables us to issue shares of our Class A common stock, preferred stock or debt securities
either separately or represented by warrants, or depositary shares as well as units that include any of these securities. Under the rules
governing automatic shelf registration statements, we will file a prospectus supplement and advise the Commission of the amount and
type of securities each time we issue securities under this registration statement. No shares were issued under this registration
statement through the date of this filing.
Debt Instruments and Debt Service Requirements
Senior Credit Agreement
On February 7, 2014, SBA Senior Finance II entered into a Second Amended and Restated Credit Agreement with several banks
and other financial institutions or entities from time to time parties to the Second Amended and Restated Credit Agreement to, among
other things, incur the 2014 Term Loan and amend certain terms of the existing senior credit agreement (as amended, the “Senior
Credit Agreement”).
Terms of the Senior Credit Agreement
The Senior Credit Agreement, as amended, requires SBA Senior Finance II to maintain specific financial ratios, including (1) a
ratio of Consolidated Total Debt to Annualized Borrower EBITDA not to exceed 6.5 times for any fiscal quarter, (2) a ratio of
Consolidated Total Debt and Net Hedge Exposure (calculated in accordance with the Senior Credit Agreement) to Annualized
Borrower EBITDA for the most recently ended fiscal quarter not to exceed 6.5 times for 30 consecutive days and (3) a ratio of
Annualized Borrower EBITDA to Annualized Cash Interest Expense (calculated in accordance with the Senior Credit Agreement) of
not less than 2.0 times for any fiscal quarter. The Senior Credit Agreement contains customary affirmative and negative covenants
that, among other things, limit the ability of SBA Senior Finance II and its subsidiaries to incur indebtedness, grant certain liens, make
certain investments, enter into sale leaseback transactions, merge or consolidate, make certain restricted payments, enter into
transactions with affiliates, and engage in certain asset dispositions, including a sale of all or substantially all of their property. As of
December 31, 2015, SBA Senior Finance II was in compliance with the financial covenants contained in the Senior Credit Agreement.
The Senior Credit Agreement is also subject to customary events of default. Pursuant to the Second Amended and Restated Guarantee
and Collateral Agreement, amounts borrowed under the Revolving Credit Facility, the Term Loans and certain hedging transactions
that may be entered into by SBA Senior Finance II or the Subsidiary Guarantors (as defined in the Senior Credit Agreement) with
lenders or their affiliates are secured by a first lien on the membership interests of SBA Telecommunications, LLC, SBA Senior
Finance, LLC and SBA Senior Finance II and on substantially all of the assets (other than leasehold, easement and fee interests in real
property) of SBA Senior Finance II and the Subsidiary Guarantors.
The Senior Credit Agreement, as amended, permits SBA Senior Finance II, without the consent of the other lenders, to request
that one or more lenders provide SBA Senior Finance II with increases in the Revolving Credit Facility or additional term loans
provided that after giving effect to the proposed increase in Revolving Credit Facility commitments or incremental term loans the ratio
of Consolidated Total Debt to Annualized Borrower EBITDA would not exceed 6.5 times. SBA Senior Finance II’s ability to request
such increases in the Revolving Credit Facility or additional term loans is subject to its compliance with customary conditions set forth
in the Senior Credit Agreement including compliance, on a pro forma basis, with the financial covenants and ratios set forth therein
and, with respect to any additional term loan, an increase in the margin on existing term loans to the extent required by the terms of
the Senior Credit Agreement. 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 with additional
term loans and, if so, upon what terms.
37
Revolving Credit Facility under the Senior Credit Agreement
On February 5, 2015, SBA Senior Finance II entered into the 2015 Revolving Refinancing Amendment with several banks and
other financial institutions or entities from time to time parties to the Senior Credit Agreement to, among other things, (i) increase the
borrowing capacity under our Revolving Credit Facility from $770.0 million to $1.0 billion, (ii) extend the maturity date of the
Revolving Credit Facility to February 5, 2020, (iii) provide for the ability to borrow in U.S. dollars and certain designated foreign
currencies, and (iv) lower the applicable interest rate margins and commitment fees under the Revolving Credit Facility.
As amended February 2015, the Revolving Credit Facility consists of a revolving loan under which up to $1.0 billion aggregate
principal amount may be borrowed, repaid and redrawn, subject to compliance with specific financial ratios and the satisfaction of
other customary conditions to borrowing. Amounts borrowed under the Revolving Credit Facility accrue interest, at SBA Senior
Finance II’s election, at either (i) the Eurodollar Rate plus a margin that ranges from 137.5 basis points to 200.0 basis points or (ii) the
Base Rate plus a margin that ranges from 37.5 basis points to 100.0 basis points, in each case based on the ratio of Consolidated Total
Debt to Annualized Borrower EBITDA, calculated in accordance with the Senior Credit Agreement. In addition, SBA Senior Finance
II is required to pay a commitment fee of 0.25% per annum on the amount of unused commitment. If not earlier terminated by SBA
Senior Finance II, the Revolving Credit Facility will terminate on, and SBA Senior Finance II will repay all amounts outstanding on or
before, February 5, 2020. The proceeds available under the Revolving Credit Facility may be used for general corporate purposes.
SBA Senior Finance II may, from time to time, borrow from and repay the Revolving Credit Facility. Consequently, the amount
outstanding under the Revolving Credit Facility at the end of a period may not be reflective of the total amounts outstanding during
such period.
During the year ended December 31, 2015, we borrowed $770.0 million and repaid $895.0 million of the outstanding balance
under the Revolving Credit Facility. As of December 31, 2015, there was no amount outstanding under the Revolving Credit Facility.
The remaining borrowing capacity under the Revolving Credit Facility was $1.0 billion at December 31, 2015, subject to compliance
with specified financial ratios and satisfaction of other customary conditions to borrowing.
Term Loans under the Senior Credit Agreement
2012-1 Term Loan
The 2012-1 Term Loan consisted of a senior secured term loan with an initial aggregate principal amount of $200.0 million with
a maturity date of May 9, 2017. The 2012-1 Term Loan accrued interest, at SBA Senior Finance II’s election, at either the Base Rate
plus a margin that ranges from 100 to 150 basis points or the Eurodollar Rate plus a margin that ranges from 200 to 250 basis points,
in each case based on the ratio of Consolidated Total Debt to Annualized Borrower EBITDA (calculated in accordance with the Senior
Credit Agreement). The 2012-1 Term Loan was issued at par. We incurred deferred financing fees of $2.7 million in relation to this
transaction which were being amortized through the maturity date.
During the year ended December 31, 2015, we repaid the entire $172.5 million outstanding principal balance on the 2012-1
Term Loan. Included in this amount was a prepayment of $160.0 million made on November 18, 2015. In connection with the
prepayment, we expensed $0.8 million of net deferred financing fees.
2014 Term Loan
The 2014 Term Loan consists of a senior secured term loan with an initial aggregate principal amount of $1.5 billion that
matures on March 24, 2021. The 2014 Term Loan accrues interest, at SBA Senior Finance II’s election, at either the Base Rate plus
150 basis points (with a Base Rate floor of 1.75%) or the Eurodollar Rate plus 250 basis points (with a Eurodollar Rate floor of
0.75%). The 2014 Term Loan was issued at 99.75% of par value. As of December 31, 2015, the 2014 Term Loan was accruing
interest at 3.25% per annum. Principal payments on the 2014 Term Loan commenced on September 30, 2014 and are being made in
quarterly installments on the last day of each March, June, September, and December in an amount equal to $3.8 million. SBA Senior
Finance II has the ability to prepay any or all amounts under the 2014 Term Loan. We incurred deferred financing fees of
approximately $12.9 million in relation to this transaction which are being amortized through the maturity date.
During the year ended December 31, 2015, we repaid $15.0 million of principal on the 2014 Term Loan. As of December 31,
2015, the 2014 Term Loan had a principal balance of $1.5 billion.
38
2015 Term Loan
On June 10, 2015, SBA Senior Finance II obtained a new senior secured term loan with an initial aggregate principal amount of
$500.0 million that matures on June 10, 2022. The 2015 Term Loan accrues interest, at SBA Senior Finance II’s election, at either the
Base Rate plus 150 basis points (with a Base Rate floor of 1.75%) or the Eurodollar Rate plus 250 basis points (with a Eurodollar Rate
floor of 0.75%). The 2015 Term Loan was issued at 99.0% of par value. As of September 30, 2015, the 2015 Term Loan was accruing
interest at 3.25% per annum. Principal payments on the 2015 Term Loan commenced on September 30, 2015 and are being made in
quarterly installments on the last day of each March, June, September, and December in an amount equal to $1.3 million. SBA Senior
Finance II has the ability to prepay any or all amounts under the 2015 Term Loan. We incurred deferred financing fees of
approximately $5.1 million in relation to this transaction which are being amortized through the maturity date.
During the year ended December 31, 2015, we repaid $2.5 million of principal on the 2015 Term Loan. As of December 31,
2015, the 2015 Term Loan had a principal balance of $497.5 million.
Secured Tower Revenue Securities
Tower Revenue Securities Terms
The mortgage loan underlying the 2010 Tower Securities, 2012 Tower Securities, 2013 Tower Securities, 2014 Tower
Securities, and 2015 Tower Securities (together the “Tower Securities”) will be paid from the operating cash flows from the aggregate
10,585 tower sites owned by the Borrowers. The mortgage loan is secured by (i) mortgages, deeds of trust, and deeds to secure debt on
a substantial portion of the tower sites, (ii) a security interest in the tower sites and substantially all of the Borrowers’ personal
property and fixtures, (iii) the Borrowers’ rights under certain tenant leases, and (iv) all of the proceeds of the foregoing. For each
calendar month, SBA Network Management, Inc., an indirect subsidiary (“Network Management”), is entitled to receive a
management fee equal to 4.5% of the Borrowers’ operating revenues for the immediately preceding calendar month.
The Borrowers may prepay any of the mortgage loan components, in whole or in part, with no prepayment consideration,
(i) within nine months (in the case of the components corresponding to the 2010 Tower Securities), twelve months (in the case of the
component corresponding to the 2012 Tower Securities, Secured Tower Revenue Securities Series 2013-1C, Secured Tower Revenue
Securities Series 2013-1D, Secured Tower Revenue Securities Series 2014-1C, and Secured Tower Revenue Securities Series 2015-
1C), or eighteen months (in the case of the components corresponding to the Secured Tower Revenue Securities Series 2013-2C and
Secured Tower Revenue Securities Series 2014-2C) of the anticipated repayment date of such mortgage loan component, (ii) with
proceeds received as a result of any condemnation or casualty of any tower owned by the Borrowers or (iii) during an amortization
period. In all other circumstances, the Borrowers may prepay the mortgage loan, in whole or in part, upon payment of the applicable
prepayment consideration. The prepayment consideration is determined based on the class of the Tower Securities to which the
prepaid mortgage loan component corresponds and consists of an amount equal to the excess, if any, of (1) the present value
associated with the portion of the principal balance being prepaid, calculated in accordance with the formula set forth in the mortgage
loan agreement, 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 within nine months (in the case of the components corresponding to the 2010 Tower
Securities), twelve months (in the case of the component corresponding to the 2012 Tower Securities, Secured Tower Revenue
Securities Series 2013-1C, Secured Tower Revenue Securities Series 2013-1D, Secured Tower Revenue Securities Series 2014-1C,
and Secured Tower Revenue Securities Series 2015-1C), or eighteen months (in the case of the components corresponding to the
Secured Tower Revenue Securities Series 2013-2C and Secured Tower Revenue Securities Series 2014-2C) of the anticipated
repayment date of such mortgage loan component over (2) that portion of the principal balance of such class prepaid on the date of
such prepayment.
To the extent that the mortgage loan components corresponding to the Tower Securities are not fully repaid by their respective
anticipated repayment dates, the interest rate of each such component will increase by the greater of (i) 5% and (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.
Pursuant to the terms of the Tower Securities, all rents and other sums due on any of the towers owned by the Borrowers are
directly deposited by the lessees into a controlled deposit account 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 Consolidated Balance Sheets (see Note 4). 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 are required to pay over the succeeding twelve
months, as of the end of any calendar quarter, falls to 1.30x 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
39
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 1.30x 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 will be applied to
prepay the mortgage loan until such time that the Debt Service Coverage Ratio exceeds 1.15x for a calendar quarter. In addition, if any
of the Tower Securities are not fully repaid by their respective anticipated repayment dates, the cash flow from the towers owned by
the Borrowers will be trapped by the trustee for the Tower Securities and applied first to repay the interest, at the original interest
rates, on the mortgage loan components underlying the Tower Securities, second to fund all reserve accounts and operating expenses
associated with those towers, third to pay the management fees due to Network Management, fourth to repay principal of the Tower
Securities and fifth to repay the additional interest discussed above. The mortgage loan agreement, as amended, also includes
covenants customary for mortgage loans subject to rated securitizations. Among other things, the Borrowers are prohibited from
incurring other indebtedness for borrowed money or further encumbering their assets. As of December 31, 2015, the Borrowers met
the required Debt Service Coverage Ratio as set forth in the mortgage loan agreement and were in compliance with all other
covenants.
2010 Tower Securities
On April 16, 2010, we, through a New York common law trust (the “Trust”), issued $550.0 million of Secured Tower Revenue
Securities Series 2010-2C (the “2010 Tower Securities”). The 2010 Tower Securities have an annual interest rate of 5.101%. The
anticipated repayment date and the final maturity date for the 2010 Tower Securities are April 11, 2017 and April 9, 2042,
respectively. The sole asset of the Trust consists of a non-recourse mortgage loan made in favor of those entities that are borrowers on
the mortgage loan (the “Borrowers”). We incurred deferred financing fees of $8.1 million in relation to this transaction which are
being amortized through the anticipated repayment date of the 2010 Tower Securities.
2012 Tower Securities
On August 9, 2012, we, through the Trust, issued $610.0 million of Secured Tower Revenue Securities Series 2012-1C (the
“2012 Tower Securities”) which have an anticipated repayment date of December 11, 2017 and a final maturity date of December 9,
2042. The fixed interest rate of the 2012 Tower Securities is 2.933% per annum, payable monthly. We incurred deferred financing
fees of $14.9 million in relation to this transaction which are being amortized through the anticipated repayment date of the 2012
Tower Securities.
2013 Tower Securities
On April 18, 2013, we, through the Trust, issued $425.0 million of 2.240% Secured Tower Revenue Securities Series 2013-1C
which have an anticipated repayment date of April 10, 2018 and a final maturity date of April 9, 2043, $575.0 million of 3.722%
Secured Tower Revenue Securities Series 2013-2C which have an anticipated repayment date of April 11, 2023 and a final maturity
date of April 9, 2048, and $330.0 million of 3.598% Secured Tower Revenue Securities Series 2013-1D which have an anticipated
repayment date of April 10, 2018 and a final maturity date of April 9, 2043 (collectively the “2013 Tower Securities”). The aggregate
$1.33 billion of 2013 Tower Securities have a blended interest rate of 3.218% per annum, payable monthly. We incurred deferred
financing fees of $25.5 million in relation to this transaction which are being amortized through the anticipated repayment date of each
of the 2013 Tower Securities.
2014 Tower Securities
On October 15, 2014, we, through the Trust, issued $920.0 million of 2.898% Secured Tower Revenue Securities Series 2014-
1C which have an anticipated repayment date of October 8, 2019 and a final maturity date of October 11, 2044, and $620.0 million of
3.869% Secured Tower Revenue Securities Series 2014-2C which have an anticipated repayment date of October 8, 2024 and a final
maturity date of October 8, 2049, (collectively the “2014 Tower Securities”). The aggregate $1.54 billion of 2014 Tower Securities
have a blended interest rate of 3.289% per annum, payable monthly. We incurred deferred financing fees of $22.5 million in relation
to this transaction which are being amortized through the anticipated repayment date of each of the 2014 Tower Securities.
2015 Tower Securities
On October 14, 2015, we, through the Trust, issued $500.0 million of Secured Tower Revenue Securities Series 2015-1C which
have an anticipated repayment date of October 8, 2020 and a final maturity date of October 10, 2045 (the “2015 Tower Securities”).
The fixed interest rate of the 2015 Tower Securities is 3.156% per annum, payable monthly. We have incurred deferred financing fees
40
of $10.9 million to date in relation to this transaction which are being amortized through the anticipated repayment date of the 2015
Tower Securities. In connection with the issuance of the 2015 Tower Securities, the advance rents reserve requirement was modified
such that the Borrowers will only be required to maintain an advance rents reserve at any time the monthly tenant debt service
coverage ratio is equal to or less than 2:1 and for two calendar months after such coverage ratio again exceeds 2:1.
In connection with the issuance of the 2015 Tower Securities, SBA Properties, LLC, SBA Sites, LLC, SBA Structures, LLC,
SBA Infrastructure, LLC, SBA Monarch Towers III, LLC, SBA 2012 TC Assets PR, LLC, SBA 2012 TC Assets, LLC, SBA Towers
IV, LLC, SBA Monarch Towers I, LLC, SBA Towers USVI, Inc., SBA Towers VII, LLC, SBA GC Towers, LLC, SBA Towers V,
LLC, and SBA Towers VI, LLC (collectively, the “Borrowers”), each an indirect subsidiary of SBAC, and Midland Loan Services, a
division of PNC Bank, National Association, as servicer, on behalf of the Trustee entered into the First Loan and Security Agreement
Supplement and Amendment pursuant to which, among other things, (i) the existing Second Amended and Restated Loan and Security
Agreement was amended to modify the advance rents reserve as described above, (ii) the outstanding principal amount of the
mortgage loan was increased by $500 million, and (iii) the Borrowers became jointly and severally liable for the aggregate $4.5 billion
borrowed under the mortgage loan corresponding to the 2010 Tower Securities, 2012 Tower Securities, 2013 Tower Securities, 2014
Tower Securities, and the newly issued 2015 Tower Securities.
4.0% Convertible Senior Notes due 2014
On April 24, 2009, we issued $500.0 million of 4.0% Convertible Senior Notes (“4.0% Notes”). Concurrently with the pricing
of the 4.0% Notes, we entered into convertible note hedge and warrant transactions with affiliates of certain of the initial purchasers of
the convertible notes. As of December 31, 2014, we settled our conversion obligations and associated convertible note hedges. During
the year ended December 31, 2015, we settled the remaining outstanding warrants for $150.9 million, representing approximately 2.1
million underlying shares.
Senior Notes
5.75% Senior Notes
On July 13, 2012, Telecommunications issued $800.0 million of unsecured senior notes due July 15, 2020 (the “5.75% Notes”).
The 5.75% Notes accrue interest at a rate of 5.75% and were issued at par. Interest on the 5.75% Notes is due semi-annually on July
15 and January 15 of each year. We incurred deferred financing fees of $14.0 million in relation to this transaction which are being
amortized through the maturity date.
The 5.75% Notes are subject to redemption in whole or in part on or after July 15, 2016 at the redemption prices set forth in the
indenture agreement plus accrued and unpaid interest. If redeemed during the twelve-month period beginning on July 15, 2016, July
15, 2017, or July 15, 2018 through maturity, the redemption price will be 102.875%, 101.438%, and 100.000%, respectively, of the
principal amount of the 5.75% Notes to be redeemed on the redemption date plus accrued and unpaid interest.
