SBA COMMUNICATIONS CORP 10-Q

ITEM 1: FINANCIAL STATEMENTS SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except par values) September 30, December 31, 2020 2019 ASSETS (unaudited) Current assets: Cash and cash equivalents $ 271,874 $ 108,309 Restricted cash 61,572 30,243 Accounts receivable, net 68,042 132,125 Costs and estimated earnings in excess of billings on uncompleted contracts 27,109 26,313 Prepaid expenses and other current assets 29,994 37,281 Total current assets 458,591 334,271 Property and equipment, net 2,668,004 2,794,602 Intangible assets, net 3,063,498 3,626,773 Right-of-use assets, net 2,340,035 2,572,217 Other assets 504,554 432,078 Total assets $ 9,034,682 $ 9,759,941 LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS, AND SHAREHOLDERS' DEFICIT Current Liabilities: Accounts payable $ 29,230 $ 31,846 Accrued expenses 62,523 67,618 Current maturities of long-term debt 24,000 522,090 Deferred revenue 155,799 113,507 Accrued interest 33,885 49,269 Current lease liabilities 229,177 247,015 Other current liabilities 16,634 16,948 Total current liabilities 551,248 1,048,293 Long-term liabilities: Long-term debt, net 10,692,710 9,812,335 Long-term lease liabilities 2,080,916 2,279,400 Other long-term liabilities 181,012 270,868 Total long-term liabilities 12,954,638 12,362,603 Redeemable noncontrolling interests 15,194 16,052 Shareholders' deficit: Preferred stock - par value $ 0.01 , 30,000 shares authorized, no shares issued or outstanding — — Common stock - Class A, par value $ 0.01 , 400,000 shares authorized, 111,443 shares and 111,775 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively 1,114 1,118 Additional paid-in capital 2,563,979 2,461,335 Accumulated deficit ( 6,177,879 ) ( 5,560,695 ) Accumulated other comprehensive loss, net ( 873,612 ) ( 568,765 ) Total shareholders' deficit ( 4,486,398 ) ( 3,667,007 ) Total liabilities, redeemable noncontrolling interests, and shareholders' deficit $ 9,034,682 $ 9,759,941 The accompanying condensed notes are an integral part of these consolidated financial statements. 1 Table of Contents SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (in thousands, except per share amounts) For the three months For the nine months ended September 30, ended September 30, 2020 2019 2020 2019 Revenues: Site leasing $ 486,765 $ 468,572 $ 1,461,523 $ 1,379,758 Site development 36,175 38,975 85,708 121,229 Total revenues 522,940 507,547 1,547,231 1,500,987 Operating expenses: Cost of revenues (exclusive of depreciation, accretion, and amortization shown below): Cost of site leasing 92,722 92,993 280,120 279,167 Cost of site development 28,797 30,516 68,417 92,606 Selling, general, and administrative expenses (1) 48,152 42,272 146,856 148,755 Acquisition and new business initiatives related adjustments and expenses 4,124 4,692 12,557 9,669 Asset impairment and decommission costs 8,506 8,240 29,103 23,631 Depreciation, accretion, and amortization 180,302 174,987 541,587 517,590 Total operating expenses 362,603 353,700 1,078,640 1,071,418 Operating income 160,337 153,847 468,591 429,569 Other income (expense): Interest income 756 1,311 2,340 4,692 Interest expense ( 89,791 ) ( 96,567 ) ( 281,329 ) ( 292,681 ) Non-cash interest expense ( 8,323 ) ( 662 ) ( 13,066 ) ( 1,954 ) Amortization of deferred financing fees ( 4,883 ) ( 5,157 ) ( 15,211 ) ( 15,333 ) Loss from extinguishment of debt, net ( 2,599 ) ( 457 ) ( 19,463 ) ( 457 ) Other expense, net ( 42,262 ) ( 33,551 ) ( 300,144 ) ( 21,296 ) Total other expense, net ( 147,102 ) ( 135,083 ) ( 626,873 ) ( 327,029 ) Income (loss) before income taxes 13,235 18,764 ( 158,282 ) 102,540 Benefit (provision) for income taxes 9,441 3,002 76,143 ( 22,813 ) Net income (loss) 22,676 21,766 ( 82,139 ) 79,727 Net (income) loss attributable to noncontrolling interests ( 108 ) ( 87 ) 461 ( 87 ) Net income (loss) attributable to SBA Communications Corporation $ 22,568 $ 21,679 $ ( 81,678 ) $ 79,640 Net income (loss) per common share attributable to SBA Communications Corporation: Basic $ 0.20 $ 0.19 $ ( 0.73 ) $ 0.70 Diluted $ 0.20 $ 0.19 $ ( 0.73 ) $ 0.69 Weighted average number of common shares Basic 111,783 113,037 111,809 112,985 Diluted 113,703 115,184 111,809 114,824 (1) Includes non-cash compensation of $ 16,606 and $ 12,281 for the three months ended September 30, 2020 and 2019, respectively, and $ 50,291 and $ 59,017 for the nine months ended September 30, 2020 and 2019, respectively. The accompanying condensed notes are an integral part of these consolidated financial statements. 2 Table of Contents SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited) (in thousands) For the three months For the nine months ended September 30, ended September 30, 2020 2019 2020 2019 Net income (loss) $ 22,676 $ 21,766 $ ( 82,139 ) $ 79,727 Adjustments related to interest rate swaps 1,557 ( 10,811 ) ( 114,366 ) ( 62,404 ) Foreign currency translation adjustments ( 7,196 ) ( 55,047 ) ( 191,389 ) ( 46,469 ) Comprehensive income (loss) 17,037 ( 44,092 ) ( 387,894 ) ( 29,146 ) Comprehensive (income) loss attributable to noncontrolling interests ( 204 ) ( 87 ) 1,369 ( 87 ) Comprehensive income (loss) attributable to SBA Communications Corporation $ 16,833 $ ( 44,179 ) $ ( 386,525 ) $ ( 29,233 ) The accompanying condensed notes are an integral part of these consolidated financial statements. ‎ 3 Table of Contents SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS ’ DEFICIT (unaudited) (in thousands) Accumulated Class A Additional Other Total Common Stock Paid-In Accumulated Comprehensive Shareholders' Shares Amount Capital Deficit Loss, Net Equity (Deficit) BALANCE, June 30, 2020 111,918 $ 1,119 $ 2,534,423 $ ( 5,972,657 ) $ ( 867,877 ) $ ( 4,304,992 ) Net income attributable to SBA Communications Corporation — — — 22,568 — 22,568 Common stock issued in connection with equity awards and stock purchase plans, offset by the impact of net share settlements 105 1 12,810 — — 12,811 Non-cash stock compensation — — 17,387 — — 17,387 Adjustments related to interest rate swaps — — — — 1,557 1,557 Repurchase and retirement of common stock ( 580 ) ( 6 ) — ( 175,652 ) — ( 175,658 ) Foreign currency translation adjustments attributable to SBA Communications Corporation — — — — ( 7,292 ) ( 7,292 ) Dividends on common stock — — — ( 52,138 ) — ( 52,138 ) Adjustment to fair value related to noncontrolling interests — — ( 641 ) — — ( 641 ) BALANCE, September 30, 2020 111,443 $ 1,114 $ 2,563,979 $ ( 6,177,879 ) $ ( 873,612 ) $ ( 4,486,398 ) Accumulated Class A Additional Other Total Common Stock Paid-In Accumulated Comprehensive Shareholders' Shares Amount Capital Deficit Loss Equity (Deficit) BALANCE, June 30, 2019 113,090 $ 1,131 $ 2,408,385 $ ( 5,193,942 ) $ ( 554,920 ) $ ( 3,339,346 ) Net income attributable to SBA Communications Corporation — — — 21,679 — 21,679 Common stock issued in connection with equity awards and stock purchase plans, offset by the impact of net share settlements 208 2 24,986 — — 24,988 Non-cash stock compensation — — 12,998 — — 12,998 Adjustments related to interest rate swaps — — — — ( 10,811 ) ( 10,811 ) Repurchase and retirement of common stock ( 694 ) ( 7 ) — ( 172,955 ) — ( 172,962 ) Foreign currency translation adjustments attributable to SBA Communications Corporation — — — — ( 55,047 ) ( 55,047 ) Dividends on common stock — — — ( 41,873 ) — ( 41,873 ) BALANCE, September 30, 2019 112,604 $ 1,126 $ 2,446,369 $ ( 5,387,091 ) $ ( 620,778 ) $ ( 3,560,374 ) ‎ 4 Table of Contents SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ DEFICIT (unaudited) (in thousands) Accumulated Class A Additional Other Total Common Stock Paid-In Accumulated Comprehensive Shareholders' Shares Amount Capital Deficit Loss Equity (Deficit) BALANCE, December 31, 2019 111,775 1,118 2,461,335 ( 5,560,695 ) ( 568,765 ) ( 3,667,007 ) Net loss attributable to SBA Communications Corporation — — — ( 81,678 ) — ( 81,678 ) Common stock issued in connection with equity awards and stock purchase plans, offset by the impact of net share settlements 