What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2020-11-05 compared with 2020-08-06 · 179 added, 155 removed, 451 unchanged (43% of the section changed)

2 unchanged sentences

In addition, we own and operate towers in South America, Central America, Canada, and South Africa.

Our primary business line is our site leasing business, which contributed 98.8% of our total segment operating profit for the six months ended June 30, 2020.

Our primary business line is our site leasing business, which contributed 98.6% of our total segment operating profit for the nine months ended September 30, 2020.

In our site leasing business, we (1) lease antenna space to wireless service providers on towers that we own or operate and (2) manage rooftop and tower sites for property owners under various contractual arrangements.

As of June 30, 2020, we owned 32,610 towers, a substantial portion of which have been built by us or built by other tower owners or operators who, like us, have built such towers to lease space to multiple wireless service providers.

As of September 30, 2020, we owned 32,724 towers, a substantial portion of which have been built

by us or built by other tower owners or operators who, like us, have built such towers to lease space to multiple wireless service providers.

Our other business line is our site development business, through which we assist wireless service providers in developing and maintaining their own wireless service networks.

Our primary focus is the leasing of antenna space on our multi-tenant towers to a variety of wireless service providers under long-term lease contracts in the United States, South America, Central America, Canada, and South Africa.

As of June 30, 2020, (1) no U.S.

As of September 30, 2020, (1) no U.S.

state or territory accounted for more than 10% of our total tower portfolio by tower count, and (2) no U.S.

state or territory accounted for more than 10% of our total revenues for the six months ended June 30, 2020.

In addition, as of June 30, 2020, approximately 30.4% of our total towers are located in Brazil and less than 4% of our total towers are located in any of our other international markets (each country is considered a market).

state or territory accounted for more than 10% of our total revenues for the nine months ended September 30, 2020.

In addition, as of September 30, 2020, approximately 30% of our total towers are located in Brazil and less than 4% of our total towers are located in any of our other international markets (each country is considered a market).

We derive site leasing revenues primarily from wireless service provider tenants, including T-Mobile, AT&T, Verizon Wireless, Oi S.A., Telefonica, Claro, and TIM.

12 unchanged sentences

In the United States and our international markets, ground leases and other property interests are generally for an initial term of five years to 10 years with multiple renewal periods, at our option, and provide for rent escalators which typically average 2-3% annually, or in our South American markets and South Africa, adjust in accordance with a standard cost of living index.

As of June 30, 2020, approximately 71% of our tower structures were located on parcels of land that we own, land subject to perpetual easements, or parcels of land in which we have a leasehold interest that extends beyond 20 years.

As of September 30, 2020, approximately 71% of our tower structures were located on parcels of land that we own, land subject to perpetual easements, or parcels of land in which we have a leasehold interest that extends beyond 20 years.

For any given tower, costs are relatively fixed over a monthly or an annual time period.

10 unchanged sentences

For the three months ended

For the six months ended

For the nine months ended

September 30,

Segment operating profit as a percentage of total

29 unchanged sentences

On April 1, 2020, T-Mobile finalized a merger with Sprint and now operates as T-Mobile.

For the three months ended June 30, 2020, T-Mobile represented 40.4% of our total domestic site leasing revenue and 53.0% of our site development revenue.

For the six months ended June 30, 2020, T-Mobile represented 40.8% of our total domestic site leasing revenue and 53.8% of our site development revenue.

For the three months ended September 30, 2020, T-Mobile represented 40.2% of our total domestic site leasing revenue and 67.6% of our site development revenue.

For the nine months ended September 30, 2020, T-Mobile represented 40.6% of our total domestic site leasing revenue and 59.7% of our site development revenue.

Capital Allocation Strategy

12 unchanged sentences

COVID-19 Update

During the six months ended June 30, 2020, we experienced minimal impact to our business or results of operations from the coronavirus (COVID-19) pandemic.

During the nine months ended September 30, 2020, we experienced minimal impact to our business or results of operations from the coronavirus (COVID-19) pandemic.

The extent to which COVID-19 could adversely affect our future business operations will depend on future developments such as the duration of the outbreak, new information on the severity of COVID-19, and methods taken to contain or treat the outbreak of COVID-19.

While the full impact of COVID-19 is not yet known, we will continue to monitor this recent outbreak and the potential effects on our business.

For more information regarding COVID-19, refer to Item 1A.

Risk Factors.

Critical Accounting Policies and Estimates

11 unchanged sentences

We believe that providing these financial results and metrics on a constant currency basis, which are non-GAAP measures, gives management and investors the ability to evaluate the performance of our business without the impact of foreign currency exchange rate fluctuations.

We eliminate the impact of changes in foreign currency exchange rates by dividing the

current period’s financial results by the average monthly exchange rates of the prior year period, as well as by eliminating the impact of the remeasurement of our intercompany loans.

Three Months Ended June 30, 2020 Compared to Three Months Ended June 30, 2019

We eliminate the impact of changes in foreign currency exchange rates by dividing the current period’s financial results by the average monthly exchange rates of the prior year period, as well as by eliminating the impact of the remeasurement of our intercompany loans.

Three Months Ended September 30, 2020 Compared to Three Months Ended September 30, 2019

Revenues and Segment Operating Profit:

For the three months ended

September 30,

Currency Impact

12 unchanged sentences

Site development

Domestic site leasing revenues increased $18.8 million for the three months ended June 30, 2020, as compared to the prior year, primarily due to (1) revenues from 180 towers acquired and 28 towers built since April 1, 2019 and (2) organic site leasing growth, primarily from monetary lease amendments for additional equipment added to our towers as well as new leases and contractual rent escalators, partially offset by lease non-renewals.

International site leasing revenues increased $4.6 million for the three months ended June 30, 2020, as compared to the prior year.

Domestic site leasing revenues increased $16.3 million for the three months ended September 30, 2020, as compared to the prior year, primarily due to (1) revenues from 120 towers acquired and 21 towers built since July 1, 2019 and (2) organic site leasing growth, primarily from monetary lease amendments for additional equipment added to our towers as well as new leases and contractual rent escalators, partially offset by lease non-renewals.

