9 unchanged sentences
Factors that could cause or contribute to these differences include, but are not limited to:
+Added: Our pending acquisition of the Wireline Business of Sprint Communications, including delays in or conditions on obtaining necessary regulatory approvals, our failure to close the Transaction or difficulties integrating our business with the acquired Sprint Communications business;
the COVID-19 pandemic and accompanying government policies worldwide;
−Removed: vaccination and in-office requirements, delays in the delivery of network equipment and optical fiber, future economic instability in the global economy, which could affect spending on Internet services;
+Added: vaccination and in-office requirements, delays in the delivery of network equipment and optical fiber;
+Added: future economic instability in the global economy, including the risk of economic recession, which could affect spending on Internet services;
the impact of changing foreign exchange rates (in particular the Euro to US dollar and Canadian dollar to US dollar exchange rates) on the translation of our non-US dollar denominated revenues, expenses, assets and liabilities into US dollars;
10 unchanged sentences
the management of network failures and/or disruptions;
−Removed: our ability to make payments on our indebtedness as they become due and outcomes in litigation, risks associated with variable interest rates under our interest rate Swap Agreement as well as other risks discussed from time to time in our filings with the Securities and Exchange Commission, including, without limitation, this Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q.
+Added: our ability to make payments on our indebtedness as they become due and outcomes in litigation, risks associated with variable interest rates under our Swap Agreement, as well as other risks discussed from time to time in our filings with the Securities and Exchange Commission, including, without limitation, this Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q.
+Added: Ukraine & Russia
+Added: Following the Russian invasion of Ukraine in February 2022, we terminated services to customers based in Russia and customer linked to the Russian government.
+Added: These customers represented less than 0.3% of our consolidated revenues for the three months ended March 31, 2022.
+Added: We do not provide services within Russia but we do provide services in Ukraine via our Ukrainian subsidiary, TOV Cogent Communications Ukraine (“Cogent Ukraine”).
+Added: As a result of the damage to facilities caused by the war, our services in Ukraine have experienced periodic outages which our third-party fiber provider repairs for us.
+Added: We have taken steps to enhance our network security, provide financial flexibility to our Ukrainian customers and assist our Ukrainian employees.
+Added: We do not believe that the termination of services to certain Russian customers or the impact of the war on our ability to provide services in Ukraine will have, taken together, a material impact on our network, financial statements or operating results.
+Added: Cogent Ukraine represented less than 0.3% of our consolidated revenues for the year ended December 31, 2022 and less than 0.6% of our consolidated assets as of December 31, 2022.
+Added: Sprint Acquisition
+Added: On September 6, 2022, Cogent Infrastructure, Inc., a Delaware corporation (the “Buyer”) and a wholly owned subsidiary of the Company, entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”) with Sprint Communications LLC, a Kansas limited liability company (“Sprint Communications”) and an indirect wholly owned subsidiary of T-Mobile US, Inc., a Delaware corporation (“T-Mobile”), and Sprint LLC, a Delaware limited liability company and a direct wholly owned subsidiary of T-Mobile (the “Seller”), pursuant to which the Company will acquire the U.S.
+Added: long-haul fiber network (including the non-U.S.
+Added: extensions thereof) of Sprint Communications and its subsidiaries (the “Wireline Business”).
+Added: The Purchase Agreement provides that, upon the terms and conditions set forth therein, the Company will purchase from the Seller all of the issued and outstanding membership interests of a Delaware limited liability company that holds Sprint Communications’ assets and liabilities relating to the Wireline Business (such transactions contemplated by the Purchase Agreement, collectively, the “Transaction”).
+Added: Page 28 of 75
Results of Operations
11 unchanged sentences
Selling, general, and administrative expenses (2)
+Added: Acquisition costs - Sprint (T-Mobile Wireline)
Depreciation and amortization expenses
−Removed: Gain (loss) on lease terminations
−Removed: Realized gain on foreign exchange – 2024 Notes
−Removed: Unrealized gain (loss) on foreign exchange - 2024 Notes
+Added: Gains on foreign exchange - 2024 Notes
Loss on debt extinguishment and redemption – 2024 Notes
Loss on debt extinguishment and redemption – 2022 Notes
+Added: Change in valuation expense - interest rate swap agreement
Interest expense
2 unchanged sentences
(2) Includes non-cash equity-based compensation expense of $23,886 and $24,301 for 2022 and 2021, respectively.
