þ
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Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
|
For the quarterly period ended March 31, 2017
|
|
or
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¨
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Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
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For the transition period from ____ to ____
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Delaware
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|
20-2096338
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(State or Other Jurisdiction of
|
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(I.R.S. Employer Identification No.)
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Incorporation or Organization)
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|
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Large Accelerated Filer
¨
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Accelerated Filer
þ
|
|
|
|
Non-Accelerated Filer
¨
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|
(Do not check if a smaller reporting company)
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|
|
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Smaller reporting company
¨
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Emerging growth company
¨
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Page
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|
March 31, 2017
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|
December 31, 2016
|
||||
ASSETS
|
|
|
|
|
|
||
Current assets:
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
32,970
|
|
|
$
|
29,748
|
|
Accounts receivable, net of allowances of $3,748 and $2,656, respectively
|
91,659
|
|
|
76,292
|
|
||
Deferred costs
|
4,707
|
|
|
3,415
|
|
||
Prepaid expenses
|
25,868
|
|
|
5,765
|
|
||
Other assets
|
1,487
|
|
|
3,565
|
|
||
Total current assets
|
156,691
|
|
|
118,785
|
|
||
Restricted cash and cash equivalents
|
—
|
|
|
304,266
|
|
||
Property and equipment, net
|
467,646
|
|
|
43,369
|
|
||
Intangible assets, net
|
367,610
|
|
|
193,936
|
|
||
Goodwill
|
467,131
|
|
|
280,593
|
|
||
Other long-term assets
|
35,263
|
|
|
12,312
|
|
||
Total assets
|
$
|
1,494,341
|
|
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$
|
953,261
|
|
LIABILITIES AND STOCKHOLDERS
’
EQUITY
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
||
Accounts payable
|
$
|
18,111
|
|
|
$
|
11,334
|
|
Accrued expenses and other current liabilities
|
57,865
|
|
|
36,888
|
|
||
Acquisition earn-outs and holdbacks
|
27,338
|
|
|
24,379
|
|
||
Current portion of capital lease obligations
|
815
|
|
|
1,015
|
|
||
Current portion of long-term debt
|
7,000
|
|
|
4,300
|
|
||
Deferred revenue
|
53,140
|
|
|
17,875
|
|
||
Total current liabilities
|
164,269
|
|
|
95,791
|
|
||
Capital lease obligations, net of current portion
|
—
|
|
|
120
|
|
||
Long-term debt
|
953,354
|
|
|
725,208
|
|
||
Deferred revenue, long-term portion
|
120,281
|
|
|
3,416
|
|
||
Deferred tax liability
|
26,726
|
|
|
—
|
|
||
Other long-term liabilities
|
13,173
|
|
|
967
|
|
||
Total liabilities
|
1,277,803
|
|
|
825,502
|
|
||
Commitments and contingencies
|
|
|
|
|
|
||
Stockholders
’
equity:
|
|
|
|
|
|
||
Common stock, par value $.0001 per share, 80,000,000 shares authorized, 41,154,397 and 37,228,144 shares issued and outstanding as of March 31, 2017 and December 31, 2016, respectively
|
4
|
|
|
3
|
|
||
Additional paid-in capital
|
287,582
|
|
|
197,326
|
|
||
Accumulated deficit
|
(66,505
|
)
|
|
(64,641
|
)
|
||
Accumulated other comprehensive loss
|
(4,543
|
)
|
|
(4,929
|
)
|
||
Total stockholders
’
equity
|
216,538
|
|
|
127,759
|
|
||
Total liabilities and stockholders
’
equity
|
$
|
1,494,341
|
|
|
$
|
953,261
|
|
|
Three Months Ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