SBAC is a holding company with no business operations of its own and its only significant asset is the outstanding capital stock
of Telecommunications. Telecommunications is 100% owned by SBAC. SBAC has fully and unconditionally guaranteed the Senior
Notes issued by Telecommunications.
5.625% Senior Notes
On September 28, 2012, we issued $500.0 million of unsecured senior notes due October 1, 2019 (the “5.625% Notes”). The
5.625% Notes accrue interest at a rate of 5.625% per annum and were issued at par. Interest on the 5.625% Notes is due semi-annually
on April 1 and October 1 of each year. We incurred deferred financing fees of $8.6 million in relation to this transaction which are
being amortized through the maturity date.
The 5.625% Notes are subject to redemption in whole or in part on or after October 1, 2016 at the redemption prices set forth in
the indenture agreement plus accrued and unpaid interest. If redeemed during the twelve-month period beginning on October 1, 2016,
October 1, 2017, or October 1, 2018 until maturity, the redemption price will be 102.813%, 101.406%, and 100.000%, respectively, of
the principal amount of the 5.625% Notes to be redeemed on the redemption date plus accrued and unpaid interest.
41
4.875% Senior Notes
On July 1, 2014, we issued $750.0 million of unsecured senior notes due July 15, 2022 (the “4.875% Notes”). The 4.875%
Notes accrue interest at a rate of 4.875% per annum and were issued at 99.178% of par value. Interest on the 4.875% Notes is due
semi-annually on January 15 and July 15 of each year. We incurred deferred financing fees of $11.6 million in relation to this
transaction which are being amortized through the maturity date.
The 4.875% Notes are subject to redemption in whole or in part on or after July 15, 2017 at the redemption prices set forth in the
indenture agreement plus accrued and unpaid interest. Prior to July 15, 2017, we may at our option redeem up to 35% of the aggregate
principal amount of the 4.875% Notes originally issued at a redemption price of 104.875% of the principal amount of the 4.875%
Notes to be redeemed on the redemption date plus accrued and unpaid interest with the net proceeds of certain equity offerings. If
redeemed during the twelve-month period beginning on July 15, 2017, July 15, 2018, July 15, 2019, or July 15, 2020 until maturity,
the redemption price will be 103.656%, 102.438%, 101.219% and 100.000%, respectively, of the principal amount of the 4.875%
Notes to be redeemed on the redemption date plus accrued and unpaid interest.
Indentures Governing Senior Notes
The Indentures governing the Senior Notes contain customary covenants, subject to a number of exceptions and qualifications,
including restrictions on the ability of SBAC and Telecommunications to (1) incur additional indebtedness unless the Consolidated
Indebtedness to Annualized Consolidated Adjusted EBITDA Ratio (as defined in the Indenture), pro forma for the additional
indebtedness does not exceed, with respect to any fiscal quarter, 9.5x for SBAC and 7.5x for Telecommunications, (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 the Restricted Subsidiaries of SBAC and
Telecommunications (as defined in the Indentures) to incur liens securing indebtedness.
Debt Service
As of December 31, 2015, we believe that our cash on hand, capacity available under our Revolving Credit Facility, and our
cash flows from operations for the next twelve months will be sufficient to service our outstanding debt during the next twelve
months.
The following table illustrates our estimate of our debt service requirement over the twelve months ended December 31, 2016
based on the amounts outstanding as of December 31, 2015 and the interest rates accruing on those amounts on such date (in
thousands):
5.625% Senior Notes due 2019
5.750% Senior Notes due 2020
4.875% Senior Notes due 2022
5.101% Secured Tower Revenue Securities Series 2010-2C
2.933% Secured Tower Revenue Securities Series 2012-1C
2.240% Secured Tower Revenue Securities Series 2013-1C
3.722% Secured Tower Revenue Securities Series 2013-2C
3.598% Secured Tower Revenue Securities Series 2013-1D
2.898% Secured Tower Revenue Securities Series 2014-1C
3.869% Secured Tower Revenue Securities Series 2014-2C
3.156% Secured Tower Revenue Securities Series 2015-1C
Revolving Credit Facility
2014 Term Loan B
2015 Term Loan B
Total debt service for next 12 months
Inflation
$
$
28,125
46,000
36,563
28,230
18,085
9,655
21,584
11,978
26,954
24,185
15,939
2,500
62,836
21,108
353,741
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
42
governed by long-term contracts with pre-determined pricing that we will not be able to increase in response to increases in inflation
other than our contracts in Brazil which have inflationary index based rental escalators.
Commitments and Contractual Obligations
The following table summarizes our scheduled contractual commitments as of December 31, 2015:
$
Principal payments of debt
Interest payments (1)
Operating leases
Capital leases
Employment agreements
Total contractual obligations
$
2016
2017
2018
2019
2020
20,000 $
333,741
188,382
1,619
2,100
545,842 $
(in thousands)
1,180,000 $
311,991
190,538
1,150
2,100
1,685,779 $
775,000 $
270,918
194,228
799
1,400
1,242,345 $
1,440,000 $
251,119
197,012
251
—
1,888,382 $
1,320,000
181,371
198,774
—
—
1,700,145
(1) Represents interest payments based on the 2010 Tower Securities interest rate of 5.1010%, the 2012 Tower Securities interest
rate of 2.933%, the 2013-1C Tower Securities interest rate of 2.240%, the 2013-2C Tower Securities interest rate of 3.722%, the
2013-1D Tower Securities interest rate of 3.598%, the 2014-1C Tower Securities interest rate of 2.898%, the 2014-2C Tower
Securities interest rate of 3.869%, the 2015 Tower Securities interest rate of 3.156%, the 2014 Term Loan at an interest rate of
3.25% as of December 31, 2015, the 2015 Term Loan at an interest rate of 3.25% as of December 31, 2015, and the Senior
Notes interest rates of 5.625%, 5.750% and 4.875%.
Off-Balance Sheet Arrangements
We are not involved in any off-balance sheet arrangements.
43
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, 2015:
2016
2017
2018
2019
2020
Thereafter
Total
Fair Value
Debt:
5.625% Senior Notes due 2019 $
5.750% Senior Notes due 2020
4.875% Senior Notes due 2022
5.101% 2010-2 Tower
— $
—
—
— $
—
—
— $
—
—
(in thousands)
500,000 $
— $
800,000
—
—
— $
—
500,000 $
800,000
521,250
832,000
—
750,000
750,000
744,375
Securities (1)
2.933% 2012 Tower
Securities (1)
2.240% 2013-1C Tower
Securities (1)
3.722% 2013-2C Tower
Securities (1)
3.598% 2013-1D Tower
Securities (1)
2.898% 2014-1C Tower
Securities (1)
3.869% 2014-2C Tower
Securities (1)
3.156% 2015-1C Tower
Securities (1)
2014 Term Loan
2015 Term Loan
—
550,000
—
—
—
—
550,000
558,223
—
610,000
—
—
—
—
610,000
611,879
—
—
425,000
—
—
—
425,000
416,959
—
—
—
—
—
575,000
575,000
565,541
—
—
330,000
—
—
—
330,000
332,676
—
—
—
920,000
—
—
920,000
910,368
—
—
—
—
—
620,000
620,000
608,084
—
15,000
—
15,000
—
15,000
—
15,000
500,000
15,000
—
1,402,500
500,000
1,477,500
489,680
1,447,950
Total debt obligation
$ 20,000 $ 1,180,000 $
5,000
5,000
5,000
486,306
775,000 $ 1,440,000 $ 1,320,000 $ 3,820,000 $ 8,555,000 $ 8,525,291
472,500
497,500
5,000
5,000
(1) The anticipated repayment date and the final maturity date for the 2010-2 Tower Securities is April 11, 2017 and April 9, 2042,
respectively.
The anticipated repayment date and the final maturity date for the 2012 Tower Securities is December 11, 2017 and December
9, 2042, respectively.
The anticipated repayment date and the final maturity date for the 2013-1C Tower Securities is April 10, 2018 and April 9,
2043, respectively.
The anticipated repayment date and the final maturity date for the 2013-2C Tower Securities is April 11, 2023 and April 9,
2048, respectively.
The anticipated repayment date and the final maturity date for the 2013-1D Tower Securities is April 10, 2018 and April 9,
2043, respectively.
The anticipated repayment date and the final maturity date for the 2014-1C Tower Securities is October 8, 2019 and October 11,
2044, respectively.
The anticipated repayment date and the final maturity date for the 2014-2C Tower Securities is October 8, 2024 and October 8,
2049, respectively.
The anticipated repayment date and the final maturity date for the 2015-1C Tower Securities is October 8, 2020 and October 10,
2049, respectively.
Our current primary market risk exposure is interest rate risk relating to (1) our ability to refinance our debt at commercially
reasonable rates, if at all, (2) interest rate risk relating to the impact of interest rate movements on our 2014 Term Loan and 2015 Term
Loan and any borrowings that we may incur under our Revolving Credit Facility, which are at floating rates. We manage the interest
rate risk on our outstanding debt through our large percentage of fixed rate debt. While we cannot predict our ability to refinance
44
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.
We are exposed to market risk from changes in foreign currency exchange rates in connection with our operations in Brazil,
Canada, Costa Rica, Guatemala, and Nicaragua. In each of these countries, we pay most of our selling, general, and administrative
expenses and a portion of our operating expenses, such as taxes and utilities incurred in the country in local currency. In addition, in
Brazil and Canada, we receive significantly all of our revenue and pay significantly all of our operating expenses in local currency. All
transactions denominated in currencies other than the U.S. Dollar are reported in U.S. Dollars at the applicable exchange rate. All
assets and liabilities are translated into U.S. Dollars at exchange rates in effect at the end of the applicable fiscal reporting period and
all revenues and expenses are translated at average rates for the period. The cumulative translation effect is included in equity as a
component of Accumulated other comprehensive income (loss). For the year ended December 31, 2015, approximately 11.0% of our
revenues and approximately 11.7% of our total operating expenses were denominated in foreign currencies.
We have performed a sensitivity analysis assuming a hypothetical 10% adverse movement in the Brazilian Real from the quoted
foreign currency exchange rates at December 31, 2015. As of December 31, 2015, the analysis indicated that such an adverse
movement would have caused our revenues and operating results to fluctuate by less than 2.0% for the year ended December 31, 2015.
During 2014, we incurred intercompany debt, which is denominated in a currency other than the functional currency of the
subsidiary in which it is recorded. As this debt had not been designated as being a long-term investment in nature, any changes in the
foreign currency exchange rates will result in unrealized gains or losses, which will be included in our determination of net income. A
change of 10% in the underlying exchange rates of our unsettled intercompany debt at December 31, 2015 would have resulted in
approximately $46.6 million of unrealized gains or losses that would have been included in Other expense in our condensed
consolidated statements of operations for the year ended December 31, 2015.
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, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements concern expectations, beliefs,
projections, plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts.
Specifically, this annual report contains forward-looking statements regarding:
•
•
•
•
•
•
•
•
our expectations on the future growth and financial health of the wireless industry and the industry participants, the
drivers of such growth, and the trends developing in our industry;
our expectations regarding the opportunities in the international wireless markets in which we currently operate or have
targeted for growth, our beliefs regarding how we can capitalize on such opportunities, and our intent to continue
expanding internationally through new builds and acquisitions;
our beliefs regarding our ability to capture and capitalize on industry growth and the impact of such growth on our
financial and operational results;
our expectation that over the long-term, site leasing revenues will continue to grow as wireless service providers lease
additional antenna space on our towers due to increasing minutes of network use and data transfer, network expansion and
network coverage requirements and the rate of such growth, on an organic basis, in our domestic and international
segments;
our belief that our site leasing business is characterized by stable and long-term recurring revenues, predictable operating
costs, and minimal non-discretionary capital expenditures;
our expectation that, due to the relatively young age and mix of our tower portfolio, future expenditures required to
maintain these towers will be minimal;
our expectation that we will grow our cash flows by adding tenants to our towers at minimal incremental costs and
executing monetary amendments;
our expectations regarding the churn rate of our non-iDEN tenant leases;
45
•
•
•
•
•
•
•
•
our intent to grow our tower portfolio, domestically and internationally, and our expectations regarding the pace of such
growth;
our expectation that we will continue our ground lease purchase program and the estimates of the impact of such program
on our financial results;
our expectation that we will continue to incur losses;
our expectations regarding our future cash capital expenditures, both discretionary and non-discretionary, including
expenditures required to maintain, improve, and modify our towers, ground lease purchases, and general corporate
expenditures, and the source of funds for these expenditures;
our intended use of our liquidity;
our expectations regarding our annual debt service in 2016 and thereafter, and our belief that our cash on hand, cash flows
from operations for the next twelve months and availability under our Revolving Credit Facility will be sufficient to
service our outstanding debt during the next twelve months;
our belief regarding our credit risk; and
our estimates regarding certain accounting and tax matters.
These forward-looking statements reflect our current views about future events and are subject to risks, uncertainties and
assumptions. We wish to caution readers that certain important factors may have affected and could in the future affect our actual
results and could cause actual results to differ significantly from those expressed in any forward-looking statement. The most
important factors that could prevent us from achieving our goals, and cause the assumptions underlying forward-looking statements
and the actual results to differ materially from those expressed in or implied by those forward-looking statements include, but are not
limited to, the following:
•
•
•
•
•
•
•
•
the impact of consolidation among wireless service providers on our leasing revenue;
our ability to continue to comply with covenants and the terms of our credit instruments and our ability to obtain
additional financing to fund our capital expenditures;
our ability to successfully manage the risks associated with international operations, including risks relating to political or
economic conditions, tax laws, currency restrictions, legal or judicial systems, and land ownership;
our ability to successfully manage the risks associated with our acquisition initiatives, including our ability to effectively
integrate acquired towers into our business and to achieve the financial results projected in our valuation models for the
acquired towers;
developments in the wireless communications industry in general, and for wireless communications infrastructure
providers in particular, that may slow growth or affect the willingness or ability of the wireless service providers to
expend capital to fund network expansion or enhancements;
our ability to secure as many site leasing tenants as anticipated, recognize our expected economies of scale with respect to
new tenants on our towers, and retain current leases on towers;
our ability to secure and deliver anticipated services business at contemplated margins;
our ability to build new towers, including our ability to identify and acquire land that would be attractive for our clients
and to successfully and timely address zoning, permitting, weather, availability of labor and supplies and other issues that
arise in connection with the building of new towers;
46
•
•
•
•
•
•
•
•
competition for the acquisition of towers and other factors that may adversely affect our ability to purchase towers that
meet our investment criteria and are available at prices which we believe will be accretive to our shareholders and allow
us to maintain our long-term target leverage ratios;
our ability to protect our rights to the land under our towers, and our ability to acquire land underneath our towers on
terms that are accretive;
our ability to sufficiently increase our revenues and maintain expenses and cash capital expenditures at appropriate levels
to permit us to meet our anticipated uses of liquidity for operations, debt service and estimated portfolio growth;
our ability to successfully estimate the impact of regulatory and litigation matters;
our ability to successfully estimate the impact of certain accounting and tax matters, including the effect on our company
of adopting certain accounting pronouncements and the availability of sufficient net operating losses to offset future
taxable income;
natural disasters and other unforeseen damage for which our insurance may not provide adequate coverage;
a decrease in demand for our towers; and
the introduction of new technologies or changes in a tenant’s business model that may make our tower leasing business
less desirable to potential tenants.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial statements and supplementary data are on pages F-1 through F-38.
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, 2015, 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, 2015, 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, 2015 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, 2015. 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
47
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 SBAC; (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 SBAC are being made only in accordance with authorizations of management and directors of SBAC; and
(iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of SBAC’s
assets that could have a material effect on the financial statements.
Management performed an assessment of the effectiveness of SBAC’s internal control over financial reporting as of December
31, 2015 based upon criteria in Internal Control – Integrated Framework (2013 Framework) issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). Based on our assessment, management determined that SBAC’s internal control
over financial reporting was effective as of December 31, 2015 based on the criteria in Internal Control – Integrated Framework
(2013 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 public accounting firm that audited the financial statements included in this
Annual Report on Form 10-K, has issued an attestation report on SBAC’s internal control over financial reporting.
48
Report of Independent Registered 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,
2015, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations
of the Treadway Commission (2013 framework) (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, 2015, 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, 2015 and 2014, and the related
consolidated statements of operations, comprehensive loss, shareholders’ equity (deficit) and cash flows for each of the three years in
the period ended December 31, 2015 of SBA Communications Corporation and Subsidiaries and our report dated February 26, 2016
expressed an unqualified opinion thereon.
/s/ Ernst & Young LLP
Certified Public Accountants
Boca Raton, Florida
February 26, 2016
49
ITEM 9B. OTHER INFORMATION
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory
Arrangements of Certain Officers.
Item 5.02(e)
On December 7, 2015, we entered into amended and restated employment agreements with each of Brendan Cavanagh,
Executive Vice President and Chief Financial Officer, Thomas P. Hunt, Executive Vice President, General Counsel and Chief
Administrative Officer, and Kurt L. Bagwell, Executive Vice President and President of International. The prior employment
agreements with each of Messrs. Cavanagh, Hunt and Bagwell were set to expire by their terms on December 31, 2015. The amended
and restated employment agreements, which provide for each of Messrs. Cavanagh, Hunt and Bagwell to continue to serve in their
present positions, became effective on December 31, 2015 and expire on December 31, 2018. All other material terms of the
employment agreements remained the same.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERANCE
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
– Governance 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 2016 Annual Meeting of Shareholders to be filed on or before April 29, 2016.
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 2016
Annual Meeting of Shareholders to be filed on or before April 29, 2016.
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 2016
Annual Meeting of Shareholders to be filed on or before April 29, 2016.
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 2016
Annual Meeting of Shareholders to be filed on or before April 29, 2016.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The items required by Part III, Item 14 are incorporated herein by reference from the Registrant’s Proxy Statement for its 2016
Annual Meeting of Shareholders to be filed on or before April 29, 2016.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a) Documents filed as part of this report:
(1) Financial Statements
50
See Item 8 for Financial Statements included with this Annual Report on Form 10-K.
(2) Financial Statement Schedules
None.
(3) Exhibits
Exhibit
Nb.
3.4
Fourth Amended and Restated Articles of Incorporation, as Amended, of SBA
Communications Corporation.
Exhibit Description
Incorporated by Reference
Period Covered or
Date of Filing
05/19/10
Form
S-4
(333-166966)
3.6
Amended and Restated Bylaws of SBA Communications Corporation, effective
8-K
07/31/15
as of July 28, 2015.
4.15A Form of Senior Indenture.
4.16A Form of Subordinated Indenture.
S-3ASR
(333-202477)
S-3ASR
(333-202477)
03/03/15
03/03/15
4.20
Indenture, dated July 13, 2012, between SBA Telecommunications, Inc., SBA
8-K
07/16/12
Communications Corporation and U.S. Bank National Association.
4.21
Form of 5.75% Senior Notes due 2020 (included in Exhibit 4.20).
4.22
Indenture, dated as of September 28, 2012, between SBA Communications
Corporation and U.S. Bank National Association.
4.23
Form of 5.625% Senior Notes due 2019 (included in Exhibit 4.22).
4.24
Indenture, dated July 1, 2014, between SBA Communications Corporation and
U.S. Bank National Association.
4.25
Form of 4.875% Senior Notes due 2022 (included in Exhibit 4.24).