1,086 10 50,117 — — 50,127 Non-cash stock compensation — — 53,038 — — 53,038 Adjustments related to interest rate swaps — — — — ( 114,366 ) ( 114,366 ) Repurchase and retirement of common stock ( 1,418 ) ( 14 ) — ( 378,974 ) — ( 378,988 ) Foreign currency translation adjustments attributable to SBA Communications Corporation — — — — ( 190,481 ) ( 190,481 ) Dividends on common stock — — — ( 156,532 ) — ( 156,532 ) Adjustment to fair value related to noncontrolling interests — — ( 511 ) — — ( 511 ) BALANCE, September 30, 2020 111,443 $ 1,114 $ 2,563,979 $ ( 6,177,879 ) $ ( 873,612 ) $ ( 4,486,398 ) Accumulated Class A Additional Other Total Common Stock Paid-In Accumulated Comprehensive Shareholders' Shares Amount Capital Deficit Loss Equity (Deficit) BALANCE, December 31, 2018 112,433 $ 1,124 $ 2,270,326 $ ( 5,136,368 ) $ ( 511,905 ) $ ( 3,376,823 ) Net income attributable to SBA Communications Corporation — — — 79,641 — 79,641 Common stock issued in connection with equity awards and stock purchase plans, offset by the impact of net share settlements 1,318 13 112,896 — — 112,909 Non-cash stock compensation — — 61,467 — — 61,467 Common stock issued in connection with acquisitions 10 — 1,680 — — 1,680 Adjustments related to interest rate swaps — — — — ( 62,404 ) ( 62,404 ) Repurchase and retirement of common stock ( 1,157 ) ( 11 ) — ( 267,523 ) — ( 267,534 ) Foreign currency translation adjustments attributable to SBA Communications Corporation — — — — ( 46,469 ) ( 46,469 ) Impact of adoption of ASU 2016-02 related to leases — — — ( 20,968 ) — ( 20,968 ) Dividends on common stock — — — ( 41,873 ) — ( 41,873 ) BALANCE, September 30, 2019 112,604 $ 1,126 $ 2,446,369 $ ( 5,387,091 ) $ ( 620,778 ) $ ( 3,560,374 ) The accompanying condensed notes are an integral part of these consolidated financial statements. ‎ 5 Table of Contents SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (in thousands) For the nine months ended September 30, 2020 2019 CASH FLOWS FROM OPERATING ACTIVITIES: Net (loss) income $ ( 82,139 ) $ 79,727 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Depreciation, accretion, and amortization 541,587 517,590 Loss on remeasurement of U.S. dollar denominated intercompany loans 299,913 25,880 Non-cash compensation expense 51,915 60,633 Non-cash asset impairment and decommission costs 28,675 22,816 Loss from extinguishment of debt 19,463 235 Deferred income tax (benefit) expense ( 93,104 ) 5,988 Other non-cash items reflected in the Statements of Operations 28,700 14,604 Changes in operating assets and liabilities, net of acquisitions: Accounts receivable and costs and estimated earnings in excess of billings on uncompleted contracts, net 48,272 ( 13,909 ) Prepaid expenses and other assets ( 2,571 ) 669 Operating lease right-of-use assets, net 88,470 68,518 Accounts payable and accrued expenses 5,672 ( 2,521 ) Accrued interest ( 17,010 ) ( 14,228 ) Long-term lease liabilities ( 75,199 ) ( 64,057 ) Other liabilities 40,264 3,039 Net cash provided by operating activities 882,908 704,984 CASH FLOWS FROM INVESTING ACTIVITIES: Acquisitions ( 199,899 ) ( 283,701 ) Capital expenditures ( 95,371 ) ( 111,381 ) Purchase of investments ( 1,288,267 ) ( 528,915 ) Proceeds from sale of investments 1,235,000 515,557 Other investing activities ( 4,841 ) ( 6,626 ) Net cash used in investing activities ( 353,378 ) ( 415,066 ) CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings under Revolving Credit Facility 515,000 265,000 Repayments under Revolving Credit Facility ( 1,005,000 ) ( 590,000 ) Proceeds from issuance of Senior Notes, net of fees 1,479,522 — Repayment of Senior Notes ( 759,143 ) — Proceeds from issuance of Tower Securities, net of fees 1,336,003 1,153,036 Repayment of Tower Securities ( 1,200,000 ) ( 920,000 ) Termination of interest rate swap ( 176,200 ) — Proceeds from employee stock purchase/stock option plans, net of taxes 50,283 112,909 Repurchase and retirement of common stock ( 378,988 ) ( 267,534 ) Payment of dividends on common stock ( 156,199 ) ( 41,873 ) Other financing activities ( 19,528 ) ( 19,119 ) Net cash used in financing activities ( 314,250 ) ( 307,581 ) Effect of exchange rate changes on cash, cash equivalents, and restricted cash ( 20,427 ) ( 1,957 ) NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH 194,853 ( 19,620 ) CASH, CASH EQUIVALENTS, AND RESTRICTED CASH: Beginning of period 141,120 178,300 End of period $ 335,973 $ 158,680 The accompanying condensed notes are an integral part of these consolidated financial statements. 6 Table of Contents SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) For the nine months ended September 30, 2020 2019 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest $ 298,140 $ 306,810 Income taxes $ 14,061 $ 14,860 SUPPLEMENTAL CASH FLOW INFORMATION OF NON-CASH ACTIVITIES: Right-of-use assets obtained in exchange for new operating lease liabilities $ 21,785 $ 37,913 Operating lease modifications and reassessments $ 23,811 $ ( 67,794 ) Right-of-use assets obtained in exchange for new finance lease liabilities $ 893 $ 1,706 Common stock issued in connection with acquisitions $ — $ 1,680 Consolidation of an equity method investment $ — $ 71,990 The accompanying condensed notes are an integral part of these consolidated financial statements. ‎ 7 Table of Contents SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. BASIS OF PRESENTATION The accompanying consolidated financial statements should be read in conjunction with the Annual Report on Form 10-K for the fiscal year ended December 31, 2019 for SBA Communications Corporation and its subsidiaries (the “Company”). These financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X and, therefore, omit or condense certain footnotes and other information normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States. In the opinion of the Company’s management, all adjustments (consisting of normal recurring accruals) considered necessary for fair financial statement presentation have been made. The results of operations for an interim period may not give a true indication of the results for the year. Certain reclassifications have been made to prior year amounts or balances to conform to the presentation adopted in the current year. The preparation of financial statements requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. While the Company believes that such estimates are fair when considered in conjunction with the consolidated financial statements and accompanying notes, the actual amounts, when known, may vary from these estimates. Foreign Currency Translation All assets and liabilities of foreign subsidiaries that do not utilize the U.S. dollar as its functional currency are translated at period-end exchange rates, while revenues and expenses are translated at monthly average exchange rates during the period. Unrealized remeasurement gains and losses are reported as foreign currency translation adjustments through Accumulated other comprehensive loss, net in the Consolidated Statement of Shareholders’ Deficit. For foreign subsidiaries where the U.S. dollar is the functional currency, monetary assets and liabilities of such subsidiaries, which are not denominated in U.S. dollars, are remeasured at exchange rates in effect at the balance sheet date, and revenues and expenses are remeasured at monthly average rates prevailing during the year. Unrealized translation gains and losses are reported as other income (expense), net in the Consolidated Statements of Operations. Intercompany Loans Subject to Remeasurement In accordance with Accounting Standards Codification (ASC) 830, the Company remeasures foreign denominated intercompany loans with the corresponding change in the balance being recorded in Other income (expense), net in the Consolidated Statements of Operations as settlement is anticipated or planned in the foreseeable future. The Company recorded a $ 25.4 million loss and a $ 21.0 million loss, net of taxes, on the remeasurement of intercompany loans for the