Delaware
|
23-2827736
|
(State
or other jurisdiction of
|
(I.R.S.
Employer
|
incorporation
or organization)
|
Identification
Number)
|
6805
Route 202
|
18938
|
New
Hope, PA
|
(zip
code)
|
(Address
of principal executive offices)
|
Title
of each class
|
Name
of each exchange on which registered
|
None
|
Not
applicable
|
ITEM
NO.
|
PAGE
NO.
|
PART
II
|
|
6.
Selected Financial Data
|
2
|
7.
Management's Discussion and Analysis of Financial Condition and Results
of
Operations
|
3
|
7A.
Quantitative and Qualitative Disclosure About Market Risk
|
12
|
8.
Financial Statements and Supplementary Data
|
13
|
9A.
Controls and Procedures
|
|
PART
III
|
|
10.
Directors and Executive Officers of the Registrant
|
40
|
11.
Executive Compensation
|
42
|
12.
Security Ownership of Certain Beneficial Owners and Management
|
46
|
13.
Certain Relationships and Related Transactions
|
49
|
14.
Principal Accounting Fees and Services
|
49
|
PART
IV
|
|
15.
Exhibits, Financial Statement Schedules
|
50
|
|
|
Year
Ended December 31,
|
|
|||||||||||||
|
|
|
2005
|
|
|
2004
|
|
|
2003
|
2002
|
2001
|
|||||
|
(In
Thousands, Except For Per Share Amounts)
|
|||||||||||||||
C Consolidated
Statements of Operations Data:
|
||||||||||||||||
Revenue
|
$
|
462,740
|
$
|
471,012
|
$
|
383,693
|
$
|
317,507
|
$
|
488,158
|
||||||
Costs
and expenses:
|
||||||||||||||||
Network
and line costs
|
243,925
|
225,244
|
173,349
|
146,911
|
218,964
|
|||||||||||
General
and administrative expenses
|
82,127
|
72,020
|
63,104
|
62,166
|
98,391
|
|||||||||||
Provision
for doubtful accounts
|
19,114
|
21,313
|
11,599
|
9,365
|
92,778
|
|||||||||||
Sales
and marketing expenses
|
29,863
|
70,202
|
51,008
|
27,148
|
73,973
|
|||||||||||
Depreciation
and amortization
|
44,937
|
22,904
|
18,345
|
17,318
|
34,390
|
|||||||||||
Impairment
and restructuring charges
|
--
|
--
|
--
|
--
|
170,571
|
|||||||||||
Total
costs and expenses
|
419,966
|
411,683
|
317,405
|
262,908
|
689,067
|
|||||||||||
Operating
income (loss)
|
42,774
|
59,329
|
66,288
|
54,599
|
(200,909
|
)
|
||||||||||
Other
income (expense):
|
||||||||||||||||
Interest
income
|
1,007
|
290
|
388
|
802
|
1,220
|
|||||||||||
Interest
expense
|
(350
|
)
|
(733
|
)
|
(7,353
|
)
|
(9,087
|
)
|
(6,091
|
)
|
||||||
Other
income (expense), net
|
974
|
1,895
|
2,470
|
28,448
|
17,950
|
|||||||||||
Income
(loss) before provision (benefit) for income
taxes
|
44,405
|
60,781
|
61,793
|
74,762
|
(187,830
|
)
|
||||||||||
Provision
(benefit) for income taxes
|
18,244
|
23,969
|
(20,024
|
)
|
(22,300
|
)
|
--
|
|||||||||
Income
(loss) before cumulative effect of an
accounting change
|
26,161
|
36,812
|
81,817
|
97,062
|
(187,830
|
)
|
||||||||||
Cumulative
effect of an accounting change
|
--
|
--
|
--
|
--
|
(36,837
|
)
|
||||||||||
Net