International site leasing revenues increased $1.9 million for the three months ended September 30, 2020, as compared to the prior year.

On a constant currency basis, international site leasing revenues increased $22.1 million.

These changes were primarily due to (1) revenues from 2,294 towers acquired and 451 towers built since April 1, 2019 and (2) organic site leasing growth from new leases, amendments, and contractual escalators.

These changes were primarily due to (1) revenues from 2,316 towers acquired (including 1,313 and 911 towers acquired in Brazil and South Africa, respectively) and 446 towers built since July 1, 2019 and (2) organic site leasing growth from new leases, amendments, and contractual escalators.

Site leasing revenue in Brazil represented 10.8% of total site leasing revenue for the period.

No other individual international market represented more than 4% of our total site leasing revenue.

Site development revenues decreased $16.3 million for the three months ended June 30, 2020, as compared to prior year, as a result of decreased carrier activity driven primarily by T-Mobile and Sprint.

Site development revenues decreased $2.8 million for the three months ended September 30, 2020, as compared to prior year, as a result of decreased carrier activity driven primarily by T-Mobile and Sprint.

Operating Profit

Domestic site leasing segment operating profit increased $20.3 million for the three months ended June 30, 2020, as compared to the prior year, primarily due to additional profit generated by (1) towers acquired and built since April 1, 2019 and organic site leasing growth as noted above, (2) continued control of our site leasing cost of revenue, and (3) the positive impact of our ground lease purchase program.

International site leasing segment operating profit increased $4.9 million for the three months ended June 30, 2020, as compared to the prior year.

Domestic site leasing segment operating profit increased $15.9 million for the three months ended September 30, 2020, as compared to the prior year, primarily due to additional profit generated by (1) towers acquired and built since July 1, 2019 and organic site leasing growth as noted above, (2) continued control of our site leasing cost of revenue, and (3) the positive impact of our ground lease purchase program.

International site leasing segment operating profit increased $2.6 million for the three months ended September 30, 2020, as compared to the prior year.

On a constant currency basis, international site leasing segment operating profit increased $16.1 million.

These changes were primarily due to additional profit generated by (1) towers acquired and built since April 1, 2019 and organic site leasing growth as noted above, (2) continued control of our site leasing cost of revenue, and (3) the positive impact of our ground lease purchase program.

Site development segment operating profit decreased $5.2 million for the three months ended June 30, 2020, as compared to the prior year, as a result of decreased carrier activity driven primarily by T-Mobile and Sprint.

These changes were primarily due to additional profit generated by (1) towers acquired and built since July 1, 2019 and organic site

leasing growth as noted above, (2) continued control of our site leasing cost of revenue, and (3) the positive impact of our ground lease purchase program.

Site development segment operating profit decreased $1.1 million for the three months ended September 30, 2020, as compared to the prior year, as a result of decreased carrier activity driven primarily by T-Mobile and Sprint.

Selling, General, and Administrative Expenses:

For the three months ended

September 30,

Currency Impact

5 unchanged sentences

Site development

Selling, general, and administrative expenses decreased $6.4 million for the three months ended June 30, 2020, as compared to the prior year.

On a constant currency basis, selling, general, and administrative expenses decreased $5.0 million.

These changes were primarily as a result of decreases in noncash compensation due to the acceleration of unrecognized stock compensation expense in the prior year related to the adoption of the retirement plan, back-office operating expenses, and travel related expenses.

These decreases were partially offset by increases in personnel and other support related costs due in part to our continued international expansion and charitable contributions related to COVID-19 relief.

Selling, general, and administrative expenses increased $5.9 million for the three months ended September 30, 2020, as compared to the prior year.

On a constant currency basis, selling, general, and administrative expenses increased $7.1 million.

These changes were primarily as a result of increases in noncash compensation, personnel and other support related costs due in part to our continued international expansion and charitable contributions related to COVID-19 relief, and back-office operating expenses, partially offset by a decrease in travel related expenses.

Acquisition and New Business Initiatives Related Adjustments and Expenses:

For the three months ended

September 30,

Currency Impact

3 unchanged sentences

International site leasing

Acquisition and new business initiatives related adjustments and expenses increased $2.1 million for the three months ended June 30, 2020, as compared to the prior year.

On a constant currency basis, acquisition and new business initiatives related adjustments and expenses increased $2.3 million.

These changes were primarily as a result of incremental costs incurred in support of new business initiatives.

Asset Impairment and Decommission Costs:

For the three months ended

September 30,

Currency Impact

3 unchanged sentences

International site leasing

Asset impairment and decommission costs decreased $3.4 million for the three months ended June 30, 2020, as compared to the prior year.

On a constant currency basis, asset impairment and decommission costs decreased $3.1 million.

These changes were primarily as a result of a $4.5 million decrease in the impairment charge recorded due to sites decommissioned in the second quarter of 2020 compared to the prior year period, partially offset by a $1.1 million increase in impairment charges resulting from our regular analysis of whether the future cash flows from certain towers are adequate to recover the carrying value of the investment in those towers.

Asset impairment and decommission costs increased $0.3 million for the three months ended September 30, 2020, as compared to the prior year.

On a constant currency basis, asset impairment and decommission costs increased $0.8 million.

These changes were primarily as a result of a $1.4 million increase in impairment charges resulting from our regular analysis of whether the future cash flows from certain towers are adequate to recover the carrying value of the investment in those towers, partially offset by a $1.1 million decrease in the impairment charge related to sites decommissioned in the third quarter of 2020 compared to the prior year period.

Depreciation, Accretion, and Amortization Expense:

For the three months ended

September 30,

Currency Impact

5 unchanged sentences

Site development

Depreciation, accretion, and amortization expense increased $7.1 million for the three months ended June 30, 2020, as compared to the prior year.

Depreciation, accretion, and amortization expense increased $5.3 million for the three months ended September 30, 2020, as compared to the prior year.

On a constant currency basis, depreciation, accretion, and amortization expense increased $14.2 million.

These changes were primarily due to an increase in the number of towers we acquired and built since April 1, 2019, partially offset by the impact of assets that became fully depreciated since the prior year period.