−Removed: Page 25 of 70
NM - not meaningful
5 unchanged sentences
We continually work to grow our total service revenue by increasing the number of potential customers that we can reach on our network.
−Removed: We do this by investing capital to expand the geographic footprint of our network, by increasing the number of buildings that we are connected to, including carrier neutral data centers and multi-tenant office buildings, and by increasing our penetration rate into our existing buildings.
+Added: We do this by investing capital to expand the geographic footprint of our network, increasing the number of buildings that we are connected to, including CNDCs and MTOBs, and increasing our penetration rate into our existing buildings.
These efforts broaden the global reach of our network and increase the size of our potential addressable market.
2 unchanged sentences
In the net-centric market, we offer comparable services in terms of capacity but typically at significantly lower prices.
+Added: Page 29 of 75
Our service revenue increased by 1.7% from 2021 to 2022.
−Removed: Exchange rates positively impacted our increase in service revenue by $5.3 million.
+Added: Exchange rates negatively impacted our increase in service revenue by $13.1 million.
All foreign currency comparisons herein reflect results for 2022 translated at the average foreign currency exchange rates for 2021.
1 unchanged sentence
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.
−Removed: 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 2020 to 2021 of $3.4 million.
+Added: We record these taxes billed to our customers on a gross basis (as service revenue and network operations expense) in our consolidated statements of comprehensive income.
+Added: The impact of these taxes including the Universal Service Fund resulted in a decrease to our revenues from 2021 to 2022 of $3.1 million.
Our corporate customers generally purchase their services on a price per connection basis.
3 unchanged sentences
Revenues from our net-centric customers increased by 11.1% to $257.0 million for 2022 from 2021.
+Added: Exchange rates negatively impacted our increase in our net-centric service revenue by approximately $13.1 million.
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 in order to construct VPNs has also led to our ability to increase our corporate revenues.
+Added: The growing trend of customers installing second lines for redundancy in order to construct virtual private networks (“VPNs”) has also led to our ability to increase our corporate revenues.
However, beginning in the second quarter of 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.
8 unchanged sentences
The impact of foreign exchange rates has a more significant impact on our net-centric revenues.
−Removed: Page 26 of 70
Our on-net revenues increased by 2.2% from 2021 to 2022.
−Removed: Our on-net revenues increased as we increased the number of our on-net customer connections by 4.4% at December 31, 2021 from December 31, 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 2020 to 2021 and the positive impact of foreign exchange.
+Added: Our on-net revenues increased as we increased the number of our on-net customer connections.
+Added: On-net customers increased at a greater rate than on-net revenues primarily due to a decrease in our on-net ARPU from 2021 to 2022 and the negative impact of foreign exchange.
ARPU is determined by dividing revenue for the period by the average customer connections for that period.
Our off-net revenues decreased by 0.2% from 2021 to 2022.
−Removed: Our off-net revenues decreased primarily from the 5.2% decrease in our off-net ARPU from 2020 to 2021 offsetting the 5.8% increase in the number of our off-net customer connections from December 31, 2020 to December 31, 2021.
+Added: Our off-net revenues decreased primarily from the decrease in our off-net ARPU from 2021 to 2022, partly offset by the increase in the number of our off-net customer connections.
Network Operations Expenses.
1 unchanged sentence
Non-cash equity-based compensation expense is included in network operations expenses consistent with the classification of the employee’s salary and other compensation.
−Removed: Our network operations expenses, including non-cash equity-based compensation expense, increased by 3.3% for 2021 from 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 and the impact of a renewal of an IRU fiber lease agreement in the second quarter of 2020.
−Removed: 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.
−Removed: As a result of accounting for this IRU renewal under ASU 2016-02, the present value of $1.8 million of quarterly maintenance and co-location fees (non-lease components) that were previously accounted for as network operations expenses prior to the second quarter of 2020, were capitalized as a finance lease liability and right-of-use leased asset totaling $34.0 million.
−Removed: Amortization of the right-of-use asset is recorded as depreciation and amortization expense and the payments that are made toward the finance lease liability are recorded as a reduction of the finance lease liability and interest expense.