income (loss)
|
$
|
26,161
|
$
|
36,812
|
$
|
81,817
|
$
|
97,062
|
$
|
(224,667
|
)
|
|||||
Income
(loss) per share - Basic:
|
||||||||||||||||
Income
(loss) before cumulative effect of an accounting change per share
|
$
|
0.91
|
$
|
1.37
|
$
|
3.10
|
$
|
3.56
|
$
|
(7.11
|
)
|
|||||
Cumulative
effect of an accounting change per share
|
--
|
--
|
--
|
--
|
(1.40
|
)
|
||||||||||
Net
income (loss) per share
|
$
|
0.91
|
$
|
1.37
|
$
|
3.10
|
$
|
3.56
|
$
|
(8.51
|
)
|
|||||
Weighted
average common shares outstanding
|
28,675
|
26,847
|
26,376
|
27,253
|
26,414
|
|||||||||||
Income
(loss) per share - Diluted:
|
||||||||||||||||
Income
(loss) before cumulative effect of an accounting change per
share
|
$
|
0.89
|
$
|
1.32
|
$
|
2.94
|
$
|
3.15
|
$
|
(7.11
|
)
|
|||||
Cumulative
effect of an accounting change per share
|
--
|
--
|
--
|
--
|
(1.40
|
)
|
||||||||||
Net
income (loss) per share
|
$
|
0.89
|
$
|
1.32
|
$
|
2.94
|
$
|
3.15
|
$
|
(8.51
|
)
|
|||||
Weighted
average common and common equivalent shares outstanding
|
29,296
|
27,854
|
27,806
|
30,798
|
26,414
|
At
December 31,
|
|
|||||||||||||||
|
|
|
2005
|
|
|
2004
|
2003
|
2002
|
2001
|
|||||||
|
(In
Thousands)
|
|||||||||||||||
Consolidated
Balance Sheet Data:
|
||||||||||||||||
Cash
and cash equivalents
|
$
|
46,288
|
$
|
47,492
|
$
|
35,242
|
$
|
33,588
|
$
|
22,100
|
||||||
Total
current assets
|
118,281
|
138,068
|
105,595
|
82,825
|
51,214
|
|||||||||||
Goodwill
and intangibles, net
|
41,413
|
14,979
|
17,769
|
26,882
|
29,672
|
|||||||||||
Total
assets
|
288,689
|
241,728
|
247,178
|
189,075
|
165,737
|
|||||||||||
Current
portion of long-term debt
|
3,988
|
2,529
|
16,806
|
61
|
14,454
|
|||||||||||
Total
current liabilities
|
88,739
|
84,584
|
93,235
|
64,754
|
87,789
|
|||||||||||
Long-term
debt
|
1,289
|
1,717
|
31,791
|
100,855
|
152,370
|
|||||||||||
Stockholders'
equity (deficit)
|
$
|
191,787
|
$
|
141,521
|
$
|
103,143
|
$
|
23,466
|
$
|
(74,422
|
)
|
Year
Ended December 31,
|
||||||||||
2005
|
2004
|
2003
|
||||||||
Revenue
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
||||
Costs
and expenses:
|
||||||||||
Network
and line costs
|
52.7
|
47.8
|
45.2
|
|||||||
General
and administrative expenses
|
17.7
|
15.3
|
16.4
|
|||||||
Provision
for doubtful accounts
|
4.1
|
4.5
|
3.0
|
|||||||
Sales
and marketing expenses
|
6.5
|
14.9
|
13.3
|
|||||||
Depreciation
and amortization
|
9.7
|
4.9
|
4.8
|
|||||||
Total
costs and expenses
|
90.8
|
87.4
|
82.7
|
|||||||
Operating
income
|
9.2
|
12.6
|
17.3
|
|||||||
Other
income (expense):
|
||||||||||
Interest
income
|
0.2
|
0.1
|
0.1
|
|||||||
Interest
expense
|
(0.1
|
)
|
(0.2
|
)
|
(1.9
|
)
|
||||
Other,
net
|
0.2
|
0.4
|
0.6
|
|||||||
Income
before income taxes
|
9.6
|
12.9
|
16.1
|
|||||||
Provision
