UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

 

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended September 30, 2005

March 31, 2006

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 65-0716501
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)

5900 Broken Sound Parkway NW
Boca Raton, Florida
 33487
(Address of principal executive offices) (Zip code)

(561) 995-7670

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrantRegistrant (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 twelve (12)12 months (or for such shorter period that the registrantRegistrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yesx No¨

Indicate by check mark whether the registrantRegistrant is a large accelerated filer, an accelerated filer, (as definedor a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act).Act.

 

Large accelerated filer xAccelerated filer¨Non-Accelerated filer¨

Yesx    No¨

Indicate by check mark whether the registrant is a shell Companycompany (as defined in Rule 12b-2 of the Exchange Act).

Yes¨ Nox

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 85,316,971103,017,031 shares of Class A common stock as of NovemberMay 8, 2005.2006.

 



SBA COMMUNICATIONS CORPORATION

INDEX

 

     Page

PART I - FINANCIAL INFORMATION

  

Item 1.

 

Unaudited Financial Statements

  

Consolidated Balance Sheets as of September 30, 2005March 31, 2006 and December 31, 20042005

  3

Consolidated Statements of Operations for the three and nine months ended September 30,March 31, 2006 and 2005 and 2004

  4

Consolidated Statement of Shareholders’ DeficitEquity for the ninethree months ended September 30, 2005March 31, 2006

  5

Consolidated Statements of Cash Flows for the ninethree months ended September 30,March 31, 2006 and 2005 and 2004

  6

Condensed Notes to Consolidated Financial Statements

  87

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

  2119

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

  33

Item 4.

 

Controls and Procedures

  3638

PART II - OTHER INFORMATION

  

Item 5.1A.

 

Other InformationRisk Factors

  3738

Item 6.

 

Exhibits

  3742

SIGNATURES

  3843

CERTIFICATIONS

  

PART I – FINANCIAL INFORMATION

ITEM 1: UNAUDITED FINANCIAL STATEMENTS

SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except par values)

 

   September 30,
2005


  December 31,
2004


 
   (unaudited)    
ASSETS         

Current assets:

         

Cash and cash equivalents

  $23,477  $69,627 

Restricted cash

   1,554   2,017 

Accounts receivable, net of allowances of $1,287 and $1,731 in 2005 and 2004, respectively

   21,076   21,125 

Costs and estimated earnings in excess of billings on uncompleted contracts

   20,169   19,066 

Prepaid and other current expenses

   12,693   4,327 

Assets held for sale

   —     10 
   


 


Total current assets

   78,969   116,172 

Property and equipment, net

   724,831   745,831 

Deferred financing fees, net

   15,707   19,421 

Other assets

   40,440   34,455 

Intangible assets, net

   25,982   1,365 
   


 


Total assets

  $885,929  $917,244 
   


 


LIABILITIES AND SHAREHOLDERS’ DEFICIT         

Current liabilities:

         

Accounts payable

  $15,097  $15,204 

Accrued expenses

   14,114   14,997 

Deferred revenue

   12,275   10,810 

Interest payable

   7,819   3,729 

Long term debt, current portion

   3,250   3,250 

Billings in excess of costs and estimated earnings on uncompleted contracts

   431   1,251 

Other current liabilities

   1,398   1,762 
   


 


Total current liabilities

   54,384   51,003 
   


 


Long Term Liabilities:

         

Long-term debt

   844,011   924,456 

Deferred revenue

   263   384 

Other long-term liabilities

   33,940   30,072 
   


 


Total long term liabilities

   878,214   954,912 
   


 


Commitments and contingencies

         

Shareholders’ deficit :

         

Preferred stock - $.01 par value, 30,000 shares authorized, none issued or outstanding

   —     —   

Common Stock - Class A par value $.01, 200,000 shares authorized, 75,228 and 64,903 shares issued and outstanding at September 30, 2005 and December 31, 2004, respectively

   752   649 

Additional paid-in capital

   835,865   740,037 

Accumulated deficit

   (891,769)  (829,357)

Accumulated other comprehensive income

   8,483   —   
   


 


Total shareholders’ deficit

   (46,669)  (88,671)
   


 


Total liabilities and shareholders’ deficit

  $885,929  $917,244 
   


 


   March 31,
2006
  December 31,
2005
 
   (unaudited)    
ASSETS   

Current assets:

   

Cash and cash equivalents

  $59,874  $45,934 

Short term investments

   —     19,777 

Restricted cash

   11,290   19,512 

Accounts receivable, net of allowances of $1,154 and $1,136 in 2006 and 2005, respectively

   18,565   17,533 

Costs and estimated earnings in excess of billings on uncompleted contracts

   22,777   25,184 

Prepaid and other current expenses

   6,159   4,248 
         

Total current assets

   118,665   132,188 

Property and equipment, net

   732,459   728,333 

Intangible assets, net

   37,585   31,491 

Deferred financing fees, net

   19,063   19,931 

Other assets

   42,350   40,593 
         

Total assets

  $950,122  $952,536 
         
LIABILITIES AND SHAREHOLDERS’ EQUITY   

Current liabilities:

   

Accounts payable

  $13,502  $17,283 

Accrued expenses

   13,602   15,544 

Deferred revenue

   13,217   11,838 

Interest payable

   5,613   3,880 

Billings in excess of costs and estimated earnings on uncompleted contracts

   945   1,391 

Other current liabilities

   1,589   2,207 
         

Total current liabilities

   48,468   52,143 
         

Long-term liabilities:

   

Long-term debt

   789,657   784,392 

Deferred revenue

   272   302 

Other long-term liabilities

   35,634   34,268 
         

Total long-term liabilities

   825,563   818,962 
         

Commitments and contingencies

   

Shareholders’ equity:

   

Preferred stock - $.01 par value, 30,000 shares authorized, none issued or outstanding

   —     —   

Common Stock - Class A par value $.01, 200,000 shares authorized, 85,819 and 85,615 shares issued and outstanding at March 31, 2006 and December 31, 2005, respectively

   858   856 

Additional paid-in capital

   992,660   990,181 

Accumulated deficit

   (933,271)  (924,066)

Accumulated other comprehensive income

   15,844   14,460 
         

Total shareholders’ equity

   76,091   81,431 
         

Total liabilities and shareholders’ equity

  $950,122  $952,536 
         

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

SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited) (in thousands, except per share amounts)

 

   For the three months
ended September 30,


  For the nine months
ended September 30,


 
   2005

  2004
As restated


  2005

  2004
As restated


 

Revenues:

                 

Site leasing

  $41,104  $36,965  $118,380  $106,352 

Site development

   24,917   21,778   69,192   59,597 
   


 


 


 


Total revenues

   66,021   58,743   187,572   165,949 
   


 


 


 


Operating expenses:

                 

Cost of revenues (exclusive of depreciation, accretion and amortization shown below):

                 

Cost of site leasing

   11,694   11,871   35,431   35,556 

Cost of site development

   23,311   20,169   65,547   55,740 

Selling, general and administrative

   6,725   7,374   21,037   21,652 

Restructuring and other charges

   31   3   50   223 

Asset impairment charges

   (16)  88   238   1,620 

Depreciation, accretion and amortization

   21,673   22,641   64,960   68,102 
   


 


 


 


Total operating expenses

   63,418   62,146   187,263   182,893 
   


 


 


 


Operating income (loss) from continuing operations

   2,603   (3,403)  309   (16,944)
   


 


 


 


Other income (expense):

                 

Interest income

   244   88   988   285 

Interest expense

   (10,230)  (11,270)  (30,661)  (36,816)

Non-cash interest expense

   (6,028)  (7,022)  (20,771)  (21,035)

Amortization of debt issuance fees

   (701)  (900)  (2,045)  (2,611)

Write-off of deferred financing fees and extinguishment of debt

   —     (2,092)  (9,730)  (24,764)

Other

   19   3   475   74 
   


 


 


 


Total other expense

   (16,696)  (21,193)  (61,744)  (84,867)
   


 


 


 


Loss from continuing operations before provision for income taxes

   (14,093)  (24,596)  (61,435)  (101,811)

Provision for income taxes

   (354)  (234)  (931)  (696)
   


 


 


 


Loss from continuing operations

   (14,447)  (24,830)  (62,366)  (102,507)

Gain (loss) from discontinued operations, net of income taxes

   3   (2,542)  (46)  (2,937)
   


 


 


 


Net loss

  $(14,444) $(27,372) $(62,412) $(105,444)
   


 


 


 


Basic and diluted loss per common share amounts:

                 

Loss from continuing operations

  $(0.19) $(0.43) $(0.89) $(1.81)

Loss from discontinued operations

   —     (0.04)  —     (0.05)
   


 


 


 


Net loss per common share

  $(0.19) $(0.47) $(0.89) $(1.86)
   


 


 


 


Weighted average number of common shares

   74,487   57,776   70,060   56,673 
   


 


 


 


   For the three months
ended March 31,
 
   2006  2005 

Revenues:

   

Site leasing

  $45,029  $38,342 

Site development

   23,775   19,962 
         

Total revenues

   68,804   58,304 
         

Operating expenses:

   

Cost of revenues (exclusive of depreciation, accretion and amortization shown below):

   

Site leasing

   12,331   12,045 

Site development

   21,932   19,249 

Selling, general and administrative (including $1,024 and $115 of non-cash compensation for the three months ended March 31, 2006 and March 31, 2005, respectively)

   8,703   7,200 

Asset impairment and other charges

   —     231 

Depreciation, accretion and amortization

   21,008   21,643 
         

Total operating expenses

   63,974   60,368 
         

Operating income (loss) from continuing operations

   4,830   (2,064)
         

Other income (expense):

   

Interest income

   853   247 

Interest expense

   (8,349)  (10,004)

Non-cash interest expense

   (5,265)  (7,342)

Amortization of deferred financing fees

   (876)  (798)

Loss from deferred financing fees and extinguishment of debt

   —     (1,486)

Other income

   —     150 
         

Total other expense

   (13,637)  (19,233)
         

Loss from continuing operations before provision for income taxes

   (8,807)  (21,297)

Provision for income taxes

   (398)  (246)
         

Loss from continuing operations

   (9,205)  (21,543)

Loss from discontinued operations, net of income taxes

   —     (170)
         

Net loss

  $(9,205) $(21,713)
         

Basic and diluted loss per common share amounts:

   

Loss from continuing operations

  $(0.11) $(0.33)

Loss from discontinued operations

   —     —   
         

Net loss per common share

  $(0.11) $(0.33)
         

Weighted average number of common shares

   85,694   65,260 
         

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

SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ DEFICITEQUITY

FOR THE NINETHREE MONTHS ENDED SEPTEMBER 30, 2005MARCH 31, 2006

(unaudited)

(in thousands)

 

   Common Stock

  

Additional

Paid-In

Capital


  

Accumulated
Other

Comprehensive

Income


  

Accumulated

Deficit


  

Total


 
   Class A

       
   Shares

  Amount

       

BALANCE, December 31, 2004

  64,903  $649  $740,037  $—    $(829,357) $(88,671)

Common stock issued in connection with acquisitions and earn outs

  1,585   16   17,149   —     —     17,165 

Non-cash compensation

  —     —     323   —     —     323 

Common stock issued in connection with public offering

  8,000   80   75,297   —     —     75,377 

Common stock issued in connection with stock option plans

  740   7   3,059   —     —     3,066 

Change in value in derivative financial instrument

              8,483       8,483 

Net loss

  —     —     —     —     (62,412)  (62,412)
   
  

  

  

  


 


BALANCE, September 30, 2005

  75,228  $752  $835,865  $8,483  $(891,769) $(46,669)
   
  

  

  

  


 


   Common Stock
Class A
  

Additional
Paid-In

Capital

  

Accumulated
Other
Comprehensive

Income

  

Accumulated

Deficit

  Total 
   Shares  Amount     

BALANCE, December 31, 2005

  85,615  $856  $990,181  $14,460  $(924,066) $81,431 

Non-cash compensation

  —     —     1,155   —     —     1,155 

Common stock issued in connection with stock option plans

  204   2   1,368   —     —     1,370 

Fees relating to issuance of common stock

  —     —     (44)  —     —     (44)

Amortization of deferred gain from settlement of derivative financial instrument

  —     —     —     (662)  —     (662)

Change in value in derivative financial instrument

  —     —     —     2,046   —     2,046 

Net loss

  —     —     —     —     (9,205)  (9,205)
                        

BALANCE, March 31, 2006

  85,819  $858  $992,660  $15,844  $(933,271) $76,091 
                        

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

SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited) (in thousands)

 

   For the nine months
ended September 30,


 
   2005

  2004
As restated


 

CASH FLOWS FROM OPERATING ACTIVITIES:

         

Net loss

  $(62,412) $(105,444)

Adjustments to reconcile net loss to net cash provided by operating activities:

         

Depreciation, accretion, and amortization

   64,960   68,102 

Non-cash restructuring and other charges

   50   223 

Asset impairment charges

   238   1,620 

Non-cash items reported in discontinued operations (primarily depreciation, asset impairment charges, and gain/loss on sale of assets)

   (364)  (66)

Non-cash compensation expense

   323   356 

(Credit) provision for doubtful accounts

   (300)  493 

Amortization of original issue discount and debt issuance fees

   22,816   23,092 

Interest converted to term loan

   —     554 

Loss from write-off of deferred financing fees and extinguishment of debt

   9,730   24,764 

Amortization of deferred gain of derivative

   (33)  (549)

Changes in operating assets and liabilities:

         

Short term investments

   —     15,200 

Accounts receivable

   349   3,980 

Costs and estimated earnings in excess of billings on uncompleted contracts

   (1,104)  (6,550)

Prepaid and other current assets

   1,329   (572)

Other assets

   (5,637)  (1,657)

Accounts payable

   (316)  1,286 

Accrued expenses

   (462)  (1,401)

Deferred revenue

   317   1,613 

Interest payable

   4,090   (14,782)

Other liabilities

   3,388   4,489 

Billings in excess of costs and estimated earnings on uncompleted contracts

   (819)  (690)
   


 


Net cash provided by operating activities

   36,143   14,061 
   


 


CASH FLOWS FROM INVESTING ACTIVITIES:

         

Capital expenditures

   (13,407)  (4,610)

Acquisitions and related earn-outs

   (38,815)  (880)

Proceeds from sale of fixed assets

   1,139   1,102 

Receipt of restricted cash

   116   4,349 
   


 


Net cash used in investing activities

   (50,967)  (39)
   


 


CASH FLOWS FROM FINANCING ACTIVITIES:

         

Proceeds from equity offering, net of fees paid

   75,377   —   

Proceeds from employee stock purchase/option plans

   3,066   107 

Borrowings under senior credit facility, net of financing fees

   26,384   334,046 

Repayment of 9 3/4% senior discount notes

   (75,644)  —   

Repayment of senior credit facility and notes payable

   (7,437)  (157,589)

Repurchase of 10 1/4% senior notes

   (52,546)  (107,134)

Repurchase of 12% senior discount notes

   —     (70,794)

Bank overdraft

   (526)  —   
   


 


Net cash used in financing activities

   (31,326)  (1,364)
   


 


NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

   (46,150)  12,658 

CASH AND CASH EQUIVALENTS:

         

Beginning of period

   69,627   8,338 
   


 


End of period

  $23,477  $20,996 
   


 


(continued)

SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited) (in thousands)

   For the nine months
ended September 30,


   2005

  2004
As restated


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

        

Cash paid during the period for:

        

Interest

  $26,618  $51,840
   


 

Income taxes

  $1,032  $1,668
   


 

Assets purchased in connection with acquisitions

  $52,543  $—  
   


 

Liabilities assumed in connection with acquisitions

  $(1,081) $—  
   


 

Cash paid in connection with acquisitions

  $(34,622) $—  
   


 

SUPPLEMENTAL CASH FLOW INFORMATION OF NON-CASH ACTIVITIES:

        

Class A common stock issued in exchange for 10 1/4% senior notes and accrued interest

  $—    $23,365
   


 

Change in fair value of interest rate swap recorded in accumulated other comprehensive income

  $8,483  $—  
   


 

Common stock issued in connection with acquisitions

  $(16,840) $—  
   


 

   For the three months
ended March 31,
 
   2006  2005 

CASH FLOWS FROM OPERATING ACTIVITIES:

   

Net loss

  $(9,205) $(21,713)

Adjustments to reconcile net loss to net cash provided by operating activities:

   

Depreciation, accretion, and amortization

   21,008   21,643 

Accretion of interest income on short-term investments

   (123)  —   

Asset impairment and other charges

   —     231 

Loss/(gain) on sale of assets

   99   (64)

Non-cash compensation expense

   1,082   115 

Provision (credit) for doubtful accounts

   100   (300)

Amortization of original issue discount and deferred financing fees

   6,141   8,140 

Loss from write-off of deferred financing fees and extinguishment of debt

   —     1,486 

Amortization of deferred gain of derivative

   (662)  (33)

Changes in operating assets and liabilities:

   

Accounts receivable

   (1,132)  8,132 

Costs and estimated earnings in excess of billings on uncompleted contracts

   2,407   1,272 

Prepaid and other current assets

   206   145 

Other assets

   (1,145)  (985)

Accounts payable

   (4,321)  (3,944)

Accrued expenses

   (2,110)  (1,016)

Deferred revenue

   1,079   (991)

Interest payable

   1,733   3,372 

Other liabilities

   501   1,225 

Billings in excess of costs and estimated earnings on uncompleted contracts

   (446)  (717)
         

Net cash provided by operating activities

   15,212   15,998 
         

CASH FLOWS FROM INVESTING ACTIVITIES:

   

Maturity of short term investments

   19,900   —   

Capital expenditures

   (5,625)  (3,130)

Acquisitions and related earn-outs

   (24,249)  (10,206)

Proceeds from sale of fixed assets

   79   570 

Payment of restricted cash relating to tower removal obligations

   (630)  (234)
         

Net cash used in investing activities

   (10,525)  (13,000)
         

CASH FLOWS FROM FINANCING ACTIVITIES:

   

Fees paid relating to equity offering

   (44)  —   

Release of restricted cash relating to CMBS-1 Trust

   8,240   —   

Deferred financing fees paid relating to CMBS-1 Certificates

   (313)  —   

Proceeds from employee stock purchase/option plans

   1,370   278 

Repayment of senior credit facility

   —     (813)

Redemption of 10 1/4% senior notes

   —     (52,547)

Repayment of bank overdraft

   —     (526)
         

Net cash provided by (used in) financing activities

   9,253   (53,608)
         

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

   13,940   (50,610)

CASH AND CASH EQUIVALENTS:

   

Beginning of period

   45,934   69,627 
         

End of period

  $59,874  $19,017 
         

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

   

Cash paid during the period for:

   

Interest

  $7,548  $6,689 
         

Income taxes

  $627  $475 
         

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

SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

1.BASIS OF PRESENTATION

The accompanying consolidated financial statements should be read in conjunction with the 20042005 Form 10-K for SBA Communications Corporation. These financial statements have been prepared in accordance with instructions to Form 10-Q and Article 10 of Regulation S-X and, therefore, omit or condense certain footnotes and other information normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States. In the opinion of the Company’s management, all adjustments (consisting of normal recurring accruals) considered necessary for fair financial statement presentation have been made. Certain amounts in the prior year’s consolidated financial statements have been reclassified to conform to the current year’s presentation. The results of operations for an interim period may not give a true indication of the results for the year.

 

As discussed in further detail in Note 2, the Company had discontinued operations relating to the sale of tower assets and western site development services business units. These towers and business units have been accounted for as discontinued operations for all periods presented.

2.DISCONTINUED OPERATIONS

In March 2003, certain of the Company’s subsidiaries entered into a definitive agreement (the “Western tower sale”) to sell up to an aggregate of 801 towers, which represented substantially all of the Company’s towers in the Western two-thirds of the United States. In addition, 33 other sites were identified to be held for sale. As of September 30, 2005, the Company has sold all 834 of these towers and no assets or liabilities are classified as held for sale. At December 31, 2004 all of the assets held for sale consisted of property and equipment related to the site leasing segment.

The following is a summary of the operating results of the site leasing segment discontinued operations:

   For the three months
ended September 30,


  For the nine months
ended September 30,


 
   2005

  2004

  2005

  2004

 
   (in thousands)       

Revenues

  $—    $20  $16  $150 
   


 


 


 


Loss from operations, net of income taxes

  $(28) $(62) $(44) $(227)

(Loss) gain on disposal of discontinued operations, net of income taxes

   (14)  (2,011)  117   (1,612)
   


 


 


 


(Loss) gain from discontinued operations, net of income taxes

  $(42) $(2,073) $73  $(1,839)
   


 


 


 


In May 2004, the Company’s Board of Directors approved a plan of disposition related to site development services operations (including both the site development consulting and site development construction segments) in the Western portion of the United States (“Western site development services”).

