UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(x) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended June 30, 2001
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITES
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 (I.R.S. Employer Identification No.)
incorporation or organization)
One Town Center Road, Boca Raton, Florida 33486
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(Address of principal executive offices) (Zip code)
(561) 995-7670
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(Registrant's telephone number, including area code)
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding twelve (12) months (or for such shorter period that the registrant
was required to file such report), and (2) has been subject to such filing
requirement for the past 90 days.
Yes X No
------ ------
Number of shares of common stock outstanding at August 9, 2001
Class A Common Stock - 42,015,028 shares
Class B Common Stock - 5,455,595 shares
SBA COMMUNICATIONS CORPORATION
INDEX
Page
----
PART I - FINANCIAL INFORMATION
Item 1. Unaudited Financial Statements
Consolidated Balance Sheets as of June 30, 2001 and December 31, 2000 3
Consolidated Statements of Operations for the three and six months ended June 30, 2001 and 2000 4
Consolidated Statements of Cash Flows for the six months ended June 30, 2001 and 2000 5
Consolidated Statement of Shareholders' Equity for the six months ended June 30, 2001 6
Condensed Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11
Item 3. Quantitative and Qualitative Disclosures About Market Risk 17
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Shareholders 19
Item 6. Exhibits and Reports on Form 8-K 19
SIGNATURES 20
2
ITEM 1: UNAUDITED FINANCIAL STATEMENTS
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands, except per share amounts)
June 30, 2001 December 31, 2000
------------- -----------------
ASSETS
Current assets:
Cash and cash equivalents $ 150,875 $ 14,980
Accounts receivable, net of allowance of $3,179 and $2,117 in
2001 and 2000, respectively 65,032 47,704
Prepaid and other current assets 8,090 5,968
Costs and estimated earnings in excess of billings on
uncompleted contracts 6,549 13,584
------------- --------------
Total current assets 230,546 82,236
Property and equipment, net 1,056,166 765,815
Intangible assets, net 116,870 83,387
Other assets 10,600 17,380
------------- --------------
Total assets $1,414,182 $948,818
============= ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 54,746 $ 76,944
Accrued expenses 12,331 13,504
Current portion - notes payable 713 2,606
Interest payable 20,921 49
Billings in excess of costs and estimated earnings
on uncompleted contracts 5,084 5,942
Other current liabilities 14,144 10,665
------------- --------------
Total current liabilities 107,939 109,710
------------- --------------
Long-term liabilities:
Senior discount notes payable 221,587 209,042
Senior notes payable 500,000 -
Notes payable 50,381 72,625
Deferred tax liabilities, net 18,465 18,445
Other long-term liabilities 1,325 836
------------- --------------
Total long-term liabilities 791,758 300,948
------------- --------------
Commitments and contingencies (see Note 8)
Shareholders' equity:
Common stock-Class A par value $.01 (100,000 shares authorized),
41,999 and 40,989 shares issued and outstanding in 2001 and 2000,
respectively 420 410
Common stock-Class B par value $.01 (8,100 shares authorized),
5,456 shares issued and outstanding in 2001 and 2000 55 55
Additional paid-in capital 650,002 627,370
Accumulated deficit (135,992) (89,675)
------------- --------------
Total shareholders' equity 514,485 538,160
------------- --------------
Total liabilities and shareholders' equity $1,414,182 $948,818
============= ==============
The accompanying Condensed Notes to Consolidated Financial Statements on pages 7
through 11 herein are an integral part of these consolidated financial
statements.
3
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except per share amounts)
For the three months For the six months
ended June 30, ended June 30,
------------------------ ----------------------------
2001 2000 2001 2000
---- ---- ---- ----
Revenues:
Site development $ 32,840 $ 26,692 $ 65,513 $ 47,034
Site leasing 24,915 11,811 45,198 21,898
--------- --------- --------- ---------
Total revenues 57,755 38,503 110,711 68,932
--------- --------- --------- ---------
Cost of revenues (exclusive of depreciation and
amortization shown below):
Cost of site development 25,214 20,650 50,232 36,219
Cost of site leasing 9,110 4,459 16,238 8,324
--------- --------- --------- ---------
Total cost of revenues 34,324 25,109 66,470 44,543
--------- --------- --------- ---------
Gross profit 23,431 13,394 44,241 24,389
Operating expenses:
Selling, general and administrative 10,759 6,338 21,400 12,456
Depreciation and amortization 18,368 7,932 33,375 14,763
--------- --------- --------- ---------
Total operating expenses 29,127 14,270 54,775 27,219
--------- --------- --------- ---------
Operating loss (5,696) (876) (10,534) (2,830)
Other income (expense):
Interest income 2,207 1,293 5,207 2,821
Interest expense (11,954) (1,620) (20,637) (4,527)
Non-cash amortization of original issue discount and
debt issuance costs (7,288) (6,352) (14,256) (12,569)
Other (112) - (196) 51
--------- --------- --------- ---------
Total other expense (17,147) (6,679) (29,882) (14,224)
--------- --------- --------- ---------
Loss before provision for income taxes and
extraordinary item (22,843) (7,555) (40,416) (17,054)
Provision for income taxes (478) (353) (832) (577)
-------- --------- --------- ---------
Net loss before extraordinary item (23,321) (7,908) (41,248) (17,631)
Extraordinary item - write-off of deferred financing fees - - (5,069) -
--------- --------- --------- ---------
Net loss $ (23,321) $ (7,908) $ (46,317) $ (17,631)
========= ========= ========= =========
Basic and diluted loss per common share before
extraordinary item $ (0.50) $ (0.20) $ (0.88) $ (0.47)
Extraordinary item - write-off of deferred financing fees - - $ (0.11) -
--------- --------- --------- ---------
Basic and diluted loss per common share $ (0.50) $ (0.20) $ (0.99) $ (0.47)
========= ========= ========= =========
Basic and diluted weighted average number of shares of
common stock 47,105 39,234 46,954 37,308
========= ========= ========= =========
The accompanying Condensed Notes to Consolidated Financial Statements on pages 7
through 11 herein are an integral part of these consolidated financial
statements.