8-K
8-K
8-K
8-K
8-K
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.
S-4
(333-50219)
07/16/12
09/28/12
09/28/12
07/01/14
07/01/14
04/15/98
10.1
10.2
Purchase Agreement, dated July 26, 2012, among SBA Senior Finance, LLC,
Deutsche Bank Trust Company Americas, as trustee, and the several initial
purchasers listed on Schedule I thereto.
10-Q
Quarter ended
September 30, 2012
10.3
2015 Revolving Refinancing Amendment, dated as of February 5, 2015, among
10-K
SBA Senior Finance II, as borrower, the several lenders from time to time parties
thereto, and Toronto Dominion (Texas) LLC, as administrative agent.
Year ended December
31, 2014
10.4
Purchase Agreement, dated April 4, 2013, among SBA Senior Finance, LLC,
Deutsche Bank Trust Company Americas, as trustee, and the several initial
purchasers listed on Schedule I thereto.
8-K
04/23/13
10.5
Incremental Term Loan B-2 Amendment, dated as of June 10, 2015, among SBA
Senior Finance II LLC, as borrower, the several lenders from time to time parties
10-Q
Quarter ended June
30, 2015
51
thereto, and Toronto Dominion (Texas) LLC, as administrative agent.
10.6
Purchase Agreement, dated October 6, 2015, among SBA Senior Finance, LLC,
8-K
10/09/15
Deutsche Bank Trust Company Americas, as trustee, and the several initial
purchasers listed on Schedule I thereto.
10.7
Second Amended and Restated Credit Agreement, dated as of February 7, 2014,
among SBA Senior Finance II LLC, as borrower, the several lenders from time
to time parties thereto, Citigroup Global Capital Markets Inc. and Barclays Bank
PLC, as incremental tranche B-1 term loan joint lead arrangers and syndication
agents, Deutsche Bank Securities Inc., J.P. Morgan Securities LLC, TD
Securities (USA) LLC, The Royal Bank of Scotland plc and Wells Fargo
Securities, LLC, as co-incremental Tranche B-1 term loan documentation agents,
and Toronto Dominion (Texas) LLC, as administrative agent.
8-K
02/13/14
10.8
Second Amended and Restated Guarantee and Collateral Agreement, dated as of
8-K
02/13/14
February 7, 2014, among SBA Communications Corporation, SBA
Telecommunications, LLC, SBA Senior Finance, LLC, SBA Senior Finance II
LLC and certain of its subsidiaries, as identified in the Second Amended and
Restated Guarantee and Collateral Agreement, in favor of Toronto Dominion
(Texas) LLC, as administrative agent.
10.9
Purchase Agreement, dated June 17, 2014, among SBA Communications
8-K
06/23/14
Corporation, U.S. Bank National Association, as trustee, and the several initial
purchasers listed on Schedule I thereto.
10.10
Registration Rights Agreement, dated July 1, 2014, among SBA
8-K
07/01/14
Communications Corporation and the several initial purchasers listed on
Schedule I thereto.
10.11
Purchase Agreement, dated October 7, 2014, among SBA Senior Finance, LLC,
8-K
10/10/14
Deutsche Bank Trust Company, as trustee, and several initial purchasers listed on
Schedule I thereto.
10.12
Second Amended and Restated Loan and Security Agreement, dated as of
October 15, 2014, among SBA Properties, LLC, SBA Sites, LLC, SBA
Structures, LLC, SBA Infrastructure, LLC, SBA Monarch Towers III, LLC, SBA
2012 TC Assets PR, LLC, SBA 2012 TC Assets, LLC, SBA Towers IV, LLC,
SBA Monarch Towers I, LLC, SBA Towers USVI, Inc., SBA GC Towers, LLC,
SBA Towers VII, LLC and any Additional Borrower or Borrowers that may
become a party thereto and Midland Loan Services, as Servicer on behalf of
Deutsche Bank Trust Company Americas, as Trustee.
10-Q
Quarter ended
September 30, 2014
10.12A First Loan and Security Agreement Supplement and Amendment, dated as of
8-K
10/20/15
October 14, 2015, by and among the Borrowers named therein and Midland Loan
Services, a division of PNC Bank, National Association, as Servicer on behalf of
Deutsche Bank Trust Company Americas, as Trustee.
10.33
2001 Equity Participation Plan as Amended and Restated on May 16, 2002.†
DEF 14A
04/16/02
10.35F Employment Agreement, dated October 30, 2014, between SBA
Communications Corporation and Jeffrey A. Stoops.†
10-K
Year ended December
31, 2014
10.50
Management Agreement, dated as of November 18, 2005, by and among SBA
10-K
Year ended December
52
Properties, Inc., SBA Network Management, Inc. and SBA Senior Finance, Inc.
31, 2005
10.57D Amended and Restated Employment Agreement, dated as of December 7, 2015,
between SBA Communications Corporation and Kurt L. Bagwell.†*
10.58D Amended and Restated Employment Agreement, dated as of December 7, 2015,
between SBA Communications Corporation and Thomas P. Hunt.†*
10.60
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.
10-K
Year ended December
31, 2006
10.75A SBA Communications Corporation 2008 Employee Stock Purchase Plan, as
10-Q
Quarter ended June
amended on May 4, 2011.†
10.76
Form of Indemnification Agreement dated January 15, 2009 between SBA
10-K
Communications Corporation and its directors and certain officers.
10.85C Amended and Restated Employment Agreement, dated as of December 7, 2015,
between SBA Communications Corporation and Brendan T. Cavanagh.†*
30, 2011
Year ended December
31, 2008
10.89
SBA Communications Corporation 2010 Performance and Equity Incentive
Plan.†
S-8
(333-166969)
05/20/10
10.96
Purchase Agreement, dated July 10, 2012, among SBA Communications
8-K
07/16/12
Corporation, SBA Telecommunications, Inc. and J.P. Morgan Securities LLC, as
representative of the several initial purchasers listed on Schedule 1 thereto.
10.97
Registration Rights Agreement, dated July 13, 2012, among SBA
8-K
07/16/12
Communications Corporation, SBA Telecommunications, Inc. and J.P. Morgan
Securities LLC, as representative of the several initial purchasers listed on
Schedule 2 thereto.
10.98
Purchase Agreement, dated September 20, 2012, between SBA Communications
Corporation and J.P. Morgan Securities LLC, as representative of the several
initial purchasers listed on Schedule 1 thereto.
8-K
09/26/12
10.99
Registration Rights Agreement, dated September 28, 2012, between SBA
8-K
09/28/12
Communications Corporation and J.P. Morgan Securities LLC, as representative
of the several initial purchasers listed on Schedule 2 thereto.
21
Subsidiaries.*
23.1
Consent of Ernst & Young LLP.*
31.1
Certification by Jeffrey A. Stoops, Chief Executive Officer, pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.*
31.2
Certification by Brendan T. Cavanagh, Chief Financial Officer, pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1
Certification by Jeffrey A. Stoops, Chief Executive Officer, pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.*
53
32.2
Certification by Brendan T. Cavanagh, Chief Financial Officer, pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.*
101.INS XBRL Instance Document.**
101.SCH XBRL Taxonomy Extension Schema Document.**
101.DEF XBRL Taxonomy Extension Definition Linkbase Document.**
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document.**
101.LAB XBRL Taxonomy Extension Label Linkbase Document.**
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document.**
______________
† Management contract or compensatory plan or arrangement.
* Filed herewith.
** Furnished herewith.
54
SIGNATURES
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.
SBA COMMUNICATIONS CORPORATION
By:
/s/ Jeffrey A. Stoops
Jeffrey A. Stoops
Chief Executive Officer and President
Date: February 26, 2016
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
/s/ Steven E. Bernstein
Steven E. Bernstein
/s/ Jeffrey A. Stoops
Jeffrey A. Stoops
/s/ Brendan T. Cavanagh
Brendan T. Cavanagh
/s/ Brian D. Lazarus
Brian D. Lazarus
/s/ Brian C. Carr
Brian C. Carr
/s/ Mary S. Chan
Mary S. Chan
/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
Chairman of the Board of Directors
February 26, 2016
Chief Executive Officer and President
(Principal Executive Officer)
February 26, 2016
Chief Financial Officer and Executive Vice President
(Principal Financial Officer)
February 26, 2016
Chief Accounting Officer and Senior Vice President
(Principal Accounting Officer)
February 26, 2016
Director
Director
Director
Director
Director
Director
55
February 26, 2016
February 26, 2016
February 26, 2016
February 26, 2016
February 26, 2016
February 26, 2016
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
Table of Contents
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31, 2015 and 2014
Consolidated Statements of Operations for the years ended December 31, 2015, 2014 and 2013
Consolidated Statements of Comprehensive Loss for the years ended December 31, 2015, 2014 and 2013
Consolidated Statements of Shareholders’ Equity (Deficit) for the years ended December 31, 2015, 2014, and 2013
Consolidated Statements of Cash Flows for the years ended December 31, 2015, 2014 and 2013
Notes to Consolidated Financial Statements
Page
F-1
F-2
F-3
F-4
F-5
F-6
F-8
REPORT OF INDEPENDENT REGISTERED 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, 2015 and 2014, and the related consolidated statements of operations, comprehensive loss, shareholders’ equity (deficit)
and cash flows for each of the three years in the period ended December 31, 2015. 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, 2015 and 2014, and the consolidated results of their operations
and their cash flows for each of the three years in the period ended December 31, 2015, in conformity with U.S. generally accepted
accounting principles.
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, 2015, based on criteria
established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (2013 framework), and our report dated February 26, 2016 expressed an unqualified opinion thereon.
/s/ Ernst & Young LLP
Certified Public Accountants
Boca Raton, Florida
February 26, 2016
F-1
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except par values)
ASSETS
Current assets:
Cash and cash equivalents
Restricted cash
Short-term investments
Accounts receivable, net of allowance of $1,681 and $889
at December 31, 2015 and December 31, 2014, respectively
Costs and estimated earnings in excess of billings on uncompleted contracts
Prepaid expenses 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' DEFICIT
Current liabilities:
Accounts payable
Accrued expenses
Current maturities of long-term debt
Deferred revenue
Accrued interest
Other current liabilities
Total current liabilities
Long-term liabilities:
Long-term debt
Other long-term liabilities
Total long-term liabilities
Shareholders' deficit:
Preferred stock - par value $.01, 30,000 shares authorized, no shares issued or outstanding
Common stock - Class A, par value $.01, 400,000 shares authorized, 125,743 and
129,134 shares issued and outstanding at December 31, 2015 and
December 31, 2014, respectively
Additional paid-in capital
Accumulated deficit
Accumulated other comprehensive loss, net
Total shareholders' deficit
Total liabilities and shareholders' deficit
December 31,
December 31,
2015
2014
$
$
118,039
25,353
706
39,443
52,519
5,549
$
$
83,326
16,934
49,602
293,960
2,782,353
3,735,413
94,152
497,337
7,403,215
27,105
63,755
20,000
97,083
53,365
12,063
273,371
$
$
104,268
30,078
95,031
326,888
2,762,417
4,189,540
95,237
467,043
7,841,125
42,851
65,553
32,500
120,047
53,178
16,921
331,050
8,522,305
313,683
8,835,988
7,828,299
342,576
8,170,875
—
—
1,257
1,962,713
(3,168,069)
(502,045)
(1,706,144)
7,403,215
1,291
2,062,775
(2,542,380)
(182,486)
(660,800)
7,841,125
$
$
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)
Revenues:
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 adjustments and expenses
Asset impairment and decommission costs
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 from extinguishment of debt, net
Other (expense) income, net
Total other expense, net
Loss before provision for income taxes
(Provision) benefit for income taxes
Net loss
Net loss per common share
Basic and diluted weighted average number of common shares
For the year ended December 31,
2015
2014
2013
$
1,480,634
157,840
1,638,474
$
1,360,202 $
166,794
1,526,996
1,133,013
171,853
1,304,866
324,655
119,744
114,951
11,864
94,783
660,021
1,326,018
312,456
301,313
127,172
103,317
7,798
23,801
627,072
1,190,473
336,523
3,894
(322,366)
(1,505)
(19,154)
(783)
(139,137)
(479,051)
(166,595)
(9,061)
(175,656) $
(1.37) $
677
(292,600)
(27,112)
(17,572)
(26,204)
10,628
(352,183)
(15,660)
(8,635)
(24,295) $
(0.19) $
127,794
128,919
$
$
270,772
137,481
85,476
19,198
28,960
533,334
1,075,221
229,645
1,794
(249,051)
(49,085)
(15,560)
(6,099)
31,138
(286,863)
(57,218)
1,309
(55,909)
(0.44)
127,769
The accompanying notes are an integral part of these consolidated financial statements.
F-3
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in thousands)
Net loss
Foreign currency translation adjustments
Comprehensive loss
For the year ended December 31,
$
$
2015
(175,656) $
(319,559)
(495,215) $
2014
2013
(24,295) $
(148,807)
(173,102) $
(55,909)
(36,470)
(92,379)
The accompanying condensed notes are an integral part of these consolidated financial statements.
F-4
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT)
(in thousands)
BALANCE, December 31, 2012
Net loss
Common stock issued in connection with
stock purchase/option plans
Non-cash stock compensation
Adjustment associated with the acquisition
of noncontrolling interest
Settlement of convertible notes
Settlement of convertible note hedges
Settlement of common stock warrants
Foreign currency translation adjustments
BALANCE, December 31, 2013
Net loss
Common stock issued in connection with
stock purchase/option plans
Non-cash stock compensation
Settlement of convertible notes
Settlement of convertible note hedges
Settlement of common stock warrants
Foreign currency translation adjustments
BALANCE, December 31, 2014
Net loss
Common stock issued in connection with
stock purchase/option plans
Non-cash stock compensation
Settlement of common stock warrants
Repurchase and retirement of common stock
Foreign currency translation adjustments
Class A
Additional
Accumulated
Other
Common Stock
Paid-In
Accumulated
Comprehensive
Shares
Amount
Capital
Deficit
(Loss) Income
Total
126,933
—
1,269
—
3,111,107
—
(2,462,176)
(55,909)
2,791
—
652,991
(55,909)
740
—
7
—
10,198
17,422
—
—
—
—
10,205
17,422
—
439
(82)
402
—
128,432
—
—
4
—
4
—
1,284
—
5,703
(321,925)
182,856
(97,915)
—
2,907,446
—
—
—
—
—
—
(2,518,085)
(24,295)
696
—
11,742
(11,737)
1
—
129,134
—
7
—
117
(117)
—
—
1,291
—
7,741
22,999
9,450
124
(884,985)
—
2,062,775
—
—
—
—
—
—
—
(2,542,380)
(175,656)
591
—
—
(3,982)
—
6
—
—
(40)
—
21,604
29,208
(150,874)
—
—
—
—
—
(450,033)
—
—
—
—
—
(36,470)
(33,679)
—
—
—
—
—
—
(148,807)
(182,486)
—
5,703
(321,921)
182,856
(97,911)
(36,470)
356,966
(24,295)
7,748
22,999
9,567
7
(884,985)
(148,807)
(660,800)
(175,656)
21,610
—
29,208
—
(150,874)
—
(450,073)
—
(319,559)
(319,559)
(502,045) $ (1,706,144)
BALANCE, December 31, 2015
125,743 $ 1,257 $ 1,962,713 $ (3,168,069) $
The accompanying notes are an integral part of these consolidated financial statements
F-5
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
For the year ended December 31,
2015
2014
2013
$
(175,656) $
(24,295) $
(55,909)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation, accretion, and amortization
Non-cash interest expense
Deferred income tax (benefit) expense
Non-cash asset impairment and decommission costs
Non-cash compensation expense
Amortization of deferred financing fees
Loss on remeasurement of U.S. denominated intercompany loan
Gain on sale of cost method investments
Other non-cash items reflected in the Statements of Operations
Changes in operating assets and liabilities, net of acquisitions:
AR and costs and est. earnings in excess of billings on uncompleted contracts, net
Prepaid expenses and other assets
Accounts payable and accrued expenses
Other liabilities
Net cash provided by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions
Capital expenditures
Proceeds from sale of cost method investments
Other investing activities
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under Revolving Credit Facility
Repayments under Revolving Credit Facility
Repayment of Term Loans
Proceeds from Term Loans, net of fees
Payments on settlement of convertible debt
Proceeds from settlement of convertible note hedges
Payments for settlement of common stock warrants
Payment for the redemption of 8.25% Notes
Proceeds from 4.875% Senior Notes, net of fees
Proceeds from issuance of Tower Securities
Repayment of 2010 Tower Securities
Repurchase and retirement of common stock, inclusive of fees
Other financing activities
Net cash provided by financing activities
Effect of exchange rate changes on cash and cash equivalents
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS:
Beginning of year
End of year
660,021
1,505
(5)
89,406
28,747
19,154
178,854
(38,326)
(4,892)
15,975
(48,975)
7,366
3,999
737,173
(609,530)
(208,707)
89,728
(6,012)
(734,521)
770,000
(895,000)
(190,000)
489,884
—
—
(150,874)
—
—
489,100
—
(450,073)
25,900
88,937
(12,993)
78,596
39,443
627,072
27,112
530
18,384
22,671
17,572
22,965
(12,461)
924
(36,245)
(64,882)
5,475
66,821
671,643
(1,585,222)
(211,251)
20,889
15,457
(1,760,127)
700,000
(790,000)
(310,500)
1,483,337
(499,721)
7
(884,985)
(253,805)
732,325
1,518,229
(680,000)
—
(23,049)
991,838
13,977
(82,669)
122,112
39,443 $
533,334
49,085
(6,642)
23,819
17,205
15,560
—
—
(23,681)
(29,097)
(81,458)
7,711
47,660
497,587
(677,379)
(168,893)
—
29,074
(817,198)
340,000
(225,000)
(512,000)
—
(794,997)
182,855
(97,912)
—
—
1,304,665
—
—
13,226
210,837
(2,213)
(110,987)
233,099
122,112
$
118,039 $
(continued)
F-6
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
For the year ended December 31,
2015
2014
2013
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest
Income taxes
$
$
322,396 $
9,431 $
278,359 $
7,525 $
244,123
6,645
SUPPLEMENTAL CASH FLOW INFORMATION OF NON-CASH
ACTIVITIES:
Assets acquired through capital leases
Issuance of stock for settlement of convertible debt and warrants, net
of hedges
$
$
2,627 $
— $
1,290 $
229 $
1,239
18,159
The accompanying condensed 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 “SBAC”) 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, LLC
(“Telecommunications”). Telecommunications is a holding company that holds the outstanding capital stock of SBA Senior Finance,
LLC (“SBA Senior Finance”), and other operating subsidiaries which are not a party to any loan agreement. SBA Senior Finance is a
holding company that holds, directly or indirectly, the equity interest in certain subsidiaries that issued the Tower Securities (see Note
12) and certain subsidiaries that were not involved in the issuance of the Tower Securities. With respect to the subsidiaries involved in
the issuance of the Tower Securities, SBA Senior Finance is the sole member of SBA Holdings, LLC and SBA Depositor, LLC. SBA
Holdings, LLC is the sole member of SBA Guarantor, LLC. SBA Guarantor, LLC directly or indirectly holds all of the capital stock of
the companies referred to as the “Borrowers” under the Tower Securities. With respect to subsidiaries not involved in the issuance of
the Tower Securities, SBA Senior Finance holds all of the membership interests in SBA Senior Finance II, LLC (“SBA Senior
Finance II”) and certain non-operating subsidiaries. SBA Senior Finance II holds, directly or indirectly, all the capital stock of certain
international subsidiaries and certain other tower companies (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, LLC (“Network Services”) as well as SBA Network Management, Inc. (“Network Management”)
which manages and administers the operations of the Borrowers.