These changes were primarily due to an increase in the number of towers we acquired and built since July 1, 2019, partially offset by the impact of assets that became fully depreciated since the prior year period.

Operating Income (Expense):

For the three months ended

September 30,

Currency Impact

5 unchanged sentences

Site development

Domestic site leasing operating income increased $20.9 million for the three months ended June 30, 2020, as compared to the prior year, primarily due to higher segment operating profit and decreases in asset impairment and decommission costs and selling, general, and administrative expenses, partially offset by increases in depreciation, accretion, and amortization expense and acquisition and new business initiatives related adjustments and expenses.

International site leasing operating income decreased $0.1 million for the three months ended June 30, 2020, as compared to the prior year.

Domestic site leasing operating income increased $9.7 million for the three months ended September 30, 2020, as compared to the prior year, primarily due to higher segment operating profit, partially offset by increases in selling, general, and administrative expenses and depreciation, accretion, and amortization expense.

International site leasing operating income did not change significantly on an actual basis for the three months ended September 30, 2020, as compared to the prior year.

On a constant currency basis, international site leasing operating income increased $2.6 million.

These changes were primarily due to higher segment operating profit, partially offset by increases in depreciation, accretion, and amortization expense, selling, general, and administrative expenses, acquisition and new business initiatives related adjustments and expenses, and asset impairment and decommission costs.

Site development operating income decreased $2.8 million for the three months ended June 30, 2020, as compared to the prior year, primarily due to lower segment operating profit driven by less activity from Sprint and T-Mobile, partially offset by a decrease in selling, general, and administrative expenses .

Site development operating income decreased $1.3 million for the three months ended September 30, 2020, as compared to the prior year, primarily due to lower segment operating profit driven by less activity from T-Mobile and Sprint and an increase in selling, general, and administrative expenses .

Other Income (Expense):

For the three months ended

September 30,

Currency Impact

5 unchanged sentences

Amortization of deferred financing fees

Other (expense) income, net

Interest expense decreased $1.8 million for the three months ended June 30, 2020, as compared to the prior year primarily due to a lower weighted average interest rate as compared to the prior year, partially offset by a higher average principal amount of cash-interest bearing debt outstanding as compared to the prior year.

Non-cash interest expense increased $1.7 million for the three months ended June 30, 2020, as compared to the prior year primarily related to amortization on our interest rate swaps de-designated as cash flow hedges.

Other (expense) income, net includes a $31.2 million loss on the remeasurement of U.S.

dollar denominated intercompany loans with foreign subsidiaries for the three months ended June 30, 2020.

For the three months ended June 30, 2019, other (expense) income, net included a $9.1 million gain on the remeasurement of U.S.

dollar denominated intercompany loans with foreign subsidiaries.

Loss from extinguishment of debt, net

Other expense, net

Interest expense decreased $6.8 million for the three months ended September 30, 2020, as compared to the prior year primarily due to a lower weighted average interest rate due in part to the new interest rate swap entered into during the third quarter of 2020, partially offset by a higher average principal amount of cash-interest bearing debt outstanding.

Non-cash interest expense increased $7.7 million for the three months ended September 30, 2020, as compared to the prior year primarily related to amortization of accumulated losses related to our interest rate swaps de-designated as cash flow hedges.

Loss from extinguishment of debt was $2.6 million for the three months ended September 30, 2020 representing the write-off of unamortized financing fees related to the repayment of the 2015-1C and 2016-1C Tower Securities.

Other expense, net includes a $38.6 million loss on the remeasurement of U.S.

dollar denominated intercompany loans with foreign subsidiaries for the three months ended September 30, 2020, while the prior year period included a $31.9 million loss.

Benefit (Provision) for Income Taxes:

For the three months ended

September 30,

Currency Impact

2 unchanged sentences

Benefit (provision) for income taxes

Benefit for income taxes increased $15.8 million for the three months ended June 30, 2020, as compared to the prior year.

On a constant currency basis, provision for income taxes decreased $0.7 million primarily due to a decrease in domestic and foreign income taxes partially offset by an increase in foreign withholding taxes.

Benefit for income taxes increased $6.4 million for the three months ended September 30, 2020, as compared to the prior year.

On a constant currency basis, benefit for income taxes increased $3.7 million primarily due to a decrease in domestic and foreign withholding taxes, partially offset by an increase in foreign income taxes.

For the three months ended

September 30,

Currency Impact

1 unchanged sentence

(in thousands)

Net income decreased $8.9 million for the three months ended June 30, 2020, as compared to the prior year.

This change was primarily due to fluctuations in foreign currency exchange rates including changes recorded on the remeasurement of the U.S.

dollar denominated intercompany loans with foreign subsidiaries, partially offset by increases in operating income and benefit for income taxes.

Six Months Ended June 30, 2020 Compared to Six Months Ended June 30, 2019

Net income increased $0.9 million for the three months ended September 30, 2020, as compared to the prior year.

On a constant currency basis, net income increased $7.9 million.

This change was primarily due to increases in operating income and benefit for income taxes and a decrease in cash interest expense related to the interest rate swaps, partially offset by increases in non-cash interest expense related to the interest rate swap and loss from extinguishment of debt.

Nine Months Ended September 30, 2020 Compared to Nine Months Ended September 30, 2019

Revenues and Segment Operating Profit:

For the six months ended

For the nine months ended

September 30,

Currency Impact

12 unchanged sentences

Site development

Domestic site leasing revenues increased $42.3 million for the six months ended June 30, 2020, as compared to the prior year, primarily due to (1) revenues from 208 towers acquired and 35 towers built since January 1, 2019 and (2) organic site leasing growth, primarily from monetary lease amendments for additional equipment added to our towers as well as new leases and contractual rent escalators, partially offset by lease non-renewals.

International site leasing revenues increased $21.2 million for the six months ended June 30, 2020, as compared to the prior year.

Domestic site leasing revenues increased $58.6 million for the nine months ended September 30, 2020, as compared to the prior year, primarily due to (1) revenues from 230 towers acquired and 35 towers built since January 1, 2019 and (2) organic site leasing growth, primarily from monetary lease amendments for additional equipment added to our towers as well as new leases and contractual rent escalators, partially offset by lease non-renewals.