three months ended September 30, 2020 and 2019, respectively, and a $ 198.6 million loss and a $ 16.3 million loss, net of taxes, on the remeasurement of intercompany loans for the nine months ended September 30, 2020 and 2019, respectively, due to changes in foreign exchange rates. As of September 30, 2020 and December 31, 2019, the aggregate amount outstanding under the intercompany loan agreements subject to remeasurement with the Company’s foreign subsidiaries was $ 935.3 million and $ 899.7 million, respectively. Credit Losses Effective January 1, 2020, the Company adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”) prospectively. ASU 2016-13 replaces the incurred loss impairment model with an expected credit loss impairment model for financial instruments, including trade receivables. The amendment requires entities to consider forward-looking information to estimate expected credit losses over the lifetime of the asset, resulting in earlier recognition of losses for receivables that are current or not yet due, which were not considered under the previous accounting guidance. The impact of the adoption of ASU 2016-13 was not material individually or in the aggregate to the Company. ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments – Credit Losses (“ASU 2018-19”) clarified that operating lease receivables are not within the scope of ASC 326-20 and should instead be accounted for under the new leasing standard, ASC 842. The Company is exposed to credit losses which are subject to this standard primarily through the site development business segment which provides consulting and construction related services. The Company’s expected credit loss allowance methodology for accounts receivable is developed using historical collection experience, current and future economic and market conditions, and a review of the current status of customers’ trade accounts receivables. Due to the short-term nature of such receivables, the estimate of the amount of accounts receivable that may not be collected considers aging of the accounts receivable 8 Table of Contents balances and the financial condition of customers. Additionally, specific allowance amounts are established to record the appropriate provision for customers that have a higher probability of default. The Company’s monitoring activities include timely account reconciliation, dispute resolution, payment confirmation, consideration of customers’ financial condition and macroeconomic conditions. Balances are written off when determined to be uncollectible. Reference Rate Reform ASU 2020-04, Reference Rate Reform, provides optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. The amendments are effective for all entities as of March 12, 2020 through December 31, 2022. As of September 30, 2020, the Company has not modified any contracts as a result of reference rate reform and is evaluating the impact this standard may have on its consolidated financial statements. 2. FAIR VALUE MEASUREMENTS Items Measured at Fair Value on a Recurring Basis — The Company’s asset retirement obligations are measured at fair value on a recurring basis using Level 3 inputs and are recorded in Other long-term liabilities in the Consolidated Balance Sheets. The fair value of the asset retirement obligations is calculated using a discounted cash flow model. Refer to Note 16 for discussion of the Company’s redeemable non-controlling interests. Items Measured at Fair Value on a Nonrecurring Basis — The Company’s long-lived and intangible assets are measured at fair value on a nonrecurring basis using Level 3 inputs. The Company considers many factors and makes certain assumptions when making this assessment, including, but not limited to: general market and economic conditions, historical operating results, geographic location, lease-up potential and expected timing of lease-up. The fair value of the long-lived and intangible assets is calculated using a discounted cash flow model. Asset impairment and decommission costs for all periods presented and the related impaired assets primarily relate to the Company’s site leasing operating segment. The following summarizes the activity of asset impairment and decommission costs (in thousands): For the three months For the nine months ended September 30, ended September 30, 2020 2019 2020 2019 Asset impairment (1) $ 7,132 $ 5,742 $ 23,565 $ 13,326 Write-off of carrying value of decommissioned towers 1,187 2,241 4,626 9,405 Other (including third party decommission costs) 187 257 912 900 Total asset impairment and decommission costs $ 8,506 $ 8,240 $ 29,103 $ 23,631 (1) Represents impairment charges resulting from the Company’s regular analysis of whether the future cash flows from certain towers are adequate to recover the carrying value of the investment in those towers. The Company’s long term investments were $ 60.0 million and $ 13.3 million as of September 30, 2020 and December 31, 2019, respectively, which are classified within other assets on the Consolidated Balance Sheets. These investments are accounted for under the cost and equity method. The Company periodically reviews these investments for impairment. The Company considers impairment indicators such as negative changes in industry and market conditions, financial performance, business prospects, and other relevant events and factors. If indicators exist and the fair value of the investment is below the carrying amount, the investment could be impaired. The estimation of the fair value of the investment involves the use of Level 3 inputs. Fair Value of Financial Instruments — The carrying values of cash and cash equivalents, accounts receivable, restricted cash, accounts payable, and short-term investments approximate their estimated fair values due to the shorter maturity of these instruments. The Company’s estimate of its short term investments are based primarily upon Level 1 reported market values. As of 9 Table of Contents September 30, 2020 and December 31, 2019, the Company had $ 4.9 million and $ 0.5 million of short-term investments, which are classified within prepaid expenses and other current assets on the Consolidated Balance Sheets. The Company determines fair value of its debt instruments utilizing various Level 2 sources including quoted prices and indicative quotes (non-binding quotes) from brokers that require judgment to interpret market information including implied credit spreads for similar borrowings on recent trades or bid/ask prices. The fair value of the Revolving Credit Facility is considered to approximate the carrying value because the interest payments are based on Eurodollar rates that reset monthly or more frequently. The Company does not believe its credit risk has changed materially from the date the applicable Eurodollar Rate was set for the Revolving Credit Facility ( 112.5 to 175.0 basis points). Refer to Note 10 for the fair values, principal balances, and carrying values of the Company’s debt instruments. For discussion of the Company’s derivatives and hedging activities, refer to Note 17. 