|
|
|
|
||||
Revenue:
|
|
|
|
||||
Telecommunications services
|
$
|
182,365
|
|
|
$
|
124,437
|
|
|
|
|
|
||||
Operating expenses:
|
|
|
|
||||
Cost of telecommunications services
|
91,369
|
|
|
66,197
|
|
||
Selling, general and administrative expenses
|
52,933
|
|
|
32,194
|
|
||
Severance, restructuring and other exit costs
|
10,671
|
|
|
1,495
|
|
||
Depreciation and amortization
|
30,360
|
|
|
15,598
|
|
||
|
|
|
|
||||
Total operating expenses
|
185,333
|
|
|
115,484
|
|
||
|
|
|
|
||||
Operating (loss) income
|
(2,968
|
)
|
|
8,953
|
|
||
|
|
|
|
||||
Other expense:
|
|
|
|
||||
Interest expense, net
|
(15,833
|
)
|
|
(7,370
|
)
|
||
Loss on debt extinguishment
|
(5,659
|
)
|
|
—
|
|
||
Other expense, net
|
(107
|
)
|
|
(280
|
)
|
||
|
|
|
|
||||
Total other expense
|
(21,599
|
)
|
|
(7,650
|
)
|
||
|
|
|
|
||||
(Loss) income before income taxes
|
(24,567
|
)
|
|
1,303
|
|
||
|
|
|
|
||||
(Benefit from) provision for income taxes
|
(11,456
|
)
|
|
405
|
|
||
|
|
|
|
||||
Net (loss) income
|
$
|
(13,111
|
)
|
|
$
|
898
|
|
|
|
|
|
||||
(Loss) earnings per share:
|
|
|
|
||||
Basic
|
$
|
(0.32
|
)
|
|
$
|
0.02
|
|
Diluted
|
$
|
(0.32
|
)
|
|
$
|
0.02
|
|
|
|
|
|
||||
Weighted average shares:
|
|
|
|
||||
Basic
|
40,410,554
|
|
|
36,854,219
|
|
||
Diluted
|
40,410,554
|
|
|
37,455,379
|
|
|
Three Months Ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
|
|
|
|
||||
Net (loss) income
|
$
|
(13,111
|
)
|
|
$
|
898
|
|
|
|
|
|
||||
Other comprehensive (loss) income:
|
|
|
|
|
|
||
Foreign currency translation adjustment
|
386
|
|
|
(178
|
)
|
||
Comprehensive (loss) income
|
$
|
(12,725
|
)
|
|
$
|
720
|
|
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Accumulated Deficit
|
|
Accumulated Other Comprehensive Loss
|
|
Total
|
||||||||||||||
|
Shares
|
|
Amount
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance, December 31, 2016
|
37,228,144
|
|
|
$
|
3
|
|
|
$
|
197,326
|
|
|
$
|
(64,641
|
)
|
|
$
|
(4,929
|
)
|
|
$
|
127,759
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Share-based compensation for options issued
|
—
|
|
|
—
|
|
|
341
|
|
|
—
|
|
|
—
|
|
|
341
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Share-based compensation for restricted stock issued
|
575,639
|
|
|
—
|
|
|
4,235
|
|
|
—
|
|
|
—
|
|
|
4,235
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Tax withholding related to the vesting of restricted stock units
|
(95,125
|
)
|
|
—
|
|
|
(1,371
|
)
|
|
—
|
|
|
—
|
|
|
(1,371
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Stock issued in connection with employee stock purchase plan
|
5,517
|
|
|
—
|
|
|
130
|
|
|
—
|
|
|
—
|
|
|
130
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Stock issued in connection with acquisition
|
3,329,872
|
|
|
1
|
|
|
86,091
|
|
|
—
|
|
|
—
|
|
|
86,092
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Stock options exercised
|
110,350
|
|
|
—
|
|
|
830
|
|
|
—
|
|
|
—
|
|
|
830
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cumulative effect of adjustment for unrecognized windfall benefits
|
—
|
|
|
—
|
|
|
—
|
|
|
11,247
|
|
|
—
|
|
|
11,247
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(13,111
|
)
|
|
—
|
|
|
(13,111
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign currency translation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
386
|
|
|
386
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance, March 31, 2017
|
41,154,397
|
|
|
$
|
4
|
|
|
$
|
287,582
|
|
|
$
|
(66,505
|
)
|
|
$
|
(4,543
|
)
|
|
$
|
216,538
|
|
|
Three Months Ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
Cash flows from operating activities:
|
|
|
|
|
|
||
Net (loss) income
|
$
|
(13,111
|
)
|
|
$
|
898
|
|
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
30,360
|
|
|
15,598
|
|
||
Share-based compensation
|
4,576
|
|
|
1,553
|
|
||
Debt discount amortization
|
