Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
In Billions, except Share data, unless otherwise specified | Dec. 31, 2014 | Feb. 20, 2015 | Jun. 30, 2014 |
Document and Entity Information | |||
Entity Registrant Name | COGENT COMMUNICATIONS HOLDINGS, INC. | ||
Entity Central Index Key | 1158324 | ||
Document Type | 10-K | ||
Document Period End Date | 31-Dec-14 | ||
Amendment Flag | FALSE | ||
Current Fiscal Year End Date | -19 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $1.50 | ||
Entity Common Stock, Shares Outstanding | 46,391,534 | ||
Document Fiscal Year Focus | 2014 | ||
Document Fiscal Period Focus | FY |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Current assets: | ||
Cash and cash equivalents | $287,790 | $304,866 |
Accounts receivable, net of allowance for doubtful accounts of $1,707 and $1,871, respectively | 33,089 | 30,628 |
Prepaid expenses and other current assets | 18,762 | 18,777 |
Total current assets | 339,641 | 354,271 |
Property and equipment: | ||
Property and equipment | 1,047,590 | 985,084 |
Accumulated depreciation and amortization | -686,829 | -643,891 |
Total property and equipment, net | 360,761 | 341,193 |
Deferred tax assets - noncurrent | 48,963 | 50,861 |
Deposits and other assets - $389 and $448 restricted, respectively | 12,410 | 8,776 |
Total assets | 761,775 | 755,101 |
Current liabilities: | ||
Accounts payable | 13,287 | 14,098 |
Accrued and other current liabilities | 32,151 | 31,465 |
Convertible senior notes - current portion, net of discount of $3,099 | 88,879 | |
Current maturities, capital lease obligations | 14,594 | 9,252 |
Total current liabilities | 60,032 | 143,694 |
Senior secured notes including premium of $4,230 and $5,423, respectively | 244,230 | 245,423 |
Senior unsecured notes | 200,000 | |
Capital lease obligations, net of current maturities | 151,944 | 152,527 |
Other long term liabilities | 21,775 | 19,965 |
Total liabilities | 677,981 | 561,609 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Common stock, $0.001 par value; 75,000,000 shares authorized; 46,398,729 and 47,334,218 shares issued and outstanding, respectively | 46 | 47 |
Additional paid-in capital | 460,576 | 508,256 |
Accumulated other comprehensive income | -6,462 | 2,136 |
Accumulated deficit | -370,366 | -316,947 |
Total stockholders' equity | 83,794 | 193,492 |
Total liabilities and stockholders' equity | $761,775 | $755,101 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, except Share data, unless otherwise specified | ||
CONSOLIDATED BALANCE SHEETS | ||
Accounts receivable, allowance for doubtful accounts (in dollars) | $1,707 | $1,871 |
Deposits and other assets, restricted (in dollars) | 389 | 448 |
Convertible senior notes, discount (in dollars) | 3,099 | |
Senior secured notes, premium (in dollars) | $4,230 | $5,423 |
Common stock, par value (in dollars per share) | $0.00 | $0.00 |
Common stock, shares authorized | 75,000,000 | 75,000,000 |
Common stock, shares issued | 46,398,729 | 47,334,218 |
Common stock, shares outstanding | 46,398,729 | 47,334,218 |
CONSOLIDATED_STATEMENTS_OF_COM
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (USD $) | 12 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | |||
Service revenue | $380,003 | $347,979 | $316,973 |
Operating expenses: | |||
Network operations (including $488, $507 and $529 of equity-based compensation expense, respectively), exclusive of amounts shown separately | 159,893 | 150,225 | 143,642 |
Selling, general, and administrative (including $9,083, $8,212 and $7,794 of equity-based compensation expense, respectively) | 107,679 | 87,242 | 79,885 |
Gains on equipment transactions | -10,950 | ||
Depreciation and amortization | 69,481 | 64,358 | 62,478 |
Total operating expenses | 326,103 | 301,825 | 286,005 |
Operating income | 53,900 | 46,154 | 30,968 |
Interest income and other | 536 | 2,630 | 1,851 |
Interest expense | -49,945 | -41,797 | -36,319 |
Income (loss) before income taxes | 4,491 | 6,987 | -3,500 |
Income tax (expense) benefit | -3,694 | 49,702 | -751 |
Net income (loss) | 797 | 56,689 | -4,251 |
Comprehensive (loss) income: | |||
Net income (loss) | 797 | 56,689 | -4,251 |
Foreign currency translation adjustment | -8,598 | 1,469 | 1,249 |
Comprehensive (loss) income | ($7,801) | $58,158 | ($3,002) |
Basic net income (loss) per common share (in dollars per share) | $0.02 | $1.22 | ($0.09) |
Diluted net income (loss) per common share (in dollars per share) | $0.02 | $1.21 | ($0.09) |
Dividends declared per common share (in dollars per share) | $1.17 | $0.76 | $0.21 |
Weighted-average common shares -basic (in shares) | 45,960,720 | 46,286,735 | 45,514,844 |
Weighted-average common shares - diluted (in shares) | 46,349,670 | 46,996,904 | 45,514,844 |
CONSOLIDATED_STATEMENTS_OF_COM1
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | |||
Network operations, equity-based compensation expense | $488 | $507 | $529 |
Selling, general, and administrative, equity-based compensation expense | $9,083 | $8,212 | $7,794 |
CONSOLIDATED_STATEMENTS_OF_CHA
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (USD $) | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income | Accumulated Deficit | Total |
In Thousands, except Share data, unless otherwise specified | |||||
Balance at Dec. 31, 2011 | $46 | $489,021 | ($582) | ($324,484) | $164,001 |
Balance (in shares) at Dec. 31, 2011 | 45,893,347 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Forfeitures of shares granted to employees (in shares) | -82,580 | ||||
Equity-based compensation | 9,164 | 9,164 | |||
Foreign currency translation | 1,249 | 1,249 | |||
Issuances of common stock | 1 | 1 | |||
Issuances of common stock (in shares) | 1,338,120 | ||||
Exercises of options | 404 | 404 | |||
Exercises of options (in shares) | 42,341 | ||||
Common stock purchases and retirement | -1,265 | -1,265 | |||
Common stock purchases and retirement (in shares) | -74,584 | ||||
Excess income tax benefit | 25 | 25 | |||
Dividends paid | -9,549 | -9,549 | |||
Net income (loss) | -4,251 | -4,251 | |||
Balance at Dec. 31, 2012 | 47 | 497,349 | 667 | -338,284 | 159,779 |
Balance (in shares) at Dec. 31, 2012 | 47,116,644 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Forfeitures of shares granted to employees (in shares) | -46,335 | ||||
Equity-based compensation | 9,557 | 9,557 | |||
Foreign currency translation | 1,469 | 1,469 | |||
Issuances of common stock (in shares) | 175,500 | ||||
Exercises of options | 1,218 | 1,218 | |||
Exercises of options (in shares) | 88,409 | ||||
Excess income tax benefit | 132 | 132 | |||
Dividends paid | -35,352 | -35,352 | |||
Net income (loss) | 56,689 | 56,689 | |||
Balance at Dec. 31, 2013 | 47 | 508,256 | 2,136 | -316,947 | 193,492 |
Balance (in shares) at Dec. 31, 2013 | 47,334,218 | 47,334,218 | |||
Increase (Decrease) in Stockholders' Equity | |||||
Forfeitures of shares granted to employees (in shares) | -35,290 | ||||
Equity-based compensation | 10,385 | 10,385 | |||
Foreign currency translation | -8,598 | -8,598 | |||
Issuances of common stock | 1 | 1 | |||
Issuances of common stock (in shares) | 792,550 | ||||
Exercises of options | 533 | 533 | |||
Exercises of options (in shares) | 38,379 | ||||
Common stock purchases and retirement | -1 | -58,582 | -58,583 | ||
Common stock purchases and retirement (in shares) | -1,731,128 | ||||
Excess income tax benefit | -17 | -17 | |||
Dividends paid | -54,216 | -54,216 | |||
Net income (loss) | 797 | 797 | |||
Balance at Dec. 31, 2014 | $46 | $460,576 | ($6,462) | ($370,366) | $83,794 |
Balance (in shares) at Dec. 31, 2014 | 46,398,729 | 46,398,729 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Cash flows from operating activities: | |||
Net income (loss) | $797 | $56,689 | ($4,251) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||
Depreciation and amortization | 69,481 | 64,358 | 62,478 |
Amortization of debt discount and premium | 1,976 | 6,086 | 6,031 |
Equity-based compensation expense (net of amounts capitalized) | 9,571 | 8,719 | 8,323 |
Gains-dispositions of assets and other, net | -10,382 | -1,001 | -971 |
Deferred income taxes | 3,163 | -50,069 | 2,692 |
Changes in operating assets and liabilities: | |||
Accounts receivable | -3,938 | -6,293 | 1,247 |
Prepaid expenses and other current assets | -2,338 | -3,642 | 459 |
Deposits and other assets | 219 | 770 | -436 |
Accounts payable, accrued liabilities and other long-term liabilities | 4,497 | 6,234 | 4,371 |
Net cash provided by operating activities | 73,046 | 81,851 | 79,943 |
Cash flows from investing activities: | |||
Purchases of property and equipment | -60,032 | -49,031 | -44,337 |
Proceeds from asset sales | 90 | 50 | 141 |
Net cash used in investing activities | -59,942 | -48,981 | -44,196 |
Cash flows from financing activities: | |||
Net proceeds from issuance of senior unsecured notes | 195,824 | ||
Net proceeds from issuance of senior secured notes | 69,882 | ||
Repayment of convertible senior notes | -91,978 | ||
Dividends paid | -54,216 | -35,352 | -9,549 |
Principal payments of capital lease obligations | -18,208 | -11,164 | -16,794 |
Purchases of common stock | -58,582 | -1,265 | |
Proceeds from exercises of stock options | 533 | 1,218 | 404 |
Net cash (used in) provided by financing activities | -26,627 | 24,584 | -27,204 |
Effect of exchange rate changes on cash | -3,553 | 127 | 535 |
Net (decrease) increase in cash and cash equivalents | -17,076 | 57,581 | 9,078 |
Cash and cash equivalents, beginning of year | 304,866 | 247,285 | 238,207 |
Cash and cash equivalents, end of year | 287,790 | 304,866 | 247,285 |
Supplemental disclosure of cash flow information: | |||
Cash paid for interest | 46,531 | 34,511 | 26,107 |
Cash paid for income taxes | 1,896 | 822 | 428 |
Non-cash investing and financing activities: | |||
Capital lease obligations incurred | 28,707 | 33,428 | 17,805 |
Fair value of equipment acquired in leases | 174 | 8,029 | 273 |
Non-cash component of network equipment obtained in exchange transactions | $11,031 | $934 | $1,127 |
Description_of_the_business_an
Description of the business and summary of significant accounting policies: | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Description of the business and summary of significant accounting policies: | ||||||||
Description of the business and summary of significant accounting policies: | ||||||||
1. Description of the business and summary of significant accounting policies: | ||||||||
Reorganization and merger | ||||||||
On May 15, 2014, pursuant to the Agreement and Plan of Reorganization (the "Merger Agreement") by and among Cogent Communications Group, Inc. ("Group"), a Delaware corporation, Cogent Communications Holdings, Inc., a Delaware corporation ("Holdings") and Cogent Communications Merger Sub, Inc., a Delaware corporation ("Merger Sub"), Group adopted a new holding company organizational structure whereby Group is now a wholly owned subsidiary of Holdings. Holdings is a "successor issuer" to Group pursuant to Rule 12g-3(a) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). In connection with the succession, the common stock of Holdings is deemed to be registered under Section 12(b) of the Exchange Act by operation of law. | ||||||||
The holding company organizational structure was effected by a merger (the "Merger") structured as a tax-free transaction and conducted pursuant to Section 251(g) of Delaware General Corporation Law which provides for the formation of a holding company structure without a vote of the stockholders of the constituent corporations. Because the holding company organizational structure has occurred at the parent company level, the remainder of the Company's subsidiaries, operations and customers were not affected by the Merger. Accordingly, the historical financial statements reflect the effect of the reorganization for all periods presented. Under the terms of the Merger Agreement, Merger Sub merged with and into Group, with Group surviving the Merger and becoming a direct, wholly owned subsidiary of Holdings. | ||||||||
Pursuant to the Merger Agreement, all of the outstanding capital stock of Group was converted, on a share for share basis, into the common stock of Holdings. As a result, each former stockholder of Group became the owner of an identical number of shares of common stock of Holdings, evidencing the same proportional interests in the Company (as defined below) and having the same designations, rights, powers and preferences, qualifications, limitations and restrictions, as those that the stockholder held in Group. Additionally, each outstanding option to purchase shares of common stock of Group was automatically converted into an option to purchase, upon the same terms and conditions, an identical number of shares of Holding's common stock. Each outstanding restricted share of common stock of Group was also converted into a restricted share of common stock of Holdings upon the same terms and conditions. The directors and executive officers of the Company immediately after completion of the Merger are comprised of the same persons who were directors of and executive officers of Group immediately prior to the Merger. | ||||||||
References to the "Company" for events that occurred prior to May 15, 2014 refer to Cogent Communications Group, Inc. and its subsidiaries and on and after May 15, 2014 the "Company" refers to Cogent Communications Holdings, Inc. and its subsidiaries. | ||||||||
Description of business | ||||||||
The Company is a Delaware corporation and is headquartered in Washington, DC. The Company is a facilities-based provider of low-cost, high-speed Internet access and Internet Protocol ("IP") communications services. The Company's network is specifically designed and optimized to transmit data using IP. The Company delivers its services primarily to small and medium-sized businesses, communications service providers and other bandwidth-intensive organizations in North America, Europe and Japan. | ||||||||
The Company offers on-net Internet access services exclusively through its own facilities, which run from its network to its customers' premises. The Company is not dependent on local telephone companies to serve its customers for its on-net Internet access services because of its integrated network architecture. The Company offers its on-net services to customers located in buildings that are physically connected to its network. The Company's on-net service consists of high-speed Internet access and IP connectivity ranging from 100 Megabits per second to 100 Gigabits per second of bandwidth. The Company provides its on-net Internet access services to its net-centric and corporate customers. The Company's net-centric customers include bandwidth-intensive users such as universities, other Internet service providers, telephone companies, cable television companies, web hosting companies, content delivery network companies and commercial content and application service providers. These net-centric customers obtain the Company's services in colocation facilities and in the Company's data centers. The Company operates data centers throughout North America and Europe that allow its customers to collocate their equipment and access the Company's network. The Company's corporate customers are located in multi-tenant office buildings and typically include law firms, financial services firms, advertising and marketing firms and other professional services businesses. | ||||||||
In addition to providing its on-net services, the Company provides Internet connectivity to customers that are not located in buildings directly connected to its network. The Company provides this off-net service primarily to corporate customers using other carriers' facilities to provide the "last mile" portion of the link from the customers' premises to the Company's network. The Company also provides certain non-core services that resulted from acquisitions. The Company continues to support but does not actively sell these non-core services. | ||||||||
Summary of significant accounting policies | ||||||||
Principles of consolidation | ||||||||
The consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles and include the accounts of the Company and all of its wholly-owned and majority-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. | ||||||||
Use of estimates | ||||||||
The preparation of consolidated financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates. | ||||||||
Revenue recognition and allowance for doubtful accounts | ||||||||
The Company's service offerings consist of on-net and off-net telecommunications services. Fixed fees are billed monthly in advance and usage fees are billed monthly in arrears. Revenues from telecommunication services are recognized when the services are performed, evidence of an arrangement exists, the fee is fixed and determinable and collection is probable. The probability of collection is determined by an analysis of credit history for new customers and historical payment patterns for existing customers. Service discounts and incentives related to telecommunication services are recorded as a reduction of revenue when granted. Fees billed in connection with customer installations are deferred and recognized ratably over the longer of the contract term or the estimated customer life. The Company expenses the direct costs associated with sales as incurred. | ||||||||
The Company invoices certain customers for amounts contractually due for unfulfilled minimum contractual obligations and recognizes a corresponding sales allowance equal to the amount invoiced resulting in the recognition of no net revenue at the time the customer is billed. The Company vigorously seeks payment of these amounts. The Company recognizes revenue for these billings as they are collected. | ||||||||
The Company establishes an allowance for doubtful accounts and other sales credit adjustments related to its trade receivables. Trade receivables are recorded at the invoiced amount and can bear interest. Allowances for sales credits are established through a reduction of revenue, while allowances for doubtful accounts are established through a charge to selling, general, and administrative expenses as bad debt expense. The Company assesses the adequacy of these reserves by evaluating factors, such as the length of time individual receivables are past due, historical collection experience, and changes in the credit worthiness of its customers. The Company also assesses the ability of specific customers to meet their financial obligations and establishes specific allowances related to these customers. If circumstances relating to specific customers change or economic conditions change such that the Company's past collection experience and assessment of the economic environment are no longer appropriate, the Company's estimate of the recoverability of its trade receivables could be impacted. Accounts receivable balances are written-off against the allowance for doubtful accounts after all means of internal collection activities have been exhausted and the potential for recovery is considered remote. The Company recognized bad debt expense, net of recoveries, of $3.7 million, $3.5 million and $5.1 million for the years ended December 31, 2014, 2013 and 2012, respectively. | ||||||||
Gross Receipts Taxes | ||||||||
Revenue recognition standards include guidance relating to any tax assessed by a governmental authority that is directly imposed on a revenue-producing transaction between a seller and a customer and may include, but is not limited to, gross receipts taxes and certain state regulatory fees. The Company records certain excise taxes billed to its customers on a gross basis in its consolidated statements of operations. | ||||||||
Network operations | ||||||||
Network operations expenses include the costs of personnel and related operating expenses associated with service delivery, network management, and customer support, network facilities costs, fiber and equipment maintenance fees, leased circuit costs, and access fees paid to building owners. The Company estimates its accruals for any disputed leased circuit obligations based upon the nature and age of the dispute. Network operations costs are impacted by the timing and amounts of disputed circuit costs. The Company generally records these disputed amounts when billed by the vendor and reverses these amounts when the vendor credit has been received or the dispute has otherwise been resolved. The Company does not allocate depreciation and amortization expense to its network operations expense. | ||||||||