3. CASH, CASH EQUIVALENTS, AND RESTRICTED CASH The cash, cash equivalents, and restricted cash balances on the Consolidated Statements of Cash Flows consist of the following: As of As of September 30, 2020 December 31, 2019 Included on Balance Sheet (in thousands) Cash and cash equivalents $ 271,874 $ 108,309 Securitization escrow accounts (1) 61,417 30,046 Restricted cash - current asset Payment and performance bonds 155 197 Restricted cash - current asset Surety bonds and workers compensation 2,527 2,568 Other assets - noncurrent Total cash, cash equivalents, and restricted cash $ 335,973 $ 141,120 (1) Increase is due to the timing of customer payments. Pursuant to the terms of the Tower Securities (see Note 10), the Company is required to establish a securitization escrow account, held by the indenture trustee, into which all rents and other sums due on the towers that secure the Tower Securities are directly deposited by the lessees. These restricted cash amounts are used to fund reserve accounts for the payment of (1) debt service costs, (2) ground rents, real estate and personal property taxes and insurance premiums related to towers, (3) trustee and servicing expenses, and (4) management fees. The restricted cash in the securitization escrow account in excess of required reserve balances is subsequently released to the Borrowers (as defined in Note 10) monthly, provided that the Borrowers are in compliance with their debt service coverage ratio and that no event of default has occurred. All monies held by the indenture trustee are classified as restricted cash on the Company’s Consolidated Balance Sheets. Payment and performance bonds relate primarily to collateral requirements for tower construction currently in process by the Company. Cash is pledged as collateral related to surety bonds issued for the benefit of the Company or its affiliates in the ordinary course of business and primarily related to the Company’s tower removal obligations. As of September 30, 2020 and December 31, 2019, the Company had $ 41.6 million and $ 41.7 million in surety, payment and performance bonds, respectively, for which no collateral was required to be posted. The Company periodically evaluates the collateral posted for its bonds to ensure that it meets the minimum requirements. As of September 30, 2020 and December 31, 2019, the Company had also pledged $ 2.3 million as collateral related to its workers’ compensation policy. ‎ 10 Table of Contents 4. COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS The Company’s costs and estimated earnings on uncompleted contracts are comprised of the following: As of As of September 30, 2020 December 31, 2019 (in thousands) Costs incurred on uncompleted contracts $ 51,419 $ 52,339 Estimated earnings 20,134 19,954 Billings to date ( 45,484 ) ( 47,401 ) $ 26,069 $ 24,892 These amounts are included in the Consolidated Balance Sheets under the following captions: As of As of September 30, 2020 December 31, 2019 (in thousands) Costs and estimated earnings in excess of billings on uncompleted contracts $ 27,109 $ 26,313 Billings in excess of costs and estimated earnings on uncompleted contracts (included in Other current liabilities) ( 1,040 ) ( 1,421 ) $ 26,069 $ 24,892 At September 30, 2020 and December 31, 2019, eight customers comprised 98.4 % and 94.4 % of the costs and estimated earnings in excess of billings on uncompleted contracts, net of billings in excess of costs and estimated earnings, respectively. 5. PREPAID EXPENSES AND OTHER CURRENT ASSETS AND OTHER ASSETS The Company’s prepaid expenses and other current assets are comprised of the following: As of As of September 30, 2020 December 31, 2019 (in thousands) Prepaid ground rent $ 2,508 $ 1,632 Prepaid real estate taxes 4,349 3,003 Prepaid taxes 5,087 4,924 Other 18,050 27,722 Total prepaid expenses and other current assets $ 29,994 $ 37,281 11 Table of Contents The Company’s other assets are comprised of the following: As of As of September 30, 2020 December 31, 2019 (in thousands) Straight-line rent receivable $ 317,694 $ 330,660 Interest rate swap asset (1) 7,750 47,583 Loan receivables 13,858 8,295 Deferred lease costs, net 4,591 4,865 Deferred tax asset - long term 77,431 4,342 Long-term investments 60,012 13,255 Other 23,218 23,078 Total other assets $ 504,554 $ 432,078 (1) Refer to Note 17 for more information on the Company’s interest rate swaps. 6. ACQUISITIONS The following table summarizes the Company’s acquisition activity: For the three months For the nine months ended September 30, ended September 30, 2020 2019 2020 2019 (in thousands) Acquisitions of towers and related intangible assets (1) $ 21,895 $ 99,173 $ 121,319 $ 224,585 Land buyouts and other assets (2) 58,969 33,346 78,580 59,116 Total cash acquisition capital expenditures $ 80,864 $ 132,519 $ 199,899 $ 283,701 (1) The nine months ended September 30, 2019 excludes $ 1.7 million of acquisition costs funded through the issuance of 10,000 shares of Class A common stock. (2) In addition, the Company paid $ 2.3 million and $ 7.0 million for ground lease extensions and term easements on land underlying the Company’s towers during the three months ended September 30, 2020 and 2019, respectively, and paid $ 5.9 million and $ 13.1 million for ground lease extensions and term easements on land underlying the Company’s towers during the nine months ended September 30, 2020 and 2019, respectively. The Company recorded these amounts in prepaid rent on its Consolidated Balance Sheets. Includes amounts paid related to the acquisition of data centers for the nine months ended September 30, 2020 and 2019. During the nine months ended September 30, 2020, the Company allocated the purchase price of 129 acquired towers and related assets and liabilities consisting of $ 16.7 million of property and equipment, $ 100.3 million of intangible assets, and $ 4.4 million of other net assets and liabilities assumed. All acquisitions in the three and nine months ended September 30, 2020 were accounted for as asset acquisitions. Subsequent to September 30, 2020, the Company acquired 54 towers and related assets for $ 14.6 million in cash. The maximum potential obligation related to the performance targets for acquisitions, which have not been recorded on the Company’s Consolidated Balance Sheet, were $ 24.9 million and $ 29.7 million as of September 30, 2020 and December 31, 2019, respectively. 12 Table of Contents 7. PROPERTY AND EQUIPMENT, NET Property and equipment, net consists of the following: As of As of September 30, 2020 December 31, 2019 (in thousands) Towers and related components $ 5,142,440 $ 5,164,104 Construction-in-process (1) 36,642 33,644 Furniture, equipment, and vehicles 51,545 51,654 Land, buildings, and improvements 803,963 736,378 Total property and equipment 6,034,590 5,985,780 Less: accumulated depreciation ( 3,366,586 ) ( 3,191,178 ) Property and equipment, net $ 2,668,004 $ 2,794,602 (1) Construction-in-process represents costs incurred related to towers that are under development and will be used in the Company’s site leasing operations. Depreciation expense was $ 71.8 million and $ 71.4 million for the three months ended September 30, 2020 and 2019, respectively, and $ 215.0 million and $ 210.1 million for the nine months ended September 30, 2020 and 2019, respectively. At September 30, 2020 and December 31, 2019, unpaid capital expenditures that are included in accounts payable and accrued expenses were $ 7.0 million and $ 14.7 million, respectively. 8. INTANGIBLE ASSETS, NET The following table provides the gross and net carrying amounts for each major class of intangible assets: As of September 30, 2020 As of December 31, 2019 Gross carrying Accumulated Net book Gross carrying Accumulated Net book amount amortization value amount amortization value (in thousands) Current contract intangibles $ 4,688,240 $ ( 2,367,997 ) $ 2,320,243 $ 4,996,591 $ ( 2,218,404 ) $ 2,778,187 Network location intangibles 1,730,030 ( 986,775 ) 743,255 1,764,484 ( 915,898 ) 848,586 Intangible assets, net $ 6,418,270 $ ( 3,354,772 ) $ 3,063,498 $ 6,761,075 $ ( 3,134,302 ) $ 3,626,773 All intangible assets noted above are included in the Company’s site leasing segment. Amortization expense relating to the intangible assets above was $ 108.2 million and $ 103.5 million for the three months ended September 30, 2020 and 2019, respectively, and $ 326.2 million and $ 307.3 million for the nine months ended September 30, 2020 and 2019, respectively. ‎ 13 Table of Contents 9. ACCRUED EXPENSES The Company’s accrued expenses are comprised of the following: As of As of September 30, 2020 December 31, 2019 (in thousands) Salaries and benefits $ 18,759 $ 19,838 Real estate and property taxes 11,841 9,598 Unpaid capital expenditures 7,026 14,669 Other 24,897 23,513 Total accrued expenses $ 62,523 $ 67,618 10. DEBT The principal values, fair values, and carrying values of debt consist of the following (in thousands): As of As of