252
|
|
|
323
|
|
||
Loss on debt extinguishment
|
5,659
|
|
|
—
|
|
||
Amortization of debt issuance costs
|
741
|
|
|
445
|
|
||
Excess tax benefit from stock-based compensation
|
(5,340
|
)
|
|
—
|
|
||
Deferred income taxes
|
(7,597
|
)
|
|
—
|
|
||
Non-cash deferred revenue
|
(11,726
|
)
|
|
(1,711
|
)
|
||
Non-cash deferred costs
|
945
|
|
|
750
|
|
||
Changes in operating assets and liabilities, net of acquisitions:
|
|
|
|
||||
Accounts receivable, net
|
5,501
|
|
|
(7,776
|
)
|
||
Prepaid expenses and other current assets
|
(1,224
|
)
|
|
(719
|
)
|
||
Deferred costs and other assets
|
(644
|
)
|
|
(500
|
)
|
||
Accounts payable
|
(10,470
|
)
|
|
(525
|
)
|
||
Accrued expenses and other current liabilities
|
3,759
|
|
|
(2,611
|
)
|
||
Deferred revenue and other liabilities
|
510
|
|
|
526
|
|
||
Net cash provided by operating activities
|
2,191
|
|
|
6,251
|
|
||
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
|
|||
Acquisition of businesses, net of cash acquired
|
(513,113
|
)
|
|
(13,751
|
)
|
||
Purchase of customer contracts
|
(3,900
|
)
|
|
—
|
|
||
Change in restricted cash and cash equivalents
|
304,266
|
|
|
—
|
|
||
Purchases of property and equipment
|
(8,471
|
)
|
|
(7,517
|
)
|
||
Net cash used in investing activities
|
(221,218
|
)
|
|
(21,268
|
)
|
||
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
|
|||
Proceeds from revolving line of credit
|
—
|
|
|
14,000
|
|
||
Repayment of revolving line of credit
|
(20,000
|
)
|
|
—
|
|
||
Proceeds from term loan
|
696,500
|
|
|
—
|
|
||
Repayment of term loan
|
(427,525
|
)
|
|
(1,000
|
)
|
||
Payment of earn-out and holdbacks
|
(1,800
|
)
|
|
(999
|
)
|
||
Debt issuance costs
|
(24,779
|
)
|
|
—
|
|
||
Repayment of capital leases
|
(320
|
)
|
|
(184
|
)
|
||
Proceeds from issuance of common stock under employee stock purchase plan
|
130
|
|
|
—
|
|
||
Tax withholding related to the vesting of restricted stock units
|
(1,371
|
)
|
|
(536
|
)
|
||
Exercise of stock options
|
830
|
|
|
163
|
|
||
Net cash provided by financing activities
|
221,665
|
|
|
11,444
|
|
||
|
|
|
|
||||
Effect of exchange rate changes on cash
|
584
|
|
|
(880
|
)
|
||
|
|
|
|
||||
Net increase (decrease) in cash and cash equivalents
|
3,222
|
|
|
(4,453
|
)
|
||
|
|
|
|
||||
Cash and cash equivalents at beginning of period
|
29,748
|
|
|
14,630
|
|
||
|
|
|
|
||||
Cash and cash equivalents at end of period
|
$
|
32,970
|
|
|
$
|
10,177
|
|
|
|
|
|
||||
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
||
Cash paid for interest
|
$
|
7,964
|
|
|
$
|
6,604
|
|
Cash paid for income taxes
|
$
|
68
|
|
|
$
|
209
|
|
|
Three Months Ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
Numerator for basic and diluted EPS – (loss) earnings available to common stockholders
|
$
|
(13,111
|
)
|
|
$
|
898
|
|
Denominator for basic EPS – weighted average shares
|
40,410,554
|
|
|
36,854,219
|
|
||
Effect of dilutive securities
|
—
|
|
|
601,160
|
|
||
Denominator for diluted EPS – weighted average shares
|
40,410,554
|
|
|
37,455,379
|
|
||
|
|
|
|
||||
(Loss) earnings per share: basic
|
$
|
(0.32
|
)
|
|
$
|
0.02
|
|
(Loss) earnings per share: diluted
|
$
|
(0.32
|
)
|
|
$
|
0.02
|
|
Freehold Land and Buildings
|
30 years
|
Furniture and Fixtures
|
7 years
|
Fiber Optic Cable
|
20 years
|
Fiber Optic Network Equipment
|
5 - 15 years
|
Leasehold Improvements
|
up to 10 years
|
Computer Hardware and Software
|
3-5 years
|
Level 1:
|
Quoted prices for identical assets or liabilities in active markets that can be assessed at the measurement date.
|
Level 2:
|
Inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
|
Level 3:
|
Inputs reflect management's best estimate of what market participants would use in pricing the asset or liability at the measurement date. The inputs are unobservable in the market and significant to the instrument's valuation.