As of December 31, 2015, the Company owned and operated wireless towers in the United States and its territories. In addition,
the Company owned towers in Brazil, Canada, Costa Rica, Ecuador, El Salvador, Guatemala, Nicaragua, and Panama. Space on these
towers is leased primarily to wireless service providers. As of December 31, 2015, the Company owned and operated 25,465 towers of
which 15,778 are domestic and 9,687 are international.
2.
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:
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.
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 assumptions, 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.
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.
F-8
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, mutual
funds, and preferred securities. 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.
During the years ended December 31, 2015 and 2014, the Company received proceeds related to the sale or maturity of
investments of $89.7 million and $20.9 million, respectively, and recorded gains of $38.3 million and $12.5 million, respectively. The
proceeds are reflected in Net cash used in investing activities on the Consolidated Statements of Cash Flows, and the related gain on
sale or maturity is reflected in Other (expense) income, net in the accompanying Consolidated Statement of Operations. The aggregate
carrying value of the Company’s investments was approximately $8.8 million and $49.6 million as of December 31, 2015 and 2014,
respectively, and is classified within other assets on the Company’s consolidated balance sheets.
The Company accounts for its investments in privately held companies under the cost-method as it does not exert significant
influence. The Company evaluates its cost-method investments for impairment at least annually. The Company determines the fair
value of its cost-method investments by considering available evidence, including general market conditions, the investee’s financial
condition, near-term prospects, market comparables and subsequent rounds of financing. The Company measures and records its cost-
method investments at fair value when they are deemed to be other-than-temporarily impaired. The Company did not recognize any
impairment loss associated with its cost-method investments during the years ended December 31, 2015, 2014, and 2013.
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 Tower Securities as well as for payment and
performance bonds and surety bonds issued for the benefit of the Company in the ordinary course of business (see Note 4).
Property and Equipment
Property and equipment are recorded at cost or at estimated fair value (in the case of acquired properties), adjusted for asset
impairment and estimated asset retirement obligations. Costs for self-constructed towers include direct materials and labor, indirect
costs and capitalized interest. Approximately $0.8 million, $0.3 million, and $0.1 million of interest cost was capitalized in 2015, 2014
and 2013, 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.
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
Furniture, equipment and vehicles
Buildings and improvements
F-9
3 - 15 years
2 - 7 years
5 - 30 years
Betterments, improvements, and significant 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.
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 duration of the related indebtedness (see Note 12).
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 or over the lease term remaining if related to a lease amendment. Such deferred costs
were approximately $10.9 million, $12.4 million, and $12.8 million in 2015, 2014, and 2013, respectively. Amortization expense was
$9.0 million, $6.8 million, and $5.5 million for the years ended December 31, 2015, 2014 and 2013, respectively, and is included in
cost of site leasing on the accompanying Consolidated Statements of Operations. As of December 31, 2015 and 2014, unamortized
deferred lease costs were $30.6 million and $28.5 million, respectively, and are included in other assets on the accompanying
Consolidated Balance Sheets.
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 a useful life consistent
with the 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.
Impairment of Long-Lived Assets
The Company evaluates its individual long-lived and related assets with finite lives for indicators of impairment to determine
when an impairment analysis should be performed. The Company evaluates its tower assets and Current contract intangibles at the
tower level, which is the lowest level for which identifiable cash flows exists. The Company evaluates its Network location
intangibles for impairment at the tower leasing business level whenever indicators of impairment are present. The Company has
established a policy to at least annually evaluate its tower assets and Current contract intangibles for impairment.
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
and related intangible. If the future undiscounted cash flows are lower than the carrying value of the investment in the tower and
related intangible, the Company calculates future discounted cash flows and compares those amounts to the carrying value. The
Company records an impairment charge for any amounts lower than the carrying value. 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 recognized impairment charges of $94.8 million, $23.8 million, and $29.0 million for the years ended December
31, 2015, 2014 and 2013, respectively. Refer to Note 3 for further detail of these amounts.
Fair Value Measurements
The Company determines the fair market values of its financial instruments based on the fair value hierarchy, which requires an
entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The
following three levels of inputs may be used to measure fair value:
Level 1
Quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the
measurement date.
F-10
Level 2
Level 3
Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in
markets that are not active; or other inputs that are observable or can be corroborated by observable market data for
substantially the full term of the assets or liabilities.
Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the
assets or liabilities.
Revenue Recognition
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 to ten years. Receivables recorded related to the straight-lining of site leases are reflected in other
assets on the Consolidated Balance Sheets. Rental amounts received in advance are recorded as deferred revenue on the Consolidated
Balance Sheets.
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 and revenue is recognized 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. Amounts billed in advance (collected or uncollected) are recorded as deferred revenue on the
Company’s Consolidated Balance Sheets.
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 costs incurred and revenues recognized in excess of
amounts billed. The liability “billings in excess of costs and estimated earnings on uncompleted contracts,” included within other
current liabilities on the Company’s Consolidated Balance Sheets, represents billings in excess of costs incurred and revenues
recognized. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined to be
probable.
Allowance for Doubtful Accounts
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
uncollectibility is determined to be probable.
The following is a rollforward of the allowance for doubtful accounts:
Beginning balance
Provision for doubtful accounts
Write-offs, net of recoveries
Ending balance
Cost of Revenue
For the year ended December 31,
2015
2014
2013
$
$
889
864
(72)
1,681
$
$
(in thousands)
686
338
(135)
889
$
$
246
770
(330)
686
Cost of site leasing revenue includes ground lease rent, property taxes, amortization of deferred lease costs, maintenance and
other tower operating expenses. All ground lease rental obligations due to be paid out over the lease term, including fixed escalations,
are recorded on a straight-line basis over the minimum lease term. 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
F-11
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.
Income Taxes
The Company recognizes deferred tax assets and liabilities for the estimated future tax consequences attributable to differences
between the financial reporting and tax bases of existing assets and liabilities. Deferred tax assets and liabilities are measured using
tax rates in effect for the year in which the temporary differences are expected to reverse. A valuation allowance is recorded to reduce
the carrying amounts of deferred tax assets if it is "more-likely-than-not" that those assets will not be realized. The Company
considers many factors when assessing the likelihood of future realization, including the Company's recent cumulative earnings
experience by taxing jurisdiction, expectations of future taxable income, prudent and feasible tax planning strategies that are available,
the carryforward periods available to the Company for tax reporting purposes and other relevant factors.
The Company had taxable income for the year ended December 31, 2015 and 2014 and utilized net operating loss carry-
forwards. For the year ended December 31, 2013, the Company had taxable losses and generated a net operating loss which was
carried forward for use in future years. The majority of these net operating loss carry-forwards are fully reserved by a valuation
allowance. The U.S. tax losses generated in tax years 1999 through 2013 remain subject to adjustment and tax years 2012 through
2014 are open to examination by the major jurisdictions in which the Company operates.
The Company records a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be
taken in a tax return. The Company has not identified any tax exposures that require a reserve. 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.
Stock-Based Compensation
The Company measures and recognizes compensation expense for all share-based payment awards made to employees and
directors, including stock options, restricted stock units and employee stock purchases under employee stock purchase plans. The
Company records compensation expense, net of estimated forfeitures, for stock options and restricted stock units on a straight-line
basis over the vesting period. Compensation expense for employee stock options is based on the estimated fair value of the options on
the date of the grant using the Black-Scholes option-pricing model. Any stock options granted to non-employees would be 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 options granted to non-employees would be recognized on
a straight-line basis over the shorter of the period over which services are to be received or the vesting period. Compensation expense
for restricted stock units is based on the fair market value of the units awarded at the date of the grant.
Asset Retirement Obligations
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 land interests to their original condition upon termination of the ground lease.
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 asset retirement obligation 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 measurement 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-12
The following summarizes the activity of the asset retirement obligation liability:
Beginning balance
Additions
Currency translation adjustment
Accretion expense
Removal
Revision in estimates
Ending balance
Loss Per Share
For the year ended December 31,
2015
2014
2013
(in thousands)
5,856
781
(57)
373
(50)
(594)
6,309
$
$
5,312
599
(161)
446
(188)
(152)
5,856
$
$
7,506
597
(42)
512
(407)
(2,854)
5,312
$
$
The Company has potential common stock equivalents related to its outstanding stock options and until October 2014, its
convertible senior notes. These potential common stock equivalents, including 3.8 million shares of stock options outstanding and 0.3
million shares of restricted stock outstanding, were not included in diluted loss per share for the year ended December 31, 2015,
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.
Comprehensive Income (Loss)
Comprehensive income (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 income (loss) and other foreign
currency adjustments.
Foreign Currency Translation
The functional currency for the Company’s Central American subsidiaries is the U.S. dollar. Monetary assets and liabilities of
such subsidiaries which are not denominated in U.S. dollars are remeasured at exchange rates in effect at the balance sheet date, and
revenues and expenses are remeasured at monthly average rates prevailing during the year. Unrealized translation gains and losses are
reported as other income/expense in the Consolidated Statement of Operations.
All assets and liabilities of foreign subsidiaries that do not utilize the U.S. dollar as its functional currency are translated at
period-end rates of exchange, while revenues and expenses are translated at monthly average rates of exchange prevailing during the
year. Unrealized translation gains and losses are reported as foreign currency translation adjustments through accumulated other
comprehensive loss in shareholders’ deficit.
Business Combinations
The Company accounts for business combinations under the acquisition method of accounting. The assets and liabilities
acquired are recorded at fair market value at the date of each acquisition and the results of operations of the acquired assets are
included with those of the Company from the dates of the respective acquisitions. The Company continues to evaluate all acquisitions
for a period not to exceed 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 as a result of
information available at the acquisition date. The intangible assets represent the value associated with the current leases at the
acquisition date (“Current contract intangibles”) and future tenant leases anticipated to be added to the towers (“Network location
intangibles”) and were calculated using the discounted values of the current or future expected cash flows. The intangible assets are
estimated to have a useful life consistent with the useful life of the related tower assets, which is typically 15 years.
In connection with certain acquisitions, the Company may agree to pay contingent consideration (or earnouts) in cash or stock if
the communication sites or businesses that are acquired meet or exceed certain performance targets over a period of one to three years
after they have been acquired. The Company accrues for contingent consideration in connection with acquisitions at fair value as of
F-13
the date of the acquisition. All subsequent changes in fair value of contingent consideration payable in cash are recorded through
Consolidated Statements of Operations.
Intercompany Loans
On November 25, 2014, two wholly owned subsidiaries of the Company, Brazil Shareholder I, LLC, a Florida limited liability
company, and SBA Torres Brasil, Limitada, a limitada existing under the laws of the Republic of Brazil, entered into an intercompany
loan agreement where from time to time the entities may agree to lend/borrow amounts up to $750.0 million. As of December 31,
2015, the outstanding balance under this agreement was $455.8 million.
In accordance with ASC 830, the Company remeasures foreign denominated intercompany loans with the corresponding change
in the balance being recorded in Other income (expenses), net in the Consolidated Statements of Operations. For the years ended
December 31, 2015 and 2014, the Company recorded $178.9 million and $23.0 million, respectively, of foreign exchange losses on
the remeasurement of intercompany loans.
Recent Accounting Pronouncements Not Yet Adopted
In May 2014, the Financial Accounting Standards Board ("FASB") released updated guidance regarding the recognition of
revenue from contracts with customers, exclusive of those contracts within lease accounting. The core principle of the guidance is that
an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the
consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an
entity should apply the following steps: (1) identify the contracts with the customer; (2) identify the performance obligations in the
contract; (3) determine the contract price; (4) allocate the transaction price to the performance obligations in the contract; and (5)
recognize revenue when (or as) the entity satisfies a performance obligation. The new guidance is effective for annual reporting
periods (including interim periods within those periods) beginning after December 15, 2017 for public companies. Under the proposal,
the standard would be required to be adopted by public business entities in annual periods beginning on or after December 15, 2017.
Early adoption is permitted but not before interim and annual reporting periods beginning after December 15, 2016. This guidance is
required to be applied (1) retrospectively to each prior reporting period presented, or (2) with the cumulative effect being recognized
at the date of initial application. The Company is evaluating the guidance including the impact on its consolidated financial
statements.
In April 2015, the FASB issued ASU 2015-03, Interest—Imputation of Interest. The standard requires debt issuance costs to be
presented on the balance sheet as a direct deduction from the related debt liability rather than as an asset. Once adopted, entities are
required to apply the new guidance retrospectively to all prior periods presented. ASU 2015-03 is effective for annual and interim
periods beginning after December 15, 2015 and early application is permitted. The Company has not elected to early adopt the
standard.
In August 2015, the FASB issued ASU 2015-15, Interest - Imputation of Interest - Presentation and Subsequent Measurement of
Debt Issuance Costs Associated with Line-of-Credit Arrangements. The standard indicates the SEC staff would not object to
presenting deferred debt issuance costs for a line of credit arrangement as an asset in the balance sheet. ASU 2015-15 is effective for
annual and interim periods beginning after December 15, 2015 and early application is permitted. The Company has not elected to
early adopt the standard.
In September 2015, the FASB issued ASU 2015-16, Business Combinations. The standard requires that the acquirer (1)
recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the
adjustment amounts are determined, (2) record, in the same period’s financial statements, the effect on earnings of changes in
depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the
accounting had been completed at the acquisition date, and (3) to present separately on the face of the income statement or disclose in
the notes the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous
reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. ASU 2015-16 is
effective for annual and interim periods beginning after December 15, 2015 and early application is permitted. The Company has not
elected to early adopt the standard.
In February 2016, the FASB issued ASU 2016-02, Leases. The standard amends the existing accounting standards for lease
accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor
accounting. This standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date
of initial application, with an option to use certain transition relief. ASU 2016-02 is effective for annual and interim periods beginning
F-14
after December 15, 2018 and early adoption is permitted. The Company is evaluating the guidance including the impact on its
consolidated financial statements.
3.
FAIR VALUE MEASUREMENTS
Items Measured at Fair Value on a Recurring Basis— The Company’s earnout liabilities related to acquisitions are measured
at fair value on a recurring basis using Level 3 inputs and are recorded in Accrued expenses in the accompanying Consolidated
Balance Sheets. Changes in estimate are recorded in Acquisition related adjustments and expenses in the accompanying Consolidated
Statement of Operations. The Company determines the fair value of acquisition-related earnouts (contingent consideration) and any
subsequent changes in fair value using a discounted probability-weighted approach using Level 3 inputs. Level 3 valuations rely on
unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability.
The fair value of the earnouts is reviewed quarterly and is based on the payments the Company expects to make based on historical
internal observations related to the anticipated performance of the underlying assets. The Company’s estimate of the fair value of its
obligation contained in various acquisitions was $7.2 million and $15.1 million as of December 31, 2015 and 2014, respectively. The
maximum potential obligation related to the performance targets was $10.2 million and $23.1 million as of December 31, 2015 and
2014, respectively.
The following summarizes the activity of the accrued earnouts:
Beginning balance
Additions
Payments
Change in estimate
Foreign currency translation adjustments
Ending balance
For the year ended December 31,
2015
2014
2013
$
$
15,086 $
3,295
(4,094)
(6,468)
(589)
7,230 $
(in thousands)
30,063 $
11,048
(18,724)
(7,310)
9
15,086 $
9,840
31,704
(9,324)
(1,585)
(572)
30,063
Items Measured at Fair Value on a Nonrecurring Basis— The Company’s long-lived assets, intangibles, and asset retirement
obligations are measured at fair value on a nonrecurring basis using Level 3 inputs. The Company considers many factors and makes
certain assumptions when making this assessment, including but not limited to: general market and economic conditions, historical
operating results, geographic location, lease-up potential and expected timing of lease-up. The fair value of the long-lived assets,
intangibles, and asset retirement obligations is calculated using a discounted cash flow model.
During the years ended December 31, 2015, 2014, and 2013, the Company recognized impairment charges of $94.8 million,
$23.8 million, and $29.0 million, respectively. The impairment charges include the write off of $31.6 million, $18.4 million, and $23.5
million in carrying value of decommissioned towers for the years ended December 31, 2015, 2014, and 2013, respectively, a $56.7
million impairment charge recorded in the third quarter of 2015 related to fiber assets acquired in the 2012 Mobilitie transaction, $1.2
million in exit costs related to the Company’s former corporate headquarters building during 2015, and $5.3 million, $5.4 million, and
$5.5 million of other third party decommission costs incurred related to the Company’s long-lived assets and intangibles for the years
ended December 31, 2015, 2014, and 2013, respectively. The impairment review of the fiber assets was triggered by a strategic
decision made by the Company during the third quarter. The undiscounted cash flows were not sufficient to recover the carrying
amount of the assets and thus a discounted cash flow valuation was used to determine the fair value. Key assumptions used in the
valuation include forecasts of revenue and expenses over an extended period of time, and estimated costs of debt and equity capital to
discount the projected cash flows. Certain of these assumptions involve significant judgment, are based on management’s estimate of
current and forecasted market conditions and are sensitive and susceptible to change. The write offs result from the Company’s
analysis that the future cash flows from certain towers would not recover the carrying value of the investment in those towers. Asset
impairment and decommission costs for all periods presented and the related impaired assets relate to the Company’s site leasing
operating segment.
Fair Value of Financial Instruments— The carrying values of cash and cash equivalents, accounts receivable, restricted cash,
accounts payable, and short-term investments approximate their estimated fair values due to the short maturity of these instruments.
Short-term investments consisted of $0.5 million and $5.3 million in certificate of deposits as of December 31, 2015 and 2014,
respectively, and $0.2 million in Treasury securities as of December 31, 2015 and 2014. The Company’s estimate of the fair value of
its held-to-maturity investments in treasury and corporate bonds, including current portion, are based primarily upon Level 1 reported
market values. As of December 31, 2015, the carrying value and fair value of the held-to-maturity investments, including current
portion, were $0.8 million and $0.9 million, respectively. As of December 31, 2014, the carrying value and fair value of the held-to-
F-15
maturity investments, including current portion, was $1.0 million and $1.1 million, respectively. These amounts are recorded in Other
Assets in the accompanying Consolidated Balance Sheets.
The Company determines fair value of its debt instruments utilizing various Level 2 sources including quoted prices and
indicative quotes (non-binding quotes) from brokers that require judgment to interpret market information including implied credit
spreads for similar borrowings on recent trades or bid/ask prices. The fair value of the Revolving Credit Facility is considered to
approximate the carrying value because the interest payments are based on Eurodollar rates that reset every month. The Company does
not believe its credit risk has changed materially from the date the applicable Eurodollar Rate plus 137.5 to 200.0 basis points was set
for the Revolving Credit Facility. Refer to Note 12 for the fair values, principal balances, and carrying values of the Company’s debt
instruments.
4.