International site leasing revenues increased $23.2 million for the nine months ended September 30, 2020, as compared to the prior year.

On a constant currency basis, international site leasing revenues increased $76.8 million.

2 unchanged sentences

No other individual international market represented more than 4% of our total site leasing revenue.

Site development revenues decreased $32.7 million for the six months ended June 30, 2020, as compared to prior year, as a result of decreased carrier activity driven primarily by T-Mobile and Sprint.

Site development revenues decreased $35.5 million for the nine months ended September 30, 2020, as compared to prior year, as a result of decreased carrier activity driven primarily by T-Mobile and Sprint.

Operating Profit

Domestic site leasing segment operating profit increased $45.0 million for the six months ended June 30, 2020, as compared to the prior year, primarily due to additional profit generated by (1) towers acquired and built since January 1, 2019 and organic site leasing growth as noted above, (2) continued control of our site leasing cost of revenue, and (3) the positive impact of our ground lease purchase program.

International site leasing segment operating profit increased $17.3 million for the six months ended June 30, 2020, as compared to the prior year.

Domestic site leasing segment operating profit increased $60.9 million for the nine months ended September 30, 2020, as compared to the prior year, primarily due to additional profit generated by (1) towers acquired and built since January 1, 2019 and organic site leasing growth as noted above, (2) continued control of our site leasing cost of revenue, and (3) the positive impact of our ground lease purchase program.

International site leasing segment operating profit increased $19.9 million for the nine months ended September 30, 2020, as compared to the prior year.

On a constant currency basis, international site leasing segment operating profit increased $56.1 million.

These changes were primarily due to additional profit generated by (1) towers acquired and built since January 1, 2019 and organic site leasing growth as noted above, (2) continued control of our site leasing cost of revenue, and (3) the positive impact of our ground lease purchase program.

Site development segment operating profit decreased $10.3 million for the six months ended June 30, 2020, as compared to the prior year, as a result of decreased carrier activity driven primarily by T-Mobile and Sprint.

Site development segment operating profit decreased $11.3 million for the nine months ended September 30, 2020, as compared to the prior year, as a result of decreased carrier activity driven primarily by T-Mobile and Sprint.

Selling, General, and Administrative Expenses:

For the six months ended

For the nine months ended

September 30,

Currency Impact

5 unchanged sentences

Site development

Selling, general, and administrative expenses decreased $7.8 million for the six months ended June 30, 2020, as compared to the prior year.

On a constant currency basis, selling, general, and administrative expenses decreased $5.9 million.

Selling, general, and administrative expenses decreased $1.9 million for the nine months ended September 30, 2020, as compared to the prior year.

On a constant currency basis, selling, general, and administrative expenses increased $1.2 million.

These changes were primarily as a result of increases in personnel and other support related costs due in part to our continued international expansion and charitable contributions related to COVID-19 relief, partially offset by decreases in noncash compensation due to the acceleration of unrecognized stock compensation expense in the prior year related to the adoption of the retirement plan, travel related expenses, and back-office operating expenses.

Acquisition and New Business Initiatives Related Adjustments and Expenses:

For the six months ended

For the nine months ended

September 30,

Currency Impact

3 unchanged sentences

International site leasing

Acquisition and new business initiatives related adjustments and expenses increased $3.5 million for the six months ended June 30, 2020, as compared to the prior year.

Acquisition and new business initiatives related adjustments and expenses increased $2.9 million for the nine months ended September 30, 2020, as compared to the prior year.

On a constant currency basis, acquisition and new business initiatives related adjustments and expenses increased $3.6 million.

1 unchanged sentence

Asset Impairment and Decommission Costs:

For the six months ended

For the nine months ended

September 30,

Currency Impact

3 unchanged sentences

International site leasing

Asset impairment and decommission costs increased $5.2 million for the six months ended June 30, 2020, as compared to the prior year.

Asset impairment and decommission costs increased $5.5 million for the nine months ended September 30, 2020, as compared to the prior year.

On a constant currency basis, asset impairment and decommission costs increased $6.4 million.

These changes were primarily as a result of a $8.8 million increase in impairment charges resulting from our regular analysis of whether the future cash flows from certain towers are adequate to recover the carrying value of the investment in those towers, partially offset by a $3.6 million decrease in the impairment charge recorded due to sites decommissioned in the six months ended June 30, 2020 compared to the prior year period.

These changes were primarily as a result of a $10.2 million increase in impairment charges resulting from our regular analysis of whether the

future cash flows from certain towers are adequate to recover the carrying value of the investment in those towers, partially offset by a $4.8 million decrease in the impairment charge related to sites decommissioned in the nine months ended September 30, 2020 compared to the prior year period.

Depreciation, Accretion, and Amortization Expenses:

For the six months ended

For the nine months ended

September 30,

Currency Impact

5 unchanged sentences

Site development

Depreciation, accretion, and amortization expense increased $18.7 million for the six months ended June 30, 2020, as compared to the prior year.

Depreciation, accretion, and amortization expense increased $24.0 million for the nine months ended September 30, 2020, as compared to the prior year.

On a constant currency basis, depreciation, accretion, and amortization expense increased $47.8 million.

1 unchanged sentence

Operating Income (Expense):

For the six months ended

For the nine months ended

September 30,

Currency Impact

5 unchanged sentences

Site development

Domestic site leasing operating income increased $34.5 million for the six months ended June 30, 2020, as compared to the prior year, primarily due to higher segment operating profit and a decrease in selling, general, and administrative expenses, partially offset by increases in depreciation, accretion, and amortization expense, asset impairment and decommission costs, and acquisition and new business initiatives related adjustments and expenses.

International site leasing operating income increased $1.4 million for the six months ended June 30, 2020, as compared to the prior year.

Domestic site leasing operating income increased $44.2 million for the nine months ended September 30, 2020, as compared to the prior year, primarily due to higher segment operating profit, partially offset by increases in depreciation, accretion, and amortization expense, asset impairment and decommission costs, acquisition and new business initiatives related adjustments and expenses, and selling, general, and administrative expenses.

