<PAGE>
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
[X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
For the quarterly period ended June 30, 2000
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 (I.R.S. Employer Identification No.)
incorporation or organization)
33486
One Town Center Road, Boca Raton, (Zip code)
Florida
(Address of principal executive
offices)
(561) 995-7670
(Registrant's telephone number, including area code)
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, 2000
Class A Common Stock -- 39,244,813 shares
Class B Common Stock -- 5,465,595 shares
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
1
<PAGE>
SBA COMMUNICATIONS CORPORATION
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I--FINANCIAL INFORMATION
Item 1. Unaudited Financial Statements
Consolidated Balance Sheets as of December 31, 1999 and June 30, 2000. 3
Consolidated Statements of Operations for the three and six months
ended June 30, 1999 and 2000......................................... 4
Consolidated Statements of Cash Flows for the six months ended June
30, 1999 and 2000.................................................... 5
Consolidated Statement of Shareholders' Equity as of June 30, 2000.... 6
Condensed Notes to Consolidated Financial Statements.................. 7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.................................................. 12
Item 3. Quantitative and Qualitative Disclosures About Market Risk...... 17
PART II--OTHER INFORMATION
Item 2--Changes in Securities........................................... 20
Item 4--Submission of Matters to a Vote of Security Shareholders........ 20
Item 6--Exhibits and Reports on Form 8-K................................ 20
SIGNATURES................................................................ 21
</TABLE>
2
<PAGE>
ITEM 1: UNAUDITED FINANCIAL STATEMENTS
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited)
<TABLE>
<CAPTION>
June 30,
December 31, 1999 2000
----------------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents, includes interest
bearing amounts of $2,399,115 and
$25,401,273 in 1999 and 2000, respectively.. $ 3,130,912 $ 27,199,049
Accounts receivable, net of allowance of
$785,299 and $1,236,947 in 1999 and 2000,
respectively................................ 22,644,777 32,874,185
Prepaid and other current assets............. 4,946,561 7,917,515
Costs and estimated earnings in excess of
billings on uncompleted contracts........... 2,888,963 7,869,789
------------ ------------
Total current assets....................... 33,611,213 75,860,538
Property and equipment, net.................. 338,891,513 507,035,210
Intangible assets, net....................... 34,387,262 34,657,298
Other assets................................. 22,933,238 22,940,538
------------ ------------
Total assets............................... $429,823,226 $640,493,584
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable............................. $ 40,655,950 $ 58,574,780
Accrued expenses............................. 6,094,669 4,140,237
Notes payable................................ 50,176 1,300,176
Due to shareholder........................... 2,500,000 --
Billings in excess of costs and estimated
earnings on uncompleted contracts........... 1,600,981 3,008,498
Other current liabilities.................... 3,654,584 10,327,547
------------ ------------
Total current liabilities.................. 54,556,360 77,351,238
------------ ------------
Other liabilities:
Senior discount notes payable................ 186,041,542 197,206,522
Notes payable................................ 132,175,616 73,900,527
Deferred tax liabilities..................... 7,950,454 7,943,821
Other long-term liabilities.................. 517,007 585,057
------------ ------------
Total long-term liabilities................ 326,684,619 279,635,927
------------ ------------
Commitments and contingencies (see Note 8)
Shareholders' equity:
Common stock:
Class A, par value $.01 (100,000,000 shares
authorized) 21,546,737 and 34,192,639 shares
issued and outstanding in 1999 and 2000..... 215,467 341,926
Class B, par value $.01 (8,100,000 shares
authorized) 7,644,264 and 5,465,595 shares
outstanding in 1999 and 2000................ 76,443 54,656
Additional paid in capital................... 109,049,538 361,500,082
Accumulated deficit.......................... (60,759,201) (78,390,245)
------------ ------------
Total shareholders' equity................. 48,582,247 283,506,419
------------ ------------
Total liabilities and shareholders' equity. $429,823,226 $640,493,584
============ ============
</TABLE>
The accompanying Notes to Consolidated Financial Statements on pages 7 through
11 herein are an integral part of these consolidated financial statements.
3
<PAGE>
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
For the three months For the six months
ended June 30, ended June 30,
------------------------ --------------------------
1999 2000 1999 2000
----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
Revenues:
Site development
revenue............... $13,647,457 $26,691,944 $ 22,222,144 $ 47,033,524
Site leasing revenue... 5,757,815 11,810,942 10,899,429 21,898,387
----------- ----------- ------------ ------------
Total revenues....... 19,405,272 38,502,886 33,121,573 68,931,911
----------- ----------- ------------ ------------
Cost of revenues
(exclusive of
depreciation shown
below):
Cost of site development
revenue................. 10,009,566 20,650,015 16,632,761 36,219,364
Cost of site leasing
revenue................. 2,777,017 4,458,372 5,154,523 8,324,014
----------- ----------- ------------ ------------
Total cost of
revenues............ 12,786,583 25,108,387 21,787,284 44,543,378
----------- ----------- ------------ ------------
Gross profit......... 6,618,689 13,394,499 11,334,289 24,388,533
Operating expenses:
Selling, general and
administrative........ 4,855,498 6,338,187 8,933,071 12,456,007
Depreciation and
amortization.......... 3,538,092 7,931,956 6,669,393 14,762,230
----------- ----------- ------------ ------------
Total operating
expenses............ 8,393,590 14,270,143 15,602,464 27,218,237
----------- ----------- ------------ ------------
Operating loss....... (1,774,901) (875,644) (4,268,175) (2,829,704)
Other income (expense):
Interest income........ 339,722 1,293,312 846,665 2,821,096
Interest expense....... (1,650,829) (1,619,394) (2,466,319) (4,526,659)
Amortization of
original issue
discount and debt
issuance costs........ (5,452,713) (6,352,389) (10,652,957) (12,569,315)
Other.................. 14,312 (961) 23,526 50,575
----------- ----------- ------------ ------------
Total other expense.. (6,749,508) (6,679,432) (12,249,085) (14,224,303)
----------- ----------- ------------ ------------
Loss before provision
for income taxes and
extraordinary item.. (8,524,409) (7,555,076) (16,517,260) (17,054,007)
(Provision) benefit for
income taxes............ (209,680) (352,551) 575,901 (577,037)
----------- ----------- ------------ ------------
Net loss before
extraordinary item
and dividends....... (8,734,089) (7,907,627) (15,941,359) (17,631,044)
Extraordinary item....... -- -- (1,149,954) --
----------- ----------- ------------ ------------
Net loss............. (8,734,089) (7,907,627) (17,091,313) (17,631,044)
Dividends on preferred
stock................... 1,445,903 -- 733,403 --
----------- ----------- ------------ ------------
Net loss to common
shareholders........ $(7,288,186) $(7,907,627) $(16,357,910) $(17,631,044)
=========== =========== ============ ============
Basic and diluted loss
per common share before
extraordinary item...... $ (0.64) $ (0.20) $ (1.49) $ (0.47)
Extraordinary item....... -- -- (0.11) --
----------- ----------- ------------ ------------
Basic and diluted loss
per common share........ $ (0.64) $ (0.20) $ (1.60) $ (0.47)
=========== =========== ============ ============
Basic and diluted
weighted average number
of shares of common
stock................... 11,423,533 39,234,008 10,196,544 37,308,178
=========== =========== ============ ============
</TABLE>
The accompanying Notes to Consolidated Financial Statements on pages 7 through
11 herein are an integral part of these consolidated financial statements.