|
|
|
|
|
|
|
Fair Value Measurement Using
|
||||||||||||||||||
|
|
Total Carrying Value in Consolidated Balance Sheet
|
|
Unadjusted Quoted Prices in Active Markets for Identical Assets or Liabilities
(1)
(Level 1)
|
|
Significant Other Observable Inputs
(Level 2)
|
||||||||||||||||||
(amounts in thousands)
|
|
March 31,
2017
|
|
December 31, 2016
|
|
March 31,
2017
|
|
December 31, 2016
|
|
March 31,
2017
|
|
December 31, 2016
|
||||||||||||
Liabilities not recorded at fair value in the Financial Statements:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Long-term debt, including the current portion:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Term loan
|
|
$
|
698,250
|
|
|
$
|
425,775
|
|
|
$
|
708,724
|
|
|
$
|
425,775
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Senior notes
|
|
300,000
|
|
|
300,000
|
|
|
312,390
|
|
|
300,000
|
|
|
—
|
|
|
—
|
|
||||||
Capital leases
|
|
815
|
|
|
1,135
|
|
|
—
|
|
|
—
|
|
|
815
|
|
|
1,135
|
|
||||||
Total Long-term Debt, including current portion
|
|
$
|
999,065
|
|
|
$
|
726,910
|
|
|
$
|
1,021,114
|
|
|
$
|
725,775
|
|
|
$
|
815
|
|
|
$
|
1,135
|
|
Purchase Price
|
Hibernia
|
||
Cash paid at closing, including working capital estimate
|
$
|
527,655
|
|
Common stock
(1)
|
86,092
|
|
|
Purchase consideration
|
$
|
613,747
|
|
|
|
||
Purchase Price Allocation
|
|
||
Assets acquired:
|
|
||
Current assets
|
$
|
52,330
|
|
Property, plant and equipment
|
426,548
|
|
|
Other assets
|
359
|
|
|
Intangible assets - customer lists
|
171,240
|
|
|
Intangible assets - tradename
|
720
|
|
|
Intangible assets - other
|
6,800
|
|
|
Goodwill
|
186,538
|
|
|
Total assets acquired
|
844,535
|
|
|
|
|
||
Liabilities assumed:
|
|
||
Current liabilities
|
(40,762
|
)
|
|
Capital leases, long-term portion
|
—
|
|
|
Deferred revenue
|
(163,300
|
)
|
|
Deferred tax liability
|
(26,726
|
)
|
|
Total liabilities assumed
|
(230,788
|
)
|
|
Net assets acquired
|
$
|
613,747
|
|
2017 remaining
|
$
|
13,622
|
|
2018
|
18,163
|
|
|
2019
|
17,803
|
|
|
2020
|
17,803
|
|
|
2021
|
17,803
|
|
|
2022 and beyond
|
89,015
|
|
|
Total
|
$
|
174,209
|
|
|
Three Months Ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
(Amounts in thousands, except per share and share data)
|
|
|
|
||||
Revenue
|
$
|
182,365
|
|
|
$
|
172,378
|
|
Net (loss) income
|
$
|
(13,111
|
)
|
|
$
|
4,582
|
|
|
|
|
|
||||
(Loss) earnings per share:
|
|
|
|
||||
Basic
|
$
|
(0.32
|
)
|
|
$
|
0.11
|
|
Diluted
|
$
|
(0.32
|
)
|
|
$
|
0.11
|
|
|
|
|
|
||||
Denominator for basic EPS – weighted average shares
|
40,410,554
|
|
|
40,184,091
|
|
||
Denominator for diluted EPS – weighted average shares
|
40,410,554
|
|
|
40,785,251
|
|
Balance, December 31, 2016
|
$
|
280,593
|
|
Goodwill associated with Hibernia acquisition
|
186,538
|
|
|
Balance, March 31, 2017
|
$
|
467,131
|
|
|
|
|
March 31, 2017
|
|
December 31, 2016
|
||||||||||||||||||||
|
Amortization
Period |
|
Gross Asset Cost
|
|
Accumulated Amortization
|
|
Net Book Value
|
|
Gross Asset Cost
|
|
Accumulated Amortization
|
|
Net Book Value
|
||||||||||||
Customer contracts
|
3-10 years
|
|
$
|
456,718
|
|
|
$
|
106,226
|
|
|
$
|
350,492
|
|
|
$
|
267,755
|
|
|
$
|
91,136
|
|
|
$
|
176,619
|
|
Non-compete agreements
|
3-5 years
|
|
4,572
|
|
|
4,443
|
|
|
129
|
|
|
4,572
|
|
|
4,420
|
|
|
152
|
|
||||||
Point-to-point FCC license fees
|
3 years
|
|
1,697
|
|
|
1,414
|
|
|
283
|
|
|
1,695
|
|
|
1,268
|
|
|
427
|
|
||||||
Intellectual property
|
10 years
|
|
17,378
|
|
|
2,509
|
|
|
14,869
|
|
|
17,379
|
|
|
2,076
|
|
|
15,303
|
|
||||||
Trade name
|
3 years
|
|
3,812
|
|
|
1,975
|
|
|
1,837
|
|
|
3,092
|
|
|
1,657
|
|
|
1,435
|
|
||||||
|