+Added: Our network operations expenses, including non-cash equity-based compensation expense, increased by 0.8% from 2021 to 2022.
+Added: The increase in network operations expense is primarily attributable to an increase in costs related to our network and facilities international expansion activities, partly offset by a reduction in taxes billed to our customers recorded on a gross basis (as service revenue and network operations expense) and price reductions obtained in certain of our domestic leased circuit costs.
+Added: Page 30 of 75
Selling, General, and Administrative (“SG&A”) Expenses.
1 unchanged sentence
Non-cash equity-based compensation expense is included in SG&A expenses consistent with the classification of the employee’s salary and other compensation.
−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.
+Added: 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 bad debt expense.
Our sales force headcount was 633 at December 31, 2021 and 698 at December 31, 2022, and our total headcount was 1,001 at December 31, 2021 and 1,076 at December 31, 2022.
−Removed: We experienced an increase in both voluntary and involuntary employee departures, particularly within our sales department, in the third and fourth quarters of 2021.
−Removed: We believe that this rise in departures was 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.
+Added: Acquisition Costs – Sprint (T-Mobile Wireline).
+Added: In connection with the Transaction and the negotiation of the Purchase Agreement, we incurred $2.2 million of professional fees in 2022.
+Added: Subject to the satisfaction or waiver of certain conditions and the other terms and conditions of the Purchase Agreement, the Transaction is expected to close in 2023.
Depreciation and Amortization Expenses.
Our depreciation and amortization expense increased by 3.3% for 2022 from 2021.
−Removed: 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.
−Removed: As a result of accounting for this IRU renewal under ASU 2016-02, the present value of $1.8 million of quarterly maintenance and co-location fees (non-lease components) that were previously accounted for as network operations expenses prior to the second quarter of 2020, were capitalized as a finance lease liability and right-of-use leased asset totaling $34.0 million.
−Removed: Amortization of the right-of-use asset is recorded as depreciation and amortization expense and the payments that are made toward the finance lease liability are recorded as a reduction of the finance lease liability and interest expense.
−Removed: Interest Expense and Losses on Debt Extinguishment and Redemptions.
−Removed: Our interest expense resulted from interest incurred on our $445.0 million of our 2022 Notes until these notes were fully extinguished in May 2021, 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.
−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 $189.2 million of 2021 Notes at par value resulting in a loss on debt extinguishment and redemption of $0.6 million for the year ended December 31, 2020.
−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 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 for the year ended December 31, 2021.
−Removed: Page 27 of 70
−Removed: 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 SOFR so that the interest payable on the 2026 Notes effectively became variable based on overnight SOFR.
−Removed: 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.
−Removed: The values that we report for the Swap Agreement as of each reporting date are recognized as non-cash interest expense with the corresponding amounts included in assets or liabilities in our consolidated balance sheets.
−Removed: As of December 31, 2021 the fair value of our Swap Agreement was a net liability of $9.0 million and we recorded an unrealized loss as interest expense related to our Swap Agreement of $9.0 million in 2021.
−Removed: We did not elect hedge accounting for our Swap Agreement.
+Added: The increase is primarily due to the depreciation expense associated with the increase in deployed fixed assets.
+Added: Interest Expense and Losses on Debt Extinguishment and Redemption.
+Added: Our interest expense resulted from interest incurred on our $445.0 million of 5.375% 2022 Notes until these notes were fully extinguished in May 2021, interest incurred on our €350.0 million of 4.375% 2024 Notes until these notes were fully extinguished in June 2022, interest incurred on our $500.0 million of 3.50% 2026 Notes that we issued in May 2021, interest incurred on our $450.0 million of 7.00% 2027 Notes that we issued in June 2022, interest incurred on our finance lease obligations and net interest paid on our Swap Agreement.
Our interest expense increased by 16.4% from 2021 to 2022.
−Removed: This increase was primarily due to the reduction in interest expense from the lower interest rate on our new 2026 Notes as compared to our extinguished 2022 Notes being offset by the additional $9.0 million of additional non-cash interest expense we recorded related to our Swap Agreement.
−Removed: Realized Gain and Unrealized Gain (Loss) on Foreign Exchange – 2024 Notes .
−Removed: In June 2020, our €215.0 million of 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.
