3 unchanged sentences
CONDENSED CONSOLIDATED BALANCE SHEETS
−Removed: AS OF JUNE 30, 2021 AND DECEMBER 31, 2020
+Added: AS OF SEPTEMBER 30, 2021 AND DECEMBER 31, 2020
(IN THOUSANDS, EXCEPT SHARE DATA)
+Added: September 30,
Current assets:
Cash and cash equivalents
+Added: Restricted cash
Accounts receivable, net of allowance for credit losses of $ 1,413 and $ 1,921 , respectively
12 unchanged sentences
Total current liabilities
−Removed: Senior secured 2022 notes, net of unamortized debt costs of $ 1,052 and including premiums of $ 544
+Added: Senior secured 2022 notes, net of unamortized debt costs of $ 1,052 and including premium of $ 544
Senior unsecured 2024 Euro notes, net of unamortized debt costs of $ 2,327 and $ 2,961 , respectively, and net of discounts of $ 863 and $ 1,142 , respectively
14 unchanged sentences
Total liabilities and stockholders’ deficit
−Removed: The accompanying notes are an integral part of these condensed consolidated balance sheets.
+Added: The accompanying notes are an integral part of these condensed consolidated financial statements.
COGENT COMMUNICATIONS HOLDINGS, INC.
AND SUBSIDIARIES
−Removed: CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
−Removed: FOR THE THREE MONTHS ENDED JUNE 30, 2021 AND JUNE 30, 2020
+Added: CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
+Added: FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2021 AND SEPTEMBER 30, 2020
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
−Removed: June 30, 2021
−Removed: June 30, 2020
+Added: September 30, 2021
+Added: September 30, 2020
Service revenue
4 unchanged sentences
Total operating expenses
+Added: Loss on finance lease amendment
Gains on equipment transactions
1 unchanged sentence
Interest expense
−Removed: Realized foreign exchange gain on issuance on 2024 Euro Notes
−Removed: Unrealized foreign exchange losses on 2024 Euro Notes
−Removed: Loss on debt extinguishment and redemption – 2021 Notes
−Removed: Loss on debt extinguishment and redemption – 2022 Notes
+Added: Unrealized foreign exchange gain (loss) on 2024 Euro Notes
Interest income and other, net
−Removed: (Loss) income before income taxes
−Removed: Income tax provision
−Removed: Net (loss) income
−Removed: Comprehensive (loss) income:
−Removed: Net (loss) income
+Added: Income (loss) before income taxes
+Added: Income tax (provision) benefit
+Added: Net income (loss)
+Added: Comprehensive income:
+Added: Net income (loss)
Foreign currency translation adjustment
−Removed: Comprehensive (loss) income
−Removed: Net (loss) income per common share:
−Removed: Basic net (loss) income per common share
−Removed: Diluted net (loss) income per common share
+Added: Comprehensive income
+Added: Net income (loss) per common share:
+Added: Basic net income (loss) per common share
+Added: Diluted net income (loss) per common share
Dividends declared per common share
5 unchanged sentences
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
−Removed: FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND JUNE 30, 2020
+Added: FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND SEPTEMBER 30, 2020
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
−Removed: June 30, 2021
−Removed: June 30, 2020
+Added: September 30, 2021
+Added: September 30, 2020
Service revenue
4 unchanged sentences
Total operating expenses
+Added: Losses on finance lease amendments
Gains on equipment transactions
3 unchanged sentences
Unrealized gain (loss) on foreign exchange on 2024 Euro Notes
−Removed: Interest income and other, net
Loss on debt extinguishment and redemption – 2021 Notes
Loss on debt extinguishment and redemption – 2022 Notes
+Added: Interest income and other, net
Income before income taxes
13 unchanged sentences
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
−Removed: FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND JUNE 30, 2020
+Added: FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND SEPTEMBER 30, 2020
(IN THOUSANDS)
−Removed: June 30, 2021
−Removed: June 30, 2020
+Added: September 30, 2021
+Added: September 30, 2020
Cash flows from operating activities:
1 unchanged sentence
Depreciation and amortization
−Removed: Amortization of debt costs, discounts and premiums
+Added: Amortization of debt costs, discounts and premium
Equity-based compensation expense (net of amounts capitalized)
1 unchanged sentence
Loss on debt extinguishment and redemption – 2022 Notes
−Removed: Unrealized (gains) losses on foreign exchange – 2024 Notes
+Added: Unrealized (gain) loss on foreign exchange – 2024 Notes
Realized foreign exchange gain on issuance of 2024 Notes
12 unchanged sentences
Dividends paid
−Removed: Redemption and extinguishment of 2021 Notes
−Removed: Redemption and extinguishment of 2022 Notes
+Added: Purchases of common stock
+Added: Extinguishment and redemption of 2021 Notes
+Added: Extinguishment and redemption of 2022 Notes
Net proceeds from issuance of senior unsecured 2024 Euro Notes - net of debt costs of $ 2,137
5 unchanged sentences
Effect of exchange rates changes on cash
−Removed: Net increase in cash and cash equivalents
−Removed: Cash and cash equivalents, beginning of period
−Removed: Cash and cash equivalents, end of period
+Added: Net decrease in cash and cash equivalents & restricted cash
+Added: Cash and cash equivalents & restricted cash, beginning of period
+Added: Cash and cash equivalents & restricted cash, end of period
Supplemental disclosure of non-cash investing and financing activities:
2 unchanged sentences
Finance lease obligations incurred
+Added: Fair value of equipment acquired in leases
The accompanying notes are an integral part of these condensed consolidated financial statements.
46 unchanged sentences
Financial instruments
−Removed: At June 30, 2021, the carrying amount of cash and cash equivalents, accounts receivable, prepaid and other current assets, accounts payable and accrued expenses approximated fair value because of the short-term nature of these instruments.
+Added: At September 30, 2021, the carrying amount of cash and cash equivalents, accounts receivable, prepaid and other current assets, accounts payable and accrued expenses approximated fair value because of the short-term nature of these instruments.
The Company measures its cash equivalents at amortized cost, which approximates fair value based upon quoted market prices (Level 1).
−Removed: Based upon recent trading prices (Level 2— market approach) at June 30, 2021 the fair value of the Company’s $ 500.0 million senior secured notes was $ 510.0 million and the fair value of the Company’s € 350.0 million Euro ($ 415.8 million USD) senior unsecured notes was $ 424.1 million.
+Added: Based upon recent trading prices (Level 2— market approach), at September 30, 2021, the fair value of the Company’s $ 500.0 million senior secured notes was $ 507.5 million and the fair value of the Company’s € 350.0 million ($ 405.6 million USD) senior unsecured notes was $ 413.2 million.
+Added: The estimated fair value of the Company’s interest rate swap agreement using the Level 2 market approach was a long-term liability of $ 3.1 million.
+Added: Restricted cash and interest rate swap agreement
+Added: Restricted cash represents amounts held in segregated bank accounts by our clearing broker as margin in support of our interest rate swap agreement as discussed in Note 3 and was $ 3.1 million as of September 30, 2021.
+Added: Additional cash may be further restricted to maintain our interest rate swap instrument as interest rates fluctuate and margin requirements change.
+Added: The Company does not use derivative financial instruments for trading purposes.
Gross receipts taxes, universal service fund and other surcharges
1 unchanged sentence
Such charges may be presented gross or net based upon the Company’s accounting policy election.
−Removed: The Company records certain excise taxes and surcharges on a gross basis and includes them in its revenues and costs of network operations.
−Removed: Excise taxes and surcharges billed to customers and recorded on a gross basis (as service revenue and network operations expense)were $ 4.8 million and $ 3.3 million for the three months ended June 30, 2021 and 2020, respectively, and $ 9.3 million and $ 7.0 million for the six months ended June 30, 2021 and 2020, respectively.
+Added: The Company records certain excise taxes and surcharges on a gross basis and includes them in its revenues and network operations expense.
+Added: Excise taxes and surcharges billed to customers and recorded on a gross basis (as service revenue and network operations expense)were $ 4.8 million and $ 3.9 million for the three months ended September 30, 2021 and 2020, respectively, and $ 14.2 million and $ 10.9 million for the nine months ended September 30, 2021 and 2020, respectively.
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.
−Removed: 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.
+Added: Diluted EPS is based on the weighted-average number of shares of common stock outstanding during each period, adjusted for the effect of dilutive
+Added: 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.
2 unchanged sentences
Three Months Ended
−Removed: Six Months Ended
−Removed: Six Months Ended
−Removed: June 30, 2021
−Removed: June 30, 2020
−Removed: June 30, 2021
−Removed: June 30, 2020
+Added: Nine Months Ended
+Added: Nine Months Ended
+Added: September 30, 2021
+Added: September 30, 2020
+Added: September 30, 2021
+Added: September 30, 2020
Weighted average common shares - basic
3 unchanged sentences
The following details unvested shares of restricted common stock as well as the anti-dilutive effects of stock options and restricted stock awards outstanding:
−Removed: June 30, 2021
−Removed: June 30, 2020
−Removed: June 30, 2021
−Removed: June 30, 2020
+Added: September 30, 2021
+Added: September 30, 2020
+Added: September 30, 2021
+Added: September 30, 2020
Unvested shares of restricted common stock
1 unchanged sentence
Anti-dilutive shares of restricted common stock
−Removed: Stockholder’s Deficit
−Removed: The following details the changes in stockholder’s deficit for the three and six months ended June 30, 2021 and June 30, 2020 (in thousands except share amounts):
+Added: Stockholders’ Deficit
+Added: The following details the changes in stockholders’ deficit for the three and nine months ended September 30, 2021 and September 30, 2020 (in thousands except share amounts):
Comprehensive
−Removed: Stockholder’s
+Added: Stockholders’
Income (Loss)
Equity (Deficit)
−Removed: Balance at March 31, 2020
+Added: Balance at June 30, 2020
Forfeitures of shares granted to employees
3 unchanged sentences
Exercises of options
+Added: Common stock purchases and retirement
Dividends paid
−Removed: Balance at June 30, 2020
+Added: Balance at September 30, 2020
Comprehensive
−Removed: Stockholder’s
+Added: Stockholders’
Income (Loss)
Equity (Deficit)
−Removed: Balance at March 31, 2021
+Added: Balance at June 30, 2021
Forfeitures of shares granted to employees
4 unchanged sentences
Dividends paid
−Removed: Balance at June 30, 2021
+Added: Balance at September 30, 2021
Comprehensive
−Removed: Stockholder’s
+Added: Stockholders’
Income (Loss)
6 unchanged sentences
Exercises of options
+Added: Common stock purchases and retirement
Dividends paid
−Removed: Balance at June 30, 2020
+Added: Balance at September 30, 2020
Comprehensive
−Removed: Stockholder's
+Added: Stockholders’
Income (Loss)
7 unchanged sentences
Dividends paid
−Removed: Balance at June 30, 2021
+Added: Balance at September 30, 2021
Revenue recognition
24 unchanged sentences
The Company recognizes revenue for these amounts as they are collected.