4
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
For the six months ended June 30,
---------------------------------
2001 2000
---- ----
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Net loss $ (46,317) $ (17,631)
Adjustments to reconcile net loss to net cash provided by
operating activities-
Depreciation and amortization 33,375 14,763
Non-cash compensation expense 1,679 203
Provision for doubtful accounts 744 893
Amortization of original issue discount and debt issuance costs 14,256 12,569
Write-off of deferred financing fees 5,069 -
Changes in operating assets and liabilities:
(Increase) decrease in-
Accounts receivable (10,311) (11,122)
Prepaid and other current assets (2,107) (2,971)
Costs and estimated earnings in excess of
billings on uncompleted contracts 7,985 (4,981)
Other assets 5,971 (1,354)
Increase (decrease) in-
Accounts payable (23,836) 17,919
Accrued expenses (2,005) 3,258
Accrued interest 20,872 188
Other liabilities 2,946 1,333
Billings in excess of costs and estimated earnings on uncompleted contracts (1,061) 1,408
--------- ---------
Total adjustments 53,577 32,106
--------- ---------
Net cash provided by operating activities 7,260 14,475
--------- ---------
CASH FLOWS USED IN INVESTING ACTIVITIES:
Tower and other capital expenditures (327,318) (163,153)
--------- ---------
Net cash used in investing activities (327,318) (163,153)
--------- ---------
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES:
Net proceeds from common stock offerings - 229,594
Proceeds from option exercise 2,474 2,735
Proceeds from senior notes payable, net of financing fees 484,266 -
Borrowings under senior credit facility 30,000 11,000
Proceeds from senior secured credit facility, net of financing fees 44,320 -
Repayment of senior credit facility and notes payable (105,107) (70,525)
Deferred financing fees - (58)
--------- ---------
Net cash provided by financing activities 455,953 172,746
--------- ---------
Net increase in cash and cash equivalents 135,895 24,068
CASH AND CASH EQUIVALENTS:
Beginning of period 14,980 3,131
--------- ---------
End of period $ 150,875 $ 27,199
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 1,303 $ 6,119
Taxes $ 1,784 $ 688
NON-CASH INVESTING ACTIVITIES:
Assets acquired in connection with acquisitions $ 45,524 $ 25,576
Liabilities assumed in connection with acquisitions $ (4,549) $ (315)
Common stock issued in connection with acquisitions $ (18,489) $(20,023)
The accompanying Condensed Notes to Consolidated Financial Statements on pages 7
through 11 herein are an integral part of these consolidated financial
statements.
5
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2001
(unaudited)
(in thousands)
Additional
Paid-In Accumulated
Common Stock Capital Deficit Total
---------------------------------------- ---------- ---------------------
Class A Class B
------- -------
Number Amount Number Amount
------ ------ ------ ------
BALANCE, December 31, 2000 40,989 $410 5,456 $55 $627,370 $ (89,675) $538,160
Common stock issued in connection with
acquisitions 579 6 - - 18,483 - 18,489
Exercise of employee stock options 431 4 - - 2,470 - 2,474
Non-cash compensation adjustment - - - - 1,679 - 1,679
Net loss - - - - (46,317) (46,317)
------ ---- ----- --- -------- ---------- --------
BALANCE, June 30, 2001 41,999 $420 5,456 $55 $650,002 $(135,992) $514,485
====== ==== ===== === ======== ========== ========
The accompanying Condensed Notes to Consolidated Financial Statements on pages 7
through 11 herein are an integral part of these consolidated financial
statements.
6
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 2000 Form 10-K for SBA Communications Corporation. These financial
statements have been prepared in accordance with the instructions to Form 10-Q
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 included 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.
During the three and six months ended June 30, 2001 and 2000, the Company did
not have any changes in its equity resulting from non-owner sources and
accordingly, comprehensive income was equal to the net loss amounts presented
for the respective periods in the accompanying Consolidated Statements of
Operations.
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 3.5 million and 3.0 million options outstanding at June 30, 2001 and
2000, respectively.
2. CURRENT ACCOUNTING PRONOUNCEMENTS
In June 2000, the Financial Accounting Standards Board ("FASB") issued SFAS No.
138, Accounting for Certain Derivative Instruments and Certain Hedging
Activities, an amendment of SFAS 133. SFAS 133 established accounting and
reporting standards for derivative instruments including certain derivative
instruments embedded in other contracts and for hedging activities. SFAS 138
addresses a limited number of issues causing implementation difficulties for
numerous entities that apply SFAS 133 and amends the accounting and reporting
standards of SFAS 133 for certain derivative instruments and certain hedging
activities. The Company adopted SFAS 138 on January 1, 2001 and there was not a
significant impact from the adoption.
In June 2001, the FASB issued SFAS No. 142, Goodwill and Other Intangible Assets
("SFAS 142"). This standard eliminates the amortization of goodwill against
earnings. Instead, goodwill will be subject to at least an annual assessment for
impairment by applying a fair-value-based test. Goodwill will be written-down
against earnings only in the periods in which the recorded value of goodwill is
more than its fair value. Goodwill existing at June 30, 2001 will continue to be
amortized until December 31, 2001. Goodwill acquired subsequent to June 30, 2001
will not be amortized during the year ending December 31, 2001. Management
expects to have SFAS 142 fully implemented by January 1, 2002, however, the
effect SFAS 142 will have on the consolidated financial statements has not been
determined.
In June 2001, the Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants issued an exposure draft of a proposed
Statement of Position (SOP) entitled Accounting for Certain Costs and Activities
Related to Property, Plant and Equipment. The proposed SOP may limit the ability
of companies to capitalize certain costs as part of property, plant and
equipment (PP&E). The proposed SOP would also require that each significant
separately identifiable part of PP&E with a useful life different from the
useful life of the PP&E to which it relates be accounted for separately and
depreciated over the individual component's expected useful life. The proposed
SOP would be effective for fiscal years beginning after June 15, 2002.
Management has not determined the effect this SOP, if issued as proposed, would
have on the consolidated financial statements but it may be material.
7
In June 2001, the FASB issued Statement of Financial Accounting Standards No.
141 ("SFAS 141"), Business Combinations. SFAS 141 addresses financial accounting
and reporting for business combinations and supercedes APB NO. 16, Business
Combinations and SFAS No. 38 Accounting for Preacquisition Contingencies of
Purchased Enterprises. All business combinations in the scope of SFAS 141 are
to be accounted for under the purchase method. SFAS 141 is effective June 30,
2001. The adoption of SFAS 141 did not have an impact on the Company's
consolidated financial statements.
3. PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
As of
June 30, December 31,
2001 2000
-------- ------------
(in thousands)
Towers $1,019,968 $ 721,361
Construction in process 81,080 69,012
Furniture, equipment and vehicles 28,869 19,497
Land 10,876 10,014
Buildings and improvements 704 625
---------- ---------
1,141,497 820,509
Less: accumulated depreciation and
amortization (85,331) (54,694)
---------- ---------
Property and equipment, net $1,056,166 $ 765,815
========== =========
Construction in process represents costs incurred related to towers which are
under development. Interest is capitalized in connection with the construction
of towers. Approximately $1.5 and $1.6 million of interest cost was capitalized
during the six months ended June 30, 2001 and the year ended December 31, 2000,
respectively.
4. COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS
Costs and estimated earnings on uncompleted contracts consist of the following:
For the six months ended For the year ended
June 30, 2001 December 31, 2000
------------------------ ------------------
(in thousands)
Costs incurred on uncompleted contracts $31,634 $ 48,060
Estimated earnings 9,388 9,941
Billings to date (39,557) (50,359)
------- --------
$ 1,465 $ 7,642
======= ========
As of As of
June 30, 2001 December 31, 2000
------------- -----------------
(in thousands)
Costs and estimated earnings in excess of billings on
uncompleted contracts $ 6,549 $ 13,584
Billings in excess of costs and estimated earnings on
uncompleted contracts (5,084) (5,942)
------- --------
$ 1,465 $ 7,642
8
5. CURRENT AND LONG-TERM DEBT
As of As of
June 30, 2001 December 31, 2000
------------- -----------------
(in thousands)
12% senior discount notes, net of unamortized original issue
discount of $47,413 at June 30, 2001, unsecured, cash
interest payable semi-annually in arrears beginning
September 1, 2003, balloon principal payment of $269,000 due at
maturity on March 1, 2008. $221,587 $209,042
10 1/4% senior notes, unsecured, interest payable semi-annually
beginning August, 2001, balloon principal payment of $500,000 due
at maturity on February 1, 2009. 500,000 -
Senior secured credit facility term loan, interest at varying rates
(6.60% at June 30, 2001) quarterly installments based on reduced
availability beginning September 30, 2003, maturing June 15, 2007. 50,000 -
Notes payable, interest at varying rates (2.9% to 11.4% at
June 30, 2001). 1,094 231
Senior credit facility term loan, repaid in February 2001. - 50,000
Senior credit facility revolving loan, repaid in March 2001. - 25,000
--------- ---------
772,681 284,273
Less: current maturities (713) (2,606)
--------- ---------
Long-term debt $771,968 $281,667
========= =========
6. SHAREHOLDERS' EQUITY
In January 2001, the Company entered into bonus agreements with certain
executives and employees to issue shares, or options to acquire shares, of the
Company's Class A common stock. The Company expects to record approximately $3.1
million of non-cash compensation expense in 2001 and $1.1 million in non-cash
compensation expense in each year from 2002 through 2006. The Company recorded
approximately $0.9 million and $1.7 million in non-cash compensation expense
during the three and six months ended June 30, 2001, respectively.
7. INCOME TAXES
The components of the provision for income taxes are as follows:
For the six months ended
------------------------
June 30, 2001 June 30, 2000
------------- -------------
(in thousands)
Federal income tax $ 15,465 $ 5,798
State income tax (825) (570)
Foreign tax (7) (7)
Change in valuation allowance (15,465) (5,798)
-------- -------
$ (832) $ (577)
======== =======
9
The Company has taxable losses in the three and six months ended June 30, 2001
and 2000, 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.
8. COMMITMENTS AND CONTINGENCIES
The Company is involved in various claims, lawsuits and proceedings arising in
the ordinary course of business. While there are uncertainties inherent in the
ultimate outcome of such matters and it is impossible to presently determine the
ultimate costs that may be incurred, management believes the resolution of such
uncertainties and the incurrence of such costs should not have a material
adverse effect on the Company's consolidated financial position or results of
operations.
As part of the consideration for its acquisitions, the Company sometimes agrees
to issue additional shares of Class A common stock if the towers or businesses
that are acquired meet or exceed certain earnings or new tower targets in the
1-3 years after they have been acquired. As of June 30, 2001, the Company had
the obligation to issue approximately 1.9 million additional shares of Class A
common stock and pay approximately $5.5 million in cash if the earnings targets
identified in various acquisition agreements are met.
9. ACQUISITONS
During the six months ended June 30, 2001 the Company completed 50 acquisitions,
all of which were individually insignificant to the Company. The aggregate
purchase price for the acquisitions was $194.1 million for the six months ended
June 30, 2001.
10. 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.
These business units are managed separately based on the fundamental differences
in their operations.
The Company's segment information for revenues, gross profit, capital
expenditures (including assets acquired through the issuance of the Company's
Class A common stock) and assets is as follows:
For the six months
ended June 30,
----------------------
2001 2000
---- ----
(in thousands)
Revenues:
Site development - consulting $ 13,890 $ 12,431
Site development - construction 51,623 34,603
Site leasing 45,198 21,898
-------- --------
$110,711 $ 68,932
======== ========
Gross profit:
Site development - consulting $ 4,487 $ 4,236
Site development - construction 10,794 6,579
Site leasing 28,960 13,574
-------- --------
$ 44,241 $ 24,389
======== ========
Capital expenditures:
Site development - consulting $ 918 $ 914
Site development - construction 29,901 1,417
Site leasing 313,212 180,339
Assets not identified by segment 1,776 506
-------- --------
$345,807 $183,176
======== ========
10
As of As of
June 30, 2001 December 31, 2000
------------- -----------------
(in thousands)
Assets:
Site development - consulting $ 11,150 $ 14,248
Site development - construction 129,899 99,962
Site leasing 1,091,939 815,660
Assets not identified by segment 181,194 18,948
---------- --------
$1,414,182 $948,818
========== ========
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
We are a leading independent owner and operator of wireless communications
towers in the United States. We generate revenues from our two primary
businesses, site leasing and site development. In our site leasing business, we
lease antenna space to wireless service providers on towers and other structures
that we own or manage for others. The towers that we own have either been
constructed by us at the request of a carrier, built or constructed based on our
own initiative or acquired. In our site development business, we offer wireless
service providers assistance in developing their own networks, including
designing a network with full signal coverage, identifying and acquiring
locations to place their antennas, obtaining zoning approvals, building towers
when necessary and installing their antennas. Since our founding in 1989, we
have participated in the development of more than 15,000 antenna sites in 49 of
the 51 major wireless markets in the United States.
