Document and Entity Information
Document and Entity Information - USD ($) $ in Billions | 12 Months Ended | ||
Dec. 31, 2022 | Jan. 31, 2023 | Jun. 30, 2022 | |
Document and Entity Information | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2022 | ||
Document Transition Report | false | ||
Entity File Number | 000-51829 | ||
Entity Registrant Name | COGENT COMMUNICATIONS HOLDINGS, INC. | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 46-5706863 | ||
Entity Address, Address Line One | 2450 N Street N.W. | ||
Entity Address, City or Town | Washington, D.C | ||
Entity Address, Country | US | ||
Entity Address, Postal Zip Code | 20037 | ||
City Area Code | (202) | ||
Local Phone Number | 295-4200 | ||
Title of 12(b) Security | Common Stock, par value $0.001 per share | ||
Trading Symbol | CCOI | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 2.6 | ||
Entity Common Stock, Shares Outstanding | 48,299,092 | ||
Entity Central Index Key | 0001158324 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2022 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Auditor Name | Ernst & Young LLP | ||
Auditor Firm ID | 42 | ||
Auditor Location | Tysons, VA |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 223,783 | $ 319,609 |
Restricted cash | 52,129 | 9,015 |
Accounts receivable, net of allowance for credit losses of $2,303 and $1,510, respectively | 44,123 | 41,938 |
Prepaid expenses and other current assets | 45,878 | 39,015 |
Total current assets | 365,913 | 409,577 |
Property and equipment: | ||
Property and equipment | 1,714,906 | 1,619,515 |
Accumulated depreciation and amortization | (1,170,476) | (1,161,635) |
Total property and equipment, net | 544,430 | 457,880 |
Right-of-use leased assets | 81,601 | 101,687 |
Deposits and other assets | 18,238 | 15,413 |
Total assets | 1,010,182 | 984,557 |
Current liabilities: | ||
Accounts payable | 27,208 | 11,923 |
Accrued and other current liabilities | 63,889 | 39,057 |
Current maturities, operating lease liabilities | 12,005 | 12,197 |
Installment payment agreement, current portion, net of discount of $6 | 785 | |
Finance lease obligations, current maturities | 17,182 | 17,048 |
Total current liabilities | 120,284 | 81,010 |
Operating lease liabilities, net of current maturities | 94,587 | 111,794 |
Finance lease obligations, net of current maturities | 287,044 | 228,822 |
Other long-term liabilities | 82,636 | 44,609 |
Total liabilities | 1,528,814 | 1,357,655 |
Commitments and contingencies | ||
Stockholders' deficit: | ||
Common stock, $0.001 par value; 75,000,000 shares authorized; 48,013,330 and 47,674,189 shares issued and outstanding, respectively | 48 | 48 |
Additional paid-in capital | 575,064 | 547,734 |
Accumulated other comprehensive loss | (19,156) | (11,003) |
Accumulated deficit | (1,074,588) | (909,877) |
Total stockholders' deficit | (518,632) | (373,098) |
Total liabilities and stockholders' deficit | 1,010,182 | 984,557 |
Senior unsecured 2024 Notes | ||
Current liabilities: | ||
Senior unsecured 2024 notes, net of unamortized debt costs of $2,121 and net of discount of $772 | 394,112 | |
Senior secured 2026 Notes | ||
Current liabilities: | ||
Senior secured 2026 notes, net of unamortized debt costs of $905 and $1,156, respectively, and discount of $1,203 and $1,536, respectively | 497,892 | $ 497,308 |
Senior unsecured 2027 Notes | ||
Current liabilities: | ||
Senior unsecured 2027 notes, net of unamortized debt costs of $1,173 and discount of $2,456 | $ 446,371 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Assets | ||
Accounts receivable, allowance for credit losses (in dollars) | $ 2,303 | $ 1,510 |
Liabilities and stockholders' equity | ||
Discount on installment payment agreement | 6 | |
Unamortized debt premium noncurrent | $ 1,536 | |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 75,000,000 | 75,000,000 |
Common stock, shares issued | 48,013,330 | 47,674,189 |
Common stock, shares outstanding | 48,013,330 | 47,674,189 |
Senior unsecured 2024 Notes | ||
Liabilities and stockholders' equity | ||
Unamortized debt costs | $ 2,121 | |
Unamortized debt premium | 772 | |
Senior secured 2026 Notes | ||
Liabilities and stockholders' equity | ||
Unamortized debt costs | 905 | $ 1,156 |
Unamortized debt premium noncurrent | 1,203 | |
Senior unsecured 2027 Notes | ||
Liabilities and stockholders' equity | ||
Unamortized debt costs | 1,173 | |
Unamortized debt premium noncurrent | $ 2,456 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Service revenue | $ 599,604 | $ 589,797 | $ 568,103 |
Operating expenses: | |||
Network operations (including $2,248, $2,521 and $1,219 of equity-based compensation expense, respectively), exclusive of amounts shown separately | 228,154 | 226,337 | 219,157 |
Selling, general, and administrative (including $23,886, $24,301 and $22,306 of equity-based compensation expense, respectively) | 163,021 | 162,380 | 158,476 |
Acquisition costs - Sprint (T-Mobile Wireline) (Note 1) | 2,248 | ||
Depreciation and amortization | 92,222 | 89,240 | 83,477 |
Total operating expenses | 485,645 | 477,957 | 461,110 |
Gains on equipment transactions | 18 | 352 | |
Gains (losses) on lease terminations | 7,375 | (423) | |
Operating income | 113,959 | 119,233 | 106,922 |
Interest expense | (67,584) | (58,059) | (62,486) |
Change in valuation - interest rate swap | (43,113) | (9,015) | |
Realized foreign exchange gain on 2024 Notes | 2,533 | ||
Foreign exchange gain (loss) on 2024 Notes | 31,561 | 32,522 | (36,997) |
Interest income and other | 3,438 | 1,437 | 978 |
Income before income taxes | 26,376 | 71,420 | 10,312 |
Income tax expense | (21,230) | (23,235) | (4,096) |
Net income | 5,146 | 48,185 | 6,216 |
Comprehensive (loss) income: | |||
Net income | 5,146 | 48,185 | 6,216 |
Foreign currency translation adjustment | (8,153) | (9,697) | 11,020 |
Comprehensive (loss) income | $ (3,007) | $ 38,488 | $ 17,236 |
Net (loss) income per common share: | |||
Basic net income per common share | $ 0.11 | $ 1.04 | $ 0.14 |
Diluted net income per common share | 0.11 | 1.03 | 0.13 |
Dividends declared per common share | $ 3.555 | $ 3.170 | $ 2.780 |
Weighted-average common shares - basic (in shares) | 46,875,992 | 46,419,180 | 45,947,772 |
Weighted-average common shares - diluted (in shares) | 47,207,298 | 46,963,920 | 46,668,198 |
Senior notes | |||
Operating expenses: | |||
Loss on debt extinguishment and redemption - 2021 Notes | $ (638) | ||
2022 Notes | |||
Operating expenses: | |||
Loss on debt extinguishment and redemption - 2022 Notes | $ (14,698) | ||
2024 Notes | |||
Operating expenses: | |||
Loss on debt extinguishment and redemption - 2024 Notes | $ (11,885) |
CONSOLIDATED STATEMENTS OF CO_2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Equity-based compensation expense | $ 24,439 | $ 26,822 | $ 23,525 |
Network operations | |||
Equity-based compensation expense | 553 | 2,521 | 1,219 |
Selling, general and administrative | |||
Equity-based compensation expense | $ 23,886 | $ 24,301 | $ 22,306 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT - USD ($) $ in Thousands | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total |
Balance at Dec. 31, 2019 | $ 47 | $ 493,178 | $ (12,326) | $ (684,578) | $ (203,679) |
Balance (in shares) at Dec. 31, 2019 | 46,840,434 | ||||
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) | |||||
Forfeitures of shares granted to employees (in shares) | (53,428) | ||||
Equity-based compensation | 25,802 | 25,802 | |||
Foreign currency translation | 11,020 | 11,020 | |||
Issuances of common stock (in shares) | 476,030 | ||||
Exercises of options | 1,382 | 1,382 | |||
Exercises of options (in shares) | 30,097 | ||||
Common stock purchases and retirement | (4,495) | (4,495) | |||
Common stock purchases and retirement (in shares) | (79,056) | ||||
Dividends paid | (129,412) | (129,412) | |||
Net income | 6,216 | 6,216 | |||
Balance at Dec. 31, 2020 | $ 47 | 515,867 | (1,306) | (807,774) | (293,166) |
Balance (in shares) at Dec. 31, 2020 | 47,214,077 | ||||
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) | |||||
Forfeitures of shares granted to employees (in shares) | (47,436) | ||||
Equity-based compensation | 30,044 | 30,044 | |||
Foreign currency translation | (9,697) | (9,697) | |||
Issuances of common stock | $ 1 | 1 | |||
Issuances of common stock (in shares) | 471,080 | ||||
Exercises of options | 1,823 | 1,823 | |||
Exercises of options (in shares) | 36,468 | ||||
Dividends paid | (150,288) | (150,288) | |||
Net income | 48,185 | 48,185 | |||
Balance at Dec. 31, 2021 | $ 48 | 547,734 | (11,003) | (909,877) | $ (373,098) |
Balance (in shares) at Dec. 31, 2021 | 47,674,189 | 47,674,189 | |||
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) | |||||
Forfeitures of shares granted to employees (in shares) | (77,079) | ||||
Equity-based compensation | 26,716 | $ 26,716 | |||
Foreign currency translation | (8,153) | (8,153) | |||
Issuances of common stock | $ 0 | ||||
Issuances of common stock (in shares) | 401,036 | ||||
Exercises of options | 614 | 614 | |||
Exercises of options (in shares) | 15,184 | ||||
Dividends paid | (169,857) | (169,857) | |||
Net income | 5,146 | 5,146 | |||
Balance at Dec. 31, 2022 | $ 48 | $ 575,064 | $ (19,156) | $ (1,074,588) | $ (518,632) |
Balance (in shares) at Dec. 31, 2022 | 48,013,330 | 48,013,330 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Cash flows from operating activities: | |||
Net income | $ 5,146 | $ 48,185 | $ 6,216 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 92,222 | 89,240 | 83,477 |
Amortization of debt discount and premium | 1,464 | 1,759 | 1,894 |
Equity-based compensation expense (net of amounts capitalized) | 24,439 | 26,822 | 23,525 |
Foreign currency exchange (gain) loss on 2024 Notes | (31,561) | (32,522) | 36,997 |
Realized foreign currency exchange gain on 2024 Notes | (2,533) | ||
Gain - lease termination | (7,375) | ||
Gains-equipment transactions and other, net | 372 | 69 | (546) |
Deferred income taxes | 16,539 | 18,159 | 282 |
Changes in operating assets and liabilities: | |||
Accounts receivable | (2,838) | 1,385 | (2,702) |
Prepaid expenses and other current assets | (7,427) | (17) | (2,771) |
Change in valuation - interest rate swap agreement | 43,113 | 9,015 | |
Deposits and other assets | (282) | (12) | (873) |
Accounts payable, accrued liabilities and other long-term liabilities | 20,635 | 851 | (3,284) |
Net cash provided by operating activities | 173,707 | 170,257 | 140,320 |
Cash flows from investing activities: | |||
Purchases of property and equipment | (78,971) | (69,916) | (55,952) |
Net cash used in investing activities | (78,971) | (69,916) | (55,952) |
Cash flows from financing activities: | |||
Redemption and extinguishment of 2024 Notes | (375,354) | ||
Redemption and extinguishment of 2022 Notes | (459,317) | ||
Redemption and extinguishment of 2021 Notes | (189,225) | ||
Dividends paid | (169,857) | (150,288) | (129,412) |
Principal payments of finance lease obligations | (45,472) | (23,054) | (23,990) |
Principal payments of installment payment agreement | (790) | (6,922) | (10,547) |
Purchases of common stock | (4,495) | ||
Proceeds from exercises of common stock options | 614 | 1,823 | 1,382 |
Net cash used in financing activities | (144,849) | (140,825) | (116,002) |
Effect of exchange rate changes on cash | (2,599) | (2,193) | 3,513 |
Net decrease in cash and cash equivalents & restricted cash | (52,712) | (42,677) | (28,121) |
Cash and cash equivalents & restricted cash, beginning of year | 328,624 | 371,301 | 399,422 |
Cash and cash equivalents & restricted cash, end of year | 275,912 | 328,624 | 371,301 |
Supplemental disclosures of cash flow information: | |||
Cash paid for interest | 66,479 | 59,497 | 62,917 |
Cash paid for income taxes | 7,156 | 4,452 | 3,446 |
Non-cash investing and financing activities: | |||
Finance lease obligations incurred | 107,875 | 50,831 | 71,622 |
PP&E obtained for installment payment agreement | 5,771 | ||
Fair value of equipment acquired in leases | 1,969 | 536 | |
Non-cash component of network equipment obtained in exchange transactions | 320 | ||
Senior notes | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Loss on extinguishment & redemption of 2021 notes | 638 | ||
2022 Notes | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Loss on extinguishment & redemption of 2022 notes | 14,698 | ||
2024 Notes | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Loss on extinguishment & redemption of 2024 notes | 11,885 | ||
Senior unsecured 2024 Notes | |||
Cash flows from financing activities: | |||
Net proceeds from issuance | $ 240,285 | ||
Senior unsecured 2026 Notes | |||
Cash flows from financing activities: | |||
Net proceeds from issuance | $ 496,933 | ||
Senior unsecured 2027 Notes | |||
Cash flows from financing activities: | |||
Net proceeds from issuance | $ 446,010 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) $ in Thousands | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Senior unsecured 2024 Notes | |
Cash flows from operating activities: | |
Debt costs | $ 2,137 |
Senior Unsecured 2027 Notes [Member] | |
Cash flows from operating activities: | |
Debt costs | 1,290 |
Senior Secured 2026 Notes [Member] | |
Cash flows from operating activities: | |
Debt costs | $ 1,317 |
Description of the business and
Description of the business and summary of significant accounting policies: | 12 Months Ended |
Dec. 31, 2022 | |
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” or the “Company”) and Cogent Communications Merger Sub, Inc., a Delaware corporation, 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”). Cogent Communications, Inc. is wholly owned by Group and the vast majority of Group’s assets, contractual arrangements, and operations are executed by Cogent Communications, Inc. and its subsidiaries. Description of business The Company is a facilities-based provider of low-cost, high-speed Internet access, private network services, and data center colocation space and power. The Company’s network is specifically designed and optimized to transmit packet switched data. The Company delivers its services primarily to small and medium-sized businesses, communications service providers and other bandwidth-intensive organizations in 51 countries across North America, Europe, Asia, South America, Oceania and Africa. The Company is a Delaware corporation and is headquartered in Washington, DC. The Company offers on-net Internet access services exclusively through its own facilities, which run from its network to its customers’ premises. The Company offers its on-net services to customers located in buildings that are physically connected to its network. As a result, the Company is not dependent on local telephone companies or cable TV companies to serve its customers for its on-net Internet access and private network services. The Company’s on- net service consists of high-speed Internet access and private network services offered at speeds ranging from 100 megabits per second to 400 gigabits per second. The Company provides its on-net Internet access and private network services to its corporate and net-centric customers. The Company’s corporate customers are located in multi-tenant office buildings (“MTOBs”) and typically include law firms, financial services firms, advertising and marketing firms, as well as health care providers, educational institutions and other professional services businesses. The Company’s net-centric customers include bandwidth-intensive users that leverage its network to either deliver content to end users or to provide access to residential or commercial internet users. Content delivery customers include over the top (“OTT”) media service providers, content delivery networks, web hosting companies, and commercial content and application software providers. Access customers include access networks comprised of other Internet Service Providers (“ISPs”), telephone companies, mobile phone operators and cable television companies that collectively provide internet access to a substantial number of broadband subscribers and mobile phone subscribers across the world. These net-centric customers generally receive the Company’s services in carrier neutral colocation facilities and in the Company’s own 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. In addition to providing on-net services, the Company provides Internet access and private network services to customers that are not located in buildings directly connected to its network. The Company provides these off-net services primarily to corporate customers using other carriers’ circuits 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. In connection with the Company’s Sprint acquisition (discussed below), the Company will begin to provide optical wavelength services over the Company’s fiber network. The Company will sell these wavelength services to its existing customers, Sprint customers and to new customers who require dedicated optical transport connectivity without the capital and ongoing expenses associated with owning and operating network infrastructure. Acquisition of Sprint Communications On September 6, 2022, Cogent Infrastructure, Inc., a Delaware corporation (the “Buyer”) and a wholly owned subsidiary of the Company, entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”) with Sprint Communications LLC, a Kansas limited liability