(benefit) for income taxes
|
3.9
|
5.1
|
(5.2
|
)
|
||||||
Net
income
|
5.7
|
%
|
7.8
|
%
|
21.3
|
%
|
Year
Ended December 31,
|
|||||||
2005
|
2004
|
||||||
Revenue
|
(1.8
|
%)
|
22.8
|
%
|
|||
Costs
and expenses:
|
|||||||
Network
and line costs
|
8.3
|
%
|
29.9
|
%
|
|||
General
and administrative expenses
|
14.0
|
%
|
14.1
|
%
|
|||
Provision
for doubtful accounts
|
(10.3
|
%)
|
83.7
|
%
|
|||
Sales
and marketing expenses
|
(57.5
|
%)
|
37.6
|
%
|
|||
Depreciation
and amortization
|
96.2
|
%
|
24.9
|
%
|
|||
Total
costs and expenses
|
2.0
|
%
|
29.7
|
%
|
|||
Operating
income
|
(27.9
|
%)
|
(10.5
|
%)
|
|||
Other
income (expense):
|
|||||||
Interest
income
|
247.2
|
%
|
(25.3
|
%)
|
|||
Interest
expense
|
(52.3
|
%)
|
(90.0
|
%)
|
|||
Other,
net
|
(48.6
|
%)
|
(23.3
|
%)
|
|||
Income
before income taxes
|
(26.9
|
%)
|
(1.6
|
%)
|
|||
Provision
for income taxes
|
(23.9
|
%)
|
219.7
|
%
|
|||
Net
income
|
(28.9
|
%)
|
(55.0
|
%)
|
Contractual
Obligations
|
Total
|
Less
than
1
year
|
1
- 3
Years
|
3
- 5
Years
|
More
than
5
Years
|
|||||||||||
Vendor
financing agreement (1)
|
$
|
1,220
|
$
|
1,220
|
$
|
--
|
$
|
--
|
$
|
--
|
||||||
Capital
lease obligations
|
4,057
|
2,768
|
1,289
|
--
|
--
|
|||||||||||
Vendor
financed maintenance (1)
|
561
|
561
|
--
|
--
|
--
|
|||||||||||
Operating
leases (2)
|
21,509
|
5,175
|
5,813
|
4,777
|
5,744
|
|||||||||||
Purchase
commitments (3)
|
588
|
588
|
--
|
--
|
--
|
|||||||||||
Invoice
printing commitment (4)
|
3,730
|
1,213
|
2,517
|
--
|
--
|
|||||||||||
Carrier
commitments (5)
|
73,296
|
37,637
|
35,586
|
48
|
25
|
|||||||||||
Total
Contractual Obligations
|
$
|
104,961
|
$
|
49,162
|
$
|
45,205
|
$
|
4,825
|
$
|
5,769
|
Percent
Change
|
|||||
2005
|
2004
|
2003
|
2005
vs. 2004
|
2004
vs. 2003
|
|
Operating
activities
|
$
72,012
|
$
74,595
|
$
73,171
|
(3.5%)
|
1.9%
|
Investing
activities
|
(76,003)
|
(16,497)
|
(14,715)
|
(360.7%)
|
(12.1%)
|
Financing
activities
|
2,787
|
(45,848)
|
(56,802)
|
106.1%
|
19.3%
|
·
|
Significant
underperformance relative to historical or projected future operating
results
|
·
|
Significant
changes in the manner of our use of the acquired assets or expected
useful
lives of the assets or the strategy for our overall business
|
·
|
Significant
negative regulatory, industry or economic trends
|
·
|
Significant
decline in our stock price for a sustained period and market
capitalization relative to net book value
|
|
|
Aggregate Number of
Common Stock Shares Issuable
Under Accelerated Stock Options
|
|
Weighted Average
Exercise
Price
Per
Share
|
|
Total
Non-Employee Directors
|
|
11,666
|
|
$10.49
|
|
Total
Named Executive Officers (1)
|
|
159,998
|
|
$10.49
|
|
Total
Directors and Named Executive Officers
|
|
171,664
|
|
$10.49
|
|
Total
All Other Employees
|
|
