Gaztransport & Technigaz
Annual Report 2013

Plain-text annual report

Morningstar® Document Research℠ FORM 10-KGTT Communications, Inc. - GTTFiled: March 18, 2014 (period: December 31, 2013)Annual report with a comprehensive overview of the companyThe information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The userassumes all risks for any damages or losses arising from any use of this information, except to the extent such damages or losses cannot belimited or excluded by applicable law. Past financial performance is no guarantee of future results.UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal year ended December 31, 2013 Commission File Number 000-51211 GTT Communications, Inc.(Exact Name of Registrant as Specified in Its Charter) Delaware 20-2096338(State or Other Jurisdiction of (I.R.S. Employer Identification No.)Incorporation or Organization) 8484 Westpark DriveSuite 720McLean, Virginia 22102(703) 442-5500(Address including zip code, and telephone number, including areacode, of principal executive offices)Securities registered pursuant to Section 12(b) of the Act:Title of each className of each exchange on which registeredCommon stock, par value $.0001 per shareNYSE MKT Securities registered pursuant to Section 12(g) of the Act:NoneIndicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.Yes ¨ No Indicate by check mark whether the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.Yes ¨ No 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 1934during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filingrequirements for the past 90 days. Yes  No ¨Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File requiredto be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period thatthe registrant was required to submit and post such files). Yes  No ¨Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to thebest of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to thisForm 10-K. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer andlarge accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one): Large Accelerated Filer ¨ Accelerated Filer ¨ Non-Accelerated Filer ¨ Smaller reporting company (Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No  Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.The aggregate market value of the common stock held by non-affiliates of the registrant (10,578,970 shares) based on the $4.40 closing price of theregistrant’s common stock as reported on the NYSE MKT on June 30, 2013, was $46,547,468. For purposes of this computation, all officers, directors and10% beneficial owners of the registrant are deemed to be affiliates. Such determination should not be deemed to be an admission that such officers, directors or10% beneficial owners are, in fact, affiliates of the registrant. As of March 18, 2014, 23,615,566 shares of common stock, par value $.0001 per share, of the registrant were outstanding.Documents Incorporated by Reference Portions of our definitive proxy statement for the 2014 Annual Meeting of Stockholders, to be filed within 120 days after the end of the fiscal yearcovered by this Form 10-K, are incorporated by reference into Part III hereof. Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Page PART I Item 1.Business1Item 1A.Risk Factors4Item 1B.Unresolved Staff Comments14Item 2.Properties14Item 3.Legal Proceedings15Item 4.Mine Safety Disclosures15 PART II Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities16Item 6.Selected Financial Data16Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations17Item 7A.Quantitative and Qualitative Disclosures About Market Risk27Item 8.Financial Statements and Supplementary Data27Item 9.Changes In and Disagreements with Accountants on Accounting and Financial Disclosures27Item 9A.Controls and Procedures27Item 9B.Other Information28 PART III Item 10.Directors, Executive Officers and Corporate Governance29Item 11.Executive Compensation29Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters29Item 13.Certain Relationships and Related Transactions, and Director Independence29Item 14.Principal Accounting Fees and Services29 PART IV Item 15.Exhibits, Financial Statement Schedules30 Signatures34iSource: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.CAUTIONARY NOTES REGARDING FORWARD-LOOKING STATEMENTS Our Form 10-K (“Annual Report”) includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of1995, which reflect the current views of GTT Communications, Inc., with respect to current events and financial performance. You can identify thesestatements by forward-looking words such as “may,” “will,” “expect,” “intend,” “anticipate,” “believe,” “estimate,” “plan,” “could,” “should,” and“continue” or similar words. These forward-looking statements may also use different phrases. From time to time, GTT Communications, Inc., which werefer to as “we”, “us” or “our” and in some cases, “GTT” or the “Company”, also provides forward-looking statements in other materials GTT releases to thepublic or files with the United States Securities and Exchange Commission (“SEC”), as well as oral forward-looking statements. You should consider anyfurther disclosures on related subjects in our quarterly reports on Form 10-Q and current reports on Form 8-K filed with the SEC. Such forward-looking statements are and will be subject to many risks, uncertainties and factors relating to our operations and the business environmentthat may cause our actual results to be materially different from any future results, express or implied, by such forward-looking statements. Factors that couldcause GTT’s actual results to differ materially from these forward-looking statements include, but are not limited to, the following:•our ability to develop and market new products and services that meet customer demands and generate acceptable margins;•our reliance on several large customers;•our ability to negotiate and enter into acceptable contract terms with our suppliers;•our ability to attract and retain qualified management and other personnel;•competition in the industry in which we do business;•failure of the third-party communications networks on which we depend;•legislation or regulatory environments, requirements or changes adversely affecting the businesses in which we are engaged;•our ability to maintain our databases, management systems and other intellectual property;•our ability to maintain adequate liquidity and produce sufficient cash flow to fund our capital expenditures and debt service;•our ability to obtain capital to grow our business;•technological developments and changes in the industry;•our ability to complete acquisitions or divestures and to integrate any business or operation acquired; and•general economic conditions.You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this annual report. Forward-lookingstatements involve known and unknown risks and uncertainties that may cause our actual future results to differ materially from those projected orcontemplated in the forward-looking statements. All forward-looking statements included herein attributable to us or any person acting on our behalf are expressly qualified in their entirety by thecautionary statements contained or referred to in this section. Except to the extent required by applicable laws and regulations, we undertake no obligation toupdate these forward-looking statements to reflect events or circumstances after the date of this annual report or to reflect the occurrence of unanticipatedevents. You should be aware that the occurrence of the events described in the “Risk Factors” section and elsewhere in this annual report could have a materialadverse effect on our business and our results of operations. Unless the context otherwise requires, when we use the words ‘‘the Company,” “GTT,” “we”, or “us" in this Form 10-K, we are referring to GTTCommunications, Inc., a Delaware corporation, and its subsidiaries, unless it is clear from the context or expressly stated that these references areonly to GTT Communications, Inc.iiSource: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.PART IITEM 1. BUSINESSIntroduction GTT Communications, Inc. is a Delaware corporation which was incorporated on January 3, 2005. GTT operates a global Tier 1 IP network with one ofthe most interconnected Ethernet service platforms around the world. We provide highly reliable, scalable and secure cloud networking services. Our clientstrust us to deliver solutions with simplicity, speed, and agility. Our Customers As of December 31, 2013, our customer base was comprised of over 2,000 businesses. For the year ended December 31, 2013, no single customeraccounted for more than 10% of our total consolidated revenue. Our five largest customers accounted for approximately 18% of consolidated revenue during thesame period. We provide services in over 100 countries, with the ability to expand into new geographic areas by adding new regional partners and suppliers. Our serviceexpansion is largely customer-driven. We have designed, delivered, and subsequently managed services in all six populated continents around the world. For the year ended December 31, 2013, approximately 57% of our revenue was attributable to our operations based in the United States, 25% based in Italy,15% based in the United Kingdom, and 3% from operations in other countries. Our customer contracts for network services and support are generally for initial terms of one to three years, with some contracts calling for terms in excessof five years. Following the initial terms, these agreements typically provide for renewal automatically for specified periods ranging from one month to one year.Our prices are fixed for the duration of the contract, and we typically bill in advance for such services. If a customer terminates its agreement, the terms of ourcustomer contracts typically require full recovery of any amounts due for the remainder of the term (or at a minimum, our liability to the underlyingsuppliers). Our Network GTT has deployed network assets in North America, Europe and Asia to provide Dedicated Internet Access, IP Transit and Ethernet Transport services.GTT’s core network consists of a global Layer 2 switched Ethernet, diversely routed 10Gb mesh network as well as IP Transit or Dedicated Internet Accessthrough approximately 200 Points of Presence (“PoPs”), delivering cloud networking services to enterprise, government and wholesale customers. GTT hasnetwork connectivity in all major U.S. cities and European cities, established Ethernet hubs with various carriers and multiple peering connections to otherTier 1 IP providers. The GTT backbone network is built using a multi-layer design developed to offer the highest level of performance and reliability. GTT's private opticallong-haul network provides the foundation for a Layer 2 Ethernet-over-MPLS mesh between core backbone routers in each city. This same infrastructure alsoprovides dedicated data transport services to customers in GTT's backbone cities. Built on top of GTT's highly-resilient optical transport network, the Company’s Layer 3/IP Network was engineered to provide the highest levels of capacityand performance, even when utilizing enhanced services such as traffic analysis, DDoS mitigation and traffic filtering. Additionally, we have over 800 supplier relationships worldwide from which we source bandwidth and other services and combine our own network assetsto meet our customers’ requirements. Through our extensive supplier relationships, our customers have access to an array of service providers without havingto manage multiple contracts. Our supplier management team works with our suppliers to acquire updated pricing and network asset information and negotiate purchase agreements whenappropriate. In some cases, we have electronic interfaces into our suppliers’ pricing systems to provide our customers with real time pricing updates. Oursupplier management team is constantly seeking out strategic partnerships with new carriers, negotiating favorable terms on existing contracts, and looking toexpand each supplier’s product portfolio. These partnerships are reflected in long-term contracts, commonly referred to as Master Service Agreements. All ofthese efforts are aimed at providing greater choice, flexibility, and cost savings for our customers. We are committed to using high-quality suppliers, and oursupplier management team continually monitors supplier performance. 1Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Business Overview and Strategy Our customer facing operations are led by two business units - “Americas” and “EMEA/APAC.” Each business unit owns the key customer touch pointsincluding quoting, sales engineering, ordering, provisioning and account management. Because our markets are highly competitive, we believe that personal relationships and quality of service delivery remain important in winning new andrepeat customer business. We therefore sell our services largely through direct sales forces located across the globe, as well as strong agent channelrelationships, with principal concentration in the United States and the United Kingdom. Most of our sales representatives have many years of experience inselling to multinational enterprises, governmental entities, service providers, and carriers. The average sales cycle can be as little as two to six weeks forexisting customers and three to six months or longer for new customers with complicated service requirements. Our sales and marketing efforts are focused on generating new business opportunities through industry contacts, new product offerings, and long-termrelationships with new and existing customers. Our sales activities are specifically focused on recruiting seasoned industry experts with deep ties to the directenterprise, government and wholesale markets, building relationships with our new clients, and driving expansion within existing accounts. Our marketingactivities are designed to generate awareness and familiarity of our value proposition with our target accounts, develop new products to meet the needs of ourcustomer base, and communicate to our target markets, thereby reinforcing our value proposition among our customers’ key decision makers. Our project management teams assure the successful implementation of customer services after the sale. A project manager is assigned to each customerorder to ensure that the underlying network facilities required for the solution are provisioned, that the customer is provided with status reports on its service,and that any difficulties related to the installation of a customer order are proactively managed. Network Operations and Engineering Network Operations include the global Network Operations Center (“NOC”), Data Center, and Information and Communications Technology (“ICT”)groups. The NOC is responsible for the active monitoring, reception, prioritization, and resolution of network-related events in addition to responding to otherclient requirements. ICT manages all internal activities for network, server/desktop, and telecom support. Engineering is responsible for the overall network architecture, including design, deployment, capacity management, and maintenance. Engineering alsoprovides technical support for our business units and the Network Operations group. Competition Our competition consists primarily of traditional, facilities-based providers, including companies that provide network connectivity and internet accessprincipally within one continent or geographical region, such as CenturyLink, KPN, XO and COLT. We also compete against carriers who provide networkconnectivity on a multi-continent, or global basis, such as Level 3, Verizon Business, AT&T, British Telecom, NTT and Deutsche Telekom. Government Regulation In connection with certain of our service offerings, we may be subject to federal, state, and foreign regulations. United States Federal laws and FederalCommunications Commission, or FCC, regulations generally apply to interstate telecommunications and international telecommunications that originate orterminate in the United States, while state laws and regulations apply to telecommunications transmissions ultimately terminating within the same state as thepoint of origination. A foreign country’s laws and regulations apply to telecommunications that originate or terminate in, or in some instances traverse, thatcountry. The regulation of the telecommunications industry is changing rapidly, and varies from state to state and from country to country. Where certification or licensing is required, carriers are required to comply with certain ongoing responsibilities. For example, we may be required to submitperiodic reports to various telecommunications regulatory authorities relating to the provision of services within the relevant jurisdiction. Another potentialongoing responsibility relates to payment of regulatory fees and the collection and remittance of surcharges and fees associated with the provision oftelecommunications services. Some of our services are subject to these assessments, depending upon the jurisdiction, the type of service, and the type ofcustomer. 2Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Federal Regulation Generally, the FCC has chosen not to heavily regulate the charges or practices of non-dominant carriers. For example, we are not required to tariff theinterstate inter-exchange private line services we provide, but need only to post terms and conditions for such services on our website. In providing certaintelecommunications services, however, we may remain subject to the regulatory requirements applicable to common carriers, such as providing services at justand reasonable rates, filing the requisite reports, and paying regulatory fees and contributing to universal service. The FCC also releases orders and takes otheractions from time to time that modify the regulations applicable to services provided by carriers such as us; these orders and actions can result in additional(or reduced) reporting or payment requirements, or changes in the relative rights and obligations of carriers with respect to services they provide to each other orto other categories of customers. These changes in regulation can affect the services that we procure and/or provide and, in some instances, may affect demandfor or the costs of providing our services. State Regulation The Telecommunications Act of 1996, as amended, generally prohibits state and local governments from enforcing any law, rule, or legal requirement thatprohibits or has the effect of prohibiting any person from providing any interstate or intrastate telecommunications service. However, states retain jurisdictionto adopt regulations necessary to preserve universal service, protect public safety and welfare, ensure the continued quality of communications services, andsafeguard the rights of consumers. Generally, each carrier must obtain and maintain certificates of authority from regulatory bodies in states in which it offersintrastate telecommunications services. In most states, a carrier must also file and obtain prior regulatory approval of tariffs containing the rates, terms andconditions of service for its regulated intrastate services. A state may also impose telecommunications regulatory fees, fees related to the support for universalservice, and other costs and reporting obligations on providers of services in that state. We are currently authorized to provide intrastate services in more than20 states and the District of Columbia as an interexchange carrier and/or a competitive local provider. Foreign Regulation Generally, the provisioning to U.S. customers of international telecommunications services originating or terminating in the United States is governed by theFCC. In addition, the regulatory requirements to operate within a foreign country or to provide services to customers within that foreign country vary fromjurisdiction to jurisdiction, although in some respects regulation in the Western European markets is harmonized under the regulatory structure of theEuropean Union. As opportunities arise in particular nations, we may need to apply for and acquire various authorizations to operate and provide certainkinds of telecommunications services. Although some countries require complex application procedures for authorizations and/or impose certain reporting andfee payment requirements, others simply require registration with or notification to the regulatory agency and some simply operate through generalauthorization with no filing requirement at all. Intellectual Property We do not own any patent registrations, applications or licenses. We maintain and protect trade secrets, know-how, and other proprietary informationregarding many of our business processes and related systems and databases. Employees As of December 31, 2013, we had a total of 189 employees and full-time equivalents. Executive Officers Our executive officers and their respective ages and positions as of March 18, 2014 are as follows:Richard D. Calder, Jr., 50, has served as our President, Chief Executive Officer and Director since May 2007. Prior to joining us, from 2004 to 2006,Mr. Calder served as President and Chief Operating Officer of InPhonic, Inc., a publicly-traded online seller of wireless services and products. From 2001 to2003, Mr. Calder served in a variety of executive roles for Broadwing Communications, Inc., including President - Business Enterprises and Carrier Markets.From 1996 to 2001, Mr. Calder held several senior management positions with Winstar Communications, including Chief Marketing Officer, and Presidentof the company’s South Division. In 1994 Mr. Calder co-founded Go Communications, a wireless communications company, and served as its Vice Presidentof Corporate Development from its founding until 1996. Mr. Calder previously held a variety of marketing, business development, and engineering positionswithin MCI Communications, Inc. and Tellabs, Inc. Mr. Calder holds a Master of Business Administration from Harvard Business School and a Bachelor ofScience in Electrical Engineering from Yale University.3Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. H. Brian Thompson, 75, has served as Chairman of our Board of Directors since January 2005, as our Executive Chairman since October 2006, and asour interim Chief Executive Officer from January 2005 to October 2006 and from February 2007 to May 2007. Mr. Thompson continues to head his ownprivate equity investment and advisory firm, Universal Telecommunications, Inc. From December 2002 to June 2007, Mr. Thompson was Chairman ofComsat International, one of the largest independent telecommunications operators serving all of Latin America. He also served as Chairman and ChiefExecutive Officer of Global TeleSystems Group, Inc. from March 1999 through September of 2000. Mr. Thompson was Chairman and CEO of LCIInternational from 1991 until its merger with Qwest Communications International Inc. in June 1998, and became Vice Chairman of the board for Qwestuntil his resignation in December 1998. He previously served as Executive Vice President of MCI Communications Corporation from 1981 to 1990, andprior to MCI, was a management consultant with the Washington, DC offices of McKinsey & Company for nine years, where he specialized in themanagement of telecommunications. Mr. Thompson currently serves as a member of the board of directors of Axcelis Technologies, Inc., Pendrell Corporation,Penske Automotive Group, and Sonus Networks, Inc., and is a member of the Irish Prime Minister’s Ireland-America Economic Advisory Board.Mr. Thompson holds a Master of Business Administration from Harvard Business School, and holds an undergraduate degree in chemical engineering fromthe University of Massachusetts. Michael R. Bauer, 41, has served as our Chief Financial Officer since June 2012, as our Principal Accounting Officer between December 2011 and June2012, as our Treasurer since December 2011, and between January 2008 and December 2011, Mr. Bauer served the Company in various roles including mostrecently as Vice President of Finance and Controller. Mr. Bauer oversees all global financial functions and has direct responsibility for financial operations,investor relations activities, and all banking and advisory relationships. Prior to joining GTT, Mr. Bauer led the financial planning and analysis and investorrelations efforts at MeriStar Hospitality Corporation. Mr. Bauer’s previous telecommunications experience includes Sprint and OneMain.com, an internetservice provider. Mr. Bauer began his career with Arthur Andersen in audit and business advisory services. Mr. Bauer is a Certified Public Accountant andholds his Bachelor of Science degree in Accounting from the Pennsylvania State University. Chris McKee, 45, joined GTT in 2008 and is GTT's General Counsel and EVP, Corporate Development and Corporate Secretary for the GTT Board. Mr.McKee is responsible for all of the company’s corporate legal requirements, human resources and supplier management. Mr. McKee also oversees thedevelopment of strategic business opportunities for the company, including all merger and acquisition activities. Mr. McKee has over 20 years of broad legalexperience in the telecommunications industry. Prior to joining GTT, he served as General Counsel for StarVox Communications where he was responsible forthe company's legal department, mergers and acquisitions, employment law, litigation, and legal support for the sales teams. Mr. McKee also formerly servedas Vice President and Assistant General Counsel for Covad Communications where he headed Covad's Washington, DC office and directed the federal andstate regulatory compliance and advocacy efforts for the company. Mr. McKee previously worked for XO Communications, Net2000 Communications andwas in private practice in Washington, DC as an associate at Dickstein Shapiro and Cooley LLP. Mr. McKee earned a law degree from Syracuse Universityand received his Bachelor of Arts from Colby College.Available Information The public may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 450 Fifth Street, NW, Washington, DC 20549.The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Our annual reports on Form 10-K,quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to such reports filed with or furnished to the SEC pursuant to Section 13(a)or 15(d) of the Securities Exchange Act of 1934 are available free of charge on the SEC website at www.sec.gov and on our website at www.gtt.net as soon asreasonably practicable after such material is electronically filed with or furnished to the SEC.ITEM 1A. RISK FACTORS We operate in a rapidly changing environment that involves a number of risks, some of which are beyond our control. Below are the risks and uncertaintieswe believe are most important for you to consider. Additional risks and uncertainties not presently known to us, which we currently deem immaterial or whichare similar to those faced by other companies in our industry or telecommunications and/or technology companies in general, may also impair our businessoperations. If any of these risks or uncertainties actually occurs, our business, financial condition and operating results could be materially adversely affected. 4Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Risks Relating to Our Business and Operations We depend on several large customers, and the loss of one or more of these customers, or a significant decrease in total revenue from any of thesecustomers, would likely reduce our revenue and income. For the year ended December 31, 2013, our five largest customers accounted for approximately 18% of our total service revenue. If we were to lose all of theunderlying services from one or more of our large customers, or if one or more of our large customers were to significantly reduce the services purchased fromus or otherwise renegotiate the terms on which services are purchased from us, our revenue could decline and our results of operations would suffer. If our customers elect to terminate their agreements with us, our business, financial condition and results of operations may be adversely affected. Our services are sold under agreements that generally have initial terms of between one and three years. Following the initial terms, these agreementsgenerally automatically renew for successive month-to-month, quarterly or annual periods, but can be terminated by the customer without cause with relativelylittle notice during a renewal period. In addition, certain government customers may have rights under Federal law with respect to termination for conveniencethat can serve to minimize or eliminate altogether the liability payable by that customer in the event of early termination. Our customers may elect to terminatetheir agreements as a result of a number of factors, including their level of satisfaction with the services they are receiving, their ability to continue theiroperations due to budgetary or other concerns and the availability and pricing of competing services. If customers elect to terminate their agreements with us,our business, financial condition and results of operation may be adversely affected.Competition in the industry in which we do business is intense and growing, and our failure to compete successfully could make it difficult for usto add and retain customers or increase or maintain revenue. The markets in which we operate are rapidly evolving and highly competitive. We currently or potentially compete with a variety of companies, includingsome of our transport suppliers, with respect to their products and services, including global and regional telecommunications service providers such asAT&T, British Telecom, NTT, Level 3, Qwest and Verizon, among others. The industry in which we operate is consolidating, which is increasing the size and scope of our competitors. Competitors could benefit from assets orbusinesses acquired from other carriers or from strategic alliances in the telecommunications industry. New entrants could enter the market with a businessmodel similar to ours. Our target markets may support only a limited number of competitors. Operations in such markets with multiple competitive providersmay be unprofitable for one or more of such providers. Prices in the data transmission and internet access business have declined in recent years and maycontinue to decline. Many of our potential competitors have certain advantages over us, including: •substantially greater financial, technical, marketing, and other resources, including brand or corporate name recognition;•substantially lower cost structures, including cost structures of facility-based providers who have reduced debt and other obligations throughbankruptcy or other restructuring proceedings;•larger client bases;•longer operating histories;•more established relationships in the industry; and•larger geographic presence.Our competitors may be able to use these advantages to: •develop or adapt to new or emerging technologies and changes in client requirements more quickly;•take advantage of acquisitions and other opportunities more readily;•enter into strategic relationships to rapidly grow the reach of their networks and capacity;5Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.