Foreign currency translation adjustment and comprehensive income (loss) | ||||||||
The consolidated financial statements of the Company's non-US operations are translated into US dollars using the period-end foreign currency exchange rates for assets and liabilities and the average foreign currency exchange rates for revenues and expenses. Gains and losses on translation of the accounts are accumulated and reported as a component of other comprehensive income (loss) in stockholders' equity. The Company's only components of "other comprehensive income (loss)" are currency translation adjustments for all periods presented. The Company considers the majority of its investments in its foreign subsidiaries to be long-term in nature. The Company's foreign exchange transaction gains (losses), including where its investments in its foreign subsidiaries are not considered to be long-term in nature, are included within interest income and other on the consolidated statements of comprehensive income (loss). | ||||||||
Financial instruments | ||||||||
The Company considers all highly liquid investments with an original maturity of three months or less at purchase to be cash equivalents. The Company determines the appropriate classification of its investments at the time of purchase and evaluates such designation at each balance sheet date. | ||||||||
At December 31, 2014 and December 31, 2013, the carrying amount of cash and cash equivalents, accounts receivable, prepaid and other current assets, accounts payable, and accrued expenses approximated fair value because of the short-term nature of these instruments. The Company measures its cash equivalents at amortized cost, which approximates fair value based upon quoted market prices (Level 1). Based upon recent trading prices (Level 2—market approach) at December 31, 2014 the fair value of the Company's $200.0 million senior unsecured notes was $196.0 million and the fair value of the Company's $240.0 million senior secured notes was $250.8 million. | ||||||||
The Company was party to letters of credit totaling $0.4 million as of December 31, 2014 and $0.4 million as of December 31, 2013. These letters of credit are secured by investments that are restricted and included in deposits and other assets. | ||||||||
Concentrations of credit risk | ||||||||
The Company's assets that are exposed to credit risk consist of its cash and cash equivalents, other assets and accounts receivable. As of December 31, 2014 and 2013, the Company's cash equivalents were invested in demand deposit accounts, overnight investments and money market funds. The Company places its cash equivalents in instruments that meet high-quality credit standards as specified in the Company's investment policy guidelines. Accounts receivable are due from customers located in major metropolitan areas in the United States, Europe, Canada and Mexico. Receivables from the Company's net-centric (wholesale) customers are generally subject to a higher degree of credit risk than the Company's corporate customers. | ||||||||
The Company relies upon an equipment vendor for the majority of its network equipment and is also dependent upon many third-party fiber providers for providing its services to its customers. | ||||||||
Property and equipment | ||||||||
Property and equipment are recorded at cost and depreciated once deployed using the straight-line method over the estimated useful lives of the assets. Useful lives are determined based on historical usage with consideration given to technological changes and trends in the industry that could impact the asset utilization. System infrastructure costs include the capitalized compensation costs of employees directly involved with construction activities and costs incurred by third party contractors. | ||||||||
Assets and liabilities under capital leases are recorded at the lesser of the present value of the aggregate future minimum lease payments or the fair value of the assets under lease. Leasehold improvements include costs associated with building improvements. The Company determines the number of renewal option periods, if any, included in the lease term for purposes of amortizing leasehold improvements and the lease term of its capital leases based upon its assessment at the inception of the lease for which the failure to renew the lease imposes a penalty on the Company in such amount that a renewal appears to be reasonably assured. Expenditures for maintenance and repairs are expensed as incurred. | ||||||||
Depreciation and amortization periods are as follows: | ||||||||
Type of asset | Depreciation or amortization period | |||||||
Indefeasible rights of use (IRUs) | Shorter of useful life or the IRU lease agreement; generally 15 to 20 years | |||||||
Network equipment | 3 to 8 years | |||||||
Leasehold improvements | Shorter of lease term, including reasonably assured renewal periods, or useful life | |||||||
Software | 5 years | |||||||
Owned buildings | 40 years | |||||||
Office and other equipment | 3 to 7 years | |||||||
System infrastructure | 5 to 10 years | |||||||
Long-lived assets | ||||||||
The Company's long-lived assets include property and equipment. These long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Impairment is determined by comparing the carrying value of these long-lived assets to management's probability weighted estimate of the future undiscounted cash flows expected to result from the use of the assets. In the event an impairment exists, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the asset, which would be determined by using quoted market prices or valuation techniques such as the discounted present value of expected future cash flows, appraisals, or other pricing models. In the event there are changes in the planned use of the Company's long-term assets or the Company's expected future undiscounted cash flows are reduced significantly, the Company's assessment of its ability to recover the carrying value of these assets could change. | ||||||||
Asset retirement obligations | ||||||||
The Company's asset retirement obligations consist of restoration requirements for certain leased facilities. The Company recognizes a liability for the present value of the estimated fair value of contractual obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and/or the normal operation of a long-lived asset in the period incurred. The present value of the fair value of the obligation is also capitalized as property, plant and equipment and then amortized over the estimated remaining useful life of the associated asset. | ||||||||
Increases to the asset retirement obligation liability due to the passage of time are recognized within selling, general and administrative expenses in the Company's consolidated statements of operations. Changes in the liability due to revisions to estimates of future cash flows are recognized by increasing or decreasing the liability with the offset adjusting the carrying amount of the related long-lived asset. | ||||||||
Equity-based compensation | ||||||||
The Company recognizes compensation expense for its share-based payments granted to its employees based on their grant date fair values with the expense being recognized on a straight-line basis over the requisite service period. The Company begins recording equity-based compensation expense related to performance awards when it is considered probable that the performance conditions will be met. Equity-based compensation expense is recognized in the statement of operations in a manner consistent with the classification of the employee's salary and other compensation. | ||||||||
Income taxes | ||||||||
The Company's deferred tax assets or liabilities are computed based upon the differences between financial statement and income tax bases of assets and liabilities using the enacted marginal tax rate. Deferred income tax expenses or benefits are based upon the changes in the assets or liability from period to period. At each balance sheet date, the Company assesses the likelihood that it will be able to realize its deferred tax assets. Valuation allowances are established when management determines that it is "more likely than not" that some portion or all of the deferred tax asset may not be realized. The Company considers all available positive and negative evidence in assessing the need for a valuation allowance including its historical operating results, ongoing tax planning, and forecasts of future taxable income, on a jurisdiction by jurisdiction basis. The Company reduces its valuation allowance if the Company concludes that it is "more likely than not" that it would be able to realize its deferred tax assets. | ||||||||
Management determines whether a tax position is more likely than not to be sustained upon examination based on the technical merits of the position. Once it is determined that a position meets this recognition threshold, the position is measured to determine the amount of benefit to be recognized in the financial statements. The Company adjusts its estimated liabilities for uncertain tax positions periodically because of ongoing examinations by, and settlements with, the various taxing authorities, as well as changes in tax laws, regulations and interpretations. The Company's policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of its income tax expense. | ||||||||
Basic and diluted net (loss) income per common share | ||||||||
Basic earnings per share ("EPS") excludes dilution for common stock equivalents and is computed by dividing net income or (loss) available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted EPS is based on the weighted-average number of shares of common stock outstanding during each period, adjusted for the effect of dilutive common stock equivalents. | ||||||||
Shares of restricted stock are included in the computation of basic EPS as they vest and are included in diluted EPS, to the extent they are dilutive, determined using the treasury stock method. As of December 31, 2014, 2013 and 2012, 1.3 million, 1.0 million and 1.7 million unvested shares of restricted common stock, respectively, are not included in the computation of basic income per share, as these shares were not vested and as of December 31, 2014, 0.4 million anti-dilutive shares of restricted common stock are excluded from the computation of diluted income per share. Using the "if-converted" method, the shares issuable upon conversion of the Company's convertible senior notes (the "Convertible Notes") were anti-dilutive for the years ended December 31, 2013 and 2012. Accordingly, that impact has been excluded from the computation of diluted loss per share. The Convertible Notes were convertible into 1.9 million shares of the Company's common stock at December 31, 2013 and 2012. The Convertible Notes were repaid in June 2014 and are no longer outstanding. | ||||||||
The following details the determination of the diluted weighted average shares for the year ended December 31, 2014 and 2013: | ||||||||
Year Ended | Year Ended | |||||||
December 31, | December 31, | |||||||
2014 | 2013 | |||||||
Weighted average common shares—basic | 45,960,720 | 46,286,735 | ||||||
Dilutive effect of stock options | 59,196 | 76,884 | ||||||
Dilutive effect of restricted stock | 329,754 | 633,285 | ||||||
| | | | | | | | |
Weighted average common shares—diluted | 46,349,670 | 46,996,904 | ||||||
| | | | | | | | |
| | | | | | | | |
Recent accounting pronouncements | ||||||||
On May 28, 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for the Company beginning on January 1, 2017. Early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting. | ||||||||
Property_and_equipment
Property and equipment: | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Property and equipment: | ||||||||
Property and equipment: | ||||||||
2. Property and equipment: | ||||||||
Property and equipment consisted of the following (in thousands): | ||||||||
December 31, | ||||||||
2014 | 2013 | |||||||
Owned assets: | ||||||||
Network equipment | $ | 432,848 | $ | 404,426 | ||||
Leasehold improvements | 161,470 | 147,718 | ||||||
System infrastructure | 86,749 | 79,811 | ||||||
Software | 9,562 | 9,531 | ||||||
Office and other equipment | 12,893 | 12,521 | ||||||
Building | 1,353 | 1,532 | ||||||
Land | 115 | 130 | ||||||
| | | | | | | | |
704,990 | 655,669 | |||||||
Less—Accumulated depreciation and amortization | (553,113 | ) | (521,290 | ) | ||||
| | | | | | | | |
151,877 | 134,379 | |||||||
Assets under capital leases: | ||||||||
IRUs | 342,600 | 329,415 | ||||||
Less—Accumulated depreciation and amortization | (133,716 | ) | (122,601 | ) | ||||
| | | | | | | | |
208,884 | 206,814 | |||||||
| | | | | | | | |
Property and equipment, net | $ | 360,761 | $ | 341,193 | ||||
| | | | | | | | |
| | | | | | | | |
Depreciation and amortization expense related to property and equipment and capital leases was $69.5 million, $64.3 million and $62.4 million, for the years ended December 31, 2014, 2013 and 2012, respectively. | ||||||||
The Company capitalizes the compensation cost of employees directly involved with its construction activities. In 2014, 2013 and 2012, the Company capitalized compensation costs of $7.6 million, $7.4 million and $7.2 million respectively. These amounts are included in system infrastructure costs. | ||||||||
In 2014, 2013 and 2012 the Company exchanged certain used network equipment for new network equipment and cash consideration. The fair value of the equipment received was estimated to be $23.1 million, $2.0 million and $1.7 million resulting in gains of $10.8 million, $0.9 million and $0.7 million respectively. The estimated fair value of the equipment received was based upon the cash consideration price the Company pays for the new network equipment on a standalone basis (Level 3). | ||||||||
Accrued_and_other_liabilities
Accrued and other liabilities: | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Accrued and other liabilities: | ||||||||
Accrued and other liabilities: | ||||||||
3. Accrued and other liabilities: | ||||||||
Accrued and other current liabilities as of December 31 consist of the following (in thousands): | ||||||||
2014 | 2013 | |||||||
Operating accruals | $ | 11,286 | $ | 11,539 | ||||
Deferred revenue—current portion | 4,307 | 4,174 | ||||||
Payroll and benefits | 3,371 | 2,952 | ||||||
Taxes—non-income based | 1,359 | 1,128 | ||||||
Interest | 11,828 | 11,672 | ||||||
| | | | | | | | |
Total | $ | 32,151 | $ | 31,465 | ||||
| | | | | | | | |
| | | | | | | | |
Longterm_debt
Long-term debt: | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Long-term debt: | |||||||||||
Long-term debt: | |||||||||||
4. Long-term debt: | |||||||||||
Senior unsecured notes | |||||||||||
On April 9, 2014, Cogent Communications Finance, Inc. ("Cogent Finance"), a newly formed financing subsidiary of Group, completed an offering at par of $200.0 million in aggregate principal amount of 5.625% Senior Notes due 2021 (the "2021 Notes"). The 2021 Notes were sold in private offerings for resale to qualified institutional buyers pursuant to SEC Rule 144A. The offering closed into escrow pursuant to an escrow agreement, dated as of April 9, 2014 (the "Escrow Agreement"). The term "Issuer" refers to Cogent Finance prior to the release of the funds from the escrow account (such date of release, the "Escrow Release Date") and to Group after the Escrow Release Date. As a condition to releasing the funds from escrow Group redeemed its remaining outstanding Convertible Notes on June 20, 2014 (the "Redemption Transaction"). After consummation of the Redemption Transaction, Cogent Finance merged with Group, with Group continuing as the surviving corporation (the "Finance Merger"). At the time of consummation of the Finance Merger, Group assumed the obligations of Cogent Finance under the 2021 Notes and the indenture governing the 2021 Notes (the "Indenture") and Group and each of Group's domestic subsidiaries became party to the Indenture pursuant to a supplemental indenture to the Indenture and the obligations under the Indenture became obligations solely of Group and each of Group's domestic subsidiaries. Holdings also provided a guarantee of the 2021 Notes but Holdings is not subject to the covenants under the Indenture. After the conditions to the release of the escrow proceeds were satisfied, on June 25, 2014 (the "Escrow Release Date") the proceeds from the 2021 Notes were released. The net proceeds from the offering were $195.8 million after deducting commissions and offering expenses. Issuance costs are included in deposits and other assets. The net proceeds from the offering are intended to be used for general corporate purposes. | |||||||||||
The 2021 Notes were issued pursuant to, and are governed by the Indenture between Cogent Finance and the trustee. The 2021 Notes bear interest at a rate of 5.625% per year and will mature on April 15, 2021. Interest began to accrue on the 2021 Notes on April 9, 2014 and will be paid semi-annually on April 15 and October 15, commencing on October 15, 2014. Following the Escrow Release Date, the 2021 Notes became Group's senior unsecured obligations and are guaranteed on a senior unsecured basis by the Company. The 2021 Notes are effectively subordinated in right of payment to all of Group's and each guarantor's secured indebtedness, including Group's existing $240.0 million of senior secured notes, described below, and future secured indebtedness, if any, to the extent of the value of the assets securing such indebtedness. The 2021 Notes are equal in right of payment with Group's and each guarantor's unsecured indebtedness that is not subordinated in right of payment to the 2021 Notes. The 2021 Notes will rank senior in right of payment to Group's and each guarantor's future subordinated debt, if any; and will be structurally subordinated in right of payment to all indebtedness and other liabilities of any of the Group's subsidiaries that are not guarantors, which will only consist of immaterial subsidiaries and foreign subsidiaries that do not guarantee other indebtedness of Group. | |||||||||||
Group may redeem the 2021 Notes, in whole or in part, at any time prior to April 15, 2017 at a price equal to 100% of the principal amount plus an "applicable" premium, plus accrued and unpaid interest, if any, to the date of redemption. The "applicable" premium means, with respect to a note at any date of redemption, the greater of (i) 1.0% of the then-outstanding principal amount of such note and (ii) the excess of (A) the present value at such date of redemption of (1) the redemption price of 104.219% plus (2) all remaining required interest payments due on such note through April 15, 2017 (excluding accrued but unpaid interest to the date of redemption), computed using a discount rate equal to the Treasury Rate as of such date of redemption plus 50 basis points, over (B) the then-outstanding principal amount of such note. Group may also redeem the 2021 Notes, in whole or in part, at any time on or after April 15, 2017 at the applicable redemption prices specified under the indenture governing the 2021 Notes plus accrued and unpaid interest, if any, to the date of redemption. The redemption prices (expressed as a percentage of the principal amount) are 104.219% during the 12-month period beginning on April 15, 2017, 102.813% during the 12-month period beginning on April 15, 2018, 101.406% during the 12-month period beginning on April 15, 2019 and 100.0% during the 12-month period beginning on April 15, 2020 and thereafter. In addition, the Company may redeem up to 35% of the 2021 Notes before April 15, 2017 with the net cash proceeds from certain equity offerings at a redemption price of 105.625% of the principal amount plus accrued and unpaid interest. If Group experiences specific kinds of changes of control, Group must offer to repurchase all of the 2021 Notes at a purchase price of 101.0% of their principal amount, plus accrued and unpaid interest, if any, to the repurchase date. | |||||||||||