Site Leasing Services
In 1997, we began aggressively expanding our site leasing business by
capitalizing on our nationally recognized site development experience and strong
relationships with wireless service providers to take advantage of the trends
toward independent tower ownerships and co-location, which is the placement of
multiple antennas on one tower. As of June 30, 2001, we owned or controlled
3,254 towers and had agreements providing us with the rights to acquire 407
additional existing towers. As of June 30, 2001 we had carrier directives to
build approximately 500 additional towers and had, in various phases of
development, 1,100 sites we had internally identified as desirable locations on
which to build a tower. Subsequent to our decision to scale back our
construction plan and operation discussed below, we had a total of approximately
1,000 sites in our backlog.
We believe our history and experience in providing site development services
gives us a competitive advantage in choosing the most attractive locations on
which to build new towers or buy existing towers, as measured by our success in
increasing tower revenues and cash flows. Based on tenant leases executed as of
June 30, 2001, same tower revenue growth for the trailing twelve months on the
1,660 towers we owned as of June 30, 2000 was 30%. We signed 321 new tenant
leases in the quarter ended June 30, 2001 on the 2,839 towers we owned at the
beginning of the quarter, at an average initial monthly rent of $1,559. Our
annualized rate of tenants added per tower, on a broadband equivalent basis, was
.47, .52, .56, and .59, for the quarters ended June 30, 2001, March 31, 2001,
December 31, 2000, and September 30, 2000, respectively. A broadband equivalent
basis is calculated by dividing total lease revenue by $1,500, an industry
benchmark for monthly rent per tenant. We believe that our annualized rate of
new tenants added per tower per quarter is among the highest in the industry. As
of June 30, 2001, the tenant count on owned towers was 7,202 or an average of
2.2 tenants per tower.
We have focused our capital expenditures on building new towers and acquiring
existing towers and related businesses. Our average construction cost of a new
tower is approximately $250,000, while we believe the industry's average
acquisition cost of a new tower over the last two years has been approximately
$350,000. As a result of these favorable economics, we have historically elected
to build the majority, 59%, of our towers. However, this trend changed somewhat
in the first half of 2001 as the average acquisition price per tower declined.
We acquired more towers than we built in the first half of 2001, and in the
second half of 2001, we again expect to acquire more towers than we build. On
August 9, 2001 we announced that, in light of our assessment of capital market
conditions, acquisition opportunities and our success in growing our tower
portfolio year-to-date, we were adjusting our new tower build construction plan
and operation to produce 100-150 new towers per quarter commencing with the
third quarter of 2001, instead of the 200 to 250 new towers per quarter
previously built or capable of being built by the Company. We now expect to
build a total of approximately 600-700 new towers in 2001 and approximately 400
to 600 in 2002. The adjustment is not expected to impact our anticipated
portfolio at year-end 2001 of 3,800 to 4,000 towers. In connection with the
adjustment to the scale of our new tower construction operation, we expect to
incur a non-recurring developmental charge in the third quarter of 2001,
estimated to be between $21.0 million and $24.0 million. Included in the charge
will be a write-off of costs reflected on our balance sheet as work in process
for certain new tower build sites for which development activity is expected to
be abandoned, costs of employee separation for certain employees and costs
associated with the closing or consolidation of selected offices that were
utilized primarily in our new asset development activities.
We have acquired 1,321 towers as of June 30, 2001. We seek to acquire
towers where we have also acquired 1,321 towers as of June 30, 2001. We seek to
acquire towers where we can increase cash flow to substantially reduce the tower
cash flow multiple paid at acquisition through additional tenant leases. For the
quarter ended June 30, 2001, we acquired 206 towers. The 206 tower acquisitions
were completed at an aggregate purchase price of $70.1 million, an
11
average price of approximately $340,000 per tower. In addition to what we have
previously acquired, we are actively negotiating to acquire additional existing
towers. In 2000, we entered into agreements to purchase 275 existing towers from
TeleCorp PCS, Inc. (TeleCorp), and a total of 300 towers including an option to
purchase up to an additional 100 towers from US Unwired. During the six months
ended June 30, 2001, we acquired 238 towers under the TeleCorp agreement for
$77.9 million and 141 towers under the US Unwired agreement for $44.1 million.
As of June 30, 2001, we had agreements giving us the right to acquire 407
additional towers in 37 separate transactions for an aggregate purchase price of
approximately $107.1 million or an average acquisition price of approximately
$263,000 per tower. These numbers do not include an option to purchase up to 100
additional towers from US Unwired later in 2001. These acquisitions are subject
to a number of conditions and may or may not close.
The following chart shows the number of towers we constructed for our own
account and the number of towers we acquired during the periods indicated:
Six months ended Year ended
June 30, 2001 December 31, 2000
---------------- -----------------
Towers constructed 391 779
Towers acquired 473 448
Site Development Services
Our site development 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 segment
of our site development business, we offer clients the following services: (1)
network pre-design; (2) identification of potential locations for towers and
antennas; (3) support in buying or leasing the location; and (4) assistance in
obtaining zoning approvals and permits. In the construction segment of our site
development business we provide a number of services, including the following:
(1) tower and related site construction; (2) switch construction; (3) antenna
installation; and (4) radio equipment installation, optimization and service.
We believe that our total site development business will grow with the expected
overall growth of wireless and other telecommunications networks. We anticipate
that site development construction revenues will continue to exceed site
development consulting revenues. We also believe that our site leasing revenues
will grow as wireless service providers continue to lease antenna space on our
towers and the number of towers we own or control grows.