4
<PAGE>
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
For the six months ended
June 30,
--------------------------
1999 2000
------------ ------------
<S> <C> <C>
CASH FLOWS USED IN OPERATING ACTIVITIES:
Net loss.......................................... $(17,091,313) $(17,631,044)
Adjustments to reconcile net loss to net cash
provided by operating activities-
Depreciation and amortization..................... 6,669,393 14,762,230
Non-cash compensation expense..................... 136,650 202,701
Provision for doubtful accounts................... 326,301 892,917
Amortization of original issue discount and debt
issue costs...................................... 10,652,957 12,569,315
Interest on shareholder note...................... (91,858) --
Write-off of deferred financing fees.............. 1,149,954 --
Changes in operating assets and liabilities:
(Increase) decrease in-
Accounts receivable.............................. 328,478 (11,122,325)
Prepaid and other current assets................. 720,742 (2,970,954)
Costs and estimated earnings in excess of
billings on uncompleted contracts............... (122,530) (4,980,826)
Other assets..................................... (1,373,856) (1,353,761)
Increase (decrease) in-
Accounts payable.................................. 5,811,066 17,918,830
Accrued expenses.................................. 1,020,416 3,257,684
Other liabilities................................. (172,702) 1,522,264
Billings in excess of costs and estimated earnings
on uncompleted contracts......................... 173,782 1,407,517
------------ ------------
Total adjustments................................. 25,228,793 32,105,592
------------ ------------
Net cash provided by operating activities......... 8,137,480 14,474,548
------------ ------------
CASH FLOWS USED IN INVESTING ACTIVITIES:
Tower and other capital expenditures.............. (91,551,497) (163,153,476)
------------ ------------
Net cash used in investing activities............. (91,551,497) (163,153,476)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from offering of common stock........ 82,698,719 229,594,588
Proceeds from option exercise..................... 45,075 2,735,440
Proceeds from notes payable....................... 81,000,000 11,000,000
Redemption of preferred stock..................... (32,824,930) --
Repayment of notes payable........................ (63,001,000) (70,525,089)
Deferred financing fees........................... (6,209,781) (57,874)
------------ ------------
Net cash provided by financing activities......... 61,708,083 172,747,065
------------ ------------
Net increase (decrease) in cash and cash
equivalents...................................... (21,705,934) 24,068,137
CASH AND CASH EQUIVALENTS:
Beginning of period............................... 26,743,270 3,130,912
------------ ------------
End of period..................................... $ 5,037,336 $ 27,199,049
============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest.......................................... $ 2,507,796 $ 6,119,083
============ ============
Taxes............................................. $ 185,751 $ 688,134
============ ============
NON-CASH ACTIVITIES:
Dividends on preferred stock...................... $ (733,403) $ --
============ ============
Interest on bonds payable......................... $ 9,936,542 $ 11,164,980
============ ============
Note receivable--shareholder...................... $ (3,876,626) $ --
============ ============
Exchange of Series B preferred stock for common
stock............................................ $ 8,050,000 $ --
============ ============
Assets acquired in acquisitions.................... $ 21,601,360 $ 25,575,838
Liabilities assumed in acquisitions................ (6,666,726) (315,104)
Stock issued for acquisitions...................... (7,020,000) (20,022,487)
------------ ------------
$ 7,914,634 $ 3,238,247
============ ============
</TABLE>
The accompanying Notes to Consolidated Financial Statements on pages 7 through
11 herein are an integral part of these consolidated financial statements.
5
<PAGE>
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2000
(unaudited)
<TABLE>
<CAPTION>
Common Stock
----------------------------------------
Class A Class B Additional
------------------- -------------------- Paid in Accumulated
Number Amount Number Amount Capital Deficit Total
---------- -------- ---------- -------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, December 31,
1999................... 21,546,737 $215,467 7,644,264 $ 76,443 $109,049,538 $(60,759,201) $ 48,582,247
Offering of common
stock, net of issuance
costs................. 9,000,000 90,000 -- -- 229,504,588 -- 229,594,588
Exercise of employee
stock options......... 687,313 6,873 -- -- 2,728,567 -- 2,735,440
Exercise of warrants... 357,387 3,574 -- -- (3,574) -- --
Common stock issued in
connection with
acquisitions.......... 422,533 4,225 -- -- 20,018,262 -- 20,022,487
Conversion of Class B
to Class A............ 2,178,669 21,787 (2,178,669) (21,787) -- -- --
Non-cash compensation
adjustment............ -- -- -- -- 202,701 -- 202,701
Net loss............... -- -- -- -- -- (17,631,044) (17,631,044)
---------- -------- ---------- -------- ------------ ------------ ------------
BALANCE, June 30, 2000.. 34,192,639 $341,926 5,465,595 $ 54,656 $361,500,082 $(78,390,245) $283,506,419
========== ======== ========== ======== ============ ============ ============
</TABLE>
The accompanying Notes to Consolidated Financial Statements on pages 7 through
11 herein are an integral part of these consolidated financial statements.
