þ
|
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
|
For the quarterly period ended September 30, 2017
|
|
or
|
¨
|
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
|
For the transition period from ____ to ____
|
Delaware
|
|
20-2096338
|
(State or Other Jurisdiction of
|
|
(I.R.S. Employer Identification No.)
|
Incorporation or Organization)
|
|
|
Large Accelerated Filer
¨
|
|
Accelerated Filer
þ
|
|
|
|
Non-Accelerated Filer
¨
|
|
(Do not check if a smaller reporting company)
|
|
|
|
Smaller reporting company
¨
|
|
Emerging growth company
¨
|
|
Page
|
|
|
September 30, 2017
|
|
December 31, 2016
|
||||
ASSETS
|
|
|
|
|
|
||
Current assets:
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
34,799
|
|
|
$
|
29,748
|
|
Accounts receivable, net of allowances of $3,831 and $2,656, respectively
|
123,332
|
|
|
76,292
|
|
||
Deferred costs
|
2,865
|
|
|
3,415
|
|
||
Prepaid expenses
|
18,575
|
|
|
5,765
|
|
||
Other assets
|
6,527
|
|
|
3,565
|
|
||
Total current assets
|
186,098
|
|
|
118,785
|
|
||
Restricted cash and cash equivalents
|
—
|
|
|
304,266
|
|
||
Property and equipment, net
|
494,501
|
|
|
43,369
|
|
||
Intangible assets, net
|
412,964
|
|
|
193,936
|
|
||
Goodwill
|
593,106
|
|
|
280,593
|
|
||
Other long-term assets
|
46,273
|
|
|
12,312
|
|
||
Total assets
|
$
|
1,732,942
|
|
|
$
|
953,261
|
|
LIABILITIES AND STOCKHOLDERS
’
EQUITY
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
||
Accounts payable
|
$
|
23,063
|
|
|
$
|
11,334
|
|
Accrued expenses and other current liabilities
|
92,889
|
|
|
36,888
|
|
||
Acquisition earn-outs and holdbacks
|
17,634
|
|
|
24,379
|
|
||
Current portion of capital lease obligations
|
1,648
|
|
|
1,015
|
|
||
Current portion of long-term debt
|
7,000
|
|
|
4,300
|
|
||
Deferred revenue
|
61,608
|
|
|
17,875
|
|
||
Total current liabilities
|
203,842
|
|
|
95,791
|
|
||
Capital lease obligations, long-term portion
|
412
|
|
|
120
|
|
||
Long-term debt
|
1,108,885
|
|
|
725,208
|
|
||
Deferred revenue, long-term portion
|
112,042
|
|
|
3,416
|
|
||
Deferred tax liability
|
27,667
|
|
|
—
|
|
||
Other long-term liabilities
|
8,129
|
|
|
967
|
|
||
Total liabilities
|
1,460,977
|
|
|
825,502
|
|
||
Commitments and contingencies
|
|
|
|
|
|
||
Stockholders
’
equity:
|
|
|
|
|
|
||
Common stock, par value $.0001 per share, 80,000,000 shares authorized, 43,439,282 and 37,228,144 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively
|
4
|
|
|
3
|
|
||
Additional paid-in capital
|
351,280
|
|
|
197,326
|
|
||
Accumulated deficit
|
(75,374
|
)
|
|
(64,641
|
)
|
||
Accumulated other comprehensive loss
|
(3,945
|
)
|
|
(4,929
|
)
|
||
Total stockholders
’
equity
|
271,965
|
|
|
127,759
|
|
||
Total liabilities and stockholders
’
equity
|
$
|
1,732,942
|
|
|
$
|
953,261
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
Telecommunications services
|
$
|
198,858
|
|
|
$
|
131,851
|
|
|
$
|
567,439
|
|
|
$
|
385,201
|
|
|
|
|
|
|
|
|
|
||||||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Cost of telecommunications services
|
100,068
|
|
|
68,184
|
|
|
284,855
|
|
|
202,653
|
|
||||
Selling, general and administrative expenses
|
51,966
|
|
|
37,177
|
|
|
151,595
|
|
|
105,311
|
|
||||
Severance, restructuring and other exit costs
|
11,125
|
|
|
(625
|
)
|
|
21,848
|
|
|
870
|
|
||||
Depreciation and amortization
|
32,847
|
|
|
14,880
|
|
|
94,670
|
|
|
46,139