The indenture governing the 2021 Notes, among other things, limits Group's and its restricted subsidiaries ability to incur indebtedness; to pay dividends or make other distributions; to make certain investments and other restricted payments; to create liens; consolidate, merge, sell or otherwise dispose of all or substantially all of its assets; to incur restrictions on the ability of a subsidiary to pay dividends or make other payments; and to enter into certain transactions with its affiliates. Limitations on the ability to incur additional indebtedness (excluding IRU agreements incurred in the normal course of business and certain refinancing of existing debt) include a restriction on incurring additional indebtedness if the Company's consolidated leverage ratio, as defined in the Indenture is greater than 5.0. Permitted investments and payments that are not restricted include an amount of up to $150.0 million. This amount may be increased by the Company's consolidated cash flow, as defined in the Indenture as long as the Company's consolidated leverage ratio is less than 4.25. Holdings had cash and cash equivalents totaling $66.0 million as of December 31, 2014 which are not subject to these limitations. | |||||||||||
Senior secured notes | |||||||||||
As described in Note 12, the Company expects to redeem its 8.375% Senior Secured Notes (the "Senior Notes") in March 2015. | |||||||||||
On January 26, 2011 and on August 19, 2013, the Company issued its Senior Notes due February 15, 2018, for aggregate principal amounts of $175.0 million and $65.0 million, respectively, in private offerings for resale to qualified institutional buyers pursuant to SEC Rule 144A. The Senior Notes were secured and bore interest at 8.375% per annum. Interest was payable in cash semiannually in arrears on February 15 and August 15, of each year. On January 26, 2011, the Company received net proceeds of $170.5 million after deducting $4.5 million of issuance costs from issuing $175.0 million of Senior Notes. On August 19, 2013, the Company received net proceeds of $69.9 million after deducting $1.0 million of issuance costs from issuing $65.0 million of Senior Notes. The Senior Notes sold in August 2013 were sold at 109.00% of par value. The $5.9 million premium was being amortized as a reduction to interest expense to the maturity date using the effective interest rate method. Issuance costs are included in deposits and other assets. The net proceeds from the Senior Notes were intended to be used for general corporate purposes, the buyback of the Company's Convertible Notes if the holders exercise their put, and/or repurchases of its common stock or Convertible Notes or special or recurring dividends to the Company's stockholders. | |||||||||||
The Senior Notes were fully guaranteed on a senior secured basis, jointly and severally, by each of the Company's existing domestic and future material domestic subsidiaries, subject to certain exceptions and permitted liens. Under certain circumstances, the Company's subsidiaries may be released from these guarantees without the consent of the holders of the Senior Notes. The Senior Notes and the guarantees were secured by (i) first priority liens on substantially all of the Company's and guarantors' assets, (ii) all of the equity interests in any of its domestic subsidiaries and (iii) 65% of the equity interests of its first-tier foreign subsidiaries held by the Company and its guarantors. The Senior Notes and the guarantees represent the Company's and the guarantors' senior secured obligations and effectively ranked equally and ratably with all of its and the guarantors' existing and future first lien obligations, to the extent of the value of the collateral securing such indebtedness, subject to permitted liens; were structurally subordinated to any existing and future indebtedness and liabilities of non-guarantor subsidiaries and ranked equally in right of payment with all of its and the guarantors' existing and future senior indebtedness. Holdings was also a guarantor of the Senior Notes, however, Holdings' guarantee was unsecured and thus its guarantee was not secured by any of Holdings assets. Holdings was also not subject to the covenants under the indenture governing the Senior Notes. | |||||||||||
The Company could redeem the Senior Notes, in whole or in part, at any time prior to February 15, 2015 at a price equal to 100% of the principal amount plus a "make-whole" premium, plus accrued and unpaid interest, if any, to the date of redemption. The "make whole" premium means, with respect to a note at any date of redemption, the greater of (i) 1.0% of the then-outstanding principal amount of such note and (ii) the excess of (A) the present value at such date of redemption of (1) the redemption price of 104.188%, plus (2) all remaining required interest payments due on such note through February 15, 2015 (excluding accrued but unpaid interest to the date of redemption), computed using a discount rate equal to the Treasury Rate as of such date of redemption plus 50 basis points, over (B) the then-outstanding principal amount of such note. The Company could also redeem the Senior Notes, in whole or in part, at any time on or after February 15, 2015 at the applicable redemption prices specified under the indenture governing the Senior Notes plus accrued and unpaid interest, if any, to the date of redemption. The redemption prices (expressed as a percentage of the principal amount) were 104.188% during the 12-month period beginning on February 15, 2015, 102.094% during the 12-month period beginning on February 15, 2016 and 100.0% during the 12-month period beginning on February 15, 2017 and thereafter. In addition, the Company could redeem up to 35% of the Senior Notes before February 15, 2014 with the net cash proceeds from certain equity offerings at a redemption price of 108.375% of the principal amount plus accrued and unpaid interest. If the Company experienced specific kinds of changes of control, the Company must have offered to repurchase all of the Senior Notes at a purchase price of 101.0% of their principal amount, plus accrued and unpaid interest, if any, to the repurchase date. | |||||||||||
Convertible senior notes | |||||||||||
In June 2007, the Company issued its Convertible Notes for an aggregate principal amount of $200.0 million in a private offering for resale to qualified institutional buyers pursuant to SEC Rule 144A. The Convertible Notes were scheduled to mature on June 15, 2027, were unsecured, and bore interest at 1.00% per annum. Interest was payable in cash semiannually in arrears on June 15 and December 15, of each year, beginning on December 15, 2007. The Company received net proceeds from the issuance of the Convertible Notes of approximately $195.1 million, after deducting the original issue discount of 2.25% and issuance costs. The discount and other issuance costs were being amortized to interest expense using the effective interest method through June 15, 2014, which was the earliest put date. In 2008, the Company purchased an aggregate of $108.0 million of face value of the Convertible Notes for $48.6 million in cash in a series of transactions resulting in $92.0 million of principal amount of the Convertible Notes remaining after these purchase transactions. | |||||||||||
Holders of the Convertible Notes had the right to require the Company to repurchase for cash all or some of their notes on June 15, 2014, 2017 and 2022 at a redemption price of 100% of the principal amount plus accrued interest. Holders of $58.5 million of principal amount of the Convertible Notes issued a repurchase notice to the Company and on June 16, 2014 the Company repaid $58.5 million of Convertible Notes principal amount plus accrued interest. The Convertible Notes may have been redeemed by the Company at any time on and after June 20, 2014 at a redemption price of 100% of the principal amount plus accrued interest. On June 20, 2014 the Company redeemed the remaining $33.5 million principal amount of the Convertible Notes. | |||||||||||
As of December 31, 2013, the Convertible Notes were classified as a current liability since the earliest put date in June 2014 was within one year. The Company separately accounted for the debt and equity components of its Convertible Notes in a manner that reflected its nonconvertible unsecured debt borrowing rate. The debt and equity components for the Convertible Notes were as follows (in thousands): | |||||||||||
December 31, | |||||||||||
2013 | |||||||||||
Principal amount of convertible senior notes | $ | 91,978 | |||||||||
Unamortized discount | (3,099 | ) | |||||||||
Net carrying amount | 88,879 | ||||||||||
Additional paid-in capital | 74,933 | ||||||||||
The amount of interest expense recognized and effective interest rate for the Convertible Notes were as follows (in thousands): | |||||||||||
Year Ended December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
Contractual coupon interest | $ | 419 | $ | 920 | $ | 920 | |||||
Amortization of discount and costs | 3,106 | 6,409 | 5,886 | ||||||||
| | | | | | | | | | | |
Interest expense | $ | 3,525 | $ | 7,329 | $ | 6,806 | |||||
| | | | | | | | | | | |
Effective interest rate | 8.7 | % | 8.7 | % | 8.7 | % | |||||
Long-term debt maturities | |||||||||||
The aggregate future contractual maturities of long-term debt were as follows as of December 31, 2014 (in thousands): | |||||||||||
For the year ending December 31, | |||||||||||
2015 | $ | — | |||||||||
2016 | — | ||||||||||
2017 | — | ||||||||||
2018 | 240,000 | ||||||||||
2019 | — | ||||||||||
Thereafter | 200,000 | ||||||||||
| | | | | |||||||
Total | $ | 440,000 | |||||||||
| | | | | |||||||
| | | | | |||||||
As described in Note 12, the $240.0 million of Senior Notes due in 2018 are expected to be redeemed in March 2015. | |||||||||||
Income_taxes
Income taxes: | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Income taxes: | |||||||||||
Income taxes: | |||||||||||
5. Income taxes: | |||||||||||
The components of income (loss) before income taxes consist of the following (in thousands): | |||||||||||
Years Ended December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
Domestic | $ | 31,645 | $ | 30,779 | $ | 20,411 | |||||
Foreign | (27,154 | ) | (23,792 | ) | (23,911 | ) | |||||
| | | | | | | | | | | |
Total income (loss) before income taxes | $ | 4,491 | $ | 6,987 | $ | (3,500 | ) | ||||
| | | | | | | | | | | |
| | | | | | | | | | | |
The income tax (expense) benefit is comprised of the following (in thousands): | |||||||||||
Years Ended December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
Current: | |||||||||||
Federal | $ | (126 | ) | $ | — | $ | — | ||||
State | (243 | ) | (83 | ) | 2,285 | ||||||
Foreign | (169 | ) | (284 | ) | (344 | ) | |||||
Deferred: | |||||||||||
Federal | (2,352 | ) | 49,317 | — | |||||||
State | (824 | ) | 995 | (1,245 | ) | ||||||
Foreign | 20 | (243 | ) | (1,447 | ) | ||||||
| | | | | | | | | | | |
Total income tax (expense) benefit | $ | (3,694 | ) | $ | 49,702 | $ | (751 | ) | |||
| | | | | | | | | | | |
| | | | | | | | | | | |
Our consolidated temporary differences comprising our net deferred tax assets are as follows (in thousands): | |||||||||||
December 31, | |||||||||||
2014 | 2013 | ||||||||||
Deferred Tax Assets: | |||||||||||
Net operating loss carry-forwards | $ | 366,686 | $ | 402,484 | |||||||
Depreciation and amortization | 7,769 | 3,110 | |||||||||
Tax credits | 2,208 | 2,775 | |||||||||
Equity-based compensation | 849 | — | |||||||||
Accrued liabilities and other | 20,705 | 3,748 | |||||||||
| | | | | | | | ||||
Total gross deferred tax assets | 398,217 | 412,117 | |||||||||
| | | | | | | | ||||
Deferred Tax Liabilities: | |||||||||||
Convertible notes | — | 1,150 | |||||||||
Equity-based compensation | — | 248 | |||||||||
| | | | | | | | ||||
Total gross deferred tax liabilities | — | 1,398 | |||||||||
| | | | | | | | ||||
Net deferred tax assets before valuation allowance | 398,217 | 410,719 | |||||||||
Valuation allowance | (345,250 | ) | (354,537 | ) | |||||||
| | | | | | | | ||||
Net deferred tax asset | $ | 52,967 | $ | 56,182 | |||||||
| | | | | | | | ||||
| | | | | | | | ||||
At each balance sheet date, the Company assesses the likelihood that it will be able to realize its deferred tax assets. The Company considers all available positive and negative evidence in assessing the need for a valuation allowance. At December 31, 2013, the Company concluded that it was more likely than not that it would be able to realize certain of its US Federal and state deferred tax assets primarily as a result of expected future US Federal taxable income related to its operations in the United States. Accordingly, the Company reduced the valuation allowance related to these deferred tax assets and recorded an income tax benefit of $52.2 million in the year ended December 31, 2013. The Company maintains a full valuation allowance against its other deferred tax assets consisting primarily of net operating loss carryforwards related to its foreign operations in Europe and Mexico and net operating losses in the United States that are limited for use under Section 382 of the Internal Revenue Code. | |||||||||||
As of December 31, 2014, the Company has combined net operating loss carry-forwards of approximately $1.2 billion. This amount includes federal and state net operating loss carry-forwards in the United States of approximately $390.6 million, net operating loss carry-forwards related to its European, Mexican, Canadian and Japanese operations of approximately $786.3 million, $1.8 million,$0.4 million and $0.1 million, respectively. Section 382 of the Internal Revenue Code in the United States limits the utilization of net operating losses when ownership changes, as defined by that section, occur. The Company has performed an analysis of its Section 382 ownership changes and has determined that the utilization of certain of its net operating loss carryforwards in the United States is limited and for those carryforwards with limitations the Company continues to maintain a valuation allowance. Of the $390.6 million of net operating losses available at December 31, 2014 in the United States approximately $286 million are unavailable for use and approximately $81 million are limited for use under Section 382. Our net operating loss carryforwards outside of the United States totaling approximately $789 million are not subject to limitations similar to Section 382. The net operating loss carryforwards in the United States and Canada will expire, if unused, between 2024 and 2034. The net operating loss carry-forwards related to the Company's Mexican and Japanese operations expire if unused, between 2019 and 2024. The net operating loss carry-forwards related to the Company's European operations include $641.7 million that do not expire and $144.6 million that expire between 2015 and 2029. | |||||||||||
The Company has not provided for United States deferred income taxes or foreign withholding taxes on its undistributed earnings for certain non-US subsidiaries earnings or cumulative translation adjustments because these earnings and adjustments are intended to be permanently reinvested in operations outside the United States. | |||||||||||
In the normal course of business the Company takes positions on its tax returns that may be challenged by taxing authorities. The Company evaluates all uncertain tax positions to assess whether the position will more likely than not be sustained upon examination. If the Company determines that the tax position is more likely than not to be sustained, the Company records the amount of the benefit that is more likely than not to be realized when the tax position is settled. This liability, including accrued interest and penalties, is included in other long-term liabilities in the accompanying balance sheets and was $1.0 million as of December 31, 2014 and $1.1 million as of December 31, 2013. The Company expects that its liability for uncertain tax positions will decrease by approximately $0.1 million during the twelve months ended December 31, 2015, due to the expiration of certain statutes of limitation, however, actual changes in the liability for uncertain tax positions could be different than currently expected. If recognized, changes in the Company's total unrecognized tax benefits would impact the Company's effective income tax rate. The roll-forward of the liability for uncertain tax positions is below and excludes interest and penalties. | |||||||||||
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands): | |||||||||||
Years Ended December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
Beginning balance of unrecognized tax benefits | $ | 1,000 | $ | 1,312 | $ | 2,875 | |||||
Change attributable to tax positions taken during a prior period | 82 | (51 | ) | 745 | |||||||
Decrease attributable to settlements with taxing authorities | (160 | ) | (1,655 | ) | |||||||
Decrease attributable to lapses of statutes of limitation | (56 | ) | (261 | ) | (653 | ) | |||||
| | | | | | | | | | | |
Ending balance of unrecognized tax benefits | $ | 866 | $ | 1,000 | $ | 1,312 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
The Company or one of its subsidiaries files income tax returns in the US federal jurisdiction and various state and foreign jurisdictions. The Company is subject to US federal tax and state tax examinations for years 2004 to 2014. The Company is subject to tax examinations in its foreign jurisdictions generally for years 2005 to 2014. | |||||||||||
The following is a reconciliation of the Federal statutory income taxes to the amounts reported in the financial statements (in thousands). | |||||||||||
Years Ended December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
Federal income tax (expense) benefit at statutory rates | $ | (1,572 | ) | $ | (2,445 | ) | $ | 1,225 | |||
Effect of: | |||||||||||
State income taxes, net of federal benefit | (590 | ) | (454 | ) | (1,152 | ) | |||||
Impact of foreign operations | (267 | ) | 95 | 147 | |||||||
Non-deductible expenses | (659 | ) | (461 | ) | (2,549 | ) | |||||
Changes in tax reserves | 165 | 503 | 1,552 | ||||||||
Other | (191 | ) | 277 | 4 | |||||||
Changes in valuation allowance—US | (580 | ) | 52,187 | 22 | |||||||
| | | | | | | | | | | |
Income tax (expense) benefit | $ | (3,694 | ) | $ | 49,702 | $ | (751 | ) | |||
| | | | | | | | | | | |
| | | | | | | | | | | |
Commitments_and_contingencies
Commitments and contingencies: | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Commitments and contingencies: | |||||
Commitments and contingencies: | |||||
6. Commitments and contingencies: | |||||
Capital leases—fiber lease agreements | |||||
The Company has entered into lease agreements with numerous providers of dark fiber primarily under 15-20 year IRUs typically with additional renewal terms. Once the Company has accepted the related fiber route, leases that meet the criteria for treatment as capital leases are recorded as a capital lease obligation and an IRU asset. The interest rate used in determining the present value of the aggregate future minimum lease payments is determined by adding a premium to the US treasury interest rate for the lease term. The future minimum payments under these agreements are as follows (in thousands): | |||||
For the year ending December 31, | |||||
2015 | $ | 33,848 | |||
2016 | 22,089 | ||||
2017 | 22,058 | ||||
2018 | 21,988 | ||||
2019 | 21,976 | ||||
Thereafter | 233,816 | ||||
| | | | | |
Total minimum lease obligations | 355,775 | ||||
Less—amounts representing interest | (189,237 | ) | |||
| | | | | |
Present value of minimum lease obligations | 166,538 | ||||
Current maturities | (14,594 | ) | |||
| | | | | |
Capital lease obligations, net of current maturities | $ | 151,944 | |||
| | | | | |
| | | | | |
Current and potential litigation | |||||
