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Share Name | Share Symbol | Market | Type |
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Earthlink Holdings Corp. | NASDAQ:ELNK | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 5.63 | 5.62 | 76.00 | 0 | 01:00:00 |
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x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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46-4228084
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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Large accelerated filer
x
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Accelerated filer
o
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Non-accelerated filer
o
(Do not check if a smaller reporting company)
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Smaller reporting company
o
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•
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Operate each of our business units with focused, value-optimizing strategies.
Our organization is aligned around four distinct business units, which are Enterprise/Mid-Market, Small Business, Carrier/Transport and Consumer. We believe this concentrates resources and investments into areas that will drive growth and deliver improved performance, enable each business to compete more successfully in the market and provide strategic optionality. We are focused on operating each business unit with value-optimizing strategies, which are managing the decline in our Small Business and Consumer business units and investing the cash flow to grow our Enterprise/Mid-Market and Carrier/Transport business units.
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•
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Optimize our cost structure and cash flows.
We are focused on optimizing our cost structure and maximizing our cash flows. This includes managing our cost of revenues and operating expenses, streamlining our internal processes and aligning our workforce to current revenue trends. It also includes the repayment and/or refinancing of debt in order to reduce our interest expense. We plan to use the cash flow generated from our improvement efforts to continue to optimize our balance sheet and invest in growth.
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•
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Invest in growth business products, marketing and sales.
Our growth business products are MultiProtocol Label Switching ("MPLS"), hosted voice and other UCaaS products, software-defined wide area network ("SD-WAN"), hybrid WAN and managed network, security and cloud services for multi-location businesses and transport services for other communications carriers and enterprises. We are focused on investing in product and service capabilities and sales and marketing initiatives to support these growth products.
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•
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Evaluate potential strategic transactions.
We believe that targeted acquisitions, when available at the right economics, can be an effective means for growth and targeted capability building. In addition, we continue to evaluate our business, which could lead us to further discontinue or divest non-strategic products, assets or customers based on management's assessment of their strategic value to our business.
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Segment
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Description
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2016 Revenues
|
Percent
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Enterprise/Mid-Market
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Our Enterprise/Mid-Market segment provides a broad range of data, voice and managed network services to distributed multi-site business customers.
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$397,676
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41%
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Small Business
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Our Small Business segment provides a broad range of data, voice and managed network services to small, often single-site business customers.
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223,776
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23%
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Carrier/Transport
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Our Carrier/Transport segment provides transmission capacity and other data, voice and managed network services to telecommunications carriers and large enterprises.
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141,709
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15%
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Consumer
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Our Consumer segment provides nationwide Internet access and related value-added services to residential customers.
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196,713
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21%
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•
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interconnect with other telecommunications carriers;
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•
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establish reciprocal compensation arrangements for the completion of telecommunications service calls originated by customers of other carriers, which the FCC has interpreted to include bill and keep (a pricing arrangement under which each carrier terminates calls from the other at no charge);
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•
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permit the resale of their services;
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•
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permit users to retain their telephone numbers when changing carriers; and
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•
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provide competing carriers access to poles, ducts, conduits and rights-of-way at regulated prices.
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•
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offer interconnection at any technically feasible point in their networks on non-discriminatory, cost-based terms;
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•
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offer collocation of competitors' equipment at their premises on a non-discriminatory basis;
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•
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make available some of their network facilities, features and capabilities, referred to as Unbundled Network Elements, or UNEs, on non-discriminatory, cost-based terms; and
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•
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offer wholesale versions of their retail services for resale at discounted rates.
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•
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diversion of management's attention and resources that would otherwise be available for the current operation of our business;
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•
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failure to fully achieve expected synergies and costs savings or anticipated benefits may take longer;
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•
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higher integration costs than anticipated;
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•
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the impact on employee morale and the retention of employees, many of whom may have specialized knowledge about the business;
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•
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lost revenues or opportunities as a result of our current or potential customers or strategic partners deciding to delay or forego business;
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•
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difficulties combining product offerings and entering into new markets in which we are not experienced;
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•
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difficulties integrating the sales organizations of acquired companies;
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•
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the integration of departments, operating support systems, such as provisioning and billing systems, and technologies, such as network equipment; and
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•
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the need to implement and maintain uniform controls, procedures and policies throughout all of our acquired companies or the need to remediate significant control deficiencies that may exist at acquired companies
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•
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limit our ability to use our cash flows from operations for working capital, capital expenditures, acquisitions or other general business purposes;
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•
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limit our ability to borrow additional funds for working capital, capital expenditures, acquisitions or other general business purposes;
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•
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limit our flexibility to plan for, or react to, changes in our business and industry;
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•
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limit our ability to engage in strategic transactions or to make divestitures of non-strategic businesses;
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•
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place us at a competitive disadvantage compared to our less leveraged competitors; and
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•
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increase our vulnerability to the impact of adverse economic and industry conditions.
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•
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incur or guarantee additional indebtedness or issue preferred stock;
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•
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pay dividends or make other distributions to stockholders;
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•
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purchase or redeem capital stock or subordinated indebtedness;
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•
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make investments;
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•
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create liens or use assets as security;
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•
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enter into agreements restricting such restricted subsidiaries' ability to pay dividends, make loans or transfer assets to us or other restricted subsidiaries;
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engage in transactions with affiliates; and
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•
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consolidate or merge with or into other companies or transfer all or substantially all of our or their assets.
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Stock Price
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||||||
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High
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Low
|
||||
Year Ended December 31, 2015
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|
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||||
First Quarter
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$
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4.72
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$
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4.07
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Second Quarter
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7.63
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4.35
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Third Quarter
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9.38
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7.12
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Fourth Quarter
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9.86
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7.19
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Year Ended December 31, 2016
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First Quarter
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7.42
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4.97
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Second Quarter
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6.85
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5.34
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Third Quarter
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7.05
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5.65
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Fourth Quarter
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6.42
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4.85
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December 31, 2011
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December 31, 2012
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December 31, 2013
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December 31, 2014
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December 31, 2015
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December 31, 2016
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||||||||||||
EarthLink
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$
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100.0
|
|
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$
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100.3
|
|
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$
|
79.4
|
|
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$
|
69.1
|
|
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$
|
114.9
|
|
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$
|
88.0
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Russell 2000 Index
|
|
100.0
|
|
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114.6
|
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157.1
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|
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162.6
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|
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153.3
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|
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183.2
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||||||
NASDAQ Telecomm Index
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100.0
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102.0
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126.5
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137.8
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127.4
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|
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146.4
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Year Ended December 31,
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||||||||||||||||||
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2012
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2013
|
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2014
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2015
|
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2016
|
||||||||||
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(in thousands, except per share amounts)
|
||||||||||||||||||
Statement of operations data:
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||||||||||
Revenues
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$
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1,335,135
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$
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1,240,606
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|
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$
|
1,176,895
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$
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1,097,252
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$
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959,874
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|
Operating costs and expenses (1)(2)
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|
1,263,112
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|
|
1,505,555
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|
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1,197,749
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1,077,026
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914,894
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|||||
Income (loss) from operations
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|
72,023
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|
|
(264,949
|
)
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|
(20,854
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)
|
|
20,226
|
|
|
44,980
|
|
|||||
Income (loss) from continuing operations (3)
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|
9,938
|
|
|
(536,866
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)
|
|
(72,371
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)
|
|
(43,210
|
)
|
|
7,680
|
|
|||||
Loss from discontinued operations, net of tax (4)
|
|
(2,418
|
)
|
|
(1,961
|
)
|
|
(381
|
)
|
|
—
|
|
|
—
|
|
|||||
Net income (loss)
|
|
7,520
|
|
|
(538,827
|
)
|
|
(72,752
|
)
|
|
(43,210
|
)
|
|
7,680
|
|
|||||
Basic net income (loss) per share
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Continuing operations
|
|
$
|
0.09
|
|
|
$
|
(5.23
|
)
|
|
$
|
(0.71
|
)
|
|
$
|
(0.42
|
)
|
|
$
|
0.07
|
|
Discontinued operations
|
|
(0.02
|
)
|
|
(0.02
|
)
|
|
—
|
|
|
—
|
|
|
—
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|
|||||
Basic net income (loss) per share
|
|
$
|
0.07
|
|
|
$
|
(5.25
|
)
|
|
$
|
(0.71
|
)
|
|
$
|
(0.42
|
)
|
|
$
|
0.07
|
|
Diluted net income (loss) per share
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Continuing operations
|
|
$
|
0.09
|
|
|
$
|
(5.23
|
)
|
|
$
|
(0.71
|
)
|
|
$
|
(0.42
|
)
|
|
$
|
0.07
|
|
Discontinued operations
|
|
(0.02
|
)
|
|
(0.02
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Diluted net income (loss) per share
|
|
$
|
0.07
|
|
|
$
|
(5.25
|
)
|
|
$
|
(0.71
|
)
|
|
$
|
(0.42
|
)
|
|
$
|
0.07
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic weighted average common shares outstanding
|
|
105,221
|
|
|
102,599
|
|
|
102,313
|
|
|
103,388
|
|
|
105,194
|
|
|||||
Diluted weighted average common shares outstanding
|
|
105,983
|
|
|
102,599
|
|
|
102,313
|
|
|
103,388
|
|
|
108,596
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash dividends declared per common share
|
|
$
|
0.20
|
|
|
$
|
0.20
|
|
|
$
|
0.20
|
|
|
$
|
0.20
|
|
|
$
|
0.20
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash flow data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash provided by operating activities
|
|
191,055
|
|
|
124,156
|
|
|
139,995
|
|
|
167,448
|
|
|
125,965
|
|
|||||
Cash used in investing activities
|
|
(163,836
|
)
|
|
(112,500
|
)
|
|
(102,777
|
)
|
|
(87,468
|
)
|
|
(64,003
|
)
|
|||||
Cash used in financing activities
|
|
(81,381
|
)
|
|
(52,641
|
)
|
|
(19,721
|
)
|
|
(122,817
|
)
|
|
(101,729
|
)
|
|
|
As of December 31,
|
||||||||||||||||||
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
||||||||||
|
|
(in thousands)
|
||||||||||||||||||
Balance sheet data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
|
$
|
157,621
|
|
|
$
|
116,636
|
|
|
$
|
134,133
|
|
|
$
|
91,296
|
|
|
$
|
51,529
|
|
Investments in marketable securities
|
|
46,851
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Cash and marketable securities
|
|
204,472
|
|
|
116,636
|
|
|
134,133
|
|
|
91,296
|
|
|
51,529
|
|
|||||
Total assets
|
|
1,591,850
|
|
|
994,090
|
|
|
899,196
|
|
|
734,652
|
|
|
635,646
|
|
|||||
Long-term debt, including long-term portion of capital leases (5)
|
|
607,330
|
|
|
593,214
|
|
|
595,319
|
|
|
505,613
|
|
|
437,458
|
|
|||||
Total liabilities
|
|
873,046
|
|
|
831,872
|
|
|
824,412
|
|
|
711,806
|
|
|
615,458
|
|
|||||
Accumulated deficit
|
|
(606,148
|
)
|
|
(1,144,975
|
)
|
|
(1,217,727
|
)
|
|
(1,260,937
|
)
|
|
(1,253,257
|
)
|
|||||
Stockholders' equity
|
|
718,804
|
|
|
162,218
|
|
|
74,784
|
|
|
22,846
|
|
|
20,188
|
|
(1)
|
Operating costs and expenses for the year ended December 31, 2013 includes a non-cash impairment charge of $255.6 million related to goodwill. During 2013, we performed an interim goodwill impairment test following a sustained decrease in our stock price and market capitalization which resulted in an impairment charge in our legacy Business Services reporting unit. Operating costs and expenses for the year ended December 31, 2014 includes non-cash impairment charge of $14.3 million related to long-lived assets for certain work in progress and software licenses not expected to be used.
|
(2)
|
Operating costs and expenses for the years ended December 31, 2012, 2013, 2014, 2015 and 2016 include restructuring, acquisition and integration-related costs of $18.2 million, $40.0 million,
$20.1 million
,
$19.3 million
and
$17.8 million
, respectively.
|
(3)
|
During the year ended December 31, 2013, we recorded an income tax provision of approximately $266.3 million to record a valuation allowance for deferred tax assets. These deferred tax assets related primarily to net operating loss carryforwards which we determined we "more-likely-than-not" would be unable to utilize.
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(4)
|
The operating results of our telecom systems business acquired as part of ITC^DeltaCom, Inc. have been separately presented as discontinued operations for all periods presented. On August 2, 2013, we sold our telecom systems business.
|
(5)
|
Includes the carrying amount of ITC^DeltaCom's 10.5% senior secured notes due 2016, our 8.875% Senior Notes due 2019, our 7.375% Senior Secured Notes due 2020, our senior secured term loan and amounts outstanding under our senior secured revolving credit facility. In 2012, we redeemed $32.5 million aggregate principal amount of the ITC^DeltaCom Notes. In 2013, we redeemed the remaining $292.3 million aggregate principal amount of the ITC^DeltaCom Notes and issued $300.0 million aggregate principal amount of 7.375% Senior Secured Notes due 2020. In 2015, we redeemed and repurchased $126.1 million aggregate principal amount of 8.875% Senior Notes due 2019 and drew down $35.0 million (net of repayments) under our senior secured revolving credit facility. In 2016, we redeemed and repurchased $97.4 million aggregate principal amount of 8.875% Senior Notes due 2019, repaid $25.0 million (net of draw downs) under our senior secured revolving credit facility and borrowed $48.7 million (net of principal repayments) under our term loan.
|
•
|
Generated revenues of
$1.0 billion
in 2016, a
13%
decrease during the year primarily driven by declines in traditional voice and data products and the sale of our IT services business, as further discussed below. These declines were partially offset by targeted price increases, increased sales of our growth products, successful efforts to renew customers coming out of contract and our acquisition of Boston Retail Partners.
|
•
|
Reduced cost of revenues
12%
during 2016, primarily due to the decline in revenues noted above as well as a concentrated effort to manage cost of revenues through network grooming, auditing telecommunications vendor invoices and other cost saving initiatives.
|
•
|
Generated net income of
$7.7 million
in 2016, compared to a net loss of
$43.2 million
in the prior year, primarily due to a decrease in depreciation and amortization expense, a decrease in interest expense due to lower outstanding debt, a decrease in loss on extinguishment of debt due to fewer debt repurchases and a $9.1 million pretax gain recognized on our sale of businesses. Partially offsetting these declines was a decrease in Adjusted EBITDA as described below.
|
•
|
Generated Adjusted EBITDA (a non-GAAP measure, see “Non-GAAP Financial Measures” in this Item 7) of
$214.2 million
in 2016, a decrease from
$242.5 million
in the prior year, primarily due to the decrease in revenues from traditional voice and data products, offset by improvements in our cost of revenues and operating expenses. The decrease in cost of revenues and operating expenses was driven by cost savings initiatives, including reductions in workforce, implemented over the past year.
|
•
|
Made capital expenditures of
$84.1 million
in 2016, a
4%
reduction from the prior year, primarily due to improving our processes and being more efficient, as well as a decrease in customer additions.
|
•
|
Reduced gross outstanding debt by $73.6 million during 2016.
|
•
|
Made
$22.0 million
million of dividend payments to shareholders in 2016.
|
•
|
Operate each of our business units with focused, value-optimizing strategies.
Our organization is aligned around four distinct business units, which are Enterprise/Mid-Market, Small Business, Carrier/Transport and Consumer. We believe this concentrates our resources and investments into areas that will drive growth and deliver improved performance, enable each business to compete more successfully in the market and provide strategic optionality. We are focused on operating each business unit with value-optimizing strategies, which are managing the decline in our Small Business and Consumer Services business units and investing the cash flow to grow our Enterprise/Mid-Market and Carrier/Transport business units.
|
•
|
Optimize our cost structure and cash flows.
We are focused on optimizing our cost structure and maximizing our cash flows. This includes managing our cost of revenues and operating expenses, streamlining our internal processes and aligning our workforce to current revenue trends. It also includes the repayment and/or refinancing of debt in order to
|
•
|
Invest in growth business products, marketing and sales.
Our growth business products are MultiProtocol Label Switching ("MPLS"), hosted voice and other UCaaS products, software-defined wide area network ("SD-WAN"), hybrid WAN and managed network, security and cloud services for multi-location businesses and transport services for other communications carriers and enterprises. We are focused on investing in product and service capabilities and sales and marketing initiatives to support these growth products.
|
•
|
Evaluate potential strategic transactions.
We believe that targeted acquisitions, when available at the right economics, can be an effective means for growth and targeted capability building. In addition, we continue to evaluate our business, which could lead us to discontinue or divest non-strategic products, assets or customers based on management's assessment of their strategic value to our business.
|
•
|
Targeting larger multi-location retail and service businesses which have lower churn profiles, as well as a need for our product and services
|
•
|
Investing in new products and service capabilities to create value for our customers, in particular our cloud-based offerings and SD-WAN
|
•
|
Focusing on customer contract re-term efforts, retention offers, targeted price increases and opportunities to upsell products and services
|
•
|
Improving the customer experience to increase customer satisfaction and further enhance customer retention
|
•
|
Continuing to refine and narrow our product portfolio
|
•
|
Implementing cost efficiencies, such as network grooming, workforce alignment and facility closings, and seeking to make costs more variable
|
•
|
Repaying and/or refinancing outstanding indebtedness in order to reduce interest expense
|
•
|
Considering further divestitures of non-strategic products, assets or customers in order to continue to simplify our operations and generate cash to reduce debt or to use for other strategic needs
|
•
|
Evaluating potential strategic transactions to add products and services
|
•
|
Industry factors
. The communications industry is characterized by intense competition, changing technology and changes in customer needs, an evolving regulatory environment and industry consolidation resulting in larger competitors and fewer suppliers. We expect these trends to continue. More recently, trends in the industry have included increased demand for data, evolving security threats, the adoption of cloud computing and the increased use of outsourcing. We are trying to capitalize on these changes by focusing on our managed network, security and cloud services and transport services.
|
•
|
Traditional business voice and data products
.
Our traditional business voice and data revenues have been declining due to competition, migration to more advanced integrated voice and data services and mandated rate reductions. We expect this trend to continue. We have also experienced an increase in churn for these products. However, we are focused on decelerating these declines through customer retention efforts, contract renewals, upselling products and services and offering new services.
|
•
|
Consumer access declines
. Our consumer access subscriber base and revenues have been declining and are expected to continue to decline due to the continued maturation of the market for Internet access, competition from cable, DSL and wireless providers and limited sales and marketing activities. In addition, we have implemented, and expect to continue to implement, targeted price increases, which could negatively impact our churn rates. In July 2016, we sold approximately 12,000 customer relationships to one of our network providers, which will also cause our consumer access subscriber base and revenues to decrease. However, we are focused on customer retention and, as a result, we expect the rate of churn to continue to generally decline as our customer base becomes longer tenured. In 2016, we also launched Hyperlink high-speed Internet service that offers service at faster speeds than traditional DSL.
|
•
|
Operating costs and expenses
. We have experienced declines in cost of revenues and operating expense due to various cost saving initiatives and lower sales of traditional voice and data products. We are focused on continuing to optimize our cost structure to offset pressures on revenue. However, we may not be able to continue to achieve the level of cost savings we have been experiencing and there will be decreasing opportunities for cost savings in the future.
|
•
|
Dispute settlements.
Due to the nature of our industry, we are regularly involved in disputes related to our billings to other carriers for access to our network and network access charges that we are assessed by other companies. The disputes often take significant time to resolve, and they may be resolved or require adjustment in future periods although they relate to costs and revenues in prior periods. We have experienced an increase in dispute settlements impacting revenues and cost of revenues over the past few years. However, this trend may not continue at the rate it has historically.