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Total operating expenses
|
196,006
|
|
|
119,616
|
|
|
552,968
|
|
|
354,973
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Operating income
|
2,852
|
|
|
12,235
|
|
|
14,471
|
|
|
30,228
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Other expense:
|
|
|
|
|
|
|
|
||||||||
Interest expense, net
|
(18,251
|
)
|
|
(7,123
|
)
|
|
(50,707
|
)
|
|
(21,620
|
)
|
||||
Loss on debt extinguishment
|
(2,988
|
)
|
|
—
|
|
|
(8,647
|
)
|
|
(1,632
|
)
|
||||
Other expense, net
|
220
|
|
|
(74
|
)
|
|
184
|
|
|
(542
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Total other expense
|
(21,019
|
)
|
|
(7,197
|
)
|
|
(59,170
|
)
|
|
(23,794
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
||||||
(Loss) income before income taxes
|
(18,167
|
)
|
|
5,038
|
|
|
(44,699
|
)
|
|
6,434
|
|
||||
|
|
|
|
|
|
|
|
||||||||
(Benefit from) provision for income taxes
|
(8,648
|
)
|
|
(89
|
)
|
|
(22,719
|
)
|
|
320
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||
Net (loss) income
|
$
|
(9,519
|
)
|
|
$
|
5,127
|
|
|
$
|
(21,980
|
)
|
|
$
|
6,114
|
|
|
|
|
|
|
|
|
|
|
|
||||||
(Loss) earnings per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.23
|
)
|
|
$
|
0.14
|
|
|
$
|
(0.53
|
)
|
|
$
|
0.17
|
|
Diluted
|
$
|
(0.23
|
)
|
|
$
|
0.14
|
|
|
$
|
(0.53
|
)
|
|
$
|
0.16
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average shares:
|
|
|
|
|
|
|
|
||||||||
Basic
|
41,762,693
|
|
|
37,152,063
|
|
|
41,160,317
|
|
|
36,998,607
|
|
||||
Diluted
|
41,762,693
|
|
|
37,785,921
|
|
|
41,160,317
|
|
|
37,481,414
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Net (loss) income
|
$
|
(9,519
|
)
|
|
$
|
5,127
|
|
|
$
|
(21,980
|
)
|
|
$
|
6,114
|
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
||||||
Foreign currency translation adjustment
|
471
|
|
|
(215
|
)
|
|
984
|
|
|
(2,126
|
)
|
||||
Comprehensive (loss) income
|
$
|
(9,048
|
)
|
|
$
|
4,912
|
|
|
$
|
(20,996
|
)
|
|
$
|
3,988
|
|
|
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
|
—
|
|
|
—
|
|
|
1,029
|
|
|
—
|
|
|
—
|
|
|
1,029
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Share-based compensation for restricted stock issued
|
858,285
|
|
|
—
|
|
|
14,802
|
|
|
—
|
|
|
—
|
|
|
14,802
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Tax withholding related to the vesting of restricted stock units
|
(208,481
|
)
|
|
—
|
|
|
(3,217
|
)
|
|
—
|
|
|
—
|
|
|
(3,217
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Stock issued in connection with employee stock purchase plan
|
21,018
|
|
|
—
|
|
|
582
|
|
|
—
|
|
|
—
|
|
|
582
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Stock issued in connection with acquisition
|
5,179,872
|
|
|
1
|
|
|
139,740
|
|
|
—
|
|
|
—
|
|
|
139,741
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Stock options exercised
|
360,444
|
|
|
—
|
|
|
1,018
|
|
|
—
|
|
|
—
|
|
|
1,018
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cumulative effect of adjustment for unrecognized windfall benefits
|
—
|
|
|
—
|
|
|
—
|
|
|
11,247
|
|
|
—
|
|
|
11,247
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(21,980
|
)
|
|
—
|
|
|
(21,980
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign currency translation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
984
|
|
|
984
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance, September 30, 2017
|
43,439,282
|
|
|
$
|
4
|
|
|
$
|
351,280
|
|
|
$
|
(75,374
|
)
|
|
$