•devote greater resources to the marketing and sale of their services;•adopt more aggressive pricing and incentive policies, which could drive down margins; and•expand their offerings more quickly.If we are unable to compete successfully against our current and future competitors, our revenue and gross margin could decline and we would lose marketshare, which could materially and adversely affect our business. We might require additional capital to support business growth, and this capital might not be available on favorable terms, or at all. Our operations or expansion efforts may require substantial additional financial, operational and managerial resources. As of December 31, 2013, we hadapproximately $5.8 million in cash, and our current liabilities were $28.3 million greater than current assets. We may have insufficient cash to fund ourworking capital or other capital requirements and may be required to raise additional funds to continue or expand our operations. If we are required to obtainadditional funding in the future, we may have to sell assets, seek debt financing, or obtain additional equity capital. Our ability to sell assets or raiseadditional equity or debt capital will depend on the condition of the capital and credit markets and our financial condition at such time. Accordingly,additional capital may not be available to us, or may only be available on terms that adversely affect our existing stockholders, or that restrict our operations.For example, if we raise additional funds through issuances of equity or convertible debt securities, our existing stockholders could suffer dilution, and anynew equity securities we issue could have rights, preferences, and privileges superior to those of holders of our common stock. Also, if we were forced to sellassets, there can be no assurance regarding the terms and conditions we could obtain for any such sale, and if we were required to sell assets that are importantto our current or future business, our current and future results of operations could be materially and adversely affected. We have granted security interests insubstantially all of our assets to secure the repayment of our indebtedness maturing between 2014 and 2016, and if we are unable to satisfy our obligations,the lenders could foreclose on their security interests. Because our business is dependent upon selling telecommunications network capacity purchased from third parties, the failure of our suppliersand other service providers to provide us with services, or disputes with those suppliers and service providers, could affect our ability to providequality services to our customers and have an adverse effect on our operations and financial condition. Much of our business consists of integrating and selling network capacity purchased from facility-based telecommunications carriers. Accordingly, we willbe largely dependent on third parties to supply us with services. Occasionally in the past, our operating companies have experienced delays or other problemsin receiving services from third-party providers. Disputes also arise from time to time with suppliers with respect to billing or interpretation of contract terms.Any failure on the part of third parties to adequately supply us or to maintain the quality of their facilities and services in the future, or the termination of anysignificant contracts by a supplier, could cause customers to experience delays in service and lower levels of customer care, which could cause them to switchproviders. Furthermore, disputes over billed amounts or interpretation of contract terms could lead to claims against us, some of which if resolved against uscould have an adverse impact on our results of operations and/or financial condition. Suppliers may also attempt to impose onerous terms as part of purchasecontract negotiations. Although we know of no pending or threatened claims with respect to past compliance with any such terms, claims asserting any pastnoncompliance, if successful, could have a material adverse effect on our operations and/or financial condition. Moreover, to the extent that key suppliers wereto attempt to impose such provisions as part of future contract negotiations, such developments could have an adverse impact on the company’s operations.Finally, some of our suppliers are potential competitors. We cannot guarantee that we will be able to obtain use of facilities or services in a timely manner or onterms acceptable and in quantities satisfactory to us. Industry consolidation may affect our ability to obtain services from suppliers on a timely or cost-efficient basis. A principal method of connecting with our customers is through local transport and last mile circuits we purchase from incumbent carriers such as AT&Tand Verizon, or competitive carriers such as Time Warner Telecom, XO, or Level 3. In recent years, AT&T, Verizon, and Level 3 have acquired competitorswith significant local and/or long-haul network assets. Industry consolidation has occurred on a lesser scale as well through mergers and acquisitionsinvolving regional or smaller national or international competitors. Generally speaking, we believe that a marketplace with multiple supplier options fortransport access is important to the long-term availability of competitive pricing, service quality, and carrier responsiveness. It is unclear at this time what thelong-term impact of such consolidation will be, or whether it will continue at the same pace as it has in recent years; we cannot guarantee that we will6Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.continue to be able to obtain use of facilities or services in a timely manner or on terms acceptable and in quantities satisfactory to us from such suppliers. We may occasionally have certain sales commitments to customers that extend beyond the Company’s commitments from its underlying suppliers. The Company’s financial results could be adversely affected if the Company were unable to purchase extended service from a supplier at a cost sufficientlylow to maintain the Company’s margin for the remaining term of its commitment to a customer. While the Company has not encountered material priceincreases from suppliers with respect to continuation or renewal of services after expiration of initial contract terms, the Company cannot be certain that itwould be able to obtain similar terms and conditions from suppliers. In most cases where the Company has faced any price increase from a supplier followingcontract expiration, the Company has been able to locate another supplier to provide the service at a similar or reduced future cost; however, the Company’ssuppliers may not provide services at such cost levels in the future. We may make purchase commitments to vendors for longer terms or in excess of the volumes committed by our underlying customers. The Company attempts to match its purchase of network capacity from its suppliers and its service commitments from its customers. However, from timeto time, the Company has obligations to its suppliers that exceed the duration of the Company’s related customer contracts or that are for capacity in excess ofthe amount for which it has Customer commitments. This could arise based upon the terms and conditions available from the Company’s suppliers, from anexpectation of the Company that we will be able to utilize the excess capacity, as a result of a breach of a customer’s commitment to us, or to support fixedelements of the Company’s network. Under any of these circumstances, the Company would incur the cost of the network capacity from its supplier withouthaving corresponding revenue from its customers, which could result in a material and adverse impact on the Company’s operating results. System disruptions, either in our network or in third party networks on which we depend, could cause delays or interruptions of our service,which could cause us to lose customers, or incur additional expenses. Our customers depend on our ability to provide network availability with minimal interruption or degradation in services. The ability to provide this servicedepends in part on the networks of third party transport suppliers. The networks of transport suppliers may be interrupted as a result of various events,many of which they cannot control, including fire, human error, earthquakes and other natural disasters, power loss, telecommunications failures, terrorism,sabotage, vandalism, cyber-attacks, computer viruses or other infiltration by third parties or the financial distress or other events adversely affecting asupplier, such as bankruptcy or liquidation. Although we have attempted to design our network services to minimize the possibility of service disruptions or other outages, in addition to risks associatedwith third party provider networks, our services may be disrupted by problems on our own systems, that affect our central offices, corporate headquarters,network operations centers, or network equipment. Our network, including our routers, may be vulnerable to unauthorized access, computer viruses, cyber-attacks, distributed denial of service (DDOS), and other security breaches. An attack on or security breach of our network could result in interruption orcessation of services, our inability to meet our service level commitments, and potentially compromise customer data transmitted over our network. There arecertain locations through which a large amount of our Internet traffic passes. Examples are facilities in which we exchange traffic with other carriers, thefacilities through which our transatlantic traffic passes, and certain of our network hub sites. If any of these facilities were destroyed or seriously damaged asignificant amount of our network traffic could be disrupted. The continued threat of terrorist activity and other acts of war or hostility have had, and maycontinue to have, an adverse effect on business, financial and general economic conditions internationally. We are also susceptible to other catastrophic eventssuch as major natural disasters, extreme weather, fire or similar events that could affect our headquarters, other offices, our network, infrastructure orequipment, which could adversely affect our business. Disruptions or degradations in our service could subject us to legal claims and liability for losses suffered by customers due to our inability to provideservice. If our network failure rates are higher than permitted under the applicable customer contracts, we may incur significant expenses related to networkoutage credits, which would reduce our revenue and gross margin. In addition, customers may, under certain contracts, have the ability to terminate servicesin case of prolonged or severe service disruptions or other outages which would also adversely impact our results of operations. Our reputation could beharmed if we fail to provide a reasonably adequate level of network availability, and as a result we could find it more difficult to attract and retain customers. 7Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.If the products or services that we market or sell do not maintain market acceptance, our results of operations will be adversely affected. Certain segments of the telecommunications industry are dependent on developing and marketing new products and services that respond to technologicaland competitive developments and changing customer needs. We cannot assure you that our products and services will gain or obtain increased marketacceptance. Any significant delay or failure in developing new or enhanced technology, including new product and service offerings, could result in a loss ofactual or potential market share and a decrease in revenue. The communications market in which we operate is highly competitive; we could be forced to reduce prices, may lose customers to other providers thatoffer lower prices and have problems attracting new customers. The communications industry is highly competitive and pricing for some of our key service offerings, such as our dedicated IP transport services, has beengenerally declining. If our costs of service, including the cost of leasing underlying facilities, do not decline in a similar fashion, we could experiencesignificant margin compression, reduction of profitability and loss of business. If carrier and enterprise connectivity demand does not continue to expand, we may experience a shortfall in revenue or earnings or otherwise failto meet public market expectations. The growth of our business will be dependent, in part, upon the increased use of carrier and enterprise connectivity services and our ability to capture ahigher proportion of this market. Increased usage of enterprise connectivity services depends on numerous factors, including: •the willingness of enterprises to make additional information technology expenditures;•the availability of security products necessary to ensure data privacy over the public networks;•the quality, cost, and functionality of these services and competing services;•the increased adoption of wired and wireless broadband access methods;•the continued growth of broadband-intensive applications; and•the proliferation of electronic devices and related applications.Our long sales and service deployment cycles require us to incur substantial sales costs that may not result in related revenue. Our business is characterized by long sales cycles between the time a potential customer is contacted and a customer contract is signed. The average salescycle can be as little as two to six weeks for existing customers and three to six months or longer for new customers with complicated service requirements.Furthermore, once a customer contract is signed, there is typically an extended period of between 30 and 120 days before the customer actually begins to usethe services, which is when we begin to realize revenue. As a result, we may invest a significant amount of time and effort in attempting to secure a customer,which investment may not result in near term, if any, revenue. Even if we enter into a contract, we will have incurred substantial sales-related expenses wellbefore we recognize any related revenue. If the expenses associated with sales increase, if we are not successful in our sales efforts, or if we are unable togenerate associated offsetting revenue in a timely manner, our operating results could be materially and adversely affected. Because much of our business is international, our financial results may be affected by foreign exchange rate fluctuations. Approximately 43% of our revenue comes from countries outside of the United States. As such, other currencies, particularly the Euro and the BritishPound Sterling can have an impact on the Company’s results (expressed in U.S. Dollars). Currency variations also contribute to variations in sales inimpacted jurisdictions. Accordingly, fluctuations in foreign currency rates, most notably the strengthening of the dollar against the Euro and the Pound, couldhave a material impact on our revenue growth in future periods. In addition, currency variations can adversely affect margins on sales of our products incountries outside of the United States and margins on sales of products that include components obtained from suppliers located outside of the United States. 8Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Because much of our business is international, we may be subject to local taxes, tariffs, statutory requirements, or other restrictions in foreigncountries, which may reduce our profitability. The Company is subject to various risks associated with conducting business worldwide. Revenue from our foreign subsidiaries, or other locations wherewe provide or procure services internationally, may be subject to additional taxes in some foreign jurisdictions. Additionally, some foreign jurisdictions maysubject us to additional withholding tax requirements or the imposition of tariffs, exchange controls, or other restrictions on foreign earnings. The Company isalso subject to foreign government employment standards, labor strikes and work stoppages. These risks and any other restrictions imposed on our foreignoperations may increase our costs of business in those jurisdictions, which in turn may reduce our profitability. If our goodwill or amortizable intangible assets become impaired we may be required to record a significant charge to earnings. Under generally accepted accounting principles, we review our amortizable intangible assets for impairment when events or changes in circumstancesindicate the carrying value may not be recoverable. Goodwill is tested for impairment at least annually. Factors that may be considered a change incircumstances indicating that the carrying value of our goodwill or amortizable intangible assets may not be recoverable include, reduced future cash flowestimates, a decline in stock price and market capitalization, and slower growth rates in our industry. During the years ended December 31, 2013 and 2012,the Company recorded no impairment to goodwill and amortizable intangible assets. We may be required to record a significant charge to earnings in ourfinancial statements during the period in which any impairment of our goodwill or amortizable intangible assets is determined, negatively impacting our resultsof operations. The ability to implement and maintain our databases and management information systems is a critical business requirement, and if we cannotobtain or maintain accurate data or maintain these systems, we might be unable to cost-effectively provide solutions to our customers. To be successful, we must increase and update information in our databases about network pricing, capacity and availability. Our ability to provide cost-effective network availability and access cost management depends upon the information we collect from our transport suppliers regarding their networks.These suppliers are not obligated to provide this information and could decide to stop providing it to us at any time. Moreover, we cannot be certain that theinformation that these suppliers share with us is accurate. If we cannot continue to maintain and expand the existing databases, we may be unable to increaserevenue or to facilitate the supply of services in a cost-effective manner. If we are unable to protect our intellectual property rights, competitors may be able to use our technology or trademarks, which could weaken ourcompetitive position. We own certain proprietary programs, software and technology. However, we do not have any patented technology that would preclude competitors fromreplicating our business model; instead, we rely upon a combination of know-how, trade secret laws, contractual restrictions, and copyright, trademark andservice mark laws to establish and protect our intellectual property. Our success will depend in part on our ability to maintain or obtain (as applicable) andenforce intellectual property rights for those assets, both in the United States and in other countries. Although our Americas operating company has registeredsome of its service marks in the United States, we have not otherwise applied for registration of any marks in any other jurisdiction. Instead, with theexception of the few registered service marks in the United States, we rely exclusively on common law trademark rights in the countries in which we operate. We may file applications for patents, copyrights and trademarks as our management deems appropriate. We cannot assure you that these applications, iffiled, will be approved or that we will have the financial and other resources necessary to enforce our proprietary rights against infringement by others.Additionally, we cannot assure you that any patent, trademark, or copyright obtained by us will not be challenged, invalidated, or circumvented, and the lawsof certain foreign countries may not protect intellectual property rights to the same extent as do the laws of the United States or the member states of theEuropean Union. Finally, although we intend to undertake reasonable measures to protect the proprietary assets of our combined operations, we cannotguarantee that we will be successful in all cases in protecting the trade secret status of certain significant intellectual property assets. If these assets should bemisappropriated, if our intellectual property rights are otherwise infringed, or if a competitor should independently develop similar intellectual property, thiscould harm our ability to attract new clients, retain existing customers and generate revenue.9Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Intellectual property and proprietary rights of others could prevent us from using necessary technology to provide our services or otherwiseoperate our business. We utilize data and processing capabilities available through commercially available third-party software tools and databases to assist in the efficientanalysis of network engineering and pricing options. Where such technology is held under patent or other intellectual property rights by third parties, we arerequired to negotiate license agreements in order to use that technology. In the future, we may not be able to negotiate such license agreements at acceptable pricesor on acceptable terms. If an adequate substitute is not available on acceptable terms and at an acceptable price from another software licensor, we could becompelled to undertake additional efforts to obtain the relevant network and pricing data independently from other, disparate sources, which, if available atall, could involve significant time and expense and adversely affect our ability to deliver network services to customers in an efficient manner. Furthermore, to the extent that we are subject to litigation regarding the ownership of our intellectual property or the licensing and use of others’ intellectualproperty, this litigation could: •be time-consuming and expensive;•divert attention and resources away from our daily business;•impede or prevent delivery of our products and services; and•require us to pay significant royalties, licensing fees, and damages.Parties making claims of infringement may be able to obtain injunctive or other equitable relief that could effectively block our ability to provide ourservices and could cause us to pay substantial damages. In the event of a successful claim of infringement, we may need to obtain one or more licenses fromthird parties, which may not be available at a reasonable cost, if at all. The defense of any lawsuit could result in time-consuming and expensive litigation,regardless of the merits of such claims, and could also result in damages, license fees, royalty payments, and restrictions on our ability to provide ourservices, any of which could harm our business. We continue to evaluate merger and acquisition opportunities and may purchase additional companies in the future, and the failure to integratethem successfully with our existing business may adversely affect our financial condition and results of operations. We continue to explore merger and acquisition opportunities and we may face difficulties if we acquire other businesses in the future including: •integrating the management personnel, services, products, systems and technologies of the acquired businesses into our existing operations;•retaining key personnel of the acquired businesses;•failing to adequately identify or assess liabilities of acquired businesses;•retaining existing customers and/or vendors of both companies;•failing to achieve the synergies, revenue growth and other expected benefits we used to determine the purchase price of the acquired businesses;•failing to realize the anticipated benefits of a particular merger and acquisition;•incurring significant transaction and acquisition-related costs;•incurring unanticipated problems or legal liabilities;•being subject to business uncertainties and contractual restrictions while an acquisition is pending that could adversely affect our business; and10Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.•diverting our management’s attention from the day-to-day operation of our business.These difficulties could disrupt our ongoing business and increase our expenses. As of the date of the filing of this Form 10-K, we have no agreement ormemorandum of understanding to enter into any acquisition transaction. In addition, our ability to complete acquisitions may depend, in part, on our ability to finance these acquisitions, including both the costs of the acquisitionand the cost of the subsequent integration activities. Our ability may be constrained by our cash flow, the level of our indebtedness, restrictive covenants in theagreements governing our indebtedness, conditions in the securities and credit markets and other factors, most of which are generally beyond our control. If weproceed with one or more acquisitions in which the consideration consists of cash, we may use a substantial portion of our available cash to complete suchacquisitions, thereby reducing our liquidity. If we finance one or more acquisitions with the proceeds of indebtedness, our interest expense and debt servicerequirements could increase materially. Thus, the financial impact of future acquisitions, including the costs to pursue acquisitions that do not ultimatelyclose, could materially affect our business and could cause substantial fluctuations in our quarterly and yearly operating results. Our efforts to develop new service offerings may not be successful, in which case our revenue may not grow as we anticipate or may decline. The market for telecommunications services is characterized by rapid change, as new technologies are developed and introduced, often renderingestablished technologies obsolete. For our business to remain competitive, we must continually update our service offerings to make new technologies availableto our customers and prospects. To do so, we may have to expend significant management and sales resources, which may increase our operating costs. Thesuccess of our potential new service offerings is uncertain and would depend on a number of factors, including the acceptance by end-user customers of thetelecommunications technologies which would underlie these new service offerings, the compatibility of these technologies with existing customer informationtechnology systems and processes, the compatibility of these technologies with our then-existing systems and processes, and our ability to find third-partyvendors that would be willing to provide these new technologies to us for delivery to our users. If we are unsuccessful in developing and selling new serviceofferings, our revenue may not grow as we anticipate, or may decline. If we do not continue to train, manage and retain employees, clients may reduce purchases of services. Our employees are responsible for providing clients with technical and operational support, and for identifying and developing opportunities to provideadditional services to existing clients. In order to perform these activities, our employees must have expertise in areas such as telecommunications networktechnologies, network design, network implementation and network management, including the ability to integrate services offered by multipletelecommunications carriers. They must also accept and incorporate training on our systems and databases developed to support our operations and businessmodel. Employees with this level of expertise tend to be in high demand in the telecommunications industry, which may make it more difficult for us to attractand retain qualified employees. If we fail to train, manage, and retain our employees, we may be limited in our ability to gain more business from existingclients, and we may be unable to obtain or maintain current information regarding our clients’ and suppliers’ communications networks, which could limitour ability to provide future services. The regulatory framework under which we operate could require substantial time and resources for compliance, which could make it difficult andcostly for us to operate the businesses. In providing certain interstate and international telecommunications services, we must comply, or cause our customers or carriers to comply, withapplicable telecommunications laws and regulations prescribed by the FCC and applicable foreign regulatory authorities. In offering services on an intrastatebasis, we may also be subject to state laws and to regulation by state public utility commissions. Our international services may also be subject to regulationby foreign authorities and, in some markets, multinational authorities, such