company (“Sprint Communications”) and an indirect wholly owned subsidiary of T-Mobile US, Inc., a Delaware corporation (“T-Mobile”), and Sprint LLC, a Delaware limited liability company and a direct wholly owned subsidiary of T-Mobile (the “Seller”), pursuant to which the Company will acquire the U.S. long-haul fiber network (including the non-U.S. extensions thereof) of Sprint Communications and its subsidiaries (the “Wireline Business”). The Purchase Agreement provides that, upon the terms and conditions set forth therein, the Company will purchase from the Seller all of the issued and outstanding membership interests (the “Purchased Interests”) of a Delaware limited liability company that holds Sprint Communications’ assets and liabilities relating to the Wireline Business (such transactions contemplated by the Purchase Agreement, collectively, the “Transaction”). The parties have agreed to a $1 purchase price in consideration for the Purchased Interests, subject to customary adjustments set forth in the Purchase Agreement. In addition, at the consummation of the Transaction (the “Closing”), a T-Mobile affiliate will enter into an agreement for IP transit services, pursuant to which T-Mobile will pay the Company an aggregate of $700 million, consisting of (i) $350 million in equal monthly installments during the first year after the Closing and (ii) $350 million in equal monthly installments over the subsequent 42 months. The Purchase Agreement includes customary representations, warranties, indemnities and covenants, including regarding the conduct of the Wireline Business prior to the Closing. In addition, the Closing is subject to customary closing conditions, including as to the receipt of certain required regulatory approvals and consents. Subject to the satisfaction or waiver of certain conditions and the other terms and conditions of the Purchase Agreement, the Transaction is expected to close in 2023. The Purchase Agreement contains certain termination rights for the Buyer and Seller, including that, subject to certain limitations, either the Buyer or the Seller may terminate the Purchase Agreement if the Transaction is not consummated by September 6, 2023, subject to two automatic six-month extensions if certain regulatory approvals have not been obtained. The Purchase Agreement also provides that each party may specifically enforce the other party’s obligations under the Purchase Agreement. The Company has agreed to guarantee the obligations of the Buyer under the Purchase Agreement pursuant to the terms of a Guaranty, dated as of September 6, 2022, by and between the Company and the Seller (the “Parent Guaranty”). The Parent Guaranty contains customary representations, warranties and covenants of the Company and the Seller. Acquisition Related Costs In connection with the Transaction and negotiation of the Purchase Agreement, the Company incurred $2.2 million of professional fees in the year ended December 31, 2022. 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. Allowance for credit losses The Company establishes an allowance for credit losses 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 credit losses 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 credit losses after all means of internal collection activities have been exhausted and the potential for recovery is considered remote. The Company uses third-party collection services to continue to seek collection for it’s written off accounts receivable. Effective January 1, 2020, the Company adopted Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments Current-period Balance at Provision for Write offs Balance at Beginning Expected Credit Charged Against End of Description of Period Losses Allowance Period Allowance for credit losses (deducted from accounts receivable) Year ending December 31, 2022 $ 1,510 $ 4,318 $ (3,525) $ 2,303 Year ending December 31, 2021 $ 1,921 $ 5,595 $ (6,006) $ 1,510 Year ending December 31, 2020 $ 1,771 $ 4,997 $ (4,847) $ 1,921 The current-period provision for expected credit losses is net of bad debt recoveries of $1.9 million, $2.2 million and $1.2 million for the years ended December 31, 2022, 2021 and 2020, respectively. Leases In February 2016, the FASB issued ASU No. 2016-02, Leases not reassessing whether any existing contracts contained leases, not reconsidering lease classification, not reassessing initial direct costs and using hindsight in determining the lease reasonably certain term of its leases. Year Year Ended Ended December 31, 2022 December 31, 2021 Finance lease cost amortization of right-of-use assets $ 28,915 $ 26,424 Interest expense on finance lease liabilities 23,317 19,419 Operating lease cost 18,331 18,382 Total lease costs 70,563 64,225 Other lease information Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from finance leases (23,317) (17,366) Operating cash flows from operating leases (18,836) (20,194) Financing cash flows from finance leases (45,472) (23,054) Right-of-use assets obtained in exchange for new finance lease liabilities 107,875 50,831 Right-of-use assets obtained in exchange for new operating lease liabilities 11,168 17,853 Weighted-average remaining lease term — finance leases (in years) 13.5 12.6 Weighted-average remaining lease term — operating leases (in years) 16.6 18.7 Weighted average discount rate — finance leases 8.6 % 9.0 % Weighted average discount rate — operating leases 5.4 % 5.4 % Finance leases—fiber lease agreements The Company has entered into lease agreements with numerous providers of dark fiber under indefeasible-right-of-use agreements (“IRUs”). These IRUs typically have initial terms of 15-20 years and include renewal options after the initial lease term. The Company establishes the number of renewal option periods used in determining the lease term based upon its assessment at the inception of the lease of the number of option periods for which failure to renew the lease imposes a penalty in such amount that renewal appears to be reasonably certain. The option to renew may be automatic, at the option of the Company or mutually agreed to between the dark fiber provider and the Company. Once the Company has accepted the related fiber route, leases that meet the criteria for treatment as finance leases are recorded as a finance lease obligation and an IRU asset. The interest rate used in determining the present value of the aggregate future minimum lease payments is the Company’s incremental borrowing rate for the reasonably certain lease term. The determination of the Company’s incremental borrowing rate requires some judgment. Finance lease assets are included in property and equipment in the Company’s consolidated balance sheets. As of December 31, 2022, the Company had committed to additional dark fiber IRU lease agreements totaling $70.3 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 the next 12 months. Operating leases The Company leases office space and certain data center facilities under operating leases. In certain cases the Company also enters into short-term operating leases for dark fiber. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments under the lease. Operating lease right-of-use assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the reasonably certain lease term. The implicit rates within the Company’s operating leases are generally not determinable and the Company uses its incremental borrowing rate at the lease commencement date to determine the present value of its lease payments. The determination of the Company’s incremental borrowing rate requires some judgment. The Company determines its incremental borrowing rate for each lease using its current borrowing rate, adjusted for various factors including level of collateralization and term to align with the term of the lease. Certain of the Company’s leases include options to extend or terminate the lease. The Company establishes the number of renewal option periods used in determining the operating lease term based upon its assessment at the inception of the operating lease of the number of option periods for which failure to renew the lease imposes a penalty in such amount that renewal appears to be reasonably certain. The option to renew may be automatic, at the option of the Company or mutually agreed to between the landlord or dark fiber provider and the Company. Once the Company has accepted the related fiber route or the facility lease term has begun, the present value of the aggregate future minimum operating lease payments is recorded as an operating lease liability and a right-of-use leased asset. Lease incentives and deferred rent liabilities for facilities operating leases are presented with, and netted against, the right-of-use leased asset. Lease expense for lease payments is recognized on a straight-line basis over the term of the lease. The future minimum payments under these operating lease and finance lease agreements are as follows (in thousands): Operating Finance For the twelve months ending December 31, Leases Leases 2023 $ 17,181 $ 40,425 2024 16,658 42,686 2025 14,255 37,458 2026 12,285 34,685 2027 10,900 35,521 Thereafter 87,702 333,836 Total minimum lease obligations 158,981 524,611 Less—amounts representing interest (52,389) (220,385) Present value of minimum lease obligations 106,592 304,226 Current maturities (12,005) (17,182) Lease obligations, net of current maturities $ 94,587 $ 287,044 Revenue recognition The Company recognizes revenue under ASU No. 2014-09, Revenue from Contracts with Customers 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. Amounts billed are due upon receipt and contract lengths range from month to month to 60 months. The Company satisfies its performance obligations to provide services to customers over time as the services are rendered. In accordance with ASC 606, revenue is recognized when a customer obtains the promised service. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these services. The Company has adopted the practical expedient related to certain performance obligation disclosures since it has a right to consideration from its customer in an amount that corresponds directly with the value to the customer of the Company’s performance completed to date. To achieve this core principle, the Company follows the following five steps: 1) Identification of the contract, or contracts with a customer; 2) Identification of the performance obligations in the contract; 3) Determination of the transaction price; 4) Allocation of the transaction price to the performance obligations in the contract; and 5) Recognition of revenue when, or as, the Company satisfies a performance obligation. Fees billed in connection with customer installations are deferred (as deferred revenue) and recognized as noted above. To the extent a customer contract is terminated prior to its contractual end the customer is subject to termination fees. The Company vigorously seeks payment of termination fees. The Company recognizes revenue for termination fees as they are collected. Service revenue recognized from amounts in deferred revenue (contract liabilities) at the beginning of the period during the years ended December 31, 2022, 2021 and 2020 was $5.0 million, $4.6 million and $4.4 million, respectively. Amortization expense for contract costs for the years ended December 31, 2022, 2021 and 2020 was $19.4 million, $18.4 million and $17.1 million, respectively. Gross receipts taxes, universal service fund and other surcharges Revenue recognition standards include guidance relating to taxes or surcharges assessed by a governmental authority that are directly imposed on a revenue-producing transaction between a seller and a customer and may include, but are not limited to, gross receipts taxes, excise taxes, Universal Service Fund fees and certain state regulatory fees. Such charges may be presented gross or net based upon the Company’s accounting policy election. The Company records certain excise taxes and surcharges on a gross basis and includes them in its revenues and costs of network operations. Excise taxes and surcharges billed to customers and recorded on a gross basis (as service revenue and network operations expense) were $15.4 million, $18.5 million, and $15.1 million for the years ended December 31, 2022, 2021 and 2020, respectively. 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, access fees paid to building owners and certain excise taxes and surcharges recorded on a gross basis. 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 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 in stockholders’ equity. The Company’s only components of “other comprehensive income” 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) are included within interest income and other on the consolidated statements of comprehensive income. 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, 2022 and December 31, 2021, the carrying amount of cash and cash equivalents, restricted cash, 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 and restricted cash 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, 2022, the fair value of the Company’s $500.0 million senior secured notes due 2026 was $452.5 million, the fair value of the Company’s $450.0 million senior unsecured notes due 2027 was $441.0 million and the estimated fair value of the Company’s Swap Agreement was $52.1 million. Restricted cash and interest rate swap agreement Restricted cash represents amounts held in segregated bank accounts by our clearing broker as margin in support of our Swap Agreement, as discussed in Note 4, and was $52.1 million as of December 31, 2022. Additional cash may be further restricted to maintain our interest rate swap instrument as interest rates fluctuate and margin requirements change. The Company does not use derivative financial instruments for trading purposes. 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, 2022 and 2021, 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, Mexico, Asia, South America, Oceania and Africa. 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 finance 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 and customer installation costs. 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 finance 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. 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 and for market-based awards compensation cost is recognized if the service condition is satisfied even if the market condition is not satisfied. Equity-based compensation expense is recognized in the statements of comprehensive income 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 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. The following details the determination of the diluted weighted average shares: Year Ended Year Ended Year Ended December 31, December 31, December 31, 2022 2021 2020 Weighted average common shares—basic 46,875,992 46,419,180 45,947,772 Dilutive effect of stock options 16,064 34,007 80,849 Dilutive effect of restricted stock 315,242 510,733 639,577 Weighted average common shares—diluted 47,207,298 46,963,920 46,668,198 The following details unvested shares of restricted common stock as well as the anti-dilutive effects of stock options and restricted stock awards outstanding: December 31, December 31, December 31, 2022 2021 2020 Unvested shares of restricted common stock 1,164,021 1,253,321 1,339,596 Anti-dilutive options for common stock 105,556 45,809 32,324 Anti-dilutive shares of restricted common stock 541,608 86,619 223,118 |
Property and equipment_
Property and equipment: | 12 Months Ended |
Dec. 31, 2022 | |
Property and equipment: | |
Property and equipment: | 2. Property and equipment: Property and equipment consisted of the following (in thousands): December 31, 2022 2021 Owned assets: Network equipment $ 673,479 $ 650,634 Leasehold improvements 263,861 250,623 System infrastructure 171,694 160,376 Software 11,277 11,028 Office and other equipment 22,071 20,999 Building 6,140 1,273 Land 101 107 1,148,623 1,095,040 Less—Accumulated depreciation and amortization (949,277) (912,579) 199,346 182,461 Assets under finance leases: IRUs 566,283 524,475 Less—Accumulated depreciation and amortization (221,199) (249,056) 345,084 275,419 Property and equipment, net $ 544,430 $ 457,880 Depreciation and amortization expense related to property and equipment and finance leases was $92.2 million, $89.2 $83.5 The Company capitalizes the compensation cost of employees directly involved with its construction activities. In 2022, 2021 and 2020, the Company capitalized compensation costs of $12.6 million, $13.4 million and $12.1 million, respectively. These amounts are included in system infrastructure costs. Installment payment agreement The Company had entered into an installment payment agreement (“IPA”) with a vendor. Under the IPA the Company was able to purchase network equipment in exchange for interest free note obligations each with a twenty-four month term. There were no payments under each note obligation for the first six months followed by eighteen equal installment payments for the remaining eighteen month term. As of December 31, 2021, there was $0.8 million of note obligations outstanding under the IPA, secured by the related equipment. The Company recorded the assets purchased and the present value of the note obligation utilizing an imputed interest rate. The resulting discounts under the note obligations were amortized over the note term using the effective interest rate method. The IPA was fully repaid in 2022. |