In accordance with the accounting guidance for contingencies, the Company accrues its estimate of a contingent liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Where it is probable that a liability has been incurred and there is a range of expected loss for which no amount in the range is more likely than any other amount, the Company accrues at the low end of the range. The Company reviews its accruals at least quarterly and adjusts them to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular matter. The Company has taken certain positions related to its obligations for leased circuit and dark fiber obligations for which it is reasonably possible could result in a loss of up to $2.1 million in excess of the amount accrued at December 31, 2014. | |||||
Certain former sales employees of the Company filed a collective action against the Company in December 2011 in the United States District Court, Southern District of Texas, Houston Division alleging misclassification of the Company's sales employees throughout the United States in violation of the Fair Labor Standards Act. The lawsuit seeks to recover pay for allegedly unpaid overtime and other damages, including attorney's fees. In March 2014, the judge de-certified the collective action. Each of the former employees that opted-in to the collective action retained the right to file an individual action. Approximately 70 former employees did so. The Company has reached oral settlements in a number of the cases that were filed. These settlements still require settlement agreements to be signed by all parties and, in certain instances, court approval. Upon final resolution of the pending settlements, three cases will remain. In several of the remaining cases, the plaintiffs seek certification of a class or collective action related to the employees in that jurisdiction. The Company denies the claims and believes that the claims for unpaid overtime are without merit. The Company believes its classification of sales employees is in compliance with applicable law. | |||||
In the normal course of business the Company is involved in other legal activities and claims. Because such matters are subject to many uncertainties and the outcomes are not predictable with assurance, the liability related to these legal actions and claims cannot be determined with certainty. Management does not believe that such claims and actions will have a material impact on the Company's financial condition or results of operations. Judgment is required in estimating the ultimate outcome of any dispute resolution process, as well as any other amounts that may be incurred to conclude the negotiations or settle any litigation. Actual results may differ from these estimates under different assumptions or conditions and such differences could be material. | |||||
Operating leases | |||||
The Company leases office space, network equipment sites, and data center facilities under operating leases. In certain cases the Company enters into operating lease commitments for fiber. Future minimum annual payments under these arrangements are as follows (in thousands): | |||||
For the year ending December 31, | |||||
2015 | $ | 31,947 | |||
2016 | 24,025 | ||||
2017 | 18,852 | ||||
2018 | 15,891 | ||||
2019 | 13,124 | ||||
Thereafter | 54,172 | ||||
| | | | | |
$ | 158,011 | ||||
| | | | | |
| | | | | |
Expenses related to these arrangements were $39.1 million in 2014, $36.4 million in 2013 and $33.8 million in 2012. | |||||
Unconditional purchase obligations | |||||
Unconditional purchase obligations for equipment and services totaled approximately $6.6 million at December 31, 2014. As of December 31, 2014, the Company had also committed to additional dark fiber IRU capital and operating lease agreements totaling approximately $29.2 million in future payments to be paid over periods of up to 20 years. These obligations begin when the related fiber is accepted, which is generally expected to occur in 2015. Future minimum payments under these obligations are approximately, $16.2 million, $1.0 million, $0.9 million, $0.9 million and $1.0 million for the years ending December 31, 2015 to December 31, 2019, respectively, and approximately $15.8 million, thereafter. | |||||
Defined contribution plan | |||||
The Company sponsors a 401(k) defined contribution plan that provides for a Company matching payment. The Company matching payments were $0.5 million for 2014, $0.4 million for 2013 and $0.4 million 2012 and were paid in cash. | |||||
Stockholders_equity
Stockholders' equity: | 12 Months Ended | |||||||||||||||
Dec. 31, 2014 | ||||||||||||||||
Stockholders' equity: | ||||||||||||||||
Stockholders' equity: | ||||||||||||||||
7. Stockholders' equity: | ||||||||||||||||
Authorized shares | ||||||||||||||||
The Company has 75.0 million shares of authorized $0.001 par value common stock and 10,000 authorized but unissued shares of $0.001 par value preferred stock. The holders of common stock are entitled to one vote per common share and, subject to any rights of any series of preferred stock, dividends may be declared and paid on the common stock when determined by the Company's board of directors. | ||||||||||||||||
Common stock buybacks | ||||||||||||||||
The Company's board of directors has approved $50.0 million for purchases of the Company's common stock under a buyback program (the "Buyback Program"). At December 31, 2014, there was approximately $37.2 million remaining for purchases under the Buyback Program. During the years ended December 31, 2014 and 2012, the Company purchased approximately 1.7 million and 0.1 million shares of its common stock for $58.6 million and $1.3 million, respectively. These common shares were subsequently retired. There were no purchases of the Company's common stock in 2013. | ||||||||||||||||
Dividends on common stock and return of capital program | ||||||||||||||||
Dividends are recorded as a reduction to retained earnings. Dividends on unvested restricted shares of common stock are paid as the awards vest. The Company's initial quarterly dividend payment was made in the third quarter of 2012. In addition to the Company's regular quarterly dividends, in 2013, the Company's board of directors approved an additional return of capital program (the "Capital Program") for the Company's shareholders. Under the Capital Program the Company plans on returning additional capital to the Company's shareholders each quarter through either stock buybacks or a special dividend or a combination of stock buybacks and a special dividend until the Company's net debt to trailing twelve months EBITDA, as adjusted, ratio reaches an amount specified by the Company's board of directors. The aggregate payment under the Capital Program initially was at least $10.0 million each quarter and was increased to be at least $12.0 million each quarter. Amounts paid under the Capital Program are in addition to the Company's regular quarterly dividend payments. | ||||||||||||||||
A summary of the Company's quarterly dividends paid since its initial dividend payment is as follows (in thousands, except per share amounts): | ||||||||||||||||
Dividend Period | Amount per | Record Date | Payment Date | Total | ||||||||||||
Common Share | Dividends | |||||||||||||||
Paid | ||||||||||||||||
Q3 2012 | $ | 0.10 | August 22, 2012 | September 12, 2012 | $ | 4,537 | ||||||||||
Q4 2012 | $ | 0.11 | November 21, 2012 | December 12, 2012 | $ | 5,012 | ||||||||||
Q1 2013 | $ | 0.12 | March 4, 2013 | March 15, 2013 | $ | 5,489 | ||||||||||
Q2 2013 | $ | 0.13 | May 31, 2013 | June 18, 2013 | $ | 6,145 | ||||||||||
Q3 2013 | $ | 0.14 | September 5, 2013 | September 25, 2013 | $ | 6,512 | ||||||||||
Q4 2013 | $ | 0.37 | November 27, 2013 | December 20, 2013 | $ | 17,206 | ||||||||||
Q1 2014 | $ | 0.39 | March 7, 2014 | March 27, 2014 | $ | 18,352 | ||||||||||
Q2 2014 | $ | 0.17 | May 30, 2014 | June 18, 2014 | $ | 7,882 | ||||||||||
Q3 2014 | $ | 0.30 | August 29, 2014 | September 19, 2014 | $ | 13,792 | ||||||||||
Q4 2014 | $ | 0.31 | November 26, 2014 | December 12, 2014 | $ | 14,190 | ||||||||||
A summary of the Company's amounts paid under the Capital Program is as follows (in thousands, except per share amounts): | ||||||||||||||||
Dividend Period | Capital | Stock Buyback | Stock Buyback | Payment Under | Amount Per | |||||||||||
Program | Amount | Amount Greater | Capital Program | Share Paid As | ||||||||||||
Amount | During the | than Capital | Paid As | Dividends | ||||||||||||
Period | Program Amount? | Dividend(1) | Under the | |||||||||||||
Capital Program | ||||||||||||||||
Q3 2013 | $ | 10,000 | $ | — | No | $ | — | $ | — | |||||||
Q4 2013 | $ | 10,500 | $ | — | No | $ | 10,186 | $ | 0.22 | |||||||
Q1 2014 | $ | 10,500 | $ | 14,196 | Yes | $ | 10,707 | $ | 0.23 | |||||||
Q2 2014 | $ | 10,500 | $ | 17,888 | Yes | $ | — | $ | — | |||||||
Q3 2014 | $ | 12,000 | $ | 15,943 | Yes | $ | — | $ | — | |||||||
Q4 2014 | $ | 12,000 | $ | 10,555 | No | $ | — | $ | — | |||||||
-1 | Under the Capital Program if the amount spent on stock buybacks during a quarter is less than the program amount the difference is added to the dividend payment for the following quarter. Since the stock buyback amount for the fourth quarter of 2014 was $10.6 million and less than the Capital Program amount of $12.0 million an additional $1.4 million or $0.03 per share will be added to the first quarter 2015 regular dividend. | |||||||||||||||
The payment of any future dividends and any other returns of capital will be at the discretion of the Company's board of directors and may be reduced, eliminated or increased and will be dependent upon the Company's financial position, results of operations, available cash, cash flow, capital requirements and other factors deemed relevant by the Company's board of directors. The Company is a Delaware Corporation and under the General Corporate Law of the State of Delaware distributions may be restricted including a restriction that distributions, including stock purchases and dividends, do not result in an impairment of a corporation's capital, as defined under Delaware Law. | ||||||||||||||||
Stock_option_and_award_plan
Stock option and award plan: | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Stock option and award plan: | |||||||||||
Stock option and award plan: | |||||||||||
8. Stock option and award plan: | |||||||||||
Incentive award plan | |||||||||||
The Company grants restricted stock and options for common stock under its award plan, the 2004 Incentive Award Plan, as amended (the "Award Plan"). Stock options granted under the Award Plan generally vest over a four-year period and have a term of ten years. Grants of shares of restricted stock granted under the Award Plan generally vest over periods ranging from three to four years. Compensation expense for all awards is recognized over the service period. Awards with graded vesting terms are recognized on a straight-line basis. Certain option and share grants provide for accelerated vesting if there is a change in control, as defined. For grants of restricted stock, when an employee terminates prior to full vesting the employee retains their vested shares and the employees' unvested shares are returned to the plan. For grants of options for common stock, when an employee terminates prior to full vesting, the employee may elect to exercise their vested options for a period of ninety days and any unvested options are returned to the plan. Shares issued to satisfy awards are provided from the Company's authorized shares. As of December 31, 2014 there were a total of 0.4 million shares available for grant under the Award Plan. | |||||||||||
The accounting for equity-based compensation expense requires the Company to make estimates and judgments that affect its financial statements. These estimates include the following. | |||||||||||
Expected Dividend Yield—Prior to the initial declaration of a quarterly cash dividend in the third quarter of 2012, the Company used an expected dividend yield of 0% as the Company did not historically pay cash dividends on its common stock. The Company now uses an expected dividend yield based upon expected annual dividends and the stock price. | |||||||||||
Expected Volatility—The Company uses its historical volatility for a period commensurate with the expected term of the option. | |||||||||||
Risk-Free Interest Rate—The Company uses the zero coupon US Treasury rate during the quarter having a term that most closely resembles the expected term of the option. | |||||||||||
Expected Term of the Option—The Company estimates the expected life of the option term by analyzing historical stock option exercises. | |||||||||||
Forfeiture Rates—The Company estimates its forfeiture rate based on historical data with further consideration given to the class of employees to whom the options or shares were granted. | |||||||||||
The weighted-average per share grant date fair value of options was $8.32 in 2014, $9.44 in 2013 and $9.00 in 2012. The following assumptions were used for determining the fair value of options granted in the three years ended December 31, 2014: | |||||||||||
Years Ended December 31, | |||||||||||
Black-Scholes Assumptions | 2014 | 2013 | 2012 | ||||||||
Dividend yield | 3.6 | % | 2.0 | % | 1.3 | % | |||||
Expected volatility | 37.0 | % | 58.5 | % | 61.6 | % | |||||
Risk-free interest rate | 1.6 | % | 0.8 | % | 0.7 | % | |||||
Expected life of the option term (in years) | 4.6 | 4.8 | 4.8 | ||||||||
Stock option activity under the Company's Award Plan during the year ended December 31, 2014, was as follows: | |||||||||||
Number of | Weighted-Average | ||||||||||
Options | Exercise Price | ||||||||||
Outstanding at December 31, 2013 | 175,578 | $ | 19.36 | ||||||||
Granted | 83,540 | $ | 35.11 | ||||||||
Cancelled and expired | (31,842 | ) | $ | 31.01 | |||||||
Exercised—intrinsic value $0.8 million; cash received $0.5 million | (38,379 | ) | $ | 14.19 | |||||||
| | | | | | | | ||||
Outstanding at December 31, 2014—$2.0 million intrinsic value and 6.7 years weighted-average remaining contractual term | 188,897 | $ | 25.41 | ||||||||
| | | | | | | | ||||
| | | | | | | | ||||
Exercisable at December 31, 2014—$1.7 million intrinsic value and 4.7 years weighted-average remaining contractual term | 105,709 | $ | 19.78 | ||||||||
| | | | | | | | ||||
| | | | | | | | ||||
Expected to vest—$1.9 million intrinsic value and 6.3 years weighted-average remaining contractual term | 169,527 | $ | 24.43 | ||||||||
| | | | | | | | ||||
| | | | | | | | ||||
A summary of the Company's non-vested restricted stock awards as of December 31, 2014 and the changes during the year ended December 31, 2014 are as follows: | |||||||||||
Non-vested awards | Shares | Weighted-Average | |||||||||
Grant Date | |||||||||||
Fair Value | |||||||||||
Non-vested at December 31, 2013 | 1,039,323 | $ | 18.69 | ||||||||
Granted | 792,550 | $ | 34.57 | ||||||||
Vested | (513,937 | ) | $ | 19.33 | |||||||
Forfeited | (35,290 | ) | $ | 18.23 | |||||||
| | | | | | | | ||||
Non-vested at December 31, 2014 | 1,282,646 | $ | 28.26 | ||||||||
| | | | | | | | ||||
| | | | | | | | ||||
The weighted average per share grant date fair value of restricted stock granted was $34.57 in 2014 (0.8 million shares) $27.82 in 2013 (0.2 million shares) and $17.74 in 2012 (1.3 million shares). The fair value was determined using the quoted market price of the Company's common stock on the date of grant. The fair value of shares of restricted stock vested in the years ended December 31, 2014, 2013 and 2012 was $19.0 million $21.7 million and $8.8 million, respectively. | |||||||||||
Equity-based compensation expense related to stock options and restricted stock was $9.6 million, $8.7 million, and $8.3 million for the years ended December 31, 2014, 2013, and 2012, respectively. The income tax benefit related to stock options and restricted stock was $2.1 million, $2.5 million, and $0 for the years ended December 31, 2014, 2013, and 2012, respectively The Company capitalized compensation expense related to stock options and restricted stock of $0.8 million for each of the years ended December 31, 2014, 2013, and 2012. As of December 31, 2014 there was $31.1 million of total unrecognized compensation cost related to non-vested equity-based compensation awards. That cost is expected to be recognized over a weighted average period of 2.9 years. | |||||||||||
Related_party_transactions
Related party transactions: | 12 Months Ended |
Dec. 31, 2014 | |
Related party transactions: | |
Related party transactions: | |
9. Related party transactions: | |
Office lease | |
The Company's headquarters is located in an office building owned by Niobium LLC (a successor to 6715 Kenilworth Avenue Partnership). The two owners of the company are the Company's Chief Executive Officer, who has a 51% interest in the partnership and his wife who has a 49% interest. The Company paid $0.5 million in 2014, $0.6 million in 2013 and $0.6 million in 2012, respectively, for rent and related costs (including taxes and utilities) to this company, respectively. The lease ends on August 31, 2016 and is cancellable by the Company upon 60 days' notice. The Company's audit committee reviews and approves all transactions with related parties. | |
Geographic_information
Geographic information: | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Geographic information: | |||||||||||
Geographic information: | |||||||||||
10. Geographic information: | |||||||||||
Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing the Company's performance. The Company has one operating segment. Below are the Company's service revenues and long lived assets by geographic region (in thousands): | |||||||||||
Years Ended December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
Service Revenue | |||||||||||
North America | $ | 301,400 | $ | 274,320 | $ | 253,396 | |||||
Europe | 78,603 | 73,659 | 63,577 | ||||||||
| | | | | | | | | | | |
Total | $ | 380,003 | $ | 347,979 | $ | 316,973 | |||||
| | | | | | | | | | | |
December 31, | December 31, | ||||||||||
2014 | 2013 | ||||||||||
Long lived assets, net | |||||||||||
North America | $ | 266,713 | $ | 251,352 | |||||||
Europe | 94,082 | 89,879 | |||||||||
| | | | | | | | ||||
Total | $ | 360,795 | $ | 341,231 | |||||||
| | | | | | | | ||||
The majority of North American revenue consists of services delivered within the United States. | |||||||||||
Quarterly_financial_informatio
Quarterly financial information (unaudited): | 12 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
Quarterly financial information (unaudited): | ||||||||||||||
Quarterly financial information (unaudited): | ||||||||||||||
11. Quarterly financial information (unaudited): | ||||||||||||||
Three months ended | ||||||||||||||
March 31, | June 30, | September 30, | December 31, | |||||||||||
2014 | 2014 | 2014 | 2014 | |||||||||||
(in thousands, except share and per share amounts) | ||||||||||||||
Service revenue | $ | 92,937 | $ | 94,623 | $ | 95,691 | $ | 96,749 | ||||||
Network operations, including equity-based compensation expense | 38,836 | 39,605 | 40,407 | 41,046 | ||||||||||
Operating income | 12,907 | 14,309 | 13,614 | 13,066 | ||||||||||
Net income (loss) | 125 | 1,208 | (184 | ) | (352 | ) | ||||||||
Net income (loss) per common share—basic | 0 | 0.03 | (0.00 | ) | (0.01 | ) | ||||||||
Net income (loss) per common share—diluted | 0 | 0.03 | (0.00 | ) | (0.01 | ) | ||||||||
Weighted-average number of common shares—basic | 46,409,735 | 45,897,449 | 45,629,079 | 45,229,125 | ||||||||||
Weighted-average number of common shares—diluted | 46,907,360 | 46,294,966 | 45,629,079 | 45,229,125 | ||||||||||
Three months ended | ||||||||||||||
March 31, | June 30, | September 30, | December 31, | |||||||||||
2013 | 2013 | 2013 | 2013(1)(2) | |||||||||||
(in thousands, except share and per share amounts) | ||||||||||||||
Service revenue | $ | 84,553 | $ | 85,803 | $ | 87,761 | $ | 89,859 | ||||||
Network operations, including equity-based compensation expense | 37,309 | 37,076 | 37,441 | 38,400 | ||||||||||
Operating income | 9,905 | 11,601 | 12,577 | 12,065 | ||||||||||
Net income | 361 | 1,607 | 2,122 | 52,599 | ||||||||||
Net income per common share—basic | 0.01 | 0.03 | 0.05 | 1.14 | ||||||||||
Net income per common share—diluted | 0.01 | 0.03 | 0.05 | 1.10 | ||||||||||
Weighted-average number of common shares—basic | 45,537,607 | 46,040,692 | 46,171,194 | 46,302,926 | ||||||||||