−Removed: Our 2024 Notes were issued in Euros and are reported in our reporting currency – US Dollars.
−Removed: As of December 31, 2021, our 2024 Notes were valued at $397.0 million.
−Removed: Our unrealized gain (loss) on foreign exchange on our 2024 Notes from converting our 2024 Notes into USD was $32.5 million for 2021 and $(37.0) million for 2020.
+Added: The increase was primarily due to the increase in interest rates on our 7.00% 2027 Notes as compared to our 4.375% 2024 Notes, net interest paid in 2022 under our Swap Agreement, partially offset by the reduction in interest expense from the lower interest rate on our 3.50% 2026 Notes as compared to our 5.375% 2022 Notes.
+Added: In March 2021, we redeemed and extinguished $115.9 million of our 5.375% 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.
+Added: In May 2021, we extinguished the remaining $329.1 million of our 2022 Notes at par value resulting in a loss on debt extinguishment and redemption of $10.8 million.
+Added: In June 2022, we extinguished our 4.375% 2024 Notes at 101.094% of par value resulting in a loss on debt extinguishment and redemption of $11.9 million.
+Added: Change in Valuation – Interest Rate Swap Agreement.
+Added: As of December 31, 2022, the fair value of our Swap Agreement was a net liability of $52.1 million, and we recorded an unrealized loss for the non-cash change in the valuation of the Swap Agreement of $43.1 million in 2022 and $9.0 million in 2021.
+Added: Under the Swap Agreement settlement payment made in November 2021, we received $0.6 million from the counterparty for a net cash savings of $0.6 million for the period from August 9, 2021 (the Swap Agreement inception date) to October 31, 2021, in May 2022, we received $1.2 million from the counterparty for a net cash savings of $1.2 million for the period from November 1, 2021 to April 30, 2022.
+Added: Under the Swap Agreement settlement payment made in November 2022, we paid $3.4 million to the counterparty for a net cash interest cost of $3.4 million for the period from May 1, 2022 to October 31, 2022.
+Added: Gains on Foreign Exchange – 2024 Notes.
+Added: Our 2024 Notes were issued in Euros and were reported in our reporting currency, US dollars, until they were extinguished and redeemed in June 2022.
+Added: Our 2024 Notes were issued in June 2019 and June 2020 when the Euro to USD exchange rate was approximately $1.13 and they were extinguished in June 2022 at a Euro to USD exchange rate of $1.06.
+Added: Our gains on foreign exchange on our 2024 Notes from converting Euros into US dollars was $31.6 million for 2022 and was $32.5 million for 2021.
We have not entered into hedging arrangements for our foreign currency obligations.
Income Tax Expense.
−Removed: Our income tax expense was $23.2 million for 2021 and $4.1 million for 2020.
−Removed: The increase in our income tax expense is primarily related to an increase in certain non-deductible expenses and the increase in our income before income taxes.
+Added: Our income tax expense was $23.2 million for 2021 and $21.2 million for 2022 that includes deferred income taxes of $18.2 million for 2021 and $16.5 million for 2022.
+Added: The decrease in our income tax expense is primarily related to the decrease in our income before income taxes.
Buildings On-net.
2 unchanged sentences
We anticipate adding a similar number of buildings to our network for the next several years.
+Added: Page 31 of 75
Liquidity and Capital Resources
In assessing our liquidity, management reviews and analyzes our current cash balances, accounts receivable, accounts payable, accrued liabilities, capital expenditure commitments, and required finance lease and debt payments and other obligations.
−Removed: As our business has grown as a result of an increasing customer base, broader geographic coverage and increased traffic on our network, we have produced a growing level of operating cash flow.
+Added: As our business has grown as a result of an increasing customer base, broader geographic coverage and increased traffic on our network, we have produced a growing level of cash provided by operating activities.
As a result of the operating leverage of our network, our annual capital expenditures as measured as a percentage of revenues has fallen over the last decade.
−Removed: Increasing our operating cash flow is in part dependent upon expanding our geographic footprint and increasing our network capacity.
+Added: Increasing our cash provided by operating activities is, in part, dependent upon expanding our geographic footprint and increasing our network capacity.
Recent supply chain issues may adversely impact our ability to grow our network and revenue.