Accrued and other liabilities_
Accrued and other liabilities: | 12 Months Ended |
Dec. 31, 2022 | |
Accrued and other liabilities: | |
Accrued and other liabilities: | 3. Accrued and other liabilities: Accrued and other current liabilities consist of the following (in thousands): December 31, 2022 2021 Operating accruals $ 19,488 $ 16,360 Interest rate swap agreement - current portion 20,267 — Deferred revenue—current portion 4,911 4,894 Payroll and benefits 11,880 8,466 Taxes—non-income based 2,687 4,291 Interest 4,656 5,046 Total $ 63,889 $ 39,057 |
Long-term debt
Long-term debt | 12 Months Ended |
Dec. 31, 2022 | |
Long-term debt: | |
Long-term debt: | 4. Long-term debt: As of December 31, 2022, the Company had outstanding $450.0 million aggregate principal amount of Senior Unsecured Notes due 2027 (the “2027 Notes”) and $500.0 million aggregate principal amount of Senior Secured Notes due 2026 (the “2026 Notes”). The 2027 Notes were issued in June 2022, are due on June 15, 2027 and bear interest at a rate of 7.00% per year. Interest on the 2027 Notes is paid semi-annually on June 15 and December 15 of each year. The 2026 Notes were issued in May 2021, are due on May 1, 2026 and bear interest at a rate of 3.50% per year. Interest on the 2026 Notes is paid semi-annually on May 1 and November 1 of each year. In June 2022, the Company redeemed and extinguished its €350.0 million aggregate principal amount of Senior Unsecured Euro Notes due 2024 (the “2024 Notes”). The 2024 Notes were due on June 30, 2024 and bore interest at a rate of 4.375% per year. Interest on the 2024 Notes was paid semi-annually on June 30 and December 30 of each year. Issuance of 2027 Notes and redemption of 2024 Notes On June 22, 2022 (the “2027 Notes Closing Date”), Group completed its offering of $450.0 million aggregate principal amount of its 2027 Notes for issuance in a private placement not registered under the Securities Act of 1933, as amended (the “Securities Act”). The 2027 Notes were offered and sold only to persons reasonably believed to be qualified institutional buyers in an unregistered offering pursuant to Rule 144A under the Securities Act and to certain non-U.S. persons in transactions outside the United States in compliance with Regulation S under the Securities Act. The 2027 Notes were issued pursuant to, and are governed by, an indenture (the “2027 Notes Indenture”), dated the 2027 Notes Closing Date by and among Group, Holdings, the other guarantors named therein and the trustee. The 2027 Notes are jointly and severally guaranteed on a senior unsecured basis by each of the Company’s existing and future material domestic subsidiaries, subject to certain exceptions, and by the Company. Under certain circumstances, the Guarantors may be released from these Guarantees without the consent of the holders of the 2027 Notes. The net proceeds from the 2027 Notes offering were $446.0 million after deducting the $2.7 million discount and $1.3 million of offering expenses. The Company used a portion of the net proceeds from the 2027 Notes offering to redeem its 2024 Notes. The Company expects to use the remaining net proceeds from the 2027 Notes offering for general corporate purposes, and/or to repurchase the Company’s common stock or for special or recurring dividends to the Company’s stockholders. In connection with full redemption of its 2024 Notes, Group issued a conditional notice of full redemption to holders of the 2024 Notes, specifying June 30, 2022 as the redemption date (the “Redemption Date”). On the 2027 Notes Closing Date, Group satisfied and discharged its obligations under the 2024 Notes by depositing with a designee of the trustee for the 2024 Notes sufficient funds to pay the principal of the Premium (defined below) and accrued and unpaid interest on the Euro Notes to the Redemption Date. The 2024 Notes were issued in Euros and were reported in the Company’s reporting currency, US dollars, until they were extinguished and redeemed. Prior to the redemption of the 2024 Notes, the gain (loss) on foreign exchange on the 2024 Notes from converting Euros into US dollars was $31.6 million, $32.5 million and ($37.0) million for 2022, 2021 and 2020, respectively. Unless earlier redeemed or repurchased, the 2027 Notes will mature on June 15, 2027. Group may redeem some or all of the 2027 Notes at any time prior to June 15, 2024 at a price equal to 100% of the principal amount of the 2027 Notes, plus a “make-whole” premium, as set forth in the 2027 Notes Indenture, plus accrued and unpaid interest, if any, to, but not including, the date of redemption, or may redeem up to 40.0% of the 2027 Notes using proceeds of certain equity offerings completed prior to June 15, 2024 at 107.0% of the principal amount plus accrued and unpaid interest, if any. Thereafter, Group may redeem the 2027 Notes, in whole or in part, at a redemption price ranging from 103.5% of the aggregate principal amount of the 2027 Notes redeemed to par (depending on the year), in each case, as set forth in the 2027 Notes Indenture, plus accrued and unpaid interest, if any. On the Redemption Date, Group redeemed its €350.0 million of 2024 Notes at a price of 101.094% (€353.8 million or $375.2 million) of the principal amount (the “Premium”) plus €7.7 million ($8.1 million) of interest paid through June 30, 2022, the Redemption Date where the Premium reduced to 101.094%, for a total payment of €361.5 million ($383.4 million). Group entered into a short-term USD to Euro forward purchase agreement to mitigate the risk of foreign currency fluctuations. As a result of these transactions, the Company incurred a loss on debt extinguishment and redemption of $11.9 million. On the Redemption Date the 2024 Notes were valued at $365.8 million, resulting in a gain on foreign exchange of $31.6 million for the year ended December 31, 2022. Issuance of the 2026 Notes and redemption of 2022 Notes On May 7, 2021 (the “2026 Notes Closing Date”), Group completed an offering of $500.0 million aggregate principal amount of its 2026 Notes for issuance in a private placement exempt from registration under the Securities Act. The 2026 Notes were offered and sold only to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act and to certain non-U.S. persons in transactions outside the United States in compliance with Regulation S under the Securities Act. The 2026 Notes were issued pursuant to, and are governed by, an indenture (the “2026 Notes Indenture”), dated the 2026 Notes Closing Date by and among Group, Holdings, the other guarantors named therein, the trustee and the collateral agent. The 2026 Notes are guaranteed on a senior secured basis, jointly and severally, by Group’s material domestic subsidiaries, subject to certain exceptions (the “Subsidiary Guarantors”). In addition, the 2026 Notes are guaranteed on a senior unsecured basis by Holdings (together with the Subsidiary Guarantors, the “Guarantors”). Under certain circumstances, the Guarantors may be released from these guarantees without the consent of the holders of the 2026 Notes. The net proceeds from the 2026 Notes offering were $496.9 million after deducting the $1.8 million discount and $1.3 million of offering expenses. Unless earlier redeemed or repurchased, the 2026 Notes will mature on May 1, 2026. Group may redeem some or all of the 2026 Notes at any time prior to February 1, 2026 at a price equal to 100% of the principal amount of the 2026 Notes, plus a “make-whole” premium as set forth in the 2026 Notes Indenture, plus accrued and unpaid interest, if any, to, but not including, the date of redemption. Thereafter, Group may redeem the 2026 Notes, in whole or in part, at a price equal to 100% of the principal amount of the 2026 Notes, plus accrued and unpaid interest, if any, to, but not including, the date of redemption. In March 2021, Group redeemed $115.9 million aggregate principal amount of its 5.375% Senior Secured Notes due 2022 (the “2022 Notes”) at an average price of 103.2% of the principal amount plus $0.4 million of accrued and unpaid interest. As a result of this transaction, the Company incurred a loss on debt extinguishment and redemption of $3.9 million from the premium payment above par value, the amortization of the remaining unamortized notes cost and certain transaction expenses. In May 2021, Group redeemed $45.0 million aggregate principal amount of its 2022 Notes at par plus the “make-whole amount” as defined in the 2022 Notes indenture of $1.9 million ($41.41533 per $1,000 aggregate principal amount) plus accrued interest to, but excluding, the redemption date of $0.4 million ($9.70486 per aggregate principal amount). Following the $115.9 million and the $45.0 million redemptions there was $284.1 million aggregate principal amount of 2022 Notes remaining. On the 2026 Notes Closing Date, Group used the net proceeds from the offering of its 2026 Notes to fully satisfy and discharge its remaining obligations under its 2022 Notes. As a result of these transactions, the Company incurred an additional loss on debt extinguishment and redemption of $10.8 million from the payment of $11.5 million of interest on the 2022 Notes through December 1, 2021 and the amortization of the remaining unamortized notes costs and debt premium. Senior unsecured notes - €350.0 million 2024 Notes In June 2019, Group completed an offering of €135.0 million of 2024 Notes. The net proceeds from the June 2019 offering, after deducting offering expenses, were $152.1 million. In June 2020, Group completed an offering of €215.0 million of 2024 Notes. The net proceeds from the June 2020 offering, after deducting offering expenses, was $240.3 million. The 2024 Notes were guaranteed (the “Guarantees”) on a senior unsecured basis, jointly and severally, by the Company’s material domestic subsidiaries, subject to certain exceptions, and by the Company (collectively, the “Guarantors”). Under certain circumstances, the Guarantors could be released from these Guarantees without the consent of the holders of the 2024 Notes. The 2024 Notes bore interest at a rate of 4.375% per annum and was paid semi-annually in arrears on June 30 and December 30 of each year. The 2024 Notes were scheduled to mature on June 30, 2024. The 2024 Notes were issued in Euros and were reported in the Company’s reporting currency — US dollars. As of December 31, 2020, the Company’s €350.0 million of 2024 Notes were valued at $429.3 million resulting in a loss on foreign exchange of $37.0 million for the year ended December 31, 2020. As of December 31, 2021, the 2024 Notes were valued at $397.0 million, resulting in a gain on foreign exchange of $32.5 million for the year ended December 31, 2021. In June 2022, Group redeemed the 2024 Notes, as noted above. Senior secured notes - $445.0 million 2022 Notes In February 2015, Group issued $250.0 million of 2022 Notes. In December 2016, the Company issued an additional $125.0 million par value of its 2022 Notes at a premium of 100.375% of par value. In August 2018, the Company issued an additional $70.0 million par value of its 2022 Notes at a premium of 101.75% of par value. The 2022 Notes were sold in private offerings for resale to qualified institutional buyers pursuant to SEC Rule 144A and were scheduled to mature on March 1, 2022. Interest accrued at 5.375% and was paid semi-annually in arrears on March 1 and September 1 of each year. The 2022 Notes were redeemable 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 2022 Notes) from the respective dates on which such principal and interest would have been payable if such redemption had not been made. In May 2021, Group redeemed the 2022 Notes, as noted above. Senior unsecured notes—$189.2 million 2021 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 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, accrued interest at a rate of 5.625% and were scheduled to mature on April 15, 2021. Interest was paid semi-annually on April 15 and October 15. 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 was not subject to the covenants under the Indenture. In the second quarter of 2016, the Company paid $10.9 million for the purchase of $10.8 million of par value and accrued interest on its 2021 Notes reducing the principal amount to $189.2 million. In June 2020, Group redeemed the 2021 Notes with the proceeds from its June 2020 issuance of its 2024 Notes. The Company redeemed the 2021 Notes at a redemption price of 100.00% of the $189.2 million principal amount plus $1.6 million of accrued interest. As a result of this transaction, the Company incurred a loss on debt extinguishment and redemption of $0.6 million from the amortization of the remaining unamortized notes cost and certain transaction expenses. Limitations under the indentures The 2027 Notes Indenture and the 2026 Notes Indenture (the “Indentures”), among other things, limit the Company’s ability to incur indebtedness; to pay dividends or make other distributions; to make certain investments and other restricted payments; to create liens; to 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. There are certain exceptions to the limitations on the Company’s ability to incur indebtedness under the Indentures, including IRU agreements incurred in the normal course of business and any additional indebtedness if the Company’s consolidated leverage ratio, as defined in the Indentures, is less than 6.0 to 1.0 or the Company’s fixed charge coverage ratio, as defined in the Indentures, is 2.0 to 1.0 or greater. The Company can also incur unlimited liens (which can be used, together with capacity under the debt covenant, to incur additional secured indebtedness) if the Company’s consolidated secured leverage ratio, as defined in the Indentures, is than The aggregate future contractual maturities of long-term debt were as follows as of December 31, 2022 (in thousands): For the year ending December 31, 2023 $ — 2024 — 2025 — 2026 500,000 2027 450,000 Thereafter — Total $ 950,000 Interest rate swap agreement As of December 31, 2022, the Company was party to an interest rate swap agreement (the “Swap Agreement”) that has the economic effect of modifying the fixed interest rate obligation associated with its 2026 Notes to a variable interest rate obligation based on the Secured Overnight Financing Rate (“SOFR”) so that the interest payable on the 2026 Notes effectively became variable based on overnight SOFR. The critical terms of the Swap Agreement match the terms of the 2026 Notes, including the notional amount and the optional redemption date on February 1, 2026. The Company did not elect hedge accounting for the Swap Agreement. The Swap Agreement is recorded at its fair value at each reporting period, and the Company incurs gains and losses due to changes in market interest rates. By entering into the Swap Agreement, the Company has assumed the risk associated with variable interest rates. Changes in interest rates affect the valuation of the Swap Agreement that the Company recognizes in its consolidated statements of comprehensive income. The values that the Company reports for the Swap Agreement as of each reporting date are recognized as “change in valuation – interest rate swap” with the corresponding amounts included in assets or liabilities in the Company’s consolidated balance sheets. As of December 31, 2022 the fair value of the Swap Agreement was a net liability of $52.1 million of which $20.3 million is presented with accrued and other current liabilities and $31.9 million is presented with other long-term liabilities. In 2022 and 2021, the Company recorded an unrealized loss related to the Swap Agreement of $43.1 million and $9.0 million, respectively. The Company has made a $61.7 million deposit with the counterparty to the Swap Agreement. If the fair value of the Swap Agreement exceeds a net liability of $61.7 million the Company will be required to deposit additional funds with the counterparty equal to the net liability fair value. As of December 31, 2022, $52.1 million of the deposit was restricted and $9.6 million was unrestricted. Under the Swap Agreement, the Company pays the counterparty a semi-annual payment based upon overnight SOFR plus a contractual interest rate spread, and the counterparty pays the Company a semi-annual fixed 3.50% interest payment. The settlement payment is made each November and May until the Swap Agreement expires in February 2026. Under the first Swap Agreement settlement in November 2021, the Company received a payment of $0.6 million from the counterparty for a net cash savings of $0.6 million for the period from August 9, 2021 (the Swap Agreement inception date) to October 31, 2021. Under the settlement payment made in May 2022, the Company received a payment of $1.2 million from the counterparty for a net cash savings of $1.2 million for the period from November 1, 2021 to April 30, 2022. Under the settlement payment made in November 2022, the Company made a payment of $3.4 million to the counterparty for a net cash interest cost of $3.4 million for the period from May 1, 2022 to October 31, 2022. |
Income taxes_
Income taxes: | 12 Months Ended |
Dec. 31, 2022 | |
Income taxes: | |