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2015
|
|
2016
|
||||||
|
(in thousands)
|
||||||||||
Revenues
|
$
|
1,176,895
|
|
|
$
|
1,097,252
|
|
|
$
|
959,874
|
|
Operating costs and expenses:
|
|
|
|
|
|
|
|
||||
Cost of revenues (exclusive of depreciation and amortization shown separately below)
|
557,436
|
|
|
500,628
|
|
|
442,608
|
|
|||
Selling, general and administrative (exclusive of of depreciation and amortization shown separately below)
|
419,019
|
|
|
368,763
|
|
|
319,231
|
|
|||
Depreciation and amortization
|
186,872
|
|
|
188,315
|
|
|
135,248
|
|
|||
Impairment of long-lived assets
|
14,334
|
|
|
—
|
|
|
—
|
|
|||
Restructuring, acquisition and integration-related costs
|
20,088
|
|
|
19,320
|
|
|
17,807
|
|
|||
Total operating costs and expenses
|
1,197,749
|
|
|
1,077,026
|
|
|
914,894
|
|
|||
Income (loss) from operations
|
(20,854
|
)
|
|
20,226
|
|
|
44,980
|
|
|||
Gain on sale of businesses
|
—
|
|
|
—
|
|
|
9,128
|
|
|||
Interest expense and other, net
|
(56,261
|
)
|
|
(50,972
|
)
|
|
(40,660
|
)
|
|||
Loss on extinguishment of debt
|
—
|
|
|
(9,734
|
)
|
|
(4,823
|
)
|
|||
Income (loss) from continuing operations before income taxes
|
(77,115
|
)
|
|
(40,480
|
)
|
|
8,625
|
|
|||
Income tax benefit (provision)
|
4,744
|
|
|
(2,730
|
)
|
|
(945
|
)
|
|||
Income (loss) from continuing operations
|
(72,371
|
)
|
|
(43,210
|
)
|
|
7,680
|
|
|||
Loss from discontinued operations, net of tax
|
(381
|
)
|
|
—
|
|
|
—
|
|
|||
Net income (loss)
|
$
|
(72,752
|
)
|
|
$
|
(43,210
|
)
|
|
$
|
7,680
|
|
•
|
Monthly recurring charges for providing data, voice and managed network services; transmission capacity; and Internet access and related value-added services;
|
•
|
Usage revenues;
|
•
|
Equipment revenues; and
|
•
|
Non-recurring and other revenues, such as installation fees, termination fees and administrative fees.
|
|
Year Ended December 31,
|
|
2015 vs 2014
|
|
2016 vs 2015
|
|||||||||||||||||||
|
2014
|
|
2015
|
|
2016
|
|
$ Change
|
|
% Change
|
|
$ Change
|
|
% Change
|
|||||||||||
|
(dollars in thousands)
|
|||||||||||||||||||||||
Monthly recurring revenues
|
$
|
1,021,931
|
|
|
$
|
970,731
|
|
|
$
|
841,989
|
|
|
$
|
(51,200
|
)
|
|
(5)%
|
|
$
|
(128,742
|
)
|
|
(13
|
)%
|
Usage revenues
|
124,266
|
|
|
99,227
|
|
|
82,513
|
|
|
(25,039
|
)
|
|
(20)%
|
|
(16,714
|
)
|
|
(17
|
)%
|
|||||
Equipment revenues
|
14,731
|
|
|
15,201
|
|
|
15,920
|
|
|
470
|
|
|
3%
|
|
719
|
|
|
5
|
%
|
|||||
Non-recurring and other revenues
|
15,967
|
|
|
12,093
|
|
|
19,452
|
|
|
(3,874
|
)
|
|
(24)%
|
|
7,359
|
|
|
61
|
%
|
|||||
Total revenues
|
$
|
1,176,895
|
|
|
$
|
1,097,252
|
|
|
$
|
959,874
|
|
|
$
|
(79,643
|
)
|
|
(7)%
|
|
$
|
(137,378
|
)
|
|
(13
|
)%
|
|
2016 vs 2015
|
||
|
(in millions)
|
||
Due to decrease in Small Business revenues (a)
|
$
|
(60.0
|
)
|
Due to decrease in IT services revenues (b)
|
(41.7
|
)
|
|
Due to decrease in Enterprise/Mid-Market revenues (c)
|
(24.0
|
)
|
|
Due to decrease in Consumer revenues (d)
|
(22.6
|
)
|
|
Due to increase in Carrier/Transport (e)
|
6.2
|
|
|
Due to increase in BRP revenues (f)
|
4.7
|
|
|
Total change in revenues
|
$
|
(137.4
|
)
|
(a)
|
Decrease primarily due to decline in traditional voice and data products, including traditional voice, lower-end, single site broadband services and web hosting. Revenues for these voice and data products have been decreasing due to an increase in customer churn, competition and a deemphasis on certain traditional products. Partially offsetting the decline in revenues for our traditional voice and data products were efforts to protect our revenue base, such as targeted price increases and re-terms of customers coming out of contract.
|
(b)
|
Decrease in IT services revenues primarily due to the sale of certain assets related to our IT services product offerings on February 1, 2016. Also contributing to the decrease prior to the sale in February 2016 was the discontinuance of certain products that were low margin revenue streams or that were not consistent with our more focused business strategy.
|
(c)
|
Decrease primarily due to decline in traditional voice and data products due to an increase in customer churn, competition and a deemphasis on certain traditional products. Over the past year we deemphasized and discontinued certain products that were low margin revenue streams or that were not consistent with our more focused business strategy. Partially offsetting the decline in revenues for our traditional voice and data products were price increases implemented during the year and an increase in sales of growth products, including MPLS, hosted voice and managed network services due to an increased emphasis on selling these products and services.
|
(d)
|
Decrease primarily due to the continued maturation of the market for Internet access, competitive pressures in the industry and limited sales and marketing activities. Also contributing to the decrease was the sale of approximately 12,000 customer relationships to one of our network providers in July 2016. Partially offsetting theses decrease was the launch of our Hyperlink high-speed Internet service in 2016, which offers service at faster speeds than traditional DSL.
|
(e)
|
Increase primarily due to an increase in transport revenues as we capitalize on unique fiber routes. Also contributing to the increase was a change in settlements and disputes related to billings to other carriers, as we recognized net unfavorable settlements during the year ended December 31, 2015 and favorable settlements during the year ended December 31, 2016.
|
(f)
|
Increase due to the inclusion of revenues from our acquisition of BRP in July 2016. The revenues are included within non-recurring and other revenues in our Enterprise/Mid-Market segment.
|
|
2015 vs 2014
|
||
|
(in millions)
|
||
Due to decrease in traditional voice and data products (a)
|
$
|
(66.1
|
)
|
Due to decrease in Consumer revenues (b)
|
(26.6
|
)
|
|
Due to net favorable settlements and reserve adjustments (c)
|
(5.5
|
)
|
|
Due to increase in growth products (d)
|
18.6
|
|
|
Total change in revenues
|
$
|
(79.6
|
)
|
(a)
|
Decrease due to decline in traditional voice and data products, including traditional voice, lower-end, single site broadband services, usage and web hosting. Revenues for these voice and data products have been decreasing due to competition, migration to more advanced integrated voice and data services, customer churn and continued rate reductions as a result of FCC rules regarding intercarrier compensation. In addition, during 2015 we deemphasized and discontinued certain products that were low margin revenue streams or that were not in line with our more focused business strategy. Partially offsetting the decline in revenues was price increases implemented during 2015.
|
(b)
|
Decrease primarily due to the continued maturation of the market for Internet access, competitive pressures in the industry and limited sales and marketing activities, partially offset by targeted price increases.
|
(c)
|
Decrease due to change in favorable settlements and reserve adjustments, primarily related to our billings to other carriers for access to our network, for which revenue had not been previously recognized.
|
(d)
|
Increase due to sales of growth products, including MPLS, hosted voice and managed network services due to an increased emphasis on selling these products and services.
|
|
Year Ended December 31,
|
|
2015 vs 2014
|
|
2016 vs 2015
|
|||||||||||||||||||
|
2014
|
|
2015
|
|
2016
|
|
$ Change
|
|
% Change
|
|
$ Change
|
|
% Change
|
|||||||||||
|
(dollars in thousands)
|
|||||||||||||||||||||||
Cost of revenues
|
$
|
557,436
|
|
|
$
|
500,628
|
|
|
$
|
442,608
|
|
|
$
|
(56,808
|
)
|
|
(10)%
|
|
$
|
(58,020
|
)
|
|
(12
|
)%
|
|
2015 vs 2014
|
|
2016 vs 2015
|
||||
|
(in millions)
|
||||||
Due to decrease in interconnection expenses (a)
|
$
|
(34.4
|
)
|
|
$
|
(31.5
|
)
|
Due to decrease in network expenses (b)
|
(9.5
|
)
|
|
(8.6
|
)
|
||
Due to decrease in usage (c)
|
(11.1
|
)
|
|
(6.0
|
)
|
||
Due to sale of IT services business (d)
|
(1.1
|
)
|
|
(19.2
|
)
|
||
Due to change in non-recurring charges and other expenses (e)
|
(0.7
|
)
|
|
4.8
|
|
||
Due to increase in BRP cost of revenues (f)
|
—
|
|
|
2.5
|
|
||
Total change in business services cost of revenues
|
$
|
(56.8
|
)
|
|
$
|
(58.0
|
)
|
(a)
|
Decrease due to decline in revenues and a concentrated effort to manage cost of revenues through auditing telecommunications vendor invoices and other cost saving initiatives and declines in traditional voice and data products. Partially offsetting these declines were increased sales of growth products.
|
(b)
|
Decrease due to a concentrated effort to manage cost of revenues through network grooming and other cost saving initiatives and declines in traditional voice and data products. Partially offsetting these declines were increased sales of growth products.
|
(c)
|
Decrease due to declines in traditional voice and data products and a decreased emphasis on selling certain lower margin products and services.
|
(d)
|
Decrease in IT services cost of revenues primarily due to the sale of certain assets related to our IT services product offerings on February 1, 2016. Also contributing to the decrease prior to the sale in February 2016 was the discontinuance of certain products that had low margins or that were not consistent with our more focused business strategy.
|
(e)
|
Increase primarily due to fewer favorable adjustments and settlements during the year ended December 31, 2016 compared to the year ended December 31, 2015.
|
(f)
|
Increase due to the inclusion of cost of revenues from our acquisition of BRP in July 2016.
|
|
Year Ended December 31,
|
|
2015 vs 2014
|
|
2016 vs 2015
|
|||||||||||||||||||
|
2014
|
|
2015
|
|
2016
|
|
$ Change
|
|
% Change
|
|
$ Change
|
|
% Change
|
|||||||||||
|
(dollars in thousands)
|
|||||||||||||||||||||||
Selling, general and administrative expenses
|
$
|
419,019
|
|
|
$
|
368,763
|
|
|
$
|
319,231
|
|
|
$
|
(50,256
|
)
|
|
(12)%
|
|
$
|
(49,532
|
)
|
|
(13
|
)%
|
|
2015 vs 2014
|
|
2016 vs 2015
|
||||
|
(in millions)
|
||||||
Due to decrease in people costs (a)
|
$
|
(35.7
|
)
|
|
$
|
(39.6
|
)
|
Due to decrease in rent and occupancy costs (b)
|
(4.5
|
)
|
|
(3.5
|
)
|
||
Due to decrease in outside sales commissions (c)
|
(3.1
|
)
|
|
(1.7
|
)
|
||
Due to decrease in bad debt expense (d)
|
(2.5
|
)
|
|
(1.0
|
)
|
||
Due to decrease in loss contingencies (e)
|
(2.2
|
)
|
|
—
|
|
||
Due to decrease in other selling, general and administrative costs (f)
|
(2.3
|
)
|
|
(5.5
|
)
|
||
Due to increase in BRP selling, general and administrative (g)
|
—
|
|
|
1.8
|
|
||
Total change in selling, general and administrative expenses
|
$
|
(50.3
|
)
|
|
$
|
(49.5
|
)
|
(a)
|
Decrease in people costs primarily due headcount declines, as full-time equivalents were 2,659, 2,138 and 1,890 as of December 31, 2014, 2015 and 2016, respectively. The decrease in 2015 was primarily due to reductions in workforce driven by changes in our business strategy, including a reduction in workforce implemented during the fourth quarter of 2014 that eliminated approximately 450 positions. The decrease in 2016 was primarily due to reductions in workforce driven by additional changes in our business strategy and the transfer of employees in connection with the sale of IT services business on February 1, 2016.
|
(b)
|
Decrease in rent and occupancy costs primarily due to cost savings from the closing of several sales offices and other properties over the past two years in connection with changes to our business strategy and from moving our corporate headquarters location in September 2014.
|
(c)
|
Decrease in outside sales commissions primarily due to lower sales volume.
|
(d)
|
Decrease in bad debt expense due to more effective collection efforts and the overall decrease in revenues.
|
(e)
|
Decrease in loss contingencies due to $2.2 million of reserves recorded during year ended December 31, 2014, which was settled and paid during the year ended December 31, 2015.
|
(f)
|
Decrease in other selling, general and administrative costs such as advertising and marketing, outsourced labor, professional fees, payment processing, travel and insurance due to increased focus on optimizing our cost structure.
|
(g)
|
Increase due to the inclusion of selling, general and administrative expenses from our acquisition of BRP beginning in July 2016.
|
|
Year Ended December 31,
|
|
2015 vs 2014
|
|
2016 vs 2015
|
||||||||||||||||||
|
2014
|
|
2015
|
|
2016
|
|
$ Change
|
|
% Change
|
|
$ Change
|
|
% Change
|
||||||||||
|
(dollars in thousands)
|
||||||||||||||||||||||
Depreciation expense
|
$
|
123,695
|
|
|
$
|
122,151
|
|
|
$
|
112,424
|
|
|
$
|
(1,544
|
)
|
|
(1)%
|
|
$
|
(9,727
|
)
|
|
(8)%
|
Amortization expense
|
63,177
|
|
|
66,164
|
|
|
22,824
|
|
|
2,987
|
|
|
5%
|
|
(43,340
|
)
|
|
(66)%
|
|||||
Total depreciation and amortization
|
$
|
186,872
|
|
|
$
|
188,315
|
|
|
$
|
135,248
|
|
|
$
|
1,443
|
|
|
1%
|
|
$
|
(53,067
|
)
|
|
(28)%
|
•
|
Integration-related costs, such as system conversion and integration-related consulting and employee costs. We are also undertaking a long-term network optimization project designed to consolidate traffic onto network facilities operated by us and reduce the usage of other carriers’ networks. Integration-related costs associated with this initiative include costs to migrate traffic to lower cost circuits and to terminate existing contracts prior to their expiration;
|
•
|
Severance, retention and other employee termination costs associated with acquisition and integration activities and with certain voluntary employee separations; and
|
•
|
Facility-related costs, such as lease termination and asset impairments; and
|
•
|
Transaction-related costs, which are direct costs incurred to effect a business combination, such as advisory, legal, accounting, valuation and other professional fees.
|
|
Year Ended December 31,
|
|
2015 vs 2014
|
|
2016 vs 2015
|
|||||||||||||||||||
|
2014
|
|
2015
|
|
2016
|
|
$ Change
|
|
% Change
|
|
$ Change
|
|
% Change
|
|||||||||||
|
(dollars in thousands)
|
|||||||||||||||||||||||
Integration-related costs
|
$
|
9,043
|
|
|
$
|
5,924
|
|
|
$
|
8,135
|
|
|
$
|
(3,119
|
)
|
|
(34)%
|
|
$
|
2,211
|
|
|
37
|
%
|
Severance, retention and other employee costs
|
9,297
|
|
|
9,798
|
|
|
3,753
|
|
|
501
|
|
|
5%
|
|
(6,045
|
)
|
|
(62
|
)%
|
|||||
Facility-related costs
|
1,744
|
|
|
3,598
|
|
|
669
|
|
|
1,854
|
|
|
106%
|
|
(2,929
|
)
|
|
(81
|
)%
|
|||||
Transaction-related costs
|
4
|
|
|
—
|
|
|
5,250
|
|
|
(4
|
)
|
|
(100)%
|
|
5,250
|
|
|
100
|
%
|
|||||
Restructuring, acquisition and integration-related costs
|
$
|
20,088
|
|
|
$
|
19,320
|
|
|
$
|
17,807
|
|
|
$
|
(768
|
)
|
|
(4)%
|
|
$
|
(1,513
|
)
|
|
(8
|
)%
|
•
|
the completion of integration projects during the year;
|
•
|
partially offset by an increase is restructuring costs. During the year ended December 31, 2015, we recorded $13.4 million of restructuring costs in connection with changes in our business strategy, consisting of $9.8 million of severance and other employee costs due to reductions in workforce and $3.6 million of facilities-related costs due to the closing of certain sales offices.
|
•
|
transaction-related costs incurred in connection with our pending merger with Windstream;
|
•
|
an increase in integration-related costs related to our network optimization projects;
|
•
|
partially offset by a decrease is restructuring costs. During the year ended December 31, 2016, we recored $4.4 million of restructuring costs in connection with changes in our business strategy, consisting of $3.7 million of severance and other employee costs due to reductions in workforce and $0.7 million of facilities-related costs due to the closing of certain sales offices.
|
|
Year Ended December 31,
|
|
2015 vs 2014
|
|
2016 vs 2015
|
|||||||||||||||||||
|
2014
|
|
2015
|
|
2016
|
|
$ Change
|
|
% Change
|
|
$ Change
|
|
% Change
|
|||||||||||
|
(dollars in thousands)
|
|||||||||||||||||||||||
Interest expense
|
$
|
56,382
|
|
|
$
|
49,979
|
|
|
$
|
40,711
|
|
|
$
|
(6,403
|
)
|
|
(11)%
|
|
$
|
(9,268
|
)
|
|
(19
|
)%
|
Other, net
|
(121
|
)
|
|
993
|
|
|
(51
|
)
|
|
1,114
|
|
|
*
|
|
(1,044
|
)
|
|
(105
|
)%
|
|||||
Total interest expense and other, net
|
$
|
56,261
|
|
|
$
|
50,972
|
|
|
$
|
40,660
|
|
|
$
|
(5,289
|
)
|
|
(9)%
|
|
$
|
(10,312
|
)
|
|
(20
|
)%
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2015
|
|
2016
|
||||||
|
(in thousands)
|
||||||||||
Current benefit (provision)
|
$
|
5,335
|
|
|
$
|
(2,053
|
)
|
|
$
|
(375
|
)
|
Deferred provision
|
(591
|
)
|
|
(677
|
)
|
|
(570
|
)
|
|||
Total income tax benefit (provision)
|
$
|
4,744
|
|
|
$
|
(2,730
|
)
|
|
$
|
(945
|
)
|
•
|
Enterprise/Mid-Market
. Our Enterprise/Mid-Market segment provides a broad range of data, voice and managed network services to distributed multi-site business customers.
|
•
|
Small Business
. Our Small Business segment provides a broad range of data, voice and managed network services to small, often single-site business customers.
|
•
|
Carrier/Transport
. Our Carrier/Transport segment provides transmission capacity and other data, voice and managed network services to telecommunications carriers and large enterprises.
|
•
|
Consumer
. Our Consumer segment provides nationwide Internet access and related value-added services to residential customers.
|
|
Year Ended December 31,
|
|
Change
|
||||||||||
|
2015
|
|
2016
|
|
Dollars
|
|
Percent
|
||||||
|
(dollars in thousands)
|
||||||||||||
Revenues
|
$
|
444,968
|
|
|
$
|
397,676
|
|
|
$
|
(47,292
|
)
|
|
(11)%
|
Cost of revenues
|
221,347
|
|
|
203,928
|
|
|
(17,419
|
)
|
|
(8)%
|
|||
Gross margin
|
$
|
223,621
|
|
|
$
|
193,748
|
|
|
$
|
(29,873
|
)
|
|
(13)%
|
•
|
Decrease of $28.0 million in IT services revenues during the year ended December 31, 2016 compared to the prior year primarily due to the sale of certain assets related to our IT services product offerings on February 1, 2016, as well as the discontinuance of certain products that had low margins or that were not consistent with our more focused business strategy.
|
•
|
Decrease in traditional voice and data products. Revenues for traditional voice and data products have been decreasing due to an increase in customer churn, competition and a deemphasis on certain traditional products.
|
•
|
Partially offset by targeted price increases implemented during the year ended December 31, 2016 and increased sales of our growth products, including MPLS, hosted voice and managed network services.
|
•
|
Partially offset by an increase of $4.7 million during the year ended December 31, 2016 for the inclusion of revenues from our acquisition of BRP in July 2016.
|
|
Year Ended December 31,
|
|
Change
|
||||||||||
|
2015
|
|
2016
|
|
Dollars
|
|
Percent
|
||||||
|
(dollars in thousands)
|
||||||||||||
Revenues
|
$
|
297,039
|
|
|
$
|
223,776
|
|
|
$
|
(73,263
|
)
|
|
(25)%
|
Cost of revenues
|
139,440
|
|
|
107,662
|
|
|
(31,778
|
)
|
|
(23)%
|
|||
Gross margin
|
$
|
157,599
|
|
|
$
|
116,114
|
|
|
$
|
(41,485
|
)
|
|
(26)%
|
•
|
Decrease in traditional voice and data products. Revenues for traditional voice and data products have been decreasing due to an increase in customer churn, competition and a deemphasis on certain traditional products.
|
•
|
Decrease of $13.6 million in IT services revenues during the year ended December 31, 2016 compared to the prior year primarily due to the sale of certain assets related to our IT services product offerings on February 1, 2016, as well as the discontinuance of certain products that had low margins or that were not consistent with our more focused business strategy.