International site leasing operating income increased $1.4 million for the nine months ended September 30, 2020, as compared to the prior year.

On a constant currency basis, international site leasing operating income increased $9.1 million.

These changes were primarily due to higher segment operating profit, partially offset by increases in depreciation, accretion, and amortization expense, selling, general, and administrative expenses, asset impairment and decommission costs, and acquisition and new business initiatives related adjustments and expenses.

Site development operating income decreased $6.6 million for the six months ended June 30, 2020, as compared to the prior year, primarily due to lower segment operating profit driven by less activity from Sprint and T-Mobile , partially offset by a decrease in selling, general, and administrative expenses .

Site development operating income decreased $7.9 million for the nine months ended September 30, 2020, as compared to the prior year, primarily due to lower segment operating profit driven by less activity from T-Mobile and Sprint , partially offset by a decrease in selling, general, and administrative expenses .

Other Income (Expense):

For the six months ended

For the nine months ended

September 30,

Currency Impact

6 unchanged sentences

Loss from extinguishment of debt, net

Other (expense) income, net

Interest income decreased $1.8 million for the six months ended June 30, 2020, as compared to the prior year.

Other expense, net

Interest income decreased $2.4 million for the nine months ended September 30, 2020, as compared to the prior year.

On a constant currency basis, interest income decreased $2.0 million.

These changes were primarily due to a lower amount of interest bearing domestic investments.

Interest expense decreased $4.6 million for the six months ended June 30, 2020, as compared to the prior year.

These changes were primarily due to a lower weighted average interest rate as compared to the prior year, partially offset by a higher average principal amount of cash-interest bearing debt outstanding as compared to the prior year.

Non-cash interest expense increased $3.5 million for the six months ended June 30, 2020, as compared to the prior year primarily related to amortization on our interest rate swaps de-designated as cash flow hedges.

Loss from extinguishment of debt was $16.9 million for the six months ended June 30, 2020 due to the payment of a $9.1 million call premium and the write-off of $7.7 million of the original issuance discount and financing fees related to the redemption of the 2014 Senior Notes.

Other (expense) income, net includes a $261.3 million loss on the remeasurement of U.S.

dollar denominated intercompany loans with foreign subsidiaries as well as a $3.2 million net gain on the change in fair value related to interest rate swaps not designated as hedges for the six months ended June 30, 2020.

Other (expense) income, net includes a $7.0 million gain on the remeasurement of U.S.

dollar denominated intercompany loans with foreign subsidiaries for the six months ended June 30, 2019.

These changes were primarily due to a lower rate of interest earned on both domestic and international investments.

Interest expense decreased $11.4 million for the nine months ended September 30, 2020, as compared to the prior year.

These changes were primarily due to a lower weighted average interest rate due in part to the new interest rate swap entered into during third quarter of 2020, partially offset by a higher average principal amount of cash-interest bearing debt outstanding.

Non-cash interest expense increased $11.1 million for the nine months ended September 30, 2020, as compared to the prior year primarily related to amortization of accumulated losses related to our interest rate swaps de-designated as cash flow hedges.

Loss from extinguishment of debt was $19.5 million for the nine months ended September 30, 2020 due to the payment of a $9.1 million call premium and the write-off of $7.7 million of the original issuance discount and financing fees related to the redemption of the 2014 Senior Notes in February 2020, as well as the write-off of $2.6 million of unamortized financing fees related to the repayment of the 2015-1C and 2016-1C Tower Securities in July 2020.

Other expense, net includes a $299.9 million loss on the remeasurement of U.S.

dollar denominated intercompany loans with foreign subsidiaries for the nine months ended September 30, 2020, while the prior year period included a $24.8 million loss.

Benefit (Provision) for Income Taxes:

For the six months ended

For the nine months ended

September 30,

Currency Impact

2 unchanged sentences

Benefit (provision) for income taxes

Benefit for income taxes increased $92.5 million for the six months ended June 30, 2020, as compared to the prior year.

On a constant currency basis, provision for income taxes decreased $2.4 million primarily due to a decrease in domestic and foreign income taxes partially offset by an increase in foreign withholding taxes.

Benefit for income taxes increased $99.0 million for the nine months ended September 30, 2020, as compared to the prior year.

On a constant currency basis, benefit for income taxes increased $6.1 million.

These changes were primarily due to a decrease in domestic income taxes and foreign withholding taxes, partially offset by an increase in foreign income taxes.

Net (Loss) Income:

For the six months ended

For the nine months ended

September 30,

Currency Impact

2 unchanged sentences

Net (loss) income

Net loss was $104.8 million for the six months ended June 30, 2020, as compared to net income of $58.0 million in the prior year period.

Net loss was $82.1 million for the nine months ended September 30, 2020, as compared to net income of $79.7 million in the prior year period.

This change was primarily due to fluctuations in foreign currency exchange rates including changes recorded on the remeasurement of the U.S.

dollar denominated intercompany loans with foreign subsidiaries and a loss from extinguishment of debt in the current year period, partially offset by increases in operating income and benefit for income taxes.

dollar denominated intercompany loans with foreign subsidiaries, a loss from extinguishment of debt in the current year period, and an increase in non-cash interest expense, partially offset by increases in operating income, interest expense, and benefit for income taxes.

NON-GAAP FINANCIAL MEASURES

13 unchanged sentences

For the three months ended

September 30,

Currency Impact

4 unchanged sentences

Non-cash compensation

Other expense (income), net

Loss from extinguishment of debt, net

Other expense, net

Acquisition and new business initiatives

4 unchanged sentences

Depreciation, accretion, and amortization

(Benefit) provision for income taxes (2)

Benefit for income taxes (2)

Adjusted EBITDA

For the six months ended

For the nine months ended

September 30,

Currency Impact

6 unchanged sentences

Loss from extinguishment of debt, net

Other expense (income), net

Other expense, net

Acquisition and new business initiatives

7 unchanged sentences

(1) Total interest expense includes interest expense, non-cash interest expense, and amortization of deferred financing fees.