Weighted-average number of common shares—diluted | 46,435,677 | 46,769,184 | 46,823,167 | 48,800,560 | ||||||||||
-1 | As described in Note 5, during the fourth quarter of 2013 the Company reversed its valuation allowance against its US federal and certain state deferred income tax assets. | |||||||||||||
-2 | Diluted earnings per share for the fourth quarter of 2013 assumed the conversion of the Convertible Notes since the Convertible Notes were dilutive this quarter. The assumed conversion of the Convertible Notes was anti-dilutive for the other periods presented. Diluted earnings per share for the fourth quarter of 2013 is determined by adding back $1.2 million of interest expense from the Convertible Notes to net income and including 1.9 million shares from the assumed conversion of the Convertible Notes in the weighted-average number of common dilutive shares. | |||||||||||||
Subsequent_events
Subsequent events: | 12 Months Ended |
Dec. 31, 2014 | |
Subsequent events: | |
Subsequent events: | |
12. Subsequent Events: | |
Purchase agreement | |
In January 2015, the Company entered into an equipment purchase agreement with a vendor. Under the purchase agreement the Company is required to purchase a total of $28.9 million of equipment during the eighteen month term. | |
Dividends | |
On February 24, 2015, the Company's board of directors approved the payment of the Company's regular quarterly dividend of $0.32 per common share and a $1.4 million dividend ($0.03 per share) under the Company's Capital Program. The total dividend for the first quarter of 2015 of $0.35 per share will be paid to holders of record on March 11, 2015. This estimated $15.8 million dividend payment is expected to be made on March 26, 2015. | |
Debt redemption and new debt issuance | |
In March 2015, Group is expected to redeem its $240.0 million 8.375% Senior Notes with the proceeds from its February 2015 issuance of $250.0 million of 5.375% senior secured notes (the "New Secured Notes") and existing cash on hand. The Company deposited $251.6 million with the trustee for the benefit of the holders of the Senior Notes in order to redeem on March 12, 2015 the entire outstanding amount of Senior Notes at a redemption price of 104.188% of the $240.0 million principal amount thereof plus accrued and unpaid interest. As a result of this transaction the Company expects to incur a loss on redemption of approximately $9.0 million in the first quarter of 2015. | |
The New Secured Notes will mature on March 1, 2022 and interest will accrue at 5.375% beginning on February 20, 2015 and will be paid semi-annually in arrears on March 1 and September 1 of each year, commencing on September 1, 2015. The indenture governing the New Secured Notes provides that the Company and each of the Company's existing domestic subsidiaries and future material domestic subsidiaries guarantee the New Secured Notes, subject to certain exceptions and permitted liens. The New Secured Notes are also secured by a pledge of all of the equity interests in Group's domestic subsidiaries and 65% of the equity interests in Group's first-tier foreign subsidiaries. The New Secured Notes and the subsidiary guarantees will be the Company's and the subsidiary guarantors' senior indebtedness and will rank pari passu in right of payment with all of the Company's and the subsidiary guarantors' existing and future senior indebtedness, effectively senior to Group's senior unsecured indebtedness to the extent of the value of the collateral securing the New Secured Notes and the subsidiary guarantees, including Group's $200.0 million 2021 Notes that were issued on April 9, 2014 and senior to any of the Company's and the subsidiary guarantors' future subordinated indebtedness. The New Secured Notes will be structurally subordinated to the liabilities of the non-guarantor subsidiaries and will be effectively subordinated to the Company's and the subsidiary guarantors' secured indebtedness to the extent of the value of the collateral securing such indebtedness on a basis senior to the New Secured Notes and the subsidiary guarantees. Holdings is also a guarantor of the New Secured Notes; however Holdings's guarantee is unsecured and thus its guarantee is not secured by any of the Holdings assets. Holdings is also not subject to the covenants under the indenture governing the New Secured Notes. | |
The New Secured Notes may be redeemed prior to December 1, 2021 (three months prior to the maturity date of the Notes) in whole or from time to time in part, at a redemption price equal to the sum of (1) 100% of the principal amount plus accrued and unpaid interest, if any, to, but not including, the redemption date, and (2) a make-whole premium, if any. The make-whole premium is the excess of (1) the net present value, on the redemption date, of the principal being redeemed or paid and the amount of interest (exclusive of interest accrued to the date of redemption) that would have been payable if such redemption had not been made, over (2) the aggregate principal amount of the notes being redeemed or paid. Net present value shall be determined by discounting, on a semi-annual basis, such principal and interest at the reinvestment rate (as determined in the indenture governing the New Secured Notes) from the respective dates on which such principal and interest would have been payable if such redemption had not been made. In addition, at any time on or after December 1, 2021 (three months prior to the maturity date of the Notes), the Issuer may redeem the Notes, in whole and or in part, at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, to, but not including, the redemption date. | |
The indenture governing the New Secured Notes, among other things, limits Group's and its restricted subsidiaries' ability to incur indebtedness; to pay dividends or make other distributions; to make certain investments and other restricted payments; to create liens; consolidate, merge, sell or otherwise dispose of all or substantially all of its assets; to incur restrictions on the ability of a subsidiary to pay dividends or make other payments; and to enter into certain transactions with its affiliates. | |
Schedule_II_VALUATION_AND_QUAL
Schedule II VALUATION AND QUALIFYING ACCOUNTS | 12 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
Schedule II VALUATION AND QUALIFYING ACCOUNTS | ||||||||||||||
Schedule II VALUATION AND QUALIFYING ACCOUNTS | Schedule II | |||||||||||||
COGENT COMMUNICATIONS HOLDINGS, INC. AND SUBSIDIARIES | ||||||||||||||
VALUATION AND QUALIFYING ACCOUNTS | ||||||||||||||
(in thousands) | ||||||||||||||
Description | Balance at | Charged to | (Deductions) | Balance at | ||||||||||
Beginning of | Costs and | End of | ||||||||||||
Period | Expenses | Period | ||||||||||||
Allowance for doubtful accounts (deducted from accounts receivable)(a) | ||||||||||||||
Year ended December 31, 2012 | $ | 3,345 | $ | 6,058 | $ | (6,320 | ) | $ | 3,083 | |||||
Year ended December 31, 2013 | $ | 3,083 | $ | 4,731 | $ | (5,943 | ) | $ | 1,871 | |||||
Year ended December 31, 2014 | $ | 1,871 | $ | 5,046 | $ | (5,210 | ) | $ | 1,707 | |||||
Allowance for Unfulfilled Customer Purchase Obligations (deducted from accounts receivable) | ||||||||||||||
Year ended December 31, 2012 | $ | 1,859 | $ | 6,888 | $ | (7,065 | ) | $ | 1,682 | |||||
Year ended December 31, 2013 | $ | 1,682 | $ | 4,690 | $ | (4,228 | ) | $ | 2,144 | |||||
Year ended December 31, 2014 | $ | 2,144 | $ | 5,082 | $ | (5,678 | ) | $ | 1,548 | |||||
Deferred tax valuation allowance | ||||||||||||||
Year ended December 31, 2012 | $ | 370,293 | $ | 18,200 | $ | (33 | ) | $ | 388,460 | |||||
Year ended December 31, 2013 | $ | 388,460 | $ | 5,542 | $ | (39,465 | ) | $ | 354,537 | |||||
Year ended December 31, 2014 | $ | 354,537 | $ | 10,436 | $ | (19,723 | ) | $ | 345,250 | |||||
(a) | Bad debt expense, net of recoveries, was approximately $3.7 million for the year ended December 31, 2014, $3.5 million for the year ended December 31, 2013 and $5.1 million for the year ended December 31, 2012. | |||||||||||||
Description_of_the_business_an1
Description of the business and summary of significant accounting policies: (Policies) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Description of the business and summary of significant accounting policies: | ||||||||
Principles of consolidation | Principles of consolidation | |||||||
The consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles and include the accounts of the Company and all of its wholly-owned and majority-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. | ||||||||
Use of estimates | Use of estimates | |||||||
The preparation of consolidated financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates. | ||||||||
Revenue recognition and allowance for doubtful accounts | Revenue recognition and allowance for doubtful accounts | |||||||
The Company's service offerings consist of on-net and off-net telecommunications services. Fixed fees are billed monthly in advance and usage fees are billed monthly in arrears. Revenues from telecommunication services are recognized when the services are performed, evidence of an arrangement exists, the fee is fixed and determinable and collection is probable. The probability of collection is determined by an analysis of credit history for new customers and historical payment patterns for existing customers. Service discounts and incentives related to telecommunication services are recorded as a reduction of revenue when granted. Fees billed in connection with customer installations are deferred and recognized ratably over the longer of the contract term or the estimated customer life. The Company expenses the direct costs associated with sales as incurred. | ||||||||
The Company invoices certain customers for amounts contractually due for unfulfilled minimum contractual obligations and recognizes a corresponding sales allowance equal to the amount invoiced resulting in the recognition of no net revenue at the time the customer is billed. The Company vigorously seeks payment of these amounts. The Company recognizes revenue for these billings as they are collected. | ||||||||
The Company establishes an allowance for doubtful accounts and other sales credit adjustments related to its trade receivables. Trade receivables are recorded at the invoiced amount and can bear interest. Allowances for sales credits are established through a reduction of revenue, while allowances for doubtful accounts are established through a charge to selling, general, and administrative expenses as bad debt expense. The Company assesses the adequacy of these reserves by evaluating factors, such as the length of time individual receivables are past due, historical collection experience, and changes in the credit worthiness of its customers. The Company also assesses the ability of specific customers to meet their financial obligations and establishes specific allowances related to these customers. If circumstances relating to specific customers change or economic conditions change such that the Company's past collection experience and assessment of the economic environment are no longer appropriate, the Company's estimate of the recoverability of its trade receivables could be impacted. Accounts receivable balances are written-off against the allowance for doubtful accounts after all means of internal collection activities have been exhausted and the potential for recovery is considered remote. The Company recognized bad debt expense, net of recoveries, of $3.7 million, $3.5 million and $5.1 million for the years ended December 31, 2014, 2013 and 2012, respectively. | ||||||||
Gross Receipts Taxes | ||||||||
Revenue recognition standards include guidance relating to any tax assessed by a governmental authority that is directly imposed on a revenue-producing transaction between a seller and a customer and may include, but is not limited to, gross receipts taxes and certain state regulatory fees. The Company records certain excise taxes billed to its customers on a gross basis in its consolidated statements of operations. | ||||||||
Network operations | Network operations | |||||||
Network operations expenses include the costs of personnel and related operating expenses associated with service delivery, network management, and customer support, network facilities costs, fiber and equipment maintenance fees, leased circuit costs, and access fees paid to building owners. The Company estimates its accruals for any disputed leased circuit obligations based upon the nature and age of the dispute. Network operations costs are impacted by the timing and amounts of disputed circuit costs. The Company generally records these disputed amounts when billed by the vendor and reverses these amounts when the vendor credit has been received or the dispute has otherwise been resolved. The Company does not allocate depreciation and amortization expense to its network operations expense. | ||||||||
Foreign currency translation adjustment and comprehensive income (loss) | Foreign currency translation adjustment and comprehensive income (loss) | |||||||
The consolidated financial statements of the Company's non-US operations are translated into US dollars using the period-end foreign currency exchange rates for assets and liabilities and the average foreign currency exchange rates for revenues and expenses. Gains and losses on translation of the accounts are accumulated and reported as a component of other comprehensive income (loss) in stockholders' equity. The Company's only components of "other comprehensive income (loss)" are currency translation adjustments for all periods presented. The Company considers the majority of its investments in its foreign subsidiaries to be long-term in nature. The Company's foreign exchange transaction gains (losses), including where its investments in its foreign subsidiaries are not considered to be long-term in nature, are included within interest income and other on the consolidated statements of comprehensive income (loss). | ||||||||
Financial instruments | Financial instruments | |||||||
The Company considers all highly liquid investments with an original maturity of three months or less at purchase to be cash equivalents. The Company determines the appropriate classification of its investments at the time of purchase and evaluates such designation at each balance sheet date. | ||||||||
At December 31, 2014 and December 31, 2013, the carrying amount of cash and cash equivalents, accounts receivable, prepaid and other current assets, accounts payable, and accrued expenses approximated fair value because of the short-term nature of these instruments. The Company measures its cash equivalents at amortized cost, which approximates fair value based upon quoted market prices (Level 1). Based upon recent trading prices (Level 2—market approach) at December 31, 2014 the fair value of the Company's $200.0 million senior unsecured notes was $196.0 million and the fair value of the Company's $240.0 million senior secured notes was $250.8 million. | ||||||||
The Company was party to letters of credit totaling $0.4 million as of December 31, 2014 and $0.4 million as of December 31, 2013. These letters of credit are secured by investments that are restricted and included in deposits and other assets. | ||||||||
Concentrations of credit risk | Concentrations of credit risk | |||||||
The Company's assets that are exposed to credit risk consist of its cash and cash equivalents, other assets and accounts receivable. As of December 31, 2014 and 2013, the Company's cash equivalents were invested in demand deposit accounts, overnight investments and money market funds. The Company places its cash equivalents in instruments that meet high-quality credit standards as specified in the Company's investment policy guidelines. Accounts receivable are due from customers located in major metropolitan areas in the United States, Europe, Canada and Mexico. Receivables from the Company's net-centric (wholesale) customers are generally subject to a higher degree of credit risk than the Company's corporate customers. | ||||||||
The Company relies upon an equipment vendor for the majority of its network equipment and is also dependent upon many third-party fiber providers for providing its services to its customers. | ||||||||
Property and equipment | Property and equipment | |||||||
Property and equipment are recorded at cost and depreciated once deployed using the straight-line method over the estimated useful lives of the assets. Useful lives are determined based on historical usage with consideration given to technological changes and trends in the industry that could impact the asset utilization. System infrastructure costs include the capitalized compensation costs of employees directly involved with construction activities and costs incurred by third party contractors. | ||||||||
Assets and liabilities under capital leases are recorded at the lesser of the present value of the aggregate future minimum lease payments or the fair value of the assets under lease. Leasehold improvements include costs associated with building improvements. The Company determines the number of renewal option periods, if any, included in the lease term for purposes of amortizing leasehold improvements and the lease term of its capital leases based upon its assessment at the inception of the lease for which the failure to renew the lease imposes a penalty on the Company in such amount that a renewal appears to be reasonably assured. Expenditures for maintenance and repairs are expensed as incurred. | ||||||||
Depreciation and amortization periods are as follows: | ||||||||
Type of asset | Depreciation or amortization period | |||||||
Indefeasible rights of use (IRUs) | Shorter of useful life or the IRU lease agreement; generally 15 to 20 years | |||||||
Network equipment | 3 to 8 years | |||||||
Leasehold improvements | Shorter of lease term, including reasonably assured renewal periods, or useful life | |||||||
Software | 5 years | |||||||
Owned buildings | 40 years | |||||||
Office and other equipment | 3 to 7 years | |||||||
System infrastructure | 5 to 10 years | |||||||
Long-lived assets | Long-lived assets | |||||||
The Company's long-lived assets include property and equipment. These long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Impairment is determined by comparing the carrying value of these long-lived assets to management's probability weighted estimate of the future undiscounted cash flows expected to result from the use of the assets. In the event an impairment exists, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the asset, which would be determined by using quoted market prices or valuation techniques such as the discounted present value of expected future cash flows, appraisals, or other pricing models. In the event there are changes in the planned use of the Company's long-term assets or the Company's expected future undiscounted cash flows are reduced significantly, the Company's assessment of its ability to recover the carrying value of these assets could change. | ||||||||
Asset retirement obligations | Asset retirement obligations | |||||||
The Company's asset retirement obligations consist of restoration requirements for certain leased facilities. The Company recognizes a liability for the present value of the estimated fair value of contractual obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and/or the normal operation of a long-lived asset in the period incurred. The present value of the fair value of the obligation is also capitalized as property, plant and equipment and then amortized over the estimated remaining useful life of the associated asset. | ||||||||
Increases to the asset retirement obligation liability due to the passage of time are recognized within selling, general and administrative expenses in the Company's consolidated statements of operations. Changes in the liability due to revisions to estimates of future cash flows are recognized by increasing or decreasing the liability with the offset adjusting the carrying amount of the related long-lived asset. | ||||||||
Equity-based compensation | Equity-based compensation | |||||||