|
•
|
Partially offset by efforts to protect our revenue base, such as targeted price increases and re-terms of customers coming out of contract.
|
|
Year Ended December 31,
|
|
Change
|
||||||||||
|
2015
|
|
2016
|
|
Dollars
|
|
Percent
|
||||||
|
(dollars in thousands)
|
||||||||||||
Revenues
|
$
|
135,905
|
|
|
$
|
141,709
|
|
|
$
|
5,804
|
|
|
4%
|
Cost of revenues
|
61,979
|
|
|
63,158
|
|
|
1,179
|
|
|
2%
|
|||
Gross margin
|
$
|
73,926
|
|
|
$
|
78,551
|
|
|
$
|
4,625
|
|
|
6%
|
|
Year Ended December 31,
|
|
2015 vs 2014
|
|
2016 vs 2015
|
|||||||||||||||||||
|
2014
|
|
2015
|
|
2016
|
|
$ Change
|
|
% Change
|
|
$ Change
|
|
% Change
|
|||||||||||
|
(dollars in thousands)
|
|||||||||||||||||||||||
Revenues
|
$
|
930,931
|
|
|
$
|
877,912
|
|
|
$
|
763,161
|
|
|
$
|
(53,019
|
)
|
|
(6)%
|
|
$
|
(114,751
|
)
|
|
(13
|
)%
|
Cost of revenues
|
469,523
|
|
|
422,766
|
|
|
374,748
|
|
|
(46,757
|
)
|
|
(10)%
|
|
(48,018
|
)
|
|
(11
|
)%
|
|||||
Gross margin
|
$
|
461,408
|
|
|
$
|
455,146
|
|
|
$
|
388,413
|
|
|
$
|
(6,262
|
)
|
|
(1)%
|
|
$
|
(66,733
|
)
|
|
(15
|
)%
|
•
|
Decrease in traditional voice and data products. Revenues for traditional voice and data products have been decreasing due to an increase in customer churn, competition and a deemphasis on certain traditional products.
|
•
|
Partially offset by targeted price increases and increased sales of our growth products, including MPLS, hosted voice and managed network services.
|
•
|
Decrease in traditional voice and data products. Revenues for traditional voice and data products have been decreasing due to an increase in customer churn, competition and a deemphasis on certain traditional products.
|
•
|
Decrease of $41.7 million in IT services revenues due to the sale of certain assets related to our IT services product offerings on February 1, 2016, as well as the discontinuance of certain products that had low margins or that were not consistent with our more focused business strategy.
|
•
|
Partially offset by targeted price increases and increased sales of our growth products, including MPLS, hosted voice and managed network services.
|
•
|
Partially offset by the inclusion of $4.7 million of revenues from our acquisition of BRP in July 2016.
|
|
Year Ended December 31,
|
|
2015 vs 2014
|
|
2016 vs 2015
|
|||||||||||||||||||
|
2014
|
|
2015
|
|
2016
|
|
$ Change
|
|
% Change
|
|
$ Change
|
|
% Change
|
|||||||||||
|
(dollars in thousands)
|
|||||||||||||||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Access services
|
$
|
202,008
|
|
|
$
|
173,389
|
|
|
$
|
151,909
|
|
|
$
|
(28,619
|
)
|
|
(14)%
|
|
$
|
(21,480
|
)
|
|
(12
|
)%
|
Value-added services
|
43,956
|
|
|
45,951
|
|
|
44,804
|
|
|
1,995
|
|
|
5%
|
|
(1,147
|
)
|
|
(2
|
)%
|
|||||
Total revenues
|
245,964
|
|
|
219,340
|
|
|
196,713
|
|
|
(26,624
|
)
|
|
(11)%
|
|
(22,627
|
)
|
|
(10
|
)%
|
|||||
Cost of revenues
|
87,913
|
|
|
77,862
|
|
|
67,860
|
|
|
(10,051
|
)
|
|
(11)%
|
|
(10,002
|
)
|
|
(13
|
)%
|
|||||
Gross margin
|
$
|
158,051
|
|
|
$
|
141,478
|
|
|
$
|
128,853
|
|
|
$
|
(16,573
|
)
|
|
(10)%
|
|
$
|
(12,625
|
)
|
|
(9
|
)%
|
•
|
Decreases in average consumer access subscribers, which were
0.9 million
,
0.8 million
and
0.7 million
during the years ended
December 31, 2014, 2015 and 2016
, respectively. The decreases resulted from limited sales and marketing activities, the continued maturation of the market for Internet access and competitive pressures in the industry. However, as we continue to focus on the retention of customers, our monthly consumer subscriber churn rates were
2.1%
,
1.9%
and
1.6%
during the years ended
December 31, 2014, 2015 and 2016
, respectively, which moderated the decline in average consumer subscribers. During 2016, we also launched Hyperlink high speed Internet service that offers service at faster speeds than traditional DSL, which offset some of the decline.
|
•
|
Partially offset by increases in our average revenue per subscriber, which were
$22.89
,
$23.57
and
$23.92
during the years ended
December 31, 2014, 2015 and 2016
, respectively. The increases were due to targeted price increases and a change in mix of subscribers to those with hight price points, including subscribers for our recently launched Hyperlink service.
|
•
|
The decreases in average consumer subscribers noted above.
|
•
|
Partially offset by increases in our average cost per subscriber. This was due to a shift in the mix to customers with higher costs associated with delivering services and higher unit costs as our agreements with certain service providers generally have volume based tiered pricing which is leading to higher unit costs as our subscriber base decreases.
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2015
|
|
2016
|
||||||
Consumer Subscriber Activity
|
|
|
|
|
|
|
|||||
Subscribers at beginning of year
|
976,000
|
|
|
821,000
|
|
|
729,000
|
|
|||
Gross organic subscriber additions
|
75,000
|
|
|
62,000
|
|
|
57,000
|
|
|||
Adjustment (a)
|
—
|
|
|
19,000
|
|
|
6,000
|
|
|||
Sale of subscribers (b)
|
—
|
|
|
—
|
|
|
(12,000
|
)
|
|||
Churn
|
(230,000
|
)
|
|
(173,000
|
)
|
|
(132,000
|
)
|
|||
Subscribers at end of year (c)
|
821,000
|
|
|
729,000
|
|
|
648,000
|
|
|||
|
|
|
|
|
|
||||||
Consumer Metrics
|
|
|
|
|
|
|
|||||
Average dial-up subscribers (d)
|
511,000
|
|
|
466,000
|
|
|
430,000
|
|
|||
Average high-speed subscribers (d)
|
385,000
|
|
|
307,000
|
|
|
255,000
|
|
|||
Average consumer subscribers (d)
|
896,000
|
|
|
773,000
|
|
|
685,000
|
|
|||
|
|
|
|
|
|
||||||
ARPU (e)
|
$
|
22.89
|
|
|
$
|
23.57
|
|
|
$
|
23.92
|
|
Churn rate (f)
|
2.1
|
%
|
|
1.9
|
%
|
|
1.6
|
%
|
|
Year Ended December 31,
|
|
2015 vs 2014
|
|
2016 vs 2015
|
||||||||||||||||||
|
2014
|
|
2015
|
|
2016
|
|
$ Change
|
|
% Change
|
|
$ Change
|
|
% Change
|
||||||||||
|
(dollars in thousands)
|
||||||||||||||||||||||
Net cash provided by operating activities
|
$
|
139,995
|
|
|
$
|
167,448
|
|
|
$
|
125,965
|
|
|
$
|
27,453
|
|
|
20%
|
|
$
|
(41,483
|
)
|
|
(25)%
|
Net cash used in investing activities
|
(102,777
|
)
|
|
(87,468
|
)
|
|
(64,003
|
)
|
|
15,309
|
|
|
15%
|
|
23,465
|
|
|
27%
|
|||||
Net cash used in financing activities
|
(19,721
|
)
|
|
(122,817
|
)
|
|
(101,729
|
)
|
|
(103,096
|
)
|
|
*
|
|
21,088
|
|
|
17%
|
|||||
Net increase (decrease) in cash and cash equivalents
|
$
|
17,497
|
|
|
$
|
(42,837
|
)
|
|
$
|
(39,767
|
)
|
|
$
|
(60,334
|
)
|
|
*
|
|
$
|
(3,070
|
)
|
|
(7)%
|
•
|
$26.6 million of cash received from the sale of our IT services business.
|
•
|
$3.8 million of cash received from the sale of certain Consumer customer relationships.
|
•
|
a $3.4 million decrease in capital expenditures. Capital expenditures for the year ended December 31, 2016 primarily related to enhancing our network and technology infrastructure and the acquisition of new customers.
|
•
|
partially offset by $10.4 million net cash used for our acquisition of BRP.
|
•
|
$131.3 million used for the redemption and repurchase of $126.1 million outstanding principal of our Senior Notes during the year ended December 31, 2015. For more information about these transactions, refer to Note 9 to our Consolidated Financial Statements.
|
•
|
a $10.4 million increase in dividends paid due to the timing of the funding of our quarterly dividend payment. During the the years ended December 31, 2014 and 2015, we declared cash dividends of $0.20 per share. However, we funded three quarterly payments during the year ended December 31, 2014 compared to five quarterly payments during the year ended December 31, 2015.
|
•
|
partially offset by $35.0 million drawn down under our senior secured revolving credit facility, net of repayments.
|
•
|
partially offset by a $2.2 million decrease in repurchases of common stock and $1.7 million of proceeds received for stock option exercises during the year ended December 31, 2015.
|
•
|
a $31.9 million decrease in repayment of our Senior Notes. During the year ended December 31, 2015, we used $131.3 million to repurchase and redeem our Senior Notes and during the year ended December 31, 2016, we used $99.4 million to repurchase and redeem our Senior Notes. For more information about our debt transactions, refer to Note 9 to our Consolidated Financial Statements.
|
•
|
$48.7 million of proceeds (less quarterly principal payments) received from our term loan.
|
•
|
a $4.4 million decrease in dividends paid primarily due to the timing of the funding of our quarterly dividend payment. During the years ended December 31, 2015 and 2016, we declared cash dividends of $0.20 per share; however, we funded five quarterly payments during the year ended December 31, 2015 compared to four payments during the year ended December 31, 2016.
|
•
|
partially offset by a change in senior secured revolving credit facility proceeds. During the year ended December 31, 2015, we drew $35.0 million under our senior secured revolving credit facility, net of repayments, and during the year ended December 31, 2016, we paid $25.0 million under our senior secured revolving credit facility, net of draw downs.
|
•
|
partially offset by a $1.5 million decrease in proceeds received for stock option exercises.
|
•
|
Debt and interest.
We expect to use cash to service our outstanding indebtedness, including $300.0 million aggregate principal amount of our Senior Secured Notes due in June 2020, $76.6 million aggregate principal amount of our Senior Notes due in May 2019, $48.8 million principal amount of our term loan and borrowings under our $125.0 million revolving credit facility. We may also use cash to repay outstanding indebtedness. During the year ended December 31, 2016, we redeemed and repurchased $97.4 million outstanding principal of our Senior Notes and made $1.3 million of quarterly principal payments on our term loan. We may repurchase or redeem additional debt.
|
•
|
Capital expenditures
. We incurred capital expenditures of
$84.1 million
in 2016 and expect to continue to incur capital expenditures in 2017. The capital expenditures primarily relate to the acquisition of new customers and to maintain and upgrade our network and technology infrastructure. The actual amount of capital expenditures may fluctuate due to a number of factors which are difficult to predict and could change significantly over time. Additionally, technological advances may require us to make capital expenditures to develop or acquire new equipment or technology in order to replace aging or obsolete equipment.
|
•
|
Investments in our growth products and services.
We expect to invest cash in sales and marketing efforts and other resources required to support our strategy related to our growth products and services, including our recently launched SD-WAN product.
|
•
|
Dividends
. We have historically used cash for dividends. The decision to declare future dividends is made at the discretion of the Board of Directors and will depend on, among other things, our results of operations, financial condition, cash requirements, investment opportunities, restrictions on dividends under the agreements governing our indebtedness and other factors the Board of Directors may deem relevant.
|
•
|
Other
. We may also use cash to acquire or invest in other companies or to repurchase common stock. We also expect to use cash for current restructuring liabilities. Payments for restructuring liabilities incurred to date will be funded through operating cash flows. We continue to evaluate our business, including evaluating ways to reduce the cost structure of our business, and may use cash for additional restructuring activities.
|
|
|
|
|
Payment Due by Period
|
||||||||||||||||
|
|
Total
|
|
2017
|
|
2018-
2019 |
|
2020-
2021 |
|
After 5 Years
|
||||||||||
|
|
(in thousands)
|
||||||||||||||||||
Long-term debt (1)
|
|
$
|
435,307
|
|
|
$
|
2,500
|
|
|
$
|
83,432
|
|
|
$
|
349,375
|
|
|
$
|
—
|
|
Interest payments on long-term debt (2)
|
|
101,271
|
|
|
31,268
|
|
|
57,937
|
|
|
12,066
|
|
|
—
|
|
|||||
Purchase commitments (3)
|
|
117,191
|
|
|
49,908
|
|
|
52,638
|
|
|
9,935
|
|
|
4,710
|
|
|||||
Operating leases (4)
|
|
111,885
|
|
|
31,533
|
|
|
46,867
|
|
|
21,793
|
|
|
11,692
|
|
|||||
Capital leases (5)
|
|
16,678
|
|
|
3,427
|
|
|
6,920
|
|
|
5,420
|
|
|
911
|
|
|||||
Total (6)
|
|
$
|
782,332
|
|
|
$
|
118,636
|
|
|
$
|
247,794
|
|
|
$
|
398,589
|
|
|
$
|
17,313
|
|
(1)
|
Long-term debt includes principal payments on outstanding debt obligations. Long-term debt excludes unamortized discounts and unamortized issuance costs. As of
December 31, 2016
, we had $435.3 million aggregate principal amount of debt outstanding, consisting of $300.0 million of 7.375% Senior Secured Notes due June 1, 2020, $76.6 million of 8.875% Senior Notes due May 15, 2019, $48.7 million outstanding under our term loan and $10.0 million outstanding under our senior secured revolving credit facility. For more information regarding our outstanding indebtedness, refer to Note 9 to our Consolidated Financial Statements.
|
(2)
|
Interest payments on long-term debt includes interest due on outstanding debt through maturity and commitment fees and borrowing costs under our senior secured revolving credit facility.
|
(3)
|
Purchase commitments represent non-cancellable contractual obligations for services and equipment; minimum commitments under network access agreements with several carriers.
|
(4)
|
These amounts represent base rent payments under non-cancellable operating leases for facilities and equipment that expire in various years through 2023, as well as an allocation for operating expenses. Not included in these amounts is expected sublease income of
$2.2 million
,
$2.2 million
and
$1.9 million
during the years ended December 31, 2017, 2018 and 2019, respectively.
|
(5)
|
Represents remaining payments under capital leases, including interest.
|
(6)
|
The table does not include our reserve for uncertain tax positions, as the specific timing of any cash payments relating to this obligation cannot be projected with reasonable certainty. Of our total
$18.1 million
total gross uncertain tax positions as of December 31, 2016, $1.5 million would impact the effective tax rate once settled.
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2015
|
|
2016
|
||||||
|
(in thousands)
|
||||||||||
Net income (loss)
|
$
|
(72,752
|
)
|
|
$
|
(43,210
|
)
|
|
$
|
7,680
|
|
Interest expense and other, net
|
56,261
|
|
|
50,972
|
|
|
40,660
|
|
|||
Income tax (benefit) provision
|
(4,744
|
)
|
|
2,730
|
|
|
945
|
|
|||
Depreciation and amortization
|
186,872
|
|
|
188,315
|
|
|
135,248
|
|
|||
Stock-based compensation expense
|
12,600
|
|
|
14,594
|
|
|
16,192
|
|
|||
Impairment of long-lived assets
|
14,334
|
|
|
—
|
|
|
—
|
|
|||
Restructuring, acquisition and integration-related costs
|
20,088
|
|
|
19,320
|
|
|
17,807
|
|
|||
Gain on sale of businesses
|
—
|
|
|
—
|
|
|
(9,128
|
)
|
|||
Loss on extinguishment of debt
|
—
|
|
|
9,734
|
|
|
4,823
|
|
|||
Loss from discontinued operations, net of tax
|
381
|
|
|
—
|
|
|
—
|
|
|||
Adjusted EBITDA
|
$
|
213,040
|
|
|
$
|
242,455
|
|
|
$
|
214,227
|
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2015
|
|
2016
|
||||||
|
(in thousands)
|
||||||||||
Net income (loss)
|
$
|
(72,752
|
)
|
|
$
|
(43,210
|
)
|
|
$
|
7,680
|
|
Interest expense and other, net
|
56,261
|
|
|
50,972
|
|
|
40,660
|
|
|||
Income tax (benefit) provision
|
(4,744
|
)
|
|
2,730
|
|
|
945
|
|
|||
Depreciation and amortization
|
186,872
|
|
|
188,315
|
|
|
135,248
|
|
|||
Stock-based compensation expense
|
12,600
|
|
|
14,594
|
|
|
16,192
|
|
|||
Impairment of long-lived assets
|
14,334
|
|
|
—
|
|
|
—
|
|
|||
Restructuring, acquisition and integration-related costs
|
20,088
|
|
|
19,320
|
|
|
17,807
|
|
|||
Gain on sale of businesses
|
—
|
|
|
—
|
|
|
(9,128
|
)
|
|||
Loss on extinguishment of debt
|
—
|
|
|
9,734
|
|
|
4,823
|
|
|||
Loss from discontinued operations, net of tax
|
381
|
|
|
—
|
|
|
—
|
|
|||
Purchases of property and equipment
|
(102,863
|
)
|
|
(87,468
|
)
|
|
(84,071
|
)
|
|||
Unlevered Free Cash Flow
|
$
|
110,177
|
|
|
$
|
154,987
|
|
|
$
|
130,156
|
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2015
|
|
2016
|
||||||
|
(in thousands)
|
||||||||||
Net cash provided by operating activities
|
$
|
139,995
|
|
|
$
|
167,448
|
|
|
$
|
125,965
|
|
Income tax provision (benefit)
|
(4,744
|
)
|
|
2,730
|
|
|
945
|
|
|||
Non-cash income taxes
|
(591
|
)
|
|
(677
|
)
|
|
(570
|
)
|
|||
Interest expense and other, net
|
56,261
|
|
|
50,972
|
|
|
40,660
|
|
|||
Amortization of debt discount, premium and issuance costs
|
(4,104
|
)
|
|
(3,703
|
)
|
|
(3,091
|
)
|
|||
Restructuring, acquisition and integration-related costs
|
20,088
|
|
|
19,320
|
|
|
17,807
|
|
|||
Changes in operating assets and liabilities
|
5,673
|
|
|
6,721
|
|
|
31,828
|
|
|||
Purchases of property and equipment
|
(102,863
|
)
|
|
(87,468
|
)
|
|
(84,071
|
)
|
|||
Other, net
|
462
|
|
|
(356
|
)
|
|
683
|
|
|||
Unlevered Free Cash Flow
|
$
|
110,177
|
|
|
$
|
154,987
|
|
|
$
|
130,156
|
|
|
|
|
|
|
|
|
|||||
Net cash used in investing activities
|
$
|
(102,777
|
)
|
|
$
|
(87,468
|
)
|
|
$
|
(64,003
|
)
|
Net cash used in financing activities
|
$
|
(19,721
|
)
|
|
$
|
(122,817
|
)
|
|
$
|
(101,729
|
)
|
Description
|
Judgments and Uncertainties
|
Effect if Actual Results Differ From Assumptions
|
Revenue Recognition
|
|
|
We offer certain services that are provided by third-party vendors. When we are the primary obligor in a transaction, have latitude in establishing prices, are the party determining the service specifications or have several but not all of these indicators, we record the revenue and cost of revenue on a gross basis. If we are not the primary obligor and/or a third-party vendor has latitude in establishing prices, we record revenue associated with the related subscribers on a net basis, netting the cost of revenue associated with the service against the gross amount billed to the customer and recording the net amount as revenue.
|
The determination of whether we meet many of the attributes for gross and net revenue recognition is judgmental in nature and is based on an evaluation of the terms of each arrangement.
|
We have not made any material changes in the accounting methodology we use to recognize revenue during the past three years.
We do not believe there is a reasonable likelihood that there will be a material change in the future estimates or assumptions used to recognize revenue.