6
<PAGE>
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 1999 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 generally accepted accounting principles. 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, 1999 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 exercisable stock options. Potential common stock equivalents of
474,552 and 833,554 shares for the three and six months ended June 30, 1999
and 2000, respectively, were not included in diluted loss per share
calculations because the effect would have been antidulutive. Accordingly,
basic and diluted loss per common share are the same for all periods
presented.
2. Current Accounting Pronouncements
In June 2000, the FASB issued SFAS 138, "Accounting for Certain Derivative
Instruments and Certain Hedging Activities, an amendment of SFAS 133." The
statement established accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. In addition, this Statement 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.
We deferred the adoption of both SFAS 133 and SFAS 137, "Accounting for
Derivative Instruments and Hedging Activities--Deferral of the Effective Date
of SFAS No. 133," until fiscal 2001. We do not believe that the adoption of
SFAS 138 will have a material effect on the Company's results of operations or
financial position.
3. Property and Equipment
Property and equipment, net, consists of the following:
<TABLE>
<CAPTION>
June 30,
December 31, 1999 2000
----------------- ------------
<S> <C> <C>
Towers....................................... $329,046,558 $470,576,984
Construction in process...................... 18,648,109 54,033,775
Furniture and fixtures....................... 6,880,071 10,304,025
Vehicles..................................... 667,756 667,756
Buildings and improvements................... 596,676 546,943
Land......................................... 6,664,178 7,741,828
------------ ------------
362,503,348 543,871,311
Less: Depreciation and Amortization.......... (23,611,835) (36,836,101)
------------ ------------
Property and equipment, net.................. $338,891,513 $507,035,210
============ ============
</TABLE>
Construction in process represents costs incurred related to towers which
are under development and will be used in the Company's operations.
7
<PAGE>
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
4. Cost and Estimated Earnings on Uncompleted Contracts
Costs and estimated earnings on uncompleted contracts consist of the
following:
<TABLE>
<CAPTION>
As of As of
December 31, 1999 June 30, 2000
----------------- -------------
<S> <C> <C>
Costs incurred on uncompleted contracts..... $ 11,259,511 $ 18,305,762
Estimated earnings.......................... 2,830,072 3,752,617
Billings to date............................ (12,801,601) (17,197,088)
------------ ------------
$ 1,287,982 $ 4,861,291
============ ============
<CAPTION>
As of As of
December 31, 1999 June 30, 2000
----------------- -------------
<S> <C> <C>
Costs and estimated earnings in excess of
billings on uncompleted contracts.......... $ 2,888,963 $ 7,869,789
Billings in excess of costs and estimated
earnings on uncompleted contracts.......... (1,600,981) (3,008,498)
------------ ------------
$ 1,287,982 $ 4,861,291
============ ============
</TABLE>
5. Current and Long Term Debt
<TABLE>
<CAPTION>
As of As of
December 31, 1999 June 30, 2000
----------------- -------------
<S> <C> <C>
Senior Credit Facility term loans, interest at
variable rates (10.20% to 10.22% at June 30,
2000) quarterly installments Based on reduced
availability beginning March 31, 2001,
Maturing December 31, 2004 and December 31,
2005. ........................................ $ 75,000,000 $ 75,000,000
Senior Credit Facility revolving loan, interest
at variable rates (9.62% to 11.00% at December
31, 1999) quarterly installments Based on
reduced availability beginning March 31, 2001,
Maturing December 31, 2004. .................. 57,000,000 --
Senior 12% discount notes, net of unamortized
original issue discount of $71,793,478 at June
30, 2000, unsecured, cash interest payable
semi-annually in arrears beginning September
1, 2003, balloon principal payment of
$269,000,000 due at maturity on March 1,
2008. ........................................ 186,041,542 197,206,522
Note Payable, monthly principal installments of
$4,181 plus Interest at 90 day LIBOR plus
2.25% (8.86% at June 30, 2000), Maturing June
30, 2004. Secured by vehicles. ............... 225,792 200,703
------------ ------------
318,267,334 272,407,225
Less: current maturities....................... (50,176) (1,300,176)
------------ ------------
Long-term debt................................. $318,217,158 $271,107,049
============ ============
</TABLE>
6. Shareholders' Equity
a. Offering of Common Stock
On February 2, 2000, the Company completed an equity offering of 9.0 million
shares of its Class A common stock. The Company raised gross proceeds of
$243.0 million, which produced net proceeds of approximately $229.6 million,
after deduction of the underwriting discount and estimated offering expenses.
The
8
<PAGE>
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Company used $70.5 million of these net proceeds to repay all revolving credit
loans under the Senior Credit Facility. Remaining proceeds have and will be
used for the construction and acquisition of towers and for general working
capital purposes.
On February 3, 2000, the managing underwriters of the equity offering
exercised and closed on their over-allotment option to purchase an additional
1,350,000 shares of the Company's Class A common stock. Certain shareholders
along with the Company had granted this option to the underwriters in
connection with the follow-on offering. These certain shareholders satisfied
from their shareholdings the exercise of the over-allotment option in full,
resulting in no proceeds to the Company as a result of this exercise.
b. Registration of Additional Shares During the Six Months Ended June 30,
2000
In January 2000, the Company filed a registration statement with the
Securities and Exchange Commission registering 1.0 million shares of its Class
A common stock. These shares are currently reserved for issuance in connection
with acquisitions of wireless communication towers or companies that provide
related services at various locations in the United States from time to time.