RESTRICTED CASH
Restricted cash consists of the following:
As of
As of
December 31, 2015
December 31, 2014
Included on Balance Sheet
Securitization escrow accounts
Payment and performance bonds
Surety bonds and workers compensation
Total restricted cash
$
$
(in thousands)
25,135 $
218
3,227
28,580 $
52,117 Restricted cash - current asset
402 Restricted cash - current asset
5,934 Other assets - noncurrent
58,453
Pursuant to the terms of the Tower Securities (see Note 12), the Company is required to establish a securitization escrow
account, held by the indenture trustee, into which all rents and other sums due on the towers that secure the Tower Securities are
directly deposited by the lessees. These restricted cash amounts are used to fund reserve accounts for the payment of (1) debt service
costs, (2) ground rents, real estate and personal property taxes and insurance premiums related to towers, (3) trustee and servicing
expenses, and (4) management fees. The restricted cash in the securitization escrow account in excess of required reserve balances is
subsequently released to the Borrowers (as defined in Note 12) monthly, provided that the Borrowers are in compliance with their debt
service coverage ratio and that no event of default has occurred. All monies held by the indenture trustee are classified as restricted
cash on the Company’s Consolidated Balance Sheets.
Payment and performance bonds relate primarily to collateral requirements for tower construction currently in process by the
Company. Cash is pledged as collateral related to surety bonds issued for the benefit of the Company or its affiliates in the ordinary
course of business and primarily related to the Company’s tower removal obligations. As of December 31, 2015, the Company had
$38.6 million in surety, payment and performance bonds for which it is only required to post $0.7 million in collateral. As of
December 31, 2014, the Company had $38.3 million in surety, payment and performance bonds for which it is only required to post
$1.7 million in collateral. The Company periodically evaluates the collateral posted for its bonds to ensure that it meets the minimum
requirements. As of December 31, 2015 and 2014, the Company had also pledged $2.5 million and $2.6 million, respectively, as
collateral related to its workers compensation policy. Restricted cash for surety bonds and workers compensation are included in other
assets on the Company’s Consolidated Balance Sheets.
5. OTHER ASSETS
The Company’s other assets are comprised of the following:
Long-term investments
Prepaid land rent
Straight-line rent receivable
Deferred lease costs, net
Other
Total other assets
As of
As of
December 31, 2015
December 31, 2014
$
$
(in thousands)
8,140 $
158,176
267,682
30,577
32,762
497,337 $
44,095
134,148
230,384
28,517
29,899
467,043
F-16
6.
ACQUISITIONS
The following table summarizes the Company’s acquisition activity:
Tower acquisitions (number of towers)
For the year ended December 31,
2015
2014
2013
893
4,030
2,502
The following table summarizes the Company’s cash acquisition capital expenditures:
Towers and related intangible assets (1)
Land buyouts (2)
Total cash acquisition capital expenditures
For the year ended December 31,
2015
2014
2013
$
$
525,802 $
83,728
609,530 $
(in thousands)
1,540,258 $
44,964
1,585,222 $
628,423
48,956
677,379
(1)
(2)
Total acquisition capital expenditures for the year ended December 31, 2013, included $175.9 million related to an acquisition
in Brazil which closed in the fourth quarter of 2012 and funded on January 4, 2013.
In addition, the Company paid $16.3 million, $10.8 million, and $9.1 million for ground lease extensions during the years
ending 2015, 2014, and 2013, respectively. The Company recorded these amounts in prepaid rent on its Consolidated Balance
Sheet.
During the year ended December 31, 2015, the Company acquired 893 completed towers and related assets and liabilities for
$525.8 million in cash consisting of $176.3 million of property and equipment, $351.0 million of intangible assets, and $1.5 million of
working capital adjustments.
On March 31, 2014, the Company acquired 2,007 towers in Brazil from Oi S.A. for an aggregate purchase price of $673.9
million in cash. The fair value of the assets acquired and liabilities assumed relating to the Oi S.A. acquisition is summarized below
(in thousands):
Property and equipment
Intangible assets
Net assets acquired
$
$
86,787
587,111
673,898
For the year ended December 31, 2014, total revenue for this acquisition was $60.7 million.
On December 1, 2014, the Company acquired 1,641 towers in Brazil from Oi S.A. for an aggregate purchase price of $463.2
million in cash. The fair value of the assets acquired and liabilities assumed relating to the Oi S.A. acquisition is summarized below
(in thousands):
Property and equipment
Intangible assets
Net assets acquired
$
$
99,810
363,352
463,162
For the year ended December 31, 2014, total revenue for this acquisition was $4.8 million.
During the year ended December 31, 2014, in addition to the Oi S.A. acquisitions, the Company acquired 382 completed towers
and related assets and liabilities for $403.2 million in cash.
On November 26, 2013, the Company acquired the rights to use 2,113 towers in Brazil from Oi S.A. for an aggregate purchase
price of $317.0 million. During the year ended December 31, 2013, in addition to the Oi S.A. acquisition, the Company acquired 389
completed towers and related assets and liabilities for $311.4 million in cash.
F-17
The Company evaluates all acquisitions after the applicable closing date of each transaction to determine whether any
additional adjustments are needed to the allocation of the purchase price paid for the assets acquired and liabilities assumed by major
balance sheet caption, as well as the separate recognition of intangible assets from goodwill if certain criteria are met.
The estimates of the fair value of the assets acquired and liabilities assumed at the date of an acquisition are subject to
adjustment during the measurement period (up to one year from the particular acquisition date). The primary areas of the preliminary
purchase price allocations that are not yet finalized relate to the fair value of certain tangible and intangible assets acquired and
liabilities assumed, including contingent consideration and any related tax impact. The fair values of these net assets acquired are
based on management’s estimates and assumptions, as well as other information compiled by management, including valuations that
utilize customary valuation procedures and techniques. During the measurement period, the Company will adjust assets and/or
liabilities if new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would
have resulted in a revised estimated value of those assets and/or liabilities as of that date. The effect of material measurement period
adjustments to the estimated fair values is reflected as if the adjustments had been completed on the acquisition date. The impact of all
changes that do not qualify as measurement period adjustments are included in current period earnings. If the actual results differ from
the estimates and judgments used in these fair values, the amounts recorded in the consolidated financial statements could be subject
to a possible impairment of the intangible assets, or require acceleration of the amortization expense of intangible assets in subsequent
periods.
Subsequent to December 31, 2015, the Company acquired 102 towers and related assets for $62.5 million in cash.
Foreign Currency Forward Contract
On March 26, 2014, the Company settled two foreign currency contracts entered into during the quarter with an aggregate
notional amount of R$1,525.0 million in order to hedge the purchase price of the Oi S.A. acquisition in Brazil, which closed on March
31, 2014. The Company realized a gain of $17.9 million related to these foreign currency forward contracts which is included in other
income in the accompanying Consolidated Statement of Operations and Net cash used in investing activities on the Consolidated
Statements of Cash Flows.
On September 29, 2014, the Company executed put and call option contracts settling on November 25, 2014 which created a
“costless collar” based on the cost to purchase $1.17 billion Brazilian Reais with US Dollars. The options were intended to limit
exposure to movements in the related exchange rates and were entered into in contemplation of the purchase of the Oi S.A. acquisition
that closed on December 1, 2014. These options created a floor price for the purchase of Brazilian Reais of 2.4 and a ceiling price of
2.5665. Since the closing price was within the floor and ceiling price, no gain or loss was realized.
The Company measures its foreign currency forward contracts, which are recorded in Prepaid and other current assets, at fair
value based on indicative prices in active markets (Level 2 inputs). These contracts do not qualify for hedge accounting and as such
any gains and losses are reflected within Other Income, net in the accompanying Consolidated Statement of Operations. As of
December 31, 2015, the Company does not have any pending forward contracts.
7.
INTANGIBLE ASSETS, NET
The following table provides the gross and net carrying amounts for each major class of intangible assets:
As of December 31, 2015
As of December 31, 2014
Gross carrying
Accumulated
Net book
Gross carrying
Accumulated
Net book
amount
amortization
value
amount
amortization
value
Current contract intangibles
Network location intangibles
Intangible assets, net
$
$
3,904,864 $ (1,118,493) $
1,446,293
5,351,157 $ (1,615,744) $
(497,251)
2,786,371 $
949,042
3,735,413 $
4,090,129 $
1,402,704
5,492,833 $ (1,303,293) $
(891,374) $
(411,919)
3,198,755
990,785
4,189,540
(in thousands)
All intangible assets noted above are included in the Company’s site leasing segment. The Company amortizes its intangible
assets using the straight-line method over 15 years. Amortization expense relating to the intangible assets above was $363.1 million,
$338.4 million, and $266.6 million for the years ended December 31, 2015, 2014 and 2013, respectively.
F-18
Estimated amortization expense on the Company’s intangibles assets is as follows:
For the year ended December 31,
2016
2017
2018
2019
2020
$
(in thousands)
357,963
355,914
355,811
355,467
354,620
8.
PROPERTY AND EQUIPMENT, NET
Property and equipment, net (including assets held under capital leases) consists of the following:
Towers and related components
Construction-in-process
Furniture, equipment, and vehicles
Land, buildings, and improvements
Total property and equipment
Less: accumulated depreciation
Property and equipment, net
As of
As of
December 31, 2015
December 31, 2014
$
$
(in thousands)
4,370,664 $
32,730
48,018
524,847
4,976,259
(2,193,906)
2,782,353 $
4,194,375
35,855
51,832
426,974
4,709,036
(1,946,619)
2,762,417
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 $296.5 million, $287.8 million, and $266.1 million for the years ended December
31, 2015, 2014, and 2013, respectively. At December 31, 2015 and 2014, non-cash capital expenditures that are included in accounts
payable and accrued expenses were $9.5 million and $29.0 million, respectively.
9.
COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS
Costs and estimated earnings on uncompleted contracts consist of the following:
Costs incurred on uncompleted contracts
Estimated earnings
Billings to date
As of
As of
December 31, 2015
December 31, 2014
$
$
(in thousands)
78,849 $
29,333
(95,055)
13,127 $
113,654
48,949
(143,323)
19,280
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 (included in Other current liabilities)
F-19
As of
As of
December 31, 2015
December 31, 2014
(in thousands)
$
16,934 $
30,078
$
(3,807)
13,127 $
(10,798)
19,280
At December 31, 2015, eight significant customers comprised 95.9% of the costs and estimated earnings in excess of billings on
uncompleted contracts, net of billings in excess of costs and estimated earnings, while at December 31, 2014, eight significant
customers comprised 92.7% of the costs and estimated earnings in excess of billings on uncompleted contracts, net of billings in
excess of costs and estimated earnings.
10. 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 (representing at least 10% of revenue for any period reported) and the percentage
of total revenue for the specified time periods derived from such customers:
Percentage of Total Revenues
AT&T Wireless (1)
Sprint
T-Mobile
Verizon Wireless
For the year ended December 31,
2015
2014
2013
24.2%
19.6%
16.0%
13.8%
23.0%
23.4%
15.5%
12.0%
20.5%
25.0%
17.3%
11.3%
The Company’s site leasing and site development segments derive revenue from these customers. Client percentages of total
revenue in each of the segments are as follows:
Percentage of Domestic Site Leasing Revenue
AT&T Wireless (1)
Sprint
T-Mobile
Verizon Wireless
Percentage of International Site Leasing Revenue
Oi S.A.
Telefonica
Digicel
Percentage of Site Development Revenue
Sprint
T-Mobile
Ericsson, Inc.
Verizon Wireless
For the year ended December 31,
2015
2014
2013
31.9%
22.3%
19.0%
16.3%
30.1%
25.6%
19.2%
14.4%
25.5%
30.9%
20.2%
13.3%
For the year ended December 31,
2015
2014
2013
48.8%
24.7%
4.6%
44.3%
28.8%
4.9%
6.3%
44.2%
11.2%
For the year ended December 31,
2015
2014
2013
28.5%
17.6%
15.3%
14.8%
36.7%
8.5%
16.8%
10.1%
1.5%
8.4%
34.5%
4.8%
(1) Prior year amounts have been adjusted to reflect the merger of AT&T Wireless and Leap Wireless (Cricket Wireless).
Five significant customers comprised 62.1% of total gross accounts receivable at December 31, 2015 compared to five
significant customers which comprised 63.5% of total gross accounts receivable at December 31, 2014.
F-20
11. ACCRUED EXPENSES
The Company’s accrued expenses are comprised of the following:
Accrued earnouts
Salaries and benefits
Real estate and property taxes
Other
Total accrued expenses
12. DEBT
As of
As of
December 31, 2015
December 31, 2014
$
$
(in thousands)
7,230 $
14,253
7,899
34,373
63,755 $
15,086
13,440
5,331
31,696
65,553
The carrying and principal values of debt consist of the following (in thousands):
As of
December 31, 2015
As of
December 31, 2014
Maturity Date
Oct. 1, 2019 $
5.625% Senior Notes
July 15, 2020
5.750% Senior Notes
4.875% Senior Notes
July 15, 2022
2010-2C Tower Securities April 11, 2017
2012-1C Tower Securities Dec. 11, 2017
2013-1C Tower Securities April 10, 2018
2013-2C Tower Securities April 11, 2023
2013-1D Tower Securities April 10, 2018
2014-1C Tower Securities Oct. 8, 2019
2014-2C Tower Securities Oct. 8, 2024
2015-1C Tower Securities Oct. 8, 2020
Revolving Credit Facility Feb. 5, 2020
May 9, 2017
2012-1 Term Loan
Mar. 24, 2021
2014 Term Loan
June 10, 2022
2015 Term Loan
Total debt
Less: current maturities of long-term debt
Fair Value
Fair Value
Carrying Value
Principal
Balance
500,000 $
800,000
750,000
550,000
610,000
425,000
575,000
330,000
920,000
620,000
500,000
—
—
1,477,500
497,500
521,250 $
832,000
744,375
558,223
611,879
416,959
565,541
332,676
910,368
608,084
489,680
—
—
1,447,950
486,306
Carrying Value
500,000
800,000
744,150
550,000
610,000
425,000
575,000
330,000
920,000
620,000
—
125,000
172,500
1,489,149
—
$ 8,555,000 $ 8,525,291 $ 8,542,305 $ 7,870,000 $ 7,887,202 $ 7,860,799
(32,500)
$ 7,828,299
500,000 $
800,000
744,806
550,000
610,000
425,000
575,000
330,000
920,000
620,000
500,000
—
—
1,474,641
492,858
511,250 $
816,000
721,875
576,901
620,175
420,776
584,344
330,551
920,515
629,474
—
125,000
171,422
1,458,919
—
Principal
Balance
500,000 $
800,000
750,000
550,000
610,000
425,000
575,000
330,000
920,000
620,000
—
125,000
172,500
1,492,500
—
$ 8,522,305
(20,000)
Total long-term debt, net of current maturities
The Company’s future principal payment obligations (based on the outstanding debt as of December 31, 2015 and assuming the
Tower Securities are repaid at their respective anticipated repayment dates) are as follows:
For the year ended December 31,
(in thousands)
2016
2017
2018
2019
2020
$
20,000
1,180,000
775,000
1,440,000
1,320,000
F-21
The table below reflects cash and non-cash interest expense amounts recognized by debt instrument for the years ended
December 31, 2015, 2014, and 2013, respectively:
2015
For the year ended December 31,
2014
2013
Cash
Interest
Non-cash
Interest
Cash
Interest
Non-cash
Interest
Cash
Interest
Non-cash
Interest
$
$
— $
—
—
28,125
46,000
36,563
28,230
18,111
43,217
51,138
3,453
5,552
—
3,959
—
48,992
9,243
(217)
322,366 $
— $
—
—
—
—
655
—
—
—
—
—
—
—
—
—
492
358
—
1,505 $
(in thousands)
— $
— $
2,670 $
12,520
12,513
28,125
46,000
18,281
51,237
18,085
43,217
10,796
—
4,591
696
4,534
424
41,338
—
243
292,600 $
26,266
121
—
—
315
—
—
—
—
—
—
7
—
4
399
—
—
27,112 $
19,998
20,109
28,125
46,000
—
57,383
18,085
30,392
—
—
4,515
10,533
4,557
6,416
—
—
268
249,051 $
10,434
38,307
182
—
—
—
—
—
—
—
—
—
101
—
61
—
—
—
49,085
1.875% Convertible Senior Notes
4.0% Convertible Senior Notes
8.25% Senior Notes
5.625% Senior Notes
5.75% Senior Notes
4.875% Senior Notes
2010 Tower Securities
2012 Tower Securities
2013 Tower Securities
2014 Tower Securities
2015 Tower Securities
Revolving Credit Facility
2011 Term Loan
2012-1 Term Loan
2012-2 Term Loan
2014 Term Loan
2015 Term Loan
Other
Total
Senior Credit Agreement
On February 7, 2014, SBA Senior Finance II entered into a Second Amended and Restated Credit Agreement with several banks
and other financial institutions or entities from time to time parties to the Second Amended and Restated Credit Agreement to, among
other things, incur the 2014 Term Loan and amend certain terms of the existing senior credit agreement (as amended, the “Senior
Credit Agreement”).
Terms of the Senior Credit Agreement
The Senior Credit Agreement, as amended, requires SBA Senior Finance II to maintain specific financial ratios, including (1) a
ratio of Consolidated Total Debt to Annualized Borrower EBITDA not to exceed 6.5 times for any fiscal quarter, (2) a ratio of
Consolidated Total Debt and Net Hedge Exposure (calculated in accordance with the Senior Credit Agreement) to Annualized
Borrower EBITDA for the most recently ended fiscal quarter not to exceed 6.5 times for 30 consecutive days and (3) a ratio of
Annualized Borrower EBITDA to Annualized Cash Interest Expense (calculated in accordance with the Senior Credit Agreement) of
not less than 2.0 times for any fiscal quarter. The Senior Credit Agreement contains customary affirmative and negative covenants
that, among other things, limit the ability of SBA Senior Finance II and its subsidiaries to incur indebtedness, grant certain liens, make
certain investments, enter into sale leaseback transactions, merge or consolidate, make certain restricted payments, enter into
transactions with affiliates, and engage in certain asset dispositions, including a sale of all or substantially all of their property. As of
December 31, 2015, SBA Senior Finance II was in compliance with the financial covenants contained in the Senior Credit Agreement.
The Senior Credit Agreement is also subject to customary events of default. Pursuant to the Second Amended and Restated Guarantee
and Collateral Agreement, amounts borrowed under the Revolving Credit Facility, the Term Loans and certain hedging transactions
that may be entered into by SBA Senior Finance II or the Subsidiary Guarantors (as defined in the Senior Credit Agreement) with
lenders or their affiliates are secured by a first lien on the membership interests of SBA Telecommunications, LLC, SBA Senior
Finance, LLC and SBA Senior Finance II and on substantially all of the assets (other than leasehold, easement and fee interests in real
property) of SBA Senior Finance II and the Subsidiary Guarantors.
The Senior Credit Agreement, as amended, permits SBA Senior Finance II, without the consent of the other lenders, to request
that one or more lenders provide SBA Senior Finance II with increases in the Revolving Credit Facility or additional term loans
F-22
provided that after giving effect to the proposed increase in Revolving Credit Facility commitments or incremental term loans the ratio
of Consolidated Total Debt to Annualized Borrower EBITDA would not exceed 6.5 times. SBA Senior Finance II’s ability to request
such increases in the Revolving Credit Facility or additional term loans is subject to its compliance with customary conditions set forth
in the Senior Credit Agreement including compliance, on a pro forma basis, with the financial covenants and ratios set forth therein
and, with respect to any additional term loan, an increase in the margin on existing term loans to the extent required by the terms of
the Senior Credit Agreement. 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 with additional
term loans and, if so, upon what terms.