(2) (Benefit) provision for taxes includes $220 and $200 of franchise taxes for the three months ended June 30, 2020 and 2019, respectively, and $447 and $396 of franchise taxes for the six months ended June 30, 2020 and 2019, respectively, reflected in selling, general, and administrative expenses on the Consolidated Statements of Operations.

Adjusted EBITDA increased $21.5 million for the three months ended June 30, 2020, as compared to the prior year period.

(2) (Benefit) provision for taxes includes $235 and $214 of franchise taxes for the three months ended September 30, 2020 and 2019, respectively, and $682 and $610 of franchise taxes for the nine months ended September 30, 2020 and 2019, respectively, reflected in selling, general, and administrative expenses on the Consolidated Statements of Operations.

Adjusted EBITDA increased $17.9 million for the three months ended September 30, 2020, as compared to the prior year period.

On a constant currency basis, Adjusted EBITDA increased $30.5 million.

These changes were primarily due to an increase in site leasing segment operating profit, partially offset by a decrease in site development segment operating profit.

Adjusted EBITDA increased $45.9 million for the six months ended June 30, 2020, as compared to the prior year period.

These changes were primarily due to an increase in site leasing segment operating profit, partially offset by a decrease in site development segment operating profit and an increase in cash selling, general, and administrative expenses.

Adjusted EBITDA increased $63.8 million for the nine months ended September 30, 2020, as compared to the prior year period.

On a constant currency basis, Adjusted EBITDA increased $97.9 million.

6 unchanged sentences

A summary of our cash flows is as follows:

For the six months ended

June 30, 2020

June 30, 2019

For the nine months ended

September 30, 2020

September 30, 2019

(in thousands)

7 unchanged sentences

Operating Activities

Cash provided by operating activities was $592.4 million for the six months ended June 30, 2020 as compared to $466.1 million for the six months ended June 30, 2019.

Cash provided by operating activities was $882.9 million for the nine months ended September 30, 2020 as compared to $705.0 million for the nine months ended September 30, 2019.

The increase was primarily due to increases in site leasing segment operating profit and cash inflows associated with working capital changes primarily from timing of customer payments, partially offset by a decrease in site development segment operating profit and an increase in cash selling, general, and administrative expenses.

1 unchanged sentence

A detail of our investing activities is as follows:

For the six months ended June 30,

For the nine months ended September 30,

(in thousands)

8 unchanged sentences

Net cash used in investing activities

(1) Excludes $3.6 million and $6.7 million spent to extend ground lease terms for the six months ended June 30, 2020 and 2019, respectively.

Subsequent to June 30, 2020, we acquired 25 towers and related assets and one data center for $61.6 million in cash.

(1) Excludes $5.9 million and $13.1 million spent to extend ground lease terms for the nine months ended September 30, 2020 and 2019, respectively.

Includes amounts paid related to the acquisition of data centers for the nine months ended September 30, 2020 and 2019.

Subsequent to September 30, 2020, we acquired 54 towers and related assets for $14.6 million in cash.

In addition, we agreed to purchase 132 additional sites for $85.0 million.

1 unchanged sentence

We expect to fund these cash capital expenditures from cash on hand, cash flow from operations, and borrowings under the Revolving Credit Facility or new financings.

The exact amount of our future cash capital expenditures will

depend on a number of factors, including amounts necessary to support our tower portfolio, our new tower build and acquisition programs, and our ground lease purchase program.

The exact amount of our future cash capital expenditures will depend on a number of factors, including amounts necessary to support our tower portfolio, our new tower build and acquisition programs, and our ground lease purchase program.

Financing Activities

A detail of our financing activities is as follows:

For the six months ended

June 30, 2020

June 30, 2019

For the nine months ended

September 30, 2020

September 30, 2019

(in thousands)

Net borrowings (repayments) under Revolving Credit Facility (1)

Proceeds from Senior Notes, net of fees and original issue discount (1)

Proceeds from issuance of Senior Notes, net of fees (1)

Repayment of Senior Notes (1)

Proceeds from issuance of Tower Securities, net of fees (1)

Repayment of Tower Securities (1)

Termination of interest rate swap

Proceeds from employee stock purchase/stock option plans, net of taxes

4 unchanged sentences

(1) For additional information regarding our debt instruments and financings, refer to the Debt Instruments and Debt Service Requirements below.

(2) During the six months ended June 30, 2020, we repurchased 0.8 million shares of our Class A common stock for $200.0 million, at an average price per share of $242.86.

(2) During the nine months ended September 30, 2020, we repurchased 1.4 million shares of our Class A common stock for $375.6 million, at an average price per share of $267.57.

Subsequent to September 30, 2020, we repurchased 0.4 million shares of our Class A common stock for $124.4 million at a weighted average price per share of $299.54.

Shares repurchased were retired.

As of the date of this filing, we had $424.3 million of authorization remaining under the current stock repurchase plan.

For the six months ended June 30, 2020, we paid the following cash dividends:

On November 2, 2020, our Board of Directors authorized a new $1.0 billion stock repurchase plan, replacing the prior plan authorized on July 29, 2019 which had a remaining authorization of $124.3 million.

This new plan authorizes the purchase, from time to time, of up to $1.0 billion of our outstanding Class A common stock through open market repurchases in compliance with Rule 10b-18 under the Exchange Act and/or in privately negotiated transactions at management’s discretion based on market and business conditions, applicable legal requirements and other factors.

Shares repurchased will be retired.

The new plan has no time deadline and will continue until otherwise modified or terminated by our Board of Directors at any time in its sole discretion.

As of the date of this filing, we had the full $1.0 billion of authorization remaining under the new plan.

For the nine months ended September 30, 2020, we paid the following cash dividends:

Payable to Shareholders

9 unchanged sentences

June 18, 2020

Subsequent to June 30, 2020, we declared the following cash dividends:

August 3, 2020

August 25, 2020

$52.0 million

September 21, 2020

Subsequent to September 30, 2020, we declared the following cash dividends:

Payable to Shareholders

3 unchanged sentences

Date to be Paid

August 3, 2020

August 25, 2020

September 22, 2020

November 2, 2020

November 19, 2020

December 17, 2020

The amount of future distributions will be determined, from time to time, by our Board of Directors to balance our goal of increasing long-term shareholder value and retaining sufficient cash to implement our current capital allocation policy, which prioritizes investment in quality assets that meet our return criteria, and then stock repurchases when we believe our stock price is below its intrinsic value.