as the European Union. The costs of compliance with these regulations, includinglegal, operational and administrative expenses, may be substantial. In addition, delays in receiving or failure to obtain required regulatory approvals or theenactment of new or adverse legislation, regulations or regulatory requirements may have a material adverse effect on our financial condition, results ofoperations and cash flow. If we fail to obtain required authorizations from the FCC or other applicable authorities, or if we are found to have failed to comply, or are alleged to havefailed to comply, with the rules of the FCC or other authorities, our right to offer certain services could be challenged and/or fines or other penalties could beimposed on us. Any such challenges or fines could be substantial and could cause us to incur substantial legal and administrative expenses as well; thesecosts in the forms of fines, penalties, and legal and administrative expenses could have a material adverse impact, on our business and operations.Furthermore, we are dependent in certain cases on the services other carriers provide, and therefore on other carriers’ abilities to retain their respective licensesin the regions of the11Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.world in which they operate. We are also dependent, in some circumstances, on our customers’ abilities to obtain and retain the necessary licenses. The failureof a customer or carrier to obtain or retain any necessary license could have an adverse effect on our ability to conduct operations. Future changes in regulatory requirements, new interpretations of existing regulatory requirements, or determinations that we violated existingregulatory requirements may impair our ability to provide services, result in financial losses or otherwise reduce our profitability. Many of the laws and regulations that apply to providers of telecommunications services are subject to frequent changes and different interpretations andmay vary between jurisdictions. Changes to existing legislation or regulations in particular markets may limit the opportunities that are available to enter intomarkets, may increase the legal, administrative, or operational costs of operating in those markets, or may constrain other activities, including our ability tocomplete subsequent acquisitions, or purchase services or products, in ways that we cannot anticipate. Because we purchase telecommunications servicesfrom other carriers, our costs and manner of doing business can also be adversely affected by changes in regulatory policies affecting these other carriers. In addition, any determination that we, including companies that we have acquired, have violated applicable regulatory requirements could result in materialfines, penalties, forfeitures, interest or retroactive assessments. For example, a determination that we have not paid all required universal service fundcontributions could result in substantial retroactive assessment of universal service fund contributions, together with applicable interest, penalties, fines orforfeitures. We depend on key personnel to manage our businesses effectively in a rapidly changing market, and our ability to generate revenue will suffer ifwe are unable to retain key personnel and hire additional personnel. The future success, strategic development and execution of our business will depend upon the continued services of our executive officers and other keysales, marketing and support personnel. We do not maintain “key person” life insurance policies with respect to any of our employees, nor are we certain ifany such policies will be obtained or maintained in the future. We may need to hire additional personnel in the future and we believe the success of thecombined business depends, in large part, upon our ability to attract and retain key employees. The loss of the services of any key employees, the inability toattract or retain qualified personnel in the future, or delays in hiring required personnel could limit our ability to generate revenue and to operate our business.Our business and operations are growing rapidly and we may not be able to efficiently manage our growth.We have rapidly grown our company through network expansion and obtaining new customers through our sales efforts. Our expansion places significantstrains on our management, operational and financial infrastructure. Our ability to manage our growth will be particularly dependent upon our ability to:•expand, develop and retain an effective sales force and qualified personnel;•maintain the quality of our operations and our service offerings;•maintain and enhance our system of internal controls to ensure timely and accurate compliance with our financial and regulatory reportingrequirements; and•expand our accounting and operational information systems in order to support our growth.If we fail to implement these measures successfully, our ability to manage our growth will be impaired. Interruption or failure of our information technology and communications systems could hurt our ability to effectively provide our products andservices, which could damage our reputation and harm our operating results. The availability of our products and services depends on the continuing operation of our information technology and communications systems. Oursystems are vulnerable to damage or interruption from earthquakes, terrorist attacks, floods, fires, power loss, telecommunications failures, computerviruses, computer denial of service attacks or other attempts to harm our systems. Some of our systems are not fully redundant and our disaster recoveryplanning cannot account for all eventualities. The occurrence of a natural disaster, a decision to close a facility we are using without adequate notice forfinancial reasons, or other unanticipated problems at our data centers could result in lengthy interruptions in our service. 12Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Risks Relating to Our Indebtedness Our failure to comply with covenants in our loan agreements could result in our indebtedness being immediately due and payable and the loss ofour assets.Pursuant to the terms of our loan agreements, we have pledged substantially all of our assets to the lenders as security for our payment obligations underthe loan agreements. If we fail to pay any of our indebtedness under the loan agreements when due, or if we breach any of the other covenants in the loanagreements, it may result in one or more events of default. An event of default under our loan agreements would permit the lenders to declare all amounts owingto be immediately due and payable and, if we were unable to repay any indebtedness owed, the lenders could proceed against the collateral securing thatindebtedness.Covenants in our loan agreements and outstanding notes, and in any future debt agreements, may restrict our future operations. The loan agreements related to our outstanding senior and mezzanine indebtedness impose financial restrictions that limit our discretion on some businessmatters, which could make it more difficult for us to expand our business, finance our operations and engage in other business activities that may be in ourinterest. These restrictions include compliance with, or maintenance of, certain financial tests and ratios and restrictions that limit our ability and that of oursubsidiaries to, among other things: •incur additional indebtedness or place additional liens on our assets;•pay dividends or make other distributions on, redeem or repurchase our capital stock;•make investments or repay subordinated indebtedness;•enter into transactions with affiliates;•sell assets;•engage in a merger, consolidation or other business combination; or•change the nature of our businesses.Any additional indebtedness we may incur in the future may subject us to similar or even more restrictive conditions. Our substantial level of indebtedness and debt service obligations could impair our financial condition, hinder our growth and put us at acompetitive disadvantage. As of December 31, 2013, our indebtedness was substantial in comparison to our available cash and our cash provided by operations. Our substantial levelof indebtedness could have important consequences for our business, results of operations and financial condition. For example, a high level of indebtednesscould, among other things: •make it more difficult for us to satisfy our financial obligations;•increase our vulnerability to general adverse economic and industry conditions, including interest rate fluctuations;•increase the risk that a substantial decrease in cash flows from operating activities or an increase in expenses will make it difficult for us to meetour debt service requirements and will require us to modify our operations;•require us to dedicate a substantial portion of our cash flow from operations to make payments on our indebtedness, thereby reducing theavailability of our cash flow to fund future business opportunities, working capital, capital expenditures and other general corporate purposes;•limit our ability to borrow additional funds to expand our business or ease liquidity constraints;•limit our ability to refinance all or a portion of our indebtedness on or before maturity;13Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.•limit our ability to pursue future acquisitions;•limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; and•place us at a competitive disadvantage relative to competitors that have less indebtedness.Risks Related to our Common Stock and the Securities Markets Because we do not currently intend to pay dividends on our common stock, stockholders will benefit from an investment in our common stock onlyif it appreciates in value. We do not currently anticipate paying any dividends on shares of our common stock. Any determination to pay dividends in the future will be made by ourBoard of Directors and will depend upon results of operations, financial conditions, contractual restrictions, restrictions imposed by applicable law and otherfactors our Board of Directors deems relevant. Accordingly, realization of a gain on stockholders’ investments will depend on the appreciation of the price ofour common stock. There is no guarantee that our common stock will appreciate in value or even maintain the price at which stockholders purchased theirshares. Our outstanding warrants may have an adverse effect on the market price of our common stock. As of December 31, 2013, we had outstanding warrants to purchase approximately 2.3 million shares of our common stock at a weighted-average exerciseprice equal to $2.34 per share. The common stock underlying the warrants is entitled to registration rights for sale in the public market at or soon after exerciseor conversion. If, and to the extent, these warrants are exercised, stockholders may experience dilution to their ownership interests in the Company. Thepresence of this additional number of shares of common stock and warrants eligible for trading in the public market may have an adverse effect on the marketprice of our common stock. The concentration of our capital stock ownership will likely limit a stockholder’s ability to influence corporate matters, and could discourage atakeover that stockholders may consider favorable and make it more difficult for a stockholder to elect directors of its choosing. H. Brian Thompson, the Company’s Executive Chairman of the Board of Directors, and Universal Telecommunications, Inc., his own private equityinvestment and advisory firm, owned 6,746,171 shares of our common stock at December 31, 2013. Based on the number of shares of our common stockoutstanding on December 31, 2013, Mr. Thompson and Universal Telecommunications, Inc. would beneficially own approximately 29% of our commonstock. Based on public filings with the SEC made by J. Carlo Cannell, we believe that, as of December 31, 2013, funds associated with Cannell Capital LLCowned 3,371,880 shares of our common stock. Based on the number of shares of our common stock outstanding on December 31, 2013, these funds wouldbeneficially own approximately 14% of our common stock. In addition, as of December 31, 2013, our executive officers, directors and affiliated entities,excluding H. Brian Thompson and Universal Telecommunications, Inc., together beneficially owned common stock, without taking into account theirunexercised options, representing approximately 12% of our common stock. As a result, these stockholders have the ability to exert significant control overmatters that require approval by our stockholders, including the election of directors and approval of significant corporate transactions. The interests of thesestockholders might conflict with your interests as a holder of our securities, and it may cause us to pursue transactions that, in their judgment, could enhancetheir equity investments, even though such transactions may involve significant risks to you as a security holder. The large concentration of ownership in asmall group of stockholders might also have the effect of delaying or preventing a change of control of GTT that other stockholders may view as beneficial. It may be difficult for you to resell shares of our common stock if an active market for our common stock does not develop. Our common stock has only recently been listed on the NYSE MKT, and prior to this listing the common stock was thinly traded on the OTC Markets. If a liquid market for the common stock does not develop on the NYSE MKT, then, in addition to the concentrated ownership of our capital stock, this mayfurther impair your ability to sell your shares when you want to do so and could depress our stock price. As a result, you may find it difficult to dispose of,or to obtain accurate quotations of the price of, our securities because smaller quantities of shares could be bought and sold, transactions could be delayed,and security analyst and news coverage of the Company may be limited. These factors could result in lower prices and larger spreads in the bid and askprices for our shares.ITEM 1B. UNRESOLVED STAFF COMMENTSNot applicable.14Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.ITEM 2. PROPERTIESThe Company does not own any real estate. Instead, all of the Company’s facilities are leased. GTT’s headquarters are located in McLean, Virginia. Wealso lease corporate office space in the following cities around the world:•North America: Chicago, IL; Denver, CO;•Europe: London, England; Cagliari, Italy; Milan, Italy; Frankfurt, Germany; Belfast, IrelandWe lease data center space in Chicago, IL to house our networking equipment. We believe our properties, taken as a whole, are in good operating conditionand are adequate for our business needs. ITEM 3. LEGAL PROCEEDINGS From time to time, the Company is a party to legal proceedings arising in the normal course of its business. Aside from the matters discussed below, theCompany does not believe that it is a party to any pending legal action that could reasonably be expected to have a material adverse effect on its business oroperating results, financial position or cash flows. The Company filed a civil complaint against Artel, LLC on June 15, 2012 in the Fairfax County Virginia Circuit Court; docket number CL2012-04735,alleging breach of contract with respect to telecommunication services provided by the Company. In response to the Company’s complaint, Artel filed acounterclaim against the Company based on allegations of breach of contract and certain business torts. On December 20, 2013, the Court entered a judgmentagainst the Company in the amount of $3.4 million. The Court suspended the judgment, subject to a letter of credit during GTT’s appeal, which is presentlypending in the Supreme Court of Virginia. While the final outcome cannot be predicted, the Company has not accrued for this contingency as it believes it hasa meritorious position on appeal and intends to contest the judgment vigorously.ITEM 4. MINE SAFETY DISCLOSURESNot applicable.15Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.PART IIITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OFEQUITY SECURITIESMarket for Equity Securities Our common stock trades on the NYSE MKT under the symbol “GTT” and has traded on the NYSE MKT since June 17, 2013. Prior to June 17, 2013,our common stock traded on the OTC markets.The following table sets forth, for the calendar quarters indicated, the quarterly high and low sales information of our common stock as reported on theNYSE MKT since June 17, 2013 and the quarterly high and low bid information of our common stock as reported on the OTC Markets for the period priorto June 17, 2013. The bid information listed below for the period prior to June 17, 2013 reflects interdealer prices, without retail markup, markdown, orcommission, and may not necessarily represent actual transactions. Common Stock High Low2012 First Quarter$2.39 $1.12Second Quarter$2.39 $1.75Third Quarter$2.79 $2.10Fourth Quarter$2.82 $1.022013 First Quarter$3.65 $2.55Second Quarter, to June 17$4.25 $2.30Second Quarter, from June 17$4.48 $4.25Third Quarter$5.93 $4.01Fourth Quarter$7.74 $4.83 Dividends We have not paid any dividends on our common stock to date, and do not anticipate paying any dividends in the foreseeable future. Moreover, restrictivecovenants existing in certain promissory notes that we have issued preclude us from paying dividends until those notes are paid in full.ITEM 6. SELECTED FINANCIAL DATANot required as a Smaller Reporting Company.16Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis should be read together with the Company’s Consolidated Financial Statements and related notes thereto beginningon page F-1. Reference is made to “Cautionary Notes Regarding Forward-Looking Statements” which describes important factors that could cause actualresults to differ from expectations and non-historical information contained herein.Overview GTT Communications, Inc. is a Delaware corporation which was incorporated on January 3, 2005. GTT operates a global Tier 1 IP network with one ofthe most interconnected Ethernet service platforms around the world. We provide highly reliable, scalable and secure cloud networking services. Our clientstrust us to deliver solutions with simplicity, speed, and agility. As of December 31, 2013, our customer base was comprised of over 2,000 businesses. Our five largest customers accounted for approximately 18% ofconsolidated revenues for the year ended December 31, 2013. Costs and Expenses The Company’s cost of revenue consists of the costs for its core network consisting of a global Layer 2 Switched Ethernet mesh network as well as IPTransit/Internet Access through approximately 200 PoPs and for off-net procurement of services associated with customer services across North America,EMEA and Asia. The key off-net terms and conditions appearing in both supplier and customer agreements are substantially the same, with margin applied tothe suppliers’ costs, and generally on back-to-back term lengths. There are no wages or overheads included in these costs. From time to time, the Companyhas agreed to certain special commitments with vendors in order to obtain better rates, terms and conditions for the procurement of services from thosevendors. These commitments include volume purchase commitments and purchases on a longer-term basis than the term for which the applicable customerhas committed. Our supplier contracts do not have any market related net settlement provisions. The Company has not entered into, and has no plans to enter into, anysupplier contracts which involve financial or derivative instruments. The supplier contracts are entered into solely for the direct purchase oftelecommunications capacity, which is resold by the Company in its normal course of business. Other than cost of revenue, the Company’s most significant operating expenses are employment costs. As of December 31, 2013, the Company had189 employees and full-time equivalents and employment costs comprised approximately 12% of total operating expenses.Critical Accounting Policies and Estimates The Company’s significant accounting policies are described in Note 2 to its accompanying consolidated financial statements. The Company considers thefollowing accounting policies to be those that require the most significant judgments and estimates in the preparation of its consolidated financial statements,and believes that an understanding of these policies is important to a proper evaluation of the reported consolidated financial results. Revenue Recognition The Company provides cloud networking solutions, such as Ethernet transport and IP transit to its customers. Certain of the Company’s current revenueactivities have features that may be considered multiple elements. The Company believes that there is insufficient evidence to determine each element’s fairvalue and as a result, in those arrangements where there are multiple elements, revenue is recorded ratably over the term of the arrangement. The Company’s services are provided under contracts that typically provide for an installation charge along with payments of recurring charges on amonthly (or other periodic) basis for use of the services over a committed term. Our contracts with customers specify the terms and conditions for providingsuch services. These contracts call for the Company to provide the service in question (e.g., data transmission between point A and point Z), to manage theactivation process, and to provide ongoing support (in the form of service maintenance and trouble-shooting) during the service term. The contracts do nottypically provide the customer any rights to use specifically identifiable assets. Furthermore, the contracts generally provide us with discretion to engineer (orre-engineer) a particular network solution to satisfy each customer’s data transmission requirement, and typically prohibit physical access by the customer tothe network infrastructure used by the Company and its suppliers to deliver the services.17Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.The Company recognizes revenue as follows: Network Services and Support. The Company’s services are provided pursuant to contracts that typically provide for payments of recurring charges on amonthly basis for use of the services over a committed term. Each service contract typically has a fixed monthly cost and a fixed term, in addition to a fixedinstallation charge (if applicable). Variable usage charges are applied when incurred for certain product offerings. At the end of the initial term of most servicecontracts the contracts roll forward on a month-to-month or other periodic basis and continue to bill at the same fixed recurring rate. If any cancellation ortermination charges become due from the customer as a result of early cancellation or termination of a service contract, those amounts are calculated pursuantto a formula specified in each contract. Recurring costs relating to supply contracts are recognized ratably over the term of the contract.Non-recurring Fees, Deferred Revenue. Non-recurring fees for data connectivity typically take the form of one-time, non-refundable provisioning feesestablished pursuant to service contracts. The amount of the provisioning fee included in each contract is generally determined by marking up or passingthrough the corresponding charge from the Company’s supplier, imposed pursuant to the Company’s purchase agreement. Non-recurring revenue earned forproviding provisioning services in connection with the delivery of recurring communications services is recognized ratably over the contractual term of therecurring service starting upon commencement of the service contract term. Fees recorded or billed from these provisioning services are initially recorded asdeferred revenue then recognized ratably over the contractual term of the recurring service. Installation costs related to provisioning incurred by the Companyfrom independent third-party suppliers, directly attributable and necessary to fulfill a particular service contract, and which costs would not have beenincurred but for the occurrence of that service contract, are recorded as deferred contract costs and expensed proportionally over the contractual term of servicein the same manner as the deferred revenue arising from that contract. Deferred costs do not exceed deferred upfront fees. The Company believes the initialcontractual term is the best estimate of the period of earnings. Other Revenue. From time to time, the Company recognizes revenue in the form of fixed or determinable cancellation (pre-installation) or termination (post-installation) charges imposed pursuant to the service contract. This revenue is earned when a customer cancels or terminates a service agreement prior to theend of its committed term. This revenue is recognized when billed if collectability is reasonably assured. In addition, the Company from time to time sellsequipment in connection with data networking applications. The Company recognizes revenue from the sale of equipment at the contracted selling price whentitle to the equipment passes to the customer (generally F.O.B. origin) and when collectability is reasonably assured.Estimating Allowances and Accrued Liabilities The Company employs the “allowance for bad debts” method to account for bad debts. The Company states its accounts receivable balances at amountsdue from the customer net of an allowance for doubtful accounts. The Company determines this allowance by considering a number of factors, including thelength of time receivables are past due, previous loss history, and the customer’s current ability to pay. In the normal course of business from time to time, the Company identifies errors by suppliers with respect to the billing of services. The Companyperforms bill verification procedures to attempt to ensure that errors in its suppliers’ billed invoices are identified and resolved. The bill verification proceduresinclude the examination of bills, comparison of billed rates to rates shown on the actual contract documentation and logged in the Company’s operatingsystems, comparison of circuits billed to the Company’s database of active circuits, and evaluation of the trend of invoiced amounts by suppliers, includingthe types of charges being assessed. If the Company concludes by reference to such objective factors that it has been billed inaccurately, the Company willrecord a liability for the amount that it believes is owed with reference to the applicable contractual rate and, in the instances where the billed amount exceedsthe applicable contractual rate, the likelihood of prevailing with respect to any dispute. These disputes with suppliers generally fall into four categories: pricing errors, network design, start of service date or disconnection errors, and taxationand regulatory surcharge errors. In the instances where the billed amount exceeds the applicable contractual rate the Company does not accrue the full faceamount of obvious billing errors in accounts payable because to do so would present a misleading and confusing picture of the Company’s current liabilitiesby accounting for liabilities that are erroneous based upon a detailed review of objective evidence. If the Company ultimately pays less than the correspondingaccrual in resolution of an erroneously over-billed amount, the Company recognizes the resultant decrease in cost of revenue in the period in which theresolution is reached. If the Company ultimately pays more than the corresponding accrual in resolution of an erroneously billed amount, the Companyrecognizes the resultant cost of revenue increase in the period in which the resolution is reached and during which period the Company makes payment toresolve such account. 18Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Although the Company disputes erroneously billed amounts in good faith and historically has prevailed in most cases, it recognizes that it may not prevailin all cases (or in full) with a particular supplier with respect to such billing errors or it may choose to settle the matter because of the quality of the supplierrelationship or the cost and time associated with continuing the dispute. Careful judgment is required in estimating the ultimate outcome of disputing eacherror, and each reserve is based upon a specific evaluation by management of the merits of each billing error (based upon the bill verification process) and thepotential for loss with respect to that billing error. In making such a case-by-case evaluation, the Company considers, among other things, the documentationavailable to support its assertions with respect to the billing errors, its past experience with the supplier in question, and its past experience with similar errorsand disputes. As of December 31, 2013, the Company had $7.3 million in disputed billings from suppliers. In instances where the Company has been billed less than the applicable contractual rate, the accruals remain on the Company’s consolidated financialstatements until the vendor invoices for the under-billed amount or until such time as the obligations related to the under-billed amounts, based upon applicablecontract terms and relevant statutory periods in accordance with the Company’s internal policy, have passed. If the Company ultimately determines it has nofurther obligation related to the under-billed amounts, the Company recognizes a decrease in expense in the period in which the determination is made.Goodwill and Intangible Assets Goodwill is the excess purchase price paid over identified intangible and tangible net assets of acquired companies. Goodwill is not amortized, and is testedfor impairment at the reporting unit level annually or when there are any indications of impairment, as required by the Financial Accounting Standards Board(“FASB”) Accounting Standards Codification (“ASC”) Topic 350, Intangibles - Goodwill and Other. ASC Topic 350 provides guidance on financialaccounting and reporting related to goodwill and other intangibles, other than the accounting at acquisition for goodwill and other intangibles. A reporting unitis an operating segment, or component of an operating segment, for which discrete financial information is available and is regularly reviewed by management.We have one reporting unit to which goodwill is assigned. In September 2011, the FASB issued ASU No. 2011-08, Intangibles - Goodwill and Other (Topic 350): Testing Goodwill for Impairment. ASU 2011-08 is intended to simplify how entities, both public and nonpublic, test goodwill for impairment. ASU 2011-08 permits an entity to first assess qualitativefactors to determine whether it is “more likely than not” that the fair value of a reporting unit is less than its carrying amount as a basis for determiningwhether it is necessary to perform the two-step goodwill impairment test described in Topic 350, Intangibles - Goodwill and Other. The first step tests forimpairment by applying fair value-based tests. The second step, if deemed necessary, measures the impairment by applying fair value-based tests to specificassets and liabilities. Application of the goodwill impairment test requires significant judgments including estimation of future cash flows, which is dependenton internal forecasts, estimation of the long-term rate of growth for the Company, the useful life over which cash flows will occur, and determination of theCompany’s cost of capital. Changes in these estimates and assumptions could materially affect the determination of fair value and conclusions on goodwillimpairment. The Company performs its annual goodwill impairment testing in the third quarter of each year, or more frequently if events or changes in circumstancesindicate that goodwill may be impaired. The Company tested its goodwill during the third quarter of 2013 and 2012 and concluded that no impairment existed. or Disposal of Long-Lived Assets. ASC Topic 360-10-35 provides guidance for recognition and measurement of the impairment of long-lived assets to beheld, used and disposed of by sale. Intangible assets arose from business combinations and consist of customer contracts, acquired technology and restrictivecovenants related to employment agreements that are amortized, on a straight-line basis, over periods of up to five years. Intangible assets are reviewed forimpairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. During the third quarter of 2013 and2012, the Company performed a qualitative assessment and concluded that no impairment existed. Income Taxes The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes. Under ASC Topic 740, deferred tax assets are recognized forfuture deductible temporary differences and for tax net operating loss and tax credit carry-forwards, and deferred tax liabilities are recognized for temporarydifferences that will result in taxable amounts in future years. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply totaxable income in the periods in which the deferred tax asset or liability is expected to be realized or settled. A valuation allowance is provided to offset the netdeferred tax asset if, based upon the available evidence, management determines that it is more likely than not that some or all of the deferred tax asset will notbe realized.19Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.In June 2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes (“FIN 48”). FIN 48 was codified into ASC Topic 740,which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements, and prescribes a recognition threshold andmeasurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The adoption of FASBASC Topic 740 did not have a material effect on the Company’s consolidated financial statements. We may from time to time be assessed interest and/or penalties by taxing jurisdictions, although any such assessments historically have been minimal andimmaterial to our financial results. The Company’s federal, state and international tax returns for 2010, 2011 and 2012 are still open. In the event we havereceived an assessment for interest and/or penalties, it has been classified in the statement of operations as other general and administrative costs.Share-Based Compensation On October 16, 2006, the Company adopted ASC Topic 718, Compensation - Stock Compensation which requires the measurement and recognition ofcompensation expense for all share-based payment awards made to employees, directors, and consultants based on estimated fair values. ASC Topic 718 requires companies to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. The valueof the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the Company’s consolidatedstatement of operations. The Company follows the straight-line single option method of attributing the value of stock-based compensation to expense. As stock-based compensation expense recognized is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. ASC Topic 718 requiresforfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company uses the Black-Scholes option-pricing model as its method of valuation for share-based awards granted. The Company’s determination offair value of share-based payment awards on the date of grant using an option-pricing model is affected by the Company’s stock price as well as assumptionsregarding a number of highly complex and subjective variables. These variables include, but are not limited to the Company’s expected stock price volatilityover the term of the awards and the expected term of the awards. The Company accounts for non-employee share-based compensation expense in accordancewith ASC Topic 505, Equity - Based Payments to Non-Employee. Use of Estimates and Assumptions The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management tomake estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date ofthe financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results can, and in many cases will, differ fromthose estimates. Recent Accounting Pronouncements Reference is made to Note 2 (“Significant Accounting Policies”) of the consolidated financial statements, which commence on page F-9 of this annualreport, which Note is incorporated herein by reference.20Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Results of Operations of the Company Fiscal Year Ended December 31, 2013 compared to Fiscal Year Ended December 31, 2012 Overview. The financial information presented in the tables below is comprised of the consolidated financial information of the Company for the year endedDecember 31, 2013 and 2012 (amounts in thousands - except share and per share information): Year Ended December 31, 2013 December 31, 2012 Revenue: Telecommunications services $157,368 $107,877 Operating expenses: Cost of telecommunications services 102,815 76,000Selling, general and administrative expense 31,675 18,957Restructuring costs, employee termination and other items 7,677 701Depreciation and amortization 17,157 7,296 Total operating expenses 159,324 102,954 Operating (loss) income (1,956) 4,923 Other expense: Interest expense, net (8,408) (4,686)Loss on debt extinguishment (706) —Other expense, net (11,724) (1,054) Total other expense (20,838) (5,740) Loss before income taxes(22,794)(817) Income tax (benefit) expense (2,005) 746 Net loss $(20,789) $(1,563) Loss per share: Basic $(0.95) $(0.08)Diluted $(0.95) $(0.08) Weighted average shares: Basic 21,985,241 18,960,347Diluted 21,985,241 18,960,347 21Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Revenue. The table below presents the components of revenue for the years ended December 31, 2013 and 2012: Geographical Revenue20132012 United States57%76%Italy25%—%United Kingdom15%19%Other3%5%Totals100%100%Revenue increased $49.5 million, or 45.9% for the year ended December 31, 2013, compared to year ended December 31, 2012, primarily due to theacquisition of Tinet on April 30, 2013, which had over 1,000 customers.Costs of Service and Gross Margin. Costs of telecommunications services and gross margin increased $26.8 million, or 35.3% and $22.7 million, or71.1% , respectively, for the year ended December 31, 2013 compared to the year ended December 31, 2012, primarily due to the Tinet acquisition, which hadover 120 points of presence globally and operated one of the largest global Ethernet interconnection networks and global Tier 1 IP networks. Selling, General and Administrative Expenses. SG&A increased $12.7 million, or 67.1%, for the year ended December 31, 2013 compared to the yearended December 31, 2012, primarily due to the increase in employment costs resulting from the net increase of approximately 85 employees following theTinet acquisition, as well as an increase in rent expense, travel costs, and professional fees to support the broader global organization resulting from the Tinetacquisition. Restructuring costs, employee termination and non-recurring items. Restructuring costs increased by $7.0 million for the year ended December 31, 2013compared to the year ended December 31, 2012. The increase primarily reflects the additional costs associated with the acquisition of Tinet for severance andother employee termination related costs, professional fees, network integration, and travel expenses. Depreciation and Amortization. Depreciation and amortization expense increased $9.9 million to $17.2 million for the year ended December 31, 2013,compared to the year ended December 31, 2012. The increase was due primarily to the depreciation and amortization of the global IP and Ethernet networkassets and intangible assets, primarily customer relationships, obtained in the Tinet acquisition. Interest Expense. Interest expense increased $3.7 million, or 79.4%, to $8.4 million for the year ended December 31, 2013, compared to the year endedDecember 31, 2012. The increase was due to the additional debt incurred in connection with the Tinet acquisition. Other Expense. Other expense increased $10.7 million to $11.7 million for the year ended December 31, 2013, compared to the year ended December 31,2012. The increase is due to the warrant liability of $8.7 million that was marked to market in 2013 as well as the $2.0 million change in fair value of theearn-out related to the nLayer acquisition on April 30, 2012. Liquidity and Capital Resources December 31, 2013 December 31, 2012 Cash and cash equivalents and short-term investments$5,785 $4,726Debt$92,460 $42,829Management monitors cash flow and liquidity requirements. Based on the Company’s cash, debt, and analysis of the anticipated working capitalrequirements, management believes the Company has sufficient liquidity to fund the business and meet its contractual obligations for 2014. The Company’scurrent planned cash requirements for 2014 are based upon certain assumptions, including its ability to manage expenses and the growth of revenue fromservice arrangements. In connection with the activities associated with the services, the Company expects to incur expenses, including provider fees, employeecompensation and consulting fees,22Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.professional fees, sales and marketing, insurance and interest expense. Should the expected cash flows not be available, management believes it would have theability to revise its operating plan and make reductions in expenses. The Company believes that cash currently on hand, expected cash flows from future operations and existing borrowing capacity are sufficient to fundoperations for at least the next twelve months, including the $6.5 million scheduled repayment of the senior term loan indebtedness. If our operatingperformance differs significantly from our forecasts, we may be required to reduce our operating expenses and curtail capital spending, and we may notremain in compliance with our debt covenants. In addition, if the Company were unable to fully fund its cash requirements through operations and currentcash on hand, the Company would need to obtain additional financing through a combination of equity and subordinated debt financings and/or renegotiationof terms of its existing debt. If any such activities become necessary, there can be no assurance that the Company would be successful in obtaining additionalfinancing or modifying its existing debt terms. Operating Activities. Cash provided by operating activities for the year ended December 31, 2013, was approximately $2.7 million. Cash provided byoperating activities for the year ended December 31, 2012 was approximately $4.0 million. Investing Activities. Cash used in investing activities was approximately $60.0 million for the year ended December 31, 2013, consisting primarily ofapproximately $51.9 million of cash used, net of cash acquired, in the acquisitions of Tinet and IDC. Cash used in investing activities were approximately$17.4 million for the year ended December 31, 2012. Financing Activities. Net cash provided by financing activities for the year ended December 31, 2013, was approximately $57.7 million, consistingprimarily of approximately $65.0 million Webster Bank, N.A. term loan. Cash provided by financing activities were approximately $14.7 million for theyear ended December 31, 2012. Effect of Exchange Rate Changes on Cash. Effect of exchange rate changes on cash increased by $0.5 million to approximately $0.7 million for the yearended December 31, 2013 compared to approximately $0.2 million for the year ended December 31, 2012. Interest Payments. During the years ended December 31, 2013 and 2012, the Company made cash payments for interest totaling $7.4 million and $4.8million, respectively. The increase in interest payments was a result of the new Senior Term Loan with Webster Bank, N.A. and the Amended and RestatedNote Purchase Agreement with BIA Digital Partners, Plexus Fund II, L.P., and BNY Mellon-Alcentra Mezzanine III, L.P. during the year ended December 31,2013.Debt.The following summarizes the debt activity of the Company during the year ended December 31, 2013 (amounts in thousands): Total DebtSenior TermLoan Line ofCredit MezzanineNotes SubordinatedNotesPromissory Note Debt obligation as of December 31, 2012$42,829 $24,500 $— $15,481 $2,611 $237Issuance, net of discount83,445 65,794 6,000 11,651 — —Debt discount amortization601 — — 578 23 —Payments(31,866) (28,544) (3,000) — (85) (237)Extinguishment of debt(2,549) — — — (2,549) —Debt obligation as of December 31, 2013$92,460 $61,750 $3,000 $27,710 $— $—Senior Term Loan and Line of Credit On April 30, 2013, to fund the Company’s acquisition of Tinet, the Company arranged financing with a new senior lender, Webster Bank, N.A.("Webster"). The Company entered into an agreement (the "Credit Agreement") with Webster that provided for a term loan in the aggregate principal amount of$65.0 million and a revolving line of credit in the aggregate principal amount of $5.0 million. The term loan matures on March 31, 2016, unless, on or before December 31, 2015, the maturity date of the mezzanine facility has been extended to (orbeyond) September 30, 2018, or repaid in full or refinanced with the written consent of the lenders holding more than 50% of the outstanding obligations (the“Required Lenders") and replaced with subordinated indebtedness having a maturity date acceptable to the Required Lenders, in which case the maturity datewill automatically extend to April 30, 2018.23Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.The Company will repay the Webster term loan in twenty (20) quarterly principal installments with each payment of principal being accompanied by apayment of accrued interest, beginning in September 2013. The interest rate applicable to the Credit Agreement is the higher of LIBOR or 1% plus a margin of5.5%. As of December 31, 2013, the interest rate was 6.5%.On April 30, 2013, the Company prepaid in full all indebtedness outstanding under its existing credit facilities with Silicon Valley Bank and terminated thecollateral agreements related thereto, including under the syndicated credit agreement dated as of May 23, 2012, as amended, by and among the Company andcertain of its United States subsidiaries, which consisted of approximately $26.0 million in principal and accrued and unpaid interest, and under theAmended and Restated Loan and Security Agreement dated as of June 29, 2011, as amended, by and among certain of the Company’s foreign subsidiaries,which consisted of approximately $1.5 million in principal and accrued and unpaid interest. On July 11, 2013, the Company entered into an amendment to the Credit Agreement that increased the revolving line-of-credit from $5.0 million to $7.5million. As part of the amendment, Webster and GTT achieved broader-based commitments, expanding the Credit Agreement to include, East West Bank,Fifth Third Bank, Brown Brothers Harriman and Co., BDCA Funding LLC, and Crescent Capital. The obligations of the Company under the CreditAgreement are secured by substantially all of the Company’s tangible and intangible assets.On December 30, 2013, the Company entered into an amendment to the July 11, 2013 Credit Agreement that increased the revolving line-of-credit by $7.5million, increasing the maximum borrowings under the line-of-credit to $15.0 million. The Company also issued a letter of credit facility of $4.0 million,which is a sublimit within the line-of-credit. As of December 31, 2013, the Company is in compliance with the reporting and financial covenants stated in theCredit Agreement.Mezzanine Notes On June 6, 2011, the Company entered into a note purchase agreement (the “Purchase Agreement”) with BIA Digital Partners SBIC II LP (“BIA”). ThePurchase Agreement provided for a total commitment of $12.5 million, of which $7.5 million was immediately funded (the “BIA Notes”). The BIA Noteswere issued at a discount to face value of $0.4 million and the discount is being amortized, into interest expense, over the life of the notes. The remaining $5.0million of the committed financing was available to be called by the Company on or before August 11, 2011, subject to extension to December 31, 2011 at thesole option of BIA. On September 19, 2011, BIA agreed to extend the commitment period and funded the Company an additional $1.0 million. Theadditional funding was issued at a discount to face value of $45,000, due to the warrants issued, and the discount is being amortized, into interest expense,over the life of the notes. On April 30, 2012, in connection with the nLayer acquisition, the Company entered into an amended and restated note purchase agreement (the "AmendedNote Purchase Agreement") with BIA and Plexus Fund II, L.P. (“Plexus”) . The Amended Note Purchase Agreement provided for an increase in the totalfinancing commitment by $8.0 million, of which $6.0 million was immediately funded (the "Plexus Notes"). The Company called on the remaining $2.0million on December 31, 2012. The funding by Plexus was issued at a total discount to face value of $0.8 million, due to the warrants issued, and thediscount is being amortized into interest expense over the life of the notes. On April 30, 2013, the Company arranged financing through an increase in the Company’s existing mezzanine financing arrangement, in the form of amodification to its existing note purchase agreement (the “Second Amended Note Purchase Agreement”) with BIA and Plexus that expands the amount ofborrowing under the Amended Note Purchase Agreement on April 30, 2012 and adds BNY Mellon-Alcentra Mezzanine III, L.P. (“Alcentra”) as a new notepurchaser and lender thereunder (together with BIA and Plexus, the “Note Holders”). The Second Amended Note Purchase Agreement provides for a totalfinancing commitment of $11.5 million, of which $8.5 million was immediately funded, (the “BIA Notes” and together with the "Plexus Notes", the “Notes”)and issued at a discount to face value of $1.3 million, due to the warrants issued. The discount is being amortized, into interest expense, over the life of theNotes.On November 1, 2013, the remaining $3.0 million of the committed financing was called on by the Company and the original interest rate of 13.5% perannum was reduced to 11.0% per annum for the entire outstanding Notes of $29.5 million. No warrants were issued.On December 30, 2013, the Company modified the Second Amended Note Purchase Agreement (the "Third Amended Note Purchase Agreement") with BIA,Plexus, and Alcentra, expanding the total financing commitment by $10.0 million, of which $1.5 million was immediately funded. This additional financingcommitment has no warrant issuances required. The remaining $8.5 million of the committed financing may be called by the Company, subject to certainconditions, on or before December 31, 2014.24Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.The Third Amended Note Purchase Agreement increases the maximum borrowings to $38.0 million with the Notes maturing on June 6, 2016, and shall bearinterest at a rate of 11.0% per annum.The obligations of the Company under the Third Amended Note Purchase Agreement are secured by a second lien on substantially all of Company’stangible and intangible assets. Pursuant to a pledge agreement, dated June 6, 2011, by and between BIA and the Company, the obligations of the Company arealso secured by a pledge in all of the equity interests of the Company in its respective United States subsidiaries and a pledge of 65% of the voting equityinterests and all of the non-voting equity interests of the Company in its respective non-United States subsidiaries. Concurrent with entering into the Third Amended Note Purchase Agreement, Webster and the Note Holders entered into an intercreditor and subordinationagreement which governs, among other things, ranking and collateral access for the respective lenders. Warrants On June 6, 2011, pursuant to the Purchase Agreement, the Company issued to BIA a warrant to purchase from the Company 634,648 shares of theCompany’s common stock, at an exercise price equal to $1.144 per share (as adjusted from time to time as provided in the Purchase Agreement). Upon theadditional $1.0 million funding, the Company issued to BIA an additional warrant to purchase from the Company 63,225 shares of the Company’s commonstock, at an exercise price equal to $1.181 per share. On April 30, 2012, pursuant to the Amended Note Purchase Agreement, the Company issued to Plexus a warrant to purchase from the Company 535,135shares of the Company’s common stock at an exercise price equal to $2.208 per share (as adjusted from time to time as provided in the warrant). OnDecember 31, 2012, the Company issued to Plexus an additional warrant to purchase from the Company 178,378 shares of the Company’s common stock,at an exercise price equal to $2.542 per share (as adjusted from time to time as provided in the warrant). Upon a change of control (as defined in the AmendedNote Purchase Agreement), the repayment of the Notes prior to the maturity date of the Notes, the occurrence of an event of default under the Notes or thematurity date of the Notes, the holder of the warrant shall have the option to require the Company to repurchase from the holder the warrant and any sharesreceived upon exercise of the warrant and then held by the holder, which repurchase would be at a price equal to the greater of the closing price of theCompany’s common stock on such date or a price determined by reference to the Company’s adjusted enterprise value on such date, in each case, with respectto any warrant, less the exercise price per share. On April 30, 2013, pursuant to the Second Amended Note Purchase Agreement, the Company issued to Plexus a warrant to purchase from the Company246,911 shares of the Company’s common stock, to BIA a warrant to purchase 356,649 shares of the Company’s common stock, and to Alcentra a warrantto purchase from the Company 329,214 shares of the Company’s common stock, each at an exercise price equal to $3.306 per share. All the warrants issuedby the Company expire on June 6, 2016.The Company evaluated the down round ratchet feature embedded in the warrants and after considering ASC 480, Distinguishing Liabilities from Equity,which establishes standards for how an issuer classifies and measures in its statement of financial position certain financial instruments with characteristicsof both liabilities and equity, and ASC 815, Derivatives and Hedging, the Company concluded the warrants should be treated as a derivative and recorded aliability for the original fair value amount of $2.6 million on the respective dates of issuance. During the year ended December 31, 2013, the warrant liabilitywas marked to market which resulted in a loss of $8.7 million. The balance of the warrant liability was $12.3 million as of December 31, 2013, which isincluded in other long-term liabilities. Subordinated Notes On February 8, 2010, the Company completed a financing transaction in which it sold debt and common stock (“February 2010 Units”), resulting in $2.4million of proceeds to the Company. The February 2010 Units consisted of $1.5 million in aggregate principal amount of the Company’s subordinated notesdue February 8, 2012, and $0.9 million of the Company’s common stock. The subordinated notes were issued at a discount to face value of $0.2 million andthe discount is being amortized into interest expense over the life of the notes. Interest on the subordinated notes accrues at 10% per annum. In May 2011, $1.4million of the February 2010 Units subordinated notes were amended to mature in four equal installments on March 31, June 30, September 30 and December31, 2013. The remaining $0.1 million of the February 2010 Units subordinated notes were paid off in February 2012. On December 31, 2010, the Company completed a financing transaction in which it sold debt and common stock (“December 2010 Units”), resulting in$2.2 million of proceeds to the Company. The December 2010 Units consisted of $1.1 million in aggregate principal amount of the Company’s subordinatednotes due December 31, 2013 and $1.1 million of the Company’s common stock. On February 16, 2011, the Company and the holders of the December 2010Units amended the offering solely to increase the aggregate principal amount available for issuance, resulting in an additional $0.4 million of proceeds to theCompany, consisting of $0.2 million25Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.in the aggregate principal amount of the Company’s subordinated notes due December 31, 2013, and $0.2 million of the Company’s common stock. Thesubordinated notes were issued at a discount to face value of $0.3 million and the discount is being amortized into interest expense over the life of the notes.Interest on the subordinated notes accrues at 10% per annum. All accrued interest as of December 31, 2012 was paid. On March 28, 2013, the Company issued 2,259,617 shares of its common stock in a transaction exempt from registration under the Securities Act of1933, as amended. The purchase price of the common stock in this private offering was $3.00 per share, representing a 15% discount to the average closingprice of the common stock for the 30-day period preceding the closing of the offering. On April 30, 2013, the Company issued 783,334 shares of its commonstock for a purchase price of $3.00 per share, representing the average closing price of the stock for that day. Among the purchasers of the common stock in the private offering on March 28, 2013, were certain of the holders of subordinated notes due 2013, whoagreed to accept payment for the principal amount of their notes and the accrued but unpaid interest thereon in the form of common stock. Out of the $2.7million aggregate principal amount of the Company’s subordinated notes due 2013 outstanding before this private offering, the holders of $2.6 million inaggregate principal amount of the notes accepted common stock in the private offering in full satisfaction of their notes. The Company issued an aggregate of982,356 shares of common stock to these investors, in payment of the principal amount of their notes and accrued but unpaid interest in the aggregateamount of $0.3 million. The remainder of the common stock issued in the private offering was paid for in cash. As a result of the 15% discount to the average closing price of the common stock, GTT recorded a loss in the amount of $0.7 million on the 982,356shares that were issued to extinguish the subordinate notes. In accordance with ASC Topic 470-50-40, Derecognition – General, these losses were included indebt extinguishment loss in the consolidated statements of operations for the year ended December 31, 2013.The shares of common stock sold in the private offering are restricted securities under the Securities Act of 1933. The Company entered into a RegistrationRights Agreement with the purchasers of common stock in the private offering, pursuant to which the Company agreed to file with the Securities and ExchangeCommission a registration statement related to the resale of such common stock by the investors. The previous balance of the subordinated notes of $2.7 million included $2.3 million due to a related party, Universal Telecommunications, Inc. H. BrianThompson, the Company’s Executive Chairman of the Board of Directors, is also the head of Universal Telecommunications, Inc., his own private equityinvestment and advisory firm. Also, included in the previous balance was $0.2 million of the subordinated notes held by officers and directors of theCompany.On December 31, 2013, the remaining total outstanding principal of the subordinated notes of $22,000 was paid, along with accrued interest of $2,000.Promissory Note As part of the June 2011 acquisition of PacketExchange, the Company assumed a promissory note of approximately $0.7 million. During the quarter endedMarch 31, 2013, the remaining balance of $0.2 million was paid.Contractual Obligations and Commitments As of December 31, 2013, the Company had total contractual obligations of approximately $145.5 million. Of these obligations, approximately $46.7million, or 32.1% are supplier agreements associated with the telecommunications services that the Company has contracted to purchase from its vendorsthrough 2018 and beyond. The Company generally tries to structure its contracts so the terms and conditions in the vendor and client customer contracts aresubstantially the same in terms of duration and capacity. The back-to-back nature of the Company’s contracts means that the largest component of itscontractual obligations is generally mirrored by its customer’s commitment to purchase the services associated with those obligations. However, in certaininstances relating to network infrastructure, the Company will enter into purchase commitments with vendors that do not directly tie to underlying customercommitments. Approximately $92.5 million, or 63.6%, of the total contractual obligations are associated with the Company’s debt which matures between 2014 and2016. Operating leases amount to $6.3 million, or 4.3% of total contractual obligations, which consist mainly of building leases. 26Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.The following table summarizes the Company’s significant contractual obligations as of December 31, 2013 (amounts in thousands): Total Less than 1 year 1-3 years 3-5 years More than 5yearsSenior Term Loan$61,750 $6,500 $55,250 $— $—Mezzanine Notes27,710 — 27,710 — —Line of Credit3,000 — 3,000 — —Operating Leases6,327 1,427 2,319 1,170 1,411Supplier Agreements46,679 9,168 28,930 2,874 5,707 $145,466 $17,095 $117,209 $4,044 $7,118ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKInterest Rate Sensitivity Interest due on the Company’s loans is based upon the applicable stated fixed contractual rate with the lender. Interest earned on the Company’s bankaccounts is linked to the applicable base interest rate. For the years ended December 31, 2013 and 2012, the Company had interest expense, net of interestincome, of approximately $8.4 million and $4.7 million, respectively. The Company believes that its results of operations are not materially affected bychanges in interest rates. Exchange Rate Sensitivity Approximately 43% of the Company’s revenue for the year ended December 31, 2013 is derived from services provided outside of the United States. As aconsequence, a material percentage of the Company’s revenue is billed in British Pounds Sterling or Euros. Since we operate on a global basis, we are exposedto various foreign currency risks. First, our consolidated financial statements are denominated in U.S. Dollars, but a significant portion of our revenue isgenerated in the local currency of our foreign subsidiaries. Accordingly, changes in exchange rates between the applicable foreign currency and the U.S. Dollarwill affect the translation of each foreign subsidiary’s financial results into U.S. Dollars for purposes of reporting consolidated financial results. In addition, because of the global nature of our business, we may from time to time be required to pay a supplier in one currency while receiving paymentsfrom the underlying customer of the service in another currency. Although it is the Company’s general policy to pay its suppliers in the same currency that itwill receive cash from customers, where these circumstances arise with respect to supplier invoices in one currency and customer billings in another currency,the Company’s gross margins may increase or decrease based upon changes in the exchange rate. Such factors did not have a material impact on theCompany’s results in the year ended December 31, 2013.ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAReference is made to the consolidated financial statements, the notes thereto, and the report thereon, commencing on page F-1 of this annual report, whichconsolidated financial statements, notes, and report are incorporated herein by reference.ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES Not applicable.ITEM 9A. CONTROLS AND PROCEDURESAs of the end of the period covered by this annual report, an evaluation was carried out under the supervision and with the participation of the Company’smanagement, including our Chief Executive Officer and Chief Accounting Officer, of the effectiveness of the design and operation of the Company’sdisclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) and internal control over financial reporting.27Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.The evaluation of the Company’s disclosure controls and procedures and internal control over financial reporting included a review of our objectives andprocesses, implementation by the Company and the effect on the information generated for use in this annual report. In the course of this evaluation and inaccordance with Section 302 of the Sarbanes-Oxley Act of 2002, we sought to identify material weaknesses in our controls, to determine whether we hadidentified any acts of fraud involving personnel who have a significant role in our internal control over financial reporting that would have a material effect onour consolidated financial statements, and to confirm that any necessary corrective action, including process improvements, were being undertaken. Ourevaluation of our disclosure controls and procedures is done quarterly and management reports the effectiveness of our controls and procedures in our periodicreports filed with the SEC. Our internal control over financial reporting is also evaluated on an ongoing basis by personnel in the Company’s financeorganization. The overall goals of these evaluation activities are to monitor our disclosure controls and procedures and internal control over financial reportingand to make modifications as necessary. We periodically evaluate our processes and procedures and make improvements as required. Because of its inherent limitations, disclosure controls and procedures and internal control over financial reporting may not prevent or detect misstatements.In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes inconditions or that the degree of compliance with the policies or procedures may deteriorate. Management applies its judgment in assessing the benefits ofcontrols relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that allcontrol issues and instances of fraud, if any, within the Company have been detected. The design of any system of controls is based in part upon certainassumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potentialfuture conditions, regardless of how remote. Disclosure Controls and Procedures Disclosure controls and procedures are designed with the objective of ensuring that (i) information required to be disclosed in the Company’s reports filedunder the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and formsand (ii) information is accumulated and communicated to management, including our Chief Executive Officer and Chief Accounting Officer, as appropriate toallow timely decisions regarding required disclosures. Our Chief Executive Officer and Chief Accounting Officer evaluated the effectiveness of the ourdisclosure controls and procedures in place at the end of the period covered by this Annual Report pursuant to Rule 13a-15(b) of the Exchange Act. Based onthis evaluation, the Chief Executive Officer and Chief Accounting Officer concluded that the Company’s disclosure controls and procedures (as defined in theExchange Act Rule 13(a)-15(e)) were effective as of December 31, 2013. Management’s Report on Internal Control over Financial Reporting The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined inExchange Act Rule 13a-15(f). Under the supervision and with the participation of the Company management, including our Chief Executive Officer and ChiefAccounting Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in InternalControl - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluationunder the framework in Internal Control - Integrated Framework (1992), our management concluded that our internal control over financial reporting waseffective as of December 31, 2013. This annual report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control overfinancial reporting. Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to rules ofthe Securities and Exchange Commission that permit the Company to provide only management’s report in this Annual Report.Changes in Internal Control over Financial Reporting There have been no significant changes in our internal control over financial reporting during the most recently completed fiscal period ended December 31,2013 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.ITEM 9B. OTHER INFORMATIONNot applicable.28Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.PART IIIITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCEThe information required by this Item relating to our directors and corporate governance is incorporated herein by reference to the definitive Proxy Statementto be filed pursuant to Regulation 14A of the Exchange Act for our 2014 Annual Meeting of Stockholders. The information required by this Item relating to ourexecutive officers is included in Item 1, “Business - Executive Officers” of this report.ITEM 11. EXECUTIVE COMPENSATIONThe information required by this Item is incorporated herein by reference to the definitive Proxy Statement to be filed pursuant to Regulation 14A of theExchange Act for our 2014 Annual Meeting of Stockholders.ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDERMATTERSThe information required by this Item is incorporated herein by reference to the definitive Proxy Statement to be filed pursuant to Regulation 14A of theExchange Act for our 2014 Annual Meeting of Stockholders.ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCEThe information required by this Item is incorporated herein by reference to the definitive Proxy Statement to be filed pursuant to Regulation 14A of theExchange Act for our 2014 Annual Meeting of Stockholders.ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICESThe information required by this Item is incorporated herein by reference to the definitive Proxy Statement to be filed pursuant to Regulation 14A of theExchange Act for our 2014 Annual Meeting of Stockholders.29Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.PART IVITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES(a) Financial Statements1.Financial Statements are listed in the Index to Financial Statements on page F-1 of this annual report.2.Schedules have been omitted because they are not applicable or because the information required to be set forth therein is included in the consolidatedfinancial statements or notes thereto.(b) ExhibitsThe following exhibits, which are numbered in accordance with Item 601 of Regulation S-K, are filed herewith or, as noted, incorporated by referenceherein: Exhibit NumberDescription of Document 2.1 (1)Agreement for the sale and purchase of the entire issued share capital of and loan notes in PacketExchange (Ireland) Limited, dated May23, 2011, among Esprit Capital I Fund No. 1 LP, Esprit Capital I Fund No. 2 LP and the others, as Sellers, and GTT-EMEA, Limited,as Buyer.2.2 (2)Stock Purchase Agreement, dated as of April 30, 2012, among nLayer Communications, Inc., Jordan Lowe, Daniel Brosk Trust datedDecember 22, 2006, Global Telecom & Technology Americas, Inc. and the Registrant.2.3 (18)Equity Purchase Agreement, dated April 30, 2013, between Neutral Tandem, Inc. (d/b/a Inteliquent) and the Registrant.3.1 (3)Second Amended and Restated Certificate of Incorporation, dated October 16, 2006.3.2 (20)Certificate of Amendment to Second Amended and Restated Certificate of Incorporation, dated December 31, 2013.3.3 (3)Amended and Restated Bylaws, dated October 15, 2006.3.4 (4)Amendment to Amended and Restated Bylaws, dated May 7, 2007.4.1 (5)Specimen of Common Stock Certificate.4.2 (6)Warrant, dated June 6, 2011, issued by the Registrant to BIA Digital Partners SBIC II LP.4.3 (2)Warrant, dated April 30, 2012, issued by the Registrant to Plexus Fund II, L.P.4.4 (18)Warrant, dated April 30, 2013, issued by the Registrant to BIA Digital Partners, SBIC II LP.4.5 (18)Warrant, dated April 30, 2013, issued by the Registrant to Plexus Fund II L.P.4.6 (18)Warrant, dated April 30, 2013, issued by the Registrant to BNY Mellon-Alcentra Mezzanine III, L.P.4.7 (7)Form of Registration Rights Agreement, dated as of 2005, among the Registrant, Universal Telecommunications, Inc., Hackman FamilyTrust, Charles Schwab & Company Custodian FBO David Ballarini IRA and Mercator Capital L.L.C.4.8 (2)Registration Rights Agreement, dated April 30, 2012, among the Registrant, Jordon Lowe and Daniel Brosk Trust dated December 22,2006.4.9 (17)Form of Registration Rights Agreement, dated March 28, 2013.10.1 (8) +2006 Employee, Director and Consultant Stock Plan, as amended.10.2 (9) +2011 Employee, Director and Consultant Stock Plan.10.3 (3) +Employment Agreement for H. Brian Thompson, dated October 15, 2006.10.4 (4) +Employment Agreement for Richard D. Calder, Jr., dated May 7, 2007.10.5 (10) +Amendment No. 1 to the Employment Agreement for Richard D. Calder, Jr., dated July 18, 2008.10.6 (11) +Employment Agreement for Christopher McKee, dated September 12, 2011.10.7 (12) +Employment Agreement for Michael R. Bauer, dated June 27, 2012.10.8 (2)Joinder and Second Loan Modification Agreement, dated April 30, 2012, (i) among Silicon Valley Bank, (ii) the Registrant, GlobalTelecom & Technology (Americas), Inc., PacketExchange (USA), Inc., PacketExchange, Inc., WBS Connect LLC and (iii) nLayerCommunications, Inc.30Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.10.9First Loan Modification Agreement, dated as of December 15, 2011, among the Registrant, Global Telecom and Technology Americas,Inc., PacketExchange (USA), Inc., PacketExchange, Inc. and WBS Connect LLC and Silicon Valley Bank.10.10 (13)Loan and Security Agreement, dated June 29, 2011, among the Registrant, Global Telecom and Technology Americas, Inc.,PacketExchange (USA), Inc., PacketExchange, Inc. and WBS Connect LLC and Silicon Valley Bank.10.11 (18)Credit Agreement, dated April 30, 2013, among the Registrant, Global Telecom & Technology Americas, Inc., GTT Global TelecomGovernment Services, LLC, nLayer Communications, Inc., PacketExchange (USA), Inc., PacketExchange, Inc., TEK ChannelConsulting, LLC, WBS Connect LLC, Communication Decisions-SNVC, LLC, Core180, LLC, Electra, LTD, and IDC Global, Inc.,Webster Bank, N.A., and the other Lenders (as defined therein) party thereto.10.12 (20)Amended and Restated Credit Agreement, dated December 30, 2013, among the Registrant, Global Telecom & Technology Americas,Inc., GTT Global Telecom Government Services, LLC, nLayer Communications, Inc., PacketExchange (USA), Inc., PacketExchange,Inc., TEK Channel Consulting, LLC, WBS Connect LLC, Communication Decisions-SNVC, LLC, Core180, LLC, Electra, LTD,IDC Global, Inc., NT Network Services, LLC, Webster Bank, N.A., and the other Lenders (as defined therein) party thereto.10.13 (18)Security Agreement, dated April 30, 2013, among the Registrant, Global Telecom & Technology Americas, Inc., GTT Global TelecomGovernment Services, LLC, nLayer Communications, Inc., PacketExchange (USA), Inc., PacketExchange, Inc., TEK ChannelConsulting, LLC, WBS Connect LLC, Communication Decisions-SNVC, LLC, Core180, LLC, Electra, Ltd., IDC Global, Inc., andWebster Bank, N.A., and the other Lenders (as defined therein) party thereto.10.14 (6)Note Purchase Agreement, dated June 6, 2011, between (i) the Registrant, Global Telecom & Technology (Americas), Inc., WBSConnect, LLC, PacketExchange, Inc., PacketExchange (USA), Inc. and (ii) BIA Digital Partners SBIC II LP.10.15 (6)Unconditional Guaranty, dated June 6, 2011, between TEK Channel Consulting, LLC and BIA Digital Partners SBIC II LP.10.16 (6)Unconditional Guaranty, dated June 6, 2011, between GTT Global Telecom Government Services, LLC and BIA Digital Partners SBICII LP.10.17 (6)Security Agreement, dated June 6, 2011, among BIA Digital Partners SBIC II LP and TEK Channel Consulting, LLC and GTT GlobalTelecom Government Services, LLC.10.18 (6)Pledge Agreement, dated June 6, 2011, among BIA Digital Partners SBIC II LP and the Registrant and Global Telecom & TechnologyAmericas, Inc.10.19 (2)Amended and Restated Note Purchase Agreement, dated April 30, 2012, among (i) the Registrant, Global Telecom & Technology(Americas), Inc., WBS Connect, LLC, PacketExchange, Inc., PacketExchange (USA), Inc., nLayer Communications, Inc., (ii) BIADigital Partners SBIC II LP, as agent for the Purchasers, and (iii) the Purchasers party thereto.10.20 (2)Note, dated April 30, 2012, issued by the Registrant, Global Telecom & Technology (Americas), Inc., WBS Connect, LLC,PacketExchange (USA), Inc, PacketExchange, Inc. and nLayer Communications, Inc., jointly and severally as borrowers, to PlexusFund II, L.P.10.21 (2)Amended and Restated Note, dated April 30, 2012, issued by the Registrant, Global Telecom & Technology (Americas), Inc., WBSConnect, LLC, PacketExchange (USA), Inc, PacketExchange, Inc. and nLayer Communications, Inc., jointly and severally asborrowers, to BIA Digital Partners II LP.10.22 (15)Form of Promissory Note of the Registrant due February 8, 2012.10.23Amendment No. 1, dated May __, 2011, to Promissory Notes of the Registrant due February 8, 2012.10.24 (16)Form of Promissory Note of the Registrant due December 31, 2013. 10.25 (18)Second Amended and Restated Note Purchase Agreement, dated April 30, 2013, among (i) BIA Digital Partners SBIC II LP (as agent andpurchaser), (ii) Plexus Fund II, L.P., and BNY Mellon-Alcentra Mezzanine III, L.P. (as purchasers) and (iii) the Registrant, GlobalTelecom & Technology Americas, Inc., WBS Connect LLC, PacketExchange (USA), Inc., PacketExchange Inc., CommunicationDecisions-SNVC, LLC, Core180, LLC, Electra Ltd., IDC Global, Inc., nLayer Communications, Inc., NT Network Services, LLC(as borrowers).10.26 (20)Third Amendment Agreement, dated December 30, 2013, among (i) BIA Digital Partners SBIC II, LP. (as agent and purchaser), (ii)Plexus Fund II, L.P., Plexus Fund III, L.P., Plexus Fund QP III, L.P., and BNY Mellon-Alcentra Mezzanine III, L.P. (as purchasers) and(iii) the Registrant, Global Telecom & Technology Americas, Inc, nLayer Communications, Inc., PacketExchange (USA), Inc.,PacketExchange, Inc., WBS Connect LLC, Communication Decisions-SNVC, LLC, Core180, LLC, Electra, Ltd., IDC Global, Inc.,NT Network Services, LLC (as borrowers).31Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.10.27 (18)Note, dated April 30, 2013, issued by the Registrant, Global Telecom & Technology Americas, Inc., WBS Connect LLC,PacketExchange Inc., PacketExchange (USA), Inc., Communication Decisions-SNVC, LLC, Core180, LLC, Electra Ltd., IDCGlobal, Inc., and nLayer Communications, Inc., jointly and severally as borrowers, to Plexus Fund II, L.P.10.28 (18)Note, dated April 30, 2013, issued by the Registrant, Global Telecom & Technology Americas, Inc., WBS Connect LLC,PacketExchange Inc., PacketExchange (USA), Inc., Communication Decisions-SNVC, LLC, Core180, LLC, Electra Ltd., IDCGlobal, Inc., and nLayer Communications, Inc., jointly and severally as borrowers, to BIA Digital Partners SBIC II, LP.10.29 (18)Note, dated April 30, 2013, issued by the Registrant, Global Telecom & Technology Americas, Inc., WBS Connect LLC,PacketExchange Inc., PacketExchange (USA), Inc., Communication Decisions-SNVC, LLC, Core180, LLC, Electra Ltd., IDCGlobal, Inc., and nLayer Communications, Inc., jointly and severally as borrowers, to BNY Mellon-Alcentra Mezzanine III, L.P.10.30 (18)Second Amended and Restated Note, dated April 30, 2013, issued by the Registrant, Global Telecom & Technology Americas, Inc.,WBS Connect LLC, PacketExchange Inc., PacketExchange (USA), Inc., Communication Decisions-SNVC, LLC, Core180, LLC,Electra Ltd., IDC Global, Inc., and nLayer Communications, Inc., jointly and severally as borrowers, to BIA Digital Partners SBIC II,LP.10.31 (18)Amended and Restated Note, dated April 30, 2013, issued by the Registrant, Global Telecom & Technology Americas, Inc., WBSConnect LLC, PacketExchange Inc., PacketExchange (USA), Inc., Communication Decisions-SNVC, LLC, Core180, LLC, ElectraLtd., IDC Global, Inc., and nLayer Communications, Inc., jointly and severally as borrowers, to Plexus Fund II, L.P.10.32 (19)Second Amendment Agreement, dated November 1, 2013, among (i) BIA Digital Partners SBIC II, LP. (as agent and purchaser), (ii)Plexus Fund II, L.P. and BNY Mellon-Alcentra Mezzanine II, L.P. (as purchasers) and (iii) the Registrant, Global Telecom &Technology Americas, Inc., nLayer Communications, Inc., PacketExchange (USA), Inc., PacketExchange, Inc., WBS Connect LLC,Communication Decisions-SNVC, LLC, Core180, LLC, Electra, Ltd., IDC Global, Inc., NT Network Services, LLC (as borrowers).10.33 (19)Additional Note, dated November 1, 2013, issued by the Registrant, Global Telecom & Technology Americas, Inc., WBS ConnectLLC, PacketExchange Inc., PacketExchange (USA), Inc., Communication Decisions-SNVC, LLC, Core180, LLC, Electra Ltd., IDCGlobal, Inc., NT Network Services, LLC, and nLayer Communications, Inc., jointly and severally as borrowers, to Plexus Fund II,L.P.10.34 (19)Additional Note, dated November 1, 2013, issued by the Registrant, Global Telecom & Technology Americas, Inc., WBS ConnectLLC, PacketExchange Inc., PacketExchange (USA), Inc., Communication Decisions-SNVC, LLC, Core180, LLC, Electra Ltd., IDCGlobal, Inc., NT Network Services, LLC, and nLayer Communications, Inc., jointly and severally as borrowers, to BNY Mellon-Alcentra Mezzanine III, L.P.10.35 (20)Third Amendment Note, issued by the Registrant, Global Telecom & Technology Americas, Inc., WBS Connect LLC, PacketExchangeInc., PacketExchange (USA), Inc., Communication Decisions-SNVC, LLC, Core180, LLC, Electra Ltd., IDC Global, Inc., NTNetwork Services, LLC, and nLayer Communications, Inc., to Plexus Fund III, L.P.10.36 (20)Third Amendment Note, issued by the Registrant, Global Telecom & Technology Americas, Inc., WBS Connect LLC, PacketExchangeInc., PacketExchange (USA), Inc., Communication Decisions-SNVC, LLC, Core180, LLC, Electra Ltd., IDC Global, Inc., NTNetwork Services, LLC, and nLayer Communications, Inc., to Plexus Fund QP III, L.P.21.1*Subsidiaries of the Registrant.23.1*Consent of CohnReznick LLP.24.1*Power of Attorney (included on the signature page to this report).31.1*Certification of Chief Executive Officer pursuant to Rules 13a-14 and 15d-14 promulgated under the Securities Exchange Act of 1934.31.2*Certification of Chief Financial Officer pursuant to Rules 13a-14 and 15d-14 promulgated under the Securities Exchange Act of 1934.32.1*Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-OxleyAct 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-OxleyAct of 2002.101.INS**XBRL Instance Document101.SCH**XBRL Taxonomy Extension Schema101.CAL**XBRL Taxonomy Extension Calculation Linkbase101.DEF**XBRL Taxonomy Extension Definition Linkbase101.LAB**XBRL Taxonomy Extension Label Linkbase101.PRE**XBRL Taxonomy Extension Presentation Linkbase32Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. *Filed herewith**Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus forpurposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject toliability.+Denotes a management or compensatory plan or arrangement. (1)Previously filed as an Exhibit to the Registrant’s Current Report on Form 8-K filed May 21, 2011, and incorporated herein by reference.(2)Previously filed as an Exhibit to the Registrant’s Current Report on Form 8-K filed May 4, 2012, and incorporated herein by reference.(3)Previously filed as an Exhibit to the Registrant’s Current Report on Form 8-K filed October 19, 2006, and incorporated herein by reference.(4)Previously filed as an Exhibit to the Registrant’s Current Report on Form 8-K filed May 10, 2007, and incorporated herein by reference.(5)Previously filed as an Exhibit to the Registrant’s Quarterly Report on Form 10-Q filed November 14, 2006 and incorporated herein by reference.(6)Previously filed as an Exhibit to the Registrant’s Current Report on Form 8-K filed June 10, 2011, and incorporated herein by reference.(7)Previously filed as an Exhibit to the Registrant’s Amendment No. 1 to the Registration Statement on Form S-1 (Registration No. 333-122303) filedJanuary 26, 2005, and incorporated herein by reference.(8)Previously filed as Annex E to the Registrant’s Definitive Proxy Statement on Schedule 14A filed October 2, 2006, and incorporated herein byreference. (9)Previously filed as Appendix A to the Registrant’s Definitive Proxy Statement on Schedule 14A filed April 29, 2011, and incorporated herein byreference. (10)Previously filed as an Exhibit to the Registrant’s Current Report on Form 8-K filed August 4, 2008, and incorporated herein by reference.(11)Previously filed as an Exhibit to the Registrant’s Current Report on Form 8-K filed September 16, 2011, and incorporated herein by reference.(12)Previously filed as an Exhibit to the Registrant’s Current Report on Form 8-K filed June 29, 2012, and incorporated herein by reference.(13)Previously filed as an Exhibit to the Registrant’s Current Report on Form 8-K filed July 6, 2011, and incorporated herein by reference.(14)Previously filed as an Exhibit to the Registrant’s Current Report on Form 8-K filed October 6, 2010, and incorporated herein by reference.(15)Previously filed as an Exhibit to the Registrant’s Current Report on Form 8-K filed February 12, 1010, and incorporated herein by reference.(16)Previously filed as an Exhibit to the Registrant’s Current Report on Form 8-K filed February 23, 2011, and incorporated herein by reference.(17)Previously filed as an Exhibit to the Registrant’s Current Report on Form 8-K filed April 3, 2013, and incorporated herein by reference.(18)Previously filed as an Exhibit to the Registrant’s Current Report on Form 8-K filed May 6, 2013, and incorporated herein by reference.(19)Previously filed as an Exhibit to the Registrant’s Current Report on Form 8-K filed November 7, 2013, and incorporated herein by reference.(20)Previously filed as an Exhibit to the Registrant’s Current Report on Form 8-K filed January 6, 2014, and incorporated herein by reference.33Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.SIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized. GTT COMMUNICATIONS, INC. By:/s/ Richard D. Calder, Jr. Richard D. Calder, Jr. President and Chief Executive Officer Date: March 18, 2014POWER OF ATTORNEYKNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Richard D. Calder, Jr. andMichael R. Bauer, jointly and severally, his attorney-in-fact, each with the full power of substitution, for such person, in any and all capacities, to sign anyand all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto and other documents in connection therewith, with theSecurities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thingrequisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might do or could do in person hereby ratifying andconfirming all that each of said attorneys-in-fact and agents, or his substitute, may do or cause to be done by virtue hereof.Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed on or before March 18, 2014 by the following persons onbehalf of the registrant and in the capacities indicated.Signature Title/s/ Richard D. Calder, Jr. President, Chief Executive Officer andRichard D. Calder, Jr. Director (Principal Executive Officer)/s/ Michael R. Bauer Chief Financial Officer and TreasurerMichael R. Bauer (Principal Financial Officer)/s/ H. Brian Thompson Chairman of the Board and ExecutiveH. Brian Thompson Chairman/s/ S. Jospeh Bruno DirectorS. Joseph Bruno /s/ Rhodric C. Hackman DirectorRhodric C. Hackman /s/ Howard Janzen DirectorHoward Janzen /s/ Morgan E. O'Brien DirectorMorgan E. O’Brien /s/ Theodore B. Smith, III DirectorTheodore B. Smith, III 34Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.INDEX TO FINANCIAL STATEMENTS GTT Communications, Inc. Report of Independent Registered Public Accounting FirmF-2Consolidated Balance Sheets as of December 31, 2013 and 2012F-3Consolidated Statements of Operations for the years ended December 31, 2013 and 2012F-4Consolidated Statements of Comprehensive Loss for the years ended December 31, 2013 and 2012F-5Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2013 and 2012F-6Consolidated Statements of Cash Flows for the years ended December 31, 2013 and 2012F-7Notes to Consolidated Financial StatementsF-8F-1Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Shareholders of GTT Communications, Inc. We have audited the accompanying consolidated balance sheets of GTT Communications, Inc. and Subsidiaries as of December 31, 2013 and 2012, andthe related consolidated statements of operations, comprehensive loss, stockholders’ equity, and cash flows for the years then ended. GTT Communications,Inc.'s management is responsible for these consolidated financial statements. Our responsibility is to express an opinion on these consolidated financialstatements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards requirethat we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company isnot required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internalcontrol over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing anopinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includesexamining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used andsignificant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonablebasis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of GTTCommunications, Inc. and Subsidiaries as of December 31, 2013 and 2012 and the results of their operations and their cash flows for the years then ended, inconformity with accounting principles generally accepted in the United States of America. /s/ CohnReznick LLP Vienna, VAMarch 18, 2014 F-2Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.GTT Communications, Inc.Consolidated Balance Sheets(Amounts in thousands, except for share and per share data) December 31, 2013 December 31, 2012ASSETS Current assets: Cash and cash equivalents$5,785 $4,726Accounts receivable, net of allowances of $702 and $748, respectively22,305 11,003Deferred contract costs1,975 1,346Prepaid expenses and other current assets2,878 1,877Total current assets32,943 18,952Property and equipment, net20,450 5,494Intangible assets, net43,618 20,903Other assets7,726 2,614Goodwill67,019 49,793 Total assets$171,756 $97,756 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable$20,983 $12,857Accrued expenses and other current liabilities26,999 13,301Short-term debt6,500 7,848Deferred revenue6,797 6,588 Total current liabilities61,279 40,594Long-term debt85,960 34,981Deferred revenue1,480 234Warrant liability12,295 2,288Other long-term liabilities1,232 2,620 Total liabilities162,246 80,717 Commitments and contingencies Stockholders' equity: Common stock, par value $.0001 per share, 80,000,000 shares authorized, 23,311,023, and19,129,765 shares issued and outstanding as of December 31, 2013 and 2012, respectively2 2Additional paid-in capital76,014 63,207Accumulated deficit(66,226) (45,437)Accumulated other comprehensive loss(280) (733) Total stockholders' equity9,510 17,039 Total liabilities and stockholders' equity$171,756 $97,756 The accompanying notes are an integral part of these Consolidated Financial Statements.F-3Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.GTT Communications, Inc.Consolidated Statements of Operations(Amounts in thousands, except for share and per share data) Year Ended December 31, 2013 December 31, 2012Revenue: Telecommunications services$157,368 $107,877 Operating expenses: Cost of telecommunications services102,815 76,000Selling, general and administrative expense31,675 18,957Restructuring costs, employee termination and other items7,677 701Depreciation and amortization17,157 7,296 Total operating expenses159,324 102,954 Operating (loss) income(1,956) 4,923 Other expense: Interest expense, net(8,408) (4,686)Loss on debt extinguishment(706) —Other expense, net(11,724) (1,054) Total other expense(20,838) (5,740) Loss before income taxes(22,794)(817) Income tax (benefit) expense(2,005) 746 Net loss$(20,789) $(1,563) Loss per share: Basic$(0.95) $(0.08)Diluted$(0.95) $(0.08) Weighted average shares: Basic21,985,241 18,960,347Diluted21,985,241 18,960,347 The accompanying notes are an integral part of these Consolidated Financial Statements.F-4Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.GTT Communications, Inc.Consolidated Statements of Comprehensive Loss(Amounts in thousands) Year Ended December 31, 2013 December 31, 2012 Net loss$(20,789) $(1,563) Other comprehensive income (loss): Foreign currency translation453 (294)Comprehensive loss$(20,336) $(1,857) The accompanying notes are an integral part of these Consolidated Financial Statements. F-5Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.GTT Communications, Inc.Consolidated Statements of Stockholders’ Equity(Amounts in thousands, except for share data) Accumulated Common Stock AdditionalPaid -In Accumulated OtherComprehensive Shares Amount Capital Deficit Loss Total Balance, December 31, 201118,674,860 $2 $62,442 $(43,874) $(439) $18,131 Share-based compensation for options issued— — 210 — — 210 Share-based compensation for restrictedstock issued406,248 — 400 — — 400 Stock options exercised48,657 — 3 — — 3 Tax benefit from stock option plans— — 152 — — 152 Net loss— — — (1,563) — (1,563) Foreign currency translation— — — — (294) (294)Balance, December 31, 201219,129,765 $2 $63,207 $(45,437) $(733) $17,039 Share-based compensation for options issued— — 363 — — 363 Share-based compensation for restrictedstock issued722,357 — 1,103 — — 1,103 Tax witholding related to the vesting ofrestricted stock units(32,297) — (120) — — (120) Shares issued in connection with nLayerearn-out356,122 — 1,650 — — 1,650 Stock issued in private offering2,060,595 — 6,182 — — 6,182 Stock options exercised92,125 — 43 — — 43 Stock issued on debt extinguishment982,356 — 3,586 — — 3,586 Net loss— — — (20,789) — (20,789) Foreign currency translation— — — — 453 453 Balance, December 31, 201323,311,023 $2 $76,014 $(66,226) $(280) $9,510 The accompanying notes are an integral part of these Consolidated Financial Statements.F-6Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.GTT Communications, Inc.Consolidated Statements of Cash Flows(Amounts in thousands) Year Ended December 31, 2013 December 31, 2012Cash flows from operating activities: Net loss$(20,789) $(1,563)Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization17,157 7,296Shared-based compensation1,466 610Debt discount amortization601 303Change in fair value of warrant liability8,658 1,072Loss on debt extinguishment706 —Tax benefit for stock options— (152)Change in fair value of nLayer earn-out1,978 —Changes in operating assets and liabilities, net of effects of acquisitions: Accounts receivable, net485 1,017Deferred contract costs(619) 517Prepaid expenses and other current assets5,252 361Other assets(4,533) (601)Accounts payable604 (4,109)Accrued expenses and other current liabilities(6,987) (1,382)Deferred revenue and other long-term liabilities(1,300) 644 Net cash provided by operating activities2,679 4,013 Cash flows from investing activities: Acquisition of businesses, net of cash acquired(51,884) (13,833)Purchases of customer lists(4,042) (1,723)Purchases of property and equipment(4,053) (1,839) Net cash used in investing activities(59,979) (17,395) Cash flows from financing activities: Repayments of promissory note(237) (472)Proceeds from (repayment of) line of credit, net3,000 (3,100)Repayment of term loan(28,544) (3,500)Proceeds from term loan65,794 14,500Proceeds from mezzanine debt, net of discount11,651 7,214Repayment of subordinate notes payable(85) (105)Tax withholding related to the vesting of restricted stock units(120) —Tax benefit for stock options— 152Exercise of stock options43 3Stock issued in private offering6,182 — Net cash provided by financing activities57,684 14,692 Effect of exchange rate changes on cash675 167 Net increase in cash and cash equivalents1,059 1,477 Cash and cash equivalents at beginning of year4,726 3,249 Cash and cash equivalents at end of year$5,785 $4,726 Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Supplemental disclosure of cash flow information: Cash paid for interest$7,412 $4,759 Supplemental disclosure of non-cash investing and financing activities: Fair value of Tinet net assets acquired (Note 3)$59,925 $—Fair value of IDC net assets acquired (Note 3)4,167 —Common stock issued in connection with the extinguishment of subordinated notes andaccrued interest thereon2,880 —Measurement period adjustment related to PacketExchange acquisition— 744Adjustment related to August 2010 sales novations— 2,885Shares issued in connection with nLayer earn-out1,650 — The accompanying notes are an integral part of these Consolidated Financial Statements. F-7Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.GTT Communications, Inc. Notes to Consolidated Financial StatementsNOTE 1 — ORGANIZATION AND BUSINESS Organization and Business GTT Communications, Inc. (“GTT” or the “Company”) is a Delaware corporation which was incorporated on January 3, 2005. GTT operates a globalTier 1 IP network with one of the most interconnected Ethernet service platforms around the world. GTT provides highly reliable, scalable and secure cloudnetworking services. Our clients trust us to deliver solutions with simplicity, speed, and agility.NOTE 2 — SIGNIFICANT ACCOUNTING POLICIESBasis of Presentation of Consolidated Financial Statements and Use of Estimates The consolidated financial statements include the accounts of the Company and it's subsidiaries. All significant intercompany transactions and balanceshave been eliminated in consolidation.The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of Americarequires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets andliabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Significantaccounting estimates to be made by management include allowances for doubtful accounts, valuation of goodwill and other long-lived assets, accrual forbilling disputes, and valuation of equity instruments. Because of the uncertainty inherent in such estimates, actual results may differ from these estimates.Revenue RecognitionThe Company provides data connectivity solutions, such as dedicated circuit access, access aggregation and hubbing and managed network services to itscustomers. Certain of the Company’s current revenue activities have features that may be considered multiple elements. The Company believes that there isinsufficient evidence to determine each element’s fair value and as a result, in those arrangements where there are multiple elements, revenue is recorded ratablyover the term of the arrangement. Network Services and Support. The Company’s services are provided pursuant to contracts that typically provide for payments of recurring charges on amonthly basis for use of the services over a committed term. Each service contract has a fixed monthly cost and a fixed term, in addition to a fixed installationcharge (if applicable). At the end of the initial term of most service contracts, the contracts roll forward on a month-to-month or other periodic basis andcontinue to bill at the same fixed recurring rate. If any cancellation or termination charges become due from the customer as a result of early cancellation ortermination of a service contract, those amounts are calculated pursuant to a formula specified in each contract. Recurring costs relating to supply contracts arerecognized ratably over the term of the contract. Non-recurring Fees, Deferred Revenue. Non-recurring fees for data connectivity typically take the form of one-time, non-refundable provisioning feesestablished pursuant to service contracts. The amount of the provisioning fee included in each contract is generally determined by marking up or passingthrough the corresponding charge from the Company’s supplier, imposed pursuant to the Company’s purchase agreement. Non-recurring revenue earned forproviding provisioning services in connection with the delivery of recurring communications services is recognized ratably over the contractual term of therecurring service starting upon commencement of the service contract term. Fees recorded or billed from these provisioning services are initially recorded asdeferred revenue then recognized ratably over the contractual term of the recurring service. Installation costs related to provisioning incurred by the Companyfrom independent third party suppliers, directly attributable and necessary to fulfill a particular service contract, and which costs would not have beenincurred but for the occurrence of that service contract, are recorded as deferred contract costs and expensed proportionally over the contractual term of servicein the same manner as the deferred revenue arising from that contract. Deferred costs do not exceed deferred upfront fees. Based on operating activity, theCompany believes the initial contractual term is the best estimate of the period of earnings.Other Revenue. From time to time, the Company recognizes revenue in the form of fixed or determinable cancellation (pre-installation) or termination (post-installation) charges imposed pursuant to the service contract. This revenue is earned when a customer cancels or terminates a service agreement prior to theend of its committed term. This revenue is recognized when billed if collectability is reasonably assured. In addition, the Company from time to time sellsequipment in connection with data networkingF-8Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.applications. The Company recognizes revenue from the sale of equipment at the contracted selling price when title to the equipment passes to the customer(generally F.O.B. origin) and when collectability is reasonably assured.Translation of Foreign Currencies These consolidated financial statements have been reported in U.S. Dollars by translating asset and liability amounts of foreign subsidiaries at the closingexchange rate, equity amounts at historical rates, and the results of operations and cash flow at the average exchange rate prevailing during the periods reported. A summary of exchange rates used is as follows: U.S. Dollar / BritishPounds Sterling U.S. Dollar / Euro 2013 2012 2013 2012Closing exchange rate at December 311.65 1.62 1.38 1.32 Average exchange rate during the period1.56 1.58 1.33 1.29 Transactions denominated in foreign currencies are recorded at the rates of exchange prevailing at the time of the transaction. Monetary assets and liabilitiesdenominated in foreign currencies are translated at the rate of exchange prevailing at the balance sheet date. Exchange differences arising upon settlement of atransaction are reported in the consolidated statements of operations in other income. Other Expense, Net The Company recognized other expense, net, of $11.7 million and $1.1 million for the years ended December 31, 2013 and 2012, respectively, whichincludes the warrant liability of $8.7 million that was marked to market in 2013 as well as the $2.0 million change in fair value of the earn-out related to thenLayer acquisition on April 30, 2012 for the year ended December 31, 2013. Accounts Receivable, Net Accounts receivable balances are stated at amounts due from the customer net of an allowance for doubtful accounts. Credit extended is based on anevaluation of the customer’s financial condition and is granted to qualified customers on an unsecured basis. The Company, pursuant to its standard service contracts, is entitled to impose a finance charge of a certain percentage per month with respect to allamounts that are past due. The Company’s standard terms require payment within 30 days of the date of the invoice. The Company treats invoices as pastdue when they remain unpaid, in whole or in part, beyond the payment time set forth in the applicable service contract. The Company determines its allowance for doubtful accounts by considering a number of factors, including the length of time trade receivables are pastdue, the customer’s current ability to pay its obligation to the Company, and the condition of the general economy and the industry as a whole. Specificreserves are also established on a case-by-case basis by management. The Company writes off accounts receivable when they become uncollectible. Creditlosses have historically been within management’s expectations. Actual bad debts, when determined, reduce the allowance, the adequacy of which managementthen reassesses. The Company writes off accounts after a determination by management that the amounts at issue are no longer likely to be collected, followingthe exercise of reasonable collection efforts, and upon management’s determination that the costs of pursuing collection outweigh the likelihood of recovery. Asof both December 31, 2013 and 2012, the total allowance for doubtful accounts was $0.7 million. Other Comprehensive Loss In addition to net loss, comprehensive loss includes charges or credits to equity occurring other than as a result of transactions with stockholders. For theCompany, this consists of foreign currency translation adjustments. Share-Based CompensationF-9Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Accounting Standards Codification (“ASC”) Topic 718, Compensation - Stock Compensation requires the Company to measure and recognizecompensation expense for all share-based payment awards made to employees and directors based on estimated fair values. Share-based compensation expense recognized under ASC Topic 718 was $1.5 million for the year ended December 31, 2013 and $0.6 million for the yearended December 31, 2012. For the years ended December 31, 2013 and 2012, share-based compensation expense related to stock option grants wasapproximately $0.4 million and $0.2 million, respectively. Share-based compensation expense related to restricted stock awards was $1.1 million for the yearended December 31, 2013 and $0.4 million for the year ended December 31, 2012. Share-based compensation expense is included in selling general andadministrative expense on the accompanying consolidated statements of operations. See Note 10 for additional information. ASC Topic 718 requires companies to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. The valueof the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the Company’s consolidatedstatement of operations. Share-based compensation expense recognized in the Company’s consolidated statements of operations for the years ended December 31, 2013 and 2012,included compensation expense for share-based payment awards based on the grant date fair value estimated in accordance with the provisions of ASC Topic718. The Company follows the straight-line single option method of attributing the value of stock-based compensation to expense. As stock-basedcompensation expense recognized in the consolidated statement of operations for the years ended December 31, 2013 and 2012 is based on awards ultimatelyexpected to vest, it has been reduced for estimated forfeitures. ASC Topic 718 requires forfeitures to be estimated at the time of grant and revised, if necessary,in subsequent periods if actual forfeitures differ from those estimates. The Company uses the Black-Scholes option-pricing model as its method of valuation for share-based awards granted. The Company’s determination offair value of share-based payment awards on the date of grant using an option-pricing model is affected by the Company’s stock price as well as assumptionsregarding a number of complex and subjective variables. These variables include, but are not limited to; the Company’s expected stock price volatility over theterm of the awards and the expected term of the awards. The Company accounts for non-employee stock-based compensation expense in accordance with ASC Topic 505, Equity-Based Payments to Non-Employees. The Company did not issue any options or shares to non-employees in 2013 and 2012. Cash and Cash Equivalents Included in cash and cash equivalents are deposits with financial institutions as well as short-term money market instruments, certificates of deposit anddebt instruments with maturities of three months or less when purchased. Accounting for Derivative Instruments The Company accounts for derivative instruments in accordance with ASC 815, Derivatives and Hedging, which establishes accounting and reportingstandards for derivative instruments and hedging activities, including certain derivative instruments imbedded in other financial instruments or contracts. TheCompany also considers the ASC 815 Subtopic 40, Contracts in Entity’s Own Equity, which provides criteria for determining whether freestanding contractsthat are settled in a company’s own stock, including common stock warrants, should be designated as either an equity instrument, an asset or as a liability. The Company also considers in ASC 815, the guidance for determining whether an equity-linked financial instrument (or embedded feature) issued by anentity is indexed to the entity’s stock, and therefore, qualifying for the first part of the scope exception. As a result, the Company recorded a warrant liabilityin the amount of $1.3 million in 2013 and $0.8 million in 2012. As of December 31, 2013, the warrant liability was marked to market which resulted in aloss of $8.7 million in 2013. The balance of the warrant liability was $12.3 million at December 31, 2013. See Note 12 for additional information. Taxes The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes. Under ASC Topic 740, deferred tax assets are recognized forfuture deductible temporary differences and for net operating loss and tax credit carry-forwards, and deferred tax liabilities are recognized for temporarydifferences that will result in taxable amounts in future years. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply totaxable income in the periods in which the deferred tax assetF-10Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.or liability is expected to be realized or settled. A valuation allowance is provided to offset the net deferred tax asset if, based upon the available evidence,management determines that it is more likely than not that some or all of the deferred tax asset will not be realized. The Company may, from time to time, be assessed interest and/or penalties by taxing jurisdictions, although any such assessments historically have beenminimal and immaterial to its financial results. The Company’s federal, state and international tax returns for 2009, 2010, 2011 and 2012 are still open. Inthe event the Company has received an assessment for interest and/or penalties, it has been classified in the consolidated statements of operations as othergeneral and administrative costs. The Company is liable in certain cases for collecting regulatory fees and/or certain sales taxes from its customers and remitting the fees and taxes to theapplicable governing authorities. The Company records taxes applicable under ASC Topic 605, Subtopic 45, Revenue Recognition - Principal AgentConsiderations, on a net basis. Net Loss Per ShareBasic loss per share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding.Diluted earnings per share reflect, in periods with earnings and in which they have a dilutive effect, the effect of common shares issuable upon exercise ofstock options and warrants.The table below details the calculations of earnings per share (in thousands, except for share and per share amounts): Year Ended December 31, 2013 2012Numerator for basic and diluted EPS – loss available to common stockholders$(20,789) $(1,563)Denominator for basic EPS – weighted average shares21,985,241 18,960,347Effect of dilutive securities— —Denominator for diluted EPS – weighted average shares21,985,241 18,960,347 Loss per share: basic$(0.95) $(0.08)Loss per share: diluted$(0.95) $(0.08) The table below details the anti-dilutive common share items that were excluded in the computation of earnings per share (amounts in thousands): Year Ended December 31, 2013 2012BIA warrant1,055 698Plexus warrant960 714Alcentra warrant329 —Stock options1,698 1,395Totals4,042 2,807 Software Capitalization Internal Use Software - The Company recognizes internal use software in accordance with ASC Topic 350-40, Internal-Use Software, which requiresthat certain costs incurred in purchasing or developing software for internal use be capitalized as internal use software development costs and included in fixedassets. Amortization of the software begins when the software is ready for its intended use.Property and EquipmentF-11Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Property and equipment are stated at cost, net of accumulated depreciation computed using the straight-line method and in accordance with ASC 360,Property, Plant, and Equipment. Depreciation on these assets is computed over the estimated useful lives of the assets ranging from three to seven years.Leasehold improvements are amortized over the shorter of the term of the lease, excluding optional extensions, or the useful life. Depreciable lives used by theCompany for its classes of assets are as follows: Furniture and Fixtures7 yearsNetwork Equipment5 yearsLeasehold Improvementsup to 10 yearsComputer Hardware and Software3-5 yearsASC 360-10-35, Impairment or Disposal of Long-Lived Assets, provides guidance for recognition and measurement of the impairment of long-livedassets to be held, used and disposed of by sale. The Company reviews long-lived assets to be held and used for impairment whenever events or changes incircumstances indicate that the carrying amount of the assets may not be recoverable. If the carrying amount of an asset exceeds its estimated futureundiscounted cash flows, the asset is considered to be impaired. Impairment losses are measured as the amount by which the carrying amount of the assetexceeds the fair value of the asset. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.Goodwill Goodwill is the excess purchase price paid over identified intangible and tangible net assets of acquired businesses. Goodwill is not amortized, and is testedfor impairment at the reporting unit level annually or when there are any indications of impairment, as required by ASC Topic 350, Intangibles - Goodwilland Other. ASC Topic 350 provides guidance on financial accounting and reporting related to goodwill and other intangibles, other than the accounting atacquisition for goodwill and other intangibles. A reporting unit is an operating segment, or component of an operating segment, for which discrete financialinformation is available and is regularly reviewed by management. We have one reporting unit to which goodwill is assigned. In September 2011, the FASB issued Accounting Standards Update (“ASU”) No. 2011-08, Intangibles - Goodwill and Other (Topic 350): TestingGoodwill for Impairment. ASU 2011-08 is intended to simplify how entities, both public and nonpublic, test goodwill for impairment. ASU 2011-08permits an entity to first assess qualitative factors to determine whether it is “more likely than not” that the fair value of a reporting unit is less than itscarrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test described in Topic 350, Intangibles -Goodwill and Other. The first step tests for impairment by applying fair value-based tests. The second step, if deemed necessary, measures the impairmentby applying fair value-based tests to specific assets and liabilities. Application of the goodwill impairment test requires significant judgments includingestimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for the Company, the useful life overwhich cash flows will occur, and determination of the Company’s cost of capital. Changes in these estimates and assumptions could materially affect thedetermination of fair value and conclusions on goodwill impairment.Intangibles Intangible assets are accounted for in accordance with ASC Topic 350, Intangibles — Goodwill and Other. Intangible assets arose from businesscombinations and consist of customer contracts, acquired technology and restrictive covenants related to employment agreements that are amortized, on astraight-line basis, over periods of up to five years.ASC 360-10-35, Impairment or Disposal of Long-Lived Assets, provides guidance for recognition and measurement of the impairment of long-livedassets to be held, used and disposed of by sale. The Company reviews long-lived assets to be held and used for impairment whenever events or changes incircumstances indicate that the carrying amount of the assets may not be recoverable. If the carrying amount of an asset exceeds its estimated futureundiscounted cash flows, the asset is considered to be impaired. Impairment losses are measured as the amount by which the carrying amount of the assetexceeds the fair value of the asset. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.Fair Value of Financial Instruments The fair values of the Company’s assets and liabilities that qualify as financial instruments under ASC Topic 825, Financial Instruments, includingcash and cash equivalents, accounts receivable, accounts payable, short-term debt, and accrued expenses are carried at cost, which approximates fair valuedue to the short-term maturity of these instruments. The reported amounts of long-F-12Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.term obligations approximate fair value, given management’s evaluation of the instruments’ current rates compared to market rates of interest and other factors. Accrued Carrier Expenses The Company accrues estimated charges owed to its suppliers for services. The Company bases this accrual on the supplier contract, the individual serviceorder executed with the supplier for that service, the length of time the service has been active, and the overall supplier relationship. Disputed Carrier Expenses It is common in the telecommunications industry for users and suppliers to engage in disputes over amounts billed (or not billed) in error or overinterpretation of contract terms. The disputed carrier cost included in the consolidated financial statements includes disputed but unresolved amounts claimedas due by suppliers, unless management is confident, based upon its experience and its review of the relevant facts and contract terms, that the outcome of thedispute will not result in liability for the Company. Management estimates this liability and reconciles the estimates with actual results as disputes areresolved, or as the appropriate statute of limitations with respect to a given dispute expires. For the year ended December 31, 2013, open disputes totaled approximately $7.3 million. Based upon its experience with each vendor and similar disputesin the past, and based upon management review of the facts and contract terms applicable to each dispute, management has determined that the most likelyoutcome is that the Company will be liable for approximately $2.3 million in connection with these disputes as of December 31, 2013. As of December 31,2012, open disputes totaled approximately $4.1 million and the Company determined the liability from these disputes to be $1.1 million. Recent Accounting Pronouncements In July 2013, the FASB issued ASU 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a SimilarTax Loss, or a Tax Credit Carryforward Exists. Under current GAAP, there is no explicit guidance on the presentation of unrecognized tax benefits whensuch carryforwards exist, which has led to diversity in practice. ASU 2013-11 requires entities to present an unrecognized tax benefit as a reduction of adeferred tax asset for a net operating loss ("NOL") carryforward whenever the NOL or tax credit carryforward would be available to reduce the additionaltaxable income or tax due if the tax position is disallowed. The ASU is effective for fiscal years beginning after December 15, 2013, and interim periods withinthose years. The adoption of this guidance is not expected to have a material effect on our consolidated results of operations or financial condition. Management does not believe that any recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on theCompany’s consolidated financial statements or the Company’s future results of operations.NOTE 3 — ACQUISITIONS IDCOn February 1, 2013, the Company entered into a stock purchase agreement with IDC Global Incorporated (“IDC”), a privately held company in Chicago.IDC owns and operates two data center facilities and its own metro optical fiber network in Chicago. The two data center facilities' fiber connects to 350 EastCermak, which is the largest multi-story data center property in the world. IDC provides cloud networking, co-location, and managed cloud services to nearly100 clients with a focus on providing multi-location enterprises with a complete portfolio of cloud infrastructure services. Pursuant to the agreement, the Company acquired 100% of the issued and outstanding shares of capital stock of IDC for an aggregate purchase price of $4.6million, which amount is subject to adjustment to the extent that IDC’s net working capital as of the closing of the transaction is determined to be greater or lessthan the estimated net working capital as of such date provided by IDC. For the year ended December 31, 2013, the Company has concluded that noadjustment will be made in regards to the IDC purchase price. The Company accounted for the acquisition using the acquisition method of accounting with GTT treated as the acquiring entity. Accordingly, considerationpaid by the Company to complete the acquisition of IDC has been allocated to IDC’s assets and liabilities based upon their estimated fair values as of the dateof completion of the acquisition, February 1, 2013. The Company estimated the fair value of IDC’s assets and liabilities based on discussions with IDC’smanagement, due diligence and information presented inF-13Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.financial statements. The following table summarizes the purchase price and the assets acquired and liabilities assumed as of the acquisition date at estimatedfair value: Amounts inthousandsPurchase Price: Cash consideration paid$3,593Fair value of liabilities assumed1,338Total consideration$4,931 Purchase Price Allocation: Acquired Assets Current assets$187Property and equipment798Other assets82Intangible assets3,100Total fair value of assets acquired4,167Goodwill764Total consideration$4,931Intangible assets acquired include $3.1 million related to customer relationships with a weighted-average useful life of 5 years. Customer relationships areamortized on a straight-line basis based on the expected period of benefit.Amortization expense of $0.6 million has been recorded for the year ended December 31, 2013. Estimated amortization expense related to customerrelationships created as a result of the IDC acquisition for each of the years subsequent to December 31, 2013, is as follows (amounts in thousands):2014$620201562020166202017620201852Total$2,532Goodwill in the amount of $0.8 million was recorded as a result of the acquisition of IDC. Goodwill is calculated as the excess of the considerationtransferred over the net assets recognized and represents the estimated future economic benefits arising from other assets acquired that could not beindividually identified and separately recognized. The Company completed a 338(h)10 election in 2013 and concluded that goodwill is deductible for taxpurposes. TinetOn April 30, 2013, the Company acquired from Neutral Tandem, Inc. (doing business as Inteliquent) all of the equity interests (the “Interests”) in NTNetwork Services, LLC and NT Network Services, LLC SCS (collectively, “Tinet”), which, together with the subsidiaries of such companies, comprise thedata transport business of Inteliquent. The acquisition was pursuant to an equity purchase agreement between the Company and Inteliquent on April 30, 2013. Pursuant to the agreement, the Company paid Inteliquent an aggregate purchase price of $52.5 million for the Interests, in cash, subject to a net workingcapital adjustment and an adjustment based on the cash and cash equivalents and amount of indebtedness of Tinet immediately prior to the acquisition. Inaddition, the Company will provide certain services to Inteliquent without charge for up to three years after the closing. These services are provided under aseparate service agreement that is valued at $2.0 million.To fund the Company’s acquisition of Tinet, the Company arranged financing with a new senior lender, Webster Bank, N.A. (“Webster”), on April 30,2013. The Company entered into a credit agreement with Webster that, among other matters, provided forF-14Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.a term loan in the aggregate principal amount of $65.0 million and a revolving line of credit in the aggregate principal amount of $5.0 million. The financingis described in detail in Note 12.The Company accounted for the acquisition using the acquisition method of accounting with GTT treated as the acquiring entity. Accordingly,consideration paid by the Company to complete the acquisition of Tinet has been preliminarily allocated to Tinet's assets and liabilities based upon theirestimated fair values as of the date of completion of the acquisition, April 30, 2013. The Company estimated the fair value of the acquired companies assetsand liabilities based on discussions with management, due diligence and information presented in financial statements. The recorded amounts for acquired assets and liabilities assumed are provisional and subject to change. The Company will finalize the amountsrecognized as it obtains the information necessary to complete the analysis. In accordance with US GAAP, the Company expects to finalize these amountsbefore April 30, 2014. The following table summarizes the purchase price and the assets acquired and liabilities assumed as of the acquisition date at estimatedfair value: Amounts inthousandsPurchase Price: Cash consideration paid$49,158Liabilities assumed Accounts payable4,179Accrued expenses and other current liabilities20,607Deferred revenue2,443 Total fair value of liabilities assumed27,229 Total consideration$76,387 Purchase Price Allocation: Acquired assets Accounts receivable$11,601 Prepaid expenses1,137 Other current assets5,101 Property and equipment15,004 Other assets1,282 Intangible assets25,800 Total fair value of assets acquired59,925 Goodwill16,462 Total consideration$76,387 Intangible assets acquired include $25.0 million related to customer relationships with a weighted-average useful life of 5 years and $0.8 million related tothe trade name. Customer relationships are amortized on a straight-line basis based on the expected period of benefit. The trade name is assessed as anindefinite-lived asset and is not amortized, but rather tested for impairment at least annually by comparing the estimated fair values to their carrying values. F-15Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Amortization expense of $3.3 million has been recorded for the year ended December 31, 2013. Estimated amortization expense related to customerrelationships created as a result of the Tinet acquisition for each of the years subsequent to December 31, 2013, is as follows (amounts in thousands):2014$5,00020155,00020165,00020175,00020181,667Total$21,667Goodwill in the amount of $16.5 million was recorded as a result of the acquisition of Tinet. Goodwill is calculated as the excess of the considerationtransferred over the net assets recognized and represents the estimated future economic benefits arising from other assets acquired that could not beindividually identified and separately recognized. The Company completed a 338(g) election for the Tinet Group in 2013 and concluded that goodwill isdeductible for earnings and profit purposes.The following schedule presents unaudited consolidated pro forma results of operations as if the Tinet acquisition had occurred on January 1, 2012. Thisinformation does not purport to be indicative of the actual results that would have occurred if the Tinet acquisition had actually been completed on January 1,2012, nor is it necessarily indicative of the future operating results or the financial position of the combined company. The unaudited pro forma results ofoperations do not reflect the cost of any integration activities or benefits that may result from synergies that may be derived from any integration activities. Year Ended December 31, 2013 2012 Amounts in thousands, except per share and share data Revenue$185,526 $179,971 Net loss$(23,920) $(45,612) Net loss per share: Basic$(1.09) $(2.41) Diluted$(1.09) $(2.41) Basic21,985,241 18,960,347 Diluted21,985,241 18,960,347NOTE 4 — GOODWILL AND INTANGIBLE ASSETS During the third quarter of 2013, the Company completed its annual goodwill impairment testing in accordance with ASC Topic 350, Intangibles —Goodwill and Other. After performing the qualitative assessment, the Company determined that it is more likely than not that the fair value of the reportingunit is greater than its carrying amount; therefore, the first and second steps of the goodwill impairment test are unnecessary and concluded that noimpairment existed.The Company recorded goodwill in the amount of $0.8 million during the quarter ended March 31, 2013 in connection with the IDC acquisition and inaccordance with ASC Topic 350, Intangibles — Goodwill and Other. Additionally, $3.1 million of the IDC purchase price was allocated to intangible assetsrelated to customer relationships which are subject to straight-line amortization.During the quarter ended June 30, 2013, the Company recorded goodwill in the amount of $16.5 million in connection with the Tinet acquisition and inaccordance with ASC Topic 350, Intangibles — Goodwill and Other. Additionally, $25.0 million of the Tinet purchase price was allocated to intangibleassets related to customer relationships and $0.8 million to the trade name.F-16Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.The Company entered into sales novation agreements during 2013, which assigned and transferred to the Company certain service level agreements and allrights under those agreements, as well as certain supply agreements and obligations thereunder. The Company valued the customer relationships from thenovation agreements and recorded $4.0 million in intangible assets.In accordance with US GAAP, goodwill and intangible assets with indefinite lives are not amortized, but rather tested for impairment at least annually bycomparing the estimated fair values to their carrying values. Acquired trade names are assessed as indefinite lived assets because there is no foreseeable limiton the period of time over which they are expected to contribute cash flows.The changes in the carrying amount of goodwill for the year ended December 31, 2013 are as follows (amounts in thousands): Balance, January 1, 2012$40,950Goodwill associated with the nLayer acquisition7,759Measurement period adjustment related to the PacketExchange acquisition744Goodwill associated with the Electra acquisition340Balance, December 31, 201249,793Goodwill associated with the IDC acquisition764Goodwill associated with the Tinet acquisition16,462Balance, December 31, 2013$67,019 The following table summarizes the Company’s intangible assets as of December 31, 2013 and December 31, 2012 (amounts in thousands): December 31, 2013 AmortizationPeriod Gross AssetCost AccumulatedAmortization Net BookValueCustomer contracts3-7 years $58,611 $16,218 $42,393Carrier contracts1 year 151 151 —Noncompete agreements3-5 years 4,331 3,906 425Software7 years 4,935 4,935 —Trade name (non-amortizing)N/A 800 — 800 $68,828 $25,210 $43,618 December 31, 2012 AmortizationPeriod Gross AssetCost AccumulatedAmortization Net BookValueCustomer contracts4-7 years $26,471 $6,802 $19,669Carrier contracts1 year 151 151 —Noncompete agreements4-5 years 4,331 3,593 738Software7 years 4,935 4,439 496 $35,888 $14,985 $20,903 Amortization expense was $10.2 million and $4.8 million for the year ended December 31, 2013 and 2012, respectively. F-17Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Estimated amortization expense related to intangible assets subject to amortization at December 31, 2013 in each of the years subsequent to December 31,2013 is as follows (amounts in thousands):2014$11,883201510,53920169,62920178,05420182,713Total$42,818 NOTE 5 — FAIR VALUE MEASUREMENTS The Company accounts for fair value measurements in accordance with ASC 820, Fair Value Measurements, as it relates to financial assets and financialliabilities. ASC 820 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America and expandsdisclosures about fair value measurements. ASC 820 applies under other previously issued accounting pronouncements that require or permit fair valuemeasurements, but does not require any new fair value measurements. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between marketparticipants at the measurement date. ASC 820 establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developedbased on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptionsdeveloped based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets orliabilities (level 1) and the lowest priority to unobservable inputs (level 3). The three levels of the fair value hierarchy under ASC 820 are described as follows: •Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities that are accessible at the measurement date.•Level 2 - Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs includequoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputsother than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable marketdata by correlation or other means.•Level 3 - Inputs that are unobservable for the asset or liability.The following section describes the valuation methodologies that we used to measure financial instruments at fair value. The Company considers the valuation of its warrant liability as a level 3 liability based on unobservable inputs. The Company uses the Black-Scholespricing model to measure the fair value of the warrant liability. As of December 31, 2013, the model required the input of highly subjective assumptionsincluding volatility of 63%, expected term of 3 years, and risk-free interest rate of 0%.The sellers of nLayer may elect to receive up to one-half of the post-closing payments to which they become entitled in the form of common stock of theCompany. The Company considers the valuation of the nLayer earn-out as a level 3 liability based on unobservable inputs and measures the fair value of theoption to take the stock using the Black-Scholes pricing model. As of December 31, 2013, the model required the input of highly subjective assumptionsincluding volatility of 60%, expected term of 3 months, and a risk-free interest rate of 0.1%. F-18Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.The following table presents the liabilities that are measured and recognized at fair value on a recurring basis classified under the appropriate level of the fairvalue hierarchy as of December 31, 2013 and 2012 (amounts in thousands): December 31, 2013 Level 1 Level 2 Level 3 TotalLiabilities: Warrant liability$— $— $12,295 $12,295nLayer earn-out— — 2,900 2,900 December 31, 2012 Level 1 Level 2 Level 3 TotalLiabilities: Warrant liability$— $— $2,288 $2,288nLayer earn-out$— $— $6,200 $6,200Rollforward of level 3 liabilities are as follows (amounts in thousands):Warrant LiabilityBalance, January 1, 2012$430Issuance of warrants786Change in fair value of warrant liability1,072Balance, December 31, 20122,288Issuance of warrants1,349Change in fair value of warrant liability8,658Balance, December 31, 2013$12,295nLayer Earn-outBalance, December 31, 2012$6,200nLayer earn-out paid in cash(3,628)nLayer earn-out paid in equity(1,650)Change in the fair value of the nLayer earn-out1,978Balance, December 31, 2013$2,900During 2012, there was no change in the fair value of the initial $6.2 million liability related to the nLayer earn-out.The carrying amounts of cash equivalents, receivables, accounts payable, and accrued expenses approximate fair value due to the immediate or short-termmaturity of these financial instruments. The fair value of notes payable is determined using current applicable rates for similar instruments as of the balancesheet date and approximates the carrying value of such debt.Assets and liabilities measured at a fair value on a non-recurring basis include goodwill, tangible assets, and intangible assets. Such assets are reviewedquarterly for impairment indicators. If a triggering event has occurred, the assets are remeasured when the estimated fair value of the corresponding asset groupis less than the carrying value. The fair value measurements, in such instances, are based on significant unobservable inputs (level 3). There were noimpairments recorded during the year ended December 31, 2013. F-19Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.NOTE 6 - PROPERTY AND EQUIPMENT The following table summarizes the Company’s property and equipment at December 31, 2013 and 2012 (amounts in thousands): 2013 2012Network equipment$30,485 $8,710Computer software3,423 3,353Leasehold improvements757 744Furniture and fixtures259 256Property and equipment, gross34,924 13,063Less accumulated depreciation and amortization(14,474) (7,569)Property and equipment, net$20,450 $5,494 Depreciation expense associated with property and equipment was $6.9 million and $2.5 million for the years ended December 31, 2013 and 2012,respectively.NOTE 7 - ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES The following table summarizes the Company’s accrued expenses and other current liabilities as of December 31, 2013 and 2012 (amounts in thousands): 2013 2012Accrued compensation and benefits$4,257 $1,056Accrued interest payable379 610Accrued taxes3,407 843Accrued carrier costs13,085 3,912nLayer earn-out2,900 6,200Accrued other2,971 680 $26,999 $13,301NOTE 8 — INCOME TAXES The components of the provision for income taxes for the years ended December 31, 2013 and 2012 are as follows (amounts in thousands): 2013 2012Current: Federal$— $219State(8) 144Foreign720 279Subtotal712 642Deferred: Federal(6,000) (285)State(803) (93)Foreign1,439 (167)Subtotal(5,364) (545)Change in valuation allowance2,647 649Provision for income taxes$(2,005) $746 F-20Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.The provision for income taxes differs from the amount computed by applying the U.S. federal statutory income tax rate to income before income taxes forthe reasons set forth below for the years ended December 31, 2013 and 2012: 2013 2012U.S. federal statutory income tax rate35.00 % 35.00 %Permanent items(10.23)% (4.26)%State taxes, net of federal benefit(0.13)% (13.12)%Foreign tax rate differential1.55 % (15.79)%Change in valuation allowance(14.17)% (98.81)%Unrecognized tax positions(1.31)% — %Italian IRAP tax(1.60)% — %Prior year AMT0.11 % (6.74)%Return to provision adjustments(0.29)% 12.37 %Effective Tax Rate8.93 % (91.35)% In 2013, loss before income taxes of $22.8 million consisted of a $23.6 million domestic loss and $0.8 million foreign income. In 2012, income beforeincome taxes of $0.8 million consisted of $0.4 million domestic and $0.4 million foreign income. As of December 31, 2013, the Company has net operating loss ("NOL") carryforwards of approximately $31.0 million for tax purposes which will beavailable to offset future income. The NOL carryforwards consist of $19.3 million in foreign NOL carryforwards, which have an indefinite life, and $11.7million in U.S. NOL carryforward. If not used, these carryforwards will expire between 2020 and 2030. The Company's U.S. NOL carryforward are limitedunder Section 382 of the Internal Revenue Code ("IRC"). In future periods, an aggregate, tax effected amount of $0.8 million of NOL's will be recorded toAdditional paid-in-capital when carried forward excess tax benefits from stock based compensation are utilized to reduce future cash tax payments. Deferred income taxes reflect the net effects of net operating loss carryforwards and the temporary differences between the carrying amounts of assets andliabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax assets andliabilities at December 31, 2013 and 2012 are as follows (amounts in thousands): 2013 2012Deferred tax assets: Net operating loss carryforwards $8,442 $5,400Capital loss and trade deficit loss carryforwards 745 —Allowance for doubtful accounts 860 85Fixed assets 286 320Intangible Assets 5,585 —Mark to market adjustment 3,794 402Stock compensation 671 503Miscellaneous items 1,435 244Total deferred tax assets before valuation allowance 21,818 6,954Less: Valuation allowance (19,806) (6,708)Total deferred tax assets 2,012 246Deferred tax liabilities: Intangibles — 780Miscellaneous items 239 274Total deferred tax liabilities 239 1,054Net deferred tax liability $(1,773) $808 As of December 31, 2012, the Company provided a full valuation allowance against its net deferred tax assets since, based on the application of thecriteria in ASC 740, it concluded that it was more likely than not that the benefits of these assets would not be realized in the future. Following the criteria inASC 740, the Company reviews this valuation allowance on a quarterly basis assessing the positive and negative evidence to determine if it is more likely thannot that some or all of the deferred tax assets will be realized.F-21Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Based on its assessment as of December 31, 2013, the Company determined that the release of a significant component of this valuation allowance wasappropriate, therefore; the Company recorded a $2.9 million benefit for releasing valuation allowance previously provided for on certain UK deferred taxassets. This conclusion was based on management's consideration of various factors, including the Company's improved operating performance, itscumulative operating results or the prior twelve quarters and the outlook regarding the Company's prospective operating performance. As of December 31,2013 the Company's valuation allowance relates mainly to capital loss carryforwards and net operating losses in the United States, Italy, France, Hong Kong,and certain UK assets, except to the extent that those assets are expected to be realized through the continuing amortization of the Company's deferred taxliabilities for intangible assets. This valuation allowance was determined based on the Company's application of the guidance in ASC 740 and its conclusionthat it was more likely than not that the benefits of these assets would not be realized in the future. The Company will continue to assess the need to maintainthis valuation allowance at each reporting date.Earnings are considered to be permanently reinvested and, accordingly, no U.S. federal and state income taxes have been provided thereon. Upondistribution of those earnings in the form of dividends or otherwise, the Company could be subject to both U.S. income taxes (subject to an adjustment forforeign tax credits) and withholding taxes payable to various foreign countries.The Company has performed an analysis of all open years, December 31, 2009 to December 31, 2012 and the expected tax positions to be taken at thebalance sheet date. At December 31, 2013, approximately $1.9 million of unrecognized tax expense including penalties and interest in conjunction with itsactivities in certain countries where a permanent establishment may give rise to corporate income taxes. Of the $1.9 million recorded, $1.5 million wasestablished through purchase price accounting. The gross unrecognized tax expense amount is not expected to materially change in the next 12 months. Thefollowing table presents a reconciliation of the beginning and ending amounts of unrecognized tax expense: 2013 2012Balance, January 1$— $—Changes for tax positions of prior years1,851 —Increases for tax positions related to the current year— —Settlements and lapsing of statues of limitations— —Balance, December 31$1,851 $—NOTE 9 — RESTRUCTURING COSTS, EMPLOYEE TERMINATION AND OTHER ITEMS During the year ended December 31, 2013, the Company incurred costs associated with executing and closing the IDC and Tinet acquisitions, includingpayroll and employee severance costs, professional fees, termination costs associated with network grooming, and travel expenses. During the year endedDecember 31, 2013, the Company incurred $7.7 million in costs associated with executing and closing the IDC and Tinet acquisitions. The restructuring charges and accruals established by the Company, and activities related thereto, are summarized as follows for the year endedDecember 31, 2013 (amounts in thousands): Charges Netof Reversals CashPayments Total Balance, December 31, 2012$— $— $— Employment costs4,600 4,564 36 Professional fees1,565 1,246 319 Integration expenses1,282 891 391 Travel and other expenses230 221 9Balance, December 31, 2013$7,677 $6,922 $755 F-22Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.NOTE 10 — EMPLOYEE STOCK-BASED COMPENSATION BENEFITSStock-Based Compensation Plan The Company adopted its 2006 Employee, Director and Consultant Stock Plan (the “2006 Plan”) in October 2006. In addition to stock options, theCompany may also grant restricted stock or other stock-based awards under the 2006 Plan. The maximum number of shares issuable over the term of the2006 Plan is limited to 3,500,000 shares. The Company adopted its 2011 Employee, Director and Consultant Stock Plan (the “2011 Plan”) in June 2011. In addition to stock options, theCompany may also grant restricted stock or other stock-based awards under the 2011 Plan. The maximum number of shares issuable over the term of the2011 Plan is limited to 3,000,000 shares. The 2006 Plan will continue according to its terms.The Plan permits the granting of stock options and restricted stock to employees (including employee directors and officers) and consultants of theCompany, and non-employee directors of the Company. Options granted under the Plan have an exercise price of at least 100% of the fair market value of theunderlying stock on the grant date and expire no later than ten years from the grant date. The options generally vest over four years with 25% of the optionshares becoming exercisable one year from the date of grant and the remaining 75% annually or quarterly over the following three years. The CompensationCommittee of the Board of Directors, as administrator of the Plan, has the discretion to use a different vesting schedule. Stock OptionsDue to the Company’s limited history as a public company, the Company has estimated expected volatility based on the historical volatility of certaincomparable companies as determined by management. The risk-free interest rate assumption is based upon observed interest rates at the time of grantappropriate for the term of the Company’s employee stock options. The dividend yield assumption is based on the Company’s intent not to issue a dividendunder its dividend policy. The Company uses the simplified method under ASC Topic 718, Compensation - Stock Compensation, to estimate the options’expected term. Assumptions used in the calculation of the stock option expense were as follows: 2013 2012Volatility 60.2% - 63.4% 61.9% - 64.0%Risk free rate 1.0% - 1.9% .08% - 1.8%Term 6.25 6.25Dividend yield —% —%Stock-based compensation expense recognized in the accompanying consolidated statement of operations for the year ended December 31, 2013 is based onawards ultimately expected to vest, reduced for estimated forfeitures. ASC Topic 718 requires forfeitures to be estimated at the time of grant and revised, ifnecessary, in subsequent periods if actual forfeitures differ from those estimates. Forfeiture assumptions were based upon management’s estimate. The fair value of each stock option grant to employees is estimated on the date of grant. The fair value of each stock option grant to non-employees isestimated on the applicable performance commitment date, performance completion date or interim financial reporting date. During the years ended December 31, 2013 and 2012, the Company recognized compensation expense related to stock options of $0.4 million and $0.2million, respectively, related to stock options issued to employees and consultants, which is included in selling, general and administrative expense on theaccompanying consolidated statements of operations.F-23Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.During the year ended December 31, 2013, 486,750 options were granted pursuant to the Plan. The following table summarizes information concerningoptions outstanding as of December 31, 2013: Options Weighted AverageExercise Price WeightedAverageFair Value Weighted AverageRemainingContractualLife (Years) AggregateIntrinsicValueBalance at December 31, 2012 1,395,250 $1.49 $0.43 7.23 $1,834,685Granted 486,750 3.64 2.07 — —Exercised (92,125) — — — 279,830Forfeited (92,375) 1.03 0.56 — 594,455Balance at December 31, 2013 1,697,500 $2.09 $0.47 7.31 $7,962,468Exercisable 829,913 $4.34 $0.93 5.81 $4,885,047 As of December 31, 2013, the vested portion of share-based compensation expense was $0.8 million. As of December 31, 2013, the unvested portion ofshare-based compensation expense attributable to stock options and the period in which such expense is expected to vest and be recognized is as follows(amounts in thousands): 2014$42720153702016284201797Total$1,178 The fair value of share-based compensation for options that