During the six months ended June 30, 2000, the Company issued 422,533 shares
of Class A common stock in connection with four acquisitions. The Company
accounted for these acquisitions using the purchase method of accounting. The
results of operations of the acquired assets and companies are included with
those of the Company from the date of the acquisitions. The historical results
of operations of the assets acquired are not material in relation to the
Company's consolidated financial statements; accordingly, pro forma financial
information has not been presented. As of the date of this report, 577,467
shares remain reserved for future issuance.
c. Exercise of Warrants
In February 2000, the holders of warrants issued in 1997 exercised, pursuant
to a cashless option, warrants to purchase 402,500 shares of SBA's Class A
common stock at an exercise price of $3.73 per share. Pursuant to the cashless
exercise option, the Company issued 357,387 shares of Class A common stock and
the holders surrendered warrants to purchase 45,113 additional shares as
consideration. The shares of Class A common stock were issued pursuant to
Section 3(a)9 of the Securities Act.
7. Income Taxes
The components of the (provision) benefit for income taxes related to
continuing operations are as follows:
<TABLE>
<CAPTION>
For the six months ended
---------------------------
June 30, 1999 June 30, 2000
------------- -------------
<S> <C> <C>
Federal income tax.............................. $ 5,311,527 $ 5,798,362
State income tax................................ (444,266) (569,740)
Foreign tax..................................... (243,881) (7,297)
Change in valuation allowance................... (4,047,479) (5,798,362)
----------- -----------
$ 575,901 $ (577,037)
=========== ===========
</TABLE>
The Company recorded a benefit in the first quarter of 1999 as a result of
net operating loss carry-backs available. The amount recorded as a benefit
represents the entire carry-back amount available. The Company has taxable
losses in the six months ended June 30, 1999 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.
9
<PAGE>
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
8. Commitments and Contingencies
Under the terms of our acquisition of Com-Net, we may be obligated to issue
up to 400,000 additional shares of Class A common stock to the former
shareholders of Com-Net if certain 2000 earnings targets are achieved.
We are 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.
9. 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 is as follows:
<TABLE>
<CAPTION>
For the six months ended June
30
-------------------------------
1999 2000
----------------- -------------
<S> <C> <C>
Revenue:
Site development--consulting............... $ 8,060,191 $ 12,430,535
Site development--construction............. 14,161,953 34,602,989
Site leasing............................... 10,899,429 21,898,387
------------ ------------
$ 33,121,573 $ 68,931,911
============ ============
Gross Profit:
Site development--consulting............... 2,460,426 4,235,727
Site development--construction............. 3,128,957 6,578,433
Site leasing............................... 5,744,906 13,574,373
------------ ------------
$ 11,334,289 $ 24,388,533
============ ============
Capital expenditures:
Site development--consulting............... -- 914,368
Site development--construction............. 11,655,339 1,417,467
Site leasing............................... 86,663,599 180,338,671
Assets not identified by segment........... 252,559 505,459
------------ ------------
$ 98,571,497 $183,175,965
============ ============
<CAPTION>
As of As of
December 31, 1999 June 30, 2000
----------------- -------------
<S> <C> <C>
Assets:
Site development--consulting............... $ 22,418,344 $ 2,251,103
Site development--construction............. 48,519,024 68,676,978
Site leasing............................... 338,722,978 548,236,524
Assets not identified by segment........... 20,162,880 21,328,979
------------ ------------
$429,823,226 $640,493,584
============ ============
</TABLE>
10
<PAGE>
SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
10. Subsequent Events
On July 28, 2000, the Company completed an offering of 5.0 million shares of
its Class A common stock. The Company raised gross proceeds of $215.0 million,
which produced net proceeds of approximately $204.4 million, after deduction
of the underwriting discount and estimated offering expenses. The Company used
$25.0 million of these net proceeds to repay a portion of the Senior Credit
Facility term loans. Remaining proceeds will be used for the acquisition and
construction of towers and for general working capital purposes, and possibly
for the repayment of a portion or all of the remaining Senior Credit Facility
term loans.
In connection with this offering, the Company granted the managing
underwriters of the offering a 30-day option to purchase an additional 750,000
shares of our Class A common stock to cover any over-allotments. As of the
date of this report, the managing underwriters have not exercised this option.
11
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis reflects only changes from information
previously presented for the 1999 fiscal year. Financial information relating
to the June 30, 1999 and June 30, 2000 periods is unaudited. This interim
discussion and analysis should be read in conjunction with our 1999 audited
financial statements, notes thereto and management's discussion and analysis
of financial condition and results of operations. The following discussion
should be read in conjunction with our Form 10-K filed with the SEC on March
30, 2000.
We continue to be a leading independent owner and operator of wireless
communications infrastructure in the United States. Our strategy is to utilize
our historical leadership position in the site development business, a project
revenue business, to expand our ownership and leasing of communication towers,
a recurring revenue business. We began in 1997, and continue, to transition
our revenue stream from project driven revenues to recurring revenues through
the leasing of antennae space at or on communications facilities. We owned 770
towers as of June 30, 1999 and 1,660 towers as of June 30, 2000.
While we intend to continue to offer site development services to wireless
carriers where demand and profitable opportunities exist, we will emphasize
our site leasing business through the construction of owned towers for lease
to wireless service providers, the acquisition of existing sites and the
leasing, subleasing and management of other antennae sites. As the site
development industry has matured our revenues and gross profit from the
consulting segment of that business have declined substantially over the last
two years, as wireless service providers chose to outsource ownership of
communication sites in order to conserve capital. We believe our site
development consulting business may experience continued declines in revenues
as this outsourcing trend continues. We also believe that, over the longer
term, site leasing revenues will increase as carriers move to outsource tower
ownership and the number of towers we own grows.
As a result of these trends and the shift in focus of our business, our net
loss in 2000 increased from the prior periods due to substantially increased
depreciation expense and interest expense. Capital expenditures increased
significantly in 2000 as compared to 1999 as we continued to accumulate
towers. We expect capital expenditures to continue to increase more in 2000 as
compared to 1999. In addition, we anticipate that our operating expenses will
increase above 1999 levels as we continue to build the infrastructure to
enable us to construct, acquire, and operate tower assets.