The following is a summary of the operating results of the discontinued operations relating to the Western site development services:

   For the three months
ended September 30,


  For the nine months
ended September 30,


 
   2005

  2004

  2005

  2004

 

Revenues

  $—    $1,990  $51  $13,782 
   

  


 


 


Gain (loss) from operations, net of income taxes

  $45  $(360) $(119) $(570)

Loss on disposal of discontinued operations, net of income taxes

   —     (109)  —     (528)
   

  


 


 


Gain (loss) from discontinued operations, net of income taxes

  $45  $(469) $(119) $(1,098)
   

  


 


 


3.RESTATEMENT

On February 7, 2005, the Office of the Chief Accountant of the Securities and Exchange Commission (“SEC”) issued a letter to the American Institute of Certified Public Accountants expressing its views regarding certain operating lease accounting issues and their application under generally accepted accounting principles in the United States of America (“GAAP”). In light of this letter, the Company’s management initiated a review of its accounting practices and determined that it would adjust its method of accounting for certain types of ground leases underlying its tower sites, on the basis that while its accounting practices were in line with industry practice, they were not in accordance with GAAP. As a result, the Company restated its consolidated financial statements for the fiscal years ended December 31, 2003 and 2002, as well as the first three quarters of fiscal year 2004 (the “Ground Lease Restatement”).

The Company had previously defined the minimum lease term of its ground leases underlying its tower sites as the initial term of the leases and had been straight lining all rental payments due to the lessor evenly over this term, which typically is five years in length. Management determined that the appropriate interpretation of the minimum lease term under Statement of Financial Accounting Standards No. 13 (“SFAS 13”), “Accounting for Leases” was equal to the shorter of (i) 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 (ii) the ground lease term, including renewal periods. Each of the Company’s ground leases provides it an unconditional right to renew for all granted renewal terms. If no tenant lease obligations existed at the date of ground lease inception, the initial term of the ground lease is considered the minimum lease term. All rental obligations due to be paid out over the minimum lease term, including fixed escalations, have therefore been straight-lined evenly over the minimum lease term. Additionally, if the minimum lease term ends prior to the originally established depreciable life of the tower (typically 15 years), the Company has shortened the depreciable life of the tower to coincide with the minimum lease term of the ground lease.

The following is a summary of the effects of the Ground Lease Restatement on the consolidated statements of operations for the three months ended September 30, 2004:

   For the three months ended
September 30, 2004


 
   As previously
reported


  Ground Lease
Restatement


  As restated

 
   (in thousands) 

CONSOLIDATED STATEMENT OF OPERATIONS

     

Total revenues

  $58,743  $—    $58,743 

Site leasing cost of revenue

   (10,532)  (1,339)  (11,871)

Site development cost of revenue

   (20,169)  —     (20,169)

Depreciation, accretion, and amortization

   (20,511)  (2,130)  (22,641)

Other operating expenses

   (7,532)  67   (7,465)
   


 


 


Operating loss from continuing operations

   (1)  (3,402)  (3,403)

Total other expense

   (21,193)  —     (21,193)

(Provision) benefit for income taxes

   (278)  44   (234)
   


 


 


Loss from continuing operations

   (21,472)  (3,358)  (24,830)

Loss from discontinued operations, net

   (2,538)  (4)  (2,542)
   


 


 


Net loss

  $(24,010) $(3,362) $(27,372)
   


 


 


Net loss per common share

  $(0.42) $(0.05) $(0.47)
   


 


 


As a result of the adjustments described above, the accompanying results of operations for the three months ended September 30, 2004 have been adjusted to record additional rent expense (included in operating expenses on the statement of operations) of $1.3 million; additional depreciation expense of $2.1 million; and a decrease of provision for income taxes of $0.04 million.

The following is a summary of the effects of the Ground Lease Restatement on the consolidated statements of operations for the nine months ended September 30, 2004:

   For the nine months ended
September 30, 2004


 
   As previously
reported


  Ground Lease
Restatement


  As restated

 
   (in thousands) 

CONSOLIDATED STATEMENT OF OPERATIONS

     

Total revenues

  $165,949  $—    $165,949 

Site leasing cost of revenue

   (31,384)  (4,172)  (35,556)

Site development cost of revenue

   (55,740)  —     (55,740)

Depreciation, accretion, and amortization

   (61,755)  (6,347)  (68,102)

Other operating expenses

   (23,589)  94   (23,495)
   


 


 


Operating loss from continuing operations

   (6,519)  (10,425)  (16,944)

Total other expense

   (84,867)  —     (84,867)

(Provision) benefit for income taxes

   (827)  131   (696)
   


 


 


Loss from continuing operations

   (92,213)  (10,294)  (102,507)

(Loss) gain from discontinued operations, net

   (2,964)  27   (2,937)
   


 


 


Net loss

  $(95,177) $(10,267) $(105,444)
   


 


 


Net loss per common share

  $(1.68) $(0.18) $(1.86)
   


 


 


As a result of the adjustments described above, the accompanying results of operations for the nine months ended September 30, 2004 have been adjusted to record additional rent expense (included in operating expenses on the statement of operations) of $4.2 million; additional depreciation expense of $6.3 million; a decrease of provision for income taxes of $0.1 million; and a decrease in loss from discontinued operations of $0.03 million.

4.CURRENT ACCOUNTING PRONOUNCEMENTS

In May 2005,February 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standard (“SFAS”) No. 155,“Accounting for Certain Hybrid Financial Instruments—an Amendment of FASB Statements No. 133 and 140” (“SFAS No. 155”). SFAS No. 155 allows financial instruments that contain an embedded derivative and that otherwise would require bifurcation to be accounted for as a whole on a fair value basis, at the holders’ election. SFAS No. 155 also clarifies and amends certain other provisions of SFAS No. 133 and SFAS No. 140. This statement is effective for all financial instruments acquired or issued in fiscal years beginning after September 15, 2006. We are currently evaluating what, if any, impact the adoption of SFAS No. 155 will have on our consolidated financial condition or results of operations.

In May 2005, the FASB issued SFAS No. 154, “AccountingAccounting Changes and Error Corrections-a replacement of APB Opinion No. 20 and FASB Statement No. 3”3 (“SFAS 154”). This standard replaces APB Opinion No. 20,Accounting Changes, and FASB Statement No. 3,Reporting Accounting Changes in Interim Financial Statements, and changes the requirements for the accounting and reporting of a change in accounting principle. SFAS 154 applies to all voluntary changes in accounting principle and to changes required by an accounting pronouncement in the unusual instance that the pronouncement does not include specific transition provisions. SFAS 154 also requires that a change in depreciation, amortization, or depletion method for long-lived, nonfinancial assets be accounted for as a change in accounting estimate affected by a change in accounting principle. SFAS 154 requires that the change in accounting principle be applied to the balances of assets and liabilities as of the beginning of the earliest period for which retrospective application is practicable and that a corresponding adjustment be made to the opening balance of retained earnings for that period rather than being reported in an income statement. Such a change would require the Company to restate its previously issued financial statements to reflect the change in accounting principle to prior periods presented. SFAS 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. The adoption of SFAS 154 isdid not expected to have a material impact on the Company’s results of operations and financial position.

In March 2005, FASB Interpretation No. 47, “Accounting for Conditional Asset Retirement Obligations (an interpretation of FASB Statement No. 143)” (“FIN 47”) was issued. FIN 47 provides clarification with respect to the timing of liability recognition of legal obligations associated with the retirement of tangible long-lived assets when the timing and/or method of settlement of the obligation are conditional on a future event. FIN 47 is effective no later than the end of fiscal years ending after December 15, 2005 (December 31, 2005 for calendar-year enterprises). The Company is currently evaluating the potential impact of FIN 47.

In December 2004, the Financial Accounting Standards Board (“FASB”) issued a revised SFAS No. 123, Share-Based Payment (“Statement 123R”), which is effective for the Company’s first quarter of fiscal year 2006. Statement 123R requires companies to expense in their consolidated statement of operations the estimated fair value of employee stock options and similar awards. The Company is currently evaluating which application method will be applied once SFAS 123R is adopted. Depending on the model used to calculate stock-based compensation expense in the future, the implementation of certain other requirements of Statement 123R and additional option grants expected to be made in the future, the pro forma disclosure may not be indicative of the stock-based compensation expense that will be recognized in the Company’s future financial statements. The Company is in the process of determining how the new method of valuing stock-based compensation as prescribed in Statement 123R will be applied to valuing stock-based awards granted after the effective date and the impact the recognition of compensation expense related to such awards will have on the Company’s Consolidated Financial Statements.

In December 2004, the FASB issued SFAS No. 153, “Exchanges of Nonmonetary Assets—an Amendment of APB No. 29” (“SFAS 153”). The amendments made by SFAS 153 are based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged. Further, the amendments eliminate the narrow exception for nonmonetary exchanges of similar productive assets and replace it with a broader exception for exchanges of nonmonetary assets that do not have “commercial substance.” This standard was effective for nonmonetary asset exchanges occurring after July 1, 2005. The adoption of this standard did not have a material impact on the Company’s Consolidated Financial Statements.

5.3.RESTRICTED CASH

Restricted cash at September 30, 2005 was $9.8 million. Theconsists of the following:

   March 31,
2006
  December 31,
2005
  

Included on Balance Sheet

CMBS Certificates

  $9,697  $17,937  restricted cash - current asset

Payment and performance bonds

   1,593   1,575  restricted cash - current asset

Surety bonds

   10,904   10,291  Other assets - noncurrent
          

Total restricted cash

  $22,194  $29,803  
          

In connection with issuance of the CMBS Certificates, the Company is required to fund a restricted cash balance includes $8.2 millionamount, which represents the cash held in escrow pursuant to the mortgage loan agreement governing the CMBS Certificates to fund certain reserve accounts for the payment of cash pledged as collateraldebt service costs, ground rents, real estate and personal property taxes, insurance premiums related to secure certain obligationstower sites, trustee and service expenses, and to reserve a portion of certain affiliatesadvance rents from tenants on the 1,714 tower sites. Based on the terms of the Company relatedCMBS Certificates, all rental cash receipts each month are restricted and held by the indenture trustee. The monies held by the indenture trustee are classified as restricted cash on the Company’s Balance Sheet. The monies held by the indenture trustee in excess of required reserve balances are subsequently released to suretySBA Properties on or before the 15th calendar day following month end.

Surety bonds are issued for the benefit of the Company or its affiliates in the ordinary course of business and is includedprimarily relate to tower removal obligations. Payment and performance bonds relate primarily to collateral requirements relating to tower construction currently in other assets inprocess by the Consolidated Balance Sheet. Approximately $1.6 million of the collateral relates to reimbursement obligations with respect to workers’ compensation insurance, which are shorter term in nature and are included in restricted cash and reflected as a current asset.

Company.

6.4.COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS

Costs and estimated earnings on uncompleted contracts consist of the following:

 

  As of
September 30, 2005


 As of
December 31, 2004


   As of
March 31, 2006
 As of
December 31, 2005
 
  (in thousands)   (in thousands) 

Costs incurred on uncompleted contracts

  $78,392  $63,198   $94,167  $94,323 

Estimated earnings

   13,832   10,334    15,850   15,609 

Billings to date

   (72,486)  (55,717)   (88,185)  (86,139)
  


 


       
  $19,738  $17,815   $21,832  $23,793 
  


 


       

These amounts are included in the accompanying consolidated balance sheets under the following captions:

 

   As of
September 30, 2005


  As of
December 31, 2004


 
   (in thousands) 

Costs and estimated earnings in excess of
billings on uncompleted contracts

  $20,169  $19,066 

Billings in excess of costs and estimated
earnings on uncompleted contracts

   (431)  (1,251)
   


 


   $19,738  $17,815 
   


 


   As of
March 31, 2006
  As of
December 31, 2005
 
   (in thousands) 

Costs and estimated earnings in excess of billings on uncompleted contracts

  $22,777  $25,184 

Billings in excess of costs and estimated earnings on uncompleted contracts

   (945)  (1,391)
         
  $21,832  $23,793 
         

 

7.5.PROPERTY & EQUIPMENT

Property and equipment excluding assets held for sale, consists of the following:

 

   As of
September 30, 2005


  As of
December 31, 2004


 
   (in thousands) 

Towers and related components

  $1,093,632  $1,064,085 

Construction-in-process

   2,773   55 

Furniture, equipment and vehicles

   26,587   30,223 

Land, buildings and improvements

   23,481   20,658 
   


 


    1,146,473   1,115,021 

Less: accumulated depreciation and amortization

   (421,642)  (369,190)
   


 


Property and equipment, net

  $724,831  $745,831 
   


 


   As of
March 31, 2006
  As of
December 31, 2005
 
   (in thousands) 

Towers and related components

  $1,139,984  $1,117,497 

Construction-in-process

   4,482   4,792 

Furniture, equipment and vehicles

   25,947   25,552 

Land, buildings and improvements

   23,629   22,549 
         
   1,194,042   1,170,390 

Less: accumulated depreciation

   (461,583)  (442,057)
         

Property and equipment, net

  $732,459  $728,333 
         

Construction-in-process represents costs incurred related to towers that are under development and will be used in the Company’s operations. At March 31, 2006 and December 31, 2005, non-cash capital expenditures that are included in accounts payable and accrued expenses were $3.3 million and $3.2 million, respectively.

 

8.6.ACQUISITIONS

During the three months ended September 30, 2005,first quarter of 2006, the Company acquired the equity of two entities, whose assets consisted almost entirely of 36 towers and related assets and liabilities. In addition, the Company acquired 2578 towers and related assets from various sellers. The aggregate purchase price for all acquisitions was $28.6 million. The aggregate consideration paid was $20.8$22.5 million in cash and approximately 605,000 shares of Class A common stock.cash. The Company accounted for all of the above tower acquisitions at fair market value at the date of acquisition. The results of operations of the acquired assets and companies are included with those of the Company from the

dates of the respective acquisitions. None of the individual acquisitions or aggregate acquisitions consummated were significant to the Company and accordingly, pro forma financial information has not been presented.

In addition, the Company paid $0.2 million in settlement of contingent purchase price amounts payable as a result of acquired towers exceeding certain performance targets.

In accordance with the provisions of SFAS No. 141,Business Combinations, the Company continues to evaluate all acquisitions within one year after the respectiveapplicable closing date of the transactionseach 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. As a result of these evaluations, the Company has recorded on the balance sheet in intangible assets $25.5 million of the purchase price paid for acquisitions consummated prior to September 30, 2005. These intangible assets represent the value associated with current tenant leases in place at the acquisition date and future tenant leases anticipated to be added to the acquired towers and were calculated using the discounted values of the current or future expected cash flows. The intangible assets are estimated to have an economic useful life consistent with the economic useful life of the related tower assets, which is typically 15 years.

The table below outlines the composition of the purchase price paid for acquisitions including earnouts:

 

   For the three months
ended March 31,
   2006  2005
   (in thousands)

Purchase price of acquisitions1

    

Amount paid in cash

  $22,729  $9,463

Amount paid in stock

   —     5,946
        
  $22,729  $15,409
        

Purchase price consists of:

    

Towers and related assets

  $16,276  $9,862

Contract intangibles

   6,453   5,547
        
  $22,729  $15,409
        

1Amounts paid at acquisition do not include the impact of adjustments made at closing associated with prorated rental receipts and payments. The net impact of these adjustments was to reduce the amount paid in cash by approximately $0.3 million for the three months ended March 31, 2006 and March 31, 2005.

From time to time, the Company agrees to pay additional consideration for such acquisitions if the towers or businesses that are acquired meet or exceed certain performance targets in the 1-3 years after they have been acquired. As of September 30, 2005,March 31, 2006, the Company has an obligation to pay up to an additional $1.9$2.0 million in consideration if the targets contained in various acquisition agreements are met. These obligations are associated with acquisitions within the Company’s site leasing segment. On certain acquisitions, at the Company’s option, additional consideration may be paid in cash or shares of Class A common stock. The Company records such obligations as additional consideration when it becomes probable that the targets will be met.

9.7.CURRENT AND LONG-TERM DEBTINTANGIBLE ASSETS, NET

   As of
September 30, 2005


  As of
December 31, 2004


 
   (in thousands) 

8 1/2% senior notes, unsecured, interest payable semi-annually in arrears on June 1 and December 1. Balance due in full December 1, 2012.

  $250,000  $250,000 

10 1/4% senior notes, unsecured, interest payable semi-annually in arrears, includes deferred gain related to termination of derivative of $1,909 at December 31, 2004. Amount repaid in full in February 2005.

   —     51,894 

9 3/4% senior discount notes, net of unamortized original issue discount of $59,412 and $98,337 at September 30, 2005 and December 31, 2004, respectively, unsecured, cash interest payable semi-annually in arrears beginning June 15, 2008, balloon principal payment of $313,736 due at maturity on December 15, 2011.

   254,324   302,437 

Senior secured credit facility, interest at varying rates (5.63% to 6.24%) at September 30, 2005. Amortization of 0.25% is payable quarterly on term loans. Outstanding term loan balance due October 31, 2008. Outstanding revolving line of credit balance due July 31, 2008.

   342,937   323,375 
   


 


    847,261   927,706 

Less: current maturities

   (3,250)  (3,250)
   


 


Long-term debt

  $844,011  $924,456 
   


 


On January 30, 2004, SBA Senior Finance, Inc. closed on a senior credit facility inThe following table provides the amountgross and net carrying amounts for each major class of $400.0 million. This facility consists of a $325.0 million term loan and a $75.0 million revolving line of credit. The revolving line of credit may be borrowed, repaid and redrawn. Amortization of the term loan isintangible asset at a quarterly rate of 0.25% and is payable quarterly beginning September 30, 2004 and ending September 30, 2008. All remaining outstanding amounts under the term loans are due OctoberMarch 31, 2008. There is no amortization of the revolving line of credit and all amounts outstanding under the revolving line of credit are due on July 31, 2008. The credit facility will require amortization payments of $3.2 million during 2005. This facility may be prepaid at any time after December 16, 2005 without prepayment penalty. If the facility is prepaid with proceeds from another senior credit facility prior to this date, there is a 1% prepayment penalty. Prepayments from sources other than a senior credit facility prior to December 16, 2005 will not incur this penalty.2006:

 

   Gross
Carrying
Amount
  Less
Accumulated
Amortization
  Net
Carrying
Amount
      (in thousands)   

Contract intangibles

  $38,840  $(1,508) $37,332

Covenants not to compete

   6,231   (5,978)  253
            
  $45,071  $(7,486) $37,585
            

In accordance with its original terms, the facility accrued interest at the Eurodollar Rate (as definedAll intangibles noted above are contained in the senior credit facility) plus a spread of 350 basis points or the Base Rate (as defined in the senior credit facility) plus a spread of 250 basis points. On November 12, 2004, we entered into an amendmentour site leasing segment. Amortization expense relating to the senior credit facility that reduced the interest rate spread on the facility to up to 275 basis points over the Eurodollar Rate, or up to 175 points over the Base Rate. On June 16, 2005, we entered into a second amendment to the senior credit facility that further reduced the interest rate spread on the term loan to 225 basis points over the Eurodollar Rate, or 125 basis points over the Base Rate. SBA Senior Finance has recorded deferred financing fees of approximately $6.5intangible assets above was $0.7 million associated with this facility.

Amounts borrowed under this facility are secured by a first priority lien on substantially all of SBA Senior Finance’s assets. In addition, each of SBA Senior Finance’s domestic subsidiaries has guaranteed the obligations of SBA Senior Finance under the senior credit facility and has pledged substantially all of their respective assets to secure such guarantee. In addition, SBA Communications and SBA Telecommunications, Inc. have pledged, on a

non-recourse basis, all of the common stock of SBATelecommunications and SBA Senior Finance to secure SBA Senior Finance’s obligations under this senior credit facility.

The senior credit facility requires SBA Senior Finance to maintain specified financial ratios, including ratios regarding its debt to annualized operating cash flow, debt service, cash interest expense and fixed charges for each quarter. The senior credit facility contains affirmative and negative covenants that, among other things, restrict its ability to incur debt and liens, sell assets, commit to capital expenditures, enter into affiliate transactions or sale-leaseback transactions, and/or build towers without anchor tenants. SBA Senior Finance’s ability in the future to comply with the covenants and access the available funds under the senior credit facility in the future will depend on its future financial performance. As of September 30, 2005, SBA Senior Finance was in full compliance with the terms of the credit facility and had the ability to draw an additional $53.0 million. We expect to refinance this credit facility on November 18, 2005 upon the closing of the CMBS Transaction (see note 17).

On December 1, 2004, the Company issued $250.0$0.3 million of its 8 1/2% senior notes due 2012, which produced net proceeds of $244.8 million after deducting offering expenses. Interest accrues on the notes and is payable in cash semi-annually in arrears on June 1 and December 1, commencing June 1, 2005. Proceeds from the 8 1/2% senior notes were used to repurchase and/or redeem $186.5 million of the Company’s 10 1/4% senior notes in December 2004 and the remaining $50.0 million of the 10 1/4% senior notes in February 2005.

