Uniti(US:UNIT)2019-03-18 20:22Financial Performance - For the year ended December 31, 2018, the company reported revenues of $1,017.6 million, net income attributable to common shareholders of $8.0 million, Funds From Operations (FFO) of $373.7 million, and Adjusted Funds From Operations (AFFO) of $443.8 million[18]. - Uniti Group Inc. reported total revenues of $1,017.6 million for the year ended December 31, 2018, an increase of 11.1% from $916.0 million in 2017[321]. - The company's net income attributable to common shareholders was $7.99 million in 2018, compared to a net loss of $16.55 million in 2017[321]. - Total assets increased to $4,592.9 million as of December 31, 2018, up from $4,330.1 million in 2017, reflecting a growth of 6.1%[319]. - The company's total liabilities rose to $5,999.6 million in 2018, compared to $5,453.7 million in 2017, marking an increase of 10%[319]. - Comprehensive income attributable to common shareholders was $38.5 million in 2018, compared to $4.8 million in 2017[325]. - Cash flow from operating activities increased to $472,818,000 in 2018 from $405,260,000 in 2017, reflecting improved operational efficiency[335]. - The company incurred interest expenses of $319.6 million in 2018, up from $306.0 million in 2017, indicating a rise of 4.9%[321]. Revenue Sources - For the years ended December 31, 2018, 68.2%, 74.8%, and 87.9% of revenues were derived from leasing Distribution Systems to Windstream Holdings[52]. - Windstream Holdings, Inc. accounted for approximately 68.2% of Uniti's total revenues, raising substantial doubt about the company's ability to continue as a going concern due to Windstream's Chapter 11 bankruptcy filing[308]. - Revenue from the Master Lease with Windstream accounted for 68.2% of total revenue for the year ended December 31, 2018, down from 74.8% in 2017 and 87.9% in 2016, highlighting increasing revenue diversification[397]. Business Segments - The company operates through four reportable business segments: Uniti Fiber, Uniti Towers, Uniti Leasing, and Talk America[19]. - Talk America provides services to approximately 22,500 customers across 17 states, primarily through interconnection agreements with other telecommunications carriers[28]. - Uniti Towers' portfolio included 430 wireless communications towers in the U.S. and 498 towers in Latin America as of December 31, 2018[25]. Acquisitions and Investments - The acquisition of NMS included 366 wireless communication towers in Latin America for a total consideration of $62.6 million, funded through cash on hand[427]. - The acquisition of Information Transport Solutions, Inc. was completed for cash consideration of $59.6 million, expanding product offerings and strengthening customer relationships[431]. - The estimated fair values of assets acquired from ITS included $30.3 million assigned to customer relationships with a useful life of 14 years[433]. - The total purchase consideration for the NMS acquisition was $62.6 million, with significant intangible assets valued at $52.4 million[427]. Financial Position and Liquidity - As of December 31, 2018, the company had $38.0 million in unrestricted cash and $110 million of undrawn borrowing capacity under its revolving credit facility[40]. - The company has adequate liquidity to continue funding operations for twelve months after the issuance of the financial statements[347]. - The company has a variable rate Revolving Credit Facility of $750 million, with $110 million of undrawn borrowing capacity as of December 31, 2018[297]. Regulatory and Market Conditions - The company operates in a regulated market, subject to extensive federal, state, and local telecommunications laws and regulations, which could significantly affect operations and financial condition[54]. - The communications infrastructure industry is experiencing increased demand for bandwidth, driven by the growth of bandwidth-intensive devices and applications[31]. Risk Factors - Windstream filed for Chapter 11 bankruptcy on February 25, 2019, which may impact the Master Lease[53]. - The company has identified conditions that raise substantial doubt about its ability to continue as a going concern within one year after the issuance of the financial statements[346]. - Windstream's financial difficulties, including a Chapter 11 bankruptcy filing, pose a risk to the Company's revenue and cash flow, as Windstream is a significant source of leasing revenue[398][399]. Accounting and Reporting - The company adopted ASC Topic 606 on January 1, 2018, resulting in a net increase to opening retained earnings of $1.9 million due to capitalized commission costs[409]. - The Company must distribute at least 90% of its annual REIT taxable income to shareholders to maintain its REIT status, which could be impacted by Windstream's ability to meet its lease obligations[378][399]. - Stock-based compensation is accounted for using the fair value method, with the fair value of performance-based awards measured using a Monte Carlo simulation[376][377].