vested as of December 31, 2013 was $1.2 million. Restricted Stock The Company expenses restricted shares granted in accordance with the provisions of ASC Topic 718. The fair value of the restricted shares issued isamortized on a straight-line basis over the vesting periods. During the year ended December 31, 2013 and 2012, the Company recognized compensationexpense related to restricted stock of $1.1 million and $0.4 million, respectively, which is included in selling, general and administrative expense on theaccompanying consolidated statements of operations. Following table summarizes restricted stock activity during the years ended December 31, 2013 and 2012: 2013 2012 Shares WeightedAverageFairValue Shares WeightedAverageFairValueNonvested Balance at January 1, 660,001 $1.66 536,125 $1.04Granted 727,357 3.58 406,248 2.08Forfeited (5,000) 3.40 — —Vested (405,420) 5.02 (282,372) 2.38Nonvested Balance at December 31, 976,938 $2.96 660,001 $1.66 As of December 31, 2013, the non-vested portion of share-based compensation expense attributable to restricted stock amounts to $1.1 million which isexpected to vest and be recognized during a weighted-average period of 2.9 years.F-24Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.NOTE 11 - DEFINED CONTRIBUTION PLAN The Company has a defined contribution retirement plan under Section 401(k) of the IRC that covers substantially all U.S. based employees. Eligibleemployees may contribute amounts to the plan, via payroll withholding, subject to certain limitations. During 2013 and 2012, the Company matched 40% ofemployees’ contributions to the plan. The Company’s 401(k) expense was $179,000 in 2013 and $84,000 in 2012.NOTE 12 — DEBT The following summarizes the debt activity of the Company during the year ended December 31, 2013 (amounts in thousands): Total Debt Senior TermLoan Line ofCredit Mezzanine Notes SubordinatedNotes Promissory Note Debt obligation as of December 31, 2012$42,829 $24,500 $— $15,481 $2,611 $237Issuance, net of discount83,445 65,794 6,000 11,651 — —Debt discount amortization601 — — 578 23 —Payments(31,866) (28,544) (3,000) — (85) (237)Extinguishment of debt(2,549) — — — (2,549) —Debt obligation as of December 31, 2013$92,460 $61,750 $3,000 $27,710 $— $—Estimated annual commitments for debt maturities net of unamortized discounts are as follows at December 31, 2013 (amounts in thousands): Total Debt2014$6,50020156,500201679,460Total$92,460 Senior Term Loan and Line of Credit On April 30, 2013, to fund the Company’s acquisition of Tinet, the Company arranged financing with a new senior lender, Webster. The Company enteredinto an agreement (the "Credit Agreement") with Webster that provided for a term loan in the aggregate principal amount of $65.0 million and a revolving lineof credit in the aggregate principal amount of $5.0 million. The term loan matures on March 31, 2016, unless, on or before December 31, 2015, the maturity date of the mezzanine facility has been extended to (orbeyond) September 30, 2018, or repaid in full or refinanced with the written consent of the lenders holding more than 50% of the outstanding obligations (the“Required Lenders") and replaced with subordinated indebtedness having a maturity date acceptable to the Required Lenders, in which case the maturity datewill automatically extend to April 30, 2018.The Company will repay the Webster term loan in twenty (20) quarterly principal installments with each payment of principal being accompanied by apayment of accrued interest, beginning in September 2013. The interest rate applicable to the Credit Agreement is the higher of LIBOR or 1% plus a margin of5.5%. As of December 31, 2013, the interest rate was 6.5%.On April 30, 2013, the Company prepaid in full all indebtedness outstanding under its existing credit facilities with Silicon Valley Bank and terminated thecollateral agreements related thereto, including under the syndicated credit agreement dated as of May 23, 2012, as amended, by and among the Company andcertain of its United States subsidiaries, which consisted of approximately $26.0 million in principal and accrued and unpaid interest, and under theAmended and Restated Loan and Security Agreement dated as of June 29, 2011, as amended, by and among certain of the Company’s foreign subsidiaries,which consisted of approximately $1.5 million in principal and accrued and unpaid interest. F-25Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.On July 11, 2013, the Company entered into an amendment to the Credit Agreement that increased the revolving line-of-credit from $5.0 million to $7.5million. As part of the amendment, Webster and GTT achieved broader-based commitments, expanding the Credit Agreement to include, East West Bank,Fifth Third Bank, Brown Brothers Harriman and Co., BDCA Funding LLC, and Crescent Capital. The obligations of the Company under the CreditAgreement are secured by substantially all of the Company’s tangible and intangible assets.On December 30, 2013, the Company entered into an amendment to the July 11, 2013 Credit Agreement that increased the revolving line-of-credit by $7.5million, increasing the maximum borrowings under the line-of-credit to $15.0 million. The Company also issued a letter of credit facility of $4.0 million,which is a sublimit within the line-of-credit. As of December 31, 2013, the Company is in compliance with the reporting and financial covenants stated in theCredit Agreement.Mezzanine Notes On June 6, 2011, the Company entered into a note purchase agreement (the “Purchase Agreement”) with BIA Digital Partners SBIC II LP (“BIA”). ThePurchase Agreement provided for a total commitment of $12.5 million, of which $7.5 million was immediately funded (the “BIA Notes”). The BIA Noteswere issued at a discount to face value of $0.4 million and the discount is being amortized, into interest expense, over the life of the notes. The remaining $5.0million of the committed financing was available to be called by the Company on or before August 11, 2011, subject to extension to December 31, 2011 at thesole option of BIA. On September 19, 2011, BIA agreed to extend the commitment period and funded the Company an additional $1.0 million. Theadditional funding was issued at a discount to face value of $45,000, due to the warrants issued, and the discount is being amortized, into interest expense,over the life of the notes. On April 30, 2012, in connection with the nLayer acquisition, the Company entered into an amended and restated note purchase agreement (the "AmendedNote Purchase Agreement") with BIA and Plexus Fund II, L.P. (“Plexus”). The Amended Note Purchase Agreement provided for an increase in the totalfinancing commitment by $8.0 million, of which $6.0 million was immediately funded (the "Plexus Notes"). The Company called on the remaining $2.0million on December 31, 2012. The funding by Plexus was issued at a total discount to face value of $0.8 million, due to the warrants issued, and thediscount is being amortized into interest expense over the life of the notes. On April 30, 2013, the Company arranged financing through an increase in the Company’s existing mezzanine financing arrangement, in the form of amodification to its existing note purchase agreement (the “Second Amended Note Purchase Agreement”) with BIA and Plexus that expands the amount ofborrowing under the Amended Note Purchase Agreement on April 30, 2012 and adds BNY Mellon-Alcentra Mezzanine III, L.P. (“Alcentra”) as a new notepurchaser and lender thereunder (together with BIA and Plexus, the “Note Holders”). The Second Amended Note Purchase Agreement provides for a totalfinancing commitment of $11.5 million, of which $8.5 million was immediately funded, (the “BIA Notes” and together with the "Plexus Notes", the “Notes”)and issued at a discount to face value of $1.3 million, due to the warrants issued. The discount is being amortized, into interest expense, over the life of theNotes.On November 1, 2013, the remaining $3.0 million of the committed financing was called on by the Company and the original interest rate of 13.5% perannum was reduced to 11.0% per annum for the entire outstanding Notes of $29.5 million. No warrants were issued.On December 30, 2013, the Company modified the Second Amended Note Purchase Agreement ( the "Third Amended Note Purchase Agreement") with BIA,Plexus, and Alcentra, expanding the total financing commitment by $10.0 million, of which $1.5 million was immediately funded. This additional financingcommitment has no warrant issuances required. The remaining $8.5 million of the committed financing may be called by the Company, subject to certainconditions, on or before December 31, 2014. The Third Amended Note Purchase Agreement increases the maximum borrowings to $38.0 million with theNotes maturing on June 6, 2016, and shall bear interest at a rate of 11.0% per annum.The obligations of the Company under the Third Amended Note Purchase Agreement are secured by a second lien on substantially all of Company’stangible and intangible assets. Pursuant to a pledge agreement, dated June 6, 2011, by and between BIA and the Company, the obligations of the Company arealso secured by a pledge in all of the equity interests of the Company in its respective United States subsidiaries and a pledge of 65% of the voting equityinterests and all of the non-voting equity interests of the Company in its respective non-United States subsidiaries. Concurrent with entering into the Third Amended Note Purchase Agreement, Webster and the Note Holders entered into an intercreditor and subordinationagreement which governs, among other things, ranking and collateral access for the respective lenders.F-26Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Warrants On June 6, 2011, pursuant to the Purchase Agreement, the Company issued to BIA a warrant to purchase from the Company 634,648 shares of theCompany’s common stock, at an exercise price equal to $1.144 per share (as adjusted from time to time as provided in the Purchase Agreement). Upon theadditional $1.0 million funding, the Company issued to BIA an additional warrant to purchase from the Company 63,225 shares of the Company’s commonstock, at an exercise price equal to $1.181 per share. On April 30, 2012, pursuant to the Amended Note Purchase Agreement, the Company issued to Plexus a warrant to purchase from the Company 535,135shares of the Company’s common stock at an exercise price equal to $2.208 per share (as adjusted from time to time as provided in the warrant). OnDecember 31, 2012, the Company issued to Plexus an additional warrant to purchase from the Company 178,378 shares of the Company’s common stock,at an exercise price equal to $2.542 per share (as adjusted from time to time as provided in the warrant). Upon a change of control (as defined in the AmendedNote Purchase Agreement), the repayment of the Notes prior to the maturity date of the Notes, the occurrence of an event of default under the Notes or thematurity date of the Notes, the holder of the warrant shall have the option to require the Company to repurchase from the holder the warrant and any sharesreceived upon exercise of the warrant and then held by the holder, which repurchase would be at a price equal to the greater of the closing price of theCompany’s common stock on such date or a price determined by reference to the Company’s adjusted enterprise value on such date, in each case, with respectto any warrant, less the exercise price per share. On April 30, 2013, pursuant to the Second Amended Note Purchase Agreement, the Company issued to Plexus a warrant to purchase from the Company246,911 shares of the Company’s common stock, to BIA a warrant to purchase 356,649 shares of the Company’s common stock, and to Alcentra a warrantto purchase from the Company 329,214 shares of the Company’s common stock, each at an exercise price equal to $3.306 per share. All the warrants issuedby the Company expire on June 6, 2016.The Company evaluated the down round ratchet feature embedded in the warrants and after considering ASC 480, Distinguishing Liabilities from Equity,which establishes standards for how an issuer classifies and measures in its statement of financial position certain financial instruments with characteristicsof both liabilities and equity, and ASC 815, Derivatives and Hedging, the Company concluded the warrants should be treated as a derivative and recorded aliability for the original fair value amount of $2.6 million on the respective dates of issuance. During the year ended December 31, 2013, the warrant liabilitywas marked to market which resulted in a loss of $8.7 million. The balance of the warrant liability was $12.3 million as of December 31, 2013, which isincluded in other long-term liabilities. Subordinated Notes On February 8, 2010, the Company completed a financing transaction in which it sold debt and common stock (“February 2010 Units”), resulting in $2.4million of proceeds to the Company. The February 2010 Units consisted of $1.5 million in aggregate principal amount of the Company’s subordinated notesdue February 8, 2012, and $0.9 million of the Company’s common stock. The subordinated notes were issued at a discount to face value of $0.2 million andthe discount is being amortized into interest expense over the life of the notes. Interest on the subordinated notes accrues at 10% per annum. In May 2011, $1.4million of the February 2010 Units subordinated notes were amended to mature in four equal installments on March 31, June 30, September 30 and December31, 2013. The remaining $0.1 million of the February 2010 Units subordinated notes were paid off in February 2012. On December 31, 2010, the Company completed a financing transaction in which it sold debt and common stock (“December 2010 Units”), resulting in$2.2 million of proceeds to the Company. The December 2010 Units consisted of $1.1 million in aggregate principal amount of the Company’s subordinatednotes due December 31, 2013 and $1.1 million of the Company’s common stock. On February 16, 2011, the Company and the holders of the December 2010Units amended the offering solely to increase the aggregate principal amount available for issuance, resulting in an additional $0.4 million of proceeds to theCompany, consisting of $0.2 million in the aggregate principal amount of the Company’s subordinated notes due December 31, 2013, and $0.2 million of theCompany’s common stock. The subordinated notes were issued at a discount to face value of $0.3 million and the discount is being amortized into interestexpense over the life of the notes. Interest on the subordinated notes accrues at 10% per annum. All accrued interest as of December 31, 2012 was paid. On March 28, 2013, the Company issued 2,259,617 shares of its common stock in a transaction exempt from registration under the Securities Act of1933, as amended. The purchase price of the common stock in this private offering was $3.00 per share, representing a 15% discount to the average closingprice of the common stock for the 30-day period preceding the closing of the offering. On April 30, 2013, the Company issued 783,334 shares of its commonstock for a purchase price of $3.00 per share, representing the average closing price of the stock for that day. F-27Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Among the purchasers of the common stock in the private offering on March 28, 2013, were certain of the holders of subordinated notes due 2013, whoagreed to accept payment for the principal amount of their notes and the accrued but unpaid interest thereon in the form of common stock. Out of the $2.7million aggregate principal amount of the Company’s subordinated notes due 2013 outstanding before this private offering, the holders of $2.6 million inaggregate principal amount of the notes accepted common stock in the private offering in full satisfaction of their notes. The Company issued an aggregate of982,356 shares of common stock to these investors, in payment of the principal amount of their notes and accrued but unpaid interest in the aggregateamount of $0.3 million. The remainder of the common stock issued in the private offering was paid for in cash. As a result of the 15% discount to the average closing price of the common stock, GTT recorded a loss in the amount of $0.7 million on the 982,356shares that were issued to extinguish the subordinate notes. In accordance with ASC Topic 470-50-40, Derecognition – General, these losses were included indebt extinguishment loss in the consolidated statements of operations for the year ended December 31, 2013.The shares of common stock sold in the private offering are restricted securities under the Securities Act of 1933. The Company entered into a RegistrationRights Agreement with the purchasers of common stock in the private offering, pursuant to which the Company agreed to file with the Securities and ExchangeCommission a registration statement related to the resale of such common stock by the investors. The previous balance of the subordinated notes of $2.7 million included $2.3 million due to a related party, Universal Telecommunications, Inc. H. BrianThompson, the Company’s Executive Chairman of the Board of Directors, is also the head of Universal Telecommunications, Inc., his own private equityinvestment and advisory firm. Also, included in the previous balance was $0.2 million of the subordinated notes held by officers and directors of theCompany. On December 31, 2013, the remaining total outstanding principal of the subordinated notes of $22,000 was paid, along with accrued interest of $2,000. Promissory Note As part of the June 2011 acquisition of PacketExchange, the Company assumed a promissory note of approximately $0.7 million. During the quarter endedMarch 31, 2013, the remaining balance of $0.2 million was paid. NOTE 13 - CONCENTRATIONS Financial instruments potentially subjecting the Company to a significant concentration of credit risk consist primarily of cash and cash equivalents. Attimes during the periods presented, the Company had funds in excess of $250,000 insured by the U.S. Federal Deposit Insurance Corporation, or in excess ofsimilar Deposit Insurance programs outside of the United States, on deposit at various financial institutions. As of December 31, 2013, approximately $4.2million of the Company’s deposits were held at institutions as balances in excess of the U.S. Federal Deposit Insurance Corporation and international insureddeposit limits for those institutions. However, management believes the Company is not exposed to significant credit risk due to the financial position of thedepository institutions in which those deposits are held. For the year ended December 31, 2013, no single customer exceeded 10% of total consolidated revenue. For the year ended December 31, 2012, no singlecustomer exceeded 10% of total consolidated revenue.NOTE 14 - COMMITMENTS AND CONTINGENCIES Office Space and Operating Leases Office facility leases may provide for escalations of rent or rent abatements and payment of pro rata portions of building operating expenses. The Companycurrently leases facilities in McLean, Virginia (lease expires July 2014), London (United Kingdom) (lease expires May 2017), Denver, Colorado (lease expiresJanuary 2015) and with the acquisition of PacketExchange, in London (United Kingdom) (lease expires April 2014). In connection with the acquisition ofTinet, the Company has additional facilities in Cagliari, Italy (lease expires 2016), Milan, Italy (lease expires July 2014), Frankfurt, Germany (lease expires2022) and Chicago, IL (lease expires May 2014). The Company leases data center space in Chicago, IL that expires in May 2015 and December 2017.The Company records rent expense using the straight-line method over the term of the lease agreement. Office facility rent expense was $1.2 million and $0.8million for the years ended December 31, 2013 and 2012, respectively.F-28Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Estimated annual commitments under non-cancelable operating leases are as follows at December 31, 2013 (amounts in thousands): Office Space Other 2014$974 $4532015765 4442016765 3452017473 3452018353 —2019 and beyond1,410 — $4,740 $1,587 Commitments - Supply agreements As of December 31, 2013, the Company had supplier agreement purchase obligations of $46.7 million associated with the telecommunications services thatthe Company has contracted to purchase from its vendors. The Company’s contracts are generally such that the terms and conditions in the vendor and clientcustomer contracts are substantially the same in terms of duration. The back-to-back nature of the Company’s contracts means that the largest component ofits contractual obligations is generally mirrored by its customer’s commitment to purchase the services associated with those obligations. Estimated annual commitments under supplier contractual agreements are as follows at December 31, 2013 (amounts in thousands): SupplierAgreements 2014$9,168201514,409201614,52120172,13820187352019 and beyond5,707 $46,678 If a customer disconnects its service before the term ordered from the vendor expires, and if GTT were unable to find another customer for the capacity,GTT may be subject to an early termination liability. Under standard telecommunications industry practice (commonly referred to in the industry as“portability”), this early termination liability may be waived by the vendor if GTT were to order replacement service with the vendor of equal or greater valueto the service cancelled. Additionally, the Company maintains some fixed network costs and from time to time, if it deems portions of the network are noteconomically beneficial, the Company may disconnect those portions and potentially incur early termination liabilities.“Take-or-Pay” Purchase Commitments Some of the Company’s supplier purchase agreements call for the Company to make monthly payments to suppliers whether or not the Company iscurrently utilizing the underlying capacity in that particular month (commonly referred to in the industry as “take-or-pay” commitments). As of December 31,2013 and 2012, the Company’s aggregate monthly obligations under such take-or-pay commitments over the remaining term of all of those contracts totaled$4.3 million and $2.6 million, respectively.F-29Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Contingencies - Legal proceedings From time to time, the Company is a party to legal proceedings arising in the normal course of its business. Aside from the matters discussed below, theCompany does not believe that it is a party to any pending legal action that could reasonably be expected to have a material adverse effect on its business oroperating results, financial position or cash flows. The Company filed a civil complaint against Artel, LLC on June 15, 2012 in the Fairfax County Virginia Circuit Court; docket number CL2012-04735,alleging breach of contract with respect to telecommunication services provided by the Company. In response to the Company’s complaint, Artel filed acounterclaim against the Company based on allegations of breach of contract and certain business torts. On December 20, 2013, the Court entered a judgmentagainst the Company in the amount of $3.4 million. The Court suspended the judgment, subject to a letter of credit during GTT’s appeal, which is presentlypending in the Supreme Court of Virginia. While the final outcome cannot be predicted, the Company has not accrued for this contingency as it believes it hasa meritorious position on appeal and intends to contest the judgment vigorously.NOTE 15 - FOREIGN OPERATIONSThe Company’s operations are located primarily in the United States and Europe. The Company’s financial data by geographic area is as follows: US ITALY UK OTHER Total GTT2013 Revenues by geographic area$88,995 $39,959 $23,481 $4,933 $157,368Long-lived assets at December 31$73,462 $46,510 $11,109 $6 $131,0872012 Revenues by geographic area$82,430 $— $20,648 $4,799 $107,877Long-lived assets at December 31$63,492 $— $12,679 $19 $76,190F-30Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit 21.1Subsidiaries of GTT Communications, Inc.Name of Subsidiary State or Other Jurisdiction of Incorporationor OrganizationCommunication-Decisions-SNVC, LLC VirginiaCore 180, LLC DelawareElectra, Ltd. VirginiaETT Network Services Limited United KingdomEuropean Telecommunications & Technology, Inc. DelawareEuropean Telecommunications &Technology (S) Pte Limited SingaporeGlobal Telecom & Technology Americas, Inc. VirginiaGlobal Telecom & Technology Deutschland GmbH GermanyGTT Acquisition Ltd. England and WalesGTT-EMEA, Ltd. United KingdomGTT Global Telecom Government Services, LLC VirginiaIDC Global, Inc. DelawareInteliquent S.a.r.l. LuxembourgInteliquent Australia, Pty Ltd. AustraliaInteliquent Canada Communications, Inc. CanadaInteliquent Holdings S.a.r.l. LuxembourgInteliquent Istanbul Telekomunikasyon Hizmetleri Limited Sirketi TurkeynLayer Communications, Inc. DelawareNT Network Services, LLC DelawareNT Network Services LLC, SCS LuxembourgPacketExchange, Inc. DelawarePacketExchange KK JapanPacketExchange (Europe) Limited United KingdomPacketExchange (Hong Kong) Limited Hong KongPacketExchange (Ireland) Ltd IrelandPacketExchange Limited United KingdomPacketExchange (Metro) Limited United KingdomPacketExchange (Singapore) Pte Limited SingaporePacketExchange (USA), Inc. DelawareTEK Channel Consulting, LLC ColoradoTinet GmbH GermanyTinet SpA ItalyTinet Hong Kong Ltd Hong KongTinet Singapore Pte Ltd SingaporeTinet UK Ltd United KingdomUAB “Inteliquent Lithuania” LithuaniaWBS Connect, LLC ColoradoWBS Connect Europe, Ltd. IrelandSource: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit 23.1CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe hereby consent to the incorporation by reference in Form S-8 (No. 333-139356) of GTT Communications, Inc. of our report dated March 18, 2014relating to the consolidated financial statements of GTT Communications, Inc. and Subsidiaries as of December 31, 2013 and 2012 and for the years thenended included in this Annual Report on Form 10-K for the year ended December 31, 2013./s/ CohnReznick LLPVienna, VirginiaMarch 18, 2014Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Exhibit 31.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER I, Richard D. Calder, Jr., certify that: 1. I have reviewed this annual report on Form 10-K of GTT Communications, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in ExchangeAct Rules 13a-15e and 15d-15e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrantand have: (a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this report is being prepared; and (b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes inaccordance with generally accepted accounting principles; and (c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectivenessof the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscalquarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, theregistrant's internal control over financial reporting; 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likelyto adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control overfinancial reporting.Date:March 18, 2014/s/ Richard D. Calder, Jr. Richard D. Calder, Jr. President and Chief Executive Officer Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit 31.2 CERTIFICATION OF CHIEF FINANCIAL OFFICER I, Michael R. Bauer, certify that: 1. I have reviewed this annual report on Form 10-K of GTT Communications, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in ExchangeAct Rules 13a-15(e) and 15d-15(e))and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrantand have: (a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensurethat material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularlyduring the period in which this report is being prepared; (b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision,to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles; (c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness ofthe disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscalquarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, theregistrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likelyto adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control overfinancial reporting. Date:March 18, 2014/s/ Michael R. Bauer Michael R. Bauer Chief Financial Officer and Treasurer Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit 32.1 CERTIFICATION OFCHIEF EXECUTIVE OFFICERPURSUANT TO 18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the annual report of GTT Communications, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2013 as filed withthe Securities and Exchange Commission on the date hereof (the “Report”), I, Richard D. Calder, Jr., Chief Executive Officer of the Company certify,pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my best knowledge: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date:March 18, 2014/s/ Richard D. Calder, Jr. Richard D. Calder, Jr. President and Chief Executive Officer Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit 32.2 CERTIFICATION OFCHIEF FINANCIAL OFFICERPURSUANT TO 18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the annual report of GTT Communications, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2013 as filed with theSecurities and Exchange Commission on the date hereof (the “Report”), I, Michael R. Bauer, Chief Financial Officer and Treasurer of the Company certify,pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my best knowledge: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date:March 18, 2014/s/ Michael R. Bauer Michael R. Bauer Chief Financial Officer and Treasurer Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Source: GTT Communications, Inc., 10-K, March 18, 2014Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.

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