A change in the determination of gross versus net revenue recognition would have an impact on the gross amounts of revenues and cost of revenues we recognize and the gross profit margin percentages in the period in which such determination is made and in subsequent periods; however, such a change in determination of revenue recognition would not affect net loss.
|
Allowance for Doubtful Accounts
|
|
|
We maintain an allowance for accounts receivable that may not be collectible. In assessing the adequacy of the allowance for doubtful accounts, management considers a number of factors, including the aging of the accounts receivable balances, historical collection experience and a specific customer's ability to meet its financial obligations to us.
|
The determination of our allowance for doubtful accounts contains uncertainties because it requires management to make assumptions and apply judgment about future uncollectible accounts.
|
We have not made any material changes in the accounting methodology we use to record our allowance for doubtful accounts during the past three years.
We do not believe there is a reasonable likelihood that there will be a material change in the future estimates or assumptions used to record our allowance for doubtful accounts.
A 10% difference in our allowance for doubtful accounts as of December 31, 2016 would have affected net loss by approximately $0.3 million as of December 31, 2016.
|
Description
|
Judgments and Uncertainties
|
Effect if Actual Results Differ From Assumptions
|
Cost of Revenues
|
|
|
We rely on other carriers to provide services where we do not have facilities, and we use a number of different carriers to terminate our long distance calls. These costs are expensed as incurred. The invoices received from other telecommunications providers are often subject to significant billing disputes. These disputes may require a significant amount of time to resolve given the complexities and regulatory issues surrounding the vendor relationships.
We maintain reserves for any anticipated exposure associated with these billing disputes. The reserves are reviewed on a monthly basis, but are subject to changes in estimates and management judgment as new information becomes available.
|
Our cost of revenues methodology contains uncertainties because it requires management to make assumptions and apply judgment regarding the amount of future billing dispute resolutions.
|
We have not made any material changes in the accounting methodology we use to estimate reserves for billing disputes during the past three years.
While we believe our reserves for billing disputes are adequate, it is reasonably possible that we could record additional expense of up to $12.4 million for unrecorded disputed amounts.
We do not believe there is a reasonable likelihood that there will be a material change in the future estimates or assumptions we use for these reserves.
|
Income Taxes
|
|
|
We recognize deferred tax assets and liabilities using tax rates in effect for the years in which temporary differences are expected to reverse, including net operating loss carryforwards. Management assesses the realizability of deferred tax assets and records a valuation allowance if it is more-likely-than-not that all or a portion of the deferred tax assets will not be realized.
We establish reserves for tax-related uncertainties if it is more-likely-than-not that additional taxes will be due. We adjust these reserves in light of changing facts and circumstances, such as the closing of a tax audit, new tax legislation or the change of an estimate. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made. The provision for income taxes includes the effect of reserve provisions and changes to reserves that are considered appropriate, as well as the related net interest and penalties.
|
We consider the probability of future taxable income and our historical profitability, among other factors, in assessing the amount of the valuation allowance. Significant judgment is involved in this determination, including projections of future taxable income.
Our liability for unrecognized tax benefits contains uncertainties because management is required to make assumptions and to apply judgment to estimate the exposures associated with our various filing positions.
Our effective income tax rate is also affected by changes in tax law, our level of earnings and the results of tax audits.
|
As of December 31, 2016, we had a valuation allowance for deferred tax assets that we determined are not "more likely than not" able to be realized. Any future change in the valuation allowance could have an effect on stockholders' equity and the income tax benefit (provision) in the Statement of Comprehensive Income (Loss).
As of December 31, 2016, we had unrecognized tax positions of $18.1 million. Within the next twelve months, it is reasonably possible that approximately $2.1 million of the total uncertain tax positions recorded will reverse, primarily due to the expiration of statutes of limitation in various jurisdictions. Approximately $1.5 million would impact the effective rate once settled.
Changes in these estimates and assumptions could materially affect the amount or timing of valuation allowance releases.
|
Description
|
Judgments and Uncertainties
|
Effect if Actual Results Differ From Assumptions
|
Long-lived assets
|
|
|
We depreciate property and equipment and amortize intangible assets using the straight-line method over the estimated useful lives of the assets. Estimates of useful lives are based on the nature of the underlying assets as well as our experience with similar assets and intended use. We periodically review estimated useful lives for reasonableness.
We evaluate recoverability of long-lived assets, including property and equipment and definite-lived intangible assets, when events or changes in circumstances indicate that the carrying amount may not be recoverable.
|
Estimates of useful lives can differ from actual useful lives due to the inherent uncertainty in making these estimates.
Our impairment tests contain uncertainties because they require management to make assumptions and apply judgment to estimate future cash flows and asset fair values including, subscriber additions, churn, prices, marketing spending, operating costs and capital spending. Significant judgment is involved in estimating these factors, and they include inherent uncertainties.
|
We have not made any material changes in the accounting methodology we use to account for long-lived assets during the past three years.
During the year ended December 31, 2014, we recorded $14.3 million for impairment of long-lived assets, which consisted of impairment of work in progress for information technology projects not expected to be used, impairment of software licenses not expected to be used and impairment of certain assets held for sale. We did not recognize any other material impairment charges for our long-lived assets during the past three years.
During the year ended December 31, 2015, we recorded additional amortization expense of $5.7 million as a result of a change in estimate in December 2014 for the estimated useful lives of certain customer relationships. We did not have any other material changes in useful lives for our long-lived assets during the past three years.
We do not believe there is a reasonable likelihood that there will be a material change in the future estimates or assumptions used to account for long-lived assets.
|
|
|
As of December 31, 2015
|
|
As of December 31, 2016
|
||||||||||||
|
|
Carrying
Amount
|
|
Fair Value
|
|
Carrying
Amount
|
|
Fair Value
|
||||||||
|
|
(in thousands)
|
||||||||||||||
Senior Secured Notes
|
|
$
|
295,277
|
|
|
$
|
305,439
|
|
|
$
|
296,346
|
|
|
$
|
316,200
|
|
Senior Notes
|
|
168,532
|
|
|
177,404
|
|
|
74,846
|
|
|
78,433
|
|
||||
Senior secured term loan
|
|
—
|
|
|
—
|
|
|
48,211
|
|
|
48,750
|
|
||||
Senior secured revolving credit facility
|
|
35,000
|
|
|
35,000
|
|
|
10,000
|
|
|
10,000
|
|
||||
Total debt, excluding capital leases
|
|
$
|
498,809
|
|
|
$
|
517,843
|
|
|
$
|
429,403
|
|
|
$
|
453,383
|
|
|
|
|
|
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2014, 2015 and 2016
|
|
|
|
|
|
|
|
|
December 31,
2015 |
|
December 31,
2016 |
||||
|
(in thousands, except per share data)
|
||||||
ASSETS
|
|||||||
Current assets:
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
91,296
|
|
|
$
|
51,529
|
|
Accounts receivable, net of allowance of $3,537 and $2,999 as of December 31, 2015 and 2016, respectively
|
74,724
|
|
|
76,765
|
|
||
Prepaid expenses
|
14,187
|
|
|
15,557
|
|
||
Other current assets
|
9,724
|
|
|
7,142
|
|
||
Total current assets
|
189,931
|
|
|
150,993
|
|
||
Property and equipment, net
|
372,504
|
|
|
331,119
|
|
||
Goodwill
|
137,751
|
|
|
142,411
|
|
||
Other intangible assets, net
|
25,325
|
|
|
2,360
|
|
||
Other long-term assets
|
9,141
|
|
|
8,763
|
|
||
Total assets
|
$
|
734,652
|
|
|
$
|
635,646
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|||||||
Current liabilities:
|
|
|
|
|
|
||
Accounts payable
|
$
|
18,442
|
|
|
$
|
15,782
|
|
Accrued payroll and related expenses
|
50,532
|
|
|
34,884
|
|
||
Other accrued liabilities
|
64,305
|
|
|
56,472
|
|
||
Deferred revenue
|
40,229
|
|
|
37,051
|
|
||
Current portion of long-term debt and capital lease obligations
|
6,787
|
|
|
4,444
|
|
||
Total current liabilities
|
180,295
|
|
|
148,633
|
|
||
Long-term debt and capital lease obligations
|
505,613
|
|
|
437,458
|
|
||
Long-term deferred income taxes, net
|
3,876
|
|
|
4,494
|
|
||
Other long-term liabilities
|
22,022
|
|
|
24,873
|
|
||
Total liabilities
|
711,806
|
|
|
615,458
|
|
||
Commitments and contingencies (See Note 15)
|
|
|
|
|
|
||
Stockholders’ equity:
|
|
|
|
|
|
||
Preferred stock, $0.01 par value, 100,000 shares authorized, 0 shares issued and outstanding as of December 31, 2015 and 2016
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value, 300,000 shares authorized, 200,207 and 201,879 shares issued as of December 31, 2015 and 2016, respectively, and 103,880 and 105,503 shares outstanding as of December 31, 2015 and 2016, respectively
|
2,002
|
|
|
2,019
|
|
||
Additional paid-in capital
|
2,026,638
|
|
|
2,016,575
|
|
||
Accumulated deficit
|
(1,260,937
|
)
|
|
(1,253,257
|
)
|
||
Treasury stock, at cost, 96,327 and 96,376 shares as of December 31, 2015 and 2016, respectively
|
(744,857
|
)
|
|
(745,149
|
)
|
||
Total stockholders’ equity
|
22,846
|
|
|
20,188
|
|
||
Total liabilities and stockholders’ equity
|
$
|
734,652
|
|
|
$
|
635,646
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2014
|
|
2015
|
|
2016
|
||||||
|
(in thousands, except per share data)
|
|||||||||||
Revenues
|
|
$
|
1,176,895
|
|
|
$
|
1,097,252
|
|
|
$
|
959,874
|
|
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
||||
Cost of revenues (exclusive of depreciation and amortization shown separately below)
|
|
557,436
|
|
|
500,628
|
|
|
442,608
|
|
|||
Selling, general and administrative (exclusive of depreciation and amortization shown separately below)
|
|
419,019
|
|
|
368,763
|
|
|
319,231
|
|
|||
Depreciation and amortization
|
|
186,872
|
|
|
188,315
|
|
|
135,248
|
|
|||
Impairment of long-lived assets
|
|
14,334
|
|
|
—
|
|
|
—
|
|
|||
Restructuring, acquisition and integration-related costs
|
|
20,088
|
|
|
19,320
|
|
|
17,807
|
|
|||
Total operating costs and expenses
|
|
1,197,749
|
|
|
1,077,026
|
|
|
914,894
|
|
|||
Income (loss) from operations
|
|
(20,854
|
)
|
|
20,226
|
|
|
44,980
|
|
|||
Gain on sale of businesses
|
|
—
|
|
|
—
|
|
|
9,128
|
|
|||
Interest expense and other, net
|
|
(56,261
|
)
|
|
(50,972
|
)
|
|
(40,660
|
)
|
|||
Loss on extinguishment of debt
|
|
—
|
|
|
(9,734
|
)
|
|
(4,823
|
)
|
|||
Income (loss) from continuing operations before income taxes
|
|
(77,115
|
)
|
|
(40,480
|
)
|
|
8,625
|
|
|||
Income tax benefit (provision)
|
|
4,744
|
|
|
(2,730
|
)
|
|
(945
|
)
|
|||
Income (loss) from continuing operations
|
|
(72,371
|
)
|
|
(43,210
|
)
|
|
7,680
|
|
|||
Loss from discontinued operations, net of tax
|
|
(381
|
)
|
|
—
|
|
|
—
|
|
|||
Net income (loss) and comprehensive income (loss)
|
|
$
|
(72,752
|
)
|
|
$
|
(43,210
|
)
|
|
$
|
7,680
|
|
|
|
|
|
|
|
|
||||||
Basic net income (loss) per share
|
|
|
|
|
|
|
|
|
||||
Continuing operations
|
|
$
|
(0.71
|
)
|
|
$
|
(0.42
|
)
|
|
$
|
0.07
|
|
Discontinued operations
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Basic net income (loss) per share
|
|
$
|
(0.71
|
)
|
|
$
|
(0.42
|
)
|
|
$
|
0.07
|
|
Basic weighted average common shares outstanding
|
|
102,313
|
|
|
103,388
|
|
|
105,194
|
|
|||
|
|
|
|
|
|
|
||||||
Diluted net income (loss) per share
|
|
|
|
|
|
|
|
|
||||
Continuing operations
|
|
$
|
(0.71
|
)
|
|
$
|
(0.42
|
)
|
|
$
|
0.07
|
|
Discontinued operations
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Diluted net income (loss) per share
|
|
$
|
(0.71
|
)
|
|
$
|
(0.42
|
)
|
|
$
|
0.07
|
|
Diluted weighted average common shares outstanding
|
|
102,313
|
|
|
103,388
|
|
|
108,596
|
|
|||
|
|
|
|
|
|
|
|
Common Stock
|
|
Additional Paid-in Capital
|
|
Accumulated Deficit
|
|
Treasury Stock
|
|
Total Stockholders' Equity
|
||||||||||||||||
|
Shares
|
|
Amount
|
|
|
|
Shares
|
|
Amount
|
|
|||||||||||||||
|
(in thousands)
|
||||||||||||||||||||||||
Balance as of December 31, 2013
|
197,491
|
|
|
$
|
1,975
|
|
|
$
|
2,047,607
|
|
|
$
|
(1,144,975
|
)
|
|
(95,615
|
)
|
|
$
|
(742,389
|
)
|
|
$
|
162,218
|
|
Vesting of restricted stock units
|
1,132
|
|
|
11
|
|
|
(11
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Tax withholdings related to net share settlements of restricted stock units
|
—
|
|
|
—
|
|
|
(3,418
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,418
|
)
|
|||||
Dividends paid on shares outstanding and restricted stock units
|
—
|
|
|
—
|
|
|
(16,013
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(16,013
|
)
|
|||||
Change in dividends payable on restricted stock units
|
—
|
|
|
—
|
|
|
(5,383
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,383
|
)
|
|||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
12,600
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,600
|
|
|||||
Return of One Communications escrow shares
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(56
|
)
|
|
(258
|
)
|
|
(258
|
)
|
|||||
Repurchases of common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(656
|
)
|
|
(2,210
|
)
|
|
(2,210
|
)
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(72,752
|
)
|
|
—
|
|
|
—
|
|
|
(72,752
|
)
|
|||||
Balance as of December 31, 2014
|
198,623
|
|
|
1,986
|
|
|
2,035,382
|
|
|
(1,217,727
|
)
|
|
(96,327
|
)
|
|
(744,857
|
)
|
|
74,784
|
|
|||||
Vesting of restricted stock units and exercise of stock options
|
1,584
|
|
|
16
|
|
|
1,699
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,715
|
|
|||||
Tax withholdings related to net share settlements of restricted stock units and stock options
|
—
|
|
|
—
|
|
|
(3,102
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,102
|
)
|
|||||
Dividends paid on shares outstanding and restricted stock units
|
—
|
|
|
—
|
|
|
(26,388
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(26,388
|
)
|
|||||
Change in dividends payable on shares outstanding and restricted stock units
|
—
|
|
|
—
|
|
|
4,453
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,453
|
|
|||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
14,594
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14,594
|
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(43,210
|
)
|
|
—
|
|
|
—
|
|
|
(43,210
|
)
|
|||||
Balance as of December 31, 2015
|
200,207
|
|
|
2,002
|
|
|
2,026,638
|
|
|
(1,260,937
|
)
|
|
(96,327
|
)
|
|
(744,857
|
)
|
|
22,846
|
|
|||||
Vesting of restricted stock units and exercise of stock options
|
1,672
|
|
|
17
|
|
|
235
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
252
|
|
|||||
Tax withholdings related to net share settlements of restricted stock units
|
—
|
|
|
—
|
|
|
(4,355
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,355
|
)
|
|||||
Dividends paid on shares outstanding and restricted stock units
|
—
|
|
|
—
|
|
|
(22,023
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(22,023
|
)
|
|||||
Change in dividends payable on shares outstanding and restricted stock units
|
—
|
|
|
—
|
|
|
(112
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(112
|
)
|
|||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
16,192
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16,192
|
|
|||||
Return of One Communications escrow shares
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(49
|
)
|
|
(292
|
)
|
|
(292
|
)
|
|||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
7,680
|
|
|
—
|
|
|
—
|
|
|
7,680
|
|
|||||
Balance as of December 31, 2016
|
201,879
|
|
|
$
|
2,019
|
|
|
$
|
2,016,575
|
|
|
$
|
(1,253,257
|
)
|
|
(96,376
|
)
|
|
$
|
(745,149
|
)
|
|
$
|
20,188
|
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2015
|
|
2016
|
||||||
Cash flows from operating activities:
|
(in thousands)
|
||||||||||
Net income (loss)
|
$
|
(72,752
|
)
|
|
$
|
(43,210
|
)
|
|
$
|
7,680
|
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
|
|
|||||
Depreciation and amortization
|
186,872
|
|
|
188,315
|
|
|
135,248
|
|
|||
Impairment of long-lived assets
|
14,334
|
|
|
—
|
|
|
—
|
|
|||
Gain on sale of businesses
|
—
|
|
|
—
|
|
|
(9,128
|
)
|
|||
Non-cash income taxes
|
591
|
|
|
677
|
|
|
570
|
|
|||
Stock-based compensation
|
12,600
|
|
|
14,594
|
|
|
16,192
|
|
|||
Amortization of debt discount and issuance costs
|
4,104
|
|
|
3,703
|
|
|
3,091
|
|
|||
Loss on extinguishment of debt
|
—
|
|
|
9,734
|
|
|
4,823
|
|
|||
Other operating activities
|
(81
|
)
|
|
356
|
|
|
(683
|
)
|
|||
Decrease (increase) in accounts receivable, net
|
8,191
|
|
|
17,892
|
|
|
(4,546
|
)
|
|||
Decrease (increase) in prepaid expenses and other assets
|
4,457
|
|
|
3,281
|
|
|
(1,861
|
)
|
|||
Decrease in accounts payable and accrued and other liabilities
|
(12,792
|
)
|
|
(24,171
|
)
|
|
(31,318
|
)
|
|||
(Decrease) increase in deferred revenue
|
(5,529
|
)
|
|
(3,723
|
)
|
|
5,897
|
|
|||
Net cash provided by operating activities
|
139,995
|
|
|
167,448
|
|
|
125,965
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Purchases of property and equipment
|
(102,863
|
)
|
|
(87,468
|
)
|
|
(84,071
|
)
|
|||
Purchase of business, net of cash acquired
|
—
|
|
|
—
|
|
|
(10,359
|
)
|
|||
Proceeds from sale of businesses
|
—
|
|
|
—
|
|
|
30,427
|
|
|||
Other investing activities
|
86
|
|
|
—
|
|
|
—
|
|
|||
Net cash used in investing activities
|
(102,777
|
)
|
|
(87,468
|
)
|
|
(64,003
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Proceeds from issuance of debt, net of issuance costs
|
—
|
|
|
89,761
|
|
|
67,522
|
|
|||
Repayment of debt and capital lease obligations
|
(1,498
|
)
|
|
(187,905
|
)
|
|
(147,479
|
)
|
|||
Payment of dividends
|
(16,013
|
)
|
|
(26,388
|
)
|
|
(22,023
|
)
|
|||
Repurchases of common stock
|
(2,210
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from exercises of stock options
|
—
|
|
|
1,715
|
|
|
251
|
|
|||
Net cash used in financing activities
|
(19,721
|
)
|
|
(122,817
|
)
|
|
(101,729
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
17,497
|
|
|
(42,837
|
)
|
|
(39,767
|
)
|
|||
Cash and cash equivalents, beginning of year
|
116,636
|
|
|
134,133
|
|
|
91,296
|
|
|||
Cash and cash equivalents, end of year
|
$
|
134,133
|
|
|
$
|
91,296
|
|
|
$
|
51,529
|
|
Buildings
|
|
20–40 years
|
Communications and fiber optic network
|
|
5–20 years
|
Computer equipment and software
|
|
3–5 years
|
Office and other equipment
|
|
3–5 years
|
Customer acquisition costs
|
|
3 years
|
Leasehold improvements
|
|
Shorter of estimated useful life or lease term
|
•
|
Monthly recurring charges for providing data, voice and managed network services; transmission capacity; and Internet access and related value-added services;
|
•
|
Usage revenues;
|
•
|
Equipment revenues; and
|
•
|
Non-recurring and other revenues, such as installation fees, termination fees and administrative fees.