Income taxes: | 5. Income taxes: The components of income before income taxes consist of the following (in thousands): Years Ended December 31, 2022 2021 2020 Domestic $ 34,784 $ 73,753 $ 23,808 Foreign (8,408) (2,333) (13,496) Total income before income taxes $ 26,376 $ 71,420 $ 10,312 The income tax expense is comprised of the following (in thousands): Years Ended December 31, 2022 2021 2020 Current: Federal $ — $ — $ 32 State (4,195) (3,116) (2,908) Foreign (496) (1,833) (947) Deferred: Federal (16,299) (17,959) (1,867) State (143) (2,348) 1,241 Foreign (97) 2,021 353 Total income tax expense $ (21,230) $ (23,235) $ (4,096) Our consolidated temporary differences comprising our net deferred tax assets are as follows (in thousands): December 31, 2022 2021 Deferred Tax Assets: Net operating loss carry-forwards $ 226,625 $ 246,276 Tax credits 1,936 2,119 Equity-based compensation 3,951 3,976 Operating leases 32,769 40,627 Total gross deferred tax assets 265,281 292,998 Valuation allowance (140,895) (132,800) 124,386 160,198 Deferred Tax Liabilities: Depreciation and amortization 61,761 46,642 Accrued liabilities and other 77,690 103,705 Right-of-use assets 29,710 37,784 Gross deferred tax liabilities 169,161 188,131 Net deferred tax liabilities $ 44,775 $ 27,933 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. The Company maintains a full valuation allowance against certain of its deferred tax assets consisting primarily of net operating loss carryforwards related to its foreign operations in Europe, Asia, South America, Oceania and Africa. As of December 31, 2022, the Company has combined net operating loss carry-forwards of $943.0 million. This amount includes federal net operating loss carry-forwards in the United States of $19.2 million, net operating loss carry-forwards related to its European operations of $913.7 million and $10.1 million related to its other international operations. 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 based on the annual Section 382 limitation and remaining carryforward period. Of the net operating losses available at December 31, 2022 in the United States $19.2 million are limited for use under Section 382. Net operating loss carryforwards outside of the United States totaling $923.8 million are not subject to limitations similar to Section 382. The net operating loss carryforwards in the United States will expire, if unused, in 2026. The net operating loss carry-forwards related to the Company’s European operations include $780.5 million that do not expire and $133.2 million that expire between 2023 and 2038. 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. It is not practical to determine the amount of the unrecognized deferred tax liability on such undistributed earnings or cumulative translation adjustments. 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 not more likely than not to be sustained, the Company records a liability for the amount of the benefit that is not more likely than not to be realized when the tax position is settled. The Company does not have a material liability for uncertain tax positions at December 31, 2022 and does not expect that its liability for uncertain tax positions will materially increase during the twelve months ended December 31, 2023, 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 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 2005 to 2022. The Company is subject to tax examinations in its foreign jurisdictions generally for years 2005 to 2022. 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, 2022 2021 2020 Federal income tax expense at statutory rates $ (5,537) $ (14,999) $ (2,166) Effect of: State income taxes, net of federal benefit (1,700) (4,123) (1,091) Impact of foreign operations (651) 715 (365) Non-deductible expenses (2,679) (1,365) (411) Tax effect of TCJA from foreign earnings (360) (389) (66) Other — — 32 Changes in valuation allowance (10,303) (3,074) (29) Income tax expense $ (21,230) $ (23,235) $ (4,096) |
Commitments and contingencies_
Commitments and contingencies: | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and contingencies: | |
Commitments and contingencies: | 6. Commitments and contingencies: 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 circuits for which it is reasonably possible to result in a loss of up to $3.8 million in excess of the amount accrued at December 31, 2022. The Company was engaged in litigation in Virginia in which a former provider of transoceanic capacity to the Company was seeking approximately $0.6 million for alleged unpaid fees and the Company’s early termination of the arrangement. The complaint was filed in December 2021 in the Circuit Court of Fairfax County, Virginia. The trial took place in July 2022, and in August 2022, the Circuit Court issued an order requiring the Company to pay approximately $0.4 million in damages, inclusive of attorneys’ fees. The Company paid a final payment of approximately $0.4 million, reflecting accumulated interest and additional attorneys’ fees, in October 2022. In the ordinary 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. Network equipment sites and data center facilities The Company enters into leases for network equipment sites and for space in data center facilities. Future minimum annual payments under these arrangements are as follows (in thousands): For the year ending December 31, 2023 $ 28,038 2024 16,711 2025 12,937 2026 11,104 2027 3,065 Thereafter 1,164 $ 73,019 Expenses related to these arrangements were $21.8 million in 2022, $22.0 million in 2021 and $21.0 million in 2020. Unconditional purchase obligations Unconditional purchase obligations for equipment and services totaled $33.6 million at December 31, 2022. As of December 31, 2022, the Company had also committed to additional dark fiber IRU finance and operating lease agreements totaling $70.3 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 2023. Future minimum payments under these obligations are $6.2 million, $4.1 million, $2.8 million, $2.8 million and $3.2 million for the years ending December 31, 2023 to December 31, 2027, respectively, and $51.2 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 paid in cash and were $0.9 million for 2022, $0.9 million for 2021 and $0.9 million for 2020. |
Stockholders' equity_
Stockholders' equity: | 12 Months Ended |
Dec. 31, 2022 | |
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, 2022, there was $30.4 million remaining for purchases under the Buyback Program. During 2020, the Company purchased 79,056 shares of its common stock for $4.5 million. These shares of common stock were subsequently retired.There were no purchases of common stock in 2022 or 2021. Dividends on common stock Dividends are recorded as a reduction to retained earnings. Dividends on unvested restricted shares of common stock are paid as the awards vest. The payment of any future dividends and any other returns of capital, including stock buybacks, 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, limitations under the Company’s debt indentures 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. The indentures governing the Company’s notes limit the Company’s ability to return cash to its stockholders. |
Stock option and award plan_
Stock option and award plan: | 12 Months Ended |
Dec. 31, 2022 | |
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, 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 The accounting for equity-based compensation expense requires the Company to make estimates and judgments that affect its financial statements. These estimates for stock options include the following. Expected Dividend Yield—The Company uses an expected dividend yield based upon expected annual dividends and the Company’s 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 $10.73 in 2022, $12.22 in 2021 and $13.21 in 2020. The following assumptions were used for determining the fair value of options granted in the three years ended December 31, 2022: Years Ended December 31, Black-Scholes Assumptions 2022 2021 2020 Dividend yield 5.9 % 4.6 % 3.4 % Expected volatility 33.1 % 33.4 % 31.5 % Risk-free interest rate 3.0 % 0.6 % 1.1 % Expected life of the option term (in years) 4.1 4.2 4.2 Stock option activity under the Company’s Award Plan during the year ended December 31, 2022, was as follows: Number of Weighted-Average Options Exercise Price Outstanding at December 31, 2021 148,535 $ 58.24 Granted 84,476 $ 61.28 Cancelled and expired (49,836) $ 66.77 Exercised—intrinsic value $0.3 million; cash received $0.6 million (15,184) $ 40.44 Outstanding at December 31, 2022—$0.7 million intrinsic value and 7.3 years weighted-average remaining contractual term 167,991 $ 58.85 Exercisable at December 31, 2022—$0.7 million intrinsic value and 5.7 years weighted-average remaining contractual term 91,351 $ 55.11 Expected to vest—$0.7 million intrinsic value and 6.9 years weighted-average remaining contractual term 144,268 $ 58.29 A summary of the Company’s non-vested restricted stock awards as of December 31, 2022 and the changes during the year ended December 31, 2022 are as follows: Weighted-Average Grant Date Non-vested awards Shares Fair Value Non-vested at December 31, 2021 1,253,321 $ 61.66 Granted 401,036 $ 66.08 Vested (413,257) $ 51.63 Forfeited (77,079) $ 69.72 Non-vested at December 31, 2022 1,164,021 $ 66.22 The weighted average per share grant date fair value of restricted stock granted was $66.08 in 2022 (0.4 million shares), $64.59 in 2021 (0.5 million shares) and $75.18 in 2020 (0.5 million shares). The fair value was determined using the quoted market price of the Company’s common stock on the date of grant. Valuations were obtained to determine the fair value for the shares granted to the Company’s CEO that are subject to the total shareholder return of the Company’s common stock compared to the total shareholder return of the Nasdaq Telecommunications Index. Years Ended December 31, Additional Award Plan Information – Related to Stock Options & Restricted Stock (thousands) 2022 2021 2020 Equity-based compensation expense $ 24,439 $ 26,822 $ 23,525 Income tax benefit related to stock options and restricted stock 2,489 6,314 4,211 Capitalized compensation expense related to stock options and restricted stock 2,277 3,222 2,275 Intrinsic value of stock options exercised 305 881 841 Fair value of shares of restricted stock vested 25,792 35,749 25,439 As of December 31, 2022, there was $35.3 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 2.0 years. |
Related party transactions_
Related party transactions: | 12 Months Ended |
Dec. 31, 2022 | |
Related party transactions: | |
Related party transactions: | 9. Related party transactions: Office leases The Company’s headquarters is located in an office building owned by Sodium LLC whose owner is the Company’s Chief Executive Officer. The fixed annual rent for the headquarters building is $1.0 million per year plus an allocation of taxes and utilities. The lease began in May 2015, and the lease term was for five years. In February 2020, the lease term was extended to May 2025. The lease is cancellable at no cost by the Company upon 60 days’ notice. The Company’s audit committee reviews and approves all transactions with related parties. The Company paid $1.7 million in 2022, $1.7 million in 2021 and $1.7 million in 2020 for rent and related costs (including taxes and utilities) for this lease. On January 6, 2023, the Company entered into two lease agreements (the “New Leases”), one with Thorium LLC and one with Germanium LLC, entities owned by the Company’s Chief Executive Officer, David Schaeffer. The Company’s Audit Committee, which is responsible for reviewing any related party transactions, reviewed and approved the Company’s entry into the New Leases. The first of the New Leases is with Thorium LLC for approximately 54,803 square feet of office space, which will serve as office space for the Company replacing a portion of its current office space in the Northern Virginia area (“Office Lease”). The second of the New Leases is with Germanium LLC for approximately 1,587 square feet of technical space, in the building which will serve as network operations space for the Company (“Network Operations Lease”). The term for each of the New Leases is five years beginning March 1, 2023 (or an actual later date of occupancy). Both of the New Leases are cancellable by the Company without penalty upon 60 days written notice. The amount of fixed annual rent during the term of the Office Lease |
Segment information_
Segment information: | 12 Months Ended |
Dec. 31, 2022 | |
Segment information: | |
Segment 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. Revenues are attributed to regions based on where the services are provided. Below are the Company’s service revenues and long lived assets by geographic region (in thousands): Year Ended December 31, 2022 On-net Off-net Non-core Total North America $ 350,256 $ 128,486 $ 619 $ 479,361 Europe 82,451 16,144 49 98,644 Oceania 13,689 1,271 3 14,963 South America 5,656 174 2 5,832 Africa 727 77 — 804 Total $ 452,779 $ 146,152 $ 673 $ 599,604 Year Ended December 31, 2021 On-net Off-net Non-core Total North America $ 340,107 $ 127,383 $ 502 $ 467,992 Europe 87,929 17,729 72 105,730 Oceania 10,197 1,094 1 11,292 South America 4,102 173 1 4,276 Africa 503 4 — 507 Total $ 442,838 $ 146,383 $ 576 $ 589,797 Year Ended December 31, 2020 On-net Off-net Non-core Total North America $ 330,924 $ 129,879 $ 474 $ 461,277 Europe 79,568 17,252 47 96,867 Oceania 6,834 949 — 7,783 South America 2,056 48 — 2,104 Africa 72 — — 72 Total $ 419,454 $ 148,128 $ 521 $ 568,103 December 31, December 31, 2022 2021 Long lived assets, net North America $ 397,434 $ 331,537 Europe and other 147,005 126,355 Total $ 544,439 $ 457,892 |
Quarterly financial information
Quarterly financial information (unaudited): | 12 Months Ended |
Dec. 31, 2022 | |
Quarterly financial information (unaudited): | |
Quarterly financial information (unaudited): | 11. Quarterly financial information (unaudited): Three months ended March 31, June 30, September 30, December 31, 2022 2022 2022 2022 (in thousands, except share and per share amounts) Service revenue $ 149,175 $ 148,450 $ 150,000 $ 151,979 Network operations, including equity-based compensation expense 57,449 56,514 57,220 56,972 Operating income 28,784 29,566 28,095 27,311 Net income (loss) (1) 1,137 11,164 (8,007) 851 Net income (loss) per common share - basic 0.02 0.24 (0.17) 0.02 Net income (loss) per common share - diluted 0.02 0.24 (0.17) 0.02 Weighted-average number of common shares—basic 46,575,848 46,691,142 46,736,742 46,885,512 Weighted-average number of common shares—diluted 46,929,191 47,029,446 46,736,742 47,196,890 Three months ended March 31, June 30, September 30, December 31, 2021 2021 2021 2021 (in thousands, except share and per share amounts) Service revenue $ 146,777 $ 147,879 $ 147,927 $ 147,208 Network operations, including equity-based compensation expense 57,092 56,180 56,645 56,418 Operating income 26,291 28,211 28,556 36,165 Net income ( loss) (2) 18,851 (2,493) 13,320 18,507 Net income (loss) per common share - basic 0.41 (0.05) 0.29 0.40 Net income (loss) per common share - diluted 0.41 (0.05) 0.28 0.39 Weighted-average number of common shares—basic 46,067,096 46,229,603 46,293,524 46,420,168 Weighted-average number of common shares—diluted 46,507,258 46,229,603 46,866,929 46,992,639 (1) Included in net income for the three months ended March 31, 2022 and June 30, 2022, are unrealized gains on foreign exchange on the 2024 Notes of $8.0 million and $23.5 million, respectively. Included in net income (loss) for the three months ended June 30, 2022, is a loss on debt extinguishment and redemption on the 2024 Notes of $11.9 million. Included in net income (loss) for the three months ended March 31, 2022, June 30, 2022, September 30, 2022 and December 31, 2022 are non-cash charges (benefit) from changes in the valuation of the Swap Agreement of $21.3 million, $7.5 million, $16.9 million and ( $2.6 ) million, respectively. (2) Included in net income (loss) for the three months ended March 31, 2021, June 30, 2021, September 30, 2021 and December 31, 2021 are unrealized gains (losses) on foreign exchange on the 2024 Notes of $18.9 million, ( $5.3 ) million, $10.2 million and $8.8 million, respectively. Included in net income (loss) for the three months ended March 31, 2021 and June 30, 2021, are losses on debt extinguishment and redemption on the 2022 Notes of $3.9 million and $10.8 million, respectively. Included in net income for the three months ended December 31, 2021 is a gain on lease termination of $7.4 million. Included in net income for the three months ended September 30, 2021 and December 31, 2021 are non-c ash charges from changes in the valuation of the Swap Agreement of $3.1 million and $5.9 million, respectively. |
Subsequent Events_
Subsequent Events: | 12 Months Ended |
Dec. 31, 2022 | |
Subsequent Events: | |
Subsequent Events: | 12. Subsequent Events: Dividend On February 22, 2023, the Company’s Board of Directors approved the payment of a quarterly dividend of $0.925 per common share. The dividend for the first quarter of 2023 will be paid to holders of record on March 10, 2023. This estimated $43.3 million dividend payment is expected to be made on March 24, 2023. |
Schedule II VALUATION AND QUALI