We have also had increasing success in raising capital by issuing notes and arranging financing and leases that have had a lower cost and more flexible terms.
−Removed: The combination of this improved operating performance and access to capital has enhanced our financial flexibility and increased our ability to make distributions to shareholders in the form of cash dividends or through share repurchases.
−Removed: Since our initial public offering, we have returned over $1.0 billion to our shareholders through share repurchases and dividends.
−Removed: We will continue to assess our capital and liquidity needs and, where appropriate, return capital to shareholders.
+Added: The combination of this improved operating performance and access to capital has enhanced our financial flexibility and increased our ability to make distributions to stockholders in the form of cash dividends or through share repurchases.
+Added: Since our initial public offering, we have returned over $1.2 billion to our stockholders through share repurchases and dividends.
+Added: We will continue to assess our capital and liquidity needs and, where appropriate, return capital to stockholders.
Over the next several years, we have significant contractual and anticipated cash outlays including our indicative dividend payments on our common stock, our maturing debt obligations, interest payments on our debt obligations and our projected capital expenditure requirements in order to help execute our business plan.
−Removed: Based upon our historical growth rate of our dividend, we expect that we would have to provide approximately $353 million in order to meet our quarterly dividend payments over the next two years.
−Removed: Our $500.0 million of Senior Secured Notes mature in May 2026 and include annual interest payments of $17.5 million until maturity.
−Removed: Our €350 million of Senior Unsecured Euro Notes mature in June 2024 and include annual interest payments €15.3 million until maturity.
−Removed: Our €350 million of Senior Unsecured Euro Notes are denominated in Euros and expose us to potentially unfavorable adverse movements in foreign currency rate changes.
−Removed: Our overseas operations provides us access to Euros, however these amounts may be insufficient to fund our obligations under our Senior Unsecured Euro Notes.
−Removed: Additionally, we have not entered into foreign currency hedging arrangements which would seek to reduce our risks related to foreign exchange volatility.
+Added: Based upon our historical growth rate of our dividend, we expect that we would have to provide approximately $363 million in order to meet our expected quarterly dividend payments over the next two years.
+Added: In March 2021, we redeemed and extinguished $115.9 million of our 2022 Notes.
+Added: In April 2021, we redeemed $45.0 million of our 2022 Notes, and in May 2021, we redeemed the remaining $284.1 million of our 2022 Notes with the proceeds from our issuance of $500.0 million of our 2026 Notes.
+Added: Our 2022 Notes accrued interest at 5.375% and our 2026 Notes accrue interest at 3.50%.
+Added: Our $500.0 million of 2026 Notes mature in May 2026 and include annual interest payments of $17.5 million until maturity.
+Added: In June 2022, we redeemed our 2024 Notes with the proceeds from our issuance of $450.0 million of our 2027 Notes.
+Added: Our 2024 Notes accrued interest at 4.375% and our 2027 Notes accrue interest at 7.00%.
+Added: Our $450.0 million of 2027 Notes mature in June 2027 and include annual interest payments of $31.5 million until maturity.
+Added: Under our Swap Agreement, we pay the counterparty a semi-annual payment based upon overnight SOFR plus a contractual interest rate spread, and the counterparty pays us a semi-annual fixed 3.50% interest payment.
+Added: These settlement payments are made in November and May of each year until the Swap Agreement expires in February 2026.
+Added: Under the first Swap Agreement settlement payment made in November 2021, we received $0.6 million from the counterparty for a net cash savings of $0.6 million for the period from August 9, 2021 (the Swap Agreement inception date) to October 31, 2021.
+Added: Under the Swap Agreement settlement payment made in May 2022, we received $1.2 million from the counterparty for a net cash savings of $1.2 million for the period from November 1, 2021 to April 30, 2022.
+Added: Under the Swap Agreement the settlement payment made in November 2022, the Company paid $3.4 million to the counterparty for a net cash interest cost of $3.4 million for the period from May 1, 2022 to October 31, 2022.
+Added: As of December 31, 2022, the fair value of the Swap Agreement was a liability of $52.1 million.
+Added: We have made a $61.7 million deposit with the counterparty to our Swap Agreement.
+Added: If the fair value of our Swap Agreement exceeds a liability of $61.7 million we will be required to deposit additional funds with the counterparty equal to the liability fair value.