−Removed: Service revenue recognized from amounts in deferred revenue (contract liabilities) at the beginning of the period during the three months ended June 30, 2021 was $ 1.8 million and during the three months ended June 30, 2020 was $ 1.8 million.
−Removed: Service revenue recognized from amounts in deferred revenue (contract liabilities) at the beginning of the period during the six months ended June 30, 2021 was $ 3.1 million and during the six months ended June 30, 2020 was $ 3.0 million.
−Removed: Amortization expense for contract costs was $ 4.6 million for the three months ended June 30, 2021 and $ 4.2 million for the three months ended June 30, 2020.
−Removed: Amortization expense for contract costs was $ 9.2 million for the six months ended June 30, 2021 and $ 8.4 million for the six months ended June 30, 2020.
+Added: Service revenue recognized from amounts in deferred revenue (contract liabilities) at the beginning of the period during the three months ended September 30, 2021 was $ 1.9 million and during the three months ended September 30, 2020 was $ 1.6 million.
+Added: Service revenue recognized from amounts in deferred revenue (contract liabilities) at the beginning of the period during the nine months ended September 30, 2021 was $ 4.1 million and during the nine months ended September 30, 2020 was $ 3.9 million.
+Added: Amortization expense for contract costs was $ 4.6 million for the three months ended September 30, 2021 and $ 4.2 million for the three months ended September 30, 2020.
+Added: Amortization expense for contract costs was $ 13.8 million for the nine months ended September 30, 2021 and $ 12.6 million for the nine months ended September 30, 2020.
In February 2016, the FASB issued ASU No.
8 unchanged sentences
The Company has also elected to apply certain practical expedients under ASU 2016-02 including not separating lease and non-lease components on its finance and operating leases.
−Removed: June 30, 2021
−Removed: June 30, 2020
−Removed: June 30, 2021
−Removed: June 30, 2020
+Added: September 30, 2021
+Added: September 30, 2020
+Added: September 30, 2021
+Added: September 30, 2020
Finance lease cost
3 unchanged sentences
Total lease costs
−Removed: June 30, 2021
−Removed: June 30, 2020
+Added: September 30, 2021
+Added: September 30, 2020
Other lease information
10 unchanged sentences
Finance leases—fiber lease agreements
−Removed: The Company has entered into lease agreements with numerous providers of dark fiber under indefeasible-right-of use agreements (“IRU’s”).
−Removed: These IRU’s typically have initial terms of 15 - 20 years and include renewal options after the initial lease term.
+Added: The Company has entered into lease agreements with numerous providers of dark fiber under indefeasible-right-of-use agreements (“IRUs”).
+Added: 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.
3 unchanged sentences
Finance lease assets are included in property and equipment in the Company’s consolidated balance sheets.
−Removed: As of June 30, 2021, the Company had committed to additional dark fiber IRU lease agreements totaling $ 29.5 million in future payments to be paid over periods of up to 20 years .
+Added: As of September 30, 2021, the Company had committed to additional dark fiber IRU lease agreements totaling $ 35.1 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.
14 unchanged sentences
The future minimum payments under these operating lease and finance lease agreements are as follows (in thousands):
−Removed: For the twelve months ending June 30,
+Added: For the twelve months ending September 30,
Total minimum lease obligations
18 unchanged sentences
Allowance for credit losses (deducted from accounts receivable)
−Removed: Three months ending June 30, 2021
−Removed: Three months ending June 30, 2020
−Removed: Six months ending June 30, 2021
−Removed: Six months ending June 30, 2020
−Removed: Net bad debt expense for the three and six months ended June 30, 2021 was $ 0.8 million and $ 1.6 million, respectively, which is net of bad debt recoveries of $ 0.4 million and $ 1.6 million respectively.
−Removed: Net bad debt expense for the three and six months ended June 30, 2020 was $ 1.3 million and $ 2.3 million, respectively, which is net of bad debt recoveries of $ 0.2 million and $ 0.4 million respectively .
+Added: Three months ending September 30, 2021
+Added: Three months ending September 30, 2020
+Added: Nine months ending September 30, 2021
+Added: Nine months ending September 30, 2020
+Added: Net bad debt expense for the three and nine months ended September 30, 2021 was $ 1.0 million and $ 2.6 million, respectively, which is net of bad debt recoveries of $ 0.3 million and $ 1.9 million, respectively.
+Added: Net bad debt expense for the three and nine months ended September 30, 2020 was $ 0.8 million and $ 3.2 million, respectively, which is net of bad debt recoveries of $ 0.4 million and $ 0.8 million, respectively .
Property and equipment:
−Removed: Depreciation and amortization expense related to property and equipment and finance leases was $ 22.1 million and $ 19.9 million for the three months ended June 30, 2021 and 2020 respectively, and $ 44.1 million and $ 39.4 million for the six months ended June 30, 2021 and 2020, respectively.
−Removed: The Company capitalized salaries and related benefits of employees working directly on the construction and build-out of its network of $ 4.2 million and $ 3.0 million for the three months ended June 30, 2021 and 2020, respectively, and $ 7.4 million and $ 5.9 million for the six months ended June 30, 2021 and 2020, respectively.
−Removed: Installment payment agreement
−Removed: The Company has entered into an installment payment agreement (“IPA”) with a vendor.
−Removed: 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.
−Removed: 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 until July 2020 when additional borrowings under the IPA expired.
−Removed: As of June 30, 2021 and December 31, 2020 there was $ 3.4 million and $ 7.7 million, respectively, of note obligations outstanding under the IPA, secured by the related equipment.
−Removed: The Company recorded the assets purchased and the net present value of the note obligation utilizing an imputed interest rate.
−Removed: The resulting discounts totaling $ 41,000 and $ 141,000 as of June 30, 2021 and December 31, 2020, respectively, are being amortized over the note term using the effective interest rate method.
+Added: Depreciation and amortization expense related to property and equipment and finance leases was $ 22.6 million and $ 21.6 million for the three months ended September 30, 2021 and 2020, respectively, and $ 66.7 million and $ 61.0 million for the nine months ended September 30, 2021 and 2020, respectively.
+Added: The Company capitalized salaries and related benefits of employees working directly on the construction and build-out of its network of $ 3.1 million and $ 3.0 million for the three months ended September 30, 2021 and 2020, respectively, and $ 10.4 million and $ 8.9 million for the nine months ended September 30, 2021 and 2020, respectively.
Long-term debt:
−Removed: As of June 30, 2021, the Company had outstanding $ 500.0 million aggregate principal amount of Senior Secured Notes due 2026 (the “2026 Notes”) and € 350.0 million ($ 415.8 million USD) aggregate principal amount of Senior Unsecured Euro Notes due 2024 (the “2024 Notes”).
+Added: As of September 30, 2021, the Company had outstanding $ 500.0 million aggregate principal amount of Senior Secured Notes due 2026 (the “2026 Notes”) and € 350.0 million ($ 405.6 million USD) aggregate principal amount of Senior Unsecured Euro Notes due 2024 (the “2024 Notes”).
The 2026 Notes are due on May 1, 2026 and bear interest at a rate of 3.50 % per year.
2 unchanged sentences
Interest on the 2024 Notes is paid semi-annually on June 30 and December 30 of each year.
+Added: Interest rate swap agreement
+Added: As of September 30, 2021, Group held 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.
+Added: 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.
+Added: The Company did not elect hedge accounting.The Swap Agreement is recorded at its fair value at each reporting period, and Group incurs gains and losses due to changes in market interest rates.
+Added: By entering into the Swap Agreement, Group has assumed the risk associated with variable interest rates.
+Added: Changes in interest rates affect the interest expense that the Company recognizes in its consolidated statements of comprehensive income.
+Added: The values that the Company reports for the Swap
+Added: Agreement as of each reporting date are recognized as interest expense with the corresponding amounts included in assets or liabilities in the Company’s consolidated balance sheets.
+Added: As of September 30, 2021 the fair value of the Swap Agreement was a long-term liability of $ 3.1 million and the Company recorded an unrealized loss related to the Swap Agreement of $ 3.1 million in the three and nine months ended September 30, 2021, which is presented in interest expense on the statement of comprehensive income.
Issuance of the 2026 Notes
21 unchanged sentences
The 2026 Notes bear interest at a rate of 3.50 % per annum.
−Removed: Interest began to accrue on the 2026 Notes on May 7, 2021 and will be paid semi-annually in arrears on May 1 and November 1 of each year, commencing November 1, 2021.
+Added: Interest began to accrue on the 2026 Notes on May 7, 2021 and will be paid semi-annually in arrears on May 1 and November 1 of each year, commencing on November 1, 2021.
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.
−Removed: 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.
+Added: 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.
Debt extinguishment and redemption of 2022 Notes
21 unchanged sentences
The issuances of the 2024 Notes were in Euros and are reported in the Company’s reporting currency – US Dollars.
−Removed: As of June 30, 2021 the 2024 Notes were valued at $ 415.8 million.
−Removed: The unrealized (loss) gain on foreign exchange on the Company’s 2024 Notes from converting the 2024 Notes into USD was $( 5.3 ) million for the three months ended June 30, 2021 and $( 3.4 ) million for the three months ended June 30, 2020 and was $ 13.6 million for the six months ended June 30, 2021 and $( 0.5 ) million for the six months ended June 30, 2020.
+Added: As of September 30, 2021, the 2024 Notes were valued at $ 405.6 million.
+Added: The unrealized gain (loss) on foreign exchange on the Company’s 2024 Notes from converting the 2024 Notes into USD was $ 10.2 million for the three months ended September 30, 2021 and $( 17.3 ) million for the three months ended September 30, 2020 and was $ 23.8 million for the nine months ended September 30, 2021 and $( 17.8 ) million for the nine months ended September 30, 2020.
Debt extinguishment and redemption of 2021 Notes
1 unchanged sentence
Group redeemed the entire outstanding amount of the 2021 Notes at a redemption price of 100 % of the $ 189.2 million aggregate principal amount plus $ 1.6 million of accrued and unpaid interest.
−Removed: 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.
+Added: 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 costs and certain transaction expenses.
Limitations under the indentures
−Removed: The indentures governing the 2024 Notes and 2026 Notes, among other things, limit the Company’s ability to incur indebtedness;
+Added: The indenture governing the 2024 Notes (the “2024 Notes Indenture”) and the 2026 Notes Indenture, among other things, limit the Company’s ability to incur indebtedness;
to pay dividends or make other distributions;
4 unchanged sentences
and to enter into certain transactions with its affiliates.
−Removed: There are certain exceptions to the limitations on the Company’s ability to incur indebtedness under the indentures governing the 2024 Notes and the 2026 Notes, including IRU agreements incurred in the normal course of business and any additional indebtedness if (i) under the indenture governing the 2024 Notes (the “2024 Notes Indenture”), the Company’s consolidated leverage ratio, as defined in 2024 Notes Indenture, is less than 6.0 to 1.0 and (ii) under the 2026 Notes Indenture, either the Company’s consolidated leverage ratio, as defined in 2026 Notes Indenture, is less than 6.0 to 1.0 or the Company’s fixed charge coverage ratio, as defined in the 2026 Notes Indenture, is greater than 2.0 to 1.0 .