The 8 1/2% senior notes are unsecured and are pari passu in right of payment with the Company’s other existing and future senior indebtedness. The 8 1/2% senior notes place certain restrictions on, among other things, the incurrence of debt and liens, issuance of preferred stock, payment of dividends or other distributions, sales of assets, transactions with affiliates, sale and leaseback transactions, certain investments and the Company’s ability to merge or consolidate with other entities. The ability of the Company to comply with the covenants and other terms of the 8 1/2% senior notes and to satisfy its respective debt obligations will depend on the future operating performance of the Company. In the event the Company fails to comply with the various covenants contained in the 8 1/2% senior notes, it would be in default there under, and in any such case, the maturity of a portion or all of its long-term indebtedness could be accelerated. In addition, the acceleration of amounts due under the senior credit facility would also cause a cross-default under the indenture for the 8 1/2% senior notes.

On May 11,three months ended March 31, 2006 and March 31, 2005, we issued 8.0 million shares of our Class A common stock. The net proceeds from the issuance were $75.4 million after deducting underwriter fees and offering expenses. On June 30, 2005, these proceeds were used to redeem an accreted balance of $68.9 million of the Company’s 9 3/4% senior discount notes and to pay the applicable premium for the redemption.respectively.

 

10.8.INTEREST RATE SWAP AGREEMENT

On June 22, 2005, in anticipation of the CMBS Transaction (see note 17), we entered into two forward-starting interest rate swap agreements, each with a notional principal amount of $200.0 million, with Deutsche Bank AG and Lehman Brothers Special Financing, Inc. to hedge the variability of future interest rates on the CMBS Transaction. Under the swap agreements, we agreed to pay the counterparties a fixed interest rate of 4.199% on the total notional amount of $400.0 million, beginning on December 22, 2005 through December 22, 2010 in exchange for receiving floating payments based on three-month LIBOR on the same notional amount for the same five year period. The Company has determined the swap to be an effective cash flow hedge, and has recorded the fair value of the interest rate swap in accumulated other comprehensive income, net of applicable income taxes. The fair value of the swap asset of $8.5 million is included in prepaid and other current expenses in the accompanying Consolidated Balance Sheet at September 30, 2005.

On November 4, 2005, two of our subsidiaries entered into a purchase agreement with Lehman Brothers Inc. and Deutsche Bank Securities Inc. (the “Initial Purchasers”) regarding the purchase and sale of $405.0 million of commercial mortgage pass-through certificates (the “Certificates”) to be issued by SBA CMBS Trust, a trust established by a special purpose subsidiary of ours (the “CMBS Transaction”). In connection with this agreement, the Company terminated the interest rate swap agreements, resulting in a $14.8 million settlement payment to the Company. The settlement payment will be amortized into interest expense on the statement of operations utilizing the effective interest method over the anticipated five year life of the Certificates and will reduce the effective interest rate on the Certificates by 0.8%. The CMBS Transaction is expected to close on November 18, 2005.

11.SHAREHOLDERS’ DEFICIT AND COMPREHENSIVE LOSS

The Company has potential common stock equivalents related to its outstanding stock options. These potential common stock equivalents were not included in diluted loss per share because the effect would have been anti-dilutive. Accordingly, basic and diluted loss per common share and the weighted average number of shares used in the computation are the same for all periods presented. There were 4.9 million and 4.6 million options outstanding at September 30, 2005 and 2004, respectively. For the nine months ended September 30, 2005, the Company granted 1.3 million options at exercise prices between $8.56 and $15.05 per share, which was the fair market value at the date of grant.

Comprehensive loss includes unrealized gain on the fair value of the interest rate swap as follows:

   For the three months
ended September 30,


  For the nine months
ended September 30,


 
   2005

  2004
As restated


  2005

  2004
As restated


 

Net loss

  $(14,444) $(27,372) $(62,412) $(105,444)

Other comprehensive income, change in fair value of interest rate swap

   8,279   —     8,483   —   
   


 


 


 


Comprehensive loss

  $(6,165) $(27,372) $(53,929) $(105,444)
   


 


 


 


12.RESTRUCTURINGASSET IMPAIRMENT AND OTHER CHARGES

In February 2002, as a result of the continuing deterioration of capital market conditions for wireless carriers, the Company announced it was reducing its capital expenditures for new tower development and acquisition activities, suspending any material new investment for additional towers, reducing its workforce and closing or consolidating offices. In connection with this restructuring, a portion of the Company’s workforce was reduced and certain offices were closed, substantially all of which were primarily dedicated to new tower development activities. The accrual of approximately $0.6 million remaining at September 30, 2005, relates entirely to remaining obligations through the year 2012 associated with offices exited or downsized as part of this plan.

The following summarizes the activity during the nine months ended September 30, 2005, related to the 2002 restructuring plan:

   Accrual
as of
January 1, 2005


  Restructuring
Charges


  Payments

  Accrual
as of
September 30, 2005


   (in thousands)

Employee separation and exit costs

  $733  $50  $(198) $585

Restructuring expense for the three and nine months ended September 30, 2005 and 2004 consisted of the following:

   For the three months
ended
September 30,


  For the nine months
ended
September 30,


 
   2005

  2004

  2005

  2004

 
   (in thousands) 

Abandonment of new tower build and acquisition work-in-process
and related construction materials

  $—    $(4) $—    $(33)

Employee separation and exit costs

   31   7   50   256 
   

  


 

  


   $31  $3  $50  $223 
   

  


 

  


13.ASSET IMPAIRMENT CHARGES

In accordance with SFAS No. 144,Accounting for the Impairment or Disposal of Long-Lived Assets(“SFAS 144”), long-lived assets, consisting primarily of tower assets and contract intangibles, are reviewedevaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If an asset is determined to be impaired, the loss is measured by the excess of the carrying amount of the asset over its fair value as determined by an estimate of discounted future cash flows. Estimates and assumptions inherent in the impairment evaluation include, but are not limited to, general market conditions, historical operating results, lease-up potential and expected timing of lease-up.

During the nine months ended September 30,first quarter of 2005, the Company reevaluated its future cash flow expectations on one tower that hashad not achieved expected lease up results. The resulting change in the fair value of this tower, as determined using a discounted cash flow analysis, resulted in an impairment charge of $0.2 million.million in the first quarter of 2005. There were no asset impairment charges in the first quarter of 2006.

 

9.LONG-TERM DEBT

During the nine months ended September 30, 2004,

   

As of

March 31, 2006

  

As of

December 31, 2005

   (in thousands)

Commercial mortgage pass-through certificates, series 2005-1, (“CMBS Certificates”), secured, interest payable monthly in arrears, balloon payment principal of $405,000 with an anticipated repayment date of November 15, 2010. Interest at varying rates (5.369% to 6.706%) at March 31, 2006.

  $405,000  $405,000

8 1/2% senior notes, unsecured, interest payable semi-annually in arrears on June 1 and December 1. Balance due in full December 1, 2012.

   162,500   162,500

9 3/4% senior discount notes, net of unamortized original issue discount of $39,159 and $44,424 at March 31, 2006 and December 31, 2005, respectively, unsecured, cash interest payable semi-annually in arrears beginning June 15, 2008, balloon principal payment of $ 261,316 due at maturity on December 15, 2011.

   222,157   216,892

Senior revolving credit facility. Facility originated in December 2005. No amounts outstanding at March 31, 2006 and December 31, 2005.

   —     —  
        

Long-term debt

  $789,657  $784,392
        

Commercial Mortgage Pass-Through Certificates, Series 2005-1

On November 18, 2005, SBA CMBS-1 Depositor LLC (the “Depositor”), an indirect subsidiary of the Company, reevaluatedsold in a private transaction, $405 million of CMBS Certificates, Series 2005-1 issued by SBA CMBS Trust (the “Trust”), a trust established by the Depositor (the “CMBS Transaction”). The CMBS Certificates consist of five classes, all of which are rated investment grade, as indicated in the table below:

Subclass

  

Initial Subclass

Principal Balance

  

Pass through

Interest Rate

 
   (in thousands)    

2005-1A

  $238,580  5.369%

2005-1B

   48,320  5.565%

2005-1C

   48,320  5.731%

2005-1D

   48,320  6.219%

2005-1E

   21,460  6.706%
      
  $405,000  5.608%
      

The contract weighted average fixed interest rate of the CMBS Certificates is 5.6% and the effective weighted average fixed interest rate is 4.8%, after giving effect to the settlement of two interest rate swap

agreements entered in contemplation of the transaction. The CMBS Certificates have an anticipated repayment date of November 15, 2010 with a final repayment date in 2035.

8 1/2% Senior Notes and 93/4% Senior Discount Notes

On April 27, 2006, the remaining outstanding amounts of $162.5 million of the 8 1/2% senior notes and $223.7 million of the 9 3/4% senior discount notes (the accreted value at April 27, 2006) were repaid from the proceeds of the $1.1 billion bridge loan obtained in connection with the AAT acquisition (see note 15).

Senior Revolving Credit Facility

On December 22, 2005, SBA Senior Finance II LLC, a subsidiary of the Company, closed on a senior secured revolving credit facility in the amount of $160.0 million (“GECC II facility”). This facility replaces the prior facility which was assigned and became the Mortgage Loan underlying the Company’s recent $405.0 million CMBS Certificates issuance. The Company paid deferred financing fees of $1.1 million associated with the closing of this transaction.

This facility consists of a $160.0 million revolving loan which may be borrowed, repaid and redrawn, subject to compliance with certain covenants. This facility matures on December 21, 2007. Amounts borrowed under the facility will accrue interest at LIBOR plus a margin that ranges from 75 basis points to 200 basis points or at base rate plus a margin that ranges from 12.5 basis points to 100 basis points. Unused amounts on this facility accrue interest at 37.5 basis points on the $160.0 million committed amount. Amounts borrowed under this facility are secured by a first lien on substantially all of SBA Senior Finance II’s assets and are guaranteed by the Company and certain of its other subsidiaries. No amounts were drawn on this facility as of March 31, 2006.

This senior credit facility requires SBA Senior Finance II to maintain specified financial ratios, including ratios regarding its debt to annualized operating cash flow, debt service, cash interest expense and fixed charges for each quarter. The senior credit facility contains affirmative and negative covenants that, among other things, limit its ability to incur debt and liens, sell assets, commit to capital expenditures, enter into affiliate transactions or sale-leaseback transactions, and build and/or acquire towers without anchor or acceptable tenants. SBA Senior Finance II’s ability in the future to comply with the covenants and access the available funds under the senior credit facility in the future will depend on its future financial performance. As of March 31, 2006, SBA Senior Finance II was in full compliance with the terms of the credit facility and had the ability to draw an additional $66.0 million. In connection with closing of the bridge loan on April 27, 2006 (see note 15), the Company and the lenders agreed that no loans may be borrowed and no letters of credit issued from the available amounts under the credit facility and agreed to, except in certain instances, subordinate the lenders’ liens on their collateral to the liens granted to the bridge loan lenders until the bridge loan amount has been repaid in full.

10.DERIVATIVE FINANCIAL INSTRUMENTS

On February 22, 2006, a subsidiary of the Company entered into three forward-starting interest rate swap agreements, at an aggregate notional principal amount of $200 million, to hedge the variability of future interest rates in anticipation of the issuance of debt, which is expected to be issued on or before December 21, 2007 by an affiliate of the Company. Under the swap agreements, the subsidiary has agreed to pay a fixed monthly interest rate of 5.024% on a total notional amount of $200 million, beginning on or before December 21, 2007 through December 21, 2012, in exchange for receiving floating payments based on three-month LIBOR on the same $200 million notional amount for the same five year period. The swap agreements will be settled in cash, in accordance with their terms, on or before December 21, 2007. The Company has determined that a portion of the swaps are effective cash flow expectations on nine towers that had not achieved expected lease up results. The resulting changehedges, and has recorded $2.0 million of the fair value relating to the effective portion of the interest rate swaps in

accumulated other comprehensive income, net of applicable income taxes. In addition, $0.2 million of the swaps were determined to be ineffective hedges, and were recorded as a reduction to interest expense in the consolidated statements of operations. At March 31, 2006, the swaps have a fair value of these towers, as determined using a discounted cash flow analysis, resulted$2.2 million, which is recorded in an impairment charge of $1.9 million.other assets on the Consolidated Balance Sheet.

 

11.SHAREHOLDERS’ EQUITY AND COMPREHENSIVE LOSS

Additionally,The Company has potential common stock equivalents related to its outstanding stock options. These potential common stock equivalents were not included in diluted loss per share because the effect would have been anti-dilutive. Accordingly, basic and diluted loss per common share and the weighted average number of shares used in the computation are the same for all periods presented.

Comprehensive loss is defined as the change in equity (net assets) of a business enterprise during a period from transactions and other events and circumstances from non-owner sources, and is comprised of net loss and “other comprehensive loss.”

Comprehensive loss is comprised of the following:

   

For the three months

ended March 31,

 
   2006  2005 
   (in thousands) 

Net loss

  $(9,205) $(21,713)

Other comprehensive income, change in fair value of interest rate swap

   2,046   —   
         

Comprehensive loss

  $(7,159) $(21,713)
         

For the three months ended March 31, 2006, the Company’s other comprehensive loss includes an unrealized deferred gain from the three forward-starting interest rate swap agreements entered in anticipation of the issuance of debt on or before December 21, 2007 by a subsidiary of the Company (see note 10 above).

12.STOCK BASED COMPENSATION

Effective January 1, 2006, the Company adopted the provisions of SFAS No. 123R (“SFAS 123R”), “Share-Based Payments,” which requires the measurement and recognition of compensation expense for all share-based payment awards to employees and directors based on estimated fair values. SFAS 123R supersedes the Company’s previous accounting methodology using the intrinsic value method under APB Opinion No. 25 (“APB 25”).

The Company adopted SFAS 123R using the modified prospective transition method. Under this transition method, compensation expense recognized during the second quarter of 2004, the Company identified 14 towers previously classified as heldthree months ended March 31, 2006 included: (a) compensation expense for sale and included in discontinued operations and reclassified them into continuing operationsall share-based awards granted prior to, but not yet vested, as of June 30, 2004December 31, 2005, based on the grant date fair value estimated in accordance with the original provisions of SFAS 123, and (b) compensation expense for all share-based awards granted subsequent to December 31, 2005, based on the grant date fair value estimated in accordance with the provisions of SFAS 144. As a result123R. In accordance with the modified prospective transition method, the Company’s Consolidated Financial Statements for prior periods have not been restated to reflect the impact of this reclassification,SFAS 123R.

On November 10, 2005, the Company increased the book value of these towers by $0.3 million, and recorded this charge as a reductionFASB issued FASB Staff Position No. FAS 123R-3, “Transition Election Related to asset impairment charges in the Consolidated Statements of Operations for the nine months ended September 30, 2004.

14.STOCK BASED COMPENSATION

SFAS No. 148,Accounting for Stock-Based Compensation—Transition and Disclosure—an AmendmentTax Effects of SFAS 123 (“SFAS 148”) provides alternative methods for a voluntary change to the fair value method of accounting for stock-based employee compensation and amends the disclosure requirements of SFAS 123,Accounting for Stock-Based Compensation(“SFAS 123”).Share-Based Payment Awards.” The Company has elected to continue to account for its stock-based employee compensation plans under Accounting Principles Board No. 25,Accounting for Stock Issued to Employees (“APB 25”), and related interpretations and adopt the disclosure provisionsalternative transition method provided in the FASB Staff Position for calculating the tax effects of share-based compensation pursuant to SFAS 123R. The alternative transition method includes simplified methods to establish the beginning balance of the additional paid-in capital pool (“APIC Pool”) related to the tax effects of employee share-based compensation, and to determine the subsequent impact on the APIC Pool and consolidated statements of cash flows of the tax effects of employee and director share-based awards that are outstanding upon adoption of SFAS 148.123R.

Stock Options

The Company has three equity participation plans (the 1996 Stock Option Plan, the 1999 Equity Participation Plan and the 2001 Equity Participation Plan) whereby options (both non-qualified and incentive stock options), stock appreciation rights and restricted stock may be granted to directors, employees and consultants. Upon adoption of the 2001 Equity Participation Plan, the 1996 Stock Option Plan and the 1999 Equity Participation Plan were terminated and no further grants were permitted under such plans. The 2001 Equity Participation Plan provides for a maximum issuance of shares, together with all outstanding options and unvested shares of restricted stock under all three of the plans, equal to 15% of the Company’s common stock outstanding, adjusted for certain shares issued and the exercise of certain options. These options generally vest between three and six years from the date of grant on a straight-line basis and generally have a ten year life. The Company recorded approximately $1.1 million and $0.1 million of non-cash compensation expense during the three month periods ended March 31, 2006 and 2005, respectively.

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 was used with the assumptions included in the table below. The Company uses a combination of historical data and implied volatility to establish the expected volatility. Historical data is used to estimate the expected option life and 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:assumptions were used to estimate the fair value of options granted during the three months ended March 31, 2006 and 2005 using the Black-Scholes option-pricing model:

 

  

For the three and nine months
ended September 30,


  

For the three months

ended March 31,

  

2005


  

2004


  2006  2005

Risk free interest rate

  4.2%  3.0%  4.2%  4.0%

Dividend yield

  0.0%  0.0%  0.0%  0.0%

Expected volatility

  107%  115%  45%  45%

Expected lives

  4 years  4 years  3.75 years  3.75 years

The following table illustratessummarizes the effect on net lossCompany’s activities with respect to its stock option plans for the first three months of 2006 as follows (number of shares in thousands):

Options

  

Number

of Shares

  

Weighted-

Average

Exercise Price

Per Share

  

Weighted-

Average

Remaining

Contractual

Term

  

Aggregate

Intrinsic

Value

Outstanding at January 1, 2006

  4,575  $8.22  7.5  $24,808

Granted

  979  $19.10    

Exercised

  (182) $5.24    

Canceled

  (221) $32.27    
           

Outstanding at March 31, 2006

  5,151  $9.36  7.9  $25,821
           

Exercisable at March 31, 2006

  1,724  $8.94  6.6  $10,895
           

Unvested at March 31, 2006

  3,427  $9.57  8.5  $14,926
           

The weighted-average fair value of options granted during the three months ended March 31, 2006 and loss per share if2005 was $19.10 and $8.56, respectively. The total intrinsic value for options exercised during the three months ended March 31, 2006 and 2005 was $0.5 million and $0.2 million, respectively.

Cash received from option exercises under all plans for the three months ended March 31, 2006 and 2005 was approximately $1.0 million and $0.3 million, respectively. No tax benefit was realized for the tax deductions from option exercises under all plans for the three months ended March 31, 2006 and 2005, respectively.

Employee Stock Purchase Plan

In 1999, the Board of Directors of the Company had appliedadopted the fair value recognition provisions1999 Stock Purchase Plan (the “Purchase Plan”). A total of SFAS 123, to stock-based employee compensation:

   For the three months
ended September 30,


  For the nine months
ended September 30,


 
   2005

  2004

  2005

  2004

 
   (in thousands,
except per share data)
  (in thousands,
except per share data)
 

Net loss, as reported

  $(14,444) $(27,372) $(62,412) $(105,444)

Non-cash compensation charges included in net loss

   108   115   323   356 

Incremental stock-based employee compensation credit/(expense) determined under the fair value based method for all awards, net of related tax effects

   (1,420)  15   (4,201)  (1,250)
   


 


 


 


Pro forma net loss

  $(15,756) $(27,242) $(66,290) $(106,338)
   


 


 


 


Loss per share:

                 

Basic and diluted - as reported

  $(0.19) $(0.47) $(0.89) $(1.86)

Basic and diluted - pro forma

  $(0.21) $(0.47) $(0.95) $(1.88)

The effect of applying SFAS 123 in the pro-forma disclosure is not necessarily indicative of future results.

From time to time, restricted500,000 shares of Class A common stock or optionswere reserved for purchase under the Purchase Plan. During 2003, an amendment to the Purchase Plan was adopted which increased the number of shares reserved for purchase from 500,000 to 1,500,000 shares. The Purchase Plan permits eligible employee participants to purchase Class A common stock have been grantedat a price per share which is equal to 85% of the fair market value of the Class A common stock on the last day of an offering period. During the quarter ended March 31, 2006 approximately 21,500 shares of the Company’s Common Stock were purchased under the Company’s equity participation plans at prices below market value atPurchase Plan, which resulted in cash proceeds to the timeCompany of grant.$0.4 million. In addition, the Company had bonus agreements with certain executives and employees to issue shares of the Company’s Class A common stock in lieu of cash payments. The Company recorded approximately $0.3$0.1 million of non-cash compensation expense during eachrelating to these shares.