|
|
$
|
484,177
|
|
|
$
|
116,567
|
|
|
$
|
367,610
|
|
|
$
|
294,493
|
|
|
$
|
100,557
|
|
|
$
|
193,936
|
|
2017 remaining
|
$
|
47,356
|
|
2018
|
57,222
|
|
|
2019
|
52,006
|
|
|
2020
|
48,978
|
|
|
2021
|
47,433
|
|
|
2022 and beyond
|
114,615
|
|
|
Total
|
$
|
367,610
|
|
|
March 31, 2017
|
|
December 31, 2016
|
||||
Accrued compensation and benefits
|
$
|
4,795
|
|
|
$
|
10,035
|
|
Accrued selling, general and administrative
|
3,953
|
|
|
4,534
|
|
||
Accrued carrier costs
|
14,286
|
|
|
13,543
|
|
||
Accrued restructuring
|
7,001
|
|
|
3,247
|
|
||
Accrued interest
|
6,086
|
|
|
—
|
|
||
Accrued fiber pair repurchase
|
10,000
|
|
|
—
|
|
||
Accrued other
|
11,744
|
|
|
5,529
|
|
||
|
$
|
57,865
|
|
|
$
|
36,888
|
|
|
March 31, 2017
|
|
December 31, 2016
|
||||
Prepaid capacity sales and IRUs
|
$
|
138,530
|
|
|
$
|
—
|
|
Deferred non-recurring revenue
|
8,862
|
|
|
8,763
|
|
||
Unearned revenue
|
26,029
|
|
|
12,528
|
|
||
Total deferred revenue
|
173,421
|
|
|
21,291
|
|
||
Less current portion
|
(53,140
|
)
|
|
(17,875
|
)
|
||
|
$
|
120,281
|
|
|
$
|
3,416
|
|
|
Nonrecurring Revenue
|
|
Capacity Sales and IRUs
|
|
Total
|
||||||
2017 remaining
|
$
|
4,156
|
|
|
$
|
18,011
|
|
|
$
|
22,167
|
|
2018
|
2,858
|
|
|
16,212
|
|
|
19,070
|
|
|||
2019
|
1,505
|
|
|
11,911
|
|
|
13,416
|
|
|||
2020
|
276
|
|
|
11,221
|
|
|
11,497
|
|
|||
2021
|
66
|
|
|
9,603
|
|
|
9,669
|
|
|||
2022 and beyond
|
1
|
|
|
71,572
|
|
|
71,573
|
|
|||
|
$
|
8,862
|
|
|
$
|
138,530
|
|
|
$
|
147,392
|
|
|
March 31, 2017
|
|
December 31, 2016
|
||||
|
|
|
|
||||
Term loan
|
$
|
698,250
|
|
|
$
|
425,775
|
|
7.875% Senior unsecured notes
|
300,000
|
|
|
300,000
|
|
||
Revolving line of credit
|
—
|
|
|
20,000
|
|
||
Total debt obligations
|
998,250
|
|
|
745,775
|
|
||
Unamortized debt issuance costs
|
(29,618
|
)
|
|
(9,310
|
)
|
||
Unamortized original issuance discount
|
(8,278
|
)
|
|
(6,957
|
)
|
||
Carrying value of debt
|
960,354
|
|
|
729,508
|
|
||
Less current portion
|
(7,000
|
)
|
|
(4,300
|
)
|
||
Long-term debt less current portion
|
$
|
953,354
|
|
|
$
|
725,208
|
|
|
Total Debt
|
||
2017 remaining
|
$
|
5,250
|
|
2018
|
7,000
|
|
|
2019
|
7,000
|
|
|
2020
|
7,000
|
|
|
2021
|
7,000
|
|
|
2022
|
7,000
|
|
|
2023 and beyond
|
658,000
|
|
|
Total
|
$
|
698,250
|
|
|
Three months ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
Stock options
|
$
|
341
|
|
|
$
|
427
|
|
Restricted stock
|
4,207
|
|
|
1,126
|
|
||
ESPP
|
28
|
|
|
—
|
|
||
Total
|
$
|
4,576
|
|
|
$
|
1,553
|
|
|
March 31, 2017
|
||||
|
Unrecognized Compensation Cost
|
|
Weighted Average Remaining Period to be Recognized (Years)
|
||
Time-based stock options
|
$
|
2,790
|
|
|
1.77
|
Time-based restricted stock
|
28,115
|
|
|
2.39
|
|
Performance-based restricted stock
|
6,524
|
|
|
1.49
|
|
Total
|
$
|
37,429
|
|
|
2.18
|
|
Three months ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
Time-based stock options granted
|
—
|
|
|
144,958
|
|
||
Fair value of stock options granted
|
$
|
—
|
|
|
$
|
851
|
|
|
|
|
|
||||
Time-based restricted stock granted
|
584,108
|
|
|
475,534
|
|
||
Fair value of time-based restricted stock granted
|
$
|
16,799
|
|
|
$
|
6,369
|
|
|
Balance, December 31, 2016
|
|
Charges and Adjustments
|
|
Payments
|
|
Balance, March 31, 2017
|
||||||||
Employee Termination Benefits
|
$
|
42
|
|
|
$
|
9,640
|
|
|
$
|
(6,696
|
)
|
|
$
|
2,986
|
|
Contract Terminations:
|
|
|
|
|
|
|
|
||||||||
Lease terminations
|
859
|
|
|
500
|
|
|
(98
|
)
|
|
1,261
|
|
||||
Other contract terminations
|
2,346
|
|
|
531
|
|
|
(123
|
)
|
|
2,754
|
|
||||
|
$
|
3,247
|
|
|
$
|
10,671
|
|
|
$
|
(6,917
|
)
|
|
$
|
7,001
|
|
|
Network Supply