−Removed: 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 less than 4.0 to 1.0 .
+Added: There are certain exceptions to the limitations on the Company’s ability to incur indebtedness under the 2024 Notes Indenture and the 2026 Notes Indenture, including IRU agreements incurred in the normal course of business and any additional indebtedness if (i) under the 2024 Notes Indenture, the Company’s consolidated leverage ratio, as defined in 2024 Notes Indenture, is less than 6.0 to 1.0 and (ii) under the 2026 Notes Indenture, either the Company’s consolidated leverage ratio, as defined in 2026 Notes Indenture, is less than 6.0 to 1.0 or the Company’s fixed charge coverage ratio, as defined in the 2026 Notes Indenture, is greater than 2.0 to 1.0 .
+Added: 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 each of the 2024 Notes Indenture and the 2026 Notes Indenture, is less than 4.0 to 1.0 .
The 2024 Notes Indenture permits restricted payments, such as dividends and stock purchases, using accumulated consolidated cash flow, as defined in the 2024 Notes indenture, when the Company’s consolidated leverage ratio, as defined by the 2024 Notes Indenture, is less than 4.25 to 1.00 .
Under the 2026 Notes Indenture, such accumulated consolidated cash flow, as defined therein, can be used to make such restricted payments if the Company is able to incur $ 1 of debt, as defined (i.e., either its consolidated leverage ratio is less than 6.0 to 1.0 or its fixed charge coverage ratio is greater than 2.0 to 1.0 ).
−Removed: The Company’s consolidated leverage ratio was above 4.25 as of June 30, 2021 and the Company’s fixed charge coverage ratio was above 2.0 as of June 30, 2021.
−Removed: As of June 30, 2021, a total of $ 263.9 million was unrestricted and permitted for restricted payments including dividends and stock purchases.
+Added: The Company’s consolidated leverage ratio was above 4.25 as of September 30, 2021, and the Company’s fixed charge coverage ratio was above 2.0 as of September 30, 2021.
+Added: As of September 30, 2021, a total of $ 226.3 million was unrestricted and permitted for restricted payments including dividends and stock purchases.
Commitments and contingencies :
3 unchanged sentences
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.
−Removed: The Company has taken certain positions related to its obligations for leased circuits for which it is reasonably possible could result in a loss of up to $ 3.5 million in excess of the amount accrued at June 30, 2021.
+Added: The Company has taken certain positions related to its obligations for leased circuits for which it is reasonably possible could result in a loss of up to $ 3.5 million in excess of the amount accrued at September 30, 2021.
The Company is engaged in an arbitration proceeding in Spain in which a former provider of optical fiber to the Company is seeking approximately $ 9 million for the Company’s early termination of the optical fiber leases, which amount the Company accrued in 2015.
1 unchanged sentence
The arbitration is being conducted by the Civil and Commercial Arbitration Court (CIMA) in Madrid, Spain.
+Added: On October 25, 2021, CIMA issued its decision, awarding the former provider approximately $ 0.7 million and rejecting the Company’s counterclaims.
+Added: Both parties have until (i) November 4, 2021 to request clarifications from CIMA regarding clerical or mathematical errors, unaddressed claims or other minor issues and (ii) two months from the later of the date of the award or a subsequent clarifying order from CIMA to file a court action before the High Court of Justice of Madrid to annul the award.
+Added: The Company’s policy is to not record the impact of legal proceedings until all appeals have been exhausted or legal counsel has advised that any further appeal will likely not change the outcome of the matter.
In the ordinary course of business the Company is involved in other legal activities and claims.
4 unchanged sentences
Income taxes:
−Removed: The components of (loss) income before income taxes consist of the following (in thousands):
+Added: The components of income (loss) before income taxes consist of the following (in thousands):
Three Months Ended
Three Months Ended
−Removed: Six Months Ended
−Removed: Six Months Ended
−Removed: June 30, 2021
−Removed: June 30, 2020
−Removed: June 30, 2021
−Removed: June 30, 2020
+Added: Nine Months Ended
+Added: Nine Months Ended
+Added: September 30, 2021
+Added: September 30, 2020
+Added: September 30, 2021
+Added: September 30, 2020
Common stock buyback program:
The Company’s Board of Directors has approved purchases of the Company’s common stock under a buyback program (the “Buyback Program”) through December 31, 2022.
−Removed: At June 30, 2021, there was approximately $ 30.4 million remaining for purchases under the Buyback Program.
−Removed: There were no purchases of common stock during the three or six months ended June 30, 2021 and three or six months ended June 30, 2020.
+Added: At September 30, 2021, there was approximately $ 30.4 million remaining for purchases under the Buyback Program.
+Added: In the three and nine months ended September 30, 2020 the Company purchased 4,567 shares of its common stock for $ 0.3 million.
+Added: There were no purchases of common stock during the three and nine months ended September 30, 2021.
Dividends on common stock:
−Removed: On August 4, 2021, the Company’s Board of Directors approved the payment of a quarterly dividend of $ 0.805 per common share.
−Removed: This estimated $ 37.2 million dividend payment is expected to be made on September 3, 2021.
+Added: On November 2, 2021, the Company’s Board of Directors approved the payment of a quarterly dividend of $ 0.83 per common share.
+Added: This estimated $ 38.4 million dividend payment is expected to be made on December 3, 2021.
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.
−Removed: The indentures governing the Company’s notes limit the Company’s ability to return cash to its stockholders.
+Added: The 2024 Notes Indenture and the 2026 Notes Indenture limit the Company’s ability to return cash to its stockholders.
Related party transactions:
2 unchanged sentences
The fixed annual rent for the headquarters building is $ 1.0 million per year plus an allocation of taxes and utilities.
−Removed: The lease began in May 2015 and the lease term is for five years which is cancellable by the Company upon 60 days ' notice.
+Added: 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.
+Added: The lease is cancellable by the Company upon 60 days' notice.
The Company’s audit committee reviews and approves all transactions with related parties.
−Removed: The Company paid $ 0.5 million and $ 0.5 million in the three months ended June 30, 2021 and 2020, respectively, and $ 0.8 million and $ 0.8 million in the six months ended June 30, 2021 and 2020, respectively, for rent and related costs (including taxes and utilities) to Sodium LLC for this lease.
+Added: The Company paid $ 0.5 million and $ 0.5 million in the three months ended September 30, 2021 and 2020, respectively, and $ 1.3 million and $ 1.3 million in the nine months ended September 30, 2021 and 2020, respectively, for rent and related costs (including taxes and utilities) to Sodium LLC for this lease.
Segment information:
1 unchanged sentence
The Company’s service revenue by geographic region and product class and long lived assets by geographic region are as follows (in thousands):
−Removed: Three months Ended June 30, 2021
+Added: Three Months Ended September 30, 2021
North America
−Removed: Latin America
−Removed: Three months Ended June 30, 2020
+Added: South America
+Added: Three Months Ended September 30, 2020
North America
−Removed: Latin America
−Removed: Six months Ended June 30, 2021
+Added: South America
+Added: Nine Months Ended September 30, 2021
North America
−Removed: Latin America
−Removed: Six months Ended June 30, 2020
+Added: South America
+Added: Nine Months Ended September 30, 2020
North America
−Removed: Latin America
+Added: South America
+Added: September 30,
Long lived assets, net
34 unchanged sentences
Our on-net service consists of high-speed Internet access and private network services offered at speeds ranging from 100 megabits per second ("Mbps") to 100 gigabits per second ("Gbps").
−Removed: Our on-net revenues represented 75.1% of our revenues for the three months ended June 30, 2021, 73.6% of our revenues for the three months ended June 30, 2020, 75.0% of our revenues for the six months ended June 30, 2021 and 73.5% of our revenues for the six months ended June 30, 2020.
+Added: Our on-net revenues represented 75.1% of our revenues for the three months ended September 30, 2021, 73.9% of our revenues for the three months ended September 30, 2020, 75.0% of our revenues for the nine months ended September 30, 2021 and 73.6% of our revenues for the nine months ended September 30, 2020.
We provide our on-net Internet access and private network services to our corporate and net-centric customers.
7 unchanged sentences
We provide 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 our network.
−Removed: Our off-net revenues represented 24.8% of our revenues for the three months ended June 30, 2021, 26.3% of our revenues for the three months ended June 30, 2020, 24.9% of our revenues for the six months ended June 30, 2021 and 26.4% of our revenues for the six months ended June 30, 2020.
+Added: Our off-net revenues represented 24.8% of our revenues for the three months ended September 30, 2021, 26.1% of our revenues for the three months ended September 30, 2020, 24.9% of our revenues for the nine months ended September 30, 2021 and 26.3% of our revenues for the nine months ended September 30, 2020.
We also provide certain non-core services that resulted from acquisitions.
7 unchanged sentences
We believe that the wireline telecom industry is undergoing, and will continue to face, significant price deflation for its applications and services.
−Removed: This price deflation is a result of a variety of factors including increased competition, enhanced substitutability of certain products and services and the continued impact of Moore’s Law, which has driven down the cost of technology, particularly for customer premise, fiber optics and networking equipment.
+Added: This price deflation is a result of a variety of factors including increased competition, enhanced substitutability of certain products and services and the continued impact of Moore’s Law, which has driven down the cost of technology, particularly for fiber optic Wavelength Division Multiplexing (“WDM”) equipment and optically interfaced routers.
Faced with the backdrop of continued price deflation in our industry, we have made a series of discreet choices around our network design, operating strategy and product offering that are consistent with our objective of becoming the low cost operator in our industry.
8 unchanged sentences
We believe the vast majority of our competition currently operates their networks with multiple protocols and we believe that attempts to upgrade their networks to one protocol would be operationally challenging and costly.
−Removed: ● Broad Access to Fiber on a Cost Effective, Long-Term Basis .
+Added: ● Wide Spread Access to Fiber on a Cost Effective, Long-Term Basis .
We have acquired a large portfolio of dark fiber leases from around the world sourced from the excess inventory of existing networks.
5 unchanged sentences
Since our founding, we have strategically focused on delivering a very narrow product set to our customers.
−Removed: The vast majority of our revenue is driven or related to our high-capacity, bi-directional, symmetric internet access services which can be accessed on-net in multi-tenant office buildings and carrier neutral data centers or off-net through other carriers’ “last mile” connections to customer facilities.
+Added: The vast majority of our revenue is driven or related to our high-capacity, bi-directional, symmetric internet access services which can be accessed on-net in large multi-tenant office buildings and carrier neutral data centers or off-net through other carriers’ “last mile” connections to customer facilities.
There are significant cost advantages as a result of this narrow product set.
3 unchanged sentences
In order to further scale our operating leverage, we have systematically reused older equipment in less dense portions of our network.
−Removed: Due to interoperability between the generations of products, we are able to transfer older equipment from our core, high-traffic areas to newer, less congested routes.
+Added: interoperability between the generations of products, we are able to transfer older equipment from our core, high-traffic areas to newer, less congested routes.