|
•
|
Integration-related costs, such as system conversion and integration-related consulting and employee costs. The Company is also undertaking a long-term network optimization project designed to consolidate traffic onto network facilities operated by the Company and reduce the usage of other carriers’ networks. Integration-related costs associated with this initiative include costs to migrate traffic to lower cost circuits and to terminate existing contracts prior to their expiration;
|
•
|
Severance, retention and other employee termination costs associated with acquisition and integration activities and as a result of evaluations of our operating structure;
|
•
|
Facility-related costs, such as lease termination and asset impairments; and
|
•
|
Transaction-related costs, which are direct costs incurred to effect a business combination, such as advisory, legal, accounting, valuation and other professional fees.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2014
|
|
2015
|
|
2016
|
||||||
|
|
(in thousands)
|
||||||||||
Interest expense
|
|
$
|
56,382
|
|
|
$
|
49,979
|
|
|
$
|
40,711
|
|
Other, net
|
|
(121
|
)
|
|
993
|
|
|
(51
|
)
|
|||
Interest expense and other, net
|
|
$
|
56,261
|
|
|
$
|
50,972
|
|
|
$
|
40,660
|
|
|
Year Ended
|
||
|
December 31, 2014
|
||
|
(in thousands)
|
||
Revenues
|
$
|
116
|
|
Operating costs and expenses
|
(497
|
)
|
|
Loss from discontinued operations, net of tax
|
$
|
(381
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2015
|
|
2016
|
||||||
|
(in thousands, except per share data)
|
||||||||||
Numerator
|
|
|
|
|
|
|
|||||
Income (loss) from continuing operations
|
$
|
(72,371
|
)
|
|
$
|
(43,210
|
)
|
|
$
|
7,680
|
|
Loss from discontinued operations, net of tax
|
(381
|
)
|
|
—
|
|
|
—
|
|
|||
Net income (loss)
|
$
|
(72,752
|
)
|
|
$
|
(43,210
|
)
|
|
$
|
7,680
|
|
|
|
|
|
|
|
|
|||||
Denominator
|
|
|
|
|
|
||||||
Basic weighted average common shares outstanding
|
102,313
|
|
|
103,388
|
|
|
105,194
|
|
|||
Dilutive effect of Common Stock Equivalents
|
—
|
|
|
—
|
|
|
3,402
|
|
|||
Diluted weighted average common shares outstanding
|
102,313
|
|
|
103,388
|
|
|
108,596
|
|
|||
|
|
|
|
|
|
||||||
Basic net income (loss) per share
|
|
|
|
|
|
||||||
Continuing operations
|
$
|
(0.71
|
)
|
|
$
|
(0.42
|
)
|
|
$
|
0.07
|
|
Discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|||
Basic net income (loss) per share
|
$
|
(0.71
|
)
|
|
$
|
(0.42
|
)
|
|
$
|
0.07
|
|
|
|
|
|
|
|
||||||
Diluted net income (loss) per share
|
|
|
|
|
|
||||||
Continuing operations
|
$
|
(0.71
|
)
|
|
$
|
(0.42
|
)
|
|
$
|
0.07
|
|
Discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|||
Diluted net income (loss) per share
|
$
|
(0.71
|
)
|
|
$
|
(0.42
|
)
|
|
$
|
0.07
|
|
|
|
December 31, 2015
|
|
December 31, 2016
|
||||
|
|
(in thousands)
|
||||||
Communications and fiber optic networks
|
|
$
|
619,699
|
|
|
$
|
634,936
|
|
Computer equipment and software
|
|
278,139
|
|
|
255,055
|
|
||
Land and buildings
|
|
42,477
|
|
|
42,623
|
|
||
Leasehold improvements
|
|
29,407
|
|
|
26,237
|
|
||
Office and other equipment
|
|
15,688
|
|
|
14,906
|
|
||
Work in progress
|
|
13,786
|
|
|
11,401
|
|
||
Property and equipment, gross
|
|
999,196
|
|
|
985,158
|
|
||
Less accumulated depreciation
|
|
(626,692
|
)
|
|
(654,039
|
)
|
||
Property and equipment, net
|
|
$
|
372,504
|
|
|
$
|
331,119
|
|
|
Enterprise/
|
|
Small
|
|
Carrier/
|
|
|
|
|
||||||||||
|
Mid-Market
|
|
Business
|
|
Transport
|
|
Consumer
|
|
Total
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Balance as of December 31, 2015
|
|
|
|
|
|
|
|
|
|
||||||||||
Goodwill
|
$
|
237,982
|
|
|
$
|
57,137
|
|
|
$
|
98,290
|
|
|
$
|
88,920
|
|
|
$
|
482,329
|
|
Accumulated impairment loss
|
(208,443
|
)
|
|
(50,045
|
)
|
|
(86,090
|
)
|
|
—
|
|
|
(344,578
|
)
|
|||||
|
29,539
|
|
|
7,092
|
|
|
12,200
|
|
|
88,920
|
|
|
137,751
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Goodwill acquired
|
7,947
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,947
|
|
|||||
Goodwill disposed
|
(1,516
|
)
|
|
(746
|
)
|
|
—
|
|
|
(1,025
|
)
|
|
(3,287
|
)
|
|||||
|
6,431
|
|
|
(746
|
)
|
|
—
|
|
|
(1,025
|
)
|
|
4,660
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance as of December 31, 2016
|
|
|
|
|
|
|
|
|
|
||||||||||
Goodwill
|
244,413
|
|
|
56,391
|
|
|
98,290
|
|
|
87,895
|
|
|
486,989
|
|
|||||
Accumulated impairment loss
|
(208,443
|
)
|
|
(50,045
|
)
|
|
(86,090
|
)
|
|
—
|
|
|
(344,578
|
)
|
|||||
|
$
|
35,970
|
|
|
$
|
6,346
|
|
|
$
|
12,200
|
|
|
$
|
87,895
|
|
|
$
|
142,411
|
|
|
As of December 31, 2015
|
|
As of December 31, 2016
|
||||||||||||||||||||
|
Gross
Carrying
Value
|
|
Accumulated
Amortization
|
|
Net
Carrying
Value
|
|
Gross
Carrying
Value
|
|
Accumulated
Amortization
|
|
Net
Carrying
Value
|
||||||||||||
|
(in thousands)
|
||||||||||||||||||||||
Customer relationships
|
$
|
346,825
|
|
|
$
|
(323,365
|
)
|
|
$
|
23,460
|
|
|
$
|
339,858
|
|
|
$
|
(338,307
|
)
|
|
$
|
1,551
|
|
Developed technology and software
|
26,261
|
|
|
(24,396
|
)
|
|
1,865
|
|
|
25,311
|
|
|
(25,311
|
)
|
|
—
|
|
||||||
Trade names
|
1,521
|
|
|
(1,521
|
)
|
|
—
|
|
|
1,801
|
|
|
(1,564
|
)
|
|
237
|
|
||||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
630
|
|
|
(58
|
)
|
|
572
|
|
||||||
Other intangible assets, net
|
$
|
374,607
|
|
|
$
|
(349,282
|
)
|
|
$
|
25,325
|
|
|
$
|
367,600
|
|
|
$
|
(365,240
|
)
|
|
$
|
2,360
|
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2015
|
|
2016
|
||||||
|
(in thousands)
|
||||||||||
Amortization expense
|
$
|
63,177
|
|
|
$
|
66,164
|
|
|
$
|
22,824
|
|
|
December 31, 2015
|
|
December 31, 2016
|
||||
|
(in thousands)
|
||||||
Accrued taxes and surcharges
|
$
|
14,663
|
|
|
$
|
13,766
|
|
Accrued communications costs
|
23,201
|
|
|
16,332
|
|
||
Customer-related liabilities
|
7,854
|
|
|
5,501
|
|
||
Accrued interest
|
3,822
|
|
|
2,712
|
|
||
Other
|
14,765
|
|
|
18,161
|
|
||
Total other accrued liabilities
|
$
|
64,305
|
|
|
$
|
56,472
|
|
|
December 31, 2015
|
|
December 31, 2016
|
||||
|
(in thousands)
|
||||||
Senior secured notes due June 2020
|
$
|
300,000
|
|
|
$
|
300,000
|
|
Unamortized debt issue costs on senior secured notes due June 2020
|
(4,723
|
)
|
|
(3,654
|
)
|
||
Senior notes due May 2019
|
173,925
|
|
|
76,557
|
|
||
Unamortized discount and debt issue costs on senior notes due May 2019
|
(5,393
|
)
|
|
(1,711
|
)
|
||
Senior secured term loan
|
—
|
|
|
48,750
|
|
||
Unamortized debt issue costs on senior secured term loan
|
—
|
|
|
(541
|
)
|
||
Senior secured revolving credit facility
|
35,000
|
|
|
10,000
|
|
||
Capital lease obligations
|
13,591
|
|
|
12,501
|
|
||
Carrying value of debt and capital lease obligations
|
512,400
|
|
|
441,902
|
|
||
Less current portion of debt and capital lease obligations
|
(6,787
|
)
|
|
(4,444
|
)
|
||
Long-term debt and capital lease obligations
|
$
|
505,613
|
|
|
$
|
437,458
|
|
Year Ending December 31,
|
(in thousands)
|
||
2017
|
$
|
3,427
|
|
2018
|
3,445
|
|
|
2019
|
3,475
|
|
|
2020
|
3,298
|
|
|
2021
|
2,122
|
|
|
Thereafter
|
911
|
|
|
Total minimum lease payments
|
16,678
|
|
|
Less amounts representing interest
|
(4,177
|
)
|
|
Total capital lease obligations
|
$
|
12,501
|
|
|
Year Ended December 31,
|
||||||
|
2014
|
|
2016
|
||||
|
(in thousands)
|
||||||
Total shares returned
|
56
|
|
|
49
|
|
||
Total value of shares returned
|
$
|
258
|
|
|
$
|
292
|
|
|
Stock Options
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual
Term (Years)
|
|
Aggregate
Intrinsic
Value
|
|||||
|
(shares and dollars in thousands)
|
|||||||||||
Outstanding as of December 31, 2015
|
908
|
|
|
$
|
6.52
|
|
|
|
|
|
|
|
Granted
|
—
|
|
|
—
|
|
|
|
|
|
|
||
Exercised
|
(41
|
)
|
|
6.08
|
|
|
|
|
|
|
||
Forfeited and expired
|
(184
|
)
|
|
8.44
|
|
|
|
|
|
|
||
Outstanding as of December 31, 2016
|
683
|
|
|
6.04
|
|
|
6.0
|
|
$
|
201
|
|
|
Vested and expected to vest as of December 31, 2016
|
647
|
|
|
6.07
|
|
|
5.9
|
|
$
|
186
|
|
|
Exercisable as of December 31, 2016
|
444
|
|
|
6.39
|
|
|
5.6
|
|
$
|
101
|
|
Stock Options Outstanding
|
|
Stock Options Exercisable
|
||||||||||||||||||||||
|
|
|
|
Weighted
|
|
|
|
|
||||||||||||||||
|
|
|
|
Average
|
|
Weighted
|
|
|
|
Weighted
|
||||||||||||||
|
|
|
|
Remaining
|
|
Average
|
|
|
|
Average
|
||||||||||||||
Range of
|
|
Number
|
|
Contractual
|
|
Exercise
|
|
Number
|
|
Exercise
|
||||||||||||||
Exercise Prices
|
|
Outstanding
|
|
Life
|
|
Price
|
|
Exercisable
|
|
Price
|
||||||||||||||
|
|
(in thousands)
|
|
|
|
|
|
(in thousands)
|
|
|
||||||||||||||
$
|
4.97
|
|
|
to
|
|
$
|
4.97
|
|
|
300
|
|
|
7.0
|
|
$
|
4.97
|
|
|
150
|
|
|
$
|
4.97
|
|
6.08
|
|
|
to
|
|
6.08
|
|
|
179
|
|
|
6.1
|
|
6.08
|
|
|
90
|
|
|
6.08
|
|
||||
7.02
|
|
|
to
|
|
9.23
|
|
|
204
|
|
|
4.2
|
|
7.56
|
|
|
204
|
|
|
7.56
|
|
||||
4.97
|
|
|
to
|
|
9.23
|
|
|
683
|
|
|
6.0
|
|
6.04
|
|
|
444
|
|
|
6.39
|
|
|
Restricted
Stock Units
|
|
Weighted
Average
Grant Date
Fair Value
|
|||
|
(in thousands)
|
|
|
|||
Outstanding as of December 31, 2015
|
7,751
|
|
|
$
|
4.58
|
|
Granted
|
3,582
|
|
|
5.24
|
|
|
Vested
|
(2,420
|
)
|
|
4.90
|
|
|
Forfeited
|
(779
|
)
|
|
4.55
|
|
|
Outstanding as of December 31, 2016
|
8,134
|
|
|
$
|
4.77
|
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2015
|
|
2016
|
||||||
|
(in thousands)
|
||||||||||
Integration-related costs
|
$
|
9,043
|
|
|
$
|
5,924
|
|
|
$
|
8,135
|
|
Severance, retention and other employee costs
|
9,297
|
|
|
9,798
|
|
|
3,753
|
|
|||
Facility-related costs
|
1,744
|
|
|
3,598
|
|
|
669
|
|
|||
Transaction-related costs
|
4
|
|
|
—
|
|
|
5,250
|
|
|||
Restructuring, acquisition and integration-related costs
|
$
|
20,088
|
|
|
$
|
19,320
|
|
|
$
|
17,807
|
|
•
|
Integration-related costs, such as system conversion and integration-related consulting and employee costs. The Company is also undertaking a long-term network optimization project designed to consolidate traffic onto network facilities operated by the Company and reduce the usage of other carriers’ networks. Integration-related costs associated with this initiative include costs to migrate traffic to lower cost circuits and to terminate existing contracts prior to their expiration;
|
•
|
Severance, retention and other employee termination costs associated with acquisition and integration activities and as a result of evaluations of our operating structure;
|
•
|
Facility-related costs, such as lease termination and asset impairments; and
|
•
|
Transaction-related costs, which are direct costs incurred to effect a business combination, such as advisory, legal, accounting, valuation and other professional fees.
|
|
Severance and Benefits
|
|
Facilities
|
|
Total
|
||||||
|
(in thousands)
|
||||||||||
Balance as of December 31, 2013
|
$
|
—
|
|
|
$
|
5,064
|
|
|
$
|
5,064
|
|
Accruals
|
7,337
|
|
|
1,744
|
|
|
9,081
|
|
|||
Payments
|
(1,964
|
)
|
|
(2,095
|
)
|
|
(4,059
|
)
|
|||
Balance as of December 31, 2014
|
5,373
|
|
|
4,713
|
|
|
10,086
|
|
|||
Accruals
|
9,798
|
|
|
3,598
|
|
|
13,396
|
|
|||
Payments
|
(11,632
|
)
|
|
(2,769
|
)
|
|
(14,401
|
)
|
|||
Balance as of December 31, 2015
|
3,539
|
|
|
5,542
|
|
|
9,081
|
|
|||
Accruals
|
3,753
|
|
|
669
|
|
|
4,422
|
|
|||
Payments
|
(5,053
|
)
|
|
(2,703
|
)
|
|
(7,756
|
)
|
|||
Balance as of December 31, 2016
|
$
|
2,239
|
|
|
$
|
3,508
|
|
|
$
|
5,747
|
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2015
|
|
2016
|
||||||
|
(in thousands)
|
||||||||||
Current
|
|
|
|
|
|
||||||
Federal
|
$
|
4,470
|
|
|
$
|
—
|
|
|
$
|
—
|
|
State
|
954
|
|
|
(1,974
|
)
|
|
(370
|
)
|
|||
Foreign
|
(89
|
)
|
|
(79
|
)
|
|
(5
|
)
|
|||
Total current
|
5,335
|
|
|
(2,053
|
)
|
|
(375
|
)
|
|||
Deferred
|
|
|
|
|
|
||||||
Federal
|
(637
|
)
|
|
(634
|
)
|
|
(542
|
)
|
|||
State
|
9
|
|
|
(52
|
)
|
|
(28
|
)
|
|||
Foreign
|
37
|
|
|
9
|
|
|
—
|
|
|||
Total deferred
|
(591
|
)
|
|
(677
|
)
|
|
(570
|
)
|
|||
Income tax benefit (provision) from continuing operations
|
$
|
4,744
|
|
|
$
|
(2,730
|
)
|
|
$
|
(945
|
)
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2014
|
|
2015
|
|
2016
|
||||||
|
|
(in thousands)
|
||||||||||
Federal income tax benefit (provision) at statutory rate (35%)
|
|
$
|
26,990
|
|
|
$
|
14,168
|
|
|
$
|
(3,019
|
)
|
State income taxes, net of federal benefit
|
|
2,885
|
|
|
1,351
|
|
|
(1,370
|
)
|
|||
Non-deductible expenses
|
|
(732
|
)
|
|
(326
|
)
|
|
(2,551
|
)
|
|||
Net change to valuation allowance
|
|
(29,565
|
)
|
|
(15,165
|
)
|
|
7,513
|
|
|||
Change in state tax rate
|
|
241
|
|
|
(2,081
|
)
|
|
(1,469
|
)
|
|||
Uncertain tax positions
|
|
5,140
|
|
|
(1,164
|
)
|
|
(6
|
)
|
|||
Other
|
|
(215
|
)
|
|
487
|
|
|
(43
|
)
|
|||
Income tax benefit (provision) from continuing operations
|
|
$
|
4,744
|
|
|
$
|
(2,730
|
)
|
|
$
|
(945
|
)
|
|
|
As of December 31,
|
||||||
|
|
2015
|
|
2016
|
||||
|
|
(in thousands)
|
||||||
Deferred tax assets:
|
|
|
|
|
||||
Net operating loss carryforwards
|
|
$
|
270,922
|
|
|
$
|
274,709
|
|
Capital loss carryforward
|
|
1,493
|
|
|
—
|
|
||
Alternative minimum tax carryforward
|
|
14,952
|
|
|
14,952
|
|
||
Accrued liabilities and reserves
|
|
7,501
|
|
|
6,107
|
|
||
Accrued bonus
|
|
13,217
|
|
|
8,096
|
|
||
Subscriber base and other intangible assets
|
|
48,286
|
|
|
48,007
|
|
||
Other
|
|
16,990
|
|
|
18,782
|
|
||
Valuation allowance
|
|
(348,791
|
)
|
|
(341,278
|
)
|
||
Total deferred tax assets
|
|
24,570
|
|
|
29,375
|
|
||
Deferred tax liabilities:
|
|
|
|
|
||||
Fixed assets
|
|
(19,280
|
)
|
|
(21,015
|
)
|
||
Accrued liabilities and reserves
|
|
(4,334
|
)
|
|
(6,833
|
)
|
||
Indefinite-lived intangible assets
|
|
(3,922
|
)
|
|
(4,492
|
)
|
||
Other
|
|
(910
|
)
|
|
(1,529
|
)
|
||
Total deferred tax liabilities
|
|
(28,446
|
)
|
|
(33,869
|
)
|
||
Net deferred tax liabilities
|
|
$
|
(3,876
|
)
|
|
$
|
(4,494
|
)
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2014
|
|
2015
|
|
2016
|
||||||
|
|
(in thousands)
|
||||||||||
Balance as of January 1
|
|
$
|
(305,436
|
)
|
|
$
|
(333,627
|
)
|
|
$
|
(348,791
|
)
|
Charges/credits to income tax (provision) benefit
|
|
(29,721
|
)
|
|
(15,164
|
)
|
|
7,513
|
|
|||
Other adjustments
|
|
1,530
|
|
|
—
|
|
|
—
|
|
|||
Balance as of December 31
|
|
$
|
(333,627
|
)
|
|
$
|
(348,791
|
)
|
|
$
|
(341,278
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2015
|
|
2016
|
||||||
|
(in thousands)
|
||||||||||
Balance as of January 1
|
$
|
21,628
|
|
|
$
|
17,205
|
|
|
$
|
18,357
|
|
Additions for tax positions of prior years
|
—
|
|
|
1,332
|
|
|
—
|
|
|||
Reductions as a result of lapses in applicable statute of limitations
|
(4,423
|
)
|
|
(180
|
)
|
|
(229
|
)
|
|||
Balance as of December 31
|
$
|
17,205
|
|
|
$
|
18,357
|
|
|
$
|
18,128
|
|
Year Ending December 31,
|
(in thousands)
|
||
2017
|
$
|
31,533
|
|
2018
|
25,876
|
|
|
2019
|
20,991
|
|
|
2020
|
12,650
|
|
|
2021
|
9,143
|
|
|
Thereafter
|
11,692
|
|
|
Total minimum lease payments, including estimated operating expenses
|
111,885
|
|
|
Less aggregate contracted sublease income
|
(6,330
|
)
|
|
|
$
|
105,555
|
|
Year Ending December 31,
|
(in thousands)
|
||
2017
|
$
|
49,908
|
|
2018
|
34,055
|
|
|
2019
|
18,583
|
|
|
2020
|
7,168
|
|
|
2021
|
2,767
|
|
|
Thereafter
|
4,710
|
|
|
Total
|
$
|
117,191
|
|
|
As of December 31, 2015
|
|
As of December 31, 2016
|
||||||||||||
|
Carrying
|
|
|
|
Carrying
|
|
|
||||||||
|
Amount
|
|
Fair Value
|
|
Amount
|
|
Fair Value
|
||||||||
|
(in thousands)
|
||||||||||||||
Senior Secured Notes
|
$
|
295,277
|
|
|
$
|
305,439
|
|
|
$
|
296,346
|
|
|
$
|
316,200
|
|
Senior Notes
|
168,532
|
|
|
177,404
|
|
|
74,846
|
|
|
78,433
|
|
||||
Senior secured term loan
|
—
|
|
|
—
|
|
|
48,211
|
|
|
48,750
|
|
||||
Senior secured revolving credit facility
|
35,000
|
|
|
35,000
|
|
|
10,000
|
|
|
10,000
|
|
||||
Total debt, excluding capital leases
|
$
|
498,809
|
|
|
$
|
517,843
|
|
|
$
|
429,403
|
|
|
$
|
453,383
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2014
|
|
2015
|
|
2016
|
||||||
|
|
(in thousands)
|
||||||||||
Cash paid during the year for interest
|
|
$
|
52,317
|
|
|
$
|
47,705
|
|
|
$
|
38,730
|
|
Cash paid during the year for income taxes
|
|
1,071
|
|
|
625
|
|
|
1,158
|
|
•
|
Enterprise/Mid-Market
. The Company’s Enterprise/Mid-Market segment provides a broad range of data, voice and managed network services to distributed multi-site business customers.