176,185
|
|
$10.49
|
|
Total
(2)
|
|
347,849
|
|
$10.49
|
PAGE
|
||
Report
of Independent Registered Public Accounting Firm
|
14
|
|
Consolidated
statements of operations for the years ended December 31, 2005, 2004
and
2003
|
15
|
|
Consolidated
balance sheets as of December 31, 2005 and 2004
|
16
|
|
Consolidated
statements of cash flows for the years ended December 31, 2005, 2004
and
2003
|
17
|
|
Consolidated
statements of stockholders' equity for the years ended December 31,
2005,
2004 and 2003
|
18
|
|
Notes
to consolidated financial statements
|
19
|
Year
Ended December 31,
|
||||||||||
2005
|
2004
|
2003
|
||||||||
Revenue
|
$
|
462,740
|
$
|
471,012
|
$
|
383,693
|
||||
Costs
and expenses:
|
||||||||||
Network
and line costs (excluding depreciation
shown below)
|
243,925
|
225,244
|
173,349
|
|||||||
General
and administrative expenses
|
82,127
|
72,020
|
63,104
|
|||||||
Provision
for doubtful accounts
|
19,114
|
21,313
|
11,599
|
|||||||
Sales
and marketing expenses
|
29,863
|
70,202
|
51,008
|
|||||||
Depreciation
and amortization
|
44,937
|
22,904
|
18,345
|
|||||||
Total
costs and expenses
|
419,966
|
411,683
|
317,405
|
|||||||
Operating
income
|
42,774
|
59,329
|
66,288
|
|||||||
Other
income (expense):
|
||||||||||
Interest
income
|
1,007
|
290
|
388
|
|||||||
Interest
expense
|
(350
|
)
|
(733
|
)
|
(7,353
|
)
|
||||
Other
income, net
|
974
|
1,895
|
2,470
|
|||||||
Income
before provision (benefit) for income taxes
|
44,405
|
60,781
|
61,793
|
|||||||
Provision
(benefit) for income taxes
|
18,244
|
23,969
|
(20,024
|
)
|
||||||
Net
income
|
$
|
26,161
|
$
|
36,812
|
$
|
81,817
|
||||
Income
per share - Basic:
|
||||||||||
Net
income per share
|
$
|
0.91
|
$
|
1.37
|
$
|
3.10
|
||||
Weighted
average common shares outstanding
|
28,675
|
26,847
|
26,376
|
|||||||
Income
per share - Diluted:
|
||||||||||
Net
income per share
|
$
|
0.89
|
$
|
1.32
|
$
|
2.94
|
||||
Weighted
average common and common equivalent
shares outstanding
|
29,296
|
27,854
|
27,806
|
December
31,
2005
|
December
31,
2004
|
||||||
Assets
|
|||||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
46,288
|
$
|
47,492
|
|||
Accounts
receivable, trade (net of allowance for uncollectible accounts of
$13,838
and $17,508 at December 31, 2005 and 2004, respectively)
|
43,600
|
48,873
|
|||||
Deferred
income taxes
|
18,096
|
34,815
|
|||||
Prepaid
expenses and other current assets
|
10,297
|
6,888
|
|||||
Total
current assets
|
118,281
|
138,068
|
|||||
Property
and equipment, net
|
98,492
|
65,823
|
|||||
Goodwill
|
36,479
|
13,013
|
|||||
Intangible
assets, net
|
4,934
|
1,966
|
|||||
Deferred
income taxes
|
21,033
|
14,291
|
|||||
Capitalized
software cost and other assets
|
9,470
|
8,567
|
|||||
$
|
288,689
|
$
|
241,728
|
||||
Liabilities