|
(3,945
|
)
|
|
$
|
271,965
|
|
|
Nine Months Ended September 30,
|
||||||
|
2017
|
|
2016
|
||||
Cash flows from operating activities:
|
|
|
|
|
|
||
Net (loss) income
|
$
|
(21,980
|
)
|
|
$
|
6,114
|
|
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
94,670
|
|
|
46,139
|
|
||
Share-based compensation
|
15,960
|
|
|
10,896
|
|
||
Debt discount amortization
|
498
|
|
|
600
|
|
||
Loss on debt extinguishment
|
8,647
|
|
|
1,632
|
|
||
Amortization of debt issuance costs
|
2,638
|
|
|
1,188
|
|
||
Excess tax benefit from stock-based compensation
|
(5,365
|
)
|
|
—
|
|
||
Deferred income taxes
|
(18,347
|
)
|
|
—
|
|
||
Non-cash deferred revenue
|
(28,018
|
)
|
|
(4,964
|
)
|
||
Non-cash deferred costs
|
4,253
|
|
|
1,999
|
|
||
Changes in operating assets and liabilities, net of acquisitions:
|
|
|
|
||||
Accounts receivable, net
|
(7,375
|
)
|
|
(19,887
|
)
|
||
Prepaid expenses and other current assets
|
3,762
|
|
|
(1,180
|
)
|
||
Deferred costs and other assets
|
(500
|
)
|
|
(4,358
|
)
|
||
Accounts payable
|
(15,680
|
)
|
|
(8,816
|
)
|
||
Accrued expenses and other current liabilities
|
24,093
|
|
|
(3,605
|
)
|
||
Deferred revenue and other liabilities
|
(10,165
|
)
|
|
7,009
|
|
||
Net cash provided by operating activities
|
47,091
|
|
|
32,767
|
|
||
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
|
|||
Acquisition of businesses, net of cash acquired
|
(652,776
|
)
|
|
(14,146
|
)
|
||
Purchase of customer contracts
|
(14,943
|
)
|
|
(6,000
|
)
|
||
Change in restricted cash and cash equivalents
|
304,266
|
|
|
—
|
|
||
Purchases of property and equipment
|
(26,865
|
)
|
|
(17,813
|
)
|
||
Net cash used in investing activities
|
(390,318
|
)
|
|
(37,959
|
)
|
||
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
|
|||
Proceeds from revolving line of credit
|
—
|
|
|
33,000
|
|
||
Repayment of revolving line of credit
|
(20,000
|
)
|
|
(32,000
|
)
|
||
Proceeds from term loan
|
696,500
|
|
|
29,850
|
|
||
Repayment of term loan
|
(431,025
|
)
|
|
(3,150
|
)
|
||
Proceeds from senior note
|
159,000
|
|
|
—
|
|
||
Payment of earn-out and holdbacks
|
(22,646
|
)
|
|
(15,563
|
)
|
||
Debt issuance costs
|
(29,881
|
)
|
|
(904
|
)
|
||
Repayment of capital leases
|
(981
|
)
|
|
(1,433
|
)
|
||
Proceeds from issuance of common stock under employee stock purchase plan
|
453
|
|
|
1,045
|
|
||
Tax withholding related to the vesting of restricted stock units
|
(3,217
|
)
|
|
(3,442
|
)
|
||
Exercise of stock options
|
1,018
|
|
|
468
|
|
||
Net cash provided by financing activities
|
349,221
|
|
|
7,871
|
|
||
|
|
|
|
||||
Effect of exchange rate changes on cash
|
(943
|
)
|
|
(1,902
|
)
|
||
|
|
|
|
||||
Net increase in cash and cash equivalents
|
5,051
|
|
|
777
|
|
||
|
|
|
|
||||
Cash and cash equivalents at beginning of period
|
29,748
|
|
|
14,630
|
|
||
|
|
|
|
||||
Cash and cash equivalents at end of period
|
$
|
34,799
|
|
|
$
|
15,407
|
|
|
|
|
|
||||
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
||
Cash paid for interest
|
$
|
38,984
|
|
|
$
|
19,894
|
|
Cash paid for income taxes, net of refunds
|
$
|
587
|
|
|
$
|
408
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Numerator for basic and diluted EPS – (loss) earnings available to common stockholders
|
$
|
(9,519
|
)
|
|
$
|
5,127
|
|
|
$
|
(21,980
|
)
|
|
$
|
6,114
|
|
Denominator for basic EPS – weighted average shares
|
41,762,693
|
|
|
37,152,063
|
|
|
41,160,317
|