RESULTS OF OPERATIONS
As we continue our transition into site leasing, operating results in prior
periods may not be meaningful predictors of future prospects. You should be
aware of the dramatic changes in the nature and scope of our business when
reviewing the ensuing discussion of comparative historical results. We expect
that the acquisitions consummated to date and any future acquisitions, as well
as our new tower builds, will have a material impact on future revenues,
expenses and net loss. Revenues, cost of revenues, selling, general and
administrative expenses, depreciation and amortization, interest income and
interest expense each increased significantly in the three and six month period
ended June 30, 2001 as compared to the respective periods in the prior year, and
some or all of those items may continue to increase significantly in future
periods. Additionally, during the six months ended June 30, 2001, we recorded an
extraordinary loss of $5.1 million for the write-off of deferred financing fees
associated with the termination of a senior credit facility. We believe that our
new tower build programs may have a material effect on future financial results,
and that effect will probably be negative until such time, if ever, as the newly
constructed towers attain higher levels of tenant use.
Second Quarter 2001 compared to the Second Quarter 2000
Total revenues increased 50.0% to $57.8 million for the second quarter of 2001
from $38.5 million for the second quarter of 2000. Site development revenues
increased 23.0% to $32.8 million in the second quarter of 2001 from $26.7
million in the second quarter of 2000 due to increases in both site development
consulting revenues and construction revenues. Site development consulting
revenues increased 10.7% to $7.6 million for the second quarter 2001 from $6.9
million for the second quarter of 2000, due to the increased demand for site
acquisition and zoning services from wireless communications carriers and our
efforts to increase our range of services.
12
Site development construction revenues increased 27.3% to $25.3 million for the
second quarter of 2001 from $19.8 million for the second quarter of 2000, due to
the increased demand for construction services from wireless communications
carriers, the number of projects on which services were rendered and the
acquisition of several small construction companies. Site leasing revenues
increased 110.9% to $24.9 million for the second quarter of 2001, from $11.8
million for the second quarter of 2000, due to the increased number of tenants
added to our towers, higher average rents received and the increase in the
number of towers added to our portfolio.
Total cost of revenues increased 36.7% to $34.3 million for the second quarter
of 2001 from $25.1 million for the second quarter of 2000. Site development cost
of revenues increased 22.1% to $25.2 million for the second quarter of 2001 from
$20.7 million in the second quarter of 2000 due to the increased volume in both
site development consulting and construction revenues. Site development
consulting cost of revenues increased 9.3% to $5.1 million for the second
quarter of 2001 from $4.7 million for the second quarter of 2000 due primarily
to higher revenues. Site development construction cost of revenues increased
25.8% to $20.1 million for the second quarter of 2001 from $16.0 million in the
second quarter of 2000 due primarily to higher revenues. Site leasing cost of
revenues increased 104.3% to $9.1 million for the second quarter of 2001 from
$4.5 million for the first quarter of 2000, due primarily to the increased
number of towers owned resulting in an increased amount of lease payments to
site owners and other related site costs.
Gross profit increased 74.9% to $23.4 million for the second quarter of 2001
from $13.4 million for the second quarter of 2000, due to increased site
development and site leasing revenues. Gross profit from site development
increased 26.2% to $7.6 million in the second quarter of 2001 from $6.0 million
in the second quarter of 2000 due to higher site development revenues. Gross
profit margins from site development remained relatively consistent for the
second quarter of 2001 and 2000. Gross profit margin on site development
consulting also remained relatively consistent. Gross profit margin on site
development construction increased in the second quarter of 2001 to 20.4% from
11.0% in the second quarter of 2000 as a result of our efforts to emphasize
higher margin projects, such as antenna installation and use of less
subcontractor labor. Gross profit for the site leasing business increased 115.0%
to $15.8 million in the second quarter of 2001 from $7.4 million in the second
quarter of 2000, and site leasing gross profit margin improved to 63.4% in the
second quarter of 2001 from 62.2% in the second quarter of 2000. The increased
gross profit was due to the substantially greater number of towers owned, the
increase in the number of tenants and the greater average revenue per tower in
the 2001 period. As a percentage of total revenues, gross profit increased to
40.6% of total revenues for the second quarter of 2001 from 34.8% for the second
quarter of 2000 due primarily to increased levels of higher margin site leasing
gross profit.
Selling, general and administrative expenses increased 69.8% to $10.8 million
for the second quarter of 2001 from $6.3 million for the second quarter of 2000.
The increase in selling, general and administrative expenses represented the
addition of offices, personnel and other infrastructure necessary to support our
continued growth as well as increased non-cash compensation expense and
recurring developmental expenses. The amount recorded as non-cash compensation
in the second quarter of 2001 was $0.9 million and no non-cash compensation
expense was recorded in the second quarter of 2000. This increase results from
the Company's increased usage of both common stock and options to purchase
shares of common stock as a means of both rewarding and retaining key employees.
The increase in recurring developmental expenses is due to higher levels of new
build and acquisition activity, the increasingly difficult zoning environment
and, to a lessor extent, pending acquisitions that ultimately did not close. In
the third quarter, we anticipate recording a non-recurring developmental charge
between $21.0 million and $24.0 million relating to a reduction in the scale of
our new tower construction operations. As a result of this decision,
developmental expenses may decline in future quarters.
Depreciation and amortization increased to $18.4 million for the second quarter
of 2001 as compared to $7.9 million for the second quarter of 2000. This
increase is directly related to the increased amount of fixed assets (primarily
towers) we owned in 2001 as compared to 2000.
Operating loss was $(5.7) million for the second quarter 2001, as compared to an
operating loss of $(0.9) million for the second quarter of 2000. Total other
expenses increased to $(17.1) million for the second quarter of 2001, as
compared to $(6.7) million for the second quarter of 2000, primarily as a result
of increased interest expense. The increase in interest expense is primarily due
to additional interest expense on our $500.0 million 10 1/4% senior notes issued
in February 2001 and the related amortization of deferred financing fees
partially offset by an increase in interest income due to higher cash balance as
a result of the issuance of 10 1/4% senior notes.