and Stockholders’ Equity
|
|||||||
Current
liabilities:
|
|||||||
Accounts
payable and accrued expenses
|
$
|
40,025
|
$
|
38,843
|
|||
Sales,
use and excise taxes
|
7,316
|
11,179
|
|||||
Deferred
revenue
|
13,824
|
15,321
|
|||||
Current
portion of long-term debt and capitalized lease
obligations
|
3,988
|
2,529
|
|||||
Accrued
compensation
|
9,405
|
6,690
|
|||||
Other
current liabilities
|
14,181
|
10,022
|
|||||
Total
current liabilities
|
$
|
88,739
|
$
|
84,584
|
|||
Long-term
debt and capitalized lease obligations
|
1,289
|
1,717
|
|||||
Deferred
income taxes
|
4,853
|
13,906
|
|||||
Asset
retirement obligation
|
2,021
|
--
|
|||||
Commitments
and contingencies
|
|||||||
Stockholders'
equity:
|
|||||||
Preferred
stock - $.01 par value, 5,000,000 shares authorized; no shares outstanding
|
--
|
--
|
|||||
Common
stock - $.01 par value, 100,000,000 shares authorized; 30,368,267
and
27,037,096 shares issued and outstanding at December 31, 2005 and
2004,
respectively
|
317
|
284
|
|||||
Additional
paid-in capital
|
380,481
|
356,409
|
|||||
Accumulated
deficit
|
(184,011
|
)
|
(210,172
|
)
|
|||
Treasury
stock - at cost, 1,315,789 shares at December 31, 2005 and
2004
|
(5,000
|
)
|
(5,000
|
)
|
|||
Total
stockholders' equity
|
191,787
|
141,521
|
|||||
$
|
288,689
|
$
|
241,728
|
|
Year
Ended December 31,
|
|||||||||
2005
|
2004
|
2003
|
||||||||
Cash
flows from operating activities:
|
||||||||||
Net income
|
$
|
26,161
|
$
|
36,812
|
$
|
81,817
|
||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||||
Provision
for doubtful accounts
|
19,114
|
21,313
|
11,599
|
|||||||
Depreciation
and amortization
|
44,937
|
22,904
|
18,345
|
|||||||
Other
non-cash charges
|
378
|
13
|
22
|
|||||||
Non-cash
interest
|
96
|
(956
|
)
|
(260
|
)
|
|||||
Gain
from extinguishment of debt
|
--
|
--
|
(2,476
|
)
|
||||||
Deferred
income taxes
|
14,928
|
19,588
|
(23,411
|
)
|
||||||
Changes
in assets and liabilities:
|
||||||||||
Accounts
receivable, trade
|
(2,490
|
)
|
(29,865
|
)
|
(24,077
|
)
|
||||
Prepaid
expenses and other current assets
|
3,405
|
(900
|
)
|
(1,533
|
)
|
|||||
Other
assets
|
(15
|
)
|
60
|
1,410
|
||||||
Accounts
payable
|
(19,937
|
)
|
5,189
|
3,799
|
||||||
Deferred
revenue
|
(4,626
|
)
|
4,448
|
4,393
|
||||||
Sales,
use and excise taxes
|
(8,414
|
)
|
(2,342
|
)
|
2,082
|
|||||
Accrued
compensation
|
(274
|
)
|
(3,198
|
)
|
4,279
|
|||||
Other
current liabilities
|
(1,251
|
)
|
1,529
|
(2,818
|
)
|
|||||
Net
cash provided by operating activities
|
72,012
|
74,595
|
73,171
|
|||||||
Cash
flows from investing activities:
|
||||||||||
Proceeds
from sale of fixed assets
|
70
|
--
|
--
|
|||||||
Acquisition
of LDMI, net of cash acquired
|
(26,850
|
)
|
--
|
--
|
||||||
Acquisition
of intangibles
|
--
|
--
|
(133
|
)
|
||||||