We derive our revenues from two businesses-site development and site
leasing. Our site development business consists of site development consulting
and site development construction. We provide site development services, both
consulting and construction, on a contract basis which is usually customer and
project specific. We also provide site leasing services on a contract basis.
Revenue from our site development business may fluctuate from period to period
depending on construction schedules, which are a function of our clients'
build-out schedules, weather and other factors. Our antenna site leases are
typically long-term agreements with renewal periods. Leases are generally paid
on a monthly basis. Because of the low variable operating costs of the site
leasing business, additional tenants on a tower generate disproportionately
larger increases in tower cash flow.
We have focused our capital deployment on building new towers and acquiring
existing towers. Of the 1,660 towers we owned as of June 30, 2000, 1,092 were
new builds. In general, we have chosen to build rather than buy the
substantial majority (66%) of our towers due to what we believe are more
favorable economics. To date, our construction cost of a new tower averages
approximately $225,000, while we believe the industry's average acquisition
cost of a tower over the last two years has been approximately $400,000. At
June 30, 2000, we had non-binding mandates to build over 600 additional towers
under build-to-suit programs (the majority of which we expect will result in
binding anchor tenant lease agreements). We believe we have one of the largest
number of non-binding build-to-suit mandates from wireless service providers
in the industry. At June 30, 2000, we were also pursuing over 900 new
strategic builds in locations chosen by us based on our industry knowledge and
experience. While we have focused primarily on new build towers for growth, we
have also acquired 568 towers as of June 30, 2000. Our acquisition strategy
has focused primarily on small acquisition targets, those
12
<PAGE>
which we believe offer better opportunities for value. We seek to acquire
towers where we can, through additional tenant leases, increase cash flow to
substantially reduce the tower cash flow multiple from the multiple paid at
acquisition. The 568 tower acquisitions to date have been completed at an
average acquisition price of approximately $382,000 per tower and a 14.6 times
multiple of annualized tower cash flow to purchase price, or an aggregate
purchase price of $217.2 million. In addition to what we have already
acquired, we are currently actively negotiating to acquire existing towers. At
June 30, 2000, we had letters of intent or definitive agreements to acquire
147 towers in 38 separate transactions for an aggregate purchase price of
approximately $56.4 million, or an average acquisition price of approximately
$384,000 per tower, and a 17.3 times multiple of annualized tower cash flow to
purchase price. We cannot assure you that we will be able to close these
transactions, or identify towers or tower companies to acquire in the future.
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
periods ended June 30, 2000 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. We believe that our new tower build programs may have a
material effect on future financial results, which effect will probably be
negative until such time, if ever, as the newly constructed towers attain
higher levels of tenant use. As of June 30, 2000 the tenant count on owned
towers was 4,095 or an average of 2.5 tenants per tower. The proforma average
monthly rent for all tenants in the portfolio was $1,022 as of June 30, 2000.
Second Quarter 2000 Compared to the Second Quarter 1999
Total revenues increased 98.4% to $38.5 million for the second quarter of
2000 from $19.4 million for the second quarter of 1999. We derive our revenues
from two businesses, site development and site leasing. Our site development
business consists of site development consulting and site development
construction. Site development revenues increased 95.6% to $26.7 million in
the second quarter of 2000 from $13.6 million in the second quarter of 1999
due to increases in both site development consulting revenues and construction
revenues. Site development consulting revenues increased 65.6% to $6.9 million
for the second quarter 2000 from $4.1 million for the second quarter of 1999,
due to an increase in demand for site acquisition and zoning services from
wireless communications carriers. Site development construction revenues
increased 108.6% to $19.8 million for the second quarter of 2000 from $9.5
million for the second quarter of 1999, due to the inclusion of Com-Net, which
was acquired in April 1999, the expanded customer base of our construction
activities and the number of projects on which services were rendered. Site
leasing revenues increased 105.1% to $11.8 million for the second quarter of
2000, from $5.8 million for the second quarter of 1999, due to the
substantially greater number of towers in our portfolio during 2000 as
compared to 1999.
Total cost of revenues increased 96.4% to $25.1 million for the second
quarter of 2000 from $12.8 million for the second quarter of 1999. Site
development cost of revenues increased 106.3% to $20.7 million for the second
quarter of 2000 from $10.0 million in the second quarter of 1999 due to the
increased volume in both site development consulting and construction
revenues. Site development consulting cost of revenues increased 82.0% to $4.7
million for the second quarter of 2000 from $2.6 million for the second
quarter of 1999 due primarily to higher revenues.
Site development construction cost of revenues increased 114.7% to $16.0
million for the second quarter of 2000 from $7.4 million in the second quarter
of 1999 due primarily to increased revenues. Site leasing cost of revenues
increased 60.5% to $4.5 million for the second quarter of 2000 from $2.8
million for the second quarter of 1999, due primarily to the increased number
of towers owned resulting in an increased amount of lease payments to site
owners and related site costs.
13
<PAGE>
Gross profit increased 102.4% to $13.4 million for the second quarter of
2000 from $6.6 million for the second quarter of 1999, due to increased site
development and site leasing revenues. Gross profit from site development
increased 66.1% to $6.0 million in the second quarter of 2000 from $3.6
million in the second quarter of 1999 due to higher site development revenues.
Gross profit margins for site development decreased in the second quarter of
2000 to 22.6% from 26.7% in the second quarter of 1999. Gross profit margin on
site development consulting decreased to 31.8% for the second quarter of 2000
from 38.0% for the second quarter of 1999. This decrease is attributable to
the relative percentage in the 2000 period of later stages of projects which
are generally less profitable than the earlier stages of projects. Gross
profit margin on site development construction increased in the second quarter
of 2000 to 19.5% from 16.5% in the second quarter of 1999, as a result of the
increased number of higher margin jobs. Gross profit for the site leasing
business increased 146.7% to $7.4 million in the second quarter of 2000 from
$3.0 million in the second quarter of 1999, and site leasing gross profit
margin improved to 62.2% in the second quarter of 2000 from 51.8% in 1999. The
increased gross profit and improved margin were both due to the substantially
greater number of towers owned and the greater average revenue per tower in
the 2000 period. As a percentage of total revenues, gross profit increased to
34.7% of total revenues for the second quarter of 2000 from 34.1% for the
second quarter of 1999 due primarily to increased levels of higher margin site
leasing gross profit.