13
Earnings before interest, taxes, depreciation and amortization, non-cash
compensation expense and extraordinary items ("EBITDA") increased 92.2% to $13.6
million for the second quarter of 2001 from $7.1 million in the second quarter
of 2000. The following table provides a reconciliation of EBITDA to net loss:
Three months ended June 30,
---------------------------
2001 2000
---- ----
(in thousands)
EBITDA $ 13,563 $ 7,056
Interest expense (11,954) (1,620)
Amortization of original issue discount
and debt issuance costs (7,288) (6,352)
Interest income 2,207 1,293
Provision for income taxes (478) (353)
Depreciation and amortization (18,368) (7,932)
Other expense (112) -
Non-cash compensation expense (891) -
--------- --------
Net loss $(23,321) $(7,908)
========= ========
First Half of 2001 compared to the First Half of 2000
Total revenues increased 60.6% to $110.7 million for the first half of 2001 from
$68.9 million for the first half of 2000. Site development revenues increased
39.3% to $65.5 million in the first half of 2001 from $47.0 million in the first
half of 2000 due to increases in both site development consulting revenues and
construction revenues. Site development consulting revenues increased 11.7% to
$13.9 million for the first half 2001 from $12.4 million for the first half of
2000, due to the increased demand for site acquisition, zoning and other
consulting services from wireless communications carriers. Site development
construction revenues increased 49.2% to $51.6 million for the first half of
2001 from $34.6 million for the first half of 2000, due to the increased demand
for construction services from wireless communications carriers, the number of
projects on which services were rendered and the acquisition of several small
construction companies. Site leasing revenues increased 106.4% to $45.2 million
for the first half of 2001, from $21.9 million for the first half of 2000, due
to the increased number of tenants added to our towers, higher average rents
received and the increase in the number of towers added to our portfolio.
Total cost of revenues increased 49.2% to $66.5 million for the first half of
2001 from $44.5 million for the first half of 2000. Site development cost of
revenues increased 38.7% to $50.2 million for the first half of 2001 from $36.2
million in the first half of 2000 due to the increased volume in both site
development consulting and construction revenues. Site development consulting
cost of revenues increased 14.8% to $9.4 million for the first half of 2001 from
$8.2 million for the first half of 2000 due primarily to higher revenues. Site
development construction cost of revenues increased 45.7% to $40.8 million for
the first half of 2001 from $28.0 million in the first half of 2000 due
primarily to higher revenues. Site leasing cost of revenues increased 95.1% to
$16.2 million for the first half of 2001 from $8.3 million for the first half of
2000, due primarily to the increased number of towers owned resulting in an
increased amount of lease payments to site owners and other related site costs.
Gross profit increased 81.4% to $44.2 million for the first half of 2001 from
$24.4 million for the first half of 2000, due to increased site development and
site leasing revenues. Gross profit from site development increased 41.3% to
$15.3 million in the first half of 2001 from $10.8 million in the first half of
2000 due to higher site development revenues. Gross profit margins for site
development remained relatively consistent for the first half of 2001 as
compared to the first half of 2000. Gross profit margin on site development
consulting decreased to 32.3% for the first half of 2001 from 34.1% for the
first half of 2000, reflecting different states of project completions. Gross
profit margin on site development construction increased in the first half of
2001 to 20.9% from 12.2% in the first half of 2000 as a result of our efforts to
emphasize higher margin projects, such as antenna installation, and the use of
less subcontractor labor. Gross profit for the site leasing business increased
113.3% to $29.0 million in the first half of
14
2001 from $13.6 million in the first half of 2000, and site leasing gross profit
margin improved to 64.1% in the first half of 2001 from 62.0% in the first half
of 2000. The increased gross profit was due to the substantially greater number
of towers owned, the increase in the number of tenants and the greater average
revenue per tower in the 2001 period. As a percentage of total revenues, gross
profit increased to 40.0% of total revenues for the first half of 2001 from
35.4% for the first half of 2000 due primarily to increased levels of higher
margin site leasing gross profit.
Selling, general and administrative expenses increased 71.8% to $21.4 million
for the first half of 2001 from $12.5 million for the first half of 2000. The
increase in selling, general and administrative expenses represented the
addition of offices, personnel and other infrastructure necessary to support our
continued growth as well as increased non-cash compensation expense and
recurring developmental expenses. The amount recorded as non-cash compensation
in the first half of 2001 was $1.7 million as compared to $0.2 million in the
first half of 2000. This increase results from the Company's increased usage of
both common stock and options to purchase shares of common stock as a means of
rewarding and retaining key employees. The increase in recurring developmental
expenses is due to higher levels of new build and acquisition activity, the
increasingly difficult zoning environment and, to a lessor extent, pending
acquisitions that ultimately did not close. In the third quarter, we anticipate
recording a non-recurring developmental charge between $21.0 million and $24.0
million relating to a reduction in the scale of our new tower construction
operations. As a result of this decision, developmental expenses may decline in
future quarters.
Depreciation and amortization increased to $33.4 million for the first half of
2001 as compared to $14.8 million for the first half of 2000. This increase is
directly related to the increased amount of fixed assets (primarily towers) we
owned in 2001 as compared to 2000.
Operating loss was $(10.5) for the first half 2001, as compared to an operating
loss of $(2.8) million for the first half of 2000. Total other expenses
increased to $(29.9) million for the first quarter of 2001, as compared to
$(14.2) million for the first half of 2000, primarily as a result of increased
interest expense. The increase in interest expense is primarily due to
additional interest expense on our $500.0 million 10 1/4% senior notes issued in
February 2001. The extraordinary item in 2001 of $(5.1) million relates to the
write-off of deferred financing fees associated with a credit facility we
terminated in the first quarter of 2001.
EBITDA increased 102.0% to $24.5 million for the first half of 2001 from $12.1
million in the first half of 2000. The following table provides a reconciliation
of EBITDA to net loss:
Six months ended June 30,
-------------------------
2001 2000
---- ----
(in thousands)
EBITDA $ 24,520 $ 12,136
Interest expense (20,637) (4,527)
Amortization of original issue discount and debt issuance costss (14,256)
(12,569)
Interest income 5,207 2,821
Provision for income taxes (832) (577)
Depreciation and amortization (33,375) (14,763)
Other income (expense) (196) 51
Non-cash compensation expense (1,679) (203)
Extraordinary item, write-off of deferred financing fees (5,069) -
--------- --------
Net loss $(46,317) $(17,631)
========= ========
LIQUIDITY AND CAPITAL RESOURCES
SBA Communications Corporation is a holding company with no business operations
of its own. Our only significant asset is the outstanding capital stock of our
subsidiaries. We conduct all our business operations through our 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 on or make a distribution of
the capital stock of our subsidiaries, we cannot assure you that our
subsidiaries will generate sufficient cash flow to pay a dividend or distribute
funds, or that we will be permitted to pay any dividends under the terms of the
senior secured credit facility or other loan documents.