The result of this dynamic grooming process is that we are able to utilize our equipment for materially longer time frames than the expected life of this equipment thereby reducing our capital investment in our network.
5 unchanged sentences
In carrier neutral data centers (“CNDCs”) we are collocated with our customers.
−Removed: As a result, only a cross-connection within the data center is required to provide our services.
+Added: As a result, only a cross-connection within the data center is required to provide our services to our customers.
The structure of our on-net service provides us more control over our service, quality and pricing.
It also allows us to provision services more quickly and efficiently than provisioning services on a third-party carrier network.
−Removed: The vast majority of our on-net services can be installed in less than two weeks versus a materially longer time for incombent competitors.
+Added: The vast majority of our on-net services can be installed in less than two weeks versus a materially longer time for incumbent competitors.
High-Quality, Reliable Service.
14 unchanged sentences
We currently serve 7,590 access networks as well as numerous large and small content providers and 45,559 corporate customer connections.
−Removed: As a result of these growing bases of customers who distribute (content providers) and receive (access networks) content on our network, we believe that the majority of all the traffic on our network originates and terminates on our network.
−Removed: This control of traffic increases our reliability and speed of delivery and enhances our margins.
−Removed: The breadth of our network, extensive size of our customer base, and volume of our traffic enables us to be one of a handful of Tier One networks that are interconnected on a settlement free basis.
−Removed: This interconnection status broadens our geographic delivery capability and materially reduces our network costs.
+Added: As a result of these growing bases of customers who distribute (content providers) and receive (access networks) content on our network, the majority of all the traffic on our network remains “on-net’ by both originating and terminating on our network.
+Added: This control of traffic increases our service reliability and speed of traffic delivery and also enhances our margins.
+Added: The breadth of our network, extensive size of our customer base, and the volume of our network traffic enables us to be one of a handful of Tier One networks that are interconnected on a settlement free basis.
+Added: This Tier One interconnection status broadens our geographic delivery capability and materially reduces our network costs.
Proven and Experienced Management Team.
6 unchanged sentences
Grow our Corporate Customer Base.
−Removed: Our on-net corporate customers are typically small- to medium-sized businesses connected to our network through our multi-tenant office buildings or connected to our network through one of our carrier neutral data centers.
+Added: Our on-net corporate customers are typically small- to medium-sized businesses connected to our network through multi-tenant office buildings or connected to our network through one of our carrier neutral data centers.
We generally sell two types of services to our corporate customers:
dedicated internet access and private network services.
−Removed: We typically sell dedicated internet access at the same price per connection as our competitors, but our clients benefit from our significantly faster speeds and rapid installation times.
+Added: We typically sell dedicated internet access at the same price per connection as our competitors, but our clients benefit from our
+Added: significantly faster speeds and rapid installation times.
These customers are increasingly integrating off-site data centers and cloud services into their IT infrastructure in order to take advantage of the safety, security and redundancy that is offered by locating company processing power, storage and software at a data center.
31 unchanged sentences
Our fiber network connects directly to our on-net customers’ premises and we pay no local access (“last mile”) charges to other carriers to provide our on-net services.
−Removed: Grow and Improve our Sales Efforts.
−Removed: A critical factor in our success has been our growing investment and focus on our sales and marketing efforts.
−Removed: Over the past five years, we have increased the size of our quota bearing salesforce by 30% from 397 to 565 employees.
−Removed: We seek to pair this growth in the size of our salesforce with a consistent level of productivity as measured by the number of connections sold per salesperson per month, taking into account adjustments to the changing mix of products sold and installed.
−Removed: In order to gain market share in our targeted businesses, we expect to continue to increase our sales efforts, including increasing the number of sales representatives and introducing strategies and tools to optimize sales productivity.
+Added: Improve our Sales Efforts and Productivity.
+Added: A critical factor in our success has been our investment and focus on our sales and marketing efforts.
+Added: We seek to maintain a consistent level of sales productivity as measured by the number of connections sold per
+Added: salesperson per month, taking into account adjustments to the changing mix of products sold and installed.
+Added: In order to gain market share in our targeted businesses, we expect to continue our sales efforts including introducing strategies and tools to optimize and improve our sales productivity.
Expand our Off-Net Corporate Business.
2 unchanged sentences
We believe these agreements broaden our addressable market for corporate dedicated internet access and enable us to better leverage the skills and capacity of our direct salesforce.
−Removed: The carrier agreements also provide for discounts related to volume purchases thereby enabling us to reduce our cost of service if we are able to increase our pool of off-net customers.
+Added: We also believe that we have one of the largest direct salesforces that sells high-capacity internet access to small and medium-size businesses.
+Added: We continue to negotiate reduced pricing under our numerous carrier agreements enabling us to reduce our cost of off-net services and to be more competitive in this market.
Results of Operations
−Removed: Three Months Ended June 30, 2021 Compared to the Three Months Ended June 30, 2020
+Added: Three Months Ended September 30, 2021 Compared to the Three Months Ended September 30, 2020
The following summary table presents a comparison of our results of operations with respect to certain key financial measures.
1 unchanged sentence
Three Months Ended
+Added: September 30,
(in thousands)
5 unchanged sentences
Depreciation and amortization expenses
−Removed: Realized foreign exchange gain on 2024 Notes
−Removed: Unrealized foreign exchange loss on 2024 Euro Notes
−Removed: Loss on debt extinguishment and redemption – 2021 Notes
−Removed: Loss on debt extinguishment and redemption – 2022 Notes
+Added: Unrealized foreign exchange gain (loss) on 2024 Euro Notes
Interest expense
−Removed: Income tax provision
−Removed: (1) Includes equity-based compensation expenses of $136 and $305 in the three months ended June 30, 2021 and 2020, respectively.
−Removed: (2) Includes equity-based compensation expenses of $6,738 and $5,778 in the three months ended June 30, 2021 and 2020, respectively.
+Added: Income tax (provision) benefit
+Added: (1) Includes equity-based compensation expenses of $163 and $346 in the three months ended September 30, 2021 and 2020, respectively.
+Added: (2) Includes equity-based compensation expenses of $6,425 and $6,176 in the three months ended September 30, 2021 and 2020, respectively.
NM – not meaningful
Three Months Ended
+Added: September 30,
Other Operating Data
7 unchanged sentences
We also seek to grow our service revenue by investing in our sales and marketing team.
−Removed: Over the last five years we have grown our quota bearing salesforce by 30% to 565 full time equivalent salespeople.
−Removed: We typically sell corporate connections at similar pricing to our competitors, but our clients benefit from our significantly faster speeds, enhanced service level agreements and rapid installation times.
+Added: We typically sell corporate connections at similar pricing to our competitors,
+Added: but our clients benefit from our significantly faster speeds, enhanced service level agreements and rapid installation times.
In the net-centric market, we offer comparable services in terms of capacity but typically at significantly lower prices.
−Removed: Our service revenue increased by 4.9% from the three months ended June 30, 2020 to the three months ended June 30, 2021.
+Added: Our service revenue increased by 4.0% from the three months ended September 30, 2020 to the three months ended September 30, 2021.
Exchange rates positively impacted our increase in service revenue by $0.6 million.
−Removed: All foreign currency comparisons herein reflect results for the three months ended June 30, 2021 translated at the average foreign currency exchange rates for the three months ended June 30, 2020.
−Removed: We increased our total service revenue by increasing the number of sales representatives selling our services, by expanding our network, by adding additional buildings to our network, by increasing our penetration into the buildings connected to our network and by gaining market share by offering our services at lower prices than our competitors.
+Added: All foreign currency comparisons herein reflect results for the three months ended September 30, 2021 translated at the average foreign currency exchange rates for the three months ended September 30, 2020.
+Added: We increased our total service revenue by expanding our network, by adding additional buildings to our network, by increasing our penetration into the buildings connected to our network and by gaining market share by offering our services at lower prices than our competitors.
Revenue recognition standards include guidance relating to any tax assessed by a governmental authority that is directly imposed on a revenue-producing transaction between a seller and a customer and may include, but is not limited to, gross receipts taxes, Universal Service Fund fees and certain state regulatory fees.
We record these taxes billed to our customers on a gross basis (as service revenue and network operations expense) in our consolidated statements of operations.
−Removed: The impact of these taxes including the Universal Service Fund resulted in an increase to our revenues from the three months ended June 30, 2020 to the three months ended June 30, 2021 of $1.5 million.
−Removed: Our corporate customers purchase their services on a price per connection basis.
+Added: The impact of these taxes including the Universal Service Fund resulted in an increase to our revenues from the three months ended September 30, 2020 to the three months ended September 30, 2021 of $0.9 million.
+Added: Our corporate customers generally purchase their services on a price per connection basis.
Our net-centric customers generally purchase their services on a price per megabit basis.
−Removed: Revenues from our corporate and net-centric customers represented 61.2% and 38.8% of total service revenue, respectively, for the three months ended June 30, 2021 and represented 68.8% and 31.2% of total service revenue, respectively, for the three months ended June 30, 2020.
−Removed: Revenues from corporate customers decreased by 6.7% to $90.5 million for the three months ended June 30, 2021 from $97.0 million for the three months ended June 30, 2020.
−Removed: Revenues from our net-centric customers increased by 30.5% to $57.4 million for the three months ended June 30, 2021 from $44.0 million for the three months ended June 30, 2020.
+Added: Revenues from our corporate and net-centric customers represented 60.2% and 39.8% of total service revenue, respectively, for the three months ended September 30, 2021 and represented 67.3% and 32.7% of total service revenue, respectively, for the three months ended September 30, 2020.
+Added: Revenues from corporate customers decreased by 6.9% to $89.1 million for the three months ended September 30, 2021 from the three months ended September 30, 2020.
+Added: Revenues from our net-centric customers increased by 26.3% to $58.8 million for the three months ended September 30, 2021 from the three months ended September 30, 2020.
Our corporate customers take advantage of our superior speeds, service levels and installation times versus our competitors.
−Removed: The growing trend of customers installing second lines for redundancy and in order to supplement their VPN capabilities has also led to our growing corporate revenues.
+Added: The growing trend of customers installing second lines for redundancy in order to construct Virtual Private Networks (“VPN’s”) has also led to our ability to increase our corporate revenues.
However, beginning in March 2020, we saw corporate customers take a more cautious approach to new configurations and upgrades as well as a reduction in demand for connecting smaller satellite offices as a result of the challenges and uncertainties of the COVID-19 pandemic.
2 unchanged sentences
While we believe that demand for office space in the buildings in which we operate will remain among the strongest in our markets, we may experience increased corporate customer turnover, fewer upgrades of existing corporate customer configurations and fewer new tenant opportunities which would negatively impact our corporate revenue growth.
−Removed: Our revenue from our net-centric customers increased primarily due to an increase in our number of net-centric customers and growth in network traffic from these customers partly offset by a decline in our average price per megabit.
+Added: Our revenue from our net-centric customers increased primarily due to an increase in our number of net-centric customers, growth in network traffic and an increased number of locations from these customers partly offset by a decline in our average price per megabit.