|
|
Office Space
|
|
Capital Leases
|
|
Other
|
||||||||
2017
|
$
|
95,268
|
|
|
$
|
2,536
|
|
|
$
|
815
|
|
|
$
|
4,442
|
|
2018
|
77,663
|
|
|
3,481
|
|
|
—
|
|
|
397
|
|
||||
2019
|
38,985
|
|
|
2,893
|
|
|
—
|
|
|
103
|
|
||||
2020
|
11,125
|
|
|
1,990
|
|
|
—
|
|
|
—
|
|
||||
2021
|
5,666
|
|
|
1,478
|
|
|
—
|
|
|
—
|
|
||||
2022 and beyond
|
43,606
|
|
|
5,235
|
|
|
—
|
|
|
—
|
|
||||
|
$
|
272,313
|
|
|
$
|
17,613
|
|
|
$
|
815
|
|
|
$
|
4,942
|
|
•
|
Managed CPE.
Managed CPE provides a turnkey solution for the end-to-end management of customer premise equipment, from premises through the core network. This includes the design, procurement, implementation, monitoring and maintenance of equipment including routers, switches, servers and Wi-Fi access points.
|
•
|
Security Services.
Our cloud-based and premises-based security services provide a comprehensive, multi-layered security solution that protects the network while meeting the most stringent security standards. Our Unified Threat Management (“UTM”) services include advanced firewall, intrusion detection, anti-virus, web filtering and anti-spam. UTM services also cover a broad range of compliance requirements, offering customers Security-as-a-Service versions of managed logging, vulnerability scanning and security information management that meet numerous security standards, including Payment Card Industry / Cardholder Information Security Program compliance.
|
•
|
Managed Remote Access.
Our Managed Remote Access service provides clients of all sizes with secure remote access to their network applications from any device, anywhere, anytime from any authorized user. Managed Remote Access extends network reach, allowing trusted users to establish a secure data connection from any browser or device using Transport Layer Security to encrypt all traffic and protect the network from unauthorized users.
|
•
|
Managed Software Defined Wide Area Networking (“SD-WAN”)
. Leveraging our success to date in delivering hybrid WAN services, GTT’s Managed SD-WAN service provides our clients with optimized application performance and cost-effective network expansion, as well as dynamic bandwidth management, and the ability to integrate cost-effective network technologies into the corporate WAN. With a Tier 1 IP network, extensive connectivity to leading cloud service providers across 300+ global points of presence, and a broad portfolio of diverse last mile connectivity options to any location in the world, GTT is well positioned to deliver managed SD-WAN services.
|
•
|
SIP Trunking.
Our SIP Trunking service is an enterprise-built unified communications offering that integrates voice, video and chat onto a single IP connection, driving efficiency and productivity organization-wide. The service is interoperable with key unified communications platforms such as Cisco, Avaya, ShoreTel, Siemens and Microsoft to support collaboration requirements, as well as with legacy infrastructure. SIP Trunking brings substantial cost savings by eliminating legacy infrastructure and providing more predictable local and long-distance costs. SIP Trunking is delivered over our fully redundant and robust global network that is purpose-built to handle bandwidth-intensive communication services. The service includes a full suite of international telephony services, including direct inward dialing, toll-free numbers, termination and emergency services. We also offer customized redundancy options to meet clients' most stringent disaster recovery requirements, as well as a secure trunking option for encryption of sensitive call signaling and media.
|
•
|
Enterprise PBX.