Schedule II VALUATION AND QUALIFYING ACCOUNTS | 12 Months Ended |
Dec. 31, 2022 | |
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 ) Balance at Charged to Balance at Beginning of Costs and End of Description Period Expenses (Deductions) Period Deferred tax valuation allowance Year ended December 31, 2020 $ 131,069 $ 20,599 $ (1,079) $ 150,589 Year ended December 31, 2021 $ 150,589 $ 4,918 $ (22,707) $ 132,800 Year ended December 31, 2022 $ 132,800 $ 16,583 $ (8,488) $ 140,895 |
Description of the business a_2
Description of the business and summary of significant accounting policies: (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
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. |
Allowance for credit losses | Allowance for credit losses The Company establishes an allowance for credit losses 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 credit losses 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 credit losses after all means of internal collection activities have been exhausted and the potential for recovery is considered remote. The Company uses third-party collection services to continue to seek collection for it’s written off accounts receivable. Effective January 1, 2020, the Company adopted Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments Current-period Balance at Provision for Write offs Balance at Beginning Expected Credit Charged Against End of Description of Period Losses Allowance Period Allowance for credit losses (deducted from accounts receivable) Year ending December 31, 2022 $ 1,510 $ 4,318 $ (3,525) $ 2,303 Year ending December 31, 2021 $ 1,921 $ 5,595 $ (6,006) $ 1,510 Year ending December 31, 2020 $ 1,771 $ 4,997 $ (4,847) $ 1,921 The current-period provision for expected credit losses is net of bad debt recoveries of $1.9 million, $2.2 million and $1.2 million for the years ended December 31, 2022, 2021 and 2020, respectively. |
Leases | Leases In February 2016, the FASB issued ASU No. 2016-02, Leases not reassessing whether any existing contracts contained leases, not reconsidering lease classification, not reassessing initial direct costs and using hindsight in determining the lease reasonably certain term of its leases. Year Year Ended Ended December 31, 2022 December 31, 2021 Finance lease cost amortization of right-of-use assets $ 28,915 $ 26,424 Interest expense on finance lease liabilities 23,317 19,419 Operating lease cost 18,331 18,382 Total lease costs 70,563 64,225 Other lease information Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from finance leases (23,317) (17,366) Operating cash flows from operating leases (18,836) (20,194) Financing cash flows from finance leases (45,472) (23,054) Right-of-use assets obtained in exchange for new finance lease liabilities 107,875 50,831 Right-of-use assets obtained in exchange for new operating lease liabilities 11,168 17,853 Weighted-average remaining lease term — finance leases (in years) 13.5 12.6 Weighted-average remaining lease term — operating leases (in years) 16.6 18.7 Weighted average discount rate — finance leases 8.6 % 9.0 % Weighted average discount rate — operating leases 5.4 % 5.4 % Finance leases—fiber lease agreements The Company has entered into lease agreements with numerous providers of dark fiber under indefeasible-right-of-use agreements (“IRUs”). These IRUs typically have initial terms of 15-20 years and include renewal options after the initial lease term. The Company establishes the number of renewal option periods used in determining the lease term based upon its assessment at the inception of the lease of the number of option periods for which failure to renew the lease imposes a penalty in such amount that renewal appears to be reasonably certain. The option to renew may be automatic, at the option of the Company or mutually agreed to between the dark fiber provider and the Company. Once the Company has accepted the related fiber route, leases that meet the criteria for treatment as finance leases are recorded as a finance lease obligation and an IRU asset. The interest rate used in determining the present value of the aggregate future minimum lease payments is the Company’s incremental borrowing rate for the reasonably certain lease term. The determination of the Company’s incremental borrowing rate requires some judgment. Finance lease assets are included in property and equipment in the Company’s consolidated balance sheets. As of December 31, 2022, the Company had committed to additional dark fiber IRU lease agreements totaling $70.3 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 the next 12 months. Operating leases The Company leases office space and certain data center facilities under operating leases. In certain cases the Company also enters into short-term operating leases for dark fiber. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments under the lease. Operating lease right-of-use assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the reasonably certain lease term. The implicit rates within the Company’s operating leases are generally not determinable and the Company uses its incremental borrowing rate at the lease commencement date to determine the present value of its lease payments. The determination of the Company’s incremental borrowing rate requires some judgment. The Company determines its incremental borrowing rate for each lease using its current borrowing rate, adjusted for various factors including level of collateralization and term to align with the term of the lease. Certain of the Company’s leases include options to extend or terminate the lease. The Company establishes the number of renewal option periods used in determining the operating lease term based upon its assessment at the inception of the operating lease of the number of option periods for which failure to renew the lease imposes a penalty in such amount that renewal appears to be reasonably certain. The option to renew may be automatic, at the option of the Company or mutually agreed to between the landlord or dark fiber provider and the Company. Once the Company has accepted the related fiber route or the facility lease term has begun, the present value of the aggregate future minimum operating lease payments is recorded as an operating lease liability and a right-of-use leased asset. Lease incentives and deferred rent liabilities for facilities operating leases are presented with, and netted against, the right-of-use leased asset. Lease expense for lease payments is recognized on a straight-line basis over the term of the lease. The future minimum payments under these operating lease and finance lease agreements are as follows (in thousands): Operating Finance For the twelve months ending December 31, Leases Leases 2023 $ 17,181 $ 40,425 2024 16,658 42,686 2025 14,255 37,458 2026 12,285 34,685 2027 10,900 35,521 Thereafter 87,702 333,836 Total minimum lease obligations 158,981 524,611 Less—amounts representing interest (52,389) (220,385) Present value of minimum lease obligations 106,592 304,226 Current maturities (12,005) (17,182) Lease obligations, net of current maturities $ 94,587 $ 287,044 |
Revenue recognition | Revenue recognition The Company recognizes revenue under ASU No. 2014-09, Revenue from Contracts with Customers 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. Amounts billed are due upon receipt and contract lengths range from month to month to 60 months. The Company satisfies its performance obligations to provide services to customers over time as the services are rendered. In accordance with ASC 606, revenue is recognized when a customer obtains the promised service. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these services. The Company has adopted the practical expedient related to certain performance obligation disclosures since it has a right to consideration from its customer in an amount that corresponds directly with the value to the customer of the Company’s performance completed to date. To achieve this core principle, the Company follows the following five steps: 1) Identification of the contract, or contracts with a customer; 2) Identification of the performance obligations in the contract; 3) Determination of the transaction price; 4) Allocation of the transaction price to the performance obligations in the contract; and 5) Recognition of revenue when, or as, the Company satisfies a performance obligation. Fees billed in connection with customer installations are deferred (as deferred revenue) and recognized as noted above. To the extent a customer contract is terminated prior to its contractual end the customer is subject to termination fees. The Company vigorously seeks payment of termination fees. The Company recognizes revenue for termination fees as they are collected. Service revenue recognized from amounts in deferred revenue (contract liabilities) at the beginning of the period during the years ended December 31, 2022, 2021 and 2020 was $5.0 million, $4.6 million and $4.4 million, respectively. Amortization expense for contract costs for the years ended December 31, 2022, 2021 and 2020 was $19.4 million, $18.4 million and $17.1 million, respectively. |
Gross receipts taxes, universal service fund and other surcharges | Gross receipts taxes, universal service fund and other surcharges Revenue recognition standards include guidance relating to taxes or surcharges assessed by a governmental authority that are directly imposed on a revenue-producing transaction between a seller and a customer and may include, but are not limited to, gross receipts taxes, excise taxes, Universal Service Fund fees and certain state regulatory fees. Such charges may be presented gross or net based upon the Company’s accounting policy election. The Company records certain excise taxes and surcharges on a gross basis and includes them in its revenues and costs of network operations. Excise taxes and surcharges billed to customers and recorded on a gross basis (as service revenue and network operations expense) were $15.4 million, $18.5 million, and $15.1 million for the years ended December 31, 2022, 2021 and 2020, respectively. |
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, access fees paid to building owners and certain excise taxes and surcharges recorded on a gross basis. 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 | Foreign currency translation adjustment and comprehensive income 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 in stockholders’ equity. The Company’s only components of “other comprehensive income” 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) are included within interest income and other on the consolidated statements of comprehensive income. |
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, 2022 and December 31, 2021, the carrying amount of cash and cash equivalents, restricted cash, 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 and restricted cash 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, 2022, the fair value of the Company’s $500.0 million senior secured notes due 2026 was $452.5 million, the fair value of the Company’s $450.0 million senior unsecured notes due 2027 was $441.0 million and the estimated fair value of the Company’s Swap Agreement was $52.1 million. |
Restricted cash and interest rate swap agreement | Restricted cash and interest rate swap agreement Restricted cash represents amounts held in segregated bank accounts by our clearing broker as margin in support of our Swap Agreement, as discussed in Note 4, and was $52.1 million as of December 31, 2022. Additional cash may be further restricted to maintain our interest rate swap instrument as interest rates fluctuate and margin requirements change. The Company does not use derivative financial instruments for trading purposes. |
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, 2022 and 2021, 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, Mexico, Asia, South America, Oceania and Africa. 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 finance 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 and customer installation costs. 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 finance 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. |
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 and for market-based awards compensation cost is recognized if the service condition is satisfied even if the market condition is not satisfied. Equity-based compensation expense is recognized in the statements of comprehensive income 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 per common share | Basic and diluted net 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. The following details the determination of the diluted weighted average shares: Year Ended Year Ended Year Ended December 31, December 31, December 31, 2022 2021 2020 Weighted average common shares—basic 46,875,992 46,419,180 45,947,772 Dilutive effect of stock options 16,064 34,007 80,849 Dilutive effect of restricted stock 315,242 510,733 639,577 Weighted average common shares—diluted 47,207,298 46,963,920 46,668,198 The following details unvested shares of restricted common stock as well as the anti-dilutive effects of stock options and restricted stock awards outstanding: December 31, December 31, December 31, 2022 2021 2020 Unvested shares of restricted common stock 1,164,021 1,253,321 1,339,596 Anti-dilutive options for common stock 105,556 45,809 32,324 Anti-dilutive shares of restricted common stock 541,608 86,619 223,118 |
Description of the business a_3
Description of the business and summary of significant accounting policies: (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Description of the business and summary of significant accounting policies: | |
Schedule of impact on financial statement line items from adopting ASC 326 | Current-period Balance at Provision for Write offs Balance at Beginning Expected Credit Charged Against End of Description of Period Losses Allowance Period Allowance for credit losses (deducted from accounts receivable) Year ending December 31, 2022 $ 1,510 $ 4,318 $ (3,525) $ 2,303 Year ending December 31, 2021 $ 1,921 $ 5,595 $ (6,006) $ 1,510 Year ending December 31, 2020 $ 1,771 $ 4,997 $ (4,847) $ 1,921 |
Schedule of lease cost | Year Year Ended Ended December 31, 2022 December 31, 2021 Finance lease cost amortization of right-of-use assets $ 28,915 $ 26,424 Interest expense on finance lease liabilities 23,317 19,419 Operating lease cost 18,331 18,382 Total lease costs 70,563 64,225 Other lease information Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from finance leases (23,317) (17,366) Operating cash flows from operating leases (18,836) (20,194) Financing cash flows from finance leases (45,472) (23,054) Right-of-use assets obtained in exchange for new finance lease liabilities 107,875 50,831 Right-of-use assets obtained in exchange for new operating lease liabilities 11,168 17,853 Weighted-average remaining lease term — finance leases (in years) 13.5 12.6 Weighted-average remaining lease term — operating leases (in years) 16.6 18.7 Weighted average discount rate — finance leases 8.6 % 9.0 % Weighted average discount rate — operating leases 5.4 % 5.4 % |
Schedule of future minimum payments under operating lease agreements | The future minimum payments under these operating lease and finance lease agreements are as follows (in thousands): Operating Finance For the twelve months ending December 31, Leases Leases 2023 $ 17,181 $ 40,425 2024 16,658 42,686 2025 14,255 37,458 2026 12,285 34,685 2027 10,900 35,521 Thereafter 87,702 333,836 Total minimum lease obligations 158,981 524,611 Less—amounts representing interest (52,389) (220,385) Present value of minimum lease obligations 106,592 304,226 Current maturities (12,005) (17,182) Lease obligations, net of current maturities $ 94,587 $ 287,044 |
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 Year Ended December 31, December 31, December 31, 2022 2021 2020 Weighted average common shares—basic 46,875,992 46,419,180 45,947,772 Dilutive effect of stock options 16,064 34,007 80,849 Dilutive effect of restricted stock 315,242 510,733 639,577 Weighted average common shares—diluted 47,207,298 46,963,920 46,668,198 |
Schedule of unvested and anti-dilutive shares | December 31, December 31, December 31, 2022 2021 2020 Unvested shares of restricted common stock 1,164,021 1,253,321 1,339,596 Anti-dilutive options for common stock 105,556 45,809 32,324 Anti-dilutive shares of restricted common stock 541,608 86,619 223,118 |
Property and equipment_ (Tables
Property and equipment: (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Property and equipment: | |
Schedule of property and equipment | Property and equipment consisted of the following (in thousands): December 31, 2022 2021 Owned assets: Network equipment $ 673,479 $ 650,634 Leasehold improvements 263,861 250,623 System infrastructure 171,694 160,376 Software 11,277 11,028 Office and other equipment 22,071 20,999 Building 6,140 1,273 Land 101 107 1,148,623 1,095,040 Less—Accumulated depreciation and amortization (949,277) (912,579) 199,346 182,461 Assets under finance leases: IRUs 566,283 524,475 Less—Accumulated depreciation and amortization (221,199) (249,056) 345,084 275,419 Property and equipment, net $ 544,430 $ 457,880 |
Accrued and other liabilities_
