Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. GTT Communications, Inc. (1315255) 10-K published on Mar 01, 2019 at 3:22 pm
Reporting Period: Dec 30, 2018
GTT's Ethernet service enables clients to design a network environment best suited to their needs, with point-to-point and point-to-multipoint topology options, and dynamic or fixed routing. GTT's Ethernet Direct service provides enhanced performance capabilities for clients seeking guaranteed routes and latency SLAs between key financial markets, data centers and carrier hotels over a service-specific platform. This service is particularly suited for the financial industry, including trading firms that may require a lower-bandwidth alternative to wavelength services. Financial organizations can also leverage our low-latency network to access over 60 unique routes and more than 130 financial exchanges.
In addition, on June 23, 2016, the citizens of the United Kingdom voted to leave the European Union ("Brexit"). In March 2017, the British government invoked Article 50 of the Treaty on European Union, which formally triggered a negotiation process with the European Union. In March 2018, the parties agreed to a transition period of 21 months -- from March 29, 2019 until the end of 2020 -- before the United Kingdom leaves the European Union completely, assuming approval of the negotiated withdrawal agreement. Withdrawal from the European Union is controversial in the United Kingdom notwithstanding the 2016 vote. In December 2018, the European Court of Justice ruled that, subject to certain conditions, a member state could revoke notification of its intention to withdraw from the European Union. The British government and the European Union have now negotiated a withdrawal agreement and the European Union has approved that agreement, but the British Parliament has not yet approved it. As a result, there remains considerable uncertainty around the withdrawal. Failure to obtain parliamentary approval of the negotiated withdrawal agreement could mean that the United Kingdom would be forced to leave the European Union on March 29, 2019 (a so-called “hard Brexit”). The consequences for the economies of the European Union and the United Kingdom are unknown and unpredictable, especially in the case of a hard Brexit. Our operations in the United Kingdom and Europe, as well as our North American operations, could be impacted by the global economic uncertainty caused by Brexit. If we are unable to manage any of these risks effectively, our business could be adversely affected.
Our communications services and communications networks in Europe and elsewhere are also subject to regulatory oversight by national communications regulators, such as the United Kingdom’s Office of Communications ("Ofcom"). In addition, in April 2016, the European Commission adopted the General Data Protection Regulation ("GDPR"), which went into effect in May 2018. GDPR extends the scope of European privacy laws to any entity which processes personal data about European Union residents in connection with the offer of goods or services or the monitoring of behavior. GDPR imposes numerous new requirements for the collection, use and disclosure of personal information, including: more stringent requirements relating to data subject consent; what information must be shared with data subjects regarding how their personal information is used; the obligation to notify regulators and affected individuals of personal data breaches; extensive new internal privacy governance obligations; and obligations to honor expanded rights of individuals in relation to their personal information (e.g., the right to access, correct and delete their data). Complying with GDPR and other emerging and changing privacy requirements may cause us to incur substantial costs or require us to change our business practices. Noncompliance could result in penalties or significant legal liability, and could affect our ability to retain and attract customers.
On July 27, 2017, the United Kingdom’s Financial Conduct Authority, which regulates LIBOR, announced that it intends to phase out LIBOR by the end of 2021. It is unclear if at that time whether LIBOR will cease to exist or if new methods of calculating LIBOR will be established such that it continues to exist after 2021. The Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S. financial institutions, announced replacement of U.S. dollar LIBOR with a new index calculated by short-term repurchase agreements, backed by U.S. Treasury securities called the Secured Overnight Financing Rate (“SOFR”). The first publication of SOFR was released in April 2018. Whether or not SOFR gains market traction as a LIBOR replacement remains in question and the future of LIBOR at this time is uncertain. If LIBOR ceases to exist, we may need to renegotiate our loan documents that utilize LIBOR as a factor in determining the interest rate to replace LIBOR with the new standard that is established.
In August 2018, the FASB issued ASU No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force), which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a cloud-based services arrangement with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The update specifies that the capitalized implementation costs are amortized over the term of the service arrangement and are presented in the same line item in the statement of operations as the service contract. The standard is effective for financial statements issued for fiscal years beginning after December 15, 2019, and interim periods within those periods, and early adoption is permitted and can be applied either retrospectively or prospectively. The Company early adopted this guidance as of October 1, 2018 under the prospective transition method. The early adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.