|
|
36,998,607
|
|
||||
Effect of dilutive securities
|
—
|
|
|
633,858
|
|
|
—
|
|
|
482,807
|
|
||||
Denominator for diluted EPS – weighted average shares
|
41,762,693
|
|
|
37,785,921
|
|
|
41,160,317
|
|
|
37,481,414
|
|
||||
|
|
|
|
|
|
|
|
||||||||
(Loss) earnings per share: basic
|
$
|
(0.23
|
)
|
|
$
|
0.14
|
|
|
$
|
(0.53
|
)
|
|
$
|
0.17
|
|
(Loss) earnings per share: diluted
|
$
|
(0.23
|
)
|
|
$
|
0.14
|
|
|
$
|
(0.53
|
)
|
|
$
|
0.16
|
|
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)
|
||||||||||||
(amounts in thousands)
|
|
September 30, 2017
|
|
December 31, 2016
|
|
September 30, 2017
|
|
December 31, 2016
|
||||||||
Liabilities not recorded at fair value in the Financial Statements:
|
|
|
|
|
|
|
|
|
||||||||
Long-term debt, including the current portion:
|
|
|
|
|
|
|
|
|
||||||||
Term loan
|
|
$
|
694,750
|
|
|
$
|
425,775
|
|
|
$
|
699,440
|
|
|
$
|
425,775
|
|
Senior notes
|
|
450,000
|
|
|
300,000
|
|
|
478,125
|
|
|
300,000
|
|
||||
Total long-term debt, including current portion
|
|
$
|
1,144,750
|
|
|
$
|
725,775
|
|
|
$
|
1,177,565
|
|
|
$
|
725,775
|
|
Purchase Price
|
Hibernia
|
|
Perseus
|
|
Global Capacity
|
||||||
Cash paid at closing, including working capital estimate
|
$
|
529,600
|
|
|
$
|
37,500
|
|
|
$
|
104,000
|
|
Common stock
(1)
|
86,092
|
|
|
—
|
|
|
53,649
|
|
|||
Purchase consideration
|
$
|
615,692
|
|
|
$
|
37,500
|
|
|
$
|
157,649
|
|
|
|
|
|
|
|
||||||
Purchase Price Allocation
|
|
|
|
|
|
||||||
Assets acquired:
|
|
|
|
|
|
||||||
Current assets
|
$
|
49,119
|
|
|
$
|
1,792
|
|
|
$
|
25,838
|
|
Property, plant and equipment
|
432,911
|
|
|
5,255
|
|
|
30,451
|
|
|||
Other assets
|
359
|
|
|
—
|
|
|
1,554
|
|
|||
Intangible assets - customer lists
|
166,740
|
|
|
13,840
|
|
|
43,800
|
|
|||
Intangible assets - tradename
|
720
|
|
|
40
|
|
|
200
|
|
|||
Intangible assets - other
|
—
|
|
|
140
|
|
|
5,600
|
|
|||
Goodwill
|
196,057
|
|
|
31,536
|
|
|
84,640
|
|
|||
Total assets acquired
|
845,906
|
|
|
52,603
|
|
|
192,083
|
|
|||
|
|
|
|
|
|
||||||
Liabilities assumed:
|
|
|
|
|
|
||||||
Current liabilities
|
(40,749
|
)
|
|
(11,301
|
)
|
|
(17,911
|
)
|
|||
Capital leases, long-term portion
|
—
|
|
|
(1,906
|
)
|
|
—
|
|
|||
Deferred revenue
|
(163,300
|
)
|
|
—
|
|
|
(16,108
|
)
|
|||
Deferred tax liability
|
(26,165
|
)
|
|
(1,708
|
)
|
|
—
|
|
|||
Other long-term liabilities
|
—
|
|
|
(188
|
)
|
|
(415
|
)
|
|||
Total liabilities assumed
|
(230,214
|
)
|
|
(15,103
|
)
|
|
(34,434
|
)
|
|||
Net assets acquired
|
$
|
615,692
|
|
|
$
|
37,500
|
|
|
$
|
157,649
|
|
2017 remaining
|
$
|
7,297
|
|
2018
|
27,595
|
|
|
2019
|
24,176
|
|
|
2020
|
24,176
|
|
|
2021
|
24,176
|
|
|
2022 and beyond
|
109,843
|
|
|
Total
|
$
|
217,263
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
(Amounts in thousands, except per share and share data)
|
|
|
|
|
|
|
|
||||||||
Revenue
|
$
|
240,554
|
|
|
$
|
234,924
|
|
|
$
|
726,139
|
|
|
$
|
694,001
|
|
Net (loss) income
|
$
|
(13,482
|
)
|
|
$
|
4,716
|
|
|
$
|
(35,017
|
)
|
|
$
|
402
|
|
|
|
|
|
|
|
|
|
||||||||
(Loss) earnings per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.32
|
)
|
|
$
|
0.11
|
|
|
$
|
(0.85
|
)
|
|
$
|
0.01
|
|
Diluted
|
$
|
(0.32
|
)
|
|
$
|
0.11
|
|
|
$
|
(0.85
|
)
|
|
$
|
0.01
|
|
|
|
|
|
|
|
|
|
||||||||
Denominator for basic EPS – weighted average shares
|
41,762,693
|
|
|
42,331,935
|
|
|
41,160,317
|
|
|
42,178,479
|
|
||||