Selling, general and administrative expenses increased to $6.3 million for
the second quarter of 2000 from $4.9 million for the second quarter of 1999.
As a percentage of total revenues, selling, general and administrative
expenses decreased to 16.5% for the second quarter of 2000 from 25.0% for the
second quarter of 1999. The increase in selling, general and administrative
expenses represents the addition of additional offices, personnel and other
infrastructure necessary to support our continued growth.
Depreciation and amortization increased to $7.9 million for the second
quarter of 2000 as compared to $3.5 million for the second quarter of 1999.
This increase is directly related to the increased amount of fixed assets
(primarily towers) we owned in 2000 as compared to 1999.
Operating loss decreased to $(0.9) million for the second quarter of 2000
from $(1.8) million for the second quarter of 1999 as a result of the
increased revenues in 2000. Other expense remained relatively constant at
$(6.7) million for both the second quarter in 2000 and 1999. Increased
interest expense in the second quarter of 2000 was offset by increased
interest income in the second quarter of 2000. Net loss was $(7.9) million for
the second quarter of 2000 as compared to net loss of $(8.7) million for the
second quarter of 1999.
First Half of 2000 Compared to the First Half of 1999
Total revenues increased 108.1% to $68.9 million for the first half of 2000
from $33.1 million for the first half of 1999. Site development revenues
increased 111.7% to $47.0 million in the first half of 2000 from $22.2 million
in the first half of 1999 due to increases in both site development consulting
revenues and construction revenues. Site development consulting revenues
increased 54.2% to $12.4 million for the first half of 2000 from $8.1 million
for the first half of 1999, due to an increased demand for site acquisition
and zoning services from wireless communications carriers. Site development
construction revenues increased 144.3% to $34.6 million for the first half of
2000 from $14.2 million for the first half of 1999, due primarily to the
inclusion of Com-Net, which was acquired in April 1999, as well as the
expanded customer base of our construction activities and the number of
projects on which construction services were rendered. Site leasing revenues
increased 100.9% to $21.9 million for the first half of 2000, from $10.9
million for the first half of 1999, due to the substantially greater number of
towers in our portfolio during 2000 compared to 1999.
Total cost of revenues increased 104.5% to $44.5 million for the first half
of 2000 from $21.8 million for the first half of 1999. Site development cost
of revenues increased 117.8% to $36.2 million for the first half of 2000 from
$16.6 million in the first half of 1999 due to the increased volume in both
the site development consulting and construction revenues. Site development
consulting cost of revenues increased 46.3% to $8.2 million for the first half
of 2000 from $5.6 million for the first half of 1999 due primarily to higher
volume of activity. Site development construction cost of revenues increased
154.1% to $28.0 million for the first half of
14
<PAGE>
2000 from $11.0 million in the first half of 1999 due to the inclusion of Com-
Net, acquired in April 1999, and to increased construction activity. Site
leasing cost of revenues increased 61.5% to $8.3 million for the first half of
2000 from $5.2 million for the first half of 1999, due primarily to the
increased number of towers owned resulting in an increased amount of lease
payments to site owners and related site costs.
Gross profit increased 115.1% to $24.4 million for the first half of 2000
from $11.3 million for the first half of 1999, due to increased site
development and site leasing revenues. Gross profit from site development
increased 93.3% to $10.8 million in the first half of 2000 from $5.6 million
in the first half of 1999 due to higher site development revenues. Gross
profit margins for site development decreased slightly in the first half of
2000 to 23.0% from 25.2% in the first half of 1999 due to a greater relative
amount of lower margin site development construction business. Gross profit
margin on site development consulting increased to 34.1% for the first half of
2000 from 30.5% for the first half of 1999. This increase is attributable to a
changing mix of project stages, where the early stages of a project are
generally more profitable than the later stages. Gross profit margin on site
development construction also increased in the first half of 2000 to 19.0%
from 17.4% in the first half of 1999, as a result of the increased number of
higher margin jobs. Gross profit for the site leasing business increased
136.3% to $13.6 million in the first half of 2000 from $5.7 million in the
first half of 1999, and site leasing gross profit margin improved to 62.0% in
the first half of 2000 from 52.7% in 1999. The increased gross profit and
improved margin were both due to the substantially greater number of towers
owned and the greater average revenue per tower in the 2000 period. As a
percentage of total revenues, gross profit increased to 35.3% of total
revenues for the first half of 2000 from 34.2% for the first half of 1999 due
primarily to increased levels of higher margin site leasing gross profit.
Selling, general and administrative expenses increased to $12.5 million for
the first half of 2000 from $8.9 million for the first half of 1999. As a
percentage of total revenues, selling, general and administrative expenses
decreased to 18.1% for the first half of 2000 from 27.0% for the first half of
1999. The increase in selling, general and administrative expenses represents
the addition of additional offices, personnel, and other infrastructure
necessary to support our continued growth.
Depreciation and amortization increased to $14.8 million for the first half
of 2000 as compared to $6.7 million for the first half of 1999. This increase
is directly related to the increased amount of fixed assets (primarily towers)
we owned in 2000 as compared to 1999.
Operating loss decreased to $(2.8) million for the first half of 2000 from
$(4.3) million for the first half of 1999 as a result of the increased
revenues in 2000. Other expense increased to $(14.2) million for the first
half of 2000 from $(12.2) million for the first half of 1999. This increase is
attributable to increased interest expense associated with the Senior Credit
Facility and amortization of deferred financing charges partially offset by
increased interest income. The extraordinary item in 1999 of $1.1 million
relates to the write-off of deferred financing fees associated with our prior
bank credit agreement. Net loss was $(17.6) million for the first half of 2000
as compared to net loss of $(17.1) million for the first half of 1999.
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
in respect 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 Credit Facility.