+Added: As of December 31, 2022, $52.1 million of our deposit was restricted and $9.6 million was unrestricted.
Any future acquisitions or other significant unplanned costs or cash requirements in excess of amounts we currently hold may require that we raise additional funds through the issuance of debt or equity.
2 unchanged sentences
If issuing equity securities raises additional funds, substantial dilution to existing stockholders may result.
−Removed: Page 28 of 70
We may need to, or elect to, refinance all or a portion of our indebtedness at or before maturity and we cannot provide assurances that we will be able to refinance any such indebtedness on commercially reasonable terms or at all.
3 unchanged sentences
The amounts involved in any such transaction, individually or in the aggregate, may be material.
+Added: Page 32 of 75
We or our affiliates may, at any time and from time to time, seek to retire or purchase our outstanding debt through cash purchases and/or exchanges for equity or debt, in open-market purchases, privately negotiated transactions or otherwise.
1 unchanged sentence
The amounts involved may be material.
+Added: Any future acquisitions or other significant unplanned costs or cash requirements in excess of amounts we currently hold may require that we raise additional funds through the issuance of debt or equity.
+Added: We cannot assure you that such financing will be available on terms acceptable to us or our stockholders, or at all.
+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 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: If issuing equity securities raises additional funds, substantial dilution to existing stockholders may result.
In light of the economic uncertainties associated with the COVID-19 pandemic, our executive officers and Board have continued to carefully monitor our liquidity and cash requirements.
19 unchanged sentences
Third, for offices around the world that had not been closed by government order, we shifted much of our workforce to fully remote status on a temporary basis at the end of 2021 in order to reduce the density of our offices.
−Removed: Sales representatives with less than 12 months tenure, sales representative on performance improvement plans and their managers are currently still working in our offices on a full-time basis, as we believe that the training and coaching required by new and underperforming sales representatives is significantly more effective when provided in an in-office environment.
+Added: Sales representatives with less than 12 months tenure, sales representatives on performance improvement plans and their managers remained working in our offices on a full-time basis, as we believe that the training and coaching required by new and underperforming sales representatives is significantly more effective when provided in an in-office environment.
+Added: In March 2022, all of our US employees returned to our offices on a full-time basis, and our employees around the world have returned to the office as and when permitted by local regulations.
Our employees have largely complied with our vaccine mandate in the United States.
−Removed: However, we experienced an increase in both voluntary and involuntary employee departures, particularly within our sales department, in the third and fourth quarters of 2021.
+Added: However, we experienced an increase in both voluntary and involuntary employee departures, particularly within our sales department, beginning in the second half of 2021 and continuing into 2022.
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.
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: Further, a resurgence of COVID-19 due to immunity-resistant variants may cause employees to be more reluctant to continue in, or make new employees more reluctant to accept, a full-time, in-office position due to concerns about COVID-19.
If this occurs, we may experience lower sales, revenue and profitability.
7 unchanged sentences
We also experienced a reduction in new sales to corporate customers.
−Removed: 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 most 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.
+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 most employers will eventually require their employees to return to their offices, the timing and scope of a return to office, particularly in a number of key markets we serve, remains uncertain.
+Added: As a result, we may experience increased customer turnover, fewer upgrades of existing customer configurations and fewer new tenant opportunities.
+Added: A potential resurgence of COVID-19 due to new immunity-resistant variants could cause companies to continue to delay the return of their employees to the office, to cause companies to shift workers in the office back to remote work and to delay further opening new offices.
These trends may negatively impact our revenue growth, cash flows and profitability.
−Removed: We have seen a slight slowdown in the availability and delivery of networking equipment and optical fiber.
+Added: We continue to experience a slowdown in the availability and delivery of networking equipment and optical fiber.
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.
7 unchanged sentences
Net cash used in investing activities
−Removed: Net cash (used in) provided by financing activities
+Added: Net cash used in financing activities
Effect of exchange rates on cash
−Removed: Net (decrease) increase in cash, cash equivalents and restricted cash during the year
+Added: Net decrease in cash, cash equivalents and restricted cash during the year
Net Cash Provided By Operating Activities.
Our primary source of operating cash is receipts from our customers who are billed on a monthly basis for our services.