Denominator for diluted EPS – weighted average shares
|
41,762,693
|
|
|
42,965,793
|
|
|
41,160,317
|
|
|
42,661,286
|
|
|
Global Capacity
|
|
Perseus
|
|
Hibernia
|
|
Prior Year Acquisitions
|
|
Total
|
||||||||||
Balance, December 31, 2016
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
280,593
|
|
|
$
|
280,593
|
|
Initial goodwill associated with current year business combinations
|
84,640
|
|
|
23,375
|
|
|
186,538
|
|
|
—
|
|
|
294,553
|
|
|||||
Adjustments to current year business combinations
|
—
|
|
|
8,161
|
|
|
9,519
|
|
|
—
|
|
|
17,680
|
|
|||||
Adjustments to prior year business combinations
|
—
|
|
|
—
|
|
|
—
|
|
|
280
|
|
|
280
|
|
|||||
Balance, September 30, 2017
|
$
|
84,640
|
|
|
$
|
31,536
|
|
|
$
|
196,057
|
|
|
$
|
280,873
|
|
|
$
|
593,106
|
|
|
|
|
September 30, 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
|
|
$
|
529,810
|
|
|
$
|
137,735
|
|
|
$
|
392,075
|
|
|
$
|
267,755
|
|
|
$
|
91,136
|
|
|
$
|
176,619
|
|
Non-compete agreements
|
3-5 years
|
|
4,571
|
|
|
4,491
|
|
|
80
|
|
|
4,572
|
|
|
4,420
|
|
|
152
|
|
||||||
Point-to-point FCC license fees
|
3 years
|
|
1,697
|
|
|
1,697
|
|
|
—
|
|
|
1,695
|
|
|
1,268
|
|
|
427
|
|
||||||
Intellectual property
|
10 years
|
|
4,052
|
|
|
2,658
|
|
|
1,394
|
|
|
17,379
|
|
|
2,076
|
|
|
15,303
|
|
||||||
Trade name
|
3 years
|
|
22,979
|
|
|
3,564
|
|
|
19,415
|
|
|
3,092
|
|
|
1,657
|
|
|
1,435
|
|
||||||
|
|
|
$
|
563,109
|
|
|
$
|
150,145
|
|
|
$
|
412,964
|
|
|
$
|
294,493
|
|
|
$
|
100,557
|
|
|
$
|
193,936
|
|
2017 remaining
|
$
|
19,429
|
|
2018
|
70,759
|
|
|
2019
|
62,485
|
|
|
2020
|
59,457
|
|
|
2021
|
57,912
|
|
|
2022 and beyond
|
142,922
|
|
|
Total
|
$
|
412,964
|
|
|
September 30, 2017
|
|
December 31, 2016
|
||||
Compensation and benefits
|
$
|
12,657
|
|
|
$
|
10,035
|
|
Selling, general and administrative
|
5,861
|
|
|
4,492
|
|
||
Carrier costs
|
14,680
|
|
|
13,543
|
|
||
Restructuring
|
15,670
|
|
|
3,247
|
|
||
Interest
|
9,494
|
|
|
657
|
|
||
Fiber pair repurchase
|
20,000
|
|
|
—
|
|
||
Customer pass-through taxes
|
6,607
|
|
|
3,213
|
|
||
Other
|
7,920
|
|
|
1,701
|
|
||
|
$
|
92,889
|
|
|
$
|
36,888
|
|
|
Capacity Sales and IRUs
|
||
2017 remaining
|
$
|
5,430
|
|
2018
|
15,681
|
|
|
2019
|
11,249
|
|
|
2020
|
10,919
|
|
|
2021
|
10,049
|
|
|
2022 and beyond
|
73,347
|
|
|
|
$
|
126,675
|
|
|
September 30, 2017
|
|
December 31, 2016
|
||||
|
|
|
|
||||
Term loan
|
$
|
694,750
|
|
|
$
|
425,775
|
|
7.875% Senior unsecured notes
|
450,000
|
|
|
300,000
|
|
||
Revolving line of credit
|
—
|
|
|
20,000
|
|
||
Total debt obligations
|
1,144,750
|
|
|
745,775
|
|
||
Unamortized debt issuance costs
|
(30,806
|
)
|
|
(9,310
|
)
|
||
Unamortized original issuance premium (discount), net
|
1,941
|
|
|
(6,957
|
)
|
||
Carrying value of debt
|
1,115,885
|
|
|
729,508
|
|
||
Less current portion
|
(7,000
|
)
|
|
(4,300
|
)
|
||
Long-term debt less current portion
|
$
|
1,108,885
|
|
|
$
|
725,208
|
|
Committed capacity
|
$
|
75,000
|
|
Borrowings outstanding
|
—
|
|
|
Letters of credit issued
|
(3,296
|
)
|
|
Unused and available
|
$
|
71,704
|
|
|
Total debt
|
||
2017 remaining
|
$
|
1,750
|
|
2018
|
7,000
|
|
|
2019
|
7,000
|
|
|
2020
|
7,000
|
|
|
2021
|
7,000
|
|
|
2022 and beyond
|
1,115,000
|
|
|
|
$
|
1,144,750
|
|
|
Term Loan
|
|
7.875% Senior Unsecured Notes
|
|
Revolving Line of Credit
|
|
Total
|
||||||||
Balance, December 31, 2016
|
$
|
(7,765
|
)
|
|
$
|