September 30, 2020 December 31, 2019 Maturity Date Principal ‎ Balance Fair Value Carrying ‎ Value Principal ‎ Balance Fair Value Carrying ‎ Value Revolving Credit Facility Apr. 11, 2023 $ — $ — $ — $ 490,000 $ 490,000 $ 490,000 2018 Term Loan Apr. 11, 2025 2,346,000 2,281,485 2,330,568 2,364,000 2,369,910 2,346,183 2013-2C Tower Securities (1) Apr. 11, 2023 575,000 603,802 571,760 575,000 585,954 570,866 2014-2C Tower Securities (1) Oct. 8, 2024 620,000 675,726 615,896 620,000 644,912 615,205 2015-1C Tower Securities (1) Oct. 8, 2020 — — — 500,000 502,095 498,090 2016-1C Tower Securities (1) Jul. 9, 2021 — — — 700,000 704,095 696,936 2017-1C Tower Securities (1) Apr. 11, 2022 760,000 778,445 756,632 760,000 763,405 755,061 2018-1C Tower Securities (1) Mar. 9, 2023 640,000 676,198 635,614 640,000 658,266 634,344 2019-1C Tower Securities (1) Jan. 12, 2025 1,165,000 1,226,570 1,154,532 1,165,000 1,158,057 1,153,086 2020-1C Tower Securities (1) Jan. 9, 2026 750,000 756,563 742,505 — — — 2020-2C Tower Securities (1) Jan. 11, 2028 600,000 605,214 593,938 — — — 2014 Senior Notes Jul. 15, 2022 — — — 750,000 760,313 743,580 2016 Senior Notes Sep. 1, 2024 1,100,000 1,124,750 1,088,241 1,100,000 1,142,625 1,086,241 2017 Senior Notes Oct. 1, 2022 750,000 755,625 746,182 750,000 764,063 744,833 2020 Senior Notes Feb. 15, 2027 1,500,000 1,515,000 1,480,842 — — — Total debt $ 10,806,000 $ 10,999,378 $ 10,716,710 $ 10,414,000 $ 10,543,695 $ 10,334,425 Less: current maturities of long-term debt ( 24,000 ) ( 522,090 ) Total long-term debt, net of current maturities $ 10,692,710 $ 9,812,335 (1) The maturity date represents the anticipated repayment date for each issuance. ‎ 14 Table of Contents The table below reflects cash and non-cash interest expense amounts recognized by debt instrument for the periods presented: Interest For the three months ended September 30, For the nine months ended September 30, Rates as of 2020 2019 2020 2019 September 30, Cash Non-cash Cash Non-cash Cash Non-cash Cash Non-cash 2020 Interest Interest Interest Interest Interest Interest Interest Interest (in thousands) Revolving Credit Facility 1.347 % $ 711 $ — $ 1,009 $ — $ 5,086 $ — $ 5,409 $ — 2018 Term Loan (1) 1.878 % 14,536 7,962 26,243 196 57,688 12,014 79,959 572 2013-2C Tower Securities 3.722 % 5,396 — 5,396 — 16,188 — 16,188 — 2014 Tower Securities (2) 3.869 % 6,046 — 11,439 — 18,138 — 37,009 — 2015-1C Tower Securities 3.156 % 620 — 3,985 — 8,589 — 11,954 — 2016-1C Tower Securities 2.877 % 792 — 5,090 — 10,972 — 15,271 — 2017-1C Tower Securities 3.168 % 6,096 — 6,096 — 18,269 — 18,269 — 2018-1C Tower Securities 3.448 % 5,570 — 5,570 — 16,711 — 16,711 — 2019-1C Tower Securities 2.836 % 8,357 — 1,671 — 25,072 — 1,671 — 2020-1C Tower Securities 1.884 % 3,077 — — — 3,077 — — — 2020-2C Tower Securities 2.328 % 3,028 — — — 3,028 — — — 2014 Senior Notes 4.875 % — — 9,141 201 3,352 112 27,422 596 2016 Senior Notes 4.875 % 13,406 279 13,406 265 40,219 826 40,219 786 2017 Senior Notes 4.000 % 7,500 — 7,500 — 22,500 — 22,500 — 2020 Senior Notes 3.875 % 14,531 82 — — 32,238 114 — — Other 125 — 21 — 202 — 99 — Total $ 89,791 $ 8,323 $ 96,567 $ 662 $ 281,329 $ 13,066 $ 292,681 $ 1,954 (1) The 2018 Term Loan has a blended rate of 1.878 % which 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. Excluding the impact of the interest rate swap, the 2018 Term Loan was accruing interest at 1.900 % as of September 30, 2020. Refer to Note 17 for more information on the Company’s interest rate swap. (2) The 2014-1C Tower Securities, which was repaid September 13, 2019, accrued interest at 2.898 %. The 2014-2C Tower Securities accrue interest at 3.869 %. Revolving Credit Facility under the Senior Credit Agreement 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, the Company borrowed $ 515.0 million and repaid $ 1.0 billion of the outstanding balance under the Revolving Credit Facility. As of September 30, 2020, the Company had no amount outstanding under the $ 1.25 billion Revolving Credit Facility. In addition, SBA Senior Finance II LLC, the Company’s wholly owned subsidiary (“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 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, the Company had no amount outstanding under the Revolving Credit Facility. Term Loan under the Senior Credit Agreement During the three and nine months ended September 30, 2020, the Company repaid an aggregate of $ 6.0 million and $ 18.0 million, respectively, of principal on the 2018 Term Loan. As of September 30, 2020, the 2018 Term Loan had a principal balance of $ 2.3 billion. 15 Table of Contents On August 4, 2020, the Company, through its wholly owned subsidiary, SBA Senior Finance II, terminated its existing $ 1.95 billion cash flow hedge on a portion of its 2018 Term Loan in exchange for a payment of $ 176.2 million. On the same date, the Company 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. Refer to Note 17 for more information on the Company’s interest rate swaps. Secured Tower Revenue Securities As of September 30, 2020, the entities that are borrowers on the mortgage loan (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. The sole asset of the Trust (defined below) consists of a non-recourse mortgage loan made in favor of the Borrowers. 2020 Tower Securities On July 14, 2020, the Company, through a New York common law trust (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”). The aggregate $ 1.35 billion of 2020 Tower Securities have a blended interest rate of 2.081 % and a weighted average life through the anticipated repayment date of 6.4 years. Net proceeds from this offering 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). The remaining net proceeds were used for general corporate purposes. The Company has 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. In addition, to satisfy certain risk retention requirements of Regulation RR promulgated under the Exchange Act, SBA Guarantor, LLC, a wholly owned subsidiary, purchased $ 71.1 million of Secured Tower Revenue Securities Series 2020-2R issued by the Trust. These securities have an anticipated repayment date of January 11, 2028 and a final maturity date of July 9, 2052 (the “2020-2R Tower Securities”). The fixed interest rate on the 2020-2R Tower Securities is 4.336 % per annum, payable monthly. Principal and interest payments made on the 2020-2R Tower Securities eliminate in consolidation. Senior Notes 2020 Senior Notes On February 4, 2020, the Company issued $ 1.0 billion of unsecured senior notes at par value (the “2020-1 Senior Notes”). On May 26, 2020, the Company issued $ 500.0 million of additional unsecured senior notes under the same indenture at 99.500 % of par value (the “2020-2 Senior Notes”). These notes, collectively the “2020 Senior Notes,” accrue interest at a rate of 3.875 % per annum and are due February 15, 2027 . Interest on the 2020 Senior Notes is due semi-annually on February 15 and August 15 of each year, beginning on August 15, 2020. The Company incurred financing fees of $ 18.0 million in relation to these transactions, which are being amortized through the maturity date. Net proceeds from these offerings were used to redeem all of the outstanding principal amount of the 2014 Senior Notes, repay amounts outstanding under the Revolving Credit Facility, and for general corporate purposes. In addition, the Company 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 Statements of Operations. 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. Prior to February 15, 2023 , the Company may, at its option, redeem up to 35 % of the aggregate principal amount of the 2020 Senior Notes originally issued at a redemption price of 103.875 % of the principal amount of the 2020 Senior Notes to be redeemed on the redemption date plus accrued and unpaid interest with the net proceeds of certain equity offerings. The Company may redeem the 2020 Senior Notes during the twelve-month period beginning on the following dates at the following redemption prices: February 15, 2023 at 101.938 %, February 15, 2024 at 100.969 %, or February 15, 2025 until maturity at 100.000 %, of the principal amount of the 2020 Senior Notes to be redeemed on the redemption date plus accrued and unpaid interest. 