Why did SBA Communications report a larger net loss in 2001?

The net loss was $125.1 million in 2001, compared with $28.9 million in 2000. The filing attributes the losses principally to significant interest expense, depreciation and amortization, and a $24.4 million restructuring and other charge in 2001. Total other expense rose to $70.5 million, largely due to interest on the 10¼% senior notes.

How is the company funding its cash needs?

The filing states that operating cash flow was insufficient to fund cash expenditures in 2001 and is expected to remain so until early 2003. The company says its only likely material source of liquidity through early 2003 is availability under its senior credit facility, which had about $190.0 million available at December 31, 2001. Access to debt and equity markets may not be available on commercially reasonable terms.

What changed in the company's tower development plans?

In August 2001, the company reduced new tower builds to 100 to 150 per quarter. In February 2002, it further reduced 2002 capital expenditures for new towers and suspended material new investment, with 2002 tower builds and acquisitions expected at approximately 250 to 350. It anticipates charges of $30.0 million to $65.0 million for the 2002 restructuring.

What are the main debt obligations and upcoming cash requirements?

Total debt at December 31, 2001 was $845.5 million, including $500.0 million of 10¼% senior notes due 2009 and $234.9 million of 12% senior discount notes accreted value, with $269.0 million principal due in 2008. Cash interest on the discount notes begins September 2003, and the $100.0 million term loan begins amortizing in September 2003, which the filing says will materially increase cash interest requirements.

What governance risk do outside shareholders face?

Chairman Steven E. Bernstein controls 100% of the Class B common stock, which carries 10 votes per share while Class B exceeds 10% of total common stock. As of March 15, 2002, Class B represented 11.2% of common stock, and Mr. Bernstein controlled approximately 57% of total voting power. This allows him to determine the outcome of matters requiring majority shareholder approval.

SBAC 10-K FY2001 Annual Report — Revenue, Net Income, EPS

01—Abstract

Summary

Summary of the 10-K filed March 21, 2002. Cited figures are marked; the original filing is the authoritative source.

SBA Communications Corporation reported a net loss of $125.1 million^a for 2001 on total revenues of $242.9 million, up from $167.9 million in 2000.

Site leasing revenue rose to $103.2 million^b from $52.0 million, and site development revenue rose to $139.7 million from $115.9 million. Operating loss widened to $(48.0) million, driven by $80.5 million of depreciation and amortization and a $24.4 million restructuring charge. EBITDA increased 88.0% to $60.2 million.

The company owned or controlled 3,734 towers at December 31, 2001, and reported total debt of $845.5 million^c against shareholders' equity of $450.6 million. Cash flow was a key concern. Operating cash flow was $13.0 million, while investing activities used $530.3 million, mainly for tower acquisitions and construction.

The company stated that it did not generate sufficient operating cash flow to fund its cash expenditures in 2001 and expected this to continue until early 2003. It relies on availability under its $300.0 million^d senior secured credit facility, of which $190.0 million was undrawn at year-end. In February 2002, management announced a sharp reduction in new tower development, suspended material new tower investment, and planned restructuring charges of $30.0 million to $65.0 million in 2002.

The filing also flags leverage and governance risks. Cash interest obligations increase materially from September 2003, when interest begins on the 12% senior discount notes. Steven E.

Bernstein controls approximately 57% of total voting power through Class B shares. The company adopted a shareholder rights plan in January 2002, and it expects the adoption of SFAS 142 to have a potentially material impact.

02—Key points

Key Highlights

Total revenues rose 44.7% to $242.9 million in 2001, with site leasing revenue up 98.3% to $103.2 million.
Net loss widened to $125.1 million in 2001, versus $28.9 million in 2000, including a $24.4 million restructuring and other charge.
EBITDA increased 88.0% to $60.2 million, and annualized tower cash flow reached $78.8 million.
Operating cash flow was only $13.0 million, against $530.3 million of investing outflows, requiring external financing.
Total debt rose to $845.5 million, including $500.0 million of 10¼% senior notes due 2009, against stockholders' equity of $450.6 million.
Management suspended material new tower investment in February 2002 and expects 2002 restructuring charges of $30.0 million to $65.0 million.
Available liquidity was $190.0 million under the senior credit facility at December 31, 2001.

03—Questions

Frequently Asked Questions

Why did SBA Communications report a larger net loss in 2001?
The net loss was $125.1 million in 2001, compared with $28.9 million in 2000. The filing attributes the losses principally to significant interest expense, depreciation and amortization, and a $24.4 million restructuring and other charge in 2001. Total other expense rose to $70.5 million, largely due to interest on the 10¼% senior notes.
How is the company funding its cash needs?
The filing states that operating cash flow was insufficient to fund cash expenditures in 2001 and is expected to remain so until early 2003. The company says its only likely material source of liquidity through early 2003 is availability under its senior credit facility, which had about $190.0 million available at December 31, 2001. Access to debt and equity markets may not be available on commercially reasonable terms.
What changed in the company's tower development plans?
In August 2001, the company reduced new tower builds to 100 to 150 per quarter. In February 2002, it further reduced 2002 capital expenditures for new towers and suspended material new investment, with 2002 tower builds and acquisitions expected at approximately 250 to 350. It anticipates charges of $30.0 million to $65.0 million for the 2002 restructuring.
What are the main debt obligations and upcoming cash requirements?
Total debt at December 31, 2001 was $845.5 million, including $500.0 million of 10¼% senior notes due 2009 and $234.9 million of 12% senior discount notes accreted value, with $269.0 million principal due in 2008. Cash interest on the discount notes begins September 2003, and the $100.0 million term loan begins amortizing in September 2003, which the filing says will materially increase cash interest requirements.
What governance risk do outside shareholders face?
Chairman Steven E. Bernstein controls 100% of the Class B common stock, which carries 10 votes per share while Class B exceeds 10% of total common stock. As of March 15, 2002, Class B represented 11.2% of common stock, and Mr. Bernstein controlled approximately 57% of total voting power. This allows him to determine the outcome of matters requiring majority shareholder approval.

04—Continue

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