Net cash provided by operations during the six months ended June 30, 2000
was $14.5 million as compared to $8.1 million in the six months ended June 30,
1999. This increase is attributable to the increase in revenues.
15
<PAGE>
Net cash used in investing activities for the six months ended June 30, 2000
was $163.2 million compared to $91.6 million for the six months ended June 30,
1999. This increase is attributable to a higher level of tower acquisition and
new build activity in 2000 versus 1999. Net cash provided by financing
activities for the six months ended June 30, 2000 was $172.7 million compared
to $61.7 million for the six months ended June 30, 1999. The increase in net
cash provided by financing activities in 2000 was attributable to our equity
offering of Class A common stock which closed in February 2000.
Our balance sheet reflected negative working capital of $(1.5) million as of
June 30, 2000 and negative working capital of $(20.9) million as of December
31, 1999. This change is attributable to increased cash balances as a result
of the February 2000 offering.
In February 2000, we completed an offering of 9.0 million shares of our
Class A common stock. We raised gross proceeds of $243.0 million, which
produced net proceeds of approximately $229.6 million, after deduction of the
underwriting discount and offering expenses. We used $70.5 million of these
net proceeds to repay all revolving credit loans under the Senior Credit
Facility. Remaining proceeds have been used for the construction and
acquisition of towers and for general working capital purposes. Additionally,
in February 2000 the managing underwriters of the offering exercised and
closed on their over-allotment option to purchase an additional 1,350,000
shares of our Class A common stock from certain shareholders. We did not
receive any proceeds as a result of this exercise.
In August 2000, we completed an offering of 5.0 million shares of our Class
A common stock. We raised gross proceeds of $215.0 million, which produced net
proceeds of approximately $204.4 million, after deduction of the underwriting
discount and offering expenses. We used $25.0 million of these net proceeds to
repay a portion of the term loans under the Senior Credit Facility. Remaining
proceeds will be used for the construction and acquisition of towers, general
working capital purposes and the possible repayment of a portion or all of the
remaining term loan under the Senior Credit Facility. In addition, we have
granted the managing underwriters of the offering a 30 day option to purchase
750,000 shares of our Class A common stock. As of the date of this report, the
managing underwriters have not exercised their option.
In the event that the business acquired in the Com-Net acquisition achieves
certain EBITDA targets in 2000, we may be obligated to issue up to 400,000
additional shares of Class A common stock to the former shareholders of Com-
Net.
As of June 30, 2000 our Senior Credit Facility, as amended, consists of two
term loans in an aggregate amount of $25.0 million and $50.0 million and a
$225.0 million revolving line of credit. In connection with the August 2000
equity offering, we repaid the full prinicpal amount of the $25.0 million term
loan. Availability under the Senior Credit Facility is determined by a number
of factors, including the number of towers built by us with anchor tenants on
the date of completion, the financial performance of our other towers, site
development and construction segments, as well as by other financial
covenants, financial ratios and other conditions. The revolving line of credit
matures on December 31, 2004 and reduced availability begins on June 30, 2001.
The $50.0 million term loan matures on December 31, 2005 and amortization of
this term loan begins on June 30, 2002. The Senior Credit Facility is secured
by substantially all of the assets of Telecommunications and its direct and
indirect subsidiaries and requires Telecommunications to maintain certain
financial covenants, and places restriction on, among other things, the
incurrence of debt and liens, disposition of assets, transactions with
affiliates and certain investments. As of June 30, 2000, we had $75.0 million
of borrowings outstanding under the Senior Credit Facility at variable rates
ranging from 10.20% to 10.22%.
We currently anticipate building a significant number of towers for which we
have non-binding mandates pursuant to our build-to-suit program or pursuant to
our strategic site initiatives. We also intend to continue to explore
opportunities to acquire additional towers, tower companies and/or related
businesses. The exact amount of our future capital expenditures will depend on
a number of factors. Our future capital expenditures will depend in part upon
acquisition opportunities that become available during the period, the needs
of our build-to-suit customers and the availability to us of additional debt
or equity capital on acceptable terms. Our cash capital expenditures for the
year ended December 31, 1999 were $208.9 million, and for the six months ended
June 30,
16
<PAGE>
2000 were $163.2 million. We currently plan to make total cash capital
expenditures during the twelve months ending June 30, 2001 of at least $250.0
million to $300.0 million. Substantially all of these planned capital
expenditures are expected to be funded by proceeds from our issuance of
equity, borrowings under our Senior Credit Facility and cash flow from
operations. In the event that there is not sufficient availability under the
Senior Credit Facility when an acquisition or construction opportunity arises,
we would be required to seek additional debt or equity financing. We cannot
assure you that any required financing will be available on commercially
reasonable terms or at all or that any additional debt financing would be
permitted by the terms of our existing indebtedness. In addition, we have on
file with the Commission a shelf registration on Form S-4 registering up to
1,000,000 shares of Class A common stock which we may issue in connection with
the acquisition of towers or related businesses. As of the date of this
report, 577,467 shares remain reserved for future issuance. During the six
months ended June 30, 2000, we issued 422,533 shares of Class A common stock
in connection with four acquisitions. In addition, we have on file with the
Commission a shelf registration on Form S-3 registering up to $500.0 of either
Class A common stock, preferred stock, debt securities, depositary shares or
warrants. As of the date of this report we have issued 5.0 million Class A
common shares under this shelf registration, generating gross proceeds of
$215.0 million.
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, 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. Our business strategy contemplates substantial
capital expenditures in connection with our planned tower build-out and
acquisitions. Based on our current operations and anticipated revenue growth,
we believe that, if our business strategy is successful cash flow from
operations, the proceeds of our equity offerings, and available borrowings
under the Senior Credit Facility will be sufficient to fund our anticipated
capital expenditures for the next twelve months. Thereafter, however, or in
the event we exceed our currently anticipated capital expenditures for the
next twelve months, we anticipate that we will need to seek additional equity
or debt financing to fund our business plan. Failure to obtain any such
financing could require us to significantly reduce our planned capital
expenditures and scale back the scope of our tower build-out or acquisitions,
either of which could have a material adverse effect on our projected
financial condition or results of operations. In addition we may need to
refinance all or a portion of our indebtedness (including the Notes and/or the
Senior Credit Facility) on or prior to its scheduled maturity. We cannot
assure you that we will generate sufficient cash flow from operations in the
future, that anticipated revenue growth will be realized or that future
borrowings or equity contributions will be available in amounts sufficient to
service our indebtedness and make anticipated capital expenditures. In
addition, we cannot assure you that we will be able to effect any required
refinancing of our indebtedness (including the Notes) on commercially
reasonable terms or at all.