Capital
expenditures
|
(45,234
|
)
|
(12,963
|
)
|
(11,844
|
)
|
||||
Capitalized
software development costs
|
(3,989
|
)
|
(3,534
|
)
|
(2,738
|
)
|
||||
Net
cash used in investing activities
|
(76,003
|
)
|
(16,497
|
)
|
(14,715
|
)
|
||||
Cash
flows from financing activities:
|
||||||||||
Payments
on borrowings
|
--
|
(45,273
|
)
|
(52,918
|
)
|
|||||
Payments
of capital lease obligations
|
(2,230
|
)
|
(1,228
|
)
|
(61
|
)
|
||||
Proceeds
from exercise of options and warrants
|
5,017
|
653
|
1,177
|
|||||||
Purchase
of treasury stock
|
--
|
--
|
(5,000
|
)
|
||||||
Net
cash provided by (used in) financing activities
|
2,787
|
(45,848
|
)
|
(56,802
|
)
|
|||||
Net
increase (decrease) in cash and cash equivalents
|
(1,204
|
)
|
12,250
|
1,654
|
||||||
Cash
and cash equivalents, beginning of year
|
47,492
|
35,242
|
33,588
|
|||||||
Cash
and cash equivalents, end of year
|
$
|
46,288
|
$
|
47,492
|
$
|
35,242
|
Additional
|
||||||||||||||||||||||
|
Common
Stock
|
Paid
In
|
Accumulated |
Treasury
Stock
|
||||||||||||||||||
Shares | Amount |
Capital
|
Deficit
|
Shares
|
Amount
|
Total
|
||||||||||||||||
Balance,
December 31, 2002
|
27,470
|
$
|
275
|
$
|
351,992
|
$
|
(328,801
|
)
|
--
|
$
|
--
|
$
|
23,466
|
|||||||||
Net
income
|
--
|
--
|
--
|
81,817
|
--
|
--
|
81,817
|
|||||||||||||||
Acquisition
of treasury stock
|
--
|
--
|
--
|
--
|
1,316
|
(5,000
|
)
|
(5,000
|
)
|
|||||||||||||
Exercise
of common stock options
|
509
|
5
|
1,172
|
--
|
--
|
--
|
1,177
|
|||||||||||||||
Income
tax benefit related to exercise of common stock options
|
--
|
--
|
1,683
|
--
|
--
|
--
|
1,683
|
|||||||||||||||
Balance,
December 31, 2003
|
27,979
|
280
|
354,847
|
(246,984
|
)
|
1,316
|
(5,000
|
)
|
103,143
|
|||||||||||||
Net
income
|
--
|
--
|
--
|
36,812
|
--
|
--
|
36,812
|
|||||||||||||||
Exercise
of common stock options
|
374
|
4
|
658
|
--
|
--
|
--
|
662
|
|||||||||||||||
Income
tax benefit related to exercise of common stock options
|
--
|
--
|
904
|
--
|
--
|
--
|
904
|
|||||||||||||||
Balance,
December 31, 2004
|
28,353
|
284
|
356,409
|
(210,172
|
)
|
1,316
|
(5,000
|
)
|
141,521
|
|||||||||||||
Net
income
|
--
|
--
|
--
|
26,161
|
--
|
--
|
26,161
|
|||||||||||||||
Exercise
of common stock options
|
1,531
|
15
|
5,002
|
--
|
--
|
--
|
5,017
|
|||||||||||||||
Income
tax benefit related to exercise of common stock options
|
--
|
--
|
3,126
|
--
|
--
|
--
|
3,126
|
|||||||||||||||
Common
stock issued in connection with acquisition of LDMI
|
1,800
|
18
|
15,944
|
--
|
--
|
--
|
15,962
|
|||||||||||||||
Balance,
December 31, 2005
|
31,684
|
$
|
317
|
$
|
380,481
|
$
|
(184,011
|
)
|
1,316
|
$
|
(5,000
|
)
|
$
|
191,787
|
·
|
Our
ability to successfully integrate business that we acquire, including
but
not limited to LDMI and NTC
|
·
