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 June 30, 2004 |
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File No. 1-31227
COGENT COMMUNICATIONS GROUP, INC.
(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 |
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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, $.001 par value 16,045,151 Shares Outstanding as of August 10, 2004
INDEX
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PART I |
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Item 1. |
Financial Statements (Unaudited) |
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Notes to Interim Condensed Consolidated Financial Statements |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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CERTIFICATIONS |
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2
COGENT COMMUNICATIONS GROUP, INC., AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2003 AND JUNE 30, 2004
(IN THOUSANDS, EXCEPT SHARE DATA)
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December 31, |
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June 30, |
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(Unaudited) |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
7,875 |
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$ |
13,000 |
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Short term investments ($753 and $740 restricted, respectively) |
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4,115 |
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1,839 |
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Accounts receivable, net of allowance for doubtful accounts of $2,868 and $3,109, respectively |
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5,066 |
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6,754 |
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Accounts receivable — related party |
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— |
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1,214 |
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Prepaid expenses and other current assets |
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905 |
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4,434 |
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Total current assets |
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17,961 |
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27,241 |
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Property and equipment: |
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Property and equipment |
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400,097 |
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457,527 |
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Accumulated depreciation and amortization |
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(85,691 |
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(110,884 |
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Total property and equipment, net |
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314,406 |
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346,643 |
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Intangible assets: |
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Intangible assets |
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26,780 |
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27,809 |
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Accumulated amortization |
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(18,671 |
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(23,582 |
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Total intangible assets, net |
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8,109 |
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4,227 |
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Other assets ($1,608 and $1,333 restricted, respectively) |
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3,964 |
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5,199 |
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Total assets |
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$ |
344,440 |
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$ |
383,310 |
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Liabilities and stockholders’ equity |
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Current liabilities: |
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Accounts payable |
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$ |
7,296 |
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$ |
11,036 |
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Accounts payable—related party |
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— |
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1,322 |
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Accrued liabilities |
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7,885 |
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12,313 |
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Current maturities, capital lease obligations |
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3,646 |
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6,049 |
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Total current liabilities |
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18,827 |
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30,720 |
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Amended and Restated Cisco Note |
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17,842 |
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17,842 |
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Convertible subordinated notes, net of discount of $6,084 and $5,606 |
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4,107 |
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4,585 |
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Capital lease obligations, net of current |
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58,107 |
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102,464 |
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Other long-term liabilities |
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803 |
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1,621 |
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Total liabilities |
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99,686 |
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157,232 |
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Commitments and contingencies: |
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Stockholders’ equity: |
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Convertible preferred stock, Series F, $0.001 par value; 11,000 shares authorized, issued, and outstanding; liquidation preference of $29,100 |
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10,904 |
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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; liquidation preference of $123,090 |
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40,787 |
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40,787 |
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Convertible preferred stock, Series H, $0.001 par value; 84,001 shares authorized; 53,372 and 52,023 shares issued and outstanding, respectively; liquidation preference of $7,960 |
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45,990 |
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41,015 |
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Convertible preferred stock, Series I, $0.001 par value; 3,000 shares authorized, 2,575 shares issued and outstanding at June 30, 2004; liquidation preference of $7,725 |
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2,545 |
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Convertible preferred stock, Series J, $0.001 par value; 3,891 shares authorized, issued and outstanding at June 30, 2004; liquidation preference of $58,365 |
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19,421 |
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Common stock, $0.001 par value; 600,000,000 shares authorized; 13,071,340 and 16,042,844 shares outstanding, respectively |
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14 |
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16 |
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Additional paid-in capital |
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232,461 |
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235,786 |
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Deferred compensation |
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(32,680 |
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(24,955 |
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Stock purchase warrants |
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764 |
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764 |
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Treasury stock, 1,229,235 shares |
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(90 |
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(90 |
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Accumulated other comprehensive income |
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628 |
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304 |
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Accumulated deficit |
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(54,024 |
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(100,419 |
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Total stockholders’ equity |
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244,754 |
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226,078 |
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Total liabilities and stockholders’ equity |
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$ |
344,440 |
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$ |
383,310 |
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The accompanying notes are an integral part of these condensed consolidated statements.
3
COGENT COMMUNICATIONS GROUP, INC., AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2003 AND JUNE 30, 2004
(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 (none and $503 from related party, respectively) |
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$ |
15,519 |
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$ |
20,387 |
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Operating expenses: |
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Network operations (including $51 and $213 of amortization of deferred compensation, respectively, and none and $316 to related party, respectively, exclusive of amounts shown separately) |
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12,282 |
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13,486 |
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Selling, general, and administrative (including $761 and $2,832 of amortization of deferred compensation, respectively, and $1,718 and $1,192 of allowance for doubtful accounts, respectively) |
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7,978 |
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12,370 |
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Depreciation and amortization |
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11,827 |
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13,749 |
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Total operating expenses |
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32,087 |
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39,605 |
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Operating loss |
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(16,568 |
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(19,218 |
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Interest income and other |
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315 |
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120 |
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Interest expense |
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