−Removed: Our primary uses of operating cash are payments made to our vendors, employees and interest payments made to our finance lease vendors and our note holders.
+Added: Our primary uses of operating cash are payments made to our vendors and employees and interest payments made to our finance lease vendors and our note holders.
Our changes in cash provided by operating activities are primarily due to changes in our operating profit and changes in our interest payments.
4 unchanged sentences
The annual 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.
−Removed: In 2020 and 2019 we obtained $5.8 million and $11.3 million, respectively, of network equipment and software in non-cash exchanges for notes payable under an installment payment agreement.
−Removed: There was no network equipment and software obtained under the installment payment agreement in 2021.
Page 34 of 75
−Removed: Net Cash (Used In) Provided By Financing Activities.
−Removed: Our primary uses of cash for financing activities are for dividend payments, stock purchases and principal payments under our debt and finance lease obligations.
+Added: Net Cash Used In Financing Activities.
+Added: Our primary uses of cash for financing activities are for payments to redeem and extinguish our debt, dividend payments, stock purchases and principal payments under our debt and finance lease obligations.
During 2022, 2021 and 2020, we paid $169.9 million, $150.3 million and $129.4 million, respectively, for our quarterly dividend payments.
−Removed: Our quarterly dividend payments have increased due to regular quarterly increases in our quarterly dividend per share amounts.
+Added: Our quarterly dividend payments have increased due to regular increases in our quarterly dividend per share amounts.
Amounts paid under our stock buyback program were $4.5 million for 2020.
There were no stock purchases during 2022 or 2021.
−Removed: Principal payments under our finance lease obligations were $23.1 million, $24.0 million and $9.1 million for 2021, 2020 and 2019, respectively, and are impacted by the timing and extent of our network expansion activities.
+Added: Principal payments under our finance lease obligations were $45.5 million, $23.1 million and $24.0 million for 2022, 2021 and 2020, respectively, and are impacted by the timing and extent of our network expansion activities, including geographic expansion and adding buildings to our network.
Total installment payment agreement principal payments were $0.8 million, $6.9 million and $10.5 million for 2022, 2021 and 2020, respectively.
We completed a series of debt redemptions and issuances in 2022, 2021 and 2020.
+Added: In June 2022, we paid $375.4 million to redeem and extinguish our 2024 Notes at 101.094% of par value, and we issued $450.0 million of our 2027 Notes for net proceeds of $446.0 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.
3 unchanged sentences
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.
−Removed: In June 2019 we received net proceeds of $152.1 million from the issuance of €135.0 million of our 2024 Notes.
Our total cash, cash equivalents and restricted cash at December 31, 2022 were $275.9 million.
We believe this level of liquidity reduces our exposure to refinancing risk, potential underperformance of the business or other unforeseen challenges and enhances our ability to pursue acquisitions or operating opportunities.
−Removed: We intend upon holding levels of cash and cash equivalents sufficient to maintain our ability to fund operations, refinance indebtedness and make dividend payments to our shareholders.
+Added: We intend to hold levels of cash and cash equivalents sufficient to maintain our ability to fund operations, refinance indebtedness and make dividend payments to our stockholders.
Our total indebtedness at December 31, 2022, at par value, was $1.3 billion.
3 unchanged sentences
Holdings is a “successor issuer” to Group pursuant to Rule 12g-3(a) under the Exchange Act.
+Added: Senior unsecured 2027 notes—$450.0 million
+Added: In June 2022, Group issued $500.0 million of 2027 Notes.
+Added: The 2027 Notes were sold in private offerings for resale to qualified institutional buyers pursuant to SEC Rule 144A and mature on June 15, 2027.
+Added: Interest accrues at 7.00% and is paid semi-annually in arrears on June 15 and December 15 of each year.
+Added: Holdings provided a guarantee of the 2027 Notes, but Holdings is not subject to the covenants under the indenture.
Senior secured 2026 notes—$500.0 million
6 unchanged sentences
In June 2020, Group completed an offering of €215.0 million of 2024 Notes.
−Removed: The 2024 Notes were sold in private offerings for resale to qualified institutional buyers pursuant to SEC Rule 144A and mature on June 30, 2024.
−Removed: Interest accrues at 4.375% and is paid semi-annually in arrears on June 30 and December 30 of each year.