|
Dependence
on the availability and functionality of the networks of the incumbent
local exchange carriers
|
·
|
Increased
price and product competition in commercial and residential voice
and data
services, and overall competition within the telecommunications
industry
|
Year
Ended December 31,
|
Balance
at Beginning of Year
|
Acquired
Balances
|
Provision
|
Write-offs
Net of Recoveries
|
Balance
at End of Year
|
|||||||||||
2005
|
$
|
17,508
|
$
|
1,589
|
19,114
|
(24,373
|
)
|
$
|
13,838
|
|||||||
2004
|
$
|
9,414
|
--
|
21,313
|
(13,219
|
)
|
$
|
17,508
|
||||||||
2003
|
$
|
7,821
|
--
|
11,599
|
(10,006
|
)
|
$
|
9,414
|
Year
Ended December 31,
(In
thousands)
|
||||||||||
|
2005
|
2004
|
2003
|
|||||||
Net
income as reported
|
$
|
26,161
|
$
|
36,812
|
$
|
81,817
|
||||
Add:
Stock-based employee compensation expense included in reported net
income,
net of taxes
|
3
|
5
|
--
|
|||||||
Deduct:
Total stock-based employee compensation expense determined under
fair
value based method for all options, net of taxes
|
(3,491
|
)
|
(5,308
|
)
|
(1,348
|
)
|
||||
Pro
forma net income
|
$
|
22,673
|
$
|
31,509
|
$
|
80,469
|
|
|
Year
Ended December 31,
|
|
|||||||
|
|
|
2005
|
|
|
2004
|
|
|
2003
|
|
Basic
earnings per share:
|
|
|
|
|
|
|
|
|
|
|
As
reported
|
|
$
|
0.91
|
|
$
|
1.37
|
|
$
|
3.10
|
|
Pro
forma
|
|
$
|
0.79
|
|
$
|
1.17
|
|
$
|
3.05
|
|
Diluted
earnings per share:
|
|
|
|
|
|
|
|
|
|
|
As
reported
|
|
$
|
0.89
|
|
$
|
1.32
|
|
$
|
2.94
|
|
Pro
forma
|
|
$
|
0.77
|
|
$
|
1.15
|
|
$
|
2.94
|
|
2005
|
||||
Balance
at January 1,
|
$
|
--
|
||
Acquisitions
(See Note 14)
|
1,249
|
|||
Additions
|
613
|
|||
Revisions
|
1,004
|
|||
Accretion
|
96
|
|||
Retirement
|
(42
|
)
|
||
Balance
at December 31,
|
$
|
2,920
|
Year
Ended December 31,
|
Operating
Leases
|
Capital
Leases
|
Total
|
|||||||
2006
|
$
|
5,175
|
$
|
3,059
|
$
|
8,234
|
||||
2007
|
3,135
|
1,056
|
4,191
|
|||||||
2008
|
2,678
|
346
|
3,024
|
|||||||
2009
|
2,657
|
--
|
2,657
|
|||||||
2010
|
2,120
|
--
|
2,120
|
|||||||
Thereafter
|
5,744
|
--
|
5,744
|
|||||||
Total
minimum lease payments
|
21,509
|
4,461
|
25,970
|
|||||||
Less:
interest
|
404
|
|||||||||
Present
value of minimum lease payments
|
4,057
|
|||||||||
Less:
current installments
|
2,768
|
|||||||||
Long-term
obligations
|
1,289
|
|
December
31,
|
|||||||||
|
Lives
|
2005
|
2004
|
|||||||
Land
|
$
|
330
|
$
|
330
|
||||||
Buildings
and building improvements
|
39
years
|
7,077
|
7,004
|
|||||||
Leasehold
improvements
|
3-10
years
|
3,713
|
2,146
|
|||||||
Switching
equipment
|
1-10
years
|
121,033
|
68,444
|
|||||||
Purchased
software
|
3
years
|
18,483
|
11,812
|
|||||||
Equipment
and other
|
3-10
years
|
57,892
|
49,152
|
|||||||
|
208,528
|
138,888
|
||||||||
Less:
Accumulated depreciation
|