Revolving Credit Facility under the Senior Credit Agreement
On February 5, 2015, SBA Senior Finance II entered into the 2015 Revolving Refinancing Amendment with several banks and
other financial institutions or entities from time to time parties to the Senior Credit Agreement to, among other things, (i) increase the
borrowing capacity under the Company’s Revolving Credit Facility from $770.0 million to $1.0 billion, (ii) extend the maturity date
of the Revolving Credit Facility to February 5, 2020, (iii) provide for the ability to borrow in U.S. dollars and certain designated
foreign currencies, and (iv) lower the applicable interest rate margins and commitment fees under the Revolving Credit Facility.
As amended February 2015, the Revolving Credit Facility consists of a revolving loan under which up to $1.0 billion aggregate
principal amount may be borrowed, repaid and redrawn, subject to compliance with specific financial ratios and the satisfaction of
other customary conditions to borrowing. Amounts borrowed under the Revolving Credit Facility accrue interest, at SBA Senior
Finance II’s election, at either (i) the Eurodollar Rate plus a margin that ranges from 137.5 basis points to 200.0 basis points or (ii) the
Base Rate plus a margin that ranges from 37.5 basis points to 100.0 basis points, in each case based on the ratio of Consolidated Total
Debt to Annualized Borrower EBITDA, calculated in accordance with the Senior Credit Agreement. In addition, SBA Senior Finance
II is required to pay a commitment fee of 0.25% per annum on the amount of unused commitment. If not earlier terminated by SBA
Senior Finance II, the Revolving Credit Facility will terminate on, and SBA Senior Finance II will repay all amounts outstanding on or
before, February 5, 2020. The proceeds available under the Revolving Credit Facility may be used for general corporate purposes.
SBA Senior Finance II may, from time to time, borrow from and repay the Revolving Credit Facility. Consequently, the amount
outstanding under the Revolving Credit Facility at the end of a period may not be reflective of the total amounts outstanding during
such period.
During the year ended December 31, 2015, the Company borrowed $770.0 million and repaid $895.0 million of the outstanding
balance under the Revolving Credit Facility. As of December 31, 2015, there was no amount outstanding under the Revolving Credit
Facility. The remaining borrowing capacity under the Revolving Credit Facility was $1.0 billion at December 31, 2015, subject to
compliance with specified financial ratios and satisfaction of other customary conditions to borrowing.
Term Loans under the Senior Credit Agreement
2011 Term Loan
The 2011 Term Loan consisted of a senior secured term loan with an initial aggregate principal amount of $500.0 million with a
maturity date of June 30, 2018. The 2011 Term Loan accrued interest, at SBA Senior Finance II’s election, at either the Base Rate plus
a margin of 175 basis points (with a Base Rate floor of 2%) or Eurodollar Rate plus a margin of 275 basis points (with a Eurodollar
Rate floor of 1%). The 2011 Term Loan was issued at 99.75% of par value. The Company incurred deferred financing fees of $4.9
million associated with this transaction which were being amortized through the maturity date.
During the year ended December 31, 2013, the Company repaid $312.0 million on the 2011 Term Loan. Included in this amount
was a prepayment of $310.7 million made on April 24, 2013 using proceeds from the 2013 Tower Securities. In connection with the
prepayment, the Company expensed $2.3 million of net deferred financing fees and $0.6 million of discount related to the debt. As a
result of the prepayment, no further scheduled quarterly principal payments were required until the maturity date.
On February 7, 2014, the Company repaid the entire $180.5 million outstanding principal balance of the 2011 Term Loan. In
connection with the prepayment, the Company expensed $1.1 million of net deferred financing fees and $0.3 million of discount
related to the debt.
2012-1 Term Loan
The 2012-1 Term Loan consisted of a senior secured term loan with an initial aggregate principal amount of $200.0 million that
matures on May 9, 2017. The 2012-1 Term Loan accrued interest, at SBA Senior Finance II’s election, at either the Base Rate plus a
F-23
margin that ranges from 100 to 150 basis points or the Eurodollar Rate plus a margin that ranges from 200 to 250 basis points, in each
case based on the ratio of Consolidated Total Debt to Annualized Borrower EBITDA (calculated in accordance with the Senior Credit
Agreement). The 2012-1 Term Loan was issued at par. The Company incurred deferred financing fees of $2.7 million in relation to
this transaction which were being amortized through the maturity date.
During the year ended December 31, 2015, the Company repaid $172.5 million on the 2012-1 Term Loan. Included in this
amount was a prepayment of $160.0 million made on November 18, 2015. In connection with the prepayment, the Company expensed
$0.8 million of net deferred financing fees.
2012-2 Term Loan
The 2012-2 Term Loan consisted of a senior secured term loan with an initial aggregate principal amount of $300.0 million with
a maturity date of September 28, 2019. The 2012-2 Term Loan accrued interest, at SBA Senior Finance II’s election, at either the Base
Rate plus 175 basis points (with a Base Rate floor of 2%) or Eurodollar Rate plus 275 basis points (with a Eurodollar Rate floor of
1%). The 2012-2 Term Loan was issued at 99.75% of par value. The Company incurred deferred financing fees of approximately $3.5
million in relation to this transaction which were being amortized through the maturity date.
During the year ended December 31, 2013, the Company repaid $190.0 million on the 2012-2 Term Loan. Included in this
amount was a prepayment of $189.3 million made on April 24, 2013 using proceeds from the 2013 Tower Securities. In connection
with the prepayment, the Company expensed $2.0 million of net deferred financing fees and $0.4 million of discount related to the
debt. As a result of the prepayment, no further scheduled quarterly principal payments were required until the maturity date.
On February 7, 2014, the Company repaid the entire $110.0 million outstanding principal balance of the 2012-2 Term Loan. In
connection with the prepayment, the Company expensed $1.0 million of net deferred financing fees and $0.2 million of discount
related to the debt.
2014 Term Loan
The 2014 Term Loan consists of a senior secured term loan with an initial aggregate principal amount of $1.5 billion that
matures on March 24, 2021. The 2014 Term Loan accrues interest, at SBA Senior Finance II’s election, at either the Base Rate plus
150 basis points (with a Base Rate floor of 1.75%) or the Eurodollar Rate plus 250 basis points (with a Eurodollar Rate floor of
0.75%). The 2014 Term Loan was issued at 99.75% of par value. As of December 31, 2015, the 2014 Term Loan was accruing
interest at 3.25% per annum. Principal payments on the 2014 Term Loan commenced on September 30, 2014 and are being made in
quarterly installments on the last day of each March, June, September, and December in an amount equal to $3.8 million. SBA Senior
Finance II has the ability to prepay any or all amounts under the 2014 Term Loan. The Company incurred deferred financing fees of
approximately $12.9 million in relation to this transaction which are being amortized through the maturity date.
Net proceeds from the 2014 Term Loan were used (1) to repay in full the remaining $180.5 million balance of the 2011 Term
Loan, (2) to repay in full the remaining $110.0 million balance of the 2012-2 Term Loan, (3) to repay the $390.0 million outstanding
balance under the Revolving Credit Facility, (4) to pay the cash consideration in connection with SBAC’s acquisition of towers from
Oi S.A. in Brazil, and (5) for general corporate purposes.
During the year ended December 31, 2015, the Company repaid $15.0 million of principal on the 2014 Term Loan. As of
December 31, 2015, the 2014 Term Loan had a principal balance of $1.5 billion.
2015 Term Loan
On June 10, 2015, SBA Senior Finance II obtained a new senior secured term loan with an initial aggregate principal amount of
$500.0 million that matures on June 10, 2022. The 2015 Term Loan accrues interest, at SBA Senior Finance II’s election, at either the
Base Rate plus 150 basis points (with a Base Rate floor of 1.75%) or the Eurodollar Rate plus 250 basis points (with a Eurodollar Rate
floor of 0.75%). The 2015 Term Loan was issued at 99.0% of par value. As of September 30, 2015, the 2015 Term Loan was accruing
interest at 3.25% per annum. Principal payments on the 2015 Term Loan commenced on September 30, 2015 and are being made in
quarterly installments on the last day of each March, June, September, and December in an amount equal to $1.3 million. SBA Senior
Finance II has the ability to prepay any or all amounts under the 2015 Term Loan. The Company incurred deferred financing fees of
approximately $5.1 million in relation to this transaction which are being amortized through the maturity date.
During the year ended December 31, 2015, the Company repaid $2.5 million of principal on the 2015 Term Loan. As of
December 31, 2015, the 2015 Term Loan had a principal balance of $497.5 million.
F-24
Secured Tower Revenue Securities
Tower Revenue Securities Terms
The mortgage loan underlying the 2010 Tower Securities, 2012 Tower Securities, 2013 Tower Securities, 2014 Tower
Securities, and 2015 Tower Securities (together the “Tower Securities”) will be paid from the operating cash flows from the aggregate
10,585 tower sites owned by the Borrowers. The mortgage loan is secured by (i) mortgages, deeds of trust, and deeds to secure debt on
a substantial portion of the tower sites, (ii) a security interest in the tower sites and substantially all of the Borrowers’ personal
property and fixtures, (iii) the Borrowers’ rights under certain tenant leases, and (iv) all of the proceeds of the foregoing. For each
calendar month, SBA Network Management, Inc., an indirect subsidiary (“Network Management”), is entitled to receive a
management fee equal to 4.5% of the Borrowers’ operating revenues for the immediately preceding calendar month.
The Borrowers may prepay any of the mortgage loan components, in whole or in part, with no prepayment consideration,
(i) within nine months (in the case of the components corresponding to the 2010 Tower Securities), twelve months (in the case of the
component corresponding to the 2012 Tower Securities, Secured Tower Revenue Securities Series 2013-1C, Secured Tower Revenue
Securities Series 2013-1D, Secured Tower Revenue Securities Series 2014-1C, and Secured Tower Revenue Securities Series 2015-
1C), or eighteen months (in the case of the components corresponding to the Secured Tower Revenue Securities Series 2013-2C and
Secured Tower Revenue Securities Series 2014-2C) of the anticipated repayment date of such mortgage loan component, (ii) with
proceeds received as a result of any condemnation or casualty of any tower owned by the Borrowers or (iii) during an amortization
period. In all other circumstances, the Borrowers may prepay the mortgage loan, in whole or in part, upon payment of the applicable
prepayment consideration. The prepayment consideration is determined based on the class of the Tower Securities to which the
prepaid mortgage loan component corresponds and consists of an amount equal to the excess, if any, of (1) the present value
associated with the portion of the principal balance being prepaid, calculated in accordance with the formula set forth in the mortgage
loan agreement, 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 within nine months (in the case of the components corresponding to the 2010 Tower
Securities), twelve months (in the case of the component corresponding to the 2012 Tower Securities, Secured Tower Revenue
Securities Series 2013-1C, Secured Tower Revenue Securities Series 2013-1D, Secured Tower Revenue Securities Series 2014-1C,
and Secured Tower Revenue Securities Series 2015-1C), or eighteen months (in the case of the components corresponding to the
Secured Tower Revenue Securities Series 2013-2C and Secured Tower Revenue Securities Series 2014-2C) of the anticipated
repayment date of such mortgage loan component over (2) that portion of the principal balance of such class prepaid on the date of
such prepayment.
To the extent that the mortgage loan components corresponding to the Tower Securities are not fully repaid by their respective
anticipated repayment dates, the interest rate of each such component will increase by the greater of (i) 5% and (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.
Pursuant to the terms of the Tower Securities, all rents and other sums due on any of the towers owned by the Borrowers are
directly deposited by the lessees into a controlled deposit account 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 Consolidated Balance Sheets (see Note 4). 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 are required to pay over the succeeding twelve
months, as of the end of any calendar quarter, falls to 1.30x 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 1.30x 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 will be applied to
prepay the mortgage loan until such time that the Debt Service Coverage Ratio exceeds 1.15x for a calendar quarter. In addition, if any
of the Tower Securities are not fully repaid by their respective anticipated repayment dates, the cash flow from the towers owned by
the Borrowers will be trapped by the trustee for the Tower Securities and applied first to repay the interest, at the original interest
rates, on the mortgage loan components underlying the Tower Securities, second to fund all reserve accounts and operating expenses
associated with those towers, third to pay the management fees due to Network Management, fourth to repay principal of the Tower
Securities and fifth to repay the additional interest discussed above. The mortgage loan agreement, as amended, also includes
covenants customary for mortgage loans subject to rated securitizations. Among other things, the Borrowers are prohibited from
incurring other indebtedness for borrowed money or further encumbering their assets. As of December 31, 2015, the Borrowers met
the required Debt Service Coverage Ratio as set forth in the mortgage loan agreement and were in compliance with all other
covenants.
F-25
2010 Tower Securities
On April 16, 2010, the Company, through a New York common law trust (the “Trust”), issued $680.0 million of 2010-1 Tower
Securities and $550.0 million of 2010-2 Tower Securities (together the “2010 Tower Securities”). The 2010-1 Tower Securities had an
annual interest rate of 4.254% and the 2010-2 Tower Securities have an annual interest rate of 5.101%. The anticipated repayment
date and the final maturity date for the 2010–1 Tower Securities were April 15, 2015 and April 16, 2040, respectively. The anticipated
repayment date and the final maturity date for the 2010–2 Tower Securities are April 11, 2017 and April 9, 2042, respectively. The
sole asset of the Trust consists of a non-recourse mortgage loan made in favor of those entities that are borrowers on the mortgage
loan (“the Borrowers”). The Company incurred deferred financing fees of $8.1 million in relation to this transaction which are being
amortized through the anticipated repayment date of each of the 2010 Tower Securities.
On October 15, 2014, the Company repaid in full the 2010-1 Tower Securities with proceeds from the 2014 Tower Securities
(defined below). In connection with the prepayment, the Company expensed $1.1 million of net deferred financing fees.
2012 Tower Securities
On August 9, 2012, the Company, through the Trust, issued $610.0 million of Secured Tower Revenue Securities Series 2012-
1C (the “2012 Tower Securities”) which have an anticipated repayment date of December 11, 2017 and a final maturity date of
December 9, 2042. The fixed interest rate of the 2012 Tower Securities is 2.933% per annum, payable monthly. The Company
incurred deferred financing fees of $14.9 million in relation to this transaction which are being amortized through the anticipated
repayment date of the 2012 Tower Securities.
2013 Tower Securities
On April 18, 2013, the Company, through the Trust, issued $425.0 million of 2.240% Secured Tower Revenue Securities Series
2013-1C which have an anticipated repayment date of April 10, 2018 and a final maturity date of April 9, 2043, $575.0 million of
3.722% Secured Tower Revenue Securities Series 2013-2C which have an anticipated repayment date of April 11, 2023 and a final
maturity date of April 9, 2048, and $330.0 million of 3.598% Secured Tower Revenue Securities Series 2013-1D which have an
anticipated repayment date of April 10, 2018 and a final maturity date of April 9, 2043 (collectively the “2013 Tower Securities”). The
aggregate $1.33 billion of 2013 Tower Securities have a blended interest rate of 3.218% per annum, payable monthly. The Company
incurred deferred financing fees of $25.5 million in relation to this transaction which are being amortized through the anticipated
repayment date of each of the 2013 Tower Securities.
2014 Tower Securities
On October 15, 2014, the Company, through the Trust, issued $920.0 million of 2.898% Secured Tower Revenue Securities
Series 2014-1C which have an anticipated repayment date of October 8, 2019 and a final maturity date of October 11, 2044 and
$620.0 million of 3.869% Secured Tower Revenue Securities Series 2014-2C which have an anticipated repayment date of October 8,
2024 and a final maturity date of October 8, 2049 (collectively the “2014 Tower Securities”). The aggregate $1.54 billion of 2014
Tower Securities have a blended interest rate of 3.289% per annum, payable monthly. The Company has incurred deferred financing
fees in the aggregate of $22.5 million in relation to this transaction which are being amortized through the anticipated repayment date
of each of the 2014 Tower Securities.
2015 Tower Securities
On October 14, 2015, the Company, through the Trust, issued $500.0 million of Secured Tower Revenue Securities Series
2015-1C which have an anticipated repayment date of October 8, 2020 and a final maturity date of October 10, 2045 (the “2015
Tower Securities”). The fixed interest rate of the 2015 Tower Securities is 3.156% per annum, payable monthly. The Company
incurred deferred financing fees of $10.9 million to date in relation to this transaction which are being amortized through the
anticipated repayment date of the 2015 Tower Securities. In connection with the issuance of the 2015 Tower Securities, the advance
rents reserve requirement was modified such that the Borrowers will only be required to maintain an advance rents reserve at any time
the monthly tenant debt service coverage ratio is equal to or less than 2:1 and for two calendar months after such coverage ratio again
exceeds 2:1.
In connection with the issuance of the 2015 Tower Securities, SBA Properties, LLC, SBA Sites, LLC, SBA Structures, LLC,
SBA Infrastructure, LLC, SBA Monarch Towers III, LLC, SBA 2012 TC Assets PR, LLC, SBA 2012 TC Assets, LLC, SBA Towers
IV, LLC, SBA Monarch Towers I, LLC, SBA Towers USVI, Inc., SBA Towers VII, LLC, SBA GC Towers, LLC, SBA Towers V,
LLC, and SBA Towers VI, LLC (collectively, the “Borrowers”), each an indirect subsidiary of SBAC, and Midland Loan Services, a
F-26
division of PNC Bank, National Association, as servicer, on behalf of the Trustee entered into the First Loan and Security Agreement
Supplement and Amendment pursuant to which, among other things, (i) the existing Second Amended and Restated Loan and Security
Agreement was amended to modify the advance rents reserve as described above, (ii) the outstanding principal amount of the
mortgage loan was increased by $500 million, and (iii) the Borrowers became jointly and severally liable for the aggregate $4.5 billion
borrowed under the mortgage loan corresponding to the 2010 Tower Securities, 2012 Tower Securities, 2013 Tower Securities, 2014
Tower Securities, and the newly issued 2015 Tower Securities.
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
was payable semi-annually on May 1 and November 1. During the year ended December 31, 2013, the Company sold its claim against
Lehman Brothers, related to a hedge terminated when Lehman Brothers filed for bankruptcy in 2008, for $27.3 million and recorded a
gain on the transaction of the same amount. The gain has been recorded within Other Income, net in the accompanying Consolidated
Statement of Operations.
During the year ended December 31, 2013, the Company had settled all conversion obligations and related hedges and warrants
for the 1.875% Notes.
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. Interest was payable
semi-annually on April 1 and October 1. As of December 31, 2014, the Company settled its conversion obligations and associated
convertible note hedges. During the year ended December 31, 2015, the Company settled the remaining outstanding warrants for
$150.9 million, representing approximately 2.1 million underlying shares.
Senior Notes
8.0% Senior Notes and 8.25% Senior Notes
On July 24, 2009, Telecommunications issued $750.0 million of unsecured senior notes (the “Senior Notes”), $375.0 million of
which were due August 15, 2016 (the “8.0% Notes”) and $375.0 million of which were due August 15, 2019 (the “8.25% Notes”).
The 8.0% Notes had an interest rate of 8.00% per annum and were issued at a price of 99.330% of their face value. The 8.25% Notes
had an interest rate of 8.25% per annum and were issued at a price of 99.152% of their face value.