(481
|
)
|
|
$
|
(1,064
|
)
|
|
$
|
(9,310
|
)
|
Debt issuance costs incurred
|
(14,467
|
)
|
|
(13,660
|
)
|
|
(1,754
|
)
|
|
(29,881
|
)
|
||||
Amortization
|
1,622
|
|
|
812
|
|
|
204
|
|
|
2,638
|
|
||||
Loss on debt extinguishment
|
5,397
|
|
|
—
|
|
|
350
|
|
|
5,747
|
|
||||
Balance, September 30, 2017
|
$
|
(15,213
|
)
|
|
$
|
(13,329
|
)
|
|
$
|
(2,264
|
)
|
|
$
|
(30,806
|
)
|
|
Term Loan
|
|
7.875% Senior Unsecured Notes
|
|
Total
|
||||||
Balance, December 31, 2016
|
$
|
(6,957
|
)
|
|
$
|
—
|
|
|
$
|
(6,957
|
)
|
New Original Issuance (Discount)/Premium
|
(3,500
|
)
|
|
9,000
|
|
|
5,500
|
|
|||
Amortization
|
781
|
|
|
(283
|
)
|
|
498
|
|
|||
Loss on debt extinguishment
|
2,900
|
|
|
—
|
|
|
2,900
|
|
|||
Balance, September 30, 2017
|
$
|
(6,776
|
)
|
|
$
|
8,717
|
|
|
$
|
1,941
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Stock options
|
$
|
354
|
|
|
$
|
446
|
|
|
$
|
1,029
|
|
|
$
|
1,178
|
|
Restricted stock
|
5,666
|
|
|
4,356
|
|
|
14,802
|
|
|
9,625
|
|
||||
ESPP
|
38
|
|
|
42
|
|
|
129
|
|
|
93
|
|
||||
Total
|
$
|
6,058
|
|
|
$
|
4,844
|
|
|
$
|
15,960
|
|
|
$
|
10,896
|
|
|
September 30, 2017
|
||||
|
Unrecognized Compensation Cost
|
|
Weighted Average Remaining Period to be Recognized (Years)
|
||
Time-based stock options
|
$
|
2,229
|
|
|
1.68
|
Time-based restricted stock
|
33,511
|
|
|
2.45
|
|
Performance-based restricted stock
|
11,349
|
|
|
1.39
|
|
Total
|
$
|
47,089
|
|
|
2.16
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Time-based stock options granted
|
—
|
|
|
3,000
|
|
|
—
|
|
|
158,958
|
|
||||
Fair value of stock options granted
|
$
|
—
|
|
|
$
|
30
|
|
|
$
|
—
|
|
|
$
|
971
|
|
|
|
|
|
|
|
|
|
||||||||
Time-based restricted stock granted
|
258,088
|
|
|
100,059
|
|
|
949,896
|
|
|
629,362
|
|
||||
Fair value of time-based restricted stock granted
|
$
|
8,076
|
|
|
$
|
1,846
|
|
|
$
|
28,066
|
|
|
$
|
9,170
|
|
|
Balance, December 31, 2016
|
|
Charges and Adjustments
|
|
Payments
|
|
Balance,
September 30, 2017 |
||||||||
Employee Termination Benefits
|
$
|
42
|
|
|
$
|
16,132
|
|
|
$
|
(7,349
|
)
|
|
$
|
8,825
|
|
Contract Terminations:
|
|
|
|
|
|
|
|
||||||||
Lease terminations
|
859
|
|
|
3,491
|
|
|
(744
|
)
|
|
3,606
|
|
||||
Other contract terminations
|
2,346
|
|
|
2,225
|
|
|
(1,332
|
)
|
|
3,239
|
|
||||
|
$
|
3,247
|
|
|
$
|
21,848
|
|
|
$
|
(9,425
|
)
|
|
$
|
15,670
|
|
|
Balance, December 31, 2015
|
|
Charges and Adjustments
|
|
Payments
|
|
Balance, September 30, 2016
|
||||||||
Employee Termination Benefits
|
$
|
1,903
|
|
|
$
|
870
|
|
|
$
|
(2,728
|
)
|
|
$
|
45
|
|
Contract Terminations:
|
|
|
|
|
|
|
|
||||||||
Lease terminations
|
1,503
|
|
|
—
|
|
|
(838
|
)
|
|
665
|
|
||||
Other contract terminations
|
3,427
|
|
|
(102
|
)
|
|
(586
|
)
|
|
2,739
|
|
||||
|
$
|
6,833
|
|
|
$
|
768
|
|
|
$
|
(4,152
|
)
|
|
$
|
3,449
|
|
|
Network Supply
|
|
Office Space
|
|
Capital Leases
|
|
Other
|
||||||||
2017 remaining
|
$
|
40,310
|
|
|
$
|
1,726
|
|
|
$
|
560
|
|
|
$
|
796
|
|
2018
|
115,656
|
|
|
5,774
|
|
|
1,277
|
|
|
628
|
|
||||
2019
|
62,454
|
|
|
4,962
|
|
|
223
|
|
|
1,500
|
|
||||
2020
|
21,314
|
|
|
3,974
|
|
|
—
|
|
|
1,500
|
|
||||
2021
|
7,008
|
|
|
3,462
|
|
|
—
|
|
|
1,125
|
|
||||
2022 and beyond
|
44,100
|
|
|
7,992
|
|
|
—
|
|
|
—
|
|
||||
|
$
|
290,842
|
|
|
$
|
27,890
|
|
|
$
|
2,060
|
|
|
$
|
5,549
|
|
•
|
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 Secure Access.