Our Enterprise PBX service allows clients to eliminate traditional voice infrastructure with communication services delivered through the cloud. The offering includes fully hosted and hybrid models for maximum flexibility. Enterprise PBX includes full PBX features, such as call transfer, music on hold, voicemail, unified messaging, company directory, auto attendant and enhanced call routing. The user management portal provides integrated and consistent functionality, regardless of user location. Clients can further expand capabilities through additional cloud-based features, such as contact center and audio conferencing.
|
|
March 31, 2017
|
|
December 31, 2016
|
||||
|
|
|
|
||||
Term loan
|
$
|
698,250
|
|
|
$
|
425,775
|
|
7.875% Senior unsecured notes
|
300,000
|
|
|
300,000
|
|
||
Revolving line of credit
|
—
|
|
|
20,000
|
|
||
Total debt obligations
|
998,250
|
|
|
745,775
|
|
||
Unamortized debt issuance costs
|
(29,618
|
)
|
|
(9,310
|
)
|
||
Unamortized original issuance discount
|
(8,278
|
)
|
|
(6,957
|
)
|
||
Carrying value of debt
|
960,354
|
|
|
729,508
|
|
||
Less current portion
|
(7,000
|
)
|
|
(4,300
|
)
|
||
|
$
|
953,354
|
|
|
$
|
725,208
|
|
|
Three Months Ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
Employee related compensation (excluding share-based compensation)
|
$
|
27,519
|
|
|
$
|
20,200
|
|
Share-based compensation
|
4,576
|
|
|
1,553
|
|
||
Transaction and integration expense
|
8,086
|
|
|
1,260
|
|
||
Other SG&A
(1)
|
12,752
|
|
|
9,181
|
|
||
Total
|
$
|
52,933
|
|
|
$
|
32,194
|
|
Consolidated Statements of Cash Flows
|
Three Months Ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
Net cash provided by operating activities
|
$
|
2,191
|
|
|
$
|
6,251
|
|
Net cash used in investing activities
|
(221,218
|
)
|
|
(21,268
|
)
|
||
Net cash provided by financing activities
|
221,665
|
|
|
11,444
|
|
|
Total
|
|
Less than 1 year
|
|
1-3 years
|
|
3-5 years
|
|
More than 5 years
|
||||||||||
Term loan
|
$
|
698,250
|
|
|
$
|
5,250
|
|
|
$
|
14,000
|
|
|
$
|
14,000
|
|
|
$
|
665,000
|
|
7.875% Senior unsecured note
|
300,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
300,000
|
|
|||||
Operating leases
|
17,613
|
|
|
2,536
|
|
|
6,374
|
|
|
3,468
|
|
|
5,235
|
|
|||||
Capital leases
|
815
|
|
|
815
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Network supplier agreements
|
272,313
|
|
|
95,268
|
|
|
116,648
|
|
|
16,791
|
|
|
43,606
|
|
|||||
Other
|
4,942
|
|
|
4,442
|
|
|
500
|
|
|
—
|
|
|
—
|
|
|||||
|
$
|
1,293,933
|
|
|
$
|
108,311
|
|
|
$
|
137,522
|
|
|
$
|
34,259
|
|
|
$
|
1,013,841
|
|
|
Three Months Ended March 31,
|
||||||
(Amounts in thousands, except share and per share data)
|
2017
|
|
2016
|
||||
|
|
|
|
||||
Adjusted EBITDA
|
|
|
|
||||
Net (loss) income
|
$
|
(13,111
|
)
|
|
$
|
898
|
|
(Benefit from) provision for income taxes
|
(11,456
|
)
|
|
405
|
|
||
Interest and other expense, net
|
15,940
|
|
|
7,650
|
|
||
Loss on debt extinguishment
|
5,659
|
|
|
—
|
|
||
Depreciation and amortization
|
30,360
|
|
|
15,598
|
|
||
Severance, restructuring and other exit costs
|
10,671
|
|
|
1,495
|
|
||
Transaction and integration costs
|
8,086
|
|
|
1,260
|
|
||
Share-based compensation
|
4,576
|
|
|
1,553
|
|
||
Adjusted EBITDA
|
50,725
|
|
|
28,859
|
|
||
|
|
|
|
||||
Purchases of property and equipment
|
(8,471
|
)
|
|
(7,517
|
)
|
||
Adjusted EBITDA less capital expenditures
|
$
|
42,254
|
|
|
$
|
21,342
|
|
Exhibit
|
|
Number
|
Description of Document
|
|
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4.1
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First Supplemental Indenture, dated as of January 9, 2017, by and among the Company, the Guaranteeing Subsidiaries party thereto and Wilmington Trust, National Association, as trustee (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed January 13, 2017, and incorporated herein by reference).