A significant portion of our net-centric customers purchase our services on a price per megabit basis.
−Removed: The net-centric market exhibits significant pricing pressure due to the continued introduction of new technology which lowers the marginal cost of transmitting bytes, and the commodity nature of the service where price is typically the only differentiating factor for these customers.
−Removed: Our average price per megabit declined by 24.8% from the three months ended June 30, 2020 to the three months ended June 30, 2021.
+Added: The net-centric market exhibits significant pricing pressure due to the continued introduction of new technology which lowers the marginal cost of transmission and routing and the commodity nature of the service where price is typically the only differentiating factor for these customers.
+Added: Our average price per megabit declined by 23.3% from the three months ended September 30, 2020 to the three months ended September 30, 2021.
We expect that our average price per megabit will continue to decline at similar rates.
The impact of foreign exchange rates has a more significant impact on our net-centric revenues.
−Removed: Our on-net revenues increased by 7.0% from the three months ended June 30, 2020 to the three months ended June 30, 2021.
−Removed: Our on-net revenues increased as we increased the number of our on-net customer connections by 4.2% at June 30, 2021 from June 30, 2020.
−Removed: On-net revenues increased at a greater rate than on-net customer connections primarily due to an increase in our on-net ARPU from the three months ended June 30, 2020 to the three months ended June 30, 2021 and the positive impact of foreign exchange.
+Added: Our on-net revenues increased by 5.7% from the three months ended September 30, 2020 to the three months ended September 30, 2021.
+Added: Our on-net revenues increased as we increased the number of our on-net customer connections by 5.0% at September 30, 2021 from September 30, 2020.
+Added: On-net revenues increased at a greater rate than on-net customer connections primarily due to an increase in our on-net ARPU from the three months ended September 30, 2020 to the three months ended September 30, 2021 and the positive impact of foreign exchange.
ARPU is determined by dividing revenue for the period by the average customer connections for that period.
−Removed: Our off-net revenues decreased by 0.9% from the three months ended June 30, 2020 to the three months ended June 30, 2021.
−Removed: Our off-net revenues decreased as the 5.1% decrease in our off-net ARPU more than offset the 4.6% increase in the number of our off-net customer connections from June 30, 2020 to June 30, 2021.
+Added: Our off-net revenues decreased by 1.2% from the three months ended September 30, 2020 to the three months ended September 30, 2021.
+Added: Our off-net revenues decreased as the 5.9% decrease in our off-net ARPU more than offset the 5.5% increase in the number of our off-net customer connections from September 30, 2020 to September 30, 2021.
Network Operations Expenses.
Network operations expenses include the costs of personnel associated with service delivery, network management and customer support, network facilities costs, fiber and equipment maintenance fees, leased circuit costs, access and facilities fees paid to building owners and excise taxes billed to our customers and recorded on a gross basis.
−Removed: Non-cash equity-based compensation expense is included in network operations expenses consistent with the classification of the employee’s salary and other compensation and was $0.1 million for the three months ended June 30, 2021 and $0.3 million for the three months ended June 30, 2020.
−Removed: Our network operations expenses, including non-cash equity-based compensation expense, increased by 4.3% for the three months ended June 30, 2021 from the three months ended June 30, 2020.
−Removed: The increase in network operations expense is primarily attributable to an increase in costs related to our network and facilities expansion activities, partly offset by price reductions obtained in certain of our leased circuit costs and fewer operating leases for dark fiber.
+Added: Our network operations expenses, including non-cash equity-based compensation expense, increased by 3.9% for the three months ended September 30, 2021 from the three months ended September 30, 2020.
+Added: The increase in network operations expense is primarily attributable to an increase in costs related to our network and facilities expansion activities and an increase in taxes billed to our customers recorded on a gross basis.
Selling, General, and Administrative (“SG&A”) Expenses.
−Removed: Our SG&A expenses, including non-cash equity-based compensation expense, increased by 3.9% for the three months ended June 30, 2021 from the three months ended June 30, 2020.
−Removed: Non-cash equity-based compensation expense is included in SG&A expenses consistent with the classification of the employee’s salary and other compensation and was $6.7 million for the three months ended June 30, 2021 and $5.8 million for the three months ended June 30, 2020.
−Removed: SG&A expenses increased primarily from an increase in salaries and related costs required to support our expansion and increases in our sales efforts, partly offset by a reduction in sales meeting and travel costs related to the COVID-19 pandemic and a reduction in bad debt expense.
−Removed: Our sales force headcount decreased from 716 at June 30, 2020 to 710 at June 30, 2021 and our total headcount increased from 1,083 at June 30, 2020 to 1,087 at June 30, 2021.
+Added: Our SG&A expenses, including non-cash equity-based compensation expense, increased by 1.0% for the three months ended September 30, 2021 from the three months ended September 30, 2020.
+Added: Non-cash equity-based compensation expense is included in SG&A expenses consistent with the classification of the employee’s salary and other compensation and was $6.4 million for the three months ended September 30, 2021 and $6.2 million for the three months ended September 30, 2020.
+Added: SG&A expenses increased primarily from an increase in salaries and related costs required to support our expansion related activities.
+Added: Our sales force headcount decreased from 740 at September 30, 2020 to 662 at September 30, 2021, and our total headcount decreased from 1,110 at September 30, 2020 to 1,031 at September 30, 2021.
+Added: We experienced an increase in both voluntary and involuntary employee departures, particularly within our sales department, in the three months ended September 30, 2021.
+Added: We believe this rise in departures is attributable both to an increased focus on monitoring sales productivity and to the unwillingness of some employees to be vaccinated and/or to return to a full time, in office environment.
Depreciation and Amortization Expenses.
−Removed: Our depreciation and amortization expense increased by 11.1% for the three months ended June 30, 2021 from the three months ended June 30, 2020.
+Added: Our depreciation and amortization expense increased by 4.6% for the three months ended September 30, 2021 from the three months ended September 30, 2020.
The increase is primarily due to the depreciation expense associated with the increase in deployed fixed assets.
Interest Expense and Losses on Debt Extinguishment and Redemption.
−Removed: Our interest expense resulted from interest incurred on our senior secured notes due 2022 (“2022 Notes”) until these notes were fully redeemed in May 2021, interest incurred on our $189.2 million of senior unsecured notes due 2021 (“2021 Notes") until these notes were redeemed in June 2020, interest incurred on our €350.0 million senior unsecured notes due 2024 (“2024 Notes”), interest incurred on our $500.0 million senior secured notes due in 2026 (“2026 Notes”), interest incurred on our installment payment agreement and interest incurred on our finance lease obligations.
−Removed: We issued €215.0 million of our 2024 Notes in June 2020 and €135.0 million of our 2024 Notes were issued in June 2019.
−Removed: In June 2020, we redeemed and extinguished our 2021 Notes at par value.
−Removed: In March 2021, we redeemed and extinguished $115.9 million of our 2022 Notes at 103.24% of par value resulting in a loss on debt extinguishment and redemption of $3.9 million and reduced the par value from $445.0 million to $329.1 million.
−Removed: In May 2021, we redeemed and extinguished the remaining $329.1 million of our 2022 Notes at par value and by paying $11.5 million of interest through December 1, 2021 resulting in a loss on debt extinguishment and redemption of $10.8 million.
+Added: Our interest expense resulted from interest incurred on our senior secured notes due 2022 (“2022 Notes”) until these notes were fully redeemed in May 2021, interest incurred on our €350.0 million senior unsecured notes due 2024 (“2024 Notes”), interest incurred on our $500.0 million senior secured notes due in 2026 (“2026 Notes”), interest incurred on our installment payment agreement and interest incurred on our finance lease obligations.
+Added: We issued €215.0 million of our 2024 Notes in June 2020 and €135.0 million of our 2024 Notes were issued in June 2019.In March 2021, we redeemed and extinguished $115.9 million of our 2022 Notes at 103.24% of par value.
+Added: In May 2021, we redeemed and extinguished the remaining $329.1 million of our 2022 Notes at par value and deposited funds with the trustee to pay $11.5 million of interest through December 1, 2021.
In May 2021, we issued $500.0 million of our 3.50% 2026 Notes.
−Removed: Our interest expense decreased by 8.1% for the three months ended June 30, 2021 from the three months ended June 30, 2020 primarily due to the lower interest rate on our 2026 Notes as compared to our 2022 Notes that we extinguished.
−Removed: Realized gain and unrealized gain (loss) on foreign exchange – 2024 Notes .
−Removed: In June 2020 our €215.0 million 2024 Notes were issued at a Euro to USD rate of $1.112.
−Removed: We received proceeds in USD on the 2024 Notes on June 9, 2020 at a Euro to USD rate of $1.133 resulting in a realized gain on foreign exchange of $2.5 million.
+Added: In August 2021 we entered into an interest rate swap agreement (the “Swap Agreement”) that has the economic effect of modifying the fixed interest rate obligation associated with our 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.
+Added: The Swap Agreement is recorded at its fair value at each reporting period, and we incurs gains and losses due to changes in market interest rates.
+Added: The values that we report for the Swap Agreement as of each reporting date are recognized as interest expense with the corresponding amounts included in assets or liabilities in the our consolidated balance sheets.
+Added: As of September 30, 2021 the fair value of the Swap Agreement was a long-term liability $3.1 million and we recorded an unrealized loss as interest expense related to the Swap Agreement of $3.1 million in the three months ended September 30, 2021.
+Added: Our interest expense increased by 10.1% for the three months ended September 30, 2020 to the three months ended September 30, 2021 primarily due to the lower interest rate on our 2026 Notes as compared to our 2022 Notes that we extinguished being offset by the additional $3.1 million of unrealized loss recorded as interest expense related to our Swap Agreement.
+Added: Unrealized gain (loss) on foreign exchange – 2024 Notes .
Our 2024 Notes were issued in Euros and are reported in our reporting currency – US Dollars.
−Removed: As of June 30, 2021 our 2024 Notes were valued at $415.8 million.
−Removed: Our unrealized loss on foreign exchange on our 2024 Notes from converting our 2024 Notes into USD was $5.3 million for the three months ended June 30, 2021 and $3.4 million for the three months ended June 30, 2020.
+Added: As of September 30, 2021, our 2024 Notes were valued at $405.6 million.
+Added: Our unrealized gain (loss) on foreign exchange on our 2024 Notes from converting our 2024 Notes into USD was $10.2 million for the three months ended September 30, 2021 and $(17.3) million for the three months ended September 30, 2020.
We do not enter into hedges for our foreign currency obligations.
−Removed: Income Tax Provision.
−Removed: Our income tax provision was $0.4 million for the three months ended June 30, 2021 and $2.7 million for the three months ended June 30, 2020.
−Removed: The decrease in our income tax provision is primarily related to the decrease in our income before income taxes.
+Added: Income Tax (Provision) Benefit.
+Added: Our income tax provision was $8.7 million for the three months ended September 30, 2021, and our income tax benefit was $1.6 million for the three months ended September 30, 2020.