|
•
|
Small Business
. The Company’s Small Business segment provides a broad range of data, voice and managed network services to small, often single-site business customers.
|
•
|
Carrier/Transport
. The Company’s Carrier/Transport segment provides transmission capacity and other data, voice and managed network services to telecommunications carriers and large enterprises.
|
•
|
Consumer
. The Company’s Consumer segment provides nationwide Internet access and related value-added services to residential customers.
|
|
Year Ended December 31,
|
||||||
|
2015
|
|
2016
|
||||
|
(in thousands)
|
||||||
Enterprise/Mid-Market
|
|
|
|
|
|||
Revenues
|
$
|
444,968
|
|
|
$
|
397,676
|
|
Cost of revenues (excluding depreciation and amortization)
|
221,347
|
|
|
203,928
|
|
||
Gross margin
|
223,621
|
|
|
193,748
|
|
||
Small Business
|
|
|
|
|
|||
Revenues
|
297,039
|
|
|
223,776
|
|
||
Cost of revenues (excluding depreciation and amortization)
|
139,440
|
|
|
107,662
|
|
||
Gross margin
|
157,599
|
|
|
116,114
|
|
||
Carrier/Transport
|
|
|
|
||||
Revenues
|
135,905
|
|
|
141,709
|
|
||
Cost of revenues (excluding depreciation and amortization)
|
61,979
|
|
|
63,158
|
|
||
Gross margin
|
73,926
|
|
|
78,551
|
|
||
Consumer
|
|
|
|
||||
Revenues
|
219,340
|
|
|
196,713
|
|
||
Cost of revenues (excluding depreciation and amortization)
|
77,862
|
|
|
67,860
|
|
||
Gross margin
|
141,478
|
|
|
128,853
|
|
||
Total Segments
|
|
|
|
||||
Revenues
|
1,097,252
|
|
|
959,874
|
|
||
Cost of revenues (excluding depreciation and amortization)
|
500,628
|
|
|
442,608
|
|
||
Gross margin
|
$
|
596,624
|
|
|
$
|
517,266
|
|
|
Year Ended December 31,
|
||||||
|
2015
|
|
2016
|
||||
|
(in thousands)
|
||||||
Segment gross margin
|
$
|
596,624
|
|
|
$
|
517,266
|
|
Operating costs and expenses:
|
|
|
|
||||
Selling, general and administrative expenses
|
368,763
|
|
|
319,231
|
|
||
Depreciation and amortization
|
188,315
|
|
|
135,248
|
|
||
Restructuring, acquisition and integration-related costs
|
19,320
|
|
|
17,807
|
|
||
Total operating costs and expenses
|
576,398
|
|
|
472,286
|
|
||
Income from operations
|
20,226
|
|
|
44,980
|
|
||
Gain on sale of businesses
|
—
|
|
|
9,128
|
|
||
Interest expense and other, net
|
(50,972
|
)
|
|
(40,660
|
)
|
||
Loss on extinguishment of debt
|
(9,734
|
)
|
|
(4,823
|
)
|
||
Income (loss) from continuing operations before income taxes
|
$
|
(40,480
|
)
|
|
$
|
8,625
|
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2015
|
|
2016
|
||||||
|
(in thousands)
|
||||||||||
Business Services
|
|
|
|
|
|
|
|
|
|||
Revenues
|
$
|
930,931
|
|
|
$
|
877,912
|
|
|
$
|
763,161
|
|
Cost of revenues (excluding depreciation and amortization)
|
469,523
|
|
|
422,766
|
|
|
374,748
|
|
|||
Gross margin
|
461,408
|
|
|
455,146
|
|
|
388,413
|
|
|||
Direct segment operating expenses
|
345,982
|
|
|
316,220
|
|
|
273,966
|
|
|||
Segment operating income
|
$
|
115,426
|
|
|
$
|
138,926
|
|
|
$
|
114,447
|
|
Consumer Services
|
|
|
|
|
|
|
|
|
|||
Revenues
|
$
|
245,964
|
|
|
$
|
219,340
|
|
|
$
|
196,713
|
|
Cost of revenues (excluding depreciation and amortization)
|
87,913
|
|
|
77,862
|
|
|
67,860
|
|
|||
Gross margin
|
158,051
|
|
|
141,478
|
|
|
128,853
|
|
|||
Direct segment operating expenses
|
43,615
|
|
|
30,731
|
|
|
29,020
|
|
|||
Segment operating income
|
$
|
114,436
|
|
|
$
|
110,747
|
|
|
$
|
99,833
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|||
Revenues
|
$
|
1,176,895
|
|
|
$
|
1,097,252
|
|
|
$
|
959,874
|
|
Cost of revenues (excluding depreciation and amortization)
|
557,436
|
|
|
500,628
|
|
|
442,608
|
|
|||
Gross margin
|
619,459
|
|
|
596,624
|
|
|
517,266
|
|
|||
Direct segment operating expenses
|
389,597
|
|
|
346,951
|
|
|
302,986
|
|
|||
Segment operating income
|
229,862
|
|
|
249,673
|
|
|
214,280
|
|
|||
Depreciation and amortization
|
186,872
|
|
|
188,315
|
|
|
135,248
|
|
|||
Impairment of long-lived assets
|
14,334
|
|
|
—
|
|
|
—
|
|
|||
Restructuring, acquisition and integration-related costs
|
20,088
|
|
|
19,320
|
|
|
17,807
|
|
|||
Corporate operating expenses
|
29,422
|
|
|
21,812
|
|
|
16,245
|
|
|||
Gain on sale of businesses
|
—
|
|
|
—
|
|
|
(9,128
|
)
|
|||
Interest expense and other, net
|
56,261
|
|
|
50,972
|
|
|
40,660
|
|
|||
Loss on extinguishment of debt
|
—
|
|
|
9,734
|
|
|
4,823
|
|
|||
Income (loss) from continuing operations before income taxes
|
$
|
(77,115
|
)
|
|
$
|
(40,480
|
)
|
|
$
|
8,625
|
|
•
|
Monthly recurring charges for providing data, voice and managed network services; transmission capacity; and Internet access and related value-added services;
|
•
|
Usage revenues;
|
•
|
Equipment revenues; and
|
•
|
Non-recurring and other revenues, such as installation fees, termination fees and administrative fees.
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2015
|
|
2016
|
||||||
|
(in thousands)
|
||||||||||
Monthly recurring revenues
|
$
|
1,021,931
|
|
|
$
|
970,731
|
|
|
$
|
841,989
|
|
Usage revenues
|
124,266
|
|
|
99,227
|
|
|
82,513
|
|
|||
Equipment revenues
|
14,731
|
|
|
15,201
|
|
|
15,920
|
|
|||
Non-recurring and other revenues
|
15,967
|
|
|
12,093
|
|
|
19,452
|
|
|||
Total revenues
|
$
|
1,176,895
|
|
|
$
|
1,097,252
|
|
|
$
|
959,874
|
|
|
|
Three Months Ended
|
||||||||||||||||||||||||||||||
|
|
Mar. 31,
2015
|
|
June 30,
2015
|
|
Sept. 30,
2015
|
|
Dec. 31,
2015
|
|
Mar. 31,
2016
|
|
June 30,
2016
|
|
Sept. 30,
2016
|
|
Dec. 31,
2016
|
||||||||||||||||
|
|
(unaudited)
(in thousands, except per share data)
|
||||||||||||||||||||||||||||||
Revenues
|
|
$
|
282,447
|
|
|
$
|
283,664
|
|
|
$
|
270,904
|
|
|
$
|
260,237
|
|
|
$
|
254,262
|
|
|
$
|
240,357
|
|
|
$
|
235,125
|
|
|
$
|
230,130
|
|
Cost of revenues
|
|
129,462
|
|
|
127,048
|
|
|
122,391
|
|
|
121,727
|
|
|
115,206
|
|
|
110,934
|
|
|
109,540
|
|
|
106,928
|
|
||||||||
Income (loss) from operations
|
|
5,091
|
|
|
10,566
|
|
|
5,750
|
|
|
(1,181
|
)
|
|
14,432
|
|
|
15,648
|
|
|
11,116
|
|
|
3,784
|
|
||||||||
Net income (loss) (1)(2)
|
|
(10,483
|
)
|
|
(9,922
|
)
|
|
(10,523
|
)
|
|
(12,282
|
)
|
|
7,867
|
|
|
4,115
|
|
|
230
|
|
|
(4,532
|
)
|
||||||||
Net income (loss) per share (3):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Basic
|
|
$
|
(0.10
|
)
|
|
$
|
(0.10
|
)
|
|
$
|
(0.10
|
)
|
|
$
|
(0.12
|
)
|
|
$
|
0.08
|
|
|
$
|
0.04
|
|
|
$
|
—
|
|
|
$
|
(0.04
|
)
|
Diluted
|
|
$
|
(0.10
|
)
|
|
$
|
(0.10
|
)
|
|
$
|
(0.10
|
)
|
|
$
|
(0.12
|
)
|
|
$
|
0.07
|
|
|
$
|
0.04
|
|
|
$
|
—
|
|
|
$
|
(0.04
|
)
|
(1)
|
The Company recognized a gain of sale of businesses of
$5.7 million
and
$3.4 million
during the three months ended March 31, 2016 and September 30, 2016, respectively.
|
(2)
|
The Company recognized
$1.3 million
,
$6.0 million
and
$2.5 million
of losses of extinguishment of debt during the three months ended March 31, 2015, June 30, 2015 and September 30, 2015, respectively. The Company recognized
$0.2 million
,
$0.2 million
and
$4.4 million
of losses of extinguishment of debt during the three months ended March 31, 2016, June 30, 2016 and September 30, 2016, respectively.
|
(3)
|
The quarterly net income per share amounts will not necessarily add to the net income per share computed for the year because of the method used in calculating per share data.
|
•
|
offer competitive compensation to attract and retain talented executives;
|
•
|
link annual cash incentives to achievement of performance objectives that tie directly to our strategic and operational goals; and
|
•
|
align executives’ interests with long-term stockholder value creation.
|
•
|
generated $214.2 million in Adjusted EBITDA
1
|
•
|
generated $130.2 million of Unlevered Free Cash Flow
1
;
|
•
|
returned to stockholders approximately $22.0 million through dividends; and
|
•
|
reduced our gross outstanding debt by approximately $73.6 million.
|
Compensation Practice
|
|
EarthLink Policy
|
Pay for Performance
|
|
A significant portion of our compensation to our Named Executive Officers, including all of our STI and 50% of our LTI, is at risk based on performance.
|
Stock Ownership Guidelines
|
|
We have meaningful stock ownership guidelines for our executive officers, including our Named Executive Officers, and each of our executive officers complies with these guidelines.
|
Independent Compensation Consultation
|
|
The Committee retains an independent compensation consultant. In February 2017, the Committee determined that the work performed for the Committee by Frederic W. Cook & Co., Inc. did not raise any conflict of interest.
|
Compensation Recoupment Policy
|
|
We may obtain the reimbursement of improperly awarded incentive compensation in the event the Company restates its financial statements.
|
Prohibition on Hedging and Pledging Transactions
|
|
We prohibit executive officers, directors and employees from engaging in transactions involving Company securities that hedge or offset any decreases in the market value of such securities, including put or call options, pledges, any other form of hedging transactions, margin purchases of Company stock or short sales. We also prohibit pledging of our Common Stock to secure loans.
|
No Tax Gross‑Ups
|
|
We do not pay tax gross-ups for payments relating to a change in control or with respect to perquisites.
|
Limited Executive Perquisites
|
|
We provide only limited executive perquisites.
|
Employment Agreement with CEO Only
|
|
We have only one employment agreement, which is with our Chief Executive Officer.
|
Benchmarking Process
|
|
The Committee reviews the external marketplace in order to set market‑based pay levels and consider best practices when making compensation decisions.
|
Annual Say‑on‑Pay
|
|
We value our stockholders’ input on our executive compensation programs. We seek an annual non‑binding vote on our executive compensation policies.
|
Key Corporate Objective
|
|
Incentive Used
|
Balance operational and financial success
|
|
The 2016 STI tied to each of Adjusted EBITDA, CAPEX & Restructuring Costs and Operational Metrics
|
Deliver target cash generation
|
|
50% of 2016 performance-based RSUs tied to Levered Free Cash Flow
|
Deliver target revenue
|
|
50% of 2016 performance-based RSUs tied to revenue generation
|
•
|
Achieve corporate financial and operating targets, both overall and by business unit
|
•
|
Develop a three-year product roadmap with competitive analysis/differentiation
|
•
|
Develop a three-year internal systems and cyber security roadmap
|
•
|
Business unit objectives:
|
◦
|
Enterprise/Mid‑Market - demonstrate market/sales momentum, redesign Quote to Cash process, upgrade leadership team
|
◦
|
Small Business Unit - define product and market growth strategy, reduce churn
|
◦
|
Network and Carrier/Transport - continue momentum in Transport sales, establish product and market strategy for Wholesale, meet COR reduction target
|
◦
|
Consumer - improve partner management, develop product and market strategy, reduce churn -
|
•
|
Continue to improve on corporate culture, complete talent succession and development plans, improve and balance leadership and talent, and invest in training
|
•
|
Continue to optimize balance sheet.
|
Base Salary
|
Short‑Term Incentives
•Annual Incentive Plan
|
Long‑Term Incentives
•Performance‑based
RSUs
•Service‑based RSUs
|
Health and Welfare and
Other Benefits
•Financial and Tax
Planning Services
•Insurance
•401(K) Plan
|
1)
|
align total direct compensation (including base salary, annual cash incentives and long‑term equity incentives) with our business goals; and
|
2)
|
design compensation that is competitive with other companies of similar size operating in our industry sectors.
|
Name and Title
|
|
2016 Base Salaries
|
|
Joseph F. Eazor
|
|
$825,000
|
|
President and Chief Executive Officer
|
|
|
|
Louis M. Alterman
|
|
400,000
|
|
Executive Vice President, Chief Financial Officer
|
|
|
|
Gerard Brossard
|
|
440,000
|
|
Executive Vice President and Managing Director, Enterprise/Mid‑Market and Information Technology
|
|
|
|
John T. Dobbins
|
|
370,000
|
|
Executive Vice President, Network Operations and Carrier
|
|
|
|
Bradley A. Ferguson
|
|
379,250
|
|
Executive Vice President, Corporate Development and Managing Director, Consumer and Small Business
|
|
|
Name
|
|
2016 Target Incentive
Opportunity
|
Joseph F. Eazor
|
|
120%
|
Louis M. Alterman
|
|
70%
|
Gerard Brossard
|
|
80%
|
John T. Dobbins
|
|
70%
|
Bradley A. Ferguson
|
|
70%
|
Performance Measure
|
|
Weight
|
|
Rationale for Inclusion
|
Adjusted EBITDA
|
|
30%
|
|
Incentivize profitability and cash generation and efficient operations in all business segments
|
CAPEX & Restructuring
|
|
30%
|
|
Incentivize efficient use of capital and management of costs
|
Net Sales
|
|
10%
|
|
Incentivize profitability and cash generation
|
Business New Billed Revenues
|
|
10%
|
|
Incentivize growth
|
Business Churn
|
|
10%
|
|
Incentivize churn reduction
|
Consumer Churn
|
|
10%
|
|
Incentivize churn reduction
|
|
50% Payout
Threshold
|
|
100% Payout
Target
|
|
150% Payout
Target
|
|
200% Payout
Maximum
|
|
Actual
Performance
|
|
Achievement
|
||
Adjusted EBITDA (30%)
|
$191.1
|
|
$215.9
|
|
$226.4
|
|
$247.9
|
|
$214.1
|
|
|
96
|
%
|
CAPEX & Restructuring (30%)
|
$135.0
|
|
$116.8
|
|
$105.1
|
|
$93.4
|
|
$96.6
|
|
|
186
|
%
|
Net Sales (10%)
|
$6.6
|
|
$12.7
|
|
$13.9
|
|
$15.8
|
|
$7.9
|
|
|
61
|
%
|
Business New Billed Revenues (10%)
|
$5.5
|
|
$8.9
|
|
$9.8
|
|
$11.1
|
|
$5.8
|
|
|
53
|
%
|
Business Churn (10%)
|
1.90%
|
|
1.60%
|
|
1.52%
|
|
1.36%
|
|
1.81
|
%
|
|
66
|
%
|
Consumer Churn (10%)
|
1.96%
|
|
1.68%
|
|
1.60%
|
|
1.43%
|
|
1.61
|
%
|
|
147
|
%
|
Name
|
|
2016 Individual Performance Multiplier
|
|
2016 Corporate Performance Payment
|
|
2016 Individual Performance Payment
|
|
2016 Total Annual Incentive Plan Payment
|
|||||||
Joseph F. Eazor
|
|
100
|
%
|
|
$
|
766,159
|
|
|
$
|
328,353
|
|
|
$
|
1,094,512
|
|
Louis M. Alterman
|
|
100
|
%
|
|
225,871
|
|
|
96,802
|
|
|
322,673
|
|
|||
Gerard Brossard
|
|
100
|
%
|
|
289,520
|
|
|
124,080
|
|
|
413,600
|
|
|||
John T. Dobbins
|
|
100
|
%
|
|
211,256
|
|
|
90,538
|
|
|
301,794
|
|
|||
Bradley A. Ferguson
|
|
100
|
%
|
|
218,353
|
|
|
93,580
|
|
|
311,933
|
|
Performance Measure
|
|
Weight
|
|
Rationale for Inclusion
|
Revenue
|
|
50%
|
|
Incentivize growth and churn reduction
|
Levered Free Cash Flow
1
|
|
50%
|
|
Incentivize profitability, cash generation and efficient use of costs
|
|
|
50% Payout
Threshold
|
|
75% Payout
Target
|
|
100% Payout
Maximum
|
|
Actual
Performance
|
|
Achievement
|
|
Revenue (50%)
|
|
$916.0
|
|
$925.6
|
|
$964.2
|
|
$955.0
|
|
94
|
%
|
Levered Cash Flow (50%)
|
|
$35.3
|
|
$41.2
|
|
$58.8
|
|
$82.0
|
|
132
|
%
|
Name
|
|
Number of
Performance-Based
RSUs Granted
|
|
Number of
Service-Based
RSUs Granted
|
|
Total
Number of
RSUs
Granted
|
|||
Joseph F. Eazor
|
|
249,501
|
|
|
249,501
|
|
|
499,002
|
|
Louis M. Alterman
|
|
59,880
|
|
|
59,880
|
|
|
119,760
|
|
Gerard Brossard
|
|
59,880
|
|
|
59,880
|
|
|
119,760
|
|
John T. Dobbins
|
|
44,910
|
|
|
44,910
|
|
|
89,820
|
|
Bradley A. Ferguson
|
|
44,910
|
|
|
44,910
|
|
|
89,820
|
|
Name and Principal Position
|
Year
|
|
Salary
($)
|
|
Bonus
($)
|
|
Stock
Awards(1)
($)
|
|
Option
Awards(1)
($)
|
|
Non-Equity
Incentive Plan
Compensation(2)
($)
|
|
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)
|
|
All Other
Compensation
($)
|
|
Total(3)
($)
|
||||||||||||||
Joseph F. Eazor(4)
|
2016
|
|
$
|
776,250
|
|
|
$
|
—
|
|
|
$
|
2,500,000
|
|
|
$
|
—
|
|
|
$
|
1,094,512
|
|
|
$
|
—
|
|
|
74,595(5)
|
|
$
|
4,445,357
|
|
President and Chief Executive Officer
|
2015
|
|
750,000
|
|
|
—
|
|
|
2,400,001
|
|
|
—
|
|
|
1,631,056
|
|
|
—
|
|
|
365,665(5)
|
|
5,146,722
|
|
|||||||
2014
|
|
706,731
|
|
|
250,000(6)
|
|
|
2,884,410
|
|
|
442,530
|
|
|
1,024,759
|
|
|
—
|
|
|
91,136(5)
|
|
5,399,565
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Louis M. Alterman(7)
|
2016
|
|
392,308
|
|
|
—
|
|
|
599,998
|
|
|
—
|
|
|
322,673
|
|
|
—
|
|
|
29,140(9)
|
|
1,344,119
|
|
|||||||
Executive Vice
President, Chief
Financial Officer
|
2015
|
|
338,846
|
|
|
75,000(8)
|
|
|
550,002
|
|
|
—
|
|
|
445,495
|
|
|
—
|
|
|
16,455(9)
|
|
1,425,798
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Gerard Brossard(10)
|
2016
|
|
440,000
|
|
|
—
|
|
|
599,998
|
|
|
—
|
|
|
413,600
|
|
|
—
|
|
|
8,973(12)
|
|
1,462,571
|
|
|||||||
Executive Vice
President and
Managing Director,
Enterprise/Mid‑
Market and
Information
Technology
|
2015
|
|
313,077
|
|
|
150,000(11)
|
|
|
724,995
|
|
|
—
|
|
|
459,847
|
|
|
—
|
|
|
4,135(12)
|
|
1,652,054
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
John T. Dobbins
|
2016
|
|
366,923
|
|
|
—
|
|
|
449,998
|
|
|
—
|
|
|
576,794
|
|
|
—
|
|
|
24,687(14)
|
|
1,418,402
|
|
|||||||
Executive Vice President and
Managing Director,
Network Operations
and Carrier
|
2015
|
|
342,308
|
|
|
125,000(13)
|
|
|
400,002
|
|
|
—
|
|
|
731,215
|
|
|
—
|
|
|
11,528(14)
|
|
1,610,053
|
|
|||||||
2014
|
|
277,952
|
|
|
125,000(13)
|
|
|
383,200
|
|
|
—
|
|
|
659,893
|
|
|
—
|
|
|
7,500(14)
|
|
1,453,545
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Bradley A. Ferguson
|
2016
|
|
379,250
|
|
|
—
|
|
|
449,998
|
|
|
—
|
|
|
311,933
|
|
|
—
|
|
|
53,021(15)
|
|
1,194,202
|
|
|||||||
Executive Vice President, Corporate Development and
Managing Director,
Consumer and
Small Business
|
2015
|
|
379,250
|
|
|
—
|
|
|
500,002
|
|
|
—
|
|
|
487,412
|
|
|
—
|
|
|
25,097(15)
|
|
1,391,761
|
|
|||||||
2014
|
|
376,760
|
|
|
—
|
|
|
491,989
|
|
|
—
|
|
|
382,411
|
|
|
—
|
|
|
36,025(15)
|
|
1,287,185
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Compensation for stock awards and option awards represents the aggregate grant date fair value of the award, computed based on the number of awards granted and the fair value of the award on the date of grant. Assumptions used in the calculation of these award amounts are included in Note 9 to the consolidated financial statements included in this Form 10‑K.