Accrued and other liabilities: (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Accrued and other liabilities: | |
Schedule of accrued and other current liabilities | Accrued and other current liabilities consist of the following (in thousands): December 31, 2022 2021 Operating accruals $ 19,488 $ 16,360 Interest rate swap agreement - current portion 20,267 — Deferred revenue—current portion 4,911 4,894 Payroll and benefits 11,880 8,466 Taxes—non-income based 2,687 4,291 Interest 4,656 5,046 Total $ 63,889 $ 39,057 |
Long-term debt_ (Tables)
Long-term debt: (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Long-term debt: | |
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, 2022 (in thousands): For the year ending December 31, 2023 $ — 2024 — 2025 — 2026 500,000 2027 450,000 Thereafter — Total $ 950,000 |
Income taxes_ (Tables)
Income taxes: (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income taxes: | |
Schedule of components of income (loss) before income taxes | The components of income before income taxes consist of the following (in thousands): Years Ended December 31, 2022 2021 2020 Domestic $ 34,784 $ 73,753 $ 23,808 Foreign (8,408) (2,333) (13,496) Total income before income taxes $ 26,376 $ 71,420 $ 10,312 |
Schedule of income tax expense | The income tax expense is comprised of the following (in thousands): Years Ended December 31, 2022 2021 2020 Current: Federal $ — $ — $ 32 State (4,195) (3,116) (2,908) Foreign (496) (1,833) (947) Deferred: Federal (16,299) (17,959) (1,867) State (143) (2,348) 1,241 Foreign (97) 2,021 353 Total income tax expense $ (21,230) $ (23,235) $ (4,096) |
Schedule of net deferred tax assets | Our consolidated temporary differences comprising our net deferred tax assets are as follows (in thousands): December 31, 2022 2021 Deferred Tax Assets: Net operating loss carry-forwards $ 226,625 $ 246,276 Tax credits 1,936 2,119 Equity-based compensation 3,951 3,976 Operating leases 32,769 40,627 Total gross deferred tax assets 265,281 292,998 Valuation allowance (140,895) (132,800) 124,386 160,198 Deferred Tax Liabilities: Depreciation and amortization 61,761 46,642 Accrued liabilities and other 77,690 103,705 Right-of-use assets 29,710 37,784 Gross deferred tax liabilities 169,161 188,131 Net deferred tax liabilities $ 44,775 $ 27,933 |
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, 2022 2021 2020 Federal income tax expense at statutory rates $ (5,537) $ (14,999) $ (2,166) Effect of: State income taxes, net of federal benefit (1,700) (4,123) (1,091) Impact of foreign operations (651) 715 (365) Non-deductible expenses (2,679) (1,365) (411) Tax effect of TCJA from foreign earnings (360) (389) (66) Other — — 32 Changes in valuation allowance (10,303) (3,074) (29) Income tax expense $ (21,230) $ (23,235) $ (4,096) |
Commitments and contingencies_
Commitments and contingencies: (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and contingencies: | |
Schedule of future minimum annual payments under operating leases, other facility leases and building access agreements | The Company enters into leases for network equipment sites and for space in data center facilities. Future minimum annual payments under these arrangements are as follows (in thousands): For the year ending December 31, 2023 $ 28,038 2024 16,711 2025 12,937 2026 11,104 2027 3,065 Thereafter 1,164 $ 73,019 |
Stock option and award plan_ (T
Stock option and award plan: (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Stock option and award plan: | |
Schedule of assumptions used for determining the fair value of options granted | Years Ended December 31, Black-Scholes Assumptions 2022 2021 2020 Dividend yield 5.9 % 4.6 % 3.4 % Expected volatility 33.1 % 33.4 % 31.5 % Risk-free interest rate 3.0 % 0.6 % 1.1 % Expected life of the option term (in years) 4.1 4.2 4.2 |
Schedule of stock option activity | Number of Weighted-Average Options Exercise Price Outstanding at December 31, 2021 148,535 $ 58.24 Granted 84,476 $ 61.28 Cancelled and expired (49,836) $ 66.77 Exercised—intrinsic value $0.3 million; cash received $0.6 million (15,184) $ 40.44 Outstanding at December 31, 2022—$0.7 million intrinsic value and 7.3 years weighted-average remaining contractual term 167,991 $ 58.85 Exercisable at December 31, 2022—$0.7 million intrinsic value and 5.7 years weighted-average remaining contractual term 91,351 $ 55.11 Expected to vest—$0.7 million intrinsic value and 6.9 years weighted-average remaining contractual term 144,268 $ 58.29 |
Schedule of non-vested restricted stock awards | Weighted-Average Grant Date Non-vested awards Shares Fair Value Non-vested at December 31, 2021 1,253,321 $ 61.66 Granted 401,036 $ 66.08 Vested (413,257) $ 51.63 Forfeited (77,079) $ 69.72 Non-vested at December 31, 2022 1,164,021 $ 66.22 Years Ended December 31, Additional Award Plan Information – Related to Stock Options & Restricted Stock (thousands) 2022 2021 2020 Equity-based compensation expense $ 24,439 $ 26,822 $ 23,525 Income tax benefit related to stock options and restricted stock 2,489 6,314 4,211 Capitalized compensation expense related to stock options and restricted stock 2,277 3,222 2,275 Intrinsic value of stock options exercised 305 881 841 Fair value of shares of restricted stock vested 25,792 35,749 25,439 |
Geographic information_ (Tables
Geographic information: (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Segment information: | |
Schedule of service revenue by geographic region and product class and long lived assets by geographic region | Year Ended December 31, 2022 On-net Off-net Non-core Total North America $ 350,256 $ 128,486 $ 619 $ 479,361 Europe 82,451 16,144 49 98,644 Oceania 13,689 1,271 3 14,963 South America 5,656 174 2 5,832 Africa 727 77 — 804 Total $ 452,779 $ 146,152 $ 673 $ 599,604 Year Ended December 31, 2021 On-net Off-net Non-core Total North America $ 340,107 $ 127,383 $ 502 $ 467,992 Europe 87,929 17,729 72 105,730 Oceania 10,197 1,094 1 11,292 South America 4,102 173 1 4,276 Africa 503 4 — 507 Total $ 442,838 $ 146,383 $ 576 $ 589,797 Year Ended December 31, 2020 On-net Off-net Non-core Total North America $ 330,924 $ 129,879 $ 474 $ 461,277 Europe 79,568 17,252 47 96,867 Oceania 6,834 949 — 7,783 South America 2,056 48 — 2,104 Africa 72 — — 72 Total $ 419,454 $ 148,128 $ 521 $ 568,103 December 31, December 31, 2022 2021 Long lived assets, net North America $ 397,434 $ 331,537 Europe and other 147,005 126,355 Total $ 544,439 $ 457,892 |
Quarterly financial informati_2
Quarterly financial information (unaudited): (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Quarterly financial information (unaudited): | |
Schedule of quarterly financial information | Three months ended March 31, June 30, September 30, December 31, 2022 2022 2022 2022 (in thousands, except share and per share amounts) Service revenue $ 149,175 $ 148,450 $ 150,000 $ 151,979 Network operations, including equity-based compensation expense 57,449 56,514 57,220 56,972 Operating income 28,784 29,566 28,095 27,311 Net income (loss) (1) 1,137 11,164 (8,007) 851 Net income (loss) per common share - basic 0.02 0.24 (0.17) 0.02 Net income (loss) per common share - diluted 0.02 0.24 (0.17) 0.02 Weighted-average number of common shares—basic 46,575,848 46,691,142 46,736,742 46,885,512 Weighted-average number of common shares—diluted 46,929,191 47,029,446 46,736,742 47,196,890 Three months ended March 31, June 30, September 30, December 31, 2021 2021 2021 2021 (in thousands, except share and per share amounts) Service revenue $ 146,777 $ 147,879 $ 147,927 $ 147,208 Network operations, including equity-based compensation expense 57,092 56,180 56,645 56,418 Operating income 26,291 28,211 28,556 36,165 Net income ( loss) (2) 18,851 (2,493) 13,320 18,507 Net income (loss) per common share - basic 0.41 (0.05) 0.29 0.40 Net income (loss) per common share - diluted 0.41 (0.05) 0.28 0.39 Weighted-average number of common shares—basic 46,067,096 46,229,603 46,293,524 46,420,168 Weighted-average number of common shares—diluted 46,507,258 46,229,603 46,866,929 46,992,639 (1) Included in net income for the three months ended March 31, 2022 and June 30, 2022, are unrealized gains on foreign exchange on the 2024 Notes of $8.0 million and $23.5 million, respectively. Included in net income (loss) for the three months ended June 30, 2022, is a loss on debt extinguishment and redemption on the 2024 Notes of $11.9 million. Included in net income (loss) for the three months ended March 31, 2022, June 30, 2022, September 30, 2022 and December 31, 2022 are non-cash charges (benefit) from changes in the valuation of the Swap Agreement of $21.3 million, $7.5 million, $16.9 million and ( $2.6 ) million, respectively. (2) Included in net income (loss) for the three months ended March 31, 2021, June 30, 2021, September 30, 2021 and December 31, 2021 are unrealized gains (losses) on foreign exchange on the 2024 Notes of $18.9 million, ( $5.3 ) million, $10.2 million and $8.8 million, respectively. Included in net income (loss) for the three months ended March 31, 2021 and June 30, 2021, are losses on debt extinguishment and redemption on the 2022 Notes of $3.9 million and $10.8 million, respectively. Included in net income for the three months ended December 31, 2021 is a gain on lease termination of $7.4 million. Included in net income for the three months ended September 30, 2021 and December 31, 2021 are non-c ash charges from changes in the valuation of the Swap Agreement of $3.1 million and $5.9 million, respectively. |
Description of the business a_4
Description of the business and summary of significant accounting policies: Additional information (Details) | 12 Months Ended | |
Sep. 06, 2022 USD ($) item | Dec. 31, 2022 USD ($) country GB MB | |
Description of the business and summary of significant accounting policies: | ||
Number of countries entity operates | country | 51 | |
Acquisition related costs | $ 2,248,000 | |
T-Mobile affiliate | ||
Description of the business and summary of significant accounting policies: | ||
Aggregate amount for providing IP transit services | $ 700,000,000 | |
T-Mobile affiliate | Equal monthly installments during the first year after the Closing | ||
Description of the business and summary of significant accounting policies: | ||
Aggregate amount for providing IP transit services | 350,000,000 | |
T-Mobile affiliate | Equal monthly installments over the subsequent 42 months | ||
Description of the business and summary of significant accounting policies: | ||
Aggregate amount for providing IP transit services | 350,000,000 | |
Sprint Communications | ||
Description of the business and summary of significant accounting policies: | ||
Acquisition related costs | $ 2,200,000 | |
Sprint Communications | Purchase Agreement | ||
Description of the business and summary of significant accounting policies: | ||
Purchase price for the Purchased Interests | $ 1 | |
Number of automatic six month extension | item | 2 | |
Minimum | ||
Description of the business and summary of significant accounting policies: | ||
On-net service speed range | MB | 100 | |
Maximum | ||
Description of the business and summary of significant accounting policies: | ||
On-net service speed range | GB | 400 |
Description of the business a_5
Description of the business and summary of significant accounting policies: Allowance for credit losses (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Description of the business and summary of significant accounting policies: | |||
Balance at Beginning of Period | $ 1,510 | $ 1,921 | $ 1,771 |
Current-period Provision for Expected Credit Losses | 4,318 | 5,595 | 4,997 |
Write offs Charged Against Allowance | (3,525) | (6,006) | (4,847) |
Balance at End of Period | 2,303 | 1,510 | 1,921 |
Bad debt recoveries | $ 1,900 | $ 2,200 | $ 1,200 |
Description of the business a_6
Description of the business and summary of significant accounting policies: Leases (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Jan. 01, 2019 | |
Description of the business and summary of significant accounting policies: | ||||
Asset and lease liability | $ 97,300 | |||
Finance leases-fiber lease agreements | ||||
Initial terms | 20 years | |||
Additional finance lease future payments due | $ 70,300 | |||
Cash paid for amounts included in the measurement of lease liabilities | ||||
Finance lease cost amortization of right-of-use assets | 28,915 | $ 26,424 | ||
Interest expense on finance lease liabilities | 23,317 | 19,419 | ||
Operating lease cost | 18,331 | 18,382 | ||
Total lease costs | 70,563 | 64,225 | ||
Operating cash flows from finance leases | (23,317) | (17,366) | ||
Operating cash flows from operating leases | (18,836) | (20,194) | ||
Financing cash flows from finance leases | (45,472) | (23,054) | $ (23,990) | |
Right-of-use assets obtained in exchange for new finance lease liabilities | 107,875 | 50,831 | ||
Right-of-use assets obtained in exchange for new operating lease liabilities | $ 11,168 | $ 17,853 | ||
Weighted-average remaining lease term - finance leases (in years) | 13 years 6 months | 12 years 7 months 6 days | ||
Weighted-average remaining lease term - operating leases (in years) | 16 years 7 months 6 days | 18 years 8 months 12 days | ||
Weighted average discount rate - finance leases | 8.60% | 9% | ||
Weighted average discount rate - operating leases | 5.40% | 5.40% | ||
Future minimum payments (principal and interest) under these finance leases | ||||
2023 | $ 40,425 | |||
2024 | 42,686 | |||
2025 | 37,458 | |||
2026 | 34,685 | |||
2027 | 35,521 | |||
Thereafter | 333,836 | |||
Total minimum lease obligations | 524,611 | |||
Less-amounts representing interest | (220,385) | |||
Present value of minimum lease obligations | 304,226 | |||
Current maturities | (17,182) | $ (17,048) | ||
Finance lease obligations, net of current maturities | 287,044 | 228,822 | ||
Future minimum payments under these operating lease agreements | ||||
2023 | 17,181 | |||
2024 | 16,658 | |||
2025 | 14,255 | |||
2026 | 12,285 | |||
2027 | 10,900 | |||
Thereafter | 87,702 | |||
Total minimum lease obligations | 158,981 | |||
Less-amounts representing interest | (52,389) | |||
Present value of minimum lease obligations | 106,592 | |||
Current maturities | (12,005) | (12,197) | ||
Lease obligations, net of current maturities | $ 94,587 | $ 111,794 | ||
Minimum | ||||
Finance leases-fiber lease agreements | ||||
Initial terms | 15 years | |||
Maximum | ||||
Finance leases-fiber lease agreements | ||||
Initial terms | 20 years |
Description of the business a_7
Description of the business and summary of significant accounting policies: Revenue recognition (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Description of the business and summary of significant accounting policies: | |||
Maximum contract lengths for billing due upon receipts (in months) | 60 months | ||
Contract costs | $ 23.7 | $ 21.4 | |
Accounting Standards Update 2014-09 [Member] | |||
Description of the business and summary of significant accounting policies: | |||
Service revenue recognized | 5 | 4.6 | $ 4.4 |
Amortization expense for contract costs | $ 19.4 | $ 18.4 | $ 17.1 |
Description of the business a_8
Description of the business and summary of significant accounting policies: Gross receipts taxes, universal service fund and other surcharges (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Description of the business and summary of significant accounting policies: | |||
Excise taxes and surcharge | $ 15.4 | $ 18.5 | $ 15.1 |
Description of the business a_9
Description of the business and summary of significant accounting policies: Financial instruments (Details) $ in Millions | Dec. 31, 2022 USD ($) |
Level 2 | Interest rate swap | |
Description of the business and summary of significant accounting policies: | |
Fair value of interest rate swaps | $ 52.1 |
Unsecured debt | |
Description of the business and summary of significant accounting policies: | |
Senior notes | 500 |
Unsecured debt | Level 2 | |
Description of the business and summary of significant accounting policies: | |
Senior notes, fair value | 452.5 |
Senior Unsecured 2027 Notes [Member] | |
Description of the business and summary of significant accounting policies: | |
Senior notes | 450 |
Senior Unsecured 2027 Notes [Member] | Level 2 | |
Description of the business and summary of significant accounting policies: | |
Senior notes, fair value | $ 441 |
Description of the business _10
Description of the business and summary of significant accounting policies: Property and equipment (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Indefeasible rights of use (IRUs) | Minimum | |
Description of the business and summary of significant accounting policies: | |
Depreciation or amortization period (in years) | 15 years |
Indefeasible rights of use (IRUs) | Maximum | |
Description of the business and summary of significant accounting policies: | |
Depreciation or amortization period (in years) | 20 years |
Network equipment | Minimum | |
Description of the business and summary of significant accounting policies: | |
Depreciation or amortization period (in years) | 3 years |
Network equipment | Maximum | |
Description of the business and summary of significant accounting policies: | |
Depreciation or amortization period (in years) | 8 years |
Software | |
Description of the business and summary of significant accounting policies: | |
Depreciation or amortization period (in years) | 5 years |