15
Net cash provided by operations during the six months ended June 30, 2001 was
$7.3 million as compared to $14.5 million in the six months ended June 30, 2000.
Net cash used in investing activities for the six months ended June 30, 2001 was
$(327.3) million compared to $(163.2) million for the six months ended June 30,
2000. This increase is primarily attributable to a higher level of acquisitions
and new build activity in 2001 versus 2000. Net cash provided by financing
activities for the six months ended June 30, 2001 was $456.0 million compared to
$172.7 million for the six months ended June 30, 2000. The increase in net cash
provided by financing activities is primarily due to the issuance of our $500.0
million 10 1/4% senior notes completed in February 2001 and the $50.0 borrowed
in accordance with the terms of our new senior secured credit facility.
Our balance sheet reflected positive working capital of $122.6 million as of
June 30, 2001 compared to negative working capital of $(27.5) million as of
December 31, 2000. This change is primarily attributable to increased cash
balances as a result of the issuance of our $500.0 million 10 1/4% senior notes
completed in February 2001, the $50.0 borrowing under our senior secured credit
facility and a reduction in payables.
In February 2001, the Company issued $500.0 million 10 1/4% senior notes due
2009, which produced net proceeds of approximately $483.4 million after
deducting offering expenses. Interest on the 10 1/4% senior notes is payable on
February 1 and August 1 of each year, beginning August 1, 2001. The 10 1/4%
senior notes are unsecured and pari passu in right of payment with the Company's
other existing and future senior indebtedness. The 10 1/4% senior notes place
certain restrictions on, among other things, the incurrance 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.
In June 2001, SBA Telecommunications, Inc. ("Telecommunications"), a subsidiary
of the Company, entered into a $300.0 million senior secured credit facility.
The facility provides for a $100.0 million term loan and a $200.0 million
revolving loan. Telecommunications drew $50.0 million of the term loan at
closing and the additional $50.0 million available under the term loan will be
drawn by December 15, 2001. Availability under this facility is based on certain
covenants. The term loan and the revolving loan mature June 15, 2007 and
amortization of the term loan begins in September 2003. Borrowings under the
senior secured credit facility bear interest at the euro dollar rate plus a
margin or a base rate plus a margin, as defined in the agreement. The senior
secured credit facility is secured by substantially all of the assets of
Telecommunications and its subsidiaries. The facility also places certain
restrictions on, among other things, the incurrance of debt and liens, the sale
of assets, capital expenditures, transactions with affiliates, sale and lease-
back transactions and the number of towers that can be built without anchor
tenants.
Our cash capital expenditures for the six months ended June 30, 2001 were $327.3
million, and for the year ended December 31, 2000 were $445.3 million. We
currently plan to make total cash capital expenditures during the year ending
December 31, 2001 of $400.0 million to $450.0 million, including up to $90.0 for
the acquisition of up to 275 towers we have acquired or will acquire from
TeleCorp and approximately $54.1 million for the acquisition of up to 173 towers
we have acquired or will acquire from US Unwired. Substantially all of these
planned capital expenditures are expected to be funded by the remaining proceeds
of our $500.0 million 10 1/4% senior note offering completed in February 2001,
the $50.0 borrowed under the senior secured credit facility and cash flow from
operations. Cash capital expenditures for fiscal year end 2002 are currently
estimated at approximately $250.0 million. Borrowings under our senior secured
credit facility and cash flows from operations are expected to be sufficient to
fund our existing 2002 capital expenditure plan. The exact amount of our future
capital expenditures will depend on a number of factors including acquisition
opportunities that become available during the period, the needs of our
build-to-suit customers, the number of towers we build and the availability to
us of additional debt or equity capital on acceptable terms. Thereafter,
however, or in the event we exceed current estimated cash capital expenditures,
we anticipate that we will need to seek additional equity or debt financing to
fund our business plan. In the event that we do not have sufficient liquidity
and there is not sufficient availability under the senior secured credit
facility when an acquisition or construction opportunity arises, we would be
required to seek additional debt or equity financing. Failure to obtain any such
financing could require us to significantly reduce our planned capital
expenditures and scale back the scope of our construction or acquisition
activities, either of which could have a material adverse effect on our
financial condition or results of operations. In addition we may need to
refinance all or a portion of our indebtedness (including the 12% senior
discount notes and the 10 1/4% senior notes) on or prior to scheduled maturity.
16
Our ability to make scheduled payments of principal of, or to pay interest on,
our debt obligations, and our ability to refinance any such debt obligations
(including the 12% senior discount notes and the 10 1/4% senior notes), or to
fund planned capital expenditures, will depend on our future performance, which,
to a certain extent, is subject to general economic, financial, competitive,
legislative, regulatory and other factors that are beyond our control.
We have on file with the Securities and Exchange Commission (SEC) shelf
registration statements on Form S-4 registering up to a total of 3.0 million
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 in the United States. During the six months ended
June 30, 2001, we issued 579,215 shares of Class A common stock under the terms
of certain acquisition agreements. As of the date of this report, the Company
may issue 1.7 million shares under these shelf registration statements.
We have on file with the SEC a universal shelf registration statement on Form S-
3 registering the sale of up to $500.0 million of any combination of the
following securities: Class A common stock, preferred stock, debt securities,
depository shares or warrants. As of the date of this report, the Company may
issue under this universal shelf registration statement any combination of the
registered securities, with an aggregate offering price of up to $252.7 million.
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.
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to certain market risks which are inherent in our financial
instruments. These instruments arise from transactions entered into in the
normal course of business, and in some cases relate to our acquisition of
related businesses. We are subject to interest rate risk on our senior secured
credit facility and certain other notes payable and any future financing
requirements. Substantially all of our indebtedness currently consists of fixed
rate debt.