+Added: The increase in our income tax provision is primarily related to the increase in our income before income taxes.
Buildings On-net.
−Removed: As of June 30, 2021 and 2020, we had a total of 2,975 and 2,854 on-net buildings connected to our network, respectively.
+Added: As of September 30, 2021 and 2020, we had a total of 3,008 and 2,884 on-net buildings connected to our network, respectively.
The increase in our on-net buildings was a result of our disciplined network expansion program.
We anticipate adding a similar number of buildings to our network for the next several years.
−Removed: Six Months Ended June 30, 2021 Compared to the Six Months Ended June 30, 2020
+Added: Nine Months Ended September 30, 2021 Compared to the Nine Months Ended September 30, 2020
The following summary table presents a comparison of our results of operations with respect to certain key financial measures.
The comparisons illustrated in the table are discussed in greater detail below.
−Removed: Six Months Ended
+Added: Nine Months Ended
+Added: September 30,
(in thousands)
11 unchanged sentences
Income tax provision
−Removed: (1) Includes equity-based compensation expenses of $2,212 and $557 in the six months ended June 30, 2021 and 2020, respectively.
−Removed: (2) Includes equity-based compensation expenses of $11,969 and $10,600 in the six months ended June 30, 2021 and 2020, respectively.
+Added: (1) Includes equity-based compensation expenses of $2,375 and $903 in the nine months ended September 30, 2021 and 2020, respectively.
+Added: (2) Includes equity-based compensation expenses of $18,394 and $16,776 in the nine months ended September 30, 2021 and 2020, respectively.
NM – not meaningful
−Removed: Six Months Ended
+Added: Nine Months Ended
+Added: September 30,
Other Operating Data
7 unchanged sentences
We also seek to grow our service revenue by investing in our sales and marketing team.
−Removed: Over the last five years we have grown our quota bearing salesforce by 30% to 565 full time equivalent salespeople.
We typically sell corporate connections at similar pricing to our competitors, but our clients benefit from our significantly faster speeds, enhanced service level agreements and rapid installation times.
In the net-centric market, we offer comparable services in terms of capacity but typically at significantly lower prices.
−Removed: Our service revenue increased by 4.5% from the six months ended June 30, 2020 to the six months ended June 30, 2021.
+Added: Our service revenue increased by 4.3% from the nine months ended September 30, 2020 to the nine months ended September 30, 2021.
Exchange rates positively impacted our increase in service revenue by $6.2 million.
−Removed: All foreign currency comparisons herein reflect results for the six months ended June 30, 2021 translated at the average foreign currency exchange rates for the six months ended June 30, 2020.
−Removed: We increased our total service revenue by increasing the number of sales representatives selling our services, by expanding our network, by adding additional buildings to our network, by increasing our penetration into the buildings connected to our network and by gaining market share by offering our services at lower prices than our competitors.
+Added: All foreign currency comparisons herein reflect results for the nine months ended September 30, 2021 translated at the average foreign currency exchange rates for the nine months ended September 30, 2020.
+Added: We increased our total service revenue by expanding our network, by adding additional buildings to our network, by increasing our penetration into the buildings connected to our network and by gaining market share by offering our services at lower prices than our competitors.
Revenue recognition standards include guidance relating to any tax assessed by a governmental authority that is directly imposed on a revenue-producing transaction between a seller and a customer and may include, but is not limited to, gross receipts taxes, Universal Service Fund fees and certain state regulatory fees.
We record these taxes billed to our customers on a gross basis (as service revenue and network operations expense) in our consolidated statements of operations.
−Removed: The impact of these taxes including the Universal Service Fund resulted in an increase to our revenues from the six months ended June 30, 2020 to the six months ended June 30, 2021 of $2.3 million.
−Removed: Our corporate customers purchase their services on a price per connection basis.
+Added: The impact of these taxes including the Universal Service Fund resulted in an increase to our revenues from the nine months ended September 30, 2020 to the nine months ended September 30, 2021 of $3.2 million.
+Added: Our corporate customers generally purchase their services on a price per connection basis.
Our net-centric customers generally purchase their services on a price per megabit basis.
−Removed: Revenues from our corporate and net-centric customers represented 61.9% and 38.1% of total service revenue, respectively, for the six months ended June 30, 2021 and represented 68.8% and 31.2% of total service revenue, respectively, for the six months ended June 30, 2020.
−Removed: Revenues from corporate customers decreased by 5.9% to $182.5 million for the six months ended June 30, 2021 from $194.0 million for the six months ended June 30, 2020.
−Removed: Revenues from our net-centric customers increased by 27.6% to $112.2 million for the six months ended June 30, 2021 from $87.9 million for the six months ended June 30, 2020.
+Added: Revenues from our corporate and net-centric customers represented 61.4% and 38.6% of total service revenue, respectively, for the nine months ended September 30, 2021 and represented 68.3% and 31.7% of total service revenue, respectively, for the nine months ended September 30, 2020.
+Added: Revenues from corporate customers decreased by 6.3% to $271.6 million for the nine months ended September 30, 2021 from the nine months ended September 30, 2020.
+Added: Revenues from our net-centric customers increased by 27.1% to $171.0 million for the nine months ended September 30, 2021 from the nine months ended September 30, 2020.
Our corporate customers take advantage of our superior speeds, service levels and installation times versus our competitors.
−Removed: The growing trend of customers installing second lines for redundancy and in order to supplement their VPN capabilities has also led to our growing corporate revenues.
+Added: The growing trend of customers installing second lines for redundancy in order to construct VPN’s has also led to our ability to increase our corporate revenues.
However, beginning in March 2020, we saw corporate customers take a more cautious approach to new configurations and upgrades as well as a reduction in demand for connecting smaller satellite offices as a result of the challenges and uncertainties of the COVID-19 pandemic.
4 unchanged sentences
Our net-centric customers purchase our services on a price per megabit basis.
−Removed: The net-centric market exhibits significant pricing pressure due to the continued introduction of new technology which lowers the marginal cost of transmitting bits, and the commodity nature of the service where price is typically the only differentiating factor for these customers.
−Removed: Our average price per megabit declined by 26.5% from the six months ended June 30, 2020 to the six months ended June 30, 2021.
+Added: The net-centric market exhibits significant pricing pressure due to the continued introduction of new technology which lowers the marginal cost of transmission and routing, and the commodity nature of the service where price is typically the only differentiating factor for these customers.
+Added: Our average price per megabit declined by 25.5% from the nine months ended September 30, 2020 to the nine months ended September 30, 2021.
We expect that our average price per megabit will continue to decline at similar rates.
The impact of foreign exchange rates has a more significant impact on our net-centric revenues.
−Removed: Our on-net revenues increased by 6.6% from the six months ended June 30, 2020 to the six months ended June 30, 2021.
−Removed: Our on-net revenues increased as we increased the number of our on-net customer connections by 4.2% at June 30, 2021 from June 30, 2020.
−Removed: On-net revenues increased at a greater rate than on-net customer connections primarily due to an increase in our on-net ARPU from the six months ended June 30, 2020 to the six months ended June 30, 2021 and the positive impact of foreign exchange.
+Added: Our on-net revenues increased by 6.3% from the nine months ended September 30, 2020 to the nine months ended September 30, 2021.
+Added: Our on-net revenues increased as we increased the number of our on-net customer connections by 5.0% at September 30, 2021 from September 30, 2020.
+Added: On-net revenues increased at a greater rate than on-net customer connections primarily due to an increase in our on-net ARPU from the nine months ended September 30, 2020 to the nine months ended September 30, 2021 and the positive impact of foreign exchange.
ARPU is determined by dividing revenue for the period by the average customer connections for that period.
−Removed: Our off-net revenues decreased by 1.3% from the six months ended June 30, 2020 to the six months ended June 30, 2021.
−Removed: Our off-net revenues decreased primarily from the 3.5% decrease in our off-net ARPU from June 30, 2020 to June 30, 2021.
+Added: Our off-net revenues decreased by 1.2% from the nine months ended September 30, 2020 to the nine months ended September 30, 2021.
+Added: Our off-net revenues decreased primarily from the 5.1% decrease in our off-net ARPU from September 30, 2020 to September 30, 2021 more than offsetting the 5.5% increase in the number of our off-net customer connections from September 30, 2020 to September 30, 2021.
Network Operations Expenses.
Network operations expenses include the costs of personnel associated with service delivery, network management and customer support, network facilities costs, fiber and equipment maintenance fees, leased circuit costs, access and facilities fees paid to building owners and excise taxes billed to our customers and recorded on a gross basis.
−Removed: Non-cash equity-based compensation expense is included in network operations expenses consistent with the classification of the employee’s salary and other compensation and was $2.2 million for the six months ended June 30, 2021 and $0.6 million for the six months ended June 30, 2020.
−Removed: Our network operations expenses, including non-cash equity-based compensation expense, increased by 3.2% for the six months ended June 30, 2021 from the six months ended June 30, 2020.
−Removed: The increase in network operations expense is primarily attributable to an increase in costs related to our network and facilities expansion activities and an increase in equity-based compensation expense from the vesting of restricted employee shares, partly offset by price reductions obtained in certain of our leased circuit costs, fewer operating leases for dark fiber and the impact of a renewal of an IRU fiber lease agreement in the second quarter of 2020.
−Removed: We adopted Leases (“ASU 2016-02”) on January 1, 2019.
+Added: Non-cash equity-based compensation expense is included in network operations expenses consistent with the classification of the employee’s salary and other compensation and was $2.4 million for the nine months ended September 30, 2021 and $0.9 million for the nine months ended September 30, 2020.
+Added: Our network operations expenses, including non-cash equity-based compensation expense, increased by 3.4% for the nine months ended September 30, 2021 from the nine months ended September 30, 2020.
+Added: The increase in network operations expense is primarily attributable to an increase in costs related to our network and facilities expansion activities and an increase in equity-based compensation expense from the vesting of restricted employee shares, partly offset by price reductions obtained in certain of our leased circuit costs and the impact of a renewal of an IRU fiber lease agreement in the second quarter of
When we adopted ASU 2016-02, we elected to apply certain practical expedients under ASU 2016-02 including not separating the lease and non-lease components of our finance and operating leases.
2 unchanged sentences
Selling, General, and Administrative (“SG&A”) Expenses.
−Removed: Our SG&A expenses, including non-cash equity-based compensation expense, increased by 4.2% for the six months ended June 30, 2021 from the six months ended June 30, 2020.
−Removed: Non-cash equity-based compensation expense is included in SG&A expenses consistent with the classification of the employee’s salary and other compensation and was $12.0 million for the six months ended June 30, 2021 and $10.6 million for the six months ended June 30, 2020.
+Added: Our SG&A expenses, including non-cash equity-based compensation expense, increased by 3.1% for the nine months ended September 30, 2021 from the nine months ended September 30, 2020.
+Added: Non-cash equity-based compensation expense is included in SG&A expenses consistent with the classification of the employee’s salary and other compensation and was $18.4 million for the nine months ended September 30, 2021 and $16.8 million for the nine months ended September 30, 2020.