|
(2)
|
Non-equity incentive plan compensation for 2016 represents cash incentive awards earned in 2016 under our 2016 annual incentive award plan. For 2016, our cash incentive awards under those plans for the Named Executive Officers were 117.5% of our corporate performance target for the Named Executive Officers. The non-equity incentive plan also included an individual performance component. The 2016 cash incentive award payments were made in cash in February 2017. Non-equity incentive plan compensation for Mr. Dobbins also includes a $275,000 incentive award earned under the 2016 Access Management Executive Save Sharing Plan, which award was earned at 100% of the eligible award and which was paid in fully vested RSUs.
|
(3)
|
Salary, bonus and non-equity incentive plan compensation as a percentage of total compensation for each of our Named Executive Officers for 2016 is as follows: Mr. Eazor 42%; Mr. Alterman 53%; Mr. Brossard, 58%; Mr. Dobbins, 67%; and Mr. Ferguson 58%.
|
(4)
|
In connection with Mr. Eazor's employment agreement, as an additional inducement to retain his services in light of his performance, the Company made a cash retention payment to Mr. Eazor of $2.6 million in 2016. However, this payment is not deemed earned by Mr. Eazor in 2016 since Mr. Eazor is required to reimburse the cash retention payment to the Company upon the merger with Windstream. For more information, see "Agreement with our Chief Executive Officer" later in this Item 11.
|
(5)
|
For 2016, other compensation consists of $5,000 of financial planning services, $7,950 in matching contributions made to Mr. Eazor’s account under our 401(k) Plan and $61,645 in deferred dividend payments upon vesting of RSUs. For 2015, other compensation consists of $5,290 of financial planning and tax services, $7,500 in matching contributions made to Mr. Eazor’s account under our 401(k) Plan, $22,875 in deferred dividend payments upon vesting of RSUs, $20,250 for temporary living expenses and $309,750 relocation expenses. For 2014, other compensation consists of $8,290 of financial planning services, $7,500 in matching contributions made to Mr. Eazor’s account under our 401(k) Plan and $75,346 for temporary living expenses.
|
(6)
|
Represents a sign‑on payment to Mr. Eazor in connection with his employment with our Company.
|
(7)
|
Mr. Alterman was not a Named Executive Officer in 2014. Summary compensation information for Mr. Alterman is only required for 2016 and 2015.
|
(8)
|
Represents a retention bonus paid to Mr. Alterman in connection with an agreement entered into with the Company in June 2014 before he became an executive officer.
|
(9)
|
For 2016, other compensation consists of $779 of financial planning and tax services, $7,950 in matching contributions made to Mr. Alterman’s account under our 401(k) Plan, and $20,411 in deferred dividend payments upon vesting of RSUs. For 2015, other compensation consists of $647 of financial planning services, $7,500 in matching contributions made to Mr. Alterman’s account under our 401(k) Plan and $8,308 in deferred dividend payments upon vesting of RSUs.
|
(10)
|
Mr. Brossard joined the Company in April 2015. Therefore, summary compensation information for Mr. Brossard is only required for 2016 and 2015.
|
(11)
|
Represents a sign‑on payment to Mr. Brossard in connection with his employment with our Company.
|
(12)
|
For 2016, other compensation consists of $4,000 of financial planning and tax services and $4,973 in deferred dividend payments upon vesting of RSUs. For 2015, other compensation consists of $4,135 of financial planning services.
|
(13)
|
Represents 2014 and 2015 retention payments to Mr. Dobbins. In recognition of (i) his expertise in achieving network cost savings and (ii) compensation from his former employer he was foregoing by joining us, Mr. Dobbins received a compensation arrangement when he was hired in September 2013 providing for a continued employment bonus of $125,000 to be paid after 12 months of continuous employment and an additional continued employment bonus of $125,000 to be paid after 24 months of continuous employment.
|
(14)
|
For 2016, other compensation consists of $3,555 of financial planning services, $7,950 in matching contributions made to Mr. Dobbins’ account under our 401(k) Plan, and $13,182 in deferred dividend payments upon vesting of RSUs. For 2015, other compensation consists of $7,500 in matching contributions made to Mr. Dobbins’ account under our 401(k) Plan and $4,028 in deferred dividend payments upon vesting of RSUs. For 2014, other compensation consists of $7,500 in matching contributions made to Mr. Dobbins’ account under our 401(k) Plan.
|
(15)
|
For 2016, other compensation consists of $7,000 of financial planning and tax services, $7,950 in matching contributions made to Mr. Ferguson’s account under our 401(k) Plan, and $38,071 in deferred dividend payments upon vesting of RSUs. For 2015, other compensation consists of $6,050 of financial planning services, $7,500 in matching contributions made to Mr. Ferguson’s account under our 401(k) Plan and $11,547 in deferred dividend payments upon vesting of RSUs. For 2014, other compensation consists of $9,025 of financial planning services, $7,500 in matching contributions made to Mr. Ferguson’s account under our 401(k) Plan and $19,500 in deferred dividend payments upon vesting of RSUs.
|
|
|
|
|
Estimated Future Payouts
Under Non‑Equity
Incentive Plan Awards(1)($)
|
|
Estimated Future Payouts
Under Equity
Incentive Plan Awards(#)
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Name
|
|
Grant Date
|
|
Threshold
($)
|
|
Target
($)
|
|
Maximum
($)
|
|
Threshold
(#)
|
|
Target
(#)
|
|
Maximum
(#)
|
|
All Other
Stock
Awards:
Number
of Shares
of Stock
of Units
(#)
|
|
All Other
Option
Awards:
Number
of
Securities
Underlying
Options (#)
|
|
Exercise
or
Base
Price
of
Option
Awards
($/Sh)
|
|
Grant
Date Fair
Value of
Stock and
Option
Awards(2)
($)
|
|||||||||||||||
Joseph F. Eazor
|
|
N/A
|
|
$
|
456,750
|
|
|
$
|
931,500
|
|
|
$
|
1,863,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
2/18/2016
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
499,002
|
|
|
—
|
|
|
—
|
|
|
2,500,000
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Louis M. Alterman
|
|
N/A
|
|
137,308
|
|
|
274,615
|
|
|
549,231
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
|
2/18/2016
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
119,760
|
|
|
—
|
|
|
—
|
|
|
599,998
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Gerard Brossard
|
|
N/A
|
|
176,000
|
|
|
352,000
|
|
|
704,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
|
2/18/2016
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
119,760
|
|
|
—
|
|
|
—
|
|
|
599,998
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
John T. Dobbins
|
|
N/A
|
|
128,423
|
|
|
256,846
|
|
|
513,692
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
|
2/18/2016
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
89,820
|
|
|
—
|
|
|
—
|
|
|
449,998
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Bradley A. Ferguson
|
|
N/A
|
|
132,738
|
|
|
265,475
|
|
|
530,950
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
|
2/18/2016
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
89,820
|
|
|
—
|
|
|
—
|
|
|
449,998
|
|
(1)
|
Estimated future payouts under non‑equity incentive plan awards represents incentive awards earned under our 2016 annual incentive award plans. For 2016, our incentive awards payouts for our Named Executive Officers under those plans were 117.5% of our corporate performance target for the Named Executive Officers. The plan also included an individual performance component. The following amounts were earned in 2016 under the 2016 annual incentive award plans: Mr. Eazor, $1,094,512; Mr. Alterman, $322,673; Mr. Brossard, $413,600; Mr. Dobbins, $301,794; and Mr. Ferguson, $311,933.
|
(2)
|
The grant date fair value for stock awards was based on the closing price of the underlying shares on the date of grant.
|
|
Option Awards
|
|
Stock Awards
|
||||||||||||||||||||||||
Name
|
Number of
Securities
Underlying
Unexercised
Options
Exercisable
|
|
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
|
|
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
|
|
Option
Exercise
Price
|
|
Option
Expiration
Date
|
|
Number of
Units That
Have Not
Vested
|
|
Value of
Units That
Have Not
Vested
|
|
Equity
Incentive
Plan
Awards:
Number of
Unearned
Units That
Have Not
Vested
|
|
Equity
Incentive
Plan
Awards:
Market
Value of
Unearned
Units That
Have Not
Vested
|
||||||||||
Joseph F. Eazor
|
150,000
|
|
|
150,000(1)
|
|
|
—
|
|
|
$
|
4.97
|
|
|
1/13/2024
|
|
|
580,112(2)
|
|
$
|
3,271,832
|
|
|
805,005(3)
|
|
$
|
4,540,228
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Louis M. Alterman
|
42,037
|
|
|
—
|
|
|
—
|
|
|
$
|
7.51
|
|
|
2/16/2022
|
|
|
118,225(4)
|
|
666,789
|
|
|
173,121(5)
|
|
976,402
|
|
||
|
14,874
|
|
|
14,874
|
|
|
—
|
|
|
$
|
6.08
|
|
|
2/20/2023
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Gerard Brossard
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
109,605(6)
|
|
618,172
|
|
|
134,468(7)
|
|
758,400
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
John T. Dobbins
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
92,013(8)
|
|
518,953
|
|
|
141,277(9)
|
|
796,802
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Bradley A. Ferguson
|
31,250
|
|
|
—
|
|
|
—
|
|
|
$
|
7.51
|
|
|
2/16/2022
|
|
|
101,566(10)
|
|
572,832
|
|
|
158,700(11)
|
|
895,068
|
|
||
|
42,017
|
|
|
42,017
|
|
|
—
|
|
|
$
|
6.08
|
|
|
2/20/2023
|
|
|
|
|
|
|
|
|
|
(1)
|
Mr. Eazor's stock options vest as follows: 75,000 vested on January 13, 2017 and 75,000 will vest of January 13, 2018.
|
(2)
|
Mr. Eazor's restricted stock units vest as follows: (a) 62,500 vested on January 13, 2017; (b) 83,167 vested on February 18, 2017; (c) 89,887 vested on February 19, 2017; (d) 88,336 vested on February 20, 2017; (e) 89,888 will vest on February 19, 2018; and (f) 83,167 will vest on February 20, 2018 and 83,166 on February 20, 2019.
|
(3)
|
Mr. Eazor's restricted equity incentive plan awards vest as follows due to satisfaction of performance objectives: (a) 20,834 vested on January 13, 2017; (b) 265,007 vested on February 20, 2017; (c) 269,663 will vest of February 19, 2018; and (d) 249,501 will vest on February 18, 2019.
|
(4)
|
Mr. Alterman's restricted stock units vest as follows: (a) 19,960 vested on February 18, 2017; (b) 20,599 vested on February 19, 2017; (c) 8,814 vested on February 20, 2017; (d) 8,333 will vest on October 28, 2017; (e) 20,599 will vest on February 19, 2018; and (f) 19,960 will vest on each of February 18, 2018 and 2019.
|
(5)
|
Mr. Alterman's restricted equity incentive plan awards vest as follows due to satisfaction of performance objectives: (a) 26,443 vested on February 20, 2017; (b) 25,000 will vest on October 28, 2017; (c) 61,798 will vest of February 19, 2018; and (d) 59,880 will vest on February 18, 2019.
|
(6)
|
Mr. Brossard's restricted stock units vest as follows: (a) 19,960 vested on February 18, 2017; (b) 24,862 will vest April 28, 2017; (c) 19,960 will vest on each of February 18, 2018 and 2019; and (d) 24,863 will vest on April 28, 2018.
|
(7)
|
Mr. Brossard's restricted equity incentive plan awards vest as follows due to satisfaction of performance objectives: (a) 74,588 will vest April 28, 2018 and (b) 59,880 will vest on February 18, 2019.
|
(8)
|
Mr. Dobbins' restricted stock units vest as follows: (a) 14,970 vested on February 18, 2017; (b) 14,981 vested on February 19, 2017; (c) 7,720 vested on February 20, 2017; (d) 9,921 will vest on April 29, 2017; (e) 14,981 will vest on February 19, 2018; and (f) 14,970 will vest on each of February 18, 2018 and 2019.
|
(9)
|
Mr. Dobbins' restricted equity incentive plan awards vest as follows due to satisfaction of performance objectives: (a) 21,661 vested on February 20, 2017; (b) 29,762 will vest on April 29, 2017; (c) 44,944 will vest of February 19, 2018; and (d) 44,910 will vest on February 18, 2019.
|
(10)
|
Mr. Ferguson's restricted stock units vest as follows: (a) 14,970 vested on February 18, 2017; (b) 18,726 vested on February 19, 2017; (c) 19,203 vested on February 20, 2017; (d) 18,727 will vest on February 19, 2018; and (e) 14,970 will vest on each of February 18, 2018 and 2019.
|
(11)
|
Mr. Ferguson's restricted equity incentive plan awards vest as follows due to satisfaction of performance objectives: (a) 57,610 vested on February 20, 2017; (b) 56,180 will vest of February 19, 2018; and (c) 44,910 will vest on February 18, 2019.
|
|
|
Option Awards
|
|
Stock Awards
|
|||||||||
Name
|
|
Number of
Shares
Acquired on
Exercise
(#)
|
|
Value
Realized on
Exercise
($)
|
|
Number of
Shares
Acquired on
Vesting
(#)
|
|
Value
Realized on
Vesting(1)
($)
|
|||||
Joseph F. Eazor
|
|
—
|
|
|
$
|
—
|
|
|
199,056
|
|
|
1,089,809
|
|
Louis M. Alterman
|
|
—
|
|
|
—
|
|
|
53,467
|
|
|
292,923
|
|
|
Gerard Brossard
|
|
—
|
|
|
—
|
|
|
24,863
|
|
|
149,924
|
|
|
John T. Dobbins
|
|
—
|
|
|
—
|
|
|
70,108
|
|
|
373,830
|
|
|
Bradley A. Ferguson
|
|
—
|
|
|
—
|
|
|
82,338
|
|
|
445,449
|
|
(1)
|
The value realized on vesting for stock awards represents the number of shares acquired on vesting multiplied by the closing price of our Common Stock on the vesting date.
|
Name
|
|
Severance
|
|
Non‑Compete
|
|
Stock
Options(1)
|
|
Restricted
Stock Units(2)
|
|
COBRA
Coverage
|
|
Pro‑Rata
Bonus(3)
|
|
Total
|
||||||||||||||
Joseph F. Eazor
|
|
$
|
1,815,000
|
|
|
$
|
1,815,000
|
|
|
$
|
201,000
|
|
|
$
|
7,812,060
|
|
|
$
|
28,990
|
|
|
$
|
990,000
|
|
|
$
|
12,662,050
|
|
Louis M. Alterman
|
|
566,644
|
|
|
453,356
|
|
|
—
|
|
|
1,643,191
|
|
|
28,495
|
|
|
280,000
|
|
|
2,971,686
|
|
|||||||
Gerard Brossard
|
|
659,974
|
|
|
528,026
|
|
|
—
|
|
|
1,376,572
|
|
|
28,440
|
|
|
352,000
|
|
|
2,945,012
|
|
|||||||
John T. Dobbins
|
|
524,146
|
|
|
419,354
|
|
|
—
|
|
|
1,315,756
|
|
|
27,118
|
|
|
259,000
|
|
|
2,545,374
|
|
|||||||
Bradley A. Ferguson
|
|
537,250
|
|
|
429,838
|
|
|
—
|
|
|
1,467,900
|
|
|
28,678
|
|
|
265,475
|
|
|
2,729,141
|
|
(1)
|
The amount of benefit for stock options represents the number of in-the-money options outstanding (if any) multiplied by the difference between the exercise price and the closing price per share of our Common Stock on December 30, 2016, or $5.64 per share.
|
(2)
|
The amount of benefit for restricted stock units represents the number of outstanding restricted stock units multiplied by the closing price of our Common Stock on December 30, 2016, or $5.64 per share.
|
(3)
|
The cash incentive award amounts assume that the bonus under the 2016 annual incentive award plan is earned at the target level.
|
Name
|
|
Severance
|
|
COBRA
Coverage
|
|
Pro‑Rata
Bonus(1)
|
|
Outplacement Services
|
|
Total
|
||||||||||
Louis M. Alterman
|
|
$
|
600,000
|
|
|
$
|
28,495
|
|
|
$
|
280,000
|
|
|
$
|
30,000
|
|
|
$
|
938,495
|
|
Gerard Brossard
|
|
660,000
|
|
|
28,440
|
|
|
352,000
|
|
|
30,000
|
|
|
1,070,440
|
|
|||||
John T. Dobbins
|
|
555,000
|
|
|
27,118
|
|
|
259,000
|
|
|
30,000
|
|
|
871,118
|
|
|||||
Bradley A. Ferguson
|
|
568,875
|
|
|
28,678
|
|
|
265,475
|
|
|
30,000
|
|
|
893,028
|
|
(1)
|
The cash incentive award amounts assume that the bonus under the 2016 annual incentive award plan is earned at the target level.
|
Name
|
|
Severance
|
|
Non‑Compete
|
|
Stock
Options(1)
|
|
Restricted
Stock Units(2)
|
|
COBRA
Coverage
|
|
Pro‑Rata
Bonus(3)
|
|
Total
|
||||||||||||||
Joseph F. Eazor
|
|
$
|
1,815,000
|
|
|
$
|
1,815,000
|
|
|
$
|
201,000
|
|
|
$
|
7,812,060
|
|
|
$
|
28,990
|
|
|
$
|
990,000
|
|
|
$
|
12,662,050
|
|
(1)
|
The amount of benefit for stock options represents the number of in-the-money options outstanding multiplied by the difference between the exercise price and the closing price per share of our Common Stock on December 30, 2016, or $5.64 per share.