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 debt indebtedness as of June 30, 2001:
(in thousands)
2001 2002 2003 2004 2005 Thereafter
---- ---- ---- ---- ---- ----------
Long-term debt:
Fixed rate (12.0%) -- -- -- -- -- $269,000
Fixed rate (10 1/4%) -- -- -- -- -- $500,000
Term loan, variable rate
6.6% at June 30, 2001 -- -- $2,500 $7,500 $12,500 $ 27,500
Notes payable variable rates
(between 2.9% and 11.4% at
June 30, 2001) $ 352 $ 492 $ 194 $ 55 $ 1 --
Our primary market risk exposure relates to (1) the interest rate risk on
long-term and short-term borrowings, (2) our ability to refinance our senior
notes at maturity at market rates, (3) the impact of interest rate movements on
our ability to meet interest expense requirements and financial covenants and
(4) the impact of interest rate movements on our ability to obtain adequate
financing to fund future acquisitions, and other capital expenditures. We manage
the interest rate risk on our outstanding long-term and short-term debt through
our use of fixed and variable rate debt and, if warranted, hedging instruments.
Although 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.
17
Senior Discount Note and Senior Note Disclosure Requirements
The indentures governing our 12% senior discount notes and our 10 1/4% senior
notes require certain financial disclosures for restricted subsidiaries separate
from unrestricted subsidiaries and the disclosure to be made of Tower Cash Flow,
as defined in the indentures, for the most recent fiscal quarter and Adjusted
Consolidated Cash Flow, as defined in the indentures, for the most recently
completed four-quarter period. As of June 30, 2001, we had no unrestricted
subsidiaries. Tower Cash Flow, as defined in the indentures, for the quarter
ended June 30, 2001 was $11.5 million. Adjusted Consolidated Cash Flow for the
twelve months ended June 30, 2001 was $55.3 million.
Disclosure 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. Discussions containing forward-looking statements may be found in
the material set forth in the section "Management's Discussion and Analysis of
Financial Condition and Results of Operations." 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 estimate of non-recurring developmental charges expected to be recorded
in 2001 and the impact on future developmental expense.
. our strategy to transition the primary focus of our business from site
development services toward the site leasing business, including our
intent to make strategic acquisitions of towers and related businesses;
. anticipated trends in the site development industry and its effect on our
revenues and profits;
. our estimates regarding the future development of the site leasing industry
and its effect on our site leasing revenues;
. our plan to continue to construct and acquire tower assets and the
resulting effect on our revenues, capital expenditures, expenses and net
income;
. our ability to successfully conclude letters of intent or definitive
agreements for newly built towers, acquisitions of existing towers and
related businesses, and the resulting effect on our financial operations;
. our estimate of the amount of planned capital expenditures for the years
ending December 31, 2001 and 2002 that will be required for the construction
or acquisition of towers and related businesses;
. our expectations regarding the average acquisition cost per tower and our
average construction cost per tower;
. our intention to fund cash capital expenditures through the end of 2002 from
the net remaining proceeds of our February 2001 10 1/4% senior note offering,
cash flow from operations and borrowings under our senior secured credit
facility; and
These forward-looking statements reflect our current views about future events
and are subject to risks, uncertainties and assumptions. We wish to caution
readers that certain important factors may have affected and could in the future
affect our actual results and could cause actual results to differ significantly
from those expressed in any forward-looking statement. The most important
factors that could prevent us from achieving our goals, and cause the
assumptions underlying forward-looking statements and the actual results to
differ materially from those expressed in or implied by those forward-looking
statements include, but are not limited to, the following:
. the business climate for the wireless communications industry in general and
the wireless communications infrastructure providers in particular;
. our ability and the ability of our customers to access sufficient capital to
fund expansion of networks and new tower builds and acquisitions
. our ability to secure as many site leasing tenants as planned;
. our ability to expand our site leasing business and maintain or expand our
site development business;
. our ability to complete construction of new towers on a timely and cost-
efficient basis, including our ability to successfully address zoning issues,
carrier design changes, changing local market conditions and the impact of
adverse weather conditions;
. our ability to identify and acquire new towers and related businesses,
including our capability to timely complete a review of the business,
financial, and legal aspects and obtain third party consents;
. our ability to retain current lessees on newly acquired towers;
. our ability to realize economies of scale for newly acquired towers;
18
. the continued use of towers and dependence on out-sourced site development
services by the wireless communications industry;
. our ability to compete effectively for new tower opportunities and site
development services in light of increased competition; and
. our ability to close and raise substantial additional financing to expand our
tower holdings.
We assume no responsibility for updating forward-looking statements in this
quarterly report.
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY SHAREHOLDERS
On May 3, 2001 SBA held its Annual Meeting of Shareholders (the
"Meeting"). At the meeting the Shareholders voted on the election of
two directors to serve until the 2004 Annual Meeting of Shareholders
and a proposal to adopt the 2001 Equity Participation Plan.
The voting results were as follows:
1. Election of Directors:
Name of Nominee For Withheld
--------------- --- --------
Richard W. Miller 85,638,669 143,880
Jeffrey A. Stoops 81,492,880 4,289,669
2. Adoption of the SBA 2001 Equity Participation Plan:
For Against Abstain
--- ------- -------
69,469,630 16,164,452 148,467
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit
10.32 $300,000,000 Credit Agreement
(b) REPORTS ON FORM 8-K
The Company filed a report on Form 8-K on April 18, 2001. In the
report, the Company reported under Item 9 certain operational
results.
The Company filed a report on Form 8-K on April 27, 2001. In the
report, the Company reported under Item 5 the receipt of a
commitment for a $300 million senior secured credit facility.
The Company filed a report on Form 8-K on May 9, 2001. In the
report, the Company reported under Item 5 certain financial
results.
The Company filed a report on Form 8-K on May 10, 2001. In the
report, the Company reported under Item 9 additional operational
information.
The Company filed a report on Form 8-K on May 16, 2001. In the
report, the Company reported under Item 5 the extension of its
pending exchange offer for all $500.0 million of its outstanding
series of 10 1/4% notes due 2009.
19
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
August 14, 2001 /s/ John Marino
------------------------------
John Marino
Chief Financial Officer
(Duly Authorized Officer)
August 14, 2001 /s/ Pamela J. Kline
------------------------------
Pamela J. Kline
Chief Accounting Officer
(Principal Accounting Officer)
20