UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the Quarterly Period Ended September 30, 2003 |
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OR |
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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Commission File No. 1-31227 |
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COGENT COMMUNICATIONS GROUP, INC. |
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(Exact Name of Registrant as Specified in Its Charter) |
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Delaware |
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52-2337274 |
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(State of Incorporation) |
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(I.R.S. Employer Identification Number) |
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1015 31st Street N.W. |
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(Address of Principal Executive Offices and Zip Code) |
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(202) 295-4200 |
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(Registrant’s Telephone Number, Including Area Code) |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes o No ý
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Common Stock, $.001 par value 13,071,349 Shares Outstanding as of November 12, 2003
INDEX
PART I
FINANCIAL INFORMATION
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Item 1. |
Financial Statements (Unaudited) |
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Notes to Interim Condensed Consolidated Financial Statements |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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COGENT COMMUNICATIONS GROUP, INC., AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
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December 31, 2002 |
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September 30, 2003 |
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(Unaudited) |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
39,314 |
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$ |
11,031 |
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Short term investments ($851 and $456 restricted, respectively) |
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3,515 |
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8,531 |
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Accounts receivable, net of allowance for doubtful accounts of $2,023 and $2,717, respectively |
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5,516 |
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5,694 |
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Prepaid expenses and other current assets |
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2,781 |
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2,531 |
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Total current assets |
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51,126 |
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27,787 |
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Property and equipment: |
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Property and equipment |
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365,831 |
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394,677 |
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Accumulated depreciation and amortization |
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(43,051 |
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(73,849 |
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Total property and equipment, net |
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322,780 |
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320,828 |
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Intangible assets: |
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Intangible assets |
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23,373 |
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26,780 |
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Accumulated amortization |
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(8,718 |
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(16,050 |
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Total intangible assets, net |
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14,655 |
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10,730 |
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Other assets ($4,431 and $2,639 restricted, respectively) |
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19,116 |
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4,862 |
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Total assets |
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$ |
407,677 |
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$ |
364,207 |
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Liabilities and stockholders’ equity |
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Current liabilities: |
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Accounts payable |
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$ |
7,830 |
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$ |
8,172 |
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Accrued liabilities |
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18,542 |
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9,336 |
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Cisco credit facility (Note 1) |
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250,305 |
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— |
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Current maturities, capital lease obligations |
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3,505 |
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3,734 |
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Total current liabilities |
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280,182 |
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21,242 |
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Convertible subordinated notes, net of discount of $78,140 and $6,289 (Note 7) |
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38,840 |
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3,902 |
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Cisco note payable (Note 1) |
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17,842 |
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Capital lease obligations, net of current |
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55,280 |
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57,522 |
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Other long-term liabilities |
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749 |
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628 |
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Total liabilities |
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375,051 |
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101,136 |
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Commitments and contingencies |
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Stockholders’ equity: |
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Convertible preferred stock, Series A, $0.001 par value; 26,000,000 shares authorized, issued, and outstanding in 2002; none at September 30, 2003 |
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25,892 |
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— |
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Convertible preferred stock, Series B, $0.001 par value; 20,000,000 shares authorized; 19,370,223 shares issued and outstanding in 2002; none at September 30, 2003 |
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88,009 |
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— |
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Convertible preferred stock, Series C, $0.001 par value; 52,173,463 shares authorized; 49,773,402 shares issued and outstanding in 2002; none at September 30, 2003 |
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61,345 |
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— |
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Convertible preferred stock, Series F, $0.001 par value; 11,000 shares authorized, issued and outstanding at September 30, 2003; liquidation preference of $11,000 |
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10,904 |
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Convertible preferred stock, Series G, $0.001 par value; 41,030 shares authorized, issued and outstanding at September 30, 2003; liquidation preference of $123,000 |
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40,787 |
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Common stock, $0.001 par value; 21,100,000 shares authorized; 3,483,838 shares issued and outstanding in 2002; 395,000,000 shares authorized; 14,259,563 shares issued and outstanding at September 30, 2003 |
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4 |
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14 |
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Additional paid-in capital |
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49,199 |
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232,461 |
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Deferred compensation |
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(6,024 |
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(3,153 |
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Stock purchase warrants |
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9,012 |
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764 |
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Accumulated other comprehensive (loss) income |
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(44 |
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481 |
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Accumulated deficit |
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(194,767 |
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(19,187 |
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Total stockholders’ equity |
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32,626 |
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263,071 |
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Total liabilities and stockholders’ equity |
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$ |
407,677 |
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$ |
364,207 |
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The accompanying notes are an integral part of these condensed consolidated balance sheets.
1
COGENT COMMUNICATIONS GROUP, INC., AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2002 AND SEPTEMBER 30, 2003
(IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
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Three Months Ended |
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Three Months Ended |
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(Unaudited) |
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(Unaudited) |
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Net service revenue |
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$ |
15,960 |
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$ |
15,148 |
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Operating expenses: |
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Network operations (including $56 and $53 of amortization of deferred compensation, respectively) |
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14,243 |
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12,067 |
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Selling, general, and administrative (including $798 and $702 of amortization of deferred compensation, respectively) |
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9,654 |
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7,014 |
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Depreciation and amortization |
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8,938 |
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11,968 |
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Total operating expenses |
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32,835 |
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31,049 |
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Operating loss |
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(16,875 |
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(15,901 |
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Gain – Cisco credit facility troubled debt restructuring (Note 1) |
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215,432 |
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Interest income and other |
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226 |
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199 |
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