Non-Cash Compensation Expense

The table below reflects a break out by category of the nine month periodsamounts recognized in the financial statements for the three months ended September 30,March 31, 2006 for non-cash compensation. Amounts are in thousands, except for per share data:

   

For the three

months ended

March 31, 2006

 

Cost of revenues

  $58 

Selling, general and administrative

   1,024 
     

Total cost of non-cash compensation included in income, before income tax

   1,082 

Amount of income tax recognized in earnings

   —   
     

Amount charged against income

  $1,082 
     

Impact on net income per common share:

  

Basic

  $(0.01)
     

Diluted

  $(0.01)
     

In addition, the Company capitalized $0.1 million to fixed assets relating to employee non-cash compensation during the three months ended March 31, 2006.

Pro Forma Non-Cash Compensation Expense

Prior to December 31, 2005, the Company accounted for non-cash compensation arrangements in accordance with the provisions and 2004.related interpretations of APB 25. Had compensation cost for share-based awards been determined consistent with SFAS No. 123R, the net income and earnings per share would have been adjusted to the following pro forma amounts (in thousands, except for per share data):

   

For the three

months ended

March 31, 2005

 

Net loss, as reported

  $(21,713)

Non-cash compensation charges included in net loss

   115 

Incremental stock-based employee compensation (expense determined under the fair value based method for all awards, net of related tax effects)

   (1,390)
     

Pro forma net loss

  $(22,988)
     

Loss per share:

  

Basic and diluted - as reported

  $(0.33)
     

Basic and diluted - pro forma

  $(0.35)
     

 

15.13.INCOME TAXES

The Company hashad taxable losses in the three and nine months ended September 30,March 31, 2006 and 2005, and 2004, and as a result, net operating loss carry-forwards have been generated. These net operating loss carry-forwards are fully reserved as management believes it is not “more likely than not” that the Company will generate sufficient taxable income in future periods to recognize the assets.losses. The provision for income taxes presented for the three and nine months ended September 30,March 31, 2006 and 2005 and 2004 relatesrelate to state and local taxes.

16.14.SEGMENT DATA

The Company operates principally in three business segments: site development consulting, site development construction, and 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. 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 (in thousands):below:

 

  Site
Leasing


 Site
Development
Consulting


 Site
Development
Construction


 Not
Identified
by Segment(2)


  Total

   

Site

Leasing

  

Site

Development

Consulting

 

Site

Development

Construction

 

Not

Identified by

Segment(1)

 Total 

Three months ended September 30, 2005

      
  (in thousands) 

Three months ended March 31, 2006

             

Revenues

  $41,104  $3,577  $21,340  $—    $66,021   $45,029  $3,473  $20,302  $—    $68,804 

Cost of revenues

  $11,694  $3,036  $20,275  $—    $35,005   $12,331  $2,876  $19,056  $—    $34,263 

Operating income (loss) from continuing operations

  $2,933  $269  $(599) $—    $2,603   $7,781  $316  $(600) $(2,667) $4,830 

Capital expenditures

  $9,807  $40  $238  $222  $10,307 

Capital expenditures(2)

  $30,336  $65  $379  $305  $31,085 

Three months ended September 30, 2004 (restated)

      

Three months ended March 31, 2005

             

Revenues

  $36,965  $3,812  $17,966  $—    $58,743   $38,342  $3,087  $16,875  $—    $58,304 

Cost of revenues

  $11,871  $3,303  $16,866  $—    $32,040   $12,045  $2,829  $16,420  $—    $31,294 

Operating income (loss) from continuing operations

  $(2,681) $101  $(823) $—    $(3,403)  $1,325  $(11) $(1,237) $(2,141) $(2,064)

Capital expenditures

  $1,480  $36  $36  $152  $1,704 

Nine months ended September 30, 2005

      

Revenues

  $118,380  $10,422  $58,770  $—    $187,572 

Cost of revenues

  $35,431  $9,145  $56,402  $—    $100,978 

Operating income (loss) from continuing operations

  $2,767  $366  $(2,824) $—    $309 

Capital expenditures

  $41,953  $74  $426  $614  $43,067 

Nine months ended September 30, 2004 (restated)

      

Revenues

  $106,352  $10,721  $48,876  $—    $165,949 

Cost of revenues

  $35,556  $9,677  $46,063  $—    $91,296 

Operating loss from continuing operations

  $(13,732) $(187) $(3,025) $—    $(16,944)

Capital expenditures(1)

  $4,478  $83  $86  $843  $5,490 

Capital expenditures(2)

  $12,730  $23  $123  $243  $13,119 

Assets

                   

As of December 31, 2004

  $784,332  $8,843  $44,750  $79,319  $917,244 

As of September 30, 2005

  $792,615  $7,962  $47,499  $37,854  $885,930 

As of March 31, 2006

  $835,124  $3,728  $45,576  $65,694  $950,122 

As of December 31, 2005

  $834,923  $4,005  $51,381  $62,227  $952,536 

 

(1)Site development construction capital expenditures for 2004 are net of a $300,000 return of deposit on construction in progress.

(2)Assets not identified by segment consist primarily of general corporate assets

The Company has client concentrations with respect to revenues in each of its financial reporting segments as follows:

   Percentage of Site Leasing Revenue
for the three months ended September 30,


 
   2005

  2004

 

Cingular

  27.8% 29.8%

Sprint/Nextel

  21.0% 22.0%

Verizon

  10.3% 9.7%
   Percentage of Site Development
Consulting Revenue
for the three months ended September 30,


 
   2005

  2004

 

Cingular

  29.7% 20.7%

Verizon

  25.6% 25.6%

Bechtel Corporation

  24.0% 28.5%

Sprint/Nextel

  12.0% 4.7%
   Percentage of Site Development
Construction Revenue
for the three months ended September 30,


 
   2005

  2004

 

Sprint/Nextel

  30.6% 46.3%

Cingular

  26.0% 13.7%

Bechtel Corporation

  11.1% 10.9%

 

17.(2)Includes acquisitions and related earn-outs

The Company’s credit risks consist primarily of accounts receivable with national, regional and local wireless communications providers and federal and state governmental agencies. The Company performs periodic credit evaluations of its customers’ financial condition and provides allowances for doubtful accounts as required based upon factors surrounding the credit risk of specific customers, historical trends and other information. The Company generally does not require collateral. The following is a list of significant customers and the percentage of total revenue derived from such customers:

   

Percentage of Total Revenues

for the three months ended March 31,

 
   2006  2005 

Cingular

  21.6% 23.6%

Sprint/Nextel

  18.5% 23.0%

Verizon

  10.4% 9.1%

   

Percentage of Site Leasing Revenue

for the three months ended March 31,

 
   2006  2005 

Cingular

  28.4% 27.8%

Sprint/Nextel

  15.0% 14.7%

Verizon

  10.2% 9.5%
   

Percentage of Site Development

Consulting Revenue

for the three months ended March 31,

 
   2006  2005 

Verizon Wireless

  32.9% 29.7%

Sprint/Nextel

  20.1% 1.5%

Cingular

  12.1% 32.2%

Bechtel Corporation

  14.9% 20.2%
   

Percentage of Site Development

Construction Revenue

for the three months ended March 31,

 
   2006  2005 

Sprint/Nextel

  26.0% 45.7%

Cingular

  8.2% 12.5%

Bechtel Corporation

  14.7% 11.6%

Nokia, Inc.

  11.4% —   

15.SUBSEQUENT EVENTS

Subsequent to March 31, 2006, the Company acquired 3 towers for an aggregate purchase price of $2.9 million, which was paid in cash.

On April 17, 2006, the Company entered into two forward-starting interest rate swap agreements, each with a notional amount of $100.0 million, with each of JP Morgan Chase Bank N.A. and Deutsche Bank AG to hedge the variability of future interest rates in anticipation of the issuance of debt which is expected to be issued on or before February 28, 2007 by the Company. Under the swap agreements, the Company has agreed to pay fixed interest rates of 5.400% and 5.399%, respectively, on the total notional amount of $200.0 million, beginning on or before February 28, 2007 through February 28, 2012, in exchange for receiving floating payments based on three-month LIBOR on the same $200 million notional amount for the same five-year period. The swap agreements will be cash settled, in accordance with their terms, on or before February 28, 2007. The swap agreements are considered to be effective hedges as of the filing date of this document.

On October 5, 2005,April 27, 2006, the Company issued 10.0acquired all of the outstanding stock of AAT Communications Corp. (“AAT”) for $634.0 million in cash and the issuance of approximately 17.1 million shares of the Company’s Class A common stock. The net proceeds fromAAT owns 1,850 tower sites and has under management over 5,000 actual or potential communications sites, of which 607 are revenue producing. Simultaneously with the issuance were $151.2 million after deducting underwriter fees and offering expenses. On November 7, 2005, these proceeds were used to redeem an accreted balance of $42.9 millionclosing of the Company’sAAT acquisition, the Company repurchased the remaining 9 3/4% senior discount notes (with a carrying amount of $223.7 million on the closing date) and to pay the applicable premium for the redemption, and to redeem $87.5 million of the Company’sremaining 8 1/2% senior notes and pay(with a carrying amount of $162.5 million on the applicable premium forclosing date) pursuant to the redemption.

On November 4, 2005, two of our subsidiaries entered into a purchase agreement with the Initial Purchasers regarding the purchase and sale of $405.0 million of commercial mortgage pass-through certificates to be issued by SBA CMBS Trust. The assets of SBA CMBS Trust will consist of a non-recourse mortgage loan to be paid from the operating cash flows of 1,714terms of the Company’s tower sitestender offers and secured by mortgagesconsent solicitations that expired on substantially all of such tower sitesApril 27, 2006. In order to facilitate the tender offers and their operatingconsent solicitations and to fund the cash flows. The Certificates will have a contract weighted average fixed interest rate of 5.6%, and a weighted average interest rate to us of 4.8% after giving effect to the hedging arrangements discussed above in note 10. The Company intends to use a substantial portion of the net proceedsAAT acquisition, the Company obtained bridge financing in the amount of $1.1 billion. The bridge financing accrues interest at the Eurodollar rate plus 2% and matures on September 12, 2006. The facility may be extended to January 27, 2007. If the facility is extended, interest will accrue at the Eurodollar rate plus 2.75% from this issuance to refinanceSeptember 13, 2006 through the existing senior credit facility and fund reserves and expenses associated with the CMBS Transaction. The remainderearlier of the net proceeds will be used byrefinancing of the facility or the extended maturity date. The Company at its discretion.may prepay the bridge loan, in whole or in part, without premium or penalty.

ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

We are a leading independent owner and operator of approximately 3,200 wireless communications towers in the Eastern third of the United States. We generate revenues fromtowers. Our principal business line is our two primary businesses, site leasing and site development.business. In our site leasing business, we lease antenna space to wireless service providers on towers and other structures that we own, or manage for or lease from others. The towers that we own have been constructed by us at the request of a carrier, built orwireless service provider, constructed based on our own initiative or acquired. As of March 31, 2006, we owned 3,396 towers, the substantial majority of which have been built by us or built by other tower owners or operators who, like us, have built such towers taking into consideration co-location opportunities. As a result of the AAT Acquisition, we now own over 5,200 towers in the United States, Puerto Rico, and the U.S. Virgin Islands.

In addition, through our site development business, we offer wireless service providers assistance in developing and maintaining their own wireless service networks. We focus our leasing and site development activities in the eastern third of the United States where substantially all of our towers are located.

Operating results in prior periods may not be meaningful predictors of future results. You should be aware of the significant changes in the nature and scope of our business when reviewing the ensuing discussion of comparative historical results.

Recent Developments

On April 27, 2006, we completed the acquisition of all of the issued and outstanding shares of common stock of AAT Communications Corp. (“AAT”) from AAT Holdings, LLC II, which we refer to as the AAT Acquisition. The total purchase price paid was (i) $634.0 million in cash and (ii) 17,059,336 newly issued shares of our Class A common stock. Simultaneously with the closing of the AAT Acquisition, we repurchased 100% of the aggregate outstanding amount of our 9 3/4% senior discount notes and 100% of the aggregate outstanding amount of our 8 1/2% senior notes pursuant to tender offers and consent solicitations for an aggregate of $438.2 million, including accrued interest on the 8 1/2% senior notes and the accretion amount applicable to the 9 3/4% senior discount notes.

In order to fund the cash consideration for the AAT Acquisition and the amounts necessary to repurchase the outstanding notes, SBA Senior Finance, Inc., an indirect wholly-owned subsidiary of ours, entered into a credit agreement for a $1.1 billion term loan, among Senior Finance, the several banks and other financial institutions parties thereto, and Deutsche Bank AG, New York Branch, as administrative agent. The bridge loan matures on September 12, 2006 and may be extended to January 27, 2007, at our option, provided that (i) no default or event of default shall have occurred and be continuing and (ii) each of the representations and warranties of Senior Finance, us and certain of our subsidiaries are true and correct in all material respects on and as of such date. Loans outstanding under the bridge loan are Eurodollar loans, unless converted to alternate base rate loans as provided in the bridge loan credit agreement. Eurodollar loans accrue interest at a rate per annum equal to the Eurodollar rate plus a margin of 2.00% calculated on the basis of a 360-day year. If the bridge loan is extended the interest rate margin shall be increased to 2.75%. Senior Finance may prepay the bridge loan, in whole or in part, without premium or penalty. Amounts borrowed under the bridge loan are secured by a first lien on substantially all of Senior Finance’s assets and are guaranteed by us and certain of our subsidiaries, which guarantee is secured by a first lien on substantially all of our and such subsidiaries’ non-real estate assets.

Concurrently with the closing of the bridge loan, we entered into an Omnibus Agreement with our lenders under our revolving credit facility and the bridge loan lenders. Pursuant to the Omnibus Agreement, the revolving credit facility lenders consented to the bridge loan and the AAT Acquisition. In addition, until the bridge loan is paid in full, we have agreed not to request, and the revolving credit facility lenders have agreed not to make, any loans or issue any letters of credit under the revolving credit

facility. Furthermore, the revolving credit facility lenders have agreed that all liens, with certain exceptions, whether now existing or hereafter arising, in favor of the credit facility lenders securing the obligations under the revolving credit facility will be junior in priority to all liens in favor of the bridge loan lenders securing the obligations under the bridge loan. Pursuant to the Omnibus Agreement, all representations, warranties and covenants, with certain exceptions, under the revolving credit facility are suspended and of no force and effect until such time as the bridge loan is repaid.

As of March 31, 2006 AAT owned 1,850 tower sites and had under management over 5,000 actual or potential communications sites, of which 607 are revenue producing. As a result of the AAT Acquisition, we own and operate over 5,200 towers in 47 of the 48 contiguous United States, Puerto Rico and the U.S. Virgin Islands.

Site Leasing Services

Our primary focus is the leasing of antenna space on our multi-tenant towers to a variety of wireless service providers under long-term lease contracts. Site leasing revenues are received primarily from wireless communications companies.service provider tenants, including Alltel, Cingular, Sprint Nextel, T-Mobile and Verizon Wireless. Revenues from these clients are derived from numerous different site leasing contracts.tenant leases. Each site leasing contracttenant lease relates to the lease or use of space at an individual tower site and issite. As of March 31, 2006, our tenant leases generally for anhad initial termterms of five years, and were renewable for five 5-year periods at the option of the tenant. Almost all of our site leasing contractsthese tenant leases contain specific rent escalators, which typically range from 3-5%average 3-4% per year, including the renewal option periods. Site leasing contractsTenant leases are generally paid on a monthly basis and revenue from site leasing is recorded monthly on a straight-line basis over the current term of the related lease agreements. The difference between the site leasing revenue that we receive and the site leasing revenue that isRental amounts received in advance are recorded due to straight-line accounting is reflected in other assets.

deferred revenue.

Cost of site leasing revenue primarily consists of:

 

rental payments for rental on ground and other underlying property leases (including non-cash straight line adjustments);leases;

 

repairsstraight line rent adjustment for difference between rental payments made and expense recorded as if the payments had been made evenly throughout the minimum lease term (which may include renewal terms) of the underlying property leases;

site maintenance and monitoring costs (exclusive of employee related costs);

 

utilities;

 

property insurance; and

 

property taxes;taxes.

Our non-cash straight line rent adjustments reflect the difference between ground lease payments that we made during the period and the payments that would have been made if the total rent due for the entire minimum lease term (which may include renewal terms) was paid evenly throughout such minimum term. The minimum lease term is equal to the shorter of (i) the period from lease inception through the end of the term of all tenant lease obligations (including renewal periods) in existence at ground lease inception or (ii) the ground lease term, including renewal periods. Each of our ground leases provides us an unconditional right to renew for all granted renewal terms. If no tenant lease obligations existed at the date of ground lease inception, the initial term of the ground lease is considered the initial lease term.

For any given tower, such costs of site leasing revenue are relatively fixed over a monthly or an annual time period. As such, operating costs for owned towers do not generally increase significantly as a result of adding additional customers to the tower.

The amount of other direct costs associated with operating a tower varies from site to site depending on the taxing jurisdiction and the height and age of the tower but typically do not make up a large percentage of total company revenues contributed byoperating costs. The ongoing maintenance requirements are typically minimal and include replacing lighting systems, painting towers or upgrading or repairing access roads or fencing. As of March 31, 2006, our ground leases were generally for an initial term of 5 years or more with multiple renewal options of five year periods at our option and provided for rent escalators which typically average 3% - 4% annually or provided for term escalations of approximately 15%.

Our site leasing services is as follows:business generates substantially all of our segment operating profit. As indicated in the chart below, during the first quarters of 2005 and 2006 our site leasing business generated 65% of our total revenue and represented a substantial portion of our segment operating profit (as defined below).

 

   Percentage of Revenues

  Percentage of Revenues

 
   For the three
months ended
September 30,


  For the nine
months ended
September 30,


 
   2005

  2004

  2005

  2004

 

Site Leasing

  62.3% 62.9% 63.1% 64.0%
   For the three months ended
March 31,
 
   2006  2005 
   (in thousands except for percentages) 

Site leasing revenue

  $45,029  $38,342 

Site leasing segment operating profit

  $32,698  $26,297 

Percentage of total revenue

   65.4%  65.8%

Site leasing operating profit percentage contribution of total operating profit

   94.7%  97.4%

As a result of the AAT Acquisition, we expect that site leasing revenue and site leasing segment operating profit will increase substantially in future periods. We believe that over the long-term our 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 network coverage requirements. We believe our site leasing business is characterized by stable and long-term recurring revenues, predictable operating costs and minimal capital expenditures. Due to the relatively young age and mix of our tower portfolio, we expect future expenditures required to maintain these towers to be minimal. Consequently, we expect to grow our cash flows by adding tenants to our towers at minimal incremental costs by using existing tower capacity or requiring wireless service providers to bear all or a portion of the cost of tower modifications. Furthermore, because our towers are strategically positioned and our customers typically do not re-locate, we have historically experienced low customer churn as a percentage of revenue.

The following rollforward summarizes the quarterly activity in our tower portfolio from December 31, 20042005 to September 30, 2005:March 31, 2006:

 

   Operating
Towers


  Towers
Accounted for as
Discontinued
Operations


  Total
Towers


 

Towers owned at December 31, 2004

  3,060  6  3,066 

Purchased towers

  51  —    51 

Constructed towers

  2  —    2 

Sold towers

  —    (1) (1)
   
  

 

Towers owned at March 31, 2005

  3,113  5  3,118 

Purchased towers

  23  —    23 

Constructed towers

  2  —    2 

Sold towers

  —    (5) (5)
   
  

 

Towers owned at June 30, 2005

  3,138  —    3,138 

Purchased towers

  61  —    61 

Constructed towers

  16  —    16 
   
  

 

Towers owned at September 30, 2005

  3,215  —    3,215 
   
  

 

Number of Towers

Towers owned at December 31, 2005

3,304

Purchased towers

78

Constructed towers

15

Towers disposed of

(1)

Towers owned at March 31, 2006

3,396

As a result of the AAT Acquisition, the number of towers we owned increased by 1,850 towers.

Site Development Services

Our site development business is a corollary to our site leasing business, and provides us the ability to (1) keep in close contact with the wireless service providers who generate substantially all of our site leasing revenue and (2) capture ancillary revenues that are generated by our site leasing activities, such as antenna installation and equipment installation at our tower locations. Our site development services business consists of two segments, site development consulting and site development construction, through which we provide wireless service providers a full range of end-to-end services. In the consulting segmentWe principally perform services for third parties in our core, historical areas of ourwireless expertise, specifically site development business, we offer clients the following services: (1) network pre-design; (2) site audits; (3) identification of potential locations for towersacquisition, zoning, technical services and antennas; (4) support in buying or leasing of the location; and (5) assistance in obtaining zoning approvals and permits. In the construction segment of our site development business, we provide a number of services, including, but not limited to the following: (1) tower and related site construction; (2) antenna installation; and (3) radio equipment installation, commissioning and maintenance.

construction.