Owned buildings | |
Description of the business and summary of significant accounting policies: | |
Depreciation or amortization period (in years) | 40 years |
Office and other equipment | Minimum | |
Description of the business and summary of significant accounting policies: | |
Depreciation or amortization period (in years) | 3 years |
Office and other equipment | Maximum | |
Description of the business and summary of significant accounting policies: | |
Depreciation or amortization period (in years) | 7 years |
System infrastructure | Minimum | |
Description of the business and summary of significant accounting policies: | |
Depreciation or amortization period (in years) | 5 years |
System infrastructure | Maximum | |
Description of the business and summary of significant accounting policies: | |
Depreciation or amortization period (in years) | 10 years |
Description of the business _11
Description of the business and summary of significant accounting policies: Basic and diluted net income per common share (Details) - shares | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Diluted weighted average shares | |||
Weighted-average number of common shares-basic | 46,875,992 | 46,419,180 | 45,947,772 |
Weighted average common shares-diluted | 47,207,298 | 46,963,920 | 46,668,198 |
Stock options | |||
Diluted weighted average shares | |||
Dilutive effect | 16,064 | 34,007 | 80,849 |
Anti-dilutive effects | |||
Anti-dilutive | 105,556 | 45,809 | 32,324 |
Restricted stock | |||
Diluted weighted average shares | |||
Dilutive effect | 315,242 | 510,733 | 639,577 |
Anti-dilutive effects | |||
Unvested shares of restricted common stock | 1,164,021 | 1,253,321 | 1,339,596 |
Anti-dilutive | 541,608 | 86,619 | 223,118 |
Property and equipment_ (Detail
Property and equipment: (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Property and equipment: | |||
Property and equipment, gross | $ 1,714,906 | $ 1,619,515 | |
Accumulated depreciation and amortization | (1,170,476) | (1,161,635) | |
Total property and equipment, net | 544,430 | 457,880 | |
Depreciation and amortization | 92,222 | 89,240 | $ 83,477 |
Owned assets | |||
Property and equipment: | |||
Property and equipment, gross | 1,148,623 | 1,095,040 | |
Accumulated depreciation and amortization | (949,277) | (912,579) | |
Total property and equipment, net | 199,346 | 182,461 | |
Network equipment | Owned assets | |||
Property and equipment: | |||
Property and equipment, gross | 673,479 | 650,634 | |
Leasehold improvements | Owned assets | |||
Property and equipment: | |||
Property and equipment, gross | 263,861 | 250,623 | |
System infrastructure | Owned assets | |||
Property and equipment: | |||
Property and equipment, gross | 171,694 | 160,376 | |
Capitalized salaries and related benefits of employees | 12,600 | 13,400 | $ 12,100 |
Software | Owned assets | |||
Property and equipment: | |||
Property and equipment, gross | 11,277 | 11,028 | |
Office and other equipment | Owned assets | |||
Property and equipment: | |||
Property and equipment, gross | 22,071 | 20,999 | |
Owned buildings | Owned assets | |||
Property and equipment: | |||
Property and equipment, gross | 6,140 | 1,273 | |
Land | Owned assets | |||
Property and equipment: | |||
Property and equipment, gross | 101 | 107 | |
Indefeasible rights of use (IRUs) | |||
Property and equipment: | |||
Property and equipment, gross | 566,283 | 524,475 | |
Accumulated depreciation and amortization | (221,199) | (249,056) | |
Total property and equipment, net | $ 345,084 | $ 275,419 |
Property and equipment_ Install
Property and equipment: Installment payment agreement (Details) - Network equipment - Note obligations $ in Millions | 12 Months Ended |
Dec. 31, 2022 USD ($) payment | |
Property and equipment: | |
Term of debt (in months) | 24 months |
Number of payments first six months | 0 |
Number of equal payments | 18 |
Outstanding obligation | $ | $ 0.8 |
Accrued and other liabilities_2
Accrued and other liabilities: (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Accrued and other liabilities: | ||
Operating accruals | $ 19,488 | $ 16,360 |
Interest rate swap agreement - current portion | 20,267 | |
Deferred revenue-current portion | 4,911 | 4,894 |
Payroll and benefits | 11,880 | 8,466 |
Taxes-non-income based | 2,687 | 4,291 |
Interest | 4,656 | 5,046 |
Total | $ 63,889 | $ 39,057 |
Long-term debt_ (Details)
Long-term debt: (Details) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||||||||||||||||||||
Jun. 22, 2022 USD ($) | Jun. 22, 2022 EUR (€) | Dec. 01, 2021 USD ($) | May 07, 2021 USD ($) | May 31, 2021 USD ($) | Mar. 31, 2021 USD ($) | Jun. 30, 2020 USD ($) | Jun. 30, 2019 USD ($) | Aug. 31, 2018 USD ($) | Dec. 31, 2016 USD ($) | Jun. 30, 2022 USD ($) | Oct. 31, 2021 USD ($) | Jun. 30, 2021 USD ($) | Mar. 31, 2021 USD ($) | Jun. 30, 2016 USD ($) | Oct. 31, 2022 USD ($) | Apr. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | Dec. 31, 2022 EUR (€) | Dec. 01, 2021 EUR (€) | Jun. 30, 2020 EUR (€) | Jun. 30, 2019 EUR (€) | Feb. 28, 2015 USD ($) | Apr. 09, 2014 USD ($) | |
Long-term debt: | ||||||||||||||||||||||||||
Gain and loss on foreign exchange | $ 11,900,000 | $ 10,800,000 | $ 3,900,000 | |||||||||||||||||||||||
Redemption price percentage | 101.094% | 101.094% | 103.20% | |||||||||||||||||||||||
Accrued and unpaid interest | $ 4,656,000 | $ 5,046,000 | ||||||||||||||||||||||||
Unrealized foreign exchange gain (loss) on 2024 Euro Notes | 31,561,000 | 32,522,000 | $ (36,997,000) | |||||||||||||||||||||||
Senior secured debt outstanding | 950,000,000 | |||||||||||||||||||||||||
Restricted cash | ||||||||||||||||||||||||||
Long-term debt: | ||||||||||||||||||||||||||
Margin deposits | 52,100,000 | |||||||||||||||||||||||||
Unrestricted cash | ||||||||||||||||||||||||||
Long-term debt: | ||||||||||||||||||||||||||
Margin deposits | 9,600,000 | |||||||||||||||||||||||||
Interest rate swap | ||||||||||||||||||||||||||
Long-term debt: | ||||||||||||||||||||||||||
Interest expense | 43,100,000 | 9,000,000 | ||||||||||||||||||||||||
Interest rate swap | Cash | ||||||||||||||||||||||||||
Long-term debt: | ||||||||||||||||||||||||||
Margin deposits | $ 61,700,000 | |||||||||||||||||||||||||
SOFR | ||||||||||||||||||||||||||
Long-term debt: | ||||||||||||||||||||||||||
Interest rate | 3.50% | |||||||||||||||||||||||||
Senior secured 2026 Notes | ||||||||||||||||||||||||||
Long-term debt: | ||||||||||||||||||||||||||
Face amount | $ 500,000,000 | € 500,000,000 | ||||||||||||||||||||||||
Interest rate (as a percent) | 3.50% | 3.50% | ||||||||||||||||||||||||
Discount on issuance of debt | 1,800,000 | |||||||||||||||||||||||||
Debt costs | 1,300,000 | $ 1,317,000 | ||||||||||||||||||||||||
Redemption price percentage of principal amount redeemed | 100% | |||||||||||||||||||||||||
Net proceeds | $ 496,900,000 | |||||||||||||||||||||||||
2027 Notes | ||||||||||||||||||||||||||
Long-term debt: | ||||||||||||||||||||||||||
Face amount | $ 450,000,000 | $ 450,000,000 | ||||||||||||||||||||||||
Interest rate (as a percent) | 7% | 7% | ||||||||||||||||||||||||
Discount on issuance of debt | $ 2,700,000 | |||||||||||||||||||||||||
Debt costs | 1,300,000 | |||||||||||||||||||||||||
Redemption price percentage of principal amount redeemed | 100% | 100% | ||||||||||||||||||||||||
Redemption price percentage | 40% | 40% | ||||||||||||||||||||||||
Proceeds from issuance of secured debt | $ 446,000,000 | |||||||||||||||||||||||||
2027 Notes | Prior to June 15, 2024 | ||||||||||||||||||||||||||
Long-term debt: | ||||||||||||||||||||||||||
Redemption price percentage of principal amount redeemed | 107% | 107% | ||||||||||||||||||||||||
2027 Notes | June 15, 2024 to June 14, 2025 | ||||||||||||||||||||||||||
Long-term debt: | ||||||||||||||||||||||||||
Redemption price percentage of principal amount redeemed | 103.50% | |||||||||||||||||||||||||
Senior secured notes due 2022 | ||||||||||||||||||||||||||
Long-term debt: | ||||||||||||||||||||||||||
Face amount | $ 115,900,000 | $ 115,900,000 | 115,900,000 | |||||||||||||||||||||||
Redemption price percentage | 5.375% | |||||||||||||||||||||||||
Redemption value | 1,900,000 | |||||||||||||||||||||||||
Accrued and unpaid interest | $ 400,000 | $ 400,000 | ||||||||||||||||||||||||
Loss on extinguishment debt purchases | $ 10,800,000 | $ 3,900,000 | ||||||||||||||||||||||||
Notice issued for redemption of debt | $ 45,000,000 | |||||||||||||||||||||||||
Redemption price per $1,000 aggregate principal amount | 41.41533 | |||||||||||||||||||||||||
Accrued interest value | $ 400,000 | |||||||||||||||||||||||||
Accrued interest per $1,000 aggregate principal amount | 9.70486 | |||||||||||||||||||||||||
Amount of debt redeemed | $ 45,000,000 | |||||||||||||||||||||||||
Senior notes outstanding | 284,100,000 | |||||||||||||||||||||||||
Senior secured notes due 2022 | Interest rate swap | ||||||||||||||||||||||||||
Long-term debt: | ||||||||||||||||||||||||||
Face amount | $ 52,100,000 | |||||||||||||||||||||||||
Net liability, prepaid expenses | 20,300,000 | |||||||||||||||||||||||||
Net liability, other long term | 31,900,000 | |||||||||||||||||||||||||
2021 Notes | ||||||||||||||||||||||||||
Long-term debt: | ||||||||||||||||||||||||||
Face amount | $ 189,200,000 | $ 189,200,000 | $ 200,000,000 | |||||||||||||||||||||||
Interest rate (as a percent) | 5.625% | |||||||||||||||||||||||||
Accrued and unpaid interest | $ 1,600,000 | |||||||||||||||||||||||||
Senior notes outstanding | 500,000,000 | |||||||||||||||||||||||||
Interest expense | $ 10,900,000 | |||||||||||||||||||||||||
2021 Notes | June 15, 2024 to June 14, 2025 | ||||||||||||||||||||||||||
Long-term debt: | ||||||||||||||||||||||||||
Redemption price percentage | 100% | |||||||||||||||||||||||||
Senior unsecured 2024 Notes | ||||||||||||||||||||||||||
Long-term debt: | ||||||||||||||||||||||||||
Face amount | 350,000,000 | € 350,000,000 | € 215,000,000 | € 135,000,000 | ||||||||||||||||||||||
Interest rate (as a percent) | 4.375% | 4.375% | ||||||||||||||||||||||||
Debt costs | 2,137,000 | |||||||||||||||||||||||||
Gain on foreign exchange | 31,600,000 | 32,500,000 | ||||||||||||||||||||||||
Redemption price percentage | 101.094% | 101.094% | ||||||||||||||||||||||||
Aggregate principal amount of redemption | € | 350,000,000 | |||||||||||||||||||||||||
Redemption value | $ 375,200,000 | € 353,800,000 | ||||||||||||||||||||||||
Repayments of interest | 8,100,000 | 7,700,000 | ||||||||||||||||||||||||
Total repayment | 383,400,000 | € 361,500,000 | ||||||||||||||||||||||||
Loss on extinguishment & redemption of 2022 notes | $ 11,900,000 | |||||||||||||||||||||||||
Net proceeds | $ 240,300,000 | $ 152,100,000 | ||||||||||||||||||||||||
Accrued and unpaid interest | € | € 11,500,000 | |||||||||||||||||||||||||
Loss on extinguishment debt purchases | $ 600,000 | |||||||||||||||||||||||||
Debt fair value | $ 365,800,000 | 397,000,000 | 429,300,000 | |||||||||||||||||||||||
Loss on foreign exchange | 37,000,000 | |||||||||||||||||||||||||
Senior notes | ||||||||||||||||||||||||||
Long-term debt: | ||||||||||||||||||||||||||
Face amount | $ 70,000,000 | $ 125,000,000 | $ 250,000,000 | |||||||||||||||||||||||
Interest rate (as a percent) | 5.375% | |||||||||||||||||||||||||
Gain and loss on foreign exchange | (638,000) | |||||||||||||||||||||||||
Premium percentage (as a percent) | 101.75% | 100.375% | ||||||||||||||||||||||||
Senior notes | Prior to December 1, 2021 | ||||||||||||||||||||||||||
Long-term debt: | ||||||||||||||||||||||||||
Redemption price percentage | 100% | |||||||||||||||||||||||||
2024 Notes | ||||||||||||||||||||||||||
Long-term debt: | ||||||||||||||||||||||||||
Interest rate (as a percent) | 4.375% | 4.375% | ||||||||||||||||||||||||
Gain (loss) on foreign exchange | $ 31,600,000 | $ 32.5 | $ 37,000,000 | |||||||||||||||||||||||
Installment One | SOFR | ||||||||||||||||||||||||||
Long-term debt: | ||||||||||||||||||||||||||
Net proceeds | $ 600,000 | |||||||||||||||||||||||||
Payment of debt in Installments | $ 600,000 | |||||||||||||||||||||||||
Installment One | SOFR | Interest rate swap | ||||||||||||||||||||||||||
Long-term debt: | ||||||||||||||||||||||||||
Payment made to counter party | $ 3,400,000 | |||||||||||||||||||||||||
Installment Two | SOFR | ||||||||||||||||||||||||||
Long-term debt: | ||||||||||||||||||||||||||
Net proceeds | $ 1,200,000 | |||||||||||||||||||||||||
Payment of debt in Installments | $ 1,200,000 | |||||||||||||||||||||||||
Installment Two | SOFR | Interest rate swap | ||||||||||||||||||||||||||
Long-term debt: | ||||||||||||||||||||||||||
Net proceeds | $ 3,400,000 |
Long-term debt_ Debt extinguish
Long-term debt: Debt extinguishment and redemptions of 2022 Notes (Details) | 1 Months Ended | 12 Months Ended | ||||||||||||||
Jun. 22, 2022 USD ($) | Jun. 22, 2022 EUR (€) | Dec. 01, 2021 USD ($) | May 31, 2021 USD ($) | Mar. 31, 2021 USD ($) | Jun. 30, 2020 USD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2022 EUR (€) | Dec. 31, 2021 USD ($) | Dec. 01, 2021 EUR (€) | Dec. 31, 2020 USD ($) | Jun. 30, 2020 EUR (€) | Jun. 30, 2019 EUR (€) | Aug. 31, 2018 USD ($) | Dec. 31, 2016 USD ($) | Feb. 28, 2015 USD ($) | |
Long-term debt: | ||||||||||||||||
Redemption price percentage | 101.094% | 101.094% | 103.20% | |||||||||||||
Interest | $ 4,656,000 | $ 5,046,000 | ||||||||||||||
Senior secured notes due 2022 | ||||||||||||||||
Long-term debt: | ||||||||||||||||
Redemption price percentage | 5.375% | |||||||||||||||
Face amount | $ 115,900,000 | $ 115,900,000 | ||||||||||||||
Interest | 400,000 | |||||||||||||||
Loss on debt purchase | $ 10,800,000 | $ 3,900,000 | ||||||||||||||
Notice issued for redemption of debt | 45,000,000 | |||||||||||||||
Amount of debt redeemed | 45,000,000 | |||||||||||||||
Redemption value | $ 1,900,000 | |||||||||||||||
Redemption price per $1,000 aggregate principal amount | 41.41533 | |||||||||||||||
Accrued interest value | $ 400,000 | |||||||||||||||
Accrued interest per $1,000 aggregate principal amount | 9.70486 | |||||||||||||||
Senior notes outstanding | $ 284,100,000 | |||||||||||||||
Senior unsecured 2024 Notes | ||||||||||||||||
Long-term debt: | ||||||||||||||||
Redemption price percentage | 101.094% | 101.094% | ||||||||||||||
Face amount | € 350,000,000 | $ 350,000,000 | € 215,000,000 | € 135,000,000 | ||||||||||||
Interest | € | € 11,500,000 | |||||||||||||||
Loss on debt purchase | $ 600,000 | |||||||||||||||
Redemption value | $ 375,200,000 | € 353,800,000 | ||||||||||||||
Senior notes | ||||||||||||||||
Long-term debt: | ||||||||||||||||
Face amount | $ 70,000,000 | $ 125,000,000 | $ 250,000,000 | |||||||||||||
Senior notes | Prior to December 1, 2021 | ||||||||||||||||
Long-term debt: | ||||||||||||||||
Redemption price percentage | 100% |
Long-term debt_ Senior unsecure
Long-term debt: Senior unsecured notes (Details) $ in Millions | 1 Months Ended | 3 Months Ended | |||||||
Jun. 22, 2022 | Mar. 31, 2021 | Jun. 30, 2020 USD ($) | Jun. 30, 2016 USD ($) | Dec. 31, 2022 EUR (€) | Dec. 31, 2020 USD ($) | Jun. 30, 2020 EUR (€) | Jun. 30, 2019 EUR (€) | Apr. 09, 2014 USD ($) | |
Senior unsecured notes- $189.2 million 2021 Notes | |||||||||
Redemption price percentage | 101.094% | 103.20% | |||||||
2021 Notes | |||||||||
Senior unsecured notes- $189.2 million 2021 Notes | |||||||||
Principal amount | $ 189.2 | $ 189.2 | $ 200 | ||||||
Interest rate (as a percent) | 5.625% | ||||||||
Interest expense on original debt | 10.9 | ||||||||
Interest expense on repurchased debt | $ 10.8 | ||||||||
2021 Notes | On or After April 15, 2017 | |||||||||
Senior unsecured notes- $189.2 million 2021 Notes | |||||||||
Redemption price percentage | 100% | ||||||||
Senior unsecured 2024 Notes | |||||||||
Senior unsecured notes- $189.2 million 2021 Notes | |||||||||
Principal amount | € 350,000,000 | $ 350 | € 215,000,000 | € 135,000,000 | |||||
Interest rate (as a percent) | 4.375% | 4.375% | |||||||
Loss on extinguishment debt purchases | $ 0.6 | ||||||||
Redemption price percentage | 101.094% |
Long-term debt_ Limitations und
Long-term debt: Limitations under the Indentures (Details) | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Long-term debt: | |
Consolidated leverage ratio | 6 |
Consolidated secured leverage ratio | 4 |
Amount unrestricted and permitted for investment payments | $ 442,400,000 |
Fixed charge coverage ratio | 2 |
Restriction on incurring additional indebtedness | Senior notes | Minimum | |
Long-term debt: | |
Consolidated secured leverage ratio | 1 |
Restriction on incurring additional indebtedness | Senior unsecured 2024 Notes | Minimum | |
Long-term debt: | |
Consolidated leverage ratio | 1 |
Restriction on incurring additional indebtedness | Senior unsecured 2024 Notes | Maximum | |
Long-term debt: | |
Consolidated leverage ratio | 6 |
Consolidated secured leverage ratio | 4 |
Restriction on incurring additional indebtedness | Senior secured 2026 Notes | Minimum | |
Long-term debt: | |
Consolidated secured leverage ratio | 1 |
Fixed charge coverage ratio | 2 |
Restriction on incurring additional indebtedness | Senior secured 2026 Notes | Maximum | |
Long-term debt: | |
Consolidated secured leverage ratio | 4 |
Fixed charge coverage ratio | 1 |
Restriction on dividends and stock purchases | Senior unsecured 2024 Notes | Minimum | |
Long-term debt: | |
Indebtedness that may occur | $ 1 |
Restriction on dividends and stock purchases | Senior secured 2026 Notes | |