(110,036
|
)
|
(73,065
|
)
|
||||||
|
$
|
98,492
|
$
|
65,823
|
|
|
December
31,
|
|||
|
Lives
|
|
2005
|
2004
|
|
Equipment
and other
|
3
years
|
$
6,968
|
$
3,627
|
||
Less:
Accumulated depreciation
|
(2,544)
|
(1,
457)
|
|||
$
4,424
|
$
2,170
|
December
31,
|
|||||||
2005
|
2004
|
||||||
Vendor
financing agreement
|
$
|
1,220
|
$
|
2,057
|
|||
Capital
lease obligations
|
4,057
|
2,189
|
|||||
Total
long-term debt and capital lease obligations
|
5,277
|
4,246
|
|||||
Less:
current maturities
|
3,988
|
2,529
|
|||||
Total
long-term debt and capital lease obligations, excluding current
maturities
|
$
|
1,289
|
$
|
1,717
|
Year
Ended December 31,
|
||
2006
|
$3,988
|
|
2007
|
954
|
|
2008
|
335
|
|
$5,277
|
|
|
Options
Shares
|
|
Exercise
Price
Range
Per
Share
|
|
Weighted
Average
Exercise
Price
|
Outstanding,
December 31, 2002
|
|
4,185,701
|
|
$1.11-$48.54
|
|
$6.84
|
Granted
|
|
1,873,171
|
|
$3.70-$14.35
|
|
$10.33
|
Exercised
|
|
(509,149)
|
|
$0.99-$15.75
|
|
$2.34
|
Cancelled
|
|
(112,616)
|
|
$1.38-$30.18
|
|
$12.48
|
|
|
|
|
|
|
|
Outstanding,
December 31, 2003
|
|
5,437,107
|
|
$0.99-$47.64
|
|
$8.35
|
Granted
|
|
220,833
|
|
$5.14-$10.87
|
|
$6.83
|
Exercised
|
|
(374,144)
|
|
$1.05-$6.81
|
|
$1.75
|
Cancelled
|
|
(401,952)
|
|
$1.32-$29.63
|
|
$12.86
|
|
|
|
|
|
|
|
Outstanding,
December 31, 2004
|
|
4,881,844
|
|
$0.99-$47.64
|
|
$8.41
|
Granted
|
|
1,670,000
|
$6.22-$9.57
|
$8.52
|
||
Exercised
|
|
(1,240,706)
|
$0.99
- $10.49
|
$2.43
|
||
Cancelled
|
|
(310,334)
|
$1.11-$30.38
|
$10.28
|
||
Outstanding,
December 31, 2005
|
|
5,000,804
|
$1.20-$47.64
|
$9.82
|
|
Option
Shares
|
|
Exercise
Price Range
Per
Share
|
|
Weighted
Average Exercise Price
|
2003
|
2,939,893
|
|
$0.99-$47.64
|
|
$7.99
|
2004
|
3,413,585
|
|
$0.99-$47.64
|
|
$8.36
|
2005
|
3,237,232
|
|
$1.20-$47.64
|
|
$10.57
|
Range
of Exercise Prices
|
|
Number
Outstanding at December 31, 2005
|
|
Weighted
Average Exercise Price
|
|
Weighted
Average Remaining Contractual Life (years)
|
|
Number
Exercisable at December 31, 2005
|
|
Weighted
Average Exercise Price
|
$1.20
to $10.31
|
|
2,707,611
|
|
$
6.81
|
|
7.6
|
|
961,838
|
|
$
3.91
|
$10.32
to $14.35
|
|
1,987,250
|
|
11.61
|
|
6.9
|
|
1,969,451
|
|
11.62
|
$14.36
to $21.00
|
|
144,335
|
|
19.85
|
|
3.2
|
|
144,335
|
|
19.85
|
$21.01
to $30.00
|
|
66,666
|
|
26.65
|
|
3.1
|
|
66,666
|
|
26.65
|
$30.01
to $47.64
|
|
94,942
|
|
30.94
|
|
3.4
|
|
94,942
|
|
30.94
|
Assumption
|
|
2005
|
|
2004
|
|
2003
|
Expected
Term
|
|
5
years
|
|
5
years
|
|
5
years
|
Expected
Volatility
|
|
92.16%
|
|
93.82%
|
|
98.63%
|
Expected
Dividend Yield
|
|
--%
|
|
--%
|
|
--%
|
Risk-Free
Interest Rate
|
|
4.10%
|
|
3.49%
|
|
3.15%
|
Year
Ended December 31,
|
||||||||||
|
2005
|
2004
|
2003
|
|||||||
Current income tax expense: |