SG&A expenses increased primarily from an increase in salaries and related costs required to support our expansion and increases in our sales efforts, partly offset by a reduction in sales meeting and travel costs related to the COVID-19 pandemic and a reduction in bad debt expense.
−Removed: Our sales force headcount was 716 at June 30, 2020 and 710 at June 30, 2021 and our total headcount increased from 1,083 at June 30, 2020 to 1,087 at June 30, 2021.
+Added: Our sales force headcount was 740 at September 30, 2020 and 662 at September 30, 2021, and our total headcount decreased from 1,110 at September 30, 2020 to 1,031 at September 30, 2021.
+Added: We experienced an increase in both voluntary and involuntary employee departures, particularly within our sales department, in the three months ended September 30,2021.
+Added: We believe this rise in departures is attributable both to an increased focus on monitoring sales productivity and to the unwillingness of some employees to be vaccinated and/or to return to a full time, in office environment.
Depreciation and Amortization Expenses.
−Removed: Our depreciation and amortization expense increased by 11.8% for the six months ended June 30, 2021 from the six months ended June 30, 2020.
+Added: Our depreciation and amortization expense increased by 9.3% for the nine months ended September 30, 2021 from the nine months ended September 30, 2020.
The increase is primarily due to the depreciation expense associated with the increase in deployed fixed assets and the impact of a renewal of an IRU fiber lease agreement in the second quarter of 2020.
2 unchanged sentences
Interest Expense and Losses on Debt Extinguishment and Repurchases.
−Removed: Our interest expense resulted from interest incurred on our senior secured notes due 2022 (“2022 Notes”) until these notes were fully repurchased in May 2021, interest incurred on our $189.2 million of senior unsecured notes due 2021 (“2021 Notes") until these notes were redeemed in June 2020, interest incurred on our €350.0 million senior unsecured notes due 2024 (“2024 Notes”), interest incurred on our $500.0 million senior secured 3.50% notes due 2026 (“2026” Notes”) that we issued in May 2021, interest incurred on our installment payment agreement and interest incurred on our finance lease obligations.
+Added: Our interest expense resulted from interest incurred on our 2022 Notes until these notes were fully redeemed in May 2021, interest incurred on our $189.2 million of 2021 Notes until these notes were redeemed in June 2020, interest incurred on our €350.0 million of 2024 Notes, interest incurred on our $500.0 million of 2026 Notes that we issued in May 2021, interest incurred on our installment payment agreement and interest incurred on our finance lease obligations.
We issued €215.0 million of our 2024 Notes in June 2020 and €135.0 million of our 2024 Notes were issued in June 2019.
1 unchanged sentence
In March 2021, we redeemed and extinguished $115.9 million of our 2022 Notes at 103.24% of par value resulting in a loss on debt extinguishment and redemption of $3.9 million and reduced the par value from $445.0 million to $329.1 million.
−Removed: In May 2021, we redeemed and extinguished the remaining $329.1 million of our 2022 Notes at par value and by paying $11.5 million of interest through December 1, 2021 resulting in a loss on debt extinguishment and redemption of $10.8 million.
−Removed: Our interest expense decreased by 2.1% for the six months ended June 30, 2021 from the six months ended June 30, 2020 primarily due to the lower interest rate on our 2026 Notes as compared to our 2022 Notes that we extinguished.
+Added: In May 2021, we redeemed and extinguished the remaining $329.1 million of our 2022 Notes at par value and deposited funds with the trustee to pay $11.5 million of interest through December 1, 2021 resulting in a loss on debt extinguishment and redemption of $10.8 million.
+Added: In August 2021 we entered into an interest rate swap agreement (the “Swap Agreement”) that has the economic effect of modifying the fixed interest rate obligation associated with our 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.
+Added: The Swap Agreement is recorded at its fair value at each reporting period, and we incurs gains and losses due to changes in market interest rates.
+Added: The values that we report for the Swap Agreement as of each reporting date are recognized as interest expense with the corresponding amounts included in assets or liabilities in our consolidated balance sheets.
+Added: As of September 30, 2021 the fair value of the Swap Agreement was a long-term liability $3.1 million and we recorded an unrealized loss as interest expense related to the Swap Agreement of $3.1 million in the nine months ended September 30, 2021.
+Added: Our interest expense increased by 2.0% for the nine months ended September 30, 2020 to the nine months ended September 30, 2021 primarily due to the lower interest rate on our 2026 Notes as compared to our 2022 Notes that we extinguished being offset by the additional $3.1 million of an unrealized loss recorded as interest expense related to our Swap Agreement.
Realized gain and unrealized gain (loss) on foreign exchange – 2024 Notes .
−Removed: In June 2019, we completed an offering of our €135.0 million principal amount of 2024 Notes.
−Removed: In June 2020 our €215.0 million 2024 Notes were issued at a Euro to USD rate of $1.112.
+Added: In June 2020, our €215.0 million of 2024 Notes were issued at a Euro to USD rate of $1.112.
We received proceeds in USD on the 2024 Notes on June 9, 2020 at a Euro to USD rate of $1.133 resulting in a realized gain on foreign exchange of $2.5 million.
Our 2024 Notes were issued in Euros and are reported in our reporting currency – US Dollars.
−Removed: As of June 30, 2021 our 2024 Notes were valued at $415.8 million.
−Removed: Our unrealized (loss) gain on foreign exchange on our 2024 Notes from converting our 2024 Notes into USD was $13.6 million for the six months ended June 30, 2021 and $(0.5) million for the six months ended June 30, 2020.
+Added: As of September 30, 2021, our 2024 Notes were valued at $405.6 million.
+Added: Our unrealized gain (loss) on foreign exchange on our 2024 Notes from converting our 2024 Notes into USD was $23.8 million for the nine months ended
+Added: September 30, 2021 and $(17.8) million for the nine months ended September 30, 2020.
We do not enter into hedges for our foreign currency obligations.
Income Tax Provision.
−Removed: Our income tax provision was $7.8 million for the six months ended June 30, 2021 and $6.3 million for the six months ended June 30, 2020.
−Removed: The increase in our income tax provision is primarily related to an increase in certain non-deductible expenses.
+Added: Our income tax provision was $16.5 million for the nine months ended September 30, 2021 and $4.7 million for the nine months ended September 30, 2020.
+Added: The increase in our income tax provision is primarily related to an increase in certain non-deductible expenses and the increase in our income before income taxes.
Buildings On-net.
−Removed: As of June 30, 2021 and 2020, we had a total of 2,975 and 2,854 on-net buildings connected to our network, respectively.
+Added: As of September 30, 2021 and 2020, we had a total of 3,008 and 2,884 on-net buildings connected to our network, respectively.
The increase in our on-net buildings was a result of our disciplined network expansion program.
8 unchanged sentences
Our $500.0 million of 2026 Notes mature in May 2026 and include annual interest payments of $17.5 million until maturity.
+Added: In August 2021 we entered into our Swap Agreement that has the economic effect of modifying the fixed interest rate obligation associated with our 2026 Notes to a variable interest rate obligation based on the Secured Overnight Financing Rate (“SOFR”) so that the interest payable on our 2026 Notes effectively became variable based on overnight SOFR.
+Added: By entering into the Swap Agreement, we have assumed the risk associated with variable interest rates.
Our €350 million of 2024 Notes mature in June 2024 and include annual interest payments of €15.3 million until maturity.
−Removed: Our 2024 Notes are denominated in Euros and expose us to potentially unfavorable adverse movements in foreign currency rate changes.
+Added: Our 2024 Notes are denominated in Euros and expose us to potentially unfavorable adverse movements in foreign currency rates.
Our overseas operations provides us access to Euros, however these amounts may be insufficient to fund our obligations under our 2024 Notes.
17 unchanged sentences
The following table sets forth our consolidated cash flows.
−Removed: Six Months Ended June 30,
+Added: Nine Months Ended September 30,
(in thousands)
3 unchanged sentences
Effect of exchange rates changes on cash
−Removed: Net increase in cash and cash equivalents
+Added: Net increase in cash and cash equivalents & restricted cash
Net Cash Provided by Operating Activities.
2 unchanged sentences
Our changes in cash provided by operating activities are primarily due to changes in our operating profit and changes in our interest payments.
−Removed: Cash provided by operating activities for the six months ended June 30, 2021 and 2020 includes interest payments on our note obligations of $32.9 million and $27.5 million, respectively.
+Added: Cash provided by operating activities for the nine months ended September 30, 2021 and 2020 includes interest payments on our note obligations of $32.9 million and $32.5 million, respectively.
Net Cash Used In Investing Activities.
Our primary use of cash for investing activities is for purchases of property and equipment.
−Removed: Purchases of property and equipment were $32.7 million and $26.8 million for the six months ended June 30, 2021 and 2020, respectively.
+Added: Purchases of property and equipment were $54.6 million and $40.1 million for the nine months ended September 30, 2021 and 2020, respectively.
The changes in purchases of property and equipment are primarily due to the timing and scope of our network expansion activities including geographic expansion and adding buildings to our network.
2 unchanged sentences
Our primary sources of cash for financing activities are proceeds from our debt offerings.
−Removed: During the six months ended June 30, 2021 and 2020 we paid $73.1 million and $62.3 million, respectively, for our quarterly dividend payments.
+Added: During the nine months ended September 30, 2021 and 2020, we paid $110.7 million and $95.0 million, respectively, for our quarterly dividend payments.
Our quarterly dividend payments have increased due to increases in our quarterly dividend per share amounts.
−Removed: Principal payments under our finance lease obligations were $11.9 million and $9.9 million for the six months ended June 30, 2021 and 2020, respectively.
+Added: Principal payments under our finance lease obligations were $16.8 million and $19.4 million for the nine months ended September 30, 2021 and 2020, respectively.
The changes in our principal payments under our finance lease obligations are primarily due to the timing and scope of our network expansion activities including geographic expansion and adding buildings to our network.
−Removed: Principal payments under our installment payment agreement were $4.3 million and $5.1 million for the six months ended June 30, 2021 and 2020, respectively.
−Removed: There were no purchases of our common stock in the six months ended June 30, 2021 and 2020.
−Removed: We completed a series of debt redemptions and issuances in the six months ended June 30, 2021 and the six months ended June 30, 2020.
−Removed: In June 2020 we redeemed our $189.2 million of our 2021 Notes at par value.
+Added: Principal payments under our installment payment agreement were $5.8 million and $7.9 million for the nine months ended September 30, 2021 and 2020, respectively.
+Added: In the nine months ended September 30, 2020 we purchased 4,567 shares of our common stock for $0.3 million.
+Added: There were no purchases of our common stock during the nine months ended September 30, 2021.
+Added: We completed a series of debt redemptions and issuances in the nine months ended September 30, 2021 and the nine months ended September 30, 2020.
+Added: In June 2020, we redeemed our $189.2 million of our 2021 Notes at par value and completed an offering of €215.0 million of our 2024 Notes for net proceeds of $240.3 million.
In March 2021, we paid $119.7 million to redeem and extinguish $115.9 million of our 2022 Notes at 103.24% of par value.