The Company recognizes compensation expense for its share-based payments granted to its employees based on their grant date fair values with the expense being recognized on a straight-line basis over the requisite service period. The Company begins recording equity-based compensation expense related to performance awards when it is considered probable that the performance conditions will be met. Equity-based compensation expense is recognized in the statement of operations in a manner consistent with the classification of the employee's salary and other compensation. | ||||||||
Income taxes | Income taxes | |||||||
The Company's deferred tax assets or liabilities are computed based upon the differences between financial statement and income tax bases of assets and liabilities using the enacted marginal tax rate. Deferred income tax expenses or benefits are based upon the changes in the assets or liability from period to period. At each balance sheet date, the Company assesses the likelihood that it will be able to realize its deferred tax assets. Valuation allowances are established when management determines that it is "more likely than not" that some portion or all of the deferred tax asset may not be realized. The Company considers all available positive and negative evidence in assessing the need for a valuation allowance including its historical operating results, ongoing tax planning, and forecasts of future taxable income, on a jurisdiction by jurisdiction basis. The Company reduces its valuation allowance if the Company concludes that it is "more likely than not" that it would be able to realize its deferred tax assets. | ||||||||
Management determines whether a tax position is more likely than not to be sustained upon examination based on the technical merits of the position. Once it is determined that a position meets this recognition threshold, the position is measured to determine the amount of benefit to be recognized in the financial statements. The Company adjusts its estimated liabilities for uncertain tax positions periodically because of ongoing examinations by, and settlements with, the various taxing authorities, as well as changes in tax laws, regulations and interpretations. The Company's policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of its income tax expense. | ||||||||
Basic and diluted net income (loss) per common share | Basic and diluted net (loss) income per common share | |||||||
Basic earnings per share ("EPS") excludes dilution for common stock equivalents and is computed by dividing net income or (loss) available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted EPS is based on the weighted-average number of shares of common stock outstanding during each period, adjusted for the effect of dilutive common stock equivalents. | ||||||||
Shares of restricted stock are included in the computation of basic EPS as they vest and are included in diluted EPS, to the extent they are dilutive, determined using the treasury stock method. As of December 31, 2014, 2013 and 2012, 1.3 million, 1.0 million and 1.7 million unvested shares of restricted common stock, respectively, are not included in the computation of basic income per share, as these shares were not vested and as of December 31, 2014, 0.4 million anti-dilutive shares of restricted common stock are excluded from the computation of diluted income per share. Using the "if-converted" method, the shares issuable upon conversion of the Company's convertible senior notes (the "Convertible Notes") were anti-dilutive for the years ended December 31, 2013 and 2012. Accordingly, that impact has been excluded from the computation of diluted loss per share. The Convertible Notes were convertible into 1.9 million shares of the Company's common stock at December 31, 2013 and 2012. The Convertible Notes were repaid in June 2014 and are no longer outstanding. | ||||||||
The following details the determination of the diluted weighted average shares for the year ended December 31, 2014 and 2013: | ||||||||
Year Ended | Year Ended | |||||||
December 31, | December 31, | |||||||
2014 | 2013 | |||||||
Weighted average common shares—basic | 45,960,720 | 46,286,735 | ||||||
Dilutive effect of stock options | 59,196 | 76,884 | ||||||
Dilutive effect of restricted stock | 329,754 | 633,285 | ||||||
| | | | | | | | |
Weighted average common shares—diluted | 46,349,670 | 46,996,904 | ||||||
| | | | | | | | |
| | | | | | | | |
Recent accounting pronouncements | ||||||||
Recent accounting pronouncements | ||||||||
On May 28, 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for the Company beginning on January 1, 2017. Early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting. | ||||||||
Description_of_the_business_an2
Description of the business and summary of significant accounting policies: (Tables) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Description of the business and summary of significant accounting policies: | ||||||||
Schedule of depreciation and amortization periods | ||||||||
Type of asset | Depreciation or amortization period | |||||||
Indefeasible rights of use (IRUs) | Shorter of useful life or the IRU lease agreement; generally 15 to 20 years | |||||||
Network equipment | 3 to 8 years | |||||||
Leasehold improvements | Shorter of lease term, including reasonably assured renewal periods, or useful life | |||||||
Software | 5 years | |||||||
Owned buildings | 40 years | |||||||
Office and other equipment | 3 to 7 years | |||||||
System infrastructure | 5 to 10 years | |||||||
Schedule of diluted weighted average shares | ||||||||
Year Ended | Year Ended | |||||||
December 31, | December 31, | |||||||
2014 | 2013 | |||||||
Weighted average common shares—basic | 45,960,720 | 46,286,735 | ||||||
Dilutive effect of stock options | 59,196 | 76,884 | ||||||
Dilutive effect of restricted stock | 329,754 | 633,285 | ||||||
| | | | | | | | |
Weighted average common shares—diluted | 46,349,670 | 46,996,904 | ||||||
| | | | | | | | |
| | | | | | | | |
Property_and_equipment_Tables
Property and equipment: (Tables) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Property and equipment: | ||||||||
Schedule of property and equipment | ||||||||
Property and equipment consisted of the following (in thousands): | ||||||||
December 31, | ||||||||
2014 | 2013 | |||||||
Owned assets: | ||||||||
Network equipment | $ | 432,848 | $ | 404,426 | ||||
Leasehold improvements | 161,470 | 147,718 | ||||||
System infrastructure | 86,749 | 79,811 | ||||||
Software | 9,562 | 9,531 | ||||||
Office and other equipment | 12,893 | 12,521 | ||||||
Building | 1,353 | 1,532 | ||||||
Land | 115 | 130 | ||||||
| | | | | | | | |
704,990 | 655,669 | |||||||
Less—Accumulated depreciation and amortization | (553,113 | ) | (521,290 | ) | ||||
| | | | | | | | |
151,877 | 134,379 | |||||||
Assets under capital leases: | ||||||||
IRUs | 342,600 | 329,415 | ||||||
Less—Accumulated depreciation and amortization | (133,716 | ) | (122,601 | ) | ||||
| | | | | | | | |
208,884 | 206,814 | |||||||
| | | | | | | | |
Property and equipment, net | $ | 360,761 | $ | 341,193 | ||||
| | | | | | | | |
| | | | | | | | |
Accrued_and_other_liabilities_
Accrued and other liabilities: (Tables) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Accrued and other liabilities: | ||||||||
Schedule of accrued and other current liabilities | ||||||||
Accrued and other current liabilities as of December 31 consist of the following (in thousands): | ||||||||
2014 | 2013 | |||||||
Operating accruals | $ | 11,286 | $ | 11,539 | ||||
Deferred revenue—current portion | 4,307 | 4,174 | ||||||
Payroll and benefits | 3,371 | 2,952 | ||||||
Taxes—non-income based | 1,359 | 1,128 | ||||||
Interest | 11,828 | 11,672 | ||||||
| | | | | | | | |
Total | $ | 32,151 | $ | 31,465 | ||||
| | | | | | | | |
| | | | | | | | |
Longterm_debt_Tables
Long-term debt: (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Long-term debt: | |||||||||||
Schedule of debt and equity components for the Convertible Notes | The debt and equity components for the Convertible Notes were as follows (in thousands): | ||||||||||
December 31, | |||||||||||
2013 | |||||||||||
Principal amount of convertible senior notes | $ | 91,978 | |||||||||
Unamortized discount | (3,099 | ) | |||||||||
Net carrying amount | 88,879 | ||||||||||
Additional paid-in capital | 74,933 | ||||||||||
Schedule of interest expense recognized and the effective interest rate for the Convertible Notes | The amount of interest expense recognized and effective interest rate for the Convertible Notes were as follows (in thousands): | ||||||||||
Year Ended December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
Contractual coupon interest | $ | 419 | $ | 920 | $ | 920 | |||||
Amortization of discount and costs | 3,106 | 6,409 | 5,886 | ||||||||
| | | | | | | | | | | |
Interest expense | $ | 3,525 | $ | 7,329 | $ | 6,806 | |||||
| | | | | | | | | | | |
Effective interest rate | 8.7 | % | 8.7 | % | 8.7 | % | |||||
Schedule of aggregate future contractual maturities of long-term debt | The aggregate future contractual maturities of long-term debt were as follows as of December 31, 2014 (in thousands): | ||||||||||
For the year ending December 31, | |||||||||||
2015 | $ | — | |||||||||
2016 | — | ||||||||||
2017 | — | ||||||||||
2018 | 240,000 | ||||||||||
2019 | — | ||||||||||
Thereafter | 200,000 | ||||||||||
| | | | | |||||||
Total | $ | 440,000 | |||||||||
| | | | | |||||||
| | | | | |||||||
Income_taxes_Tables
Income taxes: (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Income taxes: | |||||||||||
Schedule of components of income (loss) before income taxes | |||||||||||
The components of income (loss) before income taxes consist of the following (in thousands): | |||||||||||
Years Ended December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
Domestic | $ | 31,645 | $ | 30,779 | $ | 20,411 | |||||
Foreign | (27,154 | ) | (23,792 | ) | (23,911 | ) | |||||
| | | | | | | | | | | |
Total income (loss) before income taxes | $ | 4,491 | $ | 6,987 | $ | (3,500 | ) | ||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Schedule of income tax (expense) benefit | The income tax (expense) benefit is comprised of the following (in thousands): | ||||||||||
Years Ended December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
Current: | |||||||||||
Federal | $ | (126 | ) | $ | — | $ | — | ||||
State | (243 | ) | (83 | ) | 2,285 | ||||||
Foreign | (169 | ) | (284 | ) | (344 | ) | |||||
Deferred: | |||||||||||
Federal | (2,352 | ) | 49,317 | — | |||||||
State | (824 | ) | 995 | (1,245 | ) | ||||||
Foreign | 20 | (243 | ) | (1,447 | ) | ||||||
| | | | | | | | | | | |
Total income tax (expense) benefit | $ | (3,694 | ) | $ | 49,702 | $ | (751 | ) | |||
| | | | | | | | | | | |
| | | | | | | | | | | |
Schedule of deferred tax assets (liabilities) | Our consolidated temporary differences comprising our net deferred tax assets are as follows (in thousands): | ||||||||||
December 31, | |||||||||||
2014 | 2013 | ||||||||||
Deferred Tax Assets: | |||||||||||
Net operating loss carry-forwards | $ | 366,686 | $ | 402,484 | |||||||
Depreciation and amortization | 7,769 | 3,110 | |||||||||
Tax credits | 2,208 | 2,775 | |||||||||
Equity-based compensation | 849 | — | |||||||||
Accrued liabilities and other | 20,705 | 3,748 | |||||||||
| | | | | | | | ||||
Total gross deferred tax assets | 398,217 | 412,117 | |||||||||
| | | | | | | | ||||
Deferred Tax Liabilities: | |||||||||||
Convertible notes | — | 1,150 | |||||||||
Equity-based compensation | — | 248 | |||||||||
| | | | | | | | ||||
Total gross deferred tax liabilities | — | 1,398 | |||||||||
| | | | | | | | ||||
Net deferred tax assets before valuation allowance | 398,217 | 410,719 | |||||||||
Valuation allowance | (345,250 | ) | (354,537 | ) | |||||||
| | | | | | | | ||||
Net deferred tax asset | $ | 52,967 | $ | 56,182 | |||||||
| | | | | | | | ||||
| | | | | | | | ||||
Schedule of reconciliation of unrecognized tax benefits | A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands): | ||||||||||
Years Ended December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
Beginning balance of unrecognized tax benefits | $ | 1,000 | $ | 1,312 | $ | 2,875 | |||||
Change attributable to tax positions taken during a prior period | 82 | (51 | ) | 745 | |||||||
Decrease attributable to settlements with taxing authorities | (160 | ) | (1,655 | ) | |||||||
Decrease attributable to lapses of statutes of limitation | (56 | ) | (261 | ) | (653 | ) | |||||
| | | | | | | | | | | |
Ending balance of unrecognized tax benefits | $ | 866 | $ | 1,000 | $ | 1,312 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Schedule of reconciliation of the Federal statutory income taxes to the amounts reported in the financial statements | The following is a reconciliation of the Federal statutory income taxes to the amounts reported in the financial statements (in thousands). | ||||||||||
Years Ended December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
Federal income tax (expense) benefit at statutory rates | $ | (1,572 | ) | $ | (2,445 | ) | $ | 1,225 | |||
Effect of: | |||||||||||
State income taxes, net of federal benefit | (590 | ) | (454 | ) | (1,152 | ) | |||||
Impact of foreign operations | (267 | ) | 95 | 147 | |||||||
Non-deductible expenses | (659 | ) | (461 | ) | (2,549 | ) | |||||
Changes in tax reserves | 165 | 503 | 1,552 | ||||||||
Other | (191 | ) | 277 | 4 | |||||||
Changes in valuation allowance—US | (580 | ) | 52,187 | 22 | |||||||
| | | | | | | | | | | |
Income tax (expense) benefit | $ | (3,694 | ) | $ | 49,702 | $ | (751 | ) | |||
| | | | | | | | | | | |
| | | | | | | | | | | |
Commitments_and_contingencies_
Commitments and contingencies: (Tables) | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Commitments and contingencies: | |||||
Schedule of future minimum annual payments under capital leases-fiber lease agreements | The future minimum payments under these agreements are as follows (in thousands): | ||||
For the year ending December 31, | |||||
2015 | $ | 33,848 | |||
2016 | 22,089 | ||||
2017 | 22,058 | ||||
2018 | 21,988 | ||||
2019 | 21,976 | ||||
Thereafter | 233,816 | ||||
| | | | | |
Total minimum lease obligations | 355,775 | ||||
Less—amounts representing interest | (189,237 | ) | |||
| | | | | |
Present value of minimum lease obligations | 166,538 | ||||
Current maturities | (14,594 | ) | |||
| | | | | |
Capital lease obligations, net of current maturities | $ | 151,944 | |||
| | | | | |
| | | | | |
Schedule of future minimum annual payments under operating leases and building access agreements | . Future minimum annual payments under these arrangements are as follows (in thousands): | ||||
For the year ending December 31, | |||||
2015 | $ | 31,947 | |||
2016 | 24,025 | ||||
2017 | 18,852 | ||||
2018 | 15,891 | ||||
2019 | 13,124 | ||||
Thereafter | 54,172 | ||||
| | | | | |
$ | 158,011 | ||||
| | | | | |
| | | | | |
Stockholders_Equity_Tables
Stockholders' Equity: (Tables) | 12 Months Ended | |||||||||||||||
Dec. 31, 2014 | ||||||||||||||||
Stockholders' equity: | ||||||||||||||||
Summary of the Company's quarterly dividends since the initial dividend payment | A summary of the Company's quarterly dividends paid since its initial dividend payment is as follows (in thousands, except per share amounts): | |||||||||||||||
Dividend Period | Amount per | Record Date | Payment Date | Total | ||||||||||||
Common Share | Dividends | |||||||||||||||
Paid | ||||||||||||||||
Q3 2012 | $ | 0.10 | August 22, 2012 | September 12, 2012 | $ | 4,537 | ||||||||||
Q4 2012 | $ | 0.11 | November 21, 2012 | December 12, 2012 | $ | 5,012 | ||||||||||
Q1 2013 | $ | 0.12 | March 4, 2013 | March 15, 2013 | $ | 5,489 | ||||||||||
Q2 2013 | $ | 0.13 | May 31, 2013 | June 18, 2013 | $ | 6,145 | ||||||||||
Q3 2013 | $ | 0.14 | September 5, 2013 | September 25, 2013 | $ | 6,512 | ||||||||||
Q4 2013 | $ | 0.37 | November 27, 2013 | December 20, 2013 | $ | 17,206 | ||||||||||
Q1 2014 | $ | 0.39 | March 7, 2014 | March 27, 2014 | $ | 18,352 | ||||||||||
Q2 2014 | $ | 0.17 | May 30, 2014 | June 18, 2014 | $ | 7,882 | ||||||||||
Q3 2014 | $ | 0.30 | August 29, 2014 | September 19, 2014 | $ | 13,792 | ||||||||||
Q4 2014 | $ | 0.31 | November 26, 2014 | December 12, 2014 | $ | 14,190 | ||||||||||
Summary of the Company's amounts paid under the Capital Program | A summary of the Company's amounts paid under the Capital Program is as follows (in thousands, except per share amounts): | |||||||||||||||
Dividend Period | Capital | Stock Buyback | Stock Buyback | Payment Under | Amount Per | |||||||||||
Program | Amount | Amount Greater | Capital Program | Share Paid As | ||||||||||||
Amount | During the | than Capital | Paid As | Dividends | ||||||||||||
Period | Program Amount? | Dividend(1) | Under the | |||||||||||||
Capital Program | ||||||||||||||||
Q3 2013 | $ | 10,000 | $ | — | No | $ | — | $ | — | |||||||
Q4 2013 | $ | 10,500 | $ | — | No | $ | 10,186 | $ | 0.22 | |||||||
Q1 2014 | $ | 10,500 | $ | 14,196 | Yes | $ | 10,707 | $ | 0.23 | |||||||
Q2 2014 | $ | 10,500 | $ | 17,888 | Yes | $ | — | $ | — | |||||||
Q3 2014 | $ | 12,000 | $ | 15,943 | Yes | $ | — | $ | — | |||||||
Q4 2014 | $ | 12,000 | $ | 10,555 | No | $ | — | $ | — | |||||||
-1 | Under the Capital Program if the amount spent on stock buybacks during a quarter is less than the program amount the difference is added to the dividend payment for the following quarter. Since the stock buyback amount for the fourth quarter of 2014 was $10.6 million and less than the Capital Program amount of $12.0 million an additional $1.4 million or $0.03 per share will be added to the first quarter 2015 regular dividend. | |||||||||||||||
Stock_option_and_award_plan_Ta
Stock option and award plan: (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Stock option and award plan: | |||||||||||
Schedule of assumptions used for determining the fair value of options granted | |||||||||||
Years Ended December 31, | |||||||||||
Black-Scholes Assumptions | 2014 | 2013 | 2012 | ||||||||
Dividend yield | 3.6 | % | 2.0 | % | 1.3 | % | |||||
Expected volatility | 37.0 | % | 58.5 | % | 61.6 | % | |||||
Risk-free interest rate | 1.6 | % | 0.8 | % | 0.7 | % | |||||
Expected life of the option term (in years) | 4.6 | 4.8 | 4.8 | ||||||||
Schedule of stock option activity | |||||||||||
Number of | Weighted-Average | ||||||||||
Options | Exercise Price | ||||||||||
Outstanding at December 31, 2013 | 175,578 | $ | 19.36 | ||||||||
Granted | 83,540 | $ | 35.11 | ||||||||
Cancelled and expired | (31,842 | ) | $ | 31.01 | |||||||
Exercised—intrinsic value $0.8 million; cash received $0.5 million | (38,379 | ) | $ | 14.19 | |||||||
| | | | | | | | ||||
Outstanding at December 31, 2014—$2.0 million intrinsic value and 6.7 years weighted-average remaining contractual term | 188,897 | $ | 25.41 | ||||||||
| | | | | | | | ||||
| | | | | | | | ||||
Exercisable at December 31, 2014—$1.7 million intrinsic value and 4.7 years weighted-average remaining contractual term | 105,709 | $ | 19.78 | ||||||||
| | | | | | | | ||||
| | | | | | | | ||||
Expected to vest—$1.9 million intrinsic value and 6.3 years weighted-average remaining contractual term | 169,527 | $ | 24.43 | ||||||||
| | | | | | | | ||||
| | | | | | | | ||||
Schedule of non-vested restricted stock awards | |||||||||||
Non-vested awards | Shares | Weighted-Average | |||||||||
Grant Date | |||||||||||
Fair Value | |||||||||||
Non-vested at December 31, 2013 | 1,039,323 | $ | 18.69 | ||||||||
Granted | 792,550 | $ | 34.57 | ||||||||
Vested | (513,937 | ) | $ | 19.33 | |||||||
Forfeited | (35,290 | ) | $ | 18.23 | |||||||
| | | | | | | | ||||
Non-vested at December 31, 2014 | 1,282,646 | $ | 28.26 | ||||||||
| | | | | | | | ||||
| | | | | | | | ||||
Geographic_information_Tables
Geographic information: (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Geographic information: | |||||||||||
Schedule of service revenues and long lived assets by geographic region | Below are the Company's service revenues and long lived assets by geographic region (in thousands): | ||||||||||
Years Ended December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
Service Revenue | |||||||||||
North America | $ | 301,400 | $ | 274,320 | $ | 253,396 | |||||