16 Table of Contents 11. SHAREHOLDERS’ EQUITY Common Stock Equivalents The Company has outstanding stock options, time-based restricted stock units (“RSUs”), and performance-based restricted stock units (“PSUs”) which were considered in the Company’s diluted earnings per share calculation (see Note 15). Registration of Additional Shares On August 6, 2020, the Company filed a registration statement on Form S-8 with the Securities and Exchange Commission registering 3.4 million shares of the Company’s 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 Performance and Equity Incentive Plan (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. Stock Repurchases The Company’s Board of Directors authorizes the Company to purchase, from time to time, 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. Once authorized, the repurchase plan has no time deadline and will continue until otherwise modified or terminated by the Company’s Board of Directors at any time in its sole discretion. Shares repurchased are retired. On November 2, 2020, the Company’s 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. As of the date of this filing, the Company had the full $ 1.0 billion of authorization remaining under the new plan. The following is a summary of the Company’s share repurchases: For the three months For the nine months ended September 30, ended September 30, 2020 2019 2020 2019 Total number of shares purchased (in millions) (1) 0.6 0.7 1.4 1.2 Average price paid per share (1) $ 302.63 $ 249.04 $ 267.57 $ 231.20 Total price paid (in millions) (1) $ 175.6 $ 175.7 $ 375.6 $ 270.3 (1) Amounts are calculated based on the trade date. For the nine months ended September 30, 2020, this differs from the Consolidated Statements of Cash Flows which calculate share repurchases based on the settlement date and includes an additional $ 3.3 million spent to repurchase 13,870 shares which settled on January 2, 2020. Subsequent to September 30, 2020, the Company made the following share repurchases : Total number of shares purchased (in millions) (1) 0.4 Average price paid per share (1) $ 299.54 Total price paid (in millions) (1) $ 124.4 (1) Amounts are calculated based on the trade date. 17 Table of Contents Dividends As of September 30, 2020, the Company paid the following cash dividends: Payable to Shareholders of Record At the Close Cash Paid Aggregate Amount Date Declared of Business on Per Share Paid Date Paid February 20, 2020 March 10, 2020 $ 0.465 $ 52.2 million March 26, 2020 May 5, 2020 May 28, 2020 $ 0.465 $ 52.0 million June 18, 2020 August 3, 2020 August 25, 2020 $ 0.465 $ 52.0 million September 21, 2020 Subsequent to September 30, 2020, the Company declared the following cash dividends: Payable to Shareholders Cash to of Record At the Close be Paid Date Declared of Business on Per Share Date to be Paid November 2, 2020 November 19, 2020 $ 0.465 December 17, 2020 12. STOCK-BASED COMPENSATION Commencing with the 2020 equity award, the Company modified the type of equity granted to certain employees to align long-term compensation with Company performance. Under the new structure, the Company continued to issue RSUs; however, RSUs will now vest ratably over three years rather than four years . The Company further replaced stock options with PSUs which will cliff vest at the end of three years . PSUs have performance metrics for which threshold, target, and maximum parameters are established at the time of the grant. The performance metrics are used to calculate the number of shares that will be issuable when the awards vest, which may range from zero to 200 % of the target amounts. At the end of each three year performance period, the number of shares that vest will depend on the results achieved against the pre-established performance metrics. The Company recognizes compensation expense for RSUs and PSUs on a straight-line basis over the vesting period; however, compensation expense related to certain PSUs are subject to adjustment on performance relative to the established targets. Furthermore, effective with the 2020 grant, RSUs and PSUs will accrue dividend equivalents prior to vesting, which will be paid out only in respect to shares that actually vest. On February 25, 2020, the Company’s 2010 Plan expired by its terms. On May 14, 2020, the Company’s shareholders approved the 2020 Plan which provides for the issuance of up to 3.0 million shares of the Company’s Class A common stock (of which approximately 3.0 million shares remain available for future issuance as of September 30, 2020), plus additional shares of Class A common stock (a) 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 or (b) which become issuable under the 2020 Plan by reason of any stock dividend, stock split, recapitalization or other similar transaction effected without the receipt of consideration which results in an increase in the number of outstanding shares of Class A common stock. Stock Options The Company records compensation expense for employee stock options based on the estimated fair value of the options on the date of grant using the Black-Scholes option-pricing model with the assumptions included in the table below. The Company uses a combination of historical data and historical volatility to establish the expected volatility, as well as to estimate the expected option life. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for the estimated life of the option. The following assumptions were used to estimate the fair value of options granted using the Black-Scholes option-pricing model: 18 Table of Contents For the nine months ended September 30, 2020 2019 Risk free interest rate 1.66 % 1.37 % - 2.47 % Dividend yield 1.3 % 1.3 % Expected volatility 20 % 20 % Expected lives 4.6 years 4.6 years The following table summarizes the Company’s activities with respect to its stock option plans for the nine months ended September 30, 2020 as follows (dollars and shares in thousands, except for per share data): Weighted- Weighted-Average Average Remaining Number Exercise Price Contractual Aggregate of Shares Per Share Life (in years) Intrinsic Value Outstanding at December 31, 2019 4,507 $ 133.68 Granted 10 $ 240.99 Exercised ( 1,266 ) $ 110.44 Forfeited/canceled ( 28 ) $ 168.11 Outstanding at September 30, 2020 3,223 $ 142.84 4.0 $ 566,269 Exercisable at September 30, 2020 1,722 $ 124.84 3.3 $ 333,471 Unvested at September 30, 2020 1,501 $ 163.47 4.8 $ 232,798 The weighted-average per share fair value of options granted during the nine months ended September 30, 2020 was $ 41.09 . The total intrinsic value for options exercised during the nine months ended September 30, 2020 was $ 231.1 million. Restricted Stock Units and Performance-Based Restricted Stock Units The following table summarizes the Company’s RSU and PSU activity for the nine months ended September 30, 2020: RSUs PSUs Weighted-Average Weighted-Average Number of Grant Date Fair Number of Grant Date Fair Shares Value per Share Shares Value per Share (in thousands) (in thousands) Outstanding at December 31, 2019 313 $ 152.98 — $ — Granted (1) 99 $ 290.77 149 $ 376.48 Vested ( 129 ) $ 142.06 — $ — Forfeited/canceled ( 8 ) $ 200.03 ( 1 ) $ 376.50 Outstanding at September 30, 2020 275 $ 206.51 148 $ 376.48 (1) PSUs represent the target number of shares granted that are issuable at the end of the three year performance period. Fair value for a portion of the PSUs was calculated using a Monte Carlo simulation model. 