Our Managed Secure 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 Secure 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.
|
|
September 30, 2017
|
|
December 31, 2016
|
||||
|
|
|
|
||||
Term loan
|
$
|
694,750
|
|
|
$
|
425,775
|
|
7.875% Senior unsecured notes
|
450,000
|
|
|
300,000
|
|
||
Revolving line of credit
|
—
|
|
|
20,000
|
|
||
Total debt obligations
|
1,144,750
|
|
|
745,775
|
|
||
Unamortized debt issuance costs
|
(30,806
|
)
|
|
(9,310
|
)
|
||
Unamortized original issuance premium (discount), net
|
1,941
|
|
|
(6,957
|
)
|
||
Carrying value of debt
|
1,115,885
|
|
|
729,508
|
|
||
Less current portion
|
(7,000
|
)
|
|
(4,300
|
)
|
||
|
$
|
1,108,885
|
|
|
$
|
725,208
|
|
|
Three Months Ended September 30,
|
|||||||||||||
|
2017
|
|
2016
|
|
$ Variance
|
|
% Change
|
|||||||
Employee related compensation (excluding share-based compensation)
|
$
|
24,686
|
|
|
$
|
17,917
|
|
|
$
|
6,769
|
|
|
37.8
|
%
|
Share-based compensation
|
6,058
|
|
|
4,844
|
|
|
1,214
|
|
|
25.1
|
%
|
|||
Transaction and integration expense
|
3,367
|
|
|
801
|
|
|
2,566
|
|
|
320.3
|
%
|
|||
Other SG&A
(1)
|
17,855
|
|
|
13,615
|
|
|
4,240
|
|
|
31.1
|
%
|
|||
Total
|
$
|
51,966
|
|
|
$
|
37,177
|
|
|
$
|
14,789
|
|
|
39.8
|
%
|
|
Nine Months Ended September 30,
|
|||||||||||||
|
2017
|
|
2016
|
|
$ Variance
|
|
% Change
|
|||||||
Employee related compensation (excluding share-based compensation)
|
$
|
70,438
|
|
|
$
|
51,838
|
|
|
$
|
18,600
|
|
|
35.9
|
%
|
Share-based compensation
|
15,960
|
|
|
10,896
|
|
|
5,064
|
|
|
46.5
|
%
|
|||
Transaction and integration expense
|
13,794
|
|
|
3,124
|
|
|
10,670
|
|
|
341.5
|
%
|
|||
Other SG&A
(1)
|
51,403
|
|
|
39,453
|
|
|
11,950
|
|
|
30.3
|
%
|
|||
Total
|
$
|
151,595
|
|
|
$
|
105,311
|
|
|
$
|
46,284
|
|
|
43.9
|
%
|
Condensed Consolidated Statements of Cash Flows
|
Nine Months Ended September 30,
|
||||||||||
|
2017
|
|
2016
|
|
$ Variance
|
||||||
Net cash provided by operating activities
|
$
|
47,091
|
|
|
$
|
32,767
|
|
|
$
|
14,324
|
|
Net cash used in investing activities
|
(390,318
|
)
|
|
(37,959
|
)
|
|
(352,359
|
)
|
|||
Net cash provided by financing activities
|
349,221
|
|
|
7,871
|
|
|
341,350
|
|
|
Total
|
|
Less than 1 year
|
|
1-3 years
|
|
3-5 years
|
|
More than 5 years
|
||||||||||
Term loan
|
$
|
694,750
|
|
|
$
|
7,000
|
|
|
$
|
14,000
|
|
|
$
|
14,000
|
|
|
$
|
659,750
|
|
7.875% Senior unsecured note
|
450,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
450,000
|
|
|||||
Operating leases
|
27,890
|
|
|
6,115
|
|
|
9,360
|
|
|
6,768
|
|
|
5,647
|
|
|||||
Capital leases
|
2,060
|
|
|
1,648
|
|
|
412
|
|
|
—
|
|
|
—
|
|
|||||
Network supplier agreements
|
290,842
|
|
|
133,228
|
|
|
104,241
|
|
|
13,300
|
|
|
40,073
|
|
|||||
Other
|