Europe | 78,603 | 73,659 | 63,577 | ||||||||
| | | | | | | | | | | |
Total | $ | 380,003 | $ | 347,979 | $ | 316,973 | |||||
| | | | | | | | | | | |
December 31, | December 31, | ||||||||||
2014 | 2013 | ||||||||||
Long lived assets, net | |||||||||||
North America | $ | 266,713 | $ | 251,352 | |||||||
Europe | 94,082 | 89,879 | |||||||||
| | | | | | | | ||||
Total | $ | 360,795 | $ | 341,231 | |||||||
| | | | | | | | ||||
Quarterly_financial_informatio1
Quarterly financial information (unaudited): (Tables) | 12 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
Quarterly financial information (unaudited): | ||||||||||||||
Schedule of quarterly financial information | ||||||||||||||
Three months ended | ||||||||||||||
March 31, | June 30, | September 30, | December 31, | |||||||||||
2014 | 2014 | 2014 | 2014 | |||||||||||
(in thousands, except share and per share amounts) | ||||||||||||||
Service revenue | $ | 92,937 | $ | 94,623 | $ | 95,691 | $ | 96,749 | ||||||
Network operations, including equity-based compensation expense | 38,836 | 39,605 | 40,407 | 41,046 | ||||||||||
Operating income | 12,907 | 14,309 | 13,614 | 13,066 | ||||||||||
Net income (loss) | 125 | 1,208 | (184 | ) | (352 | ) | ||||||||
Net income (loss) per common share—basic | 0 | 0.03 | (0.00 | ) | (0.01 | ) | ||||||||
Net income (loss) per common share—diluted | 0 | 0.03 | (0.00 | ) | (0.01 | ) | ||||||||
Weighted-average number of common shares—basic | 46,409,735 | 45,897,449 | 45,629,079 | 45,229,125 | ||||||||||
Weighted-average number of common shares—diluted | 46,907,360 | 46,294,966 | 45,629,079 | 45,229,125 | ||||||||||
Three months ended | ||||||||||||||
March 31, | June 30, | September 30, | December 31, | |||||||||||
2013 | 2013 | 2013 | 2013(1)(2) | |||||||||||
(in thousands, except share and per share amounts) | ||||||||||||||
Service revenue | $ | 84,553 | $ | 85,803 | $ | 87,761 | $ | 89,859 | ||||||
Network operations, including equity-based compensation expense | 37,309 | 37,076 | 37,441 | 38,400 | ||||||||||
Operating income | 9,905 | 11,601 | 12,577 | 12,065 | ||||||||||
Net income | 361 | 1,607 | 2,122 | 52,599 | ||||||||||
Net income per common share—basic | 0.01 | 0.03 | 0.05 | 1.14 | ||||||||||
Net income per common share—diluted | 0.01 | 0.03 | 0.05 | 1.10 | ||||||||||
Weighted-average number of common shares—basic | 45,537,607 | 46,040,692 | 46,171,194 | 46,302,926 | ||||||||||
Weighted-average number of common shares—diluted | 46,435,677 | 46,769,184 | 46,823,167 | 48,800,560 | ||||||||||
-1 | As described in Note 5, during the fourth quarter of 2013 the Company reversed its valuation allowance against its US federal and certain state deferred income tax assets. | |||||||||||||
-2 | Diluted earnings per share for the fourth quarter of 2013 assumed the conversion of the Convertible Notes since the Convertible Notes were dilutive this quarter. The assumed conversion of the Convertible Notes was anti-dilutive for the other periods presented. Diluted earnings per share for the fourth quarter of 2013 is determined by adding back $1.2 million of interest expense from the Convertible Notes to net income and including 1.9 million shares from the assumed conversion of the Convertible Notes in the weighted-average number of common dilutive shares. | |||||||||||||
Description_of_the_business_an3
Description of the business and summary of significant accounting policies: (Details) (USD $) | 12 Months Ended | |||||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Apr. 09, 2014 | Aug. 19, 2013 | Jan. 26, 2011 |
Description of the business and summary of significant accounting policies: | ||||||
Bad debt expense, net of recoveries | $3.70 | $3.50 | $5.10 | |||
Financial instruments | ||||||
Letters of credit, outstanding amount | 0.4 | 0.4 | ||||
Minimum | ||||||
On-net service - high-speed Internet access and IP connectivity | ||||||
Speed per second of bandwidth (in megabits) | 100 | |||||
Maximum | ||||||
On-net service - high-speed Internet access and IP connectivity | ||||||
Speed per second of bandwidth (in megabits) | 10,240 | |||||
Senior unsecured notes | ||||||
Financial instruments | ||||||
Aggregate principal amount of debt issued | 200 | 200 | ||||
Senior unsecured notes | Level 2 | ||||||
Financial instruments | ||||||
Debt instrument, amount | 196 | |||||
Senior secured notes | ||||||
Financial instruments | ||||||
Aggregate principal amount of debt issued | 240 | 65 | 175 | |||
Senior secured notes | Level 2 | ||||||
Financial instruments | ||||||
Debt instrument, amount | $250.80 |
Description_of_the_business_an4
Description of the business and summary of significant accounting policies: (Details 2) | 12 Months Ended |
Dec. 31, 2014 | |
Indefeasible rights of use (IRUs) | Minimum | |
Property and equipment | |
Depreciation or amortization period | 15 years |
Indefeasible rights of use (IRUs) | Maximum | |
Property and equipment | |
Depreciation or amortization period | 20 years |
Network equipment | Minimum | |
Property and equipment | |
Depreciation or amortization period | 3 years |
Network equipment | Maximum | |
Property and equipment | |
Depreciation or amortization period | 8 years |
Software | |
Property and equipment | |
Depreciation or amortization period | 5 years |
Owned buildings | |
Property and equipment | |
Depreciation or amortization period | 40 years |
Office and other equipment | Minimum | |
Property and equipment | |
Depreciation or amortization period | 3 years |
Office and other equipment | Maximum | |
Property and equipment | |
Depreciation or amortization period | 7 years |
System infrastructure | Minimum | |
Property and equipment | |
Depreciation or amortization period | 5 years |
System infrastructure | Maximum | |
Property and equipment | |
Depreciation or amortization period | 10 years |
Description_of_the_business_an5
Description of the business and summary of significant accounting policies: (Details 3) | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Diluted weighted average shares | |||||||||||
Weighted average common shares-basic | 45,229,125 | 45,629,079 | 45,897,449 | 46,409,735 | 46,302,926 | 46,171,194 | 46,040,692 | 45,537,607 | 45,960,720 | 46,286,735 | 45,514,844 |
Weighted average common shares-diluted | 45,229,125 | 45,629,079 | 46,294,966 | 46,907,360 | 48,800,560 | 46,823,167 | 46,769,184 | 46,435,677 | 46,349,670 | 46,996,904 | 45,514,844 |
Convertible senior notes | |||||||||||
Basic and diluted net (loss) income per common share | |||||||||||
Number of shares yield after conversion | 1,900,000 | 1,900,000 | 1,900,000 | ||||||||
Restricted stock | |||||||||||
Basic and diluted net (loss) income per common share | |||||||||||
Restricted common stock not included in computation of basic income per share as shares were not vested (in shares) | 1,300,000 | 1,000,000 | 1,300,000 | 1,000,000 | 1,700,000 | ||||||
Shares not included in the computation of diluted loss per share as the effect would be anti-dilutive | 400,000 | ||||||||||
Diluted weighted average shares | |||||||||||
Dilutive effect of awards (in shares) | 329,754 | 633,285 | |||||||||
Stock options | |||||||||||
Diluted weighted average shares | |||||||||||
Dilutive effect of awards (in shares) | 59,196 | 76,884 |
Property_and_equipment_Details
Property and equipment: (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Property and equipment | |||
Property, Plant and Equipment, Gross | $1,047,590,000 | $985,084,000 | |
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment | 686,829,000 | 643,891,000 | |
Property, Plant and Equipment, Net | 360,761,000 | 341,193,000 | |
Depreciation and amortization expense | 69,481,000 | 64,358,000 | 62,478,000 |
Gains from asset related transactions | 11,031,000 | 934,000 | 1,127,000 |
Capitalized salaries and related benefits of employees | 7,600,000 | 7,400,000 | 7,200,000 |
Owned assets: | |||
Property and equipment | |||
Property, Plant and Equipment, Gross | 704,990,000 | 655,669,000 | |
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment | 553,113,000 | 521,290,000 | |
Property, Plant and Equipment, Net | 151,877,000 | 134,379,000 | |
Network equipment | |||
Property and equipment | |||
Property, Plant and Equipment, Gross | 432,848,000 | 404,426,000 | |
Gains from asset related transactions | 10,800,000 | 900,000 | 700,000 |
Network equipment | Level 3 | |||
Property and equipment | |||
Fair market value of equipment received in exchange | 23,100,000 | 2,000,000 | 1,700,000 |
Leasehold improvements | |||
Property and equipment | |||
Property, Plant and Equipment, Gross | 161,470,000 | 147,718,000 | |
System infrastructure | |||
Property and equipment | |||
Property, Plant and Equipment, Gross | 86,749,000 | 79,811,000 | |
Software | |||
Property and equipment | |||
Property, Plant and Equipment, Gross | 9,562,000 | 9,531,000 | |
Office and other equipment | |||
Property and equipment | |||
Property, Plant and Equipment, Gross | 12,893,000 | 12,521,000 | |
Owned buildings | |||
Property and equipment | |||
Property, Plant and Equipment, Gross | 1,353,000 | 1,532,000 | |
Land | |||
Property and equipment | |||
Property, Plant and Equipment, Gross | 115,000 | 130,000 | |
Property, equipment and capital leases | |||
Property and equipment | |||
Depreciation and amortization expense | 69,500,000 | 64,300,000 | 62,400,000 |
Indefeasible rights of use (IRUs) | |||
Property and equipment | |||
Property, Plant and Equipment, Gross | 342,600,000 | 329,415,000 | |
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment | 133,716,000 | 122,601,000 | |
Property, Plant and Equipment, Net | $208,884,000 | $206,814,000 |
Accrued_and_other_liabilities_1
Accrued and other liabilities: (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Accrued and other current liabilities | ||
Operating accruals | $11,286 | $11,539 |
Deferred revenue -current portion | 4,307 | 4,174 |
Payroll and benefits | 3,371 | 2,952 |
Taxes -non-income based | 1,359 | 1,128 |
Interest | 11,828 | 11,672 |
Total | $32,151 | $31,465 |
Longterm_debt_Details
Long-term debt: (Details) (USD $) | 12 Months Ended | 0 Months Ended | 1 Months Ended | 12 Months Ended | 0 Months Ended | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||
Dec. 31, 2014 | Apr. 09, 2014 | Aug. 19, 2013 | Jan. 26, 2011 | Feb. 20, 2015 | Mar. 31, 2015 | Dec. 31, 2013 | Jun. 20, 2014 | Jun. 16, 2014 | Jun. 30, 2007 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2008 | |
Long-term debt | |||||||||||||
Cash and cash equivalents not subject to debt limitations | $66,000,000 | ||||||||||||
Senior secured notes, premium (in dollars) | 4,230,000 | 5,423,000 | 5,423,000 | ||||||||||
Purchase of convertible notes in cash | 91,978,000 | ||||||||||||
Debt and equity components for the Convertible Notes | |||||||||||||
Unamortized discount | -3,099,000 | -3,099,000 | |||||||||||
Long-term debt maturities | |||||||||||||
2018 | 240,000,000 | ||||||||||||
Thereafter | 200,000,000 | ||||||||||||
Total | 440,000,000 | ||||||||||||
Senior unsecured notes | |||||||||||||
Long-term debt | |||||||||||||
Aggregate principal amount of debt issued | 200,000,000 | 200,000,000 | |||||||||||
Percentage of principal amount at which notes will be required to be repurchased in the event of a change of control | 101.00% | ||||||||||||
Senior unsecured notes | Treasury Rate | |||||||||||||
Long-term debt | |||||||||||||
Discount rate used to compute make-whole premium, basis points added to reference rate (as a percent) | 0.50% | ||||||||||||
Senior unsecured notes | Minimum | |||||||||||||
Long-term debt | |||||||||||||
Consolidated leverage ratio to restrict on incurring additional indebtedness | 5 | ||||||||||||
Senior unsecured notes | Maximum | |||||||||||||
Long-term debt | |||||||||||||
Permitted investments and payments | 150,000,000 | ||||||||||||
Consolidated leverage ratio to be maintained to increase amount of permitted investments and payments by consolidated cash flow | 4.25% | ||||||||||||
Senior unsecured notes | Prior to April 15, 2017 | |||||||||||||
Long-term debt | |||||||||||||
Percentage of principal amount that the holders of the Convertible Notes may require the Company to repurchase | 100.00% | ||||||||||||
Percentage of outstanding principal amount used in calculation of make-whole premium | 1.00% | ||||||||||||
Percentage of redemption price of principal amount accrued interest | 104.22% | ||||||||||||
Maximum percentage of principal amount of debt instrument which the entity could redeem with proceeds from certain equity offerings | 35.00% | ||||||||||||
Percentage of redemption price which may redeem with net cash proceeds from certain equity offerings | 105.63% | ||||||||||||
Senior unsecured notes | 12-month period beginning on April 15, 2017 | |||||||||||||
Long-term debt | |||||||||||||
Percentage of principal amount that the holders of the Convertible Notes may require the Company to repurchase | 104.22% | ||||||||||||
Senior unsecured notes | 12-month period beginning on April 15, 2018 | |||||||||||||
Long-term debt | |||||||||||||
Percentage of principal amount that the holders of the Convertible Notes may require the Company to repurchase | 102.81% | ||||||||||||
Senior unsecured notes | 12-month period beginning on April 15, 2019 | |||||||||||||
Long-term debt | |||||||||||||
Percentage of principal amount that the holders of the Convertible Notes may require the Company to repurchase | 101.41% | ||||||||||||
Senior unsecured notes | 12-month period beginning on April 15, 2020 | |||||||||||||
Long-term debt | |||||||||||||
Percentage of principal amount that the holders of the Convertible Notes may require the Company to repurchase | 100.00% | ||||||||||||
Senior unsecured notes | Cogent Finance | |||||||||||||
Long-term debt | |||||||||||||
Aggregate principal amount of debt issued | 200,000,000 | ||||||||||||
Interest rate (as a percent) | 5.63% | ||||||||||||
Proceeds from issuance of long-term debt, net of issuance costs | 195,800,000 | ||||||||||||
Senior secured notes | |||||||||||||
Long-term debt | |||||||||||||
Aggregate principal amount of debt issued | 240,000,000 | 65,000,000 | 175,000,000 | ||||||||||
Interest rate (as a percent) | 8.38% | 8.38% | 8.38% | ||||||||||
Proceeds from issuance of long-term debt, net of issuance costs | 69,900,000 | 170,500,000 | |||||||||||
Percentage of principal amount at which notes will be required to be repurchased in the event of a change of control | 101.00% | ||||||||||||
Debt issuance costs | 1,000,000 | 4,500,000 | |||||||||||
Premium price of debt instrument (as a percent) | 109.00% | ||||||||||||
Senior secured notes, premium (in dollars) | 5,900,000 | ||||||||||||
Security of senior notes and guarantees, expressed as a percentage of equity interests of first-tier foreign subsidiaries held by Company and its guarantors | 65.00% | ||||||||||||
Senior secured notes | Subsequent Event | |||||||||||||
Long-term debt | |||||||||||||
Aggregate principal amount of debt issued | 250,000,000 | ||||||||||||
Interest rate (as a percent) | 5.38% | ||||||||||||
Security of senior notes and guarantees, expressed as a percentage of equity interests of first-tier foreign subsidiaries held by Company and its guarantors | 65.00% | ||||||||||||
Senior secured notes | Subsequent Event | Expected | |||||||||||||
Long-term debt | |||||||||||||
Repayment of debt | 240,000,000 | ||||||||||||
Senior secured notes | Treasury Rate | |||||||||||||
Long-term debt | |||||||||||||
Discount rate used to compute make-whole premium, basis points added to reference rate (as a percent) | 0.50% | ||||||||||||
Senior secured notes | Prior to February 15, 2015 | |||||||||||||
Long-term debt | |||||||||||||
Percentage of principal amount that the holders of the Convertible Notes may require the Company to repurchase | 100.00% | ||||||||||||
Percentage of outstanding principal amount used in calculation of make-whole premium | 1.00% | ||||||||||||
Senior secured notes | Prior to February 15, 2014 | |||||||||||||
Long-term debt | |||||||||||||
Percentage of principal amount that the holders of the Convertible Notes may require the Company to repurchase | 108.38% | ||||||||||||
Maximum percentage of principal amount of debt instrument which the entity could redeem with proceeds from certain equity offerings | 35.00% | ||||||||||||
Senior secured notes | 12-month period beginning on February 15, 2015 | |||||||||||||
Long-term debt | |||||||||||||
Percentage of principal amount that the holders of the Convertible Notes may require the Company to repurchase | 104.19% | ||||||||||||
Senior secured notes | 12-month period beginning on February 15, 2016 | |||||||||||||
Long-term debt | |||||||||||||
Percentage of principal amount that the holders of the Convertible Notes may require the Company to repurchase | 102.09% | ||||||||||||
Senior secured notes | 12-month period beginning on February 15, 2017 and thereafter | |||||||||||||
Long-term debt | |||||||||||||
Percentage of principal amount that the holders of the Convertible Notes may require the Company to repurchase | 100.00% | ||||||||||||
Convertible senior notes | |||||||||||||
Long-term debt | |||||||||||||
Aggregate principal amount of debt issued | 200,000,000 | ||||||||||||
Interest rate (as a percent) | 1.00% | ||||||||||||
Proceeds from issuance of long-term debt, net of issuance costs | 195,100,000 | ||||||||||||
Percentage of original issuance discount | 2.25% | ||||||||||||
Aggregate face value of debt purchased | 108,000,000 | ||||||||||||
Purchase of convertible notes in cash | 33,500,000 | 58,500,000 | 48,600,000 | ||||||||||
Debt and equity components for the Convertible Notes | |||||||||||||
Principal amount | 91,978,000 | 91,978,000 | |||||||||||
Unamortized discount | -3,099,000 | -3,099,000 | |||||||||||
Net carrying amount | 88,879,000 | 88,879,000 | |||||||||||
Additional paid-in capital | 74,933,000 | 74,933,000 | |||||||||||
Amount of interest expense recognized and effective interest rate | |||||||||||||
Contractual coupon interest | 419,000 | 920,000 | 920,000 | ||||||||||
Amortization of discount and costs on Notes | 3,106,000 | 6,409,000 | 5,886,000 | ||||||||||
Interest expense | $3,525,000 | 7,329,000 | $1,200,000 | $6,806,000 | |||||||||
Effective interest rate (as a percent) | 8.70% | 8.70% | 8.70% | 8.70% | |||||||||
Convertible senior notes | June 15, 2014, 2017 and 2022 | |||||||||||||
Long-term debt | |||||||||||||
Percentage of principal amount that the holders of the Convertible Notes may require the Company to repurchase | 100.00% | ||||||||||||
Convertible senior notes | After June 20, 2014 | |||||||||||||
Long-term debt | |||||||||||||
Percentage of principal amount that the holders of the Convertible Notes may require the Company to repurchase | 100.00% |
Income_taxes_Details
Income taxes: (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
subsidiary | |||
Components of (loss) income before income taxes | |||
Domestic | $31,645,000 | $30,779,000 | $20,411,000 |
Foreign | -27,154,000 | -23,792,000 | -23,911,000 |
Income (loss) before income taxes | 4,491,000 | 6,987,000 | -3,500,000 |
Current provision | |||
Federal income tax | -126,000 | ||
State income tax | -243,000 | -83,000 | 2,285,000 |
Foreign income tax | -169,000 | -284,000 | -344,000 |
Deferred provision | |||
Federal income tax | -2,352,000 | 49,317,000 | |
State Income tax | -824,000 | 995,000 | -1,245,000 |
Foreign income tax | 20,000 | -243,000 | -1,447,000 |
Income tax (expense) benefit | -3,694,000 | 49,702,000 | -751,000 |
Deferred Tax Assets: | |||
Net operating loss carry-forwards | 366,686,000 | 402,484,000 | |
Depreciation and amortization | 7,769,000 | 3,110,000 | |
Tax credits | 2,208,000 | 2,775,000 | |
Equity-based compensation | 849,000 | ||
Accrued liabilities and other | 20,705,000 | 3,748,000 | |
Total gross deferred tax assets | 398,217,000 | 412,117,000 | |
Deferred Tax Liabilities: | |||
Convertible Notes | 1,150,000 | ||
Equity-based compensation | 248,000 | ||
Total gross deferred tax liabilities | 1,398,000 | ||
Net deferred tax assets before valuation allowance | 398,217,000 | 410,719,000 | |
Valuation allowance | -345,250,000 | -354,537,000 | |
Net deferred tax asset | 52,967,000 | 56,182,000 | |
Income tax benefit due to reduction in valuation allowance | 52,200,000 | ||
Number of subsidiaries filing income tax returns in U.S. federal, and various state and foreign jurisdictions | 1 | ||
Net operating loss carry-forwards | |||
Combined net operating loss carry-forwards | 1,200,000,000 | ||
Uncertain tax positions | |||
Liability for uncertain tax positions, including accrued interest and penalties | 1,000,000 | 1,100,000 | |
Expected decrease in liability for uncertain tax positions | 100,000 | ||
Reconciliation of the beginning and ending amount of unrecognized tax benefits (excluding interest and penalties) | |||
Beginning balance of unrecognized tax benefits | 1,000,000 | 1,312,000 | 2,875,000 |
Gross increases-tax positions in prior periods | 82,000 | -51,000 | 745,000 |
Decrease attributable to settlements with taxing authorities | -160,000 | -1,655,000 | |
Decrease attributable to lapses of statutes of limitation | -56,000 | -261,000 | -653,000 |
Ending balance of unrecognized tax benefits | 866,000 | 1,000,000 | 1,312,000 |
Reconciliation of the Federal statutory income taxes to the amounts reported in the financial statements | |||
Federal income tax (expense) benefit at statutory rates | -1,572,000 | -2,445,000 | 1,225,000 |
State income tax, net of federal benefit | -590,000 | -454,000 | -1,152,000 |
Impact of foreign operations | -267,000 | 95,000 | 147,000 |
Non-deductible expenses | -659,000 | -461,000 | -2,549,000 |
Change in tax reserves | 165,000 | 503,000 | 1,552,000 |
Other | -191,000 | 277,000 | 4,000 |
Change in valuation allowance-US | -580,000 | 52,187,000 | 22,000 |
Income tax (expense) benefit | -3,694,000 | 49,702,000 | -751,000 |
United States | |||
Net operating loss carry-forwards | |||
Combined net operating loss carry-forwards | 390,600,000 | ||
Net operating loss carry-forwards not available for use | 286,000,000 | ||
Net operating loss carry-forwards available for use | 81,000,000 | ||
Europe | |||
Net operating loss carry-forwards | |||
Combined net operating loss carry-forwards | 786,300,000 | ||
Net operating loss carry-forwards not subject to expiration | 641,700,000 | ||
Net operating loss carry-forwards subject to expiration | 144,600,000 | ||
Mexico | |||
Net operating loss carry-forwards | |||
Combined net operating loss carry-forwards | 1,800,000 | ||
Canada | |||
Net operating loss carry-forwards | |||
Combined net operating loss carry-forwards | 400,000 | ||
Japan | |||
Net operating loss carry-forwards | |||
Combined net operating loss carry-forwards | 100,000 | ||
Other than United States | |||
Net operating loss carry-forwards | |||
Combined net operating loss carry-forwards | $789,000,000 |
Commitments_and_contingencies_1
Commitments and contingencies: (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
item | |||
Commitments and contingencies | |||
Number of pending claims | 3 | ||
Future minimum payments under capital lease agreements | |||
2015 | $33,848,000 | ||
2016 | 22,089,000 | ||
2017 | 22,058,000 | ||
2018 | 21,988,000 | ||
2019 | 21,976,000 | ||
Thereafter | 233,816,000 | ||
Total minimum lease obligations | 355,775,000 | ||
Less-amounts representing interest | -189,237,000 | ||
Present value of minimum lease obligations | 166,538,000 | ||
Current maturities | -14,594,000 | -9,252,000 | |
Capital lease obligations, net of current maturities | 151,944,000 | 152,527,000 | |
Future minimum annual payments under operating lease arrangements | |||
2015 | 31,947,000 | ||
2016 | 24,025,000 | ||
2017 | 18,852,000 | ||
2018 | 15,891,000 | ||
2019 | 13,124,000 | ||
Thereafter | 54,172,000 | ||
Total minimum lease obligations | 158,011,000 | ||
Expenses related to operating lease arrangements | 39,100,000 | 36,400,000 | 33,800,000 |
Minimum | |||
Commitments and contingencies | |||
Capital lease term | 15 years | ||
Maximum | |||
Commitments and contingencies | |||
Capital lease term | 20 years | ||
Estimate of possible loss in excess of the amount accrued | $2,100,000 | ||
Number of employees who opted to file an action | 70 |
Commitments_and_contingencies_2
Commitments and contingencies: (Details 2) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Future minimum payments under unconditional purchase obligations | |||
2015 | $16.20 | ||
2016 | 1 | ||
2017 | 0.9 | ||
2018 | 0.9 | ||
2019 | 1 | ||
Thereafter | 15.8 | ||
Defined contribution plan | |||
Matching cash payments towards defined contribution plan | 0.5 | 0.4 | 0.4 |
Equipment and services | |||
Unconditional purchase obligations | |||
Unconditional purchase obligation | 6.6 | ||
Dark fiber IRU capital and operating lease agreements | |||
Unconditional purchase obligations | |||
Unconditional purchase obligation | $29.20 | ||
Maximum period of maintenance payment | 20 years |
Stockholders_equity_Details
Stockholders' equity: (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Stockholders' equity: | ||
Common stock, shares authorized | 75,000,000 | 75,000,000 |
Common stock, par value (in dollars per share) | $0.00 | $0.00 |
Preferred stock, authorized but unissued shares (in shares) | 10,000 | |
Preferred stock, par value (in dollars per share) | $0.00 | |
Voting rights per common share | 1 |
Stockholders_equity_Details_2
Stockholders' equity: (Details 2) (USD $) | 3 Months Ended | 12 Months Ended | |||||
Share data in Millions, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Common stock buyback program | |||||||
Authorized amount of common stock repurchases under the Buyback Program | $50,000,000 | $50,000,000 | |||||
Remaining authorized amount of common stock repurchases under the Buyback Program | 37,200,000 | 37,200,000 | |||||
Repurchase of common stock (in shares) | 1.7 | 0 | 0.1 | ||||
Repurchase under the common stock buyback program | $10,555,000 | $15,943,000 | $17,888,000 | $14,196,000 | $58,600,000 | $1,300,000 |
Stockholders_equity_Details_3
Stockholders' equity: (Details 3) (USD $) | 0 Months Ended | 3 Months Ended | 12 Months Ended | 0 Months Ended | 3 Months Ended | ||||||||||||||||||||
In Thousands, except Per Share data, unless otherwise specified | Dec. 12, 2014 | Sep. 19, 2014 | Jun. 18, 2014 | Mar. 27, 2014 | Dec. 20, 2013 | Sep. 25, 2013 | Jun. 18, 2013 | Mar. 15, 2013 | Dec. 12, 2012 | Sep. 12, 2012 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Feb. 24, 2015 | Mar. 31, 2015 |
Dividends on common stock | |||||||||||||||||||||||||
Number of trailing months for EBITDA ratio | 12 months | ||||||||||||||||||||||||
Approved quarterly payments under Capital Program | $12,000 | $12,000 | $10,500 | $10,500 | $10,500 | $10,000 | $12,000 | $10,500 | |||||||||||||||||
Dividends declared per common share (in dollars per share) | $0.31 | $0.30 | $0.17 | $0.39 | $0.37 | $0.14 | $0.13 | $0.12 | $0.11 | $0.10 | $1.17 | $0.76 | $0.21 | ||||||||||||
Dividends paid | 14,190 | 13,792 | 7,882 | 18,352 | 17,206 | 6,512 | 6,145 | 5,489 | 5,012 | 4,537 | 54,216 | 35,352 | 9,549 | ||||||||||||
Repurchase under the common stock buyback program | 10,555 | 15,943 | 17,888 | 14,196 | 58,600 | 1,300 | |||||||||||||||||||
Payment under Capital Program paid as dividend | 10,707 | 10,186 | |||||||||||||||||||||||
Amount per share paid as dividends under the Capital Program | $0.23 | $0.22 | |||||||||||||||||||||||
Minimum | |||||||||||||||||||||||||
Dividends on common stock | |||||||||||||||||||||||||
Approved quarterly payments under Capital Program | 12,000 | 10,000 | 12,000 | ||||||||||||||||||||||
Subsequent Event | |||||||||||||||||||||||||
Dividends on common stock | |||||||||||||||||||||||||
Dividend per common share under Capital Program (in dollars per share) | $0.03 | $0.03 | |||||||||||||||||||||||
Dividends declared per common share (in dollars per share) | $0.35 | ||||||||||||||||||||||||
Subsequent Event | Expected | |||||||||||||||||||||||||
Dividends on common stock | |||||||||||||||||||||||||
Payment under Capital Program paid as dividend | $1,400 | $1,400 |
Stock_option_and_award_plan_De
Stock option and award plan: (Details) (USD $) | 6 Months Ended | 12 Months Ended | ||
In Millions, except Share data, unless otherwise specified | Jun. 30, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Assumptions used for determining the fair value of options granted | ||||
Dividend yield (as a percent) | 0.00% | |||
Stock options | ||||
Incentive award plan | ||||
Vesting period | 4 years | |||
Expiration period | 10 years | |||
Exercise period of options vested, when an employee is terminated prior to full vesting | 90 days | |||
Weighted-average per share grant date fair value (in dollars per share) | $8.32 | $9.44 | $9 | |
Assumptions used for determining the fair value of options granted | ||||
Dividend yield (as a percent) | 3.60% | 2.00% | 1.30% | |
Expected volatility (as a percent) | 37.00% | 58.50% | 61.60% | |
Risk-free interest rate (as a percent) | 1.60% | 0.80% | 0.70% | |
Expected life of the option term | 4 years 7 months 6 days | 4 years 9 months 18 days | 4 years 9 months 18 days | |
Stock option activity | ||||
Outstanding at the beginning of the period (in shares) | 175,578 | |||
Granted (in shares) | 83,540 | |||
Cancelled and expired (in shares) | -31,842 | |||
Exercised (in shares) | -38,379 | |||
Outstanding at the end of the period (in shares) | 188,897 | 175,578 | ||
Exercisable at the end of the period (in shares) | 105,709 | |||
Expected to vest (in shares) | 169,527 | |||
Weighted-Average Exercise Price | ||||
Outstanding at the beginning of the period (in dollars per share) | $19.36 | |||
Granted (in dollars per share) | $35.11 | |||
Cancelled and expired (in dollars per share) | $31.01 | |||
Exercised (in dollars per share) | $14.19 | |||
Outstanding at the end of the period (in dollars per share) | $25.41 | $19.36 | ||
Exercisable at the end of the period (in dollars per share) | $19.78 | |||
Expected to vest (in dollars per share) | $24.43 | |||
Aggregate Intrinsic Value | ||||
Exercised | $0.80 | |||
Outstanding at the end of the period | 2 | |||
Exercisable at the end of the period | 1.7 | |||
Expected to vest | 1.9 | |||
Weighted-Average Remaining Contractual Life (in years) | ||||
Outstanding at the end of the period | 6 years 8 months 12 days | |||
Exercisable at the end of the period | 4 years 8 months 12 days | |||
Expected to vest | 6 years 3 months 18 days | |||
Stock option and award plan, additional information | ||||
Cash received from exercise of stock option | $0.50 | |||
Restricted stock | Minimum | ||||
Incentive award plan | ||||
Vesting period | 3 years | |||
Restricted stock | Maximum | ||||
Incentive award plan | ||||
Vesting period | 4 years | |||
2004 Incentive Award Plan | ||||
Incentive award plan | ||||
Total number of shares available for grant | 400,000 |
Stock_option_and_award_plan_De1
Stock option and award plan: (Details 2) (USD $) | 12 Months Ended | ||
In Millions, except Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Restricted stock | |||
Number of shares | |||
Non-vested at the beginning of the period (in shares) | 1,039,323 | ||
Granted (in shares) | 792,550 | 200,000 | 1,300,000 |
Vested (in shares) | -513,937 | ||
Forfeited (in shares) | -35,290 | ||
Non-vested at the end of the period (in shares) | 1,282,646 | 1,039,323 | |
Weighted-Average Grant Date Fair Value | |||
Non-vested at the beginning of the period (in dollars per share) | $18.69 | ||
Granted (in dollars per share) | $34.57 | $27.82 | $17.74 |
Vested (in dollars per share) | $19.33 | ||
Forfeited (in dollars per share) | $18.23 | ||
Non-vested at the end of the period (in dollars per share) | $28.26 | $18.69 | |
Incentive Award Plan, additional information | |||
Fair value of shares vested | $19 | $21.70 | $8.80 |
2004 Incentive Award Plan | |||
Incentive Award Plan, additional information | |||
Equity-based compensation expense | 9.6 | 8.7 | 8.3 |
Income tax benefit related to stock options and restricted stock | 2.1 | 2.5 | 0 |
Capitalized compensation expense | 0.8 | 0.8 | 0.8 |
Total unrecognized compensation cost | $31.10 | ||
Weighted-average period to recognize unrecognized compensation cost | 2 years 10 months 24 days |
Related_party_transactions_Det
Related party transactions: (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Lease | |||
Office lease | |||
Payment for rent and related costs (in dollars) | $0.50 | $0.60 | $0.60 |
Notice period for cancellation of lease | 60 days | ||
Headquarters building | |||
Office lease | |||
Number of owners of the LLC | 2 | ||
Chief Executive Officer | Headquarters building | |||
Office lease | |||
Ownership interest of related parties held in the partnership (as a percent) | 51.00% | ||
Chief Executive Officer's wife | Headquarters building | |||
Office lease | |||
Ownership interest of related parties held in the partnership (as a percent) | 49.00% |
Geographic_information_Details
Geographic information: (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
segment | |||||||||||
Geographic information: | |||||||||||
Number of operating segments | 1 | ||||||||||
Geographic information | |||||||||||
Revenues | $96,749 | $95,691 | $94,623 | $92,937 | $89,859 | $87,761 | $85,803 | $84,553 | $380,003 | $347,979 | $316,973 |
Long lived assets, net | 360,795 | 341,231 | 360,795 | 341,231 | |||||||
North America | |||||||||||
Geographic information | |||||||||||
Revenues | 301,400 | 274,320 | 253,396 | ||||||||
Long lived assets, net | 266,713 | 251,352 | 266,713 | 251,352 | |||||||
Europe | |||||||||||
Geographic information | |||||||||||
Revenues | 78,603 | 73,659 | 63,577 | ||||||||
Long lived assets, net | $94,082 | $89,879 | $94,082 | $89,879 |
Quarterly_financial_informatio2
Quarterly financial information (unaudited): (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Quarterly financial information (unaudited): | |||||||||||
Service revenue | $96,749 | $95,691 | $94,623 | $92,937 | $89,859 | $87,761 | $85,803 | $84,553 | $380,003 | $347,979 | $316,973 |
Network operations, including equity-based compensation expense, respectively, exclusive of amounts shown separately) | 41,046 | 40,407 | 39,605 | 38,836 | 38,400 | 37,441 | 37,076 | 37,309 | 159,893 | 150,225 | 143,642 |
Operating income | 13,066 | 13,614 | 14,309 | 12,907 | 12,065 | 12,577 | 11,601 | 9,905 | 53,900 | 46,154 | 30,968 |
Net income (loss) | -352 | -184 | 1,208 | 125 | 52,599 | 2,122 | 1,607 | 361 | 797 | 56,689 | -4,251 |
Net income (loss) per common share-basic (in dollars per share) | ($0.01) | $0 | $0.03 | $0 | $1.14 | $0.05 | $0.03 | $0.01 | $0.02 | $1.22 | ($0.09) |
Net income (loss) per common share-diluted (in dollars per share) | ($0.01) | $0 | $0.03 | $0 | $1.10 | $0.05 | $0.03 | $0.01 | $0.02 | $1.21 | ($0.09) |
Weighted-average number of common shares-basic | 45,229,125 | 45,629,079 | 45,897,449 | 46,409,735 | 46,302,926 | 46,171,194 | 46,040,692 | 45,537,607 | 45,960,720 | 46,286,735 | 45,514,844 |
Weighted-average number of common shares-diluted | 45,229,125 | 45,629,079 | 46,294,966 | 46,907,360 | 48,800,560 | 46,823,167 | 46,769,184 | 46,435,677 | 46,349,670 | 46,996,904 | 45,514,844 |
Convertible senior notes | |||||||||||
Quarterly financial information (unaudited) | |||||||||||
Interest expense | $1,200 | $3,525 | $7,329 | $6,806 | |||||||
Shares assumed from conversion of the Convertible Notes (in shares) | 1,900,000 | 1,900,000 | 1,900,000 |
Subsequent_events_Details
Subsequent events: (Details) (USD $) | 3 Months Ended | 12 Months Ended | 0 Months Ended | 1 Months Ended | 3 Months Ended | 0 Months Ended | 1 Months Ended | |||||||||||||||
Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Feb. 24, 2015 | Jan. 31, 2015 | Mar. 31, 2015 | Mar. 26, 2015 | Feb. 20, 2015 | Mar. 31, 2015 | Aug. 19, 2013 | Jan. 26, 2011 | Apr. 09, 2014 | |
Subsequent events | ||||||||||||||||||||||
Approved quarterly payments under Capital Program | $12,000,000 | $12,000,000 | $10,500,000 | $10,500,000 | $10,500,000 | $10,000,000 | $12,000,000 | $10,500,000 | ||||||||||||||
Payment under Capital Program paid as dividend | 10,707,000 | 10,186,000 | ||||||||||||||||||||
Dividends declared per common share (in dollars per share) | $0.31 | $0.30 | $0.17 | $0.39 | $0.37 | $0.14 | $0.13 | $0.12 | $0.11 | $0.10 | $1.17 | $0.76 | $0.21 | |||||||||
Senior secured notes | ||||||||||||||||||||||
Subsequent events | ||||||||||||||||||||||
Interest rate (as a percent) | 8.38% | 8.38% | 8.38% | 8.38% | ||||||||||||||||||
Aggregate principal amount of debt issued | 240,000,000 | 240,000,000 | 65,000,000 | 175,000,000 | ||||||||||||||||||
Security of senior notes and guarantees, expressed as a percentage of equity interests of first-tier foreign subsidiaries held by Company and its guarantors | 65.00% | |||||||||||||||||||||
Senior secured notes | 12-month period beginning on February 15, 2015 | ||||||||||||||||||||||
Subsequent events | ||||||||||||||||||||||
Special mandatory redemption price (as a percent) | 104.19% | |||||||||||||||||||||
Senior unsecured notes | ||||||||||||||||||||||
Subsequent events | ||||||||||||||||||||||
Aggregate principal amount of debt issued | 200,000,000 | 200,000,000 | 200,000,000 | |||||||||||||||||||
Subsequent Event | ||||||||||||||||||||||
Subsequent events | ||||||||||||||||||||||
Purchase Obligation | 28,900,000 | |||||||||||||||||||||
Purchase agreement term | 18 months | |||||||||||||||||||||
Regular quarterly dividend (in dollars per share) | 0.32 | |||||||||||||||||||||
Dividend per common share under Capital Program (in dollars per share) | $0.03 | $0.03 | ||||||||||||||||||||
Dividends declared per common share (in dollars per share) | $0.35 | |||||||||||||||||||||
Subsequent Event | Expected | ||||||||||||||||||||||
Subsequent events | ||||||||||||||||||||||
Payment under Capital Program paid as dividend | 1,400,000 | 1,400,000 | ||||||||||||||||||||
Expected value of dividend to be paid | 15,800,000 | |||||||||||||||||||||
Subsequent Event | Senior secured notes | ||||||||||||||||||||||
Subsequent events | ||||||||||||||||||||||
Interest rate (as a percent) | 5.38% | |||||||||||||||||||||
Aggregate principal amount of debt issued | 250,000,000 | |||||||||||||||||||||
Irrevocable deposit | 251,600,000 | |||||||||||||||||||||
Security of senior notes and guarantees, expressed as a percentage of equity interests of first-tier foreign subsidiaries held by Company and its guarantors | 65.00% | |||||||||||||||||||||
Subsequent Event | Senior secured notes | Prior to December 1, 2021 | ||||||||||||||||||||||
Subsequent events | ||||||||||||||||||||||
Special mandatory redemption price (as a percent) | 100.00% | |||||||||||||||||||||
Subsequent Event | Senior secured notes | On or after December 1, 2021 | ||||||||||||||||||||||
Subsequent events | ||||||||||||||||||||||
Special mandatory redemption price (as a percent) | 100.00% | |||||||||||||||||||||
Subsequent Event | Senior secured notes | Expected | ||||||||||||||||||||||
Subsequent events | ||||||||||||||||||||||
Repayment of debt | 240,000,000 | |||||||||||||||||||||
Loss on redemption | $9,000,000 |
Schedule_II_VALUATION_AND_QUAL1
Schedule II VALUATION AND QUALIFYING ACCOUNTS (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Movement in valuation and qualifying accounts | |||
Bad debt expense, net of recoveries | ($3,700,000) | ($3,500,000) | ($5,100,000) |
Allowance for doubtful accounts (deducted from accounts receivable) | |||
Movement in valuation and qualifying accounts | |||
Balance at Beginning of Period | 1,871,000 | 3,083,000 | 3,345,000 |
Charged to Costs and Expenses(a) | 5,046,000 | 4,731,000 | 6,058,000 |
Deductions | -5,210,000 | -5,943,000 | -6,320,000 |
Balance at End of Period | 1,707,000 | 1,871,000 | 3,083,000 |
Allowance for Unfulfilled Customer Purchase Obligations (deducted from accounts receivable) | |||
Movement in valuation and qualifying accounts | |||
Balance at Beginning of Period | 2,144,000 | 1,682,000 | 1,859,000 |
Charged to Costs and Expenses(a) | 5,082,000 | 4,690,000 | 6,888,000 |
Deductions | -5,678,000 | -4,228,000 | -7,065,000 |
Balance at End of Period | 1,548,000 | 2,144,000 | 1,682,000 |
Deferred tax valuation allowance | |||
Movement in valuation and qualifying accounts | |||
Balance at Beginning of Period | 354,537,000 | 388,460,000 | 370,293,000 |
Charged to Costs and Expenses(a) | 10,436,000 | 5,542,000 | 18,200,000 |
Deductions | -19,723,000 | -39,465,000 | -33,000 |
Balance at End of Period | $345,250,000 | $354,537,000 | $388,460,000 |