2 unchanged sentences

We have on file with the Commission a shelf registration statement on Form S-4 registering shares of Class A common stock that we may issue in connection with the acquisition of wireless communication towers or antenna sites and related assets or companies who own wireless communication towers, antenna sites, or related assets.

During the six months ended June 30, 2020, we did not issue any shares of Class A common stock under this registration statement.

As of June 30, 2020, we had approximately 1.2 million shares of Class A common stock remaining under this shelf registration statement.

During the nine months ended September 30, 2020, we did not issue any shares of Class A common stock under this registration statement.

As of September 30, 2020, we had approximately 1.2 million shares of Class A common stock remaining under this registration statement.

On March 5, 2018, we filed with the Commission an automatic shelf registration statement for well-known seasoned issuers on Form S-3ASR.

This registration statement enables us to issue shares of our Class A common stock, preferred stock or debt

securities either separately or represented by warrants, or depositary shares as well as units that include any of these securities.

This registration statement enables us to issue shares of our Class A common stock, preferred stock or debt securities either separately or represented by warrants, or depositary shares as well as units that include any of these securities.

Under the rules governing automatic shelf registration statements, we will file a prospectus supplement and advise the Commission of the amount and type of securities each time we issue securities under this registration statement.

No securities were issued under this registration statement through the date of this filing.

On August 6, 2020, we filed a registration statement on Form S-8 with the Securities and Exchange Commission registering 3.4 million shares of our Class A common stock, consisting of 3.0 million shares of Common Stock issuable under the 2020 Performance and Equity Incentive Plan (the “2020 Plan”) and 400,000 shares of Common Stock subject to awards granted under the 2010 Plan that may become available for issuance or reissuance, as applicable, under the 2020 Plan if such awards are forfeited or are settled in cash or otherwise expire or terminate without the delivery of the shares.

Debt Instruments and Debt Service Requirements

7 unchanged sentences

Consequently, the amount outstanding under the Revolving Credit Facility at the end of the period may not be reflective of the total amounts outstanding during such period.

During the three months ended June 30, 2020, we borrowed $15.0 million and repaid $500.0 million of the outstanding balance under the Revolving Credit Facility.

During the six months ended June 30, 2020, we borrowed $515.0 million and repaid $1.0 billion of the outstanding balance under the Revolving Credit Facility.

As of June 30, 2020, we had no amount outstanding under the $1.25 billion Revolving Credit Facility.

During the three months ended September 30, 2020, no amounts were borrowed or repaid under the Revolving Credit Facility.

During the nine months ended September 30, 2020, we borrowed $515.0 million and repaid $1.0 billion of the outstanding balance under the Revolving Credit Facility.

As of September 30, 2020, we had no amount outstanding under the $1.25 billion Revolving Credit Facility.

In addition, SBA Senior Finance II was required to pay a commitment fee of 0.20% per annum on the amount of the unused commitment.

As of June 30, 2020, SBA Senior Finance II was in compliance with the financial covenants contained in the Senior Credit Agreement.

As of September 30, 2020, SBA Senior Finance II was in compliance with the financial covenants contained in the Senior Credit Agreement.

As of the date of this filing, we had no amount outstanding under the Revolving Credit Facility.

1 unchanged sentence

2018 Term Loan

On April 11, 2018, we, through our wholly owned subsidiary, SBA Senior Finance II LLC, obtained a new term loan (the “2018 Term Loan”) under the amended and restated Senior Credit Agreement.

On April 11, 2018, we, through our wholly owned subsidiary, SBA Senior Finance II, obtained a new term loan (the “2018 Term Loan”) under the amended and restated Senior Credit Agreement.

The 2018 Term Loan consists of a senior secured term loan with an initial aggregate principal amount of $2.4 billion that matures on April 11, 2025.

The 2018 Term Loan accrues interest, at SBA Senior Finance II’s election at either the Base Rate plus 75 basis points (with a zero Base Rate floor) or the Eurodollar Rate plus 175 basis points (with a zero Eurodollar Rate floor).

As of June 30, 2020, the 2018 Term Loan was accruing interest at 1.93% per annum.

As of September 30, 2020, the 2018 Term Loan was accruing interest at 1.900% per annum.

Principal payments on the 2018 Term Loan are being made in quarterly installments on the last day of each March, June, September, and December in an amount equal to $6.0 million.

During the three and six months ended June 30, 2020, we repaid an aggregate of $6.0 million and $12.0 million of principal on the 2018 Term Loan, respectively.

As of June 30, 2020, the 2018 Term Loan had a principal balance of $2.4 billion.

On December 3, 2019, we, through our wholly owned subsidiary, SBA Senior Finance II LLC, entered into a series of interest rate swaps on a portion of our 2018 Term Loan.

As a result, we swapped $1.95 billion of notional value receiving interest at one month LIBOR plus 175 basis points for a fixed rate of 3.78% per annum settled monthly through the maturity date of the 2018 Term Loan.

On August 6, 2020, we, through our wholly owned subsidiary, SBA Senior Finance II LLC, terminated interest rate swaps entered into in 2019 in exchange for a payment of $176.2 million.

On the same date, we entered into an interest rate swap with $1.95 billion of notional value receiving interest at one month LIBOR for a fixed rate of 0.1239% per annum settled monthly through the maturity date of the 2018 Term Loan.

During the three and nine months ended September 30, 2020, we repaid an aggregate of $6.0 million and $18.0 million of principal on the 2018 Term Loan, respectively.

As of September 30, 2020, the 2018 Term Loan had a principal balance of $2.3 billion.

On August 4, 2020, we, through our wholly owned subsidiary, SBA Senior Finance II, terminated our existing $1.95 billion cash flow hedge on a portion of our 2018 Term Loan in exchange for a payment of $176.2 million.