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10.1
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Credit Agreement, dated as of January 9, 2017, by and among (1) the Company, as borrower, (2) KeyBank National Association, as the administrative agent and as an LC Issuer, (3) KeyBanc Capital Markets Inc., Credit Suisse Securities (USA) LLC and SunTrust Robinson Humphrey, Inc., as joint lead arrangers and joint bookrunners, (4) Credit Suisse AG, Cayman Islands Branch, and SunTrust Bank, as the syndication agents, (5) Citizens Bank, Wells Fargo Bank, National Association, and ING Capital LLC, as the documentation agents and (6) the lenders party thereto (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed January 13, 2017, and incorporated herein by reference).
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10.2*+
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Amendment No. 3 to the Employment Agreement for Richard D. Calder, dated May 4, 2017.
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10.3*+
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Amendment No. 1 to the Employment Agreement for Christopher McKee, dated May 4, 2017.
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10.4*+
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Amendment No. 1 to the Employment Agreement for Michael Sicoli, dated May 4, 2017.
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31.1*
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Certification of Chief Executive Officer of the Registrant, pursuant to Rules 13a-14(a) of the Securities Exchange Act of 1934.
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31.2*
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Certification of Chief Financial Officer of the Registrant, pursuant to Rules 13a-14(a) of the Securities Exchange Act of 1934.
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32.1*
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Certification of Chief Executive Officer of the Registrant, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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32.2*
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Certification of Chief Financial Officer of the Registrant, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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99.1
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GTT Communications, Inc. 2016 Employee Stock Purchase Plan (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed March 30, 2016, and incorporated herein by reference).
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101*
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The following financial statements and footnotes from GTT Communications, Inc.’s Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2016, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets (unaudited); (ii) Condensed Consolidated Statements of Operations (unaudited); (iii) Condensed Consolidated Statements of Comprehensive Income (Loss); (iv) Condensed Consolidated Statement of Stockholders' Equity (unaudited); (v) Condensed Consolidated Statements of Cash Flows (unaudited); and (v) Notes to Condensed Consolidated Financial Statements.
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*
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Filed herewith
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+
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Denotes a management or compensatory plan or arrangement
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GTT Communications, Inc.
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By:
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/s/ Richard D. Calder, Jr.
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Richard D. Calder, Jr.
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President, Chief Executive Officer and
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Director (Principal Executive Officer)
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By:
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/s/ Michael T. Sicoli
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Michael T. Sicoli
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Chief Financial Officer
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(Principal Financial Officer)
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By:
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/s/ Daniel M. Fraser
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Daniel M. Fraser
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Vice President and Controller
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Date:
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May 9, 2017
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(Principal Accounting Officer)
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A.
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Company and Executive have entered into the Agreement on May 7, 2007.
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B.
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Company and Executive amended the Agreement previously on May 14, 2008 and September 7, 2011.
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C.
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Company and Executive desire to amend the Agreement in accordance with the terms of this Amendment.
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1.
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Definitions.
Unless otherwise defined in this Amendment, all capitalized terms shall have the meanings ascribed to such terms in the Agreement.
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2.
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Termination – By Company without Cause; By Executive for Good Reason.
Section 7.4 of the Agreement is amended by replacing the current language with the following:
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A.
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Company and Executive have entered into the Agreement on September 7, 2011.
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B.
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Company and Executive desire to amend the Agreement in accordance with the terms of this Amendment.
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1.
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Definitions.
Unless otherwise defined in this Amendment, all capitalized terms shall have the meanings ascribed to such terms in the Agreement.
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2.
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Termination – By Company without Cause; By Executive for Good Reason.
Section 7.4 of the Agreement is amended by replacing the current language with the following:
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A.
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Company and Executive have entered into the Agreement on April 13, 2015.
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B.
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Company and Executive desire to amend the Agreement in accordance with the terms of this Amendment.
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1.
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Definitions.
Unless otherwise defined in this Amendment, all capitalized terms shall have the meanings ascribed to such terms in the Agreement.
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2.
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Termination – By Company without Cause; By Executive for Good Reason.
Section 7.4 of the Agreement is amended by replacing the current language with the following:
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Date:
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May 9, 2017
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/s/ Richard D. Calder, Jr.
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Richard D. Calder, Jr.
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President, Chief Executive Officer and Director
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Date:
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May 9, 2017
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/s/ Michael T. Sicoli
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Michael T. Sicoli
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Chief Financial Officer
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Date:
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May 9, 2017
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/s/ Richard D. Calder, Jr.
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Richard D. Calder, Jr.
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President, Chief Executive Officer and Director
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Date:
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May 9, 2017
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/s/ Michael T. Sicoli
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Michael T. Sicoli
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Chief Financial Officer
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