13. INCOME TAXES The primary reasons for the difference between the Company’s effective tax rate and the U.S. statutory rate are the Company’s REIT election and the Company’s full valuation allowance on the net deferred tax assets of the U.S. taxable REIT subsidiary (“TRS”). The TRS has concluded that it is not more likely than not that its deferred tax assets will be realized and has 19 Table of Contents recorded a full valuation allowance. A foreign tax provision is recognized because certain foreign subsidiaries of the Company have profitable operations or are in a net deferred tax liability position. The Company elected to be taxed as a REIT commencing with its taxable year ended December 31, 2016. As a REIT, the Company generally will be entitled to a deduction for dividends that it pays, and therefore, not subject to U.S. federal corporate income tax on that portion of its net income that it distributes to its shareholders. As a REIT, the Company will continue to pay U.S. federal income tax on earnings, if any, from assets and operations held through its TRSs. These assets and operations currently consist primarily of the Company’s site development services and its international operations. The Company’s international operations would continue to be subject, as applicable, to foreign taxes in the jurisdictions in which those operations are located. The Company may also be subject to a variety of taxes, including payroll taxes and state, local, and foreign income, property, and other taxes on its assets and operations. The Company’s determination as to the timing and amount of future dividend distributions will be based on a number of factors, including REIT distribution requirements, its existing federal net operating losses (“NOLs”) of approximately $ 652.9 million as of December 31, 2019, the Company’s financial condition, earnings, debt covenants, and other possible uses of such funds. The Company may use these NOLs to offset its REIT taxable income, and thus any required distributions to shareholders may be reduced or eliminated until such time as the NOLs have been fully utilized . 14. SEGMENT DATA The Company operates principally in two business segments: site leasing and site development. The Company’s site leasing business includes two reportable segments, domestic site leasing and international site leasing. The Company’s business segments are strategic business units that offer different services. They are managed separately based on the fundamental differences in their operations. The site leasing segment includes results of the managed and sublease businesses. The site development segment includes the results of both consulting and construction related activities. The Company’s Chief Operating Decision Maker utilizes segment operating profit and operating income as his two measures of segment profit in assessing performance and allocating resources at the reportable segment level. The Company has applied the aggregation criteria to operations within the international site leasing segment on a basis that is consistent with management’s review of information and performance evaluations of the individual markets in this region. Revenues, cost of revenues (exclusive of depreciation, accretion and amortization), capital expenditures (including assets acquired through the issuance of shares of the Company’s Class A common stock) and identifiable assets pertaining to the segments in which the Company continues to operate are presented below. ‎ 20 Table of Contents Domestic Site Int'l Site Site Leasing Leasing Development Other Total For the three months ended September 30, 2020 (in thousands) Revenues $ 390,961 $ 95,804 $ 36,175 $ — $ 522,940 Cost of revenues (1) 64,228 28,494 28,797 — 121,519 Operating profit 326,733 67,310 7,378 — 401,421 Selling, general, and administrative expenses 25,466 8,747 4,518 9,421 48,152 Acquisition and new business initiatives related adjustments and expenses 2,458 1,666 — — 4,124 Asset impairment and decommission costs 6,129 2,377 — — 8,506 Depreciation, amortization and accretion 135,350 42,851 578 1,523 180,302 Operating income (loss) 157,330 11,669 2,282 ( 10,944 ) 160,337 Other expense (principally interest expense and other income (expense)) ( 147,102 ) ( 147,102 ) Income before income taxes 13,235 Cash capital expenditures (2) 89,982 17,971 127 1,176 109,256 For the three months ended September 30, 2019 Revenues $ 374,705 $ 93,867 $ 38,975 $ — $ 507,547 Cost of revenues (1) 63,836 29,157 30,516 — 123,509 Operating profit 310,869 64,710 8,459 — 384,038 Selling, general, and administrative expenses 21,840 8,626 4,183 7,623 42,272 Acquisition and new business initiatives related adjustments and expenses 2,717 1,975 — — 4,692 Asset impairment and decommission costs 6,027 2,213 — — 8,240 Depreciation, amortization and accretion 132,650 40,208 660 1,469 174,987 Operating income (loss) 147,635 11,688 3,616 ( 9,092 ) 153,847 Other expense (principally interest expense and other income (expense)) ( 135,083 ) ( 135,083 ) Income before income taxes 18,764 Cash capital expenditures (2) 67,951 101,776 357 1,060 171,144 ‎ 21 Table of Contents Domestic Site Int'l Site Site Leasing Leasing Development Other Total For the nine months ended September 30, 2020 (in thousands) Revenues $ 1,165,322 $ 296,201 $ 85,708 $ — $ 1,547,231 Cost of revenues (1) 192,226 87,894 68,417 — 348,537 Operating profit 973,096 208,307 17,291 — 1,198,694 Selling, general, and administrative expenses 78,021 25,713 13,468 29,654 146,856 Acquisition and new business initiatives related adjustments and expenses 8,059 4,498 — — 12,557 Asset impairment and decommission costs 22,297 6,806 — — 29,103 Depreciation, amortization and accretion 403,725 131,474 1,791 4,597 541,587 Operating income (loss) 460,994 39,816 2,032 ( 34,251 ) 468,591 Other expense (principally interest expense and other income (expense)) ( 626,873 ) ( 626,873 ) Loss before income taxes ( 158,282 ) Cash capital expenditures (2) 229,795 61,605 1,191 3,572 296,163 For the nine months ended September 30, 2019 Revenues $ 1,106,722 $ 273,036 $ 121,229 $ — $ 1,500,987 Cost of revenues (1) 194,525 84,642 92,606 — 371,773 Operating profit 912,197 188,394 28,623 — 1,129,214 Selling, general, and administrative expenses 77,926 22,624 16,774 31,431 148,755 Acquisition and new business initiatives related adjustments and expenses 4,698 4,971 — — 9,669 Asset impairment and decommission costs 18,476 5,155 — — 23,631 Depreciation, amortization and accretion 394,308 117,197 1,900 4,185 517,590 Operating income (loss) 416,789 38,447 9,949 ( 35,616 ) 429,569 Other expense (principally interest expense and other income (expense)) ( 327,029 ) ( 327,029 ) Income before income taxes 102,540 Cash capital expenditures (2) 242,660 149,704 2,165 2,259 396,788 Domestic Site Int'l Site Site Leasing Leasing Development Other (3) Total Assets (in thousands) As of September 30, 2020 $ 5,939,062 $ 2,827,255 $ 60,182 $ 208,183 $ 9,034,682 As of December 31, 2019 $ 6,157,511 $ 3,381,448 $ 81,772 $ 139,210 $ 9,759,941 (1) Excludes depreciation, amortization, and accretion. (2) Includes cash paid for capital expenditures and acquisitions and financing leases. (3) Assets in Other consist primarily of general corporate assets and short-term investments. Other than Brazil, no foreign country represented a material amount of the Company’s total revenues in any of the periods presented. Site leasing revenue in Brazil was $ 167.8 million and $ 168.6 million for the nine months ended September 30, 2020 and 2019, respectively. Total long-lived assets in Brazil were $ 0.9 billion and $ 1.4 billion as of September 30, 2020 and December 31, 2019, respectively. 