5,549
|
|
|
986
|
|
|
3,063
|
|
|
1,500
|
|
|
—
|
|
|||||
|
$
|
1,471,091
|
|
|
$
|
148,977
|
|
|
$
|
131,076
|
|
|
$
|
35,568
|
|
|
$
|
1,155,470
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(Amounts in thousands)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Adjusted EBITDA
|
|
|
|
|
|
|
|
||||||||
Net (loss) income
|
$
|
(9,519
|
)
|
|
$
|
5,127
|
|
|
$
|
(21,980
|
)
|
|
$
|
6,114
|
|
(Benefit from) provision for income taxes
|
(8,648
|
)
|
|
(89
|
)
|
|
(22,719
|
)
|
|
320
|
|
||||
Interest and other expense, net
|
18,031
|
|
|
7,197
|
|
|
50,523
|
|
|
22,162
|
|
||||
Loss on debt extinguishment
|
2,988
|
|
|
—
|
|
|
8,647
|
|
|
1,632
|
|
||||
Depreciation and amortization
|
32,847
|
|
|
14,880
|
|
|
94,670
|
|
|
46,139
|
|
||||
Severance, restructuring and other exit costs
|
11,125
|
|
|
(625
|
)
|
|
21,848
|
|
|
870
|
|
||||
Transaction and integration costs
|
3,367
|
|
|
801
|
|
|
13,794
|
|
|
3,124
|
|
||||
Share-based compensation
|
6,058
|
|
|
4,844
|
|
|
15,960
|
|
|
10,896
|
|
||||
Adjusted EBITDA
|
56,249
|
|
|
32,135
|
|
|
160,743
|
|
|
91,257
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Purchases of property and equipment
|
(9,113
|
)
|
|
(5,525
|
)
|
|
(26,865
|
)
|
|
(17,813
|
)
|
||||
Adjusted EBITDA less capital expenditures
|
$
|
47,136
|
|
|
$
|
26,610
|
|
|
$
|
133,878
|
|
|
$
|
73,444
|
|
*
|
Filed herewith
|
+
|
Denotes a management or compensatory plan or arrangement
|
|
|
GTT Communications, Inc.
|
|
|
|
|
|
|
|
By:
|
/s/ Richard D. Calder, Jr.
|
|
|
|
Richard D. Calder, Jr.
|
|
|
|
President, Chief Executive Officer and
|
|
|
|
Director (Principal Executive Officer)
|
|
|
|
|
|
|
By:
|
/s/ Michael T. Sicoli
|
|
|
|
Michael T. Sicoli
|
|
|
|
Chief Financial Officer
|
|
|
|
(Principal Financial Officer)
|
|
|
|
|
|
|
By:
|
/s/ Daniel M. Fraser
|
|
|
|
Daniel M. Fraser
|
|
|
|
Vice President and Controller
|
Date:
|
November 3, 2017
|
|
(Principal Accounting Officer)
|
|
|
|
|
Incremental Revolving Credit Lenders
|
Incremental Revolving Credit Commitments
|
KeyBank National Association
|
$2,500,000
|
Credit Suisse AG, Cayman Islands Branch
|
$2,500,000
|
SunTrust Bank
|
$7,500,000
|
Wells Fargo Bank, National Association
|
$7,500,000
|
Citizens Bank, N.A.
|
$5,000,000
|
|
|
TOTAL
|
$25,000,000
|
Date:
|
November 3, 2017
|
/s/ Richard D. Calder, Jr.
|
|
|
Richard D. Calder, Jr.
|
|
|
President, Chief Executive Officer and Director
|
Date:
|
November 3, 2017
|
/s/ Michael T. Sicoli
|
|
|
Michael T. Sicoli
|
|
|
Chief Financial Officer
|
Date:
|
November 3, 2017
|
/s/ Richard D. Calder, Jr.
|
|
|
Richard D. Calder, Jr.
|
|
|
President, Chief Executive Officer and Director
|
Date:
|
November 3, 2017
|
/s/ Michael T. Sicoli
|
|
|
Michael T. Sicoli
|
|
|
Chief Financial Officer
|