|
(2)
|
The amount of benefit for restricted stock units represents the number of outstanding restricted stock units multiplied by the closing price of our Common Stock on December 30, 2016, or $5.64 per share.
|
(3)
|
The cash incentive award amount assumes that the bonus under the 2016 annual incentive award plan is earned at the target level.
|
Name
|
|
Fees
Earned
or Paid
in Cash
($)
|
|
Stock
Awards(1)(2)
($)
|
|
Option
Awards
($)
|
|
Non‑Equity
Incentive Plan
Compensation
($)
|
|
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)
|
|
All Other
Compensation
($)
|
|
Total
($)
|
||||||||||||||
Susan D. Bowick
|
|
$
|
120,000
|
|
|
$
|
140,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
260,000
|
|
Kathy S. Lane
|
|
95,000
|
|
|
140,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
235,000
|
|
|||||||
Garry K. McGuire
|
|
120,000
|
|
|
140,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
260,000
|
|
|||||||
R. Gerard Salemme
|
|
95,000
|
|
|
140,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
235,000
|
|
|||||||
Julie A. Shimer Ph.D
|
|
185,000
|
|
|
140,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
325,000
|
|
|||||||
Marc F. Stoll(3)
|
|
95,000
|
|
|
140,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
235,000
|
|
|||||||
Walter L. Turek
|
|
95,000
|
|
|
140,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
235,000
|
|
(1)
|
Compensation for stock awards represents the aggregate grant date fair value of the stock award, computed based on the number of stock awards granted and the closing stock price of EarthLink Holdings Corp. Common Stock on the date of grant. Assumptions used in the calculation of these award amounts are included in Note 11 to the consolidated financial statements included in this Form 10-K. The aggregate number of stock awards outstanding as of December 31, 2016, were as follows: Ms. Bowick, 24,390, Ms. Lane, 24,390, Mr. McGuire, 24,390, Mr. Salemme, 24,390, Dr. Shimer, 24,390, Mr. Stoll, 24,390 and Mr. Turek, 24,390.
|
(2)
|
Pursuant to the Board of Directors Compensation Plan, on April 26, 2016 we granted restricted stock units valued at $140,000 to each independent director serving on our Board of Directors on that date. The number of restricted stock units granted to each of these directors was 24,390. Additionally, on April 27, 2016, we granted restricted stock units valued at $140,000 to Mr. Stoll upon his appointment to the Board of Directors. Mr. Stoll received 24,390 restricted stock units. The number of restricted stock units granted to each director was based on the closing price of EarthLink Common Stock on the grant date. The restricted stock units vest and become exercisable one year from the grant date.
|
(3)
|
Mr. Stoll joined the Board of Directors in April 2016.
|
Name and Address of Beneficial Owners(1)
|
|
Amount and
Nature of
Beneficial
Ownership(2)
|
|
Percent
of Class(3)
|
|||
Louis M. Alterman
|
|
235,495
|
|
(4)
|
|
*
|
|
Susan D. Bowick
|
|
144,780
|
|
|
|
*
|
|
Gerard Brossard
|
|
35,711
|
|
(5)
|
|
*
|
|
John T. Dobbins
|
|
68,650
|
|
(6)
|
|
*
|
|
Joseph F. Eazor
|
|
1,091,304
|
|
(7)
|
|
1.0
|
%
|
Bradley A. Ferguson
|
|
398,200
|
|
(8)
|
|
*
|
|
Kathy S. Lane
|
|
82,327
|
|
|
|
*
|
|
Garry K. McGuire
|
|
112,553
|
|
|
|
*
|
|
R. Gerard Salemme
|
|
79,875
|
|
|
|
*
|
|
Julie A. Shimer Ph.D
|
|
82,130
|
|
|
|
*
|
|
Marc F. Stoll
|
|
—
|
|
|
|
*
|
|
Walter L. Turek
|
|
7,230
|
|
|
|
*
|
|
The Vanguard Group
|
|
14,671,857
|
|
(9)
|
|
13.9
|
%
|
Renaissance Technologies LLC
|
|
8,150,739
|
|
(10)
|
|
7.7
|
%
|
Dimensional Fund Advisors LP
|
|
5,962,125
|
|
(11)
|
|
5.6
|
%
|
BlackRock, Inc.
|
|
9,714,233
|
|
(12)
|
|
9.2
|
%
|
All directors and executive officers as a group (16 persons)
|
|
2,688,055
|
|
(13)
|
|
2.5
|
%
|
*
|
Represents beneficial ownership of less than 1.0% of our Common Stock.
|
(1)
|
Except as otherwise indicated by footnote below or in any applicable Schedule 13D, Schedule 13G or Form 13F, (i) the named person has sole voting and investment power with respect to all shares of Common Stock shown as beneficially owned, and (ii) the address of the named person is that of EarthLink.
|
(2)
|
Beneficial ownership is determined in accordance with the rules of the SEC based on factors such as voting and investment power with respect to shares of Common Stock.
|
(3)
|
Calculated based on 105,594,768 shares of Common Stock outstanding as of January 31, 2017.
|
(4)
|
Includes options to purchase 71,785 shares of Common Stock and 75,816 restricted stock units that will vest within 60 days.
|
(5)
|
Includes 19,960 restricted stock units that will vest within 60 days.
|
(6)
|
Includes 58,832 restricted stock units that will vest within 60 days.
|
(7)
|
Includes options to purchase 225,000 shares of Common Stock and 526,397 restricted stock units that will vest within 60 days.
|
(8)
|
Includes options to purchase 115,284 shares of Common Stock and 110,509 restricted stock units that will vest within 60 days.
|
(9)
|
Represents beneficial ownership as of December 31, 2016, according to the Schedule 13G filed by The Vanguard Group on February 9, 2017. Vanguard Group has sole voting power over 208,693 of these shares, shared voting power over 19,400 of these shares, sole dispositive power over 14,449,364 of these shares and shared dispositive power over 222,493 of these shares. The address for The Vanguard Group is 10 Vanguard Blvd., Malvern, PA 19355.
|
(10)
|
Represents beneficial ownership as of December 31, 2016, according to the Schedule 13G filed by Renaissance Technologies LLC on February 14, 2017. Renaissance Technologies LLC has sole voting power over 7,945,828 of these shares, sole dispositive power over 8,147,522 of these shares and shares dispositive power over 3,217 of these shares. The address for Renaissance Technologies LLC is 800 Third Avenue, New York, NY 10022.
|
(11)
|
Represents beneficial ownership as of December 31, 2016, according to the Schedule 13G filed by Dimensional Fund Advisors LP on February 9, 2017. Dimensional Fund Advisors LP has sole voting power over 5,661,752 of these shares and sole dispositive power over 5,962,125 of these shares. The address for the Dimensional Fund Advisors LP is Building One, 6300 Bee Cave Road, Austin, TX 78746.
|
(12)
|
Represents beneficial ownership as of December 31, 2016, according to the Schedule 13G filed by BlackRock, Inc. on January 24, 2017. BlackRock, Inc. has sole voting power over 9,310,305 of these shares and sole dispositive power over 9,714,233 of these shares. The address for BlackRock, Inc. is 55 East 52
nd
Street, New York, NY 10022.
|
(13)
|
Includes options to purchase an aggregate of 473,141 shares of Common Stock and 954,473 restricted stock units that will vest within 60 days.
|
Plan Category
|
|
Number of Securities
to Be Issued on Exercise
of Outstanding Options,Warrants and Rights (a)
|
|
Weighted Average
Exercise Price of
Outstanding Options,
Warrants and Rights (b)
|
|
Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation Plans
(Excluding Securities
Reflected in Column (a))
(c)
|
|||
Equity Compensation Plans Approved By Stockholders
|
|
8,816,869
|
|
(1)
|
$
|
6.04
|
|
(2)
|
8,558,259
|
(1)
|
Includes 683,118 shares of Common Stock issuable upon exercise of outstanding stock options and 8,133,751 shares of Common Stock issuable upon vesting of outstanding restricted stock units.
|
(2)
|
The weighted-average exercise price does not take into account the restricted stock units described in footnote (1) because the restricted stock units do not have an exercise price upon vesting.
|
(1)
|
Financial Statements
|
(2)
|
Financial Statement Schedules
|
(3)
|
Listing of Exhibits
|
2.1—
|
|
Agreement and Plan of Merger, dated as of December 20, 2010, by and among EarthLink, Inc., Egypt Acquisition Corp., One Communications Corp. and Kenneth D. Peterson, Jr. as Stockholder Representative (incorporated by reference to Exhibit 2.1 of EarthLink Holding Corp.'s Report on Form 8-K dated December 20, 2010—File No. 001-15605).
|
2.2—
|
|
Agreement and Plan of Merger dated December 30, 2013, among EarthLink, Inc., EarthLink, LLC and EarthLink Holdings Corp. (incorporated by reference to Exhibit 2.1 to EarthLink Holdings Corp.'s Current Report on Form 8-K dated January 2, 2014—File No. 001-15605).
|
2.3—
|
|
Agreement and Plan of Merger, dated as of November 5, 2016, by and among Windstream Holdings, Inc., Europa Merger Sub, Inc., Europa Merger Sub LLC and EarthLink Holdings Corp. (incorporated by reference to Exhibit 2.1 to EarthLink Holdings Corp.'s Current Report on Form 8-K dated November 10, 2016—File No. 001-15605).
|
3.1—
|
|
Amended and Restated Certificate of Incorporation of EarthLink Holdings Corp. (incorporated by reference to Exhibit 3.1 EarthLink Holdings Corp.'s Current Report on Form 8-K dated January 2, 2014—File No. 001-15605).
|
3.2—
|
|
Amended and Restated Bylaws of EarthLink Holdings Corp. (incorporated by reference to Exhibit 3.2 EarthLink Holdings Corp.'s Current Report on Form 8-K dated January 2, 2014—File No. 001-15605).
|
4.1—
|
|
Form of Common Stock Certificate of EarthLink Holdings Corp. (incorporated by reference to Exhibit 4.1 EarthLink Holdings Corp.'s Current Report on Form 8-K dated January 2, 2014—File No. 001-15605).
|
4.2—
|
|
Indenture, dated May 17, 2011, among EarthLink, Inc., the subsidiary guarantors party thereto and Deutsche Bank Trust Company Americas, as trustee (incorporated by reference to Exhibit 4.1 of EarthLink Holding Corp.'s Current Report on Form 8-K dated May 17, 2011—File No. 001-15605).
|
4.3—
|
|
First Supplemental Indenture, dated June 7, 2011, among EarthLink, Inc., the subsidiary guarantors party thereto and Deutsche Bank Trust Company Americas, as trustee (incorporated by reference to Exhibit 4.6 to the Registration Statement on Form S-4 of EarthLink Holding Corp. dated June 17, 2011—File No. 333-174950).
|
4.4—
|
|
Second Supplemental Indenture, Supplementing the Indenture Dated as of May 17, 2011, among EarthLink, Inc., the subsidiary guarantors party thereto and Deutsche Bank Trust Company Americas, as trustee (incorporated by reference to Exhibit 4.1 of EarthLink Holding Corp.'s Report on Form 10-Q for the quarterly period ended September 30, 2011—File No. 001-15605).
|
4.5—
|
|
Third Supplemental Indenture, Supplementing the Indenture Dated as of May 17, 2011, among EarthLink, Inc., the subsidiary guarantors party thereto and Deutsche Bank Trust Company Americas, as trustee (incorporated by reference to Exhibit 4.3 of EarthLink Holding Corp.'s Current Report on Form 8-K dated May 29, 2013—File No. 001-15605).
|
4.6—
|
|
Fourth Supplemental Indenture, Supplementing the Indenture Dated as of May 17, 2011, among EarthLink Holdings Corp., EarthLink, LLC and Deutsche Bank Trust Company Americas, as trustee (incorporated by reference to Exhibit 4.2 EarthLink Holdings Corp.'s Current Report on Form 8-K dated January 2, 2014—File No. 001-15605).
|
4.7—
|
|
Indenture, dated May 29, 2013, among EarthLink, Inc., the subsidiary guarantors party thereto and Regions Bank, as trustee (incorporated by reference to Exhibit 4.1 of EarthLink Holding Corp.'s Current Report on Form 8-K dated May 29, 2013—File No. 001-15605).
|
4.8—
|
|
First Supplemental Indenture, Supplementing the Indenture Dated May 29, 2013, among EarthLink Holdings Corp., EarthLink, LLC, the subsidiary guarantors party thereto and Regions Bank, as trustee (incorporated by reference to Exhibit 4.3 of EarthLink Holding Corp.'s Current Report on Form 8-K dated January 2, 2014—File No. 001-15605).
|
10.1#—
|
|
EarthLink Holding Corp. 2011 Equity and Cash Incentive Plan (incorporated herein by reference to Annex D to EarthLink Holding Corp.'s Definitive Proxy Statement on Schedule 14A filed March 22, 2011—File No. 001-15605).
|
10.2#—
|
|
Form of Service-Based Restricted Stock Unit Agreement under the EarthLink Holding Corp. 2011 Equity and Cash Incentive Plan (incorporated by reference to Exhibit 10.2 of EarthLink Holding Corp.'s Report on Form 10-Q for the quarterly period ended March 31, 2012—File No. 001-15605).
|
10.3#—
|
|
Form of Performance-Based Restricted Stock Unit Agreement under the EarthLink, Inc. 2011 Equity and Cash Incentive Plan (incorporated by reference to Exhibit 10.3 of EarthLink Holding Corp.'s Report on Form 10-Q for the quarterly period ended March 31, 2012—File No. 001-15605).
|
10.4#—
|
|
Form of Non-Qualified Stock Option Agreement under the EarthLink Holding Corp. 2011 Equity and Cash Incentive Plan (incorporated by reference to Exhibit 10.5 of EarthLink Holding Corp.'s Report on Form 10-Q for the quarterly period ended March 31, 2012—File No. 001-15605).
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10.5#—
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Form of Incentive Stock Option Agreement under the EarthLink Holding Corp. 2011 Equity and Cash Incentive Plan (incorporated by reference to Exhibit 10.1 of EarthLink Holding Corp.'s Report on Form 10-Q for the quarterly period ended June 30, 2012—File No. 001-15605).
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10.6#—
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Form of 2015 Performance-Based Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.2 of EarthLink Holding Corp.'s Report on Form 10-Q for the quarterly period ended March 31, 2015—File No. 001-15605).
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10.7#—
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|
Form of 2015 Service-Based Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.3 of EarthLink Holding Corp.'s Report on Form 10-Q for the quarterly period ended March 31, 2015—File No. 001-15605).
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10.8#—
|
|
EarthLink Holdings Corp. 2016 Equity and Cash Incentive Plan (incorporated herein by reference to Annex B to the Company’s Definitive Proxy Statement on Schedule 14A (File No. 001-15605), filed March 15, 2016).
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10.9#—
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Form of Service-Based Restricted Stock Unit Agreement under the EarthLink Holding Corp. 2016 Equity and Cash Incentive Plan (incorporated by reference to Exhibit 10.2 of EarthLink Holding Corp.'s Report on Form 10-Q for the quarterly period ended March 31, 2016—File No. 001-15605).
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10.10#—
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Form of Performance-Based Restricted Stock Unit Agreement under the EarthLink Holding Corp. 2016 Equity and Cash Incentive Plan (incorporated by reference to Exhibit 10.3 of EarthLink Holding Corp.'s Report on Form 10-Q for the quarterly period ended March 31, 2016—File No. 001-15605).
|
10.11#—
|
|
2016 Short-Term Incentive Plan. (incorporated by reference to Exhibit 10.1 of EarthLink Holding Corp.'s Report on Form 10-Q for the quarterly period ended March 31, 2016—File No. 001-15605).
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10.12#—
|
|
EarthLink Holding Corp. Board of Directors Compensation Plan, effective July 2015. (incorporated by reference to Exhibit 10.9 of EarthLink Holding Corp.'s Report on Form 10-K for the year ended December 31, 2015—File No. 001-15605).
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10.13#
|
|
EarthLink Shared Services, LLC Change-in-Control Accelerated Vesting and Severance Plan (incorporated by reference to Exhibit 10.24 of EarthLink Holding Corp.'s Report on Form 10-K for the year ended December 31, 2013—File No. 001-15605).
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10.14#—
|
|
Severance Plan (Amended and Restated Effective as of April 1, 2015) (incorporated by reference to Exhibit 10.1 of EarthLink Holding Corp.'s Report on Form 8-K dated March 27, 2015—File No. 001-15605).
|
10.15#—
|
|
Amended and Restated Employment Agreement, dated August 12, 2016, between EarthLink Holdings Corp. and Joseph F. Eazor (incorporated by reference to Exhibit 10.1 of EarthLink Holding Corp.'s Report on Form 8-K dated August 12, 2016—File No. 001-15605).
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10.16#*
|
|
2016 EarthLink Access Management Save-Sharing Executive Bonus Plan.
|
10.17#+—
|
|
High-Speed Service Agreement between EarthLink, Inc. and Time Warner Cable Inc. (incorporated by reference to Exhibit 10.5 of EarthLink Holding Corp.'s Report on Form 10-Q for the quarterly period ended March 31, 2009—File No. 001-15605).
|
10.18#—
|
|
Sixth Amendment to High-Speed Service Agreement (incorporated by reference to Exhibit 10.1 of EarthLink Holding Corp.'s Report on Form 8-K dated September 25, 2015—File No. 001-15605).
|
10.19#—
|
|
Second Amended and Restated Credit Agreement dated as of June 30, 2016 between EarthLink Holdings Corp., Regions Bank, as administrative and collateral agent, and the other Lenders party thereto (incorporated by reference to Exhibit 10.1 of EarthLink Holding Corp.'s Report on Form 8-K dated June 30, 2016—File No. 001-15605).
|
10.20—
|
|
Assignment and Assumption Agreement, dated December 30, 2013 by and between EarthLink, Inc., EarthLink Holdings Corp. and EarthLink Shared Services, LLC (incorporated by reference to Exhibit 10.1 of EarthLink Holding Corp.'s Current Report on Form 8-K dated January 2, 2014—File No. 001-15605).
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10.21—
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|
First Amendment to Assignment and Assumption Agreement, effective December 31, 2013 among EarthLink, LLC, EarthLink Holdings Corp. and EarthLink Shared Services, LLC (incorporated by reference to Exhibit 10.34 of EarthLink Holding Corp.'s Report on Form 10-K for the year ended December 31, 2013—File No. 001-15605).
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21.1*—
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Subsidiaries of the Registrant.
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23.1*—
|
|
Consent of Ernst & Young LLP, an independent registered public accounting firm.
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24.1*—
|
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Power of Attorney (see the Power of Attorney in the signature page hereto).
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31.1*—
|
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Certification of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14 and 15d-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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31.2*—
|
|
Certification of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14 and 15d-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
32.1*—
|
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
32.2*—
|
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
101.INS
|
|
XBRL Instance Document**
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101.SCH
|
|
XBRL Taxonomy Extension Schema Document**
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document**
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document**
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document**
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document**
|
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EARTHLINK HOLDINGS CORP.
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By:
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/s/ JOSEPH F. EAZOR
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Joseph F. Eazor,
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Chief Executive Officer and President
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Date: February 24, 2017
|
Date:
|
February 24, 2017
|
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/s/ JOSEPH F. EAZOR
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Joseph F. Eazor, Chief Executive Officer and President (principal executive officer)
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Date:
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February 24, 2017
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/s/ LOUIS M. ALTERMAN
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Louis M. Alterman, Chief Financial Officer
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(principal financial officer)
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Date:
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February 24, 2017
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/s/ R. MICHAEL THURSTON
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R. Michael Thurston, Vice President and Controller
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(principal accounting officer)
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Date:
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February 24, 2017
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/s/ JULIE A. SHIMER PH.D
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Julie A. Shimer Ph.D., Chairman of the Board
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Date:
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February 24, 2017
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/s/ SUSAN D. BOWICK
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Susan D. Bowick, Director
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Date:
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February 24, 2017
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/s/ KATHY S. LANE
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|
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Kathy S. Lane, Director
|
|
|
|
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Date:
|
February 24, 2017
|
|
/s/ GARRY K. MCGUIRE
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|
|
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Garry K. McGuire, Director
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|
|
|
|
Date:
|
February 24, 2017
|
|
/s/ R. GERARD SALEMME
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|
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R. Gerard Salemme, Director
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|
|
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Date:
|
February 24, 2017
|
|
/s/ MARC F. STOLL
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|
|
|
Marc F. Stoll, Director
|
|
|
|
|
Date:
|
February 24, 2017
|
|
/s/ WALTER L. TUREK
|
|
|
|
Walter L. Turek, Director
|
1 Year EarthLink Holdings Corp. Chart |
1 Month EarthLink Holdings Corp. Chart |
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