The 8.0% Notes were repaid in full on August 29, 2012, and the 8.25% Notes were repaid in full on August 15, 2014. In
connection with the redemption of the 8.25% Notes, the Company paid $10.1 million as a premium on redemption of the 8.25% Notes
and expensed $1.2 million and $3.3 million of debt discount and deferred financing fees, respectively.
5.75% Senior Notes
On July 13, 2012, Telecommunications issued $800.0 million of unsecured senior notes (the “5.75% Notes”) due July 15, 2020.
The Notes accrue interest at a rate of 5.75% and were issued at par. Interest on the 5.75% Notes is due semi-annually on July 15 and
January 15 of each year beginning on January 15, 2013. The Company incurred deferred financing fees of $14.0 million in relation to
this transaction which are being amortized through the maturity date.
The 5.75% Notes are subject to redemption in whole or in part on or after July 15, 2016 at the redemption prices set forth in the
indenture agreement plus accrued and unpaid interest. If redeemed during the twelve-month period beginning on July 15, 2016, July
15, 2017, or July 15, 2018 through maturity, the redemption price will be 102.875%, 101.438%, and 100.000%, respectively, of the
principal amount of the 5.75% Notes to be redeemed on the redemption date plus accrued and unpaid interest.
SBAC is a holding company with no business operations of its own and its only significant asset is the outstanding capital stock
of Telecommunications. Telecommunications is 100% owned by SBAC. SBAC has fully and unconditionally guaranteed the Senior
Notes issued by Telecommunications.
F-27
5.625% Senior Notes
On September 28, 2012, the Company issued $500.0 million of unsecured senior notes due October 1, 2019 (the “5.625%
Notes”). The 5.625% Notes accrue interest at a rate of 5.625% per annum and were issued at par. Interest on the 5.625% Notes is due
semi-annually on April 1 and October 1 of each year. The Company incurred deferred financing fees of $8.6 million in relation to this
transaction which are being amortized through the maturity date.
The 5.625% Notes are subject to redemption in whole or in part on or after October 1, 2016 at the redemption prices set forth in
the indenture agreement plus accrued and unpaid interest. If redeemed during the twelve-month period beginning on October 1, 2016,
October 1, 2017, or October 1, 2018 until maturity, the redemption price will be 102.813%, 101.406%, and 100.000%, respectively, of
the principal amount of the 5.625% Notes to be redeemed on the redemption date plus accrued and unpaid interest.
4.875% Senior Notes
On July 1, 2014, the Company issued $750.0 million of unsecured senior notes due July 15, 2022 (the “4.875% Notes”). The
4.875% Notes accrue interest at a rate of 4.875% per annum and were issued at 99.178% of par value. Interest on the 4.875% Notes is
due semi-annually on January 15 and July 15 of each year. The Company incurred deferred financing fees of $11.6 million in relation
to this transaction which are being amortized through the maturity date.
The 4.875% Notes are subject to redemption in whole or in part on or after July 15, 2017 at the redemption prices set forth in the
indenture agreement plus accrued and unpaid interest. Prior to July 15, 2017, the Company may at its option redeem up to 35% of the
aggregate principal amount of the 4.875% Notes originally issued at a redemption price of 104.875% of the principal amount of the
4.875% Notes to be redeemed on the redemption date plus accrued and unpaid interest with the net proceeds of certain equity
offerings. If redeemed during the twelve-month period beginning on July 15, 2017, July 15, 2018, July 15, 2019, or July 15, 2020 until
maturity, the redemption price will be 103.656%, 102.438%, 101.219% and 100.000%, respectively, of the principal amount of the
4.875% Notes to be redeemed on the redemption date plus accrued and unpaid interest.
Indentures Governing Senior Notes
The Indentures governing the Senior Notes contain customary covenants, subject to a number of exceptions and qualifications,
including restrictions on the ability of SBAC and Telecommunications to (1) incur additional indebtedness unless the Consolidated
Indebtedness to Annualized Consolidated Adjusted EBITDA Ratio (as defined in the Indenture), pro forma for the additional
indebtedness does not exceed, with respect to any fiscal quarter, 9.5x for SBAC and 7.5x for Telecommunications, (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 the Restricted Subsidiaries of SBAC and
Telecommunications (as defined in the Indentures) to incur liens securing indebtedness.
BNDES Loans
During 2013, the Company assumed several loans valued at $5.0 million as part of an acquisition in Brazil (the “BNDES
Loans”). The Company also borrowed an additional $1.3 million in new loans during 2013. During the year ended December 31,
2014, the Company had borrowings of $0.4 million and repayments of $6.3 million under the BNDES Loans. The BNDES Loans
were repaid in full in April 2014.
13. SHAREHOLDERS’ EQUITY
Common Stock equivalents
The Company has potential common stock equivalents related to its outstanding stock options (see Note 14), restricted stock
units, and, until its maturity in 2014, the 4.0% Notes (see Note 12). 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, 2015, 2014 and 2013,
respectively. 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.
F-28
Stock Repurchases
The Company’s Board of Directors authorized a stock repurchase program on April 27, 2011. This program authorized the
Company to purchase, from time to time, up to $300.0 million of the Company’s outstanding Class A common stock through open
market repurchases in compliance with Rule 10b-18 of the Securities Exchange Act of 1934, as amended, and/or in privately
negotiated transactions at management’s discretion based on market and business conditions, applicable legal requirements and other
factors. During the second quarter of 2015, the Company repurchased $1.3 million shares of its Class A common stock at an average
price of $114.96 with the remaining $150.0 million authorized under the $300.0 million stock repurchase plan, completing this plan.
During the years ended December 31, 2014 and 2013, the Company did not repurchase any shares in conjunction with the stock
repurchase program.
On June 4, 2015, the Company’s Board of Directors announced the authorization of a new $1.0 billion stock repurchase plan.
This plan authorizes the Company to purchase from time to time its outstanding common stock through open market repurchases in
compliance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended, and/or in privately negotiated transactions at
management’s discretion based on market and business conditions, applicable legal requirements and other factors. Shares purchased
will be retired. During the year ended December 31, 2015, the Company repurchased an additional 2.7 million shares of its Class A
common stock under the new stock repurchase program for $300 million at a weighted average price per share of $112.04. As of
December 31, 2015, the Company had a remaining authorization to repurchase $700.0 million of Class A common stock under the
current $1.0 billion stock repurchase program.
Subsequent to December 31, 2015, the Company repurchased 0.5 million shares of its Class A common stock under the stock
repurchase program for $50.0 million at a weighted average price per share of $98.65. As of the date of this filing, the Company had a
remaining authorization to repurchase $650.0 million of Class A common stock under the current $1.0 billion stock repurchase
program.
Registration of Additional Shares
On May 20, 2010, the Company filed a registration statement on Form S-8 with the Securities and Exchange Commission
registering 15.0 million shares of the Company’s Class A common stock issuable under the 2010 Performance and Equity Incentive
Plan (see Note 14).
The Company filed shelf registration statements on Form S-4 with the Securities and Exchange Commission registering
4.0 million shares of its Class A common stock in 2007. 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, 2015, 2014 and 2013, the Company did not issue any shares of its Class A
common stock pursuant to this registration statement in connection with acquisitions. At December 31, 2015, approximately
1.7 million shares remain available for issuance under this shelf registration statement.
On March 3, 2015, 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 its 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 it issues securities under this registration statement. For the year
ended December 31, 2015, the Company did not issue any securities under this automatic shelf registration statement.
14. STOCK-BASED COMPENSATION
The Company has two equity participation plans (the 2001 Equity Participation Plan and the 2010 Performance and Equity
Incentive Plan, the “2010 Plan”) whereby options (both non-qualified and incentive stock options), restricted stock units, stock
appreciation rights, and other equity and performance based instruments may be granted to directors, employees, and consultants. The
options and restricted stock units generally vest from the date of grant on a straight-line basis over the vesting term and generally have
a seven-year or a ten-year contractual life.
Upon the adoption of the 2010 Plan by the Company’s shareholders on May 6, 2010, the 2001 Equity Participation Plan was
terminated and the Company is no longer eligible to issue shares pursuant to the plan. The 2010 Plan provides for the issuance of a
maximum of 15.0 million shares of the Company’s Class A common stock; however, the aggregate number of shares that may be
issued pursuant to restricted stock awards, restricted stock unit awards, stock bonus awards, performance awards, other stock-based
F-29
awards, or other awards granted under the 2010 Plan will not exceed 7.5 million shares. As of December 31, 2015, the Company had
10.2 million shares remaining available for future issuance under the 2010 Plan.
Stock Options
The Company records compensation expense for employee stock options based on the estimated fair value of the options on the
date of grant using the Black-Scholes option-pricing model with the assumptions included in the table below. The Company uses a
combination of historical data and historical volatility to establish the expected volatility. 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:
Risk free interest rate
Dividend yield
Expected volatility
Expected lives
For the year ended December 31,
2015
2014
2013
1.21% - 1.46%
0.0%
20.0%
4.6 years
1.15% - 1.37%
0.0%
22.0%
4.4 years
0.51% - 1.38%
0.0%
25.0% - 29.0%
3.9 - 4.8 years
The following table summarizes the Company’s activities with respect to its stock option plans for the years ended December
31, 2015, 2014 and 2013 as follows (dollars and number of shares in thousands, except for per share data):
Weighted-
Average
Exercise Price
Per Share
Number
of Shares
Weighted-
Average
Remaining
Contractual
Life (in years)
Aggregate
Intrinsic Value
Outstanding at December 31, 2012
Granted
Exercised
Canceled
Outstanding at December 31, 2013
Granted
Exercised
Canceled
Outstanding at December 31, 2014
Granted
Exercised
Canceled
Outstanding at December 31, 2015
Exercisable at December 31, 2015
Unvested at December 31, 2015
2,831
984
(776)
(60)
2,979
1,121
(780)
(44)
3,276
1,076
(495)
(63)
3,794
1,349
2,445
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
34.06
73.17
27.57
52.54
48.30
95.51
36.34
81.21
66.85
124.24
51.58
93.74
84.66
54.85
101.10
4.5
3.0
5.3
$
$
$
97,731
67,721
30,010
The weighted-average fair value of options granted during the years ended December 31, 2015, 2014 and 2013 was $24.75,
$19.49, and $17.38, respectively.
The total intrinsic value for options exercised during the years ended December 31, 2015, 2014 and 2013 was $33.0 million,
$49.2 million and $39.3 million, respectively. Cash received from option exercises under all plans for the years ended December 31,
2015, 2014 and 2013 was approximately $25.4 million, $28.3 million, and $21.4 million, respectively. No tax benefit was realized for
the tax deductions from option exercises under all plans for the years ended December 31, 2015, 2014 and 2013, respectively.
F-30
The aggregate intrinsic value for stock options in the preceding table represents the total intrinsic value based on the Company’s
closing stock price of $105.07 as of December 31, 2015. 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.
Additional information regarding options outstanding and exercisable at December 31, 2015 is as follows:
Range
$0.00 - $30.00
$30.01 - $50.00
$50.01 - $90.00
$90.01 - $129.00
Outstanding
(in thousands)
141
840
754
2,059
3,794
Options Outstanding
Weighted Average
Remaining
Weighted
Average
Options Exercisable
Weighted
Average
Contractual Life
Exercise Price
Exercisable
Exercise Price
(in years)
0.6
2.4
4.2
5.7
$
$
$
$
21.74
42.84
72.96
110.32
(in thousands)
141
704
295
209
1,349
$
$
$
$
The following table summarizes the activity of options outstanding that had not yet vested:
Unvested as of December 31, 2014
Shares granted
Vesting during period
Forfeited
Unvested as of December 31, 2015
Weighted-
Average
Fair Value
Per Share
Number
of Shares
(in thousands)
2,221
1,076
(796)
(56)
2,445
$
$
$
$
$
21.74
41.93
72.53
95.58
18.89
24.75
18.98
20.68
21.43
As of December 31, 2015, the total unrecognized compensation expense related to unvested stock options outstanding under the
Plans is $35.2 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 2015, 2014, and 2013 was $15.1 million, $11.5 million, and $9.8 million,
respectively.
Restricted Stock Units
The following table summarized the Company’s restricted stock unit activity for the year ended December 31, 2015:
Outstanding at December 31, 2014
Granted
Vested
Forfeited/canceled
Outstanding at December 31, 2015
Weighted-
Average
Grant Date
Fair Value per
Share
Number of
Units
(in thousands)
295
110
(122)
(6)
277
$
$
$
$
$
73.55
123.93
64.35
95.19
97.14
As of December 31, 2015, total unrecognized compensation expense related to unvested restricted stock units granted under the
2010 Plan was $18.5 million and is expected to be recognized over a weighted-average period of 2.6 years.
F-31
Employee Stock Purchase Plan
In 2008, the Board of Directors of 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.
For the year ended December 31, 2015, 26,898 shares of Class A common stock were issued under the 2008 Purchase Plan,
which resulted in cash proceeds to the Company of approximately $2.6 million, compared to the year ended December 31, 2014 when
23,204 shares of Class A common stock were issued under the 2008 Purchase Plan which resulted in cash proceeds to the Company of
$2.1 million. At December 31, 2015, 304,339 shares remained available for issuance under the 2008 Purchase Plan. In addition, the
Company recorded $0.5 million, $0.4 million, and $0.3 million of non-cash compensation expense relating to the shares issued under
the 2008 Purchase Plans for each of the years ended December 31, 2015, 2014, and 2013.
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, 2015, 2014, and 2013, respectively:
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
For the year ended December 31,
2015
2014
(in thousands)
2013
405 $
28,342
28,747
—
28,747 $
386 $
22,285
22,671
—
22,671 $
230
16,975
17,205
—
17,205
$
$
In addition, the Company capitalized $0.5 million, $0.3 million and $0.2 million of non-cash compensation for the years ended
December 31, 2015, 2014 and 2013, respectively, to fixed assets.
15. INCOME TAXES
Income (loss) before provision for income taxes from continuing operations by geographic area is as follows:
Domestic
Foreign
Total
For the year ended December 31,
2015
2014
2013
(in thousands)
$
$
(22,698) $
(143,897)
(166,595) $
(16,623) $
963
(15,660) $
(45,429)
(11,789)
(57,218)
F-32
The provision (benefit) for income taxes on continuing operations consists of the following components:
$
Current provision (benefit):
State
Foreign
Total current
Deferred provision (benefit) for taxes:
Federal
State
Foreign
Increase in valuation allowance
Total deferred
Total provision (benefit) for income taxes
$
For the year ended December 31,
2015
2014
2013
(in thousands)
2,752 $
6,314
9,066
(3,023)
(3,106)
(40,636)
46,760
(5)
9,061
$
1,099 $
7,006
8,105
1,458
(887)
(472)
431
530
8,635
$
387
4,946
5,333
(11,977)
(3,272)
(9,013)
17,620
(6,642)
(1,309)
A reconciliation of the provision for income taxes on continuing operations at the statutory U.S. Federal tax rate (35%) and the
effective income tax rate is as follows:
Statutory federal benefit
Foreign tax expense
State and local taxes benefit
Non-deductible foreign expenses
Foreign dividend income
Foreign tax rate change
Foreign exchange rate changes
Other
Valuation allowance
Provision (benefit) for income taxes
For the year ended December 31,
2015
2014
2013
(in thousands)
(58,307) $
3,534
(230)
4,892
—
—
9,212
3,200
46,760
9,061 $
(5,481) $
3,844
138
5,644
3,700
1,374
(799)
(216)
431
8,635 $
(20,027)
2,870
(1,875)
2,605
—
(4,960)
—
2,458
17,620
(1,309)
$
$
F-33
The components of the net deferred income tax asset (liability) accounts are as follows:
Current deferred tax assets:
Net operating losses
Allowance for doubtful accounts
Deferred revenue
Accrued liabilities
Valuation allowance
Total current deferred tax assets, net (1)(2)
Noncurrent deferred tax assets:
Net operating losses
Property, equipment, and intangible basis differences
Accrued liabilities
Non-cash compensation
Deferred revenue
Allowance for doubtful accounts
Currency translation
Other
Valuation allowance
Total noncurrent deferred tax assets, net (3)
Noncurrent deferred tax liabilities:
Property, equipment, and intangible basis differences
Straight-line rents
Deferred lease costs
Other
Total noncurrent deferred tax liabilities, net (3)
As of December 31,
2015
2014
(in thousands)
— $
—
—
—
—
— $
369,924 $
28,226
45,885
14,913
43,608
647
57,015
4,357
(292,871)
271,704
(242,763)
(28,058)
(11,611)
(14,448)
(25,176) $
49,900
326
48,940
6,701
(51,249)
54,618
375,103
27,340
40,368
10,567
—
—
7,757
2,425
(216,052)
247,508
(283,185)
(25,142)
(5,647)
(10,905)
(77,371)
$
$
$
$
(1) Amounts are included in Prepaid and other current assets on the Consolidated Balance Sheets.
(2)
In November 2015, the Financial Accounting Standards Board issued accounting standard update, ASU No. 2015-17, revising
ASC 740 Income Taxes. Specifically, ASU 2015-17 requires deferred tax liabilities and assets, along with any related valuation
allowance, to be classified as noncurrent on the consolidated balance sheet. This standard is required to be adopted for annual
periods beginning after December 15, 2016, including interim periods within that annual period, with early adoption permitted.
The amendment may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods
presented. The Company elected to prospectively adopt the accounting standard in the beginning of the fourth quarter of 2015.
Prior periods in the Company’s Consolidated Financial Statements were not retrospectively adjusted.
(3) Of these amounts, $619 and $25,795 are included in Other assets and Other long-term liabilities, respectively on the
accompanying Consolidated Balance Sheets as of December 31, 2015. As of December 31, 2014, $451 and $77,822 are
included in Other assets and Other long-term liabilities on the accompanying Consolidated Balance Sheet.
A deferred tax asset is reduced by a valuation allowance if based on the weight of all available evidence, it is more likely than
not (a likelihood of more than 50%) that the value of such assets will not be realized. The valuation allowance should be sufficient to
reduce the deferred tax asset to the amount that is more likely than not to be realized. The determination of whether a deferred tax
asset is realizable is based on weighting all available evidence, including both positive and negative evidence. The realization of
deferred tax assets, including carryforwards and deductible temporary differences, depends upon the existence of sufficient taxable
income of the same character during the carryback or carryforward period. All sources of taxable income available to realize the
deferred tax asset, including the future reversal of existing temporary differences, future taxable income exclusive of reversing
temporary differences and carryforwards, taxable income in carryback years and tax-planning strategies, should be considered.
F-34
The Company has recorded a valuation allowance for the majority of its deferred tax assets as management believes that it is not
“more-likely-than-not” that the Company will generate sufficient taxable income in future periods to recognize the assets. Valuation
allowances of $292.9 million and $267.3 million were being carried to offset net deferred income tax assets as of December 31, 2015
and 2014, respectively. The net increase in the valuation allowance for the years ended December 31, 2015 and 2014 was $25.6
million and $20.8 million, respectively. At December 31, 2015, the valuation allowance related to federal and state tax credit
carryovers were approximately $2.0 million and $0.4 million, respectively. These tax credits expire beginning 2017.
The Company has available at December 31, 2015, a net federal operating tax loss carry-forward of approximately $955.7
million and an additional $253.9 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 2021 and 2033. 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, 2015, a foreign net operating loss carry-forward of $50.3 million and a net state operating tax
loss carry-forward of approximately $474.6 million. These net operating tax loss carry-forwards begin to expire in 2016.
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.
The Company does not expect to remit earnings from its foreign subsidiaries. Undistributed earnings of the Company’s foreign
subsidiaries amounted to approximately $38.2 million at December 31, 2015. Those earnings are considered to be permanently
reinvested and, accordingly, no U.S. Federal and state income taxes have been provided thereon. Upon distribution of those earnings
in the form of dividends or otherwise, the Company could be subject to both U.S. income taxes (subject to an adjustment for foreign
tax credits) and withholding taxes payable to various foreign countries.
16. COMMITMENTS AND CONTINGENCIES
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 2114. In addition, the Company is obligated under various non-cancelable capital leases for
vehicles that expire at various times through September 2019.
The annual minimum lease payments under non-cancelable operating and capital leases in effect as of December 31, 2015 are as
follows (in thousands):
For the year ended December 31,
Capital Leases
Operating Leases
2016
2017
2018
2019
2020
Total minimum lease payments
Less: amount representing interest
Present value of future payments
Less: current obligations
Long-term obligations
$
$
$
1,619
1,150
799
251
—
3,819
(178)
3,641
(1,814)
1,827
188,382
190,538
194,228
197,012
198,774
Future minimum rental payments under noncancelable ground leases include payments for certain renewal periods at the
Company’s option because failure to renew could result in a loss of the applicable tower and related revenue from tenant leases,
thereby making it reasonably assured that the Company will renew the lease. 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 $239.8 million, $223.4 million and $196.3 million for the years ended December 31,
2015, 2014 and 2013, respectively. In addition, certain of the Company’s leases include contingent rent provisions which provide for
F-35
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, 2015, 2014 and 2013 was $24.4 million, $23.3 million and $20.3 million, respectively.
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, 2015 is as follows:
For the year ended December 31,
(in thousands)
2016
2017
2018
2019
2020
$
1,271,391
1,144,510
996,793
808,933
574,797
The Company’s tenant leases provide for annual escalations and multiple renewal periods, at the tenant’s option. The tenant
rental payments disclosed in the table above do not assume exercise of tenant renewal options, however, fixed rate escalations have
been included.
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.
Contingent Purchase Obligations
From time to time, the Company agrees to pay additional consideration (or earnouts) 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. For the years
ended December 31, 2015, 2014, and 2013 certain earnings targets associated with the acquired towers were achieved, and therefore,
the Company paid in cash $4.1 million, $18.7 million, and $9.3 million, respectively. As of December 31, 2015, the Company’s
estimate of its potential obligation if the performance targets contained in various acquisition agreements were met was $7.2 million
which the Company recorded in accrued expenses. The maximum potential obligation related to the performance targets was $10.2
million and $23.1 million as of December 31, 2015 and 2014, respectively.
17. 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, 2012 and through June 30, 2013, the Company made a discretionary matching contribution of
50% of an employee’s contributions up to a maximum of $3,000 annually. Effective July 1, 2013, the Company made a discretionary
matching contribution of 75% of an employee’s contributions up to a maximum of $4,000 annually. Company matching contributions
were approximately $2.1 million, $2.0 million and $1.6 million for the years ended December 31, 2015, 2014 and 2013, respectively.
18. SEGMENT DATA
The Company operates principally in two business segments: site leasing and site development. The Company’s site leasing
business includes two reportable segments, domestic site leasing and international site leasing. The Company’s 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 and sublease businesses. The site development segment includes
the results of both consulting and construction related activities. The Company’s Chief Operating Decision Maker utilizes segment
operating profit and operating income as his two measures of segment profit in assessing performance and allocating resources at the
reportable segment level.
F-36
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:
For the year ended December 31, 2015
Revenues
Cost of revenues (2)
Operating profit
Selling, general, and administrative
Acquisition related adjustments and expenses
Asset impairment and decommission costs
Depreciation, amortization and accretion
Operating income (loss)
Other expense (principally interest expense
and other expense)
Loss before provision for income taxes
Cash capital expenditures (3)
For the year ended December 31, 2014
Revenues
Cost of revenues (2)
Operating profit
Selling, general, and administrative
Acquisition related adjustments and expenses
Asset impairment and decommission costs
Depreciation, amortization and accretion
Operating income (loss)
Other expense (principally interest expense
and other expense)
Loss before provision for income taxes
Cash capital expenditures (3)
For the year ended December 31, 2013
Revenues
Cost of revenues (2)
Operating profit
Selling, general, and administrative
Acquisition related adjustments and expenses
Asset impairment and decommission costs
Depreciation, amortization and accretion
Operating income (loss)
Other expense (principally interest expense
and other expense)
Loss before provision for income taxes
Cash capital expenditures (3)
Domestic Site
Int'l Site
Site
Identified by
Leasing
Leasing
Development
Segment
Total
Not
$
1,236,758 $
252,493
984,265
67,413
9,975
93,977
534,436
278,464
(in thousands)
243,876 $
72,162
171,714
16,196
1,889
806
118,886
33,937
157,840 $
119,744
38,096
12,247
—
—
3,662
22,187
— $
—
—
19,095
—
—
3,037
(22,132)
(479,051)
709,337
94,693
3,495
13,339
1,638,474
444,399
1,194,075
114,951
11,864
94,783
660,021
312,456
(479,051)
(166,595)
820,864
$
1,157,293 $
202,909 $
166,794 $
— $
1,526,996
247,237
910,056
67,611
3,351
21,538
515,150
302,406
54,076
148,833
16,762
4,447
2,263
104,447
20,914
127,172
39,622
9,074
—
—
2,453
28,095
—
—
9,870
—
—
5,022
(14,892)
(352,183)
547,774
1,221,786
3,851
24,352
428,485
1,098,511
103,317
7,798
23,801
627,072
336,523
(352,183)
(15,660)
1,797,763
$
1,048,756 $
84,257 $
171,853 $
— $
1,304,866
242,839
805,917
59,320
6,525
26,478
484,053
229,541
27,933
56,324
10,065
12,673
2,482
44,973
(13,869)
137,481
34,372
7,760
—
—
2,280
24,332
—
—
8,331
—
—
2,028
(10,359)
(286,863)
261,775
578,938
6,693
105
408,253
896,613
85,476
19,198
28,960
533,334
229,645
(286,863)
(57,218)
847,511
F-37
Domestic Site
Int'l Site
Site
Leasing
Leasing
Development
(in thousands)
Not
Identified by
Segment (1)
Total
Assets
As of December 31, 2015
As of December 31, 2014
$
$
5,639,495 $
5,554,753 $
1,564,496 $
1,989,571 $
56,631 $
78,633 $
142,593 $
218,168 $
7,403,215
7,841,125
(1) Assets not identified by segment consist primarily of general corporate assets.
(2) Excludes depreciation, amortization, and accretion.
(3)
Includes cash paid for capital expenditures and acquisitions and vehicle capital lease additions.
19. QUARTERLY FINANCIAL DATA (unaudited)
Quarter Ended
December 31,
September 30,
June 30,
March 31,
2015
2015
2015
2015
Revenues
Operating income
Depreciation, accretion, and amortization
Loss from extinguishment of debt, net
Net income (loss)
Net income (loss) per common share - basic
Net income (loss) per common share - diluted
$
$
(in thousands, except per share amounts)
410,704 $
98,163
(162,377)
—
28,305
410,735 $
43,083
(164,330)
—
(155,946)
406,941 $
82,129
(161,461)
(783)
31,019
410,094
89,081
(171,853)
—
(79,034)
0.25 $
0.24
(1.23) $
(1.23)
0.22 $
0.22
(0.61)
(0.61)
Quarter Ended
December 31,
September 30,
June 30,
March 31,
2014
2014
2014
2014
Revenues
Operating income
Depreciation, accretion, and amortization
Loss from extinguishment of debt, net
Net income (loss)
Net income (loss) per common share - basic
Net income (loss) per common share - diluted
$
$
(in thousands, except per share amounts)
383,420 $
83,317
(161,005)
(8,236)
(9,467)
393,293 $
89,484
(159,410)
(14,893)
(16,624)
404,734 $
96,590
(162,214)
(1,124)
388
345,549
67,132
(144,443)
(1,951)
1,408
0.00 $
0.00
(0.13) $
(0.13)
(0.07) $
(0.07)
0.01
0.01
Basic and diluted net loss per share is computed by dividing net income by the weighted average number of shares for the
period. Potentially dilutive instruments 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-38
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 and Crown Castle International Corporation (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
$350
$300
$250
$200
$150
$100
$50
s
r
a
l
l
o
D
n
I
$0
12/31/10
12/31/11
12/31/12
12/31/13
12/31/14
12/31/15
Company Name / Index
SBA Communications Corporation
Nasdaq Composite Index
Peer Group
Base Period
12/31/10
$100.00
$100.00
$100.00
2011
$104.93
$99.17
$111.17
INDEXED RETURNS
Years Ending
2013
$219.44
$163.21
$162.74
2012
$173.38
$116.48
$157.17
2014
$270.54
$187.27
$193.27
2015
$256.64
$200.31
$205.34
Reflects $100 invested on December 31, 2010 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.
Required Disclosures Non-GAAP Financial Measures in Accordance with Regulation G
SBA Communications Corporation (“SBA” or “we”) often makes disclosures of non-GAAP financial measures, such as (i)
Tower Cash Flow and Tower Cash Flow Margin; (ii) Net Debt, Net Secured Debt, Leverage Ratio, and Secured Leverage Ratio
(collectively, our “Non-GAAP Debt Measures”); and (iii) Funds from Operations (“FFO”), Adjusted Funds from Operations
(“AFFO”), and AFFO per share. We also provide certain financial metrics after eliminating the impact of changes in foreign currency
exchange rates (collectively, our “Constant Currency Measures”). Following is a reconciliation of these non-GAAP financial measures
to their most comparable GAAP measures and the other information required by Regulation G. An additional non-GAAP financial
measure, Adjusted EBITDA, which is included in this annual report, is discussed and included in our Form 10-K which accompanies
this annual report.
We believe that Tower Cash Flow and Tower Cash Flow Margin are indicators of the performance of our site leasing
operations. In addition, Tower Cash Flow is a component of the calculations used by our lenders to determine compliance with certain
covenants under our debt instruments.
We believe that Annualized Adjusted EBITDA and Adjusted EBITDA Margin are indicators of the profitability and financial
performance of our core business.
We believe that our Non-GAAP Debt Measures provide investors a more complete understanding of our net debt and leverage
position as they include the full principal amount of our debt which will be due at maturity, and they are used by our lenders to
determine compliance with certain covenants under our debt instruments.
We believe that FFO, AFFO and AFFO per share, which are also being used by American Tower Corporation and Crown Castle
International Corporation (our two public company peers in the tower industry), provide investors useful indicators of the financial
performance of our core business and permit investors an additional tool to evaluate the performance of our business against those of
our two principal competitors. FFO, AFFO and AFFO per share are not necessarily indicative of the operating results that would have
been achieved had we converted to a REIT. In addition, our FFO, AFFO and AFFO per share may not be comparable to those reported
in accordance with National Association of Real Estate Investment Trusts or by the other communication site companies as the
calculation of these non-GAAP measures requires us to estimate the impact had we converted to a REIT, including estimates of the tax
provision adjustment to reflect our estimate of our cash taxes had we been a REIT.
We believe that our Constant Currency Measures provide management and investors the ability to evaluate the performance of
the business without the impact of foreign exchange fluctuations.
These non-GAAP financial measures are not intended to be an alternative to any of the financial measures provided in our
results of operations or our balance sheet as determined in accordance with GAAP.
We also provide organic cash leasing revenue, an operational metric, which compares the results of towers owned in the prior-
year period in the current period, excluding non-cash straight-line site leasing revenue, growth from acquisitions, new tower builds,
and the impacts of certain non-standard tower leasing revenue items, such as pass-through expenses grossed up into leasing revenue,
amortization of augmentation reimbursements and our managed and non-macro business.
Tower Cash Flow and Tower Cash Flow Margin
The table below sets forth the reconciliation of consolidated Tower Cash Flow and Tower Cash Flow Margin to their most
comparable GAAP measurement.
Site leasing revenue
Non-cash straight-line leasing revenue
Cash site leasing revenue
Site leasing cost of revenues (excluding depreciation, accretion, and amortization)
Non-cash straight-line ground lease expense
Tower Cash Flow
Tower Cash Flow Margin
$
$
For the year
ended December 31,
2015
2014
($ in thousands)
1,480,634 $
(49,064)
1,431,570
(324,655)
34,204
1,141,119 $
79.7%
1,360,202
(56,867)
1,303,335
(301,313)
36,271
1,038,293
79.7%
The table below sets forth the reconciliation of Domestic Tower Cash Flow and Domestic Tower Cash Flow Margin to
their most comparable GAAP measurement.
Domestic site leasing revenue
Domestic non-cash straight-line leasing revenue
Domestic cash site leasing revenue
Domestic site leasing cost of revenues (excluding depreciation, accretion, and
amortization)
Domestic non-cash straight-line ground lease expense
Domestic Tower Cash Flow
Domestic Tower Cash Flow Margin
For the year
ended December 31,
2015
2014
($ in thousands)
1,236,758 $
(26,073)
1,210,685
1,157,293
(32,812)
1,124,481
(252,493)
30,553
988,745 $
81.7%
(247,237)
31,983
909,227
80.9%
$
$
Adjusted EBITDA Margin
The table below sets forth the reconciliation of Adjusted EBITDA Margin to its most comparable GAAP measurement.
Total revenues
Non-cash straight-line leasing revenue
Total revenues minus non-cash straight-line leasing revenue
Adjusted EBITDA
Adjusted EBITDA Margin
For the year
ended December 31,
2015
2014
($ in thousands)
$
$
$
1,638,474 $
(49,064)
1,589,410
1,094,777 $
68.9%
1,526,996
(56,867)
1,470,129
998,754
67.9%
Funds from Operations (“FFO”), Adjusted Funds from Operations (“AFFO”) and AFFO per share
The table below sets forth the reconciliations of FFO, AFFO and AFFO per share to their most comparable GAAP
measurement.
Net loss
Adjusted tax provision(a)
Real estate related depreciation, amortization and accretion
FFO
Adjustments to FFO:
Non-cash straight-line leasing revenue
Non-cash straight-line ground lease expense
Non-cash compensation
Non-real estate related depreciation, amortization and accretion
Amortization of deferred financing costs and debt discounts
Interest deemed paid upon conversion of convertible notes
Loss from extinguishment of debt, net
Other expense (income)
Acquisition related adjustments and expenses
Asset impairment and decommission costs
Non-discretionary cash capital expenditures
AFFO
Weighted average number of common shares(b)
AFFO per share
For the year
ended December 31,
2015
2014
($ in thousands, except per share amounts)
(24,295)
2,705
621,208
599,617
(175,656) $
2,211
653,990
480,545 $
$
$
(49,064)
34,204
28,747
6,031
20,659
—
783
139,137
11,863
94,783
(33,600)
734,088 $
128,914
5.69 $
(56,867)
36,271
22,671
5,862
44,684
7,537
26,204
(10,628)
7,798
23,801
(27,243)
679,709
130,061
5.23
$
$
(a) Adjusts the income tax provision during the period, to reflect our estimate of cash income taxes (primarily foreign taxes) that
would have been payable had we been a REIT.
(b) For purposes of the AFFO per share calculation, the basic weighted average number of common shares has been adjusted to include
the dilutive effect of stock options and restricted stock units.
Net Debt, Net Secured Debt, Leverage Ratio, and Secured Leverage Ratio
The table below sets forth the reconciliations of the Non-GAAP Debt Measures to their most comparable GAAP measurement.
2010-2C Tower Securities
2012-1C Tower Securities
2013-1C Tower Securities
2013-2C Tower Securities
2013-1D Tower Securities
2014-1C Tower Securities
2014-2C Tower Securities
2015-1C Tower Securities
2014 Term Loan B (carrying value of $1,474,641)
2015 Term Loan B (carrying value of $492,858)
Total secured debt
5.625% 2019 Senior Notes
5.75% 2020 Senior Notes
4.875% 2022 Senior Notes (carrying value of $744,806)
Total unsecured debt
Total debt
Net Debt and Leverage Ratio
Total debt
Less: Cash and cash equivalents, short-term restricted cash and short-term investments
Net debt
Divided by: Annualized Adjusted EBITDA(1)
Leverage Ratio
Net Secured Debt and Secured Leverage Ratio
Total secured debt
Less: Cash and cash equivalents, short-term restricted and short-term investments
Net Secured Debt
Divided by: Annualized Adjusted EBITDA(1)
Secured Leverage Ratio
For the year ended
December 31, 2015
($ in thousands)
550,000
610,000
425,000
575,000
330,000
920,000
620,000
500,000
1,477,500
497,500
6,505,000
500,000
800,000
750,000
2,050,000
8,555,000
8,555,000
(144,098 )
8,410,902
1,097,292
7.7x
6,505,000
(144,098 )
6,360,902
1,097,292
5.8x
$
$
$
$
$
$
$
$
(1) Annualized Adjusted EBITDA is calculated as Adjusted EBITDA for the most recent quarter multiplied by four.
Constant Currency Measures
We eliminate the impact of changes in foreign currency exchange rates for each of the following financial metrics (collectively,
our “Constant Currency Measures”) by dividing the current period’s financial results by the average monthly exchange rates of the
prior year period. The table below provides the reconciliation of the reported growth rate year-over-year, of each of the following
measures to the growth rate, after eliminating the impact of changes in foreign currency exchange rates to such measure: (1) total site
leasing revenue, (2) total Tower Cash Flow, (3) Adjusted EBITDA and (4) AFFO and AFFO Per Share.
Total site leasing revenue
Tower Cash Flow
Adjusted EBITDA
AFFO
AFFO Per Share
2015 year over year growth
rate
Foreign currency impact
8.9%
9.9%
9.6%
8.0%
9.0%
(5.1%)
(3.9%)
(3.8%)
(5.8%)
(5.8%)
Growth excluding foreign
currency impact
14.0%
13.8%
13.4%
13.8%
14.8%
Special Note Regarding Forward-Looking Statements
This annual report contains forward-looking statements that concern expectations, beliefs, projections, strategies, anticipated
events or trends regarding (i) continued growth in wireless infrastructure and the drivers of such growth, (ii) future portfolio and
organic growth, both domestically and internationally, (iii) the growth and development of the wireless industry in our international
markets, (iv) lease amendment activity through network deployments by existing customers, including the AWS-3, WCS and 2.5 Ghz
deployments in the U.S., as well as the future availability of additional spectrum, (v) the infrastructure needed to meet future growth in
demand and our positioning to participate in such growth, (vi) our capital allocation strategy and investment criteria with respect to
portfolio growth and stock repurchases and their impact on shareholder value creation, (vii) our balance sheet strategy and the
availability of future financing, and (viii) our growth and financial results for 2016. These forward-looking statements are qualified in
their entirety by cautionary statements set forth under “Special Note Regarding Forward-Looking Statements” and the risk factor
disclosures contained in our Form 10-K filed with the Securities and Exchange Commission on February 26, 2016 and included in this
annual report.