−Removed: Holdings provided a guarantee of the 2024 Notes but Holdings is not subject to the covenants under the indenture.
+Added: The 2024 Notes were sold in private offerings for resale to qualified institutional buyers pursuant to SEC Rule 144A and were scheduled to mature on June 30, 2024.
+Added: Interest accrued at 4.375% and was paid semi-annually in arrears on June 30 and December 30 of each year.
+Added: In June 2022, the 2024 Notes were redeemed with the proceeds from our 2027 Notes.
Page 35 of 75
Limitations under the Indentures
−Removed: The indenture governing the 2024 Notes (the “2024 Notes Indenture”) and the 2026 Notes (the “2026 Notes Indenture”), among other things, limit the Company’s ability to incur indebtedness;
+Added: The 2027 Notes Indenture and the 2026 Notes Indenture (the “Indentures”), among other things, limit the Company’s ability to incur indebtedness;
to pay dividends or make other distributions;
4 unchanged sentences
and to enter into certain transactions with its affiliates.
−Removed: There are certain exceptions to the limitations on our 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, our 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 our consolidated leverage ratio, as defined in 2026 Notes Indenture, is less than 6.0 to 1.0 or our fixed charge coverage ratio, as defined in the 2026 Notes Indenture, is greater than 2.0 to 1.0.
−Removed: We can also incur unlimited liens (which can be used, together with capacity under the debt covenant, to incur additional secured indebtedness) if our 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.
−Removed: 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 our consolidated leverage ratio, as defined by the 2024 Notes Indenture, is less than 4.25 to 1.00.
−Removed: Under the 2026 Notes Indenture, such accumulated consolidated cash flow, as defined therein, can be used to make such restricted payments if we are able to incur $1 of debt, as defined (i.e., either its consolidated leverage ratio is less than 6.0 to 1.0 or our fixed charge coverage ratio is greater than 2.0 to 1.0).
−Removed: Our consolidated leverage ratio was above 4.25 as of December 31, 2021, and our fixed charge coverage ratio was above 2.0 as of December 31, 2021.
−Removed: As of December 31, 2021, a total of $185.5 million was unrestricted and permitted for restricted payments including dividends and stock purchases.
+Added: There are certain exceptions to the limitations on the Company’s ability to incur indebtedness under the Indentures, including IRU agreements incurred in the normal course of business and any additional indebtedness if the Company’s consolidated leverage ratio, as defined in the Indentures, is less than 6.0 to 1.0 or the Company’s fixed charge coverage ratio, as defined in the Indentures, is 2.0 to 1.0 or greater.
+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 the Indentures, is less than 4.0 to 1.0.
+Added: Under the Indentures, the Company can pay dividends, make other distributions, make certain investments and make other restricted payments under certain circumstances, including if, after giving pro forma effect to such restricted payment, the Company could still incur $1 of indebtedness, as defined (i.e., either its consolidated leverage ratio is less than 6.0 to 1.0 or its fixed charge coverage ratio is 2.0 to 1.0 or greater).
+Added: As of December 31, 2022, the Company’s consolidated leverage ratio was below 6.0, the Company’s consolidated secured leverage ratio was below 4.0, and the Company’s fixed charge coverage ratio was above 2.0.
+Added: As of December 31, 2022, a total of $442.2 million (inclusive of a $250.0 general basket) was unrestricted and permitted for restricted payments, including dividends and stock purchases.
Summarized Financial Information of Holdings
15 unchanged sentences
As of December 31, 2022, there was a total of $30.4 million available under the Buyback Program.
+Added: Page 36 of 75
Dividends on Common Stock
5 unchanged sentences
This estimated $43.3 million dividend payment is expected to be made on March 24, 2023.
−Removed: Page 32 of 70
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.
19 unchanged sentences
We have performed an analysis of our Section 382 ownership changes and have determined that the utilization of certain of our net operating loss carryforwards in the United States is limited.
+Added: Page 37 of 75
Critical Accounting Policies and Significant Estimates
4 unchanged sentences
The accounting policies we believe to be most critical to understanding our financial results and condition or that require complex, significant and subjective management judgments are discussed below.
−Removed: Page 33 of 70
Finance Lease Obligations
5 unchanged sentences
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.