Long-term debt: | |
Fixed charge coverage ratio | 6 |
Restriction on dividends and stock purchases | Senior secured 2026 Notes | Minimum | |
Long-term debt: | |
Consolidated leverage ratio | 1 |
Fixed charge coverage ratio | 1 |
Restriction on dividends and stock purchases | Senior secured 2026 Notes | Maximum | |
Long-term debt: | |
Consolidated leverage ratio | 2 |
Fixed charge coverage ratio | 6 |
Unrestricted general basket payment | |
Long-term debt: | |
Amount unrestricted and permitted for investment payments | $ 250,000,000 |
Long-term debt_ Long-term debt
Long-term debt: Long-term debt maturities (Details) $ in Thousands | Dec. 31, 2022 USD ($) |
Long-term debt: | |
2025 | $ 500,000 |
2026 | 450,000 |
Total | $ 950,000 |
Income taxes_ Components of inc
Income taxes: Components of income (loss) before income taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Components of income (loss) before income taxes | |||
Domestic | $ 34,784 | $ 73,753 | $ 23,808 |
Foreign | (8,408) | (2,333) | (13,496) |
Total income before income taxes | $ 26,376 | $ 71,420 | $ 10,312 |
Income taxes_ Income tax expens
Income taxes: Income tax expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Current: | |||
Federal | $ 32 | ||
State | $ (4,195) | $ (3,116) | (2,908) |
Foreign | (496) | (1,833) | (947) |
Deferred: | |||
Federal | (16,299) | (17,959) | (1,867) |
State | (143) | (2,348) | 1,241 |
Foreign | (97) | 2,021 | 353 |
Total income tax expense | $ (21,230) | $ (23,235) | $ (4,096) |
Income taxes_ Temporary differe
Income taxes: Temporary differences (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Deferred Tax Assets: | ||
Net operating loss carry-forwards | $ 226,625 | $ 246,276 |
Tax credits | 1,936 | 2,119 |
Equity-based compensation | 3,951 | 3,976 |
Operating leases | 32,769 | 40,627 |
Total gross deferred tax assets | 265,281 | 292,998 |
Valuation allowance | (140,895) | (132,800) |
Net deferred tax assets | 124,386 | 160,198 |
Deferred Tax Liabilities: | ||
Depreciation and amortization | 61,761 | 46,642 |
Accrued liabilities and other | 77,690 | 103,705 |
Right-of-use assets | 29,710 | 37,784 |
Gross deferred tax liabilities | 169,161 | 188,131 |
Net deferred tax liabilities | $ 44,775 | $ 27,933 |
Income taxes_ Loss carry-forwar
Income taxes: Loss carry-forwards (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Income taxes | |
Net operating loss carry-forwards | $ 943 |
United States | |
Income taxes | |
Net operating loss carry-forwards | 19.2 |
Carry-forwards limited for use | 19.2 |
Europe | |
Income taxes | |
Net operating loss carry-forwards | 913.7 |
Carry-forwards limited for use | 133.2 |
Carry-forwards not limited for use | 780.5 |
Mexico | |
Income taxes | |
Net operating loss carry-forwards | 10.1 |
Other than United States | |
Income taxes | |
Carry-forwards not limited for use | $ 923.8 |
Income taxes_ Effective income
Income taxes: Effective income tax rate reconciliation (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Reconciliation of the Federal statutory income taxes to the amounts reported in the financial statements | |||
Federal income tax expense at statutory rates | $ (5,537) | $ (14,999) | $ (2,166) |
State income tax, net of federal benefit | (1,700) | (4,123) | (1,091) |
Impact of foreign operations | (651) | 715 | (365) |
Non-deductible expenses | (2,679) | (1,365) | (411) |
Tax effect of TCJA from foreign earnings | (360) | (389) | (66) |
Other | 32 | ||
Changes in valuation allowance | (10,303) | (3,074) | (29) |
Total income tax expense | $ (21,230) | $ (23,235) | $ (4,096) |
Commitments and contingencies_2
Commitments and contingencies: Current and potential litigation (Details) - USD ($) $ in Millions | 12 Months Ended | |
Aug. 31, 2022 | Dec. 31, 2022 | |
Commitments and contingencies: | ||
Estimate of possible loss in excess of accrual | $ 3.8 | |
Loss contingency, damages awarded, value | $ 0.4 | $ 0.6 |
Final payment to accumulated interest and additional attorneys | $ 0.4 |
Commitments and contingencies_3
Commitments and contingencies: Capital leases - future minimum payments (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Future minimum annual payments | |||
Total minimum lease obligations | $ 524,611 | ||
Amount of lease expenses | 21,800 | $ 22,000 | $ 21,000 |
Network Equipment Sites And Data Center Facilities | |||
Future minimum annual payments | |||
2023 | 28,038 | ||
2024 | 16,711 | ||
2025 | 12,937 | ||
2026 | 11,104 | ||
2027 | 3,065 | ||
Thereafter | 1,164 | ||
Total minimum lease obligations | $ 73,019 |
Commitments and contingencies_4
Commitments and contingencies: Unconditional purchase obligations (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2022 | |
Unconditional purchase obligations | ||
2023 | $ 6,200 | |
2024 | 4,100 | |
2025 | 2,800 | |
2026 | 2,800 | |
2027 | 3,200 | |
Thereafter | 51,200 | |
Unconditional purchase obligation | $ 785 | |
Equipment and services | ||
Unconditional purchase obligations | ||
Unconditional purchase obligation | $ 33,600 | |
IRU | ||
Unconditional purchase obligations | ||
Unconditional purchase obligation | $ 70,300 | |
Maximum period of maintenance payment (in years) | 20 years |
Commitments and contingencies_5
Commitments and contingencies: Defined contribution plan (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Commitments and contingencies: | |||
Matching cash payments towards defined contribution plan | $ 0.9 | $ 0.9 | $ 0.9 |
Stockholders' equity_ Authorize
Stockholders' equity: Authorized shares (Details) | 12 Months Ended | |
Dec. 31, 2022 Vote / shares $ / shares shares | Dec. 31, 2021 $ / shares shares | |
Stockholders' equity: | ||
Common stock, shares authorized | shares | 75,000,000 | 75,000,000 |
Common stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 |
Preferred stock, authorized but unissued shares (in shares) | shares | 10,000 | |
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.001 | |
Voting rights per common share | Vote / shares | 1 |
Stockholders' equity_ Common st
Stockholders' equity: Common stock buyback program (Details) - USD ($) $ in Millions | 12 Months Ended | 24 Months Ended |
Dec. 31, 2020 | Dec. 31, 2022 | |
Stockholders' equity: | ||
Authorized amount for common stock repurchases | $ 50 | |
Remaining authorized amount for common stock repurchases | $ 30.4 | |
Repurchase of common stock (in shares) | 79,056 | 0 |
Cost of shares of common stock | $ 4.5 |
Stock option and award plan_ In
Stock option and award plan: Incentive award plan (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Stock options | |
Stock option and 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 |
Restricted stock | Minimum | |
Stock option and award plan | |
Vesting period | 3 years |
Restricted stock | Maximum | |
Stock option and award plan | |
Vesting period | 4 years |
Stock option and award plan_ _2
Stock option and award plan: Incentive award plan fair value assumptions (Details) - Stock options - $ / shares | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Stock option and award plan | |||
Weighted-average per share grant date fair value (in dollars per share) | $ 10.73 | $ 12.22 | $ 13.21 |
Assumptions used for determining the fair value of options granted | |||
Dividend yield (as a percent) | 5.90% | 4.60% | 3.40% |
Expected volatility (as a percent) | 33.10% | 33.40% | 31.50% |
Risk-free interest rate (as a percent) | 3% | 0.60% | 1.10% |
Expected life of the option term (in years) | 4 years 1 month 6 days | 4 years 2 months 12 days | 4 years 2 months 12 days |
Stock option and award plan_ _3
Stock option and award plan: Incentive award plan - activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Stock option activity parenthetical | |||
Proceeds from exercises of common stock options | $ 614 | $ 1,823 | $ 1,382 |
Stock options | |||
Stock option activity | |||
Outstanding at the beginning of the period (in shares) | 148,535 | ||
Granted (in shares) | 84,476 | ||
Cancelled and expired (in shares) | (49,836) | ||
Exercised (in shares) | (15,184) | ||
Outstanding at the end of the period (in shares) | 167,991 | 148,535 | |
Exercisable at the end of the period (in shares) | 91,351 | ||
Expected to vest (in shares) | 144,268 | ||
Weighted-Average Exercise Price | |||
Outstanding at the beginning of the period (in dollars per share) | $ 58.24 | ||
Granted (in dollars per share) | 61.28 | ||
Cancelled and expired (in dollars per share) | 66.77 | ||
Exercised (in dollars per share) | 40.44 | ||
Outstanding at the end of the period (in dollars per share) | 58.85 | $ 58.24 | |
Exercisable at the end of the period (in dollars per share) | 55.11 | ||
Expected to vest (in dollars per share) | $ 58.29 | ||
Stock option activity parenthetical | |||
Exercised - intrinsic value | $ 300 | ||
Proceeds from exercises of common stock options | 600 | ||
Outstanding end of period - intrinsic value | $ 700 | ||
Outstanding - weighted-average term | 7 years 3 months 18 days | ||
Exercisable - intrinsic value | $ 700 | ||
Exercisable - weighted average term | 5 years 8 months 12 days | ||
Expected to vest - intrinsic value | $ 700 | ||
Expected to vest - weighted average term | 6 years 10 months 24 days |
Stock option and award plan_ No
Stock option and award plan: Non-vested restricted stock (Details) - Restricted stock - $ / shares | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Number of shares | |||
Non-vested at the beginning of the period (in shares) | 1,253,321 | ||
Granted (in shares) | 401,036 | 500,000 | 500,000 |
Vested (in shares) | (413,257) | ||
Forfeited (in shares) | (77,079) | ||
Non-vested at the end of the period (in shares) | 1,164,021 | 1,253,321 | |
Weighted-Average Grant Date Fair Value | |||
Non-vested at the beginning of the period (in dollars per share) | $ 61.66 | ||
Granted (in dollars per share) | 66.08 | $ 64.59 | $ 75.18 |
Vested (in dollars per share) | 51.63 | ||
Forfeited (in dollars per share) | 69.72 | ||
Non-vested at the end of the period (in dollars per share) | $ 66.22 | $ 61.66 |
Stock option and award plan_ _4
Stock option and award plan: Incentive award plan, additional information (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Incentive Award Plan, additional information | |||
Equity-based compensation expense | $ 24,439 | $ 26,822 | $ 23,525 |
Total unrecognized compensation cost | $ 35,300 | ||
Weighted-average period to recognize unrecognized compensation cost | 2 years | ||
Restricted stock | |||
Incentive Award Plan, additional information | |||
Granted (in dollars per share) | $ 66.08 | $ 64.59 | $ 75.18 |
Granted (in shares) | 401,036 | 500,000 | 500,000 |
Equity-based compensation expense | $ 24,439 | $ 26,822 | $ 23,525 |
Income tax benefit related to stock options and restricted stock | 2,489 | 6,314 | 4,211 |
Capitalized compensation expense related to stock options and restricted stock | 2,277 | 3,222 | 2,275 |
Intrinsic value of stock options exercised | 305 | 881 | 841 |
Fair value of shares of restricted stock vested | $ 25,792 | $ 35,749 | $ 25,439 |
Related party transactions_ (De
Related party transactions: (Details) | 1 Months Ended | 12 Months Ended | ||
May 31, 2015 | Dec. 31, 2022 USD ($) ft² | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Related party transactions | ||||
Operating lease income payments | $ 1,200,000 | |||
Operating lease income | $ 34,914 | |||
Operating Lease, Lease Income, Statement of Income or Comprehensive Income [Extensible Enumeration] | Gains on lease transactions | |||
Lease term | 5 years | |||
CEO | Lease | ||||
Related party transactions | ||||
Fixed annual rent | $ 1,000,000 | |||
Lease term (in years) | 5 years | |||
Notice period for cancellation of lease | 60 days | |||
Payment for rent and related costs (in dollars) | $ 1,700,000 | $ 1,700,000 | $ 1,700,000 | |
Thorium LLC | Lease | ||||
Related party transactions | ||||
Area of land | ft² | 54,803 | |||
Germanium LLC | Lease | ||||
Related party transactions | ||||
Area of land | ft² | 1,587 |
Geographic information_ (Detail
Geographic information: (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 USD ($) segment | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Segment information | |||
Number of operating segments | segment | 1 | ||
Revenues | $ 599,604 | $ 589,797 | $ 568,103 |
Long-lived assets, net | 544,439 | 457,892 | |
On-net | |||
Segment information | |||
Revenues | 452,779 | 442,838 | 419,454 |
Off-net | |||
Segment information | |||
Revenues | 146,152 | 146,383 | 148,128 |
Non-core | |||
Segment information | |||
Revenues | 673 | 576 | 521 |
North America | |||
Segment information | |||
Revenues | 479,361 | 467,992 | 461,277 |
Long-lived assets, net | 397,434 | 331,537 | |
North America | On-net | |||
Segment information | |||
Revenues | 350,256 | 340,107 | 330,924 |
North America | Off-net | |||
Segment information | |||
Revenues | 128,486 | 127,383 | 129,879 |
North America | Non-core | |||
Segment information | |||
Revenues | 619 | 502 | 474 |
Europe | |||
Segment information | |||
Revenues | 98,644 | 105,730 | 96,867 |
Europe | On-net | |||
Segment information | |||
Revenues | 82,451 | 87,929 | 79,568 |
Europe | Off-net | |||
Segment information | |||
Revenues | 16,144 | 17,729 | 17,252 |
Europe | Non-core | |||
Segment information | |||
Revenues | 49 | 72 | 47 |
Oceania | |||
Segment information | |||
Revenues | 14,963 | 11,292 | 7,783 |
Oceania | On-net | |||
Segment information | |||
Revenues | 13,689 | 10,197 | 6,834 |
Oceania | Off-net | |||
Segment information | |||
Revenues | 1,271 | 1,094 | 949 |
Oceania | Non-core | |||
Segment information | |||
Revenues | 3 | 1 | |
Europe and other | |||
Segment information | |||
Long-lived assets, net | 147,005 | 126,355 | |
South America | |||
Segment information | |||
Revenues | 5,832 | 4,276 | 2,104 |
South America | On-net | |||
Segment information | |||
Revenues | 5,656 | 4,102 | 2,056 |
South America | Off-net | |||
Segment information | |||
Revenues | 174 | 173 | 48 |
South America | Non-core | |||
Segment information | |||
Revenues | 2 | 1 | |
Africa | |||
Segment information | |||
Revenues | 804 | 507 | 72 |
Africa | On-net | |||
Segment information | |||
Revenues | 727 | 503 | $ 72 |
Africa | Off-net | |||
Segment information | |||
Revenues | $ 77 | $ 4 |
Quarterly financial informati_3
Quarterly financial information (unaudited): (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Quarterly financial information | |||||||||||
Service revenue | $ 599,604 | $ 589,797 | $ 568,103 | ||||||||
Network operations, including equity-based compensation expense | 228,154 | 226,337 | 219,157 | ||||||||
Operating income | 113,959 | 119,233 | 106,922 | ||||||||
Net income (loss) | $ 5,146 | $ 48,185 | $ 6,216 | ||||||||
Net income (loss) per common share - basic | $ 0.11 | $ 1.04 | $ 0.14 | ||||||||
Net income (loss) per common share - diluted | $ 0.11 | $ 1.03 | $ 0.13 | ||||||||
Weighted-average number of common shares-basic | 46,875,992 | 46,419,180 | 45,947,772 | ||||||||
Weighted-average number of common shares-diluted | 47,207,298 | 46,963,920 | 46,668,198 | ||||||||
Unrealized foreign currency exchange gain (loss) | $ 23,500 | $ 8,000 | $ 8,800 | $ 10,200 | $ (5,300) | $ 18,900 | $ 31,561 | $ 32,522 | $ (36,997) | ||
Loss on debt extinguishment and redemption | 11,900 | 10,800 | 3,900 | ||||||||
Non cash charges (benefit) | $ 2,600 | $ 16,900 | 7,500 | 21,300 | 5,900 | 3,100 | |||||
Gain on lease termination | 7,400 | ||||||||||
Unaudited | |||||||||||
Quarterly financial information | |||||||||||
Service revenue | 151,979 | 150,000 | 148,450 | 149,175 | 147,208 | 147,927 | 147,879 | 146,777 | |||
Network operations, including equity-based compensation expense | 56,972 | 57,220 | 56,514 | 57,449 | 56,418 | 56,645 | 56,180 | 57,092 | |||
Operating income | 27,311 | 28,095 | 29,566 | 28,784 | 36,165 | 28,556 | 28,211 | 26,291 | |||
Net income (loss) | $ 851 | $ (8,007) | $ 11,164 | $ 1,137 | $ 18,507 | $ 13,320 | $ (2,493) | $ 18,851 | |||
Net income (loss) per common share - basic | $ 0.02 | $ (0.17) | $ 0.24 | $ 0.02 | $ 0.40 | $ 0.29 | $ (0.05) | $ 0.41 | |||
Net income (loss) per common share - diluted | $ 0.02 | $ (0.17) | $ 0.24 | $ 0.02 | $ 0.39 | $ 0.28 | $ (0.05) | $ 0.41 | |||
Weighted-average number of common shares-basic | 46,885,512 | 46,736,742 | 46,691,142 | 46,575,848 | 46,420,168 | 46,293,524 | 46,229,603 | 46,067,096 | |||
Weighted-average number of common shares-diluted | 47,196,890 | 46,736,742 | 47,029,446 | 46,929,191 | 46,992,639 | 46,866,929 | 46,229,603 | 46,507,258 |
Subsequent Events_ (Details)
Subsequent Events: (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||||
Mar. 24, 2023 | Feb. 22, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Subsequent Events | |||||
Dividends paid | $ 169,857 | $ 150,288 | $ 129,412 | ||
Subsequent Events | |||||
Subsequent Events | |||||
Quarterly dividend payment approved (per share) | $ 0.925 | ||||
Dividends paid | $ 43,300 |
Schedule II VALUATION AND QUA_2
Schedule II VALUATION AND QUALIFYING ACCOUNTS (Details) - Deferred tax valuation allowance - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Movement in valuation and qualifying accounts | |||
Balance at Beginning of Period | $ 132,800 | $ 150,589 | $ 131,069 |
Charged to Costs and Expenses | 16,583 | 4,918 | 20,599 |
Deductions | (8,488) | (22,707) | (1,079) |
Balance at End of Period | $ 140,895 | $ 132,800 | $ 150,589 |