−Removed: In May 2021, we redeemed and extinguished the remaining $329.1 million of our 2022 Notes at par value and by paying $11.5 million of interest through December 1, 2021.
+Added: In May 2021, we redeemed and extinguished the remaining $329.1 million of our 2022 Notes at par value and deposited funds with the trustee to pay $11.5 million of interest through December 1, 2021.
The total payments to redeem our 2022 Notes were $459.3 million.
−Removed: In June 2020 we completed an offering of €215.0 million of our 2024 Notes for net proceeds of $240.3 million.
In May 2021, we issued $500.0 million of our 2026 Notes for net proceeds of $496.9 million.
Cash Position and Indebtedness
−Removed: Our total indebtedness, at par, at June 30, 2021 was $1.1 billion and our total cash and cash equivalents were $374.0 million.
−Removed: Our total indebtedness at June 30, 2021 includes $224.6 million of finance lease obligations for dark fiber under long-term IRU agreements.
+Added: Our total indebtedness, at par, at September 30, 2021 was $1.1 billion, and our total cash, cash equivalents and restricted cash were $355.0 million.
+Added: Our total indebtedness at September 30, 2021 includes $239.5 million of finance lease obligations for dark fiber under long-term IRU agreements.
Summarized Financial Information of Holdings
3 unchanged sentences
The Holdings Financial Information is detailed below (in thousands).
−Removed: June 30, 2021
+Added: September 30, 2021
Cash and cash equivalents
2 unchanged sentences
Accumulated deficit
−Removed: June 30, 2021
+Added: September 30, 2021
Equity‑based compensation expense
2 unchanged sentences
Our Board of Directors has approved purchases of our common stock under a buyback program (the “Buyback Program”).
−Removed: There were no purchases of our common stock in the three or six months ended June 30, 2021 and 2020.
−Removed: As of June 30, 2021, there was a total of $30.4 million available under the Buyback Program which is authorized to continue through December 31, 2021.
+Added: As of September 30, 2021, there was a total of $30.4 million available under the Buyback Program which is authorized to continue through December 31, 2022.
+Added: In the three and nine months ended September 30, 2020 we purchased 4,567 shares of our common stock for $0.3 million.
+Added: There were no purchases of our common stock during the three and nine months ended September 30, 2021.
Dividends on Common Stock and Return of Capital Program
−Removed: On August 4, 2021, our Board of Directors approved the payment of our quarterly dividend of $0.805 per common share.
−Removed: This estimated $37.2 million dividend payment is expected to be made on September 3, 2021.
+Added: On November 2, 2021, our Board of Directors approved the payment of our quarterly dividend of $0.83 per common share.
+Added: This estimated $38.4 million dividend payment is expected to be made on December 3, 2021.
The payment of any future dividends and any other returns of capital, including stock buybacks, will be at the discretion of our Board of Directors and may be reduced, eliminated or increased and will be dependent upon our financial position, results of operations, available cash, cash flow, capital requirements, limitations under our debt indentures and other factors deemed relevant by the our Board of Directors.
6 unchanged sentences
We cannot assure you that such financing will be available on terms acceptable to us or our stockholders, or at all.
−Removed: Insufficient funds may require us to delay or scale back the number of buildings and markets that we add to our network, reduce our planned increase in our sales and marketing efforts, or require us to otherwise alter our business plan or take other actions that could have a material adverse effect on our business, results of operations and financial condition.
+Added: Insufficient funds may require us to delay or scale back the number of buildings and markets that we add to our network, reduce our planned increase in our sales and marketing efforts, or require us to
+Added: otherwise alter our business plan or take other actions that could have a material adverse effect on our business, results of operations and financial condition.
If issuing equity securities raises additional funds, substantial dilution to existing stockholders may result.
1 unchanged sentence
In addition, we may elect to secure additional capital in the future, at acceptable terms, to improve our liquidity or fund acquisitions or for general corporate purposes.
−Removed: In addition, in an effort to reduce future cash interest payments as well as future amounts due at maturity or to extend debt maturities, we may, from time to time, issue new debt, enter into debt for debt, or cash transactions to purchase our outstanding debt securities in the open market or through privately negotiated transactions.
+Added: In effort to reduce future cash interest payments as well as future amounts due at maturity or to extend debt maturities, we may, from time to time, issue new debt, enter into interest rate swap agreements, enter into debt for debt, or cash transactions to purchase our outstanding debt securities in the open market or through privately negotiated transactions.
We will evaluate any such transactions in light of the existing market conditions.
5 unchanged sentences
Impact of COVID-19 on Our Liquidity and Operating Performance
−Removed: We continue to operate with a high level of liquidity and as of June 30, 2021 we had cash and cash equivalents of $374.0 million.
+Added: We continue to operate with a high level of liquidity, and as of September 30, 2021, we had cash and cash equivalents of $355.0 million.
The COVID-19 pandemic has not impacted our credit rating to date, nor do we believe that it has materially changed our cost of capital.
2 unchanged sentences
In late March 2020, we adopted a mandatory policy through which we required all employees to work from home and follow shelter in place guidelines issued by state and local authorities.
−Removed: We believe we have been able to continue to operate effectively with the use of laptops, remote connectivity and the continued support of our critical support employees.
−Removed: Further, we severely curtailed all business travel and adopted new safety procedures for our on-site technical personnel and customers accessing our data centers.
−Removed: We believe the policies followed by our workforce and the support provided by our IT and other groups has enabled our employees to continue to perform tasks and activities that are essential for the operation of our network, our sales and marketing efforts and other support functions.
−Removed: In July 2021, we allowed all employees to return voluntarily to all offices in the United States, and we are planning to require our employees in the United States to return to full-time in-office work in September 2021, although the timing of this return may vary depending on the situation in the United States with respect to the pandemic.
−Removed: We experienced some delays with respect to the installation of new services in March and April of 2020 when certain multi-tenant office buildings were closed to our personnel.
−Removed: We worked with local authorities and building owners to categorize our employees as essential workers who need priority access to buildings.
−Removed: We believe that our disruption in access to buildings was effectively mitigated since then.
−Removed: In April and May 2020, we waived late fees for customers who were unable to pay their bills due to the pandemic.
−Removed: We have not encountered any material change in the payment profile of our customers or seen any significant increase in customer turnover since the beginning of the pandemic.
−Removed: There can be no assurance that we will continue to experience normal operations as economic dislocations may adversely affect our customers and may lead to higher customer turnover, bad debt expense and lower revenue and profitability.
+Added: In July 2021, we allowed all employees to return voluntarily to all offices in the United States.
+Added: In August 2021, we notified our employees that they would be required to return to the office on a full time basis in the United States beginning in September 2021 and that they would be required to attest that they were fully vaccinated against the COVID-19 virus to do so.
+Added: Employees had until October 11, 2021 to provide their vaccine self-attestation.
+Added: Fully vaccinated employees in the United States returned to our offices on a full-time basis in early September 2021.
+Added: In October 2021, we opened most of our non-US offices for employees to return on a voluntary basis.
+Added: We plan to require our employees outside of the United States to return to full time in office work in November 2021, although the timing of this return may vary depending on the situation in each country with respect to the pandemic.
+Added: Our employees have largely complied with our vaccine mandate in the United States.
+Added: However, we experienced an increase in both voluntary and involuntary employee departures, particularly within our sales department, in the summer of 2021.
+Added: We believe this rise in departures is attributable both to an increased focus on managing underperforming sales representatives and to the unwillingness of some employees to be vaccinated and/or to return to a full time, in office environment.
+Added: As a result of our decisions to mandate COVID vaccination and to require employees to return to our offices on a full time basis, we may find it difficult to retain existing employees or hire new employees.
+Added: If this occurs, we may experience lower sales, revenue and profitability.
We have experienced certain corporate customers taking a more cautious approach to new configurations and upgrades as well as a reduction in demand for connecting smaller satellite offices as a result of the challenges and uncertainties of the COVID-19 pandemic.
−Removed: We also have witnessed a deteriorating real estate market in and around the buildings we service with rising vacancy levels and falling lease initiations or renewals which resulted in fewer sales opportunities for our salesforce.
+Added: We also have witnessed a deteriorating real estate market in and around the buildings we service with rising vacancy levels and falling lease initiations or renewals which resulted in fewer sales opportunities for our salesforce and a reduction in VPN opportunities.
As a result, we experienced a slowdown in new sales to our corporate customers which negatively impacted our corporate revenue growth.
−Removed: While we believe that demand for office space in the buildings in which we operate will remain among the strongest in our markets, we may experience increased customer turnover, fewer upgrades of existing customer configurations and fewer new tenant opportunities.
+Added: Moreover, with the spread of the Delta variant of COVID-19 in the summer of 2021, we believe many companies delayed the return of their employees to in-office work.
+Added: As the pandemic has continued, and the return of employees to their offices has been delayed, a greater number of corporate customers with contracts that reached their termination date have elected not to renew their service with us.
+Added: As such, we began to see increased corporate customer turnover.
+Added: While we believe that demand for office space in the buildings in which we operate will remain among the strongest in our markets, and that employers will eventually require their employees to return to their offices, we may experience increased customer turnover, fewer upgrades of existing customer configurations and fewer new tenant opportunities.
These trends may negatively impact our revenue growth, cash flows and profitability.
−Removed: In the summer of 2021, the Delta variant of COVID-19 began spreading widely in the United States and in other countries in which we operate.
−Removed: We cannot predict the impact of the spread of the Delta variant or other new COVID-19 variants on the global economy, how national and local governments may react to the spread of new variants nor predict the impact the variants and any measures taken in response may have on our operations.
+Added: We have seen a slight slowdown in the availability and delivery of networking equipment.
+Added: While we believe we can adequately manage the operation, maintenance, upgrading and growth of our network, a worsening or prolonged slowdown may impact our ability to expand and augment our network.
+Added: While the spread of COVID-19 in the United States has slowed since the summer of 2021, we cannot predict whether the Delta variant or other new COVID-19 variants will spread widely, the impact of the spread of the Delta variant or other new COVID-19 variants on the global economy, how national and local governments may react to the spread of new variants nor predict the impact the variants and any measures taken in response may have on our operations, employee retention, revenue growth, cash flows and our profitability.
Shortly after COVID-19 began its rapid spread around the world, domestic and worldwide capital markets ceased operating for a short period.
1 unchanged sentence
Critical Accounting Policies and Significant Estimates
−Removed: Management believes that as of June 30, 2021, there have been no material changes to our critical accounting policies and significant estimates from those listed in Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our annual report on Form 10-K for the year ended December 31, 2020.
−Removed: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
−Removed: Management believes that as of June 30, 2021, there have been no material changes to our exposures to market risk from those disclosed in Item 7A “Quantitative and Qualitative Disclosures About Market Risk,” of our annual report on Form 10-K for the year ended December 31, 2020.
+Added: Management believes that as of September 30, 2021, there have been no material changes to our critical accounting policies and significant estimates from those listed in Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our annual report on Form 10-K for the year ended December 31, 2020.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.