22 Table of Contents 15. EARNINGS PER SHARE Basic earnings per share was computed by dividing net income (loss) attributable to SBA Communications Corporation by the weighted-average number of shares of Common Stock outstanding for each respective period. Diluted earnings per share was calculated by dividing net income (loss) attributable to SBA Communications Corporation by the weighted-average number of shares of Common Stock outstanding adjusted for any dilutive Common Stock equivalents, including unvested RSUs, PSUs, and shares issuable upon exercise of stock options as determined under the “Treasury Stock” method. The following table sets forth basic and diluted net income (loss) per common share attributable to common shareholders for the three and nine months ended September 30, 2020 and 2019 (in thousands, except per share data): For the three months For the nine months ended September 30, ended September 30, 2020 2019 2020 2019 Numerator: Net income (loss) attributable to SBA Communications Corporation $ 22,568 $ 21,679 $ ( 81,678 ) $ 79,640 Denominator: Basic weighted-average shares outstanding 111,783 113,037 111,809 112,985 Dilutive impact of stock options, RSUs, and PSUs 1,920 2,147 — 1,839 Diluted weighted-average shares outstanding 113,703 115,184 111,809 114,824 Net income (loss) per common share attributable to SBA Communications Corporation: Basic $ 0.20 $ 0.19 $ ( 0.73 ) $ 0.70 Diluted $ 0.20 $ 0.19 $ ( 0.73 ) $ 0.69 For the three months ended September 30, 2020, the diluted weighted average number of common shares outstanding excluded an additional 1,520 shares issuable upon the vesting of the Company’s RSUs and PSUs because the impact would be anti-dilutive. For the nine months ended September 30, 2020, all potential common stock equivalents, including 3.2 million shares of stock options, 0.3 million shares of RSUs, and 0.1 million shares of PSUs, each issuable upon exercise or vesting, were excluded as the effect would be anti-dilutive. For the three and nine months ended September 30, 2019, the diluted weighted average number of common shares outstanding excluded an additional 8,091 and 18,277 shares, respectively, issuable upon exercise of the Company’s stock options because the impact would be anti-dilutive. 16. REDEEMABLE NONCONTROLLING INTERESTS During the third quarter of 2020, the Company noticed its intent to exercise its call option to acquire the remaining 6 % interest in a joint venture in South Africa, operated under the name Atlas Tower South Africa, which the Company expects to close in the fourth quarter of 2020. The Company allocates income and losses to the noncontrolling interest holder based on the applicable membership interest percentage. At each reporting period, the redeemable noncontrolling interest was recognized at the higher of (1) the initial carrying amount of the noncontrolling interest as adjusted for accumulated income or loss attributable to the noncontrolling interest holder, or (2) the contractually-defined redemption value as of the balance sheet date. Adjustments to the carrying amount of redeemable noncontrolling interest were charged against retained earnings (or additional paid-in capital if there were no retained earnings). 23 Table of Contents The components of the redeemable noncontrolling interest are as follows (in thousands): For the three months ended For the nine months ended September 30, 2020 September 30, 2020 Beginning balance $ 14,349 $ 16,052 Foreign currency translation adjustments 96 ( 908 ) Adjustment to fair value 641 511 Net income (loss) attributable to noncontrolling interests 108 ( 461 ) Ending balance $ 15,194 $ 15,194 17. DERIVATIVES AND HEDGING ACTIVITIES The Company enters into interest rate swaps to hedge the future interest expense from variable rate debt and reduce the Company’s exposure to fluctuations in interest rates. On August 4, 2020, the Company, through its wholly owned subsidiary, SBA Senior Finance II, terminated its existing $ 1.95 billion cash flow hedge on a portion of its 2018 Term Loan in exchange for a payment of $ 176.2 million. On the same date, the Company 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. The Company designated this interest rate swap as a cash flow hedge as it is expected to be highly effective at offsetting changes in cash flows of the LIBOR based component interest payments of its 2018 Term Loan. As of September 30, 2020, the hedge remains highly effective; therefore, subsequent changes in the fair value are recorded in Accumulated other comprehensive loss, net. As of September 30, 2020, the interest rate swap has a fair value of $ 7.7 million. On August 4, 2020, the Company also terminated its existing interest rate swaps, which were previously de-designated as cash flow hedges. There was no cash transferred in connection with the termination of these swaps. The Company reclassifies the fair value of its interest rate swaps recorded in Accumulated other comprehensive loss, net on their de-designation date to non-cash interest expense on the Consolidated Statements of Operations over their respective remaining terms which range from 2023 to 2025 . Accumulated other comprehensive loss, net includes an aggregate of $ 156.5 million and $ 42.1 million of accumulated derivative net losses as of September 30, 2020 and December 31, 2019, respectively. Additionally, the Company is exposed to counterparty credit risk to the extent that a counterparty fails to meet the terms of a contract. The Company’s exposure is limited to the current value of the contract at the time the counterparty fails to perform. The disclosures below provide additional information about the effects of these interest rate swaps on the Consolidated Balance Sheets, Consolidated Statements of Operations, Consolidated Statements of Comprehensive Income (Loss), and Consolidated Statements of Shareholders’ Deficit. The cash flows associated with these activities are reported in Net cash provided by operating activities on the Consolidated Statements of Cash Flows with the exception of the termination of interest rate swaps which are recorded in Net cash used in financing activities. 24 Table of Contents The table below outlines the effects of the Company’s interest rate swaps on the Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019. Fair Value as of Balance Sheet September 30, December 31, Location 2020 2019 Derivatives Designated as Hedging Instruments (in thousands) Interest rate swap agreements in a fair value asset position Other assets $ 7,750 $ — Interest rate swap agreement in a fair value liability position Other long-term liabilities $ — $ 42,698 Derivatives Not Designated as Hedging Instruments Interest rate swap agreements in a fair value asset position Other assets $ — $ 47,583 Interest rate swap agreements in a fair value liability position Other long-term liabilities $ — $ 47,583 The table below outlines the effects of the Company’s derivatives on the Consolidated Statements of Operations and Consolidated Statements of Shareholders’ Deficit for the three and nine month periods ended September 30, 2020 and 2019. For the three months For the nine months ended September 30, ended September 30, 2020 2019 2020 2019 Cash Flow Hedge - Interest Rate Swap Agreement (in thousands) Change in fair value recorded in Accumulated other comprehensive loss, net $ ( 7,252 ) $ — $ ( 132,460 ) $ — Amount recognized in Non-cash interest expense $ ( 1,062 ) $ — $ ( 6,707 ) $ — Derivatives Not Designated as Hedges - Interest Rate Swap Agreements Amount reclassified from Accumulated other comprehensive loss, net into Non-cash interest expense $ 8,809 $ — $ 18,094 $ — Change in fair value recorded in Other income (expense), net $ ( 3,192 ) $ — $ — $ — 18. CONCENTRATION OF CREDIT RISK The Company’s credit risks consist primarily of accounts receivable with national, regional, and local wireless service providers and federal and state government agencies. The Company performs periodic credit evaluations of its customers’ financial condition and provides allowances for doubtful accounts, as required, based upon factors surrounding the credit risk of specific customers, historical trends, and other information. The Company generally does not require collateral. On April 1, 2020, T-Mobile finalized a merger with Sprint and now operates as T-Mobile. For the three months ended September 30, 2020, T-Mobile represented 40.2 % of the Company’s total domestic site leasing revenue and 67.6 % of the Company’s site development revenue. For the nine months ended September 30, 2020, T-Mobile represented 40.6 % of the Company’s total domestic site leasing revenue and 59.7 % of the Company’s site development revenue.