On the same date, we entered into an interest rate swap for $1.95 billion of notional value accruing interest at one month LIBOR plus 175 basis points for a fixed rate of 1.874% per annum through the maturity date of the 2018 Term Loan.

Secured Tower Revenue Securities

As of June 30, 2020, we, through a New York common law trust (the “Trust”), had issued and outstanding an aggregate of $5.0 billion of Secured Tower Revenue Securities (“Tower Securities”).

The sole asset of the Trust consists of a non-recourse

mortgage loan made in favor of certain of our subsidiaries that are borrowers on the mortgage loan (the “Borrowers”) under which there is a loan tranche for each Tower Security outstanding with the same interest rate and maturity date as the corresponding Tower Security.

As of September 30, 2020, we, through a New York common law trust (the “Trust”), had issued and outstanding an aggregate of $5.1 billion of Secured Tower Revenue Securities (“Tower Securities”).

The sole asset of the Trust consists of a non-recourse mortgage loan made in favor of certain of our subsidiaries that are borrowers on the mortgage loan (the “Borrowers”) under which there is a loan tranche for each Tower Security outstanding with the same interest rate and maturity date as the corresponding Tower Security.

The mortgage loan is secured by (1) mortgages, deeds of trust, and deeds to secure debt on a substantial portion of the tower sites, (2) a security interest in the tower sites and substantially all of the Borrowers’ personal property and fixtures, (3) the Borrowers’ rights under certain tenant leases, and (4) all of the proceeds of the foregoing.

14 unchanged sentences

2019-1C Tower Securities

$760.0 million

$1.165 billion

2020-1C Tower Securities

1 unchanged sentence

2020-2C Tower Securities

$1.165 billion

(1) On July 14, 2020, we repaid the entire aggregate principal amounts of the 2015-1C Tower Securities and the 2016-1C Tower Securities in connection with the issuance of the 2020 Tower Securities (as defined below).

As of June 30, 2020, the Borrowers met the debt service coverage ratio required by the mortgage loan agreement and were in compliance with all other covenants as set forth in the agreement.

$600.0 million

As of September 30, 2020, the Borrowers met the debt service coverage ratio required by the mortgage loan agreement and were in compliance with all other covenants as set forth in the agreement.

On July 14, 2020, we, through the Trust, issued $750.0 million of 1.884% Secured Tower Revenue Securities Series 2020-1C which have an anticipated repayment date of January 9, 2026 and a final maturity date of July 11, 2050 (the “2020-1C Tower Securities”) and $600.0 million of 2.328% Secured Tower Revenue Securities Series 2020-2C which have an anticipated repayment date of January 11, 2028 and a final maturity date of July 9, 2052 (the “2020-2C Tower Securities”) (collectively the “2020 Tower Securities”).

2 unchanged sentences

The remaining net proceeds of the 2020 Tower Securities were used for general corporate purposes.

We have incurred deferred financing fees of $13.6 million to date in relation to this transaction which are being amortized through the anticipated repayment date of the 2020 Tower Securities.

We have incurred deferred financing fees of $14.0 million in relation to this transaction which are being amortized through the anticipated repayment date of the 2020 Tower Securities.

Risk Retention Tower Securities

15 unchanged sentences

Net proceeds from these offerings were used to redeem the entire $750.0 million outstanding principal amount of the 2014 Senior Notes, repay amounts outstanding under the Revolving Credit Facility, and for general corporate purposes.

In addition, we paid a $9.1 million call premium and expensed $7.7 million for the write-off of the original issue discount and financing fees related to the redemption of the 2014 Senior Notes which are reflected in loss from extinguishment of debt on the Consolidated Statement of Operations.

Interest on the 2020 Senior Notes begins August 15, 2020.

We incurred financing fees of $17.3 million to date in relation to this transaction, which are being amortized through the maturity date.

Interest on the 2020 Senior Notes began August 15, 2020.

We incurred financing fees of $18.0 million in relation to this transaction, which are being amortized through the maturity date.

The 2020 Senior Notes are subject to redemption in whole or in part on or after February 15, 2023 at the redemption prices set forth in the indenture agreement plus accrued and unpaid interest.

4 unchanged sentences

We may redeem each of the senior notes during the time periods and at the redemption prices set forth in the indentures.

As of June 30, 2020, we believe that our cash on hand, capacity available under our Revolving Credit Facility, and cash flows from operations for the next twelve months will be sufficient to service our outstanding debt during the next twelve months.

The following table illustrates our estimate of our debt service requirement over the next twelve months based on the amounts outstanding as of June 30, 2020 and the interest rates accruing on those amounts on such date (in thousands):

As of September 30, 2020, we believe that our cash on hand, capacity available under our Revolving Credit Facility, and cash flows from operations for the next twelve months will be sufficient to service our outstanding debt during the next twelve months.

The following table illustrates our estimate of our debt service requirement over the next twelve months based on the amounts outstanding as of September 30, 2020 and the interest rates accruing on those amounts on such date (in thousands):

Revolving Credit Facility

11 unchanged sentences

Total debt service for the next 12 months

(1) Total debt service on the 2018 Term Loan includes the impact of interest rate swaps entered into in 2019 which swapped $1.95 billion of notional value accruing interest at one month LIBOR plus 175 basis points for a fixed rate of 3.78% per

annum through the maturity date of the 2018 Term Loan.

Total debt service on the 2018 Term Loan excludes the impact of the interest rate swap entered into on August 6, 2020.

(2) The anticipated repayment date and the final maturity date for the 2015-1C Tower Securities is October 8, 2020 and October 10, 2045, respectively.

Interest expense included above is through the anticipated repayment date.

(3) Total debt service excludes interest payments on the $1.35 billion 2020 Tower Securities issued July 14, 2020, proceeds from which were used to repay the entire aggregate principal amount of the 2015-1C Tower Securities ($500.0 million) and the 2016-1C Tower Securities ($700.0 million).

(1) Total debt service on the 2018 Term Loan includes the impact of the interest rate swap entered into on August 4, 2020 which swapped $1.95 billion of notional value accruing interest at one month LIBOR plus 175 basis points for a fixed rate of 1.874% per annum through the maturity date of the 2018 Term Loan.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis