What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-02-28 compared with 2024-02-29 · 392 added, 284 removed, 741 unchanged (48% of the section changed)

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Consolidated Balance Sheets as of December 31, 2024 and 2023

Consolidated Statements of Comprehensive Income for Each of the Three Years Ended December 31, 2023

Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for Each of the Three Years Ended December 31, 2023

Consolidated Statements of Comprehensive (Loss) Income for Each of the Three Years Ended December 31, 2024

Consolidated Statements of Changes in Stockholders’ Equity for Each of the Three Years Ended December 31, 2024

Consolidated Statements of Cash Flows for Each of the Three Years Ended December 31, 2024

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Report of Ernst & Young LLP, Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Cogent Communications Holdings, Inc.

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We have audited the accompanying consolidated balance sheets of Cogent Communications Holdings, Inc.

and subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated statements of comprehensive income (loss), stockholders’ equity (deficit) and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and financial statement schedule listed in the Index at Item 15(a)2 (collectively referred to as the “consolidated financial statements”).

and subsidiaries (the Company) as of December 31, 2024 and 2023, the related consolidated statements of comprehensive (loss) income, changes in stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes and financial statement schedule listed in the Index at Item 15(a)2 (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with U.S.

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate.

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Determining the purchase price for the acquisition of Sprint

Description of the Matter

As discussed in Note 1 to the consolidated financial statements, on May 1, 2023, the Company acquired Sprint Communications and Subsidiaries (“Sprint Wireline”), for a purchase price of $1, subject to working capital adjustments, from T-Mobile US, Inc.

(the “Seller”).

Contemporaneously with the completion of the acquisition of Sprint Wireline, the Company entered into an agreement to provide IP Transit services to the Seller (the “Agreement”).

Determining the purchase price for the transaction was complex due to the fact that the accounting for the Agreement required judgment to determine if the stated contract price represented consideration for services to be delivered and did not represent revenue from a contract with a customer, because the Agreement was entered into contemporaneously with the acquisition of Sprint Wireline.

How We Addressed the Matter in Our Audit

We tested the Company's controls over its accounting for the Agreement, including the evaluation of key terms and determination regarding the commercial substance of the Agreement.

To test the Company’s accounting for the Agreement we evaluated the applicable guidance, which included evaluating the commercial substance of the Agreement.

We involved subject matter resources to assist in the evaluation of the Agreement.

Valuation of certain property & equipment assets for the acquisition of Sprint

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Assessment of Indefinite-lived Intangible Asset for Impairment

Description of the Matter

As discussed in Note 1 to the consolidated financial statements, on May 1, 2023, the Company acquired the Sprint Communications Subsidiaries (“Sprint Wireline”), for a purchase price of $1, subject to working capital adjustments, from T-Mobile US, Inc.

(the “Seller”).

The transaction was accounted for as a business combination.

Auditing the Company's accounting for its acquisition of Sprint Wireline was complex due to the estimation uncertainty in determining the $369.2 million fair value of the acquired optical fiber assets.

The estimation uncertainty was primarily due to the lack of active market data and the wide range of possible values that could be used by market participants.

The significant assumptions used to estimate the value of these assets included the replacement cost per mile of fiber and a factor to reflect the orderly liquidation value.

These assumptions are inherently subjective and market participants could have differing views on these assumptions, which could result in a materially different fair value of the optical fiber.

At December 31, 2024, the Company’s IPv4 address indefinite-lived intangible asset was $458.0 million.

As discussed in Note 1 to the consolidated financial statements, the IPv4 address indefinite-lived intangible asset is evaluated for impairment annually on the first day of the fourth quarter, or more frequently when indicators of impairment exist.

The Company did not record any impairment of the IPv4 address indefinite-lived intangible asset during the year.

Auditing management’s assessment of the indefinite-lived intangible asset for impairment was complex due to the judgment required in the identification of events or circumstances that were impairment indicators.

Significant auditor judgment was required in evaluating management’s identification of the relevant factors to consider in determining whether an indicator of impairment existed due to limited available market data.

How We Addressed the Matter in Our Audit

We tested the Company's controls over its accounting for acquisitions, including controls over management’s review of the significant assumptions described above.

To test the estimated fair value of the optical fiber assets, we performed audit procedures that included, among others, testing the significant assumptions used in the model.

For example, we compared the replacement cost per mile estimated by management to data obtained from third party sources.

We involved our internal valuation specialists to assist with the evaluation of these assumptions.

We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s assessment of the IPv4 address indefinite-lived intangible asset for impairment.

For example, we tested controls over management’s identification and consideration of the most relevant drivers of changes in fair value.

To test the Company’s assessment of the indefinite-lived intangible asset for impairment, we performed audit procedures that included, among others, assessing the Company’s identification and consideration of the most relevant drivers of changes in fair value and evaluating the underlying data used by the Company in its analysis.

The underlying data used by the Company in its analysis included, among others, market data for sales and leases of IPv4 addresses and cash flows associated with the IPv4 addresses.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2002.

Tysons, Virginia

February 28, 2025

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Accounts receivable, net of allowance for credit losses of $ 9,762 and $ 3,677 , respectively

Due from T-Mobile, IP Transit Services Agreement, current portion, net of discount of $ 24,898

Due from T-Mobile, IP Transit Services Agreement, current portion, net of discount of $ 16,915 and $ 24,898 , respectively

Due from T-Mobile, Transition Services Agreement

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Right-of-use leased assets

Intangible assets, net

Due from T-Mobile, IP Transit Services Agreement, net of discount of $ 27,916

Due from T-Mobile, Purchase Agreement, net of discount of $ 13,725

IPv4 intangible assets

Other intangible assets, net

Due from T-Mobile, IP Transit Services Agreement, net of discount of $ 12,132 and $ 27,916 , respectively

Due from T-Mobile, Purchase Agreement, net of discount of $ 5,755 and $ 13,725 , respectively

Deposits and other assets

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Senior secured 2026 notes, net of unamortized debt costs of $ 375 and $ 645 , respectively, and discount of $ 499 and $ 857 , respectively

Senior unsecured 2027 notes, net of unamortized debt costs of $ 941 and $ 1,173 , respectively, and discount of $ 1,970 and $ 2,456 , respectively

Senior unsecured 2027 notes, net of unamortized debt costs of $ 2,013 and $ 941 , respectively, and discounts of $ 7,053 and $ 1,970 , respectively

Secured IPv4 notes, net of debt costs of $ 6,702

Operating lease liabilities, net of current maturities

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Accumulated other comprehensive loss

Accumulated earnings (deficit)

( 1,074,588 )

Total stockholders’ equity (deficit)

Total liabilities and stockholders’ equity (deficit)

Accumulated (deficit) earnings

Total stockholders’ equity

Total liabilities and stockholders’ equity

The accompanying notes are an integral part of these consolidated balance sheets.

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COGENT COMMUNICATIONS HOLDINGS, INC., AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

COGENT COMMUNICATIONS HOLDINGS, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

FOR EACH OF THE THREE YEARS ENDED DECEMBER 31, 2024

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Total operating expenses

Gain on lease terminations and other

Gain on lease termination

Operating (loss) income

Interest expense

Change in valuation – interest rate swap

Interest expense, including change in valuation – interest rate swap

Foreign exchange gain on 2024 Notes

Loss on debt extinguishment and redemption – 2024 Notes

Gain on bargain purchase – Sprint Business

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Interest income and other

Income before income taxes

(Loss) income before income taxes

Income tax benefit (expense)

Comprehensive income (loss):

Net (loss) income

Comprehensive (loss) income:

Net (loss) income

Foreign currency translation adjustment

Comprehensive income (loss)

Basic net income per common share

Diluted net income per common share

Comprehensive (loss) income

Basic net (loss) income per common share

Diluted net (loss) income per common share

Dividends declared per common share

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COGENT COMMUNICATIONS HOLDINGS, INC., AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR EACH OF THE THREE YEARS ENDED DECEMBER 31, 2024

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Stockholder’s

Earnings (Deficit)

Equity (Deficit)

Balance at December 31, 2021

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Balance at December 31, 2022

( 1,074,588 )

Forfeitures of shares granted to employees

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Balance at December 31, 2023

( 1,074,588 )

Forfeitures of shares granted to employees

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Exercises of options

Common stock purchases and retirement

Dividends paid

Balance at December 31, 2024

The accompanying notes are an integral part of these consolidated statements.

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Cash flows from operating activities:

Adjustments to reconcile net income to net cash provided by operating activities:

Net (loss) income

Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:

Depreciation and amortization

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Loss on extinguishment & redemption of 2024 notes

Loss on extinguishment & redemption of 2022 notes

Gain – lease termination

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Prepaid expenses and other current assets

Change in valuation – interest rate swap agreement

Due to T-Mobile – Transition Services Agreement

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Deposits and other assets

Unfavorable lease liabilities

Accounts payable, accrued liabilities and other long-term liabilities

Net cash provided by operating activities

Net cash (used in) provided by operating activities

Cash flows from investing activities:

Cash receipts - IP Transit Services Agreement – T-Mobile

Acquisition of Sprint Business, net of $ 47.1 million of cash acquired

Acquisition of Sprint Business, net of $ 47.1 million of cash acquired in 2023

Purchases of property and equipment

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Cash flows from financing activities:

Net proceeds from issuance of 2027 Notes, net of debt costs of $ 1,290

Net proceeds from issuance of 2026 Notes, net of debt costs of $ 1,317

Redemption and extinguishment of 2024 Notes

Redemption and extinguishment of 2022 Notes

Net proceeds from issuance of senior unsecured 2027 Notes, net of debt costs of $ 1.6 million in 2024 and a discount of $ 6.8 million in 2024 and debt costs of $ 1.3 million in 2022

Net proceeds from issuance of secured IPv4 notes – net of debt costs of $ 7.6 million

Redemption and extinguishment of unsecured 2024 Notes

Dividends paid

Purchases and retirement of common stock

Principal payments of finance lease obligations

Settlement of a finance lease – at a discount

Principal payments of installment payment agreement

Proceeds from exercises of common stock options

Net cash used in financing activities

Net cash provided by (used in) financing activities

Effect of exchange rate changes on cash

Net decrease in cash and cash equivalents & restricted cash

Net increase (decrease) in cash and cash equivalents & restricted cash

Cash and cash equivalents & restricted cash, beginning of year

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Fair value of equipment acquired in leases

The accompanying notes are an integral part of these consolidated statements.

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Reorganization and merger

On May 15, 2014, pursuant to the Agreement and Plan of Reorganization (the “Merger Agreement”) by and among Cogent Communications Group, Inc.

(“Group”), a Delaware corporation, Cogent Communications Holdings, Inc., a Delaware corporation (“Holdings” or the “Company”) and Cogent Communications Merger Sub, Inc., a Delaware corporation, Group adopted a new holding company organizational structure whereby Group is now a wholly owned subsidiary of Holdings.

On May 15, 2014, pursuant to the Agreement and Plan of Reorganization by and among Cogent Communications Group, Inc.

(now Cogent Communications Group, LLC), a Delaware corporation (“Group”), Cogent Communications Holdings, Inc., a Delaware corporation (“Holdings”), and Cogent Communications Merger Sub, Inc., a Delaware corporation, Group adopted a new holding company organizational structure whereby Group is now a wholly owned subsidiary of Holdings.

Holdings is a “successor issuer” to Group pursuant to Rule 12g-3(a) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Cogent Communications, Inc.

is wholly owned by Group and the vast majority of Group’s assets, contractual arrangements, and operations are executed by Cogent Communications, Inc.

References to the “Company” for events that occurred prior to May 15, 2014 refer to Cogent Communications Group, Inc.

(now Cogent Communications Group, LLC) and its subsidiaries, and on and after May 15, 2014, the “Company” refers to Cogent Communications Holdings, Inc.

and its subsidiaries.

Cogent Communications, LLC (formerly Cogent Communications, Inc.) is wholly owned by Group, Sprint Communications Company LP is indirectly wholly owned by Holdings, and the vast majority of the Company’s assets, contractual arrangements, and operations are executed by Sprint Communications Company LP and Cogent Communications, LLC.

Description of business

The Company is a facilities-based provider of low-cost, high-speed Internet access, private network services, and data center colocation space and power.

The Company is a facilities-based provider of low-cost, high-speed Internet access, private network services, optical wavelength and optical transport services and data center colocation space and power.

The Company’s network is specifically designed and optimized to transmit packet routed data.

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The Company continues to support but does not actively sell these non-core services.

In connection with the Company’s acquisition of Sprint Communications (as discussed below), the Company began to provide optical wavelength services and optical transport services over its fiber network.

In connection with the Company’s acquisition of Sprint Communications, the Company began to provide optical wavelength services and optical transport services over a network that is generally independent of the Company’s legacy IP network.

The Company is selling these wavelength services to its existing customers, customers of Sprint Communications and to new customers who require dedicated optical transport connectivity without the capital and ongoing expenses associated with owning and operating network infrastructure.

Additionally, the Sprint Business customers include a number of companies larger than the Company’s historical customer base.

Additionally, the Sprint Business (as defined below) customers include a number of companies larger than the Company’s historical customer base.

In connection with the acquisition of Sprint Communications, the Company expanded selling services to these larger “Enterprise” customers.

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Recently Adopted Accounting Standards

In November 2023, the FASB issued ASU 2023-07, “ Segment Reporting (Topic 280) Improvements to Reportable Segment Disclosures” (ASU 2023-07”).

ASU 2023-07 modified the reporting and disclosure requirements under Accounting Standards Codification 280 “ Segment Reporting .” The Company adopted ASU 2023-07 in the year ended December 31, 2024 and has made the additional disclosures required under ASU 2023-07 in Note 10.

In October 2021, the FASB issued ASU 2021-08, “ Business Combinations (Topic 805):

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ASU 2021-08 is effective for annual reporting periods beginning after December 15, 2022 and interim periods within those fiscal years.

Early adoption is permitted.

Early adoption was permitted.

The Company adopted ASU 2021-08 in connection with its acquisition of Sprint Communications (as discussed below), at which time it became applicable to the Company and was applied in the accounting for the acquisition.

The adoption did not have a material impact on the provisional opening balance sheet recorded and there was no retrospective impact to the Company’s consolidated financial statements as a result of the adoption.

The adoption did not have a material impact on the opening balance sheet recorded and there was no retrospective impact to the Company’s consolidated financial statements as a result of the adoption.

Acquisition of Sprint Communications

On September 6, 2022, Cogent Infrastructure, Inc., a Delaware corporation (the “Buyer”) and a direct 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 an indirect wholly owned subsidiary of T-Mobile (the “Seller”), pursuant to which the Company acquired the U.S.

On September 6, 2022, Cogent Infrastructure, Inc.

(now Cogent Infrastructure, LLC), a Delaware corporation and a direct wholly owned subsidiary of the Company (the “Buyer” and “Cogent Infrastructure”), 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 an indirect wholly owned subsidiary of T-Mobile (the “Seller”), pursuant to which the Company acquired the U.S.

long-haul fiber network (including the non-U.S.

extensions thereof) of Sprint Communications and its subsidiaries (the “Sprint Business”).

The Purchase Agreement provides that, upon the terms and conditions set forth therein, the Company purchased from the Seller all of the issued and outstanding membership interests (the “Purchased Interests”) of Wireline Network Holdings LLC, a Delaware limited liability company that, following an internal restructuring and divisive merger, holds Sprint Communications’ assets and liabilities relating to the Sprint Business (such transactions contemplated by the Purchase Agreement, collectively, the “Transaction”).

Pursuant to the Purchase Agreement, the Company purchased from the Seller all of the issued and outstanding membership interests (the “Purchased Interests”) of Wireline Network Holdings LLC, a Delaware limited liability company that, following an internal restructuring and divisive merger, holds Sprint Communications’ assets and liabilities relating to the Sprint Business (such transactions contemplated by the Purchase Agreement, collectively, the “Transaction”).

The Purchase Agreement includes customary representations, warranties, indemnities and covenants, including regarding the conduct of the Sprint Business prior to the closing of the Transaction (the “Closing”).

In addition, the Closing was subject to customary closing conditions, including as to the receipt of certain required regulatory approvals and consents, all of which have been received.

The Company has agreed to guarantee the obligations of the Buyer under the Purchase Agreement pursuant to the terms of a Guaranty, dated as of September 6, 2022, by and between the Company and the Seller (the “Parent Guaranty”).

The Parent Guaranty contains customary representations, warranties and covenants of the Company and the Seller.

In addition, the Closing was subject to customary closing conditions, including the receipt of certain required regulatory approvals and consents.

The Company believes it is in a unique position to monetize the Sprint Business and its network and management expects to achieve significant cost reduction synergies and revenue synergies from the Transaction.

Revenue and pre-tax loss for the Sprint Business included in the Company’s condensed consolidated statements of comprehensive income for the year ended December 31, 2023 were $ 283.3 million and $ 234.5 million, respectively.

Revenue and pre-tax loss for the Sprint Business included in the Company’s consolidated statements of comprehensive income for the year ended December 31, 2023 were $ 283.3 million and $ 234.5 million, respectively.

Purchase Price

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During the third quarter of 2023, an additional Working Capital Adjustment of $ 5.0 million was accrued due to the Seller.

The Purchase Agreement also includes an estimated payment of $ 52.3 million from Seller to Buyer related to acquired short-term lease obligations (the “Short-term Lease Payment”).

The final determination of the Working Capital Adjustment (which included the Short - term Lease Payment below) was completed in April 2024 and the Company paid the Seller $ 5.0 million for the remaining Working Capital Adjustment.

Short-term lease payment

The Purchase Agreement also provides for a payment of $ 28.1 million ($ 19.8 million net of discount) from the Seller to the Buyer related to acquired short-term operating lease obligations (the “Short-term Lease Payment”).

The Short-term Lease Payment will be paid from the Seller to the Company in four equal payments in months 55 to 58 after the Closing Date.

The Short-term Lease Payment was recorded at its present value resulting in a discount of $ 15.6 million.

The interest rate used in determining the present value was derived considering rates on similar issued debt instruments with comparable durations, amongst other market factors.

The determination of the discount rate requires some judgment.

The amortization of the discount resulted in interest income of $ 1.9 million for the year ended December 31, 2023.

The Seller is disputing approximately $ 24.2 million of the Short-term Lease Payment amount.

The Purchase Agreement also includes reimbursement from Seller to Buyer for qualifying severance expenses incurred, which were $ 16.2 million in 2023.

A final determination of the Working Capital Adjustment and the Short-term Lease Payment is expected by the end of the first quarter of 2024.

The final determination of the Short-term Lease Payment was completed in April 2024.

The Short - term Lease Payment was recorded at its present value resulting

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in a discount of $ 8.4 million.

The interest rate used in determining the present value was derived considering rates on similar issued debt instruments with comparable durations, among other market factors.

The determination of the discount rate requires some judgment.

During the third quarter of 2023, the Short-term Lease Payment was reduced by $ 4.8 million and in the first quarter of 2024, the Short-term Lease Payment was reduced by an additional $ 17.0 million, net of discount of $ 7.2 million.

Including the cumulative impact of these adjustments, the amortization of the discount resulted in interest income of $ 0.7 million and $ 1.9 million for the years ended December 31, 2024 and 2023, respectively.

Severance reimbursements

The Purchase Agreement also provides for reimbursement from the Seller to the Buyer for qualifying severance expenses incurred.

Total qualifying severance expenses were $ 28.6 million of which $ 12.3 million were recorded in the year ended December 31, 2024 and $ 16.2 million were recorded in the year ended December 31, 2023.

These severance payments ended in the second quarter of 2024.

IP Transit Services Agreement

On the Closing Date, Cogent Communications, Inc.

and T-Mobile USA, Inc., a Delaware corporation and direct subsidiary of T-Mobile (“TMUSA”), entered into an agreement for IP transit services (“IP Transit Services Agreement”), pursuant to which TMUSA will pay an affiliate of the Company an aggregate of $ 700.0 million, consisting of (i) $ 350.0 million in equal monthly installments of $ 29.2 million per month during the first year after the Closing Date and (ii) $ 350.0 million in equal monthly installments of $ 8.3 million per month over the subsequent 42 months.

During the year ended December 31, 2023, TMUSA paid the Company $ 204.2 million under the IP Transit Agreement.

(now Cogent Communications, LLC), and T-Mobile USA, Inc., a Delaware corporation and direct subsidiary of T-Mobile (“TMUSA”), entered into an agreement for IP transit services (“IP Transit Services Agreement”), pursuant to which TMUSA will pay an affiliate of the Company an aggregate of $ 700.0 million, consisting of (i) $ 350.0 million in equal monthly installments of $ 29.2 million per month during the first year after the Closing Date and (ii) $ 350.0 million in equal monthly installments of $ 8.3 million per month over the subsequent 42 months.

Under the IP Transit Services Agreement., TMUSA paid the Company $ 204.2 million and $ 204.2 million during the years ended December 31, 2024 and 2023, respectively.

The Company accounted for the Transaction as a business combination under ASC Topic 805 Business Combinations (“ASC 805”).

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As a result, and considering statements made by T - Mobile, the IP Transit Services Agreement was recorded in connection with the Transaction at its discounted present value resulting in a discount of $ 79.6 million.

The interest rate used in determining the present value was derived considering rates on similar issued debt instruments with comparable durations, amongst other market factors.

The interest rate used in determining the present value was derived considering rates on similar issued debt instruments with comparable durations, among other market factors.

The determination of the discount rate requires some judgment.

The amortization of the discount resulted in interest income of $ 26.8 million for the year ended December 31, 2023.

The amortization of the discount resulted in interest income of $ 23.8 million and $ 26.8 million for the years ended December 31, 2024 and 2023, respectively.

Transition Services Agreement

On the Closing Date, the Buyer entered into a transition services agreement (the “TSA”) with the Seller, pursuant to which the Seller will provide to the Buyer, and the Buyer will provide to the Seller on an interim basis following the Closing Date, certain specified services (the “Transition Services”) to ensure an orderly transition following the separation of the Sprint Business from Sprint Communications.

The services to be provided by the Seller to the Buyer include, among others, information technology support, back office and finance, real estate and facilities, vendor and supply chain management, the payment and processing of vendor invoices for the Company and human resources.

The services to be provided by the Buyer to the Seller include, among others, information technology and network support, finance and back office and other wireless business support.

On the Closing Date, the Buyer entered into a transition services agreement (the “TSA”) with the Seller, pursuant to which the Seller provides to the Buyer, and the Buyer provides to the Seller on an interim basis following the Closing Date, certain specified services (the “Transition Services”) to ensure an orderly transition following the separation of the Sprint Business from Sprint Communications.

The services provided by the Seller to the Buyer include, among others, information technology support, back office and finance, real estate and facilities, vendor and supply chain management, including the payment and processing of vendor invoices for the Company and human resources services.

The services provided by the Buyer to the Seller include, among others, information technology and network support, finance and back office and other wireless business support.

The Transition Services are generally intended to be provided for a period of up to two years following the Closing Date, although such period may be extended for an additional one-year term by either party upon 30 days ’ prior written notice.

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Amounts paid for the Sprint Business by T-Mobile are reimbursed at cost.

Either party to the TSA may terminate the agreement (i) with respect to any individual service in full for convenience upon 30 days ’ prior written notice for certain services and reduced for other services after a 90-day period.

Either party to the TSA may terminate the agreement with respect to any individual service in full for convenience upon 30 days ’ prior written notice for certain services and reduced for other services after a 90-day period.

The TSA may be terminated in its entirety if the other party has failed to perform any of its material obligations and such failure is not cured within 30 days.

The TSA provides for customary indemnification and limits on liability.

Amounts billed under the TSA are due 30 days from receipt of the related invoice.

During the year ended December 31, 2023 the Company was billed $ 284.1 million as due to the Seller under the TSA, respectively, primarily for reimbursement at cost of payments to vendors of the Sprint Business.

During the year ended December 31, 2023 the Company paid $ 217.2 million to the Seller under the TSA.

As of December 31, 2023, the Company owed $ 66.9 million to the Seller and the Seller owed $ 4.5 million to the Buyer under the TSA agreement.

The amounts due to the Seller are primarily reimbursements for payments to Sprint Business vendors paid by the Seller for the Company until these vendors are fully transitioned to the Company.

The amounts due from the Seller are primarily reimbursements for severance costs related to Sprint Business employees and services provided by the Company for the Seller.

Other Services Provided to Seller

In addition, on the Closing Date, the Buyer and TMUSA entered into a commercial agreement (“Commercial Agreement”) for colocation and connectivity services, pursuant to which the Company will provide such services to TMUSA for a per service monthly fee plus certain third-party costs incurred in providing the services.

During the year ended December 31, 2023, the Company recorded $ 23.9 million from TMUSA as service revenue under the Commercial Agreement.

As of December 31, 2023, TMUSA owed $ 1.6 million to the Company under the Commercial Agreement.

These amounts are included in accounts receivable.

Amounts billed under the TSA are due 30 days from receipt of the related

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Amounts billed to the Company under the TSA were primarily for reimbursement at cost of payments to vendors of the Sprint Business until these vendors are fully transitioned to the Company.

The amounts due from the Seller were primarily reimbursements for severance costs related to Sprint Business employees and services provided by the Company for the Seller.

During the years ended December 31, 2024 and 2023, the Company was billed $ 27.2 million and $ 284.1 million as due to the Seller under the TSA, respectively.

During the years ended December 31, 2024 and 2023, the Company paid $ 93.8 million and $ 217.2 million to the Seller under the TSA, respectively.

During the years ended December 31, 2024 and 2023, the Company billed the Seller $ 1.1 million and $ 6.2 million as due from the Seller under the TSA, respectively.

During the years ended December 31, 2024 and 2023, the Seller paid the Company $ 1.3 million and $ 6.0 million under the TSA, respectively.

As of December 31, 2024, the Company owed $ 0.5 million to the Seller and the Seller owed $ 0.1 million to the Company under the TSA.

As of December 31, 2023, the Company owed $ 66.9 million to the Seller and the Seller owed $ 4.5 million to the Company under the TSA.

Other Services Provided to the Seller

In addition, on the Closing Date, the Buyer and TMUSA entered into a commercial agreement (the “Commercial Agreement”) for colocation and connectivity services, pursuant to which the Company will provide such services to TMUSA for a per service monthly fee plus certain third-party costs incurred in providing the services.

Under the Commercial Agreement, the Company recorded revenue of $ 14.7 million and $ 23.9 million during the years ended December 31, 2024 and 2023, respectively.

As of December 31, 2024, and 2023, TMUSA owed $ 2.6 million and $ 1.6 million, respectively, to the Company under the Commercial Agreement.

These amounts are recorded in accounts receivable.

Acquisition-Related Costs

In connection with the Transaction and negotiation of the Purchase Agreement, the Company has incurred professional fees and $ 16.2 million of reimbursed severance costs, in the year ended December 31, 2023, with such professional fees and reimbursed severance costs totaling $ 18.5 million and $ 2.2 million for the years ended December 31, 2023 and 2022, respectively.

In connection with the Transaction and negotiation of the Purchase Agreement, the Company incurred a total of $ 13.6 million of professional fees and other acquisition related costs (not including severance costs) since the acquisition date.

Acquisition - related costs (not including severance costs) were $ 9.1 million, $ 2.3 million and $ 2.2 million for the years ended December 31, 2024, 2023 and 2022, respectively.

Consideration

The acquisition-date fair value of consideration to be received from the Transaction totaled $ 607.2 million and comprised of the following:

The acquisition-date fair value of consideration received from the Transaction comprised of the following:

(In thousands)

Estimated working capital payments made to the Seller, net of severance reimbursements (a)

Estimated Purchase Agreement payment to be received from the Seller, net of discount of $ 15,614 (b)

Working capital payments made to the Seller, net of severance reimbursements (a)

Purchase Agreement payment to be received from the Seller, net of discount of $ 8,392 (b)

Amounts due from the Seller – IP Transit Services Agreement, net of discount of $ 79,610 (c)

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Total net consideration to be received from the Seller (d)

(a) Includes $ 61.1 million paid to the Seller on the Closing Date and an accrual of $ 5.0 million due to the Seller.

During the third quarter of 2023, the Working Capital Adjustment was increased by $ 1.5 million.

Includes an offsetting $ 16.2 million in severance reimbursement payments received from the Seller recorded as a measurement period adjustment during the fourth quarter.

A final determination of the Working Capital Adjustment is expected by the end of the first quarter of 2024.

(b) Under the Purchase Agreement, 50 % of the assumed short-term operating lease liabilities totaling $ 52.3 million is to be paid to the Company from the Seller in four equal installments in months 55 - 58 from the Closing Date and is recorded at its present value resulting in a discount of $ 15.6 million.

During the third quarter of 2023, the Short-term Lease Payment was reduced by $ 4.8 million.

A final determination of the Short-term Lease Payment is expected by the end of the first quarter of 2024.

(c) The IP Transit Services Agreement payments totaling $ 700.0 million are recorded at their present value resulting in a discount of $ 79.6 million.

Includes $ 61.1 million paid to the Seller on the Closing Date and $ 5.0 million paid in April 2024.

Additionally, includes an offsetting $ 28.6 million in total severance reimbursement payments received from the Seller recorded as measurement period adjustments of:

● $ 16.2 million during the three months ended December 31, 2023;

● $ 4.3 million during the three months ended March 31, 2024;

● $ 8.0 million during the three months ended June 30, 2024.

Under the Purchase Agreement, 50.0 % of the assumed short-term operating lease liabilities totaling $ 28.1 million are to be paid to the Company from the Seller in four equal installments in months 55 - 58 from the Closing Date and was recorded at their present value resulting in a discount of $ 8.4 million.

During the three months ended March 31, 2024, the Working Capital Adjustment, net of discount, was adjusted by $ 17.0 million to reflect the conclusion of the determination of amounts due from the Seller from the Short-term Lease Payment.

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The IP Transit Services Agreement payments totaling $ 700.0 million were recorded at their present value resulting in a discount of $ 79.6 million.

The $ 700.0 million is to be paid to the Company from the Seller in equal monthly payments of $ 29.2 million in months 1-12 and $ 8.3 million in months 13-54.

(d) Cash consideration was $ 1

Cash consideration was $ 1 .

Fair Value of Assets Acquired and Liabilities Assumed and Gain on Bargain Purchase

The Company accounted for the Transaction as a business combination under ASC 805.

The Company accounted for the Transaction as a business combination under ASC Topic 805 Business Combination (“ASC 805”).

Under ASC 805, the identifiable assets acquired and liabilities assumed were recorded at their fair values as of the Closing Date.

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The fair value of the identifiable assets acquired (including amounts due under the IP Transit Services Agreement) were in excess of the liabilities assumed and the net consideration to be paid resulting in a gain on bargain purchase of $ 1.4 billion.

During the third quarter of 2023, the Company recorded a measurement period adjustment to reclassify $ 24.9 million from right-of-use leased assets (net of related unfavorable lease liability amount) to finance lease assets (presented within property and equipment) and a measurement period adjustment to reclassify $ 160.9 million from operating lease liabilities to finance lease liability.

The Transaction is considered an asset purchase for income tax purposes.

The tax basis of the acquired business is the consideration paid ($ 1 ) plus the tax basis of certain liabilities assumed, with adjustments for cash acquired in excess of the purchase price.

Deferred income taxes were recorded based upon the difference between the book and tax basis of the acquired assets and assumed liabilities at the Company’s marginal effective income tax rate on the Closing Date.

During the years ended December 31, 2024 and 2023, the Company recorded measurement period adjustments resulting in increases to the gain on bargain purchase of $ 22.2 million and $ 254.0 million, respectively, as detailed below:

During the fourth quarter of 2023, the Company recorded the following measurement period adjustments resulting in an increase to the gain on bargain purchase of $ 254.0 million.

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This asset was recorded once management determined both the quantity of IPv4 addresses for which title was transferred and the valuation approach.

Because of the novel nature of this asset and that the Transaction has resulted in a material bargain purchase gain, management recorded the asset after appropriate consideration of the valuation approach, in the context of a distressed business.

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Because of the novel nature of this asset and that the Transaction resulted in a material bargain purchase gain, management recorded the asset after appropriate consideration of the valuation approach, in the context of a distressed business.

● A reduction to an intangible asset, acquired customer relationships, totaling $ 41.0 million from revisions to certain assumptions.

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● An increase to the net deferred tax liability totaling $ 89.5 million from the impact of the adjustments noted above.

The Transaction is considered an asset purchase for income tax purposes.

The tax basis of the acquired business is the consideration paid ($ 1 ) plus the tax basis of certain liabilities assumed, with adjustments for cash acquired in excess of the purchase price.

Deferred income taxes are recorded based upon the difference between the book and tax basis of the acquired assets and assumed liabilities at the Company’s marginal effective income tax rate on the Closing Date.

During the three months ended March 31, 2024, the Company recorded a measurement period adjustment resulting in a reduction to the gain on bargain purchase of $ 5.5 million which included;

● A reduction to the Short-term Lease Receivable of $ 24.2 million ( $ 17.0 million net of discount),

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● Additional reimbursed severance costs of $ 4.3 million,

● An increase to unfavorable lease liabilities of $ 6.0 million,

● A reduction to accrued liabilities of $ 11.3 million;

● A reduction to deferred income tax liabilities resulting from the adjustments noted above of $ 1.9 million.

During the three months ended June 30, 2024, the Company recorded measurement period adjustments resulting in an increase to the gain on bargain purchase of $ 27.7 million which included;

● Additional reimbursed severance costs of $ 8.0 million, and

● An adjustment to net deferred income tax liabilities of $ 19.7 million.

The following table summarizes the fair values for each major class of assets acquired and liabilities assumed at the Closing Date.

The Company retained the services of certified valuation specialists to assist with assigning values to certain acquired assets and assumed liabilities.

The amounts presented are provisional and are subject to change as the Company refines the estimates and inputs used in the calculations of the assets acquired and liabilities assumed.

The Company believes that estimates that are potentially subject to change include the valuations of IPv4 addresses, property and equipment, right-of-use leased assets, operating lease liabilities and the related income tax effects from such estimate revisions.

Current assets:

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Right-of-use leased assets

Intangible assets

IPv4 intangible assets

Other intangible assets

Deposits and other assets

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Gain on bargain purchase

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Acquired Property & Equipment

The Company acquired property and equipment of $ 965.7 million.

This is primarily comprised of the legacy Sprint network and consists of optical fiber, related equipment, and owned real estate which were valued using a combination of the cost and market approaches.

This is primarily comprised of the legacy Sprint network and consists of optical fiber, related equipment, and owned real estate that were valued using a combination of cost and market approaches.

Management intends to operate the acquired business;

however, management valued these assets using factors which represent an orderly liquidation value, to approximate the highest and best use of assets acquired in a distressed business.

The estimated fair value of the optical fiber on the Transaction date is $ 369.2 million.

The valuation requires the estimation of the total replacement cost per mile of fiber and a factor to reflect the orderly liquidation value.

There is not active market data for these assumptions and these assumptions are inherently subjective.

however, management valued these assets using factors that represent an orderly liquidation value, to approximate the highest and best use of assets acquired in a distressed business.

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The estimated fair value of the optical fiber on the Closing Date was $ 369.2 million.

The valuation required the estimation of the total replacement cost per mile of fiber and a factor to reflect the orderly liquidation value.

There is no active market data for these assumptions and these assumptions are inherently subjective.

Market participants could have differing views on these assumptions, which could result in a materially different fair value of the optical fiber.

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The Company acquired a portfolio of lease arrangements for the lease of dark fiber, rights-of-way and facilities.

In accordance with ASC 805 and ASC 842, the acquired leases are accounted for as if the leases are new at the acquisition date however, the Company will retain the lease classification from the Seller.

In accordance with ASC 805 and ASC Topic 842 Leases , the acquired leases are accounted for as if the leases were new at the acquisition date however, the Company retains the lease classification from the Seller.

The Company followed its historical policies with respect to evaluating the renewal periods of the acquired leases and estimating the incremental borrowing rate.

The Company also evaluated the leases for unfavorable terms and recorded an adjustment for unfavorable market terms of $ 151.1 million, was valued using the income approach, and which is presented net of the corresponding right of use assets.

The Company also evaluated the leases for unfavorable terms and recorded an adjustment for unfavorable market terms of $ 157.2 million that was valued using the income approach.

Unfavorable lease liabilities are presented net of the corresponding right-of-use assets.

Acquired Intangible Assets

Intangible assets acquired include $ 458.0 million of IPv4 address intangible assets and $ 16.0 million of acquired customer relationships.

Intangible assets acquired include $ 458.0 million of Internet Protocol version 4 (“IPv4”) addresses and $ 16.0 million of acquired customer relationships.

During the fourth quarter of 2023, the Company recorded a reduction to acquired customer relationships, totaling $ 41.0 million from revisions to certain assumptions.

The acquired customer relationships have an estimated useful life of nine years and the estimated fair value was determined using a market-based income approach.

Amortization expense was $ 1.8 million and $ 1.3 million for the years ended December 31, 2024 and 2023, respectively.

Future amortization expense of the customer relationships is $ 1.8 million per year for seven years .

The fair value measurement of the IPv4 addresses was based on recent auction prices and a factor to incorporate the uncertainty for how the market for IPv4 addresses will function in the future.

The Company believes that these IPv4 addresses have an indefinite useful live and are not being amortized.

The Company evaluates these assets for impairment on the first day of the fourth quarter.

The Company believes that these IPv4 addresses have an indefinite useful life and are not being amortized.

The Company evaluates the IPv4 address asset for impairment on the first day of the fourth quarter, or more frequently if events or changes in circumstances indicate that the carrying amount may not be recoverable.

In performing the impairment assessment, the Company may first evaluate qualitative factors to determine whether it is more likely than not that the fair value of the indefinite-lived intangible asset is less than its carrying amount.

Upon consideration of relevant factors, the Company concluded that it was not more-likely-than-not that impairment was present, and therefore, a quantitative impairment assessment was not required.

There was no impairment recorded during the period from May 1, 2023 through December 31, 2024.

The acquired customer relationships have an estimated useful life of nine years and the estimated fair value was determined using a market based income approach.

Amortization expense for the year ended December 31, 2023 was $ 1.3 million.

Future amortization expense of the customer relationships is $ 1.8 million per year for eight years .

Acquired Asset Retirement Obligations

In connection with the Transaction, the Company assumed $ 32.0 million of asset retirement obligations primarily related to restoration obligations for acquired leases which was valued using the income approach.

The obligations and corresponding asset retirement assets are being accreted and amortized over approximately four years .

Accretion of the asset retirement obligations (recorded as an increase to network operations expenses) and amortization of the asset retirement assets (recorded as depreciation and amortization expenses) for the year ended December 31, 2023 were $ 1.7 million and $ 5.1 million, respectively.

In connection with the Transaction, the Company assumed $ 32.0 million of asset retirement obligations primarily related to restoration obligations for acquired leases that were valued using the income approach.

In accordance with ASC 410, the Company has not recorded an asset retirement obligation related to the removal of the acquired optical fiber because a settlement date for which to remove the fiber is indeterminable and therefore a reasonable estimation of fair value cannot be made.

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Actual results may differ materially from the assumptions within the accompanying unaudited pro forma financial information.

The purchase adjustments are preliminary and subject to change as additional analyses are performed and finalized.

The selected unaudited pro forma condensed combined financial information is provided for illustrative purposes only and does not purport to represent what the actual consolidated results of operations would have been had the Transaction actually occurred on January 1, 2022, nor do they purport to project the future consolidated results of operations.

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Operating loss from continuing operations

The pro forma results for the year ended December 31, 2022 include estimates for the gain on bargain purchase related to the Transaction of $ 1.4 billion, interest income from the amortization of the discount recorded under the IP Transit Services Agreement of $ 36.2 million, a net increase to historical depreciation expense based on the fair value of property and equipment and the impact of the finance lease adjustment discussed above, of $ 58.0 million, amortization expense related to the customer relationship intangible assets of $ 1.8 million, the elimination of amounts charged from the parent company to the Sprint Business as autonomous entity expense adjustments of $ 45.7 million, amortization of unfavorable lease liabilities of $ 3.0 million, a reduction to network operations expense of $ 50.4 million and an increase to interest expense of $ 10.9 million from the impact of the finance lease adjustment discussed above, and the impact to income tax expense from the pro-forma and autonomous entity adjustments of $ 17.2 million.

The pro forma results for the year ended December 31, 2022 include;

● The gain on bargain purchase related to the Transaction of $ 1.4 billion,

● Interest income from the amortization of the discount recorded under the IP Transit Services Agreement of $ 36.2 million,

● A net increase to historical depreciation expense based on the fair value of property and equipment and the impact of the finance lease adjustment of $ 58.0 million,

● Amortization expense related to the customer relationship intangible assets of $ 1.8 million,

● The elimination of amounts charged from the parent company to the Sprint Business as autonomous entity expense adjustments of $ 45.7 million,

● Amortization of unfavorable lease liabilities of $ 5.6 million,

● A reduction to network operations expense of $ 50.4 million and an increase to interest expense of $ 10.9 million from the impact of the finance lease adjustment, and

● The impact to income tax expense from the pro-forma and autonomous entity adjustments of $ 17.2 million.

The historical results of the Sprint Business for the year ended December 31, 2022 include a loss on impairment of $ 477.3 million and a gain on the sale of IP addresses of $ 120.8 million.

The pro forma results for the year ended December 31, 2023 include the gain on bargain purchase related to the Transaction of $ 1.4 billion, interest income from the amortization of the discount recorded under the IP Transit Services Agreement of $ 14.7 million, a net increase to historical depreciation expense based on the fair value of property and equipment and the impact of the finance lease adjustment discussed above of $ 28.3 million, amortization expense related to the customer relationship intangible assets of $ 0.6 million, amortization of unfavorable lease liabilities of $ 1.0 million, a reduction to network operations expense of $ 16.8 million and an increase to interest expense of $ 3.9 million from the impact of the finance lease adjustment discussed above, and the impact to income tax expense from the pro-forma adjustments of $ 0.2 million.

The pro forma results for the year ended December 31, 2023 include:

● The gain on bargain purchase related to the Transaction of $ 1.4 billion,

● Interest income from the amortization of the discount recorded under the IP Transit Services Agreement of $ 14.7 million,

● A net increase to historical depreciation expense based on the fair value of property and equipment and the impact of the finance lease adjustment of $ 29.5 million,

● Amortization expense related to the customer relationship intangible assets of $ 0.6 million,

● Amortization of unfavorable lease liabilities of $ 1.0 million,

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● A reduction to network operations expense of $ 16.8 million and an increase to interest expense of $ 3.9 million from the impact of the finance lease adjustment, and

● The impact to income tax expense from the pro-forma adjustments of $ 2.6 million.

Significant Accounting Policies

Principles of consolidation

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All intercompany balances and transactions have been eliminated in consolidation.

Certain prior period amounts have been reclassified to conform to current period presentation.

Use of estimates

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Actual results may differ from these estimates.

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Allowance for credit losses

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Accounts receivable balances are written off against the allowance for credit losses after all means of internal collection activities have been exhausted and the potential for recovery is considered remote.

The Company uses third-party collection services to continue to seek collection for it’s written off accounts receivable.

The Company uses third-party collection services to continue to seek collection for its written off accounts receivable.

The Company estimates credit losses expected over the life of its trade receivables based on historical information combined with current conditions that may affect a customer’s ability to pay and reasonable and supportable forecasts.

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Allowance for credit losses (deducted from accounts receivable)

Year ending December 31, 2023

Year ending December 31, 2022

Year ending December 31, 2021

Year ended December 31, 2024

Year ended December 31, 2023

Year ended December 31, 2022

The current-period provision for expected credit losses is net of bad debt recoveries of $ 2.9 million, $ 1.9 million and $ 1.9 million for the years ended December 31, 2024, 2023 and 2022, respectively.

Lessor Accounting

The Company is a lessor for leases of owned dark fiber acquired in connection with the Transaction, that have contract terms that are accounted for as operating leases.

These transactions are generally structured as indefeasible - right - of use agreements (“IRUs”),

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that are the exclusive right to use specified fibers for a specified term, typically 20 - 25 years .

Cash consideration received on transfers of dark fiber, including upfront installation fees, is recognized on a straight - line basis to service revenue over the term of the agreement.

Lease income is included in service revenue in the consolidated statements of comprehensive (loss) income.

In February 2016, the FASB issued ASU No.

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December 31, 2023

December 31, 2022

Finance lease cost amortization of right-of-use assets

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Finance leases—fiber lease agreements

The Company has entered into lease agreements with numerous providers of dark fiber under indefeasible-right-of-use agreements (“IRUs”).

The Company has entered into lease agreements with numerous providers of dark fiber under IRUs.

These IRUs typically have initial terms of 15 - 20 years and include renewal options after the initial lease term.

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These obligations begin when the related fiber is accepted, which is generally expected to occur in the next 12 months.

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Operating leases

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Certain of the Company’s leases include options to extend or terminate the lease.

The Company establishes the number of renewal option periods used in determining the operating lease term based upon its assessment at the inception of the operating lease of the number of option periods for which failure to renew the lease imposes a penalty in such amount that renewal appears to be reasonably certain.

The option to renew may be automatic, at the option of the Company or mutually agreed to between the landlord or dark fiber provider and the Company.

The Company establishes the number of renewal option periods used in determining the

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operating lease term based upon its assessment at the inception of the operating lease of the number of option periods for which failure to renew the lease imposes a penalty in such amount that renewal appears to be reasonably certain.

The option to renew may be automatic, at the option of the Company or mutually agreed to between the landlord, dark fiber provider or the right-of-way provider and the Company.

Once the Company has accepted the related fiber route or the facility lease term has begun, the present value of the aggregate future minimum operating lease payments is recorded as an operating lease liability and a right-of-use leased asset.

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Lease obligations, net of current maturities

IRU finance lease termination – discount and gain on lease termination

In June 2024, the Company elected to exercise a contractual option to prepay in full at a 12.0 % discounted rate an IRU finance lease agreement (the “IRU Lease”) for $ 114.6 million acquired with the Sprint Business.

At the payment date, the present value of the IRU finance lease liability was $ 117.9 million and the remaining 31 monthly principal payments of $ 4.2 million each totaled $ 130.2 million.

The prepayment resulted in a gain on lease termination of $ 3.3 million related to the difference between the book value of $ 117.9 million and the cash payment of $ 114.6 million.

The Company is continuing to use the related IRU asset.

Revenue recognition

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The Company recognizes revenue over the estimated average customer life for installation fees associated with month-to-month contracts, because the installation fee represents a material right as defined by ASC 606.

The Company capitalizes certain contract acquisition costs that relate directly to a customer contract, including commissions paid to its sales team and sales agents and amortizes these costs on straight-line basis over the period the services are transferred to the customer for commissions paid to its sales team (estimated customer life) and over the remaining original contract term for agent commissions.

The Company capitalizes certain contract acquisition costs that relate directly to a customer contract, including commissions paid to its sales team and sales agents and amortizes these costs on a straight-line basis over the period the services are transferred to the customer for commissions paid to its sales team (estimated customer life) and over the remaining original contract term for agent commissions.

Management assesses these costs for impairment at least quarterly and as “triggering” events occur that indicate it is more likely than not that an impairment exists.

These contract costs were $ 24.3 million as of December 31, 2023 and were $ 23.7 million as of December 31, 2022.

These contract costs were $ 31.9 million as of December 31, 2024 and $ 24.3 million as of December 31, 2023 and are included in prepaid expenses and other current assets (current portion) and deposits and other assets (non - current portion) on the consolidated balance sheets.

The Company’s service offerings consist of on-net and off-net telecommunications services.

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The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these services.

The Company has adopted the practical expedient related to certain performance obligation disclosures since it has a right to consideration

The Company has adopted the practical expedient related to certain performance obligation disclosures since it has a right to consideration from its customer in an amount that corresponds directly with the value to the customer of the Company’s performance completed to date.

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from its customer in an amount that corresponds directly with the value to the customer of the Company’s performance completed to date.

To achieve this core principle, the Company follows the following five steps:

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Service revenue recognized from amounts in deferred revenue (contract liabilities) at the beginning of the period during the years ended December 31, 2024, 2023 and 2022 was $ 6.5 million, $ 4.9 million and $ 5.0 million, respectively.

Amortization expense for contract costs for the years ended December 31, 2023, 2022 and 2021 was $ 19.3 million, $ 19.4 million and $ 18.4 million, respectively.

Amortization expense for contract costs for the years ended December 31, 2024, 2023 and 2022 was $ 20.6 million, $ 19.3 million and $ 19.4 million, respectively and are included within selling, general, and administrative expenses on the consolidated statements of comprehensive income.

Gross receipts taxes, universal service fund and other surcharges

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The Company measures its cash equivalents and restricted cash at amortized cost, which approximates fair value based upon quoted market prices (Level 1).

Based upon recent trading prices (Level 2—market approach), at December 31, 2023, the fair value of the Company’s $ 500.0 million senior secured notes due 2026 was $ 477.5 million, the fair value of the Company’s $ 450.0 million senior unsecured notes due 2027 was $ 451.1 million and the estimated fair value of the Company’s Swap Agreement was $ 38.7 million.

Based upon recent trading prices (Level 2 market approach) at December 31, 2024,

● The fair value of the Company’s $ 450.0 million aggregate principal amount of 7.00 % Senior Unsecured Notes due 2027 (the “2027 Notes”) was $ 450.0 million,

● The fair value of the Company’s $ 300.0 million aggregate principal amount of 7.00 % Senior Unsecured Notes due 2027 (the “2027 Mirror Notes”) was $ 299.3 million,

● The fair value of the Company’s $ 500.0 million aggregate principal amount of 3.50 % Senior Secured Notes due 2026 (the “2026 Notes”) was $ 482.5 million,

● The fair value of the Company’s $ 206.0 million aggregate principal amount of secured IPv4 notes (the “IPv4 Notes”) was $ 211.8 million, and

● The fair value of the Company’s interest rate swap agreement (the “Swap Agreement”) was $ 22.3 million.

Restricted cash and interest rate swap agreement

Restricted cash represents amounts held in segregated bank accounts by our clearing broker as margin in support of our Swap Agreement, as discussed in Note 4, and was $ 38.7 million as of December 31, 2023.

Additional cash may be further restricted to maintain our interest rate swap instrument as interest rates fluctuate and margin requirements change.

Restricted cash includes amounts held in segregated bank accounts by the Company’s clearing broker as margin in support of the Company’s Swap Agreement as discussed in Note 4 and was $ 22.3 million as of December 31, 2024 and $ 38.7 million at December 31, 2023.

Additional restricted cash related to the IPv4 Notes, as discussed in Note 4, was $ 7.1 million as of December 31, 2024.

Additional cash may be further restricted to maintain the Company’s Swap Agreement as interest rates fluctuate and margin requirements change and under the provisions of the Company’s IPv4 Note Indenture, as defined below.

The Company does not use derivative financial instruments for trading purposes.

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Accounts receivable are due from customers located in major metropolitan areas in the United States, Europe, Canada, Mexico, South America, Oceania and Africa.

Receivables from the Company’s net-centric (wholesale) customers are generally subject to a higher degree of credit risk than the Company’s corporate customers.

Receivables from the Company’s net-centric (wholesale) customers are generally subject to a higher degree of credit risk than the Company’s corporate and enterprise customers.

The Company relies upon a limited number of equipment vendors for the majority of its network equipment and is also dependent upon many third-party fiber providers for providing its services to its customers.

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Expenditures for maintenance and repairs are expensed as incurred.

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Depreciation and amortization periods are as follows:

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5 to 40 years

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Change in estimated useful life - owned fiber

In accordance with its policy, the Company reviews the estimated useful lives of its fixed assets on an ongoing basis.

This review indicated that the actual lives of owned fiber acquired as part of the acquisition of the Sprint Business were longer than the estimated useful lives used for depreciation purposes in the Company’s financial statements.

As a result, effective July 1, 2024, the Company changed its estimates of the useful lives of its owned fiber to better reflect the estimated periods during which these assets will remain in service.

The estimated useful lives of the owned fiber, within system infrastructure, that previously averaged 14 years were increased to an average of 40 years .

The effect of this change in estimate on the year ended December 31, 2024 was to reduce depreciation expense by $ 8.7 million, increase net income by $ 6.5 million, and increase basic and diluted earnings per share by $ 0.14 .

Long-lived assets

The Company’s long-lived assets include property and equipment.

These long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

The Company’s long-lived assets include property and equipment and intangible assets.

Long-lived assets with finite-lives are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

Impairment is determined by comparing the carrying value of these long-lived assets to management’s probability weighted estimate of the future undiscounted cash flows expected to result from the use of the assets.

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The Company begins recording equity-based compensation expense related to performance awards when it is considered probable that the performance conditions will be met and for market-based awards compensation cost is recognized if the service condition is satisfied even if the market condition is not satisfied.

Equity-based compensation expense is recognized in the statements of comprehensive income in a manner consistent with the classification of the employee’s salary and other compensation.

Equity-based compensation expense is recognized in the statements of comprehensive income in a manner consistent with the classification of the employees’ salaries and other compensation.

The Company’s deferred tax assets or liabilities are computed based upon the differences between financial statement and income tax bases of assets and liabilities using the enacted marginal tax rate.

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Once it is determined that a position meets this recognition threshold, the position is measured to determine the amount of benefit to be recognized in the financial statements.

The Company adjusts its estimated liabilities for uncertain tax positions periodically because of ongoing examinations by, and settlements with, the various taxing authorities, as well as changes in tax laws, regulations and interpretations.

The Company adjusts its estimated liabilities for uncertain tax positions

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periodically because of ongoing examinations by, and settlements with, the various taxing authorities, as well as changes in tax laws, regulations and interpretations.

The Company’s policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of its income tax expense.

Basic and diluted net income per common share

Basic and diluted net (loss) income per common share

Basic earnings per share (“EPS”) excludes dilution for common stock equivalents and is computed by dividing net income or (loss) available to common stockholders by the weighted-average number of common shares outstanding for the period.

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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.

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The following details the determination of the diluted weighted-average shares:

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Network equipment

Leasehold improvements

System infrastructure

Owned buildings and leasehold improvements

System infrastructure (including owned fiber)

Office and other equipment

Buildings and improvements

Asset retirement obligations

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( 1,350,672 )

( 1,124,385 )

Assets under finance leases:

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Depreciation and amortization expense related to property and equipment and finance leases was $296.2 million, $229.9 million and $ 92.2 million, for the years ended December 31, 2024, 2023 and 2022, respectively.

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The Company capitalizes the compensation cost of employees directly involved with its construction activities.

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These amounts are included in system infrastructure costs.

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Accrued and other liabilities:

Accrued and other liabilities and prepaid expenses and other current assets:

Accrued and other current liabilities consist of the following (in thousands):

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Payroll and benefits

Taxes—non-income based

Prepaid expenses and other current assets consist of the following (in thousands):

Prepaid commissions, current portion

Prepaid taxes

Prepaid operating expenses

Long-term debt:

As of December 31, 2023, the Company had outstanding $ 450.0 million aggregate principal amount of Senior Unsecured Notes due 2027 (the “2027 Notes”) and $ 500.0 million aggregate principal amount of Senior Secured Notes due 2026 (the “2026 Notes”).

As of December 31, 2024, the Company had outstanding $ 300.0 million aggregate principal amount of 2027 Mirror Notes, $ 450.0 million aggregate principal amount of 2027 Notes, $ 500.0 million aggregate principal amount of 2026 Notes and $ 206.0 million aggregate principal amount of IPv4 Notes.

The IPv4 Notes were issued in May 2024 and bear interest at a rate of 7.924 %, with an anticipated term ending in May 2029 (such anticipated repayment date, the “ARD”).

Interest on the IPv4 Notes is paid monthly.

The 2027 Mirror Notes were issued in June 2024, are due on June 15, 2027, and bear interest at a rate of 7.00 % per year.

The 2027 Notes were issued in June 2022, are due on June 15, 2027, and bear interest at a rate of 7.00 % per year.

Interest on the 2027 Notes is paid semi-annually on June 15 and December 15 of each year.

Interest on the 2027 Mirror Notes and 2027 Notes is paid semi-annually on June 15 and December 15 of each year.

The 2026 Notes were issued in May 2021, are due on May 1, 2026, and bear interest at a rate of 3.50 % per year.

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Interest on the 2024 Notes was paid semi-annually on June 30 and December 30 of each year.

Issuance of 2027 Notes and redemption of 2024 Notes

Issuance of $ 300.0 Million Principal Amount of 2027 Mirror Notes

On June 11, 2024, Group and Cogent Finance, Inc.

(the “Co-Issuer” and, together with Group, the “Issuers”), two wholly owned subsidiaries of the Company, completed an offering of $ 300.0 million aggregate principal amount of its 2027 Mirror Notes for issuance in a private placement not registered under the U.S.

Securities Act of 1933, as amended (the “Securities Act”).

The 2027 Mirror Notes were offered and sold only to persons reasonably believed to be qualified institutional buyers in an unregistered offering pursuant to Rule 144A under the Securities Act and to certain non-U.S.

persons in transactions outside the United States in compliance with Regulation S under the Securities Act.

The 2027 Mirror Notes have the same maturity date and call protection, bear interest at the same rate and otherwise have substantially the same terms as the 2027 Notes;

however, the 2027 Mirror Notes are not fungible (from a trading or tax perspective) with the 2027 Notes and are a separate series of notes from the 2027 Notes.

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The 2027 Mirror Notes were issued at a price equal to 98.50 % of their face value.

The net proceeds from the offering were approximately $ 291.9 million after deducting the discount and offering expenses.

Group used $ 114.6 million of the net proceeds from the offering to exercise a contractual option to prepay in full the IRU Lease noted above, at a discount.

Group expects to use the remainder of the net proceeds for general corporate purposes and/or to make special or recurring dividends to the Company.

The 2027 Mirror Notes were issued pursuant to, and are governed by, an indenture, dated June 11, 2024 (the “2027 Mirror Notes Indenture”), among the Issuers, the Company, the other guarantors named therein and Wilmington Trust, National Association, as trustee (the “2027 Notes Trustee”).

The 2027 Mirror Notes are jointly and severally guaranteed (the “Guarantees”) on a senior unsecured basis by each of Group’s existing and future material domestic subsidiaries (other than the Co-Issuer), subject to certain exceptions (collectively, the “Subsidiary Guarantors”), and by the Company (together with the Subsidiary Guarantors, the “Guarantors”).

However, the Company is not subject to the covenants under the 2027 Mirror Notes Indenture.

Under certain circumstances, the Guarantors may be released from these Guarantees without the consent of the holders of the 2027 Mirror Notes.

The 2027 Mirror Notes and the Guarantees are the Issuers’ and the Guarantors’ senior unsecured obligations.

The 2027 Mirror Notes and the Guarantees are effectively subordinated to all of the Issuers’ and the Guarantors’ existing and future secured indebtedness to the extent of the value of the collateral securing such indebtedness, and are structurally subordinated to all indebtedness and other liabilities of subsidiaries that are not Subsidiary Guarantors.

Without giving effect to collateral arrangements, the 2027 Mirror Notes and the Guarantees rank pari passu in right of payment with all of the Issuers’ and the Guarantors’ existing and future senior indebtedness, including the Issuers’ 2026 Notes and the 2027 Notes.

The 2027 Mirror Notes and the Guarantees rank contractually senior in right of payment to all of the Issuers’ and the Guarantors’ subordinated indebtedness and are structurally subordinated to any existing and future indebtedness and other liabilities of the Issuers’ non-guarantor subsidiaries.

After June 15, 2024, the Issuers may redeem the 2027 Mirror Notes, in whole or in part, at a redemption price ranging from 103.5 % of the aggregate principal amount of the 2027 Mirror Notes redeemed to par (depending on the year), in each case, as set forth in the 2027 Mirror Notes Indenture, plus accrued and unpaid interest, if any, to, but not including, the date of redemption.

If Group undergoes specific kinds of change in control accompanied by certain ratings events, the Issuers will be required to offer to repurchase the 2027 Mirror Notes from holders at a price equal to 101 % of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, to, but not including, the date of repurchase.

Additionally, if Group or any of its restricted subsidiaries sells assets and does not apply the proceeds from such sale in a certain manner or certain other events have not occurred, under certain circumstances, the Issuers will be required to use the net proceeds to make an offer to purchase the 2027 Mirror Notes at an offer price in cash equal to 100 % of the principal amount of the 2027 Mirror Notes, plus accrued and unpaid interest, if any, to, but not including, the repurchase date.

In connection with any offer to purchase all or any of the 2027 Mirror Notes (including a change of control offer, asset sale offer or any tender offer), if holders of no less than 90 % of the aggregate principal amount of the outstanding 2027 Mirror Notes validly tender their 2027 Mirror Notes, the Issuers or a third party are entitled to redeem any remaining 2027 Mirror Notes at the price paid to each holder.

The 2027 Mirror Notes Indenture includes covenants that restrict Group and its restricted subsidiaries’ (including the Co-Issuer’s) ability to, among other things;

incur indebtedness;

issue certain preferred stock or similar equity securities;

pay dividends or make other distributions in respect of, or repurchase or redeem, capital stock;

make certain investments and other restricted payments, such as prepayment, redemption or repurchase of certain indebtedness;

create liens;

consolidate, merge, sell or otherwise dispose of all or substantially all of the properties and assets of Group and its restricted subsidiaries taken as a whole;

incur restrictions on the ability of a subsidiary to pay dividends or make other payments;

or enter into transactions with affiliates.

The covenants provide for certain exceptions to these restrictions, and the Company is not subject to the covenants under the 2027 Mirror Notes Indenture.

Certain covenants will cease to apply to the 2027 Mirror Notes if, and for so long as, the 2027 Mirror Notes have investment grade ratings from any two of Moody’s Investors Service, Inc., Fitch Ratings, Inc.

and S&P Global Ratings and so long as no default or event of default under the 2027 Mirror Notes Indenture has occurred and is continuing.

Upon suspension of the covenants, the Guarantees will be released until such time as the covenants are no longer suspended.

The principal amount of the 2027 Mirror Notes would become immediately due and payable upon the occurrence of certain bankruptcy or insolvency events involving Group, the Co-Issuer or certain of Group’s subsidiaries, and may be declared immediately due and payable by the 2027 Notes Trustee or the holders of at least 25 % of the aggregate principal amount of the then-outstanding 2027 Mirror Notes upon the occurrence of certain events of default under the 2027 Mirror Notes Indenture.

Events of default include the following with respect to the Issuers and Group’s significant subsidiaries:

(i) failure to pay principal, premium or interest at required times;

(ii) failure to comply with any other agreements in the 2027 Mirror Notes Indenture;

(iii) default on certain material indebtedness that is caused by a failure to make a payment within any applicable grace period when due at maturity or results in the acceleration of such indebtedness prior to its express maturity;

(iv) failure to pay certain material judgments;

(v) a Guarantee being

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held unenforceable or invalid or ceasing for any reason to be in full force and effect or a Guarantor denying or disaffirming its obligations under its Guarantee;

and (vi) certain events of bankruptcy or insolvency.

Issuance of $ 206.0 Million Principal Amount of IPv4 Notes

On May 2, 2024, Cogent IPv4 LLC (the “IPv4 Issuer”), a special-purpose, bankruptcy remote, indirect wholly owned subsidiary of the Company, issued $ 206.0 million principal amount of its IPv4 Notes in an offering exempt from registration under the Securities Act.

The net proceeds from the offering, after debt offering costs, were $ 198.4 million and are expected to be used for general corporate purposes.

The IPv4 Notes were issued pursuant to an indenture, dated as of May 2, 2024 (the “IPv4 Base Indenture”), as supplemented by the Series 2024-1 Supplement thereto, dated as of May 2, 2024 (the “Series 2024-1 Supplement”), in each case entered into by and between the IPv4 Issuer and Wilmington Trust, National Association, as the trustee for the IPv4 Notes (the “IPv4 Trustee”).

The IPv4 Base Indenture allows the IPv4 Issuer to issue additional series of notes subject to certain conditions set forth therein, and the IPv4 Base Indenture, together with the Series 2024-1 Supplement, and any other series supplements to the IPv4 Base Indenture, is referred to herein as the “IPv4 Indenture.”

The IPv4 Notes were issued as part of a securitization transaction, pursuant to which certain IPv4 addresses, customer IPv4 address leases, customer accounts receivable and other IPv4 address assets (collectively, “IPv4 Address Assets”) were contributed to the IPv4 Issuer and are included as collateral for the IPv4 Notes.

While the IPv4 Notes are outstanding, scheduled payments of interest are required to be made on a monthly basis.

From and after the ARD, principal payments will also be required to be made on the IPv4 Notes on a monthly basis.

No principal payments will be due on the IPv4 Notes prior to the ARD, unless certain rapid amortization or acceleration triggers are activated.

Cogent Communications LLC (in such capacity, the “Manager”) performs certain monthly services related to the IPv4 Address Assets and IPv4 Notes including billing customers, collecting amounts paid by customers, forwarding payments to the IPv4 Trustee related to the IPv4 Address Assets and other administrative services.

Amounts paid by the Manager to the IPv4 Trustee are reconciled on a monthly basis and the IPv4 Trustee pays the monthly interest on the IPv4 Notes and other expenses from the accumulated customer payments on the IPv4 Address Assets.

Amounts held by the IPv4 Trustee before the monthly reconciliation is completed are considered restricted cash.

After the IPv4 Trustee pays the monthly interest and other IPv4 Address Asset related costs, including monthly fees paid to the Manager for its services, the residual cash is paid to the Company and is unrestricted.

The legal final maturity date of the IPv4 Notes is in May of 2054 .

If the IPv4 Issuer has not repaid or refinanced the IPv4 Notes prior to the monthly payment date in May of 2029, additional interest will accrue thereon in an amount equal to the greater of (i) 5.0 % per annum and (ii) the excess amount, if any, by which the sum of the following exceeds the interest rate for such IPv4 Note:

(A) the yield to maturity (adjusted to a “mortgage-equivalent basis” pursuant to the standards and practices of the Securities Industry and Financial Markets Association) on the ARD for such IPv4 Note of the United States Treasury Security having a remaining term closest to 10 years;

plus (B) 5.0 %;

plus (C) the post-ARD note spread of 3.400 % applicable to such IPv4 Note.

The IPv4 Notes are obligations only of the IPv4 Issuer pursuant to the indenture (the IPv4 Indenture”), and are secured by a security interest in substantially all of the IPv4 Address Assets pursuant to the IPv4 Indenture.

The IPv4 Notes are guaranteed by Cogent IPv4 Holdco LLC, a special-purpose entity and an indirect wholly owned subsidiary of the Company, as the guarantor (in such capacity, the “IPv4 Guarantor”), pursuant to a guaranty, dated as of May 2, 2024 (the “Guaranty”) by the IPv4 Guarantor in favor of the IPv4 Trustee pursuant to which the IPv4 Guarantor has granted a security interest in the equity interests of the IPv4 Issuer as collateral security for its obligations under the Guaranty.

Except as described below, neither the Company nor any subsidiary of the Company, other than the IPv4 Issuer and the IPv4 Guarantor, will guarantee or in any way be liable for the obligations of the IPv4 Issuer under the IPv4 Indenture or the IPv4 Notes.

The IPv4 Notes are subject to a series of covenants and restrictions customary for transactions of this type.

These covenants and restrictions include (i) that the IPv4 Issuer maintains a liquidity reserve account to be used to make required payments in respect of the IPv4 Notes with such funds considered restricted cash;

(ii) provisions relating to optional and mandatory prepayments, including specified make-whole payments in the case of certain optional prepayments of the IPv4 Notes prior to the monthly payment date in May of 2028;

(iii) certain indemnification payments in the event, among other things, that the transfers of the assets pledged as collateral for the IPv4 Notes are in stated ways defective or ineffective;

and (iv) covenants relating to recordkeeping, access to information and similar matters.

As provided in the IPv4 Base Indenture, the IPv4 Notes are also subject to rapid amortization in the event of a failure to maintain a stated debt service coverage ratio as defined in the IPv4 Indenture.

A rapid amortization may be cured

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if the debt service coverage ratio exceeds a certain threshold for a certain period of time, upon which cure, regular amortization, if any, will resume.

In addition, if certain utilization thresholds are not met (i.e., the proportion of IP addresses which are leased to the total number of IP addresses owned by the IPv4 Issuer falls below certain thresholds), the IPv4 Issuer will be required to apply collections to the repayment of the IPv4 Notes, and in certain circumstances, the noteholders will have the ability to direct a sale of the IP Address Assets, in whole or in part, pursuant to the terms set forth in the IPv4 Indenture.

The IPv4 Notes are also subject to certain customary events of default, including events relating to non-payment of required interest, principal or other amounts due on or with respect to the IPv4 Notes, failure to comply with covenants within certain time frames, certain bankruptcy events, breaches of specified representations and warranties, failure of security interests to be effective and certain judgments.

Issuance of the 2027 Notes and Redemption of 2024 Notes

On June 22, 2022 (the “2027 Notes Closing Date”), Group completed its offering of $ 450.0 million aggregate principal amount of its 2027 Notes for issuance in a private placement not registered under the Securities Act of 1933, as amended (the “Securities Act”).

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The 2024 Notes were issued in Euros and were reported in the Company’s reporting currency, US dollars, until they were extinguished and redeemed.

Prior to the redemption of the 2024 Notes, the gains on foreign exchange on the 2024 Notes from converting Euros into US dollars were $ 31.6 million and $ 32.5 million for 2022 and 2021, respectively.

Prior to the redemption of the 2024 Notes, the gain on foreign exchange on the 2024 Notes from converting Euros into US dollars was $ 31.6 million for 2022.

Unless earlier redeemed or repurchased, the 2027 Notes will mature on June 15, 2027.

Group may redeem some or all of the 2027 Notes at any time prior to June 15, 2024 at a price equal to 100 % of the principal amount of the 2027 Notes, plus a “make-whole” premium, as set forth in the 2027 Notes Indenture, plus accrued and unpaid interest, if any, to, but not including, the date of redemption, or may redeem up to 40.0 % of the 2027 Notes using proceeds of certain equity offerings completed prior to June 15, 2024 at 107.0 % of the principal amount plus accrued and unpaid interest, if any.

Thereafter, Group may redeem the 2027 Notes, in whole or in part, at a redemption price ranging from 103.5 % of the aggregate principal amount of the 2027 Notes redeemed to par (depending on the year), in each case, as set forth in the 2027 Notes Indenture, plus accrued and unpaid interest, if any.

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After June 15, 2024, Group may redeem the 2027 Notes, in whole or in part, at a redemption price ranging from 103.5 % of the aggregate principal amount of the 2027 Notes redeemed to par (depending on the year), in each case, as set forth in the 2027 Notes Indenture, plus accrued and unpaid interest, if any.

On the Redemption Date, Group redeemed its € 350.0 million of 2024 Notes at a price of 101.094 % (€ 353.8 million or $ 375.2 million) of the principal amount (the “Premium”) plus € 7.7 million ($ 8.1 million) of interest paid through June 30, 2022, the Redemption Date where the Premium reduced to 101.094 %, for a total payment of € 361.5 million ($ 383.4 million).

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On the Redemption Date the 2024 Notes were valued at $ 365.8 million, resulting in a gain on foreign exchange of $ 31.6 million for the year ended December 31, 2022.

Issuance of the 2026 Notes and redemption of 2022 Notes

Issuance of the 2026 Notes

On May 7, 2021 (the “2026 Notes Closing Date”), Group completed an offering of $ 500.0 million aggregate principal amount of its 2026 Notes for issuance in a private placement exempt from registration under the Securities Act.

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The net proceeds from the 2026 Notes offering were $ 496.9 million after deducting the $ 1.8 million discount and $ 1.3 million of offering expenses.

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Unless earlier redeemed or repurchased, the 2026 Notes will mature on May 1, 2026.

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Thereafter, Group may redeem the 2026 Notes, in whole or in part, at a price equal to 100 % of the principal amount of the 2026 Notes, plus accrued and unpaid interest, if any, to, but not including, the date of redemption.

In March 2021, Group redeemed $ 115.9 million aggregate principal amount of its 5.375 % Senior Secured Notes due 2022 (the “2022 Notes”) at an average price of 103.2 % of the principal amount plus $ 0.4 million of accrued and unpaid interest.

As a result of this transaction, the Company incurred a loss on debt extinguishment and redemption of $ 3.9 million from the premium payment above par value, the amortization of the remaining unamortized notes cost and certain transaction expenses.

In May 2021, Group redeemed $ 45.0 million aggregate principal amount of its 2022 Notes at par plus the “make-whole amount” as defined in the 2022 Notes indenture of $ 1.9 million ($ 41.41533 per $1,000 aggregate principal amount) plus accrued interest to, but excluding, the redemption date of $ 0.4 million ($ 9.70486 per aggregate principal amount).

Following the $ 115.9 million and the $ 45.0 million redemptions there was $ 284.1 million aggregate principal amount of 2022 Notes remaining.

On the 2026 Notes Closing Date, Group used the net proceeds from the offering of its 2026 Notes to fully satisfy and discharge its remaining obligations under its 2022 Notes.

As a result of these transactions, the Company incurred an additional loss on debt extinguishment and redemption of $ 10.8 million from the payment of $ 11.5 million of interest on the 2022 Notes through December 1, 2021 and the amortization of the remaining unamortized notes costs and debt premium.

Senior Unsecured Notes - € 350.0 million 2024 Notes

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In June 2020, Group completed an offering of € 215.0 million of 2024 Notes.

The net proceeds from the June 2020 offering, after deducting offering expenses, was $ 240.3 million.

The net proceeds from the June 2020 offering, after deducting offering expenses, were $ 240.3 million.

The 2024 Notes were guaranteed (the “Guarantees”) on a senior unsecured basis, jointly and severally, by the Company’s material domestic subsidiaries, subject to certain exceptions, and by the Company (collectively, the “Guarantors”).

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The 2024 Notes were issued in Euros and were reported in the Company’s reporting currency — US dollars.

As of December 31, 2020, the Company’s € 350.0 million of 2024 Notes were valued at $ 429.3 million.

As of December 31, 2022, the 2024 Notes were valued at $ 397.0 million, resulting in a gain on foreign exchange of $ 32.5 million for the year ended December 31, 2022.

In June 2022, Group redeemed the 2024 Notes, as noted above.

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Senior secured notes - $445.0 million 2022 Notes

In February 2015, Group issued $ 250.0 million of 2022 Notes.

In December 2016, the Company issued an additional $ 125.0 million par value of its 2022 Notes at a premium of 100.375 % of par value.

In August 2018, the Company issued an additional $ 70.0 million par value of its 2022 Notes at a premium of 101.75 % of par value.

The 2022 Notes were sold in private offerings for resale to qualified institutional buyers pursuant to SEC Rule 144A and were scheduled to mature on March 1, 2022.

Interest accrued at 5.375 % and was paid semi-annually in arrears on March 1 and September 1 of each year.

The 2022 Notes were redeemable prior to December 1, 2021 (three months prior to the maturity date of the Notes) in whole or from time to time in part, at a redemption price equal to the sum of (1) 100 % of the principal amount plus accrued and unpaid interest, if any, to, but not including, the redemption date, and (2) a make-whole premium, if any.

The make-whole premium is the excess of (1) the net present value, on the redemption date, of the principal being redeemed or paid and the amount of interest (exclusive of interest accrued to the date of redemption) that would have been payable if such redemption had not been made, over (2) the aggregate principal amount of the notes being redeemed or paid.

Net present value shall be determined by discounting, on a semi-annual basis, such principal and interest at the reinvestment rate (as determined in the indenture governing the 2022 Notes) from the respective dates on which such principal and interest would have been payable if such redemption had not been made.

In May 2021, Group redeemed the 2022 Notes, as noted above.

Limitations Under the Indentures

The 2027 Notes Indenture and the 2026 Notes Indenture (the “Indentures”), among other things, limit the Company’s ability to incur indebtedness;

The indentures governing the 2026 Notes, the 2027 Notes and the 2027 Mirror Notes (the “Indentures”), among other things, limit the ability of Group and its restricted subsidiaries to incur indebtedness;

to pay dividends or make other distributions;

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and to enter into certain transactions with its affiliates.

There are certain exceptions to the limitations on the Company’s ability to incur indebtedness under the Indentures, including IRU agreements incurred in the normal course of business and any additional indebtedness if the Company’s consolidated leverage ratio, as defined in the Indentures, is less than 6.0 to 1.0 or the Company’s fixed charge coverage ratio, as defined in the Indentures, is 2.0 to 1.0 or greater.

The Company can also incur unlimited liens (which can be used, together with capacity under the debt covenant, to incur additional secured indebtedness) if the Company’s consolidated secured leverage ratio, as defined in the Indentures, is less than 4.0 to 1.0 .

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).

As of December 31, 2023, 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 .

As of December 31, 2023, a total of $ 511.3 million (inclusive of a $ 250.0 general basket) was unrestricted and permitted for restricted payments, including dividends and stock purchases.

There are certain exceptions to the limitations on the ability to incur indebtedness under the Indentures, including IRU agreements incurred in the normal course of business and any additional indebtedness if Group’s consolidated leverage ratio, as defined in the Indentures, is less than 6.0 to 1.0 or Group’s fixed charge coverage ratio, as defined in the Indentures, is 2.0 to 1.0 or greater.

Group and its subsidiaries can also incur unlimited liens (which can be used, together with capacity under the debt covenant, to incur additional secured indebtedness) if Group’s consolidated secured leverage ratio, as defined in the Indentures, is less than 4.0 to 1.0 .

Under the Indentures, Group and its restricted subsidiaries 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, Group could still incur $ 1 of “Ratio 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 2.0 to 1.0 or greater).

As of December 31, 2024, Group’s consolidated leverage ratio was below 6.0 , Group’s consolidated secured leverage ratio was below 4.0 and Group’s fixed charge coverage ratio was above 2.0 .

As of December 31, 2024, a total of $ 303.6 million was unrestricted and permitted for restricted payments, including dividends and stock purchases.

The aggregate future contractual maturities of long-term debt were as follows as of December 31, 2024 (in thousands):

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Interest Rate Swap Agreement

As of December 31, 2023, the Company was party to an interest rate swap agreement (the “Swap Agreement”) that has the economic effect of modifying the fixed interest rate obligation associated with its 2026 Notes to a variable interest rate obligation based on the Secured Overnight Financing Rate (“SOFR”) so that the interest payable on the 2026 Notes effectively became variable based on overnight SOFR.

The critical terms of the Swap Agreement match the terms of the 2026 Notes, including the notional amount and the optional redemption date on February 1, 2026.

The Company did not elect hedge accounting for the Swap Agreement.

The Swap Agreement is recorded at its fair value at each reporting period, and the Company incurs gains and losses due to changes in

As of December 31, 2024, the Company was party to 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.

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market interest rates.

terms of the Swap Agreement match the terms of the 2026 Notes, including the notional amount and the optional redemption date on February 1, 2026.

The Company did not elect hedge accounting for the Swap Agreement.

The Swap Agreement is recorded at its fair value at each reporting period, and the Company incurs gains and losses due to changes in market interest rates.

By entering into the Swap Agreement, the Company has assumed the risk associated with variable interest rates.

Changes in interest rates affect the valuation of the Swap Agreement that the Company recognizes in its consolidated statements of comprehensive income.

The values that the Company reports for the Swap Agreement as of each reporting date are recognized as “change in valuation – interest rate swap” with the corresponding amounts included in assets or liabilities in the Company’s consolidated balance sheets.

The values that the Company reports for the Swap Agreement as of each reporting date are recognized as “interest expense including change in valuation – interest rate swap agreement” with the corresponding amounts included in assets or liabilities in the Company’s consolidated balance sheets.

As of December 31, 2024, the fair value of the Swap Agreement was a net liability of $ 22.3 million, of which $ 18.3 million is presented with accrued and other current liabilities and $ 4.0 million is presented with other long-term liabilities.

As of December 31, 2023, the fair value of the Swap Agreement was a net liability of $ 38.7 million, of which $ 21.6 million is presented with accrued and other current liabilities and $ 17.1 million is presented with other long-term liabilities.

In the years ended December 31, 2023, 2022 and 2021, the Company recorded gains (losses) related to the Swap Agreement of $ 13.4 million, ($ 43.1 ) million and ($ 9.0 ) million, respectively.

The Company has made a $ 38.8 million deposit with the counterparty to the Swap Agreement.

Unrealized gains (losses) related to the Swap Agreement are included in interest expense.

As of December 31, 2024, the Company has made a $ 23.4 million deposit with the counterparty to the Swap Agreement.

If the fair value of the Swap Agreement exceeds a net liability of $ 23.4 million, the Company will be required to deposit additional funds with the counterparty equal to the net liability fair value.

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The settlement payment is made each November and May until the Swap Agreement expires in February 2026.

Under the first Swap Agreement settlement in November 2021, the Company received a payment of $ 0.6 million from the counterparty for a net cash savings of $ 0.6 million for the period from August 9, 2021 (the Swap Agreement inception date) to October 31, 2021.

Under the settlement payment made in May 2022, the Company received a payment of $ 1.2 million from the counterparty for a net cash savings of $ 1.2 million for the period from November 1, 2021 to April 30, 2022.

Under the settlement payment made in November 2022, the Company made a payment of $ 3.4 million to the counterparty for a net cash interest cost of $ 3.4 million for the period from May 1, 2022 to October 31, 2022.

Under the settlement payment made in May 2023, the Company made a payment of $ 9.5 million to the counterparty for a net cash interest cost of $ 9.5 million for the period from November 1, 2022 to April 30, 2023.

Under the settlement payment made in November 2023, the Company made a payment of $ 12.0 million to the counterparty for a net cash interest cost of $ 12.0 million for the period from May 1, 2023 to October 31, 2023.

Under the settlements paid in May and November 2024, the Company paid a total of $ 24.2 million to the counterparty for a net cash interest cost of $ 24.2 million.

Under the settlements paid in May and November 2023, the Company paid a total of $ 21.5 million to the counterparty for a net cash interest cost of $ 21.5 million.

Under the settlements paid in May and November 2022, the Company paid a total of $ 2.1 million to the counterparty for a net cash interest cost of $ 2.1 million.

Income taxes:

The components of income before income taxes consist of the following (in thousands):

The components of (loss) income before income taxes consist of the following (in thousands):

Years Ended December 31,

Total income before income taxes

The income tax expense is comprised of the following (in thousands):

Total (loss) income before income taxes

The income tax benefit (expense) is comprised of the following (in thousands):

Years Ended December 31,

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Net deferred tax liabilities

The acquisition of Sprint was an asset acquisition for tax purposes.

The Company recorded a net, deferred tax liability of $ 494 million which represents the difference in book basis and tax basis of the assets acquired and liabilities assumed.

The acquisition of Sprint was an asset acquisition for US federal income tax purposes.

The Company recorded a net, deferred tax liability of $ 475 million, that represents the difference in book basis and tax basis of the assets acquired and liabilities assumed.

The Seller indemnified the Company for historical tax exposures and the estimated indemnification asset is not material.

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Net operating loss carryforwards outside of the United States totaling $ 992.5 million are not subject to limitations similar to Section 382.

The net operating loss carryforwards in the United States will expire, if unused, in 2025.

There are $ 12.8 million of net operating loss carryforwards in the United States that will expire, if unused, in 2025.

The net operating loss carry-forwards related to the Company’s European operations include $ 828.0 million that do not expire and $ 128.8 million that expire between 2025 and 2038.

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If the Company determines that the tax position is not more likely than not to be sustained, the Company records a liability for the amount of the benefit that is not more likely than not to be realized when the tax position is settled.

The Company does not have a material liability for uncertain tax positions at December 31, 2023 and does not expect that its liability for uncertain tax positions will materially increase during the twelve months ended December 31, 2024, however, actual changes in the liability for uncertain tax positions could be different than currently expected.

The Company did not have a material liability for uncertain tax positions at December 31, 2024, 2023 and 2022, and does not expect that its liability for uncertain tax positions will materially increase during the year ended December 31, 2025;

however, actual changes in the liability for uncertain tax positions could be different than currently expected.

If recognized, changes in the Company’s total unrecognized tax benefits would impact the Company’s effective income tax rate.

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The Company or one of its subsidiaries files income tax returns in the US federal jurisdiction and various state and foreign jurisdictions.

The Company or one of its subsidiary’s files income tax returns in the US federal jurisdiction and various state and foreign jurisdictions.

The Company is subject to US federal tax and state tax examinations for years 2005 to 2025.

26 unchanged sentences

Expenses related to these arrangements were $ 35.3 million in 2024, $ 29.1 million in 2023 and $ 21.8 million in 2022.

Short - term lease expense was $ 9.8 million for 2023.

Short - term lease expense was $ 14.4 million for 2024, $ 9.8 million for 2023 and $ 1.1 million for 2022.

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12 unchanged sentences

Common stock buybacks

The Company’s Board of Directors has approved $ 50.0 million for purchases of the Company’s common stock under a buyback program (the “Buyback Program”).

At December 31, 2023, there was $ 30.4 million remaining for purchases under the Buyback Program.There were no purchases of common stock in 2023, 2022 or 2021.

The Company’s Board of Directors has approved $ 50.0 million for purchases of the Company’s common stock under a buyback program (the “Buyback Program”) through 2025.

At December 31, 2024, there was $ 22.4 million remaining for purchases under the Buyback Program.

In June 2024, the Company purchased 153,322 shares of its common stock for $ 8.0 million at an average share price of $ 51.97 .

There were no purchases of common stock in 2023 or 2022.

Dividends on common stock

2 unchanged sentences

The payment of any future dividends and any other returns of capital, including stock buybacks, will be at the discretion of the Company’s Board of Directors and may be reduced, eliminated or increased and will be dependent upon the Company’s financial position, results of operations, available cash, cash flow, capital requirements, limitations under the Company’s debt indentures and other factors deemed relevant by the Company’s Board of Directors.

The Company is a Delaware Corporation and under the General Corporate Law of the State of Delaware distributions may be restricted including a restriction that distributions, including stock purchases and dividends, do not result in an impairment of a corporation’s capital, as defined under Delaware Law.

The indentures governing the Company’s notes limit the Company’s ability to return cash to its stockholders.

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The Company is a Delaware corporation and under the General Corporation Law of the State of Delaware distributions may be restricted including a restriction that distributions, including stock purchases and dividends, do not result in an impairment of a corporation’s capital, as defined under Delaware law.

The Indentures limit the Company’s ability to return cash to its stockholders.

Stock option and award plan:

10 unchanged sentences

The vesting of certain shares granted to the Company’s executives is subject to certain performance conditions determined by the Company’s Board of Directors.

The vesting of certain shares granted to the Company’s CEO is subject to the total shareholder return of the Company’s common stock compared to the total shareholder return of the Nasdaq Telecommunications Index, the Company’s growth rate in revenue and the Company’s growth rate in cash flow from operating activities, with each portion of the CEO’s performance-based equity award subject to a cap and no shares earned if performance with respect to a target is less than zero.

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Company’s growth rate in revenue, the Company’s growth rate in cash flow from operating activities,and the Company’s growth rate in earnings before interest and depreciation, as adjusted, with each portion of the CEO’s performance-based equity award subject to a cap and no shares earned if performance with respect to a target is less than zero.

The accounting for equity-based compensation expense requires the Company to make estimates and judgments that affect its financial statements.

12 unchanged sentences

Expected life of the option term (in years)

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Stock option activity under the Company’s Award Plan during the year ended December 31, 2024, was as follows:

13 unchanged sentences

Non-vested at December 31, 2024

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The weighted average per share grant date fair value of restricted stock granted was $ 68.58 in 2024 ( 0.7 million shares), $ 60.05 in 2023 ( 0.6 million shares) and $ 66.08 in 2022 ( 0.4 million shares).

11 unchanged sentences

The Audit Committee of the Company’s Board of Directors (the “Audit Committee”) reviews and approves all transactions with related parties.

The Company’s headquarters is located in an office building owned by Sodium LLC whose owner is the Company’s Chief Executive Officer, David Schaeffer.

The Company’s headquarters is located in an office building owned by Sodium LLC whose owner is the Company’s Chief Executive Officer and Chairman, David Schaeffer.

The fixed annual rent for the headquarters building is $ 1.0 million per year plus an allocation of taxes and utilities.

2 unchanged sentences

The lease is cancellable at no cost by the Company upon 60 days ’ notice.

On January 6, 2023, the Company entered into two lease agreements (the “New Leases”), one with Thorium LLC (‘Thorium”) and one with Germanium LLC (“Germanium”), entities owned by the Company’s Chief Executive Officer, David Schaeffer.The first of the New Leases is with Thorium for 54,803 square feet of office space, which serves as office space for the Company replacing a

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portion of its office space in the Northern Virginia area (“Office Lease”).

On January 6, 2023, the Company entered into two lease agreements (the “New Leases”), one with Thorium LLC (“Thorium”) and one with Germanium LLC (“Germanium”), entities owned by the Company’s Chief Executive Officer and Chairman, David Schaeffer.The first of the New Leases is with Thorium for 54,803 square feet of office space, which serves as office space for the Company replacing a portion of its office space in the Northern Virginia area (“Office Lease”).

The second of the New Leases is with Germanium LLC for 1,587 square feet of technical space which serves as network operations space for the Company (“Network Operations Lease”).

4 unchanged sentences

The amount of fixed annual rent for the Network Operations Lease is $ 34,914 , and the Company is also responsible for paying its metered utility costs and a proportionate share of the building’s other operating expenses that exceed a 2023 base year.

On July 25, 2023 the Company entered into a Second Amendment to the lease agreement (the “Amendment”), with Germanium which amends the Network Operations Lease to lease an additional 7,369 square feet on the first floor of the building, beginning on August 1, 2023, in connection with the planned expansion of the technical space.

This includes 4,987 square feet for an auditorium suitable for training and 2,382 square feet for the data center in the building.

On July 25, 2023 the Company entered into a Second Amendment to the lease agreement with Germanium (the “Amendment”), which amended the Network Operations Lease to lease an additional 7,369 square feet on the first floor of the building, beginning on August 1, 2023, in connection with the planned expansion of the technical space.

This included 4,987 square feet for an auditorium suitable for training and 2,382 square feet for the data center in the building.

The amended Network Operations Lease remains cancellable by the Company without penalty upon 60 days written notice.

The Amendment provides for $ 162,118 of additional fixed annual rent during the term of the Network Operations Lease, plus a proportionate share of real estate taxes and operating expenses and separately metered utilities expense.

The Company paid $ 2.8 million in 2023, $ 1.7 million in 2022 and $ 1.7 million in 2021 for rent and related costs (including taxes and utilities) for this lease for these leases.

Geographic information:

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing the Company’s performance.

The Company paid $ 3.3 million in 2024, $ 2.8 million in 2023 and $ 1.7 million in 2022 for rent and related costs (including taxes and utilities) for these leases.

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Geographic and segment information:

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and in assessing the Company’s performance.

The Company’s Chief Executive officer and Chairman, Dave Schaeffer is the Company’s CODM.

The Company has one operating segment.

The CODM regularly reviews the following amounts on a worldwide consolidated basis as presented in the Company’s consolidated statements of comprehensive income (loss);

● Service revenue

● Network operations expense

● Selling, general and administrative (“SG&A”) expenses

● Amortization of compensation expense

o As components of SG&A and network operations expense

● Interest expense

● Gain on bargain purchase – Sprint business

● Net income (loss)

The Company’s results are evaluated for performance and resource allocation decisions based on consolidated net (loss) income.

The consolidated operating segment financial information regularly reviewed by the CODM, inclusive of assets, revenue, expenses, profit or loss, and noncash items are included in the Consolidated Statements of Comprehensive Income (Loss), Consolidated Balance Sheets, and Consolidated Statements of Cash Flows.

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Revenues are attributed to regions based on where the services are provided.

Below are the Company’s service revenues and long lived assets by geographic region (in thousands):

Below are the Company’s service revenues and long-lived assets by geographic region - including property plant and equipment and excluding intangible assets (in thousands):

Year Ended December 31, 2024

10 unchanged sentences

Europe and other

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Quarterly financial information (unaudited):

Three months ended

September 30,

(in thousands, except share and per share amounts)

Service revenue

Network operations, including equity-based compensation expense

Operating income (loss)

Net income (loss) (1)

Net income (loss) per common share - basic

Net income (loss) per common share - diluted

Weighted-average number of common shares—basic

Weighted-average number of common shares—diluted

Three months ended

September 30,

(in thousands, except share and per share amounts)

Service revenue

Network operations, including equity-based compensation expense

Operating income

Net income ( loss) (2)

Net income (loss) per common share - basic

Net income (loss) per common share - diluted

Weighted-average number of common shares—basic

Weighted-average number of common shares—diluted

(1) Included in net income for the three months ended June 30, 2023, September 30, 2023 and December 31, 2023 are gains (losses) on the bargain purchase of the Sprint Business of $ 1.2 billon, ( $ 3.3 )million, and $ 254.0 million, respectively.

Included in net income (loss) for the three months ended March 31, 2023, June 30, 2023, September 30, 2023 and December 31, 2023 are non - cash (charges) benefits from changes in the valuation of the Swap Agreement of $ 1.8 million, ( $ 1.3 ) million, ( $ 4.8 ) million and $ 17.7 million, respectively.

(2) Included in net income for the three months ended March 31, 2022 and June 30, 2022, are unrealized gains on foreign exchange on the 2024 Notes of $ 8.0 million and $ 23.5 million, respectively.

Included in net income (loss) for the three months ended June 30, 2022, is a loss on debt extinguishment and redemption on the 2024 Notes of $ 11.9 million.

Included in net income (loss) for the three months ended March 31, 2022, June 30, 2022, September 30, 2022 and December 31, 2022 are non-cash charges (benefit) from changes in the valuation of the Swap Agreement of $ 21.3 million, $ 7.5 million, $ 16.9 million and ( $ 2.6 ) million, respectively.

Subsequent Events:

1 unchanged sentence

The dividend for the first quarter of 2025 will be paid to holders of record on March 13, 2025.

This estimated $ 45.7 million dividend payment is expected to be made on April 9, 2024.

This estimated $ 47.8 million dividend payment is expected to be made on March 28, 2025.

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1 unchanged sentence

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.

What changed 10-K

Item 8. Financial Statements and Supplementary Data