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.
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 Credit
Facility and any future financing requirements. Our fixed rate debt consists
primarily of the accreted balance of the Senior Discount Notes.
17
<PAGE>
The following table presents the future principal payment obligations and
weighted average interest rates associated with our long-term debt instruments
assuming our actual level of long-term debt indebtedness as of June 30, 2000:
<TABLE>
<CAPTION>
2000 2001 2002 2003 2004 Thereafter
------- ---------- ---------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Long-term debt:
Fixed rate (12.0%)...... -- -- -- -- -- $269,000,000
Term loan ($25.0
million) variable rate
(10.22% at June 30,
2000).................. -- $2,500,000 $2,500,000 $7,500,000 $12,500,000 --
Term loan ($50.0
million) variable rate
(10.20% at June 30,
2000).................. -- -- $ 500,000 $ 500,000 $ 500,000 $ 48,500,000
Note Payable variable
rate (8.86% at June 30,
2000).................. $25,088 $ 50,176 $ 50,176 $ 50,176 $ 25,087 --
</TABLE>
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
Discount Notes at maturity at market rates, (3) the impact of interest rate
movements on our ability to meet interest expense requirements and exceed
financial covenants and (4) the impact of interest rate movements on our
ability to obtain adequate financing to fund future acquisitions. We manage
the interest rate risk on our outstanding long-term and short-term debt
through our use of fixed and variable rate debt. 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 Discount Note Disclosure Requirements
The indenture governing our 12% Senior Discount Notes due 2008 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 indenture, for the most recent fiscal quarter and Adjusted
Consolidated Cash Flow, as defined in the indenture, for the most recently
completed four-quarter period. As of June 30, 2000 we had no unrestricted
subsidiaries. Tower cash flow, as defined in the indenture, for the quarter
ended June 30, 2000 was $5.4 million. Adjusted Consolidated Cash Flow for the
year ended June 30, 2000 was $25.5 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 of 1934. 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 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 tower companies;
. 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 estimate of our competitive position with respect to the number of
build-to-suit mandates in the industry
. our ability to successfully conclude letters of intent or definitive
agreements for newly built towers or acquisitions of existing towers and
the resulting effect on our financial operations;
18
<PAGE>
. our estimate of the amount of capital expenditures for fiscal year 2000
that will be required for the construction or acquisition of
communications sites and the contingent share issuance related to the
acquisition of Com-Net Construction Services, Inc.; and
. our intention to fund capital expenditures for fiscal year 2000 from
cash from our equity offerings, operations and borrowings under our
Senior Credit Facility.
These forward-looking statements reflect our current views about future
events and are subject to risks, uncertainties and assumptions. We wish to
caution readers that certain important factors may have affected and could in
the future affect our actual results and could cause actual results to differ
significantly from those expressed in any forward-looking statement. The most
important factors that could prevent us from achieving our goals, and cause
the assumptions underlying forward-looking statements and the actual results
to differ materially from those expressed in or implied by those forward-
looking statements include, but are not limited to, the following:
. our ability to 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, including our capability
to timely complete due diligence 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;
. the continued dependence on towers and outsourced 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 raise substantial additional financing to expand our
tower holdings.
19
<PAGE>
PART II--OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
In February 2000, the holders of warrants issued in 1997 exercised, pursuant
to a cashless option, warrants to purchase 402,500 shares of SBA's Class A
common stock at an exercise price of $3.73 per share. Pursuant to the cashless
exercise option, the Company issued 357,387 shares of Class A common stock and
the holders surrendered warrants to purchase 45,113 additional shares as
consideration. The shares of Class A common stock were issued pursuant to
Section 3(a)9 of the Securities Act.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY SHAREHOLDERS
On May 4, 2000 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 2003 Annual Meeting of Shareholders and a proposal to amend
SBA's 1999 Equity Participation Plan to increase the number of shares of Class
A common stock authorized for issuance from 2,500,000 to 4,500,000.
The voting results were as follows:
1. Election of Directors:
<TABLE>
<CAPTION>
Name of Nominee For Withheld
--------------- --- --------
<S> <C> <C>
C. Kevin Landry 84,718,796 56,206
Robert S. Picow 84,714,806 60,196
</TABLE>
2. Amendment to SBA 's 1999 Equity Participation Plan to increase the
number of shares of Class A common stock authorized for issuance from
2,500,000 to 4,500,000:
<TABLE>
<CAPTION>
Broker
For Against Abstain Non-Votes
--- ------- ------- ---------
<S> <C> <C> <C>
77,827,089 6,945,713 2,200 0
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
27. Financial Data Schedule (filed only electronically with the SEC)
(b) REPORTS ON FORM 8-K
The Company filed a report on Form 8-K on April 18, 2000. In the report,
the Company reported under Item 5 certain operational results.
The Company filed a report on Form 8-K on April 26, 2000. In the report,
the Company reported under Item 5 that it had entered into a "build-to-
suit" agreement with TeleCorp. PCS, Inc.
The Company filed a report on Form 8-K on May 8, 2000. In the report, the
Company reported under Item 5 its schedule for the first quarter earnings
release.
The Company filed a report on Form 8-K on May 9, 2000. In the report, the
Company reported under Item 5 certain financial results.
20
<PAGE>
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 15, 2000
/s/ John Marino
_____________________________________
John Marino
Chief Financial Officer
(Duly Authorized Officer)
August 15, 2000
/s/ Pamela J. Kline
_____________________________________
Pamela J. Kline
Chief Accounting Officer
(Principal Accounting Officer)
21