Site development services revenues are received primarily from wireless communications companiesservice providers or companies providing development or project management services to wireless communications companies.service providers. Our site development customers engage us on a project-by-project basis, and a customer can generally terminate an assignment at any time without penalty. Site development projects, both consulting and construction, include contracts on a time and materials basis or a fixed price basis. The majority of our site development services are billed on a fixed price basis. Time and materials based site development

contracts are billed and revenue is recognized at contractual rates as the services are rendered. Our site development consulting projects generally take from 3three to 12twelve months to complete. For those site development consulting contracts in which we perform work on a fixed price basis, we bill the client, and recognize revenue, based on the completion of agreed upon phases of thisthe project on a per site basis. Upon the completion of each phase, we recognize the revenue related to that phase.

Our 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. Revenue from our site development construction business may fluctuate from period to period depending on construction activities, which are a function of the timing and amount of our clients’ capital expenditures, the number and significance of active customer engagements during a period, weather and other factors.

Cost of site development consulting revenue and construction revenue include all material costs of materials, salaries and labor, costs, including payroll taxes, subcontract labor, vehicle expense and other costs directly and indirectly related to the projects. All costs related to site development consulting projects and construction projects are recognized as incurred.

The table below provides the percentage of total company revenues and total segment operating profit contributed by site development consultingservices for the three months ended March 31, 2006 and construction segments are as follows:2005. Information regarding the total and percentage of assets used in our site development services businesses is included in Note 14 of our Consolidated Financial Statements included in this Report.

 

   Percentage of Revenues

  Percentage of Revenues

 
   For the three
months ended
September 30,


  For the nine
months ended
September 30,


 
   2005

  2004

  2005

  2004

 

Site development consulting

  5.4% 6.5% 5.6% 6.5%

Site development construction

  32.3% 30.6% 31.3% 29.5%

Recent Developments

On November 4, 2005, two of our subsidiaries entered into a purchase agreement with Lehman Brothers Inc. and Deutsche Bank Securities Inc. (the “Initial Purchasers”) regarding the purchase and sale of $405.0 million of commercial mortgage pass-through certificates (the “Certificates”) to be issued by SBA CMBS Trust, a trust established by a special purpose subsidiary of ours (the “CMBS Transaction”). The assets of SBA CMBS Trust will consist of a non-recourse mortgage loan to be paid from the operating cash flows of 1,714 of our tower sites and secured by mortgages on substantially all of such tower sites and their operating cash flows. The Certificates will have a contract weighted average fixed interest rate of 5.6%, and a weighted average interest rate to us of 4.8% after giving effect to the hedging arrangements discussed below in “Quantitative and Qualitative Disclosures About Market Risk”. The Certificates are expected to be rated investment grade and will have an expected life of five years with a final repayment date in 2035. We expect the issuance of the Certificates to close on November 18, 2005. We intend to use a substantial portion of the net proceeds from this issuance to refinance the existing senior credit facility and fund reserves and expenses associated with the CMBS Transaction. The remainder of the net proceeds will be used by us at our discretion.

   For the three months ended March 31, 
   Percentage of Revenues  Operating Profit Contribution 
   2006  2005  2006  2005 

Site development consulting

  5.1% 5.3% 1.7% 0.9%

Site development

  29.5% 28.9% 3.6% 1.7%

CRITICAL ACCOUNTING POLICIES

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 in the Notes to Consolidated Financial Statements for the year ended December 31, 2004,2005, included in the Form 10-K filed with the Securities and Exchange Commission on March 16, 2005.10, 2006. Note that our preparation of our financial statements requires us to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of our financial statements, and the reported amounts of revenue and expenses during the reporting periods. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances.

There can be no assurance that actual results will not differ from those estimates and such differences could be significant.

Construction Revenue

Revenue from construction projects is recognized on the percentage-of-completion method of accounting, determined by the percentage of cost incurred to date compared to management’s estimated total anticipated cost for

each contract. This method is used because we consider total cost to be the best available measure of progress on each contract. These amounts are based on estimates, and the uncertainty inherent in the estimates initially is reduced as work on each contract nears completion. The asset “Costs and estimated earnings in excess of billings on uncompleted contracts” represents expenses incurred and revenues recognized in excess of amounts billed. The liability “Billings in excess of costs and estimated earnings on uncompleted contracts” represents billings in excess of revenues recognized.

Allowance for Doubtful Accounts

We perform periodic credit evaluations of our customers. We continuously monitor collections and payments from our customers and maintain an allowance for estimated credit losses based upon our historical experience and any specific customer collection issues that we have identified. Establishing reserves against specific accounts receivable and the overall adequacy of our allowance is a matter of judgment.

Asset Impairment

We evaluate the potential impairment of individual long-lived assets, principally the tower sites. We record an impairment charge when we believe an investment in towers has been impaired, such that future undiscounted cash flows would not recover the then current carrying value of the investment in the tower site. We consider many factors and make certain assumptions when making this assessment, including but not limited to: general market and economic conditions, historical operating results, geographic location, lease-up potential, and expected timing of lease-up. In addition, we make certain assumptions in determining an asset’s fair value less costs to sell for purposes of calculating the amount of an impairment charge. Changes in those assumptions or market conditions may result in a fair value less costs to sell which is different from management’s estimates. Future adverse changes in market conditions could result in losses or an inability to recover the carrying value, thereby possibly requiring an impairment charge in the future. In addition, if our assumptions regarding future undiscounted cash flows and related assumptions are incorrect, a future impairment charge may be required.

Asset Retirement Obligations

Under SFAS 143,Accounting for Asset Retirement Obligations, we recognize asset retirement obligations in the period in which they are incurred if a reasonable estimate of a fair value can be made, and we accrete 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 depreciated over its estimated useful life.

Significant management estimates and assumptions are required in determining the scope and fair value of our obligations to restore leaseholds to their original condition upon termination of ground leases. In determining the scope and fair value of our obligations, assumptions were made with respect to 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. While we feel the assumptions were appropriate, there can be no assurances that actual costs and the probability of incurring obligations will not differ from estimates. We review these assumptions periodically and we may need to adjust them as necessary.

RESULTS OF OPERATIONS

Three Months Ended September 30, 2005March 31, 2006 Compared to Three Months Ended September 30, 2004March 31, 2005

Revenues:

 

  For the three months ended September 30,

   For the three months ended March 31, 
  2005

  Percentage
of Revenues


 2004

  Percentage
of Revenues


 Percentage
Change


   2006  Percentage
of Revenues
 2005  Percentage
of Revenues
 Percentage
Change
 
  (dollars in thousands)   (dollars in thousands) 

Site leasing

  $41,104  62.3% $36,965  62.9% 11.2%  $45,029  65.4% $38,342  65.8% 17.4%

Site development consulting

   3,577  5.4%  3,812  6.5% (6.2)%   3,473  5.1%  3,087  5.3% 12.5%

Site development construction

   21,340  32.3%  17,966  30.6% 18.8%   20,302  29.5%  16,875  28.9% 20.3%
  

  

 

  

               

Total revenues

  $66,021  100.0% $58,743  100.0% 12.4%  $68,804  100.0% $58,304  100.0% 18.0%
  

  

 

  

               

The growth of our site leasing revenue is primarily due to an increase in the increased number of tenants and the amount of equipment added to our towers. As of September 30, 2005,March 31, 2006, we had 7,9048,466 tenants as compared to 7,1367,632 at September 30, 2004.March 31, 2005. Also, site leasing revenue has increased as a result of an increase in the number of towers owned to 3,2153,396 at September 30, 2005March 31, 2006 from 3,0673,113 at September 30, 2004.March 31, 2005. Additionally, we have experienced, on average, higher rents per tenant due to higher rents from new tenants, higher rents upon renewals by existing tenants and additional equipment added by existing tenants.

Site development construction revenue increased primarily as a result of revenue generated fromhigher activity among a services contract with Cingularlarger number of wireless customers in the North and South Carolina markets that was only in its initial stages in the thirdfirst quarter of 2004. The increase in site development construction revenue is also a result of an increase in the overall volume of work in the third quarter of 20052006 as compared to the same periodfirst quarter of 2004.

2005. As a result of the AAT Acquisition, we expect that site leasing revenue will substantially increase in future periods.

Operating Expenses:

 

   For the three months
ended September 30,


    
   2005

  2004
As restated


  Percentage
Change


 
   (in thousands)    

Cost of revenues (exclusive of depreciation, accretion and amortization):

            

Site leasing

  $11,694  $11,871  (1.5)%

Site development consulting

   3,036   3,303  (8.1)%

Site development construction

   20,275   16,866  20.2%

Selling, general and administrative

   6,725   7,374  (8.8)%

Restructuring and other charges

   31   3  933.3%

Asset impairment charges

   (16)  88  (118.2)%

Depreciation, accretion and amortization

   21,673   22,641  (4.3)%
   


 

    

Total operating expenses

  $63,418  $62,146  2.0%
   


 

    

Our site leasing cost of revenues decreased primarily as a result of property tax accruals that we decreased in the third quarter of 2005 due to actual property tax expenses for 2004 being lower than previously estimated. Site development construction cost of revenue increased primarily as a result of the increase in activity associated with the services contract with Cingular in the North and South Carolina markets.

Selling, general, and administrative expense decreased due to higher accounting and consulting fees of $0.2 million related to the implementation of Sarbanes-Oxley in 2004 as well as a recovery of $0.4 million of legal fees due to the settlement of litigation in the Company’s favor in 2005.

Depreciation expense decreased due to certain towers becoming fully depreciated in 2004 and 2005 as a result of the shortened depreciable lives that resulted from our change in the method of accounting for certain types of ground leases underlying our towers.

Other Income (Expense):

   For the three months
ended September 30,


  

Percentage
Change


 
   2005

  2004

  
   (in thousands)    

Interest income

  $244  $88  177.3%

Interest expense

   (10,230)  (11,270) (9.2)%

Non-cash interest expense

   (6,028)  (7,022) (14.2)%

Amortization of debt issuance costs

   (701)  (900) (22.1)%

Loss from write-off of deferred financing fees and extinguishment of debt

   —     (2,092) (100.0)%

Other

   19   3  533.3%
   


 


   

Total other income (expense)

  $(16,696) $(21,193) (21.2)%
   


 


   

Interest expense and non-cash interest expense in total decreased as a result of lower weighted average interest rates and lower average outstanding debt levels resulting from debt refinancings, repurchases and redemptions during 2004 and the first six months of 2005. Average debt outstanding was $835.9 million in the third quarter of 2005 and $890.8 million in the third quarter of 2004. The weighted average interest rate was 8.2% in the third quarter of 2005 and 8.4% in the third quarter of 2004. The loss from write-off of deferred financing fees and extinguishment of debt is attributable to a write-off of $2.1 million of deferred financing fees associated with the repurchase of $25.8 million of our 10 1/4% senior notes in the third quarter of 2004.

Loss from Continuing Operations:

Loss from continuing operations decreased to $14.4 million for the three months ended September 30, 2005 from $24.8 million for the three months ended September 30, 2004. This decrease was primarily the result of a decrease in losses from the write-off of deferred financing fees and extinguishment of debt of $2.1 million, a decrease in interest and non-cash interest expense of $2.0 million, and a decrease in the operating loss from continuing operations of $6.0 million.

Discontinued Operations:

Loss from discontinued operations decreased by $2.5 million for the three months ended September 30, 2005 as compared to the three months ended September 30, 2004. This decrease was primarily due to a loss resulting from the recording of an additional liability of $1.9 million in the third quarter of 2004 which related to the agreement in principle to settle the indemnification claims related to the towers sold in 2003.

Net Loss:

Net loss decreased to $14.4 million for the three months ended September 30, 2005 from $27.3 million for the three months ended September 30, 2004. This decrease was primarily the result of a decrease from the write-off of deferred financing fees and extinguishment of debt, a decrease in loss from continuing operations, a decrease in interest and non-cash interest expense, and a decrease in the loss from discontinued operations.

Nine Months Ended September 30, 2005 Compared to Nine Months Ended September 30, 2004

Revenues:

   For the nine months ended September 30,

 
   2005

  Percentage
of Revenues


  2004

  Percentage
of Revenues


  Percentage
Change


 
   (dollars in thousands) 

Site leasing

  $118,380  63.1% $106,352  64.0% 11.3%

Site development consulting

   10,422  5.6%  10,721  6.5% (2.8)%

Site development construction

   58,770  31.3%  48,876  29.5% 20.2%
   

  

 

  

   

Total revenues

  $187,572  100.0% $165,949  100.0% 13.0%
   

  

 

  

   

The growth of our site leasing revenue is primarily due to the increased number of tenants and the amount of equipment added to our towers. As of September 30, 2005, we had 7,904 tenants compared to 7,136 at September 30, 2004. Also, site leasing revenue has increased as a result of an increase in towers to 3,215 at September 30, 2005 from 3,067 at September 30, 2004. Additionally, we have experienced, on average, higher rents per tenant due to higher rents from new tenants, higher rents upon renewals by existing tenants and additional equipment added by existing tenants.

Site development construction revenue increased primarily as a result of revenue generated from a services contract with Cingular in the North and South Carolina markets that was only in its initial stages in the third quarter of 2004, as well as a significant services contract by Sprint in mid 2003, for which all phases of the project are now in process, as opposed to only a portion of this project being in process in the first nine months ended September 30, 2004. The increase in site development construction revenue is also a result of an increase in the overall volume of work in the second and third quarters of 2005 as compared to the same periods of 2004.

Operating Expenses:

   For the nine months
ended September 30,


    
   2005

  2004
As restated


  Percentage
Change


 
   (in thousands)    

Cost of revenues (exclusive of depreciation, accretion and amortization):

            

Site leasing

  $35,431  $35,556  (0.4)%

Site development consulting

   9,145   9,677  (5.5)%

Site development construction

   56,402   46,063  22.4%

Selling, general and administrative

   21,037   21,652  (2.8)%

Restructuring and other charges

   50   223  (77.7)%

Asset impairment charges

   238   1,620  (85.3)%

Depreciation, accretion and amortization

   64,960   68,102  (4.6)%
   

  

    

Total operating expenses

  $187,263  $182,893  2.4%
   

  

    

   For the three months
ended March 31,
  

Percentage

Change

 
   2006  2005  
   (in thousands)    

Cost of revenues (exclusive of depreciation, accretion and amortization):

      

Site leasing

  $12,331  $12,045  2.4%

Site development consulting

   2,876   2,829  1.7%

Site development construction

   19,056   16,420  16.1%

Selling, general and administrative

   8,703   7,200  20.9%

Asset impairment and other charges

   —     231  (100.0)%

Depreciation, accretion and amortization

   21,008   21,643  (2.9)%
          

Total operating expenses

  $63,974  $60,368  6.0%
          

Site development construction cost of revenue increased primarily as a result of the increase in revenue related to the Cingular and Sprint contracts, as well as an increase in the overall volume of work in the secondmentioned above. Selling, general and third quarters of 2005 as compared to the same periods of 2004.

Asset impairment charges decreasedadministrative expense increased as a result of impairment charges taken on one towerhigher salaries and benefits as a result of higher head count in the first quarter of 2006 versus the same period of 2005, as well as the result of the expensing of stock option grants in accordance with SFAS 123R in the amount of $1.0 million for the nine months ended September 30, 2005 as opposed to charges on nine towersfirst quarter of $1.92006 versus $0.1 million in the first quarter of 2005.

As a result of the AAT Acquisition, we expect that cost of site leasing revenues will substantially increase in future periods. We also anticipate an increase in selling, general and credits of $0.3 million on 14 towers reclassified from assets held for sale to continuing operations for the nine months ended September 30, 2004.

Depreciation expense decreasedadministrative expenses due to certain towers becoming fully depreciatedthe AAT Acquisition, but not at a level proportional to the increase in 2004site leasing cost of revenue. In addition, depreciation and 2005amortization expense is expected to materially increase as a result of the shortened depreciable lives that resultedAAT Acquisition. In addition, we expect to incur up to $10.0 million of one-time transaction, integration and severance costs in connection with the AAT Acquisition.

Operating Income (Loss) From Continuing Operations:

   

For the three months

ended March 31,

  

Percentage

Change

 
   2006  2005  
   (in thousands)    

Operating income (loss) from continuing operations

  $4,830  $(2,064) 334.1%

The decrease in operating loss from our changecontinuing operations primarily was a result of higher revenues without a commensurate increase in cost of sales in the methodsite leasing and site development construction segments offset by an increase in non-cash compensation expense.

Segment Operating Profit:

   For the three months
ended March 31,
  

Percentage

Change

 
   2006  2005  
   (in thousands)    

Segment operating profit

      

Site leasing

  $32,698  $26,297  24.3%

Site development consulting

   597   258  131.4%

Site development construction

   1,246   455  174.0%
          
  $34,541  $27,010  27.9%
          

The increase in site leasing segment operating profit was related primarily to additional revenue per tower generated by the increased number of accounting for certain typestenants and tenant equipment on our sites in first quarter of ground leases underlying our towers.

2006 versus first quarter of 2005, without a commensurate increase in the cost of revenues (excluding depreciation, accretion, and amortization) due to property tax reductions and tower operating cost reduction initiatives. As a result of the AAT Acquisition, we expect that site leasing segment operating profit will substantially increase in future periods.

Other Income (Expense):

 

  For the nine months
ended September 30,


   For the three months
ended March 31,
 

Percentage

Change

 
  2005

 2004

 Percentage
Change


   2006 2005 
  (in thousands)   (in thousands) 

Interest income

  $988  $285  246.7%  $853  $247  245.3%

Interest expense

   (30,661)  (36,816) (16.7)%   (8,349)  (10,004) (16.5)%

Non-cash interest expense

   (20,771)  (21,035) (1.3)%   (5,265)  (7,342) (28.3)%

Amortization of debt issuance costs

   (2,045)  (2,611) (21.7)%

Amortization of deferred financing fees

   (876)  (798) 9.8%

Loss from write-off of deferred financing fees and extinguishment of debt

   (9,730)  (24,764) (60.7)%   —     (1,486) (100.0)%

Other

   475   74  541.9%

Other income

   —     150  (100.0)%
  


 


         

Total other income (expense)

  $(61,744) $(84,867) (27.2)%

Total other expense

  $(13,637) $(19,233) (29.1)%
  


 


         

Interest expense and non-cash interest expense in total decreased primarily as a result of lower weighted average interest ratesthe redemptions of 35% of our 9 3/4% senior discount notes and lower average outstanding debt levels resultingour 8 1/2% senior notes from debt refinancings, repurchasesthe gross proceeds of our May and redemptions during 2004 and the first six months of 2005. Average debt outstanding was $876.5 million in the first three quarters ofOctober 2005 and $906.7 million in the first three quarters of 2004.equity offerings totaling $226.9 million. The weighted average interest rate was 8.0% in the first three quarters of 2005 and 8.4% in the first three quarters of 2004.

The decrease in loss from write-off of deferred financing fees and extinguishment of debt is attributable to a write-off of $8.2 million associated with the redemption of $68.9 million of our 9 3/4% senior discount notes in the second quarter of 2005 and the write-off of $1.5 million associated with the redemption ofremaining $50.0 million of our 10 1/4% senior notes for the three months ended March 31, 2005.

Adjusted EBITDA:

   For the three months
ended March 31,
  

Percentage

Change

 
   2006  2005  
   (in thousands)    

Adjusted EBITDA

  $27,386  $20,882  31.1%

The increase in adjusted EBITDA was primarily the result of stronger performance of the site leasing segment for the three months ended March 31, 2006 versus the three months ended March 31, 2005.

Discontinued Operations:

   For the three months
ended March 31,
  

Percentage

Change

 
   2006  2005  
   (in thousands)    

Loss from discontinued operations, net of income taxes

  $—    $(170) (100.0)%

Loss from discontinued operations decreased from $0.2 million for the three months ended March 31, 2005 as compared to the three months ended March 31, 2006. This decrease was due to the runoff of activities in the first quarter of 2005. This compares2005 related to a write-off of $9.3 million of deferred financing fees and a $15.5 million loss on extinguishment of debt associated with the early retirement of our 12% senior discount notes, the repurchase of a portion of our 10 1/4% senior notes and the termination of the prior senior credit facilityWestern services business which was sold in the first nine months ofJune 2004.

Net Loss:

 

   

For the three months

ended March 31,

  

Percentage

Change

 
   2006  2005  
   (in thousands)    

Net loss

  $(9,205) $(21,713) (57.6)%

Loss From Continuing Operations:

LossNet loss decreased to 9.2 million for the three months ended March 31, 2006 from $21.7 million for the three months ended March 31, 2005. The decrease in net loss is primarily a result of improved operating income (loss) from continuing operations, decreased from $102.5 million for the nine months ended September 30, 2004 to $62.4 million for the nine months ended September 30, 2005. This decrease was primarily the result of a decrease in the operating loss from continuing operations of $17.3 million, a decrease inlower interest expense and non-cash interest expense, of $6.4 million, and a decrease in losses from the write-off of deferred financing fees and extinguishment of debt of $15.0 million.

Discontinued Operations:

Loss from discontinued operations decreased to $0.05 million for the ninethree months ended September 30, 2005 from $2.9 million forMarch 31, 2006 compared to the ninethree months ended September 30, 2004. This decrease resulted primarily from operating losses from the 47 towers and the Western site development services being included in discontinued operations in the nine months ended September 30, 2004, all of which were disposed of by June 30,March 31, 2005.

Net Loss:

Net loss decreased from $105.4 million for the nine months ended September 30, 2004 to $62.4 million for the nine months ended September 30, 2005. This decrease was primarily the As a result of a decrease in operatingthe loss from continuing operations, a decrease in interest and non-cash interest expense, and a decrease in losses from the write-off of deferred financing fees and extinguishment of debt.

debt relating to the AAT Acquisition, we expect net loss for June 30, 2006 to be materially higher than the three months ended March 31, 2006.

LIQUIDITY AND CAPITAL RESOURCES

SBA Communications Corporation (“SBA Communications”) is a holding company with no business operations of its own. Our only significant asset is the outstanding capital stock of SBA Telecommunications, Inc. (“Telecommunications”) which is also a holding company that owns the outstanding capital stock of SBA Senior Finance, Inc. (“SBA Senior Finance”). SBA Senior Finance owns directly or indirectly, all the capital stockequity interests in each of our subsidiaries.subsidiaries with one exception. SBA Senior Finance owns indirectly 50% of the membership interests of CA Towers LLC, which owns a single tower. We conduct all of our business operations through our SBA Senior Finance 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. Even if we decided to pay a dividend, we cannot assure you that our subsidiaries will generate sufficient cash flow to pay a dividend. Furthermore, theThe ability of our subsidiaries to pay cash or stock dividends is restricted under the terms of our current senior credit facilityCMBS Certificates and indentures.our other debt instruments.

A summary of our cash flows is as follows:

 

   For the nine
months ended
September 30, 2005


 
   (in thousands) 

Summary Cash Flow Information:

     

Cash provided by operating activities

  $36,143 

Cash used in investing activities

   (50,967)

Cash used in financing activities

   (31,326)
   


Decrease in cash and cash equivalents

   (46,150)

Cash and cash equivalents, December 31, 2004

   69,627 
   


Cash and cash equivalents, September 30, 2005

  $23,477 
   


   

For the three

months ended

March 31, 2006

 
   (in thousands) 

Cash provided by operating activities

  $15,212 

Cash used in investing activities

   (10,525)

Cash provided by financing activities

   9,253 
     

Increase in cash and cash equivalents

   13,940 

Cash and cash equivalents, December 31, 2005

   45,934 
     

Cash and cash equivalents, March 31, 2006

  $59,874 
     

Sources of Liquidity:

Cash provided by operating activities was $36.1 million for the nine months ended September 30, 2005. This entire amount was primarily the result of operating income from the site leasing segment exclusive of depreciation, accretion, and amortization.

We have traditionally funded our growth, including our tower portfolio growth, through long-term indebtedness. During 2003 and 2004, we issued newborrowings under our revolving credit facility, long-term indebtedness and equity issuances. In addition, we have recently begun to permit usfund our growth with cash from operations.

During the past few years, we have pursued a strategy of refinancing our higher cost long term debt with lower cost debt and equity in order to redeemlower our older, more expensive, outstanding notestotal indebtedness and reduce our weighted costinterest expense. As a result of debt. In December 2003, SBA Communications and Telecommunications co-issued $402.0these initiatives, we redeemed and/or repurchased in the open market an aggregate of $249.3 million of our high-yield debt during 2005. At March 31, 2006 we had $222.2 million aggregate principal amount at maturity of their 9 3/4% senior discount notes, and used the proceeds to redeem and/or repurchase all of our 12% senior discount notes and to repurchase a portion of our 10 1/4% senior notes. In December 2004, we issued $250.0 million of our 8 1/2% senior notes and used the proceeds to redeem and/or repurchase all of our outstanding 10 1/4% senior notes, of which we repurchased $186.5 million in December 2004 and redeemed the remaining $50.0 million on February 1, 2005.

In addition, we use our $400 million senior credit facility to finance our operations. The facility consists of a term loan and a revolving line of credit. As of September 30, 2005, we had an outstanding balance of $342.9 million under the facility, which consisted of $320.9 million outstanding under the term loan and $22.0 million outstanding under the revolving line of credit. As of September 30, 2005, we have approximately $53.0 million of additional

borrowing capacity under our senior credit facility, subject to maintenance covenants, borrowing base limitations, and other conditions.

On November 4, 2005, two of our subsidiaries entered into a purchase agreement with the Initial Purchasers regarding the purchase and sale of $405.0 million of commercial mortgage pass-through certificates to be issued by SBA CMBS Trust. The assets of SBA CMBS Trust will consist of a non-recourse mortgage loan to be paid from the operating cash flows of 1,714 of our tower sites and secured by mortgages on substantially all of such tower sites and their operating cash flows. The Certificates will have a contract weighted average fixed interest rate of 5.6%, and a weighted average interest rate to us of 4.8% after giving effect to the hedging arrangements discussed below in “Quantitative and Qualitative Disclosures About Market Risk”. The Certificates are expected to be rated investment grade and will have an expected life of five years with a final repayment date in 2035. We expect the issuance of the Certificates to close on November 18, 2005. We intend to use a substantial portion of the net proceeds from this issuance to refinance the existing senior credit facility and fund reserves and expenses associated with the CMBS Transaction. The remainder of the net proceeds will be used by us at our discretion.

On May 11, 2005, we issued 8.0 million shares of our Class A common stock. The shares were issued off of a universal shelf registration we have on file with the Securities and Exchange Commission (“SEC”) which registers the issuance of any combination of the following securities: Class A common stock, preferred stock, debt securities, depositary shares or warrants. The net proceeds from the issuance were $75.4 million after deducting underwriter fees and offering expenses, and were used to redeem an accreted balance of $68.9 million of our 9 3/4% senior discount notes (which were originally issued in December 2003) and to pay the applicable premium for the redemption. At September 30, 2005, as adjusted for this redemption and including the accretion on the 9 3/4% senior discount notes since the redemption, we had an accreted value of $254.3$162.5 million aggregate principal amount outstanding of our 9 3/4% senior discount notes.

On October 5, 2005, we issued 10.0 million shares of the Company’s Class A common stock. The shares were issued off of the universal shelf registration statement discussed above. The net proceeds from the issuance were $151.2 million after deducting underwriter fees and offering expenses. On November 7, 2005, these proceeds were used to redeem an accreted balance of $42.9 million of our 9 3/4% senior discount notes and pay the applicable premium for the redemption, to redeem $87.5 million of our 8 1/2% senior notes (which were originally issued in December 2004). In addition, we had $405.0 million of Commercial Mortgage Pass-Through Certificates; Series 2005-1 (the “CMBS Certificates”) issued by SBA CMBS Trust, an indirect subsidiary of ours.

On December 22, 2005, we closed on a senior secured $160.0 million revolving credit facility, which may be borrowed, repaid and payredrawn, subject to compliance with certain covenants. The revolving credit facility matures on December 21, 2007. Amounts borrowed under the applicable premiumfacility accrue interest at LIBOR plus a margin that ranges from 75 basis points to 200 basis points or at a base rate plus a margin that ranges from 12.5 basis points to 100 basis points. Amounts borrowed under this facility are secured by a first lien on substantially all of SBA Senior Finance II’s assets and are guaranteed by certain of our other subsidiaries. No amounts were outstanding under this facility at March 31, 2006. As of March 31, 2006, we were in full compliance with the terms of the new credit facility and had the ability to draw an additional $66.0 million (giving effect to leverage limitations contained in the indenture governing the 9 3/4% senior discount notes). However, as further discussed below, we have agreed not to request, and the revolving credit facility lenders have agreed not to make, any loans under our revolving credit facility until the bridge loan that we entered into in connection with the AAT Acquisition is repaid.

Cash provided by operating activities was $15.2 million for the redemptionthree months ended March 31, 2006. This was primarily the result of segment operating profit (excluding depreciation, accretion, and for working capital purposes. After adjustment foramortization) from the October 5, 2005 offering, we could issue up to $23.9 millionsite leasing segment, net of securities under our universal shelf registration statement.interest expense and selling, general, and administrative expenses during the quarter.

Registration Statements

We alsoIn connection with our equity issuances, we have on file with the SECCommission 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 companies that provide related services at various locations inservices. During the United States.three months ended March 31, 2006, we did not issue any shares of Class A common stock under this registration statement. As of September 30, 2005,March 31, 2006, we have 2.4had approximately 2.3 million shares of Class A common stock remaining under this shelf registration statement.

We also have on file with the Commission a universal shelf registration statement registering Class A common stock, preferred stock, debt securities, depositary shares or warrants. During the three months ended March 31, 2006, we did not issue any securities under this shelf registration. As of March 31, 2006, we can issue up to $21.4 million of securities under this shelf registration statement.

On April 14, 2006, 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 offer our Class A main priority for us continues to be reductions in our weighted average cost of debt. As part of this initiative we have, and may continue to, repurchase for cash and/or equity our higher cost outstanding indebtedness. As a result of our refinancing, debt repurchase and redemption activities we have reduced our weighted cost of debt from 8.2% at September 30, 2004 to 7.9% at September 30, 2005.

In addition to our capital restructuring activities completed in 2003, 2004 and the first three quarters of 2005, in order to manage our significant levels of indebtedness and to ensure continued compliance with our financial covenants, we may explore a number of alternatives, including selling certain assets or lines of business, issuing equity, repurchasing, restructuring, or refinancing or exchanging for equity some or all of our debt or pursuing other financial alternatives, and we may from time to time implement one or more of these alternatives. Upon closing the CMBS Transaction, we will use a substantial portion of the net proceeds to refinance the senior credit facility and we intend to explore the possibilities and alternatives for refinancing our remaining high yield debt securities. One or more of the alternatives may include the possibility of entering into a new credit facility, issuing additionalcommon stock, shares of commonpreferred stock, which may be represented by depositary shares, unsecured senior, senior subordinated or securities convertible into shares of common stock or converting our existing indebtedness into shares of common stock or securities convertible into shares of common stock, any of which would dilute our existing shareholders. We cannot assure you thatsubordinated debt securities; and warrants to purchase any of these strategies can be consummated, or if consummated, would effectively addresssecurities. Under the risks associated with our significant levelrules governing the automatic shelf registration statements, we will file a prospectus supplement and advise the Commission of indebtedness.the amount and type of securities each time we issue securities under this registration statement.

Uses of Liquidity:

DuringOur principal use of liquidity is cash capital expenditures associated with the nine months ended September 30, 2005, cash used in financing activities was $31.3 million. This amount included (1) the payment of $52.5 million relating to the redemptiongrowth of our outstanding 10 1/4% senior notes which were redeemed from proceeds from the issuance of our 8 1/2% senior notes in the fourth quarter of 2004 and (2) the payment of $75.6 million relating to the redemption of $68.9 million accreted value of our 9 3/4% senior discount notes, which were redeemed from the net proceeds from the issuance of 8.0 million shares of our Class A common stock in May 2005.

tower portfolio. Our cash capital expenditures for the nine monthsquarter ended September 30, 2005March 31, 2006 were $35.7$29.9 million. Included in this amount was $7.8$2.8 million related to new tower construction, $2.0$0.7 million for maintenance tower capital expenditures, $2.5$1.3 million for augmentations and tower upgrades, $1.1$0.8 million for general corporate expenditures, and $2.6$0.9 million for ground lease purchases. In addition, we had cash capital expenditures of $19.7$23.4 million and issued approximately 1.6 million shares of Class A common stock in connection with the acquisition of 13578 towers, related prorated rental receipts and related assets duringpayments, and earnouts for the ninethree months ended September 30, 2005.

March 31, 2006.

The $7.8$2.8 million of new tower construction included costs associated with the completion of twenty15 new towers during such nine month period2006 and costs incurred on sites currently in process. We currentlyAs of May 8, 2006, we plan to make total cash capital expenditures during 20052006 of $63.7$29.0 million to $66.2$35.0 million primarily in connection with our plans to build between 4080 and 45100 towers, and forto make cash expenditures of approximately $26.2 million relating to the acquisition of approximately 160106 towers already acquired or under signed purchase agreements as of which 135 towers have been purchased during the first three quarters of 2005.May 8, 2006. All of these planned capital expenditures are expected to be funded by cash on hand, cash flow from operations, and availability under our senior credit facility andand/or through the issuances of our Class A common stock in connection with tower acquisitions.

We estimate we will incur approximately $1,000 per tower per year for capital improvements or modifications to our towers. All of these planned capital expenditures are expected to be funded by cash on hand and cash flow from operations. The exact amount of our future capital expenditures will depend on a number of factors including amounts necessary to support our tower portfolio and our new tower build program.

Debt Service Requirements/Capital Instruments:Requirements:

Senior Notes and Senior Discount Notes:

At September 30, 2005March 31, 2006 we had $250.0$162.5 million aggregate principal amount outstanding of our 8 1/2% senior notes. As adjusted for the redemption of $87.5 million of theseThese notes on November 7, 2005, the outstanding balance of these notes is $162.5 million and annual debt service requirements are approximately $13.8 million. The 8 1/2% senior noteswere to mature December 1, 2012. Interest on these notes iswas payable June 1 and December 1 of each year.

At September 30, 2005 Based on amounts outstanding at March 31, 2006 annual debt service requirements would have been approximately $13.8 million. In addition, at March 31, 2006 we had $254.3$222.2 million aggregate principal amount outstanding of our 9 3/4% senior discount notes. As adjusted for the redemption of $42.9 million of accreted value of these notes on November 7, 2005, the outstanding balance of these notes would be $211.4 million. The 9 3/4% senior discount notes were to accrete in value until December 15, 2007 at which time the notes willwould have accreted to a principal balance of $259.2$261.3 million. TheThese notes were to mature December 15, 2011. Interest on these notes was payable June 15 and December 15, beginning June 15, 2008. As discussed above under Recent Transactions, we repurchased 100% of the outstanding amounts of both our 8 1/2% senior notes and our 9 3/4% senior discount notes mature Decemberin connection with the AAT Acquisition.

At March 31, 2006, we had $405.0 million outstanding of our CMBS Certificates. The CMBS Certificates have an anticipated repayment date of November 15, 2011.2010. Interest on the CMBS Certificates is payable monthly in arrears, generally on the 15th day of each month. Based on the amounts outstanding at March 31, 2006, annual debt service on these notes is payable June 15$22.7 million.

At March 31, 2006, we had no amounts outstanding under our revolving credit facility. Pursuant to the terms of an Omnibus Agreement that we entered into in connection with the AAT Acquisition, we have agreed not to request and December 15, beginning June 15, 2008.the revolving credit facility lenders have agreed not to make, any loans or issue any letters of credit under the revolving credit facility until the bridge loan is fully repaid. Consequently, we do not anticipate having outstanding borrowings under the revolving credit facility during 2006. We will continue to be responsible for commitment fees of approximately $0.6 million annually under our revolving credit facility.

As discussed below, on April 27, 2006 we entered into a $1.1 billion bridge loan. Interest accrues at a rate per annum equal to the Eurodollar rate plus a margin of 2.00% until September 12, 2006, and if the bridge loan is extended the interest rate margin shall be increased to 2.75%. Based on the amounts outstanding at April 27, 2006 and the Eurodollar rate in effect at the date of closing through the extended maturity date of January 27, 2007, the debt service on the bridge loan will be approximately $61.8 million.

Capital Instruments:

Senior Notes and Senior Discount Notes

TheOur 8 1/2% senior notes arewere unsecured and arepari passu in right of payment with our other existing and future senior indebtedness. TheOur 9 3/4% senior discount notes, which were co-issued bywith SBA Communications and Telecommunications, in December 2003, arewere unsecured, rankrankedpari passu with the senior indebtedness and arewere structurally senior to all indebtedness of SBA Communications. Both the 8 1/2% senior notes and the 9 3/4% senior discount notes placeplaced certain restrictions on, among other things, the incurrence of debt and liens, issuance of preferred stock, payment of dividends or other distributions, sale of assets, transactions with affiliates, sale and leaseback transactions, certain investments and our ability to merge or consolidate with other entities. As discussed above under Recent Transactions, we repurchased 100% of the aggregate principal amounts outstanding of both our 8 1/2% senior notes and our 9 3/4% senior discount notes in connection with the AAT Acquisition.

Senior Credit Facility:CMBS Certificates

On November 18, 2005, a subsidiary of ours sold in a private transaction $405.0 million of CMBS Certificates, Series 2005-1. The CMBS Certificates consist of five classes, all of which are rated investment grade, as indicated in the table below:

 

Subclass

  

Initial Subclass

Principal Balance

  Pass through
Interest Rate
 
   (in thousands)    

2005-1A

  $238,580  5.369%

2005-1B

   48,320  5.565%

2005-1C

   48,320  5.731%

2005-1D

   48,320  6.219%

2005-1E

   21,460  6.706%
      
  $405,000  5.608%
      

On January 30, 2004,The contract weighted average fixed interest rate of the Certificates is 5.6%, and the effective weighted average fixed interest rate to SBA Properties, Inc. is 4.8% after giving effect to a settlement gain of two interest rate swap agreements entered in contemplation of the transaction. The CMBS Certificates have an expected life of five years with a final repayment date in 2035. The proceeds of the CMBS Certificates were primarily used to purchase the prior senior credit facility of SBA Senior Finance and to fund reserves and pay expenses associated with the offering.

The purpose of the CMBS transaction was to refinance our prior senior credit facility and therefore continue to improve our balance sheet. In connection with the CMBS Transaction, the prior senior credit facility was amended and restated to replace SBA Properties as the new borrower, to completely release SBA Finance and the other guarantors of any obligations under the senior credit facility, to increase the principal amount of the loan to $405.0 million and to amend various other terms (as amended and restated, the “Mortgage Loan”). The Mortgage Loan was then purchased by SBA CMBS Depositor, an indirect subsidiary of ours, with proceeds from the CMBS Transaction and assigned to the Trust, which has all rights as lender under the Mortgage Loan.

Interest on the Mortgage Loan will be paid from the operating cash flows from SBA Properties’ 1,714 tower sites. SBA Properties is required to make monthly payments of interest on the Mortgage Loan. Subject to certain limited exceptions described below, no payments of principal will be required to be made prior to the monthly payment date in November 2010, which is the anticipated repayment date. 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 SBA Properties will be required to pay over the succeeding twelve months, as of the end of any calendar quarter, falls to 1.30 times or lower, then all cash flow in excess of amounts required to make debt service payments, to fund required reserves, to pay management fees and budgeted operating expenses and to make other payments required under the loan documents, referred to as excess cash flow, will be deposited into a reserve account instead of being released to SBA Properties. The funds in the reserve account will not be released to SBA Properties 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. Otherwise, on a monthly basis, the excess cash flow of SBA Properties held by the Trustee after payment of principal, interest, reserves and expenses is distributed to SBA Properties.

SBA Properties may not prepay the Mortgage Loan in whole or in part at any time prior to November 2010, except in limited circumstances (such as the occurrence of certain casualty and condemnation events relating to SBA Properties’ tower sites). Thereafter, prepayment is permitted provided it is accompanied by any applicable prepayment consideration. If the prepayment occurs within nine months of the final maturity date, no prepayment consideration is due. The entire unpaid principal balance of the Mortgage Loan will be due in November 2035. The Mortgage Loan may be defeased in whole at any time.

The Mortgage Loan is secured by (1) mortgages, deeds of trust and deeds to secure debt on substantially all of the 1,714 tower sites and their operating cash flows, (2) a security interest in substantially all of SBA Properties’ personal property and fixtures and (3) SBA Properties’ rights under the management agreement it entered into with SBA Network Management, Inc. (“SBA Network Management”) relating to the management of SBA Properties’ tower sites by SBA Network Management pursuant to which SBA Network Management arranges for the payment of all operating expenses and the funding of all capital expenditures out of amounts on deposit in one or more operating accounts maintained on SBA Properties’ behalf. For each calendar month, SBA Network Management is entitled to receive a management fee equal to 10% of SBA Properties’ operating revenues for the immediately preceding calendar month.

Senior Revolving Credit Facility

On December 20, 2005, SBA Senior Finance II closed on a senior revolving credit facility in the amount of $400.0$160.0 million. This facility consists of a $325.0 million term loan and a $75.0 million revolving line of credit. The revolving line of credit that may be borrowed, repaid and redrawn. Amortization ofAmounts borrowed under the term loan isfacility accrue interest at LIBOR plus a margin that ranges from 75 basis points to 200 basis points or at a quarterlybase rate of 0.25% and is payable quarterly beginning September 30, 2004 and ending September 30, 2008.plus a margin that ranges from 12.5 basis points to 100 basis points. All remaining outstanding amounts under the term loans are due October 31, 2008. There is no amortization of the revolving loans and all amounts outstanding under the revolving facility are due on July 31, 2008.December 21, 2007. This facility may be prepaid at any time after December 16, 2005 without prepayment penalty. If the facility is prepaid with proceeds from anotherreplaces our prior senior credit facility prior to this date, there is a 1% prepayment penalty. Prepayments from sources other than a senior credit facility will not incur this penalty.

In accordancewhich was assigned and became the Mortgage Loan in connection with its original terms, the facility accrued interest at the Eurodollar Rate (as defined in the senior credit facility) plus a spread of 350 basis points or the Base Rate (as defined in the senior credit facility) plus a spread of 250 basis points. In November 2004, we entered into an amendment to the senior credit facility that reduced the interest rate spread on the facility to up to 275 basis points over the Eurodollar Rate or up to 175 basis points over the Base Rate. On June 16, 2005, we entered into a second amendment to the senior credit facility that further reduced the interest rate spread on the term loan to 225 basis points over the Eurodollar Rate or 125 basis points over the Base Rate. SBA Senior Finance has recorded deferred financing fees of approximately $6.5 million associated with this facility.

CMBS Transaction, as discussed above.

Amounts borrowed under this facility are secured by a first lien on substantially all of SBA Senior Finance’sFinance II’s assets. In addition, each of SBA Senior Finance’s domesticFinance II’s subsidiaries has guaranteed the obligations of SBA Senior Finance II under the senior credit facility and has pledged substantially all of their respective assets to secure such guarantee. In addition, SBA Communications and SBA Telecommunications have pledged, on a non-recourse basis, all of the common stock of SBA Telecommunications and SBA Senior Finance to secure SBA Senior Finance’s obligations under this senior credit facility.

The senior credit facility requires SBA Senior Finance II to maintain specified financial ratios, including ratios regarding its debt to annualized operating cash flow, debt service, cash interest expense and fixed charges for each quarter. In addition, theThis senior credit facility contains affirmative and negative covenants that, among other things, restrict its ability to incur debt and liens, sell assets, commit to capital expenditures, enter into affiliate transactions or sale-leaseback transactions, and/or build towers without anchor tenants. TheAdditionally, this facility permits distributions by SBA Senior Finance II to SBA Telecommunications and SBA Communications to service their debt, pay consolidated taxes, pay holding company expenses and for the repurchase of senior notes or senior discount notes subject to compliance with the covenants discussed above. SBA Senior Finance’sFinance II’s ability in the future to comply with the covenants and access the available funds under the senior credit facility in the future will depend on its future financial performance. As of September 30, 2005,March 31, 2006, we were in full compliance with the financial covenants contained in this agreement.agreement and had approximately $66.0 million available to draw on this facility.

Concurrently with the closing of the bridge loan, we entered into an Omnibus Agreement with our lenders under our revolving credit facility and the bridge loan lenders. Pursuant to the Omnibus Agreement, the revolving credit facility lenders consented to the bridge loan and the AAT Acquisition. In addition, until the bridge loan is paid in full, we have agreed not to request, and the revolving credit

As

facility lenders have agreed not to make, any loans or issue any letters of credit under the revolving credit facility. Furthermore, the revolving credit facility lenders have agreed that all liens, with certain exceptions, whether now existing or hereafter arising, in favor of the credit facility lenders securing the obligations under the revolving credit facility will be junior in priority to all liens in favor of the bridge loan lenders securing the obligations under the bridge loan. Pursuant to the Omnibus Agreement, all representations, warranties and covenants, with certain exceptions, under the revolving credit facility are suspended and of no force and effect until such time as the bridge loan is repaid.

Bridge Loan

In order to fund the cash consideration for the AAT Acquisition and the amounts necessary to repurchase the outstanding notes and pay the associated premiums and fees, SBA Senior Finance, Inc., an indirect wholly-owned subsidiary of ours, entered into a credit agreement for a $1.1 billion term loan, among Senior Finance, Inc., the several banks and other financial institutions parties thereto, and Deutsche Bank AG, New York Branch, as administrative agent. The bridge loan matures on September 30, 2005 we had $342.9 million12, 2006 and may be extended to January 27, 2007, at our option, provided that (i) no default or event of default shall have occurred and be continuing and (ii) each of the representations and warranties of Senior Finance, us and certain of our subsidiaries are true and correct in all material respects on and as of such date. Loans outstanding under the seniorbridge loan are Eurodollar loans, unless converted to alternate base rate loans as provided in the bridge loan credit facility,agreement. Eurodollar loans accrue interest at a rate per annum equal to the Eurodollar rate plus a margin of which $320.9 million was outstanding2.00% calculated on the basis of a 360-day year. If the bridge loan is extended the interest rate margin shall be increased to 2.75%. Senior Finance may prepay the bridge loan, in whole or in part, without premium or penalty. Amounts borrowed under the termbridge loan are secured by a first lien on substantially all of Senior Finance’s assets and $22.0 million was outstanding under the revolving lineare guaranteed by us and certain of credit. Basedour subsidiaries, which guarantee is secured by a first lien on the outstanding amountsubstantially all of our and rates in effect at such time, we estimate our annual debt service including amortization would have been approximately $24.3 million. Upon closing the CMBS Transaction, we will use a substantial portion of the net proceeds to refinance the senior credit facility and fund reserves and expenses associated with the CMBS Transaction. The remainder of the net proceeds will be used by the Company at its discretion.

subsidiaries’ non-real estate assets.

Inflation

The impact of inflation on our operations has not been significant to date. However, we cannot assure you that a high rate of inflation in the future will not adversely affect our operating results.

Recent Accounting Pronouncements

Stock-based Compensation

Effective January 1, 2006, we adopted the provisions of Statement of Financial Accounting Standards No. 123R, “Share-Based Payments,” (“SFAS 123R”) which requires the measurement and recognition of compensation expense for all share-based payment awards to employees and directors based on estimated fair values. SFAS 123R supersedes the Company’s previous accounting methodology using the intrinsic value method under Accounting Principles Board Opinion No. 25 (“APB 25”), “Accounting for Stock Issued to Employees.”

We adopted SFAS 123R using the modified prospective transition method. Under this transition method, compensation expense recognized during the three months ended March 31, 2006 included: (a) compensation expense for all share-based awards granted prior to, but not yet vested, as of December 31, 2005, based on the grant date fair value estimated in accordance with the original provisions of SFAS 123, and (b) compensation expense for all share-based awards granted subsequent to December 31, 2005, based on the grant date fair value estimated in accordance with the provisions of SFAS 123R. In Mayaccordance with the modified prospective transition method, our Consolidated Financial Statements for prior periods have not been restated to reflect the impact of SFAS 123R.

On November 10, 2005 the Financial Accounting Standards Board (“FASB”) issued StatementFASB Staff Position No. FAS 123R-3, “Transition Election Related to Accounting for Tax Effects of Share-Based Payment Awards.” We have elected to adopt the alternative transition method provided in the FASB Staff Position for calculating the tax effects of share-based compensation pursuant to SFAS 123R. The alternative transition method includes simplified methods to establish the beginning balance of the additional paid-in capital pool (“APIC Pool”) related to the tax effects of employee share-based compensation, and to determine the subsequent impact on the APIC Pool and our Consolidated Statements of Cash Flows of the tax effects of employee and director share-based awards that are outstanding upon adoption of SFAS 123R.

Other Pronouncements

In February 2006, the FASB issued SFAS No. 155, “Accounting for Certain Hybrid Financial Instruments—an Amendment of FASB Statements No. 133 and 140” (“SFAS No. 155”). SFAS No. 155 allows financial instruments that contain an embedded derivative and that otherwise would require bifurcation to be accounted for as a whole on a fair value basis, at the holders’ election. SFAS No. 155 also clarifies and amends certain other provisions of SFAS No. 133 and SFAS No. 140. This statement is effective for all financial instruments acquired or issued in fiscal years beginning after September 15, 2006. We are currently evaluating what, if any, impact the adoption of SFAS No. 155 will have on our consolidated financial condition or results of operations.

In May 2005, FASB issued SFAS No. 154, “Accounting Changes and Error Corrections-a replacement of APB Opinion No. 20 and FASB Statement No. 3” (“SFAS 154”). This standard replaces APB Opinion No. 20,Accounting Changes, and FASB Statement No. 3,Reporting Accounting Changes in Interim Financial Statements, and changes the requirements for the accounting and reporting of a change in accounting principle. SFAS 154 applies to all voluntary changes in accounting principle and to changes required by an accounting pronouncement in the unusual instance that the pronouncement does not include specific transition provisions. SFAS 154 also requires that a change in depreciation, amortization, or depletion method for long-lived, nonfinancial assets be accounted for as a change in accounting estimate effectedaffected by a change in accounting principle. SFAS 154 requires that the change in accounting principle be applied to the balances of assets and liabilities as of the beginning of the earliest period for which retrospective application is practicable and that a corresponding adjustment be made to the opening balance of retained earnings for that period rather than being reported in an income statement. Such a change would require the Companyus to restate itsour previously issued financial statements to reflect the change in accounting principle to prior periods presented. SFAS 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. The adoption of SFAS 154 isdid not expected to have a material impact on the Company’sour results of operations and financial position.

 

In March 2005, FASB Interpretation No. 47, “Accounting for Conditional Asset Retirement Obligations (an interpretation of FASB Statement No. 143)” (“FIN 47”) was issued. FIN 47 provides clarification with respect to the timing of liability recognition of legal obligations associated with the retirement of tangible long-lived assets when the timing and/or method of settlement of the obligation are conditional on a future event. FIN 47 is effective no later than the end of fiscal years ending after December 15, 2005 (December 31, 2005 for calendar-year enterprises). The Company is currently evaluating the potential impact of FIN 47.

In December 2004, the Financial Accounting Standards Board (“FASB”) issued a revised SFAS No. 123, Share-Based Payment (“Statement 123R”), which is effective for the Company’s first quarter of fiscal year 2006. Statement 123R requires companies to expense in their consolidated statement of operations the estimated fair value of employee stock options and similar awards. The Company is currently evaluating which application method will be applied once SFAS 123R is adopted. Depending on the model used to calculate stock-based compensation expense in the future, the implementation of certain other requirements of Statement 123R and additional option grants expected to be made in the future, the pro forma disclosure may not be indicative of the stock-based compensation expense that will be recognized in the Company’s future financial statements. The Company is in the process of determining how the new method of valuing stock-based compensation as prescribed in Statement 123R will be applied to valuing stock-based awards granted after the effective date and the impact the recognition of compensation expense related to such awards will have on its financial statements.

In December 2004, the FASB issued SFAS No. 153, “Exchanges of Nonmonetary Assets—an Amendment of APB No. 29” (“SFAS 153”). The amendments made by SFAS 153 are based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged. Further, the amendments eliminate the narrow exception for nonmonetary exchanges of similar productive assets and replace it with a broader exception for exchanges of nonmonetary assets that do not have “commercial substance.” This standard is effective for nonmonetary asset exchanges occurring after July 1, 2005. The adoption of this standard did not have a material impact on the Company’s Consolidated Financial Statements.

ITEM 3:QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to certain market risks that are inherent in our financial instruments. These instruments arise from transactions entered into in the normal course of business. We are subject to interest rate risk on our senior credit facility and any future financing requirements. We attempt to limit our exposure to interest rate risk by managing the mix of our long-term fixed rate senior notes and our borrowings under our senior credit facility. As of March 31, 2006, long-term fixed rate borrowings represented 100% of our total borrowings.

The following table presents the future principal payment obligations and interest rates associated with our long-term debt instruments assuming our actual level of long-term indebtedness as of September 30, 2005:March 31, 2006:

 

   2005

  2006

  2007

  2008

  2009

  Thereafter

  Total

  Fair Value

Long-term debt:

                                

Fixed rate (8 1/2%)(1)

  $—    $—    $—    $—    $—    $250,000  $250,000  $273,125

Fixed rate (9 3/4%)(2)

  $—    $—    $—    $—    $—    $254,324  $254,324  $232,050

Senior credit facility(3)

  $3,250  $3,250  $3,250  $333,187  $—    $—    $342,937  $342,937
   2006  2007  2008  2009  2010  Thereafter  Total  

Fair

Value

   (in thousands)

Long-term debt:

                

Fixed rate CMBS Certificates (currently 5.6% at March 31, 2006)

  —    —    —    —    —    $405,000  $405,000  $408,423

Fixed rate (9 3/4%)(1)

  —    —    —    —    —    $261,316  $261,316  $249,818

Fixed rate (8 1/2%)

  —    —    —    —    —    $162,500  $162,500  $180,375

 

(1)$87.5 million of theseThe amount included for the 9 3/4% senior discount notes were redeemed on November 7, 2005.

(2)$42.9 million ofrepresents the accreted value of the notes at their maturity date. As of March 31, 2006, these notes were redeemed on November 7, 2005.had an accreted value of $222.2 million and a fair value of $243.7 million.

(3)Credit facility has variable rates between 5.63% and 6.24% at September 30, 2005. Amortization of 0.25% is payable quarterly on committed term loan amount of $325 million which commenced September 30, 2004.

OurAs result of the AAT Acquisition discussed above, the outstanding 9 3/4% senior discount notes and 8 1/2% senior notes were repaid in full. As a result, our current primary market risk exposure relates to (1) the interest rate risk on variable-rate long-term and short-term borrowings, (2) our ability to refinance our existing borrowings as necessarythe bridge loan and (3)the CMBS Certificates at their expected repayment dates or at maturity at market rates, and (2) the impact of interest rate movements on our ability to meet financial covenants. We manage the interest rate risk on our outstanding long-term and short-term debt through our use of fixed and variable rate debt.

On June 22, 2005, in anticipation of the CMBS transaction, we entered into two forward-startingdebt and interest rate swap agreements, each with a notional principal amount of $200.0 million, with Deutsche Bank AG and Lehman Brothers Special Financing, Inc. to hedge the variability of future interest rates on the financing. Under the swap agreements, we agreed to pay the counterparties a fixed interest rate of 4.199% on the total notional amount of $400.0 million, beginning on December 22, 2005 through December 22, 2010 in exchange for receiving floating payments based on three-month LIBOR on the same notional amount for the same five year period.

On November 4, 2005, two of our subsidiaries entered into a purchase agreement with the Initial Purchasers regarding the purchase and sale of $405.0 million of commercial mortgage pass-through certificates to be issued by SBA CMBS Trust. In connection with this agreement, we terminated the interest rate swap agreements, resulting in a $14.8 million settlement payment to us. The settlement payment will be amortized into interest expense on the statement of operations utilizing the effective interest method over the anticipated five year life of the Certificates and will reduce the effective interest rate on the Certificates by 0.8%. The CMBS Transaction is expected to close on November 18, 2005.

hedging arrangements. While we cannot predict or manage our ability to refinance existing debt or the impact interest rate movements will have on our existing debt, we continue to evaluate our financial position on an ongoing basis.

Senior Note and Senior Discount Note Disclosure Requirements

The indentures governing our 8 1/2% senior notes and our 9 3/4% senior discount notes require certain financial disclosures for restricted subsidiaries separate from unrestricted subsidiaries. As of September 30, 2005 we had no unrestricted subsidiaries. Additionally, we are required to disclose (i) Tower Cash Flow, as defined in the indentures, for the most recent fiscal quarter and (ii) Adjusted Consolidated Cash Flow, as defined in the indentures, for the most recently completed four-quarter period. This information is presented solely as a requirement of the indentures. Such information is not intended as an alternative measure of financial position, operating results or cash flows from operations (as determined in accordance with generally accepted accounting principles). Furthermore, our measure of the following information may not be comparable to similarly titled measures of other companies.

Tower Cash Flow and Adjusted Consolidated Cash Flow as defined in our senior note and senior discount note indentures are as follows:

   9 3/4% Senior
Discount Notes


   (in thousands)

HoldCo Tower Cash Flow for the three months ended September 30, 2005(1)

  $30,143

OpCo Tower Cash Flow for the three months ended September 30, 2005(2)

  $30,143

HoldCo Adjusted Consolidated Cash Flow for the twelve months ended September 30, 2005

  $98,679

OpCo Adjusted Consolidated Cash Flow for the twelve months ended September 30, 2005

  $103,621

(1)In the indenture for the 9 3/4% senior discount notes HoldCo is referred to as the “Co-Issuer” or SBA Communications

(2)In the indenture for the 9 3/4% senior discount notes OpCo is referred to as the “Company” or SBA Telecommunications, Inc.

   8 1/2% Senior
Notes


   (in thousands)

Tower Cash Flow for the three months ended September 30, 2005

  $30,143

Adjusted Consolidated Cash Flow of the Company for the twelve months ended September 30, 2005

  $98,679

Adjusted Consolidated Cash Flow of SBA Senior Finance for the twelve months ended September 30, 2005

  $103,889

DisclosureSpecial Note Regarding Forward-Looking Statements

This quarterly report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements concern expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. Specifically, this quarterly report contains forward-looking statements regarding:

 

our estimatesbelief that we will experience continued long-term growth of our site leasing revenues due to increasing minutes of use, network coverage and capacity requirements and as a result of the AAT Acquisition;

our expectations regarding the amount of future expenditures required to maintain our towers;

our expectation of growing our cash flows by adding tenants to our towers at minimal incremental costs by using existing tower capacity or requiring wireless service providers to bear all or a portion of the cost of tower modifications;

our expectations that site leasing segment operating profit will substantially increase in future periods as a result of the AAT Acquisition;

our intention to selectively invest in new tower builds and/or tower acquisitions and to fund such new tower builds and/or acquisitions from cash on hand and our cash flow from operating activities;

our expectations regarding our liquidity, capital expendituresnew build program and sources of both, and our ability to fund operations and meet our obligations as they become due;

our intent to build 40 to 4580 - 100 new towers in 2006;

our expectations regarding an increase in cost of site leasing revenues, selling, general and acquire approximately 160 towersadministrative expenses, depreciation and amortization expenses and net loss due to the AAT Acquisition;

our belief regarding our position to capture additional site leasing business in 2005;our markets and identify and participate in site development projects across our markets;

our expectations regarding borrowings under the revolving credit facility during 2006;

 

our estimates regarding our annual debt service and cash interest requirements in 20052006 and thereafter; and

 

our expectations regarding the adoption of certain accounting pronouncements;pronouncements.

our expectations regarding the CMBS transaction; and

our expectations regarding the future refinancing of our remaining high yield debt securities.

These forward-looking statements reflect our current views about future events and are subject to risks, uncertainties and assumptions. We wish to caution readers that certain important factors may have affected and could in the future affect our actual results and could cause actual results to differ significantly from those expressed in any forward-looking statement. The most important factors that could prevent us from achieving our goals, and cause the

assumptions underlying forward-looking statements and the actual results to differ materially from those expressed in or implied by those forward-looking statements include, but are not limited to, the following:

 

our inability to successfully integrate AAT’s operations with our operations and realize the anticipated synergies from the AAT Acquisition in the expected time-frame;

our inability to sufficiently increase our revenues and maintain or decrease expenses and cash capital expenditures to permit us to fund operations and meet our obligations as they become due;

our ability to refinance or restructure the bridge loan on acceptable terms or at all;,

our ability to further reduce our interest expense;

 

the inability of our clients to access sufficient capital or their unwillingness to expend capital to fund network expansion or enhancements;

 

our ability to continue to comply with covenants and the terms of our bridge loan and senior credit facility and to access sufficient capital to fund our operations;

 

our ability to retain current site leasing tenants and secure as many new site leasing tenants as planned;

 

our ability to expand our site leasing business and maintain or expand our site development business;

 

our ability to successfully obtain the necessary regulatory and environmental permits for ourbuild 80 - 100 new tower construction;towers in 2006;

 

our ability to satisfactorily complete due diligencesuccessfully implement our strategy of having at least one tenant on all our pending acquisitions and the ability and willingness of each party to fulfill their respective closing conditions;new build upon completion;

 

the actual amount and timing of services rendered and revenues received under our contract with Sprint Spectrum L.P.;ability to successfully address zoning issues;

 

our ability to retain current lessees on our towers;

our ability to realize economies of scale from our tower portfolio; and

 

the continued use of towers and dependence on outsourced site development services by the wireless communications industry;industry.

our ability to successfully close the CMBS transaction on the anticipated closing date; and

our ability to refinance our remaining high yield debt securities in the future and our ability to obtain reasonable financial terms for any refinancing.

We assume no responsibility for updating forward-looking statements contained in this quarterly report.

Non-GAAP Financial Measures

This report contains certain non-GAAP measures, including Adjusted EBITDA and Segment Operating Profit information. We have provided below a description of such non-GAAP measures, a reconcilement of such non-GAAP measures to their most directly comparable GAAP measures, an explanation as to why management utilizes these measures, their respective limitations and how management compensates for such limitations.

Adjusted EBITDA

We define Adjusted EBITDA as loss from continuing operations plus net interest expenses, provision for income taxes, depreciation, accretion and amortization, asset impairment charges, non-cash compensation, restructuring and other charges, and other expenses and excluding non-cash leasing revenue and non-cash ground lease expense. We have included this non-GAAP financial measure because we believe this item is an indicator of the profitability and performance of our core operations and reflects the changes in our operating results. In addition, Adjusted EBITDA is a component of the calculation used by our lenders to determine compliance with some of our debt instruments, particularly our senior credit facility. Adjusted EBITDA is not intended to be an alternative measure of operating income as determined in accordance with GAAP.

The Non-GAAP measurement of Adjusted EBITDA has certain material limitations, including:

It does not include interest expense. Because we have borrowed money in order to finance our operations, interest expense is a necessary element of our costs and ability to generate profits and cash flows. Therefore any measure that excludes interest expense has material limitations;

It does not include depreciation and amortization expense. Because we use capital assets, depreciation and amortization expense is a necessary element of our costs and ability to generate profits. Therefore any measure that excludes depreciation and amortization expense has material limitations;

It does not include provision for income taxes. Because the payment of income taxes is a necessary element of our costs, particularly in the future, any measure that excludes tax expense has material limitations; and

It does not include non-cash expenses such as asset impairment charges, non-cash compensation, restructuring and other charges, other expenses, non-cash leasing revenue and non-cash ground lease expense. Because these non-cash items are a necessary element of our costs and our ability to generate profits, any measure that excludes these non-cash items has material limitations.

We compensate for these limitations by using Adjusted EBITDA as only one of several comparative tools, together with GAAP measurements, to assist in the evaluation of our profitability and operating results.

Adjusted EBITDA is calculated below:

   For the three months
ended March 31,
 
   2006  2005 
   (in thousands) 

Loss from continuing operations

  $(9,205) $(21,543)

Interest income

   (853)  (247)

Interest expense

   14,490   18,144 

Depreciation, accretion, and amortization

   21,008   21,643 

Asset impairment and other charges

   —     231 

Provision for income taxes

   398   246 

Loss from write off of deferred financing fees and extinguishment of debt

   —     1,486 

Non-cash compensation

   1,082   115 

Non-cash leasing revenue

   (803)  (421)

Non-cash ground lease expense

   1,269   1,378 

Other income

   —     (150)
         

Adjusted EBITDA

  $27,386  $20,882 
         

Segment Operating Profit

Each respective Segment Operating Profit is defined as segment revenues less segment cost of revenues (excluding depreciation, accretion and amortization). Total Segment Operating Profit is the total of the operating profits of the two segments. Segment Operating Profit is, in our opinion, an indicator of the operating performance of our site leasing and site development segments and is used to provide management with the ability to monitor the operating results and margin of each segment, while excluding the impact of depreciation and amortization. Segment Operating Profit is not intended to be an alternative measure of revenue or operating income as determined in accordance with generally accepted accounting principles.

The Non-GAAP measurement of Segment Operating Profit has certain material limitations. Specifically this measurement does not include depreciation, accretion, and amortization expense. Because depreciation, accretion, and amortization expense is required by GAAP as it is deemed to reflect additional operating expenses relating to our site leasing and site development segments, any measure that excludes these items has material limitations. We compensate for these limitations by using Segment Operating Profit as only one of several comparative tools, together with GAAP measurements, to assist in the evaluation of the cash generation of our segment operations.

   Site leasing segment 
   For the three months
ended March 31,
 
   2006  2005 
   (in thousands) 

Segment revenue

  $45,029  $38,342 

Segment cost of revenues (excluding depreciation, accretion and amortization)

   (12,331)  (12,045)
         

Segment operating profit

  $32,698  $26,297 
         

   Site development
consulting segment
 
   For the three months
ended March 31,
 
   2006  2005 
   (in thousands) 

Segment revenue

  $3,473  $3,087 

Segment cost of revenues (excluding depreciation, accretion and amortization)

   (2,876)  (2,829)
         

Segment operating profit

  $597  $258 
         
   Site development
construction segment
 
   For the three months
ended March 31,
 
   2006  2005 
   (in thousands) 

Segment revenue

  $20,302  $16,875 

Segment cost of revenues (excluding depreciation, accretion and amortization)

   (19,056)  (16,420)
         

Segment operating profit

  $1,246  $455 
         

ITEM 4.CONTROLS AND PROCEDURES

In order to ensure that the information we must disclose in our filings with the SEC is recorded, processed, summarized and reported on a timely basis, we have formalized our disclosure controls and procedures. Our principal executive officer and principal financial officer have reviewed and evaluated the effectiveness of our disclosure controls and procedures, as defined in Exchange Act Rules 13a-15(e) and 15d-15(e), as of September 30, 2005.March 31, 2006. Based on such evaluation, such officers have concluded that, as of September 30, 2005,March 31, 2006, our disclosure controls and procedures were effective in timely alerting them to material information relating to us (and our consolidated subsidiaries) required to be included in our periodic SEC filings.

effective.

There have been no changes in our internal control over financial reporting during the quarter ended September 30, 2005March 31, 2006 that havehas materially affected, or areis reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

 

ITEM 5.1A.OTHER INFORMATIONRISK FACTORS

Our Annual Report on Form 10-K for the year ended December 31, 2005 includes a detailed discussion of our risk factors. The information presented below updates and should be read in conjunction with the risk factors and information disclosed in that Form 10-K.

DuringWe may not be able to service or refinance our substantial indebtedness.

As indicated below, we have and will continue to have a significant amount of indebtedness relative to our equity.

   As of
December 31,
2005
  As of
March 31,
2006
Actual
  As of
March 31,
2006*
   (in thousands)

Total Indebtedness

  $784,392  $789,657  $1,505,000

Shareholders’ equity (deficit)

  $81,431  $76,091  $414,216

*As adjusted to reflect the AAT Acquisition, the repurchase of 100% of the aggregate outstanding amount of our 9 3/4% senior discount notes and 100% of the aggregate outstanding amount of our 8 1/2% senior notes and the execution of a $1.1 billion term loan (collectively, the “AAT Transactions”).

As of March 31, 2006, as adjusted for the third quarterAAT Transactions, we will have approximately $1.5 billion in indebtedness. Our ability to service our debt obligations will depend on our future operating performance. In order to manage our substantial amount of 2005,indebtedness, we may from time to time sell assets, issue equity, or repurchase, restructure or refinance some or all of our debt (all of which we have done at various times in the Compensation Committeelast two years). We may not be able to effectuate any of these alternative strategies on satisfactory terms in the future, if at all. The implementation of any of these alternative strategies may dilute our current shareholders or subject us to additional costs or restrictions on our ability to manage our business and as a result could have a material adverse effect on our financial condition and growth strategy.

To finance the AAT Acquisition and the repurchase of our 9 3/4% senior discount notes and our 8 1/2% senior notes, we entered into the bridge loan in the amount of $1.1 billion. The bridge loan accrues interest at the Eurodollar rate plus 2% and matures on September 12, 2006. The bridge loan may be extended to January 27, 2007; however, interest will accrue at the Eurodollar rate plus 2.75% from September 13, 2006 through the earlier of the Company’s Boardrefinancing of Directors approved the following annualbridge loan or the extended maturity date. Prior to the maturity date, we will be required to refinance or restructure the bridge loan. We cannot assure you that we will be able to refinance or restructure the bridge loan on acceptable terms or at all, and, in particular, we cannot assure you that interest rates will be favorable to us at the time of any such refinancing or restructuring. Further, in connection with the AAT Transactions, until the bridge loan is paid in full, we are unable to draw down on our $160.0 million senior credit facility. If we are unable to refinance, restructure or otherwise repay the principal amount of the bridge loan upon its maturity, we may need to sell assets, cease operations and/or file for protection under the bankruptcy laws.

We may not have sufficient liquidity or cash compensation planflow from operations to repay the components of the mortgage loan that comprises part of the CMBS Transaction. Therefore, prior to the final repayment date for non-employee directors, effectivethe components of the mortgage loan we may be required to refinance the mortgage loan or sell a portion or all of our interests in the 1,714 tower sites that, among other things, secure along with their operating cash flows the mortgage loan. Although, the mortgage loan is a limited recourse obligation of SBA Properties, Inc. and no holder of the mortgage loan will have recourse to SBA Communications, our operations would be adversely affected if SBA Properties is unable to repay the components of the mortgage loan. We cannot assure you that our assets would be sufficient to repay this indebtedness in full.

We and our subsidiaries may be able to incur significant additional indebtedness in the future, subject to the restrictions contained in our debt instruments, some of which may be secured debt.

The failure to successfully integrate AAT’s operations with our operations and realize the anticipated synergies from the AAT Acquisition in the expected time-frame may adversely affect our resources and the future results of our combined company.

As a result of the AAT Acquisition, we increased our tower portfolio by more than 50% and increased our geographic presence to include 47 of the 48 contiguous United States from our previous concentration in the eastern third of the United States. To realize the anticipated benefits and synergies, AAT’s business must be successfully integrated into our business. The integration of AAT’s business into our business will be complex and time-consuming. The AAT Acquisition involves a number of potential risks, including the inability to productively combine disparate company cultures, operations, personnel, information technology systems and financial control systems, manage operating sites in geographically diverse markets, address and resolve unforeseen liabilities, control the amount of integration expenses, implement consistent site leasing practices, coordinate sales efforts and retain key employees. The AAT Acquisition may impose significant strains on our existing management, information technology systems, operating systems and financial resources and we may not have adequate resources to support the expanded level of operations that the acquisition of AAT will require.

Even if AAT’s business is successfully integrated with our business, we may not realize the expected benefits of the acquisition or realize the expected benefits within our expected time-frame, which are largely based on forecasts of tower cash flow, adjusted EBITDA, equity free cash flow and integration expenses which in turn are subject to certain assumptions which may prove to be inaccurate. Any one of these integration challenges or any combination thereof could adversely affect the future results of our combined company.

Our debt instruments contain restrictive covenants that could adversely affect our business.

Our senior credit facility and bridge loan each contain certain restrictive covenants. Among other things, these covenants limit the ability of certain of our subsidiaries to:

incur additional indebtedness;

engage in mergers and acquisitions or sell all or substantially all of the assets;

pay dividends, repurchase capital stock or engage in other restricted payments or repurchase the capital stock of the borrower or any restricted subsidiary;

make certain investments;

make certain capital expenditures;

incur liens; and

enter into affiliate transactions.

Additionally, the bridge loan limits, among other things, our ability to incur additional indebtedness or allow a third party to own more than 20% of our economic or voting interest of our outstanding common stock.

If we or the applicable subsidiaries fail to comply with these covenants, it could result in an event of default under one or all of these debt instruments. The acceleration of amounts due under one of our debt instruments would also cause a cross-default under our other debt instruments.

SBA Senior Finance, Inc. (“Senior Finance”), an indirect wholly-owned subsidiary of ours which owns all of the membership interests of SBA Senior Finance II LLC (“Senior Finance II”), is the borrower under our $1.1 billion bridge loan. Amounts borrowed under the bridge loan are secured by a first lien on substantially all of Senior Finance’s assets and are guaranteed by us and certain of our subsidiaries, which guarantee is secured by a first lien on substantially all of our and such subsidiaries’ non-real estate assets. The bridge loan requires Senior Finance to maintain a minimum debt service coverage ratio. In addition, the bridge loan contains additional negative covenants that, among other things, restrict Senior Finance’s ability to commit to capital expenditures and build or acquire towers without anchor or acceptable tenants. Our ability to meet the minimum debt service coverage ratio and comply with these covenants can be affected by events beyond our control, and we may not be able to do so. A breach of any of these covenants, if not remedied within the specified period, could result in an event of default under the bridge loan.

Until the bridge loan is paid in full, we have agreed not to borrow under our senior credit facility and all representations, warranties and covenants, with certain exceptions, under the senior credit facility are suspended and of no force and effect. Upon termination of the bridge loan, pursuant to the senior credit facility, Senior Finance II, which owns, directly or indirectly, all of the common stock and membership interests of the majority of our operating subsidiaries and is the borrower under our senior credit facility, will be required to maintain specified financial ratios, including ratios regarding Senior Finance II’s debt to annualized operating cash flow, cash interest expense and fixed charges for each quarter. In addition, the senior credit facility contains additional negative covenants that, among other things, will limit our ability to commit to capital expenditures and build or acquire towers without anchor or acceptable tenants. Our ability to meet these financial ratios and tests and comply with these covenants can be affected by events beyond our control, and we may not be able to do so. A breach of any of these covenants, if not remedied within the specified period, could result in an event of default under the senior credit facility. Amounts borrowed under the senior credit facility are secured by a lien on substantially all of Senior Finance II’s assets and are guaranteed by us and certain of our subsidiaries.

Upon the occurrence of any default, our senior credit facility lenders can prevent us from borrowing any additional amounts under the senior credit facility. In addition, upon the occurrence of any event of default, other than certain bankruptcy events, the lenders under our bridge loan and senior credit facility, respectively, by a majority vote, can elect to declare all amounts of principal outstanding under such facility, together with all accrued interest, to be immediately due and payable. The acceleration of amounts due under our senior credit facility or bridge loan would cause a cross-default under the other facility, thereby permitting the acceleration of such indebtedness. If the indebtedness under the bridge loan and/or indebtedness under our senior credit facility were to be accelerated, our current assets would not be sufficient to repay in full the indebtedness. If we were unable to repay amounts that become due under the bridge loan and/or the senior credit facility, such lenders could proceed against the collateral granted to them to secure that indebtedness.

Our $405.0 million mortgage loan relating to our CMBS Certificates contains a covenant requiring 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 be deposited into a reserve account if the debt service coverage ratio falls to 1.30 times or lower, as of July 1, 2005, whichthe end of any calendar quarter. Debt service coverage ratio is payabledefined as the Net Cash Flow (as defined in sharesthe mortgage loan) divided by the amount of interest on the mortgage loan, servicing fees and trustee fees that SBA Properties, Inc. will be required to pay over the succeeding twelve months. If the debt service coverage ratio falls below 1.15 times as of the Company’send 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. The funds in the reserve account will not be released to SBA Properties unless the debt service coverage ratio exceeds 1.30 times for two consecutive calendar quarters. Failure to maintain the debt service coverage ratio above 1.30 times would impact our ability to pay our indebtedness other than the mortgage loan and to operate our business.

The mortgage loan provides for customary remedies if an event of default occurs including foreclosure against all or part of the property pledged as security for the mortgage loan. The mortgage loan is secured by (1) mortgages, deeds of trust and deeds to secure debt on substantially all of the 1,714 collateralized tower sites and their operating cash flows, (2) a security interest in substantially all of SBA Properties’ personal property and fixtures and (3) SBA Properties’ rights under the management agreement with SBA Network Management, Inc. (who manages all of SBA Properties’ sites). We cannot assure you that our assets would be sufficient to repay this indebtedness in full.

Future sales of our Class A common stock in lieuthe public market or the issuance of cash atother equity may adversely affect the electionmarket price of each director:our Class A common stock and our ability to raise funds in new equity or equity-related offerings.

an annual cash retainerSales of $25,000, payablea substantial number of shares of our Class A common stock or other equity-related securities in equal quarterly installmentsthe public market, including sales by any selling shareholder, could depress the market price of our Class A common stock and impair our ability to each non-employee director in officeraise capital through the sale of additional equity securities. We cannot predict the effect that future sales of our Class A common stock or other equity-related securities would have on the first daymarket price of each calendar quarter;
our Class A common stock.

an additional annual cash retainerPursuant to our acquisition of $7,500AAT, we issued 17,059,336 newly issued shares of our Class A common stock to the Chair of the Company’s Audit Committee, payable in equal quarterly installments to the Chair of the Audit Committee in office on the first day of each calendar quarter; and

an additional annual cash retainer of $5,000 to the Chairs of each of the Company’s Compensation Committee and Nominating Committee, payable in equal quarterly installments to the Chairs of such Committees in office on the first day of each calendar quarter.

In addition, each non-employee director shall be entitled to receive the following additional fees for each meeting attended:

$1,500 per in-person meeting, or any meeting that lasts three hours or more, of the Board of Directors or any Board Committee; and

$500 per telephonic meeting of the Board of Directors or any Board Committee.

During the third quarter of 2005, the Company’s Board of Directors approved an amendment to the Company’s 2001 Equity Participation Plan reducing the number of non-qualified stock options granted to all non-employee directors, upon their initial election or appointment to the Board of Directors, from 50,000 options to 25,000 options.

On November 4, 2005, SBA CMBS-1 DepositorAAT Holdings, LLC a special purpose subsidiary of the Company and SBA Senior Finance, Inc. entered into a purchase agreement (the “Purchase Agreement”) with Lehman Brothers Inc. and Deutsche Bank Securities Inc. (collectively, the “Initial Purchasers”) regarding the issuance and sale by SBA CMBS Trust of $405,000,000 principal amount of its Commercial Mortgage Pass-Through Certificates, Series 2005-1 (the “Certificates”) to the Initial Purchasers (the “CMBS Transaction”). The Certificates will be issued in the following subclasses and principal amounts: $238,580,000 principal amount of Subclass 2005-1A Certificates (the “2005-1A Certificates”II (“AAT Holdings II”), $48,320,000 principal amountwho in turn distributed these shares to AAT Holdings, LLC (“AAT Holdings”), the indirect parent of Subclass 2005-1B Certificates (the “2005-1B Certificates”), $48,320,000 principal amount of Subclass 2005-1C Certificates (the “2005-1C Certificates”), $48,320,000 principal amount of Subclass 2005-1D Certificates (the “2005-1D Certificates”) and $21,460,000 principal amount of Subclass 2005-1E (the “2005-1E Certificates”).AAT Holdings II. Pursuant to the registration obligations of the AAT Stock Purchase Agreement, SBA CMBS-1 Depositor LLC has agreedwe have filed an automatic shelf registration statement on Form S-3 and a prospectus supplement relating to the resale of these shares by AAT Holdings as the selling shareholder. The selling shareholder may in the future determine to distribute any or all of these shares to its members and such members would then be named in a future prospectus supplement as selling shareholders. Of the 17,059,336 shares of Class A common stock, 9.2 million shares cannot be sold for two years unless they are sold through a marketed secondary offering or approved block trade (as defined in the AAT Stock Purchase Agreement) or until the selling shareholders hold less than 2.5 million of the 9.2 million shares. Sales of our Class A common stock by the selling shareholders through a marketed secondary offering, approved block trade or any other permitted method could adversely impact or increase the volatility of the market price of our Class A common stock. Sales by the selling shareholders may also make it more difficult for us to sell andequity securities or equity-related securities in the Initial Purchasers have agreed to buy, the Certificates,future at a purchasetime and price equal to, in the case of the 2005-1A Certificates, 98.66580% of the principal amount thereof, in the case of the 2005-1B Certificates, 98.66784% of the principal amount thereof, in the case of the 2005-1C Certificates, 98.66749% of the principal amount thereof, in the case of the 2005-1D Certificates, 98.66829% of the principal amount thereof and, in the case of the 2005-1E Certificates, 98.66896% of the principal amount thereof less certain structuring fees. The closing of the CMBS Transaction, which is subject to customary representations, warranties and covenants, is scheduled to occur on November 18, 2005.that our management deems acceptable or at all.

 

ITEM 6.EXHIBITS

(a) Exhibits

 

5.14.6A  OpinionFirst Amendment to Rights Agreement, dated as of Akerman Senterfitt regarding validityMarch 17, 2006, by and between SBA Communications Corporation and Computershare Trust Company, N.A.
10.54$1.1 billion Credit Agreement, dated April 27, 2006, among SBA Senior Finance, Inc., the several banks and other financial institutions parties thereto, and Deutsche Bank AG, New York Branch, as administrative agent.
10.55Guarantee and Collateral Agreement, dated as of common stock.April 27, 2006, made by SBA Communications Corporation, SBA Telecommunications, Inc., SBA Senior Finance, Inc. and certain of its subsidiaries in favor of Deutsche Bank AG New York Branch, as Administrative Agent.
10.56Omnibus Agreement, dated as of April 27, 2006, among SBA Senior Finance II LLC, as the Borrower under the senior credit facility, General Electric Capital Corporation, as Administrative Agent and a Lender, and Toronto Dominion (Texas) LLC, DB Structured Products Inc., JPMorgan Chase Bank N.A. and Lehman Commercial Paper Inc., as Lenders under the senior credit facility, SBA Senior Finance, Inc., as the borrower under the bridge loan, DB Structured Products Inc. and JPMorgan Chase Bank, N.A. as lenders under the bridge loan and Deutsche Bank AG, as Administrative Agent under the bridge loan.
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 Anthony J. Macaione, 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.
32.2  Certification by Anthony J. Macaione, Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this reportareport to be signed on its behalf by the undersigned thereunto duly authorized.

 

  

SBA COMMUNICATIONS CORPORATION

November 9, 2005

May 10, 2006

  

/s/ JEFFREYJeffrey A. STOOPS        Stoops

  

Jeffrey A. Stoops

  

Chief Executive Officer

(Duly Authorized Officer)

November 9, 2005

May 10, 2006

  

/s/ ANTHONYAnthony J. MACAIONE        Macaione

  

Anthony J. Macaione

  

